2021 Interim Report
Haier Smart Home Co., Ltd
Company Code: 600690.SH, 690D.DE Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2021 Interim Report
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2021 Interim Report
Haier Smart Home Co., Ltd
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (the “Company”) are individually and
collectively responsible for the content set out therein and hereby assure that the content
set out in the interim report is true, accurate and complete, and free from any false record,
misleading representation or material omission.
II. All directors attend the Board of Directors.
III. The interim report is unaudited.
IV. 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 interim report is true, accurate and complete.
V. Proposal of profit distribution or proposal of converting capital reserves into share capital
for this reporting period resolved and passed by the Board
Not Applicable
VI. Disclaimer in respect of forward-looking statements
√Applicable Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report
do not constitute our substantial commitment to investors. Investors are advised to pay attention
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 prescribed decision-making
procedures?
No
IX. Are there more than half of the Directors could not warrant the truthfulness, accuracy and
completeness of the interim report disclosed by the Company
No
X. Important risk warnings
For the possible risks which the Company may encounter, please refer to the relevant information
set out in the section of “DISCUSSION AND ANALYSIS ON OPERATIONS” in this report.
XI. Others
Applicable √Not Applicable
Haier Smart Home Co., Ltd.
Chairman of the Board: Liang Haishan
30 August 2021
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Contents
SECTION I — DEFINITIONS 4
SECTION II — GENERAL INFORMATION OF THE COMPANY 6
AND KEY FINANCIAL INDICATORS
SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS 11
SECTION IV — CORPORATE GOVERNANCE 37
SECTION V — ENVIRONMENTAL AND SOCIAL 41
RESPONSIBILITIES
SECTION VI — SIGNIFICANT ISSUES 48
SECTION VII — CHANGES IN SHARES AND INFORMATION 66
ABOUT SHAREHOLDERS
SECTION VIII — RELEVANT INFORMATION OF PREFERRED 76
SHARES
SECTION IX — RELEVANT INFORMATION OF BONDS 77
SECTION X — RESPONIBILITY STATEMENT 84
SECTION XI — FINANCIAL REPORT 85
I. 2021 Interim Report of Haier Smart Home Co., Ltd. with signature of the
legal representative.
Documents II. Financial statements with signatures or seals of the person in charge of the
Available for entity, chief accountant and person in charge of accounting department.
Inspection III. All documents publicly disclosed on China Securities Journal, Shanghai
Securities News, Securities Daily, Securities Times and the website of
Shanghai Stock Exchange (www.sse.com.cn) during the reporting period.
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SECTION I DEFINITIONS
Unless otherwise stated in 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 Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co.,
Ltd.”, and the original short name is “Qingdao Haier”
Four Major Securities Newspapers China Securities Journal, Shanghai Securities News, Securities Times,
Securities Daily
Haier Electrics, 1169 Haier Electronics Group Co., Ltd. (a company originally listed in Hong
Kong, stock code: 01169.HK), a subsidiary as accounted for in the
consolidated statement of the Company. Haier Electrics has been
privatized by way of H shares issuance on 23 December 2020 and became
a wholly owned subsidiary of the Company since then.
GEA GE Appliances, household appliances assets and business of General
Electric Group, have currently been owned by the Company.
FPA Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐雪派克)
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, built-in freezer, washing machine,
clothes dryer and etc. Its business covers over 50 countries/regions across
the world. FPA is wholly-owned subsidiary of the Company.
Candy Candy Group (Candy S.p.A) is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has been
committed to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has
been prestigious in the global market with users all over the world via its
ten self-owned professional household appliance brands. In January 2019,
Candy became a wholly-owned subsidiary of the Company.
CMM China Market Monitor Co., Ltd., as an authoritative market research
institute in Chinese home appliances 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 has 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 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,
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biomedicine, power and consumer electronics.
Model of RenDanHeYi The concept of " Achieving win-win via RenDanHeYi " is the guarantee
of Haier's sustainable operation and the driving force of the Company
featuring a self-motivated and empowering corporate culture. “Ren” is an
employee who has the spirit of entrepreneurship and innovation; “Dan” is
to create value for users. The " RenDanHeYi " management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of the Company
and its shareholders.
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SECTION II GENERAL INFORMATION OF THE COMPANY
AND KEY FINANCIAL INDICATORS
I. Information of the Company
Chinese name 海尔智家股份有限公司
Chinese short name 海尔智家
English name Haier Smart Home Co., Ltd.
English short name Haier Smart Home
Legal representative Liang Haishan
II. Contact person and contact Information
Secretary to Representative Representative Company Others
the Board of securities of securities Secretary (H
affairs affairs (D shares) shares)
Global
Ng Chi Yin, Custome
Name Ming Guozhen Liu Tao Sun, Yao Sophie
Trevor r Service
Hotline
Department of Department of /
Securities of Securities of
Haier Smart Haier Smart Haier
Room 3513,
Home Co., Home Co., Ltd. Deutschland
35/F, The
Ltd. Haier Haier GmbH, Konrad-
Address Center, 99
Information Information Zuse-Platz 6,
Queen’s Road
Industrial Industrial Park, 81829 München,
Central, Central,
Park, No. 1 No. 1 Haier Germany
Hong Kong
Haier Road, Road, Qingdao
Qingdao City City
+49 160 9469 4006 999
0532-
Tel 0532-88931670 3601 +852 2169 0880 999
88931670
(Germany)
0532- /
Fax 0532-88931689 / +852 2169 0000
88931689
finance@haier finance@haier.c /
Email Y.sun@haier.de ir@haier.hk
.com om
III. Summary of the changes in general information
Registered address Haier Industrial Park, Laoshan District, Qingdao City
Historical change of the
Not Applicable
registered address
Business address Haier Information Industrial Park, Laoshan District, Qingdao
City
Postal code of the
266101
business address
Website https://smart-home.haier.com/cn/
Email 9999@haier.com
Query index for any
changes during the Not applicable
reporting period
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IV. Movement of place for information disclosure
Designated newspaper for Shanghai Securities News, Securities Times, China
information disclosure Securities Journal, Securities Daily
Website for publishing interim
www.sse.com.cn
report
Website for publishing annual https://smart-home.haier.com/cn/，www.xetra.com，
report by other websites www.dgap.de，https://www.hkexnews.hk
Department of Securities of Haier Smart Home Co.,
Ltd.
Deposit place of interim report
Haier Information Industrial Park, No. 1 Haier Road,
Qingdao City
Query index for any changes
Not applicable
during the reporting period
V. Summarized information of shares of the Company
Stock Stock Short
Stock Short
Type of Shares Exchange of Stock Code Name Before
Name
Shares Listed Variation
Shanghai Stock Haier Smart
A share 600690 Qingdao Haier
Exchange Home
Frankfurt Stock Haier Smart
D share 690D Qingdao Haier
Exchange Home
Hong Kong
Haier Smart
H Share Stock 6690 /
Home
Exchange
VI. Other related information
Applicable √Not Applicable
VII. Key accounting data and financial indicators of the Company
(I) Key accounting data
Unit and Currency: RMB
Increase/decrease
for the reporting
The corresponding period of last year period compared
Key accounting For the reporting period
with the
data (January-June)
corresponding
period of last year
(%)
Operating
111,618,822,064.73 95,728,097,106.65 16.60
revenue
Net profit
attributable to
shareholders of 6,852,271,812.97 2,780,800,712.72 146.41
the listed
Company
Net profit after
deduction of
6,269,906,406.72 2,569,440,497.59 144.02
non-recurring
profit or loss
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attributable to
shareholders of
the listed
Company
Net cash flows
from operating 8,423,823,726.89 -542,919,257.40 1,651.58
activities
Increase/decrease as
As at the end of reporting period of last
at the end of the
As at the end of the year
reporting period
reporting period
compared with that
of last year (%)
Net assets
attributable to
shareholders of 73,846,216,357.78 66,816,422,614.55 10.52
the listed
Company
Total assets 206,247,420,630.60 203,459,495,879.65 1.37
(II) Key financial indicators
The corresponding period Increase/decrease for the
For the reporting
of last year reporting period compared
Key financial indicators period
with the corresponding
(January-June)
period of last year (%)
Basic earnings per share
0.741 0.423 75.18
(RMB / share)
Diluted earnings per
0.730 0.419 74.22
share (RMB / share)
Basic earnings per share
after deducting non-
0.678 0.391 73.40
recurring profit or loss
(RMB / share)
Weighted average return increased by 3.61 percentage
9.29 5.68
on net assets (%) points
Weighted average return
on net assets after increased by 3.25 percentage
8.50 5.25
deducting non-recurring points
profit or loss (%)
Explanation of the key accounting data and financial indicators of the Company
√Applicable Not Applicable
In the first half of 2021, the Company’s revenue amounted to RMB111.619 billion,
representing an increase of 16.6% and 11.6% as compared to the corresponding periods in
2020 and 2019, respectively. Due to the spin-off of the business of COSMO in the third
quarter of 2020, the business of RRS Logistics had been excluded in the third quarter of
2019. Excluding the effect of spin-off of the business of COSMO and RRS Logistics,
revenue of the Company in the first half of 2021 would have increased by 27.2% and 22.7%
as compared to the corresponding periods in 2020 and 2019, respectively, on the same basis.
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VIII. Differences in accounting data under domestic and overseas accounting standards
√Applicable Not Applicable
(I) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with International
Accounting Standards and Chinese Accounting Standards
Applicable √Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of the
listed company presented in the consolidated financial statements as disclosed in accordance
with International Accounting Standards and Chinese Accounting Standards by the Company.
(II) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with overseas accounting
standards and Chinese Accounting Standards
Applicable √Not Applicable
Apart from the financial statements prepared in accordance with International Accounting
Standards, the Company has not prepared financial statements in accordance with other
overseas accounting standards.
(III) Explanation on difference in domestic and overseas accounting standards
Applicable √Not Applicable
IX. Non-recurring profit or loss items and amount
√Applicable Not Applicable
Unit and Currency: RMB
Non-recurring profit or loss items Amount
Profit or loss from disposal of non-current assets 135,411,372.65
Government subsidies through the profit and loss,
except for government subsidies that are closely
related to the Company's normal business
operations, comply with national policies and 283,535,138.53
regulations, and continue to be enjoyed in a fixed
amount or fixed quantity according to certain
standards
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
229,227,021.99
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
Other non-operating income and expenses except
35,439,577.28
the aforementioned items
Effect of minority equity interests -7,969,113.19
Effect of income tax -93,278,591.01
Total 582,365,406.25
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X. Others
Applicable √Not Applicable
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SECTION III MANAGEMENT DISCUSSION AND ANALYSIS’
I. Introduction of the industry where the Company operates and its major business
during the reporting period
Since its birth in 1984, Haier Smart Home aspires to being an enterprise of the times. With
thirty years of unyielding commitment to provide our users with innovation and iteration, the
Company has established itself as the global leader in home appliance industry and a proud
pioneer in smart home solutions:
Euromonitor ranked the Company as the first by volume in the global major home
appliance market for 12 consecutive years, recognizing our strengths as a global portfolio of
brands including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA.
Haier brand refrigerators and washing machines also ranked first by volume for 13 and 12
consecutive years from 2009 to 2020.
Euromonitor also recognizes the Company as one of the first in the industry to launch
smart home solutions. Leveraging on our smart home appliance products, Smart Home APP,
Smart Home Experiential Cloud Platform, store network and online presence, we are able to
provide scenario-based comprehensive smart home solutions to our users in their pursuit of a
better life.
The Company has built its global presence pillared on smart home business in China, smart
home business overseas and other businesses.
Smart Home Business in China
Leveraging on Haier Smart Home APP and experience stores network, the Company
provides both comprehensive appliance products and value-added solutions, consists of
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).
The Company manufactures, distributes and exports refrigerators, freezers and
kitchen appliances, leveraging on connectivity amongst our smart products, we are able to
provide smart dietary solutions that combines hardware with software in order to meet users’
demand for convenience, wellbeing and taste.
The Company manufactures, distributes and exports washing machines and tumble
dryers, leveraging on connectivity amongst our smart products, we are able to provide smart
laundry solutions that combines hardware with software in order to meet users’ demand for
cloth care.
The Company manufactures, distributes and exports household air conditioners,
commercial air conditioners, air purifiers and new wind control systems, leveraging on
connectivity amongst our smart products, we are able to provide smart air solutions that
combines hardware with software in order to meet users’ demand for temperature, humidity,
cleanliness and freshness.
The Company manufactures, distributes and exports household electric water heaters,
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gas water heaters, solar powered water heaters, heat pumps, POE water purifiers, POU water
purifiers and water softeners, leveraging on connectivity amongst our smart products, we are
able to provide smart water solutions that combines hardware with software in order to meet
users’ demand for water purification, softening and heating.
Smart Home Business Overseas
In addition, the Company manufactures and distributes a comprehensive portfolio of home
appliance products and provides value-added services in over 160 countries and regions
including North America, Europe, South Asia, Southeast Asia, Australia, New Zealand,
Japan, Middle East and Africa.
We have over 20 years of experience in managing proprietary brand portfolio overseas,
during which time, several successful acquisitions have been completed, including Sanyo
Electric Co., Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, GE
Appliances in 2016, Fisher&Paykel in 2018, and Candy in 2019.
Solid foundations have been laid for the Company’s overseas business, which now offers a
comprehensive product portfolio under seven brands across the globe. In 2020, with a market
share of 18.6% by volume, Euromonitor ranked the Company the first in major home
appliances in Asia; second in North America with a market share of 22.0%; second in
Australia & New Zealand with a market share of 13.4%; third in Middle East & Africa with
a market share of 8.4% and number five in Europe with a market share of 7.2%.
Other Businesses
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 distribution of ancillary parts and
components for home appliances. Small home appliances business primarily involves in-
house design, outsourced manufacturing and distribution of small home appliances products.
The distribution business primarily involves distribution of televisions, consumer electronic
products and others for Haier Group and third parties through our distribution network.
During the reporting period, for the second time, the Company was included in Fortune
Global 500, moving up 30 places as compared with 2020. We are also nominated as one of
the 2021 World’s Most Admired Companies by Fortune, making Haier the only one from
home appliance and furniture industries in Europe and Asia as well as the only one from
outside the US. For a second time, the Company made it to BrandZ Top 100 Most Valuable
Global Brands list as the world’s only Internet-of-Things (IoT) ecosystem brand.
Industry Analysis
1. The China Market
In the first half of 2021, China’s economy continued to recover with improving consumer
momentum. According to the data from the National Bureau of Statistics, in the first half of
the year, sales of urban consumer goods amounted to RMB18,409.8 billion, representing an
increase of 23.3% compared to the corresponding period in 2020, and sales of rural
consumer goods amounted to RMB2,780.7 billion, representing an increase of 21.4% as
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compared to the corresponding period in 2020 The home appliance industry showed similar
trend. According to CMM, in the first half of 2021, the aggregated sales of refrigerators,
washing machines, air conditioners, water heaters and kitchen appliances (range hoods and
stoves) in China amounted to RMB245.7 billion, representing an increase of 14.1%
compared to the corresponding period in 2020.
CMM data also indicates that, in the first half of 2021, sales of refrigerator/ freezer amounted
to RMB48.9 billion, representing an increase of 20.9% and 7.5% as compared to the
corresponding periods in 2020 and 2019. Sales of washing machine amounted to RMB35.6
billion, representing an increase of 24.5% and 6.9% as compared to the corresponding
periods in 2020 and 2019. Growth in both could be attributable to the constant innovation in
functions, designs and application scenarios. Sales of air-conditioners amounted to RMB98.1
billion, representing an increase of 5.7% and a decrease of 21.3% as compared to the
corresponding periods in 2020 and 2019. The weakness was mainly attributable to the mild
temperature during the summer which suppressed the demand for air conditioners. Sales of
water heaters amounted to RMB31.2 billion, representing an increase of 14.6% and a
decrease of 4.5% as compared to the corresponding periods in 2020 and 2019. Sales of range
hoods and gas stoves amounted to RMB31.8 billion, representing an increase of 22.0% and
0.6% as compared to the corresponding periods in 2020 and 2019; integrated stoves
maintained rapid growth with sales amounted to RMB9.68 billion, representing an increase
of 66.6% and 64.6% as compared to the corresponding periods in 2020 and 2019. Consumer
demand for laundry care drove rapid growth of dryers, clothes care machines and shoe
washers. According to AVC, sales of dryers amounted to RMB2.49 billion, representing an
increase of 116.4% as compared to the corresponding period in 2020. At present, the
penetration of dryers per 100 households in China is 0.2%, whereas the penetration in the US
is 76.2%, thus ample growth potential could be unlocked going forward.
The shift of consumer demand from functions to quality has been driving industry growth.
When the desire for basic functions is satisfied, consumers start to pay increasing attention to
wellbeing, design and IoT technologies. For example, large refrigerators with multi-
temperature zone are becoming popular, while fresh-keeping, sterilization and built-in
designs have created a brand-new experience; sterilization, partition washing and smart
dispensing together make laundry healthier; as consumers are becoming increasingly
concerned with air quality, functions such as sterilization, dust prevention and purification
functions have been popular. On the supply side, industry leaders with world-class R&D
resources and innovative ideas have also accelerated the development of high-end products.
More and more consumers wish to integrate home appliances with interior design when they
are redecorating, consequently a brand that offers a “complete package of design, purchase
and installation” does not only save consumers’ time and efforts, and it also makes the whole
renovation process much more efficient.
The transition of consumption online caused by COVID-19 and attractive pricing continue to
drive e-commerce growth. For example, in the first half of 2021, the online retail sales of air-
conditioners accounted for 55.3%, representing an increase of 3.8 and 12.3 percentage
points as compared to the corresponding periods in 2020 and 2019. Benefiting from platform
diversification, social networks and live streaming have also become new sales channels. On
the other hand, offline channels fully tapped scenario offering and services to enhance on-
site experience and strengthen product premiumization. In addition, growing number of
consumers are purchasing home appliances before they start renovation. The size, model and
design style of appliances have become important elements in making renovation plans, and
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home improvement markets as well as designers have become increasingly important
channels.
The industry continues to consolidate as concentration ratio of leading brands increases. In
the offline market, combined market share of top three refrigerator brands, washing machine
brands and air-conditioner brands was 63.53%, 66.71% and 84.32% respectively,
representing an increase of 1.50, 1.73 and 2.64 percentage points as compared to the
corresponding period of last year.
Profitability of appliances industry remained under significant pressure caused by inflation in
the commodity market where price of steel, copper and aluminium rose sharply; post
pandemic supply chain disruption and surge in sea freight.
2. The Overseas Market
(1) The US market:
Second quarter US economic output growth accelerated 0.2 percentage point from the
previous quarter to an annualized rate of 6.5%; making it the first quarter in which domestic
output exceeded pre-pandemic level, personal consumption increased 11.8% while private
domestic investment declined 3.5%, indicating labour shortage and supply chain disruption
as having the biggest impact on the economy. According to AHAM, core appliances grew by
double digit figure in the first half this year.
(2) The European market:
According to GFK, sales volume of refrigerators and washing machines grew by 16% and
12% in Europe, driven by growing demand for product upgrade, also reflecting low base
effect caused by pandemic outbreak in second quarter 2020.
(3) The Australian and New Zealand market:
① Industry growth in Australia has slowed down and competition has intensified. ② The
market in New Zealand maintained growth in the first half of the year with relatively stable
demand.
(4) The Asian market:
① The Indian market was affected by resurgence of COVID-19 at the end of the first
quarter and the foot traffic in physical stores was only 50% of usual in the second quarter.
② Pakistan has actively promoted vaccination, and its economic environment is improving.
Home appliance sales volume increased by 5% in the first half of the year.
③ Sales of refrigerators in Vietnam dropped by 4% and washing machines remained the
same, while air-conditioners dropped by 8%. Resurgence of COVID-19 in Thailand led to
economic slowdown and extension of emergency decree to 31 July had a negative impact on
the market momentum. In Indonesia, sales of refrigerators and washing machines increased
by 5% and 13.5% respectively, while air-conditioners dropped by 18%.
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④Sales of white goods fell by 1% in Japan, but COVID-19 has spawned new demand for
large-capacity, healthy cleaning and fresh-keeping products.
Business Review
In the first half of 2021, the Company’s revenue amounted to RMB111.619 billion,
representing an increase of 16.6% and 11.6% as compared to the corresponding periods in
2020 and 2019, excluding the disposal of COSMOPlat (completed in 2020) and RRS
Logistics (completed in 2019), revenue growth would have been 27.2% and 22.7% as
compared to the corresponding periods in 2020 and 2019. The rapid growth was mainly
attributable to the Company’s focus on promoting high-end brand, scenario brand &
ecosystem brand; global integration and digital transformation
During the reporting period, net profit amounted to RMB6.938 billion, representing an
increase of 92.1% and 12.2% as compared to the corresponding periods in 2020 and 2019,
and net profit attributable to owners of the parent company amounted to RMB6.852 billion,
representing an increase of 146.4% and 35.5% as compared to the corresponding periods in
2020 and 2019. Despite inflation in raw materials and components, the Company’s gross
profit margin grew 2.1 percentage point reaching 30.1%. The growth was mainly attributable
to the increasing proportion of high-end products, the continuous optimization of supply
chain and disposal of low margin business. The Company’s selling and administrative
expense ratio was 15.0% and 4.5% respectively. Exclude the disposal of COSMOPlat in the
first half of 2020, the selling and administrative expense ratio would have decreased by 1.6
percentage points and 0.7 percentage points as compared to the corresponding period in 2020
respectively (If the revenue from COSMOPlat was included in the first half of 2020, the
selling and administrative expense ratio would have been 15.2% and 4.8% respectively.)
Cost optimization was mainly attributable to digitalization in China, growing economies of
scale and improvement of operational efficiency overseas.
In the first half of 2021, the Company’s net cash flow from operating activities amounted
to RMB8.424 billion, representing an increase of RMB8.968 billion and RMB4.804 billion
as compared to the corresponding periods in 2020 and 2019, with net cash flow to net profit
ratio was 1.23. The improvement was mainly attributable to the rapid growth in net profit
and the enhancement of operational efficiency.
(I) Smart Home Business in China
In the first half of 2021, revenue from smart home business in China amounted to
RMB57.461 billion, representing an increase of 29.9% as compared to the corresponding
period in 2020. Operating profit amounted to RMB3.87 billion, representing an increase of
50.1% as compared to the corresponding period in 2020. The growth was attributable to
enhanced competitiveness across the board, 74.4% revenue growth of Casarte brand and
accelerated digital transformation.
1. Household Food Solutions (Internet of Food)
(1) Refrigerators/Freezers Business
In the first half of 2021, revenue from the refrigerators/freezers segment amounted to
RMB19.189 billion, representing an increase of 30.7%. Among which, the growth of Casarte
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was 52.9%, and its revenue contribution reached 16.0%, representing an increase of 2.6
percentage points. According to CMM, the Company’s market share online and offline
reached 38.6% and 41.4%, representing an increase of 3.4 and 1.7 percentage points as
compared to the corresponding period last year, Casarte’s market share reached 13.9%,
representing an increase of 2.6 percentage points as compared to the corresponding period of
last year.
During the post pandemic period, there was an increasing demand for healthy diet, and
enhanced food preservation. By consolidating global resources, optimizing the supply chain,
upgrading technology and publishing the cold storage/frozen cell-class fresh-keeping
standard & built-in industry standard 2.0, the Company achieved 46.7% market share offline
in products priced above RMB10,000, representing an increase of 2.8 percentage points as
compared to the corresponding period of last year. During the June 18 Festival, over 30,000
units of Casarte Yuanshi ( 原 石 ) series which focus on innovative technology and natural
aesthetics were sold, while Homey 505 & 506 series ranked first in products priced above
RMB10,000. In addition, benefiting from global integration in R&D, production and supply
chain management, export revenue of products with a unit price of over US$1,000 and
1,000 grew by 200% and 128% respectively, demonstrating enhanced competitiveness of
large-capacity T door and French-style refrigerators. In Europe, Haier’s market share
increased by 1.3 percentage points as compared to the corresponding period of last year, and
we were also the fastest growing refrigerator manufacturing in the UK, Spain and Italy.
In the first half of the year, the Company led the formulation of IEC63169, the industry’s
first international standard for food preservation, Haier also applied for 449 invention patents.
In April 2021, the Company received seven iF Design
Awards in Germany for Casarte Italian-style refrigerator, Casarte Homey series refrigerator,
Haier 505T refrigerator, Leader’s customized refrigerator, Haier’s scenario-adapted
refrigerator, Leader’s Internet refrigerator and Haier’s smart large-screen refrigerator,
making Haier the company with the largest number of awards within refrigerator industry.
(2) Kitchen Appliances Business
During the reporting period, revenue from kitchen appliances segment in China amounted to
RMB1.785 billion, representing an increase of 40.8% as compared to the corresponding
period in 2020. Among which, Casarte’s kitchen appliances revenue increased 164.5% as
compared to the corresponding period of 2020, and its revenue contribution amounted to
21.1%, representing an increase of 10.6 percentage points.
According to CMM, in the first half of the year, the Company’s market share was 6.9%,
representing an increase of 0.8 percentage points. Among which, Casarte’s share was 2.6%,
representing a 73% increase or 1.1 percentage points expansion. The Company’s market
share online remained flat at 5.6%.
During the period, the Company focused on the development of high-end, complete sets and
smart kitchen, continued to consolidate kitchen appliance technologies from GE Appliances,
Fisher&Paykel in order to build user recognition. The Company launched C6 “Galaxy”
series under Casarte brand, with 114 patents and 5 breakthrough technologies, including (1).
large range hood that pioneered the smart 12-square “effective air volume” technology. the
constant air volume function enables effective extraction of smoke by sensing the pressure
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from ventilation pipe and adjust the speed of extraction by utilizing the infrared smoke
tracking technology. (2). One-pot same-temperature gas stove that pioneered the
“simultaneous five-ring fire” function, with 40% increase in heated area, when cooking
dumplings, dough will not break nor stick to the pot. (3).Chef oven pioneered self-cooking
technology, with ultrahigh temperature at 300 ℃, pizza can be thoroughly baked in 3
minutes, and baking can be stopped automatically once the food is ready. (4). Casarte’s
dishwasher drawer does not only accommodate tableware up to 265mm in diameter, it also
pioneered the vertical moving spray system, making it easier for consumers without having
to bend over. (5) Casarte pioneered the food-grade disinfection cabinet targeting 10 types of
bacteria and viruses, and took the lead in formulating medical-grade disinfection standards.
The product offers the industry’s fastest disinfection of 15 minutes at room temperature, it
can also disinfect fresh & dry food ingredients as well as degrade pesticide residues at room
temperature.
In Russia, the Philippines, the Middle East and Africa markets, Haier’s export kitchen
appliances business maintained a good growth momentum, and the Company ranked among
the top three in the Philippines.
(3) Ecosystem of the Internet of Food
The Internet of Food focuses on providing consumers with healthy dining experience. Under
“smart device + chef + pre-prepared dishes” model, together with China Cuisine Association,
the Company created digital recipes with more than 100 chefs from 23 provinces and cities,
so gourmet dishes are prepared and home delivered, so users can enjoy healthy quality food
with their families at home.
2. Household Clothing Solutions (Internet of Clothing)
(1) Washing Machine Business:
During the period, revenue from washing machine business amounted to RMB12.958 billion,
representing an increase of 24.4% as compared to the corresponding period of last year. At
the same time, online and offline retail market share reached 40.6% and 42.2% respectively,
representing an increase of 1.3 and 3 percentage points as compared to the corresponding
period of last year.
The growth was driven by consumption upgrade as the Company captured post pandemic
demand for large-capacity, partition washing, disinfection and sterilization functions as well
as dryers.
In response to users’ concern of removing stubborn stains, reducing discolouration and the
difficulty in working out the right amount of detergent for each wash, the Company
cooperated with the detergent industry to launch the detergent cartridge series. Through
“professional washing and care + special detergent + smart dispensing”, providing users with
bright colour care and opportunity to purchase detergent. Promoted by growing demand for
dryers, the Company launched washing & drying integrated machine and Zhongzihemei (中
子和美) series of Casarte. The height of the machine is reduced to 1.5m to save space. Upon
completion of washing in the lower drum, the upper drum will immediately start to pre-heat,
thereby shortening drying time. Our leadership was consolidated as market share in front
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loading washing machines priced over RMB10,000 grew 2.6 percentage points reaching
78.3%.
In order to address demand in drying large items, delicate items and reducing crease, the
Company developed industry leading technologies including independent fan, hybrid fast
drying and smart wind speed control, which have effectively improved drying experience.
Sales of dryers exceeded 120,000 units during the period, representing an increase of 227%
as compared to the corresponding period of last year. Market share went up to 27% online
and 31.9% offline, representing an increase of 11.9 and 18.7 percentage points as compared
to the corresponding period of last year.
Despite significant pressure caused by the resurgence of COVID-19 in South and Southeast
Asia, currency inflation and surging shipping cost, the washing machine segment adhered to
differentiated high-end brand strategy, optimized product mix, developed e-commerce
channels and captured the increasing demand for large-capacity washing machines to
maintain a stable growth in export revenue.
(2) Internet of Clothing:
During the reporting period, the Company remained focused on meeting consumers demand
with smart solutions that caters for laundry, care, storage and styling.
With the launch of 1+N+ecosystem model, stores from our distribution network were able to
explore new growth opportunities by providing one stop solution of laundry, care, storage
and styling services, together with partners across 9 disciplines including apparel, textile
luxury goods, hotels and property developments, the Company continued to lead the
transition from individual industry’s singular service offering towards comprehensive
ecosystem-based scenarios.
During the reporting period, the Company signed up 3,000 laundry outlets, launched Mr.
Wash Stores, formed partnership with laundry and clothing specialists including JShine(潔
神), Saint Angelo (報喜鳥) and Mendale (夢潔 ) and the total number of Internet of Clothing
outlets reached over 4,000.
3. Household Air Solutions
During the period, revenue of air-conditioners segment amounted to RMB17.645 billion,
representing an increase of 31.7% as compared to the corresponding period last year.
(1) Household Air-conditioners Business:
The Company adhered to offering healthy and smart products while accelerating network
digitalization. According to CMM, in the first half of the year, the Company’s market share
offline and online reached 15.88% and 13.2%, representing an increase of 1.83 and 1.7
percentage points as compared to the corresponding period of last year. Through continuous
expansion of Casarte’s product portfolio and network, our share in the high-end market
(hanging machines priced above RMB4,000 and standing machines priced above
RMB10,000) reached 19.2%, representing an increase of 4.3 percentage points as compared
to the corresponding period of last year.
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Leveraging multiple brand portfolio, the Company created differentiated experience
for users, built market reputation and established a solid foundation for development.
In the first half of the year, revenue of Casarte’s air-conditioners increased by 124.6% as it
adheres to original technology in creating “eco-breathing and exclusive comfort” experience.
During the reporting period, Casarte’s product series expanded to 6, fully covering the high-
end price range. The Company also launched the Galaxy series air-conditioner, equipped
with smart voice control and two-way constant temperature technology to balance indoor
temperature and reduce the temperature difference to within 0.5C after 3 minutes from
switching on. 189,000 units have been sold, contributing to the doubling of Casarte’s
revenue and 1.6 percentage points increase in its market share. In addition, Haier’s air-
conditioner focuses on creating smart and healthy experience with rapid product upgrades. It
launched the Thor sleep air- conditioner that connects with the smart pillow when adjusting
room temperature. 36,000 sets were sold within one and a half month,. contributing to 4
percentage point increase in market share of products priced above RMB3,500, and drove
the share of products priced above RMB3,500 to over 30% in 13 regions.
The Company improved the user acquisition and conversion with measures including (1)
integrate the management of online channels with physical network to improve store layout
and marketing activities, thus increasing same store sales performance; compared to the
beginning of the year. the number of sales outlets increased by 8,000. (2) promote the
presence in home improvement markets. (3) accelerate retail transformation with strategies
such as reaching out to village and replacing old appliances for new, in order to maintain
close interaction and increase user recognition.
The export revenue of air conditioners maintained rapid growth. Despite the resurgence of
COVID-19, overseas teams closely captured market demand with upgraded products,
including UVC module with TEXCELL certification in France and well received by
European market. According to GFK, the Company’s market share in air conditioners
became no. 1 in Thailand in addition to being number 1 in the US, Pakistan and Russia.
(2) Commercial Air-conditioners Business
In the first half of the year, the Company customized scenario-based commercial air
conditioners solutions to accelerate growth. Our market share reached 11.5% in China,
representing an increase of 0.7 percentage points as compared to the corresponding period of
last year. The Company also led the market in replacement multi-split system, rail transit and
coal-to-clean energy transition. In the first half of the year, market share of our export
business was 14.6%, representing an increase of 1.7 percentage points as compared to the
corresponding period of last year.
With its innovative products and scenario solutions the Company continued to lead the
industry development in IoT based central air- conditioners. The Company made major
breakthrough with oil-free, energy-saving technology and IoT based AI technology, both
were highly recognized by the market. (1) The Company also launched the X+ series
magnetic levitation unit, which saves 25% of occupied area as compared to the previous
generation, and increases energy efficiency by 7%. It can achieve a maximum capacity of
3,600RT (refrigeration tons), with coverage from 15,000 square meters to 120,000 square
meters. Through dual air and refrigerant technologies, the cooling water temperature can be
reduced to 10°C. Haier IoT cloud platform facilitate its remote control, fault diagnosis and
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real-time interaction. It is especially suitable for manufacturing premises and data centres
and the unit has been installed in projects for Guangzhou Metro, Chongqing Metro, Bangkok
Airport, Goertek and Luxshare, with its market share ranking first in the world. (2) The
business of multi-split air-conditioner system focuses on innovation and energy-saving
technologies, with remote viewing, control and IoT billing. At present, it has been
successfully implemented in projects including Jiaodong International Airport, Tibet
University and Shanghai Research Institute of Building Sciences. (3) The Company launched
“Yujia” (御家), a “forest-breeze” (森林風) new product, equipped with self-balance of
temperature and humidity, nano plasma cluster ion sterilization, 3D sterilization chamber,
smart wind sensor and oxygen-enriched fresh air technologies for household central air
conditioning system. The “3D sterilization chamber” module enables self-cleaning
sterilization, 56°C disinfection and UVC deep sterilization. 5G module enables remote
control of the device without Internet connection, a function particular users during home
renovations. (4) The Company also launched the VC-B series of air-conditioner with
integrated floor-heating that operates in –30℃environment.
4. Household Water Solutions
The water heaters and water purifiers business are committed to providing users with safe,
smart and comfortable household water solutions. The segment revenue amounted to
RMB5.885 billion, representing a high growth of 31.3%.
(1) Water Heaters Business:
During the period, the water heaters business consolidated its leadership as market share
offline and online reached 27.1% and 30.9% respectively, representing an increase of 3.6 and
5.1 percentage points as compared to the corresponding period of last year. Casarte water
heater grew 87.6% in revenue and 4.2 percentage points in market share through utilizing
ceramic heating chamber, closed stable combustion chamber and gas-electric hybrids.
Through cooperating with B.Duck IP, Leader introduced the concept of happy bath & enjoy
life and re-established itself as brand for youngers generations by utilizing seamless inner
tank (金剛無縫膽) &NFC one touch technology as well as stylish designs with colourful
lightings.
According to CMM, the Company’s market share in electric water heaters online and offline
grew 4.2 and 2.5 percentage points reaching 41.4% and 39.5% respectively, which were also
1.5 and 1.44 times the size of runner up. During the reporting period, three new electric
water heaters were launched featuring crystal inner tank, ceramic heating chamber and
macaron colour themes. Casarte’s Galaxy series was the industry’s first water heater without
magnesium rod, as it uses a crystal inner tank to eliminate limescale, rust and corrosion, and
it has obtained the NSF certification for bathing and drinking.
In the first half of 2021, revenue of Haier’s gas water heaters grew by 78%, and with Casarte
brand doubling in revenue. According to CMM, the Company’s market share online and
offline reached 22% and 19%, respectively, representing an increase of 7.8 and 4.8
percentage points as compared to the corresponding period of last year. The Company
pioneered the gas-electric hybrid technology and obtained the industry standard certification
from China Household Electrical Appliances Association, in addition, the exterior design of
the gas-electric hybrid CT7 unit won the 2021 Red Dot Design Award in Germany.
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In order to meet post pandemic demand, Haier’s air-powered water heaters accelerated the
development of high water temperature and sterilization products. In the first half of the year,
Haier led the industry with 60% market share offline and 63% online while nine of our
products made it to the top 10 best sellers.
(2) Water Purifiers Business
According to CMM, Haier water purifiers grew by 19.7% online with market share of 10.9%,
ranking second in the industry , while the growth offline was 7.8% and market share
increased by 0.7 percentage point as compared to the corresponding period of last year.
During the period, the water purifiers segment promoted Casarte’s Yunzun ( 雲 鱒 )mineral
water purifiers and offered the solution of strontium-rich mineral water to meet users’
demand for healthy water, and developed partnerships with the leading property developers
by leveraging on BWT’s brand strengths in whole house water solutions.
Internet of Water Business
During the reporting period, The Company provided one-stop solution for household water
purification, water softening, heating and hot water. In addition, Casarte’s heating unit is
equipped with remote-control enabled pre heating and scheduled heating, making it more
environmentally-friendly and energy efficient.
5. Distribution network in China
During the reporting period, the Company achieved solid revenue growth, continuous market
share expansion and efficiency improvement through digitalization, implementation of
Three-Winged Bird channel brand and expansion of Casarte brand.
In the first half of the year, the Company focused on promoting digitalization of sales,
services and supply chain with measures including the establishment of a middle platform
that facilitates social marketing etc., helping sales team mobilizing resources and managing
traffic. At the same time, the Company made use of big data analysis and modelling to
encourage repeating purchase. In addition, the Company launched training and resource
management tools online to improve efficiency and reduce operating costs. Digitalized tools
have also been implemented in dispatching and managing service coverage, as a result
service cost went down by 0.4 percentage point.
The Company actively expanded its distribution network. As of the end of June 2021, 382
Three-Winged Bird 001 stores have been established, and formed alliance with 1,600 outlets
offering appliance and decoration services in home improvement markets across China. (2)
The Company introduced services such as whole house refurbishment, partial refurbishment
and customized home appliances to offer users with smart home full-scenario solutions
including kitchen, balcony, bathroom, living room, bedroom as well as household air, water
and household smart solutions, so as to promote sales of smart product sets, which grew by
39% as compared to the corresponding period of last year. Three Winged Bird’s kitchen
business has recruited more than 100 designers to develop products and smart scenario
packages, and launched kitchen scenarios based on user groups, functional needs and
decorating styles targeting the elderly, small family and newlyweds with smart elderly
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kitchen, smart baby-friendly kitchen and smart trendy kitchen as well as kitchen upgrade
packages to help the stores shift from selling single product to promoting scenario solutions.
The average ticket price tripled to approximately RMB40,000. (3) The Company developed
the Three-Winged Bird APP, which integrates designers, home improvement, home
furnishing and building companies, so as to provide users with one-stop personalized
solutions covering design, planning, renovation and delivery.
Casarte continued to expand its leading advantages in the industry. In the first half of the
year, its revenue increased by 74.4%. Casarte developed 2,589 sales outlets in core shopping
area and home improvement markets. In addition to offering exquisite high-end seven-star
services, it provides scenario solutions ranging from “minor refurbishment to major kitchen
balcony and bathroom renovation, balcony and bathroom”. In the first half of 2021, Casarte
memberships increased by 180,000 with exclusive rewards and service offerings.
The Company’s e-commerce business maintained rapid growth. According to AVC, the
Company’s online retail sales amounted to RMB32.9 billion, representing an increase of
41%, ranking first in the high-end segment. (1) The Company offered exclusive customized
Casarte’s products to meet the demand of high-end user online. The Company improved
users’ experience and recognition with Casarte’s exclusive customer service and “one-stop
delivery and free installation”, as well as scenario interaction and living stream. Casarte’s
retail sales increased by 135%. (2) The Company actively increased presence on Douyin(抖
音) and Kuaishou（快手）, and interacted with young users through innovative videos, self-
hosted livestreams and celebrity-hosted livestreams, with an increase of 3.5 million fans on
Douyin/Kuaishou, Haier ranked first in the number of fans on Douyin platform within home
appliances industry.
The franchise store channel has benefited from the Company’s effort in establishing unified
warehouse and distribution system and the implementation of Yilihuo（易理货） digital
tool. It has maintained rapid growth despite unfavourable environment offline. Distributors
are encouraged to expand presence in home improvement markets in order to capture
changing demand.
6. Smart Manufacturing
The Company has built 17 smart factories, two of which were named lighthouse factories.
With its user-oriented mass customization model, the Company has implemented an
innovative, fully digitalized and efficient collaborative manufacturing system, enabling the
integration of factories, suppliers and users, thereby quickly satisfying the needs of users for
complex under multiple scenarios. In the first half of 2021, 4 smart factories including
Qingdao Sino- German washing machine, Qingdao Sino-German water heater, Huangdao
refrigerator and Tianjin washing machine factories were selected as China’s top 100
benchmark smart factories. Hefei refrigerator factory and Laiyang kitchen appliance smart
factory took the lead in practising the in-depth integration of new generation AI technology
and manufacturing, ranking among top 5 in the list of “2021 Industry 4.0 Innovation Top 50”,
making Haier the only company that had two factories in the list.
The Company continued to promote lean production, and improve supply chain efficiency.
UPH (units per hour) increased by 24% as compared to the corresponding period of last year,
and inventory turnover days of finished products optimized by 20% as compared to the
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corresponding period of last year. Product quality also enhanced by 26% as compared to the
corresponding period of last year. The Company further optimized efficiency with measures
by consolidating nationwide inventory management, upgrading APS order management
system and increasing the proportion of suppliers capable of centralized delivery by 30%.
(II) Overseas Home Appliances and Smart Home Businesses
During the reporting period, the Company’s overseas sales revenue grew 23.4% to
RMB56.916 billion; operating profit grew 113.4% to RMB3.22 billion and operating profit
margin reached 5.7%, representing an increase of 2.4 percentage points as compared to the
corresponding period in 2020. The strong growth was driven by our continued effort in
building a seven-brand portfolio with particular focus on premiumization and experience
enhancement, seizing the opportunities online and localizing operations that captures current
momentum while unlocking future growth potentials.
1. The US Market
In the first half of this year, with the RenDanHeYi transformation, each microenterprise at
GE Appliances actively provided the market with innovations, seized opportunities such as
strong demand in the North American market, and responded to challenges such as the
shortage of raw materials and the shortage of international logistics. Thanks to the
unremitting efforts of the team, GE Appliances achieved record growth of revenue and profit
in the North American market, with revenue up 19.8% reaching RMB35.324 billion. The
success of premium brands and high-end products is the key to winning the market.
During the reporting period, GE Appliances continued to accelerate the expansion of
premium brands and develop the scenario-based home appliance business to meet consumer
demand after the pandemic. Products such as Ultra-Fresh Front Load Laundry, Multi-door
Refrigerator, and Front Control Range were well recognized by users, and premium brands
such as Café Profile and Monogram experienced rapid revenue growth. GE Appliances
launched industry-first Over-The-Air software upgrade by adding air-fry function to existing
ranges at consumer homes, and kicked off the disruptive experience marketing of
“Appliances Are Never Outdated, and We Are Better When Connected”, which won
recognition and praise from customers and users. It is not only a revolutionary change in
hardware upgrades, but also industry leading ecological transformation based on the Internet
of Things. During the reporting period, GE Appliances was selected as the Smart Appliance
Company of the Year by IoT Breakthrough for the third consecutive year.
