QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES
INTERIM REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2018
INDEPENDENT REVIEW REPORT
TO QINGDAO HAIER CO., LTD. __________________________________________________1
(Incorporated in the People's Republic of China with limited liability)
INTRODUCTION
We have reviewed the interim condensed consolidated financial statement set out on pages 3 to 36,
which comprises the condensed consolidated statement of financial position of Qingdao Haier Co.,
Ltd. (the ‘Company’) and its subsidiaries (collectively referred to as the ‘Group’) as at 30 June 2018
and the related condensed consolidated statement of profit or loss, condensed consolidated statement
of other comprehensive income, condensed consolidated statement of changes in equity and
condensed consolidated statement of cash flows for the six-month period then ended, and a summary
of significant accounting policies and other explanatory notes. The directors of the Company are
responsible for the preparation of interim financial information to be in compliance with the relevant
provisions thereof and International Accounting Standard 34 ‘Interim Financial Reporting’ (‘IAS 34’)
issued by the International Accounting Standards Board. Our responsibility is to express a conclusion
on this interim condensed consolidated financial statement based on our review, and to report our
conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no
other purpose. We do not assume responsibility towards or accept liability to any other person for the
contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review Engagements 2410
‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued
by the International Auditing and Assurance Standards Board. A review of interim condensed
consolidated financial statement consists of making inquiries, primarily to persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
INDEPENDENT REVIEW REPORT
TO QINGDAO HAIER CO., LTD. (CONTINUED) ___________________________________2
(Incorporated in the People's Republic of China with limited liability)
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim
condensed consolidated financial statements as at 30 June 2018, do not present fairly, in all material
respects, in accordance with IAS 34.
Certified Public Accountants
Shek Lui
Practising Certificate Number: P05895
Hong Kong, 3 September 2018
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES________________________________3
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
2018 2017
RMB’M RMB’M
For the six months ended 30 June Notes (Unaudited) (Unaudited)
Revenue 3 88,581 77,575
Cost of sales (63,363) (54,465)
Gross profit 25,218 23,110
Other income 820 542
Other gains and losses 4 137 275
Selling and distribution expenses (13,107) (12,180)
Administrative and other expenses (6,188) (5,740)
Finance costs 5 (556) (560)
Share of profit of associates 581 586
Profit before taxation 6,905 6,033
Income tax expenses 8 (967) (758)
Profit for the period 5,938 5,275
Attributable to:
Owners of the Company 4,858 4,417
Non-controlling interests 1,080 858
5,938 5,275
Earnings per share
- Basic (RMB) 9 0.80 0.72
- Diluted (RMB) 9 0.79 0.72
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES________________________________4
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
2018 2017
RMB’M RMB’M
For the six months ended 30 June Notes (Unaudited) (Unaudited)
Profit for the period 5,938 5,275
Other comprehensive income/(loss)
Item that will not be reclassified subsequently
to profit or loss:
Changes in net liabilities or net assets arising from
re-measurement of defined benefit plans (7) -
Change in fair value of
equity investment at fair value through
other comprehensive income 113 -
Item that may be reclassified subsequently
to profit or loss:
Share of other comprehensive income/(loss) of associates 87 (122)
Net loss from change in fair value of
available-for-sale investments - (2)
Net fair value gain on hedging instruments
entered into for cash flow hedges 23 -
Exchange differences on translation of
financial statements denominated in
foreign currencies 175 (71)
Other comprehensive income/(loss) for the period 391 (195)
Total comprehensive income for the period 6,329 5,080
Attributable to:
Owners of the Company 5,125 4,255
Non-controlling interests 1,204 825
6,329 5,080
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES________________________________5
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At
30June 31 December
2018 2017
Notes RMB’M RMB’M
(Unaudited) (Audited)
NON-CURRENT ASSETS
Property, plant and equipment 10 18,099 17,632
Investment properties 31 31
Prepaid land lease payments 1,824 1,541
Goodwill 19,766 19,843
Other intangible assets 6,024 5,422
Investments in associates 13,425 12,993
Available-for-sale investments - 1,415
Equity instruments at fair value through
other comprehensive income 1,558 -
Prepayment for property, plant and equipment
and prepaid land lease payments 833 757
Derivative financial instruments 396 389
Deferred tax assets 1,835 1,895
Other long term financial assets 197 -
Other non-current assets 561 1,114
64,549 63,032
CURRENT ASSETS
Inventories 22,507 21,504
Trade and bills receivables 29,114 25,481
Prepayments, deposits and other receivables 4,183 4,129
Derivative financial instruments 122 77
Other financial assets 2,232 2,007
Pledged deposits 1,283 837
Cash and cash equivalents 32,185 34,340
91,626 88,375
Assets of a disposal group classified as held for sale 1,290 56
92,916 88,431
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES________________________________6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
At At
30 June 31 December
2018 2017
Notes RMB’M RMB’M
(Unaudited) (Audited)
CURRENT LIABILITIES
Trade and bill payables 47,577 42,033
Other payables and accruals 17,823 19,938
Interest-bearing borrowings 14,913 13,729
Tax payables 1,139 1,248
Provision 1,699 1,610
Derivative financial instruments 4 3
83,155 78,561
Liabilities directly associated with assets
classified as held-for-sale 297 -
83,452 78,561
NET CURRENT ASSETS 9,464 9,870
TOTAL ASSETS LESS CURRENT
LIABILITIES 74,013 72,902
NON-CURRENT LIABILITIES
Interest-bearing borrowings 13,051 16,129
Convertible and exchangeable bonds 6,348 6,211
Provisions 1,191 1,009
Deferred income 473 442
Deferred tax liabilities 163 279
Derivative financial instruments 243 249
Employee benefit obligation 955 898
Other non-current liabilities 982 935
23,406 26,152
NET ASSETS 50,607 46,750
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES________________________________7
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
At At
30 June 31 December
2018 2017
Notes RMB’M RMB’M
(Unaudited) (Audited)
CAPITAL AND RESERVES
Share capital 11 6,098 6,098
Reserves 29,169 26,118
TOTAL EQUITY ATTRIBUTABLE TO
OWNERS OF THE COMPANY 35,267 32,216
NON-CONTROLLING INTERESTS 15,340 14,534
TOTAL EQUITY 50,607 46,750
Approved and authorised for issue by the board of directors on 3 September 2018.
