Stock Code: 600690 Short Name: Qingdao Haier
Qingdao Haier Co., Ltd
2018 Interim Report
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 ormaterial 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 theCompany) and Ying Ke (the person in charge of accounting department) hereby certify that thefinancial report set out in the interim report is true, accurate and complete.
V. Proposal of profit distribution and 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 donot constitute our substantial commitment to investors. Investors are advised to pay attention toinvestment risks.
VII. Is there any fund occupation by controlling shareholders and their related parties fornon-operational purposes?
No
VIII. Is there any provision of external guarantee in violation of prescribed decision-makingprocedures?
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
30 August 2018
Note: This Report and its abstract have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
”
Contents
SECTION I DEFINITIONS ...... 5SECTION II GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIALINDICATORS 7SECTION III SUMMARY OF THE COMPANY’S BUSINESS ...... 10
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS ...... 15
SECTION V SIGNIFICANT EVENTS ...... 38SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUTSHAREHOLDERS ...... 59
SECTION VII THE RELEVANT INFORMATION OF PREFERRED SHARES ...... 62
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT ...... 63
SECTION IX RELEVANT INFORMATION ON CORPORATE BONDS ...... 64
SECTION X FINANCIAL REPORT ...... 65
SECTION XI SECTION XIDOCUMENTS AVAILABLE FOR INSPECTION ...... 204
SECTION I DEFINITIONS
Unless otherwise stated in context, the following terms should have the following meanings in thisreport:
CSRC | China Securities Regulatory Commission |
MOFCOM | Ministry of Commerce of the People's Republic of China |
SSE | Shanghai Stock Exchange |
The Company, Qingdao Haier | Qingdao Haier Co., Ltd. |
Four Major Securities Newspapers | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily |
Haier Electrics, 1169 | Haier Electronics Group Co., Ltd. (a company listed in Hong Kong, stock code: 01169.HK) |
GEA | GE Appliances,household appliances assets and business of General Electric |
FPA | Fisher & Paykel Appliances Holdings Limited (Chinese Name:斐雪派克) was established in 1934 and is known as the national appliance brand of New Zealand, the global top-level kitchen appliance brand and the famous luxury brand of the world. It has products including ventilator, gas stove, oven, dishwasher, microwave oven, freezer, washing machine, clothes dryer and etc. Its business covers over 50 countries across of the world. The Company convened Board meeting and General meeting in April and May 2018,respectively, to approve relevant resolutions of the transfer of 100% equity interest in Haier New Zealand Investment Holding Company Limited, upon the completion of the transfer, FPA became a wholly-owned subsidiary of the company. |
CMM | China Market Monitor Co., Ltd., established in 1994, has been focusing on research on retail sales in China consumption market for a long term and is the nationally recognized market research institute in terms of appliance area. |
Euromonitor | Euromonitor, established in 1972, is the leading strategic market information supplier and owns over 40-years of experience in respect of publishing market report, commercial reference data and on-line database. They create data and analysis on thousands of products and services around the world. |
The Stevenson Company | Based in Kentucky, the U.S., the firm is an institution specializing in market survey, research and analysis. The market research and analysis business of the Company started in 1995. Its “TraQline” product is a world-famous survey and research report on market share. The “TraQline” product offers customers with analysis based on global market share and consumer behaviors and supports the decision-making of various businesses. |
IEC | The International Electrotechnical Commission. Founded in 1906, it is the world’s first organization for the preparation and publication of international standards and is responsible for international standardization for electrical engineering and electronic engineering. The goals of the commission include: to ensure that the standards and conformity assessment programs are applied globally in a prioritized manner and to the greatest extent; to assess and improve the quality of products and services involved in its standards; to create conditions for the common use of complicated systems; to improve the effectiveness of the industrialization process; to improve human health and safety, and to protect the environment. |
10 Interconnected Factories | Shenyang Refrigerator Interconnected Factory, Foshan Front-Loading Washing Machine Interconnected Factory, Zhengzhou Air-conditioner Interconnected Factory, Qingdao Mold Interconnected Factory, Qingdao Water Heater Interconnected Factory, Qingdao FPA Electrical Machine Interconnected Factory, Jiaozhou Air-Conditioner Interconnected Factory, Huangdao Central Air-Conditioner Interconnected Factory, Huangdao Smart |
Kitchen Appliance Range Hood Interconnected Factory, Huangdao Smart Kitchen Appliance Stove Interconnected Factory | |
“4+7+N” smart full-scene customized full set program | “4” refers to four physical spaces continuously and iteratively upgraded by Haier, including smart living room, smart kitchen, smart bathroom and smart bedroom. “7” represents seven whole-house solutions as whole-house air, whole-house water supply, whole-house cleaning, whole-house security, whole-house audio, whole-house health and whole-house information. N as a variable represents that users are free to customize smart living scenarios according to tier living habits, thus achieving possibilities with infinite changes. |
The mode combining individual and goal | “Individual” means staff; “goal” means the need of users, rather than the “orders” in narrow sense. The mode “Combining individual and goal” encourages the integration of staff with users, and “win-win” means to realize every employees value while creating value for users. |
IEEE | The Institute of Electrical and Electronics Engineers, an international association of electronic technology and information science engineers, is currently the largest non-profit professional technology society in the world. It committed to the development and research of electrical, electronic, computer engineering and science-related fields, it has now developed into an international academic organization with high influence in terms of the fields of space, computer, telecommunications, biomedicine, power and consumer electronics. |
SECTION II GENERAL INFORMATION OF THE COMPANY AND
KEY 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 | 梁海山 |
II. Contact Person and Contact Information
Secretary to the Board | Representative of securities affairs | |
Name | Ming Guozhen | Liu Tao |
Address | Department of Securities of Qingdao Haier Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao City | Department of Securities of Qingdao Haier Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao City |
Tel | 0532-88931670 | 0532-88931670 |
Fax | 0532-88931689 | 0532-88931689 |
finance@haier.com | finance@haier.com |
III. Summary of the changes in general information
Registered address | Haier Industrial Park, Laoshan District, Qingdao City |
Postal code | 266101 |
Business address | Haier Information Industrial Park, Laoshan District, Qingdao City |
Postal cod of Business address | 266101 |
Website | http://www.haier.net/cn/ |
9999@haier.com |
IV. Movement of Place for Information Disclosure and Deposit
Designated newspaper for information disclosure | Shanghai Securities News, Securities Times, China Securities Journal, Securities Daily |
Website for publishing interim report as designated by the CSRC | www.sse.com.cn |
Deposit place of interim report | Department of Securities of Qingdao Haier Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao City |
V. Summarized Information of Shares of the Company
Type of Shares | Stock Exchange of Shares Listed | Stock Short Name | Stock Code | Stock Short Name Before Variation |
A shares | Shanghai Stock Exchange | Qingdao Haier | 600690 | / |
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
Key accounting data | For the reporting period (January - June) | The corresponding period of last year (January - June) | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
After adjustment | Before adjustment | |||
Operating revenue | 88,591,626,626.07 | 77,585,007,913.93 | 77,575,749,980.10 | 14.19 |
Net profit attributable to shareholders of the Listed company | 4,858,795,529.42 | 4,416,867,240.37 | 4,427,068,404.51 | 10.01 |
Net profit after deduction of non-recurring profit or loss attributable to shareholders of the Listed company | 4,475,991,565.27 | 3,777,339,454.95 | 3,777,339,454.95 | 18.5 |
Net cash flows from operating activities | 5,368,385,954.02 | 8,434,402,658.46 | 8,393,200,906.18 | -36.35 |
As at the end of the reporting period | As at the end of last year | Increase/decrease as at the end of the reporting period compared with the end of last year (%) | ||
After adjustment | Before adjustment | |||
Net assets attributable to shareholders of the Listed company | 35,267,251,452.26 | 32,215,515,201.45 | 32,215,515,201.45 | 9.47 |
Total assets | 157,465,352,921.46 | 151,463,110,707.63 | 151,463,110,707.63 | 3.96 |
(II) Key financial indicators
Key financial indicators | For the reporting period (January - June) | The corresponding period of last year (January - June) | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
After adjustment | Before adjustment | |||
Basic earnings per share (RMB per share) | 0.797 | 0.724 | 0.726 | 10.08 |
Diluted earnings per share (RMB per share) | 0.786 | 0.724 | 0.726 | 8.56 |
Basic earnings per share after deducting | 0.734 | 0.619 | 0.619 | 18.58 |
non-recurring profit or loss (RMB per share) | ||||
Weighted average return on net assets (%) | 14.10 | 15.40 | 15.47 | Decreased by 1.3 percentage points |
Weighted average return on net assets after deducting non-recurring profit or loss (%) | 12.99 | 13.20 | 13.20 | Decreased by 0.21 percentage points |
Explanation of the key accounting data and financial indicators of the Company
√Applicable □Not Applicable
Note: The income from January to June 2018 is RMB 88.592 billion, increased by 14.19% year-on-year;at prevailing exchange rates, while the income under constant exchange rates increased by 17.3%year-on-year. Due to lock exchange business, the net impact profit of two periods recognition fair valueincome was approximately RMB300 million, and after the restoration, the increase of net profitattributable to owners of the Parent company was 18.82%.
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 | 23,934,860.63 |
Government grants included in current profit or loss, except that closely related to the normal operating business, complied with requirements of the national policies, continued to be granted with the amount and quantity determined under certain standards | 137,147,498.76 |
In addition to the effective hedging business related to the 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 realized from disposal of trading financial assets, trading financial liabilities and financial assets available for sale | 193,260,601.21 |
Trust fee income from entrusted business | 943,396.22 |
Other non-operating income and expenses except the aforementioned items | 169,865,362.68 |
Effect of minority equity interests | -91,861,955.96 |
Effect of income tax | -50,485,799.39 |
Total | 382,803,964.15 |
X. Others
□Applicable √Not Applicable
SECTION III SUMMARY OF THE COMPANY’S BUSINESS
I. Introduction of Major Business, Operating Mode and Industry Background
In the first half of 2018, the global economy continued its growth since 2017, but trade frictions,geopolitics and normalization of monetary policies in major economies have increased the uncertainty ofthe global economy and financial markets. In the first half of 2018, China's economy maintained steadygrowth, structural adjustments were further advanced and the economy performed at a good level.
(I) Domestic market of the Industry: In the first half of 2018, the retail sales of each sub-industryof white goods in the domestic market maintained a growth trend, but the performance was
differentiated. According to the calculation of China Market Monitor Co., Ltd (CMM), ① the
home-use air-conditioner industry grew rapidly with the retail volume increased by 16.6% and the retail
value increased by 19.8%; ② in the refrigerator and washing machine market, replacement demand
became the primary demand with weak sales growth, but the average prices were boosted by structuralupgrading: retail volume in the refrigerator industry decreased by 1.7%, but the retail value increased by7.9%; retail volume and retail value in the washing machine industry increased by 4.7% and 10.5%respectively.
With the continuous tightening of real estate control policies, the kitchen and bathroom industry is
facing certain growth pressure. ①In the first half of 2018, the water heater industry recorded a negativegrowth of 0.4% in its retail volume and a growth of 4.8% in its retail value; ②the kitchen appliance
market recorded a negative growth in its retail value, representing a decrease of 1% as compared withthe corresponding period of last year, of which range hoods and stoves (two major sub-industries)recorded a decrease of 3.8% and 1.6% respectively in their retail value.
The trend of consumption upgrade continued, and brand, quality, design and technology becamethe major factors influencing the decision-making of consumers. Consumers are willing to pay apremium for "good products", and health, smart, artistic products with large capacity are increasinglyfavored. It has become the consensus of industry companies to promote the structural upgrading andincrease the added value. According to the statistics of CMM, the share of retail sales of offlinemulti-door refrigerators in the first half of 2018 increased by 4.5 percentage points year-on-year to28.3%.
Online channels maintained rapid growth with retail sales of refrigerators, washing machines, airconditioners, water heaters and kitchen appliances increasing by 29.2%, 36.3%, 54.8%, 36%, and 18.6%,respectively. The competition pattern was that the strong became stronger, the concentration of theleading brands was further strengthened, and the industry competition was intensified. Take therefrigerator industry as an example, the share of retail value of TOP5 brands reached 76.8% in the firsthalf of 2018, representing an increase of 4.3 percentage points.
(II) Overseas markets of the Industry: Due to the level of economic development and market
size in each region, the performance varies by market. ① US appliances industry declined by 1.1% inthe first half of 2018, due to soft demand for large household appliances. ② In the major European
markets, the UK and France markets recorded a flat growth, the German market fell by approximately3% year-on-year, the Italian market fell by approximately 4% year-on-year, and the Russian market
grew by approximately 6%. ③ The Japanese market recorded a slight growth with 3.4% for washingmachines and approximately 2% for refrigerators & freezers. ④ The Australian market experienced agrowth of 1.9%. ⑤ In the South Asia markets, the Pakistani market grew by 11% and the Indian
market by 5%.
The rapid development of technologies such as the Internet of Things, big data, cloud computingand artificial intelligence has enhanced the connection between people and equipment, equipment andequipment, and equipment and ecological resources, and gradually changed our consumption habits ofcustomers. The consumption trend reflected the characteristics of experience economy, communityeconomy and sharing economy. Rapid product iteration and changes in industrial ecology has turned thefocus of competition from pure product competition to user value and experience competition, forcedenterprise transformation and business model reconstruction, and accelerated the transformation fromselling products to selling services.
II. Explanation on significant change on major assets of the Company during the reporting
period
□Applicable √ Not Applicable
The overseas assets amounted to RMB 70,795.3591 million, representing 44.96% of the totalassets.
III. Analysis on core competitiveness during the reporting period√Applicable □ Not Applicable
Since its foundation in 1984, the Company has always adhered to the principle of driving thesustainable and healthy development with innovation system focusing on the needs of users, and it hassuccessfully turned itself from a debt-burdened collective small factory which was on the verge ofshutdown into one of the largest home appliances manufacturers in the world. The Company iscommitted to realizing sustainable development across different cycles through continued innovationson development strategy and management mode, brand, research and development, intelligentmanufacturing, construction of foreign and domestic market to achieve competitiveness adaptive toever-changing conditions.
(I) World-renowned brand competitiveness and comprehensive brand layoutAccording to the data published by Euromonitor, Haier has been ranked No. 1 among global largehome appliances brands for 9 consecutive years. In segments of refrigerators, washing machines, wine
cellars, freezers, the Company continues to be No. 1 in the world. To meet the personalized anddiversified needs of users, we have broken down the global technical barriers in the householdappliances industry and promoted the healthy development of the industry through the global strategicsynergy 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 householdappliances industry cluster in the world, which covers global market and communities.
The share of high-end brand is far ahead. In the first half of 2018, the market share of Casarte airconditioners above RMB16,000 is 45%, the market share of Casarte drum washing machines aboveRMB10,000 is 73.8% and the market share of Casarte refrigerators above RMB10,000 is 36%; in 2017,the market share of MONOGRAM, the high-end household appliance brand of GEA, reached 20% inthe US high-end market; the market share of Fisher & Paykel, the world's top household appliance brand,reached 36% in New Zealand's high-end market.
(II) Industry-leading R&D and technological competitiveness1. Layout of R&D resources around the world: Relying on the world's top 10 R&D centers and Ninnovation centers that are connected in parallel according to the user's pain points, Haier has built a
“10+N”open innovation system to form a global network of resources and users, and attractedworld-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, trulyrealizing the " where is the user needs and innovation resources where is the R&D" and providingexcellent experience for its users.
2. Leadership in industrial standards. With its sustained innovation capacity, Haier has become aleader in the household appliances industry in China and worldwide. As of December 2017, Haier held atotal of 66 expert seats in IEC and ISO. Haier also held 28 expert seats in UL standardizationorganization. Haier has participated in the preparation and revision of 56 international standards and hassubmitted 90 international standard revision proposals in the process of participation, is the householdappliance enterprise with the most proposals for international standard revision in China. At the sametime, Haier is also the household appliance enterprise leading the most industry standards in China, hasled and participated in 445 national/industry standards revisions in total, of which 391 have beenreleased and won 11 national standards innovation contribution awards. In terms of participation ininternational organizations, Haier is the only household appliance enterprise in China to enter theInternational Electrotechnical Commission's Market Strategy Bureau (IEC/MSB). It undertakes the workof the IEC/SC59A International Dishwasher Subcommittee Secretariat and is the only householdappliance enterprise in China that undertakes the International Standards Technical Subcommittee; Haiertook the lead in setting up the IEC TC59/SC59M WG4 Refrigerator Preservation International StandardWorking Group, led the development of new international standards for refrigerator preservation andachieved international breakthroughs in the field of household appliances.
3. Up to the end of 2017, Haier has applied for more than 25,000 patents in total, including morethan 15,000 invention patents, covering 25 countries and regions, which is the household appliance
enterprise with the most overseas invention patents in China. In 2017, Haier applied for more than 7,000patents, the proportion of invention patents was higher than 60% and the quality of patents led theindustry. In the 19
th
China Patent Awards in December 2017, Haier won the only patent gold award and2 design gold awards in the household appliance industry, and won 5 patent excellence awards at thesame time. In the previous China Patent Awards, Haier has won 5 gold awards in total and the totalnumber of gold awards was the highest in the industry; Haier became the only household applianceenterprise that won the China Patent Gold Award 2 times in 29 years and created the highest record ofwinning three at a time. Haier has won 14 National Prize for Progress in Science and Technology,accounting for 2/3 of the 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 innovationto the realization of innovation, producing cross-border and disruptive innovation continuously. As theleading 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, thussupporting the maintenance of our leading position in products/technologies.
(III) Competitiveness of smart manufacturing that leads to change
1. The core competitiveness of Haier’s smart manufacturing lies in its commitment to long-term
value for users through its user-oriented approach and the transition from large-scale manufacturing tolarge-scale customization. In practical operation, Haier has established 10 global-leading sampleinterconnected factories, as well as the interconnected capabilities and ecological system covering thewhole process. Such businesses cover refrigerators, washing machines, air-conditioners, water heaters,kitchen appliances, electric motors, molds and other fields, meeting our user's need for perfectexperience in high-end personalized products and services. Such initiatives have produced notableeffects: the orders from mass customization in which users are involved in the whole process accountedfor up to 16% of the total, and the orders from mass customization in which customers are involvedaccounted for up to 52% of the total, achieving a breakthrough, which eliminated or shortened the periodof the products in the warehouses. In addition, operational efficiency throughout the process has beenenhanced (such as the R&D cycle of new products has been reduced by more than 50%).
2. 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 indigitalization and product formation. This platform, combined with existing capabilities such as smartequipment, smart control, mold and Smart Research Institute, has been in collaboration with relevantcompanies in seven major industries, and will be able to offer comprehensive solutions and value-addedservices featured by the union of software and hardware as well as the mix of virtual and real factors forthe transformation and upgrading of smart manufacturing.
(IV) The layout of efficient and in-depth channel network and logistics network1. Through our diversified channel system, we have achieved full coverage of the first, second,third and fourth-tier-domestic market and provided convenient shopping experience anywhere, anytime.
We have also maintained strong strategic cooperation relationship with professional chains forhousehold appliances, such as Gome and Suning, as well as e-commerce platforms, such as Tmall andJD. In respect of our own channels, Haier has established more than 8,000 county-level stores, and morethan 30,000 stores within town level network. In our comprehensive store channel, we have established anumber of clubs, such as V58 and V140 Clubs, and maintained close cooperation with major enterprisesengaging in regional distribution of household appliances. Relying on the advantage that the company'sproduct line is complete, we will build a smart and full set of scene experience stores to realize the fullset of market terminal displays, design, sales and services, and improve the channel stickiness.
2. The network of the warehouses of Gooday Logistics covers more than 100 cities and regions inChina, with a total storage area of 3.60 million square meters, and 90,000 motor vehicles for deployment.Gooday Logistics offers around-the-clock service combining delivery and installation, and is dedicatedto providing users with comprehensive, timely and care-free services.
(V) Excellent global operational capability
Focusing on “building our own brand independently”, the Company has completed its layout of
trinity network comprising R&D, manufacturing and marketing in the major overseas market through
organic growth and mergers and acquisitions, which can quickly understand and meet local consumers’
demand, thus succeeding in transforming from a single-brand globalization to a multi-brandcross-industry cross-regional globalization, and has achieved a leap from "going out, going in" to "goingup" through the integration and synergy of global resources. At the end of 2017, the Company's overseasproduction capacity (Americas, Europe, South Asia and other regions) has exceeded 20 million; theproportion of overseas revenue in the first half of 2018 is over 40% and nearly 100% from its ownbrands.
(VI) Integrity of corporate culture and the win-win management mode of Individual and GoalCombination
Credibility culture based on quality and service is the core driver of Haier’s growth, and is also theessential source 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 theusers 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 challengeitself, so as to seize development opportunities. The win-win model of combining individual and goal is
the assurance of sustainable operation of Haier. In exploring the “Individual and Goal Combination 2.0,Co-create and Win-win ecosystem”, Haier endeavors to build a win-win ecosystem based on user value
interaction in new stage of e-commerce era to make every employee his/her own CEO and realize theirown value while creating value for users, so as to achieve win-win situation which is critical to parties insystem.
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS
I.Discussion and Analysis on Operations
In the first half of 2018, the Company focused on the strategic goal of “becoming a leadingprovider of smart home solutions in the era of Internet of Things”. Driven by the Individual and Goal
Combination model, the Company provided diverse complete smart household appliance solutions forconsumers through continuous product leadership, retail transformation and global operation, andrealized high growth, high market share and high value in household appliances industry. Facing theopportunities in the era of Internet of Things, we will promote the creation of eco-brands in the era ofInternet of Things, create and iterate the best experiences of users through interaction with users, achievewin-win value-added with stakeholders in the ecosystem and create new growth points such asecological revenue.In the first half of 2018, the Company recorded revenue of RMB88.592 billion, representing anincrease of 14.19%. If the impact of exchange rate is taken into consideration, the revenue increased by17.3% under constant exchange rate as compared with the corresponding period of last year. Theoverseas revenue of the Company was 35.8 billion, which accounted for 40.4%. The Company achievednet profit attributable to owners of the Parent company of 4.859 billion, a year-on-year growth of10.01% and achieved net profit non-attributable to owners of the Parent company of 4.476 billion, ayear-on-year growth of 18.50%. In the first half of the year, the overall gross profit margin of theCompany was 28.97%, which decreased by 1.2 percentage points year-on-year, and the reason for thedecrease was the reclassification of certain logistics freight in accordance with the new income criteria.In the absence of such criteria, the gross profit margin increased by 1.3 percentage points year-on-year.
The household appliance businesses of the Company realized a significant increase, thus expanding
its leadership. ① Revenue of refrigerator business, air conditioner business, washing machine business,
water heater business and kitchen appliance business in the household appliance industry (excluding
GEA) increased by 17%, 25%, 20%, 21% and 30% respectively. ② In the first half of 2018, GEA’s
sales in USD grew by 11%. Given the impact from RMB exchange rate, the corresponding sales in RMBgrew by 3.4%
In terms of market share, ①in the China market, the business for refrigerators, washing machines
and water heaters further expanded their leading, and the share of domestic retail value from January toJune increased by 4.6, 4, and 1.3 percentage points, respectively. The share of retail sales of refrigeratorand washing machine reached 34.88% and 32.94% respectively, being 3.1 times and 1.9 times of that ofthe second brand, thus further expanding the leadership and the share of retail sales of Haier water heater
reached 17.84%; ② key growth businesses such as home-use air conditioners, range hoods and stoves
further consolidated their development foundations, resulting in an increase of 0.5, 0.8, 0.8 percentage
points in the share of retail sales respectively. ② Per data from The Stevenson Company, GEA share
increased in the first half of the year. Strong sales were boosted by continued growth in the kitchen and
laundry categories as well as an increased presence with national accounts for GEA room airconditioning products.
I. The Company’s open innovation system of global 10+N layout constantly applies global
first-class resources to enhance its strong product innovation capacity, so as to provide good lifesolutions for users and to lead the development trend in the industry.1. Refrigerator/freezer business.
Based on consumers’ demands for high-quality life on fresh-keeping, nutrition, health and safety offoods that are increasingly concerned about, the Company constantly improved its product solutions. ①
The full-space fresh-keeping refrigerator includes world-leading air duct refrigeration technology toenable the refrigerating chamber to provide air supply on demand, together with precise cooling,humidity and oxygen control. The freezing chamber has a barrier against defrosting hot air, which
achieves that refrigerated or frozen food does not face dehydration and achieves better preservation; ②
The world's original MSA oxygen-control preservation technology reduces the oxygen concentration, sothat the food reaches a low-oxygen dormancy state, maximizing the preservation time and nutrition ofthe food. The preservation effect is extended by more than 8 times through this technology.
The Company made innovations in industry categories, optimized structure and targets upward
growth. ① The Company launched the new F+ refrigerator, a first in the industry. Casarte F+ free
embedded refrigerator integrates the benefits of a super-large space French refrigerator and sortedstorage of a T-door refrigerator. It realizes food preservation from temperature, humidity, speed,cleanliness and oxygen concentration, and its exclusive free embedded design achieves the integration ofhome furnishing and household appliance. The high-end market share has been promoted since theintroduction of F+. In the first half of 2018, the Company's share in the ultra-high-end RMB15,000 pricesegment was 41.5%, increased by 22.2 percentage points year-on-year, of which the share in the
multi-door refrigerator category reached 57%. ② Haier’s full-space fresh-keeping series completed the
layout of multi-door, side-by-side and T-type, and sales volume increased by 243% in the first half of
2018. The T-type “Feast (飨宴)” full-space fresh-keeping series separating dry and wet at a value of
more than RMB10,000 was ranked on the list of best-selling models of CMM within three weeks uponits introduction. With world-class industrial design, the Casarte free embedded four-door French-stylerefrigerator BCD-633WICTU1, Casarte F+ multi-door refrigerator BCD-520WICTU1 and Haier T-typefour-door refrigerator BCD-608WDPGUI were ranked on the winner list of the Germany IF DesignAward released in March 2018. The Company ranked first in the global refrigerator industry in terms ofits awards.
2. Home-use air conditioner business.Based on the purpose of creating a user environment for healthy air respiration and ecologicalrespiration, the Company enhanced its structure and brand recognition by emphasizing its technicalinnovation and continuous improvement. The Company continuously introduces intelligent, efficient andhealthy products. In the first half of 2018, the share of high-end home-use air conditioners increased
significantly: the share of hanging air conditioners above RMB4,100 increased by 4 percentage points to11.8%; the share of hanging air conditioners above RMB10,100 increased by 3 percentage points to15.7%, of which the share of hanging air conditioners above RMB16,000 is 45%, ranking first in theindustry and 2.5 times that of the second. According to the statistics of CMM, benefiting from thecontinuous optimization of product structure, our home-use air conditioner increased by 8.1% in offlineaverage price and 11.4% in online average price, ranking top among mainstream brands in the first halfof 2018.
The Company introduced Casarte TX air conditioners and Fresh Air cabinets in 2018. (1) CasarteTX air conditioners were equipped with various innovative technologies to intelligently identify the bestapparent temperature of different users in the same room, realize partitioned and exclusive air supply for
different demands. ① Temperature perception technology was used to measure and calculate the
subjective comfort based on ambient temperature, body surface temperature, body convection radiation
temperature and spatial distance. ② Multiple-temperature zone air supply technology: two independent
fans with five air supply directions in a wide horizontal angle of 120° were equipped to supply air basedon the region, location and comfort of human bodies, so as to make us comfortable by adjusting the air
speed and temperature. ③ Dual-circulation soft air technology: the original twin vortex pressurization
system realizes double circulation of soft air, with air supply smoother and less noise while air volumewas increased by 10%. (2) Fresh Air cabinets include double-power constant-temperature technology offresh air purification and dynamic dual-drive technology of balanced air supply to adjust indoor airenvironment to make us comfortable, and a smart App management was added to provide users withcomfortable and healthy air experience and intelligent and convenient manipulation experience.
3. Central air conditioner business.Based on the needs of users in different market segments, we launched a series of energy-saving,smart and healthy products, and seized market opportunities through personalized solutions to furtherenhance the brand reputation. According to industrial online statistics, in the first half of 2018, the shareof Haier's central air-conditioning increased by 1.1% year-on-year, with a growth rate of 2.5 times theindustry According to the data of the central air-conditioning market, the share of Haier's magneticlevitation air conditioners which are widely used in medical, rail transit, integrated construction, datacenters, hotels and other industries has doubled on top of ranking first in the industry.
In the first half of the year, we adhered to the product innovation strategy and focused on the needs
of market segment users and iterative innovation. ① In response to the market demand for
environmental products, we launched energy-saving and environmental air heaters with first-classenergy-efficiency, which still had powerful heating capacity under the low-temperature environment
25℃ to fulfill the heating task in winter. ② In response to the demand of high-end residential productupgrades, we introduced Casarte’s household central air conditioner. The pioneered breeze panel
technology achieves an accurate adjustment of indoor temperature, humidity, cleanliness, quietness,oxygen content and airflow distribution, and the brand-new industrial design created a new era
integrating art and industry, which further enhanced the user’s experience. ③ At large industrial sites,
we launched industry-leading VTT magnetic water machines of large cooling capacity with the
maximum single cooling capacity up to 4,500 RT. ④ We introduced the E+ cloud service platform in
the industry, to provide our clients with systematic comprehensive solutions integrating energy saving,efficiency enhancement and energy management. Such platform uploaded central air-conditioningequipment to the cloud to provide trouble-free operation monitoring and intelligent maintenance services.It can provide life-time energy-saving customized solutions for all users, save energy and reduceconsumption during the whole life cycle to improve industrial efficiency.4. Washing machine business.
Focusing on demands for washers for health, intelligence, comfort and energy conservation, theCompany expanded its industry leading advantages through upgrading of technologies and modules
including air wash, Internet of Things and direct drive motor. ① The difficulty that washing and drying
of high-end clothing may cause chemical residues which damage the skin and clothes, we innovativelylaunched the air wash technology to wash and medical clothes, cashmere, silk and down clothes, and
obtained a good market response through the shop laundry demonstration. ② The study and application
of clothing recognition technologies including speech recognition and RFID automatic recognitionhelped washing machines to automatically recommend the best washing and caring procedure byclothing type, material and color, thus optimizing both laundry experience and laundry effect.
①Casarte Shuangziyunchang (卡萨帝双子云裳) platform launched the Casarte
Shuangziyunchang Washing Machine, a partitioned washing machine with the largest capacity in theworld (17kg) to meet the double demands of high-end users on both partitioned washing and caring andultra-large capacity. The 17kg capacity achieves one-time washing for large clothes, which also shortensthe washing and caring time; variable frequency motors using FPA direct drive technology and the
Shuangzixingzhi (双子星智) balanced system achieves a silent washing with double barrels, and WiFiremote control provides real time understanding of the washing process. ② To solve the three problems
of general ripple washing machines caused by high speed, i.e., vibration, riveted inner barrel fracture andabnormal flange wearing sound, the Company introduced the Vision Series ripple washing machine,which adopted a direct drive variable frequency and double-power cleaning-free technology with aspeed of 1,000 rpm, representing an increase of 40% as compared to general ripple washing machines,realizing faster washing, cleaner rinsing and drier spinning. With a unique rain curtain feeding mode,centrifugal force technology, and 350 rpm low-speed dehydration technology, such washing machinepreserved clothing fibers and was used to wash precious cashmere and high-end clothes in a professionalmanner.In the first half of 2018, we continuously expanded our leadership in the domestic washing machinemarket with a market share of 1.8 times that of the second brand. We continue to lead the share in thehigh-end market. Casarte's share in the price segment of RMB8,000-10,000 is 45.8%, increased by 4.6
percentage points year-on-year and the Casarte drum washing machine share in the price segment aboveRMB10,000 is 73.8%, increased by more than 6 percentage points.5. Water heater business.Based on customer demands on safety, health and intelligence of bath, the Company introduced a
brand-new generation of water solution including “safety gas water heater, instant heating electricityguard water heater and the future whole-house integrated smart water solution”.
Gas water heater. Casarte self-purification combustion series gas water heater realized triplepurification through safety technology of actively eliminating carbon monoxide; precisely-controlledconstant temperature technology realized a 10s top speed constant temperature which doubled theconstant temperature speed. In the first half of 2018, the share of gas water heaters increased by 1.6percentage points to 9.2%.Electric water heater. The Company expanded its leading advantages through variable frequency
instant heating washing technology and clean water washing 3.0 technology. ① Jingxiang(净享)
PLUS9 series products adopts a unique dual drive submersible heating tube, 3D instant heating energyfocusing ring, patented advection thermal power system and variable frequency technology to solve thedifficulty of long waiting time. Scale, residual chlorine, impurities and bacteria in water affecting waterquality were addressed through double-effect scale inhibition and level-III purification technology, thusproviding bathing with clean water, where the scale-inhibition rate was 83.4% and the largest residual
chlorine removal rate was 99.5%. ② Aiming at the difficulty of purchasing a complete set of waterhousehold appliances and lack of standard size, the Casarte Tianmu(天沐)products were launched,
including a self-embedded electric water heater, hot water purifier and bacteriostatic water softener. Inthe first half of 2018, high-end electric water heaters resulted in a significant increase of 62% in theRMB4000+ segment.
Air energy water heater. ① Aiming at household users, we launched “intelligent controltechnology for full condition(全工况智能控制技术)”, where the best frequency was matched
automatically according to the ambient temperature to achieve the best operation status. Hot wateroutflow quantity of Haier Tianmu POWER with such technology increased by 60% compared to the
general heat pump, thus satisfying the water use demands in large-sized apartment. ② Aiming at the
fact that it was difficult to satisfy the industrial demand of high-temperature water use and large wateryield because the heating water temperature of commercial heat pump water heaters usually ranges from
60℃ to 70℃, the Company introduced Haier Tianchi (海尔天炽) series products, which achieve anindustry leading 90℃ high-temperature for effluent water and could be used even if the air temperatureis lowered to -25℃, and its coefficient of performance (COP) in -20℃ is still as high as 2.1. According
to online data, both overall sales volume and value of Haier air energy household heat pumps ranked 1stin the industry in the first half of 2018, being 7 times the industry growth.
Solar water heater: Traditional flat solar water heaters have low efficiency on cloudy and rainydays and only electric auxiliary water heater with low-efficiency heating can be used at night. Thereforethe Company introduced an all-round fast heating technology, which can comprehensively absorbenergy from sunshine, air or rain without being affected by weather, and achieves a heating speed of 2.5times that of traditional products. The COP reaches 4.8, saving 80% power compared to the traditionalheater. In this way, the Company provided users with a more energy-saving 24h hot water solution.
6. Kitchen appliance business.We integrated FPA and GEA global leading technology platforms to accelerate the launch processof leading products and promote innovation of each product platform and to achieve a high-endcomplete intelligent kitchen solution for users. In the first half of 2018, under the negative growth of thekitchen appliance industry, we realized a revenue growth of 30% (excluding GEA) compared with thecorresponding period of last year, while Casarte kitchen appliances recorded an increase of 215% ascompared with the corresponding period of last year.
Gas stoves. ① To solve a safety problem that may be caused by pot burnout while forgetting to
turn off the gas, the Company introduced dry burning-resistant gas stoves. The product turned off the gasafter pot bottom burnout for 1 minute through intelligent NTC active heat source tracing technology;double-head 188-minute timing function and oil temperature control technology helped users to easily
control cooking time and temperature. ② Because of China’s new two child policy, the Company
introduced special cooking utensils for baby food and line-styled three-head cooking utensils, to solvethe problem that there was no stove available for baby food.Ovens. Casarte steam energy oven launched with three core technologies including Vacuum VentFPA cloud humidity control technology, Active Heat variable frequency and uniform temperature
technology, and steam energy surrounding system to realize ±1℃ accurate temperature control and
improve preservation of food flavor and moisture.Range hoods. To address lampblack diffusion, the Company introduced an air curtain 8° rangehood. Such product formed an air curtain isolation between people and the range hood through rotarylampblack capture system to avoid lampblack diffusion; by integrating FPA resources, a direct drivemotor system was matched and designed to realize operation with low noise and low energyconsumption; to address the Chinese cooking environment, a DC variable frequency control system wasoptimized to realize 720 Pa air pressure and satisfy the demands of users in high-rise buildings.Disinfection cabinets. Addressing the demands of infant & mom users, the Company developedthe light-wave Pasteur infant & mom disinfection cabinet to disinfect tableware such as feeding bottleand nipple used by infants, thus enabling healthy eating for children. Such product became the onlydisinfection cabinet passing the infant & mom evaluation by CHEARI in the industry.
II. China: Focusing on the front-line channel competitiveness, the Company deepened theretail-oriented reform and enhanced its leading advantages over brand, network and mode.
The Company made significant achievements in its implementation “from product selling toscheme selling, from contact to conversion, from branch to contact, from price to value”. The Company
maintained an increase of 20% for seven consecutive quarters since the fourth quarter of 2016 and itsmarket share of whole line products kept increasing and ranked top in the industry. Revenue ofrefrigerators, washing machines, air conditioners, water heaters and kitchen appliances in the domesticmarket in the first half of the year increased by 18.3%, 21.5%, 27.2%, 18.2% and 22.4% year-on-year,respectively.
Transformation from product selling to scheme selling. The Company accelerated theimplementation of smart integrated household experience store in front-end channels including home
decoration materials and tooling works, and created a complete set of “one-stop, all-scenes, customized”
smart home solution through complete design, sales and service offerings. In the first half of 2018, over
2,000 stores were constructed in the whole network. ① Complete design: Haier cloud design platform
has the capability to design customized solutions for more than 20,000 model rooms with one click, and
the on-site 3D/VR experience made it possible for users to visualize the design. ② Complete sales:
transformation from single product selling to complete solution continues and traditional productsdisplays were transformed into complete scene experience and traditional single product shopping guide
was replaced with a complete household appliance consultant. ③ Complete service: network system
and human resource system with complete service were established, and the service capability ofpre-sale design + post-design installation was constructed to realize integrated service from design,delivery, commissioning, to the extension of warranty and replacement.Transformation from branch to contact, and from transaction to interaction. Confronted withthe daily integration of online and offline and the diversification of retail contacts, the Companyexpanded retail contacts through various channels, and planed different product combinations andadopted different training modes. This has increased the quantity of contacts and expanded productvisibility. The continuous communication between contacts and users achieves a stronger interaction.The Company mastered feedback on products in a continuous and dynamic manner, and acceleratedproduct iteration to realize the transformation from users to lifetime users. For example, by introducing
the value of contact, social community and integrity platform and taking ‘1 brand, 1 website, and 1ecology platform’ as breakthrough point, Shunguang Platform (顺逛平台) cumulatively achieved
1.25 million network contacts from household appliance to home decoration to home ecosystem in thefirst half year of 2018, of which 20,000 were offline O+O experience stores, 240,000 smart cloud shopsto community and to village, and 1 million were WeChat shops. The Company introduced 41 productsfor the first time. In the first half of 2018, the large Shunguang platform realized a trading value of RMB6.87 billion, representing an increase of 66.5% as compared to the corresponding period of last year.
Enhancement of quality of contacts through various measures: ① KA channel: the super storemodel was built, channel experience was upgraded, and high-end structure ratio was enhanced; ②
Exclusive store channel: the Company accelerated the network construction of blank counties andenhanced the competitiveness of weak counties. The competitiveness of village and town network was
enhanced by conveying the objectives, resources and services to towns through Jushanghui (巨商汇)and Yilihuo (易理货) to open up retail outlets. ③ Comprehensive store channel: the Company
enhanced customer profitability by maintaining the top position, the largest share and the construction of
a special Casarte hall. ④ E-commerce channel: the Company improved its operation capability and
enhanced proportion of high-end products through differentiated new products. In the first half of 2018,E-commerce revenue recorded an increase of over 40%.Transformation from contact to conversion. The Company achieved enhanced use interactionthrough activities at stores including free air wash of high-end clothes and half-cutting foods inrefrigerators, creating a buying atmosphere that involved emotions in a social community and achievingpositive feedback.Transformation from price to value. Market competitiveness was improved throughdifferentiated products and technologies. For example, Casarte was gradually recognized by the marketand accelerated its high growth by constantly launching high-end classic products and strengtheningservices for the high-end community. Our revenue increased by 52% in the first half of 2018, with anincrease of 54% in the second quarter. Our market share in the high-end market in China was far ahead,accounting for 39.2% of RMB10,000 share for refrigerators and 74% of RMB10,000 share for washingmachines. Thus, our position in the industry was consolidated as Top1 high-end household appliancebrand in China.
III. Overseas market: With the goal of localized branding and leadership, we continued to push
ahead with the ‘triple strategy’ of “manufacturing, marketing and R&D”. We focused on
competitiveness in channels, and promoted the transformation to high-end brands.1. North America Market: Continued implementation of Individual and Goal CombinationManagement system, and delivered strong growth in a soft industry.
US home appliance shipments remained flat in the first half of 2018, and declined 5% in the secondquarter. With 11% growth in USD sales in 1H2018, GEA achieved exceptional performance and faroutpaced the industry growth.
Per data from The Stevenson Company, a third-party institution, GEA has grown its share in1H2018.
During the reporting period, GEA continued to implement the Individual and Goal Combinationbusiness model, establish end-to-end collaboration operating system, adhere to the goal of becomingindustry leader, improve response time to customers and be recognized. It also increased interaction withusers and customers, promoted national marketing campaigns as well as customer-specific or
region-specific marketing campaigns to improve GEA brand awareness. Launch of leading productshelped close product gaps, including brand new 27-inch Top Load Laundry, Front ControlFree-Standing range, Door-in-Door Refrigerator, and Value French Door Refrigerator.
Continued efforts to promote global synergies: ① Procurement Synergy. Building global big data
system, focused on exploration and execution of 16 design optimization and synergy opportunities with
high priority. ② Supply Chain Synergy. Promoted best practice sharing of leading technologies andprocesses across the world through the global supply chain manufacturing platform, and utilizing Haier’sglobal scale, industry experience and organizational talent. ③ Product Synergy. Filled product gaps inGEA’s portfolio, and achieved sustained leading position, by utilizing Haier’s leading product platformand integrating resources to develop products that meet US consumer needs. ④ Sales Synergy.
Enriched product offerings to GEA China business: 60+ SKUs within 5 series had passed GEA safetyreview and qualified for China 3C Certification; 20+ SKUs were newly planned to strengthen productportfolio of contract channel. In total, 11 GEA branded experience stores were opened in China.
2. European market: Laid the foundation for continuous business growth through the launch ofleading products, marketing and expansion of channels, as well as localization of supply chain. Agrowth of 22% was recorded in the first half of 2018.
(1) A leader in the launch of products. ① Launched Cube series refrigerator, 60 wide series
drawer-type refrigerator to meet the demand of users for exquisite fashion appearance and large freezerspace; full space fresh-keeping refrigerator providing users with scientific storage solutions for storing
dried fruits and frozen meat. ② On the European market, the Hercules air-cooled magnetic levitation
water machine unit made its debut, while products were upgraded to internet appliances forinterconnection through the E+ cloud service platform, the first of its kind in the industry.
(2) Marketing and expansion of channels. Cooperated with core customers to invest in marketing
resources to promote Haier’s transformation to a high-end brand, and enhanced the harmony of in-store
display: invested in construction of model stores, built a system of direct sales staff, and enhanceddisplay image. For example, cooperation with the largest household appliance channel in the UK toachieve store training of multi-door refrigerators; made breakthrough in the D channel cooperation in theFrench market, making Haier the only brand equipped with direct sales staff in the D channel. Throughthe launch of highly-recognized channels, such as the Shanghai Home Expo, the Italian MCE Show andother official press conferences, the interaction with high-end customers was enhanced, providingopportunity for gaining deeper insight into the global industrial layout and capability of innovativeproducts of Haier.
(3) Construction of localized supply chain. The Russian refrigerator factory was running at fullcapacity in the first half of 2018. The factory delivered an output of 100,000 units, an increase of 46%over the same period of last year, with production efficiency increasing by 25%. The factory took an
active approach to promote the localization of materials and reduce the exchange rate risk of the rublewhile improving the gross profit. By the first half of the year, 68% of the materials had been procuredlocally. On May 28, the groundbreaking ceremony for the Haier Russian Industrial Park and washingmachine factory was held in Cherne, Republic of Tatarstan, Russia. The Haier washing machine factorywas the first European factory established by a player in the washing machine industry from China,
promoting localization of Haier’s “trinity” model in Russia to a new stage. Through such initiative,
Haier will be capable of providing consumers in Russia and Europe with products based on local designand local manufacturing to improve the response speed of the local market.
