Company Code: 600690.SH, 690D.DE

Short Name: Haier Smart Home

Haier Smart Home Co., Ltd.
2022 Interim Report

Haier Smart Home Co., Ltd. Interim Report 2022

Important NoticeI.

The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (the “Company”) are individually and collectively
responsible for the content set out therein and hereby assure that the content set out in theinterim report is true, accurate and complete, and free from any false record, misleading
representation or material omission.

II.

All directors attend the Board of Directors.

III.

The interim report is unaudited.

IV.

Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the interim report is true, accurate and complete.

V.

Proposal of profit distribution or proposal of converting capital reserves into share capital forthis reporting period resolved and passed by the Board
No

VI.

Disclaimer in respect of forward-looking statements√ Applicable□ Not Applicable

Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute our substantial commitment to investors. Investors are advised to pay attention toinvestment risks.
VII.

Is there any fund occupation by controlling shareholders and their related parties for
non-operational purposes
No

VIII. Is there any provision of external guarantee in violation of prescribed decision-making
procedures?
No
IX.

Are there more than half of the Directors could not warrant the truthfulness, accuracy andcompleteness of the interim report disclosed by the Company
No

X.

Important risk warnings
For the possible risks which the Company may encounter, please refer to the relevant information set
out in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.

Haier Smart Home Co., Ltd. Interim Report 20221

Important Notice

XI.

Others□ Applicable2√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

Contents

SECTION I — DEFINITIONS

4SECTION II — GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS6SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS

11

SECTION IV — CORPORATE GOVERNANCE

46

SECTION V — ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES50SECTION VI — SIGNIFICANT ISSUES61

SECTION VII — CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS76

SECTION VIII — RELEVANT INFORMATION OF PREFERRED SHARES84

SECTION IX — RELEVANT INFORMATION OF CORPORATE BONDS

85

SECTION X — FINANCIAL REPORT88

SECTION XI — RESPONSIBILITY STATEMENT

260

Documents Available
for InspectionI.

2022 Interim Report of Haier Smart Home Co., Ltd. with signature of thelegal representative.

II.

Financial statements with signatures or seals of the person in charge of theentity, chief accountant and person in charge of accounting department.

III.

All documents publicly disclosed on China Securities Journal, Shanghai
Securities News, Securities Daily, Securities Times and the website ofShanghai Stock Exchange (www.sse.com.cn) during the reporting period.

Haier Smart Home Co., Ltd. Interim Report 2022

3

Section I Definitions

Unless otherwise stated in context, the following terms should have the following meanings in this report:

DEFINITION OF FREQUENTLY USED TERMS

4

CSRC

China Securities Regulatory Commission

SSE

Shanghai Stock Exchange

The Company, Haier Smart
Home

Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”,
and the original short name is “Qingdao Haier”

Four Major Securities
Newspapers

China Securities Journal, Shanghai Securities News, Securities Times,
Securities Daily

Haier Electronics, 1169

Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong,stock code: 01169.HK), a subsidiary as accounted for in the consolidated
statement of the Company. Haier Electronics has been privatized by way of H
shares issuance on 23 December 2020 and became a wholly owned
subsidiary of the Company since then.

GEA

GE Appliances, household appliances assets and business of General ElectricGroup, have currently been owned by the Company.

FPA

Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐 雪 派 克) wasestablished in 1934 and is known as the national appliance brand of New
Zealand, the global top-level kitchen appliance brand and the famous luxury
brand of the world. It has products including ventilator, gas stove, oven,dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer
and etc. Its business covers over 50 countries/regions across the world. FPA
is wholly-owned subsidiary of the Company.

Candy

Candy Group (Candy S.p.A) is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has beencommitted to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has beenprestigious in the global market with users all over the world via its ten selfowned professional household appliance brands. In January 2019, Candy
became a wholly-owned subsidiary of the Company.

CMM

China Market Monitor Co., Ltd., as an authoritative market research institutein Chinese home appliances area, was established in 1994 and has been
focusing on research of retail sales in China consumption market ever since.

Haier Smart Home Co., Ltd. Interim Report 2022

Section I Definitions

Euromonitor

Euromonitor, established in 1972, is the leading strategic market information
supplier and has over 40-years of experience in respect of publishing market
report, commercial reference data and on-line database. They create data andanalysis on thousands of products and services around the world.

All View Cloud

All View Cloud (AVC) is a big data integrated solution provider to the smart
home field, providing enterprises with big data information services, regular
data information services and special data services.

IEC

The International Electrotechnical Commission. Founded in 1906, it is theworld’s first organization for the preparation and publication of international
electrotechnical standardization and is responsible for international
standardization for electrical engineering and electronic engineering. The goalsof the commission include: to effectively meet the needs of the global market;
to ensure that the standards and conformity assessment programs areapplied globally in a prioritized manner and to the greatest extent; to assess
and improve the quality of products and services involved in its standards; tocreate conditions for the common use of complicated systems; to improve theeffectiveness of the industrialization process; to improve human health andsafety, and to protect the environment.

IEEE

The Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers, iscurrently the largest non-profit professional technology society in the world. It
is committed to the development and research of electrical, electronic,
computer engineering and science-related fields, and has now developed into
an international academic organization with great influence in terms of the
fields of space, computer, telecommunications, biomedicine, power andconsumer electronics.

Model of Rendanheyi(人 單 合 一)

The concept of “Achieving win-win via Rendanheyi (人 單 合 一) “is theguarantee of Haier’s sustainable operation and the driving force of theCompany featuring a self-motivated and empowering corporate culture. “Ren”
is an employee who has the spirit of entrepreneurship and innovation; “Dan”
is to create value for users. The “Rendanheyi (人單合一) “management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of the Company andits shareholders.

“1+3+5+N” Whole HouseIntelligence All-Scenario
Solutions

Whole House Intelligence All-Scenario Solutions: 1: Smart Home APP; 3:
solutions including whole-house air, water, intelligence; 5. five intelligent
spaces including balcony, living room, kitchen, bathroom and bedroom; N:various personalized intelligent scenario experience.

Haier Smart Home Co., Ltd. Interim Report 2022

5

Section II General Information of theCompany and Key Financial IndicatorsI.

INFORMATION OF THE COMPANY
Chinese name
Chinese short nameEnglish nameEnglish short name
Legal representativeII.

6

海尔智家股份有限公司
海爾智家
Haier Smart Home Co., Ltd.
Haier Smart Home
Li Huagang

CONTACT PERSON AND CONTACT INFORMATION
Secretary to
the Board

Representative ofsecurities affairs

Company Secretary(D/H shares)
OthersName

Liu Xiaomei

Liu Tao

Ng Chi Yin, Trevor

Global Customer
Service Hotline

Address

Department ofSecurities of Haier
Smart Home Co.,
Ltd. Haier
Information
Industrial Park,No. 1 Haier Road,
Qingdao City

Department ofSecurities of Haier
Smart Home Co.,
Ltd. Haier
Information
Industrial Park,No. 1 Haier Road,
Qingdao City

Room 3513, 35/F,
The Center, 99
Queen’s Road
Central, Central,
Hong Kong/Tel0532–88931670

0532–88931670+852 2169 0000

4006 999 999

Fax

0532–88931689

0532–88931689+852 2169 0880

/

Email

finance@haier.com

finance@haier.com

ir@haier.hk/

Haier Smart Home Co., Ltd. Interim Report 2022

Section II General Information of the Company and Key Financial Indicators

III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION
Registered address
Historical change of theregistered address

Business address
Postal code of thebusiness address
WebsiteEmailQuery index for any
changes during thereporting period

Haier Industrial Park, Laoshan District, Qingdao City
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 since
1994, during which the address name was adjusted in line with thechange of name of the industrial park but the actual site remains
unchanged.
Haier Information Industrial Park, Laoshan District, Qingdao City
266101
https://smart-home.haier.com/cn/
9999@haier.com
Not applicable

IV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE ANDDEPOSIT
Designated newspaper for
information disclosure
Website for publishinginterim report
Other websites for annual
report disclosure
Deposit place of interim
reportQuery index for any
changes during thereporting period

V.

Shanghai Securities News, Securities Times, China Securities Journal,
Securities Dailywww.sse.com.cn
https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,https://www.hkexnews.hk
Department of Securities of Haier Smart Home Co., Ltd.
Haier Information Industrial Park, No. 1 Haier Road, Qingdao City
Not applicable

SUMMARIZED INFORMATION OF SHARES OF THE COMPANY

Stock Code

Stock Short
Name Before
Variation

Haier Smart
Home

600690

Qingdao HaierFrankfurt Stock
Exchange

Haier Smart
Home

690D

Qingdao HaierHong Kong Stock
Exchange

Haier Smart
Home

6690

/

Stock Exchange ofShares Listed

Stock ShortName

A shareShanghai Stock
Exchange

D shareH ShareType of Shares

Haier Smart Home Co., Ltd. Interim Report 2022

7

Section II General Information of the Company and Key Financial Indicators

VI. OTHER RELATED INFORMATION□ Applicable√ Not ApplicableVII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE
COMPANY(I)

Key accounting data
Unit and Currency: RMB
Increase/decrease
for the reporting

Key accounting data

Operating revenue
Net profit attributable to shareholdersof the listed Company
Net profit after deduction of
non-recurring profit or loss
attributable to shareholders of thelisted Company
Net cash flows from operating
activities

For the reporting
period(January-June)

121,857,522,462.22

111,727,756,211.06

111,618,822,064.73

9.07

7,949,084,472.70

6,858,902,854.55

6,852,271,812.97

15.89

7,490,693,705.38

6,269,906,406.72

6,269,906,406.72

19.47

5,964,247,657.22

8,442,195,160.31

8,423,823,726.89–29.35As at the end of
the reporting
periodNet assets attributable toshareholders of the listed
Company
Total assets

8

Haier Smart Home Co., Ltd. Interim Report 2022

The corresponding period of last year
After adjustment Before adjustment

period comparedwith thecorresponding
period of last year(%)

86,251,016,004.21
226,652,759,534.60

As at the end of reporting period of lastyear
After adjustment Before adjustment

79,851,734,427.42
217,599,384,435.63

79,810,927,325.55
217,459,494,212.74

Increase/decrease asat the end of
the reporting
periodcomparedwith that oflast year (%)

8.01
4.16

Section II General Information of the Company and Key Financial Indicators(II)Key financial indicators

Key financial indicators

For the reporting
period(January-June)

Basic earnings per share (RMB/
share)
Diluted earnings per share (RMB/
share)
Basic earnings per share after
deducting non-recurring profit orloss (RMB/share)
Weighted average return on net
assets (%)
Weighted average return on net
assets after deducting nonrecurring profit or loss (%)

The corresponding period of last year
After adjustment Before adjustment

Increase/decrease
for the reporting
period comparedwith thecorresponding
period of last year
(%)

0.85

0.74

0.74

14.86

0.85

0.73

0.73

16.44

0.80

0.68

0.68

9.24

9.29

9.29

17.65
decreased by 0.05
percentage point

8.71

8.50

8.50

Increased by 0.21
percentage point

Explanation of the key accounting data and financial indicators of the Company□ Applicable√ Not Applicable

VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS√ Applicable(I)□ Not Applicable

Difference in net profit and net assets attributable to shareholders of the listedcompany in financial statements as disclosed in accordance with International
Accounting Standards and Chinese 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 as disclosed in accordancewith International Accounting Standards and Chinese Accounting Standards by the Company.

(II)

Difference in net profit and net assets attributable to shareholders of the listedcompany in financial statements as disclosed in accordance with overseas
accounting standards and Chinese Accounting Standards□ Applicable√ Not Applicable

Apart from the financial statements prepared in accordance with International AccountingStandards, the Company has not prepared financial statements in accordance with otheroverseas accounting standards.

Haier Smart Home Co., Ltd. Interim Report 2022

9

Section II General Information of the Company and Key Financial Indicators(III) Explanation on difference in domestic and overseas accounting standards□ Applicable√ Not Applicable

IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT√ Applicable□ Not Applicable
Unit and Currency: RMB

Non-recurring profit and loss items
Profit and loss on disposal of non-current assets
Government subsidies through the profit and loss, except for government
subsidies that are closely related to the Company’s normal business
operations, comply with national policies and regulations, and continue to beenjoyed in a fixed amount or fixed quantity according to certain standards
Net profit and loss of subsidiaries arising from business combinations undercommon control of the current period from the beginning of the period to thedate of consolidation
Profit and loss from fair value changes of financial assets held for trading,derivative financial assets, financial liabilities held for trading and derivative
financial liabilities, as well as investment gains arising from disposal of
financial assets held for trading, derivative financial assets, financial liabilities
held for trading and derivative financial liabilities and other debt investments,
except the effective hedging related to the normal operations of the Company
Other non-operating income and expenses except the aforementioned items
reduction: Effect of income tax
Effect of minority equity interest (After Tax)
Total

Amount33,807,493.39

434,830,465.43

4,473,481.70

59,249,736.54
34,282,312.26
98,050,857.35
10,201,864.65
458,390,767.32

Explain the reasons for determination of the non-recurring profit and loss items that are in conformity
with the definition of non-recurring profit and loss items as set out in the Explanatory Announcement
on Information Disclosure by Companies Publicly Issuing Securities No. 1 — Non-recurring Profit andLoss Items□ ApplicableX.

OTHERS□ Applicable10√ Not Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion andAnalysisI.

INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESAND ITS MAJOR BUSINESS DURING THE REPORTING PERIODFounded in 1984, the Company is committed to being an enterprise of the times. Through relentless
innovation and iterations, the Company seized opportunities in the industry by continuously launching
new products that steer market development. After more than 30 years, the Company has become a
global leader in the major home appliance industry, as well as a pioneer in global smart homesolutions.
•Global leader of the major home appliance industry: According to data from Euromonitor — anauthoritative market researcher, the Company ranked first in terms of sales volume in global
major appliance market for 13 consecutive years. The Company has a global portfolio of brands,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to
2021, Haier brand refrigeration and laundry appliances ranked first among major home appliancebrands in sales volume for 14 and 13 consecutive years, respectively.

•

Pioneer of global smart home solutions: Capitalizing on the Company’s full-range home appliances
products, the Company is recognized by Euromonitor as one of the first in the industry to
introduce smart home solutions. Leveraging the Company’s connected home appliance products
and partners, supported by Haier Smart Home APP and Haier Smart Home Experiential Cloud
Platform, with integration of experience centres and franchised stores, the Company provides
users with smart home solutions for a variety of application scenarios, satisfying their pursuit fora better life.

Over the years, the Company has established three business segments, namely the Smart Home
Business in China, the Overseas Smart Home Business, and Other Business.

Smart Home Business in China
The Company provides a full range of home appliance products and value-added services in China
market through online Haier Smart Home APP, supplemented by the Company’s offline experiencecentres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home Business in
China comprises Household Food Solutions (Internet of Food), Household Clothing Solutions (Internetof Clothing), Household Air Solutions (Internet of Air), and Household Water Solutions (Internet of
Water).
•

Household Food Solutions (Internet of Food): The Company provides users with refrigerators,
freezers, kitchen appliances and other products through domestic market sales and exports.
Leveraging the connectivity amongst products, the Company is able to provide users with valueadded dietary solutions featuring a combination of products and services including smart cooking
and nutrition planning in order to meet users’ demands for convenience, wellbeing and taste.

•

Household Clothing Solutions (Internet of Clothing): The Company provides users with washingmachines, dryers and other products through domestic market sales and exports. Leveraging theconnectivity amongst the Company’s smart products, the Company is able to provide users withvalue-added laundry solutions featuring a combination of products and services in order to meetusers’ demands for washing and caring of apparels.

Haier Smart Home Co., Ltd. Interim Report 2022

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Section III Management Discussion and Analysis•

Household Air Solutions (Internet of Air): The Company provides users with residential airconditioners, commercial air-conditioners, purifiers, ventilation systems and other products
through domestic market sales and exports. Leveraging the connectivity amongst the Company’ssmart products, the Company is able to provide users with smart air solutions in order to meetusers’ demands for temperature, humidity, cleanliness and freshness.

•

Household Water Solutions (Internet of Water): The Company provides users with electric water
heaters, gas water heaters, solar water heaters, heat pump water heaters, POE water purifiers,
POU water purifiers, water softening equipments and other products through domestic market
sales and exports. Leveraging the connectivity amongst the Company’s smart products, theCompany is able to provide users with smart water solutions in order to meet users’ demands
for water purification, softening and heating.

Overseas Smart Home BusinessIn addition, the Company also manufactures and sells a comprehensive portfolio of home applianceproducts and provides value-added services in more than 160 countries and regions, including North
America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East, andAfrica.
In the overseas market, 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 the Company’s growth including acquisition of Haier Group Corporation’s
overseas 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, and Candy
in 2019. The development of the Company’s overseas smart home businesses has been fuelled bysynergies among its self- developed business and acquired businesses.
At present, the overseas smart home 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 major home
appliances in key regions in 2021 is as follows: ranked first in Asia with a market share of 20.4%;
ranked second in America with a market share of 15.1% and ranked second in Australia and New
Zealand with a market share of 11.6%. The Company ranked third in Middle East and Africa with amarket share of 7.4% and ranked fourth in Europe with a market share of 8.1%.

Other Businesses
Building on its established smart home businesses, the Company has also developed parts andcomponents, small home appliances, channel distribution and other businesses. In particular, the partsand components business mainly involve procurement, production, and sales of upstream ancillarycomponents for home appliances. The small home appliance business primarily involves small home
appliances designed by the Company, produced by outsourced third-party manufacturers and soldunder the Company’s brands and products serving to enrich the Company’s smart home solutions.
The channel distribution business primarily offers distribution services for products such as televisions
and personal electronics products for Haier Group or third-party brands, which leverages theCompany’s sales network.

12

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion and Analysis

During the reporting period, the Company was once again listed among the Top 500 World’s
Companies by Fortune Magazine in 2022. The Company was named as the ‘2022 World’s Most
Admired Companies’ by the Fortune Magazine. The Company was the only company being selected inEurope and Asia in the home appliances industry and was the only selected company incorporated
outside the US. Meanwhile, the Company is also the world’s only Internet-of-Things (IoT) ecosystembrand being named again as BrandZTM Top 100 Most Valuable Global Brands in 2022.
(I)

Industry overview for the first half of 2022
1.
The Chinese market
In the first half of 2022, demand was sluggish in the domestic home appliance market due
to economic slowdown, weakened consumer confidence, real estate market downturn, andpandemic containment measures which impacted offline sales, distribution, and installation.
Data from CMM showed that the retail sales of the China’s home appliance market(excluding 3C & digital products) in the first half of 2022 was RMB397.951 billion, down
9.89% year-on-year. At the same time, high commodity prices have dragged down
industry’s profit margins.
Retail sales declined year-on-year in refrigerators, washing machines and air
conditioners, while emerging categories including tumble dryers continued to grow.
(1) Retail sales of the refrigerator and washing machine industries reached RMB43.667
billion and RMB32.671 billion in the first half of 2022, down 5.26% and 8.34% year-onyear, respectively. Instead of competing over prices, leading players’ focus on user
experience and R&D-driven product innovation has contributed to a steady increase inaverage prices, in particular in offline channels. According to CMM, average retail price ofrefrigerator and washing machine across online and offline channels have surged 12.87%
and 9.99% respectively. In addition, benefiting from the rise in consumer demand for foodstorage during the pandemic, retail sales of freezer increased 12.12% to RMB7.394 billion.
(2) Air conditioner industry was impacted by the real estate market slowdown and lower
temperature in May and June, retail sales reached RMB84.24 billion in the first half of2022, down 14.09%. After the price war in 2019, competitions have become more rational,
and average prices of the industry rose 7.46% year-on-year. (3) Traditional kitchen
appliances such as range hoods and gas stoves recorded negative growths impacted by
the cooling real estate market, increasing penetration and competition from integrated
stoves. Data from CMM showed that in the first half of 2022, retail sales of range hood andgas stove dropped 14.95% and 9.41% year-on-year respectively to RMB16.754 billion and
RMB10.999 billion. ② Retail sales of integrated stoves amounted to RMB11.783 billion,
representing an increase of 6.54% year-on-year. (4) The water heater industry was
impacted by the downturn of the real estate market, retail sales in the first half of the year
amounted to RMB27.327 billion, down 13.90% compared to the same period in 2021. (5)Emerging categories such as tumble dryers, dishwashers and residential central air
conditioners continued to grow. According to data from CMM, retail sales of dishwashers
reached RMB5.567 billion in the first half of 2022, a growth of 7.43% year-on-year. Retailsales of tumble dryers amounted to RMB4.361 billion, a surge of 41.08% over the same
period in 2021. (6) Small kitchen appliances are consumer discretionary in nature withhigh penetration, industry demand is cooling. According to AVC, retail sales of suchproducts reached RMB26.38 billion in the first half of 2022, down 4.9% year-on-year.

Haier Smart Home Co., Ltd. Interim Report 2022

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Section III Management Discussion and Analysis

Although demand remains suppressed in the short term, industry upgrade
continues to happen on health, smart, and green energy. According to AVC, retailsales of refrigerators above RMB10,000 per unit, washing machines above RMB10,000 per
unit and air conditioners above RMB15,000 per unit have grown against the headwind by
10%, 12% and 17% respectively in the first half of the year. For instance, (1) consumers
increasingly favoured large-size refrigerators and “refrigerator + freezer” combos, withfeatures of freshness preservation, sterilization, and odour control. According to CMM, forthe first half of the year, 500 litre refrigerators accounted for 62.3% of the industry’s total
retail sales offline, up 7.5 percentage points year-on-year; and accounted for 41.6% of total
retail sales online, a year-on-year increase of 5.7 percentage points. Market demand for
self-cleaning, disinfection cabin and fresh air features of air conditioners were on the risetoo. (2) Consumer demand for effective space utilization, consistency in design and smart
technologies continued to grow, with increasing attention on design and installation ofhome appliances and decorations. On one hand, this has promoted the rapid growth of
new categories such as “built-in refrigerators, built-in washing machines, residential central
air conditioners” and according to statistics of China IoL, residential central air conditioners’
output reached RMB18.853 billion in the first half of 2022, representing a year-on-year
growth of 7.78%. On the other hand, this has contributed to the growth in suite products.
In addition, young consumers in their twenties and thirties are less willing to engage incomplicated home furnishing, resulting in a growing demand for one-stop solutions of homefurnishing, home improvement and home appliances.
Leading player continued to capture market shares by leveraging technological innovation,
brand, and extensive distribution network. Industry concentration continued to increase.
According to AVC, the combined offline shares of the top three players in refrigerator,
washing machine, air conditioner, water heater and range hood reached 70%, 80%, 84%,
60% and 65% respectively. Those equipped with superior R&D, design, and distribution
capabilities for suite products were better positioned to acquire and convert user traffic,
increase user value, and accumulate goodwill.
Online retail sales accounting for 53.8% of total sales. Offline chain retailors werechallenged as foot traffic and store expansions were restricted by pandemic containment
measures. Appliance sales in home improvement channels achieved rapid growth
benefitting from user traffic during home renovation and the capability of providing one-stop
solutions integrating appliances with home furnishing. As user’s time is becoming
increasingly fragmented, traffic has gradually migrated to content platforms such as TikTok,
Kuaishou, Xiaohongshu, bilibili, and Zhihu, who have become vibrant sites for productpromotion. In addition, consumption preferences continued to differ, high-end products gainsignificance offline while consumers tend to look for value-for-money items online, leading
to faster growth in mid to low-end markets.

14

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion and Analysis

The government issued policies to promote home appliance consumption andupgrade. Incentive programmes targeting home appliance consumption have beenlaunched by several municipal governments in the second quarter of 2022. In July 2022,
the Ministry of Commerce issued the “Notice on Several Measures to Promote theConsumption of Green and Smart Home Appliances”, which introduced measures toencourage consumption upgrade of green and smart home appliances, including launchinga nationwide home appliances “trade-in” campaign, promoting green and smart home
appliances in villages and townships, expanding consumption scenarios to enhance
consumption experience, and optimizing the supply of green and smart home appliances.
According to statistics from General Administration of Customs, China’s total exports ofhome appliances in the first half of 2022 amounted to RMB283.3 billion, down 8.2% yearon-year. Refrigerator exports amounted to RMB28.6 billion, down 11.8% year-on-year;
washing machine exports reached RMB8.8 billion, down 13.2% year-on-year; air-conditioner
exports totalled RMB34.1 billion, down 1.6% year-on-year. Such reduction was also due toan extent, the higher base of China’s home appliances exports in the corresponding period
in 2021.

2.

Overseas markets
In the first half of 2022, consumption volume was weakened by high inflation with
consumer confidence reduced by economic slowdown overseas. The University ofMichigan’s Consumer Sentiment Index dropped from 68.30 in December 2021 to 47.50 inJune 2022. In the second quarter of 2022, shipment of core appliances in European and
U.S. home appliance markets recorded a single-digit decline year-on-year. The rise of
product prices has contributed to growth in the industry’s retail sales.
(1)

The U.S.: In the first half of 2022, the home appliance industry was challenged bysupply chain shortages and high inflation. According to AHAM (Association of Home
Appliance Manufacturers), the total shipment of the U.S. home appliance market fell
6.5% year-on-year in the first half of 2022, with the shipment of core appliances
down 5.3%. However, total shipment value of home appliances increased 3.8% while
core appliances’ shipment value grew 4.2%.

(2)

Europe: Influenced by inflation and rising energy prices, products with class A energyefficiency were more favoured by consumers. Sales volume remained flat year-on-year
as consumer confidence in Western Europe declined. According to GFK, to cover thecost inflation caused by rising commodity prices, average unit prices of white goods
have increased by 9%, and retail revenue of the industry has grown 4.9% year-onyear. Record level temperatures this summer also contributed to the robust revenue
growth of air conditioners.

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Section III Management Discussion and Analysis(3)South Asia: In India, GDP began to rebound in the second quarter of 2022. Healthconscious and large-size products remained popular and high-end demand wasrobust. The overall retail sales in Pakistan have tumbled by 8% in the first half of theyear, with sales volume dropped by more than 10%. Average prices have hiked 5%–
10% to mitigate the pressure brought about by currency fluctuations and rising raw
material costs.

(4)

Southeast Asia: According to GFK: Thailand’s home appliance industry was sluggish
due to inflation and currency depreciation. Sales volume of refrigerator fell 9.3% in thefirst half of the year. Sales volume of residential air conditioner dropped 9.9% in thefirst half of the year due to economic downturn and an early monsoon season, which
also resulted in 30% volume decline in second quarter. Market demand continued topolarize with mid to low-end consumers focused on meeting their basic needs, while
mid-to high-end market opted for variable-frequency air conditioners, large-capacity
refrigerators and washing machines.
Retail volume in the Indonesian market grew 8.7% year-on-year.

(5)

Australia & New Zealand: According to distributor’s data, sales revenue of home
appliance industry in Australia has grown 10% year-on-year. High inflation, escalatingshipping cost and supply chain shortages caused the average unit price to surge
20%.
GDP fell 0.2% in New Zealand in the first half of 2022, lower consumer confidence
and rising food and fuel prices have forced consumers to cut back on big ticket
items such as home appliances. Distributors’ data estimated that industry sales
revenue have dropped by 2.7%

(6)

(II)

Japan: The industry was challenged by the sharp depreciation of the yen, escalating
prices of energy and food, and the decline in disposable income. According to GFK,
the combined sales volume and sales revenue of freezer, refrigerator and washingmachine increased by 1% and 4% respectively in the first half. Consumers haveincreased demand for large-size, health-conscious and energy-saving products, suchas large refrigerators with outstanding freshness preservation performance, a second
freezer, and large front-load washers with low noise level.

Industry Outlook for the second half of 2022
1.
The Chinese Market:
In the second half of 2022, stabilizing economy and the implementation of policy incentives
will help restore market confidence and propel recovery. Commodity prices have slumped
since the second quarter, which is conducive to easing cost pressure and improving
profitability. CMM forecasts retail revenue of China’s major home appliance market willgrow 3%, reaching RMB320 billion in the second half of 2022.
Looking ahead in the second half of 2022, although commodity and shipping costs
continue to drop and foreign trade stabilization policies are gradually taking effect, given thehigh base volume in 2021, the trend of export market is projected to be neutral.

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Section III Management Discussion and Analysis

2.

The Global Market:
In May 2022, the United Nation’s World Economic Situation and Prospects Report lowered
the projected growth rate of the global economy from 4% earlier in the year to 3.1%.
Global inflation is expected to jump to 6.7% in 2022, which is twice the average in 2010–2020. However, there are new opportunities amid challenges. Energy-saving andenvironmentally friendly home appliances, along with alternative energy heat pumps, havebecome new growth drivers. The trend of smart connectivity is also catching on in theindustry.
Chinese home appliance players with comprehensive brand portfolio, advanced R&D andmanufacturing capabilities, extensive localized distribution networks, and efficientmanagement are positioned to gain share globally.

II.

ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD√ Applicable□ Not Applicable

The Company has established a solid strategic presence and competitive advantage in China andoverseas markets. In China’s major home appliance market, the Company has long maintained aleading position across all product categories. According to CMM’s report, the Company has
established a continued leading market position in key major home appliance categories in 2021. In
overseas markets, the Company has adhered to its high-end brand creation strategy, building capacity
to create leading sustainable growth, which has continuously improved its market shares. Building on
this foundation, the Company will further consolidate its leadership position in the industry byleveraging integrated synergies of its global unified platforms, through efficiency transformations driven
by digitalization, and by leveraging its technological strengths and innovative capabilities. As
cornerstone for sustainable development, the Company’s ‘Rendanheyi (人單合一）’ Model also provided
management guidance to the Company to replicate successful experiences. It is believed that thefollowing advantages will help the Company to continue to strengthen its leading position:(i)

Dominance in China’s high-end market; rapid growth of overseas high-end
brandsRiding the trend of consumption upgrade in China, the Company started to develop the highend brand Casarte in the Chinese market more than 10 years ago. The creation of high-end
brands required not only focus, experience, and patience, but also continuous innovation oftechnological standards and differentiated service capabilities to fulfil user demand for high-quality
experiences. The Casarte brand combined the Company’s global technological strengths, productdevelopment capabilities and manufacturing craftsmanship, as well as privilege marketing anddifferentiation services, and has gradually won the trust of users in China’s high-end market.
According to statistics from CMM, the Casarte brand has assumed a definitive leading position in
China’s high-end major home appliance market, ranking first in the retail sales of refrigerator,
washing machine and air conditioner categories in the high-end segment. In the first half of2022, in terms of offline retail sales, shares of the Casarte brand of washing machines andrefrigerators reached 75.2% and 38.6% respectively in the market with product price above
RMB10,000 per unit in China, while its share of air conditioners priced above RMB15,000 per
unit in the China’s market reached 31.2%. The Company’s overall average price for refrigerators,
air conditioners and washing machines was roughly two to three times the average price of theindustry.

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Section III Management Discussion and Analysis

In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. The Company has enhanced its high-end brand profile through launch of
products such as professional gas range, large multi-door refrigerators, ultra-fresh dishwashers
with stainless steel interior, Opal ice makers, and automatic espresso machines. CAFÉBELLISSIMO Espresso Machine was named in CBS News (a renowned media outlet in the UnitedStates) Best Mother’s Gift, GE Profile new Kitchen Hub received 30s Choice Award from NKBA
(National kitchen & Bath Association). Through the creation of luxurious, customizable, and smart
technology-enabled user experience, high-end Monogram, Café and GE Profile have grown
rapidly. In the first half 2022, three high-end brands recorded over 40% revenue growth.

(ii)

Smart household solutions that continue to expand and upgrade
As users continued to demand for higher living quality, coupled with the development oftechnologies such as Internet of Things, big data, cloud computing and artificial intelligence, theindustry has shown a smart and high-end development trend that prioritized product suites,
based upon scenarios, and home appliances integrated with home furnishings. With leading user
insights, extensive product coverage and technological accumulation from intelligent AI
algorithms, home big data and IoT equipment technology, the Company provided scenario
solutions such as food storage and cooking management, clothes laundry and mix-and-match
management, whole-house air comfort and purification management, and healthy drinking water
management for five major spaces at home, including the living room, kitchen, bathroom,
bedroom and balcony, thereby ‘Designing a home, building a home, and serving a home’ forusers.
Three-Winged Bird stores provided users with scenario solutions that integrates smart home
appliances and smart home furnishings, and through having a service steward to attend to theneeds of users throughout the process, through coordination and arranging with the internal
specialised team, providing users with a whole-process service that comprised design andimplementation, building materials selection, as well as installation and fulfilment. For example,
the Three-Winged Bird kitchen scenario solution could provide users with a whole-processservice from a suite of smart kitchen appliances to cabinet design, delivery, installation, andfulfilment.
Based on the Haier Smart Home Brain platform, users could upgrade the functions of smart
home appliances, enjoy services such as professional fitness training, recipe recommendations,purchase of ingredients through refrigerator, automatic selection of laundry programs, andpersonalized scenarios through interfaces including the Haier Smart Home App and the Xiaoyou
Speaker. In the future, the Company will continue to address the needs of user experience, andto further improve and enrich the smart home solutions provided by the Company. Throughscenario solutions and ecosystem services, the Company will provide lifelong services for users
and further enhance users’ loyalty.

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Section III Management Discussion and Analysis(iii) Extensive and solid global presence with localized operational capability
In addition to success in the Chinese market, the Company also prospered in overseas markets.
The Company seeks overseas expansion of its own brands as well as synergies with acquired
brands to develop overseas markets. Such business strategy has guided the Company toestablish R&D, manufacturing and marketing three-in-one structure across 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 its
flexible and autonomous management mechanisms established in various overseas markets,
which have enabled the Company to gain rapid insights and respond swiftly to local user
demands. The Company also proactively integrates into local markets and cultures and has
established a corporate image that is recognized by local communities in the overseas regions
where the Company operates.
In 2021, the Company operated 10 R&D centres, 122 manufacturing centres, and 108 marketing
centres around the world, and achieved a coverage of nearly 130,000 points of sales in overseas
markets.

(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address
the needs of users from different tiers in various markets around the world, the Company has
adopted a differentiated multi- brand strategy in different regions that centred around users, so
as to achieve an extensive and in-depth user coverage. For example, in the Chinese market: thethree brands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream andniche market 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, midrange and low-end markets, thereby meeting the preferences and needs of different types ofusers.

(v)

Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company has
acquired 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 (which
has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in
2019. 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 employees
and enable them to generate more value. Secondly, the Company made use of its global
platform 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.

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Section III Management Discussion and Analysis(vi) Comprehensive and in-depth global collaborations and empowerment
The 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 its successful market development experience to various
markets around the world. By strengthening the synergies among its global businesses, theCompany has created a strong driving force for its future development.

20•

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 common
technologies, and share patents within the scope of compliance. For example, ① theCompany successfully applied the direct-drive motor technology developed by
Fisher&Paykel to the Casarte brand of washing machines and achieved satisfactory results.
② integrating global R&D platform resources and leveraging technologies around the globe,
such as China’s product structures and hydraulic technology, Japan’s functional design
technology, New Zealand’s driver system, and the American control system, the Company
launched the GE brand’s large-volume front-load washers in the U.S. market, which has led
to increases in both the market share and average price of washing machine products in
the U.S. market.

•

Global collaborative product development: The Company has established a global productdevelopment mechanism to coordinate global collaborative product development, which canenable regional collaboration and supplementation across product categories. For example,
the Company successfully supported GE Appliances to relaunch water heater business: thedevelopment teams in North America and China are highly integrated, benchmarking thedifferences in standards between Haier and products in North America. Haier’s R&D
advantages were combined with GE Appliance’s quality assurance system to jointly develop
the product. The resulting electric water heater product has achieved industry leadership interms of design, manufacturing, and inspection, with annual sales of more than 50,000
units, thus providing solid support for GE brand’s water heaters to successfully enter the
North American market.

•

Global collaborative procurement: The Company’s global procurement activities arecoordinated by its global procurement guidance committee. By leveraging the Company’s
global procurement operations platform, the Company’s operating divisions in different
regions can share global procurement resources, thereby achieving economies of scale.

•

Global collaborative supply chain: The Company has a visualizable and digitalized global
supply chain management system, which has enabled flexible deployment of global
production capacity, and sharing and collaboration in the development of smart
manufacturing technologies.

•

Global collaborative marketing and brand promotion: The Company operates a multi-level
brand portfolio on a global scale, which can realize global collaborative brand promotion.
The Company also promotes and introduces successful marketing strategies among
regional markets around the world. For example, the Company successfully replicated its
sales and marketing model from third and fourth- tier markets in China, in markets such as
India, Pakistan, and Thailand, which have strengthened the Company’s brand image and its
regional market competitiveness.

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Section III Management Discussion and Analysis(vii) Industry-leading R&D and technological capabilities
To ensure better living experience for users, the Company has established a global leading R&D
system under the premise of developing original technologies, thereby using original technologies
to support the overall industry-leading positions of the Company’s high-end brands, scenario
brands and ecosystem brands.
•

Leadership in terms of patent quality: As of the end of June 2022, Haier Smart Home has
accumulated more than 83,000 patents applications globally, of which there were morethan 53,000 invention patents which accounted for more than 63%. The number ofoverseas invention patents, which have been obtained in 30 countries, exceeded 15,000,
making us the Chinese home appliance enterprise with the largest number of overseas
patents.

Haier Smart Home won 1 more gold award in the 23rd China Patent Gold Awards. Having
obtained 11 state patent gold awards, Haier Smart Home ranked first in the domestic market.
In the ‘Global Smart Home Invention Patent Ranking’ in the first half of 2022, Haier outran its
counterparts from all over the world with 2,655 published patent applications, ranking first in theworld for seven consecutive years. There were 20,298 published patents for the smart homesegment.
•

Leadership in terms of international standards: As of June 2022, Haier Smart Home has
cumulatively led and participated in formulation of 82 international standards and has
issued 611 state/industrial standards, among which 389 were state standards and 222
were industrial standards.

It is the only company in the industry to obtain comprehensive coverage in the five majorinternational standard organizations, namely the IEC, ISO, IEEE, OCF and Matter. It is also the
only enterprise in the world to serve on the Council Board (CB) and Market Strategy Board(MSB) of IEC, its two highest management authorities, at the same time, which have enabled theCompany to stay actively involved in international standardization work and have a voice in theformulation of standards.
•

Leadership in terms of original technologies: The Company has innovated a range of solutions
that exceeded users’ expectations, such as the launch of the Casarte’s ‘simultaneous fivering fire’ gas stove, which enlarged the pot heating area by 40% through the use of multiring uniform combustion system, ingredients in the pot could therefore be more evenly andcomprehensively heated. The Company also introduced the Casarte’s Zhongzihemei all-inone laundry machine that could perform the three functions of washing, fabric-caring anddrying in the same machine; through continuous iteration of original technologies, it solved
the three major pain points of high-end washing, drying and fabric-caring. We therefore
created a new product category in the laundry industry and has continued to increase ourmarket share of high-end washing machines.

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Section III Management Discussion and Analysis

In January 2022, the National Development and Reform Commission of China announced the listof national engineering research centers to incorporate new sequence management. The National
Engineering Research Center for Digital Home Network built by Haier successfully passed theselection for optimization and integration. The center has achieved a number of breakthroughs inresolving bottlenecks in core and key technologies constraining the development of smart home
appliance industry, especially in the application of three key areas: operating system, artificial
intelligence and SOC chips.
Our HOPE platform, as Haier’s window for external technology collaboration, tracks, analyses andresearches technologies closely related to industry development that are 3–5 years ahead of time,and promotes the industrialization of related technologies, continue to build on the core
methodologies of user insights, demand analysis, technology analysis and resource assessment,
while brings together the supply and demand side of technologies, knowledge and creativity,
providing interactive scenarios and tools to facilitate the creation and iterations of innovative
products/scenarios. Taking Haier’s air conditioner’s ‘variable shunt technology’ as an example,
through collaboration with relevant experts, 36 patents have been applied for the technology,
including 4 PCT international patents. According to results from a real device test conducted by
CHEARI (Beijing) Certification & Testing Co. Ltd., the energy- efficiency of a 1.5 HP Haier
variable refrigerant flow air conditioner is 12% higher over a period of one year than that of an air
conditioner with the new national standard of first-class energy efficiency with same power level.

(viii) 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. From
the 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 values
for users. In Haier’s ‘Rendanheyi’ (人單合一) model, ‘Ren’ refers to creators; ‘Dan’ refers to user
value; ‘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 denying
our own perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship andinnovation. We turned employees into creators, implementers into entrepreneurs, and transformed
enterprises into open ecosystem platforms, which have supported the Company to become a
global leader of smart home in the Internet of Things era.

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Section III Management Discussion and Analysis

III. DISCUSSION AND ANALYSIS ON OPERATIONS
Amid the challenging first half of 2022, the Company leveraged strengths in high-end brands, overseas
proprietary brands while accelerating digital transformation, to deliver solid results.
In the first half of 2022, the Company realized sales revenue of RMB121.858 billion, representing an
increase of 9.1% year-on-year. The growth was driven by: (1) strengths of high-end brands, suite
products and scenario-based solutions in the Chinese market which enhanced user value; (2) overseas
market share gain supported by localized “R&D, manufacturing & sales” and global integration; (3)expansion in distribution network and accelerated digitalization which improved customer acquisitionand conversion.
In the first half of 2022, net profit attributable to the owners of the parent company reached
RMB7.949 billion, representing an increase of 15.9% compared to the same period of 2021.

1(1)

The Company’s gross profit margin reached 30.2%, up 0.2 percentage points year-on-year, driven
by product mix upgrade with enhanced competitiveness, effective supply chain costmanagement, streamlined SKUs supported by integrating R&D and distribution; improved
management of tier 2 & 3 suppliers, increased level of in-house produced components, all ofwhich aimed at improving the Company’s competitiveness of the entire value chain.

(2)

The Company’s selling expense ratio was 14.4%, representing a reduction of 0.6 percentage points
year-on-year. The optimization was due to digitalization aiming at improve marketing precisionand efficiency; integrating manufacturing, distribution & logistics to improve fulfilment efficiency
and optimize inventory turnover; replacing service dispatch centres with system’s direct matchingof user request and maintenance personnel; accurate prediction of manufacturing and storage ofspare parts & components using algorithm to reduce spare parts expense ratio1.

(3)

The Company’s administrative expense ratio was 4.2%, representing a reduction of 0.3 percentage
points year-on-year, because of digital reform and process redesign.

(4)

The Company’s financial expense ratio was –0.2% (represented as financial income for the period),
optimized by 0.5 percentage points year-on-year. This was due to the increase in interest income
from the Company’s improved capital management and the increase in foreign exchange gainfrom the optimization of foreign exchange management.

(5)

In the first half of 2022, the Company’s net cash inflow from operating activities was RMB5.964
billion, a drop of RMB2.478 billion year-on-year; in the second quarter, the Company’s net cash
inflow from operating activities amounted to RMB4.809 billion, a surge of 316.5% compared to
the first quarter. ① In the first quarter, the Company’s net cash inflow from operating activities
decreased by RMB1.714 billion year-on-year, which was due to increase in commodity inventory
and chips procurements in China, reduced payment collection amid pandemic, and increased
stockpiling caused by overseas logistics constraints. ② The net cash flow generated fromoperating activities in the second quarter decreased by RMB764 million on a year-on-year basis,
mainly due to the increase in cash expenditure for purchasing goods and services in overseas
business due to the sharp rise in raw material prices and shipping fees, as well as the increasein product and raw material stock due to the growth of overseas business and the constructionof new factories overseas.

Spare parts expense ratio: the costs of spare parts used for maintenance divided by revenue.

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Section III Management Discussion and Analysis(I)

Smart Home Business in China
In the first half of 2022, smart home business in China achieved sales revenue of RMB64.763
billion, representing an increase of 12.7% year-on-year. Operating profit grew by 27.7% to
RMB4.944 billion. The revenue growth was attributable to the Company’s increase in market
shares across the board, strong momentum of Casarte, network expansion and enhancement incustomer acquisition and conversion.
1.

Household Food Storage and Cooking Solutions(1) Refrigerator and Freezer BusinessIn the first half of 2022, the refrigerator and freezer business achieved sales revenueof RMB21.744 billion, a year-on-year increase of 13.3%, with market share gains andstrengthened high-end leadership. According to CMM, Haier’s offline market share
increased 2.7 percentage points to 43.3%, online market share went up 0.4
percentage points to 39.2%, and offline market share of products above RMB15,000
per unit amounted to 53.1%, up 9.9 percentage points year-on-year.
Casarte focused on kitchen aesthetics and cell-level freshness preservation andintroduced the seamless built-in series meetings consumers’ demand for large
capacity, appealing design, and combination of multiple units. Casarte’s built-in
products achieved revenue growth of 36% year-on-year, contributing to RMB1,000
increase in average price per unit.
The Company published Built-in Refrigerator Standards 3.0, which upgraded thestandards for seamless built-in refrigerator and spearheaded the development of builtin products and kitchen aesthetics in the industry. During the reporting period,
seamless built-in technology obtained 155 invention patents and passed the UL
certification in the U.S., and consolidated the Company’s advantages with its heatdissipation efficiency and flexibility in assembling.
Haier brand adhered to technological upgrades in precise cooling of storage zones,
image recognition, and intelligent voice interaction, in order to drive the growth ofhigh-end products such as Boguan (博 觀) series; according to CMM, Haier brandalone accounted for 9.5% of the retail share of products with price per unit above
RMB10,000. During the reporting period, Haier brand pioneered the industry with thelaunch of a refrigerator containing a freezing capacity of 265 litres to meet users’
need for larger storage space. The Company was chiefly responsible for the draftingof IEC International Refrigerator Preservation Standards and the “Level 1 Healthy
Preservation” Standards 2.0, and led the development of preservation technologies
based on international standard to address healthy diet concern. The Company has
made technological breakthrough with the “bottom-based refrigeration system”,
featuring “zero-temperature-fluctuation, zero-air-blow, and zero-delay” to ensure thefreshness of food. This technology has obtained 236 invention patents and passed
the European VDE certification and the American UL certification.

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Section III Management Discussion and Analysis

During the reporting period, the Company focused on cell-level freezing andpreservation technology to grasp the surge in demand for upright freezers. Sales
revenue of freezers in the domestic market grew by 15%.
The Company also catered to demands for additional refrigeration devices, with theintroduction of fridge + freezer (ice bar) and fridge + wine cooler sets.
The Company continued to iterate high-end products, grasped the market opportunity
for larger volume refrigerators, high-end T-door refrigerators and French door
refrigerators accounting for over 70% of total export revenue, which helped export
business outperform the industry.

(2)

Kitchen appliance business
During the reporting period, China’s kitchen appliance recorded revenue of RMB1.988
billion, a year-on-year increase of 11.4%. Revenue of Casarte’s kitchen appliances
grew 46.0% year-on-year, accounting for 27.1% of domestic kitchen appliancerevenue, up 6 percentage points. Dishwasher grew 26.9% year-on-year, of which
Casarte’s dishwasher increased 54.4% year-on-year. According to CMM, theCompany’s offline retail share of kitchen appliances went up 1 percentage point,
reaching 8% in the first half of the year, with Casarte’s market share grew by 1.3
percentage points to 3.9%; overall online retail share amounted to 4%.
During the period, the Company focused on showcasing Casarte’s best-sellingscenarios to increase presence in home improvement channels, gaining ground inretail through forming designers’ alliances, and fostering user conversion with cleaning
and replacement services. The Company added 313 new Three-Winged Bird smart
kitchen stores and entered 902 stores in villages and townships.
The Company continued to leverage technological expertise from GEA, FPA and
Candy to establish differentiated competitiveness and gain user goodwill. (1) Casarte’s
range hood continued to upgrade its smart air technology, which solved the problemof poor smoke exhaust on upper floors and allowed customization of air flow volume
according to users’ environment. (2) The performance of built-in ovens, steamers andintegrated steam ovens continued to improve. The precise and constant temperature
control technology enabled consistent baking quality and ensured similar colour andtaste of every layer during multi-layer baking. (3) Casarte’s Zhongzihemei (中 子 和 美)
dishwasher is equipped with FPA direct-drive motor on the upper drawer, and asterilizer in the lower drawer with medical-grade light wave pasteurization, addressing
growing demands for cleansing and caring of fine tableware.

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Section III Management Discussion and Analysis

2.

Household Clothing Solutions
During the reporting period, the Company’s washing machine business achieved sales
revenue of RMB14.784 billion, representing a year-on-year increase of 14.1%. According
to CMM, the washing machine business continued to lead the industry in terms of market
share. Online and offline shares by retail revenue were 40.2% and 45.9% respectively, of
which, the share of offline retail revenue grew 3.3 percentage points year-on-year.
During the period, the Company launched Casarte’s Zhongzihemei (中 子 和 美) washer anddryer combo, which integrated washing, drying and clothes caring functions while sharing
realtime data of each process, it was designed to reduce creases, wear & tear while using
lower level of energy. Air Wash with negative ion was also used to enhance experience byremoving wrinkles, odour, and bacteria. Zhongzi series adopted an all-flat design that
perfectly blended in with the home environment. According to CMM, the Company has
75% of market share of washers above RMB10,000 per unit, demonstrating a leading
advantage in the high-end market.
In addition, the Company continued to expand the tumble dryer business. In the first half ofthe year, domestic revenue of dryers grew 94% year-on-year. To solve the pain points ofincomplete drying and tangled laundry, the Company pioneered the dual-engine heat pumptechnology, to keep the laundry untangled and evenly heated, thus greatly improved user
experience. In addition, the Company has optimized its supply chain and started building a
new dryer factory in Shanghai which is expected to add 2 million units in capacity. During
the period, the Company’s dryer business ranked No.1 with offline retail share of 37%, up
5 percentage points year-on-year. Online retail sales skyrocketed 108% year-on-year.
During the period, despite pandemic outbreak, rising shipping costs and currency
fluctuations overseas, the washing machine business remained committed to brandpremiumization and product mix upgrade, meeting the needs of overseas users withdifferentiated products. According to China IoL, the Company achieved growth despite
declining revenue and volume in the sector. Export volume rose 11.5%, accounting for26.2% of market share, and export revenue grew 2.7%, accounting for 23.9% of market
share.

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Section III Management Discussion and Analysis

3.

Air Solutions
During the reporting period, the Company’s air conditioner business achieved revenue of
RMB19.46 billion, an increase of 10.3% from the same period in 2021.

(1)

Residential air conditioner business
The residential air conditioner improved operational efficiency by accelerating network
expansion. Online and offline domestic market shares continued to grow. According
to CMM, the Company’s offline retail share of air conditioners (standing & wallmounted units) increased 3.96 percentage points to 19.84% in the first half of 2022,
whereas online retail share rose 0.9 percentage points to 14.1%. Meanwhile, retailshare in the offline high-end market (wall-mounted units priced above RMB4,000 per
unit and standing units priced above RMB10,000 per unit) reached 25.5%, anincrease of 6.3 percentage points. Residential central air conditioner continued to
grow rapidly: according to China IoL, the Company’s share of residential central air
conditioners was 15.88%, an increase of 1.55 percentage points year-on-year.
Overseas business also boomed, data from China IoL showed that the Company’s
export revenue increased 32.26% in the first half of 2022.
During the reporting period, the Company launched ‘Haier polymerized ionic Air Wash’
wall-mounted air conditioner with innovative air flow structure for improved
experience, and it can remove seven types of air pollutants including PM2.5, while
increasing humidity and negative ions.
During the reporting period, the Company’s residential central air conditioner recorded
revenue growth of 38%. The Company launched “Tianfudishui” (天氟地水) series withultra-low refrigerant noise and high cooling efficiency, the air conditioner, floor heating
and ventilation system could be controlled on the same screen, making this productthe focal point of air solutions at home.
The Company improved in-store product display, by demonstrating cooling & heating
speed, low noise level and sterilization features while gaining goodwill by providing air
conditioner cleaning services in the lower tier market. More than 2,800 new franchiseoutlets were added in the first half of the year. On the e-commerce channel, theCompany concentrated on creating best-sellers such as ‘Machinist’ series to capture
mid to high end markets opportunities. The Company also enhanced presence inlower-tier markets with 30% increase in the number of outlets.
In the first half of the year, Haier’s residential air conditioner registered a growth of
32.6% in export revenue. The rapid growth was due to the Company’s commitment
to health-conscious products. The LED-UVC module in Haier’s health-boosting air
conditioners can emit ultraviolet rays, it was verified by Texcell in France for its
99.998% inhibitory effect on the COVID-19 virus. The Company also enhanced
competitiveness of its export business by integrating product platforms and optimizing
SKU portfolio.

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Section III Management Discussion and Analysis

Significant improvement in profitability of residential air conditioner was achieved by ①
streamlining SKUs through platform integration, with 17% increase in revenue
contribution per SKU. ② implementing supply chain forward integration to increase
the in-house manufacturing of five modules including circuit boards, thus, reducing
material cost by 5.5 percentage points. ③ establishing a full process cost committee,
upgrading the databases of material suppliers, module suppliers, and technicalsuppliers, and building lean cost models to improve individual model’s gross profit
margin. Taking the components of tube modules as an example introducing lean costmodel has saved over RMB16 million.

