2020 Interim Report Haier Smart Home Co., Ltd.
Company Code: 600690 Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2020 Interim Report
2020 Interim Report Haier Smart Home Co., Ltd.
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (the “Company”) are individually andcollectively responsible for the content set out therein and hereby assure that the contentset out in the interim report is true, accurate and complete, and free from any falserecord, misleading representation or material omission.II. All directors attend the Board of Directors.III. The interim report is unaudited.IV. Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of
the Company) and Ying Ke (the person in charge of accounting department) herebycertify that the financial report set out in the interim report is true, accurate andcomplete.V. Proposal of profit distribution or proposal of converting capital reserves into sharecapital for the reporting period examined and reviewed by the BoardNoVI. 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 purposesNoVIII. Is there any provision of external guarantee in violation of prescribed
decision-making procedures?NoIX. Important risk warningsFor 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 of the Board: Liang Haishan
Haier Smart Home Co., Ltd.
28 August 2020
2020 Interim Report Haier Smart Home Co., Ltd.
Contents
SECTION I DEFINITIONS ...... 4SECTION II GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIALINDICATORS ...... 6
SECTION III SUMMARY OF THE COMPANY'S BUSINESS ...... 10
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS ...... 17
SECTION V SIGNIFICANT EVENTS ...... 40SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUTSHAREHOLDERS ...... 59
SECTION VII RELEVANT INFORMATION OF PREFERRED SHARES ...... 63
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT ...... 64
SECTION IX RELEVANT INFORMATION OF CORPORATE BONDS ...... 65
SECTION X RESPONSIBILITY STATEMENT ...... 66
SECTION XI FINANCIAL REPORT ...... 67
SECTION XII DOCUMENTS AVAILABLE FOR INSPECTION ...... 251
2020 Interim Report Haier Smart Home Co., Ltd.
SECTION I DEFINITIONSUnless otherwise stated in context, the following terms should have the following meanings in thisreport:
| Definition of frequently used terms | |
| CSRC | China Securities Regulatory Commission |
| SSE | Shanghai Stock Exchange |
| The Company, Haier Smart Home | Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”, and the original short name is “Qingdao Haier” |
| Four Major Securities Newspapers | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily |
| Haier Electrics, 1169 | Haier Electronics Group Co., Ltd. (a company listed in Hong Kong, stock code: 01169.HK), a subsidiary as accounted for in the consolidated statement of the Company as to a total of 45.68% of its equity as of 30 June 2020. |
| GEA | GE Appliances, namely household appliances assets and business of General Electric Group, has currently been acquired by the Company. |
| FPA | Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐雪派克) was established in 1934 and is known as the national appliance brand of New Zealand, the global top-level kitchen appliance brand and the famous luxury brand of the world. It has products including ventilator, gas stove, oven, dishwasher, microwave oven, freezer, washing machine, clothes dryer and etc. Its business covers over 50 countries/regions across the world. FPA is wholly-owned subsidiary of the Company. |
| Candy | Candy Group (Candy S.p.A) is an international professional appliances manufacturer from Italy. Since its establishment in 1945, it has been committed to enabling the global users to enjoy a higher quality of life through innovative technologies and quality services. Candy Group has been prestigious in the global market with users all over the world via its ten self-owned professional household appliance brands. In January 2019, Candy officially became a wholly-owned subsidiary of the Company. |
| CMM | China Market Monitor Co., Ltd., as an authoritative market research institute in Chinese home appliances area, was established in 1994 and has been focusing on research of retail sales in China consumption market ever since. |
| 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. |
| All View Cloud | All View Cloud (AVC) is a big data integrated solution provider perpendicular to the smart home field, providing enterprises with big data information services, regular data information services and special data services. |
| IEC | The International Electrotechnical Commission. Founded in 1906, it is the world's first organization for the preparation and publication of international electrotechnical standardization and is responsible for international standardization for electrical engineering and electronic engineering. The goals of the commission include: to effectively meet the needs of the global market; to ensure that the standards and conformity assessment programs are applied globally in a prioritized manner and to the greatest extent; to assess and improve the quality of products and services involved in its standards; to create conditions for the |
2020 Interim Report Haier Smart Home Co., Ltd.
| common use of complicated systems; to improve the effectiveness of the industrialization process; to improve human health and safety, and to protect the environment. | |
| IEEE | The Institute of Electrical and Electronics Engineers, an international association of electronic technology and information science engineers, is currently the largest non-profit professional technology society in the world. It is committed to the development and research of electrical, electronic, computer engineering and science-related fields, and has now developed into an international academic organization with great influence in terms of the fields of space, computer, telecommunications, biomedicine, power and consumer electronics. |
| Model of RenDanHeYi | “Ren” is an employee who has the spirit of two creations (entrepreneurship, innovation); “Dan” is the value of users. Each employee creates value for the user in a different self-employed business, thereby realizing his own value, and the corporate value and shareholder value are naturally reflected. |
2020 Interim Report Haier Smart Home Co., Ltd.
SECTION II GENERAL INFORMATION OF THE COMPANY AND
KEY FINANCIAL INDICATORSI. Information of the Company
| Chinese name | 海尔智家股份有限公司 |
| Chinese short name | 海尔智家 |
| English name | Haier Smart Home Co., Ltd. |
| English short name | Haier Smart Home |
| Legal representative | Liang Haishan |
II. Contact person and contact Information
| Secretary to the Board | Representative of securities affairs | IR | Others | |
| Name | Ming Guozhen | Liu Tao | Sophie (孙瑶) | Global Customer Service Hotline |
| Address | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao City | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao City | Haier Deutschland GmbH, Hewlett-Packard-Str. 4,61352 Bad Homburg, Germany | / |
| Tel | 0532-88931670 | 0532-88931670 | +49 160 9469 3601 (Germany) | 4006 999 999 |
| Fax | 0532-88931689 | 0532-88931689 | / | / |
| finance@haier.com | finance@haier.com | Y.sun@haier.de | / |
III. Summary of the changes in general information
| Registered address | Haier Industrial Park, Laoshan District, Qingdao City |
| Postal code of the registered address | 266101 |
| Business address | Haier Information Industrial Park, Laoshan District, Qingdao City |
| Postal code of the business address | 266101 |
| Website | http://www.haier.net/cn/ |
| 9999@haier.com | |
| Query index for any changes during the reporting period | Not applicable |
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 |
| Website for publishing annual report by other websites | www.xetra.com, www.dgap.de |
| Deposit place of interim report | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao |
2020 Interim Report Haier Smart Home Co., Ltd.
| City | |
| Query index for any changes during the reporting period | Not applicable |
V. Summarized information of shares of the Company
| Type of Shares | Stock Exchange of Shares Listed | Stock Short Name | Stock Code | Stock Short Name Before Variation |
| A share | Shanghai Stock Exchange | Haier Smart Home | 600690 | Qingdao Haier |
| D share | Frankfurt Stock Exchange | Haier Smart Home | 690D | Qingdao Haier |
VI. Other related information? Applicable √Not Applicable
VII. Key accounting data and financial indicators of the Company(I) Key accounting dataUnit and Currency: RMB
| Key accounting data | For the reporting period (January-June) | The corresponding period of last year | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
| After adjustment | Before adjustment | |||
| Operating revenue | 95,728,097,106.65 | 100,023,464,237.90 | 98,979,793,121.16 | -4.29 |
| Net profit attributable to shareholders of the listed Company | 2,780,800,712.72 | 5,058,082,964.47 | 5,150,869,558.02 | -45.02 |
| Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company | 2,569,440,497.59 | 4,593,356,231.54 | 4,703,180,815.00 | -44.06 |
| Net cash flows from operating activities | -542,919,257.40 | 3,619,808,314.60 | 3,633,833,497.74 | -115.00 |
| 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 | |||
2020 Interim Report Haier Smart Home Co., Ltd.
| Net assets attributable to shareholders of the listed Company | 48,330,401,679.39 | 47,888,319,765.92 | 47,888,319,765.92 | 0.92 |
| Total assets | 198,042,777,870.24 | 187,454,236,283.17 | 187,454,236,283.17 | 5.65 |
(II) Key financial indicators
| Key financial indicators | For the reporting period (January-June) | The corresponding period of last year | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
| After adjustment | Before adjustment | |||
| Basic earnings per share (RMB / share) | 0.423 | 0.794 | 0.809 | -46.73 |
| Diluted earnings per share (RMB / share) | 0.413 | 0.764 | 0.778 | -45.94 |
| Basic earnings per share after deducting non-recurring profit or loss (RMB / share) | 0.391 | 0.739 | 0.739 | -47.09 |
| Weighted average return on net assets (%) | 5.68 | 11.99 | 12.29 | Decreased by 6.31 percent points |
| Weighted average return on net assets after deducting non-recurring profit or loss (%) | 5.25 | 11.22 | 11.22 | Decreased by 5.97 percent points |
Explanation of the key accounting data and financial indicators of the Company? Applicable √Not Applicable
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 | -11,377,076.09 |
| Government subsidies through the profit and loss, except for government subsidies that are closely related to the Company's normal business operations, comply with national policies and regulations, and continue to be enjoyed in a fixed amount or fixed quantity according to certain standards | 390,801,680.26 |
| Profit and loss of changes in fair value arising from holding of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities except for valid hedging business relevant to normal business of the company, as well as investment gain realized from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt investments | -16,026,029.49 |
2020 Interim Report Haier Smart Home Co., Ltd.
| Other non-operating income and expenses except the aforementioned items | 10,350,602.15 |
| Disposal gains of long-term equity investment | -199,825.65 |
| Effect of minority equity interests | -130,081,198.31 |
| Effect of income tax | -32,107,937.74 |
| Total | 211,360,215.13 |
X. Others? Applicable √Not Applicable
2020 Interim Report Haier Smart Home Co., Ltd.
SECTION III SUMMARY OF THE COMPANY'S BUSINESS
I. Introduction of major business, operating model of the Company and industry background
during the reporting periodThe Company mainly engages in research, development, production and sales of home appliancescovering refrigerators/freezers, washing machines, air-conditioners, water heaters, kitchen applianceproducts, small home appliances and other smart home business, as well as offering smart home scenariosolutions. Through rich portfolios of product, brand and solution, the Company aims to create afull-scene smart life experience and satisfy the needs of users to customize a better life.Since its establishment, the Company has been upholding the operation philosophy of “takingusers as right and seeing ourselves as wrong” and adhering to the corporation value of “from zero to onewith people first (人是目的、有生于无)”, while keeping the spirit of entrepreneurship and innovation, tofirmly keep up with developments of each era. In overseas markets, the Company has always adhered tothe strategy of proprietary brand management and through its persistent efforts as well as merger andacquisition integration, it has successively acquired Sanyo in Japan of its white goods business, thehome appliances sector of GE, Fisher & Paykel company in New Zealand, Candy company in Italy, andholds 48.41% equity interest of MABE in Mexico, to construct local market competitiveness byintensifying the three in one “R&D, manufacturing and marketing”. Through continuous optimization ofresource integration and platform sharing as well as global strategic synergies, the Company achievesglobal operation of seven world-class brands, including Haier, Casarte, Leader, GE Appliances, Fisher &Paykel, AQUA and Candy. In the first half of 2020, revenue from overseas operation represented 49%of the total revenue while near 100% of it was generated from self-managed brands. Oversea businesscovers five continents, namely Asia, Europe, America, Australia and Africa, providing comprehensivehome appliance products and home scenario solutions for hundreds of millions of users worldwide.In the era of IoT, the Company actively promotes the transformation, upgrade and implementationof the “1+N” smart home scenario solution across the world, and devotes itself to providing users with afull-process solution of “designing a home, building a home and servicing a home”. (1) Based onadvanced and efficient R&D system and manufacturing capacity, the Company leads the development ofthe industry and the upgrade of consumption with its original technologies and high-end smart offeringssolutions. For instance, Casarte brand has a share of 40.2% in the market of high-end refrigerators pricedabove RMB10,000, a share of 75.5% in the market of high-end washing machines and its share in themarket of high-end air-conditioners priced above RMB15,000 is as high as 42.3%. (2) In terms ofmarket construction, internally, digital transformation is made to improve operational efficiency, andexternally, smart home scenarios are applied to improve user experience. Based on the Smart HomeExperience Cloud Platform, we will build differentiated competitiveness through six platforms ofnamely “products, marketing, users, customer, logistics and services”, establish an ability system toreach users efficiently, and accelerate business model transformation. In the market of county andtownship, the Company fully pursues the integration of four networks of “marketing, logistics,after-sales and information” and the business mode of unified distribution by a single central warehouseto enhance market terminal competitiveness.
According to retail sales statistics on the global large home appliances published by Euromonitor,the world’s leading independent provider of strategic market research, in 2019, sales of Haier’s large
2020 Interim Report Haier Smart Home Co., Ltd.
home appliances ranked No. 1 in the world for the 11th consecutive year. Meanwhile, global sales ofHaier’s refrigerators, washing machines, wine cellars and freezers continued to rank No. 1 in the world.The sales of Haier Health self-cleaning air-conditioner and interconnected air-conditioner in 2019represented a global market share of 43.4% and 29.4% respectively and ranked No. 1 in the world.Industry Summary for the First Half of 2020(I) Macro environmentIn the first half of the year, the COVID-19 epidemic hit the domestic and global economy. Thedomestic market and consumer demand were greatly impacted by the epidemic in the first quarter, andthe domestic epidemic was effectively controlled in the second quarter. According to the NationalBureau of Statistics, the GDP of China decreased by 1.6% year-on-year in the first half of the year, ofwhich the GDP of the second quarter turned positive, achieving a year-on-year growth of 3.2%. Inaddition, the total amount of social retail goods increased month by month, domestic demand graduallyrecovered, and the enterprises' expectation of production and operation activities also gradually becamehigher. All indicators show that China’s economy is gradually returning to normal. However, thegradually worsening and frequently repeated overseas epidemic since the end of the first quarter, and themore complicated international political situation increases the uncertainties of international trade andglobal industrial chain operation.
(II) Domestic home appliances marketIn the first half of the year, the insufficient effective consumer demand and lack of consumerconfidence caused by severe restriction on economic and social activities during the epidemic period andthe decrease in both average actual income level and expected income level of residents, as well as theimpact of the epidemic on completion, decoration and delivery of real estate led to the slacking marketdemand for white goods. Under greater shipping pressure, market price competition is becomingincreasingly fierce, in particular, the average prices of all categories of online home appliances show adownward trend. According to the report of China Market Monitor, in the first half of 2020, the retailrevenue of main categories of white goods market (refrigerators and freezers, washing machines, airconditioners, water heaters, range hoods and gas stoves) was RMB436.5 billion, decreasing by 23.1%compared to the same period of last year; the sales volume was 79.64 million units, decreasing by 9.0%compared to the same period of last year. Among them, retail sales of refrigerators, freezers, washingmachines, household air conditioners, water heaters, range hoods and gas stoves decreased by 11.1%,
13.5%, 16.0%, 26.0%, 16.7% and 17.4% respectively compared to the same period of last year.With the impact of consumption upgrading trend and the epidemic this year, people’s demand onhigh-end and healthy home appliance is still booming, a trend of high quality, health and high-end wasobvious. High-end product experience was improved by the application of smart, IoT, voice control andother technologies, and competition expanded from a single hardware to full range products combininghardware and software, interconnected platform and integrated ecosystem. The demand for complete setof scenarios has increased significantly. For example, during the online shopping festival of Suning on18 June, the proportion of packaged purchase users of Haier refrigerators, washing machines, and waterheaters increased as high as 30%; the packaged purchase trend is conducive to higher customer unitprices, smart home scenarios creation and drainage between strong and weak categories to meet theneeds of coordination and unification of home appliances and home decoration styles. Therefore,
2020 Interim Report Haier Smart Home Co., Ltd.
enterprises must accelerate the transformation from selling single item to providingcomprehensive smart homes solutions.
In terms of competition structure: (1) concentration in the industry: the market landscapecommence further consolidation during the epidemic period, the share of leading players continued torise in refrigerator, washing machine, air conditioner and water heater, according to the data of All ViewCloud, the total market share of the TOP5 of them goes over 75% both online and offline; (2) industryaverage price performance: according to the data of CMM, the trend of online and offline average pricesof refrigerator and washing machine industry were similar, with the online average price going downand the offline average price going up; while air conditioner, water heater and kitchen appliance allexperienced downturn in both online/offline average price.
In terms of channel: ? Part of rigid demand shifted to online and the online sales growth speeds upand the proportion is significantly improved because of the restriction of going out caused by theepidemic and offline store closures. According to All View Cloud, the online retail sales amount andvolume of refrigerator increases 12.2% and 14.1%, respectively, and the retail sales amount and volumeof washing machine increases 4.3% and 9.9%, respectively; ? The sales of physical stores is impactedby the epidemic, but the e-commercial live streaming develops rapidly, and the live stream sellingbecomes one of the important sales channel in home appliance industry.(III) Overseas home appliances market
During the reporting period, the performance of overseas home appliances demand was impactedby epidemic and varied due to different level of economic development, appliances penetration andinfrastructure. Specifically:
(1) American Market: The US appliances industry declined by 5.4% in the first half of 2020.
(2) European market: Affected by the epidemic, the European home appliance industry hasdeclined significantly. All household appliances, except for refrigerators, declined year-on-year.Among them, refrigeration has fallen by 12%, washing machines by 12%, kitchen appliancesby 15%, dishwashers by 12%, and microwave ovens by 10%.
2020 Interim Report Haier Smart Home Co., Ltd.
(3) South Asian market: ①Affected by the epidemic and city lockdown, sales in India havebasically stagnated. The market began to be gradually unblocked in late May, but core citiesand stores were still unable to resume normal operations. In June, the industry as a whole onlyrecovered to about 70% of the same period. ②Affected by the epidemic, personal mobility inPakistan has declined, with rising cost living, and the market capacity of various products hasbeen greatly reduced.
(4) Southeast Asian market: ①In Thailand, under the influence of the epidemic, terminal price cutfor promotions, retail prices dropped sharply, while the share of low-end products increased;
② Commercial activities were restricted, and retail sales and retail volumes declined in themarkets of other regions affected by government control. Retail in terminals in May and Junebegan to recover gradually.
(5) Japanese market: In the Japanese market, affected by the epidemic, the overall sales ofrefrigerators, air conditioners, and washing machines white electrical appliance industry fell by
1.8% year-on-year, but sales increased 1.8% year-on-year. Residents were restricted fromgoing out, and the proportion of online sales has increased.
(6) Australia and New Zealand market: ① In Australia, affected by the epidemic and thelockdown measures to cope with the epidemic, the offline retail industry was impacted and theretail industry declined; ② The market demand for home appliances in New Zealand droppedsharply, becoming the bottom three products demanded for ordinary households. At the sametime, consumers’ demand for cost-effective products has increased and they were moresensitive to prices.(IV) Industry outlook for the second half of the year
(1) Domestic market: Since the second quarter, there have been obvious signs of improvement indomestic terminal demand. From the perspective of monthly sales, demand that has not been releaseddue to the impact of the epidemic is constantly released, and the market is gradually recovered.Specifically, factors such as real estate completion support and the release of early-stage demandcompensation have driven sales to stabilize and pick up. The market growth rate in the second half of theyear will be significantly better than that in the first half of the year. And with the further improvementof industry concentration, industry price competition is expected to gradually slow down.
(2) Overseas market: On the whole, the delayed purchase demand caused by the epidemic isexpected to be gradually released. If the epidemic in the local market is controlled, market capacitygrowth will gradually resume. The proportion of online channels will further increase.II. Explanation on significant change on major assets of the Company during the reporting
period
□Applicable √Not Applicable
III. Analysis on core competitiveness during the reporting period
√Applicable □Not Applicable
2020 Interim Report Haier Smart Home Co., Ltd.
Since incorporation in 1984, the Company has always adhered to the principle of grasping thedevelopment trend of the industry and driving the sustainable and healthy development with innovationsystem focusing on the satisfaction of users’ demand for a better life, and it has successfully turned itselffrom a collectively owned small factory which was on the verge of bankruptcy into one of the largesthome appliances manufacturers in the world. The Company is committed to realizing sustainabledevelopment across different cycles through continued innovations in strategy, management model,brand building, R&D, smart manufacturing, and expansion in domestic and foreign markets.(I) World-renowned brand reputation and global leading position in smart home solutionsBased on the all-round deployment of brand, research and development, intellectual manufacturing,channel, service, ecosystem and smart home platform, Haier has built one of the world’s leading whitegoods, kitchen and bathroom production portfolio, offering refrigerators and freezers, washing machines,air conditioners, water heaters, water purifiers and kitchen appliances, and it provides consumers with“Full set, Customized, Iterative” “1+N” smart full set solutions to realize active services. “Full set” is aone-stop solution to solve users’ demands of whole-house appliances through a full set service thatintegrates smart home product solutions and home appliances. “Customized” enables users to freelycustomize smart home scenario based on the advantages of Haier's entire industry. “Iterative” refers toupgrade and iterate smart home technology, performance and experience by user’s habits and scenerequirements, and constantly adapt to user’s need by collecting and analyzing product use data withsmart home cloud brain.According to data released by Euromonitor on 9 January 2020, Haier has been ranked global No. 1large home appliances brands for 11 consecutive years. In category of refrigerators, washing machines,wine cellars, and freezers, the Company continues to be No. 1 in the world. Facing the continuousiteration of user needs, the Company has achieved full coverage of user groups around the world,leveraging on the global synergy, promoted the healthy development and technological progress of theindustry through the global strategic synergy among seven brands, namely Haier, Casarte, Leader, GEAppliances, Fisher & Paykel, AQUA and Candy.Leveraging on outstanding brand, R&D and innovation, the Company could achieved continuoussatisfaction and leading in appliance trend consumption, promoted continuous development, thusdirectly facilitate its leadership in high-end market. In the first half year of 2020, Casarte’s market shareof home refrigerator and washing machine’s price above RMB10,000 and air conditioner’s price aboveRMB15,000 reached 40.2%, 75.5% and 42.3%, respectively; the market share of Fisher & Paykel, theworld’s top home appliance brand, is No. 1 in New Zealand.(II) Industry-leading R&D and technological competitiveness
1. Global R&D network: Under the premise of being independent and controllable, the Companyhas established a global innovation ecosystem featuring "original technology + open innovation", built auser-centric "10+N" open innovation ecosystem, and built an open innovation platform HOPE. 10represents 10 R&D centers across the world (eight are overseas), N represents N innovation centers thatfocus on changing users’ demand and an innovative community to form a global network of partners andusers, and realize the goal that “R&D goes wherever users demand and innovation resources are” toprovide excellent experience for its users.
2020 Interim Report Haier Smart Home Co., Ltd.
2. Leadership in the development of international standards and technology patents: As of the firsthalf of 2020, Haier has participated in preparation and revision of dozens of international standards, andmore than 500 national/industrial standards revisions cumulatively, and applied for more than 53,000patents in the global cumulatively.
3. Innovative R&D through HOPE (Haier Open Partnership Ecosystem) platform: In parallel toin-house innovation, Haier opened up its global resources, to attract world-class resources to participatein research and development with the open mechanism of "co-creation, win-win, and sharing", leadingthe development direction of industry products and technologies, breaking through the barriers betweenusers and resources and to incorporate users, enterprises and resources into the same interactiveecosystem. In addition, Haier continued to make cross-border and revolutionary innovation througheffective collaboration and zero-distance interaction of different stakeholders within the community. Inthe first half of the year, the global R&D center team, global community experts, innovative ecologicalresources and other co-creation teams have conducted TechLink antibacterial and antivirus technologylive broadcasts and program interactions in response to the epidemic, and iterating and upgradingproducts to constantly improve the antibacterial and antivirus experience.(III) Competitiveness of leading smart manufacturing and mass manufacturingThe core competitiveness of Haier’s smart manufacturing lies in its connected factories and thetransition from large-scale manufacturing to large-scale customization to achieve the entire enterpriseprocess, entire life cycle and entire value chain system. Haier has established 22 global-leading smartfactories as examples for the industry and continuously updated the abilities of interconnection, digitalinsight and intelligent optimization of the whole ecosystem. The business of these factories coversvarious fields such as refrigerators, washing machines, air-conditioners, water heaters, kitchenappliances to fulfill users with quality experiences. As of 30 June 2020, the non-warehousing rate ofproduct reached 77%, showing a significant effect on value embodiment.
(IV) The layout of efficient and in-depth distribution network
1. Through an Omni-channel distribution system, the Company has established coverage of first,second, third and fourth-tier domestic markets and provided convenient shopping experience. TheCompany also maintained strong cooperation with specialized chain for home appliances includingGome and Suning, as well as e-commerce platforms including Tmall and JD.com. For distributionnetwork, the Company has established sophisticate and comprehensive franchise stores, touch pointnetwork and a sophisticate operation system; for comprehensive distribution network, the Company alsoestablished V58 and V140 clubs, etc., maintained close relationship with major regional distributors. Inaddition, the Company has accelerated the expansion of network construction in home improvementchannels such as building materials and decoration market. Relying on the advantage of multi-brand andcomplete-sets product, the Company will build smart and full-scene experience stores to providecomprehensive displays, design, sales and services in the end-market.
2. The company has established entire process information system. The Company has constructed“Jushanghui”(巨商汇) platform to provide the order management for customers of distributors todigitized procurement, sales and settlement and reduce the management cost. “Yilihuo” (易理货)platform covers inventory and sales management and membership management of township customers,and realizes services to towns, products to towns, resources to towns, goals to towns, incentives to towns,
2020 Interim Report Haier Smart Home Co., Ltd.
and trainings to towns. The Company provides direct logistics to the town through cloud-basedwarehouse system, while comprehensively integrating the network of each respect including logistics,information, services and sales to improve efficiency.(V) Excellent global operational capabilityFocusing on “building proprietary brand portfolio”, the Company has completed its 3-in-1 networkcomprising R&D, manufacturing and marketing in major overseas markets through organic growth andacquisitions, in order to identify and meet local consumers’ demand. The Company’s global salesnetwork covers more than 160 countries, with 54 wholly/partially owned factories overseas.During the Report Period, the Company deepened the 3-in-1 global implementation by focusing oncreating brand and accelerating high-end transformation, and continued to strengthen leadership in smarthome solution in the IoT era overseas. In the first half of 2020, revenue from overseas operationamounted to RMB47 billion, representing 49% of the total revenue while near 100% of the revenue wasgenerated from self-managed brands. The Company has successfully transformed from a single-brandoperation to a multi-brand and cross-regional global business. The Company targets a leap from “goingout, going in” to “going up” through integration of global resources, and gradually entering themainstream market. The Company’s market shares in Pakistan, the US and India ranked No. 1, No. 2and No. 4; and it is No. 5 in Europe and No. 2 in Australia.(VI) Integrity of corporate culture and the win-win under RenDanHeYi managementIntegrity based on quality and service is vital to Haier’s development and success. With“user-oriented” and “persistent honesty” values, Haier has turned itself from a collectively owned smallfactory which was on the verge of bankruptcy into the largest white goods manufacturers in the world,while keeping a leading position in world-wide innovation in the Internet era. Haier upholds theoperation value of “taking the user as right and ourselves as wrong”, which stimulated the spirit ofinnovation, revolution and entrepreneurship, and encourages the Company to step into the beat of thetimes and constantly challenge and improve itself. The value of “win-win under RenDanHeYi” isfundamental to sustainable development of Haier. Haier belongs to all stakeholders, includingemployees, users, shareholders, business partners and the community. In the era of network, Haier hasformed a network of suppliers and partners with shared interests to create value which contributes tolong term sustainability. Only if all stakeholders continue to achieve a win-win situation, can Haierachieve sustainable operations. In order to achieve this goal, Haier continues to carry out business,develop and refine the win-win model under RenDanHeYi where “Ren” refers to employees who havethe spirit of entrepreneurship and innovation, and “Dan” refers to value creation for users. Everyemployee creates value for users in his/her business unit, thereby realizing their own value, during thisprocess, maximizing shareholders’ and enterprise value.
2020 Interim Report Haier Smart Home Co., Ltd.
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONSI. Discussion and analysis on operations
The outbreak of 2020 COVID-19 epidemic impacted the Company's overall operations, withthe domestic business affected by the epidemic in the first quarter and the good momentum of theoverseas business tempered by the spread of the epidemic around the world in the second quarter. Inthe first half of 2020, revenue of the Company amounted to RMB95.728 billion, representing ayear-on-year decrease of 4%; and net profit attributable to owners of the Parent Company amountedto RMB2.78 billion, representing a year-on-year decrease of 45%. Revenue from overseas marketachieved RMB47 billion, representing a year-on-year increase of 0.6%. Performances in main areasare better than that in the industry. The profit ratio of overseas operation increased from 2.3% in thefirst quarter to 3.8% in the second quarter. Faced with the challenges of the epidemic, multiplemeasures taken by the Company gradually came into effect, in which case the business trendimproved month by month in the second quarter and achieved dual-increase of revenue and profit inJune.
The Company maintained its focus on the IoT smart home eco brand strategy, and accelerateddigital transformation, conducted the construction of smart home Experiential Cloud platform withAI+IOT technology, launched Smart Home APP through the EMC self-driven mechanism underRenDanHeYi model, to promote online interaction and sales and maintain high-end brandleadership, launched scenario solutions such as complete sets of balcony and kitchen and promotedtransformation of replacing products with scenarios and incorporating all industries into theecosystem. Besides, the Company promoted digital transformation, optimized efficiency andincreased share through the four reconstructions of “goals, processes, organizations andmechanisms”, and six platforms for “products, marketing, users, customers, logistics, and services”,and the business trend improved month by month in the second quarter and achieved dual-digitgrowth of revenue and profit in June.
1. Domestic market share of all products continued to rise with the continuous expansionof the scale of high-end brands
2020 Interim Report Haier Smart Home Co., Ltd.
① According to China Market Monitor Co., Ltd (CMM), in the first half of 2020, theCompany's offline and online retail sales market share of refrigerators, washing machines,household air conditioners, water heaters and kitchen appliances continued to grow upward trend.Refrigerators and washing machines continued to expand our advantages as an industry leader, andthe offline market share of refrigerators and washing machines is 2.98 and 1.52 times that of No. 2player while the online market share is 2.2 and 1.26 times that of No. 2 player. According toChinaIOL, the market share of central air conditioners in the first half year was 11%, representing ayear-on-year increase of 1.25 percentage points. ② Casarte recorded a net income of RMB3.5billion in the first half year, representing a year-on-year increase of 7%, and revenue in the secondquarter increased by 21%, and continued to expand its competitive advantage in the high-endmarket.
2. Overseas markets: In the face of adverse impacts brought by the epidemic, theCompany took the domestic epidemic prevention and production and sales resumption of theCompany as reference, made swift adjustments, responded proactively, continuouslyoptimized the operating system and continued to expand the competitive advantages. Overseasmarket revenue reached RMB47 billion, representing a year-on-year increase of 0.6%, and overseasrevenue accounted for 49% of the Company’s revenue, representing an increase of 2 percentagepoints. The Company outperformed its counterparts in the local industry in major regions, such asthe United States with revenue growth of 6.5%, Japan with revenue growth of 16.3%, and SoutheastAsia with revenue growth of 7%.
3. Fully promote smart home scenarios solution to continuously develop ecosystemcapabilities.
Based on the ever-growing demand for scenario experience brought about by theinterconnected smart appliances, the Company focused on “Enjoying Smart Life at Haier Smart
2020 Interim Report Haier Smart Home Co., Ltd.
Home” and promoted the scenario-based brand building of Haier Smart Home by centering on users’personalized scenario experience: replacing products with scenarios, and transforming from sellingsingle item to providing full-suite smart homes solutions. Based on global billions of accumulateduser resources, continuously increase in the number of intelligent interacted home appliances,complete set of the home compliances of the Company and enriched smart home solutions, theCompany accurately understood the needs through the Haier Smart Home Experiential CloudPlatform by the images of users, linked into more than one thousand ecological resources andprovided solutions ranging from a smart home appliance to a full scenario of smart home toachieved the best experiences for users. In the promotion of sets of scenario solution, the Companyincubated several ecological sub-platforms such as Internet of Clothing, Internet of Food andInternet of Air to achieve “co-creation and mutual benefits”..
4. Honors of the Company.
On 9 January 2020, Euromonitor, the world’s leading market research agency, published 2019global retail sales of large home appliance brands survey, naming Haier No. 1 for the eleventh time;on 21 January 2020 (US Eastern Time), Fortune released the lists of “World’s Most AdmiredCompanies 2020”, and Haier Smart Home was listed again, making it the only one from homeappliance industry outside US. In June 2020, Haier was selected as the only “IoT Ecology” brand inthe “BrandZ? Top 100 Most Valuable Global Brands in 2020” list for two consecutive years. InJuly 2020, Haier ranked first in the industry in the “BrandZ? China Top 50 Global Brands in 2020”list. In August 2020, the Company was again listed in 2020 Fortune 500 with ranking ascended by13 places.
5. Major works of the Company during the reporting period:
(I) Continue to strengthen original technology innovation to lead technologytransformation and industry development
The Company continuously promoted the collaboration between global R&D and innovationcenters, and maintained its leading position in various aspects such as modularization, technology,products and R&D resources, focus on users’ updated demand in real time, tracked consumptionhotspots and changing tendency to ensure its brand leadership on the market in various regions allover the world, provide global users with quality-ensured home appliance product packages andsmart home solutions with leading performance.
1. Refrigerator/freezer business
As the global leader in refrigerator industry, the Company is committed to providing userswith healthy, smart and artistic high-quality food preservation solutions through sustainedtechnological and product upgrade, thus leading technology transformation and industrydevelopment.
(1) Fully upgrade the healthy fresh-keeping technology. With the first revolutionarytechnologies, the Company provided overall solutions for high-end food preservation and
2020 Interim Report Haier Smart Home Co., Ltd.
home integration. Focusing on providing high-end users with food and nutrient preservationsolutions, the Company improved the quality of healthy life of high-end users. ① The Companycontinued to upgrade its MSA oxygen-controlling and fresh-keeping technology to reduce oxygencontents in oxygen-controlling drawers and effectively mitigate the aerobic respiration of fruits andvegetables, which achieved preservation of fruits and vegetables for a time 8 times longer and madefruits and vegetables as fresh, tasty and nutritive as before; ② With the first three majorrevolutionary technologies, built-in refrigerators achieved real 0cm boundless parallel embeddingand could fit cabinets without any gap, which effectively met users’ demand for home integration,broke the visual and service restrictions, released more spaces, perfectly included kitchen design inthe overall home aesthetics and granting more artistic beauty to overall living spaces.
(2) Give full play to the advantages of multiple brands and expand leadership in theindustry. ①To fully popularize the MSA oxygen-controlling and fresh-keeping technology,Casarte refrigerator created products in vogue online, launched phenomenal products T-typerefrigerators with functions catering to mothers and infants under F+ series and ignited high-endmarket with the newly released amethyst violet series. As a result, the market shares of Casarterefrigerator’s price above RMB10,000 reached 40.2% in the first half of the year, continuing toexpand brand power. ② Leader refrigerator focused on intelligent interconnection upgradingbased on the strategy of fashionable fresh-keeping products and meeting users’ demand forbeautiful, intelligent and cost-effective scenarios. Its iCase intelligent series took the lead in theindustry, with the annual cumulative sales volume of intelligent network appliance amounting to74,921, representing a year-on-year increase of 159%.
2. Washing machine business
As a global leader in the washing industry, Haier Washing Machine is committed to providingusers with an excellent laundry experience. Through continuous product innovation andtechnological iteration, it continued to lead the industry to upgrade.
In response to the prolonged stay at home and rapidly growing demand for healthy laundryduring the epidemic, the Company studied cloud washing procedures with high-temperaturedisinfection based on factors such as temperature and time. It only took 3 days from the creation ofan idea to the product launch, changing a total of 116 models and 3 million washing machines toclothes disinfection machines within 3 days, and achieved 7 times of iterations within 2 weeks. Thehigh-temperature disinfection cloud procedures meet the epidemic prevention needs of consumersfor the health and sterilization of clothing, greatly improving the reputation of care products, anddriving the sales of smart appliances. At the same time, in response to the non-contact service forepidemic prevention, engineers developed self-installation videos and provided remote guidancethrough live classrooms and other methods, thereby quickly solving the problem of contactlessinstallation. With respect to after-sales problems, the Company developed remote diagnosis livebroadcasts to quickly solve product after-sales problems without on-site visit, making users feel realconvenience, comfort and relief.
2020 Interim Report Haier Smart Home Co., Ltd.
Products: ① It was the first in the washing machine industry to create a cartridge-based smartfront loading washing machine, which can be intelligently proportioned, automatically add laundrydetergent, builder liquid, and color protection liquid, and greatly protect the color and fiber of theclothes while improving the decontamination effect. ② In terms of top loading washing machines,it pioneered self-powered sterilization and disinfection technology. During the washing process, themodule cuts the magnetic induction line to generate induced electromotive force, thereby drivingthe UVC-LED lamp bead to emit deep ultraviolet light, realizing automatic sterilization during thewashing process with no additional power consumption and greatly meeting the needs of users fordisinfection and sterilization in laundry care of clothes. ③ The high-end brand Casarte focuses oncomplex and diversified user needs. After many iterations and upgrades, it has been upgraded fromthe initial variable temperature steam air washing to a combination of sterilization, wrinkle removal,odor removal, moisture removal, and fluffiness. Accurately customized air washing programsaccording to fabrics and different needs bring superior washing and care services to high-endfabrics such as silk, wool, down jackets, and mink fur. In the first half of 2020, Casarte's share ofwashing machine markets at RMB10,000 or above reached 75.5%, maintaining an absolute leadingedge.
3. Household air conditioner business
Focusing on changes in market demand, the Company kept advancing technology innovationand product upgrade, provided users with air solutions with leading quality, functions andintelligence and created user awareness of “Healthy Air Conditioners Goes to Haier”. At the sametime, the Company actively promoted the construction of touch point in communities fortransformation, implemented retail transformation in thousands of towns, villages, districts andregions and achieved more than 200,000 village and district groups coverage, reduced SKU modelsto improve efficiency, and accelerated Casarte Air Conditioner to achieve high-end breakthroughsto accelerate business development. In the second quarter, domestic revenue increased by 20% in asingle quarter, and Casarte Air Conditioner’s revenue in the first half of the year increased by morethan 70%. Its shares in high-end market continued to increase: Casarte’s share in the high-end airconditioner market reached 12.6%, a year-on-year increase of 8.5 percentage points; in 1.5W+cabinets, its share continued to rank first, reaching 42.3%, a year-on-year increase of 6.1 percentagepoints.
Haier Air Conditioner kept focusing on provision of better healthy air solutions to users. In theface of severe challenges brought by the epidemic, Haier Air Conditioner first released the 56℃sterilization and self-cleaning air conditioners which achieved self-clean by stripping bacteria anddusts through top-speed cooling to frosting on the surface of an evaporator while removing 99% ofdusts and bacteria by raising the temperature in the evaporator to over 56℃ throughinverse-balance dry sterilization technology based on high temperature, which brought “healthy air”to users and was recognized by users.
Casarte Air Conditioner innovatively researched and developed the soft wind technology,overturning the technology and theory of refrigeration and air distribution of air conditioners havingexisted for a hundred of years, based on which it created extremely comfortable Yunding air
2020 Interim Report Haier Smart Home Co., Ltd.
conditioners with wind of suitable temperature. It created the exclusively comfortable Tianxi airconditioners with area-based air distribution and Zhihuijia air conditioners with AI air steward byupgrading the body perception function. In addition, Tianjing air conditioners featuring UVCsterilization of Casarte was even recognized by medical institutions and users after the COVID-19outbreak and was put into use and favored by experts during the operation of Wuhan RaytheonMountain Hospital.
Since 1 July 2020, after the new energy efficiency standards for air conditioners were formallyimplemented, Haier actively participated in the formulation and implementation of the new energyefficiency standards. It upgraded its enterprise standards half a year in advance, thereby obtainingthe Enterprise Standards “Front-runner” Certificate. Through advanced research and developmentof energy-efficient and eco-friendly products meeting the new energy efficiency standards, theCompany has taken the lead in switching to air conditioning products meeting the new energyefficiency standards, and will continue to promote the research and development of innovativetechnologies and products with proprietary intellectual property rights to improve the self-development ability of technologies in the industry.
4. Central air conditioner business
During the reporting period, through accelerating product innovation and core technologydevelopment, and launched a series of smart IoT, energy-saving and healthy products to enhancemarket share and realized customization in eight industries and 26 kinds of solutions, ranked firstfor retail growth in the industry as a main brand in the first half of the year: ① In response to thespread of COVID-19 across the globe, the Company developed healthy air conditioners integratingUV disinfection lamp, Nanomist sterilization module and nano water ionizer for global marketing,which were highly recognized by customers. ② In home use scenario, the Company developedand launched Casarte household single-fan outdoor units and Haier household kitchen & bathroomair conditioners, filling the gap in the use of kitchen air conditioners. ③ For use in large-scaleprojects, inverter modules introduced by the Company greatly improved the cost performance andmet the needs of large-scale projects. ? The IoT magnetic levitation air conditioner achievedelectric saving of 50%, with domestic market share exceeding 50%.In respect of new technology research and development, ① the Company introduced IoTidentification technology enabling users to scan the unique identification code of multi-networkedproducts to enter the Haier IoT platform and conduct smart management in respect of product useand maintenance data and other data, and besides, the voice air steward enabled smart control ofair-conditioning equipment. ② The Company developed remote online upgrading technologyenabling real-time storage and upgrade of computer board information.
5. Water heater and water purifier business
Focusing on the development trend toward healthy and smart home appliances, the Companycontinuously optimized product structure, innovated product functions and increased productvariety to provide users with safe, intelligent and comfortable whole-house water solutions.
2020 Interim Report Haier Smart Home Co., Ltd.
Water heater:① Electric water heater: The Company developed the fourth-generationpurified water washing technology and frequency conversion instantaneous-heat black technology,formulated seven-star bathing standards, and launched new products integrating water-revitalizing,no-cleaning, and antibacterial functions to meet users’ needs for healthy, clean, andinstantaneous-heat water. In particular, equipped with 70L high-capacity inner pot and backed bydual-drive quad-core instantaneous-heat technology and 85°C high water temperature technology,Casarte Tianmu SPA series truly realized unlimited bathing. Haier's excellence in productinnovation and stylish and simple design has won international recognition, and the CasarteTianquan SPA electric water heaters won the AWE Award-Excellent Product Award. ② Gas waterheater: While NOCO safety technology and four-stage fine-control micro-fire combustiontechnology are adopted to ensure safety and stability, no cold water technology and waterfallwashing with large flow capacity are added to create the ultimate comfortable experience.Water purifier: In response to the more stringent requirements for water quality fromconsumers in the water purification process, the water purification industry, following the productstrategy of “health upgrade, experience upgrade and smart upgrade”, realized sterilization andbacteriostasis in the whole process from water production to water draining by upgrading the UVbacteriostasis and terminal sterilization functions of the water purification tank; the adoption of nostored water and mineralized water technologies realized the transition from providing “safe water”to “healthy water”; the entire product line was upgraded toward smart product line, and thefront-put-out product design facilitated users’ self-replacement of the filter cartridge and also helpedsolve the pain point of door-to-door service during the COVID-19 epidemic period. On 10 March2020, Haier water purifiers won the “First Prize Award of Science and Technology Progress” ofChina National Light Industry Council, becoming the only award-winning brand in the waterpurifier industry.
6. Kitchen appliance
The Company integrated global leading platforms of FPA, GEA and Candy to accelerateproduct restructuring and provide users with high-end smart kitchen solution packages; focusing onthe layout of Casarte and Haier kitchen appliances, the Company enhanced its competitiveness inhigh-end market. Revenue from Casarte brand grew by more than 30% year-on-year.
Range hoods: By using constant air volume technology jointly developed with FPA, theCompany launched 12-m
Smart Air series, which can solve the problem of poor smoke removalfacing users and achieve highly-efficient smoke discharge under constant optimal effective airvolume output in different installation environments, with the smoke-discharge andsmoke-removing effects leading the industry.
Gas stove: The Company returned to the essence of kitchen cooking. Focusing on the needs of“convenience, health, safety and active service”, the Company provided users with convenient andhealthy cooking scenarios and smart scenarios enabling active service. Based on differentingredients and cooking requirements, the new generation of Casarte smart triple-head stovefeatures accurate fire control and intelligent cooking with electrodeless electronic proportionalvalve for accurate fire control and fourth-generation real-time temperature monitoring technology.
2020 Interim Report Haier Smart Home Co., Ltd.
Disinfection cabinets: In response to the needs of specialized users, the Company launchedHaier tableware disinfection cabinets, which are the only cabinets that reach the medicaldisinfection level in the industry. The upper chamber uses light wave disinfection + moderatetemperature cleaning technology and kills enteric pathogenic bacteria and viruses through UV-Clight and pasteurization temperature (60℃~95℃). Such cabinets have lower temperature, betterdisinfection effect and are safer as compared with traditional high-temperature disinfection cabinets;The lower chamber adopts 120℃ high temperature under infrared ray + light wave disinfectiontechnology, with a bacterial eliminating rate of 99.99%. The Company took the lead in setting thegroup standards of the Tableware Disinfection Cabinets at the Same Disinfection Level asHousehold and Similar Medical Instruments, which are approved by the China Association forStandardization and are currently the first tableware disinfection standards that reach thedisinfection level of medical instruments in the industry.
Ovens: The Company promoted product innovation based on expertise from GEA and FPAand platform. ① The interconnected ovens are equipped with built-in cameras through which theusers can monitor the real-time dynamics in the ovens on their mobile equipment. Therefore, usersmay control the cooking functions and choose recipes and different users can exchange their bakingexperience. ② The high-temperature self-cleaning ovens based on hot air technology candecompose oil into carbide at 420℃, so as to realize self-cleaning; RF ovens have a totally newheating mode aiming at accurate heating of different food quickly and conveniently. ③ TheCompany has taken the initiative to adopt auto-door technology and wireless probe technology forCasarte Commander series in the industry and designed for Chinese consumers multi-menu leadingrecipes in three life scenarios, that is, Enjoy life, Fast Life, Roast/Steam at Your Will. Allowing awide temperature range of 30℃－120℃, the embedded steam and roast integrator can meetdemands for multiple materials and simplifies cooking via a three-level adjustable steam-assistedfunction, so as to produce delicious and tender cuisines.
(II) Chinese distribution network: focusing on digital reformation to improve speed andefficiency
During the reporting period, the Company improved operating efficiency through digitaltransformation internally, and improved user experience through the smart home scenario solutionexternally. Based on the Smart Home Experiential Cloud platform, the Company built differentiatedcompetitiveness by incorporating products, marketing, customers, users, logistics and services intothe digital platform, established a competence system to reach users efficiently, and acceleratedbusiness model transformation. In the first half of 2020, the home appliance business revenue inChina decreased by 9%, of which the second quarter revenue increased by 14% year-on-year. Themarket share increased in all lines, and the overall performance was better than peers in theindustry.
The Company started with digital and improved the efficiency of the whole processthrough the application of digital hand tools on the client, user and employee terminals. (1)Continuing to expand the coverage of the unified warehousing and distribution system, continuingto deepen the integration of marketing network, logistics network, service network and information
2020 Interim Report Haier Smart Home Co., Ltd.
network, and comprehensively improving the efficiency of the platform. (2) Realizing livestreaming of home appliance sales scenarios through Haier Smart APP, helping offline customersopen up online sales channels, empowering offline stores, and achieving integrated online andoffline operations. (3) Through the reverse customization of order of popular goods and the Skynetcloud TOC model, SKU focus was realized, and product efficiency, supply chain efficiency, andstorage efficiency were improved. In the first half of the year, the proportion of numbers ofeffectively operated models and total models for SKU efficiency was increased from 40% to 97%,the timely rate of logistics distribution was increased to 99.5%, the efficiency of the process systemutilization was increased to 83%, and the defective product rate was decreased by 94%.Promoting the integration of online and offline contacts, and improving the quality of thecontact network. (1) Franchised stores: through the two-dimensional transformation of retail anddistribution, the Company reshaped the direct channel operation system. The Company alsoinitiated the transformation of Haier franchised stores to HSH experience stores, and enhanced thefive major capabilities of franchised stores customers in Casarte sales, interconnected appliancesales, scenario sales, online and offline integration, and in-home services to attract users byoptimizing store layout, integrating online and offline, smart home ecological referral traffic, andunified brand display. In county and district market, the Company improved the user traffic in thedistricts and counties by “tens of thousands of households” activity; and in the township market, theCompany improved the user traffic in towns and villages by the “tens of thousands of towns andvillages” activity. (2) E-commerce channels: the Company increased attention and brand influenceand eventually translated into sales by adjusting the layout of online product planning, innovatingonline marketing approaches, and leveraging social media mass broadcast and other onlinemarketing methods. In the first half of the year, the e-commerce channel achieved a year-on-yearrevenue growth of over 40%. (3) The smart home channel centered on the integration offull-scenario smart solutions and “1+N” service capabilities with the focusing on introducing fournew types of customers, including home improvement, HVAC, home furnishing, and whole-houseintelligence, covering 180 core cities across the country. Through the creation of a brand-new storeimage, improvement of experience on solutions, design and installation and other full-processcapabilities, the Company made the users truly experience the smart home and the future home. TheCompany’s Shanghai 001 Experience Center realized integrated sales of partial decorationaccording to “solution, scenario and ecology” through the creation of a new online-offline OTOexperience model. The average price per user of smart home appliances scenarios wasRMB241,000, and it was selected as the excellent consumption experience hall of “2020 BestExperience in Shanghai" and 2020 Shanghai "First-store Economy Model". (4) The engineeringchannel maintained rapid growth by building the business capabilities of the headquarters and microcommunity, with revenue increasing by 22%. At the headquarters level, the Company improved theefficiency of engineering projects and customer experience through the construction of theengineering digital platform and engineering Experiential Cloud. At the regional level, theCompany improved the abilities of design, installation services, funds and other aspects in theend-market through the establishment of customer-engineering alliances and opening gridengineering resources. Started with strategy of the real estate industry and the Xiongan ServiceCenter and other major projects to establish industry benchmarks, the Company won the bids forreal estate user projects such as Evergrande, Country Garden, Poly, Sunac, and Longfor.
