Stock Code: 600690（SH）、690D（FSE）、6690（HK）
Short Name: Haier Smart Home
March 30th 2021
Important Notice
I. The Board of Directors, the Supervisory Committee, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (‘the Company’) hereby assure that the content
set out in the annual report is true, accurate and complete, and free from any false record,
misleading representation or material omission, and are individually and collectively
responsible for the content set out therein.
II. All Directors of the Company have attended the board meetings.
III. Hexin Certified Public Accountants Limited LLP has issued a standard and unqualified audit
report for the Company.
IV. Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of the
Company) and Ying Ke (the person in charge of accounting department) hereby certify that
the financial report set out in the annual report is true, accurate and complete.
V. Proposal of profit distribution and proposal of capitalizing capital reserves for the reporting
period examined and reviewed by the Board
Proposal of profit distribution for the reporting period are examined and reviewed by the Board: to
declare a cash dividend of RMB3.66 per 10 shares (tax inclusive) to all shareholders based on the total
number of shares held on record date and after deducting the repurchased shares from the
repurchase account in respect of the future distribution proposal.
VI. Disclaimer in respect of forward-looking statements
√ Application Not applicable
Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute the Company’s substantial commitment to investors. Investors are advised to pay
attention to investment risks.
VII. Is there any fund occupation by controlling shareholders and their related parties for non-
operational purposes?
No
VIII. Is there any provision of external guarantee in violation of the prescribed decision-making
procedures?
No
IX. Is there more than half of the Directors who are unable to guarantee the truthfulness, accuracy
and completeness of the annual report disclosed by the Company?
No
Haier Smart Home Co., Ltd. Annual Report 2020 1
Important Notice
X. Important Risk Warnings
For the possible risks which the Company may encounter, please refer to the relevant information set
out in the Section of ‘DISCUSSION AND ANALYSIS ON OPERATIONS’ in this report.
XI. Others
Application √ Not application
Chairman: Liang Haishan
Haier Smart Home Co., Ltd
30 March 2021
2 Haier Smart Home Co., Ltd. Annual Report 2020
Letter to Shareholders
In 2020, a year like no other, with the resolve and dedication of 99,000 employees, Haier Smart Home
weathered the storm of Covid-19 and came out stronger than ever — our sales revenue reached RMB209.7
billion, net profit attributable to owners of the company reached a record RMB8.88 billion, and operating
cash flow went up to RMB17.6 billion.
2020 was also a milestone in Haier Smart Home’s own history. With the overwhelming support from
shareholders home and abroad, we successfully completed the privatization of Haier Electronics and the
listing of H shares (stock code: 6690.HK), establishing ourselves as an integrated platform of people, capital,
distribution networks, technologies and expertise with an eternal drive to create value for our users.
In the letter to shareholders from the H-share Prospectus, I reflected on how Haier rose from the verge of
bankruptcy and became global appliance industry’s most recognizable brand, gaining premium leadership
and widespread consumer loyalty in the Chinese market while expanding global footprint by continuously
embracing new members into the Haier family. Mitigating the global pandemic has once again reminded us
of our inspirations and the culture instilled by Haier’s founders from day one: to provide our users with
innovative products by leveraging cutting edge technologies, through enhanced services and scenarios
applications, infused with our digital capabilities and passion, and become the lifelong partner in our users’
journey of making their home a greater and smarter place. With growing confidence, we are going to
reinforce the strategic implementation of platforms integration, scenario-based user experiences
enhancement, manufacturing optimization and comprehensive digitalization. In the next three years, we
remain fully committed to outgrowing the appliance industry, improving our operational excellence, giving our
users the ultimate experiences and creating long lasting value for our shareholders.
1. WELL-ESTABLISHED LOCALIZED BRAND PORTFOLIO AND
GLOBALIZED OPERATION PLATFORM PLAY AN ESSENTIAL ROLE IN
ACCELERATING WORLDWIDE MARKET SHARE EXPANSION AND
PROFITABILITY ENHANCEMENT.
China does not only have the world’s largest consumer population; it also produces the largest
number of appliances every year through its comprehensive supply chain infrastructures. Originated in
China, with organic growth and acquisitions in the past twenty years, Haier has completed the building
of our global portfolio, unlike others, we chosen to serve global users directly from our localized
facilities. 2020 was remarkable for our overseas business as we became the first in terms of market
share in kitchen appliances, domestic air conditioner and top-load washing machine in the US; the first
in washing machine in Australia & New Zealand and the first in freezer and large refrigerator in Japan;
our total overseas revenue grew 8.3% to RMB100 billion.
It has become increasingly evident that our investment in our proprietary brands with a local touch and
our endeavours to consolidate a globalized operating platform are bearing fruit. Ongoing integrations
around the world have improved product and service offerings, more examples of multilateral
collaborations that once created best-selling front loader and new water heater in the US are in the
pipeline; secondly we stand ready to share decade-long experience of online operations with our
colleagues abroad, where rapid e-commerce penetration is expected post pandemic; thirdly, pioneering
the application of IoT technologies in China and the US gives us the opportunity to accumulate
scenario and product innovations that are fundamental to strengthening our competitiveness in the rest
of the world.
Haier Smart Home Co., Ltd. Annual Report 2020 3
Letter to Shareholders
2. LEVERAGING ON PREMIUM LEADERSHIP, PRODUCT INNOVATION AND
SCENARIO APPLICATIONS TO REALIZE QUALITY GROWTH
Casarte also had another magnificent year in 2020. In China, it remains the undisputed No.1 in
refrigerators, washing machines ASP over 10,000 & air conditioners ASP over RMB15,000, with 79%
growth in kitchen appliances. We also see great potentials in new categories including tumble dryers,
dish washers, small kitchen appliances and water purifiers.
More and more of the appliances we make are smart with connectivity, a feature we believe will be a
prerequisite in the near future, where information can be gathered, analysed and processed to form
user insights, so we could make products and provide services that cater to exactly what our users
what. Haier’s advances in IoT-based technologies and products have also received worldwide
recognition. In the US, for the third consecutive year, IoT Breakthrough, a leading market intelligence
agency, awarded GE Appliances (GEA) the Best Smart Home Appliances Company in appraising its
continued innovations in IoT-based home appliances product and smart home solutions.
We have long been aware of our users’ growing frustration with featureless shelf displays and obvious
lack of real interaction. Our answer was to launch the brand-new scenario-based Three-Winged Bird
Stores, with a built-in smart kitchen, smart living room, smart bedroom, smart bathroom, store visitors
can explore integrated one-stop appliance & decoration solutions helped by our dedicated sales teams
that are well trained by interior designers and food connoisseur; this revolutionary immersive
experience is expected to form the foundation of a longer lasting relationship with our users that could
enhance traffic conversion with increasing loyalty.
3. CREATE GREATER VALUE THROUGH END-TO-END DIGITAL REFORM
Haier’s digital transformation has three focuses: digitalized user experience, digitalized operation
process and digitalized business model. More and more users, younger generations in particular,
favour the Internet for information, interaction and consumption, which means alliances with
omni-channel partners including e-commerce platforms, social media, livestreaming businesses are
critical for our growth; on the other hand, we ought to consolidate and streamline the backend
operations in fulfilment, installation and after sales services so our omni-channel users can switch
seamlessly without compromising Haier’s product offerings, unique user insights, customized designs
and comprehensive scenario applications. This is preciously why Haier Smart Home Cloud System was
developed to mobilize and consolidate our operations in distribution, franchised stores, logistics and
after sales services. With this enhanced interaction, our users receive the products and services they
wish for while we become one-step closer to them, this whole process is our definition of
consumer-oriented retail service transformation.
Several initiatives have also been made in renovating our factories, including identifying & prioritizing
core activities and improving inventory turnover, with the aim to mitigate cost impact from escalating
commodity prices; production was made leaner with reduction of SKUs, modularization of suppliers,
and end to end inventory management. By aligning managerial KPI in PLM functions with the overall
profit target, we were able to further streamlined SOP and enhance profitability management.
4 Haier Smart Home Co., Ltd. Annual Report 2020
Letter to Shareholders
Haier’s culture and maker spirit are pivotal to the success of our digital transformation, during this
process, a sense of responsibility to our users and accountability to our own actions are essential in
making constant adjustments with a more creative approach to capture the great possibilities from the
age of online/offline integration; and Haier’s RenDanHeYi (individual and goal combination) paradigm is
what inspires our makers with an entrepreneurial spirit to sometimes step outside their comfort zone,
often thrive in challenges and always look forward to life’s new journeys.
Corporate social responsibilities and sustainable development
Earlier this year, Haier Smart Home was amongst the five companies in China chosen by FORTUNE as
the Most Admired Companies in 2021. Candidates are evaluated based on their attributes in social
responsibilities to the community and the environment, quality of management, financial soundness,
long-term investment value, talent retention, and effectiveness in doing business globally. We consider
this a reminder of our greater responsibility in the global business community: Haier Smart Home will
continue to dedicate ourselves to the protection and preservation of our environment for future
generations; promote equality and invest in our people for future innovations; support our suppliers,
distributors, and local community for future sustainability.
In March 2021, Haier Smart Home’s ESG Committee was formed under the Board of Directors,
demonstrating our long-term commitment to environment, social and governance. The board would
very much like to guide the management and mobilize all stakeholders in Haier’s ecosystem to take
immediate action in the implementation of our long-term ESG road map including green products
development, regular suppliers’ audit system, recycling, and production optimization raise Haier’s ESG
standard.
At Haier Smart Home, we believe real life changing innovations begin when our brightest minds are
encouraged to think outside the box and start to have beautiful imaginations about making the world a
better place. With the full support of our global operational platform which prioritizes learning and
sharing, GEA’ well-established US market insight and network means we are always there when our
users need us; while Haier’s diversified product portfolio and supply chain infrastructures are integral to
GEA’s continued product innovation and market share expansion.
As we navigated the uncharted territory of a global pandemic, I often drew strength from ordinary
people doing extraordinary things: when the virus struck the city of Wuhan in February, immediate
actions were taken to form a team of 200 service specialists, many of whom volunteered, to deliver &
install the first batch of the of refrigerators, water heaters and water purifiers we donated. Our team
worked around the clock to make sure over 100 medical facilities were promptly equipped with our
sanitizing air conditioners and they even stepped in to help installing units that were produced by our
competitors, as we always choose to look at the bigger picture and prioritize social responsibility over
economic gain; when Covid-19 first hit the US, we prioritized our people’s health and safety and
implemented a number of swift measures including mandatory temperature checks, flexible shifts and
locations, cleaning and sanitization in all facilities, throughout the pandemic, 1,000 of our salaried
employees volunteered a total of 150,000 hours on our factory assembly lines to make essential
appliances for our users at a time when they needed us the most. Despite all the difficulties, GEA’s
production volume grew 10% over the same period in 2019, with 20% increase in the second half.
Haier Smart Home Co., Ltd. Annual Report 2020 5
Letter to Shareholders
I wish Haier as a brand and everyone at Haier aspires to do good for our community and society. In
May last year, Hu Yunchuan, a young engineer who was installing air conditioner in Zigong, Sichuan
province at the time, rushed to the rescue of a five-year old girl without hesitation after onlookers
noticed her being stranded outside a balcony six storeys up, heart-stopping footages showed him
clinging onto railings grabbing hold of the terrified child and pushing her back inside, he was
immediately hailed as a hero and we decided to award him with a new apartment, to show our utmost
respect and recognition.
Extraordinary acts of selflessness and bravery from ordinary people that go above and beyond the call
of duty define who we are and guide us in what we do. From sponsoring HOPE schools in
underprivileged areas and donating to charitable organizations, to leading by example of our own code
of conduct, I have always encouraged and supported Haier Smart Home, Haier’s people and Haier’s
stakeholder to step up and do what we can when our community needs us. Small act of kindness
from every individual will eventually become one big step in making the world we live in a better place.
Strategic initiatives for the future
Looking back at the year that was just behind us, I am grateful to the people that I have worked with
in this day and age. Globalization make it possible for our products and services have remained
undisrupted globally despite social distancing; our communication safeguarded by digital technologies,
and more importantly, constant sharing of information and knowhow on managing containment
measures, e-commerce operations and supply chain infrastructures, have given our colleagues in the
US, Europe and the rest of the world a head start in preparation for the virus, we could therefore keep
our promise in strengthening protection for employees, continuing innovation and providing consistent
services to our users. This global pandemic has tested each individual and the society to its extreme.
With creativity, solidarity and responsibility, we remained connected to the market and launched new
products featuring well-being, environmental protection and smart technologies to helped our users in
taking care for their families, making their food safe and clothes clean; we revamped go-to-market
strategies to raise our profile and promote our products on new social networks; our logistics and
services team worked day and night to ensure that every single order was delivered and installed on
time. As we weathered the storm, the RenDanHeYi principle and the values we share as a company
have never been so important.
In the next three years, we will remain committed to drive value from: 1. enhancing competitiveness
and profitability of overseas businesses; 2. accelerating digital reform with a focus on scenario
applications and user experience while improving operational efficiency; 3. leveraging innovation and
IoT technologies to consolidate premium market leadership and increase profitability of all business
units, thus accelerating the upgrade of our smart home solutions. With the solid cash flow generated
from prior strategic initiatives, we can make consistent investments can be made in digital upgrade,
talent retention and R&D with the future in mind.
We remain deeply grateful to the confidence from our shareholders home and abroad for the
unanimous vote of support to the proposed privatization Haier Electronics. We also appreciate Haier
Group’s full backing in recognizing Haier Smart Home as the flagship listing platform. With new
inspirations, more diversified board and aligned strategic targets, we are ready to embark upon
another new journey as we capture greater synergies and continue to lead the industry.
6 Haier Smart Home Co., Ltd. Annual Report 2020
Letter to Shareholders
The discipline, solidarity and commitment demonstrated by humanity when tested in this global
pandemic did not only preserve the vitality of our society, they are also fundamental to the
unprecedented speed which vaccine was developed, more importantly these beacons of hope that are
shining brighter each day will eventually lead us to the other end of the tunnel.
This is the best of our times. My team and I are full of anticipations for the future and we are
committed to the path we have chosen. With open mind and willingness to learn and embrace the
total harmonization of technology, consumption and humanity at this revolutionary point, we remain
dedicated to strengthen our operations on the globalized platform, so we can develop products that
best serve our users and enhance their experience, ultimately creating long lasting values for our
shareholders.
Chairman of Haier Smart Home Co., Ltd: Liang Haishan
30 March 2021
Haier Smart Home Co., Ltd. Annual Report 2020 7
Contents
SECTION I DEFINITIONS 9
SECTION II GENERAL INFORMATION OF THE COMPANY AND 11
KEY FINANCIAL INDICATORS
SECTION III SUMMARY OF THE COMPANY’S BUSINESS 18
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS 33
SECTION V SIGNIFICANT EVENTS 72
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION 123
ABOUT SHAREHOLDERS
SECTION VII RELEVANT INFORMATION OF PREFERRED SHARES 134
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES 135
SECTION IX CORPORATE GOVERNANCE 149
SECTION X RELEVANT INFORMATION ON CORPORATE BONDS 160
SECTION XI RESPONSIBILITY STATEMENT 164
SECTION XII FINANCIAL REPORT 165
SECTION XIII DOCUMENTS AVAILABLE FOR INSPECTION 376
8 Haier Smart Home Co., Ltd. Annual Report 2020
Section I Definitions
I. DEFINITIONS
Unless otherwise stated in the context, the following terms should have the following meanings in this
report:
Definition of frequently used terms
CSRC China Securities Regulatory Commission
SSE Shanghai Stock Exchange
The Company, Haier Smart Home Co., Ltd, its original name is ‘Qingdao Haier
Haier Smart Home Co., Ltd.’, and the original short name is ‘Qingdao Haier’
Four Major Securities China Securities Journal, Shanghai Securities News, Securities
Newspapers Times, Securities Daily
Haier Electrics, 1169 Haier Electronics Group Co., Ltd. (a previous company listed in
Hong Kong, stock code: 01169.HK), a subsidiary as accounted for
in the consolidated statement of the Company. On 23 December
2020, the Company completed the issuance of H-shares by way of
privatisation. Since then, Haier Electrics has become the wholly-
owned subsidiary of the Company.
GEA GE Appliances, namely home appliances assets and business of
General Electric Group, which belongs to the Company.
FPA Fisher & Paykel Appliances Holdings Limited (Chinese name:
), was established in 1934 and is known as the national
appliance brand of New Zealand, the global top-level kitchen
appliance brand and the famous luxury brand of the world. It has
products including ventilator, gas stove, oven, dishwasher,
microwave oven, embedded freezer, washing machine, clothes
dryer and etc. Its business covers over 50 countries/area across
the world. FPA is a wholly-owned subsidiary of the Company.
Candy Candy Group (Candy S.p.A), is an international professional
appliances manufacturer from Italy. Since its establishment in 1945,
it has been committed to enabling the global users to enjoy a
higher quality of life through innovative technologies and quality
services. Candy Group has been prestigious in the global market
with users all over the world via its ten self-owned professional
home appliance brands. In January 2019, Candy officially became
a wholly-owned subsidiary of the Company.
Haier Smart Home Co., Ltd. Annual Report 2020 9
Section I Definitions
Definition of frequently used terms
CMM China Market Monitor Co., Ltd., as a nationally recognized market
research institute in appliance area, was established in 1994 and
has been focusing on research of retail sales in China consumption
market ever since.
Euromonitor Euromonitor, established in 1972, is the leading strategic market
information supplier and owns over 40-years of experience in
respect of publishing market report, commercial reference data and
on-line database. They create data and analysis on thousands of
products and services around the world.
All View Cloud All View Cloud (AVC) is a big data integrated solution provider
perpendicular to the smart home field, providing enterprises with
big data information services, regular data information services and
special data services.
IEC The International Electrotechnical Commission. Founded in 1906, it
is the world’s first organization for the preparation and publication
of international electrotechnical standardization and is responsible
for international standardization for electrical engineering and
electronic engineering. The goals of the commission include: to
effectively meet the needs of the global market; to ensure that the
standards and conformity assessment programs are applied
globally in a prioritized manner and to the greatest extent; to
assess and improve the quality of products and services involved in
its standards; to create conditions for the common use of
complicated systems; to improve the effectiveness of the
industrialization process; to improve human health and safety, and
to protect the environment.
IEEE The Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science
engineers, is currently the largest non-profit professional technology
society in the world. It is committed to the development and
research of electrical, electronic, computer engineering and
science-related fields, and has now developed into an international
academic organization with great influence in terms of the fields of
space, computer, telecommunications, biomedicine, power and
consumer electronics.
Model of RenDanHeYi ‘Ren’ is an employee who has the spirit of two creations
(entrepreneurship, innovation); ‘Dan’ is the value of users. Each
employee creates value for the user in a different self-employed
business, thereby realizing his own value, and the corporate value
and shareholder value are naturally reflected.
10 Haier Smart Home Co., Ltd. Annual Report 2020
Section II General Information of
the Company and Key Financial Indicators
I. INFORMATION OF THE COMPANY
Chinese name
Chinese short name
English name Haier Smart Home Co., Ltd.
English short name Haier Smart Home
Legal representative Liang Haishan
II. CONTACT PERSON AND CONTACT INFORMATION
Representative of
Secretary to the Board securities affairs IR (D shares) Company Secretary Others
Name Ming Guozhen Liu Tao Yao Sun (Sophie) Wu Zhixian (Trevor) Global Customer
Service
Hotline
Address Department of Securities of Department of Securities of Haier Deutschland Room 3513, 35th Floor, /
Haier Smart Home Co., Ltd. Haier Smart Home Co., Ltd. GmbH Konrad-Zuse- The Center, 99
Haier Information Industrial Haier Information Industrial Platz 681829 Queen’s Road
Park, No.1 Haier Road, Park, No.1 Haier Road, München, Germany Central, Central,
Qingdao City Qingdao City Hong Kong
Tel 0532–88931670 0532–88931670 +49 160 9469 3601 +852 2169 0000 4006 999 999
(Germany)
Fax 0532–88931689 0532–88931689 / +852 2169 0880 /
Email finance@haier.com finance@haier.com Y.sun@haier.de trevor@haier.hk /
III. SUMMARY OF THE GENERAL INFORMATION
Registered address Haier Industrial Park, Laoshan District, Qingdao City
Postal code of 266101
the registered address
Business address Haier Information Industrial Park, Laoshan District, Qingdao City
Postal code of 266101
the business address
Website http://www.haier.net/cn/
Email 9999@haier.com
IV. PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT
Designated newspaper for Shanghai Securities News, Securities Times, China
information disclosure Securities Journal, Securities Daily
Website for publishing of www.sse.com.cn
annual report as designated
by the CSRC
Website for publishing annual www.xetra.com, www.dgap.de, http://www.hkexnews.hk
report by other websites
Deposit place of annual report Department of Securities of Haier Smart Home Co., Ltd. Haier
Information Industrial Park, No.1 Haier Road, Qingdao City
Haier Smart Home Co., Ltd. Annual Report 2020 11
Section II General Information of the Company and Key Financial Indicators
V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Summarized information of shares of the Company
Stock Exchange Stock Short Name
Type of Shares of Shares Listed Stock Short Name Stock Code Before Variation
A-shares Shanghai Stock Exchange Haier Smart Home 600690 Qingdao Haier
D-shares Frankfurt Stock Exchange Haier Smart Home 690D Qingdao Haier
H-shares Hong Kong Stock Exchange Haier Smart Home 6690 /
VI. OTHER RELATED INFORMATION
Name Hexin Certified Public Accountants LLP
Accounting firm engaged Business address 26th — 27th Floor, Century Building, No.39
by the Company Donghai Road West, Qingdao City
(domestic) Name of signing Zhao Bo ( ), Wang Lin ( )
accountant
Name HLB Hodgson Impey Cheng Limited
Business address 31st Floor, Gloucester Tower, The Landmark,
Accounting firm engaged
11 Pedder Street, Central, Hong Kong
by the Company
Special Administrative Region
(overseas)
Name of signing Jack, Tian Sun Kit
accountant
Name China International Capital Corporation Limited
Business address 27th & 28th Floor, China World Tower 2, No.
Sponsor responsible for
1 Jianguomenwai Avenue, Beijing
continuing supervision
Name of signing Sun Lei ( ), Li Yang ( )
during the reporting
sponsors
period
Period of continuing 18 January 2019 to 31 December 2020
supervision
Name Zheshang Securities Co., Ltd.
Financial advisor Business address No. 201 Wuxing Road, Jianggan District,
responsible for Hangzhou City, Zhejiang Province
continuing supervision Name of signing Wang Feng ( ), Wang Jian ( )
during the reporting financial advisors
period Period of continuing 23 December 2020 to 31 December 2021
supervision
Note:
(1) Accounting firm engaged by the Company (overseas): The H-shares of the Company were listed and traded on the Main Board
of The Stock Exchange of Hong Kong Limited on 23 December 2020. According to relevant requirements upon listing, the
Company shall be required to engage an international accounting standards auditor to issue the 2020 international standard
auditing report. Therefore, according to the resolutions of the general meeting, the Company engaged HLB Hodgson Impey
Cheng Limited to issue the 2020 international standard auditing report for the Company.
(2) The sponsor is responsible for continuing supervision: During the reporting period, the Company had a Convertible bonds
issued, and the ‘Haier Convertible Bonds’ were listed on 18 January 2019 (and delisted upon the redemption of the
remaining amount of non-convertible shares on 17 December 2019). China International Capital Corporation Limited, as the
sponsor of such issue, is responsible for continuing supervision for the remaining time of the year of listing and the following
whole fiscal year.
12 Haier Smart Home Co., Ltd. Annual Report 2020
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION (continued)
(3) Financial advisor responsible for continuing supervision: The H-shares of the Company have been listed for trading on the
Main Board of The Stock Exchange of Hong Kong Limited on 23 December 2020. According to relevant requirements on
significant asset reorganization and as the independent financial advisor of the offering, Zheshang Securities Co., Ltd. will
perform the responsibility for continuing supervision in the remaining days of the year when the H-shares of the Company
are listed and the subsequent complete accounting year. In addition, according to the requirement of Hong Kong rules, the
Company appointed Anglo Chinese Corporate Finance, Limited (address: 40/F, Two Exchange Square, 8 Connaught Place,
Central, Hong Kong; sponsor: Stephen Clark) as the compliance advisor to perform the responsibility for continuing
supervision in the period for continuing supervision (the remaining days of the year for listing and the subsequent complete
accounting year).
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE
RECENT THREE YEARS
(I) Key accounting data
Unit and Currency: RMB
Key accounting data 2020 2019 Yoy change (%) 2018
Operating revenue 209,725,821,099.44 200,761,983,256.57 4.46 184,108,481,959.27
Net profit attributable to shareholders
of the listed company 8,876,593,208.19 8,206,247,105.96 8.17 7,483,659,016.04
Net profit after deduction of non-
recurring profit or loss attributable
to shareholders of the listed
company 6,457,813,335.37 5,765,164,700.75 12.01 6,601,505,599.79
Net cash flows from operating
activities 17,599,111,715.51 15,082,630,942.73 16.68 19,142,782,481.20
At the end of
2020 At the end of 2019 Yoy change (%) At the end of 2018
Net assets attributable to
shareholders of the listed
company 66,816,422,614.55 47,888,319,765.92 39.53 39,742,745,893.42
Total assets 203,459,495,879.65 187,454,236,283.17 8.54 168,091,571,652.14
Note: Revenue of COSMO was no longer included in the fourth quarter of 2020 since the business of COSMO was stated
by the end of September 2020. For example, business revenue of COSMO was not included in the fourth quarter of
2019, representing an increase of 8% and 20% in 2020 and the fourth quarter, respectively.
Haier Smart Home Co., Ltd. Annual Report 2020 13
Section II General Information of the Company and Key Financial Indicators
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE
RECENT THREE YEARS (continued)
(II) Key financial indicators
Key financial indicators 2020 2019 Yoy change (%) 2018
Basic earnings (RMB per share) per
share 1.337 1.286 3.97 1.217
Diluted earnings (RMB per share) per
share 1.306 1.191 9.66 1.189
Basic earnings per share after
deducting non-recurring profit or
loss (RMB per share) 0.973 0.903 7.75 1.074
Weighted average return on net Decreased by 1.45
assets (%) 17.67 19.12 percentage points 20.88
Weighted average return on net
assets after deducting non-
recurring profit Decreased by 0.58
or loss (%) 12.85 13.43 percentage point 18.63
Explanation of the key accounting data and financial indicators of the Company as at the end of
the reporting period for the previous three years
Applicable √ Not applicable
14 Haier Smart Home Co., Ltd. Annual Report 2020
Section II General Information of the Company and Key Financial Indicators
VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND
OVERSEAS ACCOUNTING STANDARDS
(I) Differences in net profit and net asset attributable to shareholders of listed
company in financial report disclosed simultaneously according to international
accounting standards and according to China Accounting Standards (CAS)
Applicable √ Not applicable
There is no difference between the net profit and net asset attributable to shareholders of listed
company in financial report disclosed in the consolidated financial statements according to
international accounting standards and according to China Accounting Standards (CAS).
(II) Differences in net profit and net asset attributable to shareholders of listed
company in financial report disclosed simultaneously according to overseas
accounting standards and according to China Accounting Standards (CAS)
Applicable √ Not applicable
Apart from the financial report prepared according to international accounting standards, the
Company did not prepared any financial report according to overseas accounting standards.
(III) Reasons for the difference between the domestic and overseas accounting
standards:
Applicable √ Not applicable
IX. KEY FINANCIAL DATA OF 2020 BY QUARTER
Unit and Currency: RMB
Q1 Q2 Q3 Q4
(January- (April- (July- (October-
March) June) September) December)
Operating revenue 43,141,448,203.28 52,586,648,903.37 58,683,716,582.79 55,314,007,410.00
Net profit attributable to shareholders of listed
company 1,070,333,404.45 1,710,467,308.27 3,519,706,790.82 2,576,085,704.65
Net profit after deduction of non-recurring
profit or loss attributable to shareholders
of listed company 943,123,999.14 1,626,316,498.45 1,522,917,638.14 2,365,455,199.64
Net cash flow from operating activities –5,787,626,102.33 5,244,706,844.93 6,254,123,931.85 11,887,907,041.06
Reasons for the difference between quarterly data and disclosed regular reporting
data
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 15
Section II General Information of the Company and Key Financial Indicators
X. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT
√ Applicable Not Applicable
Unit and Currency: RMB
Non-recurring profit or loss items Amount in 2020
Profit or loss from disposal of non-current assets 2,149,836,798.36
Government grants included in current profit or loss, except that closely related to the
normal operating business, complied with requirements of the national policies,
continued to be granted with the amount and quantity determined under certain
standards 844,925,723.90
Profit and loss of changes in fair value arising from holding of financial assets held for
trading, derivative financial assets, financial liabilities held for trading and derivative
financial liabilities except for valid hedging business relevant to normal business of the
company, as well as investment gain realized from disposal of financial assets held
for trading, derivative financial assets, financial liabilities held for trading, derivative
financial liabilities and other debt investments 132,357,789.61
Other operating income and expenses except the aforementioned items 54,990,221.86
Impact on minority interest –389,539,423.67
Impact on income tax –373,791,237.24
Total 2,418,779,872.82
16 Haier Smart Home Co., Ltd. Annual Report 2020
Section II General Information of the Company and Key Financial Indicators
XI. ITEMS MEASURED BY FAIR VALUE
√ Applicable Not Applicable
Unit and Currency: RMB
Forward foreign currency
contract –26,180,454.72 –58,007,371.41 –31,826,916.69 113,101,043.88
Wealth management products 493,161,725.80 1,862,036,322.21 1,368,874,596.41 71,832,480.22
Investment in trading equity
instruments 24,586,332.05 83,949,637.05 59,363,305.00 3,507,512.50
Interest rate swap agreement –13,991,425.83 –50,886,744.60 –36,895,318.77
Investment funds 113,759,845.57 113,759,845.57 8,351,206.56
Investment in other equity
instruments 1,395,959,878.92 2,659,125,265.54 1,263,165,386.62 21,366,723.72
Bulk effective hedging 1,916,299.35 25,644,774.08 23,728,474.73
Other derivative financial
instruments 77,057,328.58 46,832,494.61 –30,224,833.97 5,869,913.46
Obligation of repurchasing the
minority equity rights 54,598,203.27 –54,598,203.27
Total 2,007,107,887.42 4,682,454,223.05 2,675,346,335.63 224,028,880.34
XII. OTHERS
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 17
Section III Summary of the Company’s Business
I. INTRODUCTION OF MAJOR BUSINESS, OPERATING MODEL OF THE
COMPANY AND INDUSTRY BACKGROUND DURING THE REPORTING
PERIOD
I Corporate information on principal activities, operating model and industry
overview during the reporting period
Since our establishment in 1984, the Company is committed to being an enterprise of the times,
continuing to innovate and iterate by continuously introducing new products that lead the market
development, and grasping industry opportunities arising. After over 30 years of development, the
Company has already become the global leader in large-format home appliance industry and also
the pioneer of global smart home solution provider:
Leading provider of the global large-format home appliance industry: According to data from
Euromonitor, an authoritative market researcher, among the large-format home appliances
brands, the Company has ranked 1st in the global market in terms of retail volume for 12
consecutive years. The Company has a global portfolio of home appliance brands
consisting of Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA.
Among the large-format home appliance brands, our Haier brand refrigeration appliances
and laundry appliances also ranked first in the global market in terms of retail volume for
13 and 12 consecutive years.
Pioneer of global smart home solutions: Capitalising on our full-range home appliances
products, according to Euromonitor, the Company is one of the first home appliance
enterprises in the industry to launch smart home solutions. Centring on our interconnected
home appliance products and resources from our partners, and supported by Haier Smart
Home App and Haier Smart Home Experiential Cloud Platform as well as our physical
experience stores and franchised stores, the Company provides smart home solutions
suited for various lifestyle scenarios for users to satisfy their pursuit for a better life.
After years of development, the Company has established the following three business segments:
smart home business in China, smart home business overseas and other businesses.
Smart Home Business in China
The Company provides full range home appliances products to our customers in China. Through
online Haier Smart Home App, as supplemented by physical offline experience stores, the
Company also provides value-added services centring on home appliance products, which jointly
form our smart home solutions to meet users’ needs in different lifestyle scenarios. Specifically,
our smart home solutions can be further categorised as Household Food Solutions (Internet of
Food), Household Clothing Solutions (Internet of Clothing), Household Air Solutions (Internet of
Air), and Household Water Solutions (Internet of Water).
18 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
Household Food Solutions (Internet of Food): the Company provides users with refrigerators,
freezers, kitchen appliances and other products through domestic market sales and exports
under Household Food Solutions. Through our interconnected products, the Company can
achieve interactions, for example, between stoves and range hoods, and between
refrigerators and ovens. Through providing users with value-added food services featuring a
combination of products and services, such as smart cooking and nutrition scheme
formulation, the Company is able to meet their needs for convenience, healthy and
delicious food.
Household Clothing Solutions (Internet of Clothing): the Company provides users with washing
machines, dryers and other products through domestic market sales and exports under
Household Clothing Solutions. Through our interconnected products, the Company can
achieve interactions, for example, between washing machines and dryers, and enable smart
solution such as, automatic use of laundry detergent. The Company provides users with
value-added cleaning and caring services featuring a combination of products and services,
so as to meet their needs related to cleaning and caring of apparels.
Household Air Solutions (Internet of Air): the Company provides users with household air-
conditioners, commercial air-conditioners, purifiers, fresh air systems and other products
through domestic market sales and exports under Household Air Solutions. In particular,
our interconnected products enable offerings of smart solutions such as interaction among
air-conditioners in different rooms, interactions between air conditioners and purifiers, smart
perception, adaptive air supply, air quality testing and smart sterilisation, so as to fully meet
users’ needs for healthy and comfortable experience with regards in air temperature,
humidity, cleanliness and freshness.
Household Water Solutions (Internet of Water): the Company provides users with electric
water heaters, gas water heaters, solar water heaters, heat pump water heaters, POE water
purifiers, POU water purifiers, water softening equipment and other products through
domestic market sales and exports under Household Water Solutions. In particular, our
interconnected products can provide whole-house water solutions including interactions
between water heaters and purifiers, and between heating appliances and water heaters, so
as to meet the users’ needs for water purification, softening and heating.
Smart Home Business Overseas
In addition to Chinese market, the Company also manufactures and sells a comprehensive
portfolio of home appliance products as well as provides value-added services to users in more
than 160 countries and regions including North America, Europe, South Asia and Southeast Asia,
Australia, New Zealand, Japan, Middle East and Africa.
Haier Smart Home Co., Ltd. Annual Report 2020 19
Section III Summary of the Company’s Business
In the overseas market, the Company manufactures and sells home appliance products of our
own brands based on local consumer demands. The Company has more than 20 years of
experience in overseas operations. The Company further expanded our overseas business
through cross-border acquisitions. The Company acquired Haier Group Corporation’s overseas
white goods business, including Sanyo Electric Co., Ltd.’s white goods businesses in Japan and
Southeast Asia in 2015, General Electric Company’s home appliances business in 2016,
Fisher&Paykel in 2018, and Candy in 2019. The development of the Company’s smart home
business overseas has been fuelled by the synergies from both our organic growth as well as
acquisitions of overseas business.
At present, the overseas smart home business of the Company has entered into a stage of
stable development, having achieved multi-brand, cross-product and cross-region presence on a
global basis. According to Euromonitor, in 2020, the Company ranked first in terms of retail
volume in the Asia major home appliance market, with a market share of 18.6%; ranked second
in North America, with a market share of 22.0%; ranked second in Australia and New Zealand,
with a market share of 13.4%; ranked third in Middle East and Africa, with a market share of
8.4%; ranked fifth in Europe, with a market share of 7.2%.
Other Businesses
Based on our established smart home business, the Company also expanded its business to
cover, among others, parts and components, small home appliances and distribution services.
Our parts and components business primarily involves procurement, manufacturing and sales of
ancillary parts and components for home appliances. Small home appliances business primarily
involves design, outsourced manufacturing and sales of various small home appliances under our
brands, to supplement the Company’s smart home solutions business. The distribution services
business primarily involves distribution of televisions, consumer electronic and other products for
Haier Group and other third parties, leveraging our extensive sales network.
During the period, the Company disposed of the 54.50% equity interest of Haier COSMOPlat IOT
Ecosystem Technology Co., Ltd. ( ) (hereinafter referred to as
‘COSMOPlat ’) under Other Businesses segment. The Company still holds a total of 18.75%
equity interest in COSMOPlat through direct and indirect shareholdings. COSMOPlat is no longer
accounted for on a consolidated basis in the combined statements of the Company, and the
business of COSMOPlat is no longer included in Other Businesses segment from the forth
quarter of 2020.
During the period, the Company was once again being listed among the Top 500 World’s
Companies by Fortune, moved up 13 places as compared with 2019. We are named as the
“2021 World’s Most Admired Companies” by Fortune, and are the only company in Europe and
Asia in home appliances industry selected and the only company not incorporated outside thein
USA. Meanwhile, the Company became the world’s only Internet-of-Things (IoT) ecosystem
brand, being named second time in a row as BrandZtm Top 100 Most Valuable Global Brands in
2021.
20 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
Industry Summary for 2020
(1) The China market
Due to the impact of the Covid-19 pandemic and the complex and volatile international
environment, China’s economic growth rate has declined. According to the National Bureau
of Statistics, China’s total GDP exceeded RMB101 trillion in 2020, an increase of 2.3%
year-on-year, which was the lowest growth rate in the past five years. In the first quarter,
the outbreak of the pandemic had strong impacts on the economy and enterprises. The
drop in residents’ average income led to more cautious consumer behavior. The home
appliance market was being hit hard as overall consumer demand shrank. However, as the
pandemic situation in the Mainland China was brought under control, work and production
of industries were orderly resumed, and consumer demand also restored. Since the second
quarter, the overall home appliance market has gradually shaken off the impact of the
pandemic, and market sales achieved significant quarter-on-quarter improvements.
According to data from CMM, the annual domestic market size for white goods and
kitchen appliances in terms of retail value was at RMB448.7 billion, a decrease of 11.9%
year-on-year. In particular, retail sales for the refrigerator, washing machine, air conditioner
and kitchen appliance categories have recorded negative growths of 3.3%, 6.5%, 22% and
5.4% respectively. However, the declines have significantly narrowed in the second half of
the year with a retail market size reaching RMB232.9 billion, representing a year-on-year
growth of negative 2.4%. Influenced by changes brewed during the post-pandemic era, the
home appliance market continued to evolve towards health-conscious and smart upgrades,
with encouraging developments in specific sub-categories and channels.
First of all, the pandemic as a “black swan” event did not only bring impacts to various
sectors of the economy, it also reshaped people’s attitudes towards consumption. As
people spent more time at home, they became more dependent on home appliances. For
instance, the need to stock up on food has led to the pursuit of large-capacity
refrigerators, and the increased frequency of home cleaning and laundry has brought favor
to large-capacity washing machines and water heaters. At the same time, consumers’
pursuit for higher standards of quality living has driven the upgrading of product features.
Quality and eco-friendly home appliances with disinfection and sterilization features have
become hot selling product segments. Home appliances such as air conditioners with fresh
air intake, self-cleaning and comfortable air blow features, washing machines equipped with
high-temperature sterilizing function, refrigerators that could maintain food freshness with
odor control and anti-bacterial features, along with disinfection cabinets, water purifiers and
air purifiers, have all achieved significant growths. According to CMM’s retail monitoring
data survey for major market trends for the online home appliance market in January-
November 2020, categories with health-boosting features have all achieved high rankings in
terms of sales value among products including washing machines, rice cookers, humidifiers,
etc.
Haier Smart Home Co., Ltd. Annual Report 2020 21
Section III Summary of the Company’s Business
Secondly, the upgrading of home appliances’ features also further promoted the
development of smart homes. Driven by technologies such as IoT, cloud computing, big
data and artificial intelligence, smart homes have brought great convenience to home living
with the characteristics of contactless dialogue systems, multi-product interactive linkages
and self-learning capabilities. For example, robotic vacuum cleaners with higher level of
intelligence can serve multiple purposes. They can master the room layout through AI
learning and automatic recognition, and provide home security services, hence becoming a
new center of connection for the living room. The proliferation of intelligence in single
products also fueled the rise of whole-house intelligence. The development trend of the
future home appliance industry has transformed from purchase of a single product to
customization of product sets, and from individual network devices to application of smart
scenarios. Many industry giants have already joined the field. Meanwhile, with the
emergence of more and more open cloud platforms and reduction in hardware
development costs, the smart home ecosystem value chain has become more mature.
Users have gradually gained conviction on the uses of smart home products. The
proportion of complete set purchases and scenario-based purchases have been on the
rise.
Thirdly, as emerging consumer groups became more sophisticated and the concepts of
healthy and quality living getting more ingrained into consumer mindset, small home
appliances with the characteristics of low unit price, small size, installation-free and minimal
service requirements have become a new market hotspot. Small home appliances have
grown against the industry’s downward trend especially during the pandemic outbreak, as
they were more in line with the online sales model of live-streaming e-commerce. For
instance, according to information from AVC, the online sales growth for categories such as
high-speed blenders and composite devices with steam, microwave and roasting functions
had reached 108.7% and 43.8% respectively in 2020. Against the backdrop of a slowdown
in growth of conventional large-format appliances, small home appliances that offer both
functionalities and enjoyment are capable of tapping into the market upside and provide
opportunities for development of new categories.
Lastly, in terms of channels, as offline outlets were impacted by the pandemic prevention
and control measures, online channels have become the main conduit for meeting
consumer demands. According to AVC market data, the online market shares in terms of
retail volumes for air conditioners, refrigerators and washing machines have all increased
despite a fall in overall consumption, reaching 51.5%, 60.3% and 64.6% respectively,
representing increases of 7.4, 8.0 and 9.3 percentage points. As more time is being spent
at home, and the new generation of young people prefer online shopping, e-commerce as
a contactless cloud-experience sales medium has had huge influence on users’ purchase
preference and decision-making process. Through leveraging platform resources and
technological advantages, live-streaming e-commerce improved the efficiency in
dissemination and accelerated traffic conversions due to its mobile, social and scenario-
driven characteristics, hence it has become one of the key modes of sales nowadays. In
the future, online content platforms will be enriched by the rise of core user circles such as
KOL and KOC, as well as the popularization of the 5G network and the increasingly mature
VR technology. Live-streaming e-commerce has the potential to facilitate more in-depth and
direct interactions between enterprises and users.
22 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
(2) Overseas markets
The global home appliance market has been developing differently across regions. In
developed countries and regions, the development momentum of home appliance market
relied on new housing, diversified demands in sub-markets and the upgrading of home
appliances. In developing countries, due to the relatively low home appliance ownership
rate, the overall market still saw potential for rapid growth. On the other hand, as Covid-19
has broken out in many countries around the world, economic and social activities have
been restricted, people’s income has been reduced, and the real estate sector was facing
pressure in sales and delivery. These series of factors have led to a decline in user
demand for home appliances, bringing negative impacts to different regions in varying
degrees.
In terms of channels, while offline channels remained dominant, online channels have been
developing rapidly. The distribution channels for the global home appliance market were
increasingly diversified. In view of the transformation of retail channels, the rapid
development of online channels and their integration with offline sales channels have further
enhanced the growth potential of online channels.
Breakdown by markets:
(1) The U.S. market: Impacted by the pandemic, consumption in the U.S. market was sluggish
in the first half of the year. However, with normalized pandemic prevention and control
policies such as social distancing, according to Euromonitor International’s statistics, the
home appliance industry achieved double-digit growth in the second half of the year, with
an annual growth rate of 5%. The recovery of the U.S. home appliance market was, first of
all, benefited from the extension of the stay-at-home order, which has stimulated users’
demand for home appliances, and shifted travel and entertainment spending into household
consumption; secondly, their more mature e-commerce channels have facilitated a boost in
household consumption; thirdly, a series of stimulus policies implemented by the
government has effectively spurred the growth of household consumption; finally, mortgage
rates were at record lows, leading to a surge in new home constructions, existing home
sales were also maintaining at its highest level since 2006, which have further stimulated
people’s demand for home appliances.
(2) The European market: Due to the impact of the pandemic in 2020, the growth of the large-
format home appliance market recorded 3.9%. This included a 3.9% growth for
refrigerators, a 1% growth for washing machines, and a 4% growth for built-in kitchen
appliances.
(3) The South Asian and Southeast Asian markets: In response to the impact of the
pandemic, the Indian government imposed a strict lockdown from late March to late June,
essentially halting sales nationwide. According to estimates from local distributors, the
industry has fallen by more than 25% year-on-year. Business activities in other regions
have also been restricted by the government’s quarantine rules. Retail sales and retail
volume both declined before gradually recovering in May and June.
Haier Smart Home Co., Ltd. Annual Report 2020 23
Section III Summary of the Company’s Business
(4) The Australian and New Zealand markets: The Australian home appliance and furniture
market has experienced a strong short-term growth due to the stay-at-home order.
Competition in the industry has become more intense. Enterprises have actively developed
online platforms and continued to improve their offline shopping experience. The home
appliance chain channels in New Zealand have become more concentrated, market shares
of small and medium-sized channels continued to shrink; the proportion of online sales has
increased to 5%.
(5) The Japanese Market: The overall sales volume in the white goods industry has dropped
2.3% due to the impact of Covid-19. Specifically, the refrigerator category has experienced
declines in both sales volume and sales value, whereas the washing machine category
recorded a decrease of 2.9% in sales volume, and an increase of 2.4% in sales value. In
addition, refrigerators have become a top-selling category during the pandemic, achieving
year-on-year growths of 53.3% and 42.5% in terms of sales volume and sales value
respectively (data from GFK).
(3) Industry Outlook for 2021
The Chinese Market: Various industries are expected to show trends of recovery in 2021.
Refrigerator: The industry is expected to increase in both volume and revenue.
Replacement demand due to structural upgrades will further expand market size. The
refrigerator market is expected to achieve single digit growth in retail sales in 2021. The
export market is expected to grow at a slower rate due to a high base over the same
period. Washing machine: The domestic retail market and the export market are both
expected to show positive growths. The domestic washing machine market is still in the
process of recovery while products continue to innovate towards the directions of healthy
laundry and the integration of “laundry + garment care”. Meanwhile, emerging categories
such as clothes dryers and tumble dryers are meeting users’ current pursuit of quality living
and are therefore expanding rapidly. Residential air-conditioner: Volume and sales
revenue are both expected to increase. Due to the expected macroeconomic recovery in
2021 and the low base over the same period, coupled with the rise in the average price of
products, the air-conditioner segment is expected to achieve double-digit growths in both
retail volume and retail revenue; exports are expected to continue the growth trend since
the second quarter of 2020. In addition, the water heater market will see the dawn of
recovery, the growth rate of the offline market is expected to be higher than that of the
online market due to a low base over the same period, and growth in the online market is
expected to slow down. The overall size of the kitchen appliance market will rebound
from 2020, on one hand, although the control policies for the real estate market are
tightening, the proportion of second-hand housing transactions are on the rise, which will
drive the volume as well as quality growth of the kitchen appliance category; on the other
hand, emerging categories such as dishwashers, integrated cookers and built-in integrated
cookers will continue to see fast-growing trends.
24 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
The Global Market: Looking ahead to 2021, the long-term demand for home appliances
as necessity goods remains stable. As many countries around the world are gradually
resuming economic and social activities, and the pandemic is expected to be contained
with the widespread application of vaccines, growth shall pick up in the global retail market
of home appliances. According to Euromonitor’s data forecast, the global market size for
large-format home appliances (excluding 3C products) in 2021 will rebound to over RMB3
trillion, with a year-on-year increase of about 4%.
II. EXPLANATION ON SIGNIFICANT CHANGES ON MAJOR ASSETS OF THE
COMPANY DURING THE REPORTING PERIOD
√ Applicable Not Applicable
During the reporting period, the Company advanced the H-share listing and privatisation of Haier
Electronics, a Hong Kong-listed company, which constitutes significant asset reorganization. As at the
end of the reporting period, the reorganization has been completed and Haier Electronics became a
wholly-owned subsidiary of the Company (the shareholding proportion of the Company in Haier
Electronics was 45.87% before the transaction).
Including: Overseas assets 91,106.91 million (Unit and Currency: RMB), representing 44.8% of total
assets.
III. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD
√ Applicable Not Applicable
II Analysis of core competitiveness during the reporting period
The Company has established a strong strategic layout and competitive advantages in China and
overseas markets. On this basis, the Company will continue to further solidify our leading
industry position through integration and coordination on a global unified platform, digitalisation-
driven efficiency reform, technical strength and innovation ability. AsDesigned to be a basis for
sustainable growth, the Company’s RenDanHeYi management model enables us to guides our
management and enables us to replicate our successful experiences. The Company believes that
the following advantages will help us strengthen our leading position in the future.
(1) Competitive advantages in Chinese market
The Company has maintained our long-term leadership positions in China’s large-format
home appliance market. According to CMM’s report, in 2020, the Company has
established a leading market position in different large-format home appliance categories.
The Company’s leading position in full-range home appliance products is the basis for the
development of our smart home solutions. The Company’s core technology, advanced
manufacturing experience and user base in various categories of products enable us to
have sufficient single product scale and industry experience, and to successfully transform
our model from delivery of the single product form delivers to users by the Company from
a single product to provision of a full-suite solution.
Haier Smart Home Co., Ltd. Annual Report 2020 25
Section III Summary of the Company’s Business
(2) Dominance in high-end market
In line with the consumption upgrade in China, the Company started building our Casarte
brand targeting the PRC high-end market more than 10 years ago. In addition to focus,
experience and patience, the creation of high-end brands also requires the technical ability
for continuous innovation and differentiated service, so as to meet users’ demand for high-
quality experience. By combining our technical strengths, product development ability,
manufacturing techniques and other advantages in the world as well as specialised
marketing and differentiated services, our Casarte brand has gradually gained the trust of
users in China’s high-end market. According to the information from CMM, in 2020,
Casarte has established absolute leadership in China’s high-end major home appliance
market, and ranked first in terms of the retail volume of refrigeration appliances, laundry
appliances, air-conditioners and other items in high-end market. Among which, in terms of
offline retail volumes, the share of the Casarte washing machines and refrigerators in
China’s market above RMB10,000 reached 76.7% and 37.1% respectively, and the share of
the air-conditioners in Chinese market above RMB15,000 reached 46.9%. The offline
market average price of refrigerators, air conditioners and washing machines has reached
approximately two to three times the industry average price.
(3) Continuous expansion and upgrades of smart home solutions
With the continuous improvement of users’ demand for a better life and the development of
technologies such as IoT, big data, cloud computing, and AI, home appliance industry
shows the development trend towards smart, full-suite and scenario-based offerings. With
our leading customer insight and rich category coverage, the Company has pioneered in the
industry in transforming into offering smart home solutions based on personalised life
scenarios in living spaces such as living rooms, kitchens, bedrooms, bathrooms and
balconies. Users can use the Company’s Haier Smart Home App as the gateway to
interact with existing equipment, place orders, and obtain services to meet the
comprehensive needs in specific lifestyle scenarios. In the future, the Company will
continue to meet the needs of user experience, further upgrade and enrich the smart home
solutions provided by the Company.
(4) Competitive advantages in overseas market and comprehensive and deep-rooted
global layout with localised operation capabilities
In addition to our success in China, the Company also deliveredmonstrates strong
performance in overseas markets. The Company focuses on developing overseas markets
with our ownself-managed brands. The Company’s business strategy has enabledhelped us
to establishing a multi-brand, cross-segment and cross-regional, three-in-one model with
self-built, interconnected and collaborative operations in R&D, manufacturing and
distributions.
The Company’s extensive global layout also relies on our localised business teams and
flexible and independent management mechanisms established in overseas regional
markets, through which the Company can quickly detect and respond to local consumers’
demands. The Company also actively integrate into local market and culture, and hasve
established a corporate image well received recognised by the local society in overseas
regions where the Company operates.
26 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
In 2020, the Company had 14 research and development centres, 122 production centres,
108 marketing centres around the world, and covered nearly 130,000 point-of- sales
overseas.
(5) Constantly increasing market share
With the deep-rooted local set-up across the world, the Company has the product
competitiveness to adapt to the local market, the sales channel to penetrate into the local
market, the successful experience of other regional markets, as well as the collaborative
and operating capabilities in respect of global R&D, procurement and production
scheduling, so that the Company can continuously improve our market share in each of the
major global markets.
(6) Comprehensive self-managed brand portfolio and, generating strong brand image
Through independent development and M&A, the Company has formed a portfolio covering
seven brands, namely Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and
AQUA. To meet the needs from different groups of users in the global markets, the
Company adopts a differentiated multi-brand strategy centering on users to achieve
extensive and intensive user coverage.
(7) Cross-border acquisition and integration capabilities
The Company has a successful track record in acquisition and integration. In 2015, the
Company acquired Haier Group’s overseas white goods business, including Sanyo Electric
Co., Ltd.’s white goods business in Japan and Southeast Asia. In 2016, the Company
acquired GE Appliances. In 2018, the Company acquired from Haier Group Fisher&Paykel,
a New Zealand-based brand which the Company had been managing since 2015 under a
trust arrangement. In 2019, the Company acquired the Italian Company, Candy. Our
merger and acquisition integration capabilities are reflected in the following aspects.: Firstly,
the Company promotes the RenDanHeYi management model in the enterprises acquired,
i.e. a mechanism for the teams to share added value under the same goal in the whole
process, which can vitalise the enterprises acquired and encourage the employees, to
create more value. Secondly, the Company empowers the enterprises that the Company
acquired in aspects including strategy, research and development and procurement based
on our global platforms to enhance their competitiveness. Thirdly, it is easy for the
Company to be well recreceivedognised by the enterprises acquired with our open and
inclusive corporate culture and the support for the enterprises acquired to establish flexible
and autonomous management mechanisms, which facilitates improvement of integration.
Haier Smart Home Co., Ltd. Annual Report 2020 27
Section III Summary of the Company’s Business
(8) Comprehensive and effective global collaboration ability
The Company is well positioned to take advantage of our global collaboration platform and
integrations such as R&D, product development, procurement, supply chain, marketing and
branding. Furthermore, the Company is able to shareexpand success experience of existing
markets to all markets around the world. By continuously deepening the synergy among our
global businesses, the Company injects a strong driving force into our future development.
Global collaboration in R&D: With a global collaboration R&D system, the Company
has established a global technology research and development mechanism to share
our commonuniversal modules and multiplexing technologies, as well as to share
patents within the scope of compliance. For example, the Company has successfully
applied the direct-drive motor researched and developed by Fisher&Paykel to our
Casarte laundry appliances and achieved desirable outcome.
Global collaboration in product development: The Company has established a global
product development mechanism to coordinate cooperative product development
efforts around the globe and achieved regional collaboration and complementation
among product categories. For example, the Company has successfully supported GE
Appliances’ resumption of its water heater business.
Global collaboration in procurement: The Company’s global procurement activities are
guidedinstructed and implemented by our global commodity committee. The
Company’s operation departments in different areas can share procurement resources
in the globe with our Global Sourcing Operation Platform (“GSOP”) and, so as to
achieve economies of scale effects.
Global collaboration in supply chain: With the transparentvisualised and digitalised
global supply chain management system, the Company can flexibly deploy our
production capacity across the globe and share and develop intelligent manufacturing
technologies in a coordinated way.
Global collaboration in marketing and branding: The Company hascan realised global
collaboration in branding, with the operation of our multi-level brand portfolios around
the globe. The Company also carries out promotion activities among various regional
markets around the globe and introduces successful marketing strategies. For
example, the Company has successfully introduced the sales and marketing models in
the third- and fourth-tier markets of China into India, Pakistan, Thailand and other
markets, which strengthened our brand image and market competitiveness.
28 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
(9) Industry-leading R&D and technical strengths
Based on the core concept of “the world as my R&D department”, the Company has
established a leading global R&D innovation system to ensure that the Company is making
continuous innovation centering on user demands. The Company has established 14 R&D
centres around the world and formed a R&D resource sharing network globally. On this
basis, the Company independently took the initiative to build the Haier Open Partnership
Ecosystem (HOPE platform) which has linked more than 1 million world-class resources
partners, with over 30 million patents achievedments. The resource partners can thereby
participate in our user-centred iterative R&D process.
In 2020, Haier Smart Home ranked first on the global smart home patent application
ranking list foron four consecutive occasions with 2,034 home appliance patents; Haier won
2 more awards at the 21st Chinese Outstanding Patented Invention Golden Award
Presentation and ranked 1st in the industry. We won a total of 9 national patented
invention awards, representing half of industry’s honours. As a pioneer of international
standard in home appliance sector, Haier Smart Home is accelerating its pace to propel the
Chinese standards going aboard. 80% of the international standards in China’s home
appliance industry were originatedmade by Haier. In 2020, the first IEC international
standard for refrigeration appliance preservation formulated under Haier’s guidance was
officially published. The application scenarios include the Internet of Clothing, the Internet of
Food, the Internet of Water and the relatedir ecological standards have fulfilled the
requirements of 4 major international standards organizations such as ISO/IEC/IEEE/OCF 4.
We effectively and really realized the full-range coverage and global leadership of the smart
home cloud ecological standard system.
(10) Honest corporate culture and win-win RenDanHeYi management model
The DNA behindintrinsic genes of Haier’s integrity culture as supported by survival and
development mentality lay our integrity culture in taking our belief in quality and services is
theas foundation, which is imperative for ourHaier’s continuous success. What makes Haier
evolved from a close to bankruptcy small collective enterprise to becominge the world’s
No.1 brand of white household appliances is its honesty culture, namely “Users come first”,
“Be sincere forever”, which makes Haier soldier on in leading the Internet innovation wave.
Haier’s win-win view under “RenDanHeYi” management model ensures its sustainable
operation, which is the driving force for our self-motivating and empowering corporate
culture. As “Ren” refers to employees who have the spirit of entrepreneurship and
innovation, and “Dan” refers to the value created for users, the management model of
RenDanHeYi encourages employees to generate value for users with an entrepreneur
mindset, and realise their self-value aligned with the value of our Company and the value
for the shareholders. The RenDanHeYi management model effectively destructs “department
silosgateways”, promotes innovation and improves corporate efficiency. To dateAt present,
this model has been treated as a research object by various companies and research
institutions.
Haier Smart Home Co., Ltd. Annual Report 2020 29
Section III Summary of the Company’s Business
Outlook
In 2021, the Company will focus on the building of high-end, scenario and ecosystem brands,
continuing to leverage our strengths in market-leading set products, global synergies, high-end brands
and the Smart Home experience cloud platform. We will drive forward the whole process digital
transformation to enhance efficiency, and continuously expand our smart home scenario-based
solutions, thereby to maintain a strong development momentum.
1. The Chinese market: (1) The Casarte brand will expand its competitive edge in the high-end
market through continuous product innovation, press ahead with digital transformation to achieve
whole process efficiency enhancement, and achieve breakthrough in the air conditioning business
through product upgrade, channel development and marketing innovation. (2) We will accelerate
the development of the “Three-Winged Bird” scenario brand through expanding our touch point
network, upgrading the collection of scenarios, and building capacity for 1+N services. (3) By
focusing on the development of ecosystem brands such as the Food Network and the Internet of
Clothing, we will achieve breakthroughs in the number of platform users, GMV and ecosystem
revenue. (4) In terms of smart home construction, through developing the smart home perception
and decision-making system, we shall create a Haier Smart Home brain system that can offer
interactive, reliable, thoughtful home services that can be accessed anywhere. Through various
gateways such as the Smart Home App, Three-Winged Bird App, distributed speech technology
and the multi-screen feature, we will create a smart home interactive portal that attract users’
attention.
2. Overseas markets: (1) create premium product portfolio, with comprehensive network and direct
go to market approach in order to consolidate leadership in all markets; (2) improve the global
supply chain infrastructure and provide immediate smart and healthy home solutions to our local
users; (3) upgrade our hOn platform in Europe, EVO platform in Russia, Smart HQ platform in the
US in order to provide users with superior experience leveraged on enhanced system
capabilities.
3. We will construct fully digitalized operation systems for interconnected factories globally, aiming
at maximum efficiency throughout the whole process, and focus on hitting the targets of
precision, efficiency, balanced lines and full production capacity. Through the mega-factories
projects, we strive to develop top-selling products that are most competitive in the market with
the most cost-effective production methods.
30 Haier Smart Home Co., Ltd. Annual Report 2020
Section III Summary of the Company’s Business
Potential Risk
1. Risk of decreasing market demand due to slowdown in macroeconomic growth. As white goods
are durable consumer appliances, the level of users income and their expectations of future
income growth will have an impact on their willingness to purchase products. A slowdown in
macroeconomic growth causing the decline in the purchasing power of users would have a
negative impact on industry growth. In addition, a slowdown in real estate market would also
have some negative impact on market demand, which will indirectly affect end-user demand for
home appliances.
2. Risk of price war due to intensify industry competition. The white goods industry is highly
competitive with a high degree of product homogeneity and industry concentration has increased
in recent years. However, the increase in industry inventory capacity in individual sub-sectors due
to the imbalance between supply and demand may lead to risks such as price wars.
Furthermore, due to rapid technological advancements, scarce talents in the industry, shortened
product life cycles and ease of imitation, it is becoming increasingly difficult for us to take
advantage of the higher selling prices typically associated with new products, services and
technologies while having to invest more in research and development. The Company will actively
invest in research and development to attract more users through continuous innovation in
products and services, so as to build a lasting brand awareness.
3. Risk of fluctuations in raw material prices. The raw materials that we mainly use in our products
and core components are metal raw materials such as steel, aluminium and copper, as well as
commodities raw materials such as plastics and foam. If the prices of raw materials supply
continue to rise, it will put pressure on the Company’s production and operations. In addition,
the Company relies on third party suppliers for key raw materials, components and
manufacturing equipment, as well as OEM suppliers, and any disruption in supply or significant
price increases from these suppliers would have a negative impact on the Company’s business.
As a leader in the industry, the Company will take steps to reduce the risk of raw material
fluctuations on its operations by using valuation adjustment mechanism on volume and price with
suppliers and hedging tools.
4. Operational risks in overseas business. The Company has steadily developed its global business
and has established production bases, research and development centres and marketing centres
in many parts of the world, with the proportion of overseas revenue increasing year-on-year. The
overseas markets are subject to political and economic situations, legal systems and regulatory
regimes of those countries and regions, and significant changes in these factors may pose
certain risks to the Company’s local operations in these markets. The Company has taken
various measures to mitigate the relevant impact, including actively discussing and working with
suppliers and customers to mitigate the impact of additional tariffs imposed by the United States;
improving production efficiency to offset the impact on the Company’s overall cost of sales; and
potentially expanding the Company’s supply resources to other countries.
Haier Smart Home Co., Ltd. Annual Report 2020 31
Section III Summary of the Company’s Business
5. Risk of exchange rate fluctuations. As the Company’s global footprint progresses, the import and
export of the Company’s products involves the exchange of foreign currencies such as the U.S.
dollar, the Euro and the Japanese yen. If the exchange rates of the relevant currencies fluctuate,
it will have a certain impact on the Company’s financial position and increase its financial costs.
In addition, the Company’s consolidated financial statements are denominated in Renminbi, while
the financial statements of its subsidiaries are measured and reported in the currency of the
primary economic environment in which the entity operates, and are therefore subject to currency
exchange risk. In this regard, the Company uses hedging instruments to reduce its exposure to
exchange rate fluctuations.
6. Risk of policy changes. The home appliance industry is closely related to the consumer goods
market and the real estate market. Changes in macroeconomic policies, consumer investment
policies, real estate policies and relevant laws and regulations will affect customer demand for the
Company’s products, which in turn will affect the sales of the Company’s products. The
Company will closely monitor changes in the relevant policies and laws and regulations, and
make forecasts of market changes to ensure the further development of the Company.
7. Risk of uncertainties resulted from COVID-19. The COVID-19 outbreak, which gradually spread by
the end of 2019, could lead to a further weakening of consumer demand for home appliances,
which could in turn affect the Company’s product sales. Firstly, lockdowns, social distancing
measures and travel restrictions will reduce customer mobility and result in the closure of the
retail sales sites, thereby reducing consumer demand for home appliances. Secondly, the
epidemic may also lead to operational disruptions for customers, such as logistical disruptions in
product deliveries, resulting in customer dissatisfaction with the Company’s service and
consequently reduced demand for the Company’s products. The Company will leverage on its
experience in the China market and make best use of the synergy of global resources to mitigate
the impact of the epidemic on our operations.
8. Credit risk. There is possibility that we will be unable to fully recover our trade receivables from
our customers or that they cannot settle our trade receivables in a timely manner, our business,
financial condition and results of operations may be adversely affected. As to this risk, depending
on the credit history of our customers and their transaction amounts with us, we allow the
flexibility by offering a credit period of 30 to 90 days to certain customers.
9. Inventory risk. As the Company cannot accurately predict various trends and events and maintain
adequate levels of inventory at all times. Therefore, it could lead to excessive inventory. Then, the
Company may be forced to offer discounts or conduct promotional activities to dispose of slow-
moving inventory. On the other hand, we may experience insufficient inventory, which may cause
us to lose sales. However, the Company will manage our inventories and make adjustments
based on market conditions, and periodically assess impairment of inventories.
32 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis
on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS
Management Discussion and Analysis
In 2020, the Company pressed ahead with our IoT smart home strategy and continued to expand our
leading position in the global market, achieving an annual total revenue of RMB209.7 billion, an
increase of 4.46%. Revenue for the fourth quarter was at RMB55.3 billion, an increase of 9.5%. As
COSMOPlat business was disposed at the end of September 2020, revenue of the fourth quarter of
2020 no longer consolidates the business. If excluding the disposed business on the fourth quarters of
2019, revenue should have grown 8% annually and 20% in the fourth quarter. The revenue growth was
driven by progress in both our domestic and overseas businesses. Breaking down by regions, the
domestic market achieved a revenue of RMB107.7 billion, an increase of 6.6%, while the second half
of the year increased by 18.5%. The growth was due to the Company’s ongoing development of
leading set products, Casarte’s efforts in continuously expanding its high-end market share, deepening
retail transformation and optimizing efficiency. Overseas markets achieved a revenue of RMB100.6
billion, an increase of 8.3%, while the second half of the year increased by 15.8%. The growth was
attributed to the Company’s premiumization strategy as well as our focus on operational capacity
enhancement for localized R&D, production and sales. Under the challenges of the pandemic, our
“Rendanheyi Model ( )” has ensured swift response from our micro entrepreneur in various
regions. Relying on our global procurement, supply chain and R&D platforms, we have also fully
leveraged our edge in global resource deployment and overcome the adverse impacts from external
environment, hence resulting in the achievement of sustainable business development.
The Company achieved a net profit of RMB11.3 billion for the year, an increase of 8.2%, while the
continuing net profit recorded RMB11.3billion with a growth rate of 25.31% and the net profit
attributed to shareholders were RMB8.9 billion with a growth rate of 8.17%. The net profit in the fourth
quarter reached RMB3.3 billion, a record high over the same period in previous years. Profit growth for
the year was driven by growth in revenue and optimization of expenses. Our gross profit margin was
29.68%, a decrease of 0.15 percentage points year-on-year. The decrease was driven by the impact
from COVID 19, which resulted in a 1.03 percentage points lower gross profit margin in the first half.
With the rapid recovery of topline growth, the increased proportion of Casarte as well as the product
mix optimization in oversea market, the gross profit margin in the second half rebounded by 0.46
percentage points. Total sales and management expenses dropped 0.98 percentage points, with a
decrease of 2.8 in the second half of the year. In particular, China region has achieved an expense
reduction through efficiency enhancement programs of four restructuring and six digital
transformations. Overseas region has achieved expense ratio optimization by improving economies of
scale and refining operations.
The Company’s annual net cash flow from operating activities was RMB17.6 billion, an increase of
16.68%.
Haier Smart Home Co., Ltd. Annual Report 2020 33
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
During the reporting period, the business operations of the Company’s segments were as
follows:
(I) Smart Home Business in China
Under the dire challenge of a 11.9% retail sales decline in China’s white goods and kitchen
appliance industry, our smart home business in China has grown against the downward trend in
2020. Our competitiveness and industry-leading position have been further strengthened.
Revenue from the domestic home appliance segment reached RMB98.9 billion, a year-on-year
increase of 6.6%. Operating profit grew 8.65%. Our retail shares in various industries continued
to rise. At the same time, our high-end brand Casarte achieved a net revenue of RMB8.7 billion,
a year-on-year increase of 17%, among which the growth of the fourth quarter recorded 35%.
The Company’s business growth has been driven by the introduction of smart set products that
spearheaded innovations; the use of a unified warehousing and distribution system and the
Yilihuo information tool that optimized inventory and improved channel efficiency; the active
expansion of our high-end brand Casarte’s product portfolio and market share; and the
continuous deepening of our digital transformation efforts.
1. Household Food Solutions
(1) Refrigerators and Freezers
According to the retail data of CMM, the refrigerator industry had a retail volume of 32.6
million units in 2020, down 3.6% year-on-year; its retail value was at RMB91.2 billion, down
3.3% year-on-year. Looking back at the whole year, the refrigerator industry was heavily
affected by the pandemic from the beginning of the year till May, and began to recover
strongly in the second half of the year. Growth in retail sales has improved significantly in
major domestic retail channels in the second half of the year. A surge in overseas orders
also supported the rebound of domestic production. Haier has continued to strengthen
our position as a global leader in the refrigerator industry. Through continuous
technology innovation and iteration of product features, we provided users with
health-oriented, intelligent and stylish solutions for fresh food storage, thereby
leading the consumption upgrades of the industry. In 2020, the Company’s
domestic refrigerator business achieved revenue of RMB34.4 billion, an increase of
5%; During the period, according to CMM’s report, the Company’s shares of online and
offline retail sales in the domestic market reached 36% and 39% respectively, representing
increases of 2.2 and 1.9 percentage points; our shares of online and offline retail volume
reached 30% and 36% respectively, representing increases of 3 and 3.6 percentage
points.
Influenced by the pandemic, users have been increasingly conscious about healthy eating.
At the same time, as users were spending more time at home, they had higher demands
on the long-lasting freshness and storage capacity of refrigerators.
34 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Food Solutions (continued)
(1) Refrigerators and Freezers (continued)
Based on researches on the storage and nutrition of all kinds of food ingredients, the
refrigerator business has accumulated big data of more than 1,000 kinds of ingredients and
formulated a smart fresh-keeping algorithm, which could automatically calculate and adjust
the temperature of the refrigerator according to the types of ingredients recorded by the
user, so as to maintain maximum freshness. At the same time, we have established a
variety of ways to manage food ingredients. Through multiple channels such as the
refrigerator screen, smart voice, the Smart Home APP, etc. Users could manage
ingredients in the refrigerator according to their own habits, and check the status of the
ingredients in the refrigerator anytime and anywhere to ensure the freshness and timely
use.
In terms of capacity expansion, the refrigerator business has integrated cabinet design to
enable the full opening of refrigerator doors at 90 angles, which has greatly expanded the
capacity of the refrigerator. In particular, Casarte’s refrigerator introduced a new “seamless
built-in model” with the innovative design of heat dissipation across the bottom of the
fridge. Users no longer had to reserve space for heat dissipation, thus enabling the
seamless fitting of the refrigerator into a cabinet with 0cm clearance space. This effectively
fulfilled users’ demand for the integration of furniture and home appliances, and instilled
elegance and imagination into the kitchen space. It also greatly boosted the storage
capacity of the refrigerator in a given space. Casarte’s “seamless built-in model” has won
international design awards including the iF Design Award and the Red Dot Design Award.
This design also helped Casarte’s refrigerator to achieve a total annual share of 12.3% in
retail sales, which was an increase of 2.1 percentage points year-on-year. Specifically, its
market share above 10,000 RMB has reached 37%, representing an increase of 5.4
percentage points.
The refrigerator business has built on the advantages of the global supply chain to achieve
rapid growth in the export business. As the overseas supply chains were more heavily
impacted by the pandemic, recovery was rather slow, leading to a supply shortage in the
market. This coupled with the closure of offline sales outlets and users’ extended time at
home, the demand for refrigerators and freezers from overseas users has continued to
surge. The domestic supply chain on the other hand has recovered swiftly after the
pandemic was brought under control in Mainland China, which has led to a rapid growth in
the export of refrigerators. According to demand changes in major regions in the overseas
market, we have promptly adjusted channel strategies and partnership models as well as
expanding collaboration channels, resulting in rapid growths in various regions. The
refrigerator export business had an annual growth of close to 60%.
Haier Smart Home Co., Ltd. Annual Report 2020 35
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Food Solutions (continued)
(1) Refrigerators and Freezers (continued)
During the year, the Company has continued to push forward a global and efficient system
for synergies between production and sales. In terms of procurement, we have intensified
the collaborative relationships with local strategic partners and optimized our supply chain
systems, thereby efficiently responded to local demands. In terms of manufacturing, we
have implemented smart production scheduling and flexible manufacturing systems, so as
to maximize capacity utilization through continuously improving our manufacturing
efficiency.
(2) Kitchen appliances
In 2020, China’s kitchen appliance segment recorded a revenue of RMB2.8 billion, a year-
on-year increase of 13.6%. Revenue from Casarte’s kitchen appliances grew 79%, with the
number doubling for four consecutive months from September to December, hence
displaying strong momentum in development and growth potential. In terms of market
share, our share of domestic retail sales reached 6% with an increase of 1 percentage
point year-on-year; market share in the high-end segment (price range above RMB5,000)
grew 0.9 percentage points.
The Company has created “smart and healthy” kitchen and living experience
through continuously developing global collaborations. The kitchen appliance business
has achieved market breakthrough with its original East meets West technology, bringing a
variety of healthy cooking styles from around the world into Chinese kitchens, and building
user reputation through experiential marketing. Leveraging our robust R&D capabilities and
solid experience in kitchen appliances around the globe, the Company’s kitchen appliance
business has continued to integrate technology resources from GEA, Fisher & Paykel and
Candy in the kitchen appliance field, and established the GFC global R&D alliance. During
the period, the kitchen appliance business launched a series of smart kitchen appliance
products that integrated leading technologies and modules from various regions around the
world. We released four pioneering standards, including constant air volume, medical-
grade disinfection technology, smart home and garbage disposal unit, which have
effectively supported the rapid development of the smart air series of range hoods and the
Casarte medical-grade disinfection cabinets.