Liang Haishan Gong Wei Ying Ke
Legal representative Chief Financial Officer Person in charge of accounting
department
The accompanying notes form an integral part of these condensed consolidated financial statements.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES___________________________________________________________________________8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2018
Attributable to owners of the Company
Share
Held
for the Remeasurement
Restricted of defined Equity
Share benefit Cash flow method
Share Award Capital plans hedging Other investment
capital Scheme reserve reserve reserve equity reserve
RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M
At 1 January 2018 (Audited) 6,098 - - (10) 40 431 (272)
Profit for the period - - - - - - -
Other comprehensive (loss)/income for the period - - - (7) 23 - 87
Total comprehensive income for the period - - - (7) 23 - 87
Change of accounting policy of associate - - - - - - 40
Dividend payments - - - - - - -
Changes in ownership interests in subsidiaries that do not
result in a loss of control - - 47 - - - -
Other changes - - - - - - -
At 30 June 2018 (Unaudited) 6,098 - 47 (17) 63 431 (145)
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES___________________________________________________________________________9
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the six months ended 30 June 2018
Attributable to owners of the Company
Equity instruments
at fair value
through other Exchange Non-
comprehensive Reserve Other fluctuation Retained Sub- controlling Total
income reserve fund reserve reserve profit total interests equity
RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M
At 1 January 2018 (Audited) 4 2,104 825 203 22,793 32,216 14,534 46,750
Profit for the period - - - - 4,858 4,858 1,080 5,938
Other comprehensive (loss)/income for the period 113 - - 51 - 267 124 391
Total comprehensive income for the period 113 - - 51 4,858 5,125 1,204 6,329
Change of accounting policy of associate - - - - (75) (35) - (35)
Dividend payments - - - - (2,086) (2,086) (401) (2,487)
Changes in ownership interests in subsidiaries that do not
result in a loss of control - - - - - 47 - 47
Other changes - - - - - - 3 3
At 30 June 2018 (Unaudited) 117 2,104 825 254 25,490 35,267 15,340 50,607
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES___________________________________________________________________________10
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the six months ended 30 June 2017
Attributable to owners of the Company
Share
Held
for the Remeasurement
Restricted of defined Equity
Share benefit Cash flow method
Share Award Capital plans hedging Other investment
capital Scheme reserve reserve reserve equity reserve
RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M
At 1 January 2017 (Audited) 6,098 (1) - (6) 12 - 35
Profit for the period - - - - - - -
Other comprehensive (loss)/income for the period - - - - - - (122)
Total comprehensive income for the period - - - - - - (122)
Dividend payments - - - - - - -
Transfer to reserves fund - - - - - - -
Change in equity of subsidiaries - - 224 - - - -
Acquisition from non-controlling interests - - 2 - - - -
Change in equity of associates - - 6 - - - -
Business combination under common control - - - - - - -
Transfer to capital reserve - - - - - - -
Issue of exchangeable notes - - - - - - -
Conversion of exchangeable notes - - - - - - -
Other changes - - - - - - -
At 30 June 2017 (Unaudited) 6,098 (1) 232 (6) 12 - (87)
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES___________________________________________________________________________11
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the six months ended 30 June 2017
Attributable to owners of the Company
Available-
for-sale
financial Exchange Non-
assets Reserve Other fluctuation Retained Sub- controlling Total
reserve fund reserve reserve profit total interests equity
RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M
At 1 January 2017 (Audited) 7 2,077 82 520 17,614 26,438 11,242 37,680
Profit for the year - - - - 4,417 4,417 858 5,275
Other comprehensive (loss)/income for the period (2) - - (38) - (162) (33) (195)
Total comprehensive income for the period (2) - - (38) 4,417 4,255 825 5,080
Dividend payments - - - - (1,512) (1,512) (249) (1,761)
Transfer to reserves fund - - - - - - - -
Change in equity of subsidiaries - - - - - 224 - 224
Acquisition from non-controlling interests - - - - - 2 - 2
Change in equity of associates - - - - - 6 - 6
Business combination under common control - - - - - - - -
Transfer to capital reserve - - - - - - - -
Issue of exchangeable notes - - - - - - 352 352
Conversion of exchangeable notes - - - - - - 677 677
Other changes - - - - - - 372 372
At 30 June 2017(Unaudited) 5 2,077 82 482 20,519 29,413 13,219 42,632
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________12
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
2018 2017
RMB’M RMB’M
For the six months ended 30 June (Unaudited) (Unaudited)
NET CASH FLOWS FROM OPERATING ACTIVITIES 5,368 8,434
