Company Code: 600690.SH, 690D.DE Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2022 Interim Report
Haier Smart Home Co., Ltd. Interim Report 2022
Important 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. Li Huagang (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
No
VI. Disclaimer in respect of forward-looking statements
√ Applicable □ Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute our substantial commitment to investors. Investors are advised to pay attention 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 “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.
Haier Smart Home Co., Ltd. Interim Report 2022 1
Important Notice
XI. Others
□ Applicable √ Not Applicable
2 Haier Smart Home Co., Ltd. Interim Report 2022
Contents
SECTION I — DEFINITIONS 4
SECTION II — GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS 6
SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS 11
SECTION IV — CORPORATE GOVERNANCE 46
SECTION V — ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES 50
SECTION VI — SIGNIFICANT ISSUES 61
SECTION VII — CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS 76
SECTION VIII — RELEVANT INFORMATION OF PREFERRED SHARES 84
SECTION IX — RELEVANT INFORMATION OF CORPORATE BONDS 85
SECTION X — FINANCIAL REPORT 88
I. 2022 Interim Report of Haier Smart Home Co., Ltd. with signature of the
legal representative.
II. Financial statements with signatures or seals of the person in charge of the
Documents Available
entity, chief accountant and person in charge of accounting department.
for 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.
Haier Smart Home Co., Ltd. Interim Report 2022 3
Section I Definitions
Unless otherwise stated in context, the following terms should have the following meanings in this report:
DEFINITION OF FREQUENTLY USED TERMS
CSRC China Securities Regulatory Commission
SSE Shanghai Stock Exchange
The Company, Haier Smart Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”,
Home and the original short name is “Qingdao Haier”
Four Major Securities China Securities Journal, Shanghai Securities News, Securities Times, Securities
Newspapers Daily
Haier Electronics, 1169 Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong,
stock code: 01169.HK), a subsidiary as accounted for in the consolidated
statement of the Company. Haier Electronics has been privatized by way of H
shares issuance on 23 December 2020 and became a wholly owned
subsidiary of the Company since then.
GEA GE Appliances, household appliances assets and business of General 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.
4 Haier Smart Home Co., Ltd. Interim Report 2022
Section I Definitions
Euromonitor Euromonitor, established in 1972, is the leading strategic market information
supplier and has over 40-years of experience in respect of publishing market
report, commercial reference data and on-line database. They create data 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, biomedicine, power and
consumer electronics.
Model of Rendanheyi The concept of “Achieving win-win via Rendanheyi ( 人 单 合 一 ) “is the
(人单合一) 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 (人单合一) “management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of the Company and
its shareholders.
“1+3+5+N” Whole House Whole House Intelligence All-Scenario Solutions: 1: Smart Home APP; 3:
Intelligence All-Scenario solutions including whole-house air, water, intelligence; 5. five intelligent spaces
Solutions including balcony, living room, kitchen, bathroom and bedroom; N: various
personalized intelligent scenario experience.
Haier Smart Home Co., Ltd. Interim Report 2022 5
Section II General Information of 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 Li Huagang
II. CONTACT PERSON AND CONTACT INFORMATION
Secretary to Representative of Company Secretary
the Board securities affairs (D/H shares) Others
Name Liu Xiaomei Liu Tao Ng Chi Yin, Trevor Global Customer
Service Hotline
Address Department of Department of Room 3513, 35/F, /
Securities of Haier Securities of Haier The Center, 99
Smart Home Co., Smart Home Co., Queen’s Road
Ltd. Haier Ltd. Haier Central, Central,
Information Information Hong Kong
Industrial Park, No. Industrial Park, No.
1 Haier Road, 1 Haier Road,
Qingdao City Qingdao City
Tel 0532–88931670 0532–88931670 +852 2169 0000 4006 999 999
Fax 0532–88931689 0532–88931689 +852 2169 0880 /
Email finance@haier.com finance@haier.com ir@haier.hk /
6 Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION
Registered address Haier Industrial Park, Laoshan District, Qingdao City
Historical change of the Prior to the Company’s listing in 1993, the registered address of the
registered address Company was No.165 Xiaobaigan Road, Sifang District, Qingdao City,
Shandong Province, and has changed to the current address since 1994,
during which the address name was adjusted in line with the change of
name of the industrial park but the actual site remains
unchanged.
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 Not applicable
changes during the
reporting period
IV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE AND
DEPOSIT
Designated newspaper for Shanghai Securities News, Securities Times, China Securities Journal,
information disclosure Securities Daily
Website for publishing www.sse.com.cn
interim report
Other websites for annual https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,
report disclosure https://www.hkexnews.hk
Deposit place of interim Department of Securities of Haier Smart Home Co., Ltd.
report Haier Information Industrial Park, No. 1 Haier Road, Qingdao City
Query index for any Not applicable
changes during the
reporting period
V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Stock Short
Stock Exchange of Stock Short Name Before
Type of Shares Shares Listed Name Stock Code Variation
A share Shanghai Stock Haier Smart 600690 Qingdao Haier
Exchange Home
D share Frankfurt Stock Haier Smart 690D Qingdao Haier
Exchange Home
H Share Hong Kong Stock Haier Smart 6690 /
Exchange Home
Haier Smart Home Co., Ltd. Interim Report 2022 7
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION
□ Applicable √ Not Applicable
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE
COMPANY
(I) Key accounting data
Unit and Currency: RMB
Increase/decrease
for the reporting
period compared
with the
For the reporting corresponding
period period of last year
Key accounting data (January-June) The corresponding period of last year (%)
After adjustment Before adjustment
Operating revenue 121,857,522,462.22 111,727,756,211.06 111,618,822,064.73 9.07
Net profit attributable to shareholders
of the listed Company 7,949,084,472.70 6,858,902,854.55 6,852,271,812.97 15.89
Net profit after deduction of
non-recurring profit or loss
attributable to shareholders of the
listed Company 7,490,693,705.38 6,269,906,406.72 6,269,906,406.72 19.47
Net cash flows from operating
activities 5,964,247,657.22 8,442,195,160.31 8,423,823,726.89 –29.35
Increase/
decrease as
at the end of
the reporting
period
As at the end of compared
the reporting As at the end of reporting period of last with that of
period year last year (%)
After adjustment Before adjustment
Net assets attributable to
shareholders of the listed
Company 86,251,016,004.21 79,851,734,427.42 79,810,927,325.55 8.01
Total assets 226,652,759,534.60 217,599,384,435.63 217,459,494,212.74 4.16
8 Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
(II) Key financial indicators
Increase/decrease
for the reporting
period compared
with the
For the reporting corresponding
period period of last year
Key financial indicators (January-June) The corresponding period of last year (%)
After adjustment Before adjustment
Basic earnings per share (RMB/
share) 0.85 0.74 0.74 14.86
Diluted earnings per share (RMB/
share) 0.85 0.73 0.73 16.44
Basic earnings per share after
deducting non-recurring profit or
loss (RMB/share) 0.80 0.68 0.68 17.65
Weighted average return on net decreased by 0.05
assets (%) 9.24 9.29 9.29 percentage point
Weighted average return on net
assets after deducting non- Increased by 0.21
recurring profit or loss (%) 8.71 8.50 8.50 percentage point
Explanation of the key accounting data and financial indicators of the Company
□ Applicable √ Not Applicable
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.
Haier Smart Home Co., Ltd. Interim Report 2022 9
Section II General Information of the Company and Key Financial Indicators
(III) Explanation on difference in domestic and overseas accounting standards
□ Applicable √ Not Applicable
IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT
√ Applicable □ Not Applicable
Unit and Currency: RMB
Non-recurring profit and loss items Amount
Profit and loss on disposal of non-current assets 33,807,493.39
Government subsidies through the profit and loss, except for government subsidies
that are closely related to the Company’s normal business operations, comply
with national policies and regulations, and continue to be
enjoyed in a fixed amount or fixed quantity according to certain standards 434,830,465.43
Net profit and loss of subsidiaries arising from business combinations under
common control of the current period from the beginning of the period to the
date of consolidation 4,473,481.70
Profit and loss from fair value changes of financial assets held for trading,
derivative financial assets, financial liabilities held for trading and derivative
financial liabilities, as well as investment gains arising from disposal of financial
assets held for trading, derivative financial assets, financial liabilities held for
trading and derivative financial liabilities and other debt investments,
except the effective hedging related to the normal operations of the Company 59,249,736.54
Other non-operating income and expenses except the aforementioned items 34,282,312.26
reduction: Effect of income tax 98,050,857.35
Effect of minority equity interest (After Tax) 10,201,864.65
Total 458,390,767.32
Explain the reasons for determination of the non-recurring profit and loss items that are in conformity
with the definition of non-recurring profit and loss items as set out in the Explanatory Announcement
on Information Disclosure by Companies Publicly Issuing Securities No. 1 — Non-recurring Profit and
Loss Items
□ Applicable √ Not Applicable
X. OTHERS
□ Applicable √ Not Applicable
10 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and
Analysis
I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES
AND ITS MAJOR BUSINESS DURING THE REPORTING PERIOD
Founded in 1984, the Company is committed to being an enterprise of the times. Through relentless
innovation and iterations, the Company seized opportunities in the industry by continuously launching
new products that steer market development. After more than 30 years, the Company has become a
global leader in the major home appliance industry, as well as a pioneer in global smart home solutions.
Global leader of the major home appliance industry: According to data from Euromonitor — an
authoritative market researcher, the Company ranked first in terms of sales volume in global
major appliance market for 13 consecutive years. The Company has a global portfolio of brands,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to
2021, Haier brand refrigeration and laundry appliances ranked first among major home appliance
brands in sales volume for 14 and 13 consecutive years, respectively.
Pioneer of global smart home solutions: Capitalizing on the Company’s full-range home appliances
products, the Company is recognized by Euromonitor as one of the first in the industry to
introduce smart home solutions. Leveraging the Company’s connected home appliance products
and partners, supported by Haier Smart Home APP and Haier Smart Home Experiential Cloud
Platform, with integration of experience centres and franchised stores, the Company provides
users with smart home solutions for a variety of application scenarios, satisfying their pursuit for
a better life.
Over the years, the Company has established three business segments, namely the Smart Home Business
in China, the Overseas Smart Home Business, and Other Business.
Smart Home Business in China
The Company provides a full range of home appliance products and value-added services in China
market through online Haier Smart Home APP, supplemented by the Company’s offline experience
centres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home Business in
China comprises Household Food Solutions (Internet of Food), Household Clothing Solutions (Internet
of Clothing), Household Air Solutions (Internet of Air), and Household Water Solutions (Internet of
Water).
Household Food Solutions (Internet of Food): The Company provides users with refrigerators,
freezers, kitchen appliances and other products through domestic market sales and exports.
Leveraging the connectivity amongst products, the Company is able to provide users with value-
added dietary solutions featuring a combination of products and services including smart cooking
and nutrition planning in order to meet users’ demands for convenience, wellbeing and taste.
Household Clothing Solutions (Internet of Clothing): The Company provides users with washing
machines, dryers and other products through domestic market sales and exports. Leveraging the
connectivity amongst the Company’s smart products, the Company is able to provide users with
value-added laundry solutions featuring a combination of products and services in order to meet
users’ demands for washing and caring of apparels.
