Midea Group Co., Ltd.
Semi-Annual Report 2022
August 2022
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Midea Group Co., Ltd. Semi-Annual Report 2022
Section I Important Statements, Contents and Definitions
The Board of Directors, the Supervisory Committee, directors, supervisors and senior
management of Midea Group Co., Ltd. (hereinafter referred to as the “Company”)
hereby guarantee that the information presented in this report is free of any
misrepresentations, misleading statements or material omissions, and shall together
be wholly liable for the truthfulness, accuracy and completeness of its contents.
Mr. Fang Hongbo, Chairman of the Board and CEO of the Company, Ms. Zhong Zheng,
CFO and Director of Finance of the Company, and Ms. Chen Lihong, head of the
accounting department of the Company, have represented and warranted that the
financial statements in this report are true, accurate and complete.
All directors of the Company attended the Board meeting to review this report.
The future plans and other forward-looking statements mentioned in this report shall
not be considered as promises of the Company to investors. Therefore, investors are
kindly reminded to pay attention to possible investment risks.
The Company plans not to distribute cash dividends or bonus shares or convert
capital reserves into share capital.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
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Midea Group Co., Ltd. Semi-Annual Report 2022
Contents
SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ............................. 2
SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ........................................ 6
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS ................................................... 9
SECTION IV CORPORATE GOVERNANCE .......................................................................... 94
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ....................................... 106
SECTION VI SIGNIFICANT EVENTS ................................................................................... 131
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ..... 142
SECTION VIII PREFERENCE SHARES ............................................................................... 148
SECTION IX BONDS ............................................................................................................ 149
SECTION X FINANCIAL REPORT ........................................................................................ 152
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Midea Group Co., Ltd. Semi-Annual Report 2022
Documents Available for Reference
1. The original of The Semi-Annual Report 2022 of Midea Group Co., Ltd. signed by
the legal representative;
2. The financial statements signed and stamped by the legal representative, the CFO
& Director of Finance and the head of the accounting department;
3. The originals of all company documents and announcements that are disclosed to
the public via newspaper designated for information disclosure during the Reporting
Period; and
4. The electronic version of The Semi-Annual Report 2022 that is released on
http://www.cninfo.com.cn.
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Midea Group Co., Ltd. Semi-Annual Report 2022
Definitions
Term Definition
The “Company”, “Midea”, “Midea Group”
Midea Group Co., Ltd.
or the “Group”
Midea Holding Midea Holding Co., Ltd.
TLSC Toshiba Lifestyle Products & Services Corporation
KUKA KUKA Aktiengesellschaft
Hiconics Hiconics Eco-energy Technology Co., Ltd.
WDM Beijing Wandong Medical Technology Co., Ltd.
Clou Electronics ShenZhen Clou Electronics Co., Ltd.
Swisslog Swisslog Holding AG
Servotronix Servotronix Motion Control Ltd.
WINONE WINONE Elevator Company Limited
“TTium” or “TTium Motor” WuHan TTium Motor Technology Co., Ltd.
Reporting Period 1 January 2022 to 30 June 2022
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Midea Group Co., Ltd. Semi-Annual Report 2022
Section II Company Profile and Key Financial Results
1. Corporate Information
Stock name Midea Group Stock code 000333
Stock exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
美的集团股份有限公司
Chinese
Abbr. of the Company name
美的集团
in Chinese (if any)
Name of the Company in
Midea Group Co., Ltd.
English (if any)
Abbr. of the Company name
Midea Group
in English (if any)
Legal representative Fang Hongbo
2. Contact Us
Representative for Securities
Board Secretary
Affairs
Name Jiang Peng You Mingyang
Midea Headquarters Building,
Midea Headquarters Building,
No. 6 Midea Avenue, Beijiao
No. 6 Midea Avenue, Beijiao
Address Town, Shunde District, Foshan
Town, Shunde District, Foshan
City, Guangdong Province,
City, Guangdong Province, China
China
Tel. 0757-22607708 0757-23274957
Fax 0757-26605456
E-mail IR@midea.com
3. Other Information
3.1 Ways to Contact the Company
Changes to the registered address, office address and their zip codes, website address and email
address of the Company in the Reporting Period:
□Applicable N/A
No such changes in the Reporting Period. The said information can be found in the 2021 Annual Report.
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Midea Group Co., Ltd. Semi-Annual Report 2022
3.2 Information Disclosure and Place Where the Semi-Annual Report Is Kept
Changes to the media for information disclosure and the place where materials carrying disclosed
information such as this Report were kept in the Reporting Period:
□Applicable N/A
The newspapers designated by the Company for information disclosure, the website designated by the
CSRC for disclosing this Report and the place where materials carrying disclosed information such as
this Report were kept did not change in the Reporting Period. The said information can be found in the
2021 Annual Report.
3.3 Other Information
Changes to other information in the Reporting Period:
□Applicable N/A
4. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□Yes No
H1 2022 H1 2021 Change (%)
Operating revenue (RMB'000) 182,661,009 173,809,565 5.09%
Net profit attributable to shareholders
15,995,496 15,009,046 6.57%
of the Company (RMB'000)
Net profit attributable to shareholders
of the Company before non-recurring 15,691,512 14,636,511 7.21%
gains and losses (RMB'000)
Net cash flows from operating activities
21,394,710 20,176,410 6.04%
(RMB'000)
Basic earnings per share (RMB/share) 2.34 2.17 7.83%
Diluted earnings per share
2.34 2.16 8.33%
(RMB/share)
Weighted average ROE (%) 12.18% 12.63% -0.45%
30 June 2022 31 December 2021 Change (%)
Total assets (RMB'000) 413,104,145 387,946,104 6.48%
Net assets attributable to shareholders
129,665,290 124,868,124 3.84%
of the Company (RMB'000)
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Midea Group Co., Ltd. Semi-Annual Report 2022
5. Differences in Accounting Data under Domestic and Overseas Accounting
Standards
5.1 Differences in the net profit and net assets disclosed in the financial reports prepared under
China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□Applicable N/A
No such differences for the Reporting Period.
5.2 Differences in the net profit and net assets disclosed in the financial reports prepared under
CAS and foreign accounting standards
□Applicable N/A
No such differences for the Reporting Period.
6. Non-recurring Gains and Losses
Applicable □N/A
Unit: RMB'000
Item Amount Note
Gain or loss from disposal of non-current assets 22,156
Except for effectively hedging business related to normal business
operations of the Company, gain or loss arising from the change in
the fair value of financial assets held for trading, derivative
financial assets, financial liabilities held for trading, derivative -434,341
financial liabilities, and other non-current financial assets, as well
as investment income or loss produced from the disposal of the
aforesaid financial assets and liabilities
Other non-operating income and expenses except above-
772,377
mentioned items
Less: Corporate income tax 30,095
Minority interests (after tax) 26,113
Total 303,984 --
Particulars about other items that meet the definition of non-recurring gain/loss:
□Applicable N/A
Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is enumerated
as a non-recurring gain/loss in the :
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2022
Section III Management Discussion and Analysis
1. Business Scope in the Reporting Period
1.1 Summary of business scope
Midea is a global technology group comprising five major business divisions: the Smart Home Business
Group, the Industrial Technology Business Group, the Building Technologies Division, the Robotics &
Automation Division, and the Digital Innovation Business. Midea offers diversified products and services.
Specifically, the Smart Home Business Group, as the main operating entity of smart appliances, smart
home and related peripheral industries and ecological chains, undertakes the construction of intelligent
scenarios for end users, user operations and data value discovery, and is committed to providing the best
experience of whole-house smart home appliances and service. The Industrial Technology Business
Group, with technology as the core driver, commands key technologies in intelligent transportation,
industrial automation, green energy and consumer appliances. It operates many brands including GMCC,
Welling, HICONICS, SUNYE, SERVOTRONIX, DORNA, MR, MSCT, TOSHIBA, etc., with its products
covering high-precision core components such as compressors, motors, chips, auto parts, electronic
expansion valves, variable frequency drive, servo and motion control systems, speed reducers and
cooling modules. It provides green, efficient and intelligent products and technology solutions for industrial
customers across the world. The Building Technologies Division is responsible for providing products and
services in relation to buildings, as well as the relevant operations. With the digital building service
platform as the core, it facilitates logistics, information, feeling and energy flows of buildings to provide
complete building solutions that are intelligent, digital and low-carbon. The Robotics & Automation
Division primarily focuses on providing solutions of industrial robotics, automatic logistics systems, and
transmission systems for future factory-related fields, as well as solutions for health care, entertainment,
new consumption, etc. The Digital Innovation Business primarily includes new business arising from the
business model transformation of Midea Group such as intelligent supply chains and Industrial Internet,
which can provide software services, unmanned retail solutions, and production services, among others,
for the digital transformation of enterprises. The Digital Innovation Business also comprises Beijing
Wandong Medical Technology Co., Ltd. (WDM) that is engaged in medical imaging devices and related
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Midea Group Co., Ltd. Semi-Annual Report 2022
services.
With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your
Future” as its mission, “Embrace what’s next - Aspiration、Customer First、Innovation、Collaboration、
Dedication” as its values, “High-quality Development and High-performance Operations” as its
management and operation standard, Midea integrates global resources and promotes technological
innovation to create a better life for over 400 million users, major customers and strategic partners in
different areas worldwide every year with satisfying products and services. In face of higher requirements
for products and services in the digital Internet era, Midea continues to promote its strategic focus of
“Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and Global Impact”, so as to
rebuild Midea in the new era.
Midea, a global operating company, has now established a global platform with around 200 subsidiaries,
35 R&D centers, 35 major manufacturing bases, and more than 160,000 employees. Its business covers
more than 200 countries and regions. Overseas, Midea has 20 R&D centers and 18 major manufacturing
bases in more than ten countries, with around 30,000 employees. 22 currencies are used by Midea in
settlement. In addition, Midea is the majority shareholder of KUKA, a Germany-based world-leading
provider of robotics and automation solutions, with a stake of approximately 95%.
1.2 Position in home appliance industry
Midea ranks No. 245 on the Fortune Global 500 list unveiled in August 2022, moving up 43 places from
the year before and marking its seventh year on the list. In July 2022, the Fortune China 500 list was
released and Midea ranks No. 35, moving up four places compared with the previous year. Meanwhile,
Midea ranks No. 217 on the 20th Forbes Global 2000 list released in May 2022. In August 2022, Forbes
China and the China Electronics Chamber of Commerce jointly released the list of “China Digital 100”,
and Midea was in sixth place for its comprehensive strength in the area of digital economy. In August
2022, Midea Group topped the list of “Top 200 Enterprises of China’s Light Industry in 2021” at CLIE
Summit 2022 organized by the China National Light Industry Council. In September 2021, Midea won the
China Quality Award at the fourth such event with its “5 All 5 Digitalization" intelligent quality management
model. Up to early 2022, four factories of Midea have been included in the “Global Lighthouse Network”
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Midea Group Co., Ltd. Semi-Annual Report 2022
initiated by the World Economic Forum, covering air conditioners, microwave ovens, refrigerators and
laundry appliances, which represents Midea’s leading intelligent manufacturing and digital capabilities
across the global manufacturing sector. Meanwhile, Midea takes the lead among domestic home
appliance makers by ranking No. 36 on the 2022 Brand Finance Tech 100 list released by Brand Finance,
a British brand assessment institution. Also, Midea ranks No. 33 on the 2021 BrandZ Top 100 Most
Valuable Chinese Brands list, with its brand value up 58%. Midea has been given excellent credit ratings
by the three major international credit rating agencies, Standard & Poor’s, Fitch Ratings and Moody’s.
The ratings are in a leading position among home appliance manufacturers worldwide as well as among
Chinese non-state-owned enterprises. Particularly, Standard & Poor’s has raised the credit rating on
Midea to “A”, making it the highest-rated private manufacturer in China.
In the first half of 2022, Midea has successfully retained the "Number One Engine" of ToC business on
the domestic market. According to data provider AVC, Midea ranks first with respect to both the online
and offline domestic market share for seven home appliance categories, namely, residential air
conditioners, microwave ovens, countertop ovens, electric fans, electric radiators, induction cookers, and
electric kettles.
The table below shows the offline market shares and rankings of the Company’s primary home appliance
products (by retail sales) in H1 2022:
Product category Market share Ranking
Residential air conditioners 34.27% 1
Laundry appliances 25.66% 2
Clothes dryers 26.04% 2
Refrigerators 13.91% 2
Rice cookers 40.76% 1
Microwave ovens 54.74% 1
Electric radiators 50.88% 1
Induction cookers 46.57% 1
Electric fans 40.74% 1
Electric kettles 36.96% 1
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Midea Group Co., Ltd. Semi-Annual Report 2022
Product category Market share Ranking
Water dispensers 43.67% 1
Countertop ovens 35.76% 1
Electric pressure cookers 39.54% 2
Blenders 30.63% 2
Water purifiers 19.00% 2
Electric water heaters 16.93% 3
The table below shows the online market shares and rankings of the Company’s primary home appliance
products (by retail sales) in H1 2022:
Product category Market share Ranking
Residential air conditioners 35.62% 1
Laundry appliances 33.40% 2
Clothes dryers 35.47% 1
Refrigerators 18.50% 2
Microwave ovens 47.11% 1
Countertop ovens 25.04% 1
Electric pressure cookers 39.15% 1
Induction cookers 47.57% 1
Dishwashers 29.37% 1
Electric kettles 24.52% 1
Electric fans 20.94% 1
Electric radiators 23.29% 1
Water purifiers 19.79% 1
Rice cookers 26.68% 2
Electric water heaters 31.81% 2
Gas water heaters 15.97% 2
Sterilizing cabinets 18.39% 2
Gas stoves 12.15% 2
Water dispensers 13.84% 3
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Midea Group Co., Ltd. Semi-Annual Report 2022
Product category Market share Ranking
Blenders 12.02% 3
Range hoods 12.58% 3
1.3 Industry Overview
A. Home Appliance Industry
In the first half of 2022, the domestic economy bumped along under multiple pressures. The domestic
GDP growth slowed, the recurrent COVID-19 pandemic dampened economic development, and low
income perceptions and confidence indicators among residents led to a setback in consumption intention
and a decline in total retail of consumer goods. In addition, prices of raw materials related to home
appliances remained high. According to the 2022 Semi-Annual Report of China’s Household Electrical
Appliance Industry jointly published by the China Household Electric Appliance Research Institute
(CHEARI) and the National Household Electrical Appliance Industry Information Center, China saw a
decline in both the exports and domestic sales of home appliances. To be specific, the export sales of
home appliances was RMB283.3 billion in H1 2022, down 8.2% year-on-year; and the domestic sales of
home appliances was RMB360.9 billion in H1 2022, down 11.2% year-on-year. Currently, the world is still
in a grave and complex situation due to the pandemic, with multiple challenges for economic development.
Nevertheless, in the medium and long run, upgrading of the industrial structure, relatively stable increase
of household income, diversified consumption, the national policy support for the green and smart
industries, as well as continuous upgrading of the standards for home appliances will create new
opportunities for growth. In July 2022, the Ministry of Commerce and 12 other authorities issued the
Notice on Several Measures to Promote Consumption of Green and Smart Household Appliances,
proposing nine policy measures to promote consumption of green and smart home appliances, which
mainly cover four aspects: First, to carry out nationwide household appliance trade-in; second, to promote
the use of green and smart home appliances in rural areas; third, to strengthen the whole chain of service
and guarantee; and fourth, to consolidate infrastructure support. With the introduction of detailed rules on
trade-in and "household appliances going to the countryside", it is expected that household appliance
consumption will heat up in the second half of the year.
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Midea Group Co., Ltd. Semi-Annual Report 2022
According to the data from the National Household Appliances Industry Information Center, the domestic
retail sales of air conditioners was RMB78.2 billion in H1 2022, down 16.2% year on year. In terms of the
product structure, the market share of high-end products kept rising, with the market share (by unit sales)
of products with a unit price of over RMB7,000 exceeding 10% in H1 2022. In terms of product functions,
the concept of air conditions kept expanding from the functions of cooling and heating to fresh air, self-
cleaning, dehumidification, odor removal, air purification, etc. As the comfort of product experience has
been focused on, the fresh air function products have developed rapidly, with their offline market share
(by retail sales) surpassing 7% in H1 2022.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of laundry appliances was RMB30 billion in H1 2022, down 9.4% year-on-year, with
the retail sales of clothes dryers reaching RMB3.2 billion, up 15.5% year-on-year. In the upgrade of the
laundry appliance market, in terms of the product types, the market share of front-loading products keeps
growing stably, with the offline market share (by unit sales) climbing to over 64% (over 35% for washer-
dryers). Washing capacity continued to be upgraded, with large-capacity products increasingly replacing
small-capacity ones. The offline unit sales of 10kg-12kg washers occupied a 70% market share, with a
year-on-year increase of over 12%. Meanwhile, mid- and high-end products saw a much bigger share in
the offline market by unit sales. To give an example, products with a unit price of over RMB7,000 took up
a market share of nearly 10%.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of refrigerators were RMB42.7 billion in H1 2022, down 7.3% year-on-year. The
market share (by retail sales) of the top five brands in the domestic refrigerator market has further
increased to 72.5%. Due to the impacts of rising raw material prices and structural upgrading, structural
upgrading was evident with refrigerators of different prices, with the market share (by unit sales) of
products priced over RMB12,000 reaching 7.6% and the offline market share (by unit sales) of
refrigerators with an over-400L capacity exceeding 60%. Consumer's intensified willingness to pursue
quality life has prompted the refrigerator market to pivot towards high-end multi-dimensional design,
which is mainly manifested as "good looking", "capacious", "fresh", and "intelligent". In other words, better
appearance design and material, larger capacity and structure, improved storage and preservation
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Midea Group Co., Ltd. Semi-Annual Report 2022
technology, and more smart applications.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic retail sales of kitchen appliances was RMB93 billion in H1 2022, down 8.3% year-on-year, with
online sales accounting for 50% of the total retail sales. As dishwashers became more popular on the
domestic market, the retail sales reached RMB5 billion during H1 2022, up 8.9% year-on-year. And
product upgrading continued. Integration of functions of washing, sterilization, drying and storage is a
growing trend, with nearly 70% of dishwashers carrying the sterilization function and integrated
dishwashers becoming more and more popular. With respect to models and specifications, the market
share (by unit sales) of built-in products has approximated 85%, with the offline market share (by unit
sales) of dishwashers with 15 place settings capacity soaring from 2.5% in H1 2021 to 17% in H1 2022.
Integrated stove sales reached RMB11.8 billion in the domestic market, an increase of 16.9% year-on-
year. Due to the surge in demand for high-end kitchen appliances, in particular steamers and ovens as a
result of the pandemic, integrated stove products have evolved and upgraded rapidly, with the market
share (by unit sales) of integrated stoves priced over RMB13,000 reaching 20.8% in H1 2022. The
steamer-ovens have developed dramatically, with the market share (by unit sales) of products priced over
RMB8,000 approximating 20%. Smart products with multiple functions are the trend. For instance,
intelligent voice control function will be built in to deliver a more convenient handling experience, and
integration of different cooking methods such as sautéing, stir-frying, stewing, baking and steaming
enables the multi-cooking scenario possible.
According to the data from the National Household Electrical Appliance Industry Information Center, the
domestic sales of small domestic appliances was RMB58.9 billion in H1 2022, down 10.8% year-on-year,
of which the online sales took up a higher 76.7% of the total retail sales. With respect to the market
performance of all categories, traditional products such as rice cookers, blenders and electric fans saw a
decline in domestic sales while the sales of health-friendly vacuum cleaners were relatively strong due to
the pandemic. In H1 2022, the domestic sales of vacuum cleaners were RMB12.7 billion, a slight year-
on-year growth of 1.1%. By categories, the robot cleaner industry registered a slowdown in growth.
According to AVC, the retail sales of robot cleaners were RMB5.73 billion, up 9% year-on-year. Innovative
product functions boosted growth, with the market share of products carrying self-cleaning and automatic
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Midea Group Co., Ltd. Semi-Annual Report 2022
dust collecting functions continuing to expand. Meanwhile, the product mix has been substantially
improved, with the market share of products priced between RMB3,000 and RMB4,000 reaching 42.7%.
Meanwhile, functions and experience of floor scrubbers have been improved as a result of the
advancement of technology, represented by the application of new technologies such as roller brush and
mop self-drying, sterilization through electrolysed water, push-and-pull. According to AVC, floor scrubbers
recorded retail sales of RMB4.2 billion in H1 2022, up 84% year on year. In the meantime, competition is
increasingly fierce. As of June 2022, more than 100 floor scrubber brands compete in the online market.
According to the data from the National Household Electrical Appliance Industry Information Center, the
online retail sales of home appliances in China surpassed the offline retail sales with RMB199.48 billion
in H1 2022, down 1.3% year-on-year, accounting for a higher market share of 55.3%; while the offline
retail sales amounted to RMB161.39 billion, down 21% year-on-year, accounting for a lower 44.7% of the
total retail sales. From the perspective of the development trend of the domestic household appliance
industry: First, the phenomena of brand concentration and new brand rise coexist, where the
concentration of large household appliance brands increase, and brands in the field of kitchen appliances
and small household appliances still have opportunities and develop rapidly. Second, the product upgrade
is still continuing, mainly focusing on the four development trends of high-end, innovation, integration,
and product suites. Third, a variety of channels and scenes jointly promote the progress of the industry.
On the one hand, in addition to the traditional offline and online channels and platforms, emerging
channels such as Pinduoduo, Douyin, and Kuaishou are rapidly rising. During the "618" period in 2022,
the total transaction amount of livestreaming marketing reached RMB144.5 billion, accounting for around
20% of the online transaction amount. On the other hand, new applications and scenes tapped based on
insight into new user needs are increasing, expanding from diet, personal care, cleaning, and sleep to
health care, pets, fitness, mother and infant products, security, and more scenes.
B. Robotics and Industrial Automation Industry
World Robotics 2021 Industrial Robotics released by the International Federation of Robotics (hereinafter
referred to as "IFR") showed that there will be five trends in robot industry in 2022, which refer to that
robots will be applied to more new industries, it will be more easy to operate robots, the skills of robots
and workers will get promoted, robots will guarantee manufacturing, and robots will support digital
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Midea Group Co., Ltd. Semi-Annual Report 2022
automation technology. Global robot installations rebounded strongly in 2021, with IFR projecting a 13%
increase of global robot installations, amounting to 435,000 units. In particular, Americas achieved an
increase of 18% year on year, Europe achieved an increase of 7.4% year on year, and Asia achieved an
increase of 15% year on year. IFR also predicted that the growth rate of the global industrial robotics
industry will slow down relatively from 2022 to 2024, and the annual new installations will exceed 510,000
units in 2024.
According to the data released by the National Bureau of Statistics, the domestic production volume of
industrial robotics stood at 202 thousand units in H1 2022, down 11% year on year. In the first half of
2022, the continuation and recurrence of the epidemic had an impact on China's economy, as Shanghai
and other regions entered a long shutdown one after another. The uncertainty of the international
environment increased, and factors such as the continued trade friction between China and the United
States and the outbreak of the Russia-Ukraine conflict exacerbated the instability of the global supply
chain. The robotics industry chain was also greatly affected, as the chip shortage, raw material price rise,
and logistics disruption and cost increase all had a significant negative impact on the supply side. Some
industrial robotics manufacturers encountered capacity shortage and shipping delay, so order delivery
was affected. The epidemic also affected the investment plans of downstream manufacturing enterprises,
with some of them suspending or postponing their investment activities. According to the statistical
analysis of MIR, in the first half of 2022, only six-axis robots above 20 kg and collaborative robots grew
against the trend, whereas all other models showed a decline. Specifically, shipments of six-axis robots
above 20 kg grew significantly due to the market demand for new energy vehicles and power batteries;
shipments of six-axis robots below 20 kg saw a year-on-year decline due to the contraction of market
demand in general industries such as metal processing as a result of the macroeconomic downturn,
commodity price increase, and export obstacles; shipments of SCARA robots declined year-on-year as
the 3C electronics industry was affected by the epidemic and slowdown in product innovation and the
consumer demand was low; in addition, non-manufacturing sectors such as new retail, health, catering,
and education were also affected by the epidemic, which led to a decrease in demand for robot
applications, while the robot application markets such as electric power, inspection, and medical care
performed relatively well. According to the analysis of GG-Robot Industry Institute, with the epidemic
under control and economic stimulation policies introduced successively, the industrial robotics industry
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Midea Group Co., Ltd. Semi-Annual Report 2022
is expected to achieve a high after a low start. Based on the analysis of the leading economic indicators,
the momentum mainly comes from four aspects: First, industrial production has stopped falling and
trended upward significantly. The industrial value added above the designated size increased by 3.4%
year-on-year in the first half of the year, and accelerated and rebound to an year-on-year increase of 3.9%
in June. Second, the proportion of manufacturing industry in GDP has increased. In the first half of the
year, the manufacturing value added above the designated size increased by 2.8% year-on-year, and
manufacturing value added accounted for 28.8% of GDP. Third, the driving force of export continues to
strengthen. The delivery value for export of industrial enterprises grew by 10.8% in the first half of the
year and increased by 11.1% and 15.1% in May and June, respectively. Fourth, manufacturing investment
maintains a high increase. Manufacturing investment increased by 10.4% year-on-year in the first half of
the year. As the recovery of the manufacturing industry, especially the acceleration of capacity expansion
in new energy industries such as lithium battery and photovoltaic markets, drove the growth in demand
for industrial robotics, downstream industries will also gradually recover. Meanwhile, in order to reduce
the reliance on manpower, the demand for automated production lines in various fields of manufacturing
will continue to increase, and the output of robotics is expected to usher in growth. Moreover, MIR predicts
that the industrial robotics market will continue to grow throughout 2022, with a year-on-year growth rate
of around 10%.
According to the latest statistics of IFR, in terms of industrial robotic density (the average number of
industrial robotics per 10,000 workers), South Korea ranks No.1 in the world with 932 robotics, while the
robotic density of China has increased from 49 robotics in 2015 to 246, nearly twice the global average
of 126. China ranks No. 9 in this respect, with great potential and prospects. Supported by diverse factors
such as flexible demands of the manufacturing sector, declining demographic dividend, emerging markets
and the development of innovative technologies, industrial robotics will be applied to more and more
areas.
C. Smart Building Industry
In the smart building industry, Midea focuses on products, services and related businesses with respect
to buildings. It aims to provide users with comprehensive, intelligent and sustainable building solutions
based on the digital building platform and by facilitating the logistics, information, feeling and energy flows.
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Midea Group Co., Ltd. Semi-Annual Report 2022
The smart building ecosystem mainly includes HVAC, elevator, intelligent building (building automation)
and integrated energy management. From the perspective of the industry competition pattern, domestic
HVAC, elevator and building control have the same pattern and two major characteristics. The first is the
high proportion of foreign and joint venture brands; the second is the low market concentration. According
to the data from HVAC, Industry Online and Changjiang Securities Research Institute, the proportion of
foreign brands of commercial air conditioner in 2021 was about 48%, and the long tail effect was obvious
as only four manufacturers have a share of more than 10%. For elevator, the data from the Business
Yearbook of Elevator Industry in China and Changjiang Securities Research Institute indicates that the
proportion of foreign and joint venture brands in the elevator market is as high as 70%, while the revenue
scale and market share of the top domestic brands are still low. In 2021, the four major brands of Kone,
Mitsubishi, Hitachi and OTIS's revenues exceeded RMB20 billion in China. The building control market
is also dominated by Honeywell, Siemens, Johnson Controls, Schneider and other foreign brands. From
the perspective of the market size and development prospects, according to the data from Industry Online,
HVAC and Changjiang Securities Research Institute, the sales revenue (excluding tax) of domestic
commercial air conditioner in 2021 was RMB123.2 billion, up 25% year on year, of which domestic sales
accounted for about 90%; the compound annual growth rate of the industry in the past five years was 9%.
Affected by the real estate industry and the COVID-19 pandemic, sales revenue (net of tax) of commercial
air conditioners was RMB62.7 billion during H1 2022, up 4% year on year. The application field of
commercial air conditioner is mainly divided into residential, commercial, industrial and public building.
By business type, the sales of ToB business accounted for more than 70%, and the revenue scale was
nearly RMB100 billion. In industrial development, the periodicity of the non-residential part of commercial
air conditioner was smaller than that of residential part, which was more related to infrastructure
investment. For example, government public construction, transportation, data center, culture, education
and entertainment, medicine and other downstream segmentation still maintained a good growth trend,
and a long-term high growth rate. According to the data of National Bureau of Statistics and Changjiang
Securities Research Institute, in 2021 the production of domestic elevators, escalators and lifts was 1.55
million sets, up 17% year on year, which was mainly for domestic sales; the compound annual growth
rate was 10% in the past five years, maintaining a steady expansion. Affected by the real estate industry
and the COVID-19 pandemic, the domestic output of elevators, escalators and lifts was 647 thousand
units during H1 2022, down 11.5% year on year. Judging from the operating data of major manufacturers,
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the output value of a single elevator was about RMB200,000, considering the average factory price of a
single elevator equipment and the maintenance business; the annual market size of domestic elevator
equipment was RMB250-300 billion, and the scale of the elevator industry was even larger. The data from
EqualOcean Intelligence and Changjiang Securities Research Institute shows that the current market
size of intelligent building, which was about RMB7.1 billion in 2021, is relatively small. The equipment-
based businesses such as commercial air conditioner and elevator are "organs" in building construction,
whereas building control is the "nervous system" which controls various equipments for the high-efficiency
and low-carbon operation of buildings, and determines the overall quality of building solutions. Overall,
the domestic revenue of the smart building industry alone is nearly RMB400 billion, and the compound
annual growth rate of the industry is between 5% and 10% (revenue caliber).
New opportunities are ushered into the smart building industry, which are "carbon emission peak and
carbon neutrality", "digital and intelligent transformation" and "domestic replacement". With the
establishment of the dual-carbon strategy, the intelligent and low-carbon process of building construction
is expected to accelerate. As the Building Energy Conservation Research Center of Tsinghua University
and the Changjiang Securities Research Institute showed in relevant data, the energy consumption and
carbon emissions of buildings account for a high proportion in the whole society. The carbon emissions
of building operation accounted for about 22% of the total domestic carbon emissions in 2019, and the
proportion will further increase for the growing newly started buildings and the decreasing inventory
buildings. Therefore, as one of the major sources of carbon emissions in the whole society, the low-
carbon or even zero-carbon process in the construction field will undoubtedly be propelled. In 2021, a
series of "carbon emissions peaking and carbon neutrality" policies were successively issued, such as
the Opinions on Implementing the New Development Concept to Achieve Peak Carbon Emissions and
Carbon Neutrality in a Complete, Accurate and Comprehensive Manner, the Opinions on Advancing the
Green Development of Urban and Rural Development, the Action Plan for Peak Carbon Emissions by
2030, and the 14th Five-Year Plan for Comprehensive Work on Energy Conservation and Emission
Reduction. In 2022, China’s local governments issued their action plans for peaking carbon emissions
while the ministries and committees of the central government rolled out documents for the same purpose,
such as the Opinion on Fiscal Support for Peaking Carbon Emissions and Achieving Carbon Neutrality
issued by the Ministry of Finance. All these policies mention buildings and constructions, with a view to
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improving the building energy consumption management system, enhancing the building energy
consumption monitoring capacity, building energy saving management capacity, and building energy
efficiency level, and promoting the large-scale development of ultra-low energy consumption, near-zero
energy consumption, and low-carbon buildings. With stronger policy incentives and constraints, the
building energy-saving upgrading, intelligent operation, and cooperative energy management are bound
to become the main measures for the targets in addition to the construction of low-carbon building
standards and administrative supervision. As to the market side, the electricity price reform, "power
rationing" and other measures have raised the cost and the input-output ratio in building energy saving
renovation, energy management, and digital operation, and thus more and more market entities begin to
positively carry out the “dual carbon” strategy and energy saving renovation. Taken as a whole, under the
background of "dual carbon", the building construction, as one of the main sources of energy consumption
and carbon emissions in the whole society, accelerates the process of energy conservation and carbon
reduction, and catalyzes the outbreak of demand for efficient low-carbon building solutions. The demand
for digital intelligent building will also increase significantly, as the development level of buildings is a key
link in "smart city" and still lagging behind under the trend of digital economy. At the same time, with
continuous progress of communication, computing power and algorithms, the system-level control such
as HVAC and elevators will move to the building-level control - the first is the space expansion brought
by changes from "control" to "service"; the second is the narrowing gap to foreign enterprises with first
mover advantage. Additionally, the more positive and clear signal comes from the transformation and
upgrading of the elevator industry driven by digital intelligence. In 2018, the General Office of the State
Council issued the Opinions on Strengthening the Quality and Safety of Elevators for the purpose of
promoting the elevator installation on existing residences and the maintenance of old elevators.
Specifically, the maintenance should press for quality, and resources should be allocated on the basis of
fully grasping the operation of elevators, hence the application of information technology such as big data
and IoT is getting more important. In 2020, the State Administration for Market Regulation divided the
maintenance methods of different elevators according to the standard of "whether there is a remote
monitoring system based on IoT". The domestic replacement of commercial air conditioner has
undergone three processes: unit machine, multi-split machine, and large-scale water units. In 2021, the
share growth of chillers of domestic brands began to accelerate and made breakthroughs, leading the
commercial air conditioner industry to the stage of domestic replacement in all aspects, and thus there is
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a large space for future increase. Compared with air conditioner, the domestic replacement process of
elevator is relatively slow, but the relevant market pattern will be optimized with the gradually weakened
real estate dividend, the changes in maintenance mode, and the application of IoT. In the medium and
long term, there will be more competition opportunities in the smart building industry with the market
structure of "high proportion of foreign investment & low market concentration". On the one hand, the
policy of "double carbon" is fostering the energy-saving upgrading and smart operation under the context
of high proportion of carbon emissions and energy consumption by buildings. On the other hand, with the
improvement of digital intelligence, the input-output effect of smart buildings is changing qualitatively, and
the optimization of competition pattern is underway.
D. The Company’s Key Operations during the Reporting Period
The business environment remained harsh in the first half of 2022. With the recurrent COVID-19
pandemic and the Russia-Ukraine conflict, the political and economic environment became more
complicated both at home and abroad. Meanwhile, due to supply chain disruptions, the prices of bulk raw
materials such as copper and aluminum remained at high levels. In face of these challenges, Midea
adhered to the profitability-oriented annual operational principle of “rational revenue, and recovery of
profitability”. At the very beginning of 2022, it made swift plan adjustments to concentrate on the core
businesses and products and return to the nature of business. Upon relentless efforts, remarkable results
were achieved in the first half of the year. Overall, Midea delivered expected operating results, with
substantial improvement in profit and cash flow, manifesting its resilience once again. Against an
increasingly uncertain backdrop, technology-driven transformation remains the main theme of the current
era. Midea adhered to the strategic focus with “Technology Leadership” as the core, promoted
development both in the ToB and ToC business, and ignited the “Number Two Engine” of the ToB business.
Through improving product competitiveness and core technologies in the ToC business, Midea is able to
increase profitability, which provides strategic support for ToB transformation. It is transforming from a
Chinese company to a global one by continuously enhancing its globalization capabilities. Also, the
Company is shifting its competitive edges from efficiency to products, technologies and innovation. For
H1 2022, Midea achieved, on a consolidated basis, total revenue of RMB183.7 billion, up 5.04% YoY;
and a net profit attributable to shareholders of the Company of RMB16 billion, up 6.57% YoY.
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A. Focused on users and scene-based product planning, and continuously refined the whole
value chain leveraging Midea’s multi-category advantages and digital technologies, so as to
upgrade business scenes, products and services
In order to carry on with the “customer-oriented” strategic reform, the Company creates more user value
in business scenes, products and services which are in direct contact with users. Based on users'
yearning and pursuit for a better life, Midea pursues higher goals such as originality, sustainable selling
points and technology explicitness, and continues to empower itself with the tool of big data, so as to
achieve the vision of "Bring Great Innovations to Life". In addition, based on user needs and consumption
trends with respect to living rooms, balconies, kitchens, bathrooms, among others, Midea offers its own
products and ecosystem products. Household service is comprehensively deepened by using IoT
technology, so as to provide intelligent comprehensive solutions for the whole house, making home life
more efficient, convenient, healthy and comfortable, and improving experience and happiness for
consumers. By doing so, it aims to lead the way in the innovation of smart household appliances. Midea
independently builds a big data platform integrating market, user and public opinion data, constructs a
big data-based innovative planning platform, and implements a product innovation model driven by both
big and small data. Centering on the planning process, it achieves the integration of SKU planning and
smart scene planning process. Midea continues to launch innovative products that lead the way in
satisfying differentiated consumer needs, thus driving consumption upgrading in the industry. It is the first
to create the planning connect system in the industry, covering the whole planning process. By achieving
cross-department data circulation and integrating internal and external data of the entire value chain,
Midea enhances the efficiency of data circulation and shortens the cycle of new product development.
Meanwhile, through intelligent analysis, intelligent early warning, intelligent prediction, intelligent decision-
making and intelligent control, a unique smart decision-making support model for planning is created to
empower planning decision-making. Compared to traditional market research, the intelligent market
scanning efficiency of the big data-based innovative planning center has increased by over 50%, which
can closely follow up thousands of categories and explore market opportunities and trends of users'
demand. It has covered multiple countries and regions around the world, further strengthening Midea's
global planning capability. With the big data platform's empowerment, digital marketing extends to the
C2M model, while through user insight and user research, brands and products are empowered, where
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real-time market feedback on new products is utilized to accurately target marketing. Real-time interaction
with consumers is achieved and supply and demand information is closely connected by perceiving users
and activating users' information through hundreds of millions of global user touch points, and then
product development changes from the chain mode to a closed-loop mode. In terms of industrial design,
Midea leads the way in user experience and interaction upgrading with ongoing innovations. In H1 2022,
Midea won a total of 120 industrial design awards, including 34 Red Dot Design Awards, 58 iF Design
Awards, and 28 IDEA Awards.
For smart living room scenes:
In the first half of 2022, when the domestic epidemic continued and recurred, Midea launched the first
mobile air purification and disinfection machine "Protector" with a focus on "Healthy Air". This product is
characterized by the innovative use of the dual elimination factors of plasma and hypochlorous acid. Wind
circulation through the plasma friction grid makes it possible to quickly kill 99.9% of the coronavirus in the
air in 30 minutes. Moreover, the active release and settlement of hypochlorous acid can disinfect the
surface of objects, which realizes the healthiness and safety of the whole space. The Protector is also
equipped with an isolation water pump to avoid the corrosion of hypochlorous acid to the pump and
realizes the physical separation of the impeller and the motor, thus ensuring that the motor is capable of
reliable long-term operation even in extreme and harsh environmental conditions such as high salinity,
high humidity, and strong acid. This product has a clean air delivery rate of 600 m/h for particulate matters
and 140 m/h for formaldehyde, and can be used repeatedly by cleaning the filter regularly.
Based on users' pain point of slow cooling after using water heating products and relevant demands,
Midea launched the Cool Boiled Water Smart Instant Thermos. Its application of the industry's pioneer
plate water-cooled heat exchanger uses cold water to quickly cool the boiling water and produces cool
boiled water in 10 seconds. Simultaneously, the cold water recovers the heat of boiling water and then
enters the heating tube to be heated, which does not produce sewage in the process and can
continuously prepare warm boiled water, saving 60% of energy. The product adopts double-pump control
system and multi-sensory temperature probe + PID algorithm to achieve six kinds of water temperature
regulation. This product technology led the industry, applied for more than 40 patents, and won the gold
medal at the 2022 International Exhibition of Inventions of Geneva. As certified by a third-party authority,
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the sterilization rates of all water temperature grades are greater than 99.9%, significantly improving the
user experience. With the industrialization application of this product technology, the group standard
"T/CAB 0150-2022 Instant Heating and Cooling Water Boiler (for Cool Boiled Water)" was successfully
released in May 2022.
To create a more comfortable living environment, Midea continued to research and apply various fan
technologies. Midea achieved self-adaptive comfortable wind adjustment through research on the comfort
wind control technology of wind changing with temperature. Midea realized whole-house 3D surround
stereo wind of thermostatic warm air through research on dual-engine PTC control technology of
staggered temperature difference. Midea also achieved multi-angle positioning blowing and intelligent
obstacle avoidance through research on contactless detection control positioning technology of oscillating
stepping motors. Midea Micro-electrolysis Water Washing Air Cooling Tower Fan AAF12PXJ uses
innovative micro-electrolysis sterilization to electrolyze tap water into sterilized water with a sterilization
efficiency of 99.9%. The tower fan uses a water curtain waterfall to flush and clean the air in depth and is
equipped with an air-conditioner-level cross flow turbine to offer healthy, fresh and clean wind. Midea
Formaldehyde Digital Display Air Purifier KJ800G-H Pro adopts IFD micro-electrostatic purification
technology. It uses the charge device to charge particulate matters in the air and uses the strong electric
field to achieve a sterilization rate of 99.9%. IFD cartridge can be highly effective in filtering particles in
the full particle size range of PM0.01-PM10, with a purification rate of 99%. The IFD filter cartridge is
washable and reusable, and the formaldehyde sensor carried has strong anti-interference ability and can
display indoor formaldehyde concentration in real time.
In the first half of 2022, Midea continued the Eureka brand's concept of green healthy technology and
launched the multifunctional fabric cleaning machine Ubox, and multiple functional innovations have been
made. The application of electrolytic water sterilization technology achieves green pollution-free bacteria
removal technology alongside effective cleaning of fabric. The pioneer shoe product cleaning function
satisfies the daily care demands of trendy shoes with the unique brush head. The brush head specially
designed for pets cleans the hair while combing and can recover dirt in real time, meeting daily pet
cleaning needs. The LCD dynamic interactive screen displays cleaning status in real time to enhance
users' cleaning experience. Midea’s floor scrubber products meet consumers' demand for ground
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cleaning with its functional integration of suction, dragging, and washing. The new high-end flagship
products further optimize the product performance and use experience. The handle sensor offers two-
way forward and backward boost to reduce the burden of cleaning. The forward and reverse rotation
control technology for the integrated self-cleaning roller brush improves the self-cleaning effect and fully
cleans hidden corners with no residue of stains from the water jet. The integrated roller brush drying
technology prevents long-time moisture which breeds bacteria. The "flat lying" design with a tilt angle of
up to 170° allows cleaning deep to the bottom of furniture, preventing sewage backflow. The integrated
electrolytic water sterilization technology, with a sterilization efficiency of 99.9%. The close-to-edge dead-
angle-free design and unique detachable roller brush design constitute the pioneer truly close-to-edge
and dead-angle-free design in the industry, cleaning any dead angle with a single push. The application
of intelligent technology allows human-computer interaction, so water volume, suction power, and other
parameters can be adjusted as needed. In the first half of 2022, Midea released the first intelligent robot
W11, Midea Small White Box, M9, P8, A8, A8+, and other products successively, adhering to the
innovative design principle of focusing on user experience. Midea used dual duct dust collection, base
station self-cleaning, automatic rag washing, rag drying, bacterial inhibition and deodorization, and other
new cleaning technology to provide users with a better cleaning experience. These products are equipped
with the industry's leading power management unit to achieve accurate and intelligent charge and
discharge control and enhance the service life and safety of the battery.
For smart balcony scenes:
The COLMO Light Dry Cleaning 2.0 steam care technology upgrades dry cleaning care and ushers in a
new era. Equipped with the industry's pioneer special program for ten types of odor elimination, it
achieves A-class rapid odor elimination in five minutes and low temperature bacteria removal of no more
than 60°C with a bacteria removal rate of 99.9%, winning the China Aerospace Science and
Technology|ASES Certification. "Key Technology and Industrialization of Double-Driven, Dewatering and
Double-Drum Washing Machine with Large Capacity", "Key Technology and Industrial Application of
Long-Acting Plasma for Deodorization and Sterilization" and "Application and Industrialization of New
Special Effect Technology of Electrode Catalytic Coating for Use in Washing Machines" included in Light
Dry Cleaning Technology 2.0 have also been certified as "Internationally Advanced" by the China National
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Light Industry Council. The original TM technology uses the industry's smallest dual engine system of
two-appliance coordination and electric auxiliary heating to meet the demand for fast drying and whole-
machine lean design and achieve product suite cost optimization. The industry's pioneer drum hole-free
washing machine technology introduces a new water inlet to rinse clothes with running water in a dynamic
manner and prevent dirt from flowing back. In addition, the formation of water film effect on the drum wall
reduces friction between the clothing and the drum wall, achieving a 26% reduction in the rate of clothing
wear and tear. Meanwhile, the independent chamber water storage not only reduces the water use
between the inner and outer drums to save water by up to 50% but also improves the washing power.
The COLMO Interstellar Station dry cleaning care kit combines the intelligent frequency conversion
compressor equipped with AI dual frequency conversion upgraded technology and a BLDC intelligent
frequency conversion motor and can intelligently adjust the working frequency, speed, and steering, so
as to achieve precise odor elimination for various kinds of delicate and luxurious fabrics as well as dry
cleaning care for silk, cashmere, and other high-end fabrics. It is equipped with a plasma generator, which
ionizes the air with a high voltage to achieve odor elimination and sterilization in a truly zero-dead-angle
and residue-free manner. The application of the Light Dry Cleaning 2.0 steam care technology achieves
precise dust removal, bacteria removal, wrinkle removal, and odor elimination of high-end fabrics through
the release of ultra-high-energy soft steam. The intelligent DC frequency conversion motor with the
German VDE certification is capable of whole-procedure intelligent regulation of the inner drum rotation
speed, steering, and turn-stop ratio and can precisely control the inner drum rotation speed when drying.
The dual frequency conversion source noise reduction, in combination with the multi-layer rear cover
passive noise blocking system, achieves remarkable noise reduction effects. With a slim 440 mm case
design, the Interstellar Station dry cleaning and care kit can be perfectly incorporated into most household
scenes and spaces. In addition, ergonomically designed, it allows users to easily pick up their clothes.
Midea Vigor Series Washer-Dryer Kit is equipped with hole-free inner drum technology to prevent sewage
laundry and reduce clothing wear and tear and achieves efficient cleaning of clothes while maintaining
the original quality of clothing. This product is the industry's first to be awarded the medical-grade laundry
certification. The cycle spray technology and fast cleaning 2.0 technology achieve the full utilization of
detergent and can shorten laundry time by up to 30%. Moreover, it is equipped with multi-functional
modules: The blue rod silver ion module can achieve sterilization in cold water environment without
electricity or heating; the red rod scale inhibition module can adjust the concentration of calcium and
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magnesium ions and maintain the softness and color of clothing. Vigor Clothes Dryer, equipped with a
hybrid drying system, ensures the thermal temperature conditions for whole-space inactivation of
pathogens by setting the coordination of heat, time, and temperature. Adopting UV ultraviolet bacteria
removal technology, it achieves a 99.9% mite removal rate under the national testing standards. Toshiba
T15 Series Front-loading Washing Machine has been upgraded to cover products of various capacities
and functions. These products realize WIFI intelligent interconnection and OTA upgrade through IoT
intelligence, adopt minimalist glass door appearance design, and achieve the European A-class energy
efficiency. The automatic detergent input function uses the third generation of Midea smart detergent
input technology with a precision error of only 1 ml to reduce detergent residue. The unique Ultra Fine
Bubble mode, with the front cavity pressuring on the special microporous outlet structure at the back end,
can produce hundreds of millions of ultra fine bubbles to instantly dissolve sebum and grease for thorough
cleanness. The unique Greatwaves program provides the same washing effect as heating by adjusting
the washing pace to create strong water flows, saving energy and protecting colors. Additionally, the
Steam Care function produces high temperature steam for sterilization and wrinkle removal. The MA500
Series top-loading products for the American market have capacities of 13 Kg and 16 Kg. With localized
UI and UX design, these products are equipped with the Turbo fast cleaning function. The products adopt
pulsator blade simulation optimization and barrel strength enhancement, which lead to a cleaning
capacity increase of 12% and a moisture content reduction of 12%. The products use the Auto Clean
technology and can achieve Brazil's A-class energy efficiency.
For smart kitchen scenes:
The "rapid purification technology" of Midea Refrigerator has been awarded the certification of first-class
purification and healthy preservation, creating a secure storage environment. Specifically, the technology
of high concentration AC silent ion field generation can significantly increase the discharge area and
active particle concentration while effectively reducing the short circuit risk arising from high voltage
discharge in the low temperature and high humidity environment in the refrigerator. The high odor affinity
nano-catalysis technology enhances the catalyst's affinity to odor molecules and its own stability. The
ionomer induced high current-carrying migration catalysis technology ensures that the catalytic efficiency
basically does not decay, meeting the long-cycle use demand of refrigerators. The "light quantum nutrition
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Midea Group Co., Ltd. Semi-Annual Report 2022
enhancement technology" of Midea Refrigerator is a nutrition enhancement technology for fruits and
vegetables. Specifically, the 450 nm high-energy blue light can induce the high level of expression of
anthocyanin genes, increasing anthocyanin content by more than 220%. The intelligent sensing moisture
control technology achieves the upgrade from passive freshness storage to active freshness locking,
accurately identifying the type of food ingredients and matching it with the best storage humidity, so as to
ensure the first-class seven-day freshness of fruits and vegetables. The three-layer waterproof design
and super scale surface area heat dissipation significantly increase the waterproof performance.
COLMO's new AVANT Series Refrigerators, equipped with AI active nutrition technology, overturn passive
storage and realize active nutrition management. The industry's pioneer photovoltaic-level wireless power
supply technology is used to ensure that meat maintains initial freshness and does not freeze while
slowing down the production of hypoxanthine in aquatic products. The VC + active nutrition locking
technology is applied to intelligently detect the humidity of ingredients and provide the optimal humidity
control program, and the vitamin C retention rate of fruits and vegetables can reach 80% or more.
Equipped with intelligent human-aware ambient lights, the refrigerator is capable of human-computer
interaction and refrigeration lighting at the same time. Toshiba Zhiwei Series Refrigerator, equipped with
star cuisine freshness technology, precisely matches the ecological storage environment required for
meat and seafood ingredients with the three modes of quick micro-freezing, quick chilling, and original
flavor defrosting. It is also equipped with Toshiba's patented UNIT moisture-permeable film, achieving the
effect of moisture-permeability and air-impermeability, which prevents cold air from blowing directly on
fruits and vegetables, delivers delicate water vapor that directly reaches the cells of fruits and vegetables,
creates a constant moisture environment suitable for fruit and vegetable storage, and guarantees the
freshness of fruits and vegetables for seven days. The industry's pioneer Toshiba patented "iTouch"
technology, is used to solve the pain point of the kitchen scene where both hands are occupied and
inconvenient to open the door. It has the 60-minute rapid ice making function. In addition, special clean
water filters cold air to avoid taint of odor, ice making parts are treated by antibacterial processing, and
the built-in water filter ensures the cleanliness of the ice. The height design of the middle fruit and
vegetable chamber fits Asian consumers' body shape, so it is comfortable to use. With a small volume
and a large capacity, the inner wall of the refrigerator is made of an imported vacuum insulation material,
the thickness of which is only 1/3 of ordinary insulation materials and the insulation effect of which is
better, and the dual frequency conversion technology is used to achieve ultra-low energy consumption.
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Following the current general trend of diversified and intelligent user demands, COLMO CXSP927W-SS8
Range Hood is ultra thin and low-profile, exhausting cooking oily fume from the source. The low deep
suction structure design makes it closer to the smoke, and the ultra-thin design does not block the pan,
so that the oily fume is quickly exhausted without choking the user. The intelligent fresh air purification
function can be activated with a mere touch, and the APP can customize different ventilation scenes at
will. The DC frequency conversion cruise booster, equipped with a high-power frequency conversion
copper wire motor, has strong power and a frying air volume of up to 28.5 m/min. It can provide 1,260
pa of maximum static pressure, exhausting the smoke more smoothly and effectively reducing the peak
hour backflow of oily fume. Throughout the cooking process, the AI-assisted cooking has no need of
manual adjustment, the concentration of oily fume is automatically recognized, and the air volume is
automatically adjusted by the AI algorithm. RF linkage technology enables the activation of the kitchen
hood to exhaust oily fume at the moment of ignition. Equipped with IR sensing technology, the refrigerator
automatically adjusts the gear based on the concentration of oily fume and pipe pressure without manual
adjustment. Its AI active noise reduction function automatically adjusts the power level through the
intelligent smoke sensor module to select the appropriate wind gear and reduce noise, thus achieving
active noise reduction. Midea launched a new series of products, Oxygen Stove Q63 is designed for
better cooking efficiency on the "delicious", "aroma-producing" basis. With the concept of "rapidly well-
done", it provides consumers with cooking experience with more tender meat. Also, it is equipped with
the smoke-stove linkage technology.
Always focusing on users' pain points in installation and use, COLMO Star Atlas Water Purifier X1500
adopts modular design based on the global platform development concept. The thickness is only 105 mm,
easily meeting the demands of under-sink space installation in various scenes. The product is the
industry's first to be equipped with an intelligent front solenoid valve, effectively solving the problem that
in the winter the water stored in the machine easily freezes and damages the filter cartridge. The pioneer
dual-membrane fine filtration system has a larger contact area with water, greatly enhancing the flow and
water-saving efficiency. Moreover, the product implements the green concept and is the first to adopt a
recyclable metal body, greatly reducing environmental pollution. The product has won the "Valuable
Product" award of the water purification industry in 2022, the "Industry Contribution Award” for the water
purifier category in 2022, and the iF Award 2022. COLMO TURING Water Purifier-Heater T2000 opens
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the new purification and heating all-in-one track. The product is the first in the field of water purification
to design and position the faucet as a complete intelligent product and the first to introduce the TFT
screen, infrared sensor, light-sensitive button technology, springback handle, and other new technologies
to the faucet. In addition, the introduction of the optocoupler flowmeter makes accurate quantification
possible even in high temperature and strong magnetic conditions, and the error is controlled within 5%,
which is better than the industry average. The innovative use of proportional temperature adjustment
technology can prevent the decay of water flow alongside stepless temperature adjustment, increasing
the water flow of the temperature adjustment system by three times, which easily meets the needs of
drinking water in different scenes.
Based on an in-depth insight into user needs, Midea launched a series of innovative rice cooker products,
such as Red Flame Premium Aroma, Live Rice Fresh Aroma, Wind-blown Rice Aroma, Watery Pleasant
Aroma, and Rapid Aroma. When the rice leaves the rice field for the table, it experiences a long period of
storage and multiple shipments and can be easily oxidized and lose the original rice aroma. Specifically,
the original second-generation rice grain activation technology of the Wind-blown Rice Aroma cooker can
solve the pain point of "stale rice". In order to meet users' requirements for fried and roasted product
storage, Midea launched the "Ultra-thin Electric Grill", which is equipped with the industry's latest film
heating technology and adopts high-efficiency HP insulation materials. The thickness of the whole
machine is only 62 mm, which reduces the thickness by 40% in comparison with traditional products. The
heating plate adopting film heating technology makes heating more uniform and more efficient and can
achieve a whole-machine heating power of more than 2200 W, increasing the preheating speed by 50%.
The upper and lower baking trays of the product are free to disassemble and wash and easy to clean and
can also be put into the dishwasher for automatic cleaning. The upper layer of Midea 200XQ2 Sterilizing
Cabinet realizes drying, odor elimination, and moisture and mildew resistance with circulating hot air and
achieves the maintenance effect of long-term bacterial inhibition and odor elimination through PTC hot
air circulation drying. The middle and lower layers are featured by two-star dual-effect sterilization and
disinfection, which strictly guards the health line of defense and achieves combined disinfection through
ultraviolet + light waves, with a sterilization rate of over 99%. The thermostatic heating technology fully
destroys stubborn germs in just 35 minutes. In addition, the intelligent cloud housekeeper can achieve
ten customized disinfection modes, and the 72-hour cruise disinfection function makes long-term storage
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Midea Group Co., Ltd. Semi-Annual Report 2022
possible. The cabinet also has a new inner cavity design of mirror finish stainless steel. COLMO VRF
Kitchen Air Conditioner responds to the core needs of users with the anti-oily-fume design of the indoor
unit. Specifically, the Premium Golden Fin of the evaporator reduces the accumulation of grease and oil,
and the return air panel equipped with dual filters realizes seven-layer filtration. It also has a smart self-
cleaning function through the indoor unit evaporator and a stepless speed control air supply function. In
addition, the indoor unit is as slim as 200 mm, easy to install and space-saving.
For smart bathroom scenes:
Based on users' actual needs in water use scenes, Midea independently developed an on-demand heat
preservation and energy-saving program as well as an intelligent and precise heating mode to achieve
an innovative energy-saving system for efficient use of electricity, which can ensure that users use
sufficient hot water without wasting and outperforms the first-class energy efficiency performance of the
national standard. The program's directional design technology of balanced heat insulation is a cross-
border innovative application of aerospace-grade insulation materials, which achieves efficient and
precise temperature locking in all respects and allows quick access to hot water while saving energy and
electricity. It can also achieve on-demand quantitative and accurate heating based on the user's
customized water use needs, conduct real-time AI monitoring of bathing time, and display the bathing
time of remaining hot water. To solve the main pain points of villa and large family residence users,
COLMO Gas Water Heater CE116 provides an effective solution. The product has a beautiful appearance
with a glass panel, which is fingerprint resistant, high temperature resistant, and easy to clean, and the
body is also compact and easy to install. The built-in high-performance brushless DC water pump
provides strong water power, increases single-point water output by 90%, and can drive a lift height of 17
meters, meeting the multi-point water use demands of multi-storey villas or large residence users. The
gas proportional valve and the solenoid valve can achieve the intelligent control combustion of the four-
segment fire row burner with a water temperature difference less than ± 0.5°C. Meanwhile, equipped with
intelligent temperature sensing technology, it independently learns about user habits and take into
account weather changes for the self-adaptive adjustment of appropriate water temperature. The
aerospace-grade noise reduction, combined with micro-hole noise reduction technology, achieves multi-
dimensional noise reduction effect with a working noise as quiet as 38.7 dB. Midea Electric Water Heater
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Midea Group Co., Ltd. Semi-Annual Report 2022
F6032-UD (HE) responds to the needs of users and is equipped with user-friendly functions covering the
five dimensions of the shape, experience, energy saving, intelligence, and installation, and three bathing
scene modes can be set, namely the extremely fast bath with time-saving rapid heating, the bathtub wash
with ten times of normal water amount, and the skin cleaning bath. Specifically, the skin cleaning bath
achieves deep disinfection through six layers of cleaning filtration, namely deep filtration of impurities,
dynamic running water, whole-pipeline bacterial inhibition, 80°C high temperature disinfection,
interception sterilization, and scattered scale inhibition. Also, equipped with self-cruise frequency
conversion, it can independently match two heating powers, and the low power insulation is more energy
efficient. Its small volume slim and flat bucket has a large capacity of 60 L.
B. Adhered to the strategy of “Technology Leadership”, increased R&D investments, built a global
R&D platform for better R&D efficiency, established a digital R&D system for agile innovation, and
implemented the strategy of “Innovation Patentability, Patent Standardization, Standard
Internationalization and Midea Standard Goes Out”
Midea continued to invest in R&D. Through larger investments in this respect, it aims to achieve
leadership in R&D achievements and product trends, as well as a stronger presence in the industry and
a better R&D environment. The Company made innovations with respect to mechanism, and developed
more leading products through both excellent user experience and differentiated technologies, reform of
the whole value chain of R&D using digital technology, and deep integration of big data analysis and R&D.
It kept reforming its product development model according to the strategic focus of “Leading Products”.