2020 Interim Report Haier Smart Home Co., Ltd.
Casarte: Continuously expanding high-end advantages. (1) In the first half of 2020,Casarte’s white goods & kitchen and bathroom products achieved revenue of RMB3.5 billion, ayear-on-year increase of 7%, of which, the revenue in the second quarter increased year-on-year by21%, and the monthly revenue increased by 30% in May and June, maintaining the absoluteleadership in the high-end market share. For example, the market share of Casarte refrigerator atabove RMB10,000 was 40.2%; the share of Casarte cylinder washing machine at aboveRMB10,000 was 75.5%. (2) Promoting store upgrade: nationwide use of a new generation ofterminal display standard, turning stores into a smart home experience centre, and increasing thenetwork coverage of the market above the county level from 85% to 95%. (3) Increasing customerunit price through sales of complete set, improving personnel’s sales capabilities of complete setthrough complete training. (4) Service upgrade: Casarte’s seven-star service focuses on the serviceconcept of “designing a home, building a home, and serving a home” for users, and upgrades theseven-star service to a seven-star scenario ecological service. It provides scenario customizedservices such as balcony, kitchen, bathroom for users needing new decoration; provides partialrenovation services for users needing renewal, such as demolition and replacement, cabinetrenovation, balcony renovation and other value-added services.
Initiate Experiential Cloud Mass Broadcast model to promote marketingtransformation. (1) The Company actively seeks for users, subverting the sales method of waitingfor customers through full live broadcast covering employees and customers; the Companycontinuously serves users through community fission, WeChat red envelopes, small programs,Yunjibao (云吉报) and other online tools. (2) The Company establishes four major communitycontent chain groups, forming a massive content matrix, and constantly interacting and fermentingonline on the new media community platform, realizing the transformation “from launching tobeing a circle to attract fans, from operating products to operating people, and from selling goodsthinking to creating community and flow”. (3) The Company initiates Experiential Cloud MassBroadcast model, based on the smart home scenes and taking the life needs of users at home as themain line, then attracts customers, users, and ecological stakeholders to participate in co-creation onthe platform, so as to accumulate users and create a live broadcast experience of the scenes. In thefirst half of the year, the Company has carried out 5 large-scale broadcasts, and realized thedetonation and leadership from multiple dimensions, such as user interaction, transactions andplatform daily activities, and the scene content is continuously upgraded. For example, on 1 August,the broadcasting day, the platform’s GMV (Gross Merchandise Volume) was RMB134 million andthe number of user views reached 1.89 million, an increase of 283% and 64% respectively from 31March.
(III) Overseas Market: “Three to One” localization operation promote dual-circulationand achieved development with high qualityIn the first half of 2020, the Company recorded RMB47 billion in its overseas revenue,representing a year-on-year growth of 0.6%, accounting for 49% of the Company’s total revenue.Given grim market challenges and the impact of COVID-19 in the second quarter, overseasbusinesses were developed based on local brand creation and local operation. On one hand, theCompany rapidly duplicated the domestic epidemic prevention experience to protect the health of
2020 Interim Report Haier Smart Home Co., Ltd.
overseas employees and ensure resumption of productivity of the supply chain to the greatest extent.On the other hand, the Company adjusted the product structure, channel and marketing strategies ina timely manner and explored and practised new online marketing models. Against the backdrop ofoverall industry decline, the Company’s overseas business realized growth in many countriesagainst the trend. The year-on-year revenue growth of April, May, and June in the second quarterwas respectively -22%, -12% and 20%. The revenue of overseas household air conditioner invarious markets exceeds that in the whole year of 2019.
1. High-end products leadership. The Company persisted in the development direction ofhigh-end, intelligent, and healthy products. In line with changes in consumers' demand during theepidemic to increase the stickiness of users, the Company launched a series of differentiated leadinghealth-targeted products and solutions. Meanwhile, the Company intensified efforts for promotionof all-category healthy products in various markets. Refrigerators put the focus on “sterilization andhealth”, and washing machines had their focus on “ABT bacteriostasis, double spray sterilizationand steam washing sterilization”, and air conditioners featuring “full health and self-cleaning” werelaunched. In the first half of 2020, the Company recorded revenue of USD430 million from healthyproducts in overseas market, with a year-on-year growth of 21%.
2. Channel transformation. Based on their own market characteristics, each region hascomprehensively optimized channel structure and increased network coverage through measuressuch as expanding mainstream channels, building its own network, developing e-commercechannels, and strengthening front-end channel distribution. Under the impact of the epidemic, theonline channels became a development focus of the industry. In overseas business, the Companyenhanced building of brand flagship stores on e-commerce platform and user interaction experienceto drive transformation to efficient online sales. In the first half of 2020, the sales of the oversease-commerce channels increased 32.4% year on year.
3. Zero-distance marketing experience. Around the concept of “zero distance to customers”and based on users’ needs, the Company converted the benefit of scientific and technologicaldevelopment into benefit for consumers in using home appliances, and improved reputation in usersthrough intelligent healthy network appliances plus non-contact installation services, etc.. Duringthe reporting period, based on the changes in and opportunities from social actions of globalconsumers under the impact of the epidemic, quickly promoted transformation to digital marketingonline, and through live streaming on e-commerce platforms, Vlog short video marketing andExperiential Cloud crowdcasting, the Company gained followers and built public praise of thebrand, and truly realized global linkage, global advertising and global priming. At the online CantonFair held in June, Haier launched the 10*24-hour interactive Experiential Cloud crowdcasting incooperation with makers, users and ecology circle of 12 countries, to make Haier’s charm known tohundreds of millions of users in the world. As of the end of June, the Company recorded tens ofmillions of overseas fans on Facebook, with a year-on-year increase of 51% in interaction volume.
4. The performances of major global markets were summarized as follows:
(1) In the North America market: In the first half of 2020, the sales revenue was RMB29.5billion, representing a year-on-year increase of 6.5%; the market share of GEA’s core home
2020 Interim Report Haier Smart Home Co., Ltd.
appliances increased by 2.5 percentage points and the market share of all core home appliancesrealized growth.
① In terms of epidemic prevention and control, the Company, attaching great importance toepidemic prevention in the factory, established a business continuity team to overall plan epidemicprevention and safeguard employees’ health; At the same time, GEA actively fulfilled its corporatesocial responsibility, donated home appliances to front-line personnel in need, maintained closecontracts with the community, actively donated PPE materials, and continued to support charityorganizations. ② In terms of brand, GEA adhered to the high-end transformation strategy, andfocused on high-end brand construction and awareness enhancement: its high-end brands Café andProfile maintained a year-on-year growth of 30% and 11% respectively; ③ In terms of the supplychain, GEA continued to build smart factories and storage systems to deepen the extent ofautomation and optimize manufacturing and warehousing efficiency; ④ In terms of channel, toaddress the inconvenience for offline shopping due to adjusting business hours, increasing socialdistance and restricting the flow of people, GEA enabled offline shopping experience through suchmeans of safe shopping such as pick-up outside the store, self-purchase and self-pick-up; online,GEA enhanced interaction with consumers through live broadcast, short video and other tools; forexample, it launched Chibo - a global interactive live cooking platform to create a stronglyinteractive and collaborative cooking experience by means of live broadcast. ⑤ The internationalauthoritative market research organization IoT Breakthrough awarded GE Appliances the “Internetof Things Breakthrough Annual Award” for two consecutive years; GEA was identified by UL asthe first home appliance brand with a gold level of IoT safety.
(2) In the European market: the revenue amounted to RMB6.7 billion, representing adecrease of 6.6%, within which, the revenue of Haier Brand in Germany and Italy experienced ayear-on-year increase of 61% and 52%, respectively. In terms of market share: ① In the first halfof 2020, the market share in terms of sales volume of dual-brand (Haier + Candy) washingmachines in major countries of the EU reached 14%, ranking Top 2; and the market share in termsof sales amount reached 12.6%, ranking Top 3; ② The overall market share in terms of salesamount of refrigerators in major four countries of the Europe (France, the UK, Italy and Russia)reached 8.8%, ranking Top 5. The price indix of Haier washing machines and refrigerators was 112and 117, respectively.
① At the beginning of the epidemic outbreak, the team in Europe actively communicated withthe headquarters in China and well informed about the developments of the epidemic and the salesin China, especially changes in sales online and offline. By drawing on relevant experience fromdomestic companies, the team quickly realized a shift from offline sales to online sales, and madeactive efforts in promoting online sales through social networking and media to increase interactionwith users; ② Regarding products, in response to epidemic prevention, new products were timelylaunched to bring more comfort and convenience to consumers, including large-capacity andfull-space fresh-keeping refrigerators, steam sterilization washing machines, large-capacity freezers,a full range of intelligent and interconnected kitchenware, and 56℃ air-conditioning product series;
③ In relation to production and supply chain, the factory in Europe made preparations in advance
2020 Interim Report Haier Smart Home Co., Ltd.
and implemented epidemic prevention measures in strict compliance with the requirements of localgovernment, making itself a local model enterprise in this regard; meanwhile, drawing on theexperience in epidemic prevention from the headquarters in China, the factory ensured safe andcontinuous production to meet the needs from multiple market orders; ④ Haier Europe proactivelyassumed its social responsibilities as a local enterprise. It donated protective suits, masks and otherepidemic prevention supplies to hospitals in Lombardia and Veneto, Italy, two regions mostaffected by the epidemic; in other European countries, Haier Europe also donated epidemicprevention supplies to hospitals and communities in need, which has won widespread praises.
(3) In the South Asia market: the revenue amounted to RMB2.7 billion, representing adecrease of 36%.In Indian market: the Company maintained solid growth in January and February, but theepidemic led to the national lockdown in March, which was not lifted gradually until mid-May,causing stagnation of the Company's sales. With the gradual re-opening of the market, the Companyensured the orderly resumption of production by implementing the epidemic prevention program,and met the market demand by following government guidelines to prevent epidemic whilecontinuing production.In Pakistan market: many measures were taken to minimize such impact such as internaloperations, efficiency improvement and fee reduction, strict risk control, and opening of newchannels. As a result, sales (domestic currency) of the same caliber fell by 10%, much lower thanthe rate of reduction in market capacity in the industry. ① Products: the diversity of refrigeratorsand air conditioners was increased and customized products were provided. Among them,electronic inverter refrigerator series and anti-corrosion air-conditioners designed for Karachireceived good feedback from the market. At the same time, the proportion of high-end and smartproducts sold was climbing and the unit prices of refrigerators, washing machines and airconditioners have all been increased; ② Channels: the number of Haier sales outlets has beengradually increasing; 20 new outlets were set up in the first half of the year, with an increasingpenetration rate in third- and fourth-tier cities; sales from e-commerce channels also witnessed asharp year-on-year increase of 500%.
(4) In the Australia and New Zealand markets: the revenue amounted to RMB2.5 billion,representing a year-on-year decrease of 1.5%. FPA core home appliances revenue realized a growthof 3% in NZ Dollars; the Australia market showed great development momentum, with ayear-on-year growth of 17% in the first half of the year and double-digit growth in dual-brandproducts.① Online terminal transformation was speeded up and scenario-based brand stores werebuilt to replace single product display, which contributed to doubling of online sales and asubstantial increase in the proportion of online sales; ② Breakthroughs were constantly made insales of products for commercial use; sales of products for commercial use increased by 12%; ③In relation to products, new products were updated and launched at a faster pace. In the month whenHaier’s 565 T-door refrigerators were launched, the total sales of T-door refrigerators increased by280%, greatly optimizing the product portfolio; FPA ultra-high-end Collumn refrigerators and TFTtouch-screen ovens won two prizes under the “Red Dot Awards”.
2020 Interim Report Haier Smart Home Co., Ltd.
(5) In the Japanese market: the revenue amounted to RMB1.8 billion, representing anincrease of 16.3% against the trend. ① The Company launched the AQUA full-box Delie seriesrefrigerators to expand the line-up of ultra-large and large products, achieving an increase of 24.3%against the trend in sales volume of and 48.5% in sales amount of ultra-large refrigerators in thefirst half of 2020; ② Regarding users’ demand for preservation of large-capacity cold productsduring the epidemic, the Company promptly put on the market new high-end products including the280L largest capacity vertical freezers in the industry and variable temperature series refrigerators,upgrading user experience in a timely manner; ③ The dual-brand “Haier+AQUA” has coveredabout 90% of the mainstream channels in the market. In the first half of 2020, the Companyachieved cooperation with two new chain supermarket channels and took an active part in planningand building its own online channels.
(6) In the Southeast Asia market: the revenue amounted to RMB2.1 billion, representing ayear-on-year increase of 7%; in response to the changing market demand, the Company focused onthe theme of health, continued to deepen the main product models, and promoted the sales ofhealthy products, such as the new Magic Cooling series of refrigerators, and further upgradedfunctions such as temperature change, sterilization, and freshness preservation, highlighting theproduct sterilization and freshness preservation monitoring function; the cylinder washing machinefocused on 525 large cylinder diameter and healthy washing. UV sterilization, high temperaturewashing, and antibacterial window mats brought more convenient, healthy and quiet washingexperience to users under the epidemic. The online transformation of marketing innovation and theuse of social media live broadcasting to promote medium and high-end products accelerated thedevelopment of e-commerce business. In terms of localized supply chain construction, theCompany introduced global general suppliers to quickly optimize suppliers and reduce procurementcosts.(IV) Building the Haier Smart Home Experiential Cloud platform to create an IoTecosystem
Haier Smart Home Experiential Cloud built a constantly-evolving platform connectinghundreds of millions of families and creating a win-win situation among users, enterprises and theecology by upgrading traditional home appliances to smart network devices, and building acomplete set of scenario solutions including smart kitchen and smart balcony based on theinterconnection of smart network devices to achieve the transformation of “Replacing Products withScenarios and Incorporating All Industries into the Ecosystem”, and provide users with a fullecological service experience including clothing, food, housing and entertainment.
In the first half of 2020, the Company’s sales of smart home appliances increased by 20% yearon year; network appliance binding volume increased by 111%; set sales increased by 55% and setsale accounts for 29.64%, representing a year-on-year increase of 4.8 percentage points; set salesincreased year-on-year by 107%, and the single user value of set increased by 89%; 627,000 sets ofscenario-based solutions were sold, representing an increase of 65.75%; IoT ecological incomeamounted to RMB3.77 billion, representing a year-on-year increase of 96%. As of July 2020, thepeak daily active users of Haier Smart Home APP reached 522,000, representing an increase of 132%
2020 Interim Report Haier Smart Home Co., Ltd.
compared to April 2020; the active resource providers were 9,289, representing an increase of 194%compared to April 2020.
1. Keeping strengthening the “AI+IoT” capabilities to achieve smart home whole-processactive services. Integrating the three capabilities of IoT, big data and AI and based on users’ homeappliance status and habits, the Company built customized intelligent sensing decision-makingscenarios to provide users with the most reasonable responses and the most intimate interactiveexperience. ① The Company built the first smart home appliances-specific data empowermentplatform in the industry–active service skill management platform, and worked out the first ActiveService Standards Based on Big Data in the industry to unify the standards for functionalrequirements and evaluation methods of smart home appliances in providing users withpersonalized services such as active reminders, intelligent recommendations and self-feedback onfaults under different user habits and different home environments. ② Focusing on the valueinteraction of “designing a home, building a home, serving a home and experiencing a home”, theSmart Home APP built smart home full-scenario immersive interactive experience covering users'clothing, food, housing, entertainment, health, etc. In addition, the one-stop after-sales serviceexperience also went live on a full scale, which could provide online full-scenario after-salesservices from delivery, installation and maintenance to cleaning, repair, relocation, etc., achievingwhole-process visibility.
2. Actively promoting the transformation, upgrade and implementation of the “1+N”smart home scenario solution. ① Promoting the construction of “1+N” service system andgrasping users’ demands and needs: “1” refers to the project managers, the service housekeepers ofusers providing one-on-one all-inclusive services for users; “N” refers to the relevant resourceproviders, including all home appliance service personnel, complete-set service providers,distributors, cabinet vendors, home decoration companies, etc., The service housekeepers contactthe resource providers with respect to provision of home appliances and decoration integrationservices for users; ② Creating a new online and offline OTO experience mode. Since the openingon 6 September 2019, 001 Experience Center in Shanghai realized the integrated sales of localdecoration with “solution, scenario and ecology”, recorded average transaction price per customerof RMB241,000, and attracted a total of 25,000 visitors, realizing the value guidance of smartscenario solutions. It was selected as the excellent consumption experience hall of “2020 ShanghaiExperience” and the “Model of First Store Economy” of 2020 Shanghai. In the first half of the year,225 new Haier Smart Home 001 stores were established; ③ Live broadcasting of new ecology forthe smart home scenario: Experiential Cloud crowdcasting. From live broadcasting to ExperientialCloud crowdcasting, the Company created a differentiation model in the industry, focusing onintelligent control, multi-screen interaction, active service, and massive health. Hot scenarios suchas intelligent air washing, mother-baby scenario, and 56°C sterilization air conditioner haveemerged.
3. Building eco brands such as the Internet of Clothing, the Internet of Food and theInternet of Air, to explore smart new ecology business model. (1) The Internet of Clothing ofHaier and the head resource brand in the laundry detergent market jointly created the firstink-cartridge washing machine of Haier. The ink-cartridge washing ecological protection scheme
2020 Interim Report Haier Smart Home Co., Ltd.
has been recognized by users for its leading technology and convenient service experience, such assuper stain removal power, accurate self-delivery and intelligent reminder of laundry detergent, andone-button purchase. In addition, the Company, through cooperation with shoe & boot cleaningservice resources, sports goods chain brands and shoe & boot brands, created a full-scenarioexperience of washing, care, storage and customization of shoes & boots. In April 2020, theCompany drew up and issued the standards of the Shoe Cabinet with Disinfection and NetworkingFunctions upon authorization of the China Association for Standardization. During the COVID-19outbreak, the home full-scenario epidemic prevention solution of the Internet of Clothing providedusers with a one-stop health protection solution from returning home → staying at home →traveling scenario. The Internet of Clothing covered 15 industries, involved more than 5,300resource parties, including more than 2,100 parties of clothing, more than 1,000 parties of hometextile, over 70 parties of shoes, over 50 parties of wash supplies, reached a year-on-year increase inIoT ecosystem revenue of 57%. (2) Haier’s Internet of Food provided users with a serviceexperience of “eating in smart home”. Together with nearly 1,000 resource providers in 12categories (food, logistics, kitchen appliance, cooking utensils, cabinets, kitchen peripherals, homedecoration, association, education training, audio and video entertainment, IT technology, media,etc.), the Company built a management platform of ecological recipes via the Internet of Food torealize the creation, query and accuracy tagging of smart recipes and graphic recipes, and constantlyimproved the logic of recipe recommendation algorithm, so as to provide users with thewhole-process scenario experience in the smart kitchen. (3) According to people’s activity traces,the Internet of Air of Haier created three ecosystems, namely smart home ecology, campus ecologyand travel ecology, from family to campus or to public space, covering 12 industries, includinghome furnishing, furniture, sterilization, hotel, mobile travel, finance, education and apartment, tojointly build the Internet of Things air eco brand. During the COVID-19 outbreak, through cloudupgrading, the Company created hot scenarios such as smart sterilization, air sterilization, andcomfortable sleep, and led the release of the Technical Specification for Evaluation of Smart HomeService Platform Based on Big Data - Smart Bedroom, to fill in the industry gap.(V) Smart manufacturing: Smart factory continue to lead the transition from massmanufacturing to mass customization through IOT and AI technologiesDuring the reporting period, the Company continued to promote the transformation andupgrading from mass manufacturing to mass customization in a use-oriented way and, throughbuilding the smart factory and “lighthouse factory”, achieved the interconnection and intelligentoptimization of its ecosystem. As of June 2020, the Company has built 22 smart factories, withlarge-scale customization system centered on users in the IoT era, and forming the world’s leadingbenchmark of high-end manufacturing.
Through data-based simulation modeling verification, efficient production collaboration andprecise quality control, more scenario-based and intelligent IoT products, intelligent combinationsolutions and AI technology applications, the Company’s intelligent 5G smart factory effectivelyoptimized the productivity in production efficiency, manufacturing cost and non-warehousing rateand to achieve the “self-perception” of full-process information, “self-decision” of full-factor events
2020 Interim Report Haier Smart Home Co., Ltd.
and “self-iteration” of full-cycle scenarios, and strengthen the competitiveness of smartmanufacturing.The exploration and practice of intelligent manufacturing of the Company has beenrecognized by domestic and foreign authorities. ① In January 2020, Haier ShenyangRefrigerator Smart Factory was named a lighthouse factory by the World Economic Forum bydeploying an extensible digital platform to realize end-to-end connection between enterprises anduser resources and supplier resources. Since the first lighthouses were announced in 2018, fiveChinese companies have been selected, including Haier, which has contributed two lighthousefactories to the world. ② In May 2020, Haier Sino-German Drum Washing Machine SmartFactory was selected as one of the first Chinese benchmark smart factories, which is the largest andmost flexible eco-mass customization demonstration base of the Internet of Clothing in the world.(VI) Sticking to RenDanHeYi Model and promoting organizational reform underecosystem micro-community (EMC) self-driven mechanismThe EMC self-driven mechanism is the ability of the enterprise’s production and marketingnodes to continuously meet the changes of user’s need and to survive by realizing interconnection,synergy and iteration in a highly networked society with constantly changing supply and demand. Itis the basic organizational mechanism guarantee for the Company to keep abreast of times andcreate a world-class Internet of Things model. EMC organization is an integration of“experience-oriented EMC” and “solution-oriented EMC”. The “experience-oriented EMC” is acommunity and touch point that directly interacts with users. It constantly interacts with users toobtain user needs in real time. The “solution-oriented EMC” refers to research, development andother nodes, which provides continuously iterative scenario solutions by connecting the resources ofall parties. Under the same goal, the “experience-oriented EMC” and “solution-oriented EMC”merge and compromise each other to form a self-driven ecosystem that jointly meets the user’sneeds. EMC organizations can achieve self-sustainability based on the continuous segmentation ofuser groups and can also spontaneously emerge based on new market opportunities. It undertakesmarket-leading goals to ensure continuous iteration of user experience. This self-organization andself-driven of EMC can realize the self-adaptation that can meet the needs of different users. Suchself-adaptive non-linear network enables zero-distance integration between the EMC and users andcontinuously improves transaction efficiency.II. Major operations during the reporting period(I) Analysis of principal business1 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 | 95,728,097,106.65 | 100,023,464,237.90 | -4.29 |
| Operating cost | 68,934,592,121.68 | 70,999,483,630.77 | -2.91 |
| Selling expenses | 14,526,912,493.29 | 14,777,899,222.91 | -1.70 |
| Administrative expenses | 4,608,308,707.03 | 4,536,101,362.72 | 1.59 |
| Financial expenses | 701,520,565.00 | 504,775,596.12 | 38.98 |
2020 Interim Report Haier Smart Home Co., Ltd.
| R&D expenses | 2,939,733,549.14 | 2,797,067,620.86 | 5.10 |
| Net cash flow generated from operating activities | -542,919,257.40 | 3,619,808,314.60 | -115.00 |
| Net cash flow generated from investing activities | -2,061,783,383.42 | -7,858,425,144.60 | 73.76 |
| Net cash flow generated from financing activities | 10,579,538,929.35 | 888,769,226.44 | 1,090.36 |
| Taxes and surcharges | 275,190,778.54 | 406,052,828.55 | -32.23 |
| Gains from change in fair value | -30,987,103.15 | 57,409,956.80 | -153.98 |
| Loss on credit impairment | -108,905,504.07 | 37,775,605.39 | -388.30 |
| Loss on assets impairment | -609,748,132.69 | -257,747,905.20 | -136.57 |
| Gains from disposal of assets | -14,442,406.46 | 12,706,682.87 | -213.66 |
| Non-operating income | 68,886,689.07 | 272,606,469.33 | -74.73 |
| Non-operating expenses | 55,470,756.55 | 114,506,708.29 | -51.56 |
| Income tax expense | 661,226,873.34 | 1,056,104,931.20 | -37.39 |
Reasons analysis of changes in indicators that change significantly:
1) Taxes and surcharges decreased by 32.23% compared to the corresponding period, which mainlyresulted from the change in VAT rate, which has been reduced from 16% to 13% since 1 April2019;
2) Financial expenses increased by 38.98% compared to the corresponding period, which mainlyresulted from an increase in exchange loss due to the fluctuation in foreign exchange rate in thecurrent period;
3) Gains and losses from change in fair value decreased by 153.98% compared to the correspondingperiod, which mainly resulted from a decrease in fair value of the forward foreign exchange tradingin the current period compared to the corresponding period;
4) Loss on credit impairment increased by 388.30% compared to the corresponding period, which
mainly resulted from an increase in the bad debt losses of receivables in the current period;
5) Loss on assets impairment increased by 136.57% compared to the corresponding period, which
mainly resulted from an increase in the losses of provision for impairment of inventory in thecurrent period;
6) Gains from disposal of assets decreased by 213.66% compared to the corresponding period, whichmainly resulted from the recognised non-current asset disposal loss in the current period;
7) Non-operating income decreased by 74.73% compared to the corresponding period, which mainly
resulted from a decrease in penalty income in the current period compared to the correspondingperiod;
8) Non-operating expenses decreased by 51.56% compared to the corresponding period, which mainlyresulted from a decrease in recognised one-off expenses in the current period;
9) Income tax expenses decreased by 37.39% compared to the corresponding period, which mainly
resulted from a decrease in taxable income compared to the corresponding period;10) Net cash flow generated from operating activities decreased by 115% compared to thecorresponding period, which mainly resulted from a decrease in collections due to the epidemic;
11) Net cash flow generated from investing activities increased by 73.76% compared to the
corresponding period, which mainly resulted from the expenses on acquisition of Candy and the
purchase of wealth management products;
2020 Interim Report Haier Smart Home Co., Ltd.
12) Net cash flow generated from financing activities increased by 1,090.36% compared to thecorresponding period, which mainly resulted from the new borrowings due to the epidemic.2 Others
(1) Detailed explanation on significant changes in the components of profit or sources of profit ofthe Company?Applicable √Not Applicable
(2) Others
?Applicable √Not Applicable
(II) Explanations on the major changes in profits caused by non-principle businesses? Applicable √ Not Applicable
(III) Analysis of assets and liabilities
√Applicable ?Not Applicable
1. Assets and liabilities
Unit: RMB
| Items | Amount as at the end of the period | Percentage of amount at the end of the period over total assets (%) | Amount as at the end of the corresponding period of last year | Percentage of amount at the end of the corresponding period of last year over total assets (%) | Percentage of change in amount from the end of the corresponding period of last year to current period (%) | Explanations |
| Financial assets held for trading | 2,400,484,812 | 1.21 | 308,135,007.1 | 0.16 | 679.04 | Mainly due to an increase in short-term wealth management products |
| Derivative financial assets | 66,466,125.17 | 0.03 | 19,158,132.45 | 0.01 | 246.93 | Mainly due to an increase in forward foreign exchange trading contracts in the current period |
| Accounts receivable | 17,000,438,423 | 8.58 | 11,015,871,060 | 5.88 | 54.33 | Mainly due to the prolongation of payment terms of strategic partners and a decrease in |
2020 Interim Report Haier Smart Home Co., Ltd.
| factoring in the current period | ||||||
| Prepayments | 1,720,348,361 | 0.87 | 1,272,921,547 | 0.68 | 35.15 | Mainly due to an increase in prepayments of bulk materials |
| Other current assets | 3,498,969,606 | 1.77 | 6,985,966,115 | 3.73 | -49.91 | Mainly due to a decrease in wealth management products measured at amortised cost |
| Other non-current financial assets | 72,739,420.26 | 0.04 | 294,547,364.47 | 0.16 | -75.30 | Mainly due to the reclassification of wealth management to financial assets held for trading |
| Short-term borrowings | 17,223,889,737 | 8.70 | 8,585,049,237 | 4.58 | 100.63 | Mainly due to the supplement to the Company’s working capital |
| Financial liabilities held for sale | 17,825,470.87 | 0.01 | 42,799,173.35 | 0.02 | -58.35 | Mainly due to the expiry of forward lock-exchange instruments |
| Derivative financial liabilities | 164,280,435.10 | 0.08 | 99,548,853.97 | 0.05 | 65.02 | Mainly due to an increase in cash flow hedging-interest rate swap agreements |
2. Restrictions on major assets as of the end of reporting period
? Applicable √Not Applicable
3. Other explanations
? Applicable √Not Applicable(IV) Analysis of investmentI. Overall analysis on external equity investment?Applicable √Not Applicable
2020 Interim Report Haier Smart Home Co., Ltd.
(1) Significant equity investment
?Applicable √Not Applicable
(2) Significant non-equity investment
? Applicable √Not Applicable
(3) Financial assets measured at fair value
√ Applicable ?Not Applicable
| Items | Initial investment cost | Source of funds | Current purchase / sale during the reporting period | Investment income during the reporting period | Changes in fair value during the reporting period |
| Bank of Communications (601328) | 1,803,769.50 | Self-owned | -681,126.00 | ||
| BAILIAN (600827) | 154,770.00 | Self-owned | 215,452.36 | ||
| Eastsoft (300183) | 18,713,562.84 | Self-owned | |||
| Wealth management products | 2,386,230,789.60 | Self-owned | 1,911,500,000.00 | 38,862,584.39 | 2,809,431.16 |
| Interest rate swap agreement | Self-owned | ||||
| Forward Commodity contract | Self-owned | 1,797,308.30 | |||
| Forward foreign Exchange contract | Self-owned | 17,271,384.79 | -15,054,736.65 | ||
| Others | 1,440,211,738.79 | Self-owned | 10,790,331.50 | 14,526,208.93 | -135,836,558.75 |
| Total | 3,847,114,630.73 | 1,922,290,331.50 | 70,660,178.11 | -146,750,229.58 |
Note: As of 30 June 2020, the aggregate balance of foreign exchange derivative transaction amounted toapproximately US$1.526 billion.
(V) Sale of material assets and equity? Applicable √Not Applicable
(VI) Analysis on major subsidiaries and Investees
√ Applicable □Not Applicable
Unit and currency: RMB 0’000
| Name of the company | Scope of business | Total assets | Net assets | Net profit |
| Haier Electronics Group Co., Ltd. | Production and sale of home appliances | 4,794,276 | 2,915,765 | 140,744 |
| Haier US APPLIANCE SOLUTIONS,INC. | Investment holding | 5,285,194 | 2,406,548 | 107,230 |
Remark: The financial data of Haier Electronics Group Co., Ltd. is determined in accordance with theChinese Accounting Standards and the accounting policies of the Company.
2020 Interim Report Haier Smart Home Co., Ltd.
(VII) Structured entities controlled by the Company
□ Applicable √Not Applicable
III. 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 homeappliance products fall into the category of durable consumer electronic products, the incomelevel and expectation on future income growth will have an effect on the purchase of white homeappliance. In the event of a slowdown in the macro economic growth, which will decrease thepurchasing power of consumers, growth of the industry will be adversely affected. In addition,slow-down in the growth of the real estate market will have some negative effect on marketdemand, which will in turn have some indirect effect on terminal demands for home applianceproducts.
2. Price war risk caused by intensifying industry competition. The industry of whitegoods products has intense competition with a high homogeneity of products. In recent years, theindustry has shown a trend of increasing concentration. In addition, the increase of industryinventory caused by imbalance between supply and demand in individual sub-industries may leadto price wars and other risks.
3. Risk of price fluctuation of raw materials. The Company’s products and corecomponents are mainly made of metal raw materials such as steel, aluminum and copper, as wellas plastics, foaming materials and other bulk raw materials. The potential increase of prices ofraw materials may pose a certain pressure on the Company’s production and operation.
4. Operating risk in overseas market. With the stable development of businessglobalization, the Company has set up several production bases, research and developmentcenters and marketing centers in a number of countries around the world, leading to thecontinuous rise of overseas business. As the overseas market is subject to the impact of localpolitical and economic situation, legal system and supervisory system, significant changes ofsuch factors would pose risks to the Company’s operation locally. Under the influence of globaltrade protectionism, the emergence of a series of problems, such as superpower games, tradefrictions, tariff barriers, foreign exchange fluctuations, together with the complexity of globalpolitics and economy, will increase the international trade cost, labor cost and foreign exchangetransaction cost, as well as the uncertainty of the Company’s overseas operations.
5. Risk of fluctuation in foreign currency exchange rate. With the deepening of theCompany’s global layout, the import and export of the Company’s products involve theexchange of foreign currencies such as US dollars, Euro and Japanese yen. If the exchange rateof relevant currencies fluctuates, the Company’s financial situation may be influenced to someextent and its financial costs may increase.
6. Risk of policy changes. The industry of home appliances is closely related to theconsumer goods market and real estate market. The changes in macroeconomic policy,
2020 Interim Report Haier Smart Home Co., Ltd.
consumption investment policy, real estate policy and other relevant laws and regulations willinfluence distributor demands of products, and may influence sales of the Company’s products.
7. Risk of the epidemic. The new novel coronavirus epidemic starting from late 2019 hasbrought impact on consumer demand and consumer demand for home appliances, which in turnwill affect the Company’s product sales.
(III) Other disclosures
□Applicable √Not Applicable
2020 Interim ReportHaier Smart Home Co., Ltd.
SECTION V SIGNIFICANT EVENTSI. Introduction to the general meeting of shareholders
| Meeting | Date | Index for details of websites designated for publishing resolutions | Date of disclosure |
| 2020 First Extraordinary General Meeting | 31 March 2020 | For details, please refer to the Announcement on Resolutions Passed at the 2020 First Extraordinary General Meeting of Haier Smart Home Co., Ltd. (L2020-010) published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) and the four major securities newspapers | 1 April 2020 |
| 2019 Annual General Meeting | 3 June 2020 | For details, please refer to the Announcement on Resolutions Passed at the 2019 Annual General Meeting of Haier Smart Home Co., Ltd. (L2020-029) published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) and the four major securities newspapers | 4 June 2020 |
Explanation of Shareholders' general meeting
√Applicable □Not Applicable
(1) The 2020 First Extraordinary General Meeting of the Company was held by way of on-sitevoting and network voting by poll at Room A108, Haier University, Haier Information Park, No.1Haier Road, Qingdao, the PRC, in the afternoon on 31 March 2020, considering the amendment ofarticles of association of the Company and other relevant resolutions. The Company’s share capitalin aggregate amounted to 6,579,566,627 shares. 314 shareholders and proxies attended the meeting,holding a total of 3,718,197,212 shares, representing 56.51% of the total number of shares of theCompany with voting rights. The Directors, supervisors and senior management of the Company aswell as the lawyers engaged by the Company also attended the meeting. The 2020 FirstExtraordinary General Meeting was convened by the Board of the Company and Chairman Mr.Liang Haishan, presided over the meeting. The Company had 9 Directors, of whom 1 Directorattended the meeting (Directors Tan Lixia, Li Huagang, Wu Changqi, Yan Yan, Lin Sui, Qian Daqun,Dai Deming and Shi Tiantao were unable to attend the meeting due to personal engagement); theCompany had 3 supervisors, all of whom attended the meeting. The secretary to the Board of theCompany attended the meeting and other members of senior management of the Company wereinvited to attend the meeting.
(2) The 2019 Annual General Meeting of the Company was held by way of on-site voting andnetwork voting by poll at Room B101, Haier University, Haier Information Park, No.1 Haier Road,Qingdao, the PRC, in the afternoon on 3 June 2020, considering the annual report of the Companyand other relevant resolutions. The Company’s share capital in aggregate amounted to6,579,566,627 shares. 517 shareholders and proxies attended the meeting, holding a total of4,144,404,424 shares, representing 62.99% of the total number of shares of the Company withvoting rights. The Directors, supervisors and senior management of the Company as well as thelawyers engaged by the Company also attended the meeting. The General Meeting was convened
2020 Interim ReportHaier Smart Home Co., Ltd.
by the Board of the Company and Chairman Mr. Liang Haishan, presided over the meeting. TheCompany had 9 Directors, of whom 4 Directors attended the meeting (Directors Shi Tiantao, QianDaqun, Wu Changqi, Lin Sui and Yan Yan were unable to attend the meeting due to personalengagement); the Company had 3 supervisors, all of whom attended the meeting. The secretary tothe Board of the Company attended the meeting and other members of senior management of theCompany were invited to attend the meeting.II. Proposal of profit distribution or capitalization of capital reserve(I) Proposal for interim profit distribution and proposal for reverse conversion into sharecapital
| Whether distributed or converted | No |
2020 Interim ReportHaier Smart Home Co., Ltd.
III. Performance on undertakings(I) The undertakings made by the ultimate controllers, shareholders, related parties, acquirer as well as the Company and other relevant parties
during or up to the reporting period
√Applicable □Not Applicable
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Undertaking related to significant reorganization | Eliminate the right defects in land property 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 | 27 September 2006, long-term | Yes | Yes |
2020 Interim ReportHaier Smart Home Co., Ltd.
| suffer loss due to the unavailability of such land and property. | ||||||
| Undertaking related to refinancing | Eliminate the right defects in land property and etc. | Haier Group Corporation | Haier Group Corporation undertakes that it will assure Haier Smart Home and its subsidiaries of the constant, stable and unobstructed use of the leased property. In the event that Haier Smart Home or any of its subsidiaries suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all reasonable and practicable measures to support the impaired party to recover to normal operation before the occurrence of loss. Upon the expiration of relevant leasing period, Haier Group Corporation will grant or take practicable measures to assure Haier Smart Home and its subsidiaries of priority to continue to lease the property at a price not higher than the rent in comparable market at that time. Haier Group Corporation will assure Haier Smart Home and its subsidiaries of the constant, stable, free and unobstructed use of self-built property and land of the Group. In the event that Haier Smart Home or any of its subsidiaries fails to continue to use self-built property according to its own will or in original way due to the fact that self-built property has no relevant ownership certificate, Haier Group Corporation will take all reasonable and practicable measures to eliminate obstruction and impact, or will support Haier Smart Home or its affected subsidiary to obtain alternative property as soon as possible, if Haier Group Corporation anticipates it is unable to cope with or eliminate the external obstruction and impact with its reasonable effort. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. | 24 December 2013, long-term | Yes | Yes |
2020 Interim ReportHaier Smart Home Co., Ltd.
| Eliminate the right defects in land property etc. | Haier Smart Home 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, to achieve the legality and compliance of the Company and main subsidiaries in terms of land and property. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. During the aforesaid period, the Company has formulated relevant performance guarantee measures, including the re-application by the Company and its main subsidiaries to the competent government department for the property ownership certificate and to procure Haier Group Corporation to make guarantee undertakings in respect of the defective property owned by it and its subsidiaries. As of the expiration date, the Company has resolved the property defects of itself and its eight major subsidiaries, while that of the other remaining five major subsidiaries is in process. The Company will make reasonable business efforts to resolve the property defects of these five major subsidiaries. Because of historical issues and other reasons, the approval procedure involved in solving some defective property problems is complicated, including that of multiple government departments, and it takes a long time to handle and coordinate related matters. Due to the above external factors, the Company was unable to complete the above undertakings within the original undertaking period. Therefore, after the approval of the board meeting held by the Company on 5 November 2018 and the general meeting held on 21 December 2018, the term of the above undertakings was extended for three years based on the original deadline. | 24 December 2013, eight years | Yes | Yes | |
| Other | Asset | Haier | Inject the assets of Haier Photoelectric to the Company or dispose such assets through other ways according to the requirements of the | December 2015 to | Yes | Yes |
2020 Interim ReportHaier Smart Home Co., Ltd.
| undertakings | injection | Group Corporation | domestic supervision before June 2025. For more details, please refer to the Announcement of Haier Smart Home Co., Ltd. on the Changes of Some Commitments on Asset Injection (L2020-024) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 30 April 2020. | June 2025 | ||
| Other undertakings | Profit forecast and compensation | Haier Electric Appliances International Co., Ltd. | In August 2018, Guanmei (Shanghai) Enterprise Management Company Limited (贯美(上海)企业管理有限公司) (hereinafter referred to as “Guanmei”), an indirect holding subsidiary of the Company replaced the 55% equity interests of Bingji (Shanghai) Enterprise Management Company Limited (冰戟(上海)企业管理有限公司) held by it with the 51% equity interests of Qingdao HSW Water Appliance Co., Ltd. (hereinafter referred to as “Water Appliance”) held by Haier Electric Appliances International Co., Ltd. (hereinafter referred to as “Haier International”). In this regard, Haier International promises that the cumulative actual net profit recorded by the Water Appliance in the three accounting years during the profit compensation period shall not be less than its cumulative forecasted net profit in the corresponding year, otherwise Haier International shall compensate Guanmei’s results according to the Assets Replacement Agreement. Details are set out in the Announcement on the Equity Replacement and Related-Party Transactions to Be Conducted by the Holding Subsidiary of Qingdao Haier Co., Ltd. and Haier Electronics International Co., Ltd. (L2018-047) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 31 August 2018. | As of 30 April 2021 | Yes | Yes |
2020 Interim ReportHaier Smart Home Co., Ltd.
IV. Appointment and dismissal of accounting firmExplanation of appointment and dismissal of accounting firm
□Applicable √Not Applicable
Explanation of change of accounting firm during the auditing period
□Applicable √Not Applicable
Explanation of the Company on the “non-standard audit report” issued by the accounting firm
□Applicable √Not Applicable
Explanation of the Company on the “non-standard audit report” issued by the certified publicaccountants as set out in 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 matter during the reporting period √No materiallitigation and arbitration matters during the reporting periodVII. Punishment and correction on the listed company and its directors, supervisors,senior management, controlling shareholders, ultimate controllers and acquirersand the issue of rectification
□ Applicable √ Not applicable
VIII. Explanation of the integrity status of the Company and its controllingshareholders and ultimate controller during the reporting period
□ Applicable √ Not applicable
2020 Interim ReportHaier Smart Home Co., Ltd.
IX. The Company's share option incentive scheme, employee shareholding scheme or
other employee incentive measures and its influence(I) Matters that have been disclosed in temporary announcements and without any
subsequent progress or change
□ Applicable √ Not applicable
(II) Share incentives not disclosed in temporary announcements or with subsequent
progressShare Option Incentive
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
Employee stock ownership plan (ESOP)
√ Applicable □ Not applicable
Extension of the Phase II ESOPs: As some shares under the Phase II ESOPs ofQingdao Haier Co., Ltd. (Draft) (hereinafter referred to as “Phase II ESOPs”) remainunallocated, there are still 1,854,568 shares in the asset management account of the Phase IIESOPs. According to the original arrangement, the Phase II ESOPs would expire on 27March 2020. Under the Phase II ESOPs, the validity period of the Phase ESOPs may beextended upon consideration by a Board meeting after expiry of the validity period. Therefore,with the confidence in the future continuous development of the Company and the judgmenton the Company’s stock value, Haier Smart Home convened the 6th meeting of the Tenthsession of the Board of Directors on 14 February 2020, which resolved to extend the validityperiod (from registration of underlying shares to the Phase II ESOPs (28 March 2017)) ofPhase II ESOPs from “not more than 36 months” to “not more than 60 months”. After thechange of the validity period, no lock-up period would be reset on the Phase II ESOPs. Themeeting of the Board of Supervisors held on the same day also considered and passed theabove matters, at which independent directors provided affirmative independent opinions.Other incentive measures
□ Applicable √ Not applicable
2020 Interim ReportHaier Smart Home Co., Ltd.
X. Significant related-party transactions(I) Related-party transactions from daily operation
1. Matters that have been disclosed in temporary announcements and with no subsequentprogress or change
□ Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequentprogress or change
√ Applicable □ Not applicable
The Company made a forecast on the related-party transaction matters of the Company for theyear of 2020 at the 7th meeting of the Tenth session of the Board of Directors held on 29 April2020. For details, please refer to the Announcement of Haier Smart Home Co., Ltd. regarding theAnticipation on the Daily Related-party Transactions for 2020 and relevant announcement on theresolutions of the Board disclosed on 30 April 2020.For the actual implementation of the Company’s related-party transaction in the first half of2020, please refer to “XII. Related parties and related-party transactions under section X -Financial and Accounting Report” set out in this regular report.
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matters disclosed in temporary announcements and with no subsequent progress or
change
□ Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequentprogress or change
□ Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
2020 Interim ReportHaier Smart Home Co., Ltd.
4. If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed
□ Applicable √ Not applicable
(III) Significant related-party transactions of joint external investment
1. Matters that have been disclosed in temporary announcements and with no subsequentprogress or change
□ Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
□ Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
(IV) Amounts due to or from related parties
1. Matters that have been disclosed in temporary announcements and with no subsequent
progress or change
□ Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcement and with subsequentprogress or change
□ Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
(V) Other significant related-party transactions
□ Applicable √ Not applicable
(VI) Others
□ Applicable √ Not applicable
2020 Interim ReportHaier Smart Home Co., Ltd.
XI. Significant contracts and their execution1 Trusteeship, contracting and leasing
□ Applicable √ Not applicable
2 Guarantee
√Applicable □Not Applicable
Unit and Currency: RMB
| 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) | Commencement date of guarantee | Expiry 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 | 4,309,759 | |||||||||||||
| Total balance of guarantees for subsidiaries at the end of the reporting period (B) | 3,634,867 | |||||||||||||
| Total amount of guarantees provided by the Company (including guarantees for subsidiaries) | ||||||||||||||
| Total amount of guarantee (A + B) | 3,634,867 | |||||||||||||
| Ratio of total amount of guarantees to net assets of the Company (%) | 75.21 | |||||||||||||
| Including: | ||||||||||||||
| Amount of guarantees for shareholders, ultimate controllers and their related parties (C) | 0 | |||||||||||||
| Amount of debt guarantees provided directly or indirectly for the | 2,369,621 | |||||||||||||
2020 Interim ReportHaier Smart Home Co., Ltd.
| secured party with asset-liability ratio exceeding 70% (D) | |
| The amount of total amount of guarantee in excess of 50% of net assets (E) | 1,218,346 |
| Total amount of the above three guarantees (C + D + E) | 3,587,967 |
| Explanation of possibly bearing related discharge duty for premature guarantees | None |
| Explanation of guarantee status | The total amount of the aforementioned guarantees consists of two parts: 1. In 2016, the Company acquired the assets of GEA at a total consideration of USD 5.61 billion, which was sourced from self-owned funds and loan for merger, of which, the loan for merger in the amount of USD 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. The balance of the guarantee amounted to approximately RMB4.984 billion as at the end of the reporting period. The provision of guarantee had been considered and approved by the Board and the general meeting of shareholders of the Company; 2. In June 2020, the resolution on the Expected Provision of Guarantee for subsidiaries in 2020 was reviewed and passed on the 2019 Annual General Meeting of the Company, according to which, the Company had provided guarantee 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 RMB33.775 billion. As of the end of the reporting period, the balance guaranteed was RMB31.364 billion. |
3 Other major contracts
□Applicable √Not Applicable
XII. Information on poverty alleviation of the listed companies
√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 povertyalleviation, and carries out initiatives of targeted measures in poverty alleviation within the scopeas authorized by the general meetings on related matters (such as donation).
2020 Interim ReportHaier Smart Home Co., Ltd.
Since the outbreak of the COVID-19, the Company has taken immediate action in activeresponse to the front-line fight against the epidemic. Capitalizing on its global layout, theCompany has continuously made multiple donations in funds, medical equipment, epidemicprevention materials, IoT appliances and green logistics channels, etc. to actively andcomprehensively support the epidemic areas in fighting the epidemic.In addition, over the years, the Company has been devoted to education undertakings andmaking significant contributions, with a view to targeting the weakest area of education and toblocking the transmission of poverty between generations through focused efforts in raising thebasic cultural quality in poverty and the skill levels of labor force from poor families. Up to now,the Company and the Haier Group Corporation (its ultimate controller) and its subsidiaries(referred to as the “Haier Group”) have accumulatively built over 300 hope primary schools andhope middle schools, covering 26 provinces, municipalities directly under the central governmentand autonomous regions in China, and continuously provided the above-mentioned schools withsupport in materials and other respects in each year. These initiatives have effectively enhancedthe basic educational capabilities in poverty-stricken areas and improved the quality of education;at the same time, the Company has continued to provide partner assistance in poverty alleviationthrough agricultural development, poverty alleviation through improvement of the health offarmers and other aspects in support of rural construction, contributing to the construction ofbeautiful villages. During the reporting period, the Company provided financial and other supportto Qiongkuerkeshilake Village and Xiaheyadi Village in Xinjiang.