(2)

Commercial air conditioner business
The Company provided users with customized solutions to quickly grasp market
opportunities, leading to a 26.1% revenue increase in the domestic commercial air
conditioner business. In the domestic market, the Company’s share increased 0.9
percentage points year-on-year to 10.4% in the first half of the year. The Company
ranked second in the export market with 16% market share, up 1.5 percentage
points year-on-year.
During the reporting period, the Company continued to innovate IoT central air
conditioners and spearheaded the industry development in energy efficiency
performance. The Company also made breakthroughs in compressor and high-speed
frequency invertor technologies. ① The Company’s EVI MRV has undergone upgradewith low-temperature heating performance improved by 30% and stable performance
under 56ºC. The application of smart IoT technology not only realized remote control,
centralized coordination, and separate billing, but also performed load prediction andreal-time monitoring of refrigerant quantity through big data analysis. The
600,000-square-meter Shandong University Industry Science Park project in Jinan has
a glass structure with high demand for heating and Haier’s customized IoT-based
VRF units perfectly solved the difficulties of significant difference in drop height andplacement of outdoor units and fulfilled the needs for separate billing and intelligent
energy-saving. ② The Company introduced the air-cooled modular chiller, with roomtemperature unit that can produce heat under the full-working condition of –15ºC to
50ºC to cater to the heating and cooling demand of offices, hotels, hospitals, schools
and others scenarios, whereas the low ambient temperature unit can achieve a water
discharge temperature of 45ºC at –35ºC, meeting heating demand under extremely
cold conditions. ③ Luxshare ICT’s production site required high precision intemperature and humidity, Haier provided a comprehensive energy-saving solution of
151 water-cooled magnetic bearing centrifugal chiller units, thus laying down
foundations for long term strategic partnerships. ④ In response to the market
opportunities from clean energy replacement initiated by the “carbon peaking andcarbon zero” strategy, the Company introduced building energy saving, manufacturing
engineering energy saving and waste heat recovery solutions, and grew this businessby 26% in the first half of the year.

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Section III Management Discussion and Analysis

Export revenue of the Company’s commercial air conditioners rose 32% in the firsthalf of the year, attributable to: ① The implementation of carbon neutrality policy in
the European Union has fuelled consumer demand for heat pumps, the Company
quickly seized the market through its comprehensive HVAC channels and doubled its
revenue. ② In the American market, the Company developed the market for multisplit products through its localized brands. ③ In the Southeast Asian market, theCompany built a professional workforce to make headway in the water chiller market
and established competitive edge with water-cooled magnetic bearing centrifugal
chiller units in Thailand.
4.

Household Water Solutions
During the period, the Company’s water heater and water purifier business achieved
revenue of RMB6.786 billion, an increase of 15.3% year-on-year.

(1)

Water heater
During the reporting period, the Company continued to strengthen its leading
advantages. The offline retail share of the Company’s water heater business was
30.6%, an increase of 3.5 percentage points year-on-year; online retail share was
33.7%, an increase of 3.4 percentage points year-on-year. Casarte consolidated its
high-end market position through differentiated technologies such as crystal tank,seamless titanium tank and gas-electric hybrid system. It is one of the top threebrands in the industry with market share of 13.4%.
Following the launch of the limescale-free, leakage-free, and rust-free Casarte Crystal
Tank Galaxy series, the Company expanded its dual-tank product line-up meetinguser demand for small-size, appealing design, and large-capacity electric water
heaters. During the period, the Company’s retail share of electric water heaters
reached 41.7%, an increase of 2.2 percentage points year-on-year. Casarte’s retailshare amounted to 15.5%, a growth of 1.8 percentage points year-on-year.
Gas water heater expanded its edge through technological innovation, with revenue
increase of more than 20%. During the period, the online retail share of Haier’s gas
water heaters reached 23.3%, up 2.1 percentage points compared to the same
period of last year; offline retail share reached 22.4%, representing a rise of 3.4
percentage points year-on-year. The Company pioneered the hybrid gas/electric
constant temperature technology that alternates between gas and electricity to solve
users’ pain points of slow heat up and inconsistent temperature by providing water atconstant temperature, and create enhanced bathing experience.
During the period, the Company’s air-sourced heat pump water heater has
accelerated the R&D of health-oriented products which featured high watertemperature, disinfection, frequency conversion and energy saving. Haier brand has
consolidated its leadership with a cumulative offline retail share of over 70%, and an
online retail share of 65%. Haier dominated the industry with nine out of ten bestselling models.

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Section III Management Discussion and Analysis(2)

Water purifier
According to CMM, during the period, Haier’s water purifier achieved a retail growthof 14.3% offline with retail share increased by 5 percentage points year-on-year andranking the Company amongst the top three brands in the industry.
During the period, water purifiers strengthened its competitiveness through productinnovation. Following the launch of Casarte’s Yunzun (雲 鱒) mineral water purifier
series that solved users’ pain point of lack of minerals in purified water, the Company
iterated the product and introduced Yunlan (雲 瀾) series with easy filter replacement,
helping the Company ranking No. 1 in terms of market share of products above
RMB5,000 per unit.
Water purifier concentrated on supply chain optimization and realized in-housemanufacturing of filters, water circuit boards and injection mouldings to facilitate
product development, scenario implementation and strong revenue growth.

5.

China operation: accelerating reform and taking the initiative to grow against the
headwind.
Facing industry downturn in the first half of the year, in particular multiple pandemic
outbreaks in the second quarter, the Company managed to grow against the headwind byaccelerated digitalization and distribution network expansion as well as capturing
opportunities from government’s consumption incentives. According to CMM, the market
share of Haier’s major home appliances reached 27.4% in the first half of 2022, up 2.4
percentage points year-on-year.
Selling expense ratio was optimized by 0.9 percentage points in China, leveraging reduction
in cost redundancies and improvement in marketing efficiency driven by process reform andimplementation of digital management tools; increase factory-to-DC fulfilment, while
reducing inventory and warehousing handling to reduce logistics expenses.
Strengthening distribution network to enhance competitiveness.
(1)30

Revenue from franchised channel grew 8% driven by ① store digitalization, as of theend of June, more than 8,000 franchised stores were operating on the platform
covering 90% of the entire network; digital marketing tools helped conversion rate
reach 19% with total transaction value of RMB21.2 billion. ② unlocking the growthpotential of weak areas through targeted deployment of staff, products, andmarketing resources.

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Section III Management Discussion and Analysis(2)

In the first half of the year, retail sales grew by 25% online, driven by: ① integrated
multiple platforms online and offline, facilitating sharing of membership privileges tomaximize user value. ② continued product mix optimization, during the reporting
period, 22 new products were launched online by high-end Casarte brand,
contributing to 12% increase in ASP. Tmall flagship store’s revenue from suite
products increased 11 percentage points year-on-year, reaching 56% of total. ③
implementing order management model using algorithm to improve accuracy of order
forecasting and inventory turnover, the proportion of factory-to-DC delivery increasedby 8 percentage points, realizing over RMB21 million reduction in expenses. ④
strengthened presence on new retail platforms including TikTok and Kuaishou,facilitating promotions with rich contents and increases in private domain traffic. The
Company has become No.1 major home appliance brand on both TikTok andKuaishou.

(3)

In the first half of 2022, the Company’s retail revenue from home improvement
channels amounted to RMB5.1 billion, an increase of 66% year-on-year. During thereporting period, the Company formed strategic partnerships with leading players
including Red Star Macalline and Easyhome Furnishing, to share marketing and user
resources. The Company also established additional presence in 69 Red Star
Macalline malls, 55 Easyhome Furnishing malls, 15 Yuexing Furnishing malls, 9
Ouyada malls and 185 local building materials malls.

Strengthening multi-brand strategy to meet diversified user demands(1)

Casarte brand continued to lead the high-end market with 38.6% and 75.2% sharein refrigerators and washing machines above RMB10,000 per unit as well as 31.2%
share in air conditioners above RMB15,000 per unit. In the first half of 2022,
Casarte’s revenue increased by 20.8% with a growth of over 30% in the first quarter.
Pandemic containment measures put pressure on sales and fulfilment offline in April
and May, however momentum restored and growth resumed to 20% in June as theoutbreaks were gradually under control.
“Connoisseur series” and “Z series” were introduced targeting high-end and young
consumers, while more efforts were made to enhance Casarte’s comprehensive setsofferings, in the first half this year, revenue contribution of Casarte’s product suites
reached 38.6%, a year-on-year increase of 1.5 percentage points. The Company also
focused on expanding home improvements related products, Casarte’s tumble dryer
and dishwasher grew over 50% in the first half of the year, the growth of residential
central air conditioners exceeded 80%. The Company accelerated the development inhome improvement channels to better meet high-end users’ needs for one-stop
comprehensive sets of products.

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Section III Management Discussion and Analysis

(2)

6.

Positioned as “Gen Z’s home appliances”, Leader achieved 7.0% growth against the
headwind. The breakthrough was made with renewed brand image and a collection ofbest sellers including “Bigger wind curtain” air conditioner that enjoying popularity withstrong blow technology, soft wind blow and smart wind control.

The Three-Winged Bird focused on “customizing smart home living” for users andcontinued to grow its capabilities in “scenario solutions, the Smart Home Brain,
digital platforms and the 1+N system”, to optimize scenario experience andenhance user value.
The Company continued to iterate its scenario solutions. During the reporting period, theCompany launched the “1+3+5+N” whole-house complete-scenario smart solution,leveraging Smart Home Brain and whole house connectivity to fulfil users’ needs in various
living scenarios. During the reporting period, sales volume of the Company’s smart devices
grew 14.5% year-on-year; daily active users of smart devices surged 63% year-on-year;
daily active users of scenario solutions soared 88% year-on-year from 1.5 million to 2.83
million.
Leveraging scenario experience, 1+N capabilities and digital tools, the Company enhanced
in-store scenario solutions with increased user value. During the reporting period, theCompany added more than 200 new Three-Winged Bird touch points, sales per square
metre has increased by 8.2% to RMB21,000/year. Sales of high-end products accounted
for 39.74% in Three-Winged Bird stores, an increase of 4.65 percentage points year-onyear.

(II)

Overseas home appliances and smart home businesses
During the reporting period, the Company’s overseas business achieved revenue of RMB61.481
billion, up 8.0% year-on-year. Operating profit grew 13.0% year-on-year to RMB3.634 billion
operating profit margin reached 5.9%, a growth of 0.2 percentage points year-on-year. The robust
performance exceeding the industry was contributed by the Company’s swift action to grasp highend market opportunity under the “Rendanheyi (人單合一)” Model, i.e. high-end brands’ revenue
growth of over 40% in North America. The Company also accelerated channel expansion, inparticular in HVAC channel; strengthened local manufacturing capabilities by leveraging global
supply chain platform; while mitigating the impact from escalating sea freight and chip shortages
with global procurement negotiation, resources optimization and joint procurement.
1.

32

AmericaIn the first half, sales revenue reached RMB37.434 billion in the American market, a growthof 6.0%. High-end brands recorded 40% sales increase and continued the success in themarketplace.

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Section III Management Discussion and Analysis

The Company’s growth in a negative industry is attributable to long term commitment of
product innovation and consumer satisfaction. The successful new launches in themarketplace include Monogram 36 inch integrated panel-ready Column refrigerator, GE
Profile™ smart top load and front load washing machine, the first washer with latest Alexabuilt-in, GE Profile™ UltraFresh™ System Dishwasher with Microban® Antimicrobial
Technology, premium brand pro-range, and GE Profile™ ClearView™ Energy Star certified
window air conditioner, all of which effectively capturing consumers’ demand for improved
experience at home.
In the meantime, the Company dedicated to being agile, and to be the easiest to dobusiness with. The Company established favourable customer relationships in not only
national retail channel, Builder Groups & Independents, contract channel but also DTC
channel, and win the flooring and continuously gain growth. The Company set up 4 special
workgroups specializing in manufacture, sourcing, etc. respectively to address the risingcost pressure of H1 through leveraging global synergy platform and resources co-sharing.
The Company opened the water heating manufacturing plant in Camden, South Carolina.
Through a vertical integration of the plant, the Company is able to produce high-quality
water heaters out of steel coils, serving homes across the U.S. The new plant includes
advanced systems for metal fabrication and welding, robotics for material handling andprocessing, and enamelling of the steel. 140 positions were added in the plant. The
Company also opened new West Coast area distribution centre (ADC) in Dixon, California
near Sacramento. This addition to the Company’s distribution network will help ease supply
chain congestion in the Company’s ADC near the Port of Los Angeles and reduce delivery
times by half for customers in northern California, southern Oregon, and western Nevada,allowing for next day delivery.
During the reporting period, GEA released its 2021 Corporate Citizenship Report,
highlighting the latest progress and five bold new goals that will power the company’s
future work across its five core pillars: Community Engagement, Inclusion & Diversity,
Operations Sustainability, Product Sustainability, and Compliance & Ethics. GEA achieved aperfect score on the Human Rights Campaign’s Corporate Equality Index (CEI), earning thedesignation as a “Best Place to Work for LGBTQ Equality” five years in a row.

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Section III Management Discussion and Analysis

2.

EuropeDuring the period, the European business achieved revenue of RMB10.245 billion, an
increase of 12.7% year-on-year. According to the data from GFK, the Company’s market
share in Europe has reached 6.8%, up 0.5 percentage points, growth in both revenue andvolume ranked first in the market with share expansion in multiple categories including
washing machines, refrigerators, dishwashers, and kitchen appliances. The Company’s
washing machines accounted for 12.7% of the market’s volume, an increase of 1.6
percentage points, moved one place up to No. 2 in the industry.
During the period, challenged by high inflation, escalated energy prices and rising shippingand commodity costs, the Company continued to strengthen high-end brand strategy,
accumulated consumer insight, accelerated the localization of supply chain and enhanced
channel competitiveness to achieve steady growth. The Company met demand for energysaving products with technological innovation. During the period, 905CD refrigerator and939 washing machines were launched under Haier brand to raise average prices. Largevolume and energy saving products such as the new ultra-thin iPro7plus washing machine
and 905 refrigerators have gained market recognition. The production capacity of therefrigerator factory in Romania was gradually ramping up with accumulated output of
200,000 units, contributing to the rapid growth of built-in refrigerators. In addition, newfactories for dishwashers, tumble dryers and kitchen appliances in Turkey were underway.
The Company also expanded the room for growth through successive launches of built-in
washing machines and refrigerators in home improvement channels.

3.

Australian and New Zealand
The Company remained committed to product premiumization and recorded sales revenueof RMB3.49 billion in Australia and New Zealand, up 0.9% year-on-year, a 9.2% growth inlocal currency. The share of retail revenue in Australia’s mainstream channels reached17.5%, an increase of 1.7 percentage points, while the market share of retail sales inmainstream channels in New Zealand was 37%, an increase of 3 percentage points yearon-year.
Several premium SKUs were launched under both FPA and Haier brands, adding to thecompetitiveness of comprehensive solutions; the Company also became No.1 in washingmachine category in Australia with 28% market share while best-selling heat pump dryer
achieved a record breaking 4.6 percentage points market share gain in one month.
A Specialized team was set up to capture the growth from strong housing market,
particular efforts were made to develop new partnerships with interior designers while retail
performance was improved with enhanced offerings featuring connectivity and IoTtechnologies. In addition, the Company also increased manufacturing capacity and agility of
the factory in Thailand, where total output grew by 14% during the reporting period.

34

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Section III Management Discussion and Analysis

4.

5.

South Asia
During the reporting period, the Company achieved sales revenue of RMB4.823 billion, an
increase of 22.8% year-on-year. Among which,(1)

The market share in India increased by 1.2 percentage points to 10.4%. The Company
pressed ahead with brand premiumization and multi-brand strategic implementation,
expanded the presence in high-quality channels, and improved supply chain
capabilities. ① The Company implemented the multi-brand strategy of Casarte, Haierand Candy to increase the share of mid and high-end sales revenue to 46%, up 5
percentage points year-on-year. ② The Company continued to introduce productsthat fulfilled local needs, by integrating global design resources, the Company
launched the first French door refrigerator. The Company also introduced washingmachines with heating function to address users’ pain points. ③ The Company
enhanced presence of quality channels and expanded penetration to 70%. ④ The
Company enhanced operation efficiency of the North Industrial Park and the Pune
Industrial Park and developed the supply chain to improve whole-processcompetitiveness.

(2)

In Pakistan, the Company strengthened leadership in refrigerators, freezers, airconditioners and washing machines. The Company’s overall share reached 37%, up 2
percentage points year-on-year. The Company grasped the local demand for highefficiency and energy-saving products and launched the variable-frequency freshness
preservation refrigerator series. The Company introduced the T3 air conditioner thatcan operate under temperature as high as 53ºC, thus solving the problem ofoperation suspension under high temperature condition in the southern region. The
Company also launched large-freezer & small-fridge refrigerator to meet large family’s
demand for more freezing space. The Company’s penetration exceeded 70% in Tier 3
and Tier 4 markets with over 300 franchised stores.

Southeast Asia
During the reporting period, the Company achieved revenue of RMB2.922 billion, an
increase of 11.9% year-on-year. The Company grasped demand for large capacity andhealth-conscious sterilization and accelerated new product launches to grow market share.
In the Thai market, the Company accelerated high-end brand development, with the market
share of T-door and French door refrigerators reaching 35% and topped the industry. The
residential air conditioner UV series met the users’ needs for health-conscious sterilizationin the post-pandemic era, driving the retail volume share of air conditioners to 13.6%,
ranking first in the industry. 601 large front-load washing machine gained leadership in theindustry, retail sales of front-load washing machines surged 95% in the first half of the year.
The Company upgraded retail channels and seized opportunities online, the number ofstore presence in Thailand’s chain store channels increased by 40%, while the number ofretail touch points in the Philippines grew 51%. In Vietnam, the Company streamlined sales
network into district-province-county-township levels and improved the wholesale
capabilities and retail efficiency. In the first half of the year, sales revenue grew 80% online
in Southeast Asia market. A flagship store was launched on Lazada in June in Vietnam, theGTM system went live in Malaysia and facilitated digital management of store display, awarehouse management system was also launched in Thailand.

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Section III Management Discussion and Analysis

6.

Japan
During the period, the Company achieved revenue of RMB1.837 billion in Japan, up 3.3%
year-on-year, a growth of 17.9% in local currency. The Company’s market share forfreezers, refrigerators and washing machines combined reached 15%, with 15.2% inrefrigerators and 42.8% in freezers, both ranked first in the industry. During the period, theCompany accelerated the transformation towards mid- to high-end products, and actively
expanded the line-up of medium- and large-sized products. The Company seized therefrigerators’ market share with Delie series and ultra-thin T-style products under AQUA
brand, as well as 468/406 T-door and brand new ultra-narrow 3-door products under Haier
brand. The Company captured the market opportunity of health-conscious laundry brought
about by the pandemic with AQUA’s superior line-up of variable-frequency washing machine
products line-up and high-end heat pump front-load washers, as well as Haier’s mediumand large-size variable-frequency washing machines. The Company strengthened the freezer
product line-up with the differentiated Slim series and the 20th anniversary edition. AQUA’s
high-end revenue contribution grew 5 percentage points to 61%, while Haier’s mid to highend revenue contribution rose 11 percentage points to 50%.
In addition, the community laundry business continued to lead the industry with a market
share of 70%. The Company has established more than 100 multi-scenario experience
stores offering laundry, maintenance, clothing, food, and transportation solutions withcross-industry partners including FamilyMart, P&G, ENEOS petrol stations and MUJI, tooptimize user experience.

(III) Strengthening digitalization for all processes to improve efficiency.
During the reporting period, the Company has strengthened its digital transformation focusing on
CRM, lean manufacturing and R&D.
The development of a digital user operation platform. Centring around full life cycle ofproduct purchase, usage, and services, the Company leveraged its User Experiential Brain to
integrate marketing, logistics, after-sales and smart devices, so as to visualize user experience,enhance operational efficiency and user satisfaction. In the first half of 2022, 26.59 million newmembers were added, total number of platform users reached 257 million. Average ticket size
per member was 34.3% greater than regular users. ① Establishing digital marketing platform to
improve user retention and conversion efficiency. In the first half of 2022, the number of users
with retained information2 amounted to 11.41 million, a growth of 219% year-on-year; conversion
reached 18.93%, an increase of 58% year-on-year; digital retail3 accounted for 22.6% of total
sales, a rise of 112% year-on-year. ② Replacing service dispatch centres with system’s direct
matching of user request and maintenance personnel; accurate prediction and manufacturing ofparts & components using algorithm to optimize spare parts expense ratio.

2
3

36

Number of users with retained information: users who allow us to manage the information they submit digitally
Digital retail: sales revenue generated by users acquired through digital tools divided by total sales revenue

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Section III Management Discussion and Analysis

Lean manufacturing platform:①

The manufacturing platform primarily focused on the implementation of digital ordermanagement, and DFX new product introduction to improve manufacturing costcompetitiveness and delivery efficiency. For example, establish schedule workbenches,
which enabled digital management of scheduling, dispatch and logistics coordination,
resulting in a 92% accuracy of dispatches with 95% on-time delivery of orders.

②Digital procurement service platform facilitated collaborations with third party big data
platforms to dynamically optimized supply side resources, increasing the proportion ofshared components to save procurement cost.

③

Supply chain platform improved management and the accuracy of demand forecasting while
facilitating sharing of inventories. In the first half of the year, inventory turnover at regional
headquarter level was optimized by 15%.

④

The logistics platform targeted end to end optimization of logistics expense by connecting
people, cars and data to match vehicles, goods, and orders. In the first half of 2022, truck
loading time was reduced by 30%, and logistics expense ratio was reduced by 10%.

Digitalized R&D platform was established to optimize product planning process, product life
cycle management and standard system, product efficiency4 was improved by 23% in the firsthalf of the year; in addition, it was also used to implement end to end cost optimization basedon modules iterations and facilitate mass application of cost-effective new materials andprocesses.

Development plan for the second half of the year
In the second half of 2022, the Company will press ahead with the three-level brand upgrade
strategy of “high-end brand, scenario-based brand and ecosystem brand”. Amid macro
uncertainties, the Company will seize the opportunities of innovation and structural change in themarket through strengthened leadership and forward-looking global deployment. The Company
will define the Company’s second curve development path by strategizing the smart home trend
and building a smart home appliance ecosystem. At the same time, the Company will pushforward with digital restructuring to enhance the efficiency throughout the entire value chain.
In the domestic market, the Company remains committed to high-end brand strategic
implementation to increase Casarte’s market share in all categories, continue to improve
competitiveness of air conditioners with a focus on developing core technologies from in-house
R&D and strategic alliances; accelerate growth in consumer robotics and small appliances while
grasping the suite-oriented and home furnishing market trend as well as new opportunities intumble dryers and dishwashers, focus on creating value for users and distributors with steady
performance; accelerate digital reform to facilitate cost reduction and efficiency enhancement.

4

Product efficiency: Sales revenue divided by quantity of product models

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Section III Management Discussion and Analysis

The Company will continue to implement high-end brand strategy in the overseas market,
meeting the pressing worldwide demand for energy-efficient and green products leveraging global
R&D capabilities, introduce differentiated and efficient products; speeding up development in
HVAC channels supported by localized energy efficient facilities; mitigating cost pressure with
global supply chain management platform; with Rendanheyi (人 單 合 一) management model andwell-established incentive programmes to inspire employees’ enthusiasm, capture growth
opportunities, while minimizing market risks.

Significant changes in the Company’s operating conditions during the reporting
period, and matters occurring during the reporting period that have andexpected to have a significant impact on the Company’s operating conditions□ Applicable√ Not Applicable

IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD(I)

Analysis of principal business1.

Table of movement analysis on the related items in financial statements
Unit and Currency: RMB

Items
Operating revenue
Operating cost
Selling expenses
Administrative expenses
Financial expenses
R&D expenses
Net cash flow generated fromoperating activities
Net cash flow generated frominvesting activities
Net cash flow generated fromfinancing activities
Other income
Gain on fair value changes
Loss on credit impairment
Gain from disposal of assets
Income tax expenses

38

Haier Smart Home Co., Ltd. Interim Report 2022

Corresponding
period oflast year

Change (%)

121,857,522,462.22 111,727,756,211.06
85,061,133,319.20 78,156,467,866.57
17,605,612,224.80 16,731,407,296.02
5,132,033,156.92
5,047,535,410.71–202,227,082.17
295,546,337.17
4,595,691,525.07
3,738,316,873.21

9.07
8.83
5.22
1.67
–168.42
22.93

Current period

5,964,247,657.22

8,442,195,160.31–29.35–4,160,668,747.75–3,237,011,990.71

Not Applicable

2,160,173,397.21
546,242,698.94–118,790,175.68–258,076,846.14
31,589,207.10
2,000,741,926.36–9,607,019,105.46

Not Applicable
44.46–284.83
Not Applicable–77.82
31.13

378,116,328.72
64,269,511.32–44,031,423.21
142,414,954.25
1,525,749,793.00

Section III Management Discussion and Analysis

Analysis on the reasons for significant changes in certain indicators:

2.

1)

Reasons for changes in financial expenses: the decrease of 168.42% in finance costs
over the corresponding period was primarily due to the increases in the period’s
interest income and exchange gains over the corresponding period;

2)

Reasons for changes in net cash flow generated from financing activities: primarily
attributable to the new policy borrowing raised and additional issuance of proceeds
during the period;

3)

Reasons for changes in other income: the increase of 44.46% in other gains over thecorresponding period was primarily due the increase in the period’s government
grants over the corresponding period;

4)

Reasons for changes in gain on fair value changes: the decrease of 284.83% in gains
on fair value changes over the corresponding period was primarily due to thedecrease in fair value changes in forward contracts over the corresponding period;

5)

Reasons for changes in loss on credit impairment: primarily due to the increase inprovision for the bad debt of receivables during the period;

6)

Reasons for changes in gain from disposal of assets: the decrease of 77.82% in gains
on property disposal was primarily due to the decrease in the periods’ gains on
property disposal from subsidiaries over the corresponding period;

7)

Reasons for changes in income tax expenses: the increase of 31.13% in income tax
over the corresponding period was primarily due to the increase in taxable profit of
the period.

Detailed explanation on significant changes in the operation types and the components ofprofit or sources of profit of the Company during the period□ Applicable(II)√ Not Applicable

Explanations on the major changes in profits caused by non-principal businesses□ Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

39

Section III Management Discussion and Analysis(III) Analysis of assets and liabilities√ Applicable1.

□ Not Applicable

Assets and liabilities
Unit: RMB

Amount as at theItems

Derivative financial assets

Percentage ofPercentage ofamount at the end

change in amountof the from the end of thePercentage ofend of thecorresponding

corresponding

Amount as at theamount at the end

corresponding

period of last year

period of last year

end ofof the period overperiod ofover total assets

to current period

the period

total assets (%)

last year

(%)

(%)

163,084,726.42

0.07

79,819,974.01

0.04

104.32

Explanations

Mainly due to the fluctuation in valueof foreign currency forward
contracts

Bills receivable

8,417,636,171.41

3.71

13,354,791,068.29

6.14–36.97

Mainly due to the change ofRight-of-use assets

3,664,479,071.10

1.62

2,734,678,906.53

1.26

34.00

Mainly due to the increase in lease

79,270,648.00

0.03

6,294,014.40

0.00

1,159.46

Mainly due to the fluctuation in value

repayment terms for channels
liabilities
Trading financial liabilities

of foreign currency forward
contracts
Contractual liabilities

5,397,435,938.66

2.38

10,027,091,593.60

4.61–46.17

Mainly due to the decrease inadvance receipts withperformance obligations

Other current liabilities

1,286,194,473.81

0.57

2,238,767,551.40

1.03–42.55Mainly due to the decrease in theamount of value-added tax to betransferred to output tax

Long-term borrowings

2,119,243,998.96

0.94

3,038,573,824.53

1.40–30.26Mainly due to the reclassification to
non-current liabilities due within
one year

Bonds payable

334,730,048.82

0.15–100.00

Mainly due to the reclassification to
non-current liabilities due within
one yearLease liabilities

2,763,944,633.73

1.22

1,960,894,981.47

0.90

40.95

Mainly due to the increase in leaseLong-term payables

49,353,671.92

0.02

99,602,707.76

0.05–50.45Mainly due to the repayment of long-

Other equity instruments

81,340,387.43

0.04

118,017,507.59

0.05–31.08Mainly due to the decrease in theliabilities
term payables
conversion equity component of
the convertible bonds
Treasury stock

3,962,689,830.07

1.75

2,424,038,819.70

1.11

63.47

Mainly due to the share repurchase

Other comprehensive

1,689,673,248.96

0.75–1,176,851,699.92–0.54

243.58Mainly due to the translation ofincomeforeign currency financial
statements

40

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion and Analysis

2.

Overseas Assets√ Applicable□ Not Applicable(1)

Scope of assets
Among the assets, overseas assets amounted to 10,833,800 (unit and currency:
RMB10,000), representing 47.80% of the total assets.

(2)

Relevant information on high percentage of overseas assets√ Applicable□ Not Applicable
Unit and Currency: RMB

Name of overseas asset

Reason for Formation

Operation mode

Overseas Home Appliance andSmart Home Business

Overseas mergers &acquisitions and theCompany’s own
development

Localized Operations with the
integration of R&D,
manufacturing and marketing

Operating revenue
during the reporting Net profit during theperiodreporting period
61,480,633,415.58

3,634,319,014.7

Note: Net profit stated in the above table represents operating profit.

3.

Restrictions on major assets as of the end of reporting period□ Applicable4.

√ Not Applicable

Other explanations□ Applicable√ Not Applicable(IV) Analysis of investment
1.

Overall analysis on external equity investment√ Applicable□ Not Applicable

In order to establish the competitiveness of service robots for household cleaning, promote
the development of the Company’s cleaning appliance business, as well as to enhance its
corporate governance and reduce routine connected transactions, Qingdao Haier Smart Life
Electric Co. Ltd., a wholly-owned subsidiary of the Company, proposed to acquire the
100% equity interest in Qingdao TAB Robot Technology Co., LTD. held by Qingdao Haier
Interconnect Technology Co. Ltd., with a cash consideration of RMB125 million. After thecompletion of the transaction, Qingdao TAB Robot Technology Co., LTD. has become awholly-subsidiary of Haier Smart. As at the end of the reporting period, the transaction has
been completed. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao TAB Robot
Technology Co., LTD. by a Subsidiary and Connected Transaction disclosed on 29 April
2022 by the Company.

Haier Smart Home Co., Ltd. Interim Report 2022

41

Section III Management Discussion and Analysis(1)

Significant equity investment√ Applicable□ Not Applicable

Please see the above “1. Overall analysis on external equity investment”.

(2)

Significant non-equity investment√ Applicable□ Not Applicable

In order to further enhance the sustained high-quality growth of Haier refrigerators in
the domestic market, optimize the domestic supply chain, further strengthen themarket competitiveness in Shandong, Southwest and Central China and achieve rapid
growth in Shandong, Southwest and Central China, the Company invested in theconstruction of a project with an annual production capacity of 2 million units of large
refrigerators in Jiulong Industrial Zone, Jiaozhou, Qingdao through a newly establishedsubsidiary, with a total investment of RMB3.07 billion. The project is currently inprogress. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on Investing in Large Refrigerator Project with an Annual
Capacity of 2 Million Units disclosed on 29 April 2022 by the Company.

(3)

Financial assets measured at fair value√ Applicable□ Not Applicable
RMB
Current purchase/
InitialInvestment income

Changes in fairsale during the during the reporting

value during thereporting period

periodreporting period–15,583,835.62

42,007,117.65
2,596,583.32

1,621,089.28–56,965,311.85–24,266,144.66

Items

investment cost

Source of funds

Wealth management products

2,142,050,007.50

Self-owned

Investments in other equity

3,587,415,678.11

Self-owned

284,382,243.23

Self-owned–200,041,952.15

45,206,370.39

Investment funds

124,067,582.04

Self-owned

Derivative financial assets

29,450,000.00

Self-owned

42,633,245.20—

132,833,541.83

89,404,517.91–172,992,542.57

222,643,613.19–33,262,474.24

instruments
Investments in trading equity
instrument

Total

6,167,365,510.88–43,056,624.92

Note: As of 30 June 2022, the aggregate balance of foreign exchange derivative transaction amounted toapproximately US$1.579 billion.

42

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion and Analysis(V)

Sale of material assets and equity√ Applicable□ Not Applicable

In order to focus on the main business of smart home, optimize resources allocation and realize
investment income, Haier Shareholdings (Hong Kong) Limited, a wholly-owned subsidiary of theCompany, transferred 25% equity interest in Qingdao Haier Mold Co., Ltd. to Qingdao Haier
Mold Smart Cloud Technology Co., Ltd. for an amount of RMB277 million. After the completionof the transaction, Haier Shareholdings (Hong Kong) Limited will no longer hold any equity
interest in Qingdao Haier Mold Co., Ltd. As at the end of the reporting period, the transaction
has been completed. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on the Transfer of 25% Equity Interest in Qingdao Haier Mold Co., Ltd. bya Subsidiary and Connected Transaction disclosed on 29 April 2022 by the Company.
(VI)

Analysis on major subsidiaries and Investees□ Applicable√ Not Applicable(VII) Structured entities controlled by the Company□ ApplicableV.

√ Not Applicable

OTHER DISCLOSURES(I)

Potential risks√ Applicable□ Not Applicable1.

Risk of decreasing market demand due to macroeconomic slowdown. Sales of white goods
as durable consumer appliances are subject to users’ income level and their expectationsof future income growth which will have a certain impact on their willingness to purchaseproducts. A slowdown in macroeconomic growth causing a decline in users’ purchasing
power will have a negative impact on industry growth. In addition, a slowdown in realestate market will also have a negative impact on market demand.

2.

Risk of price war caused by intensified industry competitions. The white goods industry ishighly competitive with a high degree of product homogeneity, industry concentration has
continued to increase. However, the increase in inventory in individual sub-sectors due todemand-supply imbalance may lead to price war. Furthermore, rapid technologicaladvancements, scarce talents in the industry, shortened product life cycles and ease ofimitation are making it increasingly difficult to profit. Although new products, services andtechnologies are often associated with higher selling prices, it has become necessary for
the Company to invest more in R&D.

Haier Smart Home Co., Ltd. Interim Report 2022

43

Section III Management Discussion and Analysis

44

3.

Risk of fluctuations in raw material prices. The Company’s products and core components
use metal such as steel, aluminium, and copper, as well as commodities such as plastics
and foam. If the prices of raw materials continue to rise, it will put certain pressure on the
Company’s production and operations. In addition, the Company relies on third party
manufacturers and suppliers for key raw materials, components and manufacturing
equipment, any disruption in supply or significant price increases by these suppliers will
have a negative impact on the Company’s businesses. As a leader in the industry, theCompany will take measures including volume & price adjustment mechanism as well as
hedging to reduce the risk of raw material fluctuations on its operations.

4.

Operational risk in overseas business. The Company has established production bases, R&D
centres, and marketing centres in many parts of the world, with the proportion of overseas
revenue increasing year by year. Overseas markets are subject to political and economic
situations (including events such as military conflicts), legal systems and regulatory regimesof those countries and regions. Significant changes in these factors will pose certain risks
to the Company’s local operations in these markets. The Company has taken various
measures to mitigate the relevant impacts, including collaborating with suppliers anddistributors, improving production efficiency, expanding supply chain to other countries, andsafety measures to protect its people and assets.

5.

Risk of exchange rate fluctuations. As the Company expands its global footprint, the importand export of products involve the exchange of foreign currencies such as the U.S. dollar,
the Euro, and the Japanese yen. If the exchange rates of relevant currencies fluctuate, itwill have a certain impact on the Company’s financial position. In addition, the Company’s
consolidated financial statements are denominated in Renminbi, while the financial
statements of its subsidiaries are measured and reported in the currency of their primaryeconomic environment in which the entity operates and are therefore subject to currency
exchange risk. In this regard, the Company 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, consumption
investment policies, real estate policies and relevant laws and regulations will affect productdemand, which in turn will affect product sales of the Company. The Company will closely
monitor changes in policies, laws, and regulations to ensure stable operation of its
businesses.

7.

Risk of uncertainties resulted from COVID-19 outbreak. The COVID-19 outbreak that gradually
spread around the end of 2019 may lead to a further weakening of consumer demand forhome appliances, which in turn will affect the Company’s product sales. Lockdowns andtravel restrictions will reduce people’s mobility and hamper the operations of sales
networks. Besides, the pandemic may also cause disruptions to the operations of
distributors, logistical disruptions in the delivery of product could result in distributors’
dissatisfaction with the Company’s services and consequently reduced demand for theCompany’s products. The Company will leverage its anti-pandemic experience in the
Chinese market and coordinate its global resources to mitigate the impact of the pandemic
on its businesses.

Haier Smart Home Co., Ltd. Interim Report 2022

Section III Management Discussion and Analysis

(II)

8.

Credit risk. If the Company is not able to collect all trade receivables from its distributors,
or distributors are not able to settle the Company’s trade receivables in a timely manner,
the Company’s business, financial status, and operation performance may be adversely
affected. In relation to this risk, the Company will maintain flexibility by offering credit periodof 30 to 90 days to certain distributors based on their credit history and transaction
amount.

9.

Inventory risk. Excess inventory might occur as the Company cannot always accurately predict
trends and events and maintain appropriate inventory levels; thus, the Company may beforced to offer discounts or promotions to manage the slow-moving inventory. On the other
hand, a shortage of inventory may lead to loss of sales opportunities for the Company.
However, the Company will conduct regular impairment assessment of its inventory andmanage its inventory according to market situation.

Other disclosures□ Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

45

Section IV Corporate GovernanceI.

INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS
MeetingDate2021 Annual General

28 June 2022

Meeting

Index for details of websites designated

Date offor publishing resolutions

disclosure

For details, please refer to the

29 June 2022

Resolutions approved

Considered and approved theAnnouncement on Resolutions passed at

resolutions related to annual

the 2021 Annual General Meeting, 2022

report, internal control audit

First A Shares Class Meeting, 2022 First

report, profit distribution

D Shares Class Meeting and 2022 First

proposal, re-appointment of

H Shares Class Meeting of Haier Smart
Home Co., Ltd. (L2022–042) publishedauditor, external guarantees,by the Company on the website oftransactions, general

Shanghai Stock Exchange (www.sse.

mandate to issue additionalcom.cn) and the four major securities

shares ∕ repurchase shares,

newspapers

share option incentives,

routine connected

re-election of the Board of
Directors ∕ the Board ofSupervisors and amendmentof the Company’s system,etc.
2022 First A Shares Class
Meeting

Considered and approved theresolutions for share option

2022 First D Shares

incentives and general

Class Meeting

mandate to repurchase2022 First H Shares Class

shares, etc.

Meeting

Preferred shareholders whose voting rights have been restored requested an
extraordinary general meeting□ Applicable√ Not Applicable

Explanation of Shareholders’ general meeting√ Applicable□ Not Applicable

The 2021 Annual General Meeting and the 2022 First A/D/H Shares Class Meetings of the Company
was held in successive order by way of on-site voting and network voting by poll at Room B101, Haier
Rendanheyi Research Center, Haier Information Park, No.1 Haier Road, Qingdao, the PRC, in theafternoon on 28 June 2022, considering the annual report and other relevant resolutions. The total
number of the shares of the Company carrying voting right amounted to 9,337,037,472 shares (ofwhich 6,198,798,156 shares were A shares, 271,013,973 shares were D shares and 2,867,225,343
shares were H shares). 820 shareholders and proxies, representing 6,456,427,607 shares or 69.15% of
the total number of the shares of the Company carrying voting right, were present at the 2021 Annual
General Meeting. 770 shareholders and proxies, representing 4,203,253,922 shares or 67.81% of thetotal number of A shares of the Company carrying voting rights, were present at the 2022 First A
Shares Class Meeting; 40 shareholders and proxies, representing 147,537,203 shares or 54.44% of thetotal number of D shares of the Company carrying voting rights, were present at the 2022 First D
Shares Class Meeting; 9 shareholders and proxies, representing 2,103,823,118 shares or 73.37% of
the total number of H shares of the Company carrying voting rights, were present at the 2022 First H

46

Haier Smart Home Co., Ltd. Interim Report 2022

Section IV Corporate Governance

Shares Class Meeting. The Directors, supervisors, and senior management of the Company as well as
the lawyers engaged by the Company also attended the abovementioned four meetings. The
abovementioned meetings were convened by the Board of the Company and Chairman Mr. Liang
Haishan presided over the meetings. The Company had 11 Directors, of whom 9 Directors attended
the meetings (Directors Xie Juzhi and Wu Qi were unable to attend the meetings due to personal
engagement); the Company had 3 supervisors, of whom 3 supervisors attended the meeting. The
secretary to the Board of the Company attended the abovementioned meetings and other members ofsenior management of the Company were invited to attend the abovementioned meetings.

II.

CHANGES IN OF DIRECTORS, SUPERVISORS AND SENIORMANAGEMENT OF THE COMPANY√ Applicable□ Not Applicable

Name

Position

Change Situation

Li Huagang
Liang Haishan
Shao Xinzhi
Xie Juzhi
Gong Wei
Wu Changqi
Lin Sui
Xie Juzhi
Song Yujun
Zhao Yanfeng
Wang Li
Liu Xiaomei
Ming Guozhen

Chairman and President
ChairmanVice Chairman
Vice Chairman
Director, Chief Financial Officer, and Vice President
Director
Director
Vice President
Vice President
Vice President
Vice President
Secretary to the Board
Secretary to the Board

Election
Resignation
Election
Resignation
Election
Resignation
Resignation
Appointment
Appointment
Appointment
Retired
Appointment
Resignation

Explanation of changes in Directors, supervisors and senior management of theCompany√ Applicable□ Not Applicable

During the reporting period, the term of office of the 10th session of the Board of Directors, the Boardof Supervisors, and senior management expired, and the 10th session was renewed to the 11th
session. Some members of the directors and senior management or their positions have changed in
the 11th session as compared to the 10th session, which is shown in the preceding table (those
without changes are not presented).

III. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVE
Proposal for interim profit distribution and proposal for reverse conversion into sharecapitalWhether distributed or converted

No

Haier Smart Home Co., Ltd. Interim Report 2022

47

Section IV Corporate Governance

IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR
OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF(I)

Relevant incentive events disclosed in provisional announcements but without
subsequent development or changes during implementation√ Applicable48□ Not Applicable

Summary of Matters

Query Index

Completion of registration of grant of reserved
options under the 2021 A Share Option Incentive
Scheme: According to the relevant resolutions of the25th meeting of the 10th session of the Board of
Directors held by the Company on 15 December
2021, it was confirmed that the total number ofreserved options granted under the Company’s 2021
A Share Option Incentive Scheme was 4,525,214. In
accordance with this resolution, the Company
completed the registration of the aforementioned
grant of shares on 17 January 2022.

For details, please refer to theAnnouncement of Haier Smart
Home Co., Ltd on the
Completion of Registration of theGrant of the Reserved Share
Options under the 2021 A
Share Option Incentive Scheme
disclosed by the Company on
19 January 2022.

Introduction of 2022 A Share Option Incentive andcompletion of grant: As the Company is leading theeffort to upgrade its Internet of Things from “high-end
brands” to “scenario brands”, and to “ecologicalbrands”, the Company needs to have long-termplanning to ensure the achievement of its strategic
results and also improve its long-term incentive
scheme in line with the above objectives. Therefore,
considered and approved at the General Meeting andClass Meeting convened on 28 June 2022, theCompany introduced the 2022 A Share Option
Incentive. And as considered and approved at theBoard Meeting held on the same date, 104,756,896
options were granted to the incentive recipients.

For details, please refer to the2022 A Share Option Scheme ofHaier Smart Home Co., Ltd(draft) disclosed by theCompany on 29 April 2022, theAnnouncement on the
Adjustment to the Company’s
2022 A Share Option Incentive
Scheme and Grant of 2022 A
Share Option to Incentive
Recipients by Haier Smart Home
Co., Ltd disclosed by theCompany on 29 June 2022, andrelevant contents of theannouncements of resolutions at
the General Meeting.

Haier Smart Home Co., Ltd. Interim Report 2022

Section IV Corporate Governance(II)

Summary of Matters

Query Index

Introduction of New Phase of A Share and H Share
Employee Stock Ownership Plan: In order tofurther improve the governance mechanism of theCompany, create shareholder value and promote thecomprehensive implementation of the Company’s IoT
smart home ecological brand strategy, as considered
and authorized at the 2020 Annual General Meeting
held by the Company on 25 June 2021, theCompany considered and introduced the 2022 H
Share Core Employee Stock Ownership Plan of Haier
Smart Home Co., Ltd (Draft) and the 2022 A Share
Core Employee Stock Ownership Plan of Haier Smart
Home Co., Ltd (Draft) at the 28th meeting of the10th session of the Board of Directors held by theCompany on 28 April 2022. During the reporting
period, the Company promoted the opening ofaccounts and other related works for the 2022 A
Share and H Share Employee Stock Ownership Plan.

For details, please refer to the2022 A Share Core Employee
Stock Ownership Plan of Haier
Smart Home Co., Ltd (Draft),the 2022 H Share Core
Employee Stock Ownership Planof Haier Smart Home Co., Ltd(Draft) and relevant contents
disclosed by the Company on
29 April 2022.

Incentive events not disclosed in provisional announcements or with subsequentdevelopment
Equity incentive□Applicable√ Not Applicable

Other explanations□ Applicable√ Not Applicable

Employee stock ownership plan
□ Applicable√ Not Applicable

Other Incentives□ Applicable√ Not applicable

Haier Smart Home Co., Ltd. Interim Report 2022

49

Section V Environmental and Social
Responsibilities

1.

ENVIRONMENTAL INFORMATION(I)

Explanation of the environmental protection status of companies and theirimportant subsidiaries that are key emission units announced by theenvironmental protection department√ Applicable1.

□ Not Applicable

Information on pollutant discharge√ Applicable□ Not Applicable

The Company’s indirect non-wholly owned subsidiaries Zhengzhou Haier Air-conditioning
Co., Ltd. (“Zhengzhou Air-conditioning”), Qingdao Jiaonan Haier Washing Machine Co., Ltd.
(“Jiaonan Washing Machine”), Hefei Haier Refrigerator Co., Ltd. (“Hefei Refrigerator”),
Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier Freezer Co.,
Ltd. (“Wuhan Freezer”), Dalian Haier Refrigerator Co., Ltd. (“Dalian Refrigerator”), Qingdao
Haier (Jiaozhou) Co., Limited (“Jiaozhou Air-Conditioning”), Qingdao Haier Special
Refrigerator Co., Ltd. (“Huangdao Special Refrigerator”) and Tianjin Haier Cleaning Electrical
Appliances Co., Ltd. (“Tianjin Washing Machine”) are among the key emission units
announced by the local environmental protection department.
The main information on pollutant discharge is as follows:

(1)

50

Zhengzhou Air-conditioning①
Main pollutants:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Development Zone Energy should apply for a pollutant discharge permit anddetect 17 types of pollutants (including specific pollutants), namely, total
cadmium, total chromium, total mercury, total lead, total arsenic, hexavalentchromium, COD, ammonia nitrogen, total phosphorus, total nitrogen, PH,suspended solids, chroma, petroleum, BOD, rate of flow and temperature②

Way of discharge: indirect discharge③

Number and distribution of discharge outlets: one, north of the wastewater
treatment plant, pipeline discharge

Haier Smart Home Co., Ltd. Interim Report 2022

Section V Environmental and Social Responsibilities

④

⑤

(2)

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

Name ofNo. pollutant

Total
Concentration amount ofof discharge
discharge

Approved
Whether it istotal amount excessiveof discharge discharge

12

20.74 mg/L
3.72 mg/L

6.25 tons
0.63 tons

COD
Ammonia
nitrogen0.24 tons
0.02 tons

No
No

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

Jiaonan Washing Machine①
Main pollutants:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Development Zone Energy should apply for a pollutant discharge permit anddetect 17 types of pollutants (including specific pollutants), namely, total
cadmium, total chromium, total mercury, total lead, total arsenic, hexavalentchromium, COD, ammonia nitrogen, total phosphorus, total nitrogen, PH,suspended solids, chroma, petroleum, BOD, rate of flow and temperature.
②

Way of discharge: intermittent discharge③

Number and distribution of discharge outlets: one, north of the wastewater
treatment plant, pipeline discharge④

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

Name ofNo. pollutant

Total
Concentration amount ofof discharge
discharge

Approved
Whether it istotal amount excessiveof discharge discharge

12

60.3mg/L
7.67mg/L

60 tons
5.48 tons

COD
Ammonia
nitrogen3.091 tons
0.396 tons

No
No

Haier Smart Home Co., Ltd. Interim Report 2022

51

Section V Environmental and Social Responsibilities⑤(3)

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)

Hefei Refrigerator①
Main pollutants:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018),
Development Zone Energy should apply for a pollutant discharge permit anddetect 8 types of pollutants (including specific pollutants), namely, total nitrogen(as N), total phosphorus (as P), rate of flow, suspended solids, PH, Chemical
oxygen demand (COD), ammonia nitrogen (NH3-N), and five-day biochemical
oxygen demand (BOD5)
Exhaust gas. According to the Volatile Organic Unorganized Emission Control
Standard (GB 37822–1–2019), Development Zone Energy should apply for apollutant discharge permit and detect pollutants. Main types of atmosphericpollutants: particulate matter, non-methane total hydrocarbons②

Way of discharge: continuous discharge③

Number and distribution of discharge outlets: 1 sewage, at the north entranceof the refrigerator Park; 22 exhaust gas, at the refrigerator block A(10), block
B(10), and Phase III Factory(2)④Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

Name ofNo. pollutant

Total
Concentration amount ofof discharge
discharge

Approved
Whether it istotal amount excessiveof discharge discharge

12

101.603 mg/L
12.523 mg/L

17.2 tons
2.13 tons

300 tons
28 tonsNoNo

33.95 mg/L
1.635 mg/L

5.68 tons
1.082 tons

20 tons
5 tons

No
No

3
4
⑤

52

COD
Ammonia
nitrogentotal nitrogen
total phosphorus

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

Haier Smart Home Co., Ltd. Interim Report 2022

Section V Environmental and Social Responsibilities(4)

Wuhan water heater①
Main pollutants:
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 9
types of pollutants (including specific pollutants), namely, COD, total zinc,suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen
demand (BOD5), PH, anionic surface active agent, total phosphorus, and animaland vegetable oils.
②

Way of discharge: indirect discharge③

Number and distribution of discharge outlets: one, on the southwest of thewastewater treatment plant, pipeline discharge④

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:⑤(5)Name ofNo. pollutant

Total
Concentration amount ofof discharge
discharge

Approved
Whether it istotal amount excessiveof discharge discharge

1
2

40 mg/L
0.336 mg/L

9.075 ton
0.9075 ton

CODAmmonia
nitrogen4.58 tons
0.0385 tons

No
No

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

Wuhan freezer①
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, suspended
solids, 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 discharge③

Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge

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53

Section V Environmental and Social Responsibilities

④

⑤

(6)

Name ofNo. pollutant

Total
Concentration amount ofof discharge
discharge

Approved
Whether it istotal amount excessiveof discharge discharge

1
2

46 mg/L
0.497 mg/L

4.3628 tons
0.4365 ton

CODAmmonia
nitrogen0.96 tons
0.01 tons

No
No

Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)

Dalian Refrigerator①
Main pollutants:
Wastewater. According to the Environmental Impact Report Form ofConstruction Project, a total of 6 types of pollutants should be tested, namely,
PH, COD, total phosphorus, suspended solids, total nitrogen and petroleum.
②

Way of discharge: indirect discharge③

Number and distribution of discharge outlets: one, energy wastewater plant,
pipeline discharge④

Concentration and total amount of discharge and approved total amount ofdischarge:
The concentration and total amount of pollutant discharge subject to approval
for the total amount are as follows:⑤

54

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.

Name ofpollutant

Concentration of Total amount Approved total amount ofdischargeof discharge discharge

1

COD

0mg/L

0 tons2

Ammonia
0mg/L
nitrogen

0 tonsWhether it isexcessivedischarge

Pollutant discharge permitNomanagement, no requirements
regarding the total amount
Pollutant discharge permitNomanagement, no requirements
regarding the total amount

Pollutant discharge standards implemented: Integrated Wastewater DischargeStandard of Liaoning Province (DB 21/1627–2008)

Haier Smart Home Co., Ltd. Interim Report 2022

Section V Environmental and Social Responsibilities(7)

Jiaozhou Air-Conditioning①
Main pollutants:
Hazardous waste. According to the national directory, 10 types of hazardous
waste detected are namely: waste oil, sludge, slag powder, computer boards,
activated carbon, cotton filters, lightning tubes, soldering flux buckets, paintbuckets and packaging bags.
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:

④

(8)

No.

Name of hazardous waste

Total amountof transfer(tons)

1
2
3
4
5
6

Packaging bags
Waste oilSlag powder
Forklift battery
SludgePaint buckets

0.08
17.7
15.48
17.92
3.68
1

Total amountof themanagement
plan (tons)

Whether it isexcessivedischarge

0.5
40
30
22
5
4

no
no
no
no
no
yes

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

Huangdao Special Refrigerator①
Main pollutants:
Organic exhaust gas. According to legislative requirements, Development Zone
Energy should apply for a pollutant discharge permit and detect the primary
type of pollutant in the atmosphere, namely non-methane hydrocarbon (VOC),
with the maximum concentration of discharge not exceeding 60mg/m³. A
qualified third-party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a quarterly basis.
②

Way of discharge: Continuous discharge③

Number and distribution of discharge outlets: Four in total, one absorption exhaust
port at the northeast corner of the plant roof, and two welding exhaust ports
and one foam exhaust port at the west side of the plant roof

Haier Smart Home Co., Ltd. Interim Report 2022

55

Section V Environmental and Social Responsibilities

④

⑤

(9)

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organic
exhaust gas

No.