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for acquisition of subsidiary, net of cash acquired - (70)
Payment for acquisition of associates (30) (163)
Payment for purchase of property, plant and equipment (2,737) (1,690)
Payment for equity instruments at fair value through other
comprehensive income (2017: available-for-sale investments) (10) (11)
Payment for other financial assets (2,502) (594)
Mainland China corporate income tax paid on investing activities (15) -
Advances to a fellow subsidiary - (20)
Net cash (outflow)/inflow from disposal of subsidiaries (57) 6
Proceeds from disposal of property, plant and equipment 66 38
Redemption of other financial assets 2,183 14
Dividends from associates 135 82
Interest received from other financial assets 41 11
Received of government grant related to assets 9 -
Dividends received on financial assets held as investments 68 19
NET CASH USED IN INVESTING ACTIVITIES (2,849) (2,378)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceed from issuance of additional equity of
non-wholly owned subsidiaries 80 403
Proceed from borrowings 4,510 12,543
Repayment of borrowings (6,528) (13,233)
Interest paid for borrowings (122) (127)
Payments for options bought back - (12)
Capital element of finance lease obligation - (6)
Payment for issuance costs of convertible and
exchangeable bonds (59) -
Increase in pledged deposits (446) (58)
Transactions with non-controlling interests (9) (10)
Dividends paid to shareholders (2,085) -
Dividends paid to non-controlling shareholders (26) (4)
NET CASH USED IN FINANCING ACTIVITIES (4,685) (504)
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________13
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
2018 2017
RMB’M RMB’M
For the six months ended 30 June (Unaudited) (Unaudited)
Net (decrease)/increase in cash and cash equivalents (2,166) 5,552
Cash and cash equivalents at the beginning of the period 34,340 23,295
Effect of foreign exchange rate changes 11 (73)
CASH AND CASH EQUIVALENT AT THE END
OF THE PERIOD 32,185 28,774
Analysis of balances of cash and cash equivalents
Cash and bank balances 32,185 28,774
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________14
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2018
1. GENERAL INFORMATION
Qingdao Haier Co., Ltd. is a limited liability company incorporated in the People Republic of
China. The Company is listed on Shanghai Stock Exchange since the year 1993. The registered
office of the Company is located at the Haier Industrial Park of Laoshan District, Qingdao,
Shandong Province, and the headquarters is located at the Haier Industrial Park of Laoshan
District, Qingdao, Shandong Province.
In the opinion of the directors of the Company, the ultimate holding company of the Company is
Haier Group Corporation (‘Haier Corp’), which is established in the PRC.
The Company and its subsidiaries (collectively referred to as the ‘Group’) are mainly engaged in
manufacturing and trading as well as R&D of refrigerator, air-conditioner, freezer, washing
machine, water heater, dishwashers, gas stove, kitchen appliances and relevant products and
commercial circulation business.
Pursuant to E.U. Prospectus Regulation No. 809/2004, an issuer’s listing prospectus must
include historical financial information covering the previous three fiscal years. In addition to the
consolidated financial statements for years ended 31 December 2017, 2016 and 2015, the Group
presents condensed consolidated financial statements for the six months ended 30 June 2018.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated interim financial statements consist of condensed consolidated
statement of profit or loss, condensed consolidated statement of other comprehensive income,
condensed consolidated statement of financial position, condensed consolidated statement of
cash flows, condensed consolidated statement of changes in equity and notes to the condensed
consolidated financial statements for the six months ended 30 June 2018.
The condensed consolidated interim financial statements have been prepared and published in
million of RMB (‘RMB’M’) except when otherwise indicated and on a historical cost basis as
modified by the revaluation of financial assets and financial liabilities, including derivative
instruments at fair value through profit or loss.
For further explanations of Qingdao Haier Co., Ltd. and additional information reference is made
to the consolidated financial statements for the years ended 31 December 2017. The condensed
consolidated interim financial statements should be read in conjunction with these consolidated
financial statements.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________15
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
Condensed consolidated financial statements of the Company and its subsidiaries (the ‘Group’)
as of and for the six months ended 30 June 2018 have been prepared in accordance with
International Financial Reporting Standards (‘IFRS’), as endorsed by the European Union (‘EU’)
and, in particular, for interim financial information according to International Accounting
Standard (‘IAS’) 34, Interim Financial Reporting.