2. Summary of targeted measures in poverty alleviation during the reporting period
√Applicable □Not Applicable
In the first half of 2020, the Company's expenditures on targeted measures in povertyalleviation was approximately RMB23.45 million, which was mainly utilized in supportingdisaster areas to fight against the epidemic as well as poverty alleviation through agriculturaldevelopment, and poverty alleviation through improvement of the health of farmers, as part of itsinitiatives in response to the government and the performance of its social responsibilities.
3. Results of targeted measures in poverty alleviation
√Applicable □Not Applicable
Unit and Currency: RMB0'000
| Indicator | Amount and the status |
| I. General information | |
| Including: 1. Fund | 2,344.61 |
| II. Breakdown of the use of funds | |
| 1.Poverty alleviation through education | |
| Including: 1.1 Amount invested in helping | 1.1 |
2020 Interim ReportHaier Smart Home Co., Ltd.
| poor students | |
| 2.Poverty alleviation through health enhancement | |
| Including: 2.1 Amount invested in medical and health resources in poverty areas | 18.5 |
| 3.Basic guarantees | |
| 3.1 Amount invested in helping people with disabilities who are living in poverty | 7.1 |
| 4. Poverty alleviation in the society | |
| 4.1 Contributed amount in targeted poverty alleviation works | 4.0 |
| 4.2 Charity funds for poverty alleviation | 2,299.9 |
4. Phased progress in performing social responsibilities of targeted poverty alleviation
√Applicable □Not Applicable
In the first half of 2020, the Company’s poverty alleviation work was focused on promotinganti-epidemic work in the society and the Company. After the outbreak of COVID-19, theCompany took prompt actions to help the disaster areas tide over difficulties. The Companydonated RMB13 million in cash to support Hubei and other badly stricken areas in buildinghospitals and purchasing emergency medical supplies, as well as home appliances and epidemicprevention supplies worth over RMB ten million. The Company urged branches in the US, Japan,Russia, France, India, Thailand, Malaysia, Indonesia, Nigeria and other countries to pool anddonate epidemic prevention materials to relieve the epidemic areas from shortage of epidemicprevention materials. Meanwhile, Haier Wuhan Branch immediately set up an “Anti-epidemicTask Force” to deliver materials and install home appliances such as air-conditioners and waterheaters for Wuhan Huoshenshan Hospital, Leishenshan Hospital, Tongji Hospital and UnionHospital, so as to support the anti-epidemic frontline.
5. Subsequent targeted measures in poverty alleviation plans
√Applicable □Not Applicable
In the second half of the year, the Company will make concerted efforts with Haier Groupand continue to implement the proposition of the documents issued by the central government inrespect of poverty alleviation, consolidate its achievements in fight against the epidemic, andcontinue to provide materials and services for the epidemic areas, contributing to the nationwidecampaign against the epidemic; and continue to dedicate to improve the education inpoverty-stricken areas, promote the revitalization of rural talents, show care for children’s physicaland mental health and other initiatives, and will perform our social responsibilities in a proactivemanner.
2020 Interim ReportHaier Smart Home Co., Ltd.
XIII. Convertible corporation bonds
□Applicable √Not Applicable
XIV. Environmental Information
(I) Explanation of the environmental protection status of companies and their importantsubsidiaries that are key emission units announced by the environmental protectiondepartment
√Applicable □Not Applicable
Innovation drive and green development are the development goals of modern manufacturing.The Company continues to promote green development, actively promote green consumption,enhance the application of energy-saving technologies, and integrate low carbon, cycling, energysaving and emission reduction into all aspects of enterprise development. Besides, the Companyalso continues to promote technological innovation, research and develop the products integratingsmart IoT and green development to strive to increase the green of products at full life span,extend the green supply chain, lead innovation, green, interaction and win-win of the industry, andcontribute to the national green development.
1. Information on pollutant discharge
√Applicable □Not Applicable
Qingdao Economy and Technology Development Zone Haier Energy & Power Co., Ltd.(hereinafter referred to as “Development Zone Energy”), a subsidiary indirectly held by theCompany, is one of the critical pollutant dischargers announced by the environmental protectiondepartment.The Development Zone Energy, a non-production unit, is mainly responsible for unifiedwastewater treatment for all the production units in the Development Zone. The main informationon pollutant discharge is as follows:
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance ofPollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Development Zone Energyshould apply for a pollutant discharge permit and detect 17 types of pollutants (including specificpollutants) , namely, total cadmium, total chromium, total mercury, total lead, total arsenic,hexavalent chromium, COD, ammonia nitrogen, total phosphorus, total nitrogen, PH, suspendedsolids, chroma, petroleum, BOD, rate of flow and temperature.
② Way of discharge: indirect discharge
2020 Interim ReportHaier Smart Home Co., Ltd.
③ Number and distribution of discharge outlets: one, on the southeast of the wastewatertreatment plant, pipeline discharge
④ Concentration and total amount of discharge and approved total amount of discharge:
According to the discharge permit, the concentration and total amount of pollutant dischargesubject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 36.58 mg/L | 9.62 tons | 159.83 tons | No |
| 2 | Ammonia nitrogen | 5.34 mg/L | 1.37 tons | 14.38 tons | No |
| 3 | Total phosphorus | 0.18mg/L | 0.04 ton | 2.55 tons | No |
| 4 | Total nitrogen | 7.98 mg/L | 1.99 tons | 22.37 tons | No |
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for Dischargeto Municipal Sewers (GBT 31962-2015)
2. Construction and operation of pollution control facility
√Applicable □Not Applicable
The Development Zone Energy has a wastewater treatment station with a designedprocessing capacity of 1,200 tons each day. The construction, maintenance and daily operations ofthe wastewater treatment facilities are performed in accordance with national and localenvironmental laws and regulations. All discharged wastewater data are monitored online during24 hours. The monitoring data is transmitted in real time with the environmental protectiondepartment and all equipment works well.
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 ofconstruction projects according to the laws and regulations. The Company performsenvironmental impact evaluation procedures in strict accordance with the Three Simultaneoussystem for environmental protection of construction projects which have been approved in theenvironmental impact assessment. There are no environmental violations such as havingconstructions without approval.
2020 Interim ReportHaier Smart Home Co., Ltd.
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 iscontinuously optimized 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 environmentalstandards. The sewage is discharged after being collected and treated, and is monitored in realtime through the automatic online sewage monitoring system. The data is connected to the HaierSmart Energy System. In May 2020, the Company entrusted a professional third-partycertification body to carry out audit on renewal of ISO14001 environmental management systemcertification and passed it successfully.
6. Other environmental information to be disclosed
□Applicable √Not Applicable
(II) Statement on environmental protection information of the companies not on the list ofcritical pollutant dischargers
√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 impactevaluation procedures in strict accordance with the Three Simultaneous system for environmentalprotection of construction projects. They have been approved in the environmental impactassessment. There are no environmental 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 consumptionsuch as water, electricity and gas in all factories across the country; automatically and accuratelycollects energy data, and completes the prediction and analysis of energy consumption data,optimizes energy deployment and reduce the energy consumption of single product production,thus truly achieving low-carbon production.
2020 Interim ReportHaier Smart Home Co., Ltd.
(III) Statement on reasons for non-disclosure of environmental information by thecompanies not on the list of critical pollutant dischargers
□Applicable √Not Applicable
(IV) Statement on subsequent progress or changes in the environmental informationdisclosed during 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. Statement on Other Significant Events(I) Comparing with the last accounting period, information and reasons for the changes inaccounting policies, accounting estimation and accounting method, and their impacts
□Applicable √Not Applicable
(II) Information, the corrected amount, reasons and impacts for retrospective restatement tocorrect major accounting errors during the reporting period
□Applicable √Not Applicable
(III) Others
√Applicable □Not Applicable
(1) Entrusted wealth management: By the end of the reporting period, the balance of theCompany’s entrusted wealth management amounted to RMB2.985 billion, including three parts:
①Temporarily-idle fundraising wealth management: at the end of December 2018, theCompany’s proceeds for the issuance of convertible corporate bonds were fully landed. In order toimprove the yield of temporarily-idle funds, the Company intended to carry out cash managementwith the amounts not exceeding RMB700 million after being approved by the Board of Directors.By the end of the reporting period, the balance of the entrusted wealth management amounted toRMB583 million; ②Wealth management of the Company’s Hong Kong listed subsidiary:
Haier Electronics Group Co., Ltd. (hereinafter referred to as “HEG”, stock code: 01169.HK), theholding subsidiary of the Company, has purchased some short-term principal-protected wealthmanagement and structural deposits from large commercial banks as an independently operatingHong Kong listed company in order to increase the efficiency of the use of idle funds within theauthorities of the management and on the premise of safeguarding funds security. In the purchaseprocess, all the necessary board reports were subject to the procedures such as filling and
2020 Interim ReportHaier Smart Home Co., Ltd.
management’s review according to the regulations and requirements for Hong Kong listedcompany, so as to ensure sufficient funds for the day-to-day operations of the main business andimprove the shareholders’ returns. By the end of the reporting period, the balance of the entrustedwealth management amounted to RMB2.389 billion. ③ Temporarily-idle funds wealthmanagement by certain subsidiaries of the Company: In order to improve the yield oftemporarily-idle funds, some subsidiaries of the Company use temporarily-idle funds for cashmanagement within the authority of the general manager’s office meeting. By the end of thereporting period, the balance of the entrusted wealth management amounted to RMB13 million.
(4) The progress of privatisation of HEG: On 12 December 2019, the Company announcedthe preliminary discussion on the implementation of H-share listing and privatisation of HEG. On30 July 2020, the Board of Directors of the Company approved related proposals and disclosed theReport on Acquisition of Material Assets and Related-Party Transaction of Haier Smart Home Co.,Ltd. (Draft) and relevant documents. Up to now, the Company has been continuing to pushforward the progress of relating matters and will continue to disclose related advances inaccordance with related requirements.
2020 Interim ReportHaier Smart Home Co., Ltd.
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUT SHAREHOLDERSI. Changes in share capital(I) Table of Changes in shares
1. Table of Changes in shares
During the reporting period, there was no change in the total number of shares and shareholding structure of the Company.
2. Statement on the changes in shares
□Applicable √Not Applicable
3. Effect of changes in shares on the financial indicators such as earnings per share and net assets per share (if any) after the reporting period to thedisclosure date of interim report
□Applicable √Not Applicable
4. Other disclosure deemed necessary by the Company or required by securities regulatory authorities
□Applicable √Not Applicable
(II) Changes in shares with selling restrictions
□Applicable √Not Applicable
II. Information on shareholders(I) Total number of shareholders:
| Total number of ordinary shareholders by the end of the reporting period | 161,351 |
| Total numbers of preferential shareholders with restoration of voting rights by the end of the reporting period | 0 |
2020 Interim ReportHaier Smart Home Co., Ltd.
(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable shares (or shares without selling restrictions) by the end of thereporting period
Unit: share
| Shareholdings of top ten shareholders | |||||||
| Name of shareholder (full name) | Increase/ decrease during the reporting period | Number of shares held at the end of the period | Percentage (%) | Number of shares held with selling restrictions | Status of shares pledged or frozen | Nature of shareholder | |
| Status | Number | ||||||
| Haier Electric Appliances International Co., Ltd. | 1,258,684,824 | 19.13 | Nil | Domestic non-state-owned legal entity | |||
| Haier Group Corporation | 1,072,610,764 | 16.30 | Nil | Domestic non-state-owned legal entity | |||
| Hong Kong Securities Clearing Co., Ltd. | 706,010,686 | 10.73 | Unknown | Foreign legal entity | |||
| China Securities Finance Corporation Limited | 182,592,697 | 2.78 | Unknown | State-owned 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 | 2.62 | Nil | Domestic non-state-owned legal entity | |||
| GIC PRIVATE LIMITED | 130,035,316 | 1.98 | Unknown | Foreign legal entity | |||
| CLEARSTREAM BANKING S.A. (Note) | 91,211,350 | 1.39 | Unknown | Foreign legal entity | |||
| National social security fund, Portfolio 113 | 82,917,383 | 1.26 | Unknown | Unknown | |||
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | 73,011,000 | 1.11 | Nil | Domestic non-state-owned legal entity | |||
2020 Interim ReportHaier Smart Home Co., Ltd.
| Central Huijin Asset Management Ltd. | 69,539,900 | 1.06 | Unknown | State-owned legal entity | ||||
| 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. | 706,010,686 | RMB ordinary | 706,010,686 | |||||
| China Securities Finance Corporation Limited | 182,592,697 | RMB ordinary | 182,592,697 | |||||
| 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 | |||||
| GIC PRIVATE LIMITED | 130,035,316 | RMB ordinary | 130,035,316 | |||||
| CLEARSTREAM BANKING S.A. (Note) | 91,211,350 | Overseas listed foreign shares | 91,211,350 | |||||
| National social security fund, Portfolio 113 | 82,917,383 | RMB ordinary | 82,917,383 | |||||
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | 73,011,000 | RMB ordinary | 73,011,000 | |||||
| Central Huijin Asset Management Ltd. | 69,539,900 | RMB ordinary | 69,539,900 | |||||
| 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) and Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) 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 | Not applicable | |||||||
Note: (1) This account is the Deutsche Bank collection account for the Company's D shares, which is the original data provided by the Clearstream BankCollection Account to the Company after the merger according to local market practices and technical settings, not representing the ultimate shareholder. (2)
2020 Interim ReportHaier Smart Home Co., Ltd.
57,142,857 shares in this account are held by Haier International Co., Limited, the concerted actor of the Company’s ultimate controller Haier Group Corporation,accounting for 0.87% of the Company’s total share capital.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
Haier Smart Home Co., Ltd Notes to the financial statements January-December 2020
SECTION VII RELEVANT INFORMATION OF PREFERRED
SHARES? Applicable √Not Applicable
Haier Smart Home Co., Ltd Notes to the financial statements January-December 2020
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR
MANAGEMENTI. Changes of Shareholding(I) Changes of shareholding of current and retired directors, supervisors and seniormanagement during the reporting period?Applicable √Not Applicable
Other explanations
? Applicable √Not Applicable
(II) Incentive share option granted to directors, supervisors and senior managementduring the reporting period? Applicable √Not Applicable
II. Changes in directors, supervisors and senior management of the Company
√Applicable ?Not Applicable
| Name | Position | Changes |
| Shi Tiantao | Independent director | Designation upon expiration |
| Wang Keqin | Independent director | Election |
Explanations on the change in directors, supervisors and senior management of the Company
√ Applicable ?Not Applicable
During the reporting period, Mr. Shi Tiantao, an independent director of the Company, left hispost upon expiration of his term of office. After deliberation and approval by the general meeting,Mr. Wang Keqin was nominated as the new independent director of the Company, and his term ofoffice was the same as that of the Tenth session of Board of Directors of the Company.III. Other explanations? Applicable √Not Applicable
Haier Smart Home Co., Ltd Notes to the financial statements January-December 2020
SECTION IX RELEVANT INFORMATION OF CORPORATE
BONDS? Applicable √Not Applicable
SECTION X RESPONSIBILITY STATEMENT
‘As the executive director of the Board of Haier Smart Home Co., Ltd, we hereby confirms to thebest of our knowledge, and in accordance with the applicable reporting principles, that thefinancial statements give a true and fair view of the assets, liabilities, financial position and profitor loss of the company; and the management report includes a fair review of the development andperformance of the business including the results and the position of the company, together with adescription of the principal opportunities and risks associated with the expected development ofthe company.’
Qingdao, 28 Aug 2020
The Board of Haier Smart Home Co., Ltd
Liang Haishan
Tan Lixia
Li Huagang
Wu Changqi
Lin Sui
Yan Yan
SECTION XI FINANCIAL REPORTI. Audit report
□ Applicable √ Not Applicable
II. Financial statements
Consolidated Balance Sheet
30 June 2020Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
| Items | Notes | 30 June 2020 | 31 December 2019 |
| Current assets: | |||
| Monetary funds | VII. 1 | 44,112,940,130.82 | 36,178,815,683.25 |
| Provision of settlement fund | |||
| Funds lent | |||
| Financial assets held for trading | VII. 2 | 2,400,484,812.34 | 308,135,007.05 |
| Derivative financial assets | VII. 3 | 66,466,125.17 | 19,158,132.45 |
| Bills receivable | VII. 4 | 13,176,349,200.41 | 13,951,419,893.96 |
| Accounts receivable | VII. 5 | 17,000,438,423.14 | 11,015,871,060.09 |
| Financing receivables | |||
| Prepayments | VII. 6 | 1,720,348,360.69 | 1,272,921,546.72 |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserves receivable | |||
| Other receivables | VII. 7 | 1,933,305,471.43 | 2,163,517,802.50 |
| Financial assets purchased under resale agreements | |||
| Inventories | VII. 8 | 25,281,752,105.06 | 28,228,600,971.61 |
| Contract assets | VII. 9 | 470,929,672.21 | 422,738,398.42 |
| Assets held for sale | |||
| Non-current assets due in one year | |||
| Other current assets | VII. 10 | 3,498,969,605.83 | 6,985,966,115.46 |
| Total current assets | 109,661,983,907.10 | 100,547,144,611.51 | |
| Non-current assets: |
| Loans and advances granted | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | 317,806,792.51 | 307,588,203.00 | |
| Long-term equity investments | VII. 11 | 20,934,594,095.74 | 20,460,763,915.68 |
| Investments in other equity instruments | VII. 12 | 1,270,543,648.96 | 1,395,959,878.92 |
| Other non-current financial assets | VII. 13 | 72,739,420.26 | 294,547,364.47 |
| Investment properties | VII. 14 | 30,844,577.15 | 29,402,691.38 |
| Fixed assets | VII. 15 | 21,419,374,116.74 | 21,180,057,212.01 |
| Construction in progress | VII. 16 | 2,938,851,804.25 | 2,391,364,659.97 |
| Biological assets for production | |||
| Oil and gas assets | |||
| Right-of-use assets | VII. 17 | 2,975,445,961.32 | 2,755,066,601.59 |
| Intangible assets | VII. 18 | 10,743,483,352.82 | 10,687,071,783.07 |
| Development cost | VII. 19 | 216,254,816.09 | 193,285,777.10 |
| Goodwill | VII. 20 | 24,140,784,341.49 | 23,351,729,813.35 |
| Long-term prepaid expenses | VII. 21 | 426,073,900.57 | 437,586,912.58 |
| Deferred income tax assets | VII. 22 | 1,432,333,930.84 | 1,578,901,892.73 |
| Other non-current assets | VII. 23 | 1,461,663,204.40 | 1,843,764,965.81 |
| Total non-current assets | 88,380,793,963.14 | 86,907,091,671.66 | |
| Total assets | 198,042,777,870.24 | 187,454,236,283.17 | |
| Current liabilities: | |||
| Short-term borrowings | VII. 24 | 17,223,889,737.38 | 8,585,049,237.18 |
| Borrowings from central bank | |||
| Due to banks and other financial institutions | |||
| Financial liabilities held for trading | VII. 25 | 17,825,470.87 | 42,799,173.35 |
| Derivative financial liabilities | VII. 26 | 164,280,435.09 | 99,548,853.97 |
| Bills payable | VII. 27 | 19,522,193,515.67 | 19,308,538,776.92 |
| Accounts payable | VII. 28 | 29,649,104,954.11 | 33,750,567,046.28 |
| Receipts in advance | |||
| Contract liabilities | VII. 29 | 4,756,461,007.77 | 5,583,008,412.49 |
| Disposal of repurchased financial assets | |||
| Absorbing deposit and deposit in inter-bank market | |||
| Customer deposits for trading in securities | |||
| Amounts due to issuer for |
| securities underwriting | |||
| Payables for staff's remuneration | VII. 30 | 2,837,357,250.92 | 3,155,572,417.30 |
| Taxes payable | VII. 31 | 1,917,747,901.27 | 2,117,056,381.04 |
| Other payables | VII. 32 | 18,154,358,442.12 | 15,156,392,521.82 |
| Fees and commissions payable | |||
| Reinsurance Accounts payables | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | VII. 33 | 7,925,773,776.64 | 7,317,138,918.02 |
| Other current liabilities | VII. 34 | 515,944,989.04 | 494,065,707.54 |
| Total current liabilities | 102,684,937,480.88 | 95,609,737,445.91 | |
| Non-current liabilities: | |||
| Deposits for insurance contracts | |||
| Long-term borrowings | VII. 35 | 14,716,070,114.06 | 13,276,452,935.56 |
| Bonds payable | VII. 36 | 7,232,228,799.85 | 7,004,585,761.43 |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | VII. 37 | 2,215,066,141.93 | 1,980,271,767.35 |
| Long-term payables | VII. 38 | 116,033,371.58 | 142,342,718.45 |
| Long-term payables for staff’s remuneration | VII. 39 | 1,120,685,891.42 | 1,122,350,237.36 |
| Estimated liabilities | VII. 40 | 1,411,653,965.45 | 1,398,877,746.33 |
| Deferred income | VII. 41 | 747,708,893.63 | 705,272,617.10 |
| Deferred income tax liabilities | VII. 22 | 1,212,570,950.74 | 1,154,413,295.72 |
| Other non-current liabilities | VII. 42 | 78,081,950.87 | 70,071,490.03 |
| Total non-current liabilities | 28,850,100,079.53 | 26,854,638,569.33 | |
| Total liabilities | 131,535,037,560.41 | 122,464,376,015.24 | |
| Owners' equity (or shareholders' equity): | |||
| Paid-in capital (or share capital) | VII. 43 | 6,579,566,627.00 | 6,579,566,627.00 |
| Other equity instruments | VII. 44 | 431,424,524.07 | 431,424,524.07 |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII. 45 | 4,787,092,806.14 | 4,435,890,845.47 |
| Less: treasury stock | |||
| Other comprehensive income | VII. 46 | 1,105,978,659.19 | 1,317,988,619.66 |
| Special reserve | |||
| Surplus reserve | VII. 47 | 2,655,327,405.46 | 2,655,327,405.46 |
| General risk provisions | |||
| Undistributed profits | VII. 48 | 32,771,011,657.53 | 32,468,121,744.26 |
| Total equity attributable to owners (or shareholders) of the | 48,330,401,679.39 | 47,888,319,765.92 |
| Parent Company | |||
| Minority shareholders' interests | 18,177,338,630.44 | 17,101,540,502.01 | |
| Total owners' equity (or shareholders' equity) | 66,507,740,309.83 | 64,989,860,267.93 | |
| Total liabilities and owners' equity (or shareholders' equity) | 198,042,777,870.24 | 187,454,236,283.17 |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Balance Sheet of the Parent Company
30 June 2020Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
| Items | Notes | 30 June 2020 | 31 December 2019 |
| Current Assets: | |||
| Monetary funds | 4,609,290,702.92 | 5,624,406,816.79 | |
| Financial assets held for trading | |||
| Derivative financial assets | |||
| Bills receivable | 5,000,000.00 | ||
| Accounts receivable | XVIII. 1 | 5,604,386,498.20 | 1,182,234,481.49 |
| Financing receivables | |||
| Prepayments | 1,509,874,027.01 | 30,749,459.11 | |
| Other receivables | XVIII. 2 | 3,134,888,436.32 | 5,885,752,905.74 |
| Inventories | 182,081,306.41 | 233,688,207.38 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 604,638,054.45 | 705,958,670.28 | |
| Total current assets | 15,650,159,025.31 | 13,662,790,540.79 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity | XVIII. 3 | 36,526,235,885.10 | 35,566,480,370.20 |
| investments | |||
| Investments in other equity instruments | 4,936,879.64 | 5,147,131.28 | |
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 167,481,627.77 | 180,807,176.98 | |
| Construction in progress | 82,422,580.69 | 65,367,920.02 | |
| Biological assets for production | |||
| Oil and gas assets | |||
| Right-of-use assets | 2,485,673.81 | ||
| Intangible assets | 14,769,047.21 | 15,779,108.14 | |
| Development cost | |||
| Goodwill | |||
| Long-term prepaid expenses | 4,633,466.62 | 5,405,209.80 | |
| Deferred income tax assets | 102,602,840.34 | 97,384,845.46 | |
| Other non-current assets | 16,402,236.00 | 3,792,624.04 | |
| Total non-current assets | 36,921,970,237.18 | 35,940,164,385.92 | |
| Total assets | 52,572,129,262.49 | 49,602,954,926.71 | |
| Current liabilities: | |||
| Short-term borrowings | 4,500,000,000.00 | ||
| Financial liabilities held for trading | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payables | 166,869,308.63 | 3,412,291,778.06 | |
| Receipts in advance | |||
| Contract liabilities | 14,218,302.12 | 16,562,259.31 | |
| Payables for staff's remuneration | 49,020,254.00 | 76,513,196.33 | |
| Taxes payable | 49,009,819.22 | 86,856,453.32 | |
| Other payables | 30,766,612,619.71 | 26,900,844,668.74 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 814,925.37 | ||
| Other current liabilities | 3,205,084.56 | 2,149,745.37 | |
| Total current liabilities | 35,549,750,313.61 | 30,495,218,101.13 | |
| Non-current liabilities: | |||
| Long-term borrowings |
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 851,678.50 | ||
| Long-term payable | 20,000,000.00 | 20,000,000.00 | |
| Long-term payables for staff's remuneration | |||
| Estimated liabilities | |||
| Deferred income | 56,050,000.00 | 59,820,000.00 | |
| Deferred income tax liabilities | 44,874,977.96 | 43,325,120.18 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 121,776,656.46 | 123,145,120.18 | |
| Total liabilities | 35,671,526,970.07 | 30,618,363,221.31 | |
| Owners' equity (or Shareholders' equity): | |||
| Paid-in capital (or share capital) | 6,579,566,627.00 | 6,579,566,627.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 7,036,531,178.83 | 7,036,531,178.83 | |
| Less: treasury stock | |||
| Other comprehensive income | 3,961,350.45 | 11,077,477.45 | |
| Special reserve | |||
| Surplus reserve | 2,050,181,180.01 | 2,050,181,180.01 | |
| Undistributed profits | 1,230,361,956.13 | 3,307,235,242.11 | |
| Total owners' equity (or shareholders' equity) | 16,900,602,292.42 | 18,984,591,705.40 | |
| Total liabilities and owners’ equity (or shareholders' equity) | 52,572,129,262.49 | 49,602,954,926.71 |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Consolidated Profit StatementJanuary-June 2020
Unit and Currency: RMB
| Items | Notes | 2020 Interim | 2019 Interim |
| Ⅰ. Total operating revenue | VII. 49 | 95,728,097,106.65 | 100,023,464,237.90 |
| Including: Operating revenue | 95,728,097,106.65 | 100,023,464,237.90 | |
| Interest income | |||
| Insurance premiums earned | |||
| Fee and commission income | |||
| Ⅱ. Total cost of operations | 91,986,258,214.68 | 94,021,380,261.93 | |
| Including: Operating cost | VII. 49 | 68,934,592,121.68 | 70,999,483,630.77 |
| Interest expenses | |||
| Fee and commission expenses | |||
| Insurance withdrawal payment | |||
| Net payment from indemnity | |||
| Net provisions withdrew for insurance liability | |||
| Insurance policy dividend paid | |||
| Reinsurance cost | |||
| Taxes and surcharges | VII. 50 | 275,190,778.54 | 406,052,828.55 |
| Selling expenses | VII. 51 | 14,526,912,493.29 | 14,777,899,222.91 |
| Administrative expenses | VII. 52 | 4,608,308,707.03 | 4,536,101,362.72 |
| R&D expenses | VII. 53 | 2,939,733,549.14 | 2,797,067,620.86 |
| Financial expenses | VII. 54 | 701,520,565.00 | 504,775,596.12 |
| Including: Interest expenses | 719,257,090.03 | 886,299,299.68 | |
| Interest income | 219,622,316.65 | 258,697,380.60 | |
| Add: other income | VII. 55 | 525,289,255.43 | 473,929,407.12 |
| investment income (losses are represented by “-”) | VII. 56 | 756,782,922.79 | 756,762,139.19 |
| Including: Investment income of associates and joint ventures | |||
| Income generated from the derecognition of financial assets measured at amortized cost (losses are represented by “-”) | |||
| Exchange gain (losses are represented by “-”) | |||
| Gains on net exposure hedges (losses are represented by “-”) | |||
| Income from change in fair | VII. 57 | -30,987,103.15 | 57,409,956.80 |
| value (losses are represented by “-”) | |||
| Loss on credit impairment (losses are represented by “-”) | VII. 58 | -108,905,504.07 | 37,775,605.39 |
| Loss on assets impairment (losses are represented by “-”) | VII. 59 | - 609,748,132.69 | - 257,747,905.20 |
| Gain from disposal of assets (losses are represented by “-”) | VII. 60 | -14,442,406.46 | 12,706,682.87 |
| Ⅲ. Operating profit (losses are represented by “-”) | 4,259,827,923.82 | 7,082,919,862.14 | |
| Add: non-operating income | VII. 61 | 68,886,689.07 | 272,606,469.33 |
| Less: non-operating expenses | VII. 62 | 55,470,756.55 | 114,506,708.29 |
| Ⅳ. Total profit (total losses are represented by “-”) | 4,273,243,856.34 | 7,241,019,623.18 | |
| Less: income tax expense | VII. 63 | 661,226,873.34 | 1,056,104,931.20 |
| Ⅴ. Net profit (net losses are represented by “-”) | 3,612,016,983.00 | 6,184,914,691.98 | |
| (I) Classification by continuous operation | |||
| 1.Net profit from continuous operation (net losses are represented by “-”) | 3,612,016,983.00 | 6,034,408,639.45 | |
| 2. Net profit from discontinued operation (net losses are represented by “-”) | 150,506,052.53 | ||
| (II) Classification by ownership of the equity | |||
| 1. Net profit attributable to shareholders of the Parent Company (net losses are represented by “-”) | 2,780,800,712.72 | 5,058,082,964.47 | |
| 2. Profit or loss attributable to minority shareholders (net losses are represented by “-”) | 831,216,270.28 | 1,126,831,727.51 | |
| VI. Other comprehensive income, net of tax | VII. 64 | -261,463,495.41 | 206,080,907.09 |
| (I) Other comprehensive income attributable to owners of the Parent Company, net of tax | -220,001,490.33 | 233,624,267.18 | |
| 1. Other comprehensive income that cannot be reclassified into the profit or loss | -56,383,682.14 | -12,242,959.12 | |
| (1) Changes arising from re-measurement of defined benefit plans | 12,218.39 | - 400,317.18 | |
| (2) Other comprehensive income that cannot be transferred into profit or loss under equity method | |||
| (3) Changes in fair value of investments in other equity instruments | -56,395,900.53 | -11,842,641.94 | |
| (4) Changes in fair value of credit risks of the enterprise | |||
| 2. Other comprehensive income to be reclassified into the profit or loss | -163,617,808.19 | 245,867,226.30 | |
| (1) Other comprehensive income that can be transferred into profit or loss under equity method | 29,046,113.28 | 19,829,612.65 | |
| (2) Changes in fair value of other debt investments | |||
| (3) Reclassified financial assets that are credited to other comprehensive income | |||
| (4) Credit impairment provision for other debt investments | |||
| (5) Reserve for cash flow hedging | -85,267,888.94 | -25,398,943.78 | |
| (6) Exchange differences on translation of financial statements denominated in foreign currencies | -107,396,032.53 | 251,436,557.43 | |
| (7) Others | |||
| (II) Other comprehensive income attributable to minority shareholders, net of tax | -41,462,005.08 | -27,543,360.09 | |
| Ⅶ. Total comprehensive income | 3,350,553,487.59 | 6,390,995,599.07 | |
| (I) Total comprehensive income attributable to the owners of Parent Company | 2,560,799,222.39 | 5,291,707,231.65 | |
| (II) Total comprehensive income attributable to the minority shareholders | 789,754,265.20 | 1,099,288,367.42 | |
| Ⅷ. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | XX. 1 | 0.423 | 0.794 |
| (II) Diluted earnings per share (RMB/share) | XX. 1 | 0.413 | 0.764 |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Profit Statement of the Parent Company
January-June 2020
Unit and Currency: RMB
| Items | Notes | 2020 Interim | 2019 Interim |
| I. Operating income | XVIII. 4 | 5,042,717,099.68 | 1,330,869,374.63 |
| Less: operating cost | XVIII. 4 | 4,398,410,781.55 | 950,382,533.32 |
| Taxes and surcharges | 11,343,686.85 | 8,794,240.92 | |
| Selling expenses | 217,962,272.62 | 126,957,909.17 | |
| Administration expenses | 132,288,406.83 | 141,039,328.01 | |
| R&D expenses | 142,656,643.01 | 101,983,328.38 | |
| Financial expenses | 28,978,469.77 | 99,436,940.80 | |
| Including: Interest expenses | 46,159,222.22 | 113,544,460.15 | |
| Interest income | 16,084,909.36 | 17,707,954.88 | |
| Add: other income | 33,262,133.10 | 52,472,509.25 | |
| investment income (losses are represented by “-”) | XVIII. 5 | 245,974,740.37 | 245,568,113.58 |
| Including: Investment income of associates and joint ventures | |||
| Derecognition income on financial assets measured at amortized cost (losses are represented by “-”) | |||
| Gains on net exposure hedges (losses are represented by “-”) | |||
| Income from change in fair value (losses are represented by “-”) | |||
| Loss on credit impairment (losses are represented by “-”) | 284,032.12 | 987,137.94 | |
| Loss on assets impairment (losses are represented by “-”) | -1,306,612.25 | ||
| Gain from disposal of assets (losses are represented by “-”) | 51,118.46 | ||
| II. Operating profit (losses are represented by “-”) | 389,291,132.39 | 201,353,973.26 | |
| Add: non-operating income | 36,554.33 | 9,412,803.30 |
| Less: non-operating expenses | 319,495.89 | 1,963,024.43 | |
| III. Total profit (total losses are represented by “-”) | 389,008,190.83 | 208,803,752.13 | |
| Less: income tax expenses | -1,456,008.32 | -17,287,593.90 | |
| IV. Net profit (net losses are represented by “-”) | 390,464,199.15 | 226,091,346.03 | |
| (I) Net profit from continuous operations (net losses are represented by “-”) | 390,464,199.15 | 226,091,346.03 | |
| (II) Net profit from discontinued operations (net losses are represented by “-”) | |||
| V. Other comprehensive income, net of tax | -7,116,127.00 | -751,246.37 | |
| (I) Other comprehensive income that cannot be reclassified into the profit or loss | -178,713.89 | 67,243.43 | |
| 1. Changes arising from re-measurement of defined benefit plans | |||
| 2. Other comprehensive income that cannot be transferred into profit or loss under equity method | |||
| 3. Changes in fair value of investments in other equity instruments | -178,713.89 | 67,243.43 | |
| 4. Changes in fair value of credit risks of the enterprise | |||
| (II) Other comprehensive income to be reclassified into the profit or loss | -6,937,413.11 | -818,489.80 | |
| 1. Other comprehensive income that can be transferred into profit or loss under equity method | -6,937,413.11 | -818,489.80 | |
| 2. Changes in fair value of other debt investments | |||
| 3. Reclassified financial assets that are credited to other comprehensive income | |||
| 4. Credit impairment provision for other debt investments |
| 5. Reserve for cash flow hedging | |||
| 6. Exchange differences on translation of financial statements denominated in foreign currencies | |||
| 7. Others | |||
| VI. Total comprehensive income | 383,348,072.15 | 225,340,099.66 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | |||
| (II) Diluted earnings per share (RMB/share) |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Consolidated Cash Flow Statement
January-June 2020
Unit and Currency: RMB
| Items | Notes | 2020 Interim | 2019 Interim |
| I. Cash flow from operating activities: | |||
| Cash received from the sale of goods and rendering services | 89,745,966,042.83 | 97,600,282,926.70 | |
| Net increase in customer and inter-bank deposits | |||
| Net increase in borrowing from the central bank | |||
| Net cash increase in borrowing from other financial institutes | |||
| Cash received from premiums under original insurance contract | |||
| Net cash received from reinsurance business | |||
| Net increase in deposits of policy holders and investment | |||
| Cash received from interest, fee and commissions | |||
| Net increase in placement from |
| banks and other financial institutions | |||
| Net increase in cash received from repurchase operation | |||
| Net cash received from customer deposits for trading in securities | |||
| Refunds of taxes | 469,784,953.90 | 639,545,403.73 | |
| Cash received from other related operating activities | 727,414,944.47 | 662,922,398.18 | |
| Sub-total of cash inflows from operating activities | 90,943,165,941.20 | 98,902,750,728.61 | |
| Cash paid on purchase of goods and services | 68,204,573,941.90 | 70,605,383,751.62 | |
| Net increase in loans and advances of customers | |||
| Net increase in deposits in the PBOC and inter-bank | |||
| Cash paid for compensation payments under original insurance contract | |||
| Net increase in cash lent | |||
| Cash paid for interest, bank charges and commissions | |||
| Cash paid for insurance policy dividend | |||
| Cash paid to and on behalf of employees | 11,031,460,042.03 | 11,146,189,101.38 | |
| Cash paid for all types of taxes | 3,466,925,924.16 | 4,878,000,921.22 | |
| Cash paid to other operation related activities | VII. 66 | 8,783,125,290.51 | 8,653,368,639.79 |
| Sub-total of cash outflows from operating activities | 91,486,085,198.60 | 95,282,942,414.01 | |
| Net cash flow from operating activities | VII. 69 | -542,919,257.40 | 3,619,808,314.60 |
| II. Cash flow from investing activities: | |||
| Cash received from recovery of investments | 1,912,295,416.73 | 181,007,285.39 | |
| Cash received from return on investments | 223,367,236.11 | 244,119,719.32 | |
| Net cash received from the disposal of fixed assets, | 49,585,896.20 | 200,884,406.40 |
| intangible assets and other long-term assets | |||
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received from investment activities | 43,202,970.66 | ||
| Sub-total of cash inflows from investing activities | 2,185,248,549.04 | 669,214,381.77 | |
| Cash paid on purchase of fixed assets, intangible assets and other long-term assets | 3,105,838,460.63 | 3,589,722,216.30 | |
| Cash paid for investments | 799,380,076.93 | 2,234,331,826.58 | |
| Net increase in secured loans | |||
| Net cash paid on acquisition of subsidiaries and other operating entities | 338,445,082.28 | 2,693,234,416.95 | |
| Other cash paid on investment activities | VII. 67 | 3,368,312.62 | 10,351,066.54 |
| Sub-total of cash outflows from investing activities | 4,247,031,932.46 | 8,527,639,526.37 | |
| Net cash flow from investing activities | - 2,061,783,383.42 | - 7,858,425,144.60 | |
| III. Cash flow from financing activities: | |||
| Cash received from capital contributions | 1,116,431,069.68 | 13,662,307.27 | |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | |||
| Cash received from borrowings | 15,878,143,451.50 | 9,176,456,625.95 | |
| Other cash received from financing activities | |||
| Sub-total of cash inflows from financing activities | 16,994,574,521.18 | 9,190,118,933.22 | |
| Cash paid on repayment of loans | 5,448,817,686.75 | 6,691,975,437.27 | |
| Cash paid on distribution of dividends, profits or repayment of interest expenses | 568,142,953.79 | 265,193,682.03 | |
| Including: Dividend and profit paid to minority shareholders by |
| subsidiaries | |||
| Other cash paid to financing activities | VII. 68 | 398,074,951.29 | 1,344,180,587.48 |
| Sub-total of cash outflows from financing activities | 6,415,035,591.83 | 8,301,349,706.78 | |
| Net cash flow from financing activities | 10,579,538,929.35 | 888,769,226.44 | |
| IV. Effect of fluctuations in exchange rates on cash and cash equivalents | 84,027,232.22 | 115,227,948.70 | |
| V. Net increase in cash and cash equivalents | 8,058,863,520.75 | -3,234,619,654.86 | |
| Add: balance of cash and cash equivalents at the beginning of the period | VII. 70 | 34,962,947,399.85 | 36,553,047,466.15 |
| VI. Balance of cash and cash equivalents at the end of the period | VII. 70 | 43,021,810,920.60 | 33,318,427,811.29 |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Cash Flow Statement of the Parent Company
January-June 2020
Unit and Currency: RMB
| Items | Notes | 2020 Interim | 2019 Interim |
| I. Cash flow from operating activities: | |||
| Cash received from the sale of goods and rendering of services | 1,201,820,635.00 | 918,342,631.75 | |
| Refunds of taxes | 7,969,641.49 | 25,567,202.83 | |
| Other cash received from operating activities | 44,874,440.51 | 110,143,217.54 | |
| Sub-total of cash inflows from operating activities | 1,254,664,717.00 | 1,054,053,052.12 | |
| Cash paid on purchase of goods and services | 9,839,119,707.06 | 189,337,944.61 | |
| Cash paid to and on behalf of | 299,326,532.30 | 567,010,992.25 |
| employees | |||
| Cash paid for all types of taxes | 139,592,241.79 | 95,735,060.62 | |
| Other cash paid to operation activities | 114,847,819.51 | 93,648,702.91 | |
| Sub-total of cash outflows from operating activities | 10,392,886,300.66 | 945,732,700.39 | |
| Net cash flow from operating activities | -9,138,221,583.66 | 108,320,351.73 | |
| II. Cash flow from investing activities: | |||
| Cash received from recovery of investments | 312,000,000.00 | ||
| Cash received from return on investments | 3,840,802,526.75 | 1,233,656,109.64 | |
| 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 | |||
| Other cash received from investment activities | 136,551,000.00 | ||
| Sub-total of cash inflows from investing activities | 4,152,802,526.75 | 1,370,207,109.64 | |
| Cash paid on purchase of fixed assets, intangible assets and other long-term assets | 68,733,039.41 | 25,031,303.67 | |
| Cash paid for investments | 1,159,400,000.00 | 2,201,212,503.09 | |
| Net cash paid on acquisition of subsidiaries and other operating entities | |||
| Other cash paid on investment activities | 79,000,000.00 | 183,351,121.00 | |
| Sub-total of cash outflows from investing activities | 1,307,133,039.41 | 2,409,594,927.76 | |
| Net cash flow from investing activities | 2,845,669,487.34 | -1,039,387,818.12 | |
| III. Cash flow from financing activities: | |||
| Cash received from capital contributions |
| Cash received from borrowings | 4,500,000,000.00 | ||
| Other cash received from financing activities | 818,187,321.17 | ||
| Sub-total of cash inflows from financing activities | 5,318,187,321.17 | ||
| Cash paid on repayment of borrowings | 1,500,000,000.00 | ||
| Cash paid on distribution of dividends, profits or repayment of interest expenses | 39,865,388.89 | 27,105,937.50 | |
| Other cash paid on financing activities | 978,120.00 | 669,109,443.77 | |
| Sub-total of cash outflows from financing activities | 40,843,508.89 | 2,196,215,381.27 | |
| Net cash flow from financing activities | 5,277,343,812.28 | -2,196,215,381.27 | |
| IV. Effect of fluctuations in exchange rates on cash and cash equivalents | 92,170.17 | -537,110.94 | |
| V. Net increase in cash and cash equivalents | -1,015,116,113.87 | -3,127,819,958.60 | |
| Add: balance of cash and cash equivalents at the beginning of the period | 5,624,406,816.79 | 7,068,899,574.96 | |
| VI. Balance of cash and cash equivalents at the end of the period | 4,609,290,702.92 | 3,941,079,616.36 |
Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Consolidated Statement of Changes in Owner's Equity
January-June 2020
Unit and Currency: RMB
| Items | 2020 Interim | ||||||||||||||
| Equity attributable to owners of the Parent Company | Minority equity | Total owners' equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Others | Sub-total | |||||
| preference shares | perpetual bonds | Others | |||||||||||||
| I. Closing balance for the previous year | 6,579,566,627.00 | 431,424,524.07 | 4,435,890,845.47 | 1,317,988,619.66 | 2,655,327,405.46 | 32,468,121,744.26 | 47,888,319,765.92 | 17,101,540,502.01 | 64,989,860,267.93 | ||||||
| Add: changes in accounting policies | |||||||||||||||
| Error correction for prior period | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance for | 6,579,566,627.00 | 431,424,524.07 | 4,435,890,845.47 | 1,317,988,619.66 | 2,655,327,405.46 | 32,468,121,744.26 | 47,888,319,765.92 | 17,101,540,502.01 | 64,989,860,267.93 | ||||||
| the current year | |||||||||||||||
| III. Increase/decrease for the current period (decrease is represented by “-”) | 351,201,960.67 | -212,009,960.47 | 302,889,913.27 | 442,081,913.47 | 1,075,798,128.43 | 1,517,880,041.90 | |||||||||
| (I) Total comprehensive income | -220,001,490.33 | 2,780,800,712.72 | 2,560,799,222.39 | 789,754,265.20 | 3,350,553,487.59 | ||||||||||
| (II) Capital injection and reduction by owners | 359,193,490.53 | 359,193,490.53 | 965,639,084.88 | 1,324,832,575.41 | |||||||||||
| 1. Ordinary shares invested by owners | 359,193,490.53 | 359,193,490.53 | 965,639,084.88 | 1,324,832,575.41 | |||||||||||
| 2. Capital contribution by holders of other equity instruments | |||||||||||||||
| 3. Share-based payment included in owners' equity | |||||||||||||||
| 4. Others |
| (III) Profit distribution | -2,467,337,485.13 | -2,467,337,485.13 | -679,595,221.65 | -3,146,932,706.78 | |||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2． Withdrawal of provisions for general risks | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -2,467,337,485.13 | -2,467,337,485.13 | -679,595,221.65 | -3,146,932,706.78 | |||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner's equity | |||||||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserves into capital (or share capital) | |||||||||||||||
| 3. Surplus |
| reserves used for remedying loss | |||||||||||||||
| 4. Changes in defined benefit plans carried forward to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1．Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | -7,991,529.86 | 7,991,529.86 | -10,573,314.32 | -10,573,314.32 | -10,573,314.32 | ||||||||||
| Ⅳ. Closing balance for the period | 6,579,566,627.00 | 431,424,524.07 | 4,787,092,806.14 | 1,105,978,659.19 | 2,655,327,405.46 | 32,771,011,657.53 | 48,330,401,679.39 | 18,177,338,630.44 | 66,507,740,309.83 |
| Items | 2019 Interim | ||||||||||||||
| Equity attributable to owners of the Parent Company | Minority equity | Total owners' equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Others | Sub-total | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance for the previous year | 6,368,416,700.00 | 904,485,788.71 | 2,208,773,474.57 | 772,632,347.35 | 2,288,301,317.10 | 26,859,741,163.95 | 39,402,350,791.68 | 15,727,928,145.82 | 55,130,278,937.50 | ||||||
| Add: changes in accounting policies | |||||||||||||||
| Error correction for prior period | |||||||||||||||
| Business combination under common control | 242,893,583.08 | 97,501,518.66 | 340,395,101.74 | 337,173,479.67 | 677,568,581.41 | ||||||||||
| Others | 0.00 | ||||||||||||||
| II. Opening balance for the current year | 6,368,416,700.00 | 904,485,788.71 | 2,451,667,057.65 | 772,632,347.35 | 2,288,301,317.10 | 26,957,242,682.61 | 39,742,745,893.42 | 16,065,101,625.49 | 55,807,847,518.91 | ||||||
| III. Increase/decrease for the current | 48,856.00 | -111,993.60 | -315,515,639.53 | 233,624,267.18 | 2,763,882,965.59 | 2,681,928,455.64 | 201,485,612.52 | 2,883,414,068.16 | |||||||
| period (decrease is represented by “-”) | |||||||||||||||
| (I) Total comprehensive income | 233,624,267.18 | 5,058,082,964.47 | 5,291,707,231.65 | 1,099,288,367.42 | 6,390,995,599.07 | ||||||||||
| (II) Capital injection and reduction by owners | 48,856.00 | -111,993.60 | -315,515,639.53 | -315,578,777.13 | -349,305,402.58 | -664,884,179.71 | |||||||||
| 1. Ordinary shares invested by owners | 48,856.00 | -111,993.60 | -226,635,104.87 | -226,698,242.47 | -349,305,402.58 | -576,003,645.05 | |||||||||
| 2. Capital contribution by holders of other equity instruments | |||||||||||||||
| 3. Share-based payment included in owners' equity | |||||||||||||||
| 4. Others | -88,880,534.66 | -88,880,534.66 | -88,880,534.66 | ||||||||||||
| (III) Profit distribution | -2,235,331,410.16 | -2,235,331,410.16 | -534,534,085.77 | -2,769,865,495.93 | |||||||||||
| 1. Withdrawal of surplus |
| reserves | |||||||||||||||
| 2． Withdrawal of provisions for general risks | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -2,235,331,410.16 | -2,235,331,410.16 | -534,534,085.77 | -2,769,865,495.93 | |||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner's equity | |||||||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserves into capital (or share capital) | |||||||||||||||
| 3. Surplus reserves used for remedying loss |
| 4. Changes in defined benefit plans carried forward to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1．Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | -58,868,588.72 | -58,868,588.72 | -13,963,266.55 | -72,831,855.27 | |||||||||||
| Ⅳ. Closing balance for the period | 6,368,465,556.00 | 904,373,795.11 | 2,136,151,418.12 | 1,006,256,614.53 | 2,288,301,317.10 | 29,721,125,648.20 | 42,424,674,349.06 | 16,266,587,238.01 | 58,691,261,587.07 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
Statement of Changes in Owners' Equity of the Parent Company
January-June 2020
Unit and Currency: RMB
| Items | 2020 Interim | ||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owners' equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| Ⅰ. Closing balance for the previous year | 6,579,566,627.00 | 7,036,531,178.83 | 11,077,477.45 | 2,050,181,180.01 | 3,307,235,242.11 | 18,984,591,705.40 | |||||
| Add: changes in accounting policies | |||||||||||
| Error correction for prior period | |||||||||||
| Others | |||||||||||
| Ⅱ. Opening balance for the current year | 6,579,566,627.00 | 7,036,531,178.83 | 11,077,477.45 | 2,050,181,180.01 | 3,307,235,242.11 | 18,984,591,705.40 | |||||
| III. Increase/decrease for the current period (decrease is represented by “-”) | -7,116,127.00 | -2,076,873,285.98 | -2,083,989,412.98 | ||||||||
| (I) Total comprehensive income | -7,116,127.00 | 390,464,199.15 | 383,348,072.15 | ||||||||
| (II) Capital | |||||||||||
| injection and reduction by owners | |||||||||||
| 1. Ordinary shares invested by owners | |||||||||||
| 2. Capital contribution by holders of other equity instruments | |||||||||||
| 3. Share-based payment included in owners' equity | |||||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | -2,467,337,485.13 | -2,467,337,485.13 | |||||||||
| 1. Withdrawal of surplus reserves | |||||||||||
| 2．Distribution to owners (or shareholders) | -2,467,337,485.13 | -2,467,337,485.13 | |||||||||
| 3．Others | |||||||||||
| (IV) Internal transfer of owner's equity | |||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserves into capital (or |
| share capital) | |||||||||||
| 3. Surplus reserves used for remedying loss | |||||||||||
| 4. Changes in defined benefit plans carried forward to retained earnings | |||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1．Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| Ⅳ. Closing balance for the period | 6,579,566,627.00 | 7,036,531,178.83 | 3,961,350.45 | 2,050,181,180.01 | 1,230,361,956.13 | 16,900,602,292.42 |
| Items | 2019 Interim | ||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: treasury | Other comprehensive | Special reserve | Surplus reserve | Undistributed profits | Total owners' | |
| Preference shares | Perpetual bonds | Others | stock | income | equity | ||||||
| Ⅰ. Closing balance for the previous year | 6,368,416,700.00 | 473,061,264.64 | 4,182,825,672.98 | 7,791,344.47 | 1,683,155,091.65 | 2,239,335,007.65 | 14,954,585,081.39 | ||||
| Add: changes in accounting policies | |||||||||||
| Error correction for prior period | |||||||||||
| Others | |||||||||||
| Ⅱ. Opening balance for the current year | 6,368,416,700.00 | 473,061,264.64 | 4,182,825,672.98 | 7,791,344.47 | 1,683,155,091.65 | 2,239,335,007.65 | 14,954,585,081.39 | ||||
| III. Increase/decrease for the current period (decrease is represented by “-”) | 48,856.00 | -111,993.60 | -10,644,884.53 | -751,246.37 | -2,009,240,064.13 | -2,020,699,332.63 | |||||
| (I) Total comprehensive income | -751,246.37 | 226,091,346.03 | 225,340,099.66 | ||||||||
| (II) Capital injection and reduction by owners | 48,856.00 | -111,993.60 | -10,644,884.53 | -10,708,022.13 | |||||||
| 1. Ordinary shares invested by owners | 48,856.00 | -111,993.60 | 669,546.35 | 606,408.75 | |||||||
| 2. Capital |
| contribution by holders of other equity instruments | |||||||||||
| 3. Share-based payment included in owners' equity | |||||||||||
| 4. Others | -11,314,430.88 | -11,314,430.88 | |||||||||
| (III) Profit distribution | -2,235,331,410.16 | -2,235,331,410.16 | |||||||||
| 1. Withdrawal of surplus reserves | |||||||||||
| 2．Distribution to owners (or shareholders) | -2,235,331,410.16 | -2,235,331,410.16 | |||||||||
| 3．Others | |||||||||||
| (IV) Internal transfer of owner's equity | |||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserves into capital (or share capital) | |||||||||||
| 3. Surplus reserves used for remedying loss | |||||||||||
| 4. Changes in defined benefit plans carried forward to |
| retained earnings | |||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1．Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| Ⅳ. Closing balance for the period | 6,368,465,556.00 | 472,949,271.04 | 4,172,180,788.45 | 7,040,098.10 | 1,683,155,091.65 | 230,094,943.52 | 12,933,885,748.76 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
III. General Information of the Company
1. Overview of the Company
√ Applicable □ Not Applicable
The predecessor of Haier Smart Home Co., Ltd. (herein after referred to as the Company) wasQingdao Refrigerator Factory, which was established in 1984. As permitted to offering by People's Bankof China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai [1989] No.3 on 24March 1989, based on the reconstruction of the original Qingdao Refrigerator Factory, a limitedcompany was set up by directional fund raising of RMB150 million. In March and September 1993, asapproved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9 issued by the pilot leading teamof Qingdao joint stock company, the Company was converted from a directional offering company to apublic subscription company and issued additional 50 million shares to the public and listed with tradingon Shanghai Stock Exchange in November 1993.
