Company Code: 600690.SH, 690D.DE Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2024 Interim Report
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of Haier Smart Home Co., Ltd. (the “Company”) are individually and collectivelyresponsible for the content set out therein and hereby assure that the content set out in theinterim report is true, accurate and complete, and free from any false record, misleadingrepresentation or material omission.II. All directors have attended the Board meetings.III. The interim report is unaudited.IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the interim report is true, accurate and complete.V. Proposal of profit distribution or proposal of converting capital reserves into share capital forthis reporting period resolved and passed by the BoardNot ApplicableVI. 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 other related parties fornon-operational purposesNoVIII. Is there any provision of external guarantee in violation of prescribed decision-making
proceduresNoIX. Are there more than half of the Directors could not warrant the truthfulness, accuracy andcompleteness of the interim report disclosed by the CompanyNoX. Important risk warnings
For the possible risks which the Company may encounter, please refer to the relevant information setout in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.
Important Notice
XI. Others
Applicable √ Not Applicable
Chairman of the Board: LI Huagang
Haier Smart Home Co., Ltd
27 August 2024
Contents
SECTION I— DEFINITIONSSECTION II—GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORSSECTION III— MANAGEMENT DISCUSSION AND ANALYSISSECTION IV— CORPORATE GOVERNANCESECTION V— ENVIRONMENTAL AND SOCIAL RESPONSIBILITIESSECTION VI— SIGNIFICANT ISSUESSECTION VII—CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERSSECTION VIII— RELEVANT INFORMATION OF PREFERRED SHARESSECTION IX— RELEVANT INFORMATION OF CORPORATE BONDSSECTION X— FINANCIAL REPORT
Documents Availablefor Inspection
I.2024 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.
Section I Definitions
Unless otherwise stated in context, the following terms should have the following meanings in this report:
DEFINITION OF FREQUENTLY USED TERMS
CSRCChina Securities Regulatory CommissionSSEShanghai Stock ExchangeThe Company, Haier SmartHome
Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”,and the original short name is “Qingdao Haier”Four Major SecuritiesNewspapers
China Securities Journal, Shanghai Securities News, Securities Times,Securities Daily
Haier Electronics, 1169Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong,
stock code: 01169.HK), a subsidiary as accounted for in the consolidatedstatement of the Company. Haier Electronics has been privatized by way of Hshares issuance on 23 December 2020 and became a wholly ownedsubsidiary of the Company since then.GE AppliancesHousehold appliances assets and business of General Electric Group, which
are currently owned by the Company.FPAFisher & Paykel Appliances Holdings Limited (Chinese Name: ) was
established in 1934 and is known as the national appliance brand of New
Zealand, the global top-level kitchen appliance brand and the famous luxury
brand of the world. It has products including ventilator, gas stove, oven,
dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer
and etc. Its business covers 50 countries/regions across the world. FPA is
wholly-owned subsidiary of the Company.CandyCandy Group (Candy S.p.A) is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has been
committed to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has been
prestigious in the global market with users all over the world via its various
self-owned professional household appliance brands. In January 2019, Candy
became a wholly-owned subsidiary of the Company.CMMChina Market Monitor Co., Ltd., as an authoritative market research institute
in Chinese home appliances area, was established in 1994 and has been
focusing on research of retail sales in China consumption market ever since.
Section I Definitions
EuromonitorEuromonitor, established in 1972, is the leading strategic market information
supplier and has over 40-years of experience in respect of publishing marketreport, commercial reference data and on-line database. They create data andanalysis on thousands of products and services around the world.GfkGfk Group, the world’s leading market research company. After a long period
of development and accumulation, Gfk Group’s global market researchbusiness covers consumer durables research, consumer research, mediaresearch, healthcare market research and special studies.All View CloudAll View Cloud (AVC) is a big data integrated solution provider to the smart
home field, providing enterprises with big data information services, regulardata information services and special data services.IECThe International Electrotechnical Commission. Founded in 1906, it is the
world’s first organization for the preparation and publication of internationalelectrotechnical standardization and is responsible for internationalstandardization for electrical engineering and electronic engineering. The goalsof the commission include: to effectively meet the needs of the global market;to ensure that the standards and conformity assessment programs areapplied globally in a prioritized manner and to the greatest extent; to assessand improve the quality of products and services involved in its standards; tocreate conditions for the common use of complicated systems; to improve theeffectiveness of the industrialization process; to improve human health andsafety, and to protect the environment.IEEEThe Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers, iscurrently the largest non-profit professional technology society in the world. Itis committed to the development and research of electrical, electronic,computer engineering and science-related fields, and has now developed intoan international academic organization with great influence in terms of thefields of space, computer, telecommunications, biomedicine, power andconsumer electronics.Model ofRendanheyi
(人單合一)
The concept of “Achieving win-win via Rendanheyi (人單合一)” is theguarantee of Haier’s sustainable operation and the driving force of theCompany featuring a self-motivated and empowering corporate culture. “Ren”is an employee who has the spirit of entrepreneurship and innovation; “Dan”is to create value for users. The “Rendanheyi (人單合一)” management modelencourages employees to create value for users with an entrepreneurialmindset, and to achieve self-value in line with the those of the Company andits shareholders.
Section II General Information of theCompany and Key Financial Indicators
I. INFORMATION OF THE COMPANY
Chinese name海尔智家股份有限公司Chinese short name海爾智家English nameHaier Smart Home Co., Ltd.English short nameHaier Smart HomeLegal representativeLi Huagang
II. CONTACT PERSON AND CONTACT INFORMATION
Secretary tothe Board
Representative ofsecurities affairs
Company Secretary(D/H shares)OthersNameLiu XiaomeiLiu TaoNg Chi Yin, TrevorGlobal Customer
Service HotlineAddressDepartment of
Securities of HaierSmart Home Co.,Ltd. Haier Scienceand TechnologyInnovationEcological Park,No. 1 Haier Road,Qingdao City
Department of
Securities of HaierSmart Home Co.,Ltd. Haier Scienceand TechnologyInnovationEcological Park,No. 1 Haier Road,Qingdao City
Rm 1908, 19/F,
Harbour Centre,25 Harbour Road,Wan Chai,Hong Kong
/
Tel0532-889316700532-88931670+852 2169 00004006 999 999Fax0532-889316890532-88931689+852 2169 0880/Emailfinance@haier.comfinance@haier.comir@haier.hk/
Section II General Information of the Company and Key Financial Indicators
III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION
Registered addressHaier Park, Laoshan District, Qingdao CityHistorical change of theregistered address
Prior to the Company’s listing in 1993, the registered address of theCompany was No.165 Xiaobaigan Road, Sifang District, Qingdao City,Shandong Province, and has changed to the current address since1994, during which the address name was adjusted in line with thechange of name of the industrial park but the actual site remainsunchangedBusiness addressHaier Science and Technology Innovation Ecological Park,
Laoshan District, Qingdao CityPostal code of the
business address
266101Websitehttps://smart-home.haier.com/cn/Email9999@haier.comQuery index for anychanges during thereporting period
Not applicableIV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE ANDDEPOSITDesignated newspaper for
information disclosure
Shanghai Securities News, Securities Times, China Securities Journal,Securities DailyWebsite for publishinginterim report
www.sse.com.cnOther websites for interim
report disclosure
https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,https://www.hkexnews.hkDeposit place of interimreport
Department of Securities of Haier Smart Home Co., Ltd.
Haier Science and Technology Innovation Ecological Park,No. 1 Haier Road, Qingdao CityQuery index for anychanges during thereporting period
Not applicableV. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Type of Shares
Stock Exchange ofShares Listed
Stock ShortNameStock Code
Stock ShortName BeforeVariationA shareShanghai Stock
Exchange
600690D shareFrankfurt Stock
Exchange
Haier SmartHome
690DQingdao HaierH ShareHong Kong Stock
Exchange
Haier SmartHome
6690/
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION
Applicable √ Not ApplicableVII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THECOMPANY (I) Key accounting data
Unit and Currency: RMBThe correspondingperiod of last year
Key accounting data
For thereporting period(January-June)After adjustment
Beforeadjustment
Increase/decrease for thereporting periodcompared with
thecorrespondingperiod of last
year (%)Operating revenue135,622,549,121.01131,628,595,912.05131,626,581,506.563.03Net profit attributable to shareholders of the
listed Company10,420,218,389.228,962,851,469.468,963,875,999.8416.26Net profit after deduction of non-recurringprofit or loss attributable to shareholdersof the listed Company10,160,504,902.388,603,977,764.588,603,977,764.5818.09Net cash flows from operating activities7,818,257,937.266,790,021,534.626,790,530,462.5415.14
As at the end of reportingperiod of last year
As at the end of
the reporting
periodAfter adjustment
Beforeadjustment
Increase/decrease as atthe end of thereporting period
compared withthat of last year
(%)Net assets attributable to shareholders ofthe listed Company105,734,300,351.38103,514,153,535.0496,681,175,780.712.14Total assets262,251,245,011.55253,379,859,977.97246,302,105,777.513.50
Section II General Information of the Company and Key Financial Indicators
(II) Key financial indicators
The corresponding periodof last year
Key financial indicators
For thereporting period
(January-June)
Afteradjustment
Beforeadjustment
Increase/decrease for thereporting periodcompared with
thecorrespondingperiod of last
year (%)Basic earnings per share (RMB/share)1.130.960.9717.71Diluted earnings per share (RMB/share)1.120.960.9616.67Basic earnings per share after deducting non-recurring profit or loss (RMB/share)1.100.930.9318.28Weighted average return on net assets (%)9.679.169.160.51Weighted average return on net assets afterdeducting non-recurring profit or loss (%)9.438.808.800.63Explanation of the key accounting data and financial indicators of the Company Applicable √ Not ApplicableVIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS
√ Applicable Not Applicable
(I) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with InternationalAccounting Standards and Chinese Accounting Standards Applicable √ Not ApplicableThere is no difference between the net profit and net assets attributable to shareholders of thelisted company presented in the consolidated financial statements as disclosed in accordancewith International Accounting Standards and Chinese Accounting Standards by the Company.
Section II General Information of the Company and Key Financial Indicators
(II) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with overseasaccounting standards and Chinese Accounting Standards Applicable √ Not ApplicableApart from the financial statements prepared in accordance with International AccountingStandards, the Company has not prepared financial statements in accordance with otheroverseas accounting standards. (III) Explanation on difference in domestic and overseas accounting standards.
Applicable √ Not ApplicableIX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT
√ Applicable Not Applicable
Unit and Currency: RMBNon-recurring profit and loss itemsAmountProfit or loss from disposal of non-current assets, including the write-off ofprovision for asset impairment-24,802,715.11Government subsidies included in current profit or loss, except for governmentsubsidies that are closely related to the Company’s normal business operations,conformed to requirements of state policies and granted according to specificcriteria, and have a sustained impact on the Company’s profit or loss373,800,184.84Profit or loss arising from changes in fair value of financial assets and financial
liabilities held by non-financial entities, and profit or loss arising from disposalof financial assets and financial liabilities, except for effective hedging activitiesrelated to the Company’s normal business operations-29,489,597.82Other non-operating income and expenses except the aforementioned items-3,829,918.04Less: Effect of income tax46,231,142.38
Effect of minority equity interest (After Tax)9,733,324.65Total259,713,486.84For the Company’s recognition of items that are not listed in the “Explanatory Announcement onInformation Disclosure for Companies Offering Their Securities to the Public No.1—Non-recurringProfit or Loss” as non-recurring profit or loss items and the amount of which is significant, and fornon-recurring profit or loss items as illustrated in the “Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to the Public No.1—Non-recurring Profit or Loss”designated as recurring profit or loss items, reasons shall be specified.
Applicable √ Not ApplicableX. OTHERS
Applicable √ Not Applicable
Section III Management Discussion and
Analysis
I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESAND ITS MAJOR BUSINESS DURING THE REPORTING PERIODFounded in 1984, the Company is committed to being an enterprise of the times. Through relentlessinnovation and iterations, we seize opportunities in the industry by continuously launching innovativeproducts that steer market development. After more than 30 years, the Company has become a globalleader in the major home appliance industry, as well as a pioneer in global smart home solutions.? Global leader of the major home appliance industry: According to data from Euromonitor—anauthoritative market researcher, the Company ranked first in terms of sales volume in globalmajor appliance market for 15 consecutive years. The Company has a global portfolio of brands,including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to2023, Haier brand refrigerators and washing machines ranked first among global major homeappliance brands in sales volume for 16 and 15 consecutive years respectively.? Pioneer of global smart home solutions: Capitalizing on our full-range home appliances products,
the Company is recognized by Euromonitor as one of the first in the industry to introduce smarthome solutions. San Yi Niao remained committed to the mission of “providing smart homeexperience for a better home”, by enhancing three major capabilities in respect of customisationcapability, delivery capability and intelligence capability, we have been dedicated to providingcustomised and specialised smart home appliance solutions for users.
Over the years, the Company has established a business layout that includes smart solutions for foodstorage and cooking, laundry, air and water, the Overseas Home Appliance and Smart HomeBusiness, and Other Business.
Section III Management Discussion and Analysis
The Company provides a full range of home appliance products and value-added services in globalmarket through Haier Smart Home APP and San Yi Niao APP, supplemented by our offline experiencecentres, to cater for users’ needs for different lifestyle scenarios. Smart Home Business comprisesHousehold Food Storage and Cooking Solutions, Household Laundry Management Solutions, AirSolutions (Internet of Air), and Household Water Solutions (Internet of Water).? Household Food Storage and Cooking Solutions: Through selling products such as refrigerators,
freezers, kitchen appliances in global market, as well as providing one-stop smart kitchenscenario solutions and ecosystem solutions including smart cooking and nutrition planning, theCompany fully addresses users’ need for convenient, healthy and tasteful gourmet experiences.? Household Laundry Management Solutions: Haier’s washing machine focuses on applying original
technologies to directly solve users’ pain points in home living scenarios and create newexperiences and value for users. With a product lineup of washing machines, tumble dryers, allin-one laundry machines, garment care machines, and heated drying racks, the Company hasevolved from selling individual products to providing scenario-based solutions and offering endto-end laundry care services. For example, the Zhongzihemei () three-in-one washercombines washing, drying, and fabric care functions into a single unit, and the Essence Washwashing machine reduces washing time and improves cleaning effectiveness by producing ahighly concentrated detergent solution that can quickly soak into clothes through detergent premixing and high pressure spraying.? Air Solutions (Internet of Air):
Home air conditioners: Through worldwide sales, the Company provides products such as homeair-conditioners and fresh air systems, as well as a comprehensive range of full-cycle solutionsincluding coordination of multiple air-conditioners and purifiers, adaptive air flow, air qualitymonitoring and air disinfection, thereby delivering a healthy and comfortable experience at homeand during commute that caters to the user needs in terms of air temperature, humidity andquality.Smart buildings: The Company is committed to becoming a leader in efficient, sustainable andsmart building solutions based on the state’s “carbon peaking and carbon neutrality” strategy.Focusing on the business areas of smart control, environment, energy and system integration ofbuildings, the Company provides green and smart building solutions integrating “technology +experience + space” for government and commercial buildings, railways, schools, and hospitals.? Household Water Solutions (Internet of Water): Through providing worldwide users with electricwater heaters, gas water heaters, solar water heaters, air energy heat pump water heaters, POEwater purifiers, POU water purifiers, water softening equipment, the Company offers smart watersolutions including interactions between water heaters and purifiers, and between heatingappliances and water heaters, so as to comprehensively cater to users’ needs for waterpurification, softening and heating.
Section III Management Discussion and Analysis
The Company manufactures and sells a comprehensive portfolio of home appliance products andprovides value-added services in more than 200 countries and regions, including North America,Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East and Africa.In the overseas markets, the Company has been manufacturing and selling proprietary applianceproducts catering for local users’ demands for more than 20 years. During the time, a number ofacquisitions contributed to our growth including acquisition of Haier Group Corporation’s overseaswhite goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and Southeast Asia)in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy in 2019. Thedevelopment of the Company’s overseas businesses has been fuelled by synergies among ourself-developed business and our acquired businesses.At present, the overseas business of the Company has entered a stage of promising growth, havingachieved a multi-brand, cross-product and cross-regional presence on a global basis. According toEuromonitor, the Company’s share of the global market (retail volume) for major home appliances inkey regions market share in 2023 is as follows: ranked first in Asia in terms of retail volume, with amarket share of 26%; ranked second in America, with a market share of 15.8%; ranked first inAustralia and New Zealand, with a market share of 14.6%. The Company ranked fourth in Europe witha market share of 8.8%.Other BusinessesBuilding on our established smart home businesses, the Company has also developed small homeappliances, cleaning robots, channel distribution and other businesses. In particular, the small homeappliance business primarily involves small home appliances designed by the Company, produced byoutsourced third-party manufacturers and sold under the Company’s brands, which serve to enrich oursmart home solutions product mix. The channel distribution business primarily offers distributionservices for products such as televisions and user electronics for the Haier Group or third-partybrands, which leverages the Company’s sales network.During the reporting period, the Company was once again listed among the Top 500 World’sCompanies and named again as the 2024 World’s Most Admired Companies by the Fortune Magazine.We are the only company being selected in Europe and Asia in the home appliances industry and arethe only selected company incorporated outside the US. Meanwhile, the Company is also the world’sonly Internet-of-Things (IoT) ecosystem brand being named again as BrandZ
TMTop 100 Most ValuableGlobal Brands in 2024. At the same time, the Company was named again among Fortune’s ChinaESG Impact list. The Company’s ESG effort has also been recognized by external rating agencies,receiving an MSCI ESG rating of A, which is at leading levels within home appliance sector in China.Haier Smart Home was selected into the three major ESG indices of the Hang Seng Index, includingthe HSI ESG Enhanced Index, the HSI ESG Enhanced Select Index and the HSCEI ESG EnhancedIndex.
Section III Management Discussion and Analysis
II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTINGPERIOD
√ Applicable Not Applicable
The Company has established a solid strategic presence and competitive advantage in global market.In China’s major home appliance market, the Company has long maintained a leading position acrossall product categories. According to CMM’s report, the Company has established a continued leadingmarket position in key major home appliance categories during the reporting period. In overseasmarkets, the Company has adhered to its high-end brand creation strategy, building capacity to createleading sustainable growth, which has continuously improved its market share. Building on thisfoundation, the Company will further consolidate its leadership position in the industry by leveragingintegrated synergies of its global unified platforms, through efficiency transformation driven bydigitalization, and by leveraging its technological strength and innovative capabilities. As cornerstone forsustainable development, our “Rendanheyi ()” Model also provided management guidance tothe Company and enabled us to replicate successful experiences. It is believed that the followingadvantages will help the Company to continue to strengthen its leading position:
(i) Building up excellent high-end brand operation capabilities and creating a well-recognizedhigh-end brand through forward-looking layout and long-term investment in the globalmarket to achieve a leading market position.To better meet the need of consumers in pursuit of quality life, the Company has started todevelop the high-end brand Casarte in the Chinese market more than 10 years ago. The creationof high-end brands requires not only focus, experience and patience, but also continuousinnovation of technological standards and differentiated service capabilities to fulfil user demandfor high-quality experiences. The Casarte brand combined the Company’s global technologicalstrengths, product development capabilities and manufacturing craftsmanship, as well as privilegemarketing and differentiation services, which has won the trust of users in China’s high-endmarket. According to data from CMM, the Casarte brand has assumed a definitive leadingposition in China’s high-end major home appliance market in the first half of 2024, ranking firstin the retail sales of refrigerator, washing machine and air conditioner categories in the high-endsegment. Specifically, in terms of offline retail sales, shares of the Casarte brand of airconditioners reached 32% in the market with product priced above RMB15,000 in China, while itsshare of refrigerators and drum washing machines priced above RMB10,000 in the China’smarket reached 39.5% and 82.3% respectively.In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. In collaboration with the Qingdao headquarters, we enhanced our high-end brandprofile through launching leading products including Combo washers and dryers. Through thecreation of luxurious, customizable and smart technology-enabled user experience, our high-endbrands Monogram, Café and GE Profile have grown rapidly.
Section III Management Discussion and Analysis
(ii) Providing users with specialised and customised smart household solutions through the
San Yi Niao brand with cross-household design focusing on scenario-based experienceto carry out the mission of “providing smart home experience for a better home”.As users continued to demand for higher living quality, with its focus on the mission of“providing smart home experience for a better home”, San Yi Niao has been dedicated toproviding customised and specialised smart home appliance solutions for users, strengthening itsleadership around “customisation capabilities, delivery capabilities and intelligence capabilities”. Interms of customisation capabilities, San Yi Niao promotes one-stop customisation of the wholeprocess through the digital middle platform to meet the personalized needs of users; in terms ofdelivery capabilities, San Yi Niao has established mature whole-process delivery standards, whichcan improve user experience through integrated delivery tools for smart home appliances. Interms of smart capabilities, San Yi Niao relies on Haier Smart Home’s main platform to achievedeep interconnection of the whole household, providing more boundless interaction and moreactive services.(iii) Extensive and solid global presence with localized operational capabilityIn respect of overseas markets, the Company seeks overseas expansion of its own brands aswell as synergies with acquired brands to develop overseas markets. Such business strategy hasguided the Company to establish R&D, manufacturing and marketing three-in-one structureacross multiple brands, products and regions, as well as the model of self-development,interconnection and synergized operation.The Company’s extensive global presence depends on its localized business teams as well as itsflexible and autonomous management mechanisms established in various overseas markets,which have enabled the Company to gain rapid insights and respond swiftly to local userdemands. The Company also proactively integrates into local markets and cultures and hasestablished a corporate image that is recognized by local communities in the overseas regionswhere the Company operates.At present, the Company established 10+N innovative ecosystems, 122 manufacturing centres,and 108 marketing centres around the world, and achieved a coverage of nearly 230,000 pointsof sales in global markets.(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiersThrough organic growth and acquisitions, the Company has formed seven brand clusters,including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To addressthe needs of users from different tiers in various markets around the world, the Company hasadopted a differentiated multi-brand strategy in different regions that centred around users, toachieve an extensive and in-depth user coverage. For example, in the Chinese market: the threebrands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream and nichemarket groups respectively; in the U.S. market, the six major brands such as Monogram, Café,GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end, mid-rangeand low-end markets, thereby meeting the preferences and needs of different types of users.
Section III Management Discussion and Analysis
(v) Cross-border acquisition and synergy realisation capabilitiesThe Company has an excellent track record of acquisition and integration. The Company hasacquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliancebusiness of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (whichhas been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all, the Company implements the “Rendanheyi ()” Model in theacquired companies, which is a value-added sharing mechanism for the whole-process teamunder a common goal. Such model can motivate the acquired companies and their employeesand enable them to generate more value. Secondly, the Company made use of its globalplatform to empower the acquired companies in terms of strategic planning, R&D andprocurement in order to enhance their competitiveness. Thirdly, the Company’s open andinclusive corporate culture can support the acquired companies in establishing a flexible andautonomous management mechanism, which can easily earn recognition from the acquiredcompanies and is conducive to the promotion of integration.
(vi) Comprehensive and in-depth global collaborations and empowermentThe Company has made full use of its global collaborative platform, as well as its integratedfunctions of R&D, product development, procurement, supply chain, sales and brand marketing.It was able to share and expand development experience to various markets around the world.By strengthening the synergies among its global businesses, the Company has created a strongdriving force for its future development.? Global collaborative R&D: The Company has a global collaborative R&D system and has
established global technology R&D mechanisms to share common modules, utilize commontechnologies, and share patents within the scope of compliance. For example, theCompany’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams todevelop the H20 spray technology, which has been applied to freestanding and built-indishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening theCompany’s product leadership.? Global collaborative product development: The Company has established a global product
development mechanism to facilitate regional collaboration and supplementation acrossproduct categories. For example, the R&D teams in South Asia and China embarked on a10-month collaboration, breaking away from the traditional product development model byinnovating on team organisation, quality control, product testing and cost control leveragingcomplementary local resources, in order to develop the HRT-683 refrigerator which hasbecome a mainstream high-end product in the local market.
Section III Management Discussion and Analysis
? Global collaborative procurement: The Company has established a global procurement
committee to coordinate procurement activities. The committee has built a digital sourcingplatform that brought together partners across industries and regions to develop anautonomous and controlled global supply chain ecosystem. The committee also created aglobal database of preferred suppliers and materials to achieve cost reduction byaggregating resources at the Company level. By unifying procurement rules and processes,the Company established a standardised operating system with differentiated procurementstrategies to enhance efficiency while lowering risks. We have also developed a Companylevel digital procurement platform to enhance shared capabilities through connecting“materials, businesses, people and mechanisms” to the platform, thereby improving theresilience of our global supply chain.? Global collaborative supply chain: The Company has built an end-to-end digital managementsystem for the global supply chain that spanned from marketing to suppliers to productionand logistics. Using intelligent algorithms, the system enabled real-time flexible deploymentof production capacity, and factories across the globe could share and develop smartmanufacturing technologies to boost competitiveness.? Global collaborative marketing and brand promotion: The Company operates a multi-levelbrand portfolio with collaborative brand promotions. The Company also promotes andintroduces successful marketing strategies among regional markets. For example, theCompany successfully replicated its sales and marketing model of China’s third and fourthtier markets to markets such as India, Pakistan, and Thailand, strengthening the company’sbrand image and regional market competitiveness.(vii) Industry-leading R&D and technological capabilities
Haier Smart Home delves into technological innovation to expedite the development ofinnovation-driven productivity that aims for high-end, smart and green upgrade. Leveraging onour industry-leading and comprehensive R&D presence, we constantly provide global users withhome appliances that meet their needs and customise their smart and convenient way of living,thus enriching users’ life experience as well as cementing our leading position in high-endbrands, scenario brands and ecosystem brands.
Section III Management Discussion and Analysis
? Leadership in original technologies:
In 2024, Haier Smart Home continued to innovate with a user-oriented approach and hasproduced a series of scientific and technological innovations. It developed thelow-temperature intelligent unmanned retail technology, promoted the market-orientedoperation and management of frozen products, led the intelligent unmanned retail industry,and promoted the comprehensive application of refrigerated intelligent unmanned retailequipment. In view of the problems of elution and drying, such as unclean rinsing, highnoise of dehydration vibration, and accumulation of linen scraps in the air duct, we haveachieved breakthroughs in the research on elution and drying performance, with rinsingcapacity increasing by 7% and developing low vibration and low noise washing machines,so as to achieve the effect of maintaining efficient drying for a long time. The industry’s firstthermal comfort control technology based on sleep staging has established the thermalcomfort equation (SPMV equation) based on sleep process to establish the relationshipbetween sleep and environmental parameters, filling the gap in the industry where there isonly the thermal sensation of the waking state but a lack of thermal comfort environmentalparameters in the sleep process.? Certification from authorities:
For the first half of 2024, the Company received a total of 17 State Science andTechnology Progress Award, more than any other company in the industry. The Companywon the Disruptive Technology Innovation Competition of the Ministry of Science andTechnology for two consecutive years, the highest accolade in the industry.? Leadership in patent quality:
For the first half of 2024, Haier Smart Home has accumulated more than 109,000 patentsapplications globally, including more than 70,000 invention patents. The Company alsoaccumulated 12 state patent gold awards, ranking first in the domestic market.In the ‘Global Smart Home Invention Patent Ranking’ in the first half of 2024, Haier SmartHome ranked first in the world for the eleventh consecutive times with 3,109 publishedpatent applications.? Leadership in international standards:
For the first half of 2024, Haier Smart Home has cumulatively led and participated in thedrafting of 100 international standards and 708 state/industrial standards. We are the onlycompany in the industry to have participated in smart home standards from internationalorganizations including the IEC, ISO, IEEE, OCF and Matter. We are also the onlyenterprise in the world to serve on both the IEC Board and the IEC Market Strategy Board,which have enabled the Company to stay actively involved in the formulation of internationalstandards.? Leadership in experience design:
Haier won over 600 accolades, including international design awards such as the GermanIF Design Award and the Red Dot Design Award. The Company won six internationaldesign gold awards and won 3 China Excellent Industrial Design Gold Awards from theMinistry of Industry and Information Technology, which is the only enterprise in China thathave earned three consecutive gold awards.
Section III Management Discussion and Analysis
(viii) Sustainability
Global ESG governance structure: Haier Smart Home has established a global ESGgovernance structure, including the ESG Committee of the Board of Directors, the ESGGlobal Executive Office, and the Global ESG Executive Working Group, which providesorganisational support for the in-depth practice of ESG.Green development and low-carbon operation: Haier Smart Home has formulated the “6Green” strategy of green management throughout the entire life cycle, which includes“green design, green manufacturing, green marketing, green recycling, green disposal, andgreen procurement”, and promotes green actions throughout the entire life cycle. HaierSmart Home has integrated low-carbon, recycling, energy saving and emission reductioninto its daily operations to promote green upgrading of the industry.Social responsibility and charity work: Haier Smart Home actively participates in public welfareprojects such as the Hope Project, rural revitalisation, and emergency relief on a globalscale, and continues to give back to society through donations and volunteer services.Leading ESG rating: Haier Smart Home has the leading rating among its peers in China inrespect of the ESG ratings issued by three major organizations, namely CSI, MSCI andWind, which demonstrates its excellent performance in environmental, social responsibilityand corporate governance.(ix) Staying committed to the principle of ‘value of people comes first’
‘Value of people comes first’ has always been a guiding principle for Haier’s development. Fromthe autonomous operation team at the start of the venture to the current “Rendanheyi ()” model, Haier encourages every employee to maximize their own values while creating valuesfor users. In Haier’s “Rendanheyi ()” model, ‘Ren’ refers to creators; ‘Dan’ refers to uservalue; ‘Heyi’ refers to the integration of values realized by employees and the values created forusers. ‘Value of people comes first’ is the highest purpose of the “Rendanheyi ()”model.Haier Smart Home adheres to the values of recognizing users’ demand as priority and denyingour own perceptions and is committed to the ‘two creative spirits’ of entrepreneurship andinnovation. We turned employees into creators, implementers into entrepreneurs, and transformedenterprises into open ecosystem platforms, which have supported the Company to become aglobal leader of smart home in the Internet of Things era.
III. DISCUSSION AND ANALYSIS ON OPERATIONS
Part 1: Discussion and analysis on overall operations
During the reporting period, in response to changing environment, the Company advanced end-to-enddigital transformation, improved user experience and operational efficiency, to improve profitability.
Section III Management Discussion and Analysis
In the first half of 2024, the Company recorded sales revenue of RMB135.623 billion, a 3.0% increasecompared to the same period in 2023. The following factors are contributing to revenue changes.In domestic markets, despite weak momentum in the white goods sector, particularly against a 14.5%drop in air conditioner retail sales, the Company managed to grew revenue by 2.3% in the first halfthis year, leveraging multi-brand product lineup and innovative new media marketing strategies.The Company’s revenue from overseas markets grew by 3.7% in the first half of the year. Indeveloped markets like the U.S. and Europe, where inflation suppressed demand, the Companyincreased market share by launching high-end products, optimizing supply chain, and improvingoperational efficiency. In rapidly growing South Asia, Southeast Asia, and the Middle East & Africa, theCompany strengthened supply chain and distribution network, enhanced high-end product lineup andincreased price indices to achieve 9.9% revenues growth in South Asia, 12.4% in Southeast Asia and
26.8% in Middle East & Africa in the first half this year.
In the first half of 2024, the net profit attributable to the shareholders of the parent company wasRMB10.42 billion, representing a 16.3% increase from the same period in 2023. The net profitattributable to the shareholders of the parent company after deducting non-recurring profit or lossamounted to RMB10.161 billion, representing a growth of 18.1% compared to the same period in2023.In the first half of 2024, the Company’s gross profit margin was 30.6%, up 0.2 percentage pointscompared to the same period in 2023, leveraging digitalizing procurement, R&D, and manufacturing tocoordinate production and sales management systems in domestic market; while we improved costcompetitiveness with digital procurement platform and enhanced utilization through global supply chaincollaboration.The selling expense ratio in the first half of 2024 was 13.8%, an improvement of 0.5 percentage pointscompared to the same period in 2023, leveraging digitally enhanced efficiency in marketing resourceallocation, logistics network and warehouse management.The administrative expense ratio in the first half of 2024 was 3.8%, an improvement of 0.3 percentagepoints compared to the same period in 2023, leveraging streamlining business processes, andenhancing organizational efficiency.The financial expense ratio in the first half of 2024 was 0.04% (“+” as expenses, “—” as income), anincrease of 0.05 percentage points compared to the same period in 2023 as higher interest incomefrom improved capital management could not offset the increase in interest payment.The Company’s net cash flow from operating activities in the first half of 2024 was RMB7.818 billion,an increase of RMB1.028 billion year-on-year, achieved from increased operating profit and enhancedoperational efficiency during the period.
Section III Management Discussion and Analysis
I. Household Food Storage and Cooking Solutions(I) Refrigeration businessIn the first half of 2024, the Company maintained technological leadership and acceleratedoverseas high-end brand transformation to improve product competitiveness and marketshare. During the reporting period, the Company’s global refrigerator revenue reachedRMB41.128 billion, a year-on-year increase of 1.8%.According to Gfk, the Company consolidated leadership with offline retail share of 44.1%,and an online retail share of 39% in China; the Company’s retail volume share also went upby 0.4 percentage points reaching 22.9% overseas.R&DThe Company leveraged global technology platforms to accelerate development in integratedappliances & furniture solutions, freshness preservation, and ice-making. MSA oxygen controlpreservation was also made available on more products, to offer user better value for theirpurchase. In response to users’ needs for integrated home appliances and furnishings Casartelaunched built-in Ultra-realm () 600/601 refrigerator which contributed 98% growth insales volume of seamless built-in units during the first half of the year.Domestic marketThe Company focused on creating optimal user experiences by leveraging multi-brandportfolio of Haier, Casarte and Leader, catering to specific user needs with distinct valuepropositions. Haier refrigerators concentrated on full-space freshness preservationtechnology and smart features, introduced the world’s first full-space smart preservationcompartment. This innovation combined freshness preservation technology with smartinteraction for superior food storage and management. Casarte refrigerators pioneeredhigh-end integration of home appliances and furnishings by expanding its built-in range.Leader attracted trendy users through performance and aesthetic design, new launches inthe first half including Little European style () series, featuring light green colour,rounded exterior and drawer-style door design.
Overseas markets
The Company remained committed to premium building by introducing high-end productstailored to local demands overseas. In Western European market, the Companystrengthened leading position in multi-door, large-capacity units and while makingbreakthrough in side-by-side refrigerators, helping Haier brand price index increase to 147.In South Asian market, the Company tailored high-end products to meet local needs,achieving a year-on-year volume growth of 50%. In the Australia, Fisher & Paykelconcentrated on ultra-high-end home appliances integrated with home furnishings, with abrand price index reaching 200, while Haier brand targeted mid to high-end mainstreammarket, to maintain leadership while elevating its price index to 108.
Section III Management Discussion and Analysis
(II) Kitchen appliance business
In the first half of 2024, the kitchen appliance business focused on iterating productplatforms, expanding product lineup, and enhancing presence in home improvementchannels to achieve a global revenue of RMB20.275 billion, a year-on-year increase of
0.3%.
According to Gfk, in China, the Company’s ranked the third in the offline market with 8.6%retail share, up 0.2 percentage points year-on-year while online retail share went up by 0.7percentage reaching 5.1%. Casarte ovens ranked first in the price segment aboveRMB11,000. In the North America, built-in and microwave products continued to gainmarket share against headwind. In Europe, Haier continued to grow and ranked amongstTop 4 despite industry downtown.Domestic marketThe Company further expanded the kitchen appliance lineup and upgraded productcompetitiveness: Casarte launched a seamless built-in smart lift range hood, an ultra-thinbuilt-in gas stove, and a steam oven featuring waterless fresh steam and moisture-controlroasting technology, all of which contributed to the brand’s 0.8 percentage points sharegain in high-end market.The Company enhanced presence in home improvement channels by developingpartnerships with cabinet manufacturers and interior designing firms. The Companymanaged to grow domestic revenue despite challenging market environment by promotingcontent marketing and highlighting local renovations projects to stimulate replacementdemand and capture opportunities from kitchen remodelling projects.Overseas marketsIn North American market, the Company successfully launched a new generation ofdishwashers featuring stainless steel interiors, which ensured durability, high efficiency, withexcellent cleaning and drainage performance. Café’s new-generation stainless steeldishwasher earned the “2024 Great Design Awards” by the renowned Architectural Digestfor its exceptional flexibility and customization options. The Company launched a newmodel of freestanding ovens and committed USD 118 million to upgrade production line ofnew SKUs.II. Household Laundry Solutions
In the first half of 2024, the washing machine business implemented innovation R&D,omni-channel marketing, and overall cost optimization to achieve a global revenue of RMB29.737billion, representing a 5.0% increase year-on-year. According to Gfk, in China, the Companycontinued to lead the industry with 46.5% offline retail share and 38.1% online retail share. TheCompany remained dominant in the high-end market, with a share of 83% in the price segmentabove RMB10,000. According to Euromonitor, the Company achieved top market share in 10countries, including Australia, New Zealand, and Vietnam.
Section III Management Discussion and Analysis
Domestic marketThe Company consistently delivered high-quality laundry experiences to consumers. TheCompany solidify market leadership by introducing leading products such as the CasarteUltra-realm () series Utilizing advanced technologies like 3D drying assessment, wet cleaning,and quadruple filtration. The Company also increased average ticket price by offering integratedlaundry solutions while improving user engagement leveraging air wash and wet cleaning in-storedemonstration.In response to changing consumption trends, the Company adjusted Leader brand strategy,launching products that resonated with younger users to achieve rapid growth; in addition toenhancing retail capabilities offline, the Company also bolstered marketing efforts on new mediaincluding Douyin and Xiaohongshu to amplify brand influence and create a comprehensive userservice experience, successfully captured young consumers, enhanced brand awareness andimproved user recognition.Overseas marketsThe Company launched highly differentiated and competitive products, with effective retailchannel management strategies, resulting in continued market share growth. In the NorthAmerican market, heat pump COMBO washer-dryers remained best-sellers and increasedhigh-end share. In Europe, the Company launched the X11 Fresh Air series washing machines,which could replace the air inside the drum every two minutes, effectively preventing bacterialgrowth. Their energy efficiency also surpassed the European A-class energy rating by 50%. InIndia, the Company maintained high-end product strategy, actively expanded into premiumdistribution channels and improved retail traffic conversion to achieve over 30% revenue growth.III. Air SolutionsDuring the reporting period, the Company’s air solution business realized revenue of RMB29.235billion, up 3.8% year-on-year.(I) Home air conditioner businessIn the first half of 2024, the home air conditioner business actively expanded new HVACproduct lines while enhancing competitiveness in products, marketing and supply chains, toachieve global revenue growth.According to Gfk, the Company’s offline and online retail share of standing andwall-mounted units reached 17.95% and 10.4% respectively in China and ranked first inPakistan and Malaysia.
Section III Management Discussion and Analysis
R&D
The Company expanded ducted air conditioners, fresh air systems, and residential centralair conditioners, while increasing investment in energy-saving air conditioning systems andsmart IoT technologies. The Company also enhanced product quality and costcompetitiveness leveraging digital transformation and product platform strategies. In the firsthalf of the year, average individual model output increased by 10%, and componentstandardization improved by 5%. At the same time, the Company accelerated verticalsupply chain integration by commencing production at Zhengzhou compressor joint venturein April this year as well as increasing in-house component production in Hefei to improveefficiency and cost competitiveness.Domestic marketThe Company accelerated retail transformation by integrating online and offline channels,strengthening franchised stores and improving network coverage in rural areas. TheCompany implemented omnichannel marketing strategy to enhance user acquisition andconversion by promoting in-store product demonstration and creating bestsellers online. Inaddition, revenue from Leader brand grew over 40% in the first half of the year byaccelerating development online to capture younger users.Overseas marketsBenefited from long-term strategic investments in product iteration, professional channeldevelopment, and localized supply chains across South Asia and Southeast Asia, theCompany seized opportunities from growing emerging countries and product upgradedemand in developed markets. In the first half of the year, overseas revenue maintainedrapid growth. During the reporting period, the Company strengthened presence in theMiddle East, Africa, and Japan by upgrading variable frequency portable systems, RV airconditioners, and Japanese split units.(II) Smart building business
The smart building business gained share in both domestic and export market byadvancing core compressor technologies, maintaining a leading edge in air and magneticlevitation, boosting in-house manufacturing of key components, and strengtheningprofessional solutions and services. According to China IOL, the Company’s domesticmarket share increased by 1.2 percentage points year-on-year to 10.5%, while exportmarket share rose by 2.8 percentage points year-on-year to 12.5%.
Section III Management Discussion and Analysis
R&DThe Company continuously iterated product platform through technology breakthroughs,leading the industry in energy saving, carbon reduction, and smart control trends. Wedeveloped a 500–1,200 cooling ton air-suspended, oil-free centrifugal chiller, whichcompleted large-capacity chiller lineup and enhanced market competitiveness.Breakthroughs in scroll compressors and large standard centrifugal compressorsstrengthened cost-competitiveness. Our new-generation IoT multi-split system providedenergy-efficient and smart solutions throughout its lifecycle, the increased domestic share ofmulti-split products in the first half of the year has boosted profitability. In the Europeanmarket, the Company addressed demand for energy-efficient buildings with heat pumpproducts using eco-friendly refrigerant R290, which featured a heating COP of up to 5.5with multiple anti-freezing functions.Domestic marketThe Company unlocked growth opportunities by strengthening county-level presence,eliminated coverage gaps and expanding network coverage. Targeting diverse applicationscenarios, such as real estate and underground transportation systems, we categorizedstrategic user groups to improve client acquisition, scenario-based solution implementation,and maintenance services, facilitating a shift from standalone HVAC products to integratedbuilding solutions. During the reporting period, the Company secured a RMB200 millioncontract with Shanghai Metro, positioning us as a leader in the rail transit industry.
Overseas marketsThe Company capitalized on our leading position in wireless multi-split and air & magneticlevitation products. By offering comprehensive solutions featuring our light commercial,multi-split, water chiller, point-of-use, heat pump, and smart control series, we catered todiverse regional, and scenario needs while establishing a professional brand image inoverseas markets. We advanced the development of integrated sales centres thatcombined user experience, product display, employee training, and sales operations toenhance our professional capabilities in design, installation, and services, and boost ourindustry reputation. In the rapidly growing global data centre sector, the Company won adata centre project in Malaysia with a scale exceeding 12,000 refrigeration tons, providingprofessional air-cooled magnetic levitation solutions for the facility.IV. Household Water Solutions
During the reporting period, the household water solution business achieved a global revenue ofRMB8.106 billion, up 6.6% year-on-year.In China, the Company launched innovative products including Casarte crystal tank series withskin-care features; while 20,000 units of brand new dual-tank heaters have been soldstrengthening Casarte’s market leadership in water heater unit priced RMB5,000- 8,000. HaierLittle Magic box with filtration, anti-bacteria, lime scale and chlorine reduction functions helpedthe Company become number one in units priced over RMB3,000.
Section III Management Discussion and Analysis
Product upgrade also contributed to over 20% overseas revenue growth. In Malaysia, over10,000 units of instant hot water units were sold, almost five times the volume sold last year. InEurope, introduction of dual-tank electrical water heaters addressed the weakness in the heatpump market. The Company also made breakthrough in developing new markets in Algeria.On 17 July 2024, the Company entered the transaction with Electrolux Group in Sweden toacquire 100% equity interest in Electrolux South Africa Proprietary Limited (“ESA”), its subsidiaryengaging in water heater business in South Africa. The acquisition is a crucial step in thestrategic development in African market. Leveraging Kwikot’s extensive HVAC channel andservice coverage, Haier will realize synergies in product and supply chain management to expandwater heater lineups and unlock potentials in solar water heaters and water purifiers.V. China OperationDuring the reporting period, the Company capitalized on growth opportunities among youngconsumers, replacement buyers, and pre-installation customers through continuous innovation inChina.Network Expansion offlineEnhancing competitiveness in offline channelsBy strengthening San Yi Niao’s capability in scenario planning, integrated cabinet and appliancedesign, and scenario implementation, the Company improved “scenario design deliveryservice” experience, meeting the growing demand for kitchen and bathroom renovations.The Company enhanced presence in shopping malls to create hubs for brand promotion, imageshowcase, solution experience, member engagement, ecosystem co-creation, and trafficmonetization, effectively improving user traffic acquisition and conversion.The Company also made use of digital mapping tools to identify network gaps, enhancedcoverage and retail competitiveness by empowering local micro enterprises, optimizing resourceallocation and accelerating mechanism reforms.
Model innovation online
By implementing strategies POP store cloud-based warehouse integration and lean usermanagement, the Company was able to expand product portfolio, facilitate inventory sharing,enhance warehouse and logistics capabilities and promote precise user marketing to improveefficiency in user management and product turnover, all of which contributed to 17% GMVgrowth online during 618 Festival with retail share reaching 22.3%, up 1.8 percentage pointsyear-on-year.Multi-Brand StrategyThe Company accelerated iterations of original technologies to expand Casarte’s leadingadvantages and achieve revenue growth against the headwind. By enhancing product suiteofferings and spearheading the integration of home appliances with furnishings leveraging Nebula() and Ultra-realm () series, the Company increased user value and brand recognitionwhile suite sales revenue surged 145% year-on-year in the first half of 2024. The Company alsolaunched product series online featuring natural aesthetics in appearance and industrial design, toattract younger users and expand brand recognition.
Section III Management Discussion and Analysis
The Company addressed the needs of young consumers and achieved a retail sales growth of31% from Leader brand in the first half of the year by launching popular products such as theVitality () air conditioner and Cloud () washing machine. The Company also introduced“fun small appliances” for trendy travel and camping experiences. On the other hand, theCompany renovated marketing strategies to enhance presence on Douyin and Kuaishou andintegrated in-store livestreaming to achieve a growth of 402%. Additionally, the Companystrengthened partnership with JD and Tmall Campus channel to target young audiences andexpand user base.VI. Overseas marketsIn the first half of 2024, the Company’s overseas revenue amounted to RMB70.824 billion, up
3.7% compared to the same period in 2023.
The revenue growth stemmed from commitment to strategic positioning, leveraging global R&Dresources and maintaining technological leadership. In response to diverse market demands, theCompany expanded product lineup by enriching mid-range and entry-level offerings alongsidehigh-end products. Building on strengths in traditional categories, the Company enhanced HVACand small appliance offerings. Meanwhile, the Company expedited network coverage in emergingmarkets, enhanced brand image in mainstream channels, improved conversion rates,strengthened localized social media presence to increase brand awareness, implementedorganizational reform and accelerated supply chain deployment in Belt and Road countries tocapitalize on growth opportunities.
1. North America
In the first half of 2024, despite weakness in the U.S. home appliance market, theCompany achieved revenue of RMB39.079 billion, and outperformed the U.S. homeappliance market with core appliance market share growing across all product categories.The Company continued to enhance leadership in high-end products, successfullylaunching a new generation of oven range series with easy-to-clean baking trays, Café/Profile’s new stainless-steel interior dishwasher series, and innovative products such as theProfile 2.0 chewable ice maker. Profile’s smart indoor smoker, the industry’s first and onlyindoor smoker appliance, offered consumers a novel and convenient way to experiencesmoked cooking and earned the Best of CES Award in 2024.The Company continued to expand into new channels and invest in accelerating newindustry development. At the 2024 AHR Expo, our Air and Water Solutions introduced thenew RealMAX gas water heater and the new-generation dual heat pump, dual heatrecovery system VRF MRV-5H, providing high efficiency and superior comfort for multi-roomcommercial spaces.During the reporting period, we maintained leading position in construction channels.Despite weak consumer momentum and competitive pressures, the Company outperformedthe industry by capitalizing on key sales events and became the top performer at theBrandSource and Nationwide spring sales exhibitions.
Section III Management Discussion and Analysis
For the 6th consecutive year, the Company was named “Smart Appliance Company of theYear” by IoT Breakthrough. The Company innovatively launched the Eco Balance smartenergy management solution, jointly developed with multiple ecosystem partners, providingoptimal whole-house energy management solutions for net-zero homes in the U.S. TheCompany received the Great Place to Work certification for the third time, indicating ourposition among top-tier enterprises in providing an excellent work environment foremployees.
2. Europe
In Europe, the Company recorded revenue of RMB14.505 billion, up 9.2% year-on-year,and market share increased by 0.1 percentage points.During the reporting period, the Company continued to accelerate strategic upgrade andlaunched several new product platforms that are expected to contribute to long termgrowth. Almost 150 new products covering Haier, New Candy and Hoover brands areplanned for the premium kitchen appliance platform to provide comprehensive kitchensolutions. The first batch of new products have been launched in over 150 stores in Spain,France, Italy, and Poland. The Company also introduced 905 French Door refrigerator serieswith class A energy efficiency and New Candy series were launched in 489 stores.Industry leading front-loading washing machine entered the entire Darty store network inFrance, significantly contributing to profit growth. High-end OLED series, mini M95/C900series were also launched in Spain to capture specific demand for playing games andwatching sports programmes.On the manufacturing front, the new kitchen appliances factory in Turkey continued to rampup its production capacity leveraging coordinated R&D, production platforms and ordermanagement.
3. Australia & New Zealand
In Australia and New Zealand, the Company recorded revenue of RMB3.225 billion, up
9.3% year-on-year. Connected products grew by 76% and led the market with 2.8
percentage points volume share gain and 2.9 percentage points revenue share gain inAustralia. In New Zealand, Haier and Fisher & Paykel brand outperformed the industry with
0.6 percentage points market share gain.
The Company remained dedicated to meeting consumer demand with cutting-edgetechnology and innovative products such as Haier’s 8-star energy efficiency refrigerator,which directly contributed to 7.4 percentage points market share gain in bottom-mountedrefrigerators; Haier’s ultra-thin tumble dryer integrated heat pump technology to achieve7-star energy efficiency; Fisher & Paykel also introduced self-cleansing 48 inch oven andinduction cooktop, as well as series 7 and 9 dishwasher with leading energy efficiencyperformance.On the other hand, the Company enhanced presence in mainstream channels such asWinnings with Fisher & Paykel’s popular built-in refrigerator range and made effort toimprove in-store display of Haier’s kitchen appliances in New Zealand.
Section III Management Discussion and Analysis
4. South Asia
During the period, revenue from South Asian market grew 9.9% year-on-year to RMB6.542billion.In India, sales revenue grew by over 25% year-on-year, attributable to long-term investmentacross the value chain, including products, distribution channels, and after-sales thatsuccessfully built a highly localized operational platform with well-established brandrecognition.The Company leveraged global-leading R&D capabilities and local insights to launchinnovative products such as the side-by-side refrigerator with seamless welding technology,significantly improved product lifespan and gained popularity with local consumers,capturing over 20% market share. Meanwhile, Haier enhanced cost competitiveness byincreasing in-house production of injection moulding parts.The Company adhered to value-sharing with channel partners, focusing on expandingnetwork and refining retail operations to ensure strong brand visibility online and offline.Haier’s physical retail network covered 61% of premium areas and successfully expandedinto 52% of towns and villages. The Company also expanded presence online to capturegrowth opportunities.Haier recognized the importance of serin enhancing user experience and ensuring productquality. Currently, Haier has established an after-sales service team of over 5,000employees in India, ensuring exceptional customer support and boosting the brand’sreputation.In Pakistan, the Company maintained growth momentum by enhancing distributionchannels, expanding local manufacturing, upgrading franchised store network whiledeveloping partnerships with Coca-Cola and Unilever. The Company also focused onbuilding local supply chain, the second phase of the refrigerator factory is expected toapproaching complete soon with 300,000 units annual capacity. Kitchen applianceproduction was also localized with an annual capacity of 100,000 units.