3. South Asian market: Overall income in the first half of 2018 increased by 28% and leading theindustry.(1) Pakistan. The overall share of Haier brand reached 28%, ranking first in the industry, which
was 1.5 times of the runner-up. ① Leading Products: We launched a full range of portfolio covering a
number of efficient, healthy, intelligent and fashionable products, such as cleaning-free air-conditioner,
UPS uninterrupted refrigeration series air-conditioner, “ONE TOUCH” automatic washing machine to
drive the industrial growth. As a result, revenue from air conditioners increased by 43% and revenue
from washing machines increased by 27.5%. ② Branding leadership: Promoted online and offline
interaction to create a high-end brand image. In the online channel, intelligent leadership was used as acommunication point, while the standardization of one thousand stores in one hundred cities waspromoted through the offline channel. Standardized display, image and user shopping experience wascreated and made breakthrough in the establishment of high-end image stores, and opened 5 high-end
flagship stores. ③ Creation of channels: transformed the policy-oriented commodity-stocking system
to retail mechanism based on the iterative upgrading of user experience. Differentiated various type of
networks and ensured a balanced development based on the Company’s strategy and product line
resources; strengthened the construction of channels, and changed the mode from paid by customers topaid by users, with a view to promote the transformation of retail business in a comprehensive manner.
(2) India. ① Leading Products: promoted the growth of mid- and high-end products and achieved
leading position in the industry with top products, such as BM refrigerator, kitchen appliances andrefrigerator, partitioned washing & variable frequency direct drive washing machine and intelligent
air-conditioner. ② Market network: promoted retail transformation, regulated channel resources, while
realizing horizontal expansion of network and vertical strengthening of stickiness through second salesand service. Focused on follow-up retail and display and enhanced competitiveness of terminals throughtraining of direct sales staff and standardization of terminal display. Strengthened and standardized theintensity of regular training and the scheduling of training for regional marketing staff and direct salesstaff, while enhancing the participation of the product lines, and conducted real-time assessment and
publication. ③ Branding and marketing: Secured the relay baton of the India and Sri Lanka cricket tour
for significantly enhanced brand awareness; leveraging the unique feature of differentiated products, we
had established a differentiated high-end product image by securing the TVC of BM&SCT during the
IPL (Indian Premier League) event consecutively in April - May. ④ After-sales: We further expanded
the direct and franchise service network, with over 450 full service networks; carried out training andcertification of service engineers, ensured service capability in terms of breadth and depth as well asspecial work such as optimization and upgrading of internal standard system. A work order audit will be
carried out to improve the service system and cost optimization. ⑤ Supply chain: Pune Industrial Park
achieved the goal of production and sales budget in the first half of the year. For refrigerator products, atotal of 850,000 units were produced and delivered in the first half of the year, representing ayear-on-year growth of 200%. For air-conditioners and washing machines, the budgeted production setat the beginning of the year was achieved. The gradual improvement of the supply chain system hasrealized the order production basing on the market budget target, ensuring the timeliness and responsespeed of the terminal sales.4. Japanese market.Community washing has achieved a win-win situation in the eco-sphere, cross-border cooperation
and overseas model replication continues to expand. ① Branding: Actively implementedmulti-dimensional dual marketing activities online and offline to enhance brand awareness. ② Product
strategy: We continued to transform high-end products and increase the proportion of large-volume andhigh-value products. The launch of the SV series of AQUA refrigerators with brand-new VBLappearance and the import of new products into residential washing machines continued to expand theportfolio of high-end products, such as machines integrating washing and drying functions and models
with large capacity. ③ Channel strategy: focused on the development of mass merchandiser channels,
and particularly strengthened cooperation with KS and BIC; for AQUA commercial washing,cross-industry cooperation was promoted, and cooperation with the Family Mart was progressingsmoothly; developed introduction plan for Thailand and South Korea for the commercial washingplatform of Internet of Things.5. Southeast Asian market.With the continued implementation of branding leadership strategy and Individual and GoalCombination business model, the Thailand and Malaysia market delivered outstanding performance,
recording growth of 26% and 70%, respectively. ① Product strategy: We pushed ahead with the
parallel combination of small and micro segments with headquarter resources, while introducing the fullrange of high-end differentiated products, thus realizing the simultaneous launch of leading product
platforms and implementing high-end differentiated transformation. ② Channel strategy: We promoted
the transformation of channel retail and increased the layout of networks. In the stores, we enhanced theretail performance by improving product image and sample materialization, strengthening training onknowledge of products, and by enhancing the channel experience, improving the efficiency of networkand enhancing brand image; besides, we actively promoted in-depth cooperation with large channels of
chain stores. ③ Supply chain: The Thailand factory promoted product iteration and produced new
refrigerator products with new glass door appearance; average cost reduction of 3% for key models wasachieved; single-hour production of the refrigerator factory increased by 17%.6. Latin American market.To strengthen competitiveness of products and service through the Individual and Goal
Combination model and small & micro-mechanism. ① R&D collaboration: We promoted collaboration
with MABE, complete the development work of new products to over 200 which includes refrigerator,freezer, wash machine and air-conditioner, and realized the first shipment of more than 100 models for
the first order. ② Market synergy: A new MABE product portfolio to be launched in the Latin
American market in the year 2019.7. Middle East and African market.Facing the negative impact of changes in the political and economic environment of the market, wetook a proactive approach to cope with the situation through the adjustment to products, as well asexpansion of new business and new channels. In terms of products: In Saudi Arabia, we continued topromote high-end products such as door open/T-door refrigerators, large-capacity washing machines,and variable-frequency intelligent air-conditioners; in Israel, the T-door series refrigerators achievedrapid growth and maintained third place in terms of share of the channel market; in Nigeria, wepromoted the transformation of high-end products.
IV. Smart home life platform: iterative platform technology solution with a focus on application
for AI artificial intelligence scenes; Focusing on Haier’s competitiveness in smart home market tocreate the “4+7+N” full scene solution.
To empower the ecology with platform, drive innovation with technologies. We released astrategy for upgrading of the U+ smart life platform to U+ smart life platform X.0 and promoted theimplementation of "1+2+3N", namely a smart home operating system UHomeOS and "IOT+AI" dualengine to serve the three customizations, which are "customized interaction, scenarios and services ".During the reporting period, UHomeOS has passed the first phase of expert reviews as the only smarthome operating system included in the 13
th
Five-Year Project for Core, High and FundamentalTechnologies of the Ministry of Industry and Information Technology, which consolidated andcompacted the advantages of IoT capability and product interconnection experience, network bindingexperience, and scene interaction experience.
To emphasize the way users interact and the value of solution delivered through the portal.With the insight into the trend of smart home human-computer interaction, completed the layout fordistributed multi-modal user interaction portal, and form a variety of user interaction portals such asAPP, voice and screen network. In the scenes of natural voice interaction, especially the smart homevertical scene, completed the deployment for key interaction technology of voice and semantics, thusproviding strong support for future products and solutions. With the continued growth of data related to
user interaction behaviors, which amounted to more than 500 billion, the value of big data began tomaterialize in various applications, such as food recommendation, water heater energy saving, energymanagement for air-conditioners.
As part of its efforts in promoting smart homes on a large scale, the Company released the
“4+7+N” full-scene solution, which provides a customizable one-stop packaged solution, covering the
four physical areas of living, i.e. living room, kitchen, bedroom and bathroom, and seven majorsolutions including food, water, air, washing and care, security, entertainment, etc., and provides supportfor personalized scene-based customization. Smart home experience store provides users with offlinechannels for the experience and sales of products; meanwhile, greater efforts were made to expand thefront-end installation market, including major customers from real estate industry, major customers fromhotel industry, etc., thus extending our competitiveness from product to the channel as a whole; We have
established the capabilities for delivery of a packaged solution – “packaged experience, design, sales andservices”. Through these initiatives, we have promoted the implementation of smart home solutions for
the user side in an effective manner. In the first half of the year, The activation rate of smart applianceincreased by 32.8%, packaged solution increased by 134% year-on -year, the revenue of Internet ofThings amounted to RMB1.26 billion, representing a increase of 13 times, the number of smart homesusers increased by 30.4% year-on -year.
Promote the construction of ecological circles such as the Internet of Clothes and the Internet of
Food. For example, Haier’s Internet of Clothing met the needs of users throughout the process of
washing, purchasing, wearing, care and changing and formed the Internet of Clothing ecological circlebased on the RFID chip technology for Internet of Things and by leveraging on the medium of clothing,as well as building parallel collaboration with other resources such as clothing brands, clothingassociations and detergent brands. Users share with ecological partners through the cloud platform asthey purchase products with the help of RFID smart solutions and by using the smart home appliancessuch as Haier washing machines and clothing care cabinets to share the data with the eco-partnersthrough the cloud platform, while the enterprises in the eco-sphere providing solutions based on thedynamic needs of users. The Internet of Clothing ecology has attracted various manufacturers includingBlue Moon, HLA, Mercury Household Textiles, WENSLI and EP with more than 1,800 ecologicalresources on the platform. In terms of the establishment of standards, in May 2018, GS1 China selected
Haier’s Internet of Clothing Alliance to jointly develop national standards for clothing commodity
coding rules, and jointly promoted the application of the standard in the apparel industry. Theapplication for the clothing association standard submitted by the Company was also accepted by IEEE,the authoritative international standardization organization. Actively promote the globalization of theInternet of Clothing brand, from China to Japan, the United States, South Korea, Thailand and othercountries. In the first half of the year, the ecological income of the Internet of Clothing increased by 15times year-on-year.
The Internet of Food takes smart refrigerator, smart oven and smart ventilator and stove as theinteraction portals to combine such data as eating habits, content of preferences, and habits generated
during the interactive process of smart kitchen scenes with the individual exercise data and health datain order to provide users with value-added services, including physical examination surveillance ,smartcooking, safe food purchases, monitoring pesticide residues in food ingredients, smart storage, andnutrition program formulation. The company took the lead in establishing the Internet of Food Alliance
and setting up relevant standards, market share of the Company’s smart refrigerator is
47.33%,representing 2.04 times of the runer-up; the Internet of Food collect seven modules withresources coming from 400 parties, the ecological income increased by 20 times year-on-year.
V. COSMOPlat Industrial Internet Platform empowers enterprises to transform from massmanufacturing to mass customization through reshaping the industrial value chain and ecologicalchain and building the new win-win industrial ecosystem engaging enterprises, users andresources.
Guided by the principle of “becoming a globally leading world-class branded platform in theindustrial IOT ecosystem”, COSMOPlat is dedicated to enhance the production system. In the first halfof 2018, it became the “Demonstration Platform for Integration Application of Industrial Internet-basedIntelligent Manufacturing” and was shortlisted for the “Industrial Internet-based Innovation andDevelopment Project 2018”. International standard organizations IEEE/ISO approved Haier to lead the
development of international standards for the model of mass customization. This was the first time thata Chinese company took a leading role in developing international standards in relation to models ofmanufacturing. In the first half of the year, COSMOPlat recorded revenue of RMB 2.783 billion.To date, 10 interconnected factories have been built within the Company. Iteration of product anduser experience and the upgrade of users to lifetime users were achieved through the participation ofusers, R&D and supplier resources in the full life cycle of products. The non-stock rate of productsreached 71%.
In terms of external services, COSMOPlat provided interconnection and interoperability with sevenmodules through the ecosystem, offering the IoT ecology in 15 industries such as ,the the Internet ofClothing , Internet of Food, agriculture, and RV, so as to provide customized social services oflarge-scale and promote enterprise transformation and upgrading. For example, the agriculturalsub-platform, the model of Jinxiang garlic was created, realizing one-click customization of a healthylifestyle online, while meeting the needs of users for iconic agricultural products from the place of originthrough the offline channel; For the automobile platform, the first intelligent manufacturing
interconnection plant in the auto industry was built for Compaks (康派斯), with a view to solving the
problem of fragmentation of parts procurement in the RV industry. In addition, the platform alsoprovides value-added services to other companies by taking advantage of its centralized procurementsystem.
VI. Logistics service business.
In the first half of 2018, Gooday Logistics' business revenue maintained steady growth.We continued to deepen the cooperation with major e-commerce platforms to provide high-qualityregional distribution and last-mile service for large-sized household appliances of Tmall and Jingdongplatforms. The share of Haier brand's Tmall order has maintained a high growth rate of 50%year-on-year, while the public praise (DSR) reached 4.93, much higher than the industrial average of4.86 and that of peers. During the 618 E-commerce Shopping Festival, the punctuality rate of GoodayLogistics was as high as 99%, higher than the 97.5% level of the industry.
We continue to address the household market, and strive to provide Omni-channel logistics servicesfor household customers. Relying on good reputation and advantages in the field of large-sizedhousehold appliances, the overall income of the household business increased by 11%. By furtherdeepening cooperation with the Green hand, an income of 18 million was achieved. At the same time,we have further consolidated cooperation with major customers such as SLEEMON, DeRUCCI,MANWAH and YALAN.
Gooday Logistics continuously strengthened the platform network and actively deployed intelligentand automated warehouses to set a benchmark for the logistics industry of large-scale packages. Atpresent, the total warehouse area is 3.57 million square meters, of which 1.22 million square meters areself-built warehouses and the proportion of self-built warehouses reaches 30%. In Hangzhou, theintelligent unmanned warehouse for small and medium-sized packages is deployed to realize intelligentmanagement and the integration of warehouse and goods. Besides, the full scene visualizationmanagement in the warehouse is realized through the panoramic scanning and visual and monitoringequipment to accumulate experience for large-scale replication in the future. Smart warehouses areexpected to improve the efficiency of goods storage, sorting and delivery, reduce labor costs andenhance the competitiveness of logistics in the field of intelligent warehouse management.
II. Development Plan for the Second Half of the Year(I) Industry outlookDomestic market: In the short-term, the demand for the refrigerator and washing machine industryis relatively stable and the unit price increase brought by the product upgrading is the main growthdriver. The air-conditioning industry is facing a comparison with the high base in the second half of2017. The impact of real estate control policies on real estate sales has suppressed the sales of front-endproducts such as kitchen appliances, water heaters and air conditioners. In the long run, the qualityupgrade brought by consumers' longing for a better lifestyle will continue to promote the development ofthe industry.Global market: Uncertainty of global economic growth was exacerbated with the looming globaltrade war. In particular, the accelerating decline in the export of emerging economies, depressed the
economic outlook. With US interest hikes, we may see increased instability of the global financialmarkets, which may have adverse impacts on the global economy.(II) Development plan for the second half of the yearIn response to the challenges brought by the external environment, the Company will adhere to itsstrategy of product leadership, retail transformation and globalized operations, and continue to enhanceour competitiveness, expand leadership in the refrigerator, washing machines and water heater industries,while accelerating the pace of development of the air-conditioner industry and kitchen applianceindustry, and to realize growth in our household appliances business against the economic backdrop;focus on the smart home business, continue to promote the business transformation of the Internet ofThings, while promoting the formation of ecological circles, the creation of ecological brands, and thecultivation of ecological revenue.
Domestic market: (1) Improve the competitiveness of the network of contact points: ①Continuously promote the number of contact points to ensure that all users’ needs are met and fullcoverage of blank/weak areas is achieved; ② In terms of the quality of the contact points, the stores
were continued to upgrade through the upgrade certain stores to specialty stores. For small towns, fromwholesale-to-town to service-to-town, we achieved the goal-to-town, market stability, price transparencyand efficient operation of information tools. (2) Promote the rapid growth of the full set smart families:
we continued to improve the portfolio, promoted the sales and service of the full set of products andtargeted the front-end home improvement users through the construction of building materials andhousehold channel stores, thus changed from selling products to selling solutions.
Overseas market: Continue Haier’s focus on globalization for many years, adhering to the
advantages accumulated through its own brand and strategy of localization, while speeding up thetransformation of terminals across different regions, and increasing the proportion of high-end productswhile enhancing profitability. With the guarantee of the mechanism of parallel betting and open system,we will continue to promote the localization of Individual and Goal Combination model.
Smart Home Platform: We focused on the continuous improvement of market competitivenessand user experience of Haier Smart Home Solutions and effectively promoted the orderlyimplementation of U+ Smart Life X.0 strategy. Promoting the construction of the platform of Internet ofThings (IoT) integrating Internet of Food and the Internet of Clothing to realize the globalization ofeco-brands, internationalization of standards and the regionalization of ecological services, andachieving the full platform of services from solutions to ecological services, while building up users,data and capabilities of platform service.COSMOPlat platform: Focusing on building an industrial ecosystem, we aim to drive theconstruction of the platform's universal capability system through the construction of an industry-level
industrial Internet platform. ① Promote the output of relevant international standards; ② Internally,
we enhanced the ability of interconnection in the entire process and opened the ecosystem to promote
the replication of interconnected factories in global manufacturing bases; ③ Externally, gradually
addressing five industrial ecosystems such as clothing, RV, agriculture, molds and machinery promotethe transformation and upgrading of enterprises in the economy and creating a new industrial ecology.
(I) Analysis of principal business
1 Table of movement analysis on the related items in financial statement
Unit and Currency: RMB
Items | Current period | Corresponding period of last year | Change (%) |
Operating revenue | 88,591,626,626.07 | 77,585,007,913.93 | 14.19 |
Operating cost | 62,924,743,807.78 | 54,161,628,234.79 | 16.18 |
Sales expense | 13,106,599,051.97 | 12,180,499,014.03 | 7.60 |
Administration expenses | 5,951,531,296.20 | 5,393,556,967.87 | 10.35 |
Financial expenses | 424,983,265.35 | 611,674,697.24 | -30.52 |
Net cash flows generating from operating activities | 5,368,385,954.02 | 8,434,402,658.46 | -36.35 |
Net cash flows generating from investing activities | -2,849,012,025.94 | -2,377,591,031.60 | -19.83 |
Net cash flows generating from financing activities | -4,684,467,409.14 | -503,568,975.15 | -830.25 |
Development expenses | 431,905,938.29 | 966,051,333.81 | -55.29 |
Interests of changes on fair value | 36,661,921.50 | 412,063,845.15 | -91.10 |
Investment income | 867,458,988.96 | 653,842,714.35 | 32.67 |
Income from disposal of assets | 5,668,073.53 | -7,148,339.24 | 179.29 |
Other income | 224,292,412.02 | 134,742,567.52 | 66.46 |
Non-operating income expense | 48,392,538.09 | 77,391,457.25 | -37.47 |
Analysis of the reasons for the changes in the cash flow statement indicators with large changes:
(1) The net cash flow from operating activities decreased by 36.4% as compared with the correspondingperiod of last year, mainly due to the higher net cash flow and the larger base from operating activitiesduring the same period of last year; the net cash flow from operating activities in the current periodmatches the profitability and achieves the goal;(2) The net cash flow from financing activities decreased by 830.3% as compared with thecorresponding period of last year, mainly due to the decrease in new external borrowings in the currentperiod as compared with the corresponding period of last year.
2 Others(1) Detailed explanation on the material changes in the composition of profit or resources of
profit of the Company
√ Applicable □ Not Applicable
Analysis of the reasons for the changes in the profit statement indicators with large changes:
(1) The financial expenses decreased by 30.5% as compared with the corresponding period of last year,which was mainly attributable to the decrease in exchange losses during the current period ascompared with the corresponding period of last year;(2) The income of changes in fair value decreased by 91.1% as compared with the corresponding periodof last year, which was mainly attributable to the influence of change in fair value of derivative financialinstruments such as future exchange;(3) Investment income increased by 32.7% as compared with the corresponding period of last year,which was mainly attributable to the increase in investment income from the disposal of financial assetsat fair value through profit or loss for the current period;
(4) The profit and loss of asset disposal increased by 179.3% as compared with the corresponding periodof last year, which was mainly attributable to the higher disposal expenses of daily assets during thecorresponding period of last year;(5) Other income increased by 66.5% as compared with the corresponding period of last year, which wasmainly due to the increase in government grants related to daily operations and included in current profitor loss;(6) Non-operating expenses decreased by 37.5% as compared with the corresponding period of last year,which was mainly due to the scrapping of some fixed assets in the corresponding period of last year andfewer occurrences for the period.
(2) Others
√ Applicable □ Not Applicable
Principle operating activities by products and regions
Unit and Currency: RMB0’000
Principle operating activities by products | ||||||||||||
By product | Operating revenue | Operating cost | Gross profit margin (%) | Operating revenue increased/decreased yoy (%) | Operating cost increased/decreased yoy (%) | Gross profit margin increased/decreased yoy (%) | ||||||
Air-conditioners | 1,919,372.56 | 1,336,251.27 | 30.38 | 17.56 | 20.11 | -1.48 | ||||||
Refrigerators | 2,544,276.92 | 1,756,113.43 | 30.98 | 11.87 | 13.90 | -1.23 | ||||||
Kitchen appliances | 1,047,278.63 | 683,567.26 | 34.73 | 5.12 | 6.13 | -0.62 | ||||||
Water heater | 387,178.67 | 219,184.34 | 43.39 | 21.04 | 20.02 | 0.48 | ||||||
Washing machines | 1,628,231.52 | 1,086,960.26 | 33.24 | 17.60 | 19.94 | -1.30 | ||||||
Equipment components | 124,808.42 | 108,921.32 | 12.73 | -16.50 | -13.66 | -2.88 | ||||||
Channel integrated services business and others | 1,182,019.42 | 1,086,269.36 | 8.10 | 22.11 | 21.19 | 0.69 | ||||||
Principle operating activities by regions | ||||||||||||
By region | Operating revenue | Operating cost | Gross profit margin (%) | Operating revenue increased/decreased yoy (%) | Operating cost increased/decreased yoy (%) | Gross profit margin increased/decreased yoy (%) | ||||||
Mainland China | 5,272,148.08 | 3,589,477.61 | 31.92 | 24.46 | 23.22 | 0.68 | ||||||
Other countries/regions | 3,561,018.06 | 2,687,789.62 | 24.52 | 2.06 | 7.65 | -3.92 |
Note: Due to the reclassification of certain logistics freight according to the new income standard, thegross profit margin of the Company's refrigerators, washing machines, air conditioners and kitchen
appliances decreased year-on-year. After the restoration: ① The refrigerator (excluding GEA, the same
below) increased by 1 percentage point, washing machine increased by 1 percentage point, airconditioning decreased by 1 percentage point, kitchen appliances increased by 0.3 percentage points,
water heater increased by 0.5 percentage points; ② the gross profit margin of GEA business increased
by 1.2 percentage points.
(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 and Currency: RMB
Items | Amount as at the end of the period | Percentage of amount at the end of the period over total assets (%) | Amount as at the end of last period | Percentage of amount at the end of the previous period over total assets (%) | Percentage of change in amount from the end of previous period to current period (%) |
Derivative financial assets | 40,947,728.30 | 0.03 | 20,681,695.50 | 0.01 | 97.99 |
Accounts receivables | 16,906,190,691.77 | 10.74 | 12,448,004,833.06 | 8.22 | 35.81 |
Assets held for sale | 1,233,866,625.56 | 0.78 | 0.00 | 100.00 | |
Construction in progress | 2,582,745,338.39 | 1.64 | 1,530,390,130.25 | 1.01 | 68.76 |
Development expenses | 431,905,938.29 | 0.27 | 966,051,333.81 | 0.64 | -55.29 |
Derivative financial liabilities | 4,440,154.26 | 0.00 | 2,524,569.45 | 0.00 | 75.88 |
Receipts in advance | 3,485,578,719.92 | 2.21 | 5,833,552,815.05 | 3.85 | -40.25 |
Dividends payable | 529,822,661.11 | 0.34 | 153,756,315.64 | 0.10 | 244.59 |
Liabilities held for sale | 296,505,653.77 | 0.19 | 0.00 | 100.00 | |
Deferred income tax liabilities | 162,602,680.85 | 0.10 | 279,114,620.35 | 0.18 | -41.74 |
Other comprehensive income | 270,306,171.37 | 0.17 | -36,363,809.96 | -0.02 | 843.34 |
Other explanationsAnalysis of the reasons for the changes in the balance sheet indicators with large changes:
(1) Derivative financial assets increased by 98.0% as compared with the beginning of the year, whichwas mainly due to the impact of changes in fair value of derivative financial instruments such as foreignexchange contracts during the period;(2) Accounts receivables increased by 35.8% as compared with the beginning of the year, which wasmainly due to the growth of business;(3) Assets held for sale/ liabilities held for sale increased by 100% as compared with the beginning ofthe year, which was mainly due to the Company plans to dispose 58.08% of the equity of ShengfengLogistics Group Co., Ltd. for business planning considerations;(4) Construction in progress increased by 68.8% as compared with the beginning of the year, which was
mainly due to the Company expanded its industrial lines’ production capacity and upgraded its industrial
lines such as smart kitchens, air conditioners and refrigerators during the period;(5) Development expenses increased by 55.3% as compared with the beginning of the year, which wasmainly due to the relevant development transferred to the intangible assets when it reaches the scheduledusable status in the current period;(6) Derivative financial liabilities increased by 75.9% as compared with the beginning of the year, whichwas mainly due to the impact of changes in fair value of derivative financial instruments such as foreignexchange contracts during the period;(7) Advances from customers decreased by 40.3% as compared with the beginning of the year, whichwas mainly due to the centralized take delivery of goods by customers during the middle of the year;(8) Dividends payable increased by 244.6% as compared with the beginning of the year, which wasmainly due to the dividends payable by the Company's subsidiaries to minority shareholders;(9) Deferred income tax liabilities decreased by 41.7% as compared with the beginning of the year,which was mainly due to the decrease in the reserve of income tax of foreign companies due to theactual overseas dividends distributed by the subsidiaries of the Company;(10) Other comprehensive income increased by 843.3% as compared with the beginning of the year,which was mainly due to the increase in the share of other comprehensive income that will bereclassified into profit or loss and the change in foreign currency translation differences.
2. Restrictions on major assets at the end of reporting period
□Applicable √Not Applicable
(IV) Analysis on investment1、 Overall analysis on external equity investment√Applicable □ Not Applicable
During the reporting period, the external significant equity investment of the Company amounted toRMB 1.906 billion.
Name of investees | Major operating activities | Percentage of the equity interest of investees | Remark | Amount of investment (RMB 100 million) | Investment Amount (RMB 100 million) |
(%) | |||||
Haier New Zealand Investment Holding Company Limited | investment holding, etc. | 100 | For details, please refer to the Announcement on the Transfer of the 100% Equity of Haier New Zealand Investment Holding Company Limited by Qingdao Haier Co., Ltd. and Connected Transaction disclosed on 26 April 2018 as well as relevant announcement of the Board. | 19.06 | 0 |
Note: As of the date of disclosure of this periodic report, the above equity transfer has been completed.
(1) Significant equity investment
√Applicable □ Not ApplicablePlease 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
Abbreviation of security | Initial cost of investment | Sources of funds | Current purchase / sale during the reporting period | Investment income during the reporting period | Changes in fair value during the reporting period |
Bank of Communications (601328) | 1,803,769.50 | Own funds | -544,219.66 | ||
BAILIAN (600827) | 154,770.00 | Own funds | -110,148.54 | ||
Eastsoft (300183) | 18,713,562.84 | Own funds | -2,558,067.44 | ||
Others | 1,284,739,184.31 | Own funds | -10,334.91 | 75,454,104.49 | 153,067,058.21 |
Forward foreign exchange contract (Note) | 156,598,679.71 | 17,520,754.03 | |||
Total | 1,305,411,286.65 | -10,334.91 | 232,052,784.20 | 167,375,376.60 |
Note: As of 30 June 2018, the aggregate balance of foreign exchange derivative transactionamounted to approximately US$3.6 billion.
(V) Material Assets and Equity Disposal
√Applicable □ Not Applicable
During the reporting period, the Company transferred its 22% of equity interests in Haier Medical
and Laboratory Products Co., Ltd. to Haier BioMedical Holdings Co., Ltd.(青岛海尔生物医疗控股有限公司) with a consideration of RMB505 million. For details, please refer to the Announcement on the
Transfer of the 22% Equity of Haier Medical and Laboratory Products Co., Ltd.(青岛海尔特种电器有限公司) by Qingdao Haier Co., Ltd. and Connected Transaction disclosed on 22 June 2018 (No.
L2018-037).
(VI) Analysis on Major Controlling Companies
√Applicable □ Not Applicable
Unit: RMB0’000
Name of company | Scope of business | Total assets | Net assets | Net Profit |
Haier Electronics Group Co., Ltd. | Production and sale of household appliances | 4,390,206 | 2,436,017 | 179,361 |
Note: The financial data of Haier Electronics Group Co., Ltd. is determined in accordance with theaccounting 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 ascompare 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 applianceproducts fall into the category of durable consumer electronic products, the income level and expectationon future income growth will have an effect on the purchase of white goods. In the event of a slowdownin the macro economic growth, which will decrease the purchasing power of consumers, growth of theindustry will be adversely affected. In addition, uncertainties from the real estate market will have somenegative effect on market demand, which will in turn have some indirect effect on demand for homeappliance products.
2. Price war risk caused by intensifying industry competition. In a long run, the marketconcentration of white home appliance industry continues to rise, but in short-term, due to the imbalancebetween supply and demand caused by high capacity generated from industry expansion and decreasingof industry demand in recent years, the industry inventory amount rises. Under the background ofproduct homogeneity, price war will become a short term approach to increase its market share.
3. Risk of rise in cost. Bulk raw materials such as copper, aluminum, steel plate, and oil-relatedplastic particles and foam materials account for a large proportion in the cost of white goods production.The Company will endure more cost pressure if price of raw material continues to rise.
4. Operating risk in oversea market. The Company has set up a dozen of production base, researchand development center and marketing center in a number of countries around the world, leading to thecontinuous rise of oversea business. As the oversea market is more subject to the impact of localpolitical and economic situation, legal system and supervisory system, significant changes of such
factors would pose risks to the Company’s operation locally.
5. Risk of fluctuation in foreign currency exchange rate. Significant fluctuations in exchange ratesmay not only have an adverse impact on the Company's exports, but may also result in an exchange lossand an increase financial costs.
(III) Other disclosures
□Applicable √Not Applicable
SECTION V SIGNIFICANT EVENTS
I. Introduction to the General Meeting of shareholders
Meeting | Date | Index for details of websites designated for publishing resolutions | Date of disclosure |
First Extraordinary General Meeting in 2018 | 27 April 2018 | For details, please refer to the Announcement on Resolutions Passed at the 2018 First Extraordinary General Meeting of Qingdao Haier Co., Ltd. (L2018-023) published by the Company on the website of Shanghai Stock Exchange and the four major securities newspapers. | 28 April 2018 |
2017 Annual General Meeting | 18 May 2018 | For details, please refer to the Announcement on Resolutions Passed at the 2017 Annual General Meeting of Qingdao Haier Co., Ltd. (L2018-028) published by the Company on the website of Shanghai Stock Exchange and the four major securities newspapers. | 19 May 2018 |
Explanation of Shareholders’ general meeting
√Applicable □Not Applicable(1)The 2018 First Extraordinary General Meeting of the Company (the “2018 first EGM”) was
held by way of on-site voting and network voting by poll at Room A108, Haier University, HaierInformation Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 27 April 2018. The
Company’s share capital in aggregate amounted to 6,097,402,727 shares. 96 shareholders and proxies
attended the meeting, holding a total of 3,502,250,459 shares, representing 57.44% of the total numberof shares of the Company with voting rights. The Directors, supervisors and senior management of theCompany as well as the lawyers engaged by the Company also attended the meeting. The 2018 firstEGM was convened by the Board of the Company. Vice Chairman Ms. Tan Lixia, presided over the2018 first EGM. The Company had 9 Directors, of whom 2 Director attended the 2018 first EGM(Directors Liang Haishan , Wu Changqi, Peng Jianfeng, Zhou Hongbo, Liu Haifeng David, Wu Chengand Dai Deming were unable to attend the 2018 first EGM due to personal engagement); the Companyhad 3 supervisors, 2 of whom attended the 2018 first EGM (supervisor Wang Yuqing was unable toattend the 2018 first EGM due to personal engagement). The secretary to the Board of the Companyattended the 2018 first EGM and other members of senior management of the Company were invited toattend the 2018 first EGM.
(2)The 2017 Annual General Meeting of the Company (the “2017 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 18 May 2018. The Company’s share capital in
aggregate amounted to 6,097,630,727 shares. 73 shareholders and proxies attended the meeting, holdinga total of 3,485,550,588 shares, representing 57.16% of the total number of shares of the Company withvoting rights. The Directors, supervisors and senior management of the Company as well as the lawyersengaged by the Company also attended the meeting. The 2017 AGM was convened by the Board of the
Company. Chairman Mr. Liang Haishan, presided over the 2017 AGM. The Company had 9 Directors,of whom 2 Director attended the 2017 AGM (Directors Tan Lixia , Wu Changqi, Peng Jianfeng, ZhouHongbo, Liu Haifeng David, Wu Cheng and Shi Tiantao were unable to attend the 2017 AGM due topersonal engagement); the Company had 3 supervisors, all of whom attended the 2017 AGM. Thesecretary to the Board of the Company attended the 2017 AGM and other members of seniormanagement of the Company were invited to attend the 2017 AGM.
II. Proposal of Profit Distribution or Capitalization of Capital Reserve(I) Proposal for Interim Profit Distribution and proposal for Capitalization of Capital Reserve
Whether distributed or converted | No |
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
Background | Type | Covenanter | Content | Time and term | Whether it has a deadline for performance | Whether it is performed in a timely and strict way |
Undertaking related to significant reorganization | Eliminate the right defects in land property and etc. | Haier Group Corporation | During the period from September 2006 to May 2007, the Company issued shares to Haier Group Corporation (“Haier Group”) to purchase the controlling equity in its four subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司), Guizhou Haier Electronics Co., Ltd. (贵州海尔电器有限公司). With regard to the land and property required in the operation of Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公司) , Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司) (the “Covenantees”), Haier Group made an undertaking (the “2006 Undertaking”). According to the content of 2006 Undertaking and current condition of each Covenantee, Haier Group will constantly assure that Covenantees will lease the land and property owned by Haier Group for free. Haier Group will make compensation in the event that the Covenantees suffer loss due to the unavailability of such land and property. | 27 September 2006, long term | YES | YES |
Undertaking related to refinancing | Eliminate the right defects in land property and ect | Haier Group Corporation | 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 suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all reasonable and practicable measures to support the impaired party to recover to normal operation before the occurrence of loss. Upon the expiration of relevant leasing period, Haier Group Corporation will grant or take practicable measures to assure Qingdao Haier and its subsidiaries of priority to continue to lease the property at a price not higher than the rent in | 24 December 2013, long term | YES | YES |
comparable market at that time. Haier Group Corporation will assure Qingdao Haier and its subsidiaries of the constant, stable, free and unobstructed use of self-built property and land of the Group. In the event that Qingdao Haier or any of its subsidiaries fails to continue to use self-built property according to its own will or in original way due to the fact that self-built property has no relevant ownership certificate, Haier Group Corporation will take all reasonable and practicable measures to eliminate obstruction and impact, or will support 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 Stock Exchange on 29 March 2014. | ||||||
Eliminate the right defects in land property and etc. | Qingdao Haier Co., Ltd. | The Company undertakes that it will eliminate the property defects of the Company and main subsidiaries within five years with reasonable business effort since 24 December 2013, so as to achieve the legality and compliance of the Company and main subsidiaries in terms of land and property. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. | 24 December 2013, five years | YES | YES | |
Other undertakings | Asset | Haier Group Corporation | 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 Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment (L 2015-015) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 26 May 2015. | May 2015-June 2020 | YES | YES |
Other undertakings | injection | Haier Group Corporation | Inject the assets of Haier Photoelectric to the Company or dispose such assets through other ways according to the requirements of the domestic supervision before June 2020. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment of Haier Group | December 2015-June 2020 | YES | YES |
Corporation (L 2015-063) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015. | ||||||
Other undertakings | Profit forecast and compensation | Haier Group Corporation | 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 Equipment held by Haier Group. The Company signed the Profit Compensation Agreement with Haier Group to forecast the profits achieved by the aforementioned two companies in 2015 - 2018. If the profits are not reached during the commitment period, the difference part 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 | December 2015- December 2018 | YES | YES |
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 there-appointment of accounting firm on the 2017 annual general meeting: in order to ensure the smoothimplementation of the financial and internal auditing and the continuity of the auditing work in 2018, theCompany re-appointed Shandong Hexin Certified Public Accountants (LLP) as the audit institution ofthe financial report and internal control of 2018, and the audit fees amounted to RMB9.60 million (ofwhich, 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
VIII. Explanation of the integrity status of the Company and its controlling shareholders and
actual controllers during the reporting period
□ Applicable √Not Applicable
IX. The Company’s equity incentive plan, employees stock ownership 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(II) Share incentives not disclosed in temporary announcements or with subsequent progress
Share Option Incentive
□ Applicable √Not Applicable
Other explanations
□ Applicable √Not Applicable
Employees stock ownership plan
√Applicable □ Not Applicable(1)The Phase III Employees Stock Ownership Scheme launched and completed the share
purchase: On 24 April 2018, the Company considered and approved relevant resolutions such as thePhase III Stock Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co.,
Ltd. (Draft) (《青岛海尔股份有限公司核心员工持股计划之第三期持股计划(草案)及摘要》) andit’s Summary at the 13th meeting of the 9th session of the Board of Directors. The 635 staffs who
participated into the Stock Ownership Scheme are the directors (excluding independent directors),supervisors, senior management of the Company and regular employees who serve at the Company andits subsidiaries and sign employment contracts with the Company or its subsidiaries and receiveremuneration from them, together holding RMB271.30 million in the fund. On 23 May 2018, theCompany disclosed the Announcement on the Completion of Share Purchase by the Phase III Stock
Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司核心员工持股计划之第三期持股计划完成股票购买的公告》), and the EmployeesStock Ownership Scheme has been entrusted to Industrial Securities 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 III
Stock Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd.
(“Assets Management Plan”) for the management. As of 22 May 2018, the Assets Management Plan has
purchased an aggregate of 16,063,800 shares of the Company, representing 0.26% of the total sharecapitals of the Company through the block trade in secondary market at an average trading price ofRMB16.72 per share with a trading volume of RMB268,586,736.00. The Phase III Stock OwnershipScheme of Core Employees Stock Ownership Scheme has completed the purchase of shares of theCompany. Those shares purchased aforesaid will be locked in accordance with requirement, and thelocking period will be 12 months from the date of the disclosure of this announcement, being 23 May2018 to 22 March 2019.
(2)Allocation of the employee stock ownership plan (ESOP): During the reporting period, the
lock-up period of the Company's Phase II ESOPs (Draft) and Summary under Key Employee Stock
Ownership Plan of Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司核心员工持股计划之第二期持股计划(草案)及摘要》) (referred to as “Phase II ESOPs”) has expired. According to the Audit Reportof Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司审计报告》) (HXS Zi. [2018] No.000267) issued
by Shandong Hexin Certified Public Accountant LLP, the annual net profits vested in parent companyshareholders with allowance for non-recurring gains and losses in 2017 increased by 29.81% than 2016.Upon examination by the Management Committee, the assessment results of 556 holders of Phase IIESOPs were satisfactory. 19 holders had unsatisfactory assessment results or resigned beforedetermination of the equity for the year 2017 under Phase II ESOPs.
On May 2, 2018, upon consideration by ESOP Management Committee, 556 holders of Phase IIESOPs were determined according to performances for the year 2017 to be allocated with 8,717,600shares. The shares of the said 19 holders with unsatisfactory assessment or who resigned were suspendedfor allocation or adjusted for their shares.
There are 7 directors, supervisors and senior executives of the Company. A total of 1,617,300shares can be allocated for Phase II ESOPs. Upon application by Mr. Gong Wei as CFO and DeputyGeneral Manager, 121,325 shares he applied for not being allocated in December 2017 when shares ofthe first phase ESOPs were allocated (for the relevant announcement, refer to the Notice of QingdaoHaier Co., Ltd. on Quota Distribution and Equity Allocation of the First Phase Key Employee StockOwnership Plans disclosed by the Company on December 7, 2017, No.: L 2017-046) are allocated at thistime. In summary, the number of shares held by directors, supervisors and senior executives actuallyallocated this time is 1,738,700 shares. Any change of the shares they hold must be subject to provisionsof the Rules Governing the Holding of Shares in the Company by Directors, Supervisors and SeniorManagement of Listed Companies and Changes Thereof.
In summary, according to the aforementioned resolution, the Company has completed the transferof relevant stocks at China Securities Depository and Clearing Corporation Shanghai Branch on May 10,2018, with a total of 8,838,900 shares.
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 Applicable2. 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 2018 at the 13th meeting of the 9th session of Board Meeting held on 24 April 2018. For details,please refer to the Announcement of Qingdao Haier Co., Ltd. regarding the Anticipation on the Renewalof Daily Related-party Transactions Agreement and the Daily Related-party Transactions for 2018 andrelevant announcement on the resolutions of the Board disclosed on 26 April 2018.
For the actual implementation of the Related-party transaction of January to June 2018, 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 Equity1、 Matters disclosed in temporary announcement without any subsequent progress or change
√Applicable □ Not Applicable
Summary | Index for details |
Acquisition of FPA shares: The Company passed the acceptance of transfer of 100% shares of Haier New Zealand Investment Holding Company Limited held by the overseas subsidiary Haier (Singapore) Management Holding Co. Pte. Limited under Haier Group Corporation by Haier Singapore Investment Holding Pte. Ltd. (“Haier Singapore Investment”) who should accept the principal and interests of shareholder borrowings payable by the Target Company to Haier Singapore Management. Haier Singapore Investment, an overseas subsidiary of the Company, intends to pay US$303,040,997.28 (equivalent to RMB1,905,552,095.01) to Haier Singapore Management for accepting the transfer of the underlying shares. | Refer to the Notice of Qingdao Haier Co., Ltd. on Accepting the Transfer of 100% Shares of Haier New Zealand Investment Holding Company Limited and Related Transactions (L 2018-020) (《青岛海尔股份有限公司关于受让Haier New Zealand Investment Holding Company Limited之100%股权暨关联交易的公告》(临2018-020)) disclosed by the Company on April 26, 2018 and relevant notices for more information. |
Transfer shares of Qingdao Haier Special Electrical Appliance Co., Ltd.: As the shareholder of Qingdao Haier Special Electrical Appliance Co., Ltd. (“QHSPA”), the Company transferred 62% of QHSPA shares to Qingdao Haier Biomedical Holdings Co., Ltd. at the consideration of RMB505,129,750 for the transaction. Upon completion of the share transfer, the Company no longer holds any share of QHSPA. | Refer to the Notice of Qingdao Haier Co., Ltd. on Transferring 22% Shares of Qingdao Haier Special Electrical Appliance Co., Ltd. and Related Transactions (L 2018-037) (《青岛海尔股份有限公司关于转让青岛海尔特种电器有限公司22%股权暨关联交易的公告》(临2018-037)) disclosed by the Company on June 26, 2018 and relevant notices for more information. |
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
4、 If performance agreement is involved, the performance achieved during the reporting
period shall disclosed
□ Applicable √Not Applicable
(III) Significant related-party transactions of joint external investment1、 Matters disclosed in temporary announcement and without any subsequent progress or
change
□ Applicable √Not Applicable2、 Matters disclosed in temporary announcement and with subsequent progress or change
□ Applicable √Not Applicable3、 Matter not disclosed in temporary announcement
□ Applicable √Not Applicable
(IV) Amounts due to or from related parties1、 Matters disclosed in temporary announcement and without any subsequent progress or
change
□ Applicable √Not Applicable2、 Matters disclosed in temporary announcement and with subsequent progress or change
□ Applicable √Not Applicable3、 Matter not disclosed in temporary announcement
□ Applicable √Not Applicable(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 on relevant meetings (such as the generalmeetings of the Company) are within the term thereof:
According to the Haier Group's commitment in 2011 to further support the development of QingdaoHaier 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 tocomplete the transfer before the above commitment period. Haier Group intends to entrust the Companywith the operation and management of assets under custody and will pay RMB1 million custodian fee tothe 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: RMB0’000
External guarantees provided by the Company (excluding guarantees for subsidiaries) | |||||||||||||
Guarantor | Relationship between the guarantor and the listed company | Secured party | Amount of guarantee | Date of occurrence of the guarantee (date of agreement) | Starting date of guarantee | Expiration date of guarantee | Type of guarantee | Whether the guarantee has been fulfilled | Whether the guarantee is overdue | Overdue amount of the guarantee | Whether there is a counter-guarantee | Whether related party guarantee or not | Relationship |
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries) | |||||||||||||
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries) | |||||||||||||
Guarantees provided by the Company for subsidiaries | |||||||||||||
Total amount of guarantees for subsidiaries occurred during the reporting period | 3,167,618 | ||||||||||||
Total balance of guarantees for subsidiaries at the end of the reporting period (B) | 2,994,380 | ||||||||||||
Total amount of guarantees provided by the Company (including guarantees for subsidiaries) | |||||||||||||
Total guarantee (A + B) | 2,994,380 | ||||||||||||
Ratio of total amount of guarantees to net assets of the Company (%) | 84.9 | ||||||||||||
Among which: | |||||||||||||
Amount of guarantees for shareholders, ultimate controllers and their related parties (C) | 0 | ||||||||||||
Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) | 1,242,549 |
The amount of total amount of guarantee in excess of 50% of net assets (E) | 1,231,017 |
Total amount of the above three guarantees (C + D + E) | 2,473,566 |
Explanation of possibly bearing related discharge duty for premature guarantees | |
Explanation of guarantee status | 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 RMB10.752 billion as at the end of the reporting period. The balance guaranteed amounted to approximately RMB10.075 billion as at the end of the reporting period. The provision of security had been reviewed and approved by the Board and the general meeting of shareholders of the Company; 2、In May 2018, the resolution on the security provided to subsidiaries in the year 2018 was passed on the 2017 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 RMB20.924 billion. As at the end of the reporting period, the balance guaranteed was RMB19.869 billion. |
3 Other Major Contracts
□ Applicable √Not Applicable
XII. Information on poverty alleviation of the Company
√Applicable □ Not Applicable
1. Targeted measures in poverty alleviation plan
√Applicable □ Not Applicable
In accordance with the national plan for targeted measures in poverty alleviation and therequirements 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 bythe general meetings on related matters (such as donation). Over the years, the Company has beendevoted to education undertakings and making significant contributions, with a view to targeting theweakest area of education and to blocking the transmission of poverty between generations throughfocused efforts in raising the basic cultural quality in poverty and the skill levels of labor force frompoor 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 nearly 300 hope
schools, covering 26 provinces, municipalities directly under the central government and autonomous
regions in China, and continuously provide the above-mentioned schools support in materials and otherrespects in each year including the reporting period. These initiatives have effectively enhanced thebasic educational capabilities in poverty-stricken areas and improved the quality of education.