IFRS does not provide guidance for the preparation of financial information on a combined basis
nor for business combinations involving entities under common control. As such, IAS 8.10
requires management to use judgment in developing and applying a suitable accounting policy.
In making this judgment, IAS 8.12 requires management to consider the most recent
pronouncements of other standard-setting bodies that use a similar conceptual framework to
developing accounting standards, other accounting literature and accepted industry practices.
New standards, interpretations and amendments adopted by the Group
The Group applies, for the first time, IFRS 15 Revenue from Contracts with Customers and IFRS
9 Financial Instruments that require restatement of previous financial statements. As required by
IAS 34, the nature and effect of these changes are disclosed below.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretations
and it applies to all revenue arising from contracts with customers, unless those contracts are in
the scope of other standards. The new standard establishes a five-step model to account for
revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an
amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer.
The standard requires entities to exercise judgement, taking into consideration all of the relevant
facts and circumstances when applying each step of the model to contracts with their customers.
The standard also specifies the accounting for the incremental costs of obtaining a contract and
the costs directly related to fulfilling a contract.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________16
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
New standards, interpretations and amendments adopted by the Group (continued)
IFRS 15 Revenue from Contracts with Customers (continued)
The Group provides a right of return for some of the sales contracts of home appliances with
customers. Prior to the adoption of IFRS 15, the Group recognised revenue from the sale of
goods measured at fair value of the consideration received or receivable, net of returns and
allowances, trade discounts and volume rebates. If revenue could not be reliably measured, the
Group deferred the revenue recognition until the uncertainty is resolved. Under IFRS 15, right of
return gives rise to variable consideration. The Group uses the expected value method to estimate
the goods that will be returned because this method best predicts the amount of variable
consideration to which the Group will be entitled. The directors of the Group have assessed that
the application of IFRS 15 does not have a material impact on the Group’s condensed
consolidated financial statements for the period ended 30 June 2018. As at 30 June 2018,
contract liabilities of RMB3,486 million in respect of advance payment received from customers
were included in other payables and accruals.
IFRS 9 Financial Instruments
In the current period, the Group has applied IFRS 9 Financial Instruments and the related
consequential amendments to other IFRSs. IFRS 9 introduces new requirements for 1) the
classification and measurement of financial assets and financial liabilities, 2) expected credit
losses (“ECL”) for financial assets and 3) general hedge accounting.
The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9, i.e.
applied the classification and measurement requirements (including impairment) retrospectively
to instruments that have not been derecognised as at 1 January 2018 (date of initial application)
and has not applied the requirements to instruments that have already been derecognised as at 1
January 2018.
The following table shows the reconciliation of the categories and carrying amounts of financial
instruments as well as the impact on Group equity of the first-time application of IFRS 9.
Accordingly, certain comparative information may not be comparable as comparative
information was prepared under IAS 39 Financial Instruments: Recognition and Measurement.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________17
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
New standards, interpretations and amendments adopted by the Group (continued)
Key changes in accounting policies resulting from application of IFRS 9
Classification and measurement of financial assets
All recognised financial assets that are within the scope of IFRS 9 are subsequently measured at
amortised cost or fair value.
Debt instruments that meet the following conditions are subsequently measured at fair value
through other comprehensive income (“FVTOCI”):
the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Debt instruments classified as at FVTOCI
Subsequent changes in the carrying amounts for debt instruments classified as at FVTOCI as a
result of interest income calculated using the effective interest method are recognised in profit or
loss. All other changes in the carrying amount of these debt instruments are recognised in OCI
and accumulated under the heading of FVTOCI reserve. Impairment allowance is recognised in
profit or loss with corresponding adjustment to OCI without reducing the carrying amounts of
these debt instruments. The amounts that are recognised in profit or loss are the same as the
amounts that would have been recognised in profit or loss if these debt instruments had been
measured at amortised cost. When these debt instruments are derecognised, the cumulative gains
or losses previously recognised in other comprehensive income are reclassified to profit or loss.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or
designated as FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with
any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in
profit or loss excludes any dividend or interest earned on the financial asset and is separately
disclosed in the condensed consolidated statement of profit or loss.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________18
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
New standards, interpretations and amendments adopted by the Group (continued)
Financial assets at FVTPL (continued)
Impairment under ECL model
The Group assesses ECL on financial assets which are subject to impairment under IFRS 9
(including other receivables, debt instruments at fair value through other comprehensive income
and cash and bank balances). The assessment is updated at each reporting date to reflect changes
in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the
expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the
portion of lifetime ECL that is expected to result from default events that are possible within 12
months after the reporting date. Assessment are done based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the debtors, general economic conditions and
an assessment of both the current conditions at the reporting date as well as the forecast of future
conditions.
The Group measures the loss allowance equal to 12m ECL, unless when there has been a
significant increase in credit risk since initial recognition, the Group recognises lifetime ECL.
The assessment of whether lifetime ECL should be recognised is based on significant increases
in the likelihood or risk of a default occurring since initial recognition.
Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the financial instrument as at the reporting
date with the risk of a default occurring on the financial instrument as at the date of initial
recognition. In making this assessment, the Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-
looking information that is available without undue cost or effort.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________19
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
New standards, interpretations and amendments adopted by the Group (continued)
Significant increase in credit risk (continued)
In particular, the following information is taken into account when assessing whether credit risk
has increased significantly:
an actual or expected significant deterioration in the financial instrument’s external (if
available) or internal credit rating;
significant deterioration in external market indicators of credit risk;
existing or forecast adverse changes in business, financial or economic conditions that are
expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor;
an actual or expected significant adverse change in the regulatory, economic, or
technological environment of the debtor that results in a significant decrease in the debtor’s
ability to meet its debt obligations.
Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the
probability of default and loss given default is based on historical data adjusted by forward-
looking information.
Generally, the ECL is estimated as the difference between all contractual cash flows that are due
to the Group in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at the effective interest rate determined at initial recognition.
Interest income is calculated based on the gross carrying amount of the financial asset unless the
financial asset is credit impaired, in which case interest income is calculated based on amortised
cost of the financial asset.
Except for investments in debt instruments that are measured at FVTOCI, the Group recognises
an impairment gain or loss in profit or loss for all financial instruments by adjusting their
carrying amount. For investments in debt instruments that are measured at FVTOCI, the loss
allowance is recognised in OCI and accumulated in the FVTOCI reserve without reducing the
carrying amounts of these debt instruments.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________20
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
New standards, interpretations and amendments adopted by the Group (continued)
Measurement and recognition of ECL (continued)
Summary of effects arising from initial application of IFRS 9
Equity
Available-for-instruments
sale investments at FVTOCI
Financial assets RMB’M RMB’M
At 31 December 2017 – IAS 39 1,415 -
Effect arising from initial application of IRS 9:
Reclassification
from available-for-sale investments (1,415) 1,415
At 1 January 2018 - 1,415
Notes: Available-for-sale investments of RMB$1,415 million were reclassified from available-
for-sale financial assets to financial assets at FVTOCI, as these investments are held
within a business model whose objective is achieved by both collecting contractual cash
flows and selling of these assets and the contractual cash flows of these investments are
solely payments of principal and interest on the principal amount outstanding.
3. SEGMENT INFORMATION
For management purposes, the Group is organized into business units based on their products
and services and has six reportable segments as follows:
Refrigerator segment mainly engaged in manufacture and sales of refrigerator and freezers
products;
Air-conditioner segment mainly engaged in manufacture and sales of household air
conditioners and commercial air conditioners;
Washing machine segment mainly engaged in manufacture and sales of washing machine
products;
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________21
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
For management purposes, the Group is organized into business units based on their products
and services and has six reportable segments as follows: (continued)
Kitchenware and bathroom appliances segment mainly engaged in manufacture and sales of
water heater and kitchen appliances products;
Equipment components segment mainly engaged in procurement, manufacture and sales of
upstream matching accessories for household appliances, manufacture and sales of mould;
and
Integrated channel services and others segment mainly engaged in distribution business,
logistics business, after-sale business, small home appliance business and others.
The Group’s 3rd and 4th tier markets channel business is treated as integrated channel services
and assessed separately from other segments. Accordingly, operating profits from 3rd and 4th
tier markets of refrigerator, air-conditioner, kitchenware and bathroom appliances, washing
machine businesses was not reflected in operating profits of each segment.
Management monitors the results of the Group’s operating segments separately for the purpose
of making decisions about resource allocation and performance assessment. Segment
performance is evaluated based on operating segment profits, which is a measure of adjusted
profit before tax. The adjusted profit before tax is measured consistently with the Group’s profit
before tax except other income, other gains and losses, share of profits of associates, corporate
and other unallocated income and gains, corporate and other unallocated expenses and losses as
well as finance costs are excluded from such measurement.
Segment assets exclude goodwill, equity instruments at fair value through other comprehensive
income (2017: available-for-sale investments), investments in associates, deferred tax assets,
cash and cash equivalents and corporate and other unallocated assets as these assets are managed
on a group basis.
Segment liabilities exclude deferred tax liabilities, tax payables, interest-bearing borrowings,
convertible and exchangeable bonds and corporate and other unallocated liabilities as these
liabilities are managed on a group basis.