An innovative R&D model featuring a “Three-Tier Technical Committee System” and a “Four-Tier R&D
System” from the organizational dimension and “Three Generations” from the technology dimension has
been put in place and constantly refined to support the fulfillment of the goal of “Being the Number One
or the Only One” in respect of various product categories. Centering on customer needs and based on
different organizations and technologies, the Company carries out innovative product development,
research on cutting-edge platforms, research on core components, creation of differentiated selling points
and improvement of the basic product performance. Through group development of products across the
world, building a global product platform, as well as increasing product development efficiency by way of
group planning and group development, Midea is building “Technology Leadership”. As of June 2022,
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Midea Group Co., Ltd. Semi-Annual Report 2022
Midea boasts ten corporate technology centers/industrial design centers/post-doctoral research centers
at the state level, 19 academicians with long-term cooperation and eight academician
workstations/workshops, in addition to more than 60 corporate technology centers/engineering
centers/industrial design centers/key labs at the ministerial or provincial levels. By doing so, it builds
competitive edges with its strength in technology. Under the guidance of the strategy of “Technology
Leadership”, the innovation platform serves as the core of its technology innovation system and is
responsible for the implementation of technology development strategies and the commercialization and
application of technology innovation achievements, thus driving Midea’s transformation towards a global
technology group in a faster manner.
Midea Group is committed to investing in the research of core technologies and has made significant
breakthroughs in the main track of household appliances and in the field of new industrial technology. In
the project of "Research on the Application of Precision Washing System based on AI Vision and Electric
Spray Arms in Household Dishwashers", Midea invented the precision washing technology based on
multi-task image intelligent recognition and realized a truly intelligent and fully automatic mode to meet
the demands of Chinese families for the cleanness and hygiene, convenience and efficiency, and
precision washing of dishwasher. In the project of "Key Technology and Application of Multi-Grade High-
Efficiency Heat Energy Supply of Air Source Heat Pumps", an innovative breakthrough of key technology
of air source heat pump water heaters is made to solve the problem that conventional air source heat
pumps cannot operate reliably in the cold areas in the north and to ensure the high efficiency and low-
carbon supply of industrial steam, which leads the technical progress and industrial development of air
source heat pump heating, achieves pollution and carbon reduction, energy saving, and efficiency
increase, and produces significant economic and social benefits. In the project of "Research and
Application of Key Technology of Low-noise Heavy-rare-earth-free Permanent Magnet Motors for
Compressors", the multiplicative noise of compressors is reduced through the electromagnetic force of
the motor body, and its "double pioneer" technology makes household appliances quieter and more
environment-friendly and significantly improves the noise of air conditioning system. In addition, the
dependence of permanent magnet motors on heavy rare earth materials is effectively relieved through
the comprehensive optimization of the magnetic circuit structure of the stator and rotor. As of June 2022,
Midea has received a total of 190 "Internationally Advanced" certificates for its technologies.
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Midea Group Co., Ltd. Semi-Annual Report 2022
Midea has strengthened the transformation of R&D achievements while carrying out the core technology
research. By June 2022, Midea (inclusive of TLSC) held more than 77,000 valid patents. In H1 2022,
Midea was granted more than 2,000 invention patents around the globe. Midea continues to improve
patent quality. It won multiple awards at the 2022 23rd China Patent Awards. To be specific, the
"Dishwasher" and the "Control Method, Controller, and Refrigerator of Meat Subcooling Preservation"
won two Silver Invention Awards, the "Window Air Conditioner" won a Silver Design Award, and the
"Compressor and the Heat Exchange System with it", "Recommendation Method, System, and Big Data
Server of the Air Conditioner and Its Operation Parameters" and other patents won six Excellence Awards.
In order to provide strong support for the fulfillment of the strategic objective of “Technology Leadership”,
Midea further implements the “3+1” standardization strategy of “Innovation Patentability, Patent
Standardization, Standard Internationalization and Midea Standard Goes Out”, and a two-tier (Group-
business divisions) standardization management system has been put in place. Meanwhile, to ensure
the effective execution of the standardization strategy, the Group has set up a standardization
management committee. With the double drivers of “standard innovation + production innovation”, Midea
shifts innovation achievements to advanced technological standards. Additionally, it endeavors to play a
bigger part with respect to advanced technology standards of the industries, aiming to create more value
for users, partners and industries. During H1 2022, Midea took part in the formulation/revision of 149
technological standards, including six international standards, 33 national standards, 11 industry
standards, and 99 local and group standards, including the "Guidelines for Information Disclosure of
Enterprise Carbon Emission Management", "Artificial Intelligence-Audio, Video and Image Analysis
Algorithm Interface", "A.C. Ventilating Fans and Regulators for Household and Similar Purposes-Methods
for Measuring Performance", "Fine Bubble Technology—General Principals for Usage and Measurement
of Fine Bubbles—Part 1: Terminology", "Information Technology—Digital Twins—Part 1: General
Requirements", "Radio Interference of Antenna and Receiving System—Part 4-1: EMC Test Method for
Electronic Equipment Combined with Radio Module", "Minimum Allowable Values of Energy Efficiency
and Energy Efficiency Grades for Domestic Waste Food Disposers", and "General Technical
Requirements for Smart Aging Household Products". In addition, Midea was also awarded the Third
Science and Technology Award - Standard Contribution Award by the China Society for the Promotion of
Science and Technology Commercialization.
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C. Deepened the channel transformation, further improved the channel efficiency and rebuilt the
retail and ToB service abilities so as to achieve direct connection with customers
Being customer-oriented, Midea continues to enhance vertical efficiency and horizontal synergy efficiency,
as well as accelerate retail growth and retail transformation. Through the reform of direct retailing, Midea
has been continuously promoting the "vertical efficiency improvement" of offline channels, with the shift
from distributors to operators completed and the retail operation capability greatly improved. Meanwhile,
organizational reform has provided effective support for the "horizontal synergy efficiency enhancement".
The China division and product divisions give play to their expertise and work with the operation center.
Thus, the operation center is made the “main battlefield”, with deep coordination among all product
categories. Horizontal synergy efficiency has been greatly improved in channel expansion, scenario-
based transformation at the retail end, etc. Through the corporate operations of the operation center,
Midea has realized "One Midea" for all markets, ensuring the consistency of user service and experience.
In H1 2022, online sales as a percentage of Midea’s total sales remained over 45%. Midea's online sales
exceeded RMB44 billion, and it remained the best-selling household appliance manufacturer on major e-
commerce channels such as JD and T-mall for ten consecutive years. In terms of e-commerce, Midea
strengthened the segmentation of channel operation, reconstructed and specially built the sales channels
on Pinduoduo, interest e-commerce, and KA/TOP, focused on developing COLMO and Toshiba's ability
of online consistency operation, and accelerated the all-channel and all-brand structure optimization. As
its sales growth rate far exceeded that of mainstream e-commerce platforms, Midea achieved new growth.
Meanwhile, Midea focused on enhancing new capabilities such as self-operation, self-livestreaming, and
content marketing to consolidate the operation competitiveness. As online and offline markets integrated
at a faster speed, based on different levels and characteristics of different channels, as well as changes
to customers’ needs and ways of spending, Midea drives the retail transformation based on user demands
and experience, and keeps refining the retail operations system, so as to achieve direct connection with
retail customers. This mainly involves the following aspects. Firstly, being customer experience-oriented,
it provides just the shopping experience wanted by customers by putting in place an exclusive store
network covering all channels. To be specific, it possesses more than 1,300 pre-decoration stores in the
domestic channels of building materials and home decoration, over 2,600 flagship stores in districts and
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counties, as well as over 14,000 multi-category stores in towns and villages. Second, in terms of the retail
segment, Midea integrated the advantages of all product categories and united with brands in other
industries to create an all-scene, fully interconnected, and whole-household ecological immersion
experience for consumers. Midea built intelligent and digital terminals and promoted the installation of
intelligent scenes in terminal stores. More than 1,700 stores have been covered and more than 3,100
scenes exhibition areas have been built, and the construction of all-category halls has been piloted in
offline channels. Meanwhile, Midea builds immersive 3D model rooms for entire home appliances focused
on home decoration users, providing a roaming shopping experience to achieve accurate
recommendations and exclusive intelligent shopping guide. At the same time, focused on the
improvement of the product suite purchase, it builds the service chain and exclusive rights and interests
system for home decoration product suite purchase, driving transformation to integrated services for
home decoration + home appliances, and providing home decoration users with time-saving, cost-
effective and worry-free comprehensive solutions. Third, Midea actively seeks new business
opportunities. On emerging channels such as Pinduoduo, Douyin, Kuaishou, and Xiaohongshu, Midea
has refined its product offering and optimized the marketing and rating system. It also continued to build
the operation platform for e-commerce. By strengthening content and digital marketing, gaining insight
into users, and segmenting their needs, Midea promoted the integration of quality and efficiency,
improved DTC capability, and upgraded from traffic operation to user operation. The number of members
and acquired customers on JD, Tmall, and other platforms was leading in the industry, and the proportion
of self-broadcast on Douyin in June was over 85%. Fourth, special campaigns have been carried out to
make product mix breakthroughs. User needs are accurately identified through data analysis, new
measures are taken to drive growth in new product categories, efforts are made to improve the smart
scenario operation capability, and breakthroughs are constantly made on the high-end market. Fifth, post-
sales service and logistics experience are well optimized. Midea promoted the construction of the unified
distribution cloud warehouse and customer service middle office and the transformation of reverse
process and improved the ToB forward fulfillment timeliness and reverse service capability. Midea
leverages the “Digitization & Intelligence Driven” strategy to be “Direct to Users”, and initiates a series of
business moves in user experience, user operation and user service from user needs and service
scenarios. Based on the underlying data capabilities for user demand insights, Midea can better serve
users through user life cycle management, membership and private domain operations to enhance user
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Midea Group Co., Ltd. Semi-Annual Report 2022
loyalty. Firstly, Midea focuses on "user experience" and improves the user experience of the whole value
chain under the guidance of the Net Promoter Score (NPS), with the NPS increasing by 10% compared
to H1 2021. In addition, Midea strengthens user operation, promotes the establishment of membership
system and private domain traffic, and deeply promotes the intelligence and IoT of products. By the end
of June 2022, the cumulative number of registered members exceeded 120 million. Furthermore, Midea
reinforces the building of data platform and commercial data analysis. Analysis of user consumption
behavior data serves as a strong support for business decision-making.
Midea deepens and promotes the business model change and the digital and intelligent transformation
of the user service system to provide one-stop whole-home smart home appliance service solutions for
users. First, Midea reconstructed the user experience from the user perspective with a focus on 24-hour
service speed improvement, reached an achievement rate of 86%, upgraded the 521 service standards,
and reconstructed the return and replacement procedure experience. Replacement instead of repair has
been fully implemented for small domestic appliances and partly piloted for major domestic appliances.
The return and replacement time has been shortened to three days through online identification/no
identification or the simultaneous delivery of the new appliance and recovery of the old one. Second,
Midea accelerated the construction of active service capabilities, transformed from passive waiting to
active service for users, and built the active service platform. Twenty-one active service scenes were
launched, with more than 1.85 million active service times, more than 400,000 private domain users, and
a retention rate of up to 96%. Third, Midea built a whole-chain closed-loop system for the voice of
customers (VOC) and launched the user voice intelligent analysis platform to achieve rapid discovery,
exploration, distribution, closed-loop management, and monitoring of all-channel problems, with a closed-
loop improvement rate of over 98% for VOC. Fourth, Midea improved COLMO's high-end service
experience, promoted the suite-based construction of the COLMO network, selected high-quality service
providers, and invested resources in cultivating suite service capabilities. More than 2,200 COLMO suite
service outlets have been developed to select high-quality engineers from multiple dimensions and
guarantee and improve the reputation of high-end brand services. Fifth, Midea carried out green recycling
business, deployed the two modes of self-owned channel recycling and external cooperation for the
market recycling end, and built the "Internet +" recycling platform. Phase Three of the green recycling
system has been launched, achieving the online circulation of recycling information.
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Midea Group Co., Ltd. Semi-Annual Report 2022
Transformation of the ToB business model has been further deepened. Based on the Group's five
business segments, the business model has been upgraded from traditional hardware product packages
to scene-based solutions targeting customers in the whole industry, so as to enhance sales and brand
presence on the ToB market. Meanwhile, refinements have been carried out for the existing customer,
product and business structures, thus increasing the profitability of the business value chain. Midea has
enhanced cross-division horizontal synergy, forming a regular special collaboration mechanism for
information exchange, business opportunity sharing, market strategy making, resource allocation and
other aspects. In addition to the traditional home appliance industry, Midea has unfolded coordinated
marketing in the ToB business of the Building Technologies Division, the Robotics & Automation Division,
and the Digital Innovation Business through industry-wide solution development and promotion. In the
first half of 2022, Midea focused on improving delivery capability to enhance customer satisfaction while
focusing on promoting the transformation of Midea's ToB business model toward systematic solutions. In
terms of key industries such as intelligent manufacturing, new and old infrastructure, office R&D, business
services, and medical and health care, Midea cooperated with head customers in various industries,
designed and delivered specialized solutions based on industrial characteristics and customer needs,
and strongly supported the transformation of relevant industries and corporate customers toward
intelligence, automation, low carbon, and digitalization in the context of the "carbon peak and carbon
neutrality" policy.
Annto, a subsidiary of Midea Group, is a technological innovation-based provider of supply chain (logistics)
service. It is committed to providing customers with end-to-end digital and intelligent supply chain
solutions. In terms of internal support and services, under the background of Midea Group promoting the
T+3 business model deep reform, Annto further promoted the logistics reform and improved B2C logistics
capacity. Through big data analysis and data modeling and based on user needs, Annto refines and
integrates its warehouse network across the country and expands the unified warehousing and
distribution model to retail stores. Overall planning of channel inventories and unified operation of
warehousing and distribution boost channel efficiency and provide support for comprehensive
standardization and digitalization of user services. Annto refines the integrated delivery and installation
service network and connects the links from manufacturing to consumption, providing support for the
achievement of Midea’s “Direct to Users” strategy. Annto has established an integrated and smart logistics
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Midea Group Co., Ltd. Semi-Annual Report 2022
platform for the whole process of production logistics, warehousing, urban distribution, delivery and
installation. It also cooperated with Sino-US Global Logistics Institute of Shanghai Jiao Tong University
to establish the Joint Research Center for Smart Logistics and Supply Chain, generating achievements
in route planning for delivery vehicles, scheduling and controlling of digital manufacturing logistics and
other fields. In the first half of 2022, Annto completed the deepening and application of urban delivery
capacity scheduling algorithm and corresponding scheduling system in 65 operation centers nationwide
and launched research and application projects on core warehouse operation capabilities such as storage
network optimization and warehouse storage and sorting efficiency optimization, in order to form practical
results such as solutions, key algorithms, and decision support tools. The service network of Annto of
warehousing, trunk line transportation, distribution, delivery, and installation has realized the whole-
procedure visualized direct distribution to districts, counties, and towns, and the service capacity has
been continuously upgraded. In terms of warehouse network layout, Annto has laid out large logistics
distribution centers and thousands of distributed mini warehouses in more than 140 cities across China,
realized real-time inventory sharing and allocation, and effectively reduced inventory costs and capital
occupation through unified warehouse and unified distribution. In terms of warehouse management,
Annto accelerated the deepening application of intelligent logistics warehousing center, realized
intelligent unmanned warehouse management through intelligent equipment and advanced technology
in high-standard automated warehouses for expensive consumer goods, reduced sorting operation, and
improved sorting efficiency through procedure optimization and information system function
enhancement. Annto optimized the layout of distributed mini warehouses through online big data analysis
and scientific algorithms and achieved a 10% saving in the storage service area which meets the same
market demand. Also, it optimized the integration services of terminal warehousing and distribution and
of delivery and installation through inventory sharing and intelligent replenishment. In terms of intelligence,
Annto focused on "smart parks" to realize the whole-procedure intelligent management system for parks,
promote the improvement of the operational capacity of self-built parks, and create integrated products
of smart parks. In terms of production logistics, Annto realized the functions of factory logistics planning
collaboration, wave-based sorting, JIT delivery, inventory sharing and visualization, intelligent
replenishment, etc. through the whole-procedure digital construction of Vendor Managed Inventory (VMI),
which increased the human efficiency of the VMI intelligent warehouse by 50%, the surface efficiency by
46%, and the inventory reconciliation efficiency by 45%. In terms of trunk line urban distribution, Annto
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Midea Group Co., Ltd. Semi-Annual Report 2022
realized direct inter-city delivery through the LCL trunk line network, and achieved optimal timing
configuration through route planning. Meanwhile, it strengthened the cultivation and expansion of terminal
outlets, built a "scheduling center" platform based on the whole procedure of order-scheduling-capacity-
operation-system, broke the management boundary between the project system and shipping capacity
resources, integrated line resources, and built the operation capacity of domestic trunk line network, thus
improving user experience comprehensively. In terms of terminal delivery and installation, Annto
optimized the integrated delivery and installation and rebuilt the main procedure of the after-sales platform
in the first half of 2022 and realized the digitalization of order and engineer management. The per capita
order receiving efficiency of engineers increased by 34% year-on-year, and Annto effectively supported
business models such as complied delivery and installation and delivery of the new and recovery of the
old, with more than 3,000 delivery and installation outlets and a team of more than 32,000 professional
engineers, covering more than 2,700 districts and counties in China. In terms of capacity optimization,
Annto deepened the construction of online freight platform capacity, realized online capacity and cost
transparency through digital construction, accumulated valuable capacity resources and cost data, and
realized the integration of logistics, capital flow, information flow, contract flow, and bill flow.
In terms of external business expansion, adhering to the business philosophy of building and sharing with
customers, Annto provides strong support for corporate customers in promoting channel efficiency and
sales growth. It focuses on industrial customers and industry in depth, while continuing to strengthen the
construction of core capabilities such as LTL, urban distribution and integrated delivery and installation
to steadily improve customer service experience, thus increasing its market share year by year. In the
first half of 2022, Annto relied on the "1+3" service model, i.e., "whole chain" + "a shared inventory system,
integration of delivery and installation, production and logistics" to help customers promote channel
transformation and supply chain efficiency optimization and to assist corporate customers in whole-chain
value enhancement with smart logistics. The service model can provide integrated supply chain services
covering the whole chain of "parts-finished products-stores-users" and help customers to solve problems
such as rising fulfillment costs caused by diversified channels and fragmented orders "through a shared
inventory system" and to establish a whole-value-chain monitoring system for operation indicators,
continuously optimize costs, strengthen risk control capabilities, and provide effective data support for
enterprises' operation decisions. "Integrated delivery and installation" can help customers to better reach
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Midea Group Co., Ltd. Semi-Annual Report 2022
users and improve service experience. "Production and logistics" means transforming Midea's years of
experience in lean manufacturing into the "Lighthouse Factory Supply Chain Solution" and to realize the
output of systematic solutions based on customer needs and industrial characteristics. Based on Midea's
industry-leading experience of channel transformation and sound smart supply chain systems and
networks, Annto has provided services to thousands of enterprises, with clients spanning many industries
across home appliances, consumer electronics, food and beverage, maternal and infant, and household
necessities and chemicals.
D. Promoted “Global Impact”, enhanced localized operations overseas and accelerated the
cooperative integration of TLSC
Midea further promoted its global business layout to solidify its global competency. It formulated a global
supply cooperative mechanism, strengthened the global manufacturing network and localized operations
overseas, optimized the global logistics and service system, and promoted product globalization and
regionalization. Its overseas business spans more than 200 countries and regions in North America,
South America, Europe, Asia, Africa and Oceania. Meanwhile, guided by the market and focusing on
users, Midea builds a global user research network with foresight. Midea has established an organization
for local consumer and market observation, built a digital marketing ecosystem, implemented product
lifecycle management based on the changing trends of user needs and consumption habits around the
world, built user touch points throughout the entire chain, and continuously optimized and matched the
retail operation system for the user-growth market.
Midea has reconstructed the overseas sales operation system, continuously deepened the user-oriented
digital transformation, and established end-to-end procurement as well as execution processes, tools,
operation mechanisms and information connection for sales orders to achieve online and visual overseas
planning and order execution. Midea exerted great efforts to build the intelligent overseas commercial
system, constantly deepened its data-based business decision-making capability, and created a digital
platform to facilitate mobile operations overseas. 23 overseas branches were covered. A total of 45 key
indicators were included, such as sales, finance, supply chain, products, and e-commerce. Furthermore,
real-time online business, data transparency and sharing, and early risk warning have become available
for better operating efficiency in the key part of the overseas business.
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Midea Group Co., Ltd. Semi-Annual Report 2022
In 2021, Midea made headway towards the Global Impact strategy that has focused on the United States,
Brazil, Germany, Japan and ASEAN, and initiated a special campaign for overseas branding. It not only
clarified specific plans for user segmentation, product maps, brand matrices and localization
infrastructure construction in strategic markets, but also invested more resources in user insight, branding,
product innovation and organizational consolidation to ensure the implementation of the relevant
strategies. Midea has kept improving the distribution of overseas channels, being customer-oriented and
promoting the transformation of overseas channels into retail terminals. In the first half of 2022, it had
approximately 2,600 new active partners and built more than 20,000 new sales outlets for its own
overseas brands. Besides, it constantly streamlined the channel hierarchy and expanded e-commerce
channels to promote flat channels. Meanwhile, it rolled out the pilot direct retail model in Brazil and the
Philippines to improve channel efficiency and data transparency. By enhancing the visualization of data
and information in different dimensions on more than 60,000 retail outlets, it effectively supported and
optimized the strategies for the operation of stores. Midea has steadily increased its investment in the
overseas e-commerce business. It has established overseas e-commerce companies and formed special
teams for the overseas e-commerce IT system. Additionally, it has improved the e-commerce
organizational structure by introducing professional talent, pushed ahead with the digital transformation
and reform of overseas business, enhanced the logistics and storage capacity in the project of global
digitization, optimized the networks of post-sale services and spare parts, and promoted the overseas
iService3.0 digital post-sale service system. By doing so, it has achieved the digital upgrade of the e-
commerce business. Own branding has been strengthened overseas. Midea has expedited the pace of
the global breakthrough of its own brand by launching a special project for branding in North America. It
has strengthened its own brand penetration in key markets in multiple dimensions, including offline
terminal retail experience, guide team development, social media campaign and whole-house product
suite marketing. Specifically, Midea sponsors well-known foreign football clubs and sports events and
has intensified the effects of sponsorship for the Manchester City Football Club. It has reached more than
800 million fans worldwide in over 20 home competitions and has conveyed the content it created to 300
million people worldwide via social media, football stars and Internet celebrities, which has expanded its
localized marketing in local markets and increased its global visibility. Midea has also created a
mechanism for co-creating smart scenes overseas. By setting up the positions of IoT Product Manager
and Engineer in the markets of key countries, it has localized the connectivity testing of new IoT products.
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Midea Group Co., Ltd. Semi-Annual Report 2022
As of June 2022, the shipment of IoT products in overseas markets has surpassed 1.4 million units,
among which more than 260,000 units have been activated. Additionally, Midea has completed the
construction of the MSmartLife App—a globally unified international platform for online support services,
built a service team for the global application market such as App Store and Googleplay and for "in-app
feedback" applications, and completed the localization of FAQ for the markets of five core countries. A
digital ecosystem of user growth was constructed with six major touch points: user co-creation, user
services, brand official website, social media, overseas e-commerce and the MSmartLife App. With the
best modes of overseas user data storage, content iteration and operation explored, an overseas
customer data platform was created to promote overseas private domain traffic. Through the pilot projects
for the growth of overseas users initiated in the US and Brazil, indicators such as user conversion rate
and customer acquisition of the post-sale system have increased significantly, which has boosted sales.
Therefore, Midea has promoted its experience accrued in this regard in other markets overseas. By June
2022, it has reached a total of 1.2 billion people through foreign social media and interacted with 17
million users. Besides, the number of registered users of its official website has surpassed 5.4 million.
Moreover, Midea has constantly improved the overseas manufacturing layout and expedited the
introduction of the "China-Based Supply for the World + Local Supply" model. In the first half of 2022,
Midea further carried forward the construction of manufacturing bases in Mexico and Egypt in order to
cover the North American, the Mideast and African markets. Meanwhile, efforts were stepped up to
promote the construction of the new manufacturing base in Brazil to cover several key categories. In
addition, the domestic refined manufacturing system was introduced and promoted in the overseas
manufacturing bases, and overseas talent development was enhanced with respect to lean management,
driving improvement in global production and delivery capacity. The constantly refined EHS management
system provides firm assurance for the safe and stable operation of the overseas manufacturing bases.
Global logistics and service system was enhanced. On the one hand, it deepened cooperation with global
strategic partners, and created a new mode of international logistics cooperation to effectively ensure the
supply of logistics resources during drastic market changes. On the other hand, it improved the global
service capability. Midea optimizes service networks of overseas iService system and cloud call center
platform, and master data management of global outlets and service projects, and continues to construct
fast-response and proactive global service system. In 2022, the introduction of Amazon Connect, a global,
omnichannel cloud contact center, into Midea enabled the Company to achieve the iterative upgrading of
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its global contact center and directly reach the end customers worldwide. With the constantly improved
global integrated service system, Midea has achieved the whole-procedure closed-loop management
that ranged from user reaching to service completion, dramatically improving the service efficiency and
user experience.
In H1 2022, the COVID-19 pandemic has remained a serious impediment to the Japanese market. The
operation was further affected by rising raw material costs and exchange rate fluctuations. TLSC
continued to deepen the synergy with the Group's product divisions in the value chain to ensure the
supply of products despite the pandemic and tight sea freight resources, while safeguarding the safety of
employees. Measures such as price adjustments through the faster launch of new products and
enhanced sales activities, improved product mix, increased retail market share and tightly controlled non-
operating expenses, so as to address the impact of product costs, currency fluctuations and other factors
and ensure the accomplishment of the operating objectives. During H1 2022, the retail sales of the
Japanese home appliance market grew 6% compared to H1 2021, while that of TLSC grew 25%. Its
market share of six major product categories combined has increased to over 14%, with the respective
market share of air conditioners, refrigerators, laundry appliances, microwave ovens and rice cookers
continuously growing. Organizational structure and business model are transformed to adapt to market
changes, and organizational efficiency and vitality were continuously enhanced. TLSC continued to boost
synergies with the Group and the relevant divisions on branding, R&D and innovation, supply chain
integration, quality improvement, etc., so as to build a strong product portfolio for the global market
together. By June 2022, the business of TLSC has covered more than 120 countries and regions.
E. Stepped up the comprehensive digitalization to materialize data- and platform-based
operations in the whole value chain, and thus to become more competitive in the digital era
Focusing on “Digitization & Intelligence Driven”, Midea achieves changes in the format of products, drives
hardware sales through software sales and intensifies contents and services; and achieves changes in
business methodology, promotes reforms in research, production and sales, and fosters disruptive
changes in existing business models through an Internet mindset and Internet tools. Midea has promoted
business digitization and established a data business system. After years of digital practice, focusing on
the development trend of industrial digitalization and the characteristics of industrial digitalization, Midea
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has established its SMART data business system. With process changes throughout the whole chain of
data business, data governance to ensure data specification and availability, high-value data assets
constructed relying on the public layer, data products and data applications have been created with data
technology. In terms of domestic sales, Midea has adhered to the "Direct to Users" and "Digitization &
Intelligence Driven" strategies and the "customer-oriented" principle. It has improved the efficiency of the
omnichannel value chain with data-driven measures. With "user experience" as a focus, Midea has
enhanced the user experience of the whole value chain under the guidance of the Net Promoter Score
(NPS) and constantly promoted the establishment of the membership system and private domain traffic.
It has effectively promoted the instantiation reform of the direct-to-customer (DTC) business model and
operation center by relying on the Midea Cloud Sales platform, which supports pronged measures in
multiple dimensions, including cloud warehouse, omnichain inventory sharing, self-assessment review of
orders, simplified policies, omnichain visualization of orders, and customer-to-manufacturer (C2M) whole-
house solutions. At the same time, it has optimized the store site selection using a data algorithm. Midea
has kept empowering channel reform with digital means. In terms of overseas sales, Midea has provided
vigorous support for the "Global Impact" strategy, deepened the development of digital capabilities of the
system driven by the original equipment manufacturer (OEM) and own branding & manufacturing (OBM),
and focused on the five core regional markets worldwide. Furthermore, it has promoted the digital
transformation of overseas business in line with local circumstances and pushed ahead with the product
plan based on user insights, to upgrade its overseas products in an all-around way. Based on new
technology architecture, it has built the iBOS platform for the integration of overseas sales. With the
collaborative planning, forecasting and replenishment (CPFR) model, whole-procedure visualization of
overseas orders, and other features, the iBOS platform has improved the execution and delivery
efficiency of overseas orders and dramatically reduced the cost. Additionally, the self-created MCC
channel management system of Midea supports the channel management reform for overseas markets.
Midea has comprehensively upgraded the overseas localized digital marketing platform in Brazil on a
pilot basis, to shore up the ToC capability development of overseas markets. It also has pushed ahead
with the establishment of the overseas user operation and membership system and rolled out the
overseas contact center system in the Asia-Pacific region in an all-around way, thereby providing better
services for users of the OBM business. The construction of digital systems in manufacturing bases in
Thailand, Italy and Egypt has been completed, contributing to the improvement of the efficiency of
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overseas manufacturing. In the process of R&D, following the "Technology Leadership" strategy, Midea
has improved its digitization and intelligence capabilities in multiple application areas, including
technology innovation, user research, digital simulation and verification, software-defined hardware,
development of the global platform cluster, and C2M customization. It has built a digital planning platform
to rapidly translate technological capabilities into popular products of high user perception, increasing the
hit rate of the product plan by 8%. Midea has started the digital simulation era, established a unified digital
simulation platform and simulation talent system, and drove the transformation toward an efficient and
collaborative R&D mode. In the processes of manufacturing and supply chain, Midea has promoted the
transformation toward an end-to-end integrated supply chain and developed industry-leading capabilities
in regard to order execution, global supply chain management, and agile delivery. It has optimized the
sales and operations planning (S&OP) procedures that balance production and sales and improved the
synergy efficiency of production, supply and sales of the whole value chain. Meanwhile, the "Global
Planning Center" and "Global Order Center" have been established to provide digital support for the
decisions on the business plan for production and sales. Midea has empowered and improved its
manufacturing capability and developed highly-flexible, highly-efficient, and highly-elastic agile delivery
capabilities, thereby meeting the market demand for diversity and customization. In the first half of 2022,
another two factories of Midea were included in the "Global Lighthouse Network" initiated by the World
Economic Forum, enabling the digital, flexible manufacturing of Midea. Guided by the "Lighthouse
Network" factories that feature sustainable development, Midea has carried forward the smart
manufacturing of 5G + industrial Internet factories. Driven by the Voice of the Process (VOP) and Voice
of the Customer (VOC), the overall quality has been improved. Additionally, Midea has supported the
network-based supply chain resources and agile end-to-end response. It has applied a smart price
determination model to secure its advantage in cost and supported and helped thousands of enterprises
with rapid cloud and platform migration. In terms of overseas sales, with the optimized "T + 3" model
( production strategy based on customer orders), the loading rate has risen by 20%, and the delivery
cycle has been shortened by 16%. Midea has been committed to building green and energy-saving
factories, so as to gradually conserve energy and reduce carbon emissions. At the same time, it has
promoted and implemented the visualization and green and smart monitoring of carbon emission and
conducted full-coverage smart monitoring and early warning for the main emission points. Moreover, the
use of the smart air compression station has enabled Midea to save energy by 30%. In the process of
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warehousing and distribution, with digital technology, Midea has achieved the sharing and visualization
of the inventories of raw materials as well as the integration of delivery and packaging, thereby effectively
reducing carbon emissions. Besides, it has taken advantage of the big data technology to design the
optimal warehouse network structure and the best planning and smart scheduling of main and branch
lines for distribution, so as to promote inventory and channel management and improve the flow efficiency
of goods. Furthermore, Midea has built an engineer team to provide delivery and installation services,
which covers approximately 40,000 villages and towns across the country. It has provided high-quality
last-kilometer delivery and installation services through smart customer services and order assignment
optimization. In the process of operations management, Midea has fully promoted the objective and key
result (OKR) system as well as management by objectives and collaboration, improved the digital
collaboration platform, strengthened the fundamental capabilities of office platforms, and enhanced the
efficiency and transparency of cross-team collaboration. The five scenes of smart logistics have been
extended to more than 30 industrial parks across the country, expanding the coverage of administrative
services and improved customers' experiences when they provide services. By creating a unified bidding
invitation and procurement platform for Midea Group, all scenes designed for non-production materials
have been unified, network-based, and process-based. With the optimization of the process efficiency as
the core lever, Midea has further clarified the decentralization system and has achieved reciprocity
between power and responsibility. It also has constantly boosted organizational vitality. As a result, the
process efficiency of the core value chain covering research, production, sales, and supply has increased
by 10%; the process efficiency of finance and other functions has risen by 30%; the process efficiency of
the office automation (OA) system has climbed by 50%. Midea has carried out capability training,
assessment and certification for digital talent to enhance their digital capabilities.
Midea has constantly built the CloudNative digital base and pushed ahead with the construction of its
cloud project in Guian New Area, located between Guiyang and Anshun, Southwest China's Guizhou
province. Currently, the CloudNative application management platform has been rolled out, which
supports the microservice architecture of the business system. Besides, the total volume of resources
managed by the container has increased by 20%, promoting the integration and collaboration of
development, operation and maintenance (DevOps) in the R&D of effectiveness, connecting continuous
integration and continuous delivery (CI/CD) to achieve a closed loop and full life cycle management of
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the R&D process, and shoring up the agile reform of Midea Group. In March 2022, the contract for the
cloud project in Guian New Area was officially signed. The project will meet the computing need of Digital
Midea in the next ten years and provide a guarantee for Midea Group to develop into a leader in the IoT
era. In June 2022, the Privacy Computing Joint Laboratory jointly established by Midea Group and
College of Computer Science and Technology, Zhejiang University, was officially launched. The laboratory
is intended to carry out industry-education-research cooperation in privacy computing and artificial
intelligence and explore the application scenes of privacy computing in the manufacturing industry,
thereby speeding up Midea's digital construction. Being one of the important strategic technologies in the
future, privacy computing will further boost Midea's digital development.
Midea has constantly developed artificial intelligence (AI) technology and furthered the in-depth
application of smart technologies. In the first half of 2022, Midea AI Innovation Center achieved
application breakthroughs in four fields, namely household robots, smart home empowered by AI, smart
manufacturing empowered by AI, and smart medical services empowered by AI. Midea's household robot
brand WISHUG and its first-generation robot Xiaowei have been successfully rolled out. Xiaowei has four
core features, namely AI housekeeper, home assistant, security guard, and technology playmate. Besides,
Midea has applied voice full-stack technology to its home appliances of all categories and created a
knowledge graph of the vertical field of the home appliance industry, providing fundamental data support
for scenes such as human-robot interaction, smart customer services, and active services. Also, the AI
motion recognition solution has been applied to the plant of Midea Kitchen in Wuhu, Anhui Province. The
first-generation household robot created by Midea AI Innovation Center won the Red Dot Award 2022:
Product Design and the Red Dot Award 2022: Smart Product Design. In the SAPIEN ManiSkill Challenge,
a world-class event held by the University of California San Diego during the 2022 International
Conference on Learning Representations (ICLR 2022), a premier gathering of professionals dedicated to
AI advancement, Midea's technical team won the championship of the No Interaction group. Additionally,
Midea's household robot and edge intelligence were included in the "Artificial Intelligence Innovation
Candidate for Projects Launched under An Open Competition Mechanism" list released by the Ministry
of Industry and Information Technology. The two projects led by Midea, namely the smart grading of
service-oriented robots and the tool chain for the distribution of edge devices, were successfully initiated.
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F. Promoted the strategy of “Digitization & Intelligence Driven” and accelerated the
implementation of “Comprehensive Intellectualization” to “Customize a Smarter Midea Life for
You”
M.IoT has continuously improved fundamental technologies and developed customer-oriented Midea
Smart Life solutions. To provide home users with smart product experiences that cover the whole scene
and more high-quality ecosystem value-added services, it has created a pan-MSmartLife App ecosystem
that focuses on "Customize a Smarter Midea Life for You", thereby providing high-quality product
experiences and richer derivative value-added services for users. Midea has met users' demand for a
smart life through one-stop services. In the first half of 2022, facing consumers' demand for cooking at
home, Midea rolled out Midea Smart Kitchen solutions that combined smart home appliances and pre-
made food. With smart recipes and convenient pre-made food services, a beginner can become a chef
in a twinkling. At the same time, the market shares of small domestic appliances for kitchen scenes such
as air fryers also grew. Focusing on themes such as kitchen, balcony, bathroom, living room, bedroom,
whole-house air, whole-house water, smart lighting, and smart security, M.IoT has accelerated the launch
of smart whole-house solutions with full-scene experiences in the pre-installation market. Also, it has
continued to carry out iterative optimization based on the demand of the pre-installation market, thereby
providing consumers with scene-based smart whole-house solutions. Midea has promoted the
development of an offline business model that ranges from the retail of home appliance products to smart
whole-house solutions. Additionally, it has created an omnichain scene-based marketing model and one-
stop services to explore new markets. Through the integration of "hardware, software, content and
services", Midea has created a super-smart link for the home and delivered users smart whole-house
experiences. At the same time, adhering to opening-up and cooperation, Midea has actively carried out
strategic cooperation with leading home decoration companies in the industry. Moreover, Midea and
Huawei have opened up to each other and been integrated in the field of whole-house intelligence,
providing consumers with one-stop smart whole-house services. In the first half of 2022, M.IoT had nearly
13 million units of newly connected devices, and it provided services for more than 70 million families, up
by 87% year on year. Midea's smart scenes were executed more than 210 million times, representing a
year-on-year increase of over 300%. Through scene-based user connection, the number of users of
multiple scene-based devices grew steadily. The monthly active users of Midea Smart Cloud
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Housekeeper grew more than 90% year on year. The APP has provided more than 10 million Midea users
with more energy-saving, more comfortable, more convenient, safer and healthier digital family lives.
Meanwhile, 40 patent applications for algorithm innovation technologies have been submitted.
With the protection of user privacy and data security at the core, Midea has continuously built and
improved the Midea smart home security system that is in line with the standards of the domestic and
overseas industry, which has been CNAS and ISO 17025 certified. In the first half of 2022, the China
National App Administration Center (CNAAC) carried out an all-around inspection of information security
and privacy protection of the MSmartLife App and awarded the app "CNAAC App Security Mark".
According to the result of the appraisal of excellent cases for practicing the national standards on
cybersecurity on the 20th anniversary released by the National Information Security Standardization
Technical Committee, Midea was the only home appliance business that was included in the list and won
a case award for "the application of personal information security standards to smart home", fully
displaying the achievements of Midea's long-term construction of the personal information protection
system as well as Midea's technical strengthen in protecting the personal privacy of consumers. Besides,
the mobile security technology of Midea's MSmartLife App was included in the "2022 Security Guard
Program Excellent Cases" by the China Academy of Information and Communications Technology
(CAICT) and the China Communications Standards Association (CCSA). As such, M-Smart is considered
industry-leading in terms of data security.
Based on the demand of user scenes, M.IoT has held firm to ecological opening-up and win-win obtained
through cooperation. It has paid continuous attention to the application of innovative smart home
appliance technologies to energy saving and emissions reduction, and worked with the China Electric
Power Research Institute ("CEPRI") to jointly develop the first batch of home appliances equipped with
energy-saving solutions, achieving the online regulation of load resources and two-way interaction with
the power grid. Additionally, by proactively responding to the demand of the power grid, M.IoT has
contributed to the efficiency improvement and safe and stable operation of the power grid, thereby
promoting the national "carbon peak and carbon neutrality" strategy. It has expanded the scope and scale
of cooperation with Huawei and worked with peers to roll out the first smart kitchen solution equipped
with the HarmonyOS system, further enriching the cross-industry ecological scenes. Approximately 5
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million home appliance products equipped with the HarmonyOS system expect to be rolled out in 2022.
Through the product scene-based interconnection with ecosystem manufacturers, M.IoT will enable users
to experience more-open smart whole-house scenes. Moreover, M.IoT has played an active part in the
drafting and formulation of relevant industry standards, thereby promoting the wider popularization and
application of new industry technologies and displaying the fruits of Midea's intelligent development. For
the first half of 2022 alone, four group standards in the smart home appliance industry have been unveiled,
including Technical Requirements for Smart Home Appliance Sets, Application Guide for Knowledge
Graph of Smart Home Appliances, Assessment Model of Intelligence Capabilities of Smart Home, and
Technical Specifications for WLAN Modules of Smart Home Appliances and Connection Performance of
the Whole Machine. M.IoT has expedited the promotion of smart technological innovation and products
toward the global smart home appliance market. For example, it has continuously expanded its
cooperation with Google, Amazon and Apple in the smart home field, especially focused on air, wash and
care, and cooking. Through in-depth cooperation, M.IoT has delivered overseas users more abundant
scene experiences and products. Meanwhile, it has continued to optimize the smart features of products
such as the voice interaction experience to achieve a multi-equipment, cross-brand, cross-platform, and
cross-industry whole-scene ecosystem experience. Based on the localized scene demands of users in
different regions, M.IoT has actively explored the cooperation in the service ecosystem of energy saving
and emissions reduction, smart cooking and post-sale maintenance. Additionally, Midea has become a
member unit of the Council of the Connectivity Standards Association (CSA). It will contribute to the
application of Matter standards to the field of home appliances.
G. In view of consumer stratification, launched multiple brands and diversified product portfolios,
and enhanced the promotion of the core values of these brands to empower retail sales and user
operation
COLMO serves high-end users with high-end smart products. Its overall sales reached over RMB4 billion
in H1 2022, up 150% year on year, with more than 130,000 product suites sold. In terms of products,
after three years of development, COLMO's high-end smart product packages have covered commercial
air conditioners, water-related appliance packages, refrigerators, wine cabinets, clothes dryers, washing
machines, personal care cabinets, kitchen appliances and other categories, preliminarily establishing a
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leading high-end smart life solution in the global home appliance market. In July 2022, COLMO launched
new flat-panel integrated kitchenware, using high-end customized appearance design and suite-based
minimalist visual experience to enhance the experience of the five senses and thereby provide a natural
kitchen life. With a vision of "providing global high-end users with an all-inclusive high-end smart life
solution", COLMO started the evolution and upgrade from high-end smart products to high-end whole-
house smart systems, launching the industry positioning of "Villa Intelligence Expert" to enter the market
for higher-end whole-house smart products. In the first half of 2022, together with the Future Things
Administration and the WAD Luxury Home Institute, COLMO released the Villa Intelligence Expert
capabilities and five core Villa Intelligence systems to consolidate the product's industry positioning. In
terms of the brand, as the promoter and leader of the COLMO Lifestyle, COLMO cooperated with IPs in
luxury housing, technology, fashion and architecture to launch the third Elite Life, presenting a picture of
the COLMO Lifestyle in a multidimensional manner. In terms of users, COLMO has worked hand-in-hand
with more than 500,000 high-net-worth customers since its release. In terms of the market, according to
the data from AVC, the proportion of COLMO products in the high-end market has increased significantly
in the first half of 2022, with wall-mounted air conditioners and water purification products occupying more
than 20% of the market and dishwashers close to 13%. In terms of sales channels, to provide high-end
users with better whole-house smart experiences, COLMO collaborated with the international fashion
media group Marie Clarie in the first half of 2022 to build a high-end, stylist architectural and cultural
landmark, the COLMO "Villa Intelligence Beautiful Home" Experience Space, in Sino-Ocean Taikoo Li
Chengdu. Additionally, it further expanded the high-end whole-scene channel by setting up nearly 170
smart experience pavilions.
As a world-renowned home appliances brand with a century-old history, Toshiba is committed to providing
users with inspiring, perfect products and services. With strict requirements for the entire production flow
and quality inspection criteria higher than international standards, Toshiba has become the bellwether of
international quality in the home appliance industry. In recent years, Toshiba's increasing sales in China
have made it a new choice for high-end home appliances in the country. To create a leader in a high-end,
exquisite and star-level lifestyle, Toshiba continued its efforts in the first half of 2022. In terms of products,
it built a consistent brand mindset with a suite-based design, launching the first Toshiba product suite—
the "Xingzhuo" suite, which provides users with an exquisite, star-level lifestyle through star-level
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technology, design and experiences. In terms of marketing, campaigns were carried out for different user
circles, including food lovers and mothers, to achieve precise marketing and sustain inbound marketing
through targeted membership coverage combined with KOL recommendations. In terms of sales
channels, joint efforts were made for core terminals. In the first half of 2022, Toshiba built 42 star-level
life pavilions. Supported by Midea's domestic market resources, it built benchmarks from core stores
every month, helping single-store sales exceed one million. Meanwhile, it released standardized terminal
guidelines to ensure a unified terminal image. In terms of the market, the sales of Toshiba products in all
channels of the domestic market surpassed RMB1.1 billion as of June, a year-on-year increase of more
than 110%. During the "618" promotion, Toshiba recorded more than RMB200 million in sales, up 74%
year on year, including more than 160% year-on-year growth in its refrigerator sales. Additionally, Toshiba
has improved its product layout in the domestic market. The 479 Large White Peach and the 429 Small
White Peach, two new refrigerators launched in February 2022, exceeded RMB78 million in sales for the
first half year of release. According to the data from AVC, Toshiba's 479 Large White Peach continued to
rank first in the sales of six-door refrigerators, and its new 10LTC 3-Liter Rice Cooker made RMB4 million
in sales within the four months of launch.
WAHIN continued breaking the boundaries of traditional home appliance models. The brand insists on
innovation, embracing the Generation Z with “Trendy Designs, Practical Functions and Fun Interactions”.
It continued focusing on exploring the potential of young users. WAHIN deepened the brand marketing
towards the younger generation with innovative products as the core, the virtual character "WAHIN Girl"
being the spokesperson and a slogan of "It's your turn, young man!" Positing itself as "young,
technological and trendy appliances", WAHIN continues to provide users with good-looking, interesting
and surprising products with easy-to-use technology. In the first half of 2022, WAHIN integrated marketing
and upgraded the anime IP WAHIN Girl to an ultra-high-simulation digital human, who won the 2021
Forbes Business Value Award for Virtual Humans in Chinese Home Appliance Industry and reached 150
million users while serving as the brand's digital manager. In the meantime, WAHIN cooperated with
Peking University School of Journalism & Communication, using a young brand positioning to gain
penetration into and resonance with young consumers, delivering notable results in the "618" e-
commerce promotion. On the May 4th Youth Day, WAHIN announced a full range of new products at its
"Dare to Be a Youth to Step Forward" Launch, being the first to provide good-looking suite products in all
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categories based on the trend of popular colors. Meanwhile, with the help of professional esports players,
its new products kept breaking the circle, attracting 250 million unique visitors overall. Additionally, the
brand released the idea of "Lite Smart" that would gradually cover all categories. Building on Ling lite, a
"lighter, younger" Lite Smart 2.0 is about to be launched with the product philosophy of being instantly
discovered, instantly connected and instantly controlled. During the "618" promotion in 2022, the sales of
WAHIN products reached close to RMB1.6 billion, up 80% year on year. Particularly, WAHIN refrigerators
ranked among the top three in JD.com, Tmall and Douyin, grew 1,000% from the previous year at the
self-operated store on Pinduoduo, and sold 95,000 units via livestreaming. Furthermore, more than
10,000 articles were published online in WAHIN's air conditioner-focused content marketing. Notably, the
search index of "WAHIN air conditioner" increased by 300% on Xiaohongshu and by 260% on Zhihu.
H. Seized market opportunities amid domestic and international circulations, responded to
China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological
breakthroughs and innovations, and kept improving the ToB business landscape
In 2021, the Electromechanical Business Group has been transformed into the Industrial Technology
Business Group. With the vision of "Technology Drives the Whole World" and the power of technological
innovation to support the global industrial development in the new era, the Industrial Technology Business
Group is dedicated to becoming the world's leading solution provider in intelligent transportation, industrial
automation, green energy and consumer appliances. The Industrial Technology Research Institute and a
strategic development organization have been established in 2021. It focuses on both independent
development and acquisitions, and improves the technology, product and market structures in four major
areas. A complete industrial chain has taken shape, covering information, control, drive, and execution.
Meanwhile, it continues to increase investments in the development of key and cutting-edge technologies.
During 2021, it invested over RMB1 billion in R&D and introduced 400 more R&D personnel, in addition
to greater effort made in the introduction of senior experts in the industry. The Industrial Technology
Business Group made constant efforts for consumer appliances and consolidated its leading position in
the industry. According to data provider ChinaIOL, in H1 2022, the global market share of residential air
conditioner compressors increased to 44%, representing the largest market share across the world. The
global market share of refrigerator compressors reached 14%, thus ranking at the forefront of the industry.
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The unit sales of motors for residential air conditioners and laundry appliances accounted for 42% and
18% of the global figures respectively, still leading the way in the industry. Meanwhile, the whole-new M
Series DC Compressor for car refrigerators has been launched to the market in May 2022, with the order
volume surpassing 56,000 units in the first three months of its launch. Midea continues with digital and
intelligent transformation to deal with workforce challenges in the future and keeps expanding and
improving its capacities. The Foshan Xingtan Base was newly established to make a forward-looking
layout in intelligent manufacturing of mechanical and electrical products. Midea has comprehensively
automated, digitalized and intellectualized the production layout, process design and production
management, seeking to build an Industry 4.0 intelligent manufacturing demonstration base in China and
a world-class “Lighthouse Network” factory. The integration work on the Thai compressor company
proceeded well, which has helped significantly increase the overseas production capacity of refrigerator
compressors. In addition, construction of the Indian A/C compressor plant has started, laying a foundation
for mass production in the second half of the year and further enhancing the global supply capability of
core components.
The Industrial Technology Business Group puts more resources to core components of new energy
vehicles, focusing on the cutting-edge CO rotary automotive electric compressors that solves the
industry's pain point of low-temperature heating, domestic self-developed EPS motors for
auxiliary/autonomous driving, and main drive motors with cutting-edge performances. The existing three
product lines and five products have basically been tested on board and will be mass-produced in
succession. In terms of market expansion, it provides product technical solutions for numerous renowned
car companies. In the first half of 2022, it obtained designated cooperation projects from various
customers. These projects are expected to generate orders with a total output of more than RMB5 billion,
including the cumulative shipment of more than 36,000 units so far. In terms of production capacity, a
manufacturing base for new energy vehicle parts was built in Anqing in February 2022. With a total
investment plan of approximately RMB11 billion, the base focuses on breaking though bottlenecks such
as core basic components, primarily produces power steering motors, electric compressors for new
energy vehicles and drive motors for new energy vehicles, and creates system R&D centers for thermal
management, electric drive and chassis. In the meantime, the Hefei Manufacturing Base also continues
to improve its production capacity, with a year-on-year increase of 100% in compressors, a year-on-year
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rise of 200% in electric drives and a year-on-year growth of over 200% in EPS motors. Midea Industrial
Technology Business Group acquired WuHan TTium Motor in April 2022, officially entering the field of
two-wheeled travel and expanding the core components of two-wheeled electric vehicles. By introducing
Midea's supply-chain system and advanced experience of large-scale production, it set up modern
factories in China and Vietnam to continuously provide customers with high-quality products. Additionally,
at the Eurobike 2022, it launched three large crankset center motor products with technical advantages
such as high power density, high efficiency, quick response and low loss rate, attracting extensive
attention. With efforts in the whole industrial chain of industrial automation covering software tools,
equipment control, servo drivers, servo motors and encoder, Servotronix continues to provide customized
motion control solutions for customers in various fields. Meanwhile, it took active steps in marketing model
reform, delivering over 40% year-on-year growth in linear drive products in the first half of 2022.
Additionally, a range of new products and applications were launched, including the softMC703 High-
performance Multi-axis Controller and CDHD and CDHD2 High-performance Servo Drives exhibited at
Hannover Messe 2022. These core products and solutions have gained wide attention and recognition
for their "high-speed, high-precision and high-performance" customization. Moreover, it continues to step
up the promotion and application of existing products in new areas, including lithium batteries and 3C
electronics. It also addresses industry pain points with tailor-made solutions, empowering application
scenarios such as laser precision cutting, lean manufacturing of die-bonding machines, precise control
of six-axis robots and precise positioning of visual inspection equipment. In the field of new energy, based
on its industry-leading high-voltage variable frequency drive products, the Industrial Technology Business
Group made breakthroughs in intelligent micro-grid, energy storage and SVG dynamic reactive power
compensation device in the first half of 2022, with orders totaling over RMB100 million. Meanwhile, high-
voltage variable frequency drive products increased their market shares steadily in the petrochemical and
power industries, and low-voltage variable frequency drive products gained recognition from core
customers. In terms of new product development, in the first half of 2022, the High-voltage Variable
Frequency Drive HCA Series products completed verification, and the Household Energy Storage
Integrated Machine and Solution HEC-S and container-type integrated energy storage products were
launched. Additionally, in the field of consumer appliances, the Business Group puts more resources in
product lines of MCU, IoT, power supply and power chip. In the first half of 2022, it made breakthroughs
in chip products in MCU master control, MCU touch control, MCU frequency conversion and power
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management, which were supplied to more than 30 customers.
As a leader of core components in the pan-industry field, Midea Industrial Technology Business Group
has won many industry awards. For example, the relevant patented product technologies won six
Excellence Awards at the 22nd China Patent Awards as well as one Gold Award and two Silver Awards
at the 9th Guangdong Patent Awards. In June 2022, the China National Light Industry Council certified
four of its technologies as "Internationally Advanced", including "Research and Application of Key
Technology of Low-noise, Heavy Rare Earth-free Permanent Magnet Motor for Compressors", "Research
and Application of Key Technology of Lightweight, Silent and High-efficiency Compressor for
Refrigerators with High Volume Rate", "Research and Application of Key Technology of High-overload
Permanent Magnet Synchronous Motor Drive System for Home Appliances", and "Key Technology and
Application of Variable Capacitance Driven High-efficiency and Miniaturized Memory Motor System for
Home Appliances". Additionally, three products, including "New-type High-efficiency, High-speed Variable
Frequency Scroll Compressor", "New-generation Ultra-efficient Air Conditioner BLDC Motor", and "New-
generation High-volume-rate Refrigerator Variable Frequency Compressor", were selected as the 2021-
2022 energy-saving and ecological environment products by the China Association of Refrigeration.
In 2021, Midea HVAC & Building Technologies Division was officially upgraded to Midea Building
Technologies Division. After the upgrade, Midea will make every effort to promote the construction of the
Building Technologies Division's digital platform, and support plentiful, changeable scene groups as well
as flexible, personalized digital experience by "building equipment facilities & digital technology &
industrial ecosystem", In the first half of 2002, under the guidance of the "Digitization & Intelligence
Driven" strategy, Midea Building Technologies Division, as an important business segment of Media
Group that focuses on "intelligent building", helped China's building technology industry set sail toward
the Internet of Everything (IoE) era based on digital empowerment of buildings, and interconnected the
logistics flow, information flow, feeling flow and energy flow of buildings from multiple aspects such as
equipment implementation, building control, edge application, cloud digital platform and application
scenarios, with a view to providing customers with "end-to-end" SMART IN ONE overall solution. At the
"Make iBuilding come TRUE" building technology conference held in early 2022, Midea Building
Technologies Division released the "iBUILDING, Midea Building Digital Platform" to empower hardware
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products and promote business transformation. Additionally, according to the data monitored by Industry
Online, Midea Commercial Air Conditioner has continued to rank first with respect to domestic market
share in the first half of 2022.
As building energy consumption is increasing its proportion of the energy consumption of the whole
society in the progress of urbanization, accelerated efforts have been made in the construction of "zero-
carbon buildings" with "green energy system" as the core. In building energy management, the
iBUILDING Midea Building Digital Platform conducts intelligent energy adaptation and management with
a customized design based on the building's characteristics. In the western part of Midea Industrial Park,
iBUILDING connects the systems of power grid, carbon trading, energy and HVAC to deliver "low-carbon
and energy-saving" in every link. In terms of power generation, the platform developed a distributed
photovoltaic + energy storage integrated project on the roof of Midea office buildings to offset fossil energy
consumption. In terms of power consumption, energy is saved by the MDV8 Unbounded Multi-split
Machine with digital sensors through space characteristic recognition, system refrigerant temperature
judgment, and self-adaptive indoor machine air and flow volume. Moreover, by connecting the park's
carbon management system, iBUILDING provides the trading of carbon emission rights and green
certificates. As a model project of zero-carbon building, the park has taken the lead in achieving carbon
neutrality. In terms of market expansion, iBUILDING developed its smart construction business from
industrial parks to hospitals, health care and public facilities in the first half of 2022. In Shanghai Tongji
Hospital, centering on people and equipment, iBUILDING makes deep involvement of building
automation system and new technologies such as cloud computing, bid data, IoT and artificial intelligence
in smart building management. For example, the whole process of staff entry and exit is visualized though
3D virtual hospital modeling, and the hyper-converged application of building automation system, medical
special system and medical information system is realized by using the IOC platform to connect
information islands. In the He Art Museum (HEM) in Shunde, Foshan, iBUILDING used a digital twin
model to create a "Virtual HEM", which senses the museum's temperature and humidity as well as
monitors the status of precious collections in the storage cabinet in real time. In the event of abnormal
storage environment, the system will response with an early warning to prevent any damage. Additionally,
iBUILDING integrates security, operation and maintenance, elevators, and energy management into
unified management to achieve interconnection between devices, customer-oriented experience and full
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life cycle management of buildings, effectively supporting the better operation of HEM. In Shenzhen's
Meilin Vanke Center, the Space Tech Energy Management System was built based on iBUILDING. It not
only solves the energy data statistics and predictive analysis of existing buildings but also provides energy
optimization suggestions based on self-developed algorithms, delivering consumption reduction targets
for building through a smart operation. During the 24th Winter Olympics, Midea Building Technologies
provided a wide range of products for multiple scenes, from the opening ceremony to the closing
ceremony, from sports venues to logistical support, and at the window of broadcasting the event globally
and the transportation hub connecting the world. It provided low-carbon, efficient and smart HVAC
solutions for Winter Olympic venues and supporting buildings, including the National Stadium "Bird's
Nest", the mountain broadcasting center in Zhangjiakou, Shougang Park, the National Speed Skating
Stadium, Beijing-Zhangjiakou High-speed Railway, Winter Olympic Village, and Taizicheng Snow Town,
helping the event to fulfill its green commitment and safeguarding the holding of the games. In June 2022,
the Hetian-Ruoqiang Railway, the last piece of the world's first railway around the desert, officially opened.
Midea Building Technologies solved the cooling of the computer room for its communication base station
through technology innovation and equipment upgrade. A high-efficiency cooling solution is applied in the
communication base stations of the stations along the railway, and several air conditioners for confidential
computer rooms are deployed in stations' consoles and computer rooms. In overseas markets, Midea
Building Technologies actively responded to the EU's "2050 Carbon Neutrality" program and stepped up
its efforts in the upgrade of heat pump products. Midea's heap pump products started in 2003 and have
developed into heat pump water heaters, swimming pool machine heat pumps, commercial heat pumps,
and the M thermal and Tri thermal series that integrates space heating and cooling and domestic hot
water, providing customers with reliable, low-carbon and energy-saving comprehensive solutions. Among
them, the high-efficiency, reliable and environmentally-friendly M thermal series have the highest energy
efficiency grade (A+++ at 35°C) and can provide hot water up to 65°C at an extremely low temperature
of -25°C. The ESG series swimming pool machine, the first net zero energy heat pump product developed
by Midea, obtained the SGS zero-carbon production line certification. Manufactured by a zero-carbon
production line, it uses recyclable materials to make the body and packaging, and adopts R32, a
refrigerant that is more environmentally friendly. During operation, the clean energy generated from the
photovoltaic panels on the roof is used to connect the energy storage system to save energy and reduce
emission. According to the data from Industry Online, in the first half of 2022, the export value of Midea's
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heat pump products grew by more than 200% year on year, with its export volume ranking first in China's
heat pump industry.