Global collaboration and integration within Haier family are the keys to coping with material
inflation, shortages of parts and components and logistics cost pressures. The rapid response
of the Global Procurement Platform in terms of resource coordination, supplier and parts
sharing helped GE Appliances achieve double-digit production output growth despite
challenges such as extreme weather in Texas. In response to raw material inflation, GE
Appliances also launched many collaborative procurement projects, with significant cost
saving benefits.
During the reporting period, GE Appliances once again achieved a perfect score on the
Human Rights Campaign’s Corporate Equality Index (CEI), earning the designation as a
“Best Place to Work for LGBTQ Equality” for the fourth consecutive year.
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2. The European Market
During the period, the Company’s sales revenue from the European market amounted to
RMB9.094 billion, representing an increase of 34.9% as compared to the corresponding
period of last year, continued to ranked fifth in overall market share, with leading position in
several segments, including first for four consecutive years in air-conditioner in Russia, first
in multi-door refrigerator in Germany, France, Spain, Italy and Poland, first in washer-dryer
combo in the Czech Republic, first in wine cabinet in the UK and ranked first for two
consecutive years in washing machine, dryer and washer-dryer combo segments in the UK.
At the same time, the Company has received several awards, including Red Dot Design
Award of Hoover air purifier in Germany; in the UK, Haier Smart Home was nominated as
the fastest growing Chinese company by Grant Thornton, while Hoover & Candy were
named the six best dryers in 2021 by HomeStyle Magazine; in Italy Haier Smart Home was
listed among the five best online washing machines by ELLE DECOR Magazine. At the
same time, Candy has obtained the highest level A certification under the EU’s new energy
efficiency standard.
During the period, the Company further implemented the “high-end branding” strategy in
Europe, and steadily promoted the launch of multi-door refrigerators, high-end large-
capacity washing machines and UVC healthy air conditioners. The Company fully promoted
the strategic cooperation with local mainstream distributors and e-commerce channels to
outgrow the industry.
At the same time, Haier made full use of the synergy of global procurement and R&D to
effectively alleviate the impact of chip shortage. Equipped with the leading smart
technologies, the new refrigerator factory in Romania is expected to be recognized as a
lighthouse factory and it will specialize in the production of energy saving, smart high-end
series.
3. The Australian and New Zealand Markets
In the first half of 2021, sales revenue from the Australian and New Zealand markets
amounted to RMB3.459 billion, representing an increase of 38.6%. Profit margins continued
to increase with product optimization and cost control measures.
In March this year, the new FPA high-end front-loading washing machine achieved
remarkable results, and the heat pump dryer became the No. 1 in HVN, the largest channel,
upon launching. At the same time, the Company continued to launch built in kitchen
appliances and enriched the selection of product sets. The kitchen scenario display and
digital experience have been well recognized by high-end retail customers. The revenue of
the two brands from the builders channel also grew steadily.
Despite sharp rise in global shipping costs and the resurgence of COVID-19, the Australian
and New Zealand team closely coordinated with global supply chain platform and adjusted
go-to market strategies in order to maintain rapid growth.
4. The South Asian Market
During the reporting period, the Company’s sales revenue amounted to RMB3.926 billion,
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representing a year-on-year increase of 44.9%. Of which:
(1) Market share in India increased by 2 percentage points to 9.7% as the Company
promoted network expansion, consolidated product leadership and accelerated localization of
the supply chain management with measures including increasing the distribution network
coverage in top 50 cities from 45% to 60%, improving retail capabilities through delivering
product samples to stores and conducting weekly reviews. The Company also launched 30
new products, including side-by-side T door refrigerator and 525 front-loading washing
machine, so as to enhance high-end consumer recognition. ③ The Company overcame the
difficulties brought by the resurgence of COVID-19 and continued the construction of
Northern Industrial Park targeting to finish building by the end of the year. Once the new
facility ramps up, the Company will be better positioned to meet market demand while
optimizing procurement cost and logistics efficiency.
In Pakistan, the Company’s overall market share reached 35% with first position in
refrigerators, freezers, air conditioners and washing machines. During the reporting period,
the Company further improved the products portfolio, actively expanded online & offline
presence and promoted smart scenario implementation. 3 smart home appliance experiential
stores and 43 smart pop-up stores were opened to provide consumers with one-stop scenario
solutions, accelerating Haier’s transformation from a high-end brand to a scenario and
ecosystem brand.
5. The Southeast Asian Market
During the reporting period, the Company’s sales revenue amounted to RMB2.611 billion,
representing a year-on-year increase of 23.8%. Faced with weak market demand in Thailand,
the Company made quick adjustments, as a result, revenue from air-conditioners increased
by 17% and its market share jumped to No. 1 in May and June. In Vietnam, the market share
of Haier’s refrigerators increased by 2.3 percentage points as compared to the corresponding
period of last year, with 4.7 percentage points increase in high- end T door units. The
Company also promoted retail transformation and actively expanded the lower-tier network.
In the Vietnam, the Company improved user traffic acquisition and conversion through store
standardization and consumer interaction in a distribution network consists of 2,100 stores
6. The Japanese Market
In the first half of the year, the Company’s sales revenue amounted to RMB1.778 billion,
representing a year-on-year decrease of 1.1% in Japan or 6.6% growth in local currency.
Market share of refrigerators, freezers and washing machines combined reached 13.8%,
jumping to the third in the industry, of which, refrigerators and freezers led the industry with
15.3% market share while 400L refrigerator and variable frequency washing machine
significantly outgrew the industry.
During the reporting period, Haier made efforts to increase brand recognition and met with
users on TV for the first time with videos on popular channels in March. The Company also
cooperated with KOLs on YouTube and Instagram to create scenario- based high end
product experience.
AQUA brand introduced several new products including ultrathin TZ refrigerators, Delie
refrigerators and the industry’s only ultrasound Prette washing machines, while re-
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establishing itself with videos to interact with users online and offline throughout Japan.
In addition, community-based washing business has cooperated with partners including
FamilyMart, P&G, ENEOS and MUJI to establish more than 100 multi-scenario experiential
stores that offer services in laundry, food and transportation, creating a more convenient
experience for users.
Plans for the second half of the year
In the second half of 2021, the Company will continue to promote high-end brands, scenario
brands and ecosystem brands, grow the value of scenario-based product sets, and offer users
with solutions in apparel, food, lifestyle and entertainment, while accelerating digitalization
and enhancing operational efficiency.
II. Analysis on core competitiveness during the reporting period
√ Applicable □Not Applicable
The Company has established a solid 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 unified global platform,
digitalisation-driven efficiency reform, technical strength and innovation ability. As designed
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 the 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 the first half of 2021, 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 deliver to users by the Company from a
single product to provision of a full-suite solution.
(2) Dominance in the 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
a 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 the first half
of 2021, 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,
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Haier Smart Home Co., Ltd
laundry appliances, air-conditioners and other items in the 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 78% and 37.9% respectively, and
the share of the air-conditioners in the Chinese market above RMB15,000 reached 37.98%.
The offline market average price of refrigerators, air conditioners and washing machines was
two to three times the average industry 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, the 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 demonstrates strong performance in
overseas markets. The Company focuses on developing overseas markets with our own self-
managed brands. The Company’s business strategy has enabled us to establish a multi-brand,
cross-segment and cross-regional three-in-one model for R&D, manufacturing and
distribution to achieve self-developing, interconnectivity and collaborative operations.
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 integrates into local market and culture, and has established a
corporate image well received by the local society in overseas regions where the Company
operates.
In the first half of 2021, 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.
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(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 of 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
received 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 the improvement of integration.
(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 share the successful 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 common 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 a 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.
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Global collaboration in procurement: The Company’s global procurement activities
are guided 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 visualised 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 has 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.
(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 innovations 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 currently has over 120,000 experts and connects to more
than 1 million world-class resources partners to cover over 100 technical fields. The resource
partners can thereby participate in our user-centered iterative R&D process.
In 2021, Haier Smart Home ranked first on the global smart home patent application
ranking list for five consecutive occasions with 1,868 home appliance patents; Haier Smart
Home won 1 more awards at the 22st Chinese Outstanding Patented Invention Golden
Award Presentation. We won a total of 10 national patented invention awards, coming first
in the industry. As a pioneer of standards in the home appliance sector, Haier Smart Home
participated and led the establishment/amendment of 74 international standards and 570
national/industrial standards. In 2021, experts from Haier were elected as members of the
Council Board (CB) of the IEC, rendering Haier Smart Home the only enterprise in the
world to have representatives in both the CB of the IEC and the Market Strategy Board
(MSB) of the IEC, which are the two most authoritative regulatory bodies. Domestically, as
the sole initiating entity in the home appliance industry, Haier Smart Home and
heavyweights in the domestic intelligent interaction industry jointly established the Open
LInk Association (OLA) to co-develop technically advanced IoT connection standards and
industrial ecosystem which cater to the characteristics of China’s industry landscape, thereby
promoting healthy industry development.
(10) Honest corporate culture and win-win RenDanHeYi management model
The DNA intrinsic 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
the foundation, which is imperative for Haier’s continuous success. What makes Haier
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evolved from a close to bankruptcy small collective enterprise to 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 the Internet innovation wave.
Haier’s win-win view under the “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
gateways”, promotes innovation and improves corporate efficiency. To date, this model has
been treated as a research object by various companies and research institutions.
III. Discussion and analysis on operations
Please refer to “I. Introduction of the industry where the Company operates and its
major business during the reporting period “ of this section.
Significant changes in the Company’s operating conditions during the reporting
period, and matters occurring during the reporting period that have and expected to
have a significant impact on the Company’s operating conditions
□Applicable √Not Applicable
IV. Major operations during the reporting period
(I) Analysis of principal business
1. Table of movement analysis on the related items in financial statements
Unit and Currency: RMB
Corresponding
Items Current period Change (%)
period of last year
Operating revenue 111,618,822,064.7
95,728,097,106.65 16.60
3
Operating cost 78,071,651,525.66 68,934,592,121.68 13.25
Selling expenses 16,730,914,492.75 14,526,912,493.29 15.17
Administrative expenses 5,033,576,083.72 4,608,308,707.03 9.23
Financial expenses 295,660,086.07 701,520,565.00 -57.85
R&D expenses 3,738,734,614.40 2,939,733,549.14 27.18
Net cash flow generated
8,423,823,726.89 -542,919,257.40 1,651.58
from operating activities
Net cash flow generated
-3,234,885,281.31 -2,061,783,383.42 -56.90
from investing activities
Net cash flow generated
-9,607,019,105.46 10,579,538,929.35 -190.81
from financing activities
Investment income 1,136,683,667.22 756,782,922.79 50.20
Income from change in fair
64,269,511.32 -30,987,103.15 307.41
value
Loss on credit impairment -44,031,423.21 -108,905,504.07 59.57
Gain from disposal of assets 142,414,954.25 -14,442,406.46 1,086.09
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Income tax expense 1,523,183,264.40 661,226,873.34 130.36
Analysis of the reasons for the indicators with significant changes:
1) Reasons for changes in financial expenses: decreased by 57.85% as compared to the
corresponding period, primarily attributable to reduction in interest expenses;
2) Reasons for changes in net cash flow generated from operating activities: increased by
1651.58% as compared to the corresponding period, primarily attributable to increase in
operating profit and operating efficiency enhancement for the period;
3) Reasons for changes in net cash flow generated from investing activities: representing a
change of -56.90% as compared to the corresponding period, primarily attributable to cash
outflow incurred in purchase of wealth management products for the period;
4) Reasons for changes in net cash flow generated from financing activities: decreased by
190.81% as compared to the corresponding period, primarily attributable to repayment of
borrowings and decrease in newly raised borrowings for the period;
5) Reasons for changes in investment income: increased by 50.20% as compared to the
corresponding period, primarily attributable to increase in income from long-term equity
investments and gain or loss from expiry of forward lock-exchange instruments for the
period;
6) Reasons for changes in income from change in fair value: increased by 307.41% as
compared to the corresponding period, primarily attributable to change in fair value of
trading financial products;
7) Reasons for changes in loss on credit impairment: representing a change of 59.57% as
compared to the corresponding period, primarily attributable to decrease in bad debts losses
on accounts receivable for the period;
8) Reasons for changes in gain from disposal of assets: increased by 1086.09% as compared
to the corresponding period, primarily attributable to increase in gain from disposal of assets
by subsidiaries for the period;
9) Reasons for changes in income tax expenses: increased by 130.36% as compared to the
corresponding period, primarily attributable to increase in profit for the period as compared
to the corresponding period;
2. Detailed explanation on significant changes in the operation types and the
components of profit or sources of profit of the Company during the period
√Applicable □Not Applicable
In December 2020, the Company completed the material asset restructuring involved in the
privatisation of Haier Electronics through H Share issues, details of which was set out in the
“report on the implementation of material asset acquisition and connected transaction of
Haier Smart Home Co., Ltd.” dated 26 December 2020 of the Company. Upon completion of
the material asset restructuring, profit attributable to minority shareholders of Haier
Electronics from the original minority shareholders’ interest would be transferred to the
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Company’s net profit attributable to shareholders of the parent company. Thus, the
restructuring was one of factors in change in indicators, such as net profit attributable to
shareholders of the parent company, of the Company for the reporting period.
(II) Explanations on the major changes in profits caused by non-principal businesses
□Applicable √Not Applicable
(III) Analysis of assets and liabilities
√Applicable □Not Applicable
1. Assets and liabilities
Unit: 0’000
Percentage of
Percentage of
change in
Percentage amount at the
amount from the
of amount at Amount as at the end of the
end of the
Amount as at the the end of the end of the corresponding
Items corresponding
end of the period period over corresponding period of last
period of last
total assets period of last year year over total
year to current
(%) assets
period
(%)
(%)
Monetary fund 4,184,377.76 20.29 4,646,132.94 22.84 -9.94
Receivables 2,020,160.73 9.79 1,593,002.43 7.83 26.81
Inventory 3,350,819.01 16.25 2,944,697.34 14.47 13.79
Contract assets 24,226.59 0.12 26,341.29 0.13 -8.03
Investment real estates 2,725.44 0.01 2,838.70 0.01 -3.99
Long-term equity investment 2,258,700.71 10.95 2,156,765.85 10.60 4.73
Fixed assets 2,068,082.74 10.03 2,089,550.47 10.27 -1.03
Works in progress 502,005.56 2.43 359,690.24 1.77 39.57
Right in use assets 279,345.47 1.35 283,985.83 1.40 -1.63
Short term borrowings 1,116,011.00 5.41 768,790.82 3.78 45.16
Contract liabilities 746,655.92 3.62 704,863.77 3.46 5.93
Long term borrowings 959,029.89 4.65 1,182,141.63 5.81 -18.87
Lease liabilities 201,185.37 0.98 207,270.24 1.02 -2.94
Derivative financial assets 12,197.56 0.06 7,783.90 0.04 56.70
Other receivables 226,582.12 1.10 171,715.29 0.84 31.95
Financial liabilities held for
342.38 0.00 2,695.25 0.01 -87.30
trading
Derivative financial liabilities 9,208.14 0.04 23,958.25 0.12 -61.57
Non-current liabilities due
497,672.06 2.41 752,272.49 3.70 -33.84
within one year
Other current liabilities 49,745.94 0.24 611,205.39 3.00 -91.86
Bonds payable 42,643.68 0.21 671,350.11 3.30 -93.65
Other equity instruments 14,848.32 0.07 236,419.53 1.16 -93.72
Capital reserve 2,231,035.40 10.82 1,500,902.74 7.38 48.65
Treasury stock 179,615.46 0.87 2,889.66 0.01 6115.81
Reasons analysis of changes in indicators that change significantly:
1) Derivative financial assets increased by 56.70% as compared to the beginning of the
period, primarily attributable to fair value change in forward lock-exchange instruments;
2) Other receivables increased by 31.95% as compared to the beginning of the period,
primarily attributable to increase in other receivables;
3) Works in progress increased by 39.57% as compared to the beginning of the period,
primarily attributable to investments in factory construction;
4) Short term borrowings increased by 45.16% as compared to the beginning of the
period, primarily attributable to overseas operating capital replenishment;
5) Financial liabilities held for trading decreased by 87.30% as compared to the
beginning of the period, primarily attributable to expiry of lock-exchange instruments;
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6) Derivative financial liabilities decreased by 61.57% as compared to the beginning of
the period, primarily attributable to fair value changes in lock-exchange instruments and
interest rate swap agreements;
7) Non-current liabilities due within one year decreased by 33.84% as compared to the
beginning of the period, primarily attributable to repayment of long-term borrowings due
within one year;
8) Other current liabilities decreased by 91.86% as compared to the beginning of the
period, primarily attributable to repayment of ultra-short-term financing bonds;
9) Bonds payable decreased by 93.65% as compared to the beginning of the period,
primarily attributable to conversion of convertible bonds of the Company for the period;
10) Other equity instruments decreased by 93.72% as compared to the beginning of the
period, primarily attributable to conversion of convertible bonds of the Company resulting in
reduction in equity component;
11) Capital reserve increased by 48.65% as compared to the beginning of the period,
primarily attributable to conversion of convertible bonds of the Company resulting in
increase in share capital premium;
12) Treasury stock increased by 6115.81% as compared to the beginning of the period,
primarily attributable to repurchase of shares by the Company.
2. Overseas Assets
√Applicable □Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 9,653,733 (unit and currency: RMB0’000),
representing 46.8% of the total assets.
(2) Relevant information on overseas assets
□Applicable √Not Applicable
3. Restrictions on major assets as of the end of reporting period
Applicable √Not Applicable
4. Other explanations
Applicable √Not Applicable
(IV) Analysis of investment
1. Overall analysis on external equity investment
Applicable √Not Applicable
(1) Significant equity investment
Applicable √Not Applicable
(2) Significant non-equity investment
Applicable √Not Applicable
(3) Financial assets measured at fair value
√ Applicable Not Applicable
Unit and currency: RMB
Items Initial investment cost Source of Current purchase / Investment income Changes in fair
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funds sale during the during the value during the
reporting period reporting period reporting period
Equity instrument 139,879,387.68 440,255.20 43,521,944.78
3,061,290,481.15 Self-owned
investments
Wealth management
1,874,000,000.00 Self-owned 6,372,119.15 28,216,179.52 1,881,780.81
products
Investment funds 105,408,639.01 Self-owned 15,457,768.79
Forward foreign exchange
Self-owned 156,251,279.12 224,968,094.55
contract
Interest rate swap 13,896,465.10
Self-owned
agreement
Others 29,450,000.00 Self-owned -821,846.16
Total 5,070,149,120.16 146,251,506.83 184,907,713.84 298,904,207.87
Note: As of 30 June 2021, the aggregate balance of foreign exchange derivative
transaction amounted to approximately US$2.236 billion.
(V) Sale of material assets and equity
Applicable √Not Applicable
(VI) Analysis on major subsidiaries and Investees
Applicable √Not Applicable
(VII) Structured entities controlled by the Company
Applicable √Not Applicable
V. Other disclosures
(I) Potential risks
√ 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. 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 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.
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
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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 combined
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
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 COVID-19 outbreak. The COVID-19 outbreak 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.
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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.
(II) Other disclosures
Applicable √Not Applicable
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SECTION IV CORPORATE GOVERNANCE
I. Introduction to the general meetings of shareholders
Index for details of websites designated for Resolutions approved
Meeting Date Date of disclosure
publishing resolutions
Considered and approved the
resolutions for the amendment of the
2021 First Extraordinary For details, please refer to the Announcement on articles of association, the
Resolutions Passed at the 2021 First
General Meeting appointment of auditors, the general
Extraordinary General Meeting, 2021 First A
mandate to repurchase H share and
Shares Class Meeting, 2021 First D Shares Class
the election of additional directors
5 March 2021 Meeting and 2021 First H Shares Class Meeting 6 March 2021
2021 First A Shares Class Considered and approved a resolution
of Haier Smart Home Co., Ltd. (L2021-009)
Meeting for general mandate to repurchase H
published by the Company on the website of
2021 First D Shares Class share
Shanghai Stock Exchange (www.sse.com.cn) and
Meeting
the four major securities newspapers
2021 First H Shares Class
Meeting
2020 Annual General Considered and approved the
Meeting For details, please refer to the Announcement on resolutions related to annual report,
Resolutions Passed at the 2020 Annual General profit distribution proposal, expected
25 June 2021 Meeting, 2021 Second A Shares Class Meeting, 26 June 2021 annual guarantee/foreign exchange
2021 Second D Class Meeting and 2021 Second H operation, general mandate to issue
Shares Meeting of Haier Smart Home Co., Ltd. additional/ repurchase H/D shares of
(L2020-029) published by the Company on the the Company, Employee Stock
website of Shanghai Stock Exchange Ownership Plan and the election of
(www.sse.com.cn) and the four major securities sole director/supervisors, etc.
2021 Second A Shares newspapers Considered and approved a resolution
Class Meeting for general authorization to
2021 Second D Class repurchase H/D shares of the
Meeting Company
2021 Second H Shares
Meeting
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Preferred shareholders whose voting rights have been restored requested an extraordinary general
meeting
□Applicable √Not Applicable
Explanation of Shareholders' general meeting
√Applicable □Not Applicable
(1) The 2021 First Extraordinary General Meeting and the 2021 First A/D/H Shares Class
Meetings of the Company was held in successive order by way of on-site voting and network voting
by poll at Room B101, Haier RenDanHeYi Research Center, Haier Information Park, No.1 Haier
Road, Qingdao, the PRC, in the afternoon on 5 March 2021, considering the amendment of articles
of association of the Company and other relevant resolutions. The total number of the shares of the
Company carrying voting rights amounted to 9,284,895,068 shares (of which 6,308,552,654 shares
were A shares, 271,013,973 shares were D shares and 2,705,328,441 shares were H shares). 463
shareholders and proxies, representing 5,402,912,205 shares or 58.19% of the total number of the
shares of the Company carrying voting rights, were present at the 2021 First Extraordinary General
Meeting; 342 shareholders and proxies, representing 3,389,819,287 shares or 53.73% of the total
number of A shares of the Company carrying voting rights, were present at the 2021 First A Shares
Class Meeting; 115 shareholders and proxies, representing 136,331,271 shares or 50.30% of the
total number of D shares of the Company carrying voting rights, were present at the 2021 First D
Shares Class Meeting; 7 shareholders and proxies, representing 1,827,803,082 shares or 67.56% of
the total number of H shares of the Company carrying voting rights, were present at the 2021 First
H Shares Class Meeting. The Directors, supervisors and senior management of the Company as
well as the lawyers engaged by the Company also attended the abovementioned four meetings. The
2021 First Extraordinary General Meeting was convened by the Board of the Company and Vice
Chairman Ms. Tan Lixia, presided over the meeting. The Company had 8 Directors, of whom 2
Directors attended the meetings (Directors Liang Haishan, Wu Changqi, Lin Sui, Dai Deming, Qian
Daqun and Wong Hak Kun were unable to attend the meetings 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 abovementioned meetings and other members of senior management of the
Company were invited to attend the abovementioned meetings.
(2) The 2020 Annual General Meeting and the 2021 Second A/D/H Shares Class Meetings of
the Company was held in successive order by way of on-site voting and network voting by poll at
Room B101, Haier RenDanHeYi Research Center, Haier Information Park, No.1 Haier Road,
Qingdao, the PRC, in the afternoon on 25 June 2021, considering the annual report and other
relevant resolutions. The total number of the shares of the Company carrying voting right amounted
to 9,351,540,298 shares (of which 6,268,408,194 shares were A shares, 271,013,973 shares were D
shares and 2,812,117,411 shares were H shares). 985 shareholders and proxies, representing
6,080,584,192 shares or 64.63% of the total number of the shares of the Company carrying voting
right, were present at the 2020 Annual General Meeting. 865 shareholders and proxies,
representing 4,029,351,155 shares or 63.87% of the total number of A shares of the
Company carrying voting rights, were present at the 2021 Second A Shares Class Meeting;
119 shareholders and proxies, representing 140,727,610 shares or 51.93% of the total
number of D shares of the Company carrying voting rights, were present at the 2021
Second D Shares Class Meeting; 5 shareholders and proxies, representing 1,989,396,251
shares or 70.74% of the total number of H shares of the Company carrying voting rights,
were present at the 2021 Second H Shares Class Meeting. The Directors, supervisors and
senior management of the Company as well as the lawyers engaged by the Company also attended
the abovementioned four meetings. The General Meeting was convened by the Board of the
Company and Chairman Mr. Liang Haishan, presided over the meeting. The Company had 11
Directors, of whom 4 Directors attended the meetings (Directors Li Huagang, Xie Juzhi, Wu
Changqi, Lin Sui, Dai Deming, Chien Da-Chun and Li Shipeng were unable to attend the meetings
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due to personal engagement); the Company had 3 supervisors, of whom 1 supervisor attended the
meeting (Supervisors Wang Peihua and Ming Guoqing were unable to attend the meetings due to
personal engagement). The secretary to the Board of the Company attended the abovementioned
meetings and other members of senior management of the Company were invited to attend the
abovementioned meetings.
II. Changes in of Directors, supervisors and senior management of the Company
√Applicable □Not Applicable
Name Position Change situation
Xie Juzhi Director Election
Yu Hon To Director Election
Li Kam Fun Director Election
Li Shi Peng Independent director Election
Wu Qi Independent director Election
Tan Lix Director Resignation
Dai Deming Independent director Resignation
Liu Dalin Supervisor Election
Ma Yingjie Supervisor Election
Wang Peihua Supervisor Resignation
Ming Guoqing Supervisor Resignation
Li Pan Senior management Appointment
Li Yang Senior management Appointment
Wu Yong Senior management Appointment
Wang Li Senior management Appointment
Guan Jiangyong Senior management Appointment
Huang Xiaowu Senior management Appointment
Explanation of changes in Directors, supervisors and senior management of the Company
√Applicable □Not Applicable
In December 2020, the Company completed the major asset restructuring transaction involved in
the introduction of H-share listing and privatization of Haier Electric (01169.HK). In order to
optimize the governance structure of the new listed Company after the reorganization and integrate
advantageous resources, the Company has reorganized the Board of Directors, the Board of
Supervisors and the senior management.
III. Proposal of profit distribution or capitalization of capital reserve
Proposal for interim profit distribution and proposal for reverse conversion into share capital
Whether distributed or converted No
IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR
OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF
(I) Relevant incentive events disclosed in provisional announcements but without
subsequent development or changes during implementation
□ Applicable √Not Applicable
(II) Incentive events not disclosed in provisional announcements or with subsequent
development
Equity incentive
□Applicable √Not Applicable
Other explanations
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Haier Smart Home Co., Ltd.
□Applicable √Not Applicable
Employee stock ownership plan
√Applicable □Not Applicable
1. Partial Vesting of Employee Stock Ownership Plan and Termination of
the First Phase of Employee Stock Ownership Plan：During the Reporting period,
pursuant to the "Core Employee Stock Ownership Plan of Qingdao Haier Co., Ltd
(Draft)" (the "First phase ESOP"), the "Second Phase Stock Ownership Plan of Core
Employee Stock Ownership Plan of Qingdao Haier Co., Ltd (Draft)" (the "Second
Phase ESOP"), the "Third Phase Stock Ownership Plan of Core Employee Stock
Ownership Plan of Qingdao Haier Co., Ltd (Draft)" (the "Third Phase of ESOP"), on 15
January 2021, the Management Committee resolved that: (1) the First phase ESOP be
vested, 33 persons who pass the appraisal vest 1,783,038 shares; (2) Second Phase
ESOP be vested, 116 persons who pass the appraisal vest 1,132,832 shares; (2) Third
Phase ESOP be vested, 32 persons who pass the appraisal vest 179,351 shares.
Directors, supervisors and senior management of the Company are entitled to vest a
total of 1,339,483 shares. Any change in their stock ownership is subject to the relevant
provisions of the Rules Governing the Shares of the Company Held by Directors,
Supervisors and Senior Management of Listed Companies and Changes Thereof. The
Company has, in accordance with the aforesaid resolutions, completed the transfer of
the relevant shares on 27 January 2021 at the Shanghai Branch of the China Securities
Depository and Clearing Corporation, with an aggregate number of 3,095,221 shares.
During the reporting period, vesting of shares of the First Phase ESOP were completed
and all assets of the stock ownership plan are monetary funds. In accordance with the
relevant provisions of the First Phase ESOP, the First Phase ESOP has been
implemented and terminated. Upon completion of the liquidation and allocation of
assets, the remaining capital was remitted to the Company.
2. Termination of the Second Phase and Third Phase Employee Stock
Ownership Plan：During the Reporting period, all 721,736 and 5,374,465 shares held
by the Second Phase ESOP and the Third Phase ESOP, respectively, have been sold,
and all assets of the stock ownership plan are monetary funds. In accordance with the
relevant provisions of the Second Phase ESOP and the Third Phase ESOP, the
aforementioned plans have been implemented and terminated. Upon completion of the
liquidation and allocation of assets, the remaining capital was remitted to the Company.
3. Introduction of the new phase of A-share and H-share ESOPs: In order
to further improve the corporate governance mechanism, create shareholder value and
promote the full implementation of the Company's IoT smart household ecological
brand strategy, the Company introduced the Core Employees A Share Ownership Plan
of Haier Smart Home Co., Ltd (for Years 2021–2025) (Draft) and its Summary and the
Core Employees H Share Ownership Plan of Haier Smart Home Co., Ltd (for Years
2021–2025) (Draft) and its Summary upon the approval at the 2020 Annual General
Meeting convened by the Company on 25 June 2021. As of the date of disclosure of
this regular report, the shares pool for the A-share and H-share ESOPs for 2021 have
been established.
Other Incentives
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□Applicable √Not applicable
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Section V ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES
1. Environmental Information
(I) 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
The Company’s indirect non-wholly owned subsidiaries Zhengzhou Haier Air-
conditioning Co., Ltd. (“Zhengzhou Air-conditioning”), Foshan Haier Freezer Co., Ltd.
(“Foshan Freezer”), Hefei Haier Refrigerator Co., Ltd. (“Hefei Refrigerator”), Wuhan
Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier Freezer Co., Ltd.
(“Wuhan Freezer”) and 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 Water Heater Co., Ltd. (the
aforementioned 5 companies located in Chongqing are collectively referred to as the
"Chongqing Park Companies") are among the key emission units announced by the local
environmental protection department (according to the latest catalogue of key emission
units published by Chongqing Ecology and Environment Bureau at the end of April 2021,
three companies, namely Chongqing Haier Precision Plastic Co., Ltd, Chongqing Haier
Drum Washing Machine Co., Ltd and Chongqing Haier Washing Machine Co., Ltd, were
no longer listed as key emission units).
The main information on pollutant discharge is as follows:
（1）Zhengzhou Air-conditioning
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance of
Pollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Development Zone
Energy should 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 solids, chroma, petroleum, BOD, rate of flow and temperature.
②Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, north of the wastewater
treatment plant, pipeline discharge
④ 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:
Total Approved Whether it is
Name of Concentration
No. amount of total amount excessive
pollutant of discharge
discharge of discharge discharge
1 COD 26.66mg/L 0.65 tons 6.25 tons No
Ammonia
2 3.00mg/L 0.073 tons 0.63 tons No
nitrogen
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⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
（2）Foshan Freezer
①Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance of
Pollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Development Zone
Energy should apply for a pollutant discharge permit and detect 6 types of pollutants
(including specific pollutants) , namely, COD, ammonia nitrogen, zinc, PH, SS, suspended
solids, petroleum
②Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, south of the wastewater
treatment plant to the southeast of Fushan Sanshui District Haier Park, pipeline discharge;
exhaust emission, six dust emitting processes, eight foam generating processes, four
welding processes, one plastic injection and breaking process, two kitchens, for a total of
21
④ 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:
Total Approved Whether it is
Name of Concentration
No. amount of total amount excessive
pollutant of discharge
discharge of discharge discharge
1 COD 31 mg/L 2.57 tons 25.92 tons No
Ammonia
2 0.028mg/L 0.023 tons 2.88 tons No
nitrogen
⑤Pollutant discharge standards implemented: first standard of the second period set
forth in the “Discharge Limits of Water Pollutants” of local standard in Guangdong
Province
（3）Hefei Refrigerator
①Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance of
Pollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Development Zone
Energy should 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 solids, rate of flow, chemical oxygen demand, five-day
biochemical oxygen demand。
Exhaust gas. According to the Volatile Organic Unorganized Emission Control
Standard (GB 37822-1-2019), Development Zone Energy should apply for a pollutant
discharge permit and detect pollutants. Main types of atmospheric pollutants: particulate
matter, non-methane total hydrocarbons
②Way of discharge: continuous discharge
③Number and distribution of discharge outlets: 1 sewage, at the north entrance of the
refrigerator Park; 25 exhaust gas, above the refrigerator block A and B factories
④Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount of pollutant
discharge subject to approval for the total amount are as follows:
No. Name of Concentration Total Approved Whether it is
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pollutant of discharge amount of total amount excessive
discharge of discharge discharge
1 COD 92.044 mg/L 40.8 tons 165 tons No
Ammonia
2 10.767mg/L 4.73 tons 10 tons No
nitrogen
total
3 25.1 mg/L 11.17 tons 25 tons No
nitrogen
total
4 1.96 mg/L 0.87 tons 3 tons No
phosphorus
Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
（4）Wuhan water heater
①Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance of
Pollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Wuhan water heater
should apply for a pollutant discharge permit and detect 9 types of pollutants (including
specific pollutants), namely, COD, total zinc, suspended solids, ammonia nitrogen (NH3-
N), five-day biochemical oxygen demand, PH, anionic surface active agent, total
phosphorus, and animal and vegetable oils.
②Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the southwest of the
wastewater treatment plant, pipeline discharge
④ 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:
Whether it is
Approved total excessive
Name of Concentration Total amount
No. amount of discharge
pollutant of discharge of discharge
discharge
1 COD 30.96 mg/L 1.93 ton 9.075 ton No
Ammonia
2 9.6 mg/L 0.6 ton 0.9075 ton No
nitrogen
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
（5）Wuhan freezer
①Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuance of
Pollutant Permit - Wastewater Treatment (for Trial) (HJ 978-2018), Wuhan freezer should
apply for a pollutant discharge permit and detect 9 types of pollutants (including specific
pollutants), namely, COD, total zinc, suspended solids, ammonia nitrogen (NH3-N), five-
day biochemical oxygen demand, PH, anionic surface active agent, total phosphorus, and
animal and vegetable oils.
②Way of discharge: indirect discharge
③Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge
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④ 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:
Whether it is
Approved total excessive
Name of Concentration Total amount
No. amount of discharge
pollutant of discharge of discharge
discharge
1 COD 43 mg/L 1.97 tons 4.3628 tons No
Ammonia
2 0.082 mg/L 0.0038 ton 0.4365 ton No
nitrogen
1. Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
（6）Chongqing Park Company
①Main pollutants:
Wastewater. According to the registration and declaration of Pollutant Permit of the
PRC, 7 types of pollutants (including specific pollutants) should be tested, namely, COD、
ammonia nitrogen (NH3-N), PH, suspended solids, petroleum, animal and vegetable oil,
rate of flow.
②Way of discharge: indirect discharge
③Number and distribution of discharge outlets: three, first wastewater treatment plant,
second integrated wastewater treatment plant, the apartment wastewater treatment station,
pipeline discharge
④ 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:
Whether it is
Approved total excessive
Name of Concentration Total amount
No. amount of discharge
pollutant of discharge of discharge
discharge
1 COD 59 mg/L 33.93 tons 228.1 tons No
Suspended
2 21 mg/L 12.08 tons 177.2 tons No
solids
Animal and
3 1.24 mg/L 0.71 tons 34 tons No
vegetable oil
4 Petroleum 0.14 mg/L 0.08 ton 1.32 tons No
Integrated wastewater discharge standard (GB 8978-1996) – grade 3
2. Construction and operation of pollution prevention and treatment facilities:
√Applicable □Not Applicable
Zhengzhou Air-conditioning, Foshan Freezer, Wuhan Freezer, Wuhan Water Heater
have one, one, one and two wastewater treatment plants with a designed treatment capacity
of 550 tonnes/day, 1,800 tonnes/day, 550 tonnes/day, 300 tonnes/day and 260 tonnes/day,
respectively. There are three wastewater treatment plants in Chongqing Haier Park
responsible for collecting and treating the wastewater produced by the Chongqing Park
Companies with a wastewater treatment capacity of 3,600 tonnes/day. The construction,
maintenance and daily operation of all wastewater treatment facilities are conducted in
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Haier Smart Home Co., Ltd.
accordance with the requirements of national and local environmental laws and regulations.
Information on all wastewater discharge is subject to 24-hour online monitoring and such
monitored information is transmitted to environmental authorities in a real-time manner.
All equipment is operating normally. In addition, the Chongqing Park Companies have all
installed exhaust treatment facilities and all equipment is operating normally. Exhaust
produced is treated by the prevention and treatment facilities before compliant release and
is monitored regularly.
3. Environmental impact assessment of construction projects and other
environmental protection administrative permits
√Applicable □Not Applicable
The Company and its subsidiaries execute construction project implementation and
production in accordance with the requirements of laws and regulations and strictly comply
with the “three simultaneous” requirements of environmental protection for construction
projects in the process of environmental impact assessment, and have passed environmental
assessment acceptance and are not involved in any environmental illegal conducts such as
construction before approval.
4. Emergency plans for environmental incidents
√Applicable □Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for
Environmental Incidents in accordance with the requirements of laws and regulations and
organized drills, and continue to improve and upgrade the plans based on drill results.
5. Self-monitoring environmental programs
√Applicable □Not Applicable
The Company complies with national and local environmental standard requirements
in respect of all pollutant discharge. Wastewater collected is subject to standard treatment
and is released in a compliant manner. It is under real-time monitoring through the
automatic online wastewater monitoring system, which shares its information with Haier
Smart Energy System. In March 2017, the Company passed the upgraded certification in
relation to ISO14001 environment management system. In March 2021, a professional
certification firm was appointed to conduct a review and audit on the operation of
ISO14001 system in 2021, where satisfactory results were obtained to demonstrate its good
operating condition.
6. Administrative penalty due to environmental issues during the Reporting Period
√Applicable □Not Applicable
7. Other environmental information that should be disclosed
√Applicable □Not Applicable
(II) Explanation on environmental protection of companies other than major
pollutant-emission units
√Applicable □Not Applicable
1. Administrative penalty due to environmental issues
□Applicable √Not Applicable
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2. Other environmental information disclosure with reference to major pollutant-
emission units
√Applicable □Not Applicable
All division of the Company execute construction project implementation and
production in accordance with the requirements of laws and regulations and strictly comply
with the “three simultaneous” requirements of environmental protection for construction
projects in the process of environmental impact assessment, and have passed environmental
assessment acceptance and are not involved in any environmental illegal conducts such as
construction before approval.
Through Haier Smart Energy Center, an industry leading energy big data analysis
system, the Company implements centralized dynamic monitoring and digitalized
management in respect of major energy consumption, such as water, electricity and gas, of
all plants across the country by utilizing automatized and informationalized technology and
an integrated management model. It automatically collects precise information on energy
resources and completes prediction and analysis of energy consumption information to
optimize energy adjustment, reduce energy consumption per unit production to achieve
low-carbon production.
3. Reasons for failure to disclose other environmental information
□Applicable √Not Applicable
(III) Explanation of the subsequent progress or changes in the disclosure of
environmental information content during the Reporting Period
√Applicable □Not Applicable
The Company will continue to maintain and improve existing results and strictly
comply with existing environmental protection and emission standards to achieve
compliant emission.
(IV) Relevant information favorable to ecological protection, pollution prevention and
control and environmental responsibility fulfillment
√Applicable □Not Applicable
The Company proactively advances product iteration and upgrade and participates in
the development of ecological environment. The Company took part in the formulation of
energy consumption standard of household appliances organized by Beijing Institute of
Standardization to promote the shift to energy-saving models in the household appliance
field. We cooperated with relevant organizations in relevant refrigerant research and
development projects to strive for the application of refrigerants with lower greenhouse gas
emission. Meanwhile, the Company and Haier’s suppliers, among others, cooperated in the
research and development of low-carbon related technology, such as recyclable packaging
materials, to facilitate environmental protection.
The Company proactively responds to the household appliance recycling policies of
the NDRC by launching a household appliance recycling project and investing in the
construction of Haier’s household appliance recycling plants. With the recycling business
as the starting point, we tapped into the disintegration process and implemented extended
accountability for household appliance manufacturer to initiate the development of
household appliance recycling plants. The measure will significantly boost the efficiency of
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Haier Smart Home Co., Ltd.
resource utilization to achieve sustainable development.
(V) Measures taken during the Reporting Period to reduce its carbon emission and
their effectiveness
√Applicable □Not Applicable
As the leading enterprise in the industry, the Company proactively seeks ways to
achieve carbon neutrality and carbon peak and optimize industrial structure and energy
structure. Currently, the Company has designed and established Haier Zhong De Smart
Park, Haier’s first “beacon base” in the world to achieve carbon neutrality, and intends to
expand its coverage within the Company in the future, with a view to reaching carbon
neutrality for Haier Smart Home’s industrial parks in the PRC within a reasonable time,
while giving due regards to comprehensive elements, such as costs. Haier Zhong De
Industrial Park uses a smart general energy control platform to implement centralized
dynamic monitoring and digitalized management in respect of the production, transmission,
distribution and utilization of energy and power in the park, such as electricity, water, gas,
heat, compressed air, photovoltaic, thereby improving and optimizing energy balance,
controlling and adjusting the energy system in the park and enhancing overall efficiency.
2. Particulars on the efforts to consolidate and expand its achievements in poverty
alleviation and rural area invigoration
√Applicable □Not Applicable
In accordance with the national targeted poverty alleviation plan and documentation
requirements, the Company emphasizes poverty alleviation and conducts targeted poverty
alleviation within the authority granted on the general meeting in respect of, among others,
donations.
For years, the Company has made genuine contributions to education to improve the
basic cultural quality of people in poverty and skills of families in poverty, with an
emphasis on shoring up the weak link of the education sector and stopping inter-
generational poverty. As of now, the Company, Haier Group Companies (the effective
controller of the Company) and its subordinate enterprises (hereafter, the “Haier Group”)
have constructed over 300 hope primary schools and hope secondary schools, covering 26
provinces, municipalities and autonomous regions in the PRC. It also offers continuous
resource assistance to such schools every year to effectively boost the base education
capacity in poverty regions and improve education quality. At the same time, the Company
maintains its support to rural development in respect of poverty alleviation in agricultural
development and poverty alleviation in farmers’ health to promote beautiful rural
development. During the Reporting Period, it offered, among other assistance, funds to
Xian Feng Village, Tao Lin Town, Xi Shui County, Gui Zhou.
In the first half of 2021, the Company’s capital expenditure in targeted poverty
alleviation amounted to approximately RMB4.12 million, primarily attributable to
education poverty alleviation, poverty alleviation in agricultural development and poverty
alleviation in farmers’ health, etc., to proactively respond to the government’s call for
social responsibility fulfillment.
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Section VI SIGNIFICANT ISSUES
I. Fulfillment status of undertakings
(I) The undertakings made by the ultimate controllers, shareholders, related parties, acquirer as well as the Company and other relevant parties
during or up to the reporting period
√Applicable □Not Applicable
Any Whether
Type of Date and
Background of deadline performed in a
undertaking Covenanter Contents of undertakings term of
undertakings for timely and
s undertakings
performance strict way
During the period from September 2006 to May 2007, the
Company issued shares to Haier Group Corporation (“Haier
Group”) to purchase the controlling equity in its four
subsidiaries, namely Qingdao Haier Air-Conditioner Electronics
Co., Ltd. ( 青 岛 海 尔空调 电 子 有 限 公 司), Hefei Haier Air-
conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan
Haier Electronics Co., Ltd. ( 武 汉海尔 电器股份有 限公司 ),
Guizhou Haier Electronics Co., Ltd. (贵州海尔电器有限公司).