5. Southeast Asia
During the period, the Company realized revenue of RMB3.492 billion in Southeast Asia, up
12.4% year-on-year.
In Southeast Asia, the Company increased market share through product mix upgrade,improved offline channel efficiency, social media brand promotion, and local supply chaindeployment. In Thailand, we upgraded the self-cleaning feature of air conditioners with UVsterilization technology, addressing the market demand for healthy living and achieving a28% growth in air conditioner sales. In Vietnam, we launched AQUA refrigerators featuringABT dynamic sterilization and HCS moisture lock compartments. The Company alsointroduced smart Color AI washing machines driving AQUA’s market share reach 20%.
Section III Management Discussion and Analysis
Regarding distribution channels, the Company effectively improved retail ticket prices andcompetitiveness leveraging store development and product upgrade. We established 86new AQUA store in Indonesia and secured prime space in CANDI Bali, Indonesia’s secondlargest retail channel to enhance premium brand image. The Company implemented auser-centric approach to enhance experience using measures including promoting online/offline integration, providing personalized marketing and establishing a presence on localsearch engines and content platforms in Vietnam. The Company also strengthened localsupply chain deployment. Construction of a new air conditioner factory commenced inThailand in April, refrigerator factory in Vietnam has been upgraded to secure productioncapacity for both local and neighbouring markets.
6. Japan
During the period, revenue amounted to RMB1.827 billion in Japan, down 6.2%year-on-year, a growth of 2.4% in local currency.In Japan, the Company implemented a dual-brand strategy with AQUA and Haier,enhancing retail competitiveness through product upgrades, channel expansion, andmarketing innovation. The Company captured demands for high-efficiency and smartappliances with AQUA’s compact, large-capacity heat pump front-load series and theupgraded TX multi-door/TZ ultra-thin large refrigerator to achieve over 30% year-on-yeargrowth in AQUA’s 500L+ extra-large refrigerators and a 125% growth in heat pumpfront-load washers. Haier’s ultra-slim three-door refrigerators and variable-frequencywashers both grew over 30%. The Company entered air conditioner sector and acceleratedonline expansion in response to user trends, creating new growth opportunities. Throughinnovative activities and omni-channel promotion, the Company increased visibility and userconversion rates, maintaining leading market share for refrigerator and freezer products inJapan.
7. Middle East & Africa
During the period, revenue from the Middle East and Africa grew 26.8% year-on-year toRMB1.475 billion.During the reporting period, the Company drove rapid growth through localizedmanufacturing, operation upgrades and business acquisitions. During the reporting period,the first phase of Egypt eco-park in Egypt commenced production, localizing themanufacturing of air conditioners and washing machines, reducing operational costs, toaccelerate development in Egypt and surrounding markets. The Company strengthenedoperation and retail capabilities by focusing on brand and product mix upgrades to improveuser experience across different countries and promote mid-to-high-end products. TheCompany announced the acquisition of Electrolux’s water heater business in South Africa.This acquisition will support the development of solar water heaters and water purifiers inlocal market, while leveraging Kwikot’s channel advantages to promote Haier’s refrigerators,washing machines amongst others in South Africa and surrounding markets.
Section III Management Discussion and Analysis
VII. Digital transformationDuring the reporting period, the Company continued to advance digital transformation along theentire value chain, enhancing competitiveness in user management, R&D, cost management andorder fulfilment. In the first half of the year, the Company’s selling and administrative expenseratio optimized by 0.8 percentage points.Enhancing User Management CompetitivenessThe Company adopted AI-generated content (AIGC) to improve the quality and efficiency ofmarketing content, while utilizing digital platforms to manage media placement costs andimproved effectiveness through data-driven strategy optimization. During the reporting period,traffic acquisition costs in the domestic market were optimized by 28%.The Company carried out digital upgrade of marketing strategies through operating a matrix ofnew media accounts and integrating Douyin platform resources to improve traffic acquisition andconversion. In the first half of the year, the proportion of digital retail increased by 25.7%.Improving Product R&D and Cost CompetitivenessThe Company focused on full product lifecycle management, enhancing capabilities in userinsights, product launch and exit strategies, R&D engineering, and cross-functional integration,effectively shortened R&D cycles and enhanced user experience. In the first half of the year,average model output in the domestic market increased by 7%.The Company also integrated AI and OCR technologies to automatically identify cost factors andbuild cost models, enabling one-click procurement price comparisons. Cost comparison modelshave been established for over 100 types of materials while common component ratio increasedby 13%.The Company achieved precise pre-production planning and efficient in-process operationsthrough smart management of labour, machinery, materials, methods, and environment, toimprove order execution accuracy. In the first half of the year, manufacturing (manufacturing andlogistics in factories) cost was optimized by 0.3%, and production efficiency increased by 8%.Increasing Order Fulfilment EfficiencyThe Company achieved real-time responsiveness to customer needs through sharing data insales, supply, production, and logistics, expediting lead time by 12% in the domestic market.Furthermore, the Company upgraded smart order platform to optimize allocation based on costefficiency and reduce cost.
Section III Management Discussion and Analysis
PART 2. REVIEW OF THE INDUSTRY WHERE THE COMPANY OPERATES DURINGTHE REPORTING PERIODIndustry overview for the first half of 2024
1. Domestic market
In the first half of 2024, sluggish real estate sector and weak consumer confidence suppresseddemand and put pressure on the white goods sector. According to AVC, retail sales of whitegoods and kitchen & bathroom products fell 6.2% year-on-year to RMB290.5 billion in the firsthalf of 2024, while retail volume decreased 2.4% to 113.93 million units. The performance ofmajor sub-sectors was as follows:
(1) Home air conditioning industry
In the first half of 2024, persistent rainfall in eastern and southern China dampened marketdemand. The industry’s earlier shipment in the first quarter of 2024, coupled with pressureon end-user demand, led to elevated inventory levels and intensified competition. Accordingto AVC, in the first half of 2024, the air conditioner market’s total sales volume dropped
11.0% year-on-year to 33.15 million units across all channels, while sales revenue
decreased 14.5% year-on-year to RMB111.4 billion. The proportion of low-priced modelsincreased: according to AVC, online sales of 1.5 HP wall-mounted units priced belowRMB2,000 accounted for 22.8% of total sales volume, a year-on-year increase of 6.1percentage points; whereas the offline product mix ratio of 1.5 HP wall-mounted unitspriced above RMB3,500 dropped from 49.6% to 41.9% year-on-year.As consumers’ increasing attention to air quality and preference towards integration ofhome appliances and furnishings is driving structural upgrades as the industry shifts fromstanding and wall-mounted products to integrated HVAC solutions.
(2) Refrigerator industry
Overall market remained replacement-driven. According to AVC, in the first half of 2024,China’s refrigerator market achieved a total retail value of RMB65.2 billion across allchannels, a year-on-year increase of 0.4%, while retail volume reached 19.36 million units,up 0.8% year-on-year. Consumers’ increasing focus on healthy diet and home aesthetics,are driving the industry towards food freshness preservation and integration of applianceswith furnishings. Built-in refrigerators continued to outperform in the first half of 2024 withonline retail volume accounting for 12.4%, a year-on-year increase of 7.1%, while offlineretail volume accounted for 37.8%, a rise of 19.5% year-on-year.
Section III Management Discussion and Analysis
(3) Washing machine industry
As living standards continue to rise, washer-dryer combos have become industry growthdriver. According to AVC, in the first half of 2024, the washing machine industry achievedretail sales of RMB49.4 billion, a year-on-year increase of 3.6%, and retail volume reached
20.29 million units, up 6.2% year-on-year. Online retail sales of washer-dryer combos
totalled RMB4.34 billion, a year-on-year increase of 43.6%, and retail volume amounted to541,000 units, up 64.1% year-on-year. As home appliances and furnishings become moreintegrated, washing machines are gradually upgrading to ultra-thin models to createenhanced home aesthetic experience.
(4) Kitchen appliance industry
Traditional kitchen appliances such as range hoods and stoves remained stable,dishwashers continued to grow and integrated stoves experienced a decline. According toAVC, in the first half of 2024, range hood retail sales decreased 0.2% year-on-year toRMB14.9 billion; retail volume dropped 3.3% year-on-year to 8.68 million units. Gas stoveretail sales rose 2.7% year-on-year to RMB8.4 billion, and retail volume increased 4.8% to
10.47 million units. Dishwasher retail sales reached RMB5.8 billion in the first half of 2024,
up 5.0% year-on-year. Retail volume reached 990,000 units, a 3.4% year-on-year increase.Retail sales of integrated stoves totalled RMB11.1 billion, a year-on-year decline of 18.20%,and retail volume decreased 15.2% to 1.14 million units. As consumers increasingly pursuehigh-quality lifestyles, their demands for quality and design in kitchen appliances continue torise. The industry is trending towards appliance-furnishing integration, smart features,energy saving, and healthy cooking.
(5) Water heater industry
Industry demand has stabilized. According to AVC, in the first half of 2024, electric waterheaters recorded retail sales of RMB10.7 billion, down 0.8% year-on-year; retail volumestood at 8.26 million units, up 1.6% year-on-year. Gas water heaters recorded retail salesof RMB12.8 billion, down 1.0% year-on-year; retail volume totalled 6 million units, up 1.2%year-on-year. Consumer focus has shifted from safety considerations to design, rapidheating and comfort, thus popular models include ultra-thin electric water heaters withdual-tank, rapid heating and smart constant-temperature gas units.
(6) Water purifier industry
The water purification industry maintained steady growth as consumer awareness of healthydrinking water continued to grow. According to AVC, in the first half of 2024, retail sales ofhousehold water appliances increased 2.3% year-on-year to RMB12.6 billion; retail volumegrew 4.3% year-on-year to 10.1 million units.Currently, anticipated reduction in income has led to more cautious purchasing decisions.Value for money has become key considerations in home appliance consumption. Unliketheir parents, consumers in their 20s and 30s utilize new media to gather productinformation when making purchasing decisions, which requires appliance manufacturers tocontinually adapt their branding, marketing, and product development strategies to capturegrowth opportunities.
Section III Management Discussion and Analysis
The white goods industry has become primarily upgrades and replacement-driven. The proportionof first-time buyers is gradually declining, while demand for replacements due to homerenovations is on the rise. Consumers are increasingly seeking to enhance their quality of lifethrough kitchen and bathroom upgrades. As a result, comprehensive capabilities in scenariodesign, installation, and maintenance services have become crucial for acquiring uses.In the first half of 2024, there was a significant price increase in copper, aluminium, andrefrigerants, which had a significant impact on the profitability of the industry, particularly in theair conditioner sector.
2. Overseas markets
In the first half of 2024, overseas market demand exhibited mixed trends. Core home appliancemarkets in developed regions (Europe, U.S., Japan) remained under macroeconomic pressure.However, emerging markets, including Southeast Asia, South Asia, the Middle East, and Africa,maintained robust growth.In the U.S, industry demand declined due to a downturn in both existing and new home sales.According to AHAM, core appliance shipments in the first half of 2024 decreased by 2% involume and 6% in value year-on-year while competition remained fierce.In Europe, persistent high inflation and interest rates continued to dampen consumer sentiment;the home appliance industry remained sluggish. Demand was shifting towards value-for-moneyproducts. GfK data reported a 0.3% decline in sales volume and a 1.3% decrease in sales valuefor white goods across 21 European countries. However, green and low-carbon trends, as wellas energy price pressure created increasing demand for energy-efficient products and unlockopportunities in HVAC sector with ongoing consolidation across the industry.Benefiting from macroeconomic growth in India, the home appliance industry grew by 7–8%. Therefrigerator and washing machine sector increased by 5–6%, while the air conditioner sector,boosted by hot temperatures in the north, saw over 30% retail growth. Driven by economicgrowth and rising per capita income in Pakistan, the home appliance industry sustained growthin the first half of the year.According to Gfk, Thailand’s market grew by approximately 3%, driven by recoveries in foreigninvestment and tourism. Air conditioner sales volume surged over 20% due to hot temperatures.Vietnam experienced double-digit growth in the home appliance sector, bolstered by increasedforeign investment. Indonesia’s stable political and economic environment, coupled with risinghousehold disposable income, contributed to a 6% growth in the home appliance industry.
Section III Management Discussion and Analysis
Due to high interest rates and inflation, consumers increasingly sought value-for-money productsin Australia and New Zealand. According to data from major Australian home appliance retailchannels, sales volume grew by 4.6% year-on-year in the first half of 2024, while sales valueincreased by 1.7%.The refrigerator, freezer, and washing machine sectors declines in volume, price, and revenue inJapan because of inflation, currency depreciation, declining disposable income, longerreplacement cycles and ongoing price competition. Consumers have become more interested inseeking added-value in products with large capacity, compact size, energy efficiency, and smartfeatures.Industry Outlook for 2H2024Domestic marketThe Chinese home appliance industry has entered replacements and upgrades phase. According toChina Household Electric Appliance Research Institute, the penetration of air conditioners, refrigerators,and washing machines across the country in 2022 amounted to 780 million, 580 million, and 550million units respectively. A massive replacement market has already emerged.The industry showed a clear trend towards lower-end products because of cautious income growthexpectations and weakened consumer confidence. On 15 July 2024, the National Development andReform Commission and the Ministry of Finance jointly issued “Measures to Support Large-scaleEquipment Renewal and Trade-in of Consumer Goods”. The implementation of these measures isexpected to stimulate consumer demand for upgrades, boost consumer confidence, and promoteindustry development.Overseas markets
In the second half of 2024, interest rate cut is expected in the developed countries, where pent-updemand can be released to gradually revitalize the real estate market. Price competition is expected toease due to home appliance manufacturers’ focus on operational quality and high commodity prices.The industry is poised for steady growth in the emerging markets where continued urbanization isexpected to drive appliance penetration and home appliance manufacturers are also accelerating thelocalization of their supply chains.
Section III Management Discussion and Analysis
PART 3. DEVELOPMENT PLAN FOR THE SECOND HALF OF THE YEARIn the second half of 2024, amid dynamic changes in demand and an increasingly competitiveenvironment, the Company will continue to focus on iteratively optimizing user experience andimproving operational efficiency. We aim to enhance profitability by leveraging advantages intechnology, scale and service, while accelerating innovation and transformation to achieve long-termsustainable growth.Product InnovationWe will continue to uphold our value-oriented approach by integrating global R&D and planningresources, accelerating technology sharing, and promoting the rapid implementation of leadingtechnologies and innovations across a wider range of products, to better meet the ever-changingneeds of our users.Domestic marketIn the second half of 2024, we will align with the national trade-in policy and achieve sustainablegrowth through innovative marketing and channel strategies. We will leverage the Company’sadvantages in product lineup, scenario-based solutions, and franchised store network to capitalize ontrade-in subsidy opportunities, meeting users’ upgrade needs and driving retail growth. We will adaptour marketing content and communication strategies to changing consumer decision-making processeswhile adding on to brand value by improving go-to-market strategy and increase conversion efficiencythrough new media. We will deepen our user-centric transformation by establishing efficient systems fororder forecasting, distribution and response, thereby enhancing user experience and customersatisfaction.Overseas marketsWe will focus on improving profitability by expanding value chain through continuous productupgrades, accelerating supply chain localization, implementing end-to-end digital transformation anddeepening global collaborations, to enhance profitability and achieve growth targets.In the U.S., Australia, and New Zealand, we will strengthen profitability by improving supply chainefficiency and iterating product platforms. In Europe, we will enhance competitiveness by optimizingorganizational structure, streamlining business processes, and promoting brand transformation. We willcontinue localization along the Belt and Road Initiative in South Asia, Southeast Asia, Middle East andAfrica, to capitalize on population growth and penetration increases, thus become a leading brand inthese regions.Platform transformationWe will advance the digital transformation in production, procurement, and quality systems to enhancelean management capabilities across design, procurement, and production stages, while optimizingend-to-end cost competitiveness.Significant changes in the Company’s operating conditions during the reporting period, and mattersoccurring during the reporting period that have and expected to have a significant impact on theCompany’s operating conditions Applicable √ Not Applicable
Section III Management Discussion and Analysis
IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD(I) Analysis of principal business
1 Table of movement analysis on the related items in financial statements
Unit and Currency: RMB
ItemsCurrent period
Correspondingperiod oflast yearChange (%)Operating revenue135,622,549,121.01131,628,595,912.053.03Operating cost94,106,431,686.6691,557,518,745.022.78Selling expenses18,687,502,154.8918,768,944,057.44-0.43Administrative expenses5,186,349,563.445,461,681,481.50-5.04Financial expenses58,919,168.65–9,349,269.09N/AR&D expenses5,088,901,166.885,025,786,116.641.26Net cash flow generated fromoperating activities7,818,257,937.266,790,021,534.6215.14Net cash flow generated frominvesting activities–7,334,174,927.57–4,333,325,021.19N/ANet cash flow generated from
financing activities–191,176,728.11–1,267,997,912.18N/AGains or losses on changes in
fair value–29,565,597.8231,271,562.35-194.54Credit impairment loss–58,013,951.73–165,968,929.36N/ALosses on disposal of assets–2,583,904.37–20,647,304.64N/ANon-operating expenses84,518,604.7432,299,513.21161.67Profits or losses attributable to
minority shareholders187,104,752.9180,831,283.76131.48
Section III Management Discussion and Analysis
Reasons for significant changes in certain indicators:
1) Reasons for the changes in financial expenses: the increase of 730.20% in financial
expenses over the corresponding period was mainly due to the additional interestexpenses incurred overseas as a result of higher interest rates on borrowings due tointerest rate hikes during the current period;
2) Reasons for the changes in the gains or losses on changes in fair value: the decrease
of 194.54% in profits or losses of changes in fair value (being losses during thecurrent period) over the corresponding period was mainly due to the decrease in fairvalue of equity investments during the current period;
3) Reasons for changes in credit impairment loss: the decrease of 65.05% in credit
impairment loss over the corresponding period was mainly due to the decrease in theprovision for bad debts of receivables during the current period;
4) Reasons for changes in losses on disposal of assets: the decrease of 87.49% in losses
on disposal of assets over the corresponding period was mainly due to the decreasein non-current asset disposal operations during the current period;
5) Reasons for changes in non-operating expenses: the increase of 161.67% in non-
operating expenses over the corresponding period was mainly due to the year-on-year increase in expenses incurred during the current period that were not directlyrelated to the Company’s ordinary operation;
6) Reasons for changes in profits or losses attributable to minority shareholders: the
increase of 131.48% in profits or losses attributable to minority shareholders over thecorresponding period was mainly due to the increase in shareholding of minorityshareholders in certain subsidiaries during the current period;
7) Reasons for changes in net cash flow from investing activities: the increase of 69.25%
in net cash flow from investing activities over the corresponding period was mainlydue to the increase in cash paid for investment during the current period;
8) Reasons for changes in net cash flow from financing activities: the decrease of 84.92%
in net cash outflow from financing activities over the corresponding period was mainlydue to the increase in cash inflow from financing activities as a result of higherborrowing, and the decrease in cash outflow from financing activities attributable tothe decrease in repurchased shares during the current period.2 Detailed explanation on significant changes in the operation types and the
components of profit or sources of profit of the Company during the period Applicable √ Not Applicable
Section III Management Discussion and Analysis
(II) Explanations on the major changes in profits caused by non-principal businesses
Applicable √ Not Applicable(III) Analysis of assets and liabilities
√ Applicable Not Applicable
1. Assets and liabilities
Unit: RMB
Name of item
Amount at the end
of current period
Percentage ofamount at the endof current period tototal assets (%)
Amount at the end
of thecorrespondingperiod of last year
Percentage ofamount at the end
of the
correspondingperiod of last yearto total assets (%)
Percentage ofchange in amountfrom the end of thecorrespondingperiod of last yearto current period
(%)DescriptionDebt investments14,477,621,780.975.528,841,233,078.663.4963.75Mainly due to the
increase inlong-term timedeposits duringthe current periodContract liabilities3,256,026,994.751.247,731,916,491.543.05-57.89Mainly due to the
decrease inadvance paymentwith performanceobligationsOther payables27,248,243,510.9010.3919,181,569,184.837.5742.05Mainly due to the
increase individendspayableNon-current liabilities due
within one year
5,327,717,384.222.033,732,550,549.231.4742.74Mainly due to the
increase inlong-termborrowings duewithin one yearOther current liabilities1,095,321,670.220.421,651,239,151.520.65-33.67Mainly due to the
decrease inValue-added taxamount to bewritten off
Section III Management Discussion and Analysis
2. Overseas Assets
√ Applicable Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 12,413,782 (unit and currency:
RMB0,000), representing 47.3% of the total assets.
(2) Explanation of high percentage of overseas assets
√ Applicable Not Applicable
Unit and Currency: RMB
Name of overseas assetReason for formationOperating mode
Operating revenueduring the reporting
period
Net profit of thereporting periodOverseas Home Appliance andSmart Home Business
Overseas mergers &
acquisitions and theCompany’s owndevelopment
Localized Operations with theintegration of R&D,manufacturing and marketing
70,824,200,4244,081,094,577Note: Net profit stated in the above table represents operating profit.
3. Restrictions on major assets as of the end of reporting period
Applicable √ Not Applicable
4. Other Explanations
Applicable √ Not Applicable(IV) Analysis of investment
1. Overall analysis on external equity investment
Applicable √ Not Applicable
(1). Significant equity investment
Applicable √ Not Applicable
(2). Significant non-equity investment
Applicable √ Not Applicable
Section III Management Discussion and Analysis
(3). Financial items measured at fair value
√ Applicable Not Applicable
Unit and Currency: RMB
Asset typeOpening balance
Profits or lossesof changes in fairvalue during theperiod
Cumulativechanges in fairvalue included in
equityProvision forimpairment ofduring the period
Purchases duringthe period
Sold/redeemedamount duringthe periodOther changesClosing balanceWealth management products487,936,101.817,866,168.83907,048,190.63797,001,032.70605,849,428.57Investment in other equity instruments6,403,694,954.77–139,624,374.352,390,644.0315,353,142.086,281,814,366.53Investment in trading equity instruments243,224,439.64–54,049,574.20172,919.49189,001,945.95Investment funds222,803,002.3822,787,943.8331,168,225.048,709,245.293,668,458.53271,718,384.49Derivative instruments–101,059,175.5311,289,463.13–10,992,021.14–4,276,205.97–105,037,939.51Total7,256,599,323.07–12,105,998.41–150,616,395.49940,607,059.70805,883,197.4814,745,394.647,243,346,186.03Investment in securities
√ Applicable Not Applicable
Unit and Currency: RMB
Type ofsecurities
SecuritiescodeSecurities abbreviation
InitialinvestmentcostSourcesof funding
Carryingamount at the
beginning ofthe period
Profit and lossarising fromchanges in fairvalue duringthe periodAccumulatedfair valuechangesincluded inequityPurchasesduring theperiodDisposalsduring theperiodInvestmentprofit or loss
during theperiodCarryingamount at the
end of theperiodAccounting itemsStock601328Bank of Communications1,803,769.50Self-funding7,819,326.48883,760.128,703,086.60Investments in other equity instrumentsStock600827Bailian Group154,770.00Self-funding373,792.12373,792.12Investments in other equity instrumentsStock300183Neusoft Carrier18,713,562.84Self-funding11,795,641.7411,795,641.74Investments in other equity instrumentsStock688455KENGIC29,450,000.00Self-funding146,788,044.20–54,049,574.2092,738,470.00Financial assets held for tradingTotal//50,122,102.34/166,776,804.54–54,049,574.20883,760.12113,610,990.46/
Explanation of investment in securities
Applicable √ Not Applicable
Section III Management Discussion and Analysis
Private equity investment
√ Applicable Not Applicable
By the end of the reporting period, the Company has historically invested in privateequity funds as follows: the Company invested 63.13% share in Qingdao Haier SAIFSmart Home Industry Investment Center (Limited Partnership); Qingdao RRS HuitongInvestment Management Co., Ltd. (青島日日順匯通投資管理有限公司), a subsidiaryof the Company, invested 49% share in Guangzhou Heying Investment Partnership(Limited Partnership); Qingdao Haishang Chuangzhi Investment Co., Ltd. (青島海尚創智投資有限公司), a subsidiary of the Company, invested 30% share inHuizhixiangshun Equity Investment Fund (Qingdao) Partnership (Limited Partnership), aprivate equity fund, and 50% equity of Qingdao Ririshun Huizhi Investment Co., Ltd.,a managing partner of funds; Qingdao Haier Technology Investment Co., Ltd. (青島海爾科技投資有限公司), a subsidiary of the Company, invested in private equity funds:
1.265% share in Beijing-Tianjin-Hebei Industrial Coordinated Development Investment
Fund (Limited Partnership) (京津冀產業協同發展投資基金（有限合伙）), 14.85% sharein Shenzhen TopoScend Capital Phase I Fund (Limited Partnership) (深圳市投控東海一期基金（有限合伙）), 24% share in Qingdao Haimu Smart Home InvestmentPartnership (Limited Partnership), and invested in fund management companies:
5.01% equity of CMG-SDIC Capital Co., Ltd. (國投招商投資管理有限公司), 15%
equity of Shenzhen TopoScend Capital Co., Ltd. (深圳市投控東海投資有限公司), 49%equity of Qingdao Haimu Investment Management Co., Ltd.
Section III Management Discussion and Analysis
Derivative investment
√ Applicable Not Applicable
(1). Derivatives investments for hedging purposes during the reporting period
√ Applicable Not Applicable
Unit and Currency: RMB0’000
Type ofderivativesinvestment
InitialinvestmentamountCarrying amountat the beginning
of thecurrent period
Gains or losseson fair valuechanges for thecurrent period
Accumulativechanges in fairvalue included in
equity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Carrying amountat the end of the
Period
Proportion ofcarrying amountto net assets ofthe Company atthe end of thereporting period
(%)Forward foreignexchangecontracts1,178,6571,178,6571,272–2,1951,024,4259.69Forward
commoditycontracts11,00911,009–
1,0964,0810.04Total1,189,6661,189,6661,129–1,0991,028,5069.73Explanation on any significantchanges in the accounting policiesand specific accounting andauditing principles for the hedgingbusiness during the reporting periodas compared to the last reportingperiod
Accounting principles are based on the Accounting Standards for Business Enterprises. The Company carried out the accountingtreatment for its business in accordance with the relevant regulations of “Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments”, “Accounting Standards for Business Enterprises No. 24—HedgeAccounting”, “Accounting Standards for Business Enterprises No. 37—Presentation of Financial Instruments” and “AccountingStandards for Business Enterprises No. 39—Fair Value Measurement” published by the Ministry of Finance and its guidance, toreflect the relevant items in the balance sheet and the statement of profit or loss, which are consistent with those of the previousreporting period.Explanation on actual profit or lossduring the reporting period
The actual profit and loss for the reporting period amounted to RMB42.5669 million.Explanation on the effect ofhedging
Under the premise of ensuring normal production and operation, the Company carried out hedging business to reduce the impact
of exchange rate fluctuations on the Company’s production and operation and to realize the Company’s long-term stable
development.Source of funds for derivativeinvestments
Self-owned funds
Section III Management Discussion and Analysis
Risk analysis and explanations onrisk control measures for positionsin derivatives during the reportingperiod (including but not limited tomarket risk, liquidity risk, credit risk,operational risk, legal risk, etc.)
I. Foreign exchange hedging business
1. Risk Analysis
The Company and its holding subsidiaries conduct foreign exchange derivatives business in accordance with the principle ofstability, and do not conduct the foreign exchange transaction for speculative purposes. All foreign exchange funds businessesare based on normal production and operation and rely on specific business operations to avoid and prevent exchange rate risks.However, there are also certain risks in conducting foreign exchange funds business:
(1) Market risk: Forward settlement of foreign exchange: the Company will determine whether to sign a forward contract based
on the cost of the product (basically consisting of RMB) and market risk. Signing the contract equals to fixing the price ofcurrency exchange. It is effective to resist market fluctuation risk and ensure a reasonable and stable profit level of theCompany through forward settlement of foreign exchange. Forward purchase of foreign exchange: according to the importcontract entered with the customer and exchange rate risk, the future currency exchange cost will be fixed through theunilateral forward purchase of foreign exchange. Although there is a certain risk of loss, the forward purchase of foreignexchange will effectively reduce the market fluctuation risk and fix procurement costs. Other NDF and options businesses aremainly carried out when failed to sign the ordinary forward settlement/purchase of foreign exchange or the costs are toohigh, only serving as the supplement of the above businesses. Exchange rate fluctuation risk in currency swap business isavoided by adjusting the currency of assets and liabilities in order to match the currency of the assets with the currency ofliabilities. Interest rate fluctuation risk in interest rate swap business is avoided by transfer the floating-rate business to fix-ratebusiness or transfer the fixed-rate business to floating-rate business when the rate is going downward to reduce the costs.All of the above businesses have a real business background and there is no speculation.
(2) Exchange rate fluctuation risk: After the Company fixing the forward exchange rate according to the foreign exchange
management strategy, if the actual trend of the foreign exchange rate deviates significantly from the direction of theCompany’s fixed exchange rate fluctuation, the cost of the Company after fixing the exchange rate expenditure may exceedsthe cost of not fixing the exchange rate, thus forming a loss of the Company. When the foreign exchange rate changesgreatly, if the fluctuating direction of the Company’s fixed foreign exchange hedging contract is inconsistent with that of theforeign exchange rate, the foreign exchange loss will be formed; if the exchange rate does not fluctuate in the future, thevast deviation from the foreign exchange hedging contract will also form a foreign exchange loss.
(3) Internal control risk: The foreign exchange derivatives business is highly specialized and complex so it may cause risks due
to imperfect internal control systems.
(4) Transaction default risk: In the event of a default in the counterparty of foreign exchange derivative transaction, the Company
would not be able to obtain hedging profits as agreed to hedge the Company’s actual exchange losses, resulting in a loss ofthe Company.
(5) Customer default risk: The overdue of customer’s accounts receivable and the customer’s order adjustment will make the
actual payment inconsistent with the expected payment, which may result in the actual cash flow could not match the carriedout foreign exchange derivative business term or amount completely, leading to a loss of the Company.
2. Risk Control Measures Taken by the Company
(1) The Company may not engage in any foreign exchange derivative transactions except those carried out for the purpose of
avoiding exchange rate risks, and only for foreign exchange operations related to the Company’s import and export businessand overseas asset/liability management.
(2) The Company implemented approval process in strict compliance with the Foreign Exchange Risk Management Policy and the
Foreign Exchange Derivatives Transaction Management Rules. The general meeting of shareholders of the Company and theBoard of Directors delegate the President/President Office to take responsibility for the operation and management of theforeign exchange derivatives business, the Treasury Department shall act as the handling department, and financedepartment shall act as the daily review department.
(3) The Company conducts foreign exchange derivatives business with financial institutions such as large banks with legal
qualifications. The financial department timely tracks the changes in the transaction and strictly controls the occurrence ofclosing default risk.
Section III Management Discussion and Analysis
(4) The Company conducts foreign exchange derivatives business must base on the Company’s cautious forecast on the foreign
currency receipts and payments and actual business exposure. The delivery date of the foreign exchange derivativesbusiness must match with the Company’s predicted receipt time, deposit time or payment time of the foreign currency, ormatch with the corresponding redemption term of the foreign currency bank borrowing.II. Bulk Hedging Business
1. Risk Analysis
(1) Market risk: The futures and derivatives market itself has certain systematic risks, while hedging requires certain level of price
trend prediction. If the price prediction is directionally incorrect, it may cause losses to the Company.
(2) Policy risk: Significant changes in laws and regulations of the futures and derivatives markets may cause market fluctuations
or make trading impossible, which may result in risks.
(3) Funding risk: Due to the strict margin system and daily mark-to-market system in the futures market, there may be corresponding
funding floating loss risks. The Company will reasonably allocate its own funds for hedging business, control the scale offunds, and conduct funding projections while formulating trading plans to ensure sufficient funds. In the process of businessoperations, the Company will plan and utilize margins reasonably, and adjust funds appropriately to avoid risks.
(4) Operational risk: There may be cases in which suppliers violate their agreements and cancel or delay deliveries, resulting in a
mismatch between the actual hedging quantity and period, causing losses to the Company.
(5) Internal control risk: Futures and derivatives transactions are more specialized and complex, which may give rise to risks caused
by inadequate internal control systems or human errors in operations. The Company has formulated the ManagementMeasures for Hedging Business of Bulk Raw Materials, which contains clear provisions on the authorization scope, approvalprocedures, risk management and other aspects of hedging transactions. The Company shall strengthen internal controlmanagement and improve professionalism, implement risk prevention measures and improve the management standard ofhedging business.
2. Risk control measures adopted by the Company
(1) Matching hedging business with the Company’s production and operation to maximize hedging against the risk of market
fluctuations.
(2) Strictly control the scale of hedging funds and reasonably plan and use margins. The Company will reasonably allocate its own
funds for hedging business, and will not use raised funds directly or indirectly for hedging.
(3) The Company has formulated the Management Measures for Hedging Business of Bulk Raw Materials, which contains clear
provisions on the organizational structure and its responsibilities, business processes, risk management, file management, etc.The Company will strictly follow the provisions of the internal control system to control all aspects of the business, and willimplement the Management Measures in accordance with the established regulations.
(4) The Company will strengthen the training of relevant personnel to enhance their professionalism and overall quality; strengthen
research on the futures and derivatives market to grasp market changes and design specific operational plans for tradingbusiness.
(5) The internal audit department of the Company will conduct regular and irregular inspections of hedging trading business,
supervise hedging trading business personnel in the implementation of the risk management system and risk managementprocedures, and prevent operational risks in the business in a timely manner.
Section III Management Discussion and Analysis
Changes in market price or fairvalue of invested derivatives duringthe reporting period, where specificmethodology used and the settingsof relevant assumptions andparameters should be disclosed inthe fair value analysis of derivatives
In respect of changes in market prices or fair value of products, gains or losses actually realized from the invested derivativesamounted to RMB42.5669 million during the reporting period. As for the specific methodology used and the related assumptionsand parameter settings: Foreign exchange and interest rate swap forward quotations from financial institutions were used.Litigation case (if applicable)N/ADisclosure date of announcement inrelation to the consideration andapproval of derivatives investmentby the Board (if any)
28 March 2024Disclosure date of announcement inrelation to the consideration and theapproval of derivatives investmentby shareholders’ general meeting (ifany)
21 June 2024
(2). Derivatives investments for investment purposes during the reporting period
Applicable √ Not Applicable(V) Sale of material assets and equity
Applicable √ Not Applicable(VI) Analysis on major subsidiaries and Investees
√ Applicable Not Applicable
For details, please refer to the relevant contents of “(2) Explanation of high percentage ofoverseas assets” under “(III) Analysis of assets and liabilities” in this section.(VII) Structured entities controlled by the Company
Applicable √ Not Applicable
V. OTHER DISCLOSURES(I) Potential risks
√ Applicable Not Applicable
1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white goods
as durable consumer appliances are subject to users’ income levels and their expectationsof future income growth which will have a certain impact on their willingness to purchaseproducts. A slowdown in macroeconomic growth causing a decline in users’ purchasingpower will have a negative impact on industry growth. In addition, a slowdown in realestate market will also have a negative impact on market demand, which will indirectlyaffect end-user demand for home appliances.
Section III Management Discussion and Analysis
2. Risk of price war caused by intensified industry competitions. The white goods industry is
highly competitive with a high degree of product homogeneity, and the industryconcentration has continued to increase in recent years. However, the increase in industryinventory capacity in individual sub-sectors due to the demand-supply imbalance may leadto risks such as price wars. Furthermore, rapid technological advancements, scarce talentsin the industry, shortened product life cycles and ease of imitation are making itincreasingly difficult to profit. Although new products, services and technologies are oftenassociated with higher selling prices, it has become necessary for the Company to investmore in R&D. The Company will actively invest in R&D to attract more users throughcontinuous innovation in products and services, to build a lasting brand awareness.
3. Risk of fluctuations in raw material prices. The Company’s products and core components
use metal raw materials such as steel, aluminium, and copper, as well as commoditiessuch as plastics and foam. If the prices of raw materials continue to surge, it will putcertain pressure on the Company’s production and operations. In addition, the Companyrelies on third party manufacturers and suppliers for key raw materials, components, andmanufacturing equipment, as well as OEM suppliers, and any disruption in supply orsignificant price increases by these suppliers will have a negative impact on the Company’sbusiness. As a leader in the industry, the Company will take measures including volume &price adjustment mechanism as well as hedging to reduce the risk of raw materialfluctuations on its operations.
4. Operational risks in overseas business. The Company has steadily developed its global
business and has established production bases, R&D centres, and marketing centres inmany parts of the world, with the proportion of overseas revenue increasing year by year.Overseas markets are subject to local political and economic situations (including eventssuch as military conflicts and wars), legal systems and regulatory regimes of thosecountries and regions. Significant changes in these factors will pose certain risks to theCompany’s local operations in these markets. The Company has taken various measures tomitigate the relevant impacts, including collaborating with suppliers and distributors,improving production efficiency to offset the impact on the overall cost of sales, potentiallyexpanding the Company’s supply resources to other countries, and adopting safetymeasures to protect its people and assets.
5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the import
and export of the Company’s products involve the exchange of foreign currencies such asthe U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of the relevantcurrencies fluctuate, it will have a certain impact on the Company’s financial position andincrease its financial costs. In addition, the Company’s consolidated financial statements aredenominated in Renminbi, while the financial statements of its subsidiaries are measuredand reported in the currency of their primary economic environment in which the entityoperates and are therefore subject to currency exchange risk. In this regard, the Companyuses hedging instruments to reduce its exposure to exchange rate fluctuations.
Section III Management Discussion and Analysis
6. Risk of policy changes. The home appliance industry is closely related to the consumer
market and the real estate market. Changes in macroeconomic policies, consumptioninvestment policies, real estate policies and relevant laws and regulations will affect productdemand from distributors, which in turn will affect product sales of the Company. TheCompany will closely monitor changes in the relevant policies, laws, and regulations, andmake forecasts of market changes, in order to ensure further development of theCompany.
7. Credit risk. There is possibility that the Company will be unable to collect all trade receivables
from its distributors, or distributors are not able to settle the Company’s trade receivablesin a timely manner, in which the Company’s business, financial status, and operationperformance may be affected. In relation to this risk, the Company will maintain flexibility byoffering credit period of 30 to 90 days to certain distributors based on their credit historyand transaction amount.
8. Inventory risk. Excess inventory might occur as the Company cannot always accurately predict
trends and events and maintain appropriate inventory levels; thus, the Company may beforced to offer discounts or promotions to manage the slow-moving inventory. On the otherhand, a shortage of inventory may lead to loss of sales opportunities for the Company.However, the Company will manage its inventory and adjust according to market situationand will conduct regular impairment assessment of its inventory.
(II) Other disclosures
Applicable √ Not Applicable
Section IV Corporate Governance
I. INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS
MeetingDate
Query index of websites designated forpublishing resolutions
Date ofdisclosure forpublishingresolutionsResolutions approved2023 Annual General
Meeting2024 First A Shares Class
Meeting2024 First D Shares
Class Meeting2024 First H Shares Class
Meeting
20 June 2024For details, please refer to the
Announcement on Resolutions passed atthe 2023 Annual General Meeting, 2024First A Shares Class Meeting, 2024 FirstD Shares Class Meeting and 2024 FirstH Shares Class Meeting of Haier SmartHome Co., Ltd. (L2024-022) publishedby the Company on the website ofShanghai Stock Exchange(www.sse.com.cn) and the four majorsecurities newspapers
21 June 2024Considered and approved the
resolutions related to annualreport, internal control auditreport, profit distributionproposal, re-appointment ofauditor, external guarantees,general mandate to issueadditional shares /repurchase shares andemployee stock ownershipplan, etc.Considered and approved the
resolutions for generalmandate to repurchaseshares, etc.
Preferred shareholders whose voting rights have been restored requested an
extraordinary general meeting Applicable √ Not Applicable
Explanation of Shareholders’ general meeting
√ Applicable Not Applicable
The 2023 Annual General Meeting and the 2024 First A/D/H Shares Class Meetings of theCompany was held in successive order by way of on-site voting, off-site voting and network voting bypoll at Room B101, Haier Rendanheyi Research Center, Haier Science and Technology InnovationEcological Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 20 June 2024, consideringthe annual report and other relevant resolutions. The total number of the shares of the Companycarrying voting right amounted to 9,292,876,856 shares (of which 6,163,314,617 shares were Ashares, 271,013,973 shares were D shares and 2,858,548,266 shares were H shares). 602shareholders and proxies, representing 6,427,260,204 shares or 69.16% of the total number of theshares of the Company carrying voting right, were present at the 2023 Annual General Meeting. 545shareholders and proxies, representing 4,144,199,609 shares or 67.24% of the total number of Ashares of the Company carrying voting rights, were present at the 2024 First A Shares Class Meeting;51 shareholders and proxies, representing 167,459,817 shares or 61.79% of the total number of Dshares of the Company carrying voting rights, were present at the 2024 First D Shares Class Meeting;6 shareholders and proxies, representing 2,111,641,413 shares or 73.87% of the total number of Hshares of the Company carrying voting rights, were present at the 2024 First H Shares Class Meeting.The Directors, supervisors, and senior management of the Company as well as the lawyers engagedby the Company also attended the abovementioned four meetings. The abovementioned meetings wereconvened by the Board of the Company and Chairman Mr. Li Huagang presided over the meetings.
Section IV Corporate Governance
The Company had 9 Directors, of whom 9 Directors attended the meetings; the Company had 3supervisors, of whom 3 supervisors attended the meeting. The secretary to the Board of the Companyattended the abovementioned meetings and other members of senior management of the Companywere invited to attend the abovementioned meetings.II. CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENTOF THE COMPANY
√ Applicable Not Applicable
NamePosition HeldDescription of ChangeMa YingjieSupervisorDepartedLiu YongfeiSupervisorElectedExplanation of changes in Directors, Supervisors and senior management of the Company
√ Applicable Not Applicable
Ma Yingjie, a Supervisor of the Company, has retired and hence intends to resign as a Supervisorupon a new Supervisor has been elected at the general meeting. On 20 June 2024, pursuant to theelection results of the 2023 Annual General Meeting, Liu Yongfei was elected as a new Supervisor ofthe Company. Accordingly, there was a change in the Supervisors of the Company during thereporting period.
III. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVEProposal for interim profit distribution and proposal for reverse conversion into share
capital
Whether distributed or convertedNo
Section IV Corporate Governance
IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR
OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF(I) Relevant incentive events disclosed in provisional announcements but without
subsequent development or changes during implementation
√ Applicable Not Applicable
Summary of MattersQuery IndexCancellation of certain 2021 and 2022 equityincentive options: In view of the fact that the thirdexercise period of the first/reserved grant portion ofthe 2021 A Share Option Incentive Scheme and thesecond exercise period of the 2022 A Share OptionIncentive Scheme of the Company did not meet theexercise conditions, and due to the resignation ofsome of the incentive recipients, the Companycancelled the corresponding 11,164,621 shareoptions and 28,011,543 share options that had beengranted but had not yet been exercised.
For details, please refer to the
Announcement of Haier SmartHome Co., Ltd on theCancellation of Certain ShareOptions in the 2021 A ShareOption Incentive Scheme, the2022 A Share Option IncentiveScheme disclosed by theCompany on 30 April 2024, theAnnouncement of Haier SmartHome Co., Ltd on theCompletion of Cancellation ofCertain Share Options in the2021 A Share Option IncentiveScheme, the 2022 A ShareOption Incentive Scheme andrelevant contents disclosed bythe Company on 28 May 2024.Introduction of New Phase of A Share and H Share
Employee Stock Ownership Plan: In order tofurther improve the governance mechanism of theCompany, create shareholder value and promote thecomprehensive implementation of the Company’s IoTsmart home ecological brand strategy, the Companyconsidered and introduced the 2024 H Share CoreEmployee Stock Ownership Plan of Haier SmartHome Co., Ltd (Draft) and the 2024 A Share CoreEmployee Stock Ownership Plan of Haier SmartHome Co., Ltd (Draft) at the 10th meeting of the11th session of the Board of Directors held by theCompany on 29 April 2024 and the 2023 AnnualGeneral Meeting held by the Company on 20 June2024. During the reporting period, the Companypromoted the opening of accounts and other relatedworks for the 2023 A Share and H Share EmployeeStock Ownership Plan.
For details, please refer to the2024 A Share Core EmployeeStock Ownership Plan of HaierSmart Home Co., Ltd (Draft),the 2024 H Share CoreEmployee Stock Ownership Planof Haier Smart Home Co., Ltd(Draft) disclosed by theCompany on 30 April 2024 andthe Announcement ofResolutions at the GeneralMeeting and relevant contentsdisclosed by the Company on21 June 2024.
Section IV Corporate Governance
(II) Incentive events not disclosed in provisional announcements or with subsequent
developmentEquity incentive
Applicable √ Not ApplicableOther explanations
Applicable √ Not ApplicableEmployee stock ownership plan
Applicable √ Not ApplicableOther incentives
Applicable √ Not applicable
Section V Environmental and Social
Responsibilities
I. ENVIRONMENTAL INFORMATION(I) Explanation of the environmental protection status of companies and theirimportant subsidiaries that are key emission units announced by theenvironmental protection department
√ Applicable Not Applicable
1. Information on pollutant discharge
√ Applicable Not Applicable
The Company’s direct/indirect non-wholly owned subsidiaries Hefei Haier Refrigerator Co.,Ltd. (“Hefei Refrigerator”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao SpecialRefrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan HaierFreezer Co., Ltd (“Wuhan Freezer”), Wuhan Haier Electronics Holding Co., Ltd. (“WuhanAir-Conditioning”), Zhengzhou Haier Air-conditioning Co., Ltd. (“ZhengzhouAir-Conditioning”), Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited (“JiaozhouAir-Conditioning”), are among the key emission units announced by the local environmentalprotection department. The main information on pollutant discharge is as follows:
(1) Hefei Refrigerator
Main pollutants:
WastewaterAccording to the Integrated Wastewater Discharge Standard (GB8978–1996),Hefei Refrigerator should apply for a pollutant discharge permit and detect 8types of pollutants (including specific pollutants), namely, total nitrogen (as N),total phosphorus (as P), suspended solids, PH, chemical oxygen demand(COD), ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD
),and animal and vegetable oils.Exhaust gas. According to Emission Standard of Pollutants for Synthetic ResinIndustry (GB 31572–2015), Hefei Refrigerator should apply for a pollutantdischarge permit and detect pollutants. Main types of atmospheric pollutants:
particle matter, non-methane hydrocarbon, styrene, toluene, ethylbenzene Way of discharge: continuous dischargeNumber and distribution of discharge outlets: one for sewage, at the north
entrance of the Refrigerator Park; 20 for exhaust gas, at the Refrigerator Block
A (nine), Block B (eight) and Phase III Factory (three)
Section V Environmental and Social Responsibilities
Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount (data forJanuary-June 2024) are as follows:
No.Name of pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1COD93.31 mg/L16.1 tonsGeneral outfalls are
not subject toapproval for thetotal dischargeamount accordingto the dischargepermit.
No2Ammonia nitrogen12.78 mg/L2.73 tonsNo3Total nitrogen25.05 mg/L5.07 tonsNo4Total phosphorus2.01 mg/L0.41 tonsNo5Suspended solids43 mg/L8.63 tonsNo6BOD
56.75 mg/m?11.5 tonsNo7pH7.38/No8Animal and vegetable oils4.65 mg/L0.94 tonsNo9Non-methane hydrocarbon3.62 mg/m?4.33 tonsNo10Particle matter2.08 mg/m?0.26 tonsNo11Toluene0.09 mg/m?0.0081 tonsNo12Ethylbenzene0.017 mg/m?0.0017 tonsNo13Styrene0.048 mg/m?0.0042 tonsNo
(2) Qingdao Special Refrigerator
Main Pollutants:
Exhaust gas. In June 2024, according to the Administrative Measures forPollutant Discharge Licensing (for Trial Implementation) (HJ 978–2018), QingdaoSpecial Refrigerator should re-apply for a pollutant discharge permit with themanagement category of simplified management and detect the primary type ofpollutant in the atmosphere, namely non-methane hydrocarbon (VOCs), with themaximum concentration of discharge not exceeding 60mg/m?. Online detectionfacilities are installed and networked with the Ecology and Environment Bureaufor exhaust gas emission. Meanwhile, a qualified third-party testing unit iscommissioned to conduct organic exhaust gas concentration manual testing andissue a report on a quarterly basis.Wastewater: There is no wastewater generated by the business department, andthe domestic wastewater is discharged into the municipal sewage networkthrough the sewage pipes in Haier Industrial Park. Way of discharge: continuous emission
Section V Environmental and Social Responsibilities
Number and distribution of discharge outlets: two in total, one for absorptionexhaust port at the west side of the Special Refrigerator plant roof, which theexhaust gas treatment facilities were updated, installed and put into use in July2023, with the upgrading and adoption of activated carbon adsorption anddesorption + regenerative combustion process; and one for foam exhaust portat the west side of the Special Refrigerator plant roof.Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
No.Name of Pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1Non-methane hydrocarbon1.13 mg/m?0.108 tonsNo control regarding
the total amount ofdischarge
NoPollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries in Shandong Province(DB37/2801.7–2019)
(3) Wuhan Water Heater
Main Pollutant:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Wuhan Water Heater should apply for a pollutant discharge permit and detect 9types of pollutants (including specific pollutants), namely, COD, total zinc,suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygendemand (BOD5), PH, anionic surface active agent, total phosphorus, and animaland vegetable oils. Way of discharge: indirect dischargeNumber and distribution of discharge outlets: one, on the southwest of the
wastewater treatment plant, pipeline discharge
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
No.Name of Pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1COD13.74 mg/L2.05 tons9.075 tonsNo2Ammonia nitrogen0.07 mg/L0.0104 tons0.9075 tonsNo3Total phosphorus0.09mg/L0.0134 tons/No
Pollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962–2015)
(4) Wuhan Freezer
Main pollutants:
Organic exhaust gas. Exhaust gas pollutant discharge refers to the IntegratedEmission Standard of Air Pollutants, and the primary type of pollutant in theatmosphere detected are namely non-methane hydrocarbon (VOC), with themaximum concentration of discharge not exceeding 120 mg/m?. A qualifiedthird-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a half-yearly basis. Way of discharge: continuous dischargeNumber and distribution of discharge outlets: two in total, one exhaust port for
door at the south-west side of the plant, one exhaust port for curing at thesouth-west side of the plant.Concentration and total amount of discharge and approved total amount of
discharge: No control regarding the total amount of discharge of organicexhaust gasNo.Name of Pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1VOC5.42 mg/m
0.16368 tonsNo control regarding
the total amount ofdischarge
No
Section V Environmental and Social Responsibilities
(5) Wuhan Air-Conditioning
Main Pollutants:
Organic exhaust gas. Exhaust gas pollutant discharge refers to the IntegratedEmission Standard of Air Pollutants, and the primary type of pollutant in theatmosphere detected are namely non-methane hydrocarbon (VOC), with themaximum concentration of discharge not exceeding 120 mg/m?. A qualifiedthird-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a half-yearly basis. Way of discharge: continuous dischargeNumber and distribution of discharge outlets: five in total, one degreasing exhaustport at the south side of the plant roof, and three stamping exhaust ports at thesouth side of the plant roof and one spraying exhaust port at the north side ofthe spraying workshop roof.Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the amount of discharge of organic exhaust gasand particulate matterNo.Name of Pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1VOC0.698 mg/m?0.03523 tonsNo control regarding
the total amount ofdischarge
No
(6) Zhengzhou Air-Conditioning
Main Pollutant:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Zhengzhou Air-Conditioning should apply for a pollutant discharge permit anddetect 9 types of pollutants (including specific pollutants), namely, COD, totalzinc, suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygendemand (BOD5), PH, total phosphorus, and animal and vegetable oils. Way of discharge: indirect dischargeNumber and distribution of discharge outlets: one, on the north side of the
air-conditioning wastewater treatment plant, pipeline discharge
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
No.Name of pollutant
Concentrationof discharge
Total amountof discharge
Approvedtotal amountof discharge
Whether it isexcessivedischarge1COD29.62 mg/L1.1 tons/No2Ammonia nitrogen5.79 mg/L0.035 tons/No
(7) Jiaozhou Air-Conditioning
Main pollutants:
Hazardous waste. According to the national directory, 8 types of hazardouswaste detected are namely: waste oil, sludge, activated carbon, cotton filters,lightning tubes, soldering flux buckets, paint buckets and forklift battery.Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposalTotal amount of discharge and approved total amount of discharge:
No.Name of hazardous waste
Total amountof transfer
Total amountof managed plan
Whether it isexcessive discharge(tons)(tons)1Cotton filters0.422No2Waste oil20.2230No3Soldering flux buckets1.061.5No4Forklift battery16.320No5Sludge21.0850No6Paint buckets0.95No7Activated carbon2.186No8Lightning tubes0.060.5No
Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste.
Section V Environmental and Social Responsibilities
2. Construction and operation of pollution prevention and treatment facilities
√ Applicable Not Applicable
Jiaozhou Air-conditioning, Zhengzhou Air-conditioning, Wuhan Freezer, Wuhan WaterHeater, have one, one, one and two wastewater treatment plants with a designedtreatment capacity of 300 tons/day, 550 tons/day, 360 tons/day, 300 tons/day and 260tons/day, respectively. The construction, maintenance and daily operation of all wastewatertreatment facilities are conducted in accordance with the requirements of national and localenvironmental laws and regulations. Information on all wastewater discharge is subject to24-hour online monitoring and such monitored information is transmitted to environmentalauthorities in a real-time manner. All equipment is operating normally, and the discharge ofwastewater is steady and in compliance with standards. In addition, the Company fullypromotes all plants to install exhaust treatment facilities and VOCs online monitoringfacilities. All equipment is operating normally and exhaust produced is treated by theprevention and treatment facilities before compliant release and is monitored.
3. Environmental impact assessment of construction projects and other environmental
protection administrative permits
√ Applicable Not Applicable
The Company and its subsidiaries execute construction project implementation andproduction in accordance with the requirements of laws and regulations and strictly complywith the three simultaneous requirements of environmental protection for constructionprojects in the process of environmental impact assessment, and have passedenvironmental assessment acceptance and are not involved in any environmental illegalconducts such as construction before approval.
4. Emergency plans for environmental incidents
√ Applicable Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for EnvironmentalIncidents in accordance with the requirements of laws and regulations and organized drills,and continue to improve and upgrade the plans based on drill results.
Section V Environmental and Social Responsibilities
5. Self-monitoring environmental programs
√ Applicable Not Applicable
All pollutants of the Company are tested regularly, of which the discharge complies withnational and local environmental standard requirements. Wastewater collected is subject tostandard treatment and is released in a compliant manner. It is under real-time monitoringthrough the automatic online wastewater monitoring system, which shares its informationwith Haier Smart Energy System. In March 2017, the Company passed the upgradedcertification in relation to ISO14001 environment management system; In May 2021, aprofessional certification firm was appointed to conduct a review and audit on the operationof ISO14001 system in 2020, where satisfactory results were obtained to demonstrate itsgood operating condition; In May 2022, a review and audit was conducted on theoperation of system in 2021; In May 2023, a recertification audit was conducted on theoperation of system in 2022. In May 2024, a first review and audit was conducted on theoperation of system in 2023.
6. Administrative penalty due to environmental issues during the Reporting Period
Applicable √ Not Applicable
7. Other environmental information that should be disclosed
Applicable √ Not Applicable
(II) Explanation on environmental protection of companies other than major pollutant
emission units
√ Applicable Not Applicable
1. Administrative penalty due to environmental issues
Applicable √ Not Applicable
Section V Environmental and Social Responsibilities
2. Other environmental information disclosure with reference to major pollutant
emission units
√ Applicable Not Applicable
All divisions of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the threesimultaneous requirements of environmental protection for construction projects in theprocess of environmental impact assessment, and have passed environmental assessmentacceptance and are not involved in any environmental illegal conducts such as constructionbefore approval.Through Haier Smart Energy Center, an energy big data analysis system, the Companyimplements centralized dynamic monitoring and digitalized management in respect of majorenergy consumption, such as water, electricity and gas, of plants in the China region byutilizing automatized and informationalized technology and an integrated managementmodel. It collects precise information on energy resources and completes prediction andanalysis of energy consumption information to optimize energy adjustment, reduce energyconsumption per unit production to achieve low-carbon production.
3. Reasons for failure to disclose other environmental information
Applicable √ Not Applicable
(III) Explanation of the subsequent progress or changes in the disclosure of
environmental information content during the Reporting Period
√ Applicable Not Applicable
The Company will continue to maintain and improve existing results and strictly comply withexisting environmental protection and emission standards to achieve compliant emission.(IV) Relevant information favorable to ecological protection, pollution prevention and
control and environmental responsibility fulfillment Applicable √ Not Applicable
Section V Environmental and Social Responsibilities
(V) Measures taken during the Reporting Period to reduce its carbon emission andtheir effectiveness
√ Applicable Not Applicable
During the reporting period, the Company’s air-conditioning products pursued green andlow-carbon transformation and achieved significant results, with its carbon management capabilitybeing recognized by industry authorities: Qingdao Haier Air-Conditioner Co., Ltd., a subsidiary ofthe Company, was awarded the Carbon Management System Certification issued by the ChinaQuality Certification Center (CQC), making it the first enterprise in the industry to receive thiscertification. Based on the concept of green, low-carbon and sustainable development, HaierAir-Conditioner establishes and improves its carbon management system in accordance with therequirements of the carbon management system standard to evaluate the current state of thecompany’s carbon management, identify the main sources of greenhouse gas emissions withinthe organization, and formulate emission reduction measures to provide a “basis for carbonmanagement”. The measures include opening up new revenue sources for green carbondevelopment through high-standard laboratory performance and testing capabilities, etc.; therealization of carbon emission reduction by vigorously launching research on low-carbontechnologies and promoting their application; and the establishment of a green recycling systemthrough recycling to realize the reuse of resources and to lay a new track of “carbon reductionand emission control”. In the future, Haier Air-Conditioner will, based on the current state of itscarbon management, make sustainable improvements and optimizations for greenhouse gasemission reduction, and implement emission reduction plans in a targeted and planned manner interms of laboratory renovation, promotion and application of energy and technology, etc., so asto enhance its own capabilities while helping the industry in green transformation and upgrading.
II. PARTICULARS ON THE EFFORTS TO CONSOLIDATE AND EXPAND ITS
ACHIEVEMENTS IN POVERTY ALLEVIATION AND RURAL AREAINVIGORATION
√ Applicable Not Applicable
The Company attaches importance to the work of poverty alleviation and rural revitalization. Inaccordance with the series of national planning and filing requirements and within the scope ofauthorization of the shareholders’ general meeting on donations and other matters, the Company hasprovided targeted support to support rural revitalization. In the first half of 2024, the Company’s capitalexpenditure on targeted poverty alleviation amounted to approximately RMB3,870,000, which wasmainly used for educational poverty alleviation, etc. The Company has actively responded to the call ofthe government to fulfill its social responsibilities.
Section V Environmental and Social Responsibilities
During the reporting period, Haier Hope Primary School in Bahrain Left Banner held a ceremony for the“Haier Little Scientists Program”. As another important achievement of Haier’s “Smart CampusUpgrade Program”, smart scenarios such as smart laundry rooms have been deeply integrated intoschool life, bringing children a new smart and healthy campus life experience. In addition to the smartlaundry room, Haier has also built energy utilization scenarios for smart pantry room and green energyhut, which have comprehensively improved the learning environment of Hope Primary School, and havealso made the development of rural education come to fruition through technology. At present, thenational education digitization strategy has made positive progress, and the construction of campusinformatization is moving towards a new stage of smart campus with application, integration andinnovation. The Company is actively exploring the construction of smart campus, using technology togive children a new experience of growth, and effectively enhance the sense of achievement andhappiness of teachers and students by adding wings of “intelligence” for the high quality developmentof public welfare undertakings in education.
Section VI Significant Issues
I. FULFILLMENT STATUS OF UNDERTAKINGS(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to thereporting period
√ Applicable Not Applicable
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertaking relatedto significantreorganization ofassets
Eliminate theproperty rightdefects in landetc.
Haier GroupCorporation
During the period from September 2006 to
May 2007, the Company issued shares toHaier Group Corporation (“Haier Group”)to purchase the controlling equity in itsfour subsidiaries, namely Qingdao HaierAir-Conditioner Electronics Co., Ltd. (青島海爾空調電子有限公司), Hefei HaierAir-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier ElectronicsCo., Ltd. (武漢海爾電器股份有限公司),Guizhou Haier Electronics Co., Ltd. (貴州海爾電器有限公司). With regard to theland and property required in theoperation of Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青島海爾空調電子有限公司), Hefei HaierAir-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier ElectronicsCo., Ltd. (武漢海爾電器股份有限公司)(the “Covenantees”), Haier Group made anundertaking (the “2006 Undertaking”).According to the content of 2006Undertaking and then condition of eachCovenantee, Haier Group will constantlyassure that Covenantees will lease theland and property owned by Haier Groupfor free. Haier Group will makecompensation in the event that theCovenantees suffer loss due to theunavailability of such land and property.(Note)
27 September2006
YesLong-termYes
Address peer
competition
Haier Smart Home
Co., Ltd.
Prior to the Transaction (hereinafter “the
Transaction” refers to the transaction inrelation to the privatisation of HaierElectronics by Haier Smart Home), HaierElectric was a controlling subsidiary of theCompany and did not compete with theCompany; after the completion of theTransaction, Haier Electric became awholly-owned or controlling subsidiary ofthe Company and no new competitionwith the Company existed or will arise.There is no new peer competition orpotential competition between theCompany and other related partiescontrolled by the controlling shareholdersor the de facto controllers of theCompany.
31 July 2020YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayAddress connected
transactions
Haier GroupCorporation
1. The Transaction constitutes a connected
transaction and the connected transactionprocedures performed under the Transactionare in compliance with the relevantregulations. The pricing of the connectedtransaction is fair and there are nocircumstances under which the interests ofthe listed company and the non-connectedshareholders are prejudiced. 2. Uponcompletion of the Transaction, the Companyand its affiliates will take lawful and effectivemeasures to minimize and regulate theconnected transactions with the listedcompany, take the initiative to safeguard theinterests of the listed company and allshareholders, and refrain from takingadvantages of connected transactions forimproper benefits. 3. Provided that there is noconflict with laws and regulations, ifconnected transactions between the Companyand its affiliates and the listed company occuror exist which cannot be avoided or for whichthere are reasonable reasons, the Companyand its affiliates will legally enter into atransaction agreement with the listedcompany to ensure strict compliance with theprocedures of connected transactionsrequired by the laws, regulations, regulatorydocuments and the articles of association ofthe Company, conduct transactions inaccordance with the principles ofmarketability and fair prices to ensure thefairness and compliance of connectedtransactions, and refrain from takingadvantages of such connected transactions toengage in any acts that are detrimental to theinterests of the listed company or its minorityshareholders, and at the same time, complywith the information disclosure obligations inaccordance with relevant regulations.
29 July 2020YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayAddress peercompetition
Haier GroupCorporation
1. The Company and its controlling
subsidiary, Haier COSMO Co., Ltd., wereprincipally engaged in investment businessduring the reporting period, and the Companyand its controlling subsidiary, Haier COSMOCo., Ltd. (including its subsidiaries andentities with more than 30% shareholding),have no real or potential competition withHaier Smart Home; 2. the domestic andoverseas white goods businesses and assetsheld by the Company (including theCompany’s subsidiaries and entities withmore than 30% shareholding) have beeninjected into Haier Smart Home through assetconsolidation and equity transfer inaccordance with the commitments made bythe Company in January 2011 and therequirements for adjusting such commitmentsas considered and approved by Haier SmartHome at its 2014 annual general meeting; 3,Since the acquisition of 100% of Haier NewZealand Investment Holding Company Limited(which holds 100% of the shares in Fisher &Paykel Appliances Holdings Limited) by HaierSmart Home’s offshore subsidiary, HaierSingapore Investment Holding Co., Ltd.,following the completion in July 2018, theCompany (including the Company’ssubsidiaries and entities with more than 30%shareholding) and Haier Smart Home do nothave any competing relationship in anybusiness areas both within and outside thePRC. During the reporting period, theCompany (including the Company’ssubsidiaries and entities with more than 30%shareholding) did not have any new peercompetition with Haier Smart Home; 4. Uponcompletion of the Transaction, the Company(including the Company’s subsidiaries andentities with more than 30% shareholding)and its affiliates do not have any new orpotential peer competition with Haier SmartHome; 5. During the period when theCompany is the controlling shareholder ofHaier Smart Home and the shares of HaierSmart Home are listed on the Hong KongStock Exchange, the Company and its othersubsidiaries and entities with more than 30%shareholding will not operate any businessthat competes with the business engaged byHaier Smart Home and will not engage in realor potential competition with Haier SmartHome.
29 July 2020YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayOthersHaier Group
Corporation
Upon completion of the Transaction, theCompany will strictly comply with theCompany Law, the Securities Law, therelevant regulations of the China SecuritiesRegulatory Commission, the ShanghaiStock Exchange and the articles ofassociation of Haier Smart Home, etc.,fairly exercise shareholders’ rights andfulfill shareholders’ obligations, refrain fromtaking advantage of its shareholdingposition for improper benefits, ensure thelisted company will continue to becompletely separate from the Companyand other enterprises on which theCompany exercises control and exertssignificant influence in terms ofmanagement, personnel, assets, finance,organization and business operations, andmaintain the continued independence ofthe listed company in terms ofmanagement, personnel, assets, finance,organization and business operations.Upon completion of the Transaction, theCompany will comply with the provisionsof the Notice on Several Issuesconcerning Regulating Fund Transactionsbetween Listed Companies and TheirAffiliates and the External Guarantee ofListed Companies and the Circular ofChina Securities Regulatory Commissionand China Banking RegulatoryCommission on Regulating the ExternalGuaranties Provided by Listed Companiesto regulate the external guarantees bylisted companies and their subsidiaries,and will not misappropriate the funds ofthe listed company and their subsidiaries.The Company undertakes to strictly fulfillthe above commitments. In the event thatthe interests of the listed company aredamaged as a result of any breach of theabove commitments by the Company andother enterprises on which the Companyexercises control and exerts significantinfluence, the Company will legally bearthe corresponding liability for damage.
29 July 2020YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayAddress connectedtransactions
HCH (HK)INVESTMENTMANAGEMENTCO., LIMITED
1. The Transaction constitutes a connected
transaction and the connected transactionprocedures performed under the Transactionare in compliance with the relevantregulations. The pricing of the connectedtransaction is fair and there are nocircumstances under which the interests ofthe listed company and the non-connectedshareholders are prejudiced. 2. Uponcompletion of the Transaction, the Companyand other enterprises on which the Companyexercises control will take lawful and effectivemeasures to minimize and regulate theconnected transactions with the listedcompany, take the initiative to safeguard theinterests of the listed company and allshareholders, and refrain from takingadvantages of connected transactions forimproper benefits. 3. Provided that there is noconflict with laws and regulations, ifconnected transactions between the Companyand other enterprises on which the Companyexercise control and the listed company occuror exist which cannot be avoided or for whichthere are reasonable reasons, the Companyand other enterprises on which the Companyexercises control will legally enter into atransaction agreement with the listedcompany to ensure strict compliance with theprocedures of connected transactionsrequired by the laws, regulations, regulatorydocuments and the articles of association ofthe Company, conduct transactions inaccordance with the principles ofmarketability and fair prices, and refrain fromtaking advantages of such connectedtransactions to engage in any acts that aredetrimental to the interests of the listedcompany or its minority shareholders, and atthe same time, comply with the informationdisclosure obligations in accordance withrelevant regulations. 4. Any covenants andarrangements between the Company andother enterprises on which the Companyexercise control and the listed company inrelation to connected transactions shall notprevent the other party from conductingbusiness or dealing with any third party for itsown benefit and on equal competitive termsin the market.
29 July 2020YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertaking relatedto refinancing
Eliminate theproperty rightdefects in landetc.
Haier GroupCorporation
Haier Group Corporation undertakes that itwill assure Haier Smart Home and itssubsidiaries of the constant, stable andunobstructed use of the leased property.In the event that Haier Smart Home orany of its subsidiaries suffers anyeconomic loss due to the fact that leasedproperty has no relevant ownershipcertificate, Haier Group Corporation willmake compensation to impaired party in atimely and sufficient way and take allreasonable and practicable measures tosupport the impaired party to recover tonormal operation before the occurrence ofloss. Upon the expiration of relevantleasing period, Haier Group Corporationwill grant or take practicable measures toassure Haier Smart Home and itssubsidiaries of priority to continue to leasethe property at a price not higher than therent in comparable market at that time.Haier Group Corporation will assure HaierSmart Home and its subsidiaries of theconstant, stable, free and unobstructeduse of self-built property and land of theGroup. In the event that Haier SmartHome or any of its subsidiaries fails tocontinue to use self-built propertyaccording to its own will or in original waydue to the fact that self-built property hasno relevant ownership certificate, HaierGroup Corporation will take all reasonableand practicable measures to eliminateobstruction and impact, or will supportHaier Smart Home or its affectedsubsidiary to obtain alternative property assoon as possible, if Haier GroupCorporation anticipates it is unable tocope with or eliminate the externalobstruction and impact with itsreasonable effort. For details, please referto the Announcement of Qingdao HaierCo., Ltd. on the Formation, CurrentSituation of the Defective Property, theInfluence on Operation of Issuer Causedby Uncertainty of Ownership, Solution forthe Defect and Guarantee Measures(L2014-005) published by the Companyon the four major securities newspapersand the website of Shanghai StockExchange on 29 March 2014.
24 December 2013YesLong-termYes
Section VI Significant Issues
Background ofundertakings
Type ofundertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertakings relatedto equityincentive
OthersHaier Smart Home
Co., Ltd
The Company will not provide loans or anyother forms of financial assistance,including guaranteeing their loans, to anyincentive recipient for acquiring relevantstock options under this incentive plan.
15 September2021/28 June2022
YesThe completion of
equity incentiveimplementation
Yes
Other undertakingsAsset injectionHaier Group
Corporation
Inject the assets of Haier Photoelectric to theCompany or dispose such assets throughother ways according to the requirementsof the domestic supervision before June2025. For more details, please refer to theAnnouncement of Haier Smart Home Co.,Ltd. on the Changes of SomeCommitments on Asset Injection(L2020-024) published on the four majorsecurities newspapers and the website ofShanghai Stock Exchange on 30 April2020.
December 2015YesJune 2025Yes
Note: During the reporting period, the undertaking was fulfilled since all Covenantees of the undertaking has obtained the real property
ownership certificates.
Section VI Significant Issues
II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLING
SHAREHOLDERS AND OTHER RELATED PARTIES DURING THEREPORTING PERIOD. Applicable √ Not ApplicableIII. INFORMATION ON NON-COMPLIANCE GUARANTEES
Applicable √ Not Applicable
IV. INFORMATION ON INTERIM AUDIT
Applicable √ Not ApplicableV. CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDITOPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITSHANDLING Applicable √ Not ApplicableVI. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
Applicable √ Not Applicable
VII. MATERIAL LITIGATION AND ARBITRATION MATTERS
Material litigation and arbitration matter during the reporting period
√ No material litigation and arbitration matters during the reporting period
VIII. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITSDIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECTOF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION
Applicable √ Not applicable
IX. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND
ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERDURING THE REPORTING PERIOD
Applicable √ Not applicable
Section VI Significant Issues
X. SIGNIFICANT RELATED-PARTY TRANSACTIONS (I) Related-party transactions relating to daily operation
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change Applicable √ Not applicable
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 subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
4. If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed
Applicable √ Not applicable
Section VI Significant Issues
(III) Significant related-party transactions of joint external investment
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable (IV) Amounts due to or from related parties
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcement and with subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
Section VI Significant Issues
(V) Financial business between the Company and the finance company with which
it has a related relationship, the company’s controlling finance company andrelated parties
√ Applicable Not applicable
1. Deposit business
√ Applicable Not applicable
Unit and Currency: RMB
Changes of the periodRelated partyRelationship
Maximum daily
deposit limit
Range of depositinterestOpening balance
Total amountdeposited duringthe period
Total amountwithdrawn duringthe period
ClosingbalanceHaier Finance Co.,Ltd.
Subsidiary of HaierGroup
34 billion0.00012%to 3.5%33,654,242,534.50285,540,013,292.96285,309,670,757.9633,884,585,069.50Total///33,654,242,534.50285,540,013,292.96285,309,670,757.9633,884,585,069.50
2. Lending business
√ Applicable Not applicable
Unit and Currency: RMB
Changes of the periodRelated partyRelationshipLoan limit
Range of loan
interest
Openingbalance
Totalamount lent
during the
period
Total amount
repaidduring theperiod
ClosingbalanceHaier FinanceCo., Ltd.
Subsidiary ofHaier Group
10 billion/0000Total///0000
Section VI Significant Issues
3. Trustee business or other finance businesses
√ Applicable Not applicable
Unit and Currency: RMBRelated partyRelationshipType of businessTotal amount
Actual number of
occurrenceHaier Finance Co.,Ltd.
Subsidiary of HaierGroup
Foreign exchangederivativesproducts
5.5 billion213,576,000.00
Haier Finance Co.,
Ltd.
Subsidiary of HaierGroup
Service charge80 million4,425,427.95
4. Other explanations
Applicable √ Not applicable (VI) Other material related transactions
Applicable √ Not applicable (VII) Others
Applicable √ Not applicable
Section VI Significant Issues
XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
1 Trusteeship, contracting and leasing
Applicable √ Not applicableDuring the reporting period, the Company had no material escrow matters. Up to now, thefollowing entrusted assets that have been approved by the Company’s shareholders’ meeting arestill in effect:
According to Haier Group’s commitment in 2011 on further supporting the development ofQingdao Haier and resolving peer competition to reduce connected transactions, based on thefact that Qingdao Haier Optoelectronics Co., Ltd. (青島海爾光電有限公司) and its subsidiaries,the main body of Haier Group engaging in the color television business, are still in a period oftransformation and integration, and their financial performance has not yet met the Company’sexpectations, Haier Group is unable to complete the transfer before the aforesaid commitmentperiod. Haier Group intends to entrust the Company with the operation and management of theescrow assets and pay the Company an annual escrow fee of RMB1 million during the escrowperiod. 2 Significant guarantees performed and outstanding during the reporting period
√ Applicable Not Applicable
Unit and Currency: RMB0’000
External guarantees provided by the Company (excluding guarantees for subsidiaries)Guarantor
Relationshipbetween theguarantor andthe listedcompanySecuredpartyAmount ofguarantee
Date ofoccurrence
of theguarantee
(date ofagreement)
Commencementdate of guarantee
Expiry dateof guarantee
Type ofguaranteeStatus ofprincipleliabilitiesCollateral(if any)Whether theguaranteehas beenfulfilledWhether theguarantee isoverdueOverdueamount oftheguarantee
Whetherthere is acounter-guarantee
Whetherrelated-partyguaranteeor notRelationshipTotal amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiariesTotal amount of guarantees for subsidiaries occurred during the reporting period1,404,017Total balance of guarantees for subsidiaries at the end of the reporting period (B)1,296,712
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)Total amount of guarantee (A + B)1,296,712Ratio of total amount of guarantees to net assets of the Company (%)Including:
Amount of guarantees for shareholders, ultimate controllers and their related parties (C)0Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D)782,927The amount of total amount of guarantee in excess of 50% of net assets (E)0Total amount of the above three guarantees (C + D + E)782,927Explanation of possibly bearing related discharge duty for premature guaranteesNilExplanation of guarantee statusNil3 Other major contracts
Applicable √ Not Applicable
Section VI Significant Issues
XII. EXPLANATION OF PROGRESS IN USE OF PROCEEDS
Applicable √ Not ApplicableXIII. EXPLANATION OF OTHER SIGNIFICANT EVENTS
√ Applicable Not Applicable
Entrusted wealth management: By the end of the reporting period, the balance of the Company’sentrusted wealth management amounted to RMB2.145 billion. Under the premise of ensuring sufficientcapital required by the principal operating activities and daily operations, the Company and some of itssubsidiaries purchased some low-risk wealth management products and structured deposits from majorcommercial banks to improve the yield of temporarily-idle funds and the return for shareholders withinthe authority of the president’s office meeting and under the condition of ensuring fund safety.
Section VII Changes in Shares andInformation About Shareholders
I. CHANGES IN SHARE CAPITAL (I) Table of Changes in shares
1. Table of Changes in shares
During the reporting period, there was no change in the total number of shares and sharecapital 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 the disclosure dateof interim report Applicable √ Not Applicable
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities Applicable √ Not Applicable (II) Changes in shares with selling restrictions
Applicable √ Not ApplicableII. INFORMATION ON SHAREHOLDERS (I) Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period112,985Total number of preferential shareholders with restoration of voting rights
by the end of the reporting period
N/A
Section VII Changes in Shares and Information About Shareholders
(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable
shares (or shareholders without selling restrictions) by the end of the reportingperiod
Unit: shareShareholdings of top ten shareholders (excluding shares lent out under refinancing)
Name of shareholder(full name)
Increase/decreaseduring thereportingperiod
Number ofshares heldat the end of
the period
Percentage(%)Number ofshares heldwith sellingrestrictions
Status of shares pledged,marked or frozen
Nature ofshareholderStatus ofsharesNumberHKSCC NOMINEES LIMITED2,314,600,08124.52UnknownUnknownHaier COSMO Co., Ltd.
(海爾卡奧斯股份有限公司)
1,258,684,82413.34NoneDomestic non-state-
owned legal entityHaier Group Corporation1,072,610,76411.36NoneDomestic non-state-
owned legal entityHong Kong Securities Clearing
Co., Ltd.
71,261,645665,064,5747.05NoneUnknownHCH (HK) INVESTMENTMANAGEMENT CO., LIMITED
538,560,0005.71NoneForeign legal entityChina Securities FinanceCorporation Limited
182,592,6541.93NoneUnknownQingdao Haier Venture &Investment Information Co.,Ltd. (青島海爾創業投資咨詢有限公司)
172,252,5601.83NoneDomestic non-state-
owned legal entityQingdao HaichuangzhiManagement ConsultingEnterprise (LimitedPartnership) (青島海創智管理咨詢企業（有限合伙）)
133,791,0581.42NoneDomestic non-state-
owned legal entityIndustrial and Commercial Bank
of China -SSE 50 ExchangeTraded Open-End IndexSecurities Investment Fund
14,617,10060,753,4580.64NoneUnknownClearstream Banking S.A.58,352,2680.62NoneUnknown
Section VII Changes in Shares and Information About Shareholders
Shareholdings of top ten shareholders without selling restrictions (excluding shares lent
out under refinancing
Name of shareholder
Number oftradable sharesheld withoutsellingrestrictionsClass and number of shares
ClassNumberHKSCC NOMINEES
LIMITED
2,314,600,081Overseas listed foreign
shares
2,314,600,081Haier COSMO Co., Ltd.(海爾卡奧斯股份有限公司)
1,258,684,824RMB ordinary1,258,684,824Haier Group
Corporation
1,072,610,764RMB ordinary1,072,610,764Hong Kong SecuritiesClearing Co., Ltd.
665,064,574RMB ordinary665,064,574HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED
538,560,000Overseas listed foreign
shares
538,560,000China Securities Finance
Corporation Limited
182,592,654RMB ordinary182,592,654Qingdao Haier Venture &
InvestmentInformation Co., Ltd.(青島海爾創業投資咨詢有限公司)
172,252,560RMB ordinary172,252,560
Qingdao Haichuangzhi
ManagementConsulting Enterprise(Limited Partnership)(青島海創智管理咨詢企業（有限合伙）)
133,791,058RMB ordinary133,791,058
Industrial andCommercial Bank ofChina -SSE 50Exchange TradedOpen-End IndexSecurities InvestmentFund
60,753,458RMB ordinary60,753,458
Clearstream BankingS.A.
58,352,268Overseas listed foreign
shares
58,352,268
Section VII Changes in Shares and Information About Shareholders
Name of shareholder
Number oftradable sharesheld withoutsellingrestrictionsClass and number of shares
ClassNumberExplanation ofrepurchase account oftop ten shareholders
The repurchase accounts of the Company held a total of145,238,037 shares.Explanation of delegatedvoting rights,entrusted votingrights, abstainedvoting rights of theabove shareholders
Nil
Explanation of relatedparties or partiesacting in concertamong the aforesaidshareholders
(1) Haier COSMO Co., Ltd. (海爾卡奥斯股份有限公司) is a
subsidiary of Haier Group Corporation. Haier GroupCorporation holds 51.20% of its equity. Qingdao HaierVenture & Investment Information Co., Ltd. (青島海爾創業投資咨詢有限公司), HCH (HK) INVESTMENT MANAGEMENTCO., LIMITED and Qingdao Haichuangzhi ManagementConsulting Enterprise (Limited Partnership) (青島海創智管理咨詢企業（有限合伙）) are parties acting in concert with HaierGroup Corporation; (2) The Company is not aware of theexistence of any connections of other shareholders.Explanation ofpreferentialshareholders withrestoration of votingrights and theirshareholdings
Not applicable
Shareholders holding more than 5% of the shares, top ten shareholders and top ten holders ofoutstanding shares without selling restrictions participating in the lending of shares under therefinancing business Applicable √ Not Applicable
Section VII Changes in Shares and Information About Shareholders
Changes in top ten shareholders and top ten holders of outstanding shares without sellingrestrictions due to lending/returning under refinancing as compared to the previous period Applicable √ Not ApplicableNumber of shares held by top ten shareholders with selling restrictions and the sellingrestrictions
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. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT(I) Changes of shareholding of current and retired directors, supervisors and senior
management during the reporting period
Applicable √ Not ApplicableOther explanations
Applicable √ Not Applicable
Section VII Changes in Shares and Information About Shareholders
(II) Incentive share option granted to directors, supervisors and senior management
during the reporting period
√ Applicable Not Applicable
Unit: 0’000 shares
NamePosition
Number ofstock optionsheld at thebeginning ofthe period
Number ofstock optionsnewly grantedduring thereporting
period
Exercisablesharesoptionsduring thereportingperiod
Shares fromstock optionsexercisedduring thereportingperiod
Number ofstock optionsheld at theend of theperiodLi HuagangDirector54.83–
18.2836.56
Gong WeiDirector27.42–
9.1418.28
Xie JuzhiSenior management54.83–
18.2836.56
Li PanSenior management27.42–
9.1418.28
Song YujunSenior management18.72–
6.2412.49
Zhao YanfengSenior management28.09–
9.3618.73
Huang XiaowuSenior management27.42–
9.1418.28
Wu YongSenior management13.71–
4.579.14
Li YangSenior management27.42–
9.1418.28
Guan JiangyongSenior management13.71–
4.579.14
Liu XiaomeiSenior management8.74–
2.915.82
Total/302.32–
100.77201.55
Section VII Changes in Shares and Information About Shareholders
(III) Other explanations
Applicable √ Not Applicable
IV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATECONTROLLER
Applicable √ Not Applicable
Section VIII Relevant Information of
Preferred Shares
Applicable √ Not Applicable
Section IX Relevant Information ofCorporate Bonds
I. CORPORATE BOND (INCLUDING ENTERPRISE BOND) ANDNON-FINANCIAL CORPORATE DEBT FINANCING INSTRUMENTS Applicable √ Not ApplicableII. CONVERTIBLE CORPORATE BOND
Applicable √ Not Applicable
Section X Financial Report
I. AUDIT REPORT
Applicable √ Not ApplicableII. FINANCIAL STATEMENTSConsolidated Balance Sheet30 June 2024Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
ItemsNotes30 June 202431 December 2023
Current assets:
Monetary fundsVII.154,705,626,157.4454,486,452,841.14Provision of settlement fundFunds lentFinancial assets held for tradingVII.21,066,569,759.01953,963,543.83Derivative financial assetsVII.386,713,582.9367,565,829.44Bills receivableVII.47,147,471,192.398,621,434,831.39Accounts receivableVII.523,517,845,844.8420,268,099,436.43Financing receivablesVII.61,035,015,815.141,238,294,930.51PrepaymentsPremiums receivableReinsurance accounts receivableReinsurance contract reserves receivableOther receivablesVII.72,731,270,164.672,649,558,985.05Including: Interest receivables676,041,225.16748,496,020.24
Dividends receivablesFinancial assets purchased under resale
agreementsInventoriesVII.839,453,614,462.1039,524,006,616.33Including: Data resourcesContract assetsVII.9300,808,605.96260,939,408.73Assets held for saleNon-current assets due within one yearOther current assetsVII.104,472,061,327.094,550,167,668.68Total current assets134,516,996,911.57132,620,484,091.53Non-current assets:
Loans and advances grantedDebt investmentsVII.1114,477,621,780.978,841,233,078.66Other debt investmentsLong-term receivables351,899,806.17350,409,496.85
Section X Financial Report
ItemsNotes30 June 202431 December 2023
Long-term equity investmentsVII.1226,038,301,146.4925,546,793,450.20Investments in other equity instrumentsVII.136,281,814,366.536,403,694,954.77Other non-current financial assetsInvestment propertiesVII.1480,227,845.9498,631,080.77Fixed assetsVII.1529,686,001,800.4029,603,936,822.78Construction in progressVII.165,787,636,237.755,403,469,596.76Biological assets for productionOil and gas assetsRight-of-use assetsVII.174,815,237,702.434,367,081,679.74Intangible assetsVII.1810,814,254,709.7511,006,230,700.93Including: Data resourcesDevelopment cost284,998,053.97266,490,235.10Including: Data resourcesGoodwillVII.1924,341,834,392.3524,289,726,694.80Long-term prepaid expensesVII.20628,084,750.01741,745,517.64Deferred income tax assetsVII.211,782,173,574.041,805,945,632.16Other non-current assetsVII.222,364,161,933.182,033,986,945.28Total non-current assets127,734,248,099.98120,759,375,886.44Total assets262,251,245,011.55253,379,859,977.97Current liabilities:
Short-term borrowingsVII.2310,333,169,856.5410,318,351,841.88Borrowings from central bankFunds borrowedFinancial liabilities held for tradingDerivative financial liabilitiesVII.24191,751,522.44168,625,004.97Bills payableVII.2523,389,001,752.3522,215,726,721.62Accounts payablesVII.2647,200,496,446.9347,061,789,173.62Receipts in advanceContract liabilitiesVII.273,256,026,994.757,731,916,491.54Disposal of repurchased financial assetsAbsorbing deposit and deposit in inter-
bank marketCustomer deposits for trading in securitiesAmounts due to issuer for securities
underwritingPayables for staff’s remunerationVII.283,896,760,934.555,077,517,828.50Taxes payableVII.293,677,057,061.932,841,215,524.73Other payablesVII.3027,248,243,510.9019,181,569,184.83Including: Interest payables
Dividends payables7,515,895,607.631,880,719.69Fees and commissions payableReinsurance Accounts payablesLiabilities held for saleNon-current liabilities due within one yearVII.315,327,717,384.223,732,550,549.23
Section X Financial Report
ItemsNotes30 June 202431 December 2023Other current liabilitiesVII.321,095,321,670.221,651,239,151.52Total current liabilities125,615,547,134.83119,980,501,472.44Non-current liabilities:
Deposits for insurance contractsLong-term borrowingsVII.3318,123,651,118.1917,936,302,925.77Bonds payableIncluding: Preference sharesPerpetual bondsLease liabilitiesVII.343,724,630,519.723,286,801,426.17Long-term payablesVII.3551,160,960.1657,113,422.78Long-term payables for staff’sremunerationVII.361,055,014,630.921,085,454,839.18Estimated liabilitiesVII.372,005,235,110.361,935,014,042.24Deferred incomeVII.381,027,202,647.441,050,319,606.44Deferred income tax liabilitiesVII.211,968,954,413.502,028,390,554.20Other non-current liabilities95,069,810.18108,218,339.24Total non-current liabilities28,050,919,210.4727,487,615,156.02Total liabilities153,666,466,345.30147,468,116,628.46Owners’ equity(or shareholders’ equity):
Paid-in capital (or share capital)VII.399,438,114,893.009,438,114,893.00Other equity instrumentsIncluding: Preference shares
Perpetual bondsCapital reserveVII.4023,906,949,506.8623,762,354,684.05Less: treasury stockVII.415,500,665,317.855,034,065,107.42Other comprehensive incomeVII.421,635,545,031.021,969,724,027.01Special reserveSurplus reserveVII.434,842,338,543.804,842,338,543.80General risk provisionsUndistributed profitsVII.4471,412,017,694.5568,535,686,494.60Total equity attributable to owners(or shareholders) of the Parent Company105,734,300,351.38103,514,153,535.04Minority shareholders’ interests2,850,478,314.872,397,589,814.47
Total owners’ equity
(or shareholders’ equity)108,584,778,666.25105,911,743,349.51Total liabilities and owners’ equity
(or shareholders’ equity)262,251,245,011.55253,379,859,977.97Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Balance Sheet of the Parent Company
30 June 2024Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMBItemsNotes30 June 202431 December 2023Current Assets:
Monetary funds11,222,371,826.587,579,640,524.79Financial assets held for tradingDerivative financial assetsBills receivableAccounts receivableXIX.11,859,987,722.131,625,777,099.03Financing receivablesPrepayments3,115,793.213,212,938.83Other receivablesXIX.221,890,675,172.4923,649,977,816.57Including: Interest receivables141,536,597.40117,439,655.79
Dividends receivables872,819,744.23570,000,000.00Inventories6,163,640.835,400,498.27Including: Data resourcesContract assetsAssets held for saleNon-current assets due within one yearOther current assets1,553,369,952.401,530,274,566.66Total current assets36,535,684,107.6434,394,283,444.15Non-current assets:
Debt investments7,723,497,912.202,884,204,032.25Other debt investmentsLong-term receivablesLong-term equity investmentsXIX.356,433,082,587.8255,828,696,006.06Investments in other equity instruments1,619,260,874.041,619,260,874.04Other non-current financial assetsInvestment propertiesFixed assets141,983,596.38154,588,551.47Construction in progress3,614,971.916,054.40Biological assets for productionOil and gas assetsRight-of-use assetsIntangible assets38,255,002.9841,307,540.86Including: Data resourcesDevelopment costIncluding: Data resourcesGoodwill
Section X Financial Report
ItemsNotes30 June 202431 December 2023Long-term prepaid expenses3,508,130.343,777,722.63Deferred income tax assetsOther non-current assets1,498,818,858.081,501,734,455.48Total non-current assets67,462,021,933.7562,033,575,237.19
Total assets103,997,706,041.3996,427,858,681.34Current liabilities:
Short-term borrowingsFinancial liabilities held for tradingDerivative financial liabilitiesBills payableAccounts payables1,326,647,081.321,120,671,258.40Receipts in advanceContract liabilities22,930,469.1122,930,469.11Payables for staff’s remuneration8,273,623.0728,602,784.57Taxes payable973,985.015,590,668.41Other payables58,922,007,427.9845,012,683,942.96Including: Interest payable
Dividends payable7,513,967,094.69Liabilities held for saleNon-current liabilities due within one year1,601,000,000.00134,000,000.00Other current liabilities17,257,623.4012,486,915.31Total current liabilities61,899,090,209.8946,336,966,038.76Non-current liabilities:
Long-term borrowings3,238,500,000.003,779,500,000.00Bonds payableIncluding: Preference shares
Perpetual bondsLease liabilities58,624.38Long-term payableLong-term payables for staff’s
remunerationEstimated liabilitiesDeferred income12,973,300.0012,973,300.00Deferred income tax liabilities420,053,312.58420,053,312.58Other non-current liabilitiesTotal non-current liabilities3,671,585,236.964,212,526,612.58Total liabilities65,570,675,446.8550,549,492,651.34Owners’ equity
(or Shareholders’ equity):
Paid-in capital (or share capital)9,438,114,893.009,438,114,893.00Other equity instrumentsIncluding: Preference sharesPerpetual bondsCapital reserve27,446,396,776.6527,263,651,777.44Less: treasury stock3,641,894,152.793,175,293,942.36
Section X Financial Report
ItemsNotes30 June 202431 December 2023Other comprehensive income669,143,133.11630,674,691.95Special reserveSurplus reserve4,237,192,318.354,237,192,318.35Undistributed profits278,077,626.227,484,026,291.62Total owners’ equity(or shareholders’ equity)38,427,030,594.5445,878,366,030.00Total liabilities and owners’ equity(or shareholders’ equity)103,997,706,041.3996,427,858,681.34Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Consolidated Profit StatementJanuary-June 2024
Unit and Currency: RMBItemsNotes2024 Interim2023 InterimI. Total operating revenue135,622,549,121.01131,628,595,912.05Including: Operating revenueVII.45135,622,549,121.01131,628,595,912.05
Interest incomeInsurance premiums earnedFee and commission incomeII. Total cost of operations123,666,371,198.78121,337,680,704.03Including: Operating costVII.4594,106,431,686.6691,557,518,745.02
Interest expensesFee and commission expensesInsurance withdrawal paymentNet payment from indemnityNet provisions withdrew forinsurance contract liabilityInsurance policy dividend paidReinsurance costTaxes and surchargesVII.46538,267,458.26533,099,572.52Selling expensesVII.4718,687,502,154.8918,768,944,057.44Administrative expensesVII.485,186,349,563.445,461,681,481.50R&D expensesVII.495,088,901,166.885,025,786,116.64Financial expensesVII.5058,919,168.65–9,349,269.09Including: Interest expenses1,226,384,743.58875,078,615.27
Interest income912,438,277.44614,901,995.27Add: Other incomeVII.51555,087,752.52601,375,268.80
Investment income
(losses are represented by ‘-’)VII.521,039,614,193.701,129,768,360.36Including: investment income of
associates and joint ventures1,021,852,565.421,078,905,972.36Income generated from the
derecognition of financial assets
measured at amortized cost
(losses are represented by ‘-’)Exchange gain
(losses are represented by ‘-’)Gains on net exposure hedges
(losses are represented by ‘-’)Income from change in fair value
(losses are represented by ‘-’)VII.53–29,565,597.8231,271,562.35Loss on credit impairment
(losses are represented by ‘-’)VII.54–58,013,951.73–165,968,929.36
Section X Financial Report
ItemsNotes2024 Interim2023 Interim
Loss on assets impairment
(losses are represented by ‘-’)VII.55–710,556,264.52–779,748,575.44Gain from disposal of assets
(losses are represented by ‘-’)VII.56–2,583,904.37–20,647,304.64III. Operating profit(losses are represented by ‘-’)12,750,160,150.0111,086,965,590.09Add: non-operating incomeVII.5773,423,091.3458,784,451.89Less: non-operating expensesVII.5884,518,604.7432,299,513.21IV. Total profit
(total losses are represented by ‘-’)12,739,064,636.6111,113,450,528.77Less: income tax expenseVII.592,131,741,494.482,069,767,775.55V. Net profit
(net losses are represented by ‘-’)10,607,323,142.139,043,682,753.22
(1) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by ‘-’)10,607,323,142.139,043,682,753.22
2. Net profit from discontinued
operation (net losses arerepresented by ‘-’)
(2) Classification by ownership of
the equity
1. Net profit attributable to shareholders
of the Parent Company (net lossesare represented by ‘-’)10,420,218,389.228,962,851,469.46
2. Profit or loss attributable to minority
shareholders (net losses arerepresented by ‘-’)187,104,752.9180,831,283.76VI. Other comprehensive income, net of taxVII.60–334,806,467.13136,824,101.13
(I) Other comprehensive income
attributable to owners of the ParentCompany, net of tax–335,021,596.15155,051,059.64
1. Other comprehensive income that
cannot be reclassified into theprofit or loss–128,316,608.2536,663,726.03
(1) Changes arising from
re-measurement ofdefined benefit plans–2,491,664.0732,438,331.87
(2) Other comprehensive income
that cannot be transferred intoprofit or loss under equitymethod
(3) Changes in fair value of
investments in other equityinstruments–125,824,944.184,225,394.16
Section X Financial Report
ItemsNotes2024 Interim2023 Interim
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss–206,704,987.90118,387,333.61
(1) Other comprehensive income
that can be transferred intoprofit or loss under equitymethod23,160,537.38–15,508,344.88
(2) Changes in fair value of other
debt Investments
(3) Reclassified financial assets that
are credited to othercomprehensive income
(4) Credit impairment provision for
other debt investments
(5) Reserve for cash flow hedging
–30,039,858.31–193,755,242.84
(6) Exchange differences on
translation of financialstatements denominated inforeign currencies–199,825,666.97327,650,921.33
(7) Others
(II) Other comprehensive income
attributable to minority shareholders,net of tax215,129.02–18,226,958.51VII. Total comprehensive income10,272,516,675.009,180,506,854.35
(I) Total comprehensive incomeattributable to the owners ofParent Company10,085,196,793.079,117,902,529.10(II) Total comprehensive income
attributable to the minorityshareholders187,319,881.9362,604,325.25VIII. Earnings per share:
(I) Basic earnings per share (RMB/share)XXI.11.130.96(II) Diluted earnings per share
(RMB/share)XXI.11.120.96For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB0, and the net profit of the acquiree for the previous periodwas RMB–1,024,530.38.Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Profit Statement of the Parent CompanyJanuary-June 2024
Unit and Currency: RMBItemsNotes2024 Interim2023 InterimI. Operating incomeXIX.4251,601,614.76327,406,706.84Less: operating costXIX.4223,444,233.50286,220,868.43Taxes and surcharges2,634,526.123,754,801.82Selling expenses21,861,602.214,603,666.69Administration expenses379,191,355.33377,868,026.53R&D expenses7,802,548.596,617,045.16Financial expenses–179,030,129.87–92,308,439.54Including: interest expenses52,482,308.3932,509,056.33
Interest income233,381,967.37115,693,759.65Add: other income4,280,121.771,361,535.00Investment income (losses arerepresented by ‘-’)XIX.5508,175,341.20400,717,692.54Including: investment income of
associates and joint ventures180,476,867.12144,556,606.76
Derecognition income onfinancial assetsmeasured at amortizedcost (losses arerepresented by ‘-’)Gains on net exposure hedges
(losses are represented by ‘-’)Income from change in fair value
(losses are represented by ‘-’)Loss on credit impairment (losses
are represented by ‘-’)47,441.31Loss on assets impairment
(losses are represented by ‘-’)Gain from disposal of assets
(losses are represented by ‘-’)II. Operating profit
(losses are represented by ‘-’)308,152,941.85142,777,406.60Add: non-operating income97,965.97Less: non-operating expenses134,512.5678,702.83III. Total profit
(total losses are represented by ‘-’)308,018,429.29142,796,669.74Less: income tax expenses1,205.40IV. Net profit
(net losses are represented by ‘-’)308,018,429.29142,795,464.34
Section X Financial Report
ItemsNotes2024 Interim2023 Interim(I) Net profit from continuous operations(net losses are represented by ‘-’)308,018,429.29142,795,464.34(II) Net profit from discontinued operations(net losses are represented by ‘-’)V. Other comprehensive income, net of tax38,468,441.16
(I) Other comprehensive income thatcannot be reclassified into the profit orloss
1. Changes arising from re-
measurement of defined benefitplans
2. Other comprehensive income that
cannot be transferred into profit orloss under equity method
3. Changes in fair value of investments
in other equity instruments
4. Changes in fair value of credit risks
of the enterprise(II) Other comprehensive income to be
reclassified into the profit or loss38,468,441.16
1. Other comprehensive income that
can be transferred into profit or loss
under equity method38,468,441.16
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 income346,486,870.45142,795,464.34VII. Earnings per share:
(I) Basic earnings per share (RMB/share)(II) Diluted earnings per share
(RMB/share)Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Consolidated Cash Flow StatementJanuary-June 2024
Unit and Currency: RMBItemsNotes2024 Interim2023 InterimI. Cash flow from operating activities:
Cash received from the sale of goodsand rendering services137,770,272,988.69131,288,880,461.26Net increase in distributor and inter-bankdepositsNet increase in borrowing from thecentral bankNet cash increase in borrowing fromother financial institutesCash received from premiums underoriginal insurance contractNet cash received from reinsurance
businessNet increase in deposits of policy holdersand investmentCash received from interest, fee and
commissionsNet increase in cash borrowedNet increase in cash received from
repurchase operationNet cash received from customer
deposits for trading in securitiesRefunds of taxes1,058,338,202.231,055,963,172.82Cash received from other related
operating activitiesVII.611,273,666,446.361,004,688,596.01Sub-total of cash inflows from operating
activities140,102,277,637.28133,349,532,230.09Cash paid on purchase of goods and
services94,771,705,644.2990,340,588,373.14Net increase in loans and advances of
distributorsNet increase in deposits in the PBOC and
inter bankCash paid for compensation payments
under original insurance contactNet increase in cash lentCash paid for interest, bank charges and
commissionsCash paid for insurance policy dividend
Section X Financial Report
ItemsNotes2024 Interim2023 InterimCash paid to and on behalf of
employees16,148,989,199.6414,745,533,991.16Cash paid for all types of taxes7,567,174,632.617,628,260,419.66Cash paid to other operation relatedactivitiesVII.6113,796,150,223.4813,845,127,911.51Sub-total of cash outflows from operating
activities132,284,019,700.02126,559,510,695.47Net cash flow from operating activitiesVII.627,818,257,937.266,790,021,534.62II. Cash flow from investing activities:
Cash received from recovery of
investments9,680,782,079.515,129,042,704.70Cash received from return on
investments480,478,081.96484,178,075.61Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets7,717,184.0874,087,510.81Net cash received from disposal of
subsidiaries and other operating
entities2,000,000.00Other cash received from investment
activities15,362,098.03Sub-total of cash inflows from investing
activities10,168,977,345.555,704,670,389.15Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets3,891,922,126.473,727,907,256.47Cash paid for investments13,611,230,146.656,303,165,775.56Net increase in secured loansNet cash paid on acquisition of
subsidiaries and other operating
entitiesOther cash paid on investment activities6,922,378.31Sub-total of cash outflows from investing
activities17,503,152,273.1210,037,995,410.34Net cash flow from investing activities–7,334,174,927.57–4,333,325,021.19
Section X Financial Report
ItemsNotes2024 Interim2023 InterimIII. Cash flow from financing activities:
Cash received from capital contributions268,874,731.22Including: cash received from capitalcontributions by minority shareholdersof subsidiariesCash received from borrowings5,931,538,006.6511,553,402,031.97Other cash received from financingactivitiesSub-total of cash inflows from financingactivities6,200,412,737.8711,553,402,031.97Cash paid on repayment of loans4,150,675,947.7510,428,924,467.65Cash paid on distribution of dividends,profits or repayment of interestexpenses1,174,174,474.78817,299,422.27Including: dividend and profit paid tominority shareholders by subsidiariesOther cash paid to financing activitiesVII.611,066,739,043.451,575,176,054.23Sub-total of cash outflows from
financing activities6,391,589,465.9812,821,399,944.15Net cash flow from financing activities–191,176,728.11–1,267,997,912.18IV. Effect of fluctuations in exchangerates on cash and cashequivalents–42,182,129.41482,296,933.74V. Net increase in cash and
cash equivalents250,724,152.171,670,995,534.99Add: balance of cash and cash
equivalents at the beginning of the
periodVII.6253,977,310,651.0353,392,209,857.41VI. Balance of cash and cash equivalents
at the end of the periodVII.6254,228,034,803.2055,063,205,392.40Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Cash Flow Statement of the Parent CompanyJanuary-June 2024
Unit and Currency: RMBItemsNotes2024 Interim2023 InterimI. Cash flow from operating activities:
Cash received from the sale of goods andrendering of services219,993,729.6233,292,958.65Refunds of taxes38,214.96Other cash received from operating
activities164,614,625.4365,817,539.47Sub-total of cash inflows from operatingactivities384,646,570.0199,110,498.12Cash paid on purchase of goods andservices80,721,248.11Cash paid to and on behalf of employees27,649,816.7127,717,542.52Cash paid for all types of taxes11,299,372.6216,713,598.66Other cash paid to operation activities104,532,697.8427,993,348.41Sub-total of cash outflows fromoperating activities143,481,887.17153,145,737.70Net cash flow from operatingactivities241,164,682.84–54,035,239.58II. Cash flow from investing activities:
Cash received from recovery of
investments7,222,000,000.004,623,000,000.00Cash received from return on
investments88,433,946.8881,202,353.24Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assetsNet cash received from disposal of
subsidiaries and other operating
entitiesOther cash received from investment
activities389,573,294.54Sub-total of cash inflows from investing
activities7,700,007,241.424,704,202,353.24Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets2,692,652.094,137,180.77Cash paid for investments12,422,000,000.006,647,572,258.00Net cash paid on acquisition of
subsidiaries and other operating
entities
Section X Financial Report
ItemsNotes2024 Interim2023 Interim
Other cash paid on investment activities1,057,569,045.00Sub-total of cash outflows from
investing activities12,424,692,652.097,709,278,483.77Net cash flow from investing
activities–4,724,685,410.67–3,005,076,130.53III. Cash flow from financing activities:
Cash received from capital injectionsCash received from borrowings940,000,000.001,110,000,000.00Other cash received from financingactivities7,717,935,238.954,223,807,260.09Sub-total of cash inflows from financingactivities8,657,935,238.955,333,807,260.09Cash paid on repayment of borrowings14,000,000.007,000,000.00Cash paid on distribution of dividends,
profits or repayment of interestexpenses50,962,018.7732,820,559.74Other cash paid on financing activities466,600,210.43780,445,507.58
Sub-total of cash outflows from
financing activities531,562,229.20820,266,067.32Net cash flow from financing
activities8,126,373,009.754,513,541,192.77IV. Effect of fluctuations in exchange
rates on cash and cash equivalents–120,980.137,043,266.53V. Net increase in cash and cash
equivalents3,642,731,301.791,461,473,089.19Add: balance of cash and cash
equivalents at the beginning of theperiod7,579,640,524.795,747,356,591.19VI. Balance of cash and cash
equivalents at the end of the period11,222,371,826.587,208,829,680.38Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Consolidated Statement of Changes in Owner’s EquityJanuary-June 2024
Unit and Currency: RMB
2024 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Items
Paid-in capital(or share capital)PreferencesharesPerpetualbondsOthers
CapitalreserveLess: treasurystockOthercomprehensiveincomeSpecial reserveSurplus reserve
General riskprovisionUndistributedprofitsOthersSub-total
Minorityshareholders’interestsTotal owners’equity
I. C losing balance for the previous period9,438,114,893.0023,762,354,684.055,034,065,107.421,969,724,027.014,842,338,543.8068,535,686,494.60103,514,153,535.042,397,589,814.47105,911,743,349.51
Add: changes in accounting policies
Error correction for prior periodOthersII. Opening balance for the current year9,438,114,893.0023,762,354,684.055,034,065,107.421,969,724,027.014,842,338,543.8068,535,686,494.60103,514,153,535.042,397,589,814.47105,911,743,349.51III. Increase/decrease for the current period
(decrease is represented by ‘-’)144,594,822.81466,600,210.43
–334,178,995.99
2,876,331,199.952,220,146,816.34452,888,500.402,673,035,316.74
(I) Total comprehensive income
–335,021,596.15
10,420,218,389.2210,085,196,793.07187,319,881.9310,272,516,675.00
(II) Capital injection and reduction by
owners145,437,422.97466,600,210.43
–321,162,787.46279,388,310.76–41,774,476.70
1. Ordinary shares invested by owners279,388,310.76279,388,310.76
2. Capital contribution by holders of
other equity instruments
3. Share-based payment included in
owners’ equity201,405,574.94201,405,574.94201,405,574.94
4. Others
–55,968,151.97466,600,210.43
–522,568,362.40
–522,568,362.40
(III) Profit distribution
–7,513,967,094.69
–7,513,967,094.69–13,819,692.29–7,527,786,786.98
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provision
3. Distribution to owners (or
shareholders)
–7,513,967,094.69
–7,513,967,094.69–13,819,692.29–7,527,786,786.98
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retainedearnings
5. Other comprehensive income
carried forward to retainedearnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others
–842,600.16
842,600.16
–29,920,094.58
–29,920,094.58
–29,920,094.58
IV. Closing balance for the period9,438,114,893.0023,906,949,506.865,500,665,317.851,635,545,031.024,842,338,543.8071,412,017,694.55105,734,300,351.382,850,478,314.87108,584,778,666.25
Section X Financial Report
2023 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Items
Paid-in capital(or share capital)PreferencesharesPerpetualbondsOthers
CapitalreserveLess: treasury
stockOthercomprehensiveincomeSpecial reserveSurplus reserve
General risk
provisionUndistributed
profitsOthersSub-total
Minorityshareholders’
interestsTotal owners’
equity
I. Closing balance for the previous period9,446,598,493.0023,877,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,983,751,470.6093,454,454,213.671,290,895,044.4594,745,349,258.12
Add: changes in accounting policiesError correction for prior periodOthers5,000,000.00
–16,611.23
4,983,388.774,983,388.77
II. Opening balance for the current year9,446,598,493.0023,882,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,983,734,859.3793,459,437,602.441,290,895,044.4594,750,332,646.89III. Increase/decrease for the current period(decrease is represented by ‘-’)
–8,483,600.00
116,689,608.57714,828,075.38155,051,059.643,677,268,043.833,225,697,036.6622,433,227.253,248,130,263.91
(I) Total comprehensive income155,051,059.648,962,851,469.469,117,902,529.1062,604,325.259,180,506,854.35(II) Capital injection and reduction byowners
–8,483,600.00
116,689,608.57714,828,075.38
–606,622,066.81–31,896,976.12–638,519,042.93
1. Ordinary shares invested by owners
–31,896,976.12–31,896,976.12
2. Capital contribution by holders of
other equity instruments
3. Share-based payment included in
owners’ equity390,681,368.30390,681,368.30390,681,368.30
4. Others
–8,483,600.00
–273,991,759.73714,828,075.38
–997,303,435.11
–997,303,435.11
(III) Profit distribution
–5,297,529,553.10
–5,297,529,553.10–8,274,121.88–5,305,803,674.98
1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provision
3. Distribution to owners (or
shareholders)
–5,297,529,553.10
–5,297,529,553.10–8,274,121.88–5,305,803,674.98
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retainedearnings
5. Other comprehensive income
carried forward to retainedearnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others11,946,127.4711,946,127.4711,946,127.47
IV. Closing balance for the period9,438,114,893.0023,998,726,933.334,572,635,271.762,145,734,558.094,014,190,623.2461,661,002,903.2096,685,134,639.101,313,328,271.7097,998,462,910.80Legal representative of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Statement of Changes in Owners’ Equity of the Parent CompanyJanuary-June 2024
Unit and Currency: RMB
2024 Interim
Other equity instruments
Items
Paid-in capital (orshare capital)PreferencesharesPerpetual bondsOthers
CapitalreserveLess: treasurystockOthercomprehensiveincomeSpecial reserve
SurplusreserveUndistributed
profitsTotal owners’equity
I. Closing balance for the previous period9,438,114,893.0027,263,651,777.443,175,293,942.36630,674,691.954,237,192,318.357,484,026,291.6245,878,366,030.00
Add: changes in accounting policiesError correction for prior periodOthersII. Opening balance for the current year9,438,114,893.0027,263,651,777.443,175,293,942.36630,674,691.954,237,192,318.357,484,026,291.6245,878,366,030.00III. Increase/decrease for the current period (decrease isrepresented by ‘-’)182,744,999.21466,600,210.4338,468,441.16
–7,205,948,665.40–7,451,335,435.46
(I) Total comprehensive income38,468,441.16308,018,429.29346,486,870.45(II) Capital injection and reduction by owners182,744,999.21466,600,210.43
–283,855,211.22
1. Ordinary shares invested by owners
2. Capital contribution by holders of other equity
instruments
3. Share-based payment included in owners’ equity182,744,999.21182,744,999.21
4. Others466,600,210.43
–466,600,210.43
(III) Profit distribution
–7,513,967,094.69–7,513,967,094.69
1. Withdrawal of surplus reserves
2. Distribution to owners (or shareholders)
–7,513,967,094.69–7,513,967,094.69
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) OthersIV. Closing balance for the period9,438,114,893.0027,446,396,776.653,641,894,152.79669,143,133.114,237,192,318.35278,077,626.2238,427,030,594.54
Section X Financial Report
2023 Interim
Other equity instruments
Items
Paid-in capital (orshare capital)PreferencesharesPerpetual bondsOthers
CapitalreserveLess: treasurystockOthercomprehensiveincomeSpecial reserve
SurplusreserveUndistributedprofitsTotal owners’
equity
I. Closing balance for the previous period9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49
Add: changes in accounting policiesError correction for prior periodOthers
II. Opening balance for the current year9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49III. Increase/decrease for the current period (decrease isrepresented by ‘-’)
–8,483,600.00
186,863,532.59597,964,898.92
–5,154,734,088.76–5,574,319,055.09
(I) Total comprehensive income142,795,464.34142,795,464.34(II) Capital injection and reduction by owners
–8,483,600.00
186,863,532.59597,964,898.92
–419,584,966.33
1. Ordinary shares invested by owners
2. Capital contribution by holders of other equity
instruments
3. Share-based payment included in owners’ equity360,860,541.25360,860,541.25
4. Others
–8,483,600.00
–173,997,008.66597,964,898.92
–780,445,507.58
(III) Profit distribution
–5,297,529,553.10–5,297,529,553.10
1. Withdrawal of surplus reserves
2. Distribution to owners (or shareholders)
–5,297,529,553.10–5,297,529,553.10
3. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into capital (or share
capital)
2. Transfer of surplus reserves into capital (or share
capital)
3. Surplus reserves used for remedying loss
4. Changes in defined benefit plans 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 period9,438,114,893.0027,487,762,552.352,906,103,457.34602,091,349.743,409,044,397.79173,577,710.8638,204,487,446.40
Legal representative of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
III. GENERAL INFORMATION OF THE COMPANY
1. Overview of the Company
√ Applicable Not Applicable
The predecessor of Haier Smart Home Co., Ltd (hereinafter referred to as the Company) wasQingdao Refrigerator Factory, which was established in 1984. As permitted to offering byPeople’s Bank of China, Qingdao Branch on 16 December 1989, with the document of Qing TiGai [1989] No. 3 issued on 24 March 1989, based on the reconstruction of the original QingdaoRefrigerator Factory, a limited company was set up by directional fund raising of RMB150 million.In March and September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2and No. 9 issued by the pilot leading team of Qingdao joint stock company, the Company wasconverted from a directional offering company to a public subscription company and issuedadditional 50 million shares to the public and listed with trading on Shanghai Stock Exchange inNovember 1993. In October 2018, D-shares in issue of the Company were listed on the ChinaEurope International Exchange AG. In December 2020, H-shares in issue of the Company werelisted on the Stock Exchange of Hong Kong Limited by way of introduction.The Company’s registered office is located at the Haier Science and Technology InnovationEcological Park of Laoshan District, Qingdao, Shandong Province, and the headquarters islocated at the Haier Science and Technology Innovation Ecological Park of Laoshan District,Qingdao, Shandong Province.The Company is mainly engaged in research and development, manufacturing and sales of homeappliances including refrigerators/freezers, kitchen appliances, air-conditioners, laundry appliancesand water appliances, and other smart home business, as well as providing smart homepackaged solutions.The ultimate controlling parent company of the Company is Haier Group Corporation.These financial statements have been approved for publication by the Board of the Company on27 August 2024.
2. Scope of consolidated statements
For details of changes in the scope of consolidated financial statements for the current period,please refer to “IX. Changes in Consolidation Scope” and “X. Interest in Other Entities” of thisnote.
Section X Financial Report
IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial statements of the Company were prepared on the going concern basis according tothe transactions and matters actually occurred, in accordance with the Accounting Standards forEnterprises—Basic Standards published by the Ministry of Finance, specific accountingstandards, and guidance on application of accounting standards for enterprises, interpretations toaccounting standards for enterprises and other relevant requirements (hereinafter collectivelyreferred to as the “Accounting Standards for Enterprises”) which issued subsequently, and incombination with the disclosure provisions of the Rules for the Information Disclosure andCompilation of Companies Publicly Issuing Securities No. 15: General Provisions for FinancialReport (Revised in 2023) of CSRC as well as the following significant accounting policies andaccounting estimation.
2. Going Concern
√ Applicable Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a goingconcern.V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATESSpecific accounting policies and accounting estimates:
√ Applicable Not Applicable
According to the characteristics of its production and operation, the Company formulated a series ofspecific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.11); the measurement of inventories (Note V.12); the depreciation andamortization of the investment properties (Note V.15); the depreciation of fixed assets (Note V.16), theamortization of intangible assets (Note V.19), the criterion for determining of long-term assetsimpairment (Note V.20); and the date of revenue recognition (Note V.26), etc.
1. Statement of compliance with Accounting Standards for Enterprises
The financial statements prepared by the Company meet the requirements of the AccountingStandards for Enterprises, which accurately and completely reflected information relating to thefinancial position, results of operations, changes in shareholders’ equity and cash flows of theCompany.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the sameyear in solar calendar.
Section X Financial Report
3. Operating period
√ Applicable Not Applicable
The Company takes the period from the acquisition of assets for processing to the ultimaterealization of cash or cash equivalents as a normal operating cycle. The Company takes 12months as an operating period, which is also the classification basis for the liquidity of its assetsand liabilities.
4. Recording currency
Renminbi is the recording currency of the Company
5. Materiality criteria determination method and selection basis
√ Applicable Not Applicable
CaseMateriality criteriaMaterial receivables for whichbad debt provision isindividually assessed
The amount of provision on an individual basis accountsfor more than 10% of the total bad debt provisions forvarious types of receivables and is greater thanRMB100 millionMaterial receivables and baddebt provisions which arerecovered or reversed
The amount of recovery or reversal on an individual basis
accounts for more than 10% of the total amount ofvarious types of receivables and is greater thanRMB100 millionActual write-off of materialaccounts receivable
The amount of write-off on an individual basis accountsfor more than 10% of the total bad debt provisions ofvarious types of receivables and is greater thanRMB100 millionMaterial prepayments aged morethan one year
Prepayment aged more than 1 year on an individual basis
accounts for more than 10% of the total prepaymentsand is greater than RMB100 millionMaterial projects underconstruction
The ending balance of a project on an individual basis is
greater than RMB50 millionMaterial capitalized R&Dprojects
The ending balance of a project on an individual basis
accounts for more than 10% of the ending balance of
development expenditure and is greater than RMB100
millionMaterial accounts payable and
other payables aged morethan one year
Accounts payable/other payables with aged more than 1
year on an individual basis account for more than 10%
of the total accounts payable/other payables and are
greater than RMB100 millionMaterial contract liabilities aged
more than one year
Contract liabilities aged more than 1 year on an individual
basis account for more than 10% of the total contract
liabilities and are greater than RMB100 million
Section X Financial Report
CaseMateriality criteriaMaterial non-wholly owned
subsidiaries
The net assets of the subsidiaries account for more than5% of the Company’s net assets or the net profits andlosses of the subsidiaries account for more than 10%of the Company’s consolidated net profit.Material joint ventures orassociates
The book value of long-term equity investment in an
individual invested unit accounts for more than 5% ofthe Company’s net assets or the investment profits andlosses under the long-term equity investment equitymethod account for more than 10% of the Company’sconsolidated net profit.
6. Accounting methods of business combinations under common control and not
under common control
√ Applicable Not Applicable
A business combination is a transaction or event that brings together two or more separateentities into one reporting entity. Business combinations are classified into business combinationsunder common control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all ofthe combining entities are ultimately controlled by the same party or parties both beforeand after the combination, and that control is not transitory. For business combinationunder common control, the party that obtains the control over the other parties on thecombination date is the acquirer, and other parties involving in the business combinationare the transferors. The combination date is the date on which the acquiring partyeffectively obtains the control over the party being acquired.For business combination under common control, the transferor’s assets and liabilitiesobtained by the Company (as the acquirer) in a business combination are accounted for atthe carrying amount of the transferor in the ultimate controller’s consolidated financialstatements as at the date of combination, except for adjustments due to differences inaccounting policies. The difference between the carrying amount of the combinationconsideration paid by the Company (or the aggregate nominal value of shares issued) andthe carrying amount of net assets obtained in a business combination shall be adjusted tocapital reserve, in case the capital reserve is insufficient for the elimination, the retainedearnings shall be adjusted.
Section X Financial Report
Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the Company (as theacquirer) are credited in profit or loss in the period when they occurred. Trading expensesin direct relation to the issuance of equity instrument as the consideration for thecombination is written down to the capital reserve (share premium), where the capitalreserve (share premium) is insufficient, and to surplus reserves and undistributed profits inorder. Trading expenses in direct relation to the issuance of debt instrument as theconsideration for the combination is included in the initial recognition amount of the debtinstrument.
(2) Business combinations involving entities not under common control
A business combination not under common control is a business combination in which allof the combining entities are not ultimately controlled by the same party or parties bothbefore and after the combination. For business combination not under common control, theparty that obtains the control of the other parties at the combination date is the acquirer;other parties involving in the business combination are the transferors. The combinationdate is the date on which the acquirer effectively obtains control of the transferors.In business combination involving entities not under common control, the cost ofcombination of the Company (as the acquirer) shall be the sum of the assets paid,obligations incurred or assumed and the fair value of the equity securities issued by theCompany for obtaining control of the transferor at the date of acquisition. Intermediary fees(such as audit, legal services and valuation consultancy) and other relevant managementfees incurred by the Company for the purpose of business combination are credited inprofit or loss in the period when they occurred. Transaction fees for the equity instrumentsor debt instruments issued by the Company as combination consideration is included in theinitial recognition amount of such equity instruments or debt instruments. Contingentconsideration involved shall be recorded as the combination cost based on its fair value onthe acquisition date. Should any new or further evidence arise within 12 months after theacquisition date and makes it necessary to adjust the contingent consideration on theacquisition date, the goodwill arising from the business combination shall be amendedaccordingly.The cost of combination and identifiable net assets obtained by the Company (as theacquirer) in a business combination involving entities not under common control aremeasured at fair value on the acquisition date. Where the cost of the combination exceedsthe acquirer’s interest in the fair value of the transferor’s identifiable net assets, thedifference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of the transferor’s identifiable net assets, the differenceis initially recognized in profit or loss for the current year after the Company conducted areview of computation for the identifiable assets, liabilities or fair value of contingentliabilities and combination cost, and where the combination cost is still lower than the fairvalue of the identifiable net assets of the transferor obtained during the course ofcombination, then the difference is recorded in the profit and loss.
Section X Financial Report
7. Judgement Criteria for Control and Preparation of Consolidated Financial
Statements
√ Applicable Not Applicable
Judgement Criteria for Control:
The scope of consolidation of consolidated financial statements is on the basis of control. Controlmeans that the Company has the power over the investee, enjoys variable returns byparticipating in relevant activities of the investee, and has the ability to use its power over theinvestee to influence the amount of its return. Control refers to the Company’s right over theinvestee to enjoy variable returns through involvement in the investee and have the ability to exertthe right to affect those returns The Company will reassess when changes in relevant facts andcircumstances result in changes in the relevant elements involved in the definition of control.Preparation method of consolidated statements
(1) Scope of consolidated financial statements
The Company incorporated all subsidiaries under its control (including the separate entitiescontrolled by the Company) into the scope of consolidation financial statements, includingthe enterprises under the Company’s control, divisible part in the investees and structuredentities. Control refers to the Company having power over the investee and is entitled tovariable returns from its involvement with the investee and has the ability to use its powerover the investee to affect the amount of those return.
(2) To unify the accounting policies, balance sheets date and accounting periods of the
Company and subsidiariesWhen preparing consolidated financial statements, adjustments are made if subsidiaries’accounting policies or accounting periods are different from that of the Company, inaccordance with the Company’s accounting policies and accounting periods.
Section X Financial Report
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared by the Company on the basis ofthe financial statements of the Company and subsidiaries and based on other relevantinformation. In preparing the consolidated financial statements, all significant balances,transactions and unrealized profits between the Company and subsidiaries and amongsubsidiaries are eliminated. In preparing the consolidated financial statements, the Companytreats the entire enterprise group as one accounting entity and reflects the overall financialposition, operating results and cash flows of the Group in accordance with therequirements for recognition, measurement and presentation of relevant accountingstandards for enterprises and consistent accounting policies. The owner’s equity of thesubsidiaries not attributable to the Company shall be presented separately as “minorityequity” under the owner’s equity item in the consolidated balance sheet. The minority equityattributable to net profit or loss of subsidiaries in the current period shall be presented as“minority interest” under the “net profit” item in the consolidated profit statement. Where theamount of loss of a subsidiary attributable to the minority shareholders exceeds their shareof the opening balance of owner’s equity of the subsidiary, the excess shall be allocatedagainst minority equity. The long-term equity investment of the Company held by thesubsidiaries, deemed as treasury stock of the corporate group as well as the reduction ofowners’ equity, shall be presented as “Less: Treasury stock” under the owner’s equity itemin the consolidated balance sheet.
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control of theCompany, the opening amount of the consolidated balance sheet is adjusted, as if thebusiness combination has taken place since the ultimate controller began its control. Theincome, expenses and profits of subsidiaries or business combinations from the beginningof the current period to the end of the reporting period are included in the consolidatedprofit statement. The cash flows from the beginning of the current period to the end of thereporting period of a subsidiary or business combination are included in the consolidatedcash flow statement, and the related items in the comparative statements are adjustedWhere control can be exercised over the investee under the same control due to additionalinvestment and other reasons, the Company shall deem the parties participating in thebusiness combination to have made adjustments in their current status when the ultimatecontroller began its control. Equity investments held by the Company before control of thetransferor are recognised for profit or loss, other comprehensive income and other changesin net assets between the later of the date on which the original equity interest is acquiredand the date on which the Company and the transferor are under the same control and thedate of combination, which are offset against the opening retained earnings or current profitor loss, respectively, in the period of the comparative statements.
Section X Financial Report
For subsidiaries acquired from business combination under non-common control, theopening amount of the consolidated balance sheet is not adjusted. The income, expensesand profits of the subsidiary or business from the date of purchase to the end of thereporting period are included in the consolidated profit statement. The cash flows of thesubsidiary or business from the date of purchase to the end of the reporting period areincluded in the consolidated statement of cash flows. Where control can be exercised overan investee that is not under the same control due to additional investment or otherreasons, the Company remeasures the equity interest of the investee held before thepurchase date based on the fair value of the equity interest at the purchase date, and thedifference between the fair value and its carrying amount is included in the currentinvestment income. Where the equity interest in the transferor held before the purchasedate relates to other comprehensive income under the equity method and other changes inowner’s equity other than net profit or loss, other comprehensive income and profitdistribution, other comprehensive income and other changes in owner’s equity relatingthereto are transferred to investment income of the current period as at the purchase date,except for other comprehensive income arising from the remeasurement of net liabilities orchanges in net assets of defined benefit plans by the investee.
(5) Dispose of equity interests in subsidiaries achieved in stages until losing control
General treatmentDuring the reporting period, when the Company disposes of a subsidiary or business,the income, expenses and profits of that subsidiary or business from the beginning ofthe period to the date of disposal are included in the consolidated income statementof the Company; The cash flows from the beginning of the period to the disposaldate of the subsidiary or operation are included in the consolidated statement of cashflows of the Company.When control over the investee is lost due to the disposal of part of the equityinvestment or other reasons, the Company remeasures the remaining equityinvestment after disposal at its fair value at the date when control is lost. Thedifference between the sum of the consideration obtained on disposal of the equityinterest and the fair value of the remaining equity interest, less the sum of the shareof the net assets of the original subsidiary calculated by the Company based on theoriginal shareholding ratio and goodwill calculated on a continuing basis from the dateof purchase or consolidation, is included in investment income in the period in whichcontrol is lost and goodwill is written off. The Company converts other comprehensiveincome relating to the equity investment in the original subsidiary, etc. to investmentincome in the current period when control is lost.
Section X Financial Report
Disposal of subsidiaries step by stepWhere the Company disposed of equity investment in a subsidiary step by stepthrough multiple transactions until control is lost, for example, the terms, conditionsand economic impact of each transaction that disposes of the equity investment in asubsidiary meet one or more of the following conditions, the Company accounts formultiple transactions as a single transaction:
i. The transactions were entered into simultaneously or with mutual influence inmind;ii. The transactions as a whole are capable of achieving a complete commercialoutcome;iii. The occurrence of one transaction depends on the occurrence of at least oneother transaction;iv. The transaction is uneconomical by itself but economic when considered inconjunction with other transactions.Where each transaction that disposes of an equity investment in a subsidiary untilcontrol is lost is a blanket transaction, the Company accounts for each transaction asa transaction that disposes of the subsidiary and loses control; However, theCompany recognises the difference between each disposal price before the loss ofcontrol and the share of net assets of the subsidiary corresponding to the disposal ofthe investment as other comprehensive income in the consolidated financialstatements and is transferred to profit or loss in the period in which control is lostwhen control is lost.Where each transaction that disposes of an equity investment in a subsidiary until theloss of control is not a blanket transaction, the relevant policy for partial disposal ofan equity investment in a subsidiary without loss of control is accounted for beforethe loss of control by the Company; When control is lost, accounting is performed inthe same manner as would be done for a disposal subsidiary.
(6) Purchase of minority interests in subsidiaries
The difference between the Company’s costs of newly acquired long-term equityinvestment resulting from the purchase of minority interests and the share of net assetsattributable to the subsidiary calculated on an ongoing basis from the date of purchase (orthe date of combination) based on the newly increased shareholding ratio, the equitypremium in the capital reserve in the consolidated balance sheet is adjusted, and if theequity premium in the capital reserve is insufficient to offset, the retained earnings isadjusted.
Section X Financial Report
(7) Partial disposal of equity investments in subsidiaries without loss of control
The Company adjusts the equity premium in the capital reserve in the consolidated balancesheet for the difference between the disposal price obtained from the partial disposal of thelong-term equity investment in the subsidiary without loss of control and the share of thenet assets of the subsidiary that would continue to be calculated from the purchase date orthe combination date corresponding to the disposal of the long-term equity investment, oradjust the retained earnings if the equity premium in the capital reserve is insufficient tooffset.
8. Classification of joint arrangement and accounting methods of joint operations
√ Applicable Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. Inaccordance with the Company’s rights and obligations under a joint arrangement, the Companyclassifies joint arrangements into joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement in which the Company is a party and isentitled to relevant assets and obligations of this arrangement.The Company recognizes the following items in relation to its interest in a joint operation,and accounts the same in accordance with relevant accounting standards for businessenterprises: recognize the assets held solely by the Company, and recognize assetsheld jointly by the Company in appropriation to the share of the Company; recognize theobligations assumed solely by the Company, and recognize obligations assumed jointly bythe Company in appropriation to the share of the Company; recognize revenue fromdisposal of joint operations in appropriation to the share of the Company; recognizerevenue from disposal of joint operations in appropriation to the share of the Company;recognize fees solely occurred by the Company and recognize fees from joint operations inappropriation to the share of the Company.When the Company, as a joint venture, invests or sells assets to or purchase assets (theassets do not constitute a business, the same below) from joint operations, the Companyshall only recognize the part of profit or lost from this transaction attributable to otherparties of joint operations before these assets are sold to a third party. In case of animpairment loss incurred on these assets which meets the requirements as set out inAccounting Standards for Business Enterprises No. 8—Asset Impairment, the Companyshall full recognize the amount of this loss in relation to its investment in or sale of assetsto joint operations or recognize the loss according to the Company’s share of commitmentin relation to the its purchase of assets from joint operations.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to netassets of this arrangement. Investment in joint venture is accounted for using the equitymethod according to the accounting policies referred to under “14. Long-term equityinvestment” of Note V.
Section X Financial Report
9. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits availablefor payment of the Company at any time.Cash equivalents recognized in the cash flow statements refer to short-term, highly liquidinvestments held by the Company that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk on change in value.
10. Foreign currency businesses and translation of foreign currency statements
√ Applicable Not Applicable
(1) Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functionalcurrency by applying the exchange rate at the transaction date.Monetary items denominated in foreign currencies are translated by the Company intofunctional currencies at the rates of exchange ruling at the balance sheet date. All foreignexchange difference are credited in the profit or loss of the current period, except thosearising from the funds denominated in foreign currency specially borrowed for theestablishment of the qualifying assets are treated based on the principal of capitalization ofborrowing costs.Non-monetary items in foreign currency measured at historical cost are translated by theCompany using the spot exchange rate prevailing on the date when transaction occurredand its functional currency shall remain unchanged. Non-monetary items denominated inforeign currencies that are measured at fair value are translated using the foreign exchangerate at the date the fair value is determined; the exchange differences between thetranslated and original amounts of functional currencies are recognized in the statement ofprofit or loss or other comprehensive income as changes in fair value (including changes inexchange rate).
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, jointventures and associates under the control of the Company are different from that of theCompany, their financial statements denominated in foreign currencies shall be translated toperform accounting and prepare the consolidated financial statements.The assets and liabilities of the foreign currency balance sheet of the Company aretranslated using the spot exchange rate at the balance sheet date; all items except for“undistributed profits” of the owner’s equity are translated at the spot exchange rate on thetransaction date. The revenue and expenses in the foreign currency income statement ofthe Company are translated using the approximate rate of the spot exchange rate on thetransaction date. Exchange differences on translation of financial statements denominated inforeign currencies are presented as the “other comprehensive income” in the owner’sequity of the balance sheet.
Section X Financial Report
Foreign currency cash flow and cash flows of a foreign subsidiary of the Company istranslated using the approximate rate of the spot exchange rate on the date of the cashflows. The impact of exchange rate changes on cash amount is regarded as areconciliation item and reflected separately in the cash flow.When disposing overseas operations, the translation difference in the foreign currencyfinancial statements as shown in the owner’s equity of the balance sheet and related to theoverseas operation shall be transferred from owner’s equity to profit or loss in the currentperiod of disposal. If part of the overseas operations is disposed of, the translationdifference in the foreign currency financial statements of the disposal part shall becalculated based on the proportion of the disposal and transferred to profit or loss in thecurrent period of disposal.
11. Financial instruments
√ Applicable Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity. A financial asset or financial liability andequity instrument is recognized when the Company becomes a party to the contract of afinancial instrument.
(1) Classification, recognition and measurement of financial assets
On initial recognition of a financial asset, according to the business model for managingfinancial assets and the contractual cash flow characteristics of financial assets, theCompany classifies financial assets into: Financial assets measured at amortized cost;financial assets measured at fair value through other comprehensive income; financialassets measured at fair value through profit or loss of the current period.Financial assets are measured at fair value upon initial recognition. For financial assetsmeasured at fair value through profit and loss of the current period, related transactioncosts are directly included in profit and loss of the current period; for other types offinancial assets, related transaction costs are included in their initial recognized amounts.For the accounts receivable or bills receivable arising from the sale of products or theprovision of labor services that do not contain or consider the significant financingcomponents, etc., the Company shall take the consideration amount entitled to be receivedas the initial recognized amount.
Section X Financial Report
1) The debt instruments held by the Company:
Financial assets measured at amortized costThe Company’s business model for managing such financial assets is: With theaim of obtaining contractual cash flow, the contractual cash flow characteristicsof such financial assets shall be consistent with the basic lending arrangements,that is, the cash flow generated on a specific date is only the payment for theprincipal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordancewith the effective interest method. Such financial assets are subsequentlymeasured at amortised cost. The gains or losses arising from amortisation orimpairment are recognised in profit or loss of the current period. Such financialassets of the Company mainly include cash and cash equivalents, billsreceivable, accounts receivable, other receivables, creditor’s right investmentand long-term receivables. The Company lists the creditor’s rights investmentsand long-term receivables matured within one year (inclusive) from the balancesheet date as non-current assets matured within one year; the creditor’s rightsinvestments matured within one year (inclusive) when being obtained are listedas other current assets.Financial assets measured at fair value through other comprehensive
incomeThe Company’s business mode for managing such financial assets is: With theaim of obtaining contractual cash flow and selling the financial assets, thecontractual cash flow characteristics of such financial assets shall be consistentwith the basic lending arrangements. Such financial assets are measured at fairvalue through other comprehensive income, but impairment gains and losses,exchange gains and losses, and interest income calculated by the effectiveinterest method are included in profit and loss of the current period. Suchfinancial assets of the Company mainly include financing receivables and othercreditor’s rights investments. The Company lists other creditor’s rightsinvestments matured within one year (inclusive) from the balance sheet date asnon-current assets matured within one year; other creditor’s rights investmentsmatured within one year (inclusive) when being obtained are listed as othercurrent assets.
Section X Financial Report
Financial assets measured at fair value through profit or loss of thecurrent periodThe Company classifies financial assets other than those above measured atamortized cost and those measured at fair value through other comprehensiveincome as financial assets measured at fair value through profit or loss of thecurrent period. In addition, at the time of initial recognition, in order to eliminateor significantly reduce accounting mismatch, the Company designated somefinancial assets as financial assets measured at fair value through profit or lossof the current period. Such financial assets are subsequently measured at fairvalue and changes in fair value are included in profit or loss of the currentperiod. Such financial assets that are matured more than one year and areexpected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.
2) Equity instrument investments of the Company:
The Company classifies equity instrument investments that have no control, jointcontrol and significant influence on itself as financial assets measured at fair valuethrough profit or loss of the current period; investments that are expected to be heldfor more than one year from the balance sheet date are listed as other non-currentfinancial assets. In addition, the Company designated some non-trading equityinstrument investments as financial assets measured at fair value through othercomprehensive income, which are listed as other equity instrument investments. Suchdesignation cannot be revoked once made. The Company includes the relevantdividends and interest income of such financial assets in profit and loss of the currentperiod, and changes in fair value are included in other comprehensive income. Whenthe financial asset is derecognised, the Company transfers the cumulative gain or losspreviously included in other comprehensive income directly to retained earnings and isnot included in profit or loss of the current period.
(2) Classification, recognition and measurement of financial liabilities
On initial recognition, financial instruments or their components issued by the Company areclassified into financial liabilities or equity instruments based on the contractual terms of thefinancial instruments and the economic nature, rather than solely on its legal form, togetherwith the definition of financial liability and equity instruments.The Company classifies financial liabilities as financial liabilities at fair value through profitand loss of the current period and other financial liabilities at initial recognition.Financial liabilities at fair value through profit and loss of the current period aresubsequently measured at fair value. Any gains or losses arising from changes in the fairvalue and any interest expenses related to the financial liabilities are recognized in profit orloss of the current period. The financial liabilities at fair value through profit and loss of thecurrent period of the Company mainly consist of financial liabilities held for trading.
Section X Financial Report
Other financial liabilities are subsequently measured at amortized costs using effectiveinterest method. Other financial liabilities of the Company are financial liabilities measured atamortized cost, including bills payable, accounts payable, other payables, borrowings,bonds payable, etc. Such financial liabilities are recognized initially at fair value lesstransaction costs and subsequently measured using the effective interest method. Financialliabilities with a maturity of less than one year (inclusive) are listed as current liabilities:
those with maturity of more than one year but are mature within one year (inclusive) fromthe balance sheet date are listed as non-current liabilities due within one year; the rest arepresented as non-current liabilities.
(3) Classification and treatment of financial liabilities and equity instruments
The Company classifies financial liabilities and equity instruments on the followingprinciples: (1) Where the Company is unable to unconditionally avoid delivering cash oranother financial asset to fulfil a contractual obligation, the contractual obligation meets thedefinition of a financial liability. Although some financial instruments do not explicitly includethe terms and conditions imposing the contractual obligation to deliver cash or anotherfinancial asset, they may indirectly give rise to the contractual obligation through otherterms and conditions. (2) Where a financial instrument shall or may be settled in theCompany’s own equity instrument, consideration shall be given to whether the Company’sown equity instrument as used to settle the instrument is a substitute of cash or anotherfinancial asset or the residual interest in the assets of the Company after deducting all of itsliabilities. In the former case, the instrument shall be the Company’s financial liability; in thelatter case, the instrument shall be the equity instrument of the Company. Under certaincircumstances whereby a financial instrument contract stipulates that the Company shall ormay use its own equity instrument to settle the financial instrument, and the amount of thecontractual right or obligation equal to the number of its own equity instruments to bereceived or delivered multiplied by their fair value at the time of settlement, the contractshall be classified as a financial liability, regardless of whether the amount of thecontractual right or obligation is fixed, or fluctuates in full or in partly in response tochanges in a variable other than the market price of the Company’s own equity instruments(for example an interest rate, a commodity price or a financial instrument price).When classifying a financial instrument (or a component thereof) in consolidated financialstatements, the Company shall consider all terms and conditions agreed between membersof the Group and the holders of the financial instrument. If the Group as a whole has anobligation in respect of the instrument to settle it by delivering cash or another financialasset or in such a way that it would be a financial liability, such instrument shall beclassified as a financial liability.If the financial instrument or its component is attributable to the financial liability, therelevant interests, dividends, gains or losses, and gains or losses arising from redemptionor refinancing, shall be recorded in the profit or loss of the current period.
Section X Financial Report
If the financial instrument or its component is attributable to equity instrument, theCompany treats it as change in equity when it is issued (including refinanced), repurchased,sold or cancelled. Changes in fair value of equity instrument is not recognized by theCompany. Transaction costs related to equity transactions are deducted from equity. TheCompany recognizes the distribution to holders of the equity instruments as distribution ofprofits, and dividends paid do not affect total amount of shareholders’ equity.
(4) Recognition and measurement on transfer of financial assets
A financial asset shall be de-recognized when one of the following conditions is met: thecontractual right for receiving cash flows from the financial asset is terminated; thefinancial asset is transferred, and the risk and rewards of ownership of the financial assethave been substantially transferred to the transferee; and the financial asset istransferred; the Company neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset, but ceases the control over the financial asset. If theCompany neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset, and the control over the financial asset is not ceased, the financial assetand the related financial liabilities should be recognized based on the degree of continuinginvolvement. The degree of continuing involvement means the level of risks borne by theCompany resulting from the change in value of the financial asset.On de-recognition of other equity instruments investment, the difference between thecarrying amount and the sum of the consideration received and the cumulative changes infair value that had been recognized directly in other comprehensive income is recognized inthe retained earnings. On de-recognition of other financial assets, the difference betweenthe carrying amount and the sum of the consideration received and the cumulative changesin fair value that had been recognized directly in other comprehensive income is recognizedin current profit or loss.For financial assets that are sold with recourse or endorsement, the Company needs todetermine whether the risk and rewards of ownership of the financial asset have beensubstantially transferred. If the risk and rewards of ownership of the financial asset havebeen substantially transferred, the financial asset shall be derecognized. If the risk andrewards of ownership of the financial asset have been substantially retained, the financialasset shall not be de-recognized. If the Company neither transfers nor retains substantiallyall the risks and rewards of ownership of the financial asset, the Company shall assesswhether the control over the financial asset is retained, and the financial assets shall beaccounted for according to the above paragraphs.
Section X Financial Report
(5) Derecognition of financial liabilities
If the current obligation of a financial liability (or part of it) has been discharged, theCompany derecognizes the financial liability (or part of the financial liability). The Company(borrower) enters into an agreement with the lender to replace the original financial liabilityin the form of a new financial liability, and if the new financial liability is substantiallydifferent from the original financial liability, the original financial liability is derecognized andthe new financial liability is recognized. If the Company makes substantial changes to thecontractual terms of the original financial liability (or a part thereof), the original financialliability is derecognized and the new financial liability is recognized in accordance with therevised terms.If the financial liability (or a part thereof) is derecognized, the difference between thecarrying amount and the consideration paid (including the transferred non-cash assets orliabilities assumed) is recognized in current profit or loss.
(6) Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financialliabilities, and the legal right can be executed at present, and the Company has a plan tosettle the financial assets and financial liabilities at the same time or at net amount, thefinancial assets and financial liabilities can be presented in the balance sheet at net amountafter offsetting. Except for the above circumstances, financial assets and financial liabilitiescannot be offset and shall be presented separately in the balance sheet.
(7) Determination of fair value of financial assets and financial liabilities
Fair value is the amount at which an asset could be sold or a liability could be transferredbetween willing parties in an orderly transaction on a measurement date. The fair value of afinancial instrument that is traded in an active market is determined at the quoted price inthe active market. Quoted price in the active market represents quoted price which can beeasily obtained periodically from exchange market, brokers, industry associations or pricingservices agency, etc., which is the transactions amount in arm’s length transactions. Thefair value of a financial instrument that is not traded in an active market is determined byusing a valuation technique. Valuation techniques include using prices of recent markettransactions between knowledgeable and willing parties, reference to the current fair valueof another financial asset that is substantially the same with this instrument, discountedcash flow analysis and option pricing models, etc. During the valuation, the Companyadopts an applicable valuation technique under current conditions and there are enoughavailable data and other information to support. Those inputs should be consistent with theinputs a market participant would use when pricing the asset or liability, and the Companyshould maximize the use of relevant observable inputs. When related observable inputscan’t be acquired or are not feasible to be acquired, then use unobservable inputs.In summary, the Company categorizes inputs for fair value measurement into three levelsand uses the inputs by the order of Level 1, Level 2 and Level 3. Level 1: quoted prices(unadjusted) in active markets for identical assets or liabilities at the measurement date.Level 2: inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset orliability.
Section X Financial Report
(8) Impairment of financial assets
For financial assets measured at amortized cost and debt instrument investments measuredat fair value through other comprehensive income, contract assets and financial guaranteecontracts, the Company recognizes the loss provision based on the expected credit losses.The Company considers reasonable and reliable information about past events, currentconditions and forecasts of future economic conditions, and takes the risk of default as aweight, and calculates the probability-weighted amount of the present value of thedifference between the cash flow receivable and the cash flow expected to be received ofthe contract to confirm the expected credit losses.On each balance sheet date, the Company measures the expected credit losses offinancial instruments in different phases. If the credit risk has not increased significantlysince the initial recognition, the financial instruments are in the first phase. The Companymeasures the loss provision according to the expected credit losses in the next 12 months;if credit risk has increased significantly but credit impairment has not yet occurred since theinitial recognition, the financial instruments are in the second phase. The Companymeasures the loss provision according to the expected credit losses of the instrumentsduring the entire duration; if credit impairment has occurred since the initial recognition, thefinancial instruments are in the third phase. The Company measures the loss provisionaccording to the expected credit losses of the instruments during the entire duration.For financial instruments with lower credit risk on the balance sheet date, the Companymeasures the loss provision according to the expected credit losses in the next 12 months,assuming that its credit risk has not increased significantly since the initial recognition.For financial instruments in the first phase and second phase and financial instruments withrelatively lower credit risk, the Company calculates interest income based on their bookbalance before the deduction of provisions and effective interest rate. For financialinstruments in the third phase, the Company calculates interest income based on theiramortized cost after the impairment provision has been deducted from the book balanceand effective interest rate.For bills receivable, accounts receivable and contract assets, whether there exist significantfinancing components, the Company measures loss provision based on expected creditloss over the entire duration.The Company classifies accounts receivable into groups on the basis of shared credit riskcharacteristics, and calculates the expected credit losses on groups, the bases of groupdetermination are as follows:
For each group of bills receivable, the Company applies exposure at default and expectedcredit losses rate over the entire duration to calculate the expected credit losses by takinginto account the historical credit losses experience, the existing conditions and forecast offuture economic conditions.
Section X Financial Report
For each group of accounts receivable, the Company makes the comparison of expectedcredit losses rates of accounts receivable in overdue days and over the entire duration tocalculate the expected credit losses by taking into account the historical credit lossesexperience, the existing conditions and forecast of future economic conditions.For each group of other accounts receivable, the Company applies exposure at default andexpected credit losses rate within the next 12 months or over the entire duration tocalculate the expected credit losses by taking into account the historical credit lossesexperience, the existing conditions and forecast of future economic conditions.The Company recognizes the loss impairment provision or reversed in profit or loss of thecurrent period. For held debt instruments at fair value through other comprehensiveincome, the Company recognizes loss/gain on impairment in profit or loss of the currentperiod, and adjusts other comprehensive income at the same time.
12. Inventory
√ Applicable Not Applicable
(1) Classification of inventory
Inventory refers to finished products and commodities held by the Company in dailyactivities for sale, products in progress, materials and supplies consumed in the process ofproduction or provision of labour services, including mainly raw materials, turnovermaterials, materials for commissioned processing work, packaging materials, products inprogress, semi-finished products through in-house manufacturing, finished products(products in stock) and project construction, among others.
(2) Pricing of dispatch of inventory
The actual cost of inventories upon delivery is calculated using the weighted averagemethod.
(3) Impairment provision for inventory
At the balance sheet date, inventory is measured at the lower of cost and net realisablevalue.The net realisable value of inventories that can be directly put to sale, including finishedproducts, commodities and materials for sale is determined as the estimated selling price ofsuch inventory less estimated selling expenses and related tax expenses; the net realisablevalue of or inventories held for production, is determined as the estimated selling price offinished products manufactured less estimated cost incurred upon completion, estimatedselling expenses and related tax expenses; the net realisable value of inventory held for theexecution of sales contract or labour contract is computed on the basis of the contractprice. If the quantity of inventories held by the Company is more than the quantity orderedunder a sales contract, the net realisable value of the inventories in excess is computed onthe basis of the general selling price.
Section X Financial Report
Inventory impairment provision is made on the basis of individual inventory items, providedthat if certain inventories are related to a series of products manufactured and sold in thesame region with identical or similar end uses or purposes and are difficult to measureseparately with other items, their cost and net realisable value may be measured on anaggregate basis. Inventories The cost and net realizable value of inventories in largequantity with low unit prices are measured according to inventory types.At the balance sheet date, if the cost of inventory of the Company is higher than its netrealisable value, impairment provision is made and charged to current profit or loss. If thefactor causing the write-down of inventory value has been removed, the amount ofwrite-down should be reversed and transferred out of the previous inventory impairmentprovision amount. The reversed amount is included in current profit or loss.
(4) Inventory system
The Company adopts the perpetual inventory system as its inventory system.
(5) Amortisation of low-value consumables and packaging materials
The Company adopts one-off amortisation of its low-value consumables and packagingmaterials.
13. Contract assets
√ Applicable Not Applicable
The Company presents the right of the Company to charge consideration from the customerunconditionally (i.e. only depends on the passage of time) as a receivable, while theconsideration that the Company has the right (and this right depends on factors other thanpassage of time) to receive for goods transferred to customers is presented as a contractassets. If the Company sells two clearly distinguishable goods to the customer, and it has theright to receive payment because one of the goods has been delivered, but the receipt of suchpayment is conditioned on the delivery of another goods, the Company shall recognise such rightto receive payment as contract asset.For the determination and accounting treatment methods of the expected credit loss of contractassets, please see Note V.11 “Impairment of financial assets”.
Section X Financial Report
14. Long-term equity investments
√ Applicable Not Applicable
Long-term equity investments hereunder refer long-term equity investments in which theCompany exercises control, joint control or significant influence over the investee.
(1) Determination of initial investment cost
The initial cost of long-term equity investments acquired through business combinationinvolving parties under common control should be recognised as the share of thecarrying value of the owner’s equity of the acquired party; the initial cost of long-termequity investments acquired through business combination involving parties not undercommon control should be recognised as the combination costs determined at thedate of acquisition;The Company invested in other equity investment other than long-term equity
investments acquired through combination, the initial investment cost of long-termequity investments acquired with cash payment is the acquisition price actually paid;the initial investment cost of long-term equity investments acquired with the issuanceof equity- based securities is represented by the fair value of equity-based securities;the initial investment cost of long-term equity investments acquired through debtrestructuring is determined in accordance with relevant provisions under AccountingStandards for Business Enterprises No.12—Debt Restructuring; the initial investmentcost acquired in exchange for non-monetary assets shall be determined inaccordance with relevant provisions of the standard.
(2) Subsequent measurement and recognition of profit or loss
Cost methodLong-term equity investments in which the Company is able to exercise control overthe investee is accounted for using the cost method. Under the cost method, thecarrying value of long-term equity investments, other than additional investment orrecouped investment, shall remain constant. The Company declared the distribution ofprofit or cash dividend to the investee and calculated the portion of entitlement,which is recognised as investment income.
Section X Financial Report
Equity methodThe equity method is used by the Company to account for long-term equityinvestments in associates and joint ventures. Under the equity method, the initialinvestment cost is not adjusted for any excess of the initial investment cost over theshare of the net fair value of the investee’s identifiable assets. When the initialinvestment cost is less than the share of the fair value of the investment’s identifiablenet assets, the difference is recognised in current profit or loss and the cost oflong-term equity investment is adjusted accordingly.Under the equity method, share of net profit or losses and other comprehensiveincome of the investee are recognised by the Company as investment income andother comprehensive income, respectively, and the carrying amount of the long-termequity investment is adjusted accordingly. Share of profit or cash dividend declaredby the investee is charged against the carrying value of the long-term equityinvestment; changes in owners’ equity of the investee other than net profit or loss,other comprehensive income and profit distribution are adjusted against the carryingvalue of long-term equity investment and included in capital reserve. Share of netprofit or loss of the investee is recognised by the Company on the basis of the fairvalue of the identifiable assets of the investee when the investment is acquired andadjusted against the net profit of the investee. If the accounting policy andaccounting period of the investee are inconsistent with those of the Company, thefinancial statements of the investee is adjusted to align with the accounting policy andaccounting period of the Company, and investment income and other comprehensiveincome is recognised accordingly.Net losses of the investee is recognised by the Company by deducting the carryingvalue of the long-term equity investment together with long-term equity that insubstance forms part of the net investment in the investee until it reaches zero.Moreover, if the Company has incurred obligations to assume additional losses of theinvestee, estimated liabilities are recognised according to the obligation expected tobe assumed and charged to current investment loss. If the investee records net profitin future periods, the Company shall recognise its share of gains after applying suchshare of gains to make up for the unrecognised share of loss.
(3) Change of accounting method for long-term equity investment
Change from fair value measurement to the equity method: If an equity investment in
the investee not previously affording control, joint control or significant influence andaccounted for in accordance with the standard for recognition and measurement offinancial instruments becomes capable of affording joint control or significant influenceover the investee as a result of increased shareholding following additionalinvestment, the accounting method should be changed to the equity method, and thefair value of the original equity investment determined according to the standard forrecognition and measurement of financial instruments plus the fair value ofconsideration paid for the acquisition of the new investment shall be changed theinitial investment cost under the equity method.
Section X Financial Report
Change from fair value measurement or equity method to cost method: if an equityinvestment previously held in the investee not previously affording control, joint controlor significant influence and accounted for in accordance with the standard forrecognition and measurement of financial instruments, or a long- term equityinvestment previously held in associates or joint ventures becomes capable ofaffording control over the investee, it is accounted for long-term equity investmentformed through business combination.Change from equity method to fair value measurement: if a long-term equity investmentpreviously held in the investee affording joint control or significant influence ceases toafford joint control or significant influence as a result of decrease in shareholdingpercentage following partial disposal, the remaining equity investment is recognised inaccordance with the standard for recognition and measurement of financialinstruments, and the difference between the fair value at the date of loss of jointcontrol or significant influence and the carrying value is included in current profit orloss.Change from cost method to equity method or fair value measurement: when preparingseparate financial statements, if the Company losses control over an investee due todisposal of some equity-based investment and other reasons, the Company accountsfor the remaining equity affording joint control or significant influence over an investeeas a result of disposal based on the equity method, and the remaining equity will beadjusted as if it is accounted for using the equity method from the date ofacquisition; for the remaining equity not affording joint control or significant influenceover an investee as a result of disposal, it is accounted for in accordance withrelevant requirements of Accounting Standards for Business Enterprises No. 22—
Recognition and measurement of financial assets, and the differences between the fairvalue and book value on the date when control is lost are included in profit or loss.When preparing consolidated financial statements, it shall be accounted for inaccordance with relevant requirements of Accounting Standards for BusinessEnterprises No.33— Consolidated financial statements.
(4) Bases for determining joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control over an arrangement, whichrelevant activities of such arrangement must be decided by unanimously agreement fromparties who share control. If all the parties or a group of parties must act in concert todecide on the relevant activities of certain arrangement, it can be considered that all partiesor a group of parties have collective control over the arrangement. When determining ifthere is any joint control, it should first be determined if the arrangement is controlledcollectively by all parties or a combination of parties, and then determined whetherdecisions about activities related to the arrangement must be made by the unanimousagreement of those parties who have collective control over the arrangement. If there aretwo or more party groups that can collectively control certain arrangement, it does notconstitute joint control. When determining if there is any joint control, the relevantprotection rights will not be taken into account.
Section X Financial Report
Significant influence is the power of the investor to participate in the decision-making of aninvestee’s financial and operational policies, but neither control nor jointly control theformulation of such policies with other parties. When determining if there is any significantinfluence on the investee, the influence of the voting shares of the investee held directly orindirectly and the potential voting rights held by the Company and other parties which areexercisable in the current period and converted to the equity of the investee, including thewarrants, stock options and convertible bonds that are issued by the investee and can beconverted in the current period, shall be taken into account by the Company.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to50% of the voting shares of the investee, it is generally considered to have significantinfluence on the investee, unless there is concrete evidence to prove that it cannotparticipate in the production and operational decisions of the investee and cannot posesignificant influence in this situation.The Company usually determines whether there is significant influence on the investeethrough the following one or several circumstances:
Representation at the board or similar authority of the investee.Participation in the decision-making process of the investee’s financial and operationalpolicies. Having important transactions with the investee. Posting of management personnel at the investee. Providing key technical data to the investee.Having one or several of the above circumstances does not mean that the Company musthave significant influence on the investee. The Company needs to comprehensivelyconsider all the facts and circumstances to make an appropriate judgment.
(5) Methods for impairment test and impairment provision
At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of a long-term equity investment. If there are indications of impairment, animpairment test should be performed to ascertain its recoverable amount, and animpairment provision equivalent to the margin by which the recoverable amount is lowerthan the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods. The recoverable amount is determined as thehigher of net fair value of the long-term equity investment on disposal and present value ofestimated future cash flow.
Section X Financial Report
(6) Disposal of long-term equity investments
Upon the Company’s disposal of long-term equity investments, the difference between thecarrying value and consideration actually acquired is included in current profit or loss. Upondisposal of long-term equity investment, the portion previously included in othercomprehensive income is accounted for according to the relevant percentage on the samebasis adopted in the direct disposal of the relevant assets or liabilities by the investee.
15. Investment properties
(1) Types and measurement models of investment properties
The Company’s investment properties include the following types: leased land-use rightsand leased buildings.The Company’s investment properties is initially measured at cost and subsequently on acost basis.
(2) Adoption of cost model as accounting policy
Among the Company’s investment properties, leased buildings are subject to depreciationon a straight-line basis in accordance with accounting policies identical with accountingpolicies for fixed assets. Leased land-use rights and land-use rights held for disposal afterappreciation land- use rights in investment properties are amortised using the straight-linemethod in accordance with accounting policies identical with fixed asset accountingpolicies for intangible assets.At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of an investment property. If there are indications of impairment, an impairmenttest should be performed to ascertain its recoverable amount, and an impairment provisionequivalent to the margin by which the recoverable amount is lower than the carrying valueshould be made. Once recognised, impairment loss will not be reversed in subsequentaccounting periods.Where the investment properties are sold, transferred, retired or damaged, the differencesfrom disposal after deducting the carrying amount and related taxes are recognised in profitor loss for the current period by the Company. When the Company has evidence indicatingthe self-occupied houses and buildings are converted to leasing or leasing out itsproperties held for sale under operating leases, the carrying amount of such fixed assets,intangible assets or inventories before the conversion are transferred to investmentproperties. When the Company has evidence indicating the property held to earn rentals orfor capital appreciation are converted to self-occupation or the property intended foroperating lease purpose are open for sale, the carrying amount of such properties beforethe conversion are transferred to fixed assets, intangible asset or inventories.
Section X Financial Report
16. Fixed assets
(1) Recognition criteria and measurement of fixed assets
Fixed assets of the Company refer to tangible assets held for the production ofcommodities, provision of labour services, lease or operational management with a usefullife of more than one accounting year. Fixed assets are recognised if all of the followingconditions are met:
Economic benefits relating to such fixed assets are likely to flow into the Company; The cost of the fixed assets can be reliably measured.Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shallbe included in the cost of the fixed asset, and the carrying amount of the component ofthe fixed asset that is replaced shall be derecognised. Otherwise, such expenditure shall berecognised in profit or loss for the period in which it is incurred.Fixed assets of the Company are initially measured at cost. The purchase cost of a fixedasset comprises its purchase price, related taxes and any directly attributable expenditurefor bringing the asset to its working condition for its intended use, such as transportationcosts and installation expenses. If the payment for a purchased fixed asset is deferredbeyond the normal credit terms, the cost of the fixed asset shall be determined based onthe present value of the instalment payments. The difference between the actual paymentand the present value of the purchase price is recognised in profit or loss over the creditperiod, except for such difference that is capitalised according to Accounting Standard forBusiness Enterprises No. 17— Borrowing Costs.
(2) Classification and depreciation of fixed assets
The Company’s fixed assets are mainly classified into: buildings, machinery equipment,transportation equipment and office and other equipment; depreciation is conducted on astraight-line basis. The useful life and estimated net residual value of fixed assets aredetermined based on the nature and use of the fixed assets. At the end of the year, theuseful life and estimated residual value of and depreciation method for fixed assets arereviewed, and adjustment is made for any difference with the original estimated amount.Other than fully depreciated fixed assets which remain in use and the land which isseparately priced and recorded, the Company measures depreciation for all fixed assets.
Section X Financial Report
The type, depreciation method, estimated useful lives, estimated residual values and yearlydepreciation of the Company’s fixed assets are as follows:
Type of assetsDepreciation method
Estimateduseful lives(years)
Estimatedresidualvalues, netBuildingsLife average method8–
–5%Machinery equipmentLife average method4–
–5%Transportation equipmentLife average method5–
–5%Office and other equipmentLife average method3–
–5%
(3) Methods for impairment test and impairment provision for fixed assets
At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of fixed assets. If there are indications of impairment, an impairment test shouldbe performed to ascertain its recoverable amount, and an impairment provision equivalentto the margin by which the recoverable amount is lower than the carrying value should bemade. Once recognised, impairment loss will not be reversed in subsequent accountingperiods.
(4) Disposal of fixed assets
Fixed assets are derecognised upon disposal, or when no economic benefits are expectedfrom use or disposal. The difference between gains on disposal, transfer, retirement ordamage of fixed assets, net of their book value and related taxes, are included in profit andloss.
17. Construction in progress
√ Applicable Not Applicable
(1) Measurement of construction in progress
The cost of the Company’s construction in progress is recognised at actual constructionexpenses, including all necessary construction expenses incurred during the construction,and borrowing costs capitalized before the work reaches the expected conditions for useand other related costs.
Section X Financial Report
(2) Criteria for and timing of the transfer of construction in progress to fixed assets
The Company’s construction in progress is transferred to fixed assets when the work iscompleted and reaches the expected conditions for use. The criteria for judgement ofexpected conditions for use should meet one of the following:
The physical construction (including installation) of fixed assets has been completed infull or substantially completed in full;Trial production or operation has commenced and the result indicates that the asset
can operate normally or can manufacture compliant products in a consistent manner,or the trial operation indicates that it can operate or conduct business normally;The amount of fixed asset expenditure of the construction is minimal or almost certainnot be further incurred;Fixed assets acquired have reached design or contractual requirements, or areessentially consistent with design and contractual requirements.
(3) Methods for impairment test and impairment provision for construction in progress
At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of construction in progress. If there are indications of impairment, animpairment test should be performed to ascertain its recoverable amount, and animpairment provision equivalent to the margin by which the recoverable amount is lowerthan the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods.The recoverable amount is determined as the higher of net fair value of the asset lessdisposal cost and the present value of estimated future cash flow.
18. Borrowing costs
√ Applicable Not Applicable
(1) Principle for recognition of capitalisation of borrowing cost
Borrowing costs incurred by the Company that can be directly attributed to the acquisitionor production of assets qualified for capitalisation are capitalised and included in relevantasset costs; other borrowing costs are recognised as cost at the amount incurred at thetime of incurrence and charged to current profit or loss. Assets qualified for capitalisationrefer to fixed assets, investment properties and inventory that require a considerably longperiod of acquisition or production activities to reach the expected conditions for use orsale.
Section X Financial Report
(2) Computation of capitalised amounts
Capitalisation period: from the point of time at which the capitalisation of borrowing costsbegins to the point of time at which capitalisation ceases. The period of suspension ofcapitalisation of borrowing costs is not included.Period of suspension of capitalisation: In case of abnormal disruption during the acquisitionor production process for a consecutive period of more than 3 months, the capitalisationperiod for borrowing costs should be suspended.Computation of capitalised amount: For specific borrowings, the amount is determinedas interest expense incurred for the period in respect of the specific borrowing less interestincome received through the deposit of unutilised borrowed funds or investment gainsreceived through provisional investments; For general borrowings utilised, the amount isdetermined as the weighted average amount of the portion of cumulative asset expenses inexcess of the asset expense of specific borrowings multiplied by the capitalisation rate forthe general borrowings utilised, where the capitalisation rate is the weighted averageinterest rate of general borrowings; where there is a discount or premium in theborrowings, the amortisation of such discount or premium for each accounting period isdetermined according to the effective interest rate and the interest amount for each periodis adjusted accordingly.
19. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical form and arepossessed or controlled by the Company, and are recognized when the following conditions aremet:
it is probable that economic benefits attributable to the intangible assets will flow into theCompany; the costs of the intangible assets can be measured reliably.
(1) Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs ofpurchased intangible assets include the consideration and relevant expenses actually paid.For intangible assets contributed by investors, relevant actual costs are determined basedon the value agreed in the investment contract or agreement. But if the value agreed in theinvestment contract or agreement is not a fair value, the actual costs should be determinedbased on the fair value. The cost of a self-developed intangible asset is the totalexpenditure incurred in bringing the asset to its intended use. Intangible assets acquired ina business combination not under common control that are owned by the acquiree but notrecognised in its financial statements are recognised as intangible assets at fair value oninitial recognition of the acquiree’s assets.
Section X Financial Report
Subsequent measurement of intangible assets of the Company: Intangible assets withfinite useful lives are amortized on a straight-line basis; their useful lives and amortizationmethods are reviewed at the end of each year, and adjusted accordingly if there is anyvariance with the previous estimates; Intangible assets with indefinite useful lives are notamortized and their useful lives are reviewed at the end of each year. If there is anobjective evidence that the useful life of an intangible asset is finite, an estimation shouldbe made on the useful life and the intangible asset should be amortized using the straight-line method.
(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset bringseconomic benefits for the Company is unforeseeable, or the useful life could not beascertained.Criterion of determining indefinite useful lives: the period is derived from contractualrights or other legal rights and there are no explicit years of use stipulated in the contractor laws and regulations; the period in which the intangible assets generate benefits forthe Company still could not be estimated after considering the industrial practice orrelevant expert opinions.At the end of each year, the Company reviews the useful lives of the intangible assets withindefinite useful lives. The assessment is primarily reviewed by relevant departments thatuse the intangible assets, using the down-to-top approach, to determine if there arechanges to the determination basis of indefinite useful lives.
(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether thereis any sign of impairment. If yes, the recoverable amount is recognized through animpairment test and provision for impairment is made based on the difference between thecarrying value and the recoverable amount.Impairment loss will not be reversed in subsequent accounting periods once provision ismade for it. The recoverable amount of intangible assets should be based on the higher ofthe net fair value of the assets less the disposal expense and the present value ofestimated future cash flow of the assets.
Section X Financial Report
(4) Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stageAs for an internal research and development project, expenditure incurred in the researchstage is recognized in the profit or loss as incurred. Expenses incurred in the developmentstage are capitalized only if all of the following conditions are met: the technicalfeasibility of completing the intangible assets so that they will be available for use or forsale; the intention to complete the intangible assets for use or for sale; how theintangible assets will generate economic benefits, including there is evidence that theproducts produced by the intangible assets has a market or the intangible assetsthemselves have a market; if the intangible assets are for internal use, there is evidencethat there exists usage for the intangible assets; the availability of adequate technical,financial and other resources to complete the development and gain the ability to use orsell the intangible assets; the capability to reliably measure the expenditures attributableto the development stage of the intangible assets.Specific standards for distinguishing research stage and development stage of an internalresearch and development project: the Company refers to the research stage as the stageof planned investigation and search for obtaining new technology and knowledge, whichfeatures planning and exploration; before commercial production or other uses, theCompany regards the stage of applying the research achievements and other knowledge ina plan or design to produce new or substantially improved materials, equipment andproducts as development stage, which features pertinence and is very likely to formresults.All the expenditures incurred on research and development which cannot be distinguishedbetween research stage and development stage are recognized in the profit or loss.
20. Impairment of long-term assets
√ Applicable Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,construction in progress, intangible assets and other long-term assets are tested for impairmentif there is any sign of impairment at the balance sheet date. If the result of the impairment testindicates that the recoverable amount of the assets is less than the carrying amount, a provisionfor impairment will be made based on the difference and will be recorded in impairment loss. Therecoverable amount is the higher of the net fair value of the assets less the disposal expenseand the present value of estimated future cash flow of the assets. Provision for asset impairmentis calculated and recognized on the individual asset basis. If it is not possible to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to whichthe asset belongs is determined. An asset group is the smallest asset portfolio that can generatecash inflows independently.Goodwill arising from a business combination and an intangible asset with an indefinite useful lifeis tested for impairment at least at each year end, irrespective of whether there is any indicationthat the asset may be impaired. Intangible assets that have not been ready for intended use aretested for impairment each year.
Section X Financial Report
When the Company carries out impairment test of the goodwill, the carrying amount of thegoodwill, arising from business combination, shall be allocated to the related asset groups onreasonable basis since the acquisition date, or to the related asset group portfolios if it is difficultto be allocated to the related asset groups. When the carrying amount of the goodwill isallocated to the related asset groups or asset group portfolios, it shall be allocated in theproportion of the fair value of each asset group or asset group portfolio against the total fairvalue of related asset groups or asset group portfolios. If it is difficult to measure the fair valuereliably, it shall be allocated in the proportion of the carrying amount of each asset group orasset group portfolio against the total carrying amount of related asset groups or asset groupportfolios.When impairment test is made by the Company to the related asset groups or asset groupportfolios including goodwill, if there is a sign that the related asset groups or asset groupportfolios are prone to impair, the Company shall first conduct impairment test on the assetgroups or asset group portfolios excluding goodwill, calculate the recoverable amount andrecognize the corresponding impairment loss by comparing with its carrying amount. TheCompany shall then conduct impairment test on the asset groups or asset group portfoliosincluding goodwill and compare the carrying amount (including the carrying amount of allocatedgoodwill) of related asset groups or asset group portfolios with the recoverable amount thereof.Impairment loss shall be recognized in accordance with the differences when the recoverableamount of the related asset groups or asset group portfolios is lower than the carrying amountthereof. The amount of the impairment loss is first reduced by the carrying amount of thegoodwill allocated to the asset group or set of asset groups, and then the carrying amount ofother assets (other than the goodwill) within the asset group or set of asset groups, pro ratabased on the carrying amount of each asset.Once the above impairment loss on assets is recognized, it shall not be reversed by theCompany in any subsequent accounting period.
21. Long-term prepaid expense
√ Applicable Not Applicable
Long-term prepaid expenses of the Company are expenditures which have incurred but thebenefit period of which is more than one year (exclusive). They are amortized by installments overthe benefit period based on each item under the expenses. If items under the long-term pre-paidexpenses are no longer beneficial to the subsequent accounting periods, the amortized value ofsuch unamortized items is then fully transferred to the profit or loss.
Section X Financial Report
22. Contract liabilities
√ Applicable Not Applicable
A contract liability represents the Company’s obligation to transfer goods to a customer forwhich the Company has received consideration (or an amount of consideration is due) from thecustomer. If the customer has already paid the contract consideration before the Companytransfers goods to the customer or the Company has obtained the unconditional collection right,the Company will recognise such amount received or receivable as contract liabilities at earlier ofthe actual payment by the customer or the amount payable becoming due. Contract assets andcontract liabilities under the same contract are presented on a net basis, and contract assetsand contract liabilities under different contracts are not offset.
23. 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.
(1). Accounting treatment of short-term remunerations
√ Applicable Not Applicable
Short-term remunerations provided by the Company include short-term salaries, bonus,allowance, subsidies, employee welfare, housing provident fund, labor union fee andeducation fee, medical insurance premiums, work-related injury insurance premiums,maternity insurance premiums, short-term compensated leave, short-term profit-sharingplans, etc. During the accounting period when employees render services, the Companyshall recognize short-term remunerations that actually incurred as liabilities and credited intothe current profit or loss or the cost of relevant assets on an accrual basis by the benefitobjects.
(2). Accounting treatment of post-employment benefits
√ Applicable Not Applicable
Post-employment benefits mainly include the basic pension insurance, enterprise annuity,etc., In accordance with the risks and obligations undertaken by the Company, thepost-employment benefits are classified as defined contribution plans and defined benefitplans.Defined contribution plans: the Company shall recognize the sinking funds paid on thebalance sheet date to individual entities in exchange for services from employees in theaccounting period as liabilities, and shall credit such funds into the profit or loss or the costof relevant assets in accordance with the benefit objects.
Section X Financial Report
Defined benefit plans: the Company determines the cost for providing benefits using theexpected cumulative welfare unit method, with actuarial valuations being carried out byindependent actuary at the interim and annual balance sheet date. The costs for staff’sremunerations incurred by the defined benefit plans of the Group are categorized asfollows: (1) service cost, including current period service cost, past service cost andsettlement profit or loss. Specifically, current period service cost means the increase of thepresent value of defined benefit obligations resulted from the current period services offeredby employees. Past service cost means the increase or decrease of the present value ofdefined benefit obligations resulted from the revision of the defined benefit plans related tothe prior period services offered by employees; (2) interest expenses of defined benefitplans; (3) changes caused by the remeasurement of liabilities for defined benefit plans.Unless other accounting standards require or permit the credit of the costs for employeewelfare into the cost of assets, the Company will credit (1) and (2) above into the profit orloss; and recognize (3) above as other comprehensive income and will not transfer it backto the profit or loss in subsequent accounting periods.
(3). Accounting treatment of termination benefits
√ Applicable Not Applicable
Termination benefits are the indemnity proposal provided by the Company for employeesfor the purpose of terminating labor relations with employees before expiry of the laborcontracts or encouraging employees to accept downsizing voluntarily. When the Companycould not unilaterally withdraw the termination benefits provided as a result of plan fortermination of labor relations or the redundancy offer, or upon recognition of costs orexpenses related to a restructuring involving the payment of termination benefits, whicheveris earlier, the staff’s remuneration liabilities arising from such termination benefits arerecognized and included in current profit or loss.
24. Estimated liability
√ Applicable Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting ofcommercial acceptance bills, pending litigation or arbitration and product quality assuranceis the present obligation of the Company and the performance of such obligation is likely tolead to an outflow of economic interests and its amount can be reliably measured, suchobligation shall be recognized as an estimated liability.
Section X Financial Report
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of thenecessary expenses for the performance of the present obligation. If there is a continuousrange for the necessary expenses and if all the outcomes within this range are equally likelyto occur, the best estimate shall be determined according to the middle estimate within therange.; if there are two or more items involved, the best estimate should be determinedaccording to all possible outcomes and relevant probabilities.At the balance sheet date, the carrying value of estimated liabilities should be reviewed. Ifthere is objective evidence that the carrying value could not reflect in the current bestestimate, the carrying value shall be adjusted to reflect the current best estimate.If all or part of the expense necessary for settling the provisions is expected to becompensated by the third party, the amount of compensation is separately recognized asan asset when it is basically determined to be recoverable, and the recognized amount ofthe compensation shall not exceed the carrying amount of the provisions.
25. Share-based payments
√ Applicable Not Applicable
Share-based payments of the Company are transactions in which equity instruments are grantedto employees in exchange for services rendered by employees or for the assumption of liabilitiesbased on equity instruments. Share-based payments of the Company are equity-settledshare-based payments and cash-settled share-based payments.For equity-settled share-based payment transaction in return for services from employees, it shallbe measured at the fair value of equity instruments granted to the employees at the date ofgrant by the Company. On each balance sheet date within the vesting period, the Companymakes the best estimation of the number of vested equity instruments based on subsequentinformation such as the updated changes in the number of employees who are granted to vestand the achievement of specified performance conditions. Based on the above results, theservices received in the current period are included in the relevant cost or expenses based onthe fair value on the date of grant, with the increase in the capital reserve accordingly. Therecognized relevant cost or expenses and the total amount of owners’ interest shall no longer beadjusted after the vesting date. However, equity instruments vested immediately after the date ofgrant shall be included in the relevant cost or expenses based on its fair value on the date ofgrant, with the increase in the capital reserve accordingly.
Section X Financial Report
The cash-settled share-based payment shall be measured at the fair value of liability assumed bythe Company, which is determined based on the shares or other equity instruments. For thecash-settled share-based payment that may be exercised immediately after the grant, the fairvalue of the liability assumed by the Company shall, on the date of the grant, be recognized inrelevant costs or expenses and the liabilities shall be increased accordingly. For cash-settledshare-based payment that may be exercised if services are fulfilled during the vesting period orthe specified performance condition is achieved, on each balance sheet date within the vestingperiod, the services acquired in the current period shall, based on the best estimate of exercise,be recognized in relevant costs or expenses at the fair value of the liability assumed by theCompany, and the liabilities shall be adjusted correspondingly. At each balanced sheet date andthe settlement date prior to the settlement of liabilities, the fair value of the liability isre-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 thefair value of equity instruments refer to the difference between the fair values of the equityinstrument on the modified date before or after the modification. If the Company modifies thevesting conditions in such manner conductive to the employees, including the shortening of thevesting period, change or cancellation of the performance conditions (rather than marketconditions), the modified vesting conditions are considered upon the disposal of vestingconditions. If the modification reduces the total fair value of shares paid or the Company usesother methods not conductive to employees to modify the terms and conditions of share-basedpayment plans, the Company will continue to be accounted for the services obtained in theaccounting treatment, as if the change had not occurred, unless the Company cancelled some orall of the equity instruments granted.During the vesting period, if the Company cancel equity instruments granted which will be treatedas accelerating the exercise of rights and any amount to be charged over the remaining vestingperiod should be recognized immediately in the profit or loss, while at the same time recognizethe capital reserve. Employees or other parties can choose to meet non-vesting conditions, butfor those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.
Section X Financial Report
26. Revenue
Revenue is the total inflow of economic benefits formed by the Company and its subsidiariesduring day-to-day operations which might lead to increase of shareholders’ equity and beirrelevant to capital invested by shareholders.The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,recognized revenue when the client obtains the control right of relevant goods or services.Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various singleperformance obligation in accordance with the relevant proportion of separate selling price ofgoods or services promised by various single performance obligation, and measure revenue inaccordance with transaction price allocated to various single performance obligation.Transaction price is the amount of consideration that the Company and its subsidiaries areexpected to be entitled to collect due to transfer of goods and services transferred to the client,excluding the amount collected for any third party. The transaction price recognized by theCompany and its subsidiaries does not exceed the amount of recognized revenue when relevantuncertainties are eliminated and might not incur material carrying back. The amount that isexpected to be returned to the client is taken as liability of returned goods and is not recordedin transaction price.When one of the following conditions is met, the Company and its subsidiaries performperformance obligations during a certain time horizon, otherwise, it belongs to fulfillingperformance obligations at a certain time point:
The client simultaneously obtains and consumes economic benefits as the Company and itssubsidiaries perform the contract;The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;Goods produced by the Company and its subsidiaries during the process of performance
have no alternative use, and the Company and its subsidiaries are entitled to collect the
amount for the cumulative completed and performed portion to date during the entire
contractual period.For the performance obligations performed during a certain time horizon, the Company and itssubsidiaries recognize revenue in accordance with the schedule of performance during such timehorizon. When the schedule of performance can’t be reasonably recognized, where the costs thathave been incurred by the Company and its subsidiaries are estimated to be compensated,revenue shall be recognized in accordance with the amount of costs that has been incurred untilthe schedule of performance can be reasonably confirmed.
Section X Financial Report
For performance obligations performed at a certain time point, the Company and its subsidiariesrecognize revenue at the time point when the client obtains the control right of relevant goods orservices. When judging whether the client has obtained control right over goods or services, theCompany and its subsidiaries will consider the following signs:
The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;The Company and its subsidiaries have transferred the material objects of such goods tothe client;The Company and its subsidiaries have transferred statutory ownership right of the goods
or major risks and rewards of the ownership to the client; The client has accepted such goods or service.The right that the Company and its subsidiaries are entitled to collect the consideration forhaving transferred goods or services to the client (and such right depends on other factors otherthan time lapse) is presented as contract asset, and contract asset is provisioned impairment onthe basis of expected credit losses. The right owned by and unconditionally collected from theclient by the Company and its subsidiaries (only depend on time lapse) shall be presented asaccounts receivable. Obligations that the Company and its subsidiaries have collected or shallcollect consideration from the client and shall transfer goods or services to the client arepresented as contractual obligations.Specific accounting policies relating to major activities that the Company and its subsidiariesobtain revenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only include
performance obligation of transferring the whole machine of home appliance. Generally, on
the basis of taking into account the following factors comprehensively, the Company
recognizes the revenue at the time 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.
Section X Financial Report
(2) Construction contract income
Construction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home,because the client is able to control goods under construction during the Company’sperformance process, the Company takes them as performance obligations performedduring a certain time horizon, and recognizes revenue in accordance with the schedule ofperformance, and it is an exemption when the schedule of performance can’t bereasonably confirmed. The Company confirms the schedule of performance of servicesprovided in accordance with the input method. When the schedule of performance can’t bereasonably confirmed, where the costs that have been incurred by the Company areestimated to be compensated, the revenue will be recognized in accordance with theamount of costs that has been incurred until the schedule of performance can bereasonably confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides qualityassurance for goods sold and project constructed. For guarantee-type quality assurance inorder to ensure the client that goods sold comply with existing standards, the Companyconducts accounting treatment in accordance with estimated liabilities. For service-typequality assurance in order to ensure the client that we also provide a separate service otherthan that the goods sold comply with existing standards, the Company takes it as aseparate performance obligation, and allocates partial transaction price to service-typequality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtainscontrol right over services. When assessing whether quality assurance provides a separateservice other than ensuring the client that the goods sold comply with existing standards,the Company shall consider factors such as whether such quality assurance is understatutory requirements or industrial practices, the term of quality assurance and the natureof the Company’s commitment to perform the tasks.
27. Government grants
√ Applicable Not Applicable
(1) Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assetsobtained by the Company from the government, excluding the capital invested by thegovernment as an owner. The government grants are mainly divided into asset-relatedgovernment grants and revenue-related government grants.
Section X Financial Report
(2) Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit orloss on an even basis over the useful life of relevant assets; government grants measuredat nominal amount shall be recognized directly in current profit or loss. Revenue-relatedgovernment grants shall be treated as follows: those used to compensate relevantexpenses or losses to be incurred by the enterprise in subsequent periods are recognizedas deferred income and recorded in current profit or loss when such expenses arerecognized; those used to compensate relevant expenses or losses that have beenincurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related
government grantIf the government grant received by the Company is used for purchase, construction orother project that forms a long-term asset, it is recognized as asset-related governmentgrant.If the government grant received by the Company is not asset-related, it is recognized asrevenue-related government grant.Government grant received without clear objective shall be classified as asset-relatedgovernment grant or revenue-related government grant by:
Government grant subject to a certain project shall be separated according to theproportion of expenditure budget and capitalization budget, and the proportion shallbe reviewed and modified if necessary on each balance sheet date;Government grant shall be categorized as revenue-related if its usage is described ingeneral statement and no specific project is specified in the relevant governmentdocument.
(4) Amortization method and determination of amortization period of deferred revenue
related to government grantsAsset-related government grant received by the Company is recognized as deferredrevenue and is evenly amortized to the profit or loss in the current period over theestimated useful life of the relevant asset starting from the date when the asset is availablefor use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of theperiod when there is clear evidence that the relevant conditions set out in the financialsubsidy policies and regulations are fulfilled and the receipt of such financial subsidy isassured.Other government grants other than those measured at the account receivable isrecognized upon actual receipt of such subsidies.
Section X Financial Report
28. Deferred tax assets/deferred tax liabilities
√ Applicable Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are calculated andrecognized based on the differences between the tax bases and the carrying amounts of assetsand liabilities (temporary differences).
(1) Deferred income tax assets are recognized by the Company to the extent that it is probable
that future taxable profits will be available against which the deductible temporarydifferences can be utilized. For deductible losses and tax credits that can be carriedforward to future years, deferred income tax assets shall be recognized to the extent that itis probable that taxable profit will be available in the future to offset the deductible lossesand tax credits. Save as the exceptions, deferred income tax liabilities shall be recognizedfor the taxable temporary differences.
(2) Deferred income tax asset of the Company is recognized to the extent that there is enough
taxable income for the deduction of the deductible temporary difference. At the balancesheet date, if there is sufficient evidence that there will be enough taxable income in thefuture for the deduction of the deductible temporary difference, the deferred income taxasset not recognized in previous accounting period is recognized. If there is no sufficientevidence that there will be enough taxable income in the future for the deduction of thedeferred income tax asset, the carrying value of the deferred income tax asset is reduced.
(3) The Company recognizes deferred income tax liability for taxable temporary difference arising
from investments in subsidiaries and associated companies, unless the Company couldcontrol the time of reversal of the temporary differences and the temporary differenceswould not be probably reversed in the foreseeable future. The Company recognizesdeferred income tax asset for deductible temporary differences arising from investments insubsidiaries and associated companies, if the temporary difference will be very probablyreversed in the foreseeable future and it is highly probable that taxable income will beavailable in the future to deduct the deductible temporary difference.
(4) The Company does not recognize deferred income tax liability for a temporary difference
arising from the initial recognition of goodwill. No deferred income tax asset or deferredincome tax liability is recognized for the temporary differences resulting from the initialrecognition of assets or liabilities due to a transaction other than a business combination,which affects neither accounting profit nor taxable income (or deductible loss). At thebalance sheet date, deferred income tax assets and deferred income tax liabilities of theCompany are measured at the tax rates that apply to the period when the asset isexpected to be recovered or the liability is expected to be settled.
Section X Financial Report
(5) Deferred income tax assets and deferred income tax liabilities are offset when:
1) deferred tax assets and deferred tax liabilities relate to income taxes levied by the same
taxation authority on the same taxable entity within the Company;
2) such taxable entity within the Company has a legally enforceable right to settle current
income tax assets and current income tax liabilities on a net basis.
29. Leases
√ Applicable Not Applicable
Lease is a contract in which the Company transfers or obtains the right of use of an identifiedasset or several identified assets under control for the exchange or payment of considerationwithin a certain period of time. At inception of a contract, the Company assesses whether acontract is, or contains, a lease.
(1) The Company as the lessee
√ Applicable Not Applicable
1) Initial measurement
On the commencement date of the lease term, the Company recognizes its right touse leased assets over the lease term as right-of-use assets and recognizes thepresent value of the lease payments that have not been paid as lease liabilities,except for short-term leases and low-value leases. The lease payments arediscounted using the implicit interest rate in the lease when calculating the presentvalue of the lease payments. If that rate cannot be readily determined, the Companyuses its incremental borrowing rate as the discount rate.Right-of-use assets shall be initially measured at costs. The costs include:
a. initial measurement amount of the lease liabilities;b. a lease payment paid on or before the date of commencement of the lease term,where there were lease incentives, such incentives received shall be deducted;c. initial direct costs incurred by the lessee;d. 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.
Section X Financial Report
2) Subsequent measurement
If the Company accrues depreciation for right-of-use assets by reference to thedepreciation policy for fixed assets (see this Note V.16 “Fixed assets” for details), andcan reasonably determine that the ownership of the leased asset can be acquired atthe expiration of the lease term, the Company shall depreciate the leased asset withinits remaining useful life. If the Company cannot reasonably determine that theownership of the leased asset can be acquired at the expiration of the lease term, theCompany shall depreciate the leased asset within the lease term or its remaininguseful life, whichever is shorter. For lease liabilities, the Company shall calculate theinterest expenses for each period over the lease term at the fixed periodic interestrate, and recognize it in current profit or loss or the cost of relevant assets. Variablelease payments that are not included in the measurement of lease liabilities arerecognized in current profit or loss or the cost of relevant assets when they areactually incurred. After the commencement date of the lease term, in the event thatthere is a change in the substantive fixed payments, a change in expected paymentunder a guaranteed residual value, a change in an index or rate used in determiningthe lease payments, or a change in the evaluation result or actual exercise ofpurchase option, extension option or termination option, the Company remeasures thelease liabilities based on the present value of the lease payments after the changeand adjusts the carrying value of the right-of-use asset accordingly. If the carryingamount of the right-of-use asset has been reduced to zero, but a further reduction inthe measurement of the lease liabilities is still warranted, the Company recognizes theremaining amount of the remeasurement in current profit or loss.
3) Short-term leases and leases of low-value assets
For short-term leases (leases with a term of less than 12 months as of the leasecommencement date) and leases of low-value assets, the Company adopts asimplified approach by not recognizing the right-of-use assets and lease liabilities, andinstead recognizes the cost of relevant assets or current profit or loss on astraight-line basis for each period over the lease term.
(2) The Company as the lessor
√ Applicable Not Applicable
The Company classifies leases into finance leases and operating leases based on thesubstance of the transaction at the inception date of the lease. A finance lease is a leasethat transfers substantially all the risks and rewards incidental to ownership of the leasedasset. An operating lease is a lease other than a finance lease.
1) Operating leases
The Company uses the straight-line method to recognize lease receipts underoperating leases as rental income for each period during the lease term. Variablelease payments relating to operating leases that are not recognized as lease receiptsare recognized in current profit or loss when they are actually incurred.
Section X Financial Report
2) Finance leases
On the commencement date of the lease term, the Company recognizes finance leasereceivables and derecognizes finance lease assets. Finance lease receivables areinitially measured at the net investment in the lease (the sum of the unguaranteedresidual value and the present value of the lease receipts not yet received on thecommencement date of the lease term discounted at the interest rate embedded inthe lease), and interest income is recognized over the lease term calculated at a fixedperiodic interest rate. Variable lease payments acquired by the Company that are notincluded in the measurement of the net investment in the lease are recognized incurrent profit or loss when they are actually incurred.
30. Other significant accounting policies and accounting estimates
√ Applicable Not Applicable
(1) Asset securitisation
The Company has securitised certain receivables to entrust the assets to specific-purposeentities which would issue such securities to investors. As asset service provider, theCompany is responsible for the provision of maintenance and daily management of theassets, formulation of annual asset disposal plans, formulation and implementation of assetdisposal plan, signing of relevant asset disposal agreements and preparation asset servicereports on a regular basis.In applying the accounting policy for the securitisation of financial assets, the Company hasconsidered the extent to which the risk and reward of the assets have been transferred toother entities, and the extent to which the Company exercises control over the entity:
When the Company has transferred substantially all risk and reward relating to theownership of a financial asset, such financial asset is derecognised;When the Company retains substantially all risk and reward relating to the ownershipof a financial asset, the Company continues to recognise such financial asset;If the Company neither transfers nor retains substantially all risk and reward relating tothe ownership of a financial asset, the Company considers whether it has control overthe financial asset. If the Company does not retain control, the financial asset isderecognised, and the rights and obligations arising from or retained the transfer arerecognised as assets and liabilities, respectively. If the Company retains control, thefinancial asset is recognised according to the extent of continued involvement in thefinancial assets.
Section X Financial Report
(2) Hedge accounting
Hedge refers, in respect of the risk exposure arising from the company’s management ofspecific risks such as foreign exchange risks, interest rate risks, price risks and credit risks,to risk management activity of designating financial instruments as hedging instrumentssuch that the change in the fair value or cash flow of the hedging instruments can beexpected to set off the change in the fair value or cash flow of the hedged item.The hedged item refers to an item designated for hedge against the risk of change in fairvalue or cash flow that can be reliably measured.Hedging instruments are financial instruments designated for hedge, the change in fair valueor cash flow of which is expected to set off the change in the fair value or cash flow of thehedged item.The Company assesses whether the hedge relationship fulfills the requirement for hedgeeffectiveness at the inception date of the hedge and continuously in subsequent periods.The effectiveness of hedge refers to the extent to which the change in the fair value orcash flow of the hedging instruments can offset the change in the fair value or cash flow ofthe hedged item caused by the risk against which the hedge is made. The change in thefair value or cash flow of a hedging instrument in excess or shortfall of the change in thefair value or cash flow of the hedging instruments can offset the change in the fair value orcash flow of the hedged item represents the ineffective portion of the hedge.
(3) Significant accounting estimates
In the course of applying accounting policies, the Company is required to makejudgements, estimations and assumptions on the carrying values of statement items thatcannot be accurately measured owing to uncertainties to which operating activities aresubject. Such judgements, estimations and assumptions are made based on the pastexperience of the management and taking into consideration of other relevant factors. Suchjudgements, estimations and assumptions affect the reported amounts of income,expenses, assets and liabilities and the disclosure of contingent liabilities as at the balancesheet date. However, the actual outcome resulting from the uncertainty of such estimatescould be different from the current estimates of the management, thereby resulting insignificant adjustments to the carrying value of the future assets or liabilities affected. TheCompany regularly reviews such judgements, estimations and assumptions on a goingconcern basis. If the change in accounting estimates affects only the current period inwhich the change occurs, the affected amount is recognized for the period in which thechange occurs; if both the current period and future periods are affected, the affectedamount is recognised for the current period and the future periods.
Section X Financial Report
At the balance sheet date, important aspects in which the Company is required to makejudgements, estimations and assumptions on the amount of items on the financialstatements are as follows:
Estimated liabilitiesThe Company estimates and makes provision for product warranty and estimatedcontract loss according to contract terms, existing knowledge and historicalexperience. When such contingencies have given rise to a present obligation, and theperformance of such present obligation is likely to result in the outflow of economicbenefit from the Company, the Company recognises estimated liabilities for thecontingencies based on the best estimates of expenses required for the performanceof relevant present obligations. The recognition and measurement of estimatedliabilities is dependent to a large extent on management judgement. In the course ofjudgement, the Company is required to assess factors such as risks, uncertaintiesand the time value of currency relating to such contingencies. In particular, theCompany recognises estimated liabilities in respect of after-sales undertaking tocustomers for return and replacement, maintenance and installation of goods sold.The recognition of estimated liabilities has taken into account the maintenanceexperience and data of the Company for recent years, although past experience inmaintenance may not reflect maintenance in the future. Any increase or decrease inthis provision might affect the profit or loss of future years.
Provision for ECLThe Company measures ECL through default risk exposure and the ECL rate, whichis determined based on the default probability rate and default loss rate. Indetermining the ECL rate, the Company uses data such as internal historic credit lossexperience and adjusts the historic data taking into consideration current conditionsand prospective information. When considering prospective information, indicatorsadopted by the Company include the risk of economic downside, expected growth inunemployment rate, and changes in external market conditions, technical conditionsand customer conditions. The Company monitors and reviews the assumptionsrelating to ECL computation on a regular basis. There was no significant change toaforesaid estimation technique and key assumptions during the year.
Impairment provisions for inventory
The Company makes impairment provisions for inventory of which cost is higher thannet realisable value and obsolete and slow-moving inventory based on the lower ofcost and net realisable value according to its inventory accounting policy. Theimpairment of inventory to its net realisable value is based on assessment of thesellability of inventory and its net realisable value. The authentication of inventoryimpairment requires the management to obtain conclusive evidence and makejudgment and estimates taking into consideration factors such as the purpose ofinventory and post-balance sheet date events. Any difference between the actualoutcome and the previous estimate will affect the carrying value of inventory and thecharge or reversal of impairment provisions for inventory during the period in whichthe estimates are modified.
Section X Financial Report
Fair value of financial instrumentsFor financial instruments without an active trading market, the Company determinesits fair value using valuation techniques. Such valuation techniques include discountedcash flow model analysis and others. During the assessment, the Company isrequired to make estimates on future cashflow, credit risk, market volatility rate andrelevance and select an appropriate discount rate. Such relevant assumptions aresubject to uncertainty, and any change will affect the fair value of financialinstruments. Impairment of other equity instrument investmentsThe Company’s determination of impairment for other equity instrument investments islargely dependent on the management’s judgment and assumptions to determinewhether impairment should be recognised. In the course of making judgments andassumptions, the Company is required to assess the extent and duration of the fairvalue of the investment being lower than cost, as well as the financial conditions andshort-term business prospects of the investee, including industry conditions,technological revolution, credit rating, default rate and counterparty risks. Impairment provision for long-term assetsAt the balance sheet date, the Company assesses whether there are indications ofpossible impairment of non-current assets other than financial assets. In addition tothe annual impairment test, intangible assets with indefinite useful life are also testedfor impairment when there are indications of the same. Impairment tests on non-current assets other than financial assets are conducted when there are indicationsthat its carrying value may not be recoverable. An impairment has occurred when thecarrying value of an asset or asset group is higher than the recoverable amount (thehigher of net fair value less disposal cost and the present value of estimated futurecash flow). The net fair value less disposal cost is determined with reference to theagreed selling price of similar assets in a fair transaction or observable market pricesless incremental costs attributable directly to the disposal of such asset. In estimatingthe present value of future cashflow, significant judgement is required to be made inrespect of the production volume and selling price of the asset or (asset group),relevant operating cost and discount rate for the computation of present value. TheCompany takes into consideration all available relevant information when makingestimates on the recoverable amount, including forecasts on production volume,selling price and relevant operating costs based on reasonable and justifiableassumptions. The Company conducts goodwill impairment tests at least annually. Thisrequires estimates on the present value of future cashflow of asset group or portfolioof asset groups to which goodwill has been allocated. When making estimates on thepresent value of future cashflow, the Company is required to make estimates oncashflow generated from future asset group or portfolio of asset groups, and at thesame time select an appropriate discount rate to determine the present value offuture cashflow.
Section X Financial Report
Depreciation and amortisationDepreciation and amortisation of investment properties, fixed assets and intangibleassets is charged on a straight-line basis over their useful life after taking theirresidual values into account. The Company reviews the useful life on a regular basisto determine the amount of depreciation and amortisation charge to be allocated toeach reporting period. The useful life is determined based on past experience relatingto similar assets taking into consideration expected technological upgrades. If thereare significant changes in previous estimates, the depreciation and amortisationcharge for future periods will be adjusted. Deferred income tax assetsThe Company recognises deferred income tax assets in respect of all unutilised taxlosses, to the extent that it is probable that sufficient taxable profit will be available tooffset the loss. This requires the exercise of significant judgement by the Company’smanagement to estimate the timing and amount of future taxable profit, taking intoaccount its tax planning strategy, to determine the amount of deferred income taxassets to be recognised. Income taxIn the Company’s usual operating activities, the final tax treatment and computationof certain transactions are subject to uncertainty. Whether certain items can bepresented on a pretax basis is subject to approval of the competent taxationauthority. If the final confirmed outcome of such taxation matters is different from theamount of the initial estimates, such difference will affect the current income tax anddeferred income tax for the period of final confirmation.
Provision for sales rebate
The Company and its subsidiaries adopt a sales rebate policy for sales agentcustomers. Based on relevant provisions of the sales agreements, vetting of specifictransactions, market conditions, channel inventory level and past experience withreference to the status of completion of agreed appraisal indicators by sales agentcustomers, the Company and its subsidiaries makes estimates on and provision forsales rebate on a regular basis. The provision of sales rebate involves judgment andestimation by the management. In the event of any material change in previousestimates, the aforesaid difference will affect the sales rebate for the period for whichthe estimates are changed.
31. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
Applicable √ Not Applicable
(2). Changes in significant accounting estimates
Applicable √ Not Applicable
Section X Financial Report
VI. TAXATION
1. Main tax categories and rates
√ Applicable Not Applicable
Tax typesBasis of taxationTax rateValue-added taxTaxable revenue from sales of goods
and rendering services
6%, 9%, 13%City maintenance andconstruction tax
Circulation tax payable7%(Local) education surchargeCirculation tax payable1%, 2%, 3%EITTaxable incomeStatutory tax rate
or preferentialrates as follows
2. Preferential tax
√ Applicable Not Applicable
Companies subjected to preferential tax and preferential tax rate:
CompanyTax ratePreferential taxQingdao Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Special RefrigeratorCo., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Dishwasher Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Special Freezer Co.,
Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Intelligent HomeAppliance Technology Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseWuhan Haier Electronics Holding
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseWuhan Haier Freezer Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHefei Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHefei Haier Air-conditioning Co.,
Limited
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseZhengzhou Haier Air-conditioning
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseShenyang Haier Refrigerator Co.,
Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterprise
Section X Financial Report
CompanyTax ratePreferential taxQingdao Haier Air-ConditionerElectronics Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Meier Plastic Powder Co.,Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Hai Gao Design and
Manufacture Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Hairi High Technology Co.,Ltd
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier (Jiaozhou) Air-conditioning Co., Limited
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Intelligent TechnologyDevelopment Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseFoshan Haier Freezer Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Central Air
Conditioning Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHaier U+smart Intelligent Technology
(Beijing) Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Electronic Plastic
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Wei Xi Intelligent
Technology Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Special Refrigerating
Appliance Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Smart Kitchen
Appliance Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHefei Haier Air Conditioning
Electronics Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseShanghai Haier Medical Technology
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseShanghai Haier Smart Technology
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Yunshang Yuyi IOT
Technology Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHaier (Shanghai) Home ApplianceResearch and DevelopmentCenter Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHaier (Shenzhen) R&D Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseLaiyang Haier Smart Kitchen
Appliance Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseGuangdong Haier Intelligent
Technology Co. Ltd
15.00%entitled to the preferential taxation
policies as a hi-tech enterprise
Section X Financial Report
CompanyTax ratePreferential taxDalian Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Jijia Cloud IntelligentTechnology Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHefei Haier Washing Machine Co.,
Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Washing MachineCo., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Jiaonan Haier WashingMachine Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseFoshan Shunde Haier Electric Co.,Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseTianjin Haier Cleaning ElectricalAppliances Co., Ltd. (
)
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Economic andTechnological Development ZoneHaier Water Heater Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseWuhan Haier Water Heater Co., Ltd.15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseFoshan Haier Drum WashingMachine Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Strauss WaterEquipment Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Strauss TechnologyCo., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier New Energy Electric
Appliance Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Washing Appliance
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Lexin Cloud
Technology Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseHefei Haier Drum Washing Machine
Co., Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Smart Electrics
Equipment Co. Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseQingdao Haier Smart Living
Appliance Co. Ltd.
15.00%entitled to the preferential taxation
policies as a hi-tech enterpriseJiangxi Haier Medical Technology
Co., Ltd.
15.00%entitled to the preferential taxation
policies under the Western
Development initiative of the PRCChongqing Haier Electrical
Appliance Sales Co., Ltd. andsome Western companies
15.00%entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
Section X Financial Report
CompanyTax ratePreferential taxChongqing Haier Air-conditioning
Co., Ltd.
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Haier RefrigerationAppliance Co., Ltd.
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Haier Washing MachineCo., Ltd.
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCGuizhou Haier Electronics Co., Ltd.15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Hairishun HomeAppliance Sales Co., Ltd. andsome Western companies
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Haier Washing MachineCo., Ltd
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Haier Water Heater Co.,Ltd
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCChongqing Haier Drum WashingMachine Co., Ltd
15.00%entitled to the preferential taxation
policies under the WesternDevelopment initiative of the PRCQingdao Haier Technology Co., Ltd.10.00%entitled to the preferential taxation
policies as a key softwareenterprise
Section X Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIALSTATEMENTSUnless otherwise specified, the following closing balances represent the amount as at 30 June 2024and opening balances represent the amount as at 31 December 2023; amount for the periodrepresents the amount from 1 January to 30 June 2024 and amount for the previous periodrepresents the amount from 1 January to 30 June 2023.
1. Monetary funds
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceCash on hand937,775.91541,712.70Cash in bank53,682,763,402.5653,524,177,266.50Other cash balances1,021,924,978.97961,733,861.94Total54,705,626,157.4454,486,452,841.14Include: total amount of overseas deposits16,901,018,141.3015,909,397,682.46Deposit in Finance Company21,057,085,069.5026,276,742,534.50Other monetary funds mainly included investment fund, deposit on third party payment platforms,guarantees and other restricted fund, etc.
2. Financial assets held for trading
ItemsClosing balanceOpening balanceShort-term wealth management products605,849,428.57487,936,101.81Investments in equity instruments189,001,945.95243,224,439.64Investment funds271,718,384.49222,803,002.38Total1,066,569,759.01953,963,543.83
Section X Financial Report
3. Derivative financial assets
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts79,226,226.4767,565,829.44Forward commodity contracts7,487,356.46Total86,713,582.9367,565,829.44
4. Bills receivable
(1) Details of bills receivable
ItemsClosing balanceOpening balanceBank acceptance notes6,965,820,228.218,466,159,415.18Commercial acceptance notes186,322,599.50160,607,051.53Balance of bills receivable7,152,142,827.718,626,766,466.71Allowance for bad debts4,671,635.325,331,635.32Bills receivable, net7,147,471,192.398,621,434,831.39
(2) Changes in allowance for bad debts of bills receivable in the current period
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision for
the currentperiod
OthermovementReversal
Write-off/other
movementAllowance for bad debts5,331,635.32660,000.004,671,635.32Total5,331,635.32660,000.004,671,635.32The Company’s bills receivables were mainly generated from daily operation activities suchas sales of commodity, provision of labor, etc., and the allowance for bad debts wasmeasured based on expected credit loss over the entire duration whether there existsignificant financing components.The bills receivable pledged by the Company at the end of the period wasRMB4,345,741,682.69 (amount at the beginning of the period: RMB4,389,991,243.14).
Section X Financial Report
5. Accounts receivable
Accounts receivable are disclosed by aging as follows:
AgingClosing balanceOpening balanceWithin 1 year23,267,651,913.4220,004,004,007.43
–2 years584,789,646.99873,509,449.30
–3 years296,388,145.37510,375,731.48Over 3 years195,221,958.02288,610,175.85Balance of accounts receivable24,344,051,663.8021,676,499,364.06Allowance for bad debts826,205,818.961,408,399,927.63Accounts receivable, net23,517,845,844.8420,268,099,436.43 By method of provision of allowance for bad debts
√ Applicable Not Applicable
Closing balanceCategoriesBook balanceAllowance for bad debtsCarrying value
AmountPercentage (%)Amount
Percentage ofprovision (%)Account receivables subject toprovision for bad debts ona separate basis221,698,047.420.91219,394,075.3698.962,303,972.06Account receivables subject to
provision for bad debts ona collective basis24,122,353,616.3899.09606,811,743.602.5223,515,541,872.78Total24,344,051,663.80100.00826,205,818.963.3923,517,845,844.84
(continued)
Opening balanceCategoriesBook balanceAllowance for bad debtsCarrying value
AmountPercentage (%)Amount
Percentage ofprovision (%)Account receivables subject toprovision for bad debts ona separate basis866,424,078.124.00864,112,221.0699.732,311,857.06Account receivables subject to
provision for bad debts ona collective basis20,810,075,285.9496.00544,287,706.572.6220,265,787,579.37Total21,676,499,364.06100.001,408,399,927.636.5020,268,099,436.43
Section X Financial Report
Account receivables subject to provision for bad debts on a separate basis at the end ofthe period
Closing balanceReason for provisionNameBook balance
Allowance for
bad debts
Percentage ofprovision (%)18 customers in total221,698,047.42219,394,075.3698.96The obligors were in
significant financialdifficultyTotal221,698,047.42219,394,075.3698.96The account receivables of significant individual amount and subject to provision for baddebts on a separate basis at the end of the period was RMB194,230,825.82 (amount at thebeginning of the period: RMB726,379,640.82). Account receivables subject to provision for bad debts on a collective basis
√ Applicable Not Applicable
AgingClosing balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Within 1 year23,262,294,162.61347,867,075.571.50
–2 years474,702,996.7970,523,143.5714.86
–3 years205,692,123.9067,458,532.0832.80Over 3 years179,664,333.08120,962,992.3867.33Total24,122,353,616.38606,811,743.602.52(continued)AgingOpening balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Within 1 year19,975,992,567.68288,934,773.721.45
–2 years463,149,665.2761,273,338.9213.23
–3 years193,271,661.4772,699,318.5837.62Over 3 years177,661,391.52121,380,275.3568.32Total20,810,075,285.94544,287,706.572.62
Section X Financial Report
Changes in allowance for bad debts of accounts receivable in the current period:
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision forthe currentperiod
OthermovementReversal
Write-off/othermovementAllowance for bad debts1,408,399,927.63298,811,112.15 171,528,368.68709,476,852.14826,205,818.96The aggregate amount of the top 5 account receivables and contract assets as at the endof the period was RMB6,877,703,781.22 (amount at the beginning of the period:
RMB5,525,018,986.65), accounting for 27.83% (at the beginning of the period: 25.11%) ofthe book balance of account receivables and contract assets, and the amount of provisionfor bad debts was RMB99,835,429.46 (amount at the beginning of the period:
RMB604,983,462.26) Actual write-off of accounts receivable in the current periodThe amount of accounts receivable actually written off in the current period wasRMB708,946,193.17 (amount for the corresponding period: RMB22,054,320.92) and theamount of significant bad debt write-off of accounts receivable was RMB532,621,082.38.The Company’s accounts receivable that were terminated due to the transfer of financialassets in the current periodThe amount of accounts receivable that the company terminated at the end of the perioddue to the transfer of financial assets was RMB6,793,789,373.81 (amount at the beginningof the period: RMB6,411,839,897.28) and the transfer method was outright sale factoring/asset securitization. Restricted accounts receivable in the current periodThe amount of accounts receivable restricted at the end of the period is RMB0.00 (amountat the beginning of the period: RMB1,255,120.80).
Section X Financial Report
6. Prepayments
(1) Prepayments are presented by aging:
√ Applicable Not Applicable
Unit and Currency: RMB
AgingClosing balanceOpening balance
AmountPercentage (%)AmountPercentage (%)Within 1 year977,977,335.6494.481,163,325,306.1693.951 to 2 years20,037,401.911.9456,449,865.294.562 to 3 years25,969,921.602.517,104,895.060.57Over 3 years11,031,155.991.0711,414,864.000.92Total1,035,015,815.14100.001,238,294,930.51100.00
(2) The total amount of the top 5 in the prepayments at the end of the period was
RMB101,422,120.85, accounting for 9.80% of the book balance of prepayment (amount atthe beginning of the period: RMB214,815,987.16, accounting for 17.35%).
(3) There was no significant prepayment aged over 1 year at the end of the period.
7. Other receivables
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceInterest receivable676,041,225.16748,496,020.24Other receivables2,055,228,939.511,901,062,964.81Total2,731,270,164.672,649,558,985.05
Section X Financial Report
Interest receivableAgingClosing balanceOpening balanceWithin 1 year406,049,565.86473,678,991.02
–2 years233,381,098.21199,801,995.25
–3 years29,716,476.7170,063,170.96Over 3 years6,894,084.384,951,863.01Total676,041,225.16748,496,020.24Other receivables Other receivables are disclosed by aging as follows:
AgingClosing balanceOpening balanceWithin 1 year1,438,200,053.991,413,423,130.38
–2 years95,454,743.1194,189,862.20
–3 years173,417,137.47204,379,944.75Over 3 years360,056,535.77277,554,421.44Balance of other receivables2,067,128,470.341,989,547,358.77Allowance for bad debts11,899,530.8388,484,393.96Other receivables, net2,055,228,939.511,901,062,964.81 Provision of allowance for bad debts based on the general model of expected credit lossesAllowance for bad debtsStage 1Stage 2Stage 3Total
Expected credit
losses for thecoming 12 months
Lifetime expectedcredit losses (notcredit-impaired)
Lifetime expected
credit losses(credit-impaired)Opening balance86,830,880.961,653,513.0088,484,393.96Provision for the current period2,257,848.982,257,848.98Reversal for the current period70,866,640.7270,866,640.72Write-off and others for
the current period7,976,071.397,976,071.39Closing balance10,246,017.831,653,513.0011,899,530.83
Section X Financial Report
Changes in allowance for bad debt provision of other receivables in the current period
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision forthe currentperiod
OthermovementReversal
Write-off/othermovementAllowance for bad debts88,484,393.962,257,848.98 70,866,640.727,976,071.3911,899,530.83
The total amount of the top 5 other receivables at the end of the period was
RMB792,676,892.42 (amount at the beginning of the period: RMB671,641,747.67),accounting for 38.35% of the book balance of other receivables (at the beginning of theperiod: 33.76%), and the amount of provision for bad debts was RMB0.00 (amount at thebeginning of the period: RMB3,359,976.38). Other receivables written off during the periodThe amount of other receivables actually written off in the current period wasRMB8,107,151.46 (amount for the corresponding period: RMB18,910,375.10) and nosignificant other receivables were written off for bad debts.Other receivables mainly included deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.
8. Inventories
(1) Details of inventories
ItemsClosing Balance
Book balance
Impairmentprovision ofinventoriesCarrying valueRaw materials5,329,334,853.31193,489,094.615,135,845,758.70Work in progress117,170,940.39117,170,940.39Finished goods35,456,614,754.561,256,016,991.5534,200,597,763.01Total40,903,120,548.261,449,506,086.1639,453,614,462.10
Section X Financial Report
(Continue)ItemsOpening Balance
Book balance
Impairmentprovision ofinventoriesCarrying valueRaw materials5,873,703,173.53208,533,811.425,665,169,362.11Work in progress47,535,985.86 47,535,985.86Finished goods35,084,012,597.821,272,711,329.4633,811,301,268.36Total41,005,251,757.211,481,245,140.8839,524,006,616.33
(2) Impairment provision of inventories
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision forthe currentperiod
OthermovementReversal
Write-off/othermovementRaw materials208,533,811.4220,952,230.3435,996,947.15193,489,094.61Work in progressFinished goods1,272,711,329.46468,990,442.4857,902,504.89427,782,275.501,256,016,991.55Total1,481,245,140.88489,942,672.8257,902,504.89463,779,222.651,449,506,086.16
(3) Details of impairment provision of inventories are as follows
√ Applicable Not Applicable
Items
Specific basis fordetermining netrealizable value
Reason for reversing orwriting off the impairmentprovision of inventoriesRaw materialsMeasurement at the lower
of cost and net realizablevalue
Production, use or salesFinished goodsMeasurement at the lower
of cost and net realizablevalue
sales
Section X Financial Report
9. Contract assets
(1) Details
ItemsClosing BalanceOpening Balance
Book balance
ImpairmentprovisionCarrying ValueBook balance
ImpairmentprovisionCarrying ValueRelating to constructionservice contract366,244,018.2965,435,412.33300,808,605.96327,870,850.3066,931,441.57260,939,408.73Total366,244,018.2965,435,412.33300,808,605.96327,870,850.3066,931,441.57260,939,408.73
(2) Classification by method of provision for bad debts
CategoriesClosing balance
Book balanceAllowance for bad debtsCarrying valueAmountPercentage (%)Amount
Percentage ofprovision (%)Contract assets subject toprovision for bad debts ona separate basis56,845,712.9215.5256,845,712.92100.00Contract assets subject toprovision for bad debts ona collective basis309,398,305.3784.488,589,699.412.78300,808,605.96Total366,244,018.29100.0065,435,412.3317.87300,808,605.96(Continue)CategoriesOpening balance
Book balanceAllowance for bad debtsCarrying valueAmountPercentage (%)Amount
Percentage ofprovision (%)Contract assets subject toprovision for bad debts on aseparate basis58,419,039.5317.8258,419,039.53100.00Contract assets subject to
provision for bad debts on acollective basis269,451,810.7782.188,512,402.043.16260,939,408.73Total327,870,850.30100.0066,931,441.5720.41260,939,408.73
Section X Financial Report
(3) Contract assets subject to provision for bad debts on a separate basis at the end
of the period
Closing balanceReason for provisionNameBook balance
Allowance forbad debts
Percentage ofprovision (%)23 customers in total56,845,712.9256,845,712.92100.00The obligors were in
significant financialdifficultyTotal56,845,712.9256,845,712.92100.00
(4) Contract assets subject to provision for bad debts on a collective basis at the end
of the periodNameClosing balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Relating to construction
service contract309,398,305.378,589,699.412.78Total309,398,305.378,589,699.412.78
(5) Provision for bad debts on contract assets during the current period
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision for
the currentperiod
OthermovementReversal
Write-off/other
movementRelating to constructionservice contract66,931,441.57211,715.92 1,707,745.16 65,435,412.33Total66,931,441.57211,715.92 1,707,745.16 65,435,412.33
Section X Financial Report
10. Other current assets
(1) Details
ItemsClosing BalanceOpening Balance
Book balance
Impairment
provisionBook balance
ImpairmentprovisionBank deposit for wealth management
products1,546,781,584.31 1,530,274,566.66Deductible taxes2,606,160,831.54 2,610,660,645.55Returns cost receivables547,495,494.30280,012,125.83670,702,791.81325,055,055.98Others51,635,542.77 63,584,720.64Total4,752,073,452.92280,012,125.834,875,222,724.66325,055,055.98
(2) Impairment provision
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceProvision forthe currentperiod
OthermovementReversal
Write-off/other
movementReturns cost receivables325,055,055.98280,012,125.83 325,055,055.98280,012,125.83Total325,055,055.98280,012,125.83325,055,055.98280,012,125.83
11. Debt investments
ItemsClosing balanceOpening balance
PrincipalInterestPrincipalInterestTime deposit— long term14,127,500,000.00350,121,780.978,677,500,000.00163,733,078.66Total14,127,500,000.00350,121,780.978,677,500,000.00163,733,078.66Include: time deposit in
Finance Company12,827,500,000.00250,519,003.197,377,500,000.0086,374,745.33
Section X Financial Report
12. Long-term equity investments
√ Applicable Not Applicable
InvesteesIncrease/decrease for the current period
Opening balance
InvestmentincreaseInvestment incomerecognized underequity method
Adjustmentin othercomprehensiveincome
Other changesin equity
Declaration ofcash dividends or
profitsAssociateHaier Group Finance Co., Ltd.7,910,945,697.72284,445,655.267,236.34–235,200,000.00Bank of Qingdao Co., Ltd.3,200,132,708.75216,344,921.5997,105,713.92–76,288,947.20Wolong Electric (Jinan) Motor Co., Ltd.177,662,547.0413,280,662.39Qingdao Hegang New MaterialTechnology Co., Ltd.329,713,566.369,652,558.36Qingdao Haier SAIF Smart HomeIndustry Investment Center (LimitedPartnership)206,764,442.76–21,738.71–16,336,866.36Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co., Ltd.663,804,966.3167,634,912.51Qingdao Haier Carrier RefrigerationEquipment Co., Ltd.412,107,471.533,970,476.69Qingdao Haier Multimedia Co., Ltd.88,300,000.00Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶
)30,326,966.78Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限公司)98,000,000.00–967,219.23Zhejiang Futeng Fluid Technology
Co., Ltd.77,584,161.99Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境技
術（廣州）有限公司)4,265,965.733,000,000.00Beijing ASU Tech Co., Ltd.7,919,009.51–7,919,009.51Qingdao Haimu Investment
Management Co., Ltd.2,609,456.57Qingdao Haimu Smart Home
Investment Partnership (Limited
Partnership)57,989,007.18Haineng Wanjia (Shanghai) Technology
Development Co., Ltd.606,029.71Qingdao Guochuang Intelligent Home
Appliance Research Institute Co.,
Ltd.38,574,227.53509,880.04Guangzhou Heying Investment
Partnership (Limited Partnership)194,416,881.32–31,115,000.00–12,332,141.88Qingdao Home Wow Cloud Network
Technology Co., Ltd.2,192,669.49589,125.62Bingji (Shanghai) Corporate
Management Co., Ltd.1,056,245,062.8721,313,549.13–4,463,430.14Youjin (Shanghai) Corporate
Management Co., Ltd.1,919,627,387.0238,751,907.50–8,115,327.52RRS (Shanghai) Investment Co., Ltd.3,489,413,430.9670,458,013.65–14,755,140.96Haier Best Water Technology Co., Ltd.148,369,638.402,411,395.16
Section X Financial Report
InvesteesIncrease/decrease for the current period
Opening balance
Investment
increaseInvestment incomerecognized underequity method
Adjustment
in othercomprehensiveincome
Other changesin equity
Declaration ofcash dividends or
profitsHuizhixiangshun Equity Investment Fund(Qingdao) Partnership (LimitedPartnership)238,175,637.03–24,420,938.73–12,258,842.15Qingdao Ririshun Huizhi Investment Co.,Ltd.4,083,482.78Qingdao Xiaoshuai IntelligentTechnology Co., Ltd 6,107,497.56Qingdao Xinshenghui Technology Co.,
Ltd.10,005,915.15379,127.39Ningbo Beilian Intelligent TechnologyCo., Ltd. (寧波貝) 3,500,000.00OryginLLC22,296,931.04–22,296,931.04Konan Electronic Co., Ltd.64,378,952.07481,688.34–7,066,692.84–211,500.00HNR (Private) Company Limited111,225,806.5125,463,571.12–2,367,152.22HPZ LIMITED3,483,576.50–17,611,035.529,801,134.65Controladora Mabe S.A.de C.V.5,078,418,321.53291,024,911.07–63,639,273.43–39,311,484.05–78,031,404.17Middle East Airconditioning Company,
Limited7,299,166.60–46,540.2150,373.87Total25,656,939,084.74–71,332,869.771,026,254,310.2021,632,498.14–78,977,524.55–406,068,717.73(Continued)InvesteesIncrease/decrease for the current periodClosing balance
Closing balance ofimpairment provisionOther movement
The disposal ofthe investmentAssociateHaier Group Finance Co., Ltd.7,960,198,589.32Bank of Qingdao Co., Ltd.3,437,294,397.06Wolong Electric (Jinan) Motor Co., Ltd.190,943,209.43Qingdao Hegang New Material
Technology Co., Ltd.339,366,124.72Qingdao Haier SAIF Smart HomeIndustry Investment Center (LimitedPartnership)190,405,837.69Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co., Ltd.731,439,878.82Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd.416,077,948.22–21,000,000.00Qingdao Haier Multimedia Co., Ltd.88,300,000.00–88,300,000.00Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶
)30,326,966.78Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限公司)97,032,780.77
Section X Financial Report
InvesteesIncrease/decrease for the current periodClosing balance
Closing balance ofimpairment provisionOther movement
The disposal ofthe investmentZhejiang Futeng Fluid Technology
Co., Ltd.77,584,161.99Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境
技術廣州有限公司)7,265,965.73Beijing ASU Tech Co., Ltd.Qingdao Haimu Investment
Management Co., Ltd.2,609,456.57Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership)57,989,007.18Haineng Wanjia (Shanghai) Technology
Development Co., Ltd.606,029.71Qingdao Guochuang Intelligent Home
Appliance Research Institute Co.,
Ltd.39,084,107.57Guangzhou Heying Investment
Partnership (Limited Partnership)150,969,739.44Qingdao Home Wow Cloud Network
Technology Co., Ltd.2,781,795.11Bingji (Shanghai) Corporate
Management Co., Ltd.1,073,095,181.86Youjin (Shanghai) Corporate
Management Co., Ltd.1,950,263,967.00RRS (Shanghai) Investment Co., Ltd.3,545,116,303.65Haier Best Water Technology Co., Ltd.150,781,033.56Huizhixiangshun Equity Investment Fund
(Qingdao) Partnership (Limited
Partnership)201,495,856.15Qingdao Ririshun Huizhi Investment Co.,
Ltd.4,083,482.78Qingdao Xiaoshuai Intelligent
Technology Co., Ltd6,107,497.56Qingdao Xinshenghui Technology Co.,
Ltd.10,385,042.54Ningbo Beilian Intelligent Technology
Co., Ltd. (寧波貝立安智能科技有限
公司)3,500,000.00OryginLLCKonan Electronic Co., Ltd.57,582,447.57HNR (Private) Company Limited134,322,225.41HPZ LIMITED–4,326,324.37
Controladora Mabe S.A.de C.V.5,188,461,070.95Middle East Airconditioning Company,
Limited7,303,000.26–845,634.54Total26,148,446,781.03–110,145,634.54
Section X Financial Report
13. Investments in other equity instruments
(1) Details of investments in other equity instruments at the end of the period:
ItemsClosing balanceOpening balanceSINOPEC Fuel Oil Sales Corporation Limited1,860,840,776.611,986,156,165.17Haier COSMO IOT Ecosystem TechnologyCo., Ltd.2,817,408,000.002,817,408,000.00Others1,603,565,589.921,600,130,789.60Total6,281,814,366.536,403,694,954.77
(2) Dividends from investment in other equity instruments during the current period:
Items
Amount forthe current periodOthers2,996,902.10Total2,996,902.10
14. Investment properties
(1) The changes in investment properties measured at cost this year are as follows:
Items
Houses andbuildingsLand use rightsTotalI. Original book value
1. Opening balance93,701,271.1129,370,397.68123,071,668.79
2. Increase for the current period
(1) External acquisition
(2) Inventories/fixed assets/
construction in progress
transferred in
(3) Increase from business
combinations
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out24,662,790.6424,662,790.64
4. Change in foreign exchange rate
and others61,273.0461,273.04
5. Closing balance69,099,753.5129,370,397.6898,470,151.19II. Accumulated depreciation and
accumulated amortization
1. Opening balance21,095,536.783,345,051.2424,440,588.02
2. Increase for the current period
(1) Provision or amortization1,792,249.81292,591.072,084,840.88
Section X Financial Report
Items
Houses andbuildingsLand use rightsTotal
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out8,303,139.518,303,139.51
4. Change in foreign exchange rate
and others20,015.8620,015.86
5. Closing balance14,604,662.943,637,642.3118,242,305.25III. Provision for impairment
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book value
1. Closing book value54,495,090.5725,732,755.3780,227,845.94
2. Opening book value72,605,734.3326,025,346.4498,631,080.77
(2) The depreciation and amortization amount charge for the period is RMB2,084,840.88 (amount
for the corresponding period: RMB2,321,067.31).
(3) The recoverable amount of the investment real estate of the Company at the end of the
period is not less than its book value, so no provision for impairment is made.
Section X Financial Report
15. Fixed assets
Overall presentation
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceFixed assets29,686,001,800.4029,603,936,822.78Disposals of fixed assetsTotal29,686,001,800.4029,603,936,822.78
(1) Fixed assets:
Items
Houses andbuildings
Productionequipment
Transportation
equipmentI. Original book value:
1. Opening balance15,782,051,556.4235,404,871,324.48207,612,314.20
2. Increase for the current period
(1) Acquisition20,403,115.68596,411,958.146,410,565.37
(2) Construction in progress
transferred in449,535,662.981,231,604,775.633,008,176.55
(3) Investment properties
transferred in24,662,790.64
3. Decrease for the current period
(1) Disposal or write-off37,840,098.76340,301,783.308,914,483.39
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others–126,847,759.21–183,858,083.36164,929.84
5. Closing balance16,111,965,267.7536,708,728,191.59208,281,502.57II. Accumulated depreciation
1. Opening balance5,225,383,605.1018,211,114,029.39133,831,896.28
2. Increase for the current period
(1) Provision476,420,594.351,441,889,998.8210,372,122.39
(2) Investment properties
transferred in8,303,139.51
3. Decrease for the current period
(1) Disposal or write-off12,765,127.66266,612,990.364,041,959.20
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others–106,266,071.4224,345,705.71225,747.64
5. Closing balance5,591,076,139.8819,410,736,743.56140,387,807.11
Section X Financial Report
Items
Houses andbuildings
Productionequipment
TransportationequipmentIII. Provision for impairment
1. Opening balance27,599,976.4217,285,684.25108,327.40
2. Increase for the current period
(1) Provision
(2) Investment properties
transferred in
3. Decrease for the current period
(1) Disposal or write-off143,030.07
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others–2,712,441.38–809,005.35–4,290.81
5. Closing balance24,887,535.0416,333,648.83104,036.59IV. Book value
1. Closing book value10,496,001,592.8317,281,657,799.2067,789,658.87
2. Opening book value10,529,067,974.9017,176,471,610.8473,672,090.52(Continue)ItemsOffice furnitureOthersTotalI. Original book value:
1. Opening balance1,530,251,945.383,194,185,544.9856,118,972,685.46
2. Increase for the current period
(1) Acquisition44,606,780.574,262,875.30672,095,295.06
(2) Construction in progress
transferred in91,579,726.54180,305,551.641,956,033,893.34
(3) Investment properties
transferred in24,662,790.64
3. Decrease for the current period
(1) Disposal or write-off20,503,156.9124,263,971.81431,823,494.17
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others–521,725.19–75,030,268.46–386,092,906.38
5. Closing balance1,645,413,570.393,279,459,731.6557,953,848,263.95II. Accumulated depreciation
1. Opening Balance952,669,982.961,944,534,313.0926,467,533,826.82
2. Increase for the current period
(1) Provision97,377,419.28149,210,217.942,175,270,352.78
(2) Investment properties
transferred in8,303,139.51
3. Decrease for the current period
(1) Disposal or write-off14,356,240.5621,693,376.37319,469,694.15
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others3,690,397.44–29,545,614.14–107,549,834.77
5. Closing Balance1,039,381,559.122,042,505,540.5228,224,087,790.19
Section X Financial Report
ItemsOffice furnitureOthersTotalIII. Provision for impairment
1. Opening balance237,957.132,270,090.6647,502,035.86
2. Increase for the current period
(1) Provision
(2) Investment properties
transferred in
3. Decrease for the current period
(1) Disposal or write-off143,030.07
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others–24,206.02–50,388.87–3,600,332.43
5. Closing balance213,751.112,219,701.7943,758,673.36IV. Book value
1. Closing book value605,818,260.161,234,734,489.3429,686,001,800.40
2. Opening book value577,344,005.291,247,381,141.2329,603,936,822.78
(2) In the current period, the balance of the construction in progress transferred to the original
value of the fixed assets in a total of RMB1,956,033,893.34 (amount for the correspondingperiod: RMB1,387,520,685.77).
(3) As at 30 June 2024, the net book value of the buildings for which the Company has not yet
obtained certificates of title was RMB414 million (amount at the beginning of the periodRMB408 million), and the relevant certificates of title were being processed. The Companycan legally and effectively occupy and operate the above-mentioned buildings for which nocertificates of title have been obtained.
(4) There was no mortgage secured by the fixed assets mortgage at the end of the period, and
there was no mortgage secured by the fixed assets mortgage at the beginning of theperiod.
Section X Financial Report
16. Construction in progress
Overall presentation
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing BalanceOpening BalanceConstruction in progress5,787,636,237.755,403,469,596.76Construction materialsTotal5,787,636,237.755,403,469,596.76
(1). Construction in progress
√ Applicable Not Applicable
Unit and Currency: RMBProjectsClosing BalanceOpening Balance
Book balance
ImpairmentProvisionBook ValueBook balance
ImpairmentprovisionBook ValueQingdao RefrigerationAppliance Project1,144,431,868.011,144,431,868.01914,078,742.21914,078,742.21Qingdao Water EcologyTechnology Project680,458,113.00680,458,113.00529,949,339.20529,949,339.20Qingdao HVAC Project583,797,673.00583,797,673.00530,979,038.43530,979,038.43Europe Candy Project312,838,404.74312,838,404.741,092,171,521.231,092,171,521.23Eastern European Project265,757,422.97265,757,422.97148,106,777.45148,106,777.45America GE Appliances
Project245,382,044.3322,763,106.10222,618,938.23343,482,203.7322,622,250.04320,859,953.69New Zealand FPA Project196,161,623.39196,161,623.39200,943,871.90200,943,871.90Haier Egypt Project157,012,758.09157,012,758.0942,756,778.7042,756,778.70Zhengzhou New Energy
Project149,700,260.33149,700,260.33104,122,098.62104,122,098.62Haier Thailand Project125,633,149.71125,633,149.71Zhengzhou Air
Conditioner Project112,880,240.39112,880,240.3966,251,489.9066,251,489.90Qingdao Air Conditioning
Electronics Project104,836,279.92104,836,279.92135,966,703.60135,966,703.60Qingdao Smart
Appliances Project96,420,595.8296,420,595.8278,218,772.3078,218,772.30Qingdao Air Conditioner
Project92,656,794.1492,656,794.1473,270,568.9973,270,568.99Haier India Project88,690,748.0688,690,748.0644,279,538.7944,279,538.79Qingdao New Energy
Appliance Project71,093,934.2171,093,934.2149,653,130.3149,653,130.31Foshan Freezer Project50,999,381.0350,999,381.0367,104,763.6867,104,763.68Others1,332,739,757.411,091,704.701,331,648,052.711,005,853,596.361,097,088.601,004,756,507.76Total5,811,491,048.5523,854,810.805,787,636,237.755,427,188,935.4023,719,338.645,403,469,596.76
Section X Financial Report
(2). Details of changes of significant construction in progress for the current period
Project name
Openingbalance
Increase for thecurrent period
Transfer to fixedassetsOther decrease
Change inforeignexchange rateand othersClosing balanceSource of fundQingdao Refrigeration Appliance Project914,078,742.21293,812,998.4363,459,872.631,144,431,868.01Self-fundingQingdao Water Ecology TechnologyProject529,949,339.20152,338,331.321,829,557.52680,458,113.00Self-fundingQingdao HVAC Project530,979,038.4352,818,634.57583,797,673.00Self-fundingEurope Candy Project1,092,171,521.2349,276,448.43888,438,590.0659,829,025.14312,838,404.74Self-fundingEastern European Project148,106,777.45142,311,833.7534,659,368.429,998,180.19265,757,422.97Self-fundingAmerica GE Appliances Project343,482,203.73164,979,590.52264,885,275.101,805,525.18245,382,044.33Self-fundingNew Zealand FPA Project200,943,871.9097,832,818.4896,919,807.86–5,695,259.13196,161,623.39Self-fundingHaier Egypt Project42,756,778.70153,322,026.59797,603.15–38,268,444.05157,012,758.09Self-fundingZhengzhou New Energy Project104,122,098.6252,975,298.797,397,137.08149,700,260.33Self-fundingHaier Thailand Project127,306,542.07–1,673,392.36125,633,149.71Self-fundingZhengzhou Air Conditioner Project66,251,489.9056,713,591.8610,084,841.37112,880,240.39Self-fundingQingdao Air Conditioning Electronics
Project135,966,703.6012,257,679.9843,388,103.66104,836,279.92Self-fundingQingdao Smart Appliances Project78,218,772.3026,858,128.318,656,304.7996,420,595.82Self-fundingQingdao Air Conditioner Project73,270,568.9925,611,813.666,225,588.5192,656,794.14Self-fundingHaier India Project44,279,538.7971,257,113.3928,632,857.911,786,953.7988,690,748.06Self-fundingQingdao New Energy Appliance Project49,653,130.3141,834,327.2820,393,523.3871,093,934.21Self-fundingFoshan Freezer Project67,104,763.6816,064,201.8832,169,584.5350,999,381.03Self-fundingOthers1,005,853,596.36783,668,471.30448,095,877.37–8,686,432.881,332,739,757.41Self-fundingTotal5,427,188,935.402,321,239,850.611,956,033,893.3419,096,155.885,811,491,048.55
(3). Impairment provision of construction in progress
Project name
Openingbalance
Increase forthe currentperiod
Transfer tofixed assets
Otherdecrease
Change in
foreignexchange rate
and others
ClosingbalanceAmerica GE Appliances Project22,622,250.04140,856.0622,763,106.10Lejia IOT Project837,735.85837,735.85Others259,352.75–5,383.90253,968.85Total23,719,338.64135,472.1623,854,810.80
Section X Financial Report
17. Right-of-use assets
Items
Houses andbuildings
Productionequipment
Transportation
equipmentI. Original book value:
1. Opening balance4,968,907,125.70299,098,804.72269,881,858.76
2. Increase for the current period
(1) Acquisition1,030,726,489.271,870,863.8049,265,313.93
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal284,781,596.256,584,068.8734,576,962.16
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others–20,356,010.466,935,927.93–11,299,492.77
5. Closing balance5,694,496,008.26301,321,527.58273,270,717.76II. Accumulated depreciation
1. Opening balance1,705,273,889.2537,168,018.05130,842,447.28
2. Increase for the current period
(1) Provision423,442,479.042,831,001.4240,563,978.40
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal120,395,083.406,263,622.6933,912,771.22
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others–20,567,528.194,153,159.35–11,664,110.78
5. Closing balance1,987,753,756.7037,888,556.13125,829,543.68III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others
5. Closing balanceIV. Book Value
1. Closing book balance3,706,742,251.56263,432,971.45147,441,174.08
2. Opening book balance3,263,633,236.45261,930,786.67139,039,411.48
Section X Financial Report
(continued)
ItemsOffice furnitureOtherTotalI. Original book value:
1. Opening balance415,131,711.53539,051,832.406,492,071,333.11
2. Increase for the current period
(1) Acquisition8,817,215.7718,943,952.381,109,623,835.15
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal2,637,818.984,534,722.41333,115,168.67
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others–1,004,943.213,373,644.68–22,350,873.83
5. Closing balance420,306,165.11556,834,707.057,246,229,125.76II. Accumulated depreciation
1. Opening balance50,526,926.52201,178,372.272,124,989,653.37
2. Increase for the current period
(1) Provision21,366,174.6252,787,409.89540,991,043.37
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal2,637,818.984,534,720.74167,744,017.03
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others–40,560,815.931,394,039.17–67,245,256.38
5. Closing balance28,694,466.23250,825,100.592,430,991,423.33III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
4. Change in foreign exchange rate and
others
5. Closing balanceIV. Book Value
1. Closing book balance391,611,698.88306,009,606.464,815,237,702.43
2. Opening book balance364,604,785.01337,873,460.134,367,081,679.74
Section X Financial Report
18. Intangible assets
√ Applicable Not Applicable
Items
Proprietarytechnology
Licenses and
franchisesLand use rightsI. Original book value
1. Opening balance2,212,581,138.654,953,866,789.432,192,021,758.06
2. Increase for the current period
(1) Acquisition19,663,961.5337,601,220.15
(2) Internal research and development63,387,616.91
(3) Increase from business
combinations
3. Decrease for the current period
(1) Disposal5,896,312.911,176,803.55
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others–30,878,532.499,565,834.00–8,179,089.63
5. Closing balance2,245,090,223.074,977,200,272.052,220,267,085.03II. Accumulated amortization
1. Opening balance1,399,798,673.121,201,643,295.60286,482,786.35
2. Increase for the current period
(1) Provision98,191,433.5993,810,930.5921,391,716.61
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others–15,211,949.29–3,958,494.36–274,736.52
5. Closing balance1,482,778,157.421,291,495,731.83307,599,766.44III. Impairment provision
1. Opening balance 66,630,354.13
2. Increase for the current period
(1) Provision
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others 399,642.46
5. Closing balance 67,029,996.59IV. Book Value
1. Closing book balance762,312,065.653,618,674,543.631,912,667,318.59
2. Opening book balance812,782,465.533,685,593,139.701,905,538,971.71
Section X Financial Report
(continued)ItemsTrademark rights
Applicationmanagementsoftware and othersTotalI. Original book value
1. Opening balance2,688,191,056.206,020,210,159.5518,066,870,901.89
2. Increase for the current period
(1) Acquisition198,833,390.09256,098,571.77
(2) Internal research and development227,451,211.04290,838,827.95
(3) Increase from business
combinations
3. Decrease for the current period
(1) Disposal1,813,838.258,886,954.71
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others–44,897,220.05–16,574,133.57–90,963,141.74
5. Closing balance2,643,293,836.156,428,106,788.8618,513,958,205.16II. Accumulated amortization
1. Opening balance4,082,441,425.436,970,366,180.50
2. Increase for the current period
(1) Provision449,211,098.42662,605,179.21
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal1,743,506.451,743,506.45
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others–2,694,079.93–22,139,260.10
5. Closing balance4,527,214,937.477,609,088,593.16III. Impairment provision
1. Opening balance 23,643,666.3390,274,020.46
2. Increase for the current period
(1) Provision
(2) Increase from business
combinations
3. Decrease for the current period
(1) Disposal58,760.6758,760.67
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others399,642.46
5. Closing balance23,584,905.6690,614,902.25IV. Book Value
1. Closing book balance2,643,293,836.151,877,306,945.7310,814,254,709.75
2. Opening book balance2,688,191,056.201,914,125,067.7911,006,230,700.93At the end of the period, the intangible assets developed through the Company accounted forthe 21.57% of the original value at the end of the period (accounting for 20.52% at thebeginning of the period).
Section X Financial Report
19. Goodwill
ItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent period
Change in foreignexchange rate
and othersClosing balanceGE Appliances21,046,390,260.10131,779,576.6821,178,169,836.78Candy2,043,391,984.29–61,974,639.901,981,417,344.39Others1,199,944,450.41–17,697,239.231,182,247,211.18Total24,289,726,694.8052,107,697.5524,341,834,392.35In the case of a goodwill impairment test, the Company compares the carrying amount of therelevant asset group or asset group combination (including goodwill) with its recoverable amount.If the recoverable amount is less than the book value, corresponding difference will berecognized in profit or loss.The recoverable amount of the asset group (including goodwill) is calculated with discountedestimated future cash flow method based on a management-approved 5–15 years budget. Futurecash flows beyond the budget period are estimated using the estimated perpetual annual growthrate. The perpetual annual growth rate (mainly 1%–2%) adopted by the management isconsistent with industry forecast data and does not exceed the long-term average growth rate ofeach product. The management determines the compound income growth rate (mainly 2.33%-
5.32%) and the EBITDA profit margin (mainly 0.99%
–
12.99%) based on historical experience and
market development forecasts, and adopts the pre-tax interest rate that can reflect the specificrisks of the relevant asset group as the discount rate (mainly 12.79%–
16.25%). The management
analyzes the recoverable amount of each asset group based on these assumptions and believesthat there is no need to make provision for goodwill.
Section X Financial Report
20. Long-term amortized expenses
ItemsOpening balance
Increase for thecurrent period
Amortizationfor the currentperiod
Otherdecrease
Change inforeignexchange rate
and othersClosing balanceRenovation fees356,810,041.8337,345,735.95184,847,703.895,386.49209,313,460.38Improvement expenses on leasedplants131,110,281.1323,114,811.4615,900,256.7852,401.51138,377,237.32Others253,825,194.6860,374,749.2233,534,265.36–271,626.23280,394,052.31Total741,745,517.64120,835,296.63234,282,226.03–213,838.23628,084,750.01
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before elimination
ItemsClosing balanceOpening balanceProvision for assets impairment468,620,891.54472,765,698.56Liabilities2,721,127,075.252,647,034,061.96Internal unrealized earnings eliminated due
to combination454,487,656.99707,589,929.59Uncovered losses229,848,367.84230,766,537.22R&D expenses1,331,535,838.011,171,434,607.38Others333,163,076.13293,113,791.04Total5,538,782,905.765,522,704,625.75
(2) Deferred income tax liabilities before elimination
ItemsClosing balanceOpening balanceAssets amortisation4,104,846,683.634,067,663,051.78Remeasurement of fair value of the reaming
equity on the day when the control right
was lost878,623,804.46878,623,804.46Changes in fair value of investments in other
equity instruments306,500,729.55306,253,762.39Others435,592,527.58492,608,929.16Total5,725,563,745.225,745,149,547.79
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of the period was RMB3,756,609,331.72 (amount at the beginning of the periodRMB3,716,758,993.59).
Section X Financial Report
22. Other non-current assets
ItemsClosing balanceOpening balancePrepayments for equipment and land2,082,290,440.871,747,355,221.82Others281,871,492.31286,631,723.46Total2,364,161,933.182,033,986,945.28
23. Short-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— secured by pledge34,094,566.22Borrowings— secured by credit10,333,169,856.5410,284,257,275.66Total10,333,169,856.5410,318,351,841.88
24. Derivative financial liabilities
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts191,751,522.44166,573,028.22Forward commodity contracts2,051,976.75Total191,751,522.44168,625,004.97
25. Bills payable
√ Applicable Not Applicable
Unit and Currency: RMBClassClosing balanceOpening balanceCommercial acceptance notes5,957,754,473.515,234,670,724.72Bank acceptance notes17,431,247,278.8416,981,055,996.90Total23,389,001,752.3522,215,726,721.62
Section X Financial Report
26. Accounts payables
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceAccounts payables47,200,496,446.9347,061,789,173.62Total47,200,496,446.9347,061,789,173.62The book balance at the end of the period was mainly the unpaid expenditures on material andlabour. There were no significant accounts payables aged over 1 year at the end of the period.
27. Contractual liabilities
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceContractual liabilities3,256,026,994.757,731,916,491.54Total3,256,026,994.757,731,916,491.54The book balance at the end of the period was mainly due to the advance payment that hasbeen collected and has not yet performed the contractual obligations. There were no significantcontractual liabilities aged over 1 year at the end of the period.
Section X Financial Report
28. Payables for staff remuneration
(1). Payables for staff remuneration
√ Applicable Not Applicable
Unit and Currency: RMBItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent periodClosing balanceI. Short-term remuneration4,914,688,743.7814,440,923,916.3615,625,028,496.573,730,584,163.57II. Post-employmentbenefits-definedcontribution plan24,569,154.56726,835,986.49712,049,518.4739,355,622.58III. Termination benefits5,252,101.2731,701,783.6432,210,246.724,743,638.19IV. Other benefits due withinone year133,007,828.89789,084.2511,719,402.93122,077,510.21Total5,077,517,828.5015,200,250,770.7416,381,007,664.693,896,760,934.55
(2). Short-term remuneration
√ Applicable Not Applicable
Unit and Currency: RMBItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent periodClosing balanceI. Salaries, bonus, allowancesand benefit3,519,406,555.7110,900,787,570.7112,065,434,584.242,354,759,542.18II. Employee welfare348,954,492.00537,060,949.24549,265,229.59336,750,211.65III. Social benefit230,280,822.25908,912,292.51924,966,809.00214,226,305.76IV. Housing fund8,312,994.56321,719,307.63276,013,793.5654,018,508.63V. Labor union fee and
education fund5,506,272.8468,801,586.5666,749,249.957,558,609.45VI. Short-term compensated
leave266,918,130.07251,214,218.06254,613,910.65263,518,437.48VII. Others535,309,476.351,452,427,991.651,487,984,919.58499,752,548.42Total4,914,688,743.7814,440,923,916.3615,625,028,496.573,730,584,163.57
Section X Financial Report
(3). Defined contribution plan
√ Applicable Not Applicable
Unit and Currency: RMB
ItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent periodClosing balance
1. Basic pension insurance23,204,541.21673,535,986.28658,689,910.4638,050,617.03
2. Unemployment insurance244,971.4918,465,278.4418,619,494.8490,755.09
3. Enterprise annuity payment1,119,641.8634,834,721.7734,740,113.171,214,250.46Total24,569,154.56726,835,986.49712,049,518.4739,355,622.58
(4). Termination benefits
ItemsClosing balanceOpening balanceTermination compensation4,743,638.195,252,101.27Total4,743,638.195,252,101.27
29. Taxes payable
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceValue-added tax1,229,268,479.46915,234,725.86Corporate income tax2,221,803,320.381,555,728,849.24Individual income tax108,820,681.28185,154,739.72City maintenance and construction tax32,744,814.6826,230,124.20Education surcharge13,889,353.199,117,000.14The electrical and electronic products waste
treatment fund2,448.0089,138,721.00Other taxes70,527,964.9460,611,364.57Total3,677,057,061.932,841,215,524.73
Section X Financial Report
30. Other payables
(1). Items breakdown
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceDividends payable7,515,895,607.631,880,719.69Other payables19,732,347,903.2719,179,688,465.14Total27,248,243,510.9019,181,569,184.83
(2). Dividends payable
√ Applicable Not Applicable
ItemsClosing balanceOpening balanceHaier COSMO Co., Ltd.1,008,596,736.32Haier Group Corporation859,493,731.30Other public shareholders5,647,805,140.011,880,719.69Total7,515,895,607.631,880,719.69
(3). Other payables
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceOther payables19,732,347,903.2719,179,688,465.14Total19,732,347,903.2719,179,688,465.14The closing balance mainly included the incurred but unpaid costs. There were nosignificant other payables aged over 1 year at the end of the period.
Section X Financial Report
31. Non-current liabilities due within 1 year
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceLong-term borrowings due within 1 year1,610,273,174.78146,867,809.53Long term payables due within 1 year14,194,548.9014,105,028.65Lease liabilities due within 1 year1,072,407,791.171,039,704,621.43Estimated liabilities due within 1 year2,630,841,869.372,531,873,089.62Total5,327,717,384.223,732,550,549.23
32. Other current liabilities
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balancePayable refund578,348,692.50639,149,848.05Tax amount to be transferred to output tax489,615,722.08990,618,406.97Others27,357,255.6421,470,896.50Total1,095,321,670.221,651,239,151.52
33. Long-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— secured by pledge20,600,000.00Borrowings— secured by credit18,103,051,118.1917,936,302,925.77Total18,123,651,118.1917,936,302,925.77The interest rates of the Company’s long-term borrowings: 1.60%–
7.00%.
Section X Financial Report
34. Lease liabilities
ItemsClosing balanceOpening balanceLease liabilities4,797,038,310.894,326,506,047.60Less: lease liabilities due within one year1,072,407,791.171,039,704,621.43Total3,724,630,519.723,286,801,426.17
35. Long-term payables
ItemsClosing balanceOpening balanceInvestment from CDB development fund36,500,000.0036,500,000.00Others28,855,509.0634,718,451.43Less: long-term payables due within one year14,194,548.9014,105,028.65Total51,160,960.1657,113,422.78Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of
1.2% by means of dividends or buyback premium for the above investments. As of the end of
the period, the subsidiaries of the Company made buyback in amount of RMB36.5 million.
36. Long-term employee benefits payable
√ Applicable Not Applicable
(1) Long-term employee benefits payable
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceI. Post-employment benefits: net liability ofdefined benefit plans362,511,797.07364,213,564.08II. Termination benefits542,788,956.07575,644,959.29III. Provision for work-related injury
compensation149,713,877.78145,596,315.81Total1,055,014,630.921,085,454,839.18
Section X Financial Report
(2) Defined benefits plans
Some subsidiaries of the Company have set several defined benefit plans for the qualifiedstaff. Under these plans, the employees are entitled to the retirement benefits agreed insuch defined benefit plans.These plans are exposed to interest rate risks, changes in life expectancy of the beneficiaryand other risks.The recent actuarial evaluation of the assets and the present value of defined benefitobligations under such plans are determined by using the projected unit credit method.
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the CompanyActuarial assumptions used in the defined benefit plan
ItemsRateDiscount rate1.00%Expected rate of return2.00%Present value of defined benefit obligationsItemsAmountI. Opening balance218,042,067.90II. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (losses are represented by ‘-’)
4. Interest cost
III. Defined benefit cost recognized in other comprehensive income
1. Actuarial losses (gains are represented by ‘-’)
IV. Other changes–23,774,327.79
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences
–23,774,327.79V. Closing balance194,267,740.11
Section X Financial Report
Fair value of plan assets
ItemsAmountI. Opening balance293,597,902.22II. 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–28,866,719.75
1. Employer contributions620,221.70
2. Benefit paid2,686,753.23
3. Exchange differences
–32,173,694.68V. Closing balance264,731,182.47Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.Net liability (net asset) of the defined benefit plan
ItemsAmountI. Opening balance–75,555,834.32II. Defined benefit cost recognized in current profit or lossIII. Defined benefit cost recognized in other comprehensive incomeIV. Other changes5,092,391.96V. Closing balance–70,463,442.36The average term for the defined benefit obligation is 11.67 years at the balancesheet date.
Section X Financial Report
The defined benefit plan of Roper Corporation, a subsidiary of the CompanyRoper Corporation, a subsidiary of the Company, has provided post-employmentdefined benefit plan of health care benefits to eligible employees.Actuarial assumptions used in the defined benefit planItemsRateDiscount rate5.18%Present value of defined benefit obligations
ItemsAmountI. Opening balance79,911,044.37II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss2,606,420.93
1. Current service cost668,850.77
2. Past service cost
3. Settlement gains (losses are represented by ‘-’)
4. Interest cost1,937,570.16IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial losses (gains are represented by ‘-’)
V. Other changes–13,856,535.05
1. The consideration paid at the time of settlement
2. Benefit paid
–5,340,246.23
3. Plan amendments
–8,976,054.36
4. Others459,765.54
5. Exchange differences
VI. Closing balance68,660,930.25
Section X Financial Report
Net liability (net asset) of the defined benefit planItemsAmountI. Opening balance79,911,044.37II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss2,606,420.93IV. Defined benefit cost recognized in other comprehensive incomeV. Other changes–13,856,535.05VI. Closing balance68,660,930.25The average term for the defined benefit obligation is 1.83 years at the balance sheetdate.The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the CompanyHaier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has providedpost-retirement defined benefit plan of health care benefits for the eligible employees.Actuarial assumptions used in the defined benefit plan
ItemsRateDiscount rate5.19%
Section X Financial Report
Present value of defined benefit obligationsItemsAmountI. Opening balance165,901,942.17II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss1,455,394.92
1. Current service cost
2. Past service cost
3. Settlement gains (losses are represented by ‘-’)
4. Interest cost1,455,394.92IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial losses (gains are represented by ‘-’)
V. Other changes–10,720,806.50
1. The consideration paid at the time of settlement
2. Benefit paid
–11,720,651.90
3. Exchange differences999,845.40VI. Closing balance156,636,530.59Net liability (net asset) of the defined benefit planItemsAmountI. Opening balance165,901,942.17II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss1,455,394.92IV. Defined benefit cost recognized in other comprehensive incomeV. Other changes–10,720,806.50VI. Closing balance156,636,530.59
Section X Financial Report
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the CompanyHaier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provideddefined benefit plan of pension for the eligible employees.Actuarial assumptions used in the defined benefit planItemsRateDiscount rate5.21%Present value of defined benefit obligationsItemsAmountI. Opening balance108,437,206.49II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss3,614,005.58
1. Current service cost1,172,138.72
2. Past service cost
3. Settlement gains (losses are represented by ‘-’)
4. Interest cost2,441,866.86IV. Defined benefit cost recognized in other
comprehensive income
1. Actuarial losses (gains are represented by ‘-’)
V. Other changes686,842.49
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences686,842.49VI. Closing balance112,738,054.56
Section X Financial Report
Fair value of plan assets
ItemsAmountI. Opening balance77,778,096.35II. Defined benefit cost recognized in current profit or loss1,289,629.28
1. Interest income1,289,629.28III. 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 changes10,056,079.94
1. Employer contributions9,536,854.96
2. Benefit paid
3. Exchange differences519,224.98V. Closing balance89,123,805.57Net liability (net asset) of the defined benefit planItemsAmountI. Opening balance30,659,110.14II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss2,324,376.30IV. Defined benefit cost recognized in other comprehensive incomeV. Other changes–9,369,237.45VI. Closing balance23,614,248.99
Section X Financial Report
(3) Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision forwork-related injury claims for the staff injured during the production accidents from1 January 1991, which was used to pay for the claim made by the injured staff. Theprovision was calculated by Beechercarlson Insurance Services, LLC., based on actuarialmethod and a discount rate of 3.72%.ItemsAmountI. Opening balance145,596,315.81II. Business combination not under common controlIII. Compensation recognized in current profit or loss42,800,498.84IV. Actual compensation paid for the current period–39,599,814.24V. Other changes916,877.37VI. Closing balance149,713,877.78Classification of the balance of defined benefit plans
ItemsClosing balanceOpening balanceShort-term Benefit21,618,766.0233,170,713.47Long-term Benefit362,511,797.07364,213,564.08Total384,130,563.09397,384,277.55
37. Estimated liabilities
√ Applicable Not Applicable
Unit and Currency: RMBItemsOpening balanceClosing balanceActive litigation32,259,609.5931,448,932.56Others315,280,800.19359,408,595.01Estimation of warranty expenses and
installation fees1,587,473,632.461,614,377,582.79Total1,935,014,042.242,005,235,110.36Significant assumption and estimation relating to estimation of warranty expenses and installationfees: the Company reasonably estimated the warranty expenses and installation fees rate basedon its actual expenses on the warranty expenses and installation fees as well as sales data in thepast. The Company estimated the warranty expenses and installation fees that are likely to beincurred in the future according to its policies on the warranty expenses and installation fees, aswell as the actual sales data.
Section X Financial Report
38. Deferred income
√ Applicable Not Applicable
Unit and Currency: RMB
ItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent periodClosing balanceGovernment grants1,050,319,606.4428,730,084.9251,847,043.921,027,202,647.44Total1,050,319,606.4428,730,084.9251,847,043.921,027,202,647.44
39. Share capital
Share categoryOpening balance
Increase for the
current period
Decrease for thecurrent periodClosing balanceI. Restricted shares
1. State-owned shares
2. Shares held by domestic
non-state-owned legal entities
3. Shares held by domestic
individuals
4. Shares held by offshore non-state-
owned legal entitiesII. Non-restricted shares9,438,114,8939,438,114,893
1. Ordinary shares in RMB6,308,552,6546,308,552,654
2. Domestic listed foreign Shares
3. Offshore listed foreign Shares3,129,562,2393,129,562,239
4. OthersIII. Total shares9,438,114,8939,438,114,893
40. Capital reserve
√ Applicable Not Applicable
Unit and Currency: RMBItemsOpening balance
Increase for thecurrent period
Decrease for thecurrent periodClosing balanceCapital premium(Share capital premium)21,917,268,456.45 20,227,747.1021,897,040,709.35Others capital reserve1,845,086,227.60201,405,574.9436,583,005.032,009,908,797.51Total23,762,354,684.05201,405,574.9456,810,752.1323,906,949,506.86The main reasons for the change in other capital reserves: the amortized share-based paymentfor the current period included in other capital reserves of RMB201,405,574.94.
Section X Financial Report
41. Treasury stock
√ Applicable Not Applicable
Unit and Currency: RMB
ItemsOpening balance
Increase for the
current period
Decrease for thecurrent periodClosing balanceTreasury stock5,034,065,107.42466,600,210.43 5,500,665,317.85Total5,034,065,107.42466,600,210.43 5,500,665,317.85The main reasons for the change in treasury stock: the repurchase of treasury stock for thecurrent period of RMB466,600,210.43.
42. Other comprehensive income
ItemsOpening balanceAmounts for the current period
Amount beforecurrent incometaxDeduction ofimpact of income
taxAttributable to theparent companyafter tax
Attributable tominorityshareholdersafter taxOthersClosing balancea–345,568,801.1421,632,498.143,064,710.5223,160,537.381,536,671.28–609,008.33–323,017,272.09b–94,630,058.56–9,489,873.83–20,035,460.40–30,039,858.31514,524.08–124,669,916.87c929,934,173.30–201,685,894.65–199,825,666.97–1,860,227.68 730,108,506.33d1,332,769,480.78–139,624,374.3513,823,606.83–125,824,944.1824,176.661,451,608.491,208,396,145.09e147,219,232.63–3,587,107.421,095,428.03–2,491,664.07–
15.32 144,727,568.56Total1,969,724,027.01–332,754,752.11–2,051,715.02–335,021,596.15215,129.02842,600.161,635,545,031.02
Notes:
(1) Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the details are as follows:
Item a represents other comprehensive income classified to profit and loss under the equity method.Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).Item c represents exchange differences on translation of financial statements denominated in foreign currencies.
(2) Item d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
Section X Financial Report
43. Surplus reserve
√ Applicable Not Applicable
Unit and Currency: RMB
ItemsOpening balance
Increase for the
current period
Decrease for thecurrent periodClosing balanceStatutory surplus reserve4,794,681,742.21 4,794,681,742.21Discretionary surplus reserve26,042,290.48 26,042,290.48Reserve fund11,322,880.64 11,322,880.64Enterprise expansion fund10,291,630.47 10,291,630.47Total4,842,338,543.80 4,842,338,543.80Pursuant to the Company Law of the People’s Republic of China and the Articles of Association,the Company is required to appropriate the statutory surplus reserve at 10% of its net profit ofthe year.
44. Undistributed profits
√ Applicable Not Applicable
ItemsAmountsUndistributed profits at the end of previous year68,535,686,494.60Change in accounting policyCombination under common controlUndistributed profits at the beginning of the year68,535,686,494.60Add: net profit attributable to owners of the parent company10,420,218,389.22Other transfer in–29,920,094.58Adjustment due to implementation of enterprise accounting standardProfit available for distribution for the year78,925,984,789.24Less: appropriation of statutory surplus reserveDividend payable for ordinary shares7,513,967,094.69Undistributed profits at the end of the period71,412,017,694.55
Section X Financial Report
45. Operating income and operating cost
(1) Operating income
Items
Amount forthe currentperiod
Amount forthe previousperiodPrimary business134,840,839,073.23130,796,620,039.86Other Business781,710,047.78831,975,872.19Total135,622,549,121.01131,628,595,912.05
(2) Primary business income and primary business cost by product category
CategoriesAmount for the current periodAmount for the previous period
Primarybusiness income
Primarybusiness cost
Primarybusiness income
Primarybusiness costAir conditioner29,010,601,435.7020,557,799,077.9327,990,491,459.0419,980,348,155.19Refrigerator40,858,797,164.0428,298,305,940.2140,302,800,944.8927,987,308,901.78Kitchen appliance20,121,663,515.8913,789,690,222.0619,700,572,437.0413,561,433,684.52Water appliance7,891,692,972.944,582,039,373.077,458,185,872.454,356,557,669.16Washing machine29,427,102,302.0019,746,318,593.2928,125,479,757.3518,950,800,863.91Equipment product and
integrated channelservices7,530,981,682.666,806,340,361.077,219,089,569.096,542,477,793.42Total134,840,839,073.2393,780,493,567.63130,796,620,039.8691,378,927,067.98
46. Taxes and surcharge
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodCity maintenance and construction tax191,604,095.21211,267,062.08Education surcharge109,194,820.89129,147,500.90Property tax47,213,971.8938,175,443.04Land use tax12,543,003.6311,050,858.77Stamp duty150,674,106.29118,586,969.33Others27,037,460.3524,871,738.40Total538,267,458.26533,099,572.52
Section X Financial Report
47. Selling expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodSelling expenses18,687,502,154.8918,768,944,057.44Total18,687,502,154.8918,768,944,057.44The Company’s selling expenses are mainly salary expenses, transportation and storage fees,advertising and promotion fees, and after-sales expenses.
48. Administrative expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodAdministrative expenses5,186,349,563.445,461,681,481.50Total5,186,349,563.445,461,681,481.50The Company’s administrative expenses are mainly salary expenses, office fees, depreciation andamortization of assets fees, etc.
Section X Financial Report
49. R&D expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodR&D expenses5,088,901,166.885,025,786,116.64Total5,088,901,166.885,025,786,116.64The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspectionand testing fees.
50. Financial expenses
Items
Amount forthe currentperiod
Amount forthe previous
periodInterest expense1,226,384,743.58875,078,615.27Less: interest income912,438,277.44614,901,995.27Less: cash discount62,102,125.8459,172,643.28Exchange gains or losses
(gains are represented by ‘-’)–262,620,221.08–288,204,003.86Others69,695,049.4377,850,758.05Total58,919,168.65–9,349,269.09Interest expenditure in lease liabilities for the current period was RMB86,220,779.23 (amount forthe corresponding period: RMB54,418,808.15).
Section X Financial Report
51. Other income
√ Applicable Not Applicable
Unit and Currency: RMB
Classification by nature
Amount forthe currentperiod
Amount forthe previousperiodGovernment grants related to revenue511,077,524.43557,492,414.79Government grants related to assets44,010,228.0943,882,854.01Total555,087,752.52601,375,268.80
52. Investment income
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodLong-term equity investments income calculated
by the equity method1,021,852,565.421,078,905,972.36Investment income from disposal of long-term
equity investments–14,953,215.382,936,581.54Dividend income on other equity instrument
investments during the holding period2,996,902.1017,919,209.85Income from wealth management products29,641,941.5630,006,596.61Investment income from disposal of financial
assets measured at fair value with changes
included in current profit or loss76,000.00Total1,039,614,193.701,129,768,360.36
Section X Financial Report
53. Gains on changes in fair value
√ Applicable Not Applicable
Unit and Currency: RMB
Source of gains on changes in fair value
Amount forthe currentperiod
Amount forthe previousperiodChanges in fair value of equity investments–54,049,574.206,761,392.80Changes in fair value of fund investments22,787,943.8323,806,724.21Others1,696,032.55703,445.34Total–29,565,597.8231,271,562.35
54. Credit impairment losses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodBad debts losses on bills receivable660,000.00Bad debts losses on accounts receivable–127,282,743.47–175,246,952.66Bad debts losses on other receivables68,608,791.749,278,023.30Total–58,013,951.73–165,968,929.36
Section X Financial Report
55. Impairment losses on assets
Items
Amount forthe current
period
Amount forthe previousperiodImpairment losses on inventory–432,040,167.93–499,500,903.59Impairment losses on other current assets–280,012,125.83–269,894,630.51Impairment losses on fixed assets–6,213,746.83Impairment losses on construction in progressImpairment losses on intangible assets–28,311.57Impairment losses on long-term equity investmentsImpairment losses on contract assets1,496,029.24–4,110,982.94Total–710,556,264.52–779,748,575.44
56. Gains on disposal of assets
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previousperiodGains on disposal of non-current assets7,721,308.459,697,510.22Losses on disposal of non-current assets–10,305,212.82–30,344,814.86Total–2,583,904.37–20,647,304.64
Section X Financial Report
57. Non-operating income
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe current
period
Amount forthe previousperiodTotal gains on disposal of non-current assets 810,466.84Quality claims and fines24,265,721.4318,063,839.13Others49,157,369.9139,910,145.92Total73,423,091.3458,784,451.89
58. Non-operating expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previous
periodTotal losses on disposal of non-current assets7,267,905.194,986,722.70Others77,250,699.5527,312,790.51Total84,518,604.7432,299,513.21
Section X Financial Report
59. Income tax expenses
(1) Statement of income tax expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previousperiodCurrent income tax expense2,199,317,850.431,879,159,857.85Deferred income tax expense–67,576,355.95190,607,917.70Total2,131,741,494.482,069,767,775.55
(2) Reconciliation between accounting profit and income tax expenses
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for the
current periodTotal profit12,739,064,636.61Income tax expense calculated pursuant to statutory/applicable
tax rate3,184,766,159.15Impact from different tax rates applicable to subsidiaries–959,949,025.03Impact from adjustment to income tax in prior periods–146,905,255.39Impact from non-taxable income–130,705,109.51Impact from non-deductible cost, expense and loss121,770,556.31Impact from deductible provisional differences or deductible
losses of unrecognized income tax assets for the current
period113,686,167.41Others–50,921,998.46Income tax expense2,131,741,494.48
60. Other comprehensive income
√ Applicable Not Applicable
Please refer to Note VII.42 for details.
Section X Financial Report
61. Cash flow statement items
(1). Cash related to operating activities
Other cash received from operating activities
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent periodDeposits and securities32,807,104.74Government grants243,673,605.71Non-operating income excluding government grants35,281,847.15Interest income797,887,231.43Others164,016,657.33Total1,273,666,446.36Other cash paid to operating activities
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent periodCash paid on selling expenses10,259,440,644.80Cash paid on administrative and R&D expenses3,389,811,709.63Cash paid on financial expenses73,404,062.89Non-operating expenses13,948,889.93Others59,544,916.23Total13,796,150,223.48
Section X Financial Report
(2). Cash related to investing activities
Other cash received from significant investing activities
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for the
current periodRedemption of wealth management products andother financial assets9,619,248,890.08Total9,619,248,890.08Other cash paid to significant investing activities
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for the
current periodPurchase of wealth management products and
other financial assets13,608,230,146.65Total13,608,230,146.65
(3). Cash related to financing activities
Other cash paid to financing activities
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount forthe current periodRepurchase of shares466,600,210.43Cash paid to lease596,535,515.39Others3,603,317.63Total1,066,739,043.45
Section X Financial Report
Changes of various liabilities arising from financing activities
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Openingbalance
Increase forthe current period
Decrease forthe current period
ClosingbalanceCash change
Non-cash
changeCash change
Non-cashchangeShort-term borrowings10,318,351,841.884,170,938,006.65 4,123,128,398.8632,991,593.1310,333,169,856.54Long-term borrowings
(including long-termborrowings due withinone year)18,083,170,735.301,760,600,000.00 27,547,548.8982,298,893.4419,733,924,292.97Lease liabilities (includinglease liabilities duewithin one year)4,326,506,047.60 1,227,262,838.65596,535,515.39160,195,059.974,797,038,310.89Total32,728,028,624.785,931,538,006.651,227,262,838.654,747,211,463.14275,485,546.5434,864,132,460.40
62. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
√ Applicable Not Applicable
Unit and Currency: RMB
Supplementary information
Amount forthe currentperiod
Amount forthe previous
period
1. Net profit adjusted to cash flow of
operating activities:
Net profit10,607,323,142.139,043,682,753.22Add: impairment provision for assets710,556,264.52779,748,575.44Losses from credit impairment58,013,951.73165,968,929.36Depreciation of fixed assets, depletion ofoil and gas assets, depreciation ofbiological assets for production2,177,355,193.661,939,121,008.62Amortization of right-of-use assets540,991,043.37557,582,081.57Amortization of intangible assets662,605,179.21624,592,081.35Amortization of long-term prepaidexpenses234,282,226.03257,971,298.59Losses from disposal of fixed assets,intangible assets and other long-termassets (gains are represented by “-”)9,851,809.5624,823,560.50Losses from changes of fair value
(gains are represented by “-”)29,565,597.82–31,271,562.35Financial expenses (gains are representedby “-”)777,375,820.19586,874,611.41
Section X Financial Report
Supplementary information
Amount forthe currentperiod
Amount forthe previous
periodLosses from investments (gains arerepresented by “-”)–1,039,614,193.70–1,129,768,360.36Decrease in deferred income tax assets
(increase is represented by “-”)–20,825,542.97167,338,912.59Increase of deferred income tax liabilities(decrease is represented by “-”)–46,750,812.9723,269,005.11Decrease in inventories (increase isrepresented by “-”)–361,648,013.682,061,410,773.14Decrease of operational account
receivables (increase is represented by“-”)–3,544,136,779.13–7,213,172,804.07Increase of operational account payables
(decrease is represented by “-”)–3,154,975,564.45–1,471,582,577.11Others178,288,615.94403,433,247.61Net cash flow generated from operationalactivities7,818,257,937.266,790,021,534.62
2. Significant investment and financing
activities not involving cash inflowsand outflows:
Capital transferred from debtsConvertible corporate bonds due within
one yearFixed assets under finance lease
3. Net changes of cash and cash
equivalents:
Cash balance at the end of the period54,228,034,803.2055,063,205,392.40Less: cash balance at the beginning of
the period53,977,310,651.0353,392,209,857.41Add: cash equivalents balance at the end
of the periodLess: cash equivalents balance at the
beginning of the periodNet increase of cash and cash
equivalents250,724,152.171,670,995,534.99
Section X Financial Report
(2) Composition of cash and cash equivalents
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceI. Cash54,228,034,803.2053,977,310,651.03Including: Cash on hand937,775.91541,712.70Bank deposits always available forpayment53,682,763,402.5653,524,177,266.50Other monetary funds always available forpayment544,333,624.73452,591,671.83II. Cash equivalentsIncluding: bond investments due within
three monthsIII. Closing balance of cash and cash equivalents54,228,034,803.2053,977,310,651.03Including: restricted cash and cash
equivalents used by the parent
company or subsidiaries ofthe Group
(3) Monetary funds that are not cash and cash equivalents
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodReasonsDeposit369,153,135.96448,374,520.06Poor marketability, not readily
realizable, or not availablefor paymentRestricted special account deposit106,101,674.7954,996,888.29Others2,336,543.495,770,781.76Total477,591,354.24509,142,190.11/
Section X Financial Report
63. Monetary items in foreign currency
ItemsClosing balanceOpening balance
Balance inforeigncurrencyExchange rateBalance in RMB
Balance in
foreigncurrencyExchange rateBalance in RMBMonetary fundsUSD1,770,696,255.767.126812,619,398,075.551,706,547,575.507.082712,086,964,513.02EUR49,922,095.887.6617382,488,122.03175,320,608.197.85921,377,879,723.86JPY5,846,338,259.870.044738261,553,481.074,478,977,012.530.050213224,902,872.73HKD320,549,474.900.9127292,565,505.74353,808,079.170.9062320,620,881.34Others 4,057,224,804.54 2,377,241,597.06Subtotal 17,613,229,988.93 16,387,609,588.01Accounts receivablesUSD1,177,948,619.107.12688,395,004,218.591,139,193,238.377.08278,068,563,949.37EUR471,937,540.497.66173,615,843,853.97480,196,918.947.85923,773,963,625.34JPY4,914,241,186.460.044738219,853,322.204,914,686,701.050.050213246,781,163.32Others 7,270,396,739.33 4,873,677,549.96Subtotal 19,501,098,134.09 16,962,986,287.99Short-term borrowingsUSD541,487,838.957.12683,859,075,530.64486,876,813.467.08273,448,402,406.69EUR302,910,481.427.66172,320,809,235.52250,039,963.327.85921,965,114,079.70JPY0.0447382,017,059,526.420.050213101,282,610.00HKD2,600,000,000.000.91272,373,020,000.002,600,000,000.000.90622,356,120,000.00Others 1,490,905,824.74 1,323,813,159.10Subtotal 10,043,810,590.90 9,194,732,255.49Accounts payablesUSD2,022,641,888.307.126814,414,964,209.571,909,489,893.667.082713,524,344,069.80EUR588,652,414.237.66174,510,078,202.12621,708,354.097.85924,886,130,296.44JPY6,554,732,131.740.044738293,245,606.116,641,786,186.840.050213333,504,009.80NZD148,893,213.224.3690650,514,448.58146,250,125.134.4991657,993,937.97Others 3,977,630,399.503,451,938,860.63Subtotal 23,846,432,865.88 22,853,911,174.64Non-current liabilities due within one yearUSD138,505,187.157.1268987,098,767.78138,292,003.547.0827979,480,773.48EUR100,194,794.337.6617767,662,455.7297,148,817.207.8592763,511,984.14JPY1,318,809,690.870.04473859,000,907.951,027,109,699.080.05021351,574,259.32RUB878,187,729.960.084173,855,588.09685,662,519.930.080355,058,700.35Others 363,680,646.29 361,870,186.58Subtotal 2,251,298,365.83 2,211,495,903.87Long-term borrowingsUSD1,160,002,846.127.12688,267,108,283.731,160,000,000.007.08278,215,932,000.00EUR598,330,327.007.66174,584,227,466.38597,689,081.077.85924,697,358,025.92Others 1,004,528,830.08 1,034,286,451.77Subtotal 13,855,864,580.19 13,947,576,477.69
Section X Financial Report
64. Leases
(1) As lessee
√ Applicable Not Applicable
Variable lease payments not included in the measurement of lease liabilities
√ Applicable Not Applicable
RMB42,756,889.43Lease expenses of short-term leases or leases of low-value assets which are subject tosimplified treatment
√ Applicable Not Applicable
RMB143,700,848.84Total cash outflow for leases RMB782,993,253.66 (Unit and Currency: RMB)The leased assets leased by the Company include housing and buildings, productionequipment, transportation equipment, office equipment and others used in the course ofoperations. Some of the leases contain renewal options and termination options.
(2) As lessor
a. Lease incomes from operating leases as lessor for the current period:
RMB1,097,174.74, including incomes related to variable lease payments not includedin lease receipts: nil.b. Undiscounted lease receipts for the next five years:
Lease receipts
Undiscounted lease receipts
per yearClosing amountOpening amountWithin 1 year2,191,971.434,582,971.432 to 5 years304,164.292,933,400.00Over 5 yearsTotal2,496,135.727,516,371.43The leased assets leased out by the Company are mainly housing, buildings and landuse rights. For details of changes of the leased assets, please refer to Note VII.14.
Section X Financial Report
VIII. RESEARCH AND DEVELOPMENT EXPENDITURE
(1). By the nature of expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Items
Amount forthe currentperiod
Amount forthe previousperiodRemuneration for the employees2,403,919,474.562,442,959,436.11Design and development expenses1,716,711,325.901,704,332,781.26Material input772,114,921.04756,845,602.42Depreciation and amortization92,904,546.3898,941,998.45Organizational operation and others371,941,185.87361,790,531.89Total5,357,591,453.755,364,870,350.13Including: expensed research and development
expenditure5,088,901,166.885,025,786,116.64Capitalized research and development expenditure268,690,286.87339,084,233.49
(2). Development expenditure on research and development projects eligible for
capitalization
Decrease for the current periodItems
OpeningbalanceIncrease for the
current period
Recognized asintangibleasset
Included incurrent profitand loss
Change in
foreignexchange rate
and others
ClosingbalanceHome Appliance IntelligentInteraction Project97,519,232.7265,524,861.56163,044,094.28OWNERSHIP EXPERIENCEPROGRAM48,780,235.2017,846,556.39363,238.1866,990,029.77Whole House Intelligent Energy
Saving Project49,104,390.2049,104,390.2091ABD.ERP IT PROGRAM3,340,845.5614,626,505.90505,022.1067,891.3417,530,220.70Others116,849,921.62121,587,972.82127,289,711.5740,225,230.43151,373,413.30Total266,490,235.10268,690,286.87290,838,827.9540,656,359.95284,998,053.97
Section X Financial Report
IX. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
Applicable √ Not Applicable
2. Business combination under common control
Applicable √ Not Applicable
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Items
QingdaoHairuijiejing
Electronics
Co., Ltd.(青島海瑞潔淨電子有限公司)
Beijing HaierGuangke DigitalTechnologyCo., Ltd.(北京海爾廣科數字技術有限公司)
BeijingYunshang Yilian
TechnologyCo., Ltd.(北京雲裳衣聯科技有限公司)Equity disposal price———Proportion of equity disposal51%55%51%Method of equity disposalCancellationCancellationCancellationTime of loss-of-controlMarch 2024February 2024March 2024Basis for determination the time ofloss-of-controlCancellationCancellationCancellationDifference between consideration
and its share of net assets of thesubsidiary as respect to thedisposal in the consolidated level–3,697,883.69–
941.36
1,286.02
Section X Financial Report
4. Changes of consolidation scope due to other reasons
√ Applicable Not Applicable
(1) During the period, Qingdao Haier Dishwasher Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary, Qingdao Haier Smart Dishwasher Co., Ltd. (青島海爾智慧洗碗機有限公司).
(2) During the period, Qingdao Haier Air Conditioner Gen Corp., Ltd., a subsidiary of the
Company, established a wholly-owned subsidiary, Zhongshan Haier HV Equipment Co., Ltd.(中山海爾暖通設備有限公司).
(3) During the period, Qingdao Haier Air Conditioner Gen Corp., Ltd., a subsidiary of the
Company, established a wholly-owned subsidiary, Qingdao Haier HV Equipment TechnologyCo., Ltd. (青島海爾暖通設備科技有限公司).
(4) During the period, Hefei Haier Washing Machine Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary, Qingdao Haier Smart Washing Machine Co., Ltd.(青島海爾智慧洗衣機有限公司).X. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
√ Applicable Not Applicable
Unit and Currency: RMBName of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectFlourishing ReachLimited
Mainland of ChinaBritish Virgin
Islands
Group company, whichmainly engage ininvestment holding,the production andsale of washingmachines and waterheaters, distributionservice
100.00Establishment
Haier Electronics GroupCo., Ltd.
Mainland of Chinaand Hong Kong
BermudaGroup company, which
mainly engage ininvestment holding,the production andsale of waterequipment,distribution service
100.00Establishment
Haier U.S. Appliance
Solutions, Inc.
the United Statesthe United StatesGroup company, which
mainly engage inhome appliancesproduction anddistribution business
100.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectHaier Singapore
Investment Holding Co.,Ltd.
Singapore andother overseasareas
SingaporeGroup company, which
mainly engage inhome appliancesproduction anddistribution business
100.00Business
combinationunder commoncontrolHaier New ZealandInvestment HoldingCompany Limited
New ZealandNew ZealandGroup company, which
mainly engage inhome appliancesproduction anddistribution business
100.00Business
combinationunder commoncontrolCandy S.p.AEuropeItalyGroup company, which
mainly engage inhome appliancesproduction anddistribution business
100.00Business
combinationnot undercommoncontrolQingdao Haier AirConditioner Gen Corp.,Ltd.
Qingdao High-tech
Zone
Qingdao High-techZone
Manufacture and saleof householdair-conditioners
92.37Business
combinationunder commoncontrolGuizhou Haier Electronics
Co., Ltd.
Huichuan District,Zunyi City,GuizhouProvince
Huichuan District,
Zunyi City,GuizhouProvince
Manufacture and saleof refrigerator
59.00Business
combinationunder commoncontrolHefei Haier Air-
conditioning Co.,Limited
Hefei HaierIndustrial Park
Hefei HaierIndustrial Park
Manufacture and sale
of air-conditioners
100.00Business
combinationunder commoncontrolWuhan Haier Electronics
Holding Co., Ltd.
Wuhan HaierIndustrial Park
Wuhan HaierIndustrial Park
Manufacture and sale
of air-conditioners
59.86Business
combinationunder commoncontrolQingdao Haier
Air-ConditionerElectronics Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture and sale
of air-conditioners
97.43Business
combinationunder commoncontrolQingdao Haier
Information PlasticDevelopment Co., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Manufacturing ofplastic products
100.00Business
combinationunder commoncontrolDalian Haier PrecisionProducts Co., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressing Zone
Manufacture and sale
of precise plastics
90.00Business
combinationunder commoncontrolHefei Haier Plastic Co.,
Ltd.
Hefei Economic &
TechnologicalDevelopmentArea
Hefei Economic &TechnologicalDevelopmentArea
Manufacture and saleof plastic parts
95.174.83Business
combinationunder commoncontrolQingdao Meier PlasticPowder Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture of plasticpowder, plastic sheetand high-performancecoatings
40.0060.00Business
combinationunder commoncontrolChongqing HaierPrecision Plastic Co.,Ltd.
Jiangbei District,Chongqing City
Jiangbei District,Chongqing City
Plastic products, sheetmetal work,electronics andhardware
90.0010.00Business
combinationunder commoncontrol
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectQingdao Haier
Refrigerator Co., Ltd.
Qingdao High-tech
Zone
Qingdao High-tech
Zone
Manufacture and
production offluorine-freerefrigerators
97.91 Establishment
Qingdao HaierRefrigerator(International) Co., Ltd.
PingduDevelopmentZone, Qingdao
PingduDevelopmentZone, Qingdao
Manufacture ofrefrigerators
100.00 Establishment
Qingdao HouseholdAppliance Technologyand EquipmentResearch Institute
Qingdao High-techZone
Qingdao High-techZone
Research anddevelopment of homeappliances mold andtechnologicalequipment
100.00 Establishment
Qingdao Haier Whole SetHome ApplianceService Co., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Research,development andsales of health-related small homeappliance
98.33 Establishment
Qingdao Haier Special
Refrigerator Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture and sales
of fluorine-freerefrigerators
100.00 Establishment
Qingdao Haier
Dishwasher Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture of dish
washing machine andgas stove
99.59 Establishment
Qingdao Haier Special
Freezer Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Research, manufactureand sales of freezerand otherrefrigerationproducts
96.78 Establishment
Dalian Haier Air-
conditioning Co., Ltd.
Dalian Export
Expressing Zone
Dalian Export
Expressing Zone
Air conditionerprocessing andmanufacturing
90.00 Establishment
Dalian Haier Refrigerator
Co., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressing Zone
Refrigeratorprocessing andmanufacturing
100.00 Establishment
Qingdao Haier Electronic
Plastic Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Development,assembling and salesof plastics,electronics andproducts
100.00 Establishment
Wuhan Haier Freezer Co.,
Ltd
Wuhan Economic
& TechnologicalDevelopmentZone High-techIndustrial Park
Wuhan Economic& TechnologicalDevelopmentZone High-techIndustrial Park
Research, manufactureand sales of freezerand otherrefrigerationproducts
82.934.36Establishment
Qingdao Haidarui
Procurement ServiceCo., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Develop, purchase andsell electricalproducts andcomponents
98.002.00Establishment
Qingdao Haier IntelligentHome ApplianceTechnology Co., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Development andapplication of homeappliances,communication,electronics andnetwork engineeringtechnology
91.461.01Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectChongqing Haier
Air-conditioning Co.,Ltd.
Jiangbei District,Chongqing City
Jiangbei District,
Chongqing City
Manufacture and sales
of air conditioners
76.9223.08Establishment
Qingdao Haier PrecisionProducts Co., Ltd.
QianwangangRoad, JiaonanCity
QianwangangRoad, JiaonanCity
Development andmanufacture ofprecise plastic, metalplate, mold andelectronic productsfor home appliances
70.00Establishment
Qingdao Haier Air
Conditioning EquipmentCo., Ltd.
Jiaonan City,Qingdao
Jiaonan City,Qingdao
Manufacture of homeappliances andelectronics
100.00EstablishmentDalian Free Trade ZoneHaier Air-conditioningTrading Co., Ltd.
Dalian Export
Expressing Zone
Dalian ExportExpressing Zone
Domestic trade 100.00EstablishmentDalian Free Trade Zone
Haier RefrigeratorTrading Co., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressing Zone
Domestic trade 100.00EstablishmentChongqing Haier
Electronics Sales Co.,Ltd.
Jiangbei District,Chongqing City
Jiangbei District,Chongqing City
Sales of home
appliances
95.005.00Establishment
Chongqing HaierRefrigeration ApplianceCo., Ltd.
Jiangbei District,Chongqing City
Jiangbei District,Chongqing City
Processing andmanufacturing ofrefrigerator
84.9515.05Establishment
Hefei Haier Refrigerator
Co., Ltd.
Hefei HaierIndustrial Park
Hefei HaierIndustrial Park
Processing andmanufacturing ofrefrigerator
100.00 Establishment
Qingdao Haier Intelligent
Building TechnologyCo., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Air-conditioningengineer
100.00EstablishmentChongqing Lianmai
Electric Appliance SalesCo., Ltd.(重慶聯邁電器銷售有限公司)
Jiangbei District,Chongqing City
Jiangbei District,Chongqing City
Sales of home
appliances andelectronics
51.00EstablishmentQingdao Haier (Jiaozhou)
Air-conditioning Co.,Limited
Jiaozhou City,Qingdao
Jiaozhou City,
Qingdao
Manufacture and sale
of air-conditioners
100.00EstablishmentQingdao Haier
Component Co., Ltd.
Jiaozhou City,Qingdao
Jiaozhou City,
Qingdao
Manufacture and sales
of plastic and precisesheet metal products
100.00EstablishmentHaier Shareholdings(Hong Kong) Limited
Hong KongHong KongInvestment100.00 EstablishmentHarvest International
Company
Cayman IslandsCayman IslandsInvestment100.00EstablishmentShenyang HaierRefrigerator Co., Ltd.
Shenbei New Area,Shenyang City
Shenbei New Area,Shenyang City S
Manufacture and salesof refrigerator
100.00 Establishment
Foshan Haier Freezer
Co., Ltd.
Sanshui District,Foshan City
Sanshui District,Foshan City
Manufacture and salesof refrigerator
100.00 Establishment
Zhengzhou Haier
Air-conditioning Co.,Ltd.
ZhengzhouEconomic andTechnologicalDevelopmentZone
ZhengzhouEconomic andTechnologicalDevelopmentZone
Manufacture and salesof freezer
100.00 Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectQingdao Haidayuan
Procurement ServiceCo., Ltd.
Qingdao
DevelopmentZone
Qingdao
DevelopmentZone
Develop, purchase and
sell electricalproducts andcomponents
100.00 Establishment
Qingdao Haier IntelligentTechnologyDevelopment Co., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Development andresearch of homeappliance products
100.00 Establishment
Qingdao Hairi High
Technology Co., Ltd.
Qingdao High-techZone
Qingdao High-techZone
Design, manufactureand sales of productmodel and mould
100.00Business
combinationunder commoncontrolQingdao Hai Gao Designand Manufacture Co.,Ltd.
Qingdao High-techZone
Qingdao High-techZone
Industrial design andprototype production
75.00Business
combinationunder commoncontrolZhongshan Haier HVEquipment Co., Ltd.(中山海爾暖通設備有限公司)
ZhongshanZhongshanSales of home
appliances
100.00Establishment
Qingdao Haier HV
Equipment TechnologyCo., Ltd.(青島海爾暖通設備科技有限公司)
QingdaoQingdaoManufacture and sale
of air conditioningequipment
100.00EstablishmentShanghai Haier Medical
Technology Co., Ltd.
ShanghaiShanghaiWholesale and retail of
medical facility
66.87EstablishmentQingdao Haier
Technology Co., Ltd.
QingdaoQingdaoDevelopment and sales
of software andinformation product
100.00Business
combinationunder commoncontrolQingdao Haier
Technology InvestmentCo., Ltd.
QingdaoQingdaoEntrepreneurship
investment andconsulting
100.00Establishment
Qingdao Casarte Smart
Living Appliances Co.,Ltd.
QingdaoQingdaoDevelopment,
production and salesof appliances
100.00EstablishmentQingdao Haichuangyuan
Appliances Sales Co.,Ltd.
QingdaoQingdaoSales of home
appliances and digitalproducts
100.00EstablishmentHaier Overseas Electric
Appliance Co., Ltd.
QingdaoQingdaoSales of home
appliances,international freightforwarding
100.00Establishment
Haier Group (Dalian)
Electrical AppliancesIndustry Co., Ltd.
DalianDalianSales of home
appliances,international freightforwarding
100.00Business
combinationunder commoncontrolQingdao Haier Central AirConditioning Co., Ltd.
QingdaoQingdaoProduction and sales
of air andrefrigerationequipment
100.00EstablishmentChongqing Haier Home
Appliance Sale HefeiCo., Ltd.
HefeiHefeiSales of home
appliances
100.00Establishment
Qingdao Weixi Smart
Technology Co., Ltd.
QingdaoQingdaoIntelligent sanitary
ware
85.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectHaier U+smart Intelligent
Technology (Beijing)Co., Ltd.
BeijingBeijingSoftware development100.00EstablishmentHaier (Shanghai)
Electronics Co., Ltd.
ShanghaiShanghaiSales, research and
development of homeappliances
100.00Establishment
Shanghai Haier ZhongzhiFang Chuang KeManagement Co., Ltd.
ShanghaiShanghaiBusiness management
consulting, chuangkemanagement
100.00 Establishment
Qingdao Haier Smart
Kitchen Appliance Co.,Ltd.
QingdaoQingdaoProduction and sales
of kitchen smarthome appliances
85.82EstablishmentGE Appliance (Shanghai)
Co., Ltd.
ShanghaiShanghaiSales of home
appliances
100.00EstablishmentQingdao Haier SpecialRefrigerating ApplianceCo., Ltd.
QingdaoQingdaoProduction and sales
of home appliances
100.00EstablishmentShanghai Zhihan
Technology Co., Ltd.(上海摯瀚科技有限公司)
BeijingBeijingPromotion of
technologicaldevelopment
100.00EstablishmentLaiyang Haier Smart
Kitchen Appliance Co.,Ltd.
LaiyangLaiyangProduction and sales
of home appliances
100.00EstablishmentHefei Haier Air
Conditioning ElectronicsCo., Ltd.
HefeiHefeiProduction and sales
of home appliances
100.00EstablishmentHaier (Shanghai) Home
Appliance Research andDevelopment CenterCo., Ltd.
ShanghaiShanghaiResearch and
development of homeappliances
100.00Establishment
Haier (Shenzhen) R&D
Co., Ltd.
ShenzhenShenzhenDevelopment, research
and technicalservices of householdand commercialelectrical
100.00Establishment
Guangzhou Haier AirConditioner Co., Ltd.
GuangdongGuangdongManufacturing of
refrigeration and airconditioningequipment
100.00Establishment
Qingdao Yunshang Yuyi
IOT Technology Co.,Ltd.
QingdaoQingdaoIoT technology
research anddevelopment
60.00Establishment
Qingdao Jijia Cloud
Intelligent TechnologyCo., Ltd.
QingdaoQingdaoR&D and sales of
lighting appliances
80.00Establishment
Qingdao HaimeihuiManagementConsulting Co., Ltd. (青島海美匯管理咨詢有限公司)
QingdaoQingdaoLeasing and business
services
100.00EstablishmentWuxi Yunshang Internetof Clothing TechnologyCo., Ltd. (無錫雲裳衣聯網科技有限公司)
WuxiWuxiInternet of Things
technology R & D
100.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectQingdao Haidacheng
Procurement ServiceCo., Ltd.
QingdaoQingdaoDevelop, purchase and
sell electricalproducts andcomponents
100.00Establishment
Guangdong HaierIntelligent TechnologyCo. Ltd. (廣東海尔智能科技有限公司)
GuangzhouGuangzhouScientific research and
technology servicesector
76.72Business
combinationnot undercommoncontrolBeijing HaixianghuiTechnology Co., Ltd.(北京海享匯科技有限公司)
BeijingBeijingScientific research and
technology servicesector
100.00Establishment
Haier Smart Home
Experience CloudEcological TechnologyCo., Ltd. (海爾智家體驗雲生態科技有限公司)
QingdaoQingdaoTechnology
development ofsmart homeproducts, wholefurniturecustomization, etc.
100.00Establishment
Haier Smart Home(Qingdao) Network Co.,Ltd. (海爾智家（青島）網絡有限公司)
QingdaoQingdaoTechnical services,
development,consulting, transfer,etc.
100.00Establishment
Haier Smart Home(Qingdao) NetworkOperation Co., Ltd. (海爾智家（青島）網絡運營有限公司)
QingdaoQingdaoResidential interior
decoration,professionalconstructionoperation, specialequipmentinstallation,upgrading and repair,etc.
100.00Establishment
Qingdao Internet of WineTechnology Co., Ltd.(青島酒聯網物聯科技有限公司)
QingdaoQingdaoUrban distribution and
transportationservices, import andexport of goods,technology importand export and foodbusiness, etc.
100.00Establishment
Qingdao Linghai AirConditioning EquipmentCo., Ltd. (青島菱海空調設備有限公司)
QingdaoQingdaoManufacture and
production of airconditioner andrefrigerationequipment
100.00Establishment
Shenzhen Yunshang
Yilian Technology Co.,Ltd. (深圳雲裳衣聯網科技有限公司)
ShenzhenShenzhenImport and export
business, Internet,Internet of things, bigdata, AI, AR andtechnical servicesoperation
100.00Establishment
Qingdao HaixiangxueHuman Resources Co.,Ltd. (青島海享學人力資源有限公司)
QingdaoQingdaoProfessional
intermediaryactivities
100.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectJiangxi Haier MedicalTechnology Co., Ltd.
JiangxiJiangxiWholesale and retail of
medical equipment
100.00Establishment
Qingdao Haizhi YunlanTechnology Co., Ltd.
QingdaoQingdaoTechnical service
development
100.00EstablishmentQingdao HaishengzeTechnology Co., Ltd.
QingdaoQingdaoAir conditioning
equipment technicalservices
100.00Establishment
Qingdao HailvyuanRecycling TechnologyCo., Ltd.
QingdaoQingdaoElectrical and
electronic productswaste treatment
100.00Establishment
Qingdao Haier HVACEquipment Co., Ltd. (青島海爾暖通空調設備有限公司)
QingdaoQingdaoManufacture and sale
of air-conditioners
75.0025.00Establishment
Qingdao Haier Home AIIndustry InnovationCenter Co., Ltd. (青島海爾家庭人工智能產業創新中心有限公司)
QingdaoQingdaoIntegrated service of AI
industry applicationsystem
100.00EstablishmentZhejiang Weixi IoT
Technology Co., Ltd.(浙江衛璽物聯科技有限公司)
ZhejiangZhejiangIoT application service 100.00EstablishmentQingdao Haier Quality
Inspection Co., Ltd. (青島海爾質量檢測有限公司)
QingdaoQingdaoInspection and testing
of home appliance
100.00 Business
combinationunder commoncontrolQingdao HaiyongchengCertification ServiceCo., Ltd. (青島海永成認證服務有限公司)
QingdaoQingdaoProduct certification
service
100.00Business
combinationunder commoncontrolQingdao Zhonghai Borui
Testing TechnologyService Co., Ltd. (青島中海博睿檢測技術服務有限公司)
QingdaoQingdaoHome appliance
testing andtechnologyconsulting
100.00Business
combinationunder commoncontrolsQingdao Haier Special
Plastic DevelopmentCo., Ltd.
QingdaoQingdaoManufacture and sale
of refrigerator doors
100.00Business
combinationunder commoncontrolsQingdao Haizhiling AirConditioningEngineering Co., Ltd.(青島海智菱空調工程有限公司)
QingdaoQingdaoSoftware development
and sale of dailynecessities
100.00EstablishmentHaier Smart Home(Xiongan, Hebei)Technology Co., Ltd.(海爾智家科技（河北雄安）有限公司)
QingdaoQingdaoPromotion of
energy-savingtechnology
100.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectQingdao Ruibo EcologicalEnvironmentalTechnology Co., Ltd.(青島瑞博生態環保科技有限公司)
QingdaoQingdaoEnvironmental and AI
technologyconsulting
89.13 Establishment
Qingdao SanyiniaoTechnology Co., Ltd.(青島三翼鳥科技有限公司)
QingdaoQingdaoTechnology service
and advertisementdesign
100.00EstablishmentQingdao Jingzhi RecycleEnvironmentalTechnology Co., Ltd.(青島鯨智再生環保科技有限公司)
QingdaoQingdaoOperation of
dangerous waste
100.00EstablishmentQingdao YunshangJieshen YilianTechnology Co., Ltd.(青島雲裳潔神衣聯科技有限公司)
QingdaoQingdaoProfessional cleaning
and sale of dailynecessities
51.00EstablishmentShanghai Yunshang YuyiIoT Technology Co.,Ltd. (上海雲裳羽衣物聯科技有限公司)
ShanghaiShanghaiProfessional cleaning
and sale of dailynecessities
100.00EstablishmentShijiazhuang YunshangYilian Technology Co.,Ltd. (石家莊雲裳衣聯科技有限公司)
ShijiazhuangShijiazhuangProfessional cleaning
and sale of dailynecessities
51.00EstablishmentNanjing Yunshang Yilian
Technology Co., Ltd.(南京雲裳衣聯科技有限公司)
NanjingNanjingProfessional cleaning
and sale of dailynecessities
80.00EstablishmentShanxi Yunshang Yilian
Technology Co., Ltd.(山西雲裳衣聯科技有限公司)
ShanxiShanxiProfessional cleaning
and sale of dailynecessities
51.00EstablishmentTianjin Yunshang Yilian
Technology Co., Ltd.(天津雲裳衣聯網科技有限公司)
TianjinTianjinProfessional cleaning
and sale of dailynecessities
51.00EstablishmentChongqing Yunshang
Haihong YilianTechnology Co., Ltd.(重慶雲裳海宏衣聯科技有限公司)
ChongqingChongqingProfessional cleaning
and sale of dailynecessities
51.00EstablishmentChengdu Yunshang Meier
Yilian Technology Co.,Ltd. (成都雲裳美爾衣聯科技有限公司)
ChengduChengduProfessional cleaning
and sale of dailynecessities
80.00EstablishmentQingdao Haier Smart
Dishwasher Co., Ltd.(青島海爾智慧洗碗機有限公司)
QingdaoQingdaoManufacture, research
and development andsales of homeappliances
100.00Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding (%)Acquiring method
DirectIndirectChengdu Yunshang YilianTechnology Co., Ltd.(成都雲裳衣聯科技有限公司)
ChengduChengduProfessional cleaning
and sale of dailynecessities
100.00EstablishmentQingdao Haixiangmian
Technology Co., Ltd.(青島海享眠科技有限公司)
QingdaoQingdaoSale of food and daily
necessities
100.00EstablishmentQingdao Haier Kitchen
IoT Technology Co.,Ltd. (青島海爾廚聯網物聯科技有限公司)
QingdaoQingdaoTechnology service
and sale of dailynecessities
100.00EstablishmentTibet Haifeng Intelligent
Innovation TechnologyCo., Ltd. (西藏海峰智能創新科技有限公司)
TibetTibetDevelopment of
software and medicalequipment
100.00EstablishmentQingdao Haixiangzhi
Technology Co., Ltd.(青島海享智科技有限公司)
QingdaoQingdaoManufacturing of home
appliances
100.00Establishment
Qingdao Haier
Refrigeration ApplianceCo., Ltd. (青島海爾製冷電器有限公司)
QingdaoQingdaoManufacturing of home
appliances
100.00Establishment
Chongqing Haier
Washing Appliance Co.,Ltd. (重慶海爾洗滌電器有限公司)
ChongqingChongqingManufacturing of home
appliances
100.00Establishment
Tongfang Energy
TechnologyDevelopment Co., Ltd.(同方能源科技發展有限公司)
BeijingBeijingTechnology
development service
84.32Business
combinationnot undercommoncontrolQingdao Haier YouyangTechnology Co., Ltd.(青島海爾有養科技有限公司)
QingdaoQingdaoTechnology
development service
51.00Establishment
Qingdao Haier YikangTechnology Co., Ltd.(青島海爾益康科技有限公司)
QingdaoQingdaoTechnology
development service
100.00Establishment
Microenterprises such asQingdao Hai Heng FengElectrical AppliancesSale & Service Co.,Ltd.
All over the
country
All over thecountry
Sales of homeappliances
Establishment
(2) Material non-wholly owned subsidiaries for the Company
Applicable √ Not Applicable
Section X Financial Report
2. Transactions leading to the change of shareholding in subsidiaries but not losing
the control
√ Applicable Not Applicable
(1) Description of changes in the share of owners’ equity in subsidiaries
√ Applicable Not Applicable
Capital contribution by minority shareholders of the subsidiary of the Company leads tochanges in the Company’s shareholding ratio.
(2) Impact of the transactions on minority interest and the equity attributable to
shareholders of the Company:
ItemsOthersTotal consideration for acquisition/disposal83,668,779.14Less: share of net assets of subsidiaries in respect to theshareholding proportion acquired/disposed64,283,632.20Difference–19,385,146.94Including: adjustment to decrease capital reserve–19,385,146.94
3. Interests in joint ventures and associates
√ Applicable Not Applicable
(1) Joint ventures and associates
Name of joint venture and associates
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
Accounting treatmentof investmentHaier Group Finance Co., LtdQingdaoQingdaoFinancial services42.00%Equity methodBank of Qingdao Co., LtdQingdaoQingdaoCommercial Bank8.19%Equity methodWolong Electric (Jinan) Motor Co., Ltd.JinanJinanMotor Manufacturing30.00%Equity methodQingdao Hegang New Material Technology
Co., Ltd. (青島河鋼新材料科技股份有限公司)
QingdaoQingdaoSteel plate manufacturing23.94%Equity methodQingdao Haier SAIF Smart Home Industry
Investment Center (Limited Partnership)
QingdaoQingdaoVenture Capital63.13%Equity methodMitsubishi Heavy Industries Haier (Qingdao)Air-conditioners Co., Ltd.
QingdaoQingdaoManufacturing of home
appliances
45.00%Equity method
Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd.
QingdaoQingdaoManufacturing of home
appliances
49.00%Equity method
Qingdao Haier Multimedia Co., Ltd.QingdaoQingdaoR&D and sales of
television
20.20%Equity method
Zhengzhou Highly Electric Appliance Co.,
Ltd. (鄭州海立電器有限公司)
ZhengzhouZhengzhouManufacture and sale of
press
49.00%Equity method
Baoshihua Tong Fang Energy Technology
Co., Ltd. (寶石花同方能源科技有限公司)
BeijingBeijingTechnology service
development
20.00%Equity method
Section X Financial Report
Name of joint venture and associates
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
Accounting treatmentof investmentZhejiang Futeng Fluid Technology Co., Ltd.HuzhouHuzhouGas compression
machinerydevelopment andmanufacturing
48.00%Equity method
Hongtong Environmental Technology(Guangzhou) Co., Ltd. (宏通環境技術（廣州）有限公司)
GuangzhouGuangzhouMachinery and equipment
development andmanufacturing
15.00%Equity method
Qingdao Xiaoshuai Intelligent TechnologyCo., Ltd. (青島小帥智能科技股份有限公司)
QingdaoQingdaoInformation technology
development
32.13%Equity method
Qingdao Haimu Investment ManagementCo., Ltd.
QingdaoQingdaoInvestment management49.00%Equity methodQingdao Haimu Smart Home Investment
Partnership (Limited Partnership)
QingdaoQingdaoInvestment management24.00%Equity methodHaineng Wanjia (Shanghai) Technology
Development Co., Ltd.
ShanghaiShanghaiConstruction20.00%Equity methodQingdao Guochuang Intelligent Household
Appliance Research Institute Co., Ltd.(青島國創智能家電研究院有限公司)
QingdaoQingdaoDevelopment of home
appliances
35.51%Equity method
Guangzhou Heying Investment Partnership
(Limited Partnership)
GuangzhouGuangzhouInvestment49.00%Equity methodQingdao Home Wow Cloud Network
Technology Co., Ltd
QingdaoQingdaoHome online service22.10%Equity methodBingji (Shanghai) Corporate Management
Co., Ltd.
ShanghaiShanghaiInvestment management45.00%Equity methodYoujin (Shanghai) Corporate Management
Co., Ltd
ShanghaiShanghaiInvestment management45.00%Equity methodRRS (Shanghai) Investment Co., Ltd.
(日日順（上海）投資有限公司)
ShanghaiShanghaiInvestment management45.00%Equity methodHaier Best Water Technology Co., Ltd.
(倍世海爾飲水科技有限公司)
QingdaoQingdaoWater equipment
technologydevelopment service
49.00%Equity method
Huizhixiangshun Equity Investment Fund
(Qingdao) Partnership (LimitedPartnership)
QingdaoQingdaoInvestment management30.00%Equity methodQingdao RRS Huizhi Investment Co., Ltd.QingdaoQingdaoInvestment management50.00%Equity methodQingdao Xinshenghui Technology Co., Ltd.(青島鑫晟匯科技有限公司)
QingdaoQingdaoTechnology service
development
20.00%Equity method
Ningbo Beilian Intelligent Technology Co.,Ltd. (宁波贝立安智能科技有限公司)
NingboNingboTechnology service
development
35.00%Equity method
Konan Electronic Co., LtdJapanJapanMotor Manufacturing50.00%Equity methodHPZ LIMITEDNigeriaNigeriaManufacturing of home
appliance
25.01%Equity method
HNR (Private) Company LimitedPakistanPakistanManufacturing of home
appliance
31.72%Equity method
Controladora Mabe S.A.de C.V.MexicoMexicoManufacturing of home
appliance
48.41%Equity method
Middle East Air conditioning Company,
Limited
Saudi ArabiaSaudi ArabiaSales of home appliances49.00%Equity method
Section X Financial Report
(2) Key financial information of important associates
√ Applicable Not Applicable
Unit and Currency: RMB The basic profile of important associates:
Haier Group Finance Co., Ltd. (hereinafter referred to as “Finance company”) wasestablished by Haier Group Corporation and its three affiliates. Registration place andprincipal place of business: No.178–2 Haier Road, Laoshan District, Qingdao City. TheCompany’s subsidiaries hold an aggregate of 42.00% equity interest in FinanceCompany. Financial information of important associates:
ItemsFinance company
Closing balance/Amount for thecurrent period
Opening balance/Amount for theprevious periodCurrent assets58,118,246,068.6458,471,449,425.14Non-current assets16,522,384,591.5117,215,510,844.97Total assets74,640,630,660.1575,686,960,270.11Current liabilities55,104,446,290.2956,268,320,103.08Non-current liabilities583,330,585.96583,055,172.64Total liabilities55,687,776,876.2556,851,375,275.72Minority interestsEquity attributable to shareholders of the parent
company18,952,853,783.9018,835,584,994.39Including: share of net assets calculated pershareholding percentage7,960,198,589.247,910,945,697.64Operating income931,067,464.94903,641,445.71Net profit677,251,560.13753,528,932.20Other comprehensive income17,229.38–21,953,251.63Total comprehensive income677,268,789.51731,575,680.57Dividend received from associates for the year235,200,000.00235,200,000.00
Section X Financial Report
(3) Summarized financial information of insignificant joint ventures and associates
Investment in associates
Closing balance/Amount for the
current period
Opening balance/
Amount for theprevious periodBank of Qingdao Co., Ltd.3,437,294,397.063,200,132,708.75Wolong Electric (Jinan) Motor Co., Ltd.190,943,209.43177,662,547.04Qingdao Hegang New Material Technology Co.,Ltd. (青島河鋼新材料科技股份有限公司)339,366,124.72329,713,566.36Qingdao Haier SAIF Smart Home IndustryInvestment Center (Limited Partnership)190,405,837.69206,764,442.76Mitsubishi Heavy Industries Haier (Qingdao)Airconditioners Co., Ltd.731,439,878.82663,804,966.31Qingdao Haier Carrier Refrigeration EquipmentCo., Ltd.416,077,948.22412,107,471.53Qingdao Haier Multimedia Co., Ltd.88,300,000.0088,300,000.00Baoshihua Tong Fang Energy Technology Co.,Ltd. (寶石花同方能源科技有限公司)30,326,966.7830,326,966.78Zhengzhou Highly Electric Appliance Co., Ltd.
(鄭州海立電器有限公司)97,032,780.7798,000,000.00Zhejiang Futeng Fluid Technology Co., Ltd.77,584,161.9977,584,161.99Hongtong Environmental Technology (Guangzhou)Co., Ltd. (宏通環境技術（廣州）有限公司)7,265,965.734,265,965.73Beijing ASU Tech Co., Ltd. 7,919,009.51Qingdao Haimu Investment Management Co., Ltd.2,609,456.572,609,456.57Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership)57,989,007.1857,989,007.18Haineng Wanjia (Shanghai) Technology
Development Co., Ltd. (海能萬嘉（上海）科技
發展有限公司)606,029.71606,029.71Qingdao Guochuang Intelligent Household
Appliance Research Institute Co., Ltd.
(青島國創智能家電研究院有限公司)39,084,107.5738,574,227.53Guangzhou Heying Investment Partnership
(Limited Partnership)150,969,739.44194,416,881.32Qingdao Home Wow Cloud Network Technology
Co., Ltd2,781,795.112,192,669.49Bingji (Shanghai) Corporate Management Co.,
Ltd.1,073,095,181.861,056,245,062.87Youjin (Shanghai) Corporate Management Co.,
Ltd1,950,263,967.001,919,627,387.02
Section X Financial Report
Investment in associates
Closing balance/Amount for thecurrent period
Opening balance/
Amount for theprevious periodRRS (Shanghai) Investment Co., Ltd.(日日順（上海）投資有限公司)3,545,116,303.653,489,413,430.96Haier Best Water Technology Co., Ltd.
(倍世海爾飲水科技有限公司)150,781,033.56148,369,638.40Huizhixiangshun Equity Investment Fund(Qingdao) Partnership (Limited Partnership)201,495,856.15238,175,637.03Qingdao RRS Huizhi Investment Co., Ltd.4,083,482.784,083,482.78Qingdao Xiaoshuai Intelligent Technology Co., Ltd.(青島小帥智能科技股份有限公司)6,107,497.56Qingdao Xinshenghui Technology Co., Ltd.(青島鑫晟匯科技有限公司)10,385,042.5410,005,915.15Ningbo Beilian Intelligent Technology Co., Ltd.(寧波貝立安智能科技有限公司)3,500,000.00Orygin LLC 22,296,931.04Konan Electronic Co., Ltd57,582,447.5764,378,952.07HNR (Private) Company Limited134,322,225.41111,225,806.51HPZ LIMITED–4,326,324.373,483,576.50Controladora Mabe S.A.de C.V.5,188,461,070.955,078,418,321.53Middle East Airconditioning Company, Limited7,303,000.267,299,166.60Total book value of investment18,188,248,191.7117,745,993,387.02Total amount of the following financial data ofassociates calculated based on shareholdingpercentage– Net profit741,808,654.94775,751,075.57– Other comprehensive income21,625,261.80–6,287,979.19– Total comprehensive income763,433,916.74769,463,096.38
Section X Financial Report
XI. SEGMENT REPORT
√ Applicable Not Applicable
The Company is principally engaged in manufacture and sales of home appliances and relevantservices business, manufacture of upstream home appliances parts, distribution of products of thirdparty, logistics and after-sale business.The Company has five business segments: (1) Household Food Storage and Cooking Solutions: mainlymanufacturing and selling refrigerator/freezers and kitchen appliances; (2) Air Solutions: mainlymanufacturing and selling air conditioners; (3) Household Laundry Management Solutions: mainlymanufacturing and selling washing machines and dryers; (4) Household Water Solutions: mainlymanufacturing and selling water home appliances such as water heaters and water purifiers; (5) Otherbusiness: mainly include channel, equipment components, small home appliance business and others.The management of the Company assesses operating performance of each segment and allocatesresources according to the division. Sales between segments were mainly based on market price.Due to centralized management under the headquarters or exclusion from the assessment scope ofsegment management, the total assets of segments exclude monetary funds, financial assets held fortrading, derivative financial assets, dividends receivable, held-for-sale financial assets, other currentassets, debt investment, long-term accounts receivable, long-term equity investment, other equityinstruments investment, other non-current financial assets, goodwill and deferred income tax assets;the total liabilities of segments exclude long-term and short-term borrowings, financial liabilities held fortrading, derivative financial liabilities, taxes payable, interests payable, dividends payable, held-for-saleliabilities, bonds payable, deferred income tax liabilities and other non-current liabilities; profits ofsegments exclude financial expenses, profit or loss in fair value changes, income from investment, andincome on disposal of assets, Non-value-added tax refundable upon imposition component of otherincome, non-operating incomes and expenses and income tax.
(1) Information of reportable segments
Segment information for the period
Household Food Storage and
Cooking SolutionsSegment informationRefrigerator/freezersKitchen appliancesAir Solutions
Household Laundry
Management
SolutionsSegment revenue41,127,956,870.2220,275,302,895.2029,234,848,611.9729,736,595,881.54Including: external revenue41,022,856,775.6420,228,275,282.9929,074,828,944.3029,601,746,705.79Inter-segment revenue105,100,094.5847,027,612.21160,019,667.67134,849,175.75Total segment operating cost37,588,892,334.6218,475,056,113.7627,541,697,922.1626,646,494,850.28Segment operating profit3,539,064,535.601,800,246,781.441,693,150,689.813,090,101,031.26Total segment assets52,005,694,950.5722,654,775,328.5130,996,742,377.9432,009,317,554.55Total segment liabilities69,940,655,493.3113,848,570,895.0025,758,512,565.5017,757,478,070.87
Section X Financial Report
(continued)Segment information
Household WaterSolutionsOther business
Inter-segment
eliminationsTotalSegment revenue8,106,193,795.0550,267,171,923.80–43,125,520,856.77135,622,549,121.01Including: external revenue8,011,173,935.807,683,667,476.49—135,622,549,121.01Inter-segment revenue95,019,859.2542,583,504,447.31–43,125,520,856.77—Total segment operating cost6,910,808,149.2250,202,231,531.52–43,170,446,222.86124,194,734,678.70Segment operating profit1,195,385,645.8364,940,392.2844,925,366.0911,427,814,442.31Total segment assets7,476,419,468.8774,889,956,696.38–91,386,277,258.29128,646,629,118.53Total segment liabilities5,907,219,158.1368,163,639,745.66–91,284,540,418.29110,091,535,510.18Segment information for the corresponding period of last year
Household Food Storage and
Cooking SolutionsSegment information
Refrigerator/
freezersKitchen appliancesAir Solutions
Household LaundryManagementSolutionsSegment revenue40,411,341,041.1020,205,647,157.9928,176,850,151.1728,314,129,699.92Including: external revenue40,327,782,569.0520,187,056,144.9928,061,662,346.1528,248,158,381.79Inter-segment revenue83,558,472.0518,591,013.00115,187,805.0265,971,318.13Total segment operating cost37,449,253,888.2218,548,446,710.2426,950,740,655.3925,757,441,566.16Segment operating profit2,962,087,152.881,657,200,447.751,226,109,495.782,556,688,133.76Total segment assets46,386,636,541.8921,182,487,836.5023,095,120,351.5931,083,146,812.59Total segment liabilities61,738,020,657.7512,928,214,554.9822,560,023,701.2218,456,071,567.13
(continued)
Segment information
Household WaterSolutionsOther business
Inter-segmenteliminationsTotalSegment revenue7,606,598,837.8744,868,417,123.51–37,954,388,099.51131,628,595,912.05Including: external revenue7,547,568,985.517,256,367,484.56— 131,628,595,912.05Inter-segment revenue59,029,852.3637,612,049,638.95–37,954,388,099.51—Total segment operating cost6,601,452,862.3044,823,364,609.07–38,029,454,448.75122,101,245,842.63Segment operating profit1,005,145,975.5745,052,514.4475,066,349.249,527,350,069.42Total segment assets6,974,086,027.3772,345,944,832.66–74,983,515,615.16126,083,906,787.44Total segment liabilities5,952,269,383.2967,056,680,238.32–74,838,436,273.16113,852,843,829.53
Section X Financial Report
(2) Geographical information
“Other countries/regions” in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for thepurpose of information disclosure.a. External transaction revenue
Items
Amount for thecurrent period
Amount for theprevious periodMainland China64,798,348,696.5763,326,144,956.04Other countries/regions70,824,200,424.4468,302,450,956.01Among which:
America39,079,401,455.2739,133,384,718.31Australia3,224,852,882.972,949,512,878.44South Asia6,541,908,201.635,954,521,760.73Europe14,504,641,098.4713,278,015,975.79Southeast Asia3,491,588,857.323,107,279,065.87Middle East and Africa1,474,675,819.821,162,600,377.18Japan1,826,967,375.511,947,027,593.72Others680,164,733.45770,108,585.97Total135,622,549,121.01131,628,595,912.05b. Total non-current assets
ItemsClosing balanceOpening balanceMainland China22,972,510,062.7222,369,511,589.93Other countries/regions31,488,092,970.7131,152,060,989.07Total54,460,603,033.4353,521,572,579.00Total non-current assets exclude: debt investments, long-term receivable, long-term equityinvestments, other equity instrument investments, other non-current financial assets,goodwill and deferred income tax assets.
Section X Financial Report
XII. 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 towhich the input value is significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market.Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except for
Level 1 inputs.Level 3: Unobservable inputs of related assets or liabilities.At the end of the periodItemsInput used for fair value measurement
Quotes in anactive market
(Level 1)
Importantobservableinput (Level 2)
Importantunobservableinput (Level 3)TotalContinuously measured at fair
valueFinancial assets held for trading364,456,854.49605,849,428.5796,263,475.951,066,569,759.01Including: Bank wealth management
products 605,849,428.57 605,849,428.57Investment fund271,718,384.49 271,718,384.49Investment in equityinstruments92,738,470.00 96,263,475.95189,001,945.95Derivative financial assets 86,713,582.93 86,713,582.93Including: Forward foreign exchange
contract 79,226,226.47 79,226,226.47Forward commodity
contracts 7,487,356.46 7,487,356.46Other equity instruments20,872,520.46 6,260,941,846.076,281,814,366.53Including: Equity instruments measured
at fair value through other comprehensive income20,872,520.46 6,260,941,846.076,281,814,366.53Derivative financial liabilities 191,751,522.44 191,751,522.44Including: Forward foreign exchange
contract 191,751,522.44 191,751,522.44
Section X Financial Report
At the beginning of the period
ItemsInput used for fair value measurement
Quotes in anactive market
(Level 1)
Importantobservableinput (Level 2)
Importantunobservableinput (Level 3)TotalContinuously measured at fair
valueFinancial assets held for trading369,591,046.58487,936,101.8196,436,395.44953,963,543.83Including: Bank wealth management
products487,936,101.81487,936,101.81Investment fund222,803,002.38222,803,002.38Investment in equity
instruments146,788,044.2096,436,395.44243,224,439.64Derivative financial assets 67,565,829.44 67,565,829.44Including: Forward foreign exchange
contract 67,565,829.44 67,565,829.44Other equity instruments19,988,760.346,383,706,194.436,403,694,954.77Including: Equity instruments measured
at fair value through other
comprehensive income19,988,760.34 6,383,706,194.436,403,694,954.77Derivative financial liabilities 168,625,004.97 168,625,004.97Including: Forward foreign exchange
contract 166,573,028.22 166,573,028.22
Forward commodity contract 2,051,976.75 2,051,976.75
For financial instruments traded in an active market, the Company determines its fair value basedon its quotes in an active market; for financial instruments not traded in an active market, theCompany uses valuation techniques to determine its fair value.
Section X Financial Report
2. The basis for determining the fair value of the continual Level 2 fair value
measurement itemsItems
Fair value at theend of the periodValuation techniquesFinancial assets held for tradingIncluding: Bank wealth management
products
605,849,428.57Discounted cash flowDerivative financial assetsIncluding: Forward foreign exchange
contract
79,226,226.47Discounted cash flowForward commodity contracts7,487,356.46Discounted cash flowDerivative financial liabilitiesIncluding: Forward foreign exchange
contract
191,751,522.44Discounted cash flow
3. Continual Level 3 fair value measurement major items, the valuation techniques
adopted and information of important parametersItems
Fair value at theend of the periodValuation technique
Significantunobservable inputRange
Sensitivity of fair value tothe inputOther equity instrumentsIncluding:
1. COSMO IoT
TechnologyCo., LTD.(聯
)
2,817,408,000.00Market approach1. Average P/S
multiple of peers
2. Discount for lack
of marketability
1. 2.93 to 2.99
2. 27.46% to
29.46%
1. 1% increase (decrease) in
average P/S multiple ofthe ComparableCompanies would resultin increase (decrease) infair value by RMB21.27million.
2. 1% increase (decrease) in
the lack of marketabilitywould result in decrease(increase) in fair value byRMB29.35 million.
2. SINOPEC Fuel
Oil SalesCorporationLimited ()
1,860,840,776.61Market approach1. Average P/E
multiple of peers
2. Discount for lack
of marketability
1. 38.24 to
39.01
2. 24.55% to
26.55%
1. 1% increase (decrease) in
average P/E multiple ofthe ComparableCompanies would resultin increase (decrease) infair value by RMB18.6082million.
2. 1% increase (decrease) in
the lack of marketabilitywould result in decrease(increase) in fair value byRMB24.9951 million.
Section X Financial Report
4. Financial instruments not measured at fair value
Financial assets and financial liabilities not measured at fair value include: monetary funds, billsreceivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,etc. The difference between the book value and the fair value of financial assets and financialliabilities not measured at fair value at the end of the period is small.XIII. RELATED PARTIES AND THEIR CONNECTED TRANSACTIONS(I) Explanation for basis of identifying related partyAccording to Accounting Standards for Business Enterprises No. 36—Related PartyDisclosures, parties are considered to be related if one party has the ability to control or jointlycontrol the other party or exercise significant influence over the other party. Parties (two or morethan two) are also considered to be related if they are subject to common control, joint controlor significant influence from another party.According to Management Practices for Information Disclosure of Listed Company (ChinaSecurities Regulatory Commission Order No. 182), related legal entity or individual will beidentified as related parties in certain occasions.(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the
CompanyName
Type ofenterpriseRegistered place
RegisteredcapitalLegalrepresentative
Relationshipswith the Company
Interest in theCompany
Voting rightsto theCompanyHaier GroupCorporation
Collectiveownershipcompany
Qingdao High-tech
Zone Haier Park
311,180,000Zhou YunjieParent Company11.36%11.36%Haier COSMO Co.,
Ltd. (海爾卡奧斯股份有限公司)
Joint-stockcompany
Qingdao High-tech
Zone Haier Park
404,500,000Zhou YunjieSubsidiary of
ParentCompany
13.34%13.34%
HCH (HK) Investment
Management Co.,Limited
Privatecompany
Hong KongHKD10,000/Parties acting in
concert ofParentCompany
5.71%5.71%
Qingdao Haier Venture
& InvestmentInformation Co.,Ltd.
Company withlimitedliability
Qingdao Free TradeZone
923,000,000Zhou YunjieParties acting in
concert ofParentCompany
1.83%1.83%
Qingdao Haichuangzhi
ManagementConsultingEnterprise (LimitedPartnership)
Limitedpartnershipcompany
Qingdao High-tech
Zone Haier Park
1,616,120,000/Parties acting in
concert ofParentCompany
1.42%1.42%
Haier International
Co., Limited
Privatecompany
Hong KongHKD 2/Parties acting in
concert ofParentCompany
0.62%0.62%
Section X Financial Report
2. Subsidiaries of the Company
√ Applicable Not Applicable
The details of the subsidiaries of the Company are detailed in Note X.1. Interests insubsidiaries.
3. Joint ventures and associates of the Company
√ Applicable Not Applicable
The details of important joint ventures and associates of the Company are detailed in NoteVII.12 and Note X.3.
4. Connected companies with no relationship of control
NameRelationship with the CompanyChongqing Zhonglian Energy Technology Co.,Ltd.
Subsidiary of Haier GroupChongqing Haier Electrical Appliances Sales Co.,
Ltd.
Subsidiary of Haier GroupHongkong Gooday Supply Chain ManagementLimited
Subsidiary of Haier GroupShanghai Cotai Supply Chain Management Co.,
Ltd.
Subsidiary of Haier GroupGooday Supply Chain Technologies Co., Ltd.Subsidiary of Haier GroupGooday (Qingdao) International Supply Chain
Service Co., Ltd.
Subsidiary of Haier GroupQingdao Goodaymart Supply Chains Co., Ltd.Subsidiary of Haier GroupQingdao Manniq Intelligent Technology Co., Ltd.Subsidiary of Haier GroupQingdao Oasis Technology Co., Ltd.Subsidiary of Haier GroupQingdao Haironghui Commercial Factoring Co.,Ltd.(青島海融匯商業保理有限公司)Subsidiary of Haier GroupQingdao Haier Parts Procurement Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Trading Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Travel Agency Co.,Ltd.
Subsidiary of Haier GroupQingdao Haier Industrial Development Co., LtdSubsidiary of Haier GroupCOSMO Moulds (Qingdao) Co., Ltd. (卡奧斯模具（青島）有限公司)
Subsidiary of Haier GroupHefei Ririshun Logistics Co., Ltd. (合肥日日順物流有限公司)
Subsidiary of Haier GroupQingdao Haier New Materials R & D Co., Ltd.Associate of subsidiary of Haier
GroupHPZ LimitedAssociateHNR (Private) Company LimitedAssociateWolong Electric (Jinan) Motor Co., Ltd.Associate
Section X Financial Report
NameRelationship with the CompanyMitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd.
AssociateControladora Mabe S.A.de C.V.AssociateQingdao HBIS Composite New Material Co.,Ltd.
Subsidiary of associateHefei Hegang New Material Technology Co.,Ltd.
Subsidiary of associate(III) Related-party transactions
1. Details of the Company’s procurement of goods and services from related parties are as
follows:
√ Applicable Not Applicable
Unit and Currency: RMBRelated parties
Amount for thecurrent period
Amount for theprevious periodControladora Mabe, S.A.de C.V.7,687,926,090.905,353,771,339.60Qingdao Haier Parts Procurement Co., Ltd.3,059,386,453.563,608,931,862.86Gooday Supply Chain Technologies Co., Ltd.1,972,219,635.411,635,118,057.32HNR (Private) Company Limited1,729,101,867.081,642,887,548.69Chongqing Haier Electrical Appliances Sales
Co., Ltd.847,550,618.71623,669,202.51Shanghai Cotai Supply Chain ManagementCo., Ltd.712,737,566.32710,764,662.41Other related parties3,544,298,655.852,837,630,921.90Total19,553,220,887.8316,412,773,595.29
2. Details of the Company’s sales of goods to related parties are as follows:
√ Applicable Not Applicable
Unit and Currency: RMBRelated parties
Amount for thecurrent period
Amount for theprevious periodControladora Mabe S.A.de C.V.723,506,543.36641,206,803.16HNR (Private) Company Limited331,070,763.13910,139,552.47Qingdao Haier International Trading Co., Ltd.283,889,750.78372,641,570.39Qingdao Haier Parts Procurement Co., Ltd.238,417,939.07278,395,066.75Other related parties371,847,585.92372,284,369.32Total1,948,732,582.262,574,667,362.09
Section X Financial Report
3. Amount of unsettled items of related parties
Items and name of customers
ClosingBalance
OpeningBalanceBills receivable:
Qingdao Haier Parts Procurement Co., Ltd.196,664,472.63Chongqing Haier Electrical Appliances SalesCo., Ltd.100,520,000.00Qingdao Haier International Trading Co., Ltd.178,000,000.00Other related parties19,578,830.3320,640,531.66Accounts receivable:
HNR (Private) Company Limited680,823,286.601,191,001,767.66Qingdao Oasis Technology Co., Ltd.98,743,874.06116,266,117.23Mitsubishi Heavy Industry Haier (Qingdao) AirConditioner Co., Ltd.59,317,651.955,467,727.75HPZ Limited41,867,299.4137,410,646.01Qingdao Haier International Trading Co., Ltd38,693,364.5513,320,054.89Other related parties199,631,845.53365,341,125.71Prepayments:
Qingdao Haier International Trade Co., Ltd.7,737,990.208,594,602.74COSMO Moulds (Qingdao) Co., Ltd. (卡奧斯模具（青島）有限公司)6,270,889.381,380,353.31HNR (Private) Company Limited4,620,420.81Hefei Hegang New Material Technology Co., Ltd.4,471,168.776,241,957.96Qingdao Haier Parts Procurement Co., Ltd.2,946,575.372,956,547.28Qingdao Haier International Travel Agency Co.,Ltd.2,224,783.213,115,793.21Qingdao Haier Industrial Development Co., Ltd1,878,840.252,501,673.89Qingdao HBIS Composite New Material Co., Ltd.1,721,562.191,443,538.08Other related parties13,908,017.6514,918,099.11Other receivables:
Qingdao Haier International Trade Co., Ltd.56,190,891.197,951,101.19Qingdao Manniq Intelligent Technology Co., Ltd.32,561,213.58318,694.51Controladora Mabe, S.A.de C.V.20,644,871.1114,824,407.91Wuhan Haizhi Real Estate Development Co., Ltd.
(武漢海智房地產開發有限公司)5,712,459.003,200,000.00Other related parties28,178,485.9515,233,663.55Bills payable:
Qingdao Haier New Materials R & D Co., Ltd.330,259,945.68390,891,579.36Wolong Electric (Jinan) Motor Co., Ltd.43,179,863.0630,416,664.00Qingdao HBIS Composite New Material Co., Ltd.21,325,751.0627,781,266.64Hefei Hegang New Material Technology Co., Ltd.15,595,879.6921,795,818.85
Section X Financial Report
Items and name of customers
ClosingBalance
OpeningBalanceAccounts payable:
Controladora Mabe, S.A.de C.V.1,472,686,933.561,017,676,511.30Qingdao Haironghui Commercial FactoringCo., Ltd. (青島海融匯商業保理有限公司)417,697,006.32367,964,948.49Qingdao Haier Parts Procurement Co., Ltd.252,154,899.21247,164,539.11HNR (Private) Company Limited250,069,188.30225,492,094.68Qingdao Haier International Trading Co., Ltd.212,308,791.23197,267,091.22Hong Kong Gooday Supply Chain TechnologiesCo., Ltd.124,801,868.0274,153,281.02Other related parties681,423,587.12703,667,318.78Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd.38,652,174.6250,686,531.85Chongqing Zhonglian Energy Technology
Co., Ltd.17,210,127.9217,217,306.92Mitsubishi Heavy Industry Haier (Qingdao) AirConditioner Co., Ltd.6,818,411.004,119,857.00Other related parties10,693,897.685,981,325.89Dividends payable:
Haier COSMO Co., Ltd. (海爾卡奧斯股份有限
公司)1,008,596,736.32Haier Group Corporation859,493,731.30Qingdao Haier Venture & Investment Information
Co., Ltd. (青島海爾創業投資咨詢)138,027,698.85Qingdao Haichuangzhi Management Consulting
Enterprise (Limited Partnership) (青島海創智管
理咨詢企業 (有限合伙))107,208,112.69Other payables:
Gooday Supply Chain Technologies Co., Ltd.933,977,156.37897,015,102.10Shanghai Cotai Supply Chain Management
Co., Ltd.160,487,139.16129,653,209.93Gooday (Qingdao) International Supply Chain
Service Co., Ltd.96,558,428.9764,467,694.39Qingdao Goodaymart Supply Chains Co., Ltd.50,667,954.5845,292,270.93Qingdao Manniq Intelligent Technology
Co., Ltd.48,555,926.9114,038,277.93Other related parties283,063,012.99347,492,658.45
Section X Financial Report
4. Other related-party transactions
(1) On 30 March 2023, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services FrameworkAgreement, and the “resolution on the renewal of the Financial Services FrameworkAgreement between Haier Smart Home Co., Ltd. and Haier Group Corporation andthe estimated amount of connected transaction” was considered and passed at thegeneral meeting. The Financial Services Framework Agreement became effective fromthe passing of the resolution.Various current balances of the Company and the Finance Company are as follows:
ItemsClosing BalanceOpening BalanceMonetary funds deposited at the FinanceCompany21,057,085,069.5026,276,742,534.50Debt investments deposited at the FinanceCompany12,827,500,000.007,377,500,000.00Interest receivable from the Finance Company872,330,240.02688,144,130.70Bills issued8,548,324,901.068,909,470,662.88Foreign exchange derivatives of the FinanceCompany2,059,045.00–10,143,691.03Various balances of the Company and the Finance Company are as follows:
Items
Amount for the
current period
Amount for theprevious periodInterest income of the Finance Company439,523,818.78353,842,566.54Interest expense of the Finance Company413,964.86Service fee of the Finance Company4,425,427.957,917,428.19Spot foreign exchange business (foreignexchange settlement and sale)2,455,313,888.203,287,657,392.00
(2) The lease expense of the Company and its subsidiaries for production and operation
leased from related parties for the current period was RMB57 million (amount for thecorresponding period: RMB49 million).
(3) Haier Group Corporation provided joint liability guarantee for certain bills payable of
the subsidiaries of the Company with the guaranteed amount of RMB2,316 million atthe end of the period (amount at the beginning of the period: RMB2,639 million).
Section X Financial Report
(IV) Pricing Policy
1. Related-party Sales
Some related parties purchase components through the independent procurement platformof the Company, purchase electrical appliances for sales from the Company, and receiveafter-sales services, R&D service, housing rental and other business provided by thecompany due to their business needs. In April 2022, according to the implementation ofconnected transactions in the early stage and the relevant listing requirements in HongKong, the Company and Haier Group Corporation revised and signed the Product andMaterials Sales Framework Agreement, the Service Provision Framework Agreement and theProperty Leasing Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thatboth parties should agree on the price which is not less favourable than those provided bythe Company to the Independent Third Parties on arm’s length to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement commencedfrom 1 January 2023 to 31 December 2025, which can be renewed for another three yearsupon expire.
2. Related-party Procurement
In addition to independent procurement platform, the Company entrusted Haier GroupCorporation and its subsidiaries for procurements of part of raw materials. Moreover, theCompany entrusted Haier Group Corporation and its subsidiaries to provide the Companywith logistics and distribution, energy and power, basic research and testing, equipmentleasing, house leasing and maintenance, greening and cleaning, gift procurement, design,consulting, various ticket booking and other services. In April 2022, according to theimplementation of connected transactions in the early stage and the relevant listingrequirements in Hong Kong, the Company and Haier Group Corporation revised and signedthe Product and Materials Sales Framework Agreement, the Service Provision FrameworkAgreement and the Property Leasing Framework Agreement on the basis of the originalexecution contract, which agreed on the financial connected transactions. The pricingprinciple included that both parties should agree on the price which is not less favourablethan those provided by the Company to the Independent Third Parties on arm’s length toensure the fairness and reasonableness of connected transactions. The valid term of theagreement commenced from 1 January 2023 to 31 December 2025, which can berenewed for another three years upon expire.
Section X Financial Report
3. Financial aspect
Some of the financial services such as deposit and loan service, discounting service andforeign exchange derivatives needed by the Company are provided by Haier GroupCorporation, its subsidiaries and other companies. According to the Financial ServiceAgreement entered among the Company, Haier Group Corporation and other parties, theprice of financial services is determined by the principle of not less favourable than marketvalue fair. The Company is entitled to decide whether to keep cooperation relationship withthem with the knowledge of the price prevailing in the market and in combination with itsown interests. While performing the agreement, the Company could also require otherfinancial service institutions to provide related financial services basing on actual situation.In order to meet the Company’s demands such as the avoidance of foreign exchangefluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide someforeign exchange derivative business after comparing with comparable companies. TheCompany will uphold the safe and sound, appropriate and reasonable principle, underwhich all foreign exchange capital business shall have a normal and reasonable businessbackground to eliminate speculative operation. At the same time, the Company hasspecified the examination and permission rights, management positions and responsibilitiesat all levels for its foreign exchange capital business to eradicate the risks of operation bypersons and improved its response speed to risks on the premise that the risks areeffectively controlled. In March 2023, the Company and Haier Group Corporation renewedthe Financial Services Framework Agreement, which agreed on the financial connectedtransactions. The pricing principle included the deposit interest rate not lower than themaximum interest rate of major banks listed and the loan interest rate not less favourablethan the market price to ensure the fairness and reasonableness of connected transactions.The valid term of the agreement lasts until 31 December 2026, which can be renewed foranother three years upon expire.
4. Others
The Company signed the Intellectual Property Licensing Framework Agreement with HaierGroup Corporation in November 2020. According to the agreement, Haier Group hasagreed to grant or procure its subsidiaries and contact persons to grant the license to theCompany at nil consideration to use all its intellectual property rights, including but notlimited to trademarks, patents, copyrights and logos for the products, packaging, servicesand business introduction documents of the Company. The date of the Intellectual PropertyLicensing Framework Agreement shall be permanently effective from the listing date. Whensuch specific intellectual property rights expire and are not renewed by Haier Group, ourright to use certain intellectual property rights under the Intellectual Property LicensingFramework Agreement will terminate.
Section X Financial Report
XIV. SHARE-BASED PAYMENTS
1. Overall of share-based payments
√ Applicable Not Applicable
Quantity Unit: sharesAmount Unit and Currency: RMB
Granted during the
current period
Exercised during thecurrent period
Vested during thecurrent period
Lapsed during thecurrent periodCategories of participantsNumberAmountNumberAmountNumberAmountNumberAmountDirectors and senior management1,190,523.008,352,377.35Staff4,258,615.00108,989,967.1439,366,889.00309,703,219.45Total4,258,615.00108,989,967.1440,557,412.00318,055,596.80Outstanding share options or other equity instruments at the end of the period
√ Applicable Not Applicable
Outstanding share options at the end of the periodOutstanding other equity instruments at the end of the periodCategories of participantsExercise price
The remainingcontractual termExercise price
The remainingcontractual term2021 First OptionRMB25.63 per shareSeptember 2021—September20262021 Second OptionRMB25.63 per shareDecember 2021—December20262022 OptionRMB23.86 per shareJune 2022— June 20262022 Stock Ownership Plan AN/AAugust 2022-August 20242022 Stock Ownership Plan HN/AAugust 2022-August 20242023 Stock Ownership Plan AN/AJuly 2023— July 20252023 Stock Ownership Plan HN/AJuly 2023— July 20252021 Restricted SharesN/AAugust 2021— July 20242022 Restricted SharesN/AJuly 2022— June 20252023 Restricted SharesN/AJuly 2023— June 20262024 Restricted SharesN/AJune 2024— May 2027
Section X Financial Report
2. Equity-settled share-based payments
√ Applicable Not Applicable
Unit and Currency: RMBMethod of determining the fair value of equityinstrument on the date of grant
Closing price of share on the date of grant,
Black-Scholes ModelImportant parameters of the fair value ofequity instrument on the date of grant
Historical volatility rate, risk-free rate, yield
rateBasis for determining the number ofexercisable equity instruments
The best estimate of the managementReason for significant differences between
current and prior period estimates
NilAccumulated amount of equity-settled share-
based payment included in the capitalreserve
RMB1.371 billion
3. Cash-settled share-based payments
Applicable √ Not Applicable
4. Share-based payments for the current period
√ Applicable Not Applicable
Unit and Currency: RMB
Categories of participants
Equity-settledshare-basedpayment
Cash-settledshare-basedpaymentDirector, Senior management30,742,934.79Staff170,662,640.18Total201,405,574.97
5. Modification and termination of share-based payments
Applicable √ Not Applicable
Section X Financial Report
XV. CONTINGENCIES
√ Applicable Not Applicable
As of 27 August 2024, the Company has no significant contingencies that need to be disclosed.
XVI. EVENTS AFTER THE BALANCE SHEET DATEAs of 27 August 2024, the Company has no significant events after the balance sheet date that needto be disclosed.XVII. RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assetsItemsClosing Balance
Financial assetsmeasured at fairvalue andchanges of whichincluded incurrent profit and
loss
Measured atamortized cost
Financial assetsmeasured at fairvalue andchanges of whichincluded in othercomprehensive
incomeTotalMonetary funds 54,705,626,157.44 54,705,626,157.44Financial assets held for trading1,066,569,759.01 1,066,569,759.01Derivative financial assets 86,713,582.9386,713,582.93Bills receivable 7,147,471,192.39 7,147,471,192.39Accounts receivable 23,517,845,844.84 23,517,845,844.84Other receivables 2,731,270,164.67 2,731,270,164.67Other current assets 1,546,781,584.31 1,546,781,584.31Debt investments 14,477,621,780.97 14,477,621,780.97Long-term receivables 351,899,806.17 351,899,806.17Other equity instruments 6,281,814,366.536,281,814,366.53
Section X Financial Report
Financial assets (continued)
ItemsOpening Balance
Financial assetsmeasured at fairvalue andchanges of whichincluded incurrent profit and
loss
Measured atamortized cost
Financial assetsmeasured at fairvalue andchanges of whichincluded in othercomprehensive
incomeTotalMonetary funds 54,486,452,841.14 54,486,452,841.14Financial assets held for trading953,963,543.83 953,963,543.83Derivative financial assets 67,565,829.4467,565,829.44Bills receivable 8,621,434,831.39 8,621,434,831.39Accounts receivable 20,268,099,436.43 20,268,099,436.43Other receivables 2,649,558,985.05 2,649,558,985.05Other current assets 1,530,274,566.66 1,530,274,566.66Debt investments 8,841,233,078.66 8,841,233,078.66Long-term receivables 350,409,496.85 350,409,496.85Other equity instruments 6,403,694,954.776,403,694,954.77Financial liabilities
ItemsClosing Balance
Financialliabilitiesmeasured at fair
value
Financialliabilitiesmeasured atamortised costTotalShort-term borrowings 10,333,169,856.5410,333,169,856.54Derivative financial liabilities191,751,522.44 191,751,522.44Bills payable 23,389,001,752.3523,389,001,752.35Accounts payable 47,200,496,446.9347,200,496,446.93Other payables 27,248,243,510.9027,248,243,510.90Non-current liabilities due in one year 1,610,273,174.781,610,273,174.78Long-term borrowings 18,123,651,118.1918,123,651,118.19Long-term payables 51,160,960.1651,160,960.16
Section X Financial Report
Financial liabilities (continued)ItemsOpening Balance
Financialliabilitiesmeasured at fair
value
Financialliabilitiesmeasured atamortised costTotalShort-term borrowings 10,318,351,841.8810,318,351,841.88Derivative financial liabilities168,625,004.97 168,625,004.97Bills payable 22,215,726,721.6222,215,726,721.62Accounts payable 47,061,789,173.6247,061,789,173.62Other payables 19,181,569,184.8319,181,569,184.83Non-current liabilities due in one year 146,867,809.53146,867,809.53Long-term borrowings 17,936,302,925.7717,936,302,925.77Long-term payables 57,113,422.7857,113,422.78Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company managesand monitors these risk exposures to ensure the above risks are well under control.
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accountsreceivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks.The interest receivables are mainly the accrued interests from fixed deposits which aredeposited in the above banks. The Group does not believe there is any significant creditrisk due to defaults of its counterparties which would cause any significant loss. (2)Accounts receivable and bills receivable: The Company only trades with approved andreputable third parties. All customers who are traded by credit are subject to creditassessment according to the policies of the Company, and the payment terms shall bedetermined on a reasonable basis. The Company monitors the balances of accountsreceivable on an ongoing basis and purchases credit insurance for receivables of large-amount credit customers in order to ensure the Company is free from material bad debtsrisks. (3) Other receivables of the Company mainly include export tax refund, borrowingsand contingency provision. The Company strengthened its management and continuousmonitoring 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 iscontrollable and will be further reduced.
Section X Financial Report
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfillingobligations associated with financial liabilities. To control such risk, the Company utilizes variousfinancing methods such as notes settlement and bank loans to strive for a balance betweensustainable and flexible financing. It also has obtained bank credit facilities from severalcommercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, SouthAsia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and othercurrencies.The Company’s overseas assets and liabilities denominated in foreign currencies as well astransactions to be settled in foreign currencies expose the Company to fluctuations in exchangerates. The Company’s finance department is responsible for monitoring the size of transactions inforeign currencies and assets and liabilities denominated in foreign currencies to minimize the riskof exposure to fluctuation in exchange rate; the Company resorts the way of signing forwardforeign exchange contracts to avoid the risk of exchange fluctuation.
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long— and short—term bank loansand bonds payables which are interest-bearing debts. Financial liabilities with floating interestrates expose the Company to cash flow interest rate risk, while financial liabilities with fixedinterest rates expose the Company to fair value interest rate risk. The Group determines therelative proportion of fixed-interest rate and floating interest rate contracts in light of theprevailing market conditions.XVIII. OTHER SIGNIFICANT EVENTS
√ Applicable Not Applicable
The Company intends to acquire, through its wholly-owned subsidiary, the commercial refrigerationbusiness of Carrier Global Corporation, a company listed on the New York Stock Exchange of theUnited States of America, at a cash consideration of approximately US$640 million (equivalent toapproximately RMB4,559 million, with the final consideration amount subject to adjustments atCompletion). The transaction has been considered and approved by the President’s Office meeting ofthe Company. While it involves an overseas acquisition, it remains conditional to the filing or approvalprocedures with relevant domestic and overseas government authorities.As of 27 August 2024, the Company has no other significant events that need to be disclosed.
Section X Financial Report
XIX.NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENTCOMPANY
1. Accounts receivable
Aging
ClosingBalance
OpeningBalanceWithin 1 year629,729,877.07715,238,098.86
–2 years639,447,810.65378,071,982.79
–3 years185,502,552.24532,467,268.93Over 3 years405,307,733.72Accounts receivable balance1,859,987,973.681,625,777,350.58Allowance for bad debts251.55251.55Accounts receivable, net1,859,987,722.131,625,777,099.03Changes in bad debt provision for accounts receivable in the current period:
√ Applicable Not Applicable
Items
OpeningBalance
Increase for the current
period
Decrease for the current
period
ClosingBalanceProvision forthe currentperiod
OtherincreaseReversal
Write-off and
othermovementAllowance for baddebts251.55 251.55
2. Other receivables
√ Applicable Not Applicable
Unit and Currency: RMBItemsClosing BalanceOpening BalanceInterest receivable141,536,597.40117,439,655.79Dividend receivable872,819,744.23570,000,000.00Other receivables20,876,318,830.8622,962,538,160.78Total21,890,675,172.4923,649,977,816.57
Section X Financial Report
Interest receivableAgingClosing BalanceOpening BalanceWithin 1 year141,536,597.40117,439,655.79More than 1 year
Total141,536,597.40117,439,655.79Dividend receivable
AgingClosing BalanceOpening BalanceWithin 1 year872,819,744.23570,000,000.00More than 1 year
Total872,819,744.23570,000,000.00Other receivables The disclosure of other receivables by aging is as follows:
AgingClosing BalanceOpening BalanceWithin 1 year10,232,748,179.3013,256,949,623.31More than 1 year10,646,935,534.459,708,953,420.36Other receivables balance20,879,683,713.7522,965,903,043.67Allowance for bad debts3,364,882.893,364,882.89Other receivables, net20,876,318,830.8622,962,538,160.78 Changes in bad debt provision for other receivables in the current period:
Increase for the current
period
Decrease for the current
periodItems
OpeningBalance
Provision forthe currentperiod
OtherincreaseReversal
Write-off and
othermovement
ClosingBalanceAllowance for baddebts3,364,882.893,364,882.89
Section X Financial Report
3. Long-term equity investment
√ Applicable Not Applicable
(1) Details of long-term equity investments:
Closing BalanceOpening BalanceItemsBook balance
Provision forimpairmentBook balance
Provision forimpairmentLong-term equity investmentIncluding: Long-term equity investments in
subsidiaries53,255,723,686.317,100,000.0052,823,723,686.317,100,000.00Long-term equity investments inassociates3,293,758,901.51109,300,000.003,121,372,319.75109,300,000.00Total56,549,482,587.82116,400,000.0055,945,096,006.06116,400,000.00
(2) Long-term equity investments to subsidiaries
Name of investeeOpening Balance
Increase/decrease for
the currentperiodClosing Balance
Impairmentprovisions atthe end of the
periodI. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd.9,500,000.00 9,500,000.00Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd34,735,489.79 34,735,489.79Qingdao Haier Refrigerator Co., Ltd.402,667,504.64 402,667,504.64Qingdao Haier Special Refrigerator Co., Ltd.426,736,418.99 426,736,418.99Qingdao Haier Information Plastic DevelopmentCo., Ltd.102,888,407.30 102,888,407.30Dalian Haier Precision Products Co., Ltd.41,836,159.33 41,836,159.33Hefei Haier Plastic Co., Ltd.72,350,283.21 72,350,283.21Qingdao Haier Technology Co., Ltd.16,817,162.03 16,817,162.03Qingdao Household Appliance Technology and
Equipment Research Institute66,778,810.80 66,778,810.80Qingdao Meier Plastic Powder Co., Ltd.24,327,257.77 24,327,257.77Chongqing Haier Precision Plastic Co., Ltd.47,811,283.24 47,811,283.24Qingdao Haier Electronic Plastic Co., Ltd.69,200,000.00 69,200,000.00Dalian Haier Refrigerator Co., Ltd.138,600,000.00 138,600,000.00Dalian Haier Air-conditioning Co., Ltd.99,000,000.00 99,000,000.00Hefei Haier Air-conditioning Co., Limited79,403,123.85 79,403,123.85Qingdao Haier Refrigerator (International) Co.,
Ltd.238,758,240.85 238,758,240.85Qingdao Haier Air-Conditioner Electronics Co.,
Ltd.1,131,107,944.51 1,131,107,944.51Qingdao Haier Air Conditioner Gen Corp., Ltd.220,636,306.02 220,636,306.02Qingdao Haier Special Freezer Co., Ltd.471,530,562.76 471,530,562.76Qingdao Haier Dishwasher Co., Ltd.206,594,292.82 206,594,292.82Wuhan Haier Freezer Co., Ltd.47,310,000.00 47,310,000.00Wuhan Haier Electronics Holding Co., Ltd.100,715,445.04 100,715,445.04
Section X Financial Report
Name of investeeOpening Balance
Increase/decrease forthe currentperiodClosing Balance
Impairmentprovisions atthe end of theperiodChongqing Haier Air-conditioning Co., Ltd100,000,000.00 100,000,000.00Hefei Haier Refrigerator Co., Ltd.49,000,000.00 49,000,000.00Qingdao Haier Whole Set Home Appliance
Service Co., Ltd.118,000,000.00 118,000,000.00Chongqing Haier Refrigeration Appliance Co.,
Ltd.91,750,000.00 91,750,000.00Haier Shanghai Zhongzhi Fang Chuang Ke
Management Co., Ltd.2,000,000.00 2,000,000.00Qingdao Haier Special Refrigerating Appliance
Co., Ltd.100,000,000.00 100,000,000.00Haier Shareholdings (Hong Kong) Limited29,249,228,284.24432,000,000.0029,681,228,284.24Shenyang Haier Refrigerator Co., Ltd.100,000,000.00 100,000,000.00Foshan Haier Freezer Co., Ltd.100,000,000.00 100,000,000.00Zhengzhou Haier Air-conditioning Co., Ltd.100,000,000.00 100,000,000.00Qingdao Haidayuan Procurement Service Co.,
Ltd.20,000,000.00 20,000,000.00Qingdao Haier Intelligent Technology
Development Co., Ltd.130,000,000.00 130,000,000.00Qingdao Haier Technology Investment Co., Ltd.410,375,635.00 410,375,635.00Qingdao Casarte Smart Living Appliances Co.,
Ltd.10,000,000.00 10,000,000.00Haier Overseas Electric Appliance Co., Ltd.500,000,000.00 500,000,000.00Haier (Shanghai) Electronics Co., Ltd.12,500,000.00 12,500,000.00Haier U+smart Intelligent Technology (Beijing)
Co., Ltd.143,000,000.00 143,000,000.00Haier Electronics Group Co., Ltd.3,979,407,602.61 3,979,407,602.617,100,000.00Flourishing Reach Limited (SPVX)12,751,300,336.02 12,751,300,336.02Qingdao Haidarui Procurement Service Co., Ltd.107,800,000.00 107,800,000.00Qingdao Haier Intelligent Household Appliances
Co., Ltd.326,400,000.00 326,400,000.00Qingdao Haidacheng Procurement Service Co.,
Ltd.100,000,000.00 100,000,000.00Qingdao Haier Quality Inspection Co., Ltd.18,657,135.49 18,657,135.49Qingdao Haier Home AI Industry Innovation
Center Co., Ltd.100,000,000.00 100,000,000.00Haier Zhjia Experience Cloud Ecological
Technology Co., Ltd.100,000,000.00 100,000,000.00Qingdao Ruibo Ecological Environmental
Technology Co., Ltd.55,000,000.00 55,000,000.00Total52,823,723,686.31432,000,000.0053,255,723,686.317,100,000.00
Section X Financial Report
(3) Long-term equity investments to associates
Increase/decrease for the current periodName of investeeOpening Balance
Increased/
decreasedamount for thecurrent period
Investmentincomerecognized underequity methodOthersClosing Balance
Impairmentprovisions at theend of the periodWolong Electric (Jinan)Motor Co., Ltd.172,054,149.9413,535,589.54 185,589,739.48Qingdao Haier SAIF SmartHome IndustryInvestment Center(Limited Partnership)206,764,442.76–21,738.71–16,336,866.36190,405,837.69Bank of Qingdao Co., Ltd.1,267,732,987.4285,705,068.738,246,581.001,361,684,637.15Mitsubishi Heavy Industries
Haier (Qingdao)Air-conditioners Co.,Ltd.663,804,966.3167,634,912.51 731,439,878.82Qingdao Haier Carrier
Refrigeration EquipmentCo., Ltd.412,107,471.533,970,476.69 416,077,948.2221,000,000.00Qingdao Haier Multimedia
Co., Ltd88,300,000.00 88,300,000.0088,300,000.00Qingdao HBIS New Material
Technology Co., Ltd.310,608,301.799,652,558.36 320,260,860.15Total3,121,372,319.75180,476,867.12–8,090,285.363,293,758,901.51109,300,000.00
4. Operating revenue and operating cost
√ Applicable Not Applicable
Unit and Currency: RMBAmount for the current periodAmount for the previous periodItemsRevenueCostRevenueCostPrimary Business209,681,355.52183,992,284.05284,845,756.66247,445,754.14Other Business41,920,259.2439,451,949.4542,560,950.1838,775,114.29Total251,601,614.76223,444,233.50327,406,706.84286,220,868.43
Section X Financial Report
5. Investment income
√ Applicable Not Applicable
Unit and Currency: RMBItems
Amount for the
current period
Amount for theprevious periodInvestment income from long-term equity investmentaccounted for using cost method302,819,744.23228,173,185.59Long-term equity investments income calculated by theequity method180,476,867.12144,556,606.76Income from wealth management products24,878,729.8527,987,900.19Investment income from investment in other equityinstrument during the holding periodTotal508,175,341.20400,717,692.54XX. APPROVAL OF FINANCIAL REPORTThis financial report was approved for publication by the Board of Directors of the Company on 27August 2024.XXI. OTHER SUPPLEMENTARY INFORMATION
1. Basic earnings per share and diluted earnings per share
Amount for the current periodAmount for the previous period
Earnings per share
(RMB)
Earnings per share(RMB)Items
Weightedaveragereturn onnet assets
Basicearningsper share
Dilutedearningsper share
Weightedaveragereturn onnet assets
Basicearningsper share
Dilutedearningsper shareNet profit attributable to ordinary
shareholders of the Company9.67%1.131.129.16%0.960.96Net profit attributable to ordinary
shareholders of the Company
after deduction of non-recurring
profit or loss9.43%1.101.098.80%0.930.92
Section X Financial Report
2. Non-recurring profit or loss
Items
Amount for thecurrent period
Amount for theprevious periodNet profit attributable to ordinary shareholders of the ParentCompany10,420,218,389.228,962,851,469.46Less: non-recurring profit or loss259,713,486.84358,873,704.88Net profit attributable to ordinary shareholders of the ParentCompany after deduction of non-recurring profit or loss10,160,504,902.388,603,977,764.58Breakdown of non-recurring profit and loss for the current periodNon-recurring profit and loss itemsAmounts for the current periodProfit and loss from disposal of non-current assets-24,802,715.11Government subsidies included in current profit or loss,except for government subsidies that are closely relatedto the Company’s normal business operations, to beenjoyed in a fixed amount or fixed quantity based onthe national unified standards373,800,184.84Profit from the excess of the fair value of the identifiable
net assets of investee companies on acquisition of theinvestment over the cost of investment in theCompany’s subsidiaries, associates and joint venturesProfit and loss from fair value changes of financial assets
held for trading, financial liabilities held for trading, aswell as investment gains arising from disposal offinancial assets held for trading, financial liabilities heldfor trading and financial assets held for sale, except theeffective hedging related to the normal operations of theCompany-29,489,597.82Other non-operating income and expenses except theaforementioned items-3,829,918.04Effect of minority equity interest-9,733,324.65Effect of income tax-46,231,142.38Effect of profit from business combination under commoncontrolTotal259,713,486.84
Chairman: LI HuagangBoard approval submission date: 27 August 2024Information of amendmentApplicable √ Not Applicable