In terms of product innovation, in the first half of 2022, Midea Building Technologies launched various
new products to strengthen its business in commercial air conditioners, building automation and elevators.
For example, the MDV8 Unbounded Multi-split Machine loaded with digital sensors and MDV-Link chips
reconstructs the integrated value of space, air and humans. Midea Fully Variable Frequency Air-Cooled
Chiller (Heat Pump) uses smart technologies to provide heating and cooling in an environmentally-friendly,
energy-saving, healthy and safe manner. The energy-saving, comfortable and smart MDV FIT Unit is
designed for small and medium-sized commercial spaces. The modular evaporative cooling scroll chiller,
which combines smart control, high-efficiency and energy-saving, and modules, features independent
dual systems and a whole-machine anti-corrosion design. The NYR100 Modular Hot Water Shelter
Hospital developed in cooperation with Shanghai Aerospace Smart Energy Technology Co., Ltd. is
characterized by modular prefabrication, convenient installation, environmentally-friendly and energy-
saving, safety, and intelligent IoT, ensuring hot water supply for all scenarios in the COVID-19 responses
in an all-around way. MeiKong's cleaning business, KONG DDC M0 new products and shelter hospital
solutions brings efficient, convenient integrated solutions for medical buildings. LINVOL, a digital and
intelligent elevator brand under Midea Building Technologies, released two new villa elevators, "Tianlin"
and "Tianyi", the first digital and intelligent passenger elevator series, "Yunhang" (without computer room)
and "Yunling" (with computer room), and the iBUILDING smart elevator management platform,
empowering smart buildings with brand new digital and intelligent solutions. In terms of technology
development, in the first half of 2022, Midea MDV8 Series Multi-split Air Conditioner (Heat Pump) Unit
was granted the certificates of "professional, characteristic, energy-saving and refined products", low-
carbon certification and carbon footprint evaluation in the inspection and assessment by Hefei General
Machinery & Electrical Products Inspection Institute (National Quality Supervision and Inspection Center
of Compressors and Refrigeration Equipment). MDV8 VRF was honored with multiple Tick-Mark
performance certifications issued by Intertek, three of which are free topology high reliability, ultra-high
temperature stable operation and ultra-high energy efficiency. In April 2022, two of Midea's star products,
"Medium- and High-temperature Water Outlet Variable Frequency Direct Drive Centrifugal Unit" and
"High-efficiency Modular Integrated Cooling Station", were listed in the "2021 Excellent Cold Source
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Products for Data Center Cooling" selected by the China Association of Refrigeration. Specifically, with
core technologies such as advanced aerospace pneumatics, horizontally opposed compression, single-
shaft direct drive, two-stage air-entraining and enthalpy-increasing compression, full falling-film
evaporation, high-speed frequency conversion, double anti-surge, extreme-speed start-up and low-
temperature operation, Midea's Medium- and High-temperature Water Outlet Variable Frequency Direct
Drive Centrifugal Unit reaches the national first-class energy efficiency in the whole series, addressing
the problem of poor energy efficiency, high noise and narrow operating range of traditional medium- and
high-temperature water outlet centrifugal units. Midea's High-efficiency Modular Integrated Cooling
Station integrates the refrigeration host, cold water pump and cooling water pump, among others, in the
container, and optimizes the layout of the water system pipeline. It combines system power distribution
and system control, matching appropriate system components for different cooling sections. With a smart
group control system for artificial intelligence, real-time optimization and edge design, the product is
characterized by high integration, efficient host, smart group control and convenience. With the winners
of the 2022 International Exhibition of Inventions of Geneva announced, Midea Building Technologies’
"MDV8 Smart Building Energy Solution" project won the Gold Medal, and its "KONG Cell: Empowering
Traditional DDC with IoT Technology" and "M-thermal Arctic Heating Heat Pump" projects won the Silver
Awards. Meanwhile, its "Maglev Compressor High-precision Control Technology" and "VRF Smart
Control Technology" won the 9th Guangdong Patent Gold Award and Silver Award. In early 2022, Midea
Building Technologies reached strategic cooperation with Nanjing Yangtze River Urban Architectural
Design Co., Ltd., Space Tech and Shanghai Tongji Hospital in cloud computing, big data, information
security and other fields. In April 2022, Midea Building Technologies signed a cooperation agreement on
"Co-building a High-efficiency and Energy-Saving Technology Institute" with Xi'an Jiaotong University.
Focusing on high-efficiency and energy-saving technology, both parties continue to strengthen in-depth
industry-university-research cooperation in heat exchangers and refrigeration systems based on
development needs. Additionally, Midea Building Technologies and Guangzhou Electromechanical
Installation Co., Ltd. signed a strategic cooperation agreement and will work together on projects
nationwide.
I. Promoted innovation in robotic product development, accelerated integration and expansion of
the robotics business for the China market
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KUKA, a subsidiary of Midea, is a world-renown robotics manufacturer. Relying on its industry-leading
movement algorithm, KUKA can ensure superior movement performance of robotics products throughout
their life cycle, and its mature design concept can continuously give birth to new products able to lead
the market. In the first half of 2022, KUKA continued to promote the innovation of various products and
technologies. In the software field, KUKA won the German Innovation Award with its new iiQKA robotic
operating system and ecosystem. Relying on its excellent applicability, modern and modular software
architecture, and high performance and flexibility, iiQKA.OS can help improve development efficiency and
speed, and enable users to easily and quickly achieve automation. In the field of general industry, KUKA
has launched new products of LBR IISY Series sensitive and light cooperative robotics. With wider
operating range and effective loads of 11 kg and15 kg respectively, the new robotics products just
mentioned can operate through the new iiQKA.OS operating system. Additionally, the new generation of
KR CYBERTECH nano robotics will operate on the KR C5 micro robotics controller, which can ensure
excellent operating accuracy in continuous path motion, and can thus be applied in multiple scenarios
such as PCB assembly, painting, bonding, machining, polishing, packaging and arc welding. In the field
of warehousing, the second-generation KR QUANTEC PA palletizing robotics of KUKA have a payload
of up to 240 kg, and adopt food-grade NSF H1 lubricant to meet the requirements of the food industry.
Specially developed for demanding palletizing tasks, the aforesaid product incorporates optimized weight
and gravity center design and improved drive unit, thanks to which it can effectively reduce floor space,
increase speed by 10% and significantly shorten working hours. In the medical field, KUKA LBR Med is
a certified collaborative robotics applied in medical products. At the International Conference on Robotics
and Automation (ICRA) held in May 2022, KUKA and its partners demonstrated how the LBR Med robotics
could be applied in highly complex and sensitive medical scenarios such as brain tumor biopsies.
Considering that the food, medicine and cosmetics industries have special hygiene requirements for
robotic automation, the new "Hygienic Oil" product portfolios and "Hygienic Machine" products of KUKA
are designed to avoid potential contamination and meet the highest hygiene requirements, while
maintaining excellent performance in handling, packaging, palletizing and other application scenarios that
prioritize hygiene requirements. Applied with lubricants compatible with food and boasting smooth
surfaces easy to clean, the "Hygienic Oil" industrial robotics of KUKA also comply with the hygiene
requirements of such standards as the EU Machinery Directive 2006/42/EC and the international DIN
ISO 14159.
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In the first half of 2022, in terms of market expansion, KUKA and Ford Otosan signed a new framework
agreement, based on which KUKA will provide more than 700 robotics for the new generation of
electrically interconnected commercial vehicle project at Ford's Kocaeli Plant in Turkey for such fields as
the production of white vehicle body. KUKA's proprietary technologies also serve the Swedish Automotive
Group. Specifically, KUKA provides such services as design and assembly of production lines for the
chassis systems of the two new electric vehicles of Swedish Automotive Group at its Southern California
Plant, and In addition to the assembly of the new fully automated body production line, KUKA is also
responsible for the transformation of the original logistics transportation system of the production line,
which will include spot welding, self-piercing riveting, flow drilling screw assembly and connection, gluing
and other relevant technologies. KUKA robotics provide an automated solution involving flour packaging,
delivery and loading for Moulins Bourgeois, a household flour mill in France. KUKA Assembly & Test
GmbH and Wiksfors Technology AB have established a strategic partnership to work together in the
modular house construction industry and position themselves as providers of "next-generation plant"
solutions. KUKA will provide Ellume (an Australian diagnostics company) with 144 KUKA KR AGILUS
Series robotics to expand the automated production capacity of the latter's rapid detector of novel
coronavirus, and this project is worth more than EUR1 million. KUKA and FlexFactor announced their
cooperation on "production payment models" at AUTOMATICA, a trade show for robotics and automation
technology in Munich, in hope of providing adaptive capacity services for customers, so that they can
fully focus on product development and customer requirements. The "pay to produce model" has been
developed and successfully practiced in the automotive industry, and the manufacturing operation of
KUKA Toledo Base has been using this model to manufacture car body in white since 2006, and has
accumulated years of experience in this field. Moreover, in April 2022, KUKA was named GM's "Supplier
of the Year" for 2021, the sixth time in history.
KUKA continuously promotes the integration and expansion of the robotics business in the Chinese
market and deepens the promotion of organizational reform with a focus on industrial applications and
key customers. KUKA China reaches a record high in order reception, production and delivery. Its product
varieties are further enriched, supply chain bottlenecks such as core components are gradually
addressed, and operating trend keeps improving overall. Taking opportunity of the explosive investment
in energy expansion of new energy and lithium battery, KUKA China had had more than 20,000 robotics
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been ordered by June 2022, manufactured and delivered more than 10,000 robotics in spite of difficulties
brought by the COVID-19 pandemic and supply chain, and established cooperative relations with BYD,
Tesla, NIO, Ningde Times and other top customers in the new energy vehicle industry. Additionally,
through value chain collaboration, KUKA China had improved the production capacity of upstream core
parts suppliers, completed the redesign and release of RDC (a core component of control cabinet), and
promoted the localized auxiliary configuration of key materials such as balance cylinder in joint efforts
with the aforesaid upstream core parts suppliers, thus effectively supporting the market demand of heavy
load robotics, while providing guarantee for the achievement of KUKA China's strategic goals for the next
five years. KUKA China meets the requirements of rapid market development through continuous
business optimization. Adhering to the customer-oriented operation philosophy and the positioning of a
startup, KUKA China provides customers with systematic solutions and, in response to the explosive
market demand, integrates the logistics and mobile robotics businesses of Swisslog, and establishes a
team specially in charge of the logistics automation business to provide complete industrial automation
system solutions. KUKA China keeps increasing R&D investment, builds its core competitiveness under
the driving of technology and, in spite of the impact of COVID-19, restarts the global exchange program
for R&D personnel to accelerate the progress of Sino-German team cooperation projects. In order to
further enrich its product family matrix, KUKA China launched 11 new products such as SCARA and AGV
robotics in the first half of 2022. Additionally, KUKA Robotics Guangdong Co., Ltd. obtained the
qualification of Guangdong Enterprise Technology Center. The center has built its own laboratory with a
total floor area of more than 10,000 square meters. Equipped with more than 200 sets of precision
equipment, the laboratory has established the highest standard in hardware R&D among all laboratories
of KUKA worldwide. Enabling all such experiments as drive system verification experiment, motor
verification experiment, reducer verification experiment and controller development experiment, the
laboratory can fully address various verification demands at such levels as core components, robotics
noumenon and system application. Furthermore, the patent technology of "control method, device,
computer equipment and storage media for robotics motion" independently developed by KUKA China
won the Silver Award of the 9th Guangdong Patent Award. In addition, KUKA has been playing an active
part in raising Midea Group’s intelligent manufacturing level. By June 2022, the robot density of Midea is
over 440 units per 10,000 persons. And this number is expected to reach 700 by in the next two years
with greater investments in this respect.
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J. Deepened the long-term incentive and protected the interests of shareholders
In H1 2022, Midea continued to encourage the core management to take responsibility for the Company’s
long-term development and growth by further enhancing its long-term incentive schemes. Midea has
launched nine stock option incentive schemes, six restricted share incentive schemes, eight global
partner stock ownership schemes and five business partner stock ownership schemes, which have
helped, in a more effective manner, to align the long-term interests of senior management and core
business backbones with that of all shareholders.
Midea Group protects its shareholders’ interests by ensuring a consistent dividend policy. It shares its
growth with shareholders by putting forward cash dividend plans with a total amount of more than RMB69
billion since Group listing in 2013. In addition to the consistent dividend payouts, the Company has carried
out a string of share repurchase plans. To further stabilize the market capitalization and protect the
shareholders’ interests, the Company has launched share repurchase plans for four consecutive years
since 2019. And the repurchased shares would be used for equity incentive schemes and employee stock
ownership schemes. During the period from the beginning of the Reporting Period to the disclosure date
of this Report, Midea has used more than RMB1.8 billion for share repurchases.
2. Core Competitiveness Analysis
A. As one of the leaders among the global household appliance makers and a dominator in the
major appliance sectors, Midea Group provides high-quality, one-stop home solutions through its
wide product range.
As a white goods and HVAC enterprise with a whole industrial chain and full product line, Midea Group
has developed a complete industrial chain combining R&D, manufacturing and sales of core components
and finished products, supported by an industry-leading R&D center and manufacturing technologies of
core components (such as compressors, electrical controls, magnetrons and controllers), and ultimately
based on its powerful capabilities in logistics and services. Midea owns top brands of household appliance
and HVAC in China. Its dominance in the major appliance and HVAC markets means that it can provide
a wide range of competitive product sets. It also means internal synergies in brand awareness, price
negotiation as a whole, customer needs research and R&D investments. Compatibility, coordination and
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interaction among household appliances have become increasingly important since smart home is
gaining popularity. With a full product line, Midea has had a head start in providing a combined and
compatible smart home platform with integrated home solutions for customers.
B. Adherence to the strategy of “Technology Leadership”, global R&D resource integration
capabilities, a global innovation ecosystem and a scientist system, as well as continuing lead in
R&D and technical innovation
The Group is focused on building a globally competitive R&D capability and system. It has established a
three-tier technical committee system responsible for the formulation and implementation of technology
strategies. And the four-tier R&D system has been improved with an aim to build world-leading R&D
capabilities. The interconnected technology strategies and mid- and long-term product planning serve as
two drivers of growth. Midea currently focuses on 11 technologies in a bid to make breakthroughs with
key technologies and achieve technology leadership. It has invested over RMB45 billion in R&D over the
past five years, with the investment of nearly RMB6 billion in H1 2022. In order to deepen its global
technology ecosystem in a faster way, the Group has set up a total of 35 research centers in 12 countries.
It has over 18,000 R&D personnel and over 500 foreign senior experts. With the “2+4+N” global R&D
network, it has gained the advantage of scale in R&D across the world. Domestically, Midea Global
Innovation Center in Shunde District, Foshan City and Midea Global Innovation Center in Shanghai are
the cores of Midea’s R&D arm. Overseas, with Midea America Research Center, Midea Germany
Research Center, Midea Japan Research Center and Midea Italy Research Center as the cores, Midea
makes use of the regional technological advantages, integrates global R&D resources, and builds
complementary global R&D capabilities. Following the strategy of “Technology Leadership”, it attracts
more professional talent and builds an organic global R&D network.
Midea’s long-term focus on building technology, marketing, design, product and open innovation systems,
building a cutting-edge research system and building reserves in technology for mid/long term, has
provided a solid foundation for the Group to maintain long-term product and technological superiority.
While strengthening its global R&D network, Midea also works on constructing an open platform of
innovative ecosystems. Through deepening the implementation of technology projects to integrate quality
technological resources across the world, a global innovation system has been put in place. By way of
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integrating various resources of large companies, technology companies, universities, research institutes
and innovation consulting agencies, a technology ecosystem has been put in place and continuously
expanded, which has access to enormous resources for technological innovation. Additionally, a scientist
system has been established with eight academician workstations/workshops and 19 academicians on
more than 100 cooperation projects. These projects cover green, energy-saving, health, intelligent,
robotics and automaton technologies, among others. In terms of basic research, the Group cooperates
with domestic and foreign scientific research institutions, such as Massachusetts Institute of Technology,
University of California, Berkeley, University of Illinois at Urbana-Champaign, Stanford, Purdue University,
University of Maryland, The University of Sheffield, Tsinghua University, Shanghai Jiao Tong University,
Zhejiang University, the Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong
University, Huazhong University of Science and Technology and South China University of Technology,
in order to establish joint labs for deepening technological cooperation. The Group also upgrades and
make innovations on cooperation models by carrying out strategic cooperation with tech companies such
as BASF, Honeywell, 3M, and SCHOTT to build a global innovation ecosystem through multiple channels.
C. Stronger Global Impact fueled by Midea’s continual global resource allocation and investments,
globally-advanced manufacturing capabilities and advantage of scale
The success of a series of global acquisitions and new business expansion moves has further solidified
Midea’s global operations and leading advantages in robotics and automation. With the world’s leading
production capacity and experience, and a wide variety of products as well as its production bases all
over the world, the Group has been able to expand rapidly into the emerging overseas markets and is
becoming a stronger competitor in those mature overseas markets. The Group is one of the biggest
manufacturers in the world for many product categories, which gives it competitive edges in efficiency
improving and cost reducing that its overseas competitors are unable to replicate. Overseas sales of the
Group accounts for more than 40% of the total sales revenue. Its products have been exported to over
200 countries and regions, and it owns 18 overseas manufacturing bases and 24 overseas operating
agencies. Midea’s global operations system has been further improved through the reform of international
business organizations towards diverse business models. It also increases investments in overseas
business operations, focuses on the needs of local customers and enhances product competitiveness in
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a bid to promote significant growth in its Own Branding & Manufacturing (OBM) business. In addition,
with a deep knowledge and understanding on product characteristics and product demands in overseas
market, Midea is promoting worldwide branding and expansion through global collaboration and
cooperation. In this way, the global competitiveness of Midea is increasing steadily.
D. A complete and broad channel network and a well-established smart supply chain system
ensuring the steady growth of Midea on the domestic market
With its continuous efforts, Midea has formed a multi-channel network which has a complete business
layout and covers a wide range of areas, thus meeting the purchase needs of online and offline
consumers for household appliances. Offline retail outlets have reached more than 140,000. Midea has
created a network layout of comprehensive household appliance stores, specialty stores of self-owned
products, traditional retailers and e-commerce franchise stores. It provides easy access to Midea's
products and services, covering the entire market from first-tier cities to townships. Particularly, Midea
boasts a unique exclusive shop system in the industry with more than 20,000 outlets, where various
needs of users from new decoration to updates can be met in pre-decoration stores, flagship stores,
professional stores and other stores. In 2022, Midea combined the exclusive store business and the pre-
decoration store business to create “Midea Cloud Sales+”. With a unified platform, unified management
and unified operation, the “Midea Cloud Sales+” ecosystem has been enhanced, with its business
covering markets of all tiers. Upholding the customer-oriented principle, Midea continuously promotes
digital transformation on the direct retail end, providing customers with digital platform services that are
industry-leading. By providing offline stores with professional digital platform support such as capacity
enhancement, purchasing guarantee, and user operation, it can help improve the actuarial rate, order
review timeliness and logistics efficiency to ensure store supply experience. The Company continues to
refine the Midea Cloud Sales App, improve the supply chain capability, and increase logistics efficiency.
It also builds an online shopping mall for offline stores through the Midea Home Delivery mini-app,
empowering offline retail by using tools such as marketing tool packages, user operation platforms, and
the home delivery platform. Focusing on "smart home" and "whole-house decoration solutions", Midea
promotes deep cooperation with decoration, furnishing, building materials, design and other channels. It
has built more than 1,300 smart home experience centers. Supported by the “1+N” store network, smart
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product suites and the M+Design Designer Club, Midea drives pre-decoration transformation towards
unified supply, operation and services. Thus, it is able to achieve standard operation of stores and provide
one-stop service for users, created diversified smart lifestyles for them. In H1 2022, the retail sales on
the pre-decoration market rose by over 100% year on year. Besides, in Pinduoduo, Douyin, Kuaishou
and other emerging channels, Midea grows at a faster pace, driving sales and user growth through
membership operation, as well as the offering of product suites and smart products.
Annto, a technological innovation-based provider of new supply chain (logistics) services under Midea
Group, makes full use of digital and big data technologies to refine and manage its comprehensive
logistics network, building a smart and digital integrated logistics service platform. Annto concentrates its
resources on urban distribution and is able to provide fully visualized direct distribution services covering
every town and village of the country. Relying on more than 140 urban distribution centers nationwide, it
covers more than 99% of towns and villages across the country. It can finish the delivery to 30,739 (or
over 77% of) towns and villages within 24 hours and to 37,260 (or over 94% of) towns and villages within
48 hours in the country. Additionally, Annto strengthens the shared inventory system for online and offline
channels and the competitive edge of integrated delivery for the ToB/ToC business, refines its network of
integrated delivery and installation services, drives connectivity through the whole process from
manufacturing to sale, provides quality service solutions for various orders from customers, as well as
comprehensively better the end user experience.
E. A user experience-oriented reform of “Comprehensive Digitalization and Comprehensive
Intellectualization” that focuses on “Digitization & Intelligence Driven” to make Midea a leader in
the IoT era
Midea has put in place and will prioritize the development of the Midea Cloud Sales commercial platform
supported by unified data and technology platforms, the IoT ecosystem platform, and the Industrial
Internet platform of “M.IoT”, with an aim to become a world-leading technology group driven by digitization
& intelligence. On one hand, it promotes deep integration of the digital technology and business in the
whole value chain, with the view to becoming an icon in digitalization. On the other hand, with foresight,
it plans for whole new products, services and business models centering on smart technologies, products
and scenes, so as to outcompete Internet companies. With continual investment and research in artificial
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Midea Group Co., Ltd. Semi-Annual Report 2022
intelligence (AI), silicon chip, sensor, big data, cloud computing and other new technologies, Midea has
built the biggest AI team in the household appliance industry, which is committed to enabling products,
machines, production processes and systems to sense, perceive, understand and judge, driven by the
combination of big data and AI, in order to reduce obstacles for man-machine interaction to the minimum
and create smart appliances without any assistance in interaction. Focusing on “people and their family”,
Midea builds a whole value chain of IoT. Breakthroughs have been made in user data protection, content
operation for smart scenes, smart connection technology, the smart home ecosystem, cloud platforms,
the smart voice function, the big data-based cloud housekeeper services, etc. By doing so, Midea is able
to offer complete smart home solutions for users, as well as to empower its business partners.
Upon years of digital transformation characterized by “One Midea, One System, One Standard”, Midea
has successfully materialized operations driven by software and data through its value chain, connecting
end to end and covering planning and R&D, Product Ordering, intelligent scheduling, flexible
manufacturing, coordinative supply, product quality tracking, logistics, installation & post-sale services,
etc. The Group’s digital platform has made come true C2M flexible manufacturing, platform-based and
modularized R&D, digitalized production techniques and simulation, intelligent logistics, digital marketing,
digital customer service, etc. By way of integrating the IoT capabilities of its AI Innovation Center, Software
Engineering Institute, IT Department, IoT Division, Smart Home Business Group, Robotics & Automation
Division, Building Technologies Division, Digital Innovation Business and other organs, Midea has
established a unified IoT technology platform. Its Industrial Internet platform has been upgraded to “M.IoT
2.0”, and four of its factories have been included in the “Global Lighthouse Network” initiated by the World
Economic Forum, representing Midea’s powerful technology attribute and strong intelligent manufacturing
capability. These practices are swiftly applied to other Midea manufacturing bases across the world.
Based on these “Lighthouse” factories and the “Lighthouse Network”, Midea brings the relevant
experience and services outside the Group to empower ecosystem partners and facilitate the
transformation of China’s manufacturing sector. It has provided the relevant products and services for
around 300 customers in more than 40 market segments. Therefore, it is safe to say that Midea has built
a solid foundation regarding Industrial Internet systems. While driving online systems and digitalization,
Midea also adopts a systematic data-based approach to governance. A whole new data platform has
been put in place to accumulate data assets and achieve integration of online and offline business data,
71
Midea Group Co., Ltd. Semi-Annual Report 2022
as well as product and service data. Further, the “User One_ID” system has been refined to provide
adequate data support for all business lines.
F. Sound corporate governance mechanism and effective incentive scheme to provide a solid
foundation for Midea’s sustained and steady development
Paying close attention to the construction of a governance framework, regarding its corporate control,
centralization and decentralization systems, the Group formed a mature management system for
professional managers. The divisional system has been in operation for many years, and its performance-
oriented evaluation and incentive mechanism featuring full decentralization has become a training and
growth platform for the Group's professional managers. The Group's primary senior management team
consists of professional managers who have been trained and forged in the operational practices of Midea
Group. They have rich management experience and practices in the relevant industries, deep
understanding and insights of the relevant industries with respect to ToC and ToB, and accurate
understanding of the industry environment and corporate operations and management. The Company's
advantages in such systems and mechanisms have laid a solid foundation for the efficient and effective
business operations, as well as the promising, stable and sustainable future development of the Company.
At present, the Company has launched nine Stock Option Incentive Schemes, six Restricted Share
Incentive Schemes, eight Global Partner Stock Ownership Schemes and five Business Partner Stock
Ownership Schemes for key managerial and technical personnel at different levels, in addition to the
exploration and practices with respect to diversified stock ownership schemes of key innovative
subordinates. As such, a governance structure has been put in place that aligns the interests of senior
management and core business backbones with that of all shareholders, as well as comprises long and
short-term incentives and restrains.
3. Analysis of Main Business
Overview
See contents under the heading “1. Business Scope in the Reporting Period” above.
YoY changes in key financial data:
Unit: RMB’000
72
Midea Group Co., Ltd. Semi-Annual Report 2022
YoY Change
H1 2022 H1 2021 Main reasons for change
(%)
Operating revenue 182,661,009 173,809,565 5.09%
Cost of sales 140,424,168 135,727,446 3.46%
Selling and distribution
14,698,373 13,950,077 5.36%
expenses
General and administrative
4,951,069 4,251,893 16.44%
expenses
Finance costs -1,735,418 -2,321,726 25.25%
Research and development
5,865,033 5,314,637 10.36%
expenses
Decreased investment income
Investment income 607,847 1,080,896 -43.76% derived in the period of holding
financial assets held for trading
Increased gains on disposal of non-
Losses on disposal of assets 18,962 -17,833 206.33%
current assets
Non-operating expenses 53,628 105,716 -49.27% Decreased donation expenditures
Income tax expenses 2,710,551 2,407,939 12.57%
Net profit attributable to Decreased profits of non-wholly-
126,901 207,399 -38.81%
minority interests owned subsidiaries
Net cash flows from operating
21,394,710 20,176,410 6.04%
activities
Net cash flows from investing Decreased cash received from
-6,562,852 9,137,053 -171.83%
activities disposal of investments
Net cash flows from financing Decreased cash payments relating to
5,783,043 -16,559,579 134.92%
activities other financing activities
Net increase in cash and cash Increased net cash flows from
20,760,688 12,520,109 65.82%
equivalents financing activities
Major changes to the profit structure or sources of the Company in the Reporting Period:
No such cases in the Reporting Period.
Breakdown of operating revenue:
Unit: RMB’000
H1 2022 H1 2021
As a percentage As a percentage YoY Change
Amount of total operating Amount of total operating (%)
revenue (%) revenue (%)
Total 182,661,009 100% 173,809,565 100%
By business segment
Manufacturing 163,263,193 89.38% 154,065,437 88.64% 5.97%
By product category
HVAC 83,236,383 45.57% 76,408,470 43.96% 8.94%
Consumer appliances 66,334,685 36.31% 64,964,319 37.38% 2.11%
Robotics, automation
systems and other 13,692,125 7.50% 12,692,648 7.30% 7.87%
manufactured products
By geographical segment
PRC 104,822,467 57.39% 99,850,129 57.45% 4.98%
Outside PRC 77,838,542 42.61% 73,959,436 42.55% 5.24%
The Company’s five business segments, namely the Smart Home Business Group, the Industrial
73
Midea Group Co., Ltd. Semi-Annual Report 2022
Technology Business Group, the Building Technologies Division, the Robotics & Automation Division, and
the Digital Innovation Business recorded revenue of RMB125.9 billion (up 3.48% year-on-year), RMB12.1
billion (up 13.26% year-on-year), RMB12.2 billion (up 33.09% year-on-year), RMB12.2 billion (up 2.15%
year-on-year), and RMB5.2 billion (up 42.37% year-on-year) respectively during the Reporting Period.
Business segments, products or geographical segments contributing over 10% of the operating revenue
or profit
Applicable □N/A
Unit: RMB’000
YoY change of YoY change of YoY change of
Operating Gross profit
Cost of sales operating cost of sales gross profit
Revenue margin
revenue (%) (%) margin (%)
By business segment
Manufacturing 163,263,193 123,371,723 24.43% 5.97% 4.30% 1.21%
By product category
HVAC 83,236,383 65,712,490 21.05% 8.94% 7.14% 1.33%
Consumer appliances 66,334,685 46,958,140 29.21% 2.11% -0.44% 1.81%
Robotics, automation
systems and other 13,692,125 10,701,093 21.84% 7.87% 9.41% -1.10%
manufactured products
By geographical segment
PRC 104,822,467 80,102,964 23.58% 4.98% 3.05% 1.43%
Outside PRC 77,838,542 60,321,204 22.50% 5.24% 4.01% 0.92%
Under the circumstances that the statistical standards for the Company's main business data adjusted in
the Reporting Period, the Company's main business data in the recent period is calculated based on
adjusted statistical standards at the end of the Reporting Period
□Applicable N/A
Reason for any over 30% YoY movements in the data above
□Applicable N/A
4. Analysis of Non-Core Business
□Applicable N/A
5. Assets and Liabilities
5.1 Material changes of asset items
Unit: RMB’000
30 June 2022 31 December 2021 Change in Explanation about any
Amount As a Amount As a percentage material change
74
Midea Group Co., Ltd. Semi-Annual Report 2022
percentage of percentage of (%)
total assets total assets
(%) (%)
Cash at bank
76,701,938 18.57% 71,875,556 18.53% 0.04%
and on hand
Accounts
29,586,420 7.16% 24,636,440 6.35% 0.81%
receivable
Contract assets 4,264,364 1.03% 3,823,476 0.99% 0.05%
Inventories 36,750,838 8.90% 45,924,439 11.84% -2.94%
Investment
826,593 0.20% 859,195 0.22% -0.02%
properties
Long-term equity
3,769,304 0.91% 3,796,705 0.98% -0.07%
investments
Fixed assets 23,473,308 5.68% 22,852,848 5.89% -0.21%
Construction in
3,590,625 0.87% 2,690,930 0.69% 0.18%
progress
Right-of-use
2,257,416 0.55% 2,297,354 0.59% -0.05%
assets
Short-term
10,658,682 2.58% 5,381,623 1.39% 1.19%
borrowings
Contract
24,331,594 5.89% 23,916,595 6.16% -0.27%
liabilities
Long-term
26,646,374 6.45% 19,734,020 5.09% 1.36%
borrowings
Lease liabilities 1,547,117 0.37% 1,533,552 0.40% -0.02%
5.2 Main assets overseas
□Applicable N/A
5.3 Assets and liabilities measured at fair value
Applicable □N/A
Unit: RMB’000
Profit or Amount
Cumulative
loss from provided
fair value Purchased
Opening change in for Sold in the Other Closing
Item change in the
balance fair value impairme period changes balance
charged to period
during the nt in the
equity
period period
Financial assets
1. Financial assets held
for trading (excluding
5,879,202 -335,682 - - 1,112,599 3,425,460 34,982 3,265,641
derivative financial
assets)
2. Derivative financial
1,298,815 -351,418 -364,172 - 37,026 6,072 8,283 622,462
assets
3. Receivables
10,273,552 - - - 3,798,896 - - 14,072,448
financing
4. Other debt
27,484,322 - - - 2,830,000 7,992,716 564,464 22,886,070
investments and others
5. Investments in other
45,747 - - - - 2,062 -308 43,377
equity instruments
6. Other non-current
5,912,873 -394,470 - - 1,581,046 85,777 62,692 7,076,364
financial assets
Sub-total of financial
50,894,511 -1,081,570 -364,172 - 9,359,567 11,512,087 670,113 47,966,362
assets
75
Midea Group Co., Ltd. Semi-Annual Report 2022
Investment properties
Productive living assets
Others
Sub-total of the above 50,894,511 -1,081,570 -364,172 - 9,359,567 11,512,087 670,113 47,966,362
Financial liabilities 166,649 115,087 416,521 - 1,789,514 17,056 -4,258 2,466,457
Contents of other changes
Other changes were primarily differences on translation of foreign currency financial statements and
interest income.
Whether there were any material changes on the measurement attributes of major assets of the Company
during the Reporting Period
□ Yes No
5.4 Restricted asset rights as of the end of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of the
Company were sealed, distrained, frozen, impawned, pledged or limited in any other way.
6. Investment Made
6.1 Total investment amount
Applicable □N/A
Total investment amount of the Total investment amount of the same
YoY Change (%)
Reporting Period (RMB’000) period of last year (RMB’000)
60,554,514 70,538,082 -14.15%
6.2 Significant equity investment made in the Reporting Period
□Applicable N/A
6.3 Significant non-equity investments ongoing in the Reporting Period
□Applicable N/A
6.4 Financial investments
6.4.1 Securities investments
Applicable □N/A
76
Midea Group Co., Ltd. Semi-Annual Report 2022
Unit: RMB’000
Cumul
Profit or ative
Mea
Abbre loss from fair
Type sure Fund
Code of viatio Initial Opening change in value Purchas Sold Profit or Closing Accoun
of men ing
securiti n of investment carrying fair value chang ed in the in the loss in the carrying ting
secu t sour
es securi cost amount during e period period period amount title
rities met ce
ties the charge
hod
period d to
equity
Over
Fair Financi
seas
valu al Own
liste XIAO
1810 769,972 e 927,158 -262,253 34,982 -262,253 699,887 assets fund
d MI-W
met held for s
stoc
hod trading
k
Over Other
Fair
seas non-
Soun valu Own
liste current
SOUN dHou 157,203 e - -164,362 6,696 225,806 -164,362 68,140 fund
d financi
nd AI met s
stoc al
hod
k assets
Dom
estic Fair Financi
ally valu al Own
EFOR
liste 688165 178,534 e 392,312 -36,312 - - -36,312 356,000 assets fund
T
d met held for s
stoc hod trading
k
Dom
estic Fair Financi
Rais
ally valu al
Neow ed
liste 688159 31,600 e - -16,908 - 60,308 - -16,908 43,400 assets
ay fund
d met held for
s
stoc hod trading
k
Dom
Other
estic Fair
non- Rais
ally valu
current ed
liste 688162 JEE 88,180 e - -133,187 - 317,779 - -133,187 184,592
financi fund
d met
al s
stoc hod
assets
k
Dom
Other
estic Fair
non- Rais
ally Real- valu
current ed
liste 301135 Desig 40,000 e - 33,884 - 40,000 - 33,884 73,884
financi fund
d n met
al s
stoc hod
assets
k
Dom
Other
estic Fair
non- Rais
ally valu
BOZH current ed
liste 688097 55,000 e - -40,785 - 144,743 - -40,785 103,958
ON financi fund
d met
al s
stoc hod
assets
k
Total 1,320,489 -- 1,319,470 -619,923 41,678 788,636 - -619,923 1,529,861 -- --
6.4.2 Derivatives investments
Applicable □N/A
77
Midea Group Co., Ltd. Semi-Annual Report 2022
Unit: RMB’000
Closing
Rel investme
Am
atio nt
ount
nshi Rel Purcha Sold amount
Type Initial Opening prov Closing Actual
Opera p ated sed in in as a
of investme Starting Ending investme ided investme gain/loss in
ting with tran Reporti Report percenta
deriva nt date date nt for nt Reporting
party the sact ng ing ge of the
tive amount amount imp amount Period
Co ion Period Period Company
airm
mpa ’s closing
ent
ny net
assets
Futur Futur
es es 01/01/20 31/12/2
No No 71,790 71,790 -365,081 -0.2816% -238,108
comp contra 22 022
any cts
FX
01/01/20 31/12/2
Bank No No deriva 902,875 902,875 14,465 6,072 -118,284 -0.0912% -894,709
22 022
tives
Total 974,675 -- -- 974,675 14,465 6,072 -483,365 -0.3728% -1,132,817
Source of derivatives
All from the Company’s own funds
investment funds
Litigation involved (if
N/A
applicable)
Disclosure date of the
announcement about
the board’s consent for 30/04/2022
the derivative
investment (if any)
Disclosure date of the
announcement about
the general meeting’s
-
consent for the
derivative investment (if
any)
For the sake of eliminating the cost risk of the Company's bulk purchases of raw materials as a
result of significant fluctuations in raw material prices, the Company not only carried out futures
business for some of the materials, but also made use of bank financial instruments and
promoted forex funds business, with the purpose of avoiding the risks of exchange and interest
rate fluctuation, realizing the preservation and appreciation of forex assets, reducing forex
liabilities, as well as achieving locked-in costs. The Company has performed sufficient evaluation
and control against derivatives investment and position risks, details of which are described as
follows:
1. Legal risk: The Company's futures business and forex funds businesses shall be conducted
Risk analysis of in compliance with laws and regulations, with clearly covenanted responsibility and obligation
positions held in relationship between the Company and the agencies.
derivatives during the
Reporting Period and Control measures: The Company has designated relevant responsible departments to enhance
explanation of control learning of laws and regulations and market rules, conducted strict examination and verification
measures (Including but of contracts, defined responsibility and obligation well, and strengthened compliance check, so
not limited to market as to ensure that the Company's derivatives investment and position operations meet the
risk, liquidity risk, credit requirements of the laws and regulations and internal management system of the Company.
risk, operational risk,
legal risk, etc.) 2. Operational risk: Imperfect internal process, staff, systems and external issues may cause the
Company to suffer from loss during the course of its futures business and forex funds business.
Control measures: The Company has not only developed relevant management systems that
clearly defined the assignment of responsibility and approval process for the futures business
and forex funds business, but also established a comparatively well-developed monitoring
mechanism, aiming to effectively reduce operational risk by strengthening risk control over the
business, decision-making and trading processes.
3. Market risk: Uncertainties caused by changes in the prices of bulk commodity and exchange
rate fluctuations in foreign exchange market could lead to greater market risk in the futures
business and forex funds business. Meanwhile, inability to timely raise sufficient funds to
78
Midea Group Co., Ltd. Semi-Annual Report 2022
establish and maintain hedging positions in futures operations, or the forex funds required for
performance in forex funds operations being unable to be credited into account could also result
in loss and default risks.
Control measures: The futures business and forex funds business of the Company shall always
be conducted by adhering to prudent operation principles. For futures business, the futures
transaction volume and application have been determined strictly according to the requirements
of production & operations, and the stop-loss mechanism has been implemented. Besides, to
determine the prepared margin amount which may be required to be supplemented, the futures
risk measuring system has been established to measure and calculate the margin amount
occupied, floating gains and losses, margin amount available and margin amount required for
intended positions. As for forex funds business, a hierarchical management mechanism has been
implemented, whereby the operating unit which has submitted application for funds business
should conduct risk analysis on the conditions and environment affecting operating profit and
loss, evaluate the possible greatest revenue and loss, and report the greatest acceptable margin
ratio or total margin amount, so that the Company can update operating status of the funds
business on a timely basis to ensure proper funds arrangement before the expiry dates.
Changes in market
prices or fair value of
derivative products
during the Reporting
1. Loss from futures contracts during the Reporting Period was RMB-238.108 million.
Period, specific
2. Loss from FX derivatives during the Reporting Period was RMB-894.709 million.
methods used and
3. Public quotations in futures market or forward forex quotations announced by the Bank of
relevant assumption
China are used in the analysis of derivatives fair value.
and parameter settings
shall be disclosed for
analysis of fair value of
derivatives
Explanation of
significant changes in
accounting policies and
specific financial
accounting principles in
respect of the No change
Company's derivatives
for the Reporting Period
as compared to the
previous Reporting
Period
The Company's independent directors are of the view that the futures hedging business is an
Special opinions
effective instrument for the Company to eliminate price volatility and implement risk prevention
expressed by
measures through enhanced internal control, thereby improving the operation and management
independent directors
of the Company; the Company's foreign exchange risk management capability can be further
concerning the
improved through the forex funds business, so as to maintain and increase the value of foreign
Company's derivatives
exchange assets and the abovementioned investment in derivatives can help the Company to
investment and risk
fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry
control
out derivatives investment business, and the risks are controllable.
6.5 Use of funds raised
□ Applicable N/A
No such cases in the Reporting Period.
7. Sale of Major Assets and Equity Interests
7.1 Sale of major assets
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2022
No such cases in the Reporting Period.
7.2 Sale of major equity interests
□Applicable N/A
8. Analysis of Major Subsidiaries
Applicable □N/A
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
(in RMB million)
Total Net Operating Operating
Net profit
Company Business Registered assets (in assets (in revenue profit (in
Company name (in RMB
type scope capital RMB RMB (in RMB RMB
million)
million) million) million) million)
Guangdong Midea
Manufacturing
Kitchen Appliances USD72
Subsidiary of home 20,630 8,977 8,870 1,006 888
Manufacturing Co., million
appliances
Ltd.
Manufacturing
Wuxi Little Swan RMB100
Subsidiary of laundry 20,036 6,787 10,605 905 868
Electric Co., Ltd. million
appliances
Foshan Shunde
Midea Electrical Manufacturing
USD42
Heating Appliances Subsidiary of home 17,745 9,234 3,232 464 441
million
Manufacturing Co., appliances
Ltd.
Wuhu Midea Kitchen Manufacturing
RMB60
& Bath Appliances Subsidiary of water 16,537 2,589 6,758 950 823
million
Mfg. Co., Ltd. heaters
Acquisition and disposal of subsidiaries during the Reporting Period
Applicable □N/A
The detailed information of major subsidiaries included in the consolidation scope in the current period is
set out in Notes 5 and 6. Entities newly included in the consolidation scope in the current period through
acquisition mainly include Midea Capital Co., Ltd. and its subsidiaries (including structured entities),
WuHan TTium Motor Technology Co., Ltd. and its subsidiaries, as well as Shaanxi Construction
Investment Group Co., Ltd. (please refer to Note 5(1)), while details of those through incorporation can
be found in Note 5(2)(a). The detailed information of subsidiaries no longer included in the consolidation
80
Midea Group Co., Ltd. Semi-Annual Report 2022
scope in the current period is set out in Note 5(2)(b).
Particulars about major subsidiaries
N/A
9. Structured Entities Controlled by the Company
Applicable □N/A
As of the end of the Reporting Period, two structured entities were included in the Group’s consolidated
financial statements, which are both private-equity funds controlled by the Group. As a manager and
investor of the structured entities, the Group has relevant management power in and variable returns
from these entities, and has the ability to exercise its management power to impact the returns.
10. Outlook for the Future Development of the Company
Development strategies of the Company
Midea adheres to the strategic focus of “Technology Leadership, Direct to Users, Digitization &
Intelligence Driven, and Global Impact”, focuses on “Comprehensive Digitalization and Comprehensive
Intellectualization”, and drives sustained growth in the five business segments under the guidance of the
strategic focus. Midea are built to grow on the back of advanced governance mechanism, future-proof
values, and managerial mindset growth. Midea will continuously improve the governance mechanism by
empowering responsibilities, rights and obligations, clarify decentralization and authorization, constantly
refine the agent mechanism, optimize the incentive and constraint system, encourage entrepreneurship
and boost organizational vitality, and establish a flat organization and optimization process. It will also
adhere to the values of long-termism and altruism, truly put employees, users, customers and partners
at the center of all things, and improve the EHS governance and ESG rating. Additionally, the
Management will keep reflecting on and challenging themselves, endeavoring to achieve all-round growth
both spiritually and intellectually. Meanwhile, Midea will continue to improve the talent structure, build
diverse teams that are inclusive and collaborative, further strengthen diversity, openness and
inclusiveness, and create a simple, straightforward, flat and equal environment. In the meantime, it will
constantly improve consistency management across the Group, so as to achieve consistent operations,
corporate culture and values and philosophies, which will ensure the sustained and steady development
81
Midea Group Co., Ltd. Semi-Annual Report 2022
of the Company. Midea integrates global resources, follows the customer-oriented principle, and builds
key technology barriers by way of technological innovation and quality improvement, so as to achieve
global leadership with respect to principal product categories and new business breakthroughs, as well
as to maintain technology leadership. It aims to establish direct connection with customers in terms of
mindsets, products, buying, services, etc. through digitalization and intellectualization in its operations.
Supported by data- and platform-based operations in the whole value chain, Midea strives to boost its
business competitiveness and become more competitive in the digital era by implementing the strategy
of “Digitization & Intelligence Driven”. It will also promote global operations and try to lay a solid foundation
in this regard and enhance global impact through promoting its own branded products. It will promote
efficiency driven growth by improving management, manufacturing and asset efficiency to create more
cost efficiency. Additionally, it will strengthen its ToB business to build new business platform and growth
points. It aims to create a better life for over 400 million users, major customers and strategic partners in
different areas worldwide every year with satisfying products and services.
Key operation points in H2 2022:
In H2 2022, based on the core strategic focus with “Technology Leadership” as the core, Midea will
promote development both in the ToB and ToC business, as well as adhere to the annual operational
principle of “rational revenue, and recovery of profitability”. As Midea Group’s revenue exceeded RMB300
billion in 2021, it needs to respect market rules and trends more than ever. It needs to find certainties
amid uncertainties and place importance on the quality of growth. The ability to innovate continuously is
key to building a vigorous and ever-lasting business. Therefore, Midea will continue to make
breakthroughs and innovations in products, technologies, business models, etc. Meanwhile, Midea needs
to return to the nature of business, focus on product mix, efficiency and cash flow improvement, and
provide products with high added value that comprise high technology content and can satisfy
differentiated needs, in pursuit of more value for users. Core competitiveness is central to sustained
growth. Through building product, technological and innovation competitiveness in the home appliance
sector, Midea will create stronger core competitiveness. The accumulation of competitiveness in the core
business will in turn support Midea’s transformation from the ToC business to the ToB business. Specific
priority tasks are set out below:
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Midea Group Co., Ltd. Semi-Annual Report 2022
a. Based on the core strategy of “Technology Leadership”, Midea will establish a comprehensive research
organization, increase investment in digitalization and R&D, improve talent structure, and carry out the
task of scientific innovation, product innovation, technological innovation, business model innovation, and
process innovation. Midea will resolutely increase R&D investment, build up R&D scale advantage, and
continuously lay out key technologies, cutting-edge technologies, basic technologies, digitalization and
intellectualization. By virtue of the two drivers of technology strategy and product strategy, as well as
innovation mechanism assurance of the three-tier technical committee and the four-tier R&D system,
Midea will pool together its R&D strength and continuously drive core technology breakthroughs in energy
saving, energy storage, health, green development, etc. by adopting a joint innovation model, in pursuit
of a stronger presence in the technology world. It will actively respond to China’s dual-carbon strategy
and carry on with its "Green Strategy", apply eco-friendly and low-carbon technology to products by
technology innovation, help to save energy and reduce emissions in the life cycle of products, and lead
the formulation of green standards in a deep manner to obtain the national green product certification of
all categories of products. To promote the rapid application of scientific innovation through standardization,
it will implement the "3+1" strategy for standardization, drive technological standardization for innovations
in green development, energy saving, intelligent technologies, as well as healthy, comfortable and
convenient technologies, etc., and strengthen the formulation and revision of international standards. For
the purpose of making breakthroughs and building key technology barriers in all the product categories,
and promoting innovation of global products, product structure improvement and high-end strategy, it will
continue to implement the "Three Generations" project, accelerate the application of research results,
and retain the "Number One Engine" of ToC business. In ToB business, it will cooperate with strategic
partners by digital technology to increase the research on differentiated innovation technologies in new
industries and foster the industrialization of innovation technologies. Also, it will continuously build the
scientist system, vigorously introduce high-end talent, and constantly refine the R&D network. Based on
regional technology advantages, it will continue to improve the "2+4+N" R&D network, increase the
comprehensive strength of overseas R&D centers, and build an innovation mechanism for the
“Technology Leadership” strategy, so as to maintain technology leadership in a comprehensive manner.
b. Midea will keep a high-quality development direction and stick to internal, sustained and effective
organic growth. In the process of implementing new strategies to boost new growth areas, the key for
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Midea's survival in competition lies in improving operational efficiency. Therefore, Midea will optimize the
delivery cycle, enhance the inventory turnover, improve the cash cycle, and implement the shared
inventory system. Being customer-oriented, Midea will strive to be “Direct to Users” through user research,
user insight, product plan transforming and user operation. Midea will promote the T+3 business model
reform and high-performance operations in the whole value chain in every link from product planning to
after-sales service, so as to increase efficiency in the whole value chain and the data-driven efficiency.
Channel reform will be firmly pushed forward for the front-end market in pursuit of better profitability. In
order to win in competition, it is important to develop high-end products to refine the product mix.
Breakthroughs must be made in a faster manner regarding small appliances and upgrading of the major
appliance business must be accelerated, in addition to the promotion of products catering to new
consumption trends. Midea will plan for, establish and refine business middle platforms, especially data
and technology middle platforms. In the meantime, it will maintain overall consistency by sticking to “One
Midea, One System, One Standard”. In face of common problems such as fluctuations in exchange rates
and prices of bulk raw materials, as well as sourcing management, Midea will firmly promote its internal
coordination and sharing mechanism and keep perfecting the relevant solutions. It will also maintain
effective investments, control non-operating expenses, increase labor productivity, improve human
resource allocation efficiency, promote lean management and provide fresh impetus for continual growth
through relentless innovation.
c. In the domestic market, based on the “Direct to Users” strategy, Midea will continue to deepen the
reform of its organizational structure, improve retail capacity, and develop user insights and back-end
capacity. Midea will also commit itself to intelligent experience terminals and user experience as part of
efforts to connect with users' preferences. In terms of channel reform, the Company will deepen marketing
changes and simplify delivery rules with a focus on terminal retail, and set up a professional team in the
regional headquarters and operation center in China with a focus on retail capability and user operation.
While organizing organizational reform, the Company will continuously strengthen the principle of "One
Midea, One System and One Standard", give full play to collaborative advantages, and do well in result-
oriented process control to achieve constant improvement of operating efficiency. The Company will,
based on digital systems and tools, invest special resources to ensure the implementation of the three
core projects of "full life cycle management of stores", "transformation of existing stores" and "optimization
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of all-inclusive retail", while increasing intelligent investment to strengthen the capacity building of data
middle office and business intelligence (BI). As to the reform of online channel, the Company will mainly
focus on such aspects as product structure upgrade, omni-channel and hierarchical product management,
scale expansion of high-end brands, and enhancement of content broadcast capability. Supply chain
capability will also be improved to satisfy the needs of customers and users while improving turnover
efficiency. In terms of product marketing, the Company will strengthen branding and product suites-based
operation to provide users with a full set of household appliances solutions. Furthermore, the Company
will continue to, centering around product structure upgrade, promote the implementation of intelligent
scenes and the construction of whole-house intelligent decoration center, create a terminal for immersive
experience of Midea smart home, and cultivate the core capability of providing whole-house intelligent
solutions. In terms of user operation and service, the Company will continue to, centering around the
principle of "creating value for users" and the orientation of user experience, improve the iteration of
product design and experience of purchase services, optimize the rights and interests of members, and
accelerate the construction of private domain traffic platform. Moreover, the Company will keep
strengthening the retail empowerment of "people, goods and stores", deepen terminal transformation in
a user-centered manner, and further transform to active service, strengthen diversified skill certification
and optimize user access experience. The Company will also improve its distribution capability to achieve
the integration of delivery and installation that can ensure direct access to users, improve the operation
system of service engineers, and continue to promote the cultivation of suite-based service outlets to
enable such outlets to gradually achieve such capabilities as full-category service capability, pre-
installation service capability, and whole-house intelligent scene-oriented service capability. Additionally,
further progress will be made in the reform of such services as green recycling, active service and
intelligent customer service construction, so that users can truly enjoy one-stop service experience.
d. On the overseas market, Midea will continuously optimize the product structure, build experience
centers for overseas users with intelligent-based scene, and comprehensively promote the whole-house
intelligent scene system and the upgrade of intelligent terminals to build a product competition system
with high added value. It will improve channel efficiency and flattening, enhance product turnover
efficiency, explore direct retail and the shared inventory system, and attempt to implement the DTC
business model. In response to building the capabilities of terminal retail operation and direct access to
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users, it will continue to improve the breadth and depth of the network layout of offline channels, expand
the coverage of overseas sales outlets, and drive retail transformation and the “Direct to Users” capability.
Also, to enhance the competitiveness of online channels, it will accelerate the key capacity building of
overseas e-commerce, and improve cross-border logistics, user research and digital marketing. It will
propel the digital transformation and reform of overseas business, improve logistics and storage capacity
in the project of global digitization, optimize the network of after sales service and spare parts, and
promote the overseas iService3.0 digital after-sales service system. It will strengthen local manufacturing
coordination to greatly shorten the delivery cycle and increase product competitiveness. Furthermore, it
will propel the end-to-end process sorting and reconstruction in business scenes of export, and improve
accuracy, consistency and visualization of data flow to make progress in operation efficiency of value
chain.
In the second half of 2022, the impact of COVID-19, currency fluctuations and other factors is expected
to persist. TLSC will continue to strengthen the close cooperation with key customers to jointly and
proactively address various risks, and ensure the improvement of its profitability capability through
optimizing price strategy, improving product structure and channel system, and strictly controlling
expenditure. Meanwhile, it will, through deepening the collaboration with the Group and relevant product
divisions, further promote the improvement of product quality, and ensure the launch schedule of new
products and the supply of products, while doing well in medium and long-term product planning.
e. In the second half of 2022, COLMO will focus on the whole process service capability of "Villa
Intelligence Expert", gain deep insight into the mansion decoration needs of high-end users, establish
and improve the three major capabilities of intelligent design, fine installation and personality debugging,
provide whole-house intelligent services and experience that meet the needs of high-end users, and pay
continuous efforts to build "Villa Intelligence Expert" into a leader in whole-house intelligence that leads
the high-end market. The Toshiba brand will still take suite-based measures to, following the goal of
creating popular single products, build the brand mindset and reinforce the star life label of Toshiba.
Specifically, Toshiba will center around the construction of terminal halls and the building of benchmark
stores on one hand, and on the other hand, it will leverage the strength of brand to continuously empower
relevant businesses, help achieve sales growth, and finally build "Toshiba" into the second engine of the
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Company oriented at the high-end market. The WAHIN brand will continue to focus on young user groups
by virtue of the job-hunting season on campus and school-enterprise cooperation, and will work to expand
its user base through cross-border cooperation with brands targeting different user groups. Meanwhile,
the brand will further attract the attention of young user groups through holding interesting activities such
as "store manager employment" and constantly exploring new methods and means for young user groups
to enjoy home appliances, thus improving the marketing mode of e-commerce brands and driving sales
growth by branding.
f. Midea will keep promoting the reform of core businesses and digital empowerment, with a focus on
such projects as digital empowerment of the operating center, experience optimization of the Midea Cloud
Sales App, improvement of procurement experience, cloud warehouse, whole-chain inventory sharing,
and whole-house C2M, so as to improve the experience of end users and empower channel dealers.
Moreover, Midea will build a global order and planning center with the integrated supply chain project
(ISC) as the core, improve the flexible delivery capability and delivery efficiency of the whole value chain
centering around the collaboration between production and marketing, and build a future-oriented global
operation model through G400 project. Midea will also strengthen the digital construction of ToB business
segment to facilitate the building of model and digital template for ToB business, promote the
comprehensive micro-service transformation of digital system architecture to achieve architecture
upgrade and agile delivery, and intensify efforts on the construction of underlying digital capabilities to
promote the in-depth integration of digital forecasting, decision-making capabilities and artificial
intelligence into the whole value chain involving such links as operation management and product
development.
g. Midea will dedicate itself to driving new growth in the core ToB business, constantly expand the
business boundaries and accelerate business growth, and rapidly layout, enter into and occupy the
market of new business. In H2 2022, focusing on the field of new energy automobile parts, Midea will
realize the comprehensive improvement in customers, products and manufacturing capabilities, that is, it
will shift to mass production from project acquisition to cover more mainstream customers, improve
competitiveness in three major product lines (i.e. thermal management, electric drive, chassis) and other
technical fields to gradually implement the development plan of "Parts - Components - Systems", and
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carry out mass production at the new base in Anqing, Anhui. In the field of industrial automation, the
Company will, making full use of its technology accumulation in the servo field and in combination with
different characteristics and needs of segmented markets, strictly control supply chain risks, provide new
products and systematic comprehensive solutions, make breakthroughs in localization of reducer
products, achieve rapid transformation in marketing model, expand new channel resources, stabilize top
customers, and seize market opportunities. In the field of core components, the Company will make
breakthroughs in overseas strategic layout, and promote the successful mass production of its plants in
India and the completion and operation of the TTium plant in Vietnam. Furthermore, the Company will
increase the investment in R&D resources, constantly improve the strength of technological innovation,
make continuous breakthroughs in new products, new technologies and new scenes, and launch new
products such as new integrated compressors and lightweight commercial refrigeration compressors with
large discharge capacity to create value for customers. The Company will also set up an overseas
professional service platform to provide one-stop services for small and medium-scale customers and
special services for large-scale customers, so as to achieve breakthroughs in large-scale customers
overseas and increase its share in global market. Additionally, breakthroughs will be made in the mass
production and sales of chips, and six new products will be developed as planned.
h. Midea will beef up KUKA’s localized operations in China, increase investment in the development and
application of robotics, as well as foster R&D innovation of core components and software systems. In
terms of marketing, Midea will maintain leadership in the auto sector and take active steps to explore new
areas including new energy, general industrial manufacturing, electronics, medical care and logistics,
services, etc. Concerning operation, it will concentrate on R&D, supply chain management, high-
performance operations and digitalization, among others, so as to build the core competitiveness of the
robotics and industrial automation business in a faster manner.
Risks Faced by the Company and Countermeasures:
a. Risk associated with the COVID-19 pandemic
The fluctuations and repeated outbreaks of the COVID-19 pandemic may impact the demand, production
and sales of the Company’s products and services. Pandemic control measures, such as lockdown, social
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distancing, and travel restrictions, reduce customer mobility. Other consequences include limited
production and operations in some regions, the shutdown of retail outlets, suspended customer
operations, and increased logistics costs. All these factors bring about uncertainties and challenges to
the normal functioning of the Company and the market environment.
b. Risk of macro economy fluctuation
The market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,
among other products, can be easily affected by the economic situation and macro control. If the global
economy encounters a heavy hit and consumer demand slows down in growth, the growth of the
industries in which the Company operates, may slow down accordingly, and as a result, this may affect
the product sales of Midea Group.
c. Risks in the fluctuation of production factors
The raw materials required by Midea Group to manufacture its consumer appliances and core
components primarily include different grades of copper, steel, plastics and aluminum. At present, the
household appliance manufacturing sector belongs to a labor intensive industry. If the price of raw
materials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,
electricity, and land) caused by a change to the macroeconomic environment and policy change, or the
cost reduction resulted from lean production and improved efficiency, as well as the sale prices of end
products cannot offset the total effects of cost fluctuations, the Company’s business will be influenced to
some degree.
d. Risk in global asset allocation and overseas market expansion
Internationalization and global operations is a long-term strategic goal of the Company. The Company
has built joint-venture manufacturing bases in many countries around the world. Progress has been made
day by day regarding the Company’s overseas operations and new business expansion. However, its
efforts in global resource integration may not be able to produce expected synergies; and in overseas
market expansion, there are still unpredictable risks such as local political and economic situations,
significant changes in law and regulation systems, and sharp increases in production costs.