36 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Food Solutions (continued)
(2) Kitchen appliances (continued)
At the same time, Casarte’s kitchen appliances have achieved breakthrough in the high-end
market, which has effectively strengthened the brand awareness for its kitchen appliances.
By effectively solving users’ pain points, creating differentiated experience, and
accumulating user reputation, the newly launched Casarte C5+ set products and the Haier
“double defense” set products have raised the bar for the industry’s products and
technologies. Casarte C5+ Gourmet set products have enhanced user experience
through pioneering technologies in various product categories: The constant air volume
range hood pioneers a smart 12-square technology, which is not restricted by the wind
pressure in high-rise and is not affected by exhaust ducts, hence offering constant
ventilation that creates a smoke-free cooking environment. Casarte’s three-burner stove
accounted for half of the three-burner stove market. It is equipped with features that
enable one key control rice cooking, smart temperature control, linkage between stove and
range hood, etc., thus providing convenient cooking experience. As the industry’s first
medical-grade disinfection cabinet, the C5+ disinfection cabinet can kill 10 kinds of
pathogenic bacteria with intelligent tracking and auto sterilization, thus exceeding the
industry’s two-star standard which can only kill 2 kinds of pathogens. It has also won the
annual disinfection technology leadership award. Combining GE Appliances’ century-old
dry-heat cooking technology and Fisher & Paykel’s moist-heat cooking technology, the C5+
oven can achieve dual control of temperature and humidity, so as to create culinary
delicacies that are evenly roasted and tenderly braised. Building on Candy’s water-
steam separation technology, the C5+ steamer features an innovative water-steam dual-
circulation system, which can achieve 110 high-temperature steaming and multi-layer
steaming through pure steam, thereby preserving the freshness and flavor of ingredients,
allowing users to eat fresh and healthy. The C5+ integrated steam oven enables a fifth
cooking method of simultaneous steaming and roasting, which can shorten cooking time
and produce more tasteful dishes.
The Company’s kitchen appliances recorded an export revenue growth of 51%, which was
mainly due to the strong growth in the Haier brand of kitchen appliances in markets such
as Russia and the Philippines.
By adopting large-scale centralized production, encouraging module manufacturers to build
local factories, and implementing lean production and refinement upgrades of technologies,
the kitchen appliance factories have effectively reduced procurement costs, improved
delivery speed and enhanced production efficiency during the period.
Haier Smart Home Co., Ltd. Annual Report 2020 37
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Food Solutions (continued)
(3) The Food Ecosystem
With the increasing consumer demand for food quality, convenience in cooking and food
safety, the Food Ecosystem has built on its intelligent hardware platform and alliance
resources, to provide users a healthy eating experience of pre-made products through IoT
technologies, standardization of culinary skills & dishes and digitization of cooking
algorithms,. The relationship between the Company and our users has gradually
transformed from the previous one-off selling of tangible products to the high-frequency
sharing of gourmet products. User loyalty has been greatly enhanced.
In terms of R&D of smart hardware products, the Food Network has upgraded the smart
steam oven three times. The product is equipped with eight key functions such as dual
temperature sensors and precise temperature control. It can take into account a variety of
cooking modes and customization of ingredients. The smart cooking mode can be
activated at the touch of a button. The smart refrigerator can offer recipe recommendation
and purchase of ingredients. It can also be linked to the steam oven to bring out the
genuine flavor of the food through digital precision in the cooking process.
In terms of alliance resources, the Company has partnered with partners including the
Chinese Cuisine Association to set up the Haier Food Ecosystem Alliance. Together, we
created a smart food ecosystem platform, turning recipes of famous chefs into “home
cooked dishes”. The gourmet experience and user reputation gained from the platform also
supported the sales of the Company’s smart products. For instance, the Company and
resource partners have jointly developed the “Peking Roast Duck” recipe. After receiving the
semi-finished product (duck embryo), users can scan the exclusive QR code to trace the
breeding time, growth condition and quarantine status of the duck. All they have to do is to
put the ingredients into the smart oven, and the oven would be automatically adjusted to
the matching temperature and cooking time. No additional manual operation is required,
and the resulting dish would be cooked to a higher standard. The duck embryos can also
be purchased with a single click through the Smart Home App or the refrigerator screen. In
response to the market demand from those who could not return home for New Year’s Eve
dinner with family under the call for celebrating Chinese New Year in situ, the Company has
launched the “Reunion Dinner” package, bringing together 18 dishes from six major
cuisines, which has achieved retail sales of 15,000 package sets and 120,000 dishes
during the Spring Festival.
38 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Clothing Solutions
(1) Washing Machine Business
As impacted by Covid-19 as well as the complex and volatile international environment,
China’s economy was put to severe tests in multiple aspects in 2020. According to the
market research report published by CMM, the annual retail volume and retail value of
China’s domestic washing machine market dropped 9.3% and 6.5% respectively. In view
of the sluggish performance of the industry as a whole, the Company’s washing
machine business has reacted swiftly to market changes. By fully leveraging the
strengths of our brand portfolio and actively pushing forward digital transformation
throughout our entire process, we achieved strong growth against the downward
trend and improved operational efficiency. During the period, the Company’s washing
machine business achieved a net revenue of RMB26 billion, representing an increase of
6.3%While maintaining our leading position, our market share continued to grow, reaching
40.22% in the offline market, representing a rise of 3.89 percentage points year-on-year;
and a share of 39.9% in the online market, a year-on-year increase of 3.5 percentage
points. According to statistics from Euromonitor International, Haier’s washing machine has
been the world’s No. 1 brand for 12 consecutive years in terms of retail volume, which
reached 16.3% of total market share, 1.2 percentage points higher than that of 2019.
Casarte’s domestic offline share reached 12.2%, an increase of 3 percentage points year-
on-year, making it one of the top three brands in the washing machine market; Leader on
the other hand reaped an online share of 5.1%, ranking among the top five washing
machine brands in the online market.
During the period, people’s demand for washing machine products continued to
develop towards the direction of health-conscious, personalized, smart and
scenario-based. As an industry leader, Haier washing machine continued to focus
on user needs, promoting industry upgrades through technological innovation and
product iterations.
The growing health consciousness fueled by the pandemic has driven an
accelerated upgrade and evolution of products in the washing machine industry.
Centered around health and care, partition washing products were favored by users and
became one of the hottest trends in product upgrades; meanwhile, healthy laundry features
with various sterilization methods such as high temperature, silver ions, ultraviolet rays and
ozone also gained popularity rapidly. Haier washing machine continued to capture market
share in partition washers through the Casarte Twin Tasker series. We also leveraged the
trend of healthy laundry and developed the pioneering self-initiative disinfection technology.
The Yunxi and Xianmu top-load washers would generate deep ultraviolet light automatically
during the laundry process, thus achieving auto sterilization without additional electricity
consumption. During the period, the shares of top-load and front-load washers in terms of
offline retail volume have reached 43.5% and 39.4% respectively, representing increases of
3.3 and 4.3 percentage points year-on-year.
Haier Smart Home Co., Ltd. Annual Report 2020 39
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Clothing Solutions (continued)
(1) Washing Machine Business (continued)
In view of the trend of demand segmentation, the Company has performed deep
dive analysis on the market demand of different user groups. In response to the
growing demand for care and color protection of high-end fabrics, the Company launched
the BlingBling colored apparel washer, an innovative product programmed with various
modes of detergent usage to facilitate the restoration of the original color of clothing in just
one click. Since the launch of the colored apparel washer, our online market sales have
increased rapidly and successfully drove a 9% year-on-year increase in our market share of
washers priced over RMB6000. In addition, based on the waist protection needs of female
users while doing housework, the washing machine business launched the Washer for
mothers, which successfully led to a 2.9% year-on-year increase in the market share of
top-load products in the price range of RMB2,700-4,000.
At the same time, the washing machine business has spearheaded the growing trend
of smart products. The Casarte’s Air Wash has upgraded from the initial variable-
temperature steam Air Wash, to an Air Wash that integrated sterilization, wrinkle removal,
odor removal, and humidity removal, as well as enhanced fluffiness in one machine. The Air
Wash procedure could be customized precisely according to different fabric and needs,
hence fulfilling user needs for high-end laundry in an intelligent way.
In terms of overseas exports, the growth of the washing machine business has
slowed in the first half of the year due to the impact of the pandemic. However,
benefiting from the Company’s global strength of the ‘three in one’ localized
deployment and our product competitiveness, our export revenue has achieved
rapid growth in the second half of the year, thus leading to an annual revenue
growth of 40% in overseas markets. In the U.S. market, the healthy laundry product first
launched in the region was favored by users due to its differentiated features, resulting in
an increase of 4 percentage points in the market share of front-load washers and
enhanced our market position. In Japan, the AQUA ultrasonic project focused on mid-range
to high-end products in the variable-frequency series, which were highly effective in
cleaning collars and cuffs and unlikely to damage clothing fibers. Although the industry
declined 4%, our variable-frequency series achieved growth against the negative trend and
recorded a gain of 4 percentage points in market share. In the European market, we
continued to focus on high-end brands, featuring high-end front-load washers and highly
profitable products, and has enhanced our market scale and overall profitability.
40 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. Household Clothing Solutions (continued)
(1) Washing Machine Business (continued)
During the period, the washing machine business has achieved double
breakthroughs in terms of production capacity and efficiency, and continued to push
forward our super-factories project. Through betting with suppliers as well as centralizing
product models, production modules and manufacturing sites, we raised the efficiency of
product models and reduced the whole-machine cost. In addition, the washing machine
business has advanced operational efficiency and optimized organizational structure through
the digitization of channels. We also reduced labor costs and improved production
efficiency through self-made equipment and automation. With the implementation of the
interconnected factories project, the automated, intelligent and visualized production
capacities of our factories have been strengthened. Through the collection and modeling of
big data from users, our production decision-making capability and efficiency have been
further enhanced.
(2) Internet of Clothing
Haier’s Internet of Clothing has actively promoted cross-sectoral collaborations with laundry
detergent, apparel and footwear manufacturers, so as to create an ecosystem for the
laundry industry.
During the period, to address users’ needs for personalized care of high-end clothing
fabrics, the Internet of Clothing has joint hands with leading resource brands in the laundry
detergent market to create the first ink cartridge washing machine. This ecological solution
of ink cartridge laundry has won the recognition of users for its advanced technology
including personalized laundry programs, precise and smart detergent dispensing and
detergent smart purchase, coupled with convenient service experience.
Besides, as there is an increased awareness on household disinfection after the outbreak of
Covid-19, timely and effective disinfection, sterilization and storage of footwear have
become users’ pain points. The Internet of Clothing has collaborated with resource partners
in footwear laundry services, sporting goods chain brands and footwear brands to co-
create a complete-scenario experience for the washing, caring, storage and customization
of footwear.
During the outbreak of Covid-19, the Internet of Clothing has provided a complete scenario
for household pandemic prevention solutions, covering the scenarios of going home, staying
at home and on commute, hence offering users a one-stop solution for health protection,
which have greatly boosted user demand for upgrading related smart home appliances, and
generated enthusiasm for shopping with ecosystem resource partners such as laundry
detergent.
Haier Smart Home Co., Ltd. Annual Report 2020 41
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
6. Household Air Solutions
(1) Household air conditioners
The residential air conditioning business has focused primarily on health-conscious and
intelligent products. It has led the industry to transform from distribution-based to retail-
based, actively expanded the integration of offline networks and online channels, and
pushed forward the construction of engineering channels, which have effectively increased
growth in our retail shares. In terms of market share, both offline and online shares have
achieved growths against negative trends, with offline share of retail sales standing at
14.7%, an increase of 2.2 percentage points; and online share of retail sales standing at
11.2%, an increase of 2.4 percentage points. Meanwhile, we have continued to expand
Casarte’s air conditioning product portfolio to stimulate structural upgrades and growth of
scale.
The household air conditioning business has formulated a number of health-boosting air
conditioning standards, such as sterilization cabin and air purification, and has applied for a
total of 4,881 invention patents and 609 international patents. The residential air
conditioning business has successively launched the “Thor” self-cleaning air conditioner
with 56 sterilization, the “3D sterilization cabin” series of whole-house healthy-air air
conditioner, and the “New Species” air-washing air conditioner and purifier. In particular, the
“sterilization cabin” series of air conditioners have adopted a triple sterilization technology
with the use of water, heat and electricity. They provide a bacteria removal rate of 99%,
thus completely solving the pain point of dirty air blow from air conditioners, and have
received unanimous praise from users during the pandemic. The market share of
sterilization air conditioners has reached 56.6%. Drawing on the principles of aero engines,
the world’s first air-washing air conditioner is installed with a high-speed centrifugal
waterfall curtain system to achieve a differentiated experience of purification, humidification,
oxygenation, sterilization, air blow positioning and voice interaction. It can achieve the effect
of air washing once every hour, hence offering clean, fresh and healthy air to users. Since
its launch in the market, the air-washing air conditioner has continuously captured the
largest share in the price segment above RMB14,000.
Casarte’s air conditioner has achieved revenue growth of 27% through expanding its
product portfolio and touch-points. In 2020, set products for Casarte’s residential air
conditioner have increased the Galaxy series. In terms of market share, our share in the
price segment above RMB15,000 has reached 46.9%, an increase of 6.27 percentage
points year-on-year; our high-end market share of hanging machines priced above
RMB4,000 and standing machines priced above RMB10,000 has reached 16.6%,
representing an increase of 3.8 percentage points.
The Company’s residential air conditioner had export revenue growth of 21%. In overseas
markets, we have increased market share through continuous channel expansion and the
launch of innovative products. We have also flexibly leveraged online marketing to propel
enhancement of our localized competitiveness. At the same time, our domestic factories
have resumed production in the first moments to ensure fulfillment of order demands in key
markets as well as supporting the development of proprietary brand overseas.
42 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
6. Household Air Solutions (continued)
(2) Commercial air conditioners
Benefiting from the swift control of the pandemic and the resumption of work and
production in Mainland China, the commercial air conditioning industry has shown gradual
recovery, and we outperformed the industry with double digit revenue growth.
With 61% market share in magnetic levitation products, we continue to lead the industry in
energy efficiency solutions, we also launched the industry’s first smart and energy efficient
solution using IoT based VRF units developed clean energy products in anticipation of the
surge in demand association with the switch from coal towards electricity.
Our air conditioning business has focused on featuring products that are health-boosting,
energy saving and intelligent, thereby offering healthy and convenient experience for users.
During the period, in response to users’ continuous concern on health, the commercial air
conditioning business has launched the Healthy Air Conditioner, and introduced the
industry’s first central conditioner with sterilization cabinet while continued the iteration of
maglev units with a large cooling capacity. We also made breakthrough in smart air solution
for commercial properties, developed identification technology for central air conditioners,
IoT based control system that could potentially save users’ cost by over 50%.
Haier Smart Home Co., Ltd. Annual Report 2020 43
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
4. Household Water Solutions
(1) Water heater business
The water heater and water purifier business has committed to providing users
with safe, smart and comfortable whole-house water usage solutions. In 2020,
although the pandemic situation has suppressed some offline consumer demand, the stay-
at-home economy driven by social distancing has stimulated the growth of online traffic
which further unlocked demands from lower tier markets. Haier’s water heater and water
purifier business has seized the opportunity and embraced the trend for health-boosting
and intelligent home appliances. We continued to upgrade product features, and achieved
a revenue of RMB10.2 billion, a growth of 6.5% year-on-year.
During the period, the water heater status in the industry has further enhanced, ranking first
in the overall industry. Our market shares also further increased, reaching 23.9% and
27.3% for offline and online markets respectively, representing year-on-year growths of
3.4% and 3.2%. In the high-end market, Casarte achieved a revenue growth of 80%, its
market share also further grew by 4.2%. The Leader brand developed momentum in both
online and offline markets through the Yellow Duckling IP, which has successfully captured
the hearts and minds of young users, and realized a substantial increase in market share.
As revenue grew rapidly, the water heater business has continued to optimize costs and
expenses, including streamlining SKUs, focusing resources on projects with high input-
output ratio, etc., so as to effectively improve profitability. During the period, although the
level of profit margin was impacted by the pandemic in the first half of the year, it has
shown significant improvement in the second half of the year.
As an industry-leading brand, Haier electric water heater has committed to solving
user pain points and meeting user needs. According to information from CMM, the
online and offline market shares of the Company’s electric water heater in terms of retail
value were 37.7% and 36.5% respectively, representing year-on-year growths of 4.7% and
8% respectively. During the period, Haier electric water heater launched three leading
technologies: variable-frequency instantaneous heating technology, AI artificial intelligence
technology and water purifying technology, thereby bringing users large-capacity, intelligent
and healthy bathing experience. At present, products with water purification features have
accounted for more than 70% of Haier’s electric water heaters. In particular, Casarte’s
Tianmu SPA series even provided users with unlimited hot water and a relaxing bathing
experience for the whole family. At the same time, backed by Haier’s AI artificial
intelligence technology and the U+ big data platform, Haier electric water heaters not only
provided users with smart water usage, they could also serve as smart network devices
connecting with the bathroom or the entire house, hence bringing users a future living
experience. Haier electric water heater’s outstanding product innovation capabilities and
stylish designs also received international recognitions, with Casarte’s electric heater
Tianquan SPA winning the AWE Outstanding Product Award.
44 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
4. Household Water Solutions (continued)
(1) Water heater business (continued)
Haier gas water heaters also achieved exceptional performance during the period.
Retail sales of the Company’s gas water heaters skyrocketed by nearly 100% during the
618 Festival, and rose over 60% during the Double 11 Festival. According to information
from CMM, the online and offline market shares of the Company’s gas water heater in
terms of retail value in 2020 were 16.3% and 15.6% respectively, representing year-on-year
increases of 1.7 and 4 percentage points. During the period, the newly launched double-
booster zero-cold-water product [TR7] has overturned users’ concerns on gas heater
products, such as poor at maintaining constant temperature, poor wind resistance and high
safety concerns. The product has received unanimous praise from the industry and users
upon its release, leading to a two-fold increase in our market share of products priced
below RMB5,000. The closed and stable core combustion technology adopted by the
product also received the China Patent Excellence Award, marking the only “Nobel-class”
patent in the China’s gas heating industry in the past 40 years. Besides, Haier formulated
the “special requirements for domestic instantaneous gas water heater with preheating
function”, a group standard for zero-cold-water product, which has become the industry
benchmark for zero-cold-water technology. On 8 June 2020, Haier gas water heater [CX3]
was selected and certified by the China Household Electric Appliance Research Institute as
the industry’s “seven-star smart” gas water heater. As driven by industry-leading zero-cold-
water waterfall washing products in the Casarte [CR6] series, growth of Casarte’s gas
heater products has doubled.
During the period, Haier air power has accelerated the pace of R&D for products
with health-boosting features such as high water temperature and sterilization.
Meanwhile, it has dominated the industry’s offline retail with an annual cumulative share of
over 55%, and ranked first in the industry’s online market with a 48% share. Its market
share in the high-end product segment priced above RMB10,000 has grown 25%. Among
the TOP10 best-selling model rankings of air-powered water heaters, Haier owned nine of
them, thus completely dominated the industry.
Haier Smart Home Co., Ltd. Annual Report 2020 45
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
4. Household Water Solutions (continued)
(2) Water purifier business
According to CMM’s retail monitoring report, growth in online retail sales for the overall
industry has increased by 32.4%, Haier continued to lead the industry with an
outperformed growth of 41.1%, which ranked first in the market and achieved a 0.8%
year-on-year growth in market share; growth in offline retail sales for the overall industry
has dropped by 22.8%, and Haier recorded a growth of 8.8% against the downward trend,
which was the only brand among the five top-ranked brands to achieve positive retail
growth, with a year-on-year increase of 3.8 percentage points in market share.
According to CMM, in terms of household point-of-use water purification, Haier water
purification products recorded an online retail market share of 13.2% and took the first
place in the industry; growth in offline market reached 7%, which was the only brand
among the top five brands to achieve positive growth. In terms of whole-house water
purification, through the provision of smart, differentiated set products of whole-house
water solutions, Haier water purification achieved sales of over 11,000 sets of products
under the whole-house centralized water purification and softening scenario, and over
46,000 sets of products under the living room water purification and drinking scenario.
Meanwhile, building on BWT’s brand reputation in the high-end whole-house water usage
segment, the Haier and BWT joint venture company has successfully launched partnerships
with renowned real estate developers in Mainland China on whole-house water usage
engineering projects.
During the period, in response to users’ demand for differentiated water quality, the water
purification business has primarily focused on the promotion of high-end mineral water
purifiers from the Casarte’s Yunjing series. The product series provided solutions for
mineral water that contains strontium to meet the health needs of users. The products have
attracted widespread attention and user purchases once they were launched in the market.
(3) Water-related Ecosystem
In an effort to fulfil customers’ aspiration for better water usage in everyday lives, Haier’s
whole-house smart water usage solution integrated whole-house water purification, water
softening, water heating and home heating into a one-stop solution. In addition, Casarte’s
home heaters can be controlled remotely to preheat the room before the user comes
home, heating times can also be scheduled according to the life rhythm of the user to
avoid overuse, which is more energy efficient and environmental-friendly.
46 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
5. Operating Platform in China
In the face of the challenges of the pandemic in 2020, the Company has strengthened
collaborations with e-commerce platforms, upgraded our own Smart Home App, and intensified
the integration of all channels. At the same time, we have integrated with multiple resources such
as home furnishings and building materials to create the brand-new Smart Home experience
store.
Smart Home experience stores offered displays and sales of complete sets of products that
revolved around the scenarios of clothing, food, living and entertainment. The stores have
evolved from focusing solely on product sales to one-stop shops that provide design services
before sales, immersive experience during sales, and maintenance services after sales. Building
on our increasingly strengthened capacities on smart scenario deployment, as well as the full
integration of the above-mentioned resources, the Company has rolled out the new ecosystem
scenario brand “Three-Winged Bird” during the year, which focuses on providing users whole-
process smart home solutions, hence charting a new development path for the Company.
During the period, the Company has made significant progress in the following areas. In terms of
e-commerce channel, the Company has responded to users’ growing demand for online
consumption by actively expanding our product offerings on e-commerce channels and
strengthening our brand-building strategies. At the same time, we have made use of digital tools
to enhance content marketing and engage users in high-frequency interactions, which effectively
improved user loyalty and conversions. During the period, the Company’s overall e-commerce
retail sales have increased 39.2% to 52.2 billion, ranking first in the industry. Specifically,
according to CMM’s monitoring data, Haier’s share of online retail sales has reached 22.4%
during the Double 11 Shopping Festival, which ranked first in the large-format home appliance
segment. In addition, the Company’s high-end products have attained an increasing proportion in
the online market, user satisfaction also continued to improve, which maintained our leading
standard in the market. In terms of commercial channel, the Company has focused on whole-
house smart home projects and commercial projects. Building on our whole-process service
capabilities, we established an operational system that ensured “zero missing demand, timely
order delivery, and service without distance”, hence achieving rapid growths in multiple product
categories. In particular, through the brand mix of Casarte and GEA, the kitchen appliance
business has achieved rapid growth with project coverage in multiple price segments. In terms of
franchise store channel, due to the impact of the pandemic in the overall consumer market, sales
revenue dipped in the first half of the year with a clear rebound in the second half. Major
categories such as freezer and refrigerator, washing machine and water heater have all achieved
growth higher than the industry.
During the reporting period, the Company has continued the roll out of the “Three-Winged Bird”
scenario brand, continuously enriched the Smart Home experience cloud, promoted the
integration of online and offline channels, and enhanced our refined operational capabilities with
the help of digital platforms.
Haier Smart Home Co., Ltd. Annual Report 2020 47
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
5. Operating Platform in China (continued)
First of all, we provided one-stop customized services based on the “Three-Winged
Bird” scenario brand.
Building on our solid experience in the development of smart and high-end set products as well
as our extensive network of ecosystem resources, the Company has redefined our consumption
scenarios, and launched the new brand scenario “Three-Winged Bird” in September 2020 that
revolved around the needs of a “home”, offering complete scenario-based smart home solutions
to users for balconies, kitchens, living rooms, bathrooms and bedrooms. At the same time,
through leveraging our extensive service network resources, we have established the 1+N service
system. Through a single service steward and a project manager, the system enabled
collaboration with numerous resource partners, including home appliance service personnel, set
products service providers, distributors and home furnishing companies, hence providing an
overall one-stop solution to users that covered the service needs of home appliances, home
furnishings, HVAC and whole-house intelligence.
For example, the washing machine business has successfully developed 15 scenario-based
solutions around the “theme of apparel wearing”, such as the smart balcony and smart walk-in
closet, which have provided full life cycle garment solution services for users that integrated
laundry, fabric caring, garment storage, fashion mix-and-match and apparel purchasing. Taking
the construction of the smart balcony as an example, “Three Winged Bird” would provide
personalized solutions of balcony scenarios based on the needs of different users, along with
one-stop services that include design, construction, delivery and installations. The construction
could be completed in as little as three days.
As of the end of the year, the Company has launched 325 Three-Winged Bird 001 stores by
means of new construction or renovation, achieving full coverage in all core cities. The Three-
Winged Bird scenario-based solutions has effectively stimulated the sales of the Company’s set
products and achieved sales volume of 3,454,785 sets, representing an increase of 41% year-
on-year. Among which, the sales volume of high-end intelligent set products has reached
12,161,67 sets, an increase of 63.2% year-on-year.
Secondly, we created an experience cloud platform for the IoT era.
Through bringing together a rich collection of online content, the Haier Smart Home App, an
online e-commerce platform built and developed by Haier, has attracted users to watch live-
streaming of comprehensive scenarios of clothing, food, living and entertainment. It also enabled
interaction with users to identify their ideal solutions of home furnishing and living scenarios, and
aroused their interests in purchasing home appliances and peripheral products.
48 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
5. Operating Platform in China (continued)
During the period, the Smart Home App received an average of 1.2 million daily active users and
24.8 million monthly active users, representing skyrocket increases of 546% and 803% year-on-
year respectively. In particular, the experience cloud crowd live-streaming has provided users with
scenario-based solutions through live streaming upon its launch. Throughout the year it has
delivered over 1,000 live streaming sessions with a total of over 50 million views. In the App, the
newly launched Living Home section has offered an interactive platform for users to learn smart
tips on home appliances’ usage and home living. The “1+N Smart Home Renovation” section on
the other hand has enabled integration with service resources in the ecosystem, which
transformed pure home appliance service into comprehensive household services for home
appliances, family and home living. Through the Smart Home App, the Company has helped
30,000 brick and mortar stores to go online, thus enhanced users’ online and offline shopping
experience for all types of scenarios.
The Company used the Haier Smart Home App as a digital medium to develop our experience
cloud platform, which was created based on the data we accumulated from the above-
mentioned live streaming sessions, user services and user interactions. Users could share their
purchasing and product usage tips, manage their smart home appliances through the remote
system, and apply for after-sales services on the platform. Through the experience cloud, the
Company could also optimize the design and development of our own products and services,
focusing on the continuous upgrade of user experience. At the same time, the Smart Home
experience cloud has undergone timely iterations to improve the experience of smart product
usage. For example, in terms of scenario development, we have provided templates to
collaborating manufacturer brands to facilitate swift service implementation. In terms of smart
voice products, our experience cloud has established an industry-leading whole-house distributed
speech standard, which could achieve distributed recognition on five major appliances at home,
hence driving the progress of smart products towards the goal of “speak anytime, able to
understand, smartly recognized, know you better”.
Lastly, we fully integrated our information system to implement digital marketing and
enhance capacities of our franchise stores.
At present, the Company’s Jushanghui platform has full coverage of all franchise stores’
customers, which enabled real-time visualized management of customers’ purchases, sales and
inventories. At the same time, the Yilihuo platform has also achieved 100% coverage of township
stores, thus offering a digital system for the execution of store policy, product delivery, incentives
and training directly at township levels. Through the popularization of the digitized channel
systems, township management has become more transparent, which has greatly enhanced the
effectiveness of marketing efforts and incentives. In addition, with the strengthening of the
Company’s digital management capability and the extensive coverage of unified warehousing and
distributions at township stores, the proportion of customer-to-manufacturer orders from
township customers have increased significantly, thereby optimized the number of SKUs in
sinking channels and accelerated inventory turnover, which has made significant contributions to
the enhancements of productivity and sales efficiency.
Haier Smart Home Co., Ltd. Annual Report 2020 49
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
5. Operating Platform in China (continued)
Meanwhile, the Company has leveraged the experience cloud platform to enhance the digitization
of marketing resources. We also developed a digital platform that covered all channels and
scenarios based on AI precision marketing techniques for identifying, outreaching, managing and
tracking of users, which has substantially improved the efficiency of marketing operations. During
the period, the “Potential Customer Radar” has identified around 2 million potential users through
accurate analysis of data, thus effectively empowering user conversions.
6. Smart manufacturing
During the reporting period, the Company has spearheaded the industry with the implementation
of the super-factories strategy, which has driven efficiency improvement throughout the whole
process. First of all, the Company has deepened the application of cutting-edge technologies
such as 5G and edge computing, and rolled out more than 200 projects for in-depth integration
of advanced manufacturing technologies and new-generation artificial intelligence technologies.
Secondly, we established a strategic operation system for super-factories to foster collaboration
and interaction throughout the entire process before production, and to enable processes to be
digitally driven during operation, so as to ensure the achievement of production goals. Smart
manufacturing in super-factories could effectively improve production efficiency, and create
opportunities for cost optimization.
During the period, the Company has constructed 16 interconnected factories. In September
2020, the Haier Sino-German Industrial Park won the world’s only “Industry 4.0 Award” in
Germany, which symbolized the transformation of Haier’s smart manufacturing from lighthouse
factories to becoming a lighthouse base. In October, three factories, including one for central air
conditioning, have passed the Ministry of Industry and Information Technology’s Intelligent
Manufacturing Capability Maturity Level 4 certification. In December, Haier won the honor of the
National Intelligent Manufacturing Benchmark Enterprise due to its central air conditioning
interconnected factories, and was the only enterprise that has two factories being awarded under
the National Intelligent Manufacturing Benchmark.
50 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
6. Smart manufacturing (continued)
(II) Overseas home appliances and smart home businesses
Faced with the pandemic in 2020, the Company relied on our “3-in-1” localized deployment
in overseas markets, pressed ahead with our high-end brand strategy and scenario
ecosystem transformation, and grew sales revenue to over RMB100 billion and profit to
RMB4 billion against headwind with growth rate of 8% and 26.79% respectively. Market
shares have increased across all product segments. The growth in business performance
was mainly attributed to the following factors:
1. With comprehensive premium product line-ups, an extensive distribution network and
direct to end user sales coverage, we achieved above market average growth across
regions.
2. Localized operations supported by the global platform does not only safeguard new
product launches, but also maintained stead supply throughout the period,
contributing to overall resilience in our performance.
3. We made several breakthrough in the implementations of scenario brands strategy
globally, including Randori community laundry in Japan, Wash pass ink cartridge
laundry units in the UK, similar progress was made under eco brand strategy
including hOn Experience Cloud Platform in Western Europe and Smart HQ platform
in the US, all of accelerated our development in products, scenario based solutions
and ecosystem applications with enhanced users experience.
1. US
Despite the extraordinary challenges of pandemic outbreak, continued efforts have been made in
user centric strategic implementation, brand premiumization, supply chain optimization and omni-
channel integration, making 2020 one of the most remarkable years in our history. In north
America, sales revenue grew by 10% reaching RMB63.7 billion, with over 30% growth in mass
premium brands. Meanwhile, core appliance market share went up by 1.4 percentage points with
expansion in all categories, we also launched new product lines in small appliances and water
heaters. Furthermore, online presence has been strengthened and eco-system related revenue
also increased significantly.
Haier Smart Home Co., Ltd. Annual Report 2020 51
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. US (continued)
On manufacturing front, swift and assertive actions were taken to ensure the health and safety of
our employees and maintain continued service to our consumers. Measures implemented
including mandatory temperature check for all employees, flexibility shifts and locations, cleaning
and sanitization in all facilities to ensure the safety of our service technicians, 1,000 of our
salaried employees volunteered a total of 150,000 hours on our factory assembly lines to make
essential appliances for our users at a time when they needed us the most. Despite all the
difficulties, GEA’s production volume grew by 10% over the same period in 2019, with 20%
increase in the second half. The largest assembly line from our kitchen appliance factory in Roper
completed software upgrade of Proficy system, accelerating its transformation towards lean
production under Industrial 4.0 framework.
On R&D front, we work closer with colleagues in Singapore, Israel etc on HOPE innovation
platform for more inspiration and solutions on projects including new impeller design in AC,
temperature control units in microwave, data safety from smart home system; in the launch of
new large size front load washing machine, global collaboration and unified platform helped
reduce development time by 55% with 33% fewer people involved.
We fully understood the concern for protection and safety when consumers are using our
appliances to store foods and medicine, make meals for the family and fight germs on their
clothes and dishes, thus new front load washing machines are made with UltraFresh Vent
System and Microban antimicrobial technology to eliminate excess moisture & odours.
Meanwhile, the new multi door refrigerators are equipped with humidity control system to extend
the freshness of vegetables. In addition, new lines of small appliances products have been
successfully launched under GE, GE Profile and Cafe brands, with GE Profile Opal ice maker
topped home appliance and ice maker categories on Amazon’ member’s day; we have also re-
entered water heater category by becoming Costco’s exclusive partner and forming partnership
with plumbing industries.
52 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
1. US (continued)
We’re focused on increasing the connectivity of our appliances. Through our SmartHQ digital
platforms, our owners are able to control their environment, whether it’s their home or office. Our
advances in promoting connectivity and smart home also received recognition from the
appliances industry and consumers, including 2020 IoT CyberSecurity Breakthrough Award for
Device Security Solution of the Year; IoT Breakthrough Award Winner for Smart Appliance
Company of the Year consecutively from 2019 to 2021. The First Household Appliance Brand to
Achieve Golden Security Rating from UL and our UltraFresh Front Load Washers earned the
Good Housekeeping Seal in 2020.
On distribution front, leveraging on the Company’s prior experience of doing business online,
swift actions were taken to capture new growth opportunities with ecommerce platforms. More
importantly, the professionalism and commitment demonstrated by our people during the
pandemic strengthen partnership with our most important distribution partners, which does not
only contribute to our solid performance in 2020, but also to enhance trust and closer
cooperation to our sustained growth in the future. We also set up a new business unit
specializing in commercial clients with particular focus on air conditioners and water heaters.
2. Europe
During the reporting period, the European business of Haier achieved revenue of RMB16.5 billion,
an increase of 8.7% year-on-year. The Company’s above industry growth was driven by 1) Fully
leverage on prior pandemic containment and prevention experience from China, the European
team promptly accelerated our expansion on ecommerce platforms with raised profile on social
media, followed by accelerated online/offline integration including opening flagship stores, brand
walls and shop-in-shops, while setting up online specialty stores to enhance brand recognition.
2) In response to the demand generated by the pandemic, a series of products that brought
convenience to everyday living were rolled out, including a full-space refrigerator with added
capacity, washing machines with steam disinfection and sterilization features, large-capacity
freezers, full range of smart kitchen appliances, and 56 air conditioners. 3) With early
pandemic prevention measures that were in strict accordance with local government
requirements, we took the lead in resuming work and production. 4) We also strengthened
alliances with our partners, i.e., launched silence and steam cleansing washing machines
together with detergent manufacturers; enhanced user choices and experiences of our ovens with
grocers and online liquor platforms.
Haier Smart Home Co., Ltd. Annual Report 2020 53
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
3. Australia & New Zealand
Australian and New Zealand’s revenue was RMB6 billion, an increase of 11.71% year-on-year,
and Haier brand grew by 69% by capturing new user demands for health and sterilization
products with timely launch of new products including T-door refrigerator and dishwasher; while
online revenue doubled with our initiatives in experience enhancement, product upgrade and
premiumization.
Strict lockdown measures have affected consumption in the first half of 2020. During the period
from March to May, retail sales offline in New Zealand tumbled by 70-80% on average; market
momentum started to recover as the pandemic eased off in the second half, leveraging on global
supply chain platform, the Company seized the growth opportunity from implementing
comprehensive integration, strengthened collaboration with upstream and downstream partners,
sufficient supply and flexible go to market strategies.
Covid-19 has generated demand for large storage, sterilization, and long-lasting fresh keeping. In
response, the headquarters and local teams worked closely and accelerated the launch of
upgraded HRF565 T-door refrigerators and innovative RF605 series. We promoted wellbeing
scenarios in TGG/HNV channel, while launching the “Social Kitchen” dialogue on social media
such as Facebook and Instagram, by sharing tips in new product, healthy living and cooking with
users, who are drawn to the new features of our T-door refrigerator, including temperature
controlled zones, separated storage, and smart freshness, all of which contributed to 13%
revenue growth from refrigerator segment for the year.
4. South Asia
During the reporting period, revenue reached RMB5.5 billion, down 13.69% year-on-year.
(1) In India, the lockdown from the end of March to the end of June lasted through the
traditional peak season for appliances sales, resulting in an industry decline of 35%. In response
to the new demand from the pandemic, the Company focused on products with wellbeing and
sterilization features, and enhanced the competitiveness with large sizes and capacities, while
network coverage increased by 70% and we started to produce front load washing machines
locally, further contributed to our brand and products competitiveness. (2) Amid industry wide
decline in Pakistan, our revenue grew over 17% in local currency, this was mainly attributed
the continuous expansion of offline network and the rapid development of e-commerce channels,
which grew 300% during the year; enhancement of our product portfolio that catered to the
demand at different consumption levels, in particular fully automatic washing machines continued
to lead the market, while purifying air conditioner provided users with healthy air solutions and
the share of smart products also increased; our market share in refrigerator, household
freezer, air conditioner and washing machine all reached No. 1.
54 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
I. DISCUSSION AND ANALYSIS ON OPERATIONS (continued)
Management Discussion and Analysis (continued)
5. Southeast Asia
During the reporting period, revenue of RMB4.1 billion was recorded, a year-on-year increase of
11.26%. The Company has focused on brand differentiation marketing, expanded network
coverage, improve aftersales services and reduce call centre response time. We also
implemented sales and PC management system to improve our go to market strategies while
accelerating reforms towards mid to higher products on a more retail oriented network, levering
on global supply chain, we continued to launch new products and upgrade existing products
order to capture pandemic inspired demand, promote scenario based solutions and fulfil our
users’ demand.
6. Japan
Revenue was RMB3.6 billion, up 11.2% year-on-year, it was driven by 1) Ongoing high-end brand
building and optimization of product mix including the successful launch of the AQUA full-cabinet
Delie refrigerators and our unique ultrasonic washing machine. (2) in response to users’ demand
to keep food fresh form prolonged time at home, we promptly developed industry’s largest
280Lfreezer and 3IN2 temperature adjusted refrigerators and gained premium market recognition;
3. Despite the difficulty, AQUA community laundry unit consolidated its 70% market share
through collaborating with a variety of partners, making significant progress towards scenario and
ecosystem market leadership.
Haier Smart Home Co., Ltd. Annual Report 2020 55
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD
Please refer to the related statement in ‘I. Discussion and analysis on operations’ of this section.
(I) Analysis of principal business
1. Table of movement analysis on the related items in income statement and cash flow
statement
Unit and Currency: RMB
Corresponding
Current period of Change
Items period last year (%)
Operating revenue 209,725,821,099.44 200,761,983,256.57 4.46
Operating cost 147,475,181,245.03 140,868,398,722.26 4.69
Selling expenses 33,641,711,147.72 33,682,126,291.31 –0.12
Administrative expenses 10,052,645,415.72 10,113,263,329.25 –0.60
R&D expenses 6,860,161,572.42 6,266,936,518.17 9.47
Financial expenses 1,196,217,735.43 893,017,558.86 33.95
Net cash flow generating from operating
activities 17,599,111,715.51 15,082,630,942.73 16.68
Net cash flow generating from investing
activities –5,264,150,809.37 –10,961,583,141.21 51.98
Net cash flow generating from financing
activities –1,025,923,097.55 –6,012,963,226.41 82.94
Impairment losses on assets –1,335,630,451.94 –860,578,700.61 –55.20
Gain from disposal of assets –12,812,837.06 485,727,628.01 –102.64
Non-operating income 197,444,051.06 390,971,548.74 –49.50
Analysis of the reasons for the indicators with significant changes:
1) Financial expenses increased by 33.95% when compared to the corresponding period
of last year, which was mainly due to the recognition of exchange losses arising from
exchange fluctuation for the current period;
2) Impairment losses on assets increased by 55.20% when compared to the
corresponding period of last year, which was mainly due to the increase of
impairment losses on inventories provided for the current period;
3) Gain from disposal of assets decreased by 102.64% when compared to the
corresponding period of last year, which was mainly due to the gain from disposal of
assets by subsidiaries for the current period;
4) Non-operating income decreased by 49.50% when compared to the corresponding
period of last year, which was mainly due to the decrease of penalty income when
compared to the corresponding period of last year for the current period;
56 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(I) Analysis of principal business (continued)
2. Analysis of income and cost
Applicable Not Applicable
(1). Principle operating activities by sector, product and region
Unit and Currency: RMB0,000
Principal operating activities by product
Operating Operating
Gross revenue cost
profit increased/ increased/ Gross profit margin
Operating Operating margin decreased decreased increased/
By product revenue cost (%) yoy (%) yoy (%) decreased yoy (%)
Decreased by 3.81
Air-conditioners 2,999,886 2,177,581 27.41 2.99 8.69 percentage points
Increased by 0.18
Refrigerator 6,153,804 4,156,775 32.45 5.31 5.03 percentage point
Increased by 0.57
Kitchen appliances 3,136,132 2,142,057 31.70 6.28 5.40 percentage point
Decreased by 0.11
Water appliances 985,673 534,906 45.73 2.42 2.63 percentage point
Increased by 0.40
Washing machines 4,845,243 3,240,256 33.12 8.36 7.71 percentage point
Parts and components
and integrated Decreased by
pipeline service 2,738,589 2,461,406 10.12 –2.39 –2.25 0.13 percentage point
Principle operating activities by region
Operating Operating
Gross revenue cost
profit increased/ increased/ Gross profit margin
Operating Operating margin decreased decreased increased/
By region revenue cost (%) yoy (%) yoy (%) decreased yoy (%)
Decreased by 1.34
Domestic 10,724,136 7,416,614 30.84 1.03 3.03 percentage points
Increased by 1.33
Overseas 10,135,191 7,296,368 28.01 8.61 6.63 percentage points
Haier Smart Home Co., Ltd. Annual Report 2020 57
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(I) Analysis of principal business (continued)
2. Analysis of income and cost (continued)
(2). Table of production and sales analysis
√ Applicable Not Applicable
Production Sales
volume volume Inventory
increased/ increased/ increased/
Production Sales decreased de creased decreased
Main products Unit volume volume Inventory yoy (%) yoy (%) yoy (%)
Home appliances 10,000 8,579 10,028 1,982 11.75 8.51 20.90
units/set
58 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(I) Analysis of principal business (continued)
2. Analysis of income and cost (continued)
Explanation of production and sales
(3). Table of cost analysis
Unit: RMB0,000
By sector
Percentage of
change of the
Percentage of amount for the
the amount current period
Percentage of for the compared
the amount for Amount for the corresponding to the
the current corresponding period of last corresponding
Cost Amount for the period in total period of last year in total period of last
By sector component current period costs (%) year costs (%) year (%) Explanation
Principal operation
income 12,251,576 100.00 10,503,713 100 16.64
Household electrical Raw materials 10,190,414 83.2% 8,817,249 83.94 15.57
appliances Labor services 776,334 6.3% 588,073 5.60 32.01
industry Depreciation 240,106 2.0% 174,804 1.66 37.36
Energy 63,633 0.5% 60,780 0.58 4.69
Others 981,089 8.0% 862,807 8.21 13.71
(4). Major distributors and major suppliers
√ Applicable Not Applicable
Revenue from the top five distributors was RMB45,199.19 million, representing
21.55% of the total sales for the year; among the revenue from the top five
distributors, the revenue from related parties was RMBNil million, representing 0% of
the total sales for the year.
The purchase amount from the top five suppliers amounted to RMB39,106.29 million,
representing 20.46% of the total purchase amount for the year; among the purchase
amount from the top five suppliers, the purchase amount from related parties was
RMB22,660.43 million, representing 11.85% of the total purchase amount for the
year.
Haier Smart Home Co., Ltd. Annual Report 2020 59
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(I) Analysis of principal business (continued)
Other explanations
3. Expenses
√ Applicable Not Applicable
1) Financial expenses increased by 33.95% when compared to the corresponding period
of last year, which was mainly due to the recognition of exchange losses arising from
exchange fluctuation for the current period;
4. R&D expenditure
(1). Table of R&D expenditure
√ Applicable Not Applicable
Unit: RMB
Expensed R&D expenditure for the current period 6,860,161,572
Capitalized R&D expenditure for the current period 359,861,728
Total R&D expenditure 7,220,023,300
Total R&D expenditure as a percentage in operating revenue (%) 3.44
Number of R&D personnel 18,014
Number of R&D personnel as a percentage of total employees (%) 18.14
Proportion of capitalization of R&D expenditure (%) 4.98
(2). Explanation
√ Applicable Not Applicable
By centering on user experience, in 2020, the Company mainly focused on achieving
original technological breakthrough by launching a series of industry pioneer
technology innovations, such as water air-cleaning air conditioner and smart 12
square-shape hood. For scenario application dimension, we achieved breakthrough in
products and technologies driven by smart home experience, including smart home
cloud brain, Internet-of-Things (IoT) sensing and toner cleansing. For instance, to form
a generational leader of original technology and achieve core technology breakthrough
of smart home such as smart home cloud brain, we drawing the layout of four major
technology sectors focusing on entity, intelligence, safety, scenario of smart home,
taking patent applications and patent standardization as its main line, and leveraging
complementary advantages, convergence and collaboration of respective global
research and development centres; and at the same time upgrade medium and long-
term technology road map with advance layout based on national industry strategy
and taking core Internet-of-Things (IoT) technology as key point for the purpose of
achieving continuous leadership of future smart home scenario application
technology.
60 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(I) Analysis of principal business (continued)
Other explanations (continued)
5. Cash flow
√ Applicable Not Applicable
1) Net cash flows from investing activities increased by 51.98% when compared to the
corresponding period of last year, which was mainly due to the cash inflows arising
from the disposal of subsidiaries and redemption of wealth management products as
well as the expenses spent on mergers and acquisitions of Candy for the same
period;
2) Net cash flows from financing activities increased by 82.94% when compared to the
corresponding period of last year, which was mainly due to the additional borrowings
and issuance of super-short-term financing;
(II) Major changes in profit caused by non-principal businesses
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 61
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(III) Analysis of assets and liabilities
√ Applicable Not Applicable
1. Assets and liabilities
Unit: RMB0,000
Percentag e
Percentag e of change in
Percentag e of amount as amount from
of amount as at the end of the end of
at the end of Amount as at the previous previous
Amount as at the period the end of period over period to
the end of over total previous total assets current period
Items the period assets (%) period (%) (%) Explanations
Financial assets held for 216,519 1.06 30,814 0.16 602.68 Mainly due to the increase of
trading short-term wealth management
products
Derivative financial 7,784 0.04 1,916 0.01 306.30 Mainly due to the increase of
assets forward foreign exchange
contracts for the current period
Accounts receivable 1,593,002 7.83 1,101,587 5.88 44.61 Mainly due to the increase of
income and the decrease of
factoring for the current period
Prepayments 76,543 0.38 127,292 0.68 –39.87 Mainly due to the disposal of
subsidiaries
Contract assets 26,341 0.13 42,274 0.23 –37.69 Mainly due to the disposal of
subsidiaries
Other current assets 328,389 1.61 698,597 3.73 –52.99 Mainly due to the decrease of
wealth management products
measured at amortized cost
Investments in other 265,913 1.31 139,596 0.74 90.49 During the reporting period, the
equity instruments Company disposed of the
54.50% equity interest of
COSMOPlat. Thereafter,
COSMOPlat is no longer
accounted for on a
consolidated basis in the
combined statements of the
Company. The 18.75% of
equity interest still held by the
Company was transferred to
other equity instrument
investments upon the
completion of the transaction
Other non-current — 0.00 29,455 0.16 –100.00 Mainly due to expiration of
financial assets wealth management products
Construction in 359,690 1.77 239,136 1.28 50.41 Mainly due to the increase in
progress plant under construction and
equipment
Deferred income tax 220,830 1.09 157,890 0.84 39.86 Mainly due to the increase of
assets deductible future income tax
arising from time difference
Financial liabilities held 2,695 0.01 4,280 0.02 –37.03 Mainly due to the expiration of
for trading lock tools
Derivative financial 23,958 0.12 9,955 0.05 140.67 Mainly due to the increase of
liabilities interest rate swap agreements
and forward foreign currency
contract
62 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(III) Analysis of assets and liabilities (continued)
1. Assets and liabilities (continued)
Unit: RMB0,000
Percentag e
Percentag e of change in
Percentag e of amount as amount from
of amount as at the end of the end of
at the end of Amount as at the previous previous
Amount as at the period the end of period over period to
the end of over total previous total assets current period
Items the period assets (%) period (%) (%) Explanations
Other current liabilities 611,205 3.00 49,407 0.26 1,137.09 Mainly due to the issuance of
super-short-term financing
bonds of the Company
Long-term payables 9,820 0.05 14,234 0.08 –31.01 Mainly due to the repurchase
of the investment of CDB
Development Fund Co., Ltd.
( ) in the
subsidiaries by the Company
Deferred income tax 190,040 0.93 115,441 0.62 64.62 Mainly due to the changes on
liabilities shareholdings of subsidiaries
Other non-current 2,703 0.01 7,007 0.04 –61.42 Mainly due to the repurchase
liabilities obligation of the non-controlling
interests at the beginning of the
year
Share capital 902,785 4.44 657,957 3.51 37.21 Mainly due to the issuance of
H-shares by the Company as
the consideration for cancelling
the Scheme Shares accordingly
to the privatisation proposal
and the additional issuance of
H-shares by the Company as a
result of the conversation of
H-shares convertible bonds
Other equity 236,420 1.16 43,142 0.23 448.00 Mainly due to the increase of
instruments the equity portion of
exchangeable bonds of the
Company
Capital reserve 1,500,903 7.38 443,589 2.37 238.35 Mainly due to the changes in
share premium
Other comprehensive –104,622 –0.51 131,799 0.70 –179.38 Mainly due to the translation
income difference of foreign currency
statements
Other explanations.
Nil
Haier Smart Home Co., Ltd. Annual Report 2020 63
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(III) Analysis of assets and liabilities (continued)
2. Restrictions on major assets as of the end of reporting period
Applicable √ Not Applicable
3. Other explanations
Applicable √ Not Applicable
(IV) Analysis of industry operating information
Applicable √ Not Applicable
64 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(V) Analysis of investment
1. Overall analysis on external equity investment
√ Applicable Not Applicable
In 2020, the Company completed the privatization of HEG, a Hong Kong listed company
controlled by the Company, through the issuance of H-shares. This project constitutes a
significant asset reorganization of the Company. As of the end of the reporting period, such
matter has been completed. For details, please refer to the Report on Implementation of
Significant Asset Acquisition and Connected Transactions of Haier Smart Home Co., Ltd.
( ) disclosed by the
Company on 26 December 2020.
(1) Significant equity investment
√ Applicable Not Applicable
Please refer to the content in ‘1. Overall analysis on external equity investment’ as set out
above.
(2) Significant non-equity investment
Applicable √ Not Applicable
(3) Financial assets measured at fair value
√ Applicable Not Applicable
RMB
Current
purchase/ Investment Changes in
Initial Sale during income during fair value
Financial assets measured investment Source the reporting the reporting during the
at fair value cost of funds period period eporting period
Bank of Communications (601328) 1,803,769.50 Self-owned 429,109.38 -1,566,589.80
BAILIAN (600827) 154,770.00 Self-owned 221,360.56
Eastsoft (300183) 18,713,562.84 Self-owned 1,680,624.90
Wealth management products 1,846,012,857.28 Self-owned 1,356,569,266.55 67,813,452.04 4,019,028.18
Investment funds 105,408,639.01 Self-owned 105,408,639.01 8,351,206.56
Interest rate swap agreement Self-owned 23,728,474.73
Forward commodity contract Self-owned 72,218,956.78 55,464,778.78
Other derivative financial instruments 29,450,000.00 Self-owned -36,094,747.43 5,869,913.46
Others 2,900,738,991.13 Self-owned 1,440,383,537.73 18,446,699.37 -111,515,275.63
Total 4,902,282,589.76 2,866,266,695.87 158,908,217.57 -13,746,478.26
Note: As of 31 December 2020, the aggregate balance of foreign exchange derivative transaction amounted to
approximately US$ 2.27 billion.
Haier Smart Home Co., Ltd. Annual Report 2020 65
Section IV Discussion and Analysis on Operations
II. PRINCIPAL OPERATING CONDITIONS DURING THE REPORTING
PERIOD (continued)
(VI) Sale of material assets and equity
√ Applicable Not Applicable
During the reporting period, the Company assigned the 54.50% equity interest of Haier COS-
MOPlat IOT Ecosystem Technology Co., Ltd. at RMB4.06 billion, and the transaction was com-
pleted as of the end of the reporting period. For details, please refer to the Announcement on
Assignation of 54.50% Equity Interests of Haier COSMOPlat IOT Ecosystem Technology Co., Ltd.
and Related Party Transactions (L2020–036) and the relevant announcements disclosed by the
Company on 30 July 2020.
(VII) Analysis on major subsidiaries and Investees
√ Applicable Not Applicable
RMB0,000
Name of company Business Scope Total assets Net asset Net profit
Haier Shares (Hong Kong) Co., Ltd.
( ( ) ) Investment holding 4,128,619 3,376,074 705,358
(VIII) Structured entities controlled by the Company
Applicable √ Not Applicable
66 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
III. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT
(I) Setup and trend of the industry
√ Applicable Not Applicable
For details, please refer to the relevant contents of ‘SECTION III SUMMARY OF THE
COMPANY’S BUSINESS’ in this report.
(II) Corporate development strategies
√ Applicable Not Applicable
Through continuous innovation, the Company will customize a better life for users and strive to
build an Internet-of-Things (IoT) smart home ecological brand, so as to become a pioneer in the
Internet-of-Things (IoT) era. The Company endeavours to become a global leading smart home
solution provider by leveraging the following strategies, continuing to strengthen the platform
construction of [Haier Smart Experiential Cloud] linking users, products and full-process services;
persisting in the advancement of global operation synergies and brand creation leading
position in overseas market; persevering in the enhancement of high-end oriented leadership;
driving the improvement of efficiency by facilitating digitalisation reform; and promoting
continuous innovation and long-term development leveraging on RenDanHeYi ( )
management model.
(III) Business plan
√ Applicable Not Applicable
In 2021, the Company will focus on the building of high-end, scenario and ecosystem brands,
continuing to leverage our strengths in market-leading set products, global synergies, high-end
brands and the Smart Home experience cloud platform. We will drive forward the whole process
digital transformation to enhance efficiency, and continuously expand our smart home scenario-
based solutions, thereby to maintain a strong development momentum.
1. The Chinese market: (1) The Casarte brand will expand its competitive edge in the high-
end market through continuous product innovation, press ahead with digital transformation
to achieve whole process efficiency enhancement, and achieve breakthrough in the air
conditioning business through product upgrade, channel development and marketing
innovation. (2) We will accelerate the development of the “Three-Winged Bird” scenario
brand through expanding our touch point network, upgrading the collection of scenarios,
and building capacity for 1+N services. (3) By focusing on the development of ecosystem
brands such as the Food Network and the Internet of Clothing, we will achieve
breakthroughs in the number of platform users, GMV and ecosystem revenue. (4) In terms
of smart home construction, through developing the smart home perception and decision-
making system, we shall create a Haier Smart Home brain system that can offer interactive,
reliable, thoughtful home services that can be accessed anywhere. Through various
gateways such as the Smart Home App, Three-Winged Bird App, distributed speech
technology and the multi-screen feature, we will create a smart home interactive portal that
attract users’ attention.
Haier Smart Home Co., Ltd. Annual Report 2020 67
Section IV Discussion and Analysis on Operations
III. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT (continued)
(III) Business plan (continued)
2. Overseas markets: (1) create premium product portfolio, with comprehensive network and
direct go to market approach in order to consolidate leadership in all markets; (2) improve
the global supply chain infrastructure and provide immediate smart and healthy home
solutions to our local users; (3) upgrade our hOn platform in Europe, EVO platform in
Russia, Smart HQ platform in the US in order to provide users with superior experience
leveraged on enhanced system capabilities.
3. We will construct fully digitalized operation systems for interconnected factories globally,
aiming at maximum efficiency throughout the whole process, and focus on hitting the
targets of precision, efficiency, balanced lines and full production capacity. Through the
mega-factories projects, we strive to develop top-selling products that are most competitive
in the market with the most cost-effective production methods.
(IV) Potential risks of the Company
√ Applicable Not Applicable
1. Risk of decreasing market demand due to slowdown in macroeconomic growth. As white
goods are durable consumer appliances, the level of users income and their expectations of
future income growth will have an impact on their willingness to purchase products. A
slowdown in macroeconomic growth causing the decline in the purchasing power of users
would have a negative impact on industry growth. In addition, a slowdown in real estate
market would also have some negative impact on market demand, which will indirectly
affect end-user demand for home appliances.
2. Risk of price war due to intensify industry competition. The white goods industry is highly
competitive with a high degree of product homogeneity and industry concentration has
increased in recent years. However, the increase in industry inventory capacity in individual
sub-sectors due to the imbalance between supply and demand may lead to risks such as
price wars. Furthermore, due to rapid technological advancements, scarce talents in the
industry, shortened product life cycles and ease of imitation, it is becoming increasingly
difficult for us to take advantage of the higher selling prices typically associated with new
products, services and technologies while having to invest more in research and
development. The Company will actively invest in research and development to attract more
users through continuous innovation in products and services, so as to build a lasting
brand awareness.
68 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
III. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT (continued)
(IV) Potential risks of the Company (continued)
3. Risk of fluctuations in raw material prices. The raw materials that we mainly use in our
products and core components are metal raw materials such as steel, aluminium and
copper, as well as commodities raw materials such as plastics and foam. If the prices of
raw materials supply continue to rise, it will put pressure on the Company’s production and
operations. In addition, the Company relies on third party suppliers for key raw materials,
components and manufacturing equipment, as well as OEM suppliers, and any disruption in
supply or significant price increases from these suppliers would have a negative impact on
the Company’s business. As a leader in the industry, the Company will take steps to
reduce the risk of raw material fluctuations on its operations by using valuation adjustment
mechanism on volume and price with suppliers and hedging tools.
4. Operational risks in overseas business. The Company has steadily developed its global
business and has established production bases, research and development centres and
marketing centres in many parts of the world, with the proportion of overseas revenue
increasing year-on-year. The overseas markets are subject to political and economic
situations, legal systems and regulatory regimes of those countries and regions, and
significant changes in these factors may pose certain risks to the Company’s local
operations in these markets. The Company has taken various measures to mitigate the
relevant impact, including actively discussing and working with suppliers and customers to
mitigate the impact of additional tariffs imposed by the United States; improving production
efficiency to offset the impact on the Company’s overall cost of sales; and potentially
expanding the Company’s supply resources to other countries.
5. Risk of exchange rate fluctuations. As the Company’s global footprint progresses, the import
and export of the Company’s products involves the exchange of foreign currencies such as
the U.S. dollar, the Euro and the Japanese yen. If the exchange rates of the relevant
currencies fluctuate, it will have a certain impact on the Company’s financial position and
increase its financial costs. In addition, the Company’s consolidated financial statements are
denominated in Renminbi, while the financial statements of its subsidiaries are measured
and reported in the currency of the primary economic environment in which the entity
operates, and are therefore subject to currency exchange risk. In this regard, the Company
uses hedging instruments to reduce its exposure to exchange rate fluctuations.
6. Risk of policy changes. The home appliance industry is closely related to the consumer goods
market and the real estate market. Changes in macroeconomic policies, consumer
investment policies, real estate policies and relevant laws and regulations will affect
customer demand for the Company’s products, which in turn will affect the sales of the
Company’s products. The Company will closely monitor changes in the relevant policies
and laws and regulations, and make forecasts of market changes to ensure the further
development of the Company.
Haier Smart Home Co., Ltd. Annual Report 2020 69
Section IV Discussion and Analysis on Operations
III. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTURE
DEVELOPMENT (continued)
(IV) Potential risks of the Company (continued)
7. Risk of COVID-19 outbreak. The COVID-19 outbreak, which gradually spread by the end of
2019, could lead to a further weakening of consumer demand for home appliances, which
could in turn affect the Company’s product sales. Firstly, lockdowns, social distancing
measures and travel restrictions will reduce customer mobility and result in the closure of
the retail sales sites, thereby reducing consumer demand for home appliances. Secondly,
the epidemic may also lead to operational disruptions for customers, such as logistical
disruptions in product deliveries, resulting in customer dissatisfaction with the Company’s
service and consequently reduced demand for the Company’s products. The Company will
leverage on its experience in the China market and make best use of the synergy of global
resources to mitigate the impact of the epidemic on our operations.
8. Credit risk. There is possibility that we will be unable to fully recover our trade receivables
from our customers or that they cannot settle our trade receivables in a timely manner, our
business, financial condition and results of operations may be adversely affected. As to this
risk, depending on the credit history of our customers and their transaction amounts with
us, we allow the flexibility by offering a credit period of 30 to 90 days to certain
customers.
9. Inventory risk. As the Company cannot accurately predict various trends and events and
maintain adequate levels of inventory at all times. Therefore, it could lead to excessive
inventory. Then, the Company may be forced to offer discounts or conduct promotional
activities to dispose of slow-moving inventory. On the other hand, we may experience
insufficient inventory, which may cause us to lose sales. However, the Company will
manage our inventories and make adjustments based on market conditions, and
periodically assess impairment of inventories.
(V) Others
√ Applicable Not Applicable
Future capital expenditure planning: the capital expenditure in Chinese market mainly focuses on
the intelligent factory layout and the improvement of employees’ working environment, so as to
promote the rapid development of relevant industries of the Company. The capital expenditure in
overseas market mainly focuses on the global supply chain layout and industrial park
reconstruction, new product R&D, informationised construction, etc., so as to continuously
improve the overseas operation ability and ensure the leading position and rapid development of
the market in the future. Investment funds will be financed through the Company’s own funds
and equity financing, etc.
70 Haier Smart Home Co., Ltd. Annual Report 2020
Section IV Discussion and Analysis on Operations
IV. EXPLANATION OF CIRCUMSTANCES AND REASONS FOR NON-
DISCLOSURE BY THE COMPANY IN CONSIDERATION OF
INAPPLICABLE REGULATIONS, STATE SECRETS AND COMMERCIAL
SECRETES
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 71
Section V Significant Events
I. PROPOSAL FOR PROFIT DISTRIBUTION OF ORDINARY SHARES OR
CAPITAL RESERVE CONVERSION INTO SHARE CAPITAL
(I) Formulation, implementation or adjustment of the cash dividend policies
√ Applicable Not Applicable
The Company’s 2019 profit distribution plan was passed on its 2019 Annual General Meeting
held on 3 June 2020: based on the Company’s total existing shares of 6,579,566,627 (including
6,308,552,654 A-shares and 271,013,973 D shares), it was proposed that the Company would
distribute cash dividends of RMB3.75 (tax inclusive) per 10 shares to all shareholders, with a total
amount before tax of RMB2,467,337,485.12. The plan was implemented and completed in July
2020. Details were set out in the Announcement on Implementation of Rights and Interests
Distribution of A-shares for 2019 of Haier Smart Home Co., Ltd. (No: L2020–032) published by
the Company on the four major securities newspapers and the website of Shanghai Stock
Exchange on 10 July 2020 and relevant announcements in respect of dividend distribution of D
shares published on the Company’s website and further publication platforms.
The Company has always applied a stable and sustainable profit distribution policy. During the
reporting period, the Company strictly followed the requirements set out in the Articles of
Association and in the Shareholder Return Plan for the Next Three Years (2018–2020) of the
Company. During the formulation of the profit distribution plan, the Company took full account of
return for investors, the long-term interests of the Company, overall interests of all shareholders
and sustainable development of the Company, and continued to implement the stable dividend
distribution policy to provide investors an opportunity to share the growth of value, so that
investors could form the expectation of a stable return. The procedures and mechanisms for
system decision-making such as Articles of Association and planning of return of shareholders
implemented by the Company were complete in compliance with laws and regulations. The
process was open and transparent while the standard and ratio of dividends was clear.
Responsibilities of independent directors were clear during the policy-making process, and
independent directors were given the opportunities to play their roles. Minority shareholders were
also given the opportunity to fully express their views and demands, and the legitimate interests
of minority shareholders were adequately protected. During the reporting period, the Company
launched the new shareholder return plan for the next three years (2021-2023), which will further
improve the cash dividend of the Company and increase shareholders’ returns.
The dividend distribution plan of 2020 of the Company: based on the total shares after
deducting the repurchased shares from the repurchase account on equity interest record date for
future profit distribution, it is proposed that the Company will distribute cash dividend of
RMB3.66 per 10 shares (tax inclusive) with expected cash dividend of not less than
RMB3,397,277,612.09. The remaining reserved profits will be mainly used for project
construction, foreign investment, R&D investment and daily operations related to the Company’s
principal business and therefore to maintain sustainable and stable development and to bring
more benefits for investors. The proportion of this distribution is 38.27% of the net profit
attributable to parent company of the Company in 2020. The 100% dividend of this scheme is
paid in cash.
72 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
I. PROPOSAL FOR PROFIT DISTRIBUTION OF ORDINARY SHARES OR
CAPITAL RESERVE CONVERSION INTO SHARE CAPITAL (continued)
(II) Plans or Proposals for Dividends Distribution of Ordinary Shares and for Capital
Reserve Conversion into Share Capital of the Company in Recent Three Years
(Including the Reporting Period)
Unit and Currency: RMB
Net profit Percentage of
attributable to the net profit
the ordinary attributable to
shareholders of the ordinary
the listed shareholders
companies in the of the listed
Number of Number of consolidated companies in
bonus share Cash dividend shares financial the
for per 10 per 10 shares converted per Amount of cash statement during consolidated
shares (RMB) (tax 10 shares dividend (tax the year of financial
Year of distribution (share) inclusive) (share) inclusive) distribution statement (%)
2020 0 3.66 0 3,397,277,612.09 8,876,593,208.19 38.27
2019 0 3.75 0 2,467,337,485.13 8,206,247,105.96 30.07
2018 0 3.51 0 2,235,314,261.70 7,440,228,855.90 30.04
(III) Share repurchased by cash and included in cash dividend
Applicable √ Not Applicable
(IV) The Company made profits and the profits for distribution to the shareholders
of ordinary shares of the Parent Company was positive during the reporting
period, but no cash profit distribution plan for ordinary shares was proposed;
the Company should disclose the reasons in detail and the purpose and use
plan of undistributed profits
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 73
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period
√ Applicable Not Applicable
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Undertaking related to Eliminate the right Haier Group During the period from September 2006 to May 2007, 27 September 2006, Yes Yes
significant asset defects in land Corporation the Company issued shares to Haier Group long-term
reorganization property etc. Corporation (“Haier Group”) to purchase the
controlling equity in its four subsidiaries, namely
Qingdao Haier Air-Conditioner Electronics Co., Ltd.
( ), Hefei Haier
Air-conditioning Co., Limited (
), Wuhan Haier Electronics Co., Ltd. (
), Guizhou Haier Electronics Co.,
Ltd. ( ). With regard to the
land and property required in the operation of
Qingdao Haier Air-Conditioner Electronics Co., Ltd.,
Hefei Haier Air-conditioning Co., Limited, Wuhan
Haier Electronics Co., Ltd. (the “Covenantees”),
Haier Group made an undertaking (the “2006
Undertaking”). According to the content of 2006
Undertaking and current condition of each
Covenantee, Haier Group will constantly assure that
Covenantees will lease the land and property owned
by Haier Group for free. Haier Group will make
compensation in the event that the Covenantees
suffer loss due to the unavailability of such land and
property.
Resolve horizontal Haier Smart Home Before this transaction (i.e. the transaction involving in 31 July 2020, Yes Yes
competition Co., Ltd. the matters of HSH’s proposed privatization of HEG, long-term
the same as below), HEG was the holding
subsidiary of the Company, and there was no
horizontal competition between HEG and the
Company; after the completion of this transaction,
HEG will become the wholly-owned or holding
subsidiary of the Company, and there is no or new
horizontal competition between HEG and the
Company. There is no new or potential horizontal
competition between the Company and its
controlling shareholder and other related parties
controlled by its actual controller.
Undertaking Directors, The directors, supervisors and senior management of 31 July 2020, Yes Yes
related to share supervisors and Haier Smart Home Co., Ltd. undertake: in this completion of
reduction senior transaction, during the period from the earlier of the this transaction
management of date of resumption of trading of HSH Shares and
HSH the date of issuance of this letter of undertaking to
the completion of this transaction, I have no plan to
reduce HSH Shares (if applicable). If I violate the
aforesaid undertaking so as to cause any loss to
HSH or other investors, I undertake to be liable for
compensation to HSH or other investors according
to laws.
74 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Reduce connected Haier COSMO Co., 1. This transaction constitutes a connected transaction. 29 July 2020, Yes Yes
transactions Ltd. The connected transaction procedures completed long-term
for this transaction are in compliance with relevant
regulations, the connected transaction is priced
fairly, and there are no circumstances that harm the
interests of the Listed Company and non-connected
shareholders. 2. After the completion of this
transaction, the Company and its affiliated
enterprises will take legal and effective measures to
minimize and regulate the connected transactions
with the Listed Company and consciously safeguard
the interests of the Listed Company and all
shareholders, and will not take advantage of
connected transactions for improper benefits. 3.
Without prejudice to laws and regulations, if there
are any unavoidable or well-grounded connected
transactions between the Company and its affiliated
enterprises and the Listed Company, the Company
and its affiliated enterprises will enter into
transaction agreements with the Listed Company
according to laws to ensure they will strictly
complete the connected transaction procedures
specified in laws, regulations, regulatory documents
and the Articles of Association, conduct
transactions at a fair price in accordance with
market-oriented principles to ensure the fairness
and compliance of connected transactions, and will
not take advantage of such connected transactions
to engage in any act that harms the interests of the
Listed Company or its minority shareholders, and at
the same time, they will perform the information
disclosure obligations in accordance with relevant
regulations.
Undertaking Haier COSMO Co., In this transaction, during the period from the earlier of 29 July 2020, Yes Yes
related to share Ltd. the date of resumption of trading of HSH Shares completion of this
reduction and the date of issuance of this letter of transaction
undertaking to the completion of this transaction,
the Company has no plan to reduce HSH Shares. If
the Company violates the aforesaid undertaking so
as to cause any loss to HSH or other investors, the
Company undertakes to be liable for compensation
to HSH or other investors according to laws.
Haier Smart Home Co., Ltd. Annual Report 2020 75
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Reduce connected Haier Group 1. This transaction constitutes a connected transaction. 29 July 2020, Yes Yes
transactions Corporation The connected transaction procedures completed long-term
for this transaction are in compliance with relevant
regulations, the connected transaction is priced
fairly, and there are no circumstances that harm the
interests of the Listed Company and non-connected
shareholders. 2. After the completion of this
transaction, the Company and its affiliated
enterprises will take legal and effective measures to
minimize and regulate the connected transactions
with the Listed Company and consciously safeguard
the interests of the Listed Company and all
shareholders, and will not take advantage of
connected transactions for improper benefits. 3.
Without prejudice to laws and regulations, if there
are any unavoidable or well-grounded connected
transactions between the Company and its affiliated
enterprises and the Listed Company, the Company
and its affiliated enterprises will enter into
transaction agreements with the Listed Company
according to laws to ensure they will strictly
complete the connected transaction procedures
specified in laws, regulations, regulatory documents
and the Articles of Association, conduct
transactions at a fair price in accordance with
market-oriented principles to ensure the fairness
and compliance of connected transactions, and will
not take advantage of such connected transactions
to engage in any act that harms the interests of the
Listed Company or its minority shareholders, and at
the same time, they will perform the information
disclosure obligations in accordance with relevant
regulations.
76 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Resolve horizontal Haier Group 1. The Company and the holding subsidiary Haier 29 July 2020, Yes Yes
competition Corporation Electric Appliances Internationals Co., Ltd. were long-term
mainly engaged in investment business during the
reporting period. The Company and the holding
subsidiary Haier Electric Appliances International
Co., Ltd. (including their subsidiaries and entities
holding more than 30% of its shares) are not
involved in any existing or potential horizontal
competition with HSH; 2. The domestic and
overseas white goods businesses and assets held
by the Company (including its subsidiaries and
entities holding more than 30% of its shares) have
been injected in HSH by way of asset integration
and equity transfer in accordance with the
undertakings made by the Company in January
2011 and the requirements for adjustment of such
undertakings considered and approved at the
annual general meeting for 2014 of HSH; 3. Since
the closing of acquisition of 100% shares of Haier
New Zealand Investment Holding Company Limited,
which holds 100% shares of Fisher & Paykel
Appliances Holdings Limited, by Haier Singapore
Investment Holding Co., Ltd., an overseas
subsidiary of HSH in July 2018, there has been no
horizontal competition between the Company
(including its subsidiaries and entities holding more
than 30% of its shares) and HSH in respect of any
business at home and abroad. During the reporting
period, there was no new horizontal competition
between the Company (including its subsidiaries and
entities holding more than 30% of its shares) and
HSH; 4. After the completion of this transaction,
there is no new or potential horizontal competition
between the Company (including its subsidiaries and
entities holding more than 30% of its shares) and its
affiliated enterprises and HSH; 5. During the period
when the Company is the controlling shareholder of
HSH and HSH Shares are listed on the Hong Kong
Stock Exchange, the Company and other
subsidiaries thereof and entities holding more than
30% of its shares will not engage in any businesses
which are in competition with those engaged in by
HSH or run into existing or potential horizontal
competition with HSH.