2. Summary of targeted measures in poverty alleviation during the reporting period
√Applicable □ Not ApplicableIn the first half of 2018, the Company’s expenditures on targeted measures in poverty alleviation
was approximately RMB9.11 million, which was mainly utilized in the education improvement, physicaland mental health development of adolescents and children. At the same time, as part of its initiatives inresponse to the government and the performance of its social responsibilities, Haier Group has also madeinvestments in many aspects, such as poverty alleviation through agricultural development, povertyalleviation through improvement of the health of farmers.
3. Results of targeted measures in poverty alleviation
√Applicable □ Not Applicable
Unit and Currency: RMB0’000
Indicators | Amount and the status |
I. General information | 911.29 |
Among which:1. Funds | 889.94 |
2.Cash converted from materials | 21.35 |
II. Breakdown of the use of funds | |
1. Poverty elimination through education | 911.29 |
1.1 Amount of investment for the purpose of improving the resources of education in poverty-stricken areas | 911.29 |
4. Phased progress in performing social responsibilities of targeted poverty alleviation
√Applicable □ Not ApplicableIn addition to material input in children’s education improvement, physical and mental health
development, etc., the Company also explores feasible methods in agricultural poverty alleviation. Forexample, for rural entrepreneurs, Haier customizes skills improvement solutions for them, such asXiaoshun Business School jointly established by RRS Health and Haier University. A multi-leveltraining system has been developed by centering on rural talent revitalization to enhance farmers'entrepreneurial skills. By providing local platforms and employment opportunities, we have built abenign ecological system that fosters, performs well and retains talents. In addition, the Company hascustomized the entrepreneurial poverty alleviation model for the economic conditions in different ruralareas, with programs, platforms, networks and results made, and it is replicable. The national targetedpoverty alleviation strategy is implemented to fully advance rural poverty alleviation.
5. Subsequent targeted measures in poverty alleviation plans
√Applicable □ Not Applicable
In the second half of 2018, the Company will make concerted efforts with Haier Group andcontinue to implement the proposition of the documents issued by the central government in respect ofpoverty alleviation, dedicate to improve the education in poverty-stricken areas, promote therevitalization of rural talents and other initiatives, and will perform our social responsibilities in aproactive manner.
XIII. Convertible corporation bonds
□ Applicable √Not Applicable
XIV. Environmental information(I) Statement on environmental protection of companies and their key subsidiaries as key
pollution discharge units published by the environmental protection authority
√Applicable □Not Applicable
1. Pollution discharge information
√Applicable □Not ApplicableThe Company and its subsidiaries including Qingdao Haier Refrigerator Co., Ltd. (“HaierRefrigerator”), Haier Electronics Co., Ltd., Guizhou (“Guizhou Haier”), and its former subsidiary HaierResearch and Develop Special Type of Steel Plate Co.,LTD. (currently renamed to “Hefei HBIS New
Material Technology Co., Ltd.. The Company has completed the transfer of the shares in 2015. Thecompany is no longer a subsidiary of the Company) are key pollution discharge units published by theenvironmental protection authority.
The polluted industrial wastewater of the Company is mainly domestic water (water for toilets andbathrooms) to be discharged to municipal pipelines through sewer pipes. The exhaust gas is mainlyassembly welding fume, and is exhausted out of the workshop with the high-power exhaust fans. Aftercollection and filtering through the collection hood, the workshop welding fume is exhausted to theoutside of the workshop through the exhaust pipe. The foamed injection exhaust gas is discharged to theoutside of the workshop with high-power exhaust fans and through the special fan stack pipes and theexhaust funnel in an organized way.
The major pollutants and emission standards are as shown in the figure below:
Plant | Monitoring Point | Pollutant | Monitoring Index | Standard Value | Measured Value | Reaching Standard or not |
Exhaust gas | 1# Welding of Assembly A | Particulate matter | Emission density | 120mg/m? | 2.68mg/m? | Yes |
Emission rate | 3.5 (15m in height) | 0.042kg/h |
kg/h | |||||
Carbonic oxide | Emission density | / | <0.3mg/m? | ||
Emission rate | / | / | |||
2# Welding of Assembly B | Particulate matter | Emission density | 120mg/m? | 3.92mg/m? | Yes |
Emission rate | 3.5 (15m in height) kg/h | 0.044kg/h | |||
Carbonic oxide | Emission density | / | <0.3mg/m? | ||
Emission rate | / | / | |||
3# Fan Stack of Foam Station A | Particulate matter | Emission density | 120mg/m? | / | Yes |
Emission rate | 3.5 (15m in height) kg/h | / | |||
Benzene | Emission density | 12mg/m? | <5.0×10-4mg/m? | ||
Emission rate | 0.9 (20m in height) kg/h | / | |||
Toluene | Emission density | 40mg/m? | 0.197mg/m? | ||
Emission rate | 5.2 (20m in height) kg/h | 8.2×10-4kg/h | |||
Xylene | Emission density | 70mg/m? | 4.75mg/m? | ||
Emission rate | 1.7 (20m in height) kg/h | 0.020kg/h | |||
Non-methane Hydrocarbon | Emission density | 120mg/m? | 1.12mg/m? | ||
Emission rate | 17 (20m in height) kg/h | 0.005kg/h | |||
Carbonic oxide | Emission density | / | / | ||
Emission rate | / | / | |||
4# Fan Stack of Foam Station B | Particulate matter | Emission density | 120mg/m? | / | Yes |
Emission rate | 3.5 (15m in height) kg/h | / | |||
Benzene | Emission density | 12mg/m? | <5.0×10-4mg/m? | ||
Emission rate | 0.9 (20m in height) kg/h | / | |||
Toluene | Emission density | 40mg/m? | 0.059mg/m? | ||
Emission rate | 5.2 (20m in height) kg/h | 2.5×10-4kg/h | |||
Xylene | Emission density | 70mg/m? | 4.13mg/m? | ||
Emission rate | 1.7 (20m in height) kg/h | 0.017kg/h | |||
Non-methane Hydrocarbon | Emission density | 120mg/m? | 1.21mg/m? | ||
Emission rate | 17 (20m in height) kg/h | 0.005kg/h | |||
Carbonic oxide | Emission density | / | / | ||
Emission rate | / | / | |||
Hood | 5# | Emission | 2.0mg/m? | 1.81mg/m? | Yes |
The polluted industrial wastewater of Haier Refrigerator is also mainly domestic water (water fortoilet, bathroom) to be discharged to the municipal pipelines through sewer pipes. The productionexhaust gas mainly includes welding fume, foaming exhaust gas and canteen oil fume, all of which arecollected by the gas collecting hood and discharged to high altitude through the exhaust funnel in anorganized way.
The major pollutants and emission standards are as shown in the figure below:
Item | Monitoring Point | Pollutant | Monitoring Index | Standard Value | Measured Value | Reaching Standard or not |
Exhaust gas | Exhaust Stack at 1# Welding of Assembly A | Particulate matter | Emission density | 120mg/m? | 4.21mg/m? | Yes |
Emission rate | 5.9kg/h | 0.029kg/h | ||||
Carbonic oxide | Emission density | / | <0.3mg/m? | |||
Emission rate | / | / | ||||
Exhaust Stack at 2# Welding of Assembly B | Particulate matter | Emission density | 120 mg/m? | 4.46 mg/m? | Yes | |
Emission rate | 5.9 kg/h | 0.046 kg/h | ||||
Carbonic oxide | Emission density | / | <0.3 mg/m? | |||
Emission rate | / | / | ||||
Pre-mixer 3# | Non-methane Hydrocarbon | Emission density | 120 mg/m? | 3.10 mg/m? | Yes | |
Emission rate | 17kg/h | 0.026 kg/h | ||||
Benzene | Emission density | 12 mg/m? | <5.0*10-4 mg/m? | |||
Emission rate | 0.90 kg/h | / | ||||
Toluene | Emission density | 40 mg/m? | <5.0*10-4 mg/m? | |||
Emission rate | 5.2 kg/h | / | ||||
Xylene | Emission density | 70 mg/m? | <5.0*10-4 mg/m? | |||
Emission rate | 1.7 kg/h | / | ||||
No. 1 Exhaust Stack of 4# Foaming Station | Non-methane Hydrocarbon | Emission density | 120 mg/m? | 3.49 mg/m? | Yes | |
Emission rate | 17 kg/h | 0.028 kg/h | ||||
Benzene | Emission density | 12 mg/m? | <5.0*10-4 mg/m? | |||
Emission rate | 0.90 kg/h | / | ||||
Toluene | Emission density | 40 mg/m? | <5.0*10-4 mg/m? | |||
Emission rate | 5.2 kg/h | / |
density | |||
Emission rate | / | / | |
6# | Emission density | 2.0mg/m? | 0.33mg/m? |
Emission rate | / | / |
Xylene | Emission density | 70 mg/m? | <5.0*10-4 mg/m? | ||
Emission rate | 1.7 kg/h | / | |||
No. 2 Exhaust Stack of 5# Foaming Station | Non-methane Hydrocarbon | Emission density | 120 mg/m? | 3.96 mg/m? | Yes |
Emission rate | 17 kg/h | 0.032 kg/h | |||
Benzene | Emission density | 12 mg/m? | <5.0*10-4 mg/m? | ||
Emission rate | 0.90 kg/h | / | |||
Toluene | Emission density | 40 mg/m? | <5.0*10-4 mg/m? | ||
Emission rate | 5.2 kg/h | / | |||
Xylene | Emission density | 70 mg/m? | <5.0*10-4 mg/m? | ||
Emission rate | 1.7 kg/h | / | |||
Hood | 6# | Emission density | 2.0 mg/m? | 1.47 mg/m? | Yes |
7# | Emission density | 2.0 mg/m? | 0.20 mg/m? |
Pollutants of Guizhou Haier mainly involve noise and foaming exhaust gas. For noise, plantbarriers, greening for sound absorption and attenuation over distance, etc. The foaming exhaust gas isdischarged to high altitude through the exhaust funnel in an organized way.
The major pollutants and emission standards are as shown in the figure below:
Item | Monitoring Point | Pollutant | Monitoring Index | Standard Value | Measured Value | Reaching Standard or not |
Noise | 1# Plant Gate | Noise | Diurnal noise value | 60 dB | 48.7 dB | Yes |
Night noise value | 50 dB | 41.5 dB | Yes | |||
2# Air Compression Station | Diurnal noise value | 60 dB | 48.9 dB | Yes | ||
Night noise value | 50 dB | 42.5 dB | Yes | |||
3# EMR | Diurnal noise value | 60 dB | 55.6 dB | Yes | ||
Night noise value | 50 dB | 47.6 dB | Yes | |||
Volatile organic compound | Upwind direction of unauthorized exhaust gas at boundary | Non-methane Hydrocarbon | Emission density | 4.0 mg/m? | 0.13mg/m? | Yes |
Inspection of organic matter | Downwind direction of unauthorized exhaust gas at boundary | Emission density | 4.0 mg/m? | 0.28mg/m? | Yes | |
Upwind direction of unauthorized exhaust gas at boundary | Benzene | Emission density | 0.40mg/m? | 1.8*10-3 mg/m? | Yes |
Downwind direction of unauthorized exhaust gas at boundary | Emission density | 0.40mg/m? | 2.0*10-3mg/m? | Yes | |
Upwind direction of unauthorized exhaust gas at boundary | Toluene | Emission density | 2.4 mg/m? | ND | Yes |
Downwind direction of unauthorized exhaust gas at boundary | Emission density | 2.4 mg/m? | 2.8*10-3mg/m? | Yes | |
Upwind direction of unauthorized exhaust gas at boundary | Xylene | Emission density | 1.2 mg/m? | 5.6*10-3 mg/m? | Yes |
Downwind direction of unauthorized exhaust gas at boundary | Emission density | 1.2 mg/m? | 1.12mg/m? | Yes | |
Upwind direction of unauthorized exhaust gas at boundary | Phenols | Emission density | 0.080 mg/m? | 0.005 mg/m? | Yes |
Downwind direction of unauthorized exhaust gas at boundary | Emission density | 0.080mg/m? | 0.008mg/m? | Yes | |
Upwind direction of unauthorized exhaust gas at boundary | Anilines | Emission density | 0.40 mg/m? | 0.09 mg/m? | Yes |
Downwind direction of unauthorized exhaust gas at boundary | Emission density | 0.40mg/m? | 0.10mg/m? | Yes |
2. Construction and operation of pollution control facility
√Applicable □Not Applicable
The Company and Haier Refrigerator have provided activated carbon filtration equipment for thetreatment of the exhaust gas from assembly welding absorbed by the foaming door. Replacement is on athree-month basis, with records made. Waste activated carbon is stored in the hazardous waste storage.The canteen is provided with electric ion fume decomposition devices. The exhaust gas treatmentequipment is controlled by specially assigned persons to ensure the normal operation of the equipment.The management of the operation of pollution control facilities for exhaust gas generation is
strengthened. We have ensured efficient operation of pollution control facilities. Exhaust gas is testedunder delegation on an annual basis. The fan stacks are cleaned and inspected on a weekly, monthly andquarterly basis. Spot inspection records are kept. Fan stack cleaning records are archived. All these areto ensure normal operation of the exhaust facilities and normal exhaust gas emission. The exhaust pipesare inspected periodically for presence of foreign matters and looseness or falling. Preparations foremergency response are also made.
As a response to the state call for energy conservation and emission reduction, Guizhou Haierinvested more than RMB30 million at the end of 2013 to improve the spraying production process.U-shell program was technologically improved. Phosphating coating procedure, preparation line,powder spraying equipment, drying furnace, curing furnace and etc. are cancelled. There is no industrialwastewater discharge with the coating equipment removal. Relevant sewage treatment plants have beenclosed for zero sewage discharge.
3. Evaluation of the effect of construction projects on the environment and other environmental
administration license
√Applicable □Not Applicable
The Company and its subsidiaries perform the implementation and production of constructionprojects according to the requirements of laws and regulations. We complete environmental impactevaluation procedures in strict accordance with the Three Simultaneous system for environmentalprotection of construction projects. They have been approved in the environmental impact assessment.There are no environmental violations such as construction without approval.
4. Emergency plan for environmental emergencies
√Applicable □Not Applicable
The Emergency Plan for Environmental Emergencies is developed according to the laws andregulations by the Company and its subsidiaries. Drills have been organized. The Plan is continuouslyoptimized and upgraded according to the drill results.
5. Environmental self-monitoring plan
√Applicable □Not Applicable
All pollutant discharges of the Company comply with national and local environmental standards.The sewage is discharged after being collected and treated, and is monitored in real time through theautomatic online sewage monitoring system. The data is connected to Haier Smart Energy System. InMarch 2017, the Company received and passed the certification of version change of ISO14001environmental management system. In March 2018, the professional certification body conducted thefirst supervision and audit of the operation of 2017 ISO14001 system after version change. Theoperation was approved with smooth functioning.
6. Other environmental information to be disclosed
√Applicable □Not Applicable
In 2017, the Company promoted energy-saving and emission reduction projects such as liquefiedgas to natural gas, aerial lighting renovation and provision of filtration devices with compressed gas.Haier Refrigerator made remarkable results in energy-saving and emission reduction by promotingenergy-saving and emission reduction projects such as cooling oil to water for adsorption machines,lighting renovation and etc. in 2017.
(II) Statement on environmental protection of companies other than key pollution discharge
units
√Applicable □Not Applicable
All units of the Company perform the implementation and production of construction projectsaccording to the requirements of laws and regulations. We complete environmental impact evaluationprocedures in strict accordance with the Three Simultaneous system for environmental protection ofconstruction projects. They have been approved in the environmental impact assessment. There are noenvironmental violations such as construction without approval.
The Company has established Haier Smart Energy Center, an industry-leading energy big dataanalysis system. It uses automation, information technology and centralized management mode toimplement centralized dynamic monitoring and digital management of main energy consumption such aswater, electricity and gas in all factories across the country; automatically and accurately collects energydata, and completes the prediction and analysis of energy consumption data, optimizes energydeployment and reduce the energy consumption of single product production, thus truly achievinglow-carbon production.
(III) Statement on reasons for non-disclosure of environmental information by companies
other than key pollution discharge units
□Applicable √Not Applicable
(IV) Statement on subsequent development or changes of environmental information contents
disclosed in the reporting period
√Applicable □Not Applicable
The Company will continue to maintain and keep optimizing existing results and allowsup-to-standard discharge in strict accordance with existing environmental discharge and emissionstandards.
XV. 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
(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
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 on the aggregate amount of shares and the sharecapital 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 pershare(if any)
□ Applicable √Not Applicable
4、 Other disclosure deemed necessary by the Company or required by securities regulatory
authorities
□ Applicable √Not Applicable
(II) Changes in shares with selling restrictions
□ Applicable √Not Applicable
II. Information on shareholders(I) Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period | 160,035 |
Total numbers of preferential shareholders with restoration of voting rights by the end of the reporting period | 0 |
(II) Table of shareholdings 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 | ||||||||||
Name of shareholder (full name) | Increasing/ decreasing during the reporting period | Number of shares held at the end of the period | Percentage (%) | Number of shares held with selling restrictions | Status of shares pledged or frozen | Nature of shareholder | ||||
Status | Number | |||||||||
Haier Electric Appliances International Co., Ltd. | 1,258,684,824 | 20.64 | Nil | Domestic non-state-owned legal entity | ||||||
Haier Group Corporation | 1,072,610,764 | 17.59 | Nil | Domestic non-state-owned legal entity | ||||||
Hong Kong Securities Clearing Co., Ltd. | 482,951,912 | 7.92 | Nil | Unknown | ||||||
China Securities Finance Corporation Limited | 298,731,988 | 4.90 | Nil | Unknown | ||||||
GIC PRIVATE LIMITED | 273,498,349 | 4.49 | Nil | Foreign legal entity | ||||||
KKR HOME INVESTMENT S.A R.L. | 179,168,050 | 2.94 | Nil | Foreign legal entity | ||||||
Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资咨询有限公司) | 172,252,560 | 2.83 | Nil | Domestic non-state-owned legal entity | ||||||
National social security fund, Portfolio 104 | 96,188,780 | 1.58 | Nil | Unknown | ||||||
Central Huijin Asset Management Ltd. | 69,539,900 | 1.14 | Nil | Unknown | ||||||
UBS AG | 39,626,276 | 0.65 | Nil | Unknown | ||||||
Shareholdings of top ten shareholders without selling restrictions | ||||||||||
Name of shareholder | Number of tradable shares held without selling restrictions | Class and number of shares | ||||||||
Class | Number | |||||||||
Haier Electric Appliances International Co., Ltd. | 1,258,684,824 | RMB ordinary | 1,258,684,824 | |||||||
Haier Group Corporation | 1,072,610,764 | RMB ordinary | 1,072,610,764 | |||||||
Hong Kong Securities Clearing Co., Ltd. | 482,951,912 | RMB ordinary | 482,951,912 | |||||||
China Securities Finance Corporation Limited | 298,731,988 | RMB ordinary | 298,731,988 | |||||||
GIC PRIVATE LIMITED | 273,498,349 | RMB ordinary | 273,498,349 | |||||||
KKR HOME INVESTMENT S.A R.L. | 179,168,050 | RMB ordinary | 179,168,050 | |||||||
Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资 咨询有限公司) | 172,252,560 | RMB ordinary | 172,252,560 | |||||||
National social security fund, Portfolio 104 | 96,188,780 | RMB ordinary | 96,188,780 | |||||||
Central Huijin Asset Management Ltd. | 69,539,900 | RMB ordinary | 69,539,900 | |||||||
UBS AG | 39,626,276 | RMB ordinary | 39,626,276 |
Related-parties or parties acting in concert among the aforesaid shareholders | (1) Haier Electric Appliances International Co., Ltd. is a holding subsidiary of Haier Group Corporation. Haier Group Corporation holds 51.20% of its equity. Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资咨询有限公司) is a party acting in concert with Haier Group Corporation; (2) The Company is not aware of the existence of any connections of other shareholders. |
Explanation of preferential shareholders with restoration of voting rights and their shareholdings | N/A |
Number of shares held by top ten shareholders with selling restrictions and the selling restrictions
□ Applicable √Not Applicable(III) Strategic investors or general legal persons who became the top ten shareholders due to
placing of new shares
□ Applicable √Not ApplicableIII. Changes in controlling shareholder and the ultimate controller
□ Applicable √Not Applicable
SECTION VII THE RELEVANT INFORMATION OF PREFERRED
SHARES
□Applicable √Not Applicable
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
Unit: share
Name | Title | Shareholdings at the beginning of the period | Shareholdings at the end of the period | Increase/ decrease in shares during the reporting period | Reason for increase/ decrease |
Liang Haishan | Director | 10,904,065 | 11,684,483 | 780,418 | Vesting of Employees Stock Ownership Plan |
Tan Li xia | Director | 5,272,740 | 5,897,074 | 624,334 | |
Wang Peihua | Supervisor | 27,004 | 52,732 | 25,728 | |
Ming Guoqing | Supervisor | 17,612 | 34,421 | 16,809 | |
Wang Yuqing | Supervisor | 2,231 | 4,186 | 1,955 | |
Gong Wei | Senior management | 1,050,000 | 1,277,668 | 227,668 | |
Ming Guozhen | Senior management | 944,446 | 1,006,193 | 61,747 |
Other explanations
√Applicable □Not Applicable
During the reporting period, except for the directors, supervisors and senior management listed inthe above table, the number of shares held by the other directors, supervisors and senior managementwas unchanged compared to the beginning of the reporting period.
(II) Incentive share option granted to directors, supervisors and senior management during
the reporting period
□Applicable √ Not ApplicableII、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
SECTION IX RELEVANT INFORMATION ON CORPORATE BONDS
□Applicable √ Not Applicable
SECTION X FINANCIAL REPORT
I、 Auditors’ Report
□Applicable √ Not Applicable
II、 Financial Statements
Consolidated Balance Sheet
30 June 2018Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
Items | Notes | Closing balance | Opening balance |
Current Assets: | |||
Monetary Capital | Ⅶ.1 | 33,467,936,834.26 | 35,177,276,903.91 |
Clearing settlement funds | |||
Placements with banks | |||
Financial assets measured at fair value and changes of which included in current profit and loss | |||
Derivative financial assets | Ⅶ.2 | 40,947,728.30 | 20,681,695.50 |
Notes receivables | Ⅶ.3 | 12,208,138,565.32 | 13,033,083,520.99 |
Accounts receivables | Ⅶ.4 | 16,906,190,691.77 | 12,448,004,833.06 |
Prepayments | Ⅶ.5 | 662,900,260.21 | 590,693,658.21 |
Premiums receivables | |||
Reinsurance accounts receivables | |||
Reinsurance contract reserves receivables | |||
Interests receivables | Ⅶ.6 | 241,911,436.27 | 203,637,543.83 |
Dividends receivables | 4,660,849.89 | 4,524,472.84 | |
Other receivables | Ⅶ.7 | 865,582,766.96 | 961,263,981.87 |
Financial assets purchased under resale agreements | |||
Inventories | Ⅶ.8 | 22,506,295,717.51 | 21,503,524,800.18 |
Assets held for sale | Ⅶ.9 | 1,233,866,625.56 | |
Non-current assets due within one year | |||
Other current assets | Ⅶ.10 | 4,689,319,508.59 | 4,389,760,018.83 |
Total current assets | 92,827,750,984.64 | 88,332,451,429.22 | |
Non-current assets: | |||
Loans and advances granted | |||
Available-for-sale financial assets | Ⅶ.11 | 1,558,455,723.48 | 1,415,354,307.82 |
Held-to-maturity investments | |||
Long-term receivables | |||
Long-term equity investments | Ⅶ.12 | 13,424,669,075.65 | 12,992,767,394.28 |
Investment properties | Ⅶ.13 | 30,957,475.27 | 31,214,015.99 |
Fixed assets | Ⅶ.14 | 15,428,882,880.56 | 16,017,523,376.11 |
Construction in progress | Ⅶ.15 | 2,582,745,338.39 | 1,530,390,130.25 |
Construction materials | |||
Disposals of fixed assets | Ⅶ.16 | 55,864,669.30 | 55,808,808.81 |
Biological assets for production | |||
Fuel assets | |||
Intangible assets | Ⅶ.17 | 7,880,106,466.16 | 7,005,186,296.28 |
Development expenses | Ⅶ.18 | 431,905,938.29 | 966,051,333.81 |
Goodwill | Ⅶ.19 | 19,765,740,009.59 | 19,843,317,357.30 |
Long-term deferred expenses | Ⅶ.20 | 138,323,193.86 | 123,768,671.33 |
Deferred income tax assets | Ⅶ.21 | 1,835,322,019.19 | 1,895,213,404.67 |
Other non-current assets | Ⅶ.22 | 1,504,629,147.08 | 1,254,064,181.76 |
Total non-current assets | 64,637,601,936.82 | 63,130,659,278.41 | |
Total assets | 157,465,352,921.46 | 151,463,110,707.63 | |
Current liabilities: | |||
Short-term borrowings | Ⅶ.23 | 11,804,553,521.32 | 10,878,580,275.18 |
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 current profit and loss | |||
Derivative financial liabilities | Ⅶ.24 | 4,440,154.26 | 2,524,569.45 |
Notes payable | Ⅶ.25 | 19,372,741,431.66 | 16,378,699,659.77 |
Accounts payables | Ⅶ.26 | 28,204,519,194.31 | 25,654,013,649.96 |
Receipts in advance | Ⅶ.27 | 3,485,578,719.92 | 5,833,552,815.05 |
Disposal of repurchased financial assets | |||
Handling charges and commissions payable | |||
Payables for staff’s remuneration | Ⅶ.28 | 1,934,538,690.28 | 2,349,189,122.90 |
Taxes payable | Ⅶ.29 | 1,770,431,545.54 | 1,909,260,527.42 |
Interests payable | Ⅶ.30 | 69,033,152.51 | 57,656,458.79 |
Dividends payable | Ⅶ.31 | 529,822,661.11 | 153,756,315.64 |
Other payables | Ⅶ.32 | 11,077,488,012.51 | 10,805,162,943.62 |
Reinsurance accounts payable | |||
Deposits for insurance contracts | |||
Consumer deposits for trading in securities | |||
Amounts due to issuer for securities underwriting | |||
Liabilities held for sale | Ⅶ.9 | 296,505,653.77 | |
Non-current liabilities due within one year | Ⅶ.33 | 3,108,306,051.60 | 2,850,325,000.00 |
Other current liabilities | 23,474,888.62 | 21,729,198.70 | |
Total current liabilities | 81,681,433,677.41 | 76,894,450,536.48 | |
Non-current liabilities: | |||
Long-term borrowings | Ⅶ.34 | 12,958,392,344.11 | 16,036,492,809.81 |
Debentures payable | Ⅶ.35 | 6,348,069,093.79 | 6,211,088,362.68 |
Including: preference shares | |||
Perpetual bonds | |||
Long-term payable | Ⅶ.36 | 100,337,376.67 | 106,020,029.74 |
Long-term payables for staff’s remuneration | Ⅶ.37 | 955,081,888.14 | 898,160,742.53 |
Special payable |
Estimated liabilities | Ⅶ.38 | 2,879,629,562.43 | 2,619,699,551.41 |
Deferred income | Ⅶ.39 | 544,151,421.91 | 497,141,088.72 |
Deferred income tax liabilities | Ⅶ.21 | 162,602,680.85 | 279,114,620.35 |
Other non-current liabilities | Ⅶ.40 | 1,228,485,262.18 | 1,170,936,828.55 |
Total non-current liabilities | 25,176,749,630.08 | 27,818,654,033.79 | |
Total liabilities | 106,858,183,307.49 | 104,713,104,570.27 | |
Owners’ equity | |||
Share capital | Ⅶ.41 | 6,097,402,727.00 | 6,097,402,727.00 |
Other equity instruments | Ⅶ.42 | 431,424,524.07 | 431,424,524.07 |
Including: preference shares | |||
Perpetual bonds | |||
Capital reserve | Ⅶ.43 | 873,883,441.43 | 826,883,093.84 |
Less: Treasury stock | |||
Other comprehensive income | Ⅶ.44 | 270,306,171.37 | -36,363,809.96 |
Special reserve | |||
Surplus reserve | Ⅶ.45 | 2,103,057,782.41 | 2,103,057,782.41 |
General risk provisions | |||
Undistributed profits | Ⅶ.46 | 25,491,176,805.98 | 22,793,110,884.09 |
Total equity attributable to owners of the Parent company | 35,267,251,452.26 | 32,215,515,201.45 | |
Minority equity interests | 15,339,918,161.71 | 14,534,490,935.91 | |
Total owners’ equity | 50,607,169,613.97 | 46,750,006,137.36 | |
Total liabilities and owners’ equities | 157,465,352,921.46 | 151,463,110,707.63 |
Legal representative: Liang Haishan Chief accountant: Gong Wei
Person in charge of accounting department: Ying Ke
Balance Sheet of the Parent Company
30 June 2018Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
Items | Notes | Closing balance | Opening balance |
Current Assets: | |||
Monetary Capital | 1,785,793,566.41 | 2,070,527,802.97 | |
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 | 309,470,832.66 | 288,499,726.07 |
Prepayments | 23,119,823.77 | 20,000,000.00 | |
Interests receivables | 283,463,990.41 | 220,157,282.75 | |
Dividends receivables | 99,477,568.56 | 970,851,045.94 | |
Other receivables | XⅧ.2 | 1,822,932,745.96 | 15,895,048.43 |
Inventories | 77,184,947.24 | 89,650,514.91 | |
Assets held for sale | |||
Non-current assets due within one year |
Other current assets | 271,541,009.97 | 87,165,597.70 | |
Total current assets | 4,672,984,484.98 | 3,762,747,018.77 | |
Non-current assets: | |||
Available-for-sale financial assets | 5,288,839.52 | 5,818,587.80 | |
Held-to-maturity investments | |||
Long-term receivables | 8,600,000,000.00 | 8,600,000,000.00 | |
Long-term equity investments | XⅧ.3 | 23,698,231,647.52 | 23,581,254,928.08 |
Investment properties | |||
Fixed assets | 115,045,273.03 | 118,553,830.32 | |
Construction in progress | 28,048,838.62 | 13,594,976.50 | |
Construction materials | |||
Disposals of fixed assets | |||
Biological assets for production | |||
Fuel assets | |||
Intangible assets | 7,356,456.57 | 14,601,582.38 | |
Development expenses | |||
Goodwill | |||
Long-term deferred expenses | 5,453,171.70 | ||
Deferred income tax assets | 121,829,534.01 | 106,347,777.99 | |
Other non-current assets | 2,321,251.36 | ||
Total non-current assets | 32,583,575,012.33 | 32,440,171,683.07 | |
Total assets | 37,256,559,497.31 | 36,202,918,701.84 | |
Current liabilities: | |||
Short-term borrowings | 1,500,000,000.00 | ||
Financial liabilities measured at fair value and changes of which included in current profit and loss | |||
Derivative financial liabilities | |||
Notes payable | |||
Accounts payables | 221,198,720.89 | 310,387,267.67 | |
Receipts in advance | 2,673,252,010.26 | 2,465,908,721.32 | |
Payables for staff’s remuneration | 31,301,052.64 | 51,533,384.22 | |
Taxes payable | 26,192,674.33 | 62,255,803.87 | |
Interests payable | 126,112,976.64 | 156,447,167.63 | |
Dividends payable | |||
Other payables | 22,529,346,801.59 | 21,112,143,360.73 | |
Liabilities held for sale | |||
Non-current liabilities due within one year | |||
Other current liabilities | 16,045,131.53 | 12,498,265.43 | |
Total current liabilities | 27,123,449,367.88 | 24,171,173,970.87 | |
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 | 37,700,000.00 | 37,700,000.00 | |
Deferred income tax liabilities | 37,783,379.99 | 36,152,815.34 | |
Other non-current liabilities |
Total non-current liabilities | 95,483,379.99 | 93,852,815.34 | |
Total liabilities | 27,218,932,747.87 | 24,265,026,786.21 | |
Owners’ equity: | |||
Share capital | 6,097,402,727.00 | 6,097,402,727.00 | |
Other equity instruments | |||
Including: preference shares | |||
Perpetual bonds | |||
Capital reserve | 2,318,161,831.23 | 2,317,907,947.71 | |
Less: Treasury stock | |||
Other comprehensive income | -13,478,890.15 | -43,234,737.77 | |
Special reserve | |||
Surplus reserve | 1,437,313,649.93 | 1,437,313,649.93 | |
Undistributed profits | 198,227,431.43 | 2,128,502,328.76 | |
Total owners’ equity | 10,037,626,749.44 | 11,937,891,915.63 | |
Total liabilities and owners’ equities | 37,256,559,497.31 | 36,202,918,701.84 |
Legal representative: Liang Haishan Chief accountant: Gong Wei
Person in charge of accounting department: Ying Ke
Consolidated Income Statement
January-June 2018
Unit and Currency: RMB
Items | Notes | Current period | Previous period |
Ⅰ.Total operating revenue | 88,591,626,626.07 | 77,585,007,913.93 | |
Including: operating revenue | Ⅶ.47 | 88,591,626,626.07 | 77,585,007,913.93 |
Interest income | |||
Insurance premiums earned | |||
Fee and commission income | |||
Ⅱ. Total cost of operations | 82,990,516,025.15 | 72,915,466,587.55 | |
Including: operating cost | Ⅶ.47 | 62,924,743,807.78 | 54,161,628,234.79 |
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.48 | 404,415,631.92 | 345,530,712.80 |
Selling expenses | Ⅶ.49 | 13,106,599,051.97 | 12,180,499,014.03 |
Administrative expenses | Ⅶ.50 | 5,951,531,296.20 | 5,393,556,967.87 |
Financial expenses | Ⅶ.51 | 424,983,265.35 | 611,674,697.24 |
Loss in assets impairment | Ⅶ.52 | 178,242,971.93 | 222,576,960.82 |
Add: income from change in fair value (losses are represented by “-”) | Ⅶ.53 | 36,661,921.50 | 412,063,845.15 |
Investment income (losses are represented by “-”) | Ⅶ.54 | 867,458,988.96 | 653,842,714.35 |
Including: investment income of associates and joint ventures |
Gain from disposal of assets (losses are represented by “-”) | Ⅶ.55 | 5,668,073.53 | -7,148,339.24 |
Exchange gain (losses are represented by “-”) | |||
Other income | Ⅶ.56 | 224,292,412.02 | 134,742,567.52 |
Ⅲ. Operating profit (losses are represented by “-”) | 6,735,191,996.93 | 5,863,042,114.16 | |
Add: non-operating income | Ⅶ.57 | 218,257,900.77 | 246,964,120.48 |
Less: non-operating expenses | Ⅶ.58 | 48,392,538.09 | 77,391,457.25 |
Ⅳ. Total profit (total losses are represented by “-”) | 6,905,057,359.61 | 6,032,614,777.39 | |
Less: income tax expense | Ⅶ.59 | 966,639,681.13 | 758,022,158.23 |
Ⅴ. Net profit (net losses are represented by “-”) | 5,938,417,678.48 | 5,274,592,619.16 | |
(I) Classification by continuous operation | |||
1.Net profit from continuous operation (net losses are represented by “-”) | 5,938,417,678.48 | 5,274,592,619.16 | |
2. Net profit from discontinuous operation (net losses are represented by “-”) | |||
(II)Classification by ownership of the equity | |||
1. Net profit attributable to owners of the Parent company | 4,858,795,529.42 | 4,416,867,240.37 | |
2. Profit or loss attributable to minority shareholders | 1,079,622,149.06 | 857,725,378.79 | |
VI. Other comprehensive income, net of tax | Ⅶ.60 | 390,531,904.15 | -194,096,720.26 |
Other comprehensive income attributable to owners of the Parent company, net of tax | 266,441,870.74 | -161,578,679.72 | |
(I) Other comprehensive income that will not be reclassified subsequently to profit or loss | -6,952,267.73 | ||
1. Changes in net liabilities or net assets arising from re-measurement of defined benefit plans | -6,952,267.73 | ||
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 loss | 273,394,138.47 | -161,578,679.72 | |
1. Share of other comprehensive income of investees that will be reclassified subsequently to profit or loss under equity method | 86,716,737.89 | -122,040,176.25 | |
2. Gain or loss from change in fair value of available-for-sale financial assets | 47,583,273.64 | -2,347,023.98 | |
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 | 22,583,059.17 | 37,469.92 | |
5. Exchange differences on translation of financial statements denominated in | 116,511,067.77 | -37,228,949.41 |
foreign currencies | |||
6. Other | |||
Other comprehensive income attributable to minority shareholders, net of tax | 124,090,033.41 | -32,518,040.54 | |
Ⅶ. Total comprehensive income | 6,328,949,582.63 | 5,080,495,898.90 | |
Total comprehensive income attributable to the owners of Parent company | 5,125,237,400.16 | 4,255,288,560.65 | |
Total comprehensive income attributable to the minority shareholders | 1,203,712,182.47 | 825,207,338.25 | |
Ⅷ . Earnings per share: | |||
(I) Basic earnings per share (RMB/share) | XX.1 | 0.797 | 0.724 |
(II) Diluted earnings per share (RMB/share) | XX.1 | 0.786 | 0.724 |
Legal representative: Liang Haishan Chief accountant: Gong Wei
Person in charge of accounting department: Ying Ke
Income Statement of the Parent Company
January-June 2018
Unit and Currency: RMB
Items | Notes | Current period | Previous period |
Ⅰ. Operating revenue | XⅧ.4 | 1,624,154,028.46 | 1,543,112,325.65 |
Less: Operation cost | XⅧ.4 | 1,120,062,552.26 | 1,125,099,741.07 |
Taxes and surcharge | 9,974,166.62 | 9,124,152.47 | |
Selling expenses | 125,040,887.94 | 84,535,020.01 | |
Administrative expenses | 287,700,603.90 | 291,801,719.89 | |
Financial expenses | 61,816,257.99 | 45,432,212.79 | |
Loss in assets impairment | 96,210,989.68 | 49,240,545.55 | |
Add: income from change in fair value (losses are represented by “-”) | |||
Investment income (losses are represented by “-”) | XⅧ.5 | 219,520,069.85 | 151,893,767.73 |
Including: investment income of associates and joint ventures | |||
Income from disposal of assets (losses are represented by “-”) | |||
Other income | 9,510,192.91 | 34,750,026.00 | |
Ⅱ. Operating profit (losses are represented by “-”) | 152,378,832.83 | 124,522,727.60 | |
Add: non-operating income | 27,747,401.83 | 18,075,928.68 | |
Less: non-operating expenses | 253,114.54 | 9,413.67 | |
Ⅲ. Total Profit (total losses are represented by “-”) | 179,873,120.12 | 142,589,242.61 | |
Less: income tax expense | -3,481,743.97 | -10,390,190.96 | |
Ⅳ. Net Profit (net losses are represented by “-”) | 183,354,864.09 | 152,979,433.57 | |
1.Net profit from continuous operations (net losses are represented by “-”) | 183,354,864.09 | 152,979,433.57 |
2.Net profit from discontinuous operations (net losses are represented by “-”) | |||
V. Other comprehensive income, net of tax | 14,666,831.86 | -13,603,497.91 | |
(I) Other comprehensive income 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 or loss | 14,666,831.86 | -13,603,497.91 | |
1. Share of other comprehensive income of investees that will be reclassified subsequently to profit or loss under equity method | 15,117,117.89 | -13,949,016.48 | |
2. Gain or loss from change in fair value of available-for-sale financial assets | -450,286.03 | 345,518.57 | |
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 currency | |||
6. Others | |||
VI. Total comprehensive income | 198,021,695.95 | 139,375,935.66 | |
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
Consolidated Cash Flow Statement
January-June 2018
Unit and Currency: RMB
Items | Notes | Current period | Previous period |
Ⅰ. Cash flows from operating activities: | |||
Cash received from the sale of goods and rendering of services | 88,990,747,210.36 | 74,935,403,117.83 | |
Net increase in consumer and interbank deposits | |||
Net increase in borrowing from PBOC | |||
Net cash increase in borrowing from |
other financial institutes | |||
Cash received from premiums under original insurance contract | |||
Net cash received from reinsurance business | |||
Net increase in deposits of policy holders and investment | |||
Net increase from the disposal of financial assets measured at fair value and changes of which included in current profit and loss | |||
Cash received for interest, bank charges and commissions | |||
Net increase in cash borrowed | |||
Net increase in cash received from repurchase operation | |||
Refunds of taxes | 512,976,383.25 | 485,662,098.22 | |
Cash received from other related operating activities | Ⅶ.61 | 506,972,932.99 | 459,333,039.95 |
Sub-total of cash inflows from operating activities | 90,010,696,526.60 | 75,880,398,256.00 | |
Cash paid on purchase of goods and services | 63,858,636,542.27 | 51,699,049,058.50 | |
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 employees | 9,237,917,423.80 | 7,150,233,117.84 | |
Cash paid for all types of taxes | 4,590,954,706.19 | 3,532,926,832.74 | |
Cash paid to other operation related activities | Ⅶ.62 | 6,954,801,900.32 | 5,063,786,588.46 |
Sub-total of cash outflows from operating activities | 84,642,310,572.58 | 67,445,995,597.54 | |
Net cash flows from operating activities | Ⅶ.67 | 5,368,385,954.02 | 8,434,402,658.46 |
Ⅱ. Cash flows from investing activities: | |||
Cash received from disposal of investments | 2,089,760,985.51 | 13,500,000.00 | |
Cash received from return on investments | 243,774,322.52 | 111,755,467.37 | |
Net cash received from the disposal of fixed assets, intangible assets and other long term assets | 66,472,237.59 | 38,490,006.64 | |
Net cash received from disposal of subsidiaries and other operating entities | 5,916,992.24 | ||
Cash received from other investment related activities | Ⅶ.63 | 102,448,074.88 | |
Sub-total of cash inflows from | 2,502,455,620.50 | 169,662,466.25 |
investing activities | |||
Cash paid on purchase of fixed assets, intangible assets and other long term assets | 2,737,429,642.03 | 1,690,179,598.23 | |
Cash paid for investments | 2,541,755,500.75 | 802,287,173.10 | |
Net increase in secured loans | |||
Net cash paid on acquisition of subsidiaries and other operating entities | 54,786,726.52 | ||
Cash paid on other investment related activities | Ⅶ.64 | 72,282,503.66 | |
Sub-total of cash outflows from investing activities | 5,351,467,646.44 | 2,547,253,497.85 | |
Net cash flows from investing activities | -2,849,012,025.94 | -2,377,591,031.60 | |
Ⅲ. Cash flows from financing activities: | |||
Cash received from investment | 80,422,640.20 | 403,277,599.87 | |
Including: cash received by subsidiaries from minority shareholders’ investment | |||
Cash received from borrowings | 4,509,988,283.98 | 12,542,711,276.95 | |
Cash received from issuing bonds | |||
Cash received from other financing related activities | 75,828.87 | ||
Sub-total of cash inflows from financing activities | 4,590,410,924.18 | 12,946,064,705.69 | |
Cash paid on repayment of borrowings | 6,528,030,681.51 | 13,232,929,731.76 | |
Cash paid on distribution of dividends, profits, or interest expenses | 2,233,319,529.73 | 130,616,690.52 | |
Including: dividend, profit paid to minority shareholders by subsidiaries | |||
Cash paid on other financing activities | Ⅶ.65 | 513,528,122.08 | 86,087,258.56 |
Sub-total of cash outflows from financing activities | 9,274,878,333.32 | 13,449,633,680.84 | |
Net cash flows from financing activities | -4,684,467,409.14 | -503,568,975.15 | |
Ⅳ. Effect of fluctuations in exchange rates on cash and cash equivalents | 10,109,446.43 | -74,862,962.90 | |
Ⅴ. Net increase in cash and cash equivalents | -2,154,984,034.63 | 5,478,379,688.81 | |
Add: balance of cash and cash equivalents at the beginning of the period | Ⅶ.67 | 34,340,013,574.22 | 23,295,239,445.05 |
Ⅵ. Balance of cash and cash equivalents at the end of the period | Ⅶ.67 | 32,185,029,539.59 | 28,773,619,133.86 |
Legal representative: Liang Haishan Chief accountant: Gong Wei
Person in charge of accounting department: Ying Ke
Cash Flow Statement of the Parent Company
January-June 2018
Unit and Currency: RMB
Items | Notes | Current period | Previous period |
Ⅰ. Cash flows from operating activities: | |||
Cash received from the sale of goods and rendering of services | 1,026,490,616.31 | 139,120,441.24 | |
Refunds of taxes | 11,759,645.04 | ||
Cash received from other related operating activities | 150,663,743.56 | 50,673,786.01 | |
Sub-total of cash inflows from operating activities | 1,188,914,004.91 | 189,794,227.25 | |
Cash paid on purchase of goods and services | 334,977,272.61 | 817,622,677.26 | |
Cash paid to and on behalf of employees | 519,466,890.74 | 460,813,118.91 | |
Cash paid for all types of taxes | 114,511,009.96 | 95,721,014.98 | |
Cash paid to other operation related activities | 213,818,898.29 | 201,399,325.56 | |
Sub-total of cash outflows from operating activities | 1,182,774,071.60 | 1,575,556,136.71 | |
Net cash flows from operating activities | 6,139,933.31 | -1,385,761,909.46 | |
Ⅱ. Cash flows from investing activities: | |||
Cash received from disposal of investments | 78,325.00 | ||
Cash received from return on investments | 1,053,181,844.07 | 279,713,897.32 | |
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 investing activities | 1,053,260,169.07 | 279,713,897.32 | |
Cash paid on purchase of fixed assets, intangible assets and other long term assets | 14,341,911.75 | 1,791,373.41 | |
Cash paid for investments | 65,722,235.00 | 220,659,237.50 | |
Net cash paid on acquisition of subsidiaries and other operating entities | |||
Cash paid on other investment related activities | |||
Sub-total of cash outflows from investing activities | 80,064,146.75 | 222,450,610.91 | |
Net cash flows from investing activities | 973,196,022.32 | 57,263,286.41 | |
Ⅲ. Cash flows from financing activities: |
Cash received from investment | |||
Cash received from borrowings | 1,500,000,000.00 | ||
Cash received from issuing bonds | |||
Cash received from other financing related activities | 698,132,975.25 | ||
Sub-total of cash inflows from financing activities | 1,500,000,000.00 | 698,132,975.25 | |
Cash paid on repayment of borrowings | |||
Cash paid on distribution of dividends, profits, or interest expenses | 2,089,308,295.14 | ||
Cash paid on other financing activities | 674,762,474.59 | ||
Sub-total of cash outflows from financing activities | 2,764,070,769.73 | ||
Net cash flows from financing activities | -1,264,070,769.73 | 698,132,975.25 | |
Ⅳ. Effect of fluctuations in exchange rates on cash and cash equivalents | 577.54 | -1,138.42 | |
Ⅴ. Net increase in cash and cash equivalents | -284,734,236.56 | -630,366,786.22 | |
Add: balance of cash and cash equivalents at the beginning of the period | 2,070,527,802.97 | 3,888,623,400.28 | |
Ⅵ. Balance of cash and cash equivalents at the end of the period | 1,785,793,566.41 | 3,258,256,614.06 |
Legal representative: Liang Haishan Chief accountant: Gong Wei
Person in charge of accounting department: Ying Ke
Consolidated Statement of Changes in Owner’s Equity
January-June 2018
Unit and Currency: RMB
Items | Current period | ||||||||||||
Equity attributable to owners of the parent company | Minority equity | Total owners’ equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provisions | Undistributed profits | |||||
Preference share | Perpetual bonds | Others | |||||||||||
Ⅰ. Closing balance for the previous year | 6,097,402,727.00 | 431,424,524.07 | 826,883,093.84 | -36,363,809.96 | 2,103,057,782.41 | 22,793,110,884.09 | 14,534,490,935.91 | 46,750,006,137.36 | |||||
Add: changes in accounting policies | |||||||||||||
Correction of previous errors | |||||||||||||
The consolidation of enterprises under common control | |||||||||||||
Others | |||||||||||||
Ⅱ. Opening balance for the current year | 6,097,402,727.00 | 431,424,524.07 | 826,883,093.84 | -36,363,809.96 | 2,103,057,782.41 | 22,793,110,884.09 | 14,534,490,935.91 | 46,750,006,137.36 | |||||
Ⅲ. Increase/decrease and change of amount for the current period (decrease is represented by “-”) | 47,000,347.59 | 306,669,981.33 | 2,698,065,921.89 | 805,427,225.80 | 3,857,163,476.61 | ||||||||
(I) Total comprehensive income | 266,441,870.74 | 4,858,795,529.42 | 1,203,712,182.47 | 6,328,949,582.63 | |||||||||
(II) Capital injection and reduction by owners | 47,000,347.59 | -4,389.96 | 3,281,460.84 | 50,277,418.47 | |||||||||
1. Ordinary shares invested by shareholders | 3,281,460.84 | 3,281,460.84 | |||||||||||
2. Capital injected by holders of other equity |
instruments | |||||||||||||
3. Amount of shares payment credited to owner’s equity | |||||||||||||
4.Others | 47,000,347.59 | -4,389.96 | 46,995,957.63 | ||||||||||
(III) Profit distribution | -2,085,311,732.63 | -401,292,446.68 | -2,486,604,179.31 | ||||||||||
1. Appropriation to surplus reserves | |||||||||||||
2.Provisions for general risks | |||||||||||||
3.Distribution to owners (or shareholders) | -2,085,311,732.63 | -401,292,446.68 | -2,486,604,179.31 | ||||||||||
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 the period | |||||||||||||
(VI) Others | 40,232,500.55 | -75,417,874.90 | -273,970.83 | -35,459,345.18 | |||||||||
Ⅳ. Closing balance for the period | 6,097,402,727.00 | 431,424,524.07 | 873,883,441.43 | 270,306,171.37 | 2,103,057,782.41 | 25,491,176,805.98 | 15,339,918,161.71 | 50,607,169,613.97 |
Items | Previous period | ||||||||||||
Equity attributable to owners of the parent company | Minority equity | Total owners’ equity | |||||||||||
Share capital | Other equity instruments | Capital reserve | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provisions | Undistributed profits | |||||
Preference share | Perpetual bonds | Others | |||||||||||
Ⅰ. Closing balance for the previous year | 6,097,630,727.00 | 83,383,194.51 | 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 | |||||
Add: changes in accounting policies | |||||||||||||
Correction of previous errors | |||||||||||||
The consolidation of enterprises under common control | 748,523.61 | 2,341,506.77 | 70,372,786.35 | 26,711,159.52 | 100,173,976.25 | ||||||||
Others | |||||||||||||
Ⅱ.Opening balance for the current the period | 6,097,630,727.00 | 83,383,194.51 | 1,041,960.00 | 566,987,435.57 | 2,076,460,077.78 | 17,614,768,751.70 | 11,242,352,161.16 | 37,680,540,387.72 | |||||
Ⅲ.Increase/decrease and change of amount for the period (decrease is represented by “-”) | 232,071,264.01 | -161,578,679.72 | 2,904,711,364.07 | 1,977,325,359.63 | 4,952,529,307.99 | ||||||||
(I) Total comprehensive income | -161,578,679.72 | 4,416,867,240.37 | 825,207,338.25 | 5,080,495,898.90 | |||||||||
(II) Capital injection and reduction by owners | 232,071,264.01 | 1,401,209,001.28 | 1,633,280,265.29 | ||||||||||
1. Ordinary shares invested by shareholders | 231,991,591.90 | 1,401,208,371.06 | 1,633,199,962.96 | ||||||||||
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 distribution | -1,512,155,876.30 | -249,090,979.90 | -1,761,246,856.20 | ||||||||||
1. Appropriation to surplus reserves | |||||||||||||
2. Provisions for general risks | |||||||||||||
3. Distribution to owners (or shareholders) | -1,512,155,876.30 | -249,090,979.90 | -1,761,246,856.20 | ||||||||||
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 the period | |||||||||||||
(VI) Others | |||||||||||||
Ⅳ. Closing balance for the period | 6,097,630,727.00 | 315,454,458.52 | 1,041,960.00 | 405,408,755.85 | 2,076,460,077.78 | 20,519,480,115.77 | 13,219,677,520.79 | 42,633,069,695.71 |
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke
Statement of Changes in Owner’s Equity of the Parent Company
January-June 2018
Unit and Currency: RMB
Items | Current period | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owners’ equity | |||
Preference share | Perpetual bonds | Others | |||||||||
Ⅰ. Closing balance for the previous period | 6,097,402,727.00 | 2,317,907,947.71 | -43,234,737.77 | 1,437,313,649.93 | 2,128,502,328.76 | 11,937,891,915.63 | |||||
Add: changes in accounting policies | |||||||||||
Correction of previous errors | |||||||||||
Others | |||||||||||
Ⅱ.Opening balance for the current period | 6,097,402,727.00 | 2,317,907,947.71 | -43,234,737.77 | 1,437,313,649.93 | 2,128,502,328.76 | 11,937,891,915.63 | |||||
Ⅲ.Increase/decrease and change of amount for the period (decrease is represented by “-”) | 253,883.52 | 29,755,847.62 | -1,930,274,897.33 | -1,900,265,166.19 | |||||||
(I) Total comprehensive income | 14,666,831.86 | 183,354,864.09 | 198,021,695.95 | ||||||||
(II) Capital injection and reduction by owners | 253,883.52 | 253,883.52 | |||||||||
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 | |||||||||||
4. Others | 253,883.52 | 253,883.52 | |||||||||
(III) Profit distribution | -2,085,311,732.63 | -2,085,311,732.63 | |||||||||
1. Appropriation to surplus reserves | |||||||||||
2. Distribution to owners (or shareholders) | -2,085,311,732.63 | -2,085,311,732.63 |
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 | 15,089,015.76 | -28,318,028.79 | -13,229,013.03 | ||||||||
IV. Closing balance for the period | 6,097,402,727.00 | 2,318,161,831.23 | -13,478,890.15 | 1,437,313,649.93 | 198,227,431.43 | 10,037,626,749.44 |
Items | Previous period | ||||||||||
Share capital | Other equity instruments | Capital reserve | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owners’ equity | |||
Preference share | Perpetual bonds | Others | |||||||||
Ⅰ. Closing balance for the 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 | 2,258,102,166.73 | 11,795,253,354.87 | ||||
Add: changes in accounting policies | |||||||||||
Correction of previous errors | |||||||||||
Others | |||||||||||
Ⅱ. Opening balance for the current period | 6,097,630,727.00 | 2,061,597,739.78 | 1,041,960.00 | -10,881,603.15 | 1,389,846,284.51 | 2,258,102,166.73 | 11,795,253,354.87 | ||||
Ⅲ. Increase/decrease and change of amount for the period (decrease is represented by “-”) | 29,180.39 | -13,603,497.91 | -1,359,176,442.73 | -1,372,750,760.25 | |||||||
(I) Total | -13,603,49 | 152,979,4 | 139,375,93 |
comprehensive income | 7.91 | 33.57 | 5.66 | ||||||||
(II) Capital injection and reduction by owners | 29,180.39 | 29,180.39 | |||||||||
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 | |||||||||||
4.Others | 29,180.39 | 29,180.39 | |||||||||
(III) Profit distribution | -1,512,155,876.30 | -1,512,155,876.30 | |||||||||
1. Appropriation to surplus reserves | |||||||||||
2.Distribution to owners (or shareholders) | -1,512,155,876.30 | -1,512,155,876.30 | |||||||||
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 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 |
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke
III. General Information of the Company1. Overview of the Company
√Applicable □Not ApplicableThe 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 Bankof China, Qingdao Branch on 16 December 1989, approved by Qing Ti Gai [1989] No.3 on 24 March1989, based on the reconstruction of the original Qingdao Refrigerator Factory, a limited company wasset up by directional fund raising of RMB150 million. In March and September 1993, as approved bythe document of Qing Gu Ling Zi [1993] No. 2 and No. 9 issued by the pilot leading team of Qingdaojoint stock company, the Company was converted from a directional offering company to a publicsubscription company, and issued additional 50 million shares to the public and listed with trading onSSE 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 LaoshanDistrict, 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 productsand 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 30August 2018. According to the Article of Association, these financial statements will be provided forconsideration and approval of the general meeting.