The Company's registered office is located at the Haier Industrial Park of Laoshan District,Qingdao, Shandong Province, and the headquarter is located at the Haier Industrial Park of 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 ultimate holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on 28August 2020.
2. Scope of consolidated statements
√ Applicable □ Not Applicable
For details of changes in the scope of consolidated financial statements for the current period,please refer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this note.
IV. Basis of Preparation of the Financial Statements
1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis according to thetransactions and matters actually occurred, in accordance with the Accounting Standards for BusinessEnterprises – Basic Standards published by the Ministry of Finance, specific accounting standards, andguidance on application of accounting standards for business enterprises, interpretations to accounting
standards for business enterprises and other relevant requirements (herein after collectively referred to asthe “Accounting Standards for Business Enterprises”) which issued subsequently, and in combinationwith the disclosure provisions of the Rules for the Information Disclosure and Compilation ofCompanies Publicly Issuing Securities No.15: General Provisions for Financial Report (Revised in 2014)of CSRC as well as the following significant accounting policies and accounting estimation.
2. Going Concern
√ Applicable □ Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a going concern.V. Significant accounting policies and accounting estimatesSpecific accounting policies and accounting estimates:
√ Applicable □ Not Applicable
According to the characteristics of its production and operation, the Company formulated a seriesof specific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); theamortization of intangible assets (Note V.18); the criterion for determining of long-term assetsimpairment (Note V.19); and the date of revenue recognition (Note V.25), etc.
1. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the AccountingStandards for Business Enterprises, which accurately and completely reflected information relating tothe financial condition as at 30 June 2020, the operating results and cash flow from January to June 2020of the Company.
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 currency
Renminbi is the recording currency of the Company.
5. Accounting methods of business combinations under common control and not under
common control
√ Applicable □ Not Applicable
A business combination is a transaction or event that brings together two or more separate entitiesinto one reporting entity. Business combinations are classified into business combinations undercommon control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all thecombining entities are ultimately controlled by the same party or parties both before and after thecombination, and that control is not transitory. For business 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 business combination are the transferors. 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 business 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 transferor in the ultimatecontroller's consolidated financial statements obtained as the initial investment cost of long-term equityinvestments as at the date of combination. For carrying value of net assets of the transferor is negative asat the date of combination, investment cost of long-term equity investment is calculated as zero. In casethe transferor is controlled by the ultimate controller by the business combination not under 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 beadjusted 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 business combination by the acquirer are credited in profit or loss in the
period when they occurred. Trading expenses in direct relation to the issuance of equity instrument asthe consideration for the combination is written down to the capital reserve (share premium), where thecapital reserve (share premium) is insufficient, and to surplus reserves and undistributed profits in order.Trading expenses in direct relation to the issuance of debt instrument as the consideration for thecombination is included in the initial recognition amount of the debt instrument.
For business combination under common control realized through several transactions step by step,in case of a package transaction, each transaction is accounted as one transaction that has acquired thecontrol; 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 relevant profit and loss, the othercomprehensive income and changes in the other owners' equity recognized during the period betweenthe 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 profit or loss at the beginning of the comparative reporting period, respectively.
(2) Business combinations not under common control
A business combination not under common control is a business combination in which all of thecombining entities are not ultimately controlled by the same party or parties both before and after thecombination. For business combination not under common control, the party that obtains the control ofthe other parties involving in the business combination at the combination date is the acquirer; otherparties involving in the business combination are the transferors. The combination date is the date onwhich the acquirer effectively obtains control of the transferors.In business combination not under common control, the cost of combination shall be the sum of theassets paid, obligations incurred or assumed and the fair value of the equity securities issued by theacquirer for obtaining control of the transferor at the date of acquisition. Intermediary fees (such as audit,legal services and valuation consultancy) and other relevant management fees incurred by the acquirerfor the purpose of business combination are credited in profit or loss in the period when they occurred.Transaction fees for the equity instruments or debt instruments issued by the acquirer as combinationconsideration is included in the initial recognition amount of such equity instruments or debt instruments.Contingent consideration involved shall be recorded as the combination cost based on its fair value onthe acquisition date. Should any new or further evidence arise within 12 months after the acquisitiondate and makes it necessary to adjust the contingent consideration on the acquisition date, the goodwillarising from the business combination shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in a businesscombination are measured at fair value on the acquisition date. Where the cost of the combinationexceeds the acquirer's interest in the fair value of the transferor's identifiable net assets obtained on theacquisition date, the difference is recognized as goodwill; where the cost of combination is lower thanthe acquirer's interest in the fair value of the transferor's identifiable net assets, the difference is initiallyrecognized in profit or loss for the current year after a review of computation for the identifiable assets,liabilities or fair value of contingent liabilities and combination cost, and where the combination cost isstill lower than the acquirer's interest in the fair value of the identifiable net assets of the transferorobtained during the course of combination, then the difference is recorded in the profit and loss.
In business combination not under common control that is realized in phases through multipleexchange transactions, in the Company individual financial statements, the sum of the book value of theequity investment of the transferor held before the date of acquisition and the cost of new investment onthe date of acquisition are recognized as the initial investment cost of such investment.
In the consolidated financial statement, the equity of the transferor held before the date ofacquisition is re-measured at the fair value on the date of acquisition, and the difference between the fairvalue and book value is included in current investment income; where the equity of the transferor heldbefore the date 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 in the profit or loss.
The fair value on the acquisition date of equity interest in the transferor 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 acquirer's share of the fair valueon the acquisition date of the transferor'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 profit or loss.
6. Preparation method of consolidated accounting statements
√ Applicable □ Not Applicable
(1) Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled by theCompany) into the scope of consolidation financial statements, including the enterprises under theCompany'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' accountingpolicies or accounting periods are different from that of the Company, in accordance with the Company'saccounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheets of theCompany and subsidiaries, which offset the internal transactions incurred between the Company andsubsidiaries and among subsidiaries. The owner's equity of the subsidiaries not attributable to theCompany shall be presented as “minority interests” under the owner's equity item in the consolidatedbalance sheet.
The long-term equity investment of the Company held by the subsidiaries, deemed as treasury stockof the corporate group as well as the reduction of owners' equity, shall be presented as “Less: Treasurystock” under the owner's equity item in the consolidated balance sheet.
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control, the assets, liabilities,operating results and cash flow 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 business combination not under 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. Inaccordance with the Company's rights and obligations under a joint arrangement, the Company classifiesjoint 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 theCompany; (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 therequirements 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 assetsto joint operations or recognize the loss according to the Company's share of commitment in relation tothe 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 tothe accounting policies referred to under “12 Long-term equity investment” of Note V.
8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits 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) Foreign currency transactions
If 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 in theprofit or loss, except ①those arising from the funds denominated in foreign currency speciallyborrowed for the establishment of the qualifying assets are treated based on the principal ofcapitalization of borrowing costs; ②those arising from the other changes in the balance other thanamortized 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 statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, jointventures and associates under the control of the Company are different from that of the Company, their
financial statements denominated in foreign currencies shall be translated to perform accounting andprepare the consolidated financial statements.The assets and liabilities of the balance sheet are translated using the spot exchange rate at thebalance sheet date; all items except for “undistributed profits” of the owner's equity are translated at thespot 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. Differencesarising 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 flow is translated using the approximate rate of the spot exchange rate on thetransaction date. The impact of exchange rate changes on cash amount is reflected separately in the cashflow.
When disposing overseas operations, converted difference in foreign currency statements related tothe overseas operation shall be transferred together or as the percentage of disposing the overseasoperation to profit or loss in the current period of disposal.
10. Financial instruments
√ Applicable □ Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity and afinancial liability or equity instrument of another entity. A financial asset or financial liability isrecognized when the Company becomes a party to the contract of a financial instrument.
(1) Financial assets
① Classification and measurement
According to the business model for managing financial assets and the contractual cash flowcharacteristics of financial assets, the Company classifies financial assets into: (1) Financial assetsmeasured at amortized cost; (2) financial assets measured at fair value through other comprehensiveincome; (3) financial assets measured at fair value through profit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial assets measured atfair value through profit or loss of the current period, related transaction costs are directly included inprofit and loss of the current period; for other types of financial assets, related transaction costs areincluded in their initial recognized amounts. For the accounts receivable or bills receivable arising fromthe sale of products or the provision of labor services that do not contain or consider the significantfinancing components, the Company shall take the consideration amount entitled to be received as theinitial recognized amount.
a. Debt instrument
The debt instruments held by the Company refer to the tools that are in conformity with thedefinition of financial liability from the perspective of the issuing party, which are measured in thefollowing three ways, respectively:
(a) Measured at amortized cost:
The Company's business model for managing such financial assets is: with the aim of obtainingcontractual cash flow, the contractual cash flow characteristics of such financial assets shall beconsistent with the basic lending arrangements, that is, the cash flow generated on a specific date is onlythe payment for the principal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordance with the effective interestmethod. Such financial assets mainly include cash and cash equivalents, bills receivable and accountsreceivable, other receivables, creditor's right investment and long-term receivables. The Company liststhe creditor's rights investments and long-term receivables matured within one year (inclusive) from thebalance sheet date as non-current assets matured within one year; the creditor's rights investmentsmatured within one year (inclusive) when being obtained are listed as other current assets.
(b) Measured at fair value through other comprehensive income:
The Company's business mode for managing such financial assets is: with the aim of obtainingcontractual cash flow and selling the financial assets, the contractual cash flow characteristics of suchfinancial assets shall be consistent with the basic lending arrangements. Such financial assets aremeasured at fair value through other comprehensive income, but impairment gains and losses, exchangegains and losses, and interest income calculated by the effective interest method are included in profitand loss of the current period. Such financial assets are listed as other creditor's rights investments. Othercreditor's rights investments matured within one year (inclusive) from the balance sheet date are listed asnon-current assets matured within one year; other creditor's rights investments matured within one year(inclusive) when being obtained are listed as other current assets.
(c) Measured at fair value through profit or loss of the current period:
The Company lists its held debt instruments that are neither measured at amortized cost nor at fairvalue through other comprehensive income as financial assets held for trading measured at fair valuethrough profit or loss of the current period. At the time of initial recognition, in order to eliminate orsignificantly reduce accounting mismatch, the Company designated some financial assets as financialassets measured at fair value through profit or loss of the current period. Investments that are maturedmore than one year and are expected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.
b. Equity instruments
The Company lists equity instrument investments that have no control, joint control and significantinfluence on itself as financial assets held for trading measured at fair value through profit or loss of thecurrent period; investments that are expected to be held for more than one year from the balance sheetdate are listed as other non-current financial assets.
In addition, the Company designated some non-trading equity instrument investments as financialassets measured at fair value through other comprehensive income, which are listed as other equityinstrument investments. The relevant dividends and interest income of such financial assets are includedin profit and loss of the current period.
②Impairment
For financial assets measured at amortized cost and debt instrument investments measured at fairvalue through other comprehensive income, contract assets and financial guarantee contracts, theCompany recognizes the loss provision based on the expected credit losses.The Company considers reasonable and reliable information about past events, current conditionsand forecasts of future economic conditions, and takes the risk of default as a weight, and calculates theprobability-weighted amount of the present value of the difference between the cash flow receivable andthe cash flow expected to be received of the contract to confirm the expected credit losses.
On each balance sheet date, the Company measures the expected credit losses of financialinstruments in different phases. If the credit risk has not increased significantly since the initialrecognition, the financial instruments are in the first phase. The Company measures the loss provisionaccording to the expected credit losses in the next 12 months; if credit risk has increased significantlybut credit impairment has not yet occurred since the initial recognition, the financial instruments are inthe second phase. The Company measures the loss provision according to the expected credit losses ofthe instruments during the entire duration; if credit impairment has occurred since the initial recognition,the financial instruments are in the third phase. The Company measures the loss provision according tothe expected credit losses of the instruments during the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Company measuresthe loss provision according to the expected credit losses in the next 12 months, assuming that its creditrisk has not increased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financial instruments withrelatively lower credit risk, the Company calculates interest income based on their book balance beforethe deduction of impairment provisions and effective interest rate. For financial instruments in the thirdphase, the Company calculates interest income based on their amortized cost after the impairmentprovision has been deducted from the book balance and effective interest rate.
For bills receivable, accounts receivable and contractual assets, whether there exist significantfinancing components, the Company measures loss provision based on expected credit loss over theentire duration.
The Company classifies accounts receivable into groups on the basis of shared credit riskcharacteristics, and calculates the expected credit losses on groups, the bases of group determination areas follows:
For each group of bills receivable, the Company applies exposure at default and expected creditlosses rate over the entire duration to calculate the expected credit losses on the historical credit lossesexperience, the existing conditions and forecast of future economic conditions.
For each group of accounts receivable, the Company makes the comparison of expected creditlosses rates of accounts receivable in overdue days and over the entire duration to calculate the expectedcredit losses by taking into account the historical credit losses experience, the existing conditions andforecast of future economic conditions.
For each group of other accounts receivable, the Company applies exposure at default and expectedcredit losses rate within the next 12 months or over the entire duration to calculate the expected creditlosses by taking into account the historical credit losses experience, the existing conditions and forecastof future economic conditions.
The Company recognizes the loss impairment provision or reversed in profit or loss of the currentperiod. For held debt instruments at fair value through other comprehensive income, the Companyrecognizes loss/gain on impairment in profit or loss of the current period, and adjusts othercomprehensive income at the same time.
③ Derecognition
A financial asset is derecognized when any of the below criteria is met: a. the contractual rights toreceive the cash flow from the financial asset have been terminated; b. the financial asset has beentransferred and the Company transfers substantially all the risks and rewards of ownership of thefinancial asset to the transferee; c. the financial asset has been transferred and the Company has notretained control of the financial asset, although the Company neither transfers nor retains substantiallyall the risks and rewards of ownership of the financial asset.
On de-recognition of other equity instruments investment, the difference between the book balanceand the sum of the consideration received and any cumulative profit or loss of fair value that had beenrecognized in other comprehensive income is recognized in the retained earnings. On de-recognition ofother financial assets, the difference between the book balance and the sum of the consideration receivedand any cumulative profit or loss of fair value that had been recognized in other comprehensive incomeis recognized in the profit and loss of the current period.
(2) Financial liabilities
Financial liabilities are classified as financial liabilities measured at amortized cost and financialliabilities at fair value through profit or loss of the current period at initial recognition.
The financial liabilities of the Company are financial liabilities measured at amortized cost,including bills payable, accounts payable, other payables, borrowings, bonds payable, etc. Such financialliabilities are recognized initially at fair value less transaction costs and subsequently measured using theeffective interest method. Financial liabilities with a maturity of less than one year (inclusive) are listedas current liabilities: those with maturity of more than one year but are mature within one year from thebalance sheet date (inclusive) are listed as non-current liabilities due within one year; the rest arepresented as non-current liabilities.
When all or partial current obligations of financial liabilities have been discharged, such financialliabilities or the part with obligations discharged are derecognized by the Company. The differencebetween the carrying amount of a financial liability de-recognized and the consideration paid isrecognized in the profit and loss of the current period.
(3) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quotedprice in the active market. The fair value of a financial instrument that is not traded in an active market isdetermined by using a valuation technique. During the valuation, the Company adopts an applicablevaluation technique under current conditions and there are enough available data and other informationto support. Those inputs should be consistent with the inputs a market participant would use whentrading the asset or liability, and the Company should maximize the use of relevant observable inputs.When related observable inputs can't be acquired or are not feasible to be acquired, then useunobservable inputs.
(4) Significant accounting estimates and judgments
①Significant accounting estimates and key assumptions
Measurement of expected credit lossThe Company applies exposure at default and expected credit loss rate to calculate expected creditloss, and determines expected credit loss rate based on probability of default and loss given default. Forthe determination of expected credit loss rate, the Company applies data including internal historicalcredit losses experience, and adjusts historical data taking account current conditions andforward-looking information. Regarding forward-looking information, indicators used by the Companyinclude economic downturn risk, growth in expected unemployment rate, changes in external marketenvironment, technology environment and customer status. The Company monitors and reviewsassumptions related to the calculation of expected credit loss on a regular basis. No major changeoccurred in the above-mentioned estimate techniques and key assumptions in this year.
② Critical judgments on application of accounting policies
a. Classification of financial assetsOn classification of financial assets, critical judgments considered by the Company include thebusiness mode, an analysis of contractual cash flow characteristics and others.From the dimension of financial asset portfolio, the Company determines the business mode offinancial asset management. Considerations cover assessments, reporting methods of financial assetperformance to key management personnel, risks impacting financial asset performance and relevantmanagement methods, as well as methods of relevant business management personnel receivingremuneration.
In assessing the consistency between contractual cash flow of financial assets and the basic lendingarrangements, the Company makes the following major judgments: whether the time distribution oramount of the principal changes during the duration of the financial assets due to prepayment, etc.; andwhether the interest includes considerations for the currency time value, credit risk, as well as otherbasic borrowing risks, costs and profits. For example, whether the prepayment amount merely reflectsthe principal unpaid and interest incurred by the principal unpaid, as well as reasonable compensationpaid due to premature termination of contracts.b. Judgment that credit risk increases significantlyThe main standards for the Company to judge significant increase in credit risk are that overduedays are more than 30 days, or that significant changes occur in one or more of the following indicators:
business environment of debtors, internal and external credit rating, the significant change of actual orexpected business performance, value of collaterals or significant drop in credit rating of guarantors.
The main standards for the Company to judge incurred credit impairment are that overdue days aremore than 90 days (i.e. default occurred), or that one or more of the following conditions are met: adebtor is under significant financial difficulty; other ongoing debt restructuring or high possibility ofbankruptcy.
11. 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, goods in progress, self-made semi-finished goods, finished goods(merchandise inventory) and engineering construction, etc.
(2) Measurement of inventories transferred out
At delivery, inventories are accounted using the weighted average method.
(3) Provision for inventory impairment
At balance sheet date, inventories are measured at the lower of cost or net realizable value.
The net realizable value of inventories (including finished products, merchandize and materials forsale) that can be sold directly is determined based on the estimated selling price of such inventorydeducted by the estimated selling expenses and relevant taxes. The net realizable value of materials heldfor production is determined based on the estimated selling price of the finished product deducted by theestimated cost to be incurred upon completion, estimated selling expenses and relevant taxes. The netrealizable value of inventory held for performance of sales contract or labor service contract isdetermined based on the contractual price; in case the amount of inventory held by the enterpriseexceeds the contractual amount, the net realizable value of the excess portion of inventory is calculatedbased on the general selling price.
Provision for impairment of inventories is made for individual inventory. For items of inventoriesthat is produced and marketed in the same geographical area and with the same or similar end uses orpurposes, which cannot be practicable evaluated separately from other items, cost and net realizablevalue of inventories may be determined on an aggregate basis. For large quantity and low value itemsof inventories, cost and net realizable value of inventories may be determined on types of inventories.Provision for inventory impairment is made and recognized as profit or loss when the cost is higherthan the net realizable value on the balance sheet date. If the factors that give rise to the provision inprior years are not in effect in current year, provision would be reversed within the amount of provisionfor inventory impairment originally recognized, and the reversed amount shall be recognized in theprofit 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.
12. 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 investment
①For 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 thecombined party; for a long-term equity investment obtained from business consolidation not undercommon 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 business combination: theinitial investment cost of the long-term equity investment acquired by payment in cash shall be thepurchase price actually paid; the initial investment cost of the long-term equity investment acquired byissuing equity securities shall be the fair value of the equity securities issued; for long-term equityinvestment acquired by debt restructuring, the initial investment cost shall be determined in accordancewith the relevant requirements under Accounting Standards for Enterprises No. 12 - Debt Restructuring;for long-term equity investment acquired by the exchange of non-monetary assets, the initial investmentcost shall be determined 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 recoveringthe investment, the carrying value is generally unchanged. The profit distributions or cash dividendsdeclared by the investee attributable to the Company 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 through profit or loss according to relevant requirements of AccountingStandards for Business Enterprises No.22—Recognition and measurement of Financial Instrumentsregardless whether the above entities have significant influence on such part of equity investments,while the remaining part shall be measured using equity method.
Under the equity method, where the initial investment cost of a long-term equity investmentexceeds the Company's share of the fair value of the investee's identifiable net assets at the time ofacquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is lessthan the Company's share of the fair value of the investee's identifiable net assets at the time ofacquisition, 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 recognizes
the investment income and other comprehensive income according to its share of net profit or loss andother comprehensive income 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 theCompany'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 comprehensiveincome 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 income.The Company's share of net losses of the investee shall be recognized to the extent that the carryingamount of the long-term equity investment together with any long-term interests that in substance formpart of the investor's net investment in the investee are reduced to zero. If the Company has to assumeadditional 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 investments
① Change of measurement at fair value to accounting under equity method: where the equityinvestment originally held have no control, joint control or significant impact on the investee, and thatare accounted according to the Standards for Recognition and Measurement of Financial Instrumentsand can impose common control or place significant impact on the investee due to addition ofinvestment which resulted in the increase of shareholding, the investee shall take the fair value of theequity investment originally held determined in accordance with the Standards for Recognition andMeasurement of Financial Instruments plus the fair value of the consideration payable for newinvestment as the initial investment cost accounted after the equity method is adopted.
② Change of measurement at fair value or accounting under equity method to cost method: theequity investment originally held by the investor with no control, joint control or significant impact onthe investee and accounted according to the Standards for Recognition and Measurement of FinancialInstruments, or the long-term equity investment originally held in associates or joint ventures that canimpose control over the investee due to addition of investment, shall be accounted as long-term equityinvestment formed by combination of relevant enterprises.
③ Change of accounting under equity method to measurement at fair value: for the long-termequity investment originally held with common control or significant impact on the investee that can nolonger impose common control or significant impact on the investee due to a decrease of shareholding asa result of factors such as partial disposal, the remaining equity investment shall be accounted inaccordance with Standards for Recognition and Measurement of Financial Instruments, and thedifference between the fair value on the date when the common control or significant impact no longerexists and the book value is included in profit or loss.
④ Change of cost method to equity method: where control on the investee changes to significantimpact or common control on the investee with other investors due to factors such as disposal ofinvestment, the long-term equity investment cost that ceased to be recognized shall first be carriedforward on the proportion of the investment disposed. Then the Company compares the cost of theremaining long-term equity investment with the attributable fair value of the identifiable net assetswhich are entitled to the investee at the time of original investment and are calculated based on theproportion of the remaining stake; where the former is larger than the later, it belongs to the goodwill as
showed in deciding the investment price and the carrying amount of the long-term equity investmentwill not be adjusted; where the former is less than the later, the retained earnings will be adjusted alongwith the adjustment of the cost of long-term equity investment.
(4) Basis of conclusion for common control and significant impact over the investee
①Joint control over an investee means that activities which have a significant impact on the returnof a certain arrangement could be decided only by mutual consent of the investing parties sharing theright of control, which includes the sales and purchase of goods or services, management of financialassets, acquisition and disposal of assets, research and development activities and financing activities,etc.
②Significant impact on the investee exists when the investing parties hold more than 20% but lessthan 50% of the shares with voting rights in the investee or, if the investing parties hold less than 20%shares in the investee, they:
1) have representatives in the board of directors or similar governing body of the investee;
2) participate in the investee's policy formulation;
3) assign management personnel to the investee;
4) provide technology or technical information that the investor is dependent on;
5) have major transactions with the investee.
(5) methods of impairment test and provision for impairment
At the balance sheet date, the Company reviews whether there are signs for the impairment oflong-term equity investments. If yes, the recoverable amount is determined through impairment test andprovision for impairment is made based on the difference between the recoverable amount and thecarrying value. Impairment loss will not be reversed in subsequent accounting periods once provision ismade for it.
The recoverable amount is the higher of net fair value of long-term equity investments on disposaland the present value of estimated future cash flow.
(6) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the considerations actuallyreceived and the carrying value of the disposed investment is recognized in current profit or loss. Forlong-term equity investment accounted for using the equity method, the part previously recognized inother comprehensive income is accounted on pro rata basis upon disposal in the same way as therelevant assets or liabilities are disposed of directly by the investee.
13. Investment properties
Investment properties of the Company include leased land use rights and leased buildings.
An investment property is initially measured at cost, and cost method is adopted for subsequentmeasurement.The buildings leased out of investment properties of the Company are depreciated over their usefullives using the straight-line method. The specific measurement policy is the same as that of fixed assets.For land use rights leased out of investment properties or held for resale after appreciation in value, theyare amortized 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 are signs for impairment ofinvestment properties. If yes, the recoverable amount is recognized through an impairment test andprovision for impairment is made based on the difference between the carrying value and therecoverable amount. Impairment loss will not be reversed in subsequent accounting periods onceprovision is made for it.
14. Fixed assets
(1). Recognition criteria of fixed assets
√ Applicable □ Not Applicable
Fixed assets are tangible assets that are held for production of goods, provision of labor services,leasing or operation and management purposes, and have a useful life of more than one fiscal year,which are recognized when the following conditions are met:
① economic benefits in relation to the fixed assets are very likely to flow into the enterprise;
② the cost of the fixed assets can be measured reliably.
(2). Depreciation method of fixed assets
√ Applicable □ Not Applicable
The fixed assets of the Company can be divided into: houses and buildings, production equipment,transportation equipment, office equipment, etc. The straight-line method over useful lives is used tomeasure depreciation. The useful lives and the expected net residual value of fixed assets are determinedaccording to the nature and usage of various fixed assets. At the end of each year, the useful lives,expected net residual value and depreciation method of fixed assets are reviewed, and adjusted if there isvariance with original estimates. The Company has made provisions for all the fixed assets except forthe fixed assets that have been fully depreciated and still in use.
| Type | Depreciation life (years) | Residual ratio |
| Land ownership | - | - |
| Houses and buildings | 8-40 years | 0%-5% |
| Machinery equipment | 4-20 years | 0%-5% |
| Transportation equipment | 5-10 years | 0%-5% |
| Office equipment and others | 3-10 years | 0%-5% |
(3). Method of test and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there are signs for impairment of the fixedassets. If yes, the recoverable amount is recognized through an impairment test and provision forimpairment is made based on the difference between the carrying value and the recoverable amount.Impairment loss will not be reversed in subsequent accounting periods once provision is made for it.
(4). Basis for recognition and method of measurement for fixed assets held under financelease
√ Applicable □ Not Applicable
Basis for recognition of fixed assets held under finance lease: leases for which all the risks andrewards related to the ownership of relevant assets are transferred substantially. Fixed assets held underfinance lease are recognized if one or more of the following conditions is/are met: ①upon expiry of thelease term, the ownership of the leased asset is transferred to the lessee; ②the lessee has the option topurchase the leased asset at a price expected to be sufficiently lower than the fair value of the leasedasset when the option is exercised and at the inception of the lease, it is reasonably ascertained that thelessee will exercise such option; ③the lease term approximates the useful life of the leased asset even ifthe ownership of the asset is not transferred; ④at the inception of the lease, the present value of theminimum lease payments of the lessee is substantially equivalent to the fair value of the leased asset; ⑤the leased assets are of such a specialized nature that only the lessee can use them without majormodification.
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.
For subsequent measurement of fixed assets held under finance lease, provision for depreciation andimpairment is made adopting the same depreciation policies for self-owned fixed assets.
15. Construction in progress
√ Applicable □ Not Applicable
(1) Types of construction in progress
Construction in progress for the Company is in a self-operated manner.
(2) Standard and timing of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when 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 substantiallycompleted;
②The fixed asset has been used for trial production or operation and it is evidenced that the assetcan operate ordinarily or steadily produce qualified products; or the result of trial operation proves that itcan operate normally or be opened for business;
③Further expenditure incurred for construction of the fixed asset is very minimal or remote;
④The constructed fixed asset reaches or almost reaches the design or contractual requirements, orcomplies with the design or contractual requirements.
(3) Method of test and provision for impairment 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. If yes, the recoverable amount is recognized through an impairment test andprovision for impairment is made based on the difference between the carrying value and therecoverable amount. Impairment loss will not be reversed in subsequent accounting periods onceprovision is made for it.
The recoverable amount of construction in progress should base on the higher of net fair value ofasset less disposal expense and the present value of estimated future cash flow of the asset.
16. Borrowing costs
√ Applicable □ Not Applicable
(1) Recognition principles for capitalization of borrowing costs
The Company's borrowing costs that are directly attributable to the acquisition, construction orproduction of a qualifying asset are capitalized into the cost of relevant assets. Other borrowing costs arerecognized as expenses in current profit or loss based on the amount incurred. Qualifying assets forcapitalization include fixed assets, investment properties and inventories that necessarily take asubstantial period of time for acquisition, construction or production to get ready for their intended useor for sale.
(2) Computation of capitalized amount
Period of capitalization refers to the period from the commencement to the cessation ofcapitalization timing of borrowing costs, excluding the periods in which capitalization of borrowingcosts is suspended.
Period of suspended capitalization: Capitalization of borrowing costs is suspended during periods inwhich the acquisition, construction or production of a qualifying asset is suspended abnormally and thesuspension lasts for more than 3 months.Computation of capitalized amount: ①Specific borrowings will be determined based on the actualinterest expense incurred in the current period of the special borrowings less the interest income fromunutilized borrowings deposited in banks or investment income from temporary investment; ②Normalborrowings utilized are calculated based on the weighted average of the asset expenses accumulatedexceeding 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 interestrate of normal borrowings; ③For borrowings with discount or premium, the discount or premium whichshould be amortized in each accounting period is determined based on the effective interest rate methodand an adjustment should be made to the amount of interests in each period.
17. Right-of-use assets
√ Applicable □ Not Applicable
Right-of-use assets are the right of the Company as a lessee to use leased assets during the leaseterm. On the commencement date of the lease term, the Company as lessee shall recognize theright-of-use assets and lease liabilities for the lease, except for short-term leases and low value assetsleases which are treated with practical expedient. The commencement date of the lease term refers to thestart date when the lessor provides the leased assets to make it available to the lessee.The Company’s right-of-use assets shall be initially measured at the costs. The costs include:
(1) initial measurement amount of the lease liability;
(2) a lease payment paid on or before the date of commencement of the lease period, where there
was lease incentive, such incentives shall be deducted;
(3) initial direct costs incurred by the Company as lessee;
(4) costs expected to be incurred by the Company for demolition and removal of leased assets,
restoration of the premises where the leased assets are located, or restoration of the leased assets to
the conditions of the lease terms.
The Company refers to the relevant depreciation provisions of Accounting Standards for BusinessEnterprises No. 4-Fixed Assets to accrue depreciation for right-of-use assets. If the Company canreasonably determine that the ownership of the leased asset can be acquired at the expiration of the leaseterm, the leased asset shall be depreciated within its remaining useful life. If the Company cannotreasonably determine that the ownership of the leased asset can be acquired at the expiration of the leaseterm, the leased asset shall be depreciated within the lease term or its remaining useful life (whichever isshorter).
The Company determines whether the right-of-use assets are impaired in accordance with theprovisions of Accounting Standards for Business Enterprises No. 8 – Asset Impairment and performsaccounting treatment on the identified impairment losses.When the lease liabilities are remeasured in accordance with the Standards, the Company adjusts thebook value of the right-of-use assets accordingly. If the book value of the right-of-use assets is reducedto zero, but needs a further reduction in the measurement of the lease liabilities, the Company recognizesany remaining amount of the remeasurement in current profit or loss.If the lease change results in a narrower lease or a shorter lease term, the Company reduces thebook value of the right-of-use assets accordingly and recognizes the related gains or losses of thepartially terminated or completely terminated leases into current profit and loss. For other lease changeswhich result in the remeasurement of lease liabilities, the Company adjusts the book value of theright-of-use assets accordingly.
18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical form and arepossessed or controlled by the Company.
(1). Valuation method, service life and impairment test
√ Applicable □ Not Applicable
Intangible assets of the Company are initially recognized at costs. The actual costs of purchasedintangible assets include the consideration and relevant expenses actually paid. For intangible assetscontributed by investors, relevant actual costs are determined based on the value agreed in theinvestment contract or agreement. But if the value agreed in the investment contract or agreement is nota fair value, the actual costs should be determined based on the fair value. The cost of a self-developedintangible asset is the total expenditure incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: ①Intangible assets with finiteuseful lives are amortized on a straight-line basis; their useful lives and amortization methods arereviewed at the end of each year, and adjusted accordingly if there is any variance with the previousestimates; ②Intangible assets with indefinite useful lives are not amortized and their useful lives arereviewed at the end of each year. If there is an objective evidence that the useful life of an intangibleasset is finite, an estimation should be made on the useful life and the intangible asset should beamortized using the straight-line method.
(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings economicbenefits for the Company is unforeseeable, or the useful life could not be ascertained.
Criterion of determining indefinite useful lives: ① the period is derived from contractual rights orother legal rights and there are no explicit years of use stipulated in the contract or laws and regulations;
② the period in which the intangible assets generate benefits for the Company still could not beestimated after considering the industrial practice or relevant expert opinions.
At the end of each year, the useful lives of the intangible assets with indefinite useful lives arereviewed. The assessment is primarily reviewed by relevant departments that use the intangible assets,using the down-to-top approach, to determine if there are changes to the determination basis of indefiniteuseful lives.
(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there is any signof impairment. If yes, the recoverable amount is recognized through an impairment test and provisionfor impairment is made based on the difference between the carrying value and the recoverable amount.Impairment loss will not be reversed in subsequent accounting periods once provision is made for it.
The recoverable amount of intangible assets should be based on the higher of the net fair value ofthe assets less the disposal expense and the present value of estimated future cash flow of the assets.
(4) Accounting policies regarding expenditure for internal research and developmentprojects
√ Applicable □ Not Applicable
As for an internal research and development project, expenditure incurred in the research stage isrecognized in the profit or loss as incurred. Expenses incurred in the development stage are recognizedas intangible assets if all of the following conditions are met: ①the technical feasibility of completingthe intangible assets so that they will be available for use or for sale; ②the intention to complete theintangible assets for use or for sale; ③ how the intangible assets will generate economic benefits,including there is evidence that the products produced by the intangible assets has a market or theintangible assets themselves have a market; if the intangible assets are for internal use, there is evidencethat there exists usage for the intangible assets; ④ the availability of adequate technical, financial andother resources to complete the development and gain the ability to use or sell the intangible assets; ⑤the capability to reliably measure the expenditures attributable to the development stage of the intangibleassets.
Specific standards for distinguishing research stage and development stage of an internal researchand development project: research stage refers to the stage of planned investigation and search forobtaining new technology and knowledge, which features planning and exploration; before commercialproduction or other uses, the stage of applying the research achievements and other knowledge in a planor design to produce new or substantially improved materials, equipment and products is regarded asdevelopment stage, which features pertinence and is very likely to form results. All the expendituresincurred on research and development which cannot be distinguished between research stage anddevelopment stage are recognized in the profit or loss.
19. Impairment of long-term assets
√ Applicable □ Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,construction in progress, intangible assets and other long-term assets are tested for impairment if there isany sign of impairment at the balance sheet date. If the result of the impairment test indicates that the
recoverable amount of the assets is less than the carrying amount, a provision for impairment will bemade based on the difference and will be recorded in impairment loss. The recoverable amount is thehigher of the net fair value of the assets less the disposal expense and the present value of estimatedfuture cash flow of the assets. Provision for asset impairment is calculated and recognized on theindividual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, therecoverable amount of the asset group to which the asset belongs is determined. An asset group is thesmallest asset portfolio that can generate cash inflows independently.
Goodwill is tested for impairment at least at the end of each year.In terms of impairment test of the goodwill of the Company, the carrying amount of the goodwill,arising from business combination, shall be allocated to the related asset groups on reasonable basissince the acquisition date, or to the related asset group portfolios if it is difficult to be allocated to therelated asset groups. When the carrying amount of the goodwill is allocated to the related asset groups orasset group portfolios, it shall be allocated in the proportion of the fair value of each asset group or assetgroup portfolio against the total fair value of related asset groups or asset group portfolios. If it isdifficult to measure the fair value reliably, it shall be allocated in the proportion of the carrying amountof each asset group or asset group portfolio against the total carrying amount of related asset groups orasset group portfolios.When impairment test is made to the related asset groups or asset group portfolios includinggoodwill, if there is a sign that the related asset groups or asset group portfolios are prone to impair, theCompany shall first conduct impairment test on the asset groups or asset group portfolios excludinggoodwill, calculate the recoverable amount and recognize the corresponding impairment loss bycomparing with its carrying amount. The Company shall then conduct impairment test on the assetgroups or asset group portfolios including goodwill and compare the carrying amount (including thecarrying amount of allocated goodwill) of related asset groups or asset group portfolios with therecoverable amount thereof. Impairment loss on goodwill shall be recognized when the recoverableamount of the related asset groups or asset group portfolios is lower than the carrying amount thereof.
Once the above impairment loss on assets is recognized, it shall not be reversed in any subsequentaccounting period.
20. Long-term prepaid expense
√ Applicable □ Not Applicable
Long-term prepaid expenses of the Company are expenditures which have incurred but the benefitperiod of which is more than one year (exclusive). They are amortized by installments over the benefitperiod based on each item under the expenses. If items under the long-term pre-paid expenses are nolonger beneficial to the subsequent accounting periods, the amortized value of such unamortized items isthen fully transferred to the profit or loss.
21. Staff's remuneration
Staff's remunerations are all forms of compensation and other relevant expenditure given by theCompany in exchange for services rendered by employees, including short-term remunerations,post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies, employeewelfare, housing provident fund, labor union fee and education fee, medical insurance premiums,work-related injury insurance premiums, maternity insurance premiums, short-term compensated leave,short-term profit-sharing plans, etc. During the accounting period when employees render services,short-term remunerations that actually incurred shall be recognized as liabilities and credited into thecurrent profit or loss or the cost of relevant assets on an accrual basis by the benefit objects.Post-employment benefits mainly include the basic pension insurance, enterprise annuity, etc., Inaccordance with the risks and obligations undertaken by the Company, the post-employment benefits areclassified as defined contribution plans and defined benefit plans. Defined contribution plans: theCompany shall recognize the sinking funds paid on the balance sheet date to individual entities inexchange for services from employees in the accounting period as liabilities, and shall credit such fundsinto the profit or loss or the cost of relevant assets in accordance with the benefit objects. Definedbenefit plans: the cost for providing benefits is determined using the expected cumulative welfare unitmethod, with actuarial valuations being carried out by independent actuary at the interim and annualbalance sheet date. The costs for staff’s remunerations incurred by the defined benefit plans of the Groupare categorized as follows: (1) service cost, including current period service cost, past service cost andsettlement profit or loss. Specifically, current period service cost means the increase of the present valueof defined benefit obligations resulted from the current period services offered by employees. Pastservice cost means the increase or decrease of the present value of defined benefit obligations resultedfrom the revision of the defined benefit plans related to the prior period services offered by employees;
(2) interest expenses of defined benefit plans; (3) changes caused by the remeasurement of liabilities fordefined benefit plans. Unless other accounting standards require or permit the credit of the costs foremployee welfare into the cost of assets, the Company will credit (1) and (2) above into the profit or loss;and recognize (3) above as other comprehensive income and will not transfer it back to the profit or lossin subsequent accounting periods.
Termination benefits: The indemnity proposal provided by the Company for employees for thepurpose of terminating labor relations with employees before expiry of the labor contracts orencouraging employees to accept downsizing voluntarily. When the following conditions are met, theCompany will recognize and credit into the profit or loss the accrued liabilities arising from theindemnity as a result of terminating labor relations with the employees: the Company has made a formalplan for termination of labor relations or has made an offer for voluntary redundancy which will beimplemented immediately; and the Company could not unilaterally withdraw the plan for termination oflabor relations or the redundancy offer. Early retirement plans for employees will be handled in theprinciple the same as the termination benefits above. The Company will credit the salaries and socialinsurance premiums to be paid to the early retirees during the period from the date of early retirement tothe normal retirement date to the profit or loss when recognition conditions for estimated liabilities aremet.
22. Lease liabilities
√ Applicable □ Not Applicable
On the commencement date of the lease term, the Company as the lessee shall recognize theright-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initiallymeasured at the present value of the lease payment that has not been paid on the commencement date ofthe lease term.When calculating the present value of the lease payment, the Company adopts interest rate implicitin lease as discount rate; if it is impossible to determine the interest rate implicit in lease, the incrementalborrowing rate of the Company (i.e. lessee) shall be adopted as the discount rate.The interest rate implicit in lease refers to the interest rate that makes the sum of the present value ofthe lessor’s lease receivable amount and the present value of the unguaranteed residual value equal to thesum of the fair value of the leased asset and the initial direct cost of the lessor. The lessee’s incrementalborrowing rate refers to the interest rate that the lessee is required to pay for borrowing funds undersimilar mortgage conditions in a similar economic environment in order to obtain assets close to thevalue of the right-of-use assets during a similar period.The Company shall calculate the interest expenses of lease liabilities over the lease term at the fixedperiodic interest rate, and include it into current profit or loss or assets cost.After the commencement date of the lease term, where the assessment results of the renewal of theoption, the termination of the lease option and the purchase option have changed, the Companyre-determines the lease payment and re-measures the lease liabilities in accordance with the presentvalue of the lease payment after changes and the revised discount rate.After the commencement date of the lease term, in the event that the future lease payment changesdue to a change in expected payment under a guaranteed remaining value or changes in an index or rateused in determining the lease payments, the Company shall re-measure lease liabilities based on presentvalue of the lease payment after changes. In such cases, the discount rate adopted by the Company shallremain unchanged; however, if the change in lease payment results from a change in floating interestrates, the Company shall use a revised discount rate.
23. Estimated liability
√ Applicable □ Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting ofcommercial acceptance bills, pending litigation or arbitration and product quality assurance is thepresent obligation of the Company and the performance of such obligation is likely to lead to anoutflow of economic interests and its amount can be reliably measured, such obligation shall berecognized as an estimated liability.
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of thenecessary expenses for the performance of the present obligation. If there is a continuous range forthe necessary expenses and if all the outcomes within this range are equally likely to occur, the bestestimate shall be determined according to the middle estimate within the range.; if there are two ormore items involved, the best estimate should be determined according to all possible outcomes andrelevant probabilities.At the balance sheet date, the carrying value of estimated liabilities should be reviewed. Ifthere is objective evidence that the carrying value could not reflect in the current best estimate, thecarrying value shall be adjusted to reflect the current best estimate.
24. Share-based payments
√ Applicable □ Not Applicable
For equity-settled share-based payment transaction in return for services from employees, itshall be measured at the fair value of equity instruments granted to the employees at the grant date.For the payment of such fair value that may only be exercised if services are fulfilled during thevesting period or the specified performance condition is achieved, the amount of such fair valueshall, based on the best estimate of the number of exercisable equity instruments during the vestingperiod, be recognized in relevant costs or expenses in straight-line method with the increase in thecapital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumedby the Company, which is determined based on the shares or other equity instruments. For thecash-settled share-based payment that may be exercised immediately after the grant, the fair valueof the liability assumed by the Company shall, on the date of the grant, be recognized in relevantcosts or expenses and the liabilities shall be increased accordingly. For cash-settled share-basedpayment that may be exercised if services are fulfilled during the vesting period or the specifiedperformance condition is achieved, on each balance sheet date within the vesting period, theservices acquired in the current period shall, based on the best estimate of exercise, be recognized inrelevant costs or expenses at the fair value of the liability assumed by the Company, and theliabilities shall be adjusted correspondingly.
At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fairvalue of the liability is re-measured with its change consolidated in profit/loss.
When there is changes to the Company's share-based payment plans, if the modificationincreases the fair value of the equity instruments granted, corresponding recognition of serviceincrease in accordance with the increase in the fair value of the equity instruments; if themodification increases the number of equity instruments granted, the increase in fair value of theequity instruments is recognized as a corresponding increase in service achieved. Increase in the fairvalue of equity instruments refer to the difference between the fair values of the equity instrumenton the modified date before or after the modification. If the Company modifies the vestingconditions in such manner conductive to the employees, including the shortening of the vestingperiod, change or cancellation of the performance conditions (rather than market conditions), theCompany shall consider the modified vesting conditions upon the disposal of vesting conditions. Ifthe modification reduces the total fair value of shares paid or the Company uses other methods notconductive to employees to modify the terms and conditions of share-based payment plans, it willcontinue to be accounted for the services obtained in the accounting treatment, as if the change hadnot occurred, unless the Company cancelled some or all of the equity instruments granted.
During the vesting period, if the Company cancel equity instruments granted which will betreated as accelerating the exercise of rights and any amount to be charged over the remainingvesting period should be recognized immediately in the profit or loss, while at the same timerecognize the capital reserve. Employees or other parties can choose to meet non-vesting conditions,but for those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.
25. Revenue
Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries duringday-to-day operations which might lead to increase of shareholders' equity and be irrelevant to capitalinvested by shareholders.The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,recognized revenue when the client obtains the control right of relevant goods or services.
Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various single performanceobligation in accordance with the relevant proportion of separate selling price of goods or servicespromised by various single performance obligation, and measure revenue in accordance with transactionprice allocated to various single performance obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries are expectedto be entitled to collect due to transfer of goods and services transferred to the client, excluding theamount collected for any third party. The transaction price recognized by the Company and itssubsidiaries does not exceed the amount of recognized revenue when relevant uncertainties areeliminated and might not incur material carrying back. The amount that is expected to be returned to theclient is taken as liability of returned goods and is not recorded in transaction price.
When one of the following conditions is met, the Company and its subsidiaries performperformance obligations during a certain time horizon, otherwise, it belongs to fulfilling performanceobligations at a certain time point:
① The client simultaneously obtains and consumes economic benefits as the Company and itssubsidiaries perform the contract;
② The client is able to control goods under construction during the process of performance of theCompany and its subsidiaries;
③ Goods produced by the Company and its subsidiaries during the process of performance haveno alternative use, and the Company and its subsidiaries are entitled to collect the amount forthe cumulative completed and performed portion to date during the entire contractual period.
For the performance obligations performed during a certain time horizon, the Company and itssubsidiaries recognize revenue in accordance with the schedule of performance during such time horizon.
When the schedule of performance can't be reasonably recognized, where the costs that have beenincurred by the Company and its subsidiaries are estimated to be compensated, revenue shall berecognized in accordance with the amount of costs that has been incurred until the schedule ofperformance can be reasonably confirmed.
For performance obligations performed at a certain time point, the Company and its subsidiariesrecognize revenue at the time point when the client obtains the control right of relevant goods or services.When judging whether the client has obtained control right over goods or services, the Company and itssubsidiaries will consider the following signs:
①The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;
②The Company and its subsidiaries have transferred the material objects of such goods to theclient;
③The Company and its subsidiaries have transferred statutory ownership right of the goods ormajor risks and rewards of the ownership to the client;
④ The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration for havingtransferred goods or services to the client (and such right depends on other factors other than time lapse)is presented as contractual asset, and contractual asset is provisioned impairment on the basis ofexpected credit losses. The right owned by and unconditionally collected from the client by theCompany and its subsidiaries (only depend on time lapse) shall be presented as accounts receivable.Obligations that the Company and its subsidiaries have collected or shall collect consideration from theclient and shall transfer goods or services to the client are presented as contractual obligations.
Specific accounting policies relating to major activities that the Company and its subsidiaries obtainrevenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only includeperformance obligation of transferring the whole machine of home appliance. Generally, on the basis oftaking into account the following factors comprehensively, the Company recognizes the revenue at thetime point of transfer of control right of goods: the right of instant collection for obtaining goods,transfer of major risks and rewards on ownership of goods, transfer of statutory ownership of goods,transfer of assets of material objects of goods, the client's acceptance of such goods.
(2) Construction contract income
Construction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home, because theclient is able to control goods under construction during the Company's performance process, theCompany takes them as performance obligations performed during a certain time horizon, andrecognizes revenue in accordance with the schedule of performance, and it is an exemption when theschedule of performance can't be reasonably confirmed. The Company confirms the schedule ofperformance of services provided in accordance with the input method. When the schedule ofperformance can't be reasonably confirmed, where the costs that have been incurred by the Company areestimated to be compensated, the revenue will be recognized in accordance with the amount of costs thathas been incurred until the schedule of performance can be reasonably confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides qualityassurance for goods sold and project constructed. For guarantee-type quality assurance in order to ensurethe client that goods sold comply with existing standards, the Company conducts accounting treatmentin accordance with estimated liabilities. For service-type quality assurance in order to ensure the clientthat we also provide a separate service other than that the goods sold comply with existing standards, theCompany takes it as a separate performance obligation, and allocates partial transaction price toservice-type quality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtains control rightover services. When assessing whether quality assurance provides a separate service other than ensuringthe client that the goods sold comply with existing standards, the Company shall consider factors such aswhether such quality assurance is under statutory requirements or industrial practices, the term of qualityassurance and the nature of the Company's commitment to perform the tasks.
26. Government grants
√ Applicable □Not Applicable
(1) Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets obtained by theCompany from the government, excluding the capital invested 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 current profit or loss onan even basis over the useful life of relevant assets; government grants measured at nominal amountshall be recognized directly in current profit or loss. Revenue-related government grants shall be treatedas follows: ①those used to compensate relevant expenses or losses to be incurred by the enterprise insubsequent periods are recognized as deferred income and recorded in current profit or loss when such
expenses are recognized; ②those used to compensate relevant expenses or losses that have beenincurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related government grantIf the government grant received by the Company is used for purchase, construction or other projectthat forms a long-term asset, it is recognized as asset-related government grant.
If the government grant received by the Company is not asset-related, it is recognized asrevenue-related government grant.
Government grant received without clear objective shall be classified as asset-related governmentgrant or revenue-related government grant by:
①Government grant subject to a certain project shall be separated according to the proportion ofexpenditure budget and capitalization budget, and the proportion shall be reviewed and modified ifnecessary on each balance sheet date;
②Government grant shall be categorized as revenue-related if its usage is described in generalstatement and no specific project is specified in the relevant government document.
(4) Amortization method and determination of amortization period of deferred revenue related togovernment grants
Asset-related government grant received by the Company is recognized as deferred revenue and isevenly amortized to the profit or loss in the current period over the estimated useful life of the relevantasset starting from the date when the asset is available for use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of the period whenthere is clear evidence that the relevant conditions set out in the financial subsidy policies andregulations are fulfilled and the receipt of such financial subsidy is assured.
Other government grants other than those measured at the account receivable is recognized uponactual receipt of such subsidies.
27. Deferred income tax assets and 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 tax lawsand regulations, the tax base is the difference), deferred income tax asset or deferred income tax liabilityis calculated using the applicable tax rate prevailing at the expected time of recovering the asset ordischarging the liability.
(2) Deferred income tax asset is recognized to the extent that there is enough taxable income for thededuction of the deductible temporary difference. At the balance sheet date, if there is sufficientevidence that there will be enough taxable income in the future for the deduction of the deductibletemporary difference, the deferred income tax asset not recognized in previous accounting period isrecognized. If there is no sufficient evidence that there will be enough taxable income in the future forthe deduction of the deferred income tax asset, the carrying value of the deferred income tax asset isreduced.
(3) Deferred income tax liability is recognized for taxable temporary difference arising frominvestments in subsidiaries and associated companies, unless the Company could control the time ofreversal of the temporary differences and the temporary differences would not be probably reversed inthe foreseeable 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 the foreseeable future and it is highly probable that taxable income will be availablein the future to deduct the deductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill. No deferred income tax asset or deferred income tax liability is recognized forthe temporary differences resulting from the initial recognition of assets or liabilities due to a transactionother than a business combination, which affects neither accounting profit nor taxable income (ordeductible loss). At the balance sheet date, deferred income tax assets and deferred income tax liabilitiesare measured at the tax rates that apply to the period when the asset is expected to be recovered or theliability is expected to be settled.
28. Other significant accounting policies and accounting estimations
√Applicable □Not Applicable
(1) Asset securitization business
Some of the Company's receivables are securitized. The Company's underlying assets are trusted toa special purpose entity which issues securities to investors. The Company serves as the asset servicesupplier, providing services including asset maintenance and its daily management, formulation of theannual asset disposal plan, formulation and implementation of the asset disposal plan, signing relevantasset disposal agreements and periodic preparation of asset service report.
The Company has evaluated the extent to which it transfers the risks and rewards of assets to otherentities and the extent it exercises control over such entities while applying the accounting policy inrespect of securitization of financial assets:
①The financial asset is derecognized when the Company transfers substantially all the risks andrewards of ownership of the financial asset;
②Recognition of the financial asset is continued when the Company retains substantially all therisks and rewards of ownership of the financial asset;
③When the Company neither transfers nor retains substantially all the risks and rewards ofownership 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.
(2) Hedge accounting
Hedge refers to risk management activities that enterprises designate financial instruments as hedgeinstruments in order to manage risk exposure caused by specific risks such as foreign exchange risk,interest rate risk, price risk and credit risk, allowing to expect changes in fair value or cash flow of hedgeinstruments to offset all or partial changes in fair value or cash flow of hedged items.
Hedged items refer to items which make enterprises face risks of changes in fair value or cash flowand are designated as hedged objects and can be reliably measured.
A hedging instrument is a financial instrument designated by an enterprise for the purpose ofhedging, whose fair value or cash flow changes are expected to offset the change in the fair value or cashflow of the hedged items.
The Company continuously conducts assessment over whether hedge relationship complies withrequirements of hedge effectiveness on the starting date of hedge and during follow-on period. Hedgeeffectiveness refers to the extent that changes in fair value or cash flow of hedge instruments can offsetthat of hedged items caused by the risks of being hedged. The portion that the changes in fair value orcash flow of hedge instruments is greater or less than that of hedged items is the ineffective portion ofhedge.
(3) 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 themanagement's historical experience and made after other various factors are considered. These
judgments, estimates and assumptions will influence the amount of revenues, expenses, assets andliabilities presented in financial reports and the disclosure of contingent liabilities on the balance sheetdate. However, the actual results caused by the uncertainties of these estimations may be different fromthe current estimates of the management, and thus cause a material adjustment to the carrying amountsof assets and liabilities affected in the future. The judgments, estimates and assumptions mentionedabove shall be reviewed on a going concern basis. If the revisions to accounting estimates only affect thecurrent period, the amount affected shall be recognized in the current period; if the revisions affect boththe current and future periods, the amount affected shall be recognized in both the current and futureperiods.On the balance sheet date, the Company needs to have judgments, estimates and assumptions aboutthe following items on the financial statements:
① Estimated liabilities
Provision for product quality guarantee, expected contract losses, and other estimates shall be madein accordance with the terms of contracts, current knowledge and historical experience. If the contingentevent has formed a present obligation the performance of which is very probable to result in outflow ofeconomic benefits from the Company, an estimated liability shall be recognized by the Company on thebasis of the best estimate of the expenditures to settle relevant present obligation. Recognition andmeasurement of the estimated liability significantly rely to a great extent on the management'sjudgments. In the process of judgment, the Company takes into consideration the assessment of relevantrisks, uncertainties, time value of money and other factors related to the contingent events. Among them,the Company will undertake estimated liabilities with respect to the after-sales services provided for thereturn, maintenance and installation of goods. When estimating liabilities, the Company has consideredthe empirical data on maintenance in recent years, but the previous maintenance experiences may fail toreflect the future circumstances. Any increase or decrease in this provision is likely to affect the profitsand losses of the next year.
② Provision of expected credit losses
The Company calculates the expected credit losses in accordance with breach risk exposure andexpected credit loss rate, and confirms expected credit loss rate on the basis of breach possibilities andbreach loss rate. When confirming expected credit loss rate, the Company uses data such as internalhistorical credit loss experiences, and conducts adjustments over historical data in combination withcurrent status and forward-looking information. When considering forward-looking information, indexesused by the Company include risks such as economic downturn, growth of expected unemployment rate,changes in external market environment, technological environment and client conditions. The Companyregularly monitors and reviews relevant assumptions relating to calculation of expected credit losses.The aforesaid estimation techniques and key assumptions have not changed substantially in this year.
③ Impairment provision of inventories
Inventories are measured by lower of cost and net realizable value according to the accountingpolicies of inventories; for inventories whose costs are higher than the net realizable value or thoseobsolete and unsalable, the impairment provision of inventories shall be made. The carrying value ofinventory shall be written down to the net realizable value on the basis of the evaluation of the salabilityof inventories and the net realizable value thereof. Authenticating inventory impairment requires themanagement's obtaining of solid evidence, and their judgments and estimations made after consideringthe purpose of holding inventories and the effect of events after the balanced sheet date and etc. Thedifference between the actual outcome and the previously estimated outcome will influence the carryingvalue of inventories and the provision or reversal of impairment provision of inventories during theperiod when the estimates are changed.
④Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine their fairvalue through a variety of valuation methods. Such valuation methods include discounted cash flowanalysis. 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 investment in other equity instruments
The Company largely relies on judgments and assumptions of the management when determiningwhether investments of other equity instruments are impaired to determine whether it is needed torecognize their impairment. During the process of conducting judgments or making assumptions, theCompany shall assess the extent and duration period that the fair value of such investments is below thecost, as well as financial conditions and short-term business prospects of the invested objects, includingindustry conditions, technological reform, credit rating, breach rate and risks of counterparties.
⑥Provision of long-term assets impairment
As at 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 less disposal expenses and the present value of expected future cash flow. The net offair value less disposal expenses is determined with reference to the price in the sale agreementregarding analogous asset in fair transactions or the observable market price less the increase of cost thatis directly attributable to the disposal of assets. Significant judgments regarding the output, sales price,relevant operating costs of the assets (or assets group) and the discount rate used to calculate the presentvalue shall be made when estimating the present value of future cash flow. Recoverable amount shall beestimated by the Company using all accessible relevant information, including predictions made on theoutput, sales price, and relevant operating costs based on reasonable and supportive assumptions. The
Company shall test for goodwill impairment at least every year. This requires the Company to estimatethe present value of future cash flow for such assets groups or asset group portfolios allocated withgoodwill. When estimating the present value of future cash flow, the Company shall not only estimatethe future cash flow generated by such asset groups or asset group portfolios, but also select theappropriate discount rate to determine the present value of such future cash flow.
⑦Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and amortized by theCompany with a straight-line approach over their useful life by taking into consideration the residualvalue. Useful life shall be periodically reviewed by the Company to determine the amount ofdepreciation and amortization expenses for each reporting period and be determined on the basis ofhistorical experience regarding analogous assets and the expected technological updates. Significantchanges to previous accounting estimates will result in adjustments against depreciation andamortization expenses in the future periods.
⑧Deferred income tax assets
Deferred income tax asset is recognized by the Company for all the uncompensated tax losses to theextent that there is sufficient taxable profit for the deduction of loss. In order to determine the amount ofdeferred income tax assets, the management of the Company needs to predict the timing and the amountof taxable profits in the future by making abundant judgments, as well as through the strategy of taxplanning.
⑨Income tax
In the ordinary course of business of the Company, the ultimate tax treatment and calculations ofsome transactions are uncertain. Whether some items could be presented before taxation shall beapproved by relevant tax authorities. Where there are differences between the final tax outcome of theseitems and the initial estimated amount, such differences will impact the current and deferred tax in theperiod of final confirmation.
⑩Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers. According to therelevant conventions in the sales agreement, the review of specific transactions, the market situation, thepipeline inventory levels and the historical experiences, the Company and its subsidiaries estimate andaccrue sales rebate on a regular basis with reference to the completion of agreed assessment indexes bycustomers. Accrual of sales rebate involves the judgment and estimates of the management. In case ofany significant changes in the previous estimates, the difference above will have an impact on the salesrebate during the period when relevant changes in estimates occur.
29. Changes in the significant accounting policies and accounting estimates
(1). Changes in the significant accounting policies
□ Applicable √ Not Applicable
(2). Changes in the significant accounting estimates
□ Applicable √ Not Applicable
VI. Taxation
1. Main tax categories and rates
Main tax categories and rates
√Applicable □ Not Applicable
| Tax categories | Basis of taxation | Tax rate |
| Value-added tax | Taxable revenue from sales of goods or rendering services | 6%, 9%, 13% |
| City maintenance and construction tax | Circulation Taxes payable | 7% |
| Enterprise income tax | Taxable income | Statutory tax rate or preferential rates as follows |
| (Local) education surcharge | Circulation Taxes payable | 1%, 2%, 3% |
Disclosure of tax entities with different enterprise income tax rates
□ Applicable √ Not Applicable
2. Preferential tax
√ Applicable □ Not Applicable
Companies subjected to preferential tax:
| Name of company | Tax rate | Preferential tax |
| Haier Smart Home 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., Limited | 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 |
| 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 |
| Qingdao Hai Gao Design and Manufacture Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Hairi Hi-Tech Model Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited | 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 |
| Qingdao Haier Industry Intelligence Research Institute Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Central Air Conditioning Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Air Conditioner Gen Corp., Ltd. | 15% | entitled to the preferential taxation policies as |
| a hi-tech enterprise | ||
| Beijing ASU Tech Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Haier U+smart Intelligent Technology (Beijing) Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Beijing Zero Micro Technology Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech 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 |
| Foshan Shunde Haier Electric Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Tianjin Haier Washing Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Economic and Technological 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 Strauss Water Equipment Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Lejia Electric Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier New Energy Electric Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Foshan Shunde Haier Intelligent Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Washing Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Ririshun Lexin Cloud Technology Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Drum Washing Machine Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Electronic Plastic Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Penghai Software Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Wei Xi Intelligent Technology Co., Ltd. | 15% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Special Refrigerating Appliance 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 |
| Wuhan Haier Energy and Power Co., Ltd. | 10% | entitled to the preferential policies as a microenterprise |
| Shenyang Haichen Zhilian Technology Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Dalian Free Trade Zone Haier Refrigerator Trading Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Dalian Haier Energy & Power Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Qingdao Guochuang Intelligent Household Appliance Research Institute Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Qingdao Hailian Rongchuang Technology Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Haier Digital Technology (Nanjing) Co., Ltd. | 10% | entitled to the preferential policies as a small/micro enterprise |
| Jiaxing Penghai Information Technology Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Qingdao Haimeihui Management Consulting Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| GE Appliance (Shanghai) Co., Ltd. | 10% | entitled to the preferential policies as a small/micro enterprise |
| Shanghai Haier Zhongzhi Fang Chuang Ke Management Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Haier Digital Technology (Tianjin) Co., Ltd. | 5% | entitled to the preferential policies as a small/micro enterprise |
| Chongqing Haier Electronics Sales Co., Ltd. and some Western branches | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Xin Ri Ri Shun Electric Sales Co., Ltd. And some Western branches | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Air-conditioning Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Refrigeration Appliance Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Guizhou Haier Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Precision Plastic Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Intelligent Electronics Co., Ltd. | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Washing Machine Co., Ltd | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Water Heater Co., Ltd | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Drum Washing Machine Co., Ltd | 15% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
VII. Explanatory Notes for Items in Consolidated Financial StatementsUnless otherwise specified, the following closing balance refers to the amount as of 30 June 2020.The opening balance refers to the amount as of 31 December 2019. The amount for the current periodrefers to the amount in the period from 1 January to 30 June 2020. The amount of the previous periodrefers to the amount of the period from 1 January to 30 June 2019.
1. Monetary funds
√ Applicable ? Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Cash on hand | 3,439,833.06 | 7,556,892.38 |
| Deposit in bank | 42,540,524,252.52 | 34,502,656,877.99 |
| Other monetary funds | 1,568,976,045.24 | 1,668,601,912.88 |
| Total | 44,112,940,130.82 | 36,178,815,683.25 |
| Including: Total amount deposit overseas | 11,074,244,229.27 | 8,787,573,078.32 |
Other explanations:
The cash in the monetary funds deposited in Haier Finance Co., Ltd. was RMB19,329,361,440.18 atthe end of the period, the balance of which included time deposit of RMB5,500,507,628.24. Theinvestment fund in the closing balance of other monetary funds was RMB367,976,424.43, deposit onthird party payment platforms was RMB109,870,410.59 and the security deposit was
RMB1,005,013,116.34, the frozen fund was RMB191,918.23, and the restricted fund wasRMB85,924,175.65.
2. Financial assets held for trading
| Items | Closing balance | Opening balance |
| Forward foreign exchange contracts | 24,368,892.60 | 84,934,313.67 |
| Short-term wealth management products | 2,341,623,479.22 | 198,614,361.33 |
| Investment in other equity instruments | 34,492,440.52 | 24,586,332.05 |
| Total | 2,400,484,812.34 | 308,135,007.05 |
3. Derivative financial assets
√ Applicable ? Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Forward foreign exchange trading contracts | 62,752,517.52 | 17,241,833.10 |
| Forward commodity contracts | 3,713,607.65 | 1,916,299.35 |
| Total | 66,466,125.17 | 19,158,132.45 |
4. Bills receivable
(1) Details of bills receivable
| Items | Closing balance | Opening balance |
| Bank acceptance notes | 605,212,558.20 | 462,888,721.91 |
| Commercially acceptance notes | 12,585,193,338.81 13,190,405,897.01 | 13,503,587,868.65 |
| Balance of bills receivable | 13,190,405,897.01 | 13,966,476,590.56 |
| Allowance for bad debts | 14,056,696.60 | 15,056,696.60 |
| Bills receivable, net | 13,176,349,200.41 | 13,951,419,893.96 |
(2) Changes in allowance for bad debts of bills receivable in the current period
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance | ||
| Provision | Other increases | Reversal | Write-off/ other | |||
| movement | ||||||
| Allowance for bad debts | 15,056,696.60 | 1,000,000.00 | 14,056,696.60 | |||
| Total | 15,056,696.60 | 1,000,000.00 | 14,056,696.60 |
The bills receivable pledged by the Company at the end of the period was RMB9,980,778,418.11.
(1). Disclosure by classification of bad debt provisions
□Applicable √Not Applicable
5. Accounts receivable
① Accounts receivable are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 16,816,289,465.42 | 10,948,682,641.60 |
| 1-2 years | 367,962,469.63 | 274,136,141.64 |
| 2-3 years | 137,615,516.50 | 98,672,021.59 |
| Over 3 years | 168,317,106.24 | 139,300,727.01 |
| Accounts receivable, balance | 17,490,184,557.79 | 11,460,791,531.84 |
| Allowance for bad debts | 489,746,134.65 | 444,920,471.75 |
| Accounts receivable, net | 17,000,438,423.14 | 11,015,871,060.09 |
② The total amount of the top 5 accounts receivable at the end of the period is
RMB5,148,884,871.86, accounting for 29.44% of the book balance of accounts receivable.
□Applicable √Not Applicable
③ Changes in bad debts of accounts receivable in the current period:
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other increases | Reversal | Write-off/ other movement | |||
| Allowance for bad debts | 444,920,471.75 | 104,092,338.61 | 2,109,154.85 | 2,003,555.96 | 59,372,274.60 | 489,746,134.65 |
④ Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period is RMB59,372,274.60,and there is no important bad debt write-off of accounts receivable.
⑤ The company's accounts receivable that were terminated due to the transfer of financial assets inthe current period.In the current period, the amount of accounts receivable that the company terminated due to thetransfer of financial assets was RMB4,336,031,449.56, and the transfer method was selling-typefactoring/asset securitization.
⑥ Current limited accounts receivable
The amount of accounts receivable pledged at the end of the period is RMB1,280,306,436.00.
6. Prepayments
(1) Prepayments are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 1,634,749,215.82 | 1,226,300,431.60 |
| 1-2 years | 48,134,250.21 | 14,275,907.31 |
| 2-3 years | 11,997,337.82 | 6,036,100.01 |
| Over 3 years | 25,467,556.84 | 26,309,107.80 |
| Total | 1,720,348,360.69 | 1,272,921,546.72 |
(2) The amount of the top 5 in the prepayments at the end of the period totals RMB737,779,070.53,which accounts for 42.89% of the prepayment balance.
7. Other receivables
Items are set out
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Interest receivable | 210,808,262.82 | 273,009,954.80 |
| Dividend receivable | 95,417,478.62 | 4,524,472.84 |
| Other receivables | 1,627,079,729.99 | 1,885,983,374.86 |
| Total | 1,933,305,471.43 | 2,163,517,802.50 |
Other explanations:
□Applicable √Not Applicable
(1) Interest receivable
| Aging | Closing balance | Opening balance | ||
| Book value balance | Proportion | Book value balance | Proportion | |
| Within one year | 209,221,480.99 | 99.25% | 224,873,084.17 | 82.36% |
| 1-2 years | 1,586,781.83 | 0.75% | 26,470,812.60 | 9.70% |
| 2-3 years | 21,666,058.03 | 7.94% | ||
| Total | 210,808,262.82 | 100.00% | 273,009,954.80 | 100.00% |
(2) Dividend receivable
| Aging | Closing balance | Opening balance | ||
| Book value balance | Proportion | Book value balance | Proportion | |
| Within one year | 90,893,005.78 | 95.26% | ||
| 1-2 years | ||||
| 2-3 years | ||||
| Over 3 years | 4,524,472.84 | 4.74% | 4,524,472.84 | 100.00% |
| Total | 95,417,478.62 | 100.00% | 4,524,472.84 | 100.00% |
(3) Other receivables
① Other receivables are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 1,505,760,639.37 | 1,801,028,378.02 |
| 1-2 years | 107,424,370.48 | 65,979,912.86 |
| 2-3 years | 11,557,659.31 | 26,319,826.19 |
| Over 3 years | 75,596,740.09 | 64,449,296.31 |
| Other receivables balance | 1,700,339,409.25 | 1,957,777,413.38 |
| Allowance for bad debts | 73,259,679.26 | 71,794,038.52 |
| Other receivables, net | 1,627,079,729.99 | 1,885,983,374.86 |
② The total amount of the top 5 other receivables at the end of the period is RMB801,299,548.96,
which accounts for 47.13% of the book balance of other receivables.
③ Changes in bad debt provision for other receivables in the current period
| Items | Opening | Increase for the period | Decrease for the period | Closing |
| balance | Provision | Other Increases | Reversal | Write-off/ other movement | balance | |
| Allowance for bad debts | 71,794,038.52 | 8,662,065.46 | 107,745.40 | 845,344.04 | 6,458,826.08 | 73,259,679.26 |
④ Other receivables written off during the period
The amount of other receivables actually written off in the current period is RMB6,458,826.08, andno significant other receivables are written off for bad debts.Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds, andadvance payments, etc.
8. Inventories
(1) Details of Inventories
| Items | Closing balance | Opening balance | ||
| Book value balance | Impairment provision | Book value balance | Impairment provision | |
| Raw material | 3,317,190,269.90 | 140,329,593.27 | 3,068,331,798.61 | 115,668,613.58 |
| Work in progress | 329,714,177.59 | 408,055,609.14 | 425,020.38 | |
| Finished goods | 22,528,230,727.83 | 753,053,476.99 | 25,720,392,258.54 | 852,085,060.72 |
| Total | 26,175,135,175.32 | 893,383,070.26 | 29,196,779,666.29 | 968,178,694.68 |
(2) Impairment provision of inventories
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other Increases | Reversal | Write-off/ other movement | |||
| Raw material | 115,668,613.58 | 40,252,160.86 | 183,192.35 | 15,407,988.82 | 140,329,593.27 | |
| Work in progress | 425,020.38 | 425,020.38 | ||||
| Finished goods | 852,085,060.72 | 431,760,554.10 | 169,936.18 | 59,504,356.29 | 471,457,717.72 | 753,053,476.99 |
| Total | 968,178,694.68 | 472,012,714.96 | 169,936.18 | 59,687,548.64 | 487,290,726.92 | 893,383,070.26 |
9. Contract assets
(1) Details
| Items | Closing balance | Opening balance |
| Book value balance | Impairment Provision | Book value balance | Impairment Provision | |
| Relating to construction service contract | 474,583,868.48 | 3,654,196.27 | 426,392,594.69 | 3,654,196.27 |
| Total | 474,583,868.48 | 3,654,196.27 | 426,392,594.69 | 3,654,196.27 |
(2) Provision of credit loss
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other movement | Reversal | Write-off and other movement | |||
| Relating to construction service contract | 3,654,196.27 | 3,654,196.27 | ||||
| Total | 3,654,196.27 | 3,654,196.27 | ||||
10. Other current assets
(1) Details
| Items | Closing balance | Opening balance | ||
| Book value balance | Impairment provision | Book value balance | Impairment provision | |
| Bank deposit for financial products | 889,536,054.45 | 3,981,314,321.50 | ||
| Taxes to be deducted | 2,320,829,386.20 | 2,953,191.39 | 2,578,384,287.03 | 3,276,161.33 |
| Return cost receivable | 389,324,414.91 | 230,224,779.86 | 374,052,448.32 | 218,016,000.42 |
| Others | 132,457,721.52 | 273,507,220.36 | ||
| Total | 3,732,147,577.08 | 233,177,971.25 | 7,207,258,277.21 | 221,292,161.75 |
(2) Impairment provision
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other Increases | Reversal | Write-off / other movement | |||
| Deductible | 3,276,161.33 | 322,969 | 2,953,191.39 | |||
| input tax | .94 | |||||
| Return cost receivables | 218,016,000.42 | 197,745,936.31 | 185,537,156.87 | 230,224,779.86 | ||
| Total | 221,292,161.75 | 197,745,936.31 | 322,969.94 | 185,537,156.87 | 233,177,971.25 |
11. Long-term equity investments
√Applicable □ Not Applicable
| Investees | Opening balance | Increase/decrease for the period | ||||
| Investment increase | Investment profit recognized under equity method | Adjustment in other comprehensive income | Other changes in equity | Declaration of cash dividends or profits | ||
| Associate: | ||||||
| Haier Group Finance Co., Ltd. | 6,010,611,728.26 | 352,650,151.68 | 1,562,835.07 | -126,000,000.00 | ||
| Bank of Qingdao Co., Ltd. | 2,586,957,693.97 | 132,352,393.34 | -18,620,015.12 | -77,995,640.00 | ||
| Wolong Electric (Jinan) Motor Co., Ltd. | 123,555,578.44 | 8,189,589.12 | ||||
| Qingdao Hegang New Material Technology Co., Ltd. | 280,063,773.80 | 8,645,979.45 | ||||
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | 434,540,103.12 | -626,240.10 | ||||
| Mitsubishi Heavy Industries | 643,056,436.86 | 34,236,531.91 | ||||
| Haier (Qingdao) Air-conditioners Co., Ltd. | ||||||
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 395,933,487.26 | 5,297,623.12 | ||||
| Qingdao Haier multimedia Co., Ltd. | 432,386,801.26 | -42,017,109.03 | ||||
| Qingdao Haier Software Investment Co., Ltd. | 19,636,136.75 | |||||
| Hefei Feier Smart Technology Co., Ltd. | 758,188.30 | |||||
| Qingdao Xinaohaizhi Energy Co., Ltd. | 25,966,044.95 | 522,787.67 | ||||
| Qingdao Zhongzaihaina Environmental Services Co., Ltd. | 2,261,258.70 | |||||
| Shandong Haibida Big Data Co., Ltd. | 5,332,640.10 | -340,822.72 | ||||
| Beijing Mr. Hi Network Technology Company Limited | 3,757,759.75 | |||||
| Beijing Xiaobei Technology Co., Ltd. | 2,687,341.82 | |||||
| Beijing ASU Tech Co., Ltd. | 5,862,115.78 | -5,264,385.58 | ||||
| Shenzhen | 6,914,487.73 |
| Genyuan Environment al Protection Technology Co., Ltd. | ||||||
| Qingdao Haimu Investment Management Co., Ltd. | 2,198,276.46 | |||||
| Qingdao Haimu Smart Home Investment Partnership (Limited Partnership) | 48,046,197.64 | |||||
| Guangzhou Heying Investment Partnership (Limited Partnership) | 219,198,634.81 | -11,271,104.09 | ||||
| Qingdao Home Wow Cloud Network Technology Co., Ltd. | 3,168,859.99 | -58,822.53 | ||||
| Bingji (Shanghai) Corporate Management Co., Ltd. | 894,539,765.00 | 88,871,603.09 | ||||
| Youjin (Shanghai) Corporate Management Co., Ltd | 1,625,617,754.55 | |||||
| RRS (Shanghai) Investment Co., Ltd. | 2,954,850,462.82 | |||||
| Haier Best Water Technology Co., Ltd. | 21,725,345.26 | -1,806,868.15 | ||||
| Meiling Candy | 23,222,136.38 | -1,733,369.98 | 879,525.97 |
| Washing Machine Co., Ltd. | ||||||
| Konan Electronic Co., Ltd. | 71,196,748.97 | 1,986,998.58 | 1,571,603.76 | - | ||
| HNR Company (Private) Limited | 104,557,145.65 | 4,116,720.13 | -0.01 | |||
| HPZ LIMITED | 78,149,551.49 | -2,481,483.12 | -2,770,007.89 | |||
| Controladora Mabe S.A.deC.V | 3,497,668,453.45 | 96,502,250.12 | 50,082,821.58 | -20,392,107.51 | ||
| MiddleEast Air conditioning Company Limited | 19,002,595.66 | |||||
| Total | 20,543,423,504.98 | 679,043,527.00 | 21,435,659.27 | -224,387,747.51 |
(Continued)
| Investees | Increase/decrease for the period | Closing balance | Impairment provision Closing balance | |
| Other movement | Disposal of the investment | |||
| Associate: | ||||
| Haier Finance Co., Ltd. | 6,238,824,715.01 | |||
| Bank of Qingdao Co., Ltd. | 2,622,694,432.19 | |||
| Wolong Electric (Jinan) Motor Co., Ltd. | 131,745,167.56 | |||
| Qingdao Hegang New Material Technology Co., Ltd. | 288,709,753.25 | |||
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | 433,913,863.02 | |||
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 677,292,968.77 | |||
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 401,231,110.38 | 21,000,000.00 | ||
| Qingdao Haier Multimedia Co., Ltd | 390,369,692.23 | 48,300,000.00 | ||
| Qingdao Haier Software Investment Co., Ltd. | 19,636,136.75 | |||
| Hefei Feier Smart Technology Co., Ltd. | 758,188.30 | |||
| Qingdao Xinaohaizhi Energy Co., Ltd. | 26,488,832.62 | |||
| Qingdao Zhongzaihaina Environmental Services Co., Ltd. | -2,261,258.70 | |||
| Shandong Haibida Big Data Co., Ltd. | 4,991,817.38 | |||
| Beijing Mr. Hi Network Technology Company | 3,757,759.75 | 3,757,759.75 | ||
| Limited | ||||
| Beijing Xiaobei Technology Co., Ltd. | 2,687,341.82 | 2,687,341.82 | ||
| Beijing ASU Tech Co., Ltd. | 597,730.20 | |||
| Shenzhen Genyuan Environmental Protection Technology Co., Ltd. | 6,914,487.73 | 6,914,487.73 | ||
| Qingdao Haimu Investment Management Co., Ltd. | 2,198,276.46 | |||
| Qingdao Haimu Zhijia Investment Partnership (Limited Partnership) | 48,046,197.64 | |||
| Guangzhou Heying Investment Partnership (Limited Partnership) | 207,927,530.72 | |||
| Qingdao Home Wow Cloud Network Technology Co., Ltd. | 3,110,037.46 | |||
| Bingji (Shanghai) Corporate Management Co., Ltd. | 983,411,368.09 | |||
| Youjin (Shanghai) Corporate Management Co., Ltd | 1,625,617,754.55 | |||
| RRS (Shanghai) Investment Co., Ltd. | 2,954,850,462.82 | |||
| Haier Best Water Technology Co., Ltd. | 19,918,477.11 | |||
| Meiling Candy Washing Machine Co., Ltd. | 22,368,292.37 | |||
| Konan Electronic Co., Ltd. | 74,755,351.31 | |||
| HNR Company (Private) Limited | 108,673,865.77 | |||
| HPZ LIMITED | 72,898,060.48 | |||
| Controladora Mabe S.A.deC.V. | 3,623,861,417.64 | |||
| Middle East Airconditioning Company, Limited | 19,002,595.66 | |||
| Total | - | -2,261,258.70 | 21,017,253,685.04 | 82,659,589.30 |
12. Details of investment in other equity instruments
(1) Details of investment in other equity instruments at the end of the period:
| Items | Closing balance | Opening balance |
| SINOPEC Fuel Oil Sales Corporation Limited (中国石化销售股份有限公司) | 1,112,101,000.00 | 1,242,930,000.00 |
| Others | 158,442,648.96 | 153,029,878.92 |
| Total | 1,270,543,648.96 | 1,395,959,878.92 |
(2) Dividends from investment in other equity during the current period:
| Items | Amount for the current period |
| SINOPEC Fuel Oil Sales Corporation Limited | 14,252,549.71 |
| (中国石化销售股份有限公司) | |
| Others | 273,659.22 |
| Total | 14,526,208.93 |
13. Other non-current financial assets
√Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Long-term wealth management products | 72,739,420.26 | 294,547,364.47 |
| Total | 72,739,420.26 | 294,547,364.47 |
14. Investment properties
Measure mode for investment properties
(1) The changes in investment properties measured at cost for this year are as follows:
| Items | Houses and buildings | Land use rights | Total |
| I. Original book value | |||
| 1.Opening balance | 46,415,383.99 | 2,128,550.51 | 48,543,934.50 |
| 2.Increase for the period | |||
| (1) Outsourced | |||
| (2) Inventories\fixed assets\construction in progress transferred in | 1,971,634.23 | 1,971,634.23 | |
| (3) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Other transferring out | |||
| 4. Converted difference in foreign currency statements | 479,484.30 | 479,484.30 | |
| 5. Closing balance | 48,866,502.52 | 2,128,550.51 | 50,995,053.03 |
| II. Accumulated depreciation and accumulated amortization | |||
| 1.Opening balance | 18,591,095.18 | 550,147.94 | 19,141,243.12 |
| 2.Increase for the period |
| (1) Provision or amortization | 906,365.24 | 20,118.10 | 926,483.34 |
| 3. Decrease for the period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Other transferring out | |||
| 4. Converted difference in foreign currency statements | 82,749.42 | 82,749.42 | |
| 5. Closing balance | 19,580,209.84 | 570,266.04 | 20,150,475.88 |
| III. Impairment provision | |||
| 1.Opening balance | |||
| 2.Increase for the period | |||
| (1) Provision | |||
| 3. Decrease for the period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Other transferring out | |||
| 4. Converted difference in foreign currency statements | |||
| 5. Closing balance | |||
| IV. Book value | |||
| 1. Closing book value | 29,286,292.68 | 1,558,284.47 | 30,844,577.15 |
| 2. Opening book value | 27,824,288.81 | 1,578,402.57 | 29,402,691.38 |
(2) The depreciation and amortization amount charge for the period is RMB926,483.34.
(3) The recoverable amount of the investment real estate of the Company at the end of the period isnot less than its book value, so no provision for impairment is made.
15. Fixed assets
Presented as
√Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Fixed assets | 21,398,455,636.12 | 21,159,138,731.39 |
| Disposals of fixed assets | 20,918,480.62 | 20,918,480.62 |
| Total | 21,419,374,116.74 | 21,180,057,212.01 |
（1） Fixed assets:
| Items | Houses and buildings | Production equipment | Transportation equipment |
| I. Original book value | |||
| 1.Opening balance | 9,989,544,831.06 | 24,245,714,440.91 | 174,044,711.29 |
| 2.Increase for the period | |||
| (1) Acquisition | 112,395,048.87 | 718,888,652.82 | 572,389.15 |
| (2) Construction in progress transferred in | 408,861,191.41 | 540,982,555.81 | 9,660,945.19 |
| (3) Increase in business combinations | 322,355,185.01 | 755,209.24 | |
| 3.Decrease for the period | |||
| (1) Disposal or Write-off | 18,072,656.50 | 225,902,133.45 | 3,570,623.98 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | -23,168,007.04 | -22,624,253.23 | -841,528.37 |
| 5.Closing balance | 10,469,560,407.80 | 25,579,414,447.87 | 180,621,102.52 |
| II. Accumulated depreciation | |||
| 1.Opening balance | 3,419,949,048.61 | 11,017,050,073.01 | 96,937,625.18 |
| 2.Increase for the period | |||
| (1) Provision | 248,175,958.11 | 1,194,443,129.99 | 10,774,150.77 |
| (2) Increase in business combinations | 145,073,532.93 | 372,442.10 | |
| 3.Decrease for the period | |||
| (1) Disposal or write-off | 9,400,567.89 | 147,233,701.45 | 2,823,282.77 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 1,670,703.73 | 1,299,636.52 | -107,808.65 |
| 5.Closing balance | 3,660,395,142.56 | 12,210,632,671.00 | 105,153,126.63 |
| III. Impairment provision | |||
| 1.Opening balance | 34,461,480.76 | 14,555,443.55 | 80,617.22 |
| 2.Increase for the period | |||
| (1) Provision | |||
| (2) Increase in business combinations | 127,167,231.67 | ||
| 3.Decrease for the period | |||
| (1) Disposal or Write-off | 10,355,336.24 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 635,780.59 | 13,471.59 | 402.66 |
| 5.Closing balance | 35,097,261.35 | 131,380,810.57 | 81,019.88 |
| IV. Book value | |||
| 1.Closing book value | 6,774,068,003.89 | 13,237,400,966.30 | 75,386,956.01 |
| 2.Opening book value | 6,535,134,301.69 | 13,214,108,924.35 | 77,026,468.89 |
(Continued)
| Items | Office furniture | Others | Total |
| I. Original book value | |||
| 1.Opening balance | 863,015,378.72 | 2,266,565,579.67 | 37,538,884,941.65 |
| 2.Increase for the period | |||
| (1) Acquisition | 11,205,099.32 | 21,218,488.76 | 864,279,678.92 |
| (2) Construction in progress transferred in | 70,702,218.79 | 70,784,971.20 | 1,100,991,882.40 |
| (3) Increase in business combinations | 152,184.27 | 7,966.39 | 323,270,544.91 |
| 3.Decrease for the period | |||
| (1) Disposal or Write-off | 10,590,048.89 | 92,160,434.42 | 350,295,897.24 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | -3,249,731.54 | -12,645,437.75 | -62,528,957.93 |
| 5.Closing balance | 931,235,100.67 | 2,253,771,133.85 | 39,414,602,192.71 |
| II. Accumulated depreciation | |||
| 1.Opening balance | 438,400,670.33 | 1,346,669,714.51 | 16,319,007,131.64 |
| 2.Increase for the period | |||
| (1) Provision | 59,599,208.61 | 95,713,632.40 | 1,608,706,079.88 |
| (2) Increase in business combinations | 82,716.75 | 6,866.74 | 145,535,558.52 |
| 3.Decrease for the period |
| (1) Disposal or Write-off | 8,242,654.10 | 72,139,869.24 | 239,840,075.45 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 286,029.16 | 1,361,643.57 | 4,510,204.33 |
| 5.Closing balance | 490,125,970.75 | 1,371,611,987.98 | 17,837,918,898.92 |
| III. Impairment provision | |||
| 1.Opening balance | 68,672.62 | 11,572,864.47 | 60,739,078.62 |
| 2.Increase for the period | |||
| (1) Provision | |||
| (2) Increase in business combinations | 127,167,231.67 | ||
| 3.Decrease for the period | |||
| (1) Disposal or Write-off | 10,355,336.24 | ||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | -1,032.45 | 28,061.23 | 676,683.62 |
| 5.Closing balance | 67,640.17 | 11,600,925.70 | 178,227,657.67 |
| IV. Book Value | |||
| 1.Closing book value | 441,041,489.75 | 870,558,220.17 | 21,398,455,636.12 |
| 2.Opening book value | 424,546,035.77 | 908,323,000.69 | 21,159,138,731.39 |
(2) In the current period, the balance of the construction in progress transferred to the original valueof the fixed assets is total RMB1,100,991,882.40.
(3) The amount of fixed assets mortgage at the end of the period is RMB 55,674,337.91.