Intersegment sales of the air-conditioner, washing machine, water heater, refrigerator,
kitchenware and bathroom appliances businesses represent the sales of air-conditioner, washing
machines, water heaters, refrigerator, kitchenware and bathroom appliances through the Group’s
channel services business. Intersegment sales of the logistics business represent the logistics
services provided to the air-conditioner, washing machines, water heaters, refrigerator,
kitchenware and bathroom appliances as well as channel services businesses, while intersegment
sales of the channel services business represent the after-sale services provided to the air-
conditioner, washing machines, water heaters, refrigerator, kitchenware and bathroom appliances
businesses. Such intersegment sales and transfers are transacted in accordance with the terms and
conditions mutually agreed by the parties involved.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________22
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Segment revenue and results
Revenue from external customers Inter-segment revenue Total segment revenue Segment’s profit before tax
Six months ended Six months ended Six months ended Six months ended
30 June 30 June 30 June 30 June
2018 2017 2018 2017 2018 2017 2018 2017
RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M RMB’M
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Refrigerator segment 13,280 11,672 10,062 8,989 23,342 20,661 1,907 1,658
Air-conditioner segment 6,871 5,935 13,122 10,130 19,993 16,065 1,181 1,014
Washing machine segment 7,535 6,419 6,875 5,804 14,410 12,223 1,346 1,141
Kitchenware and bathroom
appliances segment 10,052 9,671 3,378 2,847 13,430 12,518 1,007 913
Equipment components segment 1,373 1,529 29,020 18,575 30,393 20,104 238 172
Integrated channel services
and others segment 49,470 42,349 6,611 5,847 56,081 48,196 693 645
Total segment 88,581 77,575 69,068 52,192 157,649 129,767 6,372 5,543
Reconciliation to condensed
consolidated financial statements - - (69,068) (52,192) (69,068) (52,192) 533 490
88,581 77,575 - - 88,581 77,575 6,905 6,033
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________23
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Segment revenue and results (continued)
Six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Reconciliation to condensed consolidated financial statements:
Total of segments’ profit before tax 6,372 5,543
Other income 820 542
Other gains 137 275
Share of profits of associates 581 586
Finance costs (556) (560)
Eliminations, Corporate Treasury, Corporate Items, other items (449) (353)
Reconciliation to condensed consolidated financial statements 533 490
Profit before tax 6,905 6,033
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________24
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Segment assets and liabilities
Total assets Total liabilities
At At At At
30 June 31 December 30 June 31 December
2018 2017 2018 2017
RMB’M RMB’M RMB’M RMB’M
(Unaudited) (Audited) (Unaudited) (Audited)
Refrigerator segment 15,642 15,093 25,374 23,320
Air-conditioner segment 17,848 14,045 8,938 8,165
Washing machine segment 13,573 10,774 5,862 5,650
Kitchenware and bathroom appliances segment 12,363 12,462 6,382 6,468
Equipment components segment 32,462 26,193 34,669 28,089
Integrated channel services and others segment 36,267 31,818 30,787 26,754
Total segment 128,155 110,385 112,012 98,446
Reconciliation to condensed consolidated financial statements 29,310 41,078 (5,154) 6,267
157,465 151,463 106,858 104,713
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________25
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Segment assets and liabilities (continued)
At At
30 June 31 December
2018 2017
RMB’M RMB’M
(Unaudited) (Audited)
Reconciliation to condensed consolidated financial statements:
Total assets
Total of segments’ assets 128, 155 110,385
Goodwill 19,766 19,843
Deferred tax assets 1,835 1,895
Equity instruments at fair value through other comprehensive income 1,588 -
Available-for-sale investments - 1,415
Interests in associates 13,425 12,993
Eliminations, Corporate Treasury, Corporate Items, other items (7,304) 4,932
Reconciliation to condensed consolidated financial statements 29,310 41,078
Total assets 157,465 151,463
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________26
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Segment assets and liabilities (continued)
At At
30 June 31 December
2018 2017
RMB’M RMB’M
(Unaudited) (Audited)
Reconciliation to condensed consolidated financial statements: (continued)
Total liabilities
Total of segments’ liabilities 112,012 98,446
Convertible and exchangeable bonds 6,348 6,211
Tax payables 1,139 1,248
Interest-bearing borrowings 27,964 29,858
Deferred tax liabilities 163 279
Eliminations, Corporate Treasury, Corporate Items, other items (40,768) (31,329)
Reconciliation to condensed consolidated financial statements (5,154) 6,267
Total liabilities 106,858 104,713
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES____________________________________________________________________________27
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Other segment information
Product warranty and
installation provisions Depreciation and amortisation
Six months ended Six months ended
30 June 30 June 30 June 30 June
2018 2017 2018 2017
RMB’M RMB’M RMB’M RMB’M
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Refrigerator segment 737 770 392 400
Air-conditioner segment 710 688 221 189
Washing machine segment 409 359 216 202
Kitchenware and bathroom appliances segment 260 239 305 303
Equipment components segment - - 62 66
Integrated channel services and others segment - - 191 181
Total segment 2,116 2,056 1,387 1,341
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 29
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
3. SEGMENT INFORMATION (CONTINUED)
Geographical information
The following table sets out information about the geographical location of (i) the Group’s
revenue from external customers and (ii) the Group’s property, plant and equipment, investment
properties, prepaid land lease payments, other intangible assets, long-term prepayment, other
long term financial assets and other non-current assets (‘specified non-current assets’). The
geographical location of customers is based on the location at which the services were provided
or the goods delivered. The geographical location of the specified non-current assets is based on
the physical location of the asset in the case of property, plant and equipment, investment
properties, prepaid land lease payments and long-term prepayment, the location of the operation
to which they are allocated in the case of other intangible assets.