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 Statements1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis accordingto 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 accountingstandards 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) ofCSRC 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 thereporting period and there is no significant events affecting its ability to continue as a going concern.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATESTips of specific accounting policies and accounting estimation:
√Applicable □Not Applicable
According to the characteristics of its production and operation, the Company formulated a seriesof specific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.11); the measurement of inventories (Note V.12); the depreciation andamortization of the investment properties (Note V.14); the depreciation of fixed assets (Note V.15); theamortization of intangible assets (Note V.18); the criterion for determining of long-term assetsimpairment (Note V.19); and the date of revenue recognition (Note V.24), etc..
1. Statement of compliance with enterprise accounting standards
The financial statements prepared by the Company meet the requirements of the enterpriseaccounting standards, which accurately and completely reflected information relating to the financialcondition as of 30 June 2018, operation result and cash flow of the Company in January to June 2018.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same yearin solar calendar.
3. Operating cycle
√Applicable □Not Applicable
The Company takes 12 months as an operating cycle, which is also the classification basis for theliquidity of its assets and liabilities.
4. Recording currencyRMB is the recording currency of the Company.
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 entitiesinto one reporting entity. Enterprise combinations are classified into enterprise combinations undercommon control and enterprise combinations not under common control.
(1) Enterprise combinations under common controlAn enterprise combination under common control is an enterprise combination in which all of thecombining entities are ultimately controlled by the same party or parties both before and after thecombination, and that control is not transitory. For enterprise combination under common control, theparty that obtains the control over the other parties on the combination date is the acquirer, and otherparties involving in the enterprise combination are the acquiree. The combination date is the date onwhich 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 undercommon control is paid by ways of cash, transfer of non-cash assets or assumption of debts, theCompany 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 asat the date of combination, investment cost of long-term equity investment is calculated as zero. In casethe acquiree is controlled by the ultimate controller by the enterprise combination under non-commoncontrol before combination, the initial investment cost of the long-term equity investment of the acquirerincludes relevant goodwill. The Company should adjust the capital reserve (capital premium or sharepremium) in accordance with the differences between initial investment cost of the long-term equityinvestment 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 theelimination, 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 aggregatenominal value of shares issued will be deemed as the share capital. The difference between the initialinvestment cost of long-term equity investments and aggregate nominal value of shares issued shall be
adjusted to capital reserve (capital premium or share premium), in case the capital reserve (capitalpremium or share premium) is insufficient for the elimination, the surplus reserves and undistributedprofits shall be used to dilute such expenses in order.
Intermediary fees (such as audit, legal services and valuation consultancy) and other relevantmanagement fees incurred in the enterprises combination by the acquirer are credited in profit or loss inthe period when they occurred. Trading expenses in direct relation to the issuance of equity instrumentas the consideration for the combination is written down to the capital reserve (share premium), wherethe capital reserve (share premium) is insufficient, and to surplus reserves and undistributed profits inorder. Trading expenses in direct relation to the issuance of debt instrument as the consideration for thecombination is included in the initial recognition amount of the debt instrument.
For 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 acquiredthe control; in case of not a package transaction, in the financial statement of parent company the capitalreserve ( share premium) is adjusted by the difference between the initial investment cost and the sum ofthe carrying value of the original long-term equity investment and the book value of the new paymentconsideration for further acquisition of shares with the share of acquirer's owner's equity on the date ofcombination in case calculated on the proportion of shareholding on the date of combination as its initialinvestment cost; where the capital reserve is insufficient, the retained earnings will be used to offset suchexpenses.
In the consolidated financial statements, the long-term equity investment held by the combiningparty 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 underthe common control of the same party and the date of combination, are written down to the retainedearnings or current profit or loss at the beginning of the comparative reporting period, respectively.
(2) Enterprise combinations involving entities not under common controlAn enterprise combination not under common control is an enterprise combination in which all ofthe combining entities are not ultimately controlled by the same party or parties both before and after the
combination. For enterprise combination not under common control, the party that obtains the control ofthe other parties at the combination date is the acquirer; other parties involving in the enterprisecombination are the acquirees. The combination date is the date on which the acquirer effectivelyobtains control of the acquirees.
In enterprise combination involving entities not under common control, the cost of combinationshall be the sum of the assets paid, obligations incurred or assumed and the fair value of the equitysecurities 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 relevantmanagement fees incurred by the acquirer for the purpose of enterprise combination are credited inprofit or loss in the period when they occurred. Transaction fees for the equity instruments or debtinstruments issued by the acquirer as combination consideration is included in the initial recognitionamount of such equity instruments or debt instruments. Contingent consideration involved shall berecorded as the combination cost based on its fair value on the acquisition date. Should any new orfurther evidence arises within 12 months after the acquisition date and makes it necessary to adjust thecontingent consideration on the acquisition date, the goodwill arising from the enterprise combinationshall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in an enterprisecombination 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 isrecognized as goodwill; where the cost of combination is lower than the acquirer’s interest in the fairvalue 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 ofcontingent liabilities and combination cost, and where the combination cost is still lower than the fairvalue of the identifiable net assets of the acquiree obtained during the course of combination, then thedifference is recorded in the current profit and loss.
In enterprise combination involving entities not under common control that is realized in phasesthrough multiple exchange transactions, in the individual financial statements of parent company, thesum of the book value of the equity investment of the acquiree held before the date of acquisition and
the cost of new investment on the date of acquisition are recognized as the initial investment cost of suchinvestment.
In the consolidated financial statement, the equity of the acquiree held before the date of acquisitionis re-measured at the fair value on the date of acquisition, and the difference between the fair value andbook value is included in current investment income; where the equity of the acquiree held before thedate of acquisition involves the other comprehensive income, such equity and relevant othercomprehensive income are transferred to current investment income on the date of acquisition, otherthan 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 dateand the fair value of the considerations paid for the acquisition of the new equity on the acquisition dateare regarded as the combination costs of the Company, comparing with aquirer's share of the fair valueon the acquisition date of the acquiree's net identifiable assets on the proportion of the shareholding onthe acquisition date to confirm the goodwill that required to be recognized on the acquisition date or theamount 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 statementsThe Company incorporated all of its subsidiaries (including the separate entities controlled by theCompany) 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 Companyand 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 statementsThe consolidated financial statements shall be prepared on the basis of the balance sheets of theCompany 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 parentcompany, as minority equity interests, shall be presented as “minority equity interest” under the owners’
equity item in the consolidated balance sheet.
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: Treasurystock” under the owners’ equity item in the consolidated balance sheet.
(4) Accounting treatment of subsidiaries acquired from combinationFor 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 statementsfrom the beginning of the period in which the combination took place, as if the combination has takensince the ultimate controller began its control. When preparing the consolidated financial statements, forthe subsidiaries acquired from enterprise combination under non-common control, separate financialstatement will be adjusted on the basis of their fair values of the identifiable net assets on the date ofacquisition.
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 torelevant assets and obligations of this arrangement. The Company recognizes the following items inrelation to its interest in a joint operation, and accounts the same in accordance with relevant accountingstandards for business enterprises:
(1) recognize the assets held solely by the Company, and recognize assets held jointly by theCompany in appropriation to the share of the Company; (2) recognize the obligations assumed solely bythe Company, and recognize obligations assumed jointly by the Company in appropriation to the shareof the Company; (3) recognize revenue from disposal of joint operations in appropriation to the share ofthe 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 operationsin 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 notconstitute a business, the same below) from joint operations, the Company shall only recognize the partof profit or lost from this transaction attributable to other parties of joint operations before these assetsare 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 assetsof 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 V.
8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available forpayment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquidinvestments held by the Company that are readily convertible to known amounts of cash and which aresubject to an insignificant risk on change in value.
9. Foreign currency businesses and translation of foreign currency statements
√Applicable □Not Applicable
(1) Translation of Foreign currency transactionsIf foreign currency transactions occur, they are translated into the amount of functional currency byapplying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currencies at therates 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 inthe other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using the spotexchange rate prevailing on the date when transaction occurred and its functional currency shall remainunchanged. Non-monetary items denominated in foreign currencies that are measured at fair value aretranslated using the foreign exchange rate at the date the fair value is determined; the exchangedifferences between the translated and original amounts of functional currencies are recognized in thestatement of profit or loss or other comprehensive income as changes in fair value (including changes inexchange rate).
(2) Translation of foreign currency financial statementsIf the functional currencies used as the bookkeeping base currency by the subsidiaries, joint venturesand associates under the control of the Company are different from that of the Company, their financialstatements denominated in foreign currencies shall be translated to perform accounting and prepare theconsolidated 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 aretranslated 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 “othercomprehensive 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 onthe transaction date. The impact of exchange rate changes on cash amount is reflected separately in thecash flow.
When disposing overseas operations, the translation difference related to the overseas operationshall be transferred together or as the percentage of disposing the overseas operation to profit or loss forthe period of disposal.
10. Financial instruments
√Applicable □Not Applicable
(1) Classification, recognition and measurement of financial instrumentsA financial asset or a financial liability is recognized when the Company becomes a contractualparty of a financial instrument. Financial assets and financial liabilities are measured at fair value uponinitial recognition. Related transaction costs are recorded directly in current profit or loss for financialassets and financial liabilities at fair value with its change consolidated in profit/loss, or included in theamount 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 theprice receivable from the exchange of an asset or payable for the settlement of a liability in a fairtransaction between knowledgeable and willing counterparties. The fair value of financial instrumentswhere there is an active market is determined based on the quoted price in such market, which refers tothe 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 valuationtechniques. Such techniques include reference to prices used in recent market transactions betweenknowledgeable and willing counterparties, reference to the current fair value of another instrumentwhich is substantially the same, discounted cash flow analysis and option pricing models or othervaluation models.
Financial assets are classified into financial assets at fair value with its change consolidated inprofit/loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assetsupon initial recognition. Classification of financial asset other than receivables is based on the purposeand 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 inprofit/loss and other financial liabilities.
Financial assets at fair value with its change consolidated in profit/loss include financial assets heldfor trading and financial assets designated as at fair value with its change consolidated in profit/loss. Allfinancial assets at fair value with its change consolidated in profit/loss of the Company are financialassets 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 thederivatives linked to an equity instrument investment, which has no quoted price in an active market nora reliably measured fair value, and required to be settled through delivery of that equity instrument. Afinancial 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 andrelated 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 orlosses 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 asinvestment income; on disposal, the differences between the consideration received and initialrecognized amount are recognized as investment income and the gain or loss from changes in fair valueshall be adjusted accordingly.
Held-to-maturity investments are non-derivative financial assets that have fixed or determinablepayments and fixed maturity and for which the Company has the positive intention and ability to hold tomaturity. Held-to-maturity investments are measured subsequently at amortized cost by using theeffective interest rate method. Gains or losses arising from de-recognition, impairment or amortizationare recognized in the profit or loss in 2016.
The effective interest method is a method of calculating the amortized cost of a financial asset andof 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 effectiveinterest rate is the rate that discounts future cash flows from the financial asset or financial liability overits expected life or (where appropriate) a shorter period to the carrying amount of the financial asset orfinancial liability. In calculating the effective interest rate, the Company will estimate the future cashflows (excluding future credit losses) by taking into account all contract terms relating to the financialassets or financial liabilities whilst considering various fees, transaction costs and discounts or premiumswhich are part of the effective interest rate paid or received between the parties to the financial assets orfinancial liabilities contracts.
Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. Financial assets, including Notes 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 inprofit/loss for the period.
Available-for-sale financial assets include non-derivative financial assets designated asavailable-for-sale at initial recognition, and the financial assets other than financial assets at fair valuewith 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 arisingfrom changes in fair value, except for impairment losses and exchange difference related to monetaryfinancial assets and amortized cost which are recognized in profit or loss, are recognized in othercomprehensive 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 financialassets and cash dividends declared by investees are recognized in investment incomes. On disposal, thedifferences between the consideration received and the carrying amount of assets after deducting theaccumulated fair value adjustments previously recorded in capital reserves are recorded as investmentincome. However, an equity instrument investment which has no quoted price in an active market nor areliably measured fair value, and a derivative financial asset (or derivative financial liability) linked tosuch equity instrument and required to be settled through delivery of that equity instrument are measuredat 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 dateof relevant contracts, and subsequently measured at fair value. Expect for the derivative financialinstruments designated as hedging instruments with a highly effective hedging, of which the profit orloss arising from the changes in fair value will be included in the corresponding profit or loss dependingon the nature of hedging relations and the accounting requirements of hedging tools, the changes in thefair 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 fromthe hybrid instrument, where the hybrid instrument is not designated as a financial asset or financialliability at fair value with its change consolidated in profit/loss, and treated as a stand-alone derivative ifthe economic characteristics and risks of the embedded derivative are not closely related to those of thehost contract, and a separate instrument with the same terms as the embedded derivative would be incompliance with the definition of a derivative. If the Group is unable to measure the embeddedderivative separately either at acquisition or at a subsequent balance sheet date, it will designate theentire hybrid instrument as a financial asset or financial liability at fair value with its changeconsolidated in profit/loss.
Equity instruments refer to the contracts proving the ownership of the remaining equities in theassets 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 contractright 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 returnarising from the ownership of the financial asset.
When the Company does not either assign or maintain substantially all the risk and rewards ofownership 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 assetand recognizes the relevant liability accordingly. The extent of the continuous involvement is the extentto 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 recognizedin profit or loss in the period: the carrying amount and the sum of the consideration received and anyaccumulated changes in fair value that had been recognized originally and directly in capital reserve. If apart of the financial assets qualifies for derecognition, the carrying amount of the financial asset isallocated 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 isrecognized in profit or loss in the period when the carrying amount of the part that qualifies forderecognition and the sum of the consideration received and any accumulated changes in fair value thathad been recognized originally and directly in capital reserve.
Financial assets and financial liabilities are offset and the net amount is reported in the balancesheet if there is currently an enforceable legal right to offset the recognized financial assets and financialliabilities and there is an intention to settle on a net basis, or to realize the assets and settle the liabilitiessimultaneously. Otherwise, financial assets and financial liabilities are presented separately in thebalance sheet without being offset.
(3) Classification, recognition and measurement of financial liabilitiesThe Company classifies financial liabilities and equity instruments according to the substance ofthe contractual arrangements of the financial instrument and the definitions of a financial liability and anequity instrument. Financial liabilities are classified as financial liabilities at fair value with its changeconsolidated 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 financialliabilities held for trading and financial liabilities designated as at fair value with its change included inprofit 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 repurchasein 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 thederivatives linked to an equity instrument investment, which has no quoted price in an active market nora 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 andfinancial 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 informationabout the grouping is reported to key management personnel on that basis; or ③ pursuant toAccounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments,
the financial liability is designated as combination instrument of financial liabilities measured at fairvalue through current profit or loss and related to embedded derivatives.
Financial liabilities at fair value with its change consolidated in profit or loss are subsequentlymeasured at fair value. The gain or loss arising from changes in fair value and dividend and interestincomes 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 throughdelivery of the equity instruments that are not quoted in an active market and the fair value of whichcannot be reliably measured, such equity instruments are subsequently measured at cost. Other financialliabilities apart from the financial guarantee contracts are subsequently measured at amortized cost usingthe effective interest rate method and the gains or losses arising from de-recognition or amortization arerecognized in profit or loss in the period.
Financial guarantee contracts: Contracts in which the guarantor and the creditor agrees that theguarantor will settle debts or assume liabilities in accordance with terms therein if the debtor fails tomake payment. Financial guarantee contracts other than those designated as financial liabilities at fairvalue with its change consolidated in profit/loss or loan commitments that are not designated at fairvalue with its change consolidated in profit/loss and granted at a rate below market rates are initiallyrecognized at fair value less directly attributable transaction fees, and shall be subsequently measured atthe 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 partlyderecognized 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 existingfinancial liability, and the contract terms of the new financial liability are substantially different with theexisting financial liability, the existing financial liability shall be derecognized, and the new financialliability shall be recognized at the same time. If a financial liability is fully or partially derecognized, thedifference between the book value of derecognized portion and the consideration paid (includingnon-cash assets transferred out or new financial liability assumed) is recognized in current profit or loss.
(4) Impairment of financial assetsThe carrying values of all financial assets except financial assets at fair value with its changeincluded in profit or loss should be tested for impairment. If impairment is demonstrated by objectiveevidences, the provision of impairment should be prepared according to the impairment test.
Objective evidences for recognition of impairment of financial asset include the followingobservable 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 assetswould decrease and be measurable, or the ability to repay by the debtors in that group of financial assetdeteriorate, or the unemployment rate of the country or region in which the debtors situate increases, orthe price of the underlying collateral decreases significantly in its region, or the industry of the debtors isdiminishing;
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 itsinvestment 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 singleamounts. With regard to the financial assets with insignificant single amounts, an independentimpairment test shall be included in a combination of financial assets with similar credit riskcharacteristics so as to carry out an impairment test. In the event, upon independent test, the financialasset (including those financial assets with significant single amounts and those with insignificantamounts) has not been impaired, it shall be included in a combination of financial assets with similarcharacteristics so as to conduct another impairment test. Financial assets that have conductedindependent test as impairment loss shall not be included in a combination of financial assets withsimilar risk characteristics so as to conduct another impairment test.
When held-to-maturity investments, loans and accounts receivables have been impaired, the bookvalue of the financial assets shall be written down to the current value of estimated future cash flowdiscounted at the original effective interest rate, and the write-down amount is recorded as impairmentloss and written into profit or loss of the period. When a financial asset based on amortized cost isimpaired, if there are objective evidences showing the value of this financial asset is recovered and it isobjectively related to the matters happened after the impairment loss recognition, the impairment lossrecognized shall be reversed. However, the reversal shall not result in a carrying amount of the financialasset that exceeds the amortized cost if the impairment had not been recognized at the date when theimpairment is reversed.
If an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fairvalue that had been recognized directly in other comprehensive income is reclassified to current profit orloss. The cumulative loss reclassified is the difference between its acquisition cost (net of any principalrepayment and amortization) and its current fair value, less any impairment loss previously recognizedin profit or loss. If there are objective evidences that the value of that financial asset is recovered and itcan be objectively related to an event occurred after the impairment loss recognition, the impairment lossrecognized shall be reversed, impairment losses recognized for equity instruments classified as
available-for-sale are reversed through other comprehensive income, while impairment lossesrecognized for debt instruments classified as available-for-sale are reversed through current profit orloss.
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 tothat 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 onfuture cash flows of the similar financial assets, and the write-down amount shall be recognized asimpairment 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 in their fair value | Decrease in closing fair value relative to the cost has reached or exceeded 50%. |
Specific quantitative criterion on “not temporary” decrease in their fair value | Fall for 12 consecutive months. |
11. Receivables
Receivables of the Company include trade receivables and other receivables. Recognition andprovision of bad debts of receivables:
(1) Individually significant receivables for which separate bad-debt provision is madeIndividually significant receivables represent the receivables accounting for above 5% of the closingbalance. The Company conducted a separate impairment test for receivables that are individuallysignificant on the balance sheet date and made provision for its bad debts based on the differencebetween the present value of its estimated future cash flows and its carrying amount.
(2) Individually insignificant receivables for which separate bad-debt provision is madeIndividual impairment test is made where there is a concrete evidence indicates that there is anobvious difference in recoverability, and bad debts provision is made based on the difference betweenthe 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 intoseveral portfolio and then recognize the impairment loss and make bad debts provision of the balance ofthe receivables on the balance sheet date.
12. Inventories
√Applicable □Not Applicable
(1)Classification of inventories:
Inventories refer to the finished goods or commodities held for sale in daily activities, goods inprogress in the production process, consumed materials and supplies in the production process orproviding services of the Company, which mainly include raw materials, revolving materials, entrustedprocessed materials, wrap page, low-cost consumables, goods in progress, self-made semi-finishedgoods, 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.
(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, merchandise and materials forsale) that can be sold directly is determined using the estimated saleable price of such inventorydeducted by the cost of sales and relevant taxation. The net realizable value of materials in inventory thatare held for production is determined using the estimated saleable price of the finished product deductedby the cost to completion, estimated cost of sales and relevant taxation. The net realizable value ofinventory held for performance of sales contract or labor service contract is determined based on thecontractual 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 thesame 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 quantityand low value items of inventories, cost and net realizable value of inventories may be determined ontypes of inventories.
Provision for impairment of inventories is made and recognized as current profit or loss when thecost is higher than the net realizable value on the balance sheet date. If the factors that give rise to theprovision in prior years are not in effect in current year, provision would be reversed within the impairedcost, 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 thatgive it control, joint control or significant influence over the investee. Long-term equity investmentswhere the Company does not exercise control, joint control or significant influence over the investee areaccounted for as available-for-sale financial assets.
(1)Recognition of initial cost of investment①For long-term equity investment obtained from business consolidation under common control, theinitial 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 undernon-common control, the initial cost is the consolidation cost at the date of acquisition;
②For 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 totalpurchase 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 requirementsunder Accounting Standards for Enterprises No. 12 - Debt Restructuring. For long-term equityinvestment acquired by the exchange of non-monetary assets, the initial investment cost shall berecognized in accordance with relevant requirements under the Rules.
(2)Subsequent measurement and profit or loss recognition
①Cost method
Where the investor has a control over the investee, long-term equity investments are measuredusing 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.
②Equity method
Investor's long-term equity investments in associates and joint ventures are measured using equitymethod. Where part of the equity investments of an investor in its associates are held indirectly throughventure investment institutions, common fund, trust companies or other similar entities includinginvestment linked insurance funds, such part of equity investments indirectly held by the investor shallbe 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 equityinvestments, 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-termequity investment is adjusted accordingly.
For long-term equity investments accounted for using the equity method, the Company recognizesthe investment income and other comprehensive incomes according to its share of net profit or loss andother comprehensive incomes of the investee, and the carrying amount of the long-term equityinvestments 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 inowner’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 adjustedand recognized to capital reserve. When recognizing attributable share of the net profit and losses of theinvestee, the net profit of the investee shall be recognized after adjustment on the ground of the fairvalue of all identifiable assets of the investee when it obtains the investment. If the accounting policiesand accounting periods adopted by the investee are different from those adopted by the Company, anadjustment shall be made to the financial statements of the investee in accordance with the accountingpolicies and accounting periods of the Company and recognize the investment incomes and othercomprehensive 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 profitor 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 ofunrecognized losses.
(3)Change of the accounting methods for long-term equity investments①Change 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 areaccounted according to the financial instrument recognition and measurement criteria can carry outcommon control or place significant impact due to addition of investment which resulted in the increaseof shareholding, the investee shall plus the fair value of the equity investment originally held determinedin accordance with the Standards for Recognition and Measurement of Financial Instruments and the fairvalue of the consideration payable for new investment as the initial investment cost accounted underequity method when changing the equity method.
②Change 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 impactand accounted according to the financial instrument recognition and measurement criteria, or thelong-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 investmentformed by combination of enterprises.
③Change 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 cannotconduct common control or significant impact on the investee due to the decrease of shareholding as aresult of factors such as partial disposal, shall be accounted in accordance with Standards forRecognition and Measurement of Financial Instruments, and the difference between the fair value on thedate when the common control or significant impact is lost and the book value is included in currentprofit or loss.
④Change 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, thelong-term equity investment cost that ceased to be recognized shall first be carried forward on theproportion of the investment disposed. Then comparing the cost of the remaining long-term equityinvestment with the attributable fair value of the identifiable net assets of the investee at the originalinvestment calculated on proportion of the remaining shareholding, where the former larger than thelater, it belongs to the goodwill as showed in deciding the investment price and will not adjust thecarrying amount of the long-term equity investment; where the former less than the later, the retainedearnings 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 investee①Joint 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, acquisitionand disposal of assets, research and development activities and financing activities, etc.
②Significant 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 below20%, 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;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 thelong-term equity investments. When there is impairment indicator, the recoverable amount is determinedthrough impairment test and impairment is provided based on the difference between the recoverableamount 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 andthe carrying amount of the disposed investment is recognized in profit or loss. For long-term equityinvestment accounted for using the equity method, the part recognized in other comprehensive income isaccounted on pro rata basis upon disposal in the same way as the relevant assets or liabilities aredisposed 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 subsequentmeasurement.
The buildings leased out of investment properties of the Company are depreciated over their usefullives using the straight-line method. The specific measurement policy is the same as fixed assets. Forland use rights leased out or held for resale after appreciation in value, they are amortized over theiruseful lives using the straight-line method. The specific measurement policy is the same as that ofintangible assets.
At the balance sheet date, the Company reviews whether there is impairment indicator forinvestment properties. When there is impairment indicator, the recoverable amount is recognizedthrough an impairment test and impairment is provided based on the difference between the carryingvalue 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 recognizedwhen 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, productionequipment, transportation equipment and office equipment, etc. The straight-line method over usefullives is used to measure depreciation. The useful lives and the expected net residual value of fixed assetsare determined according to the nature and usage of various fixed assets. At the end of each year, theuseful lives, expected net residual value and depreciation method of fixed assets are reviewed, andadjusted if there is variance with original policies; The Company have made provisions for all of thefixed 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年 | 0%-5% |
Machinery equipment | 4-20年 | 0%-5% |
Vehicles | 5-10年 | 0%-5% |
Office equipment and others | 3-10年 | 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 fixedassets. When there is an impairment indicator, the recoverable amount is estimated and impairment isprovided based on the difference between the carrying value and the recoverable amount once theimpairment of an asset is recognized, it will not be reversed in the subsequent accounting period.
(4)Basis for Recognition, measurement of fixed assets held under finance lease
Basis for recognition of fixed assets held under finance lease: leases that transfer all the risks andrewards 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 istransferred 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 termapproximates 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 areinitially recognized at the lower of fair value of the leased assets at the inception of lease and the presentvalue of minimum lease payments. Subsequent measurement of fixed assets held under finance lease isaccounted 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 iscompleted and ready for its intended use, which shall satisfy one of the following conditions:
①The construction of the fixed assets (including installation) has been completed or substantially
completed;
②The 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 operatenormally;
③Further expenditure incurred for construction is very minimal or remote;④The 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 thereis any sign of impairment and an impairment test is needed to recognize the recoverable amount whenthere are signs that construction in progress may impair. The impairment loss should be the lower of thecarrying value and recoverable amount and impairment loss cannot be reversed in the followingaccounting period if it has been provided.
The recoverable amount of construction in progress should base on the higher value between fairvalue 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 capitalizationThe 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 asexpenses 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 capitalizationof borrowing costs, excluding the periods in which capitalization of borrowing costs is suspended.
Capitalization interruption period: Capitalization of borrowing costs is suspended during periods inwhich the acquisition or construction of a qualifying asset is interrupted abnormally and the interruptionlasts 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 assetexceeding the asset expenses of the portion of special borrowings multiplied by the capitalization ratioof 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 theeffective interest rates.
18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical shape and arepossessed or controlled by the Company.
(1)Measurement of intangible assets
Intangible assets are initially recognized at costs. The actual costs of purchased intangible assetsinclude the consideration and relevant expenses paid. For intangible asset contributed by investors, thevalue agreed in the investment contract or agreement is the actual cost of the intangible asset. But if thevalue agreed in the investment contract or agreement is not a fair value, the fair value of the intangibleasset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditureincurred 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 eachyear end date. If there is objective evidence that the useful life of an intangible asset is finite, theintangible 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 economicbenefits generated by the intangible asset could not be determined, or the useful life could not beascertained.
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
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 arereviewed. The assessment is performed by the departments that use the intangible assets, using thedown-to-top approach, to determine if there are changes to the determining basis of indefinite usefullives.
(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 anindication of impairment and an impairment test is needed to recognize the recoverable amount whenthere are signs that intangible assets may impair. The impairment provision should be the lower of therecoverable amount and carrying value and provision for impairment loss cannot be reversed in thefollowing accounting periods once it has been provided.
The recoverable amount of intangible assets should be based on the higher value between the net offair 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 isrecognized 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 ofcompleting the intangible asset so that it will be available for use or for sale; ② the intention tocomplete 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 orthe 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 otherresources 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 anddevelopment project: research stage is the activities carried out for the planned investigation and searchfor 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 knowledgeobtained 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 pinpointingand is very likely to form results. All the expenditures on research and development which cannot bedistinguished between research stage and development stage are recognized in the current profit or losswhen 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 isany indication that an asset may be impaired at the balance date. If the result of the impairment testindicates that the recoverable amount of the asset is less than its carrying amount, a provision forimpairment 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 andrecognized on the individual asset basis. If it is not possible to estimate the recoverable amount of anindividual asset, the recoverable amount of a group of assets to which the asset belongs is determined. Agroup 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 fromenterprise combination, shall be allocated to the related asset groups on reasonable basis since theacquisition 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 groupportfolios, it shall be allocated in the proportion of the fair value of each asset group or asset groupportfolio against the total fair value of related asset groups or asset group portfolios. If it is difficult tomeasure the fair value reliably, it shall be allocated in the proportion of the carrying amount of eachasset group or asset group portfolio against the total carrying amount of related asset groups or assetgroup portfolios.
When impairment test is made to the related asset groups or asset group portfolios includinggoodwill, if there is an indication that the related asset groups or asset group portfolios are prone toimpair, the Company shall firstly test for impairment for the asset groups or asset group portfoliosexcluding goodwill and calculate the recoverable amount and recognize the impairment loss accordinglyby comparing with its carrying amount. The Company shall then test for impairment for the asset groupsor asset group portfolios including goodwill and compare the carrying amount (including the carryingamount of allocated goodwill) with its recoverable amount of related asset groups or asset groupportfolios. Provision for impairment loss shall be recognized when the recoverable amount of the relatedasset 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 subsequentaccounting period.
20. Long-term prepayments
√Applicable □Not Applicable
Long-term prepayments are expenditures which have incurred but the benefit period is more thanone year (excluding one year). They are amortized evenly over the benefit period of each item ofexpenses. 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 bythe 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, injuryinsurance 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 actuallyincurred shall be recognized as liabilities and credited into the current profit and loss or relevant assetscost on an accrual basis for the benefit objects.
Post-employment benefits mainly includes the basic pension insurance, supplementary pension, etc.,In accordance with the risks and obligations undertaken by the Company, the post-employment benefitsis 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 currentprofits or losses or related assets costs in accordance with the benefit objects. Defined benefit plans: thecost of providing benefits is determined using the projected unit credit method, with actuarial valuationsbeing carried out by independent actuary at the interim and the annual balance sheet date. Staffs' benefitcosts 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 servicecost means the increase of the present value of defined benefit obligation resulted from service offeredby employee for the period. Past-service cost means the increase or decrease of the present value ofdefined benefit obligation resulted from the revision of the defined benefit plans related to the priorperiod service offered by employee; (2) interest costs of defined benefit plans; (3) changes related to theremeasurement of defined benefit plans liabilities. Unless other accounting standards require or permit tocharge the employee benefits into assets cost, the Company charges (1) and (2) above into current profitor loss, and recognized (3) above as other comprehensive income without transferring to profit or loss insubsequent accounting periods.
Termination benefits: the indemnity proposal provided by the Company for employees for thepurpose of terminating labor relation with the employees before the expiry of the labor contract orencouraging 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 fromthe indemnity as a result of terminating labor relation with the employees: the Company has made aformal plan for termination of employment relationship or has made an offer for voluntary redundancywhich will be implemented immediately; and the Company could not unilaterally withdraw from thetermination plan or the redundancy offer. Early retirement benefits will adopt same principles as thetermination benefit. The Company will credit the salaries and social benefits intend to pay for these earlyretirees during the periods from the date of early retirement to the normal retirement date to profit or lossof the period when recognition conditions for accrued liabilities are met.
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 commercialacceptance bills, pending litigation or arbitration and product quality assurance is the present obligationof the Company and the performance of such obligation is likely to lead to the outflow of economicbenefits and its amount can be reliably measured, such obligation shall be recognized as estimatedliability.