Eliminate
With regard to the land and property required in the operation of 27
the right
Undertaking Haier Group Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔 September
defects in Yes Yes
related to Corporation 空调电子有限公司), Hefei Haier Air-conditioning Co., Limited 2006, long-
land
significant term
property etc. (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd.
reorganization
( 武 汉 海 尔 电 器 股 份 有 限 公 司 ) (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.
Address Haier Smart Prior to the Transaction (hereinafter “the Transaction” 31 July
Yes Yes
peer Home Co., refers to the transaction in relation to the privatisation of 2020 long-
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2021 Interim Report
Haier Smart Home Co., Ltd.
competitio Ltd. Haier Electronics by Haier Smart Home), Haier Electric term
n was a controlling subsidiary of the Company and did not
have peer competition with the Company; after the
completion of the Transaction, Haier Electric became a
wholly-owned or controlling subsidiary of the Company
and no new peer competition with the Company existed or
will arise. There is no new peer competition or potential
competition between the Company and other related parties
controlled by the controlling shareholders or the de facto
controllers of the Company.
1. The Transaction constitutes a connected transaction and
the connected transaction procedures performed under the
Transaction are in compliance with the relevant regulations.
The pricing of the connected transaction is fair and there are
no circumstances under which the interests of the listed
company and the non-connected shareholders are
prejudiced. 2. Upon completion of the Transaction, the
Company and its affiliates will take lawful and effective
Address measures to minimize and regulate the connected
Haier 29 July
connected transactions with the listed company, take the initiative to
Group 2020, long- Yes Yes
transactions safeguard the interests of the listed company and all
Corporation term
shareholders, and refrain from taking advantages of
connected transactions for improper benefits. 3. Provided
that there is no conflict with laws and regulations, if
connected transactions between the Company and its
affiliates and the listed company occur or exist which
cannot be avoided or for which there are reasonable
reasons, the Company and its affiliates will legally enter
into a transaction agreement with the listed company to
ensure strict compliance with the procedures of connected
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transactions required by the laws, regulations, regulatory
documents and the articles of association of the Company,
conduct transactions in accordance with the principles of
marketability and fair prices to ensure the fairness and
compliance of connected transactions, and refrain from
taking advantages of such connected transactions to engage
in any acts that are detrimental to the interests of the listed
company or its minority shareholders, and at the same time,
comply with the information disclosure obligations in
accordance with relevant regulations.
1. The Company and its controlling subsidiary, Haier COSMO
Co., Ltd., were principally engaged in investment business
during the reporting period, and the Company and its
controlling subsidiary, Haier COSMO Co., Ltd. (including its
subsidiaries and entities with more than 30% shareholding),
have no real or potential pper competition with Haier Smart
Home; 2. the domestic and overseas white goods businesses
and assets held by the Company (including the Company's
Address Haier subsidiaries and entities with more than 30% shareholding)
29 July
peer Group have been injected into Haier Smart Home through asset
2020, Yes Yes
competitio Corporatio consolidation and equity transfer in accordance with the
long- term
n n commitments made by the Company in January 2011 and the
requirements for adjusting such commitments as considered
and approved by Haier Smart Home at its 2014 annual general
meeting; 3, Since the acquisition of 100% of Haier New
Zealand Investment Holding Company Limited (which holds
100% of the shares in Fisher & Paykel Appliances Holdings
Limited) by Haier Smart Home's offshore subsidiary, Haier
Singapore Investment Holding Co., Ltd., following the
completion in July 2018, the Company (including the
51
2021 Interim Report
Haier Smart Home Co., Ltd.
Company's subsidiaries and entities with more than 30%
shareholding) and Haier Smart Home do not have any peer
competing relationship in any business areas both within and
outside the PRC. During the reporting period, the Company
(including the Company's subsidiaries and entities with more
than 30% shareholding) did not have any new peer competition
with Haier Smart Home; 4. Upon completion of the
Transaction, the Company (including the Company's
subsidiaries and entities with more than 30% shareholding) and
its affiliates do not have any new or potential peer competition
with Haier Smart Home; 5. During the period when the
Company is the controlling shareholder of Haier Smart Home
and the shares of Haier Smart Home are listed on the Hong
Kong Stock Exchange, the Company and its other subsidiaries
and entities with more than 30% shareholding will not operate
any business that competes with the business engaged by Haier
Smart Home and will not engage in real or potential peer
competition with Haier Smart Home.
Upon completion of the Transaction, the Company will
strictly comply with the Company Law, the Securities Law,
the relevant regulations of the China Securities Regulatory
Commission, the Shanghai Stock Exchange and the articles
of association of Haier Smart Home, etc., fairly exercise
Haier 29 July
shareholders' rights and fulfill shareholders' obligations,
Others Group 2020, long- Yes Yes
refrain from taking advantage of its shareholding position
Corporation term
for improper benefits, ensure the listed company will
continue to be completely separate from the Company and
other enterprises on which the Company exercises control
and exerts significant influence in terms of management,
personnel, assets, finance, organization and business
52
2021 Interim Report
Haier Smart Home Co., Ltd.
operations, and maintain the continued independence of the
listed company in terms of management, personnel, assets,
finance, organization and business operations. Upon
completion of the Transaction, the Company will comply
with the provisions of the Notice on Several Issues
concerning Regulating Fund Transactions between Listed
Companies and Their Affiliates and the External Guarantee
of Listed Companies and the Circular of China Securities
Regulatory Commission and China Banking Regulatory
Commission on Regulating the External Guaranties
Provided by Listed Companies to regulate the external
guarantees by listed companies and their subsidiaries, and
will not misappropriate the funds of the listed companyy
and their subsidiaries. The Company undertakes to strictly
fulfill the above commitments. In the event that the interests
of the listed company are damaged as a result of any breach
of the above commitments by the Company and other
enterprises on which the Company exercises control and
exerts significant influence, the Company will legally bear
the corresponding liability for damage.
1. The Company legally holds the Subject Shares, of which 29 July
the Company has full ownership, and there are no 2020,
HCH (HK
restrictions on the rights of the Subject Shares or any termination
)
circumstances that may affect the offer or settlement of the of
INVESTM
Transaction. 2. The Company has full rights to participate privatisatio
Others ENT MA Yes Yes
in the Transaction and has the right to accept the Offer in n / six
NAGEME
connection with the Transaction and to sign and perform all months
NT CO.,
agreements and documents involved in the Transaction. 3. after H
LIMITED
Unless the privatisation of Haier Electronics is completed Share
or Haier Smart Home announces the termination of listing
53
2021 Interim Report
Haier Smart Home Co., Ltd.
privatisation, except for the transactions with Haier Smart
Home and its designated entities, the Company will not sell
the Subject Shares, reach any disposal arrangements with
any third party regarding the Subject Shares or their rights
and interests, and set any rights restrictions such as pledge
on the Subject Shares from the date of issuance of this
confirmation letter. 5. Unless the privatisation of Haier
Electronics is completed or Haier Smart Home announces
the termination of privatization, except for participating in
and promoting the Transaction, the Company will not
increase its shareholding in Haier Electronics, reach any
arrangements with other shareholders of Haier Electronics
regarding the disposal of the Subject Shares or their rights
and interests, or set any rights restrictions such as pledge on
Haier Electronics shares held by other shareholders of Haier
Electronics. 6. The Company will abide by the relevant
restrictions on the sale of Haier Smart Home Shares in Rule
10.07 of the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited, which has
been revised from time to time: within six months from the
date of disclosure of our shareholding in Haier Smart Home
H shares listed in the Transaction to the date of trading of
Haier Smart Home H shares on the Hong Kong Stock
Exchange, the Company will not sell Haier Smart Home H
shares acquired by the Company through the Transaction,
or enter into any agreement to sell such shares, or create
any options, rights, interests or encumbrances in respect of
such shares; In addition, the sale of the Haier Smart Home
H Shares, the entering into of any agreement to sell such
shares, or the exercise or enforcement of such options,
54
2021 Interim Report
Haier Smart Home Co., Ltd.
rights, benefits or encumbrances in respect of such shares
by the Company during the six months following the expiry
of the aforesaid six-month period shall not result in Haier
Group Companies and parties acting in concert with it
losing their status as controlling shareholders of Haier
Smart Home.
1. The Transaction constitutes a connected transaction and
the connected transaction procedures performed under the
Transaction are in compliance with the relevant regulations.
The pricing of the connected transaction is fair and there are
no circumstances under which the interests of the listed
company and the non-connected shareholders are
prejudiced. 2. Upon completion of the Transaction, the
Company and other enterprises on which the Company
exercises control will take lawful and effective measures to
HCH (HK)
minimize and regulate the connected transactions with the
INVESTM
Address listed company, take the initiative to safeguard the interests
ENT 29 July
connected of the listed company and all shareholders, and refrain from
MANAGE 2020, long- Yes Yes
transactions taking advantages of connected transactions for improper
MENT term
benefits. 3. Provided that there is no conflict with laws and
CO.,
regulations, if connected transactions between the Company
LIMITED
and other enterprises on which the Company exercise
control and the listed company occur or exist which cannot
be avoided or for which there are reasonable reasons, the
Company and other enterprises on which the Company
exercises control will legally enter into a transaction
agreement with the listed company to ensure strict
compliance with the procedures of connected transactions
required by the laws, regulations, regulatory documents and
the articles of association of the Company, conduct
55
2021 Interim Report
Haier Smart Home Co., Ltd.
transactions in accordance with the principles of
marketability and fair prices, and refrain from taking
advantages of such connected transactions to engage in any
acts that are detrimental to the interests of the listed
company or its minority shareholders, and at the same time,
comply with the information disclosure obligations in
accordance with relevant regulations. 4. Any covenants and
arrangements between the Company and other enterprises
on which the Company exercise control and the listed
company in relation to connected transactions shall not
prevent the other party from conducting business or dealing
with any third party for its own benefit and on equal
competitive terms in the market.
Haier Group Corporation undertakes that it will assure Haier
Smart Home and its subsidiaries of the constant, stable and
unobstructed use of the leased property. In the event that Haier
Smart Home or any of its subsidiaries suffers any economic loss
due to the fact that leased property has no relevant ownership
certificate, Haier Group Corporation will make compensation to
impaired party in a timely and sufficient way and take all
Eliminate
reasonable and practicable measures to support the impaired
Undertaking the right
Haier party to recover to normal operation before the occurrence of 24 December
related to defects in
Group loss. Upon the expiration of relevant leasing period, Haier Group 2013, long- Yes Yes
refinancing land
Corporation Corporation will grant or take practicable measures to assure term
property
Haier Smart Home and its subsidiaries of priority to continue to
and etc.
lease the property at a price not higher than the rent in
comparable market at that time. Haier Group Corporation will
assure Haier Smart Home and its subsidiaries of the constant,
stable, free and unobstructed use of self-built property and land
of the Group. In the event that Haier Smart Home or any of its
subsidiaries fails to continue to use self-built property according
to its own will or in original way due to the fact that self-built
56
2021 Interim Report
Haier Smart Home Co., Ltd.
property has no relevant ownership certificate, Haier Group
Corporation will take all reasonable and practicable measures to
eliminate obstruction and impact, or will support Haier Smart
Home or its affected subsidiary to obtain alternative property as
soon as possible, if Haier Group Corporation anticipates it is
unable to cope 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 Shanghai Stock Exchange on 29
March 2014.
The Company undertakes that it will eliminate the property
defects of the Company and main 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
Eliminate
Influence on Operation of Issuer Caused by Uncertainty of
the right
Haier Smart Ownership, Solution for the Defect and Guarantee Measures 24 December
defects in
Home Co., (L2014-005) published by the Company on the four major 2013, eight Yes Yes
land
Ltd. securities newspapers and the website of Shanghai Stock years
property
Exchange on 29 March 2014. As at the end of 2018, the
etc.
Company has resolved the property defects of itself and its eight
major subsidiaries. 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, the property defects of the five major subsidiaries have
been properly resolved by applying for property ownership
57
2021 Interim Report
Haier Smart Home Co., Ltd.
certificates, relocating the defective properties and categorizing
them as reserve alongside the lands, divesting the defective
properties with the equity of the subsidiaries and other means.
The Company has fulfilled this undertaking.
Inject the assets of Haier Photoelectric to the Company or
dispose such assets through other ways according to the
requirements of the domestic supervision before June 2025. For
Haier December
Asset more details, please refer to the Announcement of Haier Smart
Group 2015 to June Yes Yes
injection Home Co., Ltd. on the Changes of Some Commitments on Asset
Corporation 2025
Injection (L2020-024) published on the four major securities
newspapers and the website of Shanghai Stock Exchange on 30
April 2020.
In August 2018, Guanmei (Shanghai) Enterprise Management
Company Limited (贯美(上海)企业管理有限公司) (hereinafter
referred to as “Guanmei”), an indirect holding subsidiary of the
Company replaced the 55% equity interests of Bingji (Shanghai)
Enterprise Management Company Limited (冰戟(上海)企业管
Other Haier 理有限公司) held by it with the 51% equity interests of Qingdao
undertakings COSMO HSW Water Appliance Co., Ltd. (hereinafter referred to as
Co., “Water Appliance”) held by Haier Electric Appliances
Profit
Ltd.(formerl International Co., Ltd. (hereinafter referred to as “Haier
forecast
y known as International”). In this regard, Haier International promises that As of 30
and Yes Yes
“Haier the cumulative actual net profit recorded by the Water Appliance April 2021
compensatio
Electric in the three accounting years during the profit compensation
n
Appliances period shall not be less than its cumulative forecasted net profit
International in the corresponding year, otherwise Haier International shall
Co., Ltd.”) compensate Guanmei’s results according to the Assets
Replacement Agreement. Details are set out in the Announcement
on the Equity Replacement and Related-Party Transactions to Be
Conducted by the Holding Subsidiary of Qingdao Haier Co., Ltd.
and Haier Electronics International Co., Ltd. (L2018-047)
published by the Company on the four major securities
58
2021 Interim Report
Haier Smart Home Co., Ltd.
newspapers and the website of Shanghai Stock Exchange on 31
August 2018.
59
2021 Interim Report
Haier Smart Home Co., Ltd.
II. Non-operating utilization of funds by controlling shareholders and other related
parties during the reporting period.
□Applicable √Not Applicable
III. Information on non-compliance guarantees
□Applicable √Not Applicable
IV. Information on interim audit
□Applicable √Not Applicable
V. Changes in matters covered by the non-standard audit opinion on the previous year's
annual report and its handling
□Applicable √Not Applicable
VI. Matters relating to bankruptcy and restructuring
□Applicable √Not Applicable
VII. Material litigation and arbitration matters
□Material litigation and arbitration matter during the reporting period √No material
litigation and arbitration matters during the reporting period
VIII. Punishment and correction on the listed company and its directors, supervisors,
senior management, controlling shareholders and ultimate controllers due to suspect of
law violations and the issue of rectification
□ Applicable √ Not applicable
IX. Explanation of the integrity status of the Company and its controlling shareholders
and ultimate controller during the reporting period
□ Applicable √ Not applicable
X. Significant related-party transactions
(I) Related-party transactions from daily operation
1. Matters that have been disclosed in temporary announcements and with
no subsequent progress or change
□ Applicable √Not applicable
2. Matters that have been disclosed in temporary announcements and with
subsequent progress or change
√ Applicable □ Not applicable
Pursuant to the " Resolution on Proposal to the General Meeting to Authorize the
Board of Directors and its Authorized Persons to Sign the Framework Agreement on
Connected Transactions for 2020-2022" (《關於提請股東大會授權董事會及其授
權人士簽署 2020-2022 年關聯交易框架協定的議案》) considered and approved at
the 10th meeting of the 10th session of the Board of Directors and the Second
Extraordinary General Meeting of 2020, the " Resolution on Signing the Framework
Agreement on Connected Transactions" (《關於簽署關聯交易框架協定的議案》)
considered and approved at the 14th meeting of the 10th session of the Board of
Directors, and the " Resolution of Haier Smart Home Co., Ltd. on Renewing the
Framework Agreement on Financial Services with Haier Group Corporation and
Estimated Amount of Connected Transactions" (《海爾智家股份有限公司關於與海
爾集團公司續簽<金融服務框架協定>暨預計關聯交易額度的議案》) considered
and approved at the 18th meeting of the 10th session of the Board of Directors and the
2020 Annual General Meeting, the Company has made estimation on the connected
transactions for the next three years, as detailed in the aforesaid announcements
60
2021 Interim Report
Haier Smart Home Co., Ltd.
regarding the resolutions of the meetings.
For the actual performance of the Company's connected transactions in the first half
of 2021, please refer to "XII. Related parties and related-party transactions " under
section X — Financial and Accounting Report set out in this regular report.
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
(II) Related-party transactions regarding acquisition or disposal of
assets/equity
1. Matters disclosed in temporary announcements and with no subsequent
progress or change
□ Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with
subsequent progress or change
□ Applicable √Not applicable
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
4. If performance agreement is involved, the performance achieved during the
reporting period shall be disclosed
□ Applicable √ Not applicable
(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 not disclosed in temporary announcements
□ Applicable √ Not applicable
(V) Financial business between the Company and the finance company with
which it has a related relationship, the company's controlling finance company
and related parties
61
2021 Interim Report
Haier Smart Home Co., Ltd.
√ Applicable □Not applicable
1. Deposit business
√ Applicable □Not applicable
Unit and Currency: RMB
Balance Number
Maximu Range Balance as
as at the of
Related Relationshi m daily of at the end
beginnin occurren
party p deposit deposit of the
g of the ce of the
limit interest period
period period
Haier
Group Subsidiary 0.385 24,957,7 28,946,1
29 28,946,19
Finance of Haier %- 36,213.0 90,018.1
billion 0,018.12
Co., Ltd. Group 3.85% 4 2
and others
24,957,7 28,946,1
28,946,19
Total / / / 36,213.0 90,018.1
0,018.12
4 2
2. Lending business
√ Applicable □Not applicable
Unit and Currency: RMB
Balance Number Balance
Range as at the of as at the
Related Loan
Relationship of loan beginnin occurren end of
party limit
interest g of the ce of the the
period period period
Haier
Subsidiary 1.59%
Group 454,470, 556,979, 482,161
of Haier 5 billion ~2.47
Finance 450.05 500.00 ,521.49
Group %
Co., Ltd.
454,470, 556,979, 482,161
Total / / /
450.05 500.00 ,521.49
3. Trustee business or other finance businesses
√ Applicable □Not applicable
Unit and Currency: RMB
Actual
Total
Related party Relationship Type of business number of
amount
occurrence
Haier Group
Subsidiary of Foreign exchange 2,611,999,25
Finance Co., 5.5 billion
Haier Group derivative product 2.69
Ltd.
Haier Group
Subsidiary of 0.08 11,919,379.1
Finance Co., Service fee
Haier Group billion 1
Ltd.
4. Others
□ Applicable √ Not applicable
62
2021 Interim Report
Haier Smart Home Co., Ltd.
(VI) Other material related transactions
□ Applicable √ Not applicable
(VII) Others
□ Applicable √ Not applicable
XI. Significant contracts and their execution
1 Trusteeship, contracting and leasing
□ Applicable √ Not applicable
63
2021 Interim Report
Haier Smart Home Co., Ltd.
2 Significant guarantees performed and outstanding during the reporting period
√Applicable □Not Applicable
Unit and Currency: RMB
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date of Status
Relations
occurren of Whethe
hip Whethe Overdu
ce principl Collater Whether r Whether
between Amount Expiry r the e
of the Commencem Type of e al (if the there is Related-
Guarant the Secured of date of guarant amount Relations
guarante ent guarant liabiliti any) guarante a party
or guarantor party guarante guarant ee has of the hip
e date of ee es e is counter- guarante
and the e ee been guarant
(date of guarantee overdue guarant e or not
listed fulfilled ee
agreeme ee
company
nt)
Total amount of guarantee occurred during the reporting period (excluding 0
guarantees for subsidiaries)
Total balance of guarantee at the end of the 0
reporting period (A) (excluding guarantees
for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries 2,967,533.18
occurred during the reporting period
Total balance of guarantees for subsidiaries 2,027,910.98
at the end of the reporting period (B)
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B)
2,027,910.98
Ratio of total amount of guarantees to net assets of the Company (%) 27.46
Including:
Amount of guarantees for shareholders, 0
ultimate controllers and their related parties
64
2021 Interim Report
Haier Smart Home Co., Ltd.
(C)
Amount of debt guarantees provided directly or indirectly for the secured party 590,146.50
with asset-liability ratio exceeding 70% (D)
The amount of total amount of guarantee in 0
excess of 50% of net assets (E)
Total amount of the above three guarantees 590,146.50
(C + D + E)
Explanation of possibly bearing related discharge duty for premature guarantees None
The above guarantees include guarantees made in previous
years and carried forward to the reporting period, and
guarantees newly made for the year, including the following
guarantees:
To satisfy general corporate requirements, Haier Singapore
Investment Holding Pte. Ltd., a wholly owned subsidiary of
the Company, applied to DBS Bank Ltd. for a loan of US$280
Explanation of guarantee status million, to which the Company provided joint liability
guarantee. The Company entered into a guarantee agreement
with DBS Bank Ltd. to guarantee the above loan. The
guarantee period commences from the due date of each
payment obligation in relation to the guaranteed debt (with the
meaning ascribed to it by the amended guarantee agreement)
and ends on six months from the Initial Termination Date
under the loan agreement, i.e. 30 January 2023.
65
2021 Interim Report
Haier Smart Home Co., Ltd.
On 25 June 2021, the resolution on the Expected Provision of
Guarantee for subsidiaries in 2021 was reviewed and passed
on the 2020 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. Please refer to
relevant description in this table for the accumulated amount
of guarantee offered by the Company to subsidiaries and
closing balance of reporting period. The guarantee to the
wholly owned subsidiary, Haier Singapore Investment
Holding Pte. Ltd., was within the guarantee range approved on
the above general meeting.
66
2021 Interim Report
Haier Smart Home Co., Ltd.
3 Other major contracts
□Applicable √Not Applicable
XII Statement on Other Significant Events
√Applicable √Not Applicable
(1) Entrusted wealth management: By the end of the reporting period, the balance of
the Company’s entrusted wealth management amounted to RMB2.273 billion,
including two parts: ① temporarily-idle fundraising wealth management: at the end of
December 2018, the Company’s proceeds for the issuance of convertible corporate
bonds were fully landed. In order to improve the yield of temporarily-idle funds, the
Company intended to carry out cash management with 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 RMB0.387
billion; ② 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 president’s office meeting
and under the condition of ensuring fund safety. By the end of the reporting period,
the balance of the entrusted wealth management amounted to RMB1.886 billion.
(2) Progress of the A-share repurchase: 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 A shares of the Company by way of centralised bidding.
The repurchase price is no more than RMB46 per share and the proposed total
repurchase amount is no more than RMB4.0 billion and no less than RMB2.0 billion,
with no more than 86.96 million shares repurchased. The period of this repurchase is
within 12 months from the date the Board considered and approved the resolution of
repurchase of shares. As at the end of the reporting period, the Company had
repurchased a total of 63,076,566 shares, representing 0.67% of the total share capital
of the Company. The highest price purchased was RMB32.80 per share and the
lowest price was RMB25.45 per share, and the total amount paid was
RMB1,767,100,716.86. For details, please refer to the announcement on the progress
of the repurchase disclosed by the Company on a monthly basis.
67
2021 Interim Report
Haier Smart Home Co., Ltd.
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS
I. Changes in share capital
(I) Table of Changes in shares
1. Table of Changes in shares
Prior to changes Increase/decrease in changes After changes
Amount Percentage (%) Issue of new Bonus shares Contribution Others Sub-total Amount Percentage (%)
shares fund
convertible
shares
I. Restricted
shares
1. State-owned
shares
2. Shares held
by state-owned
legal entities
3. Other
domestic shares
Including:
Shares held by
domestic non-
state-owned
legal entities
Shares held by
domestic
individuals
4. Foreign
Shares
Including:
shares held by
offshore legal
entities
Shares held by
68
2021 Interim Report
Haier Smart Home Co., Ltd.
offshore
individuals
II. Non- 397,676,840 -32,352,800 9,393,170,481
restricted 9,027,846,441 100.00 365,324,040 100.00
shares
1. Ordinary 6,308,552,654
6,308,552,654 69.88 67.16
shares in RMB
2. Domestic
listed foreign
Shares
3. Offshore 397,676,840 -32,352,800 3,084,617,827
listed foreign 2,719,293,787 30.12 365,324,040 32.84
Shares
4. Others
III. Total shares 9,027,846,441 100.00 397,676,840 -32,352,800 365,324,040 9,393,170,481 100.00
69
2021 Interim Report
Haier Smart Home Co., Ltd.
2. Statement on the changes in shares
√Applicable □Not Applicable
(1) H-share convertible bonds: On 27 October 2020, the China Securities Regulatory
Commission issued the Reply to the Approval of Issuance of Overseas Listed Foreign
Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd. (《關於核
准海爾智家股份有限公司發行境外上市外資股及可轉換公司債券的批復》)
(Zheng Jian Xu Ke [2020] No. 2768), which approved that: (1) the Company 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, the Company can be listed on the main board of the Stock Exchange of
Hong Kong Limited (hereinafter referred to as the “Hong Kong Stock Exchange”) ; (2)
the issuance of corporate bonds not exceeding HK$8.0 billion or equivalent in foreign
currencies that can be converted into the Company’s overseas listed foreign shares by
the overseas wholly-owned subsidiaries guaranteed by the Company. On 23
December 2020, 2,448,279,814 H shares of the Company, issued for the privatisation
of Haier Electric Appliances (a Hong Kong listed company), were listed and traded on
the Main Board of the Hong Kong Stock Exchange and the related convertible bonds
under the H share convertible bonds scheme became valid and in effect immediately
after the listing amounting to HK$7,993 million. During the reporting period,
HK$7,491,000,000 of the convertible bonds were converted into a total of
397,676,840 H shares of the Company and the outstanding amount was
HK$502,000,000.
(2) Cancellation of H share repurchase: On March 5, 2021, the First Extraordinary
General Meeting of 2021 and the First Class Meeting of 2021 for A shares/D shares/H
shares of the Company considered and approved the "Resolution on the Introduction
of General Mandate for Repurchase of H Shares upon Completion of Listing", in
which the Company intends to repurchase H shares and cancel them within the agreed
period. During the reporting period, the Company repurchased a total of 32,352,800 H
shares and all such shares have been cancelled.
Based on the above, during the reporting period, the share capital of the Company was
changed from 9,027,846,441 shares at the beginning of the reporting period to
9,393,170,481 shares.
3. Effect of changes in shares on the financial indicators such as earnings per
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Haier Smart Home Co., Ltd.
share and net assets per share (if any) after the reporting period to the disclosure
date of interim report
√Applicable □Not Applicable
For the interim period in 2021, the Company recorded a net profit attributable to
shareholders of the parent company of RMB6,852,271,812.97 and equity attributable
to owners of the parent company as at the end of the reporting period of
RMB73,846,216,357.78, representing earnings per Share of RMB0.729 and net asset
per Share of RMB7.862, based on the total share capital as at the end of the reporting
period of 9,393,170,481 Shares; and earnings per Share of RMB0.729 and net asset
per Share of RMB7.861, based on the total share capital as at the date of disclosure of
the interim report of 9,393,860,615 Shares.
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
□Applicable √Not Applicable
(II) Changes in shares with selling restrictions
□Applicable √Not Applicable
II. Information on shareholders
(I) Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period 210,151
Total numbers of preferential shareholders with restoration of voting N/A
rights by the end of the reporting period
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Haier Smart Home Co., Ltd.
(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable shares (or shares without selling restrictions) by the
end of the reporting period
Unit: share
Shareholdings of top ten shareholders
Name of shareholder Increase/decrease Number of Percentage Number of Status of shares Nature of
(full name) during the reporting shares held at (%) shares held pledged, marked or shareholder
period the end of the with selling frozen
period restrictions
Status Number
HKSCC NOMINEES Unknown Foreign legal
2,184,772,038 23.26
LIMITED (Note) entity
Haier Electric None Domestic non-
Appliances 1,258,684,824 13.40 state-owned
International Co., Ltd. legal entity
Haier Group None Domestic non-
Corporation 1,072,610,764 11.42 state-owned
legal entity
HCH (HK) None Foreign legal
INVESTMENT entity
538,560,000 5.73
MANAGEMENT CO.,
LIMITED
Hong Kong Securities None Foreign legal
512,561,183 5.46
Clearing Co., Ltd. entity
China Securities None Unknown
Finance Corporation 182,592,654 1.94
Limited
Qingdao Haier None Domestic non-
Venture & Investment 172,252,560 1.83 state-owned
Information Co., Ltd. legal entity
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Haier Smart Home Co., Ltd.
(青島海爾創業投資諮
詢有限公司)
China Merchant Bank None Unknown
Co., Ltd. – Xingquan
103,290,923 1.10
Herun mixed securities
investment fund
China Merchant Bank None Unknown
Co., Ltd. –Xingquan
Heyi flexible
87,672,150 0.93
deployment mixed
securities investment
fund (LOF)
ALIBABA Unknown Unknown
INVESTMENT 83,823,993 0.89
LIMITED
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Haier Smart Home Co., Ltd.
Shareholdings of top ten shareholders without selling restrictions
Name of Number of Class and number of shares
shareholder tradable
shares held
without
selling restrictions
Class Number
HKSCC Overseas listed
NOMINEES 2,184,772,038 foreign shares 2,184,772,038
LIMITED (Note)
Haier Electric RMB ordinary
Appliances
1,258,684,824 1,258,684,824
International Co.,
Ltd.
Haier Group RMB ordinary
1,072,610,764 1,072,610,764
Corporation
HCH (HK) Overseas listed
INVESTMENT foreign shares
538,560,000 538,560,000
MANAGEMENT
CO., LIMITED
Hong Kong RMB ordinary
Securities Clearing 512,561,183 512,561,183
Co., Ltd.
China Securities RMB ordinary
Finance
182,592,654 182,592,654
Corporation
Limited
Qingdao Haier RMB ordinary
Venture &
Investment 172,252,560 172,252,560
Information Co.,
Ltd.
China Merchants RMB ordinary
Bank Co., Ltd. –
Xingquan Herun 103,290,923 103,290,923
mixed securities
investment fund
China Merchants RMB ordinary
Bank Co., Ltd. –
Xingquan Heyi
flexible allocation 87,672,150 87,672,150
mixed securities
investment fund
(LOF)
ALIBABA Overseas listed
INVESTMENT 83,823,993 foreign shares 83,823,993
LIMITED
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Haier Smart Home Co., Ltd.
Explanation on Nil
repurchase account
of top ten
shareholders
Explanation on Nil
delegated voting
rights, entrusted
voting rights,
abstained voting
rights of the above
shareholders
Related parties or (1) Haier Electric Appliances International Co., Ltd.
parties acting in (currently named as Haier COSMO Co., Ltd. （海尔卡奥斯
concert among the
aforesaid 股份有限公司）) is a holding subsidiary of Haier Group
shareholders Corporation. Haier Group Corporation holds 51.20% of its
equity. Qingdao Haier Venture & Investment Information Co.,
Ltd.(青島海爾創業投資諮詢有限公司) and HCH (HK)
INVESTMENT MANAGEMENT CO., LIMITED are parties
acting in concert with Haier Group Corporation;
(2) The Company is not aware of the existence of any
connections of other shareholders.
Explanation of Not applicable
preferential
shareholders with
restoration of
voting
rights and their
shareholdings
Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the
shareholders of the Company’s H-shares, which is the original data provided by China
Hong Kong, the securities registration agency to the Company after the merger
according to local market practices and technical settings, not representing the
ultimate shareholder.
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
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Haier Smart Home Co., Ltd.
III. Directors, supervisors, senior management
(I) Changes of shareholding of current and retired directors, supervisors and
senior management during the reporting period
√Applicable □Not Applicable
Unit: Share
Name Position Number of Number of Increase/ Reason of
shares held shares held decrease increase/
at the at the end during the decrease
beginning of reporting
of the period period
the period
Liang Director Vesting
Haishan pursuant to
14,923,047 15,570,174 647,127 employee
shareholdin
g scheme
Tan Lixia Director Vesting
(resigned) pursuant to
8,535,920 9,053,622 517,702 employee
shareholdin
g scheme
Wang Supervisor Vesting
Peihua pursuant to
(resigned) 161,067 182,401 21,334 employee
shareholdin
g scheme
Ming Supervisor Vesting
Guoqing pursuant to
(resigned) 105,511 119,449 13,938 employee
shareholdin
g scheme
Gong Wei Senior Vesting
managemen pursuant to
t 1,724,315 1,812,495 88,180 employee
shareholdin
g scheme
Ming Senior Vesting
Guozhen managemen pursuant to
t 1,275,295 1,326,497 51,202 employee
shareholdin
g scheme
Note: (1) during the reporting period (or from the date of appointment to the end of
the reporting period, there was not change in shareholdings of other directors; (2) the
above involved shares are A Shares.
Other explanations
□Applicable √Not Applicable
(II) Incentive share option granted to directors, supervisors and senior
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Haier Smart Home Co., Ltd.
management during the reporting period
□Applicable √Not Applicable
(III) Other explanations
□Applicable √Not Applicable
IV. Changes in controlling shareholder and the ultimate controller
□Applicable √Not Applicable
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Haier Smart Home Co., Ltd
SECTION VIII RELEVANT INFORMATION OF PREFERRED
SHARES
Applicable √Not Applicable
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SECTION IX RELEVANT INFORMATION OF CORPORATE BONDS
I. Enterprise bond, corporate bond, and non-financial corporate debt financing
instruments
√Applicable □Not Applicable
(1) Enterprise bond
□Applicable √Not Applicable
(2) Corporate bond
□Applicable √Not Applicable
(3) Non-financial corporate debt financing instruments in interbank bond market
√Applicable □Not Applicable
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1. General information on non-financial corporate debt financing instruments
Unit and Currency: RMB’00 million
Payment Whether
Interes Arrangement
Date method of risk of
Short Value Expiry Bond t Trading of investor Trading
Bond Name Code of principal delisting
Name date date balance Rate venue suitability (if mechanism
issue and exists
(%) any)
interest
Haier Smart
Home Co.,
Ltd. 2020 20 Haier
13
first tranche Smart 01200251 17 July 17 July
January 30 1.45 None / No
of ultra- Home 8 2020 2020
2021
short-term SCP001
One-off
financing
principal
bond Interbank
and interest
Haier Smart bond
payment
Home Co., market
upon
Ltd. 2020
20 Haier maturity
second 28 28 24
Smart 01200309
tranche of August August February 25 1.71 None / No
Home 4
ultra-short- 2020 2020 2021
SCP002
term
financing
bond
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On the 2019 Annual General Meeting, the Company passed the “Resolution of Haier
Smart Home Co., Ltd. on the Proposed Registration and Issuance of Debt Financing
Instruments” to approve the Company’s proposed application to the National Association
of Financial Market Institutional Investors for the registration of a debt financing
instrument of not more than RMB15 billion (inclusive) in total. Accordingly, the Company
issued two tranches of ultra-short-term financing bond of RMB3 billion and RMB2.5
billion on 17 July 2020 and 28 August 2020, respectively, with a maturity of 180 days.
Please refer to the “Announcement of Haier Smart Home Co., Ltd. on the Results of the
Issuance of the 2020 First Tranche of Super- short-term Bonds” and “Announcement of
Haier Smart Home Co., Ltd. on the Results of the Issuance of the 2020 Second Tranche of
Super-short-term Bonds” published by the Company on 21 July 2020 and 1 September
2020, respectively, for details.
During the reporting period, the principal and interests of the above two tranches of
ultra-short-term financing bond were settled in full as agreed.
Response measure in respect of risk of delisting of bonds
□Applicable √Not Applicable
Outstanding bonds past due
□Applicable √Not Applicable
Explanation on debt past due
□Applicable √Not Applicable
2. Trigger and implementation of issuer or investor option terms and investor protection terms
√Applicable □Not Applicable
For the above two tranches of ultra-short-term financing bond, there were trigger
mechanisms of investor protection emergency response in place in case of extraordinary
events to protect the interests of the investors and minimise the adverse impact to the bond
market. For details of the investor protection mechanism, please refer to relevant
documents, such as the prospectus of ultra-short-term financing bonds, published by the
Company on public document disclosure platforms for debt financing instruments,
including Chinamoney.com.cn.
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During the valid period of the above financing bonds, the Company did not experience
any relevant event triggering the investor protection mechanism.
3. Adjustment to credibility assessment results
□Applicable √Not Applicable
4. Guarantee, repayment schedule and implementation and change of other repayment guarantee
measures during the reporting period and their impact
√Applicable □Not Applicable
During the reporting period, the principal and interests of the above two tranches of
ultra-short-term financing bond were settled in full as agreed.
The above two tranches of ultra-short-term financing bond were not guaranteed and
the repayment was primarily funded by monetary assets of the Company. The Company
devised prudent and detailed financial arrangements and plans and delegated the task of
repayment of debt financing instruments to the financial department of the Company to
obtain funding for timely repayment, ensure capital to be deployed as planned and confirm
the timely and full settlement of principal and interests of the debt financing instruments,
thereby properly safeguarding the interests of bondholders.
5. Explanation on other information on non-financial corporate debt financing instruments
□Applicable √Not Applicable
(4) Losses exceeding 10% of net assets as at the end of previous year in the scope of combined
statements during the reporting period
□Applicable √Not Applicable
(5) Major accounting data and financial indicators
√Applicable □Not Applicable
Unit and Currency: RMB
End of the reporting
Key indicators End of last year Yoy change (%)
period
Liquidity ratio 1.02 1.04 -1.92
Quick ratio 0.73 0.78 -6.41
Debt to assets ratio (%) 63.54 66.52 -4.48
Reporting period Corresponding period
Yoy change (%)
(January - June) last year
Net profit after deduction of non- 6,269,906,406.72 2,569,440,497.59 144.02
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recurring profit or loss
Total liabilities ratio of EBITDA 0.19 0.11 75.30
Interest coverage ratio 24.29 6.94 249.97
Cash interest coverage ratio 23.19 -0.75 3,172.17
EBITDA interest coverage ratio 31.68 10.45 203.22
II. Convertible corporate bond
√Applicable □Not Applicable
(1) Convertible bond issue
On 27 October 2020, the CSRC issued “reply to the approval for the issue of overseas
listed foreign shares and convertible corporate bonds by Haier Smart Home Co., Ltd.”
(《關於核准海爾智家股份有限公司發行境外上市外資股及可轉換公司債券的批復》)
(Zheng Jian Xu Ke [2020] No. 2768) (hereafter, the “CSRC Reply”) to approve: (1) Haier
Smart Home to issue not more than 2,856,526,138 overseas listed foreign Shares (including
Shares to be issued pursuant to the exercise of conversion rights by the holders of
convertible corporate bonds with an amount of not more than HK$8 billion or equivalent in
any foreign currency) with a par value of RMB1, all registered as ordinary shares. Upon the
completion of the issue, Haier Smart Home may be listed on the main board of the Hong
Kong Stock Exchange; (2) With the guarantee of Haier Smart Home, its wholly-owned
foreign subsidiary issued overseas corporate bonds with an amount of not more than HK$8
billion or equivalent in any foreign currency, convertible into overseas listed foreign shares
of the issuer. Pursuant to this and approval from relevant parties, corporate bonds of HK$8
billion (exchangeable bonds of HK$8 billion issued in November 2017 were converted into
convertible bonds, resulting in valid convertible bonds of HK$7.993 billion) issued by
Harvest International Company, a wholly-owned subsidiary of the Company, convertible
into H Shares of the Company) were listed on 23 December 2020.
(2) Convertible bond holders and guarantors for the Reporting Period
Harvest International Company
Name of convertible corporate HK$8,000,000,000 Zero Coupon Guaranteed
bond Convertible Bonds due 2022 (hereafter, “H Share
Convertible Bonds”)
Number of convertible bond 1
holders as at the end of the period
Guarantor of the Company’s Haier Smart Home Co., Ltd.
convertible bonds
Material change of the profitability,
asset and credibility of the N/A
guarantor
Top 10 holders of convertible bonds are as follows:
Name of holder of corporate convertible bonds Holdings as at the end Holding
of the period ($) percentage
(%)
HSBC Nominees (Hong Kong) Limited 502,000,000 100
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Note: (1) the aforementioned bonds as at the end of the period are denominated in
Hong Kong Dollar; (2) H Share Convertible Bonds of the Company are held on behalf by
HSBC Nominees (Hong Kong) Limited as the sole legal holder, who is not the ultimate
holder. Information on the ultimate holders of the bonds is only stored in the clearing
system and, without the authorization from the ultimate holder, the clearing system shall
not directly provide the detailed list of ultimate bond holders to any cooperating party.
(3) Conversion of convertible bonds for the Reporting Period
Unit and Currency: HKD
Name of Increase/decrease for the conversion
convertibl Conversion Redempti Resale
Prior to the After the
e on
conversion conversion
corporate
bond
H Share 7,993,000,000 7,491,000,00 502,000,000
Convertib 0
le Bonds
(4) Cumulative conversion of convertible bond for the Reporting Period
Name of convertible corporate bond H Share Convertible Bonds
Amount of conversion for the Reporting 7,491,000,000
Period ($)
Number of conversion for the Reporting 397,676,840
Period (Share)
Cumulative number of conversion 397,676,840
(Share)
Percentage of cumulative number of 4.41
conversion to total issued Shares of the
Company prior to the conversion (%)
Outstanding amount ($) 502,000,000
Percentage of outstanding amount to 6.28
total amount of convertible bonds
issued (%)
(5) Historical adjustment of conversion price
Unit and Currency: HKD
Name of convertible corporate bond H Share Convertible Bonds
Latest conversion price as at the end 18.8369
of the Reporting Period
Note: during the Reporting Period, there was no adjustment to the conversion price of
the H Share Convertible Bonds.
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(6) Liabilities, change in credit and cash arrangements of repayment in the coming
year of the Company
As at the end of the Reporting Period, liabilities of the Company amounted to
RMB131,047,644,200, in which current liabilities amounted to RMB113,392,212,800 and
non-current liabilities amounted to RMB17,655,431,400.
The Company remains stable in every operating condition with reasonable asset
structure and good credibility and is capable of providing stable and sufficient capital for
the interests of convertible corporate bonds and repayment of the principal and interests of
the bonds in the coming year.