(4) Disposals of fixed assets
| Items | Closing balance | Opening balance | Reason for transferring to disposal |
| Relocation of Qingdao Industrial Park | 20,918,480.62 | 20,918,480.62 | Demolition |
| Total | 20,918,480.62 | 20,918,480.62 |
16. Construction in progress
Presented as
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Construction in progress | 2,938,851,804.25 | 2,391,364,659.97 |
| Construction materials | ||
| Total | 2,938,851,804.25 | 2,391,364,659.97 |
Construction in progress
(1). Details of construction in progress
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Zhengzhou New Energy Project | 397,682,156.25 | 397,682,156.25 | 339,598,483.94 | 339,598,483.94 | ||
| America GEA Project | 310,496,166.77 | 34,565,935.90 | 275,930,230.87 | 301,439,928.75 | 34,061,569.61 | 267,378,359.14 |
| Qingdao Smart Appliance Equipment Project | 222,046,723.04 | 222,046,723.04 | 236,539,836.43 | 236,539,836.43 | ||
| Europe Candy Project | 164,936,388.09 | 164,936,388.09 | 44,645,629.53 | 44,645,629.53 | ||
| Smart Home Appliance Technology Project | 120,509,363.38 | 120,509,363.38 | 17,586,162.11 | 17,586,162.11 | ||
| Dalian Refrigerator Project | 106,483,938.05 | 106,483,938.05 | 20,869,021.20 | 20,869,021.20 | ||
| New Zealand FPA Project | 100,314,539.32 | 100,314,539.32 | 83,150,746.03 | 83,150,746.03 | ||
| Haier India Project | 87,086,179.62 | 87,086,179.62 | 32,308,143.64 | 32,308,143.64 | ||
| Haier Smart Home Project | 82,422,580.69 | 82,422,580.69 | 65,367,920.02 | 65,367,920.02 | ||
| Jiaonan Washing | 77,312,248.54 | 77,312,248.54 | 38,432,444.33 | 38,432,444.33 | ||
| Items | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Machine Project | ||||||
| Haier Air- Conditioning Electronic Project | 69,535,937.27 | 69,535,937.27 | 61,168,160.86 | 61,168,160.86 | ||
| Qingdao Washing Appliance Project | 63,350,293.33 | 63,350,293.33 | 108,566,194.72 | 108,566,194.72 | ||
| Hefei Refrigerator Project | 53,478,214.27 | 53,478,214.27 | 32,162,988.77 | 32,162,988.77 | ||
| Tianjin Washing Appliance Project | 48,245,572.23 | 48,245,572.23 | 45,468,458.70 | 45,468,458.70 | ||
| Laiyang Smart Kitchen Project | 45,458,466.33 | 45,458,466.33 | 81,387,700.67 | 81,387,700.67 | ||
| Chongqing Water Heater Project | 43,383,570.58 | 43,383,570.58 | 3,039,596.13 | 3,039,596.13 | ||
| Qingdao Haier's science and technology Project | 43,359,730.83 | 43,359,730.83 | 36,834,016.09 | 36,834,016.09 | ||
| RRS Health Project | 36,941,638.55 | 36,941,638.55 | 6,389,644.74 | 6,389,644.74 | ||
| Zhengzhou Air-conditioning Project | 34,862,632.84 | 34,862,632.84 | 20,471,229.32 | 20,471,229.32 | ||
| Others | 865,511,400.17 | 865,511,400.17 | 849,999,923.60 | 849,999,923.60 | ||
| Total | 2,973,417,740.15 | 34,565,935.90 | 2,938,851,804.25 | 2,425,426,229.58 | 34,061,569.61 | 2,391,364,659.97 |
(2) Details of significant changes of construction in progress for the period
| Project name | Opening balance | Increase for the current period | Transfer to fixed assets | Other decrease | Converted difference in foreign currency statements | Closing balance | Source of fund |
| Zhengzhou New Energy Project | 339,598,483.94 | 58,083,672.31 | 397,682,156.25 | Self-funding |
| America GEA Project | 301,439,928.75 | 245,967,113.83 | 241,413,089.40 | 4,502,213.59 | 310,496,166.77 | Self-funding | |
| Qingdao Smart Appliance Project | 236,539,836.43 | 2,982,044.06 | 17,475,157.45 | 222,046,723.04 | Self-funding | ||
| Europe Candy Project | 44,645,629.53 | 135,665,044.55 | 7,649,870.37 | -7,724,415.62 | 164,936,388.09 | Self-funding | |
| Smart Home Appliance Technology Project | 17,586,162.11 | 106,767,645.72 | 3,844,444.45 | 120,509,363.38 | Self-funding | ||
| Dalian Refrigerator Project | 20,869,021.20 | 87,079,916.85 | 1,465,000.00 | 106,483,938.05 | Self-funding | ||
| New Zealand FPA Project | 83,150,746.03 | 55,347,552.58 | 37,793,197.69 | -390,561.60 | 100,314,539.32 | Self-funding | |
| Haier India Project | 32,308,143.64 | 67,894,544.98 | 10,624,830.98 | -2,491,678.02 | 87,086,179.62 | Self-funding/ fund raising | |
| Haier Smart Home Project | 65,367,920.02 | 18,145,866.72 | 1,091,206.05 | 82,422,580.69 | Self-funding | ||
| Jiaonan Washing Machine Project | 38,432,444.33 | 50,231,042.95 | 11,351,238.74 | 77,312,248.54 | Self-funding | ||
| Haier Air- conditioning Electronic Project | 61,168,160.86 | 22,612,094.87 | 14,244,318.46 | 69,535,937.27 | Self-funding | ||
| Qingdao Washing Appliance Project | 108,566,194.72 | 5,604,748.77 | 50,820,650.16 | 63,350,293.33 | Self-funding | ||
| Hefei Refrigerator Project | 32,162,988.77 | 31,458,883.53 | 10,143,658.03 | 53,478,214.27 | Self-funding | ||
| Tianjin Washing Appliance Project | 45,468,458.70 | 43,227,363.83 | 40,450,250.30 | 48,245,572.23 | Self-funding | ||
| Laiyang Smart Kitchen Project | 81,387,700.67 | 6,666,856.45 | 42,596,090.79 | 45,458,466.33 | Self-funding/ fund raising | ||
| Chongqing Water Heater Project | 3,039,596.13 | 40,524,877.03 | 180,902.58 | 43,383,570.58 | Self-funding | ||
| Qingdao Haier's | 36,834,016.09 | 6,912,045.24 | 386,330.50 | 43,359,730. | Self-fundi |
| science and technology Project | 83 | ng/ fund raising | |||||
| RRS Health Project | 6,389,644.74 | 30,551,993.81 | 36,941,638.55 | Self-funding | |||
| Zhengzhou Air-conditioning Project | 20,471,229.32 | 20,705,334.38 | 6,313,930.86 | 34,862,632.84 | Self-funding/ fund raising | ||
| Others | 849,999,923.60 | 625,230,700.24 | 603,147,715.59 | 1,971,634.23 | -4,599,873.85 | 865,511,400.17 | Self-funding/ fund raising |
| Total | 2,425,426,229.58 | 1,661,659,342.70 | 1,100,991,882.40 | 1,971,634.23 | -10,704,315.50 | 2,973,417,740.15 |
(3) Impairment provision of construction in progress
| Project name | Opening balance | Increase for the period | Transfer to fixed assets | Other decrease | Exchange differences | Closing balance |
| America GEA Project | 34,061,569.61 | 504,366.29 | 34,565,935.90 |
17. Right-of-use assets
| Items | Houses and buildings | Production equipment | Transportation equipment |
| I. Original book value: | |||
| 1.Opening balance | 2,817,150,021.16 | 30,765,699.60 | 168,524,791.57 |
| 2. Increase for the current period | |||
| (1) Increase | 550,503,778.80 | 2,278,108.14 | 24,658,892.92 |
| 3. Decrease for the current period | |||
| (1) Disposal | 60,893,951.15 | 67,987.79 | 10,726,727.37 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | 1,885,919.43 | -510,552.05 | -3,166,102.23 |
| 5. Closing balance | 3,308,645,768.24 | 32,465,267.90 | 179,290,854.89 |
| II. Accumulated amortization | |||
| 1. Opening balance | 470,357,728.65 | 4,559,852.96 | 54,622,784.52 |
| 2. Increase for the current period | |||
| (1) Provision | 272,188,683.21 | 1,764,565.75 | 26,875,376.44 |
| 3. Decrease for the current period | |||
| (1) Disposal | 39,864,806.50 | 67,987.79 | 10,477,919.65 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | 1,787,965.78 | -420,614.87 | -335,525.40 |
| 5. Closing balance | 704,469,571.14 | 5,835,816.05 | 70,684,715.91 |
| III. Impairment provision | |||
| 1.Opening balance | |||
| 2.Increase for the current period | |||
| (1) Provision | |||
| 3.Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | |||
| 5.Closing balance | |||
| IV. Book Value | |||
| 1.Closing book value | 2,604,176,197.10 | 26,629,451.85 | 108,606,138.98 |
| 2.Opening book value | 2,346,792,292.51 | 26,205,846.64 | 113,902,007.05 |
(Continued)
| Items | Office furniture | Other | Total |
| I. Original book value: | |||
| 1.Opening balance | 60,995,358.04 | 309,577,979.06 | 3,387,013,849.43 |
| 2.Increase for the current period | |||
| (1) Increase | 7,686,629.57 | 9,632,580.98 | 594,759,990.41 |
| 3. Decrease for the current period | |||
| (1) Disposal | 836,904.38 | 3,160,877.47 | 75,686,448.16 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | 147,833.76 | 4,633,423.68 | 2,990,522.59 |
| 5. Closing balance | 67,992,916.99 | 320,683,106.25 | 3,909,077,914.27 |
| II. Accumulated amortization | |||
| 1.Opening balance | 11,686,634.26 | 90,720,247.45 | 631,947,247.84 |
| 2.Increase for the current period | |||
| (1) Provision | 9,055,910.79 | 43,497,956.90 | 353,382,493.09 |
| 3.Decrease for the current period | |||
| (1) Disposal | 836,904.38 | 3,160,877.47 | 54,408,495.79 |
| (2) Disposal of subsidiary |
| 4. Converted difference in foreign currency statements | -14,463.98 | 1,693,346.28 | 2,710,707.81 | |
| 5.Closing balance | 19,891,176.69 | 132,750,673.16 | 933,631,952.95 | |
| III. Impairment provision | ||||
| 1.Opening balance | ||||
| 2.Increase for the current period | ||||
| (1) Provision | ||||
| 3.Decrease for the current period | ||||
| (1) Disposal | ||||
| (2) Disposal of subsidiary | ||||
| 4. Converted difference in foreign currency statements | ||||
| 5.Closing balance | ||||
| IV. Book Value | ||||
| 1.Closing book value | 48,101,740.30 | 187,932,433.09 | 2,975,445,961.32 | |
| 2.Opening book value | 49,308,723.78 | 218,857,731.61 | 2,755,066,601.59 | |
18. Details of intangible assets
(1). Intangible assets
√Applicable □Not Applicable
| Items | Proprietary technology | Licenses and franchises | Land use rights |
| I. Original book value | |||
| 1.Opening balance | 1,777,017,298.95 | 4,211,491,949.66 | 1,191,959,998.86 |
| 2.Increase for the current period | |||
| (1) Purchase | 7,674,795.05 | 20,556,973.98 | 149,562,420.38 |
| (2) Internal research and development | 55,419,760.06 | ||
| (3) Increase in business combination | |||
| 3.Decrease for the current period | |||
| (1) Disposal | 24,302,311.01 | ||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | -12,502,430.21 | 70,878,820.37 | -1,667,170.25 |
| 5.Closing balance | 1,827,609,423.85 | 4,302,927,744.01 | 1,315,552,937.98 |
| II. Accumulated amortization | |||
| 1.Opening balance | 735,680,465.49 | 451,771,449.40 | 145,020,102.09 |
| 2.Increase for the current period | |||
| (1) Provision | 91,496,129.76 | 65,066,332.11 | 11,578,897.19 |
| (2) Increase in business combination | |||
| 3.Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | -16,645,748.90 | 11,660,491.00 | -565,874.08 |
| 5.Closing balance | 810,530,846.35 | 528,498,272.51 | 156,033,125.20 |
| III. Impairment provision | |||
| 1.Opening balance | |||
| 2.Increase for the current period |
| (1) Provision | |||
| (2) Increase in business combination | |||
| 3.Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | |||
| 5.Closing balance | |||
| IV. Book Value | |||
| 1.Closing book value | 1,017,078,577.50 | 3,774,429,471.50 | 1,159,519,812.78 |
| 2.Opening book value | 1,041,336,833.46 | 3,759,720,500.26 | 1,046,939,896.77 |
(Continued)
| Items | Trademark rights | Application management software and others | Total |
| I. Original book value | |||
| 1.Opening balance | 2,721,643,301.47 | 3,604,814,269.91 | 13,506,926,818.85 |
| 2.Increase in the current period | |||
| (1) Purchase | 50,306,605.68 | 228,100,795.09 | |
| (2) Internal research and development | 93,415,083.79 | 148,834,843.85 | |
| (3) Increase in business combination | 46,073,558.74 | 46,073,558.74 | |
| 3.Decrease for the current period | |||
| (1) Disposal | 8,404,736.39 | 32,707,047.40 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 23,421,549.43 | 60,607,883.75 | 140,738,653.09 |
| 5.Closing balance | 2,745,064,850.90 | 3,846,812,665.48 | 14,037,967,622.22 |
| II. Accumulated amortization | |||
| 1.Opening balance | 1,477,417,910.84 | 2,809,889,927.82 | |
| 2.Increase in the current period | |||
| (1) Provision | 310,068,883.65 | 478,210,242.71 | |
| (2) Increase in business combination | 28,339.27 | 28,339.27 |
| 3.Decrease for the current period | |||
| (1) Disposal | 6,865,274.30 | 6,865,274.30 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 8,807,057.92 | 3,255,925.94 | |
| 5.Closing balance | 1,789,456,917.38 | 3,284,519,161.44 | |
| III. Impairment provision | |||
| 1.Opening balance | 9,965,107.96 | 9,965,107.96 | |
| 2.Increase in the current period | |||
| (1) Provision | |||
| (2) Increase in business combination | |||
| 3.Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | |||
| 5.Closing balance | 9,965,107.96 | 9,965,107.96 | |
| IV. Book value | |||
| 1.Closing book value | 2,745,064,850.90 | 2,047,390,640.14 | 10,743,483,352.82 |
| 2.Opening book value | 2,721,643,301.47 | 2,117,431,251.11 | 10,687,071,783.07 |
At the end of the period, the intangible assets developed through the Company accounted for the
15.95% of the original value.
19. Development cost
| Items | Opening balance | Increase for the period | Decrease for the period | Converted difference in foreign currency statements | Closing balance | |
| Confirmed as an intangible asset | Included in current profit and loss | |||||
| 91ABD.ERP IT Program | 98,811,149.48 | 51,193,000.36 | 72,157,488.73 | 1,285,239.51 | 79,131,900.62 | |
| Others | 94,474,627.62 | 201,703,749.36 | 76,677,355.12 | 79,351,385.34 | -3,026,721.05 | 137,122,915.47 |
| Total | 193,285,777.10 | 252,896,749.72 | 148,834,843.85 | 79,351,385.34 | -1,741,481.54 | 216,254,816.09 |
20. Goodwill
| Items | Opening balance | Increase for the period | Decrease for the period | Impact of fluctuation in exchange rate for the period | Closing balance |
| GEA | 20,724,937,078.57 | 303,246,388.12 | 21,028,183,466.69 | ||
| Candy | 2,032,029,984.37 | 37,829,999.71 | 2,069,859,984.08 | ||
| Others | 594,762,750.41 | 463,971,411.23 | - | -15,993,270.92 | 1,042,740,890.72 |
| Total | 23,351,729,813.35 | 463,971,411.23 | - | 325,083,116.91 | 24,140,784,341.49 |
In the case of a goodwill impairment test, the Company compares the carrying amount of therelevant asset group or asset group combination (including goodwill) with its recoverable amount. If therecoverable amount is less than the book value, corresponding difference will be recognized in profit orloss.The recoverable amount of the asset group (including goodwill) is calculated with discountedestimated future cash flow method based on a management-approved 5-10 years budget. Future cashflows beyond the budget period are estimated using the estimated perpetual annual growth rate. Theperpetual annual growth rate (mainly 2%) adopted by the management is consistent with industryforecast data and does not exceed the long-term average growth rate of each product. The managementdetermines the income growth rate (mainly 2.50%-14.39%) and the EBITDA profit margin (mainly
2.22%-6.21%) based on historical experience and market development forecasts, and adopts the pre-taxinterest rate that can reflect the specific risks of the relevant asset group as the discount rate (mainly
9.83%-11.12%). The management analyzes the recoverable amount of each asset group based on theseassumptions and believes that there is no need to make provision for goodwill.
21. Long-term prepaid expenses
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Amortization for the current period | Other decrease | Converted difference in foreign currency statements | Closing balance |
| Renovation | 172,232,866.44 | 45,080,298.24 | 58,165,998.75 | 159,147,165.93 | ||
| Improvement on leased property | 196,714,339.49 | 4,933,597.45 | 14,039,749.19 | 184,393.11 | 187,792,580.86 | |
| Others | 68,639,706.6 | 20,013,563. | 9,758,052.6 | 238,936.54 | 79,134,153.7 |
| 5 | 28 | 9 | 8 | |||
| Total | 437,586,912.58 | 70,027,458.97 | 81,963,800.63 | 423,329.65 | 426,073,900.57 |
22. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets before elimination
| Items | Closing balance | Opening balance |
| Provision for assets impairment | 263,575,303.32 | 330,149,872.25 |
| Liabilities | 1,679,505,927.99 | 1,638,698,620.85 |
| Internal unrealized earnings eliminated due to combination | 441,005,035.75 | 648,447,634.39 |
| Government grants | 139,236,881.90 | 104,843,341.38 |
| Uncovered losses | 690,316,680.96 | 644,817,113.91 |
| Others | 106,659,910.24 | 97,140,142.95 |
| Total | 3,320,299,740.16 | 3,464,096,725.73 |
(2) Deferred income tax liabilities before elimination
| Item | Closing balance | Opening balance |
| Disposal of subsidiaries and movement in investment in other equity instruments | 752,099,715.18 | 752,137,954.24 |
| Withholding income tax of overseas enterprises | 77,190,532.32 | 77,190,532.32 |
| Difference between the tax base of the assets formed from amortization of mergers and acquisitions | 2,151,892,146.63 | 2,063,021,233.00 |
| Others | 119,354,365.93 | 147,258,409.16 |
| Total | 3,100,536,760.06 | 3,039,608,128.72 |
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end ofthis period was RMB1,887,965,809.32.
23. Other non-current assets
| Items | Closing balance | Opening balance |
| Prepayments for equipment and land | 887,397,762.93 | 1,423,060,146.73 |
| Others | 574,265,441.47 | 420,704,819.08 |
| Total | 1,461,663,204.40 | 1,843,764,965.81 |
24. Short-term borrowings
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Borrowings - secured by pledge | 325,590,243.64 | 172,099,117.93 |
| Borrowings - secured by mortgage | 68,214,231.98 | 68,231,758.92 |
| Borrowings - secured by guarantor | 798,084,424.13 | 3,505,822,164.08 |
| Borrowings – unsecured | 16,032,000,837.63 | 4,838,896,196.25 |
| Total | 17,223,889,737.38 | 8,585,049,237.18 |
25. Financial liabilities held for trading
| Items | Closing balance | Opening balance |
| Forward foreign exchange trading contracts | 17,825,470.87 | 42,799,173.35 |
| Total | 17,825,470.87 | 42,799,173.35 |
26. Derivative financial liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Forward foreign exchange trading contracts | 72,492,566.52 | 85,557,428.14 |
| Interest rate swap agreement | 91,787,868.57 | 13,991,425.83 |
| Total | 164,280,435.09 | 99,548,853.97 |
27. Bills payable
√Applicable □Not Applicable
Unit and Currency: RMB
| Categories | Closing balance | Opening balance |
| Commercially acceptance notes | 2,216,928,340.87 | 2,237,116,468.45 |
| Bank acceptance notes | 17,305,265,174.80 | 17,071,422,308.47 |
| Total | 19,522,193,515.67 | 19,308,538,776.92 |
28. Accounts payable
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Accounts payable | 29,649,104,954.11 | 33,750,567,046.28 |
| Total | 29,649,104,954.11 | 33,750,567,046.28 |
The book balance at the end of the period was mainly the unpaid expenditures on material,equipment and labor.
29. Contract liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Contract liabilities | 4,756,461,007.77 | 5,583,008,412.49 |
| Total | 4,756,461,007.77 | 5,583,008,412.49 |
The book balance at the end of the period was mainly the receipt in advance.
30. Payables for staff's remuneration
(1) Payables for staff's remuneration
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Short-term remuneration | 2,978,630,280.51 | 9,771,451,412.70 | 10,073,403,850.89 | 2,676,677,842.32 |
| II. Post-employment benefits-defined contribution plan | 27,079,985.45 | 393,382,772.11 | 392,097,954.19 | 28,364,803.37 |
| III. Termination benefits | 9,818,188.41 | 2,718,370.05 | 2,718,370.05 | 9,818,188.41 |
| IV. Other benefits due within one year | 140,043,962.93 | 2,073,698.75 | 19,621,244.86 | 122,496,416.82 |
| Total | 3,155,572,417.30 | 10,169,626,253.61 | 10,487,841,419.99 | 2,837,357,250.92 |
(2) Short-term remuneration
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Salaries, bonus, allowance and benefit | 1,956,628,751.50 | 7,006,363,559.42 | 7,317,095,464.55 | 1,645,896,846.37 |
| II. Employee welfare | 298,793,183.14 | 430,472,087.18 | 413,258,792.73 | 316,006,477.59 |
| III. Social benefit | 145,972,223.15 | 759,775,992.65 | 755,411,378.85 | 150,336,836.95 |
| IV. Housing fund | 1,739,030.08 | 201,110,032.22 | 199,540,859.81 | 3,308,202.49 |
| V. Labor union fee and education fee | 1,249,039.97 | 34,799,963.35 | 34,915,192.28 | 1,133,811.04 |
| VI. Short-term compensated absences | 246,545,110.83 | 204,045,855.99 | 168,629,086.08 | 281,961,880.74 |
| Others | 327,702,941.84 | 1,134,883,921.89 | 1,184,553,076.59 | 278,033,787.14 |
| Total | 2,978,630,280.51 | 9,771,451,412.70 | 10,073,403,850.89 | 2,676,677,842.32 |
(3) Defined contribution plan
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for current the period | Closing balance |
| I. Basic pension insurance | 26,540,835.95 | 383,114,458.54 | 381,673,378.77 | 27,981,915.72 |
| II. Unemployment insurance | 268,380.08 | 4,123,809.09 | 4,191,204.28 | 200,984.89 |
| III. Enterprise annuity payment | 270,769.42 | 6,144,504.48 | 6,233,371.14 | 181,902.76 |
| Total | 27,079,985.45 | 393,382,772.11 | 392,097,954.19 | 28,364,803.37 |
(4) Termination benefits
| Items | Closing balance | Opening balance |
| Termination compensation | 9,818,188.41 | 9,818,188.41 |
| Total | 9,818,188.41 | 9,818,188.41 |
31. Taxes payable
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Value-added tax | 663,494,732.60 | 606,034,986.30 |
| Enterprise income tax | 999,227,617.96 | 1,278,004,157.85 |
| Individual income tax | 48,831,948.89 | 57,716,819.31 |
| City maintenance and construction tax | 15,493,800.86 | 12,703,998.50 |
| Education surcharge | 6,374,591.07 | 5,473,294.35 |
| The electrical and electronic products waste treatment fund | 71,581,165.50 | 102,288,068.00 |
| Other taxes | 112,744,044.39 | 54,835,056.73 |
| Total | 1,917,747,901.27 | 2,117,056,381.04 |
32. Other payables
Presented as
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Interests payable | 66,942,018.46 | 49,395,752.93 |
| Dividends payable | 3,299,128,584.79 | 145,851,115.28 |
| Other payables | 14,788,287,838.87 | 14,961,145,653.61 |
| Total | 18,154,358,442.12 | 15,156,392,521.82 |
(1) Interests payable:
| Items | Closing balance | Opening balance |
| Interest of long-term borrowings | 19,149,452.44 | 22,160,847.23 |
| Interest of short-term borrowings | 47,792,566.02 | 27,234,905.70 |
| Total | 66,942,018.46 | 49,395,752.93 |
(2) Dividends payable:
| Name of company | Closing balance | Opening balance |
| Brave Lion (HK) limited | 122,756,874.10 | 122,756,874.10 |
| Haier Electric Appliances International Co., Ltd. | 472,006,809.00 | |
| Haier Group Corporation | 402,229,036.50 | |
| Others | 2,302,135,865.19 | 23,094,241.18 |
| Total | 3,299,128,584.79 | 145,851,115.28 |
(3) Other payables:
| Items | Closing balance | Opening balance |
| Other payables | 14,788,287,838.87 | 14,961,145,653.61 |
| Total | 14,788,287,838.87 | 14,961,145,653.61 |
The closing balance at the end of the period mainly included the incurred but unpaid costs.
33. Non-current liabilities due within one year
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Long-term borrowings due within one year | 5,436,859,759.62 | 4,730,070,447.82 |
| Long-term payables due within one year | 36,500,000.00 | |
| Lease liabilities due within one year | 630,509,455.70 | 594,930,209.58 |
| Estimated liabilities due within one year | 1,821,904,561.32 | 1,992,138,260.62 |
| Total | 7,925,773,776.64 | 7,317,138,918.02 |
34. Other current liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Payable refund | 506,141,612.19 | 486,038,304.57 |
| Tax amount to be written off | 9,012,519.06 | 6,284,243.87 |
| Others | 790,857.79 | 1,743,159.10 |
| Total | 515,944,989.04 | 494,065,707.54 |
35. Long-term borrowings
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Borrowings - secured by mortgage | 8,942,630.78 | 12,663,597.65 |
| Borrowings - secured by guarantor | 2,343,619,509.01 | |
| Borrowings - unsecured | 14,707,127,483.28 | 8,877,523,705.58 |
| Borrowings - secured by guarantor and mortgage | 2,042,646,123.32 | |
| Total | 14,716,070,114.06 | 13,276,452,935.56 |
Explanation of long-term loan classification:
Interest rate on long-term borrowings – secured by guarantor is the one stipulated in the loanagreement + LIBOR.Interest rate on domestic long-term borrowings – unsecured is the benchmark rate published by thePeople's Bank of China.Interest rate on offshore long-term borrowings – unsecured is the one stipulated in the loanagreement + LIBOR.Interest rate on long-term borrowings – secured by mortgage is the one stipulated in the loanagreement + LIBOR.
36. Bonds payable
On 21 November 2017, Harvest International Company, the Company's wholly-owned subsidiary,issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate of zero and a rate oninvestment of 1%.The corporate bonds were divided into liabilities and equities on initial recognition:
| Items | Exchangeable corporate bonds issued in 2017 |
| Initial recognition: | 6,731,131,007.13 |
| Including: | |
| Equity portion of the exchangeable bond | 431,424,524.07 |
| Liability portion of the exchangeable bond | 6,299,706,483.06 |
Changes in the liability portion of corporate bonds in the current period:
| Items | Opening balance | Increase for the current period | Accrued bond interest for the current period | Less: Bond interest paid for the current period | Exchange rate impact | Shares converted in the current period | Shares redeemed in the current period | Closing balance |
| Exchangeable corporate bonds issued in 2017 | 7,004,585,761.43 | 89,010,255.63 | 138,632,782.79 | 7,232,228,799.85 | ||||
| Total | 7,004,585,761.43 | 89,010,255.63 | 138,632,782.79 | 7,232,228,799.85 |
37. Lease liabilities
| Items | Closing balance | Opening balance |
| Lease liabilities | 2,845,575,597.63 | 2,575,201,976.93 |
| Less: lease liabilities due within one year | 630,509,455.70 | 594,930,209.58 |
| Total | 2,215,066,141.93 | 1,980,271,767.35 |
38. Long-term payables
| Items | Closing balance | Opening balance |
| Investment from CDB development fund | 93,000,000.00 | 93,000,000.00 |
| Others | 59,533,371.58 | 49,342,718.45 |
| Less: long-term payables due within one year | 36,500,000.00 | |
| Total | 116,033,371.58 | 142,342,718.45 |
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. obtained an annual return of 1.2% by means of dividends orbuyback premium for the above investments. From 2020 to 2027, the Company and its subsidiaries willrepurchase the investments made by China Development Fund Co. Ltd. to the subsidiaries of theCompany.
39. Long-term payables for staff's remuneration
√Applicable □Not Applicable
(1) The presentation of long-term payables for staff's remuneration
| Items | Closing balance | Opening balance |
| Post-employment benefits- net liability of defined benefit plan | 581,328,718.69 | 577,613,222.26 |
| Termination benefits | 314,814,646.49 | 324,191,428.30 |
| Provision for work-related injury compensation | 224,542,526.24 | 220,545,586.80 |
| Other long-term benefits | ||
| Total | 1,120,685,891.42 | 1,122,350,237.36 |
(2) Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified staff.Under these plans, the employees are entitled to 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 projected unit credit method.
① The defined benefit plan of Haier Asia Co., Ltd. (海尔亚洲株式会社), a subsidiary of theCompany.
Actuarial assumption used in the defined benefit plan
| Items | Rate |
| Discount rate | 0.50% |
| Expected rate of return | 2.00% |
Present value of defined benefit obligations
| Items | Amount |
| I. Opening balance | 334,764,594.79 |
| II. Defined benefit cost recognized in current profit or loss | |
| 1. Current service cost | |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “－”) | |
| 4. Interest expenses | |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “－”) | |
| IV. Other changes | 8,995,172.62 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | |
| 3. Exchange differences | 8,995,172.62 |
| V. Closing balance | 343,759,767.41 |
Fair value of plan assets
| Items | Amount |
| Ⅰ. Opening balance | 368,725,328.67 |
| II. Defined benefit cost recognized in current profit or loss | |
| 1. Interest income | |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Return on plan assets (except those included in net interests) | |
| 2. Changes in impact of asset cap (except those included in net interests) | |
| IV. Other changes | 9,907,702.40 |
| 1. Employer contributions | |
| 2. Benefits paid | |
| 3. Exchange differences | 9,907,702.40 |
| V. Closing balance | 378,633,031.07 |
Neither the Company's ordinary shares 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 | -33,960,733.88 |
| II. Defined benefit cost recognized in current profit or loss | |
| III. Defined benefit cost recognized in other comprehensive income | |
| IV. Other changes | -912,529.78 |
| V. Closing balance | -34,873,263.66 |
The average term for the defined benefit obligation is 12.29 years at the balance sheet date.
② The defined benefit plan of Roper Corporation, a subsidiary of the CompanyRoper Corporation, a subsidiary of the Company, has provided qualified staff with definedbenefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 3.27% |
Present value of defined benefit obligations
| Item | Amount |
| I. Opening balance | 138,607,020.37 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 23,207,509.29 |
| 1. Current period service cost | 18,790,871.82 |
| 2. Past service cost | |
| 3. Settlement gains ((loss indicated in “－”) | |
| 4. Interest expenses | 4,416,637.47 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “－”) | |
| V. Other changes | -6,646,413.67 |
| 1. The consideration paid at the time of settlement |
| 2. Benefits paid | -8,820,919.86 |
| 3. Exchange differences | 2,174,506.18 |
| VI. Closing balance | 155,168,115.98 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
| I. Opening balance | 138,607,020.37 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 23,207,509.29 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | -6,646,413.68 |
| VI. Closing balance | 155,168,115.98 |
The average term for the defined benefit obligation is 10.48 years at the balance sheet date.
③ The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company.Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided qualified staffwith defined benefit plan for post-retirement health care benefits.Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 3.06% |
Present value of defined benefit obligations
| Items | Amount |
| I. Opening balance | 310,036,866.40 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 4,926,993.33 |
| 1. Current period service cost | -4,183,217.81 |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “－”) | |
| 4. Interest expenses | 9,110,211.14 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “－”) | |
| V. Other changes | -24,349,634.30 |
| 1. The consideration paid at the time of settlement |
| 2. Benefits paid | -28,738,438.06 |
| 3. Exchange differences | 4,388,803.76 |
| VI. Closing balance | 290,614,225.43 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
| I. Opening balance | 310,036,866.40 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 4,926,993.33 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | -24,349,634.30 |
| VI. Closing balance | 290,614,225.43 |
④ The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company.Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided qualified staffwith defined benefit plan for post-retirement pension.
Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 2.96% |
Present value of defined benefit obligations
| Items | Amount |
| I. Opening balance | 257,475,210.72 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 18,932,257.12 |
| 1. Current service cost | 11,979,824.74 |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “－”) | |
| 4. Interest expenses | 6,952,432.38 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “－”) | |
| V. Other changes | -45,215,485.83 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | -48,774,803.65 |
| 3. Exchange differences | 3,559,317.82 |
| VI. Closing balance | 231,191,982.01 |
Fair value of plan assets
| Items | Amount |
| I. Opening balance | 184,922,772.57 |
| II. Defined benefit cost recognized in current profit or loss | 8,003,112.18 |
| 1. Interest income | 8,003,112.18 |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Return on plan assets (except those included in net interests) | |
| 2. Changes in impact of asset cap (except those included in net interests) | |
| IV. Other changes | -30,699,602.42 |
| 1. Employer contributions | 15,550,981.96 |
| 2. Benefits paid | -48,774,803.65 |
| 3. Exchange differences | 2,524,219.27 |
| V. Closing balance | 162,226,282.33 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
| I. Opening balance | 72,552,438.15 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 10,929,144.94 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | -14,515,883.41 |
| VI. Closing balance | 68,965,699.68 |
(3) Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision forwork-related injury claims for the staff injured during the production accidents from 1 January 1991,which was used to pay for the claim made by the injured staff. The provision was calculated byBeechercarlson Insurance Services, LLC., based on actuarial method and a discount rate of 3.72%.
| Items | Amount |
| I. Opening balance | 220,545,586.80 |
| II. Business combination not under common control | |
| III. Compensation recognized in current profit and loss | 44,302,460.73 |
| IV. Actual compensation paid in the current period | -30,123,892.44 |
| V. Other changes | -10,181,628.85 |
| VI. Closing balance | 224,542,526.24 |
Classification of the balance of defined benefit plan
| Items | Closing balance | Opening balance |
| Short-term salary | 66,157,847.86 | 84,527,455.18 |
| Long-term salary | 581,328,718.69 | 577,613,222.26 |
| Total | 647,486,566.55 | 662,140,677.44 |
40. Estimated liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Closing balance |
| Pending litigation | 19,619,840.35 | 19,985,099.99 |
| Others | 192,441,718.48 | 216,794,204.60 |
| Projection of three guarantees and installation fees | 1,186,816,187.50 | 1,174,874,660.86 |
| Total | 1,398,877,746.33 | 1,411,653,965.45 |
Significant assumption and estimation relating to estimation of three guarantees and installationfees: the Company reasonably estimated the three guarantees and installation fee rate based on its actualexpenses on the three guarantees and installation fees as well as sales data in the past. The Companyestimated the three guarantees and installation fees that are likely to be incurred in the future accordingto its policies on the three guarantees and installation fees, as well as the actual sales data.
41. Deferred income
Statement of deferred income
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| Government grants | 705,272,617.10 | 84,191,382.87 | 41,755,106.34 | 747,708,893.63 |
| Total | 705,272,617.10 | 84,191,382.87 | 41,755,106.34 | 747,708,893.63 |
42. Other non-current liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Obligation of repurchasing the minority equity rights | 55,618,608.25 | 54,598,203.27 |
| Others | 22,463,342.62 | 15,473,286.76 |
| Total | 78,081,950.87 | 70,071,490.03 |
43. Share capital
| Categories of shares | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Restricted shares | ||||
| 1. State-owned shares | ||||
| 2. Shares held by domestic non-state-owned legal entities | ||||
| 3. Shares held by domestic individuals | ||||
| 4. Shares held by offshore non-state-owned legal entities | ||||
| II. Non-restricted shares | 6,579,566,627 | 6,579,566,627 | ||
| 1. Ordinary shares in RMB | 6,308,552,654 | 6,308,552,654 | ||
| 2. Domestic listed foreign Shares | ||||
| 3. Offshore listed foreign Shares | 271,013,973 | 271,013,973 | ||
| 4. Others | ||||
| III. Total shares | 6,579,566,627 | 6,579,566,627 |
44. Other equity instruments
45. Capital reserve
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| Equity portion of exchangeable bonds | 431,424,524.07 | 431,424,524.07 | ||
| Total | 431,424,524.07 | 431,424,524.07 |
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| Capital premium | 3,636,172,794.06 | 356,159,994.82 | 4,958,034.15 | 3,987,374,754.73 |
| Other capital reserve | 799,718,051.41 | 799,718,051.41 | ||
| Total | 4,435,890,845.47 | 356,159,994.82 | 4,958,034.15 | 4,787,092,806.14 |
Other explanation, including the statement and reason of the changes for the current period:
The main reasons for the change in capital premium: acquisition of minority shareholding fromsubsidiaries in the current period and non-proportional capital injection in subsidiaries in the currentperiod, increasing the capital of RMB356,159,994.82; reducing the share premium ofRMB4,958,034.15 .
46. Other comprehensive income
| Items | Opening balance | Amount for the current period | Closing balance | ||||
| Amount before income tax in the current period | Less: income tax expense | Amount attributable to the parent company after tax | Amount attributable to minority shareholders after tax | Others | |||
| a | 17,478,970.09 | 21,435,659.27 | 2,817,776.02 | 29,046,113.28 | -4,792,677.99 | -131,777.35 | 46,393,306.02 |
| b | 3,180,368.82 | -118,793,065.63 | 34,309,668.35 | -85,267,888.94 | 784,491.66 | -219,905.85 | -82,307,425.97 |
| c | 1,265,319,179.57 | -78,096,266.33 | -107,396,032.53 | 29,299,766.20 | 8,343,213.06 | 1,166,266,360.10 | |
| d | -28,644,680.35 | -136,302,232.40 | 13,152,751.06 | -56,395,900.52 | -66,753,580.82 | -85,040,580.87 | |
| e | 60,654,781.53 | 392,164.85 | -379,950.60 | 12,218.38 | -4.13 | 60,666,999.91 | |
| Total | 1,317,988,619.66 | -311,363,740.24 | 49,900,244.83 | -220,001,490.33 | -41,462,005.08 | 7,991,529.86 | 1,105,978,659.19 |
Notes:
(1) Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, thedetails are as follows:
Item a represents other comprehensive income classified into profit and loss under the equity method.Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flowhedge).Item c represents the balance arising from translation of foreign currency financial statements.
(2) Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details
are as follows:
Item d represents the change in fair value of investments in other equity instruments.Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
47. Surplus reserve
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| Statutory surplus reserve | 2,607,670,603.87 | 2,607,670,603.87 | ||
| Discretionary surplus reserve | 26,042,290.48 | 26,042,290.48 | ||
| Reserve fund | 11,322,880.64 | 11,322,880.64 | ||
| Enterprise development fund | 10,291,630.47 | 10,291,630.47 | ||
| Others | ||||
| Total | 2,655,327,405.46 | 2,655,327,405.46 |
Pursuant to the Company Law of the People's Republic of China and the articles of association, theCompany is required to appropriate 10% of its net profits as statutory surplus reserve.
48. Undistributed profits
√Applicable □Not Applicable
| Items | Amounts |
| Undistributed profits at the end of previous year | 32,468,121,744.26 |
| Adjustment due to business combination under common control | |
| Undistributed profits at the beginning of the year | 32,468,121,744.26 |
| Add: net profit attributable to owners of the parent company | 2,780,800,712.72 |
| Other transfer in | -10,573,314.32 |
| Adjustment due to implementation of enterprise accounting standard | |
| Profit available for appropriation for the year | 35,238,349,142.66 |
| Less: appropriation of statutory surplus reserve | |
| Appropriation of staff incentive and welfare fund | |
| Dividend payable for ordinary shares | 2,467,337,485.13 |
| Undistributed profits at the end of period | 32,771,011,657.53 |
49. Operating income and operating cost
(1) Operating income
| Items | Amount for the current period | Amount for the previous period |
| Primary business | 95,222,506,535.21 | 99,544,803,143.48 |
| Other business | 505,590,571.44 | 478,661,094.42 |
| Total | 95,728,097,106.65 | 100,023,464,237.90 |
(2) Primary business income and primary business cost by product category
| Categories | Amount for the current period | Amount for the previous period | ||
| Primary business income | Primary business cost | Primary business income | Primary business cost | |
| Air conditioner | 16,994,714,538.19 | 12,325,759,112.18 | 17,949,320,326.04 | 12,445,279,485.61 |
| Refrigerator | 26,737,917,721.21 | 18,296,498,256.27 | 28,391,857,610.26 | 19,344,949,352.58 |
| Kitchen appliance | 14,065,148,916.99 | 9,863,397,560.12 | 13,935,656,244.43 | 9,524,496,311.55 |
| Water appliance | 4,455,955,349.13 | 2,567,869,114.74 | 4,711,519,852.30 | 2,701,220,546.63 |
| Washing machine | 19,706,304,066.77 | 13,498,929,586.30 | 20,360,042,986.22 | 14,029,982,831.27 |
| Equipment product and integrated channel services | 13,262,465,942.92 | 12,143,658,318.29 | 14,196,406,124.23 | 12,752,908,748.43 |
| Total | 95,222,506,535.21 | 68,696,111,947.90 | 99,544,803,143.48 | 70,798,837,276.07 |
50. 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 | 88,690,704.32 | 144,597,080.21 |
| Education surcharge | 63,314,967.69 | 102,997,780.28 |
| Property tax | 22,487,302.01 | 33,641,891.03 |
| Land use tax | 5,207,509.93 | 17,075,135.53 |
| Stamp duty | 72,199,239.68 | 85,535,965.97 |
| Others | 23,291,054.91 | 22,204,975.53 |
| Total | 275,190,778.54 | 406,052,828.55 |
51. Selling expenses
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Selling expenses | 14,526,912,493.29 | 14,777,899,222.91 |
| Total | 14,526,912,493.29 | 14,777,899,222.91 |
The Company's selling expenses are mainly salary expenses, transportation and storage expenses,advertising and promotion expenses, and after-sales expenses etc.
52. Administrative expenses
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Administrative expenses | 4,608,308,707.03 | 4,536,101,362.72 |
| Total | 4,608,308,707.03 | 4,536,101,362.72 |
The Company's management expenses are mainly salary expenses, administrative office expenses,depreciation and amortization of assets fees, etc.
53. R&D expenses
√Applicable □Not Applicable
Unit and Currency: RMB
| Item | Amount for the current period | Amount for the previous period |
| R&D expenses | 2,939,733,549.14 | 2,797,067,620.86 |
| Total | 2,939,733,549.14 | 2,797,067,620.86 |
The Company's R&D expenses are mainly salary expenses, R&D equipment expenses, inspection andtesting fees.
54. Financial expenses
| Items | Amount for the current period | Amount for the previous period |
| Interest expenses | 719,257,090.03 | 886,299,299.68 |
| Less: Interest income | 219,622,316.65 | 258,697,380.60 |
| Less: Cash discount | 65,843,464.11 | 87,173,770.76 |
| Exchange gains and losses | 216,765,382.01 | -107,354,539.68 |
| Others | 50,963,873.72 | 71,701,987.48 |
| Items | Amount for the current period | Amount for the previous period |
| Total | 701,520,565.00 | 504,775,596.12 |
Interest expenditure in lease liabilities in the current period is RMB61,835,788.46.
55. Other income
| Items | Amount for the current period | Amount for the previous period | Related to assets/ revenue |
| Government grants | 497,272,167.38 | 444,934,593.58 | Related to revenue |
| Government grants | 28,017,088.05 | 28,994,813.54 | Related to assets |
| Total | 525,289,255.43 | 473,929,407.12 |
56. Investment income (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Income from long-term equity investment calculated by equity method | 679,043,527.00 | 542,608,907.11 |
| Investment income from disposal of long-term equity investment | -199,825.65 | 1,089,977.75 |
| Investment income from disposal of other equity instrument investments | - | |
| Investment income from other equity instrument investments during holding period | 14,526,208.93 | 18,421,982.06 |
| Income from wealth management products | 48,451,938.85 | 95,852,264.16 |
| Investment income from disposal of financial assets at fair value through profit or loss | 14,961,073.66 | 98,789,008.11 |
| Total | 756,782,922.79 | 756,762,139.19 |
57. Gains on changes in fair value (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Changes in fair value of forward foreign exchange trading contracts | -35,571,335.94 | 46,068,278.74 |
| Changes in fair value of wealth management products | 2,809,431.16 | 11,905,128.74 |
| Others | 1,774,801.63 | -563,450.68 |
| Total | -30,987,103.15 | 57,409,956.80 |
58. Credit impairment loss (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Bad debts losses on accounts receivable | -109,905,504.07 | 37,775,605.39 |
| Impairment losses on contract assets | ||
| Impairment losses on bills receivable | 1,000,000.00 | |
| Total | -108,905,504.07 | 37,775,605.39 |
59. Impairment loss on assets (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Impairment losses on inventory | -412,325,166.32 | -249,884,430.08 |
| Impairment losses on other current assets | -197,422,966.37 | -7,863,475.12 |
| Impairment losses on fixed assets | ||
| Impairment losses on intangible assets | ||
| Impairment losses on construction in progress | ||
| Impairment losses on long-term equity investment | ||
| Total | -609,748,132.69 | -257,747,905.20 |
60. Gains on disposal of assets
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Gains on disposal of non-current assets | 14,120,787.44 | 18,889,267.13 |
| Less: losses on disposal of non-current assets | -28,563,193.90 | -6,182,584.26 |
| Total | -14,442,406.46 | 12,706,682.87 |
Other explanation:
□Applicable √Not Applicable
61. Non-operating income
√Applicable □Not Applicable
| Items | Amount for the current period | Amount for the previous period |
| Gains on disposal of non-current assets | 12,240,620.38 | 7,143,791.10 |
| Quality claims and fines | 17,811,610.75 | 251,941,034.86 |
| Others | 38,834,457.94 | 13,521,643.37 |
| Total | 68,886,689.07 | 272,606,469.33 |
62. Non-operating expenses
| Items | Amount for the current period | Amount for the previous period |
| Losses on disposal of non-current assets | 9,175,290.01 | 16,637,393.70 |
| Others | 46,295,466.54 | 97,869,314.59 |
| Total | 55,470,756.55 | 114,506,708.29 |
63. Income tax expenses
(1) Statement of income tax expenses
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Current income tax expenses | 432,844,606.93 | 1,185,812,989.93 |
| Deferred income tax expenses | 228,382,266.41 | -129,708,058.73 |
| Total | 661,226,873.34 | 1,056,104,931.20 |
(2) Current reconciliation between accounting profit and income tax expenses
√Applicable □Not Applicable
| Unit and Currency: RMBItems | Amount for the current period |
| Total accounting profit | 4,273,243,856.34 |
| Income tax expenses calculated pursuant to statutory/applicable tax rate(s) | 1,068,310,964.01 |
| Impact from different tax rates applicable to subsidiaries | -407,798,430.47 |
| Impact from adjustment to income tax in prior periods | -161,151,691.96 |
| Impact from non-taxable income | -174,134,803.68 |
| Impact from non-deductible cost, expense and loss | 85,767,193.68 |
| Impact from deductible provisional differences or deductible losses of unrecognized deferred tax assets | 250,233,641.76 |
| Total income tax expense | 661,226,873.34 |
Other explanation:
□Applicable √Not Applicable
64. Other comprehensive income
√Applicable □Not Applicable
Please refer to Note Ⅶ. 46 for details.