(2)Measurement of estimated liability
The best estimate of the expenditure from the performance of the current obligation is initiallyrecorded as accrued liability. When the necessary expenditures falls within a range and the probability ofeach result in the range are identical, the best estimate is the median of the range; if there are severalitems 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 objectiveevidence that the carrying value could not reflect the current best estimate, the carrying value is adjustedto 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 shallbe measured at the fair value of equity instruments granted to the employees. For the payment of suchfair value that may only be exercised if services are fulfilled during the vesting period or the specifiedperformance is achieved, the fair value shall, based on the best estimate of the number of exercisableinstruments during the vesting period, be recognized in relevant costs or expenses in straight-linemethod 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 theCompany, which is calculated and determined based on the shares or other equity instruments. For thecash-settled share-based payment that may be exercised immediately after the grant, the fair value of theliability assumed by the Company shall, on the date of the grant, be recognized in relevant costs orexpenses and the liabilities shall be increased accordingly. For cash-settled share-based payment thatmay be exercised if services are fulfilled during the vesting period or the specified performance isachieved, 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 theliability 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 valueof 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 increasesthe fair value of the equity instruments granted, corresponding recognition of service increase inaccordance with the increase in the fair value of the equity instruments; if the modification increases thenumber of equity instruments granted, the increase in fair value of the equity instruments is recognizedas a corresponding increase in service achieved. Increase in the fair value of equity instruments refer tothe difference between the fair values of the equity instrument on the modified date before or after themodification. If the Company modifies the exercisable conditions in such manner conductive to theemployees, including the shortening of the vesting period, change or cancellation of the performanceconditions (rather than market conditions), the Company shall consider the modified exercisableconditions upon the disposal of exercisable conditions. If the modification reduces the total fair value ofshares paid or the Company uses other methods not conductive to employees to modify the terms andconditions of share-based payment plans, it will continue to be accounted for the services obtained in theaccounting treatment, as if the change had not occurred, unless the Company cancelled some or all of theequity 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 inthe current profit or loss, while at the same time recognize the capital reserve. Employees or otherparties 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.
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 thesignificant 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 isprobable 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 inthe 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 salesapplication, 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 services
At the balance sheet date, when the outcome of a transaction involving the rendering of services canbe estimated reliably, revenue from provision of services shall be recognized using the percentage ofcompletion method. The Company confirms the completion progress in accordance with the ratio ofactual cost accounting for the total estimated cost. At the balance sheet date, when the outcome of thetransaction 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 servicesmay be recognized.
(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 berecognized 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 withtransaction 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 completionschedule of a contract project according to the proportion of the completed total contract cost against theexpected 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 Companyfrom the government for free, not including the investment made by the government as an owner. Thegovernment grants are mainly divided into asset-related government grants and revenue-relatedgovernment 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.
(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 formsa 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 asrevenue-related government grant.
Government grant received without clear objective shall be classified as asset-related governmentgrant 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 ifnecessary 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 isevenly amortized to the current profit or loss over the estimated useful life of the relevant asset startingfrom 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 thereis clear evidence that the conditions set out in the financial subsidy policies and regulation are fulfilledand the receipt of such financial subsidy is assured.
Other government grants other than those measured at the amounts receivables are recognized uponactual 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 aliability (items not recognized as assets and liabilities but their tax base is ascertained by the current taxlaws and regulation, the tax base is the difference), deferred income tax asset or deferred income taxliability is calculated using the applicable tax rate prevailing at the expected time of recovering therelevant asset or discharging the relevant liability.
(2) Deferred income tax asset is recognized to the extent that there is enough taxable income forthe utilization of the deductible temporary difference. At the balance sheet date, if there is sufficientevidence that there would be enough taxable benefit for the utilization of the deductible temporarydifference, the deferred income tax asset not previously recognized is recognized in current period. Ifthere is no sufficient evidence that there would be enough future taxable income for the deduction of thedeferred 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 frominvestments in subsidiaries and associated companies, unless the Company could control the reversal ofthe temporary differences and the temporary differences would not be probably reversed in theforeseeable future. For deductible temporary differences arising from investments in subsidiaries andassociated companies, deferred income tax asset is recognized if the temporary difference will be veryprobably reversed in foreseeable future and there will be sufficient future taxable profit to deduct thedeductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from theinitial recognition of goodwill. No deferred income tax asset or deferred income tax liability isrecognized for the temporary differences resulting from the initial recognition of assets or liabilities dueto a transaction other than a business combination, which affects neither accounting profit nor taxableprofit (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 realizedor 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 areattributable 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 theCompany, the Company shall deduct that part of expense from the rent and amortize the net amount overthe lease term and credited to current expense.
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 involvingleasing transactions paid by the Company are credited into current expenses, in case the amount issignificant, it will be capitalized, and are credited into current revenue on the same basis as rentalincome recognized over the lease term.
When the Company bears the lease related expenses which should be undertaken by the lessee, theCompany shall deduct that part of expense from the total rent income, and allocate the rental paymentover 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 leasebeginning 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 isaccounted for as unrecognized finance charge.
The unrecognized finance charge is amortized using the effective interest method over the period ofthe lease and accounted in finance charge. Initial direct costs incurred by the Company are credited invalue 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 isrecognized as rental income over the period of receiving rental. Initial direct costs attributable to leasetransaction incurred by the Company shall be accounted in the initial measurement of finance leasereceivables and reduced the amount of recognized during period of the lease.28. Other significant accounting policies and accounting estimations
√Applicable □Not Applicable
(1) Share repurchases
When the Company purchases its own shares to decrease its registered capital or reward its staff, itshall 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-basedpayment agreement, it shall be included in capital reserve (equity premium) against the differencebetween the book balance of awarded treasury stock and the staff-paid cash and capital reserverecognized upon the granting of equity instruments.
When cancelling the treasury stock, the share capital shall be cancelled against the total face valueof the cancelled treasury stock; the treasury stock shall be eliminated against the book balance of thecancelled 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 holdssubordinated asset-backed securities which are not transferrable before both the principals and interestsof 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 annualasset disposal plan, formulation and implementation of the asset disposal plan, signing relevant assetdisposal agreements and periodic preparation of asset service report. Meanwhile, the Company, as theliquidity support organization, provides liquidity support before the principals of the senior asset-backedsecurities are fully repaid to make up the differences of the interests or principals. Trust assets areprioritized to repay the principals and interests of the senior asset-backed securities after the trust taxesand relevant fees are paid, and the remaining trust assets upon the full repayment of the principals andinterests will be owned by the Company as returns of the subordinated asset-backed securities. The trustassets are not derecognized because the Company retains substantially all the risks and rewards. At thesame time, the Company has de facto controls over the special purpose entity which are consolidatedinto our financial statements.
The Company evaluates the extent to which it transfers the risks and rewards of ownership of theassets 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;
②The financial asset is continued to recognize when the Company retains substantially all the risks
and rewards of ownership of the financial asset;
③When 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 financialasset. If the Company does not retain control, it derecognizes the financial asset and recognizesseparately as assets or liabilities any rights and obligations created or retained in the transfer. If theCompany retains control, it continues to recognize the financial asset to the extent of its continuinginvolvement in the financial asset.
(3) Hedge accounting
①Hedges are classified as:
1) A fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset orliability 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 attributableto 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 exchangerisk associated with a net investment in a foreign operation. Net investment in a foreign operation is theshare of interest in the net asset of the foreign operation.
②Designation of the hedge relationship and recognition of the effectiveness of hedging:
At the inception of a hedge relationship, the Company formally designates the hedge relationshipand prepares documents relating to the hedge relationship, the risk management objective and itsstrategy 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 ofthe 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 anongoing basis and judged whether it has been highly effective throughout the accounting periods forwhich the hedging relationship was designated. A hedge is regarded as highly effective if both of thefollowing conditions are satisfied:
1) at the inception and in subsequent periods, the hedge is expected to be highly effective inoffsetting changes in fair value or cash flows attributable to the hedged risk during the period for whichthe hedge is designated;
2) the actual results of offsetting are within a range of 80% to 125%.
③Method 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. Thechange in the fair value of the hedged item attributable to the risk hedged is recorded as a part of thecarrying 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 tocarrying value of the hedged items is amortized through the current profit or loss over the remainingterm from adjustment to maturity. Amortization based on the effective interest method may begin assoon as an adjustment is made to the carrying amount and shall not be later than when the hedged itemceases 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 thecurrent profit or loss.
When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulativechange in the fair value of the firm commitment attributable to the hedged risk is recognized as an assetor liability with a corresponding gain or loss recognized in the current profit or loss. The changes in thefair 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 capitalreserve (other capital reserve), while the ineffective portion is recognized immediately in the currentprofit or loss.
Amounts taken to capital reserve (other capital reserve) are transferred to the current profit or losswhen the hedged transaction affects the current profit or loss, such as when hedged financial income orfinancial expense is recognized or when a forecast sale occurs. Where the hedged item is the cost of anon-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 theamounts originally recognized in capital reserve (other capital reserve) will be transferred to the currentprofit or loss for in the same period when the profit or loss are affected by the non-financial asset ornon-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 withoutreplacement or rollover, or if its designation as a hedge is revoked, the amounts previously recognized inother comprehensive income remain in there until the forecast transaction or firm commitment affectsthe 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 aportion of net investment, its treatment is similar to cash flow hedge. The portion of the gain or loss on ahedging instrument that is determined to be an effective hedge is included in other comprehensiveincome. 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
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, whileapplying 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 liabilitiespresented 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 thecurrent 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 aboveshall be reviewed on a going concern basis. If the revisions to accounting estimates only affected theperiod, relevant adjustment due to the effect shall be recognized in the period; if the revision affects boththe 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 assumptionsabout financial report items are listed as follows:
① Estimated liability
Provision for product quality guarantee, estimated onerous contracts, and other estimates shall berecognized in accordance with the terms of contract, current knowledge and historical experience. If thecontingent event has formed a practical obligation which probably results in outflow of economicbenefits from the Company, an estimated liability shall be recognized on the basis of the best estimate ofthe 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 otherfactors related to the contingent events. Among them, the Company will undertake estimated liabilitieswith 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 ordecrease in this provision is likely to affect the profits and losses of the next year.
②Provision for bad debts
The allowance method is adopted for bad debts according to accounting policies of accountsreceivables. Impairment losses for receivables are assessed on the basis of recoverability, as a result ofjudgments and estimates of the management. The difference between actual outcome and the previouslyestimated outcome will influence the carrying value of receivables and accrual or reversal of provisionfor bad debts during the period accounting estimates are changed.
③Provision of impairment of inventories
Inventories are measured by lower of historical cost or net realizable value method according to theaccounting policies of inventories; for obsolete and unsalable inventories or whose costs are higher thanthe net realizable, provision for impairment of inventories shall be incurred. The carrying value ofinventory 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 inventoriesand the effect of events after the balanced sheet date and etc. The difference between the actual outcomeand the previously estimated outcome will influence the carrying value of inventories and the provisionor reversal of impairment of inventories during the period accounting estimates are changed.
④Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine the fairvalue 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 volatilityand correlation, and select the appropriate discount rate. Such related assumptions are uncertain, andtheir changes may affect the fair value of financial instruments.
⑤Impairment of available-for-sale financial assets
The determination of whether impairment loss shall be recognized in income statement foravailable-for-sale financial asset is significantly depends on the judgments and assumptions of themanagement. While making judgments and assumptions, it shall be take into consideration that howmuch the fair value of the investment is lower than the cost and its continuity, the financial position andshort-term business projection of the investee, including industry conditions, technological innovation,
the credit ratings, probability of violation and counterparts’ risks.
⑥Provision for long-term assets impairment
On the balance sheet date, the Company shall judge whether there is any possible indication ofimpairment against non-current assets other than financial assets. The intangible assets with indefiniteuseful life must be tested for impairment on an annual basis as well as when there is any indication ofimpairment. Other non-current assets other than financial assets shall be tested for impairment whenthere is an indication showing that the carrying value is not recoverable. Impairment occurs while thecarrying value of an asset or asset group is higher than the recoverable value, which is the higher of thenet of fair value deducted disposal expenses and the present value of expected future cash flow. The netof fair value deducted by disposal expenditure is determined with reference to the price in the saleagreement regarding analogous asset, and observable market price less the increase of cost that directlyattributable 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 presentvalue shall be made when determining the present value of future cash flows. Recoverable amount shallbe estimated by using all accessible relevant information, including production amount, sales price, andrelevant operating costs predictions made based on reasonable and supportive assumptions. TheCompany shall test for goodwill impairment at least every year. This requires the Company to estimatethe present value of future cash flows for such assets groups or asset group portfolios allocated withgoodwill. When estimating the present value of future cash flows, the Company shall not only estimatethe future cash flows generated by such asset groups or asset group portfolios, and select the appropriatediscount rate to determine the present value of such future cash flows.
⑦Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and amortized by astraight-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 foreach reporting period and be determined on the basis of historical experience regarding analogous assetsand the expected technological innovation. Significant changes to previous accounting estimates willresult in adjustments against depreciation and amortization expenses in the future periods.
⑧Deferred income tax assets
Deferred income tax asset is recognized for all the uncompensated tax losses to the extent that thereis sufficient taxable income for the deduction of loss. In order to determine the amount of deferred taxassets, the management of the Company needs to predict the timing and the amount of taxable profits inthe future by taking into account a large amount of judgment, as well as the strategy of tax planning.
⑨Income tax
There are certain transactions the tax treatment and calculations undertaken during the ordinarycourse of business for which the ultimate tax determination is uncertain. Whether some items could bepresented before taxation shall be approved by relevant tax authorities. Where the final tax outcome ofthese matters is different from the initial estimated amount, such differences will impact the current anddeferred tax in the period of confirmation.
⑩Returned 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, themarket situation, the pipeline inventory levels and the historical experiences, the Company and itssubsidiaries estimate and make returned profits from sales on a regular basis with reference to thecompletion of agreed assessment indexes. Provisions of returned profits from sales involve the judgmentand estimates of the management. In case of any significant changes in the previous estimates, thedifference above will have an impact on the returned profits from sales during the period whensignificant changes occur.
29. CHANGES ON SIGNIFICANT ACCOUNTING POLICES AND ACCOUNTING
ESTIMATES
(1)、Changes on Significant Accounting Policies□Applicable √Not Applicable
(2)、Changes on Significant Accounting Estimates□Applicable √Not Applicable
VI. Taxation1. Main tax types and tax ratesDetails of 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 taxable labor services revenue | 5%, 6%, 11%, 16% |
Urban maintenance and construction tax | Turnover tax amount payable | 7% |
EIT | Tax amount payable | Statuary tax rate or preferential rates as follows |
(Local) education surcharges | Turnover tax amount payable | 1%, 2%, 3% |
Disclosure of tax entities with different EIT rates
□Applicable √Not Applicable
2. Preferential tax
√Applicable □Not Applicable
Companies enjoying preferential tax and preferential tax rate:
Name of company | Tax rate | Preferential tax |
Qingdao Haier Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Refrigerator Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Intelligent Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Special Refrigerator Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Dishwasher Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Special Freezer Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Intelligent Home Appliance Technology Co., Ltd | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Wuhan Haier Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Wuhan Haier Freezer Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Hefei Haier Refrigerator Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Hefei Haier Air-conditioning Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Zhengzhou Haier Air-conditioning Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Shenyang Haier Refrigerator Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Chongqing Haier Air-conditioning Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Refrigeration Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Guizhou Haier Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Qingdao Haier Air-Conditioner Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Moulds Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Meier Plastic Powder Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Chongqing Haier Precision Plastic Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Intelligent Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Qingdao Haigao Design & Manufacture Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Technology Co., Ltd. | 10% | significant software enterprise tax preferential |
Qingdao Hairi High Technology Molding Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier (Jiaozhou) Air-Comditioner Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Beijing Haier Guangke Digital Technology Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Intelligent Technology Development Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Foshan Haier Freezer Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Wuhan Haier Energy and Power Co., Ltd. | 10% | entitled to the preferential policies as a small and micro enterprise |
Shanghai Haier Zhongzhifang Maker Space Management Co., Ltd.(上海海尔众智坊创客空间管理有限公司) | 10% | entitled to the preferential policies as a small and micro enterprise |
Hefei Haier Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Jiaonan Haier Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Drum Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Foshan Shunde Haier Electric Appliance | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Economy and Technology Development Zone Haier Water Heater Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Wuhan Haier Water Heater Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Foshan Drum Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier Goodaymart Logistic Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Qingdao Haier New Energy Electric Appliance Co., Ltd.(青岛海尔新能源电器有限公司) | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
Shengfeng Supply Chain Co., Ltd. (盛丰供应链有限公司) | 15% | entitled to the preferential taxation for enterprises in Pingtan Comprehensive Experimental Area |
Chongqing Goodaymart Electronics Sales Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Home Appliance Sale Co., Ltd. and some branches in western region | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Goodaymart Electronics Sales Co., Ltd. and some branches in western region | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Water Heater Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
Chongqing Haier Drum Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative |
VII. Explanatory Notes for Items in Consolidated Financial Statements
Unless otherwise specified, the following closing balance means the amount as at 30 June 2018;opening balance means the amount as at 31 December 2017; current period means the amount incurredfrom 1 January to 30 June 2018, while the previous period means the amount incurred from 1 January to30 June 2017.
1. Monetary funds√Applicable □Not Applicable
Unit and Currency: RMB
Items | Closing balance | Opening balance |
Treasury cash | 698,625.89 | 513,781.37 |
Bank deposit | 30,859,017,076.82 | 32,994,884,486.17 |
Other monetary funds | 2,608,221,131.55 | 2,181,878,636.37 |
Total | 33,467,936,834.26 | 35,177,276,903.91 |
Among which: total of overseas amounts | 3,404,026,327.40 | 7,732,752,678.06 |
Other explanatory
An amount of RMB13,939,454,951.97 of the monetary fund was deposited in Haier Group FinanceCo., Ltd. on 30 June 2018, the balance of which including a fixed term bank deposit ofRMB195,000,000.00. The investment fund in the closing balance of other monetary fund wasRMB1,223,917,432.91, the payment of the third party platform was RMB101,396,403.97 and theamount of deposits was RMB1,282,907,294.67.
2. Derivative financial assets√Applicable □Not Applicable
Unit and Currency: RMB
Items | Closing balance | Opening balance |
Forward foreign exchange sale and purchase agreement | 40,947,728.30 | 20,681,695.50 |
Total | 40,947,728.30 | 20,681,695.50 |
3. Notes receivable
(1). Categories of Notes receivable
√Applicable □Not Applicable
Unit and Currency: RMB
Items | Closing balance | Opening balance |
Bank acceptance notes | 688,629,971.26 | 1,946,518,710.06 |
Commercial acceptance bill | 11,519,508,594.06 | 11,086,564,810.93 |
Total | 12,208,138,565.32 | 13,033,083,520.99 |
(2)The pledged Notes receivable of the Company at the end of the period was RMB
10,672,285,824.52.
4. Accounts receivables
(1)Accounts receivables disclosed by categories:
Items | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for 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 debts on portfolio basis | 17,174,744,274.32 | 268,553,582.55 | 12,803,484,274.71 | 355,479,441.65 |
Accounts receivables that are individually insignificant but are subject to provision for bad debts on individual basis | 113,291,273.51 | 113,291,273.51 | 88,400,865.52 | 88,400,865.52 |
Total | 17,288,035,547.83 | 381,844,856.06 | 12,891,885,140.23 | 443,880,307.17 |
√Applicable □Not Applicable
(2)Accounts receivables of which provision for bad debts is made within the group:
Aging | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for bad debts | |
Within 1 year | 16,853,769,572.70 | 256,957,057.15 | 12,477,896,240.89 | 339,251,644.04 |
1-2 years | 140,519,655.88 | 5,561,809.25 | 178,439,139.22 | 8,870,352.87 |
2-3 years | 130,680,210.93 | 4,599,469.31 | 121,898,217.63 | 6,094,910.89 |
Over 3 years | 49,774,834.81 | 1,435,246.84 | 25,250,676.97 | 1,262,533.85 |
Total | 17,174,744,274.32 | 268,553,582.55 | 12,803,484,274.71 | 355,479,441.65 |
(3)The total amount of the top 5 in the accounts receivables at the end of the period was RMB6,446,253,513.62, accounting for 37.29% of the book balance of the accounts receivables, and theamount of provision for bad debts was RMB 62,522,768.63.
(4)Provisions for bad debts made, collected or reversed in the period:
Provisions for bad debts in the amount of RMB 41,168,449.83 were reverted in the period.(5)Accounts receivable written off in the period:
The bad debts written off in 2017 were RMB 10,804,087.08, and there was no significant accountsreceivable written off in the period.
(6)Restricted trade receivables in the period:
Trade receivables mortgaged and pledged for securing borrowings were RMB 4,027,213,632.11.
5. Prepayments
(1). Aging of prepayments
√Applicable □Not Applicable
Unit and Currency: RMB
Aging | Closing balance | Opening balance | ||
Amount | Proportion (%) | Amount | Proportion (%) | |
Within 1 year | 578,819,699.61 | 87.32 | 500,715,555.59 | 84.77 |
1-2 years | 46,963,726.21 | 7.08 | 71,155,092.86 | 12.05 |
2-3 years | 26,381,077.32 | 3.98 | 11,070,761.72 | 1.87 |
Over 3 years | 10,735,757.07 | 1.62 | 7,752,248.04 | 1.31 |
Total | 662,900,260.21 | 100.00 | 590,693,658.21 | 100.00 |
(2)The total amount of the top 5 in the prepayments at the end of the period was RMB 142,171,371.23,
accounting for 21.45% of the book balance of the prepayments.
6. Interest receivables
Aging | Closing balance | Opening balance | ||
Book balance | Proportion | Book balance | Proportion | |
Within 1 year | 237,294,144.94 | 98.09% | 202,405,171.56 | 99.39% |
1-2 years | 4,617,291.33 | 1.91% | 1,232,372.27 | 0.61% |
Total | 241,911,436.27 | 100.00% | 203,637,543.83 | 100.00% |
7. Other receivables
(1)Other receivables disclosed by categories:
Items | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for 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 made on a group basis | 893,993,897.28 | 28,411,130.32 | 989,277,529.42 | 28,013,547.55 |
Individual insignificant other receivables of which provision for bad debts is made on an individual basis | 47,523,424.67 | 47,523,424.67 | 48,882,935.05 | 48,882,935.05 |
Total | 941,517,321.95 | 75,934,554.99 | 1,038,160,464.47 | 76,896,482.60 |
(2)Other receivables of which provision for bad debts is made on portfolio basis:
Aging | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for bad debts | |
Within one year | 750,333,461.50 | 22,548,649.73 | 873,640,986.50 | 22,317,036.56 |
1-2 years | 85,678,706.51 | 3,472,500.09 | 60,265,756.01 | 2,927,971.65 |
2-3 years | 30,718,969.68 | 1,450,084.92 | 21,037,477.39 | 1,051,873.86 |
Over 3 years | 27,262,759.59 | 939,895.58 | 34,333,309.52 | 1,716,665.48 |
Total | 893,993,897.28 | 28,411,130.32 | 989,277,529.42 | 28,013,547.55 |
(3) At the end of the period, total amount of top five other receivables was RMB 210,498,195.75,representing 22.36% of the book balance of other receivables, and the amount of provision for bad debtswas RMB 1,750,000.00.
(4) Bad-debt provisions made, collected or reversed in the period:
Provisions for bad debts in the amount of RMB 2,436,120.66 were made in the period.(5) The other receivables actually written off in the period was RMB 3,343,491.44.(6) Other receivables mainly include the deposit, the quality retention money, staff borrowing, taxrefunds, and advance money for another, etc.
8. Inventories
(1)Details of inventories
Items | Closing balance | Opening balance |
Book balance | Impairment Provision | Book balance | Impairment Provision | |
Raw materials | 2,768,478,339.49 | 41,202,173.80 | 3,459,878,187.81 | 33,888,186.04 |
Work in progress | 115,584,274.92 | 212,212,549.56 | ||
Unsettled payments of completed projects | 214,481,301.96 | 187,935,341.58 | ||
Finished goods | 20,177,061,361.84 | 728,107,386.90 | 18,374,187,900.35 | 696,800,993.08 |
Total | 23,275,605,278.21 | 769,309,560.70 | 22,234,213,979.30 | 730,689,179.12 |
(2) Impairment provision of inventories
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
Provisions for the period | Other increase | Reversal | Write-off and others | |||
Raw materials | 33,888,186.04 | 7,603,733.47 | 261,558.60 | 28,187.11 | 41,202,173.80 | |
Finished goods | 696,800,993.08 | 204,516,648.95 | 2,864,501.37 | 170,345,753.76 | 728,107,386.90 | |
Total | 730,689,179.12 | 212,120,382.42 | 3,126,059.97 | 170,373,940.87 | 769,309,560.70 |
(3)Unsettled payments of completed projects from the construction contracts at the end of the
period
Items | Accumulated cost incurred | Accumulatively recognized gross profit | Settled Amounts | Unsettled payments of completed projects from the construction contracts |
Amount | 1,003,760,368.89 | 205,449,971.85 | 994,729,038.78 | 214,481,301.96 |
9. Assets held for sale and liabilities held for sale
Items | Closing balance | Opening balance |
Assets held for sale | 1,233,866,625.56 | |
Liabilities held for sale | 296,505,653.77 | |
Net amount held for sale | 937,360,971.79 |
The Company intends to dispose 58.08% equity of Shengfeng Logistics Group Co., Ltd
(hereinafter referred to as “Shengfeng Logistics”) at a consideration of RMB 0.798 billion in the period
for business planning consideration. After the disposal, the Company will no longer hold any equityinterests of Shengfeng Logistics. The equity disposal agreement provides that change in businessregistration and transfer of actual control shall be completed within one year, which includes update of
shareholders’ joint operation agreement; update of Article of Associations; Appointment of directors by
new shareholders and dismissal of directors by Goodaymart Logistic, etc.
10. Other current assets
(1)Details of other current assets
Items | Closing balance | Opening balance | ||
Book balance | Impairment Provision | Book balance | Impairment Provision | |
Bank Treasury deposit | 2,231,850,307.37 | 2,007,051,839.54 | ||
Deductable VAT | 1,741,330,986.94 | 7,980,978.65 | 1,941,860,551.67 | |
Others | 724,119,192.93 | 440,847,627.62 | ||
Total | 4,697,300,487.24 | 7,980,978.65 | 4,389,760,018.83 |
(2)Impairment provision of other current assets
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
Provisions for the period | Other increase | Reversal | Write-off and others | |||
Deductible VAT | 7,980,978.65 | 7,980,978.65 | ||||
Others | ||||||
Total | 7,980,978.65 | 7,980,978.65 |
11. Available-for-sale financial assets
(1)Information of available-for-sale financial assets:
Items | Closing balance | Opening balance | ||||
Carrying Balance | Provision for impairment | Book value | Carrying balance | Provision for impairment | Book value | |
Available-for-sale equity instrument | ||||||
At fair value | 1,435,064,752.28 | 1,435,064,752.28 | 26,931,420.99 | 26,931,420.99 | ||
At cost | 153,615,971.20 | 30,225,000.00 | 123,390,971.20 | 1,418,647,886.83 | 30,225,000.00 | 1,388,422,886.83 |
Total | 1,588,680,723.48 | 30,225,000.00 | 1,558,455,723.48 | 1,445,579,307.82 | 30,225,000.00 | 1,415,354,307.82 |
(2)Available-for-sale financial assets at fair value at the end of the period:
Categories of available-for-sale financial assets | Available-for-sale equity instrument |
Cost of equity instrument | 1,305,411,286.65 |
Fair value | 1,435,064,752.28 |
Accumulated fair value changes credited into other comprehensive income | 116,462,955.50 |
Allowance for impairment |
(3)Movement in impairment of available-for-sale financial assets during the reporting period:
Item | Provision for impairment of available-for-sale equity instrument |
Provision balance at the beginning of the period | 30,225,000.00 |
Provision made in 2018 | |
Decrease in 2018 | |
Allowance for impairment amounts at the end of the period | 30,225,000.00 |
12. Long-term equity investments√Applicable □Not Applicable
Investees | Opening balance | Increase╱decrease during the period | ||||
Investments increased | Investment income recognized under equity method | Adjustment in other comprehensive income | Other changes in equity | Declaration of cash dividends or profits | ||
Associates: | ||||||
Haier Group Finance Co., Ltd. | 4,682,887,227.73 | 329,018,613.88 | 23,160,510.46 | |||
Bank of Qingdao co., Ltd. | 2,462,624,099.78 | 126,969,897.23 | 40,527,018.36 | -77,995,640.00 | ||
Haier Medical and Laboratory Products Co., Ltd. | 332,230,371.89 | 18,665,089.87 | ||||
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 118,897,337.40 | 1,085,772.63 | ||||
Qingdao Haier Software Investment Co., Ltd. | 17,899,331.07 | -30.81 | ||||
Qingdao Haier SAIF Smart Home Industry Investment Center (limited partnership) | 270,536,881.98 | |||||
Qingdao Haier Special Steel Plate Research and Development Co., Ltd. | 106,068,803.08 | |||||
Hefei Haier Special Steel Plate Research and Development Co., Ltd. | 140,494,521.67 | |||||
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 529,934,750.95 | 38,033,746.45 | -56,772,000.00 | |||
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 305,185,137.09 | 6,006,028.41 | ||||
Beijing Mr. Hi Network Technology Company Limited | 3,757,759.75 | |||||
Qingdao Haier | 543,768,6 | 6,102,089.30 |
Multi-media Co., Ltd. | 56.24 | |||||
Beijing Xiaobei Technology Co., Ltd. | 2,687,341.82 | |||||
Beijing ASU Tech Co., Ltd. | 27,977,441.33 | -12,972,276.93 | ||||
Qingdao HBIS New Material Technology Co. Ltd(青岛河钢新材料科技有限公司) | 246,563,324.75 | 8,181,770.11 | ||||
Guangzhou Heying Investment Partnership (Limited Partnership)(广州合赢投资合伙企业(有限合伙)) | 152,047,535.44 | |||||
China Shengfeng Microfinance limited in Jin’an District of Fuzhou City | 80,226,595.74 | 203,120.76 | ||||
Fujian ATL-Shengfeng Logistics Co., Ltd. | 13,117,748.43 | |||||
Qingdao Jiavayun Network Technology Co., Ltd. (青岛家哇云网络科技有限公司) | 1,755,356.84 | -353,653.58 | ||||
Qingdao JSH Network Technology Co. Ltd. | 5,511,749.00 | |||||
Hunan Electronic Co., Ltd. (湖南电机株式会社) | 64,856,526.75 | 1,953,995.60 | 1,511,839.86 | -264,154.48 | ||
HNR COMPANY (PRIVATE) LIMITED | 91,578,227.62 | 15,255,570.62 | -4,448,841.20 | |||
HPZ LIMITED | 80,588,570.01 | 1,879,469.24 | 1,066,314.42 | |||
CONTROLADORA MABE S.A.deC.V. | 2,985,062,320.58 | 42,484,513.97 | 24,980,259.95 | |||
MiddleEast Air conditioning Company, Limited | 22,050,543.42 | -1,580,766.44 | 232,792.47 | |||
Total | 13,013,767,394.28 | 274,540,766.08 | 580,932,950.31 | 87,029,894.32 | -135,031,794.48 |
Continued table
Investees | Increase/decrease during the period | Closing balance | Closing balance of provision for impairment | |
Others | The disposal of the investment | |||
Associates: | ||||
Haier Group Finance Co., Ltd. | 5,035,066,352.07 | |||
Bank of Qingdao Co., Ltd. | -35,459,345.18 | 2,516,666,030.19 | ||
Haier Medical and Laboratory Products Co., Ltd. | 350,895,461.76 | |||
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 119,983,110.03 | |||
Qingdao Haier Software Investment Co., Ltd. | 17,899,300.26 |
Qingdao Haier SAIF Smart Home Industry Investment Center (limited partnership) | 270,536,881.98 | |||
Qingdao Haier Special Steel Plate Research and Development Co., Ltd. | -106,068,803.08 | |||
Hefei Haier Special Steel Plate Research and Development Co., Ltd. | -140,494,521.67 | |||
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 511,196,497.40 | |||
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 311,191,165.50 | -21,000,000.00 | ||
Beijing Mr. Hi Network Technology Company Limited | 3,757,759.75 | |||
Qingdao Haier Multi-media Co., Ltd. | 549,870,745.54 | |||
Beijing Xiaobei Technology Co., Ltd. | 2,687,341.82 | |||
Beijing ASU Tech Co., Ltd. | 15,005,164.40 | |||
Qingdao HBIS New Material Technology Co. Ltd(青岛河钢新材料科技有限公司) | 254,745,094.86 | |||
Guangzhou Heying Investment Partnership (Limited Partnership)(广州合赢投资合伙企业(有限合伙)) | 152,047,535.44 | |||
Shengfeng Microfinance limited in Jin’an District of Fuzhou City | -80,429,716.50 | |||
Fujian ATL-Shengfeng Logistics Co., Ltd. | -13,117,748.43 | |||
Qingdao Jiavayun Network Technology Co., Ltd. (青岛家哇云网络科技有限公司) | 1,401,703.26 | |||
Qingdao JSH Network Technology Co. Ltd. | 5,511,749.00 | |||
Hunan Electronic Co., Ltd. (湖南电机株式会社) | 68,058,207.73 | |||
HNR COMPANY (PRIVATE) LIMITED | 102,384,957.04 | |||
HPZ LIMITED | 83,534,353.67 | |||
CONTROLADORA MABE S.A.deC.V. | 3,052,527,094.50 | |||
MiddleEast Air conditioning Company Limited | 20,702,569.45 | |||
Total | -35,459,345.18 | -340,110,789.68 | 13,445,669,075.65 | -21,000,000.00 |
13. Investment properties
(1)Increase and decrease of investment property under cost model for the year are set out as
follows:
Items | House, buildings | Land use rights | Total |
I. Original value | |||
1.Opening balance | 44,408,479.02 | 2,128,550.51 | 46,537,029.53 |
2.Increase for the period | |||
(1)Outsourced | |||
(2)Inventories\fixed assets\construction in progress transferred | 347,500.00 | 347,500.00 |
(3)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | |||
(2)Other transferring out | |||
Impact of fluctuation in exchange rate for the period | 311,192.00 | 311,192.00 | |
4.Closing balance | 45,067,171.02 | 2,128,550.51 | 47,195,721.53 |
II. Accumulated depreciation and accumulated amortization | |||
1.Opening balance | 14,853,338.04 | 469,675.50 | 15,323,013.54 |
2.Increase for the period | |||
(1)provision or amortization | 851,057.75 | 20,118.11 | 871,175.86 |
3.Decrease for the period | |||
(1)Disposal | |||
(2)Other transferring out | |||
Impact of fluctuation in exchange rate for the period | 44,056.86 | 44,056.86 | |
4.Closing balance | 15,748,452.65 | 489,793.61 | 16,238,246.26 |
III. Provision for impairment | |||
1.Opening balance | |||
2.Increase for the period | |||
(1)Provision | |||
3、Decrease for the period | |||
(1)Disposal | |||
(2)Other transferring out | |||
4.Closing balance | |||
IV. Book value | |||
1.Book value at the end of the period | 29,318,718.37 | 1,638,756.90 | 30,957,475.27 |
2.Book value at the beginning of the period | 29,555,140.98 | 1,658,875.01 | 31,214,015.99 |
(2)Depreciated and amortized amount for the current period was RMB 871,175.86 .(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.
14. Fixed assets
Projects | Houses and buildings | Production equipment | Transportation equipment |
I. Original value | |||
1.Opening balance | 8,703,459,923.10 | 15,481,104,152.38 | 288,062,860.51 |
2.Increase amount for the period | |||
(1)Acquisition | 77,341,110.30 | 120,206,848.18 | 3,132,410.90 |
(2)Transfer into construction in progress | 77,064,914.36 | 477,923,850.95 | 25,535,754.67 |
(3)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -17,548,341.82 | -399,396,221.73 | -10,929,865.45 |
(2)Disposal of subsidiaries | |||
(3)Transfer into held for sale | -171,460,105.94 | -16,042,322.05 | -73,091,329.82 |
Impact of fluctuation in exchange rate for the period | 14,012,790.41 | 61,703,290.85 | -776,369.88 |
4.Closing balance | 8,682,870,290.41 | 15,725,499,598.58 | 231,933,460.93 |
II. Accumulated depreciation | |||
1.Opening balance | 2,504,185,797.82 | 6,292,261,294.47 | 144,327,969.99 |
2.Increase for the period | |||
(1)Provision | 215,088,009.26 | 880,437,104.10 | 15,452,707.34 |
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -6,619,572.50 | -353,210,658.55 | -10,413,738.26 |
(2)Disposal of subsidiaries | |||
(3)Transfer into held for sale | -22,411,152.92 | -9,777,327.57 | 8,335,803.08 |
Impact of fluctuation in exchange rate for the period | 3,910,590.77 | 27,917,182.42 | -505,368.52 |
4.Closing balance | 2,694,153,672.43 | 6,837,627,594.87 | 157,197,373.63 |
III. Provision for impairment | |||
1. Opening balance | 30,703,168.88 | 11,490,036.50 | 2,019.29 |
2.Increase for the period | |||
(1)Provision |
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -110,190.08 | ||
Impact of fluctuation in exchange rate for the period | 863,774.00 | 47,070.80 | |
4.Closing balance | 31,566,942.88 | 11,426,917.22 | 2,019.29 |
IV. Book value | |||
1.Book value at the end of the period | 5,957,149,675.10 | 8,876,445,086.49 | 74,734,068.01 |
2.Book value at the beginning of the period | 6,168,570,956.40 | 9,177,352,821.41 | 143,732,871.23 |
Continued table
Items | Office equipment | Other | Total |
I. Original value | |||
1.Opening balance | 359,368,775.40 | 687,992,144.77 | 25,519,987,856.16 |
2.Increase for the period | |||
(1)Acquisition | 19,781,702.09 | 30,543,129.96 | 251,005,201.43 |
(2)Transfer into construction in progress | 12,853,719.22 | 37,310,537.76 | 630,688,776.96 |
(3)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -28,445,459.55 | -18,157,754.46 | -474,477,643.01 |
(2)Disposal of subsidiaries | -22,099.15 | -22,099.15 | |
(3)Transfer into held for sale | -26,279,861.14 | -286,873,618.95 | |
Impact of fluctuation in exchange rate for the period | -1,497,148.23 | -1,538,089.27 | 71,904,473.88 |
4.Closing balance | 362,061,588.93 | 709,848,008.47 | 25,712,212,947.32 |
II. Accumulated depreciation | |||
1.Opening balance | 191,480,416.39 | 327,884,084.08 | 9,460,139,562.75 |
2.Increase for the period | |||
(1)Provision | 17,722,512.15 | 39,844,685.91 | 1,168,545,018.76 |
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -3,768,795.66 | -5,244,383.32 | -379,257,148.29 |
(2)Disposal of subsidiaries | -4,986.63 | -4,986.63 |
(3)Transfer into held for sale | -15,605,475.58 | -39,458,152.99 | |
Impact of fluctuation in exchange rate for the period | -716,241.46 | -365,962.07 | 30,240,201.14 |
4.Closing balance | 204,717,891.42 | 346,507,962.39 | 10,240,204,494.74 |
III. Provision for impairment | |||
1.Opening balance | 129,692.63 | 42,324,917.30 | |
2.Increase for the period | |||
(1)Provision | |||
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal or Write-off | -110,190.08 | ||
Impact of fluctuation in exchange rate i for the period | 910,844.80 | ||
4.Closing balance | 129,692.63 | 43,125,572.02 | |
IV. Book value | |||
1.Book value at the end of the period | 157,343,697.51 | 363,210,353.45 | 15,428,882,880.56 |
2.Book value at the beginning of the period | 167,888,359.01 | 359,978,368.06 | 16,017,523,376.11 |
(1)Total fixed asset transferred from construction-in-progress balance for the period amounted to
RMB 630,688,776.96.
(2)The pledged fixed assets were RMB 54,292,507.31 at the end of the period.
15. Construction in progress
(1). General information on Construction in progress
√Applicable □Not Applicable
Unit and currency: RMB
Projects | Closing balance | Opening balance | ||||
Carrying Balance | Provision for impairment | Book value | Carrying Balance | Provision for impairment | Book value | |
Intelligent kitchen (智慧厨房项目) | 170,181,357.33 | 170,181,357.33 | 35,666,458.97 | 35,666,458.97 | ||
Qingdao medical refrigeration appliances (青岛特种制冷电器项目) | 116,259,304.80 | 116,259,304.80 | 166,981.10 | 166,981.10 |
Hefei Air-Conditioner | 116,224,367.60 | 116,224,367.60 | 25,181,280.17 | 25,181,280.17 | ||
Hefei Refrigerator | 98,511,618.08 | 98,511,618.08 | 55,478,420.33 | 55,478,420.33 | ||
Hefei Electrical Air-Conditioner | 77,052,787.74 | 77,052,787.74 | ||||
Electrical Air-Conditioner | 53,794,749.16 | 53,794,749.16 | 5,193,377.89 | 5,193,377.89 | ||
Shenyang Refrigerator | 47,535,209.10 | 47,535,209.10 | 50,298,040.73 | 50,298,040.73 | ||
Jiaozhou air-conditioner | 36,710,172.40 | 36,710,172.40 | 5,809,318.63 | 5,809,318.63 | ||
Qingdao Refrigerator | 31,201,435.45 | 31,201,435.45 | 13,248,362.54 | 13,248,362.54 | ||
Qingdao Special Freezer | 28,040,062.89 | 28,040,062.89 | 2,148,406.14 | 2,148,406.14 | ||
Qingdao washing Appliances(青岛洗涤电器项目) | 368,679,854.81 | 368,679,854.81 | 205,964,507.66 | 205,964,507.66 | ||
Tianjing Goodaymart (天津日日新项目) | 193,315,039.43 | 193,315,039.43 | 108,020,326.49 | 108,020,326.49 | ||
Jiaozhou Goodaymart(胶州日日顺项目) | 96,474,077.51 | 96,474,077.51 | 68,395,751.19 | 68,395,751.19 | ||
Nanjing Gooddaymart (南京日日顺项目) | 96,450,984.23 | 96,450,984.23 | 54,845,708.25 | 54,845,708.25 | ||
Hefei Washing machine (合肥洗衣机项目) | 67,387,231.96 | 67,387,231.96 | 4,916,153.85 | 4,916,153.85 | ||
Qingdao Front-loading | 64,587,988.72 | 64,587,988.72 | 10,584,759.60 | 10,584,759.60 | ||
Foshan Front-loading | 50,817,691.39 | 50,817,691.39 | ||||
Jin Zhou logistics | 35,243,742.36 | 35,243,742.36 | 23,284,812.07 | 23,284,812.07 | ||
Harbin Goodaymart (哈尔滨日日顺项目) | 25,770,319.83 | 25,770,319.83 | 15,254,265.96 | 15,254,265.96 | ||
US GEA (美国GEA项目) | 226,759,449.97 | 226,759,449.97 | 274,905,675.53 | 274,905,675.53 | ||
Mexican project (墨西哥项目) | 62,344,304.18 | 62,344,304.18 | 58,343,819.44 | 58,343,819.44 | ||
Others | 519,403,589.45 | 519,403,589.45 | 512,683,703.71 | 512,683,703.71 | ||
Total | 2,582,745,338.39 | 2,582,745,338.39 | 1,530,390,130.25 | 1,530,390,130.25 |
(2)Changes in material construction in progress for the period
Projects | Opening balance | Increase for the period | Transfer to fixed assets | Other deductions | Impact of fluctuation in exchange rate for the period | Closing balance | Source of fund |
Intelligent kitchen (智慧厨房项目) | 35,666,458.97 | 134,514,898.36 | 170,181,357.33 | Self-financing | |||
Qingdao medical refrigeration appliances (青岛特种制冷电器项目) | 166,981.10 | 116,092,323.70 | 116,259,304.80 | Self-financing | |||
Hefei Air-Conditioner | 25,181,280.17 | 99,780,496.91 | 8,737,409.48 | 116,224,367.60 | Self-financing | ||
Hefei Refrigerator | 55,478,420.33 | 60,229,143.34 | 17,195,945.59 | 98,511,618.08 | Self-financing | ||
Hefei Electrical Air-Conditioner | 77,052,787.74 | 77,052,787.74 | Self-financing | ||||
Electrical Air-Conditioner | 5,193,377.89 | 52,277,012.32 | 3,675,641.05 | 53,794,749.16 | Self-financing | ||
Shenyang Refrigerator | 50,298,040.73 | 2,784,198.48 | 5,547,030.11 | 47,535,209.10 | Self-financing | ||
Jiaozhou Air-Conditioner | 5,809,318.63 | 35,462,868.60 | 4,562,014.83 | 36,710,172.40 | Self-financing | ||
Qingdao Refrigerator | 13,248,362.54 | 24,509,693.00 | 6,556,620.09 | 31,201,435.45 | Self-financing | ||
Qingdao Special Freezer | 2,148,406.14 | 27,641,526.31 | 1,749,869.56 | 28,040,062.89 | Self-financing |
Qingdao washing Appliances(青岛洗涤电器项目) | 205,964,507.66 | 163,347,045.27 | 631,698.12 | 368,679,854.81 | Self-financing | ||
Tianjing Goodaymart (天津日日新项目) | 108,020,326.49 | 85,294,712.94 | 193,315,039.43 | Self-financing | |||
Jiaozhou Goodaymart(胶州日日顺项目) | 68,395,751.19 | 28,078,326.32 | 96,474,077.51 | Self-financing | |||
Nanjing Gooddaymart (南京日日顺项目) | 54,845,708.25 | 41,605,275.98 | 96,450,984.23 | Self-financing | |||
Hefei Washing machine | 4,916,153.85 | 65,582,538.25 | 3,111,460.14 | 67,387,231.96 | Self-financing | ||
Qingdao Front-loading | 10,584,759.60 | 60,494,218.71 | 6,490,989.59 | 64,587,988.72 | Self-financing | ||
Foshan Front-loading | 97,887,279.14 | 47,069,587.75 | 50,817,691.39 | Self-financing | |||
Jin Zhou logistics | 23,284,812.07 | 11,958,930.29 | 35,243,742.36 | Self-financing | |||
Harbin Goodaymart (哈尔滨日日顺项目) | 15,254,265.96 | 10,718,276.09 | 202,222.22 | 25,770,319.83 | Self-financing | ||
US GEA (美国GEA项目) | 274,905,675.53 | 214,197,010.27 | 241,839,138.39 | -20,504,097.44 | 226,759,449.97 | Self-financing | |
Mexican project (墨西哥项目) | 58,343,819.44 | 3,531,727.16 | 7,532,211.90 | 62,344,304.18 | Self-financing | ||
Others | 512,683,703.71 | 294,550,994.60 | 279,787,422.88 | 9,210,863.23 | 1,167,177.25 | 519,403,589.45 | Self-financing |
Total | 1,530,390,130.25 | 1,704,059,556.62 | 630,688,776.96 | 9,210,863.23 | -11,804,708.29 | 2,582,745,338.39 |
No impairment provision has been made for construction in progress at the end of the period, and
the book balance equals the book value.