Name ofpollutant

Concentration of Total amount Approved total amount ofdischargeof discharge discharge

1VOC

2.8mg/m³

0.52 tons

Whether it isexcessivedischarge

No control regarding the total noamount of discharge of VOC

Implementation of the Volatile Organic Compounds Discharge Standards Part 7:
Other Industries in Shandong Province (DB37/2801.7–2019)

Tianjin Washing Machine①
Main pollutants:
Wastewater. According to legislative requirements, a pollutant discharge permit
should be applied and enforced, and 4 types of pollutants should be tested,
namely, COD, ammonia nitrogen, PH and suspended solids.
②

Way of discharge: Indirect discharge③

Number and distribution of discharge outlets: one, the wastewater plant, pipeline
discharge④

Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.
1
2

⑤

56

Name ofpollutant

Concentration of Total amount Approved total amount ofdischargeof discharge discharge

Whether it isexcessivedischarge

COD
Ammonia
nitrogen23mg/L
0.628mg/L

nono0.177 tons
0.0048 tons

34.742 tons
3.127 tons

Pollutant discharge standards implemented: Integrated wastewater discharge
standard (DB12356–2018)

Haier Smart Home Co., Ltd. Interim Report 2022

Section V Environmental and Social Responsibilities

2.

Construction and operation of pollution prevention and treatment facilities:√ Applicable□ Not Applicable

Zhengzhou Air-conditioning, Jiaozhou Air-Conditioning, Wuhan Freezer, Wuhan Water
Heater and Tianjin Washing Machine have one, one, one, two and one wastewater
treatment plants with a designed treatment capacity of 550 tons/day, 300 tons/day, 550
tons/day, 300 tons/day and 260 tons/day, and 300 tons/day, respectively; there is one
wastewater treatment plant in Dalian Haier Park responsible for collecting and treating thewastewater produced by the Dalian Park Companies with a wastewater treatment capacityof 300 tonnes/day. The construction, maintenance and daily operation of all wastewater
treatment facilities are conducted in accordance with the requirements of national and local
environmental laws and regulations. Information on all wastewater discharge is subject to24-hour online monitoring and such monitored information is transmitted to environmental
authorities in a real-time manner. All equipment is operating normally. In addition, theCompany fully promotes all plants to install exhaust treatment facilities and VOCs online
monitoring facilities. All equipment is operating normally and exhaust produced is treated by
the prevention and treatment facilities before compliant release and is monitored.
3.

Environmental impact assessment of construction projects and other environmental
protection administrative permits√ Applicable□ Not Applicable

The Company and its subsidiaries execute construction project implementation andproduction in accordance with the requirements of laws and regulations and strictly comply
with the “three simultaneous” requirements of environmental protection for construction
projects in the process of environmental impact assessment, and have passed
environmental assessment acceptance and are not involved in any environmental illegal
conducts such as construction before approval.
4.

Emergency plans for environmental incidents√ Applicable□ Not Applicable

The Company and its subsidiaries have formulated Emergency Plans for Environmental
Incidents in accordance with the requirements of laws and regulations and organized drills,
and continue to improve and upgrade the plans based on drill results.
5.

Self-monitoring environmental programs√ Applicable□ Not Applicable

The Company complies with national and local environmental standard requirements in
respect of all pollutant discharge. Wastewater collected is subject to standard treatment
and is released in a compliant manner. It is under real-time monitoring through theautomatic online wastewater monitoring system, which shares its information with Haier

Haier Smart Home Co., Ltd. Interim Report 2022

57

Section V Environmental and Social Responsibilities

Smart Energy System. In March 2017, the Company passed the upgraded certification in
relation to ISO14001 environment management system. In May 2021, a professional
certification firm was appointed to conduct a review and audit on the operation of
ISO14001 system in 2020, where satisfactory results were obtained to demonstrate its
good operating condition; In May 2022, a second review and audit was conducted on theoperation of the system in 2021.
6.

Administrative penalty due to environmental issues during the Reporting Period□ Applicable

7.

Other environmental information that should be disclosed□ Applicable(II)√ Not Applicable√ Not Applicable

Explanation on environmental protection of companies other than major
pollutant-emission units√ Applicable1.

□ Not Applicable

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 division of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the“three simultaneous” requirements of environmental protection for construction projects inthe process of environmental impact assessment, and have passed environmental
assessment acceptance and are not involved in any environmental illegal conducts such as
construction before approval.

58

Haier Smart Home Co., Ltd. Interim Report 2022

Section V Environmental and Social Responsibilities

Through Haier Smart Energy Center, an industry leading energy big data analysis system,
the Company implements centralized dynamic monitoring and digitalized management inrespect of major energy consumption, such as water, electricity and gas, of all plants
across the country by utilizing automatized and informationalized technology and an
integrated management model. It automatically collects precise information on energy
resources and completes prediction and analysis of energy consumption information to
optimize energy adjustment, reduce energy consumption per unit production to achieve
low-carbon production.
3.

Reasons for failure to disclose other environmental information□Applicable √ Not Applicable(III) Explanation of the subsequent progress or changes in the disclosure ofenvironmental information content during the Reporting Period√ Applicable□ Not Applicable

The Company will continue to maintain and improve existing results and strictly comply withexisting environmental protection and emission standards to achieve compliant emission.

(IV) Relevant information favorable to ecological protection, pollution prevention andcontrol and environmental responsibility fulfillment√ Applicable□ Not Applicable

The Company proactively advances product iteration and upgrade and participates in thedevelopment of ecological environment. The Company took part in the formulation of energy
consumption standard of household appliances organized by Beijing Institute of Standardization
to promote the shift to energy-saving models in the household appliance field. We cooperated
with relevant organizations in relevant refrigerant research and development projects to strive forthe application of refrigerants with lower greenhouse gas emission. Meanwhile, the Company andHaier’s suppliers, among others, cooperated in the research and development of low-carbon
related technology, such as recyclable packaging materials, to facilitate environmental protection.
The Company proactively responds to the household appliance recycling policies of the NDRC bylaunching a household appliance recycling project and investing in the construction of Haier’s
household appliance recycling interconnection factory. With the recycling business as the starting
point, we tapped into the disintegration process and implemented extended accountability forhousehold appliance manufacturers. The measure will significantly boost the efficiency of
resource utilization to achieve sustainable development.

Haier Smart Home Co., Ltd. Interim Report 2022

59

Section V Environmental and Social Responsibilities(V)

Measures taken during the Reporting Period to reduce its carbon emission andtheir effectiveness√ Applicable□ Not ApplicableAs the leading enterprise in the industry, the Company proactively seeks ways to achieve carbon
neutrality and carbon peak and optimize industrial structure and energy structure. Currently, theCompany has designed and established Haier Zhong De Smart Park, Haier’s first “beacon base”
in the world to achieve carbon neutrality, and intends to expand its coverage within the
Company in the future, with a view to reaching carbon neutrality for Haier Smart Home’s
industrial parks in the PRC within a reasonable time, while giving due regards to comprehensive
elements, such as costs.
2.

Particulars on the efforts to consolidate and expand its achievements in poverty
alleviation and rural area invigoration√ Applicable□ Not Applicable

In accordance with the national targeted poverty alleviation plan and documentation
requirements, the Company emphasizes poverty alleviation and conducts targeted poverty
alleviation within the authority granted on the general meeting in respect of, among others,
donations.
For years, the Company has made genuine contributions to education to improve the basic
cultural quality of people in poverty and skills of families in poverty, with an emphasis on
shoring up the weak link of the education sector and stopping inter-generational poverty.
As of now, the Company, Haier Group Companies (the effective controller of the Company)
and its subordinate enterprises have constructed over 300 hope primary schools and hopesecondary schools, covering 26 provinces, municipalities and autonomous regions in the
PRC. It also offers continuous resource assistance to such schools every year to effectively
boost the base education capacity in poverty regions and improve education quality. At thesame time, the Company focuses on poverty alleviation in agricultural development andpublic welfare fund support to actively respond to the government’s call for social
responsibility fulfillment. In the first half of 2022, the Company spent approximately
RMB6.62 million on targeted poverty alleviation.

60

Haier Smart Home Co., Ltd. Interim Report 2022

Section VI Significant Issues

I.

FULFILLMENT STATUS OF UNDERTAKINGS(I)

The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to thereporting period√ Applicable

Background ofundertakings
Undertaking
related tosignificant
reorganization□ Not Applicable

Date andterm ofundertakings

WhetherAnyperformed indeadline for a timely andperformance strict way

Type of undertakings

Covenanter

Contents of undertakings

Eliminate the property
right defects in landetc.

Haier Group
Corporation

During the period from September 2006 to May
27 September
2007, the Company issued shares to Haier
2006,
Group Corporation (“Haier Group”) to purchaselong-term
the controlling equity in its four subsidiaries,
namely Qingdao Haier Air-Conditioner Electronics
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 Electronics 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).
With regard to the land and property required in
the operation of Qingdao Haier Air-Conditioner
Electronics 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
Electronics Co., Ltd. (武漢海爾電器股份有限公司) (the “Covenantees”), Haier Group made anundertaking (the “2006 Undertaking”). According
to the content of 2006 Undertaking and thencondition of each Covenantee, Haier Group will
constantly assure that Covenantees will lease theland and property owned by Haier Group forfree. Haier Group will make compensation in theevent that the Covenantees suffer loss due tothe unavailability of such land and property.

Yes

Yes

Address competition
issuesHaier Smart Home Prior to the Transaction (hereinafter “the31 July 2020
Co., Ltd.
Transaction” refers to the transaction in relation
long-term
to the privatisation of Haier Electronics by Haier
Smart Home), Haier Electric was a controlling
subsidiary of the Company and did not competewith the Company; after the completion of theTransaction, Haier Electric became a whollyowned or controlling subsidiary of the Company
and no new competition with the Company
existed or will arise. There is no new peercompetition or potential competition between the
Company and other related parties controlled by
the controlling shareholders or the de facto
controllers of the Company.

Yes

Yes

Haier Smart Home Co., Ltd. Interim Report 2022

61

Section VI Significant Issues

Background ofundertakings

62

Date andterm ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

Address connectedtransactions

Haier Group
Corporation

1. The Transaction constitutes a connected
29 July 2020,
transaction and the connected transaction
long-term
procedures performed under the Transaction are incompliance with the relevant regulations. The pricingof the connected transaction is fair and there are no
circumstances under which the interests of thelisted company and the non-connectedshareholders are prejudiced. 2. Upon completion of
the Transaction, the Company and its affiliates willtake lawful and effective measures to minimize andregulate the connected transactions with the listedcompany, take the initiative to safeguard theinterests of the listed company and all shareholders,
and refrain from taking advantages of connectedtransactions for improper benefits. 3. Provided that
there is no conflict with laws and regulations, if
connected transactions between the Company andits affiliates and the listed company occur or exist
which cannot be avoided or for which there arereasonable reasons, the Company and its affiliates
will legally enter into a transaction agreement withthe listed company to ensure strict compliance withthe procedures of connected transactions requiredby the laws, regulations, regulatory documents andthe articles of association of the Company, conducttransactions in accordance with the principles ofmarketability and fair prices to ensure the fairness
and compliance of connected transactions, andrefrain from taking advantages of such connectedtransactions to engage in any acts that are
detrimental to the interests of the listed company or
its minority shareholders, and at the same time,comply with the information disclosure obligations inaccordance with relevant regulations.

Haier Smart Home Co., Ltd. Interim Report 2022

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

Section VI Significant Issues

Background ofundertakings

Date andterm ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

Address competition
issuesHaier Group
Corporation

1. The Company and its controlling subsidiary, Haier 29 July 2020,
COSMO Co., Ltd., were principally engaged inlong-term
investment business during the reporting period,
and the Company and its controlling subsidiary,Haier COSMO Co., Ltd. (including its subsidiaries
and entities with more than 30% shareholding), haveno real or potential competition with Haier Smart
Home; 2. the domestic and overseas white goods
businesses and assets held by the Company(including the Company’s subsidiaries and entities
with more than 30% shareholding) have been
injected into Haier Smart Home through asset
consolidation and equity transfer in accordance withthe commitments made by the Company in January
2011 and the requirements for adjusting suchcommitments as considered and approved by Haier
Smart Home at its 2014 annual general meeting; 3,
Since the acquisition of 100% of Haier New ZealandInvestment Holding Company Limited (which holds
100% of the shares in Fisher & Paykel Appliances
Holdings Limited) by Haier Smart Home’s offshore
subsidiary, Haier Singapore Investment Holding Co.,
Ltd., following the completion in July 2018, theCompany (including the Company’s subsidiaries andentities with more than 30% shareholding) and Haier
Smart Home do not have any competing
relationship in any business areas both within andoutside the PRC. During the reporting period, theCompany (including the Company’s subsidiaries andentities with more than 30% shareholding) did nothave any new peer competition with Haier Smart
Home; 4. Upon completion of the Transaction, theCompany (including the Company’s subsidiaries andentities with more than 30% shareholding) and its
affiliates do not have any new or potential peercompetition with Haier Smart Home; 5. During theperiod when the Company is the controllingshareholder of Haier Smart Home and the shares ofHaier Smart Home are listed on the Hong Kong
Stock Exchange, the Company and its othersubsidiaries and entities with more than 30%
shareholding will not operate any business thatcompetes with the business engaged by Haier
Smart Home and will not engage in real or potential
competition with Haier Smart Home.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

Haier Smart Home Co., Ltd. Interim Report 2022

63

Section VI Significant Issues

Background ofundertakings

64

Date andterm ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

OthersHaier Group
Corporation

Upon completion of the Transaction, the Company 29 July 2020,
will strictly comply with the Company Law, thelong-term
Securities Law, the relevant regulations of the
China Securities Regulatory Commission, theShanghai Stock Exchange and the articles ofassociation of Haier Smart Home, etc., fairly
exercise shareholders’ rights and fulfill
shareholders’ obligations, refrain from taking
advantage of its shareholding position forimproper benefits, ensure the listed company willcontinue to be completely separate from theCompany and other enterprises on which theCompany exercises control and exerts significant
influence in terms of management, personnel,
assets, finance, organization and business
operations, and maintain the continued
independence of the listed company in terms ofmanagement, personnel, assets, finance,
organization and business operations. Uponcompletion of the Transaction, the Company willcomply with the provisions of the Notice on
Several Issues concerning Regulating FundTransactions between Listed Companies andTheir Affiliates and the External Guarantee of
Listed Companies and the Circular of China
Securities Regulatory Commission and China
Banking Regulatory Commission on Regulating
the External Guaranties Provided by Listed
Companies to regulate the external guarantees
by listed companies and their subsidiaries, andwill not misappropriate the funds of the listedcompany and their subsidiaries. The Company
undertakes to strictly fulfill the above
commitments. In the event that the interests of
the listed company are damaged as a result ofany breach of the above commitments by theCompany and other enterprises on which theCompany exercises control and exerts significant
influence, the Company will legally bear thecorresponding liability for damage.

Haier Smart Home Co., Ltd. Interim Report 2022

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

Section VI Significant Issues

Background ofundertakings

Date andterm ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

Address connectedtransactions

HCH (HK)INVESTMENTMANAGEMENT
CO., LIMITED

1. The Transaction constitutes a connected
29 July 2020,
transaction and the connected transaction
long-term
procedures performed under the Transaction are incompliance with the relevant regulations. The pricingof the connected transaction is fair and there are no
circumstances under which the interests of thelisted company and the non-connectedshareholders are prejudiced. 2. Upon completion of
the Transaction, the Company and other enterprises
on which the Company exercises control will takelawful and effective measures to minimize andregulate the connected transactions with the listedcompany, take the initiative to safeguard theinterests of the listed company and all shareholders,
and refrain from taking advantages of connectedtransactions for improper benefits. 3. Provided that
there is no conflict with laws and regulations, if
connected transactions between the Company andother enterprises on which the Company exercise
control and the listed company occur or exist whichcannot be avoided or for which there arereasonable reasons, the Company and otherenterprises on which the Company exercises control
will legally enter into a transaction agreement withthe listed company to ensure strict compliance withthe procedures of connected transactions requiredby the laws, regulations, regulatory documents andthe articles of association of the Company, conducttransactions in accordance with the principles ofmarketability and fair prices, and refrain from taking
advantages of such connected transactions toengage in any acts that are detrimental to theinterests of the listed company or its minority
shareholders, and at the same time, comply with theinformation disclosure obligations in accordance with
relevant regulations. 4. Any covenants andarrangements between the Company and otherenterprises on which the Company exercise control
and the listed company in relation to connectedtransactions shall not prevent the other party fromconducting business or dealing with any third party
for its own benefit and on equal competitive terms
in the market.

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

Haier Smart Home Co., Ltd. Interim Report 2022

65

Section VI Significant Issues

66

Date andterm ofundertakings

Background ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

Undertaking
related torefinancing

Eliminate the property
right defects in landetc.

Haier Group
Corporation

Haier Group Corporation undertakes that it will
24 December
assure Haier Smart Home and its subsidiaries of2013,
the constant, stable and unobstructed use of thelong-termleased property. In the event that Haier Smart
Home or any of its subsidiaries suffers any
economic loss due to the fact that leased
property has no relevant ownership certificate,
Haier Group Corporation will makecompensation to impaired party in a timely andsufficient way and take all reasonable andpracticable measures to support the impaired
party to recover to normal operation before theoccurrence of loss. Upon the expiration of
relevant leasing period, Haier Group Corporation
will grant or take practicable measures to assure
Haier Smart Home and its subsidiaries of priority
to continue to lease the property at a price nothigher than the rent in comparable market atthat time. Haier Group Corporation will assure
Haier Smart Home and its subsidiaries of theconstant, stable, free and unobstructed use of
self-built property and land of the Group. In theevent that Haier Smart Home or any of its
subsidiaries fails to continue to use self-built
property according to its own will or in original
way due to the fact that self-built property has
no relevant ownership certificate, Haier Group
Corporation will take all reasonable andpracticable measures to eliminate obstruction
and impact, or will support Haier Smart Home or
its affected subsidiary to obtain alternative
property as soon as possible, if Haier Group
Corporation anticipates it is unable to cope withor eliminate the external obstruction and impact
with its reasonable effort. For details, pleaserefer to the Announcement of Qingdao Haier Co.,
Ltd. on the Formation, Current Situation of the
Defective Property, the Influence on Operation ofIssuer Caused by Uncertainty of Ownership,
Solution for the Defect and Guarantee Measures(L2014–005) published by the Company on thefour major securities newspapers and thewebsite of Shanghai Stock Exchange on 29
March 2014.

Haier Smart Home Co., Ltd. Interim Report 2022

WhetherAnyperformed indeadline for a timely andperformance strict way
Yes

Yes

Section VI Significant Issues

Background ofundertakings

Date andterm ofundertakings

Type of undertakings

Covenanter

Contents of undertakings

Eliminate the property
right defects in landetc.

Haier Smart Home The Company undertakes that it will eliminate the 24 December
Co., Ltd.
property rights defects of the Company and main
2013, eightsubsidiaries within five years with reasonable
years
business effort since 24 December 2013, toachieve the legality and compliance of theCompany and main subsidiaries in terms of landand property. For details, please refer to theAnnouncement of Qingdao Haier Co., Ltd. on theFormation, Current Situation of the Defective
Property, the Influence on Operation of Issuer
Caused by Uncertainty of Ownership, Solution
for the Defect and Guarantee Measures (L2014–005) published by the Company on the four
major securities newspapers and the website ofShanghai Stock Exchange on 29 March 2014.
As at the end of 2018, the Company has
resolved the property defects of itself and its
eight major subsidiaries. After the approval of theboard meeting held by the Company on 5
November 2018 and the general meeting heldon 21 December 2018, the term of the above
undertakings was extended for three years
based on the original deadline. At present, theproperty defects of the five major subsidiaries
have been properly resolved by applying forproperty ownership certificates, relocating thedefective properties and categorizing them as
reserve alongside the lands, divesting thedefective properties with the equity of thesubsidiaries and other means. The Company has
fulfilled this undertaking.

Yes

Yes

15 September
Yes
2021/28 June
2022, thecompletion ofequityincentive
implementation

Yes

Inject the assets of Haier Photoelectric to theDecember 2015 Yes
Company or dispose such assets through otherto June 2025
ways according to the requirements of thedomestic supervision before June 2025. For
more details, please refer to the Announcementof Haier Smart Home Co., Ltd. on the Changesof Some Commitments on Asset Injection(L2020–024) published on the four major
securities newspapers and the website ofShanghai Stock Exchange on 30 April 2020.

Yes

Undertakings
Othersrelated toequity incentive

Haier Smart Home The Company will not provide loans or any otherCo., Ltd
forms of financial assistance, including
guaranteeing their loans, to any incentive
recipient for acquiring relevant stock options
under this incentive plan.

Other
undertakings

Haier Group
Corporation

Asset injection

WhetherAnyperformed indeadline for a timely andperformance strict way

Haier Smart Home Co., Ltd. Interim Report 2022

67

Section VI Significant Issues

II.

NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLINGSHAREHOLDERS AND OTHER RELATED PARTIES DURING THE
REPORTING PERIOD.
□ Applicable√ Not Applicable

III. INFORMATION ON NON-COMPLIANCE GUARANTEES□ Applicable√ Not Applicable

IV. INFORMATION ON INTERIM AUDIT□ ApplicableV.

√ Not Applicable

CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDITOPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITS
HANDLING□ Applicable√ Not Applicable

VI. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING□ Applicable√ Not ApplicableVII. MATERIAL LITIGATION AND ARBITRATION MATTERS□ Material litigation and arbitration matter during the reporting period√ No material litigation and arbitration matters during the reporting period

VIII. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECT
OF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION□ Applicable√ Not applicable

IX. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY ANDITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER
DURING THE REPORTING PERIOD□ Applicable68√ Not applicable

Haier Smart Home Co., Ltd. Interim Report 2022

Section VI Significant Issues

X.

SIGNIFICANT RELATED-PARTY TRANSACTIONS(I)

Related-party transactions relating to daily operation
1.

Matters that have been disclosed in temporary announcements and with nosubsequent progress or change□ Applicable2.

√ Not applicable

Matters that have been disclosed in temporary announcements and with subsequent
progress or change√ Applicable□ Not applicablePursuant to the “Resolution on Proposal to the General Meeting to Authorize the Board of
Directors and its Authorized Persons to Sign the Framework Agreement on ConnectedTransactions for 2020–2022” 《關於提請股東大會授權董事會及其授權人士簽署2020–2022(
年 關 聯 交 易 框 架 協 定 的 議 案》) considered and approved at the 10th meeting of the 10th
session of the Board of Directors and the Second Extraordinary General Meeting of 2020,
the “Resolution on Signing the Framework Agreement on Connected Transactions” 《關(於簽署關聯交易框架協定的議案》) considered and approved at the 14th meeting of the 10th
session of the Board of Directors, and the “Resolution of Haier Smart Home Co., Ltd. on
Renewing the Framework Agreement on Financial Services with Haier Group Corporationand Estimated Amount of Connected Transactions” 《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 定〉暨 預 計 關 聯 交 易 額 度 的 議 案》) considered and approvedat the 18th meeting of the 10th session of the Board of Directors and the 2020 Annual
General Meeting, the Company has made estimation on the connected transactions for the
next three years, as detailed in the aforesaid announcements regarding the resolutions of
the meetings.
For the actual performance of the Company’s connected transactions in the first half of2022, 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

Haier Smart Home Co., Ltd. Interim Report 2022

69

Section VI Significant Issues(II)

Related-party transactions regarding acquisition or disposal of assets/equity
1.

Matters disclosed in temporary announcements and with no subsequent progressor change√ Applicable70□ Not applicable

Summary of matters

Query index

The acquisition of 100% equity interest in
Qingdao TAB Robot Technology Co., LTD.
and connected transaction: In order toestablish the competitiveness of service robots
for household cleaning and promote thedevelopment of the Company’s cleaning
appliance business, as well as to enhance its
corporate governance and reduce routine
connected transactions, Qingdao Haier Smart
Life Electric Co., Ltd., a wholly-owned
subsidiary of the Company, acquired 100%
equity interest in Qingdao TAB Robot
Technology Co., LTD., which was owned by
Qingdao Haier Interconnect Technology Co.,
Ltd., at a consideration of RMB125.0 million incash.

For details, please refer to theAnnouncement of Haier Smart
Home Co., Ltd. on the
Acquisition of 100% Equity
Interest in Qingdao TAB Robot
Technology Co., LTD. by a
Subsidiary and ConnectedTransaction disclosed on 29
April 2022

The transfer of 25% equity interest in
Qingdao Haier Mold Co., Ltd. andconnected transaction: In order to focus on
the smart home appliance business, optimize
resource allocation and generate investment
income, Haier Shareholdings (Hong Kong)
Limited, a wholly-owned subsidiary of theCompany, transferred 25% equity interest in
Qingdao Haier Mold Co., Ltd. to Qingdao Haier
Mold Smart Cloud Technology Co., Ltd., at aconsideration of RMB277.0 million in cash.

For details, please refer to theAnnouncement of Haier Smart
Home Co., Ltd. on the Transferof 25% Equity Interest in
Qingdao Haier Mold Co., Ltd. bya Subsidiary and ConnectedTransaction disclosed on 29
April 2022

Haier Smart Home Co., Ltd. Interim Report 2022

Section VI Significant Issues

2.

Matters that have been disclosed in temporary announcements and with subsequent
progress or change□ Applicable

3.

Matters not disclosed in temporary announcements□ Applicable4.

√ Not applicable√ Not applicableIf performance agreement is involved, the performance achieved during the reporting
period shall be disclosed□ Applicable√ Not applicable(III) Significant related-party transactions of joint external investment
1.

Matters that have been disclosed in temporary announcements and with nosubsequent progress or change□ Applicable

2.

Matters that have been disclosed in temporary announcements and with subsequent
progress or change□ Applicable3.

√ Not applicable√ Not applicable

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 nosubsequent progress or change□ Applicable

2.

Matters that have been disclosed in temporary announcement and with subsequent
progress or change□ Applicable3.

√ Not applicable√ Not applicable

Matters not disclosed in temporary announcements□ Applicable√ Not applicable

Haier Smart Home Co., Ltd. Interim Report 2022

71

Section VI Significant Issues(V)

Financial business between the Company and the finance company with which
it has a related relationship, the company’s controlling finance company andrelated parties√ Applicable1.

□ Not applicable

Deposit business√ Applicable□ Not applicable
Unit and Currency: RMB

2.

Related party

Relationship

Haier Finance Co.,Ltd.

Subsidiary of Haier
Group

Total

/

Changes of the period
Total amount
Total amountdeposited during withdrawn during
the period
the period

Balance as at theend of the period

Maximum daily
deposit limit

Range of depositinterest

Balance as at the
beginning of theperiod32 billion

0.385% to 3.5%

28,744,602,432.65

225,622,196,116.58 222,369,714,439.54

31,997,084,109.69//

28,744,602,432.65

225,622,196,116.58 222,369,714,439.54

31,997,084,109.69

Lending business√ Applicable□ Not applicable
Unit and Currency: RMB

72

Related party

Relationship

Haier FinanceCo., Ltd.

Subsidiary ofHaier Group

Total

/

Haier Smart Home Co., Ltd. Interim Report 2022

Balance as at
the beginningof the period

Changes of the period
Total amount Total amountdeposited
withdrawn Balance as atduring theduring the the end of theperiodperiodperiod7 billion

1.81%–2.00% 336,507,659.12

53,834,130.12 282,673,529.00// 336,507,659.12

53,834,130.12 282,673,529.00

Range of loan
Loan limit
interest

Section VI Significant Issues

3.

Trustee business or other finance businesses√ Applicable□ Not applicable
Unit and Currency: RMB

4.

Related party

RelationshipType of businessTotal amount

Actual numberof occurrence

Haier Finance Co.,Ltd.

Subsidiary of HaierGroup

5.5 billion

188,966,929.21

Haier Finance Co.,Ltd.

Subsidiary of HaierGroup

Foreign exchange
derivatives
products
Service charge

80 million

13,688,276.03

Others□ Applicable√ Not applicable(VI) Other material related transactions□ Applicable√ Not applicable(VII) Others□ Applicable√ Not applicable

Haier Smart Home Co., Ltd. Interim Report 2022

73

Section VI Significant Issues

XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
1

Trusteeship, contracting and leasing□ Applicable2√ Not applicable

Significant guarantees performed and outstanding during the reporting period√ Applicable□ Not Applicable
Unit and Currency: RMB10’000

Guarantor

Relationshipbetween theguarantor
and the listedcompany

Securedparty

External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date ofoccurrence
Whetherof theWhether theOverdue Whether Relatedguarantee Commencement Expiry date
Status ofguarantee Whether the amount of there is aparty
Amount of(date ofdate ofofType of principle Collateral has been guarantee
the counter- guarantee
guarantee agreement)
guarantee guarantee guarantee liabilities(if any)
fulfilled is overdue guarantee guarantee
or not RelationshipTotal amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period
Total balance of guarantees for subsidiaries at the end of the reporting period (B)Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B)
Ratio of total amount of guarantees to net assets of the Company (%)
Including:Amount of guarantees for shareholders, ultimate controllers and their related parties (C)Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D)The amount of total amount of guarantee in excess of 50% of net assets (E)Total amount of the above three guarantees (C + D + E)
Explanation of possibly bearing related discharge duty for premature guarantees
Explanation of guarantee status

3

74

1,013,666
11.8
0210,2520210,252
Not applicable
None

Other major contracts□ Applicable

1,133,669
1,013,666√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

Section VI Significant Issues

XII. STATEMENT ON OTHER SIGNIFICANT EVENTS√ Applicable□ Not Applicable(1)

Entrusted wealth management: By the end of the reporting period, the balance of the Company’s
entrusted wealth management amounted to RMB3.692 billion, including two parts:①
temporarily-idle fundraising wealth management: at the end of December 2018, the Company’s
proceeds for the issuance of convertible corporate bonds were fully landed. In order to improve
the yield of temporarily-idle funds, the Company intended to carry out cash management with theamounts not exceeding RMB0.5 billion after approved by the Board of Directors. By the end of
the reporting period, the balance of the entrusted wealth management amounted to RMB75
million; ② Temporary-idle funds wealth management by the Company and certain subsidiaries:
Under the premise of ensuring sufficient capital required by the principal operating activities anddaily operations, the Company and certain subsidiaries purchased some low risk wealthmanagement products and structured deposits from major commercial banks to improve the yieldof temporarily-idle funds and the return for shareholders within the authority of the president’s
office meeting and under the condition of ensuring fund safety. By the end of the reporting
period, the balance of the entrusted wealth management amounted to RMB3.617 billion.

(2)

Progress of the A-share repurchase: On 30 March 2022, the Company convened the 27th meetingof the 10th session of the Board of Directors, which considered and approved the Resolution in
Relation to the Repurchase Plan of a Portion of Public A Shares of Haier Smart Home Co., Ltd.
It approved the Company to use its own funds to repurchase a portion of A shares of theCompany by way of centralised bidding. The repurchase price is no more than RMB35 per shareand the proposed total repurchase amount is no more than RMB3.0 billion and no less than
RMB1.5 billion. The period of this repurchase is within 12 months from the date the Board
considered and approved the resolution of repurchase of shares. As at the end of the reporting
period, the Company had repurchased a total of 55,702,939 shares, representing 0.59% of thetotal share capital of the Company. The highest price purchased was RMB26.00 per share andthe lowest price was RMB23.50 per share, and the amount paid was RMB1,406,719,792.04. For
details, please refer to the announcements on the related progress disclosed by the Company ona monthly basis.

(3)

Progress of the Shareholding Increase by shareholders: On 8 March 2022, Qingdao Haichuangzhi
Management Consulting Enterprise (Limited Partnership) (hereinafter referred to as“Haichuangzhi”), a concerted actor of Haier Group Corporation (the actual controller of Haier
Smart Home Co., Ltd.), informed the Company that Haichuangzhi intended to increase its
shareholding of the Company’s A shares within the time frame permitted by relevant laws andregulations in the next 6 months, with the amount no less than RMB200 million and no morethan RMB350 million (including the increased shares of the Shareholding Increase). As at the endof the reporting period, the Shareholding Increase was completed. Haichuangzhi’s shareholding of
the Company’s A shares increased by 15,712,200 accumulatively, with an amount ofshareholding increase of approximately RMB347,719,237.42. For details, please refer to theAnnouncement of Haier Smart Home Co., Ltd. on the Increase in Shareholding of the Company
by Actual Controller’s Concerted Actor, and the Announcement of Haier Smart Home Co., Ltd.
on Implementation Result of the Increase in Shareholding of the Company by Actual Controller’sConcerted Actor disclosed on 9 March 2022 and 19 March 2022 respectively, and other relatedannouncements.

Haier Smart Home Co., Ltd. Interim Report 2022

75

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
Prior to changes

AmountI. Restricted shares
1. State-owned—
shares
2. Shares held bystate-owned—
legal entities
3. Other domestic
entities held—
sharesIncluding:Shares held bydomestic
non-stateowned legal—
entities
Shares held bydomestic—
individuals
4. Shares held by—foreign entities
Including:Shares held byoffshore—
legal entities
Shares held byoffshore—
individuals
II. Non-restricted
shares9,398,704,530
1. Ordinary shares
in RMB
6,308,552,654
2. Domesticallylistedforeign-owned—
Shares
3. Offshore listed
foreign-owned
Shares3,090,151,876—
4. Others
III. Total shares
9,398,704,530

76

Haier Smart Home Co., Ltd. Interim Report 2022

Increase/decrease in shares
Reserves
Bonus converted tosharessharesOthersPercentage
(%)

Issue
of newshares

—

—

—

—

—

—

—

—

—

—

After changes

Sub-total

AmountPercentage
(%)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

100.0041,413,600——

6,673,840

48,087,440 9,446,791,970

100.00

67.12

—

—

—

—

— 6,308,552,654

66.78

—

—

—

—

—

—

32.88
—
100.0041,413,600—
41,413,600

—
—
—

—
—
—

6,673,840—
6,673,840——

48,087,440 3,138,239,316——
48,087,440 9,446,791,970

33.22—
100.00Section VII Changes in Shares and Information About Shareholders

2.

Statement on the changes in shares√ Applicable □Not Applicable(1)

H-share convertible bonds: On 27 October 2020, the China Securities Regulatory
Commission issued the “Reply to the Approval of Issuance of Overseas Listed Foreign
Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《關於核准(海 爾 智 家 股 份 有 限 公 司 發 行 境 外 上 市 外 資 股 及 可 轉 換 公 司 債 券 的 批 覆》) (Zheng Jian
Xu Ke [2020] No. 2768), which approved that: (1) the Company to issue not morethan 2,856,526,138 overseas listed foreign shares (including additional shares issued
to holders of convertible corporate bonds not exceeding HK$8.0 billion or equivalent
in foreign currencies upon the exercise of the convertible rights), with a par value of
RMB1 each, all of which are ordinary shares. After the completion of this issuance,
the Company can be listed on the main board of the Stock Exchange of Hong Kong
Limited (hereinafter referred to as the “Hong Kong Stock Exchange”); (2) the issuanceof corporate bonds not exceeding HK$8.0 billion or equivalent in foreign currencies
that can be converted into the Company’s overseas listed foreign shares by theoverseas wholly-owned subsidiaries guaranteed by the Company. On 23 December
2020, 2,448,279,814 H shares of the Company, issued for the privatisation of Haier
Electronics (a Hong Kong listed company), were listed and traded on the Main Boardof the Hong Kong Stock Exchange, and the related convertible bonds under the Hshare convertible bonds scheme amounting to HK$7,993 million became valid and in
effect immediately after the listing. During the reporting period, HK$124,000,000 of
the convertible bonds were converted into a total of 6,673,840 H shares of theCompany and the outstanding amount was HK$275,000,000.

(2)

Placing of H share: Pursuant to the Resolution on Granting General Mandate to theBoard of Directors on Additional Issuance of H shares of the Company consideredand passed at the Company’s 2020 Annual General Meeting, the Resolution of Haier
Smart Home Co., Ltd. on the Issue and Listing of New H Shares on the Main Boardof the Stock Exchange of Hong Kong Limited considered and passed at the 23rd
meeting of the 10th session of the Board of Directors of the Company, etc. and the
China Securities Regulatory Commission’s “Reply to the Approval of Issuance ofOverseas Listed Foreign Shares by Haier Smart Home Co., Ltd.” 《關於核准海尔智家(股份有限公司發行境外上市外資股的批复》) (Zheng Jian Xu Ke [2021] No. 4055), theCompany can additionally issue no more than 73,000,000 overseas listed foreign
shares (H shares), with a par value of RMB1 each, all of which are ordinary shares.
On the 26th meeting of the 10th session of the Board of Directors of the Company
on 11 January 2022, the Resolution on the Placing of New H Shares Under the
General Mandate of Haier Smart Home Co., Ltd. was considered and passed and41,413,600 H shares will be issued by the Company.

Haier Smart Home Co., Ltd. Interim Report 2022

77

Section VII Changes in Shares and Information About Shareholders

On 21 January 2022, in accordance with the aforesaid resolutions and reply, theCompany issued 41,413,600 overseas listed foreign shares (H shares). The newshares accounted for 0.439% of the total number of issued shares and 1.448% of thetotal number of H shares, respectively, upon completion of placing and the Stock
Exchange of Hong Kong Limited has granted the approval for the listing of andpermission to deal in the shares on its Main Board.
Based on the above, during the reporting period, the share capital of the Company
was changed from 9,398,704,530 shares at the beginning of the reporting period to
9,446,791,970 shares.
3.

Effect of changes in shares on the financial indicators such as earnings per shareand net assets per share (if any) after the reporting period to the disclosure dateof interim report√ Applicable □ Not Applicable
For the interim period in 2022, the Company recorded a net profit attributable toshareholders of the parent company of RMB7,949,084,472.70 and equity attributable toowners of the parent company as at the end of the reporting period of
RMB86,251,016,004.21, representing earnings per Share of RMB0.841 and net asset per
Share of RMB9.130, based on the total share capital as at the end of the reporting periodof 9,446,791,970 Shares; and earnings per Share of RMB0.841 and net asset per Share of
RMB9.129, based on the total share capital as at the date of disclosure of the interim
report of 9,448,155,076 Shares.

4.

Other disclosure deemed necessary by the Company or required by securities
regulatory authorities□ Applicable √ Not Applicable(II)

Changes in shares with selling restrictions□ Applicable √ Not Applicable

II. INFORMATION ON SHAREHOLDERS(I)

Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period
Total numbers of preferential shareholders with restoration of voting rights
by the end of the reporting period

78

Haier Smart Home Co., Ltd. Interim Report 2022

150,1630Section VII Changes in Shares and Information About Shareholders(II)

Table of shareholdings of top ten shareholders, top ten shareholders of tradable
shares (or shares without selling restrictions) by the end of the reporting
periodUnit: share
Shareholdings of top ten shareholders
Increase/decrease
Number ofduring the shares heldreporting at the end of
periodthe period

Percentage(%)

HKSCC NOMINEES LIMITED
Haier COSMO Co., Ltd.
(海爾卡奧斯股份有限公司)
Haier Group Corporation— 2,239,863,660— 1,258,684,824

23.71
13.32

—
—

UnknownNone——— 1,072,610,764

11.35

—

None

—

Hong Kong Securities Clearing
Co., Ltd.
HCH (HK) INVESTMENTMANAGEMENT CO., LIMITED
China Securities FinanceCorporation Limited
Qingdao Haier Venture &Investment Information Co.,
Ltd. (青島海爾創業投資諮詢有限公司)
Qingdao Haichuangzhi
Management Consulting
Enterprise (Limited
Partnership) (青島海創智管理
諮詢企業（有限合夥）)
ALIBABA INVESTMENT LIMITED
China Merchant Bank Co., Ltd.
— Xingquan Herun mixed
securities investment fund—

715,059,902

7.57

—

None

—

Unknown
Domestic non-stateowned legal entity
Domestic non-stateowned legal entity
Unknown—

538,560,000

5.70

—

None

—

Foreign legal entity—

182,592,654

1.93

—

None

—

Unknown—

172,252,560

1.82

—

None

—

Domestic non-stateowned legal entity—

118,724,416

1.26

—

None

—

Domestic non-stateowned legal entity——

83,823,993
78,018,741

0.89
0.83

—
—

Unknown
None——

Foreign legal entity
Unknown

Name of shareholder(full name)

Number ofshares heldwith selling
restrictions

Status of shares pledged,
marked or frozen
StatusNumberNature ofshareholder

Haier Smart Home Co., Ltd. Interim Report 2022

79

Section VII Changes in Shares and Information About Shareholders

Shareholdings of top ten shareholders without selling restrictions

Name of shareholder

Number of
tradable shares
held without
selling
restrictionsClass

HKSCC NOMINEESLIMITED
Haier COSMO Co., Ltd.
(海爾卡奧斯股份有限公 司)
Haier Group
Corporation
Hong Kong Securities
Clearing Co., Ltd.
HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED
China Securities FinanceCorporation Limited
Qingdao Haier Venture &Investment
Information Co., Ltd.
(青島海爾創業投資諮
詢 有 限 公 司)
Qingdao Haichuangzhi
Management
Consulting Enterprise(Limited Partnership)(青島海創智管理諮詢企 業（有 限 合 夥）)
ALIBABA INVESTMENT
LIMITED
China Merchant Bank
Co., Ltd. — Xingquan
Herun mixed
securities investment
fund
Explanation on
repurchase account of
top ten shareholders

80

Haier Smart Home Co., Ltd. Interim Report 2022

2,239,863,660

Class and number of shares
Number2,239,863,660

1,258,684,824

Overseas listed foreign
sharesRMB ordinary

1,072,610,764

RMB ordinary

1,072,610,764

715,059,902

RMB ordinary

715,059,902

538,560,000

Overseas listed foreign
shares538,560,000

182,592,654

RMB ordinary

182,592,654

172,252,560

RMB ordinary

172,252,560

118,724,416

RMB ordinary

118,724,416

83,823,993

Overseas listed foreign
sharesRMB ordinary

83,823,993

78,018,741

1,258,684,824

78,018,741

The repurchase accounts of the Company held a total of
109,754,498 shares

Section VII Changes in Shares and Information About Shareholders

Name of shareholder

Number of
tradable shares
held without
selling
restrictions
Class

Explanation ondelegated voting
rights, entrusted
voting rights,
abstained voting
rights of the above
shareholders
Related parties orparties acting inconcert among the
aforesaid
shareholders

Class and number of shares
NumberNil(1)

Haier COSMO Co., Ltd. (海 爾 卡 奥 斯 股 份 有 限 公 司) is a
subsidiary of Haier Group Corporation. Haier Group
Corporation holds 51.20% of its equity. Qingdao Haier
Venture & Investment Information Co., Ltd. (青 島 海 爾 創 業 投
資 諮 詢 有 限 公 司), HCH (HK) INVESTMENT MANAGEMENT
CO., LIMITED and Qingdao Haichuangzhi Management
Consulting Enterprise (Limited Partnership) (青島海創智管理諮
詢 企 業（有 限 合 夥）) are parties acting in concert with HaierGroup Corporation;(2)
Explanation ofpreferential
shareholders withrestoration of voting
rights and theirshareholdings

The Company is not aware of the existence of any connectionsof other shareholders.
Not applicable

Note: (1)HKSCC NOMINEES LIMITED is the Collection Account for the shareholders of the Company’s H-shares, which is
the original data provided by the securities registration agency of Hong Kong, China to the Company after themerger according to local market practices and technical settings, not representing the ultimate shareholder.

(2)

As at the end of the reporting period, Qingdao Haichuangzhi Management Consulting Enterprise (Limited
Partnership) (青 島 海 創 智 管 理 諮 詢 企 業（有 限 合 夥）) engaged in refinancing and securities lending business,
involving a total of 1,898,000 shares, whilst the ownership of which had not been transferred. The actual numberof shares held by it totaled 120,622,416 shares.

Number of shares held by top ten shareholders with selling restrictions and the selling
restrictions□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

81

Section VII Changes in Shares and Information About Shareholders(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares□ Applicable √ Not Applicable

III. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT(I)

Changes of shareholding of current and retired directors, supervisors and senior
management during the reporting period□ Applicable√ Not Applicable

Other explanations□ Applicable(II)√ Not Applicable

Incentive share option granted to directors, supervisors and senior management
during the reporting period√ Applicable□ Not Applicable
Unit: 10,000 shares

82

Number of
Number of stock options
stock options newly granted
held at theduring the
beginning ofreportingthe period
periodExercisable
sharesoptions
during thereportingperiodShares fromstock option
Number of
exercised stock options
during theheld at thereportingend of theperiodperiodName

Position

Li Huagang
Gong Wei
Xie Juzhi
Li PanSong Yujun
Zhao Yanfeng
Huang Xiaowu
Wu Yong
Li Yang
Guan Jiangyong
Liu Xiaomei

Director
Director
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management
Senior Management

91.39
45.70
91.39
45.70
31.21
46.82
45.70
22.85
45.70
22.85
0

0
0
0
0
0
0
0
0
0
0
11.65

0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0

91.39
45.70
91.39
45.70
31.21
46.82
45.70
22.85
45.70
22.85
11.65

Total

/

489.31

11.65

0

0

500.96

Haier Smart Home Co., Ltd. Interim Report 2022

Section VII Changes in Shares and Information About Shareholders(III) Other explanations□ Applicable√ Not Applicable

IV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATECONTROLLER□ Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

83

Section VIII Relevant Information ofPreferred Shares□ Applicable84√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

Section IX Relevant Information of
Corporate Bonds

I.

ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIAL
CORPORATE DEBT FINANCING INSTRUMENTS□ ApplicableII.

√ Not Applicable

CONVERTIBLE CORPORATE BOND
√ Applicable(1)□ Not Applicable

Convertible bond issue
On 27 October 2020, CSRC issued “Reply to the Approval of Issuance of Overseas Listed
Foreign Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《關於核準海(
爾 智 家 股 份 有 限 公 司 發 行 境 外 上 市 外 資 股 及 可 轉 換 公 司 債 券 的 批 覆》) (Zheng Jian Xu Ke [2020]
No. 2768) (hereinafter referred to as “CSRC Reply”) to approve: (1) Haier Smart Home to issue
not more than 2,856,526,138 overseas listed foreign shares (including shares to be issued
pursuant to the exercise of conversion rights by the holders of convertible corporate bonds with
an amount of not more than HK$8.0 billion or equivalent in any foreign currency) with a par valueof RMB1, all registered as ordinary shares. Upon the completion of the issue, Haier Smart Home
may be listed on the main board of the Hong Kong Stock Exchange; (2) With the guarantee ofHaier Smart Home, its wholly-owned foreign subsidiary issued overseas corporate bonds with anamount of not more than HK$8.0 billion or equivalent in any foreign currency, convertible into
overseas listed foreign shares of the issuer. Pursuant to this and approval from relevant parties,
2,448,279,814 H-shares and convertible bonds (exchangeable bonds of HK$8.0 billion issued in
November 2017 were converted into convertible bonds, resulting in valid convertible bonds ofHK$7.993 billion, which were convertible into H-shares of the Company) were issued by theCompany and Harvest International Company, a wholly-owned subsidiary of the Company, on the
Hong Kong Stock Exchange on 23 December 2020, respectively. Please refer to the prospectus
and other relevant documents disclosed by the Company in the Hong Kong market during thereporting period and the Report on the Implementation of Significant Asset Acquisition andConnected Transactions 《重(大 資 產 購 買 暨 關 聯 交 易 實 施 情 況 報 告 書》) and other documents
disclosed by the Company on 26 December 2020 for details.
For the above-mentioned bonds, 105.11% of the remaining par value of the bonds were repaid
in an one-off repayment of principal and interest upon maturity.

(2)

Convertible bond holders and guarantors for the Reporting Period
Name of convertible corporate bondNumber of convertible bond holders as at the endof the period
Guarantor of the Company’s convertible bonds
Material changes of the profitability, asset andcredibility of the guarantor

Harvest International Company
HK$8,000,000,000 Zero Coupon
Guaranteed Convertible Bonds due
2022 (hereafter, “H Share Convertible
Bonds”)
1
Haier Smart Home Co., Ltd.
Nil

Haier Smart Home Co., Ltd. Interim Report 2022

85

Section IX Relevant Information of Corporate Bonds

Top 10 holders of convertible bonds are as follows:

Name of holder of corporate convertible bonds

Holdings as at theend of the period(RMB)

Holding
percentage(%)

275,000,000

100

HSBC Nominees (Hong Kong) Limited

Note: (1) the aforementioned bonds as at the end of the period are denominated in Hong Kong Dollar; (2) H Share Convertible
Bonds of the Company are held by HSBC Nominees (Hong Kong) Limited as the sole legal holder, who is not theultimate holder. Information on the ultimate holders of the bonds is only stored in the clearing system and, without
the authorization from the ultimate holder, the clearing system shall not directly provide the detailed list of ultimatebond holders to any party.

(3)

Conversion of convertible bonds for the Reporting Period
Unit and Currency: HKD
Name of convertible
corporate bondPrior to thechangesConversion

H Share Convertible
Bonds

(4)

399,000,000

Increase/decrease
Redemption

124,000,000—

After thechanges
Resale—275,000,000

Cumulative conversion of convertible bond for the Reporting Period
Currency: HKD
Name of convertible corporate bondAmount of conversion for the Reporting Period (HKD)
Number of conversion for the Reporting Period (Shares)
Cumulative number of conversion (Shares)
Percentage of cumulative number of conversion to total
issued shares of the Company prior to the conversion (%)
Outstanding amount (HKD)
Percentage of outstanding amount to total amount of
convertible bonds issued (%)(5)

H Share Convertible Bonds
124,000,000
6,673,840
409,884,729
4.54
275,000,000
3.44

Historical adjustment of conversion price
Unit and Currency: HKD
Name of convertible corporate bondLatest conversion price as at the end of the Reporting
Period86

Haier Smart Home Co., Ltd. Interim Report 2022

H Share Convertible Bonds

18.58

Section IX Relevant Information of Corporate Bonds(6)

Liabilities, change in credit and cash arrangements of repayment in the coming
year of the Company
As at the end of the reporting period, liabilities of the Company amounted to
RMB139,076,271,000, in which current liabilities amounted to RMB127,717,442,200 andnon-current liabilities amounted to RMB11,358,828,800.
The Company remains stable in every operating condition with reasonable asset structure andgood credibility, and is capable of providing stable and sufficient working capital for the
repayment of the interests and principal of convertible corporate bonds in the coming year.

(7)

Other information on convertible bonds
On 23 November 2017, the first 2017 Extraordinary General Meeting of the Company adopted
the Resolution of Qingdao Haier Co., Ltd. on the Scheme for Public Offering of Convertible
Corporate Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to theresolution at this general meeting and the approval documents of the China Securities Regulatory
Commission and others, the Company completed the issue of convertible corporate bonds inDecember 2018, with a total issue amount of RMB3,007.49 million. The bonds were listed on 18
January 2019, which is referred to as “Haier Convertible Bonds” and its bond code is 110049.
For details, please refer to the Prospectus for the Public Offering of A-share Convertible
Corporate Bonds by Qingdao Haier Co., Ltd. as disclosed on 14 December 2018, and theAnnouncement on the Listing of Convertible Corporate Bonds by Qingdao Haier Co., Ltd. as
disclosed on 16 January 2019 and other relevant documents. As the convertible bonds in 2019
met the redemption conditions and the Board of Directors of the Company decided to exercise
the redemption right after consideration and approval, the Company redeemed the balance of theconvertible bonds in full up to the registered amount on redemption registration date. After theredemption, the convertible bonds of the Company were delisted on 17 December 2019. At
present, the A-share convertible bonds have ceased to be in existence, but the funds raised fromthe issuance of the bonds have not been fully utilized. As of 30 June 2022, RMB2,791.68 millionof the funds raised from A-share convertible bonds has been utilized, with a balance of
RMB260.91 million (the account balance includes the income generated from the purchase of
wealth management products, interest on demand deposits, foreign exchange gains and losses
and the not-yet-invested capital raised). For details of the use of funds, please refer to theSpecial Report on the Deposit and Actual Use of Raised Funds in the First Half of 2022 of Haier
Smart Home Co., Ltd., which was disclosed on the same date as this report.

Haier Smart Home Co., Ltd. Interim Report 2022

87

Section X Financial ReportI.

AUDIT REPORT□ ApplicableII.