Haier Smart Home Co., Ltd. Annual Report 2020 77
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Maintain the Haier Group After the completion of this transaction, the Company 29 July 2020, Yes Yes
independence Corporation will equally exercise shareholders’ rights and fulfill long-term
of the Listed shareholders’ obligations without seeking improper
Company benefits by taking advantage of its shareholder
status in strict accordance with the Company Law,
Securities Law, relevant provisions of China
Securities Regulatory Commission and Shanghai
Stock Exchange as well as the Articles of
Association of HSH, etc. to keep the Listed
Company completely separate from the Company
and other enterprises under the control or
significant influence of the Company in
management, personnel, assets, finance, institution,
and business operations so as to maintain the
independence of the Listed Company in
management, personnel, assets, finance, institution
and business operations. After the completion of
this transaction, the Company will regulate the
external guarantees of the Listed Company and its
subsidiaries without illegally occupying the funds
thereof in compliance with the Notice on Several
Issues concerning Regulating Fund Transactions
between Listed Companies and Their Related
Parties and the External Guarantees of Listed
Companies
and the Circular
of China Securities Regulatory Commission and
China Banking Regulatory Commission on
Regulating the External Guaranties Provided by
Listed Companies
. The Company undertakes to strictly
fulfill the above undertaking. If the Company and
other enterprises under the control or significant
influence of the Company violate the above
undertaking so as to cause any damage to the
rights and interests of the Listed Company, the
Company will bear corresponding compensation
liability according to laws.
Undertaking Haier Group In this transaction, during the period from the earlier of 29 July 2020, Yes Yes
related to share Corporation the date of resumption of trading of HSH Shares completion of
reduction and the date of issuance of this letter of this transaction
undertaking to the completion of this transaction,
the Company has no plan to reduce HSH Shares. If
the Company violates the aforesaid undertaking so
as to cause any loss to HSH or other investors, the
Company undertakes to be liable for compensation
to HSH or other investors according to laws.
Undertaking Qingdao Haier In this transaction, during the period from the earlier of 29 July 2020, Yes Yes
related to share Venture & the date of resumption of trading of HSH Shares completion of
reduction Investment and the date of issuance of this letter of this transaction
Information Co., undertaking to the completion of this transaction,
Ltd. the Company has no plan to reduce HSH Shares. If
the Company violates the aforesaid undertaking so
as to cause any loss to HSH or other investors, the
Company undertakes to be liable for compensation
to HSH or other investors according to laws.
78 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Undertaking Qingdao In this transaction, during the period from the earlier of 29 July 2020, Yes Yes
related to share Haichuangzhi the date of resumption of trading of HSH Shares completion of
reduction Management and the date of issuance of this letter of this transaction
Consulting undertaking to the completion of this transaction,
Enterprise the Company has no plan to reduce HSH Shares. If
(Limited the Company violates the aforesaid undertaking so
Partnership) as to cause any loss to HSH or other investors, the
Company undertakes to be liable for compensation
to HSH or other investors according to laws.
Others HCH (HK) 1. The Company legally holds the underlying shares 29 July 2020, six Yes Yes
INVESTMENT and has complete ownership of the underlying months after
MANAGEMENT shares, which are not subject to any right termination of
CO., LIMITED restrictions or involved in any circumstance which privatisation/listing
may affect the offer or closing of this transaction. 2. of H-shares
The Company has complete right to participate in
this transaction and is entitled to accept offer for
this transaction and sign and perform all
agreements and documents involved in this
transaction. 3. The Company intends to participate
in this transaction as a shareholder in the scheme of
arrangement. 4. Unless the privatisation of HEG is
completed or HSH announces termination of
privatisation, except for the transaction with HSH
and its designated subject, the Company will not sell
underlying shares, or reach any arrangement with
any third party on disposing of relevant underlying
shares or interests thereof, or set any pledge and
other right restrictions on the underlying shares after
issue of the letter of confirmation. 5. Unless the
privatisation of HEG is completed or HSH
announces termination of privatisation, except for
participating in and promoting this transaction, the
Company will not additionally hold HEG Shares, or
reach any arrangement with other HEG
Shareholders on disposing of the relevant
underlying shares or interests thereof, or set any
pledge and other right restrictions on the HEG
Shares held by other HEG Shareholders. 6. The
Company will comply with the relevant restrictions
on the sale of HSH Shares in accordance with Rule
10.07 of the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong
Limited as amended from time to time: from the
date of disclosure of the shareholdings of the
Company in the Listing Document of HSH H-shares
involved in this transaction to the 6th month after
HSH H-shares are traded on the Hong Kong Stock
Exchange, the Company will not sell HSH H-shares
acquired by the Company through this transaction,
or enter into any agreement on selling such shares,
or set any option, right, interest or encumbrance for
such shares; in addition, within six months after the
expiry of the aforementioned 6-month period, the
Company’s selling HSH H-shares, entering into any
agreement on selling such shares, or exercising or
executing relevant options, rights, interests or
encumbrances for such shares will not cause Haier
Group Corporation and its concerted parties to lose
their status as controlling shareholders of HSH.
Haier Smart Home Co., Ltd. Annual Report 2020 79
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Reduce connected HCH (HK) 1. This transaction constitutes a connected transaction. 29 July 2020, Yes Yes
transactions INVESTMENT The connected transaction procedures completed long-term
MANAGEMENT for this transaction are in compliance with relevant
CO., LIMITED regulations, the connected transaction is priced
fairly, and there are no circumstances that harm the
interests of the Listed Company and non-connected
shareholders. 2. After the completion of this
transaction, the Company and other enterprises
controlled by it will take legal and effective
measures to minimize and regulate the connected
transactions with the Listed Company and
consciously safeguard the interests of the Listed
Company and all shareholders, and will not take
advantage of connected transactions for improper
benefits. 3. Without prejudice to laws and
regulations, if there are any unavoidable or
well-grounded connected transactions between the
Company and other enterprises controlled by it and
the Listed Company, the Company and other
enterprises controlled by it will enter into transaction
agreements with the Listed Company according to
laws to ensure they will strictly complete the
connected transaction procedures specified in laws,
regulations, regulatory documents and the Articles
of Association, conduct transactions at a fair price
in accordance with market-oriented principles, and
will not take advantage of such connected
transactions to engage in any act that harms the
interests of the Listed Company or its minority
shareholders, and at the same time, they will
perform the information disclosure obligations in
accordance with relevant regulations. 4. Any
agreement and arrangement on connected
transactions made by the Company and other
enterprises controlled by it with the Listed Company
will not prevent the other party from conducting
business or transaction with any third party for its
own sake and under the same market competition
conditions.
Undertaking Haier International In this transaction, during the period from the earlier of 29 July 2020, Yes Yes
related to share Co., Limited the date of resumption of trading of HSH Shares completion of this
reduction and the date of issuance of this letter of transaction
undertaking to the completion of this transaction,
the Company has no plan to reduce HSH Shares. If
the Company violates the aforesaid undertaking so
as to cause any loss to HSH or other investors, the
Company undertakes to be liable for compensation
to HSH or other investors according to laws.
80 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Undertaking related to Eliminate the right Haier Group Haier Group Corporation undertakes that it will assure 24 December 2013, Yes Yes
refinancing defects in land Corporation HSH and its subsidiaries of the constant, stable and long-term
property etc. unobstructed use of the leased property. In the
event that HSH or any of its subsidiaries suffers any
economic loss due to the fact that leased property
has no relevant ownership certificate, Haier Group
Corporation will make compensation to impaired
party in a timely and sufficient way and take all
reasonable and practicable measures to support the
impaired party to recover to normal operation before
the occurrence of loss. Upon the expiration of
relevant leasing period, Haier Group Corporation will
grant or take practicable measures to assure HSH
and its subsidiaries of priority to continue to lease
the property at a price not higher than the rent in
comparable market at that time. Haier Group
Corporation will assure HSH and its subsidiaries of
the constant, stable, free and unobstructed use of
self-built property and land of the Group. In the
event that HSH or any of its subsidiaries fails to
continue to use self-built property according to its
own will or in original way due to the fact that
self-built property has no relevant ownership
certificate, Haier Group Corporation will take all
reasonable and practicable measures to eliminate
obstruction and impact, or will support HSH or its
affected subsidiary to obtain alternative property as
soon as possible, if Haier Group Corporation
anticipates it is unable to cope with or eliminate the
external obstruction and impact with its reasonable
effort. For details, please refer to the
Announcement of Qingdao Haier Co., Ltd. on the
Formation, Current Situation of the Defective
Property, the Influence on Operation of Issuer
Caused by Uncertainty of Ownership, Solution for
the Defect and Guarantee Measures (L2014–005)
published by the Company on the four major
securities newspapers and the website of SSE on
29 March 2014.
Haier Smart Home Co., Ltd. Annual Report 2020 81
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Eliminate the right Haier Smart Home The Company undertakes that it will eliminate the 24 December 2013, Yes Yes
defects in land Co., Ltd. property defects of the Company and main eight years
property etc. subsidiaries within five years with reasonable
business effort since 24 December 2013, to achieve
the legality and compliance of the Company and
main subsidiaries in terms of land and property. For
details, please refer to the Announcement of
Qingdao Haier Co., Ltd. on the Formation, Current
Situation of the Defective Property, the Influence on
Operation of Issuer Caused by Uncertainty of
Ownership, Solution for the Defect and Guarantee
Measures (L2014–005) published by the Company
on the four major securities newspapers and the
website of SSE on 29 March 2014. As of the end
of 2018, the Company has resolved the property
defects of itself and its eight major subsidiaries,
while that of the other remaining five major
subsidiaries is in process. After the approval of the
board meeting held by the Company on 5
November 2018 and the general meeting held on
21 December 2018, the term of the above
undertakings was extended for three years based on
the original deadline. At present, property defects of
the five major subsidiaries have been solved
properly by applying the real estate ownership
certificate, transferring the defective property into
land reserve after relocation, and stripping the
defective property together with the equity of the
subsidiaries. The Company has completed this
undertaking.
Other undertakings Asset injection Haier Group Inject the assets of Haier Photoelectric to the December 2015 to Yes Yes
Corporation Company or dispose such assets through other June 2025
ways according to the requirements of the domestic
supervision before June 2025. For more details,
please refer to the Announcement of Haier Smart
Home Co., Ltd. on the Changes of Some
Undertakings on Asset Injection of Haier Group
Corporation (L2020–024) published on the four
major securities newspapers and the website of SSE
on 30 April 2020.
82 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period (continued)
Whether
performed in
Type of Date and term of Any deadline for a timely and
Background of undertakings undertakings Covenanter Contents of undertakings undertakings performance stringent way
Profit forecast and Haier COSMO In August 2018, Guanmei (Shanghai) Enterprise As of 30 April 2021 Yes Yes
compensation Co., Ltd. Management Company Limited (
) (hereinafter referred to as “Guanmei”),
an indirect holding subsidiary of the Company
replaced the 55% equity interests of Bingji
(Shanghai) Enterprise Management Company Limited
( ) held by it with the
51% equity interests of Qingdao Haishi Water
Equipment Co., Ltd. (hereinafter referred to as
“Water Equipment”) held by Haier Electric
Appliances International Co., Ltd. (hereinafter
referred to as “Haier International”). In this regard,
Haier International promises that the cumulative
actual net profit recorded by the Water Equipment
in the three accounting years during the profit
compensation period shall not be less than its
cumulative forecasted net profit in the
corresponding year, otherwise Haier International
shall compensate Guanmei’s results according to
the Assets Replacement Agreement. Details are set
out in the Announcement on Connected Transaction
of Planning to Conduct Equity Replacement by
Holding Subsidiary and Haier Electronics
International Co., Ltd. of Qingdao Haier Co., Ltd.
(L2018–047) published by the Company on the four
major securities newspapers and the website of SSE
on 31 August 2018.
Haier Smart Home Co., Ltd. Annual Report 2020 83
Section V Significant Events
II. PERFORMANCE OF UNDERTAKINGS (continued)
(II) The Company’s explanation on whether the earnings estimate on assets or
projects was met and its reasons in the situation that earnings in the
Company’s assets or projects is estimated, and the period of which includes
the reporting period.
√ Reached Not Reached Not Applicable
In August 2018, Guanmei (Shanghai) Enterprise Management Company Limited (
) (hereinafter referred to as ‘Guanmei’), an indirect holding subsidiary of the
Company replaced the 55% equity interests of Bingji (Shanghai) Enterprise Management
Company Limited ( ) held by it with the 51% equity interests of
Qingdao HSW Water Appliance Co., Ltd. (hereinafter referred to as ‘Water Appliance’) held by
Haier Electric Appliances International Co., Ltd. (hereinafter referred to as ‘Haier International’). In
this regard, Haier International promises that the cumulative actual net profit recorded by the
Water Appliance in the three accounting years during the profit compensation period (i.e. 2018
to 2020) shall not be less than its cumulative forecasted net profit of RMB470.5 million in the
corresponding year, otherwise Haier International shall compensate Guanmei’s results according
to the Assets Replacement Agreement. Details are set out in the Announcement on Connected
Transaction of Planning to Conduct Equity Replacement by Holding Subsidiary and Haier
Electronics International Co., Ltd. of Qingdao Haier Co., Ltd. (L2018–047) published by the
Company on the four major securities newspapers and the website of Shanghai Stock Exchange
on 31 August 2018.
According to the Special Audit Report on the Satisfaction of Performance Commitment of Haier
Smart Home Co., Ltd. issued by Hexin Certified Public Accountants LLP (Report No.: He Xin
Zhuan Zi (2021) No. 000101), the cumulative actual net profit recorded by the Water Appliance in
the three accounting years during the profit compensation period (i.e. 2018 to 2020) amounted to
RMB 472,515,700. The net profit recorded exceeded the forecasted net profit and the
performance commitment has been satisfied.
(III) Completion of performance commitments and their impact on the impairment
test of goodwill
Applicable √ Not Applicable
III. MISAPPROPRIATION AND REPAYMENT PLAN OF FUNDS DURING THE
REPORTING PERIOD
Applicable √ Not Applicable
84 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
IV. EXPLANATION OF THE COMPANY ON THE ‘NON-STANDARD AUDIT
REPORT’ ISSUED BY THE ACCOUNTING FIRM
Applicable √ Not Applicable
V. EXPLANATION OF THE COMPANY’S ANALYSIS ON REASONS AND
EFFECTS OF CHANGES IN ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES OR CORRECTION OF SIGNIFICANT
ACCOUNTING ERRORS
(I) Explanation of the Company’s analysis on reasons and effects of changes in
accounting policies and accounting estimates
Applicable √ Not Applicable
(II) Explanation of the Company’s analysis on reasons and effects of correction of
significant accounting errors
Applicable √ Not Applicable
(III) Communication with former accounting firm
Applicable √ Not Applicable
(IV) Other explanations
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 85
Section V Significant Events
VI. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRM
Unit and Currency: RMB million
Current appointment
Name of domestic accounting firm Hexin Certified Public Accountants LLP
Remuneration of domestic accounting firm 7.15
Audit period of domestic accounting firm 8 years
Name of overseas accounting firm HLB Hodgson Impey Cheng Limited
Remuneration of overseas accounting firm 3.99
Audit period of overseas accounting firm 1 year
Name Remuneration
Internal firm control Hexin Certified Public Accountants LLP 2.85
audit accounting
Sponsor China International Capital Corporation Limited 0
Independent financial advisor Zheshang Securities Co., Ltd. 0.7
Explanation of appointment and dismissal of accounting firm
Applicable √ Not Applicable
Explanation of change of accounting firm during the auditing period
Applicable √ Not Applicable
VII. POSSIBILITY OF LISTING SUSPENSION
(I) Reasons of listing suspension
Applicable √ Not Applicable
(II) Response measures to be taken by the Company
Applicable √ Not Applicable
VIII. CIRCUMSTANCES AND REASONS FOR LISTING TERMINATION
Applicable √ Not Applicable
IX. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
Applicable √ Not Applicable
X. MATERIAL LITIGATION AND ARBITRATION MATTERS
Material litigation and arbitration matters during the year
√ No material litigation and arbitration matters in the reporting year
86 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XI. PUNISHMENT ON THE LISTED COMPANY AND ITS DIRECTORS,
SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
SHAREHOLDERS, ULTIMATE CONTROLLERS AND ACQUIRERS AND
SITUATION OF RECTIFICATION
Applicable √ Not Applicable
XII. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND
ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER
DURING THE REPORTING PERIOD
Applicable √ Not Applicable
XIII. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEE
SHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURES
AND ITS INFLUENCE
(I) Matters disclosed in temporary announcements and without any subsequent
progress or change
Applicable √ Not Applicable
(II) Share incentives not disclosed in temporary announcements or with subsequent
progress
Share Option Incentive
Applicable √ Not Applicable
Other explanations
Applicable √ Not Applicable
Employee Stock Ownership Plan
√ Applicable Not Applicable
1. Extension of the Phase II ESOPs: As some shares under the Phase II ESOPs of Qingdao
Haier Co., Ltd. (Draft) (hereinafter referred to as “Phase II ESOPs”) remain unallocated,
there are still 1,854,568 shares in the asset management account of the Phase II ESOPs.
According to the original arrangement, the Phase II ESOPs would expire on 27 March
2020. Under the Phase II ESOPs, the validity period of the Phase ESOPs may be extended
upon consideration by a Board meeting after expiry of the validity period. Therefore, with
the confidence in the future continuous development of the Company and the judgment on
the Company’s stock value, Haier Smart Home convened the 6th meeting of the Tenth
session of the Board of Directors on 14 February 2020, which resolved to extend the
validity period (from registration of underlying shares to the Phase II ESOPs (28 March
2017)) of Phase II ESOPs from “not more than 36 months” to “not more than 60 months”.
After the change of the validity period, no lock-up period would be reset on the Phase II
ESOPs. The meeting of the Supervisory Committee held on the same day also considered
and passed the above matters, at which independent directors provided affirmative
independent opinions.
Haier Smart Home Co., Ltd. Annual Report 2020 87
Section V Significant Events
XIII. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEE
SHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURES
AND ITS INFLUENCE (continued)
(II) Share incentives not disclosed in temporary announcements or with subsequent
progress (continued)
2. Partial allocation of ESOPs: During the reporting period, the Company’s Phase III ESOPs
under Core Employee Stock Ownership Plan of Qingdao Haier Co., Ltd. (Draft) and
Summary (hereinafter referred to as “Phase III ESOPs”) was allocated for the second time,
and the allocation condition of the Phase IV ESOPs under Core Employee Stock Ownership
Plan of Qingdao Haier Co., Ltd. (Draft) and Summary (hereinafter referred to as “Phase IV
ESOPs”) was satisfied for the first time: On 20 July 2020, the ESOPs Management
Committee held a meeting and determined that: (1) for Phase III ESOPs, according to the
Auditing Report of Haier Smart Home Co., Ltd. (He Xin Shen Zi (2020) No. 000287) issued
by Hexin Certified Public Accountants LLP, the Company’s audited net profit attributable to
shareholders of the parent company after deducting non-recurring profit or loss in 2019
increased by 2.51% as compared to that of 2017. The directors, supervisors, senior
managers, and employees of the Company had not satisfied the allocation conditions, and
no allocation for this time; the other 428 holders should allocate 4,640,815 shares
according to the results of the 2019 annual performance and personal assessment, and the
corresponding shares of the remaining holders will not be allocated for the time being or
their allocated shares will be adjusted due to failing to reach the assessment standard or
resignation. (2) for Phase IV ESOPs, based on a comprehensive assessment of the holders,
a total of 589 holders having 5,386,118 shares allocatable this time, and the corresponding
shares of the remaining holders will not be allocated for the time being or their allocated
shares will be adjusted due to failing to reach the assessment standard or resignation. The
directors, supervisors and senior management of the Company can allocate a total of
995,043 shares on this occasion. Any change in the shares held by them must comply with
the relevant provisions of the Rules on the Management of Shares Held by the Directors,
Supervisors and Senior Management of Listed Companies and the Changes Thereof (
).
According to the aforesaid resolution, the Company has handled the transfer of relevant
shares at the Shanghai branch of the China Securities Depository and Clearing Corporation
Limited on 28 July 2020, with a total of 10,026,933 shares.
Other incentives
Applicable √ Not Applicable
88 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XIV. SIGNIFICANT RELATED PARTY TRANSACTIONS
(I) Related party transactions from routine operation
1. Matter disclosed in temporary announcements and with no subsequent progress or
change
Applicable √ Not Applicable
2. Matter disclosed in temporary announcements and with subsequent progress or
change
√ Applicable Not Applicable
The Company made a forecast on the related-party transaction matters of the Company for
the year of 2020 at the 7th meeting of the 10th session of Board Meeting held on 29 April
2020. For details, please refer to the Announcement of Haier Smart Home Co., Ltd.
regarding the Anticipation on the Daily Related-party Transactions for 2020 and relevant
announcement on the resolutions of the Board disclosed on 30 April 2020.
For the actual implementation of the Related-party transaction of 2020, please refer to ‘XII.
Related parties and related-party transactions’ under section X — Financial and Accounting
Report set out in this regular report.
3. Matter not disclosed in temporary announcements
Applicable √ Not Applicable
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matter disclosed in temporary announcements and with no subsequent progress or
change
√ Applicable Not Applicable
Summary of matters Query index
Related-party transactions related to the For details, please refer to the Report on
issuance of H-shares and privatisation Significant Asset Acquisition and
of HEG: For details, please refer to “(VI) Connected Transactions of Haier Smart
Sales of Material Assets and Equity” in Home Co., Ltd. (Draft) disclosed by the
“Section IV Discussion and Analysis on Company on 1 August 2020, and the
Operations” in this report. Report on the Implementation of
Material Asset Purchase and Related
Transactions of Haier Smart Home Co.,
Ltd. disclosed on 26 December 2020
and the related announcements
disclosed in other dates.
Related party transactions involving the For details, please refer to Announcement
assignment of subsidiary equity on Assigna-tion of 54.50% Equity
interests: For details, please refer to (VI) Interests of Haier COSMOPlat IOT
Disposal of Material Assets and Equity Ecosystem Technology Co., Ltd. and
Interests in Section IV Discussion and Related Party Transactions of the
Analysis of Operation of this report. Company on 30 July 2020 and other
relevant announcements disclosed on
that day.
Haier Smart Home Co., Ltd. Annual Report 2020 89
Section V Significant Events
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
4. If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed
Applicable √ Not applicable
(III) Significant related-party transactions of joint external investment
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
(IV) Amounts due to or from related parties
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcement and with subsequent
progress or change
Applicable √ Not applicable
3. Matters that haven’t been disclosed in temporary announcements
Applicable √ Not applicable
(V) Others
Applicable √ Not applicable
90 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
(I) Trusteeship, contracting and leasing
1. Trusteeship
Applicable √ Not applicable
During the reporting period, there was no material trusteeship. To date, the following
trusteeships have been considered and approved on the general meeting of the Company
and still within the validity period:
According to the Haier Group’s commitment in 2011 to further support the development of
Qingdao Haier and resolve intra-industry competition to reduce related-party transactions,
and given the fact that Qingdao Haier Photoelectric Co., Ltd. and its subsidiaries, who
purchase of the color TV business from Haier Group, are still under transformation and
consolidation period and their financial performance fails to reach the expectation of the
Company. Therefore, Haier Group is unable to complete the transfer before the
aforementioned commitment period. Haier Group intends to entrust the Company with the
operation and management of assets under custody and will pay RMB1 million custodian
fee to the Company each year during the period of custody.
2. Contracting
Applicable √ Not applicable
3. Leasing
Applicable √ Not applicable
Haier Smart Home Co., Ltd. Annual Report 2020 91
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION (continued)
(II) Guarantee
√ Applicable Not applicable
Unit and Currency: RMB0’000
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date of
Relationship occurrence Whether Whether Whether
between the of the Commen the the Over due Whether related
guarant or guarantee cement Expiration guarantee guarantee amount there is a party
and the listed Secured Amount of (date of date of date of Type of has been is over of the counter- guarantee
Guarantor company party guarantee agreement) guarantee guarantee guarantee fulfilled due guarantee guarantee or not Relationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company and its subsidiaries for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period 4,461,868
Total balance of guarantees for subsidiaries at the end of the reporting period (B) 2,943,165
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total guarantee (A + B) 2,943,165
Ratio of total amount of guarantees to net assets of the Company (%) 44.0
Among which:
Amount of guarantees for shareholders, ultimate controllers and their related parties (C) 0
Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio
exceeding 70% (D) 1,285,881
The amount of total amount of guarantee in excess of 50% of net assets (E) 0
Total amount of the above three guarantees (C + D + E) 1,285,881
Explanation of possibly bearing related discharge duty for premature guarantees Nil
Explanation of guarantee status The total amount of the aforementioned guarantees consists of two parts:
1. In 2016, the Company acquired the assets of GEA at a total consideration of USD 5.61 billion, which
was sourced from self-owned funds and loan for merger, of which, the loan for merger in the amount
of USD 3.3 billion was applied for by Haier US Appliance Solutions, Inc., a wholly-owned subsidiary
of the Company, to China Development Bank Co., Ltd. The loan was fully secured by the Company
and Haier Group Corporation. The amount of guarantee was approximately RMB9.322 billion with the
balance was nil as at the end of the reporting period. The provision of guarantee had been
considered and approved by the Board and the general meeting of shareholders of the Company;
2. In June 2020, the resolution on the Expected Provision of Guarantee for subsidiaries in 2020 was
passed on the 2019 Annual General Meeting of the Company, according to which, the Company had
provided guarantee in respect of the application for comprehensive facility made by certain
subsidiaries to financial institutions. During the reporting period, the accumulated amount of
guarantee offered by the Company to subsidiaries was approximately RMB35.297 billion. As of the
end of the reporting period, the balance guaranteed was RMB29.432 billion.
(III) Entrusted others to manage cash assets
1. Entrusted wealth management
(1) Overall of entrusted wealth management
√ Applicable Not applicable
Unit and Currency: RMB
Past due
Sources of Premature uncollected
Type funds Amount balance amount
Principal-guaranteed wealth Self-owned funds 2,322,018,078 2,322,018,078 0
management products and
structured deposit
92 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION (continued)
(III) Entrusted others to manage cash assets (continued)
1. Entrusted wealth management (continued)
(1) Overall of entrusted wealth management (continued)
Others
√ Applicable Not applicable
By the end of the reporting period, the balance of the Company’s entrusted wealth
management amounted to RMB2.322 billion, including two parts: temporarily-idle
fundraising wealth management: at the end of December 2018, the Company’s
proceeds for the issuance of convertible corporate bonds were fully landed. In order
to improve the yield of temporarily-idle funds, the Company intended to carry out
cash management with the amounts not exceeding RMB0.7 billion after approved by
the Board of Directors. By the end of the reporting period, the balance of the
entrusted wealth management amounted to RMB464 million; Temporary-idle
funds wealth management by certain subsidiaries of the Company: Under the
premise of ensuring sufficient capital required by the principal operating activities and
daily operations, some subsidiaries of the company purchased some short-term
principal-guaranteed wealth management products and structured deposits from major
commercial banks to improve the yield of temporarily-idle funds and the return for
shareholders within the authority of the general manager’s office meeting and under
the condition of ensuring fund safety. By the end of the reporting period, the balance
of the entrusted wealth management amounted to RMB1.859 billion.
Haier Smart Home Co., Ltd. Annual Report 2020 93
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION (continued)
(III) Entrusted others to manage cash assets (continued)
1. Entrusted wealth management (continued)
(2) Individual entrusted wealth management
√ Applicable Not applicable
Unit and Currency: RMB
Amount of
Amount of Commencement Whether Any future plan provision
Type of entrusted entrusted date of entrusted Expiration date of Expected Actual approved for entrusted for
wealth wealth wealth entrusted wealth Sources of Determination Annualized return gains or by due wealth impairment
Trustee management management management management funds Investment of return yield (if any) losses Collection process management (if any)
Haier Road sub-branch of Wealth management 231,000,000.00 2020/10/12 2021/3/29 Self-owned 3.15% 3,349,184 Not expired YES YES
Construction Bank funds
Haier Road sub-branch of Wealth management 15,000,000.00 2019/3/13 Available every Self-owned 1.7%~2.7% Not expired YES YES
Construction Bank Wednesday funds
Haier Road sub-branch of Wealth management 70,000,000.00 2019/3/20 Available every Self-owned 1.7%~2.7% Not expired YES YES
Construction Bank Wednesday funds
Haier Road sub-branch of Wealth management 17,000,000.00 2019/4/17 Available every Self-owned 1.7%~2.7% Not expired YES YES
Construction Bank Wednesday funds
Haier Road sub-branch of Wealth management 10,000,000.00 2019/6/26 Available every Self-owned 1.7%~2.7% Not expired YES YES
Construction Bank Wednesday funds
Haier Road sub-branch of Wealth management 30,000,000.00 2019/7/31 Available every Self-owned 1.7%~2.7% Not expired YES YES
Construction Bank Wednesday funds
Qingdao branch of Bank of Wealth management 304,000,000.00 2020/9/30 2021/1/8 Self-owned 2.82% 2,348,712 Not expired YES YES
Communications funds
Qingdao branch of Bank of Wealth management 549,000,000.00 2020/11/13 2021/1/22 Self-owned 2.82% 2,969,112 Not expired YES YES
Communications funds
Qingdao branch of Bank of Wealth management 60,000,000.00 2020/11/13 2021/1/22 Self-owned 2.82% 324,493 Not expired YES YES
Communications funds
Qingdao branch of Bank of Wealth management 560,000,000.00 2020/10/12 2021/1/28 Self-owned 3.50% 5,799,452 Not expired YES YES
China funds
Construction Bank Principal- 4,500,000.0 2019/7/3 Available when Self-owned Based on Not expired YES YES
unguaranteed needed funds investment
and floating days
proceeds wealth
management
products
Haier Consumer Finance Co., Fixed income 8,000,000.0 2020/10/15 2021/4/15 Self-owned 3.85% Not expired YES YES
Ltd. products funds
Road sub-branch of China Qianyuan-Zhou 197,100,000.00 2019/8/14 On-demand Raised funds 2.20% Not expired YES YES
Construction Bank Zhouli Open-end
Principal
Guaranteed
Wealth
Management
Product ( -
)
Qingdao branch of Bank of Principal guaranteed 92,000,000.00 2020/11/23 2021/5/17 Raised funds 3.25% Not expired YES YES
China Co., Ltd. wealth
management-
linked structured
deposit of Bank
of China
Road sub-branch of China Linked structured 140,000,000.00 2020/12/17 2021/6/15 Raised funds 3.25% Not expired YES YES
Construction Bank deposit
Qingdao branch of Bank of Certificate of deposit 34,418,078.00 2019/1/29 On-demand Raised funds 3.00% Not expired YES YES
China Co., Ltd.
94 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION (continued)
(III) Entrusted others to manage cash assets (continued)
1. Entrusted wealth management (continued)
(2) Individual entrusted wealth management (continued)
Others
Applicable √ Not Applicable
(3) Provisions for impairment of entrusted wealth management
Applicable √ Not Applicable
2. Entrusted loans
(1) Overall entrusted loans
Applicable √ Not Applicable
Others
Applicable √ Not Applicable
(2) Individual entrusted loans
Applicable √ Not Applicable
Others
Applicable √ Not Applicable
(3) Provisions for impairment of entrusted loans
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 95
Section V Significant Events
XV. SIGNIFICANT CONTRACTS AND THEIR EXECUTION (continued)
(III) Entrusted others to manage cash assets (continued)
3. Others
√ Applicable Not Applicable
RMB0,000
Proportion of
Initial Amount closing
investment purchased Amount sold Provision investment
Operator name of amount of Opening during the during the for Closing amount over net Actual profit or
derivatives Type of derivatives derivatives investment reporting reporting impairment investment assets at end of loss for the
investment investment investment Starting date Ending date amount period period (if any) amount reporting period reporting period
Bank Forward foreign 1,062,613 1 Jan 2020 31 Dec 2020 1,062,613 1,250,593 8,833
exchange contract
Bank Interest rate/exchange 428,824 1 Jan 2020 31 Dec 2020 428,824 230,366 –4,279
rate swap
Funding sources of
derivatives investments Owned funds of the Company
For changes in the market price or fair Changes in market prices or fair value of
value of the invested derivatives products,
products during the reporting period,
the specific methodology used and the 1. The profit or loss of the foreign exchange
settings of relevant assumptions and forward contracts amounted to
parameters should be disclosed in the
RMB88.33 million during the reporting
fair value analysis of the derivatives.
period;
2. The profit and loss arising from the
interest rate/exchange rate swap was
–RMB42.79 million during the reporting
period.
The specific methodology used and the
related assumptions and parameter settings
are according to the forward quotations of
foreign exchange and interest rate swaps of
the financial institutions.
(IV) Other Major Contracts
Applicable √ Not Applicable
96 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS
√ Applicable Not Applicable
During the Reporting Period, the Company disclosed the following information and all the information
will be disclosed on SSE (www.sse.com.cn):
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page B012, China Securities 17 January 2020
Haier Smart Home Co., Ltd. Journal; Page 137, Shanghai
on Publication of Joint Securities News; Page B66,
Announcement by the Securities Times; Page D72,
Company and Haier Securities Daily
Electronics Group Co., Ltd.
Announcement on the Page B009, China Securities 15 February 2020
Resolutions of 6th Meeting of Journal; Page 33, Shanghai
the Tenth Session of the Securities News; Page B032,
Board of Directors of Haier Securities Times; Page C23,
Smart Home Co., Ltd. Securities Daily
Announcement on the Page B009, China Securities 15 February 2020
Resolutions of 6th Meeting of Journal; Page 33, Shanghai
the Tenth Session of the Securities News; Page B032,
Supervisory Committee of Securities Times; Page C23,
Haier Smart Home Co., Ltd. Securities Daily
Notice of the 2020 First Page B009, China Securities 15 February 2020
Extraordinary General Meeting Journal; Page 33, Shanghai
of Haier Smart Home Co., Securities News; Page B032,
Ltd. Securities Times; Page C23,
Securities Daily
Announcement of Haier Smart Page B009, China Securities 15 February 2020
Home Co., Ltd. on the Journal; Page 33, Shanghai
Extension of Phase II of the Securities News; Page B032,
Core Employee Stock Securities Times; Page C23,
Ownership Plan Securities Daily
Indicative Announcement of Page B009, China Securities 15 February 2020
Haier Smart Home Co., Ltd. Journal; Page 33, Shanghai
on the Process Update of Securities News; Page B032,
Potential Privatisation of Haier Securities Times; Page C23,
Electronics Group Co., Ltd. Securities Daily
Announcement of Haier Smart Page B071, China Securities 14 March 2020
Home Co., Ltd. on the Delay Journal; Page 81, Shanghai
of the Plan to Increase the Securities News; Page B3,
Holding of the Company’s Securities Times; Page C26,
Overseas Shares by the Securities Daily
Person Acting in Concert with
the Actual Controller
Haier Smart Home Co., Ltd. Annual Report 2020 97
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page B001, China Securities 17 March 2020
Haier Smart Home Co., Ltd. Journal; Page 89, Shanghai
on the Process Update of Securities News; Page B72,
Potential Privatisation of Haier Securities Times; Page C80,
Electronics Group Co., Ltd. Securities Daily
Indicative Announcement of Page B008, China Securities 27 March 2020
Haier Smart Home Co., Ltd. Journal; Page 108, Shanghai
on the Publication of 2019 Securities News; Page B37,
Annual Results by its Holding Securities Times; Page C87,
Subsidiary Haier Electronics Securities Daily
Group Co., Ltd.
Announcement on the Page B008, China Securities 1 April 2020
Resolutions of the 2020 First Journal; Page 73, Shanghai
Extraordinary General Meeting Securities News; Page B75,
of Haier Smart Home Co., Securities Times; Page C39,
Ltd. Securities Daily
Indicative Announcement of Page B029, China Securities 17 April 2020
Haier Smart Home Co., Ltd. Journal; Page 156, Shanghai
on the Process Update of Securities News; Page B82,
Potential Privatisation of Haier Securities Times; Page C106,
Electronics Group Co., Ltd. Securities Daily
2019 Annual Report of Haier Page B278, China Securities 30 April 2020
Smart Home Co., Ltd. Journal; Pages 121–123,
Shanghai Securities News; Pages
B385–388, Securities Times;
Pages C469–474, Securities
Daily
The 2020 First Quarterly Report Page B278, China Securities 30 April 2020
of Haier Smart Home Co., Journal; Pages 121–123,
Ltd._text Shanghai Securities News; Pages
B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement on the Page B278, China Securities 30 April 2020
Resolutions of 7th meeting of Journal; Pages 121–123,
the Tenth session of the Shanghai Securities News; Pages
Board of Directors of Haier B385–388, Securities Times;
Smart Home Co., Ltd. Pages C469–474, Securities
Daily
98 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Announcement on the Page B278, China Securities 30 April 2020
Resolutions of 7th meeting of Journal; Pages 121–123,
the Tenth session of the Shanghai Securities News; Pages
Supervisory Committee of B385–388, Securities Times;
Haier Smart Home Co., Ltd. Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on 2019 Journal; Page 121–123,
Annual Profit Distribution Plan Shanghai Securities News; Page
B385–388, Securities Times;
Page C469–474, Securities Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Re- Journal; Pages 121–123,
appointment of an Accounting Shanghai Securities News; Pages
Firm B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Journal; Pages 121–123,
Expected Guarantees for Shanghai Securities News; Pages
Subsidiaries in 2020 B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Journal; Page 121–123,
Carrying out of Foreign Shanghai Securities News; Page
Exchange Capital Derivatives B385–388, Securities Times;
Business Page C469–474, Securities Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Carrying Journal; Pages 121–123,
out the Bulk Raw Materials Shanghai Securities News; Pages
Hedging Business B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Journal; Page 121–123,
Proposed Registration and Shanghai Securities News; Page
Issuance of Debt Financing B385–388, Securities Times;
Instruments Page C469–474, Securities Daily
Haier Smart Home Co., Ltd. Annual Report 2020 99
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Journal; Pages 121–123,
Estimated Daily Connected Shanghai Securities News; Pages
Transactions in 2020 B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Election of Journal; Page 121–123,
Independent Directors Shanghai Securities News; Page
B385–388, Securities Times;
Page C469–474, Securities Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Journal; Pages 121–123,
Closing of Some Investment Shanghai Securities News; Pages
Projects and Allocation of the B385–388, Securities Times;
Surplus Proceeds as Pages C469–474, Securities
Supplementary Working Daily
Capital on a Permanent Basis
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on the Use of Journal; Pages 121–123,
Idle Proceeds for Cash Shanghai Securities News; Pages
Management B385–388, Securities Times;
Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Haier Journal; Pages 121–123,
Group Corporation’s Change Shanghai Securities News; Pages
of Part of its Asset Injection B385–388, Securities Times;
Undertakings Pages C469–474, Securities
Daily
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Continual Journal; Pages 121–123,
Entrusted Management of Shanghai Securities News; Pages
Qingdao Haier Optoelectronics B385–388, Securities Times;
Co., Ltd.*( Pages C469–474, Securities
) and Connected Daily
Transactions
Announcement of Haier Smart Page B278, China Securities 30 April 2020
Home Co., Ltd. on Journal; Pages 121–123,
Amendment to the Articles of Shanghai Securities News; Pages
Association B385–388, Securities Times;
Pages C469–474, Securities
Daily
100 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Notice of 2019 Annual General Page B278, China Securities 30 April 2020
Meeting of Haier Smart Home Journal; Pages 121–123,
Co., Ltd. Shanghai Securities News; Pages
B385–388, Securities Times;
Pages C469–474, Securities
Daily
Indicative Announcement of Page B029, China Securities 16 May 2020
Haier Smart Home Co., Ltd. Journal; Page 108, Shanghai
on the Process Update of Securities News; Page B129,
Potential Privatisation of Haier Securities Times; Page C33,
Electronics Group Co., Ltd. Securities Daily
Announcement on the Page B053, China Securities 4 June 2020
Resolutions of 2019 Annual Journal; Page 116, Shanghai
General Meeting of Haier Securities News; Page B6,
Smart Home Co., Ltd. Securities Times; Page C20,
Securities Daily
Announcement on the Page B053, China Securities 4 June 2020
Resolutions of 8th Meeting of Journal; Page 116, Shanghai
the Tenth Session of the Securities News; Page B6,
Board of Directors of Haier Securities Times; Page C20,
Smart Home Co., Ltd. Securities Daily
Indicative Announcement of Page B020, China Securities 17 June 2020
Haier Smart Home Co., Ltd. Journal; Page 73, Shanghai
on the Process Update of Securities News; Page B083,
Potential Privatisation of Haier Securities Times; Page C66,
Electronics Group Co., Ltd. Securities Daily
Announcement on the Page B021, China Securities 10 July 2020
Implementation of the Journal; Page 161, Shanghai
Distribution of A-shares in Securities News; Page B070,
2019 of Haier Smart Home Securities Times; Page B3,
Co., Ltd. Securities Daily
Announcement of Haier Smart Page B005, China Securities 16 July 2020
Home Co., Ltd. on the Journal; Page 100, Shanghai
Approval and Registration of Securities News; Page B052,
Debt Financing Instruments by Securities Times; Page C50,
the National Association of Securities Daily
Financial Market Institutional
Investors
Haier Smart Home Co., Ltd. Annual Report 2020 101
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page B030, China Securities 17 July 2020
Haier Smart Home Co., Ltd. Journal; Page 100, Shanghai
on Planning a Significant Securities News; Page B009,
Asset Reorganization and the Securities Times; Page C67,
Process Update of Potential Securities Daily
Privatisation of Haier
Electronics Group Co., Ltd.
Announcement of Haier Smart Page B020, China Securities 21 July 2020
Home Co., Ltd. on the Journal; Page 100, Shanghai
Results of the Issuance of the Securities News; Page B034,
2020 First Tranche of Super- Securities Times; Page C60,
short-term Bonds Securities Daily
Announcement of Haier Smart Page B051, China Securities 30 July 2020
Home Co., Ltd. on the Journal; Page 44, Shanghai
Transfer of 54.50% Equity Securities News; Page B075,
Interests in Haier COSMO Plat Securities Times; Page C96,
IOT Ecosystem Technology Securities Daily
Co., Ltd. and Connected
Transactions
Announcement on the Page B051, China Securities 30 July 2020
Resolutions of 8th Meeting of Journal; Page 44, Shanghai
the Tenth Session of the Securities News; Page B075,
Supervisory Committee of Securities Times; Page C72,
Haier Smart Home Co., Ltd. Securities Daily
Announcement of Allocation Page B051, China Securities 30 July 2020
Amount and Equity Allocation Journal; Page 44, Shanghai
of Core Employee Stock Securities News; Page B075,
Ownership Plan of Haier Securities Times; Page C72,
Smart Home Co., Ltd. Securities Daily
Suspension Announcement of Page B078, China Securities 31 July 2020
Haier Smart Home Co., Ltd. Journal; Page 88, Shanghai
Securities News; Page B108,
Securities Times; Page C84,
Securities Daily
Announcement on the Pages A08–14, China Securities 1 August 2020
Resolutions of 10th Meeting of Journal; Pages 93–98, Shanghai
the Tenth Session of the Securities News; Pages B2–3/
Board of Directors of Haier B93–97, Securities Times; Pages
Smart Home Co., Ltd. C32–39, Securities Daily
102 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Announcement on the Pages A08–14, China Securities 1 August 2020
Resolutions of 9th Meeting of Journal; Pages 93–98, Shanghai
the Tenth Session of the Securities News; Pages B2–3/
Supervisory Committee of B93–97, Securities Times; Pages
Haier Smart Home Co., Ltd. C32–39, Securities Daily
Announcement of Haier Smart Pages A08–14, China Securities 1 August 2020
Home Co., Ltd. on Risk Journal; Pages 93–98, Shanghai
Warnings and Remedial Securities News; Pages B2–3/
Measures for Asset B93–97, Securities Times; Pages
Restructuring and Diluting C32–39, Securities Daily
Immediate Return
Notice of Haier Smart Home Pages A08–14, China Securities 1 August 2020
Co., Ltd. on Convening of the Journal; Pages 93–98, Shanghai
2020 Second Extraordinary Securities News; Pages B2–3/
General Meeting and the 2020 B93–97, Securities Times; Pages
First A-shares Class Meeting C32–39, Securities Daily
Announcement of Haier Smart Pages A08–14, China Securities 1 August 2020
Home Co., Ltd. on Journal; Pages 93–98, Shanghai
Amendment to the Articles of Securities News; Pages B2–3/
Association B93–97, Securities Times; Pages
C32–39, Securities Daily
Announcement of Haier Smart Pages A08–14, China Securities 1 August 2020
Home Co., Ltd. on Signing of Journal; Pages 93–98, Shanghai
the Framework Agreement for Securities News; Pages B2–3/
Daily Connected Transactions B93–97, Securities Times; Pages
for 2020–2022 C32–39, Securities Daily
Indicative Announcement of Pages A08–14, China Securities 1 August 2020
Haier Smart Home Co., Ltd. Journal; Pages 93–98, Shanghai
on Publication of Joint Securities News; Pages B2–3/
Announcement by the B93–97, Securities Times; Pages
Company and Haier C32–39, Securities Daily
Electronics Group Co., Ltd.
Indicative Announcement of Pages A08–14, China Securities 1 August 2020
Haier Smart Home Co., Ltd. Journal; Pages 93–98, Shanghai
on the Resumption of Trading Securities News; Pages B2–3/
of Shares B93–97, Securities Times; Pages
C32–39, Securities Daily
Haier Smart Home Co., Ltd. Annual Report 2020 103
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Announcement of Haier Smart Page B085, China Securities 15 August 2020
Home Co., Ltd. on Receiving Journal; Page 108, Shanghai
of the Inquiry Letter from the Securities News; Page B102,
Shanghai Stock Exchange on Securities Times; Page A4,
the Information Disclosure of Securities Daily
the Company’s Report on
Significant Asset Acquisition
and Connected Transaction
Indicative Announcement of Page B012, China Securities 21 August 2020
Haier Smart Home Co., Ltd. Journal; Page 156, Shanghai
on the Publication of 2020 Securities News; Page B067,
Half Yearly Results by Haier Securities Times; Page B4,
Electronics Group Co., Ltd. Securities Daily
Announcement on the Pages A15–16, China Securities 22 August 2020
Resolutions of 11th Meeting of Journal; Pages 106–107,
the Tenth Session of the Shanghai Securities News;
Board of Directors of Haier Pages B002/B137–138,
Smart Home Co., Ltd. Securities Times; Page C67,
Securities Daily
Announcement on the Pages A15–16, China Securities 22 August 2020
Resolutions of 10th Meeting of Journal; Pages 106–107,
the Tenth Session of the Shanghai Securities News;
Supervisory Committee of Pages B002/B137–138,
Haier Smart Home Co., Ltd. Securities Times; Page C67,
Securities Daily
Announcement of Haier Smart Pages A15–16, China Securities 22 August 2020
Home Co., Ltd. on Addition of Journal; Pages 106–107,
Provisional Proposals for 2020 Shanghai Securities News;
Second Extraordinary General Pages B002/B137–138,
Meeting, 2020 First A-shares Securities Times; Page C67,
Class Meeting and 2020 First Securities Daily
D-shares Class Meeting
Announcement of Haier Smart Pages A15–16, China Securities 22 August 2020
Home Co., Ltd. on the Journal; Pages 106–107,
Suspension of the Preparation Shanghai Securities News;
and Disclosure of the Target Pages B002/B137–138,
Company’s Auditing Report Securities Times; Page C67,
and Pro Forma Consolidated Securities Daily
Financial Report in
accordance with the PRC
Accounting Standards for
Business Enterprises
104 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Announcement of Haier Smart Pages A15–16, China Securities 22 August 2020
Home Co., Ltd. on Delaying Journal; Pages 106–107,
Reply to Inquiry Letter from Shanghai Securities News;
Shanghai Stock Exchange Pages B002/B137–138,
Securities Times; Page C67,
Securities Daily
2020 Half Yearly Report of Haier Page B189, China Securities 29 August 2020
Smart Home Co., Ltd. Journal; Page 252, Shanghai
Securities News; Page B251,
Securities Times; Page C129,
Securities Daily
Announcement on the Page B189, China Securities 29 August 2020
Resolutions of 12th Meeting of Journal; Page 252, Shanghai
the Tenth Session of the Securities News; Page B251,
Board of Directors of Haier Securities Times; Page C129,
Smart Home Co., Ltd. Securities Daily
Announcement on the Page B189, China Securities 29 August 2020
Resolutions of 11th Meeting of Journal; Page 252, Shanghai
the Tenth Session of the Securities News; Page B251,
Supervisory Committee of Securities Times; Page C129,
Haier Smart Home Co., Ltd. Securities Daily
Announcement of Haier Smart Page B189, China Securities 29 August 2020
Home Co., Ltd. on Delaying Journal; Page 252, Shanghai
Reply to Inquiry Letter from Securities News; Page B251,
Shanghai Stock Exchange Securities Times; Page C129,
Securities Daily
Indicative Announcement of Page B189, China Securities 29 August 2020
Publication of Joint Journal; Page 252, Shanghai
Announcement by Haier Smart Securities News; Page B251,
Home Co., Ltd. and Haier Securities Times; Page C129,
Electronics Group Co., Ltd. Securities Daily
Announcement of Haier Smart Page A109, China Securities 1 September 2020
Home Co., Ltd. on Reply to Journal; Page 181, Shanghai
the Inquiry Letter on the Securities News; Pages B083–
Information Disclosure of the 084, Securities Times; Page D42,
Report of Haier Smart Home Securities Daily
Co., Ltd. on Significant Asset
Acquisition and Connected
Transaction from Shanghai
Stock Exchange
Haier Smart Home Co., Ltd. Annual Report 2020 105
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page A109, China Securities 1 September 2020
Haier Smart Home Co., Ltd. Journal; Page 181, Shanghai
on the Update of Condensed Securities News; Pages B083–
Report on the Change in 084, Securities Times; Page D42,
Shareholding Securities Daily
Announcement of Haier Smart Page A109, China Securities 1 September 2020
Home Co., Ltd. on the Journal; Page 181, Shanghai
Results of the Issuance of the Securities News; Pages B083–
2020 Second Tranche of 084, Securities Times; Page D42,
Super-short-term Bonds Securities Daily
Notice of Haier Smart Home Page A72, China Securities 2 September 2020
Co., Ltd. on the Resolutions Journal; Page 125, Shanghai
of the 2020 Second Securities News; Page B075,
Extraordinary General Securities Times; Page D34,
Meeting, 2020 First A-shares Securities Daily
Class Meeting and 2020 First
D-shares Class Meeting
Indicative Announcement of Page A72, China Securities 2 September 2020
Publication of Joint Journal; Page 125, Shanghai
Announcement by Haier Smart Securities News; Page B075,
Home Co., Ltd. and Haier Securities Times; Page D34,
Electronics Group Co., Ltd. Securities Daily
Notice of Haier Smart Home Page B004, China Securities 11 September 2020
Co., Ltd. on Receiving of the Journal; Page 97, Shanghai
Acceptance Notice of China Securities News; Page B001,
Securities Regulatory Securities Times; Page D2,
Commission Securities Daily
Announcement of Haier Smart Page B033, China Securities 12 September 2020
Home Co., Ltd. on Submitting Journal; Page 41, Shanghai
a Listing Application to the Securities News; Page B048,
Hong Kong Stock Exchange Securities Times; Page C40,
and Publishing Application Securities Daily
Proof Information Pack
Announcement of Haier Smart Page B004, China Securities 22 September 2020
Home Co., Ltd. on Journal; Page 65, Shanghai
Participating in the Online Securities News; Page B050,
Investors Collective Reception Securities Times; Page D46,
Day Securities Daily
106 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page B005, China Securities 13 October 2020
Haier Smart Home on Journal; Page 65, Shanghai
Publication of Joint Securities News; Page A027,
Announcement by the Securities Times; Page D44,
Company and Haier Securities Daily
Electronics Group Co., Ltd.
The 2020 Third Quarterly Report Page B186, China Securities 30 October 2020
of Haier Smart Home Co., Journal; Page 132, Shanghai
Ltd. Securities News; Page B054,
Securities Times; Page D14,
Securities Daily
Announcement on the Page B186, China Securities 30 October 2020
Resolutions of 12th Meeting of Journal; Page 132, Shanghai
the Tenth Session of the Securities News; Page B054,
Supervisory Committee of Securities Times; Page D14,
Haier Smart Home Co., Ltd. Securities Daily
Announcement of Haier Smart Page B026, China Securities 31 October 2020
Home Co., Ltd. on Receiving Journal; Page 196, Shanghai
of the Approval from the Securities News; Page B243,
China Securities Regulatory Securities Times; Page C49,
Commission Securities Daily
Announcement of Haier Smart Page B034, China Securities 4 November 2020
Home Co., Ltd. on the Journal; Page 44, Shanghai
Resignation of Directors Securities News; Page A008,
Securities Times; Page D12,
Securities Daily
Announcement on the Page B012, China Securities 10 November 2020
Resolutions of 14th Meeting of Journal; Page 32, Shanghai
the Tenth Session of the Securities News; Page B092,
Board of Directors of Haier Securities Times; Page D9,
Smart Home Co., Ltd. Securities Daily
Indicative Announcement of Page B063, China Securities 14 November 2020
Haier Smart Home Co., Ltd. Journal; Page 64, Shanghai
on Publication of Joint Securities News; Page B088,
Announcement by the Securities Times; Page C34,
Company and Haier Securities Daily
Electronics Group Co., Ltd.
Announcement of Haier Smart Page B005, China Securities 17 November 2020
Home Co., Ltd. on Publication Journal
of H Share Listing Documents
and Plan Documents
Haier Smart Home Co., Ltd. Annual Report 2020 107
Section V Significant Events
XVI. OTHER MAJOR EVENTS (continued)
Subject matter Name of Newspaper and Page Date of publication
Indicative Announcement of Page B013, China Securities 2 December 2020
Haier Smart Home Co., Ltd. Journal; Page 76, Shanghai
on the Expiration of Phase III Securities News; Page B051,
ESOPs under Core Employee Securities Times; Page D29,
Stock Ownership Plan Securities Daily
Announcement of Haier Smart Page B004, China Securities 10 December 2020
Home Co., Ltd. on the Journal; Page 124, Shanghai
Progress of the Privatisation of Securities News; Page B077,
Haier Electronics Group Co., Securities Times; Page B3,
Ltd. and the Listing of Securities Daily
H-shares of the Company by
way of Introduction
Announcement of Haier Smart Page B001, China Securities 21 December 2020
Home Co., Ltd. on the Journal; Page 76, Shanghai
Progress of the Privatisation of Securities News; Page B029,
Haier Electronics Group Co., Securities Times; Page D1,
Ltd. and the Listing of Securities Daily
H-shares of the Company by
way of Introduction
Announcement of Haier Smart Page A27, China Securities 23 December 2020
Home Co., Ltd. on the Journal; Page 116, Shanghai
Effectiveness of the Plan for Securities News; Page B067,
the Privatisation of Haier Securities Times; Page D27,
Electronics Group Co., Ltd. Securities Daily
and the Related Arrangements
for the Listing of H-shares of
the Company by way of
Introduction
Announcement of Haier Smart Page A27, China Securities 23 December 2020
Home Co., Ltd. on the Listing Journal; Page 116, Shanghai
of Overseas Listed Foreign Securities News; Page B067,
Shares (H-shares) and Share Securities Times; Page D27,
Changes Securities Daily
Announcement of Haier Smart Page B012, China Securities 24 December 2020
Home Co., Ltd. on Journal; Page 132, Shanghai
Amendment to the Articles of Securities News; Page B082,
Association Securities Times; Page D36,
Securities Daily
Announcement of Haier Smart Page B004, China Securities 25 December 2020
Home Co., Ltd. on the Journal; Page 52, Shanghai
Change of the Controlling Securities News; Page B053,
Shareholder’s Name and Securities Times; Page D2,
Business Scope Securities Daily
108 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY
(I) Information on poverty alleviation of the listed companies
√ Applicable Not Applicable
1. Targeted measures in poverty alleviation plan
√ Applicable Not Applicable
In accordance with the national plan for targeted measures in poverty alleviation and the
requirements set out in relevant documents, the Company places great emphasis on
poverty alleviation, and carries out initiatives of targeted measures in poverty alleviation
within the scope as authorized by the general meetings on related matters (such as
donation).
Since the outbreak of the COVID-19, the Company has taken immediate action in active
response to the front-line fight against the epidemic. Capitalizing on its global layout, the
Company has continuously made multiple donations in funds, medical equipment, epidemic
prevention materials, IoT appliances and green logistics channels, etc. to actively and
comprehensively support the epidemic areas in fighting the epidemic.
In addition, over the years, the Company has been devoted to education undertakings and
making significant contributions, with a view to targeting the weakest area of education and
to blocking the transmission of poverty between generations through focused efforts in
raising the basic cultural quality in poverty and the skill levels of labor force from poor
families. Up to now, the Company and the Haier Group Corporation (its actual controller)
and its subsidiaries (referred to as the “Haier Group”) have accumulatively built over 300
hope primary schools and hope middle schools, covering 26 provinces, municipalities
directly under the central government and autonomous regions in China, and continuously
provided the above-mentioned schools with support in materials and other respects in each
year. These initiatives have effectively enhanced the basic educational capabilities in
poverty-stricken areas and improved the quality of education; at the same time, the
Company has continued to provide partner assistance in poverty alleviation through
agricultural development, poverty alleviation through improvement of the health of farmers
and other aspects in support of rural construction, contributing to the construction of
beautiful villages. During the reporting period, the Company provided financial and other
support to Qiongkuerkeshilake Village and Xiaheyadi Village in Xinjiang.
2. Summary of targeted measures in poverty alleviation during the year
√ Applicable Not Applicable
In 2020, the Company’s expenditures on targeted measures in poverty alleviation was
approximately RMB40.58 million, which was mainly utilized in supporting the epidemic-
disastrous regions to fight against the COVID-19 and developing agriculture and improving
the health of farmers in poverty alleviation, contributing active response to the government
and the performance of its social responsibilities.
3. Results of targeted measures in poverty alleviation
√ Applicable Not Applicable
Unit and Currency: RMB0,000
Indicator Amount and the status
I. General information
Including: 1. Funds 4,058
II. Breakdown of the use of funds
Haier Smart Home Co., Ltd. Annual Report 2020 109
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(I) Information on poverty alleviation of the listed companies (continued)
3. Results of targeted measures in poverty alleviation (continued)
Indicator Amount and the status
1. Poverty alleviation through education
Including: 1.1 Amount of 719
investment in
improving the
educational
resources in
poverty-stricken
areas
2. Poverty alleviation through health enhancement
Including: 2.1 Amount of 35
investment in
medical and
health resources
in poverty areas
3. Poverty alleviation in the society
Including: 3.2 Amount of 34
investment in
targeted poverty
alleviation works
3.3 Charity funds for 3,270
poverty alleviation
110 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(I) Information on poverty alleviation of the listed companies (continued)
4. Subsequent targeted measures in poverty alleviation plans
√ Applicable Not Applicable
The Company will make concerted efforts with Haier Group and related parties, and
continue to implement the proposition of the documents issued by the central government
in respect of poverty alleviation, consolidate its achievements in fight against the epidemic,
and continue to provide materials and services for the epidemic areas, contributing to the
nationwide campaign against the epidemic; and continue to dedicate to improve the
education in poverty-stricken areas, promote the revitalization of rural talents, show care for
children’s physical and mental health and other initiatives, and will perform our social
responsibilities in a proactive manner.
Haier Smart Home Co., Ltd. Annual Report 2020 111
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(II) Performance of social responsibilities
√ Applicable Not Applicable
For details, please refer to the 2020 Social Responsibility Report of Haier Smart Home Co., Ltd.
disclosed on the date of this periodic report.
(III) Environmental Information
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department
√ Applicable Not Applicable
(1) Information on pollutant discharge
√ Applicable Not Applicable
Zhengzhou Haier Air-conditioning Co., Ltd. (referred to as “Zhengzhou Air-
conditioning”), Foshan Haier Freezer Co., Ltd. (referred to as “Foshan Freezer”, Hefei
Haier Refrigerator Co., Ltd. (referred to as “Hefei Refrigerator”), Wuhan Haier Water
Heater Co., Ltd. (referred to as “Wuhan Water Heater”), as well as Chongqing Haier
Precision Plastic Co., Ltd., Chongqing Haier Air-conditioning Co., Ltd., Chongqing
Haier Drum Washing Machine Co., Ltd, Chongqing Haier Washing Machine Co., Ltd,
Chongqing Haier Intelligent Electronics Co., Ltd. and Chongqing Haier Water Heater
Co., Ltd (the aforesaid six companies in Chongqing collectively referred to as the
“Chongqing Industrial Park Companies”), subsidiaries indirectly held by the Company,
are are key emission units announced by the environmental protection department.
112 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(1) Information on pollutant discharge (continued)
The main information on pollutant discharge is as follows:
(1) Zhengzhou Air-conditioning
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–
2018), it shall apply for a pollutant discharge permit and detect 17 types
of pollutants (including specific pollutants), namely, total cadmium, total
chromium, total mercury, total lead, total arsenic, hexavalent chromium,
COD, ammonia nitrogen, total phosphorus, total nitrogen, PH, suspended
particles, chroma, petroleum, BOD, rate of flow and temperature.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one, on the northern side of
the wastewater treatment plant, pipeline discharge
Concentration and total amount of discharge and approved total amount
of discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as
follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 34.80mg/L 1.75 tons 6.25 tons No
2 Ammonia nitrogen 5.27mg/L 0.27 ton 0.63 tons No
Pollutant discharge standards implemented: Wastewater Quality Standards
for Discharge to Municipal Sewers (GBT 31962–2015)
Haier Smart Home Co., Ltd. Annual Report 2020 113
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(1) Information on pollutant discharge (continued)
(2) Foshan Freezer
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–
2018), it shall apply for a pollutant discharge permit and detect 6 types of
pollutants (including specific pollutants), namely, COD, ammonia nitrogen,
total zinc, PH, SS, suspended particles, and petroleum.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one, on the southern side of
the wastewater treatment plant in the southeast of Foshan Sanshui Haier
Park ( ), pipeline discharge
Concentration and total amount of discharge and approved total amount
of discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as
follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 15.52 mg/L 10.06 tons 25.92t/a No
2 Ammonia nitrogen 0.46mg/L 0.3 ton 2.88t/a No
Pollutant discharge standards implemented: primary standard of the second
period set forth in the local standard of Guangdong Province, the
Emission Limits of Water Pollutants ( ) (DB44/26–
2001)
114 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(1) Information on pollutant discharge (continued)
(3) Hefei Refrigerator
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–
2018), it shall apply for a pollutant discharge permit and detect 9 types of
pollutants (including specific pollutants), namely, COD, ammonia nitrogen,
total phosphorus, total nitrogen, PH, suspended particles, rate of flow,
chemical oxygen demand, BOD.
Waster gas: According to the Volatile Organic Unorganized Emission
Control Standard GB 37822–1–2019 (
GB 37822–1–2019 ), it shall apply for and implement a pollutant
discharge permit. Types of major air pollutants: non-methane total
hydrocarbons
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one for wastewater, at the
north gate of the refrigerator park; 16 for waste gas, above the plants A
and B of refrigerator park
Concentration and standard of discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as
follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 103.6 mg/L 0.058 ton 165 tons No
2 Ammonia nitrogen 9.31mg/L 0.0052 ton 10 tons No
Pollutant discharge standards implemented: Wastewater Quality Standards
for Discharge to Municipal Sewers (GBT 31962 –2015)
Haier Smart Home Co., Ltd. Annual Report 2020 115
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(1) Information on pollutant discharge (continued)
(4) Wuhan Water Heater
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–
2018), it shall apply for a pollutant discharge permit and detect 9 types of
pollutants (including specific pollutants), namely, COD, total zinc,
suspended particles, ammonia nitrogen (NH3-N), BOD, pH value, anionic
surfactant, total phosphorus, animal and vegetable oils.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one, on the southeast of the
wastewater treatment plant, pipeline discharge
Concentration and total amount of discharge and approved total amount
of discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as
follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 500 mg/L 0.751 ton 0.751 ton No
2 Ammonia nitrogen 45 mg/L 0.075 ton 0.075 ton No
Pollutant discharge standards implemented: Wastewater Quality Standards
for Discharge to Municipal Sewers (GBT 31962–2015)
116 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(1) Information on pollutant discharge (continued)
(5) Chongqing Industrial Park Companies
Main pollutants:
Wastewater. According to the pollution discharge permitted in the PRC, it
shall register and declare, and detect 7 types of pollutants (including
specific pollutants), namely, COD, ammonia nitrogen, PH, suspended
particles, petroleum, animal and vegetable oils and rate of flow.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: three, in the phase I
wastewater treatment plant, phase II wastewater treatment plant and
apartment wastewater treatment station, pipeline discharge
Concentration and total amount of discharge and approved total amount
of discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as
follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 72.88 mg/L 76.73 tons 228.1 tons No
2 Suspended 29.54 mg/L 31.1 tons 177.2 tons No
particles
3 Animal and 2.55mg/L 2.683 tons 34 tons No
vegetable oils
4 Petroleum 0.51 mg/L 0.534 ton 1.32 tons No
Pollutant discharge standards implemented: Grade 3 of the Comprehensive
Discharge Standard for Wastewater ( )(GB8978–1996)
Haier Smart Home Co., Ltd. Annual Report 2020 117
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(2) Construction and operation of pollution control facility
√ Applicable Not Applicable
Each of Zhengzhou Air-conditioning, Foshan Freezer and Wuhan Water Heater has
one, one and two wastewater treatment plants respectively with a designed
processing capacity of 500 tons/day, 1,800 tons/day, 550 tons/day and 260 tons/
day. Haier Park in Chongqing has three wastewater treatment plants, responsible for
the collection and treatment of production wastewater generated by the Chongqing
Industrial Park Companies, with a designed processing capacity of 3,600 tons/day.
The construction, maintenance and daily operations of all wastewater treatment
facilities are performed in accordance with national and local environmental laws and
regulations. All discharged wastewater data are monitored online during 24 hours. The
monitoring data is transmitted in real time with the environmental protection
department and all equipment works well. In addition, all of the Chongqing Industrial
Park Companies have installed all waste gas treatment facilities, and all the
equipment is under normal operation, and all waste gas generated is discharged after
being treated by the treatment facilities, and regular monitoring is organized.
(3) Evaluation of the effect of construction projects on the environment and other
environmental administration license
√ Applicable Not Applicable
The Company and its subsidiaries perform the implementation and production of
construction projects according to the laws and regulations. The Company performs
environmental impact evaluation procedures in strict accordance with the Three
Simultaneous system for environmental protection of construction projects which have
been approved in the environmental impact assessment. There are no environmental
violations such as having constructions without approval.
(4) Emergency plan for environmental emergencies
√ Applicable Not Applicable
The Emergency Plan for Environmental Emergencies is developed according to the
laws and regulations by the Company and its subsidiaries. Drills have been organized.
The Plan is continuously optimized and upgraded according to the drill results.
118 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
1. Explanation of the environmental protection status of companies and their important
subsidiaries that are key emission units announced by the environmental
protection department (continued)
(5) Environmental self-monitoring plan
√ Applicable Not Applicable
All pollutant discharges of the Company comply with national and local environmental
standards. The sewage is discharged after being collected and treated, and is
monitored in real time through the automatic online sewage monitoring system. The
data is connected to the Haier Smart Energy System. In March 2017, the Company
received and passed the certification of version change of ISO14001 environmental
management system. In March 2019, the professional certification body conducted
the second time supervision and audit of the operation of 2019 ISO14001 system
after version change. The operation was approved and functioned smoothly.
(6) Other environmental information to be disclosed
Applicable √ Not Applicable
2. Statement on environmental protection of companies other than key pollution
discharge units
√ Applicable Not Applicable
All units of the Company perform the implementation and production of construction
projects according to the requirements of laws and regulations. The Company completes
environmental impact evaluation procedures in strict accordance with the Three
Simultaneous system for environmental protection of construction projects which have been
approved in the environmental impact assessment. There are no environmental violations
such as having construction without approval.
The Company has established Haier Smart Energy Center, a leading energy big data
analysis system in the industry. It uses automation, information technology and centralized
management mode to implement centralized dynamic monitoring and digital management of
main energy for consumption such as water, electricity and gas in all factories across the
country; automatically and accurately collects energy data, and completes the prediction
and analysis of energy consumption data, optimizes energy deployment and reduce the
energy consumption by producing a single product, thus truly achieving low-carbon
production.
Haier Smart Home Co., Ltd. Annual Report 2020 119
Section V Significant Events
XVII. ACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY (continued)
(III) Environmental Information (continued)
3. Statement on reasons for non-disclosure of environmental information by companies
other than key pollution discharge units
Applicable √ Not Applicable
4. Statement on subsequent development or changes of environmental information
contents disclosed in the reporting period
√ Applicable Not Applicable
The Company will continue to maintain and keep optimizing existing results and allows up-
to-standard discharge in strict accordance with existing environmental discharge and
emission standards.
(IV) Other explanations
Applicable √ Not Applicable
XVIII. CONVERTIBLE CORPORATION BONDS
√ Applicable Not Applicable
(I) Information on the issuance of convertible bonds
√ Applicable Not Applicable
On 27 October 2020, the China Securities Regulatory Commission issued the Reply to the
Approval of Issuance of Overseas Listed Foreign Shares and Convertible Corporate Bonds by
Haier Smart Home Co., Ltd. (
) (Zheng Jian Xu Ke [2020] No. 2768) (hereinafter referred to as the “Reply from
CSRC”), which approved that: (1) HSH issued no more than 2,856,526,138 overseas listed
foreign shares (including additional shares issued by holders of convertible corporate bonds not
exceeding HK$8.0 billion or equivalent in foreign currencies upon the exercise of the convertible
rights), with a par value of RMB1 each, all of which are ordinary shares. After the completion of
this issuance, HSH can be listed on the main board of the Hong Kong Stock Exchange; (2) the
issuance of corporate bonds not exceeding HK$8.0 billion or equivalent in foreign currencies that
can be converted into the issuer’s overseas listed foreign shares by the overseas wholly-owned
subsidiaries guaranteed by HSH. Pursuant to which and with the approval of relevant parties, the
convertible bonds of HK$8.0 billion (convertible into the H-shares of the Company) (HK$8.0 billion
exchangeable bonds issued in November 2017 may converted into convertible bonds and the
actual effective convertible bonds were HK$7.993 billion) issued by Harvest International
Company, a wholly-owned subsidiary of the Company, were listed on 23 December 2020.
120 Haier Smart Home Co., Ltd. Annual Report 2020
Section V Significant Events
XVIII. CONVERTIBLE CORPORATION BONDS (continued)
(II) Information on holders and guarantors of convertible bonds during the reporting
period
√ Applicable Not Applicable
Name of convertible corporate bonds Harvest International Company HK$8,000,000,000
Zero Coupon Guaranteed Convertible Bonds due
2022
Guarantors of convertible bonds Haier Smart Home Co., Ltd.
of the Company
Information on top ten holders of convertible bonds is as follows:
Amount of
bonds held at
the end of the Holding
Name of convertible corporate bonds period (RMB) percentage (%)
HSBC Nominees (Hong Kong) Limited 7,993,000,000 100
Note: (1) The currency of the aforesaid closing amount of convertible bonds is in HKD; (2) The convertible bonds of H-shares
of the Company are held by HSBC Nominees (Hong Kong) Limited on its behalf as the sole legal holder and does
not represent the ultimate shareholders. The information of the ultimate bondholder is only stored in the clearing
system, and the clearing system cannot directly provide any third party with a detailed list of the ultimate bondholder
without the authorization of the ultimate bondholder.
(III) Information on the change in convertible bonds during the reporting period
Applicable √ Not Applicable
Information on the accumulated number of convertible bonds being converted into shares during
the reporting period
Applicable √ Not Applicable
(IV) Information on the past adjustment of prices for conversion into shares
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 121
Section V Significant Events
XVIII. CONVERTIBLE CORPORATION BONDS (continued)
(V) Information on the indebtedness, changes in creditability of the Company and
the cash arrangement for repayment of debts in the coming years
√ Applicable Not Applicable
At the end of the reporting period, the Company’s liabilities amounted to RMB135,348.4887
million in total, including current liabilities of RMB109,392.8503 million and non-current liabilities of
RMB25,955.6384 million.
The Company has stable operating conditions in all aspects, reasonable asset structure and
good credit standing, which can provide stable and sufficient working capital for the payment of
interests of convertible corporate bonds and bond repayment in future years.
(VI) Explanation on other information regarding convertible bonds
Applicable √ Not Applicable
122 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares
and Information about Shareholders
I. CHANGES IN ORDINARY SHARE CAPITAL
(I) Table of Changes in ordinary shares
1. Table of Changes in ordinary shares
Unit: share
Prior to the change Increase and decrease of the change ( ,-) After the change
Shares
Percentage New shares Bonus converted Number of Percentage
Number (%) issued shares from reserve Others Subtotal shares (%)
I. Shares with selling
restrictions
1. Shares held by the state
2. Shares held by the
state-owned legal entities
3. Shares held by other
domestic investors
Including: shares held by
domestic
non-state -owned
legal entities
Shares held by
domestic
individuals
4. Shares held by foreign
investors
Including: shares held by
foreign legal
entities
Shares held by
foreign
individuals
II. Tradable shares without
selling restrictions 6,579,566,627 100.00 2,448,279,814 2,448,279,814 9,027,846,441 100.00
1. RMB ordinary shares 6,308,552,654 95.88 6,308,552,654 69.88
2. Domestic listed foreign shares
3. Overseas listed foreign shares 271,013,973 4.12 2,448,279,814 2,448,279,814 2,719,293,787 30.12
4. Others
III. Total ordinary shares 6,579,566,627 100.00 2,448,279,814 2,448,279,814 9,027,846,441 100.00
Haier Smart Home Co., Ltd. Annual Report 2020 123
Section VI Changes in Ordinary Shares and Information about Shareholders
I. CHANGES IN ORDINARY SHARE CAPITAL (continued)
(I) Table of Changes in ordinary shares (continued)
2. Statement on the changes in ordinary shares
√ Applicable Not Applicable
During the reporting period, the Company proposed the scheme in relation to the
privatisation of Haier Electronics by way of issuing H-shares, and fulfilled all conditions
precedent to enable the scheme to become effective during the reporting period. On 23
December 2020, the 2,448,279,814 new H-shares issued by the Company were listed on
the Hong Kong Stock Exchange and the aforesaid privatisation was completed at the same
time with the total share capital of the Company changed to 9,027,846,441 shares from
6,579,566,627 shares.
3. Effect of changes in ordinary shares on the financial indicators such as earnings
per share and net assets per share (if any) over the last year and the last reporting
period
√ Applicable Not Applicable
In 2020, the Company achieved net profit attributable to shareholders of the Parent
Company of RMB8,876,593,208.19, equity attributable to owners of the Parent Company of
RMB66,816,422,614.55, in terms of total share capital of 6,579,566,627 H-shares before
the listing of the Company at the end of the reporting period, profit was RMB1.349 per
share and net asset was RMB10.155 per share accordingly; in terms of total share capital
of 9,027,846,441 H-shares after the listing of the Company, profit per share was
RMB0.983 and net asset was RMB7.401 per share accordingly.
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
Applicable √ Not Applicable
(II) Changes in shares with selling restrictions
Applicable √ Not Applicable
124 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares and Information about Shareholders
II. ISSUANCE AND LISTING OF SECURITIES
(I) Issuance of securities as of the reporting period
√ Applicable Not Applicable
Unit: shares Currency: HK$
Number of
Issuing price shares under
Type of shares and (or interests Number of listing Date of
its derivative securities Date of issue rate) issuance Date of listing approval termination
Ordinary Shares
H-shares 23 December 2020 / 2,448,279,814 23 December 2020 2,448,279,814 /
Convertible corporation bonds, convertible bonds with warrants and corporate bonds
Corporate bonds convertible 23 December 2020 / 7,993,000,000 23 December 2020 7,993,000,000 21 November 2022
into H-shares
Details of issuance of securities as of the reporting period (please specify separately for bonds
with different interest rates within the duration):
√ Applicable Not Applicable
On 27 October 2020, China Securities Regulatory Commission (CSRC) issued the Reply on Ap-
proval of the Foreign Public Issuance of Convertible Bonds by Qingdao Haier Co., Ltd.” (Zheng
Jian Xu Ke [2020] No. 2768, hereinafter referred to as “CSRC Reply”), which ap-proved: (1) Haier
Smart Home shall issue not more than 2,856,526,138 overseas listed foreign capital shares
(including not more than HK$8 billion or the equivalent in foreign currencies of shares issued for
the holders of convertible corporate bonds upon the exercise of conversion rights), with a par
value of RMB1 each and all of which are ordinary shares. Upon the comple-tion of this issue,
Haier Smart Home can be listed on the Main Board of The Stock Exchange of Hong Kong
Limited; (2) the overseas wholly-owned subsidiary guaranteed by Haier Smart Home can issue
corporate bonds of not exceeding HK$8 billion or equivalent in foreign curren-cies that can be
converted into overseas listed foreign capital shares of the issuer. Pursuant to which and with
the approval of the relevant parties, the Company and Harvest International Company, a wholly-
owned subsidiary of the Company, issued 2,448,279,814 H-shares and convertible bonds
respectively on Hong Kong Stock Exchange on 23 December 2020 (the ex-changeable bonds of
HK$8 billion issued in November 2017 were converted into convertible bonds, and the
convertible bonds in effect amounted to HK$7,993 million, which can be con-verted into
H-shares of the Company). For details, please refer to the prospectus and other relevant
documents disclosed in Hong Kong market during the reporting period of the Com-pany and the
Report on the Implementation of Material Asset Purchase and Related Party Transactions and
other relevant documents disclosed on 26 December 2020.
Haier Smart Home Co., Ltd. Annual Report 2020 125
Section VI Changes in Ordinary Shares and Information about Shareholders
II. ISSUANCE AND LISTING OF SECURITIES (continued)
(II) Changes in total ordinary shares and shareholder structure as well as assets
and liabilities structure of the Company
√ Applicable Not Applicable
For the total number of ordinary shares of the Company and changes in shareholder structure,
please refer to the relevant explanations in ‘I. Changes in ordinary share capital’ and ‘III.
Information on shareholder and ultimate controllers’ in this chapter. For the impact of the
aforesaid changes on ‘Paid-in capital (or share capital)’ in the Company’s balance sheet and
other items, please refer to the relevant content in ‘SECTION XI FINANCIAL REPORT’ of this
report.
(III) Information on existing shares held by the staff
Applicable √ Not Applicable
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(I) Total number of shareholders
Total number of ordinary shareholders up to the end
of the reporting period 160,301
Total number of ordinary shareholders as at the end of the last month
prior to the disclosure day of the annual report 193,236
126 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares and Information about Shareholders
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(continued)
(II) Table of top ten shareholders, top ten common shareholders (or the shareholders
without selling restrictions) by the end of the reporting period
Unit: share
Shareholdings of top ten shareholders
Number of
Changes shares held Number of
during the at the end shares held
reportin g of the Percentage with selling Status of shares pledged
Name of shareholder (full name) period period (%) restrictions or frozen Nature of shareholder
Status Number
HKSCC NOMINEES LIMITED (Note) 1,820,935,022 20.17 Unknown Foreign legal entity
Haier Electric Appliances International Co., Ltd. 1,258,684,824 13.94 Nil Domestic non-state-
(currently named as Haier COSMO Co., Ltd. owned legal
( )) entity
Haier Group Corporation 1,072,610,764 11.88 Nil Domestic non-state-
owned legal
entity
HCH (HK) INVESTMENT MANAGEMENT CO., 538,560,000 5.97 Nil Foreign legal entity
LIMITED
Hong Kong Securities Clearing Co., Ltd. 472,115,774 5.23 Nil Unknown
China Securities Finance Corporation Limited 182,592,697 2.02 Nil Unknown
Qingdao Haier Venture & Investment Information 172,252,560 1.91 Nil Domestic non-state-
Co., Ltd. ( ) owned legal
entity
ALIBABA INVESTMENT LIMITED 83,823,993 0.93 Unknown Foreign legal entity
CLEARSTREAM BANKING S.A. ( ) 74,465,750 0.82 Unknown Foreign legal entity
Qingdao Haichuangzhi Management Consulting 73,011,000 0.81 Nil Domestic non-state-
Enterprise (Limited Partnership) ( owned legal
) entity
Haier Smart Home Co., Ltd. Annual Report 2020 127
Section VI Changes in Ordinary Shares and Information about Shareholders
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(continued)
(II) Table of top ten shareholders, top ten common shareholders (or the shareholders
without selling restrictions) by the end of the reporting period (continued)
Shareholdings of top ten shareholders not subject to selling restrictions
Number of
tradable shares
without selling
Name of shareholder restrictions Class and number of shares
Class Number
HKSCC NOMINEES LIMITED 1,820,935,022 Overseas listed 1,820,935,022
foreign shares
Haier Electric Appliances International 1,258,684,824 RMB ordinary 1,258,684,824
Co., Ltd.
Haier Group Corporation 1,072,610,764 RMB ordinary 1,072,610,764
HCH (HK) INVESTMENT MANAGEMENT 538,560,000 Overseas listed 538,560,000
CO., LIMITED foreign shares
Hong Kong Securities Clearing Co., Ltd. 472,115,774 RMB ordinary 472,115,774
China Securities Finance Corporation 182,592,697 RMB ordinary 182,592,697
Limited
Qingdao Haier Venture & Investment 172,252,560 RMB ordinary 172,252,560
Information Co., Ltd.
ALIBABA INVESTMENT LIMITED 83,823,993 Overseas listed 83,823,993
foreign shares
CLEARSTREAM BANKING S.A. 74,465,750 Overseas listed 74,465,750
foreign shares
Qingdao Haichuangzhi Management 73,011,000 RMB ordinary 73,011,000
Consulting Enterprise (Limited
Partnership)
Related-parties or parties acting in concert (1) Haier Electric Appliances International Co., Ltd. (currently
among the aforesaid shareholders named as Haier COSMO Co., Ltd.
) is a holding subsidiary of Haier Group
Corporation. Haier Group Corporation holds 51.20% of
its equity. Qingdao Haier Venture & Investment
Information Co., Ltd.( )
and Qingdao Haichuangzhi Management Consulting
Enterprise (Limited Partnership) (
( )) is a party acting in concert with Haier
Group Corporation;
(2) The Company is not aware of the existence of any
connections of other shareholders.
Explanation of preferential shareholders Not applicable
with restoration of voting rights and
their shareholdings
Note:
HKSCC NOMINEES LIMITED, CLEARSTREAM BANKING S.A. are the Banking Collection Account for the shareholders
of the Company’s H-shares and D-shares respectively, which is the original data provided by China Hong Kong, the
German securities registration agency to the Company after the merger according to local market practices and
technical settings, not representing the ultimate shareholder. The 58,135,194 shares in CLEARSTREAM BANKING
S.A. are held by Haier International Co., Limited, the concerted actor of the Company’s ultimate controller Haier
Group Corporation, accounting for 0.64% of the Company’s total share capital.
128 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares and Information about Shareholders
III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS
(continued)
(II) Table of top ten shareholders, top ten common shareholders (or the shareholders
without selling restrictions) by the end of the reporting period (continued)
Number of shares held by top ten shareholders with selling restrictions and the selling
restrictions
Applicable √ Not Applicable
(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares
Applicable √ Not Applicable
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER
(I) Status of controlling shareholder
1 Legal person
√ Applicable Not Applicable
Name Haier COSMO Co., Ltd. ( )
(former name “Haier Electric Appliances International
Co., Ltd.”) ( )
Person in charge of Zhang Ruimin ( )
the Company or legal
representative
Establishment date 1988–06–30
Principal business Information technology integration and Internet of
Things technology services: industrial au-tomation
technology research and development, technical
consulting; research and develop-ment and
manufacturing of electrical appliances, electronic
products, mechanical products, communication
equipment and related accessories, industrial
automation control equipment, computer hardware and
software and auxiliary equipment; import and export
business (oper-ated within the scope approved by
MOFCOM); wholesale and retail: domestic commerce
(ex-cept for merchandises prohibited by the state);
investment in medical industry; investment advisory
services; enterprise management consulting. (For
projects subject to approval, busi-ness activities can
only be carried out after the approval by relevant
departments)
Haier Smart Home Co., Ltd. Annual Report 2020 129
Section VI Changes in Ordinary Shares and Information about Shareholders
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER
(continued)
(I) Status of controlling shareholder (continued)
1 Legal person (continued)
Shareholding of other controlling Indirect controlling/participating Company: ‘Qingdao
and participating domestic and Haier Biomedical Co., Ltd.’
overseas listed companies in (stock name: ‘Haier Biomedical’, stock code:
the reporting period 688139), Yingkang Life Technology Co., Ltd. (
)(stock name: ‘Yingkang Life’, stock
code: 300143), ‘Qingdao Bank Co., Ltd.’
(stock name: ‘Bank of Qingdao’, stock
code: 002948 and 3866.HK), ‘China International
Capital Corporation Limited’ (stock name: ‘CICC’, stock
code: 601995 and 3908.HK) etc.
Other explanation Nil
2 Natural person
Applicable √ Not Applicable
3 Explanation on the absence of controlling shareholders of the Company
Applicable √ Not Applicable
4 Index and dates in respect of the changes in controlling shareholders during the
reporting period
Applicable √ Not Applicable
5 Framework of the ownership and controlling relationship between the Company and
its controlling shareholder
√ Applicable Not Applicable
Haier COSMO
Co., Ltd.
( )
Haier Smart Home
Co., Ltd.
130 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares and Information about Shareholders
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER
(continued)
(II) Status of the ultimate controller
1 Legal person
√ Applicable Not Applicable
Name Haier Group Corporation
Person in charge of Zhang Ruimin ( )
the Company or
legal representative
Establishment date 1980–03–24
Principal business Technology development, technology consultation,
technology transfer and technology ser-vices (including
industrial Internet, etc.); data processing; digital
technology, intelligent tech-nology, software technology;
research and development, sales and after-sales service
of ro-bots and automation equipment products; logistics
information service; research and devel-opment and
sales of software technology for smart home products
and solutions systems; manufacturing of household
appliances, electronic products, communication
equipment, elec-tronic computers and accessories,
general machinery, kitchen utensils, industrial robots;
wholesale and retail of domestic commerce (except for
the national dangerous prohibition franchise exclusive
control merchandises); import and export business (see
the foreign trade enterprise finalized certification for
details); economic and technological consultation;
research and development and transfer of technological
achievements; rental of owned properties. (For projects
subject to approval, business activities can only be
carried out after the approval by relevant departments)
Shareholding of other controlling Indirect controlling/participating Company: ‘Qingdao
and participating domestic and Haier Biomedical Co., Ltd.’
overseas listed companies in (stock name: ‘Haier Biomedical’, stock code:
the reporting period 688139), Yingkang Life Technology Co., Ltd. (
) (stock name: ‘Yingkang Life’, stock
code: 300143), ‘Qingdao Bank Co., Ltd.’
(stock name: ‘Bank of Qingdao’, stock
code: 002948 and 3866.HK), China International Capital
Corporation Limited’ (stock name: ‘CICC’, stock code:
601995 and 3908.HK)
Other explanation Nil
Haier Smart Home Co., Ltd. Annual Report 2020 131
Section VI Changes in Ordinary Shares and Information about Shareholders
IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER
(continued)
(II) Status of the ultimate controller (continued)
2 Natural person
Applicable √ Not Applicable
3 Explanation on the absence of ultimate controller of the Company
Applicable √ Not Applicable
4 Index and dates in respect of the changes in ultimate controller during the reporting
period
Applicable √ Not Applicable
5 Framework of ownership and controlling relationship between the Company and the
ultimate controllers
√ Applicable Not Applicable
Haier Group Corporation
100% Acting
in concert
51.20% 13% 100%
Qingdao Haichuangzhi HCH (HK)
Qingdao Haier Venture & Haier
Management Consulting Haier COSMO Co., Ltd. INVESTMENT
Investment Information Interantional
Enterprise ( ) MANAGEMENT
Co., Ltd. Co., Limited
(Limited Partnership) CO., LIMITED
1.91% 0.81% 13.94% 11.88% 5.97% 0.64%
(A-shares) (A-shares) (A-shares) (A-shares) (H-shares) (D-shares)
Haier Smart Home Co., Ltd
6 The ultimate controller controls the Company by way of Trust or other assets
management
Applicable √ Not Applicable
(III) Introduction of controlling shareholders and ultimate controllers
√ Applicable Not Applicable
Haier Group Company is registered as a joint-stock enterprise. According to the statement
issued by the State-owned Assets Management Office of Qingdao on 1 June 2002, it is believed
that the enterprise nature of Haier Group Company is a collective owned enterprise.
V. OTHER LEGAL SHAREHOLDERS WITH A SHAREHOLDING
PERCENTAGE OVER 10%
Applicable √ Not Applicable
132 Haier Smart Home Co., Ltd. Annual Report 2020
Section VI Changes in Ordinary Shares and Information about Shareholders
VI. EXPLANATION OF REDUCTION OF SHARE RESTRICTIONS
√ Applicable Not Applicable
HCH (HK) INVESTMENT MANAGEMENT CO., LIMITED (referred to as “HCH”), the shareholder of
H-shares of the Company, has undertaken that, from the date of disclosure of the shareholdings of the
Company in the Listing Document of HSH H-shares involved in this transaction (which refers to the
transaction relating to the issuance of H-shares by the Company to privatise HEG, same as below) to
the 6th month after HSH H-shares are traded on the Hong Kong Stock Exchange, the Company will
not sell HSH H-shares acquired by the Company through this transaction, or enter into any agreement
on selling such shares, or set any option, right, interest or encumbrance for such shares. In addition,
within six months after the expiry of the aforementioned 6-month period, the selling of HSH H-shares,
entering into any agreement on selling such shares, or exercising or executing relevant options, rights,
interests or encumbrances for such shares by the Company will not cause Haier Group Corporation
and its concerted parties to lose their status as controlling shareholders of HSH. The H-shares of the
Company have already listed on 23 December 2020, and the aforesaid undertaking is currently still
within the undertaking period. During the reporting period, HCH has strictly fulfilled such undertaking.
Haier Smart Home Co., Ltd. Annual Report 2020 133
Section VII Relevant Information
of Preferred Shares
Applicable √ Not Applicable
134 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors,
Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period
√ Applicable Not Applicable
Unit: share
Total
remuneration Whether
received from receive
the Company remunerati
Increase/ during the on from the
Expiration date Shareholdings Shareholdings decrease in reporting period Company’ s
Appointment of at the beginning at the end of shares for Reason for increase/ (RMB0’000) related
Name Title (note) Gender Age date appointment of the year the year the year decrease (before tax) party
Liang Haishan Chairman, General Male 55 2019–06–18 2022–06–17 14,483,466 14,923,047 439,581 Employee shareholding 256 NO
manager scheme vested
Tan Lixia Vice president Female 51 2019–06–18 2022–06–17 8,136,260 8,535,920 399,660 Employee shareholding Received no YES
scheme vested remuneration
from the
Company
Li Huagang Director, General Male 52 2019–06–18 2022–06–17 653,306 694,607 41,301 Employee shareholding 180 NO
manager scheme vested
Wu Changqi Director Male 66 2019–06–18 2022–06–17 20 NO
Lin Sui Director Male 65 2019–06–18 2022–06–17 20 NO
Dai Deming Independent director Male 59 2019–06–18 2021–06–09 20 NO
Qian Daqun Independent director Male 68 2019–06–18 2022–06–17 20 NO
WONG Hak Kun Independent director Male 65 2020–06–03 2022–06–17 7.5 NO
Shi Tiantao(retired) Independent director Male 59 2019–06–18 2020-05-19 13.75 NO
Yan Yan (retired) Director Male 64 2019–06–18 2022–06–17 18.75 NO
Wang Peihua Chairman of the Male 64 2016–05–31 2019–05–30 144,764 161,067 16,303 Employee shareholding Received no YES
Supervisory scheme vested remuneration
Committee from the
Company
Ming Guoqing Supervisor Male 61 2016–05–31 2019–05–30 94,505 105,511 11,006 Employee shareholding Received no YES
scheme vested remuneration
from the
Company
Yu Miao Employee supervisor Male 39 2019–01–08 2019–05–30 28.3 NO
Gong Wei Chief financial officer, Male 48 2016–05–31 2019–05–30 1,671,903 1,724,315 52,412 Employee shareholding 88 NO
deputy general scheme vested
manager
Ming Guozhen Secretary to the board Female 57 2016–05–31 2019–05–30 1,240,515 1,275,295 34,780 Employee shareholding 60 NO
of directors, deputy scheme vested
general manager
Total / / / / / 26,424,719 27,419,762 995,043 / 732.3 /
Note: All of the above shares are A-shares. In addition to the contents of the above table, Li Huagang, a director and the president, held
a total of 812,145 H-shares of the Company at the end of the period.
Haier Smart Home Co., Ltd. Annual Report 2020 135
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
Liang Haishan Male, born in 1966, is a senior engineer. He had served as head of the
quality department of Qingdao Haier Refrigerator Co., Ltd., general
manager of Qingdao Haier Air Conditioner Gen Corp., Ltd, senior vice
president of Haier Group, rotation president of Haier Group. He is vice
president of the board of directors of Haier Group, and Chairman & CEO
of Haier Smart Home Co., Ltd. chairman of 10th session of the Board
manager of Haier Smart Home Co., Ltd.; he was rewarded National May
1st Labor Medal, Outstanding Leadership Award of the National Light
Industry Enterprise Information ( ), Top
10 Leaders in China Strategic Emerging Industries in recent year; Prize of
Technology Advancement for China Household Appliances, First Prize
Award of Science and Technology Progress of China National Light
Industry Council, 2017 Forbes China Best CEO of Listed Company,
2017 Taishan Industry Leading Talent of Shandong Province.
Tan Lixia Female, born in 1970, had served as assistant to director and general
manager of Haier Air Conditioning Electronics Import and Export
Company ( ), the head of integrated department,
deputy director, director of department of overseas market development
of Haier Group, and head of department of financial management of
Haier Group, CFO of Haier Group currently serves as the executive vice
president of Haier Group, the president of Haier Financial Holdings
Limited, the vice chairman of the 10th session of the Board of Haier
Smart Home Co., Ltd.. In recent years, she was successively awarded
Model Worker of Shandong Province, Outstanding Entrepreneur of the
State, ‘March 8’ Red-Banner Holders of the State’, PRC CFO of the
Year, China Top Ten Women in Economic Area, China Top Ten Brand
Female ( ), member of the 12th Standing Committee of
the All-China Women’s Federation and the vice president of the China
Women Entrepreneurs Association and so on.
136 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
LI Huagang Male, born in 1969. He graduated from Huazhong University of
Technology in 1991 with a Bachelor’s degree of Economics, and from
China Europe International Business School in 2014 with a degree of
Executive Master of Business Administration (EMBA). He served as the
chief operating officer and executive director of Haier Electric Group Co.,
Ltd. (HEG), the holding subsidiary of the Company, and is currently a
director, general manager and chief marketing officer of Haier Smart
Home Co., Ltd. Mr. Li has vigorously promoted the brand upgrade and
channel optimisation strategy to facilitate the revenue growth of the
online business and offline domestic business of the Company,
enhanced product brand image, and established a seamless and well-
functioning all-channel system. Mr. Li Huagang is committed to building
the Experience Cloud Platform of Haier Smart Home, realizing online and
offline integrated operation, improving the enterprise operation efficiency
and creating differentiat-ed experience for users, and providing users
with a one-stop full-scene seamless ecosystem experience of smart
home.
WU Changqi Male, born in 1955. He is currently a professor of strategic manage-ment
and doctoral supervisor of Guanghua School of Management, Peking
University. He graduated from Shandong University with a Bachelor’s
degree of Economics in 1982, and Katholieke Universiteit Leuven in
Belgium with a Master’s degree of Business Administration and a
Doctoral degree in applied economics in 1990. He served as an
assistant professor and associate professor in the Department of
Economics of School of Business and Management of Hong Kong
University of Science and Technology, a professor and head of the
Department of Strategic Management of Guanghua School of
Management of Peking University, a deputy dean of the Guanghua
School of Management of Peking University, and a director of the EM-BA
degree programme center. He is currently the president of the Academy
of Development Strategy for National High-tech Industry Zones, Peking
University, the director of Guanghua Leadership Institute of Peking
University, the dean of the School of Management of Shandong
University, and the director of the Tenth Session of the Board of
Directors of Haier Smart Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2020 137
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
LIN Sui Male, born in 1956. He was a partner of Deloitte Touche Tohmatsu
China (re-tired on 31 May 2019). He has been engaged in international
tax consultancy work in USA and China for nearly 30 years. He
participated in multinational investment transactions, mergers and
acquisitions, initial public offerings, financing projects, supply chain
taxation optimization, internal tax risk control and other aspects of
professional tax consultancy of many PRC interna-tional enterprises, and
has abundant experience in restructuring, acquisition, equity arrange-
ment, tax accounting and business transformation related to enterprise
listing. In recent years, he has been mainly engaged in the consulting of
digital transformation of corporate financial and tax management. In
1989, he pursued his studies in USA and obtained a Master’s degree in
Business Administration and a Master’s degree of Science in Taxation.
He joined Deloitte Touche Tohmatsu USA in 1993 and was transferred to
Deloitte Touche Tohmatsu China in 2002. He is a Certified Public
Accountant in USA. Prior to his return to China, he was employed by
Ministry of Science and Technology of China as a member of the
overseas scholars’ advisory committee of the National High-tech
Development Torch Program and an expert on the Unit-ed Nations
development projects in China. At present, he has been invited as an
external lec-turer of China Europe International Business School and
Shanghai National Institute of Ac-counting, a part-time master degree
tutor of Fudan University and Shanghai University of Fi-nance and
Economics, Deputy Director of the Advisory Committee of China Tax
Institute of Large Business (TILB), a council member of the Shanghai
branch of China Association for Fiscal and Tax Law, and a director of the
Tenth Session of the Board of Directors of Haier Smart Home Co., Ltd.
DAI Deming Male, born in 1962. He is currently a professor and doctoral supervisor
of the department of accounting of the Renmin Business School,
concurrently holding the po-sition of vice president of Accounting Society
of China, and is an independent director of the 10th Board of Directors
of Haier Smart Home. He once served as an independent director of
Beijing Capital Development Co., Ltd.
138 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
CHIEN Da-chun Male, born in 1953. He served as Chairman of IBM Greater China
region, CEO of IBM Greater China region, etc. He graduated from the
Department of Mathematics of Tamkang University of Taiwan, and
studied advanced management courses in the Institute of Business
Administration of Harvard University, as well as the global senior
manager courses of International Business Machines Corporation (IBM).
He is currently an independent director of the 10th Board of Directors of
Haier Smart Home Co., Ltd.
Wang Keqin or Wong Hak Kun Male, born in 1956. He received a Bachelor’s degree in social science
from the University of Hong Kong. He has over 36 years of experience in
auditing, assurance and management in Deloitte China. He has been a
partner of Deloitte China since 1992 and served as a member of the
board of directors of Deloitte China from 2000 to 2008. Prior to his
retirement in May 2017, he was Deloitte China’s National Managing
Partner of Audit & Assurance. Mr. WONG is an associate of the Hong
Kong Institute of Certified Public Accountants (HKICPA), an associate of
the Association of Chartered Certified Accountants (ACCA), an associate
of the Chartered Institute Management Accountants (CIMA), an associate
of The Institute of Chartered Secretaries and Administrators. He currently
serves as an independent non-executive director of Yue Yuen Industrial
Holdings (Limited) (551HK), Lung Kee (Bermuda) Holdings Limited
(255HK) and Zhejiang Cangnan Instrument Group Company Limited
(1743HK).
Shi Tiantao (retired) Male, born in 1962. He currently serves as a professor and doctoral
supervisor of the School of Law at Tsinghua University as well as
director of Finance & Law Research Center under the School of Law at
Tsinghua University. Meanwhile, he concurrently holds other positions
such as a vice president of the Chinese Research Association of
Securities Law, an arbitrator of CIETAC, and a member of the Case
Guidance Committee of the Supreme People’s Court. He served on the
10th session of the Board of Directors of Haier Smart Home as an
independent director.
Haier Smart Home Co., Ltd. Annual Report 2020 139
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
Yan Yan (retired) Male, born in 1957. He is currently the founding managing partner of
SAIF Asia Investment Fund. Prior to founding SAIF, Mr. Yan was the
managing director and director of the Hong Kong office of AIG Asia
Infrastructure Investment Fund from 1994 to 2001. From 1989 to 1994,
he was an economist at the World Bank headquarters in Washington, a
researcher at the well-known think tank Hudson Institute, and a director
of strategic planning and business development for the Asia Pacific
region at Sprint International Corporation. Mr. Yan obtained a bachelor’s
degree in engineering from Nanjing Institute of Aeronautics in 1982 and
specialized in master’s degree of Sociology in Peking University from
1984 to 1986. He studied his Ph.D. from Princeton University from
1986–1989 and received a master’s degree in international economics in
1989. He also took advanced finance and accountancy courses at the
Wharton School of Business in 1995.
Wang Peihua Male, born in 1957, senior political analyst, he has served as the deputy
secretary of Party Committee of Haier Group Air-Conditioner Head Office
( ), Washing Machine Head Office ( ), and
Haier Group Freezer & Heater Head Office ( ),
chairman of the labor union of Haier Group Technology and Equipment
Head Office, deputy secretary of Discipline Inspection Committee etc..
He is the head of the Organizational Department of Haier Group and the
president of the 10th session of the Supervisory Committee of Haier
Smart Home Co., Ltd..
Ming Guoqing Male, born in 1960, senior political analyst, has served as deputy
secretary of Discipline Inspection Committee of Qingdao Refrigerator
General Factory, party branch secretary and assistant manager of
Qingdao Haier Transportation Company ( ), head of the
comprehensive department of Qingdao Haier Co., Ltd., deputy secretary
of party committee and secretary of discipline inspection committee of
Haier Refrigerator Products Head Office ( ), chairman
of the labor union (retired at the end of 2020). He is the chairman of the
labor union of Haier Group, and the supervisor of the 10th session of
the Supervisory Committee of Haier Smart Home Co., Ltd..
Yu Miao Male, Han nationality, born in 1982, Chinese nationality with a master
degree. He serves as the legal manager and employee supervisor of the
10th session of the Supervisory Committee of Haier Smart Home Co.,
Ltd. since April 2012.
140 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
I. CHANGES OF SHAREHOLDING AND REMUNERATION (continued)
(I) Changes of shareholding and remuneration of current and retired directors,
supervisors and senior management during the reporting period (continued)
Name Major working experience
Gong Wei Male, born in 1973, graduated from the University Of International
Business and Economics with a senior executive master degree in
business administration in 2011. Mr. Gong Wei has served as the
financial manager of Haier Smart Home Co., Ltd., senior financial
manager and senior financial analyst of Haier Group, chief financial
officer of Haier Washing Machine Head Office ( ), chief
financial officer of Haier Air-Conditioner Head Office ), chief
financial officer of White Goods Group, he is currently the vice president
and chief financial officer of the Company, possessing rich financial
management experience. Mr. Gong Wei was granted the honorary titles
such as Outstanding Youth in Post of Qingdao City, Outstanding
Accounting Workers of Shandong Province, National Outstanding
Accounting Workers and so on, and won several awards, such as Top
Ten CFO in China as appraised by ‘New Money’ Magazine (
)in 2011, 2020 International Finance Leaders of the Year in China.
Ming Guozhen Female, born in 1964, graduated from Southwestern University of
Finance and Economics with a master’s degree in economics in 1986.
She is a senior economist, was the lecturer of the investment
department of China Institute of Finance, deputy head of the Teaching
and Research section of Investment Economy Department, a member of
treasury department of Everbright International Investment Consultancy
Company, deputy director and director of general manager office,
general manager of business management department and general
manager of personnel department, assistant to the general manager of
the Company, executive vice president of Everbright International
Investment Consultancy Company; she was the office director of analysts
professional committee of the Securities Association of China, vice
director of Qualification Management Department of the Association, vice
director of Practice Standards Committee ( ) of the
Association. She is currently the vice general manager and secretary to
the Board of Directors of Haier Smart Home Co., Ltd..
Other information
Applicable √ Not Applicable
(II) Incentive share option granted to directors and senior management during the
reporting period
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 141
Section VIII Directors, Supervisors, Senior Management and Employees
II. POSITIONS HELD BY CURRENT AND RETIRED DIRECTORS,
SUPERVISORS AND SENIOR MANAGEMENT DURING THE REPORTING
PERIOD
(I) Positions held in shareholders’ entities
√ Applicable Not Applicable
Appointment End date of
Name Company Position date appointment
Liang Haishan Haier COSMO Co., Ltd. Director 1997–11
Liang Haishan Haier Group Corporation Director
Liang Haishan Haier COSMO Co., Ltd. Director 2014–9
Tan Lixia Haier Group Corporation Director, Executive 2016–2
vice president
Wang Peihua Haier Group Corporation Head of Organizational
Department
Ming Guoqing Haier Group Corporation Chairman of the Labor
Union
Li Huagang Haier COSMO Co., Ltd. Director
Clarification about Positions in Nil
Shareholders Entities
142 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
II. POSITIONS HELD BY CURRENT AND RETIRED DIRECTORS,
SUPERVISORS AND SENIOR MANAGEMENT DURING THE REPORTING
PERIOD (continued)
(II) Positions held in other entities
√ Applicable Not Applicable
Appointment End date of
Name Company Position date appointment
Liang Haishan Haier Group Finance Co., Director
Ltd.
Liang Haishan Haier Group (Qingdao) Director
Financial Holdings Ltd.
Liang Haishan Qingdao Haier multimedia President
Co., Ltd.
Tan Lixia Haier Group Finance Co., Supervisor
Ltd.
Tan Lixia Haier Financial Holdings Legal representative, July 2014
Limited director
Tan Lixia Bank of Qingdao Co., Ltd. Non-executive April 2012 May 2021
director
Tan Lixia Wanlian (Chongqing) IoT President May 2018
Technology Co., Ltd.
(
)
Tan Lixia Yingkang Life Technology President 16 May 2019
Co., Ltd.
Tan Lixia Qingdao Haier Biomedical President July 2018
Co., Ltd.
Li Huagang Qingdao Haier Cultural Director
Industry Development Co.,
Ltd. (
)
Dai Deming China Zheshang Bank Co., Independent Non- March 2015
Ltd. executive director
Dai Deming BOC Aviation Limited Independent Non- May 2016
executive director
Dai Deming CSC Financial Co., Ltd. Independent Non- August 2016
executive director
Dai Deming Power Construction Independent Non- March 2018
Corporation of China, Ltd. executive director
Dai Deming Poly Developments and Independent Non- September 2018
Holdings Corporation executive director
Limited
WONG Hak Kun Yue Yuen Industrial Independent director June 2018
(Holdings) Limited
WONG Hak Kun Lung Kee (Bermuda) Independent director June 2018
Holdings Limited
WONG Hak Kun Zhejiang Cangnan Instrument Independent director June 2018
Group Company Limited
WONG Hak Kun Guangzhou Automobile Independent director May 2020
Group Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2020 143
Section VIII Directors, Supervisors, Senior Management and Employees
II. POSITIONS HELD BY CURRENT AND RETIRED DIRECTORS,
SUPERVISORS AND SENIOR MANAGEMENT DURING THE REPORTING
PERIOD (continued)
(II) Positions held in other entities (continued)
Appointment End date of
Name Company Position date appointment
Wu Changqi Peking University Professor
Wu Changqi China Hua Xia Bank Supervisor 12 May 2015 12 May 2021
Co., Ltd.
Wu Changqi Yijiahe Technology Co., Ltd. Independent Director 24 August 24 August 2021
2018
Wu Changqi Shandong University Dean of School of October 2019
Management
Shi Tiantao Tsinghua University Professor 2000
Shi Tiantao Jiajiayue Group Co Ltd Independent Director
Shi Tiantao Beijing Zhenghe Henderson Independent Director
Waterfront Ecological
Environment Management
Co., Ltd. (
)
Shi Tiantao Rongtong Fund Management Independent Director
Co., Ltd. (
)
Yan Yan SAIF Partners Principal Partner October 2001 To date
Yan Yan China Resources Land Independent non- July 2006 To date
Limited executive Director
Yan Yan Guodian Technology & Non-executive June 2012 To date
Environment Group Director
Corporation Limited
Yan Yan Beijing BlueFocus Data Independent Director March 2014 To date
Technology Co., Ltd.
(
)
Yan Yan TCL Group Limited Independent Director March 2015 To date
Yan Yan ATA Inc. Director March 2005 To date
Yan Yan Shanghai Welltech Director June 2019 To date
Automation Co., Ltd.
Yan Yan 360 Finance, Inc Independent Director October 2019 To date
Yan Yan Appotronics Corporation Director June 2019 To date
Limited
Ming Guozhen Qingdao Huaqiao Industrial Director July 2008
Co., Ltd.
Clarification about Positions in Nil
Shareholders Entities
144 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT
√ Applicable Not Applicable
Decision-making procedures of The decision-making process of the Company for the remuneration
the remuneration of directors, of directors, supervisors and senior management personnel is to
supervisors and senior establish a platform, define standards, communicate and negotiate,
management and make objective decisions. The Remuneration Committee of the
Company shall formulate the remuneration standards, adjust
principles, and assess and implement the principles and submit to
the Board of Directors for consideration and approval to form a
sys-tem platform. Based on the principle of customer-paid salary,
the actual remuneration for the year is determined according to the
evaluation results such as the ecosystem micro-community
contract, Rendanheyi scorecard, vertical and horizontal matching
table and win-win value appreciation table.
Basis for determining the The 2020 remuneration system of the management personnel of
remuneration of directors, the Company reflects the ecosystem micro-community contract,
supervisors and senior high value-adding and high sharing, which is linked with win-win
management value appraisal table and Rendanheyi scorecard, etc. Vertically, the
Rendanheyi scorecard represents strategic undertaking and
ecosystem micro-community contract, which is linked with the
ecosystem micro-community upgrade initiation and platform
leading, and horizontally, it embodies the global leadership and
ecosystem achievements of the market competitiveness, which
leads to the upgrading from “high-end brand” to “scenario brand”
and “ecosystem brand”. The maximum allowance for the director of
the Tenth Session of the Board of Directors is RMB200,000/year
before tax, of which fixed allowance is RMB150,000/year, and the
maximum performance allowance is RMB50,000/year. The specific
amount of performance allowance will be determined according to
the comprehensive consideration of directors’ contribution to the
decision-making of the Board of Directors of the Company,
effectiveness of resolutions and suggestions to the Board of
Directors, participation of the Board of Directors, attendance rate of
previous board meetings and other factors. The travelling expenses
of directors attending the Board of Directors meetings and general
meet-ings and the expenses required for exercising their functions
and authorities according to the Articles of Association of the
Company will be reimbursed.
Haier Smart Home Co., Ltd. Annual Report 2020 145
Section VIII Directors, Supervisors, Senior Management and Employees
III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT (continued)
Remuneration payables of Paid as prescribed
directors, supervisors and
senior management
Total actual remuneration of all RMB7,323,000
the directors, supervisors and
senior management at the end
of the reporting period
IV. CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
OF THE COMPANY
√ Applicable Not Applicable
Name Position Changes Reasons
Yan Yan Director Retired Retired due to personal
reasons
Shi Tiantao Independent director Retired Retired due to expiration
of office term for
6 years
WONG Hak Kun Independent director Election Newly elected
V. PUNISHMENT BY THE SECURITIES SUPERVISORY INSTITUTE IN LAST
THREE YEARS
Applicable √ Not Applicable
146 Haier Smart Home Co., Ltd. Annual Report 2020
Section VIII Directors, Supervisors, Senior Management and Employees
VI. STAFF OF THE PARENT COMPANY AND PRINCIPAL SUBSIDIARIES
(I) Staff information
Number of staff of the parent company 3,265
Number of staff of Principal subsidiaries 96,034
Total number of staff 99,299
Number of employees whose retirement expenses are borne by the parent
company and the principal subsidiaries 0
Breakdown by function
Function Number
Production 58,444
Sales 18,754
Technical 18,014
Financial 1,647
Administrative 2,440
Total 99,299
Breakdown by education
Education Number (person)
Bachelor’s degree and above 26,874
Junior college graduate 26,963
Technical secondary school and below 45,462
Total 99,299
Note: China region has achieved 23% optimisation of operational efficiency through four restructuring and six digital
transformations. During the period, the construction of overseas markets was further strengthened so the marketing
personnel were increased by 49% as compared to the corresponding year.
(II) Remuneration policies
√ Applicable Not Applicable
The Company implements a value-creation-centric, customer-paid, and Rendanheyi remuner-ation
system, which takes customer value-added experience as a test and originates from the Haier
strategic profit and loss statement. It assesses the creation of customer value, ecosys-tem
micro-community initiation upgrade, target-oriented budget implementation, ecosystem results and
continuous optimization based on ecosystem micro-community contracts, Rendanheyi scorecard
and win-win value appreciation table. This incentive mechanism guides the customer-paid salary,
makers for everyone, and sharing and win-win oriented, creates ecosystem value and leads the
ecosystem brand of the Internet of Things.
Haier Smart Home Co., Ltd. Annual Report 2020 147
Section VIII Directors, Supervisors, Senior Management and Employees
VI. STAFF OF THE PARENT COMPANY AND PRINCIPAL SUBSIDIARIES
(continued)
(III) Personnel training
√ Applicable Not Applicable
Please also refer to relevant content set out in 2020 Social Responsibility Report of Haier Smart
Home Co., Ltd. published on the same date as this report.
(IV) Labor Outsourcing
Applicable √ Not Applicable
VII. OTHER
Applicable √ Not Applicable
148 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE
√ Applicable Not Applicable
During the reporting period, the Company strictly complied with the requirements under the Company
Law, the Securities Law, Code on Corporate Governance for Listing Company and the requirements of
the relevant laws and regulations, to improve its corporate governance structure, regulate its operation,
improve its information disclosure system, strengthen the communication with investors and elevate the
standard of the Company’s corporate governance. In respect of corporate governance structure, the
general meeting, the Board and the management standardized its operation to practically guarantee
the legal interests of the Company and its shareholders; all Directors duly discharged their duties in a
diligent way; each committee of the Board of the Company performed their work according to their
respective detailed working rules to ensure that the Board operate in a more effective and scientific
way; independent Directors fulfilled their duties independently and issued independent opinion on major
matters in order to effectively protect the interests of the Company as a whole and the lawful rights
and interests of medium and small investors. In respect of information disclosure, the Company strictly
executed the registration and management system for insiders, achieved the management of inside
information on significant events and eliminating the act of using the Company’s inside information for
stocks trading by insider. Meanwhile, the Company reinforced the accountability of people who are
responsible for annual report disclosure and enhanced the quality and transparency of information
disclosure in annual reports. The Company has placed a lot of emphasis on information disclosure and
disclosed relevant information on a true, accurate, complete and timely basis strictly in accordance
with the requirements of laws and regulations to ensure all shareholders have equal access to such
information. In respect of the management of investor relation, in accordance with guideline of the
Management System for Investor Relation, the Company integrated business and financial resources by
the office of board secretary and realized positive and all-around access to investors in a multi-layer
and diversified format through introduction reference, result announcement conference and online
forum. Meanwhile, the Company replied investors on a timely basis by ways of interview, e-mail,
phone, fax and the website (http://sns.sseinfo.com) and enhanced interaction with investors, so as to
respect and protect the interests of various investors, with the aim of achieving harmonious and mutual
success with the Company, staff and investors. The corporate governance structure of the Company is
sound and there is no difference between the corporate governance structure and the requirement of
relevant documents from CSRC.
(1) Shareholders and general meeting of shareholders:
The Company could ensure that all shareholders, especially the minority shareholders enjoy equal
treatment and are able to fully exercise their rights; during the reporting period, the convening
and procedure of the shareholders’ general meeting of the Company were in compliance with the
requirements of the Articles of Association and Rules Governing Shareholders’ General Meeting of
the Company. Attendance of shareholders at the meeting is relatively high, which ensured that
the shareholders fully excised voting rights; the Company also engaged lawyers who possess the
qualification to engage in securities business to attend and witness the shareholders’ general
meeting; the resolutions were considered and approved in accordance with legal procedures,
which could guarantee the power and rights of minority shareholders.
Haier Smart Home Co., Ltd. Annual Report 2020 149
Section IX Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE (continued)
(2) Relationship between controlling shareholders and the listed company:
The controlling shareholders acted normatively and did not interfere with the Company’s
management decisions and operations, directly or indirectly. The Company and the controlling
shareholders are independent of each other in terms of their staff, assets, finance, organization
and business. Their respective board of directors, the Supervisory Committee and internal
administrative departments are all independent of each other. The specific requirements for
regulating Related-party transactions and fund flow are set out in the Articles of Association, Fair
Decision-Making System for Related-party Transactions and the Administrative System for
Regulation of Fund Flow between the Company and Related Parties, Risk Control System for
Related-party Transaction with Haier Group Finance Co., Ltd., and Proposal for Emergency
Response System for Risk of Deposits with Haier Group Finance Co., Ltd., which guaranteed the
interests of investors. The daily related-party transactions are subject to the consideration and
approval at the annual general meeting and set specialized execution procedure. The basis of
pricing and reasonability of operation agreement shall be supervised and reviewed by special
departments, so as to regulate the execution of related-party transactions. Internal control and
internal control audit of the Company would also focus on the compliance of the related-party
transactions, in order to protect the interests of minority shareholders and non-related
shareholders. During the reporting period, the self-procurement capability and scope of the self-
procurement platforms matched its businesses, and constantly strengthened the procurement
capability of the Company, which further optimized the related-party transactions.
(3) Directors and the Board:
During the reporting period, the Board of the Company operated in accordance with rules and
continued to perform their duties under the Articles of Association and relevant laws and
regulations better and practically implement relevant decisions at the shareholders’ general
meeting. The number and composition of the members of the Board complied with relevant laws
and regulations; the directors attended the board meeting and shareholders’ general meeting with
responsible and diligent attitude and protected the interests of the Company. During the
reporting period, the Company has 5 external directors, of which 3 are independent directors,
representing a larger proportion of the total number of the directors (8 in total) of the Company.
The Board continues to maintain an open structure and efficiently bring ‘smart’ resources to the
Company. Each of the independent directors of the Company respectively acted as member of
the nomination committee, remuneration and appraisal committee and audit committee of the
Board and practically carried out their duties, which are in accordance with the requirements in
the Code of Corporate Governance for Listed Companies .
During the reporting period, all directors and independent directors performed their duties
earnestly strictly in compliance with the Articles of Association, the Rules of Procedure for the
Board of Directors, the System for Independent Directors and relevant requirements under laws
and regulations and each committees of the Board operated normatively according to its own
work rules. During the reporting period, the Board of the Company considered and approved the
following matters: the Employees Stock Ownership Scheme and periodical reports, so as to
encourage the Company to further consolidate its resources to better implement development
strategy.
150 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE (continued)
(4) Supervisors and the Supervisory Committee:
During the reporting period, the Supervisory Committee operated in accordance with rules and
continued to practically perform their duties under the Articles of Association and relevant laws
and regulations. The number and composition of the members of the Supervisory Committee
complied with requirements under laws and regulations. During the reporting period, the
Supervisors of the Company performed their duties earnestly and adhered to the principle of
being responsible to the Company and all shareholders to supervise legality and compliance on
finance matters of the Company and performance of duty by the Company’s directors, managers
of the Company and other senior management strictly in accordance with requirements under the
Articles of Association, the Rules of Procedure for the Supervisory Committee and relevant laws
and regulations.
(5) Performance evaluation and incentive and disciplinary mechanism:
In accordance with the Articles of Association, the Board shall appoint or remove the general
manager and the secretary of the Board; the Board shall appoint or remove the deputy general
manager and other senior management (including the chief financial officer) of the Company
based on the nomination by the general manager and determine their remunerations and rewards
and penalties. The human resource department of the Company shall make routine appraisal and
evaluation on the performance of directors, supervisors and senior management and
Remuneration and Appraisal Committee shall make inspection and evaluation on their
performance to determine their remunerations at the end of the year.
During the reporting period, the Company promoted to vest the Employees Stock Ownership
Scheme and other matters which further perfected the incentive and disciplinary mechanism and
mechanism of the shareholders shares benefits and risks with the management of the Company,
so as to enhance the competitiveness and promote the sustainable and sound development of
the Company.
(6) Stakeholders:
The Company was able to fully respect and protect the lawful rights and interests of the
suppliers, channels, banks, other creditors, employees, consumers and other stakeholders.
Meanwhile, the Company actively took part in public welfare undertaking in such place where it
operates, placed a lot of emphasis on environment protection, performed its social duties
earnestly and worked together with these stakeholders actively with good communication to
jointly promote the sustainable and sound development of the Company. For details, please refer
to relevant information in 2020 Social Responsibility Report of Haier Smart Home Co., Ltd.
published on the same date of this report.
Haier Smart Home Co., Ltd. Annual Report 2020 151
Section IX Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE (continued)
(7) Information disclosure and transparency:
During the reporting period, the Company positively disclosed the relevant information in a true,
accurate and complete manner which was strictly in accordance with relevant laws and
regulations including the Articles of Association, Administrative Measure for Information Disclosure
and requirements in the Information Disclosure Management System of the Company, Work Rules
and Procedures Regarding the Annual Report and the Management System for Investor Relation,
proactively communicated with regulatory authorities and investors and designated newspapers
including Shanghai Securities News, China Securities Journal, Securities Times and Securities
Daily for information disclosure to ensure that all shareholders access to such information
equally. The Company authorized the secretary of the Board to take charge of information
disclosure, reception of visits by shareholders and handling of shareholder’s enquiries.
Meanwhile, the Company broadened communication channels for investors to get relevant
information of the Company through telephone conference calls after periodical reporting and
occasionally holding on-site and online forums. With respect to the significant Related-party
transactions, the Company performed necessary approval procedures and disclosed relevant
information strictly in compliance with the Articles of Association and Fair Decision-Making
System for Related-party Transactions to protect the interests of investors. During the reporting
period, the Company further perfected the confidentiality procedure for information disclosure
strictly in compliance with the Registration System of Insiders, the Responsibility System for
Major Errors in Information Disclosure in Annual Reports and the Management System of External
Information Users to ensure the fairness and equity of information disclosure.
(8) Implementation of corporate governance campaign in 2020:
During the reporting period, the Company continued to carry out works relating to ‘solution of
business competition and reduction of related-party transactions’ to maintain the Company’s
optimized governance results. In 2020, trading volume of related-party transactions regarding
procurement amounted to RMB22.8 billion, which accounted for 11.9% of the similar
transactions, and stable year-on-year. Trading volume of related-party transactions regarding
sales amounted to RMB2.8 billion, which accounted for 1.3% of the similar transactions and
stable year-on-year. The optimization of the related-party transactions in the previous period has
been maintained. The Company will continue to promote the continuous optimization of related-
party transactions (Related-party transactions herein refer to transactions between the Company
and related parties determined in accordance with the Rules Governing the Listing of Stocks in
China, German, China Hong Kong and other regulations. Therefore, the scope and amount of
related-party transactions may be different from that scope as identified under Accounting
Standards for Business Enterprises).
152 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
I. EXPLANATION OF CORPORATE GOVERNANCE (continued)
(8) Implementation of corporate governance campaign in 2020: (continued)
Leveraging on the further implementation of governance campaign and enhancing the
establishment of fundamental systems, the Company further improved the corporate governance
structure and enhanced the level of the corporate governance. The Company carried out various
activities to strengthen the consciousness of learning and further strengthened the consciousness
on regulating governance in the listed company among directors, supervisors and senior
management of the listed company with organizational training to improve the ability to regulate
governance and continuously improve and perfect corporate governance of the Company, thus to
protect the minority interests and to guarantee and promote the healthy, stable and sustainable
development of the Company.
Whether there is a significant difference between the corporate governance and requirements of
relevant provisions of the CSRC; if so, the reasons should be explained
Applicable √ Not Applicable
II. BRIEF INTRODUCTION TO THE GENERAL MEETING OF
SHAREHOLDERS
Index for details of websites designated for Date of
Meeting Date publishing resolutions disclosure
2020 First Extraordinary 31 March 2020 For details, please refer to the Announcement on 1 April 2020
General Meeting Resolutions of 2020 First Extraordinary General
Meeting of Haier Smart Home Co., Ltd. (L2020–
010) published by the Company on the website
of Shanghai Stock Exchange (www.sse.com.cn)
and the four major securities newspapers.
2019 Annual General Meeting 3 June 2020 For details, please refer to the Announcement on 4 June 2020
Resolutions of 2019 Annual General Meeting of
Haier Smart Home Co., Ltd. (L2020–029)
published by the Company on the website of
Shanghai Stock Exchange (www.sse.com.cn)
and the four major securities newspapers.
2020 Second Extraordinary 1 September For details, please refer to the Announcement on 2 September
General Meeting 2020 Resolutions of 2020 Second Extraordinary 2020
General Meeting, 2020 First A-shares Class
2020 First A-shares Class Meeting and 2020 First D-shares Class Meeting
Meeting of Haier Smart of Haier Smart Home Co., Ltd. (L2020–062)
Home Co., Ltd. published by the Company on the website of
Shanghai Stock Exchange (www.sse.com.cn)
2020 First D-shares Class and the four major securities newspapers.
Meeting of Haier Smart
Home Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2020 153
Section IX Corporate Governance
II. BRIEF INTRODUCTION TO THE GENERAL MEETING OF
SHAREHOLDERS (continued)
Explanation of shareholders’ general meetings
√ Applicable Not Applicable
(1) The 2020 First Extraordinary General Meeting of the Company was held by way of on-site
voting and online voting by poll at Room A108, Haier University, Haier Information Park, No.1
Haier Road, Qingdao, the PRC in the afternoon on 31 March 2020 for deliberation of the
proposals concerning the amendments to the articles of association and relevant issues. The
Company had a total of 6,579,566,627 shares. Attendance of shareholders and proxies at the
Meeting is as follows: there were 314 shareholders of the Company in attendance either in
person or by proxy at the Meeting, holding a total of 3,718,197,212 shares, representing 56.51%
of the total number of shares of the Company with voting rights. The directors, supervisors and
senior management of the Company as well as the lawyers engaged by the Company also
attended the Meeting. The Meeting was convened by the Board of the Company. Mr. Liang
Haishan, Chairman of the Board, presided over the Meeting. The Company had 9 Directors, of
whom 1 Director attended the Meeting (Directors Tan Lixia, Li Huagang, Wu Changqi, Yan yan,
Lin Sui, Qian Daqun, Dai Deming and Shi Tiantao were unable to attend the meeting due to
personal engagement); the Company had 3 Supervisors, all of whom attended the Meeting. The
secretary to the Board of the Company attended the Meeting and other members of senior
management of the Company were invited to attend the Meeting.
(2) The 2019 Annual General Meeting of the Company was held by way of on-site voting and
online voting by poll at Room B101, Haier University, Haier Information Park, No.1 Haier Road,
Qingdao, the PRC in the afternoon on 3 June 2020 for deliberation of the proposals concerning
the annual report of the Company and other issues. The Company had a total of 6,579,566,627
shares capital. Attendance of shareholders and proxies at the meeting is as follows: there were
517 shareholders of the Company in attendance either in person or by proxy at the meeting,
holding a total of 4,144,404,424 shares, representing 62.99% of the total number of shares of the
Company with voting rights. The directors, supervisors and senior management of the Company
as well as the lawyers engaged by the Company also attended the meeting. The meeting was
convened by the Board of the Company. Mr. Liang Haishan, Chairman of the Board, presided
over the meeting. The Company had 9 Directors, of whom 4 Directors attended the meeting
(Directors Shi Tiantao, Qian Daqun, Wu Changqi, Lin Sui and Yan Yan were unable to attend the
meeting due to personal engagement); the Company had 3 Supervisors, all of whom attended
the meeting. The secretary to the Board of the Company attended the meeting and other
members of senior management of the Company were invited to attend the meeting.
154 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
II. BRIEF INTRODUCTION TO THE GENERAL MEETING OF
SHAREHOLDERS (continued)
Explanation of shareholders’ general meetings (continued)
(3) The 2020 Second Extraordinary General Meeting, 2020 First A-shares Class Meeting and
2020 First D-shares Class Meeting were held sequentially by way of on-site voting and online
voting by poll at Room B101, Haier University, Haier Information Park, No.1 Haier Road,
Qingdao, the PRC in the afternoon on 1 September 2020 for deliberation of the proposals
concerning the matters on significant asset reorganization of the Company. The Company had a
total of 6,579,566,627 shares capital. Attendance of shareholders and proxies at the meetings is
as follows: there were 827 shareholders of the Company in attendance either in person or by
proxy at the meetings, holding a total of 4,408,418,171 shares, representing 67.00% of the total
number of shares of the Company with voting rights. The directors, supervisors and senior
management of the Company as well as the lawyers engaged by the Company also attended the
meetings. The meetings were convened by the Board of the Company. Mr. Liang Haishan,
Chairman of the Board, presided over the meetings. The Company had 9 Directors, of whom 1
Director attended the meetings (Directors Tan Lixia, Li Huagang, Wu Changqi, Yan Yan, Lin Sui,
Dai Deming, Qian Daqun and Wang Keqin were unable to attend the meetings due to personal
engagement); the Company had 3 Supervisors, all of whom attended the general meeting. The
secretary to the Board of the Company attended the general meeting and other members of
senior management of the Company were invited to attend the general meeting.
III. PERFORMANCE OF DUTIES BY DIRECTORS
(I) Attendance of board meetings and general meetings by directors
Attendances
at general
Attendance of Board meetings meetings
Absence from
two Number of
Whether an Required consecutive attendance of
Name of independent attendances of Attendance in Attendance by Attendance meetings in general
director director or not Board meetings person telecommunication by proxy Absence person or not meetings
Liang Haishan NO 9 8 1 1 0 NO 5
Tan Lixia NO 9 9 2 0 0 NO 1
Li Huagang NO 9 9 2 0 0 NO 1
Wu Changqi NO 9 9 9 0 0 NO 0
Dai Deming YES 9 9 9 0 0 NO 1
Shi Tiantao YES 2 2 2 0 0 NO 0
Lin Sui NO 9 9 9 0 0 NO 0
Qian Daqun YES 9 9 9 0 0 NO 0
Yan Yan NO 8 8 8 0 0 NO 0
WONG Hak Kun YES 7 7 7 0 0 NO 0
Haier Smart Home Co., Ltd. Annual Report 2020 155
Section IX Corporate Governance
III. PERFORMANCE OF DUTIES BY DIRECTORS (continued)
(I) Attendance of board meetings and general meetings by directors (continued)
Statement for failure to attend the Board meetings in person for two consecutive times
Applicable √ Not Applicable
Number of Board meetings held in the year 9
Of which: Number of on-site meetings 0
Number telecommunication of meetings held by 1
Number of meetings held both on site and by telecommunication 8
(II) Independent directors’ objection to the relevant matters of the Company
Applicable √ Not Applicable
(III) Others
Applicable √ Not Applicable
IV. MAJOR OPINIONS AND SUGGESTIONS OF THE SPECIAL COMMITTEES
OF THE BOARD IN PERFORMING THEIR DUTIES DURING THE
REPORTING PERIOD, DETAILS SHOULD BE DISCLOSED IF ANY
DISAGREEMENTS
√ Applicable Not Applicable
(1) Audit Committee: during the reporting period, the Company convened 8 meetings of the Audit
Committee to consider the annual report audit-related work for three times, namely, pre-audit,
mid-audit and post audit and made relevant arrangement. The Audit Committee believed that the
2019 financial and accounting statement issued by the Company was in compliance with the
requirements of the Accounting Standards for Business Enterprises, and gave a true and fair view
of the Company’s assets and liabilities as of 31 December 2019 and operating results and cash
flow for the year 2019. There was no significant unresolved disagreement between accounting
and auditing. There was no material risk affecting the Company’s operation. The Company
operated prudently and would be able to continue as a going concern. Other meetings
considered the plans for the annual budget of related-party transactions, internal control self-
assessment reports, profit distribution plan, engagement of accounting firm, related transactions
involving the transfer of equity interest in subsidiaries, and the first quarterly report/the semi-
annual report/the third quarterly report of 2020. The Audit Committee agreed the above
resolutions and submitted the same to the Board for consideration.
156 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
IV. MAJOR OPINIONS AND SUGGESTIONS OF THE SPECIAL COMMITTEES
OF THE BOARD IN PERFORMING THEIR DUTIES DURING THE
REPORTING PERIOD, DETAILS SHOULD BE DISCLOSED IF ANY
DISAGREEMENTS (continued)
(2) Remuneration and Appraisal Committee: during the reporting period, the Company convened 2
meeting of the Remuneration and Appraisal Committee to consider the postponement of the
Phase II Stock Ownership Scheme of Core Employees Stock Ownership Scheme and the annual
remuneration package of directors, supervisors and senior management. The Remuneration
Committee believes that the postponement is in compliance with the relevant laws and
regulations as well as the requirements described under the Ownership Scheme. The
remuneration received by the Company’s directors and senior management personnel from the
Company is strictly evaluated and cashed in accordance with the Company’s evaluation system.
The remuneration disclosed by the Company is consistent with the actual situation. The
Remuneration and Appraisal Committee agreed the above resolutions and submitted the same to
the Board for consideration.
(3) Nomination Committee: during the reporting period, the Company convened 1 meeting of the
Nomination Committee to summarize the re-election of independent director candidates as well
as annual performance of duties by directors, supervisors and senior management. The
Nomination Committee believes that there are no independent director who are not allowed to
serve as independent directors of the Company, and their qualifications meet the requirements
for being an independent director of a listed company and they are capable to meet the
requirements of the relevant positions assigned by the Company; All directors, supervisors and
senior management personnel of the Company are fulfilled their diligent and honesty obligation in
accordance with the provisions of laws, regulations and the Articles of Association, and
safeguarded the interests of the Company’s shareholders. The Nomination Committee agreed the
above resolutions and proposed relevant resolutions to the Board of directors for consideration.
(4) Strategy Committee: during the reporting period, the Company convened 3 meetings of the
Strategy Committee to consider and approve the privatisation of Haier Electronics, the
shareholders return scheme in next 3 years, annual performance of duties. The Strategy
Committee believes that this privatisation can facilitate the Company’s sustainable development
and is in line with the Company’s long-term development strategy and the long-term interests of
all shareholders of the Company. Such privatisation has no adverse impact on the Company’s
sustainable operating capacity, profit or loss and asset condition. The Strategy Committee
agreed the above resolutions and submitted the same to the Board for consideration.
Haier Smart Home Co., Ltd. Annual Report 2020 157
Section IX Corporate Governance
V. SUPERVISORY COMMITTEE’ EXPLANATION ON RISKS ABOUT THE
COMPANY
Applicable √ Not Applicable
VI. STATEMENTS OF THE COMPANY ON INABILITY TO MAINTAIN THE
INDEPENDENCE OR THE ABILITY OF INDEPENDENT OPERATIONS
BETWEEN THE COMPANY AND THE CONTROLLING SHAREHOLDERS
WITH RESPECT TO BUSINESS, PERSONNEL, ASSETS, ORGANIZATION
AND FINANCE
Applicable √ Not Applicable
Corresponding solutions, working progress and subsequent working plans of the
Company in case of horizontal competition
Applicable √ Not Applicable
VII. ESTABLISHMENT AND IMPLEMENTATION OF APPRAISAL AND
INCENTIVE MECHANISM FOR SENIOR MANAGEMENT DURING THE
REPORTING PERIOD
√ Applicable Not Applicable
The 2020 remuneration system of the management personnel of the Company reflects the ecosystem
micro-community contract, high value-adding and high sharing, which is linked with win-win value
appraisal table and Rendanheyi scorecard, etc. Vertically, the Rendanheyi scorecard represents
strategic undertaking and ecosystem micro-community contract, which is linked with the ecosystem
micro-community upgrade initiation and platform leading, and horizontally, it embodies the global
leadership and ecosystem achievements of the market competitiveness, which leads to the upgrading
from “high-end brand” to “scenario brand” and “ecosystem brand”. The remuneration competitiveness
is determined based on such elements as “strategic undertaking”, “market-leading target
competitiveness”, “micro-community initiation, platform leading” and “ecosystem achievements”. The
senior management personnel receive an annual assessment of performance for the year, which is a
key factor in determining performance bonuses and development. On one hand, the overall customer-
paid, and Rendanheyi remuneration system forms a diversified combination of the management’s
remuneration incentives, which is oriented towards creating customer value and ecosystem value. On
the other hand, it also makes the remuneration mechanism of the management more flexible, which
provides impetus for the innovation of the management and embodies the maximization of people
value.
At the same time, the Company implements measures such as the core employee stock-holding plan
to further improve the remuneration incentive system, enhances the incentive and restraint
mechanisms, and establishes a benefits and risk sharing mechanism between the Company and the
operational and managerial personnel based on the principle of the customer-paid salary.
158 Haier Smart Home Co., Ltd. Annual Report 2020
Section IX Corporate Governance
VIII. WHETHER TO DISCLOSE THE SELF-ASSESSMENT REPORT ON
INTERNAL CONTROL
√ Applicable Not Applicable
For details, please refer to the 2020 Internal Control Assessment Report of Haier Smart Home Co.,
Ltd. disclosed on the same day of this report.
Explanations on material defects found in internal control during the reporting period
Applicable √ Not Applicable
IX. RELEVANT EXPLANATIONS ON THE AUDIT REPORT OF INTERNAL
CONTROL
√ Applicable Not Applicable
The Company’s auditor Hexin Certified Public Accountants LLP has audited the efficiency of internal
control relating to the financial report of the Company, and has issued its standard unqualified audit
report for the Company’s internal control (He Xin Shen Zi (2021) No. 000175).
For the details of Audit Report of Internal Control of Haier Smart Home Co., Ltd., please refer to
relevant announcements published on the website of Shanghai Stock Exchange (www.sse.com.cn) on
the same day of this report.
Whether to disclose the audit report on internal control: Yes
Type of opinion on the audit report on internal control: Standard unqualified opinion
X. OTHERS
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 159
Section X Relevant Information
on Corporate Bonds
√ Applicable Not Applicable
I. OVERVIEW OF CORPORATE BONDS
Unit and Currency: HK$
Method of
capital
Balance of repayment with Places of
Name of bonds Abbreviation Code Issuing date Date of expiry bonds Interest rate (%) interest transaction
Harvest International Company / ISIN 2020.12.23 2022.11.23 7,993,000,000 5.11 One time Hong Kong
HK$8,000,000,000 Zero XS1716796641 repayment of Stock
Coupon Guaranteed the principal Exchange
Convertible Bonds due 2022 and interest
when due
Interest payment and repayment of corporate bonds
√ Applicable Not Applicable
During the reporting period, the above-mentioned convertible bonds issued by Harvest International
Company, a subsidiary of the Company (hereafter referred to as the “H-share Convertible Bonds”),
which are still in the subsistence period, repaid 105.11% of the remaining par value of the bonds at
maturity by way of one time repayment of principal and interest.
Other notes of the corporate bonds
√ Applicable Not applicable
On 23 November 2017, the first 2017 Extraordinary General Meeting of the Company adopted the
Resolution of Qingdao Haier Co., Ltd. on the Scheme for Public Offering of Convertible Corporate
Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to the resolution at this general
meeting and the approval documents of the China Securities Regulatory Commission and others, the
Company completed the issue of convertible corporate bonds in December 2018, with a total issue
amount of RMB3,007.49 million. The bonds were listed on 18 January 2019, which is referred to as
“Haier Convertible Bonds” and its bond code is 110049. For details, please refer to the Prospectus for
the Public Offering of A-share Convertible Corporate Bonds by Qingdao Haier Co., Ltd. as disclosed
on 14 December, 2018, and the Announcement on the Listing of Convertible Corporate Bonds by
Qingdao Haier Co., Ltd. as disclosed on 16 January, 2019 and other relevant documents. As the
convertible bonds in 2019 met the redemption conditions and the Board of Directors of the Company
decided to exercise the redemption right after consideration and approval, the Company redeemed the
balance of the convertible bonds in full up to the registered amount on redemption registration date.
After the redemption, the convertible bonds of the Company were delisted on 17 December, 2019. At
present, the A-share convertible bonds no longer exist, but the funds raised from the issuance of the
bonds have not been fully utilized.
160 Haier Smart Home Co., Ltd. Annual Report 2020
Section X Relevant Information on Corporate Bonds
II. CONTACT PERSON AND CONTACT INFORMATION FOR THE
ENTRUSTED MANAGER OF CORPORATE BONDS, AND CONTACT
INFORMATION OF CREDIT RATING AGENCY
Bond entrusted manager Name The Hongkong and Shanghai Banking Corporation Limited
Office Address L24 HSBC Main Building, 1 Queen’s Road Central, Hong Kong
Other explanations:
Applicable √ Not applicable
III. Utilization of funds raised from corporate bonds
√ Applicable Not applicable
The H-share convertible bonds are converted from the exchangeable bonds issued by Harvest
International Company, a subsidiary of the Company, in November 2017. The funds raised from the
bond issue are used to repay the foreign debts of the Company, and have all been utilized as agreed
in the proposal. For details of the utilization of funds, please refer to the Announcement of Qingdao
Haier Co., Ltd. on Issuance of Exchangeable Corporate Bonds by Overseas Wholly-owned Subsidiaries
(L2017–041) disclosed by the Company on 8 November, 2017.
As of 31 December 2020, RMB2,397.57 million of the funds raised from A-share convertible bonds has
been utilized, with a balance of RMB633.20 million (the account balance includes the income
generated from the purchase of wealth management products, interest on demand deposits, foreign
exchange gains and losses and the not-yet-invested capital raised). For details of the use of funds,
please refer to the Special Audit Report of Haier Smart Home Co., Ltd. on the Deposit and Actual
Utilization of Funds Raised in 2020, which was disclosed on the same date as this report.
Haier Smart Home Co., Ltd. Annual Report 2020 161
Section X Relevant Information on Corporate Bonds
IV. INTRODUCTION OF CORPORATE BONDS RATING
Applicable √ Not Applicable
V. CORPORATE BONDS CREDIT ENHANCEMENT MECHANISM,
SOLVENCY PLAN AND OTHERS DURING THE REPORTING PERIOD
Applicable √ Not Applicable
VI. MEETING OF CORPORATE BONDHOLDERS
Applicable √ Not Applicable
VII. DUTY FULFILLMENT OF CORPORATE BONDS TRUSTEE MANAGER
Applicable √ Not Applicable
VIII. ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE LAST TWO
YEARS OF THE COMPANY AT THE END OF THE REPORTING PERIOD
√ Applicable Not Applicable
Unit and Currency: RMB
Key indicators 2020 2019 Yoy change (%) Reasons for change
EBITDA 19,967,111,801.70 21,042,832,181.06 –5.11
Liquidity ratio 1.04 1.05 –0.54
Quick ratio 0.78 0.76 2.00
Debt to assets ratio (%) 66.52 65.33 1.83
Total liabilities ratio
of EBITDA 31.80 33.53 –5.16
Interest coverage ratio 11.21 9.37 19.62
Cash interest coverage
ratio 13.26 8.63 53.61
EBITDA interest coverage
ratio 15.05 12.04 24.92
IX. INTEREST PAYMENT OF OTHER BONDS AND DEBT FINANCING
INSTRUMENTS OF THE COMPANY
√ Applicable Not Applicable
The H-share convertible bonds will be repaid by way of repayment of principal and interest as and
when they fall due, accounting for 105.11% of the remaining par value of the bonds.
162 Haier Smart Home Co., Ltd. Annual Report 2020
Section X Relevant Information on Corporate Bonds
X. BANKING FACILITIES GRANTED BY THE COMPANY DURING THE
REPORTING PERIOD
√ Applicable Not applicable
The banking facilities amounted to RMB130,727.97 million during the reporting period of the Company.
XI. IMPLEMENTATION OF THE RELEVANT AGREEMENTS OR
UNDERTAKINGS IN THE PROSPECTUS OF CORPORATE BONDS BY
THE COMPANY DURING THE REPORTING PERIOD
√ Applicable Not applicable
The H-share convertible bonds have been fully utilized. For the utilization of funds in related projects
raised from A-share convertible bonds, please refer to the Special Audit Report of Haier Smart Home
Co., Ltd. on the Deposit and Actual Use of Raised Funds in 2020 disclosed on the same date as this
announcement.
XII. IMPACT OF MAJOR EVENTS ON OPERATING STATUS AND SOLVENCY
OF THE COMPANY
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 163
Section XI Responsibility Statement
“As the executive director of the Board of Haier Smart Home Co., Ltd, we hereby confirm to the best of our
knowledge, and in accordance with the applicable reporting principles, that the financial statements give a
true and fair view of the assets, liabilities, financial position and profit or loss of the company; and the
management report includes a fair review of the development and performance of the business including the
results and the position of the company, together with a description of the principal opportunities and risks
associated with the expected development of the company.”
Qingdao, 30 March 2020
The Board of Haier Smart Home Co., Ltd
Liang Haishan
Tan Lixia
Li Huagang
Wu Changqi
Xie Juzhi
Lin Sui
Yu Handu
Li Jinfen
164 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
I. AUDIT REPORT
√ Applicable Not Applicable
Audit Report
He Xin Shen Zi. (2021) No.000176
To all shareholders of Haier Smart Home Co., Ltd.:
I. AUDIT OPINION
We have audited the financial statements of Haier Smart Home Co., Ltd. (hereinafter referred to as the
‘Haier Smart Home Co., Ltd.’), which comprise the Consolidated and the Company’s Balance Sheet as at
31 December 2020, the Consolidated and the Company’s Income Statement, the Consolidated and the
Company’s Cash Flow Statement, the Consolidated and the Company’s Statement of Changes in
Shareholders’ Equity for the year 2020, and notes related to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the
Consolidated and the Company’s financial position of the Haier Smart Home Co., Ltd. as at 31 December
2020, and the Consolidated and the Company’s financial performance and cash flow for the year 2020 in
accordance with the requirements of Accounting Standards for Business Enterprises.
II. BASIS OF OUR AUDIT OPINION
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those
standards are further described in Auditor’s responsibilities for the Audit of Financial Statements section of
the report. We are independent of Haier Smart Home Co., Ltd. in accordance with the CICPA’s Code of
Ethics for Professional Accountants (the Code), and we have fulfilled our other ethical responsibilities in
accordance with the Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
III. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We identify the following matters as the key audit matters that need to
be communicated in the audit report:
Haier Smart Home Co., Ltd. Annual Report 2020 165
Section XII Financial Report
Key Audit Matters Audit Response
(I) Provision for impairment of goodwill and intangible assets with indefinite useful lives
Relevant disclosures are included in note V. 28 We mainly implemented the following audit
Other significant accounting policies and procedures on the provisions for the impairment of
accounting estimates and note V.19 Impairment of goodwill and intangible assets with indefinite useful
long-term assets to the financial statements. life:
As of 31 December 2020, the book value of (1) Compared the actual operating results of the
related assets group with previous year’s
goodwill was RMB22.518 billion, and the book
forecasted figures, to assess the reliability of the
value of intangible assets with indefinite useful lives
management forecast on cash flow;
was RMB2.713 billion, without any provision for
asset impairment. Whether the provision for
(2) Compared the input of cash flow forecast with
impairment of long-term assets was sufficient had historical data, approved budget and business
great influence to the financial statements. plan;
Significant management judgments are involved in (3) Tested the calculation accuracy of the
calculation of asset group’s recoverable amount, discounted cash flow model;
such as revenue growth rate, gross margin,
discount rate, etc. (4) Assessed the appropriateness of parameters in
the cash flow conversion model, such as the
Provision for impairment of goodwill and intangible discount rate and the perpetual growth rate.
assets with indefinite useful lives is considered as The assessment is based our understanding of
the key audit matter due to the significant amount the Company’s businesses and the industry.
and management judgement involved in
calculation.
166 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Key Audit Matters Audit Response
(II) Provision for impairment of inventory
Relevant disclosures are included in note VII.8 We mainly implemented the following audit
Inventory to the financial statements. procedures on the provision for impairment of
inventories:
The Company’s inventories are measured at the
lower of cost and net realizable value. As of (1) Obtained the calculation table for provision
for impairment of inventory of the Company,
31 December 2020, the inventory balance was
and reviewed the conditions and aging of the
RMB30.736 billion, and the provision for
products models stated in the table to see
impairment of inventory was RMB1,289 million and
whether they are consistent with the information
the book value was RMB29.447 billion. Whether obtained through physical inventory on a
the provision for the impairment of inventories was sample basis;
sufficient and accurate had great influence to the
financial statements. (2) Compared the major parameters estimated by
management with historical data, and assessed
The Company determines the net realizable value the appropriateness;
of inventory based on the estimated selling price
minus the estimated selling expenses and related (3) Assessed the selling price estimated by the
taxes. management, and checked the inventory
against the actual selling price after the balance
Management estimates the selling price based on sheet date on a sample basis;
the status of inventory. The estimation process
(4) Assessed selling expenses and related tax
involves significant management judgments such as
estimated by management and compared with
inventory status, repair rate, discount rate, etc.
actual amounts incurred.
Provision for inventories is considered as the key
audit matter due to the significant amount and
management judgement involved in calculation.
Haier Smart Home Co., Ltd. Annual Report 2020 167
Section XII Financial Report
Key Audit Matters Audit Response
(III) Product warranty
Relevant disclosures are included in Note VII. 33 We mainly implemented the following audit
Non-current liabilities due within one year and Note procedures on the estimated liabilities:
VII. 40 Estimated liabilities to the financial
statements. (1) Obtained the calculation table on provisions of
the management;
Estimated liabilities of the Company are mainly
accrued due to current obligations arising from (2) Compared the main parameters estimated by
product warranty. As of 31 December 2020, the management with historical data;
balance of the estimated liabilities and non-current
liabilities due within one year related to product (3) Tested the accuracy of the calculation on
warranty was RMB2.911 billion, and whether the estimated liabilities;
provision for warranty was sufficient and accurate
had great influence to the financial statements. (4) Compared and analyzed the calculation results
of the estimated liabilities and the Company’s
Estimated liabilities for product warranty of the actual operation;
Company were measured in accordance with the
best estimate of the cost to fulfill the relevant
current obligations.
Calculation of the product warranty involves
management’s significant judgments based on
historical experience, such as: replacement rate,
repair rate, and loss due to disassemble product.
Estimated liabilities are considered as the key audit
matters due to the significant amount and
management judgement involved in calculation.
168 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IV. OTHER INFORMATION
The management of Haier Smart Home Co., Ltd. (hereinafter referred to as the “Management”) is
responsible for other information. Other information includes the information covered in the 2020 annual
report of Haier Smart Home Co., Ltd., but does not include the financial statements and our audit reports.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
V. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH
GOVERNANCE FOR THE FINANCIAL STATEMENTS
The Management is responsible for the preparation of the financial statements that give a true and fair view
in accordance with the requirements as set out in the Accounting Standards for Business Enterprises, and
for such internal control as necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management are responsible for assessing the ability of Haier
Smart Home Co., Ltd. to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the management either intends to liquidate
Haier Smart Home Co., Ltd. or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Haier Smart
Home Co., Ltd.
VI. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an audit report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Haier Smart Home Co., Ltd. Annual Report 2020 169
Section XII Financial Report
As part of an audit in accordance with auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also perform the following tasks:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsible to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used by the Management and the reasonableness
of accounting estimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cause significant doubt on the ability of Haier Smart Home Co., Ltd. to continue
as a going concern. If we conclude that a material uncertainty exists, we are required by the auditing
standards to draw attention in our audit report to the related disclosures in the financial statements or;
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our audit report. However, future events or conditions may cause
Haier Smart Home Co., Ltd. to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or
business activities within Haier Smart Home Co., Ltd. to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group audit, and
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
170 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
From the matters communicated with those charged with governance, we determine those matters that are
of most significance in the audit of the financial statements of the current period and therefore constitute the
key audit matters. We describe these matters in our audit report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our audit report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Hexin Certified Public Accountants LLP
Certified Public Accountant: Zhaobo (Engagement Partner)
Certified Public Accountant: Wang Lin
Jinan, China
30 March 2021
Haier Smart Home Co., Ltd. Annual Report 2020 171
Section XII Financial Report
II. FINANCIAL STATEMENTS
Consolidated Balance Sheet
31 December 2020
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
31 December
Items Notes 31 December 2020 2019
Current assets:
Monetary funds VII.1 46,461,329,426.91 36,178,815,683.25
Provision of settlement fund
Funds lent
Financial assets held for trading VII.2 2,165,192,497.83 308,135,007.05
Derivative financial assets VII.3 77,839,006.63 19,158,132.45
Bills receivable VII.4 14,136,349,754.34 13,951,419,893.96
Accounts receivable VII.5 15,930,024,286.67 11,015,871,060.09
Financing receivables
Prepayments VII.6 765,427,571.70 1,272,921,546.72
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables VII.7 1,717,152,945.65 2,163,517,802.50
Including: Interest receivables 322,473,254.91 273,009,954.80
Dividends receivables 4,915,409.42 4,524,472.84
Financial assets purchased under resale
agreements
Inventories VII.8 29,446,973,404.75 28,228,600,971.61
172 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
31 December
Items Notes 31 December 2020 2019
Contract assets VII.9 263,412,927.58 422,738,398.42
Assets held for sale
Non-current assets due in one year
Other current assets VII.10 3,283,888,900.58 6,985,966,115.46
Total current assets 114,247,590,722.64 100,547,144,611.51
Non-current assets:
Loans and advances granted
Debt investments
Other debt investments
Long-term receivables 330,588,978.97 307,588,203.00
Long-term equity investments VII.11 21,567,658,450.89 20,460,763,915.68
Investments in other equity instruments VII.12 2,659,125,265.54 1,395,959,878.92
Other non-current financial assets VII.13 294,547,364.47
Investment properties VII.14 28,387,002.81 29,402,691.38
Fixed assets VII.15 20,895,504,722.21 21,180,057,212.01
Construction in progress VII.16 3,596,902,447.07 2,391,364,659.97
Biological assets for production
Oil and gas assets
Right-of-use assets VII.17 2,839,858,259.27 2,755,066,601.59
Intangible assets VII.18 10,017,867,645.93 10,687,071,783.07
Development cost VII.19 167,746,724.13 193,285,777.10
Goodwill VII.20 22,518,460,337.64 23,351,729,813.35
Long-term prepaid expenses VII.21 455,742,504.13 437,586,912.58
Deferred income tax assets VII.22 2,208,301,258.25 1,578,901,892.73
Other non-current assets VII.23 1,925,761,560.17 1,843,764,965.81
Total non-current assets 89,211,905,157.01 86,907,091,671.66
Total assets 203,459,495,879.65 187,454,236,283.17
Current liabilities:
Short-term borrowings VII.24 7,687,908,165.88 8,585,049,237.18
Borrowings from central bank
Funds borrowed
Financial liabilities held for trading VII.25 26,952,508.66 42,799,173.35
Derivative financial liabilities VII.26 239,582,532.90 99,548,853.97
Bills payable VII.27 21,236,057,053.67 19,308,538,776.92
Accounts payables VII.28 36,302,971,944.48 33,750,567,046.28
Receipts in advance
Contract liabilities VII.29 7,048,637,659.48 5,583,008,412.49
Disposal of repurchased financial assets
Haier Smart Home Co., Ltd. Annual Report 2020 173
Section XII Financial Report
31 December
Items Notes 31 December 2020 2019
Absorbing deposit and deposit in inter-bank
market
Customer deposits for trading in securities
Amounts due to issuer for securities underwriting
Payables for staff’s remuneration VII.30 3,760,099,978.82 3,155,572,417.30
Taxes payable VII.31 2,399,705,460.12 2,117,056,381.04
Other payables VII.32 17,056,156,167.28 15,156,392,521.82
Including: Interest payables
Dividends payables
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for sale
Non-current liabilities due within one year VII.33 7,522,724,913.40 7,317,138,918.02
Other current liabilities VII.34 6,112,053,944.63 494,065,707.54
Total current liabilities 109,392,850,329.32 95,609,737,445.91
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings VII.35 11,821,416,259.81 13,276,452,935.56
Bonds payable VII.36 6,713,501,050.27 7,004,585,761.43
Including: Preference shares
Perpetual bonds
Lease liabilities VII.37 2,072,702,352.68 1,980,271,767.35
Long-term payables VII.38 98,203,261.27 142,342,718.45
Long-term payables for staff’s remuneration VII.39 1,245,775,024.35 1,122,350,237.36
Estimated liabilities VII.40 1,442,844,036.73 1,398,877,746.33
174 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
31 December
Items Notes 31 December 2020 2019
Deferred income VII.41 633,761,669.48 705,272,617.10
Deferred income tax liabilities VII.22 1,900,401,265.97 1,154,413,295.72
Other non-current liabilities VII.42 27,033,458.13 70,071,490.03
Total non-current liabilities 25,955,638,378.69 26,854,638,569.33
Total liabilities 135,348,488,708.01 122,464,376,015.24
Owners’ equity (or shareholders’ equity):
Paid-in capital (or share capital) VII.43 9,027,846,441.00 6,579,566,627.00
Other equity instruments VII.44 2,364,195,333.79 431,424,524.07
Including: Preference shares
Perpetual bonds
Capital reserve VII.45 15,009,027,407.40 4,435,890,845.47
Less: treasury stock 28,896,550.65
Other comprehensive income VII.46 -1,046,216,729.06 1,317,988,619.66
Special reserve
Surplus reserve VII.47 3,045,334,539.60 2,655,327,405.46
General risk provisions
Undistributed profits VII.48 38,445,132,172.47 32,468,121,744.26
Total equity attributable to owners (or
shareholders) of the Parent Company 66,816,422,614.55 47,888,319,765.92
Minority shareholders’ interests 1,294,584,557.09 17,101,540,502.01
Total owners’ equity (or shareholders’ equity) 68,111,007,171.64 64,989,860,267.93
Total liabilities and owners’ equity (or
shareholders’ equity) 203,459,495,879.65 187,454,236,283.17
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 175
Section XII Financial Report
Balance Sheet of the Parent Company
31 December 2020
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
31 December
Items Notes 2020 31 December 2019
Current Assets:
Monetary funds 8,286,549,909.64 5,624,406,816.79
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable 18.1 5,491,536,070.42 1,182,234,481.49
Financing receivables
Prepayments 295,050,991.15 30,749,459.11
Other receivables 18.2 3,906,373,387.61 5,885,752,905.74
Including: Interest receivables 38,582,434.11 16,753,860.49
Dividends receivables 3,836,055,151.41
Inventories 73,974,562.87 233,688,207.38
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 459,309,301.58 705,958,670.28
Total current assets 18,512,794,223.27 13,662,790,540.79
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 18.3 52,290,227,070.21 35,566,480,370.20
Investments in other equity instruments 804,334,894.58 5,147,131.28
Other non-current financial assets
Investment properties
Fixed assets 196,529,502.16 180,807,176.98
Construction in progress 8,319,418.36 65,367,920.02
Biological assets for production
Oil and gas assets
Right-of-use assets 2,076,376.95
Intangible assets 62,103,457.66 15,779,108.14
Development cost
Goodwill
Long-term prepaid expenses 4,208,602.97 5,405,209.80
176 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
31 December
Items Notes 2020 31 December 2019
Deferred income tax assets 154,335,216.49 97,384,845.46
Other non-current assets 26,894,836.99 3,792,624.04
Total non-current assets 53,549,029,376.37 35,940,164,385.92
Total assets 72,061,823,599.64 49,602,954,926.71
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables 248,172,640.78 3,412,291,778.06
Receipts in advance
Contract liabilities 8,716,599.17 16,562,259.31
Payables for staff’s remuneration 86,872,482.44 76,513,196.33
Taxes payable 55,756,358.98 86,856,453.32
Other payables 29,642,219,320.03 26,900,844,668.74
Including: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year 20,840,106.80
Other current liabilities 5,538,254,928.01 2,149,745.37
Total current liabilities 35,600,832,436.21 30,495,218,101.13
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities 877,995.63
Long-term payable 20,000,000.00
Long-term payables for staff’s remuneration
Estimated liabilities
Deferred income 24,250,000.00 59,820,000.00
Deferred income tax liabilities 219,544,771.62 43,325,120.18
Other non-current liabilities
Total non-current liabilities 244,672,767.25 123,145,120.18
Total liabilities 35,845,505,203.46 30,618,363,221.31
Haier Smart Home Co., Ltd. Annual Report 2020 177
Section XII Financial Report
31 December
Items Notes 2020 31 December 2019
Owners’ equity (or Shareholders’ equity):
Paid-in capital (or share capital) 9,027,846,441.00 6,579,566,627.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 20,408,352,380.95 7,036,531,178.83
Less: treasury stock
Other comprehensive income -10,030,704.15 11,077,477.45
Special reserve
Surplus reserve 2,440,188,314.15 2,050,181,180.01
Undistributed profits 4,349,961,964.23 3,307,235,242.11
Total owners’ equity (or shareholders’ equity) 36,216,318,396.18 18,984,591,705.40
Total liabilities and owners’ equity
(or shareholders’ equity) 72,061,823,599.64 49,602,954,926.71
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
178 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Consolidated Profit Statement
January-December 2020
Unit and Currency: RMB
Items Notes 2020 2019
I. Total operating revenue VII.49 209,725,821,099.44 200,761,983,256.57
Including: Operating revenue 209,725,821,099.44 200,761,983,256.57
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations 199,886,424,033.65 192,625,787,459.73
Including: Operating cost VII.49 147,475,181,245.03 140,868,398,722.26
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for
insurance contract liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges VII.50 660,506,917.33 802,045,039.88
Selling expenses VII.51 33,641,711,147.72 33,682,126,291.31
Administrative expenses VII.52 10,052,645,415.72 10,113,263,329.25
R&D expenses VII.53 6,860,161,572.42 6,266,936,518.17
Financial expenses VII.54 1,196,217,735.43 893,017,558.86
Including: Interest expenses 1,327,091,393.08 1,747,107,740.65
Interest income 486,179,773.00 550,224,661.04
Add: Other income VII.55 1,150,647,821.03 1,282,213,029.53
Investment income (losses are
represented by ‘-’) VII.56 4,060,104,212.78 5,479,539,484.34
Including: investment income of associates
and joint ventures
Income generated from the
derecognition of financial assets
measured at amortized cost
Exchange gain (losses are
represented by ‘-’)
Gains on net exposure hedges
(losses are represented by ‘-’)
Income from change in fair value
(losses are represented by ‘-’) VII.57 62,629,747.80 76,716,967.53
Loss on credit impairment (losses
are represented by ‘-’) VII.58 -166,380,605.76 -150,370,315.60
Loss on assets impairment (losses
are represented by ‘-’) VII.59 -1,335,630,451.94 -860,578,700.61
Gain from disposal of assets (losses
are represented by ‘-’) VII.60 -12,812,837.06 485,727,628.01
Haier Smart Home Co., Ltd. Annual Report 2020 179
Section XII Financial Report
Items Notes 2020 2019
III. Operating profit (losses are represented by ‘-’) 13,597,954,952.64 14,449,443,890.04
Add: non-operating income VII.61 197,444,051.06 390,971,548.74
Less: non-operating expenses VII.62 240,918,538.91 209,806,640.82
IV. Total profit (total losses are represented by ‘-’) 13,554,480,464.79 14,630,608,797.96
Less: income tax expense VII.63 2,231,864,187.51 2,296,216,280.86
VII.Net profit (net losses are represented by ‘-’) 11,322,616,277.28 12,334,392,517.10
(1) Classification by continuous operation
(I) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by ‘-’) 11,322,616,277.28 9,021,527,220.76
2. Net profit from discontinued operation
(net losses are represented by ‘-’) 3,312,865,296.34
(2) Classification by ownership of the equity
(II) Classification by ownership of the equity
1. Net profit attributable to shareholders of
the Parent Company (net losses are
represented by ‘-’) 8,876,593,208.19 8,206,247,105.96
2. Profit or loss attributable to minority
shareholders (net losses are represented
by ‘-’) 2,446,023,069.09 4,128,145,411.14
VI. Other comprehensive income, net of tax VII.64 -2,576,197,838.54 569,276,732.12
(I) Other comprehensive income attributable to
owners of the Parent Company, net of tax -2,537,334,822.50 545,356,272.31
1. Other comprehensive income that cannot
be reclassified into the profit or loss -73,070,215.55 -12,605,115.57
(1) Changes arising from re-measurement
of defined benefit plans -23,030,495.09 -9,515,689.78
(2) Other comprehensive income that
cannot be transferred into profit or loss
under equity method
(3) Changes in fair value of investments in
other equity instruments -50,039,720.46 -3,089,425.79
(4) Changes in fair value of credit risks of
the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss -2,464,264,606.95 557,961,387.88
(1) Other comprehensive income that can
be transferred into profit or loss under
equity method -368,885,317.13 83,635,935.11
(2) Changes in fair value of other debt
investments
180 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Items Notes 2020 2019
(3) Reclassified financial assets that are
credited to other comprehensive
income
(4) Credit impairment provision for other
debt investments
(5) Reserve for cash flow hedging -104,122,543.00 -36,169,378.90
(6) Exchange differences on translation of
financial statements denominated in
foreign currencies -1,991,256,746.82 510,494,831.67
(7) Others
(II) Other comprehensive income attributable to
minority shareholders, net of tax -38,863,016.04 23,920,459.81
VII. Total comprehensive income 8,746,418,438.74 12,903,669,249.22
(I) Total comprehensive income attributable to
the owners of Parent Company 6,339,258,385.69 8,751,603,378.27
(II) Total comprehensive income attributable to
the minority shareholders 2,407,160,053.05 4,152,065,870.95
VIII. Earnings per share:
(I) Basic earnings per share (RMB/share) 18.1 1.337 1.286
(II) Diluted earnings per share (RMB/share) 18.1 1.306 1.191
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 181
Section XII Financial Report
Profit Statement of the Parent Company
January-December 2020
Unit and Currency: RMB
Items Notes 2020 2019
I. Operating income 18.4 7,367,641,013.39 6,637,855,488.62
Less: operating cost 18.4 6,067,653,816.35 5,160,746,140.20
Taxes and surcharges 25,848,932.07 20,131,277.44
Selling expenses 395,396,033.18 387,604,103.39
Administration expenses 308,014,697.80 498,482,577.37
R&D expenses 301,514,824.27 319,939,911.68
Financial expenses 40,412,640.04 122,106,293.64
Including: interest expenses 96,677,861.04 166,897,467.02
Interest income 60,291,871.74 45,009,504.16
Add: other income 57,446,351.54 94,265,388.14
investment income (losses are represented
by ‘-’) 18.5 4,283,510,237.79 3,536,864,902.60
Including: investment income of associates and
joint ventures
Derecognition income on financial
assets measured at amortized cost
Gains on net exposure hedges (losses
are represented by ‘-’)
Income from change in fair value
(losses are represented by ‘-’)
Loss on credit impairment (losses are
represented by ‘-’) 363,022.59 383,369.58
Loss on assets impairment (losses are
represented by ‘-’) -41,019,305.94 -51,400,268.37
Gain from disposal of assets (losses
are represented by ‘-’) 61,268.03
II. Operating profit (losses are represented by ‘-’) 4,529,100,375.66 3,709,019,844.88
Add: non-operating income 816,497.38 9,474,684.80
Less: non-operating expenses 1,544,188.81 3,019,024.42
III. Total profit (total losses are represented by ‘-’) 4,528,372,684.23 3,715,475,505.26
Less: income tax expenses 628,301,342.84 45,214,621.71
IV. Net profit (net losses are represented by ‘-’) 3,900,071,341.39 3,670,260,883.55
(I) Net profit from continuous operations
(net losses are represented by ‘-’) 3,900,071,341.39 3,670,260,883.55
(II) Net profit from discontinued operations
(net losses are represented by ‘-’)
VII.Other comprehensive income, net of tax -21,108,181.60 3,286,132.98
182 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Items Notes 2020 2019
(I) Other comprehensive income that cannot be
reclassified into the profit or loss -954,819.46 -98,047.20
1. Changes arising from re-measurement of
defined benefit plans
2. Other comprehensive income that cannot
be transferred into profit or loss under
equity method
3. Changes in fair value of investments in
other equity instruments -954,819.46 -98,047.20
4. Changes in fair value of credit risks of the
enterprise
(II) Other comprehensive income to be
reclassified into the profit or loss -20,153,362.14 3,384,180.18
1. Other comprehensive income that can be
transferred into profit or loss under
equity method -20,153,362.14 3,384,180.18
2. Changes in fair value of other debt
investments
3. Reclassified financial assets that are
credited to other comprehensive income
4. Credit impairment provision for other debt
investments
5. Reserve for cash flow hedging (effective
portion of profit or loss arising from cash
flow hedging)
6. Exchange differences on translation of
financial statements denominated in
foreign currencies
7. Others
VI. Total comprehensive income 3,878,963,159.79 3,673,547,016.53
VII.Earnings per share:
(I) Basic earnings per share (RMB/share)
(II) Diluted earnings per share (RMB/share)
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 183
Section XII Financial Report
Consolidated Cash Flow Statement
January-December 2020
Unit and Currency: RMB
Items Notes 2020 2019
I. Cash flow from operating activities:
Cash received from the sale of goods and
rendering services 207,933,660,841.94 204,152,920,970.07
Net increase in distributor and inter-bank deposits
Net increase in borrowing from the central bank
Net cash increase in borrowing from other
financial institutes
Cash received from premiums under original
insurance contract
Net cash received from reinsurance business
Net increase in deposits of policy holders and
investment
Cash received from interest, fee and commissions
Net increase in cash borrowed
Net increase in cash received from repurchase
operation
Net cash received from customer deposits for
trading in securities
Refunds of taxes 1,028,615,379.56 898,183,873.66
Cash received from other related operating
activities VII.65 1,538,344,487.10 2,134,070,599.27
Sub-total of cash inflows from operating activities 210,500,620,708.60 207,185,175,443.00
Cash paid on purchase of goods and services 141,706,941,807.74 141,035,818,536.96
Net increase in loans and advances of distributors
Net increase in deposits in the PBOC and inter-
bank
Cash paid for compensation payments under
original insurance contact
Net increase in cash lent
Cash paid for interest, bank charges and
commissions
Cash paid for insurance policy dividend
Cash paid to and on behalf of employees 22,084,658,004.57 22,281,126,153.50
Cash paid for all types of taxes 8,018,680,088.18 8,909,484,821.52
Cash paid to other operation related activities VII.66 21,091,229,092.60 19,876,114,988.29
Sub-total of cash outflows from operating
activities 192,901,508,993.09 192,102,544,500.27
Net cash flow from operating activities VII.69 17,599,111,715.51 15,082,630,942.73
184 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Items Notes 2020 2019
II. Cash flow from investing activities:
Cash received from recovery of investments 7,645,625,690.38 1,922,506,706.23
Cash received from return on investments 616,767,534.63 587,572,407.11
Net cash received from the disposal of fixed
assets, intangible assets and other long-term
assets 324,276,028.59 261,126,967.93
Net cash received from disposal of subsidiaries
and other operating entities 861,212,858.63
Other cash received from investment activities VII.67 187,717,849.30 4,628,544.73
Sub-total of cash inflows from investing activities 9,635,599,961.53 2,775,834,626.00
Cash paid on purchase of fixed assets, intangible
assets and other long-term assets 7,773,724,013.64 6,194,093,049.63
Cash paid for investments 6,816,360,337.69 3,891,482,546.25
Net increase in secured loans
Net cash paid on acquisition of subsidiaries and
other operating entities 309,348,956.95 2,700,119,610.58
Other cash paid on investment activities VII.68 317,462.62 951,722,560.75
Sub-total of cash outflows from investing activities 14,899,750,770.90 13,737,417,767.21
Net cash flow from investing activities -5,264,150,809.37 -10,961,583,141.21
III. Cash flow from financing activities:
Cash received from capital contributions 1,331,296,569.70 440,579,441.68
Including: cash received from capital contributions
by minority shareholders of subsidiaries
Cash received from borrowings 28,732,212,245.36 18,468,949,110.20
Other cash received from financing activities VII.69 14,082,437.17 2,751,630.60
Sub-total of cash inflows from financing activities 30,077,591,252.23 18,912,280,182.48
Cash paid on repayment of loans 23,508,653,041.48 19,027,731,485.58
Cash paid on distribution of dividends, profits or
repayment of interest expenses 4,290,278,773.42 4,204,473,167.16
Including: dividend and profit paid to minority
shareholders by subsidiaries
Other cash paid to financing activities VII.70 3,304,582,534.88 1,693,038,756.15
Sub-total of cash outflows from
financing activities 31,103,514,349.78 24,925,243,408.89
Net cash flow from financing activities –1,025,923,097.55 –6,012,963,226.41
IV. Effect of fluctuations in exchange rates on
cash and cash equivalents –636,852,569.96 293,937,069.64
VII. Net increase in cash and cash equivalents 10,672,185,238.63 –1,597,978,355.25
Add: balance of cash and cash equivalents at the
beginning of the period VII.71 34,962,947,399.85 36,560,925,755.10
VI. Balance of cash and cash equivalents
at the end of the period VII.71 45,635,132,638.48 34,962,947,399.85
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 185
Section XII Financial Report
Cash Flow Statement of the Parent Company
January-December 2020
Unit and Currency: RMB
Items Notes 2020 2019
I. Cash flow from operating activities:
Cash received from the sale of goods and
rendering of services 3,603,881,541.71 1,740,547,441.74
Refunds of taxes 24,537,663.34 10,340,498.97
Other cash received from operating activities 75,205,449.89 152,431,584.44
Sub-total of cash inflows from operating
activities 3,703,624,654.94 1,903,319,525.15
Cash paid on purchase of goods and services 10,101,283,560.88 619,607,241.38
Cash paid to and on behalf of employees 515,906,240.68 734,773,203.47
Cash paid for all types of taxes 235,780,589.82 170,125,689.18
Other cash paid to operation activities 141,423,832.28 235,966,622.43
Sub-total of cash outflows from operating
activities 10,994,394,223.66 1,760,472,756.46
Net cash flow from operating activities -7,290,769,568.72 142,846,768.69
II. Cash flow from investing activities:
Cash received from recovery of investments 4,234,131,825.64 1,800,977,000.00
Cash received from return on investments 4,203,101,788.48 1,533,550,644.96
Net cash received from the disposal of fixed
assets, intangible assets and other long-term
assets
Net cash received from disposal of subsidiaries
and other operating entities
Other cash received from investment activities
Sub-total of cash inflows from investing
activities 8,437,233,614.12 3,334,527,644.96
Cash paid on purchase of fixed assets,
intangible assets and other long-term assets 107,123,777.09 38,846,142.08
Cash paid for investments 2,159,770,900.00 4,122,089,854.72
Net cash paid on acquisition of subsidiaries and
other operating entities
Other cash paid on investment activities 217,500,000.00 320,291,379.00
Sub-total of cash outflows from investing
activities 2,484,394,677.09 4,481,227,375.80
Net cash flow from investing activities 5,952,838,937.03 -1,146,699,730.84
III.Cash flow from financing activities:
Cash received from capital injections
Cash received from borrowings 10,000,000,000.00
Other cash received from financing activities 1,071,070,663.49 3,585,075,242.08
186 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Items Notes 2020 2019
Sub-total of cash inflows from financing
activities 11,071,070,663.49 3,585,075,242.08
Cash paid on repayment of borrowings 4,500,000,000.00 1,509,142,243.50
Cash paid on distribution of dividends, profits or
repayment of interest expenses 2,528,459,679.57 2,506,226,703.49
Other cash paid on financing activities 42,665,759.89 8,547,229.30
Sub-total of cash outflows from financing
activities 7,071,125,439.46 4,023,916,176.29
Net cash flow from financing activities 3,999,945,224.03 -438,840,934.21
IV. Effect of fluctuations in exchange rates on
cash and cash equivalents 128,500.51 -1,798,861.81
VII. Net increase in cash and cash equivalents 2,662,143,092.85 -1,444,492,758.17
Add: balance of cash and cash equivalents at
the beginning of the period 5,624,406,816.79 7,068,899,574.96
VI. Balance of cash and cash equivalents
at the end of the period 8,286,549,909.64 5,624,406,816.79
Legal representative: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 187
Section XII Financial Report
Consolidated Statement of Changes in Owner’s Equity
January-December 2020
Unit and Currency: RMB
2020
Equity attributable to owners of the Parent Company
Items Paid-in capital (or Other equity instruments Less: treasury Other comprehensive General risk Total owners’
share capital) preference shares perpetual bonds Others Capital reserve stock income Special reserve Surplus reserve provision Undistributed profits Others Sub-total Minority equity equity
I Closing balance for
the previous year 6,579,566,627.00 431,424,524.07 4,435,890,845.47 1,317,988,619.66 2,655,327,405.46 32,468,121,744.26 47,888,319,765.92 17,101,540,502.01 64,989,860,267.93
Add: changes i accounting pol c es
Error correction for prior period
Business combination under common
control
Others
I . Opening balance for
the current year 6,579,566,627.00 431,424,524.07 4,435,890,845.47 1,317,988,619.66 2,655,327,405.46 32,468,121,744.26 47,888,319,765.92 17,101,540,502.01 64,989,860,267.93
I I I crease/decrease for the
current period (decrease i represented by
‘-’) 2,448,279,814.00 1,932,770,809.72 10,573,136,561.93 28,896,550.65 -2,364,205,348.72 390,007,134.14 5,977,010,428.21 18,928,102,848.63 -15,806,955,944.92 3,121,146,903.71
(I) Total comprehensive i come -2,537,334,822.50 8,876,593,208.19 6,339,258,385.69 2,407,160,053.05 8,746,418,438.74
(I ) Capital i j ction and reduction by owners 2,448,279,814.00 1,932,770,809.72 10,732,277,435.61 28,896,550.65 13,988,600.10 15,098,420,108.78 –17,488,531,204.72 –2,390,111,095.94
1. Ordinary shares i vested by owners 2,448,279,814.00 12,696,003,281.09 28,896,550.65 15,115,386,544.44 –17,488,531,204.72 –2,373,144,660.28
2. Capital contribution by holders of
other equity i struments 1,932,770,809.72 –1,936,586,159.16 –3,815,349.44 –3,815,349.44
3. Share-based payment i cluded i
owners’ equity
4. Others -27,139,686.32 13,988,600.10 -13,151,086.22 -13,151,086.22
(I I Profit distribution 390,007,134.14 -2,857,344,619.27 -2,467,337,485.13 -725,584,793.25 -3,192,922,278.38
1. Withdrawal of surplus reserves 390,007,134.14 -390,007,134.14
2 Withdrawal of provis ons for general
risks
3. Distribution to owners (or
shareholders) -2,467,337,485.13 -2,467,337,485.13 -725,584,793.25 -3,192,922,278.38
4. Others
(IV) I ternal transfer of owner’s equity
1. Transfer of capital reserves i to
capital (or share capital)
2. Transfer of surplus reserves i to
capital (or share capital)
3. Surplus reserves used for remedying
l ss
4. Changes i defined benefit plans
carried forward to retained
earnings
5. Other comprehensive i come carried
forward to retained earnings
6. Others
(VI ) Specia reserve
1. Withdrawal for the period
2. Uti i ation for the period
(VI) Others –159,140,873.68 159,140,873.68 –42,238,160.71 –42,238,160.71 –42,238,160.71
I . Closing balance
for the period 9,027,846,441.00 2,364,195,333.79 15,009,027,407.40 28,896,550.65 -1,046,216,729.06 3,045,334,539.60 38,445,132,172.47 66,816,422,614.55 1,294,584,557.09 68,111,007,171.64
188 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
Unit and Currency: RMB
2019
Equity attributable to owners of the Parent Company
I ems Paid-in capital (or Other equity i struments Other comprehensive General risk
share capital) preference shares perpetual bonds Others Capital reserve Less: treasury stock i come Specia reserve Surplus reserve provis on Undistributed profits Others Sub-total Minority equity Total owners’ equity
I Closing balance for
the previous year 6,368,416,700.00 904,485,788.71 2,208,773,474.57 772,632,347.35 2,288,301,317.10 —
26,859,741,163.95 39,402,350,791.68 15,727,928,145.82 55,130,278,937.50
Add: changes i accounting pol c es —
Error correction for prior period —
Business combination under common
control 242,893,583.08 97,501,518.66 340,395,101.74 337,173,479.67 677,568,581.41
Others —
I . Opening balance for
the current year 6,368,416,700.00 904,485,788.71 2,451,667,057.65 772,632,347.35 2,288,301,317.10 —
26,957,242,682.61 39,742,745,893.42 16,065,101,625.49 55,807,847,518.91
I I I crease/decrease for
the current period ( ecrease i represented
by ‘-’) 211,149,927.00 –473,061,264.64 1,984,223,787.82 545,356,272.31 367,026,088.36 —
5,510,879,061.65 8,145,573,872.50 1,036,438,876.52 9,182,012,749.02
(I) Total comprehensive i come 545,356,272.31 8,206,247,105.96 8,751,603,378.27 4,152,065,870.95 12,903,669,249.22
(I ) Capital contribution and reduction by
owners 211,149,927.00 –473,061,264.64 1,984,223,787.82 — — — —
1,722,312,450.18 –2,522,706,368.51 –800,393,918.33
1. Ordinary shares i vested by owners 211,149,927.00 –473,061,264.64 2,033,725,374.42 —
1,771,814,036.78 –2,522,706,368.51 –750,892,331.73
2. Capital contribution by holders of
other equity i struments — —
3. Share-based payment i cluded i
owners’ equity —
4. Others –49,501,586.60 –49,501,586.60 –49,501,586.60
(I I Profit distribution —
367,026,088.36 — –2,602,360,649.09 –2,235,334,560.73 –578,699,909.63 –2,814,034,470.36
1. Withdrawal of surplus reserves 367,026,088.36 –367,026,088.36 —
2. Withdrawal of provis ons for general
risks — —
3. Distribution to owners (or
shareholders) –2,235,334,560.73 –2,235,334,560.73 –578,699,909.63 –2,814,034,470.36
4. Others —
(IV) I ternal transfer of owner’s equity — — — — —
1. Transfer of capital reserves i to
capital (or share capital) —
2. Transfer of surplus reserves i to
capital (or share capital) —
3. Surplus reserves used for
remedying l ss — —
4. Changes i defined benefit plans
carried forward to retained
earnings — —
5. Other comprehensive i come
carried forward to retained
earnings — —
6. Others —
(VI ) Specia reserve — — — — — — — — — — — —
1. Withdrawal for the period —
2. Uti i ation for the period —
(VI) Others –93,007,395.22 –93,007,395.22 –14,220,716.29 –107,228,111.51
I . Closing balance
for the period 6,579,566,627.00 431,424,524.07 4,435,890,845.47 1,317,988,619.66 2,655,327,405.46 —
32,468,121,744.26 47,888,319,765.92 17,101,540,502.01 64,989,860,267.93
Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 189
Section XII Financial Report
Statement of Changes in Owners’ Equity of the Parent Company
January-December 2020
Unit and Currency: RMB
2020
Paid-in capital (or Other equity instruments Other comprehensive
Items share capital) Preference shares Perpetual bonds Others Capital reserve Less: treasury stock income Special reserve Surplus reserve Undistributed profits Total owners’ equity
I Closing balance for
the previous year 6,579,566,627.00 7,036,531,178.83 11,077,477.45 2,050,181,180.01 3,307,235,242.11 18,984,591,705.40
Add: changes i accounting pol c es
Error correction for prior period
Others
I . Opening balance for
the current year 6,579,566,627.00 7,036,531,178.83 11,077,477.45 2,050,181,180.01 3,307,235,242.11 18,984,591,705.40
I I I crease/decrease for the current
period (decrease i represented by ‘-’) 2,448,279,814.00 13,371,821,202.12 -21,108,181.60 390,007,134.14 1,042,726,722.12 17,231,726,690.78
(I) Total comprehensive i come -21,108,181.60 3,900,071,341.39 3,878,963,159.79
(I ) Capital i j ction and reduction
by owners 2,448,279,814.00 13,371,821,202.12 15,820,101,016.12
1. Ordinary shares i vested
by owners 2,448,279,814.00 13,371,821,202.12 15,820,101,016.12
2. Capital contribution by
holders of other equity i struments
3. Share-based payment
i cluded i owners’ equity
4. Others
(I I Profit distribution 390,007,134.14 -2,857,344,619.27 -2,467,337,485.13
1. Withdrawal of surplus
reserves 390,007,134.14 -390,007,134.14
2. Distribution to owners (or
shareholders) -2,467,337,485.13 -2,467,337,485.13
3. Others
(IV) I ternal transfer of owner’s
equity
1. Transfer of capital reserves
i to capital (or share capital)
2. Transfer of surplus reserves
i to capital (or share capital)
3. Surplus reserves used
for remedying l ss
4. Changes i defined benefit
plans carried forward to retained earnings
5. Other comprehensive i come
carried forward to retained earnings
6. Others
(VI ) Specia reserve
1. Withdrawal for the period
2. Uti i ation for the period
(VI) Others
I . Closing balance for the period 9,027,846,441.00 20,408,352,380.95 -10,030,704.15 2,440,188,314.15 4,349,961,964.23 36,216,318,396.18
190 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
2019
Other equity i struments Less:
Paid-in capital (or share Perpetual Capital treasury Specia Surplus
I ems capital) Preference shares bonds Others reserve stock Other comprehensive i come reserve reserve Undistributed profits Total owners’ equity
I Closing balance for the previous year 6,368,416,700.00 473,061,264.64 4,182,825,672.98 7,791,344.47 1,683,155,091.65 2,239,335,007.65 14,954,585,081.39
Add: changes i accounting pol c es
Error correction for prior period
Others
I . Opening balance for the current year 6,368,416,700.00 473,061,264.64 4,182,825,672.98 7,791,344.47 1,683,155,091.65 2,239,335,007.65 14,954,585,081.39
I I I crease/decrease for the current
period (decrease i represented
by ‘-’) 211,149,927.00 -473,061,264.64 2,853,705,505.85 3,286,132.98 367,026,088.36 1,067,900,234.46 4,030,006,624.01
(I) Total comprehensive i come 3,286,132.98 3,670,260,883.55 3,673,547,016.53
(I ) Capital i j ction and reduction
by owners 211,149,927.00 -473,061,264.64 2,889,898,684.61 2,627,987,346.97
1. Ordinary shares i vested
by owners 211,149,927.00 -473,061,264.64 2,889,898,684.61 2,627,987,346.97
2. Capital contribution by holders
of other equity i struments
3. Share-based payment i cluded
i owners’ equity
4. Others
(I I Profit distribution 367,026,088.36 -2,602,360,649.09 -2,235,334,560.73
1. Withdrawal of surplus reserves 367,026,088.36 -367,026,088.36
2. Distribution to owners
(or shareholders) -2,235,334,560.73 -2,235,334,560.73
3. Others
(IV) I ternal transfer of owner’s equity
1. Transfer of capital reserves i to
capital (or share capital)
2. Transfer of surplus reserves i to
capital (or share capital)
3. Surplus reserves used for
remedying l ss
4. Changes i defined benefit
plans carried forward to retained earnings
5. Other comprehensive i come
carried forward to retained earnings
6. Others
(VI ) Specia reserve
1. Withdrawal for the period
2. Uti i ation for the period
(VI) Others -36,193,178.76 -36,193,178.76
I . Closing balance for the period 6,579,566,627.00 7,036,531,178.83 11,077,477.45 2,050,181,180.01 3,307,235,242.11 18,984,591,705.40
Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Annual Report 2020 191
Section XII Financial Report
III. GENERAL INFORMATION OF THE COMPANY
1. Overview of the Company
√ Applicable Not Applicable
The predecessor of Haier Smart Home Co., Ltd (hereinafter referred to as the Company) was
Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by
People’s Bank of China, Qingdao Branch on 16 December 1989, with the document of Qing Ti
Gai [1989] No. 3 issued on 24 March 1989, based on the reconstruction of the original Qingdao
Refrigerator Factory, a limited company was set up by directional fund raising of RMB150 million.
In March and September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2
and No. 9 issued by the pilot leading team of Qingdao joint stock company, the Company was
converted from a directional offering company to a public subscription company and issued
additional 50 million shares to the public and listed with trading on Shanghai Stock Exchange in
November 1993. In October 2018, D-shares in issue of the Company were listed on the China
Europe International Exchange AG. In December 2020, H-shares in issue of the Company were
listed on the Stock Exchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Industrial Park of Laoshan District,
Qingdao, Shandong Province, and the headquarters is located at the Haier Industrial Park of
Laoshan District, Qingdao, Shandong Province.
The Company is mainly engaged in manufacturing and trading as well as R&D of refrigerator, air-
conditioner, freezer, washing machine, water heater, dishwashers, gas stove and relevant
products and commercial circulation business.
The ultimate controlling parent company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
30 March 2020.
2. Scope of consolidated financial statements
√ Applicable Not Applicable
For details of changes in the scope of consolidated financial statements for the current period,
please refer to ‘VIII. Changes in Consolidation Scope’ and ‘IX. Interest in Other Entities’ of this
note.
192 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial statements of the Company were prepared on the going concern basis according to
the transactions and matters actually occurred, in accordance with the Accounting Standards for
Enterprises — Basic Standards published by the Ministry of Finance, specific accounting
standards, and guidance on application of accounting standards for enterprises, interpretations to
accounting standards for enterprises and other relevant requirements (hereinafter collectively
referred to as the ‘Accounting Standards for Enterprises’) which issued subsequently, and in
combination with the disclosure provisions of the Rules for the Information Disclosure and
Compilation of Companies Publicly Issuing Securities No. 15: General Provisions for Financial
Report (Revised in 2014) of CSRC as well as the following significant accounting policies and
accounting estimation.
2. Continuing operation
√ Applicable Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of the
reporting period and there are no significant events affecting its ability to continue as a going
concern.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Specific accounting policies and accounting estimates:
√ Applicable Not Applicable
According to the characteristics of its production and operation, the Company formulated a series of
specific accounting policies and accounting estimates, including the provisions for impairment for
accounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation and
amortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14), the
amortization of intangible assets (Note V.18), the criterion for determining of long-term assets
impairment (Note V.19); and the date of revenue recognition (Note V.25), etc.
1. Statement of compliance with Accounting Standards for Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting
Standards for Enterprises, which accurately and completely reflected information relating to the
financial condition of the Company on 31 December 2020, operation result of 2020 and cash
flow.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.
Haier Smart Home Co., Ltd. Annual Report 2020 193
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
3. Operating period
√ Applicable Not Applicable
The Company takes 12 months as an operating period, which is also the classification basis for
the liquidity of its assets and liabilities.
4. Recording currency
Renminbi is the recording currency of the Company.
5. Accounting methods of business combinations under common control and not
under common control
√ Applicable Not Applicable
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under common control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all of
the combining entities are ultimately controlled by the same party or parties both before
and after the combination, and that control is not transitory. For business combination
under common control, the party that obtains the control over the other parties on the
combination date is the acquirer, and other parties involving in the business combination
are the transferors. The combination date is the date on which the acquiring party
effectively obtains the control over the party being acquired.
In case the consideration for long-term equity investments formed in business combination
under common control is paid by ways of cash, transfer of non-cash assets or assumption
of debts, the Company will regard the share of carrying amounts of the net assets of the
transferor in the ultimate controller’s consolidated financial statements obtained as the initial
investment cost of long-term equity investments as at the date of combination. For carrying
value of net assets of the transferor is negative as at the date of combination, investment
cost of long-term equity investment is calculated as zero. In case the transferor is
controlled by the ultimate controller by the business combination under non-common
control before combination, the initial investment cost of the long-term equity investment of
the acquirer includes relevant goodwill. The Company should adjust the capital reserve
(capital premium or share premium) in accordance with the differences between initial
investment cost of the long-term equity investment and the cash paid, the non-cash assets
transferred and the carrying value of liability assumed; in case the balance of the capital
reserve (capital premium or share premium) is insufficient for the elimination, the surplus
reserves and undistributed profits shall be used to dilute such expenses in order. In case
the consideration for the combination is paid by issuance of equity instruments, the
aggregate nominal value of shares issued will be deemed as the share capital. The
difference between the initial investment cost of long-term equity investments and
aggregate nominal value of shares issued shall be adjusted to capital reserve (capital
premium or share premium), in case the capital reserve (capital premium or share premium)
is insufficient for the elimination, the surplus reserves and undistributed profits shall be used
to dilute such expenses in order.
194 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
5. Accounting methods of business combinations under common control and not
under common control (continued)
(1) Business combinations under common control (continued)
Intermediary fees (such as audit, legal services and valuation consultancy) and other
relevant management fees incurred in the business combination by the acquirer are
credited in profit or loss in the period when they occurred. Trading expenses in direct
relation to the issuance of equity instrument as the consideration for the combination is
written down to the capital reserve (share premium), where the capital reserve (share
premium) is insufficient, and to surplus reserves and undistributed profits in order. Trading
expenses in direct relation to the issuance of debt instrument as the consideration for the
combination is included in the initial recognition amount of the debt instrument.
For business combination under common control realized through several transactions step
by step, in case of a package transaction, all the transactions are accounted as one
transaction that has acquired the control; in case of not a package transaction, in the
financial statement of parent company the capital reserve (share premium) is adjusted by
the difference between the initial investment cost and the sum of the carrying value of the
original long-term equity investment and the book value of the new payment consideration
for further acquisition of shares with the share of acquirer’s owner’s equity on the date of
combination in case calculated on the proportion of shareholding on the date of
combination as its initial investment cost; where the capital reserve is insufficient, the
retained earnings will be used to offset such expenses.
In the consolidated financial statements, the long-term equity investment held by the
combining party before the date of acquiring control of the combined parties, and the profit
and loss, the other comprehensive income and changes in the other owners’ equity
recognized during the period between the later of the date of acquisition and the date
when the combining and the combined parties are under the common control of the same
party and the date of combination, are written down to the retained earnings or profit or
loss at the beginning of the comparative reporting period, respectively.
Haier Smart Home Co., Ltd. Annual Report 2020 195
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
5. Accounting methods of business combinations under common control and not
under common control (continued)
(2) Business combinations involving entities not under common control
A business combination not under common control is a business combination in which all
of the combining entities are not ultimately controlled by the same party or parties both
before and after the combination. For business combination not under common control, the
party that obtains the control of the other parties at the combination date is the acquirer;
other parties involving in the business combination are the transferors. The combination
date is the date on which the acquirer effectively obtains control of the transferors.
In business combination involving entities not under common control, the cost of
combination shall be the sum of the assets paid, obligations incurred or assumed and the
fair value of the equity securities issued by the acquirer for obtaining control of the
transferor at the date of acquisition. Intermediary fees (such as audit, legal services and
valuation consultancy) and other relevant management fees incurred by the acquirer for the
purpose of business combination are credited in profit or loss in the period when they
occurred. Transaction fees for the equity instruments or debt instruments issued by the
acquirer as combination consideration is included in the initial recognition amount of such
equity instruments or debt instruments. Contingent consideration involved shall be recorded
as the combination cost based on its fair value on the acquisition date. Should any new or
further evidence arise within 12 months after the acquisition date and makes it necessary
to adjust the contingent consideration on the acquisition date, the goodwill arising from the
business combination shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in a business
combination are measured at fair value on the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the transferor’s identifiable
net assets, the difference is recognized as goodwill; where the cost of combination is lower
than the acquirer’s interest in the fair value of the transferor’s identifiable net assets, the
difference is initially recognized in profit or loss for the current year after a review of
computation for the identifiable assets, liabilities or fair value of contingent liabilities and
combination cost, and where the combination cost is still lower than the fair value of the
identifiable net assets of the transferor obtained during the course of combination, then the
difference is recorded in the profit and loss.
In business combination involving entities not under common control that is realized in
phases through multiple exchange transactions, in the Company individual financial
statements, the sum of the book value of the equity investment of the transferor held
before the date of acquisition and the cost of new investment on the date of acquisition
are recognized as the initial investment cost of such investment.
196 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
5. Accounting methods of business combinations under common control and not
under common control (continued)
(2) Business combinations involving entities not under common control (continued)
In the consolidated financial statement, the equity of the transferor held before the date of
acquisition is re-measured at the fair value on the date of acquisition, and the difference
between the fair value and book value is included in current investment income; where the
equity of the transferor held before the date of acquisition involves the other comprehensive
income, such equity and relevant other comprehensive income are transferred to current
investment income on the date of acquisition, other than the other comprehensive income
that cannot be reclassified in the profit or loss.
The fair value on the acquisition date of equity interest in the transferor prior to the
acquisition date and the fair value of the considerations paid for the acquisition of the new
equity on the acquisition date are regarded as the combination costs of the Company,
comparing with acquirer’s share of the fair value on the acquisition date of the transferor’s
net identifiable assets on the proportion of the shareholding on the acquisition date to
confirm the goodwill that required to be recognized on the acquisition date or the amount
that shall be included in the profit or loss.
6. Preparation method of consolidated financial statements
√ Applicable Not Applicable
(1) Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled
by the Company) into the scope of consolidation financial statements, including the
enterprises under the Company’s control, divisible part in the investees and structured
entities.
(2) To unify the accounting policies, balance sheets date and accounting periods of the
Company and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in
accordance with the Company’s accounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheets
of the Company and subsidiaries, which offset the internal transactions incurred between
the Company and subsidiaries and among subsidiaries. The owner’s equity of the
subsidiaries not attributable to the Company shall be presented as ‘minority equity’ under
the owner’s equity item in the consolidated balance sheet.
The long-term equity investment of the Company held by the subsidiaries, deemed as
treasury stock of the corporate group as well as the reduction of owners’ equity, shall be
presented as ‘Less: Treasury stock’ under the owner’s equity item in the consolidated
balance sheet.
Haier Smart Home Co., Ltd. Annual Report 2020 197
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
6. Preparation method of consolidated financial statements (continued)
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control, the assets,
liabilities, operating results and cash flow of the subsidiaries are included in the
consolidated financial statements from the beginning of the period in which the combination
took place, as if the combination has taken since the ultimate controller began its control.
When preparing the consolidated financial statements, for the subsidiaries acquired from
business combination under non-common control, separate financial statement will be
adjusted on the basis of their fair values of the identifiable net assets on the date of
acquisition.
7. Classification of joint arrangement and accounting methods of joint operations
√ Applicable Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In
accordance with the Company’s rights and obligations under a joint arrangement, the Company
classifies joint arrangements into joint operations and joint ventures.
Joint operations refer to a joint arrangement in which the Company is a party and is entitled to
relevant assets and obligations of this arrangement. The Company recognizes the following items
in relation to its interest in a joint operation, and accounts the same in accordance with relevant
accounting standards for business enterprises:
(1) recognize the assets held solely by the Company, and recognize assets held jointly by the
Company in appropriation to the share of the Company; (2) recognize the obligations
assumed solely by the Company, and recognize obligations assumed jointly by the
Company in appropriation to the share of the Company; (3) recognize revenue from
disposal of joint operations in appropriation to the share of the Company; (4) recognize
revenue from disposal of joint operations in appropriation to the share of the Company; (5)
recognize fees solely occurred by the Company and recognize fees from joint operations in
appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the assets
do not constitute a business, the same below) from joint operations, the Company shall only
recognize the part of profit or lost from this transaction attributable to other parties of joint
operations before these assets are sold to a third party. In case of an impairment loss incurred
on these assets which meets the requirements as set out in Accounting Standards for Business
Enterprises No. 8 — Asset Impairment, the Company shall full recognize the amount of this loss
in relation to its investment in or sale of assets to joint operations or recognize the loss
according to the Company’s share of commitment in relation to the its purchase of assets from
joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled to net
assets of this arrangement. Investment in joint venture is accounted for using the equity method
according to the accounting policies referred to under ‘12 Long-term equity investment’ of Note
V.
198 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available
for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid
investments held by the Company that are readily convertible to known amounts of cash and
which are subject to an insignificant risk on change in value.
9. Foreign currency businesses and translation of foreign currency statements
√ Applicable Not Applicable
(1) Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional
currency by applying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currencies
at the rates of exchange ruling at the balance sheet date. All foreign exchange difference
are credited in the profit or loss, except those arising from the funds denominated in
foreign currency specially borrowed for the establishment of the qualifying assets are
treated based on the principal of capitalization of borrowing costs; those arising from
the other changes in the balance other than amortized cost of available-for-sale monetary
items denominated in foreign currency are recognized in the other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using the
spot exchange rate prevailing on the date when transaction occurred and its functional
currency shall remain unchanged. Non-monetary items denominated in foreign currencies
that are measured at fair value are translated using the foreign exchange rate at the date
the fair value is determined; the exchange differences between the translated and original
amounts of functional currencies are recognized in the statement of profit or loss or other
comprehensive income as changes in fair value (including changes in exchange rate).
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint
ventures and associates under the control of the Company are different from that of the
Company, their financial statements denominated in foreign currencies shall be translated to
perform accounting and prepare the consolidated financial statements.
The assets and liabilities of the balance sheet are translated using the spot exchange rate
at the balance sheet date; all items except for ‘undistributed profits’ of the owner’s equity
are translated at the spot exchange rate on the transaction date. The revenue and
expenses in the income statement are translated using the approximate rate of the spot
exchange rate on the transaction date. Differences arising from the translation of foreign
currency financial statements are presented as the ‘other comprehensive income’ in the
owner’s equity of the balance sheet.
Haier Smart Home Co., Ltd. Annual Report 2020 199
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
9. Foreign currency businesses and translation of foreign currency statements
(continued)
(2) Translation of foreign currency financial statements (continued)
Foreign currency cash flow is translated using the approximate rate of the spot exchange
rate on the transaction date. The impact of exchange rate changes on cash amount is
reflected separately in the cash flow.
When disposing overseas operations, the translation difference related to the overseas
operation shall be transferred together or as the percentage of disposing the overseas
operation to profit or loss in the current period of disposal.
10. Financial instruments
√ Applicable Not Applicable
A financial instrument refers to 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 financial liability is
recognized when the Company becomes a party to the contract of a financial instrument.
(1) Financial assets
Classification and measurement
According to the business model for managing financial assets and the contractual
cash flow characteristics of financial assets, the Company classifies financial assets
into: (1) Financial assets measured at amortized cost; (2) financial assets measured at
fair value through other comprehensive income; (3) financial assets measured at fair
value through profit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial
assets measured at fair value through profit and loss of the current period, related
transaction costs are directly included in profit and loss of the current period; for
other types of financial assets, related transaction costs are included in their initial
recognized amounts. For the accounts receivable or bills receivable arising from the
sale of products or the provision of labor services that do not contain or consider the
significant financing components, the Company shall take the consideration amount
entitled to be received as the initial recognized amount.
a. Debt instrument
The debt instruments held by the Company refer to the tools that are in
conformity with the definition of financial liability from the perspective of the
issuing party, which are measured in the following three ways, respectively:
200 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(1) Financial assets (continued)
Classification and measurement (continued)
a. Debt instrument (continued)
(a) Measured at amortized cost:
The Company’s business model for managing such financial assets is:
With the aim of obtaining contractual cash flow, the contractual cash flow
characteristics of such financial assets shall be consistent with the basic
lending arrangements, that is, the cash flow generated on a specific date
is only the payment for the principal and the interest based on the
outstanding principal amount. For such financial assets, the Company
recognizes the interest income in accordance with the effective interest
method. Such financial assets mainly include cash and cash equivalents,
bills receivable and accounts receivable, other receivables, creditor’s right
investment and long-term receivables. The Company lists the creditor’s
rights investments and long-term receivables matured within one year
(including one year) from the balance sheet date as non-current assets
matured within one year; the creditor’s rights investments matured within
one year (including one year) when being obtained are listed as other
current assets.
(b) Measured at fair value through other comprehensive income:
The Company’s business mode for managing such financial assets is: With
the aim of obtaining contractual cash flow and selling the financial assets,
the contractual cash flow characteristics of such financial assets shall be
consistent with the basic lending arrangements. Such financial assets are
measured at fair value through other comprehensive income, but
impairment gains and losses, exchange gains and losses, and interest
income calculated by the effective interest method are included in profit
and loss of the current period. Such financial assets are listed as other
creditor’s rights investments. Other creditor’s rights investments matured
within one year (including one year) from the balance sheet date are listed
as non-current assets matured within one year; other creditor’s rights
investments matured within one year (including one year) when being
obtained are listed as other current assets.
Haier Smart Home Co., Ltd. Annual Report 2020 201
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(1) Financial assets (continued)
Classification and measurement (continued)
a. Debt instrument (continued)
(c) Measured at fair value through profit or loss of the current period:
The Company lists its held debt instruments that are neither measured at
amortized cost nor at fair value through other comprehensive income as
financial assets held for trading measured at fair value through profit or
loss of the current period. At the time of initial recognition, in order to
eliminate or significantly reduce accounting mismatch, the Company
designated some financial assets as financial assets measured at fair value
through profit or loss of the current period. Investments that are matured
more than one year and are expected to be held for more than one year
from the balance sheet date are listed as other non-current financial
assets.
b. Equity instruments
The Company lists equity instrument investments that have no control, joint
control and significant influence on itself as financial assets held for trading
measured at fair value through profit or loss of the current period; investments
that are expected to be held for more than one year from the balance sheet
date are listed as other non-current financial assets.
In addition, the Company designated some non-trading equity instrument
investments as financial assets measured at fair value through other
comprehensive income, which are listed as other equity instrument investments.
The relevant dividends and interest income of such financial assets are included
in profit and loss of the current period.
Impairment
For financial assets measured at amortized cost and debt instrument investments
measured at fair value through other comprehensive income, contract assets and
financial guarantee contracts, the Company recognizes the loss provision based on
the expected credit losses.
The Company considers reasonable and reliable information about past events,
current conditions and forecasts of future economic conditions, and takes the risk of
default as a weight, and calculates the probability-weighted amount of the present
value of the difference between the cash flow receivable and the cash flow expected
to be received of the contract to confirm the expected credit losses.
202 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(1) Financial assets (continued)
Impairment (continued)
On each balance sheet date, the Company measures the expected credit losses of
financial instruments in different phases. If the credit risk has not increased
significantly since the initial recognition, the financial instruments are in the first
phase. The Company measures the loss provision according to the expected credit
losses in the next 12 months; if credit risk has increased significantly but credit
impairment has not yet occurred since the initial recognition, the financial instruments
are in the second phase. The Company measures the loss provision according to the
expected credit losses of the instruments during the entire duration; if credit
impairment has occurred since the initial recognition, the financial instruments are in
the third phase. The Company measures the loss provision according to the expected
credit losses of the instruments during the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the
Company measures the loss provision according to the expected credit losses in the
next 12 months, assuming that its credit risk has not increased significantly since the
initial recognition.
For financial instruments in the first phase and second phase and financial
instruments with relatively lower credit risk, the Company calculates interest income
based on their book balance before the deduction of provisions and effective interest
rate. For financial instruments in the third phase, the Company calculates interest
income based on their amortized cost after the impairment provision has been
deducted from the book balance and effective interest rate.
For bills receivable, accounts receivable and contractual assets, whether there exist
significant financing components, the Company measures loss provision based on
expected credit loss over the entire duration.
The Company classifies accounts receivable into groups on the basis of shared credit
risk characteristics, and calculates the expected credit losses on groups, the bases of
group determination are as follows:
For each group of bills receivable, the Company applies exposure at default and
expected credit losses rate over the entire duration to calculate the expected credit
losses by taking into account the historical credit losses experience, the existing
conditions and forecast of future economic conditions.
Haier Smart Home Co., Ltd. Annual Report 2020 203
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(1) Financial assets (continued)
Impairment (continued)
For each group of accounts receivable, the Company makes the comparison of
expected credit losses rates of accounts receivable in overdue days and over the
entire duration to calculate the expected credit losses by taking into account the
historical credit losses experience, the existing conditions and forecast of future
economic conditions.
For each group of other accounts receivable, the Company applies exposure at
default and expected credit losses rate within the next 12 months or over the entire
duration to calculate the expected credit losses by taking into account the historical
credit losses experience, the existing conditions and forecast of future economic
conditions.
The Company recognizes the loss impairment provision or reversed in profit or loss of
the current period. For held debt instruments at fair value through other
comprehensive income, the Company recognizes loss/gain on impairment in profit or
loss of the current period, and adjusts other comprehensive income at the same
time.
Derecognition
A financial asset is derecognized when any of the below criteria is met: a. the
contractual rights to receive the cash flow from the financial asset have been
transferred; b. the financial asset has been transferred and the Company transfers
substantially all the risks and rewards of ownership of the financial asset to the
transferee; c. the financial asset has been transferred and the Company has not
retained control of the financial asset, although the Company neither transfers nor
retains substantially all the risks and rewards of ownership of the financial asset.
On de-recognition of other equity instruments investment, the difference between the
book balance and the sum of the consideration received and any cumulative profit or
loss of fair value that had been recognized in other comprehensive income is
recognized in the retained earnings. On de-recognition of other financial assets, the
difference between the book balance and the sum of the consideration received and
any cumulative profit or loss of fair value that had been recognized in other
comprehensive income is recognized in the profit and loss of the current period.
204 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(2) Financial liabilities
Financial liabilities are classified as financial liabilities measured at amortized cost and
financial liabilities at fair value through profit and loss of the current period at initial
recognition.
The financial liabilities of the Company are financial liabilities measured at amortized cost,
including bills payable, accounts payable, other payables, borrowings, bonds payable, etc.
Such financial liabilities are recognized initially at fair value less transaction costs and
subsequently measured using the effective interest method. Financial liabilities with a
maturity of less than one year (including one year) are listed as current liabilities: those with
maturity of more than one year but are mature within one year from the balance sheet date
(including one year) are listed as non-current liabilities due within one year; the rest are
presented as non-current liabilities.
When all or partial current obligations of financial liabilities have been discharged, such
financial liabilities or the part with obligations discharged are derecognized by the
Company. The difference between the carrying amount of a financial liability de-recognized
and the consideration paid is recognized in the profit and loss of the current period.
(3) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at
the quoted price in the active market. The fair value of a financial instrument that is not
traded in an active market is determined by using a valuation technique. During the
valuation, the Company adopts an applicable valuation technique under current conditions
and there are enough available data and other information to support. Those inputs should
be consistent with the inputs a market participant would use when pricing the asset or
liability, and the Company should maximize the use of relevant observable inputs. When
related observable inputs can’t be acquired or are not feasible to be acquired, then use
unobservable inputs.
(4) Significant accounting estimates and judgment
Significant accounting estimates and underlying key assumptions
Measurement of expected credit loss (“ECL”)
The Company measures ECL through default risk exposure and the ECL rate, which
is determined based on the default probability rate and default loss rate. In
determining the ECL rate, the Company uses data such as internal historic credit loss
experience and adjusts the historic data taking into consideration current conditions
and prospective information. When considering prospective information, indicators
adopted by the Company include the risk of economic downside, expected growth in
unemployment rate, and changes in external market conditions, technical conditions
and customer conditions. The Company monitors and reviews the assumptions
relating to ECL computation on a regular basis. There was no significant change to
aforesaid estimation technique and key assumptions during the year.
Haier Smart Home Co., Ltd. Annual Report 2020 205
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
10. Financial instruments (continued)
(4) Significant accounting estimates and judgment (continued)
Key judgment made in the adoption of accounting policies
a. Classification of financial assets
The determination of the classification of financial assets involves significant
judgment, including analysis of the business model and characteristics of
contract cash flow.
The Company determines the business model for managing financial assets at
the level of financial asset groups. Factors considered include the methods by
which the performance of financial assets are assessed and reported to key
management members, risks affecting the performance of financial assets and
how such risks are managed and the method in which related business
management personnel are remunerated.
In assessing whether the contract cash flow of financial assets is consistent
with the basic loan arrangement, the Company exercises the following principal
judgments: whether the time distribution or amount of principal during the
period could change as a result of early repayment or other reasons; whether
interest include only the time value of the currency, cost of credit risk and other
basic risk and consideration for profit. For example, whether the early
repayment amount reflects only the outstanding principal amount and interests
accrued thereon, and reasonable compensation paid for premature termination
of contract.
b. Judgment of significant increase in credit risk
The Company’s principal criteria for the judgment that credit risk has
significantly increased is an overdue for more than 30 days, or significant
change in one or more of the following indicators: significant change in the
business environment in which the debtor operates, its internal and external
credit ratings, and its actual or expected operating results, and significant
decrease in the value of collaterals or the credit rating of the guarantor, among
others.
The Company’s principal criteria for the judgment that a credit impairment has
occurred is an overdue for more than 90 days (namely, default has occurred),
or fulfillment of one or more of the following conditions: the debtor experiences
significant financial difficulties, is undergoing other debt restructuring or is likely
to go into bankruptcy.
206 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
11. Inventory
√ Applicable Not Applicable
(1) Classification of inventory
Inventory refers to finished products and commodities held by the Company in daily
activities for sale, products in progress, materials and supplies consumed in the process of
production or provision of labour services, including mainly raw materials, turnover
materials, materials for commissioned processing work, packaging materials, products in
progress, semi-finished products through in-house manufacturing, finished products
(products in stock) and project construction, among others.
(2) Pricing of dispatch of inventory
An inventory item is accounted for using the weighted average method upon dispatch.
(3) Impairment provision for inventory
At the balance sheet date, inventory is measured at the lower of cost and net realisable
value.
The net realisable value of inventories that can be directly put to sale, including finished
products, commodities and materials for sale is determined as the estimated selling price of
such inventory less estimated selling expenses and related tax expenses; the net realisable
value of or inventories held for production, is determined as the estimated selling price of
finished products manufactured less estimated cost incurred upon completion, estimated
selling expenses and related tax expenses; the net realisable value of inventory held for the
execution of sales contract or labour contract is computed on the basis of the contract
price. If the quantity of inventories held by a company is more than the quantity ordered
under a sales contract, the net realisable value of the inventories in excess is computed on
the basis of the general selling price.
Inventory impairment provision is made on the basis of individual inventory items, provided
that if certain inventories are related to a series of products manufactured and sold in the
same region with identical or similar end uses or purposes and are difficult to measure
separately with other items, their cost and net realisable value may be measured on an
aggregate basis. Inventories The cost and net realizable value of inventories in large
quantity with low unit prices are measured according to inventory types.
At the balance sheet date, if the cost of inventory is higher than its net realisable value,
impairment provision is made and charged to current profit or loss. If the factor causing the
write-down of inventory value has been removed, the amount of write-down should be
reversed and transferred out of the previous inventory impairment provision amount. The
reversed amount is included in current profit or loss.
(4) Inventory system
The Company adopts the perpetual inventory system.
Haier Smart Home Co., Ltd. Annual Report 2020 207
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
11. Inventory
(5) Amortisation of low-value consumables and packaging materials
The Company adopts one-off amortisation of its low-value consumables and packaging
materials.
12. Long-term equity investments
√ Applicable Not Applicable
Long-term equity investments hereunder refer long-term equity investments in which the
Company exercises control, joint control or significant influence over the investee. Long-term
equity investments in which the Company does not exercises control, joint control or significant
influence over the investee are classified as available-for-sale financial assets.
(1) Determination of initial investment cost
The initial cost of long-term equity investments acquired through business combination
involving parties under common control should be recognised as the share of the
carrying value of the owner’s equity of the acquired party; the initial cost of long-term
equity investments acquired through business combination involving parties not under
common control should be recognised as the combination costs determined at the
date of acquisition;
For equity investment other than long-term equity investments acquired through
business combination, the initial investment cost of long-term equity investments
acquired with cash payment is the acquisition price actually paid; the initial
investment cost of long-term equity investments acquired with the issuance of equity-
based securities is represented by the fair value of equity-based securities; the initial
investment cost of long-term equity investments acquired through debt restructuring
should be determined in accordance with relevant provisions under “ASBE 12 —
Debt Restructuring”; the initial investment cost of long-term equity investment
acquired in exchange for non-monetary assets shall be determined in accordance
with relevant provisions of the standard.
(2) Subsequent measurement and recognition of profit or loss
Cost method
Long-term equity investments in which the investor is able to exercise control over the
investee is accounted for using the cost method. Under the cost method, the
carrying value of long-term equity investments, other than additional investment or
recouped investment, shall remain constant. When profit distribution or cash dividend
is declared, the portion of entitlement is recognised as investment income.
208 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
12. Long-term equity investments (continued)
(2) Subsequent measurement and recognition of profit or loss (continued)
Equity method
The equity method is used to account for long-term equity investments in associates
and joint ventures. If a part of the equity investment in an associate is held indirectly
through risk investment institutions, mutual funds, trust companies or similar principals
(including investment-cum-insurance funds), the investor may elect to measure such
indirectly held investment at fair value through profit or loss and measure the
remaining portions using the equity method, in accordance with relevant provisions of
“ASBE 22- Recognition and Measurement of Financial Instruments”, whether or the
aforesaid principals are exercising significant influence over this part of the investment
Under the equity method, the initial investment cost is not adjusted for any excess of
the initial investment cost over the share of the net fair value of the investee’s
identifiable assets. When the initial investment cost is less than the share of the fair
value of the investment’s identifiable net assets, the difference is recognised in
current profit or loss and the cost of long-term equity investment is adjusted
accordingly.
Under the equity method, share of net profit or losses and other comprehensive
income of the investee are recognised as investment income and other
comprehensive income, respectively, and the carrying amount of the long-term equity
investment is adjusted accordingly. Share of profit or cash dividend declared by the
investee is charged against the carrying value of the long-term equity investment;
changes in owners’ equity of the investee other than net profit or loss, other
comprehensive income and profit distribution are adjusted against the carrying value
of long-term equity investment and included in capital reserve. Share of net profit or
loss of the investee is recognised on the basis of the fair value of the identifiable
assets of the investee when the investment is acquired and adjusted against the net
profit of the investee. If the accounting policy and accounting period of the investee
are inconsistent with those of the Company, the financial statements of the investee
is adjusted to align with the accounting policy and accounting period of the
Company, and investment income and other comprehensive income is recognised
accordingly.
Net losses of the investee is recognised by deducting the carrying value of the long-
term equity investment together with long-term equity that in substance forms part of
the net investment in the investee until it reaches zero. Moreover, if the Company has
incurred obligations to assume additional losses of the investee, estimated liabilities
are recognised according to the obligation expected to be assumed and charged to
current investment loss. If the investee records net profit in future periods, the
Company shall recognise its share of gains after applying such share of gains to
make up for the unrecognised share of loss.
Haier Smart Home Co., Ltd. Annual Report 2020 209
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
12. Long-term equity investments (continued)
(3) Change of accounting method for long-term equity investment
Change from fair value measurement to the equity method: If an equity investment
in the investee not previously affording control, joint control or significant
influence and accounted for in accordance with the standard for recognition
and measurement of financial instruments becomes capable of affording joint
control or significant influence over the investee as a result of increased
shareholding following additional investment, the accounting method should be
changed to the equity method, and the fair value of the original equity
investment determined according to the standard for recognition and
measurement of financial instruments plus the fair value of consideration paid for
the acquisition of the new investment shall be changed the initial investment
cost under the equity method.
Change from fair value measurement or equity method to cost method: if an
equity investment previously held in the investee not previously affording control,
joint control or significant influence and accounted for in accordance with the
standard for recognition and measurement of financial instruments, or a long-
term equity investment previously held in associates or joint ventures becomes
capable of affording control over the investee, it is accounted for long-term
equity investment formed through business combination.
Change from equity method to fair value measurement: if a long-term equity
investment previously held in the investee affording joint control or significant
influence ceases to afford joint control or significant influence as a result of
decrease in shareholding percentage following partial disposal, the remaining
equity investment is recognised in accordance with the standard for recognition
and measurement of financial instruments, and the difference between the fair
value at the date of loss of joint control or significant influence and the carrying
value is included in current profit or loss.
Change from cost method to equity method: If control over an investee is
changed to or significant influence or joint control with other investors as a
result of disposal of investment, the cost of long-term equity investment to be
derecognised should first of all be transferred according to the percentage of
disposal. Then a comparison is made between the cost of the remaining long-
term equity investment and the share of fair value of the identifiable net assets
of the investee measured according to the remaining shareholder percentage. If
the former is higher than the latter, it is accounted for as goodwill realised in
investment pricing and the carrying value of long-term equity investment is not
adjusted; if the former is lower than the latter, long-term equity investment cost
and retained earnings are both adjusted.
210 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
12. Long-term equity investments (continued)
(4) Bases for determining joint control or significant influence over an investee
Basis for determining joint control over an investee: decisions on activities having
a significant impact on the reward of a certain arrangement must be made with
unanimous approval of parties sharing the joint control, such as the sale and
purchase of commodities or labour services, management of financial assets,
asset acquisition and disposal, R&D activities and financing activities.
Basis for determining significant influence over an investee: holding of capital with
more than 20% and up to 50% voting rights is deemed to be having significant
influence. Or even though it is less than 20%, fulfillment of one of the following
conditions is also deemed as having significant influence:
1) Representation at the board or similar authority of the investee;
2) Participation in the decision-making process of the investee;
3) Posting of management personnel at the investee;
4) Dependence of the investee on the investing party’s technology and
technical data;
5) Having important transactions with the investee.
(5) Methods for impairment test and impairment provision
At the balance sheet date, the Company inspects whether there are
indications of possible impairment of a long-term equity investment. If
there are indications of impairment, an impairment test should be
performed to ascertain its recoverable amount, and an impairment
provision equivalent to the margin by which the recoverable amount is
lower than the carrying value should be made. Once recognised,
impairment loss will not be reversed in subsequent accounting periods.
The recoverable amount is determined as the higher of net fair value of
the long-term equity investment on disposal and present value of
estimated future cash flow.
(6) Disposal of long-term equity investments
Upon disposal of long-term equity investments, the difference between the
carrying value and consideration actually acquired is included in current
profit or loss. Upon disposal of long-term equity investment, the portion
previously included in other comprehensive income is accounted for
according to the relevant percentage on the same basis adopted in the
direct disposal of the relevant assets or liabilities by the investee.
Haier Smart Home Co., Ltd. Annual Report 2020 211
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
13. Investment properties
The Company’s investment properties included leased land-use rights and leased buildings.
The Company’s investment properties is initially measured at cost and subsequently on a cost
basis.
Among the Company’s investment properties, leased buildings are subject to depreciation on a
straight-line basis in accordance with accounting policies identical with accounting policies for
fixed assets. Leased land-use rights and land-use rights held for disposal after appreciation land-
use rights in investment properties are amortised using the straight-line method in accordance
with accounting policies identical with fixed asset accounting policies for intangible assets.
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of an investment property. If there are indications of impairment, an impairment test
should be performed to ascertain its recoverable amount, and an impairment provision equivalent
to the margin by which the recoverable amount is lower than the carrying value should be made.
Once recognised, impairment loss will not be reversed in subsequent accounting periods.
212 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
14. Fixed assets
(1) Recognition criteria
√ Applicable Not Applicable
Fixed assets refer to tangible assets held for the production of commodities, provision of
labour services, lease or operational management with a useful life of more than one
accounting year. Fixed assets are recognised if all of the following conditions are met:
Economic benefits relating to such fixed assets are likely to flow into the enterprise;
The cost of the fixed assets can be reliably measured.
(2) Classification and depreciation of fixed assets
The Company’s fixed assets are mainly classified into: buildings, production equipment,
transportation equipment and office equipment; depreciation is conducted on a straight-line
basis. The useful life and estimated net residual value of fixed assets are determined based
on the nature and use of the fixed assets. At the end of the year, the useful life and
estimated residual value of and depreciation method for fixed assets are reviewed, and
adjustment is made for any difference with the original estimated amount. Other than fully
depreciated fixed assets which remain in use, the Company measures depreciation for all
fixed assets.
Estimated
Type of fixed assets Useful life residual value
Land ownership — —
Buildings 8–40 years 0%–5%
Machinery equipment 4–20 years 0%–5%
Transportation equipment 5–10 years 0%–5%
Office equipment and others 3–10 years 0%–5%
(3) Methods for impairment test and impairment provision for fixed assets
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of fixed assets. If there are indications of impairment, an impairment test should
be performed to ascertain its recoverable amount, and an impairment provision equivalent
to the margin by which the recoverable amount is lower than the carrying value should be
made. Once recognised, impairment loss will not be reversed in subsequent accounting
periods.
Haier Smart Home Co., Ltd. Annual Report 2020 213
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
14. Fixed assets (continued)
(4) Bases for recognition and pricing of fixed assets under finance leases
√ Applicable Not Applicable
Basis for the recognition of fixed assets under finance leases: Leases that substantially
transfer all risks and rewards associated with asset ownership. The specific basis for
recognition is fulfilment of one or more of the following conditions: the ownership of the
leased assets is transferred to the lessee upon expiry of the lease; the lessee has the
option to purchase the leased assets, and the purchase price agreed is expected to be
significantly lower than the fair value of the leased assets at the time when the option is
exercised, such that it can be reasonably ascertained at the inception date of the lease that
the lessee will exercise such option; even though the ownership of the assets is not
transferred, the lease term accounts for a significant portion of the useful life of the leased
assets; the present value of the minimum lease payment made by the lessee at the
inception date of the lease is almost equivalent to the fair value of the leased assets at the
inception date of the lease; the nature of the leased assets is exceptional, such that
without significant modification, it will not be useful to any party other than the lessee.
Pricing measurement of fixed assets under finance leases: the initial pricing of fixed assets
under finance leases is recorded in the book as the lower of the fair value of the leased
assets at the inception date of the lease and the present value of the minimum lease
payment;
The subsequent measurement of fixed assets under finance leases is based on the same
depreciation policy adopted for owned fixed assets in relation to depreciation and
impairment provision.
214 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
15. Construction in progress
√ Applicable Not Applicable
(1) Types of construction in progress
The Company’s construction in progress is self-operated construction.
(2) Criteria for and timing of the transfer of construction in progress to fixed assets
The Company’s construction in progress is transferred to fixed assets when the work is
completed and reaches the expected conditions for use. The criteria for judgement of
expected conditions for use should meet one of the following:
The physical construction (including installation) of fixed assets has been completed in
full or substantially completed in full;
Trial production or operation has commenced and the result indicates that the asset
can operate normally or can manufacture compliant products in a consistent manner,
or the trial operation indicates that it can operate or conduct business normally;
The amount of fixed asset expenditure of the construction is minimal or almost certain
not be further incurred;
Fixed assets acquired have reached design or contractual requirements, or are
essentially consistent with design and contractual requirements.
(3) Methods for impairment test and impairment provision for construction in progress
At the balance sheet date, the Company inspects whether there are indications of possible
impairment of construction in progress. If there are indications of impairment, an
impairment test should be performed to ascertain its recoverable amount, and an
impairment provision equivalent to the margin by which the recoverable amount is lower
than the carrying value should be made. Once recognised, impairment loss will not be
reversed in subsequent accounting periods.
The recoverable amount is determined as the higher of net fair value of the asset less
disposal cost and the present value of estimated future cash flow.
Haier Smart Home Co., Ltd. Annual Report 2020 215
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
16. Borrowing costs
√ Applicable Not Applicable
(1) Principle for recognition of capitalisation of borrowing cost
Borrowing costs incurred by the Company that can be directly attributed to the acquisition
or production of assets qualified for capitalisation are capitalised and included in relevant
asset costs; other borrowing costs are recognised as cost at the amount incurred at the
time of incurrence and charged to current profit or loss. Assets qualified for capitalisation
refer to fixed assets, investment properties and inventory that require a considerably long
period of acquisition or production activities to reach the expected conditions for use or
sale.
(2) Computation of capitalised amounts
Capitalisation period: from the point of time at which the capitalisation of borrowing costs
begins to the point of time at which capitalisation ceases. The period of suspension of
capitalisation of borrowing costs is not included.
Period of suspension of capitalisation: In case of abnormal disruption during the acquisition
or production process for a consecutive period of more than 3 months, the capitalisation
period for borrowing costs should be suspended.
Computation of capitalised amount: For specific borrowings, the amount is determined
as interest expense incurred for the period in respect of the specific borrowing less interest
income received through the deposit of unutilised borrowed funds or investment gains
received through provisional investments; For general borrowings utilised, the amount is
determined as the weighted average amount of the portion of cumulative asset expenses in
excess of the asset expense of specific borrowings multiplied by the capitalisation rate for
the general borrowings utilised, where the capitalisation rate is the weighted average
interest rate of general borrowings; where there is a discount or premium in the
borrowings, the amortisation of such discount or premium for each accounting period is
determined according to the effective interest rate and the interest amount for each period
is adjusted accordingly.
216 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
17. Right-of-use assets
√ Applicable Not Applicable
Right-of-use assets are the rights of the Company as lessee to use leased assets during the
lease period. At the inception date of the lease, the Company as lessee should recognise right-
of-use assets and lease liabilities in respect of the lease, other than short-term leases and leases
of low-value assets which are subject to simplified treatment. The inception date of the lease
means the date on which the provision of the leased asset by the lessor for use by the lessee is
started.
The Company’s right-of-use assets are initially measured at cost, which includes:
(1) The amount of lease liability under initial measurement;
(2) The lease payment made on or before the inception date of the lease term, less the relevant
amount of lease incentive received if such incentive is available;
(3) The initial direct cost of the Company as lessee;
(4) Estimated cost to be incurred for the demolishing and removal of leased assets, restoration
of venues where the leased assets are located or restoration of the leased assets to the
conditions agreed under the lease terms.
The Company charges depreciation in respect of right-of-use assets in accordance with “ASBE 4
— Fixed Assets”. Where the acquisition of ownership of the leased asset at the end of the lease
period can be reasonably ascertained by the Company, depreciation is charged over the
remaining useful life of the leased assets. If the acquisition of ownership of the leased asset at
the end of the lease period cannot be reasonably ascertained, depreciation is charged during the
lease term or the remaining useful life of the leased assets, whichever is shorter.
The Company shall determine whether impairment of right-of-use assets has occurred and
account for impairment loss which has been identified in accordance with the provisions of
“ASBE 8 — Asset Impairment”.
When the Company remeasures lease liabilities in accordance with the accounting standard, the
carrying value of the right-of-use assets is adjusted accordingly. If the carrying value of the right-
of-use assets is reduced to zero but the lease liabilities still require further adjustment, the
remaining amount is charged to current profit or loss.
Where lease modification results in a reduced scope of lease or shortened lease term, the
carrying value of the right-of-use assets is reduced accordingly, and the relevant gain or loss
resulting from the partial or full termination of the lease is included in current profit or loss. For
other lease modifications resulting in the remeasurement of lease liabilities, the carrying value of
the right-of-use assets is adjusted accordingly.
Haier Smart Home Co., Ltd. Annual Report 2020 217
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical form and are
possessed or controlled by the Company.
(1) Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs of
purchased intangible assets include the consideration and relevant expenses actually paid.
For intangible assets contributed by investors, relevant actual costs are determined based
on the value agreed in the investment contract or agreement. But if the value agreed in the
investment contract or agreement is not a fair value, the actual costs should be determined
based on the fair value. The cost of a self-developed intangible asset is the total
expenditure incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: Intangible assets with
finite useful lives are amortized on a straight-line basis; their useful lives and amortization
methods are reviewed at the end of each year, and adjusted accordingly if there is any
variance with the previous estimates; Intangible assets with indefinite useful lives are not
amortized and their useful lives are reviewed at the end of each year. If there is an
objective evidence that the useful life of an intangible asset is finite, an estimation should
be made on the useful life and the intangible asset should be amortized using the straight-
line method.
(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings
economic benefits for the Company is unforeseeable, or the useful life could not be
ascertained.
Criterion of determining indefinite useful lives: the period is derived from contractual
rights or other legal rights and there are no explicit years of use stipulated in the contract
or laws and regulations; the period in which the intangible assets generate benefits for
the Company still could not be estimated after considering the industrial practice or
relevant expert opinions.
At the end of each year, the useful lives of the intangible assets with indefinite useful lives
are reviewed. The assessment is primarily reviewed by relevant departments that use the
intangible assets, using the down-to-top approach, to determine if there are changes to the
determination basis of indefinite useful lives.
218 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
18. Intangible assets (continued)
(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount.
Impairment loss will not be reversed in subsequent accounting periods once provision is
made for it. The recoverable amount of intangible assets should be based on the higher of
the net fair value of the assets less the disposal expense and the present value of
estimated future cash flow of the assets.
(4) Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research
stage is recognized in the profit or loss as incurred. Expenses incurred in the development
stage are recognized as intangible assets if all of the following conditions are met: the
technical feasibility of completing the intangible assets so that they will be available for use
or for sale; the intention to complete the intangible assets for use or for sale; how the
intangible assets will generate economic benefits, including there is evidence that the
products produced by the intangible assets has a market or the intangible assets
themselves have a market; if the intangible assets are for internal use, there is evidence
that there exists usage for the intangible assets; the availability of adequate technical,
financial and other resources to complete the development and gain the ability to use or
sell the intangible assets; the capability to reliably measure the expenditures attributable
to the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an internal
research and development project: research stage refers to the stage of planned
investigation and search for obtaining new technology and knowledge, which features
planning and exploration; before commercial production or other uses, the stage of
applying the research achievements and other knowledge in a plan or design to produce
new or substantially improved materials, equipment and products is regarded as
development stage, which features pertinence and is very likely to form results.
All the expenditures incurred on research and development which cannot be distinguished
between research stage and development stage are recognized in the profit or loss.
Haier Smart Home Co., Ltd. Annual Report 2020 219
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
19. Impairment of long-term assets
√ Applicable Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,
construction in progress, intangible assets and other long-term assets are tested for impairment
if there is any sign of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of the assets is less than the carrying amount, a provision
for impairment will be made based on the difference and will be recorded in impairment loss. The
recoverable amount is the higher of the net fair value of the assets less the disposal expense
and the present value of estimated future cash flow of the assets. Provision for asset impairment
is calculated and recognized on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of the asset group to which
the asset belongs is determined. An asset group is the smallest asset portfolio that can generate
cash inflows independently.
Goodwill is tested for impairment at least at the end of each year.
In terms of impairment test of the goodwill of the Company, the carrying amount of the goodwill,
arising from business combination, shall be allocated to the related asset groups on reasonable
basis since the acquisition date, or to the related asset group portfolios if it is difficult to be
allocated to the related asset groups. When the carrying amount of the goodwill is allocated to
the related asset groups or asset group portfolios, it shall be allocated in the proportion of the
fair value of each asset group or asset group portfolio against the total fair value of related asset
groups or asset group portfolios. If it is difficult to measure the fair value reliably, it shall be
allocated in the proportion of the carrying amount of each asset group or asset group portfolio
against the total carrying amount of related asset groups or asset group portfolios.
When impairment test is made to the related asset groups or asset group portfolios including
goodwill, if there is a sign that the related asset groups or asset group portfolios are prone to
impair, the Company shall first conduct impairment test on the asset groups or asset group
portfolios excluding goodwill, calculate the recoverable amount and recognize the corresponding
impairment loss by comparing with its carrying amount. The Company shall then conduct
impairment test on the asset groups or asset group portfolios including goodwill and compare
the carrying amount (including the carrying amount of allocated goodwill) of related asset groups
or asset group portfolios with the recoverable amount thereof. Impairment loss on goodwill shall
be recognized when the recoverable amount of the related asset groups or asset group
portfolios is lower than the carrying amount thereof.
Once the above impairment loss on assets is recognized, it shall not be reversed in any
subsequent accounting period.
220 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
20. Long-term prepaid expense
√ Applicable Not Applicable
Long-term prepaid expenses of the Company are expenditures which have incurred but the
benefit period of which is more than one year (exclusive). They are amortized by installments over
the benefit period based on each item under the expenses. If items under the long-term pre-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value of
such unamortized items is then fully transferred to the profit or loss.
21. Staff’s remuneration
(1) Accounting treatment of short-term remuneration
√ Applicable Not Applicable
Staff’s remunerations are all forms of compensation and other relevant expenditure given by
the Company in exchange for services rendered by employees, including short-term
remunerations, post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies,
employee welfare, housing provident fund, labor union fee and education fee, medical
insurance premiums, work-related injury insurance premiums, maternity insurance
premiums, short-term compensated leave, short-term profit-sharing plans, etc. During the
accounting period when employees render services, short-term remunerations that actually
incurred shall be recognized as liabilities and credited into the current profit or loss or the
cost of relevant assets on an accrual basis by the benefit objects.
(2) Accounting treatment of post-employment benefits
√ Applicable Not Applicable
Post-employment benefits mainly include the basic pension insurance, enterprise annuity,
etc., In accordance with the risks and obligations undertaken by the Company, the post-
employment benefits are classified as defined contribution plans and defined benefit plans.
Defined contribution plans: the Company shall recognize the sinking funds paid on the
balance sheet date to individual entities in exchange for services from employees in the
accounting period as liabilities, and shall credit such funds into the profit or loss or the cost
of relevant assets in accordance with the benefit objects. Defined benefit plans: the cost for
providing benefits is determined using the expected cumulative welfare unit method, with
actuarial valuations being carried out by independent actuary at the interim and annual
balance sheet date. The costs for staff’s remunerations incurred by the defined benefit
plans of the Group are categorized as follows: (1) service cost, including current period
service cost, past service cost and settlement profit or loss. Specifically, current period
service cost means the increase of the present value of defined benefit obligations resulted
from the current period services offered by employees. Past service cost means the
increase or decrease of the present value of defined benefit obligations resulted from the
revision of the defined benefit plans related to the prior period services offered by
employees; (2) interest expenses of defined benefit plans; (3) changes caused by the
remeasurement of liabilities for defined benefit plans. Unless other accounting standards
require or permit the credit of the costs for employee welfare into the cost of assets, the
Company will credit (1) and (2) above into the profit or loss; and recognize (3) above as
other comprehensive income and will not transfer it back to the profit or loss in subsequent
accounting periods.
Haier Smart Home Co., Ltd. Annual Report 2020 221
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
21. Staff’s remuneration
(3) Accounting treatment of termination benefits
√ Applicable Not Applicable
Termination benefits: The indemnity proposal provided by the Company for employees for
the purpose of terminating labor relations with employees before expiry of the labor
contracts or encouraging employees to accept downsizing voluntarily. When the following
conditions are met, the Company will recognize and credit into the profit or loss the
accrued liabilities arising from the indemnity as a result of terminating labor relations with
the employees: the Company has made a formal plan for termination of labor relations or
has made an offer for voluntary redundancy which will be implemented immediately; and
the Company could not unilaterally withdraw the plan for termination of labor relations or
the redundancy offer. Early retirement plans for employees will be handled in the principle
the same as the termination benefits above. The Company will credit the salaries and social
insurance premiums to be paid to the early retirees during the period from the date of early
retirement to the normal retirement date to the profit or loss when recognition conditions
for estimated liabilities are met.
(4) Accounting treatment of other long-term employee benefits
Applicable √ Not Applicable
22. Lease liabilities
√ Applicable Not Applicable
On the commencement date of the lease term, the Company as the lessee shall recognize the
right-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initially
measured at the present value of the lease payment that has not been paid on the
commencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rate
implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,
the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discount
rate.
The interest rate implicit in lease refers to the interest rate that makes the sum of the present
value of the lessor’s lease receivable amount and the present value of the unguaranteed residual
value equal to the sum of the fair value of the leased asset and the initial direct cost of the
lessor. The lessee’s incremental borrowing rate refers to the interest rate that the lessee is
required to pay for borrowing funds under similar mortgage conditions in a similar economic
environment in order to obtain assets close to the value of the right-of-use assets during a
similar period.
222 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
22. Lease liabilities (continued)
The Company shall calculate the interest expenses of lease liabilities over the lease term at the
fixed periodic interest rate, and include it into current profit or loss or assets cost.
After the commencement date of the lease term, where the assessment results of the renewal of
the option, the termination of the lease option and the purchase option have changed, the
Company re-determines the lease payment and re-measures the lease liabilities in accordance
with the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease payment
changes
due to a change in expected payment under a guaranteed remaining value or changes in an
index or rate used in determining the lease payments, the Company shall re-measure lease
liabilities based on present value of the lease payment after changes. In such cases, the
discount rate adopted by the Company shall remain unchanged; however, if the change in lease
payment results from a change in floating interest rates, the Company shall use a revised
discount rate.
23. Estimated liability
√ Applicable Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of
commercial acceptance bills, pending litigation or arbitration and product quality assurance
is the present obligation of the Company and the performance of such obligation is likely to
lead to an outflow of economic interests and its amount can be reliably measured, such
obligation shall be recognized as an estimated liability.
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of the
necessary expenses for the performance of the present obligation. If there is a continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to occur, the best estimate shall be determined according to the middle estimate within the
range.; if there are two or more items involved, the best estimate should be determined
according to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If
there is objective evidence that the carrying value could not reflect in the current best
estimate, the carrying value shall be adjusted to reflect the current best estimate.
Haier Smart Home Co., Ltd. Annual Report 2020 223
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
24. Share-based payments
√ Applicable Not Applicable
For equity-settled share-based payment transaction in return for services from employees, it shall
be measured at the fair value of equity instruments granted to the employees at the grant date.
For the payment of such fair value that may only be exercised if services are fulfilled during the
vesting period or the specified performance condition is achieved, the amount of such fair value
shall, based on the best estimate of the number of exercisable equity instruments during the
vesting period, be recognized in relevant costs or expenses in straight-line method with the
increase in the capital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumed by
the Company, which is determined based on the shares or other equity instruments. For the
cash-settled share-based payment that may be exercised immediately after the grant, the fair
value of the liability assumed by the Company shall, on the date of the grant, be recognized in
relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled
share-based payment that may be exercised if services are fulfilled during the vesting period or
the specified performance condition is achieved, on each balance sheet date within the vesting
period, the services acquired in the current period shall, based on the best estimate of exercise,
be recognized in relevant costs or expenses at the fair value of the liability assumed by the
Company, and the liabilities shall be adjusted correspondingly.
At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fair
value of the liability is re-measured with its change consolidated in profit/loss.
When there is changes to the Company’s share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if the
modification increases the number of equity instruments granted, the increase in fair value of the
equity instruments is recognized as a corresponding increase in service achieved. Increase in the
fair value of equity instruments refer to the difference between the fair values of the equity
instrument on the modified date before or after the modification. If the Company modifies the
vesting conditions in such manner conductive to the employees, including the shortening of the
vesting period, change or cancellation of the performance conditions (rather than market
conditions), the Company shall consider the modified vesting conditions upon the disposal of
vesting conditions. If the modification reduces the total fair value of shares paid or the Company
uses other methods not conductive to employees to modify the terms and conditions of share-
based payment plans, it will continue to be accounted for the services obtained in the
accounting treatment, as if the change had not occurred, unless the Company cancelled some or
all of the equity instruments granted.
During the vesting period, if the Company cancel equity instruments granted which will be treated
as accelerating the exercise of rights and any amount to be charged over the remaining vesting
period should be recognized immediately in the profit or loss, while at the same time recognize
the capital reserve. Employees or other parties can choose to meet non-vesting conditions, but
for those that are not met in the vesting period, the Company will treat it as cancellation of
equity instruments granted.
224 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
25. Revenue
(1). Accounting policies used in revenue recognition and measurement
√ Applicable Not Applicable
Revenue is the total inflow of economic benefits formed by the Company and its
subsidiaries during day-to-day operations which might lead to increase of shareholders’
equity and be irrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the
contract, i.e., recognized revenue when the client obtains the control right of relevant
goods or services.
Where the contract includes two or more performance obligations, during the starting date
of the contract, the Company and its subsidiaries allocate transaction price to various single
performance obligation in accordance with the relevant proportion of separate selling price
of goods or services promised by various single performance obligation, and measure
revenue in accordance with transaction price allocated to various single performance
obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries are
expected to be entitled to collect due to transfer of goods and services transferred to the
client, excluding the amount collected for any third party. The transaction price recognized
by the Company and its subsidiaries does not exceed the amount of recognized revenue
when relevant uncertainties are eliminated and might not incur material carrying back. The
amount that is expected to be returned to the client is taken as liability of returned goods
and is not recorded in transaction price.
When one of the following conditions is met, the Company and its subsidiaries perform
performance obligations during a certain time horizon, otherwise, it belongs to fulfilling
performance obligations at a certain time point:
The client simultaneously obtains and consumes economic benefits as the Company
and its subsidiaries perform the contract;
The client is able to control goods under construction during the process of
performance of the Company and its subsidiaries;
Goods produced by the Company and its subsidiaries during the process of
performance have no alternative use, and the Company and its subsidiaries are
entitled to collect the amount for the cumulative completed and performed portion to
date during the entire contractual period.
Haier Smart Home Co., Ltd. Annual Report 2020 225
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
25. Revenue (continued)
(1). Accounting policies used in revenue recognition and measurement (continued)
For the performance obligations performed during a certain time horizon, the Company and
its subsidiaries recognize revenue in accordance with the schedule of performance during
such time horizon. When the schedule of performance can’t be reasonably recognized,
where the costs that have been incurred by the Company and its subsidiaries are
estimated to be compensated, revenue shall be recognized in accordance with the amount
of costs that has been incurred until the schedule of performance can be reasonably
confirmed.
For performance obligations performed at a certain time point, the Company and its
subsidiaries recognize revenue at the time point when the client obtains the control right of
relevant goods or services. When judging whether the client has obtained control right over
goods or services, the Company and its subsidiaries will consider the following signs:
The Company and its subsidiaries enjoy the right of instant collection over such goods
and services;
The Company and its subsidiaries have transferred the material objects of such goods
to the client;
The Company and its subsidiaries have transferred statutory ownership right of the
goods or major risks and rewards of the ownership to the client;
The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration for
having transferred goods or services to the client (and such right depends on other factors
other than time lapse) is presented as contractual asset, and contractual asset is
provisioned impairment on the basis of expected credit losses. The right owned by and
unconditionally collected from the client by the Company and its subsidiaries (only depend
on time lapse) shall be presented as accounts receivable. Obligations that the Company
and its subsidiaries have collected or shall collect consideration from the client and shall
transfer goods or services to the client are presented as contractual obligations.
226 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
25. Revenue (continued)
(1). Accounting policies used in revenue recognition and measurement (continued)
Specific accounting policies relating to major activities that the Company and its
subsidiaries obtain revenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only
include performance obligation of transferring the whole machine of home appliance.
Generally, on the basis of taking into account the following factors comprehensively,
the Company recognizes the revenue at the time point of transfer of control right of
goods: the right of instant collection for obtaining goods, transfer of major risks and
rewards on ownership of goods, transfer of statutory ownership of goods, transfer of
assets of material objects of goods, the client’s acceptance of such goods.
(2) Construction contract income
Construction contract between the Company and the client generally includes
performance obligations of construction and installation of commercial air-conditioner
and smart home, because the client is able to control goods under construction
during the Company’s performance process, the Company takes them as
performance obligations performed during a certain time horizon, and recognizes
revenue in accordance with the schedule of performance, and it is an exemption
when the schedule of performance can’t be reasonably confirmed. The Company
confirms the schedule of performance of services provided in accordance with the
input method. When the schedule of performance can’t be reasonably confirmed,
where the costs that have been incurred by the Company are estimated to be
compensated, the revenue will be recognized in accordance with the amount of costs
that has been incurred until the schedule of performance can be reasonably
confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides
quality assurance for goods sold and project constructed. For guarantee-type quality
assurance in order to ensure the client that goods sold comply with existing
standards, the Company conducts accounting treatment in accordance with
estimated liabilities. For service-type quality assurance in order to ensure the client
that we also provide a separate service other than that the goods sold comply with
existing standards, the Company takes it as a separate performance obligation, and
allocates partial transaction price to service-type quality assurance in accordance with
the relevant proportion of separate selling price of goods and service-type quality
assurance, and recognizes revenue when the client obtains control right over
services. When assessing whether quality assurance provides a separate service other
than ensuring the client that the goods sold comply with existing standards, the
Company shall consider factors such as whether such quality assurance is under
statutory requirements or industrial practices, the term of quality assurance and the
nature of the Company’s commitment to perform the tasks.
Haier Smart Home Co., Ltd. Annual Report 2020 227
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
26. Government grants
√ Applicable Not Applicable
(1) Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets
obtained by the Company from the government, excluding the capital invested by the
government as an owner. The government grants are mainly divided into asset-related
government grants and revenue-related government grants.
(2) Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit or
loss on an even basis over the useful life of relevant assets; government grants measured
at nominal amount shall be recognized directly in current profit or loss. Revenue-related
government grants shall be treated as follows: those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized
as deferred income and recorded in current profit or loss when such expenses are
recognized; those used to compensate relevant expenses or losses that have been
incurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related government
grant If the government grant received by the Company is used for purchase, construction
or other project that forms a long-term asset, it is recognized as asset-related government
grant.
If the government grant received by the Company is not asset-related, it is recognized as
revenue-related government grant.
Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:
Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shall
be reviewed and modified if necessary on each balance sheet date;
Government grant shall be categorized as revenue-related if its usage is described in
general statement and no specific project is specified in the relevant government
document.
228 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
26. Government grants
(4) Amortization method and determination of amortization period of deferred revenue related to
government grants
Asset-related government grant received by the Company is recognized as deferred
revenue and is evenly amortized to the profit or loss in the current period over the
estimated useful life of the relevant asset starting from the date when the asset is available
for use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of the
period when there is clear evidence that the relevant conditions set out in the financial
subsidy policies and regulations are fulfilled and the receipt of such financial subsidy is
assured.
Other government grants other than those measured at the account receivable is
recognized upon actual receipt of such subsidies.
27. Deferred tax assets/deferred tax liabilities
√ Applicable Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are recognized:
(1) Based on the difference between the carrying amount and the tax base amount of an asset
or a liability (items not recognized as assets and liabilities but their tax base is ascertained
by the tax laws and regulations, the tax base is the difference), deferred income tax asset
or deferred income tax liability is calculated using the applicable tax rate prevailing at the
expected time of recovering the asset or discharging the liability.
(2) Deferred income tax asset is recognized to the extent that there is enough taxable income
for the deduction of the deductible temporary difference. At the balance sheet date, if there
is sufficient evidence that there will be enough taxable income in the future for the
deduction of the deductible temporary difference, the deferred income tax asset not
recognized in previous accounting period is recognized. If there is no sufficient evidence
that there will be enough taxable income in the future for the deduction of the deferred
income tax asset, the carrying value of the deferred income tax asset is reduced.
Haier Smart Home Co., Ltd. Annual Report 2020 229
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
27. Deferred tax assets/deferred tax liabilities (continued)
(3) Deferred income tax liability is recognized for taxable temporary difference arising from
investments in subsidiaries and associated companies, unless the Company could control
the time of reversal of the temporary differences and the temporary differences would not
be probably reversed in the foreseeable future. For deductible temporary differences arising
from investments in subsidiaries and associated companies, deferred income tax asset is
recognized if the temporary difference will be very probably reversed in the foreseeable
future and it is highly probable that taxable income will be available in the future to deduct
the deductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill. No deferred income tax asset or deferred income tax liability is
recognized for the temporary differences resulting from the initial recognition of assets or
liabilities due to a transaction other than a business combination, which affects neither
accounting profit nor taxable income (or deductible loss). At the balance sheet date,
deferred income tax assets and deferred income tax liabilities are measured at the tax rates
that apply to the period when the asset is expected to be recovered or the liability is
expected to be settled.
28. Other significant accounting policies and accounting estimates
√ Applicable Not Applicable
(1) Asset securitisation
The Company has securitised certain receivables to entrust the assets to specific-purpose
entities which would issue such securities to investors. As asset service provider, the
Company is responsible for the provision of maintenance and daily management of the
assets, formulation of annual asset disposal plans, formulation and implementation of asset
disposal plan, signing of relevant asset disposal agreements and preparation asset service
reports on a regular basis.
In applying the accounting policy for the securitisation of financial assets, the Company has
considered the extent to which the risk and reward of the assets have been transferred to
other entities, and the extent to which the Company exercises control over the entity:
When the Company has transferred substantially all risk and reward relating to the
ownership of a financial asset, such financial asset is derecognised;
When the Company retains substantially all risk and reward relating to the ownership
of a financial asset, the Company continues to recognise such financial asset;
230 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
28. Other significant accounting policies and accounting estimates (continued)
(1) Asset securitisation (continued)
If the Company neither transfers nor retains substantially all risk and reward relating to
the ownership of a financial asset, the Company considers whether it has control over
the financial asset. If the Company does not retain control, the financial asset is
derecognised, and the rights and obligations arising from or retained the transfer are
recognised as assets and liabilities, respectively. If the Company retains control, the
financial asset is recognised according to the extent of continued involvement in the
financial assets.
(2) Hedge accounting
Hedge refers, in respect of the risk exposure arising from the company’s management of
specific risks such as foreign exchange risks, interest rate risks, price risks and credit risks,
to risk management activity of designating financial instruments as hedging instruments
such that the change in the fair value or cash flow of the hedging instruments can be
expected to set off the change in the fair value or cash flow of the hedged item.
The hedged item refers to an item designated for hedge against the risk of change in fair
value or cash flow that can be reliably measured.
Hedging instruments are financial instruments designated for hedge, the change in fair value
or cash flow of which is expected to set off the change in the fair value or cash flow of the
hedged item.
The Company assesses whether the hedge relationship fulfills the requirement for hedge
effectiveness at the inception date of the hedge and continuously in subsequent periods.
The effectiveness of hedge refers to the extent to which the change in the fair value or
cash flow of the hedging instruments can offset the change in the fair value or cash flow of
the hedged item caused by the risk against which the hedge is made. The change in the
fair value or cash flow of a hedging instrument in excess or shortfall of the change in the
fair value or cash flow of the hedging instruments can offset the change in the fair value or
cash flow of the hedged item represents the ineffective portion of the hedge.
Haier Smart Home Co., Ltd. Annual Report 2020 231
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
28. Other significant accounting policies and accounting estimates (continued)
(3) Significant accounting estimates
In the course of applying accounting policies, the Company is required to make
judgements, estimations and assumptions on the carrying values of statement items that
cannot be accurately measured owing to uncertainties to which operating activities are
subject. Such judgements, estimations and assumptions are made based on the past
experience of the management and taking into consideration of other relevant factors. Such
judgements, estimations and assumptions affect the reported amounts of income,
expenses, assets and liabilities and the disclosure of contingent liabilities as at the balance
sheet date. However, the actual outcome resulting from the uncertainty of such estimates
could be different from the current estimates of the management, thereby resulting in
significant adjustments to the carrying value of the future assets or liabilities affected. The
Company regularly reviews such judgements, estimations and assumptions on a going
concern basis. If the change in accounting estimates affects only the current period in
which the change occurs, the affected amount is recognised for the period in which the
change occurs; if both the current period and future periods are affected, the affected
amount is recognised for the current period and the future periods.
At the balance sheet date, important aspects in which the Company is required to make
judgements, estimations and assumptions on the amount of items on the financial
statements are as follows:
Estimated liabilities
The Company estimates and makes provision for product warranty and estimated
contract loss according to contract terms, existing knowledge and historical
experience. When such contingencies have given rise to a present obligation, and the
performance of such present obligation is likely to result in the outflow of economic
benefit from the Company, the Company recognises estimated liabilities for the
contingencies based on the best estimates of expenses required for the performance
of relevant present obligations. The recognition and measurement of estimated
liabilities is dependent to a large extent on management judgement. In the course of
judgement, the Company is required to assess factors such as risks, uncertainties
and the time value of currency relating to such contingencies. In particular, the
Company recognises estimated liabilities in respect of after-sales undertaking to
customers for return and replacement, maintenance and installation of goods sold.
The recognition of estimated liabilities has taken into account the maintenance
experience and data of the Company for recent years, although past experience in
maintenance may not reflect maintenance in the future. Any increase or decrease in
this provision might affect the profit or loss of future years.
232 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
28. Other significant accounting policies and accounting estimates (continued)
(3) Significant accounting estimates (continued)
Provision for ECL
The Company measures ECL through default risk exposure and the ECL rate, which
is determined based on the default probability rate and default loss rate. In
determining the ECL rate, the Company uses data such as internal historic credit loss
experience and adjusts the historic data taking into consideration current conditions
and prospective information. When considering prospective information, indicators
adopted by the Company include the risk of economic downside, expected growth in
unemployment rate, and changes in external market conditions, technical conditions
and customer conditions. The Company monitors and reviews the assumptions
relating to ECL computation on a regular basis. There was no significant change to
aforesaid estimation technique and key assumptions during the year.
Impairment provisions for inventory
The Company makes impairment provisions for inventory of which cost is higher than
net realisable value and obsolete and slow-moving inventory based on the lower of
cost and net realisable value according to its inventory accounting policy. The
impairment of inventory to its net realisable value is based on assessment of the
sellability of inventory and its net realisable value. The authentication of inventory
impairment requires the management to obtain conclusive evidence and make
judgment and estimates taking into consideration factors such as the purpose of
inventory and post-balance sheet date events. Any difference between the actual
outcome and the previous estimate will affect the carrying value of inventory and the
charge or reversal of impairment provisions for inventory during the period in which
the estimates are modified.
Fair value of financial instruments
For financial instruments without an active trading market, the Company determines
its fair value using valuation techniques. Such valuation techniques include discounted
cash flow model analysis and others. During the assessment, the Company is
required to make estimates on future cashflow, credit risk, market volatility rate and
relevance and select an appropriate discount rate. Such relevant assumptions are
subject to uncertainty, and any change will affect the fair value of financial
instruments.
Impairment of other equity instrument investments
The Company’s determination of impairment for other equity instrument investments is
largely dependent on the management’s judgment and assumptions to determine
whether impairment should be recognised. In the course of making judgments and
assumptions, the Company is required to assess the extent and duration of the fair
value of the investment being lower than cost, as well as the financial conditions and
short-term business prospects of the investee, including industry conditions,
technological revolution, credit rating, default rate and counterparty risks.
Haier Smart Home Co., Ltd. Annual Report 2020 233
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
28. Other significant accounting policies and accounting estimates (continued)
(3) Significant accounting estimates (continued)
Impairment provision for long-term assets
At the balance sheet date, the Company assesses whether there are indications of
possible impairment of non-current assets other than financial assets. In addition to
the annual impairment test, intangible assets with indefinite useful life are also tested
for impairment when there are indications of the same. Impairment tests on non-
current assets other than financial assets are conducted when there are indications
that its carrying value may not be recoverable. An impairment has occurred when the
carrying value of an asset or asset group is higher than the recoverable amount (the
higher of net fair value less disposal cost and the present value of estimated future
cash flow). The net fair value less disposal cost is determined with reference to the
agreed selling price of similar assets in a fair transaction or observable market prices
less incremental costs attributable directly to the disposal of such asset. In estimating
the present value of future cashflow, significant judgement is required to be made in
respect of the production volume and selling price of the asset or (asset group),
relevant operating cost and discount rate for the computation of present value. The
Company takes into consideration all available relevant information when making
estimates on the recoverable amount, including forecasts on production volume,
selling price and relevant operating costs based on reasonable and justifiable
assumptions. The Company conducts goodwill impairment tests at least annually. This
requires estimates on the present value of future cashflow of asset group or portfolio
of asset groups to which goodwill has been allocated. When making estimates on the
present value of future cashflow, the Company is required to make estimates on
cashflow generated from future asset group or portfolio of asset groups, and at the
same time select an appropriate discount rate to determine the present value of
future cashflow.
Depreciation and amortisation
Depreciation and amortisation of investment properties, fixed assets and intangible
assets is charged on a straight-line basis over their useful life after taking their
residual values into account. The Company reviews the useful life on a regular basis
to determine the amount of depreciation and amortisation charge to be allocated to
each reporting period. The useful life is determined based on past experience relating
to similar assets taking into consideration expected technological upgrades. If there
are significant changes in previous estimates, the depreciation and amortisation
charge for future periods will be adjusted.
234 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
28. Other significant accounting policies and accounting estimates (continued)
(3) Significant accounting estimates (continued)
Deferred income tax assets
The Company recognises deferred income tax assets in respect of all unutilised tax
losses, to the extent that it is probable that sufficient taxable profit will be available to
offset the loss. This requires the exercise of significant judgement by the Company’s
management to estimate the timing and amount of future taxable profit, taking into
account its tax planning strategy, to determine the amount of deferred income tax
assets to be recognised.
Income tax
In the Company’s usual operating activities, the final tax treatment and computation
of certain transactions are subject to uncertainty. Whether certain items can be
presented on a pretax basis is subject to approval of the competent taxation
authority. If the final confirmed outcome of such taxation matters is different from the
amount of the initial estimates, such difference will affect the current income tax and
deferred income tax for the period of final confirmation.
Provision for sales rebate
The Company and its subsidiaries adopt a sales rebate policy for sales agent
customers. Based on relevant provisions of the sales agreements, vetting of specific
transactions, market conditions, channel inventory level and past experience with
reference to the status of completion of agreed appraisal indicators by sales agent
customers, the Company and its subsidiaries makes estimates on and provision for
sales rebate on a regular basis. The provision of sales rebate involves judgment and
estimation by the management. In the event of any material change in previous
estimates, the aforesaid difference will affect the sales rebate for the period for which
the estimates are changed.
Haier Smart Home Co., Ltd. Annual Report 2020 235
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
29. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Applicable √ Not Applicable
(2) Changes in significant accounting estimates
Applicable √ Not Applicable
236 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
(continued)
29. Main Changes on significant accounting policies and accounting estimates
(continued)
(3) Status in relation to the adjustments of the first implementation of relevant items in
financial statements at the beginning of the year for implementation of New
Income Standards and New Lease Standards for the first time since 2020
Applicable √ Not Applicable
(4) Explanation on the retrospective adjustments of previously comparative data for the
implementation of New Income Standards and New Lease Standards for the first
time since 2020
Applicable √ Not Applicable
30. Others
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 237
Section XII Financial Report
VI. TAXATION
1. Main tax categories and rates
Main tax categories and rates conditions
√ Applicable Not Applicable
Tax types Basis of taxation Tax rate
Value-added tax Taxable revenue from sales of 6%, 9%, 13%
goods and rendering services
City maintenance and Circulation tax payable 7%
construction tax
EIT Taxable income Statutory tax rate or
preferential rates as
follows
(Local) education Circulation tax payable 1%, 2%, 3%
surcharge
Disclosure of tax entities with different EIT rates
Applicable √ Not Applicable
2. Preferential tax
√ Applicable Not Applicable
Companies subjected to preferential tax and preferential tax rate:
Company Tax rate Preferential tax
Haier Smart Home Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Refrigerator Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Refrigerator 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Dishwasher Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Freezer Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Intelligent Home 15% entitled to the preferential taxation
Appliance Technology Co., Ltd. policies as a hi-tech enterprise
Wuhan Haier Electronics Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Wuhan Haier Freezer Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
238 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VI. TAXATION (continued)
2. Preferential tax (continued)
Company Tax rate Preferential tax
Hefei Haier Refrigerator Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Air-conditioning Co., 15% entitled to the preferential taxation
Limited policies as a hi-tech enterprise
Zhengzhou Haier Air-conditioning Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Shenyang Haier Refrigerator Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Air-Conditioner 15% entitled to the preferential taxation
Electronics Co., Ltd. policies as a hi-tech enterprise
Qingdao Meier Plastic Powder Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Hai Gao Design and 15% entitled to the preferential taxation
Manufacture Co., Ltd. policies as a hi-tech enterprise
Qingdao Hairi High Tech Model Co., 15% entitled to the preferential taxation
Ltd policies as a hi-tech enterprise
Qingdao Haier (Jiaozhou) Air- 15% entitled to the preferential taxation
conditioning Co., Limited policies as a hi-tech enterprise
Qingdao Haier Intelligent Technology 15% entitled to the preferential taxation
Development Co., Ltd. policies as a hi-tech enterprise
Foshan Haier Freezer Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Central Air Conditioning 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Air Conditioner Gen 15% entitled to the preferential taxation
Corp., Ltd. policies as a hi-tech enterprise
Haier U+smart Intelligent Technology 15% entitled to the preferential taxation
(Beijing) Co., Ltd. policies as a hi-tech enterprise
Beijing Zero Micro Technology Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Hefei Haier Washing Machine Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Washing Machine Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Jiaonan Haier Washing 15% entitled to the preferential taxation
Machine Co., Ltd. policies as a hi-tech enterprise
Foshan Shunde Haier Electric Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Haier Smart Home Co., Ltd. Annual Report 2020 239
Section XII Financial Report
VI. TAXATION (continued)
2. Preferential tax (continued)
Company Tax rate Preferential tax
[Tianjin Haier Cleaning Electrical 15% entitled to the preferential taxation
Appliances Co., Ltd.] policies as a hi-tech enterprise
( )
Qingdao Economic and Technological 15% entitled to the preferential taxation
Development Zone Haier Water policies as a hi-tech enterprise
Heater Co., Ltd.
Wuhan Haier Water Heater Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Foshan Drum Washing Machine Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Strauss Water Equipment 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Lejia Electronics Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier New Energy Electric 15% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Washing Appliance Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Ririshun Lexin Cloud 15% entitled to the preferential taxation
Technology Co., Ltd. policies as a hi-tech enterprise
Hefei Haier Drum Washing Machine 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Electronic Plastic Co., 15% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Wei Xi Intelligent Technology 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Special Refrigerating 15% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Kitchen 15% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Hefei Haier Air Conditioning 15% entitled to the preferential taxation
Electronics Co., Ltd. policies as a hi-tech enterprise
Beijing Lingwei Technology Co., Ltd. 15% entitled to the preferential taxation
( ) policies as a hi-tech enterprise
[Qingdao Hairuijiejing Electronics Co., 15% entitled to the preferential taxation
Ltd.] ( ) policies as a hi-tech enterprise
Shanghai Haier Medical Technology 15% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Yunshang Yuyi IOT 15% entitled to the preferential taxation
Technology Co., Ltd. policies as a hi-tech enterprise
240 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VI. TAXATION (continued)
2. Preferential tax (continued)
Company Tax rate Preferential tax
Haier (Shanghai) Home Appliance 15% entitled to the preferential taxation
Research and Development Center policies as a hi-tech enterprise
Co., Ltd.
Haier (Shenzhen) R&D Co., Ltd. 15% entitled to the preferential taxation
policies as a hi-tech enterprise
[Qingdao Ririshun Lejia IOT 15% entitled to the preferential taxation
Technology Co., Ltd.] policies as a hi-tech enterprise
( )
[Qingdao Haier Smart Electrical 15% entitled to the preferential taxation
Equipment Limited] policies as a hi-tech enterprise
( )
Qingdao Haier Technology Co., Ltd. 10% entitled to half deduction the
preferential taxation policies as a
key software enterprise
Wuhan Haier Energy and Power Co., 10% entitled to the preferential policies as
Ltd. a small/micro enterprise
Dalian Free Trade Zone Haier 10% entitled to the preferential policies as
RefrigeratorTrading Co., Ltd. a small/micro enterprise
Qingdao Haimeihui Management 5% entitled to the preferential policies as
Consulting Co., Ltd. a small/micro enterprise
( )
GE Appliance (Shanghai) Co., Ltd. 10% entitled to the preferential policies as
a small/micro enterprise
Shanghai Haier Zhongzhi Fang Chuang 5% entitled to the preferential policies as
Ke Management Co., Ltd. a small/micro enterprise
[Qingdao Ririshun Lejia IOT 5% entitled to the preferential policies as
Technology Co., Ltd.] a small/micro enterprise
( )
Qingdao Haichuangyuan Appliances 5% entitled to the preferential policies as
Sales Co.,Ltd. a small/micro enterprise
[Haier Smart Home (Qingdao) Network 5% entitled to the preferential policies as
Co.,Ltd.] a small/micro enterprise
( ( ) )
[Haier Smart Home (Qingdao) Network 5% entitled to the preferential policies as
Operations Co.,Ltd]. a small/micro enterprise
( ( ) )
Haier Smart Home Co., Ltd. Annual Report 2020 241
Section XII Financial Report
VI. TAXATION (continued)
2. Preferential tax (continued)
Company Tax rate Preferential tax
Chongqing Haier Electronics Sales 15% entitled to the preferential taxation
Co., Ltd. and some Western policies under the Western
companies Development initiative of the PRC
Chongqing Xin Ririshun Electric Sales 15% entitled to the preferential taxation
Co., Ltd. and some Western policies under the Western
companies Development initiative of the PRC
Chongqing Haier Air-conditioning Co., 15% entitled to the preferential taxation
Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Refrigeration 15% entitled to the preferential taxation
Appliance Co., Ltd. policies under the Western
Development initiative of the PRC
Guizhou Haier Electronics Co., Ltd. 15% entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
Chongqing Haier Washing Machine 15% entitled to the preferential taxation
Co., Ltd policies under the Western
Development initiative of the PRC
Chongqing Haier Water Heater Co., 15% entitled to the preferential taxation
Ltd policies under the Western
Development initiative of the PRC
Chongqing Haier Drum Washing 15% entitled to the preferential taxation
Machine Co., Ltd policies under the Western
Development initiative of the PRC
242 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
1. Monetary funds
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Cash on hand 2,257,666.98 7,556,892.38
Cash in bank 45,306,078,417.59 34,502,656,877.99
Other cash balances 1,152,993,342.34 1,668,601,912.88
Total 46,461,329,426.91 36,178,815,683.25
Include: — total amount of overseas deposits 10,409,047,820.91 8,787,573,078.32
Other explanation
The cash in the monetary funds deposited in Haier Finance Co., Ltd. was
RMB24,957,736,213.04 at the end of the period, the balance of which included time deposit of
RMB12,483,115,560.99. The investment fund in the closing balance of other monetary funds was
RMB213,694,084.38, deposit on third party payment platforms was RMB113,102,469.53 and the
security deposit was RMB822,191,427.65, the frozen fund was RMB191,918.23, and the
restricted fund was RMB3,813,442.55.
2. Financial assets held for trading
Unit and Currency: RMB
Closing
Items balance Opening balance
forward foreign exchange contracts 105,446,693.00 84,934,313.67
short-term wealth management products 1,862,036,322.21 198,614,361.33
Investment funds 113,759,845.57
Investments in other equity instruments 83,949,637.05 24,586,332.05
Total 2,165,192,497.83 308,135,007.05
Haier Smart Home Co., Ltd. Annual Report 2020 243
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
3. Derivative financial assets
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
forward foreign exchange contracts 52,194,232.55 17,241,833.10
Forward commodity contract 25,644,774.08 1,916,299.35
Total 77,839,006.63 19,158,132.45
4. Bills receivable
(1). Bills receivable presented by types
Unit and Currency: RMB
Closing Opening
Items balance balance
Bank acceptance notes 3,091,631,183.91 462,888,721.91
Commercially acceptance notes 11,056,075,267.03 13,503,587,868.65
Balance of bills receivable 14,147,706,450.94 13,966,476,590.56
Allowance for bad debts 11,356,696.60 15,056,696.60
Bills receivable, net 14,136,349,754.34 13,951,419,893.96
Provision for bad debts is made on a portfolio basis:
Applicable √ Not Applicable
244 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
4. Bills receivable (continued)
(2). Changes in allowance for bad debts of bills receivable in the current period:
Unit and Currency: RMB
Increase for the Decrease for the
current period current period
Provision for Write-off/
Opening the current Other other Closing
Items Balance period movement Reversal movement Balance
Allowance for bad debts 15,056,696.60 3,700,000.00 11,356,696.60
Total 15,056,696.60 3,700,000.00 11,356,696.60
The bills receivable pledged by the Company at the end of the period was
RMB12,561,829,391.13.
Haier Smart Home Co., Ltd. Annual Report 2020 245
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
5. Accounts receivable
Accounts receivable are disclosed by aging as follow:
Unit and Currency: RMB
Aging Closing Balance Opening Balance
Within one year 15,866,291,515.38 10,948,682,641.60
1–2 years 229,618,450.58 274,136,141.64
2–3 years 91,669,887.74 98,672,021.59
Over 3 years 184,125,877.54 139,300,727.01
Balance of accounts receivable 16,371,705,731.24 11,460,791,531.84
Allowance for bad debts 441,681,444.57 444,920,471.75
Accounts receivable, net 15,930,024,286.67 11,015,871,060.09
The total amount of the top 5 accounts receivable at the end of the period is
RMB4,959,526,641.14, accounting for 30.29% of the book balance of accounts
receivable.
Changes in allowance for bad debts of accounts receivable in the current period:
Increase for the Decrease for the
current period current period
Provision Write-off/
Opening for the Other other Closing
Items Balance current period movement Reversal movement Balance
Allowance for bad debts 444,920,471.75 180,883,544.99 45,931,896.24 138,190,675.93 441,681,444.57
Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period is
RMB91,294,954.56 and there is no important bad debt write-off of accounts receivable.
The company’s accounts receivable that were terminated due to the transfer of
financial assets in the current period
In the current period, the amount of accounts receivable that the company terminated due
to the transfer of financial assets was RMB4,223,734,660.24 and the transfer method was
outright sale factoring/asset securitization.
Restricted accounts receivable in the current period
The amount of accounts receivable mortgaged and pledged at the end of the period is
RMB1,833,513,050.03.
246 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
6. Prepayments
(1). Prepayments are presented by aging:
Aging Closing Balance Opening Balance
Within one year 697,975,595.05 1,226,300,431.60
1–2 years 30,590,250.54 14,275,907.31
2–3 years 4,580,733.23 6,036,100.01
Over 3 years 32,280,992.88 26,309,107.80
Total 765,427,571.70 1,272,921,546.72
(2). The total amount of the top 5 in the prepayments at the end of the period is
RMB243,113,477.73, which accounts for 31.76% of the prepayment balance.
Haier Smart Home Co., Ltd. Annual Report 2020 247
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
7. Other receivables
Presented by item:
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Interest receivable 322,473,254.91 273,009,954.80
Dividend receivable 4,915,409.42 4,524,472.84
Other receivables 1,389,764,281.32 1,885,983,374.86
Total 1,717,152,945.65 2,163,517,802.50
Interest receivable
(1) Interest receivable
Closing Balance Opening Balance
Book value Book value
Aging balance Proportion balance Proportion
Within one year 230,234,039.92 71.40% 224,873,084.17 82.36%
1–2 years 82,575,210.18 25.61% 26,470,812.60 9.70%
2–3 years 8,925,141.80 2.77% 21,666,058.03 7.94%
Over 3 years 738,863.01 0.23%
Total 322,473,254.91 100.00% 273,009,954.80 100.00%
Dividend receivable
Closing Balance Opening Balance
Book value Book value
Aging balance Proportion balance Proportion
Within one year 4,915,409.42 100.00%
1–2 years
2–3 years
Over 3 years 4,524,472.84 100.00%
Total 4,915,409.42 100.00% 4,524,472.84 100.00%
248 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
7. Other receivables (continued)
Other receivables
Other receivables are disclosed by aging as follows:
Closing Opening
Items balance balance
Within one year 931,454,573.77 1,801,028,378.02
1–2 years 417,514,929.49 65,979,912.86
2–3 years 61,251,809.96 26,319,826.19
Over 3 years 75,201,513.32 64,449,296.31
Balance of other receivables 1,485,422,826.54 1,957,777,413.38
Allowance for bad debts 95,658,545.22 71,794,038.52
Other receivables, net 1,389,764,281.32 1,885,983,374.86
The total amount of the top 5 other receivables at the end of the period is
RMB658,654,422.04, which accounts for 44.34% of the book balance of other receivables.
Changes in allowance for bad debt provision of other receivables in the current period
Increase for the Decrease for the
current period current period
Provision Write-off/
Opening for the Other other Closing
Items Balance current period movement Reversal movement Balance
Allowance for bad debts 71,794,038.52 36,606,052.37 1,477,095.36 11,264,450.31 95,658,545.22
Other receivables written off during the period
The amount of other receivables actually written off in the current period is
RMB7,241,607.86 and no significant other receivables are written off for bad debts.
Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.
Haier Smart Home Co., Ltd. Annual Report 2020 249
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
8. Inventories
(1). Category of inventories
Closing Balance Opening Balance
Book value Impairment Book value Impairment
Items balance Provision balance Provision
Raw materials 2,785,611,125.08 115,958,355.703,068,331,798.61 115,668,613.58
Work in progress 336,866,878.61 408,055,609.14 425,020.38
Finished goods 27,613,569,305.90 1,173,115,549.14 25,720,392,258.54 852,085,060.72
Total 30,736,047,309.59 1,289,073,904.84 29,196,779,666.29 968,178,694.68
(2) Impairment provision of inventories
Increase for the Decrease for the
current period current period
Provision Write-off/
Opening for the Other other Closing
Items Balance current period movement Reversal movement Balance
Raw materials 115,668,613.58 89,809,536.45 2,956,989.70 1,630,433.16 90,846,350.87 115,958,355.70
Work in progress 425,020.38 425,020.38
Finished goods 852,085,060.72 1,027,888,913.50 169,936.18 101,540,691.47 605,487,669.79 1,173,115,549.14
Total 968,178,694.68 1,117,698,449.95 3,126,925.88 103,171,124.63 696,759,041.04 1,289,073,904.84
250 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
9. Contractual assets
(1). Details
Closing Balance Opening Balance
Book value Impairment Book value Impairment
Items balance Provision balance Provision
Relating to construction
service contract 263,412,927.58 426,392,594.69 3,654,196.27
Total 263,412,927.58 426,392,594.69 3,654,196.27
(2). Impairment Provision of Assets
Increase for the Decrease for the
current period current period
Provision Write-off/
Opening for the Other other Closing
Items Balance current period movement Reversal movement Balance
Relating to construction
service contract 3,654,196.27 3,654,196.27
Total 3,654,196.27 3,654,196.27
Haier Smart Home Co., Ltd. Annual Report 2020 251
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
10. Other current assets
(1). Details
Closing Balance Opening Balance
Book value Impairment Book value Impairment
Items balance Provision balance Provision
Bank deposit for wealth
management products 554,131,037.76 3,981,314,321.50
Deductible taxes 2,438,982,829.14 2,907,303.98 2,578,384,287.03 3,276,161.33
Returns cost receivables 418,107,603.27 242,502,616.01 374,052,448.32 218,016,000.42
Others 118,077,350.40 273,507,220.36
Total 3,529,298,820.57 245,409,919.99 7,207,258,277.21 221,292,161.75
(2). Impairment Provision
Increase for the Decrease for the
current period current period
Provision Write-off/
Opening for the Other other Closing
Items Balance current period movement Reversal movement Balance
Deductible input tax 3,276,161.33 368,857.35 2,907,303.98
Returns cost receivables 218,016,000.42 230,393,423.98 205,906,808.39 242,502,616.01
Total 221,292,161.75 230,393,423.98 368,857.35 205,906,808.39 245,409,919.99
252 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
11. Long-term equity investments
√ Applicable Not Applicable
Increase/decrease for the current period
Investment
profit Adjustment
recognized in other Declaration of
Opening Investment under comprehensive Other changes cash dividends
Investees Balance increase equity method income in equity or profits
Associate
Haier Group Finance
Co., Ltd. 6,010,611,728.26 651,381,998.74 –9,756,456.33 –126,000,000.00
Bank of Qingdao Co., Ltd. 2,586,957,693.97 162,070,662.78 –54,374,791.43 –77,995,640.00
Wolong Electric (Jinan) Motor Co.,
Ltd. 123,555,578.44 20,292,292.26
Qingdao Hegang New Material
Technology Co., Ltd. (
) 280,063,773.80 17,091,162.05
Qingdao Haier SAIF Smart Home
Industry Investment Center
(Limited Partnership) 434,540,103.12 13,247,135.49 –61,990,201.88
Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co.,
Ltd. 643,056,436.86 83,525,524.98 –72,000,000.00
Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd. 395,933,487.26 19,364,678.67
Qingdao Haier Multimedia Co., Ltd 432,386,801.26 –103,399,596.19
Qingdao Haier Software Investment
Co., Ltd. 19,636,136.75
Hefei Feier Smart Technology Co.,
Ltd. 758,188.30 5,000,000.00 –4,267,163.58
Qingdao Xinaohaizhi Energy Co.,
Ltd. 25,966,044.95
Qingdao Zhongzaihaina
Environmental Services Co., Ltd.
(
) 2,261,258.70
Haier Smart Home Co., Ltd. Annual Report 2020 253
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
11. Long-term equity investments (continued)
√ Applicable Not Applicable
Increase/decrease for the current period
Investment
profit Adjustment
recognized in other Declaration of
Opening Investment under comprehensive Other changes cash dividends
Investees Balance increase equity method income in equity or profits
Shandong Haibida Big Data Co.,
Ltd. (
) 5,332,640.10
Beijing Mr. Hi Network Technology
Company Limited 3,757,759.75 3,750,000.00
Beijing Xiaobei Technology Co., Ltd. 2,687,341.82
Beijing ASU Tech Co., Ltd. 5,862,115.78 –14,598,048.47 41,101,902.14
Shenzhen Genyuan Environmental
Protection Technology Co., Ltd. 6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,198,276.46 150,964.05
Qingdao Haimu Smart Home
Investment Partnership (Limited
Partnership) 48,046,197.64 –175,500.98
Guangzhou Heying Investment
Partnership (Limited Partnership) 219,198,634.81 69,010,562.77
Qingdao Home Wow Cloud Network
Technology Co., Ltd. 3,168,859.99 –539,850.36
[Qingdao Ririshun Service Co., Ltd.]
( ) 29,970,000.00 3,040,000.00
Bingji (Shanghai) Corporate
Management Co., Ltd.( (
) ) 894,539,765.00 33,904,413.47
Youjin (Shanghai) Corporate
Management Co., Ltd.( (
) ) 1,625,617,754.55 61,644,388.12
254 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
11. Long-term equity investments (continued)
√ Applicable Not Applicable
Increase/decrease for the current period
Investment
profit Adjustment
recognized in other Declaration of
Opening Investment under comprehensive Other changes cash dividends
Investees Balance increase equity method income in equity or profits
RRS (Shanghai) Investment Co., Ltd.
( ( ) ) 2,954,850,462.82 112,080,705.67
Haier Best Water Technology Co.,
Ltd. (
) 21,725,345.26 15,213,128.49 –3,483,314.16
[Huizhixiangshun Equity Investment
Fund (Qingdao) Partnership
(Limited Partnership)](
( ) (
) 120,000,000.00
[Qingdao Ririshun Huizhi Investment
Co., Ltd.] (
) 2,100,000.00
Meiling CandyWashing Machine Co.,
Ltd ( ) 23,222,136.38 –687,845.65 24,016.37
Qingdao Haier Moulds Co., Ltd. 255,500,000.00 4,196,084.44
Konan Electronic Co., Ltd. 71,196,748.97 7,475,640.32 –1,110,836.42
HNR Company (Private) Limited 104,557,145.65 8,783,554.33 –21,198,812.71
HPZ LIMITED 78,149,551.49 –5,002,825.72 –6,318,980.11
HaierRayaElectricS.A.E 11,252,981.12 –511,747.02
CONTROLADORAMABES.A.deC.V. 3,497,668,453.45 570,365,197.50 –300,689,172.86 –19,854,505.87 –80,179,730.91
Middle East Air conditioning
Company,Limited 19,002,595.66
Total 20,543,423,504.98 442,786,109.61 1,635,948,510.74 –324,414,470.72 21,247,396.27 –418,165,572.79
Haier Smart Home Co., Ltd. Annual Report 2020 255
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
11. Long-term equity investments (continued)
√ Applicable Not Applicable
Increase/decrease for the
current period
Impairment
Provision
Other The disposal of Closing Closing
Investees movement the investment Balance Balance
Associate
Haier Group Finance Co., Ltd. 6,526,237,270.67
Bank of Qingdao Co., Ltd. –153,561,357.40 2,463,096,567.92
Wolong Electric (Jinan) Motor
Co., Ltd. 143,847,870.70
Qingdao Hegang New Material
Technology Co., Ltd (
) 297,154,935.85
Qingdao Haier SAIF Smart Home
Industry Investment Center
(Limited Partnership) 385,797,036.73
Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co.,
Ltd. 654,581,961.84
Qingdao Haier Carrier
Refrigeration
Equipment Co., Ltd. 415,298,165.93 21,000,000.00
Qingdao Haier Multimedia Co.,
Ltd 328,987,205.07 88,300,000.00
Qingdao Haier Software
Investment Co., Ltd. –19,636,136.75
Hefei Feier Smart Technology
Co., Ltd. 1,491,024.72
Qingdao Xinaohaizhi Energy Co.,
Ltd. –25,966,044.95
Qingdao Zhongzaihaina
Environmental
Services Co., Ltd. (
) –2,261,258.70
Shandong Haibida Big Data Co.,
Ltd. (
) –5,332,640.10
Beijing Mr. Hi Network
Technology Company Limited 7,507,759.75 7,507,759.75
Beijing Xiaobei Technology Co.,
Ltd. 2,687,341.82 2,687,341.82
Beijing ASU Tech Co., Ltd. 32,365,969.45
Shenzhen Genyuan
Environmental
Protection Technology Co., Ltd. 6,914,487.73 6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,349,240.51
Qingdao Haimu Smart Home
Investment Partnership
(Limited Partnership) 47,870,696.66
256 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
11. Long-term equity investments (continued)
√ Applicable Not Applicable
Increase/decrease for the
current period
Impairment
Provision
Other The disposal of Closing Closing
Investees movement the investment Balance Balance
Guangzhou Heying Investment
Partnership (Limited
Partnership) 288,209,197.58
Qingdao Home Wow Cloud
Network Technology Co., Ltd. 2,629,009.63
[Qingdao Ririshun Service Co.,
Ltd.] (
) 33,010,000.00
Bingji (Shanghai) Corporate
Management Co., Ltd. 928,444,178.47
Youjin (Shanghai) Corporate
Management Co., Ltd 1,687,262,142.67
RRS (Shanghai) Investment Co.,
Ltd. ( ( )
) 3,066,931,168.49
Haier Best Water Technology
Co., Ltd. (
) 33,455,159.59
[uizhixiangshun Equity Investment
Fund (Qingdao) Partnership
(Limited Partnership)]
( ) (
) 120,000,000.00
[Qingdao Ririshun Huizhi
Investment Co., Ltd.]
) 2,100,000.00
Meiling Candy Washing Machine
Co., Ltd. (
) 22,558,307.10
Qingdao Haier Moulds Co., Ltd., 259,696,084.44
Konan Electronic Co., Ltd. 77,561,552.87
HNR Company (Private) Limited 92,141,887.27
HPZ LIMITED 66,827,745.66
Haier Raya Electric S.A.E 10,741,234.10
CONTROLADORAMABES.A.deC.
V. 3,667,310,241.31
Middle East Air conditioning
Company,Limited 19,002,595.66
Total -206,757,437.90 21,694,068,040.19 126,409,589.30
Haier Smart Home Co., Ltd. Annual Report 2020 257
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
12. Investments in other equity instruments
(1) Details of investments in other equity instruments:
Closing Opening
Items balance balance
SINOPEC Fuel Oil Sales Corporation Limited
( ) 1,117,637,000.00 1,242,930,000.00
Haier COSMO IOT Ecosystem Technology Co.,
Ltd. 1,396,555,521.94
Other 144,932,743.60 153,029,878.92
Total 2,659,125,265.54 1,395,959,878.92
(2) Dividends from investment in other equity instruments during the current period:
Amount for the
Items current period
SINOPEC Fuel Oil Sales Corporation Limited
( ) 19,752,940.62
Other 1,613,783.10
Total 21,366,723.72
13. Other non-current financial assets
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Long-term wealth management products 294,547,364.47
Total 294,547,364.47
258 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
14. Investment properties
(1) The changes in investment properties measured at cost this year are as follows:
Houses and Land use
Items buildings rights Total
I. Original book value
1. Opening balance 46,415,383.99 2,128,550.51 48,543,934.50
2. Increase for the period
(1) External acquistion
(2) Inventories/fixed assets/construction in
progress transferred in 1,971,634.23 1,971,634.23
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Translation difference of foreign currency statement –1,408,439.39 –1,408,439.39
5. Closing balance 46,978,578.83 2,128,550.51 49,107,129.34
II. Accumulated depreciation and accumulated amortization
1. Opening balance 18,591,095.18 550,147.94 19,141,243.12
2. Increase for the period
(1) Provision or amortization 1,824,786.53 40,236.22 1,865,022.75
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Translation difference of foreign currency statement –286,139.34 –286,139.34
5. Closing balance 20,129,742.37 590,384.16 20,720,126.53
III. Provision for impairment
1. Opening balance
2. Increase for the period
(1) Provision
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiaries
(3) Other transferring out
4. Translation difference of foreign currency statement
5. Closing balance
IV. Book value
1. Closing book value 26,848,836.46 1,538,166.35 28,387,002.81
2. Opening book value 27,824,288.81 1,578,402.57 29,402,691.38
(2) The depreciation and amortization amount charge for the period is RMB1,865,022.75.
(3) The recoverable amount of the investment real estate of the Company at the end of the
period is not less than its book value, so no provision for impairment is made.
Haier Smart Home Co., Ltd. Annual Report 2020 259
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
15. Fixed assets
Presented by item
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Fixed assets 20,878,516,949.39 21,159,138,731.39
Disposals of fixed assets 16,987,772.82 20,918,480.62
Total 20,895,504,722.21 21,180,057,212.01
Other explanations:
Applicable √ Not Applicable
260 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
15. Fixed assets (continued)
Fixed assets
Unit and Currency: RMB
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 9,989,544,831.06 24,245,714,440.91 174,044,711.29
2. Increase for the period
(1) Acquisition 140,984,748.15 1,228,153,866.51 2,570,556.39
(2) Construction in progress transferred in 940,692,793.47 1,843,363,621.02 14,958,597.91
(3) Increase in business combinations 322,355,185.01 755,209.24
3. Decrease for the period
(1) Disposal or written-off 49,867,379.50 1,071,980,546.05 8,512,747.07
(2) Disposal or subsidiaries 597,145,933.92 1,150,026,699.79 11,291,650.37
(3) Transferred in and held for resale
4. Translation difference of foreign currency statements –261,833,453.99 –998,189,889.47 –3,396,468.16
5. Closing balance 10,162,375,605.27 24,419,389,978.14 169,128,209.23
II. Accumulated depreciation
1. Opening balance 3,419,949,048.61 11,017,050,073.01 96,937,625.18
2. Increase for the period
(1) Provision 497,310,982.13 2,400,036,490.94 20,208,501.12
(2) Increase in business combinations 145,073,532.93 372,442.10
3. Decrease for the period
(1) Disposal or written-off 17,818,039.93 691,148,068.91 6,397,925.68
(2) Disposal or subsidiaries 321,376,248.28 816,642,066.26 9,947,210.58
(3) Transferred in and held for resale
4. Translation difference of foreign currency statements –64,250,415.06 –441,335,487.64 –2,128,599.01
5. Closing balance 3,513,815,327.47 11,613,034,474.07 99,044,833.13
III. Provision for impairment
1. Opening balance 34,461,480.76 14,555,443.55 80,617.22
2. Increase for the period
(1) Provision 107,438.94
(2) Increase in business combinations 127,167,231.67
3. Decrease for the period
(1) Disposal or written-off
(2) Disposal or subsidiaries 102,615,477.25
(3) Transferred in and held for resale
4. Translation difference of foreign currency statements –822,483.13 577,786.42 –2,565.81
5. Closing balance 33,638,997.63 39,684,984.39 185,490.35
IV. Book value
1. Closing book value 6,614,921,280.17 12,766,670,519.68 69,897,885.75
2. Opening book value 6,535,134,301.69 13,214,108,924.35 77,026,468.89
Haier Smart Home Co., Ltd. Annual Report 2020 261
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
15. Fixed assets (continued)
Fixed assets (continued)
Items Office furniture Other Total
I. Original book value:
1. Opening Balance 863,015,378.72 2,266,565,579.67 37,538,884,941.65
2. Increase for the current period
(1) Acquisition 49,404,812.49 75,819,693.83 1,496,933,677.37
(2) Construction in progress transferred in 156,215,205.57 282,974,158.81 3,238,204,376.78
(3) Increase in business combinations 247,050.24 7,966.39 323,365,410.88
3. Decrease for the current period
(1) Disposal or write-off 51,576,744.11 191,819,251.37 1,373,756,668.10
(2) Disposal of subsidiary 44,996,957.56 125,958,155.42 1,929,419,397.06
(3) Transfer to hold for sale
4. Converted difference in foreign currency
statements –20,933,758.87 –38,887,676.09 –1,323,241,246.58
5. Closing Balance 951,374,986.48 2,268,702,315.82 37,970,971,094.94
II. Accumulated depreciation
1. Opening Balance 438,400,670.33 1,346,669,714.51 16,319,007,131.64
2. Increase for the current period
(1) Provision 135,224,212.64 202,335,963.49 3,255,116,150.32
(2) Increase in business combinations 138,622.08 6,866.74 145,591,463.85
3. Decrease for the current period
(1) Disposal or write-off 41,241,846.21 171,166,240.98 927,772,121.71
(2) Disposal of subsidiary 39,167,603.56 66,179,771.43 1,253,312,900.11
(3) Transfer to hold for sale
4. Converted difference in foreign currency
statements –10,507,078.40 –7,248,050.89 –525,469,631.00
5. Closing Balance 482,846,976.88 1,304,418,481.44 17,013,160,092.99
III Impairment Provision
1. Opening Balance 68,672.62 11,572,864.47 60,739,078.62
2. Increase for the current period
(1) Provision 305,640.73 413,079.67
(2) Increase in business combinations 127,167,231.67
3. Decrease for the current period
(1) Disposal or write-off 5,942,709.97 108,558,187.22
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign currency
statements –7,303.72 –212,583.94 –467,150.18
5. Closing Balance 367,009.63 5,417,570.56 79,294,052.56
IV. Book Value
1. Closing book value 468,160,999.97 958,866,263.82 20,878,516,949.39
2. Opening book value 424,546,035.77 908,323,000.69 21,159,138,731.39
262 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
15. Fixed assets (continued)
Fixed assets (continued)
(2) In the current period, the balance of the construction in progress transferred to the original
value of the fixed assets in a total of RMB3,238,204,376.78.
(3) There was no mortgage secured by the fixed assets mortgage at the end of the period.
(4) Disposals of fixed assets
Reason for
Closing Opening transferring
Items Balance Balance to disposal
Relocation of Qingdao Industrial Park 12,964,689.10 20,918,480.62 Demolition
Other 4,023,083.72 Scrap
cleanup
Total 16,987,772.82 20,918,480.62
16. Construction in progress
Presented by item
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Construction in progress 3,596,902,447.07 2,391,364,659.97
Construction materials
Total 3,596,902,447.07 2,391,364,659.97
Other explanations:
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 263
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
16. Construction in progress (continued)
Construction in progress
(1). Details of construction in progress
√ Applicable Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Impairment Impairment
Projects Book balance provision Book Value Book balance provision Book Value
Europe CANDY Project 611,529,115.13 611,529,115.13 44,645,629.53 44,645,629.53
America GEA Project 518,260,493.01 518,260,493.01 301,439,928.75 34,061,569.61 267,378,359.14
Haier India Project 400,955,285.59 400,955,285.59 32,308,143.64 32,308,143.64
Smart home appliance
technology project 291,584,097.58 291,584,097.58 17,586,162.11 17,586,162.11
Zhengzhou New Energy
Project 134,884,592.49 134,884,592.49 339,598,483.94 339,598,483.94
Qingdao Haier Washing
Machine Project 107,072,469.09 107,072,469.09 16,164,078.47 16,164,078.47
RRS Health Project 105,851,790.40 105,851,790.40 6,389,644.74 6,389,644.74
New Zealand FPA Project 96,050,392.73 96,050,392.73 83,150,746.03 83,150,746.03
Foshan freezer Project 89,437,456.94 89,437,456.94 18,922,781.80 18,922,781.80
Hefei Refrigerator Project 87,566,220.44 87,566,220.44 32,162,988.77 32,162,988.77
Haier Russian Project 76,966,572.40 76,966,572.40 14,781,092.08 14,781,092.08
Wuhan Water Heater
Project 66,678,197.25 66,678,197.25 17,376,290.74 17,376,290.74
Haier Thailand Project 57,560,011.78 57,560,011.78 24,777,109.81 24,777,109.81
Haier Air Conditioning
Electronics Project 56,560,330.52 56,560,330.52 61,168,160.86 61,168,160.86
Qingdao Washing
Appliance Project 55,501,811.42 55,501,811.42 108,566,194.72 108,566,194.72
Jiaonan Washing Machine
Project 48,681,689.86 48,681,689.86 38,432,444.33 38,432,444.33
Dalian Refrigerator Project 42,163,131.37 42,163,131.37 20,869,021.20 20,869,021.20
Chongqing Water Heater
Project 39,668,198.53 39,668,198.53 3,039,596.13 3,039,596.13
Special Refrigeration
Appliances Project 37,736,755.17 37,736,755.17 101,448,249.30 101,448,249.30
COSMO Project 63,804,127.26 63,804,127.26
Others 673,031,571.22 837,735.85 672,193,835.37 1,078,795,355.37 1,078,795,355.37
Total 3,597,740,182.92 837,735.85 3,596,902,447.07 2,425,426,229.58 34,061,569.61 2,391,364,659.97
264 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
16. Construction in progress (continued)
Construction in progress (continued)
(2). Details of significant changes of construction in progress for the period
Increase for the Transfer to fixed Exchange
Project name Opening balance current period assets Other decrease differences Closing balance Source of fund
Europe CANDY Project 44,645,629.53 648,095,545.07 44,569,831.04 -36,642,228.43 611,529,115.13 Self-funding
America GEA Project 301,439,928.75 887,171,960.70 642,170,296.06 -28,181,100.38 518,260,493.01 Self-funding
Haier India Project 32,308,143.64 394,196,319.21 10,144,575.01 -15,404,602.25 400,955,285.59 Self-funding/fund
raising
Smart Home Appliance Technology 17,586,162.11 273,997,935.47 291,584,097.58 Self-funding
Project
Zhengzhou New Energy Project 339,598,483.94 66,819,421.55 271,533,313.00 134,884,592.49 Self-funding
Qingdao Haier Washing Machine Project 16,164,078.47 98,038,515.34 7,130,124.72 107,072,469.09 Self-funding
RRS Health Project 6,389,644.74 123,799,093.84 24,336,948.18 105,851,790.40 Self-funding
New Zealand
FPA Project 83,150,746.03 111,530,697.50 96,888,856.92 -1,742,193.88 96,050,392.73 Self-funding
Foshan freezer project 18,922,781.80 88,230,528.35 17,715,853.21 89,437,456.94 Self-funding
Hefei Refrigerator Project 32,162,988.77 103,871,805.08 48,468,573.41 87,566,220.44 Self-funding
Haier Russian project 14,781,092.08 73,695,489.67 1,811,656.26 -9,698,353.09 76,966,572.40 Self-funding
Wuhan Water Heater Project 17,376,290.74 68,527,237.00 19,225,330.49 66,678,197.25 Self-funding
Haier Thailand project 24,777,109.81 53,564,953.60 23,889,086.13 3,107,034.50 57,560,011.78 Self-funding
Haier Air Conditioning Electronics 61,168,160.86 68,696,784.54 73,304,614.88 56,560,330.52 Self-funding
Project
Qingdao Washing Appliance Project 108,566,194.72 67,820,921.76 120,885,305.06 55,501,811.42 Self-funding
Jiaonan Washing Machine Project 38,432,444.33 77,593,678.11 67,344,432.58 48,681,689.86 Self-funding
Dalian Refrigerator Project 20,869,021.20 96,811,917.01 75,517,806.84 42,163,131.37 Self-funding
Chongqing Water Heater Project 3,039,596.13 47,202,464.85 10,573,862.45 39,668,198.53 Self-funding
Special Refrigeration Appliances Project 101,448,249.30 46,251,900.34 109,963,394.47 37,736,755.17 Self-funding/ fund
raising
COSMO Project 63,804,127.26 146,430,533.78 66,858,137.99 143,370,904.31 -5,618.74 Self-funding
Others 1,078,795,355.37 1,142,263,886.62 1,539,563,924.46 6,085,469.71 -2,378,276.60 673,031,571.22 Self-funding/ fund
raising
Total 2,425,426,229.58 4,684,611,589.39 3,271,895,923.16 149,456,374.02 -90,945,338.87 3,597,740,182.92
Haier Smart Home Co., Ltd. Annual Report 2020 265
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
16. Construction in progress (continued)
Construction in progress (continued)
(3). Impairment provision of construction in progress
Increase
Opening for the Transfer to Exchange Closing
Project name balance current period fixed assets Other decrease differences balance
America GEA Project 34,061,569.61 33,691,546.38 -370,023.23
Total 837,735.85 837,735.85
Total 34,061,569.61 837,735.85 33,691,546.38 -370,023.23 837,735.85
266 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
17. Right-of-use assets
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 2,817,150,021.16 30,765,699.60 168,524,791.57
2. Increase for the current period
(1) Increase 855,224,423.82 14,743,072.13 54,236,643.32
3. Decrease for the current period
(1) Disposal 121,342,707.89 5,981,085.55 20,949,701.34
(2) Disposal of subsidiary 30,646,112.30 196,442.81
4. Converted difference in foreign currency statements -156,719,185.51 314,577.54 -7,303,900.52
5. Closing balance 3,363,666,439.28 39,645,820.91 194,507,833.03
II. Accumulated amortization
1. Opening balance 470,357,728.65 4,559,852.96 54,622,784.52
2. Increase for the current period
(1) Provision 534,683,686.24 9,392,036.65 59,540,619.07
3. Decrease for the current period
(1) Disposal 72,518,726.56 84,382.05 16,642,206.48
(2) Disposal of subsidiary 11,422,732.30 52,384.78
4. Converted difference in foreign currency statements -35,419,267.10 -972,165.77 -8,277,197.13
5. Closing balance 885,680,688.93 12,842,957.01 89,243,999.98
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Converted difference in foreign currency statements
5. Closing balance
IV. Book Value
1. Closing book balance 2,477,985,750.35 26,802,863.90 105,263,833.05
2. Opening book balance 2,346,792,292.51 26,205,846.64 113,902,007.05
Haier Smart Home Co., Ltd. Annual Report 2020 267
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
17. Right-of-use assets (continued)
Items Office furniture Other Total
I. Other
1. Opening balance 60,995,358.04 309,577,979.06 3,387,013,849.43
2. Increase for the current period
(1) Increase 468,786.29 73,029,749.81 997,702,675.37
3. Decrease for the current period
(1) Disposal 849,426.94 3,107,063.59 152,229,985.31
(2) Disposal of subsidiary 89,426.44 30,931,981.55
4. Converted difference in foreign currency statements -11,815,615.12 -23,794,031.33 -199,318,154.94
5. Closing balance 48,709,675.83 355,706,633.95 4,002,236,403.00
II. Accumulated amortization
1. Opening balance 11,686,634.26 90,720,247.45 631,947,247.84
2. Increase for the current period
(1) Provision 6,534,909.70 83,104,707.70 693,255,959.36
3. Decrease for the current period
(1) Disposal 849,419.04 3,107,063.59 93,201,797.72
(2) Disposal of subsidiary 46,576.27 11,521,693.35
4. Converted difference in foreign currency statements -3,229,534.73 -10,203,407.67 -58,101,572.40
5. Closing balance 14,096,013.92 160,514,483.89 1,162,378,143.73
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Converted difference in foreign currency statements
5. Closing balance
IV. Book Value
1. Closing book balance 34,613,661.91 195,192,150.06 2,839,858,259.27
2. Opening book balance 49,308,723.78 218,857,731.61 2,755,066,601.59
268 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
18. Intangible assets
Proprietary Licenses and
Items technology franchises Land use rights
I. Original book value
1. Opening balance 1,777,017,298.95 4,211,491,949.66 1,191,959,998.86
2. Increase for the current period
(1) Purchase 2,047,992.39 47,790,393.14 244,923,712.86
(2) Internal research and development 107,279,565.53
(3) Increase in business combination
3. Decrease for the current period
(1) Disposal 188,438,500.00
(2) Disposal of subsidiary 43,972,030.39
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements -44,339,194.34 -248,504,540.22 -4,334,715.40
5. Closing balance 1,842,005,662.53 4,010,777,802.58 1,200,138,465.93
II. Accumulated amortization
1. Opening balance 735,680,465.49 451,771,449.40 145,020,102.09
2. Increase for the current period
(1) Provision 169,293,518.42 134,423,095.79 20,964,409.16
(2) Increase in business combination
3. Decrease for the current period
(1) Disposal 4,710,962.50
(2) Disposal of subsidiary 21,295,782.60
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements -33,769,691.74 -22,148,725.13 -812,123.32
5. Closing balance 871,204,292.17 564,045,820.06 139,165,642.83
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
(2) Increase in business combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements
5. Closing balance
IV. Book Value
1. Closing book balance 970,801,370.36 3,446,731,982.52 1,060,972,823.10
2. Opening book balance 1,041,336,833.46 3,759,720,500.26 1,046,939,896.77
Haier Smart Home Co., Ltd. Annual Report 2020 269
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
18. Intangible assets
Application
management
Trademark software and
Items rights others Total
I. Original book value
1. Opening balance 2,721,643,301.47 3,604,814,269.91 13,506,926,818.85
2. Increase for the current period
(1) Purchase 216,435,519.28 511,197,617.67
(2) Internal research and development 185,328,429.41 292,607,994.94
(3) Increase in business combination 54,992,058.74 54,992,058.74
3. Decrease for the current period
(1) Disposal 33,673,815.82 222,112,315.82
(2) Disposal of subsidiary 94,341,417.91 138,313,448.30
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements -8,198,601.88 -105,485,918.16 -410,862,970.00
5. Closing balance 2,713,444,699.59 3,828,069,125.45 13,594,435,756.08
II. Accumulated amortization
1. Opening balance 1,477,417,910.84 2,809,889,927.82
2. Increase for the current period
(1) Provision 625,804,227.11 950,485,250.48
(2) Increase in business combination 28,339.27 28,339.27
3. Decrease for the current period
(1) Disposal 27,372,791.92 32,083,754.42
(2) Disposal of subsidiary 70,342,031.60 91,637,814.20
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements -59,423,547.04 -116,154,087.23
5. Closing balance 1,946,112,106.66 3,520,527,861.72
III. Impairment provision
1. Opening balance 9,965,107.96 9,965,107.96
2. Increase for the current period
(1) Provision 46,077,744.47 46,077,744.47
(2) Increase in business combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign currency statements -2,604.00 -2,604.00
5. Closing balance 56,040,248.43 56,040,248.43
IV. Book Value
1. Closing book balance 2,713,444,699.59 1,825,916,770.36 10,017,867,645.93
2. Opening book balance 2,721,643,301.47 2,117,431,251.11 10,687,071,783.07
At the end of the period, the intangible assets developed through the Company accounted for
the 17.53% of the original value at the end of the period.
270 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
19. Development cost
Unit and Currency: RMB
Decrease for the current period
Converted
difference in
Recognized Included in foreign
Opening Increase for as intangible current profit Disposal of currency Closing
Items balance the period asset and loss subsidiary statements balance
91ABD. ERP IT Program 98,811,149.48 99,651,172.77 93,861,206.44 -6,707,314.82 97,893,800.99
Others 94,474,627.62 403,831,835.64 198,746,788.50 143,621,280.56 75,952,361.69 -10,133,109.37 69,852,923.14
Total 193,285,777.10 503,483,008.41 292,607,994.94 143,621,280.56 75,952,361.69 -16,840,424.19 167,746,724.13
Haier Smart Home Co., Ltd. Annual Report 2020 271
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
20. Goodwill
Impact of
fluctuation in
exchange rate
Opening Increase for the Decrease for the for the current
Items balance current period current period period Closing balance
GEA 20,724,937,078.57 -1,342,334,712.31 19,382,602,366.26
Candy 2,032,029,984.37 54,469,999.58 2,086,499,983.95
Others 594,762,750.41 457,060,786.48 3,298,757.75 833,208.29 1,049,357,987.43
Total 23,351,729,813.35 457,060,786.48 3,298,757.75 -1,287,031,504.44 22,518,460,337.64
In the case of a goodwill impairment test, the Company compares the carrying amount of the
relevant asset group or asset group combination (including goodwill) with its recoverable amount.
If the recoverable amount is less than the book value, corresponding difference will be
recognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discounted
estimated future cash flow method based on a management-approved 5-10 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growth
rate. The perpetual annual growth rate (mainly 2%-2.5%) adopted by the management is
consistent with industry forecast data and does not exceed the long-term average growth rate of
each product. The management determines the compound income growth rate (mainly 2.29%-
11.89%) and the EBITDA profit margin (mainly 5.26%-27.34%) based on historical experience and
market development forecasts, and adopts the pre-tax interest rate that can reflect the specific
risks of the relevant asset group as the discount rate (mainly 10.41%-14.89%). The management
analyzes the recoverable amount of each asset group based on these assumptions and believes
that there is no need to make provision for goodwill.
272 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
21. Long-term amortized expenses
Converted
difference in
Increase Amortization foreign
Opening for the for the currency Closing
Items balance current period current period Other decrease statements balance
Renovation 172,232,866.44 126,259,574.45 126,952,030.69 2,157,808.33 -110,917.30 169,271,684.57
Improvement on leased property 196,714,339.48 21,211,980.06 27,174,443.94 17,944,458.85 -2,224,663.01 170,582,753.74
Others 68,639,706.66 87,367,970.37 34,494,757.08 4,580,166.33 -1,044,687.80 115,888,065.82
Total 437,586,912.58 234,839,524.88 188,621,231.71 24,682,433.51 -3,380,268.11 455,742,504.13
22. Deferred income tax assets/deferred income tax liabilities
(1). Deferred income tax assets before elimination
Closing Opening
Items balance balance
Provision for assets impairment 374,373,978.37 330,149,872.25
Liabilities 1,745,260,196.51 1,638,698,620.85
Internal unrealized earnings eliminated due to
combination 668,981,845.53 648,447,634.39
Government grants 124,822,115.15 104,843,341.38
Uncovered losses 806,710,012.75 644,817,113.91
Others 237,331,301.90 97,140,142.95
Total 3,957,479,450.21 3,464,096,725.73
Haier Smart Home Co., Ltd. Annual Report 2020 273
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
22. Deferred income tax assets/deferred income tax liabilities (continued)
(2). Deferred income tax liabilities before elimination
Closing Opening
Items balance balance
Asset amortisation 2,371,032,689.77 2,063,021,233.00
Remeasurement of fair value of the reaming
equity on the day when the control right was
lost 878,623,804.46 664,918,329.45
Withholding income tax of oversea enterprises 93,629,113.00 77,190,532.32
Others 306,293,850.70 234,478,033.95
Total 3,649,579,457.93 3,039,608,128.72
(3). The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of the period was RMB1,749,178,191.96.
23. Other non-current assets
Closing Opening
Items balance balance
Prepayments for equipment and land 1,403,997,069.15 1,423,060,146.73
Other 521,764,491.02 420,704,819.08
Total 1,925,761,560.17 1,843,764,965.81
274 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
24. Short-term borrowings
(1). Category of short-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Borrowings — secured by pledge 472,098,030.36 172,099,117.93
Borrowings — secured by mortgage 68,231,758.92
Borrowings — secured by guarantee 3,505,822,164.08
Borrowings — unsecured by credit 7,200,328,217.00 4,838,896,196.25
Interest payable for short-term borrowings 15,481,918.52
Total 7,687,908,165.88 8,585,049,237.18
Haier Smart Home Co., Ltd. Annual Report 2020 275
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
25. Financial liabilities held for trading
Closing Opening
Items balance balance
Forward foreign exchange trading contracts 26,952,508.66 42,799,173.35
Total 26,952,508.66 42,799,173.35
26. Derivative financial liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Forward foreign exchange trading contracts 188,695,788.30 85,557,428.14
Interest rate swap agreemen 50,886,744.60 13,991,425.83
Total 239,582,532.90 99,548,853.97
276 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
27. Bills payable
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Categories balance balance
Commercial acceptance notes 2,710,903,499.32 2,237,116,468.45
Bank acceptance notes 18,525,153,554.35 17,071,422,308.47
Total 21,236,057,053.67 19,308,538,776.92
28. Accounts payables
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Accounts payables 36,302,971,944.48 33,750,567,046.28
Total 36,302,971,944.48 33,750,567,046.28
The book balance at the end of the period was mainly the unpaid expenditures on material,
equipment and labour.
Haier Smart Home Co., Ltd. Annual Report 2020 277
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
29. Contractual liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Contractual liabilities 7,048,637,659.48 5,583,008,412.49
Total 7,048,637,659.48 5,583,008,412.49
The book balance at the end of the period is mainly the receipt in advance.
30. Payables for staff remuneration
(1). Payables for staff remuneration
√ Applicable Not Applicable
Unit and Currency: RMB
Increase Decrease
Opening for the for the Closing
Items balance current period current period balance
I. Short-term remuneration 2,978,630,280.51 22,277,098,918.32 21,632,600,330.00 3,623,128,868.83
II. Post-employment benefits:
defined contribution plan 27,079,985.45 764,851,958.42 770,896,585.26 21,035,358.61
III. Termination benefits 9,818,188.41 2,061,623.44 2,061,623.44 9,818,188.41
IV. Other benefits due within
one year 140,043,962.93 76,088,297.10 110,014,697.06 106,117,562.97
Total 3,155,572,417.30 23,120,100,797.28 22,515,573,235.76 3,760,099,978.82
278 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
30. Payables for staff remuneration (continued)
(2). Short-term remuneration
√ Applicable Not Applicable
Unit and Currency: RMB
Increase Decrease
Opening for the for the Closing
Items balance current period current period balance
I. Salaries, bonus, allowances
and benefit 1,956,628,751.50 16,306,815,361.99 15,740,285,948.86 2,523,158,164.63
II. Employee welfare 298,793,183.14 922,747,295.44 901,268,873.40 320,271,605.18
III. Social benefit 145,972,223.15 1,554,485,801.28 1,516,565,820.57 183,892,203.86
IV. Housing fund 1,739,030.08 430,450,146.22 427,160,413.85 5,028,762.45
VII. Labor union fee and
education fund 1,249,039.97 94,701,643.50 94,627,566.57 1,323,116.90
VI. Short-term compensated
leave 246,545,110.83 434,406,827.53 404,222,811.04 276,729,127.32
VII. Others 327,702,941.84 2,533,491,842.36 2,548,468,895.71 312,725,888.49
Total 2,978,630,280.51 22,277,098,918.32 21,632,600,330.00 3,623,128,868.83
(3). Defined contribution plan
√ Applicable Not Applicable
Unit and Currency: RMB
Increase Decrease
Opening for the for the Closing
Items balance current period current period balance
1. Basic pension insurance 26,540,835.95 726,620,430.04 732,805,020.26 20,356,245.73
2. Unemployment insurance 268,380.08 8,034,104.26 8,132,179.64 170,304.70
3. Enterprise annuity payment 270,769.42 30,197,424.12 29,959,385.36 508,808.18
Total 27,079,985.45 764,851,958.42 770,896,585.26 21,035,358.61
(1). Termination benefits
Items Closing balance Opening balance
Termination compensation 9,818,188.41 9,818,188.41
Total 9,818,188.41 9,818,188.41
Haier Smart Home Co., Ltd. Annual Report 2020 279
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
31. Taxes payable
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Value-added tax 645,144,199.35 606,034,986.30
Corporate income tax 1,371,458,516.07 1,278,004,157.85
Individual income tax 144,333,033.24 57,716,819.31
City maintenance and construction tax 13,992,816.15 12,703,998.50
Education surcharge 5,960,935.92 5,473,294.35
The electrical and electronic products waste treatment
fund 88,989,555.00 102,288,068.00
Other taxes 129,826,404.39 54,835,056.73
Total 2,399,705,460.12 2,117,056,381.04
32. Other payables
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Interest payable 49,395,752.93
Dividends payable 145,851,115.28
Other payables 17,056,156,167.28 14,961,145,653.61
Total 17,056,156,167.28 15,156,392,521.82
280 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
32. Other payables (continued)
(1) Interest payable:
Closing Opening
Items balance balance
Interest on long-term borrowings 22,160,847.23
Interest on short-term borrowing 27,234,905.70
Total 49,395,752.93
(2) Dividends payable:
Closing Opening
Name of unit balance balance
Brave Lion (HK) limited 122,756,874.10
Others 23,094,241.18
Total 145,851,115.28
(3) Other payables:
Closing Opening
Items balance balance
Other payables 17,056,156,167.28 14,961,145,653.61
Total 17,056,156,167.28 14,961,145,653.61
The closing balance mainly included the incurred but unpaid costs.
Haier Smart Home Co., Ltd. Annual Report 2020 281
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
33. Non-current liabilities due within one year
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Long-term borrowings due within one year 4,950,555,670.08 4,730,070,447.82
Long-term payables due within one year 20,000,000.00
Lease liabilities due within one year 670,863,763.75 594,930,209.58
Anticipated liabilities due within one year 1,881,305,479.57 1,992,138,260.62
Total 7,522,724,913.40 7,317,138,918.02
34. Other current liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Short-term payable bonds 5,535,262,500.00
Payable refund 540,552,003.81 486,038,304.57
Tax amount to be written off 20,186,405.07 6,284,243.87
Others 16,053,035.75 1,743,159.10
Total 6,112,053,944.63 494,065,707.54
282 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
35. Long-term borrowings
(1). Classification long-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Borrowings — secured by mortgage 12,663,597.65
Borrowings — secured by guarantor 2,343,619,509.01
Borrowings — unsecured 11,821,416,259.81 8,877,523,705.58
Borrowings — secured by guarantor and mortgage 2,042,646,123.32
Total 11,821,416,259.81 13,276,452,935.56
Interest rate on long-term borrowings – secured by guarantor is the one as provided in the
agreement plus LIBOR.
Interest rate on domestic long-term borrowings – unsecured is the benchmark rate
published by the People’s Bank of China.
Interest rate on offshore long-term borrowings – unsecured is the one as provided in the
agreement plus LIBOR.
Interest rate on long-term borrowings – secured by mortgage is the one as provided in the
agreement plus LIBOR.
Haier Smart Home Co., Ltd. Annual Report 2020 283
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
36. Bonds payable
In November 2017, Harvest International Company, the Company’s wholly-owned subsidiary,
issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate of zero and a
rate on investment of 1%. In September 2020, the Company considered and approved the
scheme to convert the exchangeable bonds into convertible bonds. The underlying shares of the
original exchangeable bonds were changed from the shares of Haier Electronic to newly issued
H-shares of Haier Smart Home (referred to as EB to CB Scheme) . On 23 December 2020,
H-shares of Haier Smart Home were listed and traded, and the EB-to-CB Scheme took effect.
The outstanding principle amount of the original exchangeable bonds was HK$7.993 billion. The
maturity date, coupon rate and yield rate of the bond remain unchanged. The liability component
and equity component of convertible bonds at the initial recognition:
Convertible
corporate bonds on
Items 23 December 2020
Initial recognition: 9,105,660,619.93
Including
Equities of the convertible bond 2,364,195,333.79
Liabilities of the convertible bond 6,741,465,286.14
Changes in the liability portion of corporate bonds in the current period:
Shares
Less: bond converted in the
interest paid for Redemption in current period
Increase in Interest for the the current the current (EB converted Exchange rate
Items Opening balance current period Accrued bond current period period period into CB) impact Closing balance
Exchangeable
bond (EB) 7,004,585,761.43 173,060,863.92 179,814.81 5,919,340.00 6,770,674,309.82 –400,873,160.72
Exchangeable
corporate
bond (CB) 6,741,465,286.14 4,315,475.69 –32,279,711.56 6,713,501,050.27
Total 7,004,585,761.43 6,741,465,286.14 177,376,339.61 179,814.81 5,919,340.00 6,770,674,309.82 –433,152,872.28 6,713,501,050.27
284 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
37. Lease liabilities
Unit and Currency: RMB
Closing
Items balance Opening balance
Lease liabilities 2,743,566,116.43 2,575,201,976.93
Less: lease liabilities due within one year 670,863,763.75 594,930,209.58
Total 2,072,702,352.68 1,980,271,767.35
38. Long-term payables
Unit and Currency: RMB
Closing Opening
Items balance balance
Investment from CDB development fund 56,500,000.00 93,000,000.00
Others 61,703,261.27 49,342,718.45
Less: long-term payables due within one yea 20,000,000.00
Total 98,203,261.27 142,342,718.45
Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Refrigerator Co., Ltd., Qingdao Haier Air Conditioner Gen
Corp., Ltd., Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited together with China
Development Fund Co. Ltd. in 2015 and 2016, China Development Fund Co. Ltd. invested
RMB20 million in Qingdao Haier Refrigerator Co., Ltd., and RMB73 million in Qingdao Haier
(Jiaozhou) Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual
return of 1.2% by means of dividends or buyback premium for the above investments. In 2020,
the subsidiaries made buyback in amount of RMB36.5 million. From 2021 to 2027, the Company
and its subsidiaries will repurchase the investments made by China Development Fund Co. Ltd.
to the subsidiaries of the Company.
Haier Smart Home Co., Ltd. Annual Report 2020 285
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable
√ Applicable Not Applicable
(1) Long-term employee benefits payable
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
I. Post-employment benefits: net liability of
defined benefit plan 602,802,957.77 577,613,222.26
II. Termination benefits 429,651,733.32 324,191,428.30
III. Other long-term benefits
IV. Provision for work-related injury compensation 213,320,333.26 220,545,586.80
Total 1,245,775,024.35 1,122,350,237.36
(2). Defined benefits plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified
staff. Under these plans, the employees are entitled to the retirement benefits agreed in
such defined benefit plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary
and other risks.
The recent actuarial evaluation of the assets and the present value of defined benefit
obligations under such plans are determined by using the projected unit credit method.
286 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company
Actuarial assumptions used to defined benefit plans
Items Rate
Discount rate 0.50%
Expected rate of return 2.00%
Present value of defined benefit obligations
Items Amount
I. Opening balance 334,764,594.79
II. Defined benefit cost recognized in current profit or loss 10,759,701.57
1. Current service cost 9,069,397.92
2. Past service cost
3. Settlement gains (loss indicated in ‘ ’)
4. Interest cost 1,690,303.65
III. Defined benefit cost recognized in other comprehensive
income 1,544,445.38
1. Actuarial loss (gain indicated in ‘ ’) 1,544,445.38
IV. Other changes -22,693,200.83
1. The consideration paid at the time of settlement
2. Benefit paid -18,392,400.09
3. Exchange differences -4,300,800.74
VII. Closing balance 324,375,540.91
Haier Smart Home Co., Ltd. Annual Report 2020 287
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company
(continued)
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance -33,960,733.88
II. Defined benefit cost recognized in current profit or loss 3,511,418.93
III. Defined benefit cost recognized in other comprehensive
income -3,834,624.95
IV. Other changes -12,841,847.17
VII. Closing balance -47,125,787.07
The average term for the defined benefit obligation is 11.79 years at the balance
sheet date.
Fair value of plan assets
Items Amount
I. Opening balance 368,725,328.67
II. Defined benefit cost recognized in current profit or loss 7,248,282.64
1. Interest income 7,248,282.64
III. Defined benefit cost recognized in other comprehensive
income 5,379,070.33
1. Return on plan assets (except those included in net
interests) 5,379,070.33
2. Changes in impact of asset cap (except those included
in net interests)
IV. Other changes –9,851,353.66
1. Employer contributions 6,344,950.20
2. Benefit paid –11,126,189.87
3. Exchange differences –5,070,113.99
VII. Closing balance 371,501,327.98
Neither the Company’s ordinary shares or bonds, nor the properties occupied by the
Company are included in the plan assets.
288 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance –33,960,733.88
II. Defined benefit cost recognized in current profit or loss 3,511,418.93
III. Defined benefit cost recognized in other comprehensive
income –3,834,624.95
IV. Other changes –12,841,847.17
V. Closing balance –47,125,787.07
The average term for the defined benefit obligation is 11.79 years at the balance
sheet date.
The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided post-employment
defined benefit plan of health care benefits to eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 2.47%
Haier Smart Home Co., Ltd. Annual Report 2020 289
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
Present value of defined benefit obligations
Items Amount
I. Opening balance 138,607,020.37
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 10,240,125.86
1. Current service cost 6,134,939.35
2. Past service cost
3. Settlement gains (loss indicated in ‘ ’)
4. Interest cost 4,105,186.51
IV. Defined benefit cost recognized in other comprehensive
incomes 11,637,987.81
1. Actuarial loss (gain indicated in ‘ ’) 11,637,987.81
VII. Other changes -8,917,373.66
1. The consideration paid at the time of settlement
2. Benefit paid -8,198,889.19
3. Exchange differences -718,484.47
VII. Closing balance 151,567,760.38
290 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Roper Corporation, a subsidiary of the Company (continued)
Net liability (net asset) of defined benefit plam
Items Amount
I. Opening balance 138,607,020.37
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 10,240,125.86
IV. Defined benefit cost recognized in other comprehensive
incomes 11,637,987.81
V. Other changes -8,917,373.66
VI. Closing balance 151,567,760.38
The average term for the defined benefit obligation is 10.05 years at the balance
sheet date.
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided post-
retirement defined benefit plan of health care benefits for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 2.09%
Haier Smart Home Co., Ltd. Annual Report 2020 291
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company (continued)
Present value of defined benefit obligations
Items Amount
I. Opening balance 310,036,866.40
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,040,164.48
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ ’)
4. Interest cost 8,040,164.48
IV. Defined benefit cost recognized in other comprehensive
incomes 3,100,710.78
1. Actuarial loss (gain indicated in ‘ ’) 3,100,710.78
VII. Other changes -28,114,459.95
1. The consideration paid at the time of settlement
2. Benefit paid -24,006,014.06
3. Exchange differences -4,108,445.89
VI. Closing balance 293,063,281.71
292 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company (continued)
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 310,036,866.40
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,040,164.48
IV. Defined benefit cost recognized in other comprehensive
incomes 3,100,710.78
VII. Other changes -28,114,459.95
VI. Closing balance 293,063,281.71
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
defined benefit plan of pension for the eligible employees.
Actuarial assumptions used in defined benefit plans
Items Rate
Discount rate 2.08%
Haier Smart Home Co., Ltd. Annual Report 2020 293
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company (continued)
Present value of defined benefit obligations
Items Amount
I. Opening balance 257,475,210.72
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,452,545.38
1. Current service cost
2. Past service cost
3. Settlement gains (loss indicated in ‘ ’)
4. Interest cost 6,452,545.38
IV. Defined benefit cost recognized in other comprehensive
incomes 9,842,028.66
1. Actuarial loss (gain indicated in ‘ ’) 9,842,028.66
VII. Other changes -49,483,263.67
1. The consideration paid at the time of settlement
2. Benefits paid out -45,032,328.14
3. Exchange differences -4,450,935.53
VI. Closing balance 224,286,521.09
294 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(2). Defined benefits plan (continued)
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary of the
Company (continued)
Fair value of plan assets
Items Amount
I. Opening balance 184,922,772.57
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
incomes 9,666,097.78
1. Return on plan assets (except those included in
net interests) 9,666,097.78
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes -34,179,842.84
1. Employer contributions 14,086,065.04
2. Benefits paid out -45,032,328.14
3. Exchange differences -3,233,579.74
VII. Closing balance 160,409,027.51
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 72,552,438.15
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,452,545.38
IV. Defined benefit cost recognized in other comprehensive
income 175,930.88
VII. Other changes –15,303,420.83
V. Closing balance 63,877,493.58
Haier Smart Home Co., Ltd. Annual Report 2020 295
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
39. Long-term employee benefits payable (continued)
(3) Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision for
work-related injury claims for the staff injured during the production accidents from 1
January 1991, which was used to pay for the claim made by the injured staff. The
provision was calculated by Beechercarlson Insurance Services, LLC., based on actuarial
method and a discount rate of 3.72%.
Items Amount
I. Opening balance 220,545,586.80
II. Business combination not under common control
III. Compensation recognized in current profit and loss 86,716,612.64
IV. Actual compensation paid -51,636,464.63
VII. Other changes -42,305,401.55
VI. Closing balance 213,320,333.26
Classification of the balance of defined benefit plan
Closing Opening
Items balance balance
Short-term salary 38,202,187.93 84,527,455.18
Long-term salary 602,802,957.77 577,613,222.26
Total 641,005,145.70 662,140,677.44
296 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
40. Estimated liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Opening Closing
Items balance balance
Active litigation 19,619,840.35 21,550,139.03
Others 192,441,718.48 238,570,708.44
Projection of three guarantees and installation fees 1,186,816,187.50 1,182,723,189.26
Total 1,398,877,746.33 1,442,844,036.73
Significant assumption and estimation relating to estimation of three guarantees and installation
fees: the Company reasonably estimated the three guarantees and installation fee rate based on
its actual expenses on the three guarantees and installation fees as well as sales data in the
past. The Company estimated the three guarantees and installation fees that are likely to be
incurred in the future according to its policies on the three guarantees and installation fees, as
well as the actual sales data.
41. Deferred income
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Government grants 705,272,617.10 296,297,021.72 367,807,969.34 633,761,669.48
Total 705,272,617.10 296,297,021.72 367,807,969.34 633,761,669.48
Haier Smart Home Co., Ltd. Annual Report 2020 297
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
42. Other non-current liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Obligation of repurchasing the minority equity rights 54,598,203.27
Others 27,033,458.13 15,473,286.76
Total 27,033,458.13 70,071,490.03
43. Share capital
Increase for Decrease for
Opening the current the current Closing
Share category balance period period balance
I. Restricted shares
1. State-owned shares
2. Shares held by domestic
non-state-owned legal entities
3. Shares held by domestic individuals
4. Shares held by offshore
non-state-owned legal entities
II. Non-restricted shares 6,579,566,627 2,448,279,814 9,027,846,441
1. Ordinary shares in RMB 6,308,552,654 6,308,552,654
2. Domestic listed foreign Shares
3. Offshore listed foreign Shares 271,013,973 2,448,279,814 2,719,293,787
4. Others
III. Total shares 6,579,566,627 2,448,279,814 9,027,846,441
298 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
44. Other equity instruments
Increase Decrease
Opening for the for the Closing
Items balance current period current period balance
Equity portion of exchangeable bond 431,424,524.07 431,424,524.07
Equity portion of convertible bond 2,364,195,333.79 2,364,195,333.79
Total 431,424,524.07 2,364,195,333.79 431,424,524.07 2,364,195,333.79
45. Capital reserve
√ Applicable Not Applicable
Unit and Currency: RMB
Increase Decrease
Opening for the for the Closing
Items balance current period current period balance
Capital premium (Share premium) 3,636,172,794.06 12,509,214,213.19 1,950,039,867.08 14,195,347,140.17
Other capital reserve 799,718,051.41 41,101,902.14 27,139,686.32 813,680,267.23
Total 4,435,890,845.47 12,550,316,115.33 1,977,179,553.40 15,009,027,407.40
The main reasons for the change in capital premium: acquisition of minority shareholding from
subsidiaries in the current period and non-proportional capital injection in subsidiaries in the
current period.
The main reasons for the change in other capital reserves: recognition of other capital reserves
arising from changes in other equity accounted for under the equity method and transfer out of
other capital reserves arising from the disposal of subsidiaries.
Haier Smart Home Co., Ltd. Annual Report 2020 299
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
46. Other comprehensive income
Amounts for the current period
Attributable to Attributable to
Amount Less: the parent minority
Opening before current income tax company shareholders Closing
Items balance income tax expenses after tax after tax Others balance
a 17,478,970.09 -324,414,470.72 -17,252,640.69 -368,885,317.13 27,218,205.72 58,758,930.80 -292,647,416.24
b 3,180,368.82 -146,442,438.62 49,062,064.71 -104,122,543.00 6,742,169.09 -297,721.09 -101,239,895.27
c 1,265,319,179.57 -2,004,075,955.42 -1,991,256,746.82 -12,819,208.60 195,412,332.50 -530,525,234.75
d -28,644,680.35 -121,532,163.76 11,508,231.03 -50,039,720.46 -59,984,212.27 -80,744,068.43 -159,428,469.24
e 60,654,781.53 -31,009,731.41 7,959,266.34 -23,030,495.09 -19,969.98 37,624,286.44
Total 1,317,988,619.66 -2,627,474,759.93 51,276,921.39 -2,537,334,822.50 -38,863,016.04 173,129,473.78 -1,046,216,729.06
Notes:
(1) Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the details are as follows:
Item a represents other comprehensive income classified to profit and loss under the equity method.
Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).
Item c represents exchange differences from translation of foreign currency financial statements.
(2) Item d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
300 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
47. Surplus reserve
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for Decrease for
Opening the current the current Closing
Items balance period period balance
Statutory surplus reserve 2,607,670,603.87 390,007,134.14 2,997,677,738.01
Discretionary surplus reserve 26,042,290.48 26,042,290.48
Reserve fund 11,322,880.64 11,322,880.64
Enterprise expansion fund 10,291,630.47 10,291,630.47
Total 2,655,327,405.46 390,007,134.14 3,045,334,539.60
Pursuant to the Company Law of the People’s Republic of China and the Articles of Association,
the Company is required to appropriate the statutory surplus reserve at 10% of its net profit.
Haier Smart Home Co., Ltd. Annual Report 2020 301
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
48. Undistributed profits
√ Applicable Not Applicable
Amounts
Undistributed profits at the end of previous year 32,468,121,744.26
Adjustment due to business combination under common control
Undistributed profits at the beginning of the year 32,468,121,744.26
Add: net profit attributable to owners of the parent company 8,876,593,208.19
Other transfer in -42,238,160.71
Adjustment due to implementation of enterprise accounting standard
Profit available for appropriation for the year 41,302,476,791.74
Less: appropriation of statutory surplus reserve 390,007,134.14
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares 2,467,337,485.13
Undistributed profits at the end of period 38,445,132,172.47
302 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
49. Operating income and operating cost
(1). Operating income
Amount for the current period Amount for the previous period
Items Income Cost Income Cost
Primary business 208,593,269,178.46 199,470,697,570.75
Other Business 1,132,551,920.98 1,291,285,685.82
Total 209,725,821,099.44 200,761,983,256.57
(2). Primary business income and primary business cost by product category
Amount for the current period Amount for the previous period
Primary business Primary business Primary business Primary business
Categories income cost income cost
Air conditioner 29,998,860,385.28 21,775,814,158.53 29,128,360,847.20 20,034,773,426.88
Refrigerator 61,538,038,448.75 41,567,754,922.29 58,437,548,582.46 39,576,846,618.02
Kitchen appliance 31,361,319,774.44 21,420,569,709.06 29,508,925,597.30 20,323,125,202.75
Water appliance 9,856,730,639.50 5,349,058,135.46 9,623,997,584.95 5,211,758,293.50
Washing machine 48,452,426,668.33 32,402,560,443.74 44,714,295,068.12 30,082,538,105.52
Equipment product and
integrated channel
services 27,385,893,262.16 24,614,064,561.89 28,057,569,890.72 25,180,488,578.94
Total 208,593,269,178.46 147,129,821,930.97 199,470,697,570.75 140,409,530,225.61
Haier Smart Home Co., Ltd. Annual Report 2020 303
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
50. Taxes and surcharge
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
City maintenance and construction tax 222,111,567.02 291,146,530.21
Education surcharge 158,073,704.03 177,513,807.70
Property tax 56,952,660.77 57,458,858.13
Land use tax 16,516,606.32 101,817,438.06
Stamp duty 159,650,610.68 121,945,873.71
Others 47,201,768.51 52,162,532.07
Total 660,506,917.33 802,045,039.88
51. Selling expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Selling expenses 33,641,711,147.72 33,682,126,291.31
Total 33,641,711,147.72 33,682,126,291.31
The Company’s selling expenses are mainly salary expenses, transportation and storage fees,
advertising and promotion fees, and after-sales expenses.
304 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
52. Administrative expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Administrative expenses 10,052,645,415.72 10,113,263,329.25
Total 10,052,645,415.72 10,113,263,329.25
The Company’s administrative expenses are mainly salary expenses, office fees, depreciation and
amortization of assets fees, etc.
53. R&D expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
R&D expenses 6,860,161,572.42 6,266,936,518.17
Total 6,860,161,572.42 6,266,936,518.17
Haier Smart Home Co., Ltd. Annual Report 2020 305
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
54. Financial expenses
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Interest expense 1,327,091,393.08 1,747,107,740.65
Less: interest income 486,179,773.00 550,224,661.04
Less: cash discount 143,826,274.59 162,248,119.74
Exchange gains and losses 385,014,983.81 –272,402,809.68
Others 114,117,406.13 130,785,408.67
Total 1,196,217,735.43 893,017,558.86
Interest expenditure in lease liabilities in the current period is RMB123,159,380.18.
55. Other income
Amount for the Amount for the
Items current period previous period
Government grants 1,081,535,480.75 1,209,403,624.81
Government grants 69,112,340.28 72,809,404.72
Total 1,150,647,821.03 1,282,213,029.53
306 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
56. Investment income (losses are represented by ‘-’)
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Long-term equity investments income calculated by
the equity method 1,619,755,825.37 1,409,211,965.00
Investment income from disposal of long-term equity investments 2,261,114,345.13 3,823,762,154.68
Investment income from other equity instrument investments during
holding period 21,366,723.72 39,133,293.28
Income from wealth management products 88,139,276.75 168,169,628.59
Investment income from disposal of financial assets measured at fair
value with changes included in current profit and loss 69,728,041.81 39,262,442.79
Total 4,060,104,212.78 5,479,539,484.34
57. Gains on changes in fair value (losses are represented by ‘-’)
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Change in fair value of forward foreign exchange
trading contracts 40,882,087.10 72,176,324.08
Changes in fair value of wealth management products 4,019,028.18 19,675,848.00
Changes in fair value of investment funds 8,351,206.56
Others 9,377,425.96 –15,135,204.55
Total 62,629,747.80 76,716,967.53
Haier Smart Home Co., Ltd. Annual Report 2020 307
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
58. Credit impairment loss
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Bad debts losses on accounts receivable -170,080,605.76 -131,659,422.73
Impairment losses on contractual assets -3,654,196.27
Bad debts losses on bills receivable 3,700,000.00 -15,056,696.60
Total -166,380,605.76 -150,370,315.60
308 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
59. Impairment loss on assets
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Impairment losses on inventory –1,014,527,325.32 –576,400,805.50
Impairment losses on other current assets –230,024,566.63 –218,016,000.43
Impairment losses on fixed assets –413,079.67 –1,328,135.45
Impairment losses on intangible assets –46,077,744.47
Impairment losses on construction in progress –837,735.85 –9,619,271.50
Impairment losses on long-term equity investment –43,750,000.00 –55,214,487.73
Total –1,335,630,451.94 –860,578,700.61
60. Gains on disposal of assets
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 33,992,005.52 501,274,953.38
Less: losses on disposal of non-current assets 46,804,842.58 15,547,325.37
Total –12,812,837.06 485,727,628.01
Haier Smart Home Co., Ltd. Annual Report 2020 309
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
61. Non-operating income
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 13,544,653.33 638,713.73
Quality claims and fines 42,910,128.73 278,824,898.94
Others 140,989,269.00 111,507,936.07
Total 197,444,051.06 390,971,548.74
62. Non-operating expenses
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Losses on disposal of non-current assets 112,009,363.05 89,405,090.32
Others 128,909,175.86 120,401,550.50
Total 240,918,538.91 209,806,640.82
63. Income tax expenses
(1) Statement of income tax expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Current income tax expense 2,115,519,024.63 1,708,340,696.65
Deferred income tax expense 116,345,162.88 587,875,584.21
Total 2,231,864,187.51 2,296,216,280.86
310 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
63. Income tax expenses (continued)
(2) Reconciliation between accounting profit and income tax expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Total profit 13,554,480,464.79
Income tax expense calculated pursuant to statutory/applicable tax rate(s) 3,388,620,116.20
Impact from different tax rates applicable to subsidiaries —476,817,215.17
Impact from adjustment to income tax in prior periods —460,426,528.21
Impact from non-taxable income —581,537,475.46
Impact from non-deductible cost, expense and loss 269,427,976.15
Impact from deductible provisional differences or deductible losses of unrecognized
deferred tax assets from this period 92,597,314.00
Income tax expense 2,231,864,187.51
Other explanations:
Applicable √ Not Applicable
64. Other comprehensive income
√ Applicable Not Applicable
Please refer to notes VII.46 for details
Haier Smart Home Co., Ltd. Annual Report 2020 311
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
65. Other cash received from operating activities
Items Amounts
Deposits and securities 36,789,663.37
Government grants 941,626,605.90
Non-operating income excluding government grants 108,560,778.77
Interest income 437,718,310.82
Others 13,649,128.24
Total 1,538,344,487.10
66. Other cash paid to operating activities
Items Amounts
Cash paid on selling expenses 14,515,419,929.81
Cash paid on administrative and R&D expenses 6,286,961,784.16
Cash paid on financial expenses 147,769,900.77
Non-operating expenses 60,600,741.26
Others 80,476,736.60
Total 21,091,229,092.60
67. Other cash received from investing activities
Items Amounts
Land grant refunded by government 182,950,000.00
Others 4,767,849.30
Total 187,717,849.30
312 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
68. Other cash paid to investing activities
Items Amounts
Others 317,462.62
Total 317,462.62
69. Other cash received from financing activities
Items Amounts
Dividend of treasury stock 13,362,610.74
Others 719,826.43
Total 14,082,437.17
70. Other cash paid to financing activities
Items Amounts
Cash payment paid to scheme shareholders under the privatisation proposal 2,512,771,135.05
Cash paid to lease 727,823,360.61
Cash paid to withdrawal of Minority equity interests 15,199,860.00
Expenses from issuance of H-shares 48,788,179.22
Total 3,304,582,534.88
Haier Smart Home Co., Ltd. Annual Report 2020 313
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
71. Net profit adjusted to cash flow of operating activities
Unit and Currency: RMB
Net profit adjusted to cash flow of Amount for the Amount for the
operating activities current period previous period
1. Net profit 11,322,616,277.28 12,334,392,517.10
Add: impairment provision for assets 1,502,011,057.70 1,010,949,016.21
Depreciation of fixed assets 3,950,237,132.43 3,766,641,387.29
Amortization of intangible assets 950,485,250.48 786,513,629.57
Amortization of long-term prepaid expenses 188,621,231.71 110,134,513.81
Losses on disposal of fixed assets, intangible assets and
other long-term assets (‘-’ represents ‘gains’) 111,277,546.78 –396,961,251.42
Loss and gains on change of fair value (‘-’ represents ‘gains’) —62,629,747.80 –76,716,967.53
Financial expenses (‘-’ represents ‘gains’) 1,712,106,376.89 1,474,704,930.97
Loss on investments (‘-’ represents ‘gains’) —4,060,104,212.78 –5,479,539,484.34
Decrease in deferred tax assets (‘-’ represents ‘increase’) —495,054,794.76 631,902,444.76
Increase of deferred tax liabilities (‘-’ represents ‘decrease’) 611,399,957.64 –44,026,860.55
Decrease in inventories (‘-’ represents ‘increase’) —3,118,305,579.15 –3,949,038,184.52
Decrease of operational account receivables (‘-’ represents
‘increase’) —5,379,121,318.75 –908,459,449.72
Increase of operational account payables (‘-’ represents
‘decrease’) 9,954,754,491.97 5,705,533,226.59
Others 410,818,045.87 116,601,474.51
Net cash flow generated from operational activities 17,599,111,715.51 15,082,630,942.73
2. Significant investment and financing activities not involving
cash inflows and outflows:
Capital transferred from debts 2,605,447,744.16
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period 45,635,132,638.48 34,962,947,399.85
Less: cash balance at the beginning of the period 34,962,947,399.85 36,560,925,755.10
Add: cash equivalents balance at the end of the period
Less: cash equivalents balance at the beginning of the period
Net increase of cash and cash equivalents 10,672,185,238.63 –1,597,978,355.25
314 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
72. Cash and cash equivalents
Unit and Currency: RMB
Closing Opening
Items balance balance
I. Cash 45,635,132,638.48 34,962,947,399.85
Including: Cash on hand 2,257,666.98 7,556,892.38
Bank deposits always available for payment 45,306,078,417.59 34,502,656,877.99
Other monetary funds always available for payment 326,796,553.91 452,733,629.48
II. Cash equivalents
Including: bond investments due within three months
III. Closing balance of cash and cash equivalents 45,635,132,638.48 34,962,947,399.85
Including: restricted cash and cash equivalents the used by the
parent or subsidiaries of the Group
73. Monetary items in foreign currency
Closing Balance Opening Balance
Balance in Balance in
foreign foreign
Items currency Exchange rate Balance in RMB currency Exchange rate Balance in RMB
Monetary funds
USD 924,028,432.95 6.5249 6,029,193,122.15 730,666,614.19 6.9762 5,097,276,433.90
EUR 196,320,365.21 8.0250 1,575,470,930.80 151,676,201.42 7.8155 1,185,425,352.21
JPY 6,477,692,063.68 0.063236 409,623,335.34 3,356,863,028.27 0.064086 215,127,924.03
HKD 834,174,659.07 0.8416 702,041,393.07 745,289,079.40 0.8958 667,629,957.33
Others 3,237,415,723.48 2,043,389,309.90
Subtotal 11,953,744,504.84 9,208,848,977.37
Accounts receivables
USD 670,644,124.35 6.5249 4,375,885,846.99 269,987,662.70 6.9762 1,883,487,932.50
EUR 416,947,689.18 8.0250 3,346,005,205.68 325,463,066.35 7.8155 2,543,656,595.07
JPY 2,804,117,973.89 0.063236 177,321,204.20 3,829,608,370.79 0.064086 245,424,282.05
Others 3,303,192,557.86 2,931,185,158.50
Subtotal 11,202,404,814.73 7,603,753,968.12
Haier Smart Home Co., Ltd. Annual Report 2020 315
Section XII Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS (continued)
73. Monetary items in foreign currency (continued)
Closing Balance Opening Balance
Balance in Balance in
foreign foreign
Items currency Exchange rate Balance in RMB currency Exchange rate Balance in RMB
Short-term borrowings
USD 338,394,354.56 6.5249 2,207,989,324.04 521,126,042.56 6.9762 3,635,479,498.10
EUR 365,208,045.49 8.0250 2,930,794,565.08 320,772,912.41 7.8155 2,507,000,696.91
JPY 559,047,191.47 0.063236 35,351,908.20 6,656,569,078.27 0.064086 426,592,885.95
HKD 2,601,626,661.87 0.8416 2,189,528,998.63
Others 17,716,918.41 66,592,438.54
Subtotal 7,381,381,714.36 6,635,665,519.50
Accounts payables
USD 1,686,174,380.87 6.5249 11,002,119,217.74 1,219,489,898.22 6.9762 8,507,405,427.96
EUR 509,699,528.76 8.0250 4,090,338,718.32 421,042,022.97 7.8155 3,290,653,930.56
JPY 5,948,544,811.60 0.063236 376,162,179.71 5,988,441,245.39 0.064086 383,775,245.65
NZD 184,521,657.35 4.7050 868,174,397.82 147,674,519.27 4.6973 693,671,519.36
Others 2,331,300,734.45 1,735,111,878.01
Subtotal 18,668,095,248.04 14,610,618,001.54
Non-current liabilities due in one
year
USD 460,056,675.99 6.5249 3,001,823,805.15 692,201,069.75 6.9762 4,828,933,102.79
EUR 362,785,908.96 8.0250 2,911,356,919.41 104,804,376.00 7.8155 819,098,600.63
JPY 409,229,611.46 0.063236 25,878,043.71 1,923,050,313.62 0.064086 123,240,602.40
RUB 172,776,559.94 0.087700 15,152,504.31 183,707,445.72 0.112600 20,685,458.39
Others 347,591,362.24 278,535,431.52
Subtotal 6,301,802,634.82 6,070,493,195.73
Long-term borrowings
USD 1,338,974,588.19 6.5249 8,736,675,290.48 876,451,371.56 6.9762 6,114,300,058.28
EUR 143,342,874.39 8.0250 1,150,326,567.02 712,443,399.37 7.8155 5,568,101,387.80
RUB 500,000,000.00 0.087700 43,850,000.00 500,000,010.04 0.112600 56,300,001.13
NZD 319,947,612.96 4.7050 1,505,353,518.98 319,915,612.92 4.6973 1,502,739,608.57
JPY 5,861,628,375.59 0.063236 370,665,931.96
Others 14,544,951.38 22,348,282.12
Subtotal 11,821,416,259.82 13,263,789,337.90
316 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
√ Applicable Not Applicable
(1) Business consolidation not under common control occurring in the current period
√ Applicable Not Applicable
Unit and Currency: RMB
Acquiree’s revenue Acquiree’s net profit
Interest Recognition from acquisition from acquisition
Time of equity Equity acquisition acquired Equity acqui Equity acquisit basis of acquisiti date to the end of date to the end of
Name of acquiree acquisiti on cost (%) sition method ion date on dates the period the period
[Qingdao Ririshun Lejia January 2020 578,514,747.42 79.82 Acquisition January 2020 Shareholding 236,315,323.00 40,005,633.26
IOT Technology Co., transferred
Ltd.] (
)
[Guangdong Heilong January 2020 35,493,500.00 76.72 Acquisition January 2020 Shareholding 36,835,381.31 –4,228,240.28
Intelligent transferred
Technology Co. Ltd]
(
)
[Qingdao Hairuijiejing July 2020 3,060,000.00 51.00 Acquisition July 2020 Shareholding 31,118,280.84 610,421.00
Electronics Co., transferred
Ltd.] (
)
(2) Combination cost and goodwill
[Qingdao Ririshun [Guangdong [Qingdao
Lejia IOT Heilong Intelligent Hairuijiejing
Technology Co., Technology Co. Electronics Co.,
Ltd.] ( Ltd]( Ltd.] (
Items ) ) )
Cash 562,420,000.00 35,493,500.00 3,060,000.00
Contingent consideration 16,094,747.42
Total combination cost 578,514,747.42 35,493,500.00 3,060,000.00
Less: fair value of identifiable net
assets acquired 130,500,584.86 27,484,377.30 2,022,498.78
Amounts of goodwill 448,014,162.56 8,009,122.70 1,037,501.22
Haier Smart Home Co., Ltd. Annual Report 2020 317
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
1. Business combination not under common control (continued)
(3). Acquiree’s identifiable assets and liabilities on acquisition date
[Qingdao Ririshun Lejia IOT
Technology Co., Ltd.]
( )
Items Fair value Book Value
Monetary funds 223,974,917.72 223,974,917.72
Accounts receivables 15,398,428.75 15,398,428.75
Other receivables 8,407,600.82 8,407,600.82
Prepayments 20,000.00 20,000.00
Inventories 208,069.03 208,069.03
Fixed assets 49,800,195.00 4,908,266.00
Construction in progress 837,735.85 837,735.85
Intangible assets 45,965,425.27 23,584,905.66
Short-term borrowings –800,000.00 –800,000.00
Accounts payables –78,775,509.26 –78,775,509.26
Taxes payable –874,611.20 –874,611.20
Payables for staff’s remuneration –3,916,546.24 –3,916,546.24
Other payables –71,177,812.37 –71,177,812.37
Contract liabilities –20,468,473.67 –20,468,473.67
Deferred income –2,052,083.28 –2,052,083.28
Net asset 166,547,336.42 99,274,887.81
Less Minority equity interests –36,046,751.56 –22,474,228.14
Net assets obtained 130,500,584.86 76,800,659.67
318 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
1. Business combination not under common control (continued)
(3). Acquiree’s identifiable assets and liabilities at acquisition date (continued)
[Guangdong Heilong Intelligent
Technology Co. Ltd]
( )
Items Fair value Book Value
Monetary funds 27,557,545.48 27,557,545.48
Bills receivable 200,000.00 200,000.00
Accounts receivable 47,300.87 47,300.87
Prepayments 815,329.43 815,329.43
Other receivables 425,636.25 425,636.25
Inventories 8,904,880.16 8,904,880.16
Other assets 1,430,452.30 1,430,452.30
Fixed assets 767,559.72 767,559.72
Intangible assets 8,998,294.20 79,794.20
Other current liabilities 221,425.59 221,425.59
Prepayments –1,964,381.05 –1,964,381.05
Receipts in advance –10,495,805.40 –10,495,805.40
Payables for staff’s remuneration –747,591.42 –747,591.42
Taxes payable –155,049.94 –155,049.94
Other payables –179,924.13 –179,924.13
Net asset 35,825,672.06 26,907,172.06
Less Minority equity interests –8,341,294.76 –6,264,799.52
Net assets obtained 27,484,377.30 20,642,372.54
Haier Smart Home Co., Ltd. Annual Report 2020 319
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
1. Business combination not under common control (continued)
(3). Acquiree’s identifiable assets and liabilities at acquisition date (continued)
[Qingdao Hairuijiejing
Electronics Co., Ltd.]
( )
Items Fair value Book Value
Monetary funds 2,180,498.08 2,180,498.08
Accounts receivable 245,769.68 245,769.68
Prepayments 585,894.25 585,894.25
Other receivables 2,139,547.65 2,139,547.65
Inventories 345,575.28 345,575.28
Other current assets 29,000.00 29,000.00
Fixed assets 38,960.64 38,960.64
Prepayments –991,460.73 –991,460.73
Contract liabilities –244,897.66 –244,897.66
Payables for staff’s remuneration –244,854.04 –244,854.04
Taxes payable –107,319.46 –107,319.46
Other payables –11,029.81 –11,029.81
Net asset 3,965,683.88 3,965,683.88
Less Minority equity interests –1,943,185.10 –1,943,185.10
Net assets obtained 2,022,498.78 2,022,498.78
2. Business combination under common control
Applicable √ Not Applicable
320 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power
Qingdao
Goodaymart Weilan
Haier COSMO IOT Electromechanical
Ecosystem GREEN one TEC Equipment Co., Ltd.
Technology Co., Solarindustrie (
Items Ltd. GmbH )
Equity disposal price 5,712,055,521.94 32,959,727.61 690,000.00
Proportion of equity disposal 54.50% 51% 41.20%
Method of equity disposal Disposal Sale Sale
Time of loss-of-control 2020.09.30 2020.12.14 2020.7.28
Basis for determination the time of loss-of-
control Transfer Transfer Transfer
Difference between consideration and its
share of net assets of the subsidiary as
respect to the disposal in the consolidated
level 2,253,845,345.42 –6,313,363.61 178,087.73
4. Disclosure of discontinued operation
The disposal of Qingdao Haier Goodaymart Logistic Co., Ltd by the Company’s subsidiary in the
current period constitutes discontinued operation. The relevant financial information is disclosed
as follows:
(1) Profit or loss from discontinued operation
Net profit from discontinued operation (net losses are represented by ‘-’)
The
corresponding
For the current period of the
Items period previous year
Operating income 4,907,810,524.82
Less: cost and others 4,710,367,482.14
Total profit 197,443,042.68
Less: income tax expense 46,936,990.15
Net profit 150,506,052.53
Haier Smart Home Co., Ltd. Annual Report 2020 321
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
4. Disclosure of discontinued operation (continued)
(1) Profit or loss from discontinued operation (continued)
Profit or loss from disposal of discontinued operation
The
corresponding
For the current period of the
Items period previous year
Total profit or loss from disposal of discontinued
operation 3,827,277,573.26
Less: income tax expense 664,918,329.45
Net profit or loss from disposal of discontinued
operation 3,162,359,243.81
(2) Cash flow from discontinued operation
The
corresponding
For the current period of the
Items period previous year
Cash flow of operating activities –160,498,574.34
Cash flow of investing activities 19,567,060.81
Cash flow of financing activities –283,463,745.83
(3) Net profit from discontinued operation
The
corresponding
For the current period of the
Items period previous year
Net profit from discontinued operation (net losses are
represented by ‘-’) 3,312,865,296.34
Net profit attributable to shareholders of the Parent
Company 1,491,299,457.32
Net profit attributable to minority shareholders 1,821,565,839.02
322 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
VIII. CHANGES OF CONSOLIDATION SCOPE (continued)
5. Changes of consolidation scope due to other reasons
Explain other reasons that result in the changes of consolidation scope (such as new
establishment of subsidiary and liquidation of subsidiary) and its related conditions:
√ Applicable Not Applicable
(1) The Company established a wholly-owned subsidiary, Haier Smart Home Experience Cloud
Ecological Technology Co., Ltd. ( ) for the period.
(2) Haier Smart Home Experience Cloud Ecological Technology Co., Ltd. (
), a subsidiary of the Company, established a wholly-owned subsidiary, Haier
Smart Home (Qingdao) Network Co., Ltd. ( ( ) ) for the period.
(3) Haier Smart Home Experience Cloud Ecological Technology Co., Ltd. (
), a subsidiary of the Company, established a wholly-owned subsidiary, Haier
Smart Home (Qingdao) Network Operation Co., Ltd. ( ( ) ) for
the period.
(4) Qingdao Haier Special Freezer Co., Ltd. ( ), a subsidiary of
the Company, established a wholly-owned subsidiary, Qingdao Internet of Wine Technology
Co., Ltd. ( ) for the period.
(5) The Company established a wholly-owned subsidiary, Qingdao Haidacheng Purchasing
Service Co., Ltd. ( ) for the period.
(6) Qingdao Haier Air-Conditioner Electronics Co., Ltd., a subsidiary of the Company, established
a wholly-owned subsidiary, Qingdao Linghai Air Conditioning Equipment Co., Ltd. (
) for the period.
(7) Qingdao Haier Air Conditioner Gen Corp., Ltd., a subsidiary of the Company, established a
wholly-owned subsidiary, Beijing Haixianghui Technology Co., Ltd. (
) for the period.
(8) Qingdao Yunshang Yuyi IOT Technology Co., Ltd., a subsidiary of the Company, established
a wholly-owned subsidiary, Chongqing Yunshang Yilian Technology Co., Ltd. (
) for the period.
(9) Qingdao Yunshang Yuyi IOT Technology Co., Ltd., a subsidiary of the Company, established
a wholly-owned subsidiary, Shenzhen Yunshang Yilian Technology Co., Ltd. (
) for the period.
(10) The Company established a wholly-owned subsidiary, Qingdao Haixiangxue Human
Resources Co., Ltd. ( ) for the period.
Haier Smart Home Co., Ltd. Annual Report 2020 323
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of the Group
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Haier Electronics Group Mainland of China Bermuda Group company, which mainly engage in 68.26 31.74 Business combination
Co., Ltd. and Hong Kong investment holding, the production and under common
sale of washing machines and water control
heaters, distribution service
Haier U.S. Appliance the United States the United States Group company, which mainly engage in 100.00 Establishment
Solutions, Inc. home appliances production and
distribution business
Haier Singapore Singapore and other Singapore Group company, which mainly engage in 100.00 Business combination
Investment Holding overseas areas home appliances production and under common
Co., Ltd. distribution business control
Haier New Zealand New Zealand New Zealand Group company, which mainly engage in 100.00 Business combination
Investment Holding home appliances production and under common
Company Limited distribution business control
Candy S.p.A Europe Italy Group company, which mainly engage in 100.00 Business combination
home appliances production and not under common
distribution business control
Qingdao Haier Air Qingdao High-tech Qingdao High-tech Manufacture and sale of household 100.00 Business combination
Conditioner Gen Corp., Zone Zone air-conditioners under common
Ltd. control
Guizhou Haier Electronics Huichuan District, Huichuan District, Manufacture and sale of refrigerator 59.00 Business combination
Co., Ltd. Zunyi City, Zunyi City, under common
Guizhou Province Guizhou Province control
Hefei Haier Air- Hefei Haier Industrial Hefei Haier Industrial Manufacture and sale of air-conditioners 99.22 Business combination
conditioning Co., Park Park under common
Limited control
Wuhan Haier Electronics Wuhan Haier Wuhan Haier Manufacture and sale of air-Conditioners 60.00 Business combination
Holding Co., Ltd. Industrial Park Industrial Park under common
control
Qingdao Haier Air- Qingdao Qingdao Manufacture and sale of air-conditioners 99.54 Business combination
Conditioner Electronics Development Development under common
Co., Ltd. Zone Zone control
Qingdao Haier Information Qingdao High-tech Qingdao High-tech Manufacturing of plastic products 100.00 Business combination
Plastic Development Zone Zone under common
Co., Ltd. control
Dalian Haier Precision Dalian Export Dalian Export Manufacture and sale of precise plastics 90.00 Business combination
Products Co., Ltd. Expressing Zone Expressing Zone under common
control
Hefei Haier Plastic Co., Hefei Economic & Hefei Economic & Manufacture and sale of plastic parts 77.36 4.83 Business combination
Ltd. Technological Technological under common
Development Development control
Area Area
324 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic powder, plastic sheet 40.00 60.00 Business combination
Powder Co., Ltd. Development Development and high-performance coatings under common
Zone Zone control
Chongqing Haier Precision Jiangbei District, Jiangbei District, Plastic products, sheet metal work, 90.00 10.00 Business combination
Plastic Co., Ltd. Chongqing City Chongqing City electronics and hardware under common
control
Qingdao Haier Refrigerator Qingdao High-tech Qingdao High-tech Manufacture and production of fluorine-free 100.00 Establishment
Co., Ltd. Zone Zone refrigerators
Qingdao Haier Refrigerator Pingdu Development Pingdu Development Manufacture of refrigerators 100.00 Establishment
(International) Co., Ltd. Zone, Qingdao Zone, Qingdao
Qingdao Household Qingdao High-tech Qingdao High-tech Research and development of home 100.00 Establishment
Appliance Technology Zone Zone appliances mold and technological
and Equipment equipment
Research Institute
Qingdao Haier Whole Set Qingdao High-tech Qingdao High-tech Research, development and sales of health- 98.33 Establishment
Home Appliance Zone Zone related small home appliance
Service Co., Ltd.
Qingdao Haier Special Qingdao Qingdao Manufacture and sales of fluorine-free 100.00 Establishment
Refrigerator Co., Ltd. Development Development refrigerators
Zone Zone
Qingdao Haier Dishwasher Qingdao Qingdao Manufacture of dish washing machine and 100.00 Establishment
Co., Ltd. Development Development gas stove
Zone Zone
Qingdao Haier Special Qingdao Qingdao Research, manufacture and sales of freezer 96.06 Establishment
Freezer Co., Ltd. Development Development and other refrigeration products
Zone Zone
Dalian Haier Air- Dalian Export Dalian Export Air conditioner processing and 90.00 Establishment
conditioning Co., Ltd. Expressing Zone Expressing Zone manufacturing
Dalian Haier Refrigerator Dalian Export Dalian Export Refrigerator processing and manufacturing 90.00 Establishment
Co., Ltd. Expressing Zone Expressing Zone
Qingdao Haier Electronic Qingdao Qingdao Development, assembling and sales of 80.00 Establishment
Plastic Co., Ltd. Development Development plastics, electronics and products
Zone Zone
Wuhan Haier Freezer Co., Wuhan Economic & Wuhan Economic & Research, manufacture and sales of freezer 95.00 5.00 Establishment
Ltd Technological Technological and other refrigeration products
Development Development
Zone High-tech Zone High-tech
Industrial Park Industrial Park
Qingdao Haidarui Qingdao High-tech Qingdao High-tech Develop, purchase and sell electrical 98.00 2.00 Establishment
Procurement Service Zone Zone products and components
Co., Ltd.
Qingdao Haier Intelligent Qingdao High-tech Qingdao High-tech Development and application of home 98.91 1.09 Establishment
Home Appliance Zone Zone appliances, communication, electronics
Technology Co., Ltd. and network engineering technology
Chongqing Haier Jiangbei District, Jiangbei District, Manufacture and sales of air conditioners 76.92 23.08 Establishment
Air-conditioning Co., Chongqing City Chongqing City
Ltd.
Haier Smart Home Co., Ltd. Annual Report 2020 325
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Qingdao Haier Precision Qianwang ang Road, Qianwang ang Road, Development and manufacture of precise 70.00 Establishment
Products Co., Ltd. Jiaonan City Jiaonan City plastic, metal plate, mold and electronic
products for home appliances
Qingdao Haier Air Jiaonan City, Jiaonan City, Manufacture of home appliances and 100.00 Establishment
Conditioning Qingdao Qingdao electronics
Equipment Co., Ltd.
Dalian Free Trade Zone Dalian Export Dalian Export Domestic trade 100.00 Establishment
Haier Air-conditioning Expressing Zone Expressing Zone
Trading Co., Ltd.
Dalian Free Trade Zone Dalian Export Dalian Export Domestic trade 100.00 Establishment
Haier Refrigerator Expressing Zone Expressing Zone
Trading Co., Ltd.
Chongqing Haier Jiangbei District, Jiangbei District, Sales of home appliances 95.00 5.00 Establishment
Electronics Sales Co., Chongqing City Chongqing City
Ltd.
Chongqing Haier Jiangbei District, Jiangbei District, Processing and manufacturing of 84.95 15.05 Establishment
Refrigeration Appliance Chongqing City Chongqing City refrigerator
Co., Ltd.
Hefei Haier Refrigerator Hefei Haier Industrial Hefei Haier Industrial Processing and manufacturing of 100.00 Establishment
Co., Ltd. Park Park refrigerator
Wuhan Haier Energy and Wuhan Haier Wuhan Haier Energy service 75.00 Establishment
Power Co., Ltd. Industrial Park Industrial Park
Qingdao Haier HVAC Qingdao Developm Qingdao Developm Air-conditioning engineer 100.00 Establishment
Engineering Co., Ltd. ent Zone ent Zone
Chongqing Goodaymart Jiangbei District, Jiangbei District, Sales of home appliances and electronics 51.00 Establishment
Electric Appliance Sale Chongqing City Chongqing City
Co., Ltd.
Qingdao Haier (Jiaozhou) Jiaozhou City, Jiaozhou City, Manufacture and sale of air-conditioners 100.00 Establishment
Air-conditioning Co., Qingdao Qingdao
Limited
Qingdao Haier Component Jiaozhou City, Jiaozhou City, Manufacture and sales of plastic and 100.00 Establishment
Co., Ltd. Qingdao Qingdao precise sheet metal products
Haier Shareholdings (Hong Hong Kong Hong Kong Investment 100.00 Establishment
Kong) Limited
Harvest International Cayman Islands Cayman Islands Investment 100.00 Establishment
Company
Shenyang Haier Shenbei New Area, Shenbei New Area, Manufacture and sales of refrigerator 100.00 Establishment
Refrigerator Co., Ltd. Shenyang City Shenyang City
Foshan Haier Freezer Co., Sanshui District, Sanshui District, Manufacture and sales of freezer 100.00 Establishment
Ltd. Foshan City Foshan City
Zhengzhou Haier Zhengzhou Economic Zhengzhou Economic Manufacture and sales of air conditioner 100.00 Establishment
Air-conditioning Co., and Technological and Technological
Ltd. Development Development
Zone Zone
Qingdao Haidayuan Qingdao Qingdao Develop, purchase and sell electrical 100.00 Establishment
Procurement Service Development Development products and components
Co., Ltd. Zone Zone
326 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Qingdao Haier Intelligent Qingdao High-tech Qingdao High-tech Development and research of home 100.00 Establishment
Technology Zone Zone appliance products
Development Co., Ltd.
Qingdao Hairi Hi-Tech Qingdao High-tech Qingdao High-tech Design, manufacture and sales of product 100.00 Business combination
Model Co., Ltd. Zone Zone model and mould under common
control
Qingdao Hai Gao Design Qingdao High-tech Qingdao High-tech Industrial design and prototype production 75.00 Business combination
and Manufacture Co., Zone Zone under common
Ltd. control
Beijing Haier Guangke Beijing Beijing Development, promotion and transfer of 55.00 Business combination
Digital Technology Co., technology under common
Ltd. control
Shanghai Haier Medical Shanghai Shanghai Wholesale and retail of medical facility 100.00 Establishment
Technology Co., Ltd.
Qingdao Haier Technology Qingdao Qingdao Development and sales of software and 100.00 Business combination
Co., Ltd. information product under common
control
Qingdao Haier Technology Qingdao Qingdao Entrepreneurship investment and consulting 100.00 Establishment
Investment Co., Ltd.
Qingdao Casarte Smart Qingdao Qingdao Development, production and sales of 100.00 Establishment
Living Appliances Co., appliances
Ltd.
Qingdao Haichuangyuan Qingdao Qingdao Sales of home appliances and digital 100.00 Establishment
Appliances Sales Co., products
Ltd.
Haier Overseas Electric Qingdao Qingdao Sales of home appliances, international 100.00 Establishment
Appliance Co., Ltd. freight forwarding
Haier Group (Dalian) Dalian Dalian Sales of home appliances, international 100.00 Business combination
Electrical Appliances freight forwarding under common
Industry Co., Ltd. control
Qingdao Haier Central Air Qingdao Qingdao Production and sales of air and refrigeration 100.00 Establishment
Conditioning Co., Ltd. equipment
Beijing Haier Yun Kitchen Beijing Beijing Technology development promotion and 95.77 Establishment
Technology Co., Ltd. transfer
Chongqing Haier Home Hefei Hefei Sales of home appliances 100.00 Establishment
Appliance Sale Hefei
Co., Ltd.
Beijing Haier Zhongyou Beijing Beijing Radio and television program 51.00 Establishment
Netmedia Co., Ltd.
Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware 71.43 Establishment
Technology Co., Ltd.
Haier U+smart Intelligent Beijing Beijing Software development 100.00 Establishment
Technology (Beijing)
Co., Ltd.
Haier (Shanghai) Shanghai Shanghai Sales, research and development of home 100.00 Establishment
Electronics Co., Ltd. appliances
Shanghai Haier Zhongzhi Shanghai Shanghai Business management consulting, chuangke 100.00 Establishment
Fang Chuang Ke management
Management Co., Ltd.
Haier Smart Home Co., Ltd. Annual Report 2020 327
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Qingdao Haier Smart Qingdao Qingdao Production and sales of kitchen smart home 100.00 Establishment
Kitchen Appliance Co., appliances
Ltd.
GE Appliance (Shanghai) Shanghai Shanghai Sales of home appliances 100.00 Establishment
Co., Ltd.
Qingdao Hao Pin Hai Rui Qingdao Qingdao Develop, purchase and sales of electrical 100.00 Establishment
Information Technology products and components
Co., Ltd.
Qingdao Haier Special Qingdao Qingdao Production and sales of home appliances 100.00 Establishment
Refrigerating Appliance
Co., Ltd.
Beijing Zero Micro Beijing Beijing Promotion of technological development 55.00 Establishment
Technology Co., Ltd.
Laiyang Haier Smart Laiyang Laiyang Production and sales of home appliances 100.00 Establishment
Kitchen Appliance Co.,
Ltd.
Hefei Haier Air Hefei Hefei Production and sales of home appliances 100.00 Establishment
Conditioning
Electronics Co., Ltd.
Taizhou Haier Medical Taizhou Taizhou Promotion of medical research and 100.00 Establishment
Technology Co., Ltd. development
Haier (Shanghai) Home Shanghai Shanghai Research and development of home 100.00 Establishment
Appliance Research appliances
and Development
Center Co., Ltd.
Haier (Shenzhen) R&D Co., Shenzhen Shenzhen Development, research and technical 100.00 Establishment
Ltd. services of household and commercial
electrical
Guangzhou Haier Air Guangdong Guangdong Manufacturing of refrigeration and air 100.00 Establishment
Conditioner Co., Ltd. conditioning equipment
Qingdao Yunshang Yuyi Qingdao Qingdao IoT technology research and development, 70.00 Establishment
IOT Technology Co., sales of home appliances, digital
Ltd. products and accessories, clothing shoes
and hats, textiles, daily necessities, and
furniture
Haiyu (Shanghai) Intelligent Shanghai Shanghai Rental of apartments, intelligent equipment, 70.00 Establishment
Technology Co., Ltd. etc.
Qingdao Haizhi Investment Qingdao Qingdao Asset management, equity investment. 100.00 Establishment
Management Co., Ltd.
Qingdao Jijia Cloud Qingdao Qingdao R&D and sales of lighting appliances 80.00 Establishment
Intelligent Technology
Co., Ltd.
Qingdao Haimeihui Qingdao Qingdao Leasing and business services 100.00 Establishment
Management
Consulting Co., Ltd.
(
)
328 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Wuxi Yunshang Internet of Wuxi Wuxi Internet of Things technology R & D 100.00 Establishment
Clothing Technology
Co., Ltd. (
)
Qingdao Guochuang Qingdao Qingdao Scientific research and technical service 37.75 Establishment
Intelligent Household
Appliance Research
Institute Co., Ltd. (
)
Hangzhou Gandao Hangzhou Hangzhou Technology development, service 52.58 Establishment
Intelligent Technology
Co., Ltd. (
)
Qingdao Haidacheng Qingdao Qingdao Develop, purchase and sell electrical 100.00 Establishment
Procurement Service products and components
Co., Ltd.
[Guangdong Heilong Guangzhou Guangzhou Scientific research and technology service 76.72 Business combination
Intelligent Technology sector not under common
Co. Ltd]( control
)
Beijing Haixianghui Beijing Beijing Scientific research and technology service 100.00 Establishment
Technology Co., Ltd. sector
(
)
[Qingdao Hairuijiejing Qingdao Qingdao Instrument technology research, electronic 51.00 Business combination
Electronics Co., Ltd.] equipment, semiconductor materials not under common
( technology research, development, control
) transfer, consulting and services
Haier Smart Home Qingdao Qingdao Technology development of smart home 100.00 Establishment
Experience Cloud products, whole furniture customization,
Ecological Technology etc.
Co., Ltd. (
)
Haier Smart Home Qingdao Qingdao Technical services, development, consulting, 100.00 Establishment
(Qingdao) Network transfer, etc.
Co., Ltd.( (
) )
Haier Smart Home Co., Ltd. Annual Report 2020 329
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(1) Composition of the Group (continued)
Shareholding
Principal place of Place of
Name of subsidiary business registration Nature of business Direct Indirect Method
Haier Smart Home Qingdao Qingdao Residential interior decoration, professional 100.00 Establishment
(Qingdao) Network construction operation, special
Operation Co., Ltd.( equipment installation, upgrading and
( ) repair, etc.
)
Qingdao Internet of Wine Qingdao Qingdao Urban distribution and transportation 100.00 Establishment
Technology Co., Ltd. services, import and export of goods,
( technology import and export and food
) business, etc.
Qingdao Linghai Air Qingdao Qingdao Manufacture and production of air 100.00 Establishment
Conditioning conditioner and refrigeration equipment
Equipment Co., Ltd.
(
)
Chongqing Yunshang Chongqing Chongqing Food business, commodity import and 100.00 Establishment
Yilian Technology Co., export, technology import and export,
Ltd. ( Internet information services, etc.
)
Shenzhen Yunshang Yilian Shenzhen Shenzhen Import and export business, Internet, 100.00 Establishment
Technology Co., Ltd. Internet of things, big data, AI, AR and
( technical services operation
)
Qingdao Haixiangxue Qingdao Qingdao Professional intermediary activities 100.00 Establishment
Human Resources Co.,
Ltd. (
)
Microenterprises such as All over the country All over the country Sales of home appliances Establishment
Qingdao Hai Heng
Feng Electrical
Appliances Sale &
Service Co., Ltd.
Reasons for including subsidiaries which the Company has 50% or less of the equity into
the scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance
and operation of small companies like Qingdao Hai Heng Feng Electrical Appliances Sale &
Service Co., Ltd, which were included into the scope of consolidated financial statements.
330 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(2) Material non-wholly owned subsidiaries
Profit or loss
attributable to Distribute dividends Balance of minority
Shareholding of minority to minority shareholders’
minority shareholders for shareholders in the equity at the end of
Name of subsidiaries shareholders the current period current period the period
Guizhou Haier Electronics Co.,
Ltd. 41.00% 6,817,457.62 12,300,000.00 106,640,019.90
Wuhan Haier Electronics
Holding Co., Ltd. 40.00% –14,260,238.49 250,923,005.84
(3) Summarized financial information in respect of material non-wholly owned
subsidiaries
Closing Balance
Current Non-current Current Non-current
Name of subsidiary assets assets Total assets liabilities liabilities Total liabilities
Guizhou Haier Electronics
Co., Ltd. 598,503,571.44 99,869,513.40 698,373,084.84 432,050,892.47 6,224,582.87 438,275,475.34
Wuhan Haier Electronics
Co., Ltd. 857,372,778.47 162,182,594.22 1,019,555,372.69 392,247,858.10 392,247,858.10
Opening Balance
Current Non-current Current Non-current
Name of subsidiary assets assets Total assets liabilities liabilities Total liabilities
Guizhou Haier Electronics
Co., Ltd. 395,985,056.11 62,937,392.59 458,922,448.70 177,929,542.31 7,523,242.30 185,452,784.61
Wuhan Haier Electronics
Co., Ltd. 968,026,486.23 159,403,524.03 1,127,430,010.26 464,471,899.44 464,471,899.44
Haier Smart Home Co., Ltd. Annual Report 2020 331
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
1. Interests in subsidiaries (continued)
(3) Summarized financial information in respect of material non-wholly owned
subsidiaries (continued)
Amount for the current period
Total Cash flow of
comprehensive operating
Name of subsidiary Operating income Net profit income activities
Guizhou Haier Electronics Co.,
Ltd. 1,108,361,158.81 16,627,945.41 16,627,945.41 –182,379,402.95
Wuhan Haier Electronics
Holding Co., Ltd. 1,226,979,947.42 –35,650,596.23 –35,650,596.23 –102,707,239.57
Amount for the previous period
Total Cash flow of
comprehensive operating
Name of subsidiary Operating income Net profit income activities
Guizhou Haier Electronics Co.,
Ltd. 1,408,675,861.26 31,010,981.05 31,010,981.05 168,289,320.95
Wuhan Haier Electronics
Holding Co., Ltd. 1,996,073,968.98 63,100,531.13 63,100,531.13 254,103,821.03
332 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
2. Transactions leading to the change of shareholding in subsidiaries but not losing
the control
√ Applicable Not Applicable
(1). Description of changes in the share of owners’ equity in subsidiaries
√ Applicable Not Applicable
Minority shareholders’ exercise of the subsidiary, Haier Electronics Group Co., Ltd., for the
current period Section XII Financial Report led to changes in the Company’s shareholding
ratio. Capital contribution not proportional to the original shareholding results in changes of
shareholding ratio in the subsidiary. The Company and the subsidiary of the Company
acquired minority shareholding, which results in changes in the Company’s shareholding
ratio; Capital contribution by minority shareholders of the subsidiary of the Company leads
to changes in the Company’s shareholding ratio.
(2). Impact of the transactions on minority interest and the equity attributable to
shareholders of the Company:
Haier Electronics
Items Group Co., Ltd. Others
Total Consideration for acquisition/disposal 4,961,050,949.05 156,758,850.97
Less: share of net assets of subsidiaries in respect to
the shareholding proportion acquired/disposed 17,468,756,530.27 544,730,801.95
Difference 12,507,705,581.22 387,971,950.98
Including: adjustment to increase capital reserve 12,507,705,581.22 387,971,950.98
Haier Smart Home Co., Ltd. Annual Report 2020 333
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates
√ Applicable Not Applicable
(1). Associates
Principal Accounting
place of Place of treatment of
Name of joint venture business registration Nature of business Shareholding investment
Haier Group Finance Co., Ltd. Qingdao Qingdao Financial services 42.00% Equity method
Bank of Qingdao Co., Ltd. Qingdao Qingdao Commercial Bank 8.13% Equity method
Wolong Electric (Jinan) Motor Co., Jinan Jinan Motor Manufacturing 30.00% Equity method
Ltd.
Qingdao Hegang New Material Qingdao Qingdao Steel plate manufacturing 25.65% Equity method
Technology Co., Ltd. (
)
Qingdao Haier SAIF Smart Home Qingdao Qingdao Venture Capital 63.13% Equity method
Industry Investment Center
(Limited Partnership)
Mitsubishi Heavy Industries Haier Qingdao Qingdao Manufacturing of home 45.00% Equity method
(Qingdao) Air-conditioners Co., appliances
Ltd.
Qingdao Haier Carrier Refrigeration Qingdao Qingdao Manufacturing of home 49.00% Equity method
Equipment Co., Ltd. appliances
Qingdao Haier Multimedia Co., Ltd Qingdao Qingdao R&D and sales of television 20.20% Equity method
Hefei Feier Smart Technology Co., Hefei Hefei Technology development 40.00% Equity method
Ltd.
Beijing Mr. Hi Network Technology Beijing Beijing Technology development 29.03% Equity method
Company Limited
Beijing Xiaobei Technology Co., Ltd. Beijing Beijing Sales of home appliances 42.75% Equity method
Beijing ASU Tech Co., Ltd. Beijing Beijing Technical service import and 42.61% Equity method
export business
Shenzhen Genyuan Environmental Shenzhen Shenzhen Technical advisory services 18.77% Equity method
Protection Technology Co., Ltd.
Qingdao Haimu Investment Qingdao Qingdao Investment management 49.00% Equity method
Management Co., Ltd.
Qingdao Haimu Smart Home Qingdao Qingdao Investment management 24.00% Equity method
Investment Partnership (Limited
Partnership)
Guangzhou Heying Investment Guangzhou Guangzhou Investment 50.00% Equity method
Partnership (Limited Partnership)
Qingdao Home Wow Cloud Network Qingdao Qingdao Home online service 24.93% Equity method
Technology Co., Ltd
Qingdao RRS Service Co., Ltd. Qingdao Qingdao Water equipment technical 24.02% Equity method
service
334 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates (continued)
√ Applicable Not Applicable
(1). Associates
Principal Accounting
place of Place of treatment of
Name of joint venture business registration Nature of business Shareholding investment
Bingji (Shanghai) Corporate Shanghai Shanghai Investment management 45.00% Equity method
Management Co., Ltd.
Youjin (Shanghai) Corporate Shanghai Shanghai Investment management 45.00% Equity method
Management Co., Ltd
RRS (Shanghai) Investment Co., Ltd. Shanghai Shanghai Investment management 45.00% Equity method
( Investment
)
Haier Best Water Technology Co., Qingdao Qingdao Water equipment technology 49.00% Equity method
Ltd. ( ) development service
Huizhi Xiangshun Equity Investment Qingdao Qingdao Investment management 30.00% Equity method
Fund (Qingdao) Partnership
(Limited Partnership)
Qingdao RRS Huizhi Investment Co., Qingdao Qingdao Investment management 50.00% Equity method
Ltd.
Meiling Candy Washing Machine Hefei Hefei Manufacturing of home 40.00% Equity method
Co., Ltd.( appliances
)
Qingdao Haier Moulds Co., Ltd. Qingdao Qingdao Mold processing and 25.00% Equity method
manufacturing
Konan Electronic Co., Ltd. Japan Japan Motor Manufacturing 50.00% Equity method
HPZ LIMITED Nigeria Nigeria Manufacturing of home 25.01% Equity method
appliances
HNR Company (Private) Limited Pakistan Pakistan Manufacturing of home 31.72% Equity method
appliances
Haier Raya Electric S.A.E Egypt Egypt Manufacturing of home 15.00% Equity method
appliances
Controladora Mabe S.A.deC.V. Mexico Mexico Manufacturing of home 48.41% Equity method
appliances
Middle East Air conditioning Saudi Arabia Saudi Arabia Sales of home appliances 49.00% Equity method
Company,Limited
Haier Smart Home Co., Ltd. Annual Report 2020 335
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates (continued)
(2). Major financial information of important associates
The basic profile of important associates:
a. Haier Group Finance Co., Ltd. (hereinafter referred to as ‘Finance company’) was
established by Haier Group Corporation and its three affiliates. Registration
place and principal place of business: No.178-2 Haier Road, Laoshan District,
Qingdao City. The Company’s subsidiaries hold an aggregate of 42.00% equity
interest in Finance Company.
b. General Electric Company has participated in the capital contribution to the
establishment of Controladora Mabe S.A.de C.V. (hereinafter referred to as
‘MABE’). In June 2016, a subsidiary of the Company acquired 48.41% of equity
interests in MABE held by General Electric Company. The registered address
and principal place of business of MABE is Mexico. The subsidiaries of the
Company hold approximately 48.41% of equity interests in MABE in total.
Financial information of important associates:
Finance company
Closing Balance/ Opening Balance/
Amount for the Amount for the
Items current period previous period
Current assets 62,750,087,810.02 61,570,216,228.62
Non-current assets 12,907,238,025.07 5,905,904,013.65
Total assets 75,657,325,835.09 67,476,120,242.27
Current liabilities 59,895,340,204.39 52,896,669,320.65
Non-current liabilities 223,325,462.63 268,470,616.43
Total liabilities 60,118,665,667.02 53,165,139,937.08
Minority equity interests
Equity attributable to shareholders of the parent
company 15,538,660,168.07 14,310,980,305.19
Including: share of net assets calculated per
shareholding percentage 6,526,237,270.60 6,010,611,728.26
Operating income 2,225,723,222.45 2,540,718,904.25
Net profit 1,550,909,520.81 1,719,606,817.98
Other comprehensive income -23,229,657.93 20,044,108.65
Total comprehensive income 1,527,679,862.88 1,739,650,926.63
Dividend received from associates for the year 126,000,000.00 126,000,000.00
336 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates (continued)
(2). Major financial information of important associates
Financial information of important associates:
MABE
Closing Balance/ Opening Balance/
Amount for the Amount for the
Items current period previous period
Current assets 7,027,493,472.30 6,554,356,162.20
Non-current assets 11,216,277,000.40 11,976,635,517.00
Total assets 18,243,770,472.70 18,530,991,679.20
Current liabilities 8,595,818,436.30 8,493,118,880.40
Non-current liabilities 4,994,869,674.10 5,735,182,853.40
Total liabilities 13,590,688,110.40 14,228,301,733.80
Minority equity interests
Equity attributable to shareholders of the parent
company 4,653,082,362.30 4,302,689,945.40
Including: share of net assets calculated per
shareholding percentage 2,252,780,519.54 2,083,138,731.69
Operating income 22,635,962,656.46 22,678,063,972.00
Net profit 1,178,080,251.29 730,090,236.00
Other comprehensive income -621,068,708.04 89,711,280.60
Total comprehensive income 557,011,543.25 819,801,516.60
Dividend received from associates for the year 80,179,730.91 66,718,276.58
Haier Smart Home Co., Ltd. Annual Report 2020 337
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates (continued)
(3) Summarized financial information of insignificant associates
Closing Balance/ Opening Balance/
Amount for the Amount for the
Investment in associates current period previous period
Bank of Qingdao Co., Ltd. 2,463,096,567.92 2,586,957,693.97
Wolong Electric (Jinan) Motor Co., Ltd. 143,847,870.70 123,555,578.44
Qingdao Hegang New Material Technology Co., Ltd.
( ) 297,154,935.85 280,063,773.80
Qingdao Haier SAIF Smart Home Industry Investment
Center (Limited Partnership) 385,797,036.73 434,540,103.12
Mitsubishi Heavy Industries Haier (Qingdao) Air-
conditioners Co., Ltd. 654,581,961.84 643,056,436.86
Qingdao Haier Carrier Refrigeration Equipment Co.,
Ltd. 415,298,165.93 395,933,487.26
Qingdao Haier Multimedia Co., Ltd 328,987,205.07 432,386,801.26
Qingdao Haier Software Investment Co., Ltd. 19,636,136.75
Hefei Feier Smart Technology Co., Ltd. 1,491,024.72 758,188.30
Qingdao Xinaohaizhi Energy Co., Ltd.
25,966,044.95
Qingdao Zhongzaihaina Environmental Services Co.,
Ltd. 2,261,258.70
Shandong Haibida Big Data Co., Ltd.
5,332,640.10
Beijing Mr. Hi Network Technology Company Limited 7,507,759.75 3,757,759.75
Beijing Xiaobei Technology Co., Ltd. 2,687,341.82 2,687,341.82
Beijing ASU Tech Co., Ltd. 32,365,969.45 5,862,115.78
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd. 6,914,487.73 6,914,487.73
Qingdao Haimu Investment Management Co., Ltd. 2,349,240.51 2,198,276.46
Qingdao Haimu Smart Home Investment Partnership
(Limited Partnership) 47,870,696.66 48,046,197.64
Guangzhou Heying Investment Partnership (Limited
Partnership) 288,209,197.58 219,198,634.81
Qingdao Home Wow Cloud Network Technology Co.,
Ltd 2,629,009.63 3,168,859.99
Qingdao RRS Service Co., Ltd. 33,010,000.00
Bingji (Shanghai) Corporate Management Co., Ltd. 928,444,178.47 894,539,765.00
Youjin (Shanghai) Corporate Management Co., Ltd 1,687,262,142.67 1,625,617,754.55
RRS (Shanghai) Investment Co., Ltd. (
Investment ) 3,066,931,168.49 2,954,850,462.82
338 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
IX. INTERESTS IN OTHER ENTITIES (continued)
3. Interests in joint ventures and associates (continued)
(3) Summarized financial information of insignificant associates
Closing Balance/ Opening Balance/
Amount for the Amount for the
Investment in associates current period previous period
Haier Best Water Technology Co., Ltd. (
) 33,455,159.59 21,725,345.26
Huizhi Xiangshun Equity Investment Fund (Qingdao)
Partnership (Limited Partnership) 120,000,000.00
Qingdao RRS Huizhi Investment Co., Ltd. 2,100,000.00
Meiling Candy Washing Machine Co., Ltd.(
) 22,558,307.10 23,222,136.38
Qingdao Haier Moulds Co., Ltd. 259,696,084.44
Konan Electronic Co., Ltd. 77,561,552.87 71,196,748.97
HNR Company (Private) Limited 92,141,887.27 104,557,145.65
HPZ LIMITED 66,827,745.66 78,149,551.49
Haier Raya Electric S.A.E 10,741,234.10
MiddleEast Air conditioning Company,Limited 19,002,595.66 19,002,595.66
Total book value of investment 11,500,520,528.21 11,035,143,323.27
Total amount of the following financial data of
associates calculated based on shareholding
percentage
Net profit 414,201,314.50 333,505,373.87
Other comprehensive income -13,968,841.53 62,556,871.90
Total comprehensive income 400,232,472.97 396,062,245.77
Haier Smart Home Co., Ltd. Annual Report 2020 339
Section XII Financial Report
X. SEGMENT INFORMATION
√ Applicable Not Applicable
The Company is principally engaged in manufacture and sales of home appliances and relevant
services business, manufacture of upstream home appliances parts, distribution of products of third-
party, logistics and after-sale business. The Company has three business segments: (1) China smart
home business segment; (2) Overseas home appliance and smart home business segment; (3) Other
business segments. The management of the Company assesses operating performance of each
segment and allocates resources according to the division. Sales between segments were mainly
based on market price.
(1) China smart home business segment consists of:
Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers
and kitchen appliances.
Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.
Air energy solutions: mainly engages in production and sales of air conditioners.
Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.
(2) Overseas home appliance and smart home business segment mainly includes overseas business
segments such as GEA, FPA, Candy and so on.
(3) Other business segments: mainly include channel, equipment components, small home appliance
business and others.
Due to centralized management under the headquarters or exclusion from the assessment scope of
segment management, the total assets of segments exclude monetary funds, financial assets held for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, other equity instruments investment, long-term accounts receivable, long-term equity
investment, goodwill and deferred income tax assets; the total liabilities of segments exclude long-term
and short-term borrowings, financial liabilities held for trading, derivative financial liabilities, dividends
payable, taxes payable, held-for-sale liabilities, bonds payable, deferred income tax liabilities and other
non-current liabilities; profits of segments exclude financial expenses, profit or loss in fair value
changes, income from investment, and income on disposal of assets, Non-value-added tax refundable
upon imposition component of other income, non-operating incomes and expenses and income tax.
340 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
X. SEGMENT INFORMATION (continued)
(1) Information of reportable segments
Segment information for the period
China smart home business
Air energy Internet of clothing Whole house water
Internet of Food solutions solutions solutions solutions
Refrigerator/ Water home
Segment information freezers Kitchen appliances Air conditioners Washing machine appliances
Segment revenue 34,392,366,627.27 2,772,514,504.29 25,512,310,018.54 25,985,087,875.74 10,217,370,018.95
Including: external revenue 30,571,800,331.77 2,636,709,451.75 21,867,508,645.86 22,482,809,819.55 9,832,880,899.81
Inter-segment revenue 3,820,566,295.50 135,805,052.54 3,644,801,372.68 3,502,278,056.19 384,489,119.14
Total segment operating cost 32,050,102,593.72 2,732,391,511.07 25,412,035,059.34 23,785,181,115.90 9,051,888,737.91
Segment operating profit 2,342,264,033.55 40,122,993.22 100,274,959.20 2,199,906,759.84 1,165,481,281.04
Total segment assets 11,689,348,816.41 2,532,594,848.74 20,925,304,799.58 10,136,244,423.99 4,136,849,021.24
Total segment liabilities 29,205,929,335.98 1,538,646,245.07 13,440,305,435.84 8,218,924,225.44 5,108,347,965.67
Overseas home
appliance and
smart home Inter-segment
Segment information business Other business eliminations Total
Segment revenue 100,622,879,428.15 92,630,833,819.87 –82,407,541,193.37 209,725,821,099.44
Including: external revenue 100,043,920,934.59 22,290,191,016.11 — 209,725,821,099.44
Inter-segment revenue 578,958,493.56 70,340,642,803.76 –82,407,541,193.37 —
Total segment operating cost 96,622,453,341.44 92,637,421,017.84 –82,404,978,118.43 199,886,495,258.79
Segment operating profit 4,000,426,086.71 –6,587,197.97 –2,563,074.94 9,839,325,840.65
Total segment assets 50,763,259,766.21 56,983,696,562.09 –54,985,101,891.27 102,182,196,346.99
Total segment liabilities 31,137,719,930.78 60,169,129,987.26 –54,845,121,209.94 93,973,881,916.10
Haier Smart Home Co., Ltd. Annual Report 2020 341
Section XII Financial Report
X. SEGMENT INFORMATION (continued)
(1) Information of reportable segments (continued)
Segment information for the corresponding period of last year
China smart home business
Air energy Internet of clothing Whole house water
Internet of Food solutions solutions solutions solutions
Refrigerator/ Water home
Segment information freezers Kitchen appliances Air conditioners Washing machine appliances
Segment revenue 32,750,326,078.30 2,439,910,684.24 23,492,695,375.69 24,444,678,571.04 9,596,820,492.67
Including: external revenue 30,426,716,732.19 2,153,844,464.99 20,366,461,301.32 22,113,172,727.02 9,521,215,941.39
Inter-segment revenue 2,323,609,346.11 286,066,219.25 3,126,234,074.37 2,331,505,844.02 75,604,551.28
Total segment operating cost 30,638,715,948.74 2,417,186,983.20 23,480,758,896.26 22,325,534,630.18 8,479,922,900.93
Segment operating profit 2,111,610,129.56 22,723,701.04 11,936,479.43 2,119,143,940.86 1,116,897,591.74
Total segment assets 10,182,685,599.34 1,601,295,526.79 16,080,937,914.13 9,674,956,522.67 3,321,820,888.60
Total segment liabilities 30,598,595,271.84 1,468,196,660.29 8,590,183,771.36 7,447,258,502.94 4,135,690,962.81
Overseas home
appliance and
smart home Inter-segment
Segment information business Other business eliminations Total
Segment revenue 92,913,936,593.05 88,576,700,061.08 –73,453,084,599.50 200,761,983,256.57
Including: external revenue 92,392,836,342.58 23,787,735,747.08 200,761,983,256.57 209,725,821,099.44
Inter-segment revenue 521,100,250.47 64,788,964,314.00 –73,453,084,599.50 —
Total segment operating cost 89,758,855,043.71 88,359,287,313.74 –73,496,036,895.98 191,964,224,820.78
Segment operating profit 3,155,081,549.34 217,412,747.34 42,952,296.48 8,797,758,435.79
Total segment assets 45,754,466,477.11 48,931,878,145.26 –38,979,895,269.93 96,568,145,803.97
Total segment liabilities 24,233,067,377.15 48,310,739,488.06 –39,098,430,484.39 85,685,301,550.06
342 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
X. SEGMENT INFORMATION (continued)
(2) Geographical information
‘Other countries/regions’ in this report refers to all other countries/regions (including Hong Kong
and Macau Special Administration Region and Taiwan) other than the mainland China for the
purpose of information disclosure.
External transaction revenue
Amount for the Amount for the
Items current period previous period
Mainland China 107,678,156,386.81 106,643,054,818.57
Other countries/regions 102,047,664,712.63 94,118,928,438.00
Among which:
America 63,704,731,841.17 57,921,805,254.95
Australia 5,978,691,773.66 5,351,975,416.93
South Asia 5,471,774,634.45 6,339,528,301.47
Europe 16,512,783,759.03 15,194,566,954.73
Southeast Asia 4,122,964,419.05 3,705,563,558.54
Middle East and Africa 1,205,510,726.84 1,117,998,276.01
Japan 3,613,139,400.23 3,248,939,012.25
Others 1,438,068,158.20 1,238,551,663.12
Total 209,725,821,099.44 200,761,983,256.57
Total non-current assets
Items Closing Balance Opening Balance
Mainland China 14,715,132,308.86 14,257,835,282.97
Other countries/regions 25,212,638,556.86 25,259,765,320.54
Total 39,927,770,865.72 39,517,600,603.51
Total non-current assets exclude: other equity instrument investments, long-term receivable, long-
term equity investments, goodwill, deferred tax assets, and other non-current financial assets.
Haier Smart Home Co., Ltd. Annual Report 2020 343
Section XII Financial Report
XI. DISCLOSURE OF FAIR VALUE
1. Fair value of assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level to
which the input value is significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market.
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except for
Level 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
At the end of the period
Input used for fair value measurement
Important Important
Quotes in an active observable input unobservable
Items market (Level 1) (Level 2) input(Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 113,759,845.57 1,967,483,015.21 83,949,637.05 2,165,192,497.83
Including: Bank wealth management
products 1,862,036,322.21 1,862,036,322.21
Forward exchange contract 105,446,693.00 105,446,693.00
Investment fund 113,759,845.57 113,759,845.57
Investment in equity instruments 83,949,637.05 83,949,637.05
Derivative financial assets 77,839,006.63 77,839,006.63
Including: Forward exchange contract 52,194,232.55 52,194,232.55
Forward commodity contract 25,644,774.08 25,644,774.08
Other equity instruments 19,802,461.70 2,639,322,803.84 2,659,125,265.54
Including: Equity instruments
measured at fair value and
changes of which included in other
comprehensive income 19,802,461.70 2,639,322,803.84 2,659,125,265.54
Other non-current assets 46,832,494.61 46,832,494.61
Including: Other non-current financial
assets 46,832,494.61 46,832,494.61
Financial liabilities held for
trading 26,952,508.66 26,952,508.66
Including: Forward exchange contract 26,952,508.66 26,952,508.66
Derivative financial liabilities 239,582,532.90 239,582,532.90
Including: Forward exchange contract 188,695,788.30 188,695,788.30
Interest rate swap agreement 50,886,744.60 50,886,744.60
344 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XI. DISCLOSURE OF FAIR VALUE (continued)
1. Fair value of assets and liabilities measured at fair value (continued)
At the beginning of the period Items
Input used for fair value measurement
Important Important
Quotes in an active observable input unobservable
Items market (Level 1) (Level 2) input(Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 400,433.88 283,548,675.00 24,185,898.17 308,135,007.05
Including: Bank wealth management
products 198,614,361.33 198,614,361.33
Forward foreign exchange contract 84,934,313.67 84,934,313.67
Investment in equity instruments 400,433.88 24,185,898.17 24,586,332.05
Derivative financial assets 19,158,132.45 19,158,132.45
Including: Forward exchange contract 17,241,833.10 17,241,833.10
Interest rate swap agreement 1,916,299.35 1,916,299.35
Other equity instruments 19,467,066.04 1,376,492,812.88 1,395,959,878.92
Including: Equity instruments
measured at fair value and
changes of which included in other
comprehensive income 19,467,066.04 1,376,492,812.88 1,395,959,878.92
Other non-current financial assets 294,547,364.47 294,547,364.47
Including: Bank wealth management
products 294,547,364.47 294,547,364.47
Other non-current assets 62,836,363.78 14,220,964.80 77,057,328.58
Including: Other non-current financial
assets 62,836,363.78 14,220,964.80 77,057,328.58
Financial liabilities held for
trading 42,799,173.35 42,799,173.35
Including: Forward foreign exchange
contract 42,799,173.35 42,799,173.35
Forward foreign exchange options 99,548,853.97 99,548,853.97
Derivative financial liabilities 85,557,428.14 85,557,428.14
Including: Forward foreign exchange
contract 13,991,425.83 13,991,425.83
Other non-current liabilities 54,598,203.27 54,598,203.27
Including:
Obligation of repurchasing the
minority equity rights 54,598,203.27 54,598,203.27
For financial instruments traded in an active market, the Company determines its fair value based
on its quotes in an active market; for financial instruments not traded in an active market, the
Company uses valuation techniques to determine its fair value.
Haier Smart Home Co., Ltd. Annual Report 2020 345
Section XII Financial Report
XI. DISCLOSURE OF FAIR VALUE (continued)
2. The basis for determining the fair value of the continual Level 2 fair value
measurement items
Fair value at the end of the
Items period Valuation techniques
Financial assets held for trading
Including: Bank wealth management 1,862,036,322.21 Discounted cash flow
products
Forward exchange contract 105,446,693.00 Bank quote for similar
products
Derivative financial assets
Including: Forward exchange 52,194,232.55 Bank quote for similar
contract products
Forward commodity contract 25,644,774.08 Futures exchange quote
for similar products
Other non-current assets
Including: Other non-current 46,832,494.61 Recent transaction
financial assets methods
Financial liabilities held for trading Recent transaction
methods
Including: Forward exchange 26,952,508.66 Bank quote for similar
contract products
Derivative financial liabilities
Including: Forward exchange 188,695,788.30 Bank quote for similar
contract products
Interest rate swap agreement 50,886,744.60 Bank quote for similar
products
346 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XI. DISCLOSURE OF FAIR VALUE (continued)
3. Continual Level 3 fair value measurement major items, the valuation techniques
adopted and information of important parameters
Fair value at the Significant
end of the Valuation unobservable Sensitivity of fair value to the
Items period technique input Range input
Other equity instruments
Including:
1. SINOPEC Fuel Oil Sales 1,117,637,000.00 Market approach 1. Average P/E 1. 17.77–18.13 1. 1% increase (decrease) in
Corporation Limited ( multiple of average P/E multiple of the
) peers 2. 11%–13% Comparable Companies
would result in increase
2. Discount for (decrease) in fair value by
lack of RMB11,177,000.00.
marketability 2. 1% increase (decrease) in
the lack of marketability
would result in decrease
(increase) in fair value (EUR)
by RMB12,701,000.00.
2. Haier COSMO IOT 1,396,555,521.94 Market approach 1. Average P/E 1. 2.93–2.99 1. 1% increase (decrease) in
Ecological Technology Co., multiple of average P/E multiple of the
Ltd.( peers 2. 36%–38% Comparable Companies
) would result in increase
2. Discount for (decrease) in fair value by
lack of RMB13,313,000.00.
marketability 2. 1% increase (decrease) in
the lack of marketability
would result in decrease
(increase) in fair value by
RMB21,188,000.00
4. Financial instruments not measured at fair value
Closing book Closing fair
Items value value
Bonds payable (convertible corporate bonds) 6,713,501,050.27 6,746,725,887.00
Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long-term and short-term
borrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable, etc.
Except for the difference between the book value and the fair value of bonds payable disclosed above,
the difference between the book value and the fair value of financial assets and financial liabilities not
measured at fair value at the end of the period is small.
Haier Smart Home Co., Ltd. Annual Report 2020 347
Section XII Financial Report
XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
(I) Explanation for basis of identifying related party
According to Accounting Standards for Business Enterprises No. 36 — Related Party
Disclosures, parties are considered to be related if one party has the ability to control or jointly
control the other party or exercise significant influence over the other party. Parties (two or more
than two) are also considered to be related if they are subject to common control, joint control
or significant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (China
Securities Regulatory Commission Order No. 40), related legal entity or individual will be identified
as related parties in certain occasions.
(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the
Company
Interest in Voting rights
Type of Registered Legal Relationships with the to the
Name enterprise Registered place capital representative the Company Company Company
Haier Group Collective Qingdao High-tech 311,180,000 Zhang Ruimin Parent Company 11.88 11.88
Corporation ownership Zone Haier Park
company
Haier COSMO Joint-stock Qingdao High-tech 631,930,635 Zhang Ruimin Subsidiary of Parent 13.94 13.94
Co., Ltd. ( company Zone Haier Park Company
)
HCH (HK) Private company Hong Kong 10,000HKD / Parties acting in 5.97 5.97
Investment with limited concert of Parent
Management liability Company
Co.,Limited
Qingdao Haier Company with Qingdao Free Trade 923,000,000 Zhou Yunjie Parties acting in 1.91 1.91
Venture & limited Zone concert of Parent
Investment liability Company
Information
Co., Ltd.
Qingdao Limited Qingdao High-tech 1,053,306,000 Zhang Ruimin Parties acting in 0.81 0.81
Haichuangzhi partnership Zone Haier Park concert of Parent
Management company Company
Consulting
Enterprise
(Limited
Partnership)
Haier International Company with Hong Kong 10,000HKD / Parties acting in 0.63 0.63
Co., Limited limited concert of Parent
liability Company
348 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XI. DISCLOSURE OF FAIR VALUE (continued)
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note IX.1.
Applicable √ Not Applicable
3. Associates and joint ventures of the Company
The details of major associates and joint ventures of the Company are detailed in Note V.11 and
IX.3.
Applicable √ Not Applicable
Other joint ventures or associates that have related party transactions with the Company for the
current period or have related party transactions with the Company for the previous period and
have formed balances are as follows
Applicable √ Not Applicable
Other explanations
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 349
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties
√ Applicable Not Applicable
Relationship between other related
Other related parties parties and the Company
Chongqing Zhonglian Energy Technology Co., Ltd. Subsidiary of Haier Group
Chongqing Haier Logistics Co., Ltd. Subsidiary of Haier Group
Chongqing Haier Electrical Appliances Sales Co.,
Ltd. Subsidiary of Haier Group
Zhengzhou Haier New Energy Technology Co., Ltd. Subsidiary of Haier Group
Brave Lion (HK) limited Subsidiary of Haier Group
Shanghai Cotai Supply Chain Management Co.,
Ltd. Subsidiary of Haier Group
Gooday Supply Chain Technologies Co., Ltd. Subsidiary of Haier Group
Qingdao Goodaymart Supply Chains Co., Ltd. Subsidiary of Haier Group
Qingdao Haier Brothers Animation Industry Co.,
Ltd. Subsidiary of Haier Group
Qingdao Haier Special Plastic Development Co.,
Ltd. Subsidiary of Haier Group
Qingdao Haier Parts Procurement Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Trading Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Travel Agency Co., Ltd. Subsidiary of Haier Group
Qingdao Haier Industry and City Innovation Group
Co., Ltd. Subsidiary of Haier Group
Laiyang Haier Electrical Co. Ltd. Subsidiary of Haier Group
Hefei Haier Logistics Co., Limited Subsidiary of Haier Group
Haier Group Electric Appliance Industry Co., Ltd. Subsidiary of Haier Group
Haier Group Finance Co., Ltd. Subsidiary of Haier Group
Dalian Haier International Trade Co., Ltd. Subsidiary of Haier Group
Qingdao Ding Xin Electronics Technology Co., Ltd. Subsidiary of Haier Group
Cosmoplat Chuangzhi IOT Technology Co., Ltd. Subsidiary of Haier Group
Haier Digital Technology (Qingdao) Co., Ltd. Subsidiary of Haier Group
Qingdao Haier New Materials R & D Co., Ltd. Associate of subsidiary of Haier Group
Qingdao Haier Moulds Co., Ltd. Subsidiary of Haier Group
Wolong Electric (Jinan) Motor Co., Ltd. Associate
Qingdao Haier Software Investment Co., Ltd. Associate
HPZ Ltd Associate
HNR Company (Private) Limited Associate
Controladora Mabe S.A.deC.V. Associate
Hefei Hegang New Material Technology Co., Ltd. Subsidiary of associate
Qingdao HBIS Composite New Material Subsidiary of associate
350 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(III). Related transactions
1. Details of the Company’s procurement of goods and services from related
parties are as follows:
Amount for the Amount for the
Related parties current period previous period
Controladora Mabe S.A.deC.V. 11,999,474,973.38 11,619,586,690.71
Qingdao Haier Parts Procurement Co., Ltd. 4,846,802,255.37 5,953,684,963.48
Gooday Supply Chain Technologies Co., Ltd. 4,738,194,290.17 2,578,446,466.54
Chongqing Haier Electrical Appliances Sales Co.,
Ltd. 3,551,418,241.21 3,898,627,675.37
HNR Company (Private) Limited 2,018,249,351.88 1,956,294,467.87
Chongqing Haier Logistics Co., Ltd. 1,877,957,019.48 1,907,965,982.80
Hefei Haier Logistics Co., Limited 1,690,523,334.50 1,942,921,087.20
Qingdao Haier International Trading Co., Ltd. 985,309,249.11 1,175,534,219.93
Hefei Hegang New Material Technology Co., Ltd. 906,960,612.06 828,466,593.38
Qingdao HBIS Composite New Material 778,581,344.26 634,888,355.57
Wolong Electric (Jinan) Motor Co., Ltd. 773,829,886.35 730,664,069.32
Qingdao Haier Special Plastic Development Co.,
Ltd. 684,474,886.19 666,523,746.13
Cosmoplat Chuangzhi IOT Technology Co., Ltd. 555,538,358.70
Haier Digital Technology (Qingdao) Co., Ltd. 451,153,566.88
Dalian Haier International Trade Co., Ltd. 438,594,789.44 449,760,851.95
Other related parties 2,984,257,987.87 1,618,213,218.22
Total 39,281,320,146.85 35,961,578,388.47
Haier Smart Home Co., Ltd. Annual Report 2020 351
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(III). Related transactions (continued)
2. Details of the Company’s sales of goods to related parties are as follows:
Amount for the Amount for the
Related parties current period previous period
Qingdao Haier Special Plastic Development Co.,
Ltd. 623,502,863.63 594,580,472.70
Qingdao Haier International Trading Co., Ltd. 587,335,502.32 577,344,117.36
Controladora Mabe S.A.deC.V. 556,773,753.65 375,146,095.66
HNR Company (Private) Limited 434,316,420.93 436,216,032.46
Wolong Electric (Jinan) Motor Co., Ltd. 255,821,037.02 314,689,017.25
Qingdao Haier New Materials R & D Co., Ltd. 244,043,627.12 489,949,910.45
Qingdao Haier International Travel Agency Co.,
Ltd. 141,625,117.57 303,939,917.85
Chongqing Zhonglian Energy Technology Co.,
Ltd. 131,192,245.12 69,050,191.75
Zhengzhou Haier New Energy Technology Co.,
Ltd. 127,925,411.56 4,181,134.08
Qingdao HBIS Composite New Material 109,952,152.66 301,875,325.92
Other related parties 947,340,846.98 733,625,149.31
Total 4,159,828,978.57 4,200,597,364.78
352 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(III). Related transactions (continued)
3. Amount of unsettled items of related parties
Items and name of customers Closing Balance Opening Balance
Bills receivable
Qingdao Haier New Materials R & D Co., Ltd. 5,000,000.00
Other related parties 1,106,165.28 18,658,821.43
Dividend receivable
Qingdao Haier Software Investment Co., Ltd. 4,524,472.84
Accounts receivable
HNR Company (Private) Limited 388,679,073.55 420,113,418.64
Qingdao Haier Special Plastic Development Co.,
Ltd. 187,101,398.95 32,485,794.84
Chongqing Haier Electrical Appliances Sales Co.,
Ltd. 144,072,335.03 108,719,296.71
Qingdao Haier International Travel Agency Co.,
Ltd. 113,933,378.64 112,821,150.93
Haier Group Electric Appliance Industry Co., Ltd. 113,495,244.55 96,399,344.74
Controladora Mabe S.A.deC.V. 81,498,939.68 86,399,338.60
Haier Digital Technology (Qingdao) Co., Ltd. 80,254,328.37
Qingdao Haier International Trading Co., Ltd. 72,248,862.19 31,247,321.37
Other related parties 380,204,495.12 453,623,180.21
Prepayments
Qingdao Haier International Trading Co., Ltd. 80,759,659.73 23,318,702.14
HNR Company (Private) Limited 78,420,575.44 66,648,390.11
Qingdao Haier Moulds Co., Ltd. 32,695,754.10
Qingdao Haier International Travel Agency Co.,
Ltd. 26,860,737.70 24,450,705.51
Other related parties 61,908,776.76 411,883,880.41
Interest receivable:
Haier Group Finance Co., Ltd. 120,777,203.01 49,797,510.75
Other receivables
Qingdao Haier Industry and City Innovation
Group Co., Ltd. 88,640,000.00 88,640,000.00
Other related parties 186,306,992.77 371,011,761.45
Bills payable:
Laiyang Haier Electrical Co. Ltd. 49,720,701.09 39,208,909.70
Other related parties 56,956,689.86 28,684,896.03
Haier Smart Home Co., Ltd. Annual Report 2020 353
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(III). Related transactions (continued)
3. Amount of unsettled items of related parties (continued)
Items and name of customers Closing Balance Opening Balance
Accounts payable
Qingdao Haier Parts Procurement Co., Ltd. 1,647,724,215.65 1,968,841,996.69
Cosmoplat Chuangzhi IOT Technology Co., Ltd. 671,426,347.70
Chongqing Haier Electrical Appliances Sales Co.,
Ltd. 407,357,263.21 1,061,806,342.30
Controladora Mabe S.A.deC.V. 316,079,431.43 230,300,308.48
Qingdao Haier Special Plastic Development Co.,
Ltd. 295,609,746.74 69,159,088.68
Chongqing Haier Logistics Co., Ltd. 290,743,396.11 132,648,041.70
Qingdao Ding Xin Electronics Technology Co.,
Ltd. 249,323,037.13
Hefei Haier Logistics Co., Limited 242,590,693.06 75,628,528.77
Dalian Haier International Trade Co., Ltd. 197,461,939.55 156,594,556.64
Other related parties 1,139,449,286.63 581,613,269.94
Contract liabilities
Chongqing Zhonglian Energy Technology Co.,
Ltd. 17,210,554.92
HPZ Ltd 3,071,563.35 3,358,729.30
Qingdao Haier New Materials R & D Co., Ltd. 2,823,650.93 6,373,064.84
Wolong Electric (Jinan) Motor Co., Ltd. 520,294.42 15,580,146.24
Other related parties 13,764,755.25 19,171,412.42
Other payables
Gooday Supply Chain Technologies Co., Ltd. 790,674,332.08 571,867,437.60
Shanghai Cotai Supply Chain Management Co.,
Ltd. 183,123,979.68 103,450,224.91
Qingdao Haier Brothers Animation Industry Co.,
Ltd. 111,835,378.00 274,526,190.97
Qingdao Goodaymart Supply Chains Co., Ltd. 77,995,078.37 187,341,850.29
Other related parties 380,850,955.03 366,620,589.49
Interest payable
Haier Group Finance Co., Ltd. 2,808,989.55 11,288,860.64
Dividends payable
Brave Lion (HK) limited 122,756,874.10
Other related parties 14,040,737.31
354 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(III). Related transactions (continued)
(4) Other related transactions
(1) Certain of the Company’s subsidiaries entered into loan contracts with Haier
Group Finance Co., Ltd. The loan balance as of 31 December 2020 was
RMB454 million and the interest expense payable by the Company to Haier
Group Finance Co., Ltd. for the current period was RMB87 million.
(2) The interest income of deposits received by the Company and subsidiaries from
Haier Group Finance Co., Ltd. for the current period was RMB158 million.
(3) The lease expense of the Company and its subsidiaries for production and
operation leased from related parties for the current period was RMB114
million.
(4) On 1 September 2020, the Company convened the Second Extraordinary General
Meeting of 2020, the First A-shares Class Meeting of 2020 and the First
D-shares Class Meeting of 2020 and approved the Proposal on the Company’s
Transfer of 54.50% of the Equity of Haier COSMO IOT Ecological Technology
Co., Ltd. and Related Transactions (
54.50% ). According to the Equity Transfer
Agreement entered into between the Company and Qingdao Haier Ecological
Investment Co., Ltd. ( ), the Company transferred
54.50% of the equity of COSMO to Haier Ecological Investment with the
consideration of RMB4,060,000,000.
Haier Smart Home Co., Ltd. Annual Report 2020 355
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(IV) Pricing Policy (continued)
1. Related-party Sales
Some related parties purchase components through the independent procurement
platform of the Company, purchase electrical appliances for sales from the Company,
and receive after-sales services, R&D service, housing rental and other business
provided by the company due to their business needs. In November 2020, according
to the implementation of connected transactions in the early stage and the relevant
listing requirements in Hong Kong, the Company and Haier Group Corporation
revised and signed the Product and Materials Sales Framework Agreement, the
Service Provision Framework Agreement and the Property Leasing Framework
Agreement on the basis of the original execution contract, which agreed on the
financial connected transactions. The pricing principle included that both parties
should agree on the price which is not less favourable than those provided by the
Company to the Independent Third Parties on arm’s length to ensure the fairness and
reasonableness of connected transactions. The valid term of the agreement
commenced from the listing date to 31 December 2022, which can be renewed for
another three years upon expire.
2. Related-party Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover,
the Company entrusted Haier Group Corporation and its subsidiaries to provide the
Company with logistics and distribution, energy and power, basic research and
testing, equipment leasing, house leasing and maintenance, greening and cleaning,
gift procurement, design, consulting, various ticket booking and other services. In
November 2020, according to the implementation of connected transactions in the
early stage and the relevant listing requirements in Hong Kong, the Company and
Haier Group Corporation revised and signed the Product and Materials Sales
Framework Agreement, the Service Provision Framework Agreement and the Property
Leasing Framework Agreement on the basis of the original execution contract, which
agreed on the financial connected transactions. The pricing principle included that
both parties should agree on the price which is not less favourable than those
provided by the Company to the Independent Third Parties on arm’s length to ensure
the fairness and reasonableness of connected transactions. The valid term of the
agreement commenced from the listing date to 31 December 2022, which can be
renewed for another three years upon expire.
356 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(IV) Pricing Policy (continued)
3. Financial aspect
Some of the financial services such as deposit and loan service, discounting service
and foreign exchange derivatives needed by the Company are provided by Haier
Group Corporation, its subsidiaries and other companies. According to the Financial
Service Agreement entered among the Company, Haier Group Corporation and other
parties, the price of financial services is determined by the principle of not less
favourable than market value fair. The Company is entitled to decide whether to keep
cooperation relationship with them with the knowledge of the price prevailing in the
market and in combination with its own interests. While performing the agreement,
the Company could also require other financial service institutions to provide related
financial services basing on actual situation. In order to meet the Company’s
demands such as the avoidance of foreign exchange fluctuation risk, the Company
may choose Haier Group Finance Co., Ltd. to provide some foreign exchange
derivative business after comparing with comparable companies. The Company will
uphold the safe and sound, appropriate and reasonable principle, under which all
foreign exchange capital business shall have a normal and reasonable business
background to eliminate speculative operation. At the same time, the Company has
specified the examination and permission rights, management positions and
responsibilities at all levels for its foreign exchange capital business to eradicate the
risks of operation by persons and improved its response speed to risks on the
premise that the risks are effectively controlled. In November 2020, according to the
implementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and
signed the Financial Services Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included the deposit interest rate not lower than the maximum interest rate
of major banks listed and the loan interest rate not less favourable than the market
price to ensure the fairness and reasonableness of connected transactions. The valid
term of the agreement commenced from the listing date to the 2020 annual general
meeting of the Company held in 2021, which can be renewed for another three years
upon expire.
Haier Smart Home Co., Ltd. Annual Report 2020 357
Section XII Financial Report
XII. RELATED PARTIES AND RELATED TRANSACTIONS (continued)
4. Other related parties (continued)
(IV) Pricing Policy (continued)
4. Others
The Company signed the Intellectual Property Licensing Framework Agreement with
Haier Group Corporation in November 2020. According to the agreement, Haier
Group has agreed to grant or procure its subsidiaries and contact persons to grant
the license to the Company at nil consideration to use all its intellectual property
rights, including but not limited to trademarks, patents, copyrights and logos for the
products, packaging, services and business introduction documents of the Company.
The date of the Intellectual Property Licensing Framework Agreement shall be
permanently effective from the listing date. When such specific intellectual property
rights expire and are not renewed by Haier Group, our right to use certain intellectual
property rights under the Intellectual Property Licensing Framework Agreement will
terminate.
358 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XIII. SHARE-BASED PAYMENTS
1. Overall of share-based payments
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 359
Section XII Financial Report
XIV. CONTINGENCIES
As of 31 December 2020, the Company has no significant contingencies that need to be disclosed.
XV. EVENTS AFTER THE BALANCE SHEET DATE
1. According to the resolution of the 17th meeting of the 17th session of the Board of Directors of
the Company held on 30 March 2021, the profit for the year is proposed to be distributed on the
basis of the total number of shares on the record date after deducting the repurchased shares
from the repurchased account when the plan is implemented in the future, the Company will
declare cash dividend of RMB3.66 (including taxes) for every 10 shares to all shareholders.
2. On 5 March 2021, the Company convened the 16th meeting of the 10th session of the Board of
Directors, which considered and approved the Resolution in Relation to the Repurchase Plan of
a Portion of Public Shares of Haier Smart Home Co., Ltd. It approved the Company to use its
own funds to repurchase a portion of shares of the Company by way of centralised bidding. The
repurchase price is no more than RMB46 per share and the proposed repurchase amount is no
more than RMB4.0 billion and no less than RMB2.0 billion. The period of this repurchase is
within 12 months from the date the Board considered and approved the resolution of repurchase
of shares. The source of capital is from the Company’s owned funds and the category of the
shares repurchased are the A-shares issued by the Company. Calculated at the upper limit for
the share repurchase and the repurchase price, the upper limit of the number of shares
proposed to be repurchased is 86,960,000 shares, accounting for approximately 0.94% of the
current total share capital of the Company. The specific number of shares repurchased is the
number of shares actually repurchased upon the expiry of repurchase period. As of the date of
approval for the publication of these financial statements, the Company has repurchased
2,715,800 shares with a repurchase amount of RMB80,630,000.
3. As of 28 February 2021, a total of HKD4,842,000,000.00 of H-share convertible bonds have been
converted into the shares of the Company. The number of shares from conversion was
257,048,627, accounting for 2.85% of the total shares issued of the Company before the
conversion of H-share convertible bonds. As of 28 February 2021, the outstanding H-share
convertible bonds amounted to HKD3,151,000,000.00, accounting for 39.42% of the total
number of H-share convertible bonds issued.
4. The Company has no other significant event after the balance sheet date that needs to be
disclosed.
360 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
Closing Balance
Financial assets
Financial assets measured at fair
measured at fair value and changes
value and changes of which included in
of which included in other
current profit and Measured at comprehensive
Items loss amortized cost income Total
Monetary funds 46,461,329,426.91 46,461,329,426.91
Financial assets held for trading 2,165,192,497.83 2,165,192,497.83
Derivative financial assets 77,839,006.63 77,839,006.63
Receivable 14,136,349,754.34 14,136,349,754.34
Accounts receivable 15,930,024,286.67 15,930,024,286.67
Other receivables 1,717,152,945.65 1,717,152,945.65
Other current assets 554,131,037.76 554,131,037.76
Long-term receivables 330,588,978.97 330,588,978.97
Other equity instruments 2,659,125,265.54 2,659,125,265.54
Other non-current assets 46,832,494.61 46,832,494.61
Opening Balance
Financial assets
Financial assets measured at fair
measured at fair value and changes
value and changes of which included in
of which included in other
current profit and Measured at comprehensive
Items loss amortized cost income Total
Monetary funds 36,178,815,683.25 36,178,815,683.25
Financial assets held for trading 308,135,007.05 308,135,007.05
Derivative financial assets 19,158,132.45 19,158,132.45
Bills receivable 13,951,419,893.96 13,951,419,893.96
Accounts receivable 11,015,871,060.09 11,015,871,060.09
Other receivables 2,163,517,802.50 2,163,517,802.50
Other current assets 3,981,314,321.50 3,981,314,321.50
Long-term receivables 307,588,203.00 307,588,203.00
Other equity instruments 1,395,959,878.92 1,395,959,878.92
Other non-current financial assets 294,547,364.47 294,547,364.47
Other non-current assets 77,057,328.58 77,057,328.58
Haier Smart Home Co., Ltd. Annual Report 2020 361
Section XII Financial Report
XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS (continued)
Financial liabilities
Closing Balance
Financial liabilities Financial liabilities
measured at measured at
Items fair value amortised cost Total
Short-term borrowings 7,687,908,165.88 7,687,908,165.88
Financial liabilities held for trading 26,952,508.66 26,952,508.66
Derivative financial liabilities 239,582,532.90 239,582,532.90
Bills payable 21,236,057,053.67 21,236,057,053.67
Accounts payable 36,302,971,944.48 36,302,971,944.48
Other payables 17,056,156,167.28 17,056,156,167.28
Non-current liabilities due in one year 4,950,555,670.08 4,950,555,670.08
Other current liabilities 5,535,262,500.00 5,535,262,500.00
Long-term borrowings 11,821,416,259.81 11,821,416,259.81
Bonds payable 6,713,501,050.27 6,713,501,050.27
Long-term payables 98,203,261.27 98,203,261.27
Opening Balance
Financial liabilities Financial liabilities
measured at measured at
Items fair value amortised cost Total
Short-term borrowings 8,585,049,237.18 8,585,049,237.18
Financial liabilities held for trading 42,799,173.35 42,799,173.35
Derivative financial liabilities 99,548,853.97 99,548,853.97
Bills payable 19,308,538,776.92 19,308,538,776.92
Accounts payable 33,750,567,046.28 33,750,567,046.28
Other payables 15,156,392,521.82 15,156,392,521.82
Non-current liabilities due in one year 4,730,070,447.82 4,730,070,447.82
Long-term borrowings 13,276,452,935.56 13,276,452,935.56
Bonds payable 7,004,585,761.43 7,004,585,761.43
Long-term payables 142,342,718.45 142,342,718.45
Other non-current liabilities 54,598,203.27 54,598,203.27
Please refer to related items in Note VII for details on each of the financial instruments of the
Company. Risks related to these financial instruments and the risk management policies taken by the
Company to mitigate these risks are summarized below. The management of the Company manages
and monitors these risk exposures to ensure the above risks are well under control.
362 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS (continued)
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts
receivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks. The
interest receivables are mainly the accrued interests from fixed deposits which are deposited in
the above banks. The Group does not believe there is any significant credit risk due to defaults
of its counterparties which would cause any significant loss. (2) Accounts receivable and bills
receivable: The Company only trades with approved and reputable third parties. All customers
who are traded by credit are subject to credit assessment according to the policies of the
Company, and the payment terms shall be determined on a reasonable basis. The Company
monitors the balances of accounts receivable on an ongoing basis and purchases credit
insurance for receivables of large-amount credit customers in order to ensure the Company is
free from material bad debts risks. (3) Other receivables of the Company mainly include export
tax refund, borrowings and contingency provision. The Company strengthened its management
and continuous monitoring in respect of these receivables and relevant economic business based
on historical data, so as to ensure that the Company’s significant risk of bad debts is
controllable and will be further reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, South
Asia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other
currencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well as
transactions to be settled in foreign currencies expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions in
foreign currencies and assets and liabilities denominated in foreign currencies to minimize the risk
of exposure to fluctuation in exchange rate; the Company resorts the way of signing forward
foreign exchange contracts to avoid the risk of exchange fluctuation.
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short- term bank loans and
bonds payables which are interest-bearing debts. Financial liabilities with floating interest rates
expose the Company to cash flow interest rate risk, while financial liabilities with fixed interest
rates expose the Company to fair value interest rate risk. The Group determines the relative
proportion of fixed-interest rate and floating interest rate contracts in light of the prevailing market
conditions.
Haier Smart Home Co., Ltd. Annual Report 2020 363
Section XII Financial Report
XVII. OTHER SIGNIFICANT EVENTS
1. On 30 July 2020, the 10th meeting of the 10th Board of Directors deliberated and approved the
Proposal on the Specific Scheme of this Material Assets Reorganization (“
”) on item by item basis. Overview of the Scheme: The Company, as the
offeror, requests the Board of Directors of Haier Electronics Group Co., Ltd. (hereinafter referred
to as “Haier Electronics”), upon satisfaction of the prerequisites, to put forward a proposal on
privatizing Haier Electronics by way of agreement arrangement to all shareholders (hereinafter
referred to as “Scheme Shareholders”) of Haier Electronics other than the Company and its
subsidiaries of shares that have been issued by Haier Electronics or may be issued prior to the
record date of the agreement arrangement (hereinafter referred to as “Scheme Shares”). The
proposal will be made in accordance with Section 99 of the Bermuda Companies Act in the form
of an Agreement Arrangement (hereinafter referred to as “Agreement Arrangement”) involving,
among other things, the write-off of all the Scheme Shares, whereby the Scheme Shareholders
will receive the newly issued H-shares of the Company and cash payment from Haier Electronics.
The Agreement Arrangement will be specifically implemented through the following steps: (1) all
Scheme Shares will be cancelled; (2) for each cancelled Scheme Share, Scheme Shareholders
will receive 1.60 newly issued H-shares of the Company and cash payment of HK$1.95 from
Haier Electronics; (3) Haier Electronics will reduce the issued shares by canceling Scheme
Shares, and immediately after the reduction of the share capital, issue new shares to the
Company, the number of which is equal to the number of Scheme Shares so cancelled, so that
the number of issued shares of Haier Electronics will be increased to that of it before the
Scheme Shares were cancelled; and after the Scheme takes effect, the amount equivalent to the
cash payment made to cancel the Scheme Shares will be reduced from Haier Electronics’ equity
premium and other reserve accounts. Upon this Agreement Arrangement taking effect: (1) Haier
Electronics will be delisted from the Hong Kong Stock Exchange and become a wholly-owned or
controlling subsidiary of the Company; (2) H-shares of the Company will be listed and traded on
the main board of the Hong Kong Stock Exchange by way of introduction; (3) the Scheme
Shareholders will become H-share shareholders of the Company.
The privatization scheme took effect on 21 December 2020 (Bermuda time); Haier Electronics
was delisted from the Hong Kong Stock Exchange at 9:00 a.m. (Beijing time) on 23 December
2020 and became a wholly-owned subsidiary of Haier Smart Home; H-shares of Haier Smart
Home was listed and traded on the main board of the Hong Kong Stock Exchange by way of
introduction at 9:00 a.m. (Beijing time) on 23 December 2020. Scheme Shareholders (other than
non-qualified foreign shareholders)) became H-share shareholders of Haier Smart Home, the
number of H Share issued was 2,448,279,814; on 24 December 2020, Haier Electronic paid
HK$1.95 to Scheme Shareholders by cash cheque for each cancelled Scheme Share.
2. The Company has no other significant events that need to be disclosed.
364 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY
1. Accounts receivable
Aging Closing Balance Opening Balance
Within one year 5,491,427,973.11 1,175,031,729.66
1–2 years 416,430.64 7,798,791.09
2–3 years
Over 3 years
Accounts receivable balance 5,491,844,403.75 1,182,830,520.75
Allowance for bad debts 308,333.33 596,039.26
Net receivables 5,491,536,070.42 1,182,234,481.49
The total amount of the top 5 accounts receivable at the end of the period was
RMB5,476,236,719.34, accounting for 99.72% of book balance of the accounts receivable.
Changes in bad debt provision for accounts receivable in the current period
Increase for the current period Decrease for the current period
Provision for Write-off
Opening the current and other Closing
Items Balance period Other increase Reversal movement Balance
Allowance for bad debts 596,039.26 287,705.93 308,333.33
2. Other receivables
Presentation
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing Balance Opening Balance
Interest receivable 38,582,434.11 16,753,860.49
Dividend receivable 3,836,055,151.41
Other receivables 3,867,790,953.50 2,032,943,893.84
Total 3,906,373,387.61 5,885,752,905.74
Haier Smart Home Co., Ltd. Annual Report 2020 365
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
2. Other receivables (continued)
Presentation (continued)
(1) Interest receivable:
Aging Closing Balance Opening Balance
Within 1 year 38,582,434.11 16,753,860.49
More than 1 year
Total 38,582,434.11 16,753,860.49
(2) Dividend receivable:
Aging Closing Balance Opening Balance
Within 1 year 3,836,055,151.41
More than 1 year
Total 3,836,055,151.41
Other receivables
(3) Other receivables:
The disclosure of other receivables by ageing is as follows:
Aging Closing Balance Opening Balance
Within one year 3,501,616,045.85 2,033,022,986.42
More than one year 366,178,683.57
Other receivables balance 3,867,794,729.42 2,033,022,986.42
Allowance for bad debts 3,775.92 79,092.58
Net other receivables 3,867,790,953.50 2,032,943,893.84
The total amount of the top 5 other receivables at the end of the period is
RMB2,323,889,275.75, accounting for 60.08% of book balance of other receivables.
366 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
2. Other receivables (continued)
Other receivables (continued)
(3) Other receivables: (continued)
Changes in bad debt provision for other receivables in the current period:
Increase for Decrease for
the current period the current period
Provision for Write-off
Opening Closing the current Other and other
Items Balance Balance period increase Reversal movement
Allowance for bad debts 79,092.58 75,316.66 3,775.92
3. Long-term equity investment
√ Applicable Not Applicable
(1) Details of long-term equity investments:
Closing Balance Opening Balance
Provision for Provision for
Items Book balance impairment Book balance impairment
Long-term equity investments
Including: long-term
equity investments
to subsidiaries 49,231,447,092.82 7,100,000.00 32,396,253,033.48 7,100,000.00
Long-term equity
investments to
associates 3,175,179,977.39 109,300,000.00 3,246,627,336.72 69,300,000.00
Total 52,406,627,070.21 116,400,000.00 35,642,880,370.20 76,400,000.00
Haier Smart Home Co., Ltd. Annual Report 2020 367
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
3. Long-term equity investment (continued)
(2) Long-term equity investments to subsidiaries
Impairment
Increase/Decrease provisions at the
Investee Opening Balance for the period Closing Balance end of the period
I. Subsidiaries:
Chongqing Haier Electronics
Sales Co., Ltd. 9,500,000.00 9,500,000.00
Haier Group (Dalian) Electrical
Appliances Industry
Co., Ltd 34,735,489.79 34,735,489.79
Qingdao Haier Refrigerator
Co., Ltd. 402,667,504.64 402,667,504.64
Qingdao Haier Special
Refrigerator Co., Ltd. 329,832,047.28 329,832,047.28
Qingdao Haier Information
Plastic Development
Co., Ltd. 102,888,407.30 102,888,407.30
Dalian Haier Precision
Products Co., Ltd. 41,836,159.33 41,836,159.33
Hefei Haier Plastic Co., Ltd. 42,660,583.21 42,660,583.21
Qingdao Haier Technology
Co., Ltd. 16,817,162.03 16,817,162.03
Qingdao Household Appliance
Technology and
Equipment Research
Institute 66,778,810.80 66,778,810.80
Qingdao Meier Plastic
Powder Co., Ltd. 24,327,257.77 24,327,257.77
Chongqing Haier Precision
Plastic Co., Ltd. 47,811,283.24 47,811,283.24
Qingdao Haier Electronic
Plastic Co., Ltd. 48,000,000.00 48,000,000.00
Dalian Haier Refrigerator
Co., Ltd. 99,000,000.00 99,000,000.00
Dalian Haier Air-conditioning
Co., Ltd. 99,000,000.00 99,000,000.00
368 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
3. Long-term equity investment (continued)
(2) Long-term equity investments to subsidiaries (continued)
Impairment
Increase/Decrease provisions at the
Investee Opening Balance for the period Closing Balance end of the period
Guizhou Haier Electronics
Co., Ltd. 96,904,371.71 96,904,371.71
Hefei Haier Air-conditioning
Co., Limited 67,110,323.85 67,110,323.85
Qingdao Haier Refrigerator
(International) Co., Ltd. 238,758,240.85 238,758,240.85
Qingdao Haier Air-Conditioner
Electronics Co., Ltd. 1,113,433,044.51 1,113,433,044.51
Qingdao Haier Air Conditioner
Gen Corp., Ltd. 220,636,306.02 220,636,306.02
Qingdao Haier Special
Freezer Co., Ltd. 442,684,262.76 442,684,262.76
Qingdao Haier Dishwasher
Co., Ltd. 206,594,292.82 206,594,292.82
Wuhan Haier Freezer Co.,
Ltd. 47,310,000.00 47,310,000.00
Wuhan Haier Electronics
Holding Co., Ltd. 100,715,445.04 100,715,445.04
Chongqing Haier Air-
conditioning Co., Ltd 100,000,000.00 100,000,000.00
Hefei Haier Refrigerator
Co., Ltd. 49,000,000.00 49,000,000.00
Qingdao Haier Whole Set
Home Appliance Service
Co., Ltd. 118,000,000.00 118,000,000.00
Chongqing Haier Refrigeration
Appliance Co., Ltd. 91,750,000.00 91,750,000.00
Haier Shanghai Zhongzhi
Fang Chuang Ke
Management Co., Ltd. 2,000,000.00 2,000,000.00
Haier COSMO IOT Ecosystem
Technology Co., Ltd. 897,454,010.03 –897,454,010.03
Haier Smart Home Co., Ltd. Annual Report 2020 369
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
3. Long-term equity investment (continued)
(2) Long-term equity investments to subsidiaries (continued)
Impairment
Increase/Decrease provisions at the
Investee Opening Balance for the period Closing Balance end of the period
Qingdao Haier Special
Refrigerating Appliance
Co., Ltd. 100,000,000.00 100,000,000.00
Haier Shareholdings (Hong
Kong) Limited 25,076,411,626.24 946,370,900.00 26,022,782,526.24
Shenyang Haier Refrigerator
Co., Ltd. 100,000,000.00 100,000,000.00
Foshan Haier Freezer
Co., Ltd. 100,000,000.00 100,000,000.00
Zhengzhou Haier Air-
conditioning Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Haidayuan
Procurement Service
Co., Ltd. 20,000,000.00 20,000,000.00
Qingdao Haier Intelligent
Technology Development
Co., Ltd. 130,000,000.00 130,000,000.00
Qingdao Haier Technology
Investment Co., Ltd. 302,105,635.00 65,400,000.00 367,505,635.00
Qingdao Casarte Smart Living
Appliances Co., Ltd. 10,000,000.00 10,000,000.00
Haier Overseas Electric
Appliance Co., Ltd. 40,000,000.00 460,000,000.00 500,000,000.00
Haier (Shanghai) Electronics
Co., Ltd. 12,500,000.00 12,500,000.00
Haier U+smart Intelligent
Technology (Beijing)
Co., Ltd. 143,000,000.00 143,000,000.00
Haier Electronics Group
Co., Ltd. 669,830,769.26 16,060,877,169.37 16,730,707,938.63 7,100,000.00
370 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
3. Long-term equity investment (continued)
(2) Long-term equity investments to subsidiaries (continued)
Impairment
Increase/Decrease provisions at the
Investee Opening Balance for the period Closing Balance end of the period
Qingdao Haidarui
Procurement Service
Co., Ltd. 107,800,000.00 107,800,000.00
Qingdao Haier Intelligent
Household Appliances
Co., Ltd. 326,400,000.00 326,400,000.00
Qingdao Haidacheng
Procurement Service
Co., Ltd. 100,000,000.00 100,000,000.00
Haier Zhijia Experience Cloud
Ecological Technology
Co., Ltd. 100,000,000.00 100,000,000.00
Total 32,396,253,033.48 16,835,194,059.34 49,231,447,092.82 7,100,000.00
Haier Smart Home Co., Ltd. Annual Report 2020 371
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
3. Long-term equity investment (continued)
(3) Long-term equity investments to associates
Increase/Decrease for the current period
Increased/
decreased Investment Impairment
amount for income provisions at
the current recognized under the end of
Name of investee Opening Balance period equity method Others Closing Balance the period
Wolong Electric (Jinan) Motor Co., Ltd. 115,907,764.18 20,802,146.55 136,709,910.73
Qingdao Haier SAIF Smart Home
Industry Investment Center
(Limited Partnership) 434,540,103.12 13,247,135.49 –61,990,201.88 385,797,036.73
Bank of Qingdao Co., Ltd. 963,844,234.82 61,124,634.14 –49,212,843.14 975,756,025.82
Mitsubishi Heavy Industries Haier
(Qingdao) Air-conditioners Co., Ltd. 643,056,436.86 83,525,524.98 –72,000,000.00 654,581,961.84
Qingdao Haier Carrier Refrigeration
Equipment Co., Ltd. 395,933,487.26 19,364,678.67 415,298,165.93 21,000,000.00
Qingdao Haier Multimedia Co., Ltd 432,386,801.25 –103,399,596.19 328,987,205.06 88,300,000.00
Qingdao Hegang New Material
Technology Co., Ltd.
( ) 260,958,509.23 17,091,162.05 278,049,671.28
Total 3,246,627,336.72 111,755,685.69 –183,203,045.02 3,175,179,977.39 109,300,000.00
372 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY (continued)
4. Operating revenue and operating cost
(1). Basic information on operating revenue and operating cost
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the current period Amount for the previous period
Items Revenue Cost Revenue Cost
Primary Business 7,221,635,652.63 5,941,477,236.22 6,466,328,591.49 5,016,605,810.47
Other Business 146,005,360.76 126,176,580.13 171,526,897.13 144,140,329.73
Total 7,367,641,013.39 6,067,653,816.35 6,637,855,488.62 5,160,746,140.20
5. Investment income
Amount for the Amount for the
Items current period previous period
Long-term equity investments income calculated
by the equity method 111,755,685.69 187,969,031.39
Investment income generated from disposal of long-term
equity investment 3,962,491,511.91
Investment income from long-term equity investment
accounted for using cost method 191,366,562.30 3,314,994,904.38
Income from wealth management products 17,628,284.37 33,645,544.43
Investment income from investment in other equity instrument
during the holding period 268,193.52 255,422.40
Total 4,283,510,237.79 3,536,864,902.60
Haier Smart Home Co., Ltd. Annual Report 2020 373
Section XII Financial Report
XIX. SUPPLEMENTARY INFORMATION
1. Basic earnings per share and diluted earnings per share
Amount for the current period Amount for the previous period
Earnings per share (RMB) Earnings per share (RMB)
Weighted Weighted
average return Basic earnings Diluted earnings average return Basic earnings Diluted earnings
Items on net assets per share per share on net assets per share per share
Net profit attributable to ordinary shareholders
of the Company 17.67% 1.337 1.306 19.12% 1.286 1.191
Net profit attributable to ordinary shareholders of
the Company after deduction of non-recurring
profit or loss 12.85% 0.973 0.942 13.43% 0.903 0.866
2. Extraordinary profit or loss
Amount for the Amount for the
Items current period previous period
Net profit attributable to ordinary shareholders of
the parent Company 8,876,593,208.19 8,206,247,105.96
Less: Extraordinary profit or loss 2,418,779,872.82 2,441,082,405.21
Net profit attributable to ordinary shareholders of the parent
company after deduction of extraordinary profit or loss 6,457,813,335.37 5,765,164,700.75
374 Haier Smart Home Co., Ltd. Annual Report 2020
Section XII Financial Report
XIX. SUPPLEMENTARY INFORMATION (continued)
2. Extraordinary profit or loss (continued)
Details of extraordinary profit and loss for the current period
Amount for the
Extraordinary profit or loss Items current period
Profit or loss from disposal of non-current assets –111,277,546.78
Profit from disposal of long-term equity investments 2,261,114,345.13
Government grants included in current profit or loss, except that closely related
to the normal operating business, complied with requirements of the national
policies, continued to be granted with the amount and quantity determined
under certain standards 844,925,723.90
Gains from the costs of investment in the acquisition of subsidiaries, associated
companies and joint ventures being lower than the share of the fair value of
the investee’s identifiable net assets
Profit or loss from fair value changes of financial assets/liabilities held for trading,
as well as investment gains arising from disposal of financial assets/liabilities
held for trading and financial assets available-for-sale, except the effective
hedging related to the normal operations of the Company 132,357,789.61
Other non-operating income and expenses except the aforementioned items 54,990,221.87
Impact on minority interests –389,539,423.67
Impact on income tax –373,791,237.24
Impact on profit from business combination under common control
Total 2,418,779,872.82
3. Difference on figures by domestic and foreign Accounting Standards
Applicable √ Not Applicable
4. Others
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Annual Report 2020 375
Section XIII Documents Available for Inspection
Documents Available for Inspection (I) Financial statements with signatures and seals of the
legal representative, chief accountant and person in charge
of accounting department.
Documents Available for Inspection (II) Original audit report with seals of accounting firm,
signatures and seals of registered accountants.
Documents Available for Inspection (III) Original of all documents and announcements of the
Company which have been publicly disclosed on the
newspaper designated by China Securities Regulatory
Commission during the reporting period.
Chairman of the Board: Liang Haishan,
Date of approval for publication by the Board: 30 March 2021
Revised information
Applicable √ Not Applicable
376 Haier Smart Home Co., Ltd. Annual Report 2020