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e. Risk in foreign exchange losses caused by exchange rate fluctuation
As Midea carries on with its overseas expansion plan, its overseas sales have accounted for more than
40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative effects on
the overseas operations of the Company, but could also lead to exchange losses and increase its finance
costs.
f. Market risks brought by trade frictions and tariff barriers
Due to the rise of anti-globalization and trade protectionism, China will see more uncertainties in export
in 2022. The trade barriers and frictions of some major markets will affect the export business in the short
run, as well as marketing planning and investment in the medium and long run. Political and compliance
risks are rising in international trade. These can mainly be seen on compulsory safety certificates,
international standards and requirements, and product quality and management systems certification,
energy-saving requirements, the call for increasingly strict environmental protection requirements, as well
as with rigorous requirements for recycling household appliances waste. Trade frictions caused by anti-
dumping measures implemented by some countries and regions aggravate the burden in costs and
expenses for household appliance enterprises, and have brought about new challenges to market
planning and business expansion for enterprises.
In face of the complicated and changeable environment and risks at home and abroad, Midea will strictly
follow the Company Law, the Securities Law, the CSRC regulations and other applicable rules, keep
improving its governance structure for better compliance, and reinforce its internal control system so as
to effectively prevent and control various risks and ensure its sustained, steady and healthy development.
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Section IV Corporate Governance
1. Annual and Extraordinary General Meetings of Shareholders Convened during the
Reporting Period
1.1 General meetings of shareholders convened during the Reporting Period
Investor
Resolution of the
Meeting Type participation Convened date Disclosure date
meeting
ratio
Announcement No.
2022-002 on
First
Resolutions of First
Extraordinary
Extraordinary
General Meeting Extraordinary 59.06% 14 January 2022 15 January 2022
General Meeting of
of Shareholders
Shareholders of
of 2022
2022, disclosed on
www.cninfo.com.cn
Announcement No.
2022-012 on
Second Resolutions of
Extraordinary Second
General Meeting Extraordinary 58.19% 11 March 2022 12 March 2022 Extraordinary
of Shareholders General Meeting of
of 2022 Shareholders of
2022, disclosed on
www.cninfo.com.cn
Announcement No.
2022-035 on
Resolutions of
2021 Annual
2021 Annual
General Meeting Annual 58.31% 20 May 2022 21 May 2022
General Meeting of
of Shareholders
Shareholders,
disclosed on
www.cninfo.com.cn
Announcement No.
2022-068 on
Third
Resolutions of
Extraordinary
Third Extraordinary
General Meeting Extraordinary 57.61% 24 June 2022 25 June 2022
General Meeting of
of Shareholders
Shareholders of
of 2022
2022, disclosed on
www.cninfo.com.cn
1.2 Extraordinary general meetings of shareholders convened at the request of preference
shareholders with resumed voting rights
□ Applicable N/A
2. Changes in Directors, Supervisors and Senior Management
Applicable □N/A
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Name Office title Type of change Date Reason
Chief Financial
Cai Weiding Former 29 January 2022 Personal reason
Officer
Chief Human
Zhao Wenxin Resource Appointed 23 February 2022
Officer
Chief Financial
Zhong Zheng Appointed 23 February 2022
Officer
Bai Lin Vice President Appointed 31 May 2022
3. Preliminary Plan for Profit Distribution and Converting Capital Reserves into Share
Capital for the Reporting Period
□ Applicable N/A
The Company plans not to distribute cash dividends or bonus shares or convert capital reserves into
share capital for the first half of 2022.
4. Implementation of any Equity Incentive Scheme, Employee Stock Ownership
Scheme or Other Incentive Measures for Employees
Applicable □N/A
4.1 Equity incentive schemes
A. Overview of the Fifth Stock Option Incentive Scheme
a. The Company convened the Seventh Meeting of the Fourth Board of Directors on 28 April 2022, at
which the Proposal for the Retirement of Unexercised Reserved Stock Options under the Fifth Stock
Option Incentive Scheme upon Expiry was approved. As such, 58,000 stock options of five awardees that
had been unexercised upon expiry were retired.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Retirement of Unexercised Stock Options in the First Grant under the Fifth Stock
Option Incentive Scheme upon Expiry was approved. As such, 30,270 stock options of five awardees that
had been unexercised upon expiry were retired.
c. At the above-mentioned meeting, the Proposal for the Retirement of Unexercised Reserved Stock
Options under the Fifth Stock Option Incentive Scheme upon Expiry was approved. As such, 260,000
stock options of 18 awardees that had been unexercised upon expiry were retired.
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Midea Group Co., Ltd. Semi-Annual Report 2022
d. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the exercise price for the first grant under the Fifth Stock Option Incentive Scheme was revised from
RMB51.88 to RMB50.21 per share, and the exercise price for the reserved stock options under the Fifth
Stock Option Incentive Scheme was revised from RMB42.71 to RMB41.04 per share.
e. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. It was agreed to adjust the awardees and their exercisable stock options under the Fifth Stock
Option Incentive Scheme due to the resignation, reassignment, substandard individual or business unit
performance or other factors of some awardees. Upon the adjustments, the number of locked-up stock
options granted to them in the first grant under the Fifth Stock Option Incentive Scheme was reduced
from 20,380,000 to 17,447,750.
f. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Third Exercise Period for the First Grant under the Fifth Stock Option Incentive Scheme was approved.
A total of 926 awardees who are eligible for the Fifth Stock Option Incentive Scheme have been allowed
to exercise 8,237,750 stock options in the third exercise period (ended 6 May 2023).
g. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Reserved Stock Options under the Fifth Stock Option Incentive Scheme
was approved. It was agreed to adjust the awardees and their exercisable stock options under the Fifth
Stock Option Incentive Scheme due to the resignation of some awardees. Upon the adjustments, the
number of locked-up reserved stock options granted to them under the Fifth Stock Option Incentive
Scheme was reduced from 3,270,000 to 2,835,000.
h. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Second Exercise Period for the Reserved Stock Options under the Fifth Stock Option Incentive Scheme
was approved. A total of 69 awardees who are eligible for the reserved stock options under the Fifth Stock
Option Incentive Scheme have been allowed to exercise 945,000 stock options in the second exercise
period (ended 10 March 2023).
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Midea Group Co., Ltd. Semi-Annual Report 2022
During the Reporting Period, 4,570,499 shares were exercised with respect to the first grant under the
Fifth Stock Option Incentive Scheme.
During the Reporting Period, 366,900 shares were exercised with respect to the reserved stock options
under the Fifth Stock Option Incentive Scheme.
B. Overview of the Sixth Stock Option Incentive Scheme
a. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Retirement of Unexercised Stock Options under the Sixth Stock Option Incentive
Scheme upon Expiry was approved. As such, 25,100 stock options of four awardees that had been
unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the exercise price for the Sixth Stock Option Incentive Scheme was revised from RMB49.71 to
RMB48.04 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Sixth Stock Option Incentive Scheme was approved. It was agreed to
adjust the awardees and their exercisable stock options under the Sixth Stock Option Incentive Scheme
due to the resignation, substandard business unit performance, substandard individual performance,
reassignment or other factors of some awardees. Upon the adjustments, the number of locked-up stock
options granted to them under the Sixth Stock Option Incentive Scheme was reduced from 30,255,000
to 26,982,250.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Second Exercise Period for the Sixth Stock Option Incentive Scheme was approved. A total of 905
awardees who are eligible for the Sixth Stock Option Incentive Scheme have been allowed to exercise
8,412,250 stock options in the second exercise period (ended 29 May 2023).
During the Reporting Period, 3,834,609 shares were exercised under the Sixth Stock Option Incentive
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Midea Group Co., Ltd. Semi-Annual Report 2022
Scheme.
C. Overview of the Seventh Stock Option Incentive Scheme
a. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Retirement of Unexercised Stock Options under the Seventh Stock Option Incentive
Scheme upon Expiry was approved. As such, 103,990 stock options of 12 awardees that had been
unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the exercise price for the Seventh Stock Option Incentive Scheme was revised from RMB48.86 to
RMB47.19 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Seventh Stock Option Incentive Scheme was approved. It was agreed
to adjust the awardees and their exercisable stock options under the Seventh Stock Option Incentive
Scheme due to the resignation, substandard business unit performance, substandard individual
performance, reassignment or other factors of some awardees. Upon the adjustments, the number of
locked-up stock options granted to them under the Seventh Stock Option Incentive Scheme was reduced
from 49,440,000 to 44,200,200.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Second Exercise Period for the Seventh Stock Option Incentive Scheme was approved. A total of 1,237
awardees who are eligible for the Seventh Stock Option Incentive Scheme have been allowed to exercise
15,490,200 stock options in the second exercise period (ended 4 June 2023).
During the Reporting Period, 4,630,832 shares were exercised under the Seventh Stock Option Incentive
Scheme.
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Midea Group Co., Ltd. Semi-Annual Report 2022
D. Overview of the Eighth Stock Option Incentive Scheme
a. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes was
approved. As the 2021 Annual Profit Distribution Plan had been carried out, the exercise price for the
Eighth Stock Option Incentive Scheme was revised from RMB81.41 to RMB79.74 per share.
E. Overview of the Ninth Stock Option Incentive Scheme
a. The Proposal on the Ninth Stock Option Incentive Scheme (Draft) and its Abstract was approved at the
Seventh Meeting of the Fourth Board of Directors and the 2021 Annual General Meeting of Shareholders,
and the awardee list for the Ninth Stock Option Incentive Scheme (Draft) was reviewed at the Fifth
Meeting of the Fourth Supervisory Committee.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Exercise Price, Awardee List and Granted Number for the Ninth
Stock Option Incentive Scheme was approved. As the 2021 Annual Profit Distribution Plan had been
carried out, the exercise price for the Ninth Stock Option Incentive Scheme was revised from RMB56.28
to RMB54.61 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Exercise Price, Awardee List
and Granted Number for the Ninth Stock Option Incentive Scheme was approved. It was agreed to adjust
the awardees and their stock options under the Ninth Stock Option Incentive Scheme due to the
resignation of some awardees. Upon the adjustments, the number of awardees and the total stock options
under the Ninth Stock Option Incentive Scheme were reduced from 2,849 to 2,815, and from 109,074,000
to 107,791,000, respectively.
d. On 4 July 2022, the Company granted 107,693,000 stock options to 2,813 awardees with the exercise
price being RMB54.61 per share.
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Midea Group Co., Ltd. Semi-Annual Report 2022
F. Overview of the 2018 Restricted Share Incentive Scheme
a. The Company convened the Third Meeting of the Fourth Board of Directors on 24 December 2021 and
the First Extraordinary General Meeting of Shareholders of 2022 on 14 January 2022, at which the
Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018 Restricted Share
Incentive Scheme was approved. As such, it was agreed to repurchase and retire 386,250 restricted
shares that had been granted to 13 awardees but were still in lockup, for the reasons of their resignation
or being reassigned. The retirement of the said restricted shares was completed on 20 April 2022.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Exercise Prices, Repurchase Prices and Grant Prices for the
Equity Incentive Schemes was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the repurchase prices for the first grant under the 2018 Restricted Share Incentive Scheme was
revised from RMB23.11 to RMB21.44 per share, and the repurchase price for the reserved restricted
shares under the 2018 Restricted Share Incentive Scheme from RMB19.13 to RMB17.46 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2018 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 767,551 restricted shares that had been granted to 54 awardees but were still in
lockup, for the reasons of their resignation, being reassigned, substandard 2021 individual or business
unit performance or other factors.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the First Grant under the 2018 Restricted Share Incentive Scheme was approved.
A total of 189 awardees were eligible for this unlocking, with 2,791,699 restricted shares (0.0399% of the
Company’s total existing share capital) unlocked for public trading on 28 June 2022, of which 25,000
shares, 25,000 shares and 20,000 shares were unlocked for senior management Guan Jinwei, Zhang
Xiaoyi and Zhong Zheng, respectively.
e. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the Reserved Restricted Shares under the 2018 Restricted Share Incentive Scheme
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Midea Group Co., Ltd. Semi-Annual Report 2022
was approved. A total of 21 awardees were eligible for this unlocking, with 377,083 restricted shares
(0.0054% of the Company’s total existing share capital) unlocked for public trading on 22 June 2022, of
which 25,000 shares were unlocked for senior management Zhao Wenxin.
G. Overview of the 2019 Restricted Share Incentive Scheme
a. The Company convened the Third Meeting of the Fourth Board of Directors on 24 December 2021 and
the First Extraordinary General Meeting of Shareholders of 2022 on 14 January 2022, at which the
Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019 Restricted Share
Incentive Scheme was approved. As such, it was agreed to repurchase and retire 771,042 restricted
shares that had been granted to 18 awardees but were still in lockup, for the reasons of their resignation
or being reassigned. The retirement of the said restricted shares was completed on 20 April 2022.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Exercise Prices, Repurchase Prices and Grant Prices for the
Equity Incentive Schemes was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the repurchase price for the 2019 Restricted Share Incentive Scheme was revised from RMB22.63
to RMB20.96 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2019 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 1,348,916 restricted shares that had been granted to 81 awardees but were still in
lockup, for the reasons of their resignation, being reassigned, substandard 2021 individual or business
unit performance or other factors.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the 2019 Restricted Share Incentive Scheme was approved. A total of 334 awardees
were eligible for this unlocking, with 5,247,500 restricted shares (0.0750% of the Company’s total existing
share capital) unlocked for public trading on 11 July 2022, of which 25,000 shares, 30,000 shares and
25,000 shares were unlocked for senior management Zhao Wenxin, Wang Jinliang and Guan Jinwei,
respectively.
98
Midea Group Co., Ltd. Semi-Annual Report 2022
H. Overview of the 2020 Restricted Share Incentive Scheme
a. The Company convened the Third Meeting of the Fourth Board of Directors on 24 December 2021, at
which the Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020
Restricted Share Incentive Scheme was approved. As such, it was agreed to repurchase and retire
1,314,501 restricted shares that had been granted to 30 awardees but were still in lockup, for the reasons
of their resignation, being reassigned, violation of the Company’s “Red Lines” or other factors. The
retirement of the said restricted shares was completed on 20 April 2022.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Exercise Prices, Repurchase Prices and Grant Prices for the
Equity Incentive Schemes was approved. As the 2021 Annual Profit Distribution Plan had been carried
out, the repurchase price for the 2020 Restricted Share Incentive Scheme was revised from RMB22.85
to RMB21.18 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2020 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 1,914,495 restricted shares that had been granted to 154 awardees but were still
in lockup, for the reasons of their resignation, being reassigned, substandard 2021 individual or business
unit performance or other factors.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Second
Unlocking Period for the 2020 Restricted Share Incentive Scheme was approved. A total of 443 awardees
were eligible for this unlocking, with 7,899,587 restricted shares (0.1129% of the Company’s total existing
share capital) unlocked for public trading on 19 July 2022, of which 36,000 shares, 30,000 shares and
36,000 shares were unlocked for senior management Zhao Wenxin, Li Guolin and Wang Jinliang,
respectively.
I. Overview of the 2021 Restricted Share Incentive Scheme
a. The Company convened the Third Meeting of the Fourth Board of Directors on 24 December 2021, at
which the Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021
99
Midea Group Co., Ltd. Semi-Annual Report 2022
Restricted Share Incentive Scheme was approved. As such, it was agreed to repurchase and retire
290,000 restricted shares that had been granted to 7 awardees but were still in lockup, for the reasons
of their resignation, being reassigned, violation of the Company’s “Red Lines” or other factors. The
retirement of the said restricted shares was completed on 20 April 2022.
b. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive Schemes
was approved. As the 2021 Annual Profit Distribution Plan had been carried out, the repurchase price for
the 2021 Restricted Share Incentive Scheme was revised from RMB39.92 to RMB38.25 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2021 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 1,100,000 restricted shares that had been granted to 21 awardees but were still in
lockup, for the reasons of their resignation, being reassigned or other factors.
J. Overview of the 2022 Restricted Share Incentive Scheme
a. The Company convened the Seventh Meeting of the Fourth Board of Directors on 28 April 2022, at
which the 2022 Restricted Share Incentive Scheme (Draft) and its Abstract of Midea Group Co., Ltd. was
approved. And the awardee list for the 2022 Restricted Share Incentive Scheme (Draft) was reviewed at
the Fourth Meeting of the Fourth Supervisory Committee.
b. The Company convened the 2021 Annual General Meeting of Shareholders on 20 May 2022, at which
the following proposals in relation to the 2022 Restricted Share Incentive Scheme were approved: the
Proposal on the 2022 Restricted Share Incentive Scheme (Draft) and its Abstract, the Proposal on the
Formulation of the Implementation and Appraisal Measures for the 2022 Restricted Share Incentive
Scheme, and the Proposal on the Request to the General Meeting of Shareholders for Authorizing the
Board of Directors to Handle Matters in Relation to the 2022 Restricted Share Incentive Scheme, etc.
c. The Company convened the Ninth Meeting of the Fourth Board of Directors on 8 June 2022, at which
the Proposal for the Adjustments to the Grant Price, Awardee List and Granted Number for the 2022
Restricted Share Incentive Scheme was approved. As the 2021 Annual Profit Distribution Plan had been
100
Midea Group Co., Ltd. Semi-Annual Report 2022
carried out, the number of awardees and total restricted shares under the 2022 Restricted Share Incentive
Scheme was revised from 199 to 197 awardees, and from 12,630,000 to 12,450,000 shares, respectively.
d. On 13 July 2022, the Company granted 12,152,500 restricted shares to 191 awardees with the grant
price being RMB26.47 per share, of which senior management Wang Jinliang, Li Guolin, Jiang Peng and
Zhao Wenxin were granted 80,000 shares each.
4.2 Employee stock ownership schemes
Applicable □N/A
Outstanding employee stock ownership schemes during the Reporting Period
As a percentage
Scope of Number of
Total shares held Change of the Company’s Funding source
employees employees
total share capital
Employees under
the Fourth Global
Special fund for the
Partner Stock 20 3,318,540 N/A 0.0474%
scheme
Ownership
Scheme
Employees under
Special fund for the
the First Business
scheme and part of the
Partner Stock 50 1,779,300 N/A 0.0254%
performance bonuses for
Ownership
senior management
Scheme
Employees under
the Fifth Global
Special fund for the
Partner Stock 16 3,732,075 N/A 0.0533%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Second
scheme and part of the
Business Partner 45 1,867,845 N/A 0.0267%
performance bonuses for
Stock Ownership
senior management
Scheme
Employees under
the Sixth Global
Special fund for the
Partner Stock 17 3,537,663 N/A 0.0506%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Third Business
scheme and part of the
Partner Stock 46 1,873,559 N/A 0.0268%
performance bonuses for
Ownership
senior management
Scheme
Employees under
the Seventh Global
Special fund for the
Partner Stock 15 2,436,518 N/A 0.0348%
scheme
Ownership
Scheme
Employees under
Special fund for the
the Fourth
scheme and part of the
Business Partner 44 1,985,611 N/A 0.0284%
performance bonuses for
Stock Ownership
senior management
Scheme
Shares held by directors, supervisors and senior management under employee stock ownership schemes
101
Midea Group Co., Ltd. Semi-Annual Report 2022
during the Reporting Period
Shares held at the Shares held at the As a percentage of
Name Office title beginning of the end of the Reporting the Company’s total
Reporting Period Period share capital
Fang Hongbo, Yin
Bitong, Gu Yanmin,
Wang Jianguo,
Zhang Xiaoyi, Hu
Ziqiang, Wang Certain directors and
Jinliang, Li Guolin, senior management 9,172,335 9,172,335 0.1310%
Fu Yongjun, Guan of the Company
Jinwei, Bai Lin,
Zhong Zheng, Zhao
Wenxin, and Jiang
Peng
Change of asset management organizations during the Reporting Period
□Applicable N/A
Equity changes incurred by disposal of shares by holders, etc. during the Reporting Period
□Applicable N/A
4.3 Other incentive measures for employees
□Applicable N/A
102
Midea Group Co., Ltd. Semi-Annual Report 2022
Section V Environmental and Social Responsibility
1. Major Environmental Issues
Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities
Yes □ No
Name of Numb
the er of Approve
Concentration Total
Compan Major disch Distribution of discharge Pollutant discharge d total Excess
Discharge method of the discharge
y or pollutants arge outlets standards discharg discharge
discharge (ton)
subsidiar outlet e (ton)
y s
Foshan COD 34 mg/L 0.00012 0.228 No
Shunde SS 122.5 mg/L 0.0003674 / No
Midea Discharge after being treated by The southern side of 2# Discharge Limits of Water
Washing BOD5 115.2 mg/L 0.0003456 / No
wastewater treatment system and 1 plant in the Washing and Pollutants (DB44/26-2001)
Applianc Petroleum reaching the standard Sterilizing Appliances Park 0.06 mg/L of Guangdong Province 0.0000018 / No
es
Manufact Ammonia- 0.8205mg/L
0.0000024
0.0576 No
uring nitrogen 61
Co., Ltd. Benzene 0.025 mg/m 0.00105 / No
(the
Washing Toluene and Emission Standard of
0.54 mg/m 0.024 / No
and xylene The southern side of 2# Volatile Organic
High altitude discharge after being
Sterilizin 1 plant in the Washing and Compounds for Furniture
treated by waste gas treatment station
g Sterilizing Appliances Park Manufacturing (DB44/814-
VOCS 4.48 mg/m 2010) 0.3852 / No
Applianc
es Park)
Wuhu COD 112 mg/L 20.16 70.898 No
Midea Ammonia- Discharge after being treated by Integrated Wastewater
Kitchen Western gate of the Wuhu 1.11 mg/ L 0.2 2.496 No
nitrogen wastewater treatment system and 1 Discharge Standard
& Bath plant
BOD5 reaching the standard 34.1mg/ L (GB8978-1996) 6.14 / No
Applianc
es Mfg. Petroleum 1.43mg/ L 0.26 / No
103
Midea Group Co., Ltd. Semi-Annual Report 2022
Co., Ltd. Total
2.16 mg/m 0.39 / No
phosphorus
Fluoride 5.25 mg/m 0.95 / No
Soot 19.91 mg/m 4.59 / No
Sulfur Emission Standard of Air
<3mg/m 1 / No
dioxide 15m high altitude discharge Pollutants for Boiler
(GB13271-2014)
Nitrogen
18.2mg/m 4.2 / No
oxide
Particles 71.15mg/m Integrated Emission 138 / No
45 Plants at each workshop
Standards for Atmospheric
Xylene <0.01mg/m Pollutants (GB16297-1996) 0.001 / No
High altitude discharge after being Emission Control Standard
treated by waste gas treatment station for Industrial Enterprises
VOCs 5.22mg/m Volatile Organic 6.8 / No
Compounds (DB13-2322-
2016)
COD 55.78 mg/ L Implementation of the 1.652
Ammonia- takeover standards of the
11.09 mg/ L Western Hefei Group 0.3276
nitrogen
wastewater treatment plant
BOD5 67.10 mg/ L and Integrated Wastewater 1.9818
Total Discharge Standard
35.40 mg/ L (GB8978-1996) Level 3 1.0456
nitrogen
Integrated Emission
Total Discharge after being treated by
Hefei The eastern side of 1# 1.76 mg/ L Standards for Atmospheric 0.0520
phosphorus wastewater treatment system and 1 / No
Midea plant Pollutants GB16297-1996
reaching the standard
Heating Anionic Level 2
1.72 mg/ L 0.0508
& surfactant Implementation of the
Ventilatin takeover standards of the
Suspended
g 100.33 mg/ L Western Hefei Group 2.9634
matters
Equipme wastewater treatment plant
nt Co., Petroleum 0.25 mg/ L and Integrated Wastewater 0.0073
Ltd. Discharge Standard
pH value 7.63 /
(GB8978-1996) Level 3
1 set at the northeastern
side of 3# plant and 1 at Integrated Emission
RTO equipment 2 2.765mg/m 0.188
the southwestern side of Standards for Atmospheric
NMHC 4# plant / No
Pollutants GB16297-1996
Water spray + activated carbon 2 sets at 1# plant and 1 Level 2
3 3.122 mg/m 0.162
equipment set at 2# plant
104
Midea Group Co., Ltd. Semi-Annual Report 2022
2 at 1# plant, 1 at 2# plant,
Two-stage activated carbon equipment 7 1 at 3# plant, 2 at 4# plant 12.27 mg/m 0.699
and 1 cyclopentane
1 at 1# plant, 2 at 2# plant,
Particles Filter cartridge dust collector 6 2 at 3# plant and 1 at 4# 0.527 mg/m 0.729 / No
plant
The eastern side of Implementation of the
COD wastewater treatment 39mg/L takeover standards of the 4.335 58.150 No
station Western Hefei Group
Discharge after being treated by
1 wastewater treatment plant
wastewater treatment station The eastern side of
Ammonia- and Integrated Wastewater
wastewater treatment 1.23 mg/L Discharge Standard 0.42 / No
nitrogen
station (GB8978-1996) Level 3
Hefei
Midea 15m high altitude discharge after being
Laundry Particles treated by cyclone + filter cartridge 2 1 at 2# plant, 1 at 6# plant < 20 mg/m 0.13 / No
Applianc dust collector
e Co., Particles 15m high altitude discharge after being < 20 mg/m 0.88 / No
Ltd. treated by water spraying +
1 1 at 3# plant
(monitor NMHC dedusting+ UV photolysis + activated 1.39 mg/m 0.12 / No
ed by the carbon Table 5 of the Emission
municipa Standards of Industrial
15m high altitude discharge after being Pollutants in the Synthetic
l NMHC 3 1 at 2# plant 1.89mg/m 0.13 / No
treated by waste gas treatment station Resin Industry (GB 31572-
governm
ent) 15m high altitude discharge after being 2015): Special Emission
NMHC 6 6 at 6# plant 0.98 mg/m Limit Requirements 0.16 / No
treated by waste gas treatment station
15m high altitude discharge after being
NMHC 2 1 at 1# plant, 1 at 5# plant 1.13mg/m 0.12 / No
treated by low-temperature plasma
15m high altitude discharge after being
NMHC treated by photocatalyst and activated 2 2 at 3# plant 3.42 mg/m 0.23 / No
carbon
COD 36 mg/L The Discharge Standard of 1.7 9.59 No
GD Water Pollutants for
Midea Ammonia- The southeastern side of
Discharge after being treated by 1.90 mg/L Electroplating (DB441597- 0.09 1.51 No
Air- nitrogen 1 4# plant
wastewater treatment station 2015) Chart 2 PRD
Conditio SS 20 mg/L standard 0.94 / No
ning
Equipme Petroleum 0.98 mg/L 0.05 / No
nt Co., COD Discharge after being treated by The eastern side of 2# 85 mg/L The Discharge Limits of 4.02 9.59 No
Ltd. 1
SS wastewater treatment station plan 58.5 mg/L Water Pollutants (DB44/26- 2.77 / No
105
Midea Group Co., Ltd. Semi-Annual Report 2022
Ammonia- 2001)
2.52 mg/L 0.12 / No
nitrogen
Petroleum 5.02 mg/L 0.24 / No
Emission Standard of
Volatile Organic
15m high altitude discharge after being
VOCs Compounds for Furniture
treated by spray tower + activated 3 4# plant 21.23mg/m 0.47 / No
(dusting) Manufacturing (DB44/814-
carbon
2010) the second time
period
Emission Standard of
VOCs 15m high altitude discharge after being
Volatile Organic
(Screen treated by environmental protection 4 1#, 5#, 9#, 11# plants 1.92 mg/m 0.40 / No
Compounds for Printing
Printing) equipment
Industry (DB44/815-2010)
Emission Standard of
15m high altitude discharge after being
VOCs Volatile Organic
treated by environmental protection 2 10# plants 25.21mg/m 5.04 / No
(electronic) Compounds for Printing
equipment
Industry (DB44/815-2010)
NMHC
15m high altitude discharge after being Emission Limits of Air
(evaporator
treated by environmental protection 6 2#, 5# plants 25 mg/m Pollutants (DB44/27- 2001) 2.13 / No
&
equipment the second time period
condenser)
COD 52 mg/L 3.62 7.5 No
SS 55 mg/L 2.33 / No
Discharge after being treated by Integrated Wastewater
BOD wastewater treatment station The northern side of the 9 mg/L Discharge Standard 3.22 / No
1
park (GB8978-1996) chart 4
Ammonia-
7mg/L Level 3 0.318 0.675 No
nitrogen
Wuhu Petroleum 0.5 mg/L 0.054 / No
Maty Air-
Conditio Integrated Emission
ning Particles 5 2# plant 0.18mg/m Standards for Atmospheric 0.0691 0.148 No
Equipme Pollutants (GB16297-1996)
nt Co., 15m high altitude discharge after being Emission Control Standard
Ltd treated by environmental protection for Industrial Enterprises
VOCs equipment 8 2#, 3# plants 32 mg/m Volatile Organic 3.82 / No
Compounds (DB13-2322-
2016)
NOX 3 3# plant 0.48 mg/m Integrated Emission 0.242 0.515 No
Standards for Atmospheric
SO2 3 3# plant < 3 mg/m Pollutants (GB16297-1996) 0.942 2.209 No
106
Midea Group Co., Ltd. Semi-Annual Report 2022
COD 44 mg/L 8.615 16.28 No
Suspended
9 mg/L 1.762 / No
matters
Petroleum 2.53 mg/L Discharge Standard of 0.495 / No
Water Pollutants for
Total
Near the wastewater 0.96 mg/L Electroplating DB 44/1597- 0.188 / No
phosphorus Discharge after being treated by 2015
1 treatment station in the
Total zinc wastewater treatment station 0.16 mg/L 0.031 / No
north side of the plant
pH value 7.9 mg/L 1.547 / No
Total
4.11 mg/L 0.805 / No
nitrogen
Ammonia- The discharge limits of
0.257 mg/L 0.050 2.034 No
nitrogen water pollutants in
Fluoride 0.1 mg/L Guangdong DB44/26-2001 0.020 / No
Guangdo
Emission Limits of Air
ng
Meizhi Pollutants（DB44/27-
Precision 15m high altitude discharge after being 2001）/
- Particles treated by environmental protection 7 Roof of the plant 23.58 mg/m Emission Standard of Air 17.17 / No
Manufact equipment Pollutants for Industrial Kiln
uring and Furnace（GB 9078-
Co., Ltd 1996）
15m high altitude discharge after being
Sulfur Less than the
treated by environmental protection 4 Roof of the plant 0 0.436 No
dioxide limit Emission Standard of Air
equipment
Pollutants for Boiler
15m high altitude discharge after being （DB44/765-2019）
Oxynitride treated by environmental protection 4 Roof of the plant 3.14 mg/m 0.855 2.039 No
equipment
15m high altitude discharge after being
VOCs treated by environmental protection 10 Roof of the plant 3.98 mg/m 2.647 4.553 No
equipment Emission Standard of
Volatile Organic
15m high altitude discharge after being
Compounds for Surface
Benzene treated by environmental protection Roof of the plant 0.035 mg/m 0.008 / No
Coating of Automobile
equipment
2 Manufacturing Industry
Total 15m high altitude discharge after being （DB44/816-2010）
toluene and treated by environmental protection Roof of the plant 0.469 mg/m 0.111 / No
xylene equipment
107
Midea Group Co., Ltd. Semi-Annual Report 2022
COD 45 mg/L 3.078 6.046 No
Suspended
7 mg/L 0.479 / No
matters
Petroleum 0.45 mg/L 0.031 / No
Total The Discharge Standard of
0.54 mg/L 0.037 / No
phosphorus Water Pollutants for
Near the wastewater
Total zinc Discharge after being treated by 0.21 mg/L Electroplating of 0.014 / No
1 treatment station in the
wastewater treatment station Guangdong Province DB-
pH value north side of the plant 7.4 mg/L / / No
441597-2015, before 1
Total September 2012
2.26 mg/L 0.155 / No
nitrogen
Ammonia-
0.133 mg/L 0.009 0.756 No
nitrogen
Fluoride 0.1 mg/L 0.007 / No
Total nickel 0.06 mg/L 0.004 0.024 No
Guangdo Emission Limits of Air
ng Pollutants（DB44/27-
Meizhi
Over-15m high altitude discharge after 2001）/
Compres Roof of main plant and
sor Particles being treated by environmental 17 28.485 mg/m Emission Standard of Air 3.905 8.705 No
metal plate workshop
Limited protection equipment Pollutants for Industrial Kiln
and Furnace（GB 9078-
1996）
Over-15m high altitude discharge after
Sulfur Roof of main plant and Less than the
being treated by environmental 11 0 0.799 No
dioxide metal plate workshop limit Emission Standard of Air
protection equipment
Pollutants for Boiler
Over-15m high altitude discharge after （DB44/765-2019）
Roof of main plant and
Oxynitride being treated by environmental 11 3 mg/m 1.196 7.814 No
metal plate workshop
protection equipment
Over-15m high altitude discharge after
Roof of main plant and
Benzene being treated by environmental 2 4.03 mg/m 0.004 / No
metal plate workshop Emission Standard of
protection equipment
Volatile Organic
Total Over-15m high altitude discharge after
Roof of main plant and Compounds for Surface
toluene and being treated by environmental 2 0.368 mg/m 0.037 / No
metal plate workshop Coating of Automobile
xylene protection equipment
Manufacturing Industry
Over-15m high altitude discharge after （DB44/816-2010）
Roof of main plant and
VOCs being treated by environmental 7 4.11 mg/m 1.872 5.718 No
metal plate workshop
protection equipment
108
Midea Group Co., Ltd. Semi-Annual Report 2022
CODcr 52.5 mg/L 2.15 15.304 No
Discharge Standard of
Discharge after being treated by Waste water treatment
Petroleum 0.17 mg/L Water Pollutants for 0.006 / No
wastewater treatment system and 2 stations 1 and 2 of 3#
Electroplating (DB44/1597-
Ammonia- reaching the standard plant 0.53 mg/L
nitrogen 2015) 0.023 1.913 No
Total Waste gas sprayers 1 and Table 1 of the Emission
High altitude discharge after being 2 at 3# plant, outlets 1, 2 0.1208 mg/m Standard of Volatile
toluene and 0.315 / No
treated by waste gas treatment station and 3 for waste gas from Organic Compounds for
xylene
wave-soldering, painting Furniture Manufacturing
8
and drying at 6# plant, (DB44/814-2010):
Foshan VOCs
High altitude discharge after being outlets 1 and 2 for waste 0.8711 mg/m Discharge Limits for VOCs 2.178 22.72 No
Shunde treated by waste gas treatment station gas from reflow soldering through Exhaust Funnel/for
Midea at 6# plant Time Period II
Electrical Outlet of injection molding Table 4 of the Emission
Heating waste gas in the south Standards of Industrial
Applianc High altitude discharge after being side of 1# plant, outlet of Pollutants in the Synthetic
es NMHC 2 0.14 mg/m 0.067 / No
treated by waste gas treatment station injection molding waste Resin Industry (GB 31572-
Manufact gas in the south side of 9# 2015): Emission Limits of
uring plant Air Pollutants
Co., Ltd. Outlets 1 and 2 of sanding
waste gas at 3# plant, Table 2 of the Emission
Particles Pulse bag dust collecting 4 0.1856 mg/m 0.072 / No
outlets 1 and 2 of polishing Limits of Air Pollutants
waste gas at 3# plant (DB44/27-2001): Emission
Sulfur Oxidation wire roof of 3# Limits of Industrial Waste
High altitude discharge after being 3.25 mg/m Gas (Time Period 2), Level 0.072 3.8231 No
dioxide 2 plant
treated by waste gas treatment station 2
Oxynitride Drying furnace of 3# plan 1.625 mg/m 0.427 13.132 No
Emission Standard of
Cooking Discharge after being treated by waste South and north section
2 0.15 mg/m Cooking Fume (Trial) (GB 0.046 / No
fume gas treatment station canteens
18483-2001)
CODcr 28 mg/L 0.875 4.8 No
Petroleum 0.06 mg/L Discharge Standard of 0.00188 / No
Discharge after being treated by
Water Pollutants for
Guangdo SS wastewater treatment system and 1 Sewage treatment station 18.5 mg/L 0.5792 / No
Electroplating (DB44/1597-
ng Midea reaching the standard
Ammonia- 2015)
Consum 0.7885 mg/L 0.2463 0.96 No
nitrogen
er
Electric High altitude discharge after being Table 1 of the Emission
Benzene 0.01 mg/m 0.000163 / No
Manufact treated by waste gas treatment station Standard of Volatile
uring Organic Compounds for
High altitude discharge after being Spraying waste gas outlet
Co., Ltd. Toluene 1 0.09 mg/m Furniture Manufacturing 0.0015 / No
treated by waste gas treatment station at 1# plant
(DB44/814-2010):
High altitude discharge after being Discharge Limits for VOCs
Xylene 1.08 mg/m 0.0135 / No
treated by waste gas treatment station through Exhaust Funnel/for
109
Midea Group Co., Ltd. Semi-Annual Report 2022
Total Time Period II
High altitude discharge after being
toluene and 1.17 mg/m 0.01497 / No
treated by waste gas treatment station
xylene
High altitude discharge after being
VOCs 4.45 mg/m 0.0571 0.61 No
treated by waste gas treatment station
Injection molding waste Table 4 of the Emission
gas outlet in the southern Standards of Industrial
High altitude discharge after being side of 2# plant, injection Pollutants in the Synthetic
NMHC 2 0.5575 mg/m 0.04107 0.104 No
treated by waste gas treatment station molding waste gas outlet Resin Industry (GB 31572-
in the northern side of 2# 2015): Emission Limits of
plant Air Pollutants
Sanding waste gas outlet Table 2 of the Emission
of 1# plant Limits of Air Pollutants
Particles Pulse bag dust collecting 7 0.45 mg/m (DB44/27-2001): Emission 0.03314 / No
Polishing waste gas outlet
of 1# plant Limits of Industrial Waste
Gas (Time Period 2), Level
Sulfur High altitude discharge after being 2
<3 mg/m 0.01567 0.028 No
dioxide treated by waste gas treatment station
1 Drying furnace of 1# plant Emission Standard of Air
High altitude discharge after being Pollutants for Boiler
Oxynitride <3 mg/m 0.0329 0.131 No
treated by waste gas treatment station （DB44/765-2019）
Emission Standard of
Cooking Discharge after being treated by waste
1 Canteen of 1# plant 0.575 mg/m Cooking Fume (GB 18483- 0.00942 / No
fume gas treatment station
2001)
Implementation of the
COD 16 mg/L takeover standards of the 3.36 / No
The western side of the
Discharge after being treated by Western Hefei Group
comprehensive
wastewater treatment system and 1 wastewater treatment plant
wastewater treatment
Ammonia- reaching the standard and Integrated Wastewater
station 0.149 mg/L 0.059 / No
nitrogen Discharge Standard
(GB8978-1996) Level 3
Anhui No. 1 workshop welding
Meizhi soot discharge outlet for 6.7mg/m
Integrated Emission
Compres waste gas
Standards for Atmospheric
sor Co., No. 3 workshop discharge
Pollutants (GB16297-1996)
Ltd. outlet for the welding 6.4 mg/m
Collected by gas trap hood+15m high waste gas
Particles 13 5.46 65.45 No
exhaust cylinder Waste gas outlet of 1#
heat-treating furnace at 7.6 mg/m Emission Standard of Air
No. 2 workshop Pollutants for Industrial Kiln
Waste gas outlet of 2# and Furnace (GB9078-
heat-treating furnace at 7.0 mg/m 1996)
No. 2 workshop
110
Midea Group Co., Ltd. Semi-Annual Report 2022
Integrated Emission
Waste gas outlet for die
5.9 mg/m Standards for Atmospheric
casting at No. 2 workshop
Pollutants (GB16297-1996)
Waste gas outlet for die Integrated Emission
6.6 mg/m
casting at No. 4 workshop Standards for Atmospheric
Waste gas outlet of 1# Pollutants (GB16297-1996)
heat-treating furnace at 5.9 mg/m Emission Standard of Air
No. 4 workshop Pollutants for Industrial Kiln
and Furnace (GB9078-
1996)
Waste gas outlet of 2#
Emission Standard of Air
heat-treating furnace at 5.6 mg/m
Pollutants for Industrial Kiln
No. 4 workshop
and Furnace (GB9078-
1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 6.5 mg/m Standards for Atmospheric
at No. 1 workshop Pollutants (GB16297-1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 3.5 mg/m Standards for Atmospheric
at No. 3 workshop Pollutants (GB16297-1996)
Emission Standard of Air
Waste gas outlet of 1#-3#
4.7 mg/m Pollutants for Boiler
furnaces
（GB13271-2014）
Emission Standard of Air
Waste gas outlet of 1#-3# Pollutants for Boiler
<3 mg/m
furnaces
（GB13271-2014）
Outlet of 1# heat-treating
58 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
Sulfur Collected by gas trap hood+15m high 21 mg/m
9 furnace at No. 2 workshop 19.26 112.2 No
dioxide exhaust cylinder Air Pollutant Emission
Waste gas outlet for die
<3 mg/m Standards (GB16297-
casting at No. 2 workshop
Outlet of 1# heat-treating 1996) Standard Level 2
116 mg/m
furnace at No. 4 workshop
Outlet of 2# heat-treating
29 mg/m
furnace at No. 4 workshop
Waste gas outlet for die
14 mg/m
casting at No. 4 workshop
Emission Standard of Air
Collected by gas trap hood+15m high Waste gas outlet of 1#-3#
Oxynitride 9 25 mg/m Pollutants for Boiler 6.63 33.24 No
exhaust cylinder furnaces
（GB13271-2014）
111
Midea Group Co., Ltd. Semi-Annual Report 2022
Outlet of 1# heat-treating
25 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
33 mg/m
furnace at No. 2 workshop
Waste gas outlet for die
11 mg/m Air Pollutant Emission
casting at No. 2 workshop
Standards (GB16297-
Outlet of 1# heat-treating
8 mg/m 1996) Standard Level 2
furnace at No. 4 workshop
Outlet of 2# heat-treating
<3 mg/m
furnace at No. 4 workshop
Waste gas outlet for die
9mg/m
casting at No. 4 workshop
Waste gas outlet of the
drying furnace at No. 1 4.62 mg/m
workshop
Collected by gas trap hood+15m high Waste gas outlet of 1# Emission Control Standard
exhaust cylinder drying furnace at No. 3 10.5 mg/m for Industrial Enterprises
VOCs 4 workshop Volatile Organic 1.13 21.6 No
Direct-fired waste gas incinerator+15m Compounds (DB12/ 524-
high exhaust cylinder Die casting at No. 2
0.74 mg/m 2020)
workshop
Die casting at No. 4
1.14 mg/m
workshop
Emission Standard of
Volatile Organic
Waste gas outlet around Less than the Compounds for Furniture
Benzene Zeolite drum + RTO 1 0.00 / No
plant C limit Manufacturing (DB44/814-
2010) the second time
period
Guangdo
Emission Standard of
ng
Volatile Organic
Welling Total
Waste gas outlet around Compounds for Furniture
Motor toluene and Zeolite drum + RTO 1 0.255 mg/m 0.62 / No
plant C Manufacturing (DB44/814-
Manufact xylene
2010) the second time
uring
period
Co., Ltd.
Emission Standard of
Volatile Organic
Waste gas outlet around Compounds for Furniture
Total VOCs Zeolite drum + RTO 1 3.17mg/m 0.81 17.09 No
plant C Manufacturing (DB44/814-
2010) the second time
period
112
Midea Group Co., Ltd. Semi-Annual Report 2022
COD Discharge to the municipal sewage The eastern side of 60 mg/L The Discharge Limits of 6.03 22.77 No
system after being treated by 1 wastewater treatment Water Pollutants in
Ammonia-
wastewater treatment system station in Malong base 0.457 mg/L Guangdong DB-44/26- 20 0.029 4.554 No
nitrogen
Emission Standard of
Particles 0.34 mg/m Volatile Organic 1.18 / No
Sulfur Compounds for Furniture
7 mg/m Manufacturing (DB44/814- 0.262 1.055 No
dioxide
2010)/Emission Standard
Oxynitride 9 mg/m of Volatile Organic 2.33 10.314 No
Guangdo Less than the Compounds for Surface
ng Midea Benzene 20m high altitude discharge after being limit Coating of Automobile 0.027 / No
Kitchen treated by waste gas treatment 26 outlets at A1 plant, 47 Manufacturing Industry
Applianc Total equipment and reaching the standard outlets at A2 plant, 21 (DB44/816-2010)/Emission
es toluene and outlets at B2 plant, 9 0.11 mg/m Standards of Industrial 1.13 / No
Manufact xylene outlets at C2 plant, 2 Pollutants in the Synthetic
112
uring VOCs outlets at C3 plant, 1 outlet 8.35 mg/m Resin Industry (GB 31572- 5.97 35.051 No
Co., Ltd. at wastewater treatment 2015)/Guangdong
NMHC 2.15 mg/m 0.15 / No
station and 6 outlets at Province Emission Limits
Styrene canteen 12.91 mg/m of Air Pollutants (DB44/27- 0.473 / No
2001)/Emission Standard
of Volatile Organic
15m high altitude discharge after being Compounds for Printing
Fume treated by oil fume purification facility 0.17 mg/m Industry (DB44/815- 0.024 / No
and reaching the standard 2010)/Emission Standard
of Cooking Fume (on Trial)
(GB18483-2001)
Collected by gas trap hood + dust Integrated Emission
Exhaust funnels 1 and 2
Particles collector + activated carbon +15m high 2 13.8 mg/m Standards for Atmospheric 1.562 / No
for mold injection
exhaust cylinder Pollutants (GB16297-1996)
Emission Standard of Air
Collected by gas trap hood+15m high Waste gas outlets 1-7 of Pollutants for Industrial Kiln
Welling VOCs 7 19.4 mg/m 3.1752 / No
exhaust cylinder the die casting workshop and Furnace (GB9078-
(Wuhu) 1996)
Motor
Hebei Province Standard
Manufact
DB13/2322-2016 The
uring Exhaust funnels 1 and 2
VOCs Activated carbon + UV photolysis 2 19.4 mg/m Concentration Limits at 1.224 / No
Co., Ltd. for dip coating
Emission Reference Point
for Coating Operations
COD Discharge after being treated by 80 mg/L Integrated Wastewater 1.2096 / No
Ammonia- wastewater treatment system and 1 General wastewater outlet Discharge Standard
reaching the standard 20 mg/L (GB8978-1996) chart 4 0.2592 / No
nitrogen
113
Midea Group Co., Ltd. Semi-Annual Report 2022
BOD 30 mg/L Level 3 1.0368 / No
SS 23 mg/L 0.3368 / No
Petroleum 0.87 mg/L 0.0791 / No
COD 115.3mg/L 41.728 / No
Ammonia-
20.8mg/L Integrated Wastewater 7.528 / No
nitrogen Discharge after being treated by The south side of Building
Discharge Standard
wastewater treatment system and 1 6 for night shift at the north
BOD 31.4 mg/L (GB8978-1996) chart 4 11.364 / No
reaching the standard side of the plant area
Level 3
SS 20.7 mg/L 7.492 / No
Petroleum 0.32 mg/L 0.116 / No
Welding waste gas outlet Requirements in Table 1 of
13.65 mg/m
1# Integrated Emission
Collected by gas trap hood +21m high
Standards of Air Pollutants
exhaust cylinder Welding waste gas outlet
12.1 mg/m of Shanghai (DB31/933-
2# 2015)
Heat-treating furnace 1# 11.35 mg/m
Heat-treating furnace 2# 15.35 mg/m
Particles 10 6.7402608 / No
Anhui Heat-treating furnace 3# 12.55 mg/m
Meizhi Integrated emission
Collected by gas trap hood +21m high Heat-treating furnace 10.8 mg/m standards for atmospheric
Precision
Manufact exhaust cylinder Drying waste gas outlet 1# 6.5 mg/m pollutants GB16297-1996,
chart 2, Level 2
uring Drying waste gas outlet 2# 8.75 mg/m
Co., Ltd.
Drying waste gas outlet 3# 6.7 mg/m
Drying waste gas outlet 4# 8.45 mg/m
Heat-treating furnace 1# 5.25 mg/m
Heat-treating furnace 2# 5.75 mg/m
Emission limit standards
Heat-treating furnace 3# 5.25 mg/m
for other industrial furnaces
and kilns in the
Sulfur Collected by gas trap hood +21m high Heat-treating furnace 1.5 mg/m 1.4875075
8 Comprehensive Control / No
dioxide exhaust cylinder 8
Plan for Air Pollution of
Drying waste gas outlet 1# 3.25 mg/m Industrial Furnaces
(H.D.Q.[2019] NO.56)
Drying waste gas outlet 2# 3.75 mg/m
Drying waste gas outlet 3# 1.5 mg/m
114
Midea Group Co., Ltd. Semi-Annual Report 2022
Drying waste gas outlet 4# 4.75 mg/m
Heat-treating furnace 1# 10.75 mg/m
Heat-treating furnace 2# 7.75 mg/m
Heat-treating furnace 3# 1.5 mg/m
Collected by gas trap hood +21m high Heat-treating furnace 1.5 mg/m 1.5072805
Oxynitride 8 / No
exhaust cylinder Drying waste gas outlet 1# 5.75 mg/m 8
Drying waste gas outlet 2# 1.5 mg/m
Drying waste gas outlet 3# 3.75 mg/m
Drying waste gas outlet 4# 7.75 mg/m
Direct-fired waste gas incinerator+21m Drying waste gas outlet 1# 7.385 mg/m NMHC emissions meet the
2 relevant standard limit
high exhaust cylinder Drying waste gas outlet 2# 10.4 mg/m
requirements in Table 1 of
VOCs Drying waste gas outlet 3# 10.255 mg/m Shanghai Integrated 2.8546128 / No
Adsorption and desorption catalytic
2 Emission Standards for
combustion +21m high exhaust
cylinder Drying waste gas outlet 4# 6.81 mg/m Atmospheric Pollutants
(DB31/933-2015)
Emission Standard of
Gas trap hood + dry filtering + UV +
During the screen printing Volatile Organic
activated carbon + 15m high altitude 2 0.19 mg/m 0.0122 / No
process Compounds for Printing
discharge
Industry (DB44/815-2010)
Dry filtering + direct combustion of Outlet for waste gas from Emission Standards for
natural gas +15m high altitude 2 dip coating, drying and 28.01 mg/m Odor Pollutants GB14554- 1.746 3.42 No
GD discharge hardening 93
Midea VOCs
Emission Limits of Air
Environ Gas trap hood + dry filtering + UV + Pollutants (DB44/27-2001):
During the manual welding
ment activated carbon + 15m high altitude 1 4.31 mg/m Time Period 2, Level 2 0.0626 / No
process
Applianc discharge
es Mfg.
Co.,Ltd. Gas trap hood + dry filtering + UV + During the wave soldering Emission Limits of Air
activated carbon + 15m high altitude 3 process (paste printing 16.4 mg/m Pollutants (DB44/27-2001): 1.177 / No
discharge and wave reflow) Time Period 2, Level 2
Exhaust funnel for waste Emission Standards of
Gas trap hood + dry filtering + UV +
gas from the baking and Industrial Pollutants in the
NMHC activated carbon + 15m high altitude 6 1.985 mg/m 0.4347 / No
injection molding Synthetic Resin Industry
discharge
processes （BG 31572-2015）
115
Midea Group Co., Ltd. Semi-Annual Report 2022
Emission Standards of
Gas trap hood + dry filtering + UV +
Metal plate dusting waste Industrial Pollutants in the
activated carbon + 15m high altitude 3 2.11 mg/m 0.110 / No
gas exhaust cylinder Synthetic Resin Industry
discharge
（BG 31572-2015）
Gas trap hood + water spraying + dry Emission Limits of Air
Particles filtering + UV + activated carbon + 1 Dusting waste gas 0.39 mg/m Pollutants (DB44/27-2001): 0.140 / No
15m high altitude discharge Time Period 2, Level 2
Emission Standard of
Cooking Fume hood + electrostatic range hood Cooking fume outlet at
7 0.1 mg/m Cooking Fume GB18483- 0.000118 / No
fume + 15m high altitude discharge canteen
2001
Suspended
6 mg/L 0.0839
matters
COD 18.6 mg/L 0.250 / No
Animal and
vegetable 0.06 mg/L Discharge Standard of 0.00896 / No
oil Oil separation and slagging -
Domestic wastewater Pollutants for Municipal
hydrolysis and acidification - contact 1
Ammonia- treatment station Wastewater Treatment
oxidation - MRB
nitrogen 0.052 mg/L Plant GB18918-2002 0.5566 / No
（NH3- N)
pH value 7.06 / / No
Five-day
5.9 mg/L 0.083 / No
BOD
Total zinc 0.002 mg/L 0.0085 / No
COD 8.93 mg/L 0.27 / No
Suspended
8 mg/L 0.155 / No
matters
pH value 7.7 / / No
Total
Discharge Standard of
phosphorus Coagulation and sedimentation + 0.012 mg/L 0.324 / No
（in P ) Domestic wastewater Water Pollutants for
hydrolysis and acidification + aeration 1
treatment station Electroplating DB 44/1597-
+ biological tank + MBR + water reuse
Ammonia- 2015
nitrogen 0.140 mg/L 0.004328 1.724 No
（NH3-N)
Petroleum 0.03 mg/L 0.00087 / No
Total
0.0194 mg/L 0.00011 / No
aluminum
Total iron 0.00144 mg/L 0.00008 / No
116
Midea Group Co., Ltd. Semi-Annual Report 2022
COD 43 mg/L 5.37 15 No
Ammonia-
5.58 mg/L 0.7 2.5 No
nitrogen
Integrated Wastewater
BOD Discharge to the municipal domestic Domestic sewage outlets 14.9 mg/L 1.86 / No
1 Discharge Standard
SS sewage system at the plant 32 mg/L 4 / No
(GB8978-1996)
Animal and
vegetable 2.33 mg/L 0.29 / No
oil
COD 92 mg/L 1.44 15 No
Ammonia-
13.7 mg/L Integrated Wastewater 0.21 2.5 No
nitrogen
Discharge Standard
BOD Discharge to the municipal industrial 17.5 mg/L 0.27 / No
Waste water outlets at the (GB8978-1996)
SS sewage system after deep treatment in 1 7 mg/L 0.11 / No
Hubei Petroleum the industrial sewage treatment station freezer branch plant 0.5 mg/L 0.01 / No
Midea
Refrigera Animal and
tor Co., vegetable 1.2 mg/L 0.2 / No
Ltd. oil
First installation branch
NMHC 1 22.1 mg/m 2.45 / No
waste gas outlets
15m discharge after light and oxygen Second installation branch
NMHC 1 14.5 mg/m 1.87 / No
purification + activated carbon waste gas outlets
adsorption Injection molding
NMHC 1 workshop waste gas 16.8 mg/m Integrated Emission 0.52 / No
outlets Standards for Atmospheric
15m high altitude discharge after dry Pollutants (GB16297-1996)
Extrusion workshop waste
NMHC filtration +light and oxygen purification 1 11 mg/m 0.41 / No
gas outlets
+ activated carbon
NMHC Water scrubber+ Swirl plate tower + 38.1 mg/m 1.15 / No
Cold cabinet branch waste
Demister + activated carbon, 15m high 1
Particles gas outlets 4.6 mg/m 0.14 / No
altitude discharge
123.899
COD 250 mg/L 56.572 No
4
Wuxi SS 87.3 mg/L 24.192 87.2473 No
Little Integrated Wastewater
Animal and Discharge to municipal sewage Exit at the middle gate of
Swan 1 Discharge Standard
network the plant 6.81 mg/L 2.036 10.7034 No
Electric vegetable （GB8978-1996）
Co., Ltd. oil
Total
2.856mg/L 0.473 1.0701 No
phosphorus
117
Midea Group Co., Ltd. Semi-Annual Report 2022
Total
33.43mg/L 5.261 11.2612 No
nitrogen
Ammonia-
26.2mg/L 3.28 6.6906 No
nitrogen
Particles 1.325 mg/m Integrated Emission 0.3367 2.0696 No
VOCS 2.37 mg/m Standards for Atmospheric 0.4852 1.2218 No
1. Activated carbon + 20m high Pollutants（GB16297-
Sulfur 1996）/
dioxide altitude discharge 1. Injection molding 22.25 mg/m 0.3074 0.624 No
2. Water spraying + UV + activated workshop of Building Tianjin Emission Control
carbon + Filter cartridge dust collector C Standard for Industrial
+15m high altitude discharge 2. Buildings A and D Enterprises Volatile
3. Grade 2 activated carbon+15m high 3. Painting workshop Organic Compounds
11
altitude discharge 4. Injection molding DB12/524-2014/
4. Dry Filtering + electrostatic workshop of Building Emission Standards of
Oxynitride degreasing + 15m high altitude C 22.25mg/m Industrial Pollutants in the 0.3262 3.38 No
discharge 5. Crushing workshop Synthetic Resin Industry
5. Pulse dust collecting +15m high of Building C （GB31572-2015）
altitude discharge /Emission Standard of Air
Pollutants for Boiler
（GB13271-2014）
Integrated Emission
Particles 3.2 mg/m Standards for Atmospheric 0.0895 2.697 No
Huaian 5# waste gas outlet:
5#：Grade 3 filtering + honeycomb Pollutants (GB16297-1996)
Welling outside the inductor dip
zeolite + CO Integrated Emission
Motor coating room
NMHC 2 5.85 mg/m Standards for Atmospheric 0.45 1.3853 No
Manufact 8#：Grade 3 filtering + Grade 2 8# waste gas outlet:
Pollutants (GB16297-1996)
uring activated carbon outside the reactor dip
Emission Standards for
Co., Ltd. coating room
Styrene 0.028 mg/m Odor Pollutants (GB14554- 0.002 0.032 No
93)
Midea pH value 7.1 / / No
Group COD 259 mg/L Integrated Wastewater 5.85 19.60 No
Wuhan Discharge after being treated by West Gate 2 of 4# plant on Discharge Standard
Ammonia- wastewater treatment station and 1
Refrigera the west side of plant 0.272 mg/L GB8978-1996 0.0067 1.764 No
nitrogen reaching the standard
tion areas Integrated Emission
Equipme Suspended Standards for Atmospheric
32 mg/L 0.994 / No
nt matters Pollutants (GB16297-1996)
Co.,Ltd. Petroleum 3.64 mg/L 0.087 / No
118
Midea Group Co., Ltd. Semi-Annual Report 2022
Total
0.12 mg/L 0.004 / No
phosphorus
Fluoride 4.22 mg/L 0.083 / No
Total zinc 0.83 mg/L 0.039 / No
BOD5 67.7 mg/L 1.35 / No
Particles 21 4.8 mg/m 2.76 6.09 No
Sulfur 1# plant, 3# plant, 4#
16 4 mg/m 0.39 1.56 No
dioxide plant, 5# plant
Oxynitride 16 28 mg/m 2.19 5.9 No
Discharge after being treated by
Tin and its 5.92*10-4
environmental protection equipment 3 1.68*10-9 / No
compounds mg/m
3# plant Less than the
Acrylonitrile 3 ND / No
limit
Styrene 3 0.098 mg/m 2.78*10-7 / No
VOCs 10 1# plant 3.44 mg/m 1.58 / No
NMHC 9 1#、2# plants 4.74 mg/m 1) NMHC: Implementation 2.51 / No
of the emission
Particles 7 1#、2#、3# plants 1.8 mg/m concentration limits on 0.53 / No
Oxynitride 7 1#、2#、3# plants 7 mg/m organic chemicals in Table 1.47 3.241 No
1 of Emission Control
Sulfur Standard for Industrial
7 1#、2#、3# plants < 3 mg/m 0.42 3.241 No
dioxide Enterprises Volatile
Organic Compounds
Handan (DB13/2322-2016)
Midea 15m high altitude discharge after being 2) Sulfur dioxide/nitrogen
Air- treated by environmental protection oxides/particles:
Conditio equipment Implementation of the new
ning furnace standards in Table
Equipme 1 and Table 2 of Emission
nt Tin and its Standard of Air Pollutants
4 2# plant <3*10-6mg/m 0.00037 / No
Co.,Ltd. compounds for Industrial Kiln and
Furnace (DB13/1640-2012)
3) Tin and its compounds:
Implementation of the
requirements of Level 2 in
the Integrated Emission
Standards for Atmospheric
Pollutants (GB16297-1996)
COD Discharge after being treated by 1 North side of the power 68 mg/L Requirements for inflow 0.51 8.97 No
119
Midea Group Co., Ltd. Semi-Annual Report 2022
Ammonia- wastewater treatment system and house water quality of wastewater
reaching the standard 1 2.9 mg/L treatment plant in Handan 0.029 0.7 No
nitrogen
Economic and
pH 1 7.1 Technological / / No
Suspended Development Zone
1 13mg/L 0.11 / No
matters
Petroleum 1 0.56mg/L Integrated Wastewater 0.0048 / No
Discharge Standard
Fluoride 1 0.18 mg/L (GB8978-1996) chart 4 0.0018 / No
Level 3
pH value 7.7 / / No
COD 293 mg/L 1.868 76.63 No
SS 9 mg/L 0.057 / No
NH3-N 20.5 mg/L 0.1307 5.32 No
Petroleum 0.24 mg/L Integrated Wastewater 0.002 / No
Fluoride Treatment by waste water treatment 1 West gate 11.5 mg/L Discharge Standard 0.0733 / No
Chongqi station and reaching the standard (GB8978-1996) chart 4
BOD5 121 mg/L Level 3 0.7714 / No
ng Midea
Air- LAS 0.105 mg/L 0.0007 / No
Conditio
ning Total zinc 0.03 mg/L 0.0002 / No
Equipme Animal and
nt Co., vegetable 0.43 mg/L 0.003 / No
Ltd. oil
Particles 9.9 mg/m 7.80 / No
SO2 5 mg/m Integrated Emission 1.175 / No
After treatment by environmental
Standards for Atmospheric
NOX protection and treatment facilities and 11 East, west, south and 14 mg/m 2.769 / No
Pollutants DB 50、418-
reaching the standard, 25m high north corners of the plant
Tin and its 2016 Table 1 Central
altitude discharge 0.27 mg/m 0.0029 / No
compounds Downtown
NMHC 2.5 mg/m 0.6321 / No
Chongqi PH 7.65 / / No
ng Midea Suspended Discharge to municipal wastewater Integrated Wastewater
General General sewage discharge 14mg/L Discharge Standard 1.069 / No
matters treatment plant after being treated by 1
Refrigera exit of plant areas (GB8978-1996) Chart 4
COD the wastewater treatment system 122.5mg/L 9.354 / No
tion Level 3
Equipme Ammonia- 7.015mg/L 0.536 / No
120
Midea Group Co., Ltd. Semi-Annual Report 2022
nt Co., nitrogen
Ltd. （NH3-N）
Animal and
vegetable 1.37mg/L 0.105 / No
oil
Petroleum 0.255mg/L 0.019 / No
Five-day
45.35mg/L 3.463 / No
BOD
Anionic
0.147mg/L 0.011 / No
surfactant
Phosphate 0.075mg/L 0.006 / No
Fluoride 4.49mg/L 0.343 / No
Particles 10.742mg/m 1.470 / No
Integrated Emission
Toluene High altitude discharge after being 2 sets for paint waste gas 0.376mg/m Standards for Atmospheric 0.042 / No
4
Xylene treated by waste gas treatment station of 1# and 4# plants each 0.027mg/m Pollutants DB 50/418-2016 0.004 / No
Table 1 Central Downtown
NMHC 3.090mg/m 0.402 / No
5 sets for 1# plant and 4 Integrated Emission
Filter cartridge dust collector 9
sets for 4# plant Standards for Atmospheric
Particles 11.536mg/m 1.989 / No
Brazing waste gas outlets Pollutants DB 50/418-2016
Direct discharge 2 Table 1 Central Downtown
for 2# and 4# plants
Sulfuric Integrated Emission
Acid pickling waste gas 0.833 mg/m 0.007 / No
acid mist Standards for Atmospheric
Lye spray tower 2 outlets for 1# and 4#
Hydrogen Pollutants DB 50/418-2016
plants 6.100 mg/m Table 1 Central Downtown 0.050 / No
Chloride
Particles 9.95mg/m Integrated Emission 0.072 / No
Sulfur Standards for Atmospheric
4mg/m Pollutants DB 50/418-2016 0.036 / No
dioxide 1 set of direct discharge (no longer
Volatile oil drying waste Table 1 Central Downtown
Oxynitride running) 2 17.5mg/m 0.126 / No
gas outlet Emission Standard of Air
1 set of RTO
Pollutants for Industrial Kiln
NMHC 4.08mg/m and Furnace DB 50/659- 0.03 / No
2016 Table 1/2
Hefei COD 40 mg/L 5.69 9.53 No
After deep treatment by industrial
branch of Ammonia- Takeover standards of the
waste water treatment station, 13.4 mg/L 1.9 / No
Hefei nitrogen 1 Freezer waste water outlet Western Group wastewater
discharge to municipal sewage
Hualing BOD 21 mg/L treatment plant 11.01 / No
network with domestic sewage
Co., Ltd. SS 66 mg/L 5.99 / No
121
Midea Group Co., Ltd. Semi-Annual Report 2022
Petroleum 10.7 mg/L 1.78 / No
Phosphate 1.29 mg/L 0.72 / No
Total zinc 0.35 mg/L 0.48 / No
Fluoride 0.56 mg/L 1.15 / No
pH 7.36 / / No
Emission Standards of
Screen printing waster gas Industrial Pollutants in the
NMHC 1 6.1 mg/m Synthetic Resin Industry 0.19 / No
outlet
After photo-catalytic oxidation + （GB31572-2015）
activated carbon, 15m high altitude
Integrated Emission
discharge
5# plastic uptake/foaming Standards for Atmospheric
NMHC 1 2.4 mg/m Pollutants（DB31/933- 0.08 / No
waster gas outlet
2015）
Integrated Emission
After filter cartridge dust collector + Standards for Atmospheric
Welding waste gas outlets
Particles activated carbon, 15m high altitude 2 12 mg/m 0.24 / No
of 7# and 8# plants Pollutants（DB31/933-
discharge
2015）
Integrated Emission
After filter cartridge dust collector, 15m Standards for Atmospheric
Particles 1 Crushing waste gas outlet 9.8 mg/m Pollutants（DB31/933- 0.2 / No
high altitude discharge
2015）
Emission Standards of
Industrial Pollutants in the
NMHC 34 mg/m 1.06 / No
Synthetic Resin Industry
（GB31572-2015）
Emission Standards of
After Grade 2 activated carbon, 15m Foaming waste gas outlets
2 Industrial Pollutants in the
Styrene high altitude discharge of 7# and 8# plants / / / No
Synthetic Resin Industry
（GB31572-2015）
Odor Emission Standards for
concentrati 549 mg/m Odor Pollutants / / No
on （GB14554-93）Table 1
Integrated Emission
After Grade 2 activated carbon, 15m 7# plastic uptake waster Standards for Atmospheric
NMHC 1 7.3 mg/m Pollutants（DB31/933- 0.23 / No
high altitude discharge gas outlet
2015）
Integrated Emission
After dry filtering + photo-catalytic Standards for Atmospheric
8# plastic uptake waster
NMHC oxidation + activated carbon, 15m high 1 11 mg/m Pollutants（DB31/933- 0.34 / No
gas outlet
altitude discharge
2015）
After spray tower + demister + photo-
Emission Standards of
NMHC catalytic oxidation + activated carbon, 1 Spraying waste gas outlet 7.1 mg/m 0.22 / No
Industrial Pollutants in the
15m high altitude discharge
122
Midea Group Co., Ltd. Semi-Annual Report 2022
Synthetic Resin Industry
（GB31572-2015）
Waste
mineral oil,
waste oil-
containing
liquid,
Guangzh
waste
ou
packaging,
Hualing
waste
Refrigera treatment entrusted to third-party
activated N/A N/A N/A N/A 78.48 151.523 No
ting qualified enterprise
carbon,
Equipme
waste lead
nt
battery,
Co.,ltd.
waste filter
cotton,
waste
circuit
board, etc
The construction of pollution prevention facilities and their operation
During the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no major
environmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,
supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste during
the production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary, which is in
compliance with the relevant requirements of the environment administrations.