√ Not Applicable

FINANCIAL STATEMENTS
Consolidated Balance Sheet
30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items
Current assets:
Monetary funds
Provision of settlement fundFunds lent
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Financing receivables
Prepayments
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables
Including: Interest receivable
Dividend receivable
Financial assets purchased under resaleagreements
Inventories
Contract assets
Assets held for saleNon-current assets due in one year
Other current assets
Total current assets
Non-current assets:
Loans and advances granted
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments
Investments in other equity instruments

88

Haier Smart Home Co., Ltd. Interim Report 2022

Notes

Closing balance

Opening balance

VII.1

50,316,121,259.28

45,971,035,763.51

VII.2
VII.3
VII.4
VII.5

2,560,172,076.58
163,084,726.42
8,417,636,171.41
17,920,101,868.72

2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,642,659,450.22

VII.6

868,112,660.47

857,234,399.26

VII.7

2,156,760,190.99
400,015,260.13

1,956,721,621.66
294,379,438.82

VII.8
VII.9

41,006,635,494.22
280,621,191.36

39,901,262,689.59
304,434,294.70

VII.104,515,557,117.17
3,920,750,476.57
128,204,802,756.62 123,774,785,266.90

VII.11
VII.12306,402,281.56
24,110,645,622.66
4,852,445,212.91

308,998,755.30
23,200,884,340.57
4,848,709,438.96

Section X Financial Report

Items
Other non-current financial assets
Investment properties
Fixed assets
Construction in progress
Biological assets for production
Oil and gas assets
Right-of-use assets
Intangible assets
Development cost
Goodwill
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Short-term borrowings
Borrowings from central bank
Due to banks and other financial
institutions
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payable
Receipts in advanceContract liabilities
Disposal of repurchased financial assets
Absorbing deposit and deposit in interbank market
Customer deposits for trading in securities
Amounts due to issuer for securities
underwriting
Payables for staff’s remuneration
Taxes payable
Other payables
Including: Interest payable
Dividend payable
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for saleNon-current liabilities due within one year
Other current liabilities
Total current liabilities

Notes

Closing balance

Opening balance

VII.13
VII.14
VII.1525,624,249.19
24,242,589,167.64
4,858,973,923.48

24,964,888.48
22,307,090,168.64
4,183,263,398.79

VII.16
VII.17
VII.18VII.19VII.20VII.21
VII.22

3,664,479,071.10
2,734,678,906.53
9,578,002,832.45
9,550,384,743.90
225,378,688.91
227,892,229.13
22,746,678,157.03 21,827,103,060.76
686,383,400.01
588,796,706.24
1,399,363,197.75
1,857,448,518.29
1,750,990,973.29
2,164,384,013.14
98,447,956,777.98 93,824,599,168.73
226,652,759,534.60 217,599,384,435.63

VII.23

13,159,569,303.47

11,226,212,134.39

VII.24
VII.25
VII.26
VII.27

79,270,648.00
77,066,966.55
27,955,088,267.08
38,977,127,139.49

6,294,014.40
80,212,433.24
25,023,238,406.72
42,396,109,648.76

VII.285,397,435,938.66

10,027,091,593.60

VII.29VII.30VII.31

3,155,954,164.86
2,748,011,705.59
22,391,504,810.19

4,115,939,635.24
2,605,508,703.56
17,533,370,017.01

4,321,692,240.21

10,639,313.22

VII.32
VII.33

12,490,218,783.46
9,624,339,170.46
1,286,194,473.81
2,238,767,551.40
127,717,442,201.16 124,877,083,308.78

Haier Smart Home Co., Ltd. Interim Report 2022

89

Section X Financial Report

Items
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Owners’ equity (or shareholders’equity):Paid-in capital (or share capital)
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve
Less: treasury stock
Other comprehensive income
Special reserve
Surplus reserve
General risk provisions
Undistributed profits
Total equity attributable to owners (orshareholders) of the Parent Company
Minority shareholders’ interests
Total owners’ equity (or shareholders’equity)Total liabilities and owners’ equity(or shareholders’ equity)

Notes

Closing balance

Opening balance

VII.34
VII.35

2,119,243,998.96

3,038,573,824.53
334,730,048.82

VII.36
VII.372,763,944,633.73
49,353,671.92

1,960,894,981.47
99,602,707.76

VII.38VII.39VII.40VII.21

VII.41
VII.429,446,791,970.00
81,340,387.43

9,398,704,530.00
118,017,507.59

VII.43
VII.4423,820,929,638.40
3,962,689,830.07
1,689,673,248.96

22,579,374,739.46
2,424,038,819.70–1,176,851,699.92

VII.453,438,615,909.84

3,438,615,909.84

VII.46

51,736,354,679.65

47,917,912,260.15

86,251,016,004.21
1,325,472,564.58

79,851,734,427.42
1,290,988,473.17

87,576,488,568.79

81,142,722,900.59

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

90

Haier Smart Home Co., Ltd. Interim Report 2022

1,172,642,077.88
1,173,151,761.64
1,776,817,160.27
1,948,565,477.11
906,543,570.12
852,794,567.20
2,517,001,943.72
2,121,803,173.83
53,281,708.05
49,461,683.90
11,358,828,764.65 11,579,578,226.26
139,076,270,965.81 136,456,661,535.04

226,652,759,534.60 217,599,384,435.63

Section X Financial Report

Balance Sheet of the Parent Company
30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items
Current Assets:
Monetary funds
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Financing receivables
Prepayments
Other receivables
Including: Interest receivable
Dividend receivable
Inventories
Contract assets
Assets held for saleNon-current assets due within one year
Other current assets
Total current assets
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments
Investments in other equity instruments
Other non-current financial assets
Investment properties
Fixed assets
Construction in progress
Biological assets for production
Oil and gas assets
Right-of-use assets
Intangible assets
Development cost
Goodwill
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets

Notes

XVIII.1

XVIII.2

XVIII.3

Closing balance

Opening balance

4,514,223,019.08

4,043,535,735.48

594,883,399.99

546,532,442.90

4,228,627.14
18,054,815,019.15
85,694,396.74
4,015,840,000.00
42,213,555.64

275,052,864.92
16,245,280,168.41
51,632,471.99
3,615,840,000.00
1,139,135.32

1,576,901,109.42
24,787,264,730.42

337,476,209.01
21,449,016,556.04

52,725,448,184.23
1,615,450,032.92

52,513,760,277.77
1,615,450,032.92

181,459,945.43
10,549,969.42

179,789,817.34
17,569,516.17

787,591.26
51,705,499.18

1,217,186.49
55,171,485.39

3,120,559.80
159,338,211.77
798,000,000.00

3,781,398.54
159,338,211.77
803,323,404.28

Haier Smart Home Co., Ltd. Interim Report 2022

91

Section X Financial Report

Items
Total non-current assets
Total assets
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables
Receipts in advanceContract liabilities
Payables for staff’s remuneration
Taxes payable
Other payables
Including: Interest payable
Dividends payable
Liabilities held for saleNon-current liabilities due within one year
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Owners’ equity (or Shareholders’equity):Paid-in capital (or share capital)
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve
Less: treasury stock
Other comprehensive income
Special reserve
Surplus reserve

92

Haier Smart Home Co., Ltd. Interim Report 2022

Notes

Closing balance

Opening balance

55,545,859,994.01
80,333,124,724.43

55,349,401,330.67
76,798,417,886.71

282,420,326.44

183,690,889.86

12,605,139.93
637,966.36
1,539,895.66
39,882,708,592.97

12,605,139.93
12,323,670.21
1,747,023.87
34,484,355,762.60

897,357.83
8,517,052.13
40,189,326,331.32

877,995.65
5,420,156.55
34,701,020,638.67

2,100,000,000.00

11,730,000.00
448,965,654.25

19,270,000.00
448,965,654.25

2,560,695,654.25
42,750,021,985.57

468,235,654.25
35,169,256,292.92

9,446,791,970.00

9,398,704,530.00

27,121,923,173.96
2,902,003,244.14
618,738,786.66

25,802,279,483.13
1,495,170,675.08
621,302,944.83

2,833,469,684.39

2,833,469,684.39

Section X Financial Report

Items

Notes

Undistributed profits
Total owners’ equity (or shareholders’equity)Total liabilities and owners’ equity(or shareholders’ equity)

Closing balance

Opening balance

464,182,367.99

4,468,575,626.52

37,583,102,738.86

41,629,161,593.79

80,333,124,724.43

76,798,417,886.71

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

Haier Smart Home Co., Ltd. Interim Report 2022

93

Section X Financial Report

Consolidated Profit Statement
January-June 2022
Unit and Currency: RMB
Items
I. Total operating revenue
Including: Operating revenue
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations
Including: Operating cost
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance
liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges
Selling expenses
Administrative expenses
R&D expenses
Financial expenses
Including: Interest expenses
Interest income
Add: other income
investment income (losses are
represented by “–”)Including: Investment income ofassociates and joint ventures
Income generated from the derecognitionof financial assets measured atamortized cost (losses are represented
by “–”)
Exchange gain (losses are represented by“–”)
Gains on net exposure hedges (losses are
represented by “–”)
Income from change in fair value (losses
are represented by “–”)Loss on credit impairment (losses are
represented by “–”)94Haier Smart Home Co., Ltd. Interim Report 2022

Notes

2022 Interim2021 Interim

VII.47

121,857,522,462.22 111,727,756,211.06
121,857,522,462.22 111,727,756,211.06

VII.47

112,549,408,749.25 104,308,762,442.84
85,061,133,319.20 78,156,467,866.57

VII.48VII.49VII.50VII.51
VII.52

VII.53357,165,605.43
17,605,612,224.80
5,132,033,156.92
4,595,691,525.07–202,227,082.17
345,810,365.32
362,045,401.51
546,242,698.94

339,488,659.16
16,731,407,296.02
5,047,535,410.71
3,738,316,873.21
295,546,337.17
363,287,457.45
264,658,985.86
378,116,328.72

VII.54

1,170,336,743.41

1,136,280,339.22

VII.55–118,790,175.68

64,269,511.32

VII.56–258,076,846.14–44,031,423.21

Section X Financial Report

Items
Loss on assets impairment (losses are
represented by “–”)Gain from disposal of assets (losses are
represented by “–”)
III. Operating profit (losses are represented
by “–”)
Add: non-operating income
Less: non-operating expenses
IV. Total profit (total losses are represented
by “–”)
Less: income tax expense
V. Net profit (net losses are represented by“–”)(I) Classification by continuous operation
1. Net profit from continuous operation(net losses are represented by “–”)
2. Net profit from discontinued
operation (net losses are
represented by “–”)(II) Classification by ownership of theequity1. Net profit attributable to shareholdersof the Parent Company (net losses
are represented by “–”)
2. Profit or loss attributable to minority
shareholders (net losses are
represented by “–”)
VI. Other comprehensive income, net of tax(I) Other comprehensive income
attributable to owners of the Parent
Company, net of tax
1. Other comprehensive income thatcannot be reclassified into the
profit or loss
(1) Changes arising fromre-measurement of defined
benefit plans(2) Other comprehensive incomethat cannot be transferred into
profit or loss under equity
method(3) Changes in fair value ofinvestments in other equity
instruments

Notes

2022 Interim2021 Interim

VII.57–707,061,947.81–653,387,326.88

VII.5831,589,207.10

142,414,954.25

VII.59VII.609,972,353,392.79
68,854,227.41
43,535,551.68

8,442,656,151.64
80,167,397.14
51,064,696.04

VII.61

9,997,672,068.52
2,000,741,926.36

8,471,758,852.74
1,525,749,793.00

7,996,930,142.16

6,946,009,059.74

7,996,930,142.16

6,946,009,059.74

7,949,084,472.70

6,858,902,854.55

47,845,669.46
2,864,992,299.95

87,106,205.19–296,041,116.28

2,866,524,948.88–293,997,754.26—45,646,560.54

38,290,357.71

4,562,166.91–595,263.81—50,208,727.45

38,885,621.52

VII.62Haier Smart Home Co., Ltd. Interim Report 2022

95

Section X Financial Report

Items(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to bereclassified into the profit or loss
(1) Other comprehensive incomethat can be transferred into
profit or loss under equity
method(2) Changes in fair value of otherdebt investments(3) Reclassified financial assets thatare credited to othercomprehensive income(4) Credit impairment provision forother debt investments(5) Reserve for cash flow hedging(6) Exchange differences ontranslation of financial
statements denominated inforeign currencies(7) Others(II) Other comprehensive income
attributable to minority shareholders,
net of tax
VII. Total comprehensive income(I) Total comprehensive income
attributable to the owners of Parent
Company(II) Total comprehensive income
attributable to the minority
shareholders
VIII. Earnings per share:(I) Basic earnings per share (RMB/share)(II) Diluted earnings per share (RMB/
share)

Notes

2022 Interim2021 Interim

2,912,171,509.42–332,288,111.97

108,350,151.43

55,956,231.90

25,995,214.10

112,586,182.47

2,777,826,143.89–500,830,526.34—1,532,648.93
10,861,922,442.11–2,043,362.02
6,649,967,943.46

10,815,609,421.58

6,564,905,100.29

46,313,020.53

85,062,843.17

XVIII.1

0.85

0.74

XVIII.1

0.85

0.73

For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB4,473,481.70, and the net profit of the acquiree for theprevious period was RMB5,535,635.66.
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

96

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

Profit Statement of the Parent Company
January-June 2022
Unit and Currency: RMB
Items

Notes

2022 Interim2021 Interim

I. Operating income
Less: operating cost
Taxes and surcharges
Selling expenses
Administration expenses
R&D expenses
Financial expenses
Including: Interest expenses
Interest income
Add: other income
investment income (losses are
represented by “–”)Including: Investment income ofassociates and joint
venturesDerecognition income on
financial assets
measured at amortizedcost (losses are
represented by “–”)Gains on net exposure hedges(losses are represented by “–”)
Income from change in fair value(losses are represented by “–”)Loss on credit impairment (losses
are represented by “–”)Loss on assets impairment (losses
are represented by “–”)Gain from disposal of assets (losses
are represented by “–”)
II. Operating profit (losses are represented
by “–”)
Add: non-operating income
Less: non-operating expenses
III. Total profit (total losses are represented
by “–”)
Less: income tax expenses
IV. Net profit (net losses are represented
by “–”)XVIII.4
XVIII.4

93,323,883.33
80,891,389.46
1,171,987.68
4,615,963.20
328,116,657.42
5,806,423.66—42,487,430.75
4,530,273.29
53,365,585.67
17,240,565.58

196,151,588.84
170,532,414.76
1,174,776.60
1,542,784.65
143,500,790.38
17,296,703.96–32,789,762.71
7,372,782.23
35,812,614.94
39,709,407.90

XVIII.5

548,236,536.95

113,153,980.76

116,871.97–7,122,909.94

35,074,022.45

142,444,000.00

315,876,889.61
204,216.74
28,698.02

183,078,359.92
60,749.06
50,687.25

316,052,408.33

183,088,421.73—15,190,900.38

316,052,408.33

198,279,322.11

Haier Smart Home Co., Ltd. Interim Report 2022

97

Section X Financial Report

Items

Notes

(I) Net profit from continuous operations(net losses are represented by “–”)(II) Net profit from discontinued operations(net losses are represented by “–”)
V. Other comprehensive income, net of tax(I) Other comprehensive income thatcannot be reclassified into the profit orloss
1. Changes arising fromre-measurement of defined benefit
plans
2. Other comprehensive income thatcannot be transferred into profit orloss under equity method
3. Changes in fair value of investments
in other equity instruments
4. Changes in fair value of credit risksof the enterprise(II) Other comprehensive income to bereclassified into the profit or loss
1. Other comprehensive income thatcan be transferred into profit or loss
under equity method
2. Changes in fair value of other debt
investments
3. Reclassified financial assets that are
credited to other comprehensive
income4. Credit impairment provision for otherdebt investments
5. Reserve for cash flow hedging
6. Exchange differences on translationof financial statements denominatedin foreign currencies
7. Others
VI. Total comprehensive income
VII. Earnings per share:(I) Basic earnings per share (RMB/share)(II) Diluted earnings per share(RMB/share)
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

98

Haier Smart Home Co., Ltd. Interim Report 2022

2022 Interim2021 Interim

316,052,408.33

198,279,322.11—2,564,158.17

11,664,510.69—2,564,158.17

11,664,510.69—2,564,158.17

11,664,510.69

313,488,250.16

209,943,832.80

Section X Financial Report

Consolidated Cash Flow Statement
January-June 2022
Unit and Currency: RMB
Items
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering services
Net increase in customer and inter-bankdeposits
Net increase in borrowing from thecentral bank
Net cash increase in borrowing fromother financial institutes
Cash received from premiums under
original insurance contract
Net cash received from reinsurance
business
Net increase in deposits of policy holders
and investment
Cash received from interest, fee andcommissions
Net increase in placement from banks
and other financial institutions
Net increase in cash received fromrepurchase operation
Net cash received from customer
deposits for trading in securities
Refunds of taxes
Cash received from other related
operating activities
Sub-total of cash inflows from operating
activities
Cash paid on purchase of goods andservices
Net increase in loans and advances ofcustomers
Net increase in deposits in the PBOC andinter-bank
Cash paid for compensation payments
under original insurance contract
Net increase in cash lent
Cash paid for interest, bank charges andcommissions

Notes

2022 Interim2021 Interim

125,785,043,134.22 117,944,101,751.66

VII.63

1,359,611,570.36

964,437,758.54

841,294,815.74

737,260,365.59

127,985,949,520.32 119,645,799,875.79
89,586,479,170.53

80,310,181,952.46

Haier Smart Home Co., Ltd. Interim Report 2022

99

Section X Financial Report

Items
Cash paid for insurance policy dividend
Cash paid to and on behalf of
employees
Cash paid for all types of taxes
Cash paid to other operation related
activities
Sub-total of cash outflows from operating
activities
Net cash flow from operating activities
II. Cash flow from investing activities:
Cash received from recovery ofinvestments
Cash received from return on
investments
Net cash received from the disposal of
fixed assets, intangible assets andother long-term assets
Net cash received from disposal ofsubsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities
Cash paid on purchase of fixed assets,intangible assets and other long-term
assetsCash paid for investments
Net increase in secured loans
Net cash paid on acquisition ofsubsidiaries and other operating
entities
Other cash paid on investment activities
Sub-total of cash outflows from investing
activities
Net cash flow from investing activities

100

Haier Smart Home Co., Ltd. Interim Report 2022

Notes

VII.642022 Interim2021 Interim

13,701,958,122.17
5,091,644,757.74

12,773,459,633.28
5,080,969,771.64

13,641,619,812.66

13,038,993,358.10

122,021,701,863.10 111,203,604,715.48
VII.67

5,964,247,657.22

8,442,195,160.31

4,997,285,703.11

2,869,349,936.62

421,887,380.66

313,949,022.75

74,590,057.10

19,269,652.96

5,493,763,140.87

3,202,568,612.33

3,342,824,864.02
6,274,280,514.60

3,155,717,619.84
3,283,612,983.20

37,326,510.00
250,000.00
9,654,431,888.62—4,160,668,747.75

6,439,580,603.04–3,237,011,990.71

Section X Financial Report

Items
III. Cash flow from financing activities:
Cash received from capital contributions
Including: Cash received from capital
contributions by minority
shareholders of subsidiaries
Cash received from borrowings
Other cash received from financing
activities
Sub-total of cash inflows from financing
activities
Cash paid on repayment of loans
Cash paid on distribution of dividends,
profits or repayment of interest
expenses
Including: Dividend and profit paid tominority shareholders bysubsidiaries
Other cash paid to financing activities
Sub-total of cash outflows from financing
activities
Net cash flow from financing activities
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents
V. Net increase in cash and cash
equivalents
Add: balance of cash and cash
equivalents at the beginning of
the period
VI. Balance of cash and cash equivalents
at the end of the period

Notes

VII.652022 Interim2021 Interim

986,491,004.94

8,600,000.00

8,044,351,638.86

4,920,230,964.76

1,000,235.35
9,031,842,879.15
4,667,753,225.90

4,928,830,964.76
11,117,743,195.81

327,338,483.19

327,295,977.88

1,876,577,772.85

3,090,810,896.53

6,871,669,481.94
2,160,173,397.21

14,535,850,070.22–9,607,019,105.46

230,069,372.19–107,597,142.14

4,193,821,678.87–4,509,433,078.00

VII.6845,071,366,271.21

45,738,120,000.70

VII.6849,265,187,950.08

41,228,686,922.70

VII.66

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

Haier Smart Home Co., Ltd. Interim Report 2022

101

Section X Financial Report

Cash Flow Statement of the Parent Company
January-June 2022
Unit and Currency: RMB
Items
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services
Refunds of taxes
Other cash received from operating
activities
Sub-total of cash inflows from operating
activities
Cash paid on purchase of goods andservices
Cash paid to and on behalf of
employees
Cash paid for all types of taxes
Other cash paid to operation activities
Sub-total of cash outflows fromoperating activities
Net cash flow from operating
activities
II. Cash flow from investing activities:
Cash received from recovery ofinvestments
Cash received from return on
investments
Net cash received from the disposal of
fixed assets, intangible assets andother long-term assets
Net cash received from disposal ofsubsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities
Cash paid on purchase of fixed assets,intangible assets and other long-term
assetsCash paid for investments

102

Haier Smart Home Co., Ltd. Interim Report 2022

Notes

2022 Interim2021 Interim

25,976,480.20
7,799,497.52

4,574,156,292.06
15,641,231.71

311,936,036.56

60,444,554.93

345,712,014.28

4,650,242,078.70

141,857.64

81,405,473.91

24,825,638.14
1,578,405.68
81,136,892.33

138,942,956.91
33,242,176.88
9,853,987.61

107,682,793.79

263,444,595.31

238,029,220.49

4,386,797,483.39

803,860,000.00

273,250,000.00

72,346,255.88

92,194,698.15

35,206,354.85

911,412,610.73

365,444,698.15

15,544,095.62
2,173,745,507.20

31,022,950.45
231,500,000.00

Section X Financial Report

Items

Notes

Net cash paid on acquisition ofsubsidiaries and other operating
entities
Other cash paid on investment activities
Sub-total of cash outflows frominvesting activities
Net cash flow from investing
activities
III. Cash flow from financing activities:
Cash received from capital contributions
Cash received from borrowings
Other cash received from financing
activities
Sub-total of cash inflows from financing
activities
Cash paid on repayment of borrowings
Cash paid on distribution of dividends,
profits or repayment of interest
expenses
Other cash paid on financing activities
Sub-total of cash outflows fromfinancing activities
Net cash flow from financing
activities
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents
V. Net increase in cash and cash
equivalents
Add: balance of cash and cash
equivalents at the beginning of
the period
VI. Balance of cash and cash equivalents
at the end of the period2022 Interim2021 Interim

1,521,600,000.00

75,886,144.59

3,710,889,602.82

338,409,095.04—2,799,476,992.09

27,035,603.11

940,041,004.94
2,100,000,000.00
1,408,448,043.37
4,448,489,048.31
5,520,000,000.00

3,091,905.56
1,409,796,873.02

43,159,752.53
5,359,441,498.61

1,412,888,778.58

10,922,601,251.14

3,035,600,269.73 –10,922,601,251.14—3,465,214.53

5,596,792.78

470,687,283.60–6,503,171,371.86

4,043,535,735.48

8,286,549,909.64

4,514,223,019.08

1,783,378,537.78

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

Haier Smart Home Co., Ltd. Interim Report 2022

103

104

I. Closing balance for the previous year
Add: changes in accounting policies
Error correction for prior periodBusiness combination under common
control
OthersII. Opening balance for the current year
III. Increase/decrease for the current period(decrease is represented by “–”)(I) Total comprehensive income(II) Capital injection and reduction by
owners
1. Ordinary shares invested by owners
2. Capital contribution by holders ofother equity instruments
3. Share-based payment included inowners’ equity
4. Others(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for generalrisks
3. Distribution to owners(or shareholders)
4. Others(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period(VI) Others
IV.Closing balance for the period

Items

Haier Smart Home Co., Ltd. Interim Report 2022
Capital reserve

Undistributed
profits

332,853,517.66–1,665,546,186.16–4,320,445,666.86
0.00–4,320,445,666.86–4,320,445,666.86––4,320,445,666.86

1,538,651,010.37

3,962,689,830.07

332,853,517.66–126,895,175.79

2,837,585.77
81,340,387.43 23,820,929,638.40

9,446,791,970.00

1,689,673,248.96

3,438,615,909.84

104,128,286.20

189,803,613.66
51,736,354,679.65

192,641,199.43
86,251,016,004.21–288,523,377.36
940,041,004.94

6,399,281,576.79
10,815,609,421.58

134,131,566.36

3,818,442,419.50
7,949,084,472.70–36,677,120.16

1,538,651,010.37

2,866,524,948.88
2,866,524,948.88

6,673,840.00

40,807,101.87
0.00
79,851,734,427.42

79,810,927,325.55

Sub-total

1,238,717,313.17
898,627,404.94

Others–36,677,120.16

9,398,704,530.00

47,917,912,260.15

10,777,931.35— 47,907,134,328.80

General risk
provision

48,087,440.00
41,413,600.00

3,438,615,909.84

3,438,615,909.84

Surplus reserve

1,538,651,010.37

Special reserve

1,241,554,898.94

2,424,038,819.70 –1,176,851,699.92

Othercomprehensive
income–36,677,120.16

30,029,170.52

118,017,507.59 22,549,345,568.94

OthersLess: treasury
stock

48,087,440.00

Perpetualbonds

2022 Interim
Equity attributable to owners of the Parent Company

2,424,038,819.70 –1,176,851,699.92

Preference
sharesOther equity instruments
Total owners’
equity104,128,286.20–299,595,727.56
928,968,654.74

192,641,199.43
1,325,472,564.58 87,576,488,568.79–756,578.92 –4,321,202,245.78

332,853,517.66–1,665,546,186.16–756,578.92 –4,321,202,245.78–11,072,350.20
11,072,350.20

34,484,091.41 6,433,765,668.20
46,313,020.53 10,861,922,442.11

59761474.87
01,290,988,473.17 81,142,722,900.59

18954373

1,272,034,100.17 81,082,961,425.72

Minority equity

Unit and Currency: RMB

118,017,507.59 22,579,374,739.46

9,398,704,530.00

Paid-in capital(or share capital)

January-June 2022

Consolidated Statement of Changes in Owner’s Equity

Section X Financial ReportCapital reserve

54936343.39

0

0.00

9,393,170,481.00

72,148.30
1,796,154,587.01 –1,302,353,671.61

January-June 2022

Statement of Changes in Owners’ Equity of the Parent Company

Person in charge of accounting function: Gong Wei–72,148.30
148,483,179.98 22,338,831,321.48

16167229.15 –2,577,663,981.57–40,951,418.95 –3,461,870,088.80
0–12,317,618.84
73,911,870,960.89–3,420,918,669.85–12,317,618.84
1,372,168,812.34 75,284,039,773.23–40,951,418.95 –3,461,870,088.80

Person in charge of accounting department: Ying Ke–12,317,618.84
42,084,559,697.45–3,420,918,669.85–3,420,918,669.85

6,277,583,752.41

3,699,919,770.84
0.00

6,875,700,006.66
6,649,967,943.46–2,593,831,210.72–3,420,918,669.85
0.00

1,767,258,036.36

016,167,229.15

60,278,653.37
85,062,843.17

1,311,890,158.97 68,408,339,766.57

17015869.18–794,220,374.36-32,352,800.00

3,045,334,539.60

Total owners’
equity1,294,584,557.09 68,132,110,258.96
289,732.70
221,293,164.22

Minority equity

6,277,583,752.41

3,683,752,541.69
0.00

6,815,421,353.29
6,564,905,100.29

67,096,449,607.60

37,920,474.21

66,837,525,701.87
221,003,431.52

Sub-total

8,095,619,066.22

Others–2,215,712,153.81

1,767,258,036.36

3,425,666,565.86
6,858,902,854.55

38,658,893,131.59

7,891,303.69

38,467,787,059.79
183,214,768.11

Undistributed
profits

397,676,840.00

General risk
provision

7,301,398,691.86

3,045,334,539.60

3,045,334,539.60

Surplus reserve–2,215,712,153.81–293,925,605.96–293,997,754.26

Special reserve

365,324,040.00

1,767,258,036.36

28,896,550.65 –1,008,428,065.65

28,896,550.65 –1,046,216,729.06
37,788,663.41

Other
comprehensive
income7,301,326,543.56

2,364,195,333.79 15,037,504,777.92

30,029,170.52

2,364,195,333.79 15,007,475,607.40

OthersLess: treasurystock–2,215,712,153.81

Perpetualbonds

2021 Interim
Equity attributable to owners of the Parent Company

365,324,040.00

9,027,846,441.00

9,027,846,441.00

Preference
shares

Person in charge of the Company: Li Huagang

I. Closing balance for the previous year
Add: changes in accounting policies
Error correction for prior periodBusiness combination under common
control
OthersII. Opening balance for the current year
III. Increase/decrease for the current period(decrease is represented by “–”)(I) Total comprehensive income(II) Capital injection and reduction by
owners
1. Ordinary shares invested by owners
2. Capital contribution by holders ofother equity instruments
3. Share-based payment included inowners’ equity
4. Others(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for generalrisks
3. Distribution to owners(or shareholders)
4. Others(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period(VI) Others
IV. Closing balance for the period

Items

Paid-in capital(or share capital)

Other equity instruments

Section X Financial Report

Haier Smart Home Co., Ltd. Interim Report 2022

105

Section X Financial Report

Unit and Currency: RMB
2022 Intecim
Other equity instruments

Items

Paid-in capital(or share
capital)Preference
sharesI. Closing balance for theprevious year
9,398,704,530.00
Add: changes in accounting
policies
Error correction for priorperiodOthersII. Opening balance for thecurrent year
9,398,704,530.00
III. Increase/decrease for thecurrent period (decrease isrepresented by “–”)
48,087,440.00(I) Total comprehensive income(II) Capital injection andreduction by owners
48,087,440.00
1. Ordinary shares invested
by owners
41,413,600.00
2. Capital contribution byholders of other equity
instruments
6,673,840.00
3. Share-based payment
included in owners’
equity4. Others(III) Profit distribution
1. Withdrawal of surplus
reserves
2. Distribution to owners(or shareholders)
3. Others(IV) Internal transfer of owner’s
equity1. Transfer of capitalreserves 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 carriedforward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others(V) Special reserve
1. Withdrawal for theperiod
2. Utilization for the period(VI) Others
IV. Closing balance for the period 9,446,791,970.00

106

Haier Smart Home Co., Ltd. Interim Report 2022

Perpetual
bonds

Others Capital reserve

Other
Less: treasury comprehensivestock
incomeSpecialreserve

Surplusreserve

Undistributed
profits

Total owners’
equity25,802,279,483.13 1,495,170,675.08

621,302,944.83

2,833,469,684.39 4,468,575,626.52 41,629,161,593.79

25,802,279,483.13 1,495,170,675.08

621,302,944.83

2,833,469,684.39 4,468,575,626.52 41,629,161,593.79

1,319,643,690.83 1,406,832,569.06–2,564,158.17–2,564,158.17–4,004,393,258.53 –4,046,058,854.93
316,052,408.33 313,488,250.16

1,319,643,690.83 1,406,832,569.06–39,101,438.23

898,627,404.94

940,041,004.94

97,454,446.20

104,128,286.20

323,222,114.26
339,725.43 1,406,832,569.06

323,222,114.26–1,406,492,843.63–4,320,445,666.86 –4,320,445,666.86–4,320,445,666.86 –4,320,445,666.86

27,121,923,173.96 2,902,003,244.14

618,738,786.66

2,833,469,684.39

464,182,367.99 37,583,102,738.86

Section X Financial Report

2021 Interim
Other equity instruments

Items

Paid-in capital(or share
capital)I. Closing balance for the previous
year
9,027,846,441.00
Add: changes in accounting
policies
Error correction for priorperiodOthersII. Opening balance for thecurrent year
9,027,846,441.00
III. Increase/decrease for thecurrent period (decrease isrepresented by “–”)
365,324,040.00(I) Total comprehensive
income(II) Capital injection andreduction by owners
365,324,040.00
1. Ordinary shares invested
by owners-32,352,800.00
2. Capital contribution byholders of other equity
instruments
397,676,840.00
3. Share-based payment
included in owners’
equity4. Others(III) Profit distribution
1. Withdrawal of surplus
reserves
2. Distribution to owners(or shareholders)
3. Others(IV) Internal transfer of owner’s
equity1. Transfer of capitalreserves 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 carriedforward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others(V) Special reserve
1. Withdrawal for theperiod
2. Utilization for the period(VI) Others
IV. Closing balance for the period 9,393,170,481.00

Preference
sharesPerpetual
bonds

Others Capital reserve

Other
Less: treasury comprehensivestock
income20,408,352,380.95–10,030,704.15

2,440,188,314.15 4,349,961,964.23 36,216,318,396.18

20,408,352,380.95–10,030,704.15

2,440,188,314.15 4,349,961,964.23 36,216,318,396.18

5,085,971,596.28 1,767,258,036.36

11,664,510.69–3,222,639,347.74 473,062,762.87

11,664,510.69

198,279,322.11

Specialreserve

Surplusreserve

Undistributed
profits

Total owners’
equity209,943,832.80

5,085,971,596.28 1,767,258,036.36

3,684,037,599.92–793,935,316.13–826,288,116.13

5,879,906,912.41

6,277,583,752.41–1,767,258,036.36–3,420,918,669.85 –3,420,918,669.85

1,767,258,036.36–3,420,918,669.85 –3,420,918,669.85

25,494,323,977.23 1,767,258,036.36

1,633,806.54

2,440,188,314.15 1,127,322,616.49 36,689,381,159.05

Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke

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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. (herein after referred to as the Company) was
Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by
People’s Bank of China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao Refrigerator
Factory, a limited company was set up by directional fund raising of RMB150 million. In Marchand September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9
issued by the pilot leading team of Qingdao joint stock company, the Company was converted
from a directional offering company to a public subscription company and issued additional 50
million shares to the public and listed with trading on Shanghai Stock Exchange in November
1993. In October 2018, D-shares in issue of the Company were listed on the China Europe
International Exchange AG. In December 2020, H-shares in issue of the Company were listed on
the Stock Exchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Industrial Park of Laoshan District,
Qingdao, Shandong Province, and the headquarter is located at the Haier Industrial Park of
Laoshan District, Qingdao, Shandong Province.
The Company is mainly engaged in research and development, manufacturing and sales of home
appliances including refrigerators/freezers, kitchen appliances, air- conditioners, laundry
appliances and water appliances, and other smart home business, as well as providing smart
home packaged solutions.
The ultimate holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
29 August 2022.

2.

Scope of consolidated financial statements√ Applicable □ Not Applicable
For details of changes in the scope of consolidated financial statements for the current period,
please refer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this
note.

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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 to
the transactions and matters actually occurred, in accordance with the Accounting Standards for
Business Enterprises — Basic Standards published by the Ministry of Finance, specificaccounting standards, and guidance on application of accounting standards for businessenterprises, interpretations to accounting standards for business enterprises and other relevant
requirements (herein after collectively referred to as the “Accounting Standards for BusinessEnterprises”) which issued subsequently, and in combination with the disclosure provisions of theRules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities
No.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as thefollowing significant accounting policies and accounting estimation.

2.

Going Concern√ Applicable□ Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a going
concern.

V.

SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES√ Applicable□ Not Applicable

According to the characteristics of its production and operation, the Company formulated a series of
specific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); theamortization of intangible assets (Note V.18); the criterion for determining of long-term assets
impairment (Note V.19); and the date of revenue recognition (Note V.25), etc.

1.

Statement of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the AccountingStandards for Business Enterprises, which accurately and completely reflected information
relating to the financial condition as at 30 June 2022, the operating results of January to June
2022 and cash flow of the Company.

2.

Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.

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Section X Financial Report3.

Operating cycle√ Applicable□ Not Applicable

The Company takes 12 months as an operating cycle, which is also the classification basis forthe liquidity of its assets and liabilities.

4.

Recording currency√ Applicable□ Not Applicable

Renminbi is the recording currency of the Company.

5.

Accounting methods of business combinations under common control and notunder common control√ Applicable□ Not Applicable

A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under 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 the
combining entities are ultimately controlled by the same party or parties both before andafter the combination, and that control is not transitory. For business combination undercommon control, the party that obtains the control over the other parties on the
combination date is the acquirer, and other parties involving in the business combination
are the transferors. The combination date is the date on which the acquiring party
effectively obtains the control over the party being acquired.
In case the consideration for long-term equity investments formed in business combination
under common control is paid by ways of cash, transfer of non-cash assets or assumptionof debts, the Company will regard the share of carrying amounts of the net assets of thetransferor in the ultimate controller’s consolidated financial statements obtained as the initialinvestment cost of long-term equity investments as at the date of combination. For carrying
value of net assets of the transferor is negative as at the date of combination, investment
cost of long-term equity investment is calculated as zero. In case the transferor iscontrolled by the ultimate controller by the business combination not under common control
before combination, the initial investment cost of the long-term equity investment of theacquirer includes relevant goodwill. The Company should adjust the capital reserve (capital
premium or share premium) in accordance with the differences between initial investment
cost of the long-term equity investment and the cash paid, the non-cash assets transferred
and the carrying value of liability assumed; in case the balance of the capital reserve(capital premium or share premium) is insufficient for the elimination, the surplus reserves
and undistributed profits shall be used to dilute such expenses in order. In case theconsideration for the combination is paid by issuance of equity instruments, the aggregate
nominal value of shares issued will be deemed as the share capital. The difference between
the initial investment cost of long-term equity investments and aggregate nominal value of110

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Section X Financial Reportshares issued shall be adjusted to capital reserve (capital premium or share premium); in
case the capital reserve (capital premium or share premium) is insufficient for theelimination, the surplus reserves and undistributed profits shall be used to dilute such
expenses in order.
Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the acquirer are
credited in profit or loss in the period when they occurred. Trading expenses in direct
relation to the issuance of equity instrument as the consideration for the combination is
written down to the capital reserve (share premium), where the capital reserve (sharepremium) is insufficient, and to surplus reserves and undistributed profits in order. Trading
expenses in direct relation to the issuance of debt instrument as the consideration for the
combination is included in the initial recognition amount of the debt instrument.
For business combination under common control realized through several transactions stepby step, in case of a package transaction, each transaction is accounted as one
transaction that has acquired the control; in case of not a package transaction, in thefinancial statement of parent company the capital reserve (share premium) is adjusted by
the difference between the initial investment cost and the sum of the carrying value of theoriginal long-term equity investment and the book value of the new payment consideration
for further acquisition of shares with the share of acquirer’s owner’s equity on the date ofcombination in case calculated on the proportion of shareholding on the date ofcombination as its initial investment cost; where the capital reserve is insufficient, theretained earnings will be used to offset such expenses.
In the consolidated financial statements, the long-term equity investment held by the
combining party before the date of acquiring control of the combined parties, and relevant
profit and loss, the other comprehensive income and changes in the other owners’ equity
recognized during the period between the later of the date of acquisition and the datewhen the combining and the combined parties are under the common control of the same
party and the date of combination, are written down to the retained earnings or profit orloss at the beginning of the comparative reporting period, respectively.
(2)

Business combinations not under common control
A business combination not under common control is a business combination in which allof the combining entities are not ultimately controlled by the same party or parties both
before and after the combination. For business combination not under common control, theparty that obtains the control of the other parties involving in the business combination at
the combination date is the acquirer; other parties involving in the business combination are
the transferors. The combination date is the date on which the acquirer effectively obtains
control of the transferors.

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Section X Financial Report

In business combination not under common control, the cost of combination shall be thesum of the assets paid, obligations incurred or assumed and the fair value of the equity
securities issued by the acquirer for obtaining control of the transferor at the date ofacquisition. Intermediary fees (such as audit, legal services and valuation consultancy) andother relevant management fees incurred by the acquirer for the purpose of businesscombination are credited in profit or loss in the period when they occurred. Transaction
fees for the equity instruments or debt instruments issued by the acquirer as combinationconsideration is included in the initial recognition amount of such equity instruments or debt
instruments. Contingent consideration involved shall be recorded as the combination costbased on its fair value on the acquisition date. Should any new or further evidence arise
within 12 months after the acquisition date and makes it necessary to adjust thecontingent consideration on the acquisition date, the goodwill arising from the businesscombination shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in a businesscombination are measured at fair value on the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the transferor’s identifiable
net assets obtained on the acquisition date, the difference is recognized as goodwill; where
the cost of combination is lower than the acquirer’s interest in the fair value of thetransferor’s identifiable net assets, the difference is initially recognized in profit or loss forthe current year after a review of computation for the identifiable assets, liabilities or fairvalue of contingent liabilities and combination cost, and where the combination cost is still
lower than the acquirer’s interest in the fair value of the identifiable net assets of thetransferor obtained during the course of combination, then the difference is recorded in the
profit and loss.
In business combination not under common control that is realized in phases throughmultiple exchange transactions, in the Company individual financial statements, the sum of
the book value of the equity investment of the transferor held before the date of acquisition
and the cost of new investment on the date of acquisition are recognized as the initialinvestment cost of such investment.
In the consolidated financial statement, the equity of the transferor held before the date ofacquisition is re-measured at the fair value on the date of acquisition, and the difference
between the fair value and book value is included in current investment income; where theequity of the transferor held before the date of acquisition involves the other comprehensive
income, such equity and relevant other comprehensive income are transferred to current
investment income on the date of acquisition, other than the other comprehensive incomethat cannot be reclassified in the profit or loss.
The fair value on the acquisition date of equity interest in the transferor prior to theacquisition date and the fair value of the considerations paid for the acquisition of the newequity on the acquisition date are regarded as the combination costs of the Company,
comparing with acquirer’s share of the fair value on the acquisition date of the transferor’s
net identifiable assets on the proportion of the shareholding on the acquisition date toconfirm the goodwill that required to be recognized on the acquisition date or the amountthat shall be included in the profit or loss.

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Section X Financial Report6.

Preparation method of consolidated financial statements√ Applicable□ Not Applicable(1)

Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled
by the Company) into the scope of consolidation financial statements, including theenterprises under the Company’s control, divisible part in the investees and structured
entities.

(2)

To unify the accounting policies, balance sheets date and accounting periods of theCompany and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in
accordance with the Company’s accounting policies and accounting periods.

(3)

Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheetsof the Company and subsidiaries, which offset the internal transactions incurred between
the Company and subsidiaries and among subsidiaries. The owner’s equity of thesubsidiaries not attributable to the Company shall be presented as “minority interests”
under the owner’s equity item in the consolidated balance sheet.
The long-term equity investment of the Company held by the subsidiaries, deemed astreasury stock of the corporate group as well as the reduction of owners’ equity, shall bepresented as “Less: Treasury stock” under the owner’s equity item in the consolidatedbalance sheet.

(4)

Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control, the assets,
liabilities, operating results and cash flow of the subsidiaries are included in the
consolidated financial statements from the beginning of the period in which the combination
took place, as if the combination has taken since the ultimate controller began its control.
When preparing the consolidated financial statements, for the subsidiaries acquired frombusiness combination not under common control, separate financial statement will be
adjusted on the basis of their fair values of the identifiable net assets on the date ofacquisition.

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Section X Financial Report

7.

Classification of joint arrangement and accounting methods of joint operations√ Applicable□ Not Applicable

A joint arrangement refers to an arrangement jointly controlled by two or more parties. In
accordance with the Company’s rights and obligations under a joint arrangement, the Company
classifies joint arrangements into joint operations and joint ventures.
Joint operations refer to a joint arrangement in which the Company is a party and is entitled to
relevant assets and obligations of this arrangement. The Company recognizes the following items
in relation to its interest in a joint operation, and accounts the same in accordance with relevant
accounting standards for business enterprises:(1)

recognize the assets held solely by the Company, and recognize assets held jointly by theCompany in appropriation to the share of the Company; (2) recognize the obligations
assumed solely by the Company, and recognize obligations assumed jointly by theCompany in appropriation to the share of the Company; (3) recognize revenue from
disposal of joint operations in appropriation to the share of the Company; (4) recognize
revenue from disposal of joint operations in appropriation to the share of the Company; (5)recognize fees solely occurred by the Company and recognize fees from joint operations 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 Company
shall 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 an
impairment loss incurred on these assets which meets the requirements as set out in“Accounting Standards for Business Enterprises No. 8 — Asset Impairment ”, the Company
shall full recognize the amount of this loss in relation to its investment in or sale of assets
to joint operations or recognize the loss according to the Company’s share of commitment
in relation to its purchase of assets from joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled to net
assets of this arrangement. Investment in joint venture is accounted for using the equity
method according to the accounting policies referred to under “12 Long-term equity
investment” of Note V.

8.

Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available
for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid
investments held by the Company that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk on change in value.

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Section X Financial Report

9.

Foreign currency businesses and translation of foreign currency statements√ Applicable(1)□ Not Applicable

Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional
currency by applying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currencies
at the rates of exchange ruling at the balance sheet date. All foreign exchange difference
are credited in the profit or loss, except ①those arising from the funds denominated inforeign currency specially borrowed for the establishment of the qualifying assets aretreated based on the principal of capitalization of borrowing costs; ②those arising from theother changes in the balance other than amortized cost of available-for-sale monetary items
denominated in foreign currency are recognized in the other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using the
spot exchange rate prevailing on the date when transaction occurred and its functional
currency shall remain unchanged. Non-monetary items denominated in foreign currencies
that are measured at fair value are translated using the foreign exchange rate at the date
the fair value is determined; the exchange differences between the translated and originalamounts of functional currencies are recognized in the statement of profit or loss or othercomprehensive income as changes in fair value (including changes in exchange rate).

(2)

Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint
ventures and associates under the control of the Company are different from that of 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 balance sheet are translated using the spot exchange rate
at the balance sheet date; all items except for “undistributed profits” of the owner’s equity
are translated at the spot exchange rate on the transaction date. The revenue andexpenses in the income statement are translated using the approximate rate of the spot
exchange rate on the transaction date. Differences arising from the translation of foreign
currency financial statements are presented as the “other comprehensive income” in theowner’s equity of the balance sheet.
Foreign currency cash flow is translated using the approximate rate of the spot exchange
rate on the transaction date. The impact of exchange rate changes on cash amount isreflected separately in the cash flow.
When disposing overseas operations, converted difference in foreign currency statements
related to the overseas operation shall be transferred together or as the percentage ofdisposing the overseas operation to profit or loss in the current period of disposal.

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Section X Financial Report

10. 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 isrecognized when the Company becomes a party to the contract of a financial instrument.
(1)

Financial assets
1
Classification and measurement
According to the business model for managing financial assets and the contractual
cash flow characteristics of financial assets, the Company classifies financial assets
into: (1) Financial assets measured at amortized cost; (2) financial assets measured atfair value through other comprehensive income; (3) financial assets measured at fairvalue through profit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial
assets measured at fair value through profit or loss of the current period, relatedtransaction costs are directly included in profit and loss of the current period; forother types of financial assets, related transaction costs are included in their initialrecognized amounts. For the accounts receivable or bills receivable arising from thesale of products or the provision of labor services that do not contain or consider thesignificant financing components, the Company shall take the consideration amountentitled to be received as the initial recognized amount.
a.

Debt instrument
The debt instruments held by the Company refer to the tools that are inconformity with the definition of financial liability from the perspective of theissuing party, which are measured in the following three ways, respectively:
(a)

116

Measured at amortized cost:
The Company’s business model for managing such financial assets is: withthe aim of obtaining contractual cash flow, the contractual cash flow
characteristics of such financial assets shall be consistent with the basic
lending arrangements, that is, the cash flow generated on a specific dateis only the payment for the principal and the interest based on theoutstanding principal amount. For such financial assets, the Company
recognizes the interest income in accordance with the effective interest
method. Such financial assets mainly include cash and cash equivalents,
bills receivable and accounts receivable, other receivables, creditor’s rightinvestment and long-term receivables. The Company lists the creditor’srights investments and long-term receivables matured within one year(inclusive) from the balance sheet date as non-current assets matured
within one year; the creditor’s rights investments matured within one year(inclusive) when being obtained are listed as other current assets.

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Section X Financial Report

b.

(b)

Measured at fair value through other comprehensive income:
The Company’s business mode for managing such financial assets is: withthe aim of obtaining contractual cash flow and selling the financial assets,
the contractual cash flow characteristics of such financial assets shall beconsistent with the basic lending arrangements. Such financial assets aremeasured at fair value through other comprehensive income, but
impairment gains and losses, exchange gains and losses, and interest
income calculated by the effective interest method are included in profit
and loss of the current period. Such financial assets are listed as othercreditor’s rights investments. Other creditor’s rights investments matured
within one year (inclusive) from the balance sheet date are listed as noncurrent assets matured within one year; other creditor’s rights investments
matured within one year (inclusive) when being obtained are listed asother current assets.

(c)

Measured at fair value through profit or loss of the current period:
The Company lists its held debt instruments that are neither measured atamortized cost nor at fair value through other comprehensive income asfinancial assets held for trading measured at fair value through profit orloss of the current period. At the time of initial recognition, in order toeliminate or significantly reduce accounting mismatch, the Company
designated some financial assets as financial assets measured at fair value
through profit or loss of the current period. Investments that are matured
more than one year and are expected to be held for more than one year
from the balance sheet date are listed as other non-current financial
assets.

Equity instruments
The Company lists equity instrument investments that have no control, joint
control and significant influence on itself as financial assets held for trading
measured at fair value through profit or loss of the current period; investmentsthat are expected to be held for more than one year from the balance sheet
date are listed as other non-current financial assets.
In addition, the Company designated some non-trading equity instrument
investments as financial assets measured at fair value through othercomprehensive income, which are listed as other equity instrument investments.
The relevant dividends and interest income of such financial assets are included
in profit and loss of the current period.
②

Impairment
For financial assets measured at amortized cost and debt instrument
investments measured at fair value through other comprehensive income,contract assets and financial guarantee contracts, the Company
recognizes the loss provision based on the expected credit losses.

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Section X Financial Report

The Company considers reasonable and reliable information about past
events, current conditions and forecasts of future economic conditions,and takes the risk of default as a weight, and calculates the probabilityweighted amount of the present value of the difference between the cash
flow receivable and the cash flow expected to be received of the contract
to confirm the expected credit losses.
On each balance sheet date, the Company measures the expected credit
losses of financial instruments in different phases. If the credit risk has notincreased significantly since the initial recognition, the financial instruments
are in the first phase. The Company measures the loss provisionaccording to the expected credit losses in the next 12 months; if credit
risk has increased significantly but credit impairment has not yet occurredsince the initial recognition, the financial instruments are in the second
phase. The Company measures the loss provision according to the
expected credit losses of the instruments during the entire duration; if
credit impairment has occurred since the initial recognition, the financial
instruments are in the third phase. The Company measures the loss
provision according 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 Company measures the loss provision according to the expectedcredit losses in the next 12 months, assuming that its credit risk has notincreased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financial
instruments with relatively lower credit risk, the Company calculatesinterest income based on their book balance before the deduction of
impairment provisions and effective interest rate. For financial instrumentsin the third phase, the Company calculates interest income based on theiramortized cost after the impairment provision has been deducted from thebook balance and effective interest rate.
For bills receivable, accounts receivable and contractual assets, whether
there exist significant financing components, the Company measures loss
provision based on expected credit loss over the entire duration.
The Company classifies accounts receivable into groups on the basis ofshared credit risk characteristics, and calculates the expected credit
losses on groups, the bases of group determination are as follows:

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Section X Financial Report

For each group of bills receivable, the Company applies exposure atdefault and expected credit losses rate over the entire duration to
calculate the expected credit losses on the historical credit losses
experience, the existing conditions and forecast of future economic
conditions.
For each group of accounts receivable, the Company makes thecomparison of expected credit losses rates of accounts receivable inoverdue days and over the entire duration to calculate the expected credit
losses by taking into account the historical credit losses experience, theexisting conditions and forecast of future economic conditions.
For each group of other accounts receivable, the Company applies
exposure at default and expected credit losses rate within the next 12months or over the entire duration to calculate the expected credit losses
by taking into account the historical credit losses experience, the existing
conditions and forecast of future economic conditions.
The Company recognizes the loss impairment provision or reversed in
profit or loss of the current period. For held debt instruments at fair value
through other comprehensive income, the Company recognizes loss/gain
on impairment in profit or loss of the current period, and adjusts othercomprehensive income at the same time.
③

Derecognition
A financial asset is derecognized when any of the below criteria is met: a.
the contractual rights to receive the cash flow from the financial asset
have been terminated; b. the financial asset has been transferred and theCompany transfers substantially all the risks and rewards of ownership ofthe financial asset to the transferee; c. the financial asset has beentransferred and the Company has not retained control of the financial
asset, although the Company neither transfers nor retains substantially all
the risks and rewards of ownership of the financial asset.
On de-recognition of other equity instruments investment, the difference
between the book balance and the sum of the consideration received andany cumulative profit or loss of fair value that had been recognized inother comprehensive income is recognized in the retained earnings. On
de-recognition of other financial assets, the difference between the bookbalance and the sum of the consideration received and any cumulative
profit or loss of fair value that had been recognized in othercomprehensive income is recognized in the profit and loss of the current
period.

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Section X Financial Report(2)

Financial liabilities
Financial liabilities are classified as financial liabilities measured at amortized cost andfinancial liabilities at fair value through profit or loss of the current period at initialrecognition.
The financial liabilities of the Company are financial liabilities measured at amortized cost,
including bills payable, accounts payable, other payables, borrowings, bonds payable, etc.
Such financial liabilities are recognized initially at fair value less transaction costs andsubsequently measured using the effective interest method. Financial liabilities with amaturity of less than one year (inclusive) are listed as current liabilities: those with maturityof more than one year but are mature within one year from the balance sheet date(inclusive) are listed as non-current liabilities due within one year; the rest are presented as
non-current liabilities.
When all or partial current obligations of financial liabilities have been discharged, suchfinancial liabilities or the part with obligations discharged are derecognized by theCompany. The difference between the carrying amount of a financial liability de-recognized
and the consideration paid is recognized in the profit and loss of the current period.

(3)

Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at
the quoted price in the active market. The fair value of a financial instrument that is nottraded in an active market is determined by using a valuation technique. During thevaluation, the Company adopts an applicable valuation technique under current conditions
and there are enough available data and other information to support. Those inputs should
be consistent with the inputs a market participant would use when trading the asset or
liability, and the Company should maximize the use of relevant observable inputs. Whenrelated observable inputs can’t be acquired or are not feasible to be acquired, then use
unobservable inputs.

(4)

Significant accounting estimates and judgments① Significant accounting estimates and key assumptions

Measurement of expected credit loss
The Company applies exposure at default and expected credit loss rate to calculate
expected credit loss, and determines expected credit loss rate based on probability ofdefault and loss given default. For the determination of expected credit loss rate, theCompany applies data including internal historical credit losses experience, and adjusts
historical data taking account current conditions and forward-looking information. Regarding
forward-looking information, indicators used by the Company include economic downturn
risk, growth in expected unemployment rate, changes in external market environment,
technology environment and customer status. The Company monitors and reviews
assumptions related to the calculation of expected credit loss on a regular basis. No majorchange occurred in the above-mentioned estimate techniques and key assumptions in this
year.

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Section X Financial Report2

Critical judgments on application of accounting policiesa.
Classification of financial assets
On classification of financial assets, critical judgments considered by theCompany include the business mode, an analysis of contractual cash flow
characteristics and others.
From the dimension of financial asset portfolio, the Company determines thebusiness mode of financial asset management. Considerations coverassessments, reporting methods of financial asset performance to key
management personnel, risks impacting financial asset performance and relevant
management methods, as well as methods of relevant business management
personnel receiving remuneration.
In assessing the consistency between contractual cash flow of financial assets
and the basic lending arrangements, the Company makes the following major
judgments: whether the time distribution or amount of the principal changes
during the duration of the financial assets due to prepayment, etc.; and whether
the interest includes considerations for the currency time value, credit risk, aswell as other basic borrowing risks, costs and profits. For example, whether the
prepayment amount merely reflects the principal unpaid and interest incurred by
the principal unpaid, as well as reasonable compensation paid due to prematuretermination of contracts.
b.