16. Disposals of fixed assets
Items | Closing balance | Opening balance | Reasons of transfer disposals |
International Refrigerator Project | 55,808,808.81 | 55,808,808.81 | Demolition |
Dalian Refrigerator | 55,860.49 | obsolescence disposal | |
Total | 55,864,669.30 | 55,808,808.81 |
17. Intangible assets
(1). General information on intangible assets
√Applicable □Not Applicable
Items | Technical expertise | Concession | Land use tights |
I. Original value | |||
1.Opening balance | 742,607,859.28 | 3,698,357,200.00 | 1,765,843,606.80 |
2.Increase for the period | |||
(1)Acquisition | 1,293,275.47 | 349,011,322.09 | |
(2)Inner R&D | |||
(3)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | |||
(2)Disposal of subsidiaries | |||
(3)Transfer into held for sale | -58,219,505.79 | ||
Impact of fluctuation in exchange rate for the period | 9,063,065.83 | 46,638,400.00 | -1,589,801.11 |
4.Closing balance | 752,964,200.58 | 3,744,995,600.00 | 2,055,045,621.99 |
II. Accumulated amortization | |||
1.Opening balance | 123,656,890.94 | 148,964,464.68 | 182,818,222.79 |
2.Increase for the period | |||
(1)Provision | 36,141,130.31 | 41,880,508.14 | 17,589,464.35 |
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | |||
(2)Disposal of subsidiaries |
(3)Transfer into held for sale | -1,267,907.98 | ||
Impact of fluctuation in exchange rate for the period | 2,522,653.53 | 3,241,960.24 | -362,317.37 |
4.Closing balance | 162,320,674.78 | 194,086,933.06 | 198,777,461.79 |
III. Provision for impairment | |||
1.Opening balance | |||
2.Increase for the period | |||
(1)Provision | |||
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | |||
(2)Disposal of subsidiaries | |||
(3)Transfer into held for sale | |||
Impact of fluctuation in exchange rate for the period | |||
4.Closing balance | |||
IV.Book value | |||
1.Book value at the end of the period | 590,643,525.80 | 3,550,908,666.94 | 1,856,268,160.20 |
2.Book value at the beginning of the period | 618,950,968.34 | 3,549,392,735.32 | 1,583,025,384.01 |
Continued Table
Items | Trademark right | Application management software and others | Total |
I.Original value | |||
1.Opening balance | 620,749,000.00 | 997,531,221.52 | 7,825,088,887.60 |
2.Increase for the period | |||
(1)Acquisition | 39,842,045.89 | 390,146,643.45 | |
(2)Inner R&D | 683,268,017.49 | 683,268,017.49 | |
(3)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | -6,903,507.31 | -6,903,507.31 | |
(2)Disposal of subsidiaries | -18,543,829.64 | -18,543,829.64 | |
(3)Transfer into held for sale | -3,479,171.03 | -61,698,676.82 | |
Impact of fluctuation in exchange rate | 7,828,000.00 | 27,956,711.17 | 89,896,375.89 |
for the period | |||
4.Closing balance | 628,577,000.00 | 1,719,671,488.09 | 8,901,253,910.66 |
II.Accumulated amortization | |||
1.Opening balance | 353,572,422.07 | 809,012,000.48 | |
2.Increase for the period | |||
(1)Provision | 100,501,387.04 | 196,112,489.84 | |
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | |||
(2)Disposal of subsidiaries | -692,531.87 | -692,531.87 | |
(3)Transfer into held for sale | -1,087,102.68 | -2,355,010.66 | |
Impact of fluctuation in exchange rate for the period | 3,703,092.33 | 9,105,388.73 | |
4.Closing balance | 455,997,266.89 | 1,011,182,336.52 | |
III. Provision for impairment | |||
1.Opening balance | 10,890,590.84 | 10,890,590.84 | |
2.Increase for the period | |||
(1)Provision | |||
(2)Increase in enterprise combinations | |||
3.Decrease for the period | |||
(1)Disposal | -928,924.48 | -928,924.48 | |
(2)Disposal of subsidiaries | |||
(3)Transfer into held for sale | |||
Impact of fluctuation in exchange rate for the period | 3,441.62 | 3,441.62 | |
4.Closing balance | 9,965,107.98 | 9,965,107.98 | |
IV.Book value | |||
1.Book value at the end of the period | 628,577,000.00 | 1,253,709,113.22 | 7,880,106,466.16 |
2.Book value at the beginning of the period | 620,749,000.00 | 633,068,208.61 | 7,005,186,296.28 |
The intangible assets arising from inner R&D of the Company take up 12.68% of the originalvalue of intangible assets at the end of the period.
18. Development expenses
Items | Opening balance | Increase for the period | Decrease for the period | Impact of fluctuation of exchange rate for the period | Closing balance | |
Charged to profit or loss for the period | Recognized as an intangible asset | |||||
91ABD.ERPPROGRAM | 952,488,465.55 | 117,458,313.85 | 669,374,165.28 | -5,956,369.72 | 394,616,244.40 | |
Others | 13,562,868.26 | 37,064,273.27 | 39,253.78 | 13,893,852.21 | 595,658.35 | 37,289,693.89 |
Total | 966,051,333.81 | 154,522,587.12 | 39,253.78 | 683,268,017.49 | -5,360,711.37 | 431,905,938.29 |
19. Goodwill
Items | Opening balance | Increase amount for the period | Decrease for the period | Impact of fluctuation in exchange rate for the period | Closing balance |
GEA | 19,418,454,197.34 | 240,377,342.98 | 19,658,831,540.32 | ||
Furniture after-sales service business | 6,123,000.00 | 6,123,000.00 | |||
Shanghai Grand Logistics Co., Ltd. (上海广德 物流有限公司) | 29,079,469.66 | 29,079,469.66 | |||
GREEN one TEC Solarindustrie GmbH | 3,298,757.75 | 3,298,757.75 | |||
Shanghai Boyol New Brothers Supply Chain Management Company Limited | 68,407,241.86 | 68,407,241.86 | |||
Shengfeng Logistics Group Co., Ltd | 317,954,690.69 | 317,954,690.69 | |||
Total | 19,843,317,357.30 | 317,954,690.69 | 240,377,342.98 | 19,765,740,009.59 |
The Company calculates the recoverable amount of the asset groups by estimating the present valueof future cash flows. According to the cash flows in the next five to ten years based on the financialbudget approved by the management, the perpetual growth rate of cash flow in the next years is
estimated to be 2%-3%, not more than the long-term average growth rate of the asset group business.The discount rate is within the range of 9.00%-18.50%. The management prepares the financial budgetabove based on the past performance and market development forecasts. Pursuant to the result ofimpairment test, no goodwill has been impaired by the end of the period.
20. Long-term deferred expenses
Types | Opening balance | Increase amount for the period | Amortization amount for the period | Other deductions | Impact of fluctuation in exchange rate for the period | Closing balance |
Renovation fee | 7,658,358.06 | 3,391,834.09 | 16,644.93 | 4,249,879.04 | ||
Expenditure for reconstruction of leased plant | 83,720,074.13 | 37,948,667.82 | 14,505,884.55 | 19,218,987.27 | -337,657.34 | 87,606,212.79 |
Others | 32,390,239.14 | 19,744,045.12 | 4,454,129.06 | 1,219,107.96 | 6,054.79 | 46,467,102.03 |
Total | 123,768,671.33 | 57,692,712.94 | 22,351,847.70 | 20,454,740.16 | -331,602.55 | 138,323,193.86 |
21. Deferred income tax assets/ Deferred income tax liabilities
(1)The deferred income tax assets without consideration of the offsetting of balances
Items | Closing balance | Opening balance |
Provision for assets impairment | 184,309,780.09 | 185,051,809.02 |
Liabilities | 1,491,060,824.72 | 1,514,275,639.33 |
Internal unrealized profit due to consolidation | 489,050,580.01 | 418,158,297.39 |
Others | 194,161,861.92 | 327,972,788.34 |
Total | 2,358,583,046.74 | 2,445,458,534.08 |
(2)Deferred income tax liabilities without consideration of the offsetting of balances
Items | Closing balance | Opening balance |
Changes of the fair value | 6,469,995.59 | 5,298,198.09 |
Disposal of subsidiaries | 20,013,800.12 | 20,938,261.74 |
Financial assets held for sale | 94,421,609.22 | 81,922,539.71 |
Reserved foreign enterprise income tax | 37,690,532.32 | 161,690,532.32 |
Depreciation and amortization of assets and the difference of the tax | 434,785,781.50 | 471,732,062.64 |
laws | ||
Interest rate swap agreement | 21,379,038.65 | 13,902,650.26 |
Others | 71,102,951.00 | 73,875,505.00 |
Total | 685,863,708.40 | 829,359,749.76 |
(3)The deferred income tax assets and the deferred income tax liabilities offsetted at the end of the
period was RMB 523,261,027.55.
22. Other non-current assets√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Prepayments for equipment and land | 833,226,998.35 | 757,518,103.03 |
Forward foreign exchange sale and purchase agreement | 350,265,114.92 | 343,283,948.90 |
Others | 321,137,033.81 | 153,262,129.83 |
Total | 1,504,629,147.08 | 1,254,064,181.76 |
23. Short-term borrowings√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Pledged borrowings | 4,069,979,063.47 | 3,914,042,669.00 |
Mortgage borrowings | 61,325,808.17 | 130,394,916.35 |
Guaranteed borrowings | 1,983,070,826.58 | 2,501,400,000.00 |
Unsecured borrowings | 5,690,177,823.10 | 4,332,742,689.83 |
Total | 11,804,553,521.32 | 10,878,580,275.18 |
24. Derivative financial liabilities√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Forward foreign exchange sale and purchase agreement | 4,440,154.26 | 2,524,569.45 |
Total | 4,440,154.26 | 2,524,569.45 |
25. Notes payable√Applicable □Not Applicable
Unit and currency: RMB
Categories | Closing balance | Opening balance |
Commercially acceptance bill | 2,844,910,661.63 | 2,165,982,670.54 |
Bank acceptance bill | 16,527,830,770.03 | 14,212,716,989.23 |
Total | 19,372,741,431.66 | 16,378,699,659.77 |
26. Accounts payables√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Accounts payables | 28,204,519,194.31 | 25,654,013,649.96 |
Total | 28,204,519,194.31 | 25,654,013,649.96 |
The book balance at the end of the period was mainly the unpaid expenditures on material,equipment and labor.
27. Receipts in advance√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Receipts in advance | 3,485,578,719.92 | 5,833,552,815.05 |
Total | 3,485,578,719.92 | 5,833,552,815.05 |
The book balance at the end of the period was mainly the prepayment.
28. Payables for staff’s remuneration(1). Presentation of payables for staff’s remuneration√Applicable □Not Applicable
Unit and currency: RMB
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
Ⅰ. Short-term remuneration | 2,130,024,644.01 | 8,086,543,734.59 | 8,484,942,412.42 | 1,731,625,966.18 |
Ⅱ. Post-employment benefits-defined contribution plan | 44,417,648.82 | 646,344,436.95 | 653,971,756.71 | 36,790,329.06 |
Ⅲ. Termination benefits | 14,959,967.19 | 187,362.24 | 10,941,391.57 | 4,205,937.86 |
Ⅳ . Other welfare due within one year | 159,786,862.88 | 2,989,668.67 | 860,074.37 | 161,916,457.18 |
Total | 2,349,189,122.90 | 8,736,065,202.45 | 9,150,715,635.07 | 1,934,538,690.28 |
(2). Presentation of short-term remuneration
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
(1) Salaries, bonus, allowance and benefit | 1,257,065,187.61 | 5,510,985,821.40 | 5,850,082,040.41 | 917,968,968.60 |
(2) Employee welfare | 297,270,715.36 | 140,889,006.31 | 146,540,689.66 | 291,619,032.01 |
(3) Social benefit | 147,366,747.95 | 812,242,114.77 | 816,289,556.66 | 143,319,306.06 |
(4) Housing fund | 7,727,158.93 | 135,473,605.37 | 134,374,421.77 | 8,826,342.53 |
(5) Labor union fee and education fee | 2,875,359.31 | 38,365,968.50 | 38,640,762.52 | 2,600,565.29 |
(6) Short-term compensated leave | 176,242,872.66 | 113,125,238.74 | 108,561,096.13 | 180,807,015.27 |
(7) Others | 241,476,602.19 | 1,335,461,979.50 | 1,390,453,845.27 | 186,484,736.42 |
Total | 2,130,024,644.01 | 8,086,543,734.59 | 8,484,942,412.42 | 1,731,625,966.18 |
(3). Presentation of defined contribution plan
√Applicable □Not Applicable
Unit and currency: RMB
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
1. Basic pension insurance | 43,103,445.60 | 634,540,229.45 | 642,018,465.49 | 35,625,209.56 |
2. Unemployment insurance | 765,277.29 | 11,149,536.79 | 11,209,557.33 | 705,256.75 |
3. Enterprise annuity payment | 548,925.93 | 654,670.71 | 743,733.89 | 459,862.75 |
Total | 44,417,648.82 | 646,344,436.95 | 653,971,756.71 | 36,790,329.06 |
(4)Presentation of termination benefits
Items | Closing balance | Opening balance |
Termination compensation | 4,205,937.86 | 14,959,967.19 |
Total | 4,205,937.86 | 14,959,967.19 |
29. Taxes payable√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
VAT | 454,123,894.07 | 482,237,560.42 |
Business tax | 7,253,589.46 | 6,482,581.69 |
Enterprise income tax | 1,138,758,726.04 | 1,246,597,129.08 |
Individual income tax | 26,694,034.04 | 22,133,761.57 |
Municipal maintenance tax | 13,620,780.60 | 10,698,089.06 |
Education surcharge | 5,781,675.20 | 4,651,788.94 |
The electrical and electronic products waste treatment fund | 78,161,271.50 | 77,767,756.79 |
Additional taxes | 46,037,574.63 | 58,691,859.87 |
Total | 1,770,431,545.54 | 1,909,260,527.42 |
30. Interests payable
Items | Closing balance | Opening balance |
Interest of long-term borrowings | 56,521,386.59 | 46,938,624.99 |
Interest of short-term borrowings | 12,511,765.92 | 10,717,833.80 |
Total | 69,033,152.51 | 57,656,458.79 |
31. Dividends payable
Company | Closing balance | Opening balance |
BRAVE LION (HK) LIMITED | 122,756,874.10 | 122,756,874.10 |
Other minority shareholders | 407,065,787.01 | 30,999,441.54 |
Total | 529,822,661.11 | 153,756,315.64 |
32. Other payables
Items | Closing balance | Opening balance |
Other payables | 11,077,488,012.51 | 10,805,162,943.62 |
Total | 11,077,488,012.51 | 10,805,162,943.62 |
The book balance at the end of the period mainly included the incurred but unpaid costs.
33. Non-current liabilities due within 1 year√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Long-term borrowings due within one year | 3,108,306,051.60 | 2,850,325,000.00 |
Total | 3,108,306,051.60 | 2,850,325,000.00 |
34. Long-term borrowings(1). Classification of Long-term borrowings√Applicable □Not Applicable
Unit and currency: RMB
Items | Closing balance | Opening balance |
Mortgage loan | 25,676,073.88 | 30,542,316.47 |
Guaranteed borrowings | 5,293,279,998.61 | 5,227,360,000.00 |
Credit borrowings | 298,982,650.05 | 288,741,397.35 |
Guaranteed and mortgage borrowings | 7,340,453,621.57 | 10,489,849,095.99 |
Total | 12,958,392,344.11 | 16,036,492,809.81 |
Description on classification of long-term borrowings:
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 thebenchmark 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.
Long-term borrowings – pledge that the interest rate is the interest rate as provided in the borrowing
agreement plus London inter-bank offered rate.
35. Bonds payables
On 21 November 2017, Harvest International Company, a wholly owned subsidiary of the Companyissued convertible corporate bonds amounting to HK$8 billion, the term of which is 5 years with nil
coupon rate and an investors’ return of 1%.
Convertible corporate bonds were divided into liability component and equity component uponinitial recognition:
Items | Convertible corporate bonds issued in 2017 |
Initially recognized: | 6,731,131,007.13 |
Including: | |
Equity component of convertible corporate bonds | 431,424,524.07 |
Liability component of convertible corporate bonds | 6,299,706,483.06 |
Changes in liability component of convertible corporate bonds for the period:
Items | Opening balance | Increase for the period | Bond interests accrued for the period | Less: bond interests paid for the period | Impact of exchange rate | reclassified into due within one year for the period | Closing balance |
Convertible corporate bonds issued in 2017 | 6,211,088,362.68 | 80,970,718.36 | 56,010,012.75 | 6,348,069,093.79 | |||
Total | 6,211,088,362.68 | 80,970,718.36 | 56,010,012.75 | 6,348,069,093.79 |
36. Long-term payables
Items | Closing balance | Opening balance |
CDB development fund investment fund | 93,000,000.00 | 93,000,000.00 |
Lease | 7,337,376.67 | 13,020,029.74 |
Total | 100,337,376.67 | 106,020,029.74 |
Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Refrigerator Co., Ltd., Qingdao Haier Air Conditioner Gen Corp.,Ltd., Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited together with China Development FundCo. Ltd. in 2015 and 2016, China Development Fund Co. Ltd. invested RMB20 Million in QingdaoHaier 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 orthrough call premium. From 2020 to 2027, the Company and its subsidiaries will repurchase theinvestments made by China Development Fund Co. Ltd. to the subsidiary of the Company.
37. 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 defined benefit plan | 568,258,334.25 | 549,421,555.18 |
II. Termination benefits | 197,840,493.92 | 153,682,943.65 |
III. Provision for work-related injury compensation | 188,983,059.97 | 195,056,243.70 |
IV. Other long-term benefits | ||
Total | 955,081,888.14 | 898,160,742.53 |
(2)Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified staff. Inthese plans, the employees are entitled to enjoy the retirement benefits agreed in such defined benefitplans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary andother risks.
The recent actuarial evaluation of the assets and the present value of defined benefit obligationsunder 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 | 0.50% |
II. Expected rate of return | 2.00% |
Present value of defined benefit obligations
Items | Amount |
I. Opening balance | 303,316,065.92 |
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 | |
1. Actuarial loss (gain indicated in “-”) | |
IV. Other changes | 10,477,238.90 |
1. Consideration paid upon settlement | |
2. Prepaid benefits | |
3.Exchange difference | 10,477,238.90 |
V. Closing balance | 313,793,304.82 |
Fair value of plan assets
Items | Amount |
I. Opening balance | 307,323,897.90 |
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 | 10,615,678.69 |
1. Payments made by the employer | |
2. Prepaid benefits | |
3.Exchange difference | 10,615,678.69 |
V. Closing balance | 317,939,576.59 |
Neither the Company's common stocks or bonds, nor the properties occupied by the Company areincluded in the plan assets.
Net liability (net asset) of defined benefit plan
Items | Amount |
I. Opening balance | -4,007,831.98 |
II. Defined benefit cost in current profit or loss | |
III. Defined benefit cost in other comprehensive incomes | |
IV. Other changes | -138,439.79 |
V. Closing balance | -4,146,271.77 |
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 ofhealth 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
Items | Amount |
Ⅰ. Opening balance | 145,677,081.28 |
Ⅱ. Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 16,018,353.15 |
1. Current period service cost | 10,763,690.62 |
2. Past service cost |
3. Settlement profit (loss indicated in “-”) | |
4. Interest expenses | 5,254,662.53 |
Ⅳ. Defined benefit cost in other comprehensive incomes | |
1. Actuarial loss (gain indicated in “-”) | |
V. Other changes | -7,152,930.80 |
1. Consideration paid upon settlement | |
2. Paid benefits | -9,211,583.30 |
3. Exchange difference | 2,058,652.50 |
Ⅵ. Closing balance | 154,542,503.63 |
Net liability (net asset) of defined benefit plan
Items | Amount |
Ⅰ. Opening balance | 145,677,081.28 |
Ⅱ. Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 16,018,353.15 |
Ⅳ. Defined benefit cost in other comprehensive incomes | |
V. Other changes | -7,152,930.80 |
Ⅵ. Closing balance | 154,542,503.63 |
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 | 384,788,210.83 |
Ⅱ. Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 29,106,878.98 |
1. Current period service cost | 16,850,124.36 |
2. Past service cost | |
3. Settlement profit (loss indicated in “-”) |
4. Interest expenses | 12,256,754.62 |
Ⅳ. Defined benefit cost in other comprehensive incomes | |
1. Actuarial loss (gain indicated in “-”) | |
V. Other changes | -22,633,577.93 |
1. Consideration paid upon settlement | |
2. Paid benefits | -27,537,079.18 |
3. Exchange difference | 4,903,501.25 |
Ⅵ. Closing balance | 391,261,511.88 |
Net liability (net asset) of defined benefit plan
Items | Amount |
Ⅰ. Opening balance | 384,788,210.83 |
Ⅱ.Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 29,106,878.98 |
Ⅳ. Defined benefit cost in other comprehensive incomes | |
V. Other changes | -22,633,577.93 |
Ⅵ. Closing balance | 391,261,511.88 |
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 | 333,354,980.83 |
Ⅱ.Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 17,965,772.49 |
1. Current period service cost | 47,498.61 |
2. Past service cost | - |
3. Settlement profit (loss indicated in “-”) | - |
4. Interest expenses | 17,918,273.88 |
Ⅳ. Defined benefit cost in other comprehensive incomes | 9,339,933.04 |
1. Actuarial loss (gain indicated in “-”) | 9,339,933.04 |
V. Other changes | -47,890,921.01 |
1. Consideration paid upon settlement | - |
2. Paid benefits | -51,313,200.62 |
3. Exchange difference | 3,422,279.61 |
Ⅵ. Closing balance | 312,769,765.35 |
Fair value of plan assets
Items | Amount |
Ⅰ. Opening balance | 226,737,778.94 |
II. Defined benefit cost in current profit or loss | 94,562.86 |
1. Interest income | 94,562.86 |
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 | -25,946,523.34 |
1. Payments made by the employer | 23,412,557.16 |
2. Paid benefits | -51,313,200.62 |
3. Exchange difference | 1,954,120.12 |
V. Closing balance | 200,885,818.46 |
Net liability (net asset) of defined benefit plan
Items | Amount |
Ⅰ. Opening balance | 106,617,201.89 |
Ⅱ.Consolidation of enterprises under non-common control | |
Ⅲ. Defined benefit cost in current profit or loss | 17,871,209.63 |
Ⅳ. Defined benefit cost in other comprehensive incomes | 9,339,933.04 |
V. Other changes | -21,944,397.67 |
Ⅵ. Closing balance | 111,883,946.89 |
(3)Provision for work-related injury compensation
Our subsidiary Haier US APPLIANCE SOLUTIONS, INC. made a provision for theoccupational injury claims filed by the injured due to production accidents starting from 1 January1991. 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 | 267,182,167.75 |
Ⅱ. Consolidation of enterprises under non-common control | |
Ⅲ. Compensation expenses in current profit or loss | -11,690,699.39 |
Ⅳ. Compensation amount actually paid for the period | |
V. Other changes | 2,988,751.96 |
Ⅵ.Closing balance | 258,480,220.32 |
Classification of the balance of defined benefit plan
Items | Closing balance | Opening balance |
Short-term remuneration | 89,429,628.15 | 87,660,938.82 |
Long-term remuneration | 568,258,334.25 | 549,421,555.18 |
Total | 657,687,962.40 | 637,082,494.00 |
38. Estimated liabilities
Items | Closing balance | Opening balance |
Estimated charges of “three guarantees” and installations | 2,860,993,355.02 | 2,600,696,051.30 |
Pending litigation | 18,636,207.41 | 19,003,500.11 |
Others | ||
Total | 2,879,629,562.43 | 2,619,699,551.41 |
Significant assumptions and estimates related to the estimated charges of “three guarantees” andinstallations: the Company rationally estimates the rate of “three guarantees” and installations accordingto the previous actual expenditures and sales data on “three guarantees” and installations, and estimatesthe potential charges of ‘three guarantees” and installations based on the policy of “three guarantees”
and installations and the realized sales data.
39. Deferred income
Explanations of deferred income
√Applicable □Not Applicable
Unit and Currency: RMB
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
Governmental subsidy | 494,192,627.62 | 99,531,200.00 | 49,572,405.71 | 544,151,421.91 |
Leaseback | 2,948,461.10 | 2,948,461.10 | ||
Total | 497,141,088.72 | 99,531,200.00 | 52,520,866.81 | 544,151,421.91 |
40. Other non-current liabilities√Applicable □Not Applicable
Unit and Currency: RMB
Items | Closing balance | Opening balance |
Forward foreign exchange sale and purchase contracts | 242,658,549.02 | 242,417,657.63 |
Repurchase obligation for minority equity interests | 969,992,212.60 | 916,938,153.36 |
Intangible consideration | 5,612,008.70 | 5,384,860.29 |
Fair value change on sold-out share options | 6,196,157.27 | |
Long term guarantee deposit | 10,222,491.86 | |
Total | 1,228,485,262.18 | 1,170,936,828.55 |
41. Share capital
Class of shares | Opening balance | Increase for the period | Decrease for the period | Closing balance |
I. Restricted shares | ||||
1. State-owned shares | ||||
2.Shares held by domestic non-state-owned legal entities | ||||
3.Shares held by domestic natural persons | ||||
4. Shares held by foreign non-state-owned legal entities | ||||
Ⅱ. Non-restricted shares | 6,097,402,727 | 6,097,402,727 | ||
1.Ordinary shares in RMB | 6,097,402,727 | 6,097,402,727 | ||
2. Domestic listed foreign shares | ||||
3. Overseas listed foreign shares | ||||
4. Others | ||||
Ⅲ. Total shares | 6,097,402,727 | 6,097,402,727 |
42. Other equity instruments
43. Capital reserve√Applicable □Not Applicable
Unit and Currency: RMB
Items | Opening balance | Increase for the period | Decrease for the | Closing balance |
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
Equity component of convertible corporate bonds | 431,424,524.07 | 431,424,524.07 | ||
Total | 431,424,524.07 | 431,424,524.07 |
period | ||||
Capital premium (share capital premium) | 47,000,347.59 | 47,000,347.59 | ||
Other capital reserve | 826,883,093.84 | 826,883,093.84 | ||
Total | 826,883,093.84 | 47,000,347.59 | 873,883,441.43 |
Other explanations, including the explanations on increases or decreases for the period and the reasonsthereof:
Movements in share capital premium due to:①an increase of RMB 46,742,074.11 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 Parent Company; ②an increase in share
capital premium of RMB 258,273.48 due to acquisition of minority equity interests of subsidiaries forthe period.
44. Other comprehensive income
Items | Opening balance | Amounts incurred for the period | Closing balance | ||||
The pre-income amount for the period | Less: income tax expense | Attributable to the parent company, net of tax | Attributable to minority shareholders, net of tax | Others | |||
a | -272,839,961.93 | 87,029,894.32 | 86,716,737.89 | 313,156.43 | 40,228,127.70 | -145,895,096.34 | |
b | 3,074,994.11 | 125,566,608.41 | 12,373,907.34 | 47,583,273.64 | 65,609,427.43 | -17.11 | 50,658,250.64 |
c | 39,797,118.61 | 29,653,932.68 | 7,070,873.51 | 22,583,059.17 | - | 62,380,177.78 | |
d | 203,472,980.90 | 174,678,517.32 | 116,511,067.77 | 58,167,449.55 | 319,984,048.67 | ||
e | -9,868,941.65 | -9,601,565.98 | -2,649,298.25 | -6,952,267.73 | - | -16,821,209.38 | |
Total | -36,363,809.96 | 407,327,386.75 | 16,795,482.60 | 266,441,870.74 | 124,090,033.41 | 40,228,110.59 | 270,306,171.37 |
Notes:
(1) Item a, b, c, and d are other comprehensive income that will be reclassified to profit or loss inthe 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 instrumentsItem 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 definedbenefit plans, which may not be subsequently reclassified to profit or loss.
45. Surplus reserve√Applicable □Not Applicable
Unit and Currency: RMB
Items | Opening balance | Increase for the period | Decrease for the period | Closing balance |
Statutory surplus reserve | 2,055,400,980.82 | 2,055,400,980.82 | ||
Discretionary surplus reserve | 26,042,290.48 | 26,042,290.48 | ||
Reserve fund | 11,322,880.64 | 11,322,880.64 | ||
Enterprise expansion fund | 10,291,630.47 | 10,291,630.47 | ||
Others | ||||
Total | 2,103,057,782.41 | 2,103,057,782.41 |
46. Undistributed profits√Applicable □Not Applicable
Items | Amount |
Undistributed profits at the end of last year | 22,793,110,884.09 |
Add: correction of accounting errors | |
Adjustment on implementation of ASBE | |
Adjustment on business combination under common control | |
Undistributed profits at the beginning of the year | 22,793,110,884.09 |
Add: net profit attributable to owners of the Parent company | 4,858,795,529.42 |
Profit available for appropriation for the year | 27,651,906,413.51 |
Less: appropriation of statutory surplus reserve | |
Appropriation of staff incentive and welfare fund | |
Dividend payable for ordinary shares | 2,085,311,732.63 |
Changes on accounting policies of the Company calculated by equity method | 75,417,874.90 |
Undistributed profits at the end of the period | 25,491,176,805.98 |
47. Operating income and Operating cost
(1)Operating income
Categories | Amount for the current period | Amount for the previous period |
Principal Business | 88,331,661,405.98 | 77,251,885,539.39 |
Other Business | 259,965,220.09 | 333,122,374.54 |
Total | 88,591,626,626.07 | 77,585,007,913.93 |
(2)Income and cost of principle operations presented by product categories
Categories | Amount for the current period | Amount for the previous period | ||
Income of principal business | Cost of principal business | Income of principal business | Cost of principal business |
Air conditioner | 19,193,725,621.51 | 13,362,512,685.18 | 16,327,368,124.73 | 11,125,241,053.36 |
Refrigerator | 25,442,769,193.45 | 17,561,134,268.46 | 22,743,000,584.94 | 15,418,659,922.43 |
Kitchen appliance | 10,472,786,314.52 | 6,835,672,573.70 | 9,963,072,558.48 | 6,440,792,921.03 |
Water Heater | 3,871,786,733.03 | 2,191,843,437.52 | 3,198,650,838.72 | 1,826,219,892.11 |
Washing machine | 16,282,315,159.48 | 10,869,602,567.57 | 13,845,106,171.68 | 9,062,281,717.42 |
Equipment product | 1,248,084,170.06 | 1,089,213,193.13 | 1,494,754,632.57 | 1,261,495,445.43 |
Integrated channel services and others | 11,820,194,213.93 | 10,862,693,587.38 | 9,679,932,628.27 | 8,963,031,315.36 |
Total | 88,331,661,405.98 | 62,772,672,312.94 | 77,251,885,539.39 | 54,097,722,267.14 |
48. Taxes and surcharge√Applicable □Not Applicable
Unit and Currency: RMB
Items | Amount for the current period | Amount for the previous period |
City maintenance and construction tax | 136,407,185.16 | 120,193,292.32 |
Education surcharge | 58,321,187.99 | 52,303,868.63 |
Property tax | 29,657,440.18 | 26,032,307.24 |
Land use tax | 20,661,100.58 | 18,718,053.00 |
Stamp tax | 106,036,603.21 | 78,858,626.83 |
Others | 53,332,114.80 | 49,424,564.78 |
Total | 404,415,631.92 | 345,530,712.80 |
49. Expenses of sales√Applicable □Not Applicable
Unit and Currency: RMB
Items | Amount for the current period | Amount for the previous period |
Expenses of sales | 13,106,599,051.97 | 12,180,499,014.03 |
Total | 13,106,599,051.97 | 12,180,499,014.03 |
Other explanations:
Expenses of sales of the Company mainly include compensation, transportation and warehousing costs,advertising and sales promotion expenses, after-sale expenses and so on.
50. Management expenses√Applicable □Not Applicable
Unit and Currency: RMB
Items | Amount for the current period | Amount for the previous period |
Management expenses | 5,951,531,296.20 | 5,393,556,967.87 |
Total | 5,951,531,296.20 | 5,393,556,967.87 |
Other explanations:
Management expenses of the Company mainly include compensation, research and development costs,administrative expenses, taxes, rental payments and so on.
51. Financial expenses
Items | Amount for the current period | Amount for the previous period |
Interest expenses | 595,874,019.79 | 612,416,699.07 |
Less: interest income | 225,158,944.99 | 132,915,870.10 |
Less: cash discount | 72,886,733.41 | 86,520,731.41 |
Exchange gain or loss | 59,249,129.28 | 172,272,254.88 |
Others | 67,905,794.68 | 46,422,344.80 |
Total | 424,983,265.35 | 611,674,697.24 |
52. Loss in assets impairment
Items | Amount for the current period | Amount for the previous period |
Loss on Bad debts (negatives indicate reversal ) | -38,732,329.17 | 124,869,464.91 |
Loss from price drop in inventory | 208,994,322.45 | 97,707,495.91 |
Other impairment losses | 7,980,978.65 | |
Total | 178,242,971.93 | 222,576,960.82 |
53. Profit or loss of changes in fair value
Items | Amount for the current period | Amount for the previous period |
Financial instruments measured in fair value through current profit or loss - derivative financial instruments | 36,661,921.50 | 412,063,845.15 |
Total | 36,661,921.50 | 412,063,845.15 |
54. Investment Income√Applicable □Not Applicable
Items | Amount for the current period | Amount for the previous period |
Long-term equity investments income calculated by the equity method | 580,932,950.31 | 585,960,632.76 |
Investment income from disposal of long-term equity investments | 18,266,787.10 | 21,438,092.72 |
Investment income from financial assets available for sale during the holding period | 75,468,156.04 | 21,465,578.23 |
Investment income from disposal of financial assets at fair value and its changes recognized in the current profit and loss | 156,598,679.71 | 13,850,304.84 |
Wealth management products return | 36,192,415.80 | 11,128,105.80 |
Total | 867,458,988.96 | 653,842,714.35 |
55. Income on disposal of assets
Items | Amount for the current period | Amount for the previous period |
Income on disposal of non-current assets | 6,918,487.21 | 39,226.66 |
Loss on disposal of non-current assets | 1,250,413.68 | 7,187,565.90 |
Total | 5,668,073.53 | -7,148,339.24 |
56. Other income
Items | Amount for the current period | Amount for the previous period | Related to assets/income |
Government grants | 214,614,016.20 | 129,003,732.73 | Related to income |
Government grants | 9,678,395.82 | 5,738,834.79 | Related to assets |
Total | 224,292,412.02 | 134,742,567.52 |
57. Non-operating income
Items | Amount for the current period | Amount for the previous period |
Income on disposal of non-current assets | 1,998,891.62 | 49,388,374.65 |
Others | 216,259,009.15 | 197,575,745.83 |
Total | 218,257,900.77 | 246,964,120.48 |
58. Non-operating expenses
Items | Amount for the current period | Amount for the previous period |
Loss on disposal of non-current assets | 23,192,643.17 | 42,658,864.35 |
Charitable donation expenses | 9,112,854.70 | 11,183,710.06 |
Others | 16,087,040.22 | 23,548,882.84 |
Total | 48,392,538.09 | 77,391,457.25 |
59. Income tax expense
(1)Table of income tax expense
Items | Amount for the current period | Amount for the previous period |
Current income expense | 1,017,160,671.22 | 778,856,781.57 |
Deferred tax expenses | -50,520,990.09 | -20,834,623.34 |
Total | 966,639,681.13 | 758,022,158.23 |
(2)Adjustment process of accounting profit and income tax expenses for the period
Items | Amount |
Total accounting profit | 6,905,057,359.61 |
Income tax expenses calculated at statutory tax rate | 1,726,264,339.90 |
Impact from different tax rates applicable to subsidiaries | -569,886,234.04 |
Impact from adjustment to income tax in prior periods | -94,046,913.98 |
Effect from non-taxable income | -107,876,434.03 |
Impact from non-deductible costs, fees and losses | 35,131,799.83 |
Effect on deductible provisional differences or deductible losses of unrecognized deferred tax | 96,124,044.22 |
Others | -119,070,920.77 |
Total income tax expenses | 966,639,681.13 |
60. Other comprehensive income√Applicable □Not Applicable
Please refer to item 44 of Note VII. for further details.
61. Cash received from other operation related activities
Items | Amount |
Margins and securities | 57,752,210.91 |
Government grants | 54,441,945.89 |
Non-operating income excluding government grants | 123,431,292.75 |
Interest income | 176,938,213.17 |
Others | 94,409,270.27 |
Total | 506,972,932.99 |
62. Cash paid to other operation related activities
Items | Amount |
Cash paid on operating expenses | 4,693,457,442.70 |
Cash paid on management expenses | 2,133,348,610.43 |
Cash paid on financial expenses | 64,096,512.88 |
Non-operating expenses | 41,086,384.22 |
Others | 22,812,950.09 |
Total | 6,954,801,900.32 |
63. Cash received from other investment related activities
Items | Amount |
Government subsidies related to assets | 8,945,900.00 |
Income on disposal of fixed exchange rate instrument | 93,502,174.88 |
Total | 102,448,074.88 |
64. Cash paid to other investment related activities
Items | Amount |
Payment of investment tax | 15,071,145.00 |
Net cash of disposal of subsidiaries | 57,211,358.66 |
Total | 72,282,503.66 |
65. Cash paid to other financing related activities
Items | Amount |
Bonds Issuance fee | 59,211,565.84 |
cash payment for withdrawal of investments from minority shareholders | 247,350.00 |
Acquisition of minority equity of subsidiaries | 8,425,241.25 |
Bill margins | 445,643,964.99 |
Total | 513,528,122.08 |
66. Information of net profit adjusted to cash flows of operating activities:
(1) Supplementary information on the statement of cash flow√Applicable □Not Applicable
Unit and Currency: RMB
Supplementary information | Amount for the current period | Amount for the previous period |
1.Net profit adjusted to cash flows of operating activities | ||
Net profit | 5,938,417,678.48 | 5,274,592,619.16 |
Add: impairment provision for assets | 178,242,971.93 | 222,576,960.82 |
Depreciation of fixed assets, Depletion of gas and oil assets, depreciation of productive biological assets | 1,169,416,194.62 | 1,156,635,794.09 |
Amortization of intangible assets | 196,112,489.84 | 174,140,085.27 |
Amortization of long term expenses payable | 22,351,847.70 | 9,834,689.02 |
Loss on disposal of fixed assets, intangible assets and other long term assets (“-” represents “gains”) | 15,525,678.02 | 418,828.94 |
loss on retirement of fixed assets(“-” represents “gains”) | ||
Gain and loss on change of fair value (“-” represents “gains”) | -36,661,921.50 | -412,063,845.15 |
Financial expenses (“-” represents “gains”) | 555,821,678.49 | 559,989,195.34 |
Loss on investments(“-” represents “gains”) | -867,458,988.96 | -653,842,714.35 |
Decrease of deferred income tax assets | 110,034,637.01 | 274,672,665.40 |
(“-” represents “increase”) | ||
Increase of deferred income tax liabilities (“-” represents “decrease”) | -160,555,627.10 | -295,507,288.73 |
Decrease of inventories (“-” represents “increase”) | -1,211,765,239.79 | -2,039,892,028.23 |
Decrease of operational account receivables (“-” represents “increase”) | -4,038,288,227.69 | -720,284,772.02 |
Increase of operational account payables (“-” represents “decrease”) | 3,405,405,176.07 | 4,678,863,994.24 |
Others | 91,787,606.90 | 204,268,474.66 |
Net cash flows generated from operational activities | 5,368,385,954.02 | 8,434,402,658.46 |
2.Significant investment and financing activities not involving cash inflows and outflows: | ||
Capital transferred from debts | ||
Convertible corporate bonds due within 1 year | ||
Financial leased fixed assets through financing | ||
3.Net changes of cash and cash equivalents: | ||
Cash balance at the end of the period | 32,185,029,539.59 | 28,773,619,133.86 |
Less: cash balance at the beginning of the period | 34,340,013,574.22 | 23,295,239,445.05 |
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 | -2,154,984,034.63 | 5,478,379,688.81 |
67. Cash and cash equivalents
Items | Closing balance | Opening balance |
I. Cash | 32,185,029,539.59 | 34,340,013,574.22 |
Including: treasury cash | 698,625.89 | 513,781.37 |
Bank deposit available for payment at any time | 30,859,017,076.82 | 32,994,884,486.17 |
Other monetary capital available for payment at any time | 1,325,313,836.88 | 1,344,615,306.68 |
II. Cash equivalents | ||
Including: bond investment due within three months | ||
Ⅲ. Closing balance of cash and cash equivalents | 32,185,029,539.59 | 34,340,013,574.22 |
Including: restricted cash and cash equivalents used by the parent company or subsidiaries of the Group |
68. Monetary Items in Foreign Currency
Items | Closing balance | Opening balance | ||||
Foreign currency | Exchange rate | RMB balance | Foreign currency balance | Exchange rate | RMB balance |
balance | ||||||
Monetary capital | ||||||
Dollar | 1,226,265,171.00 | 6.6166 | 8,113,706,130.43 | 1,249,816,041.00 | 6.5342 | 8,166,547,975.10 |
Euro | 34,990,910.61 | 7.6515 | 267,732,952.52 | 20,058,292.65 | 7.8023 | 156,500,816.74 |
Yen | 4,243,413,546.49 | 0.059914 | 254,239,879.22 | 5,007,949,886.95 | 0.057883 | 289,875,163.31 |
HKD | 78,331,649.28 | 0.8431 | 66,041,413.51 | 1,029,213,931.69 | 0.8359 | 860,319,925.50 |
Others | 1,061,687,326.27 | 772,356,596.65 | ||||
Sub-total | 9,763,407,701.95 | 10,245,600,477.30 | ||||
Receivables | ||||||
Dollar | 1,403,378,931.47 | 6.6166 | 9,285,597,037.96 | 1,036,244,584.01 | 6.5342 | 6,771,029,360.84 |
Euro | 82,169,646.73 | 7.6515 | 628,721,051.96 | 46,516,973.55 | 7.8023 | 362,939,382.73 |
Yen | 3,918,000,824.60 | 0.059914 | 234,743,101.41 | 3,875,029,615.17 | 0.057883 | 224,298,339.21 |
Others | 2,207,477,333.76 | 1,744,262,398.17 | ||||
Sub-total | 12,356,538,525.09 | 9,102,529,480.95 | ||||
Short-term borrowings | ||||||
Dollar | 1,092,610,120.39 | 6.6166 | 7,229,364,122.58 | 1,048,141,122.69 | 6.5342 | 6,848,763,723.88 |
Euro | 19,868,970.27 | 7.6515 | 152,027,426.03 | 11,319,902.42 | 7.8023 | 88,321,274.65 |
Yen | 3,042,500,000.00 | 0.0599 | 182,245,750.00 | 740,217,334.97 | 0.057883 | 42,846,000.00 |
HKD | ||||||
Others | 142,232,842.09 | 296,567,076.35 | ||||
Sub-total | 7,705,870,140.71 | 7,276,498,074.88 | ||||
Payables | ||||||
Dollar | 1,150,676,035.35 | 6.6166 | 7,613,563,055.50 | 897,463,561.23 | 6.5342 | 5,864,206,401.79 |
Euro | 154,122,289.33 | 7.6515 | 1,179,266,696.81 | 15,125,382.24 | 7.8023 | 118,012,769.85 |
Yen | 3,105,923,438.90 | 0.0599 | 186,044,813.99 | 1,215,454,339.45 | 0.057883 | 70,354,143.53 |
Others | 2,386,497,594.37 | 1,010,745,873.14 | ||||
Sub-total | 11,365,372,160.67 | 7,063,319,188.31 | ||||
Non-current liabilities due within one year | ||||||
Dollar | 409,319,900.00 | 6.6166 | 2,708,306,050.34 | 375,000,000.00 | 6.5342 | 2,450,325,000.00 |
Sub-total | 2,708,306,050.34 | 2,450,325,000.00 | ||||
Long-term borrowings | ||||||
Dollar | 1,909,399,634.28 | 6.6166 | 12,633,733,620.18 | 2,449,565,439.28 | 6.5342 | 16,005,950,493.34 |
Yen | 4,991,363,106.01 | 0.0599 | 298,982,650.05 | |||
Euro | 3,355,691.55 | 7.6515 | 25,676,073.88 | |||
Sub-total | 12,958,392,344.10 | 16,005,950,493.34 |
VIII. Changes in consolidation scope1. The consolidation of enterprises under non-common control□Applicable √Not Applicable
2. The consolidation of enterprises under common control□Applicable √Not Applicable3. Disposal of subsidiaries
Single disposal of investments in subsidiaries representing loss of control:
Name of subsidiaries | Jiangsu Goodaymart Sunflower Supply Chain Management Co., Ltd. (江苏日日顺向日葵供应链管理有限公司) | Qingdao Haishengda Refrigeration Appliances Co., Ltd. (青岛海昇达制冷电器有限公司) | Qingdao Haizhijie Refrigeration Co., Ltd. (青岛海智捷制冷有限公司) |
Consideration for disposal of equity interest | 715,469.69 | - | - |
Proportion of equity disposal | 51.00% | - | - |
Method of equity disposal | Disposal | Deregistration | Deregistration |
Date of loss-of-control | 2018/5/30 | 2018/5/30 | 2018/5/30 |
Basis of determination of date of loss-of-control | Date of disposal | Date of deregistration | Date of deregistration |
Difference between disposal consideration and its share of net assets of the subsidiary in the consolidated financial statements as respect to the disposal of investment | 241,648.70 | - | - |
Continued,
Name of subsidiaries | Hefei Hailan Household Applianecs Manufacturing Co., Ltd. (合肥海蓝家电制造有限公司) | Hefei Haice Household Appliances Manufacturing Co., Ltd. (合肥海策家电制造有限公司) | Beijing ASU Tech Co., Ltd. |
Consideration for disposal of equity interest | - | - | 30,000,000.00 |
Proportion of equity disposal | - | - | 16.65% |
Method of equity disposal | Deregistration | Deregistration | Disposal |
Date of loss-of-control | 2018/5/30 | 2018/5/30 | 2018/1/1 |
Basis of determination of date of loss-of-control | Date of deregistration | Date of deregistration | Date of disposal |
Difference between disposal consideration and its share of net assets of the subsidiary in the consolidated financial statements as respect to the disposal of investment | - | - | 18,025,138.40 |
4. Changes of consolidation scope for other reasonsNotes for the change of consolidation scope for other reasons (such as establishment of new subsidiaries,liquidation of subsidiaries, etc.) and the relevant information:
√Applicable □Not Applicable
(1)Qingdao Haier Intelligent Technology Development Co., Ltd.(青岛海尔智能技术研发有限公司), a subsidiary of the Company, funded the establishment of Haier (Shanghai) HouseholdAppliances R&D center Co., Ltd. (海尔(上海)家电研发中心有限公司), a wholly-owned subsidiary
for the period.
(2)Haier Industrial Holding Limited(海尔工业控股有限公司), a subsidiary of the Company,funded the establishment of Haier Digital Technology (Qingdao) Co., Ltd (海尔数字科技(青岛)有限公司), a wholly-owned subsidiary for the period.
(3)Qingdao Haier Air Conditioner Gen Corp., Ltd(青岛海尔空调器有限总公司), a subsidiary ofthe Company, funded the establishment of Guangzhou Haier Air Conditioner Appliances Co., Ltd.(广州海尔空调器有限公司), a wholly-owned subsidiary for the period.
IX. Interests in other entities1. Interests in subsidiaries
(1) Composition of the Group
Name of subsidiaries | Principal place of business | Registration place | Business nature | Shareholding Percentage (%) | Voting share (%) | Acquisition method | |
Direct | Indirect | ||||||
Haier Electronics Group Co., Ltd. | Mainland of China and Hong Kong | Bermuda | This company is a group company, mainly engaging in investment holding, the production and sale of washing machines and water heaters, distribution service and logistics service | 14.01 | 29.67 | 55.69 | common control combination |
Wonder Global (BVI) Investment Limited | The US and other overseas areas | British Virgin Islands | Household appliances production distribution business | 100.00 | 100.00 | Establishment | |
Haier Singapore Investment Holding Co., Ltd. | Singapore and other overseas areas | Singapore | Household appliances production distribution business | 100.00 | 100.00 | common control combination | |
Qingdao Haier Air Conditioner Gen Corp., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Manufacture and operation of household air-conditioners | 100.00 | 100.00 | common control combination | |
Guizhou Haier Electronics Co., Ltd. | Huichuan District, Zunyi | Huichuan District, Zunyi | Manufacture and sale of refrigerator | 59.00 | 59.00 | common control combinat |
City, Guizhou Province | City, Guizhou Province | ion | |||||
Hefei Haier Air-conditioning Co., Limited | Hefei Haier Industrial Park | Hefei Haier Industrial Park | Manufacture and sale of air-conditioners | 100.00 | 100.00 | common control combination | |
Wuhan Haier Electronics Co., Ltd. | Wuhan Haier Industrial Park | Wuhan Haier Industrial Park | Manufacture and sale of air-conditioners | 60.00 | 60.00 | common control combination | |
Qingdao Haier Air-Conditioner Electronics Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture and sale of air-conditioners | 100.00 | 100.00 | common control combination | |
Qingdao Haier Information Plastic Development Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Manufacture of plastic products | 100.00 | 100.00 | common control combination | |
Dalian Haier Precision Products Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Manufacture and sale of precise plastics | 90.00 | 90.00 | common control combination | |
Hefei Haier Plastic Co., Ltd. | Hefei Economic & Technological Development Area | Hefei Economic & Technological Development Area | Manufacture and sale of plastic parts | 94.12 | 5.88 | 100.00 | common control combination |
Qingdao Haier Moulds Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Research and manufacture of precise mould and product | 75.00 | 25.00 | 100.00 | common control combination |
Qingdao Meier Plastic Powder Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture of plastic powder, plastic sheet and high performance coatings | 40.00 | 60.00 | 100.00 | common control combination |
Chongqing Haier Precision Plastic Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Plastic products, sheet metal work, electronics and hardware | 90.00 | 10.00 | 100.00 | common control combination |
Chongqing Haier Intelligent Electronics Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Manufacture and sale of electronics and automatic control system equipment | 90.00 | 10.00 | 100.00 | common control combination |
Qingdao Haier Robot Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Research, development, manufacture and sale of robot | 50.00 | 50.00 | common control combination | |
Qingdao Haier Refrigerator Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Manufacture and production of fluorine-free | 100.00 | 100.00 | Establishment |
refrigerators | |||||||
Qingdao Haier Refrigerator (International) Co., Ltd. | Pingdu Development Zone, Qingdao | Pingdu Development Zone, Qingdao | Manufacture and production of refrigerators | 75.00 | 75.00 | Establishment | |
Qingdao Household Appliance Technology and Equipment Research Institute | Qingdao High-tech Zone | Qingdao High-tech Zone | Research and development of home appliances mould and technological equipment | 100.00 | 100.00 | Establishment | |
Qingdao Haier Whole Set Home Appliance Service Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Research, development and sales of health series of small home appliance | 98.33 | 98.33 | Establishment | |
Qingdao Haier Intelligent Electronics Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Design and development of electronics and automatic control system | 100.00 | 100.00 | Establishment | |
Qingdao Haier Special Refrigerator Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture and sales of fluorine-free refrigerators | 100.00 | 100.00 | Establishment | |
Qingdao Haier Dishwasher Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture and production of dish washing machine and gas stove | 100.00 | 100.00 | Establishment | |
Qingdao Haier Special Freezer Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Research, manufacture and sales of freezer and other refrigeration products | 96.06 | 96.06 | Establishment | |
Dalian Haier Air-conditioning Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Manufacture and production of air-conditioners | 90.00 | 90.00 | Establishment | |
Dalian Haier Refrigerator Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Manufacture and production of refrigerators | 90.00 | 90.00 | Establishment | |
Qingdao Haier Electronic Plastic Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Development , assembling and sales of plastics, electronics and product | 80.00 | 80.00 | Establishment | |
Wuhan Haier Freezer Co., Ltd. | Wuhan Economic & Technological Development Zone High-tech Industrial Park | Wuhan Economic & Technological Development Zone High-tech Industrial Park | Research, manufacture and sales of freezer and other refrigeration products | 95.00 | 5.00 | 100.00 | Establishment |
Qingdao Haidarui Procurement Service Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Development , purchase and sales of electrical product and components | 98.00 | 2.00 | 100.00 | Establishment |
Qingdao Haier Intelligent Home Appliance Technology Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Development and application of household appliances, communication, electronics and network engineering technology | 98.91 | 1.09 | 100.00 | Establishment |
Chongqing Haier Air-conditioning Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Manufacture and sales of air conditioners | 76.92 | 23.08 | 100.00 | Establishment |
Qingdao Haier Precision Products Co., Ltd. | Qianwangang Road, Jiaonan City | Qianwangang Road, Jiaonan City | Development and manufacture of precise plastic, metal plate, mould and electronic products for household appliances | 70.00 | 70.00 | Establishment | |
Qingdao Haier Air Conditioning Equipment Co., Ltd. | Jiaonan City, Qingdao | Jiaonan City, Qingdao | Manufacture of household appliances and electronics | 70.00 | 70.00 | Establishment | |
Dalian Free Trade Zone Haier Air-conditioning Trading Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Domestic trade | 100.00 | 100.00 | Establishment | |
Dalian Free Trade Zone Haier Refrigerator Trading Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Domestic trade | 100.00 | 100.00 | Establishment | |
Qingdao Ding Xin Electronics Technology Co., Ltd. | QingdaoDevelopment Zone | QingdaoDevelopment Zone | Manufacture and sale of electronic Parts. | 100.00 | 100.00 | Establishment | |
Chongqing Haier Electronics Sales Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Household appliance sales | 95.00 | 5.00 | 100.00 | Establishment |
Chongqing Haier Refrigeration Appliance Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Manufacture and production of refrigerator | 84.95 | 15.05 | 100.00 | Establishment |
Hefei Haier Refrigerator Co., Ltd. | Hefei Haier Industrial Park | Hefei Haier Industrial Park | Manufacture and production of refrigerator | 100.00 | 100.00 | Establishment | |
Wuhan Haier Energy and Power Co., Ltd. | Wuhan Haier Industrial Park | Wuhan Haier Industrial Park | Energy service | 75.00 | 75.00 | Establishment | |
Qingdao Haier | Qingdao | Qingdao | Air-conditioning | 100.00 | 100.00 | Establish |
HVAC Engineering Co., Ltd | Development Zone | Development Zone | ment | ||||||
Chongqing Gooddaymart Electric Appliance Sale Co., Ltd | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Sales of household appliances and electronics | 51.00 | 51.00 | Establishment | |||
Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited | Jiaozhou City, Qingdao | Jiaozhou City, Qingdao | Manufacture and sale of air-conditioners | 100.00 | 100.00 | Establishment | |||
Qingdao Haier Component Co., Ltd. | Jiaozhou City, Qingdao | Jiaozhou City, Qingdao | Manufacture and sales of plastic and precise sheet metal products | 100.00 | 100.00 | Establishment | |||
Haier Shareholdings (Hong Kong) Limited | Hong Kong | Hong Kong | 100.00 | 100.00 | Establishment | ||||
Harvest International Company | Cayman Islands | Cayman Islands | Investment | 100.00 | 100.00 | Establishment | |||
Shenyang Haier Refrigerator Co., Ltd. | Shenbei New Area, Shenyang City | Shenbei New Area, Shenyang City | Manufacture and sales of refrigerator | 100.00 | 100.00 | Establishment | |||
Foshan Haier Freezer Co., Ltd. | Shanshui District, Foshan City | Shanshui District, Foshan City | Manufacture and sales of freezer | 100.00 | 100.00 | Establishment | |||
Zhengzhou Haier Air-conditioning Co., Ltd. | Zhengzhou Economic and Technological Development Zone | Zhengzhou Economic and Technological Development Zone | Manufacture and sales of air conditioner | 100.00 | 100.00 | Establishment | |||
Qingdao Haidayuan Procurement Service Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Development , purchase and sales of electrical product and components | 100.00 | 100.00 | Establishment | |||
Qingdao Haier Intelligent Technology Development Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Development and research of household appliances | 100.00 | 100.00 | Establishment | |||
Qingdao Hai Ri High-Tech Model Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Design, manufacture and sales of product model and mould | 100.00 | 100.00 | common control combination | |||
Qingdao Hai Gao Design and Manufacture Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Industrial design and prototype production | 75.00 | 75.00 | common control combination | |||
Beijing Haier Guangke Digital Technology Co., | Beijing | Beijing | Development , promotion and transfer | 55.00 | 55.00 | common control combinat |
Ltd. | of technology | ion | |||||
Shanghai Haier Medical Technology Co., Ltd. | Shanghai | Shanghai | Wholesale and retail of medical facility | 100.00 | 100.00 | Establishment | |
Qingdao Haier Technology Co., Ltd. | Qingdao | Qingdao | Development and sales of software and information product | 100.00 | 100.00 | common control combination | |
Qingdao Haier Technology Investment Co., Ltd. | Qingdao | Qingdao | Entrepreneurship investment and consulting | 100.00 | 100.00 | Establishment | |
Qingdao Casarte Smart Living Appliances Co., Ltd. | Qingdao | Qingdao | Development, production and sales of appliances | 100.00 | 100.00 | Establishment | |
Qingdao Haichuangyuan Appliances Sales Co., Ltd. | Qingdao | Qingdao | Sales of household appliances and digital products | 100.00 | 100.00 | Establishment | |
Haier Overseas Electric Appliance Co., Ltd. | Qingdao | Qingdao | Sales of household appliances, international freight forwarding | 100.00 | 100.00 | Establishment | |
Haier Group (Dalian) Electrical Appliances Industry Co., Ltd. | Dalian | Dalian | Sales of household appliances, international freight forwarding | 100.00 | 100.00 | common control combination | |
Qingdao Haier Central Air-conditioner Co., Ltd. | Qingdao | Qingdao | Production and sales of air conditioners and refrigeration equipment | 100.00 | 100.00 | Establishment | |
Beijing Haier Yunchu Technology Co., Ltd.(北京海尔云厨科技有限公司) | Beijing | Beijing | Technology development, promoting and transfer | 90.00 | 90.00 | Establishment | |
Chongqing Haier Home Appliance Sale Hefei Co., Ltd. | Hefei | Hefei | Household appliance sales | 100.00 | 100.00 | Establishment | |
Beijing Chuangshi Magic Mirror Technology Co., Ltd. | Beijing | Beijing | Smart home | 100.00 | 100.00 | Establishment | |
Beijing Haier Zhongyou Netmedia Co., Ltd. | Beijing | Beijing | Radio and television program | 51.00 | 51.00 | Establishment | |
Qingdao Weixi Smart Technology Co., Ltd. | Qingdao | Qingdao | Intelligent bathroom | 71.43 | 71.43 | Establishment | |
Haier U+smart Technology (Beijing) Co., Ltd. | Beijing | Beijing | Software development | 100.00 | 100.00 | Establishment | |
Haier (Shanghai) Appliance Co., | Shanghai | Shanghai | Sales, research and development | 100.00 | 100.00 | Establishment |
Ltd. | of household appliances | ||||||
Shanghai Haier Zhongzhifang Maker Space Management Co., Ltd.(上海海尔众智坊创客空间管理有限公司) | Shanghai | Shanghai | Corporate management consultation, operation and management of makers | 100.00 | 100.00 | Establishment | |
Haier Industrial Holding Limited(海尔工业控股有限公司) | Qingdao | Qingdao | Industrial investment, R&D of robots and automation,etc. | 100.00 | 100.00 | Establishment | |
Qingdao Mannike Intelligent Equipment Co., Ltd.(青岛曼尼科智能装备有限公司) | Qingdao | Qingdao | R&D and design of Internet of things, robots and automation, etc. | 100.00 | 100.00 | Establishment | |
Haier Digital Technology (Shanghai) Co., Ltd.(海尔数字科技(上海)有限公司) | Shanghai | Shanghai | R&D, promotion and transfer of technology, sale of materials, etc. | 100.00 | 100.00 | Establishment | |
Qingdao Haier Smart Kitchen Appliance Co., Ltd.(青岛海尔智慧厨房电器有限公司) | Qingdao | Qingdao | Manufacture and sales of intelligent kitchen appliances | 100.00 | 100.00 | Establishment | |
Jiyi Appliance (Shanghai) Co., Ltd.(际壹电器(上海)有限公司) | Shanghai | Shanghai | Sales of household appliances | 100.00 | 100.00 | Establishment | |
Qingdao Haopin Hairui Information Technology Co., Ltd.(青岛好品海瑞信息技术有限公司) | Qingdao | Qingdao | Development,purchase and sale of electronic appliances products and components | 100.00 | 100.00 | Establishment | |
FISHER & PAYKEL PRODUCTION MACHINERY LIMITED | New Zealand | New Zealand | Manufacture of automatic and customized special devices | 100.00 | 100.00 | common control combination | |
Maniiq (Singapore) Intelligent Equipment Co. Ltd. | Singapore | Singapore | Investment management | 100.00 | 100.00 | Establishment | |
Maniiq (HK) Intelligent Equipment Co. Ltd. | Hong Kong | Hong Kong | Investment management | 100.00 | 100.00 | Establishment | |
Qingdao Haier Medical Refrigeration Appliances Co., Ltd. (青岛海尔特种制冷电器有限公司) | Qingdao | Qingdao | Manufacture and sales of household appliances | 100.00 | 100.00 | Establishment |
Beijing Lingwei Technology Co., Ltd.(北京零微科技有限公司) | Beijing | Beijing | Development and promotion of technology | 55.00 | 55.00 | Establishment | |
Laiyang Haier Smart Kitchen Appliance Co., Ltd.(莱阳海尔智慧厨房电器有限公司) | Laiyang | Laiyang | Manufacture and sales of household appliances | 100.00 | 100.00 | Establishment | |
Aituling (Shanghai) Information Technology Co., Ltd.(爱图瓴(上海)信息科技有限公司) | Shanghai | Shanghai | Development and promotion of technology | 72.22 | 72.22 | Establishment | |
Qingdao Hailian Rongchuang Technology Co., Ltd.(青岛海联融创科技有限公司) | Qingdao | Qingdao | Industrial intelligent technology | 100.00 | 100.00 | Establishment | |
Hefei Haier Air conditioner electronic Co., Ltd (合肥海尔空 调电子有限公司) | Hefei | Hefei | Manufacture and sales of household appliances | 100.00 | 100.00 | Establishment | |
Qingdao Jiuzhidao Intelligent Technology Co., Ltd (青岛酒知道智能科技有限公司) | Qingdao | Qingdao | R&D and sales of wine set | 100.00 | 100.00 | Establishment | |
Taizhou Haier Medical technology Co., Ltd. (泰州海尔医疗科技有限公司) | Taizhou | Taizhou | R&D and promotion of Medical devices | 100.00 | 100.00 | Establishment | |
Haier Digital Technology (Qingdao) Co., Ltd (海尔数字科技(青岛)有限公司) | Qingdao | Qingdao | Technology development, promoting, Transfer, sale ofmaterials,etc. | 100.00 | 100.00 | Establishment | |
Haier (Shanghai)Household Appliances R&D Center Co., Ltd (海尔(上海)家电研发中心有限公司) | Shanghai | Shanghai | Development and promotion of technology | 100.00 | 100.00 | Establishment | |
Guangzhou Haier Air Conditioner Appliances Co., Ltd.(广州海尔空 调器有限公司) | Guangzhou | Guangzhou | Manufacture and sales of household appliances | 100.00 | 100.00 | Establishment | |
Small companies such as Qingdao Hai Heng Feng Electrical Appliances Sale & Service Co., | All over the country | All over the country | Sales of household appliances | Establishment |
Reasons for including subsidiaries which the Company has 50% or less of the equity into the scopeof consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance andoperating decision of small companies, such as Haier Electronics Group Co., Ltd., Qingdao Hai HengFeng Electrical Appliances Sale & Service Co., Ltd, thus, they were included into the scope ofconsolidated financial statements.
Reason for the ratio of voting rights higher than the ratio of shareholding of Haier ElectronicsGroup Co., Ltd.: on 10 July 2015, HCH (HK) Investment Management Co., Limited (hereinafter
referred to as ―“HCH”) signed a Shareholder Voting Right Entrustment Agreement with the Company.
HCH entrusted the Company to exercise the underlying shareholder voting rights of 336,600,000 sharesof Haier Electronics Group Co., Ltd. Both parties agreed that HCH will not revoke the entrustment andauthorization to the Company unless the Company issues a written notice of revoking trustee to HCH.
(2)Significant non-wholly owned subsidiaries
Ltd.
Name of subsidiaries
Name of subsidiaries | Percentage of shareholding of minority shareholders | Profit or loss attributed to minority shareholders for the period | Dividend declared to minority shareholders for the period | Balance of minority equity interest at the end of the period |
Haier Electronics Group Co., Ltd. | 56.32% | 1,049,772,645.21 | 401,256,639.68 | 14,711,947,220.03 |
Guizhou Haier Electronics Co., Ltd. | 41.00% | 5,503,276.05 | 113,903,459.43 | |
Wuhan Haier Electronics Co., Ltd. | 40.00% | 13,982,246.86 | 237,062,970.80 | |
Qingdao Haier Refrigerator (International) Co., Ltd. | 25.00% | 176,283.21 | 79,897,030.01 |
(3)Main financial information of significant non-wholly owned subsidiaries
Name of subsidiaries | Closing balance | |||||
Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Haier Electronics Group Co., Ltd. | 34,689,849,769.14 | 9,212,205,564.25 | 43,902,055,333.39 | 17,188,789,561.14 | 2,353,096,063.90 | 19,541,885,625.04 |
Guizhou Haier Electronics Co., Ltd. | 488,002,807.13 | 33,889,963.41 | 521,892,770.54 | 243,906,160.61 | 173,294.24 | 244,079,454.85 |
Wuhan Haier Electronics Co., Ltd. | 1,021,283,555.27 | 135,788,832.62 | 1,157,072,387.89 | 564,011,890.81 | 403,070.08 | 564,414,960.89 |
Qingdao Haier Refrigerator (International) Co., Ltd. | 281,866,791.42 | 55,808,808.81 | 337,675,600.23 | 18,087,480.21 | 18,087,480.21 |
Continued
Name of subsidiaries | Opening balance | |||||
Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Haier Electronics Group Co., Ltd. | 34,425,125,631.08 | 8,943,099,505.92 | 43,368,225,137.00 | 18,004,664,972.39 | 2,334,453,969.47 | 20,339,118,941.86 |
Guizhou Haier Electronics Co., Ltd. | 382,643,646.95 | 36,428,561.26 | 419,072,208.21 | 154,508,222.80 | 173,294.24 | 154,681,517.04 |
Wuhan Haier Electronics Co., Ltd. | 978,695,296.94 | 131,215,185.69 | 1,109,910,482.63 | 551,805,602.69 | 403,070.08 | 552,208,672.77 |
Qingdao Haier Refrigerator (International) Co., Ltd. | 280,498,996.95 | 55,808,808.81 | 336,307,805.76 | 17,424,818.56 | 17,424,818.56 |
Name of subsidiaries | Amount for the current period | |||
Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
Haier Electronics Group Co., Ltd. | 42,389,647,175.11 | 1,793,614,855.39 | 2,019,002,389.18 | 1,839,859,233.08 |
Guizhou Haier Electronics Co., Ltd. | 652,944,777.30 | 13,422,624.52 | 13,422,624.52 | 23,036,480.98 |
Wuhan Haier Electronics Co., Ltd. | 1,533,784,050.67 | 34,955,617.14 | 34,955,617.14 | -89,385,955.23 |
Qingdao Haier Refrigerator (International) Co., Ltd. | 705,132.82 | 705,132.82 | -226,577.69 |
Continued
Name of subsidiaries | Amount for the previous period | |||
Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
Haier Electronics Group Co., Ltd. | 35,859,899,261.80 | 1,447,319,410.67 | 1,391,001,266.18 | 1,837,812,414.48 |
Guizhou Haier Electronics Co., Ltd. | 530,268,800.91 | 12,070,830.44 | 12,070,830.44 | -10,146,559.16 |
Wuhan Haier Electronics Co., Ltd. | 1,317,041,564.88 | 24,571,940.73 | 24,571,940.73 | 2,692,599.62 |
Qingdao Haier Refrigerator (International) Co., Ltd. | 943,417.45 | 943,417.45 | -38,323.32 |
2. Transactions leading to the change of owners’ equity in subsidiaries but not losing the control
√Applicable □Not Applicable
(1). Explanation to the change of owners’ equity in subsidiaries:
√Applicable □Not Applicable
Minority shareholders of Haier Electronics Group Co., Ltd., a subsidiary of the Company exercisedtheir rights leading to changes in shareholding proportion of the Company; capital contribution andacquisition of minority equity on non-original proportion by the Company let to changes in shareholding
proportion of Beijing ASU Tech Co., Ltd. (北京一数科技有限公司),Qingdao Haier Air ConditionerGen Corp., Ltd(青岛海尔空调器有限总公司) and Beijing Haier Yunchu Technology Co., Ltd.(北京海尔云厨科技有限公司), all of which are subsidiaries of the Company.
(2)Impact of the transactions on the minority equity interest and the equity attributable to owners
of the Parent company:
Items | Haier Electronics Group Co., Ltd. | Others |
Total of cost of acquisition/disposal consideration | 31,635,700.00 | |
Less: share of net assets of subsidiaries calculated with reference to the proportion of the share acquired/disposed | 9,357,993.52 | 69,278,054.07 |
The difference | -9,357,993.52 | -37,642,354.07 |
Including: adjustment and increase to capital reserve | 9,357,993.52 | 37,642,354.07 |
3. Interests in joint ventures or associates
√Applicable □Not Applicable(1)Joint ventures
The name of joint ventures | Principal place of business | Registration place | Business nature | Shareholding percentage (%) | The accounting treatment for the investment |
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | Zhangqiu | Zhangqiu | Motor Manufacturing | 30.00 | Equity method |
Haier Medical and Laboratory Products Co., Ltd. | Qingdao | Qingdao | Medical freezer | 27.37 | Equity method |
Qingdao Hebei Iron & Steel New Material Technology Co. Ltd | Qingdao | Qingdao | Manufacture of steel plate | 25.65 | Equity method |
Beijing ASU Tech Co., Ltd. | Beijing | Beijing | Development of technology | 45.88 | Equity method |
Qingdao Haier SAIF Smart Home Industry Investment Center (limited partnership) | Qingdao | Qingdao | Venture capital investment | 63.00 | Equity method |
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | Qingdao | Qingdao | Manufacture of househol | 45.00 | Equity method |
d appliances | |||||
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | Qingdao | Qingdao | Manufacture of household appliances | 49.00 | Equity method |
Haier Group Finance Co., Ltd. | Qingdao | Qingdao | Financing | 42.00 | Equity method |
Qingdao Haier Software Investment Co., Ltd. | Qingdao | Qingdao | Software development | 25.00 | Equity method |
Beijing Mr. Hi Network Technology Company Limited | Beijing | Beijing | Technology development | 36.00 | Equity method |
Bank of Qingdao Co., Ltd. | Qingdao | Qingdao | Commercial bank | 9.61 | Equity method |
Beijing Xiaobei Technology Co., Ltd. | Beijing | Beijing | Sales of household appliances | 42.75 | Equity method |
Qingdao Haier Multi-media Co., Ltd. (青 岛海尔多媒体有限公司) | Qingdao | Qingdao | R&D and sale of televisions | 20.20 | Equity method |
Guangzhou Heying Investment Partnership (Limited Partnership)(广州合赢投资合伙企业(有限合伙)) | Guangzhou | Guangzhou | Investment | 50.00 | Equity method |
Qingdao Java Cloud Network Technology Co., Ltd. | Qingdao | Qingdao | Online household service | 24.93 | Equity method |
Qingdao JSH Network Technology Co. Ltd. | Qingdao | Qingdao | E-commerce platform | 24.02 | Equity method |
Hunan Electronic Co., Ltd. | Hunan | Hunan | Motor Manufacturing | 50.00 | Equity method |
HPZ LIMITED | Nigeria | Nigeria | Manufacture of household appliances | 25.01 | Equity method |
HNR COMPANY (PRIVATE) LIMITED | Pakistan | Pakistan | Manufacture of household appliances | 31.72 | Equity method |
CONTROLADORA MABE S.A.de C.V. | Mexico | Mexico | Manufacture of household appliances | 48.41 | Equity method |
Middle East Air Conditioning Company Limited | Saudi | Saudi | Sales of household | 49.00 | Equity method |
Arabia | Arabia | appliances |
(2) Basic information of important associates and financial information
①Basic information of important associates:
a. Haier Group Finance Co., Ltd. (hereinafter referred to as “Finance Company”) is established by
Haier Group Corporation and its three affiliates. Registration place and principal place of business:
Qingdao High-tech Zone Haier Park (青岛市高科技工业园海尔工业园).. The Company’s subsidiaries
hold an aggregate of 42.00% equity interest in Finance Company.
b. General Electric Company has participated in the capital contribution to the establishment of
CONTROLADORA MABE S.A.de C.V. (hereinafter referred to as “MABE”). In June 2016, a
subsidiary of the Company acquired 48.41% of equity interests in MABE held by General ElectricCompany. The registered address and principal place of business of MABE is Mexico. The subsidiariesof the Company hold approximately 48.41% of equity interests in MABE in total.
c. Bank of Qingdao Co., Ltd. (hereinafter referred to as “Qingdao Bank”), one of the first city
commercial banks in China, was established in November 1996. The registered place and principal placeof business of Qingdao Bank is No.68 Hong Kong Middle Road, Shinan District, Qingdao, ShandongProvince. The Company and its subsidiaries hold approximately 9.61% of equity interests in QingdaoBank in total at the end of the period.
②Financial information of significant associates:
Items | Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period |
Finance company | Finance company | |
Current assets | 59,997,414,241.31 | 68,438,104,678.89 |
Non-current assets | 9,185,842,122.12 | 7,913,830,198.85 |
Total assets | 69,183,256,363.43 | 76,351,934,877.74 |
Current liabilities | 54,955,121,811.93 | 62,029,645,645.42 |
Non-current liabilities | 2,239,881,332.29 | 3,172,557,737.73 |
Total liabilities | 57,195,003,144.22 | 65,202,203,383.15 |
Minority equity interests | ||
Equity interest attributable to shareholders of the Parent company | 11,988,253,219.21 | 11,149,731,494.59 |
Including: share of net assets calculated based on shareholding percentage | 5,035,066,352.07 | 4,682,887,227.73 |
Operating income | 1,297,821,635.65 | 1,248,590,983.58 |
Net profit | 783,377,652.09 | 695,130,748.49 |
Other comprehensive income | 55,144,072.53 | -31,950,742.84 |
Total comprehensive income | 838,521,724.62 | 663,180,005.65 |
Dividend received from associates for the year |
Items | Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period |
MABE | MABE | |
Current assets | 5,927,756,029.73 | 5,825,075,945.00 |
Non-current assets | 10,308,505,523.42 | 10,303,936,800.80 |
Total assets | 16,236,261,553.15 | 16,129,012,745.80 |
Current liabilities | 7,210,006,859.70 | 7,048,408,869.00 |
Non-current liabilities | 5,642,997,150.87 | 5,836,693,752.60 |
Total liabilities | 12,853,004,010.57 | 12,885,102,621.60 |
Minority equity interests | ||
Equity interest attributable to shareholders of the Parent company | 3,383,257,542.58 | 3,243,910,124.20 |
Including: share of net assets calculated based on shareholding percentage | 1,637,997,372.73 | 1,570,532,598.81 |
Operating income | 9,150,137,891.10 | 9,329,282,700.19 |
Net profit | 87,751,088.45 | 205,064,142.44 |
Other comprehensive income | 51,596,329.94 | -139,395,846.73 |
Total comprehensive income | 139,347,418.39 | 65,668,295.71 |
Dividend received from associates for the year | 34,405,195.14 |
Items | Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period |
Qingdao Bank | Qingdao Bank | |
Current assets | 172,319,593,000.00 | 130,366,445,000.00 |
Non-current assets | 129,839,603,000.00 | 175,909,647,000.00 |
Total assets | 302,159,196,000.00 | 306,276,092,000.00 |
Current liabilities | 222,104,215,000.00 | 203,654,201,000.00 |
Non-current liabilities | 53,361,544,000.00 | 76,498,682,000.00 |
Total liabilities | 275,465,759,000.00 | 280,152,883,000.00 |
Minority equity interests | 501,146,000.00 | 493,355,000.00 |
Equity interest attributable to shareholders of the Parent company | 26,192,291,000.00 | 25,629,854,000.00 |
Including: share of net assets calculated based on shareholding percentage | 2,516,666,030.19 | 2,462,624,099.78 |
Operating income | 3,131,390,000.00 | 2,835,194,000.00 |
Net profit | 1,321,444,000.00 | 1,278,760,000.00 |
Other comprehensive income | 421,494,000.00 | -404,519,000.00 |
Total comprehensive income | 1,742,938,000.00 | 874,241,000.00 |
Dividend received from associates for the year | 77,995,640.00 | 76,868,844.93 |
(3) Summarized financial information of insignificant joint ventures and associates
investment to associates | Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period |
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 119,983,110.03 | 118,897,337.40 |
Haier Medical and Laboratory Products Co., Ltd. | 350,895,461.76 | 332,230,371.89 |
Beijing ASU Tech Co., Ltd. | 15,005,164.40 | |
Qingdao Hebei Iron & Steel New Material Technology Co. Ltd | 254,745,094.86 | |
Qingdao HBIS Composite New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | 106,068,803.08 | |
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 140,494,521.67 | |
Qingdao Haier Multi-media Co., Ltd. | 549,870,745.54 | 543,768,656.24 |
Qingdao Haier SAIF Smart Home Industry Investment Center (limited | 270,536,881.98 | 270,536,881.98 |
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 511,196,497.40 | 529,934,750.95 |
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 290,191,165.50 | 284,185,137.09 |
Qingdao Haier Software Investment Co., Ltd. | 17,899,300.26 | 17,899,331.07 |
Beijing Mr. Hi Network Technology Company Limited | 3,757,759.75 | 3,757,759.75 |
Beijing Xiaobei Technology Ltd. | 2,687,341.82 | 2,687,341.82 |
Guangzhou Heying Investment Partnership (Limited Partnership)(广州合赢投资合伙企业(有限合伙)) | 152,047,535.44 | 152,047,535.44 |
China Shengfeng Microfinance limited in Jin’an District of Fuzhou City | 80,226,595.74 | |
Fujian ATL-Shengfeng Logistics Co., Ltd. | 13,117,748.43 | |
Qingdao Java Cloud Network Technology Co., Ltd. | 1,401,703.26 | 1,755,356.84 |
Qingdao JSH Network Technology Co.Ltd. | 5,511,749.00 | 5,511,749.00 |
Konan Electronic Co., Ltd. | 68,058,207.73 | 64,856,526.75 |
HPZ LIMITED | 102,384,957.04 | 91,578,227.62 |
HNR COMPANY (PRIVATE) LIMITED | 83,534,353.67 | 80,588,570.01 |
MiddleEastAirconditioningCompany,Limited | 20,702,569.45 | 22,050,543.42 |
Total book value of investment | 2,820,409,598.89 | 2,862,193,746.19 |
Total amount of the following items of associates’ financial amounts calculated based on shareholding percentage | ||
--Net profit | 82,459,925.23 | 73,900,402.83 |
--Other comprehensive income | -1,637,894.45 | -3,044,759.55 |
--Total comprehensive income | 80,822,030.78 | 70,855,643.28 |
X. Segment Information
The Company principally engaged in manufacture and sales of household appliances and relevantservices business, manufacture of upstream household appliances parts business and distribution ofproducts of third-party, logistics and after-sale business. The Company has 6 business segments,including refrigerator segment, air-conditioner segment, washing machine segment, kitchen appliancesegment, equipment components segment, integrated channel services segment and other segment. Themanagement of the Company assesses operating performance of each segment and allocates resourcesaccording to the division. Sales between segments were mainly based on market price.
Refrigerator segment mainly engaged in manufacture and sales of refrigerator and freezersproducts.
Air-conditioner segment mainly engaged in manufacture and sales of household air conditionersand commercial air conditioners.
Washing machine segment mainly engaged in manufacture and sales of washing machine products.Kitchen appliance segment mainly engaged in manufacture and sales of kitchen appliances
products.
Water heater segment mainly engaged in manufacture and sales of water heater products.Equipment components segment mainly engaged in procurement, manufacture and sales of
upstream matching accessories for household appliances, manufacture and sales of mould.
COSMO segment mainly engaged in providing intelligent manufacturing ecological service andintegrated solution on transformation and upgrade of intelligent manufacturing for external corporates.
Segment of integrated channel services and others mainly engaged in distribution business, logisticsbusiness, after-sale business, small home appliance business and others.
The Company’s 3rd and 4th tier markets channel business is treated as integrated channel services
and assessed separately with other segments. Accordingly, operating profit from 3rd and 4th tier marketsof refrigerator, air-conditioner, kitchen appliance, water heater, washing machine business segment wasnot reflected in operating profit of each segment.
As the centralized management under the headquarters or not being included in the assessmentscope of segment management, the total assets of segment exclude monetary capital, financial assetsheld for trading, dividends receivable, other current assets, available-for-sale financial assets, long-termequity investment, goodwill, deferred income tax assets; the total liabilities of segment excludelong-term and short-term borrowings, financial liabilities held for trading, dividends payables, taxpayable, bonds payable, deferred income tax liabilities; operating profit of segment exclude profit/loss infair value, income from investment, and financial expenses, income on disposal of assets, Non-VAT
refundable upon imposition component of other income, non-operating incomes and expenses andincome tax.
(1) Information of reportable segments
Segment information for the period
Segment information | Air-conditioner segment | Refrigerator segment | Kitchen appliance segment | Water heater segment | Washing machine segment |
Segment revenue | 19,994,274,671.40 | 23,347,332,742.58 | 10,130,626,492.48 | 3,299,177,229.02 | 14,409,457,635.26 |
Including: revenue from external consumers | 6,871,932,961.03 | 13,285,358,774.66 | 9,331,150,261.21 | 720,592,747.71 | 7,534,958,460.83 |
Inter-segment revenue | 13,122,341,710.37 | 10,061,973,967.92 | 799,476,231.27 | 2,578,584,481.31 | 6,874,499,174.43 |
Total segment operating cost | 18,813,671,440.21 | 21,440,213,300.55 | 9,475,212,757.00 | 2,947,615,022.72 | 13,063,184,883.29 |
Segment operating profit | 1,180,603,231.19 | 1,907,119,442.03 | 655,413,735.48 | 351,562,206.30 | 1,346,272,751.97 |
Total segment assets | 17,847,705,371.13 | 15,642,117,029.44 | 10,997,663,044.17 | 1,366,025,467.38 | 13,572,621,044.70 |
Total segment liabilities | 8,937,902,636.12 | 25,373,966,372.29 | 4,905,637,782.42 | 1,476,850,517.97 | 5,861,881,891.56 |
Continued
Segment information | Equipment components segment | COSMO segment | Segment of integrated channel services and others | Inter-segment elimination | Total |
Segment revenue | 30,397,624,212.00 | 3,310,521,126.55 | 52,857,748,036.57 | -69,067,990,606.52 | 88,678,771,539.34 |
Including: revenue from external consumers | 1,377,578,092.60 | 2,782,907,580.17 | 46,774,292,661.13 | 88,678,771,539.34 | |
Inter-segment revenue | 29,020,046,119.40 | 527,613,546.38 | 6,083,455,375.44 | -69,067,990,606.52 | |
Total segment operating cost | 30,159,338,365.48 | 3,309,600,418.34 | 52,165,398,940.06 | -68,808,702,367.85 | 82,565,532,759.80 |
Segment operating profit | 238,285,846.52 | 920,708.21 | 692,349,096.51 | -259,288,238.67 | 6,113,238,779.54 |
Total segment assets | 32,462,017,888.53 | 257,810,772.52 | 36,009,664,222.18 | -45,477,323,667.54 | 82,678,301,172.51 |
Total segment liabilities | 34,669,495,063.36 | 322,611,220.11 | 30,464,150,224.08 | -43,069,415,715.18 | 68,943,079,992.73 |
Segment information for the corresponding period of last year
Segment information | Air-conditioner segment | Refrigerator segment | Kitchen Appliance segment | Water heater segment | Washing machine segment |
Segment revenue | 16,065,232,785.84 | 20,664,137,087.68 | 9,817,927,768.00 | 2,699,723,615.97 | 12,223,265,112.69 |
Including: revenue from external consumers | 5,935,165,349.29 | 11,674,637,424.70 | 9,116,143,612.41 | 554,974,308.80 | 6,419,268,474.84 |
Inter-segment revenue | 10,130,067,436.55 | 8,989,499,662.98 | 701,784,155.59 | 2,144,749,307.17 | 5,803,996,637.85 |
Total segment operating cost | 15,051,615,417.92 | 19,005,739,766.51 | 9,210,335,248.27 | 2,394,447,541.46 | 11,082,170,369.17 |
Segment operating profit | 1,013,617,367.92 | 1,658,397,321.17 | 607,592,519.73 | 305,276,074.51 | 1,141,094,743.52 |
Total segment assets | 14,045,226,564.02 | 15,092,982,587.34 | 10,932,907,864.36 | 1,528,663,785.89 | 10,774,302,199.29 |
Total segment liabilities | 8,164,863,742.03 | 23,320,161,709.92 | 4,688,733,103.46 | 1,779,427,399.65 | 5,649,976,080.52 |
Continued
Segment information | Equipment components segment | Segment of integrated channel services and others | Inter-segment elimination | Total |
Segment revenue | 20,111,049,804.31 | 48,268,853,383.36 | -52,192,439,797.88 | 77,657,749,759.97 |
Including: revenue from external consumers | 1,535,626,710.80 | 42,421,933,879.13 | 77,657,749,759.97 | |
Inter-segment revenue | 18,575,423,093.51 | 5,846,919,504.23 | -52,192,439,797.88 | |
Total segment operating cost | 19,938,885,515.00 | 47,624,071,358.79 | -52,003,473,326.81 | 72,303,791,890.31 |
Segment operating profit | 172,164,289.31 | 644,782,024.57 | -188,966,471.07 | 5,353,957,869.66 |
Total segment assets | 26,193,061,725.41 | 31,818,076,218.88 | -34,661,005,792.71 | 75,724,215,152.48 |
Total segment liabilities | 28,088,630,394.16 | 26,753,925,068.41 | -33,224,692,236.96 | 65,221,025,261.19 |
(2) Geographical information
“Other countries/regions” in this report refers to all other countries/regions (including Hong Kong and
Macau Special Administration Region and Taiwan) other than the mainland China for the purpose ofinformation disclosure.
External transaction income | Amount for the current period | Amount for the previous period |
Mainland China | 52,880,695,930.62 | 42,565,075,285.62 |
Other countries/regions | 35,798,075,608.72 | 35,092,674,474.35 |
Including:America | 24,722,080,204.20 | 24,189,346,249.11 |
South Asia | 3,685,609,648.58 | 2,879,372,340.27 |
Europe | 2,213,871,684.84 | 1,808,826,381.86 |
Continued
Total non-current assets | Closing balance | Opening balance |
Mainland China | 13,466,483,340.65 | 12,248,609,942.72 |
Other countries/regions | 14,586,931,768.26 | 14,735,396,871.62 |
Total | 28,053,415,108.91 | 26,984,006,814.34 |
The total non-current assets exclude: available-for-sale financial assets, long-term equity investment,goodwill, deferred income tax assets.