65. Other cash received from operating activities
| Items | Amount |
| Deposits and securities | 5,906,876.76 |
| Government grants | 392,986,831.27 |
| Non-operating income excluding government grants | 35,931,408.66 |
| Interest income | 290,942,012.96 |
| Others | 1,647,814.82 |
| Total | 727,414,944.47 |
66. Other cash paid to operating activities
| Items | Amount |
| Cash paid on selling expenses | 5,614,309,250.88 |
| Cash paid on administrative and R&D expenses | 3,030,125,415.61 |
| Cash paid on financial expenses | 62,725,109.74 |
| Non-operating expenses | 18,068,509.35 |
| Others | 57,897,004.93 |
| Total | 8,783,125,290.51 |
67. Other cash paid to investing activities
| Items | Amount |
| Others | 3,368,312.62 |
| Total | 3,368,312.62 |
68. Other cash paid to financing activities
| Items | Amount |
| Payment rom Minority shareholders due to the withdrawal | 13,817,500.00 |
| Lease payment in cash | 384,257,451.29 |
| Total | 398,074,951.29 |
69. Information of Net profit adjusted to cash flow of operating activities
(1) Supplementary information of cash flow statement
√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 flow of operating activities: | ||
| Net profit | 3,612,016,983.00 | 6,184,914,691.98 |
| Add: impairment provision for assets | 718,653,636.76 | 219,972,299.81 |
| Losses on credit impairment | ||
| Depreciation of fixed assets, oil and gas assets and production materials | 1,963,015,056.31 | 1,808,446,184.52 |
| Amortization of ROU assets | ||
| Amortization of intangible assets | 478,210,242.71 | 369,529,224.67 |
| Amortization of long-term prepaid expenses | 81,963,800.63 | 17,998,286.51 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains are represented by “-”) | 11,377,076.09 | -3,213,080.27 |
| Losses on retirement of fixed assets (gains are represented by “-”) | ||
| Losses on change of fair value (gains are represented by “-”) | 30,987,103.15 | -57,409,956.80 |
| Financial expenses (gains are represented by “-”) | 936,022,472.04 | 778,944,760.00 |
| Loss on investments (gains are represented by “-”) | -756,782,922.79 | -756,762,139.19 |
| Decrease in deferred tax assets (increase is represented by “-”) | 143,796,985.57 | 36,353,097.23 |
| Increase of deferred tax liabilities (decrease is represented by | 84,585,280.84 | -166,061,155.96 |
| “-”) | ||
| Decrease in inventories (increase is represented by “-”) | 2,543,296,922.45 | -1,499,604,914.30 |
| Decrease of operational account receivables (increase is represented by “-”) | -5,862,948,537.55 | -4,917,381,549.69 |
| Increase of operational account payables (decrease is represented by “-”) | -4,757,655,587.32 | 1,256,347,755.36 |
| Others | 230,542,230.71 | 347,734,810.73 |
| Net cash flow generated from operational activities | -542,919,257.40 | 3,619,808,314.60 |
| 2. Significant investment and financing activities not involving cash inflows and outflows: | ||
| Capital transferred from debts | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under finance lease | ||
| 3. Net changes of cash and cash equivalents: | ||
| Cash balance at the end of the period | 43,021,810,920.60 | 33,318,427,811.29 |
| Less: cash balance at the beginning of the period | 34,962,947,399.85 | 36,553,047,466.15 |
| 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 | 8,058,863,520.75 | -3,234,619,654.86 |
70. Cash and cash equivalents
| Items | Closing balance | Opening balance |
| I. Cash | 43,021,810,920.60 | 34,962,947,399.85 |
| Including: cash on hand | 3,439,833.06 | 7,556,892.38 |
| Bank deposits always available for payment | 42,540,524,252.52 | 34,502,656,877.99 |
| Other monetary funds always available for payment | 477,846,835.02 | 452,733,629.48 |
| II. Cash equivalents | ||
| Including: Bond investments due within three months | ||
| III. Closing balance of cash and cash equivalents | 43,021,810,920.60 | 34,962,947,399.85 |
| Including: Cash and cash equivalents, the use of which by the parent or subsidiaries of the Group is restricted |
71. Monetary items in foreign currency
| Items | Closing Balance | Opening Balance |
| Balance in foreign currency | Exchange rate | Balance in RMB | Balance in foreign currency | Exchange rate | Balance in RMB | ||
| Monetary funds | |||||||
| USD | 1,112,828,734.88 | 7.0795 | 7,878,271,028.61 | 730,666,614.19 | 6.9762 | 5,097,276,433.90 | |
| EUR | 102,609,671.37 | 7.9610 | 816,875,593.74 | 151,676,201.42 | 7.8155 | 1,185,425,352.21 | |
| JPY | 3,458,117,268.00 | 0.065808 | 227,571,781.17 | 3,356,863,028.27 | 0.064086 | 215,127,924.03 | |
| HKD | 823,031,917.20 | 0.9134 | 751,757,353.17 | 745,289,079.40 | 0.8958 | 667,629,957.33 | |
| Others | 2,661,458,827.78 | 2,043,389,309.90 | |||||
| Sub-total | 12,335,934,584.47 | 9,208,848,977.37 | |||||
| Accounts receivable | |||||||
| USD | 770,200,080.05 | 7.0795 | 5,452,631,466.75 | 269,987,662.70 | 6.9762 | 1,883,487,932.50 | |
| EUR | 381,459,702.52 | 7.9610 | 3,036,800,691.75 | 325,463,066.35 | 7.8155 | 2,543,656,595.07 | |
| JPY | 4,719,265,155.58 | 0.065808 | 310,565,401.36 | 3,829,608,370.79 | 0.064086 | 245,424,282.05 | |
| Others | 4,142,060,327.37 | 2,931,185,158.50 | |||||
| Sub-total | 12,942,057,887.23 | 7,603,753,968.12 | |||||
| Short-term borrowings | |||||||
| USD | 653,432,031.02 | 7.0795 | 4,625,972,063.59 | 521,126,042.56 | 6.9762 | 3,635,479,498.10 | |
| EUR | 401,026,674.98 | 7.9610 | 3,192,573,359.51 | 320,772,912.41 | 7.8155 | 2,507,000,696.91 | |
| JPY | 7,078,374,287.70 | 0.065808 | 465,813,655.13 | 6,656,569,078.27 | 0.064086 | 426,592,885.95 | |
| Others | 357,673,200.39 | 66,592,438.54 | |||||
| Sub-total | 8,642,032,278.62 | 6,635,665,519.50 | |||||
| Accounts payable | |||||||
| USD | 1,304,104,302.25 | 7.0795 | 9,232,406,407.74 | 1,219,489,898.22 | 6.9762 | 8,507,405,427.96 | |
| EUR | 344,476,846.44 | 7.9610 | 2,742,380,174.54 | 421,042,022.97 | 7.8155 | 3,290,653,930.56 | |
| JPY | 5,255,586,005.08 | 0.065808 | 345,859,603.82 | 5,988,441,245.39 | 0.064086 | 383,775,245.65 | |
| NZD | 132,436,461.05 | 4.5495 | 602,519,679.56 | 147,674,519.27 | 4.6973 | 693,671,519.36 | |
| Others | 1,751,708,103.93 | 1,735,111,878.01 | |||||
| Sub-total | 14,674,873,969.59 | 14,610,618,001.54 | |||||
| Non-current liabilities due within one year | |||||||
| USD | 784,018,758.46 | 7.0795 | 5,550,460,800.52 | 692,201,069.75 | 6.9762 | 4,828,933,102.79 | |
| EUR | 100,417,162.41 | 7.9610 | 799,421,029.95 | 104,804,376.00 | 7.8155 | 819,098,600.63 | |
| JPY | 1,840,220,625.06 | 0.065808 | 121,101,238.89 | 1,923,050,313.62 | 0.064086 | 123,240,602.40 | |
| RUB | 224,988,897.55 | 0.100900 | 22,701,379.76 | 183,707,445.72 | 0.112600 | 20,685,458.39 | |
| Others | 295,367,620.58 | 278,535,431.52 | |||||
| Sub-total | 6,789,052,069.70 | 6,070,493,195.73 | |||||
| Long-term borrowings | |||||||
| USD | 1,406,945,406.71 | 7.0795 | 9,960,470,006.80 | 876,451,371.56 | 6.9762 | 6,114,300,058.28 |
| EUR | 401,516,934.33 | 7.9610 | 3,196,476,314.19 | 712,443,399.37 | 7.8155 | 5,568,101,387.80 |
| RUB | 524,883,500.00 | 0.100900 | 52,960,745.15 | 500,000,010.04 | 0.112600 | 56,300,001.13 |
| NZD | 319,931,612.94 | 4.5495 | 1,455,528,873.07 | 319,915,612.92 | 4.6973 | 1,502,739,608.57 |
| Others | 41,591,910.14 | 22,348,282.12 | ||||
| Sub-total | 14,707,027,849.35 | 13,263,789,337.90 |
VIII. Changes of consolidation scope
1. Business combination not under common control
√Applicable □Not applicable
(1). Business consolidation not under common control occurring in the current period
√Applicable □Not applicable
Unit and Currency: RMB
| Acquiree Name | Time of equity acquisition | acquisition cost | Percentage of equity acquired (% ) | Equity acquisition method | Equity acquisition date | Recognition basis of acquisition dates | Acquiree's revenue from acquisition date to the end of current period | Acquiree's net profit from acquisition date to the end of current period |
| Qingdao Gooday Lejia Iot Technology Co., Ltd. | January 2020 | 578,514,747.42 | 79.82 | Acquisition | January 2020 | shareholding transferred | 153,697,292.00 | 7,376,809.43 |
| Guangdong Black Dragon Intelligent Technology Co. Ltd. | January 2020 | 35,493,500.00 | 76.72 | Acquisition | January 2020 | shareholding transferred | 13,008,769.00 | -2,006,720.38 |
(2). Combination cost and goodwill
√Applicable □Not applicable
Unit and Currency: RMB
| Items | Qingdao Gooday Lejia Iot Technology Co., Ltd. | Guangdong Black Dragon Intelligent Technology Co. Ltd. |
| ------ Cash | 562,420,000.00 | 35,493,500.00 |
| ------ Contingent consideration | 16,094,747.42 | |
| Total combination cost | 578,514,747.42 | 35,493,500.00 |
| Less: fair value of identifiable net assets acquired | 130,500,584.86 | 19,536,251.33 |
| Goodwill | 448,014,162.56 | 15,957,248.67 |
(3). Acquiree's identifiable assets and liabilities at acquisition date
√Applicable □Not applicable
Unit and Currency: RMB
| Items | Qingdao Gooday Lejia Iot Technology Co., Ltd. | |
| Fair Value | Book Value | |
| Monetary funds | 223,974,917.72 | 223,974,917.72 |
| Accounts receivable | 15,398,428.75 | 15,398,428.75 |
| Other receivables | 8,407,600.82 | 8,407,600.82 |
| Prepayments | 20,000.00 | 20,000.00 |
| Inventories | 208,069.03 | 208,069.03 |
| Fixed assets | 49,800,195.00 | 4,908,266.00 |
| Construction in progress | 837,735.85 | 837,735.85 |
| Intangible assets | 45,965,425.27 | 23,584,905.66 |
| Short term borrowing | -800,000.00 | -800,000.00 |
| Accounts payable | -78,775,509.26 | -78,775,509.26 |
| Taxes payable | -874,611.20 | -874,611.20 |
| Payables for staff's remuneration | -3,916,546.24 | -3,916,546.24 |
| Other payables | -71,177,812.37 | -71,177,812.37 |
| Contract liabilities | -20,468,473.67 | -20,468,473.67 |
| Deferred income | -2,052,083.28 | -2,052,083.28 |
| Net assets | 166,547,336.42 | 99,274,887.81 |
| Less: Minority equity interests | -3,063,051.15 | -3,063,051.15 |
| Net assets obtained | 163,484,285.27 | 96,211,836.66 |
| Items | Guangdong Black Dragon Intelligent Technology Co. Ltd |
| Fair value | Book Value | |
| Monetary funds | 27,557,545.48 | 27,557,545.48 |
| Bills receivable | 200,000.00 | 200,000.00 |
| Accounts receivable | 47,300.87 | 47,300.87 |
| Prepayments | 815,329.43 | 815,329.43 |
| Other receivables | 425,636.25 | 425,636.25 |
| Inventories | 8,873,825.08 | 8,873,825.08 |
| Other current assets | 19,686.99 | 19,686.99 |
| Fixed assets | 767,559.72 | 767,559.72 |
| Intangible assets | 79,794.20 | 79,794.20 |
| Long-term prepaid expenses | 221,425.59 | 221,425.59 |
| Accounts payable | -1,964,381.05 | -1,964,381.05 |
| Receipts in advance | -10,495,805.40 | -10,495,805.40 |
| Payables for staff's remuneration | -747,591.42 | -747,591.42 |
| Taxes payable | -155,049.94 | -155,049.94 |
| Other payables | -179,924.13 | -179,924.13 |
| Net assets | 25,465,351.67 | 25,465,351.67 |
| Less: Minority equity interests | ||
| Net assets obtained | 25,465,351.67 | 25,465,351.67 |
2. Business combination under common control
□Applicable √Not applicable
3. Disposal of subsidiary
Whether single disposal of the investment in a subsidiary has led to the loss of control
□Applicable √Not applicable
Other explanations
□Applicable √Not applicable
Whether investment in a subsidiary is realized through several transactions step by step and has led tothe loss of control in the current period
□Applicable √Not applicable
4. Disclosure of discontinued operation
The disposal of Qingdao Haier Goodaymart Logistic Co., Ltd. by the Company’s subsidiary in theprevious year constitutes discontinued operation. The relevant financial information is disclosed asfollows:
(1) Profit or loss from discontinued operation
①Net profit from discontinued operation (net losses are represented by ‘-’)
| Items | For the current period | The corresponding period of the previous year |
| Operating income | 4,907,810,524.82 | |
| Less: cost and others | 4,710,367,482.14 | |
| Total profit | 197,443,042.68 | |
| Less: income tax expense | 46,936,990.15 | |
| Net profit | 150,506,052.53 |
②Profit or loss from disposal of discontinued operation
| Items | For the current period | The corresponding period of the previous year |
| Total profit or loss from disposal of discontinued operation | ||
| Less: income tax expense | ||
| Net profit or loss from disposal of discontinued operation |
(2) Cash flow from discontinued operation
| Items | For the current period | The corresponding period of the previous year |
| Cash flow of operating activities | -160,498,574.34 | |
| Cash flow of investing activities | 19,567,060.81 | |
| Cash flow of financing activities | -283,463,745.83 |
(3) Net profit from discontinued operation
| Items | For the current period | The corresponding period of the previous year |
| Net profit from discontinued operation (net losses are represented by ‘-’) | 150,506,052.53 | |
| Net profit attributable to shareholders of the Parent Company | 40,789,130.33 | |
| Net profit attributable to minority shareholders | 109,716,922.20 |
5. Changes of consolidation scope due to other reasons
√Applicable □Not applicable
(1) Qingdao Haier Intelligent Electronics Co., Ltd., a subsidiary of the Company, established awholly-owned subsidiary Qingdao Jiaozhou Haier Zhikong Electronics Co., Ltd (青岛胶州海尔智控电子有限公司).
(2) Haier Digital Technology (Qingdao) Co., Ltd. (海尔数字科技(青岛)有限公司), a subsidiary ofthe Company, established a wholly-owned subsidiary Haier Yuncheng Digital Technology (Qingdao)CO., LTD. (海尔云城数字科技(青岛)有限公司) for the period.
(3) Haier Digital Technology (Qingdao) Co., Ltd. (海尔数字科技(青岛)有限公司), a subsidiary ofthe Company, established a wholly-owned subsidiary Haier Digital Technology (Chongqing) Co., Ltd.(海尔数字科技(重庆)有限公司) for the period.
(4) Haier Digital Technology (Qingdao) Co., Ltd. (海尔数字科技(青岛)有限公司), a subsidiary ofthe Company, established a wholly-owned subsidiary Haier Digital Technology (Beijing) Co., Ltd. (海尔数字科技(北京)有限公司) for the period.
(5) The Company established a wholly-owned subsidiary Qingdao Haidacheng ProcurementServices CO., LTD. (青岛海达诚采购服务有限公司) for the period.
(6) Haier Digital Technology (Qingdao) Co., Ltd. (海尔数字科技(青岛)有限公司), a subsidiary ofthe Company, established a wholly-owned subsidiary Qingdao Haiyouhe IoT Technology CO., LTD.(青岛海优禾物联科技有限公司) for the period.
(7) Qingdao Haier Air Conditioner Gen Corp., Ltd., a subsidiary of the Company, established awholly-owned subsidiary Beijing Haixianghui Technology CO., LTD. (北京海享汇科技有限公司) forthe period.IX. Interests in other entities
1. Interests in subsidiaries
（1） Composition of the Group
√Applicable □Not applicable
| Name of subsidiary | Principal place of business | Place of registration | Nature of business | Shareholding (%) | Proportion of the voting rights (%) | Acquiring method | |
| Direct | Indirect | ||||||
| Haier Electronics Group Co., Ltd. | Mainland of China | Bermuda | Group company, which mainly engages | 13.94 | 31.74 | 57.63 | Business combinatio |
| and Hong Kong | in investment holding, and production, sale, distribution and logistics of washing machines and water heaters | n under common control | |||||
| Wonder Global (BVI) Investment Limited | The US and other overseas areas | British Virgin Islands | Group company, which mainly engages in household appliances production and distribution business | 100.00 | 100.00 | Establishment | |
| Haier Singapore Investment Holding Co., Ltd. | Singapore and other overseas areas | Singapore | Group company, which mainly engages in the production and distribution of home appliances | 100.00 | 100.00 | Business combination under common control | |
| Haier New Zealand Investment Holding Company Limited | New Zealand | New Zealand | Group company, which mainly engages in the production and distribution of household appliances | 100.00 | 100.00 | Business combination under common control | |
| Candy S.p.A | Europe | Italy | Group company, which mainly engages in the production and distribution of household appliances | 100.00 | 100.00 | Business combination not under common control | |
| 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 | Business combination under common control | |
| Guizhou Haier Electronics Co., Ltd. | Huichuan District, Zunyi City, Guizhou Province | Huichuan District, Zunyi City, Guizhou Province | Manufacture and sale of refrigerator | 59.00 | 59.00 | Business combination under common control |
| Hefei Haier Air-conditioning Co., Limited | Hefei Haier Industrial Park | Hefei Haier Industrial Park | Manufacture and sale of air-conditioners | 99.22 | 99.22 | Business combination under common control | |
| Wuhan Haier Electronics Co., Ltd. | Wuhan Haier Industrial Park | Wuhan Haier Industrial Park | Manufacture and sale of air-conditioners | 60.00 | 60.00 | Business combination under common control | |
| Qingdao Haier Air-Conditioner Electronics Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture and sale of air-conditioners | 100.00 | 100.00 | Business combination under common control | |
| Qingdao Haier Information Plastic Development Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Manufacturing of plastic products | 100.00 | 100.00 | Business combination under common control | |
| Dalian Haier Precision Products Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Manufacture and sale of precise plastics | 90.00 | 90.00 | Business combination under common control | |
| Hefei Haier Plastic Co., Ltd. | Hefei Economic & Technological Development Area | Hefei Economic & Technological Development Area | Manufacture and sale of plastic parts | 77.36 | 4.83 | 82.19 | Business combination under common control |
| Qingdao Haier Moulds Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | R&D and manufacture of precise mold and product | 75.00 | 25.00 | 100.00 | Business combination under common control |
| Qingdao Meier Plastic Powder Co., Ltd. | Qingdao Developmen | Qingdao Developmen | Manufacture of plastic powder, plastic | 40.00 | 60.00 | 100.00 | Business combinatio |
| t Zone | t Zone | sheet and high-performance coatings | n under common control | ||||
| 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 | Business combination under common control |
| 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 | Business combination under common control |
| Qingdao Haier Robot Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | R&D, manufacture and sale of robot | 100.00 | 100.00 | Business combination under common control | |
| Qingdao Haier Refrigerator Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | Manufacture of fluorine-free refrigerators | 100.00 | 100.00 | Establishment | |
| Qingdao Haier Refrigerator (International) Co., Ltd. | Pingdu Development Zone, Qingdao | Pingdu Development Zone, Qingdao | Manufacture of refrigerators | 100.00 | 100.00 | Establishment | |
| Qingdao Household Appliance Technology and Equipment Research Institute | Qingdao High-tech Zone | Qingdao High-tech Zone | R&D of home appliances mold 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 | R&D and sales of health-related 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 Developmen | Qingdao Developmen | Manufacture and sales of fluorine-free | 100.00 | 100.00 | Establishment |
| t Zone | t Zone | refrigerators | |||||
| Qingdao Haier Dishwasher Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Manufacture of dish washing machine and gas stove | 100.00 | 100.00 | Establishment | |
| Qingdao Haier Special Freezer Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Development, 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 of air conditioners | 90.00 | 90.00 | Establishment | |
| Dalian Haier Refrigerator Co., Ltd. | Dalian Export Expressing Zone | Dalian Export Expressing Zone | Manufacture 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 products | 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 | R&D, 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 sale of electrical products 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, | Jiangbei District, | Manufacture and sales of air | 76.92 | 23.08 | 100.00 | Establishment |
| Chongqing City | Chongqing City | conditioners | |||||
| Qingdao Haier Precision Products Co., Ltd. | Qianwangang Road, Jiaonan City | Qianwangang Road, Jiaonan City | Development and manufacture of precise plastic, metal plate, mold 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 home appliances and electronics | 100.00 | 100.00 | 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. | Qingdao Development Zone | Qingdao Development Zone | Manufacturing and sales of electronic components | 100.00 | 100.00 | Establishment | |
| Chongqing Haier Electronics Sales Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Sales of household appliances | 95.00 | 5.00 | 100.00 | Establishment |
| Chongqing Haier Refrigeration Appliance Co., Ltd. | Jiangbei District, Chongqing City | Jiangbei District, Chongqing City | Manufacture of refrigerator | 84.95 | 15.05 | 100.00 | Establishment |
| Hefei Haier Refrigerator Co., Ltd. | Hefei Haier Industrial Park | Hefei Haier Industrial Park | Manufacture 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 HVAC Engineering Co., Ltd. | Qingdao Development Zone | Qingdao Development Zone | Air-conditioning engineer | 100.00 | 100.00 | Establishment | |
| Chongqing Goodaymart Electric Appliance Sale Co., | Jiangbei District, | Jiangbei District, | Sales of household appliances and | 51.00 | 51.00 | Establishment |
| Ltd. | Chongqing City | Chongqing City | electronics | ||||
| 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 | Investment | 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. | Sanshui District, Foshan City | Sanshui 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 sale of electrical products and components | 100.00 | 100.00 | Establishment | |
| Qingdao Haier Intelligent Technology Development Co., Ltd. | Qingdao High-tech Zone | Qingdao High-tech Zone | R&D of household appliance products | 100.00 | 100.00 | Establishment | |
| Qingdao Hairi Hi-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 | Business combination under common control | |
| Qingdao Hai Gao Design and Manufacture Co., Ltd. | Qingdao High-tech | Qingdao High-tech | Industrial design and prototype production | 75.00 | 75.00 | Business combinatio |
| Zone | Zone | n under common control | |||||
| Beijing Haier Guangke Digital Technology Co., Ltd. | Beijing | Beijing | Technological development, promotion and transfer | 55.00 | 55.00 | Business combination under common control | |
| 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 | Business combination under common control | |
| 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 | Business combination under common control | |
| Qingdao Haier Central Air Conditioning Co., Ltd. | Qingdao | Qingdao | Production and sales of air conditioners and refrigeration equipment | 100.00 | 100.00 | Establishment | |
| Beijing Haier Yun Kitchen Technology Co., Ltd. | Beijing | Beijing | Technological development promotion | 95.77 | 95.77 | Establishment |
| and transfer | |||||||
| Chongqing Haier Home Appliance Sale Hefei Co., Ltd. | Hefei | Hefei | Sales of household appliances | 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 sanitary ware | 71.43 | 71.43 | Establishment | |
| Haier U+smart Intelligent Technology (Beijing) Co., Ltd. | Beijing | Beijing | Software development | 100.00 | 100.00 | Establishment | |
| Qingdao Haier Industry Intelligence Research Institute Co., Ltd. | Qingdao | Qingdao | Industrial intelligence technology | 100.00 | 100.00 | Establishment | |
| Haier (Shanghai) Electronics Co., Ltd. | Shanghai | Shanghai | Sales and R&D of home appliances | 100.00 | 100.00 | Establishment | |
| Haier Shanghai Zhongzhi Fang Chuang Ke Management Co., Ltd. | Shanghai | Shanghai | Business management consulting, chuangke management | 100.00 | 100.00 | Establishment | |
| Haier COSMO IOT Ecosystem Technology Co., Ltd. | Qingdao | Qingdao | Industrial investment, robotics and automation R&D, etc. | 67.03 | 8.23 | 75.27 | Establishment |
| Maniiq (Qingdao) Intelligent Equipment Co., Ltd. | Qingdao | Qingdao | Internet of things, robot and automation R&D, design, etc. | 100.00 | 100.00 | Establishment | |
| Haier digital technology (Shanghai) Co., Ltd. | Shanghai | Shanghai | Technological development, promotion and transfer, material sales, etc. | 100.00 | 100.00 | Establishment | |
| Qingdao Haier Smart Kitchen Appliance Co., Ltd. | Qingdao | Qingdao | Production and sales of kitchen smart household appliances | 100.00 | 100.00 | Establishment | |
| JIYI Appliance (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of household appliances | 100.00 | 100.00 | Establishment | |
| Qingdao Hao Pin Hai Rui Information Technology Co., Ltd. | Qingdao | Qingdao | Development, purchase and sales of electrical products and components | 100.00 | 100.00 | Establishment | |
| Fisher&Paykel Production Machinery Limited | New Zealand | New Zealand | Manufacturing of automation and customization special | 100.00 | 100.00 | Business combination |
| equipment | under common control | ||||||
| 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 Special Refrigerating Appliance Co., Ltd. | Qingdao | Qingdao | Production and sales of household appliances | 100.00 | 100.00 | Establishment | |
| Beijing Zero Micro Technology Co., Ltd. | Beijing | Beijing | Technological development and promotion | 55.00 | 55.00 | Establishment | |
| Laiyang Haier Smart Kitchen Appliance Co., Ltd. | Laiyang | Laiyang | Production and sales of household appliances | 100.00 | 100.00 | Establishment | |
| Qingdao Blue Whale Technology Co., Ltd. | Qingdao | Qingdao | Industrial intelligence technology | 67.00 | 67.00 | Establishment | |
| Qingdao Hailian Rongchuang Technology Co., Ltd. | Qingdao | Qingdao | Industrial intelligence technology | 100.00 | 100.00 | Establishment | |
| Hefei Haier Air Conditioning Electronics Co., Ltd. | Hefei | Hefei | Production and sales of household appliances | 100.00 | 100.00 | Establishment | |
| Taizhou Haier Medical Technology Co., Ltd. | Taizhou | Taizhou | Promotion of medical research and development | 100.00 | 100.00 | Establishment | |
| Haier (Shanghai) Home Appliance Research and Development Center Co., Ltd. | Shanghai | Shanghai | R&D of household appliances | 100.00 | 100.00 | Establishment | |
| Haier (Shenzhen) R&D Co., Ltd. | Shenzhen | Shenzhen | Development, research and technical services of home and commercial appliances | 100.00 | 100.00 | Establishment | |
| Guangzhou Haier Air Conditioner Co., Ltd. | Guangdong | Guangdong | Manufacturing of refrigeration and air conditioning equipment | 100.00 | 100.00 | Establishment |
| Qingdao Haier Institute of Investment Management Co., Ltd. | Qingdao | Qingdao | Venture Capital business | 70.00 | 70.00 | Establishment | |
| Tianjin Haiyun Chuang Digital Technology Co., Ltd. | Tianjin | Tianjin | R&D of digital technology | 100.00 | 100.00 | Establishment | |
| Haier Digital Technology (Qingdao) Co., Ltd. | Qingdao | Qingdao | R&D of digital technology | 100.00 | 100.00 | Establishment | |
| Haier Digital Technology (Nanjing) Co., Ltd. | Nanjing | Nanjing | R&D of digital technology | 100.00 | 100.00 | Establishment | |
| Haier Digital Technology (Wuxi) Co., Ltd. | Wuxi | Wuxi | R&D of digital technology | 100.00 | 100.00 | Establishment | |
| Haier Digital Technology (Xi'an) Co., Ltd. | Xi'an | Xi'an | R&D of digital technology | 100.00 | 100.00 | Establishment | |
| Ficoteng Intelligent Technology (Qingdao) Co., Ltd. | Qingdao | Qingdao | Intelligent device integrated service | 100.00 | 100.00 | Establishment | |
| Qingdao Yunshang Yuyi IOT Technology Co., Ltd. | Qingdao | Qingdao | IoT technology R&D, sales of household appliances, digital products and accessories, clothing shoes and hats, textiles, daily necessities, and furniture. | 70.00 | 70.00 | Establishment | |
| Haiyu (Shanghai) Intelligent Technology Co., Ltd. | Shanghai | Shanghai | Rental of apartments, intelligent equipment, etc. | 70.00 | 70.00 | Establishment | |
| Tianjin Haier Zhikong Electronics Co., Ltd. | Tianjin | Tianjin | Development and manufacturing of automatic control system | 100.00 | 100.00 | Establishment |
| Hefei Haier Intelligent Electronics Co., Ltd. | Hefei | Hefei | Development and manufacturing of automatic control system | 100.00 | 100.00 | Establishment | |
| Qingdao Haizhi Investment Management Co., Ltd. | Qingdao | Qingdao | Asset management, equity investment | 100.00 | 100.00 | Establishment | |
| Qingdao Haiduv Health Technology Co., Ltd. | Qingdao | Qingdao | Design and development of household appliances | 70.0 | 70.0 | Establishment | |
| Qingdao Jijia Cloud Intelligent Technology Co., Ltd. | Qingdao | Qingdao | R&D and sales of lighting appliances | 80.0 | 80.0 | Establishment | |
| Qingdao Penghai Software Co., Ltd. | Qingdao | Qingdao | Information transmission, software and information technology services | 60.01 | 60.01 | Business combination under common control | |
| Qingdao Haier Energy & Power Co., Ltd. | Qingdao | Qingdao | Water, electricity, steam heat supply | 100.00 | 100.00 | Business combination under common control | |
| Haier Digital Technology (Guangzhou) Co., Ltd. | Guangzhou | Guangzhou | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Xiong’an Haier Digital Technology Co., Ltd. | Hebei | Hebei | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Qingdao Haopin Haizhi Information Technology Co., Ltd. | Qingdao | Qingdao | Information technology consulting services | 100.00 | 100.00 | Establishment | |
| Qingdao Hainazhi Business Management Co., Ltd.（青岛 | Qingdao | Qingdao | 100.00 | 100.00 | Business combination under |
| 海纳智商务管理有限公司） | common control | ||||||
| Qingdao Haimeihui Management Consulting Co., Ltd. | Qingdao | Qingdao | Leasing and business services | 100.00 | 100.00 | Establishment | |
| Wuxi Yunshang Internet of Clothing Technology Co., Ltd. | Wuxi | Wuxi | Internet of Things technology R&D | 100.00 | 100.00 | Establishment | |
| Qingdao Guochuang Intelligent Household Appliance Research Institute Co., Ltd. | Qingdao | Qingdao | Scientific research and technical service | 43.32 | 43.32 | Establishment | |
| Shenyang Haichen Zhilian Technology Co., Ltd. | Shenyang | Shenyang | Wholesale and retail | 60.00 | 60.00 | Establishment | |
| Hangzhou Gandao Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou | Technology development, service | 60.00 | 60.00 | Establishment | |
| Haier Digital Technology (Chongqing) Co., Ltd.（海尔数字科技（重庆）有限公司） | Chongqing | Chongqing | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Haier Digital Technology (Beijing) Co., Ltd.（海尔数字科技（北京）有限公司） | Beijing | Beijing | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Haier Yuncheng Digital Technology (Qingdao) CO., LTD.（海尔云城数字科技（青岛）有限公司） | Qingdao | Qingdao | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Qingdao Jiaozhou Haier Zhikong Electronics CO., LTD.（青岛胶州海尔智控电子有限公司） | Qingdao | Qingdao | Development and manufacturing of automatic control system | 100.00 | 100.00 | Establishment | |
| Qingdao Haidacheng Procurement Services CO., | Qingdao | Qingdao | Development, purchase and sales of | 100.00 | 100.00 | Establishm |
| LTD.（青岛海达诚采购服务有限公司） | electrical products and components | ent | |||||
| Guangdong Heilong Intelligent Technology CO., LTD.（广东黑龙智能科技有限公司） | Guangzhou | Guangzhou | Scientific research and technical service | 76.72 | 76.72 | Business combination not under common control | |
| Qingdao Haiyouhe IoT Technology CO., LTD.（青岛海优禾物联科技有限公司） | Qingdao | Qingdao | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Beijing Haixianghui Technology CO., LTD.（北京海享汇科技有限公司） | Beijing | Beijing | Scientific research and technical service | 100.00 | 100.00 | Establishment | |
| Microenterprises such as Qingdao Hai Heng Feng Electrical Appliances Sale & Service Co., Ltd. | All over the country | All over the country | Sales of household appliances | Establishment |
Reasons for including subsidiaries in which the Company has 50% or less of the equity into the scope ofconsolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance andoperation decisions of Haier Electronics Group Co., Ltd., and microenterprises such as Qingdao HaiHeng Feng Electrical Appliances Sale & Service Co., Ltd, which 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 (hereinafterreferred 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 the trustor toHCH.
(2). Material non-wholly owned subsidiaries
√Applicable □Not Applicable
Unit and Currency: RMB
| Name of subsidiary | Shareholding of minority shareholders (%) | Profit or loss attributable to minority shareholders in the current period | Dividends announced to be distributed to minority shareholders in the current period | Balance of minority interests at the end of the period |
| Haier Electronics Group Co., Ltd. | 54.32 | 793,105,148.68 | 679,595,221.65 | 16,364,398,176.70 |
| Guizhou Haier Electronics Co., Ltd. | 41.00 | 5,092,265.40 | 117,214,827.70 | |
| Wuhan Haier Electronics Co., Ltd. | 40.00 | -8,061,897.55 | 257,121,346.78 |
Description of the difference between the ratio of shareholding and the ratio of voting rights of minorityshareholders of subsidiaries:
□Applicable √Not Applicable
Other descriptions:
□Applicable √Not Applicable
(3). Summarized financial information in respect of material non-wholly owned subsidiaries
| Name of subsidiary | Closing balance | |||||
| Current assets | Non-current Assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Haier Electronics Group Co., Ltd. | 33,329,356,554.25 | 14,613,405,536.09 | 47,942,762,090.34 | 16,883,445,962.95 | 1,374,462,917.71 | 18,257,908,880.66 |
| Guizhou Haier Electronics Co., Ltd. | 445,510,306.49 | 71,386,128.45 | 516,896,434.94 | 222,763,242.91 | 8,243,368.43 | 231,006,611.34 |
| Wuhan Haier Electronics Co., Ltd. | 950,267,357.30 | 154,268,445.52 | 1,104,535,802.82 | 461,732,435.87 | 461,732,435.87 | |
(Continued)
| Name of Subsidiary | Opening balance | |||||
| Current assets | Non-current Assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Haier Electronics Group Co., Ltd. | 35,532,721,320.45 | 14,246,629,453.30 | 49,779,350,773.75 | 19,005,798,243.85 | 1,368,203,239.83 | 20,374,001,483.68 |
| Guizhou Haier Electronics Co., Ltd. | 395,985,056.11 | 62,937,392.59 | 458,922,448.70 | 177,929,542.31 | 7,523,242.30 | 185,452,784.61 |
| Wuhan Haier Electronics Co., Ltd. | 968,026,486.23 | 159,403,524.03 | 1,127,430,010.26 | 464,471,899.44 | 464,471,899.44 | |
| Name of subsidiary | Amount for the current period | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Haier Electronics Group Co., Ltd. | 35,076,615,436.22 | 1,407,435,438.11 | 1,306,711,254.33 | 1,849,474,991.37 |
| Guizhou Haier Electronics Co., Ltd. | 489,594,043.14 | 12,420,159.51 | 12,420,159.51 | -244,989,823.11 |
| Wuhan Haier Electronics Co., Ltd. | 555,927,511.14 | -20,154,743.87 | -20,154,743.87 | 28,624,806.30 |
(Continued)
| Name of subsidiary | Amount for the previous period | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Haier Electronics Group Co., Ltd. | 41,237,226,098.73 | 1,936,902,298.59 | 1,905,305,772.79 | 2,296,625,722.88 |
| Guizhou Haier Electronics Co., Ltd. | 657,983,753.04 | 14,143,673.23 | 14,143,673.23 | 85,092,387.46 |
| Wuhan Haier Electronics Co., Ltd. | 1,097,872,964.21 | 29,993,585.30 | 29,993,585.30 | 263,391,235.42 |
2. Control over subsidiaries’ transactions despite change in owners’ equity in subsidiaries
√Applicable □Not Applicable
(1). Descriptions of change in owners' equity in subsidiaries
√Applicable □Not Applicable
The minority shareholders of Haier Electronics Group Co., Ltd., subsidiary of the Company,exercised rights for the current period, leading to changes in the Company's shareholding ratio. Capitalcontribution not proportional to the original shareholding resulted in changes of shareholding ratio in thesubsidiary. The acquisition of minority shareholding by the Company and its subsidiaries and the capitalincrease by minority shareholders of the Company’s subsidiaries resulted in the change in theCompany’s shareholding ratio.
(2). Impact of the transactions on minority interests and the equity attributable to shareholders ofthe Parent Company:
| Items | Haier Electronics Group Co., Ltd. | Others |
| Total consideration for acquisition/disposal | 154,160,683.22 | |
| Less: share of net assets of subsidiaries in respect to the shareholding proportion acquired/disposed | -28,339,099.34 | -168,759,823.16 |
| Difference | 28,339,099.34 | 322,920,506.38 |
| Including: capital reserve adjustment | 28,339,099.34 | 322,920,506.38 |
3. Interests in joint ventures or associates
√Applicable □Not Applicable
(1) Associates
| Name of associates | Principal place of business | Place of registration | Nature of business | Shareholding | Accounting treatment of investment |
| Haier Finance Co., Ltd. | Qingdao | Qingdao | Financial services | 42.00% | Equity method |
| Bank of Qingdao Co., Ltd. | Qingdao | Qingdao | Commercial Bank | 8.65% | Equity method |
| Wolong Electric (Jinan) Motor Co., Ltd. | Jinan | Jinan | Motor Manufacturin | 30.00% | Equity method |
| g | |||||
| Qingdao Hegang New Material Technology Co., Ltd. | Qingdao | Qingdao | Steel plate Manufacturing | 25.65% | Equity method |
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | Qingdao | Qingdao | Venture Capital | 63.13% | Equity method |
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | Qingdao | Qingdao | Manufacturing of household appliances | 45.00% | Equity method |
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | Qingdao | Qingdao | Manufacturing of household appliances | 49.00% | Equity method |
| Qingdao Haier Multimedia Co., Ltd. | Qingdao | Qingdao | R&D and sales of televisions | 20.20% | Equity method |
| Qingdao Haier Software Investment Co., Ltd. | Qingdao | Qingdao | Software development | 25.00% | Equity method |
| Hefei Feier Smart Technology Co., Ltd. | Hefei | Hefei | Technology development | 40.00% | Equity method |
| Qingdao Xinaohaizhi Energy Co., Ltd. | Qingdao | Qingdao | Production and sales of energy | 49.00% | Equity method |
| Shandong Haibida Big Data Co., Ltd. | Zibo | Zibo | Big Data Resource service | 40.00% | Equity method |
| Beijing Mr. Hi Network Technology Company Limited | Beijing | Beijing | Technology development | 29.03% | Equity method |
| Beijing Xiaobei Technology Co., Ltd. | Beijing | Beijing | Sales of household appliances | 42.75% | Equity method |
| Beijing ASU Tech Co. Ltd | Beijing | Beijing | Technical service import and export business | 42.61% | Equity method |
| Shenzhen Genyuan Environmental Protection Technology Co., Ltd. | Shenzhen | Shenzhen | Technical advisory services | 18.77% | Equity method |
| Qingdao Haimu Investment Management Co., Ltd. | Qingdao | Qingdao | Investment Management | 49.00% | Equity method |
| Qingdao Haimu Smart Home Investment Partnership (Limited Partnership) | Qingdao | Qingdao | Investment Management | 24.00% | Equity method |
| Guangzhou Heying Investment Partnership (Limited Partnership) | Guangzhou | Guangzhou | Investment | 50.00% | Equity method |
| Qingdao Java Cloud Network Technology Co., Ltd. | Qingdao | Qingdao | Home online service | 24.93% | Equity method |
| Bingji (Shanghai) Corporate Management Co., Ltd. | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| Youjin (Shanghai) Corporate Management Co., Ltd. | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| RRS (Shanghai) Investment Co., Ltd. | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| Haier Best Water Technology Co., Ltd. | Qingdao | Qingdao | Water equipment technology development service | 49.00% | Equity method |
| Meiling Candy Washing Machine Co., Ltd. | Hefei | Hefei | Manufacturing of home appliances | 40.00% | Equity method |
| Konan Electronic Co., Ltd. | Japan | Japan | Motor Manufacturing | 50.00% | Equity method |
| HPZ LIMITED | Nigeria | Nigeria | Manufacturing of household appliances | 25.01% | Equity method |
| HNR Company (Private) Limited | Pakistan | Pakistan | Manufacturing of household appliances | 31.72% | Equity method |
| Controladora Mabe S.A.deC.V. | Mexico | Mexico | Manufacturing of household appliances | 48.41% | Equity method |
| Middle East Air conditioning Company, Limited | Saudi Arabia | Saudi Arabia | Sales of household appliances | 49.00% | Equity method |
(1). Major financial information of significant joint ventures
□Applicable √Not Applicable
(2). Major financial information of significant associates
√Applicable □Not Applicable
①Basic information of significant associates:
a. Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) was established by HaierGroup Corporation and its three affiliates via capital contribution. The place of registration andprincipal place of business of the Finance Company is Yulong International Center, No.178-2 HaierRoad, Laoshan District, Qingdao City. The Company's subsidiaries hold an aggregate of 42.00%equity in the Finance Company.b. General Electric Company has participated in the capital contribution to the establishment ofControladora Mabe S.A.deC.V. (hereinafter referred to as “MABE”). In June 2016, a subsidiary of theCompany acquired 48.41% equity in MABE held by General Electric Company. The place ofregistration and principal place of business of MABE is Mexico. The Company’s subsidiaries hold anaggregate of approximately 48.41% equity in MABE.c. Bank of Qingdao Co., Ltd. (hereinafter referred to as “Qingdao Bank”), one of the first citycommercial banks in China, was established in November 1996. The place of registration and principalplace of business of Qingdao Bank is No. 68 Hong Kong Middle Road, Shinan District, Qingdao,Shandong Province. The Company and its subsidiaries hold an aggregate of approximately 8.65% equityin Qingdao Bank at the end of the period.? Financial Information of significant associates:
Unit and Currency: RMB
| Items | Finance company | |
| Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period | |
| Current assets | 59,989,703,072.66 | 61,570,216,228.62 |
| Non-current assets | 8,947,355,078.39 | 5,905,904,013.65 |
| Total assets | 68,937,058,151.05 | 67,476,120,242.27 |
| Current liabilities | 53,909,950,568.34 | 52,896,669,320.65 |
| Non-current liabilities | 172,763,023.35 | 268,470,616.43 |
| Total liabilities | 54,082,713,591.69 | 53,165,139,937.08 |
| Minority equity interests | ||
| Equity interest attributable to shareholders of the Parent Company | 14,854,344,559.36 | 14,310,980,305.19 |
| Including: share of net assets calculated based on shareholding percentage | 6,238,824,714.93 | 6,010,611,728.26 |
| Operating income | 1,116,349,935.66 | 1,300,482,943.40 |
| Net profit | 839,643,218.29 | 817,752,896.21 |
| Other comprehensive income | 3,721,035.88 | -162,279.20 |
| Total comprehensive income | 843,364,254.17 | 817,590,617.01 |
| Dividend received from associates for the year | 126,000,000.00 | 126,000,000.00 |
(Continued)
| Items | MABE | |
| Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period | |
| Current assets | 6,404,356,403.00 | 6,554,356,162.20 |
| Non-current assets | 12,175,614,359.50 | 11,976,635,517.00 |
| Total assets | 18,579,970,762.50 | 18,530,991,679.20 |
| Current liabilities | 8,287,170,666.50 | 8,493,118,880.40 |
| Non-current liabilities | 5,729,460,588.50 | 5,735,182,853.40 |
| Total liabilities | 14,016,631,255.00 | 14,228,301,733.80 |
| Minority equity interests | ||
| Equity interest attributable to shareholders of the Parent Company | 4,563,339,507.50 | 4,302,689,945.40 |
| Including: share of net assets calculated based on shareholding percentage | 2,209,331,695.88 | 2,083,138,731.69 |
| Operating income | 9,121,639,583.17 | 10,480,026,514.09 |
| Net profit | 199,323,864.03 | 109,678,922.13 |
| Other comprehensive income | 103,445,272.07 | 15,778,276.40 |
| Total comprehensive income | 302,769,136.10 | 125,457,198.53 |
| Dividend received from associates for the year | 20,392,107.51 | 32,367,659.70 |
(Continued)
| Items | Qingdao Bank | |
| Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period | |
| Current assets | 280,411,713,000.00 | 238,853,193,000.00 |
| Non-current assets | 160,110,296,000.00 | 134,768,957,000.00 |
| Total assets | 440,522,009,000.00 | 373,622,150,000.00 |
| Current liabilities | 326,610,243,000.00 | 264,534,891,000.00 |
| Non-current liabilities | 82,986,616,000.00 | 78,609,341,000.00 |
| Total liabilities | 409,596,859,000.00 | 343,144,232,000.00 |
| Minority equity interests | 596,432,000.00 | 562,458,000.00 |
| Equity interest attributable to shareholders of the Parent Company | 30,328,718,000.00 | 29,915,460,000.00 |
| Including: share of net assets calculated based on shareholding percentage | 2,622,694,432.19 | 2,586,957,693.97 |
| Operating income | 5,035,264,000.00 | 3,725,353,000.00 |
| Net profit | 1,530,517,000.00 | 1,438,462,000.00 |
| Other comprehensive income | -215,321,000.00 | -25,404,000.00 |
| Total comprehensive income | 1,315,196,000.00 | 1,413,058,000.00 |
| Dividend received from associates for the year | 77,995,640.00 | 77,995,640.00 |
(3). Summarized financial information of insignificant associates
| Investment in Associates | Closing balance/Amount for the current period | Opening balance/Amount for the previous period |
| Wolong Electric (Jinan) Motor Co., Ltd. | 131,745,167.56 | 123,555,578.44 |
| Qingdao Hegang New Material Technology Co., Ltd. | 288,709,753.25 | 280,063,773.80 |
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | 433,913,863.02 | 434,540,103.12 |
| Mitsubishi Heavy Industries Haier (Qingdao) Air Conditioner Co., Ltd. | 677,292,968.77 | 643,056,436.86 |
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 401,231,110.38 | 395,933,487.26 |
| Qingdao Haier Multimedia Co., Ltd. | 390,369,692.23 | 432,386,801.26 |
| Qingdao Haier Software Investment Co., Ltd. | 19,636,136.75 | 19,636,136.75 |
| Hefei Feier Smart Technology Co., Ltd. | 758,188.30 | 758,188.30 |
| Qingdao Xinaohaizhi Energy Co., Ltd. | 26,488,832.62 | 25,966,044.95 |
| Qingdao Zhongzaihaina Environmental Services Co., Ltd. | 2,261,258.70 | |
| Shandong Haibida Big Data Co., Ltd. | 4,991,817.38 | 5,332,640.10 |
| Beijing Mr. Hi Network Technology Company Limited | 3,757,759.75 | 3,757,759.75 |
| Beijing Xiaobei Technology Co., Ltd. | 2,687,341.82 | 2,687,341.82 |
| Beijing ASU Tech Co., Ltd. | 597,730.20 | 5,862,115.78 |
| Shenzhen Genyuan Environmental Protection Technology Co., Ltd. | 6,914,487.73 | 6,914,487.73 |
| Qingdao Haimu Investment Management Co., Ltd. | 2,198,276.46 | 2,198,276.46 |
| Qingdao Haimu Smart Home Investment Partnership (Limited Partnership) | 48,046,197.64 | 48,046,197.64 |
| Guangzhou Heying Investment Partnership (Limited Partnership) | 207,927,530.72 | 219,198,634.81 |
| Qingdao Java Cloud Network Technology Co., Ltd. | 3,110,037.46 | 3,168,859.99 |
| Bingji (Shanghai) Corporate Management Co., Ltd. | 983,411,368.09 | 894,539,765.00 |
| Youjin (Shanghai) Corporate Management Co., Ltd. | 1,625,617,754.55 | 1,625,617,754.55 |
| RRS (Shanghai) Investment Co., Ltd. | 2,954,850,462.82 | 2,954,850,462.82 |
| Haier Best Water Technology Co., Ltd. | 19,918,477.11 | 21,725,345.26 |
| Meiling Candy Washing Machine Co., Ltd. | 22,368,292.37 | 23,222,136.38 |
| Konan Electronic Co., Ltd. | 74,755,351.31 | 71,196,748.97 |
| HNR Company (Private) Limited | 108,673,865.77 | 104,557,145.65 |
| HPZ LIMITED | 72,898,060.48 | 78,149,551.49 |
| MiddleEast Air conditioning Company, Limited | 19,002,595.66 | 19,002,595.66 |
| Total book value of investment | 8,531,873,120.20 | 8,448,185,629.30 |
| Total amount of the following financial data of associates calculated based on shareholding percentage | ||
| --Net profit | 97,538,731.86 | 21,659,978.97 |
| --Other comprehensive income | -11,589,982.26 | 14,315,460.92 |
| --Total comprehensive income | 85,948,749.60 | 35,975,439.89 |
X. Segment Report
(1). Determining basis and accounting policy of reporting segment
√Applicable □Not Applicable
The Company principally engaged in manufacture and sales of household appliances and relevantservices business, manufacture of upstream household appliances parts business and distribution ofproducts of third-party, logistics and after-sale business. The Company has three business segments: (1)China smart home business segment; (2) Overseas home appliance and smart home business segment; (3)Other business segments. The management of the Company assesses operating performance of eachsegment and allocates resources according to the division. Sales between segments were mainly basedon market price.
(1) China smart home business segment consists of:
①Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers and
kitchen appliances.
②Internet of Clothing solutions: mainly engages in production and sales of washing machineproducts.
③Air energy solutions: mainly engages in production and sales of air conditioners products.
④Whole house water solutions: mainly engages in production and sales of water home appliancessuch as water heaters and water purification products.
(2) Overseas home appliance and smart home business segment mainly includes overseas businesssegments such as GEA, FPA, Candy, etc.
(3) Other business segments: mainly include channel industrial Internet of Things, equipmentcomponents, small home appliance business and others.Due to centralized management under the headquarters or exclusion from the assessment scope ofsegment management, the total assets of segments exclude monetary funds, financial assets held fortrading, derivative financial assets, dividends receivable, held-for-sale financial assets, other currentassets, other equity instruments investment, long-term accounts receivable, long-term equity investment,goodwill and deferred income tax assets; the total liabilities of segments exclude long-term andshort-term borrowings, financial liabilities held for trading, derivative financial liabilities, dividendspayable, taxes payable, held-for-sale liabilities, bonds payable, deferred income tax liabilities and othernon-current liabilities; profits of segments exclude financial expenses, profit or loss in fair value changes,income from investment, and income on disposal of assets, Non-value-added tax refundable uponimposition component of other income, non-operating incomes and expenses and income tax.
(1) Information of reportable segments
Segment information for the period
| Segment information | China smart home business | ||||
| Internet of Food solutions | Air energy solutions | Internet of clothing solutions | Whole house water solutions | ||
| Refrigerator/freezers | Kitchen appliances | Air conditioners | Washing machine | Water home appliances | |
| Segment revenue | 14,683,603,976.09 | 1,267,093,978.37 | 13,393,533,030.85 | 10,412,711,732.81 | 4,480,940,852.13 |
| Including: external revenue | 13,241,028,063.00 | 1,136,861,395.44 | 10,819,622,386.98 | 8,957,518,846.77 | 4,405,383,279.52 |
| Inter-segment | 1,442,575,913.09 | 130,232,582.93 | 2,573,910,643.87 | 1,455,192,886.04 | 75,557,572.61 |
| revenue | |||||
| Total segment operating cost | 13,228,134,258.51 | 1,257,529,605.79 | 13,392,894,090.92 | 9,830,205,497.05 | 3,950,589,964.96 |
| Segment operating profit | 1,455,469,717.58 | 9,564,372.58 | 638,939.93 | 582,506,235.76 | 530,350,887.17 |
| Total segment assets | 13,026,256,793.12 | 1,537,404,374.74 | 16,152,797,751.76 | 9,643,833,688.47 | 3,256,484,637.11 |
| Total segment liabilities | 26,981,522,397.14 | 1,367,998,481.75 | 9,083,081,923.93 | 6,136,730,402.67 | 3,623,476,540.95 |
(Continued)
| Segment information | Overseas home appliance and smart home business | Other businesses | Inter-segment offsetting | Total |
| Segment revenue | 46,113,430,665.25 | 41,772,176,557.36 | -36,395,393,686.21 | 95,728,097,106.65 |
| Including: external revenue | 45,890,025,774.06 | 11,277,657,360.88 | - | 95,728,097,106.65 |
| Inter-segment revenue | 223,404,891.19 | 30,494,519,196.48 | -36,395,393,686.21 | - |
| Total segment operating cost | 44,606,124,147.48 | 42,001,089,962.02 | -36,397,663,815.46 | 91,868,903,711.27 |
| Segment operating profit | 1,507,306,517.77 | -228,913,404.66 | 2,270,129.25 | 3,859,193,395.38 |
| Total segment assets | 51,144,877,675.60 | 47,276,851,709.62 | -42,338,809,142.76 | 99,699,697,487.66 |
| Total segment liabilities | 26,317,965,365.81 | 49,035,306,671.56 | -42,309,727,928.23 | 80,236,353,855.58 |
Segment information for the corresponding period of last year
| Segment information | China smart home business | ||||
| Internet of Food solutions | Air energy solutions | Internet of Clothing solutions | Whole house water solutions | ||
| Refrigerator/freezers | Kitchen appliances | Air conditioners | Washing machine | Water home appliances | |
| Segment revenue | 16,014,369,082.11 | 1,309,588,301.27 | 13,811,298,219.09 | 10,790,566,310.14 | 4,694,014,711.94 |
| Including: external revenue | 14,904,667,347.36 | 1,169,023,520.38 | 11,646,933,304.59 | 9,747,570,995.49 | 4,655,524,031.86 |
| Inter-segment revenue | 1,109,701,734.75 | 140,564,780.89 | 2,164,364,914.50 | 1,042,995,314.65 | 38,490,680.08 |
| Total segment operating cost | 14,021,016,300.13 | 1,199,160,979.26 | 12,838,615,639.09 | 9,808,869,510.07 | 4,144,904,947.31 |
| Segment operating profit | 1,993,352,781.98 | 110,427,322.01 | 972,682,580.00 | 981,696,800.07 | 549,109,764.63 |
| Total segment assets | 10,182,685,599.34 | 1,601,295,526.79 | 16,080,937,914.13 | 9,674,956,522.67 | 3,321,820,888.60 |
| Total segment liabilities | 30,598,595,271.84 | 1,468,196,660.29 | 8,590,183,771.36 | 7,447,258,502.94 | 4,135,690,962.81 |
(Continued)
| Segment information | Overseas home appliance and smart home business | Other business | Inter-segment offsetting | Total |
| Segment revenue | 45,860,296,598.71 | 43,820,299,344.99 | -36,276,968,330.35 | 100,023,464,237.90 |
| Including: external revenue | 45,689,299,226.28 | 12,210,445,811.94 | - | 100,023,464,237.90 |
| Inter-segment revenue | 170,997,372.43 | 31,609,853,533.05 | -36,276,968,330.35 | - |
| Total segment operating cost | 44,229,726,774.58 | 43,607,332,867.16 | -36,306,535,875.03 | 93,543,091,142.57 |
| Segment operating profit | 1,630,569,824.13 | 212,966,477.83 | 29,567,544.68 | 6,480,373,095.33 |
| Total segment assets | 45,754,466,477.11 | 48,931,878,145.26 | -38,979,895,269.93 | 96,568,145,803.97 |
| Total segment liabilities | 24,233,067,377.15 | 48,310,739,488.06 | -39,098,430,484.39 | 85,685,301,550.06 |
(2) Geographical information
“Other countries/regions” in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for the purposeof information disclosure.External transaction revenue
| Items | Amount for the current period | Amount for the previous period |
| Mainland China | 48,729,778,108.08 | 53,310,745,918.69 |
| Other countries/regions | 46,998,318,998.57 | 46,712,718,319.21 |
| Including: | ||
| America | 29,493,797,283.55 | 27,693,537,889.15 |
| Australia | 2,495,026,782.34 | 2,534,236,838.15 |
| South Asia | 2,710,264,399.09 | 4,249,663,938.66 |
| Europe | 6,742,180,009.93 | 7,221,130,297.04 |
| Southeast Asia | 2,108,114,856.79 | 1,970,496,955.14 |
| Central East and Africa | 725,859,940.76 | 690,928,785.10 |
| Japan | 1,797,904,898.35 | 1,546,013,513.31 |
| Others | 925,170,827.76 | 806,710,102.66 |
| Total | 95,728,097,106.65 | 100,023,464,237.90 |
Total non-current assets
| Items | Closing balance | Opening balance |
| Mainland China | 14,847,261,037.58 | 14,257,835,282.97 |
| Other countries/regions | 25,364,730,695.76 | 25,259,765,320.54 |
| Total | 40,211,991,733.34 | 39,517,600,603.51 |
The total non-current assets exclude other equity instruments investment, long-term accountsreceivable, long-term equity investment, goodwill, deferred income tax assets and other non-currentfinancial assets.XI. Disclosure of fair value
1. Assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level ofinputs which are significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except forLevel 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
At the end of the period
| Items | Inputs used for fair value measurement | |||
| Quotes in an active market (Level 1) | Important observable input (Level 2) | Important unobservable input (Level 3) | Total | |
| Continuously measured at fair value | ||||
| Financial assets held for trading | 306,542.35 | 2,365,992,371.82 | 34,185,898.17 | 2,400,484,812.34 |
| Including: Bank wealth management products | 2,341,623,479.22 | 2,341,623,479.22 | ||
| Forward foreign exchange contract | 24,368,892.60 | 24,368,892.60 | ||
| Equity instruments investment | 306,542.35 | 34,185,898.17 | 34,492,440.52 | |
| Derivative financial assets | - | 66,466,125.17 | - | 66,466,125.17 |
| Including: Forward foreign exchange contract | 62,752,517.52 | 62,752,517.52 | ||
| Forward commodity contract | 3,713,607.65 | 3,713,607.65 | ||
| Other equity instruments | 19,001,392.40 | 1,251,542,256.56 | 1,270,543,648.96 | |
| Including: Equity instruments measured at fair value through other comprehensive income | 19,001,392.40 | 1,251,542,256.56 | 1,270,543,648.96 | |
| Other non-current financial assets | 72,739,420.26 | 72,739,420.26 | ||
| Including: Bank wealth management products | 72,739,420.26 | 72,739,420.26 | ||
| Other non-current assets | 62,836,363.78 | 62,836,363.78 | ||
| Including: Other non-current financial | 62,836,363.78 | 62,836,363.78 | ||
| assets | ||||
| Financial liabilities held for trading | 17,825,470.87 | 17,825,470.87 | ||
| Including: Forward foreign exchange contract | 17,825,470.87 | 17,825,470.87 | ||
| Derivative financial liabilities | 164,280,435.09 | 164,280,435.09 | ||
| Including: Forward exchange contract | 72,492,566.52 | 72,492,566.52 | ||
| Interest rate swap agreement | 91,787,868.57 | 91,787,868.57 | ||
| Other non-current liabilities | 55,618,608.25 | 55,618,608.25 | ||
| Including: Obligation of repurchasing the minority equity rights | 55,618,608.25 | 55,618,608.25 |
At the beginning of the period
| Items | Input used for fair value measurement | |||
| Quotes in an active market (Level 1) | Important observable input (Level 2) | Important unobservable input (Level 3) | Total | |
| Continuously measured at fair value | ||||
| Financial assets held for trading | 400,433.88 | 283,548,675.00 | 24,185,898.17 | 308,135,007.05 |
| Including: Bank wealth management products | 198,614,361.33 | 198,614,361.33 | ||
| Forward foreign exchange contract | 84,934,313.67 | 84,934,313.67 | ||
| Investment in equity instruments | 400,433.88 | 24,185,898.17 | 24,586,332.05 | |
| Derivative financial assets | 19,158,132.45 | 19,158,132.45 | ||
| Including: Forward exchange contract | 17,241,833.10 | 17,241,833.10 | ||
| Forward commodity contract | 1,916,299.35 | 1,916,299.35 | ||
| Other equity instruments | 19,467,066.04 | 1,376,492,812.88 | 1,395,959,878.92 | |
| Including: Equity instruments measured at fair value and changes of which included in other comprehensive income | 19,467,066.04 | 1,376,492,812.88 | 1,395,959,878.92 | |
| Other non-current financial assets | 294,547,364.47 | 294,547,364.47 | ||
| Including: Bank wealth management products | 294,547,364.47 | 294,547,364.47 | ||
| Other non-current assets | 62,836,363.78 | 14,220,964.80 | 77,057,328.58 | |
| Including: Other non-current financial assets | 62,836,363.78 | 14,220,964.80 | 77,057,328.58 | |
| Financial liabilities held for trading | 42,799,173.35 | 42,799,173.35 | ||
| Including: Forward foreign exchange contract | 42,799,173.35 | 42,799,173.35 | ||
| Derivative financial liabilities | 99,548,853.97 | 99,548,853.97 | ||
| Including: Forward foreign exchange contract | 85,557,428.14 | 85,557,428.14 | ||
| Interest rate swap agreement | 13,991,425.83 | 13,991,425.83 | ||
| Other non-current liabilities | 54,598,203.27 | 54,598,203.27 | ||
| Including: Obligation of repurchasing the minority equity rights | 54,598,203.27 | 54,598,203.27 |
For financial instruments traded in an active market, the Company determines its fair value based onits quotes in an active market; for financial instruments not traded in an active market, the Company usesvaluation techniques to determine its fair value.2．The continual and discontinuous Level 2 fair value measurement items, the valuation techniquesadopted and information of important parameters
√Applicable ?Not Applicable
| Items | Closing fair value | Valuation techniques |
| Financial assets held for trading | ||
| Including: Bank wealth management products | 2,341,623,479.22 | Discounted cash flow |
| Forward exchange contract | 24,368,892.60 | Bank quote for similar products |
| Derivative financial assets | ||
| Including: Forward exchange contract | 62,752,517.52 | Bank quote for similar products |
| Forward commodity contract | 3,713,607.65 | Futures exchange quote for similar products |
| Other non-current financial assets | ||
| Including: Bank wealth management products | 72,739,420.26 | Discounted cash flow |
| Other non-current assets | ||
| Including: Other non-current financial assets | 62,836,363.78 | Discounted cash flow model |
| Financial liabilities held for trading | ||
| Including: Forward exchange contract | 17,825,470.87 | Bank quote for similar products |
| Derivative financial liabilities | ||
| Including: Forward exchange contract | 72,492,566.52 | Bank quote for similar products |
| Interest rate swap agreement | 91,787,868.57 | Bank quote for similar products |
3．Continual and discontinuous Level 3 fair value measurement major items, the valuationtechniques adopted and information of important parameters
√Applicable ?Not Applicable
| Items | Fair value at the end of the period | Valuation technique | Significant unobservable input | Range | Sensitivity of the input to fair value |
| Other equity Instruments | |||||
| Including: China Petrochemical Marketing Co., Ltd. | 1,112,101,000.00 | Valuation multiples | 1. Average P/E multiple of peers 2. Discount for lack of marketability | 1. 24.03 -24.52 2. 9%-11% | 1. 1% increase (decrease) in multiple would result in increase (decrease) in fair value by |
4. The fair value of financial assets and financial liabilities not measured at fair value
√Applicable ?Not Applicable
RMB11,121,0
00.00.
2. 1% increase
(decrease) inthe risk-freeinterest ratewould result indecrease(increase) infair value byRMB12,356,0
00.00.
Items
| Items | Closing book value | Closing fair value |
| Bonds payable (exchangeable corporate bonds issued in 2017) | 7,232,228,799.85 | 7,392,397,948.27 |
Financial assets and financial liabilities not measured at fair value include: monetary funds, billsreceivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable, etc.Except for the difference between the book value and the fair value of bonds payable disclosed above,the difference between the book value and the fair value of financial assets and financial liabilities notmeasured at fair value at the end of the period is small.XII. Related parties and related party transactions
(I) Explanation for basis of identifying related partyAccording to Accounting Standards for Business Enterprises No. 36 — Related 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 from anotherparty.
According to Management Practices for Information Disclosure of Listed Company (ChinaSecurities Regulatory Commission Order No. 40), related legal entity or individual will be identified asrelated parties in certain occasions.(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the Company
| Name | Type of enterprise | Registered place | Registered capital | Legal representative | Relations hips with the Company | Interest in the Company | Voting rights to the Company |
| Haier Group Corporation | Collective ownership company | Qingdao High-tech Zone Haier Park | 311,180,000 | Zhang Ruimin | Parent Company | 16.30% | 16.30% |
| Haier Electric Appliances International Co., Ltd. | Joint-stock company | Qingdao High-tech Zone Haier Park | 631,930,635 | Zhang Ruimin | Subsidiary of Parent Company | 19.13% | 19.13% |
| Qingdao Haier Venture & Investment Information Co., Ltd. | Company with limited liability | Qingdao Free Trade Zone | 923,000,000 | Zhou Yunjie | Parties acting in concert of Parent Company | 2.62% | 2.62% |
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | Limited partnership | Qingdao High-tech Zone Haier Park | 1,053,306,000 | Zhang Ruimin | Parties acting in concert of Parent Company | 1.11% | 1.11% |
| Haier International Co., Limited | Company with limited liability | Hong Kong | 10,000 (Hong Kong Dollars) | / | Parties acting in concert of Parent Company | 0.87% | 0.87% |
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure of interests insubsidiaries
□Applicable √Not Applicable
3. Associates and joint ventures of the Company
The details of important associates or joint ventures of the Company are detailed in Note VII. 12 andNote IX. 3
□Applicable √Not Applicable
Other associates or joint ventures that have related party transactions with the Company for thecurrent period or have related party transactions with the Company for the previous period and haveformed balances are as follows
□Applicable √Not Applicable
4. Related company with no controlling relationship
| Name of company | Relationship with the Company |
| Haier International Co., Ltd | Subsidiary of Haier Group |
| Dalian Haier International Trade 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 Finance Leasing (China) 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 Industry and City Innovation Group 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 Special Plastic Development Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Brothers Animation Industry Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Goodaymart Supply Chains Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Goodaymart Logistic Co., Ltd. | Subsidiary of Haier Group |
| RRS Internet of Things Co., Ltd. | Subsidiary of Haier Group |
| Shanghai Cotai Supply Chain Management Co., Ltd. | Subsidiary of Haier Group |
| Suzhou Hai Xin InfoTech 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 Dingteng Industrial Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Investment and Development Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier New Materials R & D Co., Ltd. | Associate of Subsidiary of Haier Group |
| Controladora Mabe S.A.deC.V. | Associate |
| HNR Company (Private) Limited | Associate |
| Qingdao Haier Software Investment Co., Ltd. | Associate |
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | Associate |
| Wolong Electric (Jinan) Motor Co., Ltd. | Associate |
| Bank of Qingdao Co., Ltd. | Associate |
| Hefei Hegang New Material Technology Co., Ltd. | Subsidiary of Associate |
| Qingdao HBIS Composite New Material | Subsidiary of Associate |
(III) Related-party transactions
1. Details of the goods and services purchased by the Company from the related parties are asfollows:
| The Name of Related parties | Amount for the current period | Amount for the previous period |
| Controladora Mabe S.A.deC.V. | 4,864,433,223.10 | 5,464,515,041.24 |
| Qingdao Haier Parts Procurement Co., Ltd. | 2,382,418,704.31 | 2,837,415,037.84 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 1,361,963,444.17 | 1,476,163,477.81 |
| HNR Company (Private) Limited | 1,142,507,687.58 | 1,429,096,343.19 |
| Qingdao Haier Goodaymart Logistic Co., Ltd. | 949,267,175.72 | |
| Hefei Haier Logistics Co., Limited | 839,757,307.64 | 892,337,984.63 |
| Chongqing Haier Logistics Co., Ltd. | 838,951,651.12 | 1,051,553,656.77 |
| Shanghai Cotai Supply Chain Management Co., Ltd. | 535,089,057.35 | |
| Qingdao Haier International Trading Co., Ltd. | 527,076,966.47 | 539,532,451.15 |
| Hefei Hegang New Material Technology Co., Ltd. | 413,914,100.88 | 412,953,069.36 |
| Qingdao HBIS Composite New Material | 355,481,832.09 | 283,067,913.51 |
| Wolong Electric (Jinan) Motor Co., Ltd. | 345,676,591.78 | 293,778,828.75 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 295,364,122.98 | 321,899,079.51 |
| Qingdao Haier Investment and Development Co., Ltd. | 188,110,164.96 | 19,898,573.91 |
| Qingdao Goodaymart Supply Chains Co., Ltd. | 173,942,768.33 | |
| Dalian Haier International Trade Co., Ltd. | 122,952,604.28 | 185,031,961.19 |
| Qingdao Haier International Travel Agency Co., Ltd. | 63,556,939.55 | 88,298,910.21 |
| Laiyang Haier Electrical Co. Ltd. | 40,454,392.37 | 36,567,109.85 |
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 33,241,619.88 | 33,990,109.50 |
| Other related parties | 624,953,584.30 | 1,125,264,035.03 |
| Total | 16,099,113,938.86 | 16,491,363,583.45 |
2. Details of the Company's sales of goods to the related parties are as follows:
| The Name of Related parties | Amount for the current period | Amount for the previous period | ||||
| Qingdao Haier International Trading Co., Ltd. | 284,072,456.94 | 268,434,363.24 | ||||
| Qingdao Haier Special Plastic Development Co., Ltd. | 277,812,831.60 | 287,905,105.77 | ||||
| Qingdao Haier New Materials R & D Co., Ltd. | 148,412,255.35 | 192,841,505.74 | ||||
| Wolong Electric (Jinan) Motor Co., Ltd. | 145,337,819.93 | 146,756,467.18 | ||||
| Controladora Mabe S.A.deC.V. | 144,426,966.26 | 121,852,991.92 | ||||
| Qingdao HBIS Composite New Material | 81,567,030.58 | 87,743,947.93 | ||||
| Qingdao Haier International Travel Agency Co., Ltd. | 55,926,947.01 | 37,294,684.35 | ||||
| Hefei Xingang New Material Technology Co., Ltd.(合肥河钢新材料科技有限公司) | 55,018,521.20 | 65,960,255.44 | ||||
| Other related parties | 236,732,885.30 | 262,209,804.45 | ||||
| Total | 1,429,307,714.17 | 1,470,999,126.02 | ||||
3. Amount for outstanding items of related parties:
| Items and name of distributors | Closing Balance | Opening Balance |
| Bills receivable: | ||
| Qingdao Haier New Materials R & D Co., Ltd. | 5,000,000.00 | |
| Other related-party | 17,221,927.54 | 18,658,821.43 |
| Dividend receivable: | ||
| Bank of Qingdao Co., Ltd. | 77,995,640.00 | |
| Qingdao Haier Software Investment Co., Ltd. | 4,524,472.84 | 4,524,472.84 |
| Other related-party | 12,897,365.78 | |
| Accounts receivable: | ||
| HNR Company (Private) Limited | 492,607,934.19 | 420,113,418.64 |
| Controladora Mabe S.A.deC.V. | 160,726,715.74 | 86,399,338.60 |
| Qingdao Haier International Travel Agency Co., Ltd. | 108,468,352.39 | 112,821,150.93 |
| Haier Group Electric Appliance Industry Co., Ltd. | 105,295,609.96 | 96,399,344.74 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 66,523,545.92 | 32,485,794.84 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 45,284,480.33 | 108,719,296.71 |
| Haier Finance Leasing (China) Co., Ltd. | 26,752,954.40 | 64,250,047.12 |
| Qingdao Haier International Trading Co., Ltd. | 22,719,696.91 | 31,247,321.37 |
| Qingdao Haier Household Integration Co., Ltd. | 20,005,683.11 | 8,092,101.80 |
| Suzhou Hai Xin InfoTech Ltd | 10,659,432.30 | 10,781,192.30 |
| Haier Group Co., Ltd. | 6,193,216.66 | 6,166,666.66 |
| RRS Internet of Things Co., Ltd. | 5,388,791.31 | 35,268,625.02 |
| Other related-party | 318,746,516.55 | 329,064,547.30 |
| Prepayments: | ||
| Qingdao Haier Parts Procurement Co., Ltd. | 298,138,484.89 | 269,505,987.96 |
| Qingdao Haier International Trading Co., Ltd. | 109,539,290.53 | 23,318,702.14 |
| HNR Company (Private) Limited | 85,631,617.45 | 66,648,390.11 |
| Hefei Haier Logistics Co., Limited | 16,469,909.68 | 45,776,811.08 |
| Chongqing Haier Logistics Co., Ltd. | 16,042,377.73 | 34,842,309.86 |
| Other related-party | 95,833,868.92 | 86,209,477.02 |
| Interest receivable: | ||
| Haier Finance Co., Ltd. | 98,462,714.60 | 49,797,510.75 |
| Other receivables: | ||
| Haier Group Co., Ltd | 225,733,742.40 | 215,130,000.00 |
| Qingdao Haier International Trading Co., Ltd. | 87,570,907.66 | 1,894,273.76 |
| Qingdao Haier Goodaymart Logistic Co., Ltd | 53,549,458.56 | 3,962,494.53 |
| Haier Group Electric Appliance Industry Co., Ltd. | 12,576,056.03 | 11,925,794.18 |
| Qingdao Haier Industry and City Innovation Group Co., Ltd. | 88,640,000.00 | |
| Other related-party | 102,801,759.37 | 138,099,198.98 |
| Bills payable: | ||
| Laiyang Haier Electrical Co. Ltd. | 21,637,277.43 | 39,208,909.70 |
| Other related-party | 50,578,836.26 | 28,684,896.03 |
| Accounts payable: | ||
| Qingdao Haier Parts Procurement Co., Ltd. | 1,547,113,429.70 | 1,968,841,996.69 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 591,047,787.64 | 1,061,806,342.30 |
| Controladora Mabe S.A.deC.V. | 494,597,468.17 | 230,300,308.48 |
| Qingdao Haier International Trading Co., Ltd. | 146,056,483.67 | 314,990,780.41 |
| Dalian Haier International Trade Co., Ltd. | 73,786,270.28 | 156,594,556.64 |
| Qingdao HBIS Composite New Material | 72,110,382.82 | 29,418,148.41 |
| Hefei Hegang New Material Technology Co., Ltd. | 63,231,433.65 | 43,160,933.30 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 60,348,809.72 | 69,159,088.68 |
| Chongqing Haier Logistics Co., Ltd. | 33,077,540.64 | 132,648,041.70 |
| Haier International Co., Ltd | 15,638,736.92 | 11,823,617.47 |
| Laiyang Haier Electrical Co. Ltd. | 14,067,278.01 | 16,287,220.50 |
| Other related-party | 200,317,123.66 | 241,561,098.62 |
| Contract liabilities: | ||
| Qingdao HBIS Composite New Material Technology Co., Ltd. | 11,457,935.00 | 1,848,679.58 |
| Hefei Hegang New Material Technology Co., Ltd. | 5,606,408.75 | 5,980,624.73 |
| Qingdao Dingteng Industrial Technology Co., Ltd. | 4,728,399.00 | 4,723,750.00 |
| Qingdao Haier New Materials R & D Co., Ltd. | 3,872,966.24 | 6,373,064.84 |
| Wolong Electric (Jinan) Motor Co., Ltd. | 4,066.72 | 15,580,146.24 |
| Other related-party | 14,610,372.99 | 9,977,087.41 |
| Other payables: | ||
| Qingdao Goodaymart Logistic Co., Ltd. | 484,252,410.26 | 571,867,437.60 |
| Qingdao Haier Investment and Development Co., Ltd. | 239,908,090.96 | 10,311,777.96 |
| Qingdao Haier Brothers Animation Industry Co., Ltd. | 197,165,604.92 | 274,526,190.97 |
| Qingdao Goodaymart Supply Chains Co., Ltd. | 141,544,554.72 | 187,341,850.29 |
| Qingdao Haier International Trading Co., Ltd. | 77,476,842.23 | 47,981,351.46 |
| Shanghai Cotai Supply Chain Management | 68,665,259.03 | 103,450,224.91 |
| Co., Ltd. | ||
| Qingdao Haier Special Plastic Development Co., Ltd. | 43,054,748.09 | 43,054,748.09 |
| Other related-party | 193,869,326.99 | 275,584,489.94 |
| Interest payable: | ||
| Haier Finance Co., Ltd. | 7,263,993.16 | 11,288,860.64 |
| Dividends payable: | ||
| Brave Lion (HK) limited | 122,756,874.10 | 122,756,874.10 |
| Haier Electric Appliances International Co., Ltd. | 472,006,809.00 | |
| Haier Group Corporation | 402,229,036.50 | |
| Other related-party | 255,567,089.87 | 14,040,737.31 |
4. Other related party transactions
(1) Certain of the Company's subsidiaries entered into loan contracts with Haier Finance Co., Ltd.The loan balance as of 30 June 2020 was RMB3.400 billion and the aggregate interest expense payableby the Company to Haier Finance Co., Ltd. for the current period was RMB52 million.
(2) Information of the guarantor (as a related party) of the Company's guaranteed loan at the end ofthe period:
| Borrower | Loan amount | Guarantor |
| Haier U.S. Appliance Solutions, Inc. | 4,984,181,990.91 | Haier Group Corporation |
| Haier Singapore Investment Holding Co., Ltd. | 798,084,424.13 | Haier Group Corporation |
| Total | 5,782,266,415.04 |
(3) The interest income of deposits received by the Company and subsidiaries from Haier FinanceCo., Ltd. for the current period was RMB71 million.
(4) Haier Electrical Appliances Rus Limited lends an amount of RMB20 million to Haier RussianTrading Company LLC, a related-party.
(5) Leasing
| Lessees | Lessors | Uses for leased assets | Lease expense recognized for the period |
| Subsidiaries of the Company | Qingdao Haier Investment and Development Co., Ltd. and its subsidiaries | Production and operation | 8,891,910.72 |
| Subsidiaries of the Company | Other companies of Haier Group | Production and operation | 61,627,269.54 |
| Total | 70,519,180.26 |
(IV) Pricing policy
1. Related-party sales
Following the acquisition of the overseas white goods assets, the Company's original overseas salesmodel, being exports through the Group's exporting platform, was changed. The trading company underthe company holding overseas white goods assets was fully responsible for sales of export-orientedproducts. Meanwhile, the trading company was also responsible for the overseas sales of some of theGroup's products (such as brown goods). As such, the Company and Haier Group Corporation enteredinto a Sales Framework Agreement, according to which, the Company and Haier Group Corporation willsell products and provide sales-related services (including but not limited to agency sales services,after-sales services and technical support) on a reciprocal basis for a term of three years.
Related-party sales among Haier Electronics Group Co., Ltd. (hereinafter referred to as “HaierElectronics”), a holding subsidiary of the Company, Qingdao Haier Investment and Development Co.,Ltd., and Haier Group Corporation are carried out according to relevant provisions of Goods ExportAgreement, After-sales Service Agreement, and Logistics Service Agreement entered into among theparties.
2. Related-party Procurement
In addition to independent procurement platform, the Company entrusted Haier Group Corporationand its subsidiaries for procurements and delivery of part of raw materials, which is conducted accordingto the Purchase and Distribution Contract entered among the Company, Haier Group Corporation andother parties. The Company, Haier Group Corporation and its subsidiaries purchase materials fromagents. They purchase and distribute goods for production and non-production use according to thespecific material procurement target proposed by the Company. After procurement and delivery, thesupply price consists of the actual purchase price and the agency fee, of which the agency fee wascalculated by 1.25% of the actual purchase price, while in principle the supply price should not be higherthan the price for the Company’s independent purchases from the market.
Related-party procurements among Haier Electronics, Qingdao Haier Investment and DevelopmentCo., Ltd., and 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 on 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 and itssubsidiaries. According to the Financial Service Agreement entered into by and among the Company,Haier Group Corporation and other parties, the price of financial services is determined by the principle
of not being less than market value fair. The Company is entitled to decide whether to keep cooperationrelationship with them with the knowledge of the price prevailing in 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 based on actual situation. In order to meet theCompany's demands such as the avoidance of foreign exchange fluctuation risk, the Company maychoose Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) to provide some foreignexchange derivative businesses after comparing with comparable companies. The Company will upholdthe safe and sound, appropriate and reasonable principle, under which all foreign exchange capitalbusiness shall have a normal and reasonable business background to eliminate speculative operation. Atthe same time, the Company has specified the examination and permission rights, management positionsand responsibilities at all levels for its foreign exchange capital business to eradicate the risks ofoperation by persons and improved its response speed to risks on the premise that the risks areeffectively 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 by and 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 ticket 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 and finance, marketing, product research anddevelopment and other 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 based onthe prices at which Haier Electronics purchases the same type of products in similar transactions fromindependent third parties in the market and as per the terms and conditions not less favorable than thoseprovided by the independent third parties to Haier Electronics; while Haier Electronics sells products tocontract parties for their own use or distribution on sales network, the selling price shall be determinedbased on the prices at which Haier Electronics sells the same type of products in similar transactions to
independent third parties in the market and as per the terms and conditions not less favorable than thoseprovided by Haier Electronics to the 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 (Jinan) Motor Co.,Ltd. and other companies, pursuant to which, it is agreed that they shall supply modular products to theCompany at the most favorable price which is not higher than the price it offers 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 Hegang NewMaterial Technology Co., Ltd., under which, it is agreed that they shall supply products to the Companyon terms which are not less favorable than those offered by other suppliers.
XIII. Share-based payments
1. Overall of share-base payments
□Applicable √Not Applicable
XIV. Contingencies
Contingencies
□Applicable √Not Applicable
As of 30 June 2020, the Company has no significant contingencies that need to be disclosed.Significant commitments
□Applicable √Not Applicable
XV. Events subsequent to the balance sheet date
1. Explanations on other events subsequent to the balance sheet date
√Applicable ?Not Applicable
1. On 16 July 2020, based on the total number of A shares of 6,579,566,627, the Company paidcash bonus RMB0.375 (including tax) per A share, with cash bonus totaling to RMB2,467,337,485.13.
2. On 29 July 2020, the 9
th meeting of the 10
thBoard of Directors deliberated and approved theProposal on the Company's Transfer of 54.50% of the Equity of Haier Kaos Wulian EcologicalTechnology Co., Ltd. and Related Transactions (“《关于公司转让海尔卡奥斯物联生态科技有限公司
54.50%股权暨关联交易的议案》”). The Company intends to transfer 54.50% of the equity held by
Haier Kaos Wulian Ecological Technology Co., Ltd. to Qingdao Haier Ecological Investment Co., Ltd.(青岛海尔生态投资有限公司) with the consideration of RMB4,060,000,000. This transactionconstitutes a related transaction, which still needs to be submitted to the shareholders' meeting forreview.
3. On 30 July 2020, the 10
th meeting of the 10
th
Board of Directors deliberated and approved theProposal on the Specific Scheme of this Material Assets Reorganization (“《关于本次重大资产重组具体方案的议案》”) on item by item basis. Overview of the Scheme: The Company, as the offeror,requests the Board of Directors of Haier Electronics Group Co., Ltd. (hereinafter referred to as “HaierElectronics”), upon satisfaction of the prerequisites, to put forward a proposal on privatizing HaierElectronics by way of agreement arrangement to all shareholders (hereinafter referred to as “SchemeShareholders”) of Haier Electronics other than the Company and its subsidiaries of shares that have beenissued by Haier Electronics or may be issued prior to the record date of the agreement arrangement(hereinafter referred to as "Scheme Shares"). The proposal will be made in accordance with Section 99of the Bermuda Companies Act in the form of an Agreement Arrangement (hereinafter referred to as"Agreement Arrangement") involving, among other things, the write-off of all the Scheme Shares,whereby the Scheme Shareholders will receive the newly issued H-shares of the Company and cashpayment from Haier Electronics. The Agreement Arrangement will be specifically implemented throughthe following steps: (1) all Scheme Shares will be cancelled; (2) for each so cancelled Scheme Share,Scheme Shareholders will receive 1.60 newly issued H Shares of the Company and cash payment of HK$1.95 from Haier Electronics; (3) Haier Electronics will reduce the issued shares by canceling SchemeShares, and immediately after the reduction of the share capital, issue new shares to the Company, thenumber of which is equal to the number of Scheme Shares so cancelled, so that the number of issuedshares of Haier Electronics will be increased to that of it before the Scheme Shares were cancelled; and
(4) after the Scheme takes effect, the amount equivalent to the cash payment made to cancel the SchemeShares will be reduced from Haier Electronics' equity premium and other reserve accounts. Upon thisAgreement Arrangement taking effect: (1) Haier Electronics will be delisted from the Hong Kong StockExchange and become a wholly-owned or controlling subsidiary of the Company (subject to theimplementation of the Exchangeable Bond (EB) to Convertible Bond (CB) Scheme); (2) H shares of theCompany will be listed and traded on the main board of the Hong Kong Stock Exchange by way ofintroduction; (3) the Scheme Shareholders will become H-share shareholders of the Company.The Proposal is subject to be submitted to the General Meeting of Shareholders of the Company forconsideration.
4. On 17 July 2020, the Company issued RMB3 billion of unsecured ultra-short-term financingbonds with a 180-day period and an annual interest rate of 1.45%. The ultra-short-term financing bondshave been approved by the National Association of Financial Market Institutional Investors andregistered with the Shanghai Clearing House.
5. The Company has no other significant events subsequent to the balance sheet date that need to bedisclosed.
XVI. Risks Related to Financial Instruments
√Applicable □Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
| Items | Closing balance | |||
| Financial assets measured at fair value and changes of which included in current profit and loss | Measured at amortized cost | Financial assets measured at fair value and changes of which included in other comprehensive income | Total | |
| Monetary funds | 44,112,940,130.82 | 44,112,940,130.82 | ||
| Financial assets held for trading | 2,400,484,812.34 | 2,400,484,812.34 | ||
| Derivative financial assets | 66,466,125.17 | 66,466,125.17 | ||
| Bills receivable | 13,176,349,200.41 | 13,176,349,200.41 | ||
| Accounts receivable | 17,000,438,423.14 | 17,000,438,423.14 | ||
| Other receivables | 1,933,305,471.43 | 1,933,305,471.43 | ||
| Other current assets | 889,536,054.45 | 889,536,054.45 | ||
| Long-term receivables | 317,806,792.51 | 317,806,792.51 | ||
| Other equity instruments | 1,270,543,648.96 | 1,270,543,648.96 | ||
| Other non-current financial assets | 72,739,420.26 | 72,739,420.26 | ||
| Other non-current assets | 62,836,363.78 | 62,836,363.78 | ||
Financial assets (Continued)
| Items | Opening balance | |||
| Financial assets measured at fair value and changes of which included in current profit and loss | Measured at amortized cost | Financial assets measured at fair value and changes of which included in other comprehensive income | Total | |
| Monetary funds | 36,178,815,683.25 | 36,178,815,683.25 | ||
| Financial assets held for trading | 308,135,007.05 | 308,135,007.05 | ||
| Derivative financial assets | 19,158,132.45 | 19,158,132.45 | ||
| Bills receivable | 13,951,419,893.96 | 13,951,419,893.96 | ||
| Accounts receivable | 11,015,871,060.09 | 11,015,871,060.09 | ||
| Other receivables | 2,163,517,802.50 | 2,163,517,802.50 | ||
| Other current assets | 3,981,314,321.50 | 3,981,314,321.50 | ||
| Long-term receivables | 307,588,203.00 | 307,588,203.00 | ||
| Other equity instruments | 1,395,959,878.92 | 1,395,959,878.92 | ||
| Other non-current financial assets | 294,547,364.47 | 294,547,364.47 | ||
| Other non-current assets | 77,057,328.58 | 77,057,328.58 |
Financial liabilities
| Items | Closing balance | |||
| Financial liabilities measured at fair value and changes of which included in current profit and loss | Financial liabilities measured at amortized cost | Financial liabilities measured at fair value and changes of which included in other comprehensive income | Total | |
| Short-term borrowings | 17,223,889,737.38 | 17,223,889,737.38 | ||
| Financial liabilities held for trading | 17,825,470.87 | 17,825,470.87 | ||
| Derivative financial liabilities | 164,280,435.09 | 164,280,435.09 | ||
| Bills payable | 19,522,193,515.67 | 19,522,193,515.67 | ||
| Accounts payable | 29,649,104,954.11 | 29,649,104,954.11 | ||
| Other payables | 15,687,020,956.99 | 15,687,020,956.99 | ||
| Non-current liabilities due within one year | 5,473,359,759.62 | 5,473,359,759.62 | ||
| Long-term borrowings | 14,716,070,114.06 | 14,716,070,114.06 | ||
| Bonds payable | 7,232,228,799.85 | 7,232,228,799.85 | ||
| Long-term payables | 116,033,371.58 | 116,033,371.58 | ||
| Other non-current liabilities | 55,618,608.25 | 55,618,608.25 | ||
Financial liabilities (Continued)
| Items | Opening balance |
| Financial liabilities measured at fair value and changes of which included in current profit and loss | Financial liabilities measured at amortized cost | Financial liabilities measured at fair value and changes of which included in other comprehensive income | Total | |
| Short-term borrowings | 8,585,049,237.18 | 8,585,049,237.18 | ||
| Financial liabilities held for trading | 42,799,173.35 | 42,799,173.35 | ||
| Derivative financial liabilities | 99,548,853.97 | 99,548,853.97 | ||
| Bills payable | 19,308,538,776.92 | 19,308,538,776.92 | ||
| Accounts payable | 33,750,567,046.28 | 33,750,567,046.28 | ||
| Other payables | 15,156,392,521.82 | 15,156,392,521.82 | ||
| Non-current liabilities due within one year | 4,730,070,447.82 | 4,730,070,447.82 | ||
| Long-term borrowings | 13,276,452,935.56 | 13,276,452,935.56 | ||
| Bonds payable | 7,004,585,761.43 | 7,004,585,761.43 | ||
| Long-term payables | 142,342,718.45 | 142,342,718.45 | ||
| Other non-current liabilities | 54,598,203.27 | 54,598,203.27 |
Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company manages andmonitors these risk exposures to ensure the above risks are well under control.
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accountsreceivable, interest receivable, other receivables and wealth management products.
(1) The Company's bank deposits and wealth management products are mainly deposited in HaierFinance Co., Ltd., state-owned banks and other large and medium-sized listed banks. The interestreceivables are mainly the accrued interests from fixed deposits which are deposited in the above banks.The Group does not believe there is any significant credit risk due to defaults of its counterparties whichwould cause any significant loss. (2) Accounts receivable and bills receivable: The Company only trades
with approved and reputable third parties. All customers who are traded by credit are subject to creditassessment according to the policies of the Company, and the payment terms shall be determined on areasonable basis. The Company monitors the balances of accounts receivable on an ongoing basis andpurchases credit insurance for receivables of large-amount credit customers in order to ensure theCompany is free from material bad debts risks. (3) Other receivables of the Company mainly includeexport tax refund, borrowings and contingency provision. The Company strengthened its managementand continuous monitoring in respect of these receivables and relevant economic business based onhistorical data, so as to ensure that the Company's significant risk of bad debts is controllable and will befurther reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfillingobligations associated with financial liabilities. To control such risk, the Company utilizes variousfinancing methods such as notes settlement and bank loans to strive for a balance between sustainableand flexible financing. It also has obtained bank credit facilities from several commercial banks tosatisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company's businesses are based in mainland China, USA, Japan, Southeast Asia, South Asia,central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other currencies.
The Company's overseas assets and liabilities denominated in foreign currencies as well astransactions to be settled in foreign currencies expose the Company to fluctuations in exchange rates.The Company's finance department is responsible for monitoring the size of transactions in foreigncurrencies and assets and liabilities denominated in foreign currencies to minimize the risk of exposureto fluctuation in exchange rate; the Company resorts the way of signing forward foreign exchangecontracts to avoid the risk of exchange fluctuation.
4. Interest rate risk
The Company's interest rate risk arises primarily from its long- and short- term bank loans andbonds payables which are interest-bearing debts. Financial liabilities with floating interest rates exposethe Company to cash flow interest rate risk, while financial liabilities with fixed interest rates expose theCompany to fair value interest rate risk. The Group determines the relative proportion of fixed-interestrate and floating interest rate contracts in light of the prevailing market conditions.XVII. Other Significant Events
The Company has no other significant events that need to be disclosed.XVIII. Notes to Main Items of Financial Statements of the Parent Company
1. Accounts receivable
| Aging | Closing balance | Opening balance |
| Within 1 year | 5,598,528,164.87 | 1,175,031,729.66 |
| 1-2 years | 7,798,791.09 | |
| 2-3 years | 6,166,666.66 | |
| Over 3 years | ||
| Accounts receivable, balance | 5,604,694,831.53 | 1,182,830,520.75 |
| Allowance for bad debts | 308,333.33 | 596,039.26 |
| Accounts receivable, net | 5,604,386,498.20 | 1,182,234,481.49 |
The total amount of the top 5 accounts receivable at the end of the period was RMB5,600,662,200.35,accounting for 99.93% of book balance of the accounts receivable.
(1). Classification and disclosure according to method for provision for bad debts
□Applicable √Not Applicable
(2). Allowance for bad debts
√Applicable □Not Applicable
Changes in allowance for bad debts of accounts receivable in the current period:
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance | ||
| Provision | Other increase | Reversal | Write-off / other movement | |||
| Allowance for bad debts | 596,039.26 | 287,705.93 | 308,333.33 | |||
2. Other receivables
Presented as
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Interest receivable | 14,606,194.06 | 16,753,860.49 |
| Dividend receivable | 173,411,284.52 | 3,836,055,151.41 |
| Other receivables | 2,946,870,957.74 | 2,032,943,893.84 |
| Total | 3,134,888,436.32 | 5,885,752,905.74 |
Other explanation:
□Applicable √Not Applicable
Interest receivable
| Aging | Closing balance | Opening balance |
| Within one year | 14,606,194.06 | 16,753,860.49 |
| Over 1 year | ||
| Total | 14,606,194.06 | 16,753,860.49 |
Dividend receivable
| Aging | Closing balance | Opening balance |
| Within 1 year | 173,411,284.52 | 3,836,055,151.41 |
| Over 1 year | ||
| Total | 173,411,284.52 | 3,836,055,151.41 |
Other receivables
○1 The disclosure of other receivables by aging is as follows:
| Aging | Closing balance | Opening balance |
| Within 1 year | 2,946,953,724.13 | 2,033,022,986.42 |
| Over 1 year | ||
| Other receivables, balance | 2,946,953,724.13 | 2,033,022,986.42 |
| Allowance for bad debts | 82,766.39 | 79,092.58 |
| Other receivables, net | 2,946,870,957.74 | 2,032,943,893.84 |
○2The total amount of the top 5 other receivables at the end of the period isRMB1,910,229,807.68, accounting for 64.82% of book balance of other receivables.○3Changes in allowance for bad debt of other receivables in the current period:
| Items | Opening | Increase for the period | Decrease for the period | Closing |
| balance | Provision | Other increase | Reversal | Write-off / other movement | balance | |
| Allowance for bad debts | 79,092.58 | 3,673.81 | 82,766.39 |
3. Long-term equity investment
√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 in subsidiaries | 33,299,653,033.48 | 7,100,000.00 | 32,396,253,033.48 | 7,100,000.00 |
| Long-term equity investments in associates | 3,302,982,851.62 | 69,300,000.00 | 3,246,627,336.72 | 69,300,000.00 |
| Total | 36,602,635,885.10 | 76,400,000.00 | 35,642,880,370.20 | 76,400,000.00 |
(2) Long-term equity investments in subsidiaries
| Name of investee | Opening balance | Increase /Decrease for the period | Closing balance | Impairment provisions at the end of the period provisions |
| I. Subsidiaries: | ||||
| Chongqing Haier Electronics Sales Co., Ltd. | 9,500,000.00 | 9,500,000.00 | ||
| Haier Group (Dalian) Electrical Appliances Industry Co., Ltd | 34,735,489.79 | 34,735,489.79 | ||
| Qingdao Haier Refrigerator Co., Ltd. | 402,667,504.64 | 402,667,504.64 | ||
| Qingdao Haier Special Refrigerator Co., Ltd. | 329,832,047.28 | 329,832,047.28 | ||
| Qingdao Haier Information Plastic Development Co., Ltd | 102,888,407.30 | 102,888,407.30 |
| Dalian Haier Precision Products Co., Ltd. | 41,836,159.33 | 41,836,159.33 | ||
| Hefei Haier Plastic Co., Ltd. | 42,660,583.21 | 42,660,583.21 | ||
| Qingdao Haier Technology Co., Ltd. | 16,817,162.03 | 16,817,162.03 | ||
| Qingdao Household Appliance Technology and Equipment Research Institute | 66,778,810.80 | 66,778,810.80 | ||
| Qingdao Meier Plastic Powder Co., Ltd. | 24,327,257.77 | 24,327,257.77 | ||
| Chongqing Haier Precision Plastic Co., Ltd. | 47,811,283.24 | 47,811,283.24 | ||
| Qingdao Haier Electronic Plastic Co., Ltd. | 48,000,000.00 | 48,000,000.00 | ||
| Dalian Haier Refrigerator Co., Ltd. | 99,000,000.00 | 99,000,000.00 | ||
| Dalian Haier Air Conditioner Co., Ltd. | 99,000,000.00 | 99,000,000.00 | ||
| Guizhou Haier Electronics Co., Ltd. | 96,904,371.71 | 96,904,371.71 | ||
| Hefei Haier Air-conditioning Co., Limited | 67,110,323.85 | 67,110,323.85 | ||
| Qingdao Haier Refrigerator (International) Co., Ltd. | 238,758,240.85 | 238,758,240.85 | ||
| Qingdao Haier Air-Condition Electronic Co., Ltd. | 1,113,433,044.51 | 1,113,433,044.51 | ||
| Qingdao Haier Air Conditioner General Corp., Ltd. | 220,636,306.02 | 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 Conditioner Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Hefei Haier Refrigerator Co., Ltd. | 49,000,000.00 | 49,000,000.00 | ||
| Qingdao Haier Whole Set Home Appliances Services Co., Ltd. | 118,000,000.00 | 118,000,000.00 | ||
| Chongqing Haier Refrigeration | 91,750,000.00 | 91,750,00 |
| Appliance Co., Ltd. | 0.00 | |||
| Shanghai Haier Zhongzhi Fang Chuang Ke Space Management Co., Ltd. | 2,000,000.00 | 2,000,000.00 | ||
| Haier COSMOPlat IOT Ecosystem Technology Co., Ltd. | 897,454,010.03 | 897,454,010.03 | ||
| Qingdao Haier Special Refrigerating Appliance Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Haier Shareholdings (Hong Kong) Limited | 25,076,411,626.24 | 578,000,000.00 | 25,654,411,626.24 | |
| Shenyang Haier Refrigerator Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Foshan Haier Freezer Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Zhengzhou Haier Air Conditioner Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Qingdao Haidayuan Procurement Service Co., Ltd. | 20,000,000.00 | 20,000,000.00 | ||
| Qingdao Haier Intelligent Technology Development Co., Ltd. | 130,000,000.00 | 130,000,000.00 | ||
| Qingdao Haier Technology Investment Co., Ltd. | 302,105,635.00 | 25,400,000.00 | 327,505,635.00 | |
| 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 | 200,000,000.00 | 240,000,000.00 | |
| 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 | ||
| Qingdao Haier Intelligent Household Appliances Co., Ltd. | 326,400,000.00 | 326,400,000.00 | ||
| Qingdao Haidacheng Procurement Service Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Total | 32,396,253,033.48 | 903,400,000.00 | 33,299,653,033.48 | 7,100,000.00 |
(3) Long-term equity investments in associates
| Name of | Opening | Increase/decrease for the current period | Closing | Impairment |
| investee | balance | Increase/decrease for the current period | Recognized investment income under equity method | Others | balance | provisions at the end of the period |
| Wolong Electric (Jinan) Motor Co., Ltd. | 115,907,764.18 | 8,444,516.27 | 124,352,280.45 | |||
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | 434,540,103.12 | -626,240.10 | 433,913,863.02 | |||
| Bank of Qingdao Co., Ltd. | 963,844,234.82 | 49,311,626.39 | -6,937,413.11 | 1,006,218,448.10 | ||
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 643,056,436.86 | 34,236,531.91 | 677,292,968.77 | |||
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 395,933,487.26 | 5,297,623.12 | 401,231,110.38 | 21,000,000.00 | ||
| Qingdao Haier Multimedia Co., Ltd. | 432,386,801.25 | -42,017,109.03 | 390,369,692.22 | 48,300,000.00 | ||
| Qingdao HBIS New Material Technology Co., Ltd. | 260,958,509.23 | 8,645,979.45 | 269,604,488.68 | |||
| Total | 3,246,627,336.72 | - | 63,292,928.01 | -6,937,413.11 | 3,302,982,851.62 | 69,300,000.00 |
4. Operating revenue and operating cost
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Primary business | 4,971,571,357.13 | 4,334,933,560.26 | 1,243,167,506.32 | 873,770,520.48 |
| Other business | 71,145,742.55 | 63,477,221.29 | 87,701,868.31 | 76,612,012.84 |
| Total | 5,042,717,099.68 | 4,398,410,781.55 | 1,330,869,374.63 | 950,382,533.32 |
5. Investment income
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Investment income from long-term equity investments accounted for using cost method | 173,411,284.52 | 158,604,089.57 |
| Investment income from long-term equity investment accounted for using equity method | 63,292,928.01 | 64,297,967.85 |
| Investment income generated from disposal of long-term equity investment | ||
| Income from wealth management products | 9,270,527.84 | 22,666,056.16 |
| Investment income from investment in other equity instrument during the holding period | ||
| Total | 245,974,740.37 | 245,568,113.58 |
XIX. Approval of financial report
This financial report was approved by the board of directors of the Company for reporting on 28August 2020.XX. Supplementary Information
1. Basic earnings per share and diluted earnings per share
| Items | Amount for the current period | Amount for the previous period |
| Weighted average return rate on net assets | Earnings per share (RMB) | Weighted average return rate 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 Parent Company | 5.68% | 0.423 | 0.413 | 11.99% | 0.794 | 0.764 |
| Net profit attributable to ordinary shareholders of the Parent Company after deduction of non-recurring profit or loss | 5.25% | 0.391 | 0.380 | 11.22% | 0.739 | 0.710 |
2. Non-recurring profit or loss
| Items | Amount for the current period | Amount for the previous period |
| Net profit attributable to ordinary shareholders of the Parent Company | 2,780,800,712.72 | 5,058,082,964.47 |
| Less: non-recurring profit or loss | 211,360,215.13 | 464,726,732.93 |
| Net profit attributable to ordinary shareholders of the Parent Company after deduction of non-recurring profit or loss | 2,569,440,497.59 | 4,593,356,231.54 |
Details of non-recurring profit or loss for the current period
| Non-recurring profit or loss items | Amount for the current period |
| Profit or loss from disposal of non-current assets | -11,377,076.09 |
| Profit from disposal of long-term equity investments | -199,825.65 |
| 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 | 390,801,680.26 |
| Gains from the costs of investment in the acquisition of subsidiaries, associated companies and joint ventures being lower than the share of the fair value of the investee's identifiable net assets | |
| Profit or loss from fair value changes of financial assets/liabilities held for trading, as well as investment gains arising from disposal of financial assets/liabilities held for trading and financial assets available-for-sale, except the effective hedging related to the normal operations of the Company | -16,026,029.49 |
| Other non-operating income and expenses except the aforementioned items | 10,350,602.15 |
| Impact on minority interest | -130,081,198.31 |
| Impact on income tax | -32,107,937.74 |
| Impact on profit from business combination under common control | |
| Total | 211,360,215.13 |
1. Difference on figures by domestic and foreign accounting standards
□Applicable √Not Applicable
SECTION XII DOCUMENTS AVAILABLE FOR INSPECTION
| Documents Available for Inspection | I. 2020 Interim Report of Haier Smart Home Co., Ltd. with signature of the legal representative. |
| II. Financial statements with signatures or seals of the person in charge of the entity, chief accountant and person in charge of accounting department. | |
| III. All documents publicly disclosed on China Securities Journal, Shanghai Securities News, Securities Daily, Securities Times and the website of Shanghai Stock Exchange (www.sse.com.cn) during the reporting period. |
Chairman of the Board: Liang HaishanDate of approval for publication by the Board: 28 August 2020