(7) Other information on convertible bonds
Nil
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SECTION X RESPONSIBILITY STATEMENT
“As 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 Aug 2021
The Board of Haier Smart Home Co., Ltd
Liang Haishan
Li Huagang
Xie Juzhi
Wu Changqi
Martin Lin
David Yu
Eva Li
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SECTION XI FINANCIAL REPORT
I. Audit report
□ Applicable √ Not Applicable
II. Financial statements
Consolidated Balance Sheet
30 June 2021
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes 30 June 2021 31 December 2020
Current assets:
Monetary funds VII. 1 41,843,777,555.56 46,461,329,426.91
Provision of settlement fund
Funds lent
Financial assets held for trading VII. 2 2,248,916,788.25 2,165,192,497.83
Derivative financial assets VII. 3 121,975,627.78 77,839,006.63
Bills receivable VII. 4 11,906,406,723.66 14,136,349,754.34
Accounts receivable VII. 5 20,201,607,270.68 15,930,024,286.67
Financing receivables
Prepayments VII. 6 866,997,982.40 765,427,571.70
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves
receivable
Other receivables VII. 7 2,265,821,208.28 1,717,152,945.65
Including: Interest receivable 284,404,268.03 322,473,254.91
Dividend receivable 4,915,409.42
Financial assets purchased under
resale agreements
Inventories VII. 8 33,508,190,125.05 29,446,973,404.75
Contract assets VII. 9 242,265,937.64 263,412,927.58
Assets held for sale
Non-current assets due in one
year
Other current assets VII. 10 2,925,075,253.35 3,283,888,900.58
Total current assets 116,131,034,472.65 114,247,590,722.64
Non-current assets:
Loans and advances granted
Debt investments
Other debt investments
Long-term receivables 309,892,045.80 330,588,978.97
Long-term equity investments VII. 11 22,587,007,137.19 21,567,658,450.89
Investments in other equity
instruments
VII. 12 2,829,179,420.16 2,659,125,265.54
Other non-current financial
assets
Investment properties VII. 13 27,254,438.10 28,387,002.81
Fixed assets VII. 14 20,680,827,377.71 20,895,504,722.21
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2021 Interim Report
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Construction in progress VII. 15 5,020,055,626.42 3,596,902,447.07
Biological assets for production
Oil and gas assets
Right-of-use assets VII. 16 2,793,454,708.24 2,839,858,259.27
Intangible assets VII. 17 9,882,925,278.28 10,017,867,645.93
Development cost VII. 18 168,477,189.37 167,746,724.13
Goodwill VII. 19 22,216,549,512.47 22,518,460,337.64
Long-term prepaid expenses VII. 20 470,212,444.74 455,742,504.13
Deferred income tax assets VII. 21 1,685,498,098.65 2,208,301,258.25
Other non-current assets VII. 22 1,445,052,880.82 1,925,761,560.17
Total non-current assets 90,116,386,157.95 89,211,905,157.01
Total assets 206,247,420,630.60 203,459,495,879.65
Current liabilities:
Short-term borrowings VII. 23 11,160,109,997.72 7,687,908,165.88
Borrowings from central bank
Due to banks and other financial
institutions
Financial liabilities held for
trading
VII. 24 3,423,774.60 26,952,508.66
Derivative financial liabilities VII. 25 92,081,440.09 239,582,532.90
Bills payable VII. 26 24,290,143,300.41 21,236,057,053.67
Accounts payable VII. 27 39,008,002,641.86 36,302,971,944.48
Receipts in advance
Contract liabilities VII. 28 7,466,559,172.71 7,048,637,659.48
Disposal of repurchased
financial assets
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. 29 3,178,004,997.26 3,760,099,978.82
Taxes payable VII. 30 2,669,466,112.57 2,399,705,460.12
Other payables VII. 31 20,050,241,387.28 17,056,156,167.28
Including: Interest receivable
Dividend receivable 3,420,918,669.85
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for sale
Non-current liabilities due
within one year
VII. 32 4,976,720,571.63 7,522,724,913.40
Other current liabilities VII. 33 497,459,434.14 6,112,053,944.63
Total current liabilities 113,392,212,830.27 109,392,850,329.32
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings VII. 34 9,590,298,914.57 11,821,416,259.81
Bonds payable VII. 35 426,436,821.17 6,713,501,050.27
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Including: Preference shares
Perpetual bonds
Lease liabilities VII. 36 2,011,853,682.89 2,072,702,352.68
Long-term payables VII. 37 94,010,166.66 98,203,261.27
Long-term payables for staff’s
remuneration
VII. 38 1,332,727,402.72 1,245,775,024.35
Estimated liabilities VII. 39 1,585,475,425.32 1,442,844,036.73
Deferred income VII. 40 617,897,583.09 633,761,669.48
Deferred income tax liabilities VII. 21 1,963,219,325.33 1,900,401,265.97
Other non-current liabilities 33,512,053.44 27,033,458.13
Total non-current liabilities 17,655,431,375.19 25,955,638,378.69
Total liabilities 131,047,644,205.46 135,348,488,708.01
Owners' equity (or shareholders'
equity):
Paid-in capital (or share capital) VII. 41 9,393,170,481.00 9,027,846,441.00
Other equity instruments VII. 42 148,483,179.98 2,364,195,333.79
Including: Preference shares
Perpetual bonds
Capital reserve VII. 43 22,310,353,950.96 15,009,027,407.40
Less: treasury stock 1,796,154,587.01 28,896,550.65
Other comprehensive income VII. 44 -1,302,353,671.61 -1,046,216,729.06
Special reserve
Surplus reserve VII. 45 3,045,334,539.60 3,045,334,539.60
General risk provisions
Undistributed profits VII. 46 42,047,382,464.86 38,445,132,172.47
Total equity attributable to
owners (or shareholders) of the 73,846,216,357.78 66,816,422,614.55
Parent Company
Minority shareholders' interests 1,353,560,067.36 1,294,584,557.09
Total owners' equity (or
75,199,776,425.14 68,111,007,171.64
shareholders' equity)
Total liabilities and owners'
206,247,420,630.60 203,459,495,879.65
equity (or shareholders' equity)
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Balance Sheet of the Parent Company
30 June 2021
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes 30 June 2021 31 December 2020
Current Assets:
Monetary funds 1,783,378,537.78 8,286,549,909.64
Financial assets held for
trading
Derivative financial assets
Bills receivable
Accounts receivable XVIII. 1 1,120,385,861.16 5,491,536,070.42
Financing receivables
Prepayments 275,054,302.88 295,050,991.15
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Other receivables XVIII. 2 11,817,209,369.87 3,906,373,387.61
Including: Interest receivable 37,316,878.96 38,582,434.11
Dividend receivable
Inventories 1,926,598.24 73,974,562.87
Contract assets
Assets held for sale
Non-current assets due within
one year
Other current assets 402,351,438.91 459,309,301.58
Total current assets 15,400,306,108.84 18,512,794,223.27
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity XVIII. 3
52,322,505,530.61 52,290,227,070.21
investments
Investments in other equity
804,334,894.58 804,334,894.58
instruments
Other non-current financial
assets
Investment properties
Fixed assets 180,583,473.83 196,529,502.16
Construction in progress 24,996,214.91 8,319,418.36
Biological assets for
production
Oil and gas assets
Right-of-use assets 1,646,781.72 2,076,376.95
Intangible assets 58,637,471.48 62,103,457.66
Development cost
Goodwill
Long-term prepaid expenses 3,410,447.98 4,208,602.97
Deferred income tax assets 154,335,216.49 154,335,216.49
Other non-current assets 26,894,836.99
Total non-current assets 53,550,450,031.60 53,549,029,376.37
Total assets 68,950,756,140.44 72,061,823,599.64
Current liabilities:
Short-term borrowings
Financial liabilities held for
trading
Derivative financial liabilities
Bills payable
Accounts payables 76,953,150.80 248,172,640.78
Receipts in advance
Contract liabilities 8,716,599.17 8,716,599.17
Payables for staff's
148,239,132.23 86,872,482.44
remuneration
Taxes payable 6,554,122.71 55,756,358.98
Other payables 31,776,407,254.45 29,642,219,320.03
Including: Interest payable
Dividends payable 3,420,918,669.85
Liabilities held for sale
Non-current liabilities due
921,780.31 20,840,106.80
within one year
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Haier Smart Home Co., Ltd
Other current liabilities 5,578,170.10 5,538,254,928.01
Total current liabilities 32,023,370,209.77 35,600,832,436.21
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities - 877,995.63
Long-term payable
Long-term payables for
staff's remuneration
Estimated liabilities
Deferred income 18,460,000.00 24,250,000.00
Deferred income tax
219,544,771.62 219,544,771.62
liabilities
Other non-current liabilities
Total non-current liabilities 238,004,771.62 244,672,767.25
Total liabilities 32,261,374,981.39 35,845,505,203.46
Owners' equity (or
Shareholders' equity):
Paid-in capital (or share
9,393,170,481.00 9,027,846,441.00
capital)
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 25,494,323,977.23 20,408,352,380.95
Less: treasury stock 1,767,258,036.36
Other comprehensive income 1,633,806.54 -10,030,704.15
Special reserve
Surplus reserve 2,440,188,314.15 2,440,188,314.15
Undistributed profits 1,127,322,616.49 4,349,961,964.23
Total owners' equity (or
36,689,381,159.05 36,216,318,396.18
shareholders' equity)
Total liabilities and owners’
68,950,756,140.44 72,061,823,599.64
equity (or shareholders' equity)
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Consolidated Profit Statement
January-June 2021
Unit and Currency: RMB
Items Notes 2021 Interim 2020 Interim
Ⅰ. Total operating revenue 111,618,822,064.73 95,728,097,106.65
Including: Operating revenue VII. 47 111,618,822,064.73 95,728,097,106.65
Interest income
Insurance premiums earned
Fee and commission income
Ⅱ. Total cost of operations 104,209,419,477.98 91,986,258,214.68
Including: Operating cost VII. 47 78,071,651,525.66 68,934,592,121.68
Interest expenses
Fee and commission expenses
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2021 Interim Report
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Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance
liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges VII. 48 338,882,675.38 275,190,778.54
Selling expenses VII. 49 16,730,914,492.75 14,526,912,493.29
Administrative expenses VII. 50 5,033,576,083.72 4,608,308,707.03
R&D expenses VII. 51 3,738,734,614.40 2,939,733,549.14
Financial expenses VII. 52 295,660,086.07 701,520,565.00
Including: Interest expenses 363,256,552.03 719,257,090.03
Interest income 264,334,107.38 219,622,316.65
Add: other income VII. 53 377,180,441.63 525,289,255.43
investment income (losses are VII. 54 1,136,683,667.22 756,782,922.79
represented by “-”)
Including: Investment income
943,069,721.83 679,043,527.00
of associates and joint ventures
Income generated from the
derecognition of financial assets
measured at amortized cost (losses are
represented by “-”)
Exchange gain (losses are
represented by “-”)
Gains on net exposure hedges
(losses are represented by “-”)
Income from change in fair value (losses VII. 55
64,269,511.32 -30,987,103.15
are represented by “-”)
Loss on credit impairment (losses are VII. 56
-44,031,423.21 -108,905,504.07
represented by “-”)
Loss on assets impairment (losses are VII. 57
-653,387,326.88 -609,748,132.69
represented by “-”)
Gain from disposal of assets VII. 58 142,414,954.25 -14,442,406.46
(losses are represented by “-”)
Ⅲ. Operating profit (losses are
8,432,532,411.08 4,259,827,923.82
represented by “-”)
Add: non-operating income VII. 59 79,500,691.72 68,886,689.07
Less: non-operating expenses VII. 60 51,064,696.04 55,470,756.55
Ⅳ. Total profit (total losses are
8,460,968,406.76 4,273,243,856.34
represented by “-”)
Less: income tax expense VII. 61 1,523,183,264.40 661,226,873.34
Ⅴ. Net profit (net losses are represented
6,937,785,142.36 3,612,016,983.00
by “-”)
(I) Classification by continuous operation
1.Net profit from continuous
operation (net losses are represented by 6,937,785,142.36 3,612,016,983.00
“-”)
2. Net profit from discontinued
operation (net losses are represented by
“-”)
(II) Classification by ownership of the equity
1. Net profit attributable to
6,852,271,812.97 2,780,800,712.72
shareholders of the Parent
92
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Haier Smart Home Co., Ltd
Company (net losses are represented by
“-”)
2. Profit or loss attributable to
minority shareholders (net losses are 85,513,329.39 831,216,270.28
represented by “-”)
VI. Other comprehensive income, net VII. 62 -296,041,116.28 -261,463,495.41
of tax
(I) Other comprehensive income
attributable to owners of the Parent -293,997,754.26 -220,001,490.33
Company, net of tax
1. Other comprehensive income
that cannot be reclassified into the 38,290,357.71 -56,383,682.14
profit or loss
(1) Changes arising from re-
measurement of defined benefit -595,263.81 12,218.39
plans
(2) Other comprehensive income that
cannot be transferred into profit or loss
under equity method
(3) Changes in fair value of
38,885,621.52 -56,395,900.53
investments in other equity instruments
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive
income to be reclassified into the profit -332,288,111.97 -163,617,808.19
or loss
(1) Other comprehensive income that
can be transferred into profit or loss 55,956,231.90 29,046,113.28
under equity method
(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 112,586,182.47 -85,267,888.94
(6) Exchange differences on
translation of financial statements -500,830,526.34 -107,396,032.53
denominated in foreign currencies
(7) Others
(II) Other comprehensive income
attributable to minority shareholders, -2,043,362.02 -41,462,005.08
net of tax
Ⅶ. Total comprehensive income 6,641,744,026.08 3,350,553,487.59
(I) Total comprehensive income
attributable to the owners of Parent 6,558,274,058.71 2,560,799,222.39
Company
(II) Total comprehensive income
attributable to the minority 83,469,967.37 789,754,265.20
shareholders
Ⅷ. Earnings per share:
(I) Basic earnings per share XIX. 1
0.741 0.423
(RMB/share)
(II) Diluted earnings per share XiX. 1 0.730 0.419
93
2021 Interim Report
Haier Smart Home Co., Ltd
(RMB/share)
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Profit Statement of the Parent Company
January-June 2021
Unit and Currency: RMB
Items Notes 2021 Interim 2020 Interim
I. Operating income XVIII. 4 196,151,588.84 5,042,717,099.68
Less: operating cost XVIII. 4 170,532,414.76 4,398,410,781.55
Taxes and surcharges 1,174,776.60 11,343,686.85
Selling expenses 1,542,784.65 217,962,272.62
Administration expenses 143,500,790.38 132,288,406.83
R&D expenses 17,296,703.96 142,656,643.01
Financial expenses -32,789,762.71 28,978,469.77
Including: Interest expenses 7,372,782.23 46,159,222.22
Interest income 35,812,614.94 16,084,909.36
Add: other income 39,709,407.90 33,262,133.10
investment income (losses are XVIII. 5
113,153,980.76 245,974,740.37
represented by “-”)
Including: Investment income
of associates and joint ventures
89,661,570.77 63,292,928.01
Derecognition income
on financial assets measured at
amortized cost (losses are represented
by “-”)
Gains on net exposure hedges
(losses are represented by “-”)
Income from change in fair
value (losses are represented by “-”)
Loss on credit impairment
-7,122,909.94 284,032.12
(losses are represented by “-”)
Loss on assets impairment
-1,306,612.25
(losses are represented by “-”)
Gain from disposal of assets
142,444,000.00
(losses are represented by “-”)
II. Operating profit (losses are
183,078,359.92 389,291,132.39
represented by “-”)
Add: non-operating income 60,749.06 36,554.33
Less: non-operating expenses 50,687.25 319,495.89
III. Total profit (total losses are
183,088,421.73 389,008,190.83
represented by “-”)
Less: income tax expenses -15,190,900.38 -1,456,008.32
IV. Net profit (net losses are
198,279,322.11 390,464,199.15
represented by “-”)
(I) Net profit from
continuous operations (net
198,279,322.11 390,464,199.15
losses are represented by
“-”)
(II) Net profit from
discontinued operations
(net losses are represented
by “-”)
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2021 Interim Report
Haier Smart Home Co., Ltd
V. Other comprehensive income, net
11,664,510.69 -7,116,127.00
of tax
(I) Other comprehensive income
that cannot be reclassified into the -178,713.89
profit or loss
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 -178,713.89
instruments
4. Changes in fair value of credit
risks of the enterprise
(II) Other comprehensive
income to be reclassified into the 11,664,510.69 -6,937,413.11
profit or loss
1. Other comprehensive income
that can be transferred into profit or 11,664,510.69 -6,937,413.11
loss under equity method
2. Changes in fair value of other
debt investments
3. Reclassified financial assets
that are credited to other
comprehensive income
4. Credit impairment provision
for other debt investments
5. Reserve for cash flow hedging
6. Exchange differences on
translation of financial statements
denominated in foreign currencies
7. Others
VI. Total comprehensive income 209,943,832.80 383,348,072.15
VII. Earnings per share:
(I) Basic earnings per share
(RMB/share)
(II) Diluted earnings per share
(RMB/share)
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Consolidated Cash Flow Statement
January-June 2021
Unit and Currency: RMB
Items Notes 2021 Interim 2020 Interim
I. Cash flow from operating
activities:
Cash received from the sale of
117,815,574,983.23 89,745,966,042.83
goods and rendering services
Net increase in customer and
inter-bank deposits
Net increase in borrowing
from the central bank
95
2021 Interim Report
Haier Smart Home Co., Ltd
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 placement from
banks and other financial
institutions
Net increase in cash received
from repurchase operation
Net cash received from
customer deposits for trading in
securities
Refunds of taxes 964,437,549.48 469,784,953.90
Cash received from other VII. 63
735,776,487.28 727,414,944.47
related operating activities
Sub-total of cash inflows
119,515,789,019.99 90,943,165,941.20
from operating activities
Cash paid on purchase of
80,228,131,855.35 68,204,573,941.90
goods and services
Net increase in loans and
advances of customers
Net increase in deposits in the
PBOC and inter-bank
Cash paid for compensation
payments under original
insurance contract
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
12,748,147,254.98 11,031,460,042.03
employees
Cash paid for all types of taxes 5,071,928,519.13 3,466,925,924.16
Cash paid to other operation VII. 64 13,043,757,663.64 8,783,125,290.51
related activities
Sub-total of cash outflows
111,091,965,293.10 91,486,085,198.60
from operating activities
Net cash flow from VII. 67 8,423,823,726.89 -542,919,257.40
operating activities
II. Cash flow from investing
activities:
Cash received from recovery
2,869,349,936.62 1,912,295,416.73
of investments
Cash received from return on
313,949,022.75 223,367,236.11
investments
Net cash received from the
disposal of fixed assets, 19,269,652.96 49,585,896.20
intangible assets and other long-
96
2021 Interim Report
Haier Smart Home Co., Ltd
term assets
Net cash received from
disposal of subsidiaries and other
operating entities
Other cash received from
investment activities
Sub-total of cash inflows
3,202,568,612.33 2,185,248,549.04
from investing activities
Cash paid on purchase of fixed
assets, intangible assets and other 3,153,590,910.44 3,105,838,460.63
long-term assets
Cash paid for investments 3,283,612,983.20 799,380,076.93
Net increase in secured loans
Net cash paid on acquisition of
subsidiaries and other operating 338,445,082.28
entities
Other cash paid on investment VII. 65 250,000.00 3,368,312.62
activities
Sub-total of cash outflows
6,437,453,893.64 4,247,031,932.46
from investing activities
Net cash flow from
-3,234,885,281.31 -2,061,783,383.42
investing activities
III. Cash flow from financing
activities:
Cash received from capital
8,600,000.00 1,116,431,069.68
contributions
Including: Cash received from
capital contributions by minority
shareholders of subsidiaries
Cash received from
4,920,230,964.76 15,878,143,451.50
borrowings
Other cash received from
financing activities
Sub-total of cash inflows
4,928,830,964.76 16,994,574,521.18
from financing activities
Cash paid on repayment of
11,117,743,195.81 5,448,817,686.75
loans
Cash paid on distribution of
dividends, profits or repayment 327,295,977.88 568,142,953.79
of interest expenses
Including: Dividend and profit
paid to minority shareholders by
subsidiaries
Other cash paid to financing VII. 66 3,090,810,896.53 398,074,951.29
activities
Sub-total of cash outflows
14,535,850,070.22 6,415,035,591.83
from financing activities
Net cash flow from
-9,607,019,105.46 10,579,538,929.35
financing activities
IV. Effect of fluctuations in
exchange rates on cash and cash -107,597,142.14 84,027,232.22
equivalents
V. Net increase in cash and cash
-4,525,677,802.02 8,058,863,520.75
equivalents
Add: balance of cash and cash VII. 68 45,635,132,638.48 34,962,947,399.85
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2021 Interim Report
Haier Smart Home Co., Ltd
equivalents at the beginning of
the period
VI. Balance of cash and cash VII. 68
equivalents at the end of the 41,109,454,836.46 43,021,810,920.60
period
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Cash Flow Statement of the Parent Company
January-June 2021
Unit and Currency: RMB
Items Notes 2021 Interim 2020 Interim
I. Cash flow from operating
activities:
Cash received from the sale of
4,574,156,292.06 1,201,820,635.00
goods and rendering of services
Refunds of taxes 15,641,231.71 7,969,641.49
Other cash received from
60,444,554.93 44,874,440.51
operating activities
Sub-total of cash inflows
4,650,242,078.70 1,254,664,717.00
from operating activities
Cash paid on purchase of
81,405,473.91 9,839,119,707.06
goods and services
Cash paid to and on behalf of
138,942,956.91 299,326,532.30
employees
Cash paid for all types of
33,242,176.88 139,592,241.79
taxes
Other cash paid to operation
9,853,987.61 114,847,819.51
activities
Sub-total of cash outflows
263,444,595.31 10,392,886,300.66
from operating activities
Net cash flow from operating
4,386,797,483.39 -9,138,221,583.66
activities
II. Cash flow from investing
activities:
Cash received from recovery
273,250,000.00 312,000,000.00
of investments
Cash received from return on
92,194,698.15 3,840,802,526.75
investments
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
365,444,698.15 4,152,802,526.75
from investing activities
Cash paid on purchase of
fixed assets, intangible assets 31,022,950.45 68,733,039.41
and other long-term assets
Cash paid for investments 231,500,000.00 1,159,400,000.00
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Haier Smart Home Co., Ltd
Net cash paid on acquisition
of subsidiaries and other
operating entities
Other cash paid on investment
75,886,144.59 79,000,000.00
activities
Sub-total of cash outflows
338,409,095.04 1,307,133,039.41
from investing activities
Net cash flow from
27,035,603.11 2,845,669,487.34
investing activities
III. Cash flow from financing
activities:
Cash received from capital
contributions
Cash received from
4,500,000,000.00
borrowings
Other cash received from
818,187,321.17
financing activities
Sub-total of cash inflows
5,318,187,321.17
from financing activities
Cash paid on repayment of
5,520,000,000.00
borrowings
Cash paid on distribution of
dividends, profits or repayment 43,159,752.53 39,865,388.89
of interest expenses
Other cash paid on financing
5,359,441,498.61 978,120.00
activities
Sub-total of cash outflows
10,922,601,251.14 40,843,508.89
from financing activities
Net cash flow from
-10,922,601,251.14 5,277,343,812.28
financing activities
IV. Effect of fluctuations in
exchange rates on cash and cash 5,596,792.78 92,170.17
equivalents
V. Net increase in cash and cash
-6,503,171,371.86 -1,015,116,113.87
equivalents
Add: balance of cash and cash
equivalents at the beginning of 8,286,549,909.64 5,624,406,816.79
the period
VI. Balance of cash and cash
equivalents at the end of the 1,783,378,537.78 4,609,290,702.92
period
Person in charge of the Company: Liang Haishan
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
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Consolidated Statement of Changes in Owner's Equity
January-June 2021
Unit and Currency: RMB
2021 Interim
Equity attributable to owners of the Parent Company
Total
Items Other equity Genera Minority
Paid-in Less: Other Speci owners'
instruments l Undistribute equity
capital (or Capital treasu comprehens al Surplus Othe equity
preferen perpetu risk d Sub-total
share reserve ry ive reser reserve rs
ce al Others provisi profits
capital) stock income ve
shares bonds on
I. Closing balance 9,027,846,44 2,364,195,3 15,009,027,40 28,89 - 3,045,334,53 38,445,132,17 66,816,422,61 1,294,584,557 68,111,007,1
for the previous year 1.00 33.79 7.40 6,550. 1,046,216,72 9.60 2.47 4.55 .09 71.64
65 9.06
Add: changes in 183,214,768.1 183,214,768.1 289,732.70 183,504,500.
accounting policies 1 1 81
Error correction for
prior period
Business
combination under
common control
Others
II. Opening balance 9,027,846,44 2,364,195,3 15,009,027,40 28,89 - 3,045,334,53 38,628,346,94 66,999,637,38 1,294,874,289 68,294,511,6
for the current year 1.00 33.79 7.40 6,550. 1,046,216,72 9.60 0.58 2.66 .79 72.45
65 9.06
III. 365,324,040. - 7,301,326,543. 1,767, - 3,419,035,524 6,846,578,975 58,685,777. 6,905,264,7
Increase/decrease 00 2,215,712,1 56 258,0 256,136,942. .28 .12 57 52.69
for the current 53.81 36.36 55
period (decrease is
represented by “-”)
(I) Total - 6,852,271,8 6,558,274,058 83,469,967. 6,641,744,0
comprehensive 293,997,754. 12.97 .71 37 26.08
income 26
(II) Capital injection 365,324,0 - 7,301,398,691. 1,767, 3,683,752, 16,167,229. 3,699,919,7
and reduction by 40.00 2,215,712,1 86 258,0 541.69 15 70.84
owners 53.81 36.36
1. Ordinary shares
invested by owners
2. Capital 397,676,8 - 8,095,619,0 6,277,583, 6,277,583,7
contribution by 40.00 2,215,71 66.22 752.41 52.41
holders of other 2,153.81
equity
instruments
100
2021 Interim Report
Haier Smart Home Co., Ltd
3. Share-based
payment included in
owners' equity
4. Others - - 1,767, - 16,167,229. -
32,352,80 794,220,37 258,0 2,593,831, 15 2,577,663,9
0.00 4.36 36.36 210.72 81.57
(III) Profit - - - -
distribution 3,420,918,6 3,420,918,669 40,951,418. 3,461,870,0
69.85 .85 95 88.80
1. Withdrawal of
surplus reserves
2. Withdrawal of -
provisions for
general risks
3. Distribution to - - - -
owners (or 3,420,918,6 3,420,918,669 40,951,418. 3,461,870,0
shareholders) 69.85 .85 95 88.80
4. Others
(IV) Internal transfer - - - -
of owner's equity
1. Transfer of capital
reserves into capital
(or share capital)
2. Transfer of
surplus reserves into
capital (or share
capital)
3. Surplus reserves -
used for remedying
loss
4. Changes in
defined benefit plans
carried forward to
retained earnings
5. Other
comprehensive
income carried
forward to retained
earnings
6. Others
(V) Special reserve - - - - - - - - -
1．Withdrawal for
the period
2. Utilization for the
period
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(VI) Others -72,148.30 37,860,811. - 25,471,044 25,471,044.
71 12,317,618. .57 57
84
Ⅳ. Closing balance 9,393,170,48 148,483,179 22,310,353, 1,796, - 3,045,334,5 42,047,382, 73,846,216,35 1,353,560,0 75,199,776,
for the period 1.00 .98 950.96 154,5 1,302,353,671. 39.60 464.86 7.78 67.36 425.14
87.01 61
2020 Interim
Equity attributable to owners of the Parent Company
Other equity Capital Genera Total
Items Paid-in Less: Other Speci Minority
instruments reserve l Undistribute owners'
capital (or treasu comprehens al Surplus Othe equity
Preferen Perpetu risk d Sub-total equity
share ry ive reser reserve rs
ce al Others provisi profits
capital) stock income ve
shares bonds on
I. Closing balance 6,579,566,627. 431,424,524.4,435,890,845. 1,317,988,619. 2,655,327,405. 32,468,121,744 47,888,319,765 17,101,540,502 64,989,860,267
for the previous year 00 07 47 66 46 .26 .92 .01 .93
Add: changes in
accounting policies
Error correction for
prior period
Business
combination under
common control
Others
II. Opening balance 6,579,566,627. 431,424,524.4,435,890,845. 1,317,988,619. 2,655,327,405. 32,468,121,744 47,888,319,765 17,101,540,502 64,989,860,267
for the current year 00 07 47 66 46 .26 .92 .01 .93
III. 351,201,960.6 - 302,889,913.27 442,081,913.47 1,075,798,128. 1,517,880,041
Increase/decrease 7 212,009,960.4 43 .90
for the current 7
period (decrease is
represented by “-”)
(I) Total - 2,780,800,712. 2,560,799,222. 789,754,265.20 3,350,553,487
comprehensive 220,001,490.3 72 39 .59
income 3
(II) Capital injection 359,193,490.5 359,193,490.53 965,639,084.88 1,324,832,575
and reduction by 3 .41
owners
1. Ordinary shares 359,193,490.5 359,193,490.53 965,639,084.88 1,324,832,575
invested by owners 3 .41
2. Capital
contribution by
holders of other
equity instruments
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3. Share-based
payment included in
owners' equity
4. Others
(III) Profit - - - -
distribution 2,467,337,485. 2,467,337,485. 679,595,221.65 3,146,932,706
13 13 .78
1. Withdrawal of
surplus reserves
2. Withdrawal of
provisions for
general risks
3. Distribution to - - - -
owners (or 2,467,337,485. 2,467,337,485. 679,595,221.65 3,146,932,706
shareholders) 13 13 .78
4. Others
(IV) Internal
transfer of owner's
equity
1. Transfer of
capital reserves into
capital (or share
capital)
2. Transfer of
surplus reserves into
capital (or share
capital)
3. Surplus reserves
used for remedying
loss
4. Changes in
defined benefit
plans carried
forward to retained
earnings
5. Other
comprehensive
income carried
forward to retained
earnings
6. Others
(V) Special reserve
1．Withdrawal for
the period
2. Utilization for the
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period
(VI) Others -7,991,529.86 7,991,529.86 -10,573,314.32 -10,573,314.32 -
10,573,314.32
Ⅳ. Closing balance 6,579,566,627. 431,424,524.4,787,092,806. 1,105,978,659. 2,655,327,405. 32,771,011,657 48,330,401,679 18,177,338,630 66,507,740,309
for the period 00 07 14 19 46 .53 .39 .44 .83
Person in charge of the Company: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying
Ke
Statement of Changes in Owners' Equity of the Parent Company
January-June 2021
Unit and Currency: RMB
2021 Interim
Other equity Capital
Less: Other Total
Items Paid-in capital (or instruments reserve Special Surplus Undistributed
treasury comprehensive owners'
share capital) Preference Perpetual Others reserve reserve profits
stock income equity
shares bonds
Ⅰ. Closing balance 9,027,846,441.00 20,408,352,380.9 -10,030,704.15 2,440,188,314.15 4,349,961,964.23 36,216,318,396.18
for the previous 5
year
Add: changes in
accounting
policies
Error correction
for prior period
Others
Ⅱ. Opening 9,027,846,441.00 20,408,352,380.9 -10,030,704.15 2,440,188,314.15 4,349,961,964.23 36,216,318,396.18
balance for the 5
current year
III. 365,324,040.00 5,085,971,596.28 1,767,2 11,664,510.69 -3,222,639,347.74 473,062,762.87
Increase/decrease 58,036.
for the current 36
period (decrease is
represented by “-
”)
(I) Total 11,664,510.69 198,279,322.11 209,943,832.80
comprehensive
income
(II) Capital 365,324,040.00 5,085,971,596.28 1,767,2 - 3,684,037,599.92
injection and 58,036.
reduction by owners 36
1. Ordinary shares -32,352,800.00 -793,935,316.13 -826,288,116.13
invested by
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owners
2. Capital 397,676,840.00 5,879,906,912.41 6,277,583,752.41
contribution by
holders of other
equity instruments
3. Share-based
payment included
in owners' equity
4. Others 1,767,2 -1,767,258,036.36
58,036.
36
(III) Profit -3,420,918,669.85 -3,420,918,669.85
distribution
1. Withdrawal of
surplus reserves
2．Distribution to -3,420,918,669.85 -3,420,918,669.85
owners (or
shareholders)
3．Others
(IV) Internal
transfer of owner's
equity
1. Transfer of
capital reserves
into capital (or
share capital)
2. Transfer of
surplus reserves
into capital (or
share capital)
3. Surplus
reserves used for
remedying loss
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Other
comprehensive
income carried
forward to
retained earnings
6. Others
(V) Special
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reserve
1．Withdrawal
for the period
2. Utilization for
the period
(VI) Others
Ⅳ. Closing 9,393,170,481.00 25,494,323,977.2 1,767,2 1,633,806.54 2,440,188,314.15 1,127,322,616.4 36,689,381,159.05
balance for the 3 58,036. 9
period 36
2020 Interim
Other equity Capital
instruments reserve Less: Other Total
Items Paid-in capital (or Special Surplus Undistributed
Perpetu Others treasury comprehensive owners'
share capital) Preference reserve reserve profits
al stock income equity
shares
bonds
Ⅰ. Closing balance 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
for the previous
year
Add: changes in -
accounting policies
Error correction -
for prior period
Others -
Ⅱ. Opening balance 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
for the current year
III. -7,116,127.00 -2,076,873,285.98 -2,083,989,412.98
Increase/decrease
for the current
period (decrease is
represented by “-”)
(I) Total -7,116,127.00 390,464,199.15 383,348,072.15
comprehensive
income
(II) Capital -
injection and
reduction by
owners
1. Ordinary shares
invested by owners
2. Capital
contribution by
holders of other
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equity instruments
3. Share-based
payment included
in owners' equity
4. Others
(III) Profit -2,467,337,485.13 -2,467,337,485.13
distribution
1. Withdrawal of -
surplus reserves
2．Distribution to - -2,467,337,485.13 -2,467,337,485.13
owners (or
shareholders)
3．Others
(IV) Internal
transfer of owner's
equity
1. Transfer of
capital reserves
into capital (or
share capital)
2. Transfer of
surplus reserves
into capital (or
share capital)
3. Surplus reserves
used for remedying
loss
4. Changes in
defined benefit
plans carried
forward to retained
earnings
5. Other
comprehensive
income carried
forward to retained
earnings
6. Others
(V) Special reserve
1．Withdrawal for
the period
2. Utilization for
the period
(VI) Others
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Ⅳ. Closing 6,579,566,627.00 7,036,531,178.83 3,961,350.45 2,050,181,180.01 1,230,361,956.13 16,900,602,292.42
balance for the
period
Person in charge of the Company: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying
Ke
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III. General Information of the Company
1. Overview of the Company
√Applicable Not Applicable
The predecessor of Haier Smart Home Co., Ltd. (herein after referred to as the
Company) was Qingdao Refrigerator Factory, which was established in 1984. As permitted
to offering by People's Bank of China, Qingdao Branch on 16 December 1989, and
approved by Qing Ti Gai [1989] No.3 on 24 March 1989, based on the reconstruction of
the original Qingdao Refrigerator Factory, a limited company was set up by directional
fund raising of RMB150 million. In 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 headquarter 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 holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the
Company on 30 August 2021.
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.
IV. Basis of Preparation of the Financial Statements
1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis
according to the transactions and matters actually occurred, in accordance with the
Accounting Standards for Business Enterprises – Basic Standards published by the
Ministry of Finance, specific accounting standards, and guidance on application of
accounting standards for business enterprises, interpretations to accounting standards for
business enterprises and other relevant requirements (herein after collectively referred to as
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the “Accounting Standards for Business 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. Going Concern
√ 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 Business Enterprises
The financial statements prepared by the Company meet the requirements of the
Accounting Standards for Business Enterprises, which accurately and completely reflected
information relating to the financial condition, the operating results, changes in
shareholders’ equity and cash flow of the Company.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of
the same year in solar calendar.
3. Operating cycle
√ Applicable □ Not Applicable
The Company takes 12 months as an operating cycle, 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.
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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
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 not under
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.
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
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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, each transaction is 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 relevant
profit and loss, the other comprehensive income and changes in the other owners' equity
recognized during the period between the later of the date of acquisition and the 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.
(2) Business combinations 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 involving in the business combination at
the combination date is the acquirer; other parties involving in the business combination are
the transferors. The combination date is the date on which the acquirer effectively obtains
control of the transferors.
In business combination 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 obtained on the acquisition date, the difference is recognized as
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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 acquirer's interest in 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 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.
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
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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 interests”
under the owner's equity item in the consolidated balance sheet.
The long-term equity investment of the Company held by the subsidiaries, deemed 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.
(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 not under common control, separate financial
statement will be adjusted on the basis of their fair values of the identifiable net assets on
the date 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
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shall full recognize the amount of this loss in relation to its investment in or sale of assets to
joint operations or recognize the loss according to the Company's share of commitment in
relation to its purchase of assets from joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled
to net assets of this arrangement. Investment in joint venture is accounted for using the
equity method according to the accounting policies referred to under “12 Long-term equity
investment” of Note V.
8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits
available for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly
liquid investments held by the Company that are readily convertible to known amounts of
cash 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 ① 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; ②those
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.
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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.
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, converted difference in foreign currency
statements 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
1 Classification and measurement
According to the business model for managing financial assets and the contractual cash
flow characteristics of financial assets, the Company classifies financial assets into: (1)
Financial assets measured at amortized cost; (2) financial assets measured 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 or 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:
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(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 (inclusive)
from the balance sheet date as non-current assets matured within one year; the creditor's
rights investments matured within one year (inclusive) when being obtained are listed as
other current assets.
(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 (inclusive) from the balance sheet
date are listed as non-current assets matured within one year; other creditor's rights
investments matured within one year (inclusive) when being obtained are listed as other
current assets.
(c) Measured at fair value through profit or loss of the current period:
The Company lists its held debt instruments that are neither measured 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
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such financial assets are included in profit and loss of the current period.
②Impairment
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.
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 impairment 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 on
the historical credit losses experience, the existing conditions and forecast of future
economic conditions.
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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.
③ Derecognition
A financial asset is derecognized when any of the below criteria is met: a. the
contractual rights to receive the cash flow from the financial asset have been terminated; b.
the financial asset has been transferred and 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.
(2) Financial liabilities
Financial liabilities are classified as financial liabilities measured at amortized cost
and financial liabilities at fair value through profit or 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 (inclusive) are listed as current liabilities: those with maturity
of more than one year but are mature within one year from the balance sheet date (inclusive)
are listed as non-current liabilities due within one year; the rest are presented as non-current
liabilities.
When all or partial current obligations of financial liabilities have been discharged,
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-
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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 trading 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 judgments
①Significant accounting estimates and key assumptions
Measurement of expected credit loss
The Company applies exposure at default and expected credit loss rate to calculate
expected credit loss, and determines expected credit loss rate based on probability of
default and loss given default. For the determination of expected credit loss rate, the
Company applies data including internal historical credit losses experience, and adjusts
historical data taking account current conditions and forward-looking information.
Regarding forward-looking information, indicators used by the Company include economic
downturn risk, growth in expected unemployment rate, changes in external market
environment, technology environment and customer status. The Company monitors and
reviews assumptions related to the calculation of expected credit loss on a regular basis. No
major change occurred in the above-mentioned estimate techniques and key assumptions in
this year.
2 Critical judgments on application of accounting policies
a. Classification of financial assets
On classification of financial assets, critical judgments considered by the Company
include the business mode, an analysis of contractual cash flow characteristics and others.
From the dimension of financial asset portfolio, the Company determines the business
mode of financial asset management. Considerations cover assessments, reporting methods
of financial asset performance to key management personnel, risks impacting financial
asset performance and relevant management methods, as well as methods of relevant
business management personnel receiving remuneration.
In assessing the consistency between contractual cash flow of financial assets and the
basic lending arrangements, the Company makes the following major judgments: whether
the time distribution or amount of the principal changes during the duration of the financial
assets due to prepayment, etc.; and whether the interest includes considerations for the
currency time value, credit risk, as well as other basic borrowing risks, costs and profits.
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For example, whether the prepayment amount merely reflects the principal unpaid and
interest incurred by the principal unpaid, as well as reasonable compensation paid due to
premature termination of contracts.
b. Judgment that credit risk increases significantly
The main standards for the Company to judge significant increase in credit risk are
that overdue days are more than 30 days, or that significant changes occur in one or more
of the following indicators: business environment of debtors, internal and external credit
rating, the significant change of actual or expected business performance, value of
collaterals or significant drop in credit rating of guarantors.
The main standards for the Company to judge incurred credit impairment are that
overdue days are more than 90 days (i.e. default occurred), or that one or more of the
following conditions are met: a debtor is under significant financial difficulty; other
ongoing debt restructuring or high possibility of bankruptcy.
11. Inventories
√ Applicable □ Not Applicable
(1) Classification of inventories
Inventories refer to the finished goods or commodities held for sale in daily activities,
goods in progress in the production process, consumed materials and supplies in the
production process or providing services of the Company, which mainly include raw
materials, revolving materials, entrusted processed materials, wrap page, goods in progress,
self-made semi-finished goods, finished goods (merchandise inventory) and engineering
construction, etc.
(2) Measurement of inventories transferred out
At delivery, inventories are accounted using the weighted average method.
(3) Provision for inventory impairment
At balance sheet date, inventories are measured at the lower of cost or net realizable
value.
The net realizable value of inventories (including finished products, merchandize and
materials for sale) that can be sold directly is determined based on the estimated selling
price of such inventory deducted by the estimated selling expenses and relevant taxes. The
net realizable value of materials held for production is determined based on the estimated
selling price of the finished product deducted by the estimated cost to be incurred upon
completion, estimated selling expenses and relevant taxes. The net realizable value of
inventory held for performance of sales contract or labor service contract is determined
based on the contractual price; in case the amount of inventory held by the enterprise
exceeds the contractual amount, the net realizable value of the excess portion of inventory
is calculated based on the general selling price.
Provision for impairment of inventories is made for individual inventory. For items of
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inventories that is produced and marketed in the same geographical area and with the
same or similar end uses or purposes, which cannot be practicable evaluated separately
from other items, cost and net realizable value of inventories may be determined on an
aggregate basis. For large quantity and low value items of inventories, cost and net
realizable value of inventories may be determined on types of inventories.
Provision for inventory impairment is made and recognized as profit or loss when the
cost is higher than the net realizable value on the balance sheet date. If the factors that give
rise to the provision in prior years are not in effect in current year, provision would be
reversed within the amount of provision for inventory impairment originally recognized,
and the reversed amount shall be recognized in the profit or loss.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization of low-value consumables and packaging
Low-value consumables and packages of the Company are amortized by one-time
write-off.
12. Long-term equity investments
√ Applicable □ Not Applicable
Long-term equity investments in this section refer to equity investments held by the
Company that give it control, joint control or significant influence over the investee. Long-
term equity investments where the Company does not exercise control, joint control or
significant influence over the investee are accounted for as other equity instrument
investments.
(1) Recognition of initial cost of investment
① For long-term equity investment obtained from business consolidation under
common control, the initial cost is measured at the combining party's share of the carrying
amount of the equity of the combined party; for a long-term equity investment obtained
from business consolidation not under common control, the initial cost is the consolidation
cost at the date of acquisition;
② For the long-term equity investment acquired in a manner other than business
combination: the initial investment cost of the long-term equity investment acquired by
payment in cash shall be the purchase price actually paid; the initial investment cost of the
long-term equity investment acquired by issuing equity securities shall be the fair value of
the equity securities issued; for long-term equity investment acquired by debt restructuring,
the initial investment cost shall be determined in accordance with the relevant requirements
under Accounting Standards for Enterprises No. 12 - Debt Restructuring; for long-term
equity investment acquired by the exchange of non-monetary assets, the initial investment
cost shall be determined in accordance with relevant requirements under the Rules.
(2) Subsequent measurement and profit or loss recognition
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①Cost method
Where the investor has a control over the investee, long-term equity investments are
measured using cost method. For long-term equity investments using cost method, unless
increasing or recovering the investment, the carrying value is generally unchanged. The
profit distributions or cash dividends declared by the investee attributable to the Company
are recognized as investment income.
②Equity method
Investor's long-term equity investments in associates and joint ventures are measured
using equity method. Where part of the equity investments of an investor in its associates
are held indirectly through venture investment institutions, common fund, trust companies
or other similar entities including investment linked insurance funds, such part of equity
investments indirectly held by the investor shall be measured at fair value through profit or
loss according to relevant requirements of Accounting Standards for Business Enterprises
No.22—Recognition and measurement of Financial Instruments regardless whether the
above entities have significant influence on such part of equity investments, while the
remaining part shall be measured using equity method.
Under the equity method, where the initial investment cost of a long-term equity
investment exceeds the Company's share of the fair value of the investee's identifiable net
assets at the time of acquisition, no adjustment is made to the initial investment cost. Where
the initial investment cost is less than the Company's share of the fair value of the investee's
identifiable net assets at the time of acquisition, the difference is recognized in profit or loss
for the period, and the cost of the long-term equity investment is adjusted accordingly.
For long-term equity investments accounted for using the equity method, the
Company recognizes the investment income and other comprehensive income according to
its share of net profit or loss and other comprehensive income of the investee, and the
carrying amount of the long-term equity investments shall be adjusted accordingly; the
carrying amount of the investment is reduced by the Company's share of the profit
distribution or cash dividends declared by an investee; for changes in owner's equity of the
investee other than those arising from its net profit or loss, other comprehensive income
and profit distribution, the carrying amount of the long-term equity investment shall be
adjusted and recognized to capital reserve. When recognizing attributable share of the net
profit and losses of the investee, the net profit of the investee shall be recognized after
adjustment on the ground of the fair value of all identifiable assets of the investee when it
obtains the investment. If the accounting policies and accounting periods adopted by the
investee are different from those adopted by the Company, an adjustment shall be made to
the financial statements of the investee in accordance with the accounting policies and
accounting periods of the Company and recognize the investment incomes and other
comprehensive income.
The Company's share of net losses of the investee shall be recognized to the extent
that the carrying amount of the long-term equity investment together with any long-term
interests that in substance form part of the investor's net investment in the investee are
reduced to zero. If the Company has to assume additional obligations, the estimated
obligation assumed shall be provided for and charged to the profit or loss as investment loss
for the period. Where the investee is making net profits in subsequent periods, the
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Company shall resume recognizing its share of profits after setting off against the share of
unrecognized losses.
(3) Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method: where the
equity investment originally held have no control, joint control or significant impact on the
investee, and that are accounted according to the Standards for Recognition and
Measurement of Financial Instruments and can impose common control or place significant
impact on the investee due to addition of investment which resulted in the increase of
shareholding, the investee shall take the fair value of the equity investment originally held
determined in accordance with the Standards for Recognition and Measurement of
Financial Instruments plus the fair value of the consideration payable for new investment as
the initial investment cost accounted after the equity method is adopted.
② Change of measurement at fair value or accounting under equity method to cost
method: the equity investment originally held by the investor with no control, joint control
or significant impact on the investee and accounted according to the Standards for
Recognition and Measurement of Financial Instruments, or the long-term equity investment
originally held in associates or joint ventures that can impose control over the investee due
to addition of investment, shall be accounted as long-term equity investment formed by
combination of relevant enterprises.
③ Change of accounting under equity method to measurement at fair value: for the
long-term equity investment originally held with common control or significant impact on
the investee that can no longer impose common control or significant impact on the
investee due to a decrease of shareholding as a result of factors such as partial disposal, the
remaining equity investment shall be accounted in accordance with Standards for
Recognition and Measurement of Financial Instruments, and the difference between the fair
value on the date when the common control or significant impact no longer exists and the
book value is included in profit or loss.
④ Change of cost method to equity method or measured at fair value: For loss of
control in the invested company due to reasons such as partial disposal of equity investment,
in the preparation of separate financial statements, the residual equity which can apply
common control or impose significant influence to the invested company after disposal
shall be accounted for under equity method. Such residual equity shall be treated as
accounting for under equity method since the equity is obtained and adjusted. For residual
equity which cannot apply common control or impose significant influence after disposal, it
shall be accounted for in accordance with relevant requirements of “Accounting Standards
for Business Enterprises No. 22 – Recognition and Measurement of Financial Instrument”,
and the difference between the fair value and the carrying value of residual equity on the
date loss of control shall be included in the profit or loss for such period. In the preparation
of combined financial statements, it shall be accounted for in accordance with relevant
requirements of “Accounting Standards for Business Enterprises No. 33 – Combined
Financial Statements”.
(4) Basis of conclusion for common control and significant impact over the investee
①Joint control over an investee means that activities which have a significant impact
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on the return of a certain arrangement could be decided only by mutual consent of the
investing parties sharing the right of control, which includes the sales and purchase of
goods or services, management of financial assets, acquisition and disposal of assets,
research and development activities and financing activities, etc.
②Significant impact on the investee exists when the investing parties hold more than
20% but less than 50% of the shares with voting rights in the investee or, if the investing
parties hold less than 20% shares in the investee, they:
1) have representatives in the board of directors or similar governing body of the
investee;
2) participate in the investee's policy formulation;
3) assign management personnel to the investee;
4) provide technology or technical information that the investor is dependent on;
5) have major transactions with the investee.
(5) methods of impairment test and provision for impairment
At the balance sheet date, the Company reviews whether there are signs for the
impairment of long-term equity investments. If yes, the recoverable amount is determined
through impairment test and provision for impairment is made based on the difference
between the recoverable amount and the carrying value. Impairment loss will not be
reversed in subsequent accounting periods once provision is made for it.
The recoverable amount is the higher of net fair value of long-term equity investments
on disposal and the present value of estimated future cash flow.
(6) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the considerations
actually received and the carrying value of the disposed investment is recognized in current
profit or loss. For long-term equity investment accounted for using the equity method, the
part previously recognized in other comprehensive income is accounted on pro rata basis
upon disposal in the same way as the relevant assets or liabilities are disposed of directly by
the investee.
13. Investment properties
Investment properties of the Company include leased land use rights and leased
buildings.
An investment property is initially measured at cost, and cost method is adopted for
subsequent measurement.
The buildings leased out of investment properties of the Company are depreciated over
their useful lives using the straight-line method. The specific measurement policy is the
same as that of fixed assets. For land use rights leased out of investment properties or held
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for resale after appreciation in value, they are amortized using the straight-line method. The
specific measurement policy is the same as that of intangible assets.
At the balance sheet date, the Company reviews whether there are signs for impairment
of investment properties. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount. Impairment loss will not be reversed in
subsequent accounting periods once provision is made for it.
14. Fixed assets
(1). Recognition criteria
√ Applicable □ Not Applicable
Fixed assets are tangible assets that are held for production of goods, provision of
labor services, leasing or operation and management purposes, and have a useful life of
more than one fiscal year, which are recognized when the following conditions are met:
1 economic benefits in relation to the fixed assets are very likely to flow into the
enterprise;
2 the cost of the fixed assets can be measured reliably.
(2). Depreciation method
√ Applicable □ Not Applicable
The fixed assets of the Company can be divided into: houses and buildings, production
equipment, transportation equipment, office equipment, etc. The straight-line method over
useful lives is used to measure depreciation. The useful lives and the expected net residual
value of fixed assets are determined according to the nature and usage of various fixed
assets. At the end of each year, the useful lives, expected net residual value and
depreciation method of fixed assets are reviewed, and adjusted if there is variance with
original estimates. The Company has made provisions for all the fixed assets except for the
fixed assets that have been fully depreciated and still in use.
Depreciation life (year) Residual ratio
Type
Land ownership - -
Houses and 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). Method of test and provision for impairment of fixed assets
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At the balance sheet date, the Company reviews whether there are signs for impairment
of the fixed assets. If yes, the recoverable amount is recognized through an impairment test
and provision for impairment is made based on the difference between the carrying value
and the recoverable amount. Impairment loss will not be reversed in subsequent accounting
periods once provision is made for it.
(4). Disposal of fixed assets
When fixed assets are disposed of or are expected to fail to generate economic benefits
after the use or disposal, the fixed assets shall be derecognized. The difference of the
income from sales, transfer, retirement or damage of fixed assets deducting the book value
and related taxes should be included in the current profit and loss.
15. Construction in progress
√ Applicable □ Not Applicable
(1) Measurement of construction in progress
Costs of construction in progress are recognised based on actual construction expense,
including various necessary construction expenses incurred during construction, borrowing
costs to be capitalised before reaching estimated usable status and other relevant fees.
(2) Standard and timing of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when the
project is completed and ready for its intended use, which shall satisfy one of the following
conditions:
①The construction of the fixed assets (including installation) has been completed or
substantially completed;
②The fixed asset has been used for trial production or operation and it is evidenced that
the asset can operate ordinarily or steadily produce qualified products; or the result of trial
operation proves that it can operate normally or be opened for business;
③Further expenditure incurred for construction of the fixed asset is very minimal or
remote;
④The constructed fixed asset reaches or almost reaches the design or contractual
requirements, or complies with the design or contractual requirements.
(3) Method of test and provision for impairment of impairment of construction in
progress
At the balance sheet date, the Company reviews the construction in progress to check
whether there is any sign of impairment. If yes, the recoverable amount is 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.
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The recoverable amount of construction in progress should base on the higher of net
fair value of asset less disposal expense and the present value of estimated future cash flow
of the asset.
16. Borrowing costs
√ Applicable □ Not Applicable
(1) Recognition principles for capitalization of borrowing costs
The Company's borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized into the cost of relevant
assets. Other borrowing costs are recognized as expenses in current profit or loss based on
the amount incurred. Qualifying assets for capitalization include fixed assets, investment
properties and inventories that necessarily take a substantial period of time for acquisition,
construction or production to get ready for their intended use or for sale.
(2) Computation of capitalized amount
Period of capitalization refers to the period from the commencement to the cessation
of capitalization timing of borrowing costs, excluding the periods in which capitalization of
borrowing costs is suspended.
Period of suspended capitalization: Capitalization of borrowing costs is suspended
during periods in which the acquisition, construction or production of a qualifying asset is
suspended abnormally and the suspension lasts for more than 3 months.
Computation of capitalized amount: ①Specific borrowings will be determined based on
the actual interest expense incurred in the current period of the special borrowings less the
interest income from unutilized borrowings deposited in banks or investment income from
temporary investment; ②Normal borrowings utilized are calculated based on the weighted
average of the asset expenses accumulated exceeding the asset expenses of the portion of
special borrowings multiplied by the capitalization ratio of the normal borrowings utilized.
Capitalization ratio is calculated based on weighted average interest rate of normal
borrowings; ③For borrowings with discount or premium, the discount or premium which
should be amortized in each accounting period is determined based on the effective interest
rate method and an adjustment should be made to the amount of interests in each period.
17. Right-of-use assets
√ Applicable □ Not Applicable
Right-of-use assets are the right of the Company as a lessee to use leased assets during
the lease term. On the commencement date of the lease term, the Company as lessee shall
recognize the right-of-use assets and lease liabilities for the lease, except for short-term
leases and low value assets leases which are treated with practical expedient. The
commencement date of the lease term refers to the start date when the lessor provides the
leased assets to make it available to the lessee.
The Company’s right-of-use assets shall be initially measured at the costs. The costs
include:
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(1) initial measurement amount of the lease liability;
(2) a lease payment paid on or before the date of commencement of the lease period,
where there was lease incentive, such incentives shall be deducted;
(3) initial direct costs incurred by the Company as lessee;
(4) costs expected to be incurred by the Company for demolition and removal of leased
assets, restoration of the premises where the leased assets are located, or restoration of
the leased assets to the conditions of the lease terms.
The Company refers to the relevant depreciation provisions of Accounting Standards
for Business Enterprises No. 4-Fixed Assets to accrue depreciation for right-of-use assets. If
the Company can reasonably determine that the ownership of the leased asset can be
acquired at the expiration of the lease term, the leased asset shall be depreciated within its
remaining useful life. If the Company cannot reasonably determine that the ownership of
the leased asset can be acquired at the expiration of the lease term, the leased asset shall be
depreciated within the lease term or its remaining useful life (whichever is shorter).
The Company determines whether the right-of-use assets are impaired in accordance
with the provisions of Accounting Standards for Business Enterprises No. 8 – Asset
Impairment and performs accounting treatment on the identified impairment losses.
When the lease liabilities are remeasured in accordance with the Standards, the
Company adjusts the book value of the right-of-use assets accordingly. If the book value of
the right-of-use assets is reduced to zero, but needs a further reduction in the measurement
of the lease liabilities, the Company recognizes any remaining amount of the
remeasurement in current profit or loss.
If the lease change results in a narrower lease or a shorter lease term, the Company
reduces the book value of the right-of-use assets accordingly and recognizes the related
gains or losses of the partially terminated or completely terminated leases into current profit
and loss. For other lease changes which result in the remeasurement of lease liabilities, the
Company adjusts the book value of the right-of-use assets accordingly.
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). Valuation method, service life and impairment test
√ Applicable □ Not Applicable
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.
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Subsequent measurement of intangible assets of the Company: ①Intangible 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; ②Intangible 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: ① the period is derived from
contractual rights or other legal rights and there are no explicit years of use stipulated in the
contract or laws and regulations; ② the period in which the intangible assets generate
benefits for the Company still could not be estimated after considering the industrial
practice or relevant expert opinions.
At the end of each year, the useful lives of the intangible assets with indefinite useful
lives are reviewed. The assessment is primarily reviewed by relevant departments that use
the intangible assets, using the down-to-top approach, to determine if there are changes to
the determination basis of indefinite useful lives.
(3). Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether
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
√ Applicable □ Not Applicable
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: ①the technical feasibility of completing the intangible assets so that they will be
available for use or for sale; ②the intention to complete the intangible assets for use or for
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sale; ③ 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; ④ the availability of adequate
technical, financial and other resources to complete the development and gain the ability to
use or sell the intangible assets; ⑤ the capability to reliably measure the expenditures
attributable to the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an
internal research and development project: research stage refers to the stage of planned
investigation and search for obtaining new technology and knowledge, which features
planning and exploration; before commercial production or other uses, the stage 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.
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
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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.
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
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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.
(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.
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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.
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
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there is objective evidence that the carrying value could not reflect in the current best estimate, the
carrying value shall be adjusted to reflect the current best estimate.
24. Share-based payments
√ Applicable □ Not Applicable
For equity-settled share-based payment transaction in return for services from employees, it
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 are changes to the Company's share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if 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.
25. Revenue
√ Applicable □ Not Applicable
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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:
① The client simultaneously obtains and consumes economic benefits as the Company
and its subsidiaries perform the contract;
② The client is able to control goods under construction during the process of
performance of the Company and its subsidiaries;
③ Goods produced by the Company and its subsidiaries during the process of
performance have no alternative use, and the Company and its subsidiaries are
entitled to collect the amount for the cumulative completed and performed portion
to date during the entire contractual period.
For the performance obligations performed during a certain time horizon, the Company
and its subsidiaries recognize revenue in accordance with the schedule of performance
during such time horizon. When the schedule of performance can't be reasonably
recognized, where the costs 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:
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① The Company and its subsidiaries enjoy the right of instant collection over such
goods and services;
② The Company and its subsidiaries have transferred the material objects of such
goods to the client;
③ The Company and its subsidiaries have transferred statutory ownership right of the
goods or major risks and rewards of the ownership to the client;
④ The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration
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.
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
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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.
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: ①those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized as
deferred income and recorded in current profit or loss when such expenses are recognized;
②those used to compensate relevant expenses or losses that have been incurred by the
enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related
government grant
If the government grant received by the Company is used for purchase, construction 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:
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①Government 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;
②Government 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.
(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 income tax assets/ deferred income tax liabilities
√ Applicable □ Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are
recognized:
(1) Based on the difference between the carrying amount and the tax base amount of an
asset or a liability (items not recognized as assets and liabilities but their tax base is
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.
(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
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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 estimations
√ Applicable □ Not Applicable
(1) Asset securitization business
Some of the Company's receivables are securitized. The Company's underlying assets
are trusted to a special purpose entity which issues securities to investors. The Company
serves as the asset service supplier, providing services including asset maintenance and its
daily management, formulation of the annual asset disposal plan, formulation and
implementation of the asset disposal plan, signing relevant asset disposal agreements and
periodic preparation of asset service report.
The Company has evaluated the extent to which it transfers the risks and rewards of
assets to other entities and the extent it exercises control over such entities while applying
the accounting policy in respect of securitization of financial assets:
①The financial asset is derecognized when the Company transfers substantially all the
risks and rewards of ownership of the financial asset;
② Recognition of the financial asset is continued when the Company retains
substantially all the risks and rewards of ownership of the financial asset;
③ When the Company neither transfers nor retains substantially all the risks and
rewards of ownership of the financial asset, the Company evaluates whether it retains
control over the financial asset. If the Company does not retain control, it derecognizes the
financial asset and recognizes separately as assets or liabilities any rights and obligations
created or retained in the transfer. If the Company retains control, it continues to recognize
the financial asset to the extent of its continuing involvement in the financial asset.
(2) Hedge accounting
Hedge refers to risk management activities that enterprises designate financial
instruments as hedge instruments in order to manage risk exposure caused by specific risks
such as foreign exchange risk, interest rate risk, price risk and credit risk, allowing to
expect changes in fair value or cash flow of hedge instruments to offset all or partial
changes in fair value or cash flow of hedged items.
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Hedged items refer to items which make enterprises face risks of changes in fair value
or cash flow and are designated as hedged objects and can be reliably measured.
A hedging instrument is a financial instrument designated by an enterprise for the
purpose of hedging, whose fair value or cash flow changes are expected to offset the
change in the fair value or cash flow of the hedged items.
The Company continuously conducts assessment over whether hedge relationship
complies with requirements of hedge effectiveness on the starting date of hedge and during
follow-on period. Hedge effectiveness refers to the extent that changes in fair value or cash
flow of hedge instruments can offset that of hedged items caused by the risks of being
hedged. The portion that the changes in fair value or cash flow of hedge instruments is
greater or less than that of hedged items is the ineffective portion of hedge.
(3) Explanations on significant accounting estimates
Judgments, estimates and assumptions shall be made to book value of the financial
statements items, which could not be measured accurately, due to the inherent uncertainties
of operating activities, while applying accounting policy. Such judgments, estimates and
assumptions were based on the management's historical experience and made after other
various factors are considered. These judgments, estimates and assumptions will influence
the amount of revenues, expenses, assets and liabilities presented in financial reports and
the disclosure of contingent liabilities on the balance sheet date. However, the actual results
caused by the uncertainties of these estimations may be different from the current estimates
of the management, and thus cause a material adjustment to the carrying amounts of assets
and liabilities affected in the future. The judgments, estimates and assumptions mentioned
above shall be reviewed on a going concern basis. If the revisions to accounting estimates
only affect the current period, the amount affected shall be recognized in the current period;
if the revisions affect both the current and future periods, the amount affected shall be
recognized in both the current and future periods.
On the balance sheet date, the Company needs to have judgments, estimates and
assumptions about the following items on the financial statements:
① Estimated liabilities
Provision for product quality guarantee, expected contract losses, and other estimates
shall be made in accordance with the terms of contracts, current knowledge and historical
experience. If the contingent event has formed a present obligation the performance of
which is very probable to result in outflow of economic benefits from the Company, an
estimated liability shall be recognized by the Company on the basis of the best estimate of
the expenditures to settle relevant present obligation. Recognition and measurement of the
estimated liability significantly rely to a great extent on the management's judgments. In the
process of judgment, the Company takes into consideration the assessment of relevant risks,
uncertainties, time value of money and other factors related to the contingent events.
Among them, the Company will undertake estimated liabilities with respect to the after-
sales services provided for the return, maintenance and installation of goods. When
estimating liabilities, the Company has considered the empirical data on maintenance in
recent years, but the previous maintenance experiences may fail to reflect the future
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circumstances. Any increase or decrease in this provision is likely to affect the profits and
losses of the next year.
② Provision of expected credit losses
The Company calculates the expected credit losses in accordance with breach risk
exposure and expected credit loss rate, and confirms expected credit loss rate on the basis
of breach possibilities and breach loss rate. When confirming expected credit loss rate, the
Company uses data such as internal historical credit loss experiences, and conducts
adjustments over historical data in combination with current status and forward-looking
information. When considering forward-looking information, indexes used by the Company
include risks such as economic downturn, growth of expected unemployment rate, changes
in external market environment, technological environment and client conditions. The
Company regularly monitors and reviews relevant assumptions relating to calculation of
expected credit losses. The aforesaid estimation techniques and key assumptions have not
changed substantially in this year.
③Impairment provision of inventories
Inventories are measured by lower of cost and net realizable value according to the
accounting policies of inventories; for inventories whose costs are higher than the net
realizable value or those obsolete and unsalable, the impairment provision of inventories
shall be made. The carrying value of inventory shall be written down to the net realizable
value on the basis of the evaluation of the salability of inventories and the net realizable
value thereof. Authenticating inventory impairment requires the management's obtaining of
solid evidence, and their judgments and estimations made after considering the purpose of
holding inventories and the effect of events after the balanced sheet date and etc. The
difference between the actual outcome and the previously estimated outcome will influence
the carrying value of inventories and the provision or reversal of impairment provision of
inventories during the period when the estimates are changed.
④Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine
their fair value through a variety of valuation methods. Such valuation methods include
discounted cash flow analysis. In the valuation, the Company shall estimate the future cash
flow, credit risk, market volatility and correlation, and select the appropriate discount rate.
Such related assumptions are uncertain, and their changes may affect the fair value of
financial instruments.
⑤Impairment of investment in other equity instruments
The Company largely relies on judgments and assumptions of the management when
determining whether investments of other equity instruments are impaired to determine
whether it is needed to recognize their impairment. During the process of conducting
judgments or making assumptions, the Company shall assess the extent and duration period
that the fair value of such investments is below the cost, as well as financial conditions and
short-term business prospects of the invested objects, including industry conditions,
technological reform, credit rating, breach rate and risks of counterparties.
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⑥Provision of long-term assets impairment
As at the balance sheet date, the Company shall judge whether there is any possible
indication of impairment against non-current assets other than financial assets. The
intangible assets with indefinite useful life must be tested for impairment on an annual
basis as well as when there is any indication of impairment. Other non-current assets other
than financial assets shall be tested for impairment when there is an indication showing that
the carrying value is not recoverable. Impairment occurs while the carrying value of an
asset or asset group is higher than the recoverable value, which is the higher of the net of
fair value less disposal expenses and the present value of expected future cash flow. The
net of fair value less disposal expenses is determined with reference to the price in the sale
agreement regarding analogous asset in fair transactions or the observable market price less
the increase of cost that is directly attributable to the disposal of assets. Significant
judgments regarding the output, sales price, relevant operating costs of the assets (or assets
group) and the discount rate used to calculate the present value shall be made when
estimating the present value of future cash flow. Recoverable amount shall be estimated by
the Company using all accessible relevant information, including predictions made on the
output, sales price, and relevant operating costs based on reasonable and supportive
assumptions. The Company shall test for goodwill impairment at least every year. This
requires the Company to estimate the present value of future cash flow for such assets
groups or asset group portfolios allocated with goodwill. When estimating the present value
of future cash flow, the Company shall not only estimate the future cash flow generated by
such asset groups or asset group portfolios, but also select the appropriate discount rate to
determine the present value of such future cash flow.
⑦Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and amortized
by the Company with a straight-line approach over their useful life by taking into
consideration the residual value. Useful life shall be periodically reviewed by the Company
to determine the amount of depreciation and amortization expenses for each reporting
period and be determined on the basis of historical experience regarding analogous assets
and the expected technological updates. Significant changes to previous accounting
estimates will result in adjustments against depreciation and amortization expenses in the
future periods.
⑧Deferred income tax assets
Deferred income tax asset is recognized by the Company for all the uncompensated tax
losses to the extent that there is sufficient taxable profit for the deduction of loss. In order
to determine the amount of deferred income tax assets, the management of the Company
needs to predict the timing and the amount of taxable profits in the future by making
abundant judgments, as well as through the strategy of tax planning.
⑨Income tax
In the ordinary course of business of the Company, the ultimate tax treatment and
calculations of some transactions are uncertain. Whether some items could be presented
before taxation shall be approved by relevant tax authorities. Where there are differences
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between the final tax outcome of these items and the initial estimated amount, such
differences will impact the current and deferred tax in the period of final confirmation.
⑩Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers.
According to the relevant conventions in the sales agreement, the review of specific
transactions, the market situation, the pipeline inventory levels and the historical
experiences, the Company and its subsidiaries estimate and accrue sales rebate on a regular
basis with reference to the completion of agreed assessment indexes by customers. Accrual
of sales rebate involves the judgment and estimates of the management. In case of any
significant changes in the previous estimates, the difference above will have an impact on
the sales rebate during the period when relevant changes in estimates occur.
29. Changes in the significant accounting policies and accounting estimates
(1). Changes in the significant accounting policies
□ Applicable √ Not Applicable
(2). Changes in the significant accounting estimates
□ Applicable √ Not Applicable
VI. Taxation
1. Main tax categories and rates
Main tax categories and rates
√ Applicable □ Not Applicable
Tax Basis of taxation Tax rate
categories
Value-added tax Taxable revenue from sales of 6%, 9%, 13%
goods or rendering services
City maintenance Circulation Taxes payable 7%
and construction
tax
Enterprise Taxable income Statutory tax rate or
income tax preferential rates as follows
(Local) education Circulation Taxes payable 1%, 2%, 3%
surcharge
Disclosure of tax entities with different enterprise income tax rates
□ Applicable √ Not Applicable
2. Preferential tax
√ Applicable □ Not Applicable
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Companies subjected to preferential tax:
Name of company Tax rate Preferential tax
Qingdao Haier Refrigerator Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Qingdao Haier Special 15% entitled to the preferential taxation policies
Refrigerator Co., Ltd. as a hi-tech enterprise
Qingdao Haier Dishwasher Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Qingdao Haier Special Freezer 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Haier Intelligent Home 15% entitled to the preferential taxation policies
Appliance Technology Co., Ltd. as a hi-tech enterprise
Wuhan Haier Electronics Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Wuhan Haier Freezer Co., Ltd. 15% entitled to the preferential taxation policies
as a hi-tech enterprise
Hefei Haier Refrigerator Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Hefei Haier Air-conditioning 15% entitled to the preferential taxation policies
Co., Limited as a hi-tech enterprise
Zhengzhou Haier Air- 15% entitled to the preferential taxation policies
conditioning Co., Ltd. as a hi-tech enterprise
Shenyang Haier Refrigerator 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Haier Air-Conditioner 15% entitled to the preferential taxation policies
Electronics Co., Ltd. as a hi-tech enterprise
Qingdao Meier Plastic Powder 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Hai Gao Design and 15% entitled to the preferential taxation policies
Manufacture Co., Ltd. as a hi-tech enterprise
Qingdao Hairi Hi-Tech Model 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Haier (Jiaozhou) Air- 15% entitled to the preferential taxation policies
conditioning Co., Limited as a hi-tech enterprise
Qingdao Haier Intelligent 15% entitled to the preferential taxation policies
Technology Development Co., as a hi-tech enterprise
Ltd.
Foshan Haier Freezer Co., Ltd. 15% entitled to the preferential taxation policies
as a hi-tech enterprise
Qingdao Haier Central Air 15% entitled to the preferential taxation policies
Conditioning Co., Ltd. as a hi-tech enterprise
Qingdao Haier Air Conditioner 15% entitled to the preferential taxation policies
Gen Corp., Ltd. as a hi-tech enterprise
Haier U+smart Intelligent 15% entitled to the preferential taxation policies
Technology (Beijing) Co., Ltd. as a hi-tech enterprise
Beijing Zero Micro Technology 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
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Hefei Haier Washing Machine 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Haier Washing 15% entitled to the preferential taxation policies
Machine Co., Ltd. as a hi-tech enterprise
Qingdao Jiaonan Haier Washing 15% entitled to the preferential taxation policies
Machine Co., Ltd. as a hi-tech enterprise
Foshan Shunde Haier Electric 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Tianjin Haier Washing 15% entitled to the preferential taxation policies
Appliance Co., Ltd. as a hi-tech enterprise
Qingdao Economic and 15% entitled to the preferential taxation policies
Technological Development as a hi-tech enterprise
Zone Haier Water Heater Co.,
Ltd.
Wuhan Haier Water Heater Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Foshan Drum Washing Machine 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Strauss Water 15% entitled to the preferential taxation policies
Equipment Co., Ltd. as a hi-tech enterprise
Qingdao Lejia Electric 15% entitled to the preferential taxation policies
Appliance Co., Ltd. as a hi-tech enterprise
Qingdao Haier New Energy 15% entitled to the preferential taxation policies
Electric Appliance Co., Ltd. as a hi-tech enterprise
Qingdao Haier Washing 15% entitled to the preferential taxation policies
Appliance Co., Ltd. as a hi-tech enterprise
Qingdao Ririshun Lexin Cloud 15% entitled to the preferential taxation policies
Technology Co., Ltd. as a hi-tech enterprise
Hefei Haier Drum Washing 15% entitled to the preferential taxation policies
Machine Co., Ltd. as a hi-tech enterprise
Qingdao Haier Electronic Plastic 15% entitled to the preferential taxation policies
Co., Ltd. as a hi-tech enterprise
Qingdao Wei Xi Intelligent 15% entitled to the preferential taxation policies
Technology Co., Ltd. as a hi-tech enterprise
Qingdao Haier Special 15% entitled to the preferential taxation policies
Refrigerating Appliance Co., as a hi-tech enterprise
Ltd.
Qingdao Haier Smart Kitchen 15% entitled to the preferential taxation policies
Appliance Co., Ltd. as a hi-tech enterprise
Hefei Haier Air-conditioning 15% entitled to the preferential taxation policies
Co., Limited as a hi-tech enterprise
Beijing Lingli Technology Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Qingdao Hairuijiejing 15% entitled to the preferential taxation policies
Electronics Co., Ltd. as a hi-tech enterprise
Shanghai Haier Medical 15% entitled to the preferential taxation policies
Technology Co., Ltd. as a hi-tech enterprise
Qingdao Yunshang Yuyi IOT 15% entitled to the preferential taxation policies
Technology Co., Ltd. as a hi-tech enterprise
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Haier (Shanghai) Home 15% entitled to the preferential taxation policies
Appliance Research and as a hi-tech enterprise
Development Center Co., Ltd.
Haier (Shenzhen) R&D Co., 15% entitled to the preferential taxation policies
Ltd. as a hi-tech enterprise
Qingdao Ririshun Lejia IOT 15% entitled to the preferential taxation policies
Technology Co., Ltd. as a hi-tech enterprise
Qingdao Haier Smart Electrical 15% entitled to the preferential taxation policies
Equipment Limited as a hi-tech enterprise
Qingdao Haier Technology Co., 10% entitled to half deduction the preferential
Ltd. taxation policies as a key software enterprise
Wuhan Haier Energy and Power 10% entitled to the preferential policies as a
Co., Ltd. small/micro enterprise
Dalian Free Trade Zone Haier 5% entitled to the preferential policies as a
Refrigerator Trading Co., Ltd. small/micro enterprise
Qingdao Haimeihui 5% entitled to the preferential policies as a
Management Consulting Co., small/micro enterprise
Ltd.
GE Appliance (Shanghai) Co., 10% entitled to the preferential policies as a
Ltd. small/micro enterprise
Shanghai Haier Zhongzhi Fang 5% entitled to the preferential policies as a
Chuang Ke small/micro enterprise
Management Co., Ltd.
Guangdong Heilong Intelligent 15% entitled to the preferential taxation policies
Technology Co. Ltd as a hi-tech enterprise
Qingdao Haichuangyuan 5% entitled to the preferential policies as a
Appliances Sales Co.,Ltd. small/micro enterprise
Dalian Haier Precision Products 5% entitled to the preferential policies as a
Co., Ltd. small/micro enterprise
Chongqing Haier Electronics 15% entitled to the preferential taxation policies
Sales Co., Ltd. and some under the Western Development initiative of
Western branches the PRC
Chongqing Xin Ri Ri Shun 15% entitled to the preferential taxation policies
Electric Sales Co., Ltd. And under the Western Development initiative of
some Western branches the PRC
Chongqing Haier Air- 15% entitled to the preferential taxation policies
conditioning Co., Ltd. under the Western Development initiative of
the PRC
Chongqing Haier Refrigeration 15% entitled to the preferential taxation policies
Appliance Co., Ltd. under the Western Development initiative of
the PRC
Guizhou Haier Electronics Co., 15% entitled to the preferential taxation policies
Ltd. under the Western Development initiative of
the PRC
Chongqing Haier Washing 15% entitled to the preferential taxation policies
Machine Co., Ltd under the Western Development initiative of
the PRC
Chongqing Haier Water Heater 15% entitled to the preferential taxation policies
Co., Ltd under the Western Development initiative of
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the PRC
Chongqing Haier Drum 15% entitled to the preferential taxation policies
Washing Machine Co., Ltd under the Western Development initiative of
the PRC
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VII. Explanatory Notes for Items in Consolidated Financial Statements
Unless otherwise specified, the following closing balance refers to the amount as of 30
June 2021. The opening balance refers to the amount as of 31 December 2020. The amount
for the current period refers to the amount in the period from 1 January to 30 June 2021.
The amount of the previous period refers to the amount of the period from 1 January to 30
June 2020.
1. Monetary funds
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Items
Cash on hand 6,532,547.04 2,257,666.98
Deposit in bank 40,349,002,059.65 45,306,078,417.59
Other monetary funds 1,488,242,948.87 1,152,993,342.34
Total 41,843,777,555.56 46,461,329,426.91
Including: Total amount 8,084,129,776.52 10,409,047,820.91
deposit overseas
Other explanations:
The cash in the monetary funds deposited in Haier Finance Co., Ltd. was
RMB28,628,590,018.12 at the end of the period, the balance of which included time
deposit of RMB13,293,000,000.00, while monetary capital as at the end of the period
included the cash deposited in Haier Consumer Finance Co., Ltd. of RMB317,600,000.00,
which was all fixed-term deposits. The investment fund in the closing balance of other
monetary funds was RMB597,660,074.72, deposit on third party payment platforms was
RMB156,260,155.05 and the security deposit was RMB722,668,603.91, the frozen fund
was RMB7,835,198.72, and the restricted fund was RMB3,818,916.47.
2. Financial assets held for trading
Items Closing balance Opening balance
Forward foreign exchange contracts 128,322,958.47 105,446,693.00
Short-term wealth management products 1,892,664,884.11 1,862,036,322.21
Investment fund 144,100,920.94 113,759,845.57
Investment in other equity instruments 83,828,024.73 83,949,637.05
Total 2,248,916,788.25 2,165,192,497.83
3. Derivative financial assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
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Items Closing balance Opening balance
Forward foreign exchange trading contracts 97,152,699.86 52,194,232.55
Forward commodity contracts 24,822,927.92 25,644,774.08
Total 121,975,627.78 77,839,006.63
4. Bills receivable
(1) Details of bills receivable
Items Closing balance Opening balance
Bank acceptance notes 11,337,058,569.30 3,091,631,183.91
Commercially acceptance notes 580,548,154.36 11,056,075,267.03
Balance of bills receivable 11,917,606,723.66 14,147,706,450.94
Allowance for bad debts 11,200,000.00 11,356,696.60
Bills receivable, net 11,906,406,723.66 14,136,349,754.34
(2) Changes in allowance for bad debts of bills receivable in the current period
Increase for the current Decrease for the current
period period
Items Opening balance Write-off/ Closing balance
Other
Provision Reversal other
increases
movement
Allowance
11,356,696.60 156,696.60 11,200,000.00
for bad debts
Total 11,356,696.60 156,696.60 11,200,000.00
The bills receivable pledged by the Company at the end of the period was
RMB10,604,557,468.20.
5. Accounts receivable
1 Accounts receivable are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 20,145,187,600.50 15,866,291,515.38
1-2 years 337,924,237.89 229,618,450.58
2-3 years 87,350,762.57 91,669,887.74
Over 3 years 87,446,223.64 184,125,877.54
Accounts receivable, balance 20,657,908,824.60 16,371,705,731.24
Allowance for bad debts 456,301,553.92 441,681,444.57
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Accounts receivable, net 20,201,607,270.68 15,930,024,286.67
2 The total amount of the top 5 accounts receivable at the end of the period is
RMB7,580,475,842.29, accounting for 36.70% of the book balance of accounts
receivable.
□ Applicable √ Not Applicable
3 Changes in bad debts of accounts receivable in the current period:
Opening Increase for the period Decrease for the period Closing
balance balance
Items Provision Other Reversal Write-off/
increases other
movement
Allowance 441,681,444.57 65,025,925.57 31,902,930.37 18,502,885. 456,301,553.92
for bad 85
debts
4 Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period is
RMB10,143,124.34, and there is no important bad debt write-off of accounts receivable.
5 Accounts receivable that were terminated due to the transfer of financial assets in
the current period.
√ Applicable □ Not Applicable
In the current period, the amount of accounts receivable that the company terminated
due to the transfer of financial assets was RMB3,513,147,393.74, and the transfer
method was selling-type factoring/asset securitization.
6 Current limited accounts receivable
The amount of limited accounts receivable at the end of the period is
RMB1,768,183,567.99.
6. Prepayments
(1). Prepayments are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 759,749,397.45 697,975,595.05
1-2 years 68,479,410.00 30,590,250.54
2-3 years 5,570,050.82 4,580,733.23
Over 3 years 33,199,124.13 32,280,992.88
Total 866,997,982.40 765,427,571.70
(2). Top five prepayments with closing balances by prepaid targets
√ Applicable □ Not Applicable
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The amount of the top 5 in the prepayments at the end of the period totals
RMB213,229,609.97, which accounts for 24.59% of the prepayment balance.
7. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Interest receivable 284,404,268.03 322,473,254.91
Dividend receivable 4,915,409.42
Other receivables 1,981,416,940.25 1,389,764,281.32
Total 2,265,821,208.28 1,717,152,945.65
Other explanations:
□ Applicable √ Not Applicable
Interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Aging
Within one year 117,728,640.37 230,234,039.92
1-2 years 155,916,288.92 82,575,210.18
2-3 years 10,759,338.74 8,925,141.80
Over 3 years 738,863.01
Total 284,404,268.03 322,473,254.91
Dividend receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Aging Closing balance Opening balance
Within one year 4,915,409.42
1-2 years
2-3 years
Over 3 years
Total 4,915,409.42
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Other receivables
1 Other receivables are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 1,527,145,718.43 931,454,573.77
1-2 years 395,365,575.42 417,514,929.49
2-3 years 51,140,489.59 61,251,809.96
Over 3 years 110,567,512.77 75,201,513.32
Other receivables balance 2,084,219,296.21 1,485,422,826.54
Allowance for bad debts 102,802,355.96 95,658,545.22
Other receivables, net 1,981,416,940.25 1,389,764,281.32
2 The total amount of the top 5 other receivables at the end of the period is
RMB805,868,283.53, which accounts for 38.67% of the book balance of other
receivables.
3 Changes in bad debt provision for other receivables in the current period
Increase for the period Decrease for the period
Opening Closing
Items Write-off/ other
balance Provision Other Increases Reversal balance
movement
Allowanc
102,802,355.9
e for bad 95,658,545.22 18,177,127.87 372,297.18 7,112,003.26 4,293,611.05
6
debts
4 Other receivables written off during the period
The amount of other receivables actually written off in the current period is
RMB4,293,611.05, and no significant other receivables are written off for bad debts.
⑤Other receivables mainly include deposits, quality guarantees, employee loans, tax
refunds, and advance payments, etc.
8. Inventories
(1) Details of Inventories
Closing balance Opening balance
Items Impairment
Book value balance Book value balance Impairment provision
provision
Raw material 3,576,352,139.27 132,707,777.25 2,785,611,125.08 115,958,355.70
Work in progress 506,624,364.38 336,866,878.61
Finished goods 30,418,238,442.94 860,317,044.29 27,613,569,305.90 1,173,115,549.14
Total 34,501,214,946.59 993,024,821.54 30,736,047,309.59 1,289,073,904.84
(2) Impairment provision of inventories
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Increase for the period Decrease for the period
Items Opening balance Other Write-off/ other Closing balance
Provision Reversal
Increases movement
Raw
115,958,355.70 27,865,439.05 101,787.20 11,014,230.30 132,707,777.25
material
Work in
progress
Finished
1,173,115,549.14 443,011,285.81 68,008,501.34 687,801,289.32 860,317,044.29
goods
Total 1,289,073,904.84 470,876,724.86 68,110,288.54 698,815,519.62 993,024,821.54
9. Contract assets
(1) Details
Closing balance Opening balance
Items Impairment Impairment
Book value balance Book value balance
Provision Provision
Relating to
construction service 242,265,937.64 263,412,927.58
contract
Total 242,265,937.64 263,412,927.58
10. Other current assets
(1) Details
Closing balance Opening balance
Items Book value Impairment Book value Impairment
balance provision balance provision
Bank deposit for
408,970,053.06 554,131,037.76
financial products
Taxes to be deducted 2,096,871,492.75 2,826,836.58 2,438,982,829.14 2,907,303.98
Return cost receivable 431,529,485.61 228,948,507.82 418,107,603.27 242,502,616.01
Others 219,479,566.33 118,077,350.40
Total 3,156,850,597.75 231,775,344.40 3,529,298,820.57 245,409,919.99
(2) Impairment provision
Opening Increase for the Decrease for the period Closing balance
balance period
Items
Provision Other Reversal Write-off / other
Increases movement
Deductible 2,907,303.98 78,683.50 1,783.90 2,826,836.58
input tax
Return cost 242,502,616.01 228,948,507.82 242,502,616.01 228,948,507.82
receivables
Total 245,409,919.99 228,948,507.82 78,683.50 242,504,399.91 231,775,344.40
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11. Long-term equity investments
√ Applicable □ Not Applicable
Opening Increase/decrease for the period
balance
Investment Investment Adjustment Other Declaration
Investees increase profit in other changes in of cash
recognized comprehensiv equity dividends or
under equity e income profits
method
Associate:
Haier Group Finance Co., Ltd. 6,526,237,270.67 332,052,043.26 31,058,064.07 -126,000,000.00
Bank of Qingdao Co., Ltd. 2,463,096,567.92 146,198,194.52 29,444,672.12 -66,019,246.02
Wolong Electric
143,847,870.70 13,441,218.96
(Jinan) Motor Co., Ltd.
Qingdao Hegang New Material
297,154,935.85 10,980,513.03
Technology Co., Ltd.
Qingdao Haier SAIF Smart
Home Industry Investment 385,797,036.73 11,710,187.89 -17,819,777.76
Center (Limited Partnership)
Mitsubishi Heavy Industries
Haier (Qingdao) Air- 654,581,961.84 39,355,157.03
conditioners Co., Ltd.
Qingdao Haier Carrier
Refrigeration Equipment Co., 415,298,165.93 6,163,986.57 -25,074,310.40
Ltd.
Qingdao Haier multimedia
328,987,205.07 -50,160,853.64
Co., Ltd.
Qingdao Haier Moulds Co.,
259,696,084.44 7,878,022.92
Ltd.
Hefei Feier Smart Technology
1,491,024.72 1,659,252.99
Co., Ltd.
Anhui Kunhe Intelligent
3,000,000.00
Technology Co., Ltd.*
Zhejiang Futeng Fluid
70,000,000.00
Technology Co., Ltd.*
Beijing Mr. Hi Network
7,507,759.75
Technology Company Limited
Beijing Xiaobei Technology
2,687,341.82
Co., Ltd.
Beijing ASU Tech Co., Ltd. 32,365,969.45 -10,478,677.95
Shenzhen Genyuan
Environment al Protection 6,914,487.73
Technology Co., Ltd.
Qingdao Haimu Investment
2,349,240.51
Management Co., Ltd.
Qingdao Haimu Smart Home
Investment
47,870,696.66 -239,104.82
Partnership (Limited
Partnership)
Guangzhou Heying Investment
Partnership (Limited 288,209,197.58
Partnership)
Qingdao Home Wow Cloud
2,629,009.63 87,644.95
Network Technology Co., Ltd.
Qingdao Ririshun Service Co.,
33,010,000.00 403,328.00
Ltd.
Bingji (Shanghai) Corporate
928,444,178.47 20,033,292.85
Management Co., Ltd.
Youjin (Shanghai) Corporate
1,687,262,142.67 36,424,168.82
Management Co., Ltd
RRS (Shanghai) Investment
3,066,931,168.49 66,225,761.48
Co., Ltd.
Haier Best Water Technology
33,455,159.59 -2,535,284.12
Co., Ltd.
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uizhixiangshun Equity
Investment
120,000,000.00
Fund (Qingdao) Partnership
(Limited Partnership)
Qingdao Ririshun Huizhi
2,100,000.00
Investment Co., Ltd.
Meiling Candy Washing
22,558,307.10 279,586.44
Machine Co., Ltd.
Konan Electronic Co., Ltd. 77,561,552.87 1,310,907.78 -5,918,521.84 -270,900.00
HNR Company (Private)
92,141,887.27 41,118,626.54 -370,616.01
Limited
HPZ LIMITED 66,827,745.66 5,581,022.71 -4,161,242.29
HaierRayaElectricS.A.E 10,741,234.10 1,257,900.00 -575,240.89
CONTROLADORAMA
3,667,310,241.31 266,155,966.51 6,027,923.74 -40,168,145.36
BES.A.deC.V.
MiddleEastAirconditionin
19,002,595.66
gCompany,Limited
Total 21,694,068,040.19 74,257,900.00 943,069,721.83 56,080,279.79 -275,352,379.54
(Continued)
Increase/decrease for the period Impairment
provision
Investees Disposal Closing balance
Other Closing
of the
movement balance
investment
Associate:
221,293,164.2 6,984,640,542.22
Haier Finance Co., Ltd.
2
2,572,720,188.54
Bank of Qingdao Co., Ltd.
157,289,089.66
Wolong Electric (Jinan) Motor Co., Ltd.
308,135,448.88
Qingdao Hegang New Material Technology Co., Ltd.
Qingdao Haier SAIF Smart Home Industry 379,687,446.86
Investment Center (Limited Partnership)
Mitsubishi Heavy Industries Haier (Qingdao) Air- 693,937,118.87
conditioners Co., Ltd.
Qingdao Haier Carrier Refrigeration Equipment Co., 396,387,842.10 21,000,000.00
Ltd.
278,826,351.43 88,300,000.00
Qingdao Haier Multimedia Co., Ltd
267,574,107.36
Qingdao Haier Moulds Co., Ltd
3,150,277.71
Hefei Feier Smart Technology Co., Ltd.
3,000,000.00
Anhui Kunhe Intelligent Technology Co., Ltd.*
70,000,000
Zhejiang Futeng Fluid Technology Co., Ltd.*
Beijing Mr. Hi Network Technology Company 7,507,759.75 7,507,759.75
Limited
2,687,341.82 2,687,341.82
Beijing Xiaobei Technology Co., Ltd.
21,887,291.50
Beijing ASU Tech Co., Ltd.
Shenzhen Genyuan Environmental Protection 6,914,487.73 6,914,487.73
Technology Co., Ltd.
2,349,240.51
Qingdao Haimu Investment Management Co., Ltd.
Qingdao Haimu Zhijia Investment Partnership 47,631,591.84
(Limited Partnership)
Guangzhou Heying Investment Partnership 288,209,197.58
(Limited Partnership)
Qingdao Home Wow Cloud Network Technology Co., 2,716,654.58
Ltd.
156
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Qingdao Ririshun Service Co., 33,413,328.00
Ltd.
948,477,471.32
Bingji (Shanghai) Corporate Management Co., Ltd.
1,723,686,311.49
Youjin (Shanghai) Corporate Management Co., Ltd
3,133,156,929.97
RRS (Shanghai) Investment Co., Ltd.
30,919,875.47
Haier Best Water Technology Co., Ltd.
Huizhixiangshun Equity Investment 120,000,000.00
Fund (Qingdao) Partnership
(Limited Partnership)
Qingdao Ririshun Huizhi 2,100,000.00
Investment Co., Ltd.
22,837,893.54
Meiling Candy Washing Machine Co., Ltd.
72,683,038.81
Konan Electronic Co., Ltd.
132,889,897.80
HNR Company (Private) Limited
68,247,526.08
HPZ LIMITED
11,423,893.21
HaierRayaElectricS.A.E
3,899,325,986.20
CONTROLADORAMABES.A.deC.V.
19,002,595.66
MiddleEastAirconditioningCompany,Limited
221,293,164.2 22,713,416,726.49 126,409,589.30
Total
2
12. Investment in other equity instruments
(1). Details of investment in other equity instruments
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
SINOPEC Fuel Oil Sales Corporation Limited 1,141,941,000.00 1,117,637,000.00
Haier COSMO IOT Ecosystem Technology Co.,
1,396,555,521.94 1,396,555,521.94
Ltd.
Others 290,682,898.22 144,932,743.60
Total 2,829,179,420.16 2,659,125,265.54
(2). Dividends from investment in other equity during the current period:
Items Amount for the current period
Others 440,255.20
Total 440,255.20
13. Investment properties
Measure mode for investment properties
(1) The changes in investment properties measured at cost for this year are as follows:
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Items Houses and buildings Land use rights Total
I. Original book value
1.Opening balance 46,978,578.83 2,128,550.51 49,107,129.34
2.Increase for the period
(1) Outsourced
(2) Inventories\fixed assets\construction
in progress transferred in
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Converted difference in foreign
-272,200.40 -272,200.40
currency statements
5. Closing balance 46,706,378.43 2,128,550.51 48,834,928.94
II. Accumulated depreciation and
accumulated amortization
1.Opening balance 20,129,742.37 590,384.16 20,720,126.53
2.Increase for the period
(1) Provision or amortization 900,247.38 20,118.11 920,365.49
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Converted difference in foreign
-60,001.18 -60,001.18
currency statements
5. Closing balance 20,969,988.57 610,502.27 21,580,490.84
III. Impairment provision
1.Opening balance
2.Increase for the period
(1) Provision
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book value
1. Closing book value 25,736,389.86 1,518,048.24 27,254,438.10
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2. Opening book value 26,848,836.46 1,538,166.35 28,387,002.81
(2) The depreciation and amortization amount charge for the period is RMB920,365.49.
(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.
14. Fixed assets
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Fixed assets 20,667,862,688.61 20,878,516,949.39
Disposals of fixed assets 12,964,689.10 16,987,772.82
Total 20,680,827,377.71 20,895,504,722.21
Fixed assets
Transportation
Items Houses and buildings Production equipment
equipment
I. Original book value
1.Opening balance 10,162,375,605.27 24,419,389,978.14 169,128,209.23
2.Increase for the period
(1) Acquisition 37,295,772.82 434,896,087.17 4,852,083.89
(2) Construction in progress
227,282,171.84 1,043,182,153.23 6,389,524.30
transferred in
(3) Increase in business
combinations
3.Decrease for the period
(1) Disposal or Write-off 36,274,739.05 467,867,291.79 9,635,049.05
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
-158,927,087.11 -296,599,393.65 -3,678,180.94
foreign currency statements
5.Closing balance 10,231,751,723.77 25,133,001,533.10 167,056,587.43
II. Accumulated depreciation
1.Opening balance 3,513,815,327.47 11,613,034,474.07 99,044,833.13
2.Increase for the period
(1) Provision 257,257,030.77 1,319,687,083.26 9,630,994.50
(2) Increase in business
combinations
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3.Decrease for the period
(1) Disposal or write-off 14,194,613.99 333,305,672.97 7,454,504.51
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
-51,985,785.86 -171,680,414.83 -1,414,647.71
foreign currency statements
5.Closing balance 3,704,891,958.39 12,427,735,469.53 99,806,675.41
III. Impairment provision
1.Opening balance 33,638,997.63 39,684,984.39 185,490.35
2.Increase for the period
(1) Provision 21,593,523.50
(2) Increase in business
combinations
3.Decrease for the period
(1) Disposal or Write-off 1,761,365.78
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
-2,538,419.21 347,003.53 -7,992.37
foreign currency statements
5.Closing balance 31,100,578.42 59,864,145.64 177,497.98
IV. Book value
1.Closing book value 6,495,759,186.96 12,645,401,917.93 67,072,414.04
2.Opening book value 6,614,921,280.17 12,766,670,519.68 69,897,885.75
(Continued)
Items Office furniture Others Total
I. Original book value
1.Opening balance 951,374,986.48 2,268,702,315.82 37,970,971,094.94
2.Increase for the period
(1) Acquisition 21,816,710.13 21,204,038.41 520,064,692.42
(2) Construction in progress
transferred in 108,042,400.74 99,892,334.04 1,484,788,584.15
(3) Increase in business
combinations
3.Decrease for the period
(1) Disposal or Write-off 31,595,474.77 52,729,382.19 598,101,936.85
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -79,529,057.44 13,477,874.80 -525,255,844.34
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5.Closing balance
970,109,565.14 2,350,547,180.88 38,852,466,590.32
II. Accumulated depreciation
1.Opening balance 482,846,976.88 1,304,418,481.44 17,013,160,092.99
2.Increase for the period
(1) Provision 72,467,718.81 111,988,219.42 1,771,031,046.76
(2) Increase in business
combinations
3.Decrease for the period
(1) Disposal or Write-off 28,878,212.22 50,501,712.28 434,334,715.97
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -6,777,472.47 -30,227,871.88 -262,086,192.75
5.Closing balance 519,659,011.00 1,335,677,116.70 18,087,770,231.03
III. Impairment provision
1.Opening balance 367,009.63 5,417,570.56 79,294,052.56
2.Increase for the period
(1) Provision 157,542.74 21,751,066.24
(2) Increase in business
combinations
3.Decrease for the period
(1) Disposal or Write-off 42,689.77 1,804,055.55
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -9,546.53 -198,437.99 -2,407,392.57
5.Closing balance 314,773.33 5,376,675.31 96,833,670.68
IV. Book Value
1.Closing book value 450,135,780.81 1,009,493,388.87 20,667,862,688.61
2.Opening book value 468,160,999.97 958,866,263.82 20,878,516,949.39
(2) In the current period, the balance of the construction in progress transferred to the
original value of the fixed assets is total RMB1,484,788,584.15.
(3) There was no mortgage secured by the fixed assets mortgage at the end of the period.
(4) Disposals of fixed assets
Reason for
Items Closing balance Opening balance transferring to
disposal
Relocation of Qingdao Industrial Park 12,964,689.10 12,964,689.10 Demolition
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Other 4,023,083.72 Scrap cleanup
Total 12,964,689.10 16,987,772.82
15. Construction in progress
Presented as
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Construction in progress 5,020,055,626.42 3,596,902,447.07
Construction materials
Total 5,020,055,626.42 3,596,902,447.07
Construction in progress
(1). Details of construction in progress
√Applicable □Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Items
Impairment Impairment
Book balance Book value Book balance Book value
provision provision
756,300,118.7 756,300,118.7 400,955,285.5 400,955,285.5
Haier India Project
0 0 9 9
Europe CANDY 585,831,480.1 585,831,480.1 611,529,115.1 611,529,115.1
Project 8 8 3 3
America GEA 569,477,992.5 569,477,992.5 518,260,493.0 518,260,493.0
Project 4 4 1 1
Smart home
438,904,361.1 438,904,361.1 291,584,097.5 291,584,097.5
appliance
4 4 8 8
technology project
Foshan freezer 303,342,506.4 303,342,506.4
89,437,456.94 89,437,456.94
Project 6 6
Hefei Refrigerator 279,298,017.6 279,298,017.6
87,566,220.44 87,566,220.44
Project 9 9
Haier Russian 202,161,316.3 202,161,316.3
76,966,572.40 76,966,572.40
Project 2 2
Qingdao Haier
156,757,876.0 156,757,876.0 107,072,469.0 107,072,469.0
Washing Machine
8 8 9 9
Project
Haier Strauss 152,700,514.9 152,700,514.9 105,851,790.4 105,851,790.4
Project 3 3 0 0
Haier Special
129,054,284.3 129,054,284.3
Refrigerator 26,181,149.22 26,181,149.22
2 2
Project
New Zealand FPA 125,335,851.6 125,335,851.6
96,050,392.73 96,050,392.73
Project 4 4
Haier Air
97,574,762.03 97,574,762.03 56,560,330.52 56,560,330.52
Conditioning
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Electronics Project
Zhengzhou New 134,884,592.4 134,884,592.4
92,592,962.03 92,592,962.03
Energy Project 9 9
Haier (Jiaozhou)
Air-conditioning 78,456,538.07 78,456,538.07 16,503,076.95 16,503,076.95
Project
Hefei Haier Air
Conditioning 71,185,462.69 71,185,462.69 12,948,252.61 12,948,252.61
Project
Haier Special
Refrigerator 63,899,120.09 63,899,120.09 28,379,142.82 28,379,142.82
Project
Wuhan Haier
61,541,218.34 61,541,218.34 29,444,043.15 29,444,043.15
Freezer Project
Jiaonan Washing
52,487,557.82 52,487,557.82 48,681,689.86 48,681,689.86
Machine Project
Qingdao Haier
51,335,506.63 51,335,506.63 25,231,410.35 25,231,410.35
Dishwasher Project
752,655,914.5 751,818,178.7 833,652,601.6 832,814,865.7
Others 837,735.85 837,735.85
7 2 4 9
5,020,893,362. 5,020,055,626. 3,597,740,182. 3,596,902,447.
Total 837,735.85 837,735.85
27 42 92 07
(2) Details of significant changes of construction in progress for the period
Converted
Increase for the Transfer to fixed difference in
Project name Opening balance Other decrease Closing balance Source of fund
current period assets foreign currency
statements
Self-funding/fund
Haier India Project 400,955,285.59 391,430,778.47 20,794,018.86 -15,291,926.50 756,300,118.70
raising
Europe CANDY
611,529,115.13 298,634,127.92 273,476,893.14 1,410,722.01 -49,444,147.72 585,831,480.18 Self-funding
Project
America GEA
518,260,493.01 324,339,049.28 267,833,262.87 -5,288,286.88 569,477,992.54 Self-funding
Project
Smart home
appliance 291,584,097.58 147,320,263.56 438,904,361.14 Self-funding
technology project
Foshan freezer
89,437,456.94 221,713,588.50 7,808,538.98 303,342,506.46 Self-funding
Project
Hefei Refrigerator
87,566,220.44 209,132,986.99 17,401,189.74 279,298,017.69 Self-funding
Project
Haier Russian
76,966,572.40 126,454,395.15 1,259,651.23 202,161,316.32 Self-funding
Project
Qingdao Haier
Washing Machine 107,072,469.09 51,315,774.62 1,630,367.63 156,757,876.08 Self-funding
Project
Haier Strauss
105,851,790.40 46,848,724.53 152,700,514.93 Self-funding
Project
Haier Special
26,181,149.22 115,425,370.68 12,552,235.58 129,054,284.32 Self-funding
Refrigerator Project
New Zealand FPA
96,050,392.73 82,110,980.12 47,998,229.79 -4,827,291.42 125,335,851.64 Self-funding
Project
Haier Air
Conditioning 56,560,330.52 57,245,084.17 14,614,409.48 1,616,243.18 97,574,762.03 Self-funding
Electronics Project
Zhengzhou New
134,884,592.49 27,893,541.47 70,185,171.93 92,592,962.03 Self-funding
Energy Project
Haier (Jiaozhou)
Self-funding/
Air-conditioning 16,503,076.95 67,387,876.07 5,434,414.95 78,456,538.07
fund raising
Project
Hefei Haier Air Self-funding/
12,948,252.61 70,286,969.34 12,049,759.26 71,185,462.69
Conditioning Project fund raising
Haier Special
28,379,142.82 50,149,268.69 14,629,291.42 63,899,120.09 Self-funding
Refrigerator Project
Wuhan Haier
29,444,043.15 34,242,750.38 2,145,575.19 61,541,218.34 Self-funding
Freezer Project
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Jiaonan Washing
48,681,689.86 27,766,593.93 23,960,725.97 52,487,557.82 Self-funding
Machine Project
Qingdao Haier
25,231,410.35 44,948,309.41 18,844,213.13 51,335,506.63 Self-funding
Dishwasher Project
Self-funding/
Others 833,652,601.64 611,259,685.76 672,170,635.00 9,891,898.84 -10,193,838.99 752,655,914.57
fund raising
Total 3,597,740,182.92 3,005,906,119.04 1,484,788,584.15 12,918,864.03 -85,045,491.51 5,020,893,362.27
(3) Impairment provision of construction in progress
Opening Increase for Transfer to Other Exchange Closing
Project name
balance the period fixed assets decrease differences balance
Lejia
837,735.85 837,735.85
IOT Project
Total 837,735.85 837,735.85
16. Right-of-use assets
Items Houses and buildings Production equipment Transportation equipment
I. Original book value:
1.Opening balance 3,363,666,439.28 39,645,820.91 194,507,833.03
2. Increase for the current
period
(1) Increase 333,998,904.49 3,638,881.01 24,650,760.62
3. Decrease for the current
period
(1) Disposal 157,794,759.00 226,268.14 14,249,314.53
(2) Disposal of subsidiary
4. Converted difference in
-71,173,390.01 44,789.54 -9,566,424.20
foreign currency statements
5. Closing balance 3,468,697,194.76 43,103,223.32 195,342,854.92
II. Accumulated amortization
1. Opening balance 885,680,688.93 12,842,957.01 89,243,999.98
2. Increase for the current
period
(1) Provision 259,451,681.67 4,703,927.50 30,984,183.89
3. Decrease for the current
period
(1) Disposal 98,572,893.69 216,262.02 13,963,041.76
(2) Disposal of subsidiary
4. Converted difference in
-27,990,907.59 -2,716,151.10 -6,333,363.23
foreign currency statements
5. Closing balance 1,018,568,569.32 14,614,471.39 99,931,778.88
III. Impairment provision
1.Opening balance
2.Increase for the current period
(1) Provision
3.Decrease for the current
period
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(1) Disposal
(2) Disposal of subsidiary
4. Converted difference in
foreign currency statements
5.Closing balance
IV. Book Value
1.Closing book value 2,450,128,625.44 28,488,751.93 95,411,076.04
2.Opening book value 2,477,985,750.35 26,802,863.90 105,263,833.05
(Continued)
Items Office furniture Other Total
I. Original book value:
1.Opening balance 48,709,675.83 355,706,633.95 4,002,236,403.00
2.Increase for the current period
(1) Increase 3,326,409.23 35,476,806.56 401,091,761.91
3. Decrease for the current
period
(1) Disposal 2,352,555.28 174,622,896.95
(2) Disposal of subsidiary
4. Converted difference in
-3,866,874.07 -35,589,345.08 -120,151,243.82
foreign currency statements
5. Closing balance 45,816,655.71 355,594,095.43 4,108,554,024.14
II. Accumulated amortization
1.Opening balance 14,096,013.92 160,514,483.89 1,162,378,143.73
2.Increase for the current period
(1) Provision 4,770,709.67 37,408,576.80 337,319,079.53
3.Decrease for the current
period
(1) Disposal 2,352,555.28 115,104,752.75
(2) Disposal of subsidiary
4. Converted difference in
1,048,058.99 -33,500,791.68 -69,493,154.61
foreign currency statements
5.Closing balance 17,562,227.30 164,422,269.01 1,315,099,315.90
III. Impairment provision
1.Opening balance
2.Increase for the current period
Provision
3.Decrease for the current
period
Disposal
Disposal of subsidiary
4. Converted difference in
foreign currency statements
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5.Closing balance
IV. Book Value
1.Closing book value 28,254,428.41 191,171,826.42 2,793,454,708.24
2.Opening book value 34,613,661.91 195,192,150.06 2,839,858,259.27
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17. Intangible assets
(1). Details of intangible assets
√ Applicable □ Not Applicable
Items Proprietary technology Licenses and franchises Land use rights
I. Original book value
1.Opening balance 1,842,005,662.53 4,010,777,802.58 1,200,138,465.93
2.Increase for the current period
(1) Purchase 1,631,271.28 152,603,821.97 49,248,805.00
(2) Internal research and
66,178,730.58 - -
development
(3) 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
-51,816,827.32 -43,190,410.67 -6,014,986.90
foreign currency statements
5.Closing balance 1,857,998,837.07 4,120,191,213.88 1,243,372,284.03
II. Accumulated amortization
1.Opening balance 871,204,292.17 564,045,820.06 139,165,642.83
2.Increase for the current period
(1) Provision 84,147,005.39 63,863,023.74 15,615,290.78
(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
-25,059,769.85 -7,762,750.39 -847,270.19
foreign currency statements
5.Closing balance 930,291,527.71 620,146,093.41 153,933,663.42
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
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(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements
5.Closing balance
IV. Book Value
1.Closing book value 927,707,309.36 3,500,045,120.47 1,089,438,620.61
2.Opening book value 970,801,370.36 3,446,731,982.52 1,060,972,823.10
(Continued)
Application
Items Trademark rights management software Total
and others
I. Original book value
1.Opening balance 2,713,444,699.59 3,828,069,125.45 13,594,435,756.08
2.Increase in the current period
(1) Purchase 117,722,303.65 321,206,201.90
(2) Internal research and
132,595,018.45
development 198,773,749.03
(3) Increase in business
combination
3.Decrease for the current
period
(1) Disposal 3,735,225.66 3,735,225.66
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -91,039,231.65 -65,906,930.06 -257,968,386.60
5.Closing balance 2,622,405,467.94 4,008,744,291.83 13,852,712,094.75
II. Accumulated amortization
1.Opening balance 1,946,112,106.66 3,520,527,861.72
2.Increase in the current period
(1) Provision 301,756,688.95 465,382,008.86
(2) Increase in business
combination
3.Decrease for the current
period
(1) Disposal 2,913,333.26 2,913,333.26
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -35,470,463.65 -69,140,254.08
5.Closing balance 2,209,484,998.70 3,913,856,283.24
III. Impairment provision
1.Opening balance 56,040,248.43 56,040,248.43
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2.Increase in the current period
(1) Provision
(2) Increase in business
combination
3.Decrease for the current
period
(1) Disposal 104,507.20 104,507.20
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in
foreign currency statements -5,208.00 -5,208.00
5.Closing balance 55,930,533.23 55,930,533.23
IV. Book value
1.Closing book value 2,622,405,467.94 1,743,328,759.90 9,882,925,278.28
2.Opening book value 2,713,444,699.59 1,825,916,770.36 10,017,867,645.93
At the end of the period, the intangible assets developed through the Company
accounted for the 18.64% of the original value.
18. Development cost
Decrease for the period Converted
Opening Increase for Included in Disposal of difference in Closing
Items Confirmed as an
balance the period Current profit subsidiaries foreign currency balance
intangible asset statements
and loss
91ABD.ERP
97,893,800.99 33,095,733.87 107,941,368.58 -785,314.94 22,262,851.34
IT Program
Others 69,852,923.14 253,749,069.91 90,832,380.45 81,509,730.11 -5,045,544.46 146,214,338.03
Total 167,746,724.13 286,844,803.78 198,773,749.03 81,509,730.11 -5,830,859.40 168,477,189.37
19. Goodwill
Impact of
Opening Increase for Decrease for fluctuation in
Items Closing balance
balance the period the period exchange rate
for the period
GEA 19,382,602,366.26 -193,295,603.31 19,189,306,762.95
Candy 2,086,499,983.95 -88,087,999.32 1,998,411,984.63
Others 1,049,357,987.43 -20,527,222.54 1,028,830,764.89
Total 22,518,460,337.64 -301,910,825.17 22,216,549,512.47
20. Long-term prepaid expenses
Converted
Increase for Amortization Other
Opening difference in Closing
Items the current for the current decrea
balance foreign currency balance
period period se
statements
Renovation 169,271,684.57 116,612,921.15 84,322,153.77 -16,669.62 201,545,782.33
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Improvement
on leased 170,582,753.74 3,024,499.46 12,054,593.70 -833,359.30 160,719,300.20
property
Others 115,888,065.82 7,063,267.43 14,128,738.52 -875,232.52 107,947,362.21
Total 455,742,504.13 126,700,688.04 110,505,485.99 -1,725,261.44 470,212,444.74
21. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets before elimination
Items Closing balance Opening balance
Provision for assets impairment 341,873,801.45 374,373,978.37
Liabilities 1,424,735,374.39 1,745,260,196.51
Internal unrealized earnings eliminated due
440,515,864.30 668,981,845.53
to combination
Government grants 128,600,941.36 124,822,115.15
Uncovered losses 848,685,152.59 806,710,012.75
Others 217,030,300.04 237,331,301.90
Total 3,401,441,434.13 3,957,479,450.21
(2) Deferred income tax liabilities before elimination
Item Closing balance Opening balance
Asset amortisation 2,430,285,259.05 2,371,032,689.77
Remeasurement of fair value of the
remaining equity interest on the date of loss 878,623,804.46 878,623,804.46
of control
Withholding income tax of overseas
93,629,113.00 93,629,113.00
enterprises
Others 276,624,484.30 306,293,850.70
Total 3,679,162,660.81 3,649,579,457.93
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at
the end of this period was RMB1,715,943,335.48.
22. Other non-current assets
Items Closing balance Opening balance
Prepayments for equipment and land 1,075,431,381.98 1,403,997,069.15
Others 369,621,498.84 521,764,491.02
Total 1,445,052,880.82 1,925,761,560.17
23. Short-term borrowings
(1). Classification of short-term borrowings
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√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings - secured by pledge 493,649,581.08 472,098,030.36
Borrowings – unsecured 10,659,639,064.09 7,200,328,217.00
Interest payable for short-term borrowings 6,821,352.55 15,481,918.52
Total 11,160,109,997.72 7,687,908,165.88
24. Financial liabilities held for trading
Items Closing balance Opening balance
Forward foreign exchange trading
3,423,774.60 26,952,508.66
contracts
Total 3,423,774.60 26,952,508.66
25. Derivative financial liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Forward foreign exchange trading
55,091,160.59 188,695,788.30
contracts
Interest rate swap agreement 36,990,279.50 50,886,744.60
Total 92,081,440.09 239,582,532.90
26. Bills payable
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Commercially acceptance notes 3,034,346,907.38 2,710,903,499.32
Bank acceptance notes 21,255,796,393.03 18,525,153,554.35
Total 24,290,143,300.41 21,236,057,053.67
27. Accounts payable
(1). Accounts payable presented as
√Applicable □Not Applicable
Unit and Currency: RMB
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Items Closing balance Opening balance
Accounts payable 39,008,002,641.86 36,302,971,944.48
Total 39,008,002,641.86 36,302,971,944.48
The book balance at the end of the period was mainly the unpaid expenditures on
material, equipment and labor.
28. Contract liabilities
(1). Details of contract liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Contract liabilities 7,466,559,172.71 7,048,637,659.48
Total 7,466,559,172.71 7,048,637,659.48
The book balance at the end of the period was mainly the receipt in advance.
29. Payables for staff's remuneration
(1). Payables for staff's remuneration
√Applicable □Not Applicable
Unit and Currency: RMB
Increase for Decrease for
Opening Closing
Items the current the current
balance balance
period period
I. Short-term remuneration 3,623,128,868.83 11,323,047,227.52 11,914,000,313.19 3,032,175,783.16
II. Post-employment benefits-
21,035,358.61 602,859,838.49 580,581,433.10 43,313,764.00
defined contribution plan
III. Termination benefits 9,818,188.41 680,845.07 680,845.07 9,818,188.41
IV. Other benefits due within
106,117,562.97 35,720,781.58 49,141,082.86 92,697,261.69
one year
Total 3,760,099,978.82 11,962,308,692.66 12,544,403,674.22 3,178,004,997.26
(2). Short-term remuneration
√Applicable □Not Applicable
Unit and Currency: RMB
Decrease for
Opening Increase for the Closing
Items the current
balance current period balance
period
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I. Salaries, bonus, allowance
2,523,158,164.63 8,510,633,954.92 8,899,437,989.65 2,134,354,129.90
and benefit
II. Employee welfare 320,271,605.18 415,341,467.29 437,547,682.94 298,065,389.53
III. Social benefit 183,892,203.86 834,299,655.80 844,257,779.02 173,934,080.64
IV. Housing fund 5,028,762.45 162,498,666.38 161,542,446.04 5,984,982.79
V. Labor union fee and
1,323,116.90 58,272,982.44 58,345,188.59 1,250,910.75
education fee
VI. Short-term compensated
276,729,127.32 166,957,660.71 165,359,691.66 278,327,096.37
absences
VII. Others 312,725,888.49 1,175,042,839.98 1,347,509,535.29 140,259,193.18
Total 3,623,128,868.83 11,323,047,227.52 11,914,000,313.19 3,032,175,783.16
(3). Defined contribution plan
√Applicable □Not Applicable
Unit and Currency: RMB
Increase for Decrease for
Opening Closing
Items the current current the
balance balance
period period
I. Basic pension insurance 20,356,245.73 567,773,896.99 545,481,730.97 42,648,411.75
II. Unemployment insurance 170,304.70 12,452,157.91 12,437,305.38 185,157.23
III. Enterprise annuity
508,808.18 22,633,783.59 22,662,396.75 480,195.02
payment
Total 21,035,358.61 602,859,838.49 580,581,433.10 43,313,764.00
(4). 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
30. Taxes payable
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Value-added tax 978,360,164.88 645,144,199.35
Enterprise income tax 1,293,070,998.27 1,371,458,516.07
City maintenance and 25,179,827.41 13,992,816.15
construction tax
Individual income tax 82,921,478.32 144,333,033.24
Education surcharge 11,182,584.38 5,960,935.92
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The electrical and electronic products waste
84,791,906.00 88,989,555.00
treatment fund
Other taxes 193,959,153.31 129,826,404.39
Total 2,669,466,112.57 2,399,705,460.12
31. Other payables
Presented as
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Dividends payable 3,420,918,669.85
Other payables 16,629,322,717.43 17,056,156,167.28
Total 20,050,241,387.28 17,056,156,167.28
Dividends payable:
Name of company Closing balance Opening balance
Haier COSMO Co., Ltd. 460,678,645.58
Haier Group Corporation 392,575,539.62
Others 2,567,664,484.65
Total 3,420,918,669.85
Other payables
(1). Other payables by nature of payment
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Other payables 16,629,322,717.43 17,056,156,167.28
Total 16,629,322,717.43 17,056,156,167.28
The closing balance at the end of the period mainly included the incurred but unpaid
costs.
32. Non-current liabilities due within one year
√Applicable □Not Applicable
Unit and Currency: RMB
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Items Closing balance Opening balance
Long-term borrowings due within
2,412,067,581.09 4,950,555,670.08
one year
Long-term payables due within one
20,000,000.00
year
Lease liabilities due within one year 677,452,058.59 670,863,763.75
Estimated liabilities due within one
1,887,200,931.95 1,881,305,479.57
year
Total 4,976,720,571.63 7,522,724,913.40
33. Other current liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Payable refund 472,368,601.91 540,552,003.81
Super-short-term bonds 5,535,262,500.00
Tax amount to be written off 14,630,402.75 20,186,405.07
Others 10,460,429.48 16,053,035.75
Total 497,459,434.14 6,112,053,944.63
34. Long-term borrowings
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings - unsecured 9,590,298,914.57 11,821,416,259.81
Total 9,590,298,914.57 11,821,416,259.81
Other explanations, including interest rate bands:
√Applicable □Not Applicable
Interest rates of long-term loans of the Company ranged from 0.85% to 7.5%.
35. Bonds payable
In November 2017, Harvest International Company, the Company's wholly-owned
subsidiary, issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate
of zero and a rate on investment of 1%. In September 2020, the Company approved the
plan to convert the exchangeable bonds into convertible bonds, pursuant to which, target
shares of the original exchangeable bonds were changed from shares of Haier Electrics to
newly issued H Shares of Haier Smart Home (the “EB-to-CB Proposal”). On 23 December
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2020, H Shares of Haier Smart Home was listed, and the EB-to-CB Proposal became
effective. The outstanding principal of the original exchangeable bonds amounted to
HK$7.993 billion and the maturity, coupon rate and rate on investment remained
unchanged. The convertible bonds were divided into liabilities and equities on initial
recognition:
Items Exchangeable corporate bonds issued on 23 December 2020
Initial recognition: 9,105,660,619.93
Including:
Equity portion of the exchangeable bond 2,364,195,333.79
Liability portion of the exchangeable bond 6,741,465,286.14
Changes in the liability portion of corporate bonds in the current period:
Less:
Accrued
Bond interest Exchange Shares
Increase for bond interest Shares Closing
Opening paid for the rate converted in
Items the current for the current redeemed in the balance
balance current impact the current
period period current period
period period
Convertible
6,713,501, 6,277,583,7
corporate bonds 44,340,674.19 -53,821,150.88 426,436,821.17
050.27 52.41
(“CB”)
6,713,501, 6,277,583,7
Total 44,340,674.19 -53,821,150.88 426,436,821.17
050.27 52.41
36. Lease liabilities
Items Closing balance Opening balance
Lease liabilities 2,689,305,741.48 2,743,566,116.43
Less: lease liabilities due within one year 677,452,058.59 670,863,763.75
Total 2,011,853,682.89 2,072,702,352.68
37. Long-term payables
Items Closing balance Opening balance
Investment from CDB development fund 36,500,000.00 56,500,000.00
Others 57,510,166.66 61,703,261.27
Less: long-term payables due within one year 20,000,000.00
Total 94,010,166.66 98,203,261.27
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. As at 30 June 2021, subsidiaries of the
Company repurchased RMB56.50 million. From 2021 to 2027, the Company and its
subsidiaries will repurchase the remaining investments made by China Development Fund
Co. Ltd. to the subsidiaries of the Company.
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38. Long-term payables for staff's remuneration
√ Applicable □ Not Applicable
(1) The presentation of long-term payables for staff's remuneration
Items Closing balance Opening balance
Post-employment benefits- net liability of
559,042,580.03 602,802,957.77
defined benefit plan
Termination benefits 571,873,456.36 429,651,733.32
Provision for work-related injury
201,811,366.33 213,320,333.26
compensation
Other long-term benefits
Total 1,332,727,402.72 1,245,775,024.35
(2) Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the
qualified staff. Under these plans, the employees are entitled to the retirement benefits
agreed 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.
① The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company.
Actuarial assumption used in the defined benefit plan
Items Rate
Discount rate 0.50%
Expected rate of return 2.00%
Present value of defined benefit obligations
Items Amount
I. Opening balance 324,375,540.91
II. Defined benefit cost recognized in current profit or loss 1,285,743.31
1. Current service cost 1,285,743.31
2. Past service cost
3. Settlement gains (loss indicated in “－”)
4. Interest expenses
III. Defined benefit cost recognized in other comprehensive income
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1. Actuarial loss (gain indicated in “－”)
IV. Other changes -24,700,954.02
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences -24,700,954.02
V. Closing balance 300,960,330.20
Fair value of plan assets
Items Amount
Ⅰ. Opening balance 371,501,327.98
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive income
1. Return on plan assets (except those included in net interests)
2. Changes in impact of asset cap (except those included in net
interests)
IV. Other changes -31,466,887.09
1. Employer contributions 776,933.35
2. Benefits paid 2,541,347.98
3. Exchange differences -34,785,168.42
V. Closing balance 340,034,440.89
Neither the Company's ordinary shares or bonds, nor the properties occupied by the
Company are included in the plan assets.
Net liability (net asset) of defined benefit plan
Items Amount
Ⅰ. Opening balance -47,125,787.07
II. Defined benefit cost recognized in current profit or loss 1,285,743.31
III. Defined benefit cost recognized in other comprehensive income
IV. Other changes 6,765,933.07
V. Closing balance -39,074,110.69
The average term for the defined benefit obligation is 11.79 years at the balance sheet
date.
② The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided qualified staff with
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defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 2.47%
Present value of defined benefit obligations
Item Amount
I. Opening balance 151,567,760.38
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 16,380,076.18
1. Current period service cost 12,973,557.63
2. Past service cost
3. Settlement gains ((loss indicated in “－”)
4. Interest expenses 3,406,518.55
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss (gain indicated in “－”)
V. Other changes -18,361,895.29
1. The consideration paid at the time of settlement
2. Benefits paid -8,671,118.10
3. Exchange differences -9,690,777.19
VI. Closing balance 149,585,941.27
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 151,567,760.38
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 16,380,076.18
IV. Defined benefit cost recognized in other comprehensive income
V. Other changes -18,361,895.29
VI. Closing balance 149,585,941.27
The average term for the defined benefit obligation is 10.05 years at the balance sheet
date.
③ 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
qualified staff with defined benefit plan for post-retirement health care benefits.
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Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 2.09%
Present value of defined benefit obligations
Items Amount
I. Opening balance 293,063,281.71
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,539,507.32
1. Current period service cost 3,077,601.69
2. Past service cost
3. Settlement gains (loss indicated in “－”)
4. Interest expenses 5,461,905.63
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss (gain indicated in “－”)
V. Other changes -46,224,577.13
1. The consideration paid at the time of settlement
2. Benefits paid -27,571,752.34
3. Exchange differences -18,652,824.79
VI. Closing balance 255,378,211.90
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 293,063,281.71
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 8,539,507.32
IV. Defined benefit cost recognized in other comprehensive income
V. Other changes -46,224,577.13
VI. Closing balance 255,378,211.90
④ 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
qualified staff with defined benefit plan for post-retirement pension.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 2.08%
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Present value of defined benefit obligations
Items Amount
I. Opening balance 224,286,521.09
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 13,744,667.66
1. Current service cost 9,768,677.65
2. Past service cost
3. Settlement gains (loss indicated in “－”)
4. Interest expenses 3,975,990.01
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss (gain indicated in “－”)
V. Other changes -53,143,430.37
1. The consideration paid at the time of settlement
2. Benefits paid -38,894,521.32
3. Exchange differences -14,248,909.05
VI. Closing balance 184,887,758.38
Fair value of plan assets
Items Amount
I. Opening balance 160,409,027.51
II. Defined benefit cost recognized in current profit or loss 5,985,091.18
1. Interest income 5,985,091.18
III. Defined benefit cost recognized in other comprehensive income
1. Return on plan assets (except those included in net interests)
2. Changes in impact of asset cap (except those included in net
interests)
IV. Other changes -34,428,739.85
1. Employer contributions 14,655,891.94
2. Benefits paid -38,894,521.32
3. Exchange differences -10,190,110.47
V. Closing balance 131,965,378.84
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 63,877,493.58
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 7,759,576.48
IV. Defined benefit cost recognized in other comprehensive income
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V. Other changes -18,714,690.52
VI. Closing balance 52,922,379.54
(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 213,320,333.26
II. Business combination not under common control
III. Compensation recognized in current profit and loss 41,190,223.38
IV. Actual compensation paid in the current period -35,354,986.64
V. Other changes -17,344,203.67
VI. Closing balance 201,811,366.33
Classification of the balance of defined benefit plan
Items Closing balance Opening balance
Short-term salary 22,013,055.61 38,202,187.93
Long-term salary 559,042,580.03 602,802,957.77
Total 581,042,547.19 641,005,145.70
39. Estimated liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Opening balance Closing balance
Pending litigation 21,550,139.03 19,124,300.01
Others 238,570,708.44 224,305,566.95
Projection of three guarantees and installation fees 1,182,723,189.26 1,342,045,558.36
Total 1,442,844,036.73 1,585,475,425.32
Other explanations, including significant assumption and estimation relating to
projected significant liabilities:
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.
40. Deferred income
182
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√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance Closing balance
current period current period
Government grants 633,761,669.48 52,012,510.90 67,876,597.29 617,897,583.09
Total 633,761,669.48 52,012,510.90 67,876,597.29 617,897,583.09
41. Share capital
Increase for the Decrease for the
Categories of shares Opening balance Closing balance
current period current period
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 9,027,846,441 397,676,840 32,352,800 9,393,170,481
1. Ordinary shares in RMB 6,308,552,654 6,308,552,654
2. Domestic listed foreign
Shares
3. Offshore listed foreign
2,719,293,787 397,676,840 32,352,800 3,084,617,827
Shares
4. Others
III. Total shares 9,027,846,441 397,676,840 32,352,800 9,393,170,481
42. Other equity instruments
Increase for the Decrease for the
Items Opening balance Closing balance
current period current period
Equity portion of
2,364,195,333.79 2,215,712,153.81 148,483,179.98
convertible bonds
Total 2,364,195,333.79 2,215,712,153.81 148,483,179.98
43. Capital reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance Closing balance
current period current period
Capital premium 14,195,347,140.17 8,095,619,066.22 794,292,522.66 21,496,673,683.73
183
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(share capital
premium)
Other capital
813,680,267.23 813,680,267.23
reserve
Total 15,009,027,407.40 8,095,619,066.22 794,292,522.66 22,310,353,950.96
Other explanation, including the statement and reason of the changes for the current
period:
The conversion of convertible bonds (CB) resulted in the increase in capital premium of
RMB8,095,619,066.22; the cancellation of treasury stock resulted in the decrease in capital
premium of RMB793,935,316.13.
44. Other comprehensive income
Amount for the current period
Amount Amount
Amount Closing
Items Opening balance Less: attributable attributable
before balance
income tax to the parent to minority Others
income tax in the
expense company shareholders
current period
after tax after tax
37,860,811.7
a -292,647,416.24 56,080,279.79 55,956,231.90 124,047.89 -198,830,372.63
1
-
b -101,239,895.27 170,835,525.87 112,586,182.47 11,346,287.20
58,249,343.40
c -530,525,234.75 -502,890,286.66 -500,830,526.34 -2,059,760.32 -1,031,355,761.09
d -159,428,469.24 42,582,461.40 -3,807,134.54 38,885,621.52 -110,294.66 -120,542,847.72
e 37,624,286.44 -759,575.21 166,956.47 -595,263.81 2,645.07 37,029,022.63
- 37,860,811.7
Total -1,046,216,729.06 -234,151,594.81 -293,997,754.26 -2,043,362.02 -1,302,353,671.61
61,889,521.47 1
Notes:
(1) Items a, b, and c are other comprehensive income that will be reclassified into profit or
loss, the details are as follows:
Item a represents other comprehensive income classified into profit and loss under the
equity method.
Item b represents cash flow hedge reserves (effective portion of profit or loss generated
from cash flow hedge).
Item c represents the balance arising from translation of foreign currency financial
statements.
(2) Items d and e are other comprehensive income that cannot be reclassified into profit or
loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined
benefit plans.
45. Surplus reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
184
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Haier Smart Home Co., Ltd
Increase for the Decrease for the
Items Opening balance Closing balance
current period current period
Statutory surplus
2,997,677,738.01 2,997,677,738.01
reserve
Discretionary
26,042,290.48 26,042,290.48
surplus reserve
Reserve fund 11,322,880.64 11,322,880.64
Enterprise
10,291,630.47 10,291,630.47
development fund
Total 3,045,334,539.60 3,045,334,539.60
Explanation of surplus reserve, including the statement and reason of the changes for the
current period:
Pursuant to the Company Law of the People's Republic of China and the articles of
association, the Company is required to appropriate 10% of its net profits as statutory
surplus reserve.
46. Undistributed profits
√ Applicable □ Not Applicable
Items Amounts
Undistributed profits at the end of previous year 38,445,132,172.47
Changes in accounting policies① 183,214,768.11
Undistributed profits at the beginning of the year 38,628,346,940.58
Add: net profit attributable to owners of the parent company 6,852,271,812.97
Other transfer in -12,317,618.84
Adjustment due to implementation of enterprise accounting standard
Profit available for appropriation for the year 45,468,301,134.71
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares 3,420,918,669.85
Undistributed profits at the end of period 42,047,382,464.86
1 The amount is the result of the adjustment to the opening amount for the
implementation of the new financial instruments standard for financial enterprises
accounted for by the equity method of the Company.
47. Operating income and operating cost
(1) Operating income
Items Amount for the current period Amount for the previous period
Primary business 110,963,580,135.76 95,222,506,535.21
Other business 655,241,928.97 505,590,571.44
185
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Haier Smart Home Co., Ltd
Total 111,618,822,064.73 95,728,097,106.65
(2) Primary business income and primary business cost by product category
Amount for the current period Amount for the previous period
Categories
Primary business Primary business Primary business Primary business
income cost income cost
Air conditioner 21,626,942,343.55 15,570,568,221.85 16,994,714,538.19 12,325,759,112.18
Refrigerator 33,637,015,872.13 23,400,300,288.46 26,737,917,721.21 18,296,498,256.27
Kitchen appliance 16,918,040,488.85 11,715,172,134.94 14,065,148,916.99 9,863,397,560.12
Water appliance 5,778,983,645.59 3,336,143,841.42 4,455,955,349.13 2,567,869,114.74
Washing machine 24,988,233,426.16 16,920,815,831.58 19,706,304,066.77 13,498,929,586.30
Equipment
product and
8,014,364,359.48 6,984,822,958.10 13,262,465,942.92 12,143,658,318.29
integrated channel
services
Total 110,963,580,135.76 77,927,823,276.35 95,222,506,535.21 68,696,111,947.90
48. Taxes and surcharge
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount for the current period Amount for the previous period
City maintenance and 116,957,051.34 88,690,704.32
construction tax
Education surcharge 84,945,850.69 63,314,967.69
Property tax 25,464,790.86 22,487,302.01
Land use tax 7,635,139.14 5,207,509.93
Stamp duty 84,852,090.78 72,199,239.68
Others 19,027,752.57 23,291,054.91
Total 338,882,675.38 275,190,778.54
49. Selling expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the previous
Items Amount for the current period
period
Selling expenses 16,730,914,492.75 14,526,912,493.29
Total 16,730,914,492.75 14,526,912,493.29
The Company's selling expenses are mainly salary expenses, transportation and storage
expenses, advertising and promotion expenses, and after-sales expenses etc.
50. Administrative expenses
√ Applicable □ Not Applicable
186
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Unit and Currency: RMB
Amount for the previous
Items Amount for the current period
period
Administrative expenses 5,033,576,083.72 4,608,308,707.03
Total 5,033,576,083.72 4,608,308,707.03
The Company's management expenses are mainly salary expenses, administrative office
expenses, depreciation and amortization of assets fees, etc.
51. R&D expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the previous
Item Amount for the current period
period
R&D expenses 3,738,734,614.40 2,939,733,549.14
Total 3,738,734,614.40 2,939,733,549.14
The Company's R&D expenses are mainly salary expenses, R&D equipment expenses,
inspection and testing fees.
52. Financial expenses
Amount for the previous
Items Amount for the current period
period
Interest expenses 363,256,552.03 719,257,090.03
Less: Interest income 264,334,107.38 219,622,316.65
Less: Cash discount 82,709,178.40 65,843,464.11
Exchange gains and losses 211,612,640.23 216,765,382.01
Others 67,834,179.59 50,963,873.72
Total 295,660,086.07 701,520,565.00
Interest expenditure in lease liabilities in the current period is RMB50,932,009.35.
53. Other income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount for the current period Amount for the previous period
Government grants related to
337,502,418.14 497,272,167.38
revenue
Government grants related to
39,678,023.49 28,017,088.05
assets
Total 377,180,441.63 525,289,255.43
187
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54. Investment income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the current Amount for the
Items
period previous period
Income from long-term equity investment calculated by equity
943,069,721.83 679,043,527.00
method
Investment income from disposal of long-term equity
-199,825.65
investment
Investment income from disposal of other equity instrument
440,255.20 14,526,208.93
investments
Income from wealth management products 28,216,179.52 48,451,938.85
Investment income from disposal of financial assets at fair
164,957,510.67 14,961,073.66
value through profit or loss
Total 1,136,683,667.22 756,782,922.79
55. Gains on changes in fair value
√ Applicable □ Not Applicable
Unit and Currency: RMB
Sources of gains from changes in Amount for the current Amount for the
fair value period previous period
Changes in fair value of forward 46,929,961.72 -35,571,335.94
foreign exchange trading contracts
Changes in fair value of wealth 1,881,780.81 2,809,431.16
management products
Changes in fair value of investment 15,457,768.79
funds
Others 1,774,801.63
Total 64,269,511.32 -30,987,103.15
56. Credit impairment loss
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the previous
Items Amount for the current period
period
Bad debts losses on bills receivable 156,696.60 1,000,000.00
Bad debts losses on accounts receivable -44,188,119.81 -109,905,504.07
Total -44,031,423.21 -108,905,504.07
188
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57. Impairment loss on assets
Amount for the previous
Items Amount for the current period
period
Impairment losses on inventory -402,766,436.32 -412,325,166.32
Impairment losses on other current assets -228,869,824.32 -197,422,966.37
Impairment losses on fixed assets -21,751,066.24
Impairment losses on intangible assets
Impairment losses on construction in
progress
Impairment losses on long-term equity
investment
Total -653,387,326.88 -609,748,132.69
58. Gains on disposal of assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount for the current Amount for the previous period
period
Gains on disposal of 157,808,087.44 14,120,787.44
non-current assets
Less: losses on disposal -15,393,133.19 -28,563,193.90
of non-current assets
Total 142,414,954.25 -14,442,406.46
Other explanations:
□ Applicable √ Not Applicable
59. Non-operating income
√ Applicable □ Not Applicable
Items Amount for the Amount for the previous
current period period
Gains on disposal of non-current 924,615.55 12,240,620.38
assets
Quality claims and fines 19,066,129.21 17,811,610.75
Others 59,509,946.96 38,834,457.94
Total 79,500,691.72 68,886,689.07
60. Non-operating expenses
Items Amount for the current Amount for the previous
period period
Losses on disposal of non-current 7,928,197.15 9,175,290.01
assets
189
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Others 43,136,498.89 46,295,466.54
Total 51,064,696.04 55,470,756.55
61. Income tax expenses
(1) Statement of income tax expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount for the current Amount for the previous
period period
Current income tax expenses 982,716,122.78 432,844,606.93
Deferred income tax expenses 540,467,141.62 228,382,266.41
Total 1,523,183,264.40 661,226,873.34
(2) Current reconciliation between accounting profit and income tax expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount for the
current period
Total profit 8,460,968,406.76
Income tax expenses calculated pursuant to statutory/applicable tax
2,115,242,101.76
rate(s)
Impact from different tax rates applicable to subsidiaries -387,639,911.45
Impact from adjustment to income tax in prior periods -152,101,320.21
Impact from non-taxable income -251,234,711.04
Impact from non-deductible cost, expense and loss 48,767,934.40
Impact from deductible provisional differences or deductible losses
150,149,170.94
of unrecognized deferred income tax assets for the current period
Income tax expense 1,523,183,264.40
Other explanations:
□ Applicable √ Not Applicable
62. Other comprehensive income
√Applicable □ Not Applicable
Please refer to Note VII. 44 for details.
63. Other cash received from operating activities
190
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Items Amount
Deposits and securities 86,924,607.81
Government grants 282,417,200.52
Non-operating income excluding government 23,698,258.91
grants
Interest income 272,381,326.84
Others 70,355,093.20
Total 735,776,487.28
64. Other cash paid to operating activities
Items Amount
Cash paid on selling expenses 9,715,516,651.76
Cash paid on administrative and R&D 3,145,406,556.73
expenses
Cash paid on financial expenses 57,104,763.74
Non-operating expenses 991,470.21
Others 124,738,221.20
Total 13,043,757,663.64
65. Other cash paid to investing activities
Items Amount
Others 250,000.00
Total 250,000.00
66. Other cash paid to financing activities
Items Amount
Cash paid to lease 313,614,596.21
Repurchase of shares 2,593,546,152.49
Expenses from issuance of H-shares 183,263,247.83
Others 386,900.00
Total 3,090,810,896.53
67. Supplementary information of cash flow statement
√Applicable □ Not Applicable
191
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Haier Smart Home Co., Ltd
Supplementary information
Amount for the current Amount for the
period previous period
1. Net profit adjusted to cash flow of operating
activities:
Net profit 6,937,785,142.36 3,612,016,983.00
Add: impairment provision for assets 697,418,750.09 718,653,636.76
Losses on credit impairment
Depreciation of fixed assets 2,109,270,491.78 1,963,015,056.31
Depreciation of fixed assets, oil and gas assets and
production materials
Amortization of ROU assets 465,382,008.86 478,210,242.71
Amortization of long-term prepaid expenses 110,505,485.99 81,963,800.63
Losses on disposal of fixed assets, intangible assets
and other long-term assets (gains are represented by “- -135,411,372.65 11,377,076.09
”)
Losses on retirement of fixed assets (gains are
represented by “-”)
Losses on change of fair value (gains are represented
-64,269,511.32 30,987,103.15
by “-”)
Financial expenses (gains are represented by “-”) 574,869,192.26 936,022,472.04
Loss on investments (gains are represented by “-”) -1,136,683,667.22 -756,782,922.79
Decrease in deferred tax assets (increase is represented
549,883,365.96 143,796,985.57
by “-”)
Increase of deferred tax liabilities (decrease is
-9,416,224.31 84,585,280.84
represented by “-”)
Decrease in inventories (increase is represented by “-”) -3,765,167,637.00 2,543,296,922.45
Decrease of operational account receivables (increase
-2,215,770,602.60 -5,862,948,537.55
is represented by “-”)
Increase of operational account payables (decrease is
4,321,292,391.08 -4,757,655,587.32
represented by “-”)
Others -15,864,086.39 230,542,230.71
Net cash flow generated from operational activities 8,423,823,726.89 -542,919,257.40
2. Significant investment and financing activities
not involving cash inflows and outflows:
Capital transferred from debts 6,277,583,752.41
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 41,109,454,836.46 43,021,810,920.60
Less: cash balance at the beginning of the period 45,635,132,638.48 34,962,947,399.85
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 -4,525,677,802.02 8,058,863,520.75
68. Cash and cash equivalents
Items Closing balance Opening balance
I. Cash 41,109,454,836.46 45,635,132,638.48
192
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Including: cash on hand 6,532,547.04 2,257,666.98
Bank deposits always available for
40,349,002,059.65 45,306,078,417.59
payment
Other monetary funds always
753,920,229.77 326,796,553.91
available for payment
II. Cash equivalents
Including: Bond investments due
within three months
III. Closing balance of cash and cash
41,109,454,836.46 45,635,132,638.48
equivalents
69. Monetary items in foreign currency
(1). Monetary items in foreign currency
√ Applicable □ Not Applicable
Unit: $
Closing Balance Exchange rate Closing converted
Items
RMB balance
Monetary funds - - 9,286,167,138.39
Including: USD 723,005,674.30 6.4601 4,670,688,956.52
EUR 102,772,303.43 7.6862 789,928,478.64
JPY 12,371,839,384.77 0.058428 722,861,831.57
HKD 411,408,354.34 0.8321 342,332,891.65
2,760,354,980.01
Accounts receivable - - 15,391,577,197.35
Including: USD 1,079,521,428.82 6.4601 6,973,816,382.31
EUR 445,419,850.63 7.6862 3,423,586,055.91
JPY 4,144,687,700.19 0.058428 242,165,812.95
4,752,008,946.18
Long-term - - 9,590,298,914.57
borrowings
Including: USD 1,052,645,878.53 6.4601 6,800,197,639.89
EUR 122,247,325.97 7.6862 939,617,396.90
329,906,360.02 0.088800 29,295,684.77
319,963,612.98 4.5153 1,444,731,701.69
JPY 6,280,974,522.34 0.058428 366,984,779.39
9,471,711.93
Short-term - - 10,906,147,093.94
borrowings
Including: USD 657,928,527.55 6.4601 4,250,284,080.84
EUR 532,452,854.50 7.6862 4,092,539,130.29
JPY 1,296,927,986.56 0.058428 75,776,908.40
HKD 2,600,173,375.64 0.8321 2,163,604,265.87
323,942,708.54
Accounts payable - - 21,514,977,908.02
Including: USD 2,059,968,218.84 6.4601 13,307,600,690.50
193
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EUR 504,937,074.31 7.6862 3,881,047,340.58
JPY 6,132,558,699.30 0.058428 358,313,139.68
213,699,394.60 4.5153 964,916,876.44
3,003,099,860.82
on-current liabilities - - 3,788,780,803.40
due within one year
Including: USD 95,843,007.76 6.4601 619,155,414.43
EUR 361,382,453.68 7.6862 2,777,657,815.47
JPY 402,268,650.00 0.058428 23,503,752.68
232,975,804.26 0.088800 20,688,251.42
347,775,569.40
(2). Explanation of foreign operating entities, including, for significant foreign
operating entities, disclosure of their foreign principal place of business, the recording
currency and the basis of selection, and the reasons for any change in the recording
currency
□ Applicable √ Not Applicable
VIII. Changes of consolidation scope
1. Business combination not under common control
□ Applicable √ Not Applicable
2. Business consolidation under common control
□ Applicable √ Not Applicable
3. Disposal of subsidiary
□ Applicable √ Not Applicable
4. Changes of consolidation scope due to other reasons
Explanation of the changes of consolidation scope due to other reasons (e.g., new
subsidiaries, liquidation of subsidiaries, etc.) and the related circumstances:
√Applicable □Not Applicable
(1) Qingdao Haier Technology Investment Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary Tianjin Yilian Ecological Technology Co., Ltd. for
the current period.
(2) Shanghai Haier Medical Technology Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary Jiangxi Haier Medical Technology Co., Ltd. for the
current period.
(3) Qingdao Haier Intelligent Home Appliance Technology Co., Ltd., a subsidiary of
the Company, established a wholly-owned subsidiary Qingdao Haizhi Shenlan Technology
Co., Ltd. for the current period.
194
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(4) Qingdao Haier Air-Conditioner Electronics Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary Qingdao Haishengze Technology Co., Ltd. for the
current period.
(5) Qingdao Haizhi Investment Management Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary Qingdao Hailvyuan Recycling Technology Co., Ltd.
for the current period.
195
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IX. Interests in other entities
1. Interests in subsidiaries
(1). Composition of the Group
Name of subsidiary Principal Place Nature of business Shareholding Proportion of Acquiring method
place of of the voting
business registration Direct Indirect rights
Flourishing Reach Mainland of China Bermuda Group company, which mainly engages Establishment
Limited and Hong Kong in investment holding, and production,
100.00% 100.00%
sale and distribution of washing
machines and water heaters
Haier U.S. Appliance The US The US Group company, which mainly engages Establishment
Solutions, Inc. in household appliances production and
100.00% 100.00%
distribution
business
Haier Singapore Singapore and other Singapore Group company, which mainly engages Business
Investment Holding overseas areas in the production and distribution of combination
100.00% 100.00%
Co., Ltd. home appliances under common
control
Haier New Zealand New Zealand New Zealand Group company, which mainly engages Business
Investment Holding in the production and distribution of combination
100.00% 100.00%
Company Limited household appliances under common
control
Candy S.p.A Europe Italy Group company, which mainly engages Business
in the production and distribution of 100.00% 100.00% combination not
household appliances under common control
Qingdao Haier Air Qingdao Qingdao Manufacture and operation of Business combination
Conditioner Gen Corp., High-tech Zone High-tech household air-conditioners 100.00% 100.00% under common control
Ltd. Zone
Guizhou Haier Huichuan District, Huichuan Manufacture and sale of refrigerator Business combination
Electronics Co., Ltd. Zunyi City, District, Zunyi under common control
59.00% 59.00%
Guizhou City, Guizhou
Province Province
196
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Hefei Haier Air- Hefei Haier Hefei Haier Manufacture and sale of air- Business combination
conditioning Co., Industrial Park Industrial Park conditioners 99.22% 99.22% under common control
Limited
Wuhan Haier Wuhan Wuhan Manufacture and sale of air- Business combination
Electronics Co., Ltd. Haier Haier conditioners 60.00% 60.00% under common control
Industrial Park Industrial Park
Qingdao Haier Air- Qingdao Qingdao Manufacture and sale of air- Business combination
Conditioner Electronics Development Zone Development conditioners 99.54% 99.54% under common control
Co., Ltd. Zone
Qingdao Haier Qingdao Qingdao Manufacturing of plastic products Business combination
Information Plastic High-tech Zone High-tech under common control
100.00% 100.00%
Development Co., Zone
Ltd.
Dalian Haier Precision Dalian Dalian Manufacture and sale of precise Business combination
Products Co., Ltd. Export Expressing Export plastics under common control
90.00% 90.00%
Zone Expressing
Zone
Hefei Haier Plastic Co., Hefei Hefei Manufacture and sale of plastic parts Business combination
Ltd. Economic & Economic & under common control
Technological Technological 77.36% 4.83% 82.19%
Development Area Development
Area
Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic powder, plastic Business combination
Powder Co., Ltd. Development Zone Development sheet and high-performance coatings 40.00% 60.00% 100.00% under common control
Zone
Chongqing Haier Jiangbei District, Jiangbei Plastic products, sheet metal work, Business combination
Precision Plastic Co., Chongqing City District, electronics and under common control
90.00% 10.00% 100.00%
Ltd. Chongqing hardware
City
Qingdao Haier Qingdao Qingdao Manufacture of fluorine-free Establishment
Refrigerator Co., Ltd. High-tech Zone High-tech refrigerators 100.00% 100.00%
Zone
Qingdao Haier Pingdu Pingdu Manufacture of refrigerators Establishment
Refrigerator Development Development
100.00% 100.00%
(International) Co., Zone, Qingdao Zone, Qingdao
Ltd.
197
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Haier Smart Home Co., Ltd
Qingdao Household Qingdao Qingdao R&D of home appliances mold and Establishment
Appliance Technology High-tech Zone High-tech technological equipment
100.00% 100.00%
and Equipment Zone
Research Institute
Qingdao Haier Whole Qingdao Qingdao R&D and sales of health-related small Establishment
Set Home Appliance High-tech Zone High-tech home appliance 98.33% 98.33%
Service Co., Ltd. Zone
Qingdao Haier Special Qingdao Qingdao Manufacture and sales of fluorine-free Establishment
Refrigerator Co., Ltd. Development Zone Development refrigerators 100.00% 100.00%
Zone
Qingdao Haier Qingdao Qingdao Manufacture of dish washing machine Establishment
Dishwasher Co., Ltd. Development Zone Development and gas stove 100.00% 100.00%
Zone
Qingdao Haier Special Qingdao Qingdao Development, manufacture and sales of Establishment
Freezer Co., Ltd. Development Zone Development freezer and other refrigeration products 96.06% 96.06%
Zone
Dalian Haier Air- Dalian Dalian Manufacture of air conditioners Establishment
conditioning Co., Ltd. Export Export
90.00% 90.00%
Expressing Zone Expressing
Zone
Dalian Haier Dalian Dalian Manufacture of refrigerators Establishment
Refrigerator Co., Ltd. Export Export
90.00% 90.00%
Expressing Zone Expressing
Zone
Qingdao Haier Qingdao Qingdao Development, Establishment
Electronic Plastic Co., Development Zone Development assembling and sales of plastics, 80.00% 80.00%
Ltd. Zone electronics and products
Wuhan Haier Freezer Wuhan Wuhan R&D, Establishment
Co., Ltd. Economic & Economic & manufacture and sales of freezer and
Technological Technological other refrigeration products
Development Zone Development 95.00% 5.00% 100.00%
High-tech Zone High-
Industrial tech Industrial
Park Park
Qingdao Haidarui Qingdao Qingdao Development, purchase and sale of Establishment
98.00% 2.00% 100.00%
Procurement Service High-tech Zone High-tech electrical products and components
198
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Haier Smart Home Co., Ltd
Co., Ltd. Zone
Qingdao Haier Qingdao Qingdao Development and application of Establishment
Intelligent Home High-tech Zone High-tech household appliances, communication,
98.91% 1.09% 100.00%
Appliance Technology Zone electronics and network engineering
Co., Ltd. technology
Chongqing Haier Jiangbei Jiangbei Manufacture and sales of air Establishment
Air-conditioning Co., District, District, conditioners
76.92% 23.08% 100.00%
Ltd. Chongqing City Chongqing
City
Qingdao Haier Qianwangang Qianwangang Development and manufacture of Establishment
Precision Products Co., Road, Road, Jiaonan precise plastic, metal plate, mold and
70.00% 70.00%
Ltd. Jiaonan City electronic products for household
City appliances
Qingdao Haier Air Jiaonan Jiaonan City, Manufacture of home appliances and Establishment
Conditioning City, Qingdao electronics 100.00% 100.00%
Equipment Co., Ltd. Qingdao
Dalian Free Trade Dalian Dalian Export Domestic trade Establishment
Zone Haier Air- Export Expressing
100.00% 100.00%
conditioning Trading Expressing Zone Zone
Co., Ltd.
Dalian Free Trade Dalian Dalian Export Domestic trade Establishment
Zone Haier Export Expressing
100.00% 100.00%
Refrigerator Trading Expressing Zone Zone
Co., Ltd.
Chongqing Haier Jiangbei Jiangbei Sales of household appliances Establishment
Electronics Sales Co., District, District,
95.00% 5.00% 100.00%
Ltd. Chongqing City Chongqing
City
Chongqing Haier Jiangbei Jiangbei Manufacture of refrigerator Establishment
Refrigeration District, District,
84.95% 15.05% 100.00%
Appliance Co., Ltd. Chongqing City Chongqing
City
Hefei Haier Hefei Haier Hefei Haier Manufacture of refrigerator Establishment
100.00% 100.00%
Refrigerator Co., Ltd. Industrial Park Industrial Park
Wuhan Haier Energy Wuhan Wuhan Energy service Establishment
75.00% 75.00%
and Power Co., Ltd. Haier Industrial Haier
199
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Park Industrial Park
Qingdao Haier HVAC Qingdao Qingdao Air-conditioning engineer Establishment
Engineering Co., Ltd. Development Zone Development 100.00% 100.00%
Zone
Chongqing Jiangbei Jiangbei Sales of household appliances and Establishment
Goodaymart Electric District, District, electronics
51.00% 51.00%
Appliance Sale Co., Chongqing City Chongqing
Ltd. City
Qingdao Haier Jiaozhou Jiaozhou Manufacture and sale of air- Establishment
(Jiaozhou) Air- City, City, conditioners
100.00% 100.00%
conditioning Co., Qingdao Qingdao
Limited
Qingdao Haier Jiaozhou Jiaozhou Manufacture and sales of plastic and Establishment
Component Co., Ltd. City, City, precise sheet metal products 100.00% 100.00%
Qingdao Qingdao
Haier Shareholdings Hong Hong Investment Establishment
100.00% 100.00%
(Hong Kong) Limited Kong Kong
Harvest International Cayman Cayman Investment Establishment
100.00% 100.00%
Company Islands Islands
Shenyang Haier Shenbei Shenbei Manufacture and sales of refrigerator Establishment
Refrigerator Co., Ltd. New Area, New Area, 100.00% 100.00%
Shenyang City Shenyang City
Foshan Haier Freezer Sanshui Sanshui Manufacture and sales of freezer Establishment
Co., Ltd. District, District,
100.00% 100.00%
Foshan Foshan
City City
Zhengzhou Haier Zhengzhou Zhengzhou Manufacture and sales of air Establishment
Air-conditioning Co., Economic and Economic and conditioner
Ltd. Technological Technological 100.00% 100.00%
Development Development
Zone Zone
Qingdao Haidayuan Qingdao Qingdao Development, purchase and sale of Establishment
Procurement Service Development Zone Development electrical products and components 100.00% 100.00%
Co., Ltd. Zone
Qingdao Haier Qingdao Qingdao R&D of household appliance products Establishment
100.00% 100.00%
Intelligent Technology High-tech Zone High-tech
200
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Haier Smart Home Co., Ltd
Development Co., Ltd. Zone
Qingdao Hairi Hi-Tech Qingdao Qingdao Design, manufacture and sales of Business
Model Co., Ltd. High-tech Zone High-tech product model and mould combination
100.00% 100.00%
Zone under common
control
Qingdao Hai Gao Qingdao Qingdao Industrial design and prototype Business
Design and High-tech Zone High-tech production combination
75.00% 75.00%
Manufacture Co., Ltd. Zone under common
control
Beijing Haier Guangke Beijing Beijing Technological development, Business
Digital Technology promotion and combination
55.00% 55.00%
Co., Ltd. transfer under common
control
Shanghai Haier Shanghai Shanghai Wholesale and retail of medical facility Establishment
Medical Technology 80.93% 80.93%
Co., Ltd.
Qingdao Haier Qingdao Qingdao Development and sales of software and Business
Technology Co., Ltd. information product combination
100.00% 100.00%
under common
control
Qingdao Haier Qingdao Qingdao Entrepreneurship investment and Establishment
Technology Investment consulting 100.00% 100.00%
Co., Ltd.
Qingdao Casarte Smart Qingdao Qingdao Development, production and sales of Establishment
Living Appliances Co., appliances 100.00% 100.00%
Ltd.
Qingdao Qingdao Qingdao Sales of household appliances and Establishment
Haichuangyuan digital products
100.00% 100.00%
Appliances Sales Co.,
Ltd.
Haier Overseas Electric Qingdao Qingdao Sales of household appliances, Establishment
100.00% 100.00%
Appliance Co., Ltd. international freight forwarding
Haier Group (Dalian) Dalian Dalian Sales of household appliances, Business
Electrical Appliances international freight forwarding combination
100.00% 100.00%
Industry Co., Ltd. under common
control
201
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Qingdao Haier Central Qingdao Qingdao Production and sales of air conditioners Establishment
Air Conditioning Co., and refrigeration 100.00% 100.00%
Ltd. equipment
Beijing Haier Yun Beijing Beijing Technological Establishment
Kitchen Technology development promotion 95.77% 95.77%
Co., Ltd. and transfer
Chongqing Haier Hefei Hefei Sales of household appliances Establishment
Home Appliance Sale
100.00% 100.00%
Hefei Co.,
Ltd.
Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware Establishment
71.43% 71.43%
Technology Co., Ltd.
Haier U+smart Beijing Beijing Software development Establishment
Intelligent Technology 100.00% 100.00%
(Beijing) Co., Ltd.
Haier (Shanghai) Shanghai Shanghai Sales and R&D of home appliances Establishment
100.00% 100.00%
Electronics Co., Ltd.
Haier Shanghai Shanghai Shanghai Business Establishment
Zhongzhi Fang Chuang management
100.00% 100.00%
Ke Management Co., consulting, chuangke management
Ltd.
Qingdao Haier Smart Qingdao Qingdao Production and sales of kitchen smart Establishment
Kitchen Appliance Co., household appliances 100.00% 100.00%
Ltd.
JIYI Appliance Shanghai Shanghai Sales of household appliances Establishment
(Shanghai) 100.00% 100.00%
Co., Ltd.
Qingdao Hao Pin Hai Qingdao Qingdao Development, purchase and sales of Establishment
Rui Information electrical products and components 100.00% 100.00%
Technology Co., Ltd.
Qingdao Haier Special Qingdao Qingdao Production and sales of household Establishment
Refrigerating appliances 100.00% 100.00%
Appliance Co., Ltd.
Beijing Zero Micro Beijing Beijing Technological development and Establishment
55.00% 55.00%
Technology Co., Ltd. promotion
Laiyang Haier Smart Laiyang Laiyang Production and sales of household 100.00% 100.00% Establishment
202
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Haier Smart Home Co., Ltd
Kitchen Appliance Co., appliances
Ltd.
Hefei Haier Air Hefei Hefei Production and sales of household Establishment
Conditioning appliances 100.00% 100.00%
Electronics Co., Ltd.
Haier (Shanghai) Shanghai Shanghai R&D of household appliances Establishment
Home Appliance
Research and 100.00% 100.00%
Development Center
Co., Ltd.
Development, research and technical
Haier (Shenzhen) R&D
Shenzhen Shenzhen services of home and commercial 100.00% 100.00% Establishment
Co., Ltd.
appliances
Guangdong
Guangzhou Haier Air Manufacturing of refrigeration and air
Guangdong 100.00% 100.00% Establishment
Conditioner Co., Ltd. conditioning equipment
Qingdao Yunshang
Qingdao
Yuyi IOT Technology Qingdao IoT technology R&D 70.00% 70.00% Establishment
Co., Ltd.
Haiyu (Shanghai)
Shanghai Rental of apartments, intelligent
Intelligent Technology Shanghai 70.00% 70.00% Establishment
equipment, etc.
Co., Ltd.
Qingdao Haizhi
Qingdao
Investment Qingdao Asset management, equity investment 100.00% 100.00% Establishment
Management Co., Ltd.
Qingdao Jijia Cloud
Qingdao
Intelligent Technology Qingdao R&D and sales of lighting appliances 80.00% 80.00% Establishment
Co., Ltd.
Qingdao Haimeihui Qingdao Qingdao Establishment
Management Leasing and business services 100.00% 100.00%
Consulting Co., Ltd.
Wuxi Yunshang Establishment
Wuxi
Internet of Clothing Wuxi Internet of Things technology R&D 100.00% 100.00%
Technology Co., Ltd.
Qingdao Guochuang Qingdao Qingdao Scientific research and technical Establishment
37.75% 37.75%
Intelligent Household service
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Appliance Research
Institute Co., Ltd.
Hangzhou Gandao Establishment
Hangzhou
Intelligent Technology Hangzhou Technology development, service 52.58% 52.58%
Co., Ltd.
Qingdao Haidacheng Establishment
Qingdao Development, purchase and sales of
Procurement Services Qingdao 100.00% 100.00%
electrical products and components
CO., LTD.
Business
Guangdong Heilong combination
Guangzhou Scientific research and technical
Intelligent Technology Guangzhou 76.72% 76.72%
service
CO., LTD. not under common
control
Beijing Haixianghui Beijing Scientific research and technical Establishment
Beijing 100.00% 100.00%
Technology CO., LTD. service
Beijing Beijing Business
combination
Qingdao Hairuijiejing Electronic equipment technology
Electronics Co., Ltd. research, development, transfer, 51.00% 51.00%
not under common
consulting and services
control
Haier Smart Home Establishment
Experience Cloud Technology development of smart
Qingdao
Qingdao home products, whole furniture 100.00% 100.00%
Ecological Technology customization, etc.
Co., Ltd.
Haier Smart Home Establishment
Qingdao Technical services, development,
Qingdao 100.00% 100.00%
(Qingdao) Network consulting, transfer, etc.
204
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Haier Smart Home Co., Ltd
Co., Ltd.
Haier Smart Home Establishment
Residential interior decoration,
(Qingdao) Network Qingdao professional construction operation,
Qingdao 100.00% 100.00%
special equipment installation,
Operation Co., Ltd. upgrading and repair, etc.
Qingdao Internet of Urban distribution and transportation Establishment
Wine Technology Co., Qingdao services, import and export of goods,
Qingdao 100.00% 100.00%
Ltd. technology import and export and food
business, etc.
Qingdao Linghai Air Establishment
Manufacture and production of air
Conditioning Qingdao
Qingdao conditioner and refrigeration 100.00% 100.00%
equipment
Equipment Co., Ltd.
Chongqing Yunshang Establishment
Food business, commodity import and
Yilian Technology Co., Qingdao
Qingdao export, technology import and export, 100.00% 100.00%
Internet information services, etc.
Ltd.
Shenzhen Yunshang Chongqing Chongqing Establishment
Import and export business, Internet,
Yilian Technology Co.,
Internet of things, big data, AI, AR and 100.00% 100.00%
Ltd.
technical services
Qingdao Haixiangxue Shenzhen Shenzhen Establishment
Human Resources Co.,
Employment agency activities 100.00% 100.00%
Ltd.
Jiangxi Haier Medical Establishment
Qingdao Wholesale and retail of medical
Technology Co., Ltd. Qingdao 100.00% 100.00%
equipment
205
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Qingdao Haizhi Jiangxi Jiangxi Establishment
Shenlan Technology
Technical service development 100.00% 100.00%
Co., Ltd.
Qingdao Haishengze Establishment
Qingdao Air conditioning equipment technical
Technology Co., Ltd. Qingdao 100.00% 100.00%
services
Qingdao Hailvyuan Establishment
Recycling Technology Qingdao Electrical and electronic products
Qingdao 100.00% 100.00%
Co., Ltd. waste treatment
Tianjin Internet of Tianjin Tianjin Establishment
clothes Ecological
IoT technology development 100.00% 100.00%
Technology Co., Ltd.
Microenterprises such
as Qingdao Hai Heng
All over the
Feng Electrical Establishment
All over the country country Sales of household appliances
Appliances Sale &
Service Co., Ltd.
Reasons for including subsidiaries in which the Company has 50% or less of the equity into the scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance and operation decisions of microenterprises such
as Qingdao Hai Heng Feng Electrical Appliances Sale & Service Co., Ltd, which were included into the scope of consolidated financial
statements.
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(2). Material non-wholly owned subsidiaries
√ Applicable □ Not Applicable
Unit and Currency: RMB
Shareholding Profit or loss Dividends Balance of
of minority attributable to announced to minority
shareholders minority be distributed to interests at the
Name of subsidiary
(%) shareholders in minority end of the
the current shareholders in period
period the current
period
Guizhou Haier 41.00 6,485,719.90 12,300,000.00 100,825,739.81
Electronics Co., Ltd.
Wuhan Haier 40.00 3,870,409.79 254,793,415.63
Electronics Co., Ltd.
Explanation of the difference between the ratio of shareholding and the ratio of voting
rights of minority
shareholders of subsidiaries:
□ Applicable √ Not Applicable
Other explanations:
□ Applicable √ Not Applicable
(3). Summarized financial information in respect of material non-wholly owned
subsidiaries
Closing balance
Name of
subsidiary Current assets Non-current Total assets Current Non-current Total
Assets liabilities liabilities liabilities
Guizhou Haier 401,766,784.21 97,384,786.88 499,151,571.09 245,840,432.97 7,394,699.61 253,235,132.58
Electronics
Co., Ltd.
Wuhan Haier 911,350,916.05 163,569,066.14 1,074,919,982.19 437,936,443.12 437,936,443.12
Electronics
Co., Ltd.
(Continued)
Opening balance
Name of
Subsidiary Current assets Non-current Total assets Current Non-current Total
Assets liabilities liabilities liabilities
Guizhou Haier 598,503,571.44 99,869,513.40 698,373,084.84 432,050,892.47 6,224,582.87 438,275,475.34
Electronics
Co., Ltd.
Wuhan Haier 857,372,778.47 162,182,594.22 1,019,555,372.69 392,247,858.10 392,247,858.10
Electronics
Co., Ltd.
Amount for the current period
Name of
subsidiary Operating revenue Net profit Total Cash flow from
comprehensive operating activities
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income
Guizhou Haier Electronics Co., Ltd. 662,890,916.60 15,818,829.01 15,818,829.01 -96,960,642.56
Wuhan Haier Electronics Co., Ltd. 1,116,565,155.40 9,676,024.48 9,676,024.48 146,467,762.05
(Continued)
Amount for the previous period
Name of
Operating revenue Net profit Total Cash flow from
subsidiary
comprehensive operating activities
income
Guizhou Haier Electronics Co., Ltd. 489,594,043.14 12,420,159.51 12,420,159.51 -244,989,823.11
Wuhan Haier Electronics Co., Ltd. 555,927,511.14 -20,154,743.87 -20,154,743.87 28,624,806.30
2. Control over subsidiaries’ transactions despite change in owners’ equity in
subsidiaries
√ Applicable □ Not Applicable
(1). Descriptions of change in owners' equity in subsidiaries
√ Applicable □ Not Applicable
Capital increase by minority shareholders of the Company’s subsidiaries resulted in the
change in the Company’s shareholding ratio.
(2). Impact of the transactions on minority interests and the equity attributable to
shareholders of the Parent Company:
Items Others
Total consideration for acquisition/disposal 2,550,000.00
Less: share of net assets of subsidiaries in 2,264,941.77
respect to the shareholding proportion
acquired/disposed
Difference
Including: capital reserve adjustment -285,058.23
3. Interests in joint ventures or associates
√ Applicable □ Not Applicable
(1). Joint ventures or associates
Principal Place of Nature of Shareholdi Accounting
place of registration business ng treatment
Name of joint ventures or associates
business of
investment
Haier Finance Co., Ltd. Qingdao Qingdao Financial 42.00% Equity
services method
Bank of Qingdao Co., Ltd. Qingdao Qingdao Commercial 8.13% Equity
Bank method
208
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Wolong Electric (Jinan) Motor Co., Ltd. Jinan Jinan Motor 30.00% Equity
Manufacturing method
Qingdao Hegang New Material Technology Qingdao Qingdao Steel plate 23.94% Equity
Co., Ltd. Manufacturing method
Qingdao Haier SAIF Smart Home Industry Qingdao Qingdao Venture Capital 63.13% Equity
Investment Center (Limited Partnership) method
Mitsubishi Heavy Industries Haier (Qingdao) Qingdao Qingdao Manufacturing of 45.00% Equity
Air-conditioners Co., Ltd. household method
appliances
Qingdao Haier Carrier Refrigeration Qingdao Qingdao Manufacturing of 49.00% Equity
Equipment Co., Ltd. household method
appliances
Qingdao Haier Multimedia Co., Ltd. Qingdao Qingdao R&D and sales of 20.20% Equity
televisions method
Qingdao Haier Moulds Co., Ltd. Qingdao Qingdao Mold processing 25.00% Equity
and method
manufacturing
Hefei Feier Smart Technology Co., Ltd. Hefei Hefei Technology 40.00% Equity
development method
Anhui Kunhe Intelligent Technology Co., Hefei Hefei Electrical 30.00% Equity
Ltd. equipment R&D method
Zhejiang Futeng Fluid Technology Co., Ltd. Huzhou Huzhou Gas compression 48.00% Equity
machinery method
development and
manufacturing
Beijing Mr. Hi Network Technology Beijing Beijing Technology 36.29% Equity
Company Limited development method
Beijing Xiaobei Technology Co., Ltd. Beijing Beijing Sales of 42.75% Equity
household method
appliances
Beijing ASU Tech Co. Ltd Beijing Beijing Technical service 36.45% Equity
import and export method
business
Shenzhen Genyuan Environmental Shenzhen Shenzhen Technical 16.89% Equity
Protection Technology Co., Ltd. advisory services method
Qingdao Haimu Investment Management Qingdao Qingdao Investment 49.00% Equity
Co., Ltd. Management method
Qingdao Haimu Smart Home Investment Qingdao Qingdao Investment 24.00% Equity
Partnership (Limited Partnership) Management method
Guangzhou Heying Investment Partnership Guangzhou Guangzhou Investment 49.00% Equity
(Limited Partnership) method
Qingdao Java Cloud Network Technology Qingdao Qingdao Home online 24.93% Equity
Co., Ltd. service method
Qingdao RRS Service Co., Ltd. Qingdao Qingdao Water equipment 40.00% Equity
technical service method
Bingji (Shanghai) Corporate Management Shanghai Shanghai Investment 45.00% Equity
Co., Ltd. management method
Youjin (Shanghai) Corporate Management Shanghai Shanghai Investment 45.00% Equity
Co., Ltd. management method
RRS (Shanghai) Investment Co., Ltd. Shanghai Shanghai Investment 45.00% Equity
management method
Haier Best Water Technology Co., Ltd. Qingdao Qingdao Water equipment 49.00% Equity
technology method
development
service
Huizhi Xiangshun Equity Investment Fund Qingdao Qingdao Investment 30.00% Equity
(Qingdao) Partnership (Limited Partnership) management method
Qingdao RRS Huizhi Investment Co., Ltd. Qingdao Qingdao Investment 50.00% Equity
management method
Meiling Candy Washing Machine Co., Ltd. Hefei Hefei Manufacturing of 40.00% Equity
home appliances method
Konan Electronic Co., Ltd. Japan Japan Motor 50.00% Equity
Manufacturing method
HPZ LIMITED Nigeria Nigeria Manufacturing of 25.01% Equity
household method
appliances
HNR Company (Private) Limited Pakistan Pakistan Manufacturing of 31.72% Equity
household method
appliances
Haier Raya Electric S.A.E Egypt Egypt Manufacturing of 15.00% Equity
home appliances method
Controladora Mabe S.A.deC.V. Mexico Mexico Manufacturing of 48.41% Equity
household method
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appliances
Middle East Air conditioning Company, Saudi Arabia Saudi Arabia Sales of 49.00% Equity
Limited household method
appliances
(2). Major financial information of significant joint ventures
□ Applicable √ Not Applicable
(3). Major financial information of significant associates
√ Applicable □ Not Applicable
①Basic information of significant associates:
Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) was
established by Haier Group Corporation and its three affiliates via capital contribution.
The place of registration and principal place of business of the Finance Company is
Yulong International Center, No.178-2 Haier Road, Laoshan District, Qingdao City. The
Company's subsidiaries hold an aggregate of 42.00% equity in the Finance Company.
② Financial Information of significant associates:
Unit and Currency: RMB
Finance company
Items Closing balance/ Amount Opening balance/
for Amount for the previous
the current period period
Current assets 59,018,215,668.78 62,750,087,810.02
Non-current assets 9,759,970,621.31 12,907,238,025.07
Total assets 68,778,186,290.09 75,657,325,835.09
Current liabilities 51,712,613,664.94 59,895,340,204.39
Non-current liabilities 435,476,096.24 223,325,462.63
Total liabilities 52,148,089,761.18 60,118,665,667.02
Minority equity interests
Equity interest attributable to 16,630,096,528.91 15,538,660,168.07
shareholders of the Parent
Company
Including: share of net assets 6,984,640,542.15 6,526,237,270.60
calculated based on shareholding
percentage
Operating income 1,071,931,150.97 1,116,349,935.66
Net profit 790,600,102.99 839,643,218.29
Other comprehensive income 73,947,771.60 3,721,035.88
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Total comprehensive income 864,547,874.59 843,364,254.17
Dividend received from 126,000,000.00 126,000,000.00
associates
for the year
(4). Summarized financial information of insignificant joint ventures or associates
Closing balance/Amount for Opening balance/Amount
Investment in Associates
the current period for the previous period
Bank of Qingdao Co., Ltd. 2,572,720,188.54 2,463,096,567.92
Wolong Electric (Jinan) Motor Co., Ltd. 157,289,089.66 143,847,870.70
Qingdao Hegang New Material Technology Co., Ltd. 308,135,448.88 297,154,935.85
Qingdao Haier SAIF Smart Home Industry Investment Center
379,687,446.86 385,797,036.73
(Limited Partnership)
Mitsubishi Heavy Industries Haier (Qingdao) Air Conditioner Co.,
693,937,118.87 654,581,961.84
Ltd.
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. 396,387,842.10 415,298,165.93
Qingdao Haier Multimedia Co., Ltd. 278,826,351.43 328,987,205.07
Qingdao Haier Moulds Co., Ltd. 267,574,107.36 259,696,084.44
Hefei Feier Smart Technology Co., Ltd. 3,150,277.71 1,491,024.72
Anhui Kunhe Intelligent Technology Co., Ltd. 3,000,000.00
Zhejiang Futeng Fluid Technology Co., Ltd. 70,000,000.00
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. 21,887,291.50 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 2,349,240.51
Qingdao Haimu Smart Home Investment Partnership (Limited
47,631,591.84 47,870,696.66
Partnership)
Guangzhou Heying Investment Partnership (Limited Partnership) 288,209,197.58 288,209,197.58
Qingdao Java Cloud Network Technology
2,716,654.58 2,629,009.63
Co., Ltd.
Qingdao RRS Service Co., Ltd. 33,413,328.00 33,010,000.00
Bingji (Shanghai) Corporate Management Co., Ltd. 948,477,471.32 928,444,178.47
Youjin (Shanghai) Corporate Management Co., Ltd. 1,723,686,311.49 1,687,262,142.67
RRS (Shanghai) Investment Co., Ltd. 3,133,156,929.97 3,066,931,168.49
Haier Best Water Technology Co., Ltd. 30,919,875.47 33,455,159.59
Huizhi Xiangshun Equity Investment Fund (Qingdao) Partnership
120,000,000.00 120,000,000.00
(Limited Partnership)
Qingdao RRS Huizhi Investment Co., Ltd. 2,100,000.00 2,100,000.00
Meiling Candy Washing Machine Co., Ltd. 22,837,893.54 22,558,307.10
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Konan Electronic Co., Ltd. 72,683,038.81 77,561,552.87
HNR Company (Private) Limited 132,889,897.80 92,141,887.27
HPZ LIMITED 68,247,526.08 66,827,745.66
Haier Raya Electric S.A.E 11,423,893.21 10,741,234.10
Controladora Mabe S.A.deC.V. 3,899,325,986.21 3,667,310,241.31
MiddleEastAirconditioningCompany,Limited 19,002,595.66 19,002,595.66
Total book value of investment 15,728,776,184.28 15,167,830,769.52
Total amount of the following financial data of associates calculated
based on shareholding percentage
--Net profit 611,017,678.57 326,393,375.32
--Other comprehensive income 25,022,215.72 19,872,824.20
--Total comprehensive income 636,039,894.29 346,266,199.52
X. Segment Information
(1). Determining basis and accounting policy of reporting segment
√ Applicable □ Not Applicable
The Company principally engaged in manufacture and sales of household appliances
and relevant services business, manufacture of upstream household appliances parts
business and distribution of products of third-party and after-sale business. The Company
has three business segments: (1) China smart home business segment; (2) Overseas home
appliance and smart home business segment; (3) Other business segments. The
management of the Company assesses operating performance of 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:
① Internet of Food solutions: mainly engages in production and sales of
refrigerator/freezers and kitchen appliances.
②Internet of Clothing solutions: mainly engages in production and sales of washing
machine products.
③Air energy solutions: mainly engages in production and sales of air conditioners
products.
④Whole 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, etc.
(3) Other business segments: mainly include channel, equipment components, small home
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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.
(1) Information of reportable segments
Segment information for the current period
China smart home business
Air energy Internet of Whole house water
Segment information Internet of Food solutions
solutions clothing solutions solutions
Kitchen Water home
Refrigerator/freezers Air conditioners Washing machine
appliances appliances
Segment revenue 19,188,607,407.17 1,784,628,763.28 17,645,069,189.02 12,958,083,453.07 5,884,989,693.13
Including: external
16,898,259,985.27 1,495,140,647.14 15,095,177,397.57 10,900,998,372.57 5,806,336,225.56
revenue
Inter-segment revenue 2,290,347,421.90 289,488,116.14 2,549,891,791.45 2,057,085,080.50 78,653,467.57
Total segment operating
17,158,967,925.84 1,746,319,577.28 17,416,889,248.90 12,111,188,820.80 5,157,901,538.45
cost
Segment operating profit 2,029,639,481.33 38,309,186.00 228,179,940.12 846,894,632.27 727,088,154.68
Total segment assets 14,263,264,997.70 2,213,752,410.82 17,291,242,044.73 10,803,883,492.16 3,686,416,228.16
Total segment liabilities 33,912,192,044.73 1,731,117,566.27 11,269,291,519.54 5,305,936,025.88 2,626,857,575.69
(Continued)
Overseas home
Inter-segment
Segment information appliance and smart Other businesses Total
offsetting
home business
Segment revenue 56,916,219,464.44 43,176,981,421.17 -45,935,757,326.55 111,618,822,064.73
Including: external
56,669,104,381.43 4,753,805,055.19 - 111,618,822,064.73
revenue
Inter-segment revenue 247,115,083.01 38,423,176,365.98 -45,935,757,326.55 -
Total segment operating
53,698,944,763.59 43,260,088,724.43 -46,032,767,760.39 104,517,532,838.90
cost
Segment operating profit 3,217,274,700.85 -83,107,303.26 97,010,433.84 7,101,289,225.83
Total segment assets 58,821,449,057.39 48,650,650,065.17 -46,251,109,104.74 109,479,549,191.39
Total segment liabilities 35,163,611,251.89 55,278,993,290.89 -46,105,899,926.52 99,182,099,348.37
Segment information for the corresponding period of last year
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China smart home business
Internet of Clothing Whole house water
Segment information Internet of Food solutions Air energy solutions
solutions solutions
Water home
Refrigerator/freezers Kitchen appliances Air conditioners Washing machine
appliances
Segment revenue 14,683,603,976.09 1,267,093,978.37 13,393,533,030.85 10,412,711,732.81 4,480,940,852.13
Including: external
13,241,028,063.00 1,136,861,395.44 10,819,622,386.98 8,957,518,846.77 4,405,383,279.52
revenue
Inter-segment revenue 1,442,575,913.09 130,232,582.93 2,573,910,643.87 1,455,192,886.04 75,557,572.61
Total segment operating
13,228,134,258.51 1,257,529,605.79 13,392,894,090.92 9,830,205,497.05 3,950,589,964.96
cost
Segment operating profit 1,455,469,717.58 9,564,372.58 638,939.93 582,506,235.76 530,350,887.17
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
(Continued)
Overseas home
Inter-segment
Segment information appliance and smart Other business Total
offsetting
home business
Segment revenue 46,113,430,665.25 41,772,176,557.36 -36,395,393,686.21 95,728,097,106.65
Including: external revenue 45,890,025,774.06 11,277,657,360.88 - 95,728,097,106.65
Inter-segment revenue 223,404,891.19 30,494,519,196.48 -36,395,393,686.21 -
Total segment operating
44,606,124,147.48 42,001,089,962.02 -36,397,663,815.46 91,868,903,711.27
cost
Segment operating profit 1,507,306,517.77 -228,913,404.66 2,270,129.25 3,859,193,395.38
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
(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 current Amount for the previous
Items
period period
Mainland China 53,591,106,982.67 48,729,778,108.08
Other countries/regions 58,027,715,082.06 46,998,318,998.57
Including:
America 35,324,883,693.09 29,493,797,283.55
Australia 3,458,819,500.44 2,495,026,782.34
South Asia 3,925,925,777.81 2,710,264,399.09
Europe 9,093,752,866.83 6,742,180,009.93
Southeast Asia 2,610,757,476.24 2,108,114,856.79
Central East and Africa 909,684,097.45 725,859,940.76
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Japan 1,778,184,357.59 1,797,904,898.35
Others 925,707,312.61 925,170,827.76
Total 111,618,822,064.73 95,728,097,106.65
Total non-current assets
Items Closing balance Opening balance
Mainland China 15,381,426,171.41 14,715,132,308.86
Other countries/regions 25,106,833,772.27 25,212,638,556.86
Total 40,488,259,943.68 39,927,770,865.72
The total non-current assets exclude other equity instruments investment, long-term
accounts receivable, long-term equity investment, goodwill, deferred income tax assets and
other non-current financial assets.
XI. Disclosure of fair value
1. Assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the
lowest level of inputs which are significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities,
except for Level 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
At the end of the period
Inputs used for fair value measurement
Items Quotes in an Important Important Total
active market observable input unobservable
(Level 1) (Level 2) input (Level 3)
Continuously measured
at fair value
Financial assets held for 144,100,920.94 2,020,987,842.58 83,828,024.73 2,248,916,788.25
trading
Including: Bank wealth 1,892,664,884.11 1,892,664,884.11
management products
Forward foreign exchange 128,322,958.47 128,322,958.47
contract
Investment funds 144,100,920.94 144,100,920.94
Equity instruments investment 83,828,024.73 83,828,024.73
Derivative financial assets 121,975,627.78 121,975,627.78
Including: Forward foreign 97,152,699.86 97,152,699.86
exchange contract
Forward commodity contract 24,822,927.92 24,822,927.92
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Other equity instruments 19,802,461.70 2,809,376,958.46 2,829,179,420.16
Including: Equity 19,802,461.70 2,809,376,958.46 2,829,179,420.16
instruments measured at
fair value through other
comprehensive income
Other non-current assets 46,832,494.61 46,832,494.61
Including: Other non- 46,832,494.61 46,832,494.61
current financial assets
Financial liabilities held 3,423,774.60 3,423,774.60
for trading
Including: Forward foreign 3,423,774.60 3,423,774.60
exchange contract
Derivative financial 92,081,440.09 92,081,440.09
liabilities
Including: Forward foreign 55,091,160.59 55,091,160.59
exchange contract
Interest rate swap agreement 36,990,279.50 36,990,279.50
At the beginning of the period
Input used for fair value measurement
Items Quotes in an Important Important
active market observable input unobservable Total
(Level 1) (Level 2) input (Level 3)
Continuously measured at
fair value
Financial assets held for
113,759,845.57 1,967,483,015.21 83,949,637.05 2,165,192,497.83
trading
Including: Bank wealth
1,862,036,322.21 1,862,036,322.21
management products
Forward foreign
105,446,693.00 105,446,693.00
exchange contract
Investment funds 113,759,845.57 113,759,845.57
Investment in equity
83,949,637.05 83,949,637.05
instruments
Derivative financial
77,839,006.63 77,839,006.63
assets
Including: Forward foreign
52,194,232.55 52,194,232.55
exchange contract
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
19,802,461.70 2,639,322,803.84 2,659,125,265.54
changes of which included in
other comprehensive income
Other non-current assets 46,832,494.61 46,832,494.61
Including: Other non-current
46,832,494.61 46,832,494.61
financial assets
Financial liabilities held for
26,952,508.66 26,952,508.66
trading
Including: Forward
foreign exchange 26,952,508.66 26,952,508.66
contract
Derivative financial liabilities 239,582,532.90 239,582,532.90
Including: Forward foreign
188,695,788.30 188,695,788.30
exchange contract
Interest rate swap agreement 50,886,744.60 50,886,744.60
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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.
2．Basis for determining the fair value of the continual Level 2 fair value
measurement items
Valuation
Items Closing fair value
techniques
Financial assets held for trading
Including: Bank wealth management Discounted cash
1,892,664,884.11
products flow
Bank quote for
Forward exchange contract 128,322,958.47
similar products
Derivative financial assets
Including: Forward exchange Bank quote for
97,152,699.86
contract similar products
Futures exchange
Forward commodity contract 24,822,927.92 quote for similar
products
Other non-current assets
Including: Other non-current financial Recent transaction
46,832,494.61
assets method
Financial liabilities held for trading
Including: Forward exchange Bank quote for
3,423,774.60
contract similar products
Derivative financial liabilities
Including: Forward exchange Bank quote for
55,091,160.59
contract similar products
Bank quote for
Interest rate swap agreement 36,990,279.50
similar products
3．Continual Level 3 fair value measurement major items, the valuation techniques
adopted and information of important parameters
Fair value Valuation Significant Range Sensitivity of the
at the end of technique unobservabl input to fair value
Items
the period e input
Other equity
Instruments
Including: Market 1. Average 1. 22.8 - 1. 1% increase
1. SINOPEC approach P/E 23.26 (decrease) in
Fuel Oil multiple of 2. 24% - average P/E multiple
1,141,941,00
Sales peers 26% of the Comparable
0.00
Corporation 2. Discount Companies would
Limited for result in increase
lack of (decrease) in fair
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marketability value by
RMB11,420,000.00.
2. 1% increase
(decrease) in the
lack of marketability
would result in
decrease (increase)
in fair value by
RMB15,226,000.00.
2. Haier Market 1. Average 1. 2.93 - 2.99 1. 1% increase
COSMO approach P/B 2. 36% - (decrease) in
IOT multiple of 38% average P/B
Ecological peers multiple of the
Technology 2. Discount Comparable
Co., Ltd. for Companies would
lack of result in increase
marketability (decrease) in fair
1,396,555,52
value by
1.94
RMB13,313,000.00.
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) 426,436,821.17 422,826,629.00
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.
XII. Related parties and related party transactions
(I) Explanation for basis of identifying related party
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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
Type of Registere Registered Legal Relatio Interest Voting
enterprise d place capital representa ns hips in the rights to
Name of
tive with the Compan the
enterprise
Compa y Compan
ny y
Haier Collective Qingdao 311,180,00 Zhang Parent 11.42% 11.42%
Group ownership High-tech 0 Ruimin Compa
Corporati company Zone ny
on Haier
Park
Haier Joint-stock Qingdao 631,930,63 Zhang Subsidi 13.40% 13.40%
COSMO company High-tech 5 Ruimin ary of
Co., Ltd. Zone Parent
Haier Compa
Park ny
HCH Private Hong 10,000 / Parties 5.73% 5.73%
(HK) company Kong (Hong acting
Investmen with limited Kong in
t liability Dollars) concert
Managem of
ent Parent
Co.,Limit Compa
ed ny
Qingdao Company Qingdao 923,000,00 Zhou Parties 1.83% 1.83%
Haier with limited Free 0 Yunjie acting
Venture & liability Trade in
Investmen Zone concert
t of
Informatio Parent
n Co., Compa
Ltd. ny
Qingdao Limited Qingdao 1,053,306, Zhang Parties 0.85% 0.85%
Haichuan partnership High-tech 000 Ruimin acting
gzhi Zone in
Managem Haier concert
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ent Park of
Consultin Parent
g Compa
Enterprise ny
(Limited
Partnershi
p)
Haier Company Hong 10,000 / Parties 0.62% 0.62%
Internatio with limited Kong (Hong acting
nal Co., liability Kong in
Limited Dollars) concert
of
Parent
Compa
ny
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure
of interests in subsidiaries
□ Applicable √ Not Applicable
3. Joint ventures and associates of the Company
The details of significant associates of the Company are detailed in Note VII. 11 and
Note 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
4. Related company with no controlling relationship
Relationship with the
Name of company
Company
Chongqing Zhonglian Energy Technology Co., Ltd. Holding subsidiary of the
parent group
Chongqing Haier Intelligent Electronics Co., Ltd. Holding subsidiary of the
parent group
Chongqing Haier Property Management Co., Ltd. Holding subsidiary of the
parent group
Chongqing Haier Electrical Appliances Sales Co., Ltd. Holding subsidiary of the
parent group
Hong Kong Goodaymart Supply Chains Co., Ltd. Holding subsidiary of the
parent group
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Shanghai Zhiyu Technology Co., Ltd. Holding subsidiary of the
parent group
Shanghai Cotai Supply Chain Management Co., Ltd. Holding subsidiary of the
parent group
Gooday Supply Chain Technologies Co., Ltd. Holding subsidiary of the
parent group
Qingdao Goodaymart Supply Chains Co., Ltd. Holding subsidiary of the
parent group
Qingdao Oasis Technology Co., Ltd. Holding subsidiary of the
parent group
Qingdao Blue Whale Technology Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haina Cloud Intelligent System Co., Ltd. Holding subsidiary of the
parent group
Qingdao Hailizhuju Technology Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier Special Plastic Development Co.,Ltd. Holding subsidiary of the
parent group
Qingdao Haier Moulds Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier Parts Procurement Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier Robot Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier International Trading Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier International Travel Agency Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier Industry Intelligence Research Institute Co., Holding subsidiary of the
Ltd. parent group
Qingdao Haier Industry and City Innovation Co., Ltd. Holding subsidiary of the
parent group
Qingdao Ding Xin Electronics Technology Co., Ltd. Holding subsidiary of the
parent group
Laiyang Haier Electrical Co. Ltd. Holding subsidiary of the
parent group
Cosmoplat Chuangzhi IOT Technology Co., Ltd. Holding subsidiary of the
parent group
Hefei Haier Logistics Co., Limited Holding subsidiary of the
parent group
Haier Consumer Finance Co., Ltd. Holding subsidiary of the
parent group
Haier Digital Technology (Qingdao) Co., Ltd. Holding subsidiary of the
parent group
Haier Digital Technology (Nanjing) Co., Ltd. Holding subsidiary of the
parent group
Haier Group Finance Co., Ltd. Holding subsidiary of the
parent group
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Foshan Shunde Haier Intelligent Electronic Co.,Ltd. Holding subsidiary of the
parent group
Dalian Haier International Trade Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier International Motors Holding subsidiary of the
parent group
Haier International Co., Ltd. Holding subsidiary of the
parent group
Qingdao Haier New Materials R & D Co., Ltd. Associate of subsidiary
of Haier Group
Controladora Mabe S.A.deC.V. Associate
Wolong Electric (Jinan) Motor Co., Ltd. Associate
Qingdao Hegang New Material Technology Co., Ltd. Associate
HPZ Limited Associate
HNR COMPANY (PRIVATE) LIMITED Associate
Qingdao Haier Multimedia Co., Ltd. Associate
Qingdao HBIS Composite New Material Technology Co., Ltd. Subsidiary of associate
Hefei Hegang New Material Technology Co., Ltd. Subsidiary of associate
(III) Related transactions
1. Details of the goods and services purchased by the Company from the related parties
are as follows:
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the current Amount for the
Related parties
period previous period
Controladora Mabe S.A.deC.V. 5,919,857,050.59 4,864,433,223.10
Gooday Supply Chain
1,795,280,208.51 949,267,175.72
Technologies Co., Ltd.
HNR COMPANY (PRIVATE)
1,753,260,194.66 1,142,507,687.58
LIMITED
Chongqing Haier Electrical
1,735,448,645.80 1,361,963,444.17
Appliances Sales Co., Ltd.
Cosmoplat Chuangzhi IOT
1,007,738,751.14
Technology Co., Ltd.
Shanghai Cotai Supply Chain
837,090,677.39 535,089,057.35
Management Co., Ltd.
Wolong Electric (Jinan) Motor
494,269,324.67 345,676,591.78
Co., Ltd.
Chongqing Haier Intelligent
493,639,084.84
Electronics Co., Ltd.
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Hefei Hegang New Material
474,928,583.73 413,914,100.88
Technology Co., Ltd.
Qingdao Ding Xin Electronics
429,570,435.77
Technology Co., Ltd.
Qingdao Goodaymart Supply
394,485,275.37 173,942,768.33
Chains Co., Ltd.
Qingdao HBIS Composite New
392,032,148.49 355,481,832.09
Material Technology Co., Ltd.
Other related parties 2,934,307,252.33 5,956,838,057.87
Total 18,661,907,633.29 16,099,113,938.87
2. Details of the Company's sales of goods to the related parties are as follows:
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the previous
Related parties
current period period
Qingdao Haier Special Plastic
324,988,575.86 277,812,831.60
Development Co., Ltd.
Qingdao Haier International Trading
312,030,850.93 284,072,456.94
Co., Ltd.
Controladora Mabe S.A.deC.V. 254,597,948.57 144,426,966.26
Qingdao Haier International Travel
105,505,398.38 55,926,947.01
Agency Co., Ltd.
Chongqing Haier Electrical Appliances
91,292,269.02 53,083,645.42
Sales Co., Ltd.
Shanghai Zhiyu Technology Co., Ltd. 30,636,966.12 15,635,577.11
Qingdao Haier International Motors 28,717,751.77
Qingdao Haina Cloud Intelligent System
26,354,742.25
Co., Ltd.
Qingdao Haier Multimedia Co., Ltd. 25,743,020.75 12,082,014.01
Chongqing Zhonglian Energy
24,614,336.31
Technology Co., Ltd.
Chongqing Haier Property Management
21,684,041.90 18,268,883.79
Co., Ltd.
Qingdao HBIS Composite New Material
81,567,030.58
Technology Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd. 145,337,819.93
Qingdao Haier New Materials R & D
148,412,255.35
Co., Ltd.
Other related parties 179,839,945.56 192,681,286.16
Total 1,426,005,847.42 1,429,307,714.16
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Explanations of related transactions for the purchase and sale of goods, provision and
receipt of services
□ Applicable √ Not Applicable
3. Amount for outstanding items of related parties
Items and name of vendors Closing Balance Opening Balance
Bills receivable:
Cosmoplat Chuangzhi IOT
116,678,930.60
Technology Co., Ltd.
Chongqing Haier Intelligent
88,727,462.00
Electronics Co., Ltd.
Foshan Shunde Haier Intelligent
46,795,014.00
Electronic Co.,Ltd.
Qingdao Ding Xin Electronics
25,111,549.00
Technology Co., Ltd.
Qingdao Hegang New Material
21,200,000.00
Technology Co., Ltd.
Other related parties 6,706,487.72 1,106,165.28
Accounts receivable:
HNR Company (Private) Limited 322,006,754.02 388,679,073.55
Controladora Mabe S.A.deC.V. 134,167,050.85 81,498,939.68
Qingdao Haier International Travel
110,915,196.14 113,933,378.64
Agency Co., Ltd.
HPZ Limited 73,772,087.58 47,762,837.62
Qingdao Haier International
44,607,925.95 72,248,862.19
Trading Co., Ltd.
Chongqing Zhonglian Energy
35,050,619.22 24,860,829.14
Technology Co., Ltd.
Haier International Co., Ltd. 33,845,223.64 3,815,282.89
Haier Digital Technology
31,696,490.12 80,254,328.37
(Qingdao) Co., Ltd.
Qingdao Blue Whale Technology
30,585,617.46 29,531,545.86
Co., Ltd.
Qingdao Hailizhuju Technology
29,719,317.78 9,549,687.48
Co., Ltd.
Qingdao Haier Special Plastic
27,228,142.89 187,101,398.95
Development Co., Ltd.
Chongqing Haier Electrical
4,647,727.71 144,072,335.03
Appliances Sales Co., Ltd.
Other related parties 201,475,388.23 378,179,556.68
Prepayments:
Qingdao Haier International
101,813,048.93 80,759,659.73
Trading Co., Ltd.
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Qingdao Haier Moulds Co., Ltd. 33,967,929.22 32,695,754.10
Qingdao Oasis Technology Co.,
28,986,324.64
Ltd.
Qingdao Haier International Travel
26,673,633.47 26,860,737.70
Agency Co., Ltd.
HNR COMPANY (PRIVATE)
21,788,673.71 78,420,575.44
LIMITED
Other related parties 35,973,956.32 61,908,776.76
Interest receivable:
Haier Group Finance Co., Ltd. 164,958,085.19 120,777,203.01
Haier Consumer Finance Co., Ltd. 2,317,700.00
Other receivables:
Hong Kong Goodaymart Supply
53,200,000.00 53,200,000.00
Chains Co., Ltd.
Qingdao Haier Moulds Co., Ltd. 27,964,393.18 14,500,982.35
Qingdao Blue Whale Technology
12,392,334.21 12,392,334.21
Co., Ltd.
Dalian Haier International Trade
11,945,428.01 7,708,641.11
Co., Ltd.
Haier Digital Technology
11,848,500.00
(Nanjing) Co., Ltd.
Controladora Mabe S.A.deC.V. 11,839,807.90 15,777,379.54
Qingdao Haier Industry and City
88,640,000.00
Innovation Co., Ltd.
Other related parties 36,525,614.70 82,727,655.55
Items and name of vendors Closing Balance Opening Balance
Bills payable:
Laiyang Haier Electrical Co. Ltd. 48,906,578.86 49,720,701.09
Other related parties 102,756,773.42 56,956,689.86
Accounts payable:
Qingdao Haier Parts Procurement
2,169,295,503.15 1,647,724,215.65
Co., Ltd.
Controladora Mabe S.A.deC.V. 369,232,073.76 316,079,431.43
Cosmoplat Chuangzhi IOT
298,172,923.36 671,426,347.70
Technology Co., Ltd.
Qingdao Ding Xin Electronics
253,327,910.73 249,323,037.13
Technology Co., Ltd.
Hefei Haier Logistics Co., Limited 239,522,578.56 242,590,693.06
Chongqing Haier Intelligent
151,594,384.27 93,236,600.86
Electronics Co., Ltd.
Qingdao Haier Special Plastic 124,643,179.86 295,609,746.74
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Development Co., Ltd.
Qingdao Haier International
120,954,475.24 117,064,526.97
Trading Co., Ltd.
Dalian Haier International Trade
107,142,641.28 197,461,939.55
Co., Ltd.
Qingdao HBIS Composite New
88,864,687.31 104,132,210.10
Material Technology Co., Ltd.
Other related parties 776,890,437.25 1,523,116,608.02
Contract liabilities:
Chongqing Zhonglian Energy
17,511,894.92 17,210,554.92
Technology Co., Ltd.
Wolong Electric (Jinan) Motor
15,324,496.66 520,294.42
Co., Ltd.
Qingdao Haier New Materials R &
5,801,081.14 2,823,650.93
D Co., Ltd.
HPZ Limited 3,071,563.35 3,071,563.35
Qingdao HBIS Composite New
550,303.52 2,705,659.12
Material Technology Co., Ltd.
Other related parties 7,340,215.00 11,059,096.13
Other payables:
Gooday Supply Chain
661,795,689.81 790,674,332.08
Technologies Co., Ltd.
Controladora Mabe S.A.deC.V. 143,948,806.20 43,590,845.08
Shanghai Cotai Supply Chain
181,198,883.06 183,123,979.68
Management Co., Ltd.
Qingdao Haier Robot Co., Ltd. 51,535,075.50 49,076,364.39
Qingdao Goodaymart Supply
51,109,774.76 77,995,078.37
Chains Co., Ltd.
Qingdao Haier Moulds Co., Ltd. 33,845,804.94 73,679,757.76
Chongqing Zhonglian Energy
32,835,814.56 59,926,366.50
Technology Co., Ltd.
Dalian Haier International Trade
21,800,000.00 21,800,000.00
Co., Ltd.
Qingdao Haier International Travel
16,256,802.64 15,508,707.39
Agency Co., Ltd.
Qingdao Haier Industry
Intelligence Research Institute Co., 15,283,578.94 25,622,538.88
Ltd.
Other related parties 57,354,356.14 203,481,753.03
Interest payable:
Haier Finance Co., Ltd. 4,849,297.70 2,808,989.55
Dividends payable:
Haier COSMO Co., Ltd. 460,678,645.58
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Haier Group Corporation 392,575,539.62
HCH (HK) Investment
197,112,960.00
Management Co., Limited
Other related parties 113,233,045.95
4. Other related party transactions
(1) The Company and its subsidiaries entered into loan contracts with Haier Finance
Co., Ltd. The loan balance as of 30 June 2021 was RMB482 million and the aggregate
interest expense payable by the Company and its subsidiaries to Haier Finance Co., Ltd. for
the current period was RMB6.3961 million.
(2) The interest income of deposits received by the Company and subsidiaries from
Haier Finance Co., Ltd. for the current period was RMB131 million. The interest income of
deposits received by the Company and subsidiaries from Haier Consumer Finance Co., Ltd.
for the current period was RMB2.32 million.
(3) The lease expense of the Company and its subsidiaries for production and operation
leased from related parties for the current period was RMB60.00 million.
(IV) Pricing policy
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 ends on 31 December 2022, which can be renewed for another three years upon
expire.
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2. Related partiesProcurement
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 ends on 31 December 2022, which can be renewed for another three years upon
expire.
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 June 2021, the Company and Haier Group Corporation signed the
Financial Services Framework Agreement on the basis of the original execution contract,
which agreed on the financial connected transactions. The pricing principle included 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 expires at 31
December 2023, which can be renewed for another three years upon expire.
4. Others
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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 H Share 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.
XIII. Share-based payments
□ Applicable √ Not Applicable
XIV. Commitments and contingencies
1. Significant commitments
□ Applicable √ Not Applicable
2. Contingencies
√ Applicable □ Not Applicable
As of 30 June 2021, the Company has no significant contingencies that need to be disclosed.
XV. Events subsequent to the balance sheet date
√ Applicable □ Not Applicable
1. On the 16th meeting of the 10th board of directors of the Company, the “Resolution of
Haier Smart Home Co., Ltd. on the Plan of Partial Repurchase of Public Shares” was
considered and approved for the Company to repurchase 8,762,400 A Shares through call
auction transaction, with a paid amount of RMB227 million.
2. The Company held the 2020 Annual General Meeting on 25 June 2021 where it adopted
A Share Employee Stock Ownership Scheme (2021-2025), H Share Employee Stock
Ownership Scheme (2021-2025) and H Share Restricted Share Unit Scheme (2021-2025).
Pursuant to the arrangement under the A Share Employee Stock Ownership Scheme (2021-
2025), The 25,440,807 shares (amounting to approximately RMB707 million (excluding
related fees and taxes)) in the “Haier Smart Home Co., Ltd. Designated Securities Account
for Repurchase” were transferred to the “Haier Smart Home Co., Ltd. - A Share Employee
Stock Ownership Scheme (2021-2025)” on 22 July 2021 on a non-transactional basis.
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Pursuant to the arrangement under the H Share Employee Stock Ownership Scheme (2021-
2025), the Company has entrusted an asset management company to purchase a total of
3,757,000 H Shares of the Company in the secondary market through Hong Kong Stock
Connect after the Reporting Period, with a transaction amount of approximately HK$106
million.
Pursuant to the arrangement under the H Share Restricted Share Unit Scheme (2021-2025),
the Company has entrusted an independent trust to buy a total of 4,538,400 H Shares of the
Company in the secondary market after the Reporting Period, with a transaction amount of
approximately HK$124 million.
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 Measured at Financial Total
assets amortized cost assets
measured at measured at
fair value and fair value and
Items changes of changes of
which which
included in included in
current profit other
and loss comprehensiv
e income
Monetary funds 41,843,777,555. 41,843,777,555.
56 56
Financial assets 2,248,916,788. 2,248,916,788.2
held for trading 25 5
Derivative 121,975,627.7 121,975,627.78
financial assets 8
11,906,406,723. 11,906,406,723.
Bills receivable 66 66
Accounts 20,201,607,270. 20,201,607,270.
receivable 68 68
Other receivables 2,265,821,208.2 2,265,821,208.2
8 8
Other current 408,970,053.06 408,970,053.06
assets
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Long-term 309,892,045.80 309,892,045.80
receivables
Other equity 2,829,179,420. 2,829,179,420.1
instruments 16 6
Other non-current 46,832,494.61 46,832,494.61
assets
Financial assets (Continued)
Opening balance
Financial Measured at Financial Total
assets amortized cost assets
measured at measured at
fair value and fair value and
Items changes of changes of
which which
included in included in
current profit other
and loss comprehensiv
e income
Monetary funds 46,461,329,426. 46,461,329,426.
91 91
Financial assets 2,165,192,497. 2,165,192,497.8
held for trading 83 3
Derivative 77,839,006.63 77,839,006.63
financial assets
14,136,349,754. 14,136,349,754.
Bills receivable 34 34
Accounts 15,930,024,286. 15,930,024,286.
receivable 67 67
Other receivables 1,717,152,945.6 1,717,152,945.6
5 5
Other current 554,131,037.76 554,131,037.76
assets
Long-term 330,588,978.97 330,588,978.97
receivables
Other equity 2,659,125,265. 2,659,125,265.5
instruments 54 4
Other non-current 46,832,494.61 46,832,494.61
assets
Financial liabilities
Items Closing balance
Financial Financial Total
liabilities liabilities
measured at fair measured at
value amortized cost
Short-term borrowings 11,160,109,997. 11,160,109,997.
72 72
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Financial liabilities held for 3,423,774.60 3,423,774.60
trading
Derivative financial 92,081,440.09 92,081,440.09
liabilities
Bills payable 24,290,143,300. 24,290,143,300.
41 41
Accounts payable 39,008,002,641. 39,008,002,641.
86 86
Other payables 20,050,241,387. 20,050,241,387.
28 28
Non-current liabilities due 2,412,067,581.0 2,412,067,581.0
within one year 9 9
Long-term borrowings 9,590,298,914.5 9,590,298,914.5
7 7
Bonds payable 426,436,821.17 426,436,821.17
Long-term payables 94,010,166.66 94,010,166.66
Financial liabilities (Continued)
Opening balance
Items Financial liabilities Financial liabilities Total
measured at fair measured at amortized
value cost
Short-term 7,687,908,165.88 7,687,908,165.
borrowings 88
Financial 26,952,508.66 26,952,508.66
liabilities held for
trading
Derivative 239,582,532.90 239,582,532.9
financial 0
liabilities
Bills payable 21,236,057,053.67 21,236,057,05
3.67
Accounts payable 36,302,971,944.48 36,302,971,94
4.48
Other payables 17,056,156,167.28 17,056,156,16
7.28
Non-current 4,950,555,670.08 4,950,555,670.
liabilities due 08
within one year
Other current 5,535,262,500.00 5,535,262,500.
liabilities 00
Long-term 11,821,416,259.81 11,821,416,25
borrowings 9.81
Bonds payable 6,713,501,050.27 6,713,501,050.
27
Long-term 98,203,261.27 98,203,261.27
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payables
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.
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
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Haier Smart Home Co., Ltd
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.
XVII. Other Significant Events
The Company has no other significant events that need to be disclosed.
XVIII. Notes to Main Items of Financial Statements of the Parent Company
1. Accounts receivable
Aging Closing balance Opening balance
Within 1 year 1,120,694,194.49 5,491,427,973.11
1-2 years 416,430.64
2-3 years
Over 3 years
Accounts receivable, 1,120,694,194.49 5,491,844,403.75
balance
Allowance for bad debts 308,333.33 308,333.33
Accounts receivable, net 1,120,385,861.16 5,491,536,070.42
The total amount of the top 5 accounts receivable at the end of the period was
RMB1,117,973,238.22, accounting for 99.76% of book balance of the accounts receivable.
Allowance for bad debts
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening Changes for the current period Closing balance
balance
Categories
Provision Recovery or Transfer or Other
reversal write-off movement
Bad debts 308,333.3 308,333.
3 33
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Haier Smart Home Co., Ltd
Total 308,333.3 308,333.
3 33
2. Other receivables
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Interest receivable 37,316,878.96 38,582,434.11
Dividend receivable
Other receivables 11,779,892,490.91 3,867,790,953.50
Total 11,817,209,369.87 3,906,373,387.61
Other explanations:
□ Applicable √ Not Applicable
Interest receivable
(1). Classification of interest receivable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Within 1 year 37,316,878.96 38,582,434.11
Over 1 year
Total 37,316,878.96 38,582,434.11
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not Applicable
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Other receivable
1 Other receivables are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 11,244,115,045.37 3,501,616,045.85
Over 1 year 542,904,131.40 366,178,683.57
Other receivables, balance 11,787,019,176.77 3,867,794,729.42
Allowance for bad debts 7,126,685.86 3,775.92
Other receivables, net 11,779,892,490.91 3,867,790,953.50
The total amount of the top 5 other receivables at the end of the period is
RMB9,453,653,528.61, accounting for 80.20% of book balance of other
receivables.
Changes in allowance for bad debt of other receivables in the current period:
Opening Increase for the current period Decrease for the current period Closing balance
balance
Items Provision for the Other Reversal Write-off and
current period increase other
movement
Allowance 3,775.92 7,122,909.94 7,126,685.86
for bad
debts
3. Long-term equity investment
√ Applicable □ Not Applicable
(1) Details of long-term equity investments:
Closing balance Opening balance
Items
Book balance Provision for Book balance Provision for
impairment impairment
Long-term equity investments
Including: long-term equity 49,231,447,092.82 7,100,000.00 49,231,447,092.82 7,100,000.00
investments in
subsidiaries
Long-term 3,207,458,437.79 109,300,000.00 3,175,179,977.39 109,300,000.00
equity
investme
nts in
associate
s
Total 52,438,905,530.61 116,400,000.00 52,406,627,070.21 116,400,000.00
(2) Long-term equity investments in subsidiaries
Opening balance Increase Closing balance Impairment
/Decrease for provisions at the end
Name of investee the current of the period
period provisions
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd. 9,500,000.00 9,500,000.00
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Haier Group (Dalian) Electrical Appliances 34,735,489.79 34,735,489.79
Industry Co., Ltd
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 102,888,407.30 102,888,407.30
Development Co., Ltd
Dalian Haier Precision Products Co., 41,836,159.33 41,836,159.33
Ltd.
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 66,778,810.80 66,778,810.80
and Equipment Research Institute
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 Conditioner Co., Ltd. 99,000,000.00 99,000,000.00
Guizhou Haier Electronics Co., Ltd. 96,904,371.71 96,904,371.71
Hefei Haier Air-conditioning Co., 67,110,323.85 67,110,323.85
Limited
Qingdao Haier Refrigerator 238,758,240.85 238,758,240.85
(International) Co., Ltd.
Qingdao Haier Air-Condition 1,113,433,044.51 1,113,433,044.51
Electronic Co., Ltd.
Qingdao Haier Air Conditioner General 220,636,306.02 220,636,306.02
Corp., Ltd.
Qingdao Haier Special Freezer Co., 442,684,262.76 442,684,262.76
Ltd.
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 Co., Ltd. 100,715,445.04 100,715,445.04
Chongqing Haier Air Conditioner 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 118,000,000.00 118,000,000.00
Appliances Services Co., Ltd.
Chongqing Haier Refrigeration 91,750,000.00 91,750,000.00
Appliance Co., Ltd.
Shanghai Haier Zhongzhi Fang Chuang 2,000,000.00 2,000,000.00
Ke Space Management Co., Ltd.
Qingdao Haier Special Refrigerating 100,000,000.00 100,000,000.00
Appliance Co., Ltd.
Haier Shareholdings (Hong Kong) 26,022,782,526.24 26,022,782,526.24
Limited
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 Conditioner Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Haidayuan Procurement 20,000,000.00 20,000,000.00
Service Co., Ltd.
Qingdao Haier Intelligent Technology 130,000,000.00 130,000,000.00
Development Co., Ltd.
Qingdao Haier Technology Investment 367,505,635.00 367,505,635.00
Co., Ltd.
Qingdao Casarte Smart Living 10,000,000.00 10,000,000.00
Appliances Co., Ltd.
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2021 Interim Report
Haier Smart Home Co., Ltd
Haier Overseas Electric Appliance Co., Ltd. 500,000,000.00 500,000,000.00
Haier (Shanghai) Electronics Co., Ltd. 12,500,000.00 12,500,000.00
Haier U+smart Intelligent Technology 143,000,000.00 143,000,000.00
(Beijing) Co., Ltd.
Haier Electronics Group Co., Ltd. 16,730,707,938.63 16,730,707,938.63 7,100,000.00
Qingdao Haidarui Procurement Service 107,800,000.00 107,800,000.00
Co., Ltd.
Qingdao Haier Intelligent Household 326,400,000.00 326,400,000.00
Appliances Co., Ltd.
Qingdao Haidacheng Procurement Service 100,000,000.00 100,000,000.00
Co., Ltd.
Haier Smart Home Experience Cloud 100,000,000.00 100,000,000.00
Ecological Technology Co., Ltd.
Total 49,231,447,092.82 49,231,447,092.82 7,100,000.00
(3) Long-term equity investments in associates
Opening balance Increase/decrease for the current period Closing balance Impairm
ent
provisio
Name of
Increase/decrea Recognized Others ns at the
investee
se for the investment income end of
current period under equity method the
period
Wolong 136,709,910.73 13,696,146.11 150,406,056.84
Electric (Jinan)
Motor Co., Ltd.
Qingdao 385,797,036.73 11,710,187.89 -17,819,777.76 379,687,446.86
Haier SAIF
Smart
Home Industry
Investment
Center (Limited
Partnership)
Bank of 975,756,025.82 57,916,433.78 -14,489,022.21 1,019,183,437.39
Qingdao Co., Ltd.
Mitsubishi 654,581,961.84 39,355,157.03 693,937,118.87
Heavy Industries
Haier (Qingdao)
Air-conditioners
Co., Ltd.
Qingdao 415,298,165.93 6,163,986.57 -25,074,310.40 396,387,842.10 21
Haier Carrier ,000,00
Refrigeration 0.00
Equipment Co.,
Ltd.
Qingdao 328,987,205.06 -50,160,853.64 278,826,351.42 88
Haier Multimedia ,300,00
Co., Ltd. 0.00
Qingdao 278,049,671.28 10,980,513.03 289,030,184.31
HBIS New
Material
Technology Co.,
Ltd.
Total 3,175,179,977. - 89,661,570.77 -57,383,110.37 3,207,458,437.79 10
39 9,300,0
00.00
4. Operating revenue and operating cost
(1). Details of 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
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2021 Interim Report
Haier Smart Home Co., Ltd
Primary 100,011,103.11 93,685,159.99 4,971,571,357.13 4,334,933,560.26
business
Other 96,140,485.73 76,847,254.77 71,145,742.55 63,477,221.29
business
Tota 196,151,588.84 170,532,414.76 5,042,717,099.68 4,398,410,781.55
l
5. Investment income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items
current period previous period
Investment income from long-term equity 17,700,000.00 173,411,284.52
investments accounted for using cost method
Investment income from long-term equity 89,661,570.77 63,292,928.01
investment accounted for using equity method
Income from wealth management products 5,792,409.99 9,270,527.84
Investment income from investment in other
equity instrument during the holding period
Total 113,153,980.76 245,974,740.37
XIX. Supplementary Information
1. Basic earnings per share and diluted earnings per share
Amount for the current Amount for the previous
period period
Weighted Earnings per Weighted Earnings per share
average share (RMB) average (RMB)
Items
return rate Basic Diluted return rate Basic Diluted
on net earnings earnings on net earnings earnings
assets per per assets per per share
share share share
Net profit 9.29% 0.741 0.730 5.68% 0.423 0.41
attributable to 9
ordinary
shareholders of the
Parent Company
Net profit 8.50% 0.678 0.669 5.25% 0.391 0.38
attributable to 6
ordinary
shareholders of the
Parent Company
after deduction of
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2021 Interim Report
Haier Smart Home Co., Ltd
non-recurring profit
or loss
2. Non-recurring profit or loss
Amount for the current Amount for the previous
Items
period period
Net profit attributable to
ordinary shareholders of the
Parent Company 6,852,271,812.97 2,780,800,712.72
Less: non-recurring profit or
loss 582,365,406.25 211,360,215.13
Net profit attributable to
ordinary shareholders of the
Parent Company after
deduction of non-recurring
profit or loss 6,269,906,406.72 2,569,440,497.59
Statement of non-recurring profit or loss for the current period
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Amount
Profit or loss from disposal of non-current assets 135,411,372.65
Government grants included in current profit or loss, except 283,535,138.53
that closely related to the company business, in accordance
with the national standard policies to be granted with the
amount and quantity determined under certain standards
Profit or loss from fair value changes of financial assets held 229,227,021.99
for trading, derivative financial assets, financial liabilities
held for trading and derivative financial liabilities, as well as
investment gains arising from disposal of financial assets
held for trading, derivative financial assets, financial
liabilities held for trading and derivative financial liabilities,
except the effective hedging related to the normal operations
of the Company
Other non-operating income and expenses except the 35,439,577.28
aforementioned items
Impact on income tax -93,278,591.01
Impact on minority interest -7,969,113.19
Total 582,365,406.25
For the Company’s designation of extraordinary gain or loss items as defined in the
Explanatory Announcement on Information Disclosure for Companies Offering Their
Securities to the Public No.1 - Extraordinary Gains or Losses, and extraordinary gain or
loss items as illustrated in the Explanatory Announcement on Information Disclosure for
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2021 Interim Report
Haier Smart Home Co., Ltd
Companies Offering Their Securities to the Public No.1 - Extraordinary Gains or Losses
as recurring gain or loss items, reasons shall be specified.
□ Applicable √ Not Applicable
3. Difference on figures by domestic and foreign accounting standards
√Applicable □Not Applicable
(1). Details on difference of net profit and net assets in the financial report disclosed in
accordance with both international accounting standards and PRC accounting
standards
□ Applicable √ Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of
the listed company as presented in the consolidated financial statements disclosed in
accordance with International Accounting Standards and in accordance with PRC
accounting standards.
(2). Details on difference of net profit and net assets in the financial report disclosed in
accordance with both foreign accounting standards and PRC accounting standards
□ Applicable √ Not Applicable
The Company has no financial reports prepared in accordance with foreign
accounting standards other than those prepared in accordance with International
Accounting Standards.
4. Others
□ Applicable √ Not Applicable
Chairman of the Board: Liang Haishan
Date of approval for publication by the Board: 30 August 2021
Information of amendment
□ Applicable √ Not Applicable
241