Haier Smart Home Co., Ltd. Interim Report 2022 11
Section III Management Discussion and Analysis
Household Air Solutions (Internet of Air): The Company provides users with residential air-
conditioners, commercial air-conditioners, purifiers, ventilation systems and other products
through domestic market sales and exports. Leveraging the connectivity amongst the Company’s
smart products, the Company is able to provide users with smart air solutions in order to meet
users’ demands for temperature, humidity, cleanliness and freshness.
Household Water Solutions (Internet of Water): The Company provides users with electric water
heaters, gas water heaters, solar water heaters, heat pump water heaters, POE water purifiers,
POU water purifiers, water softening equipments and other products through domestic market
sales and exports. Leveraging the connectivity amongst the Company’s smart products, the
Company is able to provide users with smart water solutions in order to meet users’ demands
for water purification, softening and heating.
Overseas Smart Home Business
In addition, the Company also manufactures and sells a comprehensive portfolio of home appliance
products and provides value-added services in more than 160 countries and regions, including North
America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East, and
Africa.
In the overseas market, the Company has been manufacturing and selling proprietary appliance
products catering for local users’ demands for more than 20 years. During the time, a number of
acquisitions contributed to the Company’s growth including acquisition of Haier Group Corporation’s
overseas white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and
Southeast Asia) in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy
in 2019. The development of the Company’s overseas smart home businesses has been fuelled by
synergies among its self- developed business and acquired businesses.
At present, the overseas smart home business of the Company has entered a stage of promising growth,
having achieved a multi-brand, cross-product, and cross-regional presence on a global basis. According
to Euromonitor, the Company’s share of the global market (retail volume) for major home appliances in
key regions in 2021 is as follows: ranked first in Asia with a market share of 20.4%; ranked second in
America with a market share of 15.1% and ranked second in Australia and New Zealand with a market
share of 11.6%. The Company ranked third in Middle East and Africa with a market share of 7.4% and
ranked fourth in Europe with a market share of 8.1%.
Other Businesses
Building on its established smart home businesses, the Company has also developed parts and
components, small home appliances, channel distribution and other businesses. In particular, the parts
and components business mainly involve procurement, production, and sales of upstream ancillary
components for home appliances. The small home appliance business primarily involves small home
appliances designed by the Company, produced by outsourced third-party manufacturers and sold
under the Company’s brands and products serving to enrich the Company’s smart home solutions.
The channel distribution business primarily offers distribution services for products such as televisions
and personal electronics products for Haier Group or third-party brands, which leverages the
Company’s sales network.
12 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
During the reporting period, the Company was once again listed among the Top 500 World’s
Companies by Fortune Magazine in 2022. The Company was named as the ‘2022 World’s Most
Admired Companies’ by the Fortune Magazine. The Company was the only company being selected in
Europe and Asia in the home appliances industry and was the only selected company incorporated
outside the US. Meanwhile, the Company is also the world’s only Internet-of-Things (IoT) ecosystem
brand being named again as BrandZTM Top 100 Most Valuable Global Brands in 2022.
(I) Industry overview for the first half of 2022
1. The Chinese market
In the first half of 2022, demand was sluggish in the domestic home appliance market due
to economic slowdown, weakened consumer confidence, real estate market downturn, and
pandemic containment measures which impacted offline sales, distribution, and installation.
Data from CMM showed that the retail sales of the China’s home appliance market
(excluding 3C & digital products) in the first half of 2022 was RMB397.951 billion, down 9.89%
year-on-year. At the same time, high commodity prices have dragged down industry’s profit
margins.
Retail sales declined year-on-year in refrigerators, washing machines and air
conditioners, while emerging categories including tumble dryers continued to grow.
(1) Retail sales of the refrigerator and washing machine industries reached RMB43.667
billion and RMB32.671 billion in the first half of 2022, down 5.26% and 8.34% year-on-
year, respectively. Instead of competing over prices, leading players’ focus on user
experience and R&D-driven product innovation has contributed to a steady increase in
average prices, in particular in offline channels. According to CMM, average retail price of
refrigerator and washing machine across online and offline channels have surged 12.87%
and 9.99% respectively. In addition, benefiting from the rise in consumer demand for food
storage during the pandemic, retail sales of freezer increased 12.12% to RMB7.394 billion.
(2) Air conditioner industry was impacted by the real estate market slowdown and lower
temperature in May and June, retail sales reached RMB84.24 billion in the first half of 2022,
down 14.09%. After the price war in 2019, competitions have become more rational, and
average prices of the industry rose 7.46% year-on-year. (3) Traditional kitchen appliances
such as range hoods and gas stoves recorded negative growths impacted by the cooling
real estate market, increasing penetration and competition from integrated stoves. Data from
CMM showed that in the first half of 2022, retail sales of range hood and gas stove dropped
14.95% and 9.41% year-on-year respectively to RMB16.754 billion and RMB10.999 billion. ②
Retail sales of integrated stoves amounted to RMB11.783 billion, representing an increase of
6.54% year-on-year. (4) The water heater industry was impacted by the downturn of the
real estate market, retail sales in the first half of the year amounted to RMB27.327 billion,
down 13.90% compared to the same period in 2021. (5) Emerging categories such as tumble
dryers, dishwashers and residential central air conditioners continued to grow.
According to data from CMM, retail sales of dishwashers reached RMB5.567 billion in the
first half of 2022, a growth of 7.43% year-on-year. Retail sales of tumble dryers amounted to
RMB4.361 billion, a surge of 41.08% over the same period in 2021. (6) Small kitchen
appliances are consumer discretionary in nature with high penetration, industry demand is
cooling. According to AVC, retail sales of such products reached RMB26.38 billion in the
first half of 2022, down 4.9% year-on-year.
Haier Smart Home Co., Ltd. Interim Report 2022 13
Section III Management Discussion and Analysis
Although demand remains suppressed in the short term, industry upgrade
continues to happen on health, smart, and green energy. According to AVC, retail
sales of refrigerators above RMB10,000 per unit, washing machines above RMB10,000 per
unit and air conditioners above RMB15,000 per unit have grown against the headwind by
10%, 12% and 17% respectively in the first half of the year. For instance, (1) consumers
increasingly favoured large-size refrigerators and “refrigerator + freezer” combos, with
features of freshness preservation, sterilization, and odour control. According to CMM, for
the first half of the year, 500 litre refrigerators accounted for 62.3% of the industry’s total
retail sales offline, up 7.5 percentage points year-on-year; and accounted for 41.6% of total
retail sales online, a year-on-year increase of 5.7 percentage points. Market demand for self-
cleaning, disinfection cabin and fresh air features of air conditioners were on the rise too. (2)
Consumer demand for effective space utilization, consistency in design and smart
technologies continued to grow, with increasing attention on design and installation of
home appliances and decorations. On one hand, this has promoted the rapid growth of
new categories such as “built-in refrigerators, built-in washing machines, residential central
air conditioners” and according to statistics of China IoL, residential central air conditioners’
output reached RMB18.853 billion in the first half of 2022, representing a year-on-year
growth of 7.78%. On the other hand, this has contributed to the growth in suite products.
In addition, young consumers in their twenties and thirties are less willing to engage in
complicated home furnishing, resulting in a growing demand for one-stop solutions of home
furnishing, home improvement and home appliances.
Leading player continued to capture market shares by leveraging technological innovation,
brand, and extensive distribution network. Industry concentration continued to increase.
According to AVC, the combined offline shares of the top three players in refrigerator, washing
machine, air conditioner, water heater and range hood reached 70%, 80%, 84%, 60% and 65%
respectively. Those equipped with superior R&D, design, and distribution capabilities for suite
products were better positioned to acquire and convert user traffic, increase user value, and
accumulate goodwill.
Online retail sales accounting for 53.8% of total sales. Offline chain retailors were
challenged as foot traffic and store expansions were restricted by pandemic containment
measures. Appliance sales in home improvement channels achieved rapid growth
benefitting from user traffic during home renovation and the capability of providing one-stop
solutions integrating appliances with home furnishing. As user’s time is becoming
increasingly fragmented, traffic has gradually migrated to content platforms such as TikTok,
Kuaishou, Xiaohongshu, bilibili, and Zhihu, who have become vibrant sites for product
promotion. In addition, consumption preferences continued to differ, high-end products gain
significance offline while consumers tend to look for value-for-money items online, leading
to faster growth in mid to low-end markets.
14 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
The government issued policies to promote home appliance consumption and
upgrade. Incentive programmes targeting home appliance consumption have been
launched by several municipal governments in the second quarter of 2022. In July 2022,
the Ministry of Commerce issued the “Notice on Several Measures to Promote the
Consumption of Green and Smart Home Appliances”, which introduced measures to
encourage consumption upgrade of green and smart home appliances, including launching
a nationwide home appliances “trade-in” campaign, promoting green and smart home
appliances in villages and townships, expanding consumption scenarios to enhance
consumption experience, and optimizing the supply of green and smart home appliances.
According to statistics from General Administration of Customs, China’s total exports of
home appliances in the first half of 2022 amounted to RMB283.3 billion, down 8.2% year- on-
year. Refrigerator exports amounted to RMB28.6 billion, down 11.8% year-on-year; washing
machine exports reached RMB8.8 billion, down 13.2% year-on-year; air-conditioner exports
totalled RMB34.1 billion, down 1.6% year-on-year. Such reduction was also due to an extent,
the higher base of China’s home appliances exports in the corresponding period in 2021.
2. Overseas markets
In the first half of 2022, consumption volume was weakened by high inflation with
consumer confidence reduced by economic slowdown overseas. The University of
Michigan’s Consumer Sentiment Index dropped from 68.30 in December 2021 to 47.50 in
June 2022. In the second quarter of 2022, shipment of core appliances in European and
U.S. home appliance markets recorded a single-digit decline year-on-year. The rise of product
prices has contributed to growth in the industry’s retail sales.
(1) The U.S.: In the first half of 2022, the home appliance industry was challenged by
supply chain shortages and high inflation. According to AHAM (Association of Home
Appliance Manufacturers), the total shipment of the U.S. home appliance market fell
6.5% year-on-year in the first half of 2022, with the shipment of core appliances
down 5.3%. However, total shipment value of home appliances increased 3.8% while
core appliances’ shipment value grew 4.2%.
(2) Europe: Influenced by inflation and rising energy prices, products with class A energy-
efficiency were more favoured by consumers. Sales volume remained flat year-on-year
as consumer confidence in Western Europe declined. According to GFK, to cover the
cost inflation caused by rising commodity prices, average unit prices of white goods
have increased by 9%, and retail revenue of the industry has grown 4.9% year-on-
year. Record level temperatures this summer also contributed to the robust revenue
growth of air conditioners.
Haier Smart Home Co., Ltd. Interim Report 2022 15
Section III Management Discussion and Analysis
(3) South Asia: In India, GDP began to rebound in the second quarter of 2022. Health-
conscious and large-size products remained popular and high-end demand was robust.
The overall retail sales in Pakistan have tumbled by 8% in the first half of the year, with
sales volume dropped by more than 10%. Average prices have hiked 5%– 10% to
mitigate the pressure brought about by currency fluctuations and rising raw material
costs.
(4) Southeast Asia: According to GFK: Thailand’s home appliance industry was sluggish
due to inflation and currency depreciation. Sales volume of refrigerator fell 9.3% in the
first half of the year. Sales volume of residential air conditioner dropped 9.9% in the
first half of the year due to economic downturn and an early monsoon season, which
also resulted in 30% volume decline in second quarter. Market demand continued to
polarize with mid to low-end consumers focused on meeting their basic needs, while
mid-to high-end market opted for variable-frequency air conditioners, large-capacity
refrigerators and washing machines.
Retail volume in the Indonesian market grew 8.7% year-on-year.
(5) Australia & New Zealand: According to distributor’s data, sales revenue of home
appliance industry in Australia has grown 10% year-on-year. High inflation, escalating
shipping cost and supply chain shortages caused the average unit price to surge 20%.
GDP fell 0.2% in New Zealand in the first half of 2022, lower consumer confidence
and rising food and fuel prices have forced consumers to cut back on big ticket
items such as home appliances. Distributors’ data estimated that industry sales
revenue have dropped by 2.7%
(6) Japan: The industry was challenged by the sharp depreciation of the yen, escalating
prices of energy and food, and the decline in disposable income. According to GFK,
the combined sales volume and sales revenue of freezer, refrigerator and washing
machine increased by 1% and 4% respectively in the first half. Consumers have
increased demand for large-size, health-conscious and energy-saving products, such
as large refrigerators with outstanding freshness preservation performance, a second
freezer, and large front-load washers with low noise level.
(II) Industry Outlook for the second half of 2022
1. The Chinese Market:
In the second half of 2022, stabilizing economy and the implementation of policy incentives
will help restore market confidence and propel recovery. Commodity prices have slumped
since the second quarter, which is conducive to easing cost pressure and improving
profitability. CMM forecasts retail revenue of China’s major home appliance market will
grow 3%, reaching RMB320 billion in the second half of 2022.
Looking ahead in the second half of 2022, although commodity and shipping costs continue
to drop and foreign trade stabilization policies are gradually taking effect, given the high base
volume in 2021, the trend of export market is projected to be neutral.
16 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2. The Global Market:
In May 2022, the United Nation’s World Economic Situation and Prospects Report lowered
the projected growth rate of the global economy from 4% earlier in the year to 3.1%.
Global inflation is expected to jump to 6.7% in 2022, which is twice the average in 2010–
2020. However, there are new opportunities amid challenges. Energy-saving and
environmentally friendly home appliances, along with alternative energy heat pumps, have
become new growth drivers. The trend of smart connectivity is also catching on in the
industry.
Chinese home appliance players with comprehensive brand portfolio, advanced R&D and
manufacturing capabilities, extensive localized distribution networks, and efficient management
are positioned to gain share globally.
II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD
√ Applicable □ Not Applicable
The Company has established a solid strategic presence and competitive advantage in China and
overseas markets. In China’s major home appliance market, the Company has long maintained a
leading position across all product categories. According to CMM’s report, the Company has
established a continued leading market position in key major home appliance categories in 2021. In
overseas markets, the Company has adhered to its high-end brand creation strategy, building capacity
to create leading sustainable growth, which has continuously improved its market shares. Building on
this foundation, the Company will further consolidate its leadership position in the industry by
leveraging integrated synergies of its global unified platforms, through efficiency transformations driven
by digitalization, and by leveraging its technological strengths and innovative capabilities. As
cornerstone for sustainable development, the Company’s ‘Rendanheyi (人单合一）’ Model also provided
management guidance to the Company to replicate successful experiences. It is believed that the
following advantages will help the Company to continue to strengthen its leading position:
(i) Dominance in China’s high-end market; rapid growth of overseas high-end
brands
Riding the trend of consumption upgrade in China, the Company started to develop the high-
end brand Casarte in the Chinese market more than 10 years ago. The creation of high-end
brands required not only focus, experience, and patience, but also continuous innovation of
technological standards and differentiated service capabilities to fulfil user demand for high-quality
experiences. The Casarte brand combined the Company’s global technological strengths, product
development capabilities and manufacturing craftsmanship, as well as privilege marketing and
differentiation services, and has gradually won the trust of users in China’s high-end market.
According to statistics from CMM, the Casarte brand has assumed a definitive leading position in
China’s high-end major home appliance market, ranking first in the retail sales of refrigerator,
washing machine and air conditioner categories in the high-end segment. In the first half of 2022,
in terms of offline retail sales, shares of the Casarte brand of washing machines and refrigerators
reached 75.2% and 38.6% respectively in the market with product price above RMB10,000 per unit
in China, while its share of air conditioners priced above RMB15,000 per unit in the China’s
market reached 31.2%. The Company’s overall average price for refrigerators, air conditioners and
washing machines was roughly two to three times the average price of the industry.
Haier Smart Home Co., Ltd. Interim Report 2022 17
Section III Management Discussion and Analysis
In the North American market, the Company owns high-end brands such as Monogram, Café,
and GE Profile. The Company has enhanced its high-end brand profile through launch of
products such as professional gas range, large multi-door refrigerators, ultra-fresh dishwashers
with stainless steel interior, Opal ice makers, and automatic espresso machines. CAF
BELLISSIMO Espresso Machine was named in CBS News (a renowned media outlet in the United
States) Best Mother’s Gift, GE Profile new Kitchen Hub received 30s Choice Award from NKBA
(National kitchen & Bath Association). Through the creation of luxurious, customizable, and smart
technology-enabled user experience, high-end Monogram, Café and GE Profile have grown
rapidly. In the first half 2022, three high-end brands recorded over 40% revenue growth.
(ii) Smart household solutions that continue to expand and upgrade
As users continued to demand for higher living quality, coupled with the development of
technologies such as Internet of Things, big data, cloud computing and artificial intelligence, the
industry has shown a smart and high-end development trend that prioritized product suites,
based upon scenarios, and home appliances integrated with home furnishings. With leading user
insights, extensive product coverage and technological accumulation from intelligent AI
algorithms, home big data and IoT equipment technology, the Company provided scenario
solutions such as food storage and cooking management, clothes laundry and mix-and-match
management, whole-house air comfort and purification management, and healthy drinking water
management for five major spaces at home, including the living room, kitchen, bathroom,
bedroom and balcony, thereby ‘Designing a home, building a home, and serving a home’ for
users.
Three-Winged Bird stores provided users with scenario solutions that integrates smart home
appliances and smart home furnishings, and through having a service steward to attend to the
needs of users throughout the process, through coordination and arranging with the internal
specialised team, providing users with a whole-process service that comprised design and
implementation, building materials selection, as well as installation and fulfilment. For example,
the Three-Winged Bird kitchen scenario solution could provide users with a whole-process
service from a suite of smart kitchen appliances to cabinet design, delivery, installation, and
fulfilment.
Based on the Haier Smart Home Brain platform, users could upgrade the functions of smart
home appliances, enjoy services such as professional fitness training, recipe recommendations,
purchase of ingredients through refrigerator, automatic selection of laundry programs, and
personalized scenarios through interfaces including the Haier Smart Home App and the Xiaoyou
Speaker. In the future, the Company will continue to address the needs of user experience, and
to further improve and enrich the smart home solutions provided by the Company. Through
scenario solutions and ecosystem services, the Company will provide lifelong services for users
and further enhance users’ loyalty.
18 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(iii) Extensive and solid global presence with localized operational capability
In addition to success in the Chinese market, the Company also prospered in overseas markets.
The Company seeks overseas expansion of its own brands as well as synergies with acquired
brands to develop overseas markets. Such business strategy has guided the Company to
establish R&D, manufacturing and marketing three-in-one structure across multiple brands,
products, and regions, as well as the model of self-development, interconnection and synergized
operation.
The Company’s extensive global presence depends on its localized business teams as well as its
flexible and autonomous management mechanisms established in various overseas markets,
which have enabled the Company to gain rapid insights and respond swiftly to local user
demands. The Company also proactively integrates into local markets and cultures and has
established a corporate image that is recognized by local communities in the overseas regions
where the Company operates.
In 2021, the Company operated 10 R&D centres, 122 manufacturing centres, and 108 marketing
centres around the world, and achieved a coverage of nearly 130,000 points of sales in overseas
markets.
(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address
the needs of users from different tiers in various markets around the world, the Company has
adopted a differentiated multi- brand strategy in different regions that centred around users, so
as to achieve an extensive and in-depth user coverage. For example, in the Chinese market: the
three brands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream and
niche market groups respectively; in the U.S. market, the six major brands such as Monogram,
Café, GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end, mid-
range and low-end markets, thereby meeting the preferences and needs of different types of users.
(v) Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company has
acquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,
Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliance
business of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (which
has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in
2019. The Company’s capability to perform acquisition and integration is reflected in the
following: First of all, the Company implements the ‘Rendanheyi ( 人 单 合 一 ）’ Model in the
acquired companies, which is a value-added sharing mechanism for the whole-process team
under a common goal. Such model can motivate the acquired companies and their employees
and enable them to generate more value. Secondly, the Company made use of its global
platform to empower the acquired companies in terms of strategic planning, R&D, and
procurement in order to enhance their competitiveness. Thirdly, the Company’s open and
inclusive corporate culture can support the acquired companies in establishing a flexible and
autonomous management mechanism, which can easily earn recognition from the acquired
companies and is conducive to the promotion of integration.
Haier Smart Home Co., Ltd. Interim Report 2022 19
Section III Management Discussion and Analysis
(vi) Comprehensive and in-depth global collaborations and empowerment
The Company has made full use of its global collaborative platform, as well as its integrated
functions of R&D, product development, procurement, supply chain, sales, and brand marketing.
It was able to share and expand its successful market development experience to various
markets around the world. By strengthening the synergies among its global businesses, the
Company has created a strong driving force for its future development.
Global collaborative R&D: The Company has a global collaborative R&D system and has
established global technology R&D mechanisms to share common modules, utilize common
technologies, and share patents within the scope of compliance. For example, ① the
Company successfully applied the direct-drive motor technology developed by
Fisher&Paykel to the Casarte brand of washing machines and achieved satisfactory results.
② integrating global R&D platform resources and leveraging technologies around the globe,
such as China’s product structures and hydraulic technology, Japan’s functional design
technology, New Zealand’s driver system, and the American control system, the Company
launched the GE brand’s large-volume front-load washers in the U.S. market, which has led
to increases in both the market share and average price of washing machine products in
the U.S. market.
Global collaborative product development: The Company has established a global product
development mechanism to coordinate global collaborative product development, which can
enable regional collaboration and supplementation across product categories. For example,
the Company successfully supported GE Appliances to relaunch water heater business: the
development teams in North America and China are highly integrated, benchmarking the
differences in standards between Haier and products in North America. Haier’s R&D
advantages were combined with GE Appliance’s quality assurance system to jointly develop
the product. The resulting electric water heater product has achieved industry leadership in
terms of design, manufacturing, and inspection, with annual sales of more than 50,000 units,
thus providing solid support for GE brand’s water heaters to successfully enter the North
American market.
Global collaborative procurement: The Company’s global procurement activities are
coordinated by its global procurement guidance committee. By leveraging the Company’s
global procurement operations platform, the Company’s operating divisions in different
regions can share global procurement resources, thereby achieving economies of scale.
Global collaborative supply chain: The Company has a visualizable and digitalized global
supply chain management system, which has enabled flexible deployment of global
production capacity, and sharing and collaboration in the development of smart
manufacturing technologies.
Global collaborative marketing and brand promotion: The Company operates a multi-level
brand portfolio on a global scale, which can realize global collaborative brand promotion.
The Company also promotes and introduces successful marketing strategies among
regional markets around the world. For example, the Company successfully replicated its
sales and marketing model from third and fourth- tier markets in China, in markets such as
India, Pakistan, and Thailand, which have strengthened the Company’s brand image and its
regional market competitiveness.
20 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(vii) Industry-leading R&D and technological capabilities
To ensure better living experience for users, the Company has established a global leading R&D
system under the premise of developing original technologies, thereby using original technologies
to support the overall industry-leading positions of the Company’s high-end brands, scenario
brands and ecosystem brands.
Leadership in terms of patent quality: As of the end of June 2022, Haier Smart Home has
accumulated more than 83,000 patents applications globally, of which there were more
than 53,000 invention patents which accounted for more than 63%. The number of
overseas invention patents, which have been obtained in 30 countries, exceeded 15,000,
making us the Chinese home appliance enterprise with the largest number of overseas
patents.
Haier Smart Home won 1 more gold award in the 23rd China Patent Gold Awards. Having
obtained 11 state patent gold awards, Haier Smart Home ranked first in the domestic market.
In the ‘Global Smart Home Invention Patent Ranking’ in the first half of 2022, Haier outran its
counterparts from all over the world with 2,655 published patent applications, ranking first in the world
for seven consecutive years. There were 20,298 published patents for the smart home segment.
Leadership in terms of international standards: As of June 2022, Haier Smart Home has
cumulatively led and participated in formulation of 82 international standards and has
issued 611 state/industrial standards, among which 389 were state standards and 222
were industrial standards.
It is the only company in the industry to obtain comprehensive coverage in the five major
international standard organizations, namely the IEC, ISO, IEEE, OCF and Matter. It is also the
only enterprise in the world to serve on the Council Board (CB) and Market Strategy Board
(MSB) of IEC, its two highest management authorities, at the same time, which have enabled the
Company to stay actively involved in international standardization work and have a voice in the
formulation of standards.
Leadership in terms of original technologies: The Company has innovated a range of solutions
that exceeded users’ expectations, such as the launch of the Casarte’s ‘simultaneous five-
ring fire’ gas stove, which enlarged the pot heating area by 40% through the use of multi-
ring uniform combustion system, ingredients in the pot could therefore be more evenly and
comprehensively heated. The Company also introduced the Casarte’s Zhongzihemei all-in-
one laundry machine that could perform the three functions of washing, fabric-caring and
drying in the same machine; through continuous iteration of original technologies, it solved
the three major pain points of high-end washing, drying and fabric-caring. We therefore
created a new product category in the laundry industry and has continued to increase our
market share of high-end washing machines.
Haier Smart Home Co., Ltd. Interim Report 2022 21
Section III Management Discussion and Analysis
In January 2022, the National Development and Reform Commission of China announced the list
of national engineering research centers to incorporate new sequence management. The National
Engineering Research Center for Digital Home Network built by Haier successfully passed the
selection for optimization and integration. The center has achieved a number of breakthroughs in
resolving bottlenecks in core and key technologies constraining the development of smart home
appliance industry, especially in the application of three key areas: operating system, artificial
intelligence and SOC chips.
Our HOPE platform, as Haier’s window for external technology collaboration, tracks, analyses and
researches technologies closely related to industry development that are 3 –5 years ahead of time,
and promotes the industrialization of related technologies, continue to build on the core
methodologies of user insights, demand analysis, technology analysis and resource assessment,
while brings together the supply and demand side of technologies, knowledge and creativity,
providing interactive scenarios and tools to facilitate the creation and iterations of innovative
products/scenarios. Taking Haier’s air conditioner’s ‘variable shunt technology’ as an example,
through collaboration with relevant experts, 36 patents have been applied for the technology,
including 4 PCT international patents. According to results from a real device test conducted by
CHEARI (Beijing) Certification & Testing Co. Ltd., the energy- efficiency of a 1.5 HP Haier variable
refrigerant flow air conditioner is 12% higher over a period of one year than that of an air conditioner
with the new national standard of first-class energy efficiency with same power level.
(viii) Staying committed to the principle of ‘value of people comes first’
‘Value of people comes first’ has always been a guiding principle for Haier’s development. From
the autonomous operation team at the start of the venture to the current ‘Rendanheyi’ ( 人 单 合
一 ) model, Haier encourages every employee to maximize their own values while creating values
for users. In Haier’s ‘Rendanheyi’ ( 人 单 合 一 ) model, ‘Ren’ refers to creators; ‘Dan’ refers to user
value; ‘Heyi’ refers to the integration of values realized by employees and the values created for
users. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (人单合一) model.
Haier Smart Home adheres to the values of recognizing users’ demand as priority and denying
our own perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship and
innovation. We turned employees into creators, implementers into entrepreneurs, and transformed
enterprises into open ecosystem platforms, which have supported the Company to become a
global leader of smart home in the Internet of Things era.
22 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
III. DISCUSSION AND ANALYSIS ON OPERATIONS
Amid the challenging first half of 2022, the Company leveraged strengths in high-end brands, overseas
proprietary brands while accelerating digital transformation, to deliver solid results.
In the first half of 2022, the Company realized sales revenue of RMB121.858 billion, representing an
increase of 9.1% year-on-year. The growth was driven by: (1) strengths of high-end brands, suite
products and scenario-based solutions in the Chinese market which enhanced user value; (2) overseas
market share gain supported by localized “R&D, manufacturing & sales” and global integration; (3)
expansion in distribution network and accelerated digitalization which improved customer acquisition
and conversion.
In the first half of 2022, net profit attributable to the owners of the parent company reached
RMB7.949 billion, representing an increase of 15.9% compared to the same period of 2021.
(1) The Company’s gross profit margin reached 30.2%, up 0.2 percentage points year-on-year, driven
by product mix upgrade with enhanced competitiveness, effective supply chain cost
management, streamlined SKUs supported by integrating R&D and distribution; improved
management of tier 2 & 3 suppliers, increased level of in-house produced components, all of
which aimed at improving the Company’s competitiveness of the entire value chain.
(2) The Company’s selling expense ratio was 14.4%, representing a reduction of 0.6 percentage points
year-on-year. The optimization was due to digitalization aiming at improve marketing precision
and efficiency; integrating manufacturing, distribution & logistics to improve fulfilment efficiency
and optimize inventory turnover; replacing service dispatch centres with system’s direct matching
of user request and maintenance personnel; accurate prediction of manufacturing and storage of
spare parts & components using algorithm to reduce spare parts expense ratio1.
(3) The Company’s administrative expense ratio was 4.2%, representing a reduction of 0.3 percentage
points year-on-year, because of digital reform and process redesign.
(4) The Company’s financial expense ratio was –0.2% (represented as financial income for the period),
optimized by 0.5 percentage points year-on-year. This was due to the increase in interest income
from the Company’s improved capital management and the increase in foreign exchange gain
from the optimization of foreign exchange management.
(5) In the first half of 2022, the Company’s net cash inflow from operating activities was RMB5.964
billion, a drop of RMB2.478 billion year-on-year; in the second quarter, the Company’s net cash
inflow from operating activities amounted to RMB4.809 billion, a surge of 316.5% compared to
the first quarter. ① In the first quarter, the Company’s net cash inflow from operating activities
decreased by RMB1.714 billion year-on-year, which was due to increase in commodity inventory
and chips procurements in China, reduced payment collection amid pandemic, and increased
stockpiling caused by overseas logistics constraints. ② The net cash flow generated from
operating activities in the second quarter decreased by RMB764 million on a year-on-year basis,
mainly due to the increase in cash expenditure for purchasing goods and services in overseas
business due to the sharp rise in raw material prices and shipping fees, as well as the increase
in product and raw material stock due to the growth of overseas business and the construction
of new factories overseas.
1
Spare parts expense ratio: the costs of spare parts used for maintenance divided by revenue.
Haier Smart Home Co., Ltd. Interim Report 2022 23
Section III Management Discussion and Analysis
(I) Smart Home Business in China
In the first half of 2022, smart home business in China achieved sales revenue of RMB64.763 billion,
representing an increase of 12.7% year-on-year. Operating profit grew by 27.7% to RMB4.944 billion.
The revenue growth was attributable to the Company’s increase in market shares across the board,
strong momentum of Casarte, network expansion and enhancement in customer acquisition and
conversion.
1. Household Food Storage and Cooking Solutions
(1) Refrigerator and Freezer Business
In the first half of 2022, the refrigerator and freezer business achieved sales revenue
of RMB21.744 billion, a year-on-year increase of 13.3%, with market share gains and
strengthened high-end leadership. According to CMM, Haier’s offline market share
increased 2.7 percentage points to 43.3%, online market share went up 0.4
percentage points to 39.2%, and offline market share of products above RMB15,000
per unit amounted to 53.1%, up 9.9 percentage points year-on-year.
Casarte focused on kitchen aesthetics and cell-level freshness preservation and
introduced the seamless built-in series meetings consumers’ demand for large capacity,
appealing design, and combination of multiple units. Casarte’s built-in products achieved
revenue growth of 36% year-on-year, contributing to RMB1,000 increase in average price
per unit.
The Company published Built-in Refrigerator Standards 3.0, which upgraded the
standards for seamless built-in refrigerator and spearheaded the development of built-
in products and kitchen aesthetics in the industry. During the reporting period,
seamless built-in technology obtained 155 invention patents and passed the UL
certification in the U.S., and consolidated the Company’s advantages with its heat
dissipation efficiency and flexibility in assembling.
Haier brand adhered to technological upgrades in precise cooling of storage zones,
image recognition, and intelligent voice interaction, in order to drive the growth of high-
end products such as Boguan ( 博 观 ) series; according to CMM, Haier brand alone
accounted for 9.5% of the retail share of products with price per unit above RMB10,000.
During the reporting period, Haier brand pioneered the industry with the launch of a
refrigerator containing a freezing capacity of 265 litres to meet users’ need for larger
storage space. The Company was chiefly responsible for the drafting of IEC
International Refrigerator Preservation Standards and the “Level 1 Healthy
Preservation” Standards 2.0, and led the development of preservation technologies
based on international standard to address healthy diet concern. The Company has
made technological breakthrough with the “bottom-based refrigeration system”,
featuring “zero-temperature-fluctuation, zero-air-blow, and zero-delay” to ensure the
freshness of food. This technology has obtained 236 invention patents and passed
the European VDE certification and the American UL certification.
24 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
During the reporting period, the Company focused on cell-level freezing and preservation
technology to grasp the surge in demand for upright freezers. Sales revenue of freezers
in the domestic market grew by 15%.
The Company also catered to demands for additional refrigeration devices, with the
introduction of fridge + freezer (ice bar) and fridge + wine cooler sets.
The Company continued to iterate high-end products, grasped the market opportunity
for larger volume refrigerators, high-end T-door refrigerators and French door
refrigerators accounting for over 70% of total export revenue, which helped export
business outperform the industry.
(2) Kitchen appliance business
During the reporting period, China’s kitchen appliance recorded revenue of RMB1.988
billion, a year-on-year increase of 11.4%. Revenue of Casarte’s kitchen appliances
grew 46.0% year-on-year, accounting for 27.1% of domestic kitchen appliance
revenue, up 6 percentage points. Dishwasher grew 26.9% year-on-year, of which
Casarte’s dishwasher increased 54.4% year-on-year. According to CMM, the
Company’s offline retail share of kitchen appliances went up 1 percentage point,
reaching 8% in the first half of the year, with Casarte’s market share grew by 1.3
percentage points to 3.9%; overall online retail share amounted to 4%.
During the period, the Company focused on showcasing Casarte’s best-selling
scenarios to increase presence in home improvement channels, gaining ground in
retail through forming designers’ alliances, and fostering user conversion with cleaning
and replacement services. The Company added 313 new Three-Winged Bird smart
kitchen stores and entered 902 stores in villages and townships.
The Company continued to leverage technological expertise from GEA, FPA and
Candy to establish differentiated competitiveness and gain user goodwill. (1) Casarte’s
range hood continued to upgrade its smart air technology, which solved the problem
of poor smoke exhaust on upper floors and allowed customization of air flow volume
according to users’ environment. (2) The performance of built-in ovens, steamers and
integrated steam ovens continued to improve. The precise and constant temperature
control technology enabled consistent baking quality and ensured similar colour and
taste of every layer during multi-layer baking. (3) Casarte’s Zhongzihemei (中子和美)
dishwasher is equipped with FPA direct-drive motor on the upper drawer, and a
sterilizer in the lower drawer with medical-grade light wave pasteurization, addressing
growing demands for cleansing and caring of fine tableware.
Haier Smart Home Co., Ltd. Interim Report 2022 25
Section III Management Discussion and Analysis
2. Household Clothing Solutions
During the reporting period, the Company’s washing machine business achieved sales
revenue of RMB14.784 billion, representing a year-on-year increase of 14.1%. According
to CMM, the washing machine business continued to lead the industry in terms of market
share. Online and offline shares by retail revenue were 40.2% and 45.9% respectively, of
which, the share of offline retail revenue grew 3.3 percentage points year-on-year.
During the period, the Company launched Casarte’s Zhongzihemei (中子和美) washer and
dryer combo, which integrated washing, drying and clothes caring functions while sharing
realtime data of each process, it was designed to reduce creases, wear & tear while using
lower level of energy. Air Wash with negative ion was also used to enhance experience by
removing wrinkles, odour, and bacteria. Zhongzi series adopted an all-flat design that
perfectly blended in with the home environment. According to CMM, the Company has 75%
of market share of washers above RMB10,000 per unit, demonstrating a leading advantage
in the high-end market.
In addition, the Company continued to expand the tumble dryer business. In the first half of
the year, domestic revenue of dryers grew 94% year-on-year. To solve the pain points of
incomplete drying and tangled laundry, the Company pioneered the dual-engine heat pump
technology, to keep the laundry untangled and evenly heated, thus greatly improved user
experience. In addition, the Company has optimized its supply chain and started building a
new dryer factory in Shanghai which is expected to add 2 million units in capacity. During
the period, the Company’s dryer business ranked No.1 with offline retail share of 37%, up
5 percentage points year-on-year. Online retail sales skyrocketed 108% year-on-year.
During the period, despite pandemic outbreak, rising shipping costs and currency
fluctuations overseas, the washing machine business remained committed to brand
premiumization and product mix upgrade, meeting the needs of overseas users with
differentiated products. According to China IoL, the Company achieved growth despite
declining revenue and volume in the sector. Export volume rose 11.5%, accounting for 26.2%
of market share, and export revenue grew 2.7%, accounting for 23.9% of market share.
26 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
3. Air Solutions
During the reporting period, the Company’s air conditioner business achieved revenue of
RMB19.46 billion, an increase of 10.3% from the same period in 2021.
(1) Residential air conditioner business
The residential air conditioner improved operational efficiency by accelerating network
expansion. Online and offline domestic market shares continued to grow. According
to CMM, the Company’s offline retail share of air conditioners (standing & wall-
mounted units) increased 3.96 percentage points to 19.84% in the first half of 2022,
whereas online retail share rose 0.9 percentage points to 14.1%. Meanwhile, retail
share in the offline high-end market (wall-mounted units priced above RMB4,000 per
unit and standing units priced above RMB10,000 per unit) reached 25.5%, an
increase of 6.3 percentage points. Residential central air conditioner continued to
grow rapidly: according to China IoL, the Company’s share of residential central air
conditioners was 15.88%, an increase of 1.55 percentage points year-on-year.
Overseas business also boomed, data from China IoL showed that the Company’s
export revenue increased 32.26% in the first half of 2022.
During the reporting period, the Company launched ‘Haier polymerized ionic Air Wash’
wall-mounted air conditioner with innovative air flow structure for improved experience,
and it can remove seven types of air pollutants including PM2.5, while increasing humidity
and negative ions.
During the reporting period, the Company’s residential central air conditioner recorded
revenue growth of 38%. The Company launched “Tianfudishui” (天氟地水) series with
ultra-low refrigerant noise and high cooling efficiency, the air conditioner, floor heating
and ventilation system could be controlled on the same screen, making this product
the focal point of air solutions at home.
The Company improved in-store product display, by demonstrating cooling & heating
speed, low noise level and sterilization features while gaining goodwill by providing air
conditioner cleaning services in the lower tier market. More than 2,800 new franchise
outlets were added in the first half of the year. On the e-commerce channel, the Company
concentrated on creating best-sellers such as ‘Machinist’ series to capture mid to high
end markets opportunities. The Company also enhanced presence in lower-tier markets
with 30% increase in the number of outlets.
In the first half of the year, Haier’s residential air conditioner registered a growth of
32.6% in export revenue. The rapid growth was due to the Company’s commitment
to health-conscious products. The LED-UVC module in Haier’s health-boosting air
conditioners can emit ultraviolet rays, it was verified by Texcell in France for its 99.998%
inhibitory effect on the COVID-19 virus. The Company also enhanced competitiveness
of its export business by integrating product platforms and optimizing SKU portfolio.
Haier Smart Home Co., Ltd. Interim Report 2022 27
Section III Management Discussion and Analysis
Significant improvement in profitability of residential air conditioner was achieved by ①
streamlining SKUs through platform integration, with 17% increase in revenue
contribution per SKU. ② implementing supply chain forward integration to increase
the in-house manufacturing of five modules including circuit boards, thus, reducing
material cost by 5.5 percentage points. ③ establishing a full process cost committee,
upgrading the databases of material suppliers, module suppliers, and technical
suppliers, and building lean cost models to improve individual model’s gross profit
margin. Taking the components of tube modules as an example introducing lean cost
model has saved over RMB16 million.
(2) Commercial air conditioner business
The Company provided users with customized solutions to quickly grasp market
opportunities, leading to a 26.1% revenue increase in the domestic commercial air
conditioner business. In the domestic market, the Company’s share increased 0.9
percentage points year-on-year to 10.4% in the first half of the year. The Company
ranked second in the export market with 16% market share, up 1.5 percentage
points year-on-year.
During the reporting period, the Company continued to innovate IoT central air
conditioners and spearheaded the industry development in energy efficiency
performance. The Company also made breakthroughs in compressor and high-speed
frequency invertor technologies. ① The Company’s EVI MRV has undergone upgrade
with low-temperature heating performance improved by 30% and stable performance
under 56C. The application of smart IoT technology not only realized remote control,
centralized coordination, and separate billing, but also performed load prediction and
real-time monitoring of refrigerant quantity through big data analysis. The
600,000-square-meter Shandong University Industry Science Park project in Jinan has
a glass structure with high demand for heating and Haier’s customized IoT-based
VRF units perfectly solved the difficulties of significant difference in drop height and
placement of outdoor units and fulfilled the needs for separate billing and intelligent
energy-saving. ② The Company introduced the air-cooled modular chiller, with room-
temperature unit that can produce heat under the full-working condition of –15C to
50C to cater to the heating and cooling demand of offices, hotels, hospitals, schools
and others scenarios, whereas the low ambient temperature unit can achieve a water
discharge temperature of 45C at –35C, meeting heating demand under extremely
cold conditions. ③ Luxshare ICT’s production site required high precision in
temperature and humidity, Haier provided a comprehensive energy-saving solution of
151 water-cooled magnetic bearing centrifugal chiller units, thus laying down foundations
for long term strategic partnerships. ④ In response to the market opportunities from clean
energy replacement initiated by the “carbon peaking and carbon zero” strategy, the
Company introduced building energy saving, manufacturing engineering energy saving
and waste heat recovery solutions, and grew this business by 26% in the first half of the
year.
28 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Export revenue of the Company’s commercial air conditioners rose 32% in the first
half of the year, attributable to: ① The implementation of carbon neutrality policy in
the European Union has fuelled consumer demand for heat pumps, the Company
quickly seized the market through its comprehensive HVAC channels and doubled its
revenue. ② In the American market, the Company developed the market for multi-
split products through its localized brands. ③ In the Southeast Asian market, the
Company built a professional workforce to make headway in the water chiller market
and established competitive edge with water-cooled magnetic bearing centrifugal
chiller units in Thailand.
4. Household Water Solutions
During the period, the Company’s water heater and water purifier business achieved
revenue of RMB6.786 billion, an increase of 15.3% year-on-year.
(1) Water heater
During the reporting period, the Company continued to strengthen its leading
advantages. The offline retail share of the Company’s water heater business was
30.6%, an increase of 3.5 percentage points year-on-year; online retail share was
33.7%, an increase of 3.4 percentage points year-on-year. Casarte consolidated its
high-end market position through differentiated technologies such as crystal tank,
seamless titanium tank and gas-electric hybrid system. It is one of the top three
brands in the industry with market share of 13.4%.
Following the launch of the limescale-free, leakage-free, and rust-free Casarte Crystal
Tank Galaxy series, the Company expanded its dual-tank product line-up meeting
user demand for small-size, appealing design, and large-capacity electric water
heaters. During the period, the Company’s retail share of electric water heaters
reached 41.7%, an increase of 2.2 percentage points year-on-year. Casarte’s retail
share amounted to 15.5%, a growth of 1.8 percentage points year-on-year.
Gas water heater expanded its edge through technological innovation, with revenue
increase of more than 20%. During the period, the online retail share of Haier’s gas
water heaters reached 23.3%, up 2.1 percentage points compared to the same
period of last year; offline retail share reached 22.4%, representing a rise of 3.4
percentage points year-on-year. The Company pioneered the hybrid gas/electric
constant temperature technology that alternates between gas and electricity to solve
users’ pain points of slow heat up and inconsistent temperature by providing water at
constant temperature, and create enhanced bathing experience.
During the period, the Company’s air-sourced heat pump water heater has accelerated
the R&D of health-oriented products which featured high water temperature, disinfection,
frequency conversion and energy saving. Haier brand has consolidated its leadership with
a cumulative offline retail share of over 70%, and an online retail share of 65%. Haier
dominated the industry with nine out of ten best- selling models.
Haier Smart Home Co., Ltd. Interim Report 2022 29
Section III Management Discussion and Analysis
(2) Water purifier
According to CMM, during the period, Haier’s water purifier achieved a retail growth
of 14.3% offline with retail share increased by 5 percentage points year-on-year and
ranking the Company amongst the top three brands in the industry.
During the period, water purifiers strengthened its competitiveness through product
innovation. Following the launch of Casarte’s Yunzun ( 云 鳟 ) mineral water purifier
series that solved users’ pain point of lack of minerals in purified water, the Company
iterated the product and introduced Yunlan (云澜) series with easy filter replacement,
helping the Company ranking No. 1 in terms of market share of products above
RMB5,000 per unit.
Water purifier concentrated on supply chain optimization and realized in-house
manufacturing of filters, water circuit boards and injection mouldings to facilitate product
development, scenario implementation and strong revenue growth.
5. China operation: accelerating reform and taking the initiative to grow against the
headwind.
Facing industry downturn in the first half of the year, in particular multiple pandemic outbreaks in
the second quarter, the Company managed to grow against the headwind by accelerated
digitalization and distribution network expansion as well as capturing opportunities from
government’s consumption incentives. According to CMM, the market share of Haier’s major
home appliances reached 27.4% in the first half of 2022, up 2.4 percentage points year-on-year.
Selling expense ratio was optimized by 0.9 percentage points in China, leveraging reduction
in cost redundancies and improvement in marketing efficiency driven by process reform and
implementation of digital management tools; increase factory-to-DC fulfilment, while
reducing inventory and warehousing handling to reduce logistics expenses.
Strengthening distribution network to enhance competitiveness.
(1) Revenue from franchised channel grew 8% driven by ① store digitalization, as of the
end of June, more than 8,000 franchised stores were operating on the platform
covering 90% of the entire network; digital marketing tools helped conversion rate
reach 19% with total transaction value of RMB21.2 billion. ② unlocking the growth
potential of weak areas through targeted deployment of staff, products, and
marketing resources.
30 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(2) In the first half of the year, retail sales grew by 25% online, driven by: ① integrated
multiple platforms online and offline, facilitating sharing of membership privileges to
maximize user value. ② continued product mix optimization, during the reporting
period, 22 new products were launched online by high-end Casarte brand,
contributing to 12% increase in ASP. Tmall flagship store’s revenue from suite
products increased 11 percentage points year-on-year, reaching 56% of total. ③
implementing order management model using algorithm to improve accuracy of order
forecasting and inventory turnover, the proportion of factory-to-DC delivery increased
by 8 percentage points, realizing over RMB21 million reduction in expenses. ④
strengthened presence on new retail platforms including TikTok and Kuaishou,
facilitating promotions with rich contents and increases in private domain traffic. The
Company has become No.1 major home appliance brand on both TikTok and
Kuaishou.
(3) In the first half of 2022, the Company’s retail revenue from home improvement
channels amounted to RMB5.1 billion, an increase of 66% year-on-year. During the
reporting period, the Company formed strategic partnerships with leading players
including Red Star Macalline and Easyhome Furnishing, to share marketing and user
resources. The Company also established additional presence in 69 Red Star
Macalline malls, 55 Easyhome Furnishing malls, 15 Yuexing Furnishing malls, 9
Ouyada malls and 185 local building materials malls.
Strengthening multi-brand strategy to meet diversified user demands
(1) Casarte brand continued to lead the high-end market with 38.6% and 75.2% share
in refrigerators and washing machines above RMB10,000 per unit as well as 31.2%
share in air conditioners above RMB15,000 per unit. In the first half of 2022,
Casarte’s revenue increased by 20.8% with a growth of over 30% in the first quarter.
Pandemic containment measures put pressure on sales and fulfilment offline in April
and May, however momentum restored and growth resumed to 20% in June as the
outbreaks were gradually under control.
“Connoisseur series” and “Z series” were introduced targeting high-end and young
consumers, while more efforts were made to enhance Casarte’s comprehensive sets
offerings, in the first half this year, revenue contribution of Casarte’s product suites
reached 38.6%, a year-on-year increase of 1.5 percentage points. The Company also
focused on expanding home improvements related products, Casarte’s tumble dryer and
dishwasher grew over 50% in the first half of the year, the growth of residential central air
conditioners exceeded 80%. The Company accelerated the development in home
improvement channels to better meet high-end users’ needs for one-stop comprehensive
sets of products.
Haier Smart Home Co., Ltd. Interim Report 2022 31
Section III Management Discussion and Analysis
(2) Positioned as “Gen Z’s home appliances”, Leader achieved 7.0% growth against the
headwind. The breakthrough was made with renewed brand image and a collection of
best sellers including “Bigger wind curtain” air conditioner that enjoying popularity with
strong blow technology, soft wind blow and smart wind control.
6. The Three-Winged Bird focused on “customizing smart home living” for users and
continued to grow its capabilities in “scenario solutions, the Smart Home Brain,
digital platforms and the 1+N system”, to optimize scenario experience and
enhance user value.
The Company continued to iterate its scenario solutions. During the reporting period, the
Company launched the “1+3+5+N” whole-house complete-scenario smart solution,
leveraging Smart Home Brain and whole house connectivity to fulfil users’ needs in various
living scenarios. During the reporting period, sales volume of the Company’s smart devices
grew 14.5% year-on-year; daily active users of smart devices surged 63% year-on-year;
daily active users of scenario solutions soared 88% year-on-year from 1.5 million to 2.83
million.
Leveraging scenario experience, 1+N capabilities and digital tools, the Company enhanced
in-store scenario solutions with increased user value. During the reporting period, the
Company added more than 200 new Three-Winged Bird touch points, sales per square
metre has increased by 8.2% to RMB21,000/year. Sales of high-end products accounted
for 39.74% in Three-Winged Bird stores, an increase of 4.65 percentage points year-on-
year.
(II) Overseas home appliances and smart home businesses
During the reporting period, the Company’s overseas business achieved revenue of RMB61.481
billion, up 8.0% year-on-year. Operating profit grew 13.0% year-on-year to RMB3.634 billion
operating profit margin reached 5.9%, a growth of 0.2 percentage points year-on-year. The robust
performance exceeding the industry was contributed by the Company’s swift action to grasp high end
market opportunity under the “Rendanheyi (人单合一)” Model, i.e. high-end brands’ revenue growth of
over 40% in North America. The Company also accelerated channel expansion, in particular in HVAC
channel; strengthened local manufacturing capabilities by leveraging global supply chain platform;
while mitigating the impact from escalating sea freight and chip shortages with global procurement
negotiation, resources optimization and joint procurement.
1. America
In the first half, sales revenue reached RMB37.434 billion in the American market, a growth
of 6.0%. High-end brands recorded 40% sales increase and continued the success in the
marketplace.
32 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
The Company’s growth in a negative industry is attributable to long term commitment of product
innovation and consumer satisfaction. The successful new launches in the marketplace include
Monogram 36 inch integrated panel-ready Column refrigerator, GE Profile smart top load and
front load washing machine, the first washer with latest Alexa built-in, GE Profile UltraFresh
System Dishwasher with Microban Antimicrobial Technology, premium brand pro-range, and
GE Profile ClearView Energy Star certified window air conditioner, all of which effectively
capturing consumers’ demand for improved experience at home.
In the meantime, the Company dedicated to being agile, and to be the easiest to do
business with. The Company established favourable customer relationships in not only
national retail channel, Builder Groups & Independents, contract channel but also DTC
channel, and win the flooring and continuously gain growth. The Company set up 4 special
workgroups specializing in manufacture, sourcing, etc. respectively to address the rising
cost pressure of H1 through leveraging global synergy platform and resources co-sharing.
The Company opened the water heating manufacturing plant in Camden, South Carolina.
Through a vertical integration of the plant, the Company is able to produce high-quality
water heaters out of steel coils, serving homes across the U.S. The new plant includes
advanced systems for metal fabrication and welding, robotics for material handling and
processing, and enamelling of the steel. 140 positions were added in the plant. The
Company also opened new West Coast area distribution centre (ADC) in Dixon, California
near Sacramento. This addition to the Company’s distribution network will help ease supply
chain congestion in the Company’s ADC near the Port of Los Angeles and reduce delivery
times by half for customers in northern California, southern Oregon, and western Nevada,
allowing for next day delivery.
During the reporting period, GEA released its 2021 Corporate Citizenship Report,
highlighting the latest progress and five bold new goals that will power the company’s
future work across its five core pillars: Community Engagement, Inclusion & Diversity,
Operations Sustainability, Product Sustainability, and Compliance & Ethics. GEA achieved 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” five years in a row.
Haier Smart Home Co., Ltd. Interim Report 2022 33
Section III Management Discussion and Analysis
2. Europe
During the period, the European business achieved revenue of RMB10.245 billion, an increase
of 12.7% year-on-year. According to the data from GFK, the Company’s market share in Europe
has reached 6.8%, up 0.5 percentage points, growth in both revenue and volume ranked first in
the market with share expansion in multiple categories including washing machines,
refrigerators, dishwashers, and kitchen appliances. The Company’s washing machines
accounted for 12.7% of the market’s volume, an increase of 1.6 percentage points, moved one
place up to No. 2 in the industry.
During the period, challenged by high inflation, escalated energy prices and rising shipping
and commodity costs, the Company continued to strengthen high-end brand strategy,
accumulated consumer insight, accelerated the localization of supply chain and enhanced
channel competitiveness to achieve steady growth. The Company met demand for energy-
saving products with technological innovation. During the period, 905CD refrigerator and
939 washing machines were launched under Haier brand to raise average prices. Large-
volume and energy saving products such as the new ultra-thin iPro7plus washing machine
and 905 refrigerators have gained market recognition. The production capacity of the
refrigerator factory in Romania was gradually ramping up with accumulated output of
200,000 units, contributing to the rapid growth of built-in refrigerators. In addition, new
factories for dishwashers, tumble dryers and kitchen appliances in Turkey were underway.
The Company also expanded the room for growth through successive launches of built-in
washing machines and refrigerators in home improvement channels.
3. Australian and New Zealand
The Company remained committed to product premiumization and recorded sales revenue
of RMB3.49 billion in Australia and New Zealand, up 0.9% year-on-year, a 9.2% growth in
local currency. The share of retail revenue in Australia’s mainstream channels reached
17.5%, an increase of 1.7 percentage points, while the market share of retail sales in
mainstream channels in New Zealand was 37%, an increase of 3 percentage points year- on-
year.
Several premium SKUs were launched under both FPA and Haier brands, adding to the
competitiveness of comprehensive solutions; the Company also became No.1 in washing
machine category in Australia with 28% market share while best-selling heat pump dryer
achieved a record breaking 4.6 percentage points market share gain in one month.
A Specialized team was set up to capture the growth from strong housing market,
particular efforts were made to develop new partnerships with interior designers while retail
performance was improved with enhanced offerings featuring connectivity and IoT
technologies. In addition, the Company also increased manufacturing capacity and agility of
the factory in Thailand, where total output grew by 14% during the reporting period.
34 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
4. South Asia
During the reporting period, the Company achieved sales revenue of RMB4.823 billion, an
increase of 22.8% year-on-year. Among which,
(1) The market share in India increased by 1.2 percentage points to 10.4%. The Company
pressed ahead with brand premiumization and multi-brand strategic implementation,
expanded the presence in high-quality channels, and improved supply chain
capabilities. ① The Company implemented the multi-brand strategy of Casarte, Haier
and Candy to increase the share of mid and high-end sales revenue to 46%, up 5
percentage points year-on-year. ② The Company continued to introduce products
that fulfilled local needs, by integrating global design resources, the Company
launched the first French door refrigerator. The Company also introduced washing
machines with heating function to address users’ pain points. ③ The Company
enhanced presence of quality channels and expanded penetration to 70%. ④ The
Company enhanced operation efficiency of the North Industrial Park and the Pune
Industrial Park and developed the supply chain to improve whole-process
competitiveness.
(2) In Pakistan, the Company strengthened leadership in refrigerators, freezers, air
conditioners and washing machines. The Company’s overall share reached 37%, up 2
percentage points year-on-year. The Company grasped the local demand for high-
efficiency and energy-saving products and launched the variable-frequency freshness
preservation refrigerator series. The Company introduced the T3 air conditioner that
can operate under temperature as high as 53C, thus solving the problem of
operation suspension under high temperature condition in the southern region. The
Company also launched large-freezer & small-fridge refrigerator to meet large family’s
demand for more freezing space. The Company’s penetration exceeded 70% in Tier 3
and Tier 4 markets with over 300 franchised stores.
5. Southeast Asia
During the reporting period, the Company achieved revenue of RMB2.922 billion, an increase
of 11.9% year-on-year. The Company grasped demand for large capacity and health-conscious
sterilization and accelerated new product launches to grow market share.
In the Thai market, the Company accelerated high-end brand development, with the market
share of T-door and French door refrigerators reaching 35% and topped the industry. The
residential air conditioner UV series met the users’ needs for health-conscious sterilization
in the post-pandemic era, driving the retail volume share of air conditioners to 13.6%,
ranking first in the industry. 601 large front-load washing machine gained leadership in the
industry, retail sales of front-load washing machines surged 95% in the first half of the year.
The Company upgraded retail channels and seized opportunities online, the number of
store presence in Thailand’s chain store channels increased by 40%, while the number of
retail touch points in the Philippines grew 51%. In Vietnam, the Company streamlined sales
network into district-province-county-township levels and improved the wholesale
capabilities and retail efficiency. In the first half of the year, sales revenue grew 80% online
in Southeast Asia market. A flagship store was launched on Lazada in June in Vietnam, the
GTM system went live in Malaysia and facilitated digital management of store display, a
warehouse management system was also launched in Thailand.
Haier Smart Home Co., Ltd. Interim Report 2022 35
Section III Management Discussion and Analysis
6. Japan
During the period, the Company achieved revenue of RMB1.837 billion in Japan, up 3.3%
year-on-year, a growth of 17.9% in local currency. The Company’s market share for
freezers, refrigerators and washing machines combined reached 15%, with 15.2% in
refrigerators and 42.8% in freezers, both ranked first in the industry. During the period, the
Company accelerated the transformation towards mid- to high-end products, and actively
expanded the line-up of medium- and large-sized products. The Company seized the
refrigerators’ market share with Delie series and ultra-thin T-style products under AQUA
brand, as well as 468/406 T-door and brand new ultra-narrow 3-door products under Haier
brand. The Company captured the market opportunity of health-conscious laundry brought
about by the pandemic with AQUA’s superior line-up of variable-frequency washing machine
products line-up and high-end heat pump front-load washers, as well as Haier’s medium-
and large-size variable-frequency washing machines. The Company strengthened the freezer
product line-up with the differentiated Slim series and the 20th anniversary edition. AQUA’s
high-end revenue contribution grew 5 percentage points to 61%, while Haier’s mid to high-
end revenue contribution rose 11 percentage points to 50%.
In addition, the community laundry business continued to lead the industry with a market
share of 70%. The Company has established more than 100 multi-scenario experience
stores offering laundry, maintenance, clothing, food, and transportation solutions with cross-
industry partners including FamilyMart, P&G, ENEOS petrol stations and MUJI, to optimize
user experience.
(III) Strengthening digitalization for all processes to improve efficiency.
During the reporting period, the Company has strengthened its digital transformation focusing on
CRM, lean manufacturing and R&D.
The development of a digital user operation platform. Centring around full life cycle of
product purchase, usage, and services, the Company leveraged its User Experiential Brain to
integrate marketing, logistics, after-sales and smart devices, so as to visualize user experience,
enhance operational efficiency and user satisfaction. In the first half of 2022, 26.59 million new
members were added, total number of platform users reached 257 million. Average ticket size
per member was 34.3% greater than regular users. ① Establishing digital marketing platform to
improve user retention and conversion efficiency. In the first half of 2022, the number of users
with retained information 2 amounted to 11.41 million, a growth of 219% year-on-year; conversion
reached 18.93%, an increase of 58% year-on-year; digital retail3 accounted for 22.6% of total
sales, a rise of 112% year-on-year. ② Replacing service dispatch centres with system’s direct
matching of user request and maintenance personnel; accurate prediction and manufacturing of
parts & components using algorithm to optimize spare parts expense ratio.
2
Number of users with retained information: users who allow us to manage the information they submit digitally
3
Digital retail: sales revenue generated by users acquired through digital tools divided by total sales revenue
36 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Lean manufacturing platform:
① The manufacturing platform primarily focused on the implementation of digital order management,
and DFX new product introduction to improve manufacturing cost competitiveness and delivery
efficiency. For example, establish schedule workbenches, which enabled digital management of
scheduling, dispatch and logistics coordination, resulting in a 92% accuracy of dispatches with
95% on-time delivery of orders.
② Digital procurement service platform facilitated collaborations with third party big data
platforms to dynamically optimized supply side resources, increasing the proportion of
shared components to save procurement cost.
③ Supply chain platform improved management and the accuracy of demand forecasting while
facilitating sharing of inventories. In the first half of the year, inventory turnover at regional
headquarter level was optimized by 15%.
④ The logistics platform targeted end to end optimization of logistics expense by connecting people,
cars and data to match vehicles, goods, and orders. In the first half of 2022, truck loading time
was reduced by 30%, and logistics expense ratio was reduced by 10%.
Digitalized R&D platform was established to optimize product planning process, product life
cycle management and standard system, product efficiency 4 was improved by 23% in the first
half of the year; in addition, it was also used to implement end to end cost optimization based
on modules iterations and facilitate mass application of cost-effective new materials and
processes.
Development plan for the second half of the year
In the second half of 2022, the Company will press ahead with the three-level brand upgrade
strategy of “high-end brand, scenario-based brand and ecosystem brand”. Amid macro
uncertainties, the Company will seize the opportunities of innovation and structural change in the
market through strengthened leadership and forward-looking global deployment. The Company
will define the Company’s second curve development path by strategizing the smart home trend
and building a smart home appliance ecosystem. At the same time, the Company will push
forward with digital restructuring to enhance the efficiency throughout the entire value chain.
In the domestic market, the Company remains committed to high-end brand strategic implementation
to increase Casarte’s market share in all categories, continue to improve competitiveness of air
conditioners with a focus on developing core technologies from in-house R&D and strategic alliances;
accelerate growth in consumer robotics and small appliances while grasping the suite-oriented and
home furnishing market trend as well as new opportunities in tumble dryers and dishwashers, focus
on creating value for users and distributors with steady performance; accelerate digital reform to
facilitate cost reduction and efficiency enhancement.
4
Product efficiency: Sales revenue divided by quantity of product models
Haier Smart Home Co., Ltd. Interim Report 2022 37
Section III Management Discussion and Analysis
The Company will continue to implement high-end brand strategy in the overseas market,
meeting the pressing worldwide demand for energy-efficient and green products leveraging global
R&D capabilities, introduce differentiated and efficient products; speeding up development in
HVAC channels supported by localized energy efficient facilities; mitigating cost pressure with
global supply chain management platform; with Rendanheyi (人单合一 ) management model and
well-established incentive programmes to inspire employees’ enthusiasm, capture growth
opportunities, while minimizing market risks.
Significant changes in the Company’s operating conditions during the reporting
period, and matters occurring during the reporting period that have 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
period of
Items Current period last year Change (%)
Operating revenue 121,857,522,462.22 111,727,756,211.06 9.07
Operating cost 85,061,133,319.20 78,156,467,866.57 8.83
Selling expenses 17,605,612,224.80 16,731,407,296.02 5.22
Administrative expenses 5,132,033,156.92 5,047,535,410.71 1.67
Financial expenses –202,227,082.17 295,546,337.17 –168.42
R&D expenses 4,595,691,525.07 3,738,316,873.21 22.93
Net cash flow generated from
operating activities 5,964,247,657.22 8,442,195,160.31 –29.35
Net cash flow generated from
investing activities –4,160,668,747.75 –3,237,011,990.71 Not Applicable
Net cash flow generated from
financing activities 2,160,173,397.21 –9,607,019,105.46 Not Applicable
Other income 546,242,698.94 378,116,328.72 44.46
Gain on fair value changes –118,790,175.68 64,269,511.32 –284.83
Loss on credit impairment –258,076,846.14 –44,031,423.21 Not Applicable
Gain from disposal of assets 31,589,207.10 142,414,954.25 –77.82
Income tax expenses 2,000,741,926.36 1,525,749,793.00 31.13
38 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Analysis on the reasons for significant changes in certain indicators:
1) Reasons for changes in financial expenses: the decrease of 168.42% in finance costs
over the corresponding period was primarily due to the increases in the period’s
interest income and exchange gains over the corresponding period;
2) Reasons for changes in net cash flow generated from financing activities: primarily
attributable to the new policy borrowing raised and additional issuance of proceeds
during the period;
3) Reasons for changes in other income: the increase of 44.46% in other gains over the
corresponding period was primarily due the increase in the period’s government
grants over the corresponding period;
4) Reasons for changes in gain on fair value changes: the decrease of 284.83% in gains
on fair value changes over the corresponding period was primarily due to the
decrease in fair value changes in forward contracts over the corresponding period;
5) Reasons for changes in loss on credit impairment: primarily due to the increase in
provision for the bad debt of receivables during the period;
6) Reasons for changes in gain from disposal of assets: the decrease of 77.82% in gains
on property disposal was primarily due to the decrease in the periods’ gains on
property disposal from subsidiaries over the corresponding period;
7) Reasons for changes in income tax expenses: the increase of 31.13% in income tax
over the corresponding period was primarily due to the increase in taxable profit of
the period.
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
(II) Explanations on the major changes in profits caused by non-principal businesses
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 39
Section III Management Discussion and Analysis
(III) Analysis of assets and liabilities
√ Applicable □ Not Applicable
1. Assets and liabilities
Unit: RMB
Percentage of Percentage of
amount at the end change in amount
Amount as at the of the from the end of the
Percentage of end of the corresponding corresponding
Amount as at the amount at the end corresponding period of last year period of last year
end of of the period over period of over total assets to current period
Items the period total assets (%) last year (%) (%) Explanations
Derivative financial assets 163,084,726.42 0.07 79,819,974.01 0.04 104.32 Mainly due to the fluctuation in value
of foreign currency forward
contracts
Bills receivable 8,417,636,171.41 3.71 13,354,791,068.29 6.14 –36.97 Mainly due to the change of
repayment terms for channels
Right-of-use assets 3,664,479,071.10 1.62 2,734,678,906.53 1.26 34.00 Mainly due to the increase in lease
liabilities
Trading financial liabilities 79,270,648.00 0.03 6,294,014.40 0.00 1,159.46 Mainly due to the fluctuation in value
of foreign currency forward
contracts
Contractual liabilities 5,397,435,938.66 2.38 10,027,091,593.60 4.61 –46.17 Mainly due to the decrease in
advance receipts with
performance obligations
Other current liabilities 1,286,194,473.81 0.57 2,238,767,551.40 1.03 –42.55 Mainly due to the decrease in the
amount of value-added tax to be
transferred to output tax
Long-term borrowings 2,119,243,998.96 0.94 3,038,573,824.53 1.40 –30.26 Mainly due to the reclassification to
non-current liabilities due within
one year
Bonds payable 334,730,048.82 0.15 –100.00 Mainly due to the reclassification to
non-current liabilities due within
one year
Lease liabilities 2,763,944,633.73 1.22 1,960,894,981.47 0.90 40.95 Mainly due to the increase in lease
liabilities
Long-term payables 49,353,671.92 0.02 99,602,707.76 0.05 –50.45 Mainly due to the repayment of long-
term payables
Other equity instruments 81,340,387.43 0.04 118,017,507.59 0.05 –31.08 Mainly due to the decrease in the
conversion equity component of
the convertible bonds
Treasury stock 3,962,689,830.07 1.75 2,424,038,819.70 1.11 63.47 Mainly due to the share repurchase
Other comprehensive 1,689,673,248.96 0.75 –1,176,851,699.92 –0.54 243.58 Mainly due to the translation of
income foreign currency financial
statements
40 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2. Overseas Assets
√ Applicable □ Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 10,833,800 (unit and currency:
RMB10,000), representing 47.80% of the total assets.
(2) Relevant information on high percentage of overseas assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Operating revenue
during the reporting Net profit during the
Name of overseas asset Reason for Formation Operation mode period reporting period
Overseas Home Appliance and Overseas mergers & Localized Operations with the 61,480,633,415.58 3,634,319,014.7
Smart Home Business acquisitions and the integration of R&D,
Company’s own manufacturing and marketing
development
Note: Net profit stated in the above table represents operating profit.
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
In order to establish the competitiveness of service robots for household cleaning, promote
the development of the Company’s cleaning appliance business, as well as to enhance its
corporate governance and reduce routine connected transactions, Qingdao Haier Smart Life
Electric Co. Ltd., a wholly-owned subsidiary of the Company, proposed to acquire the 100%
equity interest in Qingdao TAB Robot Technology Co., LTD. held by Qingdao Haier
Interconnect Technology Co. Ltd., with a cash consideration of RMB125 million. After the
completion of the transaction, Qingdao TAB Robot Technology Co., LTD. has become a
wholly-subsidiary of Haier Smart. As at the end of the reporting period, the transaction has
been completed. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao TAB Robot
Technology Co., LTD. by a Subsidiary and Connected Transaction disclosed on 29 April
2022 by the Company.
Haier Smart Home Co., Ltd. Interim Report 2022 41
Section III Management Discussion and Analysis
(1) Significant equity investment
√ Applicable □ Not Applicable
Please see the above “1. Overall analysis on external equity investment”.
(2) Significant non-equity investment
√ Applicable □ Not Applicable
In order to further enhance the sustained high-quality growth of Haier refrigerators in
the domestic market, optimize the domestic supply chain, further strengthen the
market competitiveness in Shandong, Southwest and Central China and achieve rapid
growth in Shandong, Southwest and Central China, the Company invested in the
construction of a project with an annual production capacity of 2 million units of large
refrigerators in Jiulong Industrial Zone, Jiaozhou, Qingdao through a newly established
subsidiary, with a total investment of RMB3.07 billion. The project is currently in
progress. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on Investing in Large Refrigerator Project with an Annual
Capacity of 2 Million Units disclosed on 29 April 2022 by the Company.
(3) Financial assets measured at fair value
√ Applicable □ Not Applicable
RMB
Current purchase/ Investment income Changes in fair
Initial sale during the during the reporting value during the
Items investment cost Source of funds reporting period period reporting period
Wealth management products 2,142,050,007.50 Self-owned –15,583,835.62 42,007,117.65 1,621,089.28
Investments in other equity 3,587,415,678.11 Self-owned 2,596,583.32 –56,965,311.85
instruments
Investments in trading equity 284,382,243.23 Self-owned –200,041,952.15 45,206,370.39 –24,266,144.66
instrument
Investment funds 124,067,582.04 Self-owned 42,633,245.20 –43,056,624.92
Derivative financial assets 29,450,000.00 Self-owned — 132,833,541.83 89,404,517.91
Total 6,167,365,510.88 –172,992,542.57 222,643,613.19 –33,262,474.24
Note: As of 30 June 2022, the aggregate balance of foreign exchange derivative transaction amounted to
approximately US$1.579 billion.
42 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(V) Sale of material assets and equity
√ Applicable □ Not Applicable
In order to focus on the main business of smart home, optimize resources allocation and realize
investment income, Haier Shareholdings (Hong Kong) Limited, a wholly-owned subsidiary of the
Company, transferred 25% equity interest in Qingdao Haier Mold Co., Ltd. to Qingdao Haier
Mold Smart Cloud Technology Co., Ltd. for an amount of RMB277 million. After the completion
of the transaction, Haier Shareholdings (Hong Kong) Limited will no longer hold any equity
interest in Qingdao Haier Mold Co., Ltd. As at the end of the reporting period, the transaction
has been completed. For details of the investment, please refer to the Announcement of Haier
Smart Home Co., Ltd. on the Transfer of 25% Equity Interest in Qingdao Haier Mold Co., Ltd. by
a Subsidiary and Connected Transaction disclosed on 29 April 2022 by the Company.
(VI) Analysis on major subsidiaries and Investees
□ Applicable √ Not Applicable
(VII) Structured entities controlled by the Company
□ Applicable √ Not Applicable
V. OTHER DISCLOSURES
(I) Potential risks
√ Applicable □ Not Applicable
1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white goods
as durable consumer appliances are subject to users’ income level and their expectations
of future income growth which will have a certain impact on their willingness to purchase
products. A slowdown in macroeconomic growth causing a decline in users’ purchasing
power will have a negative impact on industry growth. In addition, a slowdown in real
estate market will also have a negative impact on market demand.
2. Risk of price war caused by intensified industry competitions. The white goods industry is
highly competitive with a high degree of product homogeneity, industry concentration has
continued to increase. However, the increase in inventory in individual sub-sectors due to
demand-supply imbalance may lead to price war. Furthermore, rapid technological
advancements, scarce talents in the industry, shortened product life cycles and ease of
imitation are making it increasingly difficult to profit. Although new products, services and
technologies are often associated with higher selling prices, it has become necessary for
the Company to invest more in R&D.
Haier Smart Home Co., Ltd. Interim Report 2022 43
Section III Management Discussion and Analysis
3. Risk of fluctuations in raw material prices. The Company’s products and core components
use metal such as steel, aluminium, and copper, as well as commodities such as plastics
and foam. If the prices of raw materials continue to rise, it will put certain pressure on the
Company’s production and operations. In addition, the Company relies on third party
manufacturers and suppliers for key raw materials, components and manufacturing
equipment, any disruption in supply or significant price increases by these suppliers will
have a negative impact on the Company’s businesses. As a leader in the industry, the
Company will take measures including volume & price adjustment mechanism as well as
hedging to reduce the risk of raw material fluctuations on its operations.
4. Operational risk in overseas business. The Company has established production bases, R&D
centres, and marketing centres in many parts of the world, with the proportion of overseas
revenue increasing year by year. Overseas markets are subject to political and economic
situations (including events such as military conflicts), legal systems and regulatory regimes
of those countries and regions. Significant changes in these factors will pose certain risks
to the Company’s local operations in these markets. The Company has taken various
measures to mitigate the relevant impacts, including collaborating with suppliers and
distributors, improving production efficiency, expanding supply chain to other countries, and
safety measures to protect its people and assets.
5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the import
and export of products involve the exchange of foreign currencies such as the U.S. dollar,
the Euro, and the Japanese yen. If the exchange rates of relevant currencies fluctuate, it
will have a certain impact on the Company’s financial position. In addition, the Company’s
consolidated financial statements are denominated in Renminbi, while the financial
statements of its subsidiaries are measured and reported in the currency of their 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
market and the real estate market. Changes in macroeconomic policies, consumption
investment policies, real estate policies and relevant laws and regulations will affect product
demand, which in turn will affect product sales of the Company. The Company will closely
monitor changes in policies, laws, and regulations to ensure stable operation of its
businesses.
7. Risk of uncertainties resulted from COVID-19 outbreak. The COVID-19 outbreak that gradually
spread around the end of 2019 may lead to a further weakening of consumer demand for
home appliances, which in turn will affect the Company’s product sales. Lockdowns and
travel restrictions will reduce people’s mobility and hamper the operations of sales networks.
Besides, the pandemic may also cause disruptions to the operations of distributors, logistical
disruptions in the delivery of product could result in distributors’ dissatisfaction with the
Company’s services and consequently reduced demand for the Company’s products. The
Company will leverage its anti-pandemic experience in the Chinese market and coordinate its
global resources to mitigate the impact of the pandemic on its businesses.
44 Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
8. Credit risk. If the Company is not able to collect all trade receivables from its distributors,
or distributors are not able to settle the Company’s trade receivables in a timely manner,
the Company’s business, financial status, and operation performance may be adversely
affected. In relation to this risk, the Company will maintain flexibility by offering credit period
of 30 to 90 days to certain distributors based on their credit history and transaction amount.
9. Inventory risk. Excess inventory might occur as the Company cannot always accurately predict
trends and events and maintain appropriate inventory levels; thus, the Company may be
forced to offer discounts or promotions to manage the slow-moving inventory. On the other
hand, a shortage of inventory may lead to loss of sales opportunities for the Company.
However, the Company will conduct regular impairment assessment of its inventory and
manage its inventory according to market situation.
(II) Other disclosures
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 45
Section IV Corporate Governance
I. INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS
Meeting Date Index for details of websites designated Date of Resolutions approved
for publishing resolutions disclosure
2021 Annual General 28 June 2022 For details, please refer to the 29 June 2022 Considered and approved the
Meeting Announcement on Resolutions passed at resolutions related to annