Company Code：600690.SH, 690D.DE Short Name：Haier Smart Home
Haier Smart Home Co., Ltd.
2023 Annual Report
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of Haier Smart Home Co., Ltd. (‘the Company’) hereby assure that the contentset out in the annual report is true, accurate and complete, and free from any false record,misleading representation or material omission, and are individually and collectivelyresponsible for the content set out therein.II. All Directors of the Company have attended the board meetings.III. Hexin Certified Public Accountants Limited LLP has issued a standard and unqualified auditreport for the Company.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 annual report is true, accurate and complete.V. Proposal of profit distribution or proposal of capitalizing capital reserves for the reportingperiod resoluted and adopted by the BoardProposal of profit distribution for the reporting period are examined and reviewed by the Board: todeclare a cash dividend of RMB8.04 per 10 shares (tax inclusive) to all shareholders based on the totalnumber of shares held on record date and after deducting the repurchased shares from therepurchase account upon the execution of distribution proposal, with proposed distribution amountingto RMB7,471,472,992.22 (tax inclusive). The proportion of cash distribution is 45.02% of the net profitattributable to shareholder of parent company of the Company for the year. If there is any change inthe total share capital of the Company during the period from the date of this report to the recorddate of the equity distribution, the total distribution amount will be remained unchanged withcorresponding adjustment to the proportion of distribution per share.VI. Disclaimer in respect of forward-looking statements
√ Applicable □ Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report donot constitute the Company’s substantial commitment to investors. Investors are advised to payattention to investment risks.VII. Is there any fund occupation by controlling shareholders and other related parties for non-operational purposes?NoVIII. Is there any provision of external guarantee in violation of the prescribed decision-makingprocedures?No
Important Notice
IX. Are there more than half of the Directors who are unable to guarantee the truthfulness,accuracy and completeness of the annual report disclosed by the Company?NoX. Important Risk WarningsFor the possible risks which the Company may encounter, please refer to the relevant information setout in the section of ‘MANAGEMENT DISCUSSION AND ANALYSIS’ in this report.XI. Others
□ Applicable √ Not Applicable
Contents
LETTER TO SHAREHOLDERS4SECTION I
SECTION II
SECTION III
SECTION IV
SECTION V
SECTION VI
SECTION VIISECTION VIIISECTION IXSECTION X
DEFINITIONSGENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORSMANAGEMENT DISCUSSION AND ANALYSISCORPORATE GOVERNANCEENVIRONMENTAL AND SOCIAL RESPONSIBILITIESSIGNIFICANT EVENTSCHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERSRELEVANT INFORMATION OF PREFERENCE SHARESRELEVANT INFORMATION OF BONDSFINANCIAL REPORT
DOCUMENTSAVAILABLE FORINSPECTION
(I)Financial statements with signatures and seals of the legal representative,
chief accountant and person in charge of accounting department.(II)Original audit report with seals of accounting firm, signatures and seals of
registered accountants.(III)Originals of all documents and announcements of the Company which have
been publicly disclosed on the newspaper designated by China Securities
Regulatory Commission during the reporting period.
Letter to shareholders
The pandemic might seem to be a thing of the past; however slowdown in the property sector took its tollon demand for appliances in China throughout last year. High interest rate and inflation weighed onsentiment as well as residential construction and remodelling activity in the US and Europe, resulting in moreconsumers postponing purchases of appliances. Haier Smart Home made resolute effort to implementpremium brand strategy and accelerated digital transformation to deliver another year of unprecedentedperformance amid these challenges.In 2023, Haier Smart Home achieved a global revenue of RMB261.428 billion, marking a year-on-yeargrowth of 7.3%. Our net profit attributable to shareholders grew 12.8% to RMB16.597 billion; the net profitattributable to shareholders deducting non-recurring items under PRC GAAP amounted to RMB15.824billion, a growth of 13.3% year-on-year.Through the year, our entire management honoured their faith in the founding principle of “RenDanHeYi” (人單合一), as they went above and beyond to achieve quality growth with innovative product despite macrochallenges. On the other hand, our organization has become leaner, more agile, and more efficient withgrowth in sales revenue and profitability. The management also became more aware of what paves waystowards profitable growth and greater return on investments is user-centric and profit-driven digitalization.Haier Smart Home provides over 100 million units of home appliances in more than two hundred countriesand regions in 2023 including major appliances, HVAC products, water heaters, and small appliances.Rather than chasing short-term gains, we prioritise sustainable growth through a relentless focus onstakeholder experiences—be it our distributors, suppliers, consumers, or employees. In the domesticmarket, we nurture strong bonds with distribution partners, I also spend a great deal of time listening to ourdistributors who share our inspiration in building a more competitive ecosystem. We started to evaluate salesnetwork using sell-through figures, to minimize inefficient short-term stock piling. In 2023, the Companygenerated a net cash flow of RMB25.262 billion from operating activities, a growth of 24.7% year-on-year,leveraging digital management system that improves turnovers and enhances transparency in rebate policiesto enhance store performance.This year, we have developed a logistics and inventory management system with suppliers, to make deliveryschedules more predictable and our distributors’ resource allocation more efficient. Leveraging on digitaldelivery and service dispatch systems, we minimised waiting time of logistics service providers, thusimproving service and installation efficiency, all of which aim at elevating logistics and service experienceswhile reducing our selling and administrative expense ratios.We are currently undertaking numerous initiatives on R&D, manufacturing and marketing integration anddigitalised procurement management. We intend to replicate what we have learned from transformingdomestic business to overseas operations soon. I believe our sustainable development will remain intactagainst macro downturn as long as we focus on improving experience and enhancing profitability, whichshould better position us in the competition when the market turns around.Haier Smart Home continued to be named as the Most Admired Company by Fortune Magazine in 2023,and GE Appliances, our subsidiary in the US was once again recognised as the Great Place to Work. Westrive to build a place that inspires young Gen Z to take pride in generating amazing value for our userswithout bureaucracy. At Haier Smart Home, employees are listened to, as we believe their satisfactiongenerates significant operational benefits.
Letter to shareholders
Looking ahead to 2024, I have full confidence in Haier Smart Home’s positioning and growth potential.Let’s take a closer look at our businesses.Strengthening leadershipWe have over 40% domestic market share in refrigerators and washing machines. Future growth depends onproduct innovation. Our built-in refrigerators provide users with a whole new experience by seamlesslyblending in with home décor, catalysing a surge in demand for product upgrades. Additionally, our washer-dryer combo disruptively solves users’ pain points and leads the industry in the US. We have made someprogress in Europe and Southeast Asia, although we are yet to become one of the top three. Significantpotential could be unlocked by leveraging on our global R&D platform with local supply chain.Haier’s dishwasher business is poised to accelerate with growing market penetration, which is only 4% inChina. The complementary nature of dryers and washers has laid down solid foundation for the strongmomentum to continue leveraging on our strengths in washing machines.In the white goods category, Haier Smart Home has established a leading position with technologicalplatform and innovative system. Starting from 2024, Haier will focus on breaking down organisational barriersand integrating our global planning platforms to introduce more competitive products and implement moreefficient market strategy.Gearing upAnother important pillar is HVAC and water heaters. Our residential and commercial air conditioningbusinesses currently rank among second-tier players in domestic market while water heaters have becomedomestic market leader with little overseas exposure. I believe substantial growth potential could beunlocked in these sectors.In the home air conditioner business, in the past two years, we have been making efforts to addressabsence and shortage of components. By establishing a compressor joint venture and developing proprietarycomputer boards, we improved integration efficiency of R&D and manufacturing to increase profitability. Wealso accelerated MRV units and residential air conditioner business with expansions in distribution network.In commercial air conditioners, we continue to draw inspirations from original technologies that are future-proof and pioneer the industry in high-efficiency magnetic levitation air conditioners. Moreover, we were theindustry’s first to adopt air suspension technology, which gives our systems a lifespan of 30 years with littlemaintenance required.We run a highly profitable water appliance business with the largest share in both gas and electric waterheater, and a steadily growing purifiers unit in China. Our next step is to expand into the global arena,particularly in emerging markets with investments committed in HVAC and water heater to grow marketshare and profitability.
Letter to shareholders
Investing in FutureOur Company’s strategic vision is to become the number one choice for smart home solutions. In the IoTera, Haier Smart Home is positioned to capitalise on the integration of smart home appliances andfurnishing on one hand, and small appliances equipped with smart capabilities on the other hand. Ourstrategic approach entails providing integrated design solutions leveraging on San Yi Niao’s platform, whilepromoting smart small appliances supported by brand, ecosystem, and technologies.In 2023, we made the strategic decision to acquire the commercial refrigeration business of Carrier GlobalCorporation, who is also our joint venture partner in China. The food refrigeration and commercial cold chainsectors present opportunities that could be unlocked by technological advancement and digitaltransformation. Carrier’s commercial refrigeration business has a strong customer base, establishedoperational systems, leading engineering expertise, and experienced management team. Following thecompletion of the transaction, we will make further investment to grow cold chain business leveraging onsupply chain advantages in China and Haier’s ‘RenDanHeYi (人單合一)’ management approach.Since Haier Smart Home’s IPO, our dividend payout ratio has increased gradually as planned. In thefinancial year 2023, the cash dividend pay out ratio will reach 45.02%, and a total of RMB1.6 billion wereused to buy back A and H shares. Starting from financial year 2024, we will raise dividend payoutcontinuously, and in for financial years 2025 and 2026, the cash dividend payout ratio will not be less than50%.What we achieved in 2023 was merely a beginning. Our board of directors is committed to enhancingconsumer experience and improving profitability by consolidating existing advantages and unlocking newpotentials while laying down foundations for long term development. The management and employees areconfident that we could take the business to new heights.
Section I Definitions
I.DEFINITIONSUnless otherwise stated in the context, the following terms should have the following meanings in thisreport:
Definition of frequently used termsCSRCChina Securities Regulatory CommissionSSEShanghai Stock ExchangeThe Company,Haier Smart Home
Haier Smart Home Co., Ltd., its original name is ‘Qingdao Haier Co.,Ltd.’, and the original short name is ‘Qingdao Haier’.Four Major SecuritiesNewspapers
China Securities Journal, Shanghai Securities News, Securities Times,Securities DailyHaier Electrics, 1169Haier Electronics Group Co., Ltd. (a company originally listed in Hong
Kong, stock code: 01169.HK), a subsidiary as accounted for in theconsolidated statement of the Company. Haier Electrics has beenprivatized by way of H shares issuance on 23 December 2020 andbecame a wholly owned subsidiary of the Company since then.GE AppliancesHousehold appliances assets and business of General Electric Group,
have currently been owned by the Company.FPAFisher & Paykel Appliances Holdings Limited (Chinese name: 斐雪派克),was established in 1934 and is known as the national appliance brandof New Zealand, the global top-level kitchen appliance brand and thefamous luxury brand of the world. It has products including ventilator,gas stove, oven, dishwasher, microwave oven, built-in freezer, washingmachine, clothes dryer and etc. Its business covers over 50 countries/regions across the world. FPA is a wholly-owned subsidiary of theCompany.CandyCandy Group (Candy S.p.A), is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has been
committed to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has
been prestigious in the global market with users all over the world via its
ten self-owned professional household appliance brands. In January
2019, Candy became a wholly-owned subsidiary of the Company.CMMChina Market Monitor Co., Ltd., as an authoritative market research
institute in Chinese household 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 ofpublishing market report, commercial reference data and on-linedatabase. They create data and analysis on thousands of products andservices around the world.GfkGfk Group, the world’s leading market research company. After a long
period of development and accumulation, Gfk Group’s global marketresearch business covers consumer durables research, consumerresearch, media research, healthcare market research and specialstudies.All View CloudAll View Cloud (AVC) is a big data integrated solution provider to the
smart home field, providing enterprises with big data informationservices, regular data information services and special data services.IECThe International Electrotechnical Commission, founded in 1906, is the
world’s first organization for the preparation and publication ofinternational electrotechnical standardization and is responsible forinternational standardization for electrical engineering and electronicengineering. The goals of the commission include: to effectively meetthe needs of the global market; to ensure that the standards andconformity assessment programs are applied globally in a prioritizedmanner and to the greatest extent; to assess and improve the quality ofproducts and services involved in its standards; to create conditions forthe common use of complicated systems; to improve the effectivenessof the industrialization process; to improve human health and safety,and to protect the environment.IEEEThe Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers,is currently the largest non-profit professional technology society in theworld. It is committed to the development and research of electrical,electronic, computer engineering and science-related fields, and hasnow developed into an international academic organization with greatinfluence in terms of the fields of space, computer, telecommunications,biomedicine, power and consumer electronics.Model of RenDanHeYiThe concept of ‘Achieving win-win via RenDanHeYi’is the guarantee of
Haier’s sustainable operation and the driving force of the Companyfeaturing a self-motivated and empowering corporate culture. “Ren” is anemployee who has the spirit of entrepreneurship and innovation; “Dan”is to create value for users. The “RenDanHeYi “management modelencourages employees to create value for users with an entrepreneurialmindset, and to achieve self-value in line with the those of theCompany and its 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海尔智家English nameHaier Smart Home Co., Ltd.English short nameHaier Smart HomeLegal representativeLi HuagangII. CONTACT PERSON AND CONTACT INFORMATION
Secretary to theBoard
Representative ofsecurities affairs
Company Secretary(D/H shares)OthersNameLiu XiaomeiLiu TaoNg Chi Yin, TrevorGlobal Customer
Service HotlineAddressDepartment of
Securities of HaierSmart Home Co.,Ltd., Haier Scienceand TechnologyInnovationEcological Park,No.1 Haier Road,Qingdao City
Department ofSecurities of HaierSmart Home Co.,Ltd., Haier Scienceand TechnologyInnovationEcological Park,No.1 Haier Road,Qingdao City
Unit 1908, 19thFloor, HarbourCentre, 25 HarbourRoad, 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 GENERAL INFORMATION
Registered AddressHaier Industrial Park, Laoshan District, Qingdao City (now known as
Haier Science and Technology Innovation Ecological Park, LaoshanDistrict, Qingdao City)Historical Changes to the
Registered Address
Prior to the Company’s listing in 1993, the registered address of theCompany was No.165 Xiaobaigan Road, Sifang District, Qingdao City,Shandong Province, and has changed to the current address since1994, during which the address name was adjusted in line with thechange of name of the industrial park but the actual site remainsunchanged.Business addressHaier Science and Technology Innovation Ecological Park, Laoshan
District, Qingdao CityPostal code of the businessaddress
266101Websitehttps://smart-home.haier.com/cn/Email9999@haier.comIV. PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT
Newspapers and websitesfor annual reportdisclosure
Shanghai Securities News, Securities Times, China Securities Journal,Securities DailyStock Exchange Website forannual report disclosureas designated by theCSRC
www.sse.com.cn
Other websites for annual
report disclosure
https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,https://www.hkexnews.hkDeposit place of annual
report
Department of Securities of Haier Smart Home Co., Ltd., Haier Science
and Technology Innovation Ecological Park, No.1 Haier Road, Qingdao
CityV. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Summarized information of shares of the CompanyType of Shares
Stock Exchange ofShares ListedStock Short NameStock Code
Stock ShortName BeforeVariationA-sharesShanghai Stock
Exchange
Haier Smart Home600690Qingdao HaierD-sharesFrankfurt Stock
Exchange
Haier Smart Home690DQingdao HaierH-sharesHong Kong Stock
Exchange
Haier Smart Home6690/
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION
Accounting firm engagedby the Company(domestic)
NameHexin Certified Public Accountants LLPBusiness Address24th Floor, Century Building,
No.39 Donghai Road West, Qingdao CityName of signingaccountant
Zhao Bo, Li Xiang ZhiAccounting firm engagedby the Company(overseas)
NameHLB Hodgson Impey Cheng LimitedBusiness address31st Floor, Gloucester Tower, The Landmark,
11 Pedder Street, Central, Hong Kong Special
Administrative RegionName of signingaccountant
Jack, Tia Sun KitNote:
Accounting firm engaged by the Company (domestic and overseas): Pursuant to the motion for the appointment of an auditorapproved at the Company’s 2022 Annual Shareholders’ Meeting, the Company engaged Hexin Certified Public Accountants LLP andHLB Hodgson Impey Cheng Limited to issue the China Accounting Standards and International Accounting Standards auditingreport respectively for the Company’s 2023 annual report.
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE
RECENT THREE YEARS(I) Key accounting data
Unit and Currency: RMB20232022Yoy change (%)2021Key accounting dataAfter adjustmentBefore adjustmentOperating revenue261,427,783,050.10243,578,924,958.47243,513,563,670.737.33227,105,817,641.69Net profit attributable toshareholders of the listedcompany16,596,615,045.8714,712,054,763.2414,710,923,491.9912.8113,078,840,517.10Net profit after deduction ofnon-recurring profit or lossattributable to shareholders ofthe listed company15,824,164,161.4313,962,931,853.7813,962,931,853.7813.3311,831,272,558.29Net cash flows from operatingactivities25,262,376,228.3020,256,557,145.8620,153,505,783.3524.7123,235,380,690.95
Section II General Information of the Company and Key Financial Indicators
At the end of 2023At the end of 2022Yoy change (%)At the end of 2021
After adjustmentBefore adjustmentNet assets attributable to
shareholders of the listedcompany103,514,153,535.0493,459,437,602.4493,422,647,664.4310.7679,985,092,528.06Total assets253,379,859,977.97236,017,821,177.50235,842,254,826.777.36217,741,133,577.31(II) Key financial indicators
20232022Yoy change (%)2021Key financial indicatorsAfter adjustmentBefore adjustmentBasic earnings per share (RMB/
share)1.791.581.5813.291.41Diluted earnings per share (RMB/
share)1.781.571.5713.381.40Basic earnings per share after
deducting non-recurring profit
or loss (RMB/share)1.711.501.5014.001.27Weighted average return on net
assets (%)16.8516.8016.81
Increased by 0.05percentage points17.26Weighted average return on net
assets after deducting
non-recurring profit or loss (%)16.0615.9515.95
Increased by 0.11percentage points15.65
Explanation of the key accounting data and financial indicators of the Company as at the end ofthe reporting period for the previous three years
□ Applicable √ Not Applicable
Section II General Information of the Company and Key Financial Indicators
VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS(I) Differences in net profit and net asset attributable to shareholders of listedcompany in financial report disclosed in accordance with InternationalAccounting Standards and China Accounting Standards
□ Applicable √ Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of thelisted company presented in the consolidated financial statements disclosed in accordance withInternational Accounting Standards and China Accounting Standards.(II) Differences in net profit and net asset attributable to shareholders of the listedcompany in financial statements disclosed in accordance with overseasaccounting standards and China Accounting Standards
□ Applicable √ Not Applicable
Apart from the financial statements prepared in accordance with International AccountingStandards, the Company did not prepare any financial statements in accordance with otheroverseas accounting standards.
(III) Explanation on the difference between the domestic and overseas accountingstandards:
□ Applicable √ Not Applicable
IX. KEY FINANCIAL DATA OF 2023 BY QUARTER
Unit and Currency: RMBQ1(January-March)
Q2(April-June)
Q3(July-September)
Q4(October-December)Operating revenue65,066,477,648.7966,560,103,857.7767,030,721,048.1662,770,480,495.38Net profit attributable to shareholders ofthe listed Company3,971,103,084.944,992,772,914.904,185,343,372.783,447,395,673.25Net profit after deduction of non-
recurring profit or loss attributable toshareholders of the listed Company3,699,833,649.614,904,144,114.974,116,766,925.023,103,419,471.83Net cash flows from operating activities1,354,792,344.205,435,738,118.346,412,585,338.2512,059,260,427.51
Explanation on the difference between quarterly data and disclosed regular reporting data
□ Applicable √ Not Applicable
Section II General Information of the Company and Key Financial Indicators
X. NON-RECURRING PROFIT AND LOSS ITEMS AND AMOUNT
Non-recurring profit and loss itemsAmount in 2023Amount in 2022Profit or loss from disposal of non- current assets, including thewrite-off of provision for asset impairment–97,873,276.66209,436,774.95Government subsidies included in current profit or loss, except forgovernment subsidies that are closely related to the Company’snormal business operations, conformed to requirements of statepolicies and granted according to specific criteria, and have asustained impact on the Company’s profit or loss1,093,584,406.07766,426,467.17Profit or loss arising from changes in fair value of financial assetsand financial liabilities held by non-financial entities, and profit orloss arising from disposal of financial assets and financialliabilities, except for effective hedging activities related to theCompany’s normal business operations20,829,305.37–23,321,060.42Net profit or loss of subsidiaries arising from business combinations
under common control of the current period from the beginningof the period to the date of consolidation–2,581,701.7614,065,886.76Other non-operating income and expenses apart from the aforesaid
items–71,400,519.77–29,750,173.25Less: Effect of income tax150,225,774.23167,413,005.22Effect of minority interests (after tax)19,881,554.5820,321,980.53Total772,450,884.44749,122,909.46For 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 Applicable
Section II General Information of the Company and Key Financial Indicators
XI. ITEMS MEASURED BY FAIR VALUE
√ Applicable □ Not Applicable
Unit and Currency: RMB
ItemsOpening balanceClosing balance
Changes in thecurrent period
Affected amountto profit of current
periodWealth management products14,638,968.26487,936,101.81473,297,133.5552,484,639.54Investment in other equity instruments5,851,882,930.206,403,694,954.77551,812,024.5758,671,224.25Investment in trading equity instruments336,843,065.02243,224,439.64–93,618,625.38–20,876,582.33Investment funds168,430,847.63222,803,002.3854,372,154.7538,833,850.27Derivative financial instruments61,674,330.75–101,059,175.53–162,733,506.2854,086,291.94Total6,433,470,141.867,256,599,323.07823,129,181.21183,199,423.67XII. OTHERS
□ Applicable √ Not Applicable
Section III Management Discussion andAnalysis
I. DISCUSSION AND ANALYSIS ON OPERATIONSThe Company’s revenue for the 2023 financial year amounted to RMB261.428 billion, representing anincrease of 7.3% from 2022. The growth was driven by: multi-brand strategy and extensive productofferings which captured opportunities in different market segments; enhanced retail capabilities andproduct premiumization; more competitive water heater, HVAC and kitchen appliances contributedstrong revenue growth in China; enhanced user values from San Yi Niao’s improved scenario-basedsuite products; development of new categories including tumble dryers, dishwashers, home cleaningrobots and heat pumps to capture opportunities in quality living and the low-carbon economy.For the financial year ended 31 December, 2023, the net profit attributable to shareholders of theCompany was RMB16.597 billion, representing a 12.8% increase from 2022. The net profit attributableto shareholders of the Company after deducting non-recurring items amounted to RMB15.824 billion,representing a growth of 13.3% compared to the same period in 2022.The Company’s gross profit margin reached 31.5% in 2023, up 0.2 percentage points compared to thesame period in 2022. Margin improvement in domestic market was driven by lower commodity prices,digitalisation in procurement and R&D, development of a digitalised production and sales coordinationsystem, and improved product mix. In overseas markets, benefits from better product mix andproduction capacity utilisation were partly offset by intensified competition in key regions, resulting in ayear-on-year decline in gross profit margin.The selling expense ratio was 15.7% in 2023, a reduction of 0.2 percentage points compared to thesame period in 2022, selling expense ratio has improved resulting from digitally enhanced efficiency inresource allocation, logistics and fulfilment in China. On the other hand, overseas selling expense ratiowent up due to intensified competition, increased spending in network expansion, promotions, andstore upgrades.The administrative expense ratio went down by 0.1 percentage points to 4.4% in 2023, driven byoptimised business processes and improved organisational efficiency through digitalisation.The finance expense ratio was 0.2% (“+” as expenses, “—” as income) in 2023, representing anincrease of 0.3 percentage points compared to 2022, mainly because increases in interest payment asa result of overseas interest rate hike, offsetting interest income generated from improved capitalmanagement.In 2023, the Company’s net cash flow from operating activities was RMB25.262 billion, an increase ofRMB5.006 billion year-on-year.
Section III Management Discussion and Analysis
I. Household Food Storage and Cooking Solutions
(1) Refrigerator business
In 2023, the refrigerator business of the Company remained committed to leading theglobal industry in the IoT era. By constantly innovating freshness preservation and built-intechnologies, expanding high-end products, and accelerating retail transformation, theCompany was able to strengthen its leadership in the industry. In 2023, sales revenue ofthe global refrigerator business was RMB81.910 billion, a growth of 5.2% compared to thesame period in 2022.According to Gfk, the Company’s share of retail revenue reached 45.2% offline and 40.3%online in China in 2023, up 1.3 and 1.1 percentage points year-on-year, respectively.According to Euromonitor, the Company held a 14.1% share of retail volume overseas.
The domestic market
The Company has significantly increased its share in the high-end market. Casarte built-inrefrigerator achieved a remarkable 120% year-on-year volume growth. Haier refrigeratorexpanded Boguan (博觀) series with full-space freshness preservation technology andcompartmentalised storage design, dominating the market in the price range aboveRMB20,000 per unit. According to CMM, the share of offline retail with unit price ofRMB10,000 and above reached 52.8%, an increase of 4 percentage points year-on-year.Enhancing retail capabilities has been a key focus. By strengthening network coverage inunderserved areas, leveraging digital marketing to improve customer acquisition, andupgrading end-user experience, the Company enhanced efficiency in customer engagementand improved conversion by 8%.The Company also prioritised end-to-end cost reduction and efficiency improvement. Toscale up production and in-house manufacturing of basic components, the first phase ofShanghe Refrigeration Park was put into operation in 2023, adding 1.5 million units incapacity. Manufacturing efficiency has improved by over 10% via integrating advancedmanufacturing technologies and digitalising manufacturing, inspection, and logistics.
Overseas markets
The Company remained committed to high-end brand strategy and synergising globalresources to strengthen product leadership and enhance user experience. In NorthAmerica, we launched the integrated Built-in French Door refrigerator with Monogram andCafé brand, Internal Dispenser Multi-door refrigerator with Profile and Café brand. InEurope, our clean ice-making technology and grade-a silent operation elevated userexperiences and captured the largest market share in high-end multi-door refrigerators.Haier also raised price index to 122. In the Japanese market, upgrade in product andbrand portfolio contributed to the strong growth of ultra-large refrigerators.
Section III Management Discussion and Analysis
On 14 December 2023, the Company announced the acquisition of Carrier RefrigerationBenelux B.V., the commercial refrigeration business of Carrier Global Corporation, forapproximately USD 640 million in cash. This move signified the Company’s expansion fromresidential into commercial refrigeration, opening the door to new growth opportunities. Theacquisition will enhance the Company’s foothold in the European market and strengthenglobal competitiveness, while capturing opportunities in China and Asia Pacific. Thetransaction is expected to close in 2024.
(2) Kitchen appliance business
In 2023, the Company focused on becoming the global leader in high-end smart kitchen byenhancing in-store experience of smart product suites and introducing product innovations,built-in technologies, and scenario-based solutions. In 2023, the kitchen appliance businessrecorded global revenue of RMB41.654 billion, up 6.9% compared to the same period in2022.According to Gfk, the Company’s offline retail sales accounted for 8.8% of market sales,up 0.5 percentage points year-on-year, ranking third in China, where our share of high-endbuilt-in products reached 17.9%. Online retail sales accounted for 4.3%, up 0.8 percentagepoints year-on-year. According to Euromonitor, our shares continued to perform well in keymarkets overseas: we achieved double-digit growth in Europe despite industry downturn;and grew market share by 3 percentage points in Australia through the dual-brand strategyof FPA and Haier.
Section III Management Discussion and Analysis
The domestic marketSales revenue grew over 10% with sequential improvement every quarter in 2023 by seizingopportunities in product upgrades, kitchen renovations and property completions,developing partnerships with cabinet and home improvement companies, and increasingpresence in home improvement channels.Casarte kitchen appliances focused on increasing product competitiveness. The launch ofultra-slim built-in retractable range hoods, ultra-slim built-in five-ring stoves, andhumidity-controlled ovens led to a 30% increase in retail sales, driving high-end marketshare to 10%.Haier’s smart kitchen appliance factory in Laiyang was the first to win the ROI-EFESOIndustry 4.0 Award since 2013, a recognition of our substantial improvement in supplychain competitiveness. The Company enhanced cost competitiveness by increasingin-house component manufacturing from 30% to 54% and establishing a digitalised materialcost model.Overseas marketsIn North American market, in collaboration with eco-partners such as Google Cloud, theCompany uses a generative AI platform to help users generate customized recipes basedon the food in their kitchens. In Australia and New Zealand, FPA brand elevated retailexperience by launching sleek, minimalist oven suites and enhancing in-store productdisplays. In the commercial sector, the Company focused on providing high-end designsolutions, establishing partnerships with designers to drive growth.
Section III Management Discussion and Analysis
II. Household Laundry Management SolutionsThe laundry business aimed to become number one choice globally during the IoT era andstrived to maintain leadership through innovations in garment care, integration of homeappliances and furnishing, energy efficiency, and eco-friendly technologies, while expanding newcategories including tumble dryers. In 2023, the laundry business achieved a global revenue ofRMB61.491 billion, representing an increase of 6.2% from 2022.According to Gfk, the Company’s retail market share went up 1.5 percentage points year-on-yearto 47.5% offline in China, while remaining unchanged at 40.4% online. Euromonitor ranked usnumber one in ten countries, including Australia, New Zealand, and Vietnam.The domestic marketConsumers’ desire for quality living has created demand for specialized products such as tumbledryers, wall-mounted washing machines, and fabric care cabinets. The Company proactivelyshifted from selling individual washing machine to providing laundry solutions, encompassingwashing machines, tumble dryers, and fabric care cabinets. This upgrade aimed to offer a morerefined and professional laundry experience to enhance user value. In 2023, the completion oftumble dryer factory in Shanghai added capacity of 2 million units. Tumble dryer revenue grew20% year-on-year in 2023. According to Gfk, the Company topped the retail market with 40.4%share offline, and 34% share online.The Company pressed ahead with retail transformation, and enhanced capabilities by directingdistributors to focus on improving in-store experiences to improve user acquisition andconversion, while attracting younger consumers and increasing user recognition with innovativecontent on new social media platforms such douyin and Xiaohongshu.A series of end-to-end cost reduction and efficiency improvements were implemented, includingdiscontinuing low-efficiency models, and increasing the proportion of mid to high-end products toenhance competitiveness.Overseas marketsThe Company focused on implementing high-end brand strategies, leveraging on local marketinsights and global R&D strengths to enrich product pipeline and grow market share.
Section III Management Discussion and Analysis
In North America, the Company introduced Combo with washer and dryer all-in-one machine, itdisruptively solves users’ pain points through one machine by completing a full load of wash anddry within two hours, and leads in the industry. In Western Europe, the launch of Haier’s highlydifferentiated IPRO helped increase in market share by 4 percentage points for products with unitprice above EUR 599. In India, market share in selected channels grew from 4% to 16% withprice index increasing from 89 to 101 leveraging on improved in-store display and brandrecognition.
III. Air SolutionsDuring the reporting period, the Company’s air solution business achieved revenue ofRMB46.104 billion, up 13.1% year-on-year.
(1) Home air conditioner business
In 2023, the home air conditioner business concentrated on implementing smart andhealthy air solution strategy via innovating user-centred scenarios, enhancing technologicalcapabilities, developing retail-end capabilities and end-to-end digitalisation, to boost marketcompetitiveness.The domestic marketFocusing on providing air solutions with outstanding quality, taste, and performance, thehome air conditioner business ramped up R&D investment to attract top talents, deploytechnological resources and enhanced competitiveness in core functions. The innovativeVariable Shunt Technology has earned the Energy Saving and Emission Reduction Scienceand Technology Progress Award from China Energy Conservation Association. In 2023, weintroduced the Casarte Nebula (星雲) series, the industry’s first integrated high-powered airconditioner, 110,000 units have been sold since their first introduction, driving us to thefirst place in the market segment priced above RMB10,000 with 37% share.
Section III Management Discussion and Analysis
We continued to enhance network coverage and develop omnichannel retail and marketingcapabilities. We prioritised franchised sales networks and increased store count offline,while promoting best-sellers, creating new social media content, and improvingmonetization online. During the reporting period, we ranked among top 10 best-sellers forthe first time. In the commercial channel, we developed an operating framework integratingcustomer service, technical support, and installation management to improve conversionefficiency, contributing to contract revenue exceeding RMB10 billion.The Company focused on improving supply chain and boosting in-house componentmanufacturing to strengthen cost competitiveness. In March 2023, our computer boardfactory in Zhengzhou commenced mass production with an annual capacity of 2 millionsets and potential cost savings of over RMB10 million. The Company’s compressor jointventure with Shanghai Highly is expected to begin production in the first quarter of 2024,contributing to overall supply chain capabilities.
Overseas marketsThe home air conditioner business aims to provide health-conscious, smart, andenergy-efficient products tailored to meet local demand and promote sustainability in theglobal market. In the European market, we expanded the lineup of R290 with the use ofeco-friendly refrigerant to address growing environment concerns. In Pakistan, oursolar-powered air conditioners tackled rising electricity prices by reducing daytime billing tozero, fulfilling demand for affordable energy-efficiency. We also built a new factory in Egyptand enhanced manufacturing capabilities in India, Pakistan, and Thailand, leveragingfirst-mover advantage in the global supply chain.In 2023, the Company became number one in Pakistan and Thailand, and grew retailmarket share in Southeast Asia and Western Europe.
Section III Management Discussion and Analysis
(2) Smart building business
In 2023, the smart building business strategically focused on developing smart low-carbonbuilding solutions. By leveraging existing HVAC business, the Company expanded into heatpumps, energy management, and smart building management, thus seizing theopportunities from energy efficiency standard upgrade and growing demand for cleanenergy. In 2023, the global revenue of smart building business increased by over 14%compared to the same period in 2022, with revenue in the domestic market exceedingRMB5 billion. According to China IoL, our domestic market share rose 0.8 percentagepoints to 9.5%, ranking fourth in the industry in 2023.
The domestic marketLeveraging technological advantages in magnetic levitation, air suspension, andhigh-efficiency heat exchange, the Company strengthened its leadership in high-speedvariable-frequency and smart IoT technologies, while creating efficient HVAC workshopsolutions. We were world’s first to implement static pressure air suspension technology oncentral air conditioning systems that could last for a period of 30 years and require littlemaintenance while saving up to 50% energy. The MX-super IoT-based multi-split systemwas the industry’s first smart solution for large spaces, utilizing four units of 24 HPmodules running in parallel to maximize output of 96 HP, effectively reducing floor spaceby 50% while improving energy efficiency.The Company’s heat pump business captured industrial demand for clean energy withexpanded product application to achieve sales growth of 20%. The new variable frequencyhigh-temperature heat pump could provide hot water up to 90?C. It has been widely usedby clients from electroplating, slaughterhouses, petroleum, food processing, textile printingand dyeing industries, as well as on existing housing renovation projects.To accelerate the transition towards one-stop low-carbon solution provider, the Companycompleted the acquisition of Tongfang Energy Technology Development Company inSeptember 2023, which is expected to enhance our integrated heating and coolingservices, clean energy, and waste heat recycling solutions.
Overseas markets
The smart building business centred on expanding product portfolio and upgrading productmix. For example, we received over RMB100 million orders from clients in the Middle Eastfor T3 variable frequency series that could operate under high-temperature. In Europe, wefocused on the integration of heat pump products with Haier Smart hOn platform of localstorage data and energy storage systems, accelerating the transition from single product tomultiple energy source solutions to smart energy management.
Section III Management Discussion and Analysis
We also accelerated the development of store network integrating consumer experience,product display and marketing, as well as staff training to enhance design and installationcapabilities.
IV. Household Water SolutionsIn 2023, the water heater and purifier business strategically focused on becoming the globalleader in household water heating, cooling, and purification solutions. We achieved steady growthin water purifiers, softeners and filters leveraging innovations to create health-conscious, highcapacity and comfortable experience. In 2023, the global water heater and purifier revenue wasRMB15.336 billion, representing an increase of 8.5% from 2022.The domestic marketTo address concerns of ageing products, water quality and additional demand from families withtwo children, the Company focused on product iterations and grew sales revenue to overRMB12 billion in 2023. The Company’s Casarte Crystal Tank electric water heater seamlesslymoulded aerospace-grade crystal fibres and industrial-grade polymer materials to deliver amineral spring experience with water that is rich in strontium. Our gas water heaters pioneeredthe use of gas-electric hybrid constant temperature technology, automatically switching betweentwo energy sources to reduce heating time and stabilize water temperature, sales revenuerecorded a compounded annual growth of over 20% from 2021 to 2023.On the market side, we also captured replacement demand by cleaning ageing products inexisting neighbourhoods, capturing demands through showcasing solutions in new buildings,while accelerating commercial business with comprehensive water purification and heating/coolingsolutions.
Section III Management Discussion and Analysis
We promoted end-to-end cost reduction and efficiency improvement by strengthening verticalsupply chain integration to grow in-house manufacturing by 10% and reduce cost with additional19 module components. Meanwhile, we enhanced proportion of shared modules to enhanceefficiency in R&D and improve average contribution per SKU.Overseas marketsWater heater and purifier business has significant potential in overseas market where the currentexposure remains limited. The Company remained committed to meeting consumer demand withimproving product offerings to cater for local tastes. We have made several breakthroughs in themore mature markets including North America where we introduced gas storage water heaterand in Europe we offered gas water heaters and boilers. The Company also grew revenue bydeveloping comprehensive solutions and enhancing presence in specialists’ channels for buildingmaterials, bathroom fixtures and installation.
V. China operation: Driving brand transformation, optimising distribution network,and winning recognition from users.
During the reporting period, the Company strengthened multi-brand strategic transformation andimproved user experiences to enhance traffic acquisition and conversion. Our home appliancesmarket share in China amounted to 28% in 2023, up 1 percentage point year-on-year.The Company implemented a series of digital transformation initiatives to improve distributors’operational efficiency, marketing, and promotional resource deployment, while enhancingdecision-making capabilities using big data tools, all of which aimed at effectively showcasingsmart scenario-based solutions in stores and promoting local community outreach campaigns atzero distance to boost user experience and recognition.
Section III Management Discussion and Analysis
In addition, the Company also strengthened omnichannel presence and enhanced operatingcapabilities. In first and second-tier markets, we targeted shopping malls and home improvementchannels to capitalise on user traffic. In third and fourth-tier markets, we transformed stores fromselling individual products to offering scenario-based solutions, while assisting and encouragingdistributors to actively engage users online instead of waiting for customers in store, thus grewsales revenue and enhanced resource utilisation. The Company created social media releasescontaining product information and engaged customers across multiple platforms, to improveconversion while cutting the cost of acquiring traffic by 7%. In 2023, the Company achieveddouble-digit growth in retail sales revenue online. Leveraging on digital platform, we were able tocustomize scenario-based solutions for corporate clients. We also set up a task force specializingin collaborating with enterprises, and leading local companies, to increase penetration in thesemarkets.The Company actively adopted a multi-brand operation strategy to cater to different segments.An upgrade plan has been launched under high-end Casarte brand to achieve stable growth of14% in retail revenue in 2023. During the reporting period, the Company associated our brandswith smart & quality living, by enriching product portfolio, strengthening social media presence,and upgrading store experiences. In 2023, Casarte ranked first in brand awareness onXiaohongshu. 240 experience stores have been set up in shopping malls all over the country. Wealso built the Casarte Art Centre inside the prestigious Deji Plaza in Nanjing to create brand newshopping experience by combining home appliances with artistic home improvement. Leveragingon local market advantages, the Company was able to accelerate the development of luxuryhome appliance brand Fisher & Paykel. By targeting designers, equestrians, and foodenthusiasts, a series of brand communication strategies were implemented to craft its luxuriousimage. In 2023, five experiential stores were opened in high-end building materials market andshopping malls, highlighting ultra-high-end scenario solutions including social kitchen andpersonal care.In 2023, San Yi Niao focused on enhancing its design platform and store digitalisation toimprove scenario-based solutions and sales capabilities. Retail sales surged 84% year-on-year,with product suites accounting for over 60% of total sales. The Company’s proprietary NestingInterior Design Platform consists of over 500 3D-modules of home appliance designs, and floorplans covering 90% of residential districts across the country. Nearly 1,500 new outlets wereadded, facilitating product suite sales growth by localized scenario solutions and professionalfinishing standard.
Section III Management Discussion and Analysis
VI. Overseas markets: Harnessing global resources to develop high-end brands,outgrowing the industry.In 2023, the Company’s revenue from overseas market amounted to RMB136.412 billion, up
7.6% from 2022. The increase in revenue is attributed to the Company’s commitment to
high-end brand and strengthened market leadership by integrating global R&D, introducingoriginal technologies; continuous upgrade of product mix which drove up price indices; anddiversified portfolio encompassing high-end, mid-range and entry-level products to meet diversedemands. In terms of market development, the Company optimised user experience andenhanced brand reputation by expanding retail presence, increasing visibility in mainstreamchannels, and establishing professional HVAC sales channels. Efforts have also been made tostrengthen production capacity in countries along the Belt and Road Initiative to graspdevelopment opportunities.
1. North America
GE Appliances continued outperforming the industry and gained share in core appliances in2023. In 2023, sales revenue went up by 4.1% reaching RMB79.751 billion.The Company persists in promoting its leadership in premium brands and products and hassuccessfully launched innovative core appliances, such as Profile Combo with heat pumpwasher and dryer, integrated Built-in French Door refrigerator with Monogram and Cafébrand, Internal Dispenser Multi-door refrigerator with Profile and Café brand, high-endcustomized Range Hood with Monogram brand, and the next generation stainless steeldishwasher with GE and Profile brand, to fully meet the needs of local users. Take Combowith washer and dryer all-in-one machine as an example, it disruptively solves users’ painpoints through one machine by completing a full load of wash and dry within two hours,and leads in the industry. As a result, it has been honoured with dozens of awards,including the Best Product Award—Best Home Technology Product in 2023 KBIS/IBS,the Sustainable Product of the Year 2023, and the CES Innovation Award of HomeAppliance.The Company has earned the house share in Big Box and Costco and gained Lowe’s“Partner of the Year” award due to innovative products and win-win solutions.The Company persists in laying out new industries and channels. At AHR Show of 2023,the Company launched Air & Water solutions with Unitary/DFS/VRF and gas storage waterheater, which were widely recognized by professional channels.The Company is actively exploring smart ecosystem transformation to enhance users’experience. In collaboration with eco-partners such as Google Cloud, it uses a generativeAI platform to help users generate customized recipes based on the food in their kitchens.It also provides optimal energy management solutions for Net Zero homes. The Companywas recognized as IoT Breakthrough’s “Smart Appliance Company of the Year” for sixthconsecutive year.
Section III Management Discussion and Analysis
The Company continually implements RenDanHeYi to activate employees’ vitality，thusachieving zero distance from the users. The Company received a score of 100 on theHuman Rights Campaign Foundation’s 2023–2024 Corporate Equality Index (CEI) for sixthconsecutive year. CEI is the premier benchmark survey and report in the United States,measuring corporate policies and practices related to LGBTQ and workplace equality. Andonce again it was selected for Fortune Manufacturing and Production ? The BestWorkplace List, meanwhile received the “Best Workplace for Innovators” award from FastCompany.
2. Europe
In the European market, the Company recorded sales revenue of RMB28.544 billion, up
23.9% year-on-year, with retail volume share increased by 1 percentage point to 9.1%.
Dedicated efforts have been made to enhance product and supply chain competitiveness.The Company established strategic partnership with local testing centres including LGA,CTTN and Intertek, repositioned R&D facilities in Nuremberg to promote German design.The Company launched New Candy Project to raise brand positioning, leveraging globalcooperations in developing new modules and products, including Chef@Home refrigeratorwith large screen, smart oven with smart recipe recognition, dish washer with industry’sfastest programme setting, 959/979 washing machine series with class A energy efficiencythat grew price index from 118 to 127. On the distribution front, we strengthenedpartnerships with leading retailers across Europe including Boulanger and Darty.Thanks to high profile sport events sponsorship including Roland-Garros tournament, Haierbrand’s price index grew to 131 with 3.1 percentage points increase in brand awareness.
Section III Management Discussion and Analysis
3. Australia and New Zealand
Amid weak consumer sentiment in Australia and New Zealand, the Company still managedto increase market share through product innovation, retail transformation and dual-brandoperation. In Australia, the Company’s market sales in sales volume grew by 1 percentagepoint while sales revenue market share grew by 0.7 percentage points. In New Zealand,market share of kitchen appliance and dish washers grew by 4% and 2%, respectively. Thegrowth was achieved by continuing launching of innovative products including Haier H600 Tdoor refrigerator which helped our market share in unit with capacity of 500–600L grow to
15.2%, Series 11 high-end washing machines strengthened FPA’s luxury market leadership,
Haier introduced first top-loading washing machine with auto dispenser in the industry.
4. South Asia
During the period, revenue from South Asia grew 14.9% year-on-year to RMB9.521 billion.In India, our high-end market share increased by 4 percentage points supported byinnovations such as the five-star inverter air conditioner. Targeting vegetarian consumers inIndia, we introduced T-door refrigerator, over 30,000 units have been sold, ranking us firstin terms of local market share. We strengthened network coverage, particularly in thewestern and northern regions, to enhance touchpoints and product promotion to solidifyour market position. We improved automation and product competitiveness throughend-to-end upgrade and optimisation of manufacturing and sales coordination at NorthernIndustrial Park.Despite inflation and currency fluctuations in Pakistan, we managed to grow sales revenueby 20% and added more than 300 franchised stores, both of which helped us maintainleadership with 40% market share.
5. Southeast Asia
During the reporting period, sales revenue grew 11.6% to RMB5.78 billion in the SoutheastAsian market.By adjusting product mix, we successfully increased price indices and boostedcompetitiveness in Vietnam and Thailand, where our air conditioners ranked number oneleveraging product mix upgrade and introduction of new series with sterilisationtechnologies. In Vietnam, the Color AI washing machine was well received for its colourtouch screen and smart washing features. The new unit has a price index of 150 whichhelped us rank first in the industry with over 20% market share.We developed franchise channels by adding 150 new exclusive brand zones in Indonesiaand the Philippines and opening 15 new franchised stores in Malaysia. We also raisedbrand profile through product launches and sponsoring top sports games, while usingtargeted marketing strategies online and offline to deepen user engagement, positioning usas the most dynamic brand in the market.
Section III Management Discussion and Analysis
6. Japan
During the period, sales revenue amounted to RMB3.662 billion, up 2.6% year-on-year, or
5.1% in Japanese Yen.
In response to demand for large refrigerators and washers, we launched TX ultra-slim largerefrigerator and the large-volume heat pump front-load washer which helped volume marketshare grow in those two categories. We also established presence in all mainstreamchannels and secured prime shelf space by differentiating product display and in-storeexperience. Leveraging product iterations and IoT technology upgrade, Installed base ofsmart appliance from community laundry business exceeded 53,000 units, with more than2 million active users. In addition, we enhanced profitability through implementingend-to-end cost reduction measures.VII. Digital transformation
During the reporting period, the Company strategically tackled challenges in the transformation,to enhance market operations, R&D efficiency, cost competitiveness, and turnovers.To improve market competitiveness, the Company launched an experience cloud platform thatenabled real-time monitoring of the entire customer journey, starting from purchase to delivery,installation, usage, and service. The platform boosted business competitiveness through astructured feedback mechanism, resulting in a 24% reduction in user complaints. We helpeddistributor improve the management of distribution, inventory, and store operations using digitaldistribution systems and customer analysis tools. As a result, our digital retail sales increased by22% year-on-year.To enhance R&D competitiveness, the Company established an integrated R&D platform,enabling efficient collaboration in terms of planning, development, and procurement. This resultedin a 19% increase in revenue contribution of individual models in the domestic market. Bypromoting the share of common component parts, total number of components was reduced by8%, thereby increasing the procurement scale per component and cut down purchasing costs.To enhance manufacturing competitiveness, the Company centred on precise and efficient orderexecution. By streamlining information flow between material planning and logistic dispatchplanning, we established a digitalized production model with unified scheduling system. Thisenabled transparent operations and smart scheduling throughout the manufacturing process,resulting in a 4% reduction of manufacturing cost and a 16% increase in output per worker.To improve product turnover efficiency, our focus was on rapid order delivery and efficientinventory turnover. We accelerated order models upgrade and established end-to-end digitalcapabilities by integrating marketing, production, procurement, and logistics planning. Byleveraging data models, we were able to review orders, optimise assignments and resourceallocation, resulting in an 8% improvement in domestic DIO (days inventory outstanding).
Section III Management Discussion and Analysis
II. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESDURING THE REPOTING PERIOD(I) Industry Overview for 2023
1. The domestic market
In 2023, the Chinese household appliance industry experienced steady growth. Accordingto AVC data, the retail sales of household appliances in China
(excluding 3C & digitalproducts) reached RMB849.8 billion in 2023, marking a year-on-year increase of 3.6%.Demand for traditional products like refrigerators, washing machines, and air conditionersremained stable, while categories with lower penetration rates such as tumble dryers anddishwashers maintained rapid growth.Home air conditioning industry: Benefiting from hot weather, fulfilment of pent-updemand for renovation and installation during the pandemic, and low industry inventorylevels, growth of the air conditioning outperformed the rest in the market. Annual retailvolume reached 60.85 million units, up 6.5% year-on-year; retail sales amounted toRMB211.7 billion, an increase of 7.5% year-on-year.Refrigerator industry: Consumers’ increasing demand for large-capacity, freshnesspreservation, and built-in features, along with advancements in related technologies, hasfuelled the rapid growth of built-in refrigerator products and a steady rise in average prices.Retail volume of the refrigerator industry reached 38.31 million units, a 1.5% year-on-yearincrease; retail revenue amounted to RMB133.3 billion, representing a 7% year-on-yeargrowth.Laundry care industry: The rising consumer demand for high-quality laundry has fuelledthe adoption of tumble dryers, leading to an increased share of washer-dryer combo suitesand revitalising the industry’s recovery. In 2023, the total retail sales of the laundry industryreached RMB106.2 billion, a year-on-year increase of 7.7%. Specifically, (1) the washingmachine sector recorded a retail volume of 40.05 million units, up 3.4% year-on-year, withretail sales amounting to RMB93.3 billion, representing a 5.8% increase. (2) the tumbledryer sector recorded a retail volume of 2.17 million units, up 16.4% year-on-year, withretail sales reaching RMB12.9 billion, a growth of 23.8% year-on-year.Kitchen appliance industry: Benefitting from the release of pent-up demand during thepandemic and product mix upgrades, retail sales of range hoods, stoves, and disinfectioncabinets reached RMB52.5 billion, up 5.1% year-on-year. Integrated stoves, impacted bythe downturn in the third and fourth-tier real estate markets, recorded a retail revenue ofRMB24.9 billion, a decrease of 4.0% year-on-year. The growing consumer emphasis onconvenience and health has propelled the sustained popularity of dishwashers. In 2023,retail sales in the dishwasher industry amounted to RMB11.2 billion, marking a 9.6%increase year-on-year.
Including refrigerator, freezer, washing machine, dryer, air-conditioner, kitchen appliances (range hoods, stoves, and disinfectioncabinets), integrated range hoods, electric water heater, gas water heater, small home appliances, televisions, dishwasher,microwave oven, electric oven, vacuum cleaner, air purifier, water purifier, electric fans, electric heater, etc.
Section III Management Discussion and Analysis
Water heater industry: Driven by increased demand for gas water heaters, energyefficiency upgrades, and a rise in demand for large-volume water heaters, the water heaterindustry experienced steady growth. In 2023, the industry’s retail sales totalled RMB50.5billion, up 7.4% year-on-year. Specifically, retail sales of electric water heaters amounted toRMB23.3 billion, up 4.0% year-on-year, while retail sales of gas water heaters reachedRMB27.2 billion, a growth of 10.4% year-on-year.Water purifier industry: Benefitting from the recovery of the offline market and productmix upgrades of POU (point of use) water purifiers, retail sales continued to grow, withrevenue reaching RMB20.5 billion, an increase of 10.7% year-on-year.In 2023, consumer purchasing power and willingness to spend have recovered. Due todifferences in purchasing power and attitudes among consumer groups, there was anoticeable segmentation in the home appliance market. Driven by innovative experiencesbrought about by the integration of home appliances and furnishing, design aesthetics,smart features, and health-conscious options, the high-end home appliance marketoutperformed the industry average, with a continuous increase in market share. Accordingto Gfk’s 2023 retail data, refrigerators priced above RMB10,000 per unit accounted for38% of total retail revenue, up 2.9 percentage points from 2022; washing machines pricedabove RMB10,000 per unit accounted for 13.8% of total retail revenue, up 0.1 percentagepoints from 2022, and dishwashers priced above RMB8,000 per unit accounted for 42.5%of total retail revenue, a 3.4 percentage point increase from 2022.Distribution network has become increasingly diversified, with emerging channels gaining alarger share of traffic. This trend posed challenges to existing distribution networks andoperational models for businesses, while also fuelling innovation in user management andunlocking new development opportunities. As consumers became more accustomed toshopping online, along with enhanced integration of online and offline services, the share ofonline sales volume continued to rise. At the same time, live streaming in offline experientialstores facilitated the integration of online and offline channels. The combination of onlinetraffic and offline experience has become the future direction of retail development. Shortvideo/content sharing platforms such as Douyin, Kuaishou, and Xiaohongshu were rapidlydeveloping, playing an increasingly significant role in user acquisition and education.According to AVC retail data, retail revenue on Douyin surged 121% for refrigerators and164% for air conditioners in 2023.In 2023, commodity prices in the domestic market substantially declined compared to2022. Meanwhile, market competition in the white goods industry became more rationaland prices were more stable. These factors collectively contributed to an improvement inthe profitability of the industry.
Section III Management Discussion and Analysis
2. Overseas markets
According to Euromonitor, global home appliances retail revenue (including majorappliances and small appliances) totalled USD 530.106 billion in 2023, representing a 1.5%increase year-on-year. Of this total, the retail revenue of major appliances reached USD
287.023 billion, at the same level as the previous year; while the retail revenue of small
home appliances amounting to USD 243.084 billion, up 3.3% year-on-year. The surge indemand for home appliances in developed countries during the pandemic eventuallysubsided in the post-pandemic period. Additionally, in a high-interest-rate environment, realestate loan rates continued to rise, resulting in reduced willingness in buying homes, furtherdampening demand in the home appliance market.By market:
(1) The U.S.: Impacted by high interest rates, new home construction and home sales
declined. According to data from the Association of Home Appliance Manufacturers(AHAM), core appliance shipments in 2023 remained flat year-on-year. Intensifiedcompetition within the industry led to lower unit prices.
(2) Europe: According to Gfk data, consumer confidence remained low amid high interest
rates and inflation, leading to a 3.8% decline in industry sales volume year-on-year.Due to the frequent occurrence of extreme hot weather resulted in air conditionerindustry outperforming the overall home appliance industry, and more consumers arelooking for health-conscious and energy-efficient products.
(3) South Asia: ① In India, consumer demand became more segmented. Growth was
stable but slowed in the mid-range to high-end market. As purchasing power in thethird- and fourth-tier markets slowly recovered, demand for energy-saving entry-levelproducts increased. Chain retailers expanded rapidly across the country, and themarket share of e-commerce channels continued to climb. The sales volume of thehome appliance industry increased by 4.6%. ② In Pakistan, consumer purchasingpower declined due to inflation and exchange rate fluctuations, resulting in a 25%drop in the home appliance industry volume, and an increasing demand for low-endbudget-friendly products.
(4) Southeast Asia: According to Gfk data, the Thai market recorded a sales volume
growth of over 20% in air conditioners as driven by hot weather, while refrigeratorsand washing machines experienced a slight decline. In the Vietnamese market, exportdemand decreased due to weakened global economy, coupled with intensifiedindustry competition, resulting in a 4.5% decline in sales volume. In the Indonesianmarket, consumer spending levels decreased in 2023, leading to an 8.2% decline insales volume for the home appliance industry.
(5) Australia & New Zealand: Performance of the home appliance market in Australia
and New Zealand fell short of expectations due to adverse effects from the globaleconomic slowdown and inflation. Both markets have shown varying degrees ofdecline.
Section III Management Discussion and Analysis
(6) Japan: The white goods market was sluggish in Japan due to inflation and currency
depreciation. Annual sales volume of refrigerators, freezers and washing machinesdropped by 5.1% year-on-year. Consumer demand for high value-added productssuch as large capacity and energy-saving options was on the rise.(II) Industry Outlook for 2024
1. The domestic market
The domestic home appliance industry has shifted into a new phase driven by replacementdemand. According to data from the China Household Electric Appliance ResearchInstitute, the total ownership of air conditioners, refrigerators, and washing machines inChina in 2022 amounted to 780 million, 580 million, and 550 million units respectively,underscoring the existence of a massive replacement market. The 2024 Government WorkReport advocated and incentivised the replacement of old appliances to unleash consumerspending power, promote energy conservation, and mitigate safety risks associated withoutdated appliances. The government is committed to promoting large-scale recycling andreuse of home appliances, strengthen the development of a new “replace + recycle”logistics system, and coordinate central finance and local government efforts to support theimplementation to benefit consumers.At present, China’s leading home appliance companies are dedicated to enhancing the saferecycling, eco-friendly processing, and resource reuse of outdated appliances. Trade-inprograms not only drive the market sales of energy-efficient and eco-friendly products butalso facilitate the recycling of metals and other materials to minimise waste pollution.Relevant national policies will further mobilize collective societal efforts to stimulatereplacement demand, promote a circular economy, and bring new vitality into the industry’ssustainable growth.
2. Overseas markets
In 2024, developed countries are expected to enter a rate cut cycle, and the real estatemarket is expected to gradually rebound, thereby increasing demand for home appliances,and creating a more favourable market environment for home appliance exports. Accordingto Euromonitor, global home appliances’ retail revenue (including major appliances andsmall appliances) will be USD 540.6 billion in 2024, up 2% year-on-year, of which, the retailrevenue of major appliances is estimated to reach USD 292.5 billion, up 1.9%year-on-year, and the retail revenue of small home appliances amounting to USD 248.2billion, up 2.1% year-on-year.As IoT technologies progress and consumers continue to seek to improve their quality oflife, the home appliance industry is trending towards smart and high-end products,amplifying the added value of home appliances. In addition, amidst the backdrop of energyscarcity, there is a growing consumer preference for energy-efficient products, which fuelsthe development of high-efficiency products such as heat pumps.
Section III Management Discussion and Analysis
III. INTRODUCTION OF THE COMPANY’S BUSINESS DURING THEREPORTING 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—
an authoritative 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 appliancesproducts, the Company is recognized by Euromonitor as one of the first in the industry tointroduce smart home solutions. San Yi Niao remained committed to the mission of “providingsmart home experience for a better home”, by enhancing three major capabilities in respect ofdesign tools, store digitalisation and the Smart Home APP, 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 smartkitchen scenario solutions and ecosystem solutions including smart cooking and nutritionplanning, the Company fully addresses users’ need for convenient, healthy and tasteful gourmetexperiences.? Household Laundry Management Solutions: Haier’s washing machine focuses on applyingoriginal technologies to directly solve users’ pain points in home living scenarios and create newexperiences and value for users. With a product lineup of washing machines, tumble dryers, all-in-one laundry machines, garment care machines, and heated drying racks, the Company hasevolved from selling individual products to providing scenario-based solutions and offering end-to-end laundry care services. For example, the Zhongzihemei (中子和美) 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 pre-mixing and high pressure spraying.? Air Solutions (Internet of Air):
Home air conditioners: Through worldwide sales, the Company provides products such ashome air-conditioners and fresh air systems, as well as a comprehensive range of full-cyclesolutions including coordination of multiple air-conditioners and purifiers, adaptive air flow, airquality monitoring and air disinfection, thereby delivering a healthy and comfortable experience athome and during commute that caters to the user needs in terms of air temperature, humidityand quality.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 andAfrica.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’soverseas white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan andSoutheast Asia) in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, andCandy in 2019. The development of the Company’s overseas businesses has been fuelled bysynergies among our self-developed business and our acquired businesses.At present, the overseas business of the Company has entered a stage of promising growth,having achieved a multi-brand, cross-product and cross-regional presence on a global basis.According to Euromonitor, the Company’s share of the global market (retail volume) for majorhome appliances in key regions market share in 2023 is as follows: ranked first in Asia in termsof retail volume, with a market share of 26%; ranked second in America, with a market share of
15.8%; ranked first in Australia and New Zealand, with a market share of 14.6%. The Company
ranked fourth in Europe with a 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 distribution services forproducts such as televisions and user electronics for the Haier Group or third-party brands, which leveragesthe Company’s sales network.During the reporting period, the Company was once again listed among the Top 500 World’s Companiesand named again as the 2023 World’s Most Admired Companies by the Fortune Magazine. We are the onlycompany being selected in Europe and Asia in the home appliances industry and are the only selectedcompany incorporated outside the US. Meanwhile, the Company is also the world’s only Internet-of-Things(IoT) ecosystem brand being named again as BrandZ
TM Top 100 Most Valuable Global Brands in 2023.At the same time, the Company was named again among Fortune’s China ESG Impact list and Forbes’ TheWorld’s Best Employers 2023 list. The Company’s ESG effort has also been recognized by external ratingagencies, receiving an MSCI ESG rating of A, which is at leading levels within home appliance sector inChina. 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 Enhanced Index.
Section III Management Discussion and Analysis
IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD
√ 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 in 2023. In overseas markets, the Companyhas adhered to its high-end brand creation strategy, building capacity to create leading sustainablegrowth, which has continuously improved its market share. Building on this foundation, the Companywill further consolidate its leadership position in the industry by leveraging integrated synergies of itsglobal unified platforms, through efficiency transformation driven by digitalization, and by leveraging itstechnological strength and innovative capabilities. As cornerstone for sustainable development, our“Rendanheyi (人單合一)” Model also provided management guidance to the Company and enabled usto replicate successful experiences. It is believed that the following advantages will help the Companyto 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 2023, ranking first in the retail salesof refrigerator, washing machine and air conditioner categories in the high-end segment.Specifically, in terms of offline retail sales, shares of the Casarte brand of refrigerators and airconditioners reached 50% and 28% respectively in the market with product priced aboveRMB15,000 in China, while its share of washing machines priced above RMB10,000 in theChina’s market reached 84%.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 solutionsthrough the San Yi Niao brand with cross-household design focusing onscenario-based experience to carry out the mission of “providing smart homeexperience for a better home”.As users continued to demand for higher living quality, coupled with the development oftechnologies such as Internet of Things and big data, the industry has shown a smart and high-end development trend that prioritized product suites, based upon scenarios, and homeappliances integrated with home furnishings. With leading user insights, extensive productcoverage and technological accumulation from algorithms, big data models and IoT equipmenttechnology, the Company enhanced its three major capabilities in respect of design tools, storedigitalisation and the Smart Home APP to create a new home appliances sales method withcross-household design focusing on scenario-based experience, and develop high-end, package,and front-end sales capabilities. Focusing on the mission of “providing smart home experience fora better home”, the Company has been dedicated to providing customised and specialised smarthome appliance solutions for users.(iii) Extensive and solid global presence with localized operational capability
In 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.In 2023, the Company established 10+N innovative ecosystems, 122 manufacturing centres, and108 marketing centres around the world, and achieved a coverage of nearly 230,000 points ofsales 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 capabilities
The Company has an excellent track record of acquisition and integration. The Company hasacquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliancebusiness of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (whichhas been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all, the Company implements the ‘Rendanheyi (人單合一)’ 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 globalproduct development mechanism to facilitate regional collaboration and supplementationacross product categories. For example, the R&D teams in South Asia and Chinaembarked on a 10-month collaboration, breaking away from the traditional productdevelopment model by innovating on team organisation, quality control, product testing andcost control leveraging complementary local resources, in order to develop the HRT-683refrigerator which has become 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 Company-level 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 digitalmanagement system for the global supply chain that spanned from marketing to suppliersto production and logistics. Using intelligent algorithms, the system enabled real-timeflexible deployment of production capacity, and factories across the globe could share anddevelop smart manufacturing technologies to boost competitiveness.? Global collaborative marketing and brand promotion: The Company operates a multi-level brand 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 fourth-tier 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 capabilitiesHaier 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.? Leadership in original technologies:
In 2023, Haier Smart Home adopted an user-oriented approach to tackle users’ pain pointswith continuous innovation efforts, and achieved a series of technological innovations:
successfully researched and developed the magnetically-controlled chilled technology thatsaw us become the first to create a full-coverage, even and constant magnetic spacewithin the freezer, bridging the gap in the industry; originated the first 3D see-throughdrying technology that can directly penetrate cloth surface to gauge the dryness level insidethe machine and stop drying when the clothes are dry; unveiled the X11 washing machinewith the highest energy efficiency standards in Europe, with an energy efficiency standardof A-40%; created the first vertical domain model for smart home that scooped the highestindustry rating of “Double 4+”.
Section III Management Discussion and Analysis
? Certification from authorities:
As of the end of 2023, the Company received a total of 16 State Science and TechnologyProgress Award, more than any other company in the industry. The Company won theDisruptive Technology Innovation Competition of the Ministry of Science and Technology fortwo consecutive years, the highest accolade in the industry.? Leadership in patent quality:
As of the end of 2023, Haier Smart Home has accumulated more than 103,000 patentsapplications globally, including more than 67,000 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 2023, Haier Smart Home once againtopped the list with 6,152 published patent applications, ranking first in the world for thetenth consecutive times.? Leadership in international standards:
As of the end of 2023, Haier Smart Home has cumulatively led and participated in thedrafting of 97 international standards and 678 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 the most internationaldesign gold awards in the industry with six in total and won 3 China Excellent IndustrialDesign Gold Awards from the Ministry of Industry and Information Technology, which is theonly enterprise in China that have earned three consecutive gold awards.
Section III Management Discussion and Analysis
(viii) Sustainability
① Global ESG governance structure: Haier Smart Home has established a global ESG
governance 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.
② Green development and low-carbon operation: Haier Smart Home has formulated the
“6 Green” 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.
③ Social responsibility and charity work: Haier Smart Home actively participates in public
welfare projects such as the Hope Project, rural revitalisation, and emergency relief on aglobal scale, and continues to give back to society through donations and volunteerservices.
④ Leading ESG rating: Haier Smart Home has the leading rating among its peers in China
in respect 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’ (人單合一) model, Haier encourages every employee to maximize their own values while creating valuesfor users. In Haier’s ‘Rendanheyi’ (人單合一) 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’ (人單合一)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.
Section III Management Discussion and Analysis
V. MAJOR OPERATIONS DURING THE REPORTING PERIOD
Please refer to “I. DISCUSSION AND ANALYSIS ON OPERATIONS” and “III. INTRODUCTION OF THECOMPANY’S BUSINESS DURING THE REPORTING PERIOD” under this section.(I) Analysis of principal business
1. Table of movement analysis on the related items in income statement and cash flow
statement
Unit and Currency: RMB
Items
Amountfor current period
Amount forcorrespondingperiod of last yearChange (%)Operating revenue261,427,783,050.10243,578,924,958.477.33Operating cost179,053,959,580.31167,263,342,432.057.05Selling expenses40,978,039,605.3738,600,298,275.476.16Administrative expenses11,489,640,885.8810,846,346,796.515.93Financial expenses514,155,779.97–241,752,219.47N/AR&D expenses10,221,013,589.289,507,384,787.817.51Net cash flow from operating
activities25,262,376,228.3020,256,557,145.8624.71Net cash flow from investing activities–17,085,065,181.85–8,925,734,712.45N/ANet cash flow from financing activities–7,841,032,853.05–3,900,450,140.92N/AOther income1,558,864,654.361,070,103,842.6045.67Gains on changes in fair value19,753,663.05–122,442,933.65N/ACredit impairment loss–242,642,129.31–431,377,480.82N/AGains on disposal of assets–15,342,697.67206,742,815.79–
107.42
Non-operating expenses295,802,566.43190,706,969.7955.11Profit or loss attributable to minority
shareholders135,454,728.8821,258,126.54537.19Reasons for significant changes in certain indicators:
(1). Reasons for the changes in financial expenses: the increase of 312.68% 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 other income: the increase of 45.67% in other income over
the corresponding period was mainly due to the year-on-year increase in governmentgrants;
Section III Management Discussion and Analysis
(3). Reasons for the changes in the gains on changes in fair value: the increase of 116.13%
in gains on changes in fair value over the corresponding period was mainly due to theyear-on-year increase in fair value change of forward contracts;
(4). Reasons for changes in credit impairment loss: the decrease of 43.75% 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;
(5). Reasons for changes in non-operating expenses: the increase of 55.11% 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 profit or loss attributable to minority shareholders: the increase
of 537.19% in profit or loss attributable to minority shareholders over thecorresponding period was mainly due to the increase in earning of some subsidiarieswith minority interest during the current period.Detailed explanation of significant changes in the operation types and the components ofprofit or sources of profit of the company during the current period
□ Applicable √ Not Applicable
2. Analysis of Income and Cost
√ Applicable □ Not Applicable
(1). Principle Operating Activities by Sector, Product, Region and Sales Mode
Unit and Currency: RMBPrincipal operating activities by productBy ProductOperating revenueOperating cost
Gross profitmargin (%)
Operating revenueincreased/decreased yoy (%)
Operating costincreased/decreased yoy (%)
Gross profitmargin increased/decreased yoy (%)Air conditioner45,659,954,167.6732,250,291,838.5529.3713.9812.770.76Refrigerator81,640,696,197.1855,335,233,549.6732.225.164.640.34Kitchen appliances41,588,961,234.8328,293,408,033.9231.977.428.03–
0.39
Water Appliances15,010,842,426.778,089,006,857.4146.118.888.670.10Washing Machine61,272,315,753.2840,872,967,073.7333.296.155.930.14Equipment parts and channel
integrated services15,119,945,331.2313,816,209,393.148.623.745.22–
1.29
Section III Management Discussion and Analysis
Principal operating activities by regionBy regionOperating revenueOperating cost
Gross profitmargin (%)
Operating revenueincreased/decreased yoy (%)
Operating costincreased/decreased yoy (%)
Gross profitmargin increased/decreased yoy (%)Domestic124,614,230,011.1179,297,163,609.4036.377.066.200.52Overseas135,678,485,099.8599,359,953,137.0226.777.607.81–
0.15
Principal operating activities by sales modeSale modeOperating revenueOperating cost
Gross profitmargin (%)
Operating revenueincreased/decreased yoy (%)
Operating costincreased/decreased yoy (%)
Gross profitmargin increased/decreased yoy (%)Domestic—direct salecustomers12,071,968,855.836,481,694,994.3946.318.907.600.65Domestic—distribution andothers112,542,261,155.2872,815,468,615.0135.306.876.070.48Overseas—direct salecustomers5,384,503,473.214,677,974,737.5313.1214.6811.862.19Overseas—trading companiessales130,293,981,626.6494,681,978,399.4927.337.327.62–
0.20
Explanation of principle operating activities by sector, product, region and sales mode
(2). Table of production and sales analysis
√ Applicable □ Not Applicable
Main productsUnits
ProductionvolumeSales VolumeInventory
Production volume
increased/decreased yoy (%)
Sales volumeincreased/decreased yoy (%)
Inventoryincreased/decreased yoy (%)Home Appliance10,000s units/sets11,92711,9782,4584.76.4–
1.7
(3). Performance of major purchase contracts and major sales contracts
□ Applicable √ Not Applicable
Section III Management Discussion and Analysis
(4). Table of cost analysis
Unit: RMB10,000By sector
By sectorCost component
Amount for thecurrent period
Percentage ofthe amount forthe currentperiod in totalcosts (%)
Amount for thecorrespondingperiod of lastyear
Percentage ofthe amount for
thecorrespondingperiod of lastyear in totalcosts (%)
Percentage ofchange of theamount for thecurrent periodcompared tothecorrespondingperiod of lastyear (%)Home ApplianceIndustry
Primary operationcosts
16,491,091100.0015,372,381100.007.28Raw materials14,110,76485.613,135,82485.57.42Labor1,122,3346.8950,4816.218.08Depreciation280,7701.7254,0041.710.54Energy65,9820.481,6210.5–
19.16
Others911,2415.5950,4506.2–
4.13
(5). Change of consolidation scope due to changes on shareholdings of major
subsidiaries during the reporting period
□ Applicable √ Not Applicable
(6). Relevant information on significant changes or adjustments in the Company’s
business, products or services during the reporting period
□ Applicable √ Not Applicable
(7). Major distributors and major suppliers
A. Major distributors of the Company
√ Applicable □ Not Applicable
Revenue from the top five distributors was RMB60,945.63 million, representing
23.3% of the total sales for the year; among the revenue from the top five
distributors, the revenue from related parties was RMB0 million, representing0% of the total sales for the year.The proportion of sales to a single distributor exceeded 50% of the total duringthe reporting period, and new distributor or depending heavily on a fewdistributors were seen among the top five distributors.
□ Applicable √ Not Applicable
Section III Management Discussion and Analysis
B. Major suppliers of the Company
√ Applicable □ Not Applicable
The purchase amount from the top five suppliers amounted to RMB41,251.38million, representing 23.6% of the total purchase amount for the year; amongthe purchase amount from the top five suppliers, the purchase amount fromrelated parties was RMB18,643.33 million, representing 10.6% of the totalpurchase amount for the year.The proportion of purchase from a single supplier exceeded 50%of the totalduring the reporting period, and new supplier or depending heavily on a fewsuppliers were seen among the top five suppliers.
□ Applicable √ Not Applicable
3. Expenses
√ Applicable □ Not Applicable
The increase of 312.68% in financial expenses over the corresponding period was mainlydue to the additional interest expenses incurred overseas as a result of higher interest rateson borrowings due to interest rate hikes during the current period.
4. R&D expenditure
(1). Table of R&D expenditure
√ Applicable □ Not Applicable
Unit: RMBExpensed R&D expenditure for the current period10,219,284,796Capitalized R&D expenditure for the current period601,960,544Total R&D expenditure10,821,245,340Total R&D expenditure as a percentage in
operating revenue (%)4.14Proportion of capitalization of R&D expenditure (%)5.56
(2). Table of R&D Personnel
√ Applicable □ Not Applicable
Number of R&D personnel23,889Percentage of R&D personnel took up in the total employees
(%)21
Section III Management Discussion and Analysis
Educational structure of R&D personnelCategories of educational structure
Number ofpersonnelDoctor’s degree130Master’s degree4,508Bachelor’s degree12,936College Diploma4,605High School diploma or below1,710
Age structure of R&D personnelCategories of age structure
Number ofpersonnelUnder 30 years old (not including 30)8,139
–40 years old (including 30 and not including 40)10,244
–50 years old (including 40 and not including 50)4,306
–60 years old (including 50 and not including 60)1,05760 years old and above143
(3). Explanation
√ Applicable □ Not Applicable
Haier Smart Home always focuses on user experience. Under the guidance ofadhering to the strategy of original technology, it has continuously increased itsinnovation investment, established a global leading R&D system, and has seen acontinuous emergence of innovative achievements. Original technologies havesupported the overall industry-leading positions of the Company’s high-end brands,scenario brands and ecosystem brands. In terms of products, in 2023, the Companycreated a series of excellent solutions that were beyond users’ expectations withlifestyle embodied in technology, such as flat-back refrigerator, Casarte’s Zhongzi (中子) F2 washer-dryer combo, variable split air conditioner, and seamless build-in liftingultra-thin range hood, etc. In the next step, we will continue to increase investment inbasic research and subversive technology research. In terms of intelligencepromotion: focusing on all-scenario solutions such as whole house intelligence, wehave constructed smart living scenarios based on user demand. In terms of greenand dual-carbon: we will undertake the national dual-carbon strategy and activelyimplement the ESG concept. In 2023, the Company strived to enhance thesustainability of its products and solutions by integrating low carbon and energysaving into the whole life cycle of products, remaining its efforts in promotingtechnological and product innovation and developing green and low-carbon productsextended from commodity to industry, with a view to driving the green and high-quality development of the whole industry chain.
Section III Management Discussion and Analysis
(4). Reason for significant change in the composition of R&D personnel and its
impact on the future development of the Company
□ Applicable √ Not Applicable
5. Cash flow
√ Applicable □ Not Applicable
(1). The increase of 91.41% in net cash outflow from investing activities over the
corresponding period was mainly due to an increase in cash payments for theinvestment and construction and purchase of fixed assets, intangible assets, andother long-term assets during the current period;
(2). The increase of 101.03% in net cash outflow from financing activities over the
corresponding period was mainly due to the increase in cash payments for dividenddistribution or interest payments and the additional borrowings during the currentperiod.(II) Explanation for major changes in profit 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 theEnd of Current
Period
Percentage ofAmount at theEnd of CurrentPeriod to TotalAssets (%)
Amount at theEnd of PreviousPeriodPercentage ofAmount at theEnd of PreviousPeriod to TotalAssets (%)
Change in theAmount at theend of CurrentPeriod to theEnd of PreviousPeriod (%)DescriptionTrading financial liabilities953,963,543.830.38519,912,880.910.2283.49Mainly due to the increase
in short-term wealthmanagement productsmeasured at fair valueDerivative financial assets67,565,829.440.03183,185,160.510.08–
63.12Mainly due to the
fluctuation in fair valueof forward foreignexchange contractsDebt investments8,841,233,078.663.491,034,222,222.220.44754.87Mainly due to the new
long-term depositsConstruction in progress5,403,469,596.762.134,094,712,417.611.7331.96Mainly due to the increase
in factory under
construction and
equipmentDevelopment expenses266,490,235.100.11154,480,515.670.0772.51Mainly due to the
investment in
development projects
Section III Management Discussion and Analysis
Name of Item
Amount at theEnd of CurrentPeriod
Percentage ofAmount at theEnd of CurrentPeriod to TotalAssets (%)
Amount at theEnd of PreviousPeriodPercentage ofAmount at theEnd of PreviousPeriod to TotalAssets (%)
Change in theAmount at theend of CurrentPeriod to theEnd of PreviousPeriod (%)DescriptionDerivative financial liabilities168,625,004.970.07104,594,040.660.0461.22Mainly due to the
fluctuation in fair valueof forward foreignexchange contractsNon-current liabilities duewithin one year
3,732,550,549.231.476,294,750,667.082.67–
40.70Mainly due to the
repayment of long-termborrowings due withinone yearLong-term borrowings17,936,302,925.777.0813,590,866,873.435.7631.97Mainly due to the
replacement oflong-term borrowingsdue within one year andnew borrowingTreasury stock5,034,065,107.421.993,857,807,196.381.6330.49Mainly due to the share
repurchase by theCompanyMinority interest2,397,589,814.470.951,290,895,044.450.5585.73Mainly due to the capital
contribution by minorityshareholders of certainsubsidiaries
2. Overseas Assets
√ Applicable □ Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 11,771,244 (unit and currency:
RMB10,000), representing 46.5% of the total assets.
(2) Explanation of high percentage of overseas assets
√ Applicable □ Not Applicable
Unit and Currency: RMBName of overseasassetReason for FormationOperating mode
Operating revenueduring the reporting
period
Net profit of thereporting periodOverseas HomeAppliance andSmart HomeBusiness
Overseas mergers &
acquisitions and theCompany’s owndevelopment
Localized Operationswith the integration ofR&D, manufacturingand marketing
136,411,896,0016,370,417,298Note: Net profit stated in the above table represents operating profit.
Section III Management Discussion and Analysis
3. Restrictions on major assets as of the end of reporting period
□ Applicable √ Not Applicable
4. Other Explanations
□ Applicable √ Not Applicable
(IV) Analysis of industry operating information
□ Applicable √ Not Applicables
(V) Analysis of investmentOverall analysis on external equity investment
√ Applicable □ Not Applicable
During the reporting period, the Company made investments in respect of the establishment of acompressor joint venture and the acquisition of the commercial refrigeration business of CarrierGlobal Corporation. For details, please refer to the Indicative Announcement of Haier SmartHome Co., Ltd. on Establishment of A Compressor Joint Venture disclosed on 20 January 2023and the Voluntary Announcement of Haier Smart Home Co., Ltd. on Acquisition of TheCommercial Refrigeration Business of Carrier Global Corporation disclosed on 14 December2023 by the Company.
1. Significant equity investment
□ Applicable √ Not Applicable
2. Significant non-equity investment
□ Applicable √ Not Applicable
Section III Management Discussion and Analysis
3. Items measured at fair value
√ Applicable □ Not Applicable
Unit and Currency: RMB
Asset Type
OpeningBalanceProfits or Lossesof Changes inFair Value duringthe period
CumulativeChanges in FairValue Included inequity
Provision forImpairment ofduring thePeriod
Purchasesduring theperiodSold/RedeemedAmount duringthe periodOther ChangesClosing BalanceWealth management
products
14,638,968.263,105,706.341,093,550,000.00623,358,572.79487,936,101.81Investment in other equityinstruments
5,851,882,930.20550,686,416.895,738,403.7823,115,128.6118,502,332.516,403,694,954.77Investment in trading equityinstruments
336,843,065.027,973,424.9572,742,043.05-28,850,007.28243,224,439.64Investment funds168,430,847.6338,833,850.2730,275,372.7415229617.11492,548.85222,803,002.38Derivative financialinstruments
61,674,330.75–58,026,743.85–117,694,592.9812,987,830.55–101,059,175.53Total6,433,470,141.86–8,113,762.29432,991,823.9101,129,563,776.52734,445,361.563,132,704.637,256,599,323.07Investment in securities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Type ofsecurities
SecuritiescodeSecuritiesabbreviation
Initial investment
costSources offundingCarrying amountat the beginningof the Period
Profit and lossarising fromchanges in fairvalue during thePeriodAccumulated fairvalue changesincluded inequityPurchases duringthe PeriodDisposals duringthe PeriodInvestment profitor loss during the
period
Carrying amountat the end of the
PeriodAccounting itemsStock601328Bank of
Communications
1,803,769.50Self-funding6,457,074.481,362,252.007,819,326.48Investments in other
equity instrumentsStock600827Bailian Group154,770.00Self-funding477,382.56–103,590.44373,792.12Investments in other
equity instrumentsStock300183Neusoft Carrier18,713,562.84Self-funding9,419,316.302,376,325.4411,795,641.74Investments in other
equity instrumentsStock000959Beijing ShougangSelf-funding70,074,347.2029,925,649.6071,149,989.52–28,850,007.28Trading financial assetsStock688455KENGIC29,450,000.00Self-funding157,181,890.00–10,393,845.80146,788,044.20Trading financial assetsTotal//50,122,102.34/243,610,010.5419,531,803.803,634,987.00—71,149,989.52–28,850,007.28166,776,804.54/
Explanation of investment in securities
□ Applicable √ Not Applicable
Private equity investment
√ Applicable □ Not Applicable
Section III Management Discussion and Analysis
By the end of the reporting period, the Company has historically invested in private equityfunds as follows: the Company invested 63.13% share in Qingdao Haier SAIF Smart HomeIndustry Investment Center (Limited Partnership); Qingdao RRS Huitong InvestmentManagement Co., Ltd. (青島日日順匯通投資管理有限公司), a subsidiary of 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)，asubsidiary of the Company, invested 30% share in Huizhixiangshun Equity Investment Fund(Qingdao) Partnership (Limited Partnership), a private equity fund, and 50% equity ofQingdao Ririshun Huizhi Investment Co., Ltd., a managing partner of funds; Qingdao HaierTechnology Investment Co., Ltd. (青島海爾科技投資有限公司), a subsidiary of theCompany, invested in private equity funds: 1.265% share in Beijing-Tianjin-Hebei IndustrialCoordinated Development Investment Fund (Limited Partnership) (京津冀產業協同發展投資基金（有限合伙）), 14.85% share in Shenzhen TopoScend Capital Phase I Fund (LimitedPartnership) (深圳市投控東海一期基金（有限合伙）), 24% share in Qingdao Haimu SmartHome Investment Partnership (Limited Partnership), and invested in fund managementcompanies: 5.01% equity of CMG-SDIC Capital Co., Ltd. (國投招商投資管理有限公司),15% equity of Shenzhen TopoScend Capital Co., Ltd. (深圳市投控東海投資有限公司),49% equity of Qingdao Haimu Investment Management Co., Ltd.
Derivative investment
√ Applicable □ Not Applicable
(1). Derivatives investments for hedging purposes during the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000
Type of derivativesinvestment
Initial investmentamount
OpeningamountGains or losseson fair valuechanges for thecurrent period
Accumulativechanges in fairvalue included inequity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Closing amount
Proportion ofclosing amountto net assets ofthe Company atthe end of thereporting period
(%)Forward foreign exchangecontracts
1,247,8801,247,880–5,631.26–12,508.671,178,65711.39Forward commoditycontracts
20,80620,806–
171.41739.2111,0090.11Total1, 268,6861,268,686–5,802.67–11,769.461,189,66611.50Explanation on any
significant changes inthe accounting policiesand specific accountingand auditing principlesfor the hedgingbusiness during thereporting period ascompared to the lastreporting period
Accounting principles are based on the Accounting Standards for Business Enterprises. The Company carried out the accounting treatment for its business in
accordance with the relevant regulations of “Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of FinancialInstruments”, “Accounting Standards for Business Enterprises No. 24—Hedge Accounting”, “Accounting Standards for Business Enterprises No. 37—Presentation of Financial Instruments” and “Accounting Standards for Business Enterprises No. 39—Fair Value Measurement” published by theMinistry of Finance and its guidance, to reflect the relevant items in the balance sheet and the statement of profit or loss, which are consistent with thoseof the previous reporting period.
Section III Management Discussion and Analysis
Type of derivatives
investment
Initial investmentamount
Openingamount
Gains or losseson fair valuechanges for the
current period
Accumulativechanges in fairvalue included inequity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Closing amount
Proportion ofclosing amountto net assets ofthe Company at
the end of thereporting period
(%)Explanation on actual profitor loss during thereporting period
The actual profit and loss for the reporting period amounted to RMB112.5567 million.Explanation on the effect of
hedging
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
derivative investments
Self-owned fundsRisk analysis and
explanations on riskcontrol measures forpositions in derivativesduring the reportingperiod (including butnot limited to marketrisk, liquidity risk, creditrisk, 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 of stability, and do not conduct the
foreign exchange transaction for speculative purposes. All foreign exchange funds businesses are based on normal production and operation and rely onspecific business operations to avoid and prevent exchange rate risks. However, there are also certain risks in conducting foreign exchange fundsbusiness:
(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 of currency exchange. It is effective to resist marketfluctuation risk and ensure a reasonable and stable profit level of the Company through forward settlement of foreign exchange.
Forward purchase of foreign exchange: according to the import contract entered with the customer and exchange rate risk, the future currency exchangecost will be fixed through the unilateral 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 are mainly carried out when failed to sign the ordinary forward settlement/purchase of foreign exchange or the costs aretoo high, only serving as the supplement of the above businesses.
Exchange rate fluctuation risk in currency swap business is avoided by adjusting the currency of assets and liabilities in order to match the currency of theassets with the currency of liabilities. 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 businesseshave a real business background and there is no speculation.
Section III Management Discussion and Analysis
Type of derivativesinvestment
Initial investment
amount
Openingamount
Gains or losses
on fair valuechanges for thecurrent period
Accumulativechanges in fairvalue included inequity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Closing amount
Proportion ofclosing amountto net assets ofthe Company atthe end of thereporting period
(%)
(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 the Company’s fixed exchange rate fluctuation, the cost of the Companyafter fixing the exchange rate expenditure may exceeds the cost of not fixing the exchange rate, thus forming a loss of the Company. When the foreignexchange rate changes greatly, 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, the vast deviation from the foreignexchange 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 of the 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 carried out foreign exchange derivative business term or amountcompletely, 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 business and 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 the Board of Directors delegate the President/President Office to take responsibility for the operation and management of the foreign exchange derivatives business, the Treasury Department shall actas the handling department, and finance department 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 of closing default risk.
(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 derivatives business must match with the Company’s predicted receipttime, deposit time or payment time of the foreign currency, or match 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.
Section III Management Discussion and Analysis
Type of derivativesinvestment
Initial investmentamount
OpeningamountGains or losseson fair valuechanges for thecurrent period
Accumulativechanges in fairvalue included inequity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Closing amount
Proportion ofclosing amountto net assets ofthe Company atthe end of thereporting period
(%)
(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 of funds, and conduct funding projections whileformulating trading plans to ensure sufficient funds. In the process of business operations, the Company will plan and utilize margins reasonably, andadjust 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 Management Measures for Hedging Business of Bulk Raw Materials,which contains clear provisions on the authorization scope, approval procedures, risk management and other aspects of hedging transactions. TheCompany shall strengthen internal control management and improve professionalism, implement risk prevention measures and improve the managementstandard of hedging 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 theprovisions of the internal control system to control all aspects of the business, and will implement the Management Measures in accordance with theestablished 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 trading business.
(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 management procedures, and prevent operational risks in the businessin a timely manner.Changes in market price orfair value of investedderivatives during thereporting period, wherespecific methodologyused and the settingsof relevant assumptionsand parameters shouldbe disclosed in the fairvalue analysis ofderivatives
In respect of changes in market prices or fair value of products, gains or losses actually realized from the invested derivatives amounted to RMB112.5567million during the reporting period. As for the specific methodology used and the related assumptions and parameter settings: Foreign exchange andinterest rate swap forward quotations from financial institutions were used.
Litigation case (ifapplicable)
Nil
Section III Management Discussion and Analysis
Type of derivativesinvestment
Initial investmentamount
OpeningamountGains or losses
on fair valuechanges for thecurrent period
Accumulativechanges in fairvalue included inequity
Amountpurchasedduring thereporting period
Amount soldduring thereporting period
Closing amount
Proportion ofclosing amountto net assets ofthe Company atthe end of thereporting period
(%)Disclosure date ofannouncement inrelation to theconsideration andapproval of derivativesinvestment by theBoard (if any)
30 March 2023
Disclosure date ofannouncement inrelation to theconsideration and theapproval of derivativesinvestment byshareholders’ generalmeeting (if any)
26 June 2023
(2). Derivatives investments for investment purposes during the reporting period
□ Applicable √ Not Applicable
4. Detailed progression of material asset regrouping and integration during the
reporting period
□ Applicable √ Not Applicable
(VI) Sale of material assets and equity
□ Applicable √ Not Applicable
(VII) 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.(VIII) Structured entities controlled by the Company
□ Applicable √ Not Applicable
Section III Management Discussion and Analysis
VI. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTUREDEVELOPMENT
(I) Setup and trend of the industry
√ Applicable □ Not Applicable
For details, please refer to the relevant contents of “II. INTRODUCTION OF THE INDUSTRYWHERE THE COMPANY OPERATES DURING THE REPORTING PERIOD” under “Section IIIManagement Discussion and Analysis” in this report.(II) Development strategy of the Company
√ Applicable □ Not Applicable
The Company is committed to become a user-oriented digital enterprise in the IoT era, andbecome the world’s first IoT-based smart home ecosystem brand.
(1) Consumer appliance business
? Refrigerators and washing machines: The Company is committed to drivingtechnological innovation and refining scenario-based solutions to strengthen andexpand our leading position in the domestic market. We will enhance competitivenessin local markets overseas to increase our market share and profitability globally.? Kitchen appliances: In overseas markets, we aim to maintain and expand our leadingpositions in the United States, Australia, and New Zealand. Domestically, we plan torapidly increase our market share by enhancing the Casarte product line andoptimising home improvement channels.? Emerging product categories: We will accelerate R&D as well as marketing efforts fornew product categories such as tumble dryers and dishwashers. We are determinedto enter into new business areas, such as lifestyle appliances and cleaningappliances, to keep up with the growing consumer demand for high-quality living.
(2) Heating, Ventilation and Air Conditioning (HVAC) business
? Air conditioners: The Company will enhance the R&D of core technologies and refineour product lineup to establish professional solution capabilities that lead the industry.By fostering integration within the industrial chain and streamlining productionprocesses, we will lower costs and improve operational efficiency. In addition, we willstrengthen the development of our professional sales channels to deliver moreconvenient and effective customer service.? Water heaters and purifiers: By leveraging our leading position in the water heaterindustry, we are actively expanding into new product lines, such as whole-housewater purification and whole-house heating and cooling systems, to providecomprehensive household water solutions. In overseas markets, we will acceleratebusiness expansion globally by developing products that cater to local marketdemands, expanding professional sales channels, and establishing localisedproduction bases.
Section III Management Discussion and Analysis
(III) Business plan
√ Applicable □ Not Applicable
In 2024, the Company will continue to advance digital transformation. By innovating businessmodels, operational mechanisms, and organisational platforms, we aim to enhance userexperience and operational efficiency and achieve leadership objectives.In established businesses such as refrigerators, washing machines, and water heaters, we willconcentrate on product iteration, innovation of scenario-based solutions, and markettransformation to expand our competitive edge in the domestic market; while introducing newhigh-end products and reinforcing local market presence to increase market share and enhanceprofitability in overseas markets.For growing businesses such as air conditioners, kitchen appliances, and smart buildings, we willenhance competitiveness by establishing industry-leading R&D systems, improving industrial chainintegration, and actively expanding professional sales channels, to lay a solid foundation for theCompany’s long-term stability and growth.To enhance our ability to acquire user traffic in the domestic market, we will strengthen ourdistribution networks and retail capabilities to boost sales, while establishing an effective systemto acquire and monetize traffic on emerging media platforms like Douyin. We will also roll out thewarehouse-to-consumer model to improve supply chain and ensure prompt fulfilment ofconsumer demands. The Casarte brand will undergo a brand enhancement, expand into nichemarkets, and strengthen its capabilities in product innovation, retail, marketing, and top-notchservices. The objective is to strengthen Casarte’s position as a leader in the domestic high-endmarket, increase brand influence, and capture a larger market share.We will strengthen the SAN YI NIAO model as our core offering, continuously improving its userexperience on home appliance and home furnishing integration, end-to-end digital services, andsmart living features. We aim to boost its sales of home appliance product suites, which wouldresult in higher average ticket prices and market conversion rates.For overseas markets, we will focus on driving growth in market share and profitability acrossdifferent regions. (1) Develop product iteration systems tailored to local consumer needs,achieving continuous innovation and upgrades, enhancing competitiveness in high-end markets,and improving price indices and gross profit margins. (2) Accelerate the localisation of regionalsupply chains by optimising local production, warehousing, and logistics processes, to lowercosts and increase responsiveness. (3) Drive retail transformation in distribution networks byenhancing efficiency through digitalisation, and harness cutting-edge technologies such as bigdata and artificial intelligence to streamline business operations and enhance user experience. (4)Foster global collaboration across branding, R&D, procurement, supply chain, and logistics tooptimise global resource allocation, reduce costs and boost efficiency, and bolster globalcompetitiveness.
Section III Management Discussion and Analysis
(IV) Potential risks of the Company
√ Applicable □ Not Applicable
1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white
goods as durable consumer appliances are subject to users’ income levels and theirexpectations of future income growth which will have a certain impact on their willingnessto purchase products. A slowdown in macroeconomic growth causing a decline in users’purchasing power will have a negative impact on industry growth. In addition, a slowdownin real estate market will also have a negative impact on market demand, which willindirectly affect end-user demand for home appliances.
2. Risk of price war caused by intensified industry competition. The white goods industry
is highly competitive with a high degree of product homogeneity. While industryconcentration has been on the rise in recent years, certain sub-sectors may face increasedinventory levels due to supply-demand imbalance, potentially leading to risks such as pricewars. Additionally, rapid technological advancements, a shortage of industry talent,shortened product life cycles and ease of imitation are making it increasingly challenging togenerate profit. Although new products, services and technologies often command higherselling prices, the Company finds itself compelled to invest more in R&D. The Company willactively invest in R&D to introduce innovative products and services, thereby attractingmore users and establishing a lasting brand influence.
3. Risk of fluctuations in raw material prices. The Company’s products and core
components use metal raw materials such as steel, aluminium, and copper, as well ascommodities such as plastics and foam. If raw materials prices continue to rise, it will putcertain pressure on the Company’s production and operations. Additionally, the Companyrelies on third party manufacturers and suppliers for key raw materials, components,manufacturing equipment, and OEM suppliers. Any disruption in supply or significant priceincreases by these suppliers will have a negative impact on the Company’s business. As aleader in the industry, the Company will take measures including volume & price adjustmentmechanism as well as hedging to reduce the risk of raw material fluctuations on itsoperations.
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.
Section III Management Discussion and Analysis
5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the
import and export of the Company’s products involve the exchange of foreign currenciessuch as the U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of therelevant currencies fluctuate, it will have a certain impact on the Company’s financialposition and increase its financial costs. In addition, the Company’s consolidated financialstatements are denominated in Renminbi, while the financial statements of its subsidiariesare measured and reported in the currency of their primary economic environment in whichthe entity operates and are therefore subject to currency exchange risk. In this regard, theCompany uses hedging instruments to reduce its exposure to exchange rate fluctuations.
6. Risk of policy changes. The home appliance industry is closely related to the consumer
market and the real estate market. Changes in macroeconomic policies, consumptioninvestment policies, real estate policies and relevant laws and regulations will affect productdemand from distributors, which in turn will affect product sales of the Company. TheCompany will closely monitor changes in the relevant policies, laws, and regulations, andmake forecasts of market changes, to ensure further development of the Company.
7. Credit risk. There is possibility that the Company will be unable to collect all trade receivables
from its distributors, or distributors are not able to settle the Company’s trade receivablesin a timely manner, in which the Company’s business, financial status, and operationperformance may be affected. In relation to this risk, the Company will maintain flexibility byoffering credit period of 30 to 90 days to certain distributors based on their credit historyand transaction amount.
8. Inventory risk. Excess inventory might occur as the Company cannot always accurately
predict trends and events and maintain appropriate inventory levels; thus, the Companymay be forced to offer discounts or promotions to manage the slow-moving inventory. Onthe other hand, a shortage of inventory may lead to loss of sales opportunities for theCompany. However, the Company will manage its inventory and adjust according to marketsituation and will conduct regular impairment assessment of its inventory.(V) Others
□ Applicable √ Not Applicable
VII. EXPLANATION OF CIRCUMSTANCES AND REASONS FOR NON-
DISCLOSURE BY THE COMPANY IN CONSIDERATION OFINAPPLICABLE REGULATIONS, STATE SECRETS AND COMMERCIALSECRETES
□ Applicable √ Not Applicable
Section IV Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE
√ Applicable □ Not Applicable
During the reporting period, the Company has strictly complied with the requirements of the relevantlaws and regulations, including the Company Law of the People’s Republic of China, Securities Law ofthe People’s Republic of China, Code of Corporate Governance of Listed Companies and the listingrules of its listed jurisdictions. While maintaining high quality development in terms of performance, theCompany has been continuously improving its governance structure, regulating its operation, enhancingthe transparency and quality of its information disclosure, treating various investors fairly, focusing onshareholder return, implementing its equity incentive mechanism and upgrading the level of itscorporate governance.
1. Improving the governance structure
The Company has set up a standardized and orderly corporate governance structure composedof the general meeting of shareholders, the Board of Directors and its special committees(including the Strategy Committee, Audit Committee, Nomination Committee, Remuneration andAssessment Committee and ESG Committee (i.e. Environmental, Social and GovernanceCommittee)), the Board of Supervisors, and the senior management. We have established agovernance mechanism with clear lines of authority and responsibility, mutual coordination andchecks and balances, which has guaranteed efficient and compliant corporate governance.
Board of Supervisors
Remuneration and Assessment Committee
ESG Committee
Audit CommitteeStrategy Committee
Nomination Committee
General meeting of shareholders
Board of DirectorsSenior management
Governance structureDuring the reporting period, the Company has convened a total of four general meeting ofshareholders, five Board meetings, five meetings of the Board of Supervisors, one meeting of theStrategy Committee, five meetings of the Audit Committee, five meetings of the Remunerationand Assessment Committee, one meeting of the Nomination Committee and two meetings of theESG Committee. All meetings and voting procedures complied with relevant provisions specifiedin laws and regulations, the Articles of Association and rules of negotiation, and all voting resultswere legal and valid. These laid a solid foundation for the Company’s standardized operation.
Section IV Corporate Governance
2. General meetings
The Company has strictly complied with the provisions of the Articles of Association and theRules of Procedure for the General Meetings in convening and holding general meetings. Generalmeetings are witnessed by lawyers on site and legal opinions are issued on their legality. TheCompany has established and improved effective channels of communication betweenshareholders and the Board of Directors to ensure the shareholders’ right to information,participation and voting in respect of any significant issues of the Company. During the reportingperiod, the Company has held a total of four general meetings.
3. Board of Directors
The Board of Directors is mainly responsible for deciding the Company’s operational andinvestment plans, formulating the Company’s annual financial budget and final account plans,formulating the Company’s profit distribution plan and loss recovery plans, formulating theCompany’s plans for the increase or reduction of registered capital, issuance of bonds or othersecurities and listing, as well as the powers as stipulated in other laws and regulations and theArticles of Association. During the reporting period, the Board of Directors has held 5 meetings.The Board of Directors operated in accordance with rules and were able to perform their dutiesunder Articles of Association and relevant laws and regulations and practically implement relevantdecisions at the general meetings. The decision-making procedure and particulars of theresolutions of the Board of Directors were in compliance with Articles of Association and relevantrequirements under laws and regulations, and the resolutions made were legal and valid.
(1) Board Diversity
The Company is fully aware that board diversity will help to improve the efficiency indecision-making of the Board of Directors, reduce management risks, and make betterdecisions for the sustainable and healthy development of the Company. In determining thecomposition of the Board of Directors, the Company took full account of the diversity of themembers of the Board, including but not limited to gender, age, culture, educationbackground, industry experience, professional skills, knowledge, term of service and otherrelevant factors. The Nomination Committee is responsible for reviewing the effectivenessand implementation of the Board Diversity Policy and conducting regular annual diversityassessments.During the reporting period, the Board of Directors of the Company consists of 9 directors,including 2 executive directors, 3 non-executive directors and 4 independent directors. 2directors are female, accounting for 22.2% of the Board of Directors, representing anincrease of 13.2% as compared with the previous Board of Directors (9%); 4 of whom areindependent directors, accounting for 44.4% of the Board of Directors, representing anincrease of 8.1% as compared with the previous Board of Directors (36.3%). The membersof the Board of Directors have extensive knowledge and experience in industry experience,Internet of Things, corporate governance, global market experience, financial managementand risk management, which will help the Board of Directors to make the best decisionsand promote the sustainable and healthy development of the Company.
Section IV Corporate Governance
(2) Board Independence
The independent directors of the Company are all senior professionals with expertise inaccounting, finance and business management. During the reporting period, theindependent directors of the Company performed specific duties in accordance with theArticles of Association and the listing rules of its listed jurisdictions, including participating inthe meetings of each of the Company’s special committees, providing advice to theCompany on its operation and management; and providing independent opinion onconnected transactions, profit distribution plans and other significant transactions of theCompany. By performing their duties as mentioned above, the independent directors helpprotect the interests of the Company and the shareholders as a whole, and promote thedevelopment of the Company. The chairman of each of the Company’s special committees(except the Strategy Committee and ESG Committee) are all independent directors. Thenumber of independent directors present at the meetings of the Audit Committee, theRemuneration and Assessment Committee, the Nomination Committee and the StrategyCommittee accounted for at least one-half of the quorum of such meeting (inclusive).
4. Board of Supervisors
During the reporting period, the Board of Supervisors operated in accordance with rules andwere able to perform their duties under Articles of Association and relevant laws and regulations.The number and composition of the members of the Board of Supervisors complied withrequirements under laws and regulations. During the reporting period, the Supervisors of theCompany performed their duties earnestly and supervised finance matters of the Company andperformance of duty by the Company’s director and senior management in accordance withrequirements under Articles of Association and Rules of Procedure for the Board of Supervisors.
5. ESG Governance Structure
Good ESG governance is important in ensuring the stability of a company’s operations,responding to unexpected crises and seizing development opportunities. The Company hasformed an ESG governance structure comprising governance, management and executioncovering its global business units. The ESG Committee has been established by the Board ofDirectors of the Company to conduct comprehensive supervision over the ESG related matters ofthe Company and perform relevant ESG governance duties on behalf of the Board of Directors.The ESG Executive Office and Working Group have been set up under the ESG Committee totake charge of specific ESG work of the Company.The Company’s overseas subsidiaries, GE APPLIANCES, FPA, CANDY and the subsidiary inIndia, have also established sustainable development management structures to promote therelevant ESG work in accordance with their applicable laws and regulations. For details, pleaserefer to relevant information in 2023 Environmental, Social and Governance Report of Haier SmartHome Co., Ltd. published on the same date of this report.
Section IV Corporate Governance
6. Information disclosure
Haier Smart Home has strictly complied with the regulatory requirements on informationdisclosure in China and overseas and fulfilled its information disclosure obligations. During thereporting period, on the basis of improving the level of mandatory information disclosure, theCompany increased voluntary disclosure on matters of key concern to domestic and overseasinvestors and the capital market, such as corporate strategy, strategic investment and acquisitionproject, corporate governance, ESG, so as to continuously enhance the quality and transparencyof disclosure.
7. Treating various investors fairly and focusing on shareholder return
During the reporting period, the Company strengthened communication and exchange withinvestors in an active, open, innovative and professional manner so as to enhance investors’understanding and recognition of, among others, the Company’s strategy and businessoperations and safeguard the legal rights of investors. In accordance with guideline of theManagement System for Investor Relation, the Company integrated business and financialresources by the office of the Board of Directors and realized positive and all-around access toinvestors in a multi-layer and diversified format through introduction reference, annual investorconference, result announcement conference, and online forum. Meanwhile, the Company repliedinvestors on a timely basis by ways of interview, e-mail, phone, fax and the website (http://sns.sseinfo.com) and enhanced interaction with investors, so as to respect and protect the interestsof investors, with the aim of achieving harmonious and mutual success with the Company, staffand investors.The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles ofAssociation and in the Shareholder Return Plan for the Next Three Years of the Company inimplementing the profit distribution policy. As at 31 December 2023, the Company had achievedcumulative cash dividends of approximately RMB29,700 million since the listing of A-share in1993. During the reporting period, the Company repurchased a total of 63,980,252 shares in theA-share market, with a payment of RMB1,430 million; in the H-share market, a total of8,483,600 shares were repurchased, with a payment of HK$200 million.
8. Incentive mechanisms
The Company has been adhering to the management model of “RenDanHeYi”, and taking the“maximization of the value of people” as the core. In line with the global landscape of the capitalmarket, the Company has established a short-term plus mid to long-term incentive system whichaligns the interests of employees and all shareholders. During the reporting period, the Companyhas continued its incentive plan for the previous period and continued to introduce andimplement domestic and overseas incentive plans with various appraisal cycle, multi-level andall-round benefits, including A-Share Core Employee Stock Ownership Plan, H-Share CoreEmployee Stock Ownership Plan, H-Share Overseas Trust Incentive Plan, and A-Share OptionIncentive Scheme. The Company has also optimized its relevant assessment indicators accordingto the Company’s situation to ensure a deeper and more effective alignment of interests betweenthe participants and the Company.
Section IV Corporate Governance
Whether there is a significant difference between the corporate governance and requirements inrespect of corporate governance of listed companies of laws, administrative regulations and theCSRC; if so, the reasons should be explained
□ Applicable √ Not Applicable
II. SPECIFIED MEASURES ADOPTED BY THE CONTROLLING
SHAREHOLDERS AND ULTIMATE CONTROLLERS TO MAINTAININDEPENDENCE WITH RESPECT TO ASSETS, PERSONNEL, FINANCE,ORGANIZATION, BUSINESS, AND THE SOLUTIONS ADOPTED,WORKING PROGRESS AND SUBSEQUENT WORKING PLANS IN CASEOF THE COMPANY’S INDEPENDENCE BEING AFFECTED
□ Applicable √ Not Applicable
Controlling shareholders, ultimate controllers and other parties controlled by them engaged in businessthat are same as or similar to the company, peer competition and impact of significant changes inpeer competition on the company, solutions adopted, working progress and subsequent solution plans
□ Applicable √ Not Applicable
III. BRIEF INTRODUCTION TO THE GENERAL MEETINGS OFSHAREHOLDERS
MeetingsDate
Index for details of websites designatedfor publishing resolutionsDate of disclosureResolutions approved2022 Annual General
Meeting
26 June 2023For details, please refer to the Announcement
on Resolutions Passed at the 2022 AnnualGeneral Meeting, 2023 First A SharesClass Meeting, 2023 First D Shares ClassMeeting and 2023 First H Shares ClassMeeting of Haier Smart Home Co., Ltd.(L2023–027) published by the Company onthe website of Shanghai Stock Exchange(www.sse.com.cn) and the four majorsecurities Newspapers.
27 June 2023Considered and approved the
resolutions related to annualreport, internal control auditreport, profit distributionproposal, reappointment ofauditor, external guarantees,renewal of financial-relateddaily connected transactions,general mandate to additionalissue/repurchase, employeestock ownership plans, etc.2023 First A Shares Class
Meeting
Considered and approved the
resolutions for generalmandate to repurchase2023 First D Shares Class
Meeting2023 First H Shares Class
MeetingPreferred shareholders whose voting rights have been restored requested an extraordinary generalmeeting
□ Applicable √ Not Applicable
Section IV Corporate Governance
Explanation of Shareholders’ general meeting
√ Applicable □ Not Applicable
The 2022 Annual General Meeting and the 2023 First A/D/H Shares Class Meetings of theCompany was held in successive order by way of on-site voting, off-site voting and network voting bypoll at Room B101, Haier RenDanHeYi Research Center, Haier Science and Technology InnovationEcological Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 26 June 2023, consideringthe annual report and other relevant resolutions. The total number of the shares of the Companycarrying voting right amounted to 9,328,695,050 shares (of which 6,199,132,811 shares were Ashares, 271,013,973 shares were D shares and 2,858,548,266 shares were H shares). 1,031shareholders and proxies, representing 6,422,740,689 shares or 68.85% of the total number of theshares of the Company carrying voting right, were present at the 2022 Annual General Meeting. 955shareholders and proxies, representing 4,126,409,131 shares or 66.56% of the total number of Ashares of the Company carrying voting rights, were present at the 2023 First A Shares Class Meeting;66 shareholders and proxies, representing 175,964,322 shares or 64.93% of the total number of Dshares of the Company carrying voting rights, were present at the 2023 First D Shares Class Meeting;9 shareholders and proxies, representing 2,122,075,173 shares or 74.24% of the total number of Hshares of the Company carrying voting rights, were present at the 2023 First H Shares Class Meeting.The Directors, supervisors and senior management of the Company as well as the lawyers engaged bythe Company also attended the abovementioned four meetings. The abovementioned four meetingswere convened by the Board of the Company, and Chairman Mr. Li Huagang presided over thesemeetings. The Company had 9 Directors, of whom 9 Directors attended the meetings; the Companyhad 3 supervisors, of whom 3 supervisors attended the meetings. The secretary of the Board of theCompany attended the abovementioned meetings and other members of senior management of theCompany were invited to attend the abovementioned meetings.
Section IV Corporate Governance
IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period
√ Applicable □ Not Applicable
Unit: share
NameTitleGenderAge
Appointmentdate
Expiration dateof appointment
Shareholdingsat the beginningof the year
Shareholdingsat the endof the year
Increase/decrease insharesfor the year
Reason forincrease/decrease
Totalremunerationreceived fromthe Companyduring thereportingperiod(RMB0’000)(before tax)
Whetherreceiveremunerationfrom theCompany’srelated partyLi HuagangChairman, presidentMale5528 June 202227 June 2025814,245919,710105,465Employee stock
ownership plan vested
256.63NO
Shao XinzhiVice ChairmanFemale5428 June 202227 June 2025101101Not paid by
the Company
YESGong WeiDirector, Chief Financial
Officer, vice president
Male5128 June 202227 June 20251,943,4982,004,72461,226Employee stock
ownership plan vested
195.02NO
Yu Hon ToDirectorMale7628 June 202227 June 202532NOLi Kam FunDirectorFemale7228 June 202227 June 202532NOChien Da-chunIndependent directorMale7128 June 202227 June 202532 NOWong Hak KunIndependent directorMale6828 June 202227 June 202532 NOLi ShipengIndependent directorMale5728 June 202227 June 202532 NOWu QiIndependent directorMale5728 June 202227 June 202532 NOLiu DalinChairman of the Board of
Supervisors
Male4428 June 202227 June 202511,47036,67625,206Employee stock
ownership plan vested
Not paid bythe Company
YESMa YingjieSupervisorFemale5528 June 202227 June 20257,04512,7195,674Employee stock
ownership plan vested
28.2NO
Yu MiaoEmployee supervisorMale4228 June 202227 June 20252,4796,4363,957Employee stock
ownership plan vested
40.4NO
Xie JuzhiVice presidentMale5828 June 202227 June 202533,695101,64167,946Employee stock
ownership plan vested
179.95NO
Li PanVice presidentMale4828 June 202227 June 2025567,225598,48031,255Employee stock
ownership plan vested
147.09NO
Zhao YanfengVice presidentMale4728 June 202227 June 202581,229146,45865,229Employee stock
ownership plan vested
259.66NO
Li YangVice presidentMale4828 June 202227 June 202523,02071,26248,242Employee stock
ownership plan vested
168.03NO
Song YujunVice presidentMale4928 June 202227 June 2025130,345191,18260,837Employee stock
ownership plan vested
203.95NO
Guan JiangyongVice presidentMale4628 June 202227 June 202595,609163,55567,946Employee stock
ownership plan vested
216.75NO
Wu YongVice presidentMale4628 June 202227 June 2025176,208238,96462,756Employee stock
ownership plan vested
198.01NO
Huang XiaowuVice presidentMale4728 June 202227 June 202526,23476,70850,474Employee stock
ownership plan vested
111.72NO
Liu XiaomeiSecretary to the Board of
Directors
Female3928 June 202227 June 20255,10613,9538,847Employee stock
ownership plan vested
43.44NO
Total/////3,917,5094,582,569665,060/2,240.85/
Note: all the shares in the above table are A-shares.
Section IV Corporate Governance
NameMajor working experienceLi HuagangMale, born in 1969. He graduated from Huazhong University of Science
and Technology in 1991 with a Bachelor’s degree of Economics, andfrom China Europe International Business School in 2014 with a degreeof Executive Master of Business Administration (EMBA). He is currentlychairman and president of Haier Smart Home Co., Ltd. Mr. Li Huagangjoined Haier in 1991 and served as the sales head of the Marketing andPromotion Division of Haier (海爾商流本部銷售事業部長) and the generalmanager of China operations of Haier Smart Home. From August 2017 toMarch 2019, he served as the chief executive officer of Haier Electronics.Since March 2019, Mr. Li Huagang has been appointed as an executivedirector of Haier Electronics. He has been an executive director andpresident of the Company since 2019. Mr. Li Huagang has extensiveexperience in the fields of corporate management, marketing, brandoperation, and global business operation. Mr. Li Huagang wassuccessively awarded 2015 China Home Appliance Marketing Leader,Award of Outstanding Contribution in 40-Years Development of China’sHome Appliance Industry 2018, 2019 Person of the Year of China’s TopTen Brands, 2021 Taishan Industry Leading Talent and 2023 ModelWorker in Shandong Province.Shao XinzhiFemale, born in 1970, holds a Master of Business Administration degree,
and is a senior accountant. She currently serves as the vice presidentand Chief Financial Officer of Haier Group, as well as the vice chairmanof Haier Smart Home. Ms. Shao adheres to the goal of innovation andvalue-enhancement, empowering the high-quality development of theindustry, and comprehensively builds the group’s financial ecosystemthrough financial strategy formulation, financial system construction andoperation, asset management, capital operation and other financial fullvalue chain management. In 2000, Ms. Shao served as the chiefaccountant of Haier Air Conditioning Division and the general manager ofthe strategy center of Haier Group’s financial management department.In 2007, Ms. Shao established the first financial sharing center in thehome appliance industry, pioneering the “cloud + end” financialmanagement innovation model with Chinese characteristics to provideenterprises with comprehensive financial best solutions, becoming one ofthe industry benchmarks and winning the first prize of the NationalEnterprise Management Modernization Innovation Achievement. In 2019,Ms. Shao was appointed as the vice president of Haier Group and theoperator of the Big Sharing Empowerment Platform. In 2020, Ms. Shaowas appointed as vice president and Chief Financial Officer of HaierGroup. Ms. Shao has been honored as “National Advanced AccountingWorker”, “Qingdao Top Talent”, “ACCA Outstanding Achievement Award”and “IMA Outstanding Contribution Leader in Management Accounting”over the years.
Section IV Corporate Governance
NameMajor working experienceGong WeiMale, born in 1973. He graduated from the University of International
Business and Economics in 2011, and obtained a degree of ExecutiveMaster of Business Administration. He also holds membership in theCIMA Chartered Institute of Management Accountants. Mr. Gong Weiserved as the financial manager of Haier Smart Home Co., Ltd, the seniorfinance manager and senior financial analyst of Haier Group, the ChiefFinancial Officer of Haier Washing Machine Division, the Chief FinancialOfficer of Haier Air Conditioning Division, the Chief Financial Officer ofHaier White Goods Group, with extensive experience in financialmanagement. Mr. Gong Wei was granted honorary titles such as YoungPost Expert in Qingdao City (青島市青年崗位能手), Qingdao Top Talent(青島市拔尖人才), Outstanding Accounting Workers in ShandongProvince (山東省優秀會計工作者) and National Outstanding AccountingWorkers (全國優秀會計工作者), and received several awards, including2011 Top Ten CFO in China by “New Money” Magazine (《新理財雜志》),2020 International Finance Leaders of the Year in China. He is currently adirector, the Chief Financial Officer and vice president of Haier SmartHome Co., Ltd.Yu Hon ToMale, born in 1948. He holds a Bachelor of Social Science degree from
Chinese University of Hong Kong. He is a Fellow of the Institute ofChartered Accountants in England and Wales and an Associate Memberof Hong Kong Institute of Certified Public Accountants. Mr. Yu is achartered accountant with over 40 years’ experience in the fields ofauditing, corporate finance (including advisory on IPO, mergers &acquisitions and financial restructuring), financial investigation andcorporate governance. Mr. Yu was formerly a partner of a renownedinternational accounting firm with extensive experience in the corporatefinance advisory assignments in Greater China for Hong Kongcorporations, private equity groups and multinationals. He is currently adirector of 11th session of the Board of Directors of Haier Smart HomeCo., Ltd.
Section IV Corporate Governance
NameMajor working experienceLi Kam FunFemale, born in 1952. She graduated from University of Hong Kong with
Bachelor of Arts and Master of Business Administration degrees. She wasconferred with the degree of Doctor of Business Administration, honoriscausa, from the Hong Kong Metropolitan University in 2014. Ms. Li KamFun served as an independent non-executive director in the board ofHaier Electronics Co., Ltd., from 2013 to 2020 and currently serves as adirector of the 11th session of the Board of Directors of Haier SmartHome Co., Ltd. Prior to that, Ms. Li Kam Fun had a distinguished careerthat spanned 34 years with Amway Corporation. When she resigned in2011, she held the concurrent positions of Executive Vice President ofAmway Corporation and Executive Chairman of Amway China Co. Ltd.responsible for Amway Greater China & Southeast Asia Region. Fouryears later after her retirement from Amway, Ms. Li Kam Fun took up therole of president of Our Hong Kong Foundation in early 2015, and heldthe position until the end of 2022. Ms. Li Kam Fun had also been anindependent non-executive director of numerous world-renownedbusiness corporations including Nestle S.A, (a publicly listed company onthe SIX Swiss Exchange) from 2012 to 2023, Amcor Limited (a companylisted on the Australian Securities Exchange) from 2014 to 2019, TrinityLimited (a company listed on the Main Board of the Hong Kong StockExchange) from 2011 to 2020. Ms. Li Kam Fun’s leadership was wellrecognised in the business community. She was twice named the“World’s 100 Most Powerful Women” by Forbes Magazine in 2008 and2009. CNBC awarded Ms. Li Kam Fun with the “China TalentManagement Award” in its 2007 China Business Leaders Awards. Ms. LiKam Fun currently serves as a member of the Election Committee ofHong Kong Special Administration Region (“HKSAR”), a member of theSocial Development Expert Group of the Chief Executive’s Policy Unit ofHKSAR, an honorary special representative, a conference consultant andhonorary president of All-China Women’s Federation, a permanenthonorary director of The Chinese General Chamber of Commerce、acourt member of the Hong Kong Metropolitan University and a memberof the advisory panel of the Xiqu Centre of the West Kowloon CulturalDistrict Authority.Chien Da-chunMale, born in 1953. He served as Chief Executive Officer of IBM ASEAN/
South Asia, Chairman and Chief Executive of IBM Greater China region.He graduated from the Department of Mathematics of TamkangUniversity of Taiwan, and studied advanced management courses in theInstitute of Business Administration of Harvard University, as well as theglobal senior manager courses of International Business MachinesCorporation (IBM). He is currently an independent director of the 11thsession of the Board of Directors of Haier Smart Home Co., Ltd, adirector of ENN Group and professor of Management Practice at theSchool of Business of Renmin University of China/Academic Director ofEE Centre.
Section IV Corporate Governance
NameMajor working experienceWong Hak KunMale, born in 1956. He received a Bachelor’s of Social Science degree
from University of Hong Kong. He has over 36 years of experience inauditing, assurance and management in Deloitte China. He has been apartner of Deloitte China since 1992 and served as a member of theboard of directors of Deloitte China from 2000 to 2008. Prior to hisretirement in May 2017, Mr. Wong was Deloitte China’s NationalManaging Partner of Audit & Assurance. Mr. Wong is an associate of theHong Kong Institute of Certified Public Accountants (HKICPA), anassociate of the Association of Chartered Certified Accountants (ACCA),an associate of the Chartered Institute of Management Accountants(CIMA), an associate of The Chartered Governance Institute (previouslyknown as “The Institute of Chartered Secretaries and Administrators”). Hecurrently serves as an independent non-executive director of Yue YuenIndustrial Holdings (Limited), Lung Kee (Bermuda) Holdings Limited,Guangzhou Automobile Group Co., Ltd., Hangzhou SF Intra-CityIndustrial Co., Ltd. and Haier Smart Home Co., Ltd.Li ShipengMale, born in 1967. He holds a bachelor’s and Master’s degree from
University of Science and Technology of China, and a PhD degree fromLehigh University, USA. Mr. Li has extensive experience in Internet ofThings technology and artificial intelligence. Mr. Li is currently a chairscientist at the International Digital Economy Academy and an executivedirector of the Low Altitude Economic Branch. Prior to that, he served asthe Chief Researcher and Deputy Dean of Microsoft Research Asia, ChiefTechnology Officer of Cogobuy Group, Vice President of iFlytek Group,Executive President and Chief Scientist of Shenzhen Institute of ArtificialIntelligence and Robotics. Mr. Li is a member of the InternationalEurasian Academy of Sciences and a fellow of the International Instituteof Electrical and Electronics Engineers (IEEE fellow). He was listed as oneof the world’s top 1,000 computer scientists by Guide2Research andranked top 20 in Mainland China in 2020. Mr. Li is a renowned expert inInternet, computer vision, cloud computing, Internet of Things andartificial intelligence. He is currently an independent director of the 11thsession of the Board of Directors of Haier Smart Home Co., Ltd.
Section IV Corporate Governance
NameMajor working experienceWu QiMale, born in 1967. He has 25 years of (New PCEBG) experience in
world-class management and consulting companies. He is currently anindependent director of the 11th session of the Board of Haier SmartHome Co., Ltd. He served as the vice president (Global) and vicechairman (Greater China) of Accenture, and the chairman of Shun ZheTechnology Development Co., Ltd. He was a member and the president(Greater China) of Roland Berger’s Global Management Committee, amember of Roland Berger’s Global Supervisory Board, a seniorconsultant for Foxconn’s D sub-business group strategy and intelligentmanufacturing and a consultant of Xnode, a famous accelerator forstartups. He was awarded 2015 Outstanding Talent in Jing’an District,Shanghai. Mr. Wu Qi’s experience in consulting industry involvestransportation/logistics, high-tech manufacturing, tourism, finance,consumer goods, real estate, government departments and otherindustries. He has extensive experience in development strategy,organizational change, sales and brand strategy, corporate innovation,digital transformation and intelligent manufacturing, post-mergerintegration, regional industrial and economic development and upgrading.Mr. Wu Qi is a well-known expert in China in Industry 4.0, transportationand regional planning and development. He served as a consultant forHangzhou Bay Development Planning, a member of the IntelligentManufacturing Expert Committee of Municipal Government, deputy headof the 13th Five-Year Planning Expert Committee of Zhengzhou City,Henan Province, vice chairman of China Cold Chain Alliance.Liu DalinMale, born in 1980, Chinese nationality with no right of permanent
residency abroad. He graduated from the School of MechanicalEngineering of Jinan University and holds a Master’s degree in BusinessAdministration from Renmin University of China. He is a senior engineer.Since August 2005, he served as a designer of water heater departmentof Heater Head Office at Haier Group, an assistant R&D engineer, a R&Dengineer and a R&D model manager of the heater R&D center of theHeater Head Office of Haier Group successively, among other things.From July 2020 to March 2021, he served as the president of the Boardof Supervisors of Gooday Supply Chain Technologies Co., Ltd., amongother things. Mr. Liu has been the chairman of the Board of Supervisorsof Haier Smart Home Co., Ltd. since June 2021.Ma YingjieFemale, born in 1969. She is a political engineer, once served as the
secretary of the Youth League Committee of Haier Smart Home Co., Ltd.,the secretary of the labour union of Haier Smart Home Co., Ltd., thecontact person of the customer service department of Qingdao HaierDishwasher Co., Ltd. Currently, she is the head of Society andCommunity department and the supervisor of the 11th session of theBoard of Supervisors of Haier Smart Home Co., Ltd.
Section IV Corporate Governance
NameMajor working experienceYu MiaoMale, born in 1982, Chinese nationality. Mr. Yu holds a master’s degree.
He serves as the legal manager of Haier Smart Home Co., Ltd. sinceApril 2012, and serves as the employee supervisor of Haier Smart HomeCo., Ltd. since January 2019.Xie JuzhiMale. He graduated from Shandong University of Finance and Economics
in July 1989 with a Bachelor’s degree, and joined Haier in the same year.Mr. Xie has experience in whole-process product management, product-wide services and product-wide marketing. Mr. Xie has held seniorpositions in Electrothermal Division of Haier Group and East ChinaMarketing and Promotion Division of the Haier Group. Since August2002, he has been the general manager of Haier Customer ServiceCompany (海爾顧客服務公司). Since July 2012, he has been the VicePresident of Haier Group in charge of the Group’s integration ofcommunity sales services in first and second-tier cities, and developingthe online and offline sales of new household products. Since December2015, he has been managing the newly developed business segments ofHaier Group, including water purification, logistics, Haier home andGooday services. He is also in charge of the water heater business since2019 and has been appointed as the Chief Executive Officer and anexecutive director of Haier Electronics since 27 March 2019. Since April2021, he is responsible for supervising the smart living appliancessegment. Mr. Xie was awarded honorary titles including the Gold Awardof Outstanding Contribution Award of China’s Home Appliance ServicesIndustry (中國家電服務行業突出貢獻獎金獎) and OutstandingEntrepreneur of Shandong Province (山東省優秀企業家). He is currentlyresponsible for supervising the intelligent industrial platform and is thevice president of Haier Smart Home.Li PanMale, born in 1976, is a senior engineer. He graduated from Wuhan
University in 1997 and obtained the double degree in economics andinternational business administration. He obtained a Master’s degree fromChina Europe International Business School in 2017. He joined Haier in1997 and currently serves as the general manager of the overseasplatform of Haier Smart Home. Mr. Li Pan has held various positions inHaier Group, including the assistant director of Asia-Pacific Division, themanager of the Haier ASEAN Center, the manager of the OverseasBrands Marketing Center, the manager of the Overseas Strategic Centerand the director on the operation of overseas markets. He has heldimportant positions of the overseas platform of Haier Group since 2004with extensive frontline management experience in product planning,brand marketing, market exploration and corporate operation. He iscurrently the vice president of Haier Smart Home Co., Ltd.
Section IV Corporate Governance
NameMajor working experienceZhao YanfengMale, born in 1977. He graduated from Tianjin Institute of Light Industry
and obtained a Bachelor’s degree in Mechanical and ElectronicEngineering in 2001. He graduated from Renmin University of China andobtained an Executive Master degree in Business Administration in 2019.He is currently the vice president and general manager of the washingbusiness of Haier Smart Home Co., Ltd. Mr. Zhao Yanfeng joined Haierin 2001 and served as the general manager of Haier Group’s regionalbranch, general manager of the refrigeration business in China andgeneral manager of the refrigeration business. He possesses whole-process management experience in product planning, research anddevelopment, manufacturing and marketing.Li YangMale, born in 1976, is a senior engineer. He currently serves as the
general manager of the integrated supply chain of Haier Smart Home andvice president of Haier Smart Home Co., Ltd. Mr. Li Yang graduated fromQingdao University of Science & Technology in 1998 and obtained aBachelor’s degree in Fine Chemical Engineering. He joined Haier inAugust of the same year. Mr. Li Yang has held positions of the head ofthe quality department of Haier Smart Home, the manufacturing director,the general manager of the internet of clothing platform, the generalmanager of the integrated supply chain. He has served as the generalmanager of the integrated supply chain of Haier Smart Home since 2023,and has been engaged in management concerning end-to-end processand digital transformation of the integrated supply chain of Haier SmartHome. He obtained a degree of Executive Master of BusinessAdministration (EMBA) from Xi’an Jiaotong University in 2022. Theecological platform of the internet of clothing incubated under hisleadership was awarded the first prize for “Innovation Results in ModernManagement of National Light Industry Enterprises” (全國輕工業企業管理現代化創新成果) in 2019. Haier Smart Home was selected as one ofthe “2023 Intelligent Supply Chain Cases” (2023數智化供應鏈案例) by theAlliance of Industrial Internet, and he received the “Most PromisingEntrepreneur in Qingdao in 2018” and the “Advanced Individual inManagement Innovation of National Light Industry Enterprises”.
Section IV Corporate Governance
NameMajor working experienceSong YujunMale, born in 1975. He graduated from Shandong University of
Technology with a bachelor’s degree in equipment engineering andmanagement in 1998, and received a degree of Executive Master ofBusiness Administration from Tsinghua University in 2015. He joined Haierin 1998 and served as general manager of the Operation Department ofHaier Overseas Promotion Headquarters, director and general manager ofHaier Pakistan Company, executive director of Haier India Company,director of Haier Overseas businesses in South Asia and Southeast Asiaregion, and vice president of Haier Home Appliance Industry Group.Since 1998, he has held various important positions in Haier overseascompanies and has rich experience in product, manufacturing, R&D andmarketing. He was awarded the Labor Model of Qingdao City, theOutstanding Talent in Professional Technology in Qingdao City, QingdaoHigh-level Service Talent, the first prize of the 2023 Science andTechnology Advancement Award of China National Light Industry Council(2023年度中國輕工業聯合會科技進步獎) and the first prize of theInnovation Award 2023 of Energy Conservation Association (2023年節能協會創新獎) and other honorary titles. He is currently the generalmanager of Haier Air Industry Group and vice president of Haier SmartHome Co., Ltd.Guan JiangyongMale, born in 1978. He graduated from Northeast Electric Power
University in 2001 and obtained a Bachelor’s degree in ManagementInformation System. Mr. Guan Jiangyong joined Haier in 2001 andcurrently serves as the general manager of water heater and the internetof water platform. Mr. Guan Jiangyong has been responsible for productmanagement, production and manufacturing, product marketing andindustrial pipeline management and served as a regional generalmanager, the market director of the water heater business and thegeneral manager of the internet of water platform and the water heaterbusiness. He possesses whole-process management experience inproduct manufacturing, marketing, corporate planning management andindustrial platforms. He is currently the vice president of Haier SmartHome Co., Ltd.Wu YongMale, born in 1978. He graduated from Tianjin College of Commerce in
2001 and obtained a Bachelor’s degree in Heat Supply, Ventilation andAir-conditioning Engineering. He obtained the double degree of EMBAfrom the School of Economics and Management of Tsinghua Universityand the INSEAD in 2015. Mr. Wu Yong joined Haier Group in 2001 andcurrently serves as the general manager of the kitchen appliances ofHaier Smart Home. Mr. Wu Yong has served as the general manager ofthe PRC Region on manufacturing and production of refrigerators,overseas marketing and the air-conditioning business since joining theGroup and possesses whole-process management experience in high-end manufacturing, marketing and industrial platforms. He is currently thevice president of Haier Smart Home Co., Ltd.
Section IV Corporate Governance
NameMajor working experienceHuang XiaowuMale, born in 1977. He graduated from the College of Photoelectric
Engineering, Chongqing University with a Bachelor’s degree inengineering in 1998 and graduated from the Faculty of Business andEconomics of the University of Hong Kong with a master’s degree inbusiness administration in 2004. Mr. Huang has many years of extensiveworking experience in commercial banking, strategic investment, industrialfund, corporate finance and capital market operation and management,and has participated in and led important strategic investment andfinancing projects involving numerous fields such as marketing channels,logistics, home appliances and technology industry. Mr. Huang wasappointed as the vice president of the Company in 2021, responsible for,amongst others, investor relations, capital market, equity financing andstrategic investment, and served as the Director of the ESG ExecutiveOffice of Haier. Prior to that, Mr. Huang worked as the deputy generalmanager of Haier Electronics Group Co., Ltd., a company listed on theStock Exchange, which is controlled by the Company. Before joiningHaier Group, Mr. Huang worked at the Ningbo branch and Shanghaibranch of the Industrial and Commercial Bank of China, InvestmentBanking Division of Guosen Securities and Anglo Chinese InvestmentBanking Group (英高投資銀行集團).Liu XiaomeiFemale, born in 1985. She graduated from the Law School of Minzu
University of China with a double bachelor’s degree in law and literaturein 2009, and graduated from the Department of International Law of theChina Foreign Affairs University with a master’s degree in internationallaw in 2011, and is qualified to practice law in China. Ms. Liu joined theCompany in June 2015 and has been in charge of legal and compliancematters of corporate governance, capital market, M&A and corporatefinance at Haier Electronics Group Co., Ltd. and Haier Smart Home. Sheis currently the Board Secretary of the Company. Prior to joining theCompany, Ms. Liu worked for Jingtian & Gongcheng in Beijing. Ms. Liuhas accumulated extensive work experience in corporate governance,capital market, industrial fund, and investment and financing.Other information
□ Applicable √ Not Applicable
Section IV Corporate Governance
(II) Appointment of current and departing of Directors, Supervisors and SeniorManagement during the reporting period
1. Appointment in shareholder units
√ Applicable □ Not Applicable
NameName of shareholder unitPosition
Start date ofappointment
End date ofappointmentShao XinzhiHaier Group CorporationVice president and Chief
Financial Officer ofHaier Group
2020Shao XinzhiQingdao Haier Venture &
Investment InformationCo., Ltd.
SupervisorLiu DalinHaier Group CorporationMember of the Party
Committee, chairmanof the Board ofSupervisors, head ofthe organizationdepartment
June 2022
Explanation ofappointmentin shareholderunits
Nil
2. Appointment in other units
√ Applicable □ Not Applicable
NameName of other unitPosition
Start date ofappointment
End date ofappointmentLi HuagangQingdao Haier Multimedia Co Ltd.ChairmanGong WeiPegasus Telecom (Qingdao) Co.,
Ltd.
DirectorGong WeiPegasus Electronic (Qingdao) Co.,
Ltd.
DirectorGong WeiQingdao Haier Communications
Co., Ltd.
DirectorGong WeiQingdao Haier Multimedia Co.,
Ltd.
DirectorGong WeiHaier Group Finance Co., Ltd.DirectorYu Hon ToKeck Seng Investments (Hong
Kong) Limited
Independent non-executivedirector
April 2013Yu Hon ToMS Group Holdings LimitedIndependent non-executive
director
May 2018Yu Hon ToChina Resources Gas Group
Limited
Independent non-executivedirector
December 2012Yu Hon ToOne Media Group LimitedIndependent non-executive
director
June 2005
Section IV Corporate Governance
NameName of other unitPosition
Start date ofappointment
End date ofappointmentYu Hon ToPlaymates Toys LimitedIndependent non-executive
director
May 2021Wong Hak KunYue Yuen Industrial (Holdings)
Limited
Independent directorJune 2018Wong Hak KunLung Kee (Bermuda) Holdings
Limited
Independent directorJune 2018Wong Hak KunGuangzhou Automobile Group
Co., Ltd.
Independent directorMay 2020Wong Hak KunHangzhou SF Intra-City Industrial
Co., Ltd.
Independent directorDecember 2021Li ShipengApplied Artificial Intelligence
Research Center Of theSuzhou Industrial TechnologyResearch Institute
Director (concurrently)August 2020To dateLi ShipengThe Chinese University of Hong
Kong (Shenzhen)
Visiting Professor (concurrently)February 2021February 2024Li ShipengENN Group Co., Ltd.DirectorSeptember 2021September 2024Li ShipengInternational Digital Economy
Academy (Futian)
Chair scientistMay 2022To dateLi ShipengThe Hong Kong University of
Science and Technology(Guangzhou)
Part-time Professor (concurrently)July 2022July 2024Li ShipengCommunication University of
Zhejiang
Director of the EngineeringDepartment (concurrently)
February 2023February 2026Li ShipengSuzhou Beiang Technology Co.,
Ltd.
Independent directorMarch 2023October 2023Li ShipengJiangsu Hichain Logistics Co.,
Ltd.
Chief Scientist (concurrently)October 2023To dateHuang XiaowuQingdao Overseas Chinese
Industrial Co., Ltd.
DirectorOctober 2022To dateExplanation ofappointment inother units
Nil
Section IV Corporate Governance
(III) Compensation of Directors, Supervisors and Senior Management
√ Applicable □ Not Applicable
Decision-making process ofcompensation of Directors,Supervisors and SeniorManagement
The Remuneration and Assessment Committee of theCompany shall formulate the standards, adjust principles,and assess and implement the principles of theremuneration of directors, supervisors and seniormanagement personnel and submit to the Board ofDirectors for consideration and approval.Directors abstain from discussions
on their remuneration at theBoard of Directors
YesThe Remuneration andAssessment Committee orspecial meeting of independentdirectors providedrecommendation oncompensation of Directors,Supervisors and SeniorManagement
During the reporting period, the Remuneration and
Assessment Committee of the Company considered and
approved the 2022 Annual Report of Haier Smart Home
Co., Ltd. on Incentives for Senior Management of the
Company and Implementation of Remuneration
Assessment for Directors and Senior Management, and
considered that the incentive mechanism for senior
management of the Company and the implementation of
Remuneration Assessment for Directors and Senior
Management of 2022 were effectively carried out in
accordance with the principles and mechanisms
established by the Board of Directors at the beginning of
the year; the 2023 Annual Report of Haier Smart Home
Co., Ltd. on Remuneration and Assessment Scheme of
Directors and Senior Management was considered and
approved and arrangements were made for the 2023
Remuneration and Assessment Scheme of Directors and
Senior Management with proposed resolution submitted to
the Board of Directors for consideration and approval.
Section IV Corporate Governance
Determining basis of matrixcompensation of Directors,Supervisors and SeniorManagement
The cash remuneration of executives in 2023 consists ofmonthly remuneration, bonuses and sharing, and is linkedto orders triggered by the upgrade of the Company’sInternet of Things from “high-end brands” to “scenariobrands” to “ecological brands”. Focusing on the rapidimprovement of profitability and through digitaltransformation, the Company enhanced its competitivenessin the whole process, and achieved sharing of high added-value. Through the innovation of the mechanism, theCompany encouraged its executives to achieve highermarket goals, thus achieving a win-win situation for users,employees, enterprises and stakeholders. At the sametime, the Company continues to promote theimplementation of the employee stock ownership and otherlong-term incentive plans; multiple incentive tools will beeffectively utilised to mobilise competent management,frontline managers and business and technical backboneson a wider scale, further aligning the interests ofshareholders, the Company and incentive recipients, andbringing more efficient and sustainable returns toshareholders. After the approval by the general meeting,the allowance for directors is RMB320,000/year before tax.The travelling expenses of directors attending Boardmeetings and general meetings and the expenses requiredfor performing their duties and according to the Articles ofAssociation will be reimbursed.Actual compensation paid toDirectors, Supervisors and SeniorManagement
Paid as prescribedTotal of actual compensation paid
to all Directors, Supervisors andSenior Management at the endof the reporting period
RMB22,408,500
Section IV Corporate Governance
(IV) Changes in of Directors, supervisors and senior management of the Company
□ Applicable √ Not Applicable
(V) Explanation of penalties imposed by securities regulators in the past three years
□ Applicable √ Not Applicable
(VI) Others
□ Applicable √ Not Applicable
V. RELEVANT INFORMATION ON THE BOARD MEETINGS HELD DURINGTHE REPORTING PERIOD
MeetingDateResolutions approvedThe 4th meeting of the Eleventh session ofthe Board of Directors
30 March 2023Considered and approved the following resolutions: the 2022 Financial Statements of Haier
Smart Home Co., Ltd., the 2022 Annual Report and Annual Report Summary of Haier SmartHome Co., Ltd., the 2022 Report on the Work of the Board of Directors of Haier SmartHome Co., Ltd., the 2022 Report on Internal Control Assessment of Haier Smart Home Co.,Ltd., the Report on Internal Control Audit of Haier Smart Home Co., Ltd., the 2022 ProfitDistribution Plan of Haier Smart Home Co., Ltd., the Resolution on the Re-appointment ofPRC Accounting Standards Auditing Firm of Haier Smart Home Co., Ltd., the Resolution onthe Re-appointment of International Accounting Standards Auditing Firm of Haier SmartHome Co., Ltd., the 2022 Risk Assessment Report on Haier Group Finance Co., Ltd. ofHaier Smart Home Co., Ltd., the Resolution on Renewal and its Expected Related-PartyTransaction Limit with Haier Group Corporation and Haier Group Finance Co., Ltd. of HaierSmart Home Co., Ltd., the Resolution on the Anticipated Guarantees’ Amounts for HaierSmart Home Co., Ltd. and its Subsidiaries in 2023, the Resolution on Conduct of ForeignExchange Fund Derivatives Business of Haier Smart Home Co., Ltd., the Feasibility AnalysisReport on Conducting Foreign Exchange Fund Derivatives Business of Haier Smart HomeCo., Ltd., the Resolution on Conducting Commodity Hedging Business of Haier Smart HomeCo., Ltd., the Feasibility Analysis Report on Conducting Commodity Hedging Business ofHaier Smart Home Co., Ltd., the Resolution on the Special Report on the Deposit andActual Use of Raised Funds in 2022 of Haier Smart Home Co., Ltd., the Resolution onClosing Investment Projects with Funds Raised from Convertible Corporate Bonds andPermanently Supplementing Working Capital with Surplus Proceeds of Haier Smart HomeCo., Ltd., the Resolution on the Purchase of Liability Insurance for Directors, Supervisorsand Senior Management of Haier Smart Home Co., Ltd., the 2022 Report on Environmental,Social and Governance of Haier Smart Home Co., Ltd., the Resolution on the Proposal tothe General Meeting to Grant a General Mandate to the Board of Directors on AdditionalIssuance of A Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to theGeneral Meeting to Grant a General Mandate to the Board of Directors on AdditionalIssuance of H Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to theGeneral Meeting to Grant a General Mandate to the Board of Directors on AdditionalIssuance of D Shares of Haier Smart Home Co., Ltd., the Resolution on the Proposal to theGeneral Meeting to Grant a General Mandate to the Board of Directors on the Repurchaseof no more than 10% of the total H Shares issued of Haier Smart Home Co., Ltd., theResolution on the Proposal to the General Meeting to Grant a General Mandate to theBoard of Directors on the Repurchase of no more than 10% of the total D Shares issued ofHaier Smart Home Co., Ltd., the Resolution on Convening the 2022 Annual GeneralMeeting, 2023 1st A/D/H Shareholders’ Class Meeting of Haier Smart Home Co., Ltd., theReport on Remuneration and Assessment Scheme for the Senior Management for 2023 ofHaier Smart Home Co., Ltd.
Section IV Corporate Governance
MeetingDateResolutions approvedThe 5th meeting of the Eleventh session ofthe Board of Directors
27 April 2023Considered and approved the following resolutions: the 2023 First Quarter Report of Haier
Smart Home Co., Ltd., the 2023 A Share Core Employee Stock Ownership Plan (draft) ofHaier Smart Home Co., Ltd. and its Summary, the 2023 H Share Core Employee StockOwnership Plan (draft) of Haier Smart Home Co., Ltd. and its Summary, the Resolution onAuthorizing Haier Shareholdings (Hong Kong) Limited to Sign Agreements Related to theRestricted Share Unit Scheme on Behalf of the Company, the Resolution on PartialCancellation of Share Options under the 2021 A-share Option Incentive Scheme of HaierSmart Home Co., Ltd., the Resolution on Partial Cancellation of Share Options under the2022 A-share Option Incentive Scheme of Haier Smart Home Co., Ltd., the Resolution onthe Repurchase Plan of a Portion of Public Shares of A Shares of Haier Smart Home Co.,Ltd., the Resolution on Amendments to the Implementation Rules for the Remuneration andAssessment Committee Haier Smart Home Co., Ltd.The 6th meeting of the Eleventh session ofthe Board of Directors
30 August 2023Considered and approved the following resolutions: the 2023 Interim Ongoing Risk
Assessment Report on Haier Group Finance Co., Ltd. by Haier Smart Home Co., Ltd., theResolution on Partial Cancellation of Share Options under the First Grant of 2021 A-shareOption Incentive Scheme of Haier Smart Home Co., Ltd., the 2023 Interim Report of HaierSmart Home Co., Ltd. and its SummaryThe 7th meeting of the Eleventh session of
the Board of Directors
30 October 2023Considered and approved the following resolution: the 2023 Third Quarter Report of Haier
Smart Home Co., Ltd.The 8th meeting of the Eleventh session of
the Board of Directors
13 December 2023Considered and approved the following resolutions: the Resolution on Partial Cancellation of
Share Options under the Reserved Grant of 2021 A-share Option Incentive Scheme of Haier
Smart Home Co., Ltd.VI. PERFORMANCE OF DUTIES BY DIRECTORS(I) Attendance of board meetings and general meetings by directors
Name of director
Whether anIndependentdirector or notAttendance of Board meetings
Attendances atgeneralmeetingsRequiredattendances ofBoard meetings
Attendance inperson
Attendance bytelecommunication
Attendance byproxyAbsence
Absence fromtwo consecutivemeetings inperson or not
Number ofattendance ofgeneralmeetingsLi HuagangNO55000NO4Shao XinzhiNO55000NO4Gong WeiNO55000NO4Chien Da-chunYES55100NO4Wong Hak KunYES55200NO4Li ShipengYES55100NO4Wu QiYES55200NO4Yu Hon ToNO55300NO4Li Kam FunNO55300NO4
Section IV Corporate Governance
Explanation for absence from two consecutive Board meetings in person
□ Applicable √ Not Applicable
Number of Board meetings held in the year5Of which: Number of on-site meetings1Number of meetings held by telecommunication0Number of meetings held both on site and by telecommunication4(II) Directors’ objection to the relevant matters of the Company
□ Applicable √ Not Applicable
(III) Others
□ Applicable √ Not Applicable
VII. THE SPECIAL COMMITTEES OF THE BOARD
√ Applicable □ Not Applicable
(I) Personnel of The Special Committees of the Board
Categories ofThe Special CommitteesName of PersonnelAudit CommitteeWong Hak Kun, Yu Hon To, Chien Da-chun, Wu Qi, Shao XinzhiNomination CommitteeWu Qi, Li Shipeng, Li HuagangRemuneration and AppraisalCommittee
Chien Da-chun, Li Shipeng, Li HuagangStrategy CommitteeLi Huagang, Li Shipeng, Wu Qi, Gong WeiESG (“Environment, Societyand Governance”)Committee
Li Kam Fun, Chien Da-chun, Gong Wei
Section IV Corporate Governance
(II) The Company convened 5 Audit Committee meetings during the reporting period
Date of MeetingContents of Meeting
Major Opinions andSuggestions
Other Notes onPerformance of Duty28 March 2023Considered and approved the following resolutions:
the 2022 Financial Statements of Haier SmartHome Co., Ltd., the 2022 Report on InternalControl Assessment of Haier Smart Home Co.,Ltd., the 2022 Report on Internal Control Auditof Haier Smart Home Co., Ltd., the Resolutionon the Re-appointment of PRC AccountingStandards Auditing Firm of Haier Smart HomeCo., Ltd., the Resolution on the Re-appointmentof International Accounting Standards AuditingFirm of Haier Smart Home Co., Ltd., theResolution on the Anticipated Guarantees’Amounts for Haier Smart Home Co., Ltd. and itsSubsidiaries in 2023, the 2022 Profit DistributionPlan of Haier Smart Home Co., Ltd., the 2022Risk Assessment Report on Haier GroupFinance Co., Ltd. of Haier Smart Home Co.,Ltd., the Resolution on Renewal of the FinancialServices Framework Agreement and itsExpected Related-Party Transaction Limit withHaier Group Corporation and Haier GroupFinance Co., Ltd. of Haier Smart Home Co.,Ltd., the Resolution on Conduct of ForeignExchange Fund Derivatives Business of HaierSmart Home Co., Ltd., the Feasibility AnalysisReport on Conducting Foreign Exchange FundDerivatives Business of Haier Smart Home Co.,Ltd., the Resolution on Conducting CommodityHedging Business of Haier Smart Home Co.,Ltd., the Feasibility Analysis Report onConducting Commodity Hedging Business ofHaier Smart Home Co., Ltd., the Resolution onthe Special Report on the Deposit and ActualUse of Raised Funds in 2022 of Haier SmartHome Co., Ltd., the Resolution on ClosingInvestment Projects with Funds Raised fromConvertible Corporate Bonds and PermanentlySupplementing Working Capital with SurplusProceeds of Haier Smart Home Co., Ltd., the2022 Report on Performance of Duties of theAudit Committee of the Board of Haier SmartHome Co., Ltd.
No objectionsNil
26 April 2023Considered and approved the following resolution:
the 2023 First Quarter Financial Report of HaierSmart Home Co., Ltd.
No ObjectionsNil
Section IV Corporate Governance
Date of MeetingContents of Meeting
Major Opinions andSuggestions
Other Notes onPerformance of Duty28 August 2023Considered and approved the following resolutions:
the 2023 Interim Financial Report of HaierSmart Home Co., Ltd., the 2023 InterimOngoing Risk Assessment Report on HaierGroup Finance Co., Ltd. by Haier Smart HomeCo., Ltd.
No ObjectionsNil
26 October 2023Considered and approved the following resolution:
the 2023 Third Quarter Financial Report ofHaier Smart Home Co., Ltd.
No ObjectionsNil12 December
2023
Considered and approved the following resolution:
the 2023 Annual Report on Audit Work Plan ofHaier Smart Home Co., Ltd.
No ObjectionsNil
(III) The Company convened 1 Nomination Committee meeting during the reportingperiodDate of MeetingContents of Meeting
Major Opinions and
Suggestions
Other Notes onPerformance of Duty29 March 2023Considered and approved the following resolutions:
the Report of the Nomination Committee of theBoard of Directors of Haier Smart Home Co.,Ltd. on the Performance of Duty of CurrentDirectors, Supervisors and Senior Management,the 2022 Annual Report on the Performance ofDuty of the Nomination Committee of the Boardof Haier Smart Home Co., Ltd.
No ObjectionsNil
Section IV Corporate Governance
(IV) The Company convened 5 Remuneration and Appraisal Committee meetingsduring the reporting periodDate of MeetingContents of Meeting
Major Opinions andSuggestions
Other Notes onPerformance of Duty29 March 2023Considered and approved the following resolutions:
the 2022 Annual Report of Haier Smart HomeCo., Ltd. on Incentives for Senior Managementof the Company and Implementation ofRemuneration Assessment for Directors andSenior Management, the 2023 Annual Report ofHaier Smart Home Co., Ltd. on Remunerationand Assessment Scheme of Directors andSenior Management, the 2022 Annual Report ofHaier Smart Home Co., Ltd. on Performance ofDuties of the Remuneration and AppraisalCommittee of the Board
No ObjectionsNil
23 April 2023Considered and approved the following resolutions:
the 2023 A Share Core Employee StockOwnership Plan (draft) of Haier Smart HomeCo., Ltd. and its Summary, the 2023 H ShareCore Employee Stock Ownership Plan (draft) ofHaier Smart Home Co., Ltd. and its Summary,the Resolution on Authorizing HaierShareholdings (Hong Kong) Limited to SignAgreements Related to the Restricted ShareUnit Scheme on Behalf of the Company, theResolution on Partial Cancellation of ShareOptions under the 2021 A-share OptionIncentive Scheme of Haier Smart Home Co.,Ltd., the Resolution on Partial Cancellation ofShare Options under the 2022 A-share OptionIncentive Scheme of Haier Smart Home Co.,Ltd.
No ObjectionsNil
21 July 2023Considered and approved the following resolution:
the Resolution on the Vesting of the First Phaseof the 2022 A Share and H Share CoreEmployee Stock Ownership Plan of Haier SmartHome Co., Ltd.
No ObjectionsNil
29 August 2023Considered and approved the following resolution:
the Resolution on Partial Cancellation of ShareOptions under the First Grant of 2021 A-shareOption Incentive Scheme of Haier Smart HomeCo., Ltd.
No ObjectionsNil
8 December2023
Considered and approved the following resolution:
the Resolution on Partial Cancellation of ShareOptions under the Reserved Grant of 2021A-share Option Incentive Scheme of HaierSmart Home Co., Ltd.
No ObjectionsNil
Section IV Corporate Governance
(V) The Company convened 1 Strategy Committee meeting during the reportingperiodDate of MeetingContents of Meeting
Major Opinions andSuggestions
Other Notes onPerformance of Duty30 March 2023Considered and approved the following resolution:
the 2022 Annual Report on the Performance ofDuties of the Strategy Committee of the Boardof Haier Smart Home Co., Ltd.,
No ObjectionsNil
(VI) The Company convened 2 ESG Committee meetings during the reporting period
Date of MeetingContents of Meeting
Major Opinions andSuggestions
Other Notes onPerformance of Duty28 March 2023Considered and approved the following resolutions:
the 2022 Corporate Environmental, Social andGovernance Report of Haier Smart Home Co.,Ltd., 2022 Annual Report on the Performanceof Duties of the ESG Committee of Haier SmartHome Co., Ltd.
No ObjectionsNil
31 August 2023Theme Sharing and Presentation: Business
Opportunities Brought by SustainableDevelopment, Short, Medium and Long-TermPlanning for Green Products of the Company
No ObjectionsNil
(VII) Details of Disagreements
□ Applicable √ Not Applicable
VIII. BOARD OF SUPERVISORS EXPLANATION ON RISKS ABOUT THE
COMPANY
□ Applicable √ Not Applicable
Board of Supervisors had no objections to the supervising items during the reporting period.
Section IV Corporate Governance
IX. INFORMATION ON STAFF OF THE PARENT COMPANY AND PRINCIPALSUBSIDIARIES AT THE END OF THE REPORTING PERIOD(I) Staff Information
Number of staff of the parent company58Number of staff of Principal subsidiaries112,400Total number of staff112,458Number of employees whose retirement expenses are borne by the parentcompany and the principal subsidiaries
Breakdown by FunctionFunctionNumberProduction66,120Sales18,424Technical23,889Financial1,769Administrative2,256Total112,458
Breakdown by Education BackgroundEducationNumber (person)Bachelor and above36,813College Diploma30,140Secondary vocational training diploma and below45,505Total112,458(II) Remuneration policies
√ Applicable □ Not Applicable
Under the guidance of the “RenDanHeYi” management model, the Company adheres to theremuneration philosophy of uniting user pay, value creation and value sharing, and providesemployees with a short, medium and long-term remuneration incentive system that combineslabour income, super-profit sharing and capital gain, as well as all-rounded welfare policies andemployee caring schemes. The Company encourages its employees to work with anentrepreneurial mindset, aligning employee value with company value and shareholder value,continuously improving user experience and achieving a win-win development for both theCompany and its employees.The Company has established a rich and multi-dimensional incentive mechanism and continuesto implement the “A+H” global incentive system covering both domestic and overseas employeesto attract, motivate and stabilise the Company’s core talent.
Section IV Corporate Governance
(III) Personnel Training
√ Applicable □ Not Applicable
The Company puts high priority on talent cultivation and has set up a hierarchical system fortalent training accordingly. By providing employees with rich learning resources throughdiversified methods such as course training, special training and temporary exchange, theCompany promotes talent growth in multiple dimensions for employees with different needs, thusassisting them in improving their professionalism, expertise and leadership skills. In 2023, theCompany organized a number of trainings with courses covering corporate culture, officemanagement, professional skills and other contents, and adopted live broadcast, communityforums and other learning methods.For details, please refer to relevant information in 2023 Environmental, Social and GovernanceReport of Haier Smart Home Co., Ltd. published on the same date of this announcement.(IV) Labor Outsourcing
□ Applicable √ Not Applicable
X. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OFCAPITAL RESERVE(I) Formulation, implementation or adjustment of the cash dividend policies
√ Applicable □ Not Applicable
The Company’s 2022 profit distribution plan was passed on its 2022 Annual General Meetingheld on 26 June 2023: based on the Company’s total existing shares (deducting the repurchasedshares) of 9,344,557,950 (including 6,214,995,711 A shares, 271,013,973 D shares and2,858,548,266 H shares), it was proposed that the Company would distribute cash dividends ofRMB5.6692 (tax inclusive) per 10 shares to all shareholders, with a total amount before tax ofRMB5,297,529,553.10(tax inclusive). The plan was implemented and completed in August 2023.Details were set out in the Announcement on Implementation of Rights and Interests Distributionof A-shares for 2022 of Haier Smart Home Co., Ltd. (No: L2023–041) published by the Companyon the four major securities newspapers and the website of Shanghai Stock Exchange on19 August 2023 and relevant announcements in respect of dividend distribution of D shares andH shares published on the Company’s website, Hong Kong Stock Exchange and otherpublication platforms.
Section IV Corporate Governance
The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles ofAssociation and in the Shareholder Return Plan for the Next Three Years of the Company. Duringthe formulation of the profit distribution plan, the Company took full account of return forinvestors, the long-term interests of the Company, overall interests of all shareholders andsustainable development of the Company, and continued to implement the stable dividenddistribution policy to provide investors an opportunity to share the growth of value, so thatinvestors could form the expectation of a stable return. The procedures and mechanisms fordecision-making such as Articles of Association and planning of return of shareholdersimplemented by the Company were complete in compliance with laws and regulations. Theprocess was open and transparent while the standard and ratio of dividends was clear.Responsibilities of independent directors were clear during the policy-making process, andindependent directors were given the opportunities to play their roles. Minority shareholders werealso given the opportunity to fully express their views and demands, and the legitimate interestsof minority shareholders were adequately protected.The dividend distribution plan of 2023 of the Company: based on the total number of sharesafter deducting the repurchased shares on equity interest record date for future profitdistribution, it is proposed that the Company will distribute cash dividend of RMB8.04 per 10shares (tax inclusive) with cash dividend of RMB7,471,472,992.22. The retained undistributedprofit will be mainly used for project construction, foreign investment, R&D investment and dailyoperation related to the Company’s principal business in order to maintain sustainable and stabledevelopment and to create more value for investors. The proportion of this distribution is 45.02%of the net profit attributable to owners’ parent company in 2023 (In 2023, the Company spentRMB1.430 billion and HK$200 million on the purchase of A shares and H shares; if this isincluded in cash dividends, the ratio of cash dividends to net profit attributable to owners’ parentcompany for the year would be over 54.7%).100% dividend is paid in cash. If there is anychange in the total share capital of the Company during the period from the date of this reportto the record date of the equity distribution, the total distribution amount will remain unchangedwith corresponding adjustment to the proportion of distribution per share.
(II) Notes to the cash dividend policies
√ Applicable □ Not Applicable
Whether in compliance with regulations of the Articles of Association andrequirements of the resolutions of the general meeting
√ Yes □ No
Whether the standard and ratio of dividends were clear√ Yes □ NoWhether relevant procedures and mechanisms for decision-making werecomplete
√ Yes □ No
Whether independent directors performed their duties and responsibilities√ Yes □ NoWhether minority shareholders were given the opportunity to fully express theirviews and demands, and whether their legitimate interests were adequatelyprotected
√ Yes □ No
Section IV Corporate Governance
(III) The Company made profits and the profits for distribution to the owners’ Parent
Company was positive during the reporting period, but no cash profitdistribution plan was proposed; the Company should disclose the reasons indetail and the purpose of undistributed profits
□ Applicable √ Not Applicable
(IV) Plan for profit distribution and conversion of capital reserve into share capitalfor the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMBNumber of shares to be distributed for every ten shares (share)/Amount to be distributed for every ten shares (RMB) (tax inclusive)8.04Number of shares to be converted into share capital for every tenshares (share)
/Amount of cash dividend (tax inclusive)7,471,472,992.22Net profit attributable to ordinary shareholders of listed company in the
consolidated financial statement during the year of distribution
16,596,615,045.87Percentage of the net profit attributable to the ordinary shareholders ofthe listed companies in the consolidated financial statement (%)
45.02
Repurchase of shares by cash included in the amount of cash dividend1,613,104,573.271Total dividend amount (tax inclusive)9,084,577,565.50Percentage of total dividend amount to the net profit attributable to theordinary shareholders of the listed companies in the consolidatedfinancial statement (%)
54.74
Note: The above share repurchases involving foreign currencies were converted at a uniform exchange rate at the end of2023.
Section IV Corporate Governance
XI. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEESHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURESAND ITS INFLUENCE(I) Matters disclosed in temporary announcements and without any subsequentprogress or change
√ Applicable □ Not Applicable
Summary of mattersQuery indexCancellation of certain 2021 and 2022equity incentive options: In view of the factthat the second exercise period of the first/reserved grant portion of the 2021 A-shareOption Incentive Scheme and the firstexercise period of the 2022 A-share OptionIncentive Scheme of the Company did notmeet the exercise conditions, and due to theresignation of some of the participants, theCompany cancelled the corresponding11,391,979 share options and 27,934,987share options that had been granted but hadnot yet been exercised.
For details, please refer to theAnnouncement of Haier Smart Home Co.,Ltd. on the Cancellation of Certain ShareOptions Granted under the 2021 A-shareOption Incentive Scheme, the 2022A-share Option Incentive Schemedisclosed by the Company on 28 April2023, the Announcement of Haier SmartHome Co., Ltd. on the Completion ofCancellation of Certain Share OptionsGranted under the 2021 A-share OptionIncentive Scheme, the 2022 A-shareOption Incentive Scheme and relevantcontents disclosed by the Company on31 May 2023.Introduction of New Phase of A Share andH Share Employee Stock OwnershipPlan: In order to further improve thegovernance mechanism of the Company,create shareholder value and promote thecomprehensive implementation of theCompany’s IoT smart home ecological brandstrategy, the Company considered andintroduced the 2023 H Share CoreEmployee Stock Ownership Plan of HaierSmart Home Co., Ltd. (Draft) and the 2023A Share Core Employee Stock OwnershipPlan of Haier Smart Home Co., Ltd. (Draft) atthe 5th meeting of the 11th session of theBoard of Directors held by the Company on27 April 2023 and the 2022 Annual GeneralMeeting held by the Company on 26 June2023. During the reporting period, theCompany completed the position opening forthe abovementioned employee stockownership plans.
For details, please refer to the 2023 AShare Core Employee Stock OwnershipPlan of Haier Smart Home Co., Ltd.(Draft), the 2023 H Share Core EmployeeStock Ownership Plan of Haier SmartHome Co., Ltd. (Draft) disclosed by theCompany on 28 April 2023, theAnnouncement of Resolutions at theGeneral Meeting disclosed by theCompany on 27 June 2023 and theAnnouncement of Completion of SharePurchase and relevant contentsdisclosed by the Company in July 2023.
Section IV Corporate Governance
Summary of mattersQuery indexVesting of interests in the Core Employee
Stock Ownership Plan: During thereporting period, certain conditions forvesting of interests in the Company’s 2021A Share/H Share Core Employee StockOwnership Plan and 2022 A Share/H ShareCore Employee Stock Ownership Plan weresatisfied, and the Company has completedrelevant vesting matters.
For details, please refer to relevantcontents in the Announcement of HaierSmart Home Co., Ltd. on Vesting ofInterests in Core Employee StockOwnership Plan disclosed by theCompany on 1 August 2023.
Cancellation of certain share options
granted under the first grant of the 2021Share Option Incentive Scheme: Sincethere was no suitable exercise windowperiod for shares corresponding to the firstexercise period of certain share optionsgranted under the first grant of the 2021Share Option Incentive Scheme, theCompany cancelled the corresponding9,047,052 share options granted but not yetexercised.
For details, please refer to relevantcontents in the Announcement of HaierSmart Home Co., Ltd. on theCancellation of Certain Share OptionsGranted under the First Grant of the2021 A-share Option Incentive Schemedisclosed by the Company on 31 August2023.
Cancellation of certain share optionsgranted under the reserved grant of the2021 Share Option Incentive Scheme:
Since there was no suitable exercise windowperiod for shares corresponding to the firstexercise period of certain share optionsgranted under the reserved grant of the2021 Share Option Incentive Scheme, anddue to the resignation of some of theparticipants, the Company cancelled thecorresponding 860,072 share optionsgranted but not yet exercised.
For details, please refer to relevant
contents in the Announcement of HaierSmart Home Co., Ltd. on theCancellation of Certain Share OptionsGranted under the Reserved Grant of the2021 A-share Option Incentive Schemedisclosed by the Company on 14December 2023.
(II) Incentive events not disclosed in provisional announcements or with subsequentdevelopmentEquity incentive
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Employee stock ownership plan
□ Applicable √ Not Applicable
Section IV Corporate Governance
Other Incentives
□ Applicable √ Not Applicable
(III) Share option granted to directors and senior management during the reporting
period
√ Applicable □ Not Applicable
Unit: 10,000 shares
NamePosition
Number ofstockoptions heldat thebeginning ofthe year
Number ofnew stockoptionsgrantedduring the
reportingperiodExercisablesharesduring thereportingperiod
Sharessubject tostock optionexercisedduring thereportingperiod
Stockoptionsexerciseprice(RMB)
Number ofstockoptions held
at the end
of thereportingperiod
Marketvalue at theend of thereportingperiod(RMB)Li HuagangChairman, President91.3918.28–
36.56
25.6354.8321.00
Gong WeiDirector, Chief
Financial Officer,Vice President
45.709.14–
18.28
25.6327.4221.00
XieJuzhiVice President91.3918.28–
36.56
25.6354.8321.00
Li PanVice President45.709.14–
18.28
25.6327.4221.00
Song YujunVice President31.216.24–
12.49
25.6318.7221.00
Zhao YanfengVice President46.829.36–
18.73
25.6328.0921.00
Huang XiaowuVice President45.709.14–
18.28
25.6327.4221.00
Wu YongVice President22.854.57–
9.14
25.6313.7121.00
Li YangVice President45.709.14–
18.28
25.6327.4221.00
Guan JiangyongVice President22.854.57–
9.14
25.6313.7121.00
Liu XiaomeiSecretary to the Board
of Directors
11.652.91–
2.91
23.868.7421.00
Total/500.96100.77–
198.65
/302.32/(IV) Establishment and implementation of appraisal and incentive mechanism forsenior management during the reporting period
√ Applicable □ Not Applicable
The cash remuneration of executives in 2023 consists of monthly remuneration, bonuses andsharing, and is linked to orders triggered by the upgrade of the Company’s Internet of Thingsfrom “high-end brands” to “scenario brands” to “ecological brands”. Focusing on the rapidimprovement of profitability and through digital transformation, the Company enhanced itscompetitiveness in the whole process, and achieved sharing of high added-value. Through theinnovation of the mechanism, the Company encouraged its executives to achieve higher marketgoals, thus achieving a win-win situation for users, employees, enterprises and stakeholders. Atthe same time, the Company continues to promote the implementation of the employee stockownership and other long-term incentive plans; multiple incentive tools will be effectively utilisedto mobilise competent management, frontline managers and business and technical backboneson a wider scale, further aligning the interests of shareholders, the Company and incentiverecipients, and bringing more efficient and sustainable returns to shareholders.
Section IV Corporate Governance
XII. CONSTRUCTION AND IMPLEMENTATION OF INTERNAL CONTROL
SYSTEM DURING THE REPORTING PERIOD
√ Applicable □ Not Applicable
In accordance with the “Rules for the Preparation and Reporting of Information Disclosure by ListedIssuers of Securities No. 21—General Provisions on the Annual Internal Control Assessment Report”jointly issued by the China Securities Regulatory Commission and the Ministry of Finance, the“Guidelines for Self-regulation of Listed Companies on the Shanghai Stock Exchange No. 1—
Regulation of Operations”, the “Guidelines for Self-Regulation of Listed Companies on the ShanghaiStock Exchange No. 2—Business Handling” and other relevant guidelines and requirements, theCompany has conducted a self-assessment of its internal control work. Based on the identification ofsignificant deficiencies in the Company’s internal control of financial reporting, no significantdeficiencies in the Company’s internal control of financial reporting were identified as at the basis dateof the internal control assessment report, and the Company had maintained effective internal control offinancial reporting in all material respects in accordance with the requirements of the internal controlregulatory system and relevant regulations. Based on the identification of significant deficiencies in theCompany’s internal control of non-financial reporting, no significant deficiencies in the Company’sinternal control of non-financial reporting were identified as at the basis date of the internal controlassessment report. No events have occurred between the basis date of the internal controlassessment report and the date of issuance of the internal control assessment report that would affectthe effectiveness of the internal control assessment.For details, please refer to the 2023 Internal Control Assessment Report of Haier Smart Home Co.,Ltd. disclosed on the same day of this report.Explanations on material defects found in internal control during the reporting period
□ Applicable √ Not Applicable
XIII. CONTROL OVER MANAGEMENT OF SUBSIDIARIES DURING THEREPORTING PERIOD
√ Applicable □ Not Applicable
The listed company established an internal control and management system covering all subsidiarieswithin the scope of consolidated statement, which included four major areas of strategy, finance,operation and compliance with a total of 22 primary business processes and control metrics. Inparticular:
1. Unified control environment, such as strategy and culture, risk management system, internal control
manual, Rendanheyi remuneration system, unified accounting and information system in thefinancial sharing center, etc.
Section IV Corporate Governance
2. The company has clear selection methods and terms of reference in respect of appointment of
directors, supervisors and important senior management to their controlling subsidiaries.Meanwhile, relevant departments of the parent company stipulate the criteria and scope ofauthorization for major decision and important events, formulate the approval procedure for majordecision and important events beyond the scope of authorization. The management ofsubsidiaries at different levels shall exercise their authority and take responsibility within thescope of authorization.
3. Management of major events of subsidiaries: The relevant authority of the parent company of the
listed company stipulates the criteria and scope of authorization for major decision and importantevents, formulate the approval procedure for major decision and important events beyond thescope of authorization. If the Company and its subsidiaries provide external guarantees, the totalamount of which shall propose for consideration at the general meetings after approval by theBoard. Subject to the authorization by the general meetings, the Board decides the Company’sexternal investment, acquisition and disposal of assets, external guarantees, entrusted wealthmanagement, related-party transactions and other events.
4. Management of budget: The finance and budget center formulates the budget preparation policy
and guidance for the following year at the end of each year, and distributes them to eachsubsidiary together with the budget template, requiring the preparation of a comprehensivebudget in accordance with the unified budget preparation policy and guidance, which containsdetails of the preparation principles, explanation of filling the template, submission process andexamination. Each subsidiary has prepared a comprehensive budget in accordance with theunified budget preparation policy and guidance. Annual budgeting of the following year iscommenced in the third quarter every year by making profit and loss budgets for each industryand subsidiaries based on market forecasts to ensure accurate estimation in advance. Theexecution and adjustment of budgets are regularly monitored and evaluated.For non-fixed assets investment projects, the person in charge of fund of each subsidiary willsummarize the actual investment situation and report it to the manager of the investment,financing and fund management department of Haier Smart Home. The manager of theinvestment, financing and fund management department will monitor the execution of the budgetof investment and financing by comparing the report with the corresponding budget of theinvestment plan.
5. Operation analysis and performance evaluation: The Company regularly convenes global and
industry-specific performance and operations meetings to discuss the operations andperformance and carries out performance evaluation.
Section IV Corporate Governance
6. Information transmission: The Company widely collects macroeconomic and industry development
information, market information, regulatory compliance and other external information throughvarious channels, and analyzes and organizes the collected information into research reportsevery month, which are submitted to different levels of management after review. Themanagement of the parent company holds regular meetings with industries and segments toconvey the management requirements of the parent company and to be aware of the operationstatus of subsidiaries in a timely manner. At the same time, the Company has formulated theinformation security and internal report confidentiality system, which specifies the confidentialitycontent, confidentiality measures, confidentiality level and transmission scope to prevent thedisclosure of commercial secrets.
7. Test and audit of internal control: During the reporting period, the parent company conducts test
and audit of internal control for subsidiaries, which account for more than 93% and 92% ofrevenue and assets of the parent Company in aggregate, respectively, to identify problems in atimely manner and facilitate the closed-loop rectification of problems.During the reporting period, there were no new significant subsidiaries.XIV. RELEVANT EXPLANATIONS ON THE AUDIT REPORT OF INTERNAL
CONTROL
√ Applicable □ Not Applicable
The Company’s auditor Hexin Certified Public Accountants LLP has audited the efficiency of internalcontrol relating to the financial report of the Company, and has issued its standard unqualified auditreport for the Company’s internal control (He Xin Shen Zi (2024) No.000187).For the details of Audit Report of Internal Control of Haier Smart Home Co., Ltd., please refer torelevant announcements published on the website of Shanghai Stock Exchange (www.sse.com.cn) onthe same day of this report.Whether to disclose the audit report on internal control: YesType of opinion on the audit report on internal control: Standard unqualified opinionXV. RECTIFICATION OF THE SELF-ASSESSMENT PROBLEMS UNDER THEGOVERNANCE SPECIAL ACTION OF THE LISTED COMPANYNot ApplicableXVI. OTHERS
□ Applicable √ Not Applicable
Section V Environmental and SocialResponsibilities
I. ENVIRONMENTAL INFORMATIONEstablished environmental protection related mechanism or notYesEnvironmental protection funds invested during the Reporting Period (Unit:
RMB10,000)
55,200Note: During the reporting period, environmental protection funds were invested in aspects of R&D of environmental protectiontechnology, clean production, environmental protection equipment purchase and renovation, pollution control, ecologicalprotection, environmental management expenditure, etc.(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. (“Wuhan Air-Conditioning”), Zhengzhou Haier Air-conditioning Co., Ltd. (“Zhengzhou Air-Conditioning”),Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited (“Jiaozhou Air-Conditioning”), areamong the key emission units announced by the local environmental protection department.The main information on pollutant discharge is as follows:
(1) Hefei Refrigerator
① Main pollutants：
Wastewater. According to the Integrated Wastewater Discharge Standard(GB8978–1996), Hefei Refrigerator should apply for a pollutant discharge permitand detect 9 types of pollutants (including specific pollutants), namely, totalnitrogen (as N), total phosphorus (as P), rate of flow, suspended solids, PH,chemical oxygen demand (COD), ammonia nitrogen (NH3-N), five-daybiochemical oxygen demand (BOD5), 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
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: 1 for sewage, at the north entrance
of the Refrigerator Park; 20 for exhaust gas, at the Refrigerator Block A (9),Block B (8) and Phase III Factory (3)
Section V Environmental and Social Responsibilities
④ 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 (2023 data) are asfollows:
No.
Name ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1COD70.35 mg/L37.76 tons/No2Ammonia nitrogen9.52 mg/L5.71 tons/No3Total nitrogen19 mg/L10.77 tons/No4Total phosphorus1.48 mg/L0.82 tons/No
⑤ Pollutant discharge standards implemented: Integrated Wastewater Discharge
Standard (GB8978–1996)
(2) Qingdao Special Refrigerator
① Main Pollutants：
Exhaust gas. According to the Administrative Measures for Pollutant DischargeLicensing (for Trial Implementation) (HJ 978–2018), Qingdao Special Refrigeratorshould apply for a pollutant discharge permit and detect the primary type ofpollutant in the atmosphere, namely non-methane hydrocarbon (VOC), with themaximum concentration of discharge not exceeding 60mg/m?. A qualified third-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a quarterly basis.Wastewater: There is no wastewater generated by the business department, andthe domestic wastewater is discharged into the municipal sewage networkthrough the sewage pipes in Haier Industrial Park.
② Way of discharge: continuous emission
③ Number and distribution of discharge outlets: two in total, one for absorption
exhaust port at the west side of the Special Refrigerator plant roof, which theexhaust gas treatment facilities were updated, installed and put into use in2023, 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.
Section V Environmental and Social Responsibilities
④ 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 ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1Non-methane
hydrocarbon
6.62 mg/m?1.43 tonsNo control
regarding thetotal amountof discharge
No
⑤ Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries in Shandong Province(DB37/2801.7–2019)
(3) Wuhan Water Heater
① 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.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the southwest of the
wastewater treatment plant, pipeline discharge
Section V Environmental and Social Responsibilities
④ 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 ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1COD13.74 mg/L1.988 tons9.075 tonsNo2Ammonia nitrogen0.07 mg/L0.204 tons0.9075 tonsNo3Total phosphorus0.09 mg/L0.032 tons/No
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(4) Wuhan Freezer
① Main pollutants：
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Wuhan Freezer should apply for a pollutant discharge permit and detect 9 typesof pollutants (including specific pollutants), namely, COD, total zinc, suspendedsolids, ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5),PH, anionic surface active agent, total phosphorus, and animal and vegetableoils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge
Section V Environmental and Social Responsibilities
④ 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 ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1COD23 mg/L0.56 tons4.35 tonsNo2Ammonia nitrogen0.67 mg/L0.02 tons0.435 tonsNo3Total phosphorus0.12 mg/L0.003 tons/No
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(5) Wuhan Air-Conditioning
① 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.
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: five in total, one degreasing exhaust
port at the south side of the plant roof, three stamping exhaust ports at thesouth side of the plant roof and one spraying exhaust port at the north side ofthe spraying workshop roof.
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge: No control regarding the total amount of discharge of organicexhaust gas
No.
Name ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1VOC2.27 mg/m?0.04464 tonsNo control
regarding thetotal amountof discharge
No
⑤ Pollutant discharge standards implemented: Implementation of Grade 2 standards
according to Table 2 indicated in the national Integrated Emission Standard ofAir Pollutants (GB16297–1996)
(6) Zhengzhou Air-Conditioning
① 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.
② Way of discharge: indirect discharge
③ Number 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
④ 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 ofpollutant
Concentrationof discharge
Total amountof discharge
Approved totalamount ofdischarge
Whetherit isexcessivedischarge1COD40.72 mg/L0.22 tons/No2Ammonia nitrogen6.16 mg/L0.033 tons/No
(7) Jiaozhou Air-Conditioning
① Main pollutants：
Hazardous waste. According to the national directory, 9 types of hazardouswaste detected are namely: waste oil, sludge, computer boards, activatedcarbon, cotton filters, lightning tubes, soldering flux buckets, paint buckets andforklift battery.
② Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposal
③ Total amount of discharge and approved total amount of discharge:
No.
Name ofhazardous waste
Total amount oftransfer (tons)
Total amount ofmanaged plan
(tons)
Whether it isexcessivedischarge1Cotton filters0.150.5No2Waste oil16.9835No3Soldering flux buckets0.681.5No4Forklift battery18.3622No5Sludge41.4245No6Paint buckets1.025No7Activated carbon3.628No8Computer Boards17.7630No9Lightning tubes0.0060.5No
④ Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on thePrevention 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 tonnes/day, 550 tonnes/day, 360 tonnes/day, 300 tonnes/dayand 260 tonnes/day, respectively. The construction, maintenance and daily operation of allwastewater treatment facilities are conducted in accordance with the requirements ofnational and local environmental laws and regulations. Information on all wastewaterdischarge is subject to 24-hour online monitoring and such monitored information istransmitted to environmental authorities in a real-time manner. All equipment is operatingnormally, and the discharge of wastewater is steady and in compliance with standards. Inaddition, the Company fully promotes all plants to install exhaust treatment facilities andVOCs online monitoring facilities. All equipment is operating normally and exhaust producedis treated by the prevention and treatment facilities before compliant release and ismonitored.
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 second review and audit was conducted on theoperation of system in 2021; In May 2023, a third review and audit was conducted on theoperation of system in 2022.
6. Administrative penalty due to environmental issues during the Reporting Period
□Applicable √ Not Applicable
7. Other environmental information that should be disclosed
□Applicable √ Not Applicable
(II) Explanation on environmental protection of companies other than major
pollutant emission units
√ Applicable □ Not Applicable
1. Administrative penalty due to environmental issues
□Applicable √ Not Applicable
2. Other environmental information disclosure with reference to major
pollutant emission units
√ Applicable □ Not Applicable
All divisions of the Company execute construction project implementation andproduction in accordance with the requirements of laws and regulations andstrictly comply with the three simultaneous requirements of environmentalprotection for construction projects in the process of environmental impactassessment, and have passed environmental assessment acceptance and arenot involved in any environmental illegal conducts such as construction beforeapproval.
Section V Environmental and Social Responsibilities
Through Haier Smart Energy Center, an industry leading energy big dataanalysis system, the Company implements centralized dynamic monitoring anddigitalized management in respect of major energy consumption, such as water,electricity and gas, of all plants across the country by utilizing automatized andinformationalized technology and an integrated management model. Itautomatically collects precise information on energy resources and completesprediction and analysis of energy consumption information to optimize energyadjustment, reduce energy consumption per unit production to achieve low-carbon production.
3. Reasons for failure to disclose other environmental information
□Applicable √ Not Applicable
(III) Relevant information favorable to ecological protection, pollution prevention
and control and environmental responsibility fulfillment
√ Applicable □ Not Applicable
During the reporting period, Hefei Refrigerator actively participated in the declarationof “Zero-Waste factory” organized by the environmental protection department of thelocal government. With the goal of “energy conservation, consumption reduction,pollution reduction and efficiency enhancement”, it remained steadfast in ecologicaland green development. The Company and its subsidiaries have been committed toimplementing national “dual carbon” strategy by integrating low-carbon, recycling,energy conservation and emission reduction into daily operation and actively exploringa model for achieving carbon reduction throughout the product lifecycle. Wecontinuously promoted green technologies upgrading in the industry by capitalizing onour industrial leading role in green technologies, worked together to move towards agreener, win-win and sustainable future, and jointly protected our home.
(IV) Measures taken during the Reporting Period to reduce its carbon emission andtheir effectivenessWhether carbon reductionmeasures were implemented
YesReduction of carbon dioxideequivalent emission(unit: tonnes)
8,965.68Types of carbon reduction
measures (such as using cleanenergy for power generation,using carbon reductiontechniques in the productionprocess, developing andproducing new productswhich help reduce carbonemission, etc.)
The Company actively cooperates with parties
along the upstream and downstreamindustrial chain, from raw materialmanufacturers to logistics enterprises, fromconsumers to recycling and dismantlingfactories, in order to explore carbonreduction throughout the product lifecyclecentering around “R&D, raw materials,production, packaging and transportation,and product recycling” Carbon reduction.
Section V Environmental and Social Responsibilities
For details of the above-mentioned measures,please refer to relevant information in 2023Environmental, Social and GovernanceReport of Haier Smart Home Co., LTD.published on the same date of this report.Note: The scope of the aforementioned CO2 equivalent emission reduction statistics is the scope 1 and scope2 data for the Company’s domestic operations.Specifications
□ Applicable √ Not Applicable
II. PERFORMANCE OF SOCIAL RESPONSIBILITIES
(I) Whether the social responsibility report, sustainable development report or ESGreport is disclosed individually
√ Applicable □ Not Applicable
Haier Smart Home has actively participated in health education, rural construction,voluntary service, and other community public charity while striving to create social valueand practising social responsibility in order to make its contribution to promoting theconstruction of a fairer and better society wholeheartedly and sincerely.
1. Caring about education and health
Over the years, Haier Smart Home has paid attention to the growth and development ofyoung people by helping young people and children of different ages receive qualityeducation, and continuously improving the quality of fundmental education and the healthlevel of children. In 2023, we launched the “Ocean Exploration Program” and the “SeedInspiring Program” with the aim of providing more children with deep spiritual care andwisdom enlightenment, in order to continue to pass on the concept of green, healthy andintelligent life to society.
2. Supporting rural construction in multiple ways
Haier Smart Home has been deeply involved in the cause of rural revitalization, establishingan in-depth collaboration with the rural areas encompassing industry, employment,education, health and other aspects. It also contributes to the construction of beautifulvillages and improvement of rural production and living standards with its own technical andknowledge advantages.
3. Helping relief enthusiastically
In the face of extreme climate and natural disasters, Haier Smart Home has activelyparticipated in disaster rescue and relief actions to help the affected people overcomedifficulties as soon as possible. In 2023, the Company’s operating regions at home andabroad donated materials and cash to public welfare organizations and charitable activitiesin many regions, demonstrating the fulfilment of responsibility of Haier Smart Home withactual actions.
Section V Environmental and Social Responsibilities
4. Volunteering to serve the society
All members of the Company from operating regions at home and abroad insist onpracticing voluntary service activities with sincerity, devoting themselves to publicundertakings with professional skills and enthusiasm, and giving back to the society withlove.For details, please refer to the 2023 Environment, Social and Governance Report of HaierSmart Home Co., Ltd. disclosed on the date of this report.(II) Details of social responsibility works
√ Applicable □ Not Applicable
External donation, public welfare projectsQuantity/ContentTotal Contribution (RMB10,000)626.97Among which: Funds (RMB10,000)626.97Specifications
√ Applicable □ Not Applicable
For details, please refer to the 2023 Environment, Social and Governance Report of Haier SmartHome Co., Ltd. disclosed on the date of this periodic report.III. PARTICULARS ON THE EFFORTS TO CONSOLIDATE AND EXPAND ITSACHIEVEMENTS IN POVERTY ALLEVIATION AND RURAL AREAINVIGORATION
√ Applicable □ Not Applicable
Poverty alleviation andrural revitalization projectsQuantity/ContentTotal Contribution (RMB10,000)58.14Among which: Funds (RMB10,000)58.14Forms of assistance (such as poverty alleviation
through industry development, poverty alleviationthrough employment, poverty alleviation througheducation, etc.)
poverty alleviation through industry
development, poverty alleviation througheducationSpecifications
√ Applicable □ Not Applicable
In accordance with the national targeted poverty alleviation plan and documents requirements, theCompany emphasizes poverty alleviation and conducts targeted poverty alleviation within the authoritygranted on the general meeting in respect of, among others, donations.
Section V Environmental and Social Responsibilities
For years, the Company has made genuine contributions to education to improve the basic culturalquality of people in poverty and skills of families in poverty, with an emphasis on shoring up the weaklink of the education sector and stopping inter-generational poverty. As of now, the Company, HaierGroup Companies (the effective controller of the Company) and its subordinate enterprises (hereafter,the “Haier Group”) have constructed over 300 hope primary schools and hope secondary schools,covering 26 provinces, municipalities and autonomous regions in the PRC. It also offers continuousresource assistance to such schools every year to effectively boost the base education capacity inpoverty regions and improve education quality. At the same time, in the face of natural disasters, theCompany actively participated in disaster rescue and relief actions: In August 2023, Haier Smart HomeHeilongjiang Branch joined hands with local Haier franchised stores to rush to severely affected areassuch as Wuchang City and Shangzhi City in Harbin to provide emergency aid materials and helpaffected people overcome difficulties, taking up social responsibilities voluntarily. In addition, theCompany continues to launch effective measures to assist rural revitalization: In December 2023, HaierSmart Home franchised stores, in collaboration with the Shanxi Provincial Government and the RetailerIndustry Association, successfully held the “Haier Franchised Store Better Life Sales—Large ScaleTechnology Assisted Agriculture Live Broadcast China Tour” in Taiyuan. Haier Smart Home stores fullyleveraged the advantages of nationwide store layout to promote local specialty agricultural products tothe whole country.In 2023, the Company’s capital expenditure in targeted poverty alleviation amounted to approximatelyRMB6.85 million, primarily attributable to poverty alleviation through industry development, povertyalleviation through education, etc., to proactively respond to the government’s call for socialresponsibility fulfillment.
Section VI Significant Events
I. FULFILLMENT STATUS OF UNDERTAKINGS
(I) The undertakings made by the ultimate controller, shareholders, related parties,acquirer as well as the Company and other relevant parties during or up to thereporting period
√ Applicable □ Not Applicable
Background ofundertakingsType of undertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertakingrelated tosignificantreorganization
Eliminate the right defectsin land property etc.
Haier GroupCorporation
During the period from September 2006 to
May 2007, the Company issued sharesto Haier Group Corporation (“HaierGroup”) to purchase the controllingequity in its four subsidiaries, namelyQingdao Haier Air-ConditionerElectronics Co., Ltd. (青島海爾空調電子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier ElectronicsHolding Co., Ltd. (武漢海爾電器股份有限公司), Guizhou Haier Electronics Co.,Ltd. (貴州海爾電器有限公司). Withregard to the land and property requiredin the operation of three companies,namely Qingdao Haier Air-ConditionerElectronics Co., Ltd. (青島海爾空調電子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier ElectronicsHolding Co., Ltd. (武漢海爾電器股份有限公司) (the “Covenantees”), HaierGroup made an undertaking (the “2006Undertaking”). According to the contentof 2006 Undertaking and currentcondition of each Covenantee, HaierGroup will constantly assure thatCovenantees will lease the land andproperty owned by Haier Group for free.Haier Group will make compensation inthe event that the Covenantees sufferloss due to the unavailability of suchland and property (Note).
27 September2006
YesLong-termYes
Address peer competitionHaier Smart Home
Co., Ltd.
Prior to the Transaction (hereinafter “the
Transaction” refers to the transaction inrelation to the privatization of HaierElectronics by Haier Smart Home), HaierElectric was a controlling subsidiary ofthe Company and did not have peercompetition with the Company; after thecompletion of the Transaction, HaierElectric became a wholly-owned orcontrolling subsidiary of the Companyand no new peer competition with theCompany existed or will arise. There isno new peer competition or potentialcompetition between the Company andother related parties controlled by thecontrolling shareholders or the de factocontroller of the Company.
31 July 2020YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayAddress connectedtransactions
Haier GroupCorporation
1. The Transaction constitutes a connected
transaction and the connectedtransaction procedures performed underthe Transaction are in compliance withthe relevant regulations. The pricing ofthe connected transaction is fair andthere are no circumstances under whichthe interests of the listed company andthe non-connected shareholders areprejudiced. 2. Upon completion of theTransaction, the Company and itsaffiliates will take lawful and effectivemeasures to minimize and regulate theconnected transactions with the listedcompany, take the initiative tosafeguard the interests of the listedcompany and all shareholders, andrefrain from taking advantages ofconnected transactions for improperbenefits. 3. Provided that there is noconflict with laws and regulations, ifconnected transactions between theCompany and its affiliates and the listedcompany occur or exist which cannotbe avoided or for which there arereasonable reasons, the Company andits affiliates will legally enter into atransaction agreement with the listedcompany to ensure strict compliancewith the procedures of connectedtransactions required by the laws,regulations, regulatory documents andthe articles of association of theCompany, conduct transactions inaccordance with the principles ofmarketability and fair prices to ensurethe fairness and compliance ofconnected transactions, and refrain fromtaking advantages of such connectedtransactions to engage in any acts thatare detrimental to the interests of thelisted company or its minorityshareholders, and at the same time,comply with the information disclosureobligations in accordance with relevantregulations.
29 July 2020YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayAddress peer competitionHaier Group
Corporation
1. The Company and its controlling
subsidiary, Haier COSMO Co., Ltd.,were principally engaged in investmentbusiness during the reporting period,and the Company and its controllingsubsidiary, Haier COSMO Co., Ltd.(including its subsidiaries and entitieswith more than 30% shareholding), haveno real or potential per competition withHaier Smart Home; 2. the domestic andoverseas white goods businesses andassets held by the Company (includingthe Company’s subsidiaries and entitieswith more than 30% shareholding) havebeen injected into Haier Smart Homethrough asset consolidation and equitytransfer in accordance with thecommitments made by the Company inJanuary 2011 and the requirements foradjusting such commitments asconsidered and approved by HaierSmart Home at its 2014 annual generalmeeting; 3. Since the acquisition of100% of Haier New Zealand InvestmentHolding Company Limited (which holds100% of the shares in Fisher & PaykelAppliances Holdings Limited) by HaierSmart Home’s offshore subsidiary, HaierSingapore Investment Holding Co., Ltd.,following the completion in July 2018,the Company (including the Company’ssubsidiaries and entities with more than30% shareholding) and Haier SmartHome do not have any peer competingrelationship in any business areas bothwithin and outside the PRC. During thereporting period, the Company(including the Company’s subsidiariesand entities with more than 30%shareholding) did not have any newpeer competition with Haier SmartHome; 4. Upon completion of theTransaction, the Company (including theCompany’s subsidiaries and entities withmore than 30% shareholding) and itsaffiliates do not have any new orpotential peer competition with HaierSmart Home; 5. During the period whenthe company is the controllingshareholder of Haier Smart Home andthe shares of Haier Smart Home arelisted on the Hong Kong StockExchange, the company and its othersubsidiaries and entities with more than30% shareholding will not operate anybusiness that competes with thebusiness engaged by Haier Smart Homeand will not engage in real or potentialpeer competition with Haier SmartHome.
29 July 2020YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents 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 ChinaSecurities Regulatory Commission, theShanghai Stock Exchange and thearticles of association of Haier SmartHome, etc., fairly exercise shareholders’rights and fulfill shareholders’obligations, refrain from takingadvantage of its shareholding positionfor improper benefits, ensure the listedcompany will continue to be completelyseparate from the company and otherenterprises on which the companyexercises control and exerts significantinfluence in terms of management,personnel, assets, finance, organizationand business operations, and maintainthe continued independence of thelisted company in terms ofmanagement, personnel, assets,finance, organization and businessoperations. Upon completion of theTransaction, the company will complywith the provisions of the Notice onSeveral Issues concerning RegulatingFund Transactions between ListedCompanies and Their Affiliates and theExternal Guarantee of Listed Companiesand the Circular of China SecuritiesRegulatory Commission and ChinaBanking Regulatory Commission onRegulating the External GuarantiesProvided by Listed Companies toregulate the external guarantees bylisted companies and their subsidiaries,and will not misappropriate the funds ofthe listed company and theirsubsidiaries. The company undertakesto strictly fulfill the above commitments.In the event that the interests of thelisted company are damaged as a resultof any breach of the abovecommitments by the company and otherenterprises on which the companyexercises control and exerts significantinfluence, the company will legally bearthe corresponding liability for damage.
29 July 2020YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents 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 connectedtransaction procedures performed underthe Transaction are in compliance withthe relevant regulations. The pricing ofthe connected transaction is fair andthere are no circumstances under whichthe interests of the listed company andthe non-connected shareholders areprejudiced. 2. Upon completion of theTransaction, the company and otherenterprises on which the companyexercises control will take lawful andeffective measures to minimize andregulate the connected transactions withthe listed company, take the initiative tosafeguard the interests of the listedcompany and all shareholders, andrefrain from taking advantages ofconnected transactions for improperbenefits. 3. Provided that there is noconflict with laws and regulations, ifconnected transactions between thecompany and other enterprises onwhich the company exercise control andthe listed company occur or exist whichcannot be avoided or for which thereare reasonable reasons, the companyand other enterprises on which thecompany exercises control will legallyenter into a transaction agreement withthe listed company to ensure strictcompliance with the procedures ofconnected transactions required by thelaws, regulations, regulatory documentsand the articles of association of thecompany, conduct transactions inaccordance with the principles ofmarketability and fair prices, and refrainfrom taking advantages of suchconnected transactions to engage in anyacts that are detrimental to the interestsof the listed company or its minorityshareholders, and at the same time,comply with the information disclosureobligations in accordance with relevantregulations. 4. Any covenants andarrangements between the companyand other enterprises on which thecompany exercise control and the listedcompany in relation to connectedtransactions shall not prevent the otherparty from conducting business ordealing with any third party for its ownbenefit and on equal competitive termsin the market.
29 July 2020YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertakingrelated torefinancing
Eliminate the right defectsin land property andetc.
Haier GroupCorporation
Haier Group Corporation undertakes that itwill assure Haier Smart Home and itssubsidiaries of the constant, stable andunobstructed use of the leasedproperty. In the event that Haier SmartHome or any of its subsidiaries suffersany economic loss due to the fact thatleased property has no relevantownership certificate, Haier GroupCorporation will make compensation toimpaired party in a timely and sufficientway and take all reasonable andpracticable measures to support theimpaired party to recover to normaloperation before the occurrence of loss.Upon the expiration of relevant leasingperiod, Haier Group Corporation willgrant or take practicable measures toassure Haier Smart Home and itssubsidiaries of priority to continue tolease the property at a price not higherthan the rent in comparable market atthat time. Haier Group Corporation willassure Haier Smart Home and itssubsidiaries of the constant, stable, freeand unobstructed use of self-builtproperty and land of the Group. In theevent that Haier Smart Home or any ofits subsidiaries fails to continue to useself-built property according to its ownwill or in original way due to the factthat self-built property has no relevantownership certificate, Haier GroupCorporation will take all reasonable andpracticable measures to eliminateobstruction and impact, or will supportHaier Smart Home or its affectedsubsidiary to obtain alternative propertyas soon as possible, if Haier GroupCorporation anticipates it is unable tocope with or eliminate the externalobstruction and impact with itsreasonable effort. For details, pleaserefer to the Announcement of QingdaoHaier Co., Ltd. on the Formation,Current Situation of the DefectiveProperty, the Influence on Operation ofIssuer Caused by Uncertainty ofOwnership, Solution for the Defect andGuarantee Measures (L2014–005)published by the Company on the fourmajor securities newspapers and thewebsite of Shanghai Stock Exchangeon 29 March 2014.
24 December
2013
YesLong-termYes
Section VI Significant Events
Background ofundertakingsType of undertakingsCovenanterContents of undertakings
Date ofundertakings
Anydeadline forperformance
Term ofundertakings
Whetherperformed ina timely andstrict wayUndertakingsrelated toEquityincentive
OthersHaier Smart Home
Co., Ltd.
The Company will not provide loans or anyother forms of financial assistance,including guaranteeing their loans, toany incentive recipient for acquiringrelevant stock options under thisincentive plan.
15 September2021/28June 2022
YesThe completion of
equity incentiveimplementation
Yes
Otherundertakings
Asset injectionHaier Group
Corporation
Inject the assets of Haier Photoelectric tothe Company or dispose such assetsthrough other ways according to therequirements of the domesticsupervision before June 2025. For moredetails, please refer to theAnnouncement of Haier Smart HomeCo., Ltd. on the Changes of SomeCommitments on Asset Injection(L2020- 024) published on the fourmajor securities newspapers and thewebsite of Shanghai Stock Exchangeon 30 April 2020.
December
2015
YesJune 2025Yes
Note: As at the date of this report, the undertaking was fulfilled since all Covenantees of the undertaking has obtained thereal property ownership certificates.(II) The Company’s explanation on whether the earnings forecast on assets orprojects was met and its reasons in the situation that earnings in theCompany’s assets or projects have a forecast, and the period of whichincludes the reporting period.
□ Reached □ Not Reached √ Not Applicable
(III) Completion of performance commitments and their impact on the impairmenttest of goodwill
□ Applicable √ Not Applicable
II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLINGSHAREHOLDERS AND OTHER RELATED PARTIES DURING THEREPORTING PERIOD
□ Applicable √ Not Applicable
III. INFORMATION ON NON-COMPLIANCE GUARANTEES
□ Applicable √ Not Applicable
IV. EXPLANATION OF THE BOARD OF THE COMPANY ON THE‘NON-STANDARD AUDIT REPORT’ ISSUED BY THE ACCOUNTINGFIRM
□ Applicable √ Not Applicable
Section VI Significant Events
V. EXPLANATION OF THE COMPANY’S ANALYSIS ON REASONS ANDEFFECTS OF CHANGES IN ACCOUNTING POLICIES ANDACCOUNTING ESTIMATES OR CORRECTION OF SIGNIFICANTACCOUNTING ERRORS(I) Explanation of the Company’s analysis on reasons and effects of changes inaccounting policies and accounting estimates
√ Applicable □ Not Applicable
Particulars of and reasons for changes inaccounting policiesDate of issue
Date ofadoptionAccounting Standards for Business EnterprisesInterpretation No. 16 (“Interpretation No. 16”)November 20221 January 2023The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on 1January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilitiesand right-of-use assets related to a single transaction at the beginning of the earliest periodwhen the Interpretation No. 16 was adopted for the presentation of the financial statements, thenet amount of the deferred tax assets and liabilities after offsetting was equal to the amountsoriginally recognised on a net basis, with no impact on the consolidated balance sheet itemspresented at the net amount after offsetting. The impact of the changes in accounting policies ondeferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was asfollows:
Item
Before policy
changesImpact of changes
After policychangesDeferred tax assets before offsetting4,038,915,158.86868,657,062.494,907,572,221.35Deferred tax liabilities before offsetting4,673,734,789.63868,657,062.495,542,391,852.12Offset amount–2,314,874,230.44–868,657,062.49–3,183,531,292.93Deferred tax assets after offsetting1,724,040,928.421,724,040,928.42Deferred tax liabilities after offsetting2,358,860,559.192,358,860,559.19
(II) Explanation of the Company’s analysis on reasons and effects of correction of
significant accounting errors
□ Applicable √ Not Applicable
(III) Communication with former accounting firm
□ Applicable √ Not Applicable
(IV) Approval processes and other explanations
□ Applicable √ Not Applicable
Section VI Significant Events
VI. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRM
Unit and Currency: RMB10,000Current appointmentName of domestic accounting firmHexin Certified Public Accountants
LLPRemuneration of domestic accounting firm655Audit period of domestic accounting firm11 yearsNames of certified public accountants of domestic accountingfirm
Zhao Bo, Li Xiang ZhiNumber of accumulative years of audit services of certifiedpublic accountants in domestic accounting firms
11 years, 2 yearsName of overseas accounting firmHLB Hodgson Impey Cheng LimitedRemuneration of overseas accounting firm389Audit period of overseas accounting firm4 years
NameRemunerationAccounting firm for Internal control auditHexin Certified Public
Accountants LLP
Explanation of appointment and dismissal of accounting firm
□ Applicable √ Not Applicable
Explanation of change of accounting firm during the auditing period
□ Applicable √ Not Applicable
Explanation of audit fees falling by more than 20% (inclusive) compared with the previous year
□ Applicable √ Not Applicable
Section VI Significant Events
VII. POSSIBILITY OF DELISTING(I) Reasons of warning for delisting risks
□ Applicable √ Not Applicable
(II) Response measures to be taken by the Company
□ Applicable √ Not Applicable
(III) Circumstances and reasons for termination of listing
□ Applicable √ Not Applicable
VIII. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
□ Applicable √ Not Applicable
IX. MATERIAL LITIGATION AND ARBITRATION MATTERS
□ Material litigation and arbitration matters during the year
√ No material litigation and arbitration matters during the year
X. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECTOF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION
□ Applicable √ Not Applicable
XI. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY ANDITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERDURING THE REPORTING PERIOD
□ Applicable √ Not Applicable
Section VI Significant Events
XII. SIGNIFICANT RELATED-PARTY TRANSACTIONS
(I) Related-party transactions from daily operation
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
□ Applicable √ Not Applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
√ Applicable □ Not Applicable
Pursuant to the “Product and Materials Procurement Framework Agreement between HaierSmart Home Co., Ltd. and Haier Group Corporation” (《海爾智家股份有限公司與海爾集團公司之產品及物料採購框架協議》) and the “Services Procurement Framework Agreementbetween Haier Smart Home Co., Ltd. and Haier Group Corporation” (《海爾智家股份有限公司與海爾集團公司之服務採購框架協議》) considered and approved at the 28th meetingof the 10th session of the Board of Directors and the 2021 Annual General Meeting, andthe “Resolution of Haier Smart Home Co., Ltd. on Renewing the Framework Agreement onFinancial Services with Haier Group Corporation and Estimated Amount of ConnectedTransactions” (《海爾智家股份有限公司關於與海爾集團公司續簽〈金融服務框架協議〉暨預計關聯交易額度的議案》) considered and approved at the 18th meeting of the 10th sessionof the Board of Directors and the 2020 Annual General Meeting, the Company has madeestimation on the connected transactions for the next three years, as detailed in theaforesaid announcements regarding the resolutions of the meetings.For the actual performance of the Company’s connected transactions in the year of 2023,please refer to “XII. Related parties and related-party transactions “under Section X—
Financial and Accounting Report set out in this regular report.
3. Matters not disclosed in temporary announcements
□ Applicable √ Not Applicable
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matter 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 Events
(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 that haven’t been disclosed in temporary announcements
□ Applicable √ Not Applicable
(V) Financial business between the Company and the finance company with whichit has a related relationship, or it is the company’s controlling finance companyand related parties
√ Applicable □ Not Applicable
1. Deposit business
√ Applicable □ Not Applicable
Unit and Currency: RMBAmount for the current periodRelated partyRelationship
Maximum dailydeposit limit
Range of depositinterest
Balance as at thebeginning of the
period
Total amountdeposited duringthe currentperiod
Total amountwithdrawn duringthe currentperiodBalance as at theend of the periodHaier Finance Co.,
Ltd.
Subsidiary of HaierGroup
34 billion0.00012% to 5.32%31,433,124,152.44570,895,505,808.96568,674,387,426.9033,654,242,534.50Total///31,433,124,152.44570,895,505,808.96568,674,387,426.9033,654,242,534.50
Section VI Significant Events
2. Lending business
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the current period
Related partyRelationshipLoan limit
Range of loaninterest
Balance as atthe beginningof the period
Total loanamount forthe currentperiod
Totalrepaymentamount forthe currentperiodBalance as atthe end of theperiodHaier FinanceCo., Ltd.
Subsidiary ofHaier Group
10 billion0–
4.5%60,000,000.0060,000,000.00Total///60,000,000.0060,000,000.00
3. Credit business or other finance businesses
√ Applicable □ Not Applicable
Unit and Currency: RMBRelated partyRelationshipType of businessTotal amount
Actual amountof occurrenceHaier Finance Co.,Ltd.
Subsidiary of HaierGroup
Foreign exchangederivativesproducts
5.5 billion3,054,405,905.60
Haier Finance Co.,Ltd.
Subsidiary of HaierGroup
Service charge80 million23,618,778.66
4. Other explanations
□ Applicable √ Not Applicable
(VI) Others
□ Applicable √ Not Applicable
Section VI Significant Events
XIII. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
(I) Trusteeship, contracting and leasing
1. Trusteeship
□ Applicable √ Not Applicable
During 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 are still 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 onthe fact that Qingdao Haier Optoelectronics Co., Ltd. (青島海爾光電有限公司) and itssubsidiaries, the main body of Haier Group engaging in the color television business, arestill in a period of transformation and integration, and their financial performance has notyet met the Company’s expectations, Haier Group is unable to complete the transfer beforethe aforesaid commitment period. Haier Group intends to entrust the Company with theoperation and management of the escrow assets and pay the Company an annual escrowfee of RMB1 million during the escrow period.
2. Contracting
□ Applicable √ Not Applicable
3. Leasing
□ Applicable √ Not Applicable
Section VI Significant Events
(II) Guarantee
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000External guarantees provided by the Company (excluding guarantees for subsidiaries)
Guarantor
Relationshipbetween theguarantor andthe listedcompany
Securedparty
Amount ofguarantee
Date ofoccurrenceof theguarantee(date ofagreement)
Commencement
date ofguaranteeExpirationdate ofguarantee
Type ofguaranteeCollateral (ifany)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 period1,384,017Total balance of guarantees for subsidiaries at the end of the reporting period (B)1,228,647
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)Total amount of guarantee (A + B)1,228,647Ratio of total amount of guarantees to net assets of the Company (%)11.9Including:
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)15,923The amount of total amount of guarantee in excess of 50% of net assets (E)0Total amount of the above three guarantees (C + D + E)15,923Explanation of possibly bearing related discharge duty for premature guaranteesNilExplanation of guarantee statusNil
(III) Entrusted others to manage cash assets
1. Entrusted wealth management
(1) Overall of entrusted wealth management
√ Applicable □ Not Applicable
Unit and Currency: RMBType
Sources offundsAmount
Premature
balance
Past dueuncollectedamountOthersSelf-owned funds
(Assetmanagementaccount foremployee stockownership)
14,638,96814,638,968
Wealth managementin banks
Self-owned funds8,942,000,0001,988,000,000Others
√ Applicable □ Not Applicable
Section VI Significant Events
By the end of the reporting period, the balance of the Company’s entrusted wealthmanagement amounted to RMB2,002 million, including two parts:①Temporarily-idlefunds wealth management by certain subsidiaries of the Company: Under the premiseof ensuring sufficient capital required by the principal operating activities and dailyoperations, some subsidiaries of the Company purchased some short-term principal-guaranteed wealth management products and structured deposits from majorcommercial banks to improve the yield of temporarily-idle funds and the return forshareholders within the authority of the president’s office meeting and under thecondition of ensuring fund safety. By the end of the reporting period, the balance ofthe entrusted wealth management amounted to RMB1,988 million; ②Idle funds in theasset management account of the Employee Stock Ownership Scheme: the assetmanagement institution purchased cash products such as money funds according tothe liquidity of the products with some idle funds in the asset management accountof the Employee Stock Ownership Scheme of the Company. The balance of cashassets amounted to RMB15 million.
(2) Individual entrusted wealth management
Trustee
Type ofentrustedwealthmanagement
Amount ofentrustedwealthmanagementCommencementdate ofentrustedwealthmanagement
Expiration dateof entrustedwealthmanagementSourcesof fundsInvestment
Whetherthere arerestrictionsDeterminationof return
AnnualizedyieldExpectedreturn(if any)
Actualgains orlosses
UndueamountPast dueuncollectedamountWhetherapprovedby dueprocessAny futureplan forentrustedwealthmanagementAmount ofprovisionforimpairment(if any)Asset management account ofIndustrial Bank CO., LTD.
Short-term wealthmanagement
14,638,96814,638,968YESYESQingdao Sub-branch ofBank of China
Linked structureddeposit
200,000,0002023/12/152024/4/18Self-owned
funds
2.60%200,000,000YESYESQingdao Sub-branch of ChinaMerchants Bank
Linked structureddeposit
65,000,0002023/11/272024/2/27Self-owned
funds
2.55%YESYESQingdao branch of Bank ofCommunications
Linked structureddeposit
66,000,0002023/10/182024/1/22Self-owned
funds
3.05%66,000,000YESYESHaier Road sub-branch ofConstruction Bank
Linked structureddeposit
400,000,0002023/10/132024/1/13Self-owned
funds
2.90%400,000,000YESYESQingdao branch of Bank ofCommunications
Linked structureddeposit
1,000,000,0002023/10/182024/1/22Self-owned
funds
3.05%1,000,000,000YESYESQingdao branch of Bank ofCommunications
Linked structureddeposit
257,000,0002023/10/182024/1/22Self-owned
funds
3.05%257,000,000YESYESOthers
□ Applicable √ Not Applicable
(3) Provisions for impairment of entrusted wealth management
□ Applicable √ Not Applicable
Section VI Significant Events
2. Entrusted loans
(1) Overall entrusted loans
□ Applicable √ Not Applicable
Others
□ Applicable √ Not Applicable
(2) Individual entrusted loans
□ Applicable √ Not Applicable
Others
□ Applicable √ Not Applicable
(3) Provisions for impairment of entrusted loans
□ Applicable √ Not Applicable
3. Others
□ Applicable √ Not Applicable
(IV) Other Major Contracts
□ Applicable √ Not Applicable
XIV. EXPLANATION OF PROGRESS IN USE OF PROCEEDS
□ Applicable √ Not Applicable
XV. EXPLANATION OF OTHER SIGNIFICANT MATTERS THAT HAVE ASIGNIFICANT IMPACT ON THE VALUE JUDGMENTS AND INVESTMENTDECISIONS OF INVESTORS
□ Applicable √ Not Applicable
Section VII Changes in Shares andInformation about Shareholders
I. CHANGES IN SHARE CAPITAL(I) Table of Changes in shares
1. Table of Changes in shares
Unit: sharePrior to the changeIncrease and decrease of the change (,-)After the changeNumberPercentage(%)New sharesissued
Bonusshares
Sharesconvertedfrom reserveOthersSubtotalNumber
Percentage(%)I. Shares with selling
restrictions
1. Shares held by
the state
2. Shares held by
the state-ownedlegal entities
3. Shares held by
other domesticinvestorsIncluding:
shares heldby Domesticnon-state-owned legalentitiesShares held by
domesticindividuals
4. Shares held by
foreign investorsIncluding:
shares heldby foreignlegal entitiesShares held byforeignindividualsII. Tradable shareswithout sellingrestrictions9,446,598,493100.00–8,483,600–8,483,6009,438,114,893
1. RMB ordinary
shares6,308,552,65466.786,308,552,654
2. Domestic listed
foreign shares
3. Overseas listed
foreign shares3,138,045,83933.22–8,483,600–8,483,6003,129,562,239
4. Others
III. Total shares9,446,598,493100.00–8,483,600–8,483,6009,438,114,893
Section VII Changes in Shares and Information about Shareholders
2. Statement on the changes in shares
√ Applicable □ Not Applicable
Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual GeneralMeeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of 2022 forD shares and the First Class Meeting of 2022 for H shares of the Company considered andapproved the Resolution on Proposing the General Meeting to Grant the General Mandateto the Board of Directors to Repurchase not more than 10% of the Total Number of Hshares of the Company in Issue of Haier Smart Home Co., Ltd., in which the Companyintends to repurchase H shares and cancel them within the agreed period. During thereporting period, the Company repurchased a total of 8,483,600 H shares, which havebeen cancelled. As such, during the reporting period, the share capital of the Companywas changed from 9,446,598,493 shares at the beginning of the reporting period to9,438,114,893 shares.
3. Effect of changes in shares on the financial indicators such as earnings per share
and net assets per share (if any) over the last year and the last reporting period
√ Applicable □ Not Applicable
In 2023, the Company achieved net profit attributable to shareholders of the ParentCompany of RMB16,596,615,045.87, equity attributable to owners of the Parent Companyof RMB103,514,153,535.04 at the end of the reporting period, in terms of total sharecapital of 9,446,598,493 shares at the beginning of the period, profit per share wasRMB1.757 and net asset was RMB10.958 per share accordingly; in terms of total sharecapital of 9,438,114,893 shares at the end of the period, profit per share was RMB1.758and net asset was RMB10.968 per share accordingly.
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
□ Applicable √ Not Applicable
(II) Changes in shares with selling restriction
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about Shareholders
II. ISSUANCE AND LISTING OF SECURITIES(I) Issuance of securities as of the reporting period
□ Applicable √ Not Applicable
Details of issuance of securities as of the reporting period (please specify separately for bondswith different interest rates within the duration):
□Applicable √ Not Applicable
(II) Changes in total shares and shareholder structure as well as assets and liabilities
structure of the Company
√ Applicable □ Not Applicable
For the total number of ordinary shares of the Company and changes in shareholder structure,please refer to the relevant explanations in ‘I. Changes in share capital’ and ‘III. Information onshareholder and ultimate controllers’ in this section. For the impact of the aforesaid changes on‘Paid-in capital (or share capital)’ in the Company’s balance sheet and other items, please referto the relevant content in ‘Section X Financial Report’ of this report.(III) Information on existing shares specifically issued for staff
□ Applicable √ Not Applicable
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(I) Total number of shareholdersTotal number of ordinary shareholders up to the end of the reporting period158,300Total number of ordinary shareholders as at the end of the last month prior to
the disclosure day of the annual report
130,921
Section VII Changes in Shares and Information about Shareholders
(II) Table of top ten shareholders, top ten common shareholders (or the shareholdersnot subject to selling restrictions) by the end of the reporting period
Unit: shareShareholdings of top ten shareholders (excluding the lending of shares underrefinancing)
Name of shareholder(full name)
Increase/decreaseduring thereporting
periodNumber ofshares heldat the end ofthe period
Percentage(%)Number ofshares heldwith sellingrestrictions
Status of shares pledged,
marked or frozen
Nature ofshareholderStatusNumberHKSCC NOMINEES LIMITED(Note)
–9,009,3102,230,825,24223.64UnknownUnknownHaier COSMO Co., Ltd.
(海爾卡奧斯股份有限公司)
1,258,684,82413.34NoneDomestic non-state-
owned legal entityHaier Group Corporation1,072,610,76411.36NoneDomestic non-state-
owned legal entityHong Kong Securities ClearingCo., Ltd.
–112,719,932593,802,9296.29NoneUnknownHCH (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）)
13,168,642133,791,0581.42NoneDomestic non-state-
owned legal entityALIBABA INVESTMENT LIMITED83,823,9930.89NoneForeign legal entityNational Social Security Fund
Portfolio 113
45,931,26464,298,1390.68NoneUnknown
Section VII Changes in Shares and Information about Shareholders
Shareholdings of top ten shareholders not subject to selling restrictions
Name of shareholder
Number oftradable shareswithout sellingrestrictionsClass and number of shares
ClassNumberHKSCC NOMINEES
LIMITED
2,230,825,242Overseas listed foreign
shares
2,230,825,242Haier COSMO Co., Ltd.(海爾卡奧斯股份有限公司)
1,258,684,824RMB ordinary1,258,684,824Haier GroupCorporation
1,072,610,764RMB ordinary1,072,610,764Hong Kong SecuritiesClearing Co., Ltd.
593,802,929RMB ordinary593,802,929HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED
538,560,000Overseas listed foreign
shares
538,560,000China Securities FinanceCorporation Limited
182,592,654RMB ordinary182,592,654Qingdao Haier Venture &
InvestmentInformation Co., Ltd.(青島海爾創業投資咨詢有限公司)
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
ALIBABA INVESTMENTLIMITED
83,823,993Overseas listed foreign
shares
83,823,993National Social SecurityFund Portfolio 113
64,298,139RMB ordinary64,298,139Explanation on
repurchase account oftop ten shareholders
The Company’s repurchase account held a total of 125,155,995
shares.
Section VII Changes in Shares and Information about Shareholders
Name of shareholder
Number oftradable shares
without sellingrestrictionsClass and number of shares
ClassNumberExplanation on
delegated votingrights, entrustedvoting rights,abstained votingrights of the aforesaidshareholders
Nil
Related parties orparties acting inconcert among theaforesaidshareholders
(1) Haier COSMO Co., Ltd. (海爾卡奧斯股份有限公司) is a holding
subsidiary of Haier Group Corporation. Haier GroupCorporation holds 51.20% of its equity. Each of QingdaoHaier Venture & Investment Information Co., Ltd. (青島海爾創業投資咨詢有限公司), HCH (HK) INVESTMENTMANAGEMENT CO., LIMITED and Qingdao HaichuangzhiManagement Consulting Enterprise (Limited Partnership) (青島海創智管理咨詢企業（有限合伙）) is a party acting in concertwith Haier Group Corporation;
(2) The Company is not aware of the existence of any connections
of other shareholders.Explanation ofpreferentialshareholders withrestoration of votingrights and theirshareholdings
Not Applicable
Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the shareholders of the Company’s H-shares, which
is the original data provided by China Hong Kong securities registration agency to the Company after the mergeraccording to local market practices and technical settings, not representing the ultimate shareholder.Top ten shareholders participating in the lending of shares under the refinancing business
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about Shareholders
Changes in the top ten shareholders compared with the previous period
√ Applicable □ Not Applicable
Unit: shareChanges in the top ten shareholders compared with the end of the previous period
Name of shareholder(full name)
Addition/exitduring thereporting period
Number of shares lent underrefinancing at the end of the periodthat have not been returned
Shareholdings held through ordinaryaccount and credit account at theend of the period and number ofshares lent under refinancing thathave not been returned
Total numberPercentage (%)Total numberPercentage (%)China Merchant Bank Co., Ltd.—Yifangda ConsumerIndustry Equity SecuritiesInvestment Fund
Exit48,380,5840.51National Social Security FundPortfolio 113
Addition64,298,1390.68
Number of shares held by the top ten shareholders with selling restrictions and sellingrestrictions
□ Applicable √ Not Applicable
(III) Strategic investors or general legal persons who became the top tenshareholders due to placing of new shares
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about Shareholders
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER(I) Status of controlling shareholder
1 Legal person
√ Applicable □ Not Applicable
NameHaier COSMO Co., Ltd. (海爾卡奧斯股份有限公司)Person in charge of
the Company orlegal representative
Zhou Yunjie (周雲杰)Establishment date1988–
–
Principal businessInformation technology integration and Internet of Things
technology services: industrial automation technology researchand development, technical consulting; research anddevelopment and manufacturing of electrical appliances,electronic products, mechanical products, communicationequipment and related accessories, industrial automationcontrol equipment, computer hardware and software andauxiliary equipment; import and export business (operatedwithin the scope approved by MOFCOM); wholesale andretail: domestic commerce (except for merchandisesprohibited by the state); investment in medical industry;investment advisory services; enterprise managementconsulting. (For projects subject to approval, businessactivities can only be carried out after the approval byrelevant departments)Shareholding of othercontrolling andparticipatingdomestic andoverseas listedcompanies in thereporting period
Indirect controlling/participating Company: ‘Qingdao Haier
Biomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司) (stockname: ‘Haier Biomedical’, stock code: 688139), Yingkang LifeTechnology Co., Ltd. (盈康生命科技股份有限公司)(stockname: ‘Yingkang Life’, stock code: 300143), ‘Qingdao BankCo., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank ofQingdao’, stock code: 002948 and 3866.HK), ‘ChinaInternational Capital Corporation Limited’ (stock name: ‘CICC’,stock code: 601995 and 3908.HK) etc.Other explanationNil2 Natural person
□ Applicable √ Not Applicable
3 Explanation on the absence of controlling shareholders of the Company
□ Applicable √ Not Applicable
4 Explanation on the change in controlling shareholders during the reporting period
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about Shareholders
5 Framework of the ownership and controlling relationship between the Company andits controlling shareholder
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd.
13.34%
Haier COSMO Co., Ltd.()
(II) Status of the ultimate controller
1 Legal person
√ Applicable □ Not Applicable
NameHaier Group CorporationPerson in charge ofthe Company orlegal representative
Zhou Yunjie (周雲杰)Establishment date1980–
–
Principal businessTechnology development, technology consultation, technology
transfer and technology services (including industrial Internet,etc.); data processing; digital technology, intelligenttechnology, software technology; research and development,sales and after-sales service of robots and automationequipment products; logistics information service; researchand development and sales of software technology for smarthome products and solutions systems; manufacturing ofhousehold appliances, electronic products, communicationequipment, electronic computers and accessories, generalmachinery, kitchen utensils, industrial robots; wholesale andretail of domestic commerce (except for the nationaldangerous prohibition franchise exclusive controlmerchandises); import and export business (see the foreigntrade enterprise finalized certification for details); economicand technological consultation; research and developmentand transfer of technological achievements; rental of ownedproperties. (For projects subject to approval, businessactivities can only be carried out after the approval byrelevant departments)
Section VII Changes in Shares and Information about Shareholders
NameHaier Group CorporationShareholding of othercontrolling andparticipatingdomestic andoverseas listedcompanies in thereporting period
Indirect controlling/participating Company: ‘Qingdao HaierBiomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司) (stockname: ‘Haier Biomedical’, stock code: 688139), Yingkang LifeTechnology Co., Ltd. (盈康生命科技股份有限公司) (stockname: ‘Yingkang Life’, stock code: 300143), ‘Qingdao BankCo., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank ofQingdao’, stock code: 002948 and 3866.HK), ChinaInternational Capital Corporation Limited’ (stock name: ‘CICC’,stock code: 601995 and 3908.HK), ‘Qingdao ThunderobotTechnology. Co., Ltd.’ (stock name: ‘THUNDEROBOT’, stockcode: 872190) etc.Other explanationNil2 Natural person
□ Applicable √ Not Applicable
3 Explanation on the absence of ultimate controller of the Company
□ Applicable √ Not Applicable
4 Explanation on the change in control over the Company during the reporting period
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about Shareholders
5 Framework of ownership and controlling relationship between the Company and theultimate controllers
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd.
Haier Group Corporationpartiesin concert100%
1.83%
(A Shares)
1.42%
(A Shares)
11.36%
(A Shares)
13.34%
(A Shares)
5.71%
(H Shares)
0.62%
(D Share
51.20%
67%
| %1 |
00%
Qingdao Haier Venture &Investment Information
Co., Ltd.(
)
Qingdao HaichuangzhiManagement Consulting
Enterprise(Limited Partnership)(
)
Haier COSMO
Co., Ltd.(
)
HCH (HK)INVESTMENTMANAGEMENTCO., LIMITED
HaierInternationalCo. Limited
6 The ultimate controller controls the Company by way of Trust or other assetsmanagement
□ Applicable √ Not Applicable
(III) Introduction of controlling shareholders and ultimate controllers
√ Applicable □ Not Applicable
Haier Group Company is registered as a joint-stock enterprise. According to the statementissued by the State-owned Assets Management Office of Qingdao on 1 June 2002, it is believedthat the enterprise nature of Haier Group Company is a collective owned enterprise.
Section VII Changes in Shares and Information about Shareholders
V. THE PROPORTION OF THE ACCUMULATED NUMBER OF SHARESPLEDGED BY THE CONTROLLING SHAREHOLDERS OR THE LARGESTSHAREHOLDER OF THE COMPANY, TOGETHER WITH THE PARTIESACTING IN CONCERT WITH THEM, TO THE NUMBER OF SHARES OFTHE COMPANY HELD BY THEM AMOUNTS TO MORE THAN 80%
□ Applicable √ Not Applicable
VI. OTHER CORPORATE SHAREHOLDERS WITH A SHAREHOLDINGPERCENTAGE OVER 10%
□ Applicable √ Not Applicable
VII. EXPLANATION OF RESTRICTIONS ON SHAREHOLDING REDUCTION
□ Applicable √ Not Applicable
VIII. SPECIFIC IMPLEMENTATION OF SHARE REPURCHASE DURING THE
REPORTING PERIOD
√ Applicable □ Not Applicable
Unit and Currency: RMBName of share repurchase planHaier Smart Home Co., Ltd.’s public share
proposal in relation to the partial repurchaseof A SharesDate of disclosure of the share repurchase plan31 March 2022Number of shares proposed to be repurchased
and its percentage to the total share capital(%)
42.86 million shares to 85.71 million shares,
0.45 to 0.91
Proposed amount of repurchaseRMB1.5–3 billionProposed period of repurchase31 March 2022–30 March 2023Purpose of repurchaseUsed for employee stock ownership plansAmount repurchased (share)712,900Repurchased amount as a percentage to the
underlying shares covered by the equityincentive scheme (%) (if any)
Not ApplicableProgress of the Company’s reduction of its
holdings of repurchased shares by way ofcentralised bidding
Not Applicable
Note: The above-mentioned “amount repurchased” only refers to the number of repurchases implemented during the period in 2023.
As at 31 January 2023, the implementation of the repurchase plan during the period was completed. During the entirerepurchase period, a total of 59,768,139 shares were repurchased during the period, and the amount of repurchase paidwas RMB1.510 billion.
Section VII Changes in Shares and Information about Shareholders
Name of share repurchase planHaier Smart Home Co., Ltd.’s public share
proposal in relation to the partial repurchaseof A SharesDate of disclosure of the share repurchase plan28 April 2023Number of shares proposed to be repurchased
and its percentage to the total share capital(%)
46.88 million shares to 93.75 million shares,
0.50 to 0.99
Proposed amount of repurchaseRMB1.5–3 billionProposed period of repurchase28 April 2023–27 April 2024Purpose of repurchaseUsed for employee stock ownership plansAmount repurchased (share)63,267,352Repurchased amount as a percentage to the
underlying shares covered by the equityincentive scheme (%) (if any)
Not ApplicableProgress of the Company’s reduction of itsholdings of repurchased shares by way ofcentralised bidding
Not Applicable
Note: During the reporting period, the Company also implemented the H-share repurchase scheme. For details, please refer to “2.
Statement on the changes in shares” under “Section VII Changes in Shares and Information about Shareholders” of thisreport and the Announcement on the Changes in Shares of Overseas Listed Foreign Shares (H Shares) of Haier Smart HomeCo., Ltd. (《海爾智家股份有限公司關於境外上市外資股 (H股) 股份變動情況的公告》) (No.: Lin 2023–029) disclosed by theCompany on 1 July 2023.
Section VIII Relevant Information of
Preference Shares
□ Applicable √ Not Applicable
Section IX Relevant Information of Bonds
I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIALCORPORATE DEBT FINANCING INSTRUMENTS
□ Applicable √ Not Applicable
II. CONVERTIBLE CORPORATE BOND
□ Applicable √ Not Applicable
Section X Financial Report
I. AUDIT REPORT
√ Applicable □ Not Applicable
Audit Report
He Xin Shen Zi. (2024) No.000186To all shareholders of Haier Smart Home Co., Ltd.:
I. AUDIT OPINIONWe have audited the financial statements of Haier Smart Home Co., Ltd. (hereinafter referred to as the‘Haier Smart Home Co.’), which comprise the Consolidated and the Company’s Balance Sheet as at31 December 2023, the Consolidated and the Company’s Income Statement, the Consolidated and theCompany’s Cash Flow Statement, the Consolidated and the Company’s Statement of Changes inShareholders’ Equity for the year 2023, and notes related to the financial statements.In our opinion, the accompanying financial statements present fairly, in all material respects, theConsolidated and the Company’s financial position of the Haier Smart Home Co as at 31 December 2023,and the Consolidated and the Company’s financial performance and cash flow for the year 2023 inaccordance with the requirements of Accounting Standards for Business Enterprises.II. BASIS OF OUR AUDIT OPINIONWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities under thosestandards are further described in Auditor’s responsibilities for the Audit of Financial Statements section ofthe report. We are independent of Haier Smart Home Co in accordance with the CICPA’s Code of Ethics forProfessional Accountants (the Code), and we have fulfilled our other ethical responsibilities in accordancewith the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Section X Financial Report
III. KEY AUDIT MATTERSKey audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the financial statements for the current period. These matters were addressed in the context of ouraudit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters. We identify the following matters as the key audit matters that need tobe communicated in the audit report:
Key Audit MattersAudit Response(I) Provision for impairment of goodwill and intangible assets with indefinite useful livesRelevant disclosures are included in Note V. 30Other significant accounting policies and accountingestimates and Note V.20 Impairment of long-termassets to the financial statements.As of 31 December 2023, the book value ofgoodwill was RMB24.290 billion, and the bookvalue of intangible assets with indefinite useful liveswas RMB2.688 billion, without any provision forasset impairment. Whether the provision forimpairment of long-term assets was sufficient hadgreat influence to the financial statements.Significant management judgments are involved incalculation of asset group’s recoverable amount,such as revenue growth rate, gross margin,discount rate, etc.Provision for impairment of goodwill and intangibleassets with indefinite useful lives is considered asthe key audit matter due to the significant amountand management judgement involved in calculation.
We mainly implemented the following auditprocedures on the provisions for the impairment ofgoodwill and intangible assets with indefinite usefullife:
(1) Compared the actual operating results of the
related assets group with previous year’sforecasted figures, to assess the reliability ofthe management forecast on cash flow;
(2) Compared the input of cash flow forecast with
historical data, approved budget and businessplan;
(3) Tested the calculation accuracy of the
discounted cash flow model;
(4) Assessed the appropriateness of parameters
in the cash flow conversion model, such asthe discount rate and the perpetual growthrate. The assessment is based ourunderstanding of the Company’s businessesand the industry.
Section X Financial Report
Key Audit MattersAudit Response(II) Provision for impairment of inventoryRelevant disclosures are included in Note VII.8Inventory to the financial statements.The Company’s inventories are measured at thelower of cost and net realizable value. As of31 December 2023, the inventory balance wasRMB41.005 billion, and the provision for impairmentof inventory was RMB1.481 billion and the bookvalue was RMB39.524 billion. Whether the provisionfor the impairment of inventories was sufficient andaccurate had great influence to the financialstatements.The Company determines the net realizable value ofinventory based on the estimated selling priceminus the estimated selling expenses and relatedtaxes.Management estimates the selling price based onthe status of inventory. The estimation processinvolves significant management judgments such asinventory status, repair rate, discount rate, etc.Provision for inventories is considered as the keyaudit matter due to the significant amount andmanagement judgement involved in calculation.
We mainly implemented the following auditprocedures on the provision for impairment ofinventories:
(1) Obtained the calculation table for provision for
impairment of inventory of the Company, andreviewed the conditions and aging of theproducts models stated in the table to seewhether they are consistent with theinformation obtained through physicalinventory on a sample basis;
(2) Compared the major parameters estimated by
management with historical data, andassessed the appropriateness;
(3) Assessed the selling price estimated by the
management, and checked the inventoryagainst the actual selling price after thebalance sheet date on a sample basis;
(4) Assessed selling expenses and related tax
estimated by management and compared withactual amounts incurred.
Section X Financial Report
Key Audit MattersAudit Response(III) Product warrantyRelevant disclosures are included in Note VII. 31Non-current liabilities due within one year and NoteVII. 37 Estimated liabilities to the financialstatements.Estimated liabilities of the Company are mainlyaccrued due to current obligations arising fromproduct warranty. As of 31 December 2023, thebalance of the estimated liabilities and non-currentliabilities due within one year related to productwarranty was RMB3.809 billion, and whether theprovision for warranty was sufficient and accuratehad great influence to the financial statements.Estimated liabilities for product warranty of theCompany were measured in accordance with thebest estimate of the cost to fulfill the relevantcurrent obligations.Calculation of the product warranty involvesmanagement’s significant judgments based onhistorical experience, such as: replacement rate,repair rate, and loss due to disassemble product.Estimated liabilities are considered as the key auditmatters due to the significant amount andmanagement judgement involved in calculation.
We mainly implemented the following auditprocedures on the estimated liabilities:
(1) Obtained the calculation table on provisions of
the management;
(2) Compared the main parameters estimated by
management with historical data;
(3) Tested the accuracy of the calculation on
estimated liabilities;
(4) Compared and analyzed the calculation results
of the estimated liabilities and the Company’sactual operation;
Section X Financial Report
IV. OTHER INFORMATIONThe management of Haier Smart Home Co (hereinafter referred to as the “Management”) is responsible forother information. Other information includes the information covered in the 2023 annual report of HaierSmart Home Co, but does not include the financial statements and our audit reports.Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGEDWITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
The Management is responsible for the preparation of the financial statements that give a true and fair viewin accordance with the requirements as set out in the Accounting Standards for Business Enterprises, andfor such internal control as necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.In preparing the financial statements, the Management are responsible for assessing the ability of HaierSmart Home Co to continue as a going concern, disclosing, as applicable, matters related to going concernand using the going concern basis of accounting unless the management either intends to liquidate HaierSmart Home Co or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the financial reporting process of Haier SmartHome Co.VI. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF FINANCIALSTATEMENTSOur objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an audit report that includesour opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with auditing standards will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
Section X Financial Report
As part of an audit in accordance with auditing standards, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also perform the following tasks:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraudor error, design and perform audit procedures responsible to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances.(III) Evaluate the appropriateness of accounting policies used by the Management and the reasonablenessof accounting estimates and related disclosures made by the Management.(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cause significant doubt on the ability of Haier Smart Home Co to continue as agoing concern. If we conclude that a material uncertainty exists, we are required by the auditingstandards to draw attention in our audit report to the related disclosures in the financial statements or;if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our audit report. However, future events or conditions may causeHaier Smart Home Co to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within Haier Smart Home Co to express an opinion on the financial statements. Weare responsible for the direction, supervision and performance of the group audit, and remain solelyresponsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Section X Financial Report
From the matters communicated with those charged with governance, we determine those matters that areof most significance in the audit of the financial statements of the current period and therefore constitute thekey audit matters. We describe these matters in our audit report unless law or regulation precludes publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our audit report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.Hexin Certified Public Accountants LLPCertified Public Accountant: Zhaobo (Engagement Partner)Certified Public Accountant: Li Xiang ZhiJinan, China27 March 2024
Section X Financial Report
II. FINANCIAL STATEMENTSConsolidated Balance Sheet31 December 2023Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMBItemsNotes
31 December
2023
31 December
2022Current assets:
Monetary fundsVII.154,486,452,841.1454,162,212,155.31Provision of settlement fundFunds lentFinancial assets held for tradingVII.2953,963,543.83519,912,880.91Derivative financial assetsVII.367,565,829.44183,185,160.51Bills receivableVII.48,621,434,831.399,624,191,838.15Accounts receivableVII.520,268,099,436.4315,886,748,811.81Financing receivablesPrepaymentsVII.61,238,294,930.511,110,507,870.61Premiums receivableReinsurance accounts receivableReinsurance contract reserves receivableOther receivablesVII.72,649,558,985.052,401,113,902.55Including: Interest receivables748,496,020.24513,320,376.79 Dividends receivablesFinancial assets purchased under resale
agreementsInventoriesVII.839,524,006,616.3341,587,786,307.53Contract assetsVII.9260,939,408.73309,930,359.25Assets held for saleNon-current assets due in one yearOther current assetsVII.104,550,167,668.684,693,309,967.86
Total current assets132,620,484,091.53130,478,899,254.49
Section X Financial Report
ItemsNotes
31 December
2023
31 December
2022Non-current assets:
Loans and advances grantedDebt investmentsVII.118,841,233,078.661,034,222,222.22Other debt investmentsLong-term receivables350,409,496.85305,070,001.45Long-term equity investmentsVII.1225,546,793,450.2024,527,800,290.84Investments in other equity instrumentsVII.136,403,694,954.775,851,882,930.20Other non-current financial assetsInvestment propertiesVII.1498,631,080.77103,041,751.52Fixed assetsVII.1529,603,936,822.7827,158,348,424.28Construction in progressVII.165,403,469,596.764,094,712,417.61Biological assets for productionOil and gas assetsRight-of-use assetsVII.174,367,081,679.743,795,225,353.89Intangible assetsVII.1811,006,230,700.9310,505,881,377.21Development cost266,490,235.10154,480,515.67GoodwillVII.1924,289,726,694.8023,643,595,643.87Long-term prepaid expensesVII.20741,745,517.64759,883,174.20Deferred income tax assetsVII.211,805,945,632.161,724,040,928.42Other non-current assetsVII.222,033,986,945.281,880,736,891.63Total non-current assets120,759,375,886.44105,538,921,923.01Total assets253,379,859,977.97236,017,821,177.50
Section X Financial Report
ItemsNotes
31 December
2023
31 December
2022Current liabilities:
Short-term borrowingsVII.2310,318,351,841.889,672,223,522.36Borrowings from central bankFunds borrowedFinancial liabilities held for tradingDerivative financial liabilitiesVII.24168,625,004.97104,594,040.66Bills payableVII.2522,215,726,721.6225,098,557,730.06Accounts payablesVII.2647,061,789,173.6241,885,313,890.79Receipts in advanceContract liabilitiesVII.277,731,916,491.549,353,173,914.03Disposal of repurchased financial assetsAbsorbing deposit and deposit in inter-
bank marketCustomer deposits for trading in securitiesAmounts due to issuer for securities
underwritingPayables for staff remunerationVII.285,077,517,828.504,050,464,754.37Taxes payableVII.292,841,215,524.732,876,496,090.84Other payablesVII.3019,181,569,184.8317,585,198,629.13Including: Interest payables Dividends payables1,880,719.691,246,573.35Fees and commissions payableReinsurance Accounts payablesLiabilities held for saleNon-current liabilities due within one yearVII.313,732,550,549.236,294,750,667.08Other current liabilitiesVII.321,651,239,151.521,850,426,442.49
Total current liabilities119,980,501,472.44118,771,199,681.81
Section X Financial Report
ItemsNotes
31 December
2023
31 December
2022Non-current liabilities:
Deposits for insurance contractsLong-term borrowingsVII.3317,936,302,925.7713,590,866,873.43Bonds payableIncluding: Preference shares Perpetual bondsLease liabilitiesVII.343,286,801,426.172,824,477,670.61Long-term payablesVII.3557,113,422.7844,240,087.94Long-term payables for staff remunerationVII.361,085,454,839.181,010,547,202.34Estimated liabilitiesVII.371,935,014,042.241,611,029,220.17Deferred incomeVII.381,050,319,606.44948,935,134.05Deferred income tax liabilitiesVII.212,028,390,554.202,358,860,559.19Other non-current liabilities108,218,339.24107,332,101.07Total non-current liabilities27,487,615,156.0222,496,288,848.80Total liabilities147,468,116,628.46141,267,488,530.61Owners’ equity (or shareholders’equity):
Paid-in capital (or share capital)VII.399,438,114,893.009,446,598,493.00Other equity instrumentsIncluding: Preference shares Perpetual bondsCapital reserveVII.4023,762,354,684.0523,882,037,324.76Less: treasury stockVII.415,034,065,107.423,857,807,196.38Other comprehensive incomeVII.421,969,724,027.011,990,683,498.45Special reserveSurplus reserveVII.434,842,338,543.804,014,190,623.24General risk provisionsUndistributed profitsVII.4468,535,686,494.6057,983,734,859.37Total equity attributable to owners (orshareholders) of the Parent Company103,514,153,535.0493,459,437,602.44Minority interests2,397,589,814.471,290,895,044.45
Total owners’ equity (or shareholders’
equity)105,911,743,349.5194,750,332,646.89Total liabilities and owners’ equity
(or shareholders’ equity)253,379,859,977.97236,017,821,177.50Person 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
31 December 2023Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMBItemsNotes
31 December
2023
31 December
2022Current Assets:
Monetary funds7,579,640,524.795,747,356,591.19Financial assets held for tradingDerivative financial assetsBills receivableAccounts receivableXIX.11,625,777,099.03913,643,071.06Financing receivablesPrepayments3,212,938.833,116,793.21Other receivablesXIX.223,649,977,816.5714,387,031,657.57Including: Interest receivables117,439,655.7929,783,516.95 Dividends receivables570,000,000.001,015,840,000.00Inventories5,400,498.279,245,507.97Contract assetsAssets held for saleNon-current assets due within one yearOther current assets1,530,274,566.661,642,423,149.85Total current assets34,394,283,444.1522,702,816,770.85Non-current assets:
Debt investments2,884,204,032.251,034,222,222.22Other debt investmentsLong-term receivablesLong-term equity investmentsXIX.355,828,696,006.0652,744,139,527.87Investments in other equity instruments1,619,260,874.041,618,513,056.48Other non-current financial assetsInvestment propertiesFixed assets154,588,551.47167,043,774.16Construction in progress6,054.402,667,680.62Biological assets for productionOil and gas assetsRight-of-use assets357,996.03Intangible assets41,307,540.8648,239,513.12Development costGoodwillLong-term prepaid expenses3,777,722.633,910,065.39Deferred income tax assetsOther non-current assets1,501,734,455.481,302,773,743.02Total non-current assets62,033,575,237.1956,921,867,578.91Total assets96,427,858,681.3479,624,684,349.76
Section X Financial Report
ItemsNotes
31 December
2023
31 December
2022Current liabilities:
Short-term borrowingsFinancial liabilities held for tradingDerivative financial liabilitiesBills payableAccounts payables1,120,671,258.40521,733,555.60Receipts in advanceContract liabilities22,930,469.1113,084,442.85Payables for staff remuneration28,602,784.579,696,654.18Taxes payable5,590,668.417,479,878.13Other payables45,012,683,942.9632,659,845,830.05Including: Interest payable Dividends payableLiabilities held for saleNon-current liabilities due within one year134,000,000.00Other current liabilities12,486,915.315,876,886.89
Total current liabilities46,336,966,038.7633,217,717,247.70Non-current liabilities:
Long-term borrowings3,779,500,000.002,195,000,000.00Bonds payableIncluding: Preference shares Perpetual bondsLease liabilitiesLong-term payablesLong-term payables for staff remunerationEstimated liabilitiesDeferred income12,973,300.0012,355,000.00Deferred income tax liabilities420,053,312.58420,805,600.57Other non-current liabilities
Total non-current liabilities4,212,526,612.582,628,160,600.57Total liabilities50,549,492,651.3435,845,877,848.27
Section X Financial Report
ItemsNotes
31 December
2023
31 December
2022Owners’ equity (or Shareholders’equity):
Paid-in capital (or share capital)9,438,114,893.009,446,598,493.00Other equity instrumentsIncluding: Preference shares Perpetual bondsCapital reserve27,263,651,777.4427,300,899,019.76Less: treasury stock3,175,293,942.362,308,138,558.42Other comprehensive income630,674,691.95602,091,349.74Special reserveSurplus reserve4,237,192,318.353,409,044,397.79Undistributed profits7,484,026,291.625,328,311,799.62Total owners’ equity (or shareholders’equity)45,878,366,030.0043,778,806,501.49Total liabilities and owners’ equity (orshareholders’ equity)96,427,858,681.3479,624,684,349.76Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Section X Financial Report
Consolidated Profit Statement
January-December 2023
Unit and Currency: RMBItemsNotes20232022I. Total operating revenue261,427,783,050.10243,578,924,958.47
Including: Operating revenueVII.45261,427,783,050.10243,578,924,958.47
Interest incomeInsurance premiums earnedFee and commission incomeII. Total cost of operations243,273,007,696.61226,789,500,960.55Including: Operating costVII.45179,053,959,580.31167,263,342,432.05
Interest expensesFee and commission expensesInsurance withdrawal paymentNet payment from indemnityNet provisions withdrew forinsurance contract liabilityInsurance policy dividend paidReinsurance costTaxes and surchargesVII.461,016,198,255.80813,880,888.18Selling expensesVII.4740,978,039,605.3738,600,298,275.47Administrative expensesVII.4811,489,640,885.8810,846,346,796.51R&D expensesVII.4910,221,013,589.289,507,384,787.81Financial expensesVII.50514,155,779.97–241,752,219.47Including: Interest expenses2,109,996,018.29988,036,369.52
Interest income1,486,196,698.91855,213,183.91Add: Other incomeVII.511,558,864,654.361,070,103,842.60Investment income
(losses arerepresented by ‘–’)VII.521,909,917,817.251,832,656,952.60Including: investment income of
associates and
joint ventures1,786,573,842.341,582,178,829.86
Income generatedfrom thederecognition offinancial assetsmeasured atamortized cost
Exchange gain(losses arerepresented by‘–’)
Section X Financial Report
ItemsNotes20232022
Gains on net
exposure hedges(losses arerepresented by‘–’)Gains on changes infair value (lossesare representedby ‘–’)VII.5319,753,663.05–122,442,933.65Loss on credit
impairment(losses arerepresentedby ‘–’)VII.54–242,642,129.31–431,377,480.82Loss on assetsimpairment(losses arerepresentedby ‘–’)VII.55–1,505,153,026.02–1,499,859,761.26Gain from disposal
of assets (lossesare representedby ‘–’)VII.56–15,342,697.67206,742,815.79III. Operating profit (losses are represented
by ‘–’)19,880,173,635.1517,845,247,433.18Add: non-operating incomeVII.57127,886,961.44136,595,298.10Less: non-operating expensesVII.58295,802,566.43190,706,969.79IV. Total profit (total losses are represented
by ‘–’)19,712,258,030.1617,791,135,761.49Less: income tax expenseVII.592,980,188,255.413,057,822,871.71V. Net profit (net losses are represented
by ‘–’)16,732,069,774.7514,733,312,889.78
(1) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by ‘–’)16,732,069,774.7514,733,312,889.78
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 ParentCompany (net losses arerepresented by ‘–’)16,596,615,045.8714,712,054,763.24
2. Profit or loss attributable to minority
shareholders (net losses arerepresented by ‘–’)135,454,728.8821,258,126.54
Section X Financial Report
ItemsNotes20232022VI. Other comprehensive income, net of taxVII.60–35,551,610.313,164,841,092.31(I) Other comprehensive income
attributable to owners of the ParentCompany, net of tax–20,959,471.443,167,199,045.79
1. Other comprehensive income that
cannot be reclassified into the profitor loss503,462,953.84–103,425,450.86
(1) Changes arising from re-
measurement of defined benefitplans40,317,053.2333,063,471.15
(2) Other comprehensive income
that cannot be transferred intoprofit or loss under equitymethod
(3) Changes in fair value of
investments in other equityinstruments463,145,900.61–136,488,922.01
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss–524,422,425.283,270,624,496.65
(1) Other comprehensive income
that can be transferred intoprofit or loss under equitymethod–104,019,712.6899,921,599.99
(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
–98,556,869.012,308,423.98
(6) Exchange differences on
translation of financialstatements denominated inforeign currencies–321,845,843.593,168,394,472.68
(7) Others
(II) Other comprehensive income
attributable to minority shareholders,net of tax–14,592,138.87–2,357,953.48
Section X Financial Report
ItemsNotes20232022VII. Total comprehensive income16,696,518,164.4417,898,153,982.09(I) Total comprehensive incomeattributable to the owners of ParentCompany16,575,655,574.4317,879,253,809.03(II) Total comprehensive income
attributable to the minorityshareholders120,862,590.0118,900,173.06VIII. Earnings per share:
(I) Basic earnings per share (RMB/share)XXI.11.791.58(II) Diluted earnings per share (RMB/share)XXI.11.781.57For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB–2,581,701.76, and the net profit of the acquiree for theprevious period was RMB1,131,271.25.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 Company
January-December 2023
Unit and Currency: RMBItemsNotes20232022I. Operating revenueXIX.4720,992,484.07424,661,926.32Less: operating costXIX.4626,285,718.42370,625,212.62Taxes and surcharges5,260,953.753,356,878.04Selling expenses14,931,713.802,255,208.68Administration expenses629,589,430.69844,381,395.30R&D expenses20,148,355.0519,067,424.89Financial expenses–194,423,911.53–137,417,983.20Including: interest expenses81,607,850.7133,870,759.40Interest income287,121,435.40158,040,013.89Add: other income10,186,535.0032,862,065.58Investment income (losses are
represented by ‘–’)XIX.58,651,024,353.846,431,738,015.98Including: investment income of
associates and joint ventures147,523,868.1171,408,243.76Derecognition income on financial
assets measured at amortizedcostGains on net exposure hedges
(losses are represented by ‘–’)Gains on changes in fair value
(losses are represented by ‘–’)Loss on credit impairment (losses
are represented by ‘–’)74,824.58–3,315,122.80Loss on assets impairment (losses
are represented by ‘–’)Gain from disposal of assets
(losses are represented by ‘–’)34,882.70102,421,078.92II. Operating profit (losses are represented
by ‘–’)8,280,520,820.015,886,099,827.67Add: non-operating income99,051.41209,515.11Less: non-operating expenses78,702.83149,806.55III. Total profit (total losses are represented
by ‘–’)8,280,541,168.595,886,159,536.23Less: income tax expenses–938,036.98130,412,402.20IV. Net profit (net losses are represented
by ‘–’)8,281,479,205.575,755,747,134.03(I) Net profit from continuous operations
(net losses are represented by ‘–’)8,281,479,205.575,755,747,134.03
Section X Financial Report
ItemsNotes20232022(II) Net profit from discontinued operations(net losses are represented by ‘–’)V. Other comprehensive income, net of tax28,583,342.21–19,211,595.09(I) Other comprehensive income thatcannot be reclassified into the profit orloss560,863.172,297,267.67
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 instruments560,863.172,297,267.67
4. Changes in fair value of credit risks
of the enterprise(II) Other comprehensive income to be
reclassified into the profit or loss28,022,479.04–21,508,862.76
1. Other comprehensive income that
can be transferred into profit or loss
under equity method28,022,479.04–21,508,862.76
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 income8,310,062,547.785,736,535,538.94VII. 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 Statement
January-December 2023
Unit and Currency: RMBItemsNotes20232022I. Cash flow from operating activities:
Cash received from the sale of goods andrendering services275,380,453,881.77258,307,895,412.14Net increase in distributor and inter-bankdepositsNet increase in borrowing from the central
bankNet cash increase in borrowing from other
financial institutesCash received from premiums under original
insurance contractNet cash received from reinsurance businessNet increase in deposits of policy holders and
investmentCash received from interest, fee and
commissionsNet increase in cash borrowedNet increase in cash received from
repurchase operationNet cash received from customer deposits for
trading in securitiesRefunds of taxes1,863,779,679.642,047,675,601.66Cash received from other related operating
activitiesVII.612,502,260,865.461,670,029,049.93Sub-total of cash inflows from operating
activities279,746,494,426.87262,025,600,063.73Cash paid on purchase of goods and
services184,741,840,867.86179,426,790,100.90Net 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
ItemsNotes20232022Cash paid to and on behalf of employees29,275,161,426.8127,244,686,728.12Cash paid for all types of taxes14,556,605,211.4410,825,779,042.33Cash paid to other operation related activitiesVII.6125,910,510,692.4624,271,787,046.52Sub-total of cash outflows from operatingactivities254,484,118,198.57241,769,042,917.87Net cash flow from operating activitiesVII.6225,262,376,228.3020,256,557,145.86II. Cash flow from investing activities:
Cash received from recovery of investments8,146,370,206.3512,147,228,999.62Cash received from return on investments825,794,185.05686,445,555.44Net cash received from the disposal of fixedassets, intangible assets and other long-term assets168,067,958.90228,856,132.92Net cash received from disposal of
subsidiaries and other operating entities18,224,929.86Other cash received from investment activitiesSub-total of cash inflows from investingactivities9,140,232,350.3013,080,755,617.84Cash paid on purchase of fixed assets,intangible assets and other long-termassets9,906,927,817.578,209,786,230.64Cash paid for investments16,162,057,602.7113,538,237,214.16Net increase in secured loansNet cash paid on acquisition of subsidiaries
and other operating entitiesVII.62156,312,111.8740,026,037.55Other cash paid on investment activities218,440,847.94Sub-total of cash outflows from investing
activities26,225,297,532.1522,006,490,330.29Net cash flow from investing activities–17,085,065,181.85–8,925,734,712.45III. Cash flow from financing activities:
Cash received from capital contributions945,787,071.73987,339,004.94Including: cash received from capital
contributions by minority shareholders of
subsidiariesCash received from borrowings19,957,867,383.5418,378,512,304.41Other cash received from financing activities1,000,000.00Sub-total of cash inflows from financing
activities20,903,654,455.2719,366,851,309.35Cash paid on repayment of loans18,423,980,786.9614,766,271,845.92Cash paid on distribution of dividends, profits
or repayment of interest expenses7,224,378,853.725,153,227,150.11Including: dividend and profit paid to minority
shareholders by subsidiariesOther cash paid to financing activitiesVII.613,096,327,667.643,347,802,454.24
Section X Financial Report
ItemsNotes20232022Sub-total of cash outflows from financingactivities28,744,687,308.3223,267,301,450.27Net cash flow from financing activities–7,841,032,853.05–3,900,450,140.92IV. Effect of fluctuations in exchange rates oncash and cash equivalents248,822,600.22760,094,284.39V. Net increase in cash and cash equivalents585,100,793.628,190,466,576.88Add: balance of cash and cash equivalents at the beginning of the periodVII.6253,392,209,857.4145,201,743,280.53VI. Balance of cash and cash equivalents atthe end of the periodVII.6253,977,310,651.0353,392,209,857.41Person 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-December 2023
Unit and Currency: RMBItemsNotes20232022I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services87,985,716.9872,931,789.11Refunds of taxes19,008,796.07Other cash received from operatingactivities161,504,582.95373,367,957.93Sub-total of cash inflows from operatingactivities249,490,299.93465,308,543.11Cash paid on purchase of goods andservices1,410,519.44147,652.63Cash paid to and on behalf of
employees33,473,832.5430,719,560.38Cash paid for all types of taxes23,469,049.219,583,573.15Other cash paid to operation activities166,310,707.2835,896,845.76Sub-total of cash outflows from operating
activities224,664,108.4776,347,631.92Net cash flow from operating activities24,826,191.46388,960,911.19II. Cash flow from investing activities:
Cash received from recovery of
investments7,310,000,000.004,072,370,000.00Cash received from return on
investments9,221,548,256.679,114,011,850.11Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets35,206,354.85Net cash received from disposal of
subsidiaries and other operating
entitiesOther cash received from investment
activities38,509,682.22792,521,903.31Sub-total of cash inflows from investing
activities16,570,057,938.8914,014,110,108.27Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets11,225,015.0529,560,476.49Cash paid for investments12,184,423,958.006,790,729,807.20Net cash paid on acquisition of
subsidiaries and other operating
entities
Section X Financial Report
ItemsNotes20232022
Other cash paid on investment activities1,228,069,045.002,862,532,098.24Sub-total of cash outflows from investing
activities13,423,718,018.059,682,822,381.93Net cash flow from investing activities3,146,339,920.844,331,287,726.34III. Cash flow from financing activities:
Cash received from capital injections940,041,004.94Cash received from borrowings1,938,000,000.002,200,000,000.00Other cash received from financing
activities3,933,896,501.13Sub-total of cash inflows from financing
activities5,871,896,501.133,140,041,004.94Cash paid on repayment of borrowings219,500,000.005,000,000.00Cash paid on distribution of dividends,
profits or repayment of interest
expenses5,383,785,133.914,344,971,295.80Other cash paid on financing activities1,614,517,322.601,826,254,269.50Sub-total of cash outflows from financing
activities7,217,802,456.516,176,225,565.30Net cash flow from financing activities–1,345,905,955.38–3,036,184,560.36IV. Effect of fluctuations in exchange
rates on cash and cash equivalents7,023,776.6819,756,778.54V. Net increase in cash and cash
equivalents1,832,283,933.601,703,820,855.71
Add: balance of cash and cash
equivalents at the beginning of theperiod5,747,356,591.194,043,535,735.48VI. Balance of cash and cash equivalents
at the end of the period7,579,640,524.795,747,356,591.19Person 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-December 2023
Unit and Currency: RMB
2023
Equity attributable to owners of the Parent Company
Other equity instruments
Items
Paid-in capital (orshare capital)Preference sharesPerpetual bondsOthersCapital reserve
Less: treasurystockOthercomprehensiveincomeSpecial reserveSurplus reserve
General riskprovisionUndistributedprofitsOthersSub-totalMinority interests
Total owners’equity
I. Closing balance for the previous year9,446,598,493.0023,852,037,324.763,857,807,196.381,990,683,498.454,014,190,623.24
—57,976,944,921.3693,422,647,664.431,290,895,044.4594,713,542,708.88
Add: changes in accounting policiesError correction for prior periodBusiness combination under commoncontrol30,000,000.006,789,938.0136,789,938.0136,789,938.01
OthersII. 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
–119,682,640.711,176,257,911.04
–20,959,471.44828,147,920.5610,551,951,635.2310,054,715,932.601,106,694,770.0211,161,410,702.62
(I) Total comprehensive income
—20,959,471.4416,596,615,045.8716,575,655,574.43120,862,590.0116,696,518,164.44
(II) Capital injection and reduction by
owners
—8,483,600.00
–119,682,640.711,176,257,911.04
–1,304,424,151.751,010,544,184.01
–293,879,967.74
1. Ordinary shares invested by
owners1,010,544,184.011,010,544,184.01
2. Capital contribution by holders
of other equity instruments
3. Share-based payment included
in owners’ equity179,238,533.70179,238,533.70179,238,533.70
4. Others
—8,483,600.00
–298,921,174.411,176,257,911.04
–1,483,662,685.45
–1,483,662,685.45
(III) Profit distribution828,147,920.56
–6,082,584,047.78
–5,254,436,127.22–24,712,004.00–5,279,148,131.22
1. Withdrawal of surplus reserves828,147,920.56
–828,147,920.56
2. Withdrawal of general risk
provision
3. Distribution to owners (or
shareholders)
—5,254,436,127.22
–5,254,436,127.22–24,712,004.00–5,279,148,131.22
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into capital
(or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for remedying
loss
4. Changes in defined benefit plans
carried forward to retained earnings
5. Other comprehensive income carried
forward to retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others37,920,637.1437,920,637.1437,920,637.14
IV. Closing balance for the 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
Section X Financial Report
2022
Equity attributable to owners of the Parent Company
Other equity instruments
Items
Paid-in capital
(or share capital)Preference
sharesPerpetual bondsOthersCapital reserve
Less: treasury
stockOthercomprehensive
incomeSpecial reserveSurplus reserve
General risk
provisionUndistributed
profitsOthersSub-total
MinorityinterestsTotal owners’
equity
I. Closing balance for the previous year9,398,704,530.00118,017,507.5922,665,374,739.462,424,038,819.70
–1,176,851,699.92
3,438,615,909.8447,965,270,360.7979,985,092,528.061,289,500,808.7281,274,593,336.78
Add: changes in accounting policiesError correction for prior periodBusiness combination undercommon control30,000,000.0020,658,666.7650,658,666.7650,658,666.76OthersII. Opening balance for the current year9,398,704,530.00118,017,507.5922,695,374,739.462,424,038,819.70
–1,176,851,699.92
3,438,615,909.8447,985,929,027.5580,035,751,194.821,289,500,808.7281,325,252,003.54
III. Increase/decrease for the current period
(decrease is represented by ‘–’)47,893,963.00
–118,017,507.591,186,662,585.301,433,768,376.683,167,535,198.37575,574,713.409,997,805,831.8213,423,686,407.621,394,235.7313,425,080,643.35
(I) Total comprehensive income3,167,199,045.7914,712,054,763.2417,879,253,809.0318,900,173.0617,898,153,982.09(II) Capital injection and reduction byowners47,893,963.00
–118,017,507.591,353,547,865.691,433,768,376.68
–150,344,055.581,810,903.91–148,533,151.67
1. Ordinary shares invested by owners41,413,600.00898,627,404.94940,041,004.941,810,903.91941,851,908.85
2. Capital contribution by holders of
other equity instruments21,450,563.00
–118,017,507.59457,962,768.76361,395,824.17361,395,824.17
3. Share-based payment included in
owners’ equity693,835,462.71693,835,462.71693,835,462.71
4. Others
–14,970,200.00
–696,877,770.721,433,768,376.68
–2,145,616,347.40
–2,145,616,347.40
(III) Profit distribution575,574,713.40
–4,872,209,504.61
–4,296,634,791.21–19,316,841.24–4,315,951,632.45
1. Withdrawal of surplus reserves575,574,713.40
–575,574,713.40
2. Withdrawal of general risk
provision
3. Distribution to owners
(or shareholders)
–4,296,634,791.21
–4,296,634,791.21–19,316,841.24–4,315,951,632.45
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
–166,885,280.39
336,152.58157,960,573.19
–8,588,554.62
–8,588,554.62
IV. Closing balance for the period9,446,598,493.0023,882,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,983,734,859.3793,459,437,602.441,290,895,044.4594,750,332,646.89
Legal representative of the Company:
Li Huagang
Person in charge of accounting function:
Gong Wei
Person in charge of accounting department:
Ying Ke
Section X Financial Report
Statement of Changes in Owners’ Equity of the Parent CompanyJanuary-December 2023
Unit and Currency: RMB2023Other equity instrumentsItems
Paid-in capital (or
share capital)
Preference
sharesPerpetual bondsOthersCapital reserve
Less: treasurystock
Othercomprehensive
incomeSpecial reserveSurplus reserve
UndistributedprofitsTotal owners’equityI. Closing balance for the previousyear9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49Add: changes in accountingpoliciesError correction for prior
periodOthersII. Opening balance for 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 currentperiod (decrease is representedby ‘—’)—8,483,600.00–37,247,242.32867,155,383.9428,583,342.21828,147,920.562,155,714,492.002,099,559,528.51(I) Total comprehensive income—28,583,342.218,281,479,205.578,310,062,547.78(II) Capital injection and reduction
by owners—8,483,600.00–37,247,242.32867,155,383.94–912,886,226.26
1. Ordinary shares invested
by owners
2. Capital contribution by
holders of other equity
instruments
3. Share-based payment
included in owners’ equity135,995,049.35135,995,049.35
4. Others
—8,483,600.00–173,242,291.67867,155,383.94–1,048,881,275.61(III) Profit distribution828,147,920.56–6,125,764,713.57–5,297,616,793.01
1. Withdrawal of surplus
reserves828,147,920.56–828,147,920.56—
2. Distribution to owners (or
shareholders)—5,297,616,793.01–5,297,616,793.01
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 period9,438,114,893.0027,263,651,777.443,175,293,942.36630,674,691.954,237,192,318.357,484,026,291.6245,878,366,030.00
Section X Financial Report
2022Other equity instrumentsItems
Paid-in capital
(or share
capital)Preferenceshares
PerpetualbondsOthersCapital reserve
Less: treasurystock
Othercomprehensive
incomeSpecial reserveSurplus reserve
Undistributed
profitsTotal owners’equityI. Closing balance for the previousyear9,398,704,530.0025,802,279,483.131,495,170,675.08621,302,944.832,833,469,684.394,468,575,626.5241,629,161,593.79Add: changes in accountingpoliciesError correction for priorperiodOthersII. Opening balance for the
current year9,398,704,530.0025,802,279,483.131,495,170,675.08621,302,944.832,833,469,684.394,468,575,626.5241,629,161,593.79III. Increase/decrease for thecurrent period (decrease isrepresented by ‘–’)47,893,963.001,498,619,536.63812,967,883.34–19,211,595.09575,574,713.40859,736,173.102,149,644,907.70(I) Total comprehensive
income–19,211,595.095,755,747,134.035,736,535,538.94
(II) Capital injection and
reduction by owners47,893,963.001,559,004,664.94812,967,883.34793,930,744.60
1. Ordinary shares invested
by owners41,413,600.00898,627,404.94940,041,004.94
2. Capital contribution by
holders of other equityinstruments21,450,563.00339,945,261.17361,395,824.17
3. Share-based payment
included in owners’equity639,163,385.88639,163,385.88
4. Others
–14,970,200.00–318,731,387.05812,967,883.34–1,146,669,470.39
(III) Profit distribution575,574,713.40–4,896,010,960.93–4,320,436,247.53
1. Withdrawal of surplus
reserves575,574,713.40–575,574,713.40—
2. Distribution to owners
(or shareholders)—–4,320,436,247.53–4,320,436,247.53
3. Others
—
(IV) Internal transfer of owner’s
equity—
1. Transfer of capital
reserves into capital (orshare capital)
2. Transfer of surplus
reserves into capital (orshare capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carriedforward to retainedearnings
5. Other comprehensive
income carried forwardto retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the
period
2. Utilization for the period
(VI) Others–60,385,128.31–60,385,128.31IV. Closing balance for the 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
Legal representative of the Company:
Li Huagang
Person in charge of accounting
function: Gong Wei
Person 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 March 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 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 forwhich bad debtprovision is individuallyassessed
The amount of provision on an individual basis accounts formore than 10% of the total bad debt provisions for varioustypes of receivables and is greater than RMB100 millionMaterial receivables andbad debt provisionswhich are recovered orreversed
The amount of recovery or reversal on an individual basisaccounts for more than 10% of the total amount of varioustypes of receivables and is greater than RMB100 millionActual write-off of materialaccounts receivable
The amount of write-off on an individual basis accounts for
more than 10% of the total bad debt provisions of varioustypes of receivables and is greater than RMB100 millionMaterial prepayments agedmore than one year
Prepayment aged more than 1 year on an individual basis
accounts for more than 10% of the total prepayments and isgreater than RMB100 millionMaterial projects under
construction
The ending balance of a project on an individual basis is
greater than RMB50 millionMaterial capitalized R&D
projects
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 payableand other payables agedmore than 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 liabilitiesaged more than oneyear
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 millionMaterial non-wholly owned
subsidiaries
The net assets of the subsidiaries account for more than 5% of
the Company’s net assets or the net profits and losses 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% of the Company’s
net assets or the investment profits and losses under the
long-term equity investment equity method account for more
than 10% of the Company’s consolidated net profit.
Section X Financial Report
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.Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the Company (as theacquirer) are credited in profit or loss in the period when they occurred. Trading expensesin direct relation to the issuance of equity instrument as the consideration for thecombination is written down to the capital reserve (share premium), where the capitalreserve (share premium) is insufficient, and to surplus reserves and undistributed profits inorder. Trading expenses in direct relation to the issuance of debt instrument as theconsideration for the combination is included in the initial recognition amount of the debtinstrument.
Section X Financial Report
(2) Business combinations 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
① General treatment
During the Reporting Period, when the Company disposes of a subsidiary orbusiness, the income, expenses and profits of that subsidiary or business from thebeginning of the period to the date of disposal are included in the consolidatedincome statement of the Company; The cash flows from the beginning of the periodto the disposal date of the subsidiary or operation are included in the consolidatedstatement of cash flows of the Company.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
② Disposal of subsidiaries step by step
Where 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: ① recognize the assets held solely by the Company, and recognize assetsheld jointly by the Company in appropriation to the share of the Company; ② recognize theobligations assumed solely by the Company, and recognize obligations assumed jointly bythe Company in appropriation to the share of the Company; ③ recognize revenue fromdisposal of joint operations in appropriation to the share of the Company; ④ recognizerevenue from disposal of joint operations in appropriation to the share of the Company; ⑤recognize 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.
Section X Financial Report
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to netassets of this arrangement. Investment in joint venture is accounted for using the equitymethod according to the accounting policies referred to under ‘12. Long-term equityinvestment’ of Note V.
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).
Section X Financial Report
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, jointventures and associates under the control of the Company are different from that of theCompany, their financial statements denominated in foreign currencies shall be translated toperform accounting and prepare the consolidated financial statements.The assets and liabilities of the foreign currency balance sheet of the Company aretranslated using the spot exchange rate at the balance sheet date; all items except for‘undistributed profits’ of the owner’s equity are translated at the spot exchange rate on thetransaction date. The revenue and expenses in the foreign currency income statement ofthe Company are translated using the approximate rate of the spot exchange rate on thetransaction date. Exchange differences on translation of financial statements denominated inforeign currencies are presented as the ‘other comprehensive income’ in the owner’s equityof the balance sheet.Foreign currency cash flow and cash flows of a foreign subsidiary of the Company istranslated using the approximate rate of the spot exchange rate on the date of the cashflows. The impact of exchange rate changes on cash amount is regarded as areconciliation item and reflected separately in the cash flow.When disposing overseas operations, the translation difference in the foreign currencyfinancial statements as shown in the owner’s equity of the balance sheet and related to theoverseas operation shall be transferred from owner’s equity to profit or loss in the currentperiod of disposal. If part of the overseas operations is disposed of, the translationdifference in the foreign currency financial statements of the disposal part shall becalculated based on the proportion of the disposal and transferred to profit or loss in thecurrent period of disposal.
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.
Section X Financial Report
(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.
1) The debt instruments held by the Company:
① Financial assets measured at amortized cost
The Company’s business model for managing such financial assets is: With theaim of obtaining contractual cash flow, the contractual cash flow characteristicsof such financial assets shall be consistent with the basic lending arrangements,that is, the cash flow generated on a specific date is only the payment for theprincipal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordancewith the effective interest method. Such financial assets are subsequentlymeasured at amortised cost. The gains or losses arising from amortisation orimpairment are recognised in profit or loss of the current period. Such financialassets of the Company mainly include cash and cash equivalents, billsreceivable, accounts receivable, other receivables, creditor’s right investmentand long-term receivables. The Company lists the creditor’s rights investmentsand long-term receivables matured within one year (including one year) from thebalance sheet date as non-current assets matured within one year; thecreditor’s rights investments matured within one year (including one year) whenbeing obtained are listed as other current assets.
Section X Financial Report
② Financial assets measured at fair value through other comprehensive income
The Company’s business mode for managing such financial assets is: With theaim of obtaining contractual cash flow and selling the financial assets, thecontractual cash flow characteristics of such financial assets shall be consistentwith the basic lending arrangements. Such financial assets are measured at fairvalue through other comprehensive income, but impairment gains and losses,exchange gains and losses, and interest income calculated by the effectiveinterest method are included in profit and loss of the current period. Suchfinancial assets of the Company mainly include financing receivables and othercreditor’s rights investments. The Company lists other creditor’s rightsinvestments matured within one year (including one year) from the balancesheet date as non-current assets matured within one year; other creditor’srights investments matured within one year (including one year) when beingobtained are listed as other current assets.
③ Financial assets measured at fair value through profit or loss of the current period
The Company classifies financial assets other than those above measured atamortized cost and those measured at fair value through other comprehensiveincome as financial assets measured at fair value through profit or loss of thecurrent period. In addition, at the time of initial recognition, in order to eliminateor significantly reduce accounting mismatch, the Company designated somefinancial assets as financial assets measured at fair value through profit or lossof the current period. Such financial assets are subsequently measured at fairvalue and changes in fair value are included in profit or loss of the currentperiod. Such financial assets that are matured more than one year and areexpected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.
2) Equity instrument investments of the Company:
The Company classifies equity instrument investments that have no control, jointcontrol and significant influence on itself as financial assets measured at fair valuethrough profit or loss of the current period; investments that are expected to be heldfor more than one year from the balance sheet date are listed as other non-currentfinancial assets.In addition, the Company designated some non-trading equity instrument investmentsas financial assets measured at fair value through other comprehensive income, whichare listed as other equity instrument investments. Such designation cannot berevoked once made. The Company includes the relevant dividends and interestincome of such financial assets in profit and loss of the current period, and changesin fair value are included in other comprehensive income. When the financial asset isderecognised, the Company transfers the cumulative gain or loss previously includedin other comprehensive income directly to retained earnings and is not included inprofit or loss of the current period.
Section X Financial Report
(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.Other financial liabilities are subsequently measured at amortized costs using effectiveinterest method. Other financial liabilities of the Company are financial liabilities measured atamortized cost, including bills payable, accounts payable, other payables, borrowings,bonds payable, etc. Such financial liabilities are recognized initially at fair value lesstransaction costs and subsequently measured using the effective interest method. Financialliabilities with a maturity of less than one year (including one year) are listed as currentliabilities: those with maturity of more than one year but are mature within one year fromthe balance sheet date (including one year) are listed as non-current liabilities due withinone year; the rest are presented as non-current liabilities.
(3) Classification and treatment of financial liabilities and equity instruments
The Company classifies financial liabilities and equity instruments on the followingprinciples: (1) Where the Company is unable to unconditionally avoid delivering cash oranother financial asset to fulfil a contractual obligation, the contractual obligation meets thedefinition of a financial liability. Although some financial instruments do not explicitly includethe terms and conditions imposing the contractual obligation to deliver cash or anotherfinancial asset, they may indirectly give rise to the contractual obligation through otherterms and conditions. (2) Where a financial instrument shall or may be settled in theCompany’s own equity instrument, consideration shall be given to whether the Company’sown equity instrument as used to settle the instrument is a substitute of cash or anotherfinancial asset or the residual interest in the assets of the Company after deducting all of itsliabilities. In the former case, the instrument shall be the Company’s financial liability; in thelatter case, the instrument shall be the equity instrument of the Company. Under certaincircumstances whereby a financial instrument contract stipulates that the Company shall ormay use its own equity instrument to settle the financial instrument, and the amount of thecontractual right or obligation equal to the number of its own equity instruments to bereceived or delivered multiplied by their fair value at the time of settlement, the contractshall be classified as a financial liability, regardless of whether the amount of thecontractual right or obligation is fixed, or fluctuates in full or in partly in response tochanges in a variable other than the market price of the Company’s own equity instruments(for example an interest rate, a commodity price or a financial instrument price).
Section X Financial Report
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.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: ① thecontractual right for receiving cash flows from the financial asset is terminated; ②thefinancial asset is transferred, and the risk and rewards of ownership of the financial assethave been substantially transferred to the transferee; and ③ 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.
Section X Financial Report
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.
(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.
Section X Financial Report
(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.
(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.
Section X Financial Report
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.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.
Section X Financial Report
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
√ Applicable □ Not Applicable
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.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.
Section X Financial Report
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
Recognition method and criteria of 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”.
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
① The initial cost of long-term equity investments acquired through business combination
involving 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;
Section X Financial Report
② 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 initialinvestment cost acquired in exchange for non-monetary assets shall be determined inaccordance with relevant provisions of the standard.
(2) Subsequent measurement and recognition of profit or loss
Cost methodLong-term equity investments in which the Company is able to exercise control overthe investee is accounted for using the cost method. Under the cost method, thecarrying value of long-term equity investments, other than additional investment orrecouped investment, shall remain constant. The Company declared the distribution ofprofit or cash dividend to the investee and calculated the portion of entitlement,which is recognised as investment income. Equity methodThe equity method is used by the Company to account for long-term equityinvestments in associates and joint ventures. Under the equity method, 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.
Section X Financial Report
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
① 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.
② Change from fair value measurement or equity method to cost method: if an equity
investment 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.
③ Change from equity method to fair value measurement: if a long-term equity investment
previously 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.
Section X Financial Report
④ Change from cost method to equity method or fair value measurement: when preparing
separate 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.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.
Section X Financial Report
The Company usually determines whether there is significant influence on the investeethrough the following one or several circumstances:
① Representation at the board or similar authority of the investee.
② Participation in the decision-making process of the investee’s financial and operational
policies.
③ Having important transactions with the investee.
④ Posting of management personnel at the investee.
⑤ 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.
(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.
Section X Financial Report
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
√ Applicable □ Not Applicable
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:
① Economic benefits relating to such fixed assets are likely to flow into the Company;
② 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 (ASBE No. 17).
(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 assets
Depreciationmethod
Estimated usefullives (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:
① The physical construction (including installation) of fixed assets has been completed in
full or substantially completed in full;
② 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;
③ The amount of fixed asset expenditure of the construction is minimal or almost certain
not be further incurred;
④ Fixed assets acquired have reached design or contractual requirements, or are
essentially 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: ① 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; ② 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; ③ 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
√ Applicable □ Not Applicable
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:
① it is probable that economic benefits attributable to the intangible assets will flow into the
Company;
② 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: ①Intangible 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; ②Intangible 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: ① 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; ② 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: ①the technicalfeasibility of completing the intangible assets so that they will be available for use or forsale; ②the intention to complete the intangible assets for use or for sale; ③ 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; ④ the availability of adequate technical,financial and other resources to complete the development and gain the ability to use orsell the intangible assets; ⑤ 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.
Section X Financial Report
Goodwill arising from a business combination and an intangible asset with an indefinite useful lifeis tested for impairment at least at each year end, irrespective of whether there is any indicationthat the asset may be impaired. Intangible assets that have not been ready for intended use aretested for impairment each year.When the Company carries out impairment test of the goodwill, the carrying amount of thegoodwill, arising from business combination, shall be allocated to the related asset groups onreasonable basis since the acquisition date, or to the related asset group portfolios if it is difficultto be allocated to the related asset groups. When the carrying amount of the goodwill isallocated to the related asset groups or asset group portfolios, it shall be allocated in theproportion of the fair value of each asset group or asset group portfolio against the total fairvalue of related asset groups or asset group portfolios. If it is difficult to measure the fair valuereliably, it shall be allocated in the proportion of the carrying amount of each asset group orasset group portfolio against the total carrying amount of related asset groups or asset groupportfolios.When impairment test is made by the Company to the related asset groups or 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.
Section X Financial Report
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.
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 remuneration
Staff 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.
Section X Financial Report
(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.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 staffremunerations 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 remuneration liabilities arising from such termination benefits arerecognized and included in current profit or loss.
Section X Financial Report
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.
(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.
Section X Financial Report
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.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.
Section X Financial Report
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.
26. Revenue
√ Applicable □ Not Applicable
Revenue is the total inflow of economic benefits formed by the Company and its subsidiariesduring day-to-day operations which might lead to increase of shareholders’ equity and beirrelevant to capital invested by shareholders.The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,recognized revenue when the client obtains the control right of relevant goods or services.Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various singleperformance obligation in accordance with the relevant proportion of separate selling price ofgoods or services promised by various single performance obligation, and measure revenue inaccordance with transaction price allocated to various single performance obligation.Transaction price is the amount of consideration that the Company and its subsidiaries areexpected to be entitled to collect due to transfer of goods and services transferred to the client,excluding the amount collected for any third party. The transaction price recognized by theCompany and its subsidiaries does not exceed the amount of recognized revenue when relevantuncertainties are eliminated and might not incur material carrying back. The amount that isexpected to be returned to the client is taken as liability of returned goods and is not recordedin transaction price.When one of the following conditions is met, the Company and its subsidiaries performperformance obligations during a certain time horizon, otherwise, it belongs to fulfillingperformance obligations at a certain time point:
① The client simultaneously obtains and consumes economic benefits as the Company and its
subsidiaries perform the contract;
② The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;
③ 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 theamount for the cumulative completed and performed portion to date during the entirecontractual period.
Section X Financial Report
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.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:
① The Company and its subsidiaries enjoy the right of instant collection over such goods and
services;
② The Company and its subsidiaries have transferred the material objects of such goods to
the client;
③ The Company and its subsidiaries have transferred statutory ownership right of the goods
or major risks and rewards of the ownership to the client;
④ The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration forhaving transferred goods or services to the client (and such right depends on other factors otherthan time lapse) is presented as contractual asset, and contractual asset is provisionedimpairment on the basis of expected credit losses. The right owned by and unconditionallycollected from the client by the Company and its subsidiaries (only depend on time lapse) shallbe presented as accounts receivable. Obligations that the Company and its subsidiaries havecollected or shall collect consideration from the client and shall transfer goods or services to theclient are presented as contractual obligations.Specific accounting policies relating to major activities that the Company and its subsidiariesobtain revenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only includeperformance obligation of transferring the whole machine of home appliance. Generally, onthe basis of taking into account the following factors comprehensively, the Companyrecognizes the revenue at the time point of transfer of control right of goods: the right ofinstant collection for obtaining goods, transfer of major risks and rewards on ownership ofgoods, transfer of statutory ownership of goods, transfer of assets of material objects ofgoods, the client’s acceptance of such goods.
Section X Financial Report
(2) Construction contract income
Construction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home,because the client is able to control goods under construction during the Company’sperformance process, the Company takes them as performance obligations performedduring a certain time horizon, and recognizes revenue in accordance with the schedule ofperformance, and it is an exemption when the schedule of performance can’t bereasonably confirmed. The Company confirms the schedule of performance of servicesprovided in accordance with the input method. When the schedule of performance can’t bereasonably confirmed, where the costs that have been incurred by the Company areestimated to be compensated, the revenue will be recognized in accordance with theamount of costs that has been incurred until the schedule of performance can bereasonably confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides qualityassurance for goods sold and project constructed. For guarantee-type quality assurance inorder to ensure the client that goods sold comply with existing standards, the Companyconducts accounting treatment in accordance with estimated liabilities. For service-typequality assurance in order to ensure the client that we also provide a separate service otherthan that the goods sold comply with existing standards, the Company takes it as aseparate performance obligation, and allocates partial transaction price to service-typequality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtainscontrol right over services. When assessing whether quality assurance provides a separateservice other than ensuring the client that the goods sold comply with existing standards,the Company shall consider factors such as whether such quality assurance is understatutory requirements or industrial practices, the term of quality assurance and the natureof the Company’s commitment to perform the tasks.
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: ①those 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; ②those used to compensate relevant expenses or losses that have beenincurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related
government grantIf the government grant received by the Company is used for purchase, construction 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:
① Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shallbe reviewed and modified if necessary on each balance sheet date;
② Government grant shall be categorized as revenue-related if its usage is described in
general statement and no specific project is specified in the relevant governmentdocument.
(4) Amortization method and determination of amortization period of deferred revenue
related to government grantsAsset-related government grant received by the Company is recognized as deferredrevenue and is evenly amortized to the profit or loss in the current period over theestimated useful life of the relevant asset starting from the date when the asset is availablefor use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of theperiod when there is clear evidence that the relevant conditions set out in the financialsubsidy policies and regulations are fulfilled and the receipt of such financial subsidy isassured.Other government grants other than those measured at the account receivable isrecognized upon actual receipt of such subsidies.
Section X Financial Report
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; and
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:
① When the Company has transferred substantially all risk and reward relating to the
ownership of a financial asset, such financial asset is derecognised;
② When the Company retains substantially all risk and reward relating to the ownership
of a financial asset, the Company continues to recognise such financial asset;
③ If the Company neither transfers nor retains substantially all risk and reward relating to
the 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.
Section X Financial Report
Impairment provisions for inventoryThe 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. 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 investments
The 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.
Section X Financial Report
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. 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.
Section X Financial Report
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 rebateThe 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
√ Applicable □ Not Applicable
Particulars of and reasons for changes inaccounting policiesDate of issueDate of adoptionAccounting Standards for BusinessEnterprises Interpretation No. 16(“Interpretation No. 16”)
November 20221 January 2023
Section X Financial Report
The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on1 January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilitiesand right-of-use assets related to a single transaction at the beginning of the earliest periodwhen the Interpretation No. 16 was adopted for the presentation of the financial statements, thenet amount of the deferred tax assets and liabilities after offsetting was equal to the amountsoriginally recognised on a net basis, with no impact on the consolidated balance sheet itemspresented at the net amount after offsetting. The impact of the changes in accounting policies ondeferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was asfollows:
Item
Before policychangesImpact of changes
After policychangesDeferred tax assets before offsetting4,038,915,158.86868,657,062.494,907,572,221.35Deferred tax liabilities before offsetting4,673,734,789.63868,657,062.495,542,391,852.12Offset amount–2,314,874,230.44–868,657,062.49–3,183,531,292.93Deferred tax assets after offsetting1,724,040,928.421,724,040,928.42Deferred tax liabilities after offsetting2,358,860,559.192,358,860,559.19
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 and construction taxCirculation tax payable7%EITTaxable incomeStatutory tax rate
or preferentialrates as follows(Local) education surchargeCirculation tax payable1%, 2%, 3%
Section X Financial Report
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-techenterpriseQingdao Haier Special Refrigerator
Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Dishwasher Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Special Freezer Co.,Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Intelligent HomeAppliance Technology Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseWuhan Haier Electronics Holding Co.,Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseWuhan Haier Freezer Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHefei Haier Refrigerator Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHefei Haier Air-conditioning Co.,
Limited
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseZhengzhou Haier Air-conditioning Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseShenyang Haier Refrigerator Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Air-Conditioner
Electronics Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Meier Plastic Powder Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterprise
Section X Financial Report
CompanyTax ratePreferential taxQingdao Hai Gao Design andManufacture Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Hairi High Technology Co.,Ltd
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier (Jiaozhou) Air-conditioning Co., Limited
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Intelligent TechnologyDevelopment Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseFoshan Haier Freezer Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Central Air ConditioningCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHaier U+smart Intelligent Technology
(Beijing) Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseShanghai Zhi Han Technology Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Electronic Plastic Co.,Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Wei Xi Intelligent TechnologyCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Special RefrigeratingAppliance Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Smart Kitchen
Appliance Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHefei Haier Air Conditioning
Electronics Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseShanghai Haier Medical Technology
Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterprise
Section X Financial Report
CompanyTax ratePreferential taxShanghai Haier Smart Technology Co.,Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Yunshang Yuyi IOTTechnology Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHaier (Shanghai) Home ApplianceResearch and Development CenterCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHaier (Shenzhen) R&D Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseLaiyang Haier Smart Kitchen ApplianceCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseGuangdong Haier Intelligent
Technology Co. Ltd]
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseDalian Haier Refrigerator Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Jijia Cloud IntelligentTechnology Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHefei Haier Washing Machine Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Washing Machine Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Jiaonan Haier Washing
Machine Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseFoshan Shunde Haier Electric Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseTianjin Haier Cleaning Electrical
Appliances Co., Ltd. (天津海尔洗涤电器有限公司)
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Economic and Technological
Development Zone Haier WaterHeater Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterprise
Section X Financial Report
CompanyTax ratePreferential taxWuhan Haier Water Heater Co., Ltd.15.00%entitled to the preferential
taxation policies as a hi-techenterpriseFoshan Haier Drum Washing MachineCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Strauss WaterEquipment Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Strauss TechnologyCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier New Energy ElectricAppliance Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Washing Appliance Co.,
Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Lexin Cloud Technology
Co., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseHefei Haier Drum Washing MachineCo., Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Smart Electrics
Equipment Co. Ltd.
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseQingdao Haier Lejia Electrical
Appliance Co. Ltd.(青島樂家電器有限公司)
15.00%entitled to the preferential
taxation policies as a hi-techenterpriseJiangxi Haier Medical Technology Co.,
Ltd.
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Electrical Appliance
Sales Co., Ltd. and some Westerncompanies
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Air-conditioning Co.,
Ltd.
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRC
Section X Financial Report
CompanyTax ratePreferential taxChongqing Haier Refrigeration
Appliance Co., Ltd.
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Washing Machine
Co., Ltd.
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCGuizhou Haier Electronics Co., Ltd.15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Hairishun Home ApplianceSales Co., Ltd. and some Westerncompanies
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Washing MachineCo., Ltd
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Water Heater Co.,Ltd
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCChongqing Haier Drum WashingMachine Co., Ltd
15.00%entitled to the preferential
taxation policies under theWestern Development initiativeof the PRCQingdao Haier Technology Co., Ltd.10.00%entitled to the preferential
taxation policies as a keysoftware enterprise
Section X Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
1. Monetary funds
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceCash on hand541,712.705,312,391.11Cash in bank53,524,177,266.5052,978,813,851.96Other cash balances961,733,861.941,178,085,912.24Total54,486,452,841.1454,162,212,155.31Include: total amount of overseas deposits15,909,397,682.4611,963,648,575.80Deposit in Finance Company26,276,742,534.5031,433,124,152.44Other explanationsOther 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 products487,936,101.8114,638,968.26Investments in other equity instruments243,224,439.64336,843,065.02Investment funds222,803,002.38168,430,847.63Total953,963,543.83519,912,880.91
Section X Financial Report
3. Derivative financial assets
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts67,565,829.44178,992,877.32Forward commodity contracts4,192,283.19Total67,565,829.44183,185,160.51
4. Bills receivable
(1) Bills receivable presented by types
ItemsClosing balanceOpening balanceBank acceptance notes8,466,159,415.189,390,227,149.92Commercially acceptance notes160,607,051.53237,902,374.08Balance of bills receivable8,626,766,466.719,628,129,524.00Allowance for bad debts5,331,635.323,937,685.85Bills receivable, net8,621,434,831.399,624,191,838.15
(2) Changes in allowance for bad debts of bills receivable in the current period:
Items
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceAllowance for bad
debts3,937,685.852,442,094.381,048,144.915,331,635.32Total3,937,685.852,442,094.381,048,144.915,331,635.32The 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 wasRMB4,389,991,243.14 (amount at the beginning of the period RMB8,716,194,311.64).
Section X Financial Report
5. Accounts receivable
Accounts receivable are disclosed by aging as follow:
AgingClosing balanceOpening balanceWithin one year20,004,004,007.4315,941,416,673.44
–2 years873,509,449.30744,911,486.13
–3 years510,375,731.48277,269,661.37Over 3 years288,610,175.85129,303,240.96Balance of accounts receivable21,676,499,364.0617,092,901,061.90Allowance for bad debts1,408,399,927.631,206,152,250.09Accounts receivable, net20,268,099,436.4315,886,748,811.81By method of provision of allowance for bad debtsCategoriesClosing balance
Book balanceAllowance for bad debtsAmount
Percentage(%)Amount
Percentageof provision
(%)Carrying valueAccount receivablessubject to provisionfor bad debts on aseparate basis866,424,078.124.00864,112,221.0699.732,311,857.06Account receivablessubject to provisionfor bad debts on acollective 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
(continued)CategoriesOpening balance
Book balanceAllowance for bad debtsAmount
Percentage(%)Amount
Percentageof provision
(%)Carrying valueAccount receivablessubject to provisionfor bad debts on aseparate basis669,106,556.783.91658,051,988.7098.3511,054,568.08Account receivablessubject to provisionfor bad debts on acollective basis16,423,794,505.1296.09548,100,261.393.3415,875,694,243.73Total17,092,901,061.90100.001,206,152,250.097.0615,886,748,811.81Account receivables subject to provision for bad debts on a separate basis at theend of the period
√ Applicable □ Not Applicable
Unit and Currency: RMBNameClosing balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Reason for provision25 customers intotal
866,424,078.12864,112,221.0699.73The obligors were in
significant financialdifficultyTotal866,424,078.12864,112,221.0699.73The account receivables of significant individual amount and subject to provision for baddebts on a separate basis at the end of the period was RMB726,379,640.82 (amount at thebeginning of the period RMB536,690,595.28).
Section X Financial Report
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 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(continued)AgingOpening balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Within 1 year15,628,451,183.11341,360,523.712.18
–2 years445,226,708.1533,709,717.147.57
–3 years231,744,330.0390,123,931.8938.89Over 3 years118,372,283.8382,906,088.6570.04Total16,423,794,505.12548,100,261.393.34Changes in allowance for bad debts of accounts receivable in the current period:
Items
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceAllowance for
bad debts1,206,152,250.09432,154,043.654,453,844.82145,010,380.9289,349,830.011,408,399,927.63
The aggregate amount of the top 5 account receivables and contract assets as at the end
of the period was RMB5,525,018,986.65 (amount at the beginning of the period:
RMB4,030,275,384.24), accounting for 25.11% (at the beginning of the period: 23.07%) ofthe book balance of account receivables and contract assets, and the amount of provisionfor bad debts was RMB604,983,462.26 (amount at the beginning of the periodRMB604,758,501.08).
Section X Financial Report
Actual write-off of accounts receivable in the current periodThe amount of accounts receivable actually written off in the current period wasRMB82,305,106.67 (amount for the corresponding period: RMB35,724,496.02) and therewas no significant bad debt write-off of accounts receivable.The Company’s accounts receivable that were terminated due to the transfer offinancial assets 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 RMB6,411,839,897.28 (amount at the beginningof the period: RMB7,752,646,133.49) 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 RMB1,255,120.80(amount at the beginning of the period: RMB1,944,980,392.98).
6. Prepayments
(1) Prepayments are presented by aging:
√ Applicable □ Not Applicable
Unit and Currency: RMBAgingClosing balanceOpening balance
AmountPercentage (%)AmountPercentage (%)Within one year1,163,325,306.1693.951,087,347,492.3697.92
–2 years56,449,865.294.569,481,169.760.85
–3 years7,104,895.060.577,826,299.090.70Over 3 years11,414,864.000.925,852,909.400.53Total1,238,294,930.51100.001,110,507,870.61100.00
(2) The total amount of the top 5 in the prepayments at the end of the period was
RMB214,815,987.16, accounting for 17.35% of the book balance of prepayment (amount atthe beginning of the period: RMB285,279,364.51, accounting for 25.69%).
(3) There was no significant prepayment aged over 1 year at the end of the period.
Section X Financial Report
7. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceInterest receivable748,496,020.24513,320,376.79Other receivables1,901,062,964.811,887,793,525.76Total2,649,558,985.052,401,113,902.55
(1) Interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceWithin one year473,678,991.02365,716,532.95
–2 years199,801,995.25117,786,419.18
–3 years70,063,170.9619,790,000.00Over 3 years4,951,863.0110,027,424.66Total748,496,020.24513,320,376.79
(2) Other receivables
Other receivables are disclosed by aging as follows:
AgingClosing balanceOpening balanceWithin one year1,413,423,130.381,415,479,963.79
–2 years94,189,862.20217,023,682.62
–3 years204,379,944.7523,617,332.57Over 3 years277,554,421.44387,192,496.32Balance of other receivables1,989,547,358.772,043,313,475.30Allowance for bad debts88,484,393.96155,519,949.54Other receivables, net1,901,062,964.811,887,793,525.76
Section X Financial Report
Provision of allowance for bad debts based on the general model of expectedcredit losses
Allowance forbad debtsStage 1Stage 2Stage 3
Expected creditlosses for thecoming 12months
Lifetimeexpected creditlosses (notcredit-impaired)
Lifetimeexpected creditlosses (credit-impaired)TotalOpening balance133,616,436.5421,903,513.00155,519,949.54Provision for the
current period7,073,055.917,073,055.91Reversal for the
current period51,584,453.851,384,084.9552,968,538.80Write-off and
others for the
current period2,274,157.6418,865,915.0521,140,072.69Closing balance86,830,880.961,653,513.0088,484,393.96
Changes in allowance for bad debt provision of other receivables in the currentperiodItems
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceAllowance forbad debts155,519,949.547,073,055.9152,968,538.8021,140,072.6988,484,393.96
Section X Financial Report
The total amount of the top 5 other receivables at the end of the period wasRMB671,641,747.67 (amount at the beginning of the period: RMB913,820,290.12),accounting for 33.76% of the book balance of other receivables (at the beginning ofthe period: 44.72%), and the amount of provision for bad debts wasRMB3,359,976.38 (amount at the beginning of the period: RMB0.00).
Other receivables written off during the periodThe amount of other receivables actually written off in the current period wasRMB22,283,049.47 (amount for the corresponding period: RMB56,385,567.52) and nosignificant other receivables were written off for bad debts.Other receivables mainly included deposits, quality guarantees, employee loans, taxrefunds, and advance payments, etc.
8. Inventories
(1) Category of inventories
ItemsClosing Balance
Book balance
ImpairmentProvision of
inventoriesCarrying valueRaw materials5,873,703,173.53208,533,811.425,665,169,362.11Work in progress47,535,985.8647,535,985.86Finished 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(continued)ItemsOpening Balance
Book balance
ImpairmentProvision of
inventoriesCarrying valueRaw materials6,220,344,034.47171,673,251.236,048,670,783.24Work in progress74,028,876.2174,028,876.21Finished goods36,903,949,735.101,438,863,087.0235,465,086,648.08Total43,198,322,645.781,610,536,338.2541,587,786,307.53
Section X Financial Report
(2) Impairment provision of inventories
Items
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceRaw materials171,673,251.23108,912,061.7233,829,562.0638,221,939.47208,533,811.42Work in progressFinished goods1,438,863,087.021,102,723,733.9386,400,310.461,182,475,181.031,272,711,329.46Total1,610,536,338.251,211,635,795.65120,229,872.521,220,697,120.501,481,245,140.88
(3) Details of impairment provision of inventories are as follows
Items
Specific basis fordetermining netrealizable value
Reason for reversing orwriting off the impairmentprovision of inventoriesRaw materialsMeasurement at the lower of
cost and net realizable value
Production, use or salesFinished goodsMeasurement at the lower of
cost and net realizable value
sales
9. Contractual assets
(1) Details of contract assets
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing BalanceOpening Balance
Book balance
Provision forbad debtsCarrying ValueBook balance
Provision forbad debtsCarrying ValueRelating to constructionservice contract327,870,850.3066,931,441.57260,939,408.73379,905,624.9669,975,265.71309,930,359.25Total327,870,850.3066,931,441.57260,939,408.73379,905,624.9669,975,265.71309,930,359.25
Section X Financial Report
(2) Classification by method of provision for bad debts
CategoriesClosing balance
Book balanceAllowance for bad debtsAmount
Percentage(%)Amount
Percentageof provision
(%)Carrying valueContract assetssubject to provisionfor bad debts on aseparate basis58,419,039.5317.8258,419,039.53100.00Contract assetssubject to provisionfor 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(continued)CategoriesOpening balance
Book balanceAllowance for bad debtsAmount
Percentage(%)Amount
Percentageof provision
(%)Carrying valueContract assetssubject to provisionfor bad debts on aseparate basis57,105,478.3015.0357,048,337.2399.9057,141.07
Contract assets
subject toprovision for baddebts on acollective basis322,800,146.6684.9712,926,928.484.00309,873,218.18Total379,905,624.96100.0069,975,265.7118.42309,930,359.25
Section X Financial Report
(3) Contract assets subject to provision for bad debts on a separate basis at the end
of the period
√ Applicable □ Not Applicable
Unit and Currency: RMBNameClosing balance
Book balance
Allowance forbad debts
Percentage ofprovision (%)Reason for provision21 customers intotal
58,419,039.5358,419,039.53100.00The obligors were in
significant financialdifficultyTotal58,419,039.5358,419,039.53100.00
(4) Contract assets subject to provision for bad debts on a collective basis at the end
of the period
√ Applicable □ Not Applicable
Unit and Currency: RMBNameClosing balance
Contract assets
Allowance forbad debts
Percentage ofprovision (%)Relating to construction
service contract269,451,810.778,512,402.043.16Total269,451,810.778,512,402.043.16
(5) Provision for bad debts on contract assets during the current period
Items
Increase for thecurrent period
Decrease for the
current periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceRelating to
constructionservicecontract69,975,265.713,043,824.1466,931,441.57Total69,975,265.713,043,824.1466,931,441.57
Section X Financial Report
10. Other current assets
(1) Details
ItemsClosing BalanceOpening Balance
Book balance
ImpairmentProvisionBook balance
ImpairmentProvisionBank deposit for wealth
management products1,530,274,566.661,642,421,944.45Deductible taxes2,610,660,645.552,710,929,690.28Returns cost receivables670,702,791.81325,055,055.98563,233,565.88280,818,239.06Others63,584,720.6457,543,006.31Total4,875,222,724.66325,055,055.984,974,128,206.92280,818,239.06
(2) Impairment Provision
Items
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Provision forthe currentperiod
OthermovementReversal
Write-off/othermovement
ClosingbalanceReturns cost
receivables280,818,239.06325,055,055.98280,818,239.06325,055,055.98Total280,818,239.06325,055,055.98280,818,239.06325,055,055.98
11. Debt investments
ItemsClosing balanceOpening balance
PrincipalInterestPrincipalInterestTime deposit -long term8,677,500,000.00163,733,078.661,000,000,000.0034,222,222.22Total8,677,500,000.00163,733,078.661,000,000,000.0034,222,222.22Include: time deposit in Finance
Company7,377,500,000.0086,374,745.33
Section X Financial Report
12. Long-term equity investments
InvesteesIncrease/decrease for the current period
Openingbalance
Investmentincrease
Investment profitrecognized underequity method
Adjustment inothercomprehensiveincome
Otherchanges inequity
Declaration ofcash dividendsor profitsAssociate：
Haier Group Finance Co., Ltd.7,560,187,324.04595,448,540.64–9,490,166.96–235,200,000.00Bank of Qingdao Co., Ltd.2,934,085,854.00271,598,742.6770,737,018.48–76,288,906.40Wolong Electric (Jinan) MotorCo., Ltd.174,697,807.7425,270,339.30–22,305,600.00Qingdao Hegang New Material
Technology Co., Ltd.314,802,331.4514,911,234.91Qingdao Haier SAIF Smart Home
Industry Investment Center
(Limited Partnership)319,245,649.36–83,255,532.55–29,225,674.05Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners
Co., Ltd.715,461,260.26131,493,706.05–183,150,000.00Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd.413,367,540.8016,250,623.48–17,510,692.75Qingdao Haier Multimedia Co., Ltd.153,550,234.50–65,250,234.50Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶石花同
方能源科技有限公司)30,267,952.9459,013.84Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限
公司)98,000,000.00Anhui Kunhe Smart Technology
Co., Ltd.1,997,782.61Zhejiang Futeng Fluid Technology
Co., Ltd.77,807,408.84–223,246.85Beijing Mr. Hi Network Technology
Company Limited7,507,759.75Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境
技術（廣州）有限公司)4,500,000.00–234,034.27Beijing ASU Tech Co., Ltd.12,829,433.78–17,761,329.9912,850,905.72Shenzhen Genyuan Environmental
Protection Technology Co., Ltd.6,914,487.73Qingdao Haimu Investment
Management Co., Ltd.2,521,766.4287,690.15Qingdao Haimu Smart Home
Investment Partnership (Limited
Partnership)58,905,912.88–916,905.70Haineng Wanjia (Shanghai)
Technology Development
Co., Ltd.772,938.88–166,909.17Qingdao Guochuang Intelligent Home
Appliance Research Institute
Co., Ltd.45,016,334.20–6,442,106.67Guangzhou Heying Investment
Partnership (Limited Partnership)285,793,577.87–20,816,696.55
Section X Financial Report
InvesteesIncrease/decrease for the current period
Openingbalance
Investmentincrease
Investment profitrecognized underequity method
Adjustment in
othercomprehensiveincome
Otherchanges inequity
Declaration ofcash dividendsor profitsQingdao Home Wow Cloud Network
Technology Co., Ltd.2,547,217.00–354,547.51Bingji (Shanghai) CorporateManagement Co., Ltd.1,014,425,293.0441,819,769.83Youjin (Shanghai) CorporateManagement Co., Ltd.1,843,591,441.8876,035,945.14RRS (Shanghai) Investment Co., Ltd.3,351,166,257.98138,247,172.98Haier Best Water Technology
Co., Ltd.148,369,638.40Huizhixiangshun Equity Investment
Fund (Qingdao) Partnership
(Limited Partnership)238,806,947.64Qingdao Ririshun Huizhi Investment
Co., Ltd.4,083,482.78Qingdao Xinshenghui Technology
Co., Ltd.8,598,002.891,407,912.26EuropaltersItaliaS.r.l.15,760,505.28OryginLLC13,918,442.268,378,488.78Konan Electronic Co., Ltd.67,770,092.99–374,388.94–2,789,951.98–226,800.00HNR (Private) Company Limited74,366,909.5542,066,344.71–5,207,447.75HPZ LIMITED88,751,047.98–76,639,344.33–8,628,127.15CONTROLADORAMABES.A.deC.V.4,685,927,386.53673,201,637.87–133,208,775.03–20,684,123.49–126,817,804.35Middle East Airconditioning
Company,Limited8,820,101.55–1,701,195.07180,260.12Total24,652,368,172.86141,146,441.721,774,578,898.28–109,223,886.82–7,833,217.77–690,725,477.55
Section X Financial Report
(continued)Investees
Increase/decrease for the
current periodOthermovement
The disposal ofthe investment
Closingbalance
ImpairmentProvisionClosingBalanceAssociate：
Haier Group Finance Co., Ltd.7,910,945,697.72Bank of Qingdao Co., Ltd.3,200,132,708.75Wolong Electric (Jinan) Motor Co., Ltd.177,662,547.04Qingdao Hegang New MaterialTechnology Co., Ltd.329,713,566.36Qingdao Haier SAIF Smart HomeIndustry Investment Center (LimitedPartnership)206,764,442.76Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co., Ltd.663,804,966.31Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd.412,107,471.53–21,000,000.00Qingdao Haier Multimedia Co., Ltd.88,300,000.00–88,300,000.00Baoshihua Tong Fang Energy
Technology Co., Ltd. (寶石花同方能
源科技有限公司)30,326,966.78Zhengzhou Highly Electric Appliance
Co., Ltd. (鄭州海立電器有限公司)98,000,000.00Anhui Kunhe Smart Technology
Co., Ltd.–1,997,782.61Zhejiang Futeng Fluid Technology
Co., Ltd.77,584,161.99Beijing Mr. Hi Network Technology
Company Limited–7,507,759.75Hongtong Environmental Technology
(Guangzhou) Co., Ltd. (宏通環境
技術（廣州）有限公司)4,265,965.73Beijing ASU Tech Co., Ltd.7,919,009.51Shenzhen Genyuan Environmental
Protection Technology Co., Ltd.–6,914,487.73Qingdao 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.606,029.71
Section X Financial Report
Investees
Increase/decrease for thecurrent periodOthermovement
The disposal ofthe investment
Closingbalance
ImpairmentProvisionClosingBalanceQingdao Guochuang Intelligent HomeAppliance Research InstituteCo., Ltd.38,574,227.53Guangzhou Heying InvestmentPartnership (Limited Partnership)–70,560,000.00194,416,881.32Qingdao Home Wow Cloud NetworkTechnology Co., Ltd.2,192,669.49Bingji (Shanghai) CorporateManagement Co., Ltd.1,056,245,062.87Youjin (Shanghai) CorporateManagement Co., Ltd.1,919,627,387.02RRS (Shanghai) Investment Co., Ltd.3,489,413,430.96Haier Best Water Technology Co., Ltd.148,369,638.40Huizhixiangshun Equity Investment Fund(Qingdao) Partnership (LimitedPartnership)–631,310.61238,175,637.03Qingdao Ririshun Huizhi Investment
Co., Ltd.4,083,482.78Qingdao Xinshenghui TechnologyCo., Ltd.10,005,915.15EuropaltersItaliaS.r.l.–15,760,505.28OryginLLC22,296,931.04Konan Electronic Co., Ltd.64,378,952.07HNR (Private) Company Limited111,225,806.51HPZ LIMITED3,483,576.50CONTROLADORAMABES.A.deC.V.5,078,418,321.53Middle East Airconditioning Company,
Limited7,299,166.60–845,634.54Total–103,371,845.9825,656,939,084.74–110,145,634.54
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 Limited1,986,156,165.171,234,500,000.00Haier COSMO IOT Ecosystem Technology
Co., Ltd.2,817,408,000.002,817,408,000.00Other1,600,130,789.601,799,974,930.20Total6,403,694,954.775,851,882,930.20
(2) Dividends from investment in other equity instruments during the current period:
Items
Amount for thecurrent periodSINOPEC Fuel Oil Sales Corporation Limited54,539,047.11Other4,132,177.14Total58,671,224.25
Section X Financial Report
14. Investment properties
Measurement model of investment properties
(1) The changes in investment properties measured at cost this year are as follows:
Items
Houses andbuildings
Land userightsTotalI. Original book value
1. Opening balance93,351,061.9129,370,397.68122,721,459.59
2. Increase for the period
(1) External acquisition
(2) Inventories/fixed assets/
construction in progresstransferred in
(3) Increase in business
combinations
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange
rate and others350,209.20350,209.20
5. Closing balance93,701,271.1129,370,397.68123,071,668.79II. Accumulated depreciation andaccumulated amortization
1. Opening balance16,919,838.972,759,869.1019,679,708.07
2. Increase for the period
(1) Provision or amortization4,069,106.08585,182.144,654,288.22
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Change in foreign exchange
rate and others106,591.73106,591.73
5. Closing balance21,095,536.783,345,051.2424,440,588.02III. Provision for impairment
1. Opening balance
2. Increase for the period
(1) Provision
3. Decrease for the 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 value72,605,734.3326,025,346.4498,631,080.77
2. Opening book value76,431,222.9426,610,528.58103,041,751.52
Section X Financial Report
(2) The depreciation and amortization amount charge for the period is RMB4,654,288.22 (amount
for the corresponding period: RMB6,405,466.73).
(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.
15. Fixed assets
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceFixed assets29,603,936,822.7827,158,348,424.28Disposals of fixed assetsTotal29,603,936,822.7827,158,348,424.28
Section X Financial Report
(1) Fixed assets:
Items
Houses and
buildings
Productionequipment
TransportationequipmentI. Original book value:
1. Opening balance14,637,131,005.8031,324,534,257.57193,143,213.57
2. Increase for the period
(1) Purchase125,540,500.361,483,457,737.485,148,439.21
(2) Construction in progress
transferred in1,061,862,119.983,012,269,067.3325,503,782.62
(3) Increase in business
combinations27,878,074.50342,940.57
3. Decrease for the period
(1) Disposal or write-off114,596,964.43890,692,350.6512,587,327.05
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others72,114,894.71447,424,538.25–3,938,734.72
5. Closing balance15,782,051,556.4235,404,871,324.48207,612,314.20II. Accumulated depreciation
1. Opening balance4,538,423,308.2316,035,153,335.30119,070,640.87
2. Increase for the period
(1) Provision681,106,714.502,777,493,396.9422,753,739.13
(2) Increase in business
combinations1,772,785.1099,726.34
3. Decrease for the period
(1) Disposal or write-off36,751,072.95745,642,011.927,716,624.95
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others42,604,655.32142,336,523.97–375,585.11
5. Closing balance5,225,383,605.1018,211,114,029.39133,831,896.28III. Provision for impairment
1. Opening balance28,586,023.9016,202,770.28110,029.00
2. Increase for the period
(1) Provision2,831,832.73
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off122,114.80178,128.17
(2) Disposal of subsidiaries
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others–863,932.68–1,570,790.59–1,701.60
5. Closing balance27,599,976.4217,285,684.25108,327.40IV. Book value
1. Closing book value10,529,067,974.9017,176,471,610.8473,672,090.52
2. Opening book value10,070,121,673.6715,273,178,151.9973,962,543.70
Section X Financial Report
(continued)
ItemsOffice furnitureOtherTotalI. Original book value:
1. Opening balance1,324,636,809.032,916,743,458.8450,396,188,744.81
2. Increase for the period
(1) Purchase60,278,297.6554,491,762.991,728,916,737.69
(2) Construction in progress
transferred in188,218,311.67290,911,105.874,578,764,387.47
(3) Increase in business
combinations835,810.8029,056,825.87
3. Decrease for the period
(1) Disposal or write-off49,629,215.86121,896,813.791,189,402,671.78
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others5,911,932.0953,936,031.07575,448,661.40
5. Closing balance1,530,251,945.383,194,185,544.9856,118,972,685.46II. Accumulated depreciation
1. Opening Balance788,864,149.171,708,674,462.6623,190,185,896.23
2. Increase for the period
(1) Provision199,336,047.71294,040,822.303,974,730,720.58
(2) Increase in business
combinations556,277.032,428,788.47
3. Decrease for the period
(1) Disposal or write-off44,127,920.31113,346,603.90947,584,234.03
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others8,041,429.3655,165,632.03247,772,655.57
5. Closing Balance952,669,982.961,944,534,313.0926,467,533,826.82III. Provision for impairment
1. Opening balance243,387.382,512,213.7447,654,424.30
2. Increase for the period
(1) Provision8,256.792,840,089.52
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off4,957.13305,200.10
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange
rate and others–8,729.91–242,123.08–2,687,277.86
5. Closing balance237,957.132,270,090.6647,502,035.86IV. Book value
1. Closing book value577,344,005.291,247,381,141.2329,603,936,822.78
2. Opening book value535,529,272.481,205,556,782.4427,158,348,424.28
Section X Financial Report
(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 RMB4,578,764,387.47 (amount for the correspondingperiod: RMB6,244,222,182.09).
(3) As at 31 December 2023, the net book value of the buildings for which the Company has
not yet obtained certificates of title was RMB408 million (amount at the beginning of theperiod RMB2.037 billion), and the relevant certificates of title were being processed. TheCompany can legally and effectively occupy and operate the above-mentioned buildings forwhich no certificates of title have been obtained.
(4) There was no mortgage secured by the fixed assets mortgage at the end of the period, and
there was no mortgage secured by the fixed assets mortgage at the beginning of theperiod.
16. Construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing BalanceOpening BalanceConstruction in progress5,403,469,596.764,094,712,417.61Construction materialsTotal5,403,469,596.764,094,712,417.61
Section X Financial Report
Construction in progress
(1) Details of construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMBProjectsClosing BalanceOpening Balance
Bookbalance
ImpairmentProvision
BookValue
Bookbalance
Impairmentprovision
BookValueEurope Candy Project1,092,171,521.231,092,171,521.23467,370,049.46467,370,049.46Qingdao RefrigerationAppliance Project914,078,742.21914,078,742.21Qingdao HVAC Project530,979,038.43530,979,038.43365,555.56365,555.56Qingdao Water Ecology
Technology Project529,949,339.20529,949,339.2092,905,882.1392,905,882.13America GE APPLIANCESProject343,482,203.7322,622,250.04320,859,953.69338,096,215.95338,096,215.95New Zealand FPA Project200,943,871.90200,943,871.90176,619,361.43176,619,361.43Eastern European Project148,106,777.44148,106,777.44392,579,594.60392,579,594.60Qingdao Air Conditioning
Electronics Project135,966,703.60135,966,703.60313,855,913.14313,855,913.14Zhengzhou New Energy
Project104,122,098.62104,122,098.62197,524,472.64197,524,472.64Qingdao Smart Appliances
Project78,218,772.3078,218,772.3067,092,916.9967,092,916.99Qingdao Jiaozhou Washing
Appliances Project77,224,500.1077,224,500.1093,825,106.0793,825,106.07Chongqing Water Heater
Project75,225,516.5475,225,516.5461,350,349.6361,350,349.63Qingdao Air Conditioner
Project73,270,568.9973,270,568.9951,569,425.4051,569,425.40Foshan Freezer Project67,104,763.6867,104,763.6897,616,741.6997,616,741.69Zhengzhou Air Conditioner
Project66,251,489.9066,251,489.90546,460.15546,460.15Others990,093,027.531,097,088.60988,995,938.931,744,604,991.691,210,618.921,743,394,372.77Total5,427,188,935.4023,719,338.645,403,469,596.764,095,923,036.531,210,618.924,094,712,417.61
Section X Financial Report
(2) Details of significant changes of construction in progress for the period
Project name
Openingbalance
Increase for thecurrent period
Transferto fixed assets
Otherdecrease
Change inforeignexchange rateand others
Closingbalance
Source offundEurope Candy Project467,370,049.461,047,297,746.68380,869,588.00–41,626,686.911,092,171,521.23Self-fundingQingdao RefrigerationAppliance Project980,507,961.4266,429,219.21914,078,742.21Self-fundingQingdao HVAC Project365,555.56530,613,482.87530,979,038.43Self-fundingQingdao Water EcologyTechnology Project92,905,882.13439,490,359.702,446,902.63529,949,339.20Self-fundingAmerica GEAPPLIANCES Project338,096,215.95516,280,314.17516,625,823.895,731,497.50343,482,203.73Self-fundingNew Zealand FPAProject176,619,361.43219,275,901.70199,857,537.824,906,146.59200,943,871.90Self-fundingEastern European
Project392,579,594.60270,000,233.49466,229,610.14–48,243,440.51148,106,777.44Self-fundingQingdao Air ConditioningElectronics Project313,855,913.14228,411,035.68406,300,245.22135,966,703.60Self-fundingZhengzhou New Energy
Project197,524,472.64134,384,592.62227,786,966.64104,122,098.62Self-fundingQingdao SmartAppliances Project67,092,916.9957,800,691.0946,674,835.7878,218,772.30Self-fundingQingdao JiaozhouWashing AppliancesProject93,825,106.0755,037,560.0971,638,166.0677,224,500.10Self-fundingChongqing Water HeaterProject61,350,349.63115,293,593.01101,418,426.1075,225,516.54Self-fundingQingdao Air ConditionerProject51,569,425.4055,890,979.1334,189,835.5473,270,568.99Self-fundingFoshan Freezer Project97,616,741.6913,640,021.1744,151,999.1867,104,763.68Self-fundingZhengzhou AirConditioner Project546,460.15124,183,371.6658,478,341.9166,251,489.90Self-fundingOthers1,744,604,991.691,194,610,304.731,955,774,413.256,652,144.36990,093,027.53Self-fundingTotal4,095,923,036.535,982,718,149.214,578,871,911.37–72,580,338.975,427,188,935.40
Section X Financial Report
(3) Impairment provision of construction in progress
Project name
OpeningbalanceIncrease for thecurrent period
Transfer tofixed assets
Otherdecrease
Change inforeignexchange rate
and others
ClosingbalanceAmerica GE APPLIANCES
Project22,513,947.38108,302.6622,622,250.04Lejia IOT Project837,735.85837,735.85Others372,883.07107,523.90–6,006.42259,352.75Total1,210,618.9222,513,947.38107,523.90102,296.2423,719,338.64
17. Right-of-use assets
Items
Houses and
buildings
Productionequipment
TransportationequipmentI. Original book value:
1. Opening balance4,673,699,908.8337,374,188.44213,211,277.75
2. Increase for the current period
(1) Purchase884,227,772.60283,273,168.36114,591,080.22
(2) Increase in business
combination7,822,613.44
3. Decrease for the current period
(1) Disposal635,248,838.8012,340,308.8255,477,784.64
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others38,405,669.63–9,208,243.26–2,442,714.57
5. Closing balance4,968,907,125.70299,098,804.72269,881,858.76II. Accumulated depreciation
1. Opening balance1,284,083,200.1718,972,328.56125,499,329.46
2. Increase for the current period
(1) Provision820,949,004.2931,286,558.3272,638,871.28
(2) Increase in business
combination1,212,092.84
3. Decrease for the current period
(1) Disposal426,062,786.5712,340,308.8254,692,106.80
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others25,092,378.52–750,560.01–12,603,646.66
5. Closing balance1,705,273,889.2537,168,018.05130,842,447.28III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balanceIV. Book Value
1. Closing book balance3,263,633,236.45261,930,786.67139,039,411.48
2. Opening book balance3,389,616,708.6618,401,859.8887,711,948.29
Section X Financial Report
(continued)ItemsOffice furnitureOtherTotalI. Original book value:
1. Opening balance53,135,501.06364,530,322.795,341,951,198.87
2. Increase for the current period
(1) Purchase356,817,460.82167,574,757.561,806,484,239.56
(2) Increase in business
combination7,822,613.44
3. Decrease for the current period
(1) Disposal6,515,638.43709,582,570.69
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others11,694,388.086,946,752.0545,395,851.93
5. Closing balance415,131,711.53539,051,832.406,492,071,333.11II. Accumulated depreciation
1. Opening balance22,851,405.9095,319,580.891,546,725,844.98
2. Increase for the current period
(1) Provision35,008,477.81103,759,866.701,063,642,778.40
(2) Increase in business
combination1,212,092.84
3. Decrease for the current period
(1) Disposal6,515,638.43499,610,840.62
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others–817,318.762,098,924.6813,019,777.77
5. Closing balance50,526,926.52201,178,372.272,124,989,653.37III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others
5. Closing balance
IV. Book Value
1. Closing book balance364,604,785.01337,873,460.134,367,081,679.74
2. Opening book balance30,284,095.16269,210,741.903,795,225,353.89
Section X Financial Report
18. Intangible assets
Items
Proprietarytechnology
Licenses and
franchisesLand use rightsI. Original book value
1. Opening balance2,045,745,341.244,641,652,220.771,617,778,038.37
2. Increase for the current period
(1) Purchase10,398,578.49564,726,076.81
(2) Internal research and
development126,500,869.01
(3) Increase in business
combination105,591,559.06507,048.50
3. Decrease for the current period
(1) Disposal28,683,786.27174,537.22
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others40,334,928.40224,908,217.389,185,131.60
5. Closing balance2,212,581,138.654,953,866,789.432,192,021,758.06II. Accumulated amortization
1. Opening balance1,177,726,697.551,012,993,222.17246,593,605.24
2. Increase for the current period
(1) Provision197,197,149.16157,683,854.0539,359,224.37
(2) Increase in business
combination1,841,292.00232,981.38
3. Decrease for the current period
(1) Disposal681,317.29
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others24,874,826.4129,806,244.67296,975.36
5. Closing balance1,399,798,673.121,201,643,295.60286,482,786.35III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision66,323,073.48
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others307,280.65
5. Closing balance66,630,354.13IV. Book Value
1. Closing book balance812,782,465.533,685,593,139.701,905,538,971.71
2. Opening book balance868,018,643.693,628,658,998.601,371,184,433.13
Section X Financial Report
(continued)
Items
Trademarkrights
Applicationmanagementsoftware and
othersTotalI. Original book value
1. Opening balance2,582,976,744.575,344,358,234.6216,232,510,579.57
2. Increase for the current period
(1) Purchase501,216,025.111,076,340,680.41
(2) Internal research and
development341,880,210.31468,381,079.32
(3) Increase in business
combination14,383,024.24120,481,631.80
3. Decrease for the current period
(1) Disposal156,648,068.04185,506,391.53
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others105,214,311.63–24,979,266.69354,663,322.32
5. Closing balance2,688,191,056.206,020,210,159.5518,066,870,901.89II. Accumulated amortization
1. Opening balance3,265,730,771.745,703,044,296.70
2. Increase for the current period
(1) Provision853,486,338.151,247,726,565.73
(2) Increase in business
combination5,131,434.277,205,707.65
3. Decrease for the current period
(1) Disposal92,934,304.1593,615,621.44
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others51,027,185.42106,005,231.86
5. Closing balance4,082,441,425.436,970,366,180.50III. Impairment provision
1. Opening balance23,584,905.6623,584,905.66
2. Increase for the current period
(1) Provision58,760.6766,381,834.15
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others307280.65
5. Closing balance23,643,666.3390,274,020.46IV. Book Value
1. Closing book balance2,688,191,056.201,914,125,067.7911,006,230,700.93
2. Opening book balance2,582,976,744.572,055,042,557.2210,505,881,377.21
Section X Financial Report
At the end of the period, the intangible assets developed through the Company accounted forthe 20.52% of the original value at the end of the period (accounting for 20.47% at thebeginning of the period).
19. Goodwill
Items
Openingbalance
Increase for thecurrent period
Decrease for the
current period
Change in foreign
exchange rateand others
ClosingbalanceGE APPLIANCES20,695,534,392.80350,855,867.3021,046,390,260.10Candy1,929,953,985.15113,437,999.142,043,391,984.29Others1,018,107,265.92172,866,669.218,970,515.281,199,944,450.41Total23,643,595,643.87172,866,669.21473,264,381.7224,289,726,694.80In 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 0.23%
–
12.95%) 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 10.64%–
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
Items
Openingbalance
Increase for the
current period
Amortization forthe currentperiodOther decrease
Change in foreign
exchange rateand others
ClosingbalanceRenovation457,806,490.36315,677,767.30416,685,868.2011,652.37356,810,041.83Improvement on leasedproperty146,458,109.2215,067,837.0531,195,631.10779,965.96131,110,281.13Others155,618,574.62162,493,891.8661,017,923.88–3,269,347.92253,825,194.68Total759,883,174.20493,239,496.21508,899,423.18–2,477,729.59741,745,517.64
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets before elimination
ItemsClosing balanceOpening balanceProvision for assets impairment472,765,698.56486,504,423.79Liabilities2,647,034,061.962,392,703,222.82Internal unrealized earnings eliminated due to
combination707,589,929.59848,773,608.23Uncovered losses230,766,537.22217,344,490.61R&D expenses1,171,434,607.38615,110,766.72Others293,113,791.04347,135,709.18Total5,522,704,625.754,907,572,221.35
(2) Deferred income tax liabilities before elimination
ItemsClosing balanceOpening balanceAsset amortisation4,067,663,051.783,875,255,150.79Remeasurement 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 instruments306,253,762.39293,662,487.81Others492,608,929.16494,850,409.06Total5,745,149,547.795,542,391,852.12
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of the period was RMB3,716,758,993.59 (amount at the beginning of the periodRMB3,183,531,292.93).
Section X Financial Report
22. Other non-current assets
ItemsClosing balanceOpening balancePrepayments for equipment and land1,747,355,221.821,671,590,606.02Others286,631,723.46209,146,285.61Total2,033,986,945.281,880,736,891.63
23. Short-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— secured by pledge34,094,566.2282,727,127.97Borrowings— secured by guarantee 101,506,733.93Borrowings— secured by credit10,284,257,275.669,487,989,660.46Total10,318,351,841.889,672,223,522.36
24. Derivative financial liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts166,573,028.2292,580,419.48Forward commodity contracts2,051,976.7512,013,621.18Total168,625,004.97104,594,040.66
Section X Financial Report
25. Bills payable
√ Applicable □ Not Applicable
Unit and Currency: RMBTypesClosing balanceOpening balanceCommercial acceptance notes5,234,670,724.722,212,721,304.36Bank acceptance notes16,981,055,996.9022,885,836,425.70Total22,215,726,721.6225,098,557,730.06
26. Accounts payables
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceAccounts payables47,061,789,173.6241,885,313,890.79Total47,061,789,173.6241,885,313,890.79The 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 liabilities7,731,916,491.549,353,173,914.03Total7,731,916,491.549,353,173,914.03The 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: RMBItems
Openingbalance
Increase for thecurrent period
Decrease for thecurrent period
ClosingbalanceI. Short-term remuneration3,815,730,531.1429,177,490,664.5428,078,532,451.904,914,688,743.78II. Post-employmentbenefits defined contribution plan65,446,167.351,459,000,677.671,499,877,690.4624,569,154.56III. Termination benefits35,166,874.40154,856,542.69184,771,315.825,252,101.27IV. Other benefits due within one year134,121,181.4826,808,850.2327,922,202.82133,007,828.89Total4,050,464,754.3730,818,156,735.1329,791,103,661.005,077,517,828.50
(2) Short-term remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Openingbalance
Increase for the
current period
Decrease for thecurrent period
ClosingbalanceI. Salaries, bonus,
allowances and benefit2,659,565,504.9121,751,333,710.7820,891,492,659.983,519,406,555.71II. Employee welfare333,049,384.201,095,608,519.731,079,703,411.93348,954,492.00III. Social benefit224,360,701.361,893,493,834.741,887,573,713.85230,280,822.25IV. Housing fund5,036,607.14629,659,364.31626,382,976.898,312,994.56V. Labor union fee and
education fund9,025,442.26138,962,198.70142,481,368.125,506,272.84VI. Short-term compensated leave260,622,518.13488,987,097.53482,691,485.59266,918,130.07VII. Others324,070,373.143,179,445,938.752,968,206,835.54535,309,476.35Total3,815,730,531.1429,177,490,664.5428,078,532,451.904,914,688,743.78
Section X Financial Report
(3) Defined contribution plan
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Openingbalance
Increase for thecurrent period
Decrease for the
current period
Closingbalance
1. Basic pension
insurance64,162,379.081,355,288,133.101,396,245,970.9723,204,541.21
2. Unemployment
insurance346,829.9438,818,540.0338,920,398.48244,971.49
3. Enterprise annuity
payment936,958.3364,894,004.5464,711,321.011,119,641.86Total65,446,167.351,459,000,677.671,499,877,690.4624,569,154.56
(4) Termination benefits
√ Applicable □ Not Applicable
ItemsClosing balanceOpening balanceTermination compensation5,252,101.2735,166,874.40Total5,252,101.2735,166,874.40
29. Taxes payable
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceValue-added tax915,234,725.86860,587,585.73Corporate income tax1,555,728,849.241,704,621,792.80Individual income tax185,154,739.72100,208,772.52City maintenance and construction tax26,230,124.2028,891,872.00Education surcharge9,117,000.1414,945,658.71The electrical and electronic products wastetreatment fund89,138,721.0097,068,373.00Other taxes60,611,364.5770,172,036.08Total2,841,215,524.732,876,496,090.84
Section X Financial Report
30. Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceDividends payable1,880,719.691,246,573.35Other payables19,179,688,465.1417,583,952,055.78Total19,181,569,184.8317,585,198,629.13
(1) Dividends payable
Name of unitClosing balanceOpening balanceOther public shareholders1,880,719.691,246,573.35Total1,880,719.691,246,573.35
(2) Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceOther payables19,179,688,465.1417,583,952,055.78Total19,179,688,465.1417,583,952,055.78The 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 one year
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceLong-term borrowings due within one year146,867,809.532,854,446,929.32Long term payables due within one year14,105,028.65Lease liabilities due within one year1,039,704,621.43903,249,632.59Estimated liabilities due within one year2,531,873,089.622,537,054,105.17Total3,732,550,549.236,294,750,667.08
32. Other current liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balancePayable refund639,149,848.05624,887,787.38Tax amount to be transferred to output tax990,618,406.971,198,555,732.48Others21,470,896.5026,982,922.63Total1,651,239,151.521,850,426,442.49
33. Long-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— secured by guarantee23,550,000.00Borrowings— unsecured by credit17,936,302,925.7713,567,316,873.43Total17,936,302,925.7713,590,866,873.43The interest rates of the Company’s long-term borrowings: 2.00%–
7.00%.
Section X Financial Report
34. Lease liabilities
ItemsClosing balanceOpening balanceLease liabilities4,326,506,047.603,727,727,303.20Less: lease liabilities due within one year1,039,704,621.43903,249,632.59Total3,286,801,426.172,824,477,670.61
35. Long-term payables
ItemsClosing balanceOpening balanceInvestment from CDB development fund36,500,000.0036,500,000.00Others34,718,451.437,740,087.94Less: long-term payables due within one year14,105,028.65Total57,113,422.7844,240,087.94Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of
1.2% by means of dividends or buyback premium for the above investments. As 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) Statement of long-term employee benefits payable
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceI. Post-employment benefits: net liability of
defined benefit plan364,213,564.08417,072,669.76II. Termination benefits575,644,959.29386,522,704.17III. Provision for work-related injury
compensation145,596,315.81206,951,828.41Total1,085,454,839.181,010,547,202.34
Section X Financial Report
(2) Defined benefits plan
Some subsidiaries of the Company have set several defined benefit plans for the qualifiedstaff. Under these plans, the employees are entitled to the retirement benefits agreed insuch defined benefit plans.These plans are exposed to interest rate risks, changes in life expectancy of the beneficiaryand other risks.The recent actuarial evaluation of the assets and the present value of defined benefitobligations under such plans are determined by using the projected unit credit method.
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company
Actuarial assumptions used to defined benefit plansItemsRateDiscount rate1.00%Expected rate of return2.00%Present value of defined benefit obligationsItemsAmountI. Opening balance253,301,981.31II. Defined benefit cost recognized in current profit or loss8,432,769.33
1. Current service cost7,213,186.90
2. Past service cost
3. Settlement gains (loss indicated in ‘
–’)
4. Interest cost1,219,582.43III. Defined benefit cost recognized in other comprehensiveincome–14,452,614.65
1. Actuarial loss (gain indicated in ‘
–’)–14,452,614.65IV. Other changes–29,240,068.09
1. The consideration paid at the time of settlement
2. Benefit paid
–18,964,390.93
3. Exchange differences
–10,275,677.16V. Closing balance218,042,067.90
Section X Financial Report
Fair value of plan assetsItemsAmountI. Opening balance293,745,142.73II. Defined benefit cost recognized in current profit and loss5,517,808.69
1. Interest income5,517,808.69III. Defined benefit cost recognized in other comprehensiveincome14,587,336.63
1. Return on plan assets (except those included in net
interests)14,587,336.63
2. Changes in impact of asset cap (except those included in
net interests)IV. Other changes–20,252,385.83
1. Employer contributions2,146,545.90
2. Benefit paid
–10,316,265.46
3. Exchange differences
–12,082,666.27V. Closing balance293,597,902.22Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.Net liability (net asset) of defined benefit plan
ItemsAmountI. Opening balance–40,443,161.42II. Defined benefit cost recognized in current profit or loss2,914,960.64III. Defined benefit cost recognized in other comprehensive
income–29,039,951.28IV. Other changes–8,987,682.26V. Closing balance–75,555,834.32The 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 defined benefit plansItemsRateDiscount rate5.18%Present value of defined benefit obligationsItemsAmountI. Opening balance123,777,420.24II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss6,972,517.02
1. Current service cost2,334,947.59
2. Past service cost
3. Settlement gains (loss indicated in ‘
–’)
4. Interest cost4,637,569.43IV. Defined benefit cost recognized in other comprehensiveincomes1,838,733.78
1. Actuarial loss (gain indicated in ‘
–’)1,838,733.78V. Other changes–52,677,626.67
1. The consideration paid at the time of settlement
2. Benefit paid
–9,546,425.71
3. Plan amendments
–47,023,076.48
4. Others2,013,015.17
5. Exchange differences1,878,860.35VI. Closing balance79,911,044.37
Section X Financial Report
Net liability (net asset) of defined benefit planItemsAmountI. Opening balance123,777,420.24II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss6,972,517.02IV. Defined benefit cost recognized in other comprehensiveincomes1,838,733.78V. Other changes–52,677,626.67VI. Closing balance79,911,044.37The 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 defined benefit plans
ItemsRateDiscount rate5.19%
Section X Financial Report
Present value of defined benefit obligationsItemsAmountI. Opening balance195,104,194.13II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,080,514.66
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘
–’)
4. Interest cost9,080,514.66IV. Defined benefit cost recognized in other comprehensiveincomes–22,406,869.18
1. Actuarial loss (gain indicated in ‘
–’)–22,406,869.18V. Other changes–15,875,897.44
1. The consideration paid at the time of settlement
2. Benefit paid
–19,028,672.18
3. Exchange differences3,152,774.74VI. Closing balance165,901,942.17Net liability (net asset) of defined benefit plan
ItemsAmountI. Opening balance195,104,194.13II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,080,514.66IV. Defined benefit cost recognized in other comprehensive
incomes–22,406,869.18V. Other changes–15,875,897.44VI. Closing balance165,901,942.17
Section X Financial Report
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of 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 defined benefit plansItemsRateDiscount rate5.21%Present value of defined benefit obligations
ItemsAmountI. Opening balance126,866,875.02II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss8,650,933.08
1. Current service cost2,427,611.01
2. Past service cost
3. Settlement gains (loss indicated in ‘
–’)
4. Interest cost6,223,322.07IV. Defined benefit cost recognized in other comprehensive
incomes1,406,600.54
1. Actuarial loss (gain indicated in ‘
–’)1,406,600.54V. Other changes–28,487,202.15
1. The consideration paid at the time of settlement
2. Benefit paid
–30,539,976.85
3. Exchange differences2,052,774.70VI. Closing balance108,437,206.49
Section X Financial Report
Fair value of plan assetsItemsAmountI. Opening balance92,039,772.87II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensiveincomes4,523,787.83
1. Return on plan assets (except those included in net
interests)4,523,787.83
2. Changes in impact of asset cap (except those included in
net interests)IV. Other changes–18,785,464.35
1. Employer contributions10,269,526.04
2. Benefits paid out
–30,539,976.85
3. Exchange differences1,484,986.46V. Closing balance77,778,096.35Net liability (net asset) of defined benefit planItemsAmountI. Opening balance34,827,102.15II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss8,650,933.08IV. Defined benefit cost recognized in other comprehensive
income–3,117,187.29V. Other changes–9,701,737.80VI. Closing balance30,659,110.14
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 balance206,951,828.41II. Business combination not under common controlIII. Compensation recognized in current profit and loss81,910,931.51IV. Actual compensation paid–146,465,227.75V. Other changes3,198,783.64VI. Closing balance145,596,315.81Classification of the balance of defined benefit plan
ItemsClosing balanceOpening balanceShort-term Benefit33,170,713.4736,444,790.69Long-term Benefit364,213,564.08417,072,669.76Total397,384,277.55453,517,460.45
37. Estimated liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsOpening balanceClosing balanceActive litigation18,469,174.1832,259,609.59Others262,077,808.56315,280,800.19Projection of warranty expenses and
installation fees1,330,482,237.431,587,473,632.46Total1,611,029,220.171,935,014,042.24Significant 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: RMBItems
Openingbalance
Increase for the
current period
Decrease for thecurrent period
ClosingbalanceGovernment grants948,935,134.05244,851,624.29143,467,151.901,050,319,606.44Total948,935,134.05244,851,624.29143,467,151.901,050,319,606.44
39. Share capital
Share category
Openingbalance
Increase for thecurrent period
Decrease for thecurrent period
ClosingbalanceI. Restricted shares
1. State-owned shares
2. Shares held by domestic non-
state-owned legal entities
3. Shares held by domestic
individuals
4. Shares held by offshore
non-state-owned legal entitiesII. Non-restricted shares9,446,598,4938,483,6009,438,114,893
1. Ordinary shares in RMB6,308,552,6546,308,552,654
2. Domestic listed foreign Shares
3. Offshore listed foreign Shares3,138,045,8398,483,6003,129,562,239
4. Others
III. Total shares9,446,598,4938,483,6009,438,114,893
Section X Financial Report
40. Capital reserve
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Openingbalance
Increase for thecurrent period
Decrease for thecurrent period
ClosingbalanceCapital premium (Share premium)22,280,237,959.89754,716.99351,841,150.6021,929,151,526.28Others capital reserve1,601,799,364.87610,606,646.81379,202,853.911,833,203,157.77Total23,882,037,324.76611,361,363.80731,044,004.5123,762,354,684.05The main reasons for the change in capital premium: the cancellation of treasury stock for thecurrent period resulted in the decrease in capital premium of RMB173,997,008.66; a businesscombination under the same control occurred for the current period resulted in the decrease incapital premium of RMB94,561,200.00, and share premium was offset by share-based paymentexercise of RMB52,165,259.20.The main reasons for the change in other capital reserves: the amortized share-based paymentfor the current period included in other capital reserves of RMB610,606,646.81 and other capitalreserves were offset by share-based payment exercise of RMB379,202,853.91.
41. Treasury stock
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Openingbalance
Increase for thecurrent period
Decrease for thecurrent period
ClosingbalanceTreasury stock3,857,807,196.381,801,808,513.60625,550,602.565,034,065,107.42Total3,857,807,196.381,801,808,513.60625,550,602.565,034,065,107.42
Section X Financial Report
42. Other comprehensive income
Amounts for the current periodItems
Openingbalance
Amount beforecurrent income
taxDeduction ofimpact onincome tax
Attributable tothe parentcompany after
taxAttributable tominorityshareholdersafter taxOthers
Closingbalancea–241,549,088.46–109,223,886.825,204,174.14–104,019,712.68–345,568,801.14b3,926,810.45–120,129,623.5920,839,490.61–98,556,869.01–733,263.97–94,630,058.56c1,251,780,016.89–335,901,648.31–321,845,843.59–14,055,804.72929,934,173.30d869,623,580.17550,686,416.89–87,343,624.50463,145,900.61196,891.781,332,769,480.78e106,902,179.4057,335,709.85–17,018,618.5840,317,053.2338.04147,219,232.63Total1,990,683,498.4542,766,968.02–78,318,578.33–20,959,471.44–14,592,138.871,969,724,027.01Notes:
(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.
43. Surplus reserve
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Openingbalance
Increase for thecurrent period
Decrease for thecurrent period
ClosingbalanceStatutory surplus reserve3,966,533,821.65828,147,920.564,794,681,742.21Discretionary surplus reserve26,042,290.4826,042,290.48Reserve fund11,322,880.6411,322,880.64Enterprise expansion fund10,291,630.4710,291,630.47Total4,014,190,623.24828,147,920.564,842,338,543.80
Section X Financial Report
44. Undistributed profits
√ Applicable □ Not Applicable
ItemsAmountsUndistributed profits at the end of previous year57,976,944,921.36Change in accounting policyCombination under common control6,789,938.01Undistributed profits at the beginning of the year57,983,734,859.37Add: net profit attributable to owners of the parent company16,596,615,045.87Other transfer in37,920,637.14Adjustment due to implementation of enterprise accounting standardProfit available for appropriation for the year74,618,270,542.38Less: appropriation of statutory surplus reserve828,147,920.56Dividend payable for ordinary shares5,254,436,127.22Undistributed profits at the end of period68,535,686,494.60
45. Operating income and operating cost
(1) Operating income
Items
Amount for thecurrent period
Amount for theprevious periodPrimary business260,292,715,110.96242,496,674,518.97Other Business1,135,067,939.141,082,250,439.50Total261,427,783,050.10243,578,924,958.47
Section X Financial Report
(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 conditioner45,659,954,167.6732,250,291,838.5540,059,458,698.7528,599,397,831.67Refrigerator81,640,696,197.1855,335,233,549.6777,637,761,907.8552,883,745,098.80Kitchen appliance41,588,961,234.8328,293,408,033.9238,716,316,796.6426,189,345,356.34Water appliance15,010,842,426.778,089,006,857.4113,786,852,209.997,443,373,512.28Washing machine61,272,315,753.2840,872,967,073.7357,721,991,613.3338,583,555,563.97Equipment product
and integratedchannel services15,119,945,331.2313,816,209,393.1414,574,293,292.4113,130,186,928.01Total260,292,715,110.96178,657,116,746.42242,496,674,518.97166,829,604,291.07
46. Taxes and surcharge
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodCity maintenance and construction tax370,194,426.87290,370,564.78Education surcharge193,928,992.50191,064,238.17Property tax83,854,370.1661,839,604.81Land use tax24,248,077.4621,637,047.83Stamp duty289,581,777.39206,756,202.56Others54,390,611.4242,213,230.03Total1,016,198,255.80813,880,888.18
Section X Financial Report
47. Selling expenses
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodSelling expenses40,978,039,605.3738,600,298,275.47Total40,978,039,605.3738,600,298,275.47The 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: RMBItems
Amount for thecurrent period
Amount for theprevious periodAdministrative expenses11,489,640,885.8810,846,346,796.51Total11,489,640,885.8810,846,346,796.51The Company’s administrative expenses are mainly salary expenses, office fees, depreciation andamortization of assets fees, etc.
49. R&D expenses
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current period
Amount for theprevious periodR&D expenses10,221,013,589.289,507,384,787.81Total10,221,013,589.289,507,384,787.81The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspectionand testing fees.
Section X Financial Report
50. Financial expenses
Items
Amount for thecurrent period
Amount for theprevious periodInterest expense2,109,996,018.29988,036,369.52Less: interest income1,486,196,698.91855,213,183.91Less: cash discount123,733,614.83142,905,868.01Exchange gains and losses (gains are representedby ‘–’)–135,177,135.61–371,894,224.02Others149,267,211.03140,224,686.95Total514,155,779.97–241,752,219.47Interest expenditure in lease liabilities for the current period was RMB138,474,152.20 (amount forthe corresponding period: RMB96,997,943.85).
51. Other income
√ Applicable □ Not Applicable
Unit and Currency: RMBClassification by nature
Amount for thecurrent period
Amount for theprevious periodGovernment grants related to revenue1,447,141,973.36966,729,425.62Government grants related to assets111,722,681.00103,374,416.98Total1,558,864,654.361,070,103,842.60
Section X Financial Report
52. Investment income (losses are represented by ‘
–’)Items
Amount for the
current period
Amount for theprevious periodLong-term equity investments income calculated
by the equity method1,786,573,842.341,582,178,829.86Investment income from disposal of long-termequity investments13,984,506.2327,123,485.74Investment income from other equity instrumentinvestments during holding period58,671,224.2531,607,357.22Income from wealth management products49,612,602.1192,625,406.55Investment income from disposal of financialassets measured at fair value with changesincluded in current profit and loss1,075,642.3299,121,873.23Total1,909,917,817.251,832,656,952.60
53. Gains on changes in fair value (losses are represented by ‘
–’)
√ Applicable □ Not Applicable
Unit and Currency: RMBSource of gains on change in fair value
Amount for thecurrent period
Amount for theprevious periodChange in fair value of forward foreign exchangecontracts–134,151,416.10Change in fair value of equity investments–21,952,224.6559,522,888.36Change in fair value of fund investments38,833,850.27–37,211,579.82Others2,872,037.43–10,602,826.09Total19,753,663.05–122,442,933.65
54. Credit impairment loss (losses are represented by ‘
–’)
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodBad debts losses on bills receivable–1,393,949.471,901,562.15Bad debts losses on accounts receivable–287,143,662.73–420,692,343.10Bad debts losses on other receivable45,895,482.89–12,586,699.87Total–242,642,129.31–431,377,480.82
Section X Financial Report
55. Impairment loss on assets (losses are represented by ‘
–’)Items
Amount for the
current period
Amount for theprevious periodImpairment losses on inventory–1,091,405,923.13–1,144,921,827.01Impairment losses on other current assets–325,055,055.98–280,818,239.06Impairment losses on fixed assets–2,840,089.52–3,191,271.04Impairment losses on construction in progress–22,513,947.38–107,523.90Impairment losses on intangible assets–66,381,834.15Impairment losses on long-term equity investment–845,634.54Impairment losses on contract assets3,043,824.14–69,975,265.71Total–1,505,153,026.02–1,499,859,761.26
56. Gains on disposal of assets (losses are represented by ‘
–’)
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodGains on disposal of non-current assets23,609,524.65257,217,030.01Losses on disposal of non-current assets–38,952,222.32–50,474,214.22Total–15,342,697.67206,742,815.79
57. Non-operating income
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current period
Amount for theprevious periodTotal gains on disposal of non-current assets2,269,765.942,647,656.16Quality claims and fines34,631,544.0646,905,155.24Others90,985,651.4487,042,486.70Total127,886,961.44136,595,298.10
Section X Financial Report
58. Non-operating expenses
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current period
Amount for theprevious periodTotal losses on disposal of non-current assets98,784,851.1627,077,182.74Others197,017,715.27163,629,787.05Total295,802,566.43190,706,969.79
59. Income tax expenses
(1) Statement of income tax expenses
Items
Amount for thecurrent period
Amount for theprevious periodCurrent income tax expense3,552,063,937.012,752,011,782.12Deferred income tax expense–571,875,681.60305,811,089.59Total2,980,188,255.413,057,822,871.71
(2) Reconciliation between accounting profit and income tax expenses for the current
periodItemsAmountsTotal accounting profit19,712,258,030.16Income tax expense calculated pursuant to statutory tax rate4,928,064,507.54Impact from different tax rates applicable to subsidiaries–1,086,884,505.65Impact from adjustment to income tax in prior periods–170,674,750.88Impact from non-taxable income–456,115,238.02Impact from non-deductible cost, expense and loss305,664,892.51Impact from deductible provisional differences or deductible lossesof unrecognized deferred tax–215,234,847.67Others–324,631,802.42Total income tax expense2,980,188,255.41
60. Other comprehensive income
√ Applicable □ Not Applicable
Please refer to notes V.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 securities207,823,520.16Government grants1,049,491,519.04Non-operating income excluding government grants42,639,694.45Interest income1,086,296,196.12Others116,009,935.69Total2,502,260,865.46Other cash paid to operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current periodCash paid on selling expenses18,524,157,608.35Cash paid on administrative and R&D expenses7,052,345,804.22Cash paid on financial expenses126,570,147.13Non-operating expenses6,217,009.16Others201,220,123.60Total25,910,510,692.46
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 products8,068,457,513.41Total8,068,457,513.41Other cash paid to significant investing activities
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current periodPurchase of wealth management products16,050,909,175.06Total16,050,909,175.06
Section X Financial Report
(3) Cash related to financing activities
Other cash paid to financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent periodRepurchase of shares1,801,808,513.60Cash paid to lease1,137,968,353.78Cash paid for acquisition of subsidiaries through businesscombination under common control94,561,200.00Purchase of minority interests in subsidiaries26,677,200.00Others35,312,400.26Total3,096,327,667.64
Changes of various liabilities arising from financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Increase for thecurrent period
Decrease for thecurrent periodOpeningbalance
Cashchange
Non-cash
change
Cashchange
Non-cash
change
ClosingbalanceShort-termborrowings9,672,223,522.3614,894,631,688.36282,566,010.9714,531,069,379.8110,318,351,841.88Long-term
borrowings(includinglong-termborrowings duewithin one year)16,445,313,802.755,063,235,695.18467,532,644.523,892,911,407.1518,083,170,735.30Lease liabilities
(including leaseliabilities duewithin one year)3,727,727,303.201,985,283,683.511,137,968,353.78248,536,585.334,326,506,047.60Total29,845,264,628.3119,957,867,383.542,735,382,339.0019,561,949,140.74248,536,585.3332,728,028,624.78
Section X Financial Report
62. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
√ Applicable □ Not Applicable
Unit and Currency: RMBSupplementary information
Amount for the
current period
Amount for theprevious period
1. Net profit adjusted to cash flow of operating activities:
Net profit16,732,069,774.7514,733,312,889.78Add: impairment provision for assets1,505,153,026.021,499,859,761.26Loss from credit impairment242,642,129.31431,377,480.82Depreciation of fixed assets, depletion of oiland gas assets, depreciation of biologicalassets for production3,979,360,664.973,668,992,233.20Amortization of right-of-use assets1,063,642,778.40896,109,386.87Amortization of intangible assets1,247,725,926.681,074,941,740.28Amortization of long-term prepaid expenses508,899,423.18411,338,249.38Loss from disposal of fixed assets, intangibleassets and other long-term assets (gainrepresented by “—”)111,857,782.89–182,313,289.21Loss from retirement of fixed assets (gainrepresented by “—”)Loss from change of fair value (gainrepresented by “—”)–19,753,663.05122,442,933.65Financial expenses (gain represented by “—”)1,810,094,023.35616,142,145.50Loss from investments (gain represented by“—”)–1,909,917,817.25–1,832,656,952.60Decrease in deferred income tax assets
(increase represented by “—”)–679,303,548.89–452,670,928.44Increase of deferred income tax liabilities
(decrease represented by “—”)107,427,867.30758,482,018.03Decrease in inventories (increase represented
by “—”)982,047,266.87–2,783,200,168.10Decrease of operational account receivables
(increase represented by “—”)–4,117,149,099.811,795,073,188.15Increase of operational account payables
(decrease represented by “—”)2,985,588,574.38–1,509,097,715.87Others711,991,119.201,008,424,173.16Net cash flow generated from operational
activities25,262,376,228.3020,256,557,145.86
2. Significant investment and financing activities not involving cash inflows and
outflows:
Capital transferred from debts361,395,824.17Convertible corporate bonds due withinone yearFixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period53,977,310,651.0353,392,209,857.41Less: cash balance at the beginning of theperiod53,392,209,857.4145,201,743,280.53Add: cash equivalents balance at the end ofthe periodLess: cash equivalents balance at the
beginning of the periodNet increase of cash and cash equivalents585,100,793.628,190,466,576.88
Section X Financial Report
(2) Net cash paid on acquisition of subsidiaries for the current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
AmountCash or cash equivalents paid for business combination occurredfor the current period162,489,967.94Including: Europaltners Italia Srl17,537,247.94Tongfang Energy Technology Development Co., Ltd. (同方能源科技發展有限公司)144,952,720.00Less: Cash or cash equivalents held by subsidiaries on the
acquisition date6,177,856.07Including: Europaltners Italia Srl743,814.14Tongfang Energy Technology Development Co., Ltd. (同方能源科技發展有限公司)5,434,041.93Net cash paid on acquisition of subsidiaries156,312,111.87
(3) Composition of cash and cash equivalents
√ Applicable □ Not Applicable
Unit and Currency: RMBItemsClosing balanceOpening balanceI. Cash53,977,310,651.0353,392,209,857.41Including: Cash on hand541,712.705,312,391.11Bank deposits always available for payment53,524,177,266.5052,978,813,851.96Other monetary funds always available for
payment452,591,671.83408,083,614.34II. Cash equivalentsIncluding: bond investments due within three
monthsIII. Closing balance of cash and cash
equivalents53,977,310,651.0353,392,209,857.41Including: restricted cash and cash
equivalents used by the parent company
or subsidiaries of the Group
Section X Financial Report
(4) Monetary funds that are not cash and cash equivalents
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for thecurrent period
Amount for theprevious periodReasonsDeposit448,374,520.06664,825,001.43Poor marketability, not
readily realizable, oravailable for paymentRestricted specialaccount deposit
54,996,888.2994,737,979.02Others5,770,781.7610,439,317.45Total509,142,190.11770,002,297.90/
Section X Financial Report
63. Monetary items in foreign currency
ItemsClosing balanceOpening balance
Balance inforeign currency
ExchangerateBalance in RMB
Balance inforeign currency
ExchangerateBalance in RMBMonetary fundsUSD1,706,547,575.507.082712,086,964,513.021,290,843,958.566.96468,990,211,833.81EUR175,320,608.197.85921,377,879,723.8647,915,506.827.4229355,672,015.56JPY4,478,977,012.530.050213224,902,872.732,642,036,348.790.052358138,331,739.15HKD353,808,079.170.9062320,620,881.34647,479,463.240.8933578,393,404.51Others2,377,241,597.062,630,279,781.27Subtotal16,387,609,588.0112,692,888,774.30Accounts receivablesUSD1,139,193,238.377.08278,068,563,949.37770,735,456.706.96495,368,095,382.34EUR480,196,918.947.85923,773,963,625.34480,679,854.027.42293,568,038,488.40JPY4,914,686,701.050.050213246,781,163.324,448,523,930.250.052358232,915,815.94Others4,873,677,549.963,648,407,445.01Subtotal16,962,986,287.9912,817,457,131.69Short-term borrowingsUSD486,876,813.467.08273,448,402,406.69337,460,553.026.96462,350,277,767.57EUR250,039,963.327.85921,965,114,079.70551,092,544.777.42294,090,704,850.58JPY2,017,059,526.420.050213101,282,610.000.052358HKD2,600,000,000.000.90622,356,120,000.002,600,000,000.000.89332,322,580,000.00Others1,323,813,159.10518,039,984.83Subtotal9,194,732,255.499,281,602,602.98Accounts payablesUSD1,909,489,893.667.082713,524,344,069.801,941,535,383.626.964613,522,017,332.77EUR621,708,354.097.85924,886,130,296.44626,564,863.637.42294,650,928,326.21JPY6,641,786,186.840.050213333,504,009.807,649,104,013.520.052358400,491,787.94NZD146,250,125.134.4991657,993,937.97150,709,317.714.4162665,562,488.87Others3,451,938,860.633,276,292,812.40Subtotal22,853,911,174.6422,515,292,748.19Non-current liabilities due within one yearUSD138,292,003.547.0827979,480,773.48501,395,115.526.96463,492,016,421.53EUR97,148,817.207.8592763,511,984.1482,207,419.427.4229610,217,453.64JPY1,027,109,699.080.05021351,574,259.322,057,044,588.790.052358107,702,740.58RUB685,662,519.930.080355,058,700.35471,424,350.000.094244,408,173.77Others361,870,186.5886,526,344.63Subtotal2,211,495,903.874,340,871,134.15Long-term borrowingsUSD1,160,000,000.007.08278,215,932,000.00742,230,000.006.96465,169,335,058.00EUR597,689,081.077.85924,697,358,025.92698,254,017.687.42295,183,069,747.86RUB250,000,000.000.094223,550,000.00Others1,034,286,451.771,014,924,067.59Subtotal13,947,576,477.6911,390,878,873.45
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
RMB176,724,465.05Lease expenses of short-term leases or leases of low-value assets which are subject tosimplified treatment
√ Applicable □ Not Applicable
RMB262,176,314.90Total cash outflow for leases 1,576,869,133.73 (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
√ Applicable □ Not Applicable
Unit and Currency: RMB
ItemsLease incomes
Including:
incomes relatedto variable leasepayments not
included inlease receiptsOperating leases as lessor6,138,424.490Total6,138,424.490
Section X Financial Report
b. Undiscounted lease receipts for the next five years:
Lease receiptsUndiscounted lease receipts per year
Closing amountOpening amountWithin 1 year4,582,971.433,901,805.872 to 5 years2,933,400.0011,255,903.92Over 5 yearsTotal7,516,371.4315,157,709.79The 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.VIII. RESEARCH AND DEVELOPMENT EXPENDITURE
(1). By the nature of expenses
√ Applicable □ Not Applicable
Unit and Currency: RMBItems
Amount for the
current period
Amount for theprevious periodRemuneration for the employees4,561,708,115.064,280,729,363.52Design and development expenses3,553,157,344.573,401,479,754.38Material input1,801,538,991.201,718,071,325.56Depreciation and amortization235,373,827.86182,885,401.52Organizational operation and others669,467,061.28657,089,397.12Total10,821,245,339.9710,240,255,242.10Including: expensed research and
development expenditure10,219,284,795.749,499,191,097.85Capitalized research and development expenditure601,960,544.23741,064,144.25
Section X Financial Report
(2). Development expenditure on research and development projects eligible for
capitalization
Decrease for the current periodItemsOpening balance
Increase for thecurrent period
Recognized asintangible asset
Included incurrent profitand loss
Change inforeignexchange rateand othersClosing balanceHome ApplianceIntelligentInteraction Project97,519,232.7297,519,232.72OWNERSHIPEXPERIENCEPROGRAM16,439,526.9731,908,445.55432,262.6848,780,235.2091ABD.ERP ITPROGRAM7,539,118.4238,395,897.7642,701,301.82107,131.203,340,845.56AI MultimodalInteraction Project53,602,467.67100,045,772.56153,648,240.23Home AppliancesIntelligent LowCarbon EnergySaving Project131,513,213.52131,513,213.52Others76,899,402.61202,577,982.12140,518,323.751,728,793.54–20,380,345.82116,849,921.62Total154,480,515.67601,960,544.23468,381,079.321,728,793.54–19,840,951.94266,490,235.10
Section X Financial Report
IX. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
√ Applicable □ Not Applicable
(1). Business combination transactions not under common control occurring in the
current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Name of the acquiree
Acquisitiondate of equityinterest
Acquisition costof equity interest
Theproportionof equityinterestacquired(%)Acquisitionmethod ofequityinterest
Combinationdate
Basis fordetermining thecombination
Revenue ofthe acquireefromcombinationdate to theend of theperiod
Net profit ofthe acquireefromcombinationdate to theend of theperiodEuropalters Italia S.r.l.April 2023EUR2,292,460100AcquisitionApril 2023Equity deliveryEUR20,682,401EUR–710,404Tongfang EnergyTechnologyDevelopment Co., Ltd.(
)
September2023144,952,720.0080Acquisition
September
2023Equity delivery59,323,066.933,016,132.97
(2). Combination cost and goodwill
Items
EuropaltersItalia S.r.l.
TongfangEnergyTechnologyDevelopmentCo., Ltd.(
)— CashEUR2,292,460144,952,720.00— Contingent considerationTotal combination costEUR2,292,460144,952,720.00Less: acquired identifiableShare of fair value of net assetsEUR–16,032,934116,374,008.26Amount of goodwillEUR18,325,39428,578,711.74
Section X Financial Report
(3). Identifiable assets and liabilities of the acquiree on the combination date
ItemsEuropalters Italia S.r.l.
Fair value (EUR)Book value (EUR)Monetary funds97,231.0097,231.00Accounts receivables3,319,509.004,470,509.00Inventories387,481.00516,481.00Other current assets3,065,716.002,153,680.00Goodwill 6,727,210.00Long-term assets686,897.00339,897.00Short-term borrowings–3,026,876.00–3,026,876.00Accounts payables–173,081.00–173,081.00Taxes payable–33,253.00–33,253.00Payables for staff remuneration–418,771.00–418,771.00Other payables–10,189,660.00–10,189,660.00Non-current liabilities due within one year–9,303,819.00–2,784,819.00Long-term liabilities–444,308.00–444,308.00Net assets–16,032,934.00–2,765,760.00Less: minority interestsNet assets acquired–16,032,934.00–2,765,760.00
Section X Financial Report
Items
Tongfang Energy TechnologyDevelopment Co., Ltd.()Fair valueBook valueMonetary funds5,434,041.935,434,041.93Accounts receivables118,584,316.42118,584,316.42Inventories8,447,305.238,447,305.23Other current assets4,232,144.784,232,144.78Fixed assets26,628,037.4026,628,037.40Construction in progress32,508,205.1232,508,205.12Right-of-use assets6,610,520.606,610,520.60Intangible assets113,275,924.1579,811,057.21Other long-term asset35,792,288.9535,792,288.95Short-term borrowings–18,000,000.00–18,000,000.00Accounts payables–111,720,139.96–111,720,139.96Payables for staff remuneration–1,491,773.91–1,491,773.91Taxes payable–2,547,376.92–2,547,376.92Non-current liabilities due within one year–14,230,526.76–14,230,526.76Other current liabilities–7,947,388.63–7,947,388.63Lease liabilities–3,712,527.64–3,712,527.64Long-term payables–21,950,650.01–21,950,650.01Other non-current liabilities–21,712,054.34–13,345,837.60Net assets148,200,346.41123,101,696.21Less: minority interests31,826,338.1526,806,608.11Net assets acquired116,374,008.2696,295,088.10
Section X Financial Report
2. Business combination under common control
√ Applicable □ Not Applicable
(1). Business combination under common control occurring in the current period
Name of the acquiree
The proportion ofequity acquired inthe businesscombination
The basis for thetransaction ofconstituting businesscombination undercommon controlCombination date
Recognition basis ofcombination dateShanghai Haier Smart TechnologyCo., Limited (上海海爾智能科技有限公司)
100.00%Controlled by Haier Group
Corporation before andafter combination
2023.1Subject equity-related right and
obligation transferred to theCompanyZhengzhou Haiyong New Corporate
Management Co., Ltd (鄭州海永新企業管理有限公司)
100.00%Controlled by Haier Group
Corporation before andafter combination
2023.12Subject equity-related right and
obligation transferred to theCompany
(Continued)
Name of theacquiree
The incomeof theacquiree fromthe beginningof the currentperiod tocombination
date
Net profit ofthe acquireefrom thebeginning ofthe currentperiod tocombination
date
The incomeof theacquireeduring thecomparisonperiod
Net profit ofthe acquireeduring thecomparisonperiodShanghai HaierSmart TechnologyCo., Limited (上海海爾智能科技有限公司)N/AN/A154,209,888.77551,638.23Zhengzhou HaiyongNew CorporateManagement Co.,Ltd (鄭州海永新企業管理有限公司)3,330,320.71–2,581,701.766,992,260.56579,633.02
Section X Financial Report
(2). Combination cost
Combination costCashEquityShanghai Haier Smart
Technology Co., Limited(上海海爾智能科技有限公司)70,000,000.00N/AZhengzhou Haiyong NewCorporate Management Co.,Ltd (鄭州海永新企業管理有限公司)24,561,200.00N/A
(3). Carrying amount of assets and liabilities of the acquiree at the combination date
Items
Shanghai Haier Smart Technology
Co., Limited()Combination date
End of theprevious periodMonetary funds22,886,544.8822,886,544.88Accounts receivables183,024,484.05183,024,484.05Inventory45,073,195.7145,073,195.71Other current assets530,506.71530,506.71Deferred income tax assets1,817,890.711,817,890.71Less: Accounts payables189,302,217.18189,302,217.18Short-term borrowings28,848,789.9028,848,789.90Taxes payable3,375,065.743,375,065.74Net assets31,806,549.2431,806,549.24
Items
Zhengzhou Haiyong New Corporate
Management Co., Ltd()Combination date
End of theprevious periodMonetary funds1,187,696.86509,927.92Accounts receivables744,929.251,959,675.75Other current assets113,018.42363,883.92Investment properties74,125,324.1577,363,258.95Construction in progress27,917.1227,917.12Less: Accounts payables73,557,964.6774,967,076.96Taxes payable239,234.12274,197.93Net assets2,401,687.014,983,388.77
Section X Financial Report
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Items
Qingdao Haishuzhi
EnterpriseConsulting Service
Co., Ltd.(
)Equity disposal priceProportion of equity disposal100%Method of equity disposalCancellationTime of loss-of-control2023.1Basis for determination the time of loss-of- controlCancellationDifference between consideration and its share of net assets of the
subsidiary as respect to the disposal in the consolidated level–
733.51
4. Changes of consolidation scope due to other reasons
√ Applicable □ Not Applicable
(1) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd., a subsidiary
of the Company, established a wholly-owned subsidiary, Qingdao Haier Yikang TechnologyCo., Ltd. (青島海爾益康科技有限公司).
(2) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd., a subsidiary
of the Company, established a subsidiary, Qingdao Haier Youyang Technology Co., Ltd. (青島海爾有養科技有限公司).
Section X Financial Report
X. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectFlourishing ReachLimited
Mainland of ChinaBermudaGroup company, which
mainly engage ininvestment holding, theproduction and sale ofwashing machines andwater heaters,distribution service
100.00%100.00%Establishment
Haier ElectronicsGroup Co., Ltd.
Mainland of Chinaand Hong Kong
BermudaGroup company, which
mainly engage ininvestment holding, theproduction and sale ofwater equipment,distribution service
100.00%100.00%Establishment
Haier U.S. Appliance
Solutions, Inc.
the United Statesthe United
States
Group company, whichmainly engage in homeappliances productionand distributionbusiness
100.00%100.00%Establishment
Haier SingaporeInvestment HoldingCo., Ltd.
Singapore andother overseasareas
SingaporeGroup company, which
mainly engage in homeappliances productionand distributionbusiness
100.00%100.00%Business
combinationunder commoncontrolHaier New ZealandInvestment HoldingCompany Limited
New ZealandNew ZealandGroup company, which
mainly engage in homeappliances productionand distributionbusiness
100.00%100.00%Business
combinationunder commoncontrolCandy S.p.AEuropeItalyGroup company, which
mainly engage in homeappliances productionand distributionbusiness
100.00%100.00%Business
combination notunder commoncontrolQingdao Haier Air
Conditioner GenCorp., Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Manufacture and sale of
household air-conditioners
92.37% 92.37%Business
combinationunder commoncontrolGuizhou HaierElectronics Co., Ltd.
Huichuan District,Zunyi City,Guizhou Province
HuichuanDistrict, ZunyiCity, GuizhouProvince
Manufacture and sale of
refrigerator
59.00% 59.00%Business
combinationunder commoncontrolHefei Haier Air-
conditioning Co.,Limited
Hefei HaierIndustrial Park
Hefei HaierIndustrial Park
Manufacture and sale of
air-conditioners
100.00% 100.00%Business
combinationunder commoncontrol
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvoting
rightMethodDirectIndirectWuhan Haier
Electronics HoldingCo., Ltd.
Wuhan Haier
Industrial Park
Wuhan HaierIndustrial Park
Manufacture and sale ofair-conditioners
59.86% 59.86%Business
combinationunder commoncontrolQingdao HaierAir- ConditionerElectronics Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture and sale ofair-conditioners
97.43% 97.43%Business
combinationunder commoncontrolQingdao Haier
Information PlasticDevelopment Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Manufacturing of plasticproducts
100.00% 100.00%Business
combinationunder commoncontrolDalian Haier Precision
Products Co., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressingZone
Manufacture and sale of
precise plastics
90.00% 90.00%Business
combinationunder commoncontrolHefei Haier Plastic
Co., Ltd.
Hefei Economic &
TechnologicalDevelopmentArea
Hefei Economic&TechnologicalDevelopmentArea
Manufacture and sale of
plastic parts
95.17%4.83%100.00%Business
combinationunder commoncontrolQingdao Meier Plastic
Powder Co., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture of plastic
powder, plastic sheetand high-performancecoatings
40.00%60.00%100.00%Business
combinationunder commoncontrolChongqing HaierPrecision PlasticCo., Ltd.
Jiangbei District,Chongqing City
Jiangbei District,ChongqingCity
Plastic products, sheet
metal work, electronicsand hardware
90.00%10.00%100.00%Business
combinationunder commoncontrolQingdao HaierRefrigerator Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Manufacture andproduction offluorine-freerefrigerators
97.91% 97.91%Establishment
Qingdao Haier
Refrigerator(International) Co.,Ltd.
PingduDevelopmentZone, Qingdao
PingduDevelopmentZone, Qingdao
Manufacture ofrefrigerators
100.00% 100.00%Establishment
Qingdao Household
ApplianceTechnology andEquipment ResearchInstitute
Qingdao High-techZone
QingdaoHigh-techZone
Research anddevelopment of homeappliances mold andtechnological equipment
100.00% 100.00%Establishment
Qingdao Haier Whole
Set Home ApplianceService Co., Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Research, developmentand sales ofhealth- related smallhome appliance
98.33% 98.33%Establishment
Qingdao Haier SpecialRefrigerator Co.,Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture and sales offluorine-freerefrigerators
100.00% 100.00%Establishment
Qingdao HaierDishwasher Co.,Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Manufacture of dishwashing machine andgas stove
99.59% 99.59%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectQingdao Haier Special
Freezer Co., Ltd.
Qingdao
DevelopmentZone
Qingdao
DevelopmentZone
Research, manufactureand sales of freezer andother refrigerationproducts
96.78% 96.78%Establishment
Dalian Haier
Air- conditioningCo., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressingZone
Air conditioner processingand manufacturing
90.00% 90.00%Establishment
Dalian Haier
Refrigerator Co.,Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressingZone
Refrigerator processingand manufacturing
100.00% 100.00%Establishment
Qingdao Haier
Electronic PlasticCo., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Development, assemblingand sales of plastics,electronics andproducts
100.00% 100.00%Establishment
Wuhan Haier FreezerCo., Ltd
Wuhan Economic &
TechnologicalDevelopmentZone High-techIndustrial Park
Wuhan Economic&TechnologicalDevelopmentZone High-techIndustrial Park
Research, manufactureand sales of freezer andother refrigerationproducts
82.93%4.36%87.29%Establishment
Qingdao HaidaruiProcurement ServiceCo., Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Develop, purchase andsell electrical productsand components
98.00%2.00%100.00%Establishment
Qingdao Haier
Intelligent HomeApplianceTechnology Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Development andapplication of homeappliances,communication,electronics and networkengineering technology
91.46%1.01%92.47%Establishment
Chongqing HaierAir-conditioning Co.,Ltd.
Jiangbei District,
Chongqing City
Jiangbei District,ChongqingCity
Manufacture and sales ofair conditioners
76.92%23.08%100.00%Establishment
Qingdao Haier
Precision ProductsCo., Ltd.
Qianwang angRoad, JiaonanCity
Qianwang angRoad, JiaonanCity
Development andmanufacture of preciseplastic, metal plate,mold and electronicproducts for homeappliances
70.00%70.00%Establishment
Qingdao Haier AirConditioningEquipment Co., Ltd.
Jiaonan City,Qingdao
Jiaonan City,Qingdao
Manufacture of homeappliances andelectronics
100.00%100.00%EstablishmentDalian Free Trade
Zone HaierAir-conditioningTrading Co., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressingZone
Domestic trade 100.00%100.00%EstablishmentDalian Free TradeZone HaierRefrigerator TradingCo., Ltd.
Dalian ExportExpressing Zone
Dalian ExportExpressingZone
Domestic trade 100.00%100.00%EstablishmentChongqing HaierElectronics SalesCo., Ltd.
Jiangbei District,Chongqing City
Jiangbei District,ChongqingCity
Sales of home appliances95.00% 5.00% 100.00%EstablishmentChongqing HaierRefrigerationAppliance Co., Ltd.
Jiangbei District,Chongqing City
Jiangbei District,ChongqingCity
Processing andmanufacturing ofrefrigerator
84.95%15.05%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvoting
rightMethodDirectIndirectHetei Haier
Refrigerator Co.,Ltd.
Hefei HaierIndustrial Park
Hefei HaierIndustrial Park
Processing andmanufacturing ofrefrigerator
100.00% 100.00%Establishment
Qingdao Haier
Intelligent BuildingTechnology Co.,Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Air-conditioning engineer 100.00%100.00%EstablishmentChongqing Lianmai
Electric ApplianceSales Co., Ltd.(重慶聯邁電器銷售有限公司)
Jiangbei District,Chongqing City
Jiangbei District,ChongqingCity
Sales of home appliances
and electronics
51.00%51.00%EstablishmentQingdao Haier(Jiaozhou)Air-conditioning Co.,Limited
Jiaozhou City,Qingdao
Jiaozhou City,Qingdao
Manufacture and sale of
air-conditioners
100.00%100.00%EstablishmentQingdao Haier
Component Co.,Ltd.
Jiaozhou City,Qingdao
Jiaozhou City,Qingdao
Manufacture and sales of
plastic and precisesheet metal products
100.00%100.00%EstablishmentHaier Shareholdings
(Hong Kong) Limited
Hong KongHong KongInvestment100.00% 100.00%EstablishmentHarvest International
Company
Cayman IslandsCayman IslandsInvestment 100.00%100.00%EstablishmentShenyang HaierRefrigerator Co.,Ltd.
Shenbei New Area,Shenyang City
Shenbei NewArea,Shenyang CityS
Manufacture and sales of
refrigerator
100.00% 100.00%Establishment
Foshan Haier Freezer
Co., Ltd.
Sanshui District,Foshan City
Sanshui District,Foshan City
Manufacture and sales of
refrigerator
100.00% 100.00%Establishment
Zhengzhou Haier
Air-conditioning Co.,Ltd.
ZhengzhouEconomic andTechnologicalDevelopmentZone
ZhengzhouEconomic andTechnologicalDevelopmentZone
Manufacture and sales of
freezer
100.00% 100.00%Establishment
Qingdao Haidayuan
Procurement ServiceCo., Ltd.
QingdaoDevelopmentZone
QingdaoDevelopmentZone
Develop, purchase and
sell electrical productsand components
100.00% 100.00%Establishment
Qingdao HaierIntelligentTechnologyDevelopment Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Development andresearch of homeappliance products
100.00% 100.00%Establishment
Qingdao Hairi High
Technology Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Design, manufacture and
sales of product modeland mould
100.00%100.00%Business
combinationunder commoncontrolQingdao Hai Gao
Design andManufacture Co.,Ltd.
Qingdao High-techZone
QingdaoHigh-techZone
Industrial design and
prototype production
75.00%75.00%Business
combinationunder commoncontrolBeijing Haier GuangkeDigital TechnologyCo., Ltd.
BeijingBeijingDevelopment, promotion
and transfer oftechnology
55.00%55.00%Business
combinationunder commoncontrol
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvoting
rightMethodDirectIndirectShanghai Haier
Medical TechnologyCo., Ltd.
ShanghaiShanghaiWholesale and retail of
medical facility
66.87%66.87%EstablishmentQingdao Haier
Technology Co.,Ltd.
QingdaoQingdaoDevelopment and sales of
software and informationproduct
100.00% 100.00%Business
combinationunder commoncontrolQingdao HaierTechnologyInvestment Co., Ltd.
QingdaoQingdaoEntrepreneurship
investment andconsulting
100.00% 100.00%Establishment
Qingdao Casarte
Smart LivingAppliances Co., Ltd.
QingdaoQingdaoDevelopment, production
and sales of appliances
100.00%100.00%EstablishmentQingdaoHaichuangyuanAppliances SalesCo., Ltd.
QingdaoQingdaoSales of home appliances
and digital products
100.00%100.00%EstablishmentHaier Overseas
Electric ApplianceCo., Ltd.
QingdaoQingdaoSales of home appliances,
international freightforwarding
100.00% 100.00%Establishment
Haier Group (Dalian)Electrical AppliancesIndustry Co., Ltd.
DalianDalianSales of home appliances,
international freightforwarding
100.00% 100.00%Business
combinationunder commoncontrolQingdao Haier Central
Air Conditioning Co.,Ltd.
QingdaoQingdaoProduction and sales of
air and refrigerationequipment
100.00%100.00%EstablishmentChongqing Haier
Home ApplianceSale Hefei Co., Ltd.
HefeiHefeiSales of home appliances 100.00%100.00%EstablishmentQingdao Weixi SmartTechnology Co.,Ltd.
QingdaoQingdaoIntelligent sanitary ware 85.00%85.00%EstablishmentHaier U+smartIntelligentTechnology (Beijing)Co., Ltd.
BeijingBeijingSoftware development100.00%100.00%EstablishmentHaier (Shanghai)Electronics Co., Ltd.
ShanghaiShanghaiSales, research and
development of homeappliances
100.00%100.00%Establishment
Shanghai HaierZhongzhi FangChuang KeManagement Co.,Ltd.
ShanghaiShanghaiBusiness management
consulting, chuangkemanagement
100.00% 100.00%Establishment
Qingdao Haier SmartKitchen ApplianceCo., Ltd.
QingdaoQingdaoProduction and sales of
kitchen smart homeappliances
85.82%85.82%EstablishmentGE Appliance(Shanghai) Co., Ltd.
ShanghaiShanghaiSales of home appliances 100.00%100.00%EstablishmentQingdao Haier SpecialRefrigeratingAppliance Co., Ltd.
QingdaoQingdaoProduction and sales of
home appliances
100.00%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectShanghai ZhihanTechnology Co.,Ltd. (上海摯瀚科技有限公司)
BeijingBeijingPromotion of
technologicaldevelopment
100.00%100.00%EstablishmentLaiyang Haier SmartKitchen ApplianceCo., Ltd.
LaiyangLaiyangProduction and sales of
home appliances
100.00%100.00%EstablishmentHefei Haier AirConditioningElectronics Co., Ltd.
HefeiHefeiProduction and sales of
home appliances
100.00%100.00%EstablishmentHaier (Shanghai)
Home ApplianceResearch andDevelopment CenterCo., Ltd.
ShanghaiShanghaiResearch and
development of homeappliances
100.00%100.00%EstablishmentHaier (Shenzhen) R&D
Co., Ltd.
ShenzhenShenzhenDevelopment, research
and technical services ofhousehold andcommercial electrical
100.00%100.00%EstablishmentGuangzhou Haier Air
Conditioner Co.,Ltd.
GuangdongGuangdongManufacturing of
refrigeration and airconditioning equipment
100.00%100.00%EstablishmentQingdao Yunshang
Yuyi IOT TechnologyCo., Ltd.
QingdaoQingdaoIoT technology research
and development
60.00%60.00%EstablishmentQingdao Jijia Cloud
IntelligentTechnology Co.,Ltd.
QingdaoQingdaoR&D and sales of lighting
appliances
80.00%80.00%EstablishmentQingdao Haimeihui
ManagementConsulting Co., Ltd.(青島海美匯管理諮詢有限公司)
QingdaoQingdaoLeasing and business
services
100.00%100.00%EstablishmentWuxi Yunshang
Internet of ClothingTechnology Co.,Ltd. (無錫雲裳衣聯網科技有限公司)
WuxiWuxiInternet of Things
technology R & D
100.00%100.00%EstablishmentQingdao Haidacheng
Procurement ServiceCo., Ltd.
QingdaoQingdaoDevelop, purchase and
sell electrical productsand components
100.00% 100.00%Establishment
Guangdong Haier
IntelligentTechnology Co. Ltd.(廣東海爾智能科技有限公司)
GuangzhouGuangzhouScientific research and
technology servicesector
76.72%76.72%Business
combination notunder commoncontrolBeijing HaixianghuiTechnology Co.,Ltd. (北京海享匯科技有限公司)
BeijingBeijingScientific research and
technology servicesector
100.00%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectHaier Smart Home
Experience CloudEcologicalTechnology Co.,Ltd. (海爾智家體驗雲生態科技有限公司)
QingdaoQingdaoTechnology development
of smart homeproducts, wholefurniture customization,etc.
100.00% 100.00%Establishment
Haier Smart Home
(Qingdao) NetworkCo., Ltd. (海爾智家（青島）網絡有限公司)
QingdaoQingdaoTechnical services,
development,consulting, transfer, etc.
100.00%100.00%EstablishmentHaier Smart Home
(Qingdao) NetworkOperation Co., Ltd.(海爾智家（青島）網絡運營有限公司)
QingdaoQingdaoResidential interior
decoration, professionalconstruction operation,special equipmentinstallation, upgradingand repair, etc.
100.00%100.00%Establishment
Qingdao Internet ofWine TechnologyCo., Ltd. (青島酒聯網物聯科技有限公司)
QingdaoQingdaoUrban distribution and
transportation services,import and export ofgoods, technologyimport and export andfood business, etc.
100.00%100.00%Establishment
Qingdao Linghai Air
ConditioningEquipment Co., Ltd.(青島菱海空調設備有限公司)
QingdaoQingdaoManufacture and
production of airconditioner andrefrigeration equipment
100.00%100.00%EstablishmentShenzhen Yunshang
Yilian TechnologyCo., Ltd. (深圳雲裳衣聯科技有限公司)
ShenzhenShenzhenImport and export
business, Internet,Internet of things, bigdata, AI, AR andtechnical servicesoperation
100.00%100.00%Establishment
Qingdao Haixiangxue
Human ResourcesCo., Ltd. (青島海享學人力資源有限公司)
QingdaoQingdaoProfessional intermediary
activities
100.00% 100.00%Establishment
Jiangxi Haier Medical
TechnologyCo., Ltd.
JiangxiJiangxiWholesale and retail of
medical equipment
100.00%100.00%EstablishmentQingdao Haizhi
Shenlan TechnologyCo., Ltd.
QingdaoQingdaoTechnical service
development
100.00%100.00%EstablishmentQingdao HaishengzeTechnologyCo., Ltd.
QingdaoQingdaoAir conditioning
equipment technicalservices
100.00%100.00%EstablishmentQingdao Hailvyuan
RecyclingTechnologyCo., Ltd.
QingdaoQingdaoElectrical and electronic
products wastetreatment
100.00%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectQingdao Haier HVACEquipment Co., Ltd.(青島海爾暖通空調設備有限公司)
QingdaoQingdaoManufacture and sale of
air-conditioners
75.00%25.00%100.00%Establishment
Qingdao Haier HomeAI IndustryInnovation CenterCo., 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
100.00%100.00%Establishment
Zhejiang Weixi IoT
Technology Co.,Ltd. (浙江衛璽物聯科技有限公司)
ZhejiangZhejiangIoT application service 100.00%100.00%EstablishmentQingdao Haier QualityInspection Co., Ltd.(青島海爾質量檢測有限公司)
QingdaoQingdaoInspection and testing of
home appliance
100.00% 100.00%Business
combinationunder commoncontrolQingdaoHaiyongchengCertification ServiceCo., Ltd.(青島海永成認證服務有限公司)
QingdaoQingdaoProduct certification
service
100.00%100.00%Business
combinationunder commoncontrolQingdao Zhonghai
Borui TestingTechnology ServiceCo., Ltd.(青島中海博睿檢測技術服務有限公司)
QingdaoQingdaoHome appliance testing
and technologyconsulting
100.00%100.00%Business
combinationunder commoncontrolsQingdao Haier Special
Plastic DevelopmentCo., Ltd.
QingdaoQingdaoManufacture and sale of
refrigerator doors
100.00%100.00%Business
combinationunder commoncontrolsQingdao Haizhiling Air
ConditioningEngineering Co.,Ltd. (青島海智菱空調工程有限公司)
QingdaoQingdaoSoftware development
and sale of dailynecessities
100.00%100.00%EstablishmentHaier Smart Home
(Xiongan, Hebei)Technology Co.,Ltd. (海爾智家科技（河北雄安）有限公司)
QingdaoQingdaoPromotion of energy-
saving technology
100.00%100.00%Establishment
Qingdao RuiboEcologicalEnvironmentalTechnology Co.,Ltd. (青島瑞博生態環保科技有限公司)
QingdaoQingdaoEnvironmental and AI
technology consulting
89.13% 89.13%Establishment
Qingdao Sanyiniao
Technology Co.,Ltd. (青島三翼鳥科技有限公司)
QingdaoQingdaoTechnology service and
advertisement design
100.00%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectQingdao Jingzhi
RecycleEnvironmentalTechnology Co.,Ltd. (青島鯨智再生環保科技有限公司)
QingdaoQingdaoOperation of dangerous
waste
100.00%100.00%Establishment
Qingdao YunshangJieshen YilianTechnology Co.,Ltd. (青島雲裳潔神衣聯科技有限公司)
QingdaoQingdaoProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentShanghai Yunshang
Yuyi IoT TechnologyCo., Ltd. (上海雲裳羽衣物聯科技有限公司)
ShanghaiShanghaiProfessional cleaning and
sale of daily necessities
100.00%100.00%EstablishmentShijiazhuang
Yunshang YilianTechnology Co.,Ltd. (石家莊雲裳衣聯科技有限公司)
ShijiazhuangShijiazhuangProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentNanjing YunshangYilian TechnologyCo., Ltd. (南京雲裳衣聯科技有限公司)
NanjingNanjingProfessional cleaning and
sale of daily necessities
80.00%80.00%EstablishmentShanxi Yunshang
Yilian TechnologyCo., Ltd. (山西雲裳衣聯科技有限公司)
ShanxiShanxiProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentTianjin Yunshang
Yilian TechnologyCo., Ltd. (天津雲裳衣聯網科技有限公司)
TianjinTianjinProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentChongqing Yunshang
Haihong YilianTechnology Co.,Ltd. (重慶雲裳海宏衣聯科技有限公司)
ChongqingChongqingProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentChengdu Yunshang
Meier YilianTechnology Co.,Ltd. (成都雲裳美爾衣聯科技有限公司)
ChengduChengduProfessional cleaning and
sale of daily necessities
80.00%80.00%EstablishmentBeijing Yunshang
Yilian TechnologyCo., Ltd. (北京雲裳衣聯科技有限公司)
BeijingBeijingProfessional cleaning and
sale of daily necessities
51.00%51.00%EstablishmentChengdu Yunshang
Yilian TechnologyCo., Ltd. (成都雲裳衣聯科技有限公司)
ChengduChengduProfessional cleaning and
sale of daily necessities
100.00%100.00%Establishment
Section X Financial Report
Name of subsidiary
Principal place ofbusiness
Place ofregistrationNature of businessShareholding
% ofvotingrightMethodDirectIndirectQingdao Haixiangmian
Technology Co.,Ltd. (青島海享眠科技有限公司)
QingdaoQingdaoSale of food and daily
necessities
100.00%100.00%EstablishmentQingdao Haier KitchenIoT Technology Co.,Ltd. (青島海爾廚聯網物聯科技有限公司)
QingdaoQingdaoTechnology service and
sale of daily necessities
100.00%100.00%EstablishmentTibet Haifeng
Intelligent InnovationTechnology Co.,Ltd. (西藏海峰智能創新科技有限公司)
TibetTibetDevelopment of software
and medical equipment
100.00%100.00%EstablishmentQingdao Haixiangzhi
Technology Co.,Ltd. (青島海享智科技有限公司)
QingdaoQingdaoManufacturing of home
appliances
100.00%100.00%EstablishmentQingdao Haier
RefrigerationAppliance Co., Ltd.(青島海爾製冷電器有限公司)
QingdaoQingdaoManufacturing of home
appliances
100.00%100.00%EstablishmentChongqing HaierWashing ApplianceCo., Ltd. (重慶海爾洗滌電器有限公司)
ChongqingChongqingManufacturing of home
appliances
100.00%100.00%EstablishmentTongfang EnergyTechnologyDevelopment Co.,Ltd. (同方能源科技發展有限公司)
BeijingBeijingTechnology development
service
84.32%84.32%Business
combination notunder commoncontrolQingdao Haier
Youyang TechnologyCo., Ltd. (青島海爾有養科技有限公司)
QingdaoQingdaoTechnology development
service
51.00%51.00%EstablishmentQingdao Haier Yikang
Technology Co.,Ltd. (青島海爾益康科技有限公司)
QingdaoQingdaoTechnology development
service
100.00%100.00%EstablishmentMicroenterprises such
as Qingdao HaiHeng Feng ElectricalAppliances Sale &Service Co., Ltd.
All over thecountry
All over thecountry
Sales of home appliancesEstablishment
(2) The Company has no material non-wholly owned subsidiaries.
Section X Financial Report
2. Transactions leading to the changes in the share of owners’ equity 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/disposal61,354,600.26Less: share of net assets of subsidiaries in respect to theshareholding proportion acquired/disposed30,236,917.52Difference31,117,682.74Including: adjustment to decrease capital reserve31,117,682.74
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 business
Nature ofbusiness
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 TechnologyCo., 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 TechnologyCo., 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 business
Nature ofbusiness
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
Beijing ASU Tech Co., Ltd.BeijingBeijingTechnical service import
and export business
34.15%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) TechnologyDevelopment 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 NetworkTechnology 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
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
ControladoraMabeS.A.deC.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
ItemsFinance company
Closing balance/Amount for thecurrent period
Opening balance/
Amount for theprevious periodCurrent assets58,471,449,425.1462,367,859,305.44Non-current assets17,215,510,844.9712,622,422,390.73Total assets75,686,960,270.1174,990,281,696.17Current liabilities56,268,320,103.0856,509,751,262.74Non-current liabilities583,055,172.64480,084,424.03Total liabilities56,851,375,275.7256,989,835,686.77Minority interestsEquity attributable to shareholders of the parentcompany18,835,584,994.3918,000,446,009.40Including: share of net assets calculated pershareholding percentage7,910,945,697.647,560,187,323.95Operating income1,699,389,982.112,037,253,129.20Net profit1,417,734,620.571,585,017,777.56Other comprehensive income–22,595,635.589,929,719.24Total comprehensive income1,395,138,984.991,594,947,496.80Dividend received from associates for the year235,200,000.00218,400,000.00
Section X Financial Report
(3). Summarized financial information of insignificant joint ventures and associates
Investment in associates
Closing balance/
Amount for thecurrent period
Opening balance/Amount for theprevious periodBank of Qingdao Co., Ltd.3,200,132,708.752,934,085,854.00Wolong Electric (Jinan) Motor Co., Ltd.177,662,547.04174,697,807.74Qingdao Hegang New Material Technology Co.,Ltd. (青島河鋼新材料科技股份有限公司)329,713,566.36314,802,331.45Qingdao Haier SAIF Smart Home Industry
Investment Center (Limited Partnership)206,764,442.76319,245,649.36Mitsubishi Heavy Industries Haier (Qingdao)Airconditioners Co., Ltd.663,804,966.31715,461,260.26Qingdao Haier Carrier Refrigeration Equipment
Co., Ltd.412,107,471.53413,367,540.80Qingdao Haier Multimedia Co., Ltd.88,300,000.00153,550,234.50Baoshihua Tong Fang Energy Technology Co.,
Ltd. (寶石花同方能源科技有限公司)30,326,966.78Zhengzhou Highly Electric Appliance Co., Ltd.
(鄭州海立電器有限公司)98,000,000.00Anhui Kunhe Intelligent Technology Co., Ltd.1,997,782.61Zhejiang Futeng Fluid Technology Co., Ltd.77,584,161.9977,807,408.84Beijing Mr. Hi Network Technology Company
Limited7,507,759.75Hongtong Environmental Technology (Guangzhou)
Co., Ltd. (宏通環境技術（廣州）有限公司)4,265,965.73Beijing ASU Tech Co., Ltd.7,919,009.5112,829,433.78Shenzhen Genyuan Environmental Protection
Technology Co., Ltd.6,914,487.73Qingdao Haimu Investment Management Co., Ltd.2,609,456.572,521,766.42Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership)57,989,007.1858,905,912.88Yunshang Zhonglian Technology (Shanghai) Co.,
Ltd. (雲裳眾聯科技（上海）有限公司)606,029.71772,938.88Qingdao Guochuang Intelligent Household
Appliance Research Institute Co., Ltd.
(青島國創智能家電研究院有限公司)38,574,227.5345,016,334.20Guangzhou Heying Investment Partnership
(Limited Partnership)194,416,881.32285,793,577.87Qingdao Home Wow Cloud Network Technology
Co., Ltd2,192,669.492,547,217.00Bingji (Shanghai) Corporate Management
Co., Ltd.1,056,245,062.871,014,425,293.04Youjin (Shanghai) Corporate Management
Co., Ltd1,919,627,387.021,843,591,441.88
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）Investment有限公司)3,489,413,430.963,351,166,257.98Haier Best Water Technology Co., Ltd.
(倍世海爾飲水科技有限公司)148,369,638.40148,369,638.40HuizhiXiangshun Equity Investment Fund
(Qingdao) Partnership (Limited Partnership)238,175,637.03238,806,947.64Qingdao RRS Huizhi Investment Co., Ltd.4,083,482.784,083,482.78Qingdao Xinshenghui Technology Co., Ltd.
(青島鑫晟匯科技有限公司)10,005,915.158,598,002.89Europalters Italia S.r.l.15,760,505.28Orygin LLC22,296,931.0413,918,442.26Konan Electronic Co., Ltd64,378,952.0767,770,092.99HNR (Private) Company Limited111,225,806.5174,366,909.55HPZ LIMITED3,483,576.5088,751,047.98Controladora Mabe S.A.deC.V.5,078,418,321.534,685,927,386.53Middle East Airconditioning Company, Limited7,299,166.608,820,101.55Total book value of investment17,745,993,387.0217,092,180,848.82Total amount of the following financial data of
associates calculated based on shareholding
percentageNet profit1,179,130,357.63917,792,070.74Other comprehensive income–99,733,719.8695,751,117.93Total comprehensive income1,079,396,637.771,013,543,188.67
Section X Financial Report
XI. SEGMENT INFORMATION
√ 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.As of 31 December 2023, the Company’s segment reports have been updated to integrate domesticand overseas industries to reflect the Company’s management goals of globalization as a global homeappliance enterprise. The management of the Company began to review business information underthe new structure, and segment reports were updated based on this change and how the Companymanages and monitors segment performance. The amount of the comparable period has restatedbased on the changes.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.
Section X Financial Report
(1) Information of reportable segments
Segment information for the periodSegment informationHousehold Food Storage and Cooking Solutions
Air Solutions
Household Laundry
ManagementSolutionsRefrigerator/freezersKitchen appliancesSegment revenue81,910,667,160.8241,654,343,658.3646,104,262,503.6361,491,493,913.78Including: external revenue81,731,369,432.1741,594,458,746.7345,810,371,440.4761,311,742,096.32Inter-segment revenue179,297,728.6559,884,911.63293,891,063.16179,751,817.46Total segment operating cost76,884,871,643.4238,711,598,234.6344,241,479,650.5055,891,172,557.71Segment operating profit5,025,795,517.402,942,745,423.731,862,782,853.135,600,321,356.07Total 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 Water
SolutionsOther business
Inter-segmenteliminationsTotalSegment revenue15,335,988,639.3696,723,505,175.74–81,792,478,001.59261,427,783,050.10Including: external revenue15,169,679,363.0615,810,161,971.35261,427,783,050.10Inter-segment revenue166,309,276.3080,913,343,204.39–81,792,478,001.59Total segment operating cost13,518,468,362.4496,666,241,331.19–81,872,464,956.21244,041,366,823.68Segment operating profit1,817,520,276.9257,263,844.5579,986,954.6217,386,416,226.42Total 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
Segment information for the corresponding period of last year
Segment informationHousehold Food Storage and Cooking Solutions
Air Solutions
Household LaundryManagementSolutionsRefrigerator/freezersKitchen appliancesSegment revenue77,859,503,523.0038,953,051,777.0240,760,615,973.9557,909,239,383.61Including: external revenue77,677,799,236.4838,899,564,816.8940,457,857,437.5157,820,114,253.41Inter-segment revenue181,704,286.5253,486,960.13302,758,536.4489,125,130.20Total segment operating cost73,597,983,358.7636,245,984,416.0639,671,596,085.7552,735,218,516.89Segment operating profit4,261,520,164.242,707,067,360.961,089,019,888.205,174,020,866.72Total segment assets32,212,596,722.2118,635,173,441.4321,054,805,558.7628,587,194,295.50Total segment liabilities44,000,212,968.9611,068,288,033.8113,915,821,835.3016,655,474,631.12(continued)Segment information
Household WaterSolutionsOther business
Inter-segmenteliminationsTotalSegment revenue14,133,741,848.2691,174,434,408.87–77,211,661,956.24243,578,924,958.47Including: external revenue14,009,751,227.1014,713,837,987.08 243,578,924,958.47Inter-segment revenue123,990,621.1676,460,596,421.79–77,211,661,956.24Total segment operating cost12,543,842,686.4591,121,188,739.68–77,256,660,522.88228,659,153,280.71Segment operating profit1,589,899,161.8153,245,669.1944,998,566.6414,919,771,677.76Total segment assets6,706,376,868.3752,027,298,467.81–39,850,856,358.17119,372,588,995.91Total segment liabilities5,417,671,439.3958,218,057,761.30–39,617,922,327.86109,657,604,342.02
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 disclosurea. External transaction revenue
Items
Amount for the
current period
Amount for theprevious periodMainland China125,015,887,048.63116,820,021,832.58Other countries/regions136,411,896,001.47126,758,903,125.89Among which:
America79,751,236,167.6176,629,831,084.82Australia6,142,491,032.576,962,360,306.70South Asia9,520,761,970.298,283,959,988.29Europe28,543,893,610.2123,031,521,394.12Southeast Asia5,779,907,984.735,179,557,555.83Middle East and Africa1,934,336,705.541,970,513,900.11Japan3,662,478,664.813,568,558,534.13Others1,076,789,865.711,132,600,361.89Total261,427,783,050.10243,578,924,958.47b. Total non-current assets
ItemsClosing balanceOpening balanceMainland China22,369,511,589.9319,433,006,951.77Other countries/regions31,152,060,989.0729,019,302,954.24Total53,521,572,579.0048,452,309,906.01Total 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. Fair value of 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)
Importantunobservable
input(Level 3)TotalContinuously measured at fairvalueFinancial assets held for trading369,591,046.58487,936,101.8196,436,395.44953,963,543.83Including: Bank wealth management
products 487,936,101.81 487,936,101.81Investment fund222,803,002.38 222,803,002.38Investment in equity
instruments146,788,044.20 96,436,395.44243,224,439.64Derivative 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 166,573,028.22 166,573,028.22Forward commodity contracts 2,051,976.75 2,051,976.75
Section X Financial Report
At the beginning of the periodItemsInput used for fair value measurement
Quotes in anactive market(Level 1)
Importantobservable
input(Level 2)
Importantunobservable
input(Level 3)TotalContinuously measured at fair
valueFinancial assets held for trading395,687,084.8314,638,968.26109,586,827.82519,912,880.91Including: Bank wealth management
products14,638,968.2614,638,968.26Investment fund168,430,847.63168,430,847.63Investment in equityinstruments227,256,237.20109,586,827.82336,843,065.02Derivative financial assets 183,185,160.51183,185,160.51Including: Forward foreign exchange
contract 178,992,877.32178,992,877.32Forward commodity contracts 4,192,283.194,192,283.19Other equity instruments16,353,773.341,027,550,923.674,807,978,233.195,851,882,930.20Including: Equity instruments measured
at fair value through other
comprehensive income16,353,773.341,027,550,923.674,807,978,233.195,851,882,930.20Derivative financial liabilities 104,594,040.66 104,594,040.66Including: Forward foreign exchange
contract 92,580,419.48 92,580,419.48Forward commodity contract 12,013,621.18 12,013,621.18Other non-current liabilities 16,916,789.1016,916,789.10Including: Put option liability 16,916,789.1016,916,789.10
For financial instruments traded in an active market, the Company determines its fair value basedon its quotes in an active market; for financial instruments not traded in an active market, theCompany uses valuation techniques to determine its fair value.
Section X Financial Report
2. The basis for determining the fair value of the continual Level 2 fair value
measurement itemsItems
Fair value at theend of the periodValuation techniquesFinancial assets held for tradingIncluding: Bank wealth management
products
487,936,101.81Discounted cash flowDerivative financial assetsIncluding: Forward foreign exchangecontract
67,565,829.44Discounted cash flowDerivative financial liabilitiesIncluding: Forward foreign exchangecontract
166,573,028.22Discounted cash flowForward commodity contracts2,051,976.75Discounted cash flow
Section X Financial Report
3. Continual Level 3 fair value measurement major items, the valuation techniques adopted
and information of important parameters
Items
Fair value at theend of the period
Valuationtechnique
Significantunobservable inputRange
Sensitivity of fair valueto the inputOther equity instrumentsIncluding:
1. COSMO IoT
TechnologyCo., LTD. (卡奧斯物聯科技股份有限公司)
2,817,408,000.00Market approach1. Average P/S
multiple ofpeers
2. Discount for
lack ofmarketability
1. 2.93 to
2.99
2. 27.46% to
29.46%
1. 1% increase
(decrease) in averageP/S multiple of theComparableCompanies wouldresult in increase(decrease) in fairvalue by RMB21.27million.
2. 1% increase
(decrease) in thelack of marketabilitywould result indecrease (increase)in fair value byRMB29.35 million.
2. SINOPEC Fuel
Oil SalesCorporationLimited (中國石化銷售股份有限公司)
1,986,156,165.17Market approach1. Average P/E
multiple ofpeers
2. Discount for
lack ofmarketability
1. 37.38 to
38.14
2. 25.23% to
27.23%
1. 1% increase
(decrease) in averageP/E multiple of theComparableCompanies wouldresult in increase(decrease) in fairvalue by RMB19.86million.
2. 1% increase
(decrease) in thelack of marketabilitywould result indecrease (increase)in fair value byRMB26.92 million.
4. Financial instruments not measured at fair value
Financial assets and financial liabilities not measured at fair value include: monetary funds, billsreceivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,etc. The difference between the book value and the fair value of financial assets and financialliabilities not measured at fair value at the end of the period is small.
Section X Financial Report
XIII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS(I) Explanation for basis of identifying related party
According 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
Relationships withthe Company
Interestin theCompany
Voting rightsto theCompanyHaier GroupCorporation
Collectiveownershipcompany
Qingdao High-techZone Haier Park
311,180,000Zhou YunjieParent Company11.36%11.36%Haier COSMO Co.,Ltd. (海爾卡奧斯股份有限公司)
Joint-stockcompany
Qingdao High-tech
Zone Haier Park
631,930,000Zhou YunjieSubsidiary of
ParentCompany
13.34%13.34%
HCH (HK) Investment
Management Co.,Limited
Privatecompany
Hong KongHKD 10,000/Parties acting in
concert ofParentCompany
5.71%5.71%
Qingdao Haier Venture
& InvestmentInformation Co.,Ltd.
Company withlimitedliability
Qingdao Free Trade
Zone
923,000,000Zhou YunjieParties acting in
concert ofParentCompany
1.83%1.83%
Qingdao Haichuangzhi
ManagementConsultingEnterprise (LimitedPartnership)
Limitedpartnershipcompany
Qingdao High-tech
Zone Haier Park
118,924,416/Parties acting in
concert ofParentCompany
1.42%1.42%
Haier InternationalCo., Limited
Privatecompany
Hong KongHKD 2/Parties acting in
concert ofParentCompany
0.62%0.62%
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note X.1. Interests insubsidiaries.
3. Joint ventures and associates of the Company
The information of material joint ventures or associates of the Company are detailed in NoteVII.12 and X.3.
Section X Financial Report
4. Connected companies with no relationship of control
NameRelationship with the CompanyChongqing Zhonglian Energy TechnologyCo., Ltd.
Subsidiary of Haier GroupChongqing Haier Electrical Appliances SalesCo., Ltd.
Subsidiary of Haier GroupHongkong Gooday Supply Chain
Management Limited
Subsidiary of Haier GroupShanghai Cotai Supply Chain ManagementCo., Ltd.
Subsidiary of Haier GroupGooday Supply Chain Technologies Co., Ltd.Subsidiary of Haier GroupGooday (Qingdao) International Supply ChainService Co., Ltd.
Subsidiary of Haier GroupQingdao Goodaymart Supply ChainsCo., Ltd.
Subsidiary of Haier GroupQingdao Maidirui Ecological Environment
Technology Co., Ltd. (青島邁帝瑞生態環境科技有限公司)
Subsidiary of Haier GroupQingdao Oasis Technology Co., Ltd.Subsidiary of Haier GroupQingdao Haina Cloud Intelligent System
Co., Ltd.
Subsidiary of Haier GroupQingdao Haier Parts Procurement Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Trading Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Travel Agency
Co., Ltd.
Subsidiary of Haier GroupFeiketeng Intelligent Technology (Qingdao)Co., Ltd. (斐科騰智能科技（青島）有限公司)
Subsidiary of Haier GroupDalian Haier International Trade Co., Ltd.Subsidiary of Haier GroupQingdao Haironghui Commercial FactoringCo., Ltd. (青島海融匯商業保理有限公司)
Subsidiary of Haier GroupCOSMOPlat Digital Technology (Qingdao)Co., Ltd. (卡奧斯數字科技（青島）有限公司)
Subsidiary of Haier GroupHaier Cloud City Digital Technology(Qingdao) Co., Ltd. (海爾雲城數字科技（青島）有限公司)
Subsidiary of Haier GroupQingdao Blue Whale Technology Co., Ltd.Subsidiary of Haier GroupQingdao Dingxin Electronic Technology
Co., Ltd.
Subsidiary of Haier GroupCosmoplat Chuangzhi IOT Technology
Co., Ltd.
Subsidiary of Haier GroupHaier International Co., Ltd.Subsidiary of Haier GroupShenyang Ririxin Corporate Management
Co., Ltd. (瀋陽日日新企業管理有限公司)
Subsidiary of Haier GroupQingdao Xiaoshuai Intelligent Technology
Co., Ltd.
Subsidiary of Haier Group
Section X Financial Report
NameRelationship with the CompanyQingdao Manniq Intelligent TechnologyCo., Ltd.
Subsidiary of Haier GroupCosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd.
Subsidiary of Haier GroupQingdao Haier New Materials R & D
Co., Ltd.
Subsidiary and associate of Haier
GroupQingdao Haier Multi-media Co., Ltd.AssociateControladora Mabe S.A.de C.V.AssociateHNR (Private) Company LimitedAssociateHPZ LimitedAssociateMitsubishi Heavy Industry Haier (Qingdao) AirConditioner Co., Ltd.
AssociateWolong Electric (Jinan) Motor Co., Ltd.AssociateQingdao HBIS Composite New MaterialCo., Ltd.
Subsidiary of associateHefei Hegang New Material TechnologyCo., Ltd.
Subsidiary of associate(III) Related party transactions
1. Details of the Company’s procurement of goods and services from related parties are as
follows:
Name of related parties
Amount for thecurrent period
Amount for theprevious periodControladora Mabe S.A.de C.V.15,526,699,638.3013,123,708,450.38Qingdao Haier Parts Procurement Co., Ltd.6,413,180,580.727,059,896,523.58Gooday Supply Chain Technologies Co., Ltd.3,558,500,838.944,444,169,934.17HNR (Private) Company Limited2,514,374,986.363,073,674,460.32Chongqing Haier Electrical Appliances SalesCo., Ltd.2,114,941,629.473,054,825,152.17Shanghai Cotai Supply Chain ManagementCo., Ltd.1,358,496,545.271,471,945,927.42Qingdao Haier International Trading Co., Ltd.547,788,113.32397,359,401.03Gooday (Qingdao) International Supply Chain
Service Co., Ltd.685,581,695.96266,844,283.32Mitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd.607,144,743.77352,035.40Dalian Haier International Trade Co., Ltd.527,629,376.86529,797,174.58Qingdao Goodaymart Supply Chains
Co., Ltd.389,108,907.34421,203,765.86Other related parties3,296,053,790.334,057,047,170.88Total37,539,500,846.6437,900,824,279.11
Section X Financial Report
2. Details of the Company’s sales of goods to related parties are as follows:
Name of related parties
Amount for thecurrent period
Amount for theprevious periodHNR (Private) Company Limited1,245,177,362.70602,998,664.66Controladora Mabe S.A.de C.V.1,202,388,632.221,023,743,811.97Qingdao Haier International Trading Co., Ltd.557,630,937.13672,339,983.04Qingdao Oasis Technology Co., Ltd.143,051,045.4267,904,127.81Qingdao Haier Multi-media Co., Ltd.122,202,322.75136,786,578.47HPZ Limited101,907,938.50118,748,741.50Qingdao Haier International Travel AgencyCo., Ltd.53,656,646.75119,166,052.08Other related parties304,883,890.25670,938,693.97Total3,730,898,775.723,412,626,653.50
3. Amount of unsettled items of related parties
Items and name of customers
ClosingBalance
OpeningBalanceBills receivable:
Qingdao Haier International Trading Co., Ltd.178,000,000.00Qingdao Haina Cloud Intelligent System Co., Ltd.4,820,740.999,196,905.30COSMOPlat Digital Technology (Qingdao)Co., Ltd. (卡奧斯數字科技（青島）有限公司)1,080,198.772,338,177.61Qingdao Ding Xin Electronics Technology
Co., Ltd.45,947,984.43Cosmoplat Chuangzhi IOT Technology
(Chongqing) Co., Ltd.28,764,679.42Cosmoplat Chuangzhi IOT Technology Co., Ltd.23,908,824.49Other related parties14,739,591.9011,525,466.12Accounts receivable:
HNR (Private) Company Limited1,191,001,767.66887,316,060.44Qingdao Oasis Technology Co., Ltd.116,266,117.2346,664,529.91Qingdao Haier International Travel Agency
Co., Ltd.66,704,908.5913,660,669.79HPZ Limited37,410,646.01117,899,486.73Qingdao Maidirui Ecological Environment
Technology Co., Ltd. (青島邁帝瑞生態環境科
技有限公司)37,264,581.9912,210,497.95Chongqing Zhonglian Energy Technology
Co., Ltd.20,861,198.7748,870,443.21Qingdao Haina Cloud Intelligent System Co., Ltd.20,810,291.7424,917,701.10Other related parties238,487,927.26559,054,609.85
Section X Financial Report
Items and name of customers
ClosingBalance
OpeningBalancePrepayments:
Qingdao Haier International Trade Co., Ltd.8,594,602.744,248,008.35Haier Cloud City Digital Technology (Qingdao)Co., Ltd. (海爾雲城數字科技（青島）有限公司)8,393,601.61Hefei Hegang New Material Technology Co., Ltd.6,241,957.96Qingdao Haier International Travel AgencyCo., Ltd.3,115,793.216,253,573.56HNR (Private) Company Limited110,370,091.99Other related parties14,806,610.0635,104,367.42Other receivables:
Controladora Mabe S.A.de C.V.14,824,407.9112,158,833.50Qingdao Haier International Trade Co., Ltd.7,951,101.193,055,976.92Haier International Co., Ltd.3,685,669.874,272,144.02Shenyang Ririxin Corporate Management Co., Ltd.(瀋陽日日新企業管理有限公司)3,000,000.00Qingdao Blue Whale Technology Co., Ltd.12,392,334.21Qingdao Xiaoshuai Intelligent TechnologyCo., Ltd.10,500,000.00Dalian Haier International Trade Co., Ltd.9,440,616.07Other related parties12,066,688.1918,628,538.25Bills payable:
Qingdao Haier New Materials R & D Co., Ltd.390,891,579.36386,075,771.04Hefei Hegang New Material Technology Co., Ltd.21,795,818.8524,471,564.49Qingdao HBIS Composite New Material Co., Ltd.27,781,266.6412,149,382.48Wolong Electric (Jinan) Motor Co., Ltd.30,416,664.0037,773,640.00Qingdao Haier Parts Procurement Co., Ltd.180,719,158.83Other related parties606,400.00Accounts payable:
Controladora Mabe S.A.de C.V.1,017,676,511.301,299,452,149.83Qingdao Haironghui Commercial Factoring Co.,Ltd. (青島海融匯商業保理有限公司)367,964,948.49Qingdao Haier Parts Procurement Co., Ltd.247,164,539.111,860,747,884.39HNR (Private) Company Limited225,492,094.68Qingdao Haier International Trading Co., Ltd.197,267,091.22257,531,848.99Qingdao Haier New Materials R&D Co., Ltd.96,592,224.43101,958,410.60Dalian Haier International Trade Co., Ltd.82,860,333.64150,178,673.56Hong Kong Gooday Supply Chain TechnologiesCo., Ltd.74,153,281.02250,478,107.49Other related parties524,214,760.71501,220,733.45
Section X Financial Report
Items and name of customers
ClosingBalance
OpeningBalanceContract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd.50,686,531.8551,422,207.69Chongqing Zhonglian Energy TechnologyCo., Ltd.17,217,306.9217,215,206.92Other related parties10,101,182.8913,569,890.19Other payables:
Gooday Supply Chain Technologies Co., Ltd.897,015,102.10485,473,357.04Shanghai Cotai Supply Chain ManagementCo., Ltd.129,653,209.93113,720,815.14Qingdao Oasis Technology Co., Ltd.102,395,000.8283,842.78Gooday (Qingdao) International Supply ChainService Co., Ltd.64,467,694.39140,136,176.89Feiketeng Intelligent Technology (Qingdao) Co.,Ltd. (斐科騰智能科技（青島）有限公司)51,986,700.46759,000.00Qingdao Goodaymart Supply Chains Co., Ltd.45,292,270.9330,669,122.96Qingdao Manniq Intelligent Technology Co., Lt14,038,277.9367,521,909.37Other related parties193,110,957.17308,322,551.23
4. Other related party transactions
√ Applicable □ Not Applicable
(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 the4th meeting of the 11th session of the Board of Directors. The Financial ServicesFramework Agreement became effective from the passing of the resolution.Various current balances of the Company and the Finance Company are as follows:
ItemsClosing BalanceOpening BalanceMonetary funds deposited at theFinance Company33,654,242,534.5031,433,124,152.44Interest receivable from the Finance Company688,144,130.70468,636,097.70Loans of the Finance Company60,000,000.00Interest payable to the Finance Company46,158.00Bills issued8,909,470,662.8821,621,825,652.96Foreign exchange derivatives of the
Finance Company–10,143,691.03–2,293,511.73
Section X Financial Report
Various balances of the Company and the Finance Company are as follows:
Items
Amount for thecurrent period
Amount for theprevious periodInterest income of the Finance Company765,875,670.14570,162,437.71Interest expense of the Finance Company435,000.004,933,548.81Service fee of the Finance Company23,618,778.6629,446,933.09Spot foreign exchange business (foreign
exchange settlement and sale)9,015,944,003.066,337,945,933.79
(2) The lease expense of the Company and its subsidiaries for production and
operation leased from related parties for the current period was RMB99 million(amount for the corresponding period: RMB97 million).
(3) Haier Group Corporation provided joint liability guarantee for certain bills payable
of the subsidiaries of the Company with the guaranteed amount of RMB2,639million at the end of the period (amount at the beginning of the period:
RMB2,311 million).(IV) Pricing Policy
1. Related-party Sales
Some related parties purchase components through the independent procurement platformof the Company, purchase electrical appliances for sales from the Company, and receiveafter-sales services, R&D service, housing rental and other business provided by thecompany due to their business needs. In April 2022, according to the implementation ofconnected transactions in the early stage and the relevant listing requirements in HongKong, the Company and Haier Group Corporation revised and signed the Product andMaterials Sales Framework Agreement, the Service Provision Framework Agreement and theProperty Leasing Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thatboth parties should agree on the price which is not less favourable than those provided bythe Company to the Independent Third Parties on arm’s length to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement commencedfrom 1 January 2023 to 31 December 2025, which can be renewed for another three yearsupon expire.
Section X Financial Report
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.
3. Financial aspect
Some of the financial services such as deposit and loan service, discounting service andforeign exchange derivatives needed by the Company are provided by Haier GroupCorporation, its subsidiaries and other companies. According to the Financial ServiceAgreement entered among the Company, Haier Group Corporation and other parties, theprice of financial services is determined by the principle of not less favourable than marketvalue fair. The Company is entitled to decide whether to keep cooperation relationship withthem with the knowledge of the price prevailing in the market and in combination with itsown interests. While performing the agreement, the Company could also require otherfinancial service institutions to provide related financial services basing on actual situation.In order to meet the Company’s demands such as the avoidance of foreign exchangefluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide someforeign exchange derivative business after comparing with comparable companies. TheCompany will uphold the safe and sound, appropriate and reasonable principle, underwhich all foreign exchange capital business shall have a normal and reasonable businessbackground to eliminate speculative operation. At the same time, the Company hasspecified the examination and permission rights, management positions and responsibilitiesat all levels for its foreign exchange capital business to eradicate the risks of operation bypersons and improved its response speed to risks on the premise that the risks areeffectively controlled. In June 2021, the Company and Haier Group Corporation 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 2023, which can be renewed foranother three years upon expire.
Section X Financial Report
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.XIV. SHARE-BASED PAYMENTS
1. Various equity instruments
√ Applicable □ Not Applicable
Unit of Number: sharesUnit and Currency of Amount: RMB
Categories ofparticipantsGranted during the periodExercised during the periodVested during the periodLapsed during the period
NumberAmountNumberAmountNumberAmountNumberAmountDirectors and seniormanagement2,915,81664,748,022.30 1,076,88224,943,679.532,564,58617,492,337.27Staff31,590,543705,507,909.31 15,783,328373,654,712.1657,729,704529,194,750.02Total34,506,359770,255,931.61 16,860,210398,598,391.6960,294,290546,687,087.29Outstanding share options or other equity instruments at the end of the period
√ Applicable □ Not Applicable
Categories of participantsOutstanding share options at the end of the periodOutstanding other equity instruments at the end of the period
Exercise price
The remainingcontractual termExercise price
The remainingcontractual term2021 First OptionRMB25.63 per shareSeptember 2021—
September 20262021 Second OptionRMB25.63 per shareDecember 2021—
December 20262022 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 2026
Section X Financial Report
2. Equity-settled share-based payments
√ Applicable □ Not Applicable
Unit and Currency: RMB billionMethod of determining the fair value of equityinstrument on the date of grant
Closing price of share on the date ofgrant, Black-Scholes ModelKey parameters of determining the fair value ofequity instrument on the date of grant
Historical volatility rate, risk-free rate,yield rateBasis for determining the number of exercisable
equity instruments
The best estimate of the managementReason for significant differences between currentand prior period estimates
NilAccumulated amount of equity-settled share-based
payment included in the capital reserve
1.135
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 management50,198,564.36Staff560,408,082.45Total610,606,646.81
5. Modification and termination of share-based payments
□ Applicable √ Not Applicable
XV. CONTINGENCIES
As of 27 March 2024, the Company has no significant contingencies that need to be disclosed.
XVI. EVENTS AFTER THE BALANCE SHEET DATE
According to the resolution of the 9th meeting of the 11th session of the Board of Directors of theCompany held on 27 March 2024, the profit for the year is proposed to be distributed on the basis ofthe total number of shares on the record date after deducting the repurchased shares from therepurchased account when the plan is implemented in the future, the Company will declare cashdividend of RMB8.04 (including taxes) for every 10 shares to all shareholders.
Section X Financial Report
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 which
included 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 67,565,829.4467,565,829.44Receivable 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 6,403,694,954.776,403,694,954.77
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 54,162,212,155.31 54,162,212,155.31Financial assets held for trading519,912,880.91 519,912,880.91Derivative financial assets 183,185,160.51183,185,160.51Receivable 9,624,191,838.15 9,624,191,838.15Accounts receivable 15,886,748,811.81 15,886,748,811.81Other receivables 2,401,113,902.55 2,401,113,902.55Other current assets 1,642,421,944.45 1,642,421,944.45Debt investments 1,034,222,222.22 1,034,222,222.22Long-term receivables 305,070,001.45 305,070,001.45Other equity instruments 5,851,882,930.205,851,882,930.20
Section X Financial Report
Financial liabilitiesItemsClosing Balance
Financialliabilitiesmeasured atfair 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 57,113,422.7857,113,422.78Financial liabilities (continued)ItemsOpening Balance
Financialliabilitiesmeasured atfair value
Financialliabilitiesmeasured atamortised costTotalShort-term borrowings 9,672,223,522.369,672,223,522.36Derivative financial liabilities104,594,040.66 104,594,040.66Bills payable 25,098,557,730.0625,098,557,730.06Accounts payable 41,885,313,890.7941,885,313,890.79Other payables 17,585,198,629.1317,585,198,629.13Non-current liabilities due in one year 2,854,446,929.322,854,446,929.32Long-term borrowings 13,590,866,873.4313,590,866,873.43Long-term payables 44,240,087.9444,240,087.94Other non-current liabilities16,916,789.10 16,916,789.10Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company managesand monitors these risk exposures to ensure the above risks are well under control.
Section X Financial Report
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accountsreceivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks.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 oflarge-amount credit customers in order to ensure the Company is free from material baddebts risks. (3) Other receivables of the Company mainly include export tax refund,borrowings and contingency provision. The Company strengthened its management andcontinuous monitoring in respect of these receivables and relevant economic businessbased on historical data, so as to ensure that the Company’s significant risk of bad debtsis controllable and will be further reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfillingobligations associated with financial liabilities. To control such risk, the Company utilizes variousfinancing methods such as notes settlement and bank loans to strive for a balance betweensustainable and flexible financing. It also has obtained bank credit facilities from severalcommercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, SouthAsia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and othercurrencies.The Company’s overseas assets and liabilities denominated in foreign currencies as well astransactions to be settled in foreign currencies expose the Company to fluctuations in exchangerates. The Company’s finance department is responsible for monitoring the size of transactions inforeign currencies and assets and liabilities denominated in foreign currencies to minimize the riskof exposure to fluctuation in exchange rate; the Company resorts the way of signing forwardforeign exchange contracts to avoid the risk of exchange fluctuation.
Section X Financial Report
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short- term bank loans andbonds payables which are interest-bearing debts. Financial liabilities with floating interest ratesexpose the Company to cash flow interest rate risk, while financial liabilities with fixed interestrates expose the Company to fair value interest rate risk. The Group determines the relativeproportion of fixed-interest rate and floating interest rate contracts in light of the prevailing marketconditions.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.The Company has no other significant events that need to be disclosed.
XIX.NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENTCOMPANY
1. Accounts receivable
Aging
ClosingBalance
OpeningBalanceWithin one year715,238,098.86379,679,227.77
–2 years378,071,982.79533,963,843.29
–3 years532,467,268.93Over 3 yearsAccounts receivable balance1,625,777,350.58913,643,071.06Allowance for bad debts251.55Net receivables1,625,777,099.03913,643,071.06Changes in bad debt provision for accounts receivable in the current period:
Items
OpeningBalance
Increase for the current
period
Decrease for the current
period
ClosingBalanceProvision forthe currentperiod
OtherincreaseReversal
Write-off and
othermovementAllowance for baddebts 251.55 251.55
Section X Financial Report
2. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
ItemsClosing BalanceOpening BalanceInterest receivable117,439,655.7929,783,516.95Dividend receivable570,000,000.001,015,840,000.00Other receivables22,962,538,160.7813,341,408,140.62Total23,649,977,816.5714,387,031,657.57Interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
ItemsClosing BalanceOpening BalanceWithin 1 year117,439,655.7929,783,516.95More than 1 yearTotal117,439,655.7929,783,516.95 Dividend receivable
√ Applicable □ Not Applicable
Unit and Currency: RMBItems (or investees)Closing BalanceOpening BalanceWithin 1 year570,000,000.001,000,000,000.00More than 1 year 15,840,000.00Total570,000,000.001,015,840,000.00
Section X Financial Report
Other receivables
① The disclosure of other receivables by aging is as follows:
AgingClosing BalanceOpening BalanceWithin one year13,256,949,623.316,278,019,144.67More than one year9,708,953,420.367,066,828,954.97Other receivables balance22,965,903,043.6713,344,848,099.64Allowance for bad debts3,364,882.893,439,959.02Net other receivables22,962,538,160.7813,341,408,140.62
② Changes in bad debt provision for other receivables in the current period:
Increase forthe current period
Decrease forthe current periodItems
OpeningBalance
Provision for
the currentperiod
OtherincreaseReversal
Write-off and
othermovement
ClosingBalanceAllowance for bad debts3,439,959.02 75,076.13 3,364,882.89
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
subsidiaries52,823,723,686.317,100,000.0049,632,299,728.317,100,000.00Long-term equity investments in
associates3,121,372,319.75109,300,000.003,228,239,799.56109,300,000.00Total55,945,096,006.06116,400,000.0052,860,539,527.87116,400,000.00
Section X Financial Report
(2) Long-term equity investments to subsidiaries
Name of investeeOpening Balance
Increase/Decrease for the
periodClosing Balance
Impairmentprovisions at theend of the periodI. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd.9,500,000.00 9,500,000.00Haier Group (Dalian) Electrical AppliancesIndustry 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 PlasticDevelopment Co., 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.100,715,445.04 100,715,445.04Chongqing 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) Limited26,180,674,326.243,068,553,958.0029,249,228,284.24Shenyang 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.130,000,000.00 130,000,000.00
Section X Financial Report
Name of investeeOpening Balance
Increase/Decrease for the
periodClosing Balance
Impairmentprovisions at theend of the periodQingdao Haier Technology InvestmentCo., Ltd.367,505,635.0042,870,000.00410,375,635.00Qingdao Casarte Smart Living AppliancesCo., 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 ServiceCo., 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.20,000,000.0080,000,000.00100,000,000.00Haier 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 55,000,000.00Total49,632,299,728.313,191,423,958.0052,823,723,686.317,100,000.00
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.168,579,556.35 25,780,193.59–22,305,600.00172,054,149.94Qingdao Haier SAIF SmartHome IndustryInvestment Center(Limited Partnership)319,245,649.36–83,255,532.55–29,225,674.05206,764,442.76Bank of Qingdao Co., Ltd.1,162,338,491.42 107,593,877.12–2,199,381.121,267,732,987.42Mitsubishi Heavy IndustriesHaier (Qingdao)Air-conditionersCo., Ltd.715,461,260.26 131,493,706.05–183,150,000.00663,804,966.31Qingdao Haier CarrierRefrigeration EquipmentCo., Ltd.413,367,540.80 16,250,623.48–17,510,692.75412,107,471.5321,000,000.00Qingdao Haier MultimediaCo., Ltd153,550,234.49–65,250,234.49 88,300,000.0088,300,000.00Qingdao HBIS New MaterialTechnology Co., Ltd.295,697,066.88 14,911,234.91 310,608,301.79Total3,228,239,799.56147,523,868.11–254,391,347.923,121,372,319.75109,300,000.00
4. Operating revenue and operating cost
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount forthe current period
Amount forthe previous periodItemsRevenueCostRevenueCostPrimary Business633,158,770.00546,305,360.36335,344,865.65292,889,261.14Other Business87,833,714.0779,980,358.0689,317,060.6777,735,951.48Total720,992,484.07626,285,718.42424,661,926.32370,625,212.62
Section X Financial Report
5. Investment income
Items
Amount for the
current period
Amount for theprevious periodLong-term equity investments income calculated by the
equity method147,523,868.1171,408,243.76Investment income from long-term equity investmentaccounted for using cost method8,458,124,538.416,328,139,259.26Income from wealth management products45,058,372.1431,888,263.12Investment income from investment in other equityinstrument during the holding period317,575.18302,249.84Total8,651,024,353.846,431,738,015.98
XX. APPROVAL OF FINANCIAL REPORT
This financial report was approved for publication by the Board of Directors of the Company on27 March 2024.XXI. 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 Company16.85%1.791.7816.80%1.581.57Net profit attributable to ordinaryshareholders of the Companyafter deduction of non-recurringprofit or loss16.06%1.711.6915.95%1.501.49
Section X Financial Report
2. Non-recurring profit or loss
Items
Amount for the
current period
Amount for theprevious periodNet profit attributable to ordinary shareholders of the ParentCompany16,596,615,045.8714,712,054,763.24Less: non-recurring profit or loss772,450,884.44749,122,909.46Net profit attributable to ordinary shareholders of the ParentCompany after deduction of non-recurring profit or loss15,824,164,161.4313,962,931,853.78Breakdown 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–97,873,276.66Government 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 standards1,093,584,406.07Profit from the excess of the fair value of the identifiablenet 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 theCompany20,829,305.37Other non-operating income and expenses except theaforementioned items–71,400,519.77Effect of minority equity interest–19,881,554.58Effect of income tax–150,225,774.23Effect of profit from business combination under common
control–2,581,701.76Total772,450,884.44
Section X Financial Report
For 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-recurring Profit or Loss” as non-recurring profit or loss items and the amount of which issignificant, and for non-recurring profit or loss items as illustrated in the “ExplanatoryAnnouncement on Information Disclosure for Companies Offering Their Securities to the PublicNo.1—Non-recurring Profit or Loss” designated as recurring profit or loss items, reasons shallbe specified.
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Chairman of the Board: LI HuagangDate of approval for publication by the Board: 27 March 2024 Information of amendment
□ Applicable √ Not Applicable