The environmental effect evaluation of construction projects and other administrative permits in relation to environmental protection
All subsidiaries strictly observe the laws and regulations governing environmental protection, and all construction projects are in compliance with the
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Midea Group Co., Ltd. Semi-Annual Report 2022
environmental effect requirements and other rules, with no misdeeds during the Reporting Period. Once a construction project is finished, a third-party
testing institution is hired to examine indexes including waste water, waste gas and noise, and the compilation and approval of the environmental effect
evaluation report is finished in time.
Contingency plans for environmental accidents
All subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms for
environmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents has
been enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote a
comprehensive, coordinated and sustainable development of the society.
According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,
commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.
Environment self-monitoring plans
All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, which include: 1)
Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis. Major
discharge points are equipped with an online pollution discharge monitoring system for stationary pollution sources to produce and upload real-time
data to Midea Environmental Protection Online Monitoring Platform; 2) Waste water pollution source monitoring: Samples are fetched at intake and
outlet ports of waste water treatment stations to monitor changes of pollution source of waste water and up-to-standard emission of waste water after
being treated at the waste water treatment stations. Monitoring items include CODcr, SS and petroleum, etc. The data is uploaded to the governmental
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Midea Group Co., Ltd. Semi-Annual Report 2022
monitoring authority online and the government authority conducts real-time monitoring; 3) Noise monitoring: Noise monitoring points are set at noise
sensitive points and on the border of factories. Noise is monitored once in spring and summer respectively and at daytime and at nighttime respectively
each time; 4) Solid waste pollution source monitoring: Hazardous waste produced from the subsidiaries is handed over to the units with qualifications
for treatment, monitoring systems are established, and related management forms and accounts are set up.
Administrative penalties received during the Reporting Period due to environmental issues
None of the Company’s subsidiaries received any administrative penalty during the Reporting Period due to environmental issues.
Other environment-related information that should be made public
None
Measures taken to reduce carbon emissions during the Reporting Period and the results
√ Applicable □ N/A
a. Midea Group promoted the implementation of 29 distributed photovoltaic projects in the first half of 2022, with a total designed installed capacity of
154.34MW. So far, construction has started for 13 such projects, with a combined installed capacity of 53.34MW. These 13 projects are expected to be
able to generate power of approximately 54.34 million KWH per year upon the completion of construction, representing a carbon emission reduction of
around 43,472 tons of CO2.
b. All manufacturing plants kept improving their energy management systems and carried out work related to ISO 50001 (GB23331) certification. As of
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Midea Group Co., Ltd. Semi-Annual Report 2022
August, 22 plants have been certified, and the other ones are expected to be all certified by the end of the year. The certification of the energy
management systems has greatly improved the energy management level of these plants. By carrying out energy saving diagnosis, these plants are
able to enhance leakage identification and the closed-loop management.
c. Greater efforts have been made in the research and development of green technologies, as well as the implementation of the related projects. Energy
saving and emission reduction projects are promoted from the dimensions such as compressed air, waste heat recovery, combustion efficiency, power
quality and central air conditioning. As confirmed by the relevant plants’ financial departments, the energy saving and emission reduction projects
produced an income of over RMB50 million.
Other environment-related information
None
2. Corporate Social Responsibility (CSR)
2.1 Overview of the public welfare activities in the first half of 2022
Midea Group is committed to providing support for educational development. In the first half of 2022, Midea Group actively responded to the call for
rural revitalization and implemented the East China and West China coordination policy by donating RMB10 million to Qiandongnan Prefecture in
Guizhou Province, which would be used to help the students and teachers in the region for better educational development.
In addition, Midea has been donating RMB100,000 to the Dandelion School (specialized school for the children of rural migrant workers) in Beijing for
three consecutive years from 2021 to 2023. The donated money would be used to improve education in the school and the living conditions of the
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Midea Group Co., Ltd. Semi-Annual Report 2022
students and teachers of the school, support teacher cultivation plans, fund and cultivate volunteers for the school, etc.
2.2 Follow-up work plan
In the second half of 2022, Midea will continue to play its part in supporting social development. Adhering to both economic and social development, it
will give full play to its advantages and strength and play an active role in charity and public welfare activities such as the fight against the COVID-19
pandemic, poverty alleviation, disaster relief, rural revitalization, educational development, and green development. In addition to active participation in
these charity and public welfare activities as a way to give back to society, Midea will continue to increase its core competitiveness, build a good corporate
image, and motivate more companies to support charity, playing its part in pursuit of a more harmonious society.
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Midea Group Co., Ltd. Semi-Annual Report 2022
Section VI Significant Events
1. Undertakings of the Company’s Actual Controller, Shareholders, Related Parties
and Acquirer, as well as the Company and Other Commitment Makers Fulfilled in the
Reporting Period or Overdue at the Period-end
□Applicable N/A
No such cases in the Reporting Period.
2. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□Applicable N/A
No such cases in the Reporting Period.
3. Illegal Provision of Guarantees for External Parties
□Applicable N/A
No such cases in the Reporting Period.
4. Engagement and Disengagement of CPA Firm
Have the semi-annual financial statements been audited by a CPA firm?
□ Yes No
The semi-annual financial statements are unaudited by a CPA firm.
5. Explanation of the Board of Directors and the Supervisory Committee Regarding
the "Non-standard Audit Opinion" for the Reporting Period
□Applicable N/A
6. Explanation of the Board of Directors Regarding the "Non-standard Audit Opinion"
for Last Year
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2022
7. Bankruptcy and Reorganization
□Applicable N/A
No such cases in the Reporting Period.
8. Litigation
Material litigation and arbitration:
□Applicable N/A
No such cases in the Reporting Period.
Other legal matters:
□Applicable N/A
9. Punishments and Rectifications
□Applicable N/A
No such cases in the Reporting Period.
10. Credit Conditions of the Company as well as Its Controlling Shareholder and
Actual Controller
□Applicable N/A
11. Significant Related Transactions
11.1 Continuing related transactions
Applicable □N/A
Proporti
on in Obtaina
the ble
total Ove market Index
Transacti
Related Type of Content Tran amount Approved r Mode price to the
Pricing on Disclos
transac Relatio the s of the sacti s of transaction app of for the disclo
principl amount ure
tion n transac transac on transac line rov settlem transac sed
e (RMB’000 date
party tion tion price tion of (RMB’000) ed ent tion of inform
)
the line the ation
same same
kind kind
(%)
Orinko Controll www.
Procure Payme
Advanc ed by Procure ment of Market - 697,804 0.60% 1,900,000 No nt after -
30 April cninfo
ed family ment goods
price
delivery
2022 .com.
Plastics membe cn
129
Midea Group Co., Ltd. Semi-Annual Report 2022
Co., r of
Ltd. Compa
ny’s
actual
controll
er
Controll
Midea ed by
www.
Real Compa Payme
Sale of Market 30 April cninfo
Estate ny’s Sale - 74,357 0.04% 576,430 No nt after -
goods price 2022 .com.
Holding actual delivery
cn
Limited controll
er
Details of any sales return of a
Zero
large amount
Give the actual situation in the
Reporting Period (if any) where a
The line for continuing related transactions between the Company and the related
forecast had been made for the
parties and their subsidiaries did not exceed the total amount of continuing related
total amounts of continuing
transactions estimated by the Company by type.
related-party transactions by type
to occur in the current period
Reason for any significant
difference between the
N/A
transaction price and the market
reference price (if applicable)
11.2 Related transactions regarding purchase or sales of assets or equity interests
□Applicable N/A
No such cases in the Reporting Period.
11.3 Related transactions arising from joint investments in external parties
□Applicable N/A
No such cases in the Reporting Period.
11.4 Credits and liabilities with related parties
□Applicable N/A
No such cases in the Reporting Period.
11.5 Transactions with related finance companies
□Applicable N/A
The Company did not make deposits in, receive loans or credit from and was not involved in any other
finance business with any related finance company or any of its related parties.
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Midea Group Co., Ltd. Semi-Annual Report 2022
11.6 Transactions between finance companies controlled by the Company and related parties
□Applicable N/A
No related parties made deposits in, received loans or credit from or was involved in any other finance
business with any finance company controlled by the Company.
11.7 Other significant related transactions
□Applicable N/A
No such cases in the Reporting Period.
12. Significant Contracts and Their Execution
12.1 Trusteeship, contracting and leasing
12.1.1 Trusteeship
□Applicable N/A
No such cases in the Reporting Period.
12.1.2 Contracting
□Applicable N/A
12.1.3 Leasing
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2022
12.2 Major guarantees
Applicable □N/A
Unit: RMB'000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosu Guar
Actual
re date antee
occurrence Term
of the Actual for a
Line of date (date Type of of Due
Guaranteed party guarant guarantee relate
guarantee of guarantee guara or not
ee line amount d
agreement ntee
announ party
signing)
cement or not
No such cases
Total actual external
Total external guarantee line approved during the
0 guarantee amount during 0
Reporting Period (A1)
the Reporting Period (A2)
Total actual external
Total approved external guarantee line at the end guarantee balance at the
0 0
of the Reporting Period (A3) end of the Reporting
Period (A4)
Guarantees provided by the Company for its subsidiaries
Disclosu Guar
Actual
re date antee
occurrence Term
of the Actual for a
Line of date (date Type of of Due
Guaranteed party guarant guarantee relate
guarantee of guarantee guara or not
ee line amount d
agreement ntee
announ party
signing)
cement or not
2022/4/ One
Midea Group Finance Co., Ltd. 8,000,000 - Joint liability No No
30 year
GD Midea Air-Conditioning Equipment 2022/4/ One
15,430,000 2022-1-1 6,665,030 Joint liability No No
Co., Ltd. 30 year
Guangzhou Hualing Refrigerating 2022/4/ One
1,350,000 2022-1-4 122,310 Joint liability No No
Equipment Co., Ltd. 30 year
Foshan Midea Carrier Air-Conditioning 2022/4/ One
360,000 2022-2-23 2,760 Joint liability No No
Equipment Co., Ltd. 30 year
GD Midea Group Wuhu Air-Conditioning 2022/4/ One
2,800,000 - Joint liability No No
Equipment Co., Ltd. 30 year
Wuhu Maty Air-Conditioning Equipment 2022/4/ One
380,000 2022-1-1 36,240 Joint liability No No
Co., Ltd. 30 year
Guangdong Midea Precision Molding 2022/4/ One
10,000 - Joint liability No No
Technology Co., Ltd. 30 year
Midea Group Wuhan Refrigeration 2022/4/ One
550,000 - Joint liability No No
Equipment Co., Ltd. 30 year
Hainan Midea United Materials Supply 2022/4/ One
10,000 - Joint liability No No
Co. Ltd. 30 year
Handan Midea Air-Conditioning 2022/4/ One
100,000 - Joint liability No No
Equipment Co., Ltd. 30 year
Chongqing Midea Air-Conditioning 2022/4/ One
1,200,000 - Joint liability No No
Equipment Co., Ltd. 30 year
2022/4/ One
Midea Group (Shanghai) Co., Ltd. 1,000 - Joint liability No No
30 year
Midea Group Wuhan Heating & 2022/4/ One
258,000 - Joint liability No No
Ventilating Equipment Co., Ltd. 30 year
132
Midea Group Co., Ltd. Semi-Annual Report 2022
2022/4/ One
Meizhisheng Technology Co., Ltd. 1,000 - Joint liability No No
30 year
Guangdong Midea Kitchen Appliances 2022/4/ One
7,032,000 2022-1-1 1,727,500 Joint liability No No
Manufacturing Co., Ltd. 30 year
Guangdong Witol Vacuum Electronic 2022/4/ One
100,000 2022-1-5 280 Joint liability No No
Manufacture Co., Ltd 30 year
Wuhu Midea Kitchen Appliances 2022/4/ One
2,520,000 2022-1-18 1,000,000 Joint liability No No
Manufacturing Co., Ltd. 30 year
Jiangsu Midea Cleaning Appliances Co., 2022/4/ One
640,000 2022-1-1 9,430 Joint liability No No
Ltd 30 year
2022/4/ One
Maytech Technology Co., LTD. 75,000 - Joint liability No No
30 year
Hainan Meizhi Canghai E-commerce 2022/4/ One
22,000 - Joint liability No No
Service Co., Ltd. 30 year
Hainan Meizhi Hangjian Electric 2022/4/ One
22,000 - Joint liability No No
Appliance Co., Ltd. 30 year
2022/4/ One
Eureka Technology Co., Ltd. 22,000 - Joint liability No No
30 year
GD Midea Heating & Ventilating 2022/4/ One
3,110,000 2022-1-1 166,270 Joint liability No No
Equipment Co., Ltd. 30 year
Guangdong Midea-SIIX Electronics Co., 2022/4/ One
10,000 2022-3-9 130 Joint liability No No
Ltd. 30 year
Hefei Midea Heating & Ventilating 2022/4/ One
40,000 - Joint liability No No
Equipment Co., Ltd. 30 year
2022/4/ One
Hefei Midea-SIIX Electronics Co., Ltd. 5,000 - Joint liability No No
30 year
Chongqing Midea General Refrigeration 2022/4/ One
30,000 2022-1-1 9,170 Joint liability No No
Equipment Co., Ltd. 30 year
Meitong Energy Technology (Chongqing) 2022/4/ One
80,000 - Joint liability No No
Co., Ltd. 30 year
Guangdong MeiKong Intelligent Building 2022/4/ One
60,000 - Joint liability No No
Co., Ltd. 30 year
Shanghai M-BMS Intelligent Construction 2022/4/ One
40,000 - Joint liability No No
Co., Ltd. 30 year
2022/4/ One
Winone Elevator Company Limited 410,000 2022-1-1 65,610 Joint liability No No
30 year
2022/4/ One
Guangdong Lingmei Technology Co., Ltd. 60,000 - Joint liability No No
30 year
Hubei Midea Building Technology Co., 2022/4/ One
10,000 - Joint liability No No
Ltd. 30 year
2022/4/ One
Guangdong Meizhi Compressor Limited 290,000 2022-1-1 37,870 Joint liability No No
30 year
Guangdong Meizhi Precision- 2022/4/ One
55,000 - Joint liability No No
Manufacturing Co., Ltd 30 year
Guangdong Welling Motor Manufacturing 2022/4/ One
250,000 2022-1-1 22,890 Joint liability No No
Co., Ltd. 30 year
Foshan Welling Washer Motor 2022/4/ One
310,000 2022-1-1 18,490 Joint liability No No
Manufacturing Co., Ltd. 30 year
Guangdong Midea Environmental 2022/4/ One
20,000 - Joint liability No No
Technologies Co., Ltd. 30 year
Huaian Welling Motor Manufacturing Co., 2022/4/ One
10,000 - Joint liability No No
Ltd. 30 year
Guangdong Midea Intelligent 2022/4/ One
20,000 - Joint liability No No
Technologies Co., Ltd. 30 year
Zhejiang Meizhi Compressor Co., Ltd. 2022/4/ 4,000,000 2022-3-31 602,000 Joint liability One No No
133
Midea Group Co., Ltd. Semi-Annual Report 2022
30 year
2022/4/ One
Anhui Meizhi Compressor Co., Ltd. 40,000 2022-1-1 7,660 Joint liability No No
30 year
Anhui Meizhi Precision Manufacturing 2022/4/ One
60,000 2022-1-24 310 Joint liability No No
Co., Ltd. 30 year
Welling (Wuhu) Motor Manufacturing Co., 2022/4/ One
10,000 2022-1-17 800 Joint liability No No
Ltd. 30 year
2022/4/ One
Wuhu Welling Motor Sales Co., Ltd. 1,865,000 - Joint liability No No
30 year
2022/4/ One
Anhui Welling Auto Parts Co. , Ltd. 130,000 2022-5-9 - Joint liability No No
30 year
2022/4/ One
Dorna Technology Co., Ltd. 55,000 - Joint liability No No
30 year
Guangdong Midea Electromechanical 2022/4/ One
60,000 - Joint liability No No
Technology Co., Ltd. 30 year
MiSiliconn SemiConductor Technologies 2022/4/ One
67,000 - Joint liability No No
Co., Ltd. 30 year
Guangdong Jiya Precision Machinery 2022/4/ One
60,000 - Joint liability No No
Technology Co., Ltd. 30 year
2022/4/ One
Anqing Welling Auto Parts Co., Ltd. 50,000 - Joint liability No No
30 year
Servotronix Motion Technology 2022/4/ One
30,000 - Joint liability No No
Development (Shenzhen) Ltd. 30 year
Ningbo Midea United Materials Supply 2022/4/ One
2,000,000 2022-1-12 40,990 Joint liability No No
Co. Ltd. 30 year
Guangzhou Kaizhao Commercial and 2022/4/ One
60,000 - Joint liability No No
Trading Co., Ltd 30 year
Guangdong Midea Consumer Electric 2022/4/ One
185,000 2022-1-1 2,630 Joint liability No No
Manufacturing Co., Ltd. 30 year
Foshan Shunde Midea Electrical Heating 2022/4/ One
1,665,000 2022-1-1 192,320 Joint liability No No
Appliances Manufacturing Co., Ltd. 30 year
GD Midea Environment Appliances Mfg. 2022/4/ One
1,400,000 2022-1-1 11,700 Joint liability No No
Co.,Ltd. 30 year
Guangdong Midea Cuchen Company 2022/4/ One
6,000 - Joint liability No No
Ltd. 30 year
GD Midea Caffitaly Coffee Machine 2022/4/ One
10,000 - Joint liability No No
Manufacturing Co., Ltd. 30 year
Wuhu Midea Life Appliances Mfg Co., 2022/4/ One
2,200,000 2022-6-6 810,000 Joint liability No No
Ltd. 30 year
Foshan Shunde Midea Washing 2022/4/ One
2,750,000 2022-1-1 244,760 Joint liability No No
Appliances Manufacturing Co., Ltd. 30 year
Guangdong Midea Kitchen & Bath 2022/4/ One
400,000 - Joint liability No No
Appliances Manufacturing Co., Ltd. 30 year
Foshan Shunde Midea Water Dispenser 2022/4/ One
855,000 2022-1-1 14,910 Joint liability No No
Manufacturing Company Limited 30 year
Foshan Midea Chungho Water 2022/4/ One
230,000 2022-1-20 12,970 Joint liability No No
Purification Equipment. Co., Ltd. 30 year
Wuhu Midea Kitchen & Bath Appliances 2022/4/ One
2,600,000 2022-1-1 4,520 Joint liability No No
Mfg. Co., Ltd. 30 year
2022/4/ One
Wuxi Little Swan Electric Co., Ltd. 3,395,000 2022-1-1 1,135,290 Joint liability No No
30 year
2022/4/ One
Hefei Midea Laundry Appliance Co., Ltd. 2,880,000 2022-1-1 12,440 Joint liability No No
30 year
2022/4/ One
Wuxi Filin Electronics Co., Ltd. 100,000 - Joint liability No No
30 year
134
Midea Group Co., Ltd. Semi-Annual Report 2022
2022/4/ One
Hubei Midea Laundry Appliance Co., Ltd. 100,000 - Joint liability No No
30 year
Hainan Midea Refrigerator & Washer 2022/4/ One
50,000 - Joint liability No No
Sales Co., Ltd. 30 year
2022/4/ One
Hefei Hualing Co., Ltd. 700,000 2022-1-1 99,790 Joint liability No No
30 year
2022/4/ One
Hubei Midea Refrigerator Co., Ltd. 260,000 - Joint liability No No
30 year
2022/4/ One
Hefei Midea Refrigerator Co., Ltd. 3,000,000 - Joint liability No No
30 year
Guangzhou Midea Hualing Refrigerator C 2022/4/ One
700,000 2022-1-6 9,880 Joint liability No No
o., Ltd. 30 year
Toshiba Home Appliances Manufacturing 2022/4/ One
100,000 2022-3-10 - Joint liability No No
(Nanhai) Co., Ltd 30 year
Little Swan (Jing Zhou) Sanjin Electronic 2022/4/ One
10,000 - Joint liability No No
Appliances Limited 30 year
2022/4/ One
Midea Group E-Commerce Co., Ltd. 100,000 - Joint liability No No
30 year
Guangdong Midea Smart Link 2022/4/ One
91,200 2022-1-1 4,130 Joint liability No No
Technologies Co., Ltd. 30 year
2022/4/ One
Reis Robotics (Kunshan) Co., Ltd. 70,000 2022-1-1 1,880 Joint liability No No
30 year
2022/4/ One
KUKA Systems (China) CO., Ltd. 500,000 2022-1-1 56,670 Joint liability No No
30 year
KUKA Robotics Manufacturing China 2022/4/ One
50,000 2022-1-19 22,700 Joint liability No No
Co.,Ltd 30 year
2022/4/ One
KUKA Robotics Guangdong Co., Ltd 150,000 2022-2-24 61,140 Joint liability No No
30 year
2022/4/ One
KUKA Robotics (Shanghai) Co.,Ltd. 450,000 2022-1-1 32,790 Joint liability No No
30 year
2022/4/ One
Shanghai Swisslog Healthcare Co., Ltd. 10,000 - Joint liability No No
30 year
Guangdong Swisslog Technology Co., 2022/4/ One
50,000 2022-2-23 550 Joint liability No No
Ltd. 30 year
2022/4/ One
Shanghai Swisslog Technology Co., Ltd. 230,000 2022-1-1 48,140 Joint liability No No
30 year
2022/4/ One
Swisslog (Shanghai) Co., Ltd. 80,000 - Joint liability No No
30 year
Guangdong Meicloud Technology Co., 2022/4/ One
40,000 - Joint liability No No
Ltd. 30 year
2022/4/ One
Foshan Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
30 year
Guangdong Yueyun Industrial Internet 2022/4/ One
10,000 - Joint liability No No
Innovative Technology Co., Ltd. 30 year
2022/4/ One
Wuhan Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
30 year
2022/4/ One
Suzhou Meicloud Technology Co., Ltd. 10,000 - Joint liability No No
30 year
Midea International Corporation 2022/4/ One
12,330,000 2022-1-1 9,867,720 Joint liability No No
Company Limited 30 year
Midea Investment Development 2021/12 One
8,053,680 2022-2-24 3,020,130 Joint liability No No
Company Limited /27 year
Midea International Trading Company 2022/4/ One
650,000 2022-1-5 4,230 Joint liability No No
Limited 30 year
Welling International Hong Kong Ltd 2022/4/ 310,000 - Joint liability One No No
135
Midea Group Co., Ltd. Semi-Annual Report 2022
30 year
Midea Electric Trading (Singapore) 2022/4/ One
3,000,000 2022-3-15 367,200 Joint liability No No
Co.,Pte. Ltd. 30 year
2022/4/ One
Orient Household Appliances Ltd. 33,500 - Joint liability No No
30 year
Midea Consumer Electric (Vietnam) Co., 2022/4/ One
6,700 - Joint liability No No
Ltd. 30 year
2022/4/ One
Concepcion Midea Inc. 6,700 2022-1-1 - Joint liability No No
30 year
2022/4/ One
Midea Italia S.R.L. 120,000 - Joint liability No No
30 year
2022/4/ One
Midea Mexico, S. DE R.L. DE C.V. 100,000 - Joint liability No No
30 year
Midea Electric Trading (Thailand) Co., 2022/4/ One
13,400 - Joint liability No No
Ltd. 30 year
2022/4/ One
Midea America Corp. 150,000 2022-1-1 64,350 Joint liability No No
30 year
2022/4/ One
PT. Midea Planet Indonesia 247,000 - Joint liability No No
30 year
2022/4/ One
Midea Europe GmbH 400,000 - Joint liability No No
30 year
2022/4/ One
Midea America (Canada) Corp. 102,900 2022-1-1 - Joint liability No No
30 year
2022/4/ One
Midea Consumer Appliances DMCC 175,000 - Joint liability No No
30 year
2022/4/ One
Midea Middle East 70,000 - Joint liability No No
30 year
2022/4/ One
Meco Innovations Technology, LLC 80,000 - Joint liability No No
30 year
Toshiba Lifestyle Products & Services 2022/4/ One
2,055,390 2022-1-1 8,250 Joint liability No No
Corporation 30 year
2022/4/ One
Midea Electric Netherlands (I) B.V. 52,260,000 2022-1-1 28,856,400 Joint liability No No
30 year
2022/4/ One
Midea Electrics Netherlands B.V. 1,000,000 - Joint liability No No
30 year
2022/4/ One
Clivet S.p.A. 90,000 2022-1-1 76,150 Joint liability No No
30 year
2022/4/ One
Servotronix Motion Control Ltd. 940 - Joint liability No No
30 year
2022/4/ One
Midea Austria GmbH 5,000 - Joint liability No No
30 year
Midea (Egypt) Kitchen & water heater 2022/4/ One
70,000 - Joint liability No No
appliances Co. ,Ltd 30 year
Total actual guarantee
Total guarantee line for subsidiaries approved amount for subsidiaries
160,967,410 57,807,670
during the Reporting Period (B1) during the Reporting
Period (B2)
Total actual guarantee
Total approved guarantee line for subsidiaries at balance for subsidiaries
160,967,410 55,579,380
the end of the Reporting Period (B3) at the end of the
Reporting Period (B4)
Guarantees between subsidiaries
Disclosu Actual Term Guar
Actual
re date Line of occurrence Type of of Due antee
Guaranteed party guarantee
of the guarantee date (date amount
guarantee guara or not for a
guarant of ntee relate
136
Midea Group Co., Ltd. Semi-Annual Report 2022
ee line agreement d
announ signing) party
cement or not
2022/2/ One
Guangdong Midea Electric Co., Ltd. 2,803,360 2022-4-26 1,177,410 Joint liability No No
23 year
2022/4/ One
Wuhu Midea Annto Logistics Co., Ltd. 1,450,000 2022-1-1 296,340 Joint liability No No
30 year
2022/4/ One
Ningbo Annto Logistics Co., Ltd. 950,000 Joint liability No No
30 year
Hainan Annto Zhilian Supply Chain 2022/4/ One
100,000 - Joint liability No No
Management Co., Ltd. 30 year
Total actual guarantee
Total line for guarantees between subsidiaries amount between
5,303,360 1,596,480
approved during the Reporting Period (C1) subsidiaries during the
Reporting Period (C2)
Total actual guarantee
Total approved line for guarantees between
balance between
subsidiaries at the end of the Reporting Period 5,303,360 1,473,750
subsidiaries at the end of
(C3)
the Reporting Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved during the Reporting amount during the
166,270,770 59,404,150
Period (A1+B1+C1) Reporting Period
(A2+B2+C2)
Total actual guarantee
Total approved guarantee line at the end of the balance at the end of the
166,270,770 57,053,130
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets
44.00%
of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and
0
their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a
52,804,090
liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total amount of the three kinds of guarantees above (D+E+F) 52,804,090
Joint responsibilities possibly borne for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if
N/A
any)
12.3 Entrusted asset management
□ Applicable N/A
No such cases in the Reporting Period.
12.4 Other significant contracts
□ Applicable N/A
No such cases in the Reporting Period.
137
Midea Group Co., Ltd. Semi-Annual Report 2022
13. Other Significant Events
Applicable □ N/A
On 23 May 2022, the Company and Clou Electronics signed the Share Subscription Agreement. As such,
the Company intended to subscribe for 422,504,744 shares in a private placement of Clou Electronics,
accounting for 30% of Clou Electronics’ total share capital at the agreement signing date. As the private
placement of Clou Electronics is priced at RMB3.28/share, the Company’s estimated subscription amount
is RMB1.386 billion, all of which is to be paid in cash (final number of shares subscribed for subject to
the requirement of the CSRC approval document).
On the same day, the Company and Shenzhen Capital Holdings Co., Ltd. (hereinafter, “Shenzhen
Capital”) signed the Share Transfer Agreement. As such, Shenzhen Capital intended to transfer the
126,047,248 shares held by it in Clou Electronics (or 8.95% of Clou Electronics’ total share capital at the
agreement signing date) to the Company. As the transfer is priced at RMB6.64/share, the total transfer
consideration is RMB836.9537 million. In the meantime, the Company and Shenzhen Capital signed the
Voting Rights Entrustment Agreement. According the said agreement, Shenzhen Capital intended to
entrust the Company with the voting rights in correspondence to the 126,047,248 shares held by it in
Clou Electronics (or 8.95% of Clou Electronics’ total share capital at the agreement signing date). The
entrustment period will expire after 24 months of the acceptance of the private placement application
materials by the CSRC or any of the following conditions occurs (whichever is earlier): (1) both parties
agree, in writing, to terminate this agreement; (2) the shares carrying the entrusted voting rights are
transferred to the consignee; or (3) the Share Transfer Agreement is terminated before the shares
carrying the entrusted voting rights are transferred to the Company and/or the Share Subscription
Agreement is terminated before the private placement shares are registered under the Company.
Upon the acquisition, the Company is to hold 548,551,992 shares in Clou Electronics, approximately
accounting for 29.96% of Clou Electronics’ total share capital upon the private placement.
14. Significant Events of Subsidiaries
□ Applicable N/A
138
Midea Group Co., Ltd. Semi-Annual Report 2022
Section VII Changes in Shares and Information about
Shareholders
1. Changes in Shares
1.1 Changes in shares
Unit: share
Before Increase/decrease in Reporting Period (+/-) After
Percen Percen
Shares tage New issue Others Subtotal Shares tage
(%) (%)
1. Restricted shares 156,538,881 2.24 -6,918,316 -6,918,316 149,620,565 2.14
1.1 Shares held by the
state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic 153,773,081 2.20 -6,724,266 -6,724,266 147,048,815 2.10
investors
Among which: Shares
held by domestic 2,363,601 0.03 0 2,363,601 0.03
corporations
Shares held by
151,409,480 2.17 -6,724,266 -6,724,266 144,685,214 2.07
domestic individuals
1.4 Shares held by
2,765,800 0.04 -194,050 -194,050 2,571,750 0.04
foreign investors
Among which: Shares
held by foreign
corporations
Shares held by
2,765,800 0.04 -194,050 -194,050 2,571,750 0.04
foreign individuals
2. Non-restricted shares 6,830,024,963 97.76 13,526,990 4,156,523 17,683,513 6,847,708,476 97.86
2.1 RMB common
6,830,024,963 97.76 13,526,990 4,156,523 17,683,513 6,847,708,476 97.86
shares
2.2 Domestically listed
foreign shares
2.3 Overseas listed
foreign shares
2.4 Other
3. Total shares 6,986,563,844 100.00 13,526,990 -2,761,793 10,765,197 6,997,329,041 100.00
Reasons for the changes in shares
Applicable □N/A
a. The 377,083 restricted shares of a total of 21 eligible awardees for the second unlocking period of the
139
Midea Group Co., Ltd. Semi-Annual Report 2022
reserved restricted shares under the 2018 Restricted Share Incentive Scheme were unlocked on 22 June
2022.
b. The 2,791,699 restricted shares of a total of 189 eligible awardees for the third unlocking period of the
first grant under the 2018 Restricted Share Incentive Scheme were unlocked on 28 June 2022, including
182,250 restricted shares of foreign employees.
c. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 20 April 2022, the Company repurchased and retired 248,333 shares of
nine awardees with respect to the first grant under the 2018 Restricted Share Incentive Scheme, 137,917
shares of four awardees with respect to the reserved restricted shares under the 2018 Restricted Share
Incentive Scheme, 771,042 shares of 18 awardees under the 2019 Restricted Share Incentive Scheme,
1,314,501 shares of 30 awardees under the 2020 Restricted Share Incentive Scheme, and 290,000
shares of seven awardees under the 2021 Restricted Share Incentive Scheme, totaling 2,761,793
restricted shares.
d. In the Reporting Period, the awardees of stock options chose to exercise 13,526,990 shares, which
have been registered into the Company’s share capital.
e. In the Reporting Period, locked-up shares held by senior management decreased by 987,741 shares.
Approval of share changes
□Applicable N/A
Transfer of share ownership
□Applicable N/A
Progress of any share repurchase
Applicable □N/A
As of the date of this Report, via the special securities account for share repurchases, the Company
cumulatively repurchased 33,072,771 shares (0.4725% of the Company’s total share capital) by way of
centralized bidding. With the highest trading price being RMB60.05/share and the lowest being
RMB50.14/share, the total payment amounted to RMB1,830,811,030 (exclusive of transaction costs).
140
Midea Group Co., Ltd. Semi-Annual Report 2022
This share repurchase has been in conformity with the applicable laws and regulations, as well as the
Company’s share repurchase plan.
Progress of any repurchased share reduction through centralized price bidding
□Applicable N/A
Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and the last Reporting Period
□Applicable N/A
Other contents that the Company considers necessary or is required by the securities regulatory
authorities to disclose
□Applicable √N/A
1.2 Changes in restricted shares
Applicable □N/A
Unit: share
Opening Unlocked in Increased in Closing
Name of Repurchased
restricted current current restricted Reason for change Date of unlocking
shareholder and retired
shares period period shares
Awardees of the
first grant of 2018 Locked up
Restricted Share 6,687,750 2,791,699 0 248,333 3,647,718 according to the 28 June 2022
Incentive Scheme
Scheme
Awardees of
reserved
Locked up
restricted shares
1,297,500 377,083 0 137,917 782,500 according to the 22 June 2022
under 2018
Scheme
Restricted Share
Incentive Scheme
Unlocked for
Zhu Fengtao 780,300 780,300 0 0 0 former senior -
management
Unlocked for
Xiao Mingguang 353,750 353,750 0 0 0 former senior -
management
Locked up for
Zhang Xiaoyi 337,431 0 25,000 0 362,431 senior -
management
Locked up for
Jiang Peng 268,950 20,000 0 0 248,950 senior -
management
Locked up for
Hu Ziqiang 250,000 0 25,000 0 275,000 senior -
management
Guan Jinwei 276,250 0 25,000 0 301,250 Locked up for -
141
Midea Group Co., Ltd. Semi-Annual Report 2022
senior
management
Locked up for
Bai Lin 0 0 71,309 0 71,309 senior -
management
Locked up for
Zhong Zheng 167,114 0 20,000 0 187,114 senior -
management
Total 10,419,045 4,322,832 166,309 386,250 5,876,272 -- --
2. Issuance and Listing of Securities
□Applicable √N/A
3. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of common Total number of preference
shareholders at the period- 426,506 shareholders with resumed voting 0
end rights at the period-end (if any)
5% or greater common shareholders or top 10 common shareholders
Increase/dec Shares in pledge or
Shareh Number of Number of non-
Nature of Total common rease during frozen
Name of olding restricted restricted
shareholde shares held at the
shareholder percent common common
r the period-end Reporting Status Shares
age (%) shares held shares held
Period
Domestic
Midea Holding non-state- In
31.00% 2,169,178,713 - 0 2,169,178,713 100,000,000
Co., Ltd. owned pledge
corporation
Hong Kong
Securities
Foreign
Clearing 17.86% 1,249,815,931 32,851,440 0 1,249,815,931
corporation
Company
Limited
Domestic
China Securities
non-state-
Finance Co., 2.83% 198,145,134 - 0 198,145,134
owned
Ltd.
corporation
Domestic
Fang Hongbo 1.67% 116,990,492 - 87,742,869 29,247,623
individual
Central Huijin
State-
Asset
owned 1.26% 88,260,460 - 0 88,260,460
Management
corporation
Ltd.
Domestic
Huang Jian 1.23% 86,140,000 - 0 86,140,000
individual
Canada Pension
Plan Investment
Foreign
Board－ own 0.88% 61,913,903 -41,999,994 0 61,913,903
corporation
funds (stock
exchange)
Foreign
Li Jianwei 0.66% 46,264,545 -3,368,455 0 46,264,545
individual
Yuan Liqun Domestic 0.57% 39,633,597 2,137,215 0 39,633,597
142
Midea Group Co., Ltd. Semi-Annual Report 2022
individual
Merrill Lynch Foreign
0.55% 38,554,877 -5,268,098 0 38,554,877
International corporation
Strategic investors or general
corporations becoming top-
ten common shareholders N/A
due to placing of new shares
(if any) (see Note 3)
Related-parties or acting-in-
concert parties among the N/A
shareholders above
Explain if any of the
shareholders above was
involved in entrusting/being N/A
entrusted with voting rights or
waiving voting rights
Special account for 138,411,603 shares (or 1.98% of the Company’s total share capital) were held in the
repurchased shares among special account for repurchased shares of Midea Group Co., Ltd. at the end of the
the top 10 shareholders Reporting Period.
Top 10 non-restricted common shareholders
Name of shareholder Number of non-restricted common shares held at Type of shares
the period-end
Type Shares
Midea Holding Co., Ltd. 2,169,178,713 RMB common stock 2,169,178,713
Hong Kong Securities
1,249,815,931 RMB common stock 1,249,815,931
Clearing Company Limited
China Securities Finance
198,145,134 RMB common stock 198,145,134
Co., Ltd.
Central Huijin Asset
88,260,460 RMB common stock 88,260,460
Management Ltd.
Huang Jian 86,140,000 RMB common stock 86,140,000
Canada Pension Plan
Investment Board－ own 61,913,903 RMB common stock 61,913,903
funds (stock exchange)
Li Jianwei 46,264,545 RMB common stock 46,264,545
Yuan Liqun 39,633,597 RMB common stock 39,633,597
Merrill Lynch International 38,554,877 RMB common stock 38,554,877
Huang Xiaoxiang 37,835,332 RMB common stock 37,835,332
Related-parties or acting-in-
concert parties among the
top ten non-restricted
common shareholders and
N/A
between the top ten non-
restricted common
shareholders and the top ten
common shareholders
1. The Company’s shareholder Yuan Liqun holds 660,000 shares in the Company through
her common securities account and 38,973,597 shares in the Company through her
Explanation on the top 10 account of collateral securities for margin trading, representing a total holding of
common shareholders 39,633,597 shares in the Company.
participating in securities 2. The Company’s shareholder Huang Xiaoxiang holds 29,435,332 shares in the Company
margin trading through his common securities account and 8,400,000 shares in the Company through his
account of collateral securities for margin trading, representing a total holding of
37,835,332 shares in the Company.
Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the
Company conduct any promissory repurchase during the Reporting Period
143
Midea Group Co., Ltd. Semi-Annual Report 2022
□Yes No
4. Changes in Shareholdings of Directors, Supervisors and Senior Management
□Applicable √N/A
No changes occurred to the shareholdings of the Company’s directors, supervisors and senior
management during the Reporting Period. For further information, see the 2021 Annual Report.
5. Change of Controlling Shareholder or Actual Controller in the Reporting Period
Change of the controlling shareholder during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
Change of the actual controller during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
144
Midea Group Co., Ltd. Semi-Annual Report 2022
Section VIII Preference Shares
□ Applicable N/A
No such cases in the Reporting Period.
145
Midea Group Co., Ltd. Semi-Annual Report 2022
Section IX Bonds
Applicable □ N/A
1. Enterprise Bonds
□ Applicable N/A
No such cases in the Reporting Period.
2. Corporate Bonds
Applicable □ N/A
2.1 General information on corporate bonds
Unit: RMB
Way of
Outsta principal
Bond Bond Date of nding Intere repaymen Place of
Abbr. Value date Maturity
name code issuance balanc st rate t and trading
e interest
payment
Midea
Group
Interest
Co., Ltd.
payable
maturity The
semiannu
2027 Stock
MIDEAZ USD ally,
coupon ISIN Exchan
2.88% 2022-02- 2022-02- 2027-02- principal
2.88% XS24321 450Milli 2.88% ge of
02/24/20 16 24 24 and
$450 30453 on Hong
27 interest
million Kong
payable
senior Ltd.
at
unsecure
maturity
d green
bonds
Investor eligibility arrangements
N/A
(if any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue bonds
□ Applicable N/A
146
Midea Group Co., Ltd. Semi-Annual Report 2022
2.2 Triggering and execution of issuer or investor option clauses and investor protection clauses
□ Applicable N/A
2.3 Changes in credit ratings in the Reporting Period
□ Applicable N/A
2.4 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of bond holders
□ Applicable N/A
3. Debt Instruments as a Non-financial Enterprise
Applicable □ N/A
3.1 General information on debt instruments as a non-financial enterprise
Way of
principal
Name of Code of
Date of Outstandin Interest repayment Place of
debt Abbr. debt Value date Maturity
issuance g balance rate and trading
instrument instrument
interest
payment
Super-
short-term
Principal
Commerci
and
al Papers
22 Midea 012281718 2022-04- 2022-04- 2022-10- RMB4 interest Inter-bank
of Midea 2.2300%
SCP001 .IB 27 29 26 billion repayable market
Group Co.,
in full upon
Ltd.
maturity
(Tranche
1, 2022)
Investor eligibility arrangements (if
N/A
any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue debt instruments
□ Applicable N/A
3.2 Triggering and execution of issuer or investor option clauses and investor protection clauses
□ Applicable N/A
147
Midea Group Co., Ltd. Semi-Annual Report 2022
3.3 Changes in credit ratings in the Reporting Period
□ Applicable N/A
3.4 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of debt
instrument holders
□ Applicable N/A
4. Convertible Corporate Bonds
□ Applicable N/A
No such cases in the Reporting Period.
5. Consolidated Loss of the Reporting Period Over 10% of Net Assets as at the End
of Last Year
□ Applicable N/A
6. Key Financial Information of the Company in the Past Two Years
Unit: RMB’000
Item 30 June 2022 31 December 2021 Change
Current ratio 118.37% 111.67% 6.70%
Debt/asset ratio 66.01% 65.25% 0.77%
Quick ratio 99.58% 86.92% 12.65%
H1 2022 H1 2021 Change
Net profit before non-
15,792,300 14,854,608 6.31%
recurring gains and losses
EBITDA/debt ratio 23.02% 21.64% 1.38%
Interest cover (times) 22.70 26.85 -15.46%
Cash-to-interest cover
31.11 33.31 -6.61%
(times)
EBITDA-to-interest cover
26.45 31.18 -15.18%
(times)
Loan repayment ratio (%) 100.00% 100.00% 0.00%
Interest payment ratio (%) 100.00% 100.00% 0.00%
148
Midea Group Co., Ltd. Semi-Annual Report 2022
Section X Financial Report
1. Auditor’s Report
Have the semi-annual financial statements been audited by a CPA firm?
□ Yes No
The semi-annual financial statements are unaudited by a CPA firm.
149
Midea Group Co., Ltd. Semi-Annual Report 2022
2. Financial Statements
(All amounts in RMB'000 Yuan unless otherwise stated）
150
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
30 June 31 December 30 June 31 December
2022 2021 2022 2021
ASSETS Note Consolidated Consolidated Company Company
Current assets
Cash at bank and on hand 4(1) 76,701,938 71,875,556 42,386,058 48,153,997
Financial assets held for trading 4(2) 3,265,641 5,879,202 356,000 3,442,317
Derivative financial assets 586,771 545,865 346,191 157,501
Notes receivable 4(3) 6,597,218 4,784,914 - -
Accounts receivable 4(4) 29,586,420 24,636,440 - -
Receivables financing 4(6) 14,072,448 10,273,552 - -
Advances to suppliers 4(7) 4,385,716 4,352,807 37,966 106,838
Contract assets 4(8) 4,264,364 3,823,476 - -
Loans and advances 4(9) 15,584,795 20,656,600 - -
Other receivables 4(5), 17(1) 2,175,663 3,104,065 26,512,317 31,447,849
Inventories 4(10) 36,750,838 45,924,439 - -
Current portion of non-current assets 4(11) 38,717,839 19,851,577 35,669,169 19,095,262
Other current assets 4(12) 43,127,422 33,156,012 29,945,467 11,713,182
Total current assets 275,817,073 248,864,505 135,253,168 114,116,946
Non-current assets
Other debt investments 4(13) 8,150,694 7,893,935 4,954,490 6,034,563
Long-term receivables 4(14) 809,030 871,356 - -
Loans and advances 4(9) 1,190,970 851,927 - -
Long-term equity investments 4(15), 17(2) 3,769,304 3,796,705 70,366,961 66,805,691
Investments in other equity 43,377
instruments 45,747 - -
Other non-current financial assets 4(16) 7,076,364 5,912,873 353,336 537,214
Investment properties 826,593 859,195 407,641 428,460
Fixed assets 4(17) 23,473,308 22,852,848 620,423 661,692
Construction in progress 4(18) 3,590,625 2,690,930 994,114 800,243
Right-of-use assets 4(19) 2,257,416 2,297,354 11,054 2,585
Intangible assets 4(20) 16,774,398 17,173,072 661,239 669,158
Goodwill 4(21) 27,110,127 27,874,752 - -
Long-term prepaid expenses 4(22) 1,409,257 1,394,240 93,373 79,799
Deferred tax assets 4(23) 9,117,529 8,192,309 259,890 289,964
Other non-current assets 4(24) 31,688,080 36,374,356 30,717,985 33,023,304
Total non-current assets 137,287,072 139,081,599 109,440,506 109,332,673
TOTAL ASSETS 413,104,145 387,946,104 244,693,674 223,449,619
151
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
30 June 31 December 30 June 31 December
LIABILITIES AND SHAREHOLDERS’ 2022 2021 2022 2021
EQUITY Note Consolidated Consolidated Company Company
Current liabilities
Short-term borrowings 4(27) 10,658,682 5,381,623 - -
Borrowings from the Central Bank 249,139 178,878 - -
Customer deposits and deposits from
banks and other financial institutions 98,826 78,180 - -
Financial liabilities held for trading 1,706,821 - - -
Derivative financial liabilities 238,448 157,602 - -
Notes payable 4(28) 29,331,809 32,752,007 - -
Accounts payable 4(29) 65,533,733 65,983,559 - -
Contract liabilities 4(30) 24,331,594 23,916,595 - -
Employee benefits payable 4(31) 5,435,991 7,535,168 478,745 420,536
Taxes payable 4(32) 4,451,690 5,404,267 607,447 1,184,813
Other payables 4(33) 4,781,862 4,288,104 175,577,921 151,450,555
Current portion of non-current liabilities 4(34) 27,532,454 28,947,540 96,347 92,647
Other current liabilities 4(35) 58,664,857 48,227,953 4,029,027 35,932
Total current liabilities 233,015,906 222,851,476 180,789,487 153,184,483
Non-current liabilities
Long-term borrowings 4(36) 26,646,374 19,734,020 16,420,000 12,509,900
Debentures payable 4(37) 3,047,541 - - -
Lease liabilities 4(38) 1,547,117 1,533,552 5,807 -
Provisions 297,087 310,571 - -
Deferred income 1,531,430 1,228,459 154,015 154,015
Long-term employee benefits payable 4(39) 1,435,923 1,825,016 - -
Deferred tax liabilities 4(23) 4,496,992 4,950,245 30,102 17,028
Other non-current liabilities 4(40) 687,305 687,689 - -
Total non-current liabilities 39,659,084 30,269,552 16,609,924 12,680,943
Total liabilities 272,705,675 253,121,028 197,399,411 165,865,426
Shareholders’ equity
Share capital 4(41) 6,997,329 6,986,564 6,997,329 6,986,564
Capital surplus 4(43) 21,106,635 20,516,930 28,171,282 27,105,153
Less: Treasury stock 4(42) (14,645,088) (14,044,550) (14,645,088) (14,044,550)
Other comprehensive income 4(44) (1,286,877) (1,758,948) (6,274) (7,295)
General risk reserve 686,352 719,922 - -
Special reserve 16,434 15,542 - -
Surplus reserve 4(45) 9,449,901 9,449,901 9,449,901 9,449,901
Undistributed profits 4(46) 107,340,604 102,982,763 17,327,113 28,094,420
Total equity attributable to shareholders
of the Company 129,665,290 124,868,124 47,294,263 57,584,193
Minority interests 10,733,180 9,956,952 - -
Total shareholders’ equity 140,398,470 134,825,076 47,294,263 57,584,193
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 413,104,145 387,946,104 244,693,674 223,449,619
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
152
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
For the six For the six For the six For the six
months ended months ended months ended months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Item Note Consolidated Consolidated Company Company
Total revenue 183,663,399 174,846,895 824,660 940,047
Including: Operating revenue 4(47), 17(3) 182,661,009 173,809,565 824,660 940,047
Interest income 4(48) 1,001,960 1,037,174 - -
Fee and commission income 430 156 - -
Total operating cost (165,037,325) (157,800,033) 206,836 564,220
Including: Cost of sales 4(47) (140,424,168) (135,727,446) (20,820) (21,460)
Interest costs 4(48) (33,643) (41,149) - -
Fee and commission expenses (1,518) (3,400) - -
Taxes and surcharges 4(49) (798,939) (833,157) (10,053) (23,317)
Selling and distribution expenses 4(50) (14,698,373) (13,950,077) - -
General and administrative expenses 4(51) (4,951,069) (4,251,893) (785,386) (461,254)
Research and development expenses 4(52) (5,865,033) (5,314,637) - -
Financial income 4(53) 1,735,418 2,321,726 1,023,095 1,070,251
Including: Interest expenses (867,954) (681,864) (1,264,787) (1,091,508)
Interest income 2,764,267 2,501,014 2,294,576 2,034,935
Add: Other income 4(59) 644,525 578,265 18,782 96,380
Investment income 4(57), 17(4) 607,847 1,080,896 272,392 2,233,559
Including: Investment income from
associates and joint ventures 263,014 309,013 126,297 142,640
Gains/(Losses) on changes in fair value 4(56) (749,742) (801,944) (80,116) (250,070)
Asset impairment losses 4(54) (230,679) (178,230) - -
Credit impairment losses 4(55) (192,891) (154,460) (567) (1,081)
Losses on disposal of assets 4(58) 18,962 (17,833) (280) (964)
Operating profit 18,724,096 17,553,556 1,241,707 3,582,091
Add: Non-operating income 162,480 176,544 27,359 26,929
Less: Non-operating expenses (53,628) (105,716) (247) (48,764)
Total profit 18,832,948 17,624,384 1,268,819 3,560,256
Less: Income tax expenses 4(60) (2,710,551) (2,407,939) (364,840) (71,539)
Net profit 16,122,397 15,216,445 903,979 3,488,717
(1) Classified by continuity of operations
Net profit from continuing operations 16,122,397 15,216,445 903,979 3,488,717
Net profit from discontinued operations - - - -
(2) Classified by ownership of the equity
Attributable to shareholders of the Company 15,995,496 15,009,046 903,979 3,488,717
Minority interests 126,901 207,399 - -
Other comprehensive income, net of tax 406,142 (225,356) 1,021 18,926
Other comprehensive income attributable to equity
owners of the Company, net of tax 470,720 (247,653) 1,021 18,926
(1) Other comprehensive income items which will not
be reclassified subsequently to profit or loss 185,263 121,268 - -
1) Changes arising from remeasurement of defined
benefit plan 183,574 120,835 - -
2) Changes in fair value of investments in other
equity instruments 1,689 433 - -
(2) Other comprehensive income items which will be
reclassified subsequently to profit or loss 285,457 (368,921) 1,021 18,926
1) Other comprehensive income that will be
transferred subsequently to profit or loss under
the equity method 47 24,624 1,021 18,926
2) Cash flow hedging reserve (613,659) (359,040) - -
3) Differences on translation of foreign currency
financial statements 899,069 (34,505) - -
Other comprehensive income attributable to minority
shareholders, net of tax (64,578) 22,297 - -
Total comprehensive income 16,528,539 14,991,089 905,000 3,507,643
Attributable to equity owners of the Company 16,466,216 14,761,393 905,000 3,507,643
Attributable to minority interests 62,323 229,696 - -
Earnings per share
(1) Basic earnings per share 4(61) 2.34 2.17 Not applicable Not applicable
(2) Diluted earnings per share 4(61) 2.34 2.16 Not applicable Not applicable
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
153
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
For the six For the six For the six For the six
months ended months ended months ended months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Item Note Consolidated Consolidated Company Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services 153,366,180 151,628,820 - -
Net increase in customer deposits and deposits from banks
and other financial institutions 20,646 - - -
Net decrease in loans and advances 4,692,117 - - -
Net decrease in deposits with the Central Bank, banks and
other financial institutions 7,470 1,167,441 - -
Net increase in borrowings from the Central Bank 70,261 - - -
Cash received from interest, fee and commission 1,000,789 973,445 - -
Refund of taxes and surcharges 5,236,807 4,567,109 - -
Cash received relating to other operating activities 4(62)(a) 3,354,892 3,795,388 30,323,333 39,536,448
Sub-total of cash inflows 167,749,162 162,132,203 30,323,333 39,536,448
Cash paid for goods and services (104,212,384) (99,315,226) - -
Net increase in loans and advances - (1,947,468) - -
Net decrease in customer deposits and deposits from
banks and other financial institutions - (68,391) - -
Cash paid for interest, fee and commission (35,840) (45,029) - -
Cash paid to and on behalf of employees (18,431,348) (17,098,011) (241,178) (10,281)
Payments of taxes and surcharges (8,683,607) (7,493,467) (352,102) (419,819)
Cash paid relating to other operating activities 4(62)(b) (14,991,273) (15,988,201) (1,107,662) (6,307,651)
Sub-total of cash outflows (146,354,452) (141,955,793) (1,700,942) (6,737,751)
Net cash flows from operating activities 4(62)(c) 21,394,710 20,176,410 28,622,391 32,798,697
2. Cash flows from investing activities
Cash received from disposal of investments 50,554,179 76,492,455 33,400,000 42,246,499
Cash received from returns on investments 3,023,041 3,033,825 1,889,667 3,122,815
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 64,531 79,031 23 2
Net cash received from disposal of subsidiaries and other
business units 14,829 69,824 6,500 -
Cash received relating to other investing activities 335,082 - - -
Sub-total of cash inflows 53,991,662 79,675,135 35,296,190 45,369,316
Cash paid to acquire fixed assets, intangible assets and
other long-term assets (2,868,894) (3,447,518) (283,430) (167,543)
Cash paid to acquire investments (57,309,340) (65,061,652) (41,670,159) (57,395,753)
Net cash paid to acquire subsidiaries and other business
units (376,280) (2,028,912) - -
Cash paid relating to other investing activities - - - -
Sub-total of cash outflows (60,554,514) (70,538,082) (41,953,589) (57,563,296)
Net cash flows from investing activities (6,562,852) 9,137,053 (6,657,399) (12,193,980)
3. Cash flows from financing activities
Cash received from capital contributions 1,134,582 881,832 1,133,582 859,332
Including: Cash received from capital contributions by
minority shareholders of subsidiaries 1,000 22,500 - -
Cash received from borrowings 16,025,436 11,292,776 4,000,000 6,800,000
Cash received from issuance of medium-term debentures 2,841,690 - - -
Cash received from issuance of short-term financing bonds 3,999,500 2,999,629 3,999,500 2,999,629
Cash received relating to other financing activities 89,498 24,948 - -
Sub-total of cash inflows 24,090,706 15,199,185 9,133,082 10,658,961
Cash repayments of borrowings (3,916,525) (6,893,639) (89,900) (4,799,314)
Cash paid for repayment of short-term financing bonds - (3,000,000) - (3,000,000)
Cash payments for interest expenses and distribution of
dividends or profits (12,537,953) (11,889,373) (13,313,757) (12,234,993)
Including: Cash payments for dividends or profit to
minority shareholders of subsidiaries (49,705) (128,450) - -
Cash payments relating to other financing activities (1,853,185) (9,975,752) (1,357,933) (9,512,267)
Sub-total of cash outflows (18,307,663) (31,758,764) (14,761,590) (29,546,574)
Net cash flows from financing activities 5,783,043 (16,559,579) (5,628,508) (18,887,613)
4. Effect of foreign exchange rate changes on cash and
cash equivalents 145,787 (233,775) - -
5. Net increase in cash and cash equivalents 20,760,688 12,520,109 16,336,484 1,717,104
Add: Cash and cash equivalents at the beginning of the
period 40,550,039 23,548,508 21,957,042 16,595,063
6. Cash and cash equivalents at the end of the period 4(62)(d) 61,310,727 36,068,617 38,293,526 18,312,167
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
154
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the current period
Attributable to equity owners of the Company
Less: Other General Total
Share Capital Treasury comprehensive risk Special Surplus Undistributed Minority shareholders’
Item capital surplus stock income reserve reserve reserve profits interests equity
Balance at the end of the prior year 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Add: Changes in accounting policies - - - - - - - - - -
Balance at the beginning of the current year 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Movements for the current period 10,765 589,705 (600,538) 472,071 (33,570) 892 - 4,357,841 776,228 5,573,394
(1) Total comprehensive income - - - 470,720 - - - 15,995,496 62,323 16,528,539
(2) Capital contribution and withdrawal by
shareholders 10,765 1,036,064 (600,538) - - - - - 734,108 1,180,399
1). Capital contribution by shareholders 13,527 818,573 - - - - - - 68,530 900,630
2). Business combinations - - - - - - - - 87,493 87,493
3). Share-based payment included in
shareholders’ equity - 642,992 - - - - - - 35,283 678,275
4). Others (2,762) (425,501) (600,538) - - - - - 542,802 (485,999)
(3) Profit distribution - - - - (33,570) - - (11,637,716) (71,118) (11,742,404)
1). Appropriation to surplus reserve - - - - - - - - - -
2). Appropriation to general risk reserve - - - - - - - - - -
3). Profit distribution to shareholders - - - - - - - (11,671,286) (71,118) (11,742,404)
4). Others - - - - (33,570) - - 33,570 - -
(4) Transfer within shareholders’ equity - - - - - - - - - -
1). Transfer from capital surplus to share capital - - - - - - - - - -
2). Transfer from surplus reserve to share capital - - - - - - - - - -
3). Surplus reserve used to offset accumulated
losses - - - - - - - - - -
4). Others - - - - - - - - - -
(5) Specific reserve - - - - - 892 - - 223 1,115
1). Appropriation in current period - - - - - 1,656 - - 414 2,070
2). Use in current period - - - - - (764) - - (191) (955)
(6) Others - (446,359) - 1,351 - - - 61 50,692 (394,255)
Balance at the end of the current period 6,997,329 21,106,635 (14,645,088) (1,286,877) 686,352 16,434 9,449,901 107,340,604 10,733,180 140,398,470
155
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the prior year
Attributable to equity owners of the Company
Less: Other General Total
Share Capital Treasury comprehensive risk Special Surplus Undistributed Minority shareholders’
Item capital surplus stock income reserve reserve reserve profits interests equity
Balance at the end of the prior year 7,029,976 22,488,105 (6,094,347) (1,549,003) 587,984 12,730 7,966,362 87,074,453 6,720,840 124,237,100
Add: Changes in accounting policies - - - - - - - - - -
Balance at the beginning of the current year 7,029,976 22,488,105 (6,094,347) (1,549,003) 587,984 12,730 7,966,362 87,074,453 6,720,840 124,237,100
Movements for the current year (43,412) (1,971,175) (7,950,203) (209,945) 131,938 2,812 1,483,539 15,908,310 3,236,112 10,587,976
(1) Total comprehensive income - - - (207,079) - - - 28,573,650 411,499 28,778,070
(2) Capital contribution and withdrawal by
shareholders (43,412) (2,493,602) (7,950,203) - - - - - 3,389,721 (7,097,496)
1). Capital contribution by shareholders 34,437 1,495,004 - - - - - - 587,480 2,116,921
2). Business combinations - - - - - - - - 3,189,892 3,189,892
3). Share-based payment included in
shareholders’ equity - 1,190,124 - - - - - - 62,031 1,252,155
4). Others (77,849) (5,178,730) (7,950,203) - - - - - (449,682) (13,656,464)
(3) Profit distribution - - - - 131,938 - 1,483,539 (12,668,206) (401,397) (11,454,126)
1). Appropriation to surplus reserve - - - - - - 1,483,539 (1,483,539) - -
2). Appropriation to general risk reserve - - - - 131,938 - - (131,938) - -
3). Profit distribution to shareholders - - - - - - - (11,052,729) (401,397) (11,454,126)
4). Others - - - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - - - -
1). Transfer from capital surplus to share capital - - - - - - - - - -
2). Transfer from surplus reserve to share capital - - - - - - - - - -
3). Surplus reserve used to offset accumulated
losses - - - - - - - - - -
4). Others - - - - - - - - - -
(5) Specific reserve - - - - - 2,812 - - 703 3,515
1). Appropriation in current period - - - - - 2,812 - - 703 3,515
2). Use in current period - - - - - - - - - -
(6) Others - 522,427 - (2,866) - - - 2,866 (164,414) 358,013
Balance at the end of the current year 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
156
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the current period
Less: Other Total
Share Capital Treasury comprehensive Special Surplus Undistributed shareholders’
Item capital surplus stock income reserve reserve profits equity
Balance at the end of the prior year 6,986,564 27,105,153 (14,044,550) (7,295) - 9,449,901 28,094,420 57,584,193
Add: Changes in accounting policies - - - - - - - -
Balance at the beginning of the current year 6,986,564 27,105,153 (14,044,550) (7,295) - 9,449,901 28,094,420 57,584,193
Movements for the current period 10,765 1,066,129 (600,538) 1,021 - - (10,767,307) (10,289,930)
(1) Total comprehensive income - - - 1,021 - - 903,979 905,000
(2) Capital contribution and withdrawal by shareholders 10,765 1,066,163 (600,538) - - - - 476,390
1). Capital contribution by shareholders 13,527 818,573 - - - - - 832,100
2). Capital contribution by holders of other equity instruments - - - - - - - -
3). Share-based payment included in owners’ equity - 673,091 - - - - - 673,091
4). Others (2,762) (425,501) (600,538) - - - - (1,028,801)
(3) Profit distribution - - - - - - (11,671,286) (11,671,286)
1). Appropriation to surplus reserve - - - - - - - -
2). Profit distribution to shareholders - - - - - - (11,671,286) (11,671,286)
3). Others - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - -
1). Transfer from capital surplus to share capital - - - - - - - -
2). Transfer from surplus reserve to share capital - - - - - - - -
3). Surplus reserve used to offset accumulated losses - - - - - - - -
4). Others - - - - - - - -
(5) Specific reserve - - - - - - - -
1). Appropriation in the current year - - - - - - - -
2). Use in the current year - - - - - - - -
(6) Others - (34) - - - - - (34)
Balance at the end of the current period 6,997,329 28,171,282 (14,645,088) (6,274) - 9,449,901 17,327,113 47,294,263
157
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the prior year
Less: Other Total
Share Capital Treasury comprehensive Special Surplus Undistributed shareholders’
Item capital surplus stock income reserve reserve profits equity
Balance at the end of the prior year 7,029,976 29,123,547 (6,094,347) (16,009) - 7,966,362 25,795,300 63,804,829
Add: Changes in accounting policies - - - - - - - -
Balance at the beginning of the current year 7,029,976 29,123,547 (6,094,347) (16,009) - 7,966,362 25,795,300 63,804,829
Movements for the current year (43,412) (2,018,394) (7,950,203) 8,714 - 1,483,539 2,299,120 (6,220,636)
(1) Total comprehensive income - - - 8,714 - - 14,835,388 14,844,102
(2) Capital contribution and withdrawal by shareholders (43,412) (2,452,437) (7,950,203) - - - - (10,446,052)
1). Capital contribution by shareholders 34,437 1,495,004 - - - - - 1,529,441
2). Capital contribution by holders of other equity instruments - - - - - - - -
3). Share-based payment included in owners’ equity - 1,231,289 - - - - - 1,231,289
4). Others (77,849) (5,178,730) (7,950,203) - - - - (13,206,782)
(3) Profit distribution - - - - - 1,483,539 (12,536,268) (11,052,729)
1). Appropriation to surplus reserve - - - - - 1,483,539 (1,483,539) -
2). Profit distribution to shareholders - - - - - - (11,052,729) (11,052,729)
3). Others - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - -
1). Transfer from capital surplus to share capital - - - - - - - -
2). Transfer from surplus reserve to share capital - - - - - - - -
3). Surplus reserve used to offset accumulated losses - - - - - - - -
4). Others - - - - - - - -
(5) Specific reserve - - - - - - - -
1). Appropriation in the current year - - - - - - - -
2). Use in the current year - - - - - - - -
(6) Others - 434,043 - - - - - 434,043
Balance at the end of the current year 6,986,564 27,105,153 (14,044,550) (7,295) - 9,449,901 28,094,420 57,584,193
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
158
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
1 General information
The principal business activities of Midea Group Co., Ltd. (hereinafter referred to as “the
Company”) and its subsidiaries (hereinafter collectively referred to as “the Group”) include
residential air-conditioner, central air-conditioner, heating and ventilation systems, kitchen
appliances, refrigerators, washing machines and various small appliances, robotics and
automation system. Other services include the smart supply chain; sale, wholesale and
processing of raw materials of household electrical appliances; and financial business involving
customer deposits, interbank lendings and borrowings, consumption credits, buyer’s credits and
finance leases.
The Company was set up by the Council of Trade Unions of GD Midea Group Co., Ltd. and was
registered in Market Safety Supervision Bureau of Shunde District, Foshan on 7 April 2000, with
its headquarters located in Foshan, Guangdong. On 30 August 2012, the Company was
transformed into a limited liability company. On 29 July 2013, the Company was approved to
merge and acquire Guangdong Midea Electric Co., Ltd., which was listed on Shenzhen Stock
Exchange. On 18 September 2013, the Company’s shares were listed on Shenzhen Stock
Exchange.
As at 30 June 2022, the Company’s share capital was RMB 6,997,329,041, and the total number
of shares in issue was 6,997,329,041, of which 149,620,565 shares were restricted tradable A
shares and 6,847,708,476 shares were unrestricted tradable A shares.
The detailed information of major subsidiaries included in the consolidation scope in the current
year is set out in Notes 5 and 6. Subsidiaries newly included in the consolidation scope via
acquisition in the current year mainly include Midea Capital Corporation Limited. and its
subsidiaries (including structured entities), Wuhan TTium Motor Technology Co., Ltd. and its
subsidiaries and Shaanxi Construction Investment Co., Ltd., and are detailed in Note 5(1);
subsidiaries newly included in the consolidation scope via establishment in the current year are
detailed in Note 5(2)(a); subsidiaries no longer included in the consolidation scope in the current
year are detailed in Note 5(2)(b).
These financial statements were authorised for issue by the Company’s Board of Directors on
30 August 2022.
2 Summary of significant accounting policies and accounting estimates
The Group determines specific accounting policies and accounting estimates based on the
features of production and operation, mainly including the measurement of expected credit loss
(ECL) on receivables and contract assets (Note 2(9)(a)), valuation method of inventory (Note
2(10)), depreciation of fixed assets, amortisation of intangible assets and right-of-use assets
(Note 2(13), (16), (28)), impairment of long-term assets (Note 2(18)), and recognition and
measurement of revenue (Note 2(25)).
Key judgements and critical accounting estimates and key assumptions applied by the Group
on the determination of significant accounting policies are set out in Note 2(30).
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for Business
Enterprises - Basic Standard, and the specific accounting standards and other relevant
regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods
(hereinafter collectively referred to as the “Accounting Standards for Business Enterprises” or
“CASs”) and the disclosure requirements in the Preparation Convention of Information
Disclosure by Companies Offering Securities to the Public No. 15 - General Rules on Financial
Reporting issued by the China Securities Regulatory Commission (“CSRC”).
159
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(1) Basis of preparation (Cont’d)
The financial statements are prepared on a going concern basis.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the six months ended 30 June 2022 are in
compliance with the Accounting Standards for Business Enterprises, and truly and completely
present the consolidated and company’s financial position of the Company as at 30 June 2022
and their financial performance, cash flows and other information for the six months then ended.
(3) Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Functional currency
The functional currency of the Company is Renminbi (“RMB”). The subsidiaries determine their
functional currency based on the primary economic environment in which the business is
operated, mainly including EUR, JPY, USD and HKD. The financial statements are presented in
RMB.
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the Group in a business combination are
measured at the carrying amount. If the absorbed party was bought by the ultimate controller
from a third party in prior years, the value of its assets and liabilities (including goodwill generated
due to the combination) are based on the carrying amount in the ultimate controller’s
consolidated financial statements. The difference between the carrying amount of the net assets
obtained by the Group and the carrying amount of the consideration paid for the combination is
treated as an adjustment to capital surplus (share premium). If the capital surplus (share
premium) is not sufficient to absorb the difference, the remaining balance is adjusted against
retained earnings. Costs directly attributable to the combination are included in profit or loss in
the period in which they are incurred. Transaction costs associated with the issue of equity or
debt securities for the business combination are included in the initially recognised amounts of
the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the Group in a business
combination are measured at fair value at the acquisition date. Where the cost of the combination
exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is recognised as goodwill; where the cost of combination is lower than the acquirer’s
interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised in
profit or loss for the current period. Costs directly attributable to the combination are included in
profit or loss in the period in which they are incurred. Transaction costs associated with the issue
of equity or debt securities for the business combination are included in the initially recognised
amounts of the equity or debt securities.
160
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(5) Business combinations (Cont’d)
(b) Business combinations involving enterprises not under common control (Cont’d)
For business combinations achieved by stages involving enterprises not under common control,
previously-held equity in the acquiree is remeasured at its fair value at the acquisition dates in
the consolidated financial statements, and the difference between its fair value and carrying
amount is included in investment income for the current period. Where the previously-held equity
in the acquiree involves other comprehensive income under equity method and owners’ equity
changes other than those arising from the net profit or loss, other comprehensive income and
profit distribution, the related other comprehensive income and other owners’ equity changes
are transferred into income for the current period to which the acquisition dates belong, excluding
those arising from changes in the investee’s remeasurement of net liability or net asset related
to the defined benefit plan. The excess of the sum of fair value of the previously-held equity and
fair value of the consideration paid at the acquisition dates over share of fair value of identifiable
net assets acquired from the subsidiary is recognised as goodwill.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all
of its subsidiaries (including structured entities).
Subsidiaries are consolidated from the date on which the Group obtains control and are de-
consolidated from the date that such control ceases. For a subsidiary that is acquired in a
business combination involving enterprises under common control, it is included in the
consolidated financial statements from the date when it, together with the Company, comes
under common control of the ultimate controlling party. The portion of the net profits realised
before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial statements
of the subsidiaries are adjusted in accordance with the accounting policies and the accounting
period of the Company. For subsidiaries acquired from business combinations involving
enterprises not under common control, the individual financial statements of the subsidiaries are
adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of subsidiaries’ shareholders’ equity and the
portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not
attributable to the Company are recognised as minority interests, net profit attributed to minority
interests and total comprehensive income attributed to minority interests and presented
separately in the consolidated financial statements under shareholders’ equity, net profit and
total comprehensive income respectively. Where the loss for the current period attributable to
the minority shareholders of the subsidiaries exceeds the share of the minority interests in the
opening balance of owners’ equity, the excess is deducted against minority interests. Unrealised
profits and losses resulting from the sales of assets by the Company to its subsidiaries are fully
eliminated against net profit attributable to shareholders of the parent company. Unrealised
profits and losses resulting from the sales of assets by a subsidiary to the Company are
eliminated and allocated between net profit attributable to shareholders of the parent company
and net profit attributable to minority interests in accordance with the allocation proportion of the
parent company in the subsidiary. Unrealised profits and losses resulting from the sales of assets
by one subsidiary to another are eliminated and allocated between net profit attributable to
shareholders of the parent company and net profit attributable to minority interests in accordance
with the allocation proportion of the parent company in the subsidiary. If the accounting treatment
of a transaction is inconsistent in the financial statements at the Group level and at the Company
or its subsidiary level, adjustment will be made from the perspective of the Group.
161
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(7) Determination criterion for cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on
demand and other cash balances, and short-term and highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
(8) Foreign currency translation
(a) Foreign currency transactions
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into
functional currency using the spot exchange rates on the balance sheet date. Exchange
differences arising from these translations are recognised in profit or loss for the current period,
except for those attributable to foreign currency borrowings that have been taken out specifically
for acquisition or construction of qualifying assets, which are capitalised as part of the cost of
those assets. Non-monetary items denominated in foreign currencies that are measured at
historical costs are translated at the balance sheet date using the spot exchange rates at the
date of the transactions. The effect of exchange rate changes on cash is presented separately
in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at the
spot exchange rates on the balance sheet date. Among the equity items, the items other than
undistributed profits are translated at the spot exchange rates of the transaction dates. The
income and expense items in the income statements of overseas operations are translated at
the spot exchange rates of the transaction dates. The differences arising from the above
translation are recognised in other comprehensive income. The cash flows of overseas
operations are translated at the spot exchange rates on the dates of the cash flows. The effect
of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. A financial asset or a financial liability is
recognised when the Group becomes a party to the contractual provisions of the instrument.
(a) Financial assets
(i) Classification and measurement
Based on the Group’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets, financial assets are classified as: (1) financial
assets at amortised cost; (2) financial assets at fair value through other comprehensive income;
(3) financial assets at fair value through profit or loss.
162
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
The financial assets are measured at fair value at initial recognition. Related transaction costs
that are attributable to the acquisition of the financial assets are included in the initially
recognised amounts, except for the financial assets at fair value through profit or loss, the related
transaction costs of which are recognised directly in profit or loss for the current period. Accounts
receivable or notes receivable arising from sales of products or rendering of services (excluding
or without regard to significant financing components) are initially recognised at the consideration
that is entitled to be charged by the Group as expected.
(i-1) Debt instruments
The debt instruments held by the Group refer to the instruments that meet the definition of
financial liabilities from the perspective of the issuer, and are measured in the following three
ways:
Measured at amortised cost:
The objective of the Group’s business model is to hold the financial assets to collect the
contractual cash flows, and the contractual cash flow characteristics are consistent with a basic
lending arrangement, which gives rise on specified dates to the contractual cash flows that are
solely payments of principal and interest on the principal amount outstanding. The interest
income of such financial assets is recognised using the effective interest method. Such financial
assets mainly comprise cash at bank and on hand, loans and advances, notes receivable,
accounts receivable, other receivables, debt investments, long-term receivables, etc. Debt
investments and long-term receivables that are due within one year (inclusive) as from the
balance sheet date are included in the current portion of non-current assets; debt investments
with maturities of no more than one year (inclusive) at the time of acquisition are included in
other current assets.
Measured at fair value through other comprehensive income:
The objective of the Group’s business model is to hold the financial assets to both collect the
contractual cash flows and sell such financial assets, and the contractual cash flow
characteristics are consistent with a basic lending arrangement. Such financial assets are
measured at fair value through other comprehensive income, except for the impairment gains or
losses, foreign exchange gains and losses, and interest income calculated using the effective
interest method which are recognised in profit or loss for the current period. Such financial assets
mainly include receivables financing, other debt investments, etc. Other debt investments of the
Group that are due within one year (inclusive) as from the balance sheet date are included in
the current portion of non-current assets; other debt investments with maturities no more than
one year (inclusive) at the time of acquisition are included in other current assets.
163
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-1) Debt instruments (Cont’d)
Measured at fair value through profit or loss:
Debt instruments held by the Group that are not divided into those at amortised cost, or those
measured at fair value through other comprehensive income, are measured at fair value through
profit or loss. At initial recognition, the Group designates a portion of financial assets as at fair
value through profit or loss to eliminate or significantly reduce an accounting mismatch. Financial
assets that are due over one year as from the balance sheet date and are expected to be held
over one year are included in other non-current financial assets. Others are included in financial
assets held for trading.
(i-2) Equity instruments
Investments in equity instruments, over which the Group has no control, joint control or
significant influence, are measured at fair value through profit or loss under financial assets held
for trading; investments in equity instruments expected to be held over one year as from the
balance sheet date are included in other non-current financial assets.
In addition, a portion of certain investments in equity instruments not held for trading are
designated as financial assets at fair value through other comprehensive income under
investments in other equity instruments. The relevant dividend income of such financial assets
is recognised in profit or loss for the current period.
(i-3) Derivative financial instruments
The derivative financial instruments held or issued by the Group are mainly used in controlling
risk exposures. Derivative financial instruments are initially recognised at fair value on the day
when derivatives transaction contract was signed, and subsequently measured at fair value.
The derivative financial instruments are recorded as assets when they have a positive fair value
and as liabilities when they have a negative fair value.
The method for recognising changes in fair value of the derivative financial instrument depends
on whether the derivative financial instrument is designated as a hedging instrument and meets
the requirement for it, and if so, the nature of the item being hedged. For derivative financial
instruments that are not designated as hedging instruments and fail to meet requirements on
hedging instruments, including those held for the purpose of providing hedging against specific
risks in interest rate and foreign exchange but not conforming with requirements of hedge
accounting, the changes in fair value are recorded in gains or losses on changes in fair value in
the consolidated income statement.
164
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-3) Derivative financial instruments (Cont’d)
Cash flow hedge
The effective portion of gains or losses on hedging instruments is recognised in other
comprehensive income as cash flow hedging reserve, while the ineffective portion is recognised
in profit or loss for the current period. Where the hedge is a forecast transaction which
subsequently results in the recognition of a non-financial asset or liability, the amount originally
recognised in other comprehensive income is transferred and included in the initially recognised
amount of the asset or liability. For cash flow hedge beyond the foregoing scope, the amount
originally recognised in other comprehensive income is transferred and included in profit or loss
for the current period during the same time in which the profit or loss is influenced by the hedged
expected cash flow. However, if all or part of net loss recognised directly in other comprehensive
income will not be recovered in future accounting periods, the amount not expected to be
recovered should be transferred to profit or loss for the current period. When the Group revokes
the designation of a hedge, a hedging instrument expires or is sold, terminated or exercised, or
the hedge no longer meets the criteria for hedge accounting, the Group will discontinue the
hedge accounting treatments prospectively. Where the Group discontinues the hedge
accounting treatment for cash flow hedging, for hedged future cash flows that will still happen,
the accumulated gains or losses that have been recognised in other comprehensive income are
retained and subject to accounting treatment under the subsequent treatment method of
aforesaid cash flow hedging reserve; for hedged future cash flows that the forecast transaction
will never happen, the accumulated gains or losses that have been recognised in other
comprehensive income are transferred immediately and included in profit or loss for the current
period.
(ii) Impairment
Loss provision for financial assets at amortised cost, investments in debt instruments at fair
value through other comprehensive income, as well as contract assets and financial guarantee
contracts is recognised on the basis of ECL.
Giving consideration to reasonable and supportable information on past events, current
conditions, forecasts of future economic conditions and forward-looking information, and
weighted by the risk of default, the Group recognises the ECL as the probability-weighted
amount of the present value of the difference between the cash flows receivable from the
contract and the cash flows expected to collect.
165
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
As at each balance sheet date, the ECL of financial instruments at different stages are measured
respectively. 12-month ECL provision is recognised for financial instruments in Stage 1 that have
not had a significant increase in credit risk since initial recognition; lifetime ECL provision is
recognised for financial instruments in Stage 2 that have had a significant increase in credit risk
yet without credit impairment since initial recognition; and lifetime ECL provision is recognised
for financial instruments in Stage 3 that have had credit impairment since initial recognition.
For the financial instruments with lower credit risk on the balance sheet date, the Group assumes
there is no significant increase in credit risk since initial recognition and recognises the 12-month
ECL provision.
For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Group calculates
the interest income by applying the effective interest rate to the book balance (before deduction
of the impairment provision). For the financial instruments in Stage 3, the interest income is
calculated by applying the effective interest rate to the amortised cost (after deduction of the
impairment provision from the book balance).
For notes receivable, accounts receivable, receivables financing and contract assets arising from
sales of goods and rendering of services in the ordinary course of operating activities, the Group
recognises the lifetime ECL provision regardless of whether there exists a significant financing
component. Since contract assets are related to work in progress without invoice, essentially,
their risk characteristics are the same as the accounts receivable of similar contracts. Therefore,
the Group believes that the ECL rate of accounts receivable is an approximation to that of
contract assets.
In case the ECL of an individually assessed financial asset cannot be evaluated with reasonable
cost, the Group divides the receivables and contract assets into certain groupings based on
credit risk characteristics, then pursuant to which, calculates the ECL. Basis and provision
method for determining groupings are as follows:
Grouping of notes receivable 1 Bank acceptance notes grouping
Grouping of notes receivable 2 Trade acceptance notes grouping
Grouping of accounts receivable 1 Overseas business grouping
Grouping of accounts receivable 2 Domestic business grouping
Grouping of contract assets 1 Overseas business grouping
Grouping of contract assets 2 Domestic business grouping
Security deposit and guarantee
Grouping of other receivables 1 receivables grouping
166
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
Grouping of other receivables 2 Receivables from related parties grouping
Grouping of other receivables 3 Other receivables grouping
Grouping of long-term receivables Finance lease payable grouping
Grouping of loans and advances Loans business grouping
The Group, on the basis of the exposure at default and the lifetime ECL rate, calculates the ECL
of notes receivable and receivables financing that are classified into groupings with consideration
to historical credit losses experience, current conditions and forecasts of future economic
conditions.
With consideration to historical credit loss experience, current conditions and forecasts of future
economic conditions, the Group prepares the cross-reference between the number of overdue
days of accounts receivable and the lifetime ECL rate, and calculates the ECL of accounts
receivable that are classified into groupings.
The Group, on the basis of the exposure at default and the 12-month or lifetime ECL rate,
calculates the ECL of other receivables, loans and advances, and long-term receivables that are
classified into groupings with consideration to historical credit losses experience, the current
conditions and forecasts of future economic conditions.
The Group recognises the loss provision made or reversed into profit or loss for the current
period. For debt instruments held at fair value through other comprehensive income, the Group
adjusts other comprehensive income while the impairment loss or gain is recognised in profit or
loss for the current period.
(iii) Derecognition of financial assets
A financial asset is derecognised when: (1) the contractual rights to the cash flows from the
financial asset expire, (2) the financial asset has been transferred and the Group transfers
substantially all the risks and rewards of ownership of the financial asset to the transferee, or (3)
the financial asset has been transferred and the Group has not retained control of the financial
asset, although the Group neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset.
When a financial asset is derecognised, the difference between the carrying amount and the
sum of the consideration received and the cumulative changes in fair value that are previously
recognised directly in other comprehensive income is recognised in profit or loss for the current
period, except for those as investments in other equity instruments, the difference
aforementioned is recognised in retained earnings instead.
167
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(b) Financial liabilities
Financial liabilities are classified as financial liabilities at amortised cost and financial liabilities
at fair value through profit or loss at initial recognition.
Financial liabilities of the Group mainly comprise financial liabilities at amortised cost, including
notes payable, accounts payable, other payables, debentures payable, borrowings and short-
term financing bonds payable in other current liabilities, customer deposits and deposits from
banks and other financial institutions, borrowings from the Central Bank, long-term payables, etc.
Such financial liabilities are initially recognised at fair value, net of transaction costs incurred,
and subsequently measured using the effective interest method. Financial liabilities that are due
within one year (inclusive) are classified as current liabilities; those with maturities over one year
but are due within one year (inclusive) as from the balance sheet date are classified as current
portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognised or partly derecognised when the underlying present obligation
is discharged or partly discharged. The difference between the carrying amount of the
derecognised part of the financial liability and the consideration paid is recognised in profit or
loss for the current period.
(c) 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 not traded in an
active market is determined by using a valuation technique. In valuation, the Group adopts
valuation techniques applicable in the current situation and supported by adequate available
data and other information, selects inputs with the same characteristics as those of assets or
liabilities considered in relevant transactions of assets or liabilities by market participants, and
gives priority to the use of relevant observable inputs. When relevant observable inputs are not
available or feasible, unobservable inputs are adopted.
(10) Inventories
(a) Classification of inventories
Inventories, including raw materials, consigned processing materials, low value consumables,
work in progress, contract performance costs and finished goods, are measured at the lower of
cost and net realisable value.
(b) Costing of inventories
Other than those completed but unsettled, cost is determined using the first-in, first-out method
when issued. The cost of finished goods and work in progress comprises raw materials, direct
labour and systematically allocated production overhead based on the normal production
capacity.
168
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Inventories (Cont’d)
(c) Basis for determining net realisable values of inventories and method for making provision for
decline in the value of inventories
Inventories are initially measured at cost. The cost of inventories comprises purchase cost,
processing cost and other expenditures to bring the inventories to current site and condition.
On the balance sheet date, inventories are measured at the lower of cost and net realisable
value.
Net realisable value is determined based on the estimated selling price in the ordinary course of
business, less the estimated costs to completion and estimated costs necessary to make the
sale and related taxes.
Provision for decline in the value of inventories is determined at the excess amount of the cost
as calculated based on the classification of inventories over their net realisable value, and are
recognised in profit or loss for the current period.
(d) Inventory system
The Group adopts the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Low value consumables are expensed in full when issued and recognised in cost of related
assets or in profit or loss for the current period.
(11) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its
subsidiaries, and the Group’s long-term equity investments in its associates and joint ventures.
Subsidiaries are the investees over which the Company is able to exercise control. A joint
venture is a joint arrangement which is structured through a separate vehicle over which the
Group has joint control together with other parties and only has rights to the net assets of the
arrangement based on legal forms, contractual terms and other facts and circumstances. An
associate is an investee that the Group has significant influence on their financial and operating
policies.
Investments in subsidiaries are presented in the Company’s financial statements using the cost
method, and are adjusted to the equity method when preparing the consolidated financial
statements. Investments in joint ventures and associates are accounted for using the equity
method.
169
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Long-term equity investments (Cont’d)
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity
investments acquired through a business combination involving enterprises under common
control, the investment cost shall be the absorbing party’s share of the carrying amount of owners’
equity of the party being absorbed in the consolidated financial statements of the ultimate
controller at the combination date; for long-term equity investment acquired through a business
combination involving enterprises not under common control, the investment cost shall be the
combination cost.
For business combinations achieved by stages involving enterprises not under common control,
the initial investment cost accounted for using the cost method is the sum of carrying amount of
previously-held equity investment and additional investment cost. For previously-held equity
accounted for using the equity method, the accounting treatment of related other comprehensive
income from disposal of the equity is carried out on a same basis with the investee’s direct
disposal of related assets or liabilities. Owners’ equity, which is recognised due to changes in
investee’s owners’ equity other than those arising from the net profit or loss, other
comprehensive income and profit distribution, is accordingly transferred into profit or loss for the
period in which the investment is disposed.
For investment in previously-held equity accounted for using the recognition and measurement
standards of financial instruments, the initial investment cost accounted for using the cost
method is the sum of carrying amount of previously-held equity investment and additional
investment cost. The difference between the fair value and carrying amount for investment in
previously-held equity and the accumulated changes in fair value previously included in other
comprehensive income are transferred to profit or loss for the current period accounted for using
the cost method.
For long-term equity investments acquired not through a business combination: for long-term
equity investments acquired by payment in cash, the initial investment cost shall be the purchase
price actually paid; for long-term equity investments acquired by issuing equity securities, the
initial investment cost shall be the fair value of the equity securities issued.
170
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Long-term equity investments (Cont’d)
(b) Subsequent measurement and recognition methods of gains and losses
For long-term equity investments accounted for using the cost method, they are measured at
the initial investment costs, and cash dividends or profit distribution declared by the investees
are recognised as investment income in profit or loss for the current period.
For long-term equity investments accounted for using the equity method, where the initial
investment cost of a long-term equity investment exceeds the Group’s share of the fair value of
the investee’s identifiable net assets at the acquisition date, the long-term equity investment is
measured at the initial investment cost; where the initial investment cost is less than the Group’s
share of the fair value of the investee’s identifiable net assets at the acquisition date, the
difference is included in profit or loss and the cost of the long-term equity investment is adjusted
upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group recognises
the investment income according to its share of net profit or loss of the investee. The Group
discontinues recognising its share of the net losses of an investee after the carrying amount of
the long-term equity investment together with any long-term interests that in substance form part
of the investor’s net investment in the investee are reduced to zero. However, if the Group has
obligations for additional losses and the criteria with respect to recognition of provisions under
the accounting standards on contingencies are satisfied, the Group continues recognising the
investment losses and the provisions. The changes of the Group’s share in investee’s owners’
equity other than those arising from the net profit or loss, other comprehensive income and profit
distribution are recognised in capital surplus with a corresponding adjustment to the carrying
amount of the long-term equity investment. The carrying amount of the investment is reduced
by the Group’s share of the profit distribution or cash dividends declared by the investees. The
unrealised profits or losses arising from the transactions between the Group and its investees
are eliminated in proportion to the Group’s equity interest in the investees, based on which the
investment gain or losses are recognised. Any losses resulting from transactions between the
Group and its investees attributable to asset impairment losses are not eliminated.
(c) Basis for determining existence of control, joint control, significant influence over investees
Control is the power to govern an investee and obtain variable returns from participating the
investee’s activities, and the ability to utilise the power of an investee to affect its returns.
Joint control is the contractually agreed sharing of control over an arrangement, and relevant
economic activity can be arranged upon the unanimous approval of the Group and other
participants sharing of control rights.
Significant influence is the power to participate in the financial and operating policy decisions of
the investee, but is not control or joint control over those policies.
171
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Long-term equity investments (Cont’d)
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries, joint ventures and
associates are reduced to the recoverable amounts when the recoverable amounts are below
their carrying amounts (Note 2(18)).
(12) Investment properties
Investment properties, including land use rights that have already been leased out, buildings that
are held for the purpose of leasing and buildings that are being constructed or developed for
future use for leasing, are measured initially at cost. Subsequent expenditures incurred in
relation to an investment property are included in the cost of the investment property when it is
probable that the associated economic benefits will flow to the Group and their costs can be
reliably measured; otherwise, the expenditures are recognised in profit or loss for the period in
which they are incurred.
The Group adopts the cost model for subsequent measurement of investment properties.
Buildings and land use rights are depreciated or amortised to their estimated net residual values
over their estimated useful lives. The estimated useful lives, the estimated net residual values
that are expressed as a percentage of cost and the annual depreciation (amortisation) rates of
investment properties are as follows:
Estimated Estimated net Annual depreciation
useful lives residual values (amortisation) rates
Buildings 20 to 40 years 5% 2.38% to 4.75%
Land use rights 30 to 50 years - 2% to 3.33%
When an investment property is transferred to owner-occupied properties, it is reclassified as
fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is
transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset
is reclassified as investment properties at the date of the transfer. At the time of transfer, the
property is recognised based on the carrying amount before transfer.
The investment properties’ estimated useful lives, the estimated net residual values and the
depreciation (amortisation) methods applied are reviewed and adjusted as appropriate at each
year-end.
An investment property is derecognised on disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from its disposal.
The net amount of proceeds from sale, transfer, retirement or damage of an investment property
after its carrying amount and related taxes and expenses is recognised in profit or loss for the
current period.
172
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(13) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, overseas land, machinery and equipment, motor vehicles,
electronic equipment and others.
Fixed assets are recognised when it is probable that the related economic benefits will flow to
the Group and the cost can be reliably measured. The initial cost of purchased fixed assets
include purchase price, related taxes and expenditures that are attributable to the assets
incurred before the assets are ready for their intended use. The initial cost of self-constructed
fixed assets is determined based on Note 2(14).
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset
when it is probable that the associated economic benefits will flow to the Group and the related
cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the
other subsequent expenditures are recognised in profit or loss for the period in which they are
incurred.
(b) Depreciation method of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to
their estimated net residual values over their estimated useful lives. For the fixed assets that
have been provided for impairment loss, the related depreciation charge is prospectively
determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of cost
and the annual depreciation rates of the Group’s fixed assets are as follows:
Estimated Estimated net Annual
Categories useful lives residual values depreciation rates
Buildings 15 to 50 years 0% to 10% 6.7% to 1.8%
Machinery and equipment 2 to 25 years 0% to 10% 50% to 3.6%
Motor vehicles 2 to 20 years 0% to 10% 50% to 4.5%
Electronic equipment and others 2 to 20 years 0% to 10% 50% to 4.5%
Overseas land Permanent Not applicable Not applicable
The estimated useful lives and the estimated net residual values of the Group’s fixed assets and
the depreciation methods applied to the assets are reviewed, and adjusted as appropriate at
each year-end.
173
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(13) Fixed assets (Cont’d)
(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable
amount is below the carrying amount (Note 2(18)).
(d) Disposal of fixed assets
A fixed asset is derecognised on disposal or when no future economic benefits are expected
from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or
damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised
in profit or loss for the current period.
(14) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs,
installation costs, borrowing costs that are eligible for capitalisation and other costs necessary
to bring the construction in progress ready for their intended use. Construction in progress is
transferred to fixed assets when the assets are ready for their intended use, and depreciation
begins from the following month. The carrying amount of construction in progress is reduced to
the recoverable amount when the recoverable amount is below its carrying amount (Note 2(18)).
(15) Borrowing costs
The borrowing costs that are directly attributable to acquisition and construction of a fixed asset
that needs a substantially long period of time for its intended use commence to be capitalised
and recorded as part of the cost of the asset when expenditures for the asset and borrowing
costs have been incurred, and the activities relating to the acquisition and construction that are
necessary to prepare the asset for its intended use have commenced. The capitalisation of
borrowing costs ceases when the asset under acquisition or construction becomes ready for its
intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the
current period. Capitalisation of borrowing costs is suspended during periods in which the
acquisition or construction of an asset is interrupted abnormally and the interruption lasts for
more than 3 months, until the acquisition or construction is resumed.
174
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(15) Borrowing costs (Cont’d)
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying
for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by actual
interest expenses deducting any interest income earned from depositing the unused specific
borrowings in the banks or any investment income arising on the temporary investment of those
borrowings during the capitalisation period.
For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying
for capitalisation, the amount of general borrowing costs eligible for capitalisation is determined
by applying the weighted average effective interest rate of general borrowings, to the weighted
average of the excess amount of cumulative expenditures on the asset over the amount of
specific borrowings. The effective interest rate is the rate at which the future cash flows during
the period of expected duration of the borrowings or applicable shorter period are discounted to
the initial amount of the borrowings.
(16) Intangible assets
Intangible assets include land use rights, patents and non-patent technologies, trademark rights,
trademark use rights and others, are measured at cost.
(a) Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of 30 to
50 years. If the acquisition costs of the land use rights and the buildings located thereon cannot
be reasonably allocated between the land use rights and the buildings, all of the acquisition costs
are recognised as fixed assets.
(b) Patents and non-patent technologies
Patents are amortised on a straight-line basis over the statutory period of validity, the period as
stipulated by contracts or the beneficial period.
(c) Trademark rights
The trademark rights are measured at cost when acquired and are amortised over the estimated
useful life of 4 to 30 years. The cost of trademark rights obtained in the business combinations
involving enterprises not under common control is measured at fair value. As some of the
trademarks are expected to attract net cash inflows injected into the Group, management
considers that these trademarks have an indefinite useful life and are presented based upon the
carrying amount after deducting the provision for impairment (Note 4(20)).
(d) Trademark use rights
The trademark use rights are measured at cost when acquired. The cost of trademark use rights
obtained in the business combinations involving enterprises not under common control is
measured at fair value, and is amortised over the estimated useful life of 40 years.
175
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(16) Intangible assets (Cont’d)
(e) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method
is performed at each year-end, with adjustment made as appropriate.
(f) Research and development (R&D)
The expenditure on an internal research and development project is classified into expenditure
on the research phase and expenditure on the development phase based on its nature and
whether there is material uncertainty that the research and development activities can form an
intangible asset at the end of the project.
Expenditure on the planned investigation, evaluation and selection for the research of production
processes or products is categorised as expenditure on the research phase, and it is recognised
in profit or loss when it is incurred. Expenditure on design and test for the final application of the
development of production processes or products before mass production is categorised as
expenditure on the development phase, which is capitalised only if all of the following conditions
are satisfied:
The development of production processes or products has been fully justified by
technical team;
The budget on the development of production processes or products has been approved
by management;
There is market research analysis that demonstrates the product produced by the
production process or product has the ability of marketing;
There are sufficient technical and financial resources to support the development of
production processes or products and subsequent mass production; and
Expenditure attributable to the development of production processes or products can be
reliably collected.
Other development expenditures that do not meet the conditions above are recognised in profit
or loss in the period in which they are incurred. Development costs previously recognised as
expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on
the development phase is presented as development costs in the balance sheet and transferred
to intangible assets at the date that the asset is ready for its intended use.
(g) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the
recoverable amount is below the carrying amount (Note 2(18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets held
under operating leases, and other expenditures that have been incurred but should be
recognised as expenses over more than one year in the current and subsequent periods. Long-
term prepaid expenses are amortised on the straight-line basis over the expected beneficial
period and are presented at actual expenditure net of accumulated amortisation.
176
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(18) Impairment of long-term assets
Fixed assets, construction in progress, right-of-use assets, intangible assets with finite useful
lives, investment properties measured using the cost model and long-term equity investments in
subsidiaries, joint ventures and associates are tested for impairment if there is any indication
that the assets may be impaired at the balance sheet date. Intangible assets not ready for their
intended use, intangible assets with infinite useful lives and overseas land are tested at least
annually for impairment, irrespective of whether there is any indication that it may be impaired.
If the result of the impairment test indicates that the recoverable amount of an asset is less than
its carrying amount, a provision for impairment and an asset impairment loss are recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and the present value
of the future cash flows expected to be derived from the asset. Provision for asset impairment is
determined and recognised on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of a group of assets to which
the asset belongs is determined. A group of assets is the smallest group of assets that is able to
generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for
impairment, irrespective of whether there is any indication that it may be impaired. In conducting
the test, the carrying value of goodwill is allocated to the related asset group or groups of asset
groups which are expected to benefit from the synergies of the business combination. If the
result of the test indicates that the recoverable amount of an asset group or a group of asset
groups, including the allocated goodwill, is lower than its carrying amount, the corresponding
impairment loss is recognised. The impairment loss is first deducted from the carrying amount
of goodwill that is allocated to the asset group or group of asset groups, and then deducted from
the carrying amounts of other assets within the asset group or group of asset groups in proportion
to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value
recovered in the subsequent periods.
(19) Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in
exchange for service rendered by employees or for termination of employment relationship,
which include short-term employee benefits, post-employment benefits, termination benefits and
other long-term employee benefits.
(a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff
welfare, premiums or contributions on medical insurance, work injury insurance, maternity
insurance, housing funds, union running costs and employee education costs, short-term paid
absences, etc. The short-term employee benefits actually occurred are recognised as a liability
in the accounting period in which the service is rendered by the employees, with a corresponding
charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary
benefits are measured at fair value.
177
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(19) Employee benefits (Cont’d)
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under which
the Group pays fixed contributions into a separate fund and will have no obligation to pay further
contributions; and defined benefit plans are post-employment benefit plans other than defined
contribution plans. During the reporting period, the Group’s defined contribution plans mainly
include basic pensions and unemployment insurance, while the defined benefit plans are
Wandong Medical, Toshiba Lifestyle Products & Services Corporation (“TLSC”), and KUKA
Aktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA Group”) provide supplemental
retirement benefits beyond the national regulatory insurance system.
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local
authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums
on the basic pensions are calculated according to prescribed bases and percentage by the
relevant local authorities. When employees retire, the relevant local authorities are obliged to
pay the basic pensions to them. The amounts based on the above calculations are recognised
as liabilities in the accounting period in which the service has been rendered by the employees,
with a corresponding charge to the profit or loss for the current period or the cost of relevant
assets.
Supplementary retirement benefits
The liability recognised in the balance sheet in respect of defined benefit pension plans is the
present value of the defined benefit obligations less the fair value of the plan assets. The defined
benefit obligation is calculated annually by independent actuaries using the projected unit credit
method at the interest rate of treasury bonds with similar obligation term and currency. The
charges related to supplementary retirement benefits (including current service costs, historical
service costs and gains or losses on settlement) and net interest are recognised in profit or loss
for the current period or included in the cost of an asset, and the changes arising from
remeasurement in net liabilities or net assets of defined benefit plans are recognised in other
comprehensive income.
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with employees
before the end of the employment contracts or as an offer to encourage employees to accept
voluntary redundancy before the end of the employment contracts. The Group recognises a
liability arising from compensation for termination of the employment relationship with employees,
with a corresponding charge to profit or loss for the current period at the earlier of the following
dates: 1) when the Group cannot unilaterally withdraw an employment termination plan or a
curtailment proposal; 2) when the Group recognises costs or expenses related to a restructuring
that involves the payment of termination benefits.
178
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(19) Employee benefits (Cont’d)
(c) Termination benefits (Cont’d)
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security contributions
to be paid to and for the employees who accept voluntary retirement before the normal retirement
date prescribed by the State, as approved by management. The Group pays early retirement
benefits to those early retired employees from the early retirement date until the normal
retirement date. The Group accounts for the early retirement benefits in accordance with the
treatment for termination benefits, in which the salaries and social security contributions to be
paid to and for the early retired employees from the off-duty date to the normal retirement date
are recognised as liabilities with a corresponding charge to the profit or loss for the current period.
The differences arising from the changes in the respective actuarial assumptions of the early
retirement benefits and the adjustments of benefit standards are recognised in profit or loss in
the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date are
classified as current liabilities.
(20) General risk reserve
General risk reserve is the reserve appropriated from undistributed profits to cover part of
unidentified potential losses, on the basis of the estimated potential risk value of risk assets
assessed by the standardised approach, which is deducted from recognised provision for
impairment losses on loans. Risk assets include loans and advances, long-term equity
investments, deposits with banks and other financial institutions and other receivables of
subsidiaries engaged in financial business.
(21) Dividend distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by the
shareholders’ meeting.
(22) Provisions
Provisions for product warranties, onerous contracts, etc. are recognised when the Group has a
present obligation, it is probable that an outflow of economic benefits will be required to settle
the obligation, and the amount of the obligation can be measured reliably.
179
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(22) Provisions (Cont’d)
A provision is initially measured at the best estimate of the expenditure required to settle the
related present obligation. Factors surrounding a contingency, such as the risks, uncertainties
and the time value of money, are taken into account as a whole in reaching the best estimate of
a provision. Where the effect of the time value of money is material, the best estimate is
determined by discounting the related future cash outflows. The increase in the discounted
amount of the provision arising from passage of time is recognised as interest expenses.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect
the current best estimate.
The provisions expected to be settled within one year since the balance sheet date are classified
as current liabilities.
(23) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from employees as
consideration for equity instruments of the entity or by incurring liabilities for amounts based on
the equity instruments. Equity instruments include equity instruments of the Company, its parent
company or other accounting entities of the Group. Share-based payments are divided into
equity-settled and cash-settled payments. The Group’s share-based payments are equity-settled
payments.
Equity-settled share-based payment
The Group’s equity-settled share-based payment contains share option incentive plan, restricted
share plan and employee stock ownership plan. These plans are measured at the fair value of
the equity instruments at grant date and the equity instruments are exercisable or unlockable
when services in vesting period are completed or specified performance conditions are met. In
the vesting period, the services obtained in the current period are included in relevant cost and
expenses at the fair value of the equity instruments at grant date based on the best estimate of
the number of exercisable or unlockable equity instruments, and capital surplus is increased
accordingly. If the subsequent information indicates the number of exercisable or unlockable
equity instruments differs from the previous estimate, an adjustment is made and, on the
exercise or desterilisation date, the estimate is revised to equal to the number of actual vested
equity instruments.
180
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(23) Share-based payment (Cont’d)
(b) Determination of fair value of equity instruments
The Group determines the fair value of share options using option pricing model, which is Black
- Scholes option pricing model.
The fair value of other equity instruments is based on the share prices, the price that incentive
objects pay, and the number of the shares on the grant date, taking into account the effects of
clause of the Group’s relevant plans.
(c) Basis for determining best estimate of unlockable or exercisable equity instruments
As at each balance sheet date in the vesting period, the Group would make best estimate in
accordance with the newly acquired information such as changes in the number of employees
entitled with exercisable or unlockable equity instruments, and amend the estimated number of
exercisable or unlockable equity instruments. On the exercise or desterilisation date, the final
number of estimated exercisable or unlockable equity instruments is consistent with the actual
number of exercisable or unlockable equity instruments.
(24) Treasury stock
The Group’s treasury stock mainly comes from the repurchase of equity instruments and the
issuance of restricted shares, etc.
Consideration and transaction costs paid by the Group for repurchasing equity instruments are
deducted from equity and not recognised as financial assets. The considerations paid by the
Group for repurchasing equity instruments are presented as treasury stock, and the related
transaction costs are recognised in owners’ equity.
On the deregistration day of shares, relevant share capital and treasury stock are reversed with
the difference included in capital surplus (share premium) based on actual deregistration results.
On the grant day of restricted shares, the Group recognises bank deposits when receiving
subscription from the employees and measures the repurchase obligation as liability. On the day
of release of restricted shares, relevant treasury stocks, liabilities and capital surplus recognised
in the vesting period are reversed based on the actual vesting results.
181
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue
Revenue is the gross inflow of economic benefit arising from the ordinary course of the Group’s
activities, which will lead to an increase in shareholders’ equity and are irrelevant to capital
contributions by shareholders.
Revenue for the Group’s performance of contract obligations in a contract is recognised when a
customer is in control of the underlying goods. Obtaining the control of the underlying goods
means being able to direct the use of the goods and obtain almost all economic benefits from
them.
When any of the following conditions is met, the Group is subject to performance obligations
within a period of time; otherwise, at a point in time:
(1) Customers obtain and consume economic benefits coming from the Group’s performance
of contract while the Group performs the contract.
(2) Customers can control goods under construction during the Group’s performance of
contract.
(3) Goods produced during the Group’s performance of contract are irreplaceable. During the
whole contract period, the Group is entitled to collect payments for those which have been
accumulated up to now.
For a contract obligation within a period of time, the Group shall recognise the revenue based
on the progress of the obligation fulfilment within that period of time, except where the progress
of the obligation fulfilment cannot be determined reasonably.
Where the status of completion cannot be reasonably determined, revenue shall be recognised
at the amount of cost incurred if it is predicted that the cost can be compensated till the progress
of the obligation fulfilment can be reasonably determined.
For a contract obligation at a point in time, the Group shall recognise the revenue when a
customer is in control of the underlying goods.
(a) Sales of products
The Group are principally engaged in the manufacturing and sales of heating & ventilation, as
well as air-conditioner (hereinafter referred to as “HVAC”) (mainly comprises residential air
conditioner, central air-conditioner, heating and ventilation systems, etc.) and consumer
appliances (mainly comprise kitchen appliances, refrigerators, washing machines and various
small appliances, etc.), and robotics and automation system.
Revenue from domestic sales of HVAC and consumer appliances is recognised when the Group
has delivered products to the location specified in the sales contract and the buyer has confirmed
the acceptance of the products, and the delivery order is signed by both parties. Upon confirming
the acceptance, the buyer has the right to sell the products at its discretion and takes the risks
of any price fluctuations and obsolescence and loss of the products.
Revenue from overseas sales of HVAC and consumer appliances is recognised when the goods
have been declared to the customs and shipped out of the port in accordance with the sales
contract.
182
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
(a) Sales of products (Cont’d)
Revenue from sales of robotics and automation system is recognised when the Group has
delivered products to the location specified in the sales contract and the buyer has confirmed
the acceptance of the products, and the delivery order is signed by both parties.
The credit period granted to distributors by the Group is determined based on their credit risk
characteristics, which is consistent with industry practice, and there is no significant financing
component. Generally, the retail customers of the Group are entitled to return the products within
7 days after the confirmation of receipt.
The Group provides distributors with sales discount, and the relevant revenue is recognised at
contract consideration net of the discount amount estimated.
The periods and terms of product quality warranty are provided in accordance with the laws and
regulations related to the products. The Group has not provided any additional services or
product quality warranty, so the product quality warranty does not constitute a separate
performance obligation.
(b) Rendering of services
The Group provides robotics and automation system construction service, intelligent logistics
integration solution, storage services, delivery services, installation services and transportation
service, which are recognised in a certain period of time based on the stage of completion. On
the balance sheet date, the Group re-estimates the stage of completion to reflect the actual
status of contract performance.
When the Group recognises revenue based on the stage of completion, the amount with
unconditional collection right obtained by the Group is recognised as accounts receivable, and
the rest is recognised as contract assets. Meanwhile, loss provision for accounts receivable and
contract assets are recognised on the basis of ECL (Note 2(9)). If the contract price received or
receivable exceeds the amount for the completed service, the excess portion will be recognised
as contract liabilities. Contract assets and contract liabilities under the same contract are
presented on a net basis.
Contract costs include contract performance costs and contract acquisition costs. The costs
incurred by the Group for the provision of services are recognised as contract performance costs.
The recognised revenue is carried forward to the cost of sales from main operations based on
the stage of completion. Incremental costs incurred by the Group for the acquisition of contract
are recognised as the costs to obtain a contract. For the costs to obtain a contract with the
amortisation period within one year, the costs are charged to profit or loss when incurred. For
the costs to obtain a contract with the amortisation period beyond one year, the costs are
charged in the current profit or loss on the same basis as aforesaid revenue of rendering of
services recognised under the relevant contract. If the carrying amount of the contract costs is
higher than the remaining consideration expected to be obtained by rendering of the service net
of the estimated cost to be incurred, the Group makes provision for impairment on the excess
portion and recognises it as asset impairment losses. As at the balance sheet date, based on
whether the amortisation period of the costs to fulfil a contract is more than one year when initially
recognised, the amount of the Group’s costs to fulfil a contract net of related provision for asset
impairment is presented as inventories or other non-current assets. For costs to obtain a contract
with amortisation period beyond one year at the initial recognition, the amount net of related
provision for asset impairment is presented as other non-current assets.
183
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
(c) Interest income
Interest income from financial instruments is calculated by effective interest method and
recognised in profit or loss for the current period. Interest income comprises premiums or
discounts, or the amortisation based on effective rates of other difference between the initial
carrying amount and the due amount of interest-earning assets.
The effective interest method is a method of calculating the amortised cost of a financial asset
or liability and the interest income or interest costs based on effective rates. The effective interest
rate is the rate at which the estimated future cash flows during the period of expected duration
of the financial instruments or applicable shorter period are discounted to the current carrying
amount of the financial instruments. When calculating the effective interest rate, the Group
estimates cash flows by considering all contractual terms of the financial instrument (e.g., early
repayment options, similar options, etc.), but without considering future credit losses. The
calculation includes all fees and interest paid or received that are an integral part of the effective
interest rate, transaction costs, and all other premiums or discounts.
Interest income from impaired financial assets is calculated at the interest rate that is used for
discounting estimated future cash flow when measuring the impairment loss.
(d) Dividend income
Dividend income is recognised when the right to receive dividend payment is established.
(e) Rental income
Rental income from investment prosperities is recognised in the income statement on a straight-
line basis over the lease period.
(f) Fee and commission income
Fee and commission income is recognised in profit or loss for the current period when the service
is provided. The Group defers the initial charge income or commitment fee income arising from
the forming or acquisition of financial assets as the adjustment to effective interest rate. If the
loans are not lent when the loan commitment period is expired, related charges are recognised
as fee and commission income.
184
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(26) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to
the Group at nil consideration, including refund of taxes and financial subsidies, etc.
A government grant is recognised when the conditions attached to it can be complied with and
the government grant can be received. For a government grant in the form of transfer of
monetary assets, the grant is measured at the amount received or receivable. For a government
grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value
is not reliably determinable, the grant is measured at nominal amount.
Government grants related to assets are grants that are acquired by the Group and used for
acquisition, construction or forming long-term assets in other ways. Government grants related
to income refer to the government grants other than those related to assets.
Government grants related to assets are recorded as deferred income reasonably and
systematically amortised to profit or loss over the useful life of the related asset.
For government grants related to income, where the grant is a compensation for related
expenses or losses to be incurred by the Group in the subsequent periods, the grant is
recognised as deferred income, and included in profit or loss over the periods in which the related
costs are recognised; where the grant is a compensation for related expenses or losses already
incurred by the Group, the grant is recognised directly in profit or loss for the current period.
The same kind of government grants are presented with the same method.
Those related to ordinary activities are recorded into operating profit while the other in non-
operating income and expenses.
Loans to the Group at political preferential rate are recorded at the actual amount received, and
the related loan expenses are calculated based on the principal and the political preferential rate.
Finance discounts directly received offset related loans expenses.
(27) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the
differences arising between the tax bases of assets and liabilities and their carrying amounts
(temporary differences). Deferred tax asset is recognised for the deductible losses that can be
carried forward to subsequent years for deduction of the taxable profit in accordance with the
tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial
recognition of goodwill. No deferred tax asset or deferred tax liability is recognised 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 profit (or deductible losses). At the balance sheet date, deferred tax assets and deferred
tax liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled.
185
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(27) Deferred tax assets and deferred tax liabilities (Cont’d)
Deferred tax assets are only recognised for deductible temporary differences, deductible losses
and tax credits to the extent that it is probable that taxable profit will be available in the future
against which the deductible temporary differences, deductible losses and tax credits can be
utilised.
Deferred tax liabilities are recognised for temporary differences arising from investments in
subsidiaries, associates and joint ventures, except where the Group is able to control the timing
of reversal of the temporary difference, and it is probable that the temporary difference will not
reverse in the foreseeable future. When it is probable that the temporary differences arising from
investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable
future and that the taxable profit will be available in the future against which the temporary
differences can be utilised, the corresponding deferred tax assets are recognised.
Deferred tax assets and deferred tax liabilities are offset when:
the deferred tax assets and deferred tax liabilities are related to the same tax payer within
the Group and the same taxation authority; and,
that tax payer within the Group has a legally enforceable right to offset current tax assets
against current tax liabilities.
(28) Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
The Group as the lessee
At the lease commencement date, the Group recognises the right-of-use asset and measures
the lease liability at the present value of the lease payments that are not paid at that date. Lease
payments include fixed payments, the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and payments of penalties for terminating the lease if
the lessee exercises an option to terminate the lease. Variable lease payments in proportion to
sales are excluded from lease payments and recognised in profit or loss as incurred. Lease
liabilities that are due within one year (inclusive) as from the balance sheet date are included in
the current portion of non-current liabilities.
Right-of-use assets of the Group comprise leased buildings, machinery and equipment, motor
vehicles, etc. Right-of-use assets are measured initially at cost which comprises the amount of
the initial measurement of lease liabilities, any lease payments made at or before the
commencement date and any initial direct costs, less any lease incentives received. If there is
reasonable certainty that the Group will obtain ownership of the underlying asset by the end of
the lease term, the asset is depreciated over its remaining useful life; otherwise the asset is
depreciated over the shorter of the lease term and its remaining useful life. The carrying amount
of the right-of-use asset is reduced to the recoverable amount when the recoverable amount is
below the carrying amount.
For short-term leases with a term of 12 months or less and leases of an individual asset (when
new) of low value, the Group chooses to include the lease payments in the cost of the underlying
assets or in the profit or loss for the current period on a straight-line basis over the lease term,
instead of recognising right-of-use assets and lease liabilities.
186
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(28) Leases (Cont’d)
The Group accounts for a lease modification as a separate lease if both: (1) the modification
increases the scope of the lease by adding the right to use one or more underlying assets; (2)
the consideration for the lease increases by an amount commensurate with the stand-alone price
for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the
circumstances of the contract.
For a lease modification that is not accounted for as a separate lease, the Group redetermines
the lease term at the effective date of the lease modification, and remeasures the lease liability
by discounting the revised lease payments using a revised discount rate, except that the contract
changes directly resulting from COVID-19 are accounted for by applying the practical expedient.
For a lease modification which decreases the scope of the lease or shortens the lease term, the
Group correspondingly decreases the carrying amount of the right-of-use asset, and recognises
in profit or loss any gain or loss relating to the partial or full termination of the lease. For other
lease modifications which lead to the remeasurement of lease liabilities, the Group
correspondingly adjusts the carrying amount of the right-of-use asset.
For the rent concessions as a direct result of COVID-19 and for the period ended 30 June 2022
only, the Group applies the practical expedient and records the undiscounted concessions in
profit or loss when the agreement is reached to discharge the original payment obligation with
corresponding adjustment of lease liabilities.
The Group as the lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. An operating lease is a lease other than a finance
lease.
(a) Operating leases
Where the Group leases out self-owned buildings, machinery and equipment, and motor vehicles
under operating leases, rental income therefrom is recognised on a straight-line basis over the
lease term. Variable rental that is linked to a certain percentage of sales is recognised in rental
income as incurred.
For the rent concessions as a direct result of COVID-19 and for the period ended 30 June 2022
only, the Group applies the practical expedient to account for the concessions as variable lease
payments and record the concessions in profit or loss during the waiving period.
Except that the above contract changes directly resulting from COVID-19 are accounted for by
applying the practical expedient, for a lease modification, the Group accounts for it as a new
lease from the effective date of the modification, and considers any lease payments received in
advance and receivable relating to the lease before modification as receivables of the new lease.
(b) Finance leases
At the commencement date, the Group recognises the lease payments receivable under a
finance lease and derecognises relevant assets. The lease payments receivable under a finance
lease are presented as long-term receivables; the lease payments receivable under a finance
lease due within one year (inclusive) as from the balance sheet date are included in the current
portion of non-current assets.
187
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(29) Segment information
The Group identifies operating segments based on the internal organisation structure,
management requirements and internal reporting system, and discloses segment information of
reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions:
(1) the component is able to earn revenue and incur expenses from its ordinary activities; (2)
whose operating results are regularly reviewed by the Group’s management to make decisions
about resources to be allocated to the segment and to assess its performance, and (3) for which
the information on financial position, operating results and cash flows is available to the Group.
Two or more operating segments that have similar economic characteristics and satisfy certain
conditions can be aggregated into one single operating segment.
(30) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied
based on historical experience and other factors, including expectations of future events that are
believed to be reasonable.
Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next accounting
year are outlined below:
(i) Provision for impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable
amount of the asset group and group of asset groups that contain the apportioned goodwill is
determined by the higher value between the use value and the net value that is calculated by
the fair value less the disposal costs. Accounting estimate is required for the calculation of the
recoverable amount. The impairment testing is performed by assessing the recoverable amount
of the asset groups containing the relevant goodwill, based on the present value of cash flows
forecasts. Key assumptions adopted in the impairment testing of goodwill included estimated
revenue growth rate, EBITDA margin, perpetual annual growth rate, discount rate, etc. which
involved critical accounting estimates and judgement.
If management revises the estimated revenue growth rate and perpetual annual growth rate that
are used in the calculation of the future cash flows of asset groups or groups of asset groups,
and the revised rates are lower than the current rates, the Group would need to recognise further
impairment against goodwill.
If management revises the EBITDA margin that is used in the calculation of the future cash flows
of asset groups or groups of asset groups, and the revised EBITDA margin is lower than the
current one, the Group would need to recognise further impairment against goodwill.
If management revises the pre-tax discount rate applied to the discounted cash flows, and the
revised pre-tax discount rate is higher than the one currently applied, the Group would need to
recognise further impairment against goodwill.
188
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(30) Critical accounting estimates and judgements (Cont’d)
(i) Provision for impairment of goodwill (Cont’d)
If the actual estimated revenue growth rate, perpetual annual growth rate and EBITDA margin
are higher or the actual pre-tax discount rate is lower than management’s estimates, the
impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
(ii) Income tax and deferred income tax
The Group is subject to enterprise income tax in numerous jurisdictions. There are many
transactions and events for which the ultimate tax determination is uncertain during the ordinary
course of business. Significant judgement is required from the Group in determining the provision
for income taxes in each of these jurisdictions. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the income
tax and deferred tax provisions in the period in which such determination is made.
As stated in Note 3(1), some subsidiaries of the Group are high-tech enterprises. The “High-
Tech Enterprise Certificate” is effective for three years. Upon expiration, application for high-tech
enterprise assessment should be submitted again to the relevant government authorities. Based
on the past experience of reassessment for high-tech enterprise upon expiration and the actual
condition of the subsidiaries, the Group considers that the subsidiaries are able to obtain the
qualification for high-tech enterprises in future years, and therefore a preferential tax rate of 15%
is used to calculate the corresponding deferred income tax. If some subsidiaries cannot obtain
the qualification for high-tech enterprise upon expiration, then the subsidiaries are subject to a
statutory tax rate of 25% for the calculation of the income tax, which further influences the
recognised deferred tax assets, deferred tax liabilities and income tax expenses.
Deferred tax assets are recognised for the deductible tax losses that can be carried forward to
subsequent years to the extent that it is probable that taxable profit will be available in the future
against which the deductible tax losses can be utilised. Taxable profit that will be available in the
future includes the taxable profit that will be realised through normal operations and the taxable
profit that will be increased upon the reversal of taxable temporary differences incurred in prior
periods. Judgements and estimates are required to determine the time and amounts of taxable
profit in the future. Any difference between the reality and the estimate may result in adjustment
to the carrying amount of deferred tax assets.
189
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation
(1) Main tax category and rate
Category Tax base Tax rate
Enterprise income tax Levied based on taxable income Note (a)
Value-added tax (“VAT”) Taxable value-added amount (Tax Note (b)
payable is calculated using the
taxable sales amount multiplied by
the applicable tax rate less deductible
VAT input of the current period)
City maintenance and The amount of VAT paid 1% or 5% or 7%
construction tax
Educational surcharge The amount of VAT paid 3% or 5%
Local educational surcharge The amount of VAT paid 2%
Property tax Price-based property is subject to a 1.2% or 12%
1.2% tax rate after a 30% cut in the
original price of property; rental-
based property is subject to a 12%
tax rate for the rental income.
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(a-1) The following subsidiaries of the Company are subject to an enterprise income tax rate of 15% in
2022 as they qualified as high-tech enterprises and obtained the High-tech Enterprise Certificate:
No. of the High-tech Dates of Term of
Name of taxpayer Enterprise Certificate issuance validity
Jiangsu Midea Cleaning Appliances Co.,
Ltd. GR202032012131 2 December 2020 3 years
GD Midea Environment Appliances Mfg.
Co., Ltd. GR201944000430 2 December 2019 3 years
Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. GR202144008574 20 December 2021 3 years
Guangdong Witol Vacuum Electronic
Manufacture Co., Ltd. GR202044001986 1 December 2020 3 years
Foshan Shunde Midea Washing
Appliances Manufacturing Co., Ltd. GR202044003557 9 December 2020 3 years
Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. GR202144012791 31 December 2021 3 years
Foshan Shunde Midea Electric Science
and Technology Co., Ltd. GR201944000317 2 December 2019 3 years
GD Midea Heating & Ventilating Equipment
Co., Ltd. GR202144001270 20 December 2021 3 years
Hefei Midea Heating & Ventilating
Equipment Co., Ltd. GR201934001163 9 September 2019 3 years
Anhui Meizhi Precision Manufacturing Co.,
Ltd. GR202134004969 18 September 2021 3 years
Guangzhou Midea Hualing Refrigerator
Co., Ltd. GR201944009238 2 December 2019 3 years
Guangdong Welling Motor Manufacturing
Co., Ltd. GR202044006087 9 December 2020 3 years
Foshan Welling Washer Motor
Manufacturing Co., Ltd. GR202044005425 9 December 2020 3 years
Huaian Welling Motor Manufacturing Co.,
Ltd. GR201932010033 6 December 2019 3 years
Wuxi Filin Electronics Co., Ltd. GR202132000964 3 November 2021 3 years
GD Midea Air-Conditioning Equipment Co.,
Ltd. GR202044003059 1 December 2020 3 years
190
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont'd)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates (Cont’d)
(a-1) The following subsidiaries of the Company are subject to an enterprise income tax rate of 15% in
2022 as they qualified as high-tech enterprises and obtained the High-tech Enterprise Certificate
(Cont’d):
No. of the High-tech Dates of Term of
Name of taxpayer Enterprise Certificate issuance validity
Handan Midea Air-Conditioning
Equipment Co., Ltd. GR202013000191 27 September 2020 3 years
Midea Group Wuhan Refrigeration
Equipment Co., Ltd. GR202042000684 1 December 2020 3 years
Guangzhou Hualing Refrigerating
Equipment Co., Ltd. GR202044001953 1 December 2020 3 years
Guangdong Swisslog Technology Co.,
Ltd. GR202144005648 20 December 2021 3 years
Wuhu Maty Air-Conditioning Equipment
Co., Ltd. GR202034001383 17 August 2020 3 years
Chongqing Midea General Refrigeration
Equipment Co., Ltd. GR202051100347 9 October 2020 3 years
Guangdong Meizhi Compressor Limited GR202044004270 9 December 2020 3 years
Hubei Midea Refrigerator Co., Ltd. GR202042000745 1 December 2020 3 years
Guangdong Midea Consumer Electric
Manufacturing Co., Ltd. GR202044007232 9 December 2020 3 years
Anhui Meizhi Compressor Co., Ltd. GR201934000046 9 September 2019 3 years
Foshan Shunde Midea Water Dispenser
Manufacturing Co., Ltd. GR202044004098 9 December 2020 3 years
Midea Welling Motor Technology
(Shanghai) Co., Ltd. GR202031001304 12 November 2020 3 years
Welling (Wuhu) Motor Manufacturing
Co., Ltd. GR202134003666 18 November 2021 3 years
Hefei Midea Laundry Appliance Co., Ltd. GR202134003561 18 September 2021 3 years
Hefei Hualing Co., Ltd. GR202134000541 18 September 2021 3 years
Foshan Midea Chungho Water
Purification Equipment. Co., Ltd. GR202144010400 31 December 2021 3 years
Toshiba HA Manufacturing (Nanhai) Co.,
Ltd. GR202144002672 20 December 2021 3 years
Guangdong Meizhi Precision-
Manufacturing Co., Ltd. GR202144003890 20 December 2021 3 years
Wuhu Midea Kitchen & Bath Appliances
Mfg. Co., Ltd. GR202134003382 18 September 2021 3 years
Guangdong Midea Intelligent
Technologies Co., Ltd. GR202144008039 20 December 2021 3 years
WINONE ELEVATOR COMPANY
LIMITED GR202144006432 20 December 2021 3 years
Beijing Hiconics Eco-energy Frequency
Conversion Technology Co., Ltd. GR202011003365 21 October 2020 3 years
Changsha Sunye Electric Co., Ltd. GR202143000846 18 September 2021 3 years
Beijing Huatairunda Energy Saving Co.,
Ltd. GR202111004112 17 December 2021 3 years
Dorna Technology Co., Ltd. GR202033006717 1 December 2020 3 years
Wuxi Little Swan Company Limited GR202032006759 2 December 2020 3 years
KUKA Robotics Manufacturing China
Co., Ltd. GR201931001602 28 October 2019 3 years
191
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont'd)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates (Cont’d)
(a-1) The following subsidiaries of the Company are subject to an enterprise income tax rate of 15%
in 2022 as they qualified as high-tech enterprises and obtained the High-tech Enterprise
Certificate (Cont’d):
No. of the High-tech Dates of Term of
Name of taxpayer Enterprise Certificate issuance validity
KUKA Robotics Guangdong Co.,
Ltd. GR202044003841 9 December 2020 3 years
Reis Robotics (Kunshan) Co., Ltd. GR202132000238 3 November 2021 3 years
Midea Intelligent Lighting & Controls
Technology Co., Ltd. GR202036000935 14 September 2020 3 years
Beijing Wandong Software
Technology Co., Ltd. GR202011009515 2 December 2020 3 years
Wanliyun Medical Information
Technology (Beijing) Co., Ltd. GR201911005106 2 December 2019 3 years
Guangdong Midea Environmental
Technologies Co., Ltd. GR202144004692 20 December 2021 3 years
MR Semiconductor Ltd. GR202131000701 9 October 2021 3 years
Anhui Welling Auto Parts
Corporation Limited GR202134002578 18 September 2021 3 years
Guangdong Meicloud Technology
Co., Ltd. GR202144008715 20 December 2021 3 years
Wuhan TTium Motor Technology
Co., Ltd. GR201942001358 15 November 2019 3 years
(a-2) According to the Notice of the Ministry of Finance, the State Taxation Administration on
Preferential Enterprise Income Tax Policies for Hainan Free-trade Port, Cai Shui (2020) (No.31),
the Company’s subsidiary in Hainan is subject to enterprise income tax at a rate of 15% from 1
January 2020 to 31 December 2024.
(a-3) Pursuant to the Notice on Extending the Preferential Enterprise Income Tax Policies for Qianhai
Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen, enterprises that
meet the notice requirements are subject to a reduced enterprise income tax rate of 15%.
Therefore, Midea Commercial Factoring Co., Ltd., a subsidiary of the Company, is subject to
enterprise income tax at a rate of 15% from 1 January 2021 to 31 December 2025.
(a-4) According to the Announcement on Continuing the Enterprise Income Tax Policies for the
Development of Western China jointly issued by the Ministry of Finance, the State Taxation
Administration and the National Development and Reform Commission on 23 April 2020,
Chongqing Midea Air-Conditioning Equipment Co., Ltd., Chongqing Midea Commercial
Factoring Co., Ltd., Chongqing Annto Logistics Technology Co., Ltd. and Guiyang Annto
Logistics Technology Co., Ltd., subsidiaries of the Company are subject to enterprise income
tax at a rate of 15% from 1 January 2021 to 31 December 2030.
192
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont'd)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates (Cont’d)
(a-5) On 24 March 2016, Luanping Huitong Photovoltaic Power Co., Ltd., a subsidiary of the
Company, obtained the Record Form for Enterprise Income Tax Preference issued by the
Luanping County Office of the State Taxation Administration. According to the Announcement
of the State Taxation Administration on the Income Tax Preference Policies for New Power Grid
Projects of Power Grid Enterprises (State Taxation Administration Announcement in 2013, No.
26), Phase I Project of the company was subject to the preferential policy of enterprise income
tax exemption from 2016 to 2018, and was subject to the preferential policy of enterprise income
tax reduction of 50% from 2019 to 2021. On 28 November 2017, the company also obtained
the Record Form for Enterprise Income Tax Preference issued by the Luanping County Office
of the State Taxation Administration. According to Item 2 of Article 27 in the Enterprise Income
Tax Law of the People’s Republic of China, Order of the President of the People’s Republic of
China (No. 63), Phase II Project of the company was subject to the preferential policy of
enterprise income tax exemption from 2017 to 2019, and is subject to the preferential policy of
enterprise income tax reduction of 50% from 2020 to 2022.
(a-6) According to the Notice on Implementing the Inclusive Tax Deduction and Exemption Policies
for Micro and Small Enterprises (Cai Shui [2019] No. 13), the Announcement on the Matters
Concerning the Implementation of Preferential Income Tax Policies for the Development of
Small and Micro Enterprises and Individual Industrial and Commercial Households
(Announcement [2021], No. 12) and the Announcement on the Matters Concerning the
Implementation of Preferential Income Tax Policies for the Development of Small and Micro
Enterprises (Announcement [2022], No. 13) jointly issued by the Ministry of Finance and the
State Taxation Administration, for Shenzhen Midea Capital Enterprise Management Co., Ltd., a
subsidiary of the Company and qualified as a small low-profit enterprise, in 2022, EIT is based
on a 20% rate applied to 12.5% of its taxable income amount for the proportion of taxable income
up to RMB 1 million, and a 20% rate applied to 25% of its taxable income amount for the
proportion of taxable income between RMB 1 million and RMB 3 million.
(a-7) The Company's subsidiaries in Mainland China other than those mentioned in (a-1) to (a-6) are
subject to enterprise income tax at the rate of 25%.
(a-8) In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,
was awarded with the Certificate of Honour for Development and Expansion (No. 587) by the
Singapore Economic Development Board and is subject to the applicable preferential income
tax rate of 5.5% for 2022. Midea Singapore Trading Co., Pte Ltd. and Little Swan International
(Singapore) Co., Pte Ltd., the Company's subsidiaries, are subject to enterprise income tax at
the rate of 17%.
(a-9) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate of
16.5%. Such subsidiaries include Midea International Trading Company Limited, Midea
International Corporation Company Limited, Midea Home Appliances Investments (Hong Kong)
Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited, Midea
Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling International Hong Kong
Ltd., Chairing Holding Limited, Main Power Electrical Factory Limited and Midea Investment
(Asia) Company Limited.
193
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont'd)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates (Cont’d)
(a-10) The Company's subsidiaries in BVI and Cayman Islands are exempted from enterprise income
tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni Investments
Development Ltd., Midea Investment Holding (BVI) Limited, Midea Electric Investment (BVI)
Limited, Welling Holding (BVI) Ltd., Midea Holding (Cayman Islands) Limited and Midea
Investment Development Company Limited.
(a-11) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise income
tax at the rate of 34%.
(a-12) TLSC, the Company's subsidiary in Japan, and its subsidiaries (“TLSC Group”), are subject to
Japan enterprise income tax at the rate of 34.01%.
(a-13) Clivet S.P.A (“Clivet”), the Company's subsidiaries in Italy, are subject to Italy enterprise income
tax at the rate between 20% and 31.4%.
(a-14) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise income
tax at the rate of 32%.
(a-15) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to Israel
enterprise income tax at the rate of 23%.
(a-16) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's
subsidiary in Egypt, is subject to Egyptian enterprise income tax at the rate of 22.5%.
(b) Notes to the VAT tax rate of the principal tax payers with different tax rates
(b-1) Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax Reform
(Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the State Taxation
Administration and the General Administration of Customs and relevant regulations, the
applicable tax rate of revenue arising from sales of goods and rendering of repairing and
replacement services of the Company’s certain subsidiaries is 13% from 1 April 2019, and that
of revenue arising from real estate leasing and transportation services of the Company’s certain
subsidiaries is 9%.
(b-2) Financial services, consulting services and storage services provided by the Company and
certain subsidiaries are subject to VAT at the rate of 6%.
(b-3) Rental revenue of the Company’s certain subsidiaries is subject to easy levy of VAT at the rate
of 5%.
194
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont'd)
(1) Main tax category and rate (Cont’d)
(b) Notes to the VAT tax rate of the principal tax payers with different tax rates (Cont’d)
(b-4) Pursuant to relevant provisions of the Announcement on the VAT Policy Relating to the
Promotion of Relief and Development of Difficulty-ridden Industries in the Service Sector
(Announcement [2022] No. 11), Article 7 of the Announcement on Relevant Policies for
Deepening the Value-Added Tax Reform (Announcement [2019] No. 39), and additional
deduction policies of value-added tax for production and consumer service industry specified in
the Announcement on the Additional Deduction Policies of Value-added Tax for Consumer
Service Industry (Announcement [2019] No. 87), the applicable period of preferential tax policies
that have expired shall be extended to 31 December 2022, and certain subsidiaries of the
Company engaged in the production service sector, are eligible for a 10% additional VAT
deduction based on deductible input VAT.
195
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
Item Ending balance Opening balance
Cash on hand 2,447 1,609
Cash at bank (a) 45,849,451 46,691,119
Other cash balances (b) 849,514 443,893
Statutory reserve with the Central Bank (c) 412,248 419,718
Surplus reserve with the Central Bank 154,409 272,949
Deposits with banks and other financial
institutions (d) 29,157,065 23,351,878
Accrued interest 276,804 694,390
Total 76,701,938 71,875,556
Including: Total amounts deposited with banks
overseas (including Hong Kong,
China, Macau, China, Singapore,
Japan, Italy, Brazil, Germany, etc.) 15,767,238 6,763,152
(a) As at 30 June 2022, cash at bank included fixed deposits with the term of over 3 months,
amounting to RMB 12,852,645,000 (31 December 2021: RMB 28,767,516,000).
(b) Other cash balances mainly include letters of guarantee, bank acceptance notes and letters of
credit.
(c) Statutory reserve with the Central Bank represents the statutory reserve deposited in People’s
Bank of China by the financial enterprise in accordance with relevant regulations, which are
calculated at 5% and 8% for eligible RMB deposits and foreign currency deposits, respectively,
and are not available for use in the Group’s daily operations.
(d) As at 30 June 2022, deposits with banks and other financial institutions included fixed deposits
with the term of over 3 months, amounting to RMB 1,000,000,000 (31 December 2021: RMB
1,000,000,000).
(2) Financial assets held for trading
Item Ending balance Opening balance
Structural deposits (a) 1,776,905 4,285,607
Investments in equity instrument held for
trading (b) 1,099,287 1,319,470
Others 389,449 274,125
Total 3,265,641 5,879,202
(a) As at 30 June 2022, structural deposits were deposits with financial institutions due within 1
year, which were measured at fair value through profit or loss.
(b) As at 30 June 2022, investments in equity instrument held for trading referred to equity
investments in listed companies, which were measured at fair value through profit or loss.
196
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(3) Notes receivable
Item Ending balance Opening balance
Bank acceptance notes 6,559,383 4,689,898
Trade acceptance notes 129,940 126,640
Less: Provision for bad debts (a) (92,105) (31,624)
Total 6,597,218 4,784,914
(a) Provision for bad debts
For notes receivable of the Group arising from sales of goods or rendering of services in the
ordinary course of business, the Group measures bad debts based on the lifetime ECL
regardless of whether there exists a significant financing component. As at 30 June 2022, the
Group considered that there was no significant credit risk associated with its bank acceptance
notes and did not expect that there would be any significant losses from non-performance by
these banks.
(b) As at 30 June 2022, notes receivable endorsed or discounted but unmatured were as follows:
Item Derecognised Not derecognised
Bank acceptance notes - 3,320,446
(4) Accounts receivable
Item Ending balance Opening balance
Accounts receivable 30,560,260 25,495,619
Less: Provision for bad debts (973,840) (859,179)
Total 29,586,420 24,636,440
(a) The ageing of accounts receivable is analysed as follows:
Ageing Ending balance Opening balance
Within 1 year 29,799,662 24,566,401
1 to 2 years 439,256 617,355
2 to 3 years 157,043 144,300
3 to 5 years 127,743 134,460
Over 5 years 36,556 33,103
Sub-total 30,560,260 25,495,619
As at 30 June 2022, the Group had no significant overdue accounts receivable.
197
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(4) Accounts receivable (Cont’d)
(b) Under the new financial instruments standards, the Group measures the loss provision for
accounts receivable according to the lifetime ECL.
As at 30 June 2022, accounts receivable for which the related provision for bad debts was
provided on the individual basis were analysed as follows :
Ending balance
Book Lifetime Provision for
Category balance ECL rate bad debts Reason
The debtor
encountered financial
Domestic customers 43,880 100.00% (43,880) distress, etc.
The debtor
encountered financial
Overseas customers 17,471 100.00% (17,471) distress, etc.
Total 61,351 (61,351)
As at 30 June 2022, accounts receivable for which the related provision for bad debts was
provided on the grouping basis were analysed as follows:
Ending balance
Book balance Provision for bad debts
Category Amount Lifetime ECL rate Amount
Domestic business grouping 13,332,913 2.98% (397,430)
Overseas business grouping 17,165,996 3.00% (515,059)
Total 30,498,909 (912,489)
(c) For the six months ended 30 June 2022, the provision for bad debts reversed amounted to
RMB 183,359,000.
For the six months ended 30 June 2022, the accounts receivable written off by the Group were
arising from transactions with third parties and no accounts receivable with significant amounts
were written off.
(d) As at 30 June 2022, the five largest accounts receivable aggregated by debtor were
summarised and analysed as follows:
Item Amount Provision for bad debts % of total balance
Total amount of the five largest
accounts receivable 1,638,234 (40,956) 5.36%
(5) Other receivables
Item Ending balance Opening balance
Other receivables 2,217,464 3,147,595
Less: Provision for bad debts (41,801) (43,530)
Total 2,175,663 3,104,065
198
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(a) Other receivables mainly include deposits, receivables related to share options, current
accounts and petty cash to staff.
The ageing of other receivables is analysed as follows :
Ageing Ending balance Opening balance
Within 1 year 1,875,014 2,856,634
1 to 2 years 238,442 149,331
2 to 3 years 31,931 97,424
3 to 5 years 47,258 28,029
Over 5 years 24,819 16,177
Sub-total 2,217,464 3,147,595
(b) Provision for bad debts and changes in book balance statement
Stage 1 Stage 3
12-month ECL Lifetime ECL
12-month ECL (Grouping) (Individual) (Credit impaired) Sub-total
Book Provision for Book Provision for Book Provision for Provision
Item balance bad debts balance bad debts balance bad debts for bad debts
1 January 2022 2,992,048 38,263 150,280 - 5,267 5,267 43,530
Transfer to Stage 3 (18) (2) - - 18 2 -
Net (decrease)/increase
in the current year (793,457) (8,887) (136,608) - (66) (57) (8,944)
Including: Write-off in
the current
period - - - - (66) (66) (66)
Derecognition - - - - - - -
Differences on
translation of foreign
currency financial
statements 7,208 - 7 7,215
30 June 2022 2,198,573 36,582 13,672 - 5,219 5,219 41,801
(i) As at 30 June 2022, other receivables for which the related provision for bad debts was provided
on the individual basis were analysed as follows:
ECL rate in the Provision for
Book balance following 12 months bad debts Reason
Stage 1 13,672 0% - Relatively low bad debt risks
ECL rate in the Provision for
Book balance following 12 months bad debts Reason
The debtor encountered
Stage 3 5,219 100.00% (5,219) financial distress, etc.
(ii) As at 30 June 2022, other receivables for which the related provision for bad debts was provided
on the grouping basis were all at Stage 1, which were analysed as follows:
Ending balance Opening balance
Book Book
balance Provision for bad debts balance Provision for bad debts
Provision Provision
Stage 1 Amount Amount ratio Amount Amount ratio
Security deposit/
guarantee payables
grouping 2,198,573 (36,582) 1.66% 2,992,048 (38,263) 1.28%
(c) For the six months ended 30 June 2022, the provision for bad debts reversed amounted to
RMB 19,870,000.
For the six months ended 30 June 2022, no other receivables with significant amounts were
written off.
(d) As at 30 June 2022, the five largest other receivables aggregated by debtor were summarised
and analysed as follows:
Provision for % of total
Item Amount bad debts balance
Total amount of the five largest other receivables 133,079 (3,788) 6.00%
199
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
(e) As at 30 June 2022, the Group had no significant government grants recognised at amounts
receivable.
(6) Receivables financing
Item Ending balance Opening balance
Receivables financing 14,072,448 10,273,552
The Group’s receivables financing were mainly accounts receivable and bank acceptance notes
transferred, discounted and endorsed for the purpose of daily treasury management and were
qualified for derecognition.
As at 30 June 2022 and 31 December 2021, the Group measured provision for bad debts based
on the lifetime ECL and expected that there was no significant credit risk associated with its
bank acceptance notes and did not expect that there would be any significant losses from non-
performance by these banks.
As at 30 June 2022, the Group’s notes receivable endorsed or discounted but not matured
presented in receivables financing were as follows:
Item Derecognised Not derecognised
Receivables financing 17,767,351 -
(7) Advances to suppliers
Item Ending balance Opening balance
Prepayments for raw materials
and others 4,385,716 4,352,807
(a) The ageing of advances to suppliers is analysed below:
Ending balance Opening balance
% of total % of total
Ageing Amount balance Amount balance
Within 1 year 4,212,859 96.06% 4,241,867 97.45%
1 to 2 years 141,871 3.23% 74,391 1.71%
2 to 3 years 13,611 0.31% 18,798 0.43%
Over 3 years 17,375 0.40% 17,751 0.41%
Total 4,385,716 100.00% 4,352,807 100.00%
As at 30 June 2022, advances to suppliers with ageing over 1 year with a carrying amount of
RMB 172,857,000 (31 December 2021: RMB 110,940,000) were mainly unsettled prepayments
for raw materials.
As at 30 June 2022, the five largest advances to suppliers aggregated by debtor were
summarised and analysed as follows:
200
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
Item Amount % of total balance
Total amount of the five largest
advances to suppliers 1,116,432 25.46%
(8) Contract assets
Item Ending balance Opening balance
Contract assets 4,334,389 3,870,243
Less: Provision for impairment of
contract assets (70,025) (46,767)
Total 4,264,364 3,823,476
For contract assets, the Group measures the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
As at 30 June 2022, contract assets for which the related provision for bad debts was provided
on the grouping basis were analysed as follows:
Ending balance
Book Lifetime Provision for
Grouping balance ECL rate bad debts
Domestic business grouping 1,142,663 3.31% (37,861)
Overseas business grouping 3,191,726 1.01% (32,164)
Total 4,334,389 (70,025)
(9) Loans and advances
(a) By individual and corporation:
Item Ending balance Opening balance
Loans and advances measured at
amortised cost
Loans and advances to individuals 2,198,764 2,217,220
Loans and advances to corporations 15,069,283 19,744,034
Including: Loans 10,605,323 12,790,285
Discount bills 4,463,960 6,953,749
Sub-total 17,268,047 21,961,254
Less: Provision for loan losses (492,282) (452,727)
Total 16,775,765 21,508,527
As at 30 June 2022, loans and advances over 1 year amounted to RMB 1,190,970,000 (31
December 2021: RMB 851,927,000).
201
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(9) Loans and advances (Cont’d)
(b) By type of collateral held:
Item Ending balance Opening balance
Unsecured loans 2,194,596 2,211,108
Guaranteed loans 410,209 587,936
Pledged loans 14,663,242 19,162,210
Sub-total 17,268,047 21,961,254
Less: Provision for loan losses (492,282) (452,727)
Total 16,775,765 21,508,527
(10) Inventories
(a) Inventories are summarised by category as follows:
Ending balance Opening balance
Book Provision for Carrying Book Provision for Carrying
Item balance decline in value amount balance decline in value amount
Finished goods 25,857,792 (533,009) 25,324,783 33,636,462 (419,166) 33,217,296
Raw materials 9,274,477 (141,590) 9,132,887 9,592,914 (121,217) 9,471,697
Work in progress 1,751,998 - 1,751,998 2,406,866 - 2,406,866
Consigned
processing
materials and
others. 541,170 - 541,170 828,580 - 828,580
Total 37,425,437 (674,599) 36,750,838 46,464,822 (540,383) 45,924,439
(b) Analysis of provision for decline in the value of inventories is as follows:
Increase of Decrease by Differences on translation
Opening provision in the reversal or write- off of foreign currency Ending
Item balance current period in the current period financial statements balance
Finished goods 419,166 166,758 (47,347) (5,568) 533,009
Raw materials 121,217 38,585 (13,742) (4,470) 141,590
Total 540,383 205,343 (61,089) (10,038) 674,599
(c) Provision for decline in the value of inventories is as follows:
Reason for written-off of
Basis for provision for decline provision for decline in the value
Item in the value of inventories of inventories for current period
Stated at the lower of cost
Finished goods and net realisable value Sales
Stated at the lower of cost
Raw materials and net realisable value Requisition for production
202
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(11) Current portion of non-current assets
Item Ending balance Opening balance
Long-term receivables due within 1 year 457,716 491,205
Other debt investments due within 1 year 14,232,853 19,360,372
Current portion of other non-current assets 24,027,270 -
Total 38,717,839 19,851,577
(12) Other current assets
Item Ending balance Opening balance
Fixed income products (a) 35,591,234 23,696,825
Input VAT to be deducted 4,578,509 6,137,776
Prepaid expenses 970,946 828,675
Others 1,986,733 2,492,736
Total 43,127,422 33,156,012
(a) As at 30 June 2022, fixed income products were monetary investment products deposited in
financial institutions with maturities of no more than one year at the time of acquisition, which
were subsequently measured at amortised cost.
(13) Other debt investments
Item Ending balance Opening balance
Fair value through other
comprehensive income
- Transferable certificate of deposit 22,383,547 27,254,307
Less: Other debt investments due
within 1 year (14,232,853) (19,360,372)
Total 8,150,694 7,893,935
As at 30 June 2022, the cost of the Group’s transferable certificate of deposit approximated
its fair value.
As at 30 June 2022, the Group expected that there has no significant increase in credit risk of
transferable certificate of deposit since initial recognition and made provision for loss based
on 12-month ECL. The Group considered that there was no significant credit risk associated
with transferable certificate of deposit and did not expect that there would be any significant
losses from non-performance by these banks.
203
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(14) Long-term receivables
Item Ending balance Opening balance
Long-term receivables 1,282,760 1,371,022
Less: Provision for bad debts (16,014) (8,461)
Total 1,266,746 1,362,561
Less: Long-term receivables due within 1 year (457,716) (491,205)
Total 809,030 871,356
The Group’s long-term receivables are presented in net amount of finance lease receivables
after offsetting the unrealised financing income.
(15) Long-term equity investments
Long-term equity investments are classified as follows:
Item Ending balance Opening balance
Investments in associates (a) 3,769,304 3,796,705
Less: Provision for impairment of long-
term equity investments - -
Total 3,769,304 3,796,705
(a) Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., Carrier Midea North America LLC and Hefei Royalstar Motor Co.,
Ltd. and other enterprises by the Group.
(16) Other non-current financial assets
Item Ending balance Opening balance
Measured at fair value
- Equity of unlisted companies, etc. 7,076,364 5,912,873
Less: Provision for impairment of other
non-current financial assets - -
Total 7,076,364 5,912,873
204
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(17) Fixed assets
Machinery Electronic
Overseas and Motor equipment
Item Buildings land equipment vehicles and others Total
Cost
Opening balance 20,108,658 1,330,856 22,182,072 758,743 5,497,346 49,877,675
Increase in the current period 528,160 - 1,494,799 29,774 512,787 2,565,520
1) Purchase 263,493 - 1,431,122 29,594 464,258 2,188,467
2) Transfers from
construction in progress 250,850 - 62,295 104 48,494 361,743
3) Increase by business
combinations - - 1,382 76 35 1,493
4) Others 13,817 - - - - 13,817
Decrease in the current
period (89,640) (214) (354,808) (13,428) (121,750) (579,840)
1) Disposal or retirement (71,378) - (354,577) (13,428) (121,520) (560,903)
2) Others (18,262) (214) (231) - (230) (18,937)
Differences on translation of
foreign currency financial
statements (112,823) (34,443) (103,312) (1,765) (10,955) (263,298)
Ending balance 20,434,355 1,296,199 23,218,751 773,324 5,877,428 51,600,057
Accumulated depreciation
Opening balance 9,003,358 - 13,332,180 571,319 4,067,650 26,974,507
Increase in the current period 474,963 - 731,397 12,402 369,254 1,588,016
1) Provision 462,738 - 731,397 12,402 369,254 1,575,791
2) Others 12,225 - - - - 12,225
Decrease in the current
period (55,757) - (289,895) (11,997) (107,287) (464,936)
1) Disposal or retirement (41,829) - (289,740) (11,997) (107,150) (450,716)
2) Others (13,928) - (155) - (137) (14,220)
Differences on translation of
foreign currency financial
statements (6,069) - (13,873) (659) 545 (20,056)
Ending balance 9,416,495 - 13,759,809 571,065 4,330,162 28,077,531
Provision for impairment
Opening balance 6,179 5,469 10,011 21,093 7,568 50,320
Increase in the current period - - - - - -
1) Provision - - - - - -
Decrease in the current
period - - (61) (102) (1) (164)
1) Disposal or retirement - - (61) (102) (1) (164)
Differences on translation of
foreign currency financial
statements (172) (329) (30) (13) (394) (938)
Ending balance 6,007 5,140 9,920 20,978 7,173 49,218
Carrying amount at the end
of the period 11,011,853 1,291,059 9,449,022 181,281 1,540,093 23,473,308
Carrying amount at the
beginning of the period 11,099,121 1,325,387 8,839,881 166,331 1,422,128 22,852,848
(a) For the six months ended 30 June 2022, the depreciation of fixed assets amounted to RMB
1,575,791,000 (for the six months ended 30 June 2021: RMB 1,607,829,000) and was included in
the income statement in full amount.
(b) As at 30 June 2022, the Company was still in the course of obtaining the ownership certificate for
the fixed asset with a carrying amount of RMB 617,721,000 (31 December 2021: RMB 617,721,000).
205
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress
Ending balance Opening balance
Book Provision for Carrying Book Provision for Carrying
Project name balance impairment amount balance impairment amount
Early-stage Project
of Shanghai R&D
Centre 874,160 - 874,160 687,704 - 687,704
Midea Headquarters
A04 Land Parcel
Project 752,127 - 752,127 565,884 - 565,884
Midea Headquarters
08 Land Parcel
Project 240,058 - 240,058 234,165 - 234,165
Thailand Factories 256,385 - 256,385 213,005 - 213,005
Indian Science Park 177,894 - 177,894 179,813 - 179,813
Other projects 1,321,107 (31,106) 1,290,001 843,547 (33,188) 810,359
Total 3,621,731 (31,106) 3,590,625 2,724,118 (33,188) 2,690,930
206
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress (Cont’d)
(a) Movements of significant projects of construction in progress
Differences on
Increase in translation of foreign
Opening the current Transfers to Other currency financial Ending
Project name balance period fixed asset decreases statements balance Source of funds
Early-stage Project of
Shanghai R&D Centre 687,704 186,456 - - - 874,160 Self-financing
Midea Headquarters A04
Land Parcel Project 565,884 186,243 - - - 752,127 Self-financing
Midea Headquarters 08
Land Parcel Project 234,165 5,893 - - - 240,058 Self-financing
Thailand Factories 213,005 44,419 - - (1,039) 256,385 Self-financing
Indian Science Park 179,813 10,735 - (11,230) (1,424) 177,894 Self-financing
Other projects 843,547 853,606 (361,743) (7,056) (7,247) 1,321,107 Self-financing
Total 2,724,118 1,287,352 (361,743) (18,286) (9,710) 3,621,731
(i) For the six months ended 30 June 2022, the Group had no borrowing costs eligible for capitalisation.
(ii) As at 30 June 2022, the cost of construction in progress matched the budget amount, and the projects were carried out on schedule.
207
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(19) Right-of-use assets
Machinery and Land use rights
Item Buildings equipment and others Total
Cost
Opening balance 2,852,417 241,510 111,501 3,205,428
Increase in the current period 510,106 31,682 6,111 547,899
1) New lease contracts 503,180 29,467 6,073 538,720
2) Lease modifications and
others 6,926 2,215 38 9,179
Decrease in the current period (179,776) (21,583) (1,448) (202,807)
1) Expiration of lease contracts (125,741) (13,531) (854) (140,126)
2) Lease modifications and
others (54,035) (8,052) (594) (62,681)
Differences on translation of
foreign currency financial
statements (657) (9,854) (622) (11,133)
Ending balance 3,182,090 241,755 115,542 3,539,387
Accumulated depreciation
Opening balance 751,536 136,409 20,129 908,074
Increase in the current period 481,917 40,921 9,205 532,043
1) Provision 481,917 40,921 9,205 532,043
Decrease in the current period (133,681) (16,230) (966) (150,877)
1) Expiration of lease contracts (125,741) (13,531) (854) (140,126)
2) Lease modifications and
others (7,940) (2,699) (112) (10,751)
Differences on translation of
foreign currency financial
statements 171 (7,036) (404) (7,269)
Ending balance 1,099,943 154,064 27,964 1,281,971
Carrying amount at the end of
the period 2,082,147 87,691 87,578 2,257,416
Carrying amount at the
beginning of the period 2,100,881 105,101 91,372 2,297,354
208
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(20) Intangible assets
Patents and
Land use non-patent Trademark Trademark use
Item rights technologies rights rights Others Total
Cost
Opening balance 7,158,510 3,199,777 4,769,814 2,295,651 5,576,295 23,000,047
Increase in the current
period 466,118 4,437 34 - 130,061 600,650
1) Purchase 459,320 3,767 34 - 116,104 579,225
2) Increase by business
combinations 5,017 - - - 9,438 14,455
3) Others 1,781 670 - - 4,519 6,970
Decrease in the current
period (40,373) (12) - - (29,792) (70,177)
1) Disposal (40,373) (12) - - (29,792) (70,177)
Differences on translation of
foreign currency financial
statements (1,271) (48,380) (113,645) (261,506) (83,076) (507,878)
Ending balance 7,582,984 3,155,822 4,656,203 2,034,145 5,593,488 23,022,642
Accumulated amortisation
Opening balance 1,138,198 921,857 160,901 342,000 3,087,655 5,650,611
Increase in the current
period 72,774 92,197 33,565 25,860 295,124 519,520
1) Provision 71,641 92,197 33,565 25,860 295,124 518,387
2) Others 1,133 - - - - 1,133
Decrease in the current
period (10,255) (12) - - (24,605) (34,872)
1) Disposal (10,255) (12) - - (24,605) (34,872)
Differences on translation of
foreign currency financial
statements 132 (26,553) 602 (35,325) (17,072) (78,216)
Ending balance 1,200,849 987,489 195,068 332,535 3,341,102 6,057,043
Provision for impairment
Opening balance - 108,010 - - 68,354 176,364
Increase in the current
period - - - - 6,400 6,400
1) Provision - - - - 6,400 6,400
Decrease in the current
period - - - - - -
1) Disposal - - - - - -
Differences on translation of
foreign currency financial
statements - 4,957 - - 3,480 8,437
Ending balance - 112,967 - - 78,234 191,201
Carrying amount at the end
of the period 6,382,135 2,055,366 4,461,135 1,701,610 2,174,152 16,774,398
Carrying amount at the
beginning of the period 6,020,312 2,169,910 4,608,913 1,953,651 2,420,286 17,173,072
(a) For the six months ended 30 June 2022, the amortisation of intangible assets amounted to RMB
518,387,000 (for the six months ended 30 June 2021: RMB 579,289,000) and was included in the income
statement in full amount.
(b) As at 30 June 2022, intangible assets with a carrying amount of RMB 42,937,000 (31 December 2021:
RMB 0) had outstanding certificates of land use rights
209
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(21) Goodwill
The Group’s goodwill had been allocated to the asset group and asset groups at the
acquisition date, and the allocation is as follows:
Name of investee Ending balance Opening balance
KUKA Group 19,943,412 20,544,697
TLSC Group 2,287,889 2,580,274
Little Swan 1,361,306 1,361,306
Others 4,048,806 3,893,186
Sub-total 27,641,413 28,379,463
Less: Provision for impairment (531,286) (504,711)
Total 27,110,127 27,874,752
(22) Long-term prepaid expenses
Long-term prepaid expenses mainly include expenses prepaid for software and project
reconstruction.
(23) Deferred tax assets and deferred tax liabilities
(a) Deferred tax assets before offsetting
Ending balance Opening balance
Deductible Deductible
temporary temporary
differences and Deferred tax differences and Deferred tax
Item deductible losses assets deductible losses assets
Deductible losses 7,319,923 1,617,565 6,189,786 1,371,028
Provision for asset
impairment 3,105,596 647,721 2,891,362 596,763
Employee benefits
payable 1,046,634 254,343 1,214,088 285,263
Other current liabilities 33,795,392 6,213,666 29,984,331 5,531,170
Others 9,027,306 2,089,699 9,949,311 2,192,050
Total 54,294,851 10,822,994 50,228,878 9,976,274
(b) Deferred tax liabilities before offsetting
Ending balance Opening balance
Taxable Taxable
temporary Deferred tax temporary Deferred tax
Deferred tax liabilities differences liabilities differences liabilities
Changes in fair value 1,000,261 248,187 3,159,648 349,208
Business combinations
involving enterprises
not under common
control 10,446,965 2,886,786 11,683,474 3,145,282
Others 13,257,302 3,067,484 14,441,530 3,239,720
Total 24,704,528 6,202,457 29,284,652 6,734,210
(c) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as
follows:
210
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
Balance after offsetting at Balance after offsetting at the
Item the end of the period beginning of the period
Deferred tax assets 9,117,529 8,192,309
Deferred tax liabilities 4,496,992 4,950,245
(24) Other non-current assets
Item Ending balance Opening balance
Fixed income products (a) 54,492,997 35,485,395
Less: Fixed income products due
within 1 year (24,027,270) -
Sub-total 30,465,727 35,485,395
Others 1,222,353 888,961
Total 31,688,080 36,374,356
(a) As at 30 June 2022, fixed income products were monetary investment products and non-
transferable certificates of deposit deposited in financial institutions with maturities of more than
one year at the time of acquisition, which were subsequently measured at amortised cost.
211
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(25) Asset impairment and provision for loss
Decrease in the current period Differences on
translation of foreign
1 January Increase in the currency financial 30 June
Item 2022 current period Reversal Write-off statements 2022
Provision for bad debts 1,395,521 399,848 (206,021) (4,599) 31,293 1,616,042
Including: Provision for bad debts of accounts
receivable 859,179 278,516 (183,359) (4,533) 24,037 973,840
Provision for losses of loans and advances 452,727 40,511 (956) - - 492,282
Provision for bad debts of notes receivable 31,624 62,107 (1,626) - - 92,105
Provision for bad debts of other receivables 43,530 10,992 (19,870) (66) 7,215 41,801
Provision for bad debts of long-term
receivables 8,461 7,722 (210) - 41 16,014
Provision for decline in the value of inventories 540,383 205,343 (4,683) (56,406) (10,038) 674,599
Provision for impairment of fixed assets 50,320 - - (164) (938) 49,218
Provision for impairment of intangible assets 176,364 6,400 - - 8,437 191,201
Provision for impairment of contract assets 46,767 27,908 (4,289) - (361) 70,025
Provision for impairment of investment properties 12,576 - - - - 12,576
Provision for impairment of construction in progress 33,188 - - - (2,082) 31,106
Provision for impairment of goodwill 504,711 - - - 26,575 531,286
Total 2,759,830 639,499 (214,993) (61,169) 52,886 3,176,053
212
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(26) Assets with use rights restricted
As at 30 June 2022, assets with use rights restricted were mainly as follows:
Item Ending balance Opening balance
Cash at bank and on hand
Including: Cash at bank (Note 4(1)) 12,852,645 28,767,516
Other cash balances (Note 4(1)) 849,514 443,893
Statutory reserves with the Central Bank (Note 4(1)) 412,248 419,718
Deposits with banks and other financial institutions
(Note 4(1)) 1,000,000 1,000,000
Total 15,114,407 30,631,127
(27) Short-term borrowings
Item Ending balance Opening balance
Unsecured borrowings 2,436,834 1,260,780
Guaranteed borrowings 7,681,970 1,982,534
Pledged borrowings 539,878 2,138,309
Total 10,658,682 5,381,623
As at 30 June 2022, the annual interest rate range of short-term borrowings was 0.41% to
14.90% (31 December 2021: 0.41% to 9.75%).
(28) Notes payable
Item Ending balance Opening balance
Bank acceptance notes 29,331,809 32,752,007
(29) Accounts payable
Item Ending balance Opening balance
Materials cost payable 61,012,948 61,527,747
Others 4,520,785 4,455,812
Total 65,533,733 65,983,559
As at 30 June 2022, accounts payable with ageing over 1 year with a carrying amount of RMB
1,055,032,000 (31 December 2021: RMB 1,271,088,000) were mainly unsettled accounts
payable for materials.
(30) Contract liabilities
Item Ending balance Opening balance
Advances for construction projects 2,674,387 2,596,795
Advances on sales and services 21,657,207 21,319,800
Total 24,331,594 23,916,595
213
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(31) Employee benefits payable
Item Ending balance Opening balance
Short-term employee benefits payable (a) 5,318,615 7,430,595
Others 117,376 104,573
Total 5,435,991 7,535,168
(a) Short-term employee benefits
Opening Increase in the Decrease in the Ending
Item balance current period current period balance
Wages and salaries, bonus,
allowances and subsidies 6,949,838 13,300,921 (15,369,473) 4,881,286
Staff welfare 299,396 927,676 (967,517) 259,555
Social security contributions 67,268 938,408 (944,777) 60,899
Including: Medical insurance 65,663 902,786 (908,378) 60,071
Work injury
insurance 664 21,045 (21,220) 489
Maternity insurance 941 14,577 (15,179) 339
Housing funds 23,079 314,083 (314,119) 23,043
Labour union funds and
employee education funds 22,246 61,705 (59,248) 24,703
Other short-term employee
benefits 68,768 356,554 (356,193) 69,129
Sub-total 7,430,595 15,899,347 (18,011,327) 5,318,615
(32) Taxes payable
Item Ending balance Opening balance
Enterprise income tax payable 2,578,726 2,972,040
Unpaid VAT 1,154,924 1,032,688
Others 718,040 1,399,539
Total 4,451,690 5,404,267
(33) Other payables
Item Ending balance Opening balance
Other payables 4,781,862 4,288,104
(a) Other payables are mainly restricted share repurchase obligation, deposit and security deposit
payable, reimbursed logistics expense, etc.
(b) As at 30 June 2022, other payables with ageing over 1 year with a carrying amount of RMB
1,457,701,000 (31 December 2021: RMB 1,288,937,000) were mainly those recognised for
performing equity incentive plan and deposit and security deposit payable, which were unsettled
since related projects were uncompleted.
214
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(34) Current portion of non-current liabilities
Item Ending balance Opening balance
Current portion of long-term borrowings 26,695,122 28,087,037
Current portion of lease liabilities 837,332 860,503
Total 27,532,454 28,947,540
(35) Other current liabilities
Item Ending balance Opening balance
Accrued sale rebates 35,357,854 31,307,753
Short-term financing bonds payable (a) 4,015,610 -
Others 19,291,393 16,920,200
Total 58,664,857 48,227,953
(a) As at 30 June 2022, short-term financing bonds payable represented super short-term
financing bonds with a total face value of RMB 4,000,000,000 issued by the Company, with a
term of 180 days, and a coupon rate of 2.23%.
(36) Long-term borrowings
Item Ending balance Opening balance
Mortgage borrowings (a) 25,830,444 26,635,207
Guaranteed borrowings (b) 9,882,746 6,903,645
Unsecured borrowings 17,620,590 14,269,908
Pledged borrowings 7,716 12,297
Total 53,341,496 47,821,057
Less: Current portion of mortgage borrowings (25,830,444) (26,626,623)
Current portion of guaranteed borrowings (15,023) (15,025)
Current portion of unsecured borrowings (843,221) (1,439,224)
Current portion of pledged borrowings (6,434) (6,165)
Total 26,646,374 19,734,020
(a) As at 30 June 2022, bank mortgage borrowings were mainly mortgage borrowings with a cost
of EUR 3,684,357,000, equivalent to RMB 25,821,445,000 (31 December 2021: a cost of EUR
3,686,857,000, equivalent to RMB 26,617,999,000) and were pledged by 81.04% equity of
KUKA Group, which was acquired by the subsidiary of the Company. Interest is paid on a
semi-annual basis, and the borrowings are due in August 2022.
(b) As at 30 June 2022, bank guaranteed borrowings mainly included: (i) guaranteed borrowings
with a cost of EUR 271,000,000, equivalent to RMB 1,899,276,000 (31 December 2021: a cost
of EUR 271,000,000, equivalent to RMB 1,956,539,000) guaranteed by the Company, with
interest paid every 3 months, which will be due in April 2024; (ii) guaranteed borrowings with
a cost of JPY 69,460,000,000, equivalent to RMB 3,412,987,000 (31 December 2021: a cost
of JPY 69,460,000,000, equivalent to RMB 3,849,126,000) guaranteed by the Company, with
interest paid on a monthly basis, which will be due in May 2024; (iii) guaranteed borrowings
with a cost of EUR 150,000,000, equivalent to RMB 1,051,260,000 (31 December 2021: a cost
of EUR 150,000,000, equivalent to RMB 1,082,955,000) guaranteed by the Company, with
interest paid on a monthly basis, which will be due in June 2025; and (iv) guaranteed
borrowings with a cost of EUR 500,000,000, equivalent to RMB
215
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(36) Long-term borrowings (Cont’d)
3,504,200,000 (31 December 2021: Nil) guaranteed by the Company, with interest paid every
3 months, which will be due in May 2025.
(c) As at 30 June 2022, the annual interest rate range of long-term borrowings was 0.33% to 5.50%
(31 December 2021: 0.49% to 5.50%).
(37) Debentures payable
Name of Amount Nominal Opening Ending
bond Par value Value date Term issued interest rate balance balance
24 February
USD bonds 2,848,500 2022 5 years 2,848,500 2.88% - 3,047,541
(a) The Group issued a 5-year USD corporate bond on 24 February 2022, with a cost of USD
450,000,000, equivalent to RMB 2,848,500,000. The fixed coupon rate was 2.88% and interest
was paid on a semi-annual basis, which was guaranteed by the Company.
(38) Lease liabilities
Item Ending balance Opening balance
Lease liabilities 2,384,449 2,394,055
Less: Current portion of lease liabilities (837,332) (860,503)
1,547,117 1,533,552
(39) Long-term employee benefits payable
Item Ending balance Opening balance
Supplementary retirement benefits 1,322,752 1,705,440
Others 113,171 119,576
Total 1,435,923 1,825,016
(40) Other non-current liabilities
Other non-current liabilities are mainly equity purchase payables.
(41) Share capital
Movements for the current period
Share-based
Opening payment Repurchases Ending
Item balance incentive plan Desterilisation and write-offs Sub-total balance
RMB-denominated
ordinary shares -
RMB-denominated
ordinary shares
subject to trading
restriction 156,539 - (4,156) (2,762) (6,918) 149,621
RMB-denominated
ordinary shares not 6,830,025 13,527 4,156 - 17,683 6,847,708
216
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
subject to trading
restriction
Total 6,986,564 13,527 - (2,762) 10,765 6,997,329
(a) For the six months ended 30 June 2022, the share-based payment incentive plan increased the
share capital by 13,527,000 shares.
(42) Treasury stock
Movements for the current period
Opening Increase in the Decrease in the Ending
Item balance current period current period balance
Treasury stock used for share-
based payment incentive
plan 14,044,550 1,188,389 (587,851) 14,645,088
Total 14,044,550 1,188,389 (587,851) 14,645,088
For the six months ended 30 June 2022, the Group’s repurchased treasury stock amounted to
RMB 1,188,389,000. As at 30 June 2022, treasury stock mainly comprised treasury stock of
RMB 10,851,033,000 used for share-based payment incentive plan and treasury stock
recognised by share-based payment incentive plan amounting to RMB 3,794,055,000 that has
not met unlock condition, amounting to RMB 14,645,088,000 in total.
(43) Capital surplus
Opening Increase in the Decrease in the Ending
Item balance current period current period balance
Share premium (a) 14,944,914 896,560 (425,501) 15,415,973
Share-based payment
incentive plan (b) 2,161,354 799,795 (234,790) 2,726,359
Others 3,410,662 17,863 (464,222) 2,964,303
Total 20,516,930 1,714,218 (1,124,513) 21,106,635
(a) The increase in share premium arose from the exercise of share options with the amount of
approximately RMB 818,573,000, the unlocking of restricted shares with the amount of
approximately RMB 77,987,000; the decrease in share premium mainly arose from the
repurchase of restricted shares.
(b) The increase of share-based payment incentive plan arose from expenses attributable to
shareholders' equity of the parent company in the share-based payment incentive plan with the
amount of approximately RMB 799,795,000, while the decrease arose from the transfer of
approximately RMB 234,790,000 to share premium due to exercise of share-based payment
incentive plan.
217
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(44) Other comprehensive income
Other comprehensive income in the balance sheet Other comprehensive income in the income statement
Less:
Other Reclassification
comprehensive Amount of previous other
Attributable income arising before comprehensive Attributable Attributable
to the parent transferred to income tax in income to Less: to the parent to minority
Opening company retained Ending the current current profit or Income tax company shareholders
Item balance after tax earnings balance period loss expenses after tax after tax
Other comprehensive income items
which will not be reclassified to
profit or loss
Changes arising from
remeasurement of defined
benefit plan 12,038 183,574 - 195,612 248,842 - (56,244) 183,574 9,024
Changes in fair value of
investments in other equity
instruments (1,949) 1,689 1,351 1,091 1,689 - - 1,689 -
Other comprehensive income items
which will be reclassified to profit
or loss
Other comprehensive income
that will be transferred
subsequently to profit or loss
under the equity method (89,213) 47 - (89,166) 47 - - 47 -
Effective portion of gains or
losses on hedging
instruments in a cash flow
hedge 304,344 (613,659) - (309,315) (420,701) (359,992) 97,340 (613,659) (69,694)
Differences on translation of
foreign currency financial
statements (1,984,168) 899,069 - (1,085,099) 895,161 - - 899,069 (3,908)
Total (1,758,948) 470,720 1,351 (1,286,877) 725,038 (359,992) 41,096 470,720 (64,578)
218
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(45) Surplus reserve
Opening Increase in the Decrease in the Ending
Item balance current period current period balance
Statutory
surplus
reserve 9,449,901 - - 9,449,901
(46) Undistributed profits
Same period of
Item Current period prior year
Undistributed profits at the beginning of the
period 102,982,763 87,074,453
Add: Net profit attributable to owners of the
parent company for the current period 15,995,496 15,009,046
Others 33,631 -
Less: Ordinary share dividends payable (a) (11,671,286) (11,061,680)
Undistributed profits at the end of the period 107,340,604 91,021,819
(a) Ordinary share dividends distributed in the current year
In accordance with the resolution at the Board of Shareholders’ meeting, dated 20 May 2022,
the Company distributed a cash dividend to the shareholders at RMB 1.70 per share, amounting
to approximately RMB 11,677,509,000 calculated by 6,865,511,000 issued shares less those
repurchased; 2,767,000 repurchased incentive shares in the restricted shares incentive plan
were written off (Note 4(41)), and cash dividend amounting to RMB 6,223,000 was cancelled.
The actual cash dividend distributed in the current year amounted to approximately RMB
11,671,286,000.
(47) Revenue and cost of sales
Item Current period Same period of prior year
Revenue from main operations 167,496,125 157,035,631
Revenue from other operations 15,164,884 16,773,934
Sub-total 182,661,009 173,809,565
Item Current period Same period of prior year
Cost of sales from main operations 127,456,627 121,004,423
Cost of sales from other operations 12,967,541 14,723,023
Sub-total 140,424,168 135,727,446
219
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(47) Revenue and cost of sales (Cont’d)
(a) Revenue and cost of sales from main operations
Product or Current period Same period of prior year
business category Revenue Cost of sales Revenue Cost of sales
HVAC 83,236,383 65,712,490 76,408,470 61,335,227
Consumer appliances 66,334,685 46,958,140 64,964,319 47,164,339
Robotics and
automation system 13,259,483 10,447,185 12,589,884 9,729,927
Others 4,665,574 4,338,812 3,072,958 2,774,930
Sub-total 167,496,125 127,456,627 157,035,631 121,004,423
For the six months ended 30 June 2022, cost of sales from main operations was mainly material
costs and labour costs, which accounted for over 80% of total cost of sales from main operations
(for the six months ended 30 June 2021: over 80%)。
(b) Revenue and cost of sales from other operations
Current period Same period of prior year
Item Revenue Cost of sales Revenue Cost of sales
Revenue from sales
of materials 13,451,028 12,600,574 15,044,049 14,407,177
Others 1,713,856 366,967 1,729,885 315,846
Sub-total 15,164,884 12,967,541 16,773,934 14,723,023
For the six months ended 30 June 2022, cost of sales from other operations was mainly material
costs, which accounted for over 80% of total cost of sales from other operations (for the six
months ended 30 June 2021: over 80%).
(c) For the six months ended 30 June 2022, among the Group’s revenue from main operations, the
amount recognised at a point in time accounted for above 90% and the amount recognised
within a certain period of time mainly included revenue from main operations of robotics and
automation system segment. The Group’s revenue from other operations was recognised at a
point in time.
220
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(48) Interest income and interest costs
The Group’s interest income and costs arising from the normal course of financial business are
presented as follows:
Item Current period Same period of prior year
Interest income from loans and advances 910,289 857,905
Including: Interest income from loans and
advances to corporations and
individuals 873,969 809,354
Interest income from note
discounting 36,320 48,551
Interest income from deposits with banks,
other financial institutions and the Central
Bank 91,671 179,269
Interest income 1,001,960 1,037,174
Interest costs (33,643) (41,149)
(49) Taxes and surcharges
Item Current period Same period of prior year
City maintenance and construction tax 288,461 336,013
Educational surcharge 212,661 248,069
Others 297,817 249,075
Total 798,939 833,157
(50) Selling and distribution expenses
Item Current period Same period of prior year
Selling and distribution expenses 14,698,373 13,950,077
For the six months ended 30 June 2022, selling and distribution expenses were mainly
maintenance expenses, advertisement and promotion fee, employee benefits, E-commerce
service fee, storage service fee and property management expenses, which accounted for over
70% of total selling and distribution expenses (for the six months ended 30 June 2021: over
70%).
221
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(51) General and administrative expenses
Item Current period Same period of prior year
General and administrative
expenses 4,951,069 4,251,893
For the six months ended 30 June 2022, general and administrative expenses were mainly
employee benefits, depreciation and amortisation expenses, technical maintenance expenses,
administrative office expenses, storage service fee and property management expenses which
accounted for over 70% of total general and administrative expenses (for the six months ended
30 June 2021: over 70%).
(52) R&D expenses
Item Current period Same period of prior year
R&D expenses 5,865,033 5,314,637
For the six months ended 30 June 2022, R&D expenses were mainly employee benefits,
depreciation and amortisation expenses, trial products and material inputs expenses, which
accounted for over 80% of total R&D expenses (for the six months ended 30 June 2021: over
80%).
(53) Financial income
The Group’s financial income, other than those arising from financial business (Note 4(48)), is
presented as follows:
Item Current period Same period of prior year
Interest expenses (867,954) (681,864)
Less: Interest income 2,764,267 2,501,014
Add: Exchange gains or losses (71,019) 616,849
Add: Others (89,876) (114,273)
Total 1,735,418 2,321,726
(54) Asset impairment losses
Item Current period Same period of prior year
Losses on decline in the value of
inventories (Note 4(10)) 200,660 179,042
Impairment losses on contract
assets (Note 4(8)) 23,619 (812)
Impairment losses on intangible
assets (Note 4(20)) 6,400 -
Total 230,679 178,230
222
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(55) Credit impairment losses
Item Current period Same period of prior year
Losses on bad debts of accounts receivable
(Note 4(4)) 95,157 50,794
Losses on bad debts of other receivables
(Note 4(5)) (8,878) 20,450
Impairment losses on notes receivable
(Note 4(3)) 60,481 6,700
Impairment losses on loans and advances
(Note 4(9)) 38,619 67,446
Impairment losses on long-term receivables
(Note 4(14)) 7,512 9,070
Total 192,891 154,460
(56) Gains/(Losses) on changes in fair value
Item Current period Same period of prior year
Derivative financial assets and liabilities (62,667) (86,610)
Other financial assets and liabilities (687,075) (715,334)
Total (749,742) (801,944)
(57) Investment income
Item Current period Same period of prior year
Investment income from holding of financial
assets held for trading 107,261 505,877
Investment income from disposal of
financial assets held for trading - 137,681
Investment income from disposal of
derivative financial assets and liabilities 257,463 222,211
Investment income from associates and
joint ventures 263,014 309,013
Others (19,891) (93,886)
Total 607,847 1,080,896
There is no significant restriction on repatriation of investment income of the Group.
223
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(58) Losses on disposal of assets
Item Current period Same period of prior year
Gains on disposal of non-current assets 53,776 2,388
Losses on disposal of non-current assets (34,814) (20,221)
Total 18,962 (17,833)
(59) Other income
Same period of Asset related/
Item Current period prior year Income related
Special subsidy, etc. 644,525 578,265 Income related
(60) Income tax expenses
Item Current period Same period of prior year
Current income tax calculated based on tax law
and related regulations 4,089,024 2,677,644
Deferred income tax expenses (1,378,473) (269,705)
Total 2,710,551 2,407,939
The reconciliation from income tax calculated based on the applicable tax rates and total profit
presented in the consolidated income statement to the income tax expenses is listed below:
Item Current period Same period of prior year
Total profit 18,832,948 17,624,384
Income tax calculated at tax rate of 25% 4,708,237 4,406,096
Effect of different tax rates applicable to
subsidiaries (1,493,631) (1,462,481)
Effect of income tax annual filing for prior periods (166,848) 40,903
Income not subject to tax (163,217) (149,474)
Costs, expenses and losses not deductible for tax
purposes 276,483 193,728
Utilisation of previous temporary differences or
deductible losses for which no deferred tax
assets were recognised in prior periods (43,536) (57,946)
Others (406,937) (562,887)
Income tax expenses 2,710,551 2,407,939
224
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(61) Calculation of basic and diluted earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing consolidated net profit attributable to ordinary
shareholders of the Company by the weighted average number of outstanding ordinary shares:
Same period of
Item Unit Current period prior year
Consolidated net profit attributable to ordinary
shareholders of the parent company RMB’000 15,995,496 15,009,046
Less: Dividends payable to restricted shares RMB’000 (94,081) (104,901)
Consolidated net profit attributable to ordinary
shareholders of the parent company
(excluding dividends payable to restricted
shares) RMB’000 15,901,415 14,904,145
Weighted average number of outstanding
ordinary shares Thousands shares 6,794,724 6,878,509
Basic earnings per share RMB Yuan/share 2.34 2.17
(b) Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the diluted weighted average number of
outstanding ordinary shares:
Same period of
Item Unit Current period prior year
Consolidated net profit attributable to ordinary
shareholders of the parent company RMB’000 15,995,496 15,009,046
Weighted average number of outstanding
ordinary shares Thousands shares 6,794,724 6,878,509
Weighted average number of ordinary shares
increased from share options Thousands shares 35,505 72,495
Weighted average number of diluted
outstanding ordinary shares Thousands shares 6,830,229 6,951,004
Diluted earnings per share RMB Yuan/share 2.34 2.16
225
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Notes to the cash flow statement
(a) Cash received relating to other operating activities
Item Current period Same period of prior year
Non-operating income 148,065 145,631
Other income 929,267 747,933
Other operating income 1,637,751 1,686,486
Financial interest income 317,399 508,692
Others 322,410 706,646
Total 3,354,892 3,795,388
(b) Cash paid relating to other operating activities
Item Current period Same period of prior year
General and administrative
expenses and R&D expenses
(excluding employee benefits
and taxes and surcharges) 4,113,948 4,401,999
Selling and distribution expenses
(excluding employee benefits
and taxes and surcharges) 10,355,366 11,330,954
Others 521,959 255,248
Total 14,991,273 15,988,201
(c) Supplementary information to the cash flow statement
Reconciliation of net profit to cash flow from operating activities is as follows:
226
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Notes to the cash flow statement (Cont’d)
(c) Supplementary information to the cash flow statement (Cont’d)
Same period of
Supplementary information Current period prior year
1) Reconciliation of net profit to cash flows from
operating activities:
Net profit 16,122,397 15,216,445
Add: Asset impairment losses 230,679 178,230
Credit impairment losses 192,891 154,460
Depreciation and amortisation 3,255,456 2,954,858
(Gains)/Losses on disposal of assets (18,962) 17,833
Losses on changes in fair value 749,742 801,944
Financial expenses (1,557,613) (1,046,382)
Investment income (607,847) (1,080,896)
Decrease in deferred tax assets (892,692) (289,035)
Increase in deferred tax liabilities (353,888) (202,799)
Decrease in inventories 8,541,659 (3,582,020)
Decrease in operating receivables (5,945,656) (8,694,721)
Increase in operating payables 843,457 14,935,305
Share-based payments and others 835,087 813,188
Net cash flows from operating activities 21,394,710 20,176,410
2) Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the end of the
period 61,310,727 36,068,617
Less: Cash and cash equivalents at the
beginning of the period (40,550,039) (23,548,508)
Net increase in cash and cash equivalents 20,760,688 12,520,109
(d) Composition of cash and cash equivalents
Same period of
Item Current period prior year
Cash on hand 2,447 2,811
Cash at bank that can be readily drawn on
demand 32,996,806 18,962,105
Other cash balances that can be readily drawn
on demand - 355,727
Deposits with the Central Bank that can be
readily drawn on demand 154,409 104,174
Deposits with banks and other financial
institutions 28,157,065 16,643,800
Cash and cash equivalents at the end of the
period 61,310,727 36,068,617
227
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies
30 June 2022
Foreign currency
Item balance Exchange rate RMB balance
Cash at bank and on hand
USD 1,407,784 6.7114 9,448,202
JPY 16,931,813 0.0491 831,352
HKD 1,643,162 0.8552 1,405,232
EUR 1,017,446 7.0084 7,130,669
BRL 43,383 1.2813 55,587
VND 670,113,333 0.0003 201,034
Other currencies Not applicable Not applicable 1,552,754
Sub-total 20,624,830
Accounts receivable
USD 1,485,895 6.7114 9,972,436
JPY 16,253,544 0.0491 798,049
HKD 58,095 0.8552 49,683
EUR 540,668 7.0084 3,789,218
BRL 766,824 1.2813 982,532
VND 1,466,270,000 0.0003 439,881
Other currencies Not applicable Not applicable 2,612,547
Sub-total 18,644,346
Other receivables
USD 45,393 6.7114 304,651
JPY 1,339,511 0.0491 65,770
HKD 1,853 0.8552 1,585
EUR 44,872 7.0084 314,481
BRL 39,201 1.2813 50,228
Other currencies Not applicable Not applicable 376,811
Sub-total 1,113,526
Total 40,382,702
228
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
30 June 2022
Foreign currency
Item balance Exchange rate RMB balance
Short-term borrowings
USD 204,944 6.7114 1,375,461
EUR 237,923 7.0084 1,667,460
BRL 373,126 1.2813 478,086
Other currencies Not applicable Not applicable 370,794
Sub-total 3,891,801
Accounts payable
USD 401,381 6.7114 2,693,828
JPY 4,986,273 0.0491 244,826
HKD 17,975 0.8552 15,372
EUR 231,262 7.0084 1,620,777
BRL 248,349 1.2813 318,210
Other currencies Not applicable Not applicable 1,778,059
Sub-total 6,671,072
Other payables
USD 4,847 6.7114 32,530
JPY 8,462,383 0.0491 415,503
HKD 1,987 0.8552 1,699
EUR 1,399 7.0084 9,805
Other currencies Not applicable Not applicable 156,860
Sub-total 616,397
Current portion of non-
current liabilities
EUR 3,821,286 7.0084 26,781,101
Other currencies Not applicable Not applicable 110,103
Sub-total 26,891,204
Long-term borrowings
USD 50,209 6.7114 336,974
EUR 921,000 7.0084 6,454,736
JPY 69,460,000 0.0491 3,412,987
Other currencies Not applicable Not applicable 4,005
Sub-total 10,208,702
Debentures payable
USD 454,084 6.7114 3,047,541
Sub-total 3,047,541
Lease liabilities
EUR 94,957 7.0084 665,496
JPY 1,220,489 0.0491 59,926
Other currencies Not applicable Not applicable 77,631
Sub-total 803,053
Total 52,129,770
229
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
31 December 2021
Foreign currency
Item balance Exchange rate RMB balance
Cash at bank and on hand
USD 602,212 6.3757 3,839,525
JPY 12,142,726 0.0554 672,707
HKD 1,630,997 0.8176 1,333,503
EUR 148,197 7.2197 1,069,937
BRL 289,406 1.1425 330,646
VND 448,073,333 0.0003 134,422
Other currencies Not applicable Not applicable 1,452,778
Sub-total 8,833,518
Accounts receivable
USD 1,060,053 6.3757 6,758,578
JPY 11,614,937 0.0554 643,468
HKD 23,316 0.8176 19,063
EUR 394,600 7.2197 2,848,894
BRL 635,016 1.1425 725,506
VND 1,722,254,244 0.0003 516,676
Other currencies Not applicable Not applicable 2,475,054
Sub-total 13,987,239
Other receivables
USD 175,560 6.3757 1,119,315
JPY 1,379,057 0.0554 76,400
HKD 1,901 0.8176 1,555
EUR 43,768 7.2197 315,990
BRL 67,455 1.1425 77,067
Other currencies Not applicable Not applicable 328,047
Sub-total 1,918,374
Total 24,739,131
230
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
31 December 2021
Foreign currency
Item balance Exchange rate RMB balance
Short-term borrowings
USD 200,000 6.3757 1,275,140
EUR 149,976 7.2197 1,082,782
Other currencies Not applicable Not applicable 185,393
Sub-total 2,543,315
Accounts payable
USD 330,786 6.3757 2,108,991
JPY 5,227,130 0.0554 289,583
HKD 12,987 0.8176 10,618
EUR 219,900 7.2197 1,587,612
BRL 370,864 1.1425 423,712
Other currencies Not applicable Not applicable 1,845,979
Sub-total 6,266,495
Other payables
USD 7,124 6.3757 45,423
JPY 7,415,640 0.0554 410,826
HKD 10,577 0.8176 8,648
EUR 2,410 7.2197 17,401
Other currencies Not applicable Not applicable 127,366
Sub-total 609,664
Current portion of non-current
liabilities
EUR 3,824,888 7.2197 27,614,541
USD 89,993 6.3757 573,767
Other currencies Not applicable Not applicable 115,468
Sub-total 28,303,776
Long-term borrowings
USD 49,910 6.3757 318,208
EUR 421,000 7.2197 3,039,494
JPY 69,460,000 0.0554 3,849,126
Other currencies Not applicable Not applicable 17,292
Sub-total 7,224,120
Lease liabilities
EUR 95,154 7.2197 686,986
JPY 1,965,358 0.0554 108,881
Other currencies Not applicable Not applicable 45,337
Sub-total 841,204
Total 45,788,574
231
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope
(1) Business combinations involving enterprises not under common control
(a) Business combinations involving enterprises not under common control in the current year
The Group acquired Midea Venture Capital Management Co., Ltd. and its subsidiaries (including
structured entities) in January 2022, Wuhan TTium Motor Technology Co., Ltd. and its
subsidiaries in April 2022 and Shaanxi Construction Investment Co., Ltd. in May 2022.
The acquisition has no significant impact on the Group's consolidated financial statements.
(2) Changes of consolidation scope due to other reasons
(a) Increase of consolidation scope
The Company's wholly-owned subsidiary Anhui Welling Auto Parts Corporation Limited
established Anqing Welling Auto Parts Corporation Limited in January 2022, holding 100% of the
shares.
Annto Logistics Supply Chain Technology Co., Ltd. and Foshan Annto Logistics Technology Co.,
Ltd., the Company's subsidiaries, established Tianjin Antu Supply Chain Management Co., Ltd.
in January 2022, holding 99% and 1% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-owned
subsidiary of the Company, established Guangdong Midea Smart Home Retail Co., Ltd. in
January 2022, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-owned
subsidiary of the Company, established Guangdong Midea Smart Home Technology Co., Ltd. in
January 2022, holding 95% and 5% of the shares respectively.
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-owned
subsidiary of the Company, established Wuhu Yubian Intelligent Technology Co., Ltd. in
February 2022, holding 95% and 5% of the shares respectively.
Midea International Corporation Company Limited, a wholly-owned subsidiary of the Company,
established MC Innovation Center Co., Ltd. in February 2022, holding 100% of the shares.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home Technology
Co., Ltd., wholly-owned subsidiaries of the Company, established Wuhu Midea Smart Home Co.,
Ltd., Haikou Midea Smart Home Appliances Sales Co., Ltd., Hangzhou Midea Smart Home Co.,
Ltd., Foshan Midea Smart Home Co., Ltd., Lanzhou Midea Smart Home Appliances Sales Co.,
Ltd., Tianjin Midea Smart Home Co., Ltd., Hefei Midea Smart Home Co., Ltd., Changsha Midea
Smart Home Co., Ltd., Guangzhou Midea Smart Home Co., Ltd., Wuxi Midea Smart Home Co.,
Ltd., Kunming Midea Smart Home Co., Ltd., Ji’nan Midea Smart Home Co., Ltd., Chengdu Midea
Smart Home Co., Ltd., Nanyang Midea Smart Home Co., Ltd., Xi’an Midea Smart Home
Appliances Sales Co., Ltd., Beijing Midea Smart Home Co., Ltd., Guizhou Midea Smart Home
Co., Ltd., Linyi Midea Smart Home Appliances Sales Co., Ltd., Nanning Midea Smart Home
Appliances Sales Co., Ltd., Wuhan Midea Smart Home Co., Ltd. and Xuzhou Midea Smart Home
Co., Ltd. in March 2022, holding 95% and 5% of the shares respectively.
232
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope (Cont’d)
(2) Changes of consolidation scope due to other reasons (Cont’d)
(a) Increase of consolidation scope (Cont’d)
The Company and Foshan Midea Air-conditioning Industry Investment Co., Ltd., a wholly-owned
subsidiary of the Company, established Guizhou Midea Digi-Port Technology Co., Ltd. in April
2022, holding 95% and 5% of the shares respectively.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home Technology
Co., Ltd., wholly-owned subsidiaries of the Company, established Shijiazhuang Midea Smart
Home Co., Ltd., Nanjing Midea Smart Home Co., Ltd., Fuzhou Midea Smart Home Co., Ltd.,
Nanchang Midea Smart Home Co., Ltd., Urumchi Midea Smart Home Co., Ltd., Chongqing Midea
Smart Home Co., Ltd. and Ningbo Midea Smart Home Co., Ltd. in April 2022, holding 95% and
5% of the shares respectively.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home Technology
Co., Ltd., wholly-owned subsidiaries of the Company, established Shenzhen Midea Smart Home
Appliances Sales Co., Ltd. and Changchun Midea Smart Home Appliances Sales Co., Ltd. in May
2022, holding 95% and 5% of the shares respectively.
Midea Electrics Netherlands B.V., a wholly-owned subsidiary of the Company, established Midea
Electrics France in June 2022, holding 100% of the shares.
Guangdong Midea Smart Home Retail Co., Ltd. and Guangdong Midea Smart Home Technology
Co., Ltd., wholly-owned subsidiaries of the Company, established Zhengzhou Midea Smart Home
Co., Ltd. and Taiyuan Midea Smart Home Co., Ltd. in June 2022, holding 95% and 5% of the
shares respectively.
Kuka Deutschland GmbH, a subsidiary of the Company, established Kuka TR Robot Teknolojileri
Sanayi Ticaret Anonim Sirketi in June 2022, holding 100% of the shares.
(b) Decrease of consolidation scope
Decrease of consolidation scope in the current period mainly includes deregistration of subsidiaries.
Details are as follows:
Disposal method of the Disposal time-point of the
Name of entity equity equity
Shanghai Guifu Information
Technology Co., Ltd. Deregistration January 2022
Shenzhen Midea Financial
Leasing Co., Ltd. Deregistration May 2022
Wuhan Hiconics Electric Drive
Technology Co., Ltd. Change of equity March 2022
233
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities
(1) Interests in subsidiaries
(a) Composition of significant subsidiaries
Major business Place of Shareholding (%)
Subsidiaries location registration Nature of business Direct Indirect Acquisition method
Business combinations involving
GD Midea Air-Conditioning Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture and sales of air conditioner 73% 7% enterprises not under common control
Business combinations involving
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture and sales of air conditioner 93% 7% enterprises not under common control
Midea Group Wuhan Refrigeration Equipment Co., Ltd. Wuhan, PRC Wuhan, PRC Manufacture of air conditioner 73% 7% Establishment
Wuhu Maty Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioner 87% 13% Establishment
Chongqing Midea Air-Conditioning Equipment Co., Ltd. Chongqing, PRC Chongqing, PRC Manufacture and sales of air conditioner 95% 5% Establishment
GD Midea Heating & Ventilating Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of air conditioner 90% 10% Establishment
Zhejiang Meizhi Compressor Co., Ltd. Ningbo, PRC Ningbo, PRC Manufacture of air conditioner 100% - Establishment
Business combinations involving
Hefei Midea Refrigerator Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerator 75% 25% enterprises not under common control
Business combinations involving
Hefei Hualing Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerator 75% 25% enterprises not under common control
Manufacture of small household
Guangdong Midea Kitchen Appliances Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Foshan Shunde Midea Electrical Heating Appliances Manufacture of small household
Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC appliances - 100% Establishment
Manufacture of small household Business combinations involving
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 90% 10% enterprises under common control
Wuxi Little Swan Electric Co., Ltd. Wuxi, PRC Wuxi, PRC Manufacture of washing machine 100% 0% Establishment
Midea Electric Trading (Singapore) Co., Pte. Ltd. Singapore Singapore Export trade - 100% Establishment
Midea Group Finance Co., Ltd. Foshan, PRC Foshan, PRC Financial industry 95% 5% Establishment
Business combinations involving
Midea Microfinance Loan Co., Ltd. Wuhu, PRC Wuhu, PRC Petty loan 5% 95% enterprises not under common control
British Virgin British Virgin
Mecca International (BVI) Limited Islands Islands Investment holding 0% 100% Establishment
Midea International Corporation Company Limited Hong Kong Hong Kong Investment holding 100% - Establishment
Manufacture of small household
Wuhu Midea Life Appliances Mfg Co., Ltd. Wuhu, PRC Wuhu, PRC appliances 100% - Establishment
Midea Electric Netherlands (I) B.V. Netherlands Netherlands Investment holding - 100% Establishment
Business combinations involving
Toshiba Consumer Marketing Corporation Japan Japan Manufacture of home appliances - 100% enterprises not under common control
Business combinations involving
TLSC Japan Japan Manufacture of home appliances - 100% enterprises not under common control
Business combinations involving
KUKA Germany Germany Manufacture and sales of robots - 95% enterprises not under common control
Ningbo Midea United Materials Supply Co., Ltd. Ningbo, PRC Ningbo, PRC Wholesale and retail 100% 0% Establishment
Wuhu Midea Annto Logistics Co., Ltd. Wuhu, PRC Wuhu, PRC Logistics - 76% Establishment
Midea Innovation Investment Co., Ltd. Shenzhen, PRC Shenzhen, PRC Investment holding 85% 15% Establishment
Manufacture and sales of household
Midea Group (Shanghai) Co. Ltd. Shanghai, PRC Shanghai, PRC appliances 90% 10% Establishment
Chongqing Midea Commercial Factoring Co., Ltd. Chongqing, PRC Chongqing, PRC Factoring - 100% Establishment
Tianjin Midea Commercial Factoring Co., Ltd. Tianjin, PRC Tianjin, PRC Factoring - 100% Establishment
Midea Investment Co., Ltd. Hainan, PRC Hainan, PRC Investment 90% 10% Establishment
234
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont’d)
(2) Interests in associates and joint ventures
The Group’s associates and joint ventures have no significant influence on the Group and are
summarised as follows:
Item Current period Same period of prior year
Aggregated carrying amount of
investments 3,769,304 3,016,023
Aggregate of the following items in
proportion
Net profit (i) 263,014 309,013
Other comprehensive income (i) 47 24,624
Total comprehensive income 263,061 333,637
(i) The net profit and other comprehensive income have taken into account the impacts of both
the fair value of the identifiable assets and liabilities upon the acquisition of investment in
associates and the unification of accounting policies adopted by the associates to those
adopted by the Company.
(3) Structured entities not included in the consolidation scope
The Group had no significant structured entities not included in the consolidation scope.
7 Segment information
The reportable segments of the Group are the business units that provide different products or
services, or operate in different areas. Different businesses or areas require different
technologies and marketing strategies, the Group, therefore, separately manages the
production and operation of each reportable segment and evaluates their operating results
respectively, in order to make decisions about resources to be allocated to these segments and
to assess their performance.
The Group identified 4 reportable segments as follows:
- Heating & ventilation, as well as air-conditioner
- Consumer appliances
- Robotics and automation system
- Others
Inter-segment transfer prices are determined based on negotiation by both parties with reference
to selling prices for third parties.
The assets are allocated based on the operations of the segments and the physical locations of
the assets. The liabilities are allocated based on the operations of the segments. Expenses
indirectly attributable to the segments are allocated based on the proportion of each segment’s
revenue.
Operating expenses include cost of sales, interest costs, fee and commission expenses, taxes
and surcharges, selling and distribution expenses, general and administrative expenses, R&D
expenses and financial expenses.
235
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting
(a) Information on the profit or loss, assets and liabilities of reported segment
Segment information as at and for the six months ended 30 June 2022 is as follows:
Current period
Heating & ventilation, as Consumer Robotics and Other segments
Item well as air-conditioner appliances automation system and unallocated Offsetting Total
Revenue from external customers 93,948,227 70,340,259 13,426,372 5,948,541 - 183,663,399
Inter-segment revenue 1,657,240 370,055 190,159 3,832,595 (6,050,049) -
Operating expenses (86,626,933) (62,098,046) (13,412,943) (8,868,417) 5,969,014 (165,037,325)
Segment profit 8,978,534 8,612,268 203,588 912,719 (81,035) 18,626,074
Other profit or loss 206,874
Total profit 18,832,948
Total assets 179,930,301 158,277,514 35,267,424 210,934,435 (171,305,529) 413,104,145
Total liabilities 127,693,219 115,379,530 25,961,405 203,275,449 (199,603,928) 272,705,675
Long-term equity investments in
associates and joint ventures 276,107 115,248 36,620 3,341,329 - 3,769,304
Investment income from associates
and joint ventures 92,873 (2,111) 665 171,587 - 263,014
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax assets) 2,338,948 1,837,378 386,462 518,570 - 5,081,358
Losses on/(Reversal of) asset
impairment 114,138 46,838 69,703 - - 230,679
Losses on/(Reversal of) credit
impairment 88,037 53,919 (1,980) 95,022 (42,107) 192,891
Depreciation of right-of-use assets 51,085 63,381 118,900 298,677 - 532,043
Depreciation and amortisation
expenses 1,114,427 957,254 519,771 131,961 - 2,723,413
236
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont’d)
(a) Information on the profit or loss, assets and liabilities of reported segment (Cont’d)
Segment information as at and for the six months ended 30 June 2021 is as follows:
Same period of prior year
Other segments
Heating & ventilation, as Consumer Robotics and and unallocated
Item well as air-conditioner appliances automation system amount Offsetting Total
Revenue from external customers 89,094,203 68,877,276 12,627,376 4,248,040 - 174,846,895
Inter-segment revenue 1,585,955 338,135 91,109 3,800,787 (5,815,986) -
Operating expenses (82,720,464) (61,540,893) (12,476,531) (6,806,929) 5,744,784 (157,800,033)
Segment profit 7,959,694 7,674,518 241,954 1,241,898 (71,202) 17,046,862
Other profit or loss 577,522
Total profit 17,624,384
Total assets 164,823,833 139,287,931 34,823,438 191,395,213 (150,119,213) 380,211,202
Total liabilities 117,342,017 107,014,609 24,510,854 182,432,488 (174,543,552) 256,756,416
Long-term equity investments in
associates and joint ventures 247,711 128,357 24,380 2,615,575 - 3,016,023
Investment income from associates
and joint ventures 110,218 5,494 (288) 193,589 - 309,013
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax assets) 1,414,789 896,323 374,733 4,349,352 - 7,035,197
Losses on/(Reversal of) asset
impairment 70,592 89,860 17,778 - - 178,230
Losses on/(Reversal of) credit
impairment (61,249) (17,671) 87,584 181,396 (35,600) 154,460
Depreciation of right-of-use assets 45,671 41,654 130,446 184,604 - 402,375
Depreciation and amortisation
977,772 803,712 524,378 246,621 - 2,552,483
expenses
237
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont’d)
(b) Geographical area information
The Group’s revenue from external customers domestically and in foreign countries or
geographical areas, and the total non-current assets other than long-term equity investments,
financial assets, goodwill and deferred tax assets located domestically and in foreign countries
or geographical areas (including Germany, Japan, Hong Kong, Macau, Singapore, Brazil, etc.)
are as follows:
Revenue from external customers Current period Same period of prior year
Domestic 105,824,857 100,887,459
In other countries/geographical areas 77,838,542 73,959,436
Total 183,663,399 174,846,895
Total non-current assets Current period Same period of prior year
Domestic 32,732,170 39,689,984
In other countries/geographical areas 16,821,780 17,838,149
Total 49,553,950 57,528,133
9 Related parties and significant related party transactions
(1) Information of the parent company
(a) General information of the parent company
Name of the parent company Relationship Place of registration Nature of business
Controlling Shunde District,
Midea Holding Co., Ltd. shareholder Foshan Commercial
The Company’s ultimate controlling person is Mr. He Xiangjian.
(b) Registered capital and changes in registered capital of the parent company
Name of the parent company Registered capital
Midea Holding Co., Ltd. 330,000
(c) The percentages of shareholding and voting rights in the Company held by the parent company
At the end of the period At the beginning of the period
Name of the parent Shareholding (%) Voting rights Shareholding (%) Voting rights
company Direct Indirect (%) Direct Indirect (%)
Midea Holding Co.,
Ltd. 31.00% - 31.00% 31.05% - 31.05%
(2) Information of the Company's subsidiaries
Please refer to Note 6(1) for the information of the Company’s main subsidiaries.
238
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
9 Related parties and significant related party transactions (Cont’d)
(3) Information of other related parties
Name of other related parties Relationship
Controlled by direct relatives of the Company’s
Guangdong Infore Material-Tech Co., Ltd. ultimate controlling shareholder
Controlled by direct relatives of the Company’s
Orinko New Material Co., Ltd. ultimate controlling shareholder
Controlled by the Company’s ultimate controlling
Guangdong Ruizhu Intelligent Technology Co., Ltd. shareholder
Foshan Micro Midea Filter Mfg. Co., Ltd. Associate of the Company
Guangdong Shunde Rural Commercial Bank Co., Ltd. Associate of the Company
(4) Information of related party transactions
The following primary related party transactions are conducted in accordance with normal
commercial terms at agreed price by reference to the market price.
(a) Purchase of goods:
Content of related Same period of prior
Related parties party transactions Current period year
Orinko New Material Co., Ltd. Purchase of goods 697,804 671,628
Foshan Micro Midea Filter Mfg. Co.,
Ltd. Purchase of goods 161,191 180,676
Guangdong Wellkey Electrician
Material Co., Ltd. Purchase of goods 527,342
Anhui Wellkey Electrician Material Co.,
Ltd. Purchase of goods 279,685
Total 858,995 1,659,331
As at 30 June 2022, Guangdong Wellkey Electrician Material Co., Ltd. and Anhui Wellkey
Electrician Material Co., Ltd. were not related parties of the Company due to changes in equity
relationship.
(b) Sales of goods:
Content of related
Related parties party transactions Current period Same period of prior year
Guangdong Ruizhu Intelligent
Technology Co., Ltd. Sales of goods 74,357 93,907
(c) Investment income and interest income:
Related parties Current period Same period of prior year
Guangdong Shunde Rural Commercial Bank Co., Ltd. 159,386 100,448
239
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
9 Related parties and significant related party transactions (Cont’d)
(5) Receivables from and payables to related parties
Receivables from related parties:
Item Related parties Ending balance Opening balance
Cash at bank and on hand, other debt
investments and current portion of Guangdong Shunde Rural
current assets, etc. Commercial Bank Co., Ltd. 11,185,592 6,218,638
Payables to related parties:
Item Related parties Ending balance Opening balance
Orinko New Material Co., Ltd. 119,838 150,002
Foshan Micro Midea Filter Mfg. Co., Ltd. 62,916 80,498
Guangdong Wellkey Electrician Material
Co., Ltd. - 186,309
Anhui Wellkey Electrician Material Co.,
Accounts payable Ltd. - 96,106
Guangdong Wellkey Electrician Material
Notes payable Co., Ltd. - 54,613
As at 30 June 2022, Guangdong Wellkey Electrician Material Co., Ltd. and Anhui Wellkey
Electrician Material Co., Ltd. were not related parties of the Company due to changes in equity
relationship.
10 Share-based payment
(1) Share option incentive plan
(a) Pursuant to the ninth share option incentive plan (the “Ninth Share Option Incentive Plan”)
approved at the 2021 annual shareholders’ meeting in 2022, the Company granted 107,791,000
share options with exercise price of RMB 54.61 to 2,815 employees. Under the circumstance
that the Company meets expected performance, 30%, 30% and 40% of the total share options
granted will become effective after 2 years, 3 years and 4 years respectively since 8 June 2022.
Determination method for fair value of share options at the grant date
Exercise price of options: RMB 54.61
Effective period of options: 5 years
Current price of underlying shares: RMB 52.99
Estimated fluctuation rate of share price: 35.70%
Estimated dividend rate: 2.17%
Risk-free interest rate within effective period of options: 2.00%
The fair value of the Ninth Share Option Incentive Plan calculated pursuant to the above
parameters is: RMB 1,334,978,000.
240
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont’d)
(1) Share option incentive plan (Cont’d)
(b) Movements in share options during the six months ended 30 June 2022
For the six months ended 30 June 2022
Item (Share in thousands)
Share options issued at the beginning of the year 198,770
Share options granted during the period 107,791
Share options exercised during the period (13,527)
Share options lapsed during the period (12,313)
Share options issued at the end of the period 280,721
As at 30 June 2022, the residual contractual maturity date of the Fifth Share Option Incentive
Plan is on 6 May 2024. The residual contractual maturity date of the Fifth Reserved Share
Option Incentive Plan is on 10 March 2025. The residual contractual maturity date of the Sixth
Share Option Incentive Plan is on 29 May 2025. The residual contractual maturity date of the
Seventh Share Option Incentive Plan is on 4 June 2024. The residual contractual maturity date
of the Eighth Share Option Incentive Plan is on 3 June 2026. The residual contractual maturity
date of the Ninth Share Option Incentive Plan is on 7 June 2027.
(2) Restricted share plan
(a) Pursuant to the restricted shares incentive plan for 2022 approved at the 2021 annual
shareholders’ meeting in 2022 (the "Restricted Shares Incentive Plan for 2022"), the Company
granted 12,152,500 restricted shares with exercise price of RMB 26.47 to 191 employees.
Under the circumstance that the Company meets expected performance, 30%, 30% and 40%
of the total restricted shares granted will be unlocked after 2 years, 3 years and 4 years
respectively since 8 June 2022. The listing date for the granted restricted shares of this plan is
13 July 2022.
(b) Movements in restricted shares during the six months ended 30 June 2022
For the six months ended 30 June
Item 2022 (Share in thousands)
Restricted shares issued at the beginning of the year 62,267
Restricted shares granted during the period 12,153
Restricted shares unlocked during the period (3,169)
Restricted shares lapsed during the period (2,762)
Restricted shares issued at the end of the period 68,489
(3) For the six months ended 30 June 2022, the total expenses due to the above share-based
payment incentive plan were RMB 835,078,000. As at 30 June 2022, the balance relating to the
share-based payment incentive plan and accrued from capital surplus was RMB 2,726,359,000.
11 Contingencies
241
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
As at 30 June 2022, the amount in tax disputes involving Brazilian subsidiary with 51% interests
held by the Company was about BRL 616 million (equivalent to RMB 789 million) (Some cases
have lasted for more than 10 years. The above amount included the principal and interest). As
at 30 June 2022, relevant cases were still at court. Original shareholders of Brazilian subsidiary
have agreed to compensate the Company according to verdict results of the above tax disputes.
The maximum compensation amount is about BRL 157 million (equivalent to RMB 201 million).
With reference to judgements of third-party attorneys, management believes that the probability
of losing lawsuits and making compensation is small, and expects no significant risk of tax
violation.
12 Commitments
The Group had no significant commitments at the balance sheet date.
13 Events after the balance sheet date
Nil.
242
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk
The Group is exposed to various financial risks in the ordinary course of business, mainly
including:
Market risk (mainly including foreign exchange risk, interest rate risk and price risk)
Credit risk
Liquidity risk
The following mainly relates to the above risk exposures and relevant causes, objectives,
policies and process of risk management, method of risk measurement, etc.
The objective of the Group's risk management is to seek balance between risk and income,
minimising the adverse impact of financial risks on the Group's financial performance. Pursuant
to the risk management objective, the Group has made risk management policies to identify
and analyse the risks it is exposed to and set appropriate risk resistant level and design relevant
internal control procedures to monitor the Group’s risk level. The Group reviews regularly these
risk management policies and relevant internal control systems to adapt to changes in market
condition or its operating activities.
(1) Market risk
(a) Foreign exchange risk
The Group mainly operates in China, Europe, America, Asia, South America and Africa for the
manufacturing, sales, investments and financing activities. Any foreign currency denominated
monetary assets and liabilities other than in RMB would subject the Group to foreign exchange
exposure.
The Group’s finance department at its headquarters has a professional team to manage foreign
exchange risk, with approach of the natural hedge for settling currencies, signing forward
foreign exchange hedging contracts and controlling the scale of foreign currency assets and
liabilities, to minimise foreign exchange risk, and to reduce the impact of exchange rate
fluctuations on business performance.
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term
borrowings and debentures payable. Financial liabilities issued at floating rates expose the
Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group
to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and
floating rate contracts depending on the prevailing market conditions. As at 30 June 2022, the
Group’s long-term interest bearing borrowings at floating rates amounted to RMB 336,974,000
(31 December 2021: RMB 891,817,000).
The Group’s finance department at its headquarters continuously monitors the interest rate
position of the Group. Increases in interest rates will increase the cost of new borrowing and
the interest costs with respect to the Group’s outstanding floating rate borrowings, and therefore
could have a material adverse effect on the Group’s financial performance. Management makes
adjustments timely with reference to the latest market conditions and may enter into interest
rate swap agreements to mitigate its exposure to interest rate risk.
243
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk (Cont’d)
(c) Other price risk
The Group's other price risk arises mainly from financial instruments measured at fair value. As
at 30 June 2022, if expected price of the investments held by the Group fluctuated, the Group's
gains or losses on changes in fair value would be affected accordingly.
(2) Credit risk
The Group’s credit risk mainly arises from cash at bank and on hand, deposits with the Central
Bank, deposits with banks and other financial institutions, notes receivable, accounts receivable,
receivables financing, loans and advances, other receivables, contract assets, other debt
investments and derivative financial assets at fair value through profit or loss that are not
included in the impairment assessment scope. As at the balance sheet date, the carrying
amount of the Group’s financial assets represented the maximum exposure of the Group and
no guarantees that may allow the Group to undertake credit risk were provided.
The Group expects that there is no significant credit risk associated with cash at bank, deposits
with the Central Bank and deposits with banks and other financial institutions since they are
deposited at state-owned banks and other medium or large size listed banks. The Group does
not expect that there will be any significant losses from non-performance by these
counterparties.
In addition, the Group has policies to limit the credit exposure on notes receivable, accounts
receivable, receivables financing, loans and advances, other receivables, contract assets,
monetary investments in other current assets, structural deposits and other debt investments.
The Group assesses the credit quality of and sets credit limits on its customers by taking into
account their financial position, the availability of guarantee from third parties, their credit history
and other factors such as current market conditions. The credit history of the customers is
regularly monitored by the Group. In respect of customers with a poor credit history, the Group
will use written payment reminders, or shorten or cancel credit periods, to ensure the overall
credit risk of the Group is limited to a controllable extent.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the
Group’s finance department in its headquarters. The Group’s finance department at its
headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity
requirements to ensure it has sufficient cash and securities that are readily convertible to cash
to meet operational needs, while maintaining sufficient headroom on its undrawn committed
borrowing facilities from major financial institutions so that the Group does not breach
borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-
term liquidity requirements.
244
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk (Cont’d)
(3) Liquidity risk (Cont’d)
The financial liabilities of the Group at the balance sheet date are analysed by their maturity
date below at their undiscounted contractual cash flows:
30 June 2022
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings (including interest) 10,744,601 - - - 10,744,601
Borrowings from the Central Bank
(including interest) 250,000 - - - 250,000
Customer deposits and deposits from
banks and other financial institutions
(including interest) 98,895 - - - 98,895
Notes payable 29,331,809 - - - 29,331,809
Accounts payable 65,519,687 14,046 - - 65,533,733
Other payables 4,781,862 - - - 4,781,862
Financial liabilities held for trading 1,706,821 - - - 1,706,821
Derivative financial liabilities 238,448 - - - 238,448
Other current liabilities (including interest) 23,335,993 - - - 23,335,993
Current portion of non-current liabilities
(including interest) 27,724,645 - - - 27,724,645
Long-term borrowings (including interest) 553,374 18,542,481 8,715,407 - 27,811,262
Debentures payable 86,980 86,980 3,234,305 - 3,408,265
Lease liabilities (including interest) - 607,481 750,262 336,115 1,693,858
Other non-current liabilities - - 687,305 - 687,305
Sub-total 164,373,115 19,250,988 13,387,279 336,115 197,347,497
31 December 2021
Ending balance Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings (including
interest) 5,420,066 - - - 5,420,066
Borrowings from the Central Bank
（including interest) 180,000 - - - 180,000
Customer deposits and deposits from
banks and other financial institutions
(including interest) 78,235 - - - 78,235
Notes payable 32,752,007 - - - 32,752,007
Accounts payable 65,983,559 - - - 65,983,559
Other payables 4,288,104 - - - 4,288,104
Derivative financial liabilities 157,602 - - - 157,602
Other current liabilities 16,920,200 - - - 16,920,200
Current portion of non-current liabilities
(including interest) 28,995,245 - - - 28,995,245
Long-term borrowings (including interest) 409,056 6,656,015 13,726,837 - 20,791,908
Lease liabilities (including interest) - 667,710 879,105 143,316 1,690,131
Other non-current liabilities - - 687,689 - 687,689
Sub-total 155,184,074 7,323,725 15,293,631 143,316 177,944,746
245
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the fair value
hierarchy of the lowest level input that is significant to the entire fair value measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
(1) Assets and liabilities measured at fair value on a recurring basis
As at 30 June 2022, the financial assets and liabilities measured at fair value on a recurring basis by
the above three levels are analysed below:
Fair value at the end of the period
Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,099,287 2,166,354 - 3,265,641
Derivative financial assets - 586,771 - 586,771
Receivables financing - 14,072,448 - 14,072,448
Other current assets - hedging
instruments and transferable
certificate of deposit - 538,214 - 538,214
Other debt investments - 22,383,547 - 22,383,547
Other equity investments - - 43,377 43,377
Other non-current financial
assets - - 7,076,364 7,076,364
Total assets 1,099,287 39,747,334 7,119,741 47,966,362
Financial liabilities measured at fair
value -
Financial liabilities held for
trading - - 1,706,821 1,706,821
Derivative financial liabilities - 238,448 - 238,448
Other current liabilities - hedging
instruments - 521,188 - 521,188
Total liabilities - 759,636 1,706,821 2,466,457
246
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
As at 31 December 2021, the financial assets and liabilities measured at fair value on a recurring
basis by the above three levels are analysed below:
Fair value at the beginning of the year
Item Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,319,470 4,559,732 - 5,879,202
Derivative financial assets - 545,865 - 545,865
Receivables financing - 10,273,552 - 10,273,552
Other current assets - hedging
instruments and transferable
certificate of deposit - 982,965 - 982,965
Other debt investments - 27,254,307 - 27,254,307
Investments in other equity
instruments - - 45,747 45,747
Other non-current financial
assets - - 5,912,873 5,912,873
Total assets 1,319,470 43,616,421 5,958,620 50,894,511
Financial liabilities measured at fair
value -
Derivative financial liabilities - 157,602 - 157,602
Other current liabilities - hedging
instruments - 9,047 - 9,047
Total liabilities - 166,649 - 166,649
The Group takes the date on which events causing the transfers between the levels take place as
the timing specific for recognising the transfers. There was no significant transfer of fair value
measurement level of the above financial instruments among the three levels.
The fair value of financial instruments traded in an active market is determined at the quoted market
price; and the fair value of those not traded in an active market is determined by the Group using
valuation technique. The valuation models used mainly comprise discounted cash flow model and
market comparable corporate model. Inputs of valuation technique mainly comprise risk-free interest
rate, estimated interest rate and estimated annual yield.
There were no changes in the valuation technique for the fair value of the Group’s financial
instruments in the current year.
The changes in Level 3 financial assets and liabilities are analysed below:
Item Financial assets Financial liabilities
1 January 2022 5,958,620 -
Increase 1,581,046 (1,766,953)
Decrease (50,842) 17,056
Transfer out of Level 3 (51,500) -
Total gains of current period
Investment income recognised in the income
statement (379,967) 43,076
Gains recognised in other comprehensive
income 62,384 -
30 June 2022 7,119,741 (1,706,821)
247
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
Item Financial assets
1 January 2021 3,407,500
Increase 2,492,898
Decrease (869,794)
Transfer into Level 3 28,666
Total gains of current period
Investment income recognised in the
income statement 943,969
Losses recognised in other
comprehensive income (44,619)
31 December 2021 5,958,620
(a) The fair value of this part of other non-current financial assets is measured using
discounted cash flows approach. The judgement of Level 3 of the fair value hierarchy is
based on the materiality of unobservable inputs towards calculation of whole fair value.
Significant unobservable inputs mainly include the financial data of targeted company
and risk adjusted discount rates.
Assets and liabilities subject to Level 2 fair value measurement are mainly structural
deposits, transferable certificate of deposit, receivables financing and forward exchange
contracts and are evaluated by market approach and income approach.
(2) Assets and liabilities not measured at fair value but for which the fair value is disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly include:
cash at bank and on hand, deposits with the Central Bank, deposits with banks and other
financial institutions, notes receivable, accounts receivable, contract assets, loans and
advances, other receivables, other current assets (excluding those mentioned in Note 15(1)),
notes payable, accounts payable, contract liabilities, short-term borrowings, long-term
borrowings, debentures payable, lease liabilities, current portion of non-current liabilities,
customer deposits and deposits from banks and other financial institutions, other payables,
other current liabilities, etc.
Carrying amounts of the Group’s financial assets and financial liabilities measured at amortised
cost as at 30 June 2022 and 31 December 2021 approximated to their fair value.
248
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders,
and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, refund capital to shareholders, issue new shares or sell assets to reduce
debts.
The Group is not subject to external mandatory capital requirements, and monitors capital
structure on the basis of gearing ratio (total liabilities divide total assets).
As at 30 June 2022 and 31 December 2021, the Group's gearing ratio was as follows:
Item Ending balance Opening balance
Total liabilities 272,705,675 253,121,028
Total assets 413,104,145 387,946,104
Gearing ratio 66.01% 65.25%
17 Notes to the parent company’s financial statements
(1) Other receivables
Item Ending balance Opening balance
Other receivables 26,530,591 31,465,557
Less: Provision for bad debts (18,274) (17,708)
Total 26,512,317 31,447,849
(a) Other receivables are analysed by ageing as follows:
Ageing Ending Balance Opening balance
Within 1 year 26,527,119 31,461,940
1 to 2 years 860 1,708
Over 2 years 2,612 1,909
Total 26,530,591 31,465,557
249
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the parent company’s financial statements (Cont’d)
(b) Provision for bad debts and changes in book balance statements
Stage 1 Stage 3
Lifetime ECL (Credit
12-month ECL (Grouping) 12-month ECL (Individual) impaired) Sub-total
Book Provision for Book Provision for Book Provision for Provision for
Item balance bad debts balance bad debts balance bad debts bad debts
1 January 2022 31,315,234 17,708 150,323 - - - 17,708
Transfer to Stage 3 in
the current year - - - - - - -
Net increase in the
current period (4,798,315) 566 (136,651) - - - 566
Including: Write-off in the
current
period - - - - - - -
Derecognition - - - - - - -
30 June 2022 26,516,919 18,274 13,672 - - - 18,274
(c) As at 30 June 2022, other receivables of the Company at Stage 1 were analysed as follows:
(i) As at 30 June 2022, other receivables for which the related provision for bad debts was provided
on the individual basis were analysed as follows:
Ending balance
Category Book balance 12-month ECL rate Provision for bad debts Reason
Relatively low
Stage 1 13,672 0% - expected loss risk
(ii) As at 30 June 2022, other receivables for which the related provision for bad debts was provided
on the grouping basis were all at Stage 1, which were analysed as follows:
Ending balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Stage 1 Amount Amount Provision ratio Amount Amount Provision ratio
Security
deposit/guarantee
payables grouping 26,516,919 (18,274) 0.07% 31,315,234 (17,708) 0.06%
(d) As at 30 June 2022, the five largest other receivables aggregated by debtor were analysed as
follows:
Provision for
Name of entity Nature Book balance Ageing % of total balance bad debts
Company A Current accounts 23,551,391 Within 1 year 88.77% (14,131)
Company B Current accounts 1,128,000 Within 1 year 4.25% (677)
Company C Current accounts 518,672 Within 1 year 1.95% (311)
Company D Current accounts 235,000 Within 1 year 0.89% (141)
Company E Current accounts 193,503 Within 1 year 0.73% (116)
Sub-total 25,626,566 96.59% (15,376)
250
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the parent company’s financial statements (Cont’d)
(2) Long-term equity investments
Long-term equity investments are classified as follows:
Item Ending balance Opening balance
Subsidiaries (a) 67,942,113 64,376,850
Associates (b) 2,424,848 2,428,841
Sub-total 70,366,961 66,805,691
Less: Provision for impairment - -
Total 70,366,961 66,805,691
251
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the parent company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(a) Subsidiaries
Movements for the current period Cash dividends
attributable to the parent
Increase in Decrease in company declared in the
Name of investee Opening Balance investment investment Others Ending balance current period
Wuxi Little Swan Electric Co., Ltd. 20,266,584 - - 36,208 20,302,792 -
Guangdong Midea Electric Co., Ltd. 5,000,000 - - - 5,000,000 -
Midea Group Finance Co., Ltd. 3,361,856 - - 534 3,362,390 -
Foshan Shunde Midea Household Appliances Industry Co., Ltd. 5,949,000 - - - 5,949,000 -
Guangdong Midea Microwave Oven Manufacturing Co., Ltd. 1,880,041 - - - 1,880,041 -
GD Midea Air-Conditioning Equipment Co., Ltd. 1,906,520 - - 55,158 1,961,678 -
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 1,171,449 - - 13,730 1,185,179 -
Hefei Midea Heating & Ventilating Equipment Co., Ltd. 1,080,049 - - 1,952 1,082,001 -
Guangdong Midea Intelligent Technologies Co., Ltd. 1,059,451 800,000 - 2,963 1,862,414 -
Midea Group (Shanghai) Co., Ltd. 912,585 - - 5,707 918,292 -
Hubei Midea Refrigerator Co., Ltd. 874,840 - - 8,881 883,721 -
Anhui Meizhi Precision Manufacturing Co., Ltd. 831,698 - - 2,174 833,872 -
GD Midea Heating & Ventilating Equipment Co., Ltd. 850,748 - - 33,283 884,031 -
Wuhu Maty Air-Conditioning Equipment Co., Ltd. 772,668 - - 4,040 776,708 -
Wuhu Xinhe Technology Co., Ltd. 742,684 - - - 742,684 -
Hefei Midea Refrigerator Co., Ltd. 551,886 - - 9,703 561,589 -
Ningbo Midea United Material Supply Co., Ltd. 501,044 - - 1,447 502,491 -
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. 481,769 - - - 481,769 -
Hefei Hualing Co., Ltd. 313,212 - - 22,264 335,476 -
Midea International Corporation Company Limited 176,974 - - - 176,974 -
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. 193,589 - - 10,508 204,097 -
Midea Group Wuhan Refrigeration Equipment Co., Ltd. 116,227 - - 2,879 119,106 -
Chongqing Midea Air-Conditioning Equipment Co., Ltd. 88,396 - - 2,587 90,983 -
Zhejiang Meizhi Compressor Co., Ltd. 66,553 - - 98 66,651 -
Wuhu Midea Life Appliances Mfg Co., Ltd. 56,544 - - 131 56,675 -
Wandong Medical 2,297,093 2,051,910 - - 4,349,003 31,958
Midea Innovation Investment Co., Ltd. 2,135,000 - - - 2,135,000 -
Hainan Midea Building Technology Co., Ltd. 921,500 - - - 921,500 -
Guangdong Midea Electromechanical Technology Co., Ltd. 500,000 - - - 500,000 -
Guangdong Midea Commercial Air-Conditioning Equipment Co., Ltd. 769,430 - - - 769,430 -
Others 8,547,460 190,831 (18,600) 326,875 9,046,566 20,841
Total 64,376,850 3,042,741 (18,600) 541,122 67,942,113 52,799
252
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the parent company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(b) Associates
Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd. and Hefei Royalstar Motor Co., Ltd. and other companies by the
Company.
(3) Operating revenue
Operating revenue mainly comprises other operating revenue including the trademark royalty
income, rental income, management fee income, etc. obtained by the Company from the
subsidiaries.
(4) Investment income
Item Current period Same period of prior year
Income from long-term equity
investments under cost method 52,799 1,840,053
Investment income from holding of
financial assets held for trading 95,277 250,866
Income from long-term equity
investments under equity method 126,297 142,640
Others (1,981) -
Total 272,392 2,233,559
There is no significant restriction on repatriation of the Company's investment income.
253
MIDEA GROUP CO., LTD.
SUPPLEMENTARY INFORMATION
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
1 Details of non-recurring profit or loss
Same period of
Item Current period prior year
Gains or losses on disposal of non-current assets, including write-off of
provision for asset impairment 22,156 (17,085)
Except for the effective hedging activities related to the Company’s
ordinary activities, gains or losses on changes in fair value arising
from financial assets held for trading, derivative financial assets,
financial liabilities held for trading, derivative financial liabilities, other
non-current financial assets, and investment income from disposal of
financial assets held for trading, derivative financial assets, financial
liabilities held for trading, derivative financial liabilities, other non-
current financial assets. (434,341) (101,719)
Others (mainly including government grants, compensation income,
penalty income and other non-operating income and expenses) 772,377 544,913
Sub-total 360,192 426,109
Less: Effect of enterprise income tax (decrease in income tax expressed
with “-”) (30,095) (64,272)
Effect of minority interests (after tax) (26,113) 10,698
Net non-recurring profit or loss attributable to shareholders of the parent
company 303,984 372,535
Basis of preparation of details of non-recurring profit or loss:
Under the requirements of the Explanatory Announcement No. 1 on Information Disclosure by
Companies Offering Securities to the Public - Non-recurring Profit or Loss [2008] from CSRC,
non-recurring profit or loss refers to that arises from transactions and events that are not directly
relevant to ordinary activities, or that is relevant to ordinary activities, but is extraordinary and
not expected to recur frequently that would have an influence on users of financial statements
making economic decisions on the financial performance and profitability of an enterprise.
254
2 Return on net assets and earnings per share
The Group's return on net asset and earnings per share calculated pursuant to the Compilation
Rules for Information Disclosure of Companies Offering Securities to the Public No. 9 -
Calculation and Disclosure of Return on Net Asset and Earnings per Share (revised in 2010)
issued by CSRC and relevant requirements of accounting standards are as follows:
Earnings per share (in RMB Yuan)
Weighted average Basic earnings per Diluted earnings per
return on net assets (%) share share
Same Same Same
Current period of Current period of Current period of
Item period prior year period prior year period prior year
Net profit attributable to ordinary
shareholders of the Company 12.18% 12.63% 2.34 2.17 2.34 2.16
Net profit attributable to ordinary
shareholders of the Company,
net of non-recurring profit or loss 11.95% 12.31% 2.30 2.11 2.30 2.10
3 Differences in Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences in the net profit and net assets disclosed in the financial reports prepared
under China Accounting Standards (CAS) and International Financial Reporting
Standards (IFRS)
□ Applicable √Not applicable
(2) Differences in the net profit and net assets disclosed in the financial reports prepared
under CAS and foreign accounting standards
□ Applicable √Not applicable
255