Revenues from Specified
external customers non-current assets
Six months ended At At
30 June 30 June 31 December
2018 2017 2018 2017
RMB’M RMB’M RMB’M RMB’M
(Unaudited) (Unaudited) (Unaudited) (Audited)
Mainland China 52,783 42,482 13,332 12,105
Other countries/regions* 35,798 35,093 14,237 14,392
88,581 77,575 27,569 26,497
* Other countries/regions in this report refer to all other countries/regions (including Hong
Kong and Macau Special Administration Region and Taiwan) other than the Mainland
China for the purpose of information disclosure.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 30
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
4. OTHER GAINS AND LOSSES
For the six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Net gain on disposal of equity instruments at
fair value through other comprehensive
income (2017: available-for-sale investments) - 1
Net gain on disposal of associates and subsidiaries 18 20
Gain on disposal/written-off of items of property,
plant and equipment, net (16) -
Net foreign exchange losses (59) (172)
Net gain on disposal of derivative financial instruments 157 14
Fair value change on derivative financial instruments 37 412
137 275
5. FINANCE COSTS
For the six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Interest on interest-bearing borrowings 420 533
Interest on convertible and exchangeable bonds 81 1
Other interest expenses 55 26
556 560
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 31
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
6. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
For the six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Cost of inventories sold 60,676 52,173
Cost of services provided 2,687 2,292
Depreciation and amortisation 1,387 1,341
Research and development costs 2,171 2,109
Foreign exchange differences, net 59 172
7. DIVIDEND
A final dividend in respect of the year ended 31 December 2017 of RMB3.42 per ten share (2016:
RMB2.48 per ten shares) was proposed pursuant to a resolution passed by the board on 18 May
2018 and approved by the shareholders of the Company at 2018 annual general meeting. Such
dividend amounting to RMB2,085 million (final dividend for 2016: RMB1,512 million) was paid
before 30 June 2018.
The board did not declare any interim dividend for the six months ended 30 June 2018 and 2017.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 32
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
8. INCOME TAX EXPENSES
For the six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Current tax
Charge for the period 1,111 855
Overprovision in prior years (94) (76)
1,017 779
Deferred tax (50) (21)
Total income tax expenses for the period 967 758
(i) PRC corporate income tax
PRC corporate income tax has been provided for at applicable tax rates under the relevant
regulations of the PRC after considering the available tax benefits from refunds and
allowances, and on the estimated assessable profits of entities within the Group
established in the PRC for the six months ended 30 June 2018 and 2017. The general
PRC corporate income tax rate is 25% in the six months ended 30 June 2018 and 2017.
Certain subsidiaries of the Company in the PRC were approved as High and New
Technology Enterprise, and accordingly, they were subject to a reduced preferential
corporate income tax rate of 15% for the six months ended 30 June 2018 and 2017.
(ii) Corporate income tax in other countries
Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant
jurisdictions.
(iii) Withholding tax
According to applicable tax regulations prevailing in the PRC, dividends distributed by a
company established in the PRC to a foreign investor with respect to profits derived after
1 January 2008 are generally subject to a 10% withholding tax.
Withholding taxes on dividends distribution at respective applicable tax rates are under
certain jurisdictions that the Group’s entities operate.
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 33
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
9. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF
THE COMPANY
The calculation of the basic earnings per share amount is based on the profit for the six months
ended 30 June 2018 and 2017 attributable to ordinary equity holders of the Company, and the
weighted average number of ordinary shares of 6,097,402,727 and 6,097,402,727 respectively, as
adjusted to exclude the shares issued or repurchased under the Restricted Share Award Scheme
in prior years.
The calculation of the diluted earnings per share amount is based on the profit for the year
attributable to ordinary equity holders of the Company, adjusted to reflect the interest on the
convertible bonds and/or convertible and exchangeable bonds, where applicable (see below). The
weighted average number of ordinary shares used in the calculation is the number of ordinary
shares in issue during the years, as used in the basic earnings per share calculation, and the
weighted average number of ordinary shares assumed to have been issued at no consideration on
the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary shares.
The calculation of basic and diluted loss per share is based on:
For the six months ended
30 June
2018 2017
RMB’M RMB’M
(Unaudited) (Unaudited)
Earnings
Profit attributable to ordinary equity holders of the Company
used in the basic earnings per share calculation 4,858 4,417
Profit for the year from subsidiaries used in the
calculation of diluted earnings per shares from
convertible and exchangeable bonds (147) -
Interest on convertible and exchangeable bonds 81 1
4,792 4,418
For the six months ended
30 June
2018 2017
Number of Number of
shares shares
(Unaudited) (Unaudited)
Weighted average number of
ordinary shares in issue during the period
used in the basic earnings per share
calculation 6,097,402,727 6,097,402,727
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 34
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
10. PROPERTY, PLANT AND EQUIPMENT
During the period, the Group incurred construction costs for production plants and warehouses
and purchased items of property, plant and equipment at a total cost of RMB1,993 million (31
December 2017: RMB3,384 million) and disposed of items of property, plant and equipment
with a total net carrying amount of RMB96 million (2017: RMB471 million).
11. SHARE CAPITAL
At At
30 June 2018 31 December 2017
Number Number
of of
shares shares
’million RMB’M ’million RMB’M
(Unaudited) (Unaudited) (Audited) (Audited)
Issued share capital 6,098 6,098 6,098 6,098
12. OPERATING LEASE ARRANGEMENTS
(a) As lessor
The Group leases its investment properties under operating lease arrangements, with
leases negotiated for terms ranging from 1 to 5 years. At the end of the reporting period,
the Group had total future minimum lease receivables under non-cancellable operating
leases with its tenants falling due as follows:
At At
30 June 31 December
2018 2017
RMB’M RMB’M
(Unaudited) (Audited)
Within one year 23 20
In the second to fifth years, inclusive 40 12
After five years - 1
63 33
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 35
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
12. OPERATING LEASE ARRANGEMENTS (CONTINUED)
(b) As lessee
The Group leases certain properties under operating lease arrangements. Leases for the
properties are negotiated for terms ranging from one to twenty years.
At the end of the reporting period, the Group had total future minimum lease payments
under non-cancellable operating leases falling due as follows:
At At
30 June 31 December
2018 2017
RMB’M RMB’M
(Unaudited) (Audited)
Within one year 716 926
In the second to fifth years, inclusive 826 988
After five years 253 322
1,795 2,236
13. COMMITMENTS
In addition to the operating lease commitments detailed in note 12 above, the Group had the
following commitments at the end of the reporting period:
At At
30 June 31 December
2018 2017
RMB’M RMB’M
(Unaudited) (Audited)
Contracted, but not provided for:
Property, plant and equipment 1,380 1,744
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 36
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
14. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group’s financial instruments, other than those with
carrying amounts that reasonably approximate to fair values, are as follows:
Carrying amounts Fair values
At At At At
30 June 31 December 30 June 31 December
2018 2017 2018 2017
RMB’M RMB’M RMB’M RMB’M
(Unaudited) (Audited) (Unaudited) (Audited)
Financial assets
Equity instruments at fair value through
other comprehensive income 1,558 - 1,558 -
Available-for-sale investments - 27 - 27
Derivative financial instruments 518 466 518 466
Other financial assets 1,301 - 1,301 -
3,377 493 3,377 493
Financial liabilities
Derivative financial instruments 247 252 247 252
Put option liabilities 970 917 970 917
Convertible and exchangeable bonds 6,348 6,211 6,240 6,605
Contingent considerations 6 5 6 5
7,571 7,385 7,463 7,779
QINGDAO HAIER CO., LTD. AND ITS SUBSIDIARIES______________________________ 37
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended 30 June 2018
15. EVENTS AFTER THE REPORTING PERIOD
1. On 23 November 2017, the Company held the first extraordinary general meeting of
shareholders in 2017, and passed the resolution of “Proposal on the Issue of Convertible
Bonds by Qingdao Haier Co., Ltd.”. At the same time, according to the authorization of the
general meeting of shareholders to the board of directs, the resolution of the 17th meeting of
the 9th session of the board of directors of the Company held on 24 August 2018, the
Company passed the resolution on the adjustment of issuance proposal of convertible bonds.
The Company will issue convertible bonds of no more than RMB3.01 billion at RMB100 per
face value, and the term of convertible bonds shall not exceed six years from the date of issue.
The issue size, maturity, coupon interest rate and payment period of the convertible bonds are
authorized by the Company’s board of directors to be implemented by the Company's
shareholders. The issue of convertible bonds is subject to the approval of the China Securities
Regulatory Commission, and there is still uncertainty about whether or not the approval can
be obtained.
2. The Company acquired the 100% equity interest of Haier New Zealand Investment Holding
Company Limited (“Haier New Zealand”) which is held by Haier (Singapore) Management
Holding Co. Pte. Limited (“Haier Singapore”), through overseas subsidiary Haier Singapore
Investment Holding Pte. Ltd. at cash consideration of approximately US$303 million on 31
July 2018.
3. On 30 August 2018, Guanmei (Shanghai) Enterprise Management Co., Ltd. (“Guanmei”), an
indirectly owned subsidiary of the Company, entered into an asset swap agreement (“Assets
Swap Agreement”) with Haier Electric International Co., Ltd. (“Haier International”), a
subsidiary of Haier Corp (“Haier Group Corporation”). Pursuant to the Asset Swap
Agreement, Guanmei has agreed to acquire and Haier International has agreed to sell the 51
% of the equity interest in Qingdao Haishi Water Equipment Co., Ltd. at a consideration of
approximately RMB1.074 billion. In satisfaction of the consideration, Guanmei has agreed to
transfer the 55 % of the equity interest in Bingji (Shanghai) Enterprise Management Co., Ltd.
to Haier International at the same consideration. Details of which are set out in the
announcement of the Company dated 30 August 2018.
Saved as disclosed above, so far as is known to the directors, there are no other subsequent
events occurred after 30 June 2018, which may have significant effects, on the assets and
liabilities of future operations of the Group.
--- End of Notes ---