Judgment that credit risk increases significantly
The main standards for the Company to judge significant increase in credit risk
are that overdue days are more than 30 days, or that significant changes occur
in one or more of the following indicators: business environment of debtors,
internal and external credit rating, the significant change of actual or expectedbusiness performance, value of collaterals or significant drop in credit rating ofguarantors.
The main standards for the Company to judge incurred credit impairment arethat overdue days are more than 90 days (i.e. default occurred), or that one ormore of the following conditions are met: a debtor is under significant financial
difficulty; other ongoing debt restructuring or high possibility of bankruptcy.

11.

Inventories√ Applicable(1)□ Not Applicable

Classification of inventories
Inventories refer to the finished goods or commodities held for sale in daily activities, goods
in progress in the production process, consumed materials and supplies in the production
process or providing services of the Company, which mainly include raw materials,
revolving materials, entrusted processed materials, wrap page, goods in progress, selfmade semi-finished goods, finished goods (merchandise inventory) and engineering
construction, etc.

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Section X Financial Report(2)

Measurement of inventories transferred out
At delivery, inventories are accounted using the weighted average method.

(3)

Provision for inventory impairment
At balance sheet date, inventories are measured at the lower of cost or net realizablevalue.
The net realizable value of inventories (including finished products, merchandize andmaterials for sale) that can be sold directly is determined based on the estimated selling
price of such inventory deducted by the estimated selling expenses and relevant taxes. The
net realizable value of materials held for production is determined based on the estimatedselling price of the finished product deducted by the estimated cost to be incurred uponcompletion, estimated selling expenses and relevant taxes. The net realizable value of
inventory held for performance of sales contract or labor service contract is determinedbased on the contractual price; in case the amount of inventory held by the enterprise
exceeds the contractual amount, the net realizable value of the excess portion of inventory
is calculated based on the general selling price.
Provision for impairment of inventories is made for individual inventory. For items of
inventories that is produced and marketed in the same geographical area and with thesame or similar end uses or purposes, which cannot be practicable evaluated separatelyfrom other items, cost and net realizable value of inventories may be determined on an
aggregate basis. For large quantity and low value items of inventories, cost and net
realizable value of inventories may be determined on types of inventories.
Provision for inventory impairment is made and recognized as profit or loss when the costis higher than the net realizable value on the balance sheet date. If the factors that giverise to the provision in prior years are not in effect in current year, provision would bereversed within the amount of provision for inventory impairment originally recognized, andthe reversed amount shall be recognized in the profit or loss.

122

(4)

Inventory system
The Company adopts perpetual inventory system.

(5)

Amortization of low-value consumables and packaging
Low-value consumables and packages of the Company are amortized by one-time writeoff.

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Section X Financial Report

12. Long-term equity investments√ Applicable□ Not Applicable

Long-term equity investments in this section refer to equity investments held by the Company
that give it control, joint control or significant influence over the investee. Long-term equity
investments where the Company does not exercise control, joint control or significant influence
over the investee are accounted for as other equity instrument investments.
(1)

Recognition of initial cost of investment①
For long-term equity investment obtained from business consolidation under common
control, the initial cost is measured at the combining party’s share of the carrying
amount of the equity of the combined party; for a long-term equity investment
obtained from business consolidation not under common control, the initial cost is theconsolidation cost at the date of acquisition;②(2)

For the long-term equity investment acquired in a manner other than businesscombination: the initial investment cost of the long-term equity investment acquired by
payment in cash shall be the purchase price actually paid; the initial investment costof the long-term equity investment acquired by issuing equity securities shall be thefair value of the equity securities issued; for long-term equity investment acquired bydebt restructuring, the initial investment cost shall be determined in accordance withthe relevant requirements under Accounting Standards for Enterprises No. 12 — Debt
Restructuring ; for long-term equity investment acquired by the exchange of nonmonetary assets, the initial investment cost shall be determined in accordance with
relevant requirements under the Rules.

Subsequent measurement and profit or loss recognition①
Cost method
Where the investor has a control over the investee, long-term equity investments aremeasured using cost method. For long-term equity investments using cost method,
unless increasing or recovering the investment, the carrying value is generally
unchanged. The profit distributions or cash dividends declared by the investee
attributable to the Company are recognized as investment income.
②

Equity method
Investor’s long-term equity investments in associates and joint ventures are measured
using equity method. Where part of the equity investments of an investor in its
associates are held indirectly through venture investment institutions, common fund,trust companies or other similar entities including investment linked insurance funds,
such part of equity investments indirectly held by the investor shall be measured atfair value through profit or loss according to relevant requirements of AccountingStandards for Business Enterprises No. 22 — Recognition and measurement of
Financial Instruments regardless whether the above entities have significant influenceon such part of equity investments, while the remaining part shall be measured using
equity method.

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Under the equity method, where the initial investment cost of a long-term equity
investment exceeds the Company’s share of the fair value of the investee’s
identifiable net assets at the time of acquisition, no adjustment is made to the initialinvestment cost. Where the initial investment cost is less than the Company’s shareof the fair value of the investee’s identifiable net assets at the time of acquisition, thedifference is recognized in profit or loss for the period, and the cost of the long-term
equity investment is adjusted accordingly.
For long-term equity investments accounted for using the equity method, theCompany recognizes the investment income and other comprehensive income
according to its share of net profit or loss and other comprehensive income of theinvestee, and the carrying amount of the long-term equity investments shall be
adjusted accordingly; the carrying amount of the investment is reduced by theCompany’s share of the profit distribution or cash dividends declared by an investee;
for changes in owner’s equity of the investee other than those arising from its net
profit or loss, other comprehensive income and profit distribution, the carrying amountof the long-term equity investment shall be adjusted and recognized to capitalreserve. When recognizing attributable share of the net profit and losses of theinvestee, the net profit of the investee shall be recognized after adjustment on the
ground of the fair value of all identifiable assets of the investee when it obtains theinvestment. If the accounting policies and accounting periods adopted by the investee
are different from those adopted by the Company, an adjustment shall be made to
the financial statements of the investee in accordance with the accounting policies
and accounting periods of the Company and recognize the investment incomes andother comprehensive income.
The Company’s share of net losses of the investee shall be recognized to the extent
that the carrying amount of the long-term equity investment together with any longterm interests that in substance form part of the investor’s net investment in theinvestee are reduced to zero. If the Company has to assume additional obligations,the estimated obligation assumed shall be provided for and charged to the profit orloss as investment loss for the period. Where the investee is making net profits insubsequent periods, the Company shall resume recognizing its share of profits after
setting off against the share of unrecognized losses.
(3)

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Change of the accounting methods for long-term equity investments①
Change of measurement at fair value to accounting under equity method: where theequity investment originally held have no control, joint control or significant impact on
the investee, and that are accounted according to the Standards for Recognition andMeasurement of Financial Instruments and can impose common control or placesignificant impact on the investee due to addition of investment which resulted in theincrease of shareholding, the investee shall take the fair value of the equity
investment originally held determined in accordance with the Standards for
Recognition and Measurement of Financial Instruments plus the fair value of theconsideration payable for new investment as the initial investment cost accounted
after the equity method is adopted.

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Section X Financial Report(4)②Change of measurement at fair value or accounting under equity method to cost
method: the equity investment originally held by the investor with no control, joint
control or significant impact on the investee and accounted according to theStandards for Recognition and Measurement of Financial Instruments, or the longterm equity investment originally held in associates or joint ventures that can impose
control over the investee due to addition of investment, shall be accounted as longterm equity investment formed by combination of relevant enterprises.

③

Change of accounting under equity method to measurement at fair value: for the longterm equity investment originally held with common control or significant impact on
the investee that can no longer impose common control or significant impact on theinvestee due to a decrease of shareholding as a result of factors such as partial
disposal, the remaining equity investment shall be accounted in accordance withStandards for Recognition and Measurement of Financial Instruments, and thedifference between the fair value on the date when the common control or significant
impact no longer exists and the book value is included in profit or loss.

④

Change of cost method to equity method or measured at fair value: For loss of control
in the invested company due to reasons such as partial disposal of equity investment,in the preparation of separate financial statements, the residual equity which canapply common control or impose significant influence to the invested company after
disposal shall be accounted for under equity method. Such residual equity shall betreated as accounting for under equity method since the equity is obtained andadjusted. For residual equity which cannot apply common control or impose
significant influence after disposal, it shall be accounted for in accordance with
relevant requirements of “Accounting Standards for Business Enterprises No. 22 —Recognition and Measurement of Financial Instrument”, and the difference between
the fair value and the carrying value of residual equity on the date loss of control shallbe included in the profit or loss for such period. In the preparation of combined
financial statements, it shall be accounted for in accordance with relevant
requirements of “Accounting Standards for Business Enterprises No. 33 — Combined
Financial Statements”.

Basis of conclusion for common control and significant impact over the investee①
Joint control over an investee means that activities which have a significant impact on
the return of a certain arrangement could be decided only by mutual consent of theinvesting parties sharing the right of control, which includes the sales and purchase ofgoods or services, management of financial assets, acquisition and disposal of
assets, research and development activities and financing activities, etc.
②

Significant impact on the investee exists when the investing parties hold more than
20% but less than 50% of the shares with voting rights in the investee or, if theinvesting parties hold less than 20% shares in the investee, they:1)have representatives in the board of directors or similar governing body of theinvestee;

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Section X Financial Report

(5)

2)

participate in the investee’s policy formulation;3)

assign management personnel to the investee;

4)

provide technology or technical information that the investor is dependent on;5)

have major transactions with the investee.

methods of impairment test and provision for impairment
At the balance sheet date, the Company reviews whether there are signs for the
impairment of long-term equity investments. If yes, the recoverable amount is determinedthrough impairment test and provision for impairment is made based on the difference
between the recoverable amount and the carrying value. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it.
The recoverable amount is the higher of net fair value of long-term equity investments on
disposal and the present value of estimated future cash flow.

(6)

Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the considerations
actually received and the carrying value of the disposed investment is recognized in current
profit or loss. For long-term equity investment accounted for using the equity method, thepart previously recognized in other comprehensive income is accounted on pro rata basis
upon disposal in the same way as the relevant assets or liabilities are disposed of directlyby the investee.

13. Investment properties
Investment properties of the Company include leased land use rights and leased buildings.
An investment property is initially measured at cost, and cost method is adopted for subsequent
measurement.
The buildings leased out of investment properties of the Company are depreciated over theiruseful lives using the straight-line method. The specific measurement policy is the same as thatof fixed assets. For land use rights leased out of investment properties or held for resale after
appreciation in value, they are amortized using the straight-line method. The specificmeasurement policy is the same as that of intangible assets.
At the balance sheet date, the Company reviews whether there are signs for impairment ofinvestment properties. If yes, the recoverable amount is recognized through an impairment test
and provision for impairment is made based on the difference between the carrying value and therecoverable amount. Impairment loss will not be reversed in subsequent accounting periods once
provision is made for it.

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Section X Financial Report

14. Fixed assets(1).

Recognition criteria√ Applicable □ Not Applicable
Fixed assets are tangible assets that are held for production of goods, provision of labor
services, leasing or operation and management purposes, and have a useful life of morethan one fiscal year, which are recognized when the following conditions are met:

(2).

1

economic benefits in relation to the fixed assets are very likely to flow into the enterprise;2

the cost of the fixed assets can be measured reliably.

Depreciation method
The fixed assets of the Company can be divided into: houses and buildings, production
equipment, transportation equipment, office equipment, etc. The straight-line method overuseful lives is used to measure depreciation. The useful lives and the expected net residual
value of fixed assets are determined according to the nature and usage of various fixed
assets. At the end of each year, the useful lives, expected net residual value anddepreciation method of fixed assets are reviewed, and adjusted if there is variance withoriginal estimates. The Company has made provisions for all the fixed assets except for the
fixed assets that have been fully depreciated and still in use.

Type
Land ownership
Buildings
Machinery equipment
Transportation equipment
Office equipment and others

Depreciation
life (year)—–
8 40 years
4–20 years
5–10 years
3–10 years

Residual ratio
—
0%-5%
0%-5%
0%-5%
0%-5%

(3).

Method of test and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there are signs for impairment of
the fixed assets. If yes, the recoverable amount is recognized through an impairment test
and provision for impairment is made based on the difference between the carrying value
and the recoverable amount. Impairment loss will not be reversed in subsequentaccounting periods once provision is made for it.

(4).

Disposal of fixed assets
When fixed assets are disposed of or are expected to fail to generate economic benefits
after the use or disposal, the fixed assets shall be derecognized. The difference of theincome from sales, transfer, retirement or damage of fixed assets deducting the book value
and related taxes should be included in the current profit and loss.

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Section X Financial Report

15. Construction in progress√ Applicable□ Not Applicable(1)

Measurement of construction in progress
Costs of construction in progress are recognised based on actual construction expense,
including various necessary construction expenses incurred during construction, borrowing
costs to be capitalised before reaching estimated usable status and other relevant fees.

(2)Standard and timing of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when the
project is completed and ready for its intended use, which shall satisfy one of the following
conditions:(3)①

The construction of the fixed assets (including installation) has been completed or
substantially completed;②

The fixed asset has been used for trial production or operation and it is evidenced thatthe asset can operate ordinarily or steadily produce qualified products; or the result of
trial operation proves that it can operate normally or be opened for business;③

Further expenditure incurred for construction of the fixed asset is very minimal or
remote;④

The constructed fixed asset reaches or almost reaches the design or contractual
requirements, or complies with the design or contractual requirements.

Method of test and provision for impairment of impairment of construction inprogress
At the balance sheet date, the Company reviews the construction in progress to check
whether there is any sign of impairment. If yes, the recoverable amount is recognizedthrough an impairment test and provision for impairment is made based on the difference
between the carrying value and the recoverable amount. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it.
The recoverable amount of construction in progress should base on the higher of net fairvalue of asset less disposal expense and the present value of estimated future cash flow of
the asset.

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Section X Financial Report

16. Borrowing costs√ Applicable□ Not Applicable(1)

Recognition principles for capitalization of borrowing costs
The Company’s borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized into the cost of relevant
assets. Other borrowing costs are recognized as expenses in current profit or loss basedon the amount incurred. Qualifying assets for capitalization include fixed assets, investment
properties and inventories that necessarily take a substantial period of time for acquisition,
construction or production to get ready for their intended use or for sale.

(2)

Computation of capitalized amount
Period of capitalization refers to the period from the commencement to the cessation ofcapitalization timing of borrowing costs, excluding the periods in which capitalization ofborrowing costs is suspended.
Period of suspended capitalization: Capitalization of borrowing costs is suspended during
periods in which the acquisition, construction or production of a qualifying asset issuspended abnormally and the suspension lasts for more than 3 months.
Computation of capitalized amount: ①Specific borrowings will be determined based on theactual interest expense incurred in the current period of the special borrowings less theinterest income from unutilized borrowings deposited in banks or investment income from
temporary investment; ②Normal borrowings utilized are calculated based on the weighted
average of the asset expenses accumulated exceeding the asset expenses of the portion of
special borrowings multiplied by the capitalization ratio of the normal borrowings utilized.
Capitalization ratio is calculated based on weighted average interest rate of normal
borrowings; ③For borrowings with discount or premium, the discount or premium whichshould be amortized in each accounting period is determined based on the effective
interest rate method and an adjustment should be made to the amount of interests in eachperiod.

17. Right-of-use assets√ Applicable□ Not Applicable

Right-of-use assets are the right of the Company as a lessee to use leased assets during thelease term. On the commencement date of the lease term, the Company as lessee shallrecognize the right-of-use assets and lease liabilities for the lease, except for short-term leases
and low value assets leases which are treated with practical expedient. The commencement dateof the lease term refers to the start date when the lessor provides the leased assets to make itavailable to the lessee.

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Section X Financial Report

The Company’s right-of-use assets shall be initially measured at the costs. The costs include:(1)

initial measurement amount of the lease liability;(2)

a lease payment paid on or before the date of commencement of the lease period, where
there was lease incentive, such incentives shall be deducted;(3)

initial direct costs incurred by the Company as lessee;(4)

costs expected to be incurred by the Company for demolition and removal of leased assets,
restoration of the premises where the leased assets are located, or restoration of theleased assets to the conditions of the lease terms.

The Company refers to the relevant depreciation provisions of Accounting Standards for BusinessEnterprises No. 4 — Fixed Assets to accrue depreciation for right-of-use assets. If the Company
can reasonably determine that the ownership of the leased asset can be acquired at the
expiration of the lease term, the leased asset shall be depreciated within its remaining useful life.
If the Company cannot reasonably determine that the ownership of the leased asset can beacquired at the expiration of the lease term, the leased asset shall be depreciated within thelease term or its remaining useful life (whichever is shorter).
The Company determines whether the right-of-use assets are impaired in accordance with theprovisions of Accounting Standards for Business Enterprises No. 8 — Asset Impairment andperforms accounting treatment on the identified impairment losses.
When the lease liabilities are remeasured in accordance with the Standards, the Company
adjusts the book value of the right-of-use assets accordingly. If the book value of the right-ofuse assets is reduced to zero, but needs a further reduction in the measurement of the leaseliabilities, the Company recognizes any remaining amount of the remeasurement in current profit
or loss.
If the lease change results in a narrower lease or a shorter lease term, the Company reduces thebook value of the right-of-use assets accordingly and recognizes the related gains or losses ofthe partially terminated or completely terminated leases into current profit and loss. For otherlease changes which result in the remeasurement of lease liabilities, the Company adjusts thebook value of the right-of-use assets accordingly.

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Section X Financial Report

18. 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.
(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 total
expenditure incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: ①Intangible assets withfinite useful lives are amortized on a straight-line basis; their useful lives and amortization
methods are reviewed at the end of each year, and adjusted accordingly if there is any
variance 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 should
be made on the useful life and the intangible asset should be amortized using the straightline method.

(2)

Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings
economic benefits for the Company is unforeseeable, or the useful life could not be
ascertained.
Criterion of determining indefinite useful lives: ① the period is derived from contractual
rights or other legal rights and there are no explicit years of use stipulated in the contract
or laws and regulations; ② the period in which the intangible assets generate benefits for
the Company still could not be estimated after considering the industrial practice or
relevant expert opinions.
At the end of each year, the useful lives of the intangible assets with indefinite useful lives
are reviewed. The assessment is primarily reviewed by relevant departments that use theintangible assets, using the down-to-top approach, to determine if there are changes to thedetermination basis of indefinite useful lives.

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Section X Financial Report(3)

Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount. Impairment loss will not be reversed insubsequent accounting periods once provision is made for it.
The recoverable amount of intangible assets should be based on the higher of the net fairvalue of the assets less the disposal expense and the present value of estimated future
cash flow of the assets.

(4)

Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research
stage is recognized in the profit or loss as incurred. Expenses incurred in the development
stage are recognized as intangible assets if all of the following conditions are met: ①thetechnical feasibility of completing the intangible assets so that they will be available for use
or for sale; 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 the
products produced by the intangible assets has a market or the intangible assets
themselves have a market; if the intangible assets are for internal use, there is evidence
that 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 or
sell the intangible assets; ⑤ the capability to reliably measure the expenditures attributable
to the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an internal
research and development project: research stage refers to the stage of planned
investigation and search for obtaining new technology and knowledge, which features
planning and exploration; before commercial production or other uses, the stage ofapplying the research achievements and other knowledge in a plan or design to produce
new or substantially improved materials, equipment and products is regarded as
development stage, which features pertinence and is very likely to form results.
All the expenditures incurred on research and development which cannot be distinguishedbetween research stage and development stage are recognized in the profit or loss.

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Section X Financial Report

19. Impairment of long-term assets√ Applicable□ Not Applicable

Long-term equity investment, investment properties measured based on cost model, fixed assets,
construction in progress, intangible assets and other long-term assets are tested for impairment
if there is any sign of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of the assets is less than the carrying amount, a provision
for impairment will be made based on the difference and will be recorded in impairment loss. The
recoverable amount is the higher of the net fair value of the assets less the disposal expense
and the present value of estimated future cash flow of the assets. Provision for asset impairment
is 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 which
the asset belongs is determined. An asset group is the smallest asset portfolio that can generatecash inflows independently.
Goodwill is tested for impairment at least at the end of each year.
In terms of impairment test of the goodwill of the Company, the carrying amount of the goodwill,arising from business combination, shall be allocated to the related asset groups on reasonablebasis since the acquisition date, or to the related asset group portfolios if it is difficult to beallocated to the related asset groups. When the carrying amount of the goodwill is allocated to
the related asset groups or asset group portfolios, it shall be allocated in the proportion of thefair value of each asset group or asset group portfolio against the total fair value of related asset
groups or asset group portfolios. If it is difficult to measure the fair value reliably, it shall beallocated in the proportion of the carrying amount of each asset group or asset group portfolio
against the total carrying amount of related asset groups or asset group portfolios.
When impairment test is made to the related asset groups or asset group portfolios including
goodwill, if there is a sign that the related asset groups or asset group portfolios are prone to
impair, the Company shall first conduct impairment test on the asset groups or asset group
portfolios excluding goodwill, calculate the recoverable amount and recognize the corresponding
impairment loss by comparing with its carrying amount. The Company shall then conduct
impairment test on the asset groups or asset group portfolios including goodwill and compare
the carrying amount (including the carrying amount of allocated goodwill) of related asset groups
or asset group portfolios with the recoverable amount thereof. Impairment loss on goodwill shallbe recognized when the recoverable amount of the related asset groups or asset group
portfolios is lower than the carrying amount thereof.
Once the above impairment loss on assets is recognized, it shall not be reversed in any
subsequent accounting period.

20. Long-term prepaid expense√ Applicable□ Not Applicable

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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-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value ofsuch unamortized items is then fully transferred to the profit or loss.

21. Staff’s remuneration(1).

Accounting treatment of short-term remuneration√ Applicable □ Not Applicable
Staff’s remunerations are all forms of compensation and other relevant expenditure given by
the Company in exchange for services rendered by employees, including short-term
remunerations, post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies,
employee welfare, housing provident fund, labor union fee and education fee, medical
insurance premiums, work-related injury insurance premiums, maternity insurance premiums,
short-term compensated leave, short-term profit-sharing plans, etc. During the accounting
period when employees render services, short-term remunerations that actually incurred
shall be recognized as liabilities and credited into the current profit or loss or the cost of
relevant assets on an accrual basis by the benefit objects.

(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, the postemployment benefits are classified as defined contribution plans and defined benefit plans.
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 cost forproviding benefits is determined using the expected cumulative welfare unit method, withactuarial valuations being carried out by independent actuary at the interim and annual
balance sheet date. The costs for staff’s remunerations incurred by the defined benefit plansof the Group are categorized as follows: (1) service cost, including current period service
cost, past service cost and settlement profit or loss. Specifically, current period service costmeans the increase of the present value of defined benefit obligations resulted from thecurrent period services offered by employees. Past service cost means the increase or
decrease of the present value of defined benefit obligations resulted from the revision of thedefined benefit plans related to the prior period services offered by employees; (2) interest
expenses of defined benefit plans; (3) changes caused by the remeasurement of liabilities
for defined benefit plans. Unless other accounting standards require or permit the credit of
the costs for employee welfare into the cost of assets, the Company will credit (1) and (2)above into the profit or loss; and recognize (3) above as other comprehensive income andwill not transfer it back to the profit or loss in subsequent accounting periods.

(3).

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Accounting treatment of termination benefits√ Applicable □ Not Applicable

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Section X Financial Report

Termination benefits: The indemnity proposal provided by the Company for employees forthe purpose of terminating labor relations with employees before expiry of the labor
contracts or encouraging employees to accept downsizing voluntarily. When the following
conditions are met, the Company will recognize and credit into the profit or loss theaccrued liabilities arising from the indemnity as a result of terminating labor relations withthe employees: the Company has made a formal plan for termination of labor relations or
has made an offer for voluntary redundancy which will be implemented immediately; and theCompany could not unilaterally withdraw the plan for termination of labor relations or the
redundancy offer. Early retirement plans for employees will be handled in the principle thesame as the termination benefits above. The Company will credit the salaries and social
insurance premiums to be paid to the early retirees during the period from the date of early
retirement to the normal retirement date to the profit or loss when recognition conditions for
estimated liabilities are met.
(4).

Accounting treatment of other long-term employee benefits□ Applicable √ Not Applicable

22. Lease liabilities√ Applicable□ Not Applicable

On the commencement date of the lease term, the Company as the lessee shall recognize theright-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initiallymeasured at the present value of the lease payment that has not been paid on thecommencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rate
implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,
the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discountrate.
The interest rate implicit in lease refers to the interest rate that makes the sum of the present
value of the lessor’s lease receivable amount and the present value of the unguaranteed residual
value equal to the sum of the fair value of the leased asset and the initial direct cost of thelessor. The lessee’s incremental borrowing rate refers to the interest rate that the lessee isrequired to pay for borrowing funds under similar mortgage conditions in a similar economic
environment in order to obtain assets close to the value of the right-of-use assets during asimilar period.
The Company shall calculate the interest expenses of lease liabilities over the lease term at the
fixed periodic interest rate, and include it into current profit or loss or assets cost.

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Section X Financial Report

After the commencement date of the lease term, where the assessment results of the renewal of
the option, the termination of the lease option and the purchase option have changed, theCompany re-determines the lease payment and re-measures the lease liabilities in accordancewith the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease paymentchanges due to a change in expected payment under a guaranteed remaining value or changes
in an index or rate used in determining the lease payments, the Company shall re-measure leaseliabilities based on present value of the lease payment after changes. In such cases, thediscount rate adopted by the Company shall remain unchanged; however, if the change in lease
payment results from a change in floating interest rates, the Company shall use a revised
discount rate.

23. Estimated liability√ Applicable□ Not Applicable(1)

Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting ofcommercial acceptance bills, pending litigation or arbitration and product quality assurance
is 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 continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to 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. If
there is objective evidence that the carrying value could not reflect in the current best
estimate, the carrying value shall be adjusted to reflect the current best estimate.

24. Share-based payments√ Applicable□ Not Applicable

For equity-settled share-based payment transaction in return for services from employees, it shallbe measured at the fair value of equity instruments granted to the employees at the grant date.
For the payment of such fair value that may only be exercised if services are fulfilled during thevesting period or the specified performance condition is achieved, the amount of such fair value
shall, based on the best estimate of the number of exercisable equity instruments during thevesting period, be recognized in relevant costs or expenses in straight-line method with theincrease in the capital reserve accordingly.

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Section X Financial Report

The cash-settled share-based payment shall be measured at the fair value of liability assumed by
the Company, which is determined based on the shares or other equity instruments. For the
cash-settled share-based payment that may be exercised immediately after the grant, the fairvalue of the liability assumed by the Company shall, on the date of the grant, be recognized in
relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled
share-based payment that may be exercised if services are fulfilled during the vesting period or
the specified performance condition is achieved, on each balance sheet date within the vesting
period, 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 and the settlement date prior to the settlement of liabilities, the fairvalue of the liability is re-measured with its change consolidated in profit/loss.
When there are changes to the Company’s share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if 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 equity
instrument 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 market
conditions), the Company shall consider the modified vesting conditions upon the disposal ofvesting conditions. If the modification reduces the total fair value of shares paid or the Company
uses other methods not conductive to employees to modify the terms and conditions of sharebased payment plans, it will continue to be accounted for the services obtained in theaccounting treatment, as if the change had not occurred, unless the Company cancelled some or
all of the equity instruments granted.
During the vesting period, if the Company cancel equity instruments granted which will be treatedas accelerating the exercise of rights and any amount to be charged over the remaining vesting
period should be recognized immediately in the profit or loss, while at the same time recognize
the capital reserve. Employees or other parties can choose to meet non-vesting conditions, but
for those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.

25. Revenue√ Applicable□ Not Applicable

Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries
during day-to-day operations which might lead to increase of shareholders’ equity and be
irrelevant 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.

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Section X Financial Report

Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various single
performance 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 are
expected 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 relevant
uncertainties are eliminated and might not incur material carrying back. The amount that is
expected 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 fulfilling
performance 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 entire
contractual period.

For the performance obligations performed during a certain time horizon, the Company and its
subsidiaries recognize revenue in accordance with the schedule of performance during such time
horizon. When the schedule of performance can’t be reasonably recognized, where the costs 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 until
the schedule of performance can be reasonably confirmed.
For performance obligations performed at a certain time point, the Company and its subsidiaries
recognize 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:

138①

The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;②

The Company and its subsidiaries have transferred the material objects of such goods tothe client;Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report③

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 provisioned
impairment 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 subsidiaries
obtain revenue are described as follows:(1)

Sale of goods
Generally, contracts for sale of goods between the Company and its clients only include
performance obligation of transferring the whole machine of home appliance. Generally, on
the basis of taking into account the following factors comprehensively, the Company
recognizes the revenue at the time point of transfer of control right of goods: the right of
instant collection for obtaining goods, transfer of major risks and rewards on ownership ofgoods, transfer of statutory ownership of goods, transfer of assets of material objects ofgoods, the client’s acceptance of such goods.

(2)

Construction contract income
Construction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home,because the client is able to control goods under construction during the Company’s
performance process, the Company takes them as performance obligations performed
during 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 services
provided 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 are
estimated 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.

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Section X Financial Report(3)

Warranty obligations
According to contractual agreement and regulations of laws, the Company provides quality
assurance for goods sold and project constructed. For guarantee-type quality assurance inorder to ensure the client that goods sold comply with existing standards, the Company
conducts accounting treatment in accordance with estimated liabilities. For service-type
quality 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-type
quality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtains
control right over services. When assessing whether quality assurance provides a separate
service 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.

26. Government grants√ Applicable□ Not Applicable(1)

Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets
obtained by the Company from the government, excluding the capital invested by thegovernment as an owner. The government grants are mainly divided into asset-related
government grants and revenue-related government grants.

(2)

Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit orloss on an even basis over the useful life of relevant assets; government grants measured
at nominal amount shall be recognized directly in current profit or loss. Revenue-related
government grants shall be treated as follows: ①those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized
as deferred income and recorded in current profit or loss when such expenses arerecognized; ②those used to compensate relevant expenses or losses that have been
incurred by the enterprise are recorded directly in current profit or loss.

(3)

Basis for determination of asset-related government grant and revenue-related
government grant
If the government grant received by the Company is used for purchase, construction orother project that forms a long-term asset, it is recognized as asset-related government
grant.
If the government grant received by the Company is not asset-related, it is recognized asrevenue-related government grant.

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Section X Financial Report

Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:①

Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion 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 ingeneral statement and no specific project is specified in the relevant government
document.

(4)

Amortization method and determination of amortization period of deferred revenue
related to government grants
Asset-related government grant received by the Company is recognized as deferred
revenue and is evenly amortized to the profit or loss in the current period over theestimated useful life of the relevant asset starting from the date when the asset is available
for use.

(5)

Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of theperiod when there is clear evidence that the relevant conditions set out in the financial
subsidy 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.

27. Deferred income tax assets/deferred income tax liabilities√ Applicable□ Not Applicable

Deferred income tax assets and deferred income tax liabilities of the Company are recognized:(1)

Based on the difference between the carrying amount and the tax base amount of an asset
or a liability (items not recognized as assets and liabilities but their tax base is ascertainedby the tax laws and regulations, the tax base is the difference), deferred income tax asset
or deferred income tax liability is calculated using the applicable tax rate prevailing at the
expected time of recovering the asset or discharging the liability.

(2)

Deferred income tax asset is recognized to the extent that there is enough taxable income
for the deduction of the deductible temporary difference. At the balance sheet date, if there
is sufficient evidence that there will be enough taxable income in the future for the
deduction of the deductible temporary difference, the deferred income tax asset notrecognized in previous accounting period is recognized. If there is no sufficient evidence
that there will be enough taxable income in the future for the deduction of the deferredincome tax asset, the carrying value of the deferred income tax asset is reduced.

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Section X Financial Report(3)

Deferred income tax liability is recognized for taxable temporary difference arising frominvestments in subsidiaries and associated companies, unless the Company could control
the time of reversal of the temporary differences and the temporary differences would not
be probably reversed in the foreseeable future. For deductible temporary differences arisingfrom investments in subsidiaries and associated companies, deferred income tax asset isrecognized if the temporary difference will be very probably reversed in the foreseeable
future and it is highly probable that taxable income will be available in the future to deduct
the deductible temporary difference.

(4)

No deferred income tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill. No deferred income tax asset or deferred income tax liability isrecognized for the temporary differences resulting from the initial recognition of assets or
liabilities due to a transaction other than a business combination, which affects neither
accounting profit nor taxable income (or deductible loss). At the balance sheet date,deferred income tax assets and deferred income tax liabilities are measured at the tax rates
that apply to the period when the asset is expected to be recovered or the liability is
expected to be settled.

28. Other significant accounting policies and accounting estimations√ Applicable(1)□ Not Applicable

Asset securitization business
Some of the Company’s receivables are securitized. The Company’s underlying assets aretrusted to a special purpose entity which issues securities to investors. The Company
serves as the asset service supplier, providing services including asset maintenance and its
daily management, formulation of the annual asset disposal plan, formulation andimplementation of the asset disposal plan, signing relevant asset disposal agreements andperiodic preparation of asset service report.
The Company has evaluated the extent to which it transfers the risks and rewards ofassets to other entities and the extent it exercises control over such entities while applying
the accounting policy in respect of securitization of financial assets:

142①

The financial asset is derecognized when the Company transfers substantially all therisks and rewards of ownership of the financial asset;②

Recognition of the financial asset is continued when the Company retains substantially
all the risks and rewards of ownership of the financial asset;③

When the Company neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset, the Company evaluates whether it retains control
over the financial asset. If the Company does not retain control, it derecognizes thefinancial asset and recognizes separately as assets or liabilities any rights andobligations created or retained in the transfer. If the Company retains control, it
continues to recognize the financial asset to the extent of its continuing involvementin the financial asset.

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report(2)

Hedge accounting
Hedge refers to risk management activities that enterprises designate financial instruments
as hedge instruments in order to manage risk exposure caused by specific risks such as
foreign exchange risk, interest rate risk, price risk and credit risk, allowing to expect
changes in fair value or cash flow of hedge instruments to offset all or partial changes infair value or cash flow of hedged items.
Hedged items refer to items which make enterprises face risks of changes in fair value orcash flow and are designated as hedged objects and can be reliably measured.
A hedging instrument is a financial instrument designated by an enterprise for the purposeof hedging, whose fair value or cash flow changes are expected to offset the change in thefair value or cash flow of the hedged items.
The Company continuously conducts assessment over whether hedge relationship complies
with requirements of hedge effectiveness on the starting date of hedge and during followon period. Hedge effectiveness refers to the extent that changes in fair value or cash flowof hedge instruments can offset that of hedged items caused by the risks of being hedged.
The portion that the changes in fair value or cash flow of hedge instruments is greater orless than that of hedged items is the ineffective portion of hedge.

(3)

Explanations on significant accounting estimates
Judgments, estimates and assumptions shall be made to book value of the financial
statements items, which could not be measured accurately, due to the inherent
uncertainties of operating activities, while applying accounting policy. Such judgments,
estimates and assumptions were based on the management’s historical experience andmade after other various factors are considered. These judgments, estimates andassumptions will influence the amount of revenues, expenses, assets and liabilities
presented in financial reports and the disclosure of contingent liabilities on the balance
sheet date. However, the actual results caused by the uncertainties of these estimations
may be different from the current estimates of the management, and thus cause a material
adjustment to the carrying amounts of assets and liabilities affected in the future. The
judgments, estimates and assumptions mentioned above shall be reviewed on a going
concern basis. If the revisions to accounting estimates only affect the current period, theamount affected shall be recognized in the current period; if the revisions affect both thecurrent and future periods, the amount affected shall be recognized in both the current andfuture periods.

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Section X Financial Report

On the balance sheet date, the Company needs to have judgments, estimates andassumptions about the following items on the financial statements:①

Estimated liabilities
Provision for product quality guarantee, expected contract losses, and other estimates
shall be made in accordance with the terms of contracts, current knowledge andhistorical experience. If the contingent event has formed a present obligation theperformance of which is very probable to result in outflow of economic benefits fromthe Company, an estimated liability shall be recognized by the Company on the basisof the best estimate of the expenditures to settle relevant present obligation.
Recognition and measurement of the estimated liability significantly rely to a great
extent on the management’s judgments. In the process of judgment, the Company
takes into consideration the assessment of relevant risks, uncertainties, time value ofmoney and other factors related to the contingent events. Among them, the Company
will undertake estimated liabilities with respect to the after-sales services provided forthe return, maintenance and installation of goods. When estimating liabilities, theCompany has considered the empirical data on maintenance in recent years, but theprevious maintenance experiences may fail to reflect the future circumstances. Any
increase or decrease in this provision is likely to affect the profits and losses of thenext year.

②

Provision of expected credit losses
The Company calculates the expected credit losses in accordance with breach risk
exposure and expected credit loss rate, and confirms expected credit loss rate on thebasis of breach possibilities and breach loss rate. When confirming expected credit
loss rate, the Company uses data such as internal historical credit loss experiences,and conducts adjustments over historical data in combination with current status andforward-looking information. When considering forward-looking information, indexes
used by the Company include risks such as economic downturn, growth of expected
unemployment rate, changes in external market environment, technologicalenvironment and client conditions. The Company regularly monitors and reviews
relevant assumptions relating to calculation of expected credit losses. The aforesaid
estimation techniques and key assumptions have not changed substantially in this
year.

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Section X Financial Report③

Impairment provision of inventories
Inventories are measured by lower of cost and net realizable value according to theaccounting policies of inventories; for inventories whose costs are higher than the net
realizable value or those obsolete and unsalable, the impairment provision of
inventories shall be made. The carrying value of inventory shall be written down to the
net realizable value on the basis of the evaluation of the salability of inventories andthe net realizable value thereof. Authenticating inventory impairment requires the
management’s obtaining of solid evidence, and their judgments and estimations madeafter considering the purpose of holding inventories and the effect of events after thebalanced sheet date and etc. The difference between the actual outcome and thepreviously estimated outcome will influence the carrying value of inventories and theprovision or reversal of impairment provision of inventories during the period when theestimates are changed.

④

Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine
their fair value through a variety of valuation methods. Such valuation methods
include discounted cash flow analysis. In the valuation, the Company shall estimate
the future cash flow, credit risk, market volatility and correlation, and select theappropriate discount rate. Such related assumptions are uncertain, and their changes
may affect the fair value of financial instruments.

⑤

Impairment of investment in other equity instruments
The Company largely relies on judgments and assumptions of the management when
determining whether investments of other equity instruments are impaired todetermine whether it is needed to recognize their impairment. During the process ofconducting judgments or making assumptions, the Company shall assess the extent
and duration period that the fair value of such investments is below the cost, as wellas financial conditions and short-term business prospects of the invested objects,
including industry conditions, technological reform, credit rating, breach rate and risksof counterparties.

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Section X Financial Report⑥

Provision of long-term assets impairment
As at the balance sheet date, the Company shall judge whether there is any possible
indication of impairment against non-current assets other than financial assets. The
intangible assets with indefinite useful life must be tested for impairment on an annual
basis as well as when there is any indication of impairment. Other non-current assets
other than financial assets shall be tested for impairment when there is an indication
showing that the carrying value is not recoverable. Impairment occurs while thecarrying value of an asset or asset group is higher than the recoverable value, whichis the higher of the net of fair value less disposal expenses and the present value of
expected future cash flow. The net of fair value less disposal expenses is determinedwith reference to the price in the sale agreement regarding analogous asset in fairtransactions or the observable market price less the increase of cost that is directly
attributable to the disposal of assets. Significant judgments regarding the output,
sales price, relevant operating costs of the assets (or assets group) and the discountrate used to calculate the present value shall be made when estimating the present
value of future cash flow. Recoverable amount shall be estimated by the Company
using all accessible relevant information, including predictions made on the output,
sales price, and relevant operating costs based on reasonable and supportive
assumptions. The Company shall test for goodwill impairment at least every year. Thisrequires the Company to estimate the present value of future cash flow for such
assets groups or asset group portfolios allocated with goodwill. When estimating thepresent value of future cash flow, the Company shall not only estimate the future
cash flow generated by such asset groups or asset group portfolios, but also selectthe appropriate discount rate to determine the present value of such future cash flow.

⑦

Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated andamortized by the Company with a straight-line approach over their useful life bytaking into consideration the residual value. Useful life shall be periodically reviewed
by the Company to determine the amount of depreciation and amortization expenses
for each reporting period and be determined on the basis of historical experience
regarding analogous assets and the expected technological updates. Significant
changes to previous accounting estimates will result in adjustments against
depreciation and amortization expenses in the future periods.

⑧

Deferred income tax assets
Deferred income tax asset is recognized by the Company for all the uncompensatedtax losses to the extent that there is sufficient taxable profit for the deduction of loss.
In order to determine the amount of deferred income tax assets, the management of
the Company needs to predict the timing and the amount of taxable profits in the
future by making abundant judgments, as well as through the strategy of tax
planning.

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Section X Financial Report⑨

Income tax
In the ordinary course of business of the Company, the ultimate tax treatment andcalculations of some transactions are uncertain. Whether some items could bepresented before taxation shall be approved by relevant tax authorities. Where there
are differences between the final tax outcome of these items and the initial estimatedamount, such differences will impact the current and deferred tax in the period of final
confirmation.

⑩

Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers.
According to the relevant conventions in the sales agreement, the review of specifictransactions, the market situation, the pipeline inventory levels and the historicalexperiences, the Company and its subsidiaries estimate and accrue sales rebate on aregular basis with reference to the completion of agreed assessment indexes bycustomers. Accrual of sales rebate involves the judgment and estimates of the
management. In case of any significant changes in the previous estimates, thedifference above will have an impact on the sales rebate during the period whenrelevant changes in estimates occur.

29. Changes in the significant accounting policies and accounting estimates(1).

Changes in the significant accounting policies□ Applicable(2).

√ Not Applicable

Changes in the significant accounting estimates□ Applicable√ Not Applicable

VI. TAXATION
1.

Main tax categories and rates
Main tax categories and rates√ Applicable □ Not ApplicableTax categories

Basis of taxation

Value-added tax
City maintenance and construction tax
Enterprise income tax

Taxable revenue from sales ofgoods or rendering services
Circulation Taxes payable
Taxable income(Local) education surcharge

Circulation Taxes payable

Tax rate
6%, 9%, 13%
7%
Statutory tax rateor preferential
rates as follows
1%, 2%, 3%

Disclosure of tax entities with different enterprise income tax rates□ Applicable √ Not Applicable

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147

Section X Financial Report2.

Preferential tax√ Applicable□ Not ApplicableCompanies subjected to preferential tax:
Name of company

148

Tax rate

Qingdao Haier Refrigerator Co., Ltd.

15.00%

Qingdao Haier Special Refrigerator Co.,Ltd.
Qingdao Haier Dishwasher Co., Ltd.

15.00%

Qingdao Haier Special Freezer Co., Ltd.

15.00%

Qingdao Haier Intelligent Home
Appliance Technology Co., Ltd.
Wuhan Haier Electronics Co., Ltd.

15.00%

Wuhan Haier Freezer Co., Ltd.

15.00%

Hefei Haier Refrigerator Co., Ltd.

15.00%

Hefei Haier Air-conditioning Co., Limited

15.00%

Zhengzhou Haier Air-conditioning Co.,Ltd.
Shenyang Haier Refrigerator Co., Ltd.

15.00%

Qingdao Haier Air-Conditioner
Electronics Co., Ltd.
Qingdao Meier Plastic Powder Co., Ltd.

15.00%

Qingdao Hai Gao Design and
Manufacture Co., Ltd.
Qingdao Hairi Hi-Tech Model Co., Ltd.

15.00%

Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited
Qingdao Haier Intelligent Technology
Development Co., Ltd.

15.00%Haier Smart Home Co., Ltd. Interim Report 2022

15.00%

15.00%

15.00%

15.00%

15.00%

15.00%

Preferential tax
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterpriseSection X Financial Report

Name of company

Tax rate

Foshan Haier Freezer Co., Ltd.

15.00%

Qingdao Haier Central Air Conditioning
Co., Ltd.
Qingdao Haier Air Conditioner Gen
Corp., Ltd.
Haier U+smart Intelligent Technology(Beijing) Co., Ltd.
Beijing Zero Micro Technology Co., Ltd.

15.00%

Hefei Haier Washing Machine Co., Ltd.

15.00%

Qingdao Haier Washing Machine Co.,Ltd.
Qingdao Jiaonan Haier Washing
Machine Co., Ltd.
Foshan Shunde Haier Electric Co., Ltd.

15.00%

Tianjin Haier Washing Appliance Co.,Ltd.
Qingdao Economic and Technological
Development Zone Haier Water
Heater Co., Ltd.
Wuhan Haier Water Heater Co., Ltd.

15.00%

Foshan Drum Washing Machine Co.,Ltd.
Qingdao Strauss Water Equipment Co.,Ltd.
Qingdao Haier Smart Living Appliances
Co., Ltd.
Qingdao Haier New Energy ElectricAppliance Co., Ltd.
Qingdao Haier Washing Appliance Co.,Ltd.
Qingdao Ririshun Lexin Cloud
Technology Co., Ltd.
Hefei Haier Drum Washing Machine Co.,Ltd.
Zhengzhou Haier New Energy
Technology Co., Ltd.
Qingdao Haier Electronic Plastic Co.,Ltd.

15.00%

15.00%
15.00%
15.00%

15.00%
15.00%

15.00%

15.00%

15.00%
15.00%
15.00%
15.00%
15.00%
15.00%
15.00%
15.00%

Preferential tax
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterpriseHaier Smart Home Co., Ltd. Interim Report 2022

149

Section X Financial Report

Name of company

150

Tax rate

Qingdao Wei Xi Intelligent Technology
Co., Ltd.
Qingdao Haier Special Refrigerating
Appliance Co., Ltd.
Qingdao Haier Smart Kitchen ApplianceCo., Ltd.
Hefei Haier Air-conditioning Co., Limited

15.00%

Beijing Lingli Technology Co., Ltd.

15.00%

Qingdao Hairuijiejing Electronics Co.,Ltd.
Shanghai Haier Medical Technology
Co., Ltd.
Qingdao Yunshang Yuyi IOT Technology
Co., Ltd.
Haier (Shanghai) Home Appliance
Research and Development Center
Co., Ltd.
Haier (Shenzhen) R&D Co., Ltd.

15.00%

Qingdao Ririshun Lejia IOT Technology
Co., Ltd.
Qingdao Haier Smart Electrical
Equipment Limited
Laiyang Haier Smart Kitchen ApplianceCo., Ltd.
Guangdong Heilong Intelligent
Technology Co. Ltd
Dalian Haier Refrigerator Co., Ltd.

15.00%

Chongqing Haier Electronics Sales Co.,
Ltd. and some Western companies

15.00%

Chongqing Xin Ririshun Electric Sales
Co., Ltd. and some Westerncompanies
Chongqing Haier Air-conditioning Co.,Ltd.

15.00%

Chongqing Haier Refrigeration
Appliance Co., Ltd.

15.00%Haier Smart Home Co., Ltd. Interim Report 2022

15.00%
15.00%
15.00%

15.00%
15.00%
15.00%

15.00%

15.00%
15.00%
15.00%
15.00%

15.00%

Preferential tax
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies as a hi-tech enterprise
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC

Section X Financial Report

Name of company

Tax rate

Guizhou Haier Electronics Co., Ltd.

15.00%

Chongqing Haier Washing Machine Co.,Ltd

15.00%

Chongqing Haier Water Heater Co., Ltd

15.00%

Chongqing Haier Drum Washing
Machine Co., Ltd

15.00%

Qingdao Haier Technology Co., Ltd.

10.00%

Preferential tax
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
entitled to half deduction thepreferential taxation policies as a
key software enterpriseHaier Smart Home Co., Ltd. Interim Report 2022

151

Section X Financial ReportVII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
Unless otherwise specified, the following closing balance refers to the amount as of 30 June 2022.
The opening balance refers to the amount as of 31 December 2021. The amount for the current period
refers to the amount in the period from 1 January to 30 June 2022. The amount of the previous period
refers to the amount of the period from 1 January to 30 June 2021.

1.

Monetary funds√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Cash on hand
Deposit in bank
Other monetary funds
Total
Including: Total amount deposit overseas

Closingbalance

Opening balance

912,949.13
48,618,833,840.21
1,696,374,469.94
50,316,121,259.28
8,844,868,035.47

3,085,964.28
44,884,013,498.57
1,083,936,300.66
45,971,035,763.51
8,966,246,518.74

Other explanations:
Other monetary funds mainly were the investment fund, the deposit on third party payment
platforms, security deposit and other restricted fund, etc.

2.

Financial assets held for trading
Items
Short-term wealth management products
Investment in equity instruments
Investment fundForward foreign exchange contracts
Total

152

Haier Smart Home Co., Ltd. Interim Report 2022

Closingbalance

Opening balance

2,153,399,840.01
106,249,514.01
158,003,403.16
142,519,319.40
2,560,172,076.58

2,168,622,090.00
330,557,610.82
150,516,274.37
136,379,553.90
2,786,075,529.09

Section X Financial Report3.

Derivative financial assets√ Applicable□ Not Applicable
Unit and Currency: RMB
Closingbalance

Items
Forward foreign exchange contracts
Interest rate swap agreement
Forward commodity contracts
Total

4.

151,624,141.73
11,460,584.69

Opening balance
72,822,190.59

163,084,726.42

6,997,783.42
79,819,974.01

Closingbalance

Opening balance

8,200,648,941.32
282,194,019.57
8,482,842,960.89
65,206,789.48
8,417,636,171.41

13,053,809,505.49
368,076,810.80
13,421,886,316.29
67,095,248.00
13,354,791,068.29

Bills receivable(1)

Details of bills receivable

Items
Bank acceptance notes
Commercially acceptance notes
Balance of bills receivable
Allowance for bad debts
Bills receivable, net(2)

Changes in allowance for bad debts of bills receivable in the current period√ Applicable□ Not Applicable

Items

Openingbalance

Increase for thecurrent period

Provision
Allowance for bad debts
Total

67,095,248.00 35,478,414.82
67,095,248.00 35,478,414.82

Other
increases

Decrease for thecurrent period
Write-off/otherReversal
movement
3,986,104.53
3,986,104.53

33,380,768.81
33,380,768.81

Closingbalance

65,206,789.48
65,206,789.48

The Company’s bills receivable was mainly generated from daily operation activities such as
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 exist
significant financing components.
The bills receivable pledged by the Company at the end of the period was
RMB7,905,189,214.59 (amount at the beginning of the period: RMB12,526,757,275.50).

Haier Smart Home Co., Ltd. Interim Report 2022

153

Section X Financial Report5.

Accounts receivable①

Accounts receivable are disclosed by aging as follows:
Closingbalance

Opening balance

17,992,836,678.82
632,122,299.07
187,957,672.11
106,770,894.99
18,919,687,544.99
999,585,676.27
17,920,101,868.72

14,794,015,085.51
376,187,052.43
78,861,353.76
135,768,657.33
15,384,832,149.03
742,172,698.81
14,642,659,450.22

Aging
Within one year
1–2 years
2–3 years
Over 3 years
Accounts receivable, balance
Allowance for bad debts
Accounts receivable, net②

By method of provision of allowance for bad debts√ Applicable□ Not Applicable

Categories
Book balance
Account receivables
subject to provision forbad debts on a
separate basis523,300,149.88
Account receivables
subject to provision forbad debts on acollective basis
18,396,387,395.11
Total
18,919,687,544.99

154

Haier Smart Home Co., Ltd. Interim Report 2022

Closing balance
Allowance for
Percentage ofbad debts
provision (%)

Carrying value

517,255,653.38

98.84

6,044,496.50

482,330,022.89
999,585,676.27

2.62 17,914,057,372.22
5.28 17,920,101,868.72

Section X Financial Report(continued)
Categories

Account receivables subject
to provision for bad
debts on a separate
basis
Account receivables subject
to provision for bad
debts on a collective
basis
Total
③

Opening balance
Allowance for bad
Percentage ofBook balancedebts
provision (%)

Carrying value

381,406,983.17

320,303,932.13

83.98

61,103,051.04

15,003,425,165.86
15,384,832,149.03

421,868,766.68
742,172,698.81

2.81
4.82

14,581,556,399.18
14,642,659,450.22

Account receivables subject to provision for bad debts on a collective basis√ Applicable□ Not Applicable

Items

Within 1 year
1–2 years
2–3 years
Over 3 years
Total

Balance as at the end of the period
Allowance for
Percentage ofBook Balancebad debts
provision (%)
17,789,646,425.90
439,466,228.58
74,455,469.23
92,819,271.40
18,396,387,395.11

386,576,175.00
10,765,414.88
21,507,533.99
63,480,899.02
482,330,022.89

2.17
2.45
28.89
68.39
2.62

(continued)
Items

Within 1 year
1–2 years
2–3 years
Over 3 years
Total

Balance as at the beginning of the period
Allowance for
Percentage ofBook Balancebad debts
provision (%)
14,566,776,731.02
229,160,440.39
76,516,782.74
130,971,211.71
15,003,425,165.86

312,565,470.27
9,396,866.15
23,388,497.43
76,517,932.83
421,868,766.68

2.15
4.10
30.57
58.42
2.81

Haier Smart Home Co., Ltd. Interim Report 2022

155

Section X Financial Report④

Changes in allowance for bad debts of accounts receivable in the current period:
Items

Opening balance

Increase for the current period
Provision for thecurrent period Other movement

Allowance for bad debts

742,172,698.81 264,092,566.49

33,380,768.81

Decrease for the current period Closing balance
Write-off/other
Reversal
movement

41,415,511.37–1,355,153.53 999,585,676.27⑤

The aggregate amount of the top 5 account receivables as at the end of the period was
RMB4,500,321,373.99 (amount at the beginning of the period: RMB3,856,035,612.12),
accounting for 23.79% of the book balance of account receivables (as at the beginning of
the period: 25.06%).

⑥

Actual write-off of accounts receivable in the current period The amount of accounts
receivable actually written off in the current period is RMB13,058,370.53 (amount for thecorresponding period: RMB10,143,124.34) and there is no important bad debt write-off ofaccounts receivable.

⑦

The company’s accounts receivable that were terminated due to the transfer of financial
assets in the current period.
At the end of the period, the amount of accounts receivable that were terminated due tothe transfer of financial assets was RMB5,148,671,077.42 (amount at the beginning of theperiod: RMB4,127,671,197.04) and the transfer method was outright sale factoring/asset
securitization.

⑧

Restricted accounts receivable in the current period

The amount of accounts receivable restricted at the end of the period is RMB2,848,722,579.01(amount at the beginning of the period: RMB1,913,582,226.30).

156

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report6.

Prepayments(1)

Prepayments are disclosed by aging as follows:

Aging
Within one year
1–2 years
2–3 years
Over 3 years
Total
(2)

7.

Closingbalance

Opening balance

820,552,086.75
31,756,515.81
9,516,658.41
6,287,399.50
868,112,660.47

816,906,386.84
22,367,994.84
9,728,842.63
8,231,174.95
857,234,399.26

The amount of the top 5 in the prepayments at the end of the period totals
RMB88,045,020.96, which accounts for 10.14% of the book balance of prepayment(amount at the beginning of the period: RMB174,076,576.41, accounting for 20.31%).

Other receivables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Interest receivable
Other receivables
Total

Closingbalance

Opening balance

400,015,260.13
1,756,744,930.86
2,156,760,190.99

294,379,438.82
1,662,342,182.84
1,956,721,621.66

Other explanations:□ Applicable√ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

157

Section X Financial Report(1)

Interest receivable
Closingbalance

Aging
Within one year
1–2 years
2–3 years
Over 3 years
Total
(2)

Within one year
1–2 years
2–3 years
Over 3 years
Other receivables balance
Allowance for bad debts
Other receivables, net

158

231,011,687.28
47,983,727.86
15,384,023.68
294,379,438.82

Other receivables①
Other receivables are disclosed by aging as follows:

Aging

②

266,633,376.88
79,940,828.30
45,391,054.95
8,050,000.00
400,015,260.13

Opening balance

Closingbalance

Opening balance

1,348,982,183.92
118,830,576.45
361,449,614.43
127,053,718.52
1,956,316,093.32
199,571,162.46
1,756,744,930.86

1,274,872,226.90
109,677,138.52
355,219,038.13
113,213,998.61
1,852,982,402.16
190,640,219.32
1,662,342,182.84

The total amount of the top 5 other receivables at the end of the period is
RMB776,125,043.70 (amount at the beginning of the period: RMB588,207,363.50), which
accounts for 39.67% of the book balance of other receivables (at the beginning of theperiod: 31.74%).

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report③

Provision of allowance for bad debts
Allowance for bad
debts

Stage 1
Expected
credit losses
for the coming
12 months

Balance as at the
beginning of theperiodProvision for thecurrent period
Reversal for the current
periodWrite-off and others forthe current period
Balance as at the endof the period④

112,022,673.37

Stage 3
Lifetime
expected
credit losses(creditimpaired)Total

78,617,545.95

190,640,219.32

9,354,271.38

9,354,271.38

5,446,790.65

5,446,790.65–5,076,162.41

52,700.00–5,023,462.41

121,006,316.51

78,564,845.95

199,571,162.46

Changes in allowance for bad debt provision of other receivables in the current period

Items

Allowance for bad
debts⑤

Stage 2Lifetime
expected
credit losses(not creditimpaired)

Openingbalance

190,640,219.32

Increase for thecurrent period
Provisionfor thecurrent
Other
periodmovement

9,354,271.38

Decrease for thecurrent period

Reversal

5,446,790.65

Closingbalance

Write-off/othermovement–5,023,462.41 199,571,162.46

Other receivables written off during the period
The amount of other receivables actually written off in the current period is RMB306,025.66(amount for the corresponding period: RMB4,293,611.04), and no significant otherreceivables are written off for bad debts.

⑥

Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.

Haier Smart Home Co., Ltd. Interim Report 2022

159

Section X Financial Report8.

Inventories(1)

Details of Inventories
Items

Closing balanceBook value
Impairment
balanceprovision

Raw materialWork in progress
Finished goods
Total
(2)

5,505,526,057.02
148,110,212.49
36,906,925,191.71
42,560,561,461.22

129,495,787.11
1,424,430,179.89
1,553,925,967.00

Openingbalance

Increase forthe period
Provision

Raw materialWork in progress
Finished goods
Total

117,428,681.85
1,248,466,540.71
1,365,895,222.56

117,428,681.85

13,180,554.37

1,248,466,540.71
1,365,895,222.56

372,249,744.36
385,430,298.73

Other
Increases

Decrease forthe period
Write-off/other
Reversal
movement

Closingbalance

1,113,449.11

129,495,787.11

13,571,021.80
13,571,021.80

182,715,083.38 1,424,430,179.89
183,828,532.49 1,553,925,967.00

Contract assets(1)

Details
Items

Relating to construction
service contract
Total

160

5,160,836,755.15
115,676,026.77
35,990,645,130.23
41,267,157,912.15

Impairment provision of inventories

Items

9.

Opening balanceBook value
Impairment
balanceprovision

Haier Smart Home Co., Ltd. Interim Report 2022

Closing balanceBook value
Impairment
balance
Provision

280,621,191.36
280,621,191.36

Opening balanceBook value
Impairment
balance
Provision

304,434,294.70
304,434,294.70

Section X Financial Report

10. Other current assets(1)

Details
Items

Closing balanceBook value
Impairment
balanceprovision

Bank deposit for financial
products
Taxes to be deducted
Return cost receivable
OthersTotal(2)

1,551,745,385.00
2,588,443,347.96
657,641,276.81
54,260,359.93
4,852,090,369.70

336,533,252.53
336,533,252.53

Opening balanceBook value
Impairment
balanceprovision

316,590,333.42
3,275,762,776.66
585,140,752.69
71,809,601.50
4,249,303,464.27

328,552,987.70
328,552,987.70

Impairment provision

Items

Openingbalance

Increase forthe period
Provision

Return cost receivables
Total

328,552,987.70 336,533,252.53
328,552,987.70 336,533,252.53

Other
Increases

Decrease forthe period
Write-off/other
Reversal
movement

Closingbalance

1,330,581.65 327,222,406.05 336,533,252.53
1,330,581.65 327,222,406.05 336,533,252.53

Haier Smart Home Co., Ltd. Interim Report 2022

161

Section X Financial Report

11. Long-term equity investments√ Applicable□ Not Applicable

Investees

Opening balance

Investment
increase
Associate:
Haier Group Finance Co., Ltd.
Bank of Qingdao Co., Ltd.
Wolong Electric (Jinan) MotorCo., Ltd.
Qingdao Hegang New Material
Technology Co., Ltd.
Qingdao Haier SAIF Smart
Home Industry Investment
Center (Limited Partnership)
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co., Ltd.
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.
Qingdao Haier multimedia Co.,Ltd.
Qingdao Haier Moulds Co., Ltd.
Hefei Feier Smart Technology
Co., Ltd.
Anhui Kunhe Intelligent
Technology Co., Ltd.*
Zhejiang Futeng Fluid
Technology Co., Ltd.*
Beijing Mr. Hi Network
Technology Company
LimitedBeijing Xiaobei Technology Co.,Ltd.
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan Environment
al Protection Technology
Co., Ltd.
Qingdao Haimu Investment
Management Co., Ltd.
Qingdao Haimu Smart Home
Investment Partnership(Limited Partnership)*

162

7,108,709,375.38
2,654,248,436.12

352,102,643.20

Increase/decrease for the period
Adjustment in
Investment profit
otherrecognized undercomprehensive Other changes inequity method
incomeequity318,680,094.64
165,347,683.41

151,837,378.99

12,237,610.99

312,493,256.21

10,746,218.86

393,598,372.59–904,601.39

682,901,976.73

52,979,520.61

409,053,808.05

10,936,464.63

277,102,563.88
269,158,534.54

7,661,131.00–6,472,692.99

7,483,342.53–17,900,226.81

3,419,373.38

265,106.27–265,106.27

1,877,574.14

109,595.88

82,098,847.75

7,507,759.75
2,687,341.82
15,529,700.01–2,687,341.82–12,256,393.21

6,914,487.73

681,807.62

2,465,299.70–53,862.77

59,424,662.44–100,251.06

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

–218,400,000.00–76,288,906.40–17,199,060.82–14,629,468.29–272,577,907.92

Declaration of
cash dividends or
profits

9,809,616.09

Section X Financial Report

Investees

Opening balance

Investment
increase
Guangzhou Heying Investment
Partnership (Limited
Partnership)
Qingdao Home Wow Cloud
Network Technology Co.,Ltd.
Bingji (Shanghai) Corporate
Management Co., Ltd.
Youjin (Shanghai) Corporate
Management Co., Ltd
RRS (Shanghai) Investment Co.,Ltd.
Haier Best Water Technology
Co., Ltd.
Huizhixiangshun Equity
Investment Fund (Qingdao)
Partnership (Limited
Partnership)
Qingdao Ririshun Huizhi
Investment Co., Ltd.
Qingdao Xinshenghui
Technology Co., Ltd.
Meiling Candy Washing MachineCo., Ltd.
EuropaltersItaliaS.r.l.
OryginLLC
Konan Electronic Co., Ltd.
HNR Company (Private) Limited
HPZ LIMITED
Haier Raya Electric S.A.E
CONTROLADORAMABES.
A.deC.V.
Middle East Airconditioning
Company, Limited
Total

Increase/decrease for the period
Adjustment in
Investment profit
otherrecognized undercomprehensive Other changes inequity method
incomeequityDeclaration of
cash dividends or
profits

285,793,577.87

2,600,050.50–34,037.86

972,200,487.88

23,218,909.91

1,766,819,068.86

42,216,199.84

3,211,580,125.21

76,756,726.98

79,785,557.39–1,432,974.65

119,008,967.03

119,797,980.61

2,083,482.78

2,000,000.00

9,964,773.52–953,012.17

22,752,232.07
9,361,965.48–92,564.23
13,494,211.65

69,273,712.61
114,055,318.97
71,269,048.97
10,568,507.40

305,414.02
17,731,336.90
6,432,609.47–716,353.69–7,882,359.76–7,497,761.95

4,131,983,673.10

246,779,790.69

119,156,456.19–2,475,341.75
954,665,390.49

465,090.46
107,874,349.25

10,318,898.13
23,327,293,929.87

212,129,585.72–237,150.00

2,444,486.30–47,111,575.26

17,292,958.62–377,136,919.29

Haier Smart Home Co., Ltd. Interim Report 2022

163

Section X Financial Report(Continued)

Investees

Associate:
Haier Finance Co., Ltd.
Bank of Qingdao Co., Ltd.
Wolong Electric (Jinan)
Motor Co., Ltd.
Qingdao Hegang New
Material Technology Co.,Ltd.
Qingdao Haier SAIF Smart
Home Industry
Investment Center(Limited Partnership)
Mitsubishi Heavy Industries
Haier (Qingdao) Airconditioners Co., Ltd.
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.
Qingdao Haier Multimedia
Co., Ltd
Qingdao Haier Moulds Co.,
Ltd
Hefei Feier Smart
Technology Co., Ltd.
Anhui Kunhe Intelligent
Technology Co., Ltd.*
Zhejiang Futeng Fluid
Technology Co., Ltd.*
Beijing Mr. Hi Network
Technology Company
LimitedBeijing Xiaobei Technology
Co., Ltd.
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan
Environmental Protection
Technology Co., Ltd.
Qingdao Haimu Investment
Management Co., Ltd.
Qingdao Haimu Zhijia
Investment Partnership(Limited Partnership)*164

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Increase/decrease for the period Closing balance
Other Disposal of the
movement
investment

Impairment
provision
Closing balance

7,216,650,601.02
3,096,420,505.87
164,074,989.98

323,239,475.07

375,494,710.38

735,881,497.34

402,090,045.87–21,000,000.00

262,473,095.59–88,300,000.00

1,987,170.02
82,098,847.75

7,507,759.75–7,507,759.75

13,082,922.89

7,596,295.35
2,411,436.93

59,324,411.38–6,914,487.73

Section X Financial Report

Investees

Guangzhou Heying
Investment Partnership(Limited Partnership)
Qingdao Home Wow Cloud
Network Technology Co.,Ltd.
Bingji (Shanghai) Corporate
Management Co., Ltd.
Youjin (Shanghai) Corporate
Management Co., Ltd
RRS (Shanghai) Investment
Co., Ltd.
Haier Best Water
Technology Co., Ltd.
Huizhixiangshun Equity
Investment Fund
(Qingdao) Partnership(Limited Partnership)
Qingdao Ririshun Huizhi
Investment Co., Ltd.
Qingdao Xinshenghui
Technology Co., Ltd.
Meiling Candy Washing
Machine Co., Ltd.
EuropaltersItaliaS.r.l.
OryginLLC
Konan Electronic Co., Ltd.
HNR Company (Private)
Limited
HPZ LIMITED
HaierRayaElectricS.A.E
CONTROLADORAMABES.
A.deC.V.
Middle East Airconditioning
Company, Limited
Total

Increase/decrease for the period Closing balance
Other Disposal of the
movement
investment

Impairment
provision
Closing balance

285,793,577.87

2,566,012.64
995,419,397.79
1,809,035,268.70
3,288,336,852.19
78,352,582.74

238,806,947.64
4,083,482.78
9,011,761.35
22,659,667.84
9,361,965.48
13,494,211.65
61,459,616.87
124,288,893.92
80,146,144.74
9,852,153.71–7,751,424.52

4,443,056,920.20–7,751,424.52

8,308,646.84
24,234,367,870.14–123,722,247.48

Haier Smart Home Co., Ltd. Interim Report 2022

165

Section X Financial Report

12. Investment in other equity instruments(1)

Details of investment in other equity instruments:√ Applicable□ Not Applicable
Unit and Currency: RMB
Closingbalance

Opening balance

1,285,836,952.03

1,290,487,901.40

2,812,000,000.00
754,608,260.88
4,852,445,212.91

2,812,000,000.00
746,221,537.56
4,848,709,438.96

Items
SINOPEC Fuel Oil Sales Corporation Limited
Haier COSMO IOT Ecosystem Technology
Co., Ltd.
Others
Total(2)

Dividends from investment in other equity during the current period:
Items

Amount for the current period

Others — Shenzhen Toposcend Capital, etc.
Total

2,596,583.32
2,596,583.32

13. Investment properties
Measure mode for investment properties(1)
The changes in investment properties measured at cost for this year are as follows:

Items
I. Original book value
1. Opening balance
2. Increase for the period(1) Outsourced(2) Inventories\fixed
assets\construction inprogress transferred in(3) Increase in businesscombinations
3. Decrease for the period(1) Disposal(2) Disposal of subsidiary(3) Other transferring out

166

Haier Smart Home Co., Ltd. Interim Report 2022

Houses andbuildings Land use rights

34,022,711.50

2,128,550.51

Total

36,151,262.01

Section X Financial Report

Items
4. Converted difference inforeign currency
statements
5. Closing balance
II. Accumulated depreciation
and accumulated
amortization
1. Opening balance
2. Increase for the period(1) Provision oramortization
3. Decrease for the period(1) Disposal(2) Disposal of subsidiary(3) Other transferring out
4. Converted difference inforeign currency
statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the period(1) Provision
3. Decrease for the period(1) Disposal(2) Disposal of subsidiary(3) Other transferring out
4. Converted difference inforeign currency
statements
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Houses andbuildings Land use rights

Total

1,594,734.05
35,617,445.55

2,128,550.51

1,594,734.05
37,745,996.06

10,555,753.15

630,620.38

11,186,373.53

649,271.97

20,118.11

669,390.08

265,983.26
11,471,008.38

650,738.49

265,983.26
12,121,746.87

24,146,437.17
23,466,958.35

1,477,812.02
1,497,930.13

25,624,249.19
24,964,888.48(2)

The depreciation and amortization amount charge for the period is RMB669,390.08 (amountfor the corresponding period: RMB920,365.49).

(3)

The recoverable amount of the investment real estate of the Company at the end of theperiod is not less than its book value, so no provision for impairment is made.

Haier Smart Home Co., Ltd. Interim Report 2022

167

Section X Financial Report

14. Fixed assets
Presented as√ Applicable□ Not Applicable
Unit and Currency: RMB
Closingbalance

Opening balance

24,238,045,798.12
4,543,369.52
24,242,589,167.64

22,302,546,799.12
4,543,369.52
22,307,090,168.64

Items
Fixed assets
Disposals of fixed assets
Total
Fixed assets(1) Fixed assets:

Items
I. Original book value
1. Opening balance
2. Increase for the period(1) Acquisition(2) Construction in progresstransferred in(3) Increase in business combinations
3. Decrease for the period(1) Disposal or Write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated depreciation
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in businesscombinations
3. Decrease for the period(1) Disposal or write-off(2) Disposal of subsidiary(3) Transfer to hold for sale

168

Haier Smart Home Co., Ltd. Interim Report 2022

Houses andbuildings

Production
equipment

Transportationequipment

11,353,869,023.33

26,553,243,290.47

179,083,687.93

24,855,788.90

648,692,116.07

890,259.74

473,266,969.36

1,316,653,800.21

6,815,087.61

13,836,783.88

275,325,898.20

3,042,808.78
754,649.79

362,938,367.98
12,201,093,365.69

1,035,957,018.26
29,279,220,326.81

4,804,656.26
187,796,232.97

3,922,452,407.13

13,208,010,163.95

107,950,259.30

266,310,942.35

1,250,733,974.65

9,978,627.44

7,174,156.14

212,276,135.09

2,883,264.99
645,746.91

Section X Financial Report

Items
4. Converted difference in foreign
currency statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in businesscombinations
3. Decrease for the period(1) Disposal or Write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Houses andbuildings

Production
equipment

Transportationequipment

38,318,137.17
4,219,907,330.51

478,123,536.12
14,724,591,539.63

1,941,465.37
116,341,340.21

29,499,438.21

21,647,562.09

173,485.13

20,287.80–2,488,257.57
27,011,180.64–263,526.91
21,363,747.38–10,241.16
163,243.97

7,954,174,854.54
7,401,917,177.99

14,533,265,039.80
13,323,585,564.43

71,291,648.79
70,959,943.50

Office furniture

OthersTotal

1,030,764,014.90

2,464,395,005.90

41,581,355,022.53

78,881,852.21

34,929,055.41

788,249,072.33

84,566,124.47

162,827,779.57

2,044,129,761.22

25,668,390.60

52,084,817.45
37,980.00

369,958,698.91
792,629.79

19,135,686.09
1,187,679,287.07

149,484,827.72
2,759,513,871.15

1,572,320,556.31
45,615,303,083.69

565,204,246.86

1,418,493,692.20

19,222,110,769.44(Continued)
Items
I. Original book value
1. Opening balance
2. Increase for the period(1) Acquisition(2) Construction in progresstransferred in(3) Increase in business combinations
3. Decrease for the period(1) Disposal or Write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated depreciation
1. Opening balance
2. Increase for the period

Haier Smart Home Co., Ltd. Interim Report 2022

169

Section X Financial Report

(2)

170

Items

Office furniture

OthersTotal(1) Provision(2) Increase in businesscombinations
3. Decrease for the period(1) Disposal or Write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the period(1) Provision(2) Increase in businesscombinations
3. Decrease for the period(1) Disposal or Write-off(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value
2. Opening book value

142,392,072.66

125,203,692.69

1,794,619,309.79

13,259,061.00

14,233,168.34
36,090.25

249,825,785.56
681,837.16

7,271,653.01
701,608,911.53

31,510,438.78
1,560,938,565.08

557,165,230.45
21,323,387,686.96

258,528.08

5,118,440.46

56,697,453.97

4,406.40

24,694.20–27,194.93–13,940.59–2,803,161.16

226,926.75

5,104,499.87

53,869,598.61

485,843,448.79
465,301,239.96

1,193,470,806.20
1,040,782,873.24

24,238,045,798.12
22,302,546,799.12

In the current period, the balance of the construction in progress transferred to the originalvalue of the fixed assets is total RMB2,044,129,761.22 (amount for the corresponding
period: RMB1,484,788,584.15).

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report(3)

There was no mortgage secured by the fixed assets mortgage at the end of the period, andthere was no mortgage secured by the fixed assets mortgage at the beginning of theperiod.

(4)

Disposals of fixed assets

Closingbalance

Items
Relocation of Qingdao
Industrial Park
Total

4,543,369.52
4,543,369.52

Reason for
Opening transferring tobalance disposal

4,543,369.52 Demolition
4,543,369.52

15. Construction in progress
Presented as√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Construction in progress
Construction materials
Total

Closingbalance

Openingbalance

4,858,973,923.48 4,183,263,398.79
4,858,973,923.48 4,183,263,398.79

Haier Smart Home Co., Ltd. Interim Report 2022

171

Section X Financial Report

Construction in progress(1) Details of construction in progress√ Applicable□ Not Applicable
Unit and Currency: RMB

Projects
Book balance
Smart Home ApplianceTechnology Project
Eastern Europe Project
Shanghai Haier Washing
Appliance Project
Europe Candy ProjectSpecial Freezer Project
America GEA Project
Qingdao Jiaozhou
Washing Appliance
Project
Hailvyuan Recycling
Technology Project
Zhengzhou New Energy
Project
New Zealand FPA Project
Qingdao Haier Washing
Machine Project
Haier India Project
Foshan Freezer Project
Haier Dishwasher Project
Wuhan Haier Freezer
Project
Hefei Haier Drum
Washing Machine
Project
Hefei Refrigerator Project
Qingdao Smart Appliance
Equipment Project
Tianjin Haier Washing
Appliance Project
Foshan Drum Washing
Machine ProjectSpecial Refrigerator
Project
Others
Total

172

Closing balance
Impairment
provision

Book value

Opening balance
Impairment
Book balance
provision

Book value

822,506,153.78
410,516,576.87

822,506,153.78
410,516,576.87

598,122,551.15
182,497,069.58

598,122,551.15
182,497,069.58

304,975,083.42
431,710,887.15
222,065,402.53
221,394,829.44

304,975,083.42
431,710,887.15
222,065,402.53
221,394,829.44

4,756,839.22
153,117,404.68
220,203,225.72
722,008,600.99

4,756,839.22
153,117,404.68
220,203,225.72
722,008,600.99

192,445,321.17

192,445,321.17

167,168.14

167,168.14

186,280,749.74

186,280,749.74

58,589,285.46

58,589,285.46

163,699,647.98
161,190,432.03

163,699,647.98
161,190,432.03

125,734,579.67
111,516,266.46

125,734,579.67
111,516,266.46

140,224,507.71
127,636,129.62
114,194,193.12
112,460,548.93

140,224,507.71
127,636,129.62
114,194,193.12
112,460,548.93

139,065,246.00
179,479,688.03
199,726,996.70
91,964,708.57

139,065,246.00
179,479,688.03
199,726,996.70
91,964,708.57

89,806,704.07

89,806,704.07

103,052,450.36

103,052,450.36

87,599,984.93
69,449,237.57

87,599,984.93
69,449,237.57

54,949,612.93
208,080,465.14

54,949,612.93
208,080,465.14

62,138,638.82

62,138,638.82

39,116,050.61

39,116,050.61

51,851,612.74

51,851,612.74

59,409,379.45

59,409,379.45

46,487,983.76

46,487,983.76

35,705,132.24

35,705,132.24

44,668,942.12
55,838,238.24
795,670,355.98
841,367,421.17
4,858,973,923.48 4,184,468,380.51

55,838,238.24
1,204,981.72 840,162,439.45
1,204,981.72 4,183,263,398.79

44,668,942.12
796,764,668.50
4,860,068,236.00

Haier Smart Home Co., Ltd. Interim Report 2022

1,094,312.52
1,094,312.52

Section X Financial Report(2)

Details of significant changes of construction in progress for the period
Converteddifference inforeigncurrency
statements

Openingbalance

Increase forthe current
period598,122,551.15
182,497,069.58

224,383,602.63
311,848,282.34

214,893,401.62

131,064,626.57

4,756,839.22
153,117,404.68
220,203,225.72
722,008,600.99

300,218,244.20
225,876,944.09
30,677,004.00
156,597,708.77

61,928,761.17
28,814,827.19
677,235,170.56

114,645,299.55

167,168.14

192,445,321.17

167,168.14

58,589,285.46

127,691,464.28

125,734,579.67
111,516,266.46

67,690,537.98
97,733,306.99

29,725,469.67
45,251,422.96

139,065,246.00

3,628,288.25

2,469,026.54

Haier Indian Project
Foshan freezer Project
Haier Dishwasher Project
Wuhan Haier Freezer
Project
Hefei Haier Drum
Washing Machine
Project
Hefei Refrigerator Project
Qingdao Smart Appliance
Equipment Project
Tianjin Haier Washing
Appliance Project
Foshan Drum Washing
Machine ProjectSpecial Refrigerator
Project

179,479,688.03
199,726,996.70
91,964,708.57

28,921,954.44
64,617,999.76

50,251,103.87
114,454,758.02
44,122,159.40

103,052,450.36

14,019,389.30

27,265,135.59

89,806,704.07 Self-funding

54,949,612.93
208,080,465.14

54,785,576.69
24,729,111.19

22,135,204.69
163,360,338.76

87,599,984.93 Self-funding
69,449,237.57 Self-funding

39,116,050.61

24,324,358.55

1,301,770.34

62,138,638.82 Self-funding

59,409,379.45

16,185,270.24

23,743,036.95

51,851,612.74 Self-funding

35,705,132.24

19,869,545.53

9,086,694.01

46,487,983.76 Self-funding

55,838,238.24

20,579,388.16

31,748,684.28

OthersTotal

841,367,421.17 454,583,937.62 496,286,027.46
4,184,468,380.51 2,461,407,236.18 2,044,240,161.22

Project Name
Smart home appliancetechnology project
Eastern Europe Project
Shanghai Haier Washing
Appliance Project
Europe Candy ProjectSpecial freezer Project
America GEA Project
Qingdao Jiaozhou
Washing Appliance
Project
Hailvyuan Recycling
Technology Project
Zhengzhou New Energy
Project
New Zealand FPA Project
Qingdao Haier Washing
Machine ProjectTransfer to
fixed tax Other decrease

20,023,690.24

Closingbalance Source of fund822,506,153.78 Self-funding
410,516,576.87 Self-funding
304,975,083.42 Self-funding
431,710,887.15 Self-funding
222,065,402.53 Self-funding
221,394,829.44 Self-funding

192,445,321.17 Self-funding
186,280,749.74 Self-funding–2,807,718.46–1,592,454.54

163,699,647.98 Self-funding
161,190,432.03 Self-funding
140,224,507.71 Self-funding
Self-funding/fund
127,636,129.62
raising
114,194,193.12 Self-funding
112,460,548.93 Self-funding

44,668,942.12 Self-funding
Self-funding/fund–2,900,662.83 796,764,668.50
raising258,432,780.53 4,860,068,236.00

Haier Smart Home Co., Ltd. Interim Report 2022

173

Section X Financial Report(3)

Impairment provision of construction in progressOpeningbalance

Project nameLejia IOT Project
Other
Total

837,735.85
367,245.87
1,204,981.72

Increase forthe period

Transfer to
fixed assets

Otherdecrease

Exchangedifferences

Closingbalance–269.20–269.20

837,735.85
256,576.67
1,094,312.52

110,400.00
110,400.00

16. Right-of-use assets
Items
I. Original book value:
1. Opening balance
2. Increase for the current period(1) Increase
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value
2. Opening book value

174

Haier Smart Home Co., Ltd. Interim Report 2022

Houses andbuildings

Production
equipment

Transportationequipment

3,565,296,279.05

43,142,180.40

205,005,241.06

1,161,271,114.89

301,257.21

25,412,104.57

611,788,508.76

795,530.81

20,112,631.09

156,242,728.76
4,271,021,613.94–8,765,414.49
33,882,492.31–8,987,426.53
201,317,288.01

1,186,766,506.57

18,538,537.80

104,827,622.22

323,725,547.97

4,949,946.49

34,038,164.63

588,472,607.50

795,530.81

19,949,709.83

9,634,131.77
931,653,578.81–1,636,435.14–7,304,649.12

21,056,518.34

111,611,427.90

3,339,368,035.13
2,378,529,772.48

12,825,973.97
24,603,642.60

89,705,860.11
100,177,618.84

Section X Financial Report(Continued)
Items
I. Original book value:
1. Opening balance
2. Increase for the current period(1) Increase
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value
2. Opening book value

Office furniture

Other

Total

56,885,631.59

392,228,761.08 4,262,558,093.18

8,136,184.29

33,108,576.29 1,228,229,237.25

1,559,558.19

202,958,067.53—13,517,335.54

837,214,296.38

49,944,922.15

14,659,575.00
139,632,127.20
237,038,844.84 4,793,205,161.25

17,981,428.91

199,765,091.15 1,527,879,186.65

5,060,790.35

43,718,264.38

411,492,713.82

1,559,558.19

202,958,067.53

813,735,473.86—2,593,846.00
18,888,815.07

4,990,462.03
3,089,663.54
45,515,750.03 1,128,726,090.15

31,056,107.08
38,904,202.68

191,523,094.81 3,664,479,071.10
192,463,669.93 2,734,678,906.53

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Section X Financial Report

17. Intangible assets√ Applicable□ Not Applicable

Items
I. Original book value
1. Opening balance
2. Increase for the current period(1) Purchase(2) Internal research anddevelopment(3) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance

176

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Proprietary
technology

Licenses andfranchises

Land use rights

1,852,677,632.57

4,242,396,745.16

1,266,446,332.10

1,037,735.83

961,872.37

46,392,458.56

20,192,568.03

60,749,402.91–2,494,817.42
1,918,797,356.39

200,306,753.65
4,423,472,803.15–500,060.67
1,251,589,327.08

946,309,396.14

822,985,645.24

215,300,271.80

102,719,184.79

15,472,631.47

15,366,965.82

17,102,272.21

656,357.40

72,622,670.10
893,978,674.60

52,947.00
230,063,827.22

67,576,805.41

3,510,077.04
1,052,538,657.97

Section X Financial Report

Items
III. Impairment provision
1. Opening balance
2. Increase for the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value
2. Opening book value

Proprietary
technology

Licenses andfranchises

Land use rights

866,258,698.42
906,368,236.43

3,529,494,128.55
3,419,411,099.92

1,021,525,499.86
1,051,146,060.30

Trademark rights

Application
management
software andothersTotal

2,475,717,142.63

4,195,088,908.80

14,032,326,761.26

72,126,713.97

120,518,780.73

232,742,532.42

300,319,337.83

25,688,952.22

106,666,117.55(Continued)

Items
I. Original book value
1. Opening balance
2. Increase in the current period(1) Purchase(2) Internal research anddevelopment(3) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale

35,194.39

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Section X Financial Report

Items
4. Converted difference in foreign
currency statements
5. Closing balance
II. Accumulated amortization
1. Opening balance
2. Increase in the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
III. Impairment provision
1. Opening balance
2. Increase in the current period(1) Provision(2) Increase in businesscombination
3. Decrease for the current period(1) Disposal(2) Disposal of subsidiary(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book value
1. Closing book value
2. Opening book value

Trademark rights

Application
management
software andothersTotal–21,246,625.22
2,454,435,323.02

85,326,599.51
4,559,595,802.48

261,391,849.85
14,607,890,612.12

2,441,416,170.95

4,426,011,484.13

312,603,464.66

446,162,246.74

17,946,662.17

35,705,291.78

61,303,113.21
2,797,376,086.65

137,488,807.35
4,973,957,246.44

55,930,533.23

55,930,533.23

55,930,533.23

55,930,533.23

1,706,289,182.60
1,697,742,204.62

9,578,002,832.45
9,550,384,743.90

2,454,435,323.02
2,475,717,142.63

At the end of the period, the intangible assets developed through the Company accounted for
18.76% of the original value (at the beginning of the period：17.06%).

178

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Section X Financial Report

18. Development cost

Items

91ABD.ERP IT
Program
IOT Project
Others
Total

Openingbalance

Increase forthe period

41,946,252.47
110,027,251.84
75,918,724.82
227,892,229.13

37,987,997.64
151,890,695.99
210,205,140.79
400,083,834.42

Decrease for the period
Confirmed as
Included in
an intangible
Current profit
Disposal of
asset
and losssubsidiaries

49,262,205.87
161,537,475.35
89,519,656.61
300,319,337.83

Converteddifference inforeigncurrency
statements

1,818,982.22
12,660,213.46
76,108,815.49
88,769,028.95–15,327,990.08–13,509,007.86

Closingbalance

32,491,026.46
87,720,259.02
105,167,403.43
225,378,688.91

19. Goodwill

Items

Opening balance

GEA
Candy
OthersTotal

18,938,463,729.43
1,877,121,985.56
1,011,517,345.77
21,827,103,060.76

Increase forthe period

Decrease forthe period

Impact offluctuation in
exchange rate
for the period

Closing balance

993,795,916.39–19,282,820.54–54,937,999.58
919,575,096.27

19,932,259,645.82
1,857,839,165.02
956,579,346.19
22,746,678,157.03

In the case of a goodwill impairment test, the Company compares the carrying amount of therelevant asset group or asset group combination (including goodwill) with its recoverable amount.
If 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 discounted
estimated future cash flow method based on a management-approved 5–15 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growthrate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistent
with industry forecast data and does not exceed the long-term average growth rate of eachproduct. The management determines the compound income growth rate (mainly 3%- 15.54%)
and the EBITDA profit margin (mainly 3%–14%) based on historical experience and market
development forecasts, and adopts the pre-tax interest rate that can reflect the specific risks of
the relevant asset group as the discount rate (mainly 9.42%–17.85%). The management analyzes
the recoverable amount of each asset group based on these assumptions and believes that there
is no need to make provision for goodwill.

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Section X Financial Report

20. Long-term prepaid expenses

Items
Renovation
Improvement on leased
property
Others
Total

Converteddifference inforeign currency
statements

Closing balance

147,742,517.01

49,069.43

415,572,058.56

11,665,192.70
24,090,767.44
183,498,477.15

1,337,698.99
1,882,689.04
3,269,457.46

150,088,609.94
120,722,731.51
686,383,400.01

Opening balance

Increase forthe current
periodAmortization forthe current
period341,401,034.69

221,864,471.45

153,829,229.13
93,566,442.42
588,796,706.24

6,586,874.52
49,364,367.49
277,815,713.46

Other decrease

21. Deferred income tax assets and deferred income tax liabilities(1)

Deferred income tax assets before elimination

Items
Provision for assets impairment
Liabilities
Internal unrealized earnings eliminated due tocombination
Government grants
Uncovered losses
OthersTotal(2)

Asset amortisation
Remeasurement of fair value of theremaining equity interest on the date ofloss of control
Changes in fair value of investments in other
equity instruments
Others
Total

180

Opening balance

455,770,682.35
1,199,049,482.58

354,806,051.43
1,405,119,092.59

412,996,571.07
65,451,012.87
827,520,243.52
306,999,705.89
3,267,787,698.28

619,291,715.60
163,806,221.87
817,306,157.01
286,586,600.19
3,646,915,838.69

Closingbalance

Opening balance

2,612,909,276.23

2,318,829,386.48

878,623,804.46

878,623,804.46

292,550,406.68
601,342,956.88
4,385,426,444.25

292,476,080.49
421,341,222.80
3,911,270,494.23

Deferred income tax liabilities before elimination

Item

(3)

Closingbalance

The deferred income tax assets and the deferred income tax liabilities eliminated at the endof this period was RMB1,868,424,500.53 (amount at the beginning of the period:
RMB1,789,467,320.40).

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

22. Other non-current assets
Closingbalance

Item
Prepayments for equipment and land
Others
Total

Openingbalance

1,493,069,487.59 1,859,693,694.07
257,921,485.70
304,690,319.07
1,750,990,973.29 2,164,384,013.14

23. Short-term borrowings(1)

Classification of short-term borrowings√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemBorrowings — secured by pledge
Borrowings － secured by gurantee
Borrowings — unsecured
Interest payable for short-term borrowings
Total

Closingbalance

Opening balance

132,610,219.46
287,673,529.00
12,728,578,402.59
10,707,152.42
13,159,569,303.47

255,103,925.36
304,896,830.40
10,661,927,352.96
4,284,025.67
11,226,212,134.39

Closingbalance

Opening balance

79,270,648.00
79,270,648.00

6,294,014.40
6,294,014.40

24. Financial liabilities held for trading
Item
Forward foreign exchange contracts
Total

25. Derivative financial liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemForward foreign exchange contracts
Forward commodity contracts
Interest rate swap agreement
Total

Closingbalance
50,925,674.51
24,918,179.06
1,223,112.98
77,066,966.55

Opening balance
60,527,532.76
19,684,900.48
80,212,433.24

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Section X Financial Report

26. Bills payable√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemCommercially acceptance notes
Bank acceptance notes
Total

Closingbalance

Opening balance

3,942,641,684.10
24,012,446,582.98
27,955,088,267.08

3,022,602,833.31
22,000,635,573.41
25,023,238,406.72

27. Accounts payable√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemAccounts payable
Total

Closingbalance

Opening balance

38,977,127,139.49
38,977,127,139.49

42,396,109,648.76
42,396,109,648.76

The ending book balance is mainly the advance payment that has been collected and has not
yet performed the contractual obligations.

28. Contract liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemContract liabilities
Total

Closingbalance

Opening balance

5,397,435,938.66
5,397,435,938.66

10,027,091,593.60
10,027,091,593.60

The book balance at the end of the period was mainly due to the advance payment that has
been collected and has not yet performed the contractual obligations.

182

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Section X Financial Report

29. Payables for staff’s remuneration(1)

Payables for staff’s remuneration√ Applicable□ Not Applicable
Unit and Currency: RMB

(2)

Items

Opening balance

Increase for thecurrent period

Decrease for thecurrent period

Closing balance

I. Short-term remuneration
II. Post-employment
benefits-defined
contribution plan
III. Termination benefits
IV. Other benefits due
within one year
Total

3,985,572,611.32

12,372,081,213.66

13,380,927,669.30

2,976,726,155.68

18,949,702.17
9,818,188.41

692,714,047.99
1,385,509.59

636,031,124.88
1,385,509.59

75,632,625.28
9,818,188.41

101,599,133.34
4,115,939,635.24

56,162,753.31
13,122,343,524.55

63,984,691.16
14,082,328,994.93

93,777,195.49
3,155,954,164.86

Short-term remuneration√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
I. Salaries, bonus,
allowance andbenefitII. Employee welfare
III. Social benefit
IV. Housing fundV. Labor union fee andeducation fee
VI. Short-termcompensatedabsencesVII. Others
Total

Opening balance

Increase for thecurrent period

Decrease for thecurrent period

Closing balance

2,845,636,628.83
321,996,794.22
171,645,833.66
11,137,621.51

9,253,069,040.11
449,278,231.27
798,357,880.79
249,412,342.32

10,202,853,922.29
455,875,857.26
778,939,560.28
222,501,879.20

1,895,851,746.65
315,399,168.23
191,064,154.17
38,048,084.63

3,512,041.39

50,357,157.86

50,352,259.63

3,516,939.62

268,213,164.85
363,430,526.86
3,985,572,611.32

245,925,928.71
1,325,680,632.60
12,372,081,213.66

238,516,364.01
1,431,887,826.63
13,380,927,669.30

275,622,729.55
257,223,332.83
2,976,726,155.68

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Section X Financial Report(3)

Defined contribution plan
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Increase for thecurrent period

Decrease forcurrent theperiodClosing balance

18,396,477.11

651,265,918.55

595,881,144.31

73,781,251.35

132,417.35

16,469,204.68

16,153,403.18

448,218.85

420,807.71
18,949,702.17

24,978,924.76
692,714,047.99

23,996,577.39
636,031,124.88

1,403,155.08
75,632,625.28

I. Basic pension insurance
II. Unemployment
insurance
III. Enterprise annuity
payment
Total(4)

Termination benefits

Items
Termination compensation
Total

Closing balance

Openingbalance

9,818,188.41
9,818,188.41

9,818,188.41
9,818,188.41

30. Taxes payable√ Applicable□ Not Applicable
Unit and Currency: RMB

184

Openingbalance

Items

Closing balance

Value-added tax
Enterprise income tax
Individual income tax
City maintenance and construction tax
Education surcharge
The electrical and electronic products waste
treatment fund
Other taxes
Total

1,132,740,094.75
961,177,432.39
1,359,436,105.72 1,307,101,572.02
56,493,685.90
94,881,505.62
31,212,179.57
40,370,470.70
13,646,982.77
16,171,169.66

Haier Smart Home Co., Ltd. Interim Report 2022

80,351,158.58
95,522,090.50
74,131,498.30
90,284,462.67
2,748,011,705.59 2,605,508,703.56

Section X Financial Report

31. Other payables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Dividends payable
Other payables
Total

4,321,692,240.21
18,069,812,569.98
22,391,504,810.19

10,639,313.22
17,522,730,703.79
17,533,370,017.01

Name of company

Closing balance

Opening balance

Haier Group Corporation
Haier Cosmo Co., Limited
Other Shareholders of Social Shares
Total

494,859,702.08
580,706,830.40
3,246,125,707.73
4,321,692,240.21

10,639,313.22
10,639,313.22

(1)

(2)

Dividends payable:

Other payables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Other payables
Total

18,069,812,569.98
18,069,812,569.98

17,522,730,703.79
17,522,730,703.79

The closing balance at the end of the period mainly included the incurred but unpaid costs.

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Section X Financial Report

32. Non-current liabilities due within one year
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balanceLong-term borrowings due within one year
Lease liabilities due within one year
Estimated liabilities due within one year
Bond payables due within one year
Total

9,321,663,925.51
830,251,373.67
2,093,647,663.56
244,655,820.72
12,490,218,783.46

6,745,950,334.20
687,991,183.42
2,190,397,652.84
9,624,339,170.46

33. Other current liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Payable refund
Tax amount to be written off
Super-short-term bonds
Others
Total

Closing balance

Opening balance

641,035,214.33
633,816,441.43

655,801,519.33
1,568,670,492.94

11,342,818.05
1,286,194,473.81

14,295,539.13
2,238,767,551.40

Other explanations:□ Applicable√ Not Applicable

34. Long-term borrowings√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Borrowings — unsecured
Total

2,119,243,998.96
2,119,243,998.96

3,038,573,824.53
3,038,573,824.53

Interest rates of long-term loans of the Company ranged from 1.54% to 5.00%.

186

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Section X Financial Report

35. Bonds payable
In November 2017, Harvest International Company, the Company’s wholly-owned subsidiary,
issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate of zero and arate on investment of 1%. In September 2020, the Company approved the plan to convert theexchangeable bonds into convertible bonds, pursuant to which, target shares of the originalexchangeable bonds were changed from shares of Haier Electrics to newly issued H Shares ofHaier Smart Home (the “EB-to-CB Proposal”). On 23 December 2020, H Shares of Haier Smart
Home was listed, and the EB-to-CB Proposal became effective. The outstanding principal of theoriginal exchangeable bonds amounted to HK$7.993 billion and the maturity, coupon rate andrate on investment remained unchanged. The convertible bonds were divided into liabilities andequities on initial recognition:
Exchangeable corporate bonds
issued on 23 December 2020

Items
Initial recognition:
Including:
Equity portion of the exchangeable bondLiability portion of the exchangeable bond
(1)2,364,195,333.79
6,741,465,286.14

Changes in the liability portion of corporate bonds in the current period:

Items
Convertible corporate
bonds (“CB”)
Total

(2)

9,105,660,619.93

Increase for theOpening balance current period

334,730,048.82
334,730,048.82

Less: Bond
Accrued bond interest paid forinterest for thethe current
current period
period3,645,444.33
3,645,444.33

Shares Shares redeemed
Exchange rate converted in thein the current
impact current period
period Closing balance

104,128,286.20
104,128,286.20

10,408,613.77
10,408,613.77

244,655,820.72
244,655,820.72

Closing balance of bond payables
Items
Bond payables
Less: bond payables due within one year
Total

Closing balance Opening balance
244,655,820.72
244,655,820.72—

334,730,048.82
334,730,048.82

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Section X Financial Report

36. Lease liabilities
Items

Closing balance

Opening balance

Lease liabilities
Less: lease liabilities due within one year
Total

3,594,196,007.40
830,251,373.67
2,763,944,633.73

2,648,886,164.89
687,991,183.42
1,960,894,981.47

Closing balance

Opening balance

36,500,000.00
12,853,671.92

36,500,000.00
63,102,707.76

49,353,671.92

99,602,707.76

37. Long-term payables
Items
Investment from CDB development fund
OthersLess: long-term payables due within one year
Total

Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries 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) Airconditioning 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 at 30 June 2022,
subsidiaries of the Company repurchased RMB36.50 million.

38. Long-term payables for staff’s remuneration√ Applicable(1)□ Not Applicable

Long-term payables for staff’s remuneration√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Openingbalance

I. Post-employment benefits-net liability of defined
benefit plan
543,028,353.07
517,077,143.43
II. Termination benefits
427,728,738.99
453,425,129.57
III. Other long-term benefits
IV. Provision for work-related injury compensation
201,884,985.82
202,649,488.64
Total
1,172,642,077.88 1,173,151,761.64

188

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Section X Financial Report(2)

Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified
staff. Under these plans, the employees are entitled to the retirement benefits agreed 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 benefit
obligations under such plans are determined by using the projected unit credit method.

①

The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company.
Actuarial assumption used in the defined benefit plan
Items

Rate

Discount rate
Expected rate of return

0.50%
2.00%

Present value of defined benefit obligations
Items

AmountI. Opening balance
II. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses
III. Defined benefit cost recognized in other comprehensive
income1. Actuarial loss (gain indicated in “–”)
IV. Other changes
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences
V. Closing balance

279,152,422.12
8,127,898.84
8,127,898.84–32,185,093.79–32,185,093.79
255,095,227.17

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Section X Financial Report

Fair value of plan assets
Items
I. Opening balance
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
income1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes
1. Employer contributions
2. Benefits paid
3. Exchange differences
V. Closing balance

Amount337,081,685.24–29,042,363.63
9,822,252.35–38,864,615.98
308,039,321.61

Neither 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
Items
I. Opening balance
II. Defined benefit cost recognized in current profit or loss
III. Defined benefit cost recognized in other comprehensive
incomeIV. Other changes
V. Closing balance

Amount–57,929,263.12
8,127,898.84–3,142,730.16–52,944,094.44

The average term for the defined benefit obligation is 11.73 years at the balance
sheet date.

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Section X Financial Report②

The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided qualified staff withdefined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item

Rate

Discount rate

2.91%

Present value of defined benefit obligations
Item

AmountI. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current period service cost
2. Past service cost
3. Settlement gains ((loss indicated in “–”)
4. Interest expenses
IV. Defined benefit cost recognized in other comprehensive
income1. Actuarial loss (gain indicated in “–”)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences
VI. Closing balance

128,979,684.17
11,151,712.37
7,729,103.67

3,422,608.70–442,300.02–7,364,356.69
6,922,056.67
139,689,096.52

Net liability (net asset) of defined benefit plan
Items

AmountI. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomeV. Other changes
VI. Closing balance

128,979,684.17
11,151,712.37–442,300.02
139,689,096.52

The average term for the defined benefit obligation is 10.68 years at the balance
sheet date.

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Section X Financial Report③

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the Company.
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
qualified staff with defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item

Rate

Discount rate

2.62%

Present value of defined benefit obligations
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current period service cost
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses
IV. Defined benefit cost recognized in other comprehensive
income1. Actuarial loss (gain indicated in “–”)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences
VI. Closing balance

Amount221,602,455.52
14,160,180.44
11,302,750.80

2,857,429.64–14,185,489.79–25,462,931.24
11,277,441.45
221,577,146.17

Net liability (net asset) of defined benefit plan
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomeV. Other changes
VI. Closing balance

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Amount221,602,455.52
14,160,180.44–14,185,489.79
221,577,146.17

Section X Financial Report④

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the Company.
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
qualified staff with defined benefit plan for post-retirement pension.
Actuarial assumptions used in defined benefit plans
Item

Rate

Discount rate

2.61%

Present value of defined benefit obligations
Items

AmountI. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses
IV. Defined benefit cost recognized in other comprehensive
income1. Actuarial loss (gain indicated in “–”)
V. Other changes
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences
VI. Closing balance

166,510,439.87
5,234,493.60
4,697,968.57

536,525.03–25,682,890.10–33,474,257.78
7,791,367.68
146,062,043.37

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Section X Financial Report

Fair value of plan assets
Items
I. Opening balance
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
income1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes
1. Employer contributions
2. Benefits paid
3. Exchange differences
V. Closing balance

Amount126,020,077.85
1,415,308.99
1,415,308.99–24,249,168.88
3,574,130.55–33,474,257.78
5,650,958.35
103,186,217.96

Net liability (net asset) of defined benefit plan
Items
I. Opening balance
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
IV. Defined benefit cost recognized in other comprehensive
incomeV. Other changes
VI. Closing balance

194

Haier Smart Home Co., Ltd. Interim Report 2022

Amount40,490,362.02
3,819,184.61–1,433,721.22
42,875,825.41

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 from 1
January 1991, which was used to pay for the claim made by the injured staff. The
provision was calculated by Beechercarlson Insurance Services, LLC., based on actuarial
method and a discount rate of 3.72%.
Items

AmountI. Opening balance
II. Business combination not under common control
III. Compensation recognized in current profit and loss
IV. Actual compensation paid in the current period
V. Other changes
VI. Closing balance

202,649,488.64
42,595,195.29–31,089,549.42–12,270,148.69
201,884,985.82

Classification of the balance of defined benefit plan
Items
Short-term salaryLong-term salary
Total

Closing balance

Opening balance

20,343,350.71
543,028,353.07
563,371,703.78

32,502,729.33
517,077,143.43
549,579,872.76

39. Estimated liabilities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Closing balance

Pending litigation
Others
Projection of three guarantees and installation fees
Total

29,259,869.48
252,996,489.56
1,666,309,118.07
1,948,565,477.11

28,403,516.67
237,072,214.65
1,511,341,428.95
1,776,817,160.27

Significant assumption and estimation relating to projection of three guarantees and installation
fees: the Company reasonably estimated the three guarantees and installation fee rate based on
its actual expenses on the three guarantees and installation fees as well as sales data in thepast. The Company estimated the three guarantees and installation fees that are likely to be
incurred in the future according to its policies on the three guarantees and installation fees, aswell as the actual sales data.

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Section X Financial Report

40. Deferred income√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Government grants
Total

Opening balance

Increase for the Decrease for thecurrent period
current period

Closing balance

852,794,567.20
852,794,567.20

121,524,102.45
121,524,102.45

67,775,099.53
67,775,099.53

906,543,570.12
906,543,570.12

Openingbalance

Increase forthe current
periodDecrease forthe current
periodClosingbalance

9,398,704,530

48,087,440

41. Share capitalCategories of shares
I. Restricted shares
1. State-owned shares
2. Shares held bydomestic non-stateowned legal entities
3. Shares held bydomestic individuals
4. Shares held byoffshore non-stateowned legal entities
II. Non-restricted shares
1. Ordinary shares in
RMB
2. Domestic listed
foreign Shares
3. Offshore listed foreign
Shares
4. Others
III. Total shares

196

Haier Smart Home Co., Ltd. Interim Report 2022

6,308,552,654

9,446,791,970
6,308,552,654

3,090,151,876

48,087,440

3,138,239,316

9,398,704,530

48,087,440

9,446,791,970

Section X Financial Report

42. Other equity instruments
Items

Opening balance

Increase for the Decrease for thecurrent period
current period

Closing balance

118,017,507.59
118,017,507.59

36,677,120.16
36,677,120.16

81,340,387.43
81,340,387.43

Equity portion of convertible
bonds
Total

43. Capital reserve√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Increase for the Decrease for thecurrent period
current period

Capital premium (share capital
premium)
Other capital reserve
Total

21,504,525,556.91
1,074,849,182.55
22,579,374,739.46

1,061,307,365.80
350,146,476.28
1,411,453,842.08

Closing balance

155,443,570.29 22,410,389,352.42
14,455,372.85 1,410,540,285.98
169,898,943.14 23,820,929,638.40

The main reasons for the change in share premium: The non-public offering of H shares during
the period resulted in the increase in share premium of RMB898,627,404.94; the conversion of
CB shares during the period resulted in the increase in share premium of RMB134,131,566.36;
the common control combination occurred during the period resulted in the decrease in sharepremium by RMB152,818,769.28.
The main reasons for the change in other capital reserve: The amortized share-based payment
for the period included in other capital reserve was RMB332,853,517.66.

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Section X Financial Report

44. Other comprehensive income
Items

Amount for the current period

Amount before
income tax in theOpening balancecurrent period
a
b
c
d
e
Total

–341,470,688.45
1,618,386.47–1,916,614,455.79
1,005,776,349.60
73,838,708.25–1,176,851,699.92

108,350,151.43
44,150,892.48
2,771,447,499.33—56,688,764.76
5,026,518.27
2,872,286,296.75

AmountAmountattributable to
Deduction of attributable to theminority
impact on parent company shareholders after
income tax
after tax
tax

–13,269,887.07
6,440,238.56–464,348.29–7,293,996.80

108,350,151.43
25,995,214.10
2,777,826,143.89–50,208,727.45
4,562,166.91
2,866,524,948.88

OthersClosing balance–233,120,537.02

4,885,791.31–6,378,644.56–39,798.75
3.07–1,532,648.93

27,613,600.57
861,211,688.10
955,567,622.15
78,400,875.16
1,689,673,248.96

Notes:(1)

Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, the details are as follows:
Item a represents other comprehensive income classified into profit and loss under the equity method.
Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge).
Item c represents the balance arising from translation of foreign currency financial statements.

(2)

Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.

198

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Section X Financial Report

45. Surplus reserve√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Opening balance

Statutory surplus reserve
Discretionary surplus reserve
Reserve fundEnterprise development fundTotal

3,390,959,108.25
26,042,290.48
11,322,880.64
10,291,630.47
3,438,615,909.84

Increase for the Decrease for thecurrent period
current period

Closing balance
3,390,959,108.25
26,042,290.48
11,322,880.64
10,291,630.47
3,438,615,909.84

46. Undistributed profits√ Applicable□ Not Applicable

Items

Amounts

Undistributed profits at the end of previous year
Changes in accounting policies
Business combination under common control
Undistributed profits at the beginning of the year
Add: net profit attributable to owners of the parent company
Other transfer in
Adjustment due to implementation of enterprise accounting standard①
Profit available for appropriation for the year
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares
Undistributed profits at the end of period

47,907,134,328.80
10,777,931.35
47,917,912,260.15
7,949,084,472.70
189,803,613.66
56,056,800,346.51–4,320,445,666.86
51,736,354,679.65

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Section X Financial Report

47. Operating income and operating cost(1)

Operating income
Amount for thecurrent period

Items
Primary business
Other business
Total
(2)

121,248,482,590.74 111,070,737,835.16
609,039,871.48
657,018,375.90
121,857,522,462.22 111,727,756,211.06

Primary business income and primary business cost by product category

Categories
Air conditioner
Refrigerator
Kitchen appliance
Water appliance
Washing machine
Equipment product andintegrated channel
services
Total

200

Amount for theprevious period

Haier Smart Home Co., Ltd. Interim Report 2022

Amount for thecurrent period
Primary business Primary businessincomecost

Amount for theprevious period
Primary business Primary businessincomecost

23,670,538,686.34
37,913,367,317.50
18,750,037,462.88
6,713,300,912.43
26,516,919,361.82

17,107,788,658.52
26,475,741,807.66
12,816,780,100.13
3,934,510,287.34
17,907,657,332.94

21,626,942,343.55
33,637,015,872.13
16,918,040,488.85
5,778,983,645.59
24,988,233,426.16

15,570,568,221.85
23,400,300,288.46
11,715,172,134.94
3,336,143,841.42
16,920,815,831.58

7,684,318,849.77
121,248,482,590.74

6,682,457,643.78
8,121,522,058.88
84,924,935,830.37 111,070,737,835.16

7,069,369,377.40
78,012,369,695.65

Section X Financial Report

48. Taxes and surcharge√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

City construction tax
Education surcharge
Property tax
Land use tax
Stamp duty
OthersTotal

122,226,136.72
88,480,235.93
28,716,064.84
7,536,240.97
91,371,622.87
18,835,304.10
357,165,605.43

117,279,029.59
85,175,835.15
25,464,790.86
7,635,139.14
84,907,708.18
19,026,156.24
339,488,659.16

49. Selling expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Selling expenses
Total

Amount for thecurrent period

Amount for theprevious period

17,605,612,224.80
17,605,612,224.80

16,731,407,296.02
16,731,407,296.02

The Company’s selling expenses are mainly salary expenses, transportation and storage
expenses, advertising and promotion expenses, and after-sales expenses etc.

50. Administrative expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

Administrative expenses
Total

5,132,033,156.92
5,132,033,156.92

5,047,535,410.71
5,047,535,410.71

The Company’s management expenses are mainly salary expenses, administrative office
expenses, depreciation and amortization of assets fees, etc.

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Section X Financial Report

51. R&D expenses√ Applicable□ Not Applicable
Unit and Currency: RMB

ItemAmount for thecurrent period

Amount for theprevious period

R&D expenses
Total

4,595,691,525.07
4,595,691,525.07

3,738,316,873.21
3,738,316,873.21

The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspection
and testing fees.

52. Financial expenses
Items

Amount for thecurrent period

Amount for theprevious period

Interest expenses
Less: Interest income
Less: Cash discountExchange gains and losses
OthersTotal

345,810,365.32
362,045,401.51
79,106,314.27–169,143,266.33
62,257,534.62–202,227,082.17

363,287,457.45
264,658,985.86
82,709,178.40
211,633,480.85
67,993,563.13
295,546,337.17

Interest expenditure in lease liabilities in the current period is RMB37,109,559.27 (interest
expenditure in lease liabilities in the corresponding period: RMB50,962,914.77).

53. Other income√ Applicable□ Not Applicable
Unit and Currency: RMB

202

Items

Amount for thecurrent period

Amount for theprevious period

Government grants related to revenue
Government grants related to assets
Total

493,172,631.97
53,070,066.97
546,242,698.94

338,438,305.23
39,678,023.49
378,116,328.72

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

54. Investment income√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Income from long-term equity investment
calculated by equity method
Investment income from disposal of long-term
equity investment
Dividend income from other equity instruments
investment during holding period
Income from wealth management products
Investment income from disposal of financial
assets at fair value through profit or loss
Total

Amount for thecurrent period

Amount for theprevious period

936,511,207.40

942,666,393.83

11,181,922.82
2,596,583.32
42,007,117.65

440,255.20
28,216,179.52

178,039,912.22
1,170,336,743.41

164,957,510.67
1,136,280,339.22

55. Gains on changes in fair value (losses are represented by “-”)
Unit and Currency: RMB

Items
Changes in fair value of forward foreign exchange
contracts
Changes in fair value of equity instrument
investments
Changes in fair value of wealth management
products
Total

Amount for thecurrent period

Amount for theprevious period–53,088,495.38

46,929,961.72–67,322,769.58

15,457,768.79

1,621,089.28–118,790,175.68

1,881,780.81
64,269,511.32

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Section X Financial Report

56. Credit impairment loss
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Amount for theprevious period

Bad debts losses on bills receivable
Bad debts losses on accounts receivable
Bad debts losses on other receivables
Total–31,492,310.29–222,677,055.12–3,907,480.73–258,076,846.14

156,696.60–33,122,995.20–11,065,124.61–44,031,423.21

57. Impairment loss on assets (losses are represented by “-”)Items
Impairment losses on inventory
Impairment losses on other current assets
Impairment losses on fixed assets
Total

Amount for thecurrent period

Amount for theprevious period–371,859,276.93–335,202,670.88–402,766,436.32–228,869,824.32–21,751,066.24–653,387,326.88–707,061,947.81

58. Gains on disposal of assets (losses are represented by “-”)
Items
Gains on disposal of non-current assets
Losses on disposal of non-current assets
Total

204

Haier Smart Home Co., Ltd. Interim Report 2022

Amount for thecurrent period

Amount for theprevious period

38,409,742.18–6,820,535.08
31,589,207.10

157,808,087.44–15,393,133.19
142,414,954.25

Section X Financial Report

59. Non-operating income√ Applicable□ Not Applicable
Amount for thecurrent period

Amount for theprevious period

96,551.42
25,959,518.87
42,798,157.12
68,854,227.41

924,615.55
19,559,885.95
59,682,895.64
80,167,397.14

Amount for thecurrent period

Amount for theprevious period

9,060,187.94
34,475,363.74
43,535,551.68

7,928,197.15
43,136,498.89
51,064,696.04

Items

Amount for thecurrent period

Amount for theprevious period

Current income tax expenses
Deferred income tax expenses
Total

1,240,831,826.79
759,910,099.57
2,000,741,926.36

985,282,651.38
540,467,141.62
1,525,749,793.00

Items
Gains on disposal of non-current assets
Quality claims and fines
OthersTotal

60. Non-operating expenses
Items
Losses on disposal of non-current assets
OthersTotal

61. Income tax expenses(1)

Statement of income tax expenses

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Section X Financial Report(2)

Current reconciliation between accounting profit and income tax expenses
Items

Amounts

Total accounting profit
Income tax expenses calculated pursuant to statutory tax rate(s)Impact from different tax rates applicable to subsidiaries
Impact from adjustment to income tax in prior periods
Impact from non-taxable income
Impact from non-deductible cost, expense and loss
Impact from deductible provisional differences or deductible losses of
unrecognized deferred tax
OthersTotal income tax expense

9,997,672,068.52
2,499,418,017.12–544,232,640.78–162,828,321.06–224,434,783.55
67,350,658.86
434,970,684.94–69,501,689.17
2,000,741,926.36

62. Other comprehensive income√ Applicable□ Not Applicable

Please refer to Note VII. 44 for details.

63. Other cash received from operating activities√ Applicable□ Not Applicable
Unit and Currency: RMB

206

Items

Amount for thecurrent period

Deposits and securities
Government grants
Non-operating income excluding government grants
Interest income
OthersTotal

93,387,920.50
373,042,872.09
26,813,348.55
258,507,374.28
89,543,300.32
841,294,815.74

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

64. Other cash paid to operating activities√ Applicable□ Not Applicable
Unit and Currency: RMB
Amount for thecurrent period

Items
Cash paid on selling expenses
Cash paid on administrative and R&D expenses
Cash paid on financial expenses
Non-operating expenses
OthersTotal

10,010,028,996.55
3,442,392,616.83
68,146,435.16
3,136,224.43
117,915,539.69
13,641,619,812.66

65. Other cash received from financing activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

OthersTotal

1,000,235.35
1,000,235.35

66. Other cash paid to financing activities√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Amount for thecurrent period

Cash paid to lease
Repurchase of shares
Expenses from issuance of H-shares
OthersTotal

333,323,858.52
1,538,651,010.37
2,964,303.96
1,638,600.00
1,876,577,772.85

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Section X Financial Report

67. Net profit adjusted to cash flow of operating activities

208

Net profit adjusted to cash flow of operating
activities

Amount for thecurrent period

Amount for theprevious period

1. Net profit
Add: impairment provision for assets
Depreciation of fixed assets
Amortization of intangible assets
Amortization of long-term prepaid expenses
Losses on disposal of fixed assets, intangible
assets and other long-term assets (‘-’
represents ‘gains’)
Loss and gains on change of fair value (‘-’
represents ‘gains’)
Financial expenses (‘-’ represents ‘gains’)
Loss on investments (‘-’ represents ‘gains’)
Decrease in deferred income tax assets (‘-’
represents ‘increase’)Increase of deferred income tax liabilities (‘-’
represents ‘decrease’)Decrease in inventories (‘-’ represents ‘increase’)Decrease of operational account receivables (‘-’
represents ‘increase’)Increase of operational account payables (‘-’
represents ‘decrease’)
OthersNet cash flow generated from operational activities
2. Significant investment and financing
activities
not involving cash inflows and outflows:
Capital transferred from debts
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period
Less: cash balance at the beginning of the period
Add: cash equivalents balance at the end of theperiodLess: cash equivalents balance at the beginning of
the period
Net increase of cash and cash equivalents

7,996,930,142.16
965,138,793.95
2,206,781,413.69
446,162,246.74
183,498,477.15

6,946,009,059.74
697,418,750.09
2,112,591,601.45
465,527,405.85
110,874,756.18–22,625,570.58–135,411,372.65

118,790,175.68
176,667,098.99–1,170,336,743.41–64,269,511.32
574,900,097.68–1,136,280,339.22

404,639,263.48

549,883,365.96

355,270,836.09–1,477,232,081.57–9,416,224.31–3,760,150,208.14–3,324,723,794.98–2,216,760,781.29–1,281,315,120.75
386,602,520.58
5,964,247,657.22

4,323,142,646.68–15,864,086.39
8,442,195,160.31

104,128,286.20
244,655,820.72

6,277,583,752.41

49,265,187,950.08
45,071,366,271.21

41,228,686,922.70
45,738,120,000.70

Haier Smart Home Co., Ltd. Interim Report 2022

4,193,821,678.87 —4,509,433,078.00

Section X Financial Report

68. Cash and cash equivalents
Items

Closing balance

Opening balance

I. CashIncluding: cash on handBank deposits always available for payment
Other monetary funds always available forpayment
II. Cash equivalents
Including: Bond investments due within threemonthsIII. Closing balance of cash and cash equivalents

49,265,187,950.08
912,949.13
48,618,833,840.21

45,071,366,271.21
3,085,964.28
44,884,013,498.57

645,441,160.74

184,266,808.36

49,265,187,950.08

45,071,366,271.21

Haier Smart Home Co., Ltd. Interim Report 2022

209

Section X Financial Report

69. Monetary items in foreign currency
Items

Monetary funds
USD
EUR
JPY
HKD
OthersSubtotal
Accounts receivables
USD
EUR
JPY
OthersSubtotal
Short-term borrowings
USD
EUR
JPY
HKD
OthersSubtotal
Accounts payables
USD
EUR
JPY
NZD
OthersSubtotal

Closing balance
Balance inforeigncurrency

Exchangerate821,482,280.28
78,855,228.66
5,996,642,282.85
556,953,838.73

6.71147.00840.049136
0.8552

954,504,870.98
451,436,990.50
4,145,366,008.83

Exchangerate

Balancein RMB

5,513,296,175.84
850,630,647.69
552,648,984.57
149,225,110.60
294,651,015.21 10,520,503,841.74
476,306,922.88
483,444,582.35
2,832,750,561.34
9,669,653,659.84

6.37577.21970.055415
0.8176

5,423,365,820.48
1,077,360,530.99
582,993,720.39
395,264,290.53
2,955,290,563.22
10,434,274,925.61

6.71147.00840.049136

6,406,063,991.10
3,163,851,004.22
203,686,704.21
4,219,899,122.68
13,993,500,822.21

721,343,093.77
413,528,990.85
4,064,574,659.93

6.37577.21970.055415

4,599,067,162.94
2,985,555,255.25
225,238,404.78
3,668,237,038.46
11,478,097,861.43

389,158,946.13
1,044,112,198.27
740,035,110.71
2,600,000,000.00

6.71147.00840.049136
0.8552

2,611,801,351.09
7,317,555,930.38
36,362,365.20
2,223,520,000.00
752,120,202.25
12,941,359,848.92

347,844,969.69
883,863,602.21
623,360,869.80
2,600,000,000.00

6.37577.21970.055415
0.81762,217,755,173.25
6,381,230,048.85
34,543,542.60
2,125,760,000.00
328,850,057.11
11,088,138,821.81

2,215,683,621.44
617,905,515.03
6,923,831,822.49
207,421,161.10

6.7114 14,870,339,056.95
7.0084 4,330,529,011.55
0.049136
340,209,400.43
4.1771
866,418,932.05
3,422,870,500.22
23,830,366,901.20

2,033,952,669.54
640,851,532.98
8,161,874,338.90
151,371,298.46

6.3757 12,967,872,035.21
7.2197 4,626,755,812.65
0.055415
452,290,266.49
4.3553659,267,416.20
3,268,885,987.84
21,975,071,518.39

6.71147.00840.049136
0.1285757,148,488.12
214,053,730.55
3,705,244,389.61
651,073,870.06

6.37577.21970.055415
0.0855

Non-current liabilities due in one year
USD
1,088,778,232.77
EUR
172,986,633.48
JPY
1,664,720,591.01
RUB
532,452,480.00
OthersSubtotal

210

Opening balance

Haier Smart Home Co., Ltd. Interim Report 2022

Balancein RMB

Balance inforeigncurrency

7,307,226,231.42
1,212,359,522.06
81,797,710.96
68,420,143.68
1,535,283,774.82
10,205,087,382.94

4,827,351,615.72
1,545,403,718.47
205,326,117.85
55,666,815.89
1,589,397,292.33
8,223,145,560.26

Section X Financial Report

Items

Closing balanceLong-term borrowings
USD
EUR
RUB
JPY
Subtotal

Opening balance

Balance inforeigncurrency

Exchangerate

Balancein RMB

52,000,000.00
34,145,508.68
250,000,000.00
2,640,540,340.48

6.71147.00840.12850.049136

348,992,800.00
239,305,383.00
32,125,000.00
129,745,590.17
750,168,773.17

Balance inforeigncurrency

Exchangerate

Balancein RMB

403,838,717.50
37,498,911.17
186,061,000.00
3,197,333,012.36

6.37577.21970.08550.055415

2,574,754,511.17
270,730,888.98
15,908,215.50
177,180,208.88
3,038,573,824.53

VIII. CHANGES OF CONSOLIDATION SCOPE
1.

Business combination not under common control√ Applicable2.

□ Not Applicable

Business consolidation under common control√ Applicable(1).

□ Not Applicable

Business combination under common control occurring in the current period

Name of theacquiree

The basis forthe transaction
The proportion of constitutingof equitybusinessacquired in the combination
business
under common Combination
combination
controldate

Qingdao Ririshun
Service Co., Ltd.

100.00%

Qingdao TAB Robot
Technology Co.,LTD.

100.00%Controlled by
Haier Group
Corporation
before and after
combination
Controlled by
Haier Group
Corporation
before and after
combination

2022.62022.6

Recognitionbasis ofcombination
date
Subject equityrelated right andobligationtransferred to theCompany
Subject equityrelated right andobligationtransferred to theCompany

Haier Smart Home Co., Ltd. Interim Report 2022

211

Section X Financial Report(Continued)

Name of theacquiree
Qingdao Ririshun
Service Co., Ltd.
Qingdao TAB Robot
Technology Co.,
LTD.
(2).

The income of
the acquiree
from thebeginning of
the current
period tocombinationdate

Net profit of
the acquiree
from thebeginning of
the current
period tocombination
date

The income of
the acquireeduring thecomparison
periodNet profit of
the acquireeduring thecomparison
period37,211.90

1,421,013.21

66,451,627.95

1,008,319.99

205,120,142.19

3,052,468.49

94,431,139.69

4,527,315.67

Combination cost
√ Applicable□ Not Applicable
Unit and Currency: RMB10,000

Combination cost
— Cash— Equity(3).

Qingdao Ririshun
Service Co., Ltd.

Qingdao TAB Robot
Technology Co., LTD.

5,095.78
3,216.91

12,500.00/

Book value of acquiree’s assets and liabilities as at the combination date
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Monetary funds
Accounts receivables
Inventories
Other current assets
Less: Accounts payables
Payables for staff’s remuneration
Taxes payable
Other current liabilities
Net assets

212

Haier Smart Home Co., Ltd. Interim Report 2022

Qingdao Ririshun Service Co., Ltd.
Combination
End of thedateprevious period
46,604,249.71
1,041,138.30
1,837,248.48
4,840.17
12,023,461.45
65,143.90
383,755.86
118,797.58
36,896,317.87

59,493,989.32
1,144,058.93
1,879,270.49
778,605.93
26,719,700.69
988,310.00
337.90112,271.42
35,475,304.66

Section X Financial Report

Qingdao TAB Robot
Technology Co., LTD.
Combination
End of thedateprevious period

Items

Monetary funds
Accounts receivables
Inventories
Other current assets
Long-term assets
Deferred income tax assets
Less: Accounts payables
Payables for staff’s remuneration
Taxes payableNon-current liabilities due in one year
Other current liabilities
Net assets

3.

70,965,249.26
35,633,561.58
64,895,694.34
742,124.92
2,638,785.39
108,357,839.93
997,688.00
2,702,903.89
647,508.67
3,514,317.62
58,655,157.38

54,371,498.79
32,228,299.73
36,212,378.79
990,753.45
1,559,671.95
2,638,785.39
64,054,579.25
1,069,738.28
1,824,903.82
1,324,322.70
4,125,155.16
55,602,688.89

Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Yantai Ririshun
Electronics
Co., Ltd.

Items
Equity disposal price
Proportion of equity disposal
Method of equity disposal
Time of loss-of-control
Basis for determination the time of loss-of-control
Difference between consideration and its share of net assets of thesubsidiary as respect to the disposal in the consolidated level4.

26,139,242.23
81%
Disposal
2022.1
Transfer–4,432,192.08

Changes of consolidation scope due to other reasons√ Applicable□ Not Applicable(1)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Chengdu Yunshang Meier Yilian Technology Co., Ltd. (成都雲裳美爾衣聯科技
有 限 公 司) for the period.

(2)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Beijing Yunshang Yilian Technology Co., Ltd. (北京雲裳衣聯科技有限公司) forthe period.

(3)

Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda wholly-owned subsidiary, Chengdu Yunshang Yilian Technology Co., Ltd. (成 都 雲 裳 衣 聯
科 技 有 限 公 司) for the period.

(4)

Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company, established a whollyowned subsidiary, Qingdao Haier Water Ecology Technology Co., Ltd. (青 島 海 爾 水 生 態 科
技 有 限 公 司) for the period.
Haier Smart Home Co., Ltd. Interim Report 2022

213

Section X Financial Report

IX. INTERESTS IN OTHER ENTITIES
1.

Interests in subsidiaries(1).

Composition of the Group√ ApplicablePrincipal place ofbusiness

Place ofregistration

Flourishing Reach
LimitedMainland of China

British Virgin
Islands

Haier Electronics
Group Co., Ltd.

Mainland of China
and Hong Kong

BermudaHaier U.S. Appliance
Solutions, Inc.

the United States

the UnitedStatesHaier Singapore
Investment Holding
Co., Ltd.

Singapore andother overseas
areas

Singapore

Haier New ZealandInvestment Holding
Company Limited

New Zealand

New Zealand

Candy S.p.A

EuropeItaly

Qingdao Haier Air
Conditioner Gen
Corp., Ltd.*

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Guizhou Haier
Electronics Co.,Ltd.*

Huichuan District,Zunyi City,
Guizhou Province

Hefei Haier Airconditioning Co.,
Limited*Hefei Haier
Industrial Park

HuichuanDistrict, Zunyi
City, Guizhou
Province
Hefei Haier
Industrial Park

Name of subsidiary*214□ Not Applicable

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

% of thevotingrights (%)

Nature of business

Shareholding (%)
DirectIndirectAcquiring method

Group company, whichmainly engage ininvestment holding, theproduction and sale ofwashing machines andwater heaters,
distribution service
Group company, whichmainly engage ininvestment holding, theproduction and sale ofwater equipment,
distribution service
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Group company, whichmainly engage in home
appliances production
and distribution
business
Manufacture and sale ofhousehold airconditioners

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Business
combination
under common
control

100.00100.00Business
combination
under common
control

100.00100.00Business
combination notunder common
control

100.00100.00

Manufacture and sale ofrefrigerator

59.00

59.00

Manufacture and sale ofair- conditioners

99.22

99.22

Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
controlSection X Financial Report

Place ofregistration

Nature of business

Shareholding (%)
DirectIndirectWuhan Haier
Electronics Holding
Co., Ltd.*

Wuhan Haier
Industrial Park

Wuhan Haier
Industrial Park

Manufacture and sale ofair- conditioners

60.00

60.00

Qingdao Haier
Air- Conditioner
Electronics Co.,Ltd.*
Qingdao Haier
Information Plastic
Development Co.,Ltd.*
Dalian Haier Precision
Products Co., Ltd.*

QingdaoDevelopment
Zone

QingdaoDevelopment
Zone

Manufacture and sale ofair- conditioners

100.00100.00

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Manufacturing of plastic
products

100.00100.00Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone

Manufacture and sale ofprecise plastics

90.00

90.00

Hefei Haier Plastic
Co., Ltd.*

Hefei Economic &Technological
Development
Area

Manufacture and sale ofplastic parts

77.36

4.83

82.19

Qingdao Meier Plastic
Powder Co., Ltd.*

QingdaoDevelopment
Zone

Hefei Economic&
Technological
Development
Area
QingdaoDevelopment
Zone

40.00

60.00

100.00Chongqing Haier
Precision Plastic
Co., Ltd.*

Jiangbei District,
Chongqing City

Jiangbei District,
Chongqing
City

Manufacture of plastic
powder, plastic sheet
and high-performancecoatings
Plastic products, sheet
metal work, electronics
and hardware

90.00

10.00

100.00

Qingdao Haier
Refrigerator Co.,Ltd.*

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

100.00100.00

Qingdao Haier
Refrigerator(International) Co.,Ltd.*
Qingdao Household
Appliance
Technology andEquipment ResearchInstitute*
Qingdao Haier Whole
Set Home Appliance
Service Co., Ltd.*

PingduDevelopment
Zone, Qingdao

PingduDevelopment
Zone, Qingdao

Manufacture andproduction offluorine-freerefrigerators
Manufacture ofrefrigerators

Business
combination
under common
control
Business
combination
under common
control
Establishment

100.00100.00Establishment

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Research anddevelopment of home
appliances mold andtechnological equipment

100.00100.00Establishment

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

98.33

98.33

Establishment

Qingdao Haier Special
Refrigerator Co.,Ltd.*
Qingdao Haier
Dishwasher Co.,Ltd.*

QingdaoDevelopment
Zone
QingdaoDevelopment
Zone

QingdaoDevelopment
Zone
QingdaoDevelopment
Zone

Research, development
and sales ofhealth- related small
home appliance
Manufacture and sales offluorine-freerefrigerators
Manufacture of dishwashing machine andgas stove

100.00100.00Establishment

100.00100.00Establishment

Name of subsidiary*% of thevotingrights (%)

Principal place ofbusiness

Acquiring method

Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
control

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

215

Section X Financial Report

Principal place ofbusiness

Place ofregistration

Qingdao Haier Special
Freezer Co., Ltd.*

QingdaoDevelopment
Zone

QingdaoDevelopment
Zone

Dalian Haier
Air- conditioning
Co., Ltd.*
Dalian Haier
Refrigerator Co.,Ltd.*
Qingdao Haier
Electronic Plastic
Co., Ltd.*

Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone
Dalian Export
Expressing
Zone
QingdaoDevelopment
Zone

Wuhan Haier Freezer
Co., Ltd*

Wuhan Economic &Technological
Development
Zone High-tech
Industrial Park

Qingdao Haidarui
Procurement Service
Co., Ltd.*

Qingdao High-tech
Zone

Qingdao HaierIntelligent Home
Appliance
Technology Co.,Ltd.*

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Chongqing Haier
Air- conditioning
Co., Ltd.*
Qingdao Haier
Precision Products
Co., Ltd.*

Jiangbei District,
Chongqing City
Qianwang ang
Road, Jiaonan
City

Jiangbei District,
Chongqing
City
Qianwang ang
Road, Jiaonan
City

Qingdao Haier Air
Conditioning
Equipment Co.,Ltd.*
Dalian Free Trade
Zone Haier
Air-conditioning
Trading Co., Ltd.*
Dalian Free Trade
Zone Haier
Refrigerator Trading
Co., Ltd.*
Chongqing Haier
Electronics Sales
Co., Ltd.*

Jiaonan City,
Qingdao

Jiaonan City,
Qingdao

Dalian Export
Expressing Zone

Dalian Export
Expressing
Zone

Dalian Export
Expressing Zone

Jiangbei District,
Chongqing City

Name of subsidiary*

216

Dalian Export
Expressing Zone
QingdaoDevelopment
Zone

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

% of thevotingrights (%)

Nature of business

Shareholding (%)
DirectIndirectResearch, manufactureand sales of freezer andother refrigeration
products
Air conditioner processing
and manufacturing100.00100.00Establishment

90.00

90.00

Establishment

Refrigerator processing
and manufacturing100.00100.00Establishment

Development, assemblingand sales of plastics,
electronics andproducts
Research, manufactureand sales of freezer andother refrigeration
products

100.00100.00Establishment

95.00

5.00

100.00Establishment

Development, purchaseand sale of electrical
products andcomponents
Development andapplication of home
appliances,
communication,
electronics and network
engineering technology
Manufacture and sales of
air conditioners

98.00

2.00

100.00Establishment

98.91

1.09

100.00Establishment

76.92

23.08

100.00Establishment

70.00

70.00

Establishment

100.00100.00Establishment

Domestic trade

100.00100.00Establishment

Dalian Export
Expressing
Zone

Domestic trade

100.00100.00Establishment

Jiangbei District,
Chongqing
City

Sales of home appliances

5.00

100.00Establishment

Wuhan Economic&
Technological
Development
Zone High-tech
Industrial Park
QingdaoHigh-tech
Zone

Development andmanufacture of precise
plastic, metal plate,mold and electronic
products for home
appliances
Manufacture of home
appliances andelectronics

95.00

Acquiring method

Section X Financial Report

Name of subsidiary

Chongqing Haier
Refrigeration
Appliance Co., Ltd.*
Hefei Haier
Refrigerator Co.,Ltd.*
Qingdao Haier HVAC
Engineering Co.,Ltd.*
Chongqing
Goodaymart ElectricAppliance Sale Co.,Ltd.*
Qingdao Haier(Jiaozhou)
Air-conditioning Co.,
Limited*Qingdao Haier
Component Co.,Ltd.*
Haier Shareholdings(Hong Kong)
Limited*Harvest International
Company*
Shenyang Haier
Refrigerator Co.,Ltd.*
Foshan Haier Freezer
Co., Ltd.*
Zhengzhou Haier
Air- conditioning
Co., Ltd.*

Qingdao Haidayuan
Procurement Service
Co., Ltd.**Principal place ofbusiness

Place ofregistration

Jiangbei District,
Chongqing City

Jiangbei District,
Chongqing
City
Hefei Haier
Industrial Park

Hefei Haier
Industrial Park

Nature of business

Shareholding (%)
DirectIndirect

Processing andmanufacturing ofrefrigerator
Processing andmanufacturing ofrefrigerator
Air-conditioning engineer

84.95

15.05

% of thevotingrights (%)

Acquiring method

100.00Establishment

100.00Establishment

100.00100.00Establishment

Sales of home appliancesand electronics

51.00

51.00

Establishment

100.00

QingdaoDevelopment
Zone
Jiangbei District,
Chongqing City

QingdaoDevelopment
Zone
Jiangbei District,
Chongqing
City

Jiaozhou City,
QingdaoJiaozhou City,
Qingdao

Manufacture and sale ofair- conditioners

100.00100.00Establishment

Jiaozhou City,
QingdaoJiaozhou City,
Qingdao100.00100.00Establishment

Hong Kong

Hong Kong

Manufacture and sales ofplastic and precise
sheet metal products
Investment

100.00Establishment

Cayman Islands

Cayman Islands

Investment

100.00Establishment

Shenbei New Area,
Shenyang City

Shenbei New
Area,
Shenyang City
Sanshui District,Foshan City
Zhengzhou
Economic andTechnological
Development
Zone
QingdaoDevelopment
Zone

Manufacture and sales ofrefrigerator

100.00100.00Establishment

Manufacture and sales offreezer
Manufacture and sales of
air conditioner

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

Business
combination
under common
control
Business
combination
under common
control

Sanshui District,Foshan City
Zhengzhou
Economic andTechnological
Development
Zone
QingdaoDevelopment
Zone

100.00100.00

Qingdao HaierIntelligent
Technology
Development Co.,Ltd.*
Qingdao Hairi Hi-Tech
Model Co., Ltd.*

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Development, purchaseand sale of electrical
products andcomponents
Development andresearch of home
appliance products

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Design, manufacture andsales of product modeland mould

100.00100.00

Qingdao Hai Gao
Design and
Manufacture Co.,Ltd.*

Qingdao High-tech
Zone

QingdaoHigh-tech
Zone

Industrial design andprototype production

75.00

75.00

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

217

Section X Financial Report

Place ofregistration

Beijing Haier Guangke
Digital Technology
Co., Ltd.*

Beijing

Beijing

Development, promotion
and transfer oftechnology

55.00

55.00

Shanghai Haier Medical
Technology Co., Ltd.*
Qingdao Haier
Technology Co., Ltd.*

Shanghai

Shanghai

80.93

80.93

Qingdao

Qingdao

Wholesale and retail of
medical facility
Development and sales ofsoftware and information
product

Qingdao Haier
Technology
Investment Co., Ltd.*
Qingdao Casarte Smart
Living Appliances Co.,Ltd.*
Qingdao Haichuangyuan
Appliances Sales Co.,Ltd.*
Haier Overseas ElectricAppliance Co., Ltd.*

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Sales of home appliancesand digital products

Qingdao

Qingdao

Haier Group (Dalian)
Electrical Appliances
Industry Co., Ltd.*

DalianDalianSales of home appliances,international freight
forwarding
Sales of home appliances,international freight
forwarding

Qingdao Haier Central
Air Conditioning Co.,Ltd.*
Chongqing Haier Home
Appliance Sale HefeiCo., Ltd.*
Qingdao Weixi Smart
Technology Co., Ltd.*
Haier U+smart
Intelligent Technology(Beijing) Co., Ltd.*
Haier (Shanghai)Electronics Co., Ltd.*

Qingdao

QingdaoHefei

Shanghai Haier
Zhongzhi Fang
Chuang Ke
Management Co.,Ltd.*
Qingdao Haier Smart
Kitchen ApplianceCo., Ltd.*GE Appliance(Shanghai) Co., Ltd.*
Qingdao Haier Special
Refrigerating
Appliance Co., Ltd.*Name of subsidiary*218% of thevotingrights (%)

Principal place ofbusiness

Nature of business

Entrepreneurshipinvestment andconsulting
Development, production
and sales of appliances

Shareholding (%)
DirectIndirectAcquiring method

Business
combination
under common
control
Establishment

100.00100.00100.00100.00Business
combination
under common
control
Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00100.00100.00

Hefei

Production and sales of
air conditioners andrefrigeration equipment
Sales of home appliances

Business
combination
under common
control
Establishment

100.00100.00Establishment

Qingdao

QingdaoIntelligent sanitary ware

71.43

71.43

Establishment

Beijing

Beijing

Software development

100.00100.00Establishment

Shanghai

Shanghai

100.00100.00Establishment

Shanghai

Shanghai

Sales, research anddevelopment of home
appliances
Business management
consulting, chuangke
management

100.00100.00Establishment

Qingdao

Qingdao

Shanghai

Shanghai

Qingdao

Qingdao

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Production and sales ofkitchen smart home
appliances
Sales of home appliances

100.00100.00Establishment

100.00100.00Establishment

Production and sales ofhome appliances

100.00100.00Establishment

Section X Financial Report

Principal place ofbusiness

Place ofregistration

Beijing Zero Micro
Technology Co.,Ltd.*
Laiyang Haier Smart
Kitchen ApplianceCo., Ltd.*
Hefei Haier Air
Conditioning
Electronics Co.,Ltd.*
Haier (Shanghai)Home Appliance
Research andDevelopment Center
Co., Ltd.*
Haier (Shenzhen) R&D
Co., Ltd.*

Beijing

Beijing

Laiyang

Laiyang

Hefei

Hefei

ShanghaiName of subsidiary*

Nature of business

Shareholding (%)
DirectIndirect

Promotion oftechnologicaldevelopment
Production and sales ofhome appliances% of thevotingrights (%)

Acquiring method

55.00

55.00

Establishment

100.00100.00Establishment

Production and sales ofhome appliances

100.00100.00Establishment

ShanghaiResearch anddevelopment of home
appliances

100.00100.00Establishment

ShenzhenShenzhen

100.00100.00Establishment

Guangzhou Haier Air
Conditioner Co.,Ltd.*
Qingdao Yunshang
Yuyi IOT Technology
Co., Ltd.*
Qingdao Haizhi
Investment
Management Co.,Ltd.*
Qingdao Jijia CloudIntelligent
Technology Co.,Ltd.*
Qingdao Haimeihui
Management
Consulting Co., Ltd.
Wuxi Yunshang
Internet of Clothing
Technology Co.,Ltd.*
Hangzhou Gandao
Intelligent
Technology Co.,Ltd.*
Qingdao Haidacheng
Procurement Service
Co., Ltd.*Guangdong

Guangdong

100.00100.00Establishment

Qingdao

QingdaoDevelopment, researchand technical services ofhousehold andcommercial electricalappliances
Manufacturing ofrefrigeration and air
conditioning equipment
IoT technology researchand development

70.00

70.00

Establishment

Qingdao

Qingdao

Asset management,
equity investment

100.00100.00Establishment

Qingdao

Qingdao

R&D and sales of lighting
appliances

80.00

80.00

Establishment

Qingdao

Qingdao

Leasing and businessservices

100.00100.00Establishment

Wuxi

Wuxi

Internet of Things
technology R & D

100.00100.00Establishment

HangzhouHangzhouTechnology development,
service

52.58

52.58

Establishment

Qingdao

Qingdao100.00Establishment

Guangdong Heilong
Intelligent
Technology Co. Ltd*Guangzhou

Guangzhou

Development, purchaseand sale of electrical
products andcomponents
Scientific research andtechnology service
sector

76.72

Business
combination notunder common
control

100.0076.72

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

219

Section X Financial Report

Principal place ofbusiness

Place ofregistration

Beijing Haixianghui
Technology Co.,Ltd.*
Qingdao HairuijiejingElectronics Co.,Ltd.*

Beijing

Beijing

Qingdao

Qingdao

Haier Smart Home
Experience Cloud
EcologicalTechnology Co.,Ltd.*
Haier Smart Home
(Qingdao) Network
Co., Ltd.*
Haier Smart Home
(Qingdao) Network
Operation Co., Ltd.*

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao

Qingdao Internet ofWine Technology
Co., Ltd.*

Qingdao

Qingdao

Qingdao Linghai Air
Conditioning
Equipment Co.,Ltd.*
Chongqing Yunshang
Yilian Technology
Co., Ltd.*

Qingdao

Qingdao

Chongqing

Chongqing

Shenzhen Yunshang
Yilian Technology
Co., Ltd.*

ShenzhenShenzhen

Qingdao Haixiangxue
Human Resources
Co., Ltd.*
Jiangxi Haier Medical
Technology Co.,Ltd.*
Qingdao Haizhi
Shenlan Technology
Co., Ltd.*
Qingdao Haishengze
Technology Co.,Ltd.*

Qingdao

Qingdao

Jiangxi

Jiangxi

Wholesale and retail of
medical equipment

Qingdao

Qingdao

Qingdao

QingdaoName of subsidiary*220

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Nature of business

Scientific research andtechnology service
sectorElectronic equipment
technology research,development, transfer,consulting and services
Technology developmentof smart home
products, wholefurniture customization,etc.
Technical services,development,
consulting, transfer, etc.
Residential interior
decoration, professional
construction operation,
special equipment
installation, upgrading
and repair, etc.
Urban distribution andtransportation services,
import and export ofgoods, technology
import and export andfood business, etc.
Manufacture andproduction of air
conditioner andrefrigeration equipment
Food business,
commodity import andexport, technology
import and export,
Internet information
services, etc.
Import and export
business, Internet,
Internet of things, bigdata, AI, AR andtechnical services
operation
Professional intermediary
activities

Shareholding (%)
DirectIndirect% of thevotingrights (%)

Acquiring method

100.00100.00Establishment

51.00

51.00

100.00Business
combination notunder common
control
Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00100.00Establishment

100.00Establishment

100.00100.00Establishment

Technical service
development

100.00100.00Establishment

Air conditioning
equipment technicalservices

100.00100.00Establishment

100.00100.00Section X Financial Report

Place ofregistration

Qingdao Hailvyuan
Recycling
Technology Co.,Ltd.*
Tianjin Internet ofclothes EcologicalTechnology Co.,Ltd.*
Qingdao Haier HVAC
Equipment Co.,Ltd.*
Qingdao Haier HomeAI Industry
Innovation Center
Co., Ltd.*
Zhejiang Weixi IoT
Technology Co.,Ltd.*
Qingdao Haier Quality
Inspection Co., Ltd.*

Qingdao

QingdaoElectrical and electronic
products waste
treatment

100.00100.00Establishment

Tianjin

TianjinIoT technology
development

100.00100.00Establishment

Qingdao

Qingdao

Manufacture and sale ofair- conditioners

100.00100.00Establishment

Qingdao

Qingdao

Integrated service of AI
industry application
system100.00100.00Establishment

Zhejiang

Zhejiang

IoT application service

100.00100.00Establishment

Qingdao

Qingdao

Inspection and testing ofhome appliance100.00

Qingdao
Haiyongcheng
Certification Service
Co., Ltd*
Qingdao Zhonghai
Borui Testing
Technology Service
Co., Ltd*
Qingdao Haixianghui
Technology Co.,Ltd.*
Haier Smart Home
(Xiongan, Hebei)
Technology Co.,Ltd.*
Qingdao Ruibo
Ecological
Environmental
Technology Co.,Ltd.*
Qingdao Sanyiniao
Technology Co.,Ltd.*
Qingdao Jingzhi
RecycleEnvironmental
Technology Co.,Ltd.*
Qingdao Yunshang
Jieshen Yilian
Technology Co.,Ltd.*

Qingdao

Qingdao

Product certification
service100.00100.00

Qingdao

QingdaoHome appliance testing
and technology
consulting

100.00100.00

Qingdao

Qingdao100.00100.00

Qingdao

Qingdao

Software development
and sale of daily
necessities
Promotion of energysaving technology

Business
combination
under common
control
Business
combination
under common
control
Business
combination
under common
controls
Establishment

100.00100.00Establishment

Qingdao

Qingdao

Environmental and AI
technology consulting

100.00Establishment

Qingdao

QingdaoTechnology service andadvertisement design

100.00100.00Establishment

Qingdao

Qingdao

Operation of dangerous
waste

100.00100.00Establishment

Qingdao

Qingdao

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Name of subsidiary*% of thevotingrights (%)

Principal place ofbusiness

Nature of business

Shareholding (%)
DirectIndirect100.00100.00Acquiring method

For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022

221

Section X Financial Report

Name of subsidiary

Shanghai Yunshang
Yuyi IoT Technology
Co., Ltd.*
Shijiazhuang
Yunshang Yilian
Technology Co.,Ltd.*
Nanjing Yunshang
Yilian Technology
Co., Ltd.*
Yunshang ZhonglianTechnology(Shanghai) Co.,Ltd.*
Shanxi Yunshang
Yilian Technology
Co., Ltd.*
Tianjin Yunshang
Yilian Technology
Co., Ltd.*
Chongqing Yunshang
Haihong Yilian
Technology Co.,Ltd.*
Chengdu Yunshang
Meier Yilian
Technology Co.,Ltd.
Beijing Yunshang
Yilian Technology
Co., Ltd.
Chengdu Yunshang
Yilian Technology
Co., Ltd.
Qingdao Haier Water
Ecology Technology
Co., Ltd.
Qingdao HaixiangmianTechnology Co.,Ltd.*
Qingdao Haier Kitchen
IoT Technology Co.,Ltd.*
Tibet HaifengIntelligent Innovation
Technology Co.,Ltd.*
Microenterprises suchas Qingdao Hai
Heng Feng Electrical
Appliances Sale &Service Co., Ltd.**

222% of thevotingrights (%)

Principal place ofbusiness

Place ofregistration

Shanghai

Shanghai

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Shijiazhuang

Shijiazhuang

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

NanjingNanjing

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Shanghai

Shanghai

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Shanxi

Shanxi

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Tianjin

Tianjin

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

Chongqing

Chongqing

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

ChengduChengduProfessional cleaning andsale of daily necessities

51.00

51.00

Establishment

Beijing

Beijing

Professional cleaning andsale of daily necessities

51.00

51.00

Establishment

ChengduChengduProfessional cleaning andsale of daily necessities

100.00100.00Establishment

Qingdao

QingdaoTechnical services,development, consulting

100.00100.00Establishment

Qingdao

Qingdao

Sale of food and daily
necessities

100.00100.00Establishment

Qingdao

QingdaoTechnology service andsale of daily necessities

100.00100.00Establishment

Tibet

Tibet

Development of softwareand medical equipment

100.00100.00Establishment

All over thecountry

All over thecountry

Sales of home appliances

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Nature of business

Shareholding (%)
DirectIndirectAcquiring method

Establishment

Section X Financial Report

Reasons for including subsidiaries in which the Company has 50% or less of the equity into
the scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the financeand operation decisions of microenterprises such as Qingdao Hai Heng Feng Electrical
Appliances Sale & Service Co., Ltd*, which were included into the scope of consolidated
financial statements.
(2).

Material non-wholly owned subsidiaries

Name ofsubsidiary
Guizhou Haier
Electronics Co.,Ltd.*
Wuhan Haier
Electronics Co.,
Ltd.*

*

Dividends
Profit or loss announced toattributable be distributed
Balance ofto minority
to minority
minority
Shareholding shareholders shareholders
interests atof minority in the current in the current the end of theshareholders
periodperiodperiod41.00%

5,369,901.24

114,047,911.86

40.00%

925,353.74

249,848,547.86

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

223

Section X Financial Report(3).

Summarized financial information in respect of material non-wholly owned
subsidiaries
Name ofsubsidiary

Guizhou Haier
Electronics
Co., Ltd.*
Wuhan Haier
Electronics
Co., Ltd.*

Closing balance
Current
assetsNon-current
AssetsTotal assets

Current
liabilities

Non-current
liabilities

Total liabilities

395,923,946.65

83,135,071.60

479,059,018.25

193,634,661.14

7,258,718.48

200,893,379.62

733,916,522.83

137,255,826.48

871,172,349.31

246,550,979.65

Current
assetsNon-current
AssetsTotal assets

Current
liabilities

Non-current
liabilities

Total liabilities

548,369,499.75

90,003,558.19

638,373,057.94

368,134,127.34

5,170,612.06

373,304,739.40

795,204,982.68

144,368,337.05

939,573,319.73

317,265,334.43—

317,265,334.43

246,550,979.65(continued)
Name of
Subsidiary

Guizhou Haier
Electronics
Co., Ltd.*
Wuhan Haier
Electronics
Co., Ltd.*

Opening balance

Name of subsidiary

Amount for the current period
Totalcomprehensive
Net profit
incomeCash flow fromoperatingactivities

687,283,541.12

13,097,320.09

13,097,320.09–258,232,502.08

820,118,983.24

2,313,384.36

2,313,384.36–40,171,033.70

Amount for the previous period
Totalcomprehensive
Net profit
incomeCash flow fromoperatingactivities

662,890,916.60

15,818,829.01

15,818,829.01–96,960,642.56

1,116,565,155.40

9,676,024.48

9,676,024.48

146,467,762.05

Operatingrevenue
Guizhou Haier Electronics
Co., Ltd.*
Wuhan Haier Electronics
Co., Ltd.*(continued)
Name of subsidiary
Operatingrevenue
Guizhou Haier Electronics
Co., Ltd.*
Wuhan Haier Electronics
Co., Ltd.**224

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report2.

Control over subsidiaries’ transactions despite change in owners’ equity insubsidiaries√ Applicable(1).

□ Not Applicable

Descriptions of change in owners’ equity in subsidiaries√ Applicable□ Not Applicable

Capital increase by minority shareholders of the Company’s subsidiaries resulted in thechange in the Company’s shareholding ratio.
(2).

Impact of the transactions on minority interests and the equity attributable toshareholders of the Parent Company:
Items

OthersTotal consideration for acquisition/disposal
Less: share of net assets of subsidiaries in respect to theshareholding proportion acquired/disposed
Difference
Including: capital reserve adjustment–28,548,394.50
28,548,394.50
28,548,394.50

Haier Smart Home Co., Ltd. Interim Report 2022

225

Section X Financial Report

3.

Interests in joint ventures or associates√ Applicable(1)□ Not Applicable

Joint ventures or associates
Principal place of Place of

Accounting treatment

Name of joint ventures or associates

businessregistration

Nature of business

Shareholdingof investment

Haier Finance Co., Ltd.*

Qingdao

QingdaoBank of Qingdao Co., Ltd.*

Qingdao

Qingdao

Financial services

42.00%

Equity method

Commercial Bank

8.19%

Wolong Electric (Jinan) Motor Co., Ltd.*

Jinan

Equity method

Jinan

Motor Manufacturing30.00%

Qingdao Hegang New Material Technology

Equity method

Qingdao

Qingdao

Steel plate Manufacturing

23.94%

Equity method

Qingdao

Qingdao

Venture Capital

63.13%

Equity method

Qingdao

Qingdao

Manufacturing of

45.00%

Equity method

49.00%

Equity method

20.20%

Equity method

Co., Ltd.*
Qingdao Haier SAIF Smart Home Industry
Investment Center (Limited Partnership)*
Mitsubishi Heavy Industries Haier (Qingdao)
Air-conditioners Co., Ltd.*
Qingdao Haier Carrier Refrigeration

household appliances
Qingdao

QingdaoEquipment Co., Ltd.*
Qingdao Haier Multimedia Co., Ltd.*

Manufacturing ofhousehold appliances

Qingdao

Qingdao

R&D and sales of
televisions

Hefei Feier Smart Technology Co., Ltd.*

Hefei

Hefei

Technology development

40.00%

Equity method

Anhui Kunhe Intelligent Technology Co.,

Hefei

Hefei

Electrical equipment R&D

30.00%

Equity method

HuzhouHuzhouGas compression

48.00%

Equity method

Ltd.*
Zhejiang Futeng Fluid Technology Co., Ltd.*

machinerydevelopment andmanufacturing
Beijing Mr. Hi Network Technology

Beijing

Beijing

Technology development

36.29%

Equity method

Beijing

Beijing

Technical service import

36.45%

Equity method

14.70%

Equity method

Company Limited*
Beijing ASU Tech Co. Ltd*and export business
Shenzhen Genyuan Environmental Protection

ShenzhenShenzhenTechnology Co., Ltd.*
Qingdao Haimu Investment Management

Technical advisory
services

Qingdao

Qingdao

Investment Management

49.00%

Equity method

Qingdao

Qingdao

Investment Management

24.00%

Equity method

Qingdao

QingdaoDevelopment of

35.51%

Equity method

Co., Ltd.*
Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership)*
Qingdao Guochuang Intelligent Household
Appliance Research Institute Co., Ltd.*Guangzhou Heying Investment PartnershipTechnology
Guangzhou

Guangzhou

Investment

49.00%

Equity method

Qingdao

QingdaoHome online service

24.93%

Equity method

Shanghai

Shanghai

Investment management

45.00%

Equity method

Shanghai

Shanghai

Investment management

45.00%

Equity method

RRS (Shanghai) Investment Co., Ltd.*

Shanghai

Shanghai

Investment management

45.00%

Equity method

Haier Best Water Technology Co., Ltd.*

Qingdao

Qingdao

Water equipment

49.00%

Equity method(Limited Partnership)*
Qingdao Java Cloud Network Technology
Co., Ltd.*
Bingji (Shanghai) Corporate Management
Co., Ltd.*Youjin (Shanghai) Corporate Management
Co., Ltd.*

technology
development service*

226

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

Principal place of Place of

Accounting treatment

Name of joint ventures or associates

businessregistration

Nature of business

Shareholdingof investment

Huizhi Xiangshun Equity Investment Fund

Qingdao

Qingdao

Investment management

30.00%

Equity method

Qingdao RRS Huizhi Investment Co., Ltd.*

Qingdao

Qingdao Xinshenghui Technology Co., Ltd.*

Qingdao

Qingdao

Investment management

50.00%

Equity method

QingdaoTechnology service

20.00%

Equity method

40.00%

Equity method(Qingdao) Partnership (Limited
Partnership)*development
Meiling Candy Washing Machine Co., Ltd.*

Hefei

Hefei

Manufacturing of home
appliances

Konan Electronic Co., Ltd.

Japan

Japan

Motor Manufacturing50.00%

Equity method

HPZ LIMITED

Nigeria

Nigeria

Manufacturing of

25.01%

Equity method

31.72%

Equity method

15.00%

Equity method

48.41%

Equity method

49.00%

Equity method

household appliances
HNR Company (Private) Limited

Pakistan

Pakistan

Manufacturing ofhousehold appliances

Haier Raya Electric S.A.E

Egypt

Egypt

Manufacturing of home
appliances

Controladora Mabe S.A.deC.V.

MexicoMexicoManufacturing ofhousehold appliances

Middle East Air conditioning Company,
Limited(1).

Saudi Arabia

Saudi Arabia

Sales of household
appliances

Major financial information of significant joint ventures□ Applicable √ Not Applicable(2). Major financial information of significant associates√ Applicable □ Not Applicable①*

Basic information of significant associates:
Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) wasestablished by Haier Group Corporation and its three affiliates via capital contribution.
The place of registration and principal place of business of the Finance Company is
Yulong International Center, No.178-2 Haier Road, Laoshan District, Qingdao City. The
Company’s subsidiaries hold an aggregate of 42.00% equity in the Finance Company.

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

227

Section X Financial Report②

Financial Information of significant associates:
Unit and Currency: RMB

(3).

Items

Finance company
Closing balance/ Opening balance/
Amount for theAmount for thecurrent periodprevious period

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority equity interests
Equity interest attributable to shareholdersof the Parent Company
Including: share of net assets calculated basedon shareholding percentage
Operating income
Net profit
Other comprehensive income
Total comprehensive income
Dividend received from associates for the year

63,774,900,733.81
10,659,822,054.73
74,434,722,788.54
57,002,029,453.95
250,191,903.78
57,252,221,357.73

61,294,606,916.47
9,404,030,263.35
70,698,637,179.82
53,403,515,414.15
369,623,253.07
53,773,138,667.22

17,182,501,430.81

16,925,498,512.60

7,216,650,600.94
1,033,551,173.17
758,762,130.10
18,240,788.11
777,002,918.21
218,400,000.00

7,108,709,375.29
1,071,931,150.97
790,600,102.99
73,947,771.60
864,547,874.59
126,000,000.00

Summarized financial information of insignificant joint ventures or associates

Investment in Associates
Bank of Qingdao Co., Ltd.*
Wolong Electric (Jinan) Motor Co., Ltd.*
Qingdao Hegang New Material Technology Co., Ltd.*
Qingdao Haier SAIF Smart Home Industry Investment
Center (Limited Partnership)*
Mitsubishi Heavy Industries Haier (Qingdao)
Air Conditioner Co., Ltd.*
Qingdao Haier Carrier Refrigeration Equipment
Co., Ltd.*
Qingdao Haier Multimedia Co., Ltd.*
Qingdao Haier Moulds Co., Ltd.*
Hefei Feier Smart Technology Co., Ltd.**228

For identification purposes only

Haier Smart Home Co., Ltd. Interim Report 2022

Closing balance/ Opening balance/
Amount for theAmount for thecurrent periodprevious period
3,096,420,505.87
164,074,989.98
323,239,475.07

2,654,248,436.12
151,837,378.99
312,493,256.21

375,494,710.38

393,598,372.59

735,881,497.34

682,901,976.73

402,090,045.87
262,473,095.59

409,053,808.05
277,102,563.88
269,158,534.54
265,106.27

Section X Financial Report

Investment in Associates
Anhui Kunhe Intelligent Technology Co., Ltd.*
Zhejiang Futeng Fluid Technology Co., Ltd.*
Beijing Mr. Hi Network Technology Company Limited*
Beijing Xiaobei Technology Co., Ltd.*
Beijing ASU Tech Co., Ltd.*
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd.*
Qingdao Haimu Investment Management Co., Ltd.*
Qingdao Haimu Smart Home Investment Partnership(Limited Partnership)*Guangzhou Heying Investment Partnership(Limited Partnership)*
Qingdao Java Cloud Network Technology Co., Ltd.*
Bingji (Shanghai) Corporate Management Co., Ltd.*Youjin (Shanghai) Corporate Management Co., Ltd.*RRS (Shanghai) Investment Co., Ltd.*
Haier Best Water Technology Co., Ltd.*
Huizhi Xiangshun Equity Investment Fund (Qingdao)
Partnership (Limited Partnership)*
Qingdao RRS Huizhi Investment Co., Ltd.*
Qingdao Xinshenghui Technology Co., Ltd.*
Meiling Candy Washing Machine Co., Ltd.*
Europalters Italia S.r.l.
Orygin LLC
Konan Electronic Co., Ltd.
HNR Company (Private) Limited
HPZ LIMITED
Haier Raya Electric S.A.E
Controladora Mabe S.A.deC.V.
Middle East Airconditioning Company, Limited
Total book value of investment
Total amount of the following financial data ofassociates calculated based on shareholding
percentage
Net profit
Other comprehensive income
Total comprehensive income*

Closing balance/ Opening balance/
Amount for theAmount for thecurrent periodprevious period
1,987,170.02
82,098,847.75
7,507,759.75
13,082,922.89

1,877,574.14
82,098,847.75
7,507,759.75
2,687,341.82
15,529,700.01

7,596,295.35
2,411,436.93

6,914,487.73
2,465,299.70

59,324,411.38

59,424,662.44

285,793,577.87
2,566,012.64
995,419,397.79
1,809,035,268.70
3,288,336,852.19
78,352,582.74

285,793,577.87
2,600,050.50
972,200,487.88
1,766,819,068.86
3,211,580,125.21
79,785,557.39

238,806,947.64
4,083,482.78
9,011,761.35
22,659,667.84
9,361,965.48
13,494,211.65
61,459,616.87
124,288,893.92
80,146,144.74
9,852,153.71
4,443,056,920.20
8,308,646.84
17,017,717,269.12

119,008,967.03
2,083,482.78
9,964,773.52
22,752,232.07
9,361,965.48
69,273,712.61
114,055,318.97
71,269,048.97
10,568,507.40
4,131,983,673.10
10,318,898.13
16,218,584,554.49

635,985,295.85
100,213,218.25
736,198,514.10

610,614,350.57
25,022,215.72
635,636,566.29

For identification purposes only

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229

Section X Financial Report

X.

SEGMENT REPORT√ Applicable□ Not Applicable

The Company principally engaged in manufacture and sales of household appliances and relevant
services business, manufacture of upstream household appliances parts business and distribution of
products of third-party and after-sale business. The Company has three business segments: (1) China
smart home business segment; (2) Overseas home appliance and smart home business segment; (3)Other business segments. The management of the Company assesses operating performance of eachsegment and allocates resources according to the division. Sales between segments were mainly
based on market price.
(1)

China smart home business segment consists of:①

Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers
and kitchen appliances.

②Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.

③

Air energy solutions: mainly engages in production and sales of air conditioners products.

④

Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.

(2)

Overseas home appliance and smart home business segment mainly includes overseas businesssegments such as GEA, FPA, Candy, etc.

(3)

Other business segments:
business and others.

mainly include channel, equipment components, small home appliance

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 for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, other equity instruments investment, long-term accounts receivable, long-term equity
investment, goodwill and deferred income tax assets; the total liabilities of segments exclude long-termand short-term borrowings, financial liabilities held for trading, derivative financial liabilities, taxes
payable, interests payable, dividends payable, held-for-sale liabilities, bonds payable, deferred income
tax liabilities and other non-current liabilities; profits of segments exclude financial expenses, profit orloss in fair value changes, income from investment, and income on disposal of assets, Non-valueadded tax refundable upon imposition component of other income, non-operating incomes andexpenses and income tax.

230

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Section X Financial Report(1)

Information of reportable segments
Segment information for the current period
Segment information

China smart home business
Internet of Food solutions

Air energy

Internet ofWhole housesolutionsclothing solutions

water solutions

Refrigerator/

Kitchenfreezers

appliances

Air conditioners

Washing machine

Water home
appliances

Segment revenue

21,744,034,195.34

1,988,398,642.99

19,460,445,551.54

14,783,761,779.19

6,786,264,746.43

Including: external revenue

19,263,438,400.09

1,655,732,227.00

15,920,771,259.18

12,473,357,903.20

6,677,037,998.51

Inter-segment revenue

2,480,595,795.25

332,666,415.99

3,539,674,292.36

2,310,403,875.99

109,226,747.92

Total segment operating cost

19,442,607,634.74

1,943,862,296.11

19,004,620,002.77

13,489,839,349.11

5,938,407,699.27

Segment operating profit

2,301,426,560.60

44,536,346.88

455,825,548.77

1,293,922,430.08

847,857,047.16

Total segment assets

13,947,960,634.62

2,336,367,873.37

18,574,611,480.04

12,119,100,356.71

4,696,763,365.04

Total segment liabilities

33,573,717,325.74

2,007,978,966.42

10,793,012,958.08

6,106,984,807.46

4,328,337,137.59(Continued)
Overseas home
appliance and smart
Segment information

Inter-segment

home business

Other businesses

offsetting

Total

Segment revenue

61,480,633,415.58

43,031,566,226.70–47,417,582,095.55

121,857,522,462.22

Including: external revenue

61,195,622,271.60

4,671,562,402.64—

285,011,143.98

38,360,003,824.06–47,417,582,095.55

121,857,522,462.22—

Total segment operating cost

57,846,314,400.88

113,605,362,391.86

3,634,319,014.70

43,496,297,716.75–464,731,490.05–47,556,586,707.77

Segment operating profit

139,004,612.22

8,252,160,070.36

Total segment assets

68,392,051,106.40

44,008,099,650.93–48,392,664,583.87

115,682,289,883.24

Total segment liabilities

38,284,912,733.13

57,501,775,867.52–48,204,054,758.87

104,392,665,037.07

Inter-segment revenue

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Section X Financial Report

Segment information for the corresponding period of last year
Segment information

China smart home businessAir energy
Internet of Food solutions

Internet ofWhole housesolutions Clothing solutions

water solutions

Refrigerator/

Kitchenfreezers

appliances

Air conditioners

Washing machine

Water home
appliances

Segment revenue

19,188,607,407.17

1,784,628,763.28

17,645,069,189.02

12,958,083,453.07

5,884,989,693.13

Including: external revenue

16,898,259,985.27

1,495,140,647.14

15,095,177,397.57

10,900,998,372.57

5,806,336,225.56

Inter-segment revenue

2,290,347,421.90

289,488,116.14

2,549,891,791.45

2,057,085,080.50

78,653,467.57

Total segment operating cost

17,158,967,925.84

1,746,319,577.28

17,416,889,248.90

12,111,188,820.80

5,157,901,538.45

Segment operating profit

2,029,639,481.33

38,309,186.00

228,179,940.12

846,894,632.27

727,088,154.68

Total segment assets

17,849,098,835.46

2,547,615,110.79

17,958,004,697.79

20,919,506,189.82

8,406,963,618.39

Total segment liabilities

42,593,142,081.38

2,371,416,306.28

15,600,383,361.76

11,249,225,999.71

7,865,505,122.98(Continued)
Overseas home
appliance and smart
Segment information

Other businessoffsetting

Total

Segment revenue

56,916,219,464.44

43,378,230,663.00-46,028,072,422.05

111,727,756,211.06

Including: external revenue

56,669,104,381.43

4,862,739,201.52

247,115,083.01

38,515,491,461.48-46,028,072,422.05

111,727,756,211.06—

Total segment operating cost

53,698,944,763.59

43,451,860,533.69-46,125,082,855.89

104,616,989,552.66

Segment operating profit

3,217,274,700.85-73,629,870.69

97,010,433.84

7,110,766,658.40

Total segment assets

57,368,272,498.73

51,142,515,604.10-63,393,417,976.51

112,798,558,578.57

Total segment liabilities

33,874,070,274.78

59,762,657,521.50-63,126,518,841.51

110,189,881,826.88

Inter-segment revenue

(2)

232

Inter-segment

home business

Geographical information“Other countries/regions” in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for the
purpose of information disclosure.

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

External transaction revenue

Items
Mainland China
Other countries/regions
Including:America
Australia
South Asia
EuropeSoutheast Asia
Central East and Africa
Japan
OthersTotal

Amount for thecurrent period

Amount for theprevious period

59,357,352,517.26
62,500,169,944.96

53,700,041,129.00
58,027,715,082.06

37,433,676,787.86
3,489,830,122.80
4,822,648,942.01
10,245,305,312.81
2,922,334,445.85
1,163,078,229.45
1,836,927,420.37
586,368,683.81
121,857,522,462.22

35,324,883,693.09
3,458,819,500.44
3,925,925,777.81
9,093,752,866.83
2,610,757,476.24
909,684,097.45
1,778,184,357.59
925,707,312.61
111,727,756,211.06

Total non-current assets
Items

Closing balance

Opening balance

Mainland China
Other countries/regions
Total

17,488,703,477.71
27,543,718,828.36
45,032,422,306.07

16,572,158,325.12
25,209,296,729.73
41,781,455,054.85

The total non-current assets exclude other equity instruments investment, long-term accounts
receivable, long-term equity investment, goodwill, deferred income tax assets and other noncurrent financial assets.

XI. DISCLOSURE OF FAIR VALUE
1.

Assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level of
inputs which are significant to the fair value measurement as a whole:
Level 1:

Unadjusted quotes for the same asset or liability in an active market

Level 2:

Inputs that are directly or indirectly observable for related assets or liabilities, except
for Level 1 inputs.

Level 3:

Unobservable inputs of related assets or liabilities.

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Section X Financial Report

At the end of the period
Items

Continuously measured at fairvalue
Financial assets held for trading
Including: Bank wealth management
products
Forward foreign exchange contract
Investment funds
Equity instruments investment
Derivative financial assets
Including: Forward foreign exchange
contract
Interest rate swap agreement
Other equity instruments
Including: Equity instruments measured
at fair value through othercomprehensive income
Other non-current assets
Including: Other non-current financial
assetsFinancial liabilities held for trading
Including: Forward foreign exchange
contract
Derivative financial liabilities
Including: Forward foreign exchange
contract
Forward commodity contract
Interest rate swap agreement

234

Haier Smart Home Co., Ltd. Interim Report 2022

Inputs used for fair value measurement
Important
Important
Quotes in an
observableunobservable
active market
input
input
(Level 1)(Level 2)(Level 3)

Total

158,003,403.16 2,295,919,159.41

106,249,514.01 2,560,172,076.58

2,153,399,840.01
142,519,319.40

2,153,399,840.01
142,519,319.40
158,003,403.16
106,249,514.01
106,249,514.01
163,084,726.42

158,003,403.16
163,084,726.42

151,624,141.73
151,624,141.73
11,460,584.69
11,460,584.69
21,244,171.82 2,812,000,000.00 2,019,201,041.09 4,852,445,212.91

21,244,171.82 2,812,000,000.00 2,019,201,041.09 4,852,445,212.91
46,832,494.61
46,832,494.61

79,270,648.00

46,832,494.61

46,832,494.61
79,270,648.00

79,270,648.00
77,066,966.55

79,270,648.00
77,066,966.55

50,925,674.51
24,918,179.06
1,223,112.98

50,925,674.51
24,918,179.06
1,223,112.98

Section X Financial Report

At the beginning of the period
Items

Continuously measured at fair value
Financial assets held for trading
Including: Bank wealth management
products
Forward foreign exchange contract
Investment funds
Investment in equity instruments
Derivative financial assets
Including: Forward foreign exchange
contract
Forward commodity contract
Other equity instruments
Including: Equity instruments measured atfair value and changes of which
included in other comprehensive
incomeOther non-current assets
Including: Other non-current financial
assetsFinancial liabilities held for trading
Including: Forward foreign exchange
contract
Derivative financial liabilities
Including: Forward foreign exchange
contract
Interest rate swap agreement

Input used for fair value measurement
Important
Important
Quotes in an
observableunobservable
active market
input
input
(Level 1)(Level 2)(Level 3)

374,782,417.76

2,305,001,643.90

106,291,467.43

2,168,622,090.00
136,379,553.90

Total

2,786,075,529.09

79,819,974.01

2,168,622,090.00
136,379,553.90
150,516,274.37
330,557,610.82
79,819,974.01

21,055,159.54

72,822,190.59
6,997,783.42
2,812,000,000.00

2,015,654,279.42

72,822,190.59
6,997,783.42
4,848,709,438.96

21,055,159.54

2,812,000,000.00

2,015,654,279.42
46,832,494.61

4,848,709,438.96
46,832,494.61

46,832,494.61

46,832,494.61
6,294,014.40

150,516,274.37
224,266,143.39

106,291,467.43

6,294,014.40
6,294,014.40

6,294,014.40

80,212,433.24

80,212,433.24

60,527,532.76
19,684,900.48

60,527,532.76
19,684,900.48

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.

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235

Section X Financial Report2.

Continual and non-continual Level 2 fair value measurement items, the valuation
techniques adopted and the qualitative and quantitative information ofimportant parameters√ Applicable□ Not Applicable

Items
Financial assets held for trading
Including: Bank wealth management
products
Forward exchange contract
Derivative financial assets
Including: Forward exchange contract
Interest rate swap agreement
Other equity instruments investment
Including: Equity instruments measured
at fair value and changes of which
included in other comprehensive
incomeFinancial liabilities held for trading
Including: Forward exchange contract
Derivative financial liabilities
Including: Forward exchange contract
Forward commodity contract
Interest rate swap agreement

236

Haier Smart Home Co., Ltd. Interim Report 2022

Closingfair value

Valuation techniques

2,153,399,840.01

Discounted cash flow

142,519,319.40

Discounted cash flow

151,624,141.73
11,460,584.69

Discounted cash flow
Discounted cash flow

2,812,000,000.00

Recent transaction method

79,270,648.00

Discounted cash flow

50,925,674.51
24,918,179.06
1,223,112.98

Discounted cash flow
Discounted cash flow
Discounted cash flow

Section X Financial Report3.

Continual and non-continual Level 3 fair value measurement items, the valuation
techniques adopted and the qualitative and quantitative information ofimportant parameters√ Applicable□ Not Applicable

Items

Fair value at theend of the period

Other equity
Instruments
Including:
1. SINOPEC FuelOil Sales
Corporation
Limited

1,285,836,952.03

ValuationtechniqueSignificant
unobservable input Range

Market approach

1. Average P/E
multiple ofpeers

1. 17.77–18.13
2. 11%–13%

2. Discount forlack ofmarketability

Sensitivity of the input
to fair value

1. 1% increase(decrease) in average
P/E multiple of theComparable
Companies would
result in increase(decrease) in fairvalue by
RMB11,177,000.00.
2. 1% increase(decrease) in thelack of marketability
would result in
decrease (increase)in fair value by
RMB12,701,000.00.

4.

Fair value of financial assets and financial liabilities not measured at fair value√ Applicable□ Not Applicable

Items
Bonds payable (convertible corporate bonds)

Closingbook value

Closingfair value

244,655,820.72

355,949,322.87

Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,
etc. Except for the difference between the book value and the fair value of bonds payable
disclosed above, the difference between the book value and the fair value of financial assets andfinancial liabilities not measured at fair value at the end of the period is small.

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237

Section X Financial Report

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS(I)Explanation for basis of identifying related party
According to Accounting Standards for Business Enterprises No. 36 — Related Party Disclosures,
parties are considered to be related if one party has the ability to control or jointly control theother party or exercise significant influence over the other party. Parties (two or more than two)are also considered to be related if they are subject to common control, joint control orsignificant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (China
Securities 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 theCompany

Name of enterpriseHaier Group
Corporation

Registered place

RegisteredcapitalLegal
Relations hips withrepresentative the Company

Interestin theCompany

Voting rights
to theCompany

Collective
ownershipcompany
Joint-stockcompany

Qingdao High-tech
Zone Haier Park

311,180,000

Zhou Yunjie

Parent Company

11.35%

11.35%

Qingdao High-tech
Zone Haier Park

631,930,000

Zhou Yunjie

13.32%

13.32%

HCH (HK) Investment
Management
Co.,Limited

Privatecompany

Hong Kong

HKD 10,000

/

5.70%

5.70%

Qingdao Haier Venture& Investment
Information Co.,Ltd.
Qingdao Haichuangzhi
Management
Consulting
Enterprise (Limited
Partnership)
Haier International
Co., Limited

Company withlimitedliability

Qingdao Free TradeZone

923,000,000

Zhou Yunjie

1.82%

1.82%

Limitedpartnership

Qingdao High-tech
Zone Haier Park

118,924,416

Zhang
RuiminSubsidiary of
ParentCompany
Parties acting inconcert ofParentCompany
Parties acting inconcert ofParentCompany
Parties acting inconcert ofParentCompany

1.28%

1.28%

Privatecompany

Hong Kong

Parties acting inconcert ofParentCompany

0.62%

0.62%

Haier COSMO Co.,
Ltd.

2.

Type ofenterprise

HKD 2

/

Subsidiaries of the Company√ Applicable □ Not Applicable
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure ofinterests in subsidiaries

238

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report3.

Associates and joint ventures
The details of associates and joint ventures of the Company are detailed in Note VII. 11
and Note IX. 3.

4.

Related company with no controlling relationship
Name of company

Relationship with the Company

Qingdao Haier Parts Procurement Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd.
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
Shanghai Cotai Supply Chain Management
Co., Ltd.
Hotoem Information Technology
Cosmoplat Chuangzhi IOT Technology
Co., Ltd.
Qingdao Haier Moulds Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Qingdao Haier Special Plastic Development
Co., Ltd.
Qingdao Haier International Travel Agency
Co., Ltd.
Qingdao Haina Cloud Intelligent System
Co., Ltd.
Chongqing Haier Smart Electronics Co., Ltd.
Chongqing Zhonglian Energy Technology
Co., Ltd.
Shanghai Zhiyu Technology Co., Ltd.
Qingdao Haiyongda Property Management
Co., Ltd.
Qingdao Oasis Technology Co., Ltd.
Qingdao Haier Energy and Power Co., Ltd.
Dalian Haier International Trade Co., Ltd.
Qingdao Goodaymart Supply Chains
Co., Ltd.
Qingdao Haier Brothers Animation Industry
Co., Ltd.
Qingdao Manniq Intelligent Technology
Co., Ltd.
Qingdao Manniq Intelligent Equipment
Co., Ltd.
Qingdao Ding Xin Electronics Technology
Co., Ltd.
Qingdao Haier New Materials R & D
Co., Ltd.
Controladora Mabe S.A.deC.V.
HNR Company (Private) Limited

Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary of Haier Group
Subsidiary and associate of HaierGroup
Associate
Associate

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239

Section X Financial Report

Name of company

Relationship with the Company

Qingdao Haier Multimedia Co., Ltd.
HPZ Limited
Wolong Electric (Jinan) Motor Co., Ltd.
Qingdao Hegang New Material Technology
Co., Ltd.
Hefei Hegang New Material Technology
Co., Ltd.
Qingdao HBIS Composite New MaterialCo., Ltd.

Associate
Associate
Associate
Associate
Subsidiary of associate
Subsidiary of associate(III) Related party transactions
1.

Details of the goods and services purchased by the Company from the related parties
are as follows:

Related parties
Controladora Mabe S.A.deC.V.
Qingdao Haier Parts Procurement Co., Ltd.
Gooday Supply Chain Technologies Co., Ltd.
HNR Company (Private) Limited
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
Shanghai Cotai Supply Chain Management
Co., Ltd.
Hotoem Information Technology
Cosmoplat Chuangzhi IOT Technology
Co., Ltd.
Qingdao Haier Moulds Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd.
Qingdao HBIS Composite New MaterialCo., Ltd.
Qingdao Ding Xin Electronics Technology
Co., Ltd.
Chongqing Haier Intelligent Electronics
Co., Ltd.
Hefei Hegang New Material Technology
Co., Ltd.
Qingdao Haier Special Plastic Development
Co., Ltd.
Other related parties
Total

240

Haier Smart Home Co., Ltd. Interim Report 2022

Amount for thecurrent period

Amount for theprevious period

5,992,396,585.28
3,437,294,477.05
2,566,807,694.51
2,225,964,262.84

5,919,857,050.59
243,004,611.97
1,795,893,473.89
1,753,260,194.66

1,428,396,771.15

1,735,448,645.80

760,063,618.26
323,614,793.49

837,090,677.39
15,780,675.02

306,393,628.09
264,629,834.22
218,455,947.50

1,007,738,751.14
283,420,737.56
494,269,324.67

155,274,371.48

392,032,148.49

125,203,847.62

429,570,435.77

119,484,178.14

493,639,084.84

117,399,517.14

474,928,583.73

66,199,048.27
1,868,504,632.15
19,976,083,207.19

217,734,562.12
2,534,023,594.60
18,627,692,552.24

Section X Financial Report2.

Details of the Company’s sales of goods to the related parties are as follows:

Related parties
Controladora Mabe S.A.deC.V.
HNR Company (Private) Limited
Qingdao Haier Special Plastic Development
Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Qingdao Haier International Travel Agency
Co., Ltd.
Qingdao Haier Multimedia Co., Ltd.
HPZ Limited
Other related parties
Total

Amount for thecurrent period

Amount for theprevious period

540,669,324.96
371,766,028.14

468,040,995.25
314,817,192.25

273,537,316.50
231,644,878.27

324,988,575.86
312,037,256.25

118,333,617.35
105,505,398.38
62,200,352.87
25,743,020.75
46,402,303.46
85,694,941.35
383,482,730.84
451,160,486.74
2,028,036,552.39 2,087,987,866.83

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Section X Financial Report3.

Amount for outstanding items of related parties

Items and name of customers
Bills receivable:
Qingdao Haier Special Plastic Development Co.,Ltd.
Qingdao Haina Cloud Intelligent System Co., Ltd.
Chongqing Haier Smart Electronics Co., Ltd.
Qingdao Haier Moulds Co., Ltd.
Cosmoplat Chuangzhi IOT Technology Co., Ltd.
Other related parties
Accounts receivable:
HNR Company (Private) Limited
Qingdao Haier International Travel Agency
Co., Ltd.
Qingdao Haier Special Plastic Development
Co., Ltd.
HPZ Limited
Controladora Mabe S.A.deC.V.
Chongqing Zhonglian Energy Technology
Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Shanghai Zhiyu Technology Co., Ltd.
Qingdao Haina Cloud Intelligent System Co., Ltd.
Other related parties
Prepayments:
Qingdao Haier International Travel Agency
Co., Ltd.
Qingdao Haiyongda Property Management
Co., Ltd.
Qingdao Oasis Technology Co., Ltd.
Qingdao Haier Moulds Co., Ltd.
Other related parties
Other receivables:
Controladora Mabe S.A.deC.V.
Gooday Supply Chain Technologies Co., Ltd.
Qingdao Haier International Trading Co., Ltd.
Qingdao Haier Energy and Power Co., Ltd.
Other related parties

Items and name of suppliers
Bills payable:
Qingdao Haier New Materials R & D Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd.
Other related parties

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Closing
Balance

Opening
Balance

35,258,514.73
18,392,400.67
10,693,195.91
6,220,430.00
5,710,000.00
18,803,440.35

21,511,057.07
2,528,394.74
600,000.00
13,520,000.00
20,326,664.87

692,724,378.50

588,605,242.72

87,754,866.94

99,648,729.88

59,912,071.24
59,823,027.70
56,877,475.23

39,101,648.72—
123,524,843.42

51,648,147.74
51,507,251.38
43,917,268.67
31,656,497.71
198,063,150.61

45,405,801.21
34,295,519.63
43,349,588.61
31,824,063.09
223,239,739.94

23,158,794.37

23,936,807.36

16,886,792.00
15,085,363.44
13,664,084.98
27,520,134.41

17,069,128.00—
7,287,661.33
152,967,725.88

23,141,410.56
19,979,917.89
16,291,509.07
15,515,825.00
65,933,332.86

16,260,655.41
27,180,000.00
16,601,596.21
15,315,825.00
71,877,028.63

Closing
Balance

Opening
Balance

304,428,684.81
44,870,947.00
57,995,232.71

90,348,253.59
4,127,872.00
50,019,985.82

Section X Financial Report

Items and name of customers

Closing
Balance

Opening
Balance

Accounts payable:
Controladora Mabe S.A.deC.V.
1,437,362,278.03
941,545,815.41
Qingdao Haier Parts Procurement Co., Ltd.
1,270,602,288.35 1,985,902,077.10
Qingdao Haier International Trading Co., Ltd.
198,134,907.93
106,344,044.12
Dalian Haier International Trade Co., Ltd.
146,623,099.52
175,739,251.85
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
126,873,182.47
332,415,203.41
Qingdao Haier New Materials R & D Co., Ltd.
117,832,792.95
21,654,400.63
Qingdao Haier Moulds Co., Ltd.
79,707,945.36
136,685,798.49
Cosmoplat Chuangzhi IOT Technology Co., Ltd.
49,049,546.13
268,605,818.56
Wolong Electric (Jinan) Motor Co., Ltd.
47,439,179.69
117,800,983.85
Qingdao HBIS Composite New Material Co., Ltd.
44,967,206.10
161,242,782.98
Qingdao Hegang New Material Technology
Co., Ltd.
30,430,316.84
72,015,400.20
Other related parties
71,230,012.81 1,223,019,630.13
Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd.
15,133,132.31
21,373,101.27
Qingdao Haier Parts Procurement Co., Ltd.
7,939,821.15
91,082,063.05
Chongqing Haier Electrical Appliances Sales
Co., Ltd.
4,897,848.16
779,853.29
Other related parties
13,395,732.42
41,359,339.35
Dividends payable:
Haier COSMO Co., Ltd.
580,706,830.40
Haier Group Corporation
494,859,702.08
HCH (HK) Investment Management Co., Limited
248,470,041.60
Other related parties
161,942,052.03
Other payables:
Gooday Supply Chain Technologies Co., Ltd.
1,013,756,001.98
687,378,382.22
Shanghai Cotai Supply Chain Management
Co., Ltd.
317,902,528.95
154,351,301.35
Qingdao Goodaymart Supply Chains Co., Ltd.
69,476,766.47
72,545,343.35
Qingdao Haier Brothers Animation Industry—
Co., Ltd.
40,538,987.00—
Qingdao Manniq Intelligent Technology Co., Ltd.
32,559,033.02
Qingdao Haier Moulds Co., Ltd.
29,846,291.87
21,298,170.87
Qingdao Manniq Intelligent Equipment Co., Ltd.
26,540,689.73
18,114,339.24
Qingdao Haier International Travel Agency
Co., Ltd.
22,412,379.87
16,372,400.80
Dalian Haier International Trade Co., Ltd.
21,800,000.00
21,800,000.00
Other related parties
120,035,044.34
184,728,610.07

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Section X Financial Report

4.

Other related party transactions(1)
On 29 April 2021, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services Framework
Agreement, and the “Resolution on the Renewal of the Financial Services Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation andthe Estimated Amount of Connected Transaction” was considered and passed at the2020 Annual General Meeting held on 25 June 2021. The Financial Services
Framework Agreement became effective from the passing of the resolution at thegeneral meeting.
Various current balances of the Company and the Finance Company are as follows:

Items
Monetary funds deposited at the Finance
Company
Interest receivable from the Finance Company
Loans of the Finance Company
Interest payable to the Finance Company
Bank acceptance note issued
Foreign exchange derivatives of the Finance
Company

Closing
Balance

Opening
Balance

31,997,084,109.69
359,448,232.39
282,673,529.00
3,921,345.84
23,758,244,622.90

28,744,602,432.65
260,262,550.46
336,507,659.12
1,813,534.66
21,697,666,574.19

111,771,387.14

1,577,848.15

Various balances of the Company and the Finance Company are as follows:

Items

Amount for thecurrent period

Amount for theprevious period

Interest income of the Finance Company
Interest expense of the Finance Company
Service fee of the Finance Company

260,517,401.68
4,004,749.21
13,688,276.03

131,478,780.14
6,396,052.75
11,729,401.16(2)

The lease expense of the Company and its subsidiaries for production and operationleased from related parties for the current period was RMB60 million (amount for thecorresponding period: RMB60 million).

(3)

Related information on the guarantor of the Company’s guaranteed borrowings as arelated party at the end of period:
LenderHaier Russian ElectricCo., Ltd.
Total

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Haier Smart Home Co., Ltd. Interim Report 2022

Closing Balance

Opening Balance

Guarantor

282,673,529.00

304,896,830.40

Haier Group
Corporation

282,673,529.00

304,896,830.40

Section X Financial Report(4)

Haier Group Corporation provided joint liability guarantee for certain bills payable ofthe subsidiaries of the Company with the guaranteed amount of
RMB1,805,486,348.06 at the end of the period.

(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 receive
after-sales services, R&D service, housing rental and other business provided by thecompany due to their business needs. In November 2020, according to the implementationof connected transactions in the early stage and the relevant listing requirements in Hong
Kong, 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 by
the Company to the Independent Third Parties on arm’s length to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement commenced
from the listing date to 31 December 2022, which can be renewed for another three years
upon expire.

2.

Related parties Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover, theCompany entrusted Haier Group Corporation and its subsidiaries to provide the Company
with logistics and distribution, energy and power, basic research and testing, equipment
leasing, house leasing and maintenance, greening and cleaning, gift procurement, design,consulting, various ticket booking and other services. In November 2020, according to theimplementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and signed
the Product and Materials Sales Framework Agreement, the Service Provision Framework
Agreement and the Property Leasing Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included that both parties should agree on the price which is not less favourable
than 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 the listing date to 31 December 2022, which can be renewed
for another three years upon expire.

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245

Section X Financial Report

246

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 Group
Corporation, its subsidiaries and other companies. According to the Financial Service
Agreement entered among the Company, Haier Group Corporation and other parties, theprice of financial services is determined by the principle of not less favourable than market
value 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 its
own 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 exchange
fluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide someforeign exchange derivative business after comparing with comparable companies. The
Company 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 has
specified the examination and permission rights, management positions and responsibilities
at all levels for its foreign exchange capital business to eradicate the risks of operation by
persons and improved its response speed to risks on the premise that the risks are
effectively controlled. In June 2021, the Company and Haier Group Corporation signed the
Financial Services Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thedeposit interest rate not lower than the maximum interest rate of major banks listed andthe loan interest rate not less favourable than the market price to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement expires at 31
December 2023, which can be renewed for another three years upon expire.

4.

OthersThe Company signed the Intellectual Property Licensing Framework Agreement with HaierGroup Corporation in November 2020. According to the agreement, Haier Group has
agreed 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, services
and business introduction documents of the Company. The date of the Intellectual Property
Licensing Framework Agreement shall be permanently effective from the H Share listingdate. When such specific intellectual property rights expire and are not renewed by HaierGroup, our right to use certain intellectual property rights under the Intellectual Property
Licensing Framework Agreement will terminate.

Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report

XIII. SHARE-BASED PAYMENTS(1)

Share Options
According to the “Resolution on Adjustment to the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co., Ltd.” and the “Resolution on the Grant of Share Option to the Incentive
Target of Haier Smart Home Co., Ltd.” passed on the 1st meeting of the 11th session of theBoard of Directors of the Company on 28 June 2022, it was agreed that on the date of the
grant on 28 June 2022, 104,756,896 share options would be granted to 1,834 qualifying
incentive targets at the exercise price of RMB23.86 per Share.

Share Options
At the beginning of the period
Granted during the period
Vested during the period
Lapsed during the period
At the end of the period(2)

Number for theprevious period

50,525,214.00
104,756,896.00

50,525,214.00

155,282,110.00

50,525,214.00

Number for thecurrent period

Number for theprevious period

Restricted Shares
Number of restricted shares
At the beginning of the period
Granted during the period
Vested during the period
Lapsed during the period
At the end of the period(3)

Number for thecurrent period

4,438,027.00
4,438,027.00

4,438,027.00

4,438,027.00

Method of determining the fair value of equity instrument on the date of grant:
The Company has adopted the B-S model to determine the fair value of the share options.
The B-S model is subject to six variables: current price of the target share (S), exercise price ofthe option (K), risk-free rate (r), valid term of the option (t), expected volatility of the share price(σ), and the dividend rate of the target share (i).
Parameters selected for the calculation of the value of the option of the Company are as follows:①

share price (S): RMB27.01 per share (closing price on the date of grant on 28 June 2022).

②

exercise price (K): RMB23.86 per share.

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247

Section X Financial Report(4)③risk-free rate (r): according to the maturity yield rate of the China Government Bonds from
Bloomberg’s system, the risk-free rate for one year was1.997%; 2.358% for two years;
2.452% for three years; 2.561% for four years; and 2.67% for five years, where the riskfree rate for the fourth year was calculated as the arithmetic average of the risk-free rate of
the third and fifth year.

④

lifetime of the option (t): 1 year, 2 years, 3 years and 4 years, respectively (from the date of
grant to the deadline of the first exercisable date of each tranche).

⑤historical volatility rate (σ): 0.3677 (1 year); 0.4016 (2 years); 0.3783 (3 years); 0.3795 (4years). The interval adopted for the calculation of historical volatility was the continuous
closing price of the Company in the preceding four years. At the same time, the historicalvolatility for the preceding 1, 2, 3, and 4 years was calculated, respectively based on the
differences in waiting period.

⑥

yield rate (i) 1.7031% based on the yield rate shown in Bloomberg’s system on the valuation
date (28 June 2022), dividing the dividend per share by the closing price on the date of
grant. According to the calculation under the above pricing model, the theoreticalaggregate value of the 10,475.6896 share options granted under this incentive plan of theCompany amounted to RMB777,000,000.

Based on the latest available subsequent information, such as change in number of vesting
employee, result condition of the Company and evaluation of personal performance appraisal of
incentive targets, the Company makes the best estimation of the number of vesting equity
instruments, based on which, the Company includes services received for the current period in
relevant costs of expenses in accordance with the fair value of the equity instrument on the dateof grant, and accordingly included in the capital reserve.
Expense recognized in respect of the share-based payment incentive plan for the period:
RMB251,000,000 for the stock ownership plan; RMB73,000,000 for the share options; andHKD10,000,000 for the restricted shares.
On 30 June 2022, balance associated with the above share-based payment incentive plansprovided in the capital reserve amounted to RMB594,000,000.

XIV. CONTINGENCIES√ Applicable□ Not Applicable

As of 29 August 2022, the Company has no significant contingencies that need to be disclosed.

XV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE√ Applicable□ Not Applicable

As of 29 August 2022, the Company has no significant events subsequent to the balance sheet datethat need to be disclosed.

248

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Section X Financial Report

XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS√ Applicable□ Not Applicable

The book value of various financial instruments on the balance sheet date is as follows:

Financial assets
Items
Financial assets
measured at fairvalue andchanges of which
includedin current profit
and loss
Monetary funds
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Other receivables
Other current assets
Long-term receivables
Other equity instruments
Other non-current assets

Closing balance
Financial assets
measured at fairvalue andchanges of which
included in otherMeasured atcomprehensive
amortized costincome50,316,121,259.28

2,560,172,076.58
163,084,726.42
8,417,636,171.41
17,920,101,868.72
2,156,760,190.99
1,551,745,385.00
306,402,281.56
4,852,445,212.91
46,832,494.61

Total
50,316,121,259.28
2,560,172,076.58
163,084,726.42
8,417,636,171.41
17,920,101,868.72
2,156,760,190.99
1,551,745,385.00
306,402,281.56
4,852,445,212.91
46,832,494.61

Financial assets (Continued)
Items
Financial assets
measured at fairvalue andchanges of which
includedin current profit
and loss
Monetary funds
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable
Other receivables
Other current assets
Long-term receivables
Other equity instruments
Other non-current assets

Opening balance
Financial assets
measured at fairvalue andchanges of which
included in otherMeasured atcomprehensive
amortized costincome45,971,035,763.51

2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,642,659,450.22
1,956,721,621.66
316,590,333.42
308,998,755.30
4,848,709,438.96
46,832,494.61

Total
45,971,035,763.51
2,786,075,529.09
79,819,974.01
13,354,791,068.29
14,642,659,450.22
1,956,721,621.66
316,590,333.42
308,998,755.30
4,848,709,438.96
46,832,494.61

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249

Section X Financial Report

Financial liabilities
Items
Financialliabilities
measured atfair value
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payable
Other payables
Non-current liabilities due within one year
Long-term borrowings
Long-term payables

Closing balance
Financialliabilities
measured atamortized cost
13,159,569,303.47

Total

27,955,088,267.08
38,977,127,139.49
22,391,504,810.19
9,566,319,746.23
2,119,243,998.96
49,353,671.92

13,159,569,303.47
79,270,648.00
77,066,966.55
27,955,088,267.08
38,977,127,139.49
22,391,504,810.19
9,566,319,746.23
2,119,243,998.96
49,353,671.92

Opening balance
Financialliabilities
measured atamortized cost

Total

79,270,648.00
77,066,966.55

Financial liabilities (Continued)
Items
Financialliabilities
measured atfair value
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payable
Other payables
Non-current liabilities due within one year
Long-term borrowings
Bonds payable
Long-term payables

11,226,212,134.39
6,294,014.40
80,212,433.24
25,023,238,406.72
42,396,109,648.76
17,533,370,017.01
6,745,950,334.20
3,038,573,824.53
334,730,048.82
99,602,707.76

11,226,212,134.39
6,294,014.40
80,212,433.24
25,023,238,406.72
42,396,109,648.76
17,533,370,017.01
6,745,950,334.20
3,038,573,824.53
334,730,048.82
99,602,707.76

Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company manages
and monitors these risk exposures to ensure the above risks are well under control.

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Haier Smart Home Co., Ltd. Interim Report 2022

Section X Financial Report1.

Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts
receivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited inHaier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks. Theinterest receivables are mainly the accrued interests from fixed deposits which are deposited in
the above banks. The Group does not believe there is any significant credit risk due to defaults
of its counterparties which would cause any significant loss. (2) Accounts receivable and bills
receivable: The Company only trades with approved and reputable third parties. All customers
who are traded by credit are subject to credit assessment according to the policies of theCompany, and the payment terms shall be determined on a reasonable basis. The Company
monitors the balances of accounts receivable on an ongoing basis and purchases credit
insurance for receivables of large-amount credit customers in order to ensure the Company isfree from material bad debts risks. (3) Other receivables of the Company mainly include export
tax refund, borrowings and contingency provision. The Company strengthened its management
and continuous monitoring in respect of these receivables and relevant economic business basedon historical data, so as to ensure that the Company’s significant risk of bad debts is
controllable and will be further reduced.

2.

Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial 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 exchange
rates. 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 forward
foreign exchange contracts to avoid the risk of exchange fluctuation.

4.

Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short-term bank loans andbonds payables which are interest-bearing debts. Financial liabilities with floating interest rates
expose the Company to cash flow interest rate risk, while financial liabilities with fixed interest
rates expose the Company to fair value interest rate risk. The Group determines the relative
proportion of fixed-interest rate and floating interest rate contracts in light of the prevailing market
conditions.

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251

Section X Financial Report

XVII. OTHER SIGNIFICANT EVENTSThe Company has no other significant events that need to be disclosed.

XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY1.

Accounts receivable
Aging

Openingbalance

Closing balanceWithin 1 year
1-2 years
2-3 years
Over 3 years
Accounts receivable, balance
Allowance for bad debts
Accounts receivable, net

62,789,403.13
532,093,996.86

546,532,442.90

594,883,399.99

546,532,442.90

594,883,399.99

546,532,442.90

Changes in allowance for bad debts of accounts receivable during the current period:

Items

Opening
Balance

Allowance for bad
debts

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Haier Smart Home Co., Ltd. Interim Report 2022

Increase for the current
periodProvision forthe current
Other
periodincrease

Decrease for the current
periodWrite-offand other
Reversal
movement

Closing
BalanceSection X Financial Report

2.

Other receivables√ Applicable□ Not Applicable
Unit and Currency: RMB

Items

Closing balance

Opening balance

Interest receivable
Dividend receivable
Other receivables
Total

85,694,396.74
4,015,840,000.00
13,953,280,622.41
18,054,815,019.15

51,632,471.99
3,615,840,000.00
12,577,807,696.42
16,245,280,168.41

Closing balance

Opening balance

85,694,396.74

51,632,471.99

85,694,396.74

51,632,471.99

Aging

Closing Balance

Opening BalanceWithin 1 year
More than 1 year
Total

4,015,840,000.00

3,615,840,000.00

4,015,840,000.00

3,615,840,000.00(1)

Interest receivable:
Items
Within 1 year
Over 1 year
Total

(2)

Dividend receivable

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253

Section X Financial Report(3)

Other receivables:①
The disclosure of other receivables by aging is as follows:

②

Aging

Closing balance

Opening balanceWithin one year
Over 1 year
Other receivables, balance
Allowance for bad debts
Other receivables, net

12,789,835,911.72
1,163,452,674.94
13,953,288,586.66
7,964.25
13,953,280,622.41

12,040,141,153.64
537,791,379.00
12,577,932,532.64
124,836.22
12,577,807,696.42

Changes in allowance for bad debt of other receivables in the current period:

Items
Allowance
for baddebts

3.

Increase for thecurrent period
Provision for
Opening the current
Otherbalanceperiodincrease

124,836.22

116,871.97

Closingbalance

7,964.25

Long-term equity investment√ Applicable(1)□ Not Applicable

Details of long-term equity investments:

Items
Long-term equity investments
Including: long-term equity investments in
subsidiaries
Long-term equity investments inassociates
Total

254

Decrease for thecurrent period
Write-off andother
Reversal
movement

Haier Smart Home Co., Ltd. Interim Report 2022

Closing balance
Provision forBook balance
impairment

Opening balance
Book
Provision forbalance
impairment

49,377,425,428.31

7,100,000.00 49,377,425,428.31

7,100,000.00

3,464,422,755.92
52,841,848,184.23

109,300,000.00 3,252,734,849.46
116,400,000.00 52,630,160,277.77

109,300,000.00
116,400,000.00

Section X Financial Report(2)Long-term equity investments in subsidiaries

Name of investee
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd.
Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd
Qingdao Haier Refrigerator Co., Ltd.
Qingdao Haier Special Refrigerator Co., Ltd.
Qingdao Haier Information Plastic Development
Co., Ltd
Dalian Haier Precision Products Co., Ltd.
Hefei Haier Plastic Co., Ltd.
Qingdao Haier Technology Co., Ltd.
Qingdao Household Appliance Technology andEquipment Research Institute
Qingdao Meier Plastic Powder Co., Ltd.
Chongqing Haier Precision Plastic Co., Ltd.
Qingdao Haier Electronic Plastic Co., Ltd.
Dalian Haier Refrigerator Co., Ltd.
Dalian Haier Air Conditioner Co., Ltd.
Guizhou Haier Electronics Co., Ltd.
Hefei Haier Air-conditioning Co., Limited
Qingdao Haier Refrigerator (International) Co.,Ltd.
Qingdao Haier Air-Condition Electronic Co., Ltd.
Qingdao Haier Air Conditioner General Corp.,
Ltd.
Qingdao Haier Special Freezer Co., Ltd.
Qingdao Haier Dishwasher Co., Ltd.
Wuhan Haier Freezer Co., Ltd.
Wuhan Haier Electronics Co., Ltd.
Chongqing Haier Air Conditioner Co., Ltd.
Hefei Haier Refrigerator Co., Ltd.
Qingdao Haier Whole Set Home AppliancesServices Co., Ltd.
Chongqing Haier Refrigeration Appliance Co.,Ltd.
Shanghai Haier Zhongzhi Fang Chuang Ke SpaceManagement Co., Ltd.
Qingdao Haier Special Refrigerating ApplianceCo., Ltd.
Haier Shareholdings (Hong Kong) Limited

Opening balance

Increase/
Decrease forthe current
periodImpairment
provisions at
the end of theperiodClosing balance
provisions

9,500,000.00

9,500,000.00

34,735,489.79
402,667,504.64
329,832,047.28

34,735,489.79
402,667,504.64
329,832,047.28

102,888,407.30
41,836,159.33
42,660,583.21
16,817,162.03

102,888,407.30
41,836,159.33
42,660,583.21
16,817,162.03

66,778,810.80
24,327,257.77
47,811,283.24
69,200,000.00
138,600,000.00
99,000,000.00
96,904,371.71
67,110,323.85

66,778,810.80
24,327,257.77
47,811,283.24
69,200,000.00
138,600,000.00
99,000,000.00
96,904,371.71
67,110,323.85

238,758,240.85
1,131,107,944.51

238,758,240.85
1,131,107,944.51

220,636,306.02
471,530,562.76
206,594,292.82
47,310,000.00
100,715,445.04
100,000,000.00
49,000,000.00

220,636,306.02
471,530,562.76
206,594,292.82
47,310,000.00
100,715,445.04
100,000,000.00
49,000,000.00

118,000,000.00

118,000,000.00

91,750,000.00

91,750,000.00

2,000,000.00

2,000,000.00

100,000,000.00
26,022,782,526.24

100,000,000.00
26,022,782,526.24

Haier Smart Home Co., Ltd. Interim Report 2022

255

Section X Financial Report

Name of investee
Shenyang Haier Refrigerator Co., Ltd.
Foshan Haier Freezer Co., Ltd.
Zhengzhou Haier Air Conditioner Co., Ltd.
Qingdao Haidayuan Procurement Service Co.,Ltd.
Qingdao Haier Intelligent Technology
Development Co., Ltd.
Qingdao Haier Technology Investment Co., Ltd.
Qingdao Casarte Smart Living Appliances Co.,Ltd.
Haier Overseas Electric Appliance Co., Ltd.
Haier (Shanghai) Electronics Co., Ltd.
Haier U+smart Intelligent Technology (Beijing)Co., Ltd.
Haier Electronics Group Co., Ltd.
Flourishing Reach Limited (SPVX)
Qingdao Haidarui Procurement Service Co., Ltd.
Qingdao Haier Intelligent Household Appliances
Co., Ltd.
Qingdao Haidacheng Procurement Service Co.,Ltd.
Qingdao Haier Quality Inspection Co. Ltd.
Qingdao Haier Home AI Industry Innovation
Center Co. Ltd.
Haier Smart Home Experience Cloud EcologicalTechnology Co., Ltd.
Total

256

Haier Smart Home Co., Ltd. Interim Report 2022

Opening balance

Increase/
Decrease forthe current
periodImpairment
provisions at
the end of theperiodClosing balance
provisions

100,000,000.00
100,000,000.00
100,000,000.00

100,000,000.00
100,000,000.00
100,000,000.00

20,000,000.00

20,000,000.00

130,000,000.00
367,505,635.00

130,000,000.00
367,505,635.00

10,000,000.00
500,000,000.00
12,500,000.00

10,000,000.00
500,000,000.00
12,500,000.00

143,000,000.00
3,979,407,602.61
12,751,300,336.02
107,800,000.00

143,000,000.00
3,979,407,602.61
12,751,300,336.02
107,800,000.00

326,400,000.00

326,400,000.00

100,000,000.00
18,657,135.49

100,000,000.00
18,657,135.49

20,000,000.00

20,000,000.00

100,000,000.00
49,377,425,428.31

100,000,000.00
49,377,425,428.31

7,100,000.00

7,100,000.00

Section X Financial Report(3)Long-term equity investments in associates
Increase/decrease for the current period
Recognized

Name of investee

Opening balance

Increase/

investment

Impairment

decrease for theincome underprovisions at thecurrent period

equity method

OthersClosing balance end of the period

Wolong Electric (Jinan)
Motor Co., Ltd.

145,209,273.31

12,492,538.14

157,701,811.45

Qingdao Haier SAIF Smart
Home Industry
Investment Center(Limited Partnership)

393,598,372.59

Bank of Qingdao Co., Ltd.

1,051,480,863.27

139,485,507.20–904,601.39–17,199,060.82

375,494,710.38

65,502,506.22–29,821,491.89

1,226,647,384.80

Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co.,Ltd.

682,901,976.73

52,979,520.61

409,053,808.05

10,936,464.63

277,102,563.87–14,629,468.29

735,881,497.34

Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.

–17,900,226.81

402,090,045.87

21,000,000.00

262,473,095.58

88,300,000.00

Qingdao Haier Multimedia
Co., Ltd.
Qingdao HBIS New Material
Technology Co., Ltd.
Total

4.

293,387,991.64
3,252,734,849.46

10,746,218.86
139,485,507.20

137,123,178.78

304,134,210.50–64,920,779.52

3,464,422,755.92

109,300,000.00

Operating revenue and operating cost
√ Applicable□ Not Applicable
Unit and Currency: RMB

Items
Primary business
Other business
Total

Amount for theAmount for thecurrent period
Revenueprevious period
Revenue

53,149,966.60
40,173,916.73
93,323,883.33

Cost

46,742,634.57
34,148,754.89
80,891,389.46

100,011,103.11
96,140,485.73
196,151,588.84

Cost

93,685,159.99
76,847,254.77
170,532,414.76

Haier Smart Home Co., Ltd. Interim Report 2022

257

Section X Financial Report

5.

Investment income
Items
Investment income from long-term equity investment
accounted for using equity method
Investment income generated from disposal of longterm equity investment
Investment income from long-term equity investments
accounted for using cost method
Income from wealth management products
Investment income from investment in other equity
instrument during the holding period
Total

Amount for thecurrent period

Amount for theprevious period

137,123,178.78

89,661,570.77

400,000,000.00
11,113,358.17

17,700,000.00
5,792,409.99

548,236,536.95

113,153,980.76

XIX. APPROVAL OF FINANCIAL REPORTThis financial report was approved for publication by the Directors of the Company on 29 August2022.

XX. OTHER SUPPLEMENTARY INFORMATION
1.

Basic earnings per share and diluted earnings per shareItems
Net profit attributable to ordinary
shareholders of the Parent
Company
Net profit attributable to ordinary
shareholders of the Parent
Company after deduction of nonrecurring profit or loss

258

Haier Smart Home Co., Ltd. Interim Report 2022

Amount for the current period
Amount for the previous period
Earnings per share
Earnings per share
(RMB)
(RMB)
Weighted
Weighted
averageaveragereturn rate
Basic
Diluted return rate
Basic
Dilutedon netearnings
earnings
on netearnings
earnings
assets per share per shareassets per share per share

9.24%

0.85

0.85

9.29%

0.74

0.73

8.71%

0.80

0.80

8.50%

0.68

0.67

Section X Financial Report2.

Non-recurring profit or loss
Items
Net profit attributable to ordinary shareholders of the Parent
Company
Less: non-recurring profit or loss
Net profit attributable to ordinary shareholders of the Parent
Company after deduction of non-recurring profit or loss

Amount for thecurrent period

Amount for theprevious period

7,949,084,472.70
458,390,767.32

6,858,902,854.55
588,996,447.83

7,490,693,705.38

6,269,906,406.72

Statement of non-recurring profit or loss for the current period
Non-recurring profit and loss items

Amount for the current period

Profit and loss on disposal of non-current assets
Government subsidies through the profit and loss, except
for government subsidies that are closely related to theCompany’s normal business operations, comply withnational policies and regulations, and continue to beenjoyed in a fixed amount or fixed quantity according tocertain standards
Gains on investments in subsidiaries, associates and joint
ventures in which the investment cost was less than thefair value of identifiable net assets of the investees at
the time of acquisition
Profit and loss from fair value changes of financial assets
held for trading and financial liabilities held for trading,as well as investment gains arising from disposal of
financial assets held for trading, financial liabilities held
for trading and financial assets held for sale, except theeffective hedging related to the normal operations of theCompany
Other non-operating income and expenses except the
aforementioned items
Effect of minority equity interest (After Tax)
Effect of income tax
Effect of profit from business combination under common
control
Total

33,807,493.39

434,830,465.43

59,249,736.54
34,282,312.26–10,201,864.65–98,050,857.35
4,473,481.70
458,390,767.32

Chairman of the Board: LI Huagang
Date of approval for publication by the Board: 29 August 2022
Information of amendment□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Interim Report 2022

259

Section XI Responsibility Statement“As the executive directors of the Board of Haier Smart Home Co., Ltd, we hereby confirm to the best of
our knowledge, and in accordance with the applicable reporting principles, that the financial statements givea true and fair view of the assets, liabilities, financial position and profit or loss of the company; and the
management report includes a fair review of the development and performance of the business including theresults and the position of the company, together with a description of the principal opportunities and risks
associated with the expected development of the company.”
Qingdao, 29 August 2022
The Board of Haier Smart Home Co., Ltd
Li Huagang
Gong Wei

260

Haier Smart Home Co., Ltd. Interim Report 2022