XI. Disclosure of fair value1. Fair value of assets and liabilities at fair value at the end of the period
Items | Fair value at the end of the period | ||
Level 1 fair value measurement | Level 2 fair value measurement | Total | |
Recurring fair value measurement | |||
I. Financial asset designated to be measured by fair value and change of which is recorded in current profit and loss | 1,738,394,432.81 | 1,738,394,432.81 | |
II. Financial liability designated to be measured by fair value and change of which is recorded in current profit and loss | 247,098,703.28 | 247,098,703.28 | |
III. Financial asset designated to be measured by fair value and change of which is recorded in other comprehensive income | 81,409,329.08 | 81,409,329.08 | |
IV. Available-for-sale financial assets | 20,783,227.42 | 1,414,281,524.86 | 1,435,064,752.28 |
2. Basis for determination of level 1 fair value at recurring fair value measurement: Unadjustedquoted prices of similar assets or liabilities in active markets as at the measurement date.
3. Basis for determination of level 2 fair value at recurring fair value measurement: Inputs otherthan quoted prices included within level 1 that are observable for the assets or liabilities, either directlyor indirectly.
XII. Related parties and Related-party transactions
(Ⅰ) Explanation for basis of identifying related partyAccording to Accounting Standards for Business Enterprises No. 36 — Related Party Disclosures,
parties are considered to be related if one party has the ability to control or jointly control the other partyor exercise significant influence over the other party. Parties (two or more than two) are also consideredto be related if they are subject to common control, joint control or significant influence.
According to Management Practices for Information Disclosure of The Company (China SecuritiesRegulatory Commission Order No. 40), in certain occasions, related legal person and natural person willbe identified as related parties.
(II) Relations between related parties1. Information about the Parent Company and other companies holding shares of the Company
Name of enterprises | Type of enterprises | Registered address | Registered capital | legal representative | Relationship with the Company | Equity Interest of the Company(100%) | Voting share of the Company(100%) |
Haier Group Corporation | Collective owned enterprise | Qingdao High-tech Zone Haier Park | 311,180,000 | Zhang Ruimin | the Parent Company | 17.59 | 17.59 |
Haier Electric Appliances International Co., Ltd. | Joint-stock company | Qingdao High-tech Zone Haier Park | 631,930,635 | Zhang Ruimin | The subsidiary of the parent company | 20.64 | 20.64 |
Qingdao Haier Venture & Investment Information Co., Ltd. | Company with limited liabilities. | Qingdao Free Trade Zone | 100,000,000 | Zhou Yunjie | The party acting in concert with the parent company | 2.83 | 2.83 |
2. SubsidiariesDetailed information of subsidiaries is disclosed in item 1 of note IX. interests in subsidiaries.
3.Information about associates and joint ventures
Information about the associates or joint ventures of the Company are set out in item 11 of note VIIand item 3 of Note IX.
4. Related companies without controlling relationship
Name of enterprises | Relationship with the enterprises |
FISHER&PAYKEL APPLIANCES LIMITED | Subsidiary of Haier Group |
HAIER INFORMATION APPLIANCES S.R.L. | Subsidiary of Haier Group |
HAIER INTERNATIONAL (HK) LTD. | Subsidiary of Haier Group |
HAIER INTERNATIONAL CO., LTD | Subsidiary of Haier Group |
Feima Electronic (Qingdao) Co., Ltd. | Subsidiary of Haier Group |
Haier Group Finance Co., Ltd. | Subsidiary of Haier Group |
Haier Group Electric Appliance Industry Co., Ltd. | Subsidiary of Haier Group |
Haier Energy Power Co., Ltd. | Subsidiary of Haier Group |
Haier Brothers Animation Industry Co., Ltd. | Subsidiary of Haier Group |
Hefei Haier Logistics Co., Limited | Subsidiary of Haier Group |
Laiyang Haier Electrical Co. Ltd. | Subsidiary of Haier Group |
Qingdao Haier Whole House Furniture Co., Ltd.(青岛海尔全屋家具有限公司) | Subsidiary of Haier Group |
Qingdao Haier Tooling Development and Manufacturing Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier International Travel Agency Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier International Trading Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Household Integration Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Parts Procurement Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Strauss Water Equipment Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Special Plastic Development Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Communications Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier Logistics Consulting Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haiyongda Property Management Co., Ltd. | Subsidiary of Haier Group |
BRAVE LION (HK) LIMITED | Subsidiary of Haier Group |
Chongqing Haier Electrical Appliances Sales Co., Ltd. | Subsidiary of Haier Group |
Chongqing Haier Logistics Co., Ltd | Subsidiary of Haier Group |
Qingdao Goodaymart Lejia Logistics Technology Co., Ltd.(青岛日日顺乐家物联科技有限公司 ) | Subsidiary of Haier Group |
Suzhou Haixin Information Technology Co., Ltd.(苏州海新信息科技有限公司) | Subsidiary of Haier Group |
Haier Finance Leasing (China) Co., Ltd. | Subsidiary of Haier Group |
Qingdao Haier New Material Research and Development Co., Ltd.(青岛海尔新 材料研发有限公司) | Joint venture of a subsidiary of Haier Group |
CONTROLADORA MABE S.A.de C.V. | Joint venture |
HNR Company (Pvt) Limited | Joint venture |
MiddleEast Airconditioning Company,Limited | Joint venture |
Qingdao Haier Software Investment Co., Ltd. | Joint venture |
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | Subsidiary of a joint venture |
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | Joint venture |
Haier Medical and Laboratory Products Co., Ltd. | Joint venture |
Qingdao HBIS Composite New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | Subsidiary of a joint venture |
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | Joint venture |
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | Joint venture |
(III) Information on Related-party transaction1. The detailed information of the Company procuring goods and services from related-party are asfollows:
Name of related parties | Amount for the current period | Amount for the previous period |
CONTROLADORA MABE S.A.de C.V. | 3,797,313,988.61 | 3,524,320,229.06 |
Qingdao Haier Parts Procurement Co., Ltd. | 2,737,668,714.18 | 4,101,092,652.62 |
Chongqing Haier Electrical Appliances Sales Co., Ltd. | 2,117,428,201.15 | 2,215,820,324.20 |
HNR Company (Pvt) Limited | 1,258,923,720.84 | 919,404,923.83 |
Chongqing Haier Logistics Co., Ltd. | 1,028,328,519.82 | 983,636,882.26 |
Hefei Haier Logistics Co., Limited | 747,478,902.47 | 999,455,393.51 |
Qingdao Haier International Trading Co., Ltd. | 683,580,146.91 | 526,417,908.74 |
Qingdao Haier Strauss Water Equipment Co., Ltd. | 405,789,607.19 | 225,881,787.55 |
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 372,624,744.03 | 324,233,684.39 |
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 364,904,854.05 | 355,699,474.19 |
Qingdao Haier Special Plastic Development Co., Ltd. | 357,967,509.26 | 332,029,641.38 |
Qingdao HBIS Composite New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | 313,670,642.04 | 291,804,265.09 |
Haier Energy Power Co., Ltd. | 211,221,875.25 | 223,432,383.88 |
Qingdao Haier Tooling Development and Manufacturing Co., Ltd. | 165,704,463.60 | 184,193,856.07 |
Qingdao Haiyongda Property Management Co., Ltd.(青岛海永达物业管理有限公司) | 117,606,114.96 | 91,155,393.46 |
Qingdao Haier Whole House Household Co., Ltd.(青岛海尔全屋家居有限公司) | 56,987,019.04 | 104,798,646.07 |
Qingdao Haier Communications Co., Ltd. | 50,908,272.82 | 286,602,718.51 |
HAIER INTERNATIONAL CO., LTD | 34,081,851.31 | 48,993,253.14 |
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 31,785,595.57 | 26,906,682.16 |
Qingdao Haier Household Integration Co., Ltd. | 27,538,593.82 | 7,055,871.66 |
FISHER&PAYKEL AUSTRALIA PTY | 4,949,393.94 | 24,607,963.96 |
Other related parties | 1,033,772,885.49 | 751,211,974.44 |
Total | 15,920,235,616.35 | 16,548,755,910.17 |
2. The detailed information of the Company procuring goods and services from related-party are asfollows:
Name of related parties | Amount for the current period | Amount for the previous period |
FISHER&PAYKEL AUSTRALIA PTY | 520,944,530.24 | 453,206,822.74 |
CONTROLADORA MABE S.A.de C.V. | 411,595,719.20 | 172,940,605.38 |
Qingdao Haier International Trading Co., Ltd. | 365,258,871.55 | 382,386,502.01 |
Qingdao Haier Special Plastic Development Co., Ltd. | 338,525,883.67 | 94,854,275.54 |
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 200,819,911.53 | 377,550,381.70 |
Qingdao Haier New Material Research and Development Co., Ltd. | 185,265,679.09 | 216,055,389.34 |
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 174,636,996.00 | 303,051,955.98 |
Qingdao HBIS Composite New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | 119,670,204.88 | 167,992,052.29 |
Qingdao Haier Tooling Development and Manufacturing Co., Ltd. | 93,196,412.80 | 80,082,974.19 |
Qingdao Haier International Travel Agency Co., Ltd. | 39,380,799.45 | 18,529,608.83 |
Chongqing Haier Electrical Appliances Sales Co., Ltd. | 1,907,239.75 | 96,889,976.15 |
Suzhou Haixin Information Technology Co., Ltd.(苏州海新信息科技有限公司) | 1,175,782.46 | 52,583,658.53 |
Other related parties | 282,217,115.92 | 217,869,905.73 |
Total | 2,734,595,146.54 | 2,633,994,108.41 |
3. Unsettled amounts of related parties
Items and names of consumers | Ending balance | Beginning balance |
Notes receivables | ||
Other related parties | 827,490.67 | |
Dividends receivables: | ||
Qingdao Haier Software Investment Co., Ltd. | 4,524,472.84 | 4,524,472.84 |
Other related parties | 136,377.05 |
Trade receivables: | ||||
Items and names of consumers | Book balance | Provision for bad debts | Book balance | Provision for bad debts |
FISHER&PAYKEL APPLIANCES LIMITED | 345,582,591.66 | 17,279,129.58 | 240,525,663.08 | 12,026,283.15 |
CONTROLADORA MABE S.A.deC.V. | 174,604,786.17 | 8,730,239.31 | 85,868,137.29 | 4,293,406.86 |
Haier Group Electric Appliance Industry Co., Ltd. | 119,136,930.68 | 5,956,846.53 | 172,889,483.50 | 8,644,474.17 |
Haier Finance Leasing (China) Co., Ltd. | 107,389,479.68 | 5,369,473.98 | 33,979,469.96 | 1,698,973.50 |
Qingdao Haier International Travel Agency Co., Ltd. | 41,638,089.61 | 2,081,904.48 | 33,535,331.94 | 1,676,766.60 |
Qingdao Haier Special Plastic Development Co., Ltd. | 40,606,062.73 | 2,030,303.14 | 30,061,911.52 | 1,503,095.58 |
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 18,423,413.03 | 921,170.65 | 37,553,831.20 | 1,877,691.56 |
Suzhou Haixin Information Technology Co., Ltd.(苏州海新信息科技有限公司) | 16,664,234.97 | 833,211.75 | 18,580,938.10 | 929,046.91 |
Haier Medical and Laboratory Products Co., Ltd. | 8,908,758.81 | 445,437.94 | 5,293,566.32 | 264,678.32 |
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 5,252,096.64 | 262,604.83 | 2,609,651.81 | 130,482.59 |
Qingdao HBIS Composite New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | 3,449,271.12 | 172,463.56 | 5,271,174.28 | 263,558.71 |
Other related parties | 266,296,532.54 | 13,314,826.63 | 239,136,247.91 | 11,956,812.40 |
Prepayments: | ||||
Qingdao Haier International Trading Co., Ltd. | 278,331,689.34 | 25,694,085.49 | ||
Haier Group Electric Appliance Industry Co., Ltd. | 52,791,945.93 | 18,666,136.33 | ||
Qingdao Haier Parts Procurement Co., Ltd. | 46,876,371.70 | 26,855,446.50 | ||
Other related parties | 22,656,983.95 | 57,909,844.51 | ||
Interests receivables: | ||||
Haier Group Finance Co., Ltd. | 7,152,358.68 | 16,597,598.16 | ||
Other receivables: | ||||
Items and names of consumers | Book balance | Provision for bad debts | Book balance | Provision for bad debts |
Haier Group Electric Appliance Industry Co., Ltd. | 647,646.88 | 32,382.34 | 5,054,271.27 | 252,713.56 |
Other related parties | 82,569,992.51 | 4,128,499.63 | 43,505,955.80 | 2,175,297.79 |
Notes payable: | ||||
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 61,412,756.84 | |||
Laiyang Haier Electrical Co. Ltd. | 10,411,869.81 | 56,557,892.89 | ||
Other related parties | 4,553,992.51 | 6,544,689.10 | ||
Accounts payables: | ||||
Qingdao Haier Parts Procurement Co., Ltd. | 1,451,149,605.13 | 975,508,354.98 | ||
CONTROLADORA MABE S.A.deC.V. | 375,635,705.91 | 359,468,427.60 | ||
HNR Company (Pvt) Limited | 268,478,148.47 | 49,389,796.48 |
Qingdao Haier International Trading Co., Ltd. | 161,106,745.95 | 268,481,130.24 |
Chongqing Haier Logistics Co., Ltd. | 99,263,199.78 | 304,825,911.96 |
Qingdao Haier Strauss Water Equipment Co., Ltd. | 65,396,566.95 | 61,152,328.59 |
Chongqing Haier Electrical Appliances Sales Co., Ltd. | 56,957,430.58 | 90,092,109.31 |
Qingdao Haier Communications Co., Ltd. | 51,061,886.32 | 4,801,675.32 |
Qingdao Haier Special Plastic Development Co., Ltd. | 44,686,429.40 | 52,784,094.74 |
Hefei Haier Logistics Co., Limited | 31,386,951.96 | 257,354,153.49 |
HAIER INTERNATIONAL CO., LTD | 26,626,665.50 | 56,102,305.76 |
Goodaymart Electronics Co., Ltd. | 10,665,808.18 | 10,665,813.13 |
Qingdao Haier Whole House Household Co., Ltd.(青岛海尔全屋家居有限公司) | 5,920,605.71 | 33,084,367.38 |
HAIER INTERNATIONAL (HK) LIMITED | 5,075,546.70 | 162,909,377.32 |
Other related parties | 390,069,403.51 | 410,633,223.32 |
Receipts in advance: | ||
Hefei Haizhi Real Estate Co., Ltd.(合肥海智房地产有限公司) | 155,358,260.10 | 155,000,000.00 |
Haier Group Electric Appliance Industry Co., Ltd. | 6,720,145.87 | 5,984,613.13 |
Other related parties | 16,124,629.79 | 12,369,377.54 |
Other payable: | ||
Haier Brothers Animation Industry Co., Ltd. | 357,387,470.54 | 384,741,409.54 |
Chongqing Haier Logistics Co., Ltd. | 51,830,739.06 | 51,830,739.06 |
Haier Group Electric Appliance Industry Co., Ltd. | 18,308,757.39 | 2,413,136.73 |
Haier Energy Power Co., Ltd. | 15,412,788.34 | 42,485,111.74 |
Hefei Haier Logistics Co., Limited | 8,663,500.00 | 8,663,500.00 |
Other related parties | 175,837,677.92 | 159,066,947.95 |
Interests payables: | ||
Haier Group Finance Co., Ltd. | 5,442,616.18 | 5,953,652.09 |
Dividends payables: | ||
BRAVE LION (HK) LIMITED | 122,756,874.10 | 122,756,874.10 |
Other related parties | 407,065,787.01 | 30,999,441.54 |
4. Other Related-party transactions
(1) One of the Company’s subsidiaries entered into a loan contract with Haier Group Finance Co.,
Ltd.. The borrowed amount as of 30 June 2018 was RMB 3.101 billion and the interest and fees payableto Haier Group Finance Co., Ltd. for the period was RMB77 million in total.
(2) Information about the guarantor of the Company’s ending guaranteed borrowing who is a
related party:
Borrowers | Amounts | Guarantees |
Hefei Haier Refrigerator Co., Ltd. | 300,000,000.00 | Haier Group Corporation |
Qingdao Haier Special Freezer Co., Ltd. | 830,000,000.00 | Haier Group Corporation |
Zhengzhou Haier Air-conditioning Co., Ltd. | 300,000,000.00 | Haier Group Corporation |
Qingdao Haidayuan Procurement Service Co., Ltd. | 550,000,000.00 | Haier Group Corporation |
Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited | 400,000,000.00 | Haier Group Corporation |
HAIER US APPLIANCE SOLUTIONS,INC | 15,342,039,671.91 | Haier Group Corporation |
Total | 17,322,039,671.91 |
(3)Income on deposit interests received by the Company and its subsidiaries from Haier Group
Finance Co., Ltd. for the period was RMB 36 million.
(4)Balance of interbank borrowing of Haier Pakistan (Private) Limited, a subsidiary of the
Company, to HNR COMPANY (PRIVATE) LIMITED, a joint ventures at the end of the period wasRMB 0.366 billion.
(5) Qingdao Haier Goodaymart Logistic Co., Ltd., a subsidiary of the Company and othercompanies provided logistics services to other related companies under Haier Group, the logisticsincome for the period was RMB 0.108 billion.
(6) Leasing
Lessees | Lessors | Application of leased assets | Lease expense recognized for the period |
Subsidiary of the Company | Qingdao Haier Investment and Development Co., Ltd. and its subsidiaries | Production and operation | 10,120,984.12 |
Subsidiary of the Company | Other companies of Haier Group | Production and operation | 47,305,599.89 |
Total | 57,426,584.01 |
(Ⅳ) Pricing policies
1. Connected sales
Following the acquisition of the overseas white household appliances assets, the Company’soriginal overseas sales model, being exports through the Group’s exporting platform, was changed. The
trading company under the company holding overseas white household appliances assets was fullyresponsible for sales of export-oriented products. Meanwhile, the trading company was also responsible
for the overseas sales of some of the Group’s products (such as brown goods). As such, the Company
entered into a Sales Framework Agreement with Haier Group Corporation. Under which, it was agreedthat the Company and Haier Group Corporation will sell products and provide sales-related services(including but not limited to agency sales services, after-sales services and technical support ) on areciprocal basis for a term of three years.
Connected sales among Haier Electronics Group Co., Ltd. (“Haier Electronics”), a holding
subsidiary of the Company, Qingdao Haier Investment and Development Co., Ltd, Haier GroupCorporation are carried out according to relevant provisions of Goods Export Agreement, After-salesService Agreement, Logistics Service Agreement entered into among parties.2. Connected Procurements
In addition to independent procurement platform, the Company entrusted Haier Group Corporationand its subsidiaries for procurements of part of raw materials and distribution of goods and materials.
The business is conducted according to the Purchase and Distribution Contract entered among theCompany, Haier Group Corporation and other parties. The Company, Haier Group Corporation and itssubsidiaries purchase materials from agents. They purchase and distribute goods for production andnon-production use according to the specific material procurement target proposed by the Company. Theprice of materials purchased and delivered consist of the actual purchase price and the agency fee, ofwhich the agency fee was calculated by 1.25% of the actual purchase price, while in principle the priceof materials should not be higher than the price that the Company independently purchased from themarket.
Connected procurements among Haier Electronics, Qingdao Haier Investment and DevelopmentCo., Ltd, Haier Group Corporation are carried out according to relevant provisions of MaterialsProcurement Agreement and Production and Experimental Equipment Procurement Agreement enteredamong parties.3. Related-party Transactions of Financial and Logistics Services
Some of the financial services such as deposit and loan service, discounting service and foreignexchange derivatives needed by the Company are provided by Haier Group Corporation, its subsidiariesand other companies. According to the Financial Service Agreement entered among the Company, HaierGroup Corporation and other parties, the price of financial services is determined by the principle that isnot less favorable of market value fair. The Company is entitled to decide whether to keep cooperationrelationship with them with the knowledge of the price prevailing on the market and in combination withits own interests. While performing the agreement, the Company could also require other financialservice institutions to provide related financial services basing on actual situation. In order to meet the
Company’s demands such as the avoidance of foreign exchange fluctuation risk, the Company maychoose Haier Group Finance Co., Ltd. (“Finance Company”) to provide some foreign exchange
derivative service after comparing with comparable companies. The Company will uphold the safe andsound and appropriately reasonable principle, under which all foreign exchange capital business shallhave a normal and reasonable business background to eliminate speculative operation. At the same time,the Company has specified the examination and permission rights, management positions andresponsibilities at all levels for its foreign exchange capital business to eradicate the risks of operation bypersons and improved its response speed to risks on the premise that the risks are effectively controlled.
Related-party transactions of financial services among Haier Electronics, Finance Company,Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation are carried outaccording to relevant provisions of Financial Service Agreement entered into among parties.
In order to further standardize the logistics services provided by the related companies of HaierGroup Corporation, the Company signed the Logistics and Service Agreement with Qingdao HaierInvestment and Development Co., Ltd and Haier Group Corporation, the Company entrusted thesubsidiaries of Haier Group to provide energy and power, basic research and detection, equipmentleasing, house rental and maintenance, landscaping and sanitation, gift purchasing, design, consultation,all kinds of booking and other services.
In accordance with the Comprehensive Service Agreement, Promotion Agreement, ProductResearch and Development Agreement entered into among Haier Electronics, Qingdao Haier Investmentand Development Co., Ltd and Haier Group Corporation, Haier Electronics entrusted subsidiaries ofHaier Group to provide Haier Electronics with hydropower energy and related support; meeting,accommodation, ticket agent; integrated services such as product certification, software, food andbeverage agent, property decoration, house lease, finance and marketing, product research anddevelopment services.
4. Others
In order to expand the sales businesses in the third and fourth-tier markets, Haier Electronicsrenewed the Products Procurement Agreement and Internal Sales Agreement with Qingdao HaierInvestment and Development Co., Ltd and Haier Group Corporation, according to which, while HaierElectronics purchases products from contract parties, the purchasing price shall be determined basing onthe prices of which Haier Electronics purchases the same type of product in similar transactions fromindependent third parties in the market, and are not less favorable than the terms and conditions providedby the independent third parties to Haier Electronics; while Haier Electronics sales products to contractparties for their own use or distributes products through sales network, the selling price shall bedetermined basing on the prices of which Haier Electronics sells the same type of product in similartransactions to independent third parties in the market, and are not less favorable than the terms andconditions provided by Haier Electronics to independent third parties.
The Company and its subsidiaries entered into a series of contracts, including the FrameworkAgreement Regarding the Procurement of Modular Products with Wolong Electric Zhangqiu HaierMotor Co., Ltd. and other companies. Pursuant to which, they agreed to supply modular products to theCompany at the most favorable price which is no higher than the price it offered to other clients.
The Company and its subsidiaries entered into a series of contracts, including the ContractArrangement Regarding the Procurement of Special Steel Plate Products with Qingdao HBIS Composite
New Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司), Hefei HBIS New MaterialTechnology Co., Ltd.(合肥河钢新材料科技有限公司). Under which, it is agreed that they shall supply
goods to the Company on terms which are not less favorable than terms offered by other suppliers.
XIII. Share-based payments1. General information on share-based payments□Applicable √Not Applicable
2. Share-based payments settled in cash□Applicable √Not Applicable
XIV. Commitments and contingent events1. Material commitment□Applicable √Not Applicable2. Contingent events(1). Material contingent events on the balance sheet date□Applicable √Not Applicable
XV. Events Subsequent to the Balance Sheet date
1. Description on the events subsequent to the balance sheet date√Applicable □Not Applicable
1. The Company intends to acquire 100% equity of Haier New Zealand Investment Holding
Company Limited(hereinafter referred to as “Haier New Zealand” ) held by Haier (Singapore)
Management Holding Co. Pte. Limited, an oversea subsidiary of Haier Group Corporation (hereinafter
referred to as “Haier Singapore” ) through Haier Singapore Investment Holding Pte. Ltd., another
oversea subsidiary of the Company in cash. Haier Singapore Investment Holding Pte. Ltd. entered into aSale and Purchase Agreement with Hair Singapore on 24 April 2018, pursuant to which Haier SingaporeInvestment Holding Pte. Ltd. intended to acquire 100% equity of Haier New Zealand held by HaierSingapore at a consideration of USD 303,040,997.28 in cash. The transaction was completed on 31 July2018.
2. Guanmei (Shanghai) Corporate Management Co., Ltd,(贯美(上海)企业管理有限公司) an
indirect subsidiary of the Company, intends to swap its 55% equity in Bingji (Shanghai) Corporate
Management Co., Ltd,(冰戟(上海)企业管理有限公司) with 51% equity of Qingdao HSW WaterAppliance Co., Ltd.(青岛海施水设备有限公司) (hereinafter referred to as “Water Appliance”)held by
Haier Electric Appliances International Co., Ltd.
The connected transaction has been approved and passed in the eighteenth meeting of the ninthsession of the Board meeting held by the Company on 30 August 2018, and is not subject to the approvalof the general meeting.
3. The Company has no material events subsequent to the balance sheet date which need to bedisclosed.
XVI. Financial Instruments Related Risks
The Company’s financial assets include notes receivables, receivables and etc., and the Company’s
financial liabilities include Notes payable, account payable, long- and short- term borrowings and etc.Please refer to relevant items in Note VII for detailed descriptions of various financial instruments. Risksrelating to these financial instruments and the risk management policies the Company adopts to mitigate
these risks are summarized below. The Company’s management manages and monitors these risk
exposures in order to ensure these risks are well within their respective risk limits.
1. Credit risk
The credit risk the Company exposed to mainly comes from bank deposits, notes receivables,accounts receivables, interest receivables, other receivables and wealth management products in othercurrent assets.
(1)TheCompany’s bank deposits and wealth management products are mainly deposited with
Haier Group Finance Co., Ltd., national banks and other large and medium size listed banks. Theinterest receivables mainly refer to the accrued interest from time deposits placed with the aforesaid
banks. The Group doesn’t believe there is any significant credit risk due to defaults of its counterparties
which would cause any significant loss.
(2)Accounts receivables and notes receivables: The Company only trades with recognized andcreditworthy third parties. It is the Company’s policy that all consumers who wish to trade on credit
terms are subject to credit verification procedures. The payment terms shall be determined on areasonable basis. The Company monitors the balances of accounts receivables on an ongoing basis andmaintains credit insurances for significant accounts receivables due from its credit clients, so as toensure the Company will not expose to significant risk of bad debts.
(3)The Company’s other receivables mainly include export tax rebate receivable, recurrent loans
and advances to its employees. The Company strengthened the management of these receivables andcorresponding business activities based on their historical reasons of occurrence, and continued to
monitor such receivables, so as to ensure that the Company’s significant risk of bad debts are
controllable and to further reduce such risks.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meetingobligations associated with financial liabilities. In order to control liquidity risk, the Company integratesthe utilization of various financing methods such as settlement with bills and bank loans, to strive for asustainable and flexible financing. The Company has secured line of credit with a great number ofcommercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate riskThe Company’s businesses are based in mainland China, the US, Japan, Southeast Asia, South Asia,
central and east Africa, Europe, and Australia, etc. and are settled in RMB, US dollar, and othercurrencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well as
transactions settled in foreign currencies in the future expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions in
foreign currencies and assets and liabilities denominated in foreign currencies, so as to reduce itsexposure to fluctuations in exchange rates to the largest extent. The Company avoid its exposure tofluctuations in exchange rates by entering into forward foreign exchange contracts.
4. Interest rate risk
The Company mainly faces interest rate risk from its long- and short- term bank loans and bondspayables which are interest-bearing. Financial liabilities with floating interest rates expose the Companyto cash flow interest rate risk, while financial liabilities with fixed interest rates expose the Company tofair value interest rate risk. The Group determines the percentage of fixed-interest rate and floatinginterest rate contracts in light of the prevailing market conditions.
XVII. Other Important Events
1. Proposal on the intended initial public offering and listing of shares by Qingdao Haier Co., Ltd
on CEINEX D-Share Market(《青岛海尔股份有限公司关于公司拟在中欧国际交易所D股市场首次公开发行股票并上市的议案》) was considered and approved at the twelfth meeting of the ninth sessionof the Company’s board meeting on 19 April 2018. The Company intends for initial public offering and
listing of the shares on the D-Share Market of the China Europe International Exchange AG (hereinafter
referred to as “the D-Share Market ”) , which will be achieved through admittance of and listing
transactions on Frankfurt Stock Exchange. China Europe International Exchange AG is a joint ventureestablished by Shanghai Stock Exchange, Deutsche B?rse Group, and China Financial Futures Exchange.
Deutsche B?rse Groupid the main operating body of Frankfurt Stock Exchange, and the listing rules ofFrankfurt Stock Exchange applies to the D-Share Market. In compliance with regulations such as theminimum offering proportion on the market where the shares of company are listed, coupled with the
capital requirement for the future development of the Company’s business, the number of proposed
offering of the shares shall not exceed 400 million (prior to the exercise of the over-allotment options),and the bookrunner may be granted over-allotment options not exceeding 15% of the number of theaforesaid D shares to be issued. Final offering number are determined by the Board authorized by thegeneral meeting and the parties authorized by the Board according to the laws, approval of theregulatory institutions and the market conditions.
2. The first 2017 Extraordinary general meeting of the Company was convened on 23 November2017, on which Proposal of the plan on public offering of convertible corporate bonds by Qingdao Haier
Co., Ltd(《青岛海尔股份有限公司关于公开发行可转换公司债券方案的议案》) was passed. In the
meantime, according to the grant to the Board by the general meeting, the Company held the seventeenthmeeting of the ninth session of the Board meeting on 24 August 2018 and considered and approved theproposal on adjustments of the offering plans; according the proposal, the Company will issueconvertible corporate bonds not exceeding RMB3,007,490,000 (including RMB3,007,490,000), withbook value of RMB100 per convertible bonds, and the term of less than 6 years commencing on the dateof issue. The general meeting of the Company authorized the Board to determine the specific scale, term,coupon rate and the final interest rate of each interest-bearing year of the offering. The public offering ofthe convertible corporate bonds of the Company is pending on the approval of CSRC, and there existsuncertainty on whether the approval can be obtained.
XVIII. Notes to Main Items of Financial Statements of the Parent Company1. Trade receivables
(1) Disclosure of trade receivables by consumer categories is set out as follows:
Items | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for bad debts | |
Individual significant trade receivables of which provision for bad debts is made on an individual basis | ||||
Trade receivables of which provision for bad debts is made on a group basis | 325,758,771.22 | 16,287,938.56 | 303,683,922.18 | 15,184,196.11 |
Individual insignificant trade receivables of which provision for bad debts is made on an individual basis | ||||
Total | 325,758,771.22 | 16,287,938.56 | 303,683,922.18 | 15,184,196.11 |
(2) Trade receivables of which provision for bad debts is made on a group basis:
Aging | Closing balance | Opening balance |
Book balance | Provision for bad debts | Book balance | Provision for bad debts | |
Within one year | 296,299,594.02 | 14,814,979.70 | 274,306,287.64 | 13,715,314.38 |
One to two years | 10,708,925.11 | 535,446.26 | 29,377,634.54 | 1,468,881.73 |
Two to three years | 18,750,252.09 | 937,512.60 | ||
Total | 325,758,771.22 | 16,287,938.56 | 303,683,922.18 | 15,184,196.11 |
(3) The total debt amount of the top 5 debtors in the ending trade receivables amounted to RMB320,002,571.10, representing 98.23% of the book balance of the trade receivables.
2. Other receivables
(1) Disclosure of other receivables by consumer categories is set out as follows:
Items | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for 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 made on a group basis | 1,918,876,574.69 | 95,943,828.73 | 16,731,629.93 | 836,581.50 |
Individual insignificant other receivables of which provision for bad debts is made on an individual basis | ||||
Total | 1,918,876,574.69 | 95,943,828.73 | 16,731,629.93 | 836,581.50 |
(2) Other receivables of which provision for bad debts is made on a group basis:
Aging | Closing balance | Opening balance | ||
Book balance | Provision for bad debts | Book balance | Provision for bad debts | |
Within one year | 1,918,876,574.69 | 95,943,828.73 | 16,731,629.93 | 836,581.50 |
Total | 1,918,876,574.69 | 95,943,828.73 | 16,731,629.93 | 836,581.50 |
(3) The total debt amount of the top 5 debtors in the ending trade receivables amounted to RMB1,885,933,217.49, representing 98.28% of the book balance of the trade receivables.
3. Long-term equity investments√Applicable □Not Applicable
(1) Details of long-term equity investments:
Items | Closing balance | Opening balance | ||
Book balance | Provision for impairment | Book balance | Provision for impairment | |
Long-term equity investments | ||||
Including: long-term equity investments to subsidiaries | 20,548,154,444.94 | 7,100,000.00 | 20,490,178,326.42 | 7,100,000.00 |
Long-term equity investments to associates | 3,178,177,202.58 | 21,000,000.00 | 3,119,176,601.66 | 21,000,000.00 |
Total | 23,726,331,647.52 | 28,100,000.00 | 23,609,354,928.08 | 28,100,000.00 |
(2) Long-term equity investments to subsidiaries
Name of Investee Companies | Opening balance | Increase or decrease for the period | Closing balance | Impairment provision closing balance |
I. Subsidiaries: | ||||
Chongqing Haier Electronics Sales Co., Ltd. | 9,500,000.00 | 9,500,000.00 | ||
Haier Group (Dalian) Electrical Appliances Industry Co., Ltd. | 34,735,489.79 | 34,735,489.79 | ||
Qingdao Haier Refrigerator Co., Ltd. | 402,667,504.64 | 402,667,504.64 | ||
Qingdao Haier Special Refrigerator Co., Ltd. | 329,832,047.28 | 329,832,047.28 | ||
Qingdao Haier Information Plastic Development Co., Ltd. | 102,888,407.30 | 102,888,407.30 | ||
Dalian Haier Precision Products Co., Ltd. | 41,836,159.33 | 41,836,159.33 | ||
Hefei Haier Plastic Co., Ltd. | 42,660,583.21 | 42,660,583.21 | ||
Qingdao Haier Technology Co., Ltd. | 16,817,162.03 | 16,817,162.03 | ||
Qingdao Haier Moulds Co., Ltd. | 273,980,796.30 | 273,980,796.30 | ||
Qingdao Haier Intelligent Electronics Co., Ltd. | 294,453,513.06 | 294,453,513.06 | ||
Qingdao Household Appliance Technology and Equipment Research Institute | 66,778,810.80 | 66,778,810.80 | ||
Qingdao Meier Plastic Powder Co., Ltd. | 24,327,257.77 | 24,327,257.77 | ||
Chongqing Haier Precision Plastic Co., Ltd. | 47,811,283.24 | 47,811,283.24 | ||
Chongqing Haier Intelligent Electronics Co., Ltd. | 11,870,511.98 | 11,870,511.98 | ||
Qingdao Haier Electronic Plastic Co., Ltd. | 48,000,000.00 | 48,000,000.00 | ||
Dalian Haier Refrigerator Co., Ltd. | 99,000,000.00 | 99,000,000.00 | ||
Dalian Haier Air-conditioning Co., Ltd. | 99,000,000.00 | 99,000,000.00 | ||
Guizhou Haier Electronics Co., Ltd. | 96,904,371.71 | 96,904,371.71 | ||
Hefei Haier Air-conditioning Co., Limited | 67,110,323.85 | 67,110,323.85 | ||
Qingdao Haier Refrigerator (International) Co., Ltd. | 158,387,576.48 | 158,387,576.48 | ||
Qingdao Haier Robot Co., Ltd. | 3,149,188.69 | 3,149,188.69 | ||
Qingdao Haier Air-Conditioner Electronics Co., Ltd. | 1,113,433,044.51 | 1,113,433,044.51 | ||
Qingdao Haier Air Conditioner Gen Corp., Ltd. | 218,245,822.50 | 2,390,483.52 | 220,636,306.02 | |
Qingdao Haier Special Freezer Co., Ltd. | 442,684,262.76 | 442,684,262.76 | ||
Qingdao Haier Dishwasher Co., Ltd. | 206,594,292.82 | 206,594,292.82 | ||
Wuhan Haier Freezer Co., Ltd. | 47,310,000.00 | 47,310,000.00 | ||
Wuhan Haier Electronics Co., Ltd. | 100,715,445.04 | 100,715,445.04 |
Chongqing Haier Air-conditioning Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
Hefei Haier Refrigerator Co., Ltd. | 49,000,000.00 | 49,000,000.00 | ||
Qingdao Haier Whole Set Home Appliance Service Co., Ltd. | 118,000,000.00 | 118,000,000.00 | ||
Chongqing Haier Refrigeration Appliance Co., Ltd. | 91,750,000.00 | 91,750,000.00 | ||
Qingdao Haier Industry Intelligence Research Institute Co., Ltd. | 8,000,000.00 | -8,000,000.00 | - | |
Haier Shareholdings (Hong Kong) Limited | 13,561,203,702.07 | 13,561,203,702.07 | ||
Shenyang Haier Refrigerator Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
Foshan Haier Freezer Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
Zhengzhou Haier Air-conditioning Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
Qingdao Haidayuan Procurement Service Co., Ltd. | 20,000,000.00 | 20,000,000.00 | ||
Qingdao Haier Intelligent Technology Development Co., Ltd. | 130,000,000.00 | 130,000,000.00 | ||
Qingdao Haier Technology Investment Co., Ltd. | 200,000,000.00 | 13,585,635.00 | 213,585,635.00 | |
Qingdao Casarte Smart Living Appliances Co., Ltd. | 10,000,000.00 | 10,000,000.00 | ||
Haier Overseas Electric Appliance Co., Ltd. | 40,000,000.00 | 40,000,000.00 | ||
Haier (Shanghai) Electronics Co., Ltd. | 12,500,000.00 | 12,500,000.00 | ||
Haier U+smart Intelligent Technology (Beijing) Co., Ltd. | 143,000,000.00 | 143,000,000.00 | ||
Haier Electronics Group Co., Ltd. | 669,830,769.26 | 669,830,769.26 | 7,100,000.00 | |
Qingdao Haidarui Procurement Service Co., Ltd. | 107,800,000.00 | 107,800,000.00 | ||
Shanghai Haier Zhong Zhi Fang Chuang Ke Space Management Co., Ltd. | 2,000,000.00 | 2,000,000.00 | ||
Haier Industries Holdings Limited | 100,000,000.00 | 50,000,000.00 | 150,000,000.00 | |
Qingdao Haier Medical Refrigeration Appliance Co., Ltd (青岛海尔特种制冷电器有限公司) | 100,000,000.00 | 100,000,000.00 | ||
Qingdao Haier Intelligent Household Appliances Co., Ltd. | 326,400,000.00 | 326,400,000.00 | ||
Total | 20,490,178,326.42 | 57,976,118.52 | 20,548,154,444.94 | 7,100,000.00 |
(3) Long-term equity investments to associates
Name of investee companies | Opening balance | Increase or decrease for the Period | Closing balance | Impairment Provision Closing balance | ||
Increase or decrease for the Period | Investment income recognized under the equity method | Others | ||||
QingDao Haier-Medical Co., Ltd | 229,914,790.86 | 22,937,226.22 | 252,852,017.08 | |||
Wolong Electric Zhangqiu Haier Motor Co., Ltd. | 106,957,786.56 | 2,976,713.78 | 109,934,500.34 | |||
Qingdao HBIS Composite New | 106,068,803.08 | -106,068,803.08 | - |
Material Technology Co., Ltd.(青岛河钢复合新材料科技有限公司) | ||||||
Hefei HBIS New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 109,289,567.00 | -109,289,567.00 | - | |||
Qingdao Haier SAIF Smart Home Industry Investment Center (limited partnership) | 270,536,881.98 | 270,536,881.98 | ||||
Bank of Qingdao Co., Ltd. | 917,520,227.90 | 47,306,223.44 | -27,171,376.14 | 937,655,075.20 | ||
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 529,934,750.95 | 38,033,746.45 | -56,772,000.00 | 511,196,497.40 | ||
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 305,185,137.09 | 6,006,028.41 | 311,191,165.50 | 21,000,000.00 | ||
Qingdao Haier Multi-media Co., Ltd. (青岛海尔多媒体有限公司) | 543,768,656.24 | 6,102,089.30 | 549,870,745.54 | |||
Qingdao Hebei Iron & Steel New Material Technology Co. Ltd | 226,758,549.43 | 8,181,770.11 | 234,940,319.54 | |||
Total | 3,119,176,601.66 | 11,400,179.35 | 131,543,797.71 | -83,943,376.14 | 3,178,177,202.58 | 21,000,000.00 |
4. Operation Income and Operation Expense:
√Applicable □Not Applicable
Unit and Currency: RMB
Items | Amount for the current period | Amount for the previous period | ||
Revenue | Cost | Revenue | Cost | |
Principal Business | 1,621,944,396.28 | 1,119,899,681.97 | 1,541,395,774.74 | 1,124,839,769.04 |
Other Business | 2,209,632.18 | 162,870.29 | 1,716,550.91 | 259,972.03 |
Total | 1,624,154,028.46 | 1,120,062,552.26 | 1,543,112,325.65 | 1,125,099,741.07 |
5. Investment Income
Items | Amount for the current period | Amount for the previous period |
Long-term equity investments income calculated by the equity method | 131,543,797.71 | 93,545,425.01 |
Long-term equity investments income calculated by cost method | 87,976,272.14 | 58,348,342.72 |
Total | 219,520,069.85 | 151,893,767.73 |
XIX. The approval of Financial Statements
The financial statements were approved to be issued by the board of the Company on 30August 2018.
XX. Supplementary Information1.Basic earnings per share and diluted earnings per share√Applicable □Not Applicable
Items | Amount for the current period | Amount for the previous period | ||||
Weightedaverage return on net assets | Earnings per share (RMB) | Weightedaverage return on net assets | Earnings per share (RMB) | |||
Basic earnings per share | Diluted earnings per share | Basic earnings per share | Diluted earnings per share | |||
Net profit attributable to ordinary shareholders of the company | 14.10% | 0.797 | 0.786 | 15.40% | 0.724 | 0.724 |
Net profit attributable to ordinary shareholders of the company after deduction of non-recurring gain or loss | 12.99% | 0.734 | 0.723 | 13.20% | 0.619 | 0.619 |
2、Non-recurring gain or loss
Items | Amount for the current period | Amount for the previous period |
Net profit attributable to ordinary shareholders of the Company | 4,858,795,529.42 | 4,416,867,240.37 |
Less: non-recurring gain or loss | 382,803,964.15 | 639,527,785.42 |
Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring gain or loss | 4,475,991,565.27 | 3,777,339,454.95 |
Breakdown of non-recurring profit or loss for the period
Non-recurring profit or loss items | Amount for the period |
Profit or loss from disposal of non-current assets | 23,934,860.63 |
Income from disposal of long-term equity investments | |
Income from disposal of financial assets available for sale | - |
Government grants included in current profit or loss, except that closely related to the normal operating business, complied with requirements of the national policies, continued to be granted with the amount and quantity determined under certain standards | 137,147,498.76 |
Gains accrued for that investment costs made by the corporate for acquisition of subsidiaries, associate companies and joint ventures were less than fair value of the investees’ identifiable net assets upon the investments | |
Corporate reorganization fee, including staff settlement expenses and consolidation fee, etc. | |
Profit and loss of changes in fair value arising from holding of trading financial assets and trading financial liabilities except for valid straddle business relevant to normal business of the company, as well as investment gain realized from disposal of trading financial assets, trading financial liabilities and financial assets available for sale | 193,260,601.21 |
Trustee fee income from entrusted operations | 943,396.22 |
Other non-operating income and expenses except for the above mentioned | 169,865,362.68 |
Effect of minority equity interests | -91,861,955.96 |
Effect of income tax | -50,485,799.39 |
Effect on profit from combination of companies under common control | |
Total | 382,803,964.15 |
2.Difference on figures by domestic and foreign Accounting Standards□Applicable √Not Applicable
3.Others□Applicable √Not Applicable
SECTION XI SECTION XIDOCUMENTS AVAILABLE FOR
INSPECTION
Documents Available for Inspection | (I) Interim Report of 2018 of Qingdao Haier Co., Ltd with signatures of the legal representative. |
(II)Financial report with signatures and seals of the legal representative, chief accountant and person in charge of accounting department. | |
(III) All documents which have been publicly disclosed on the newspaper designated by China Securities Journal, Shanghai Securities News, Securities Times, Securities and the website of Shanghai Stock Exchange (www.sse.com.cn) during the reporting period. |
Chairman: Liang HaishanPublish approved by the Board on 30 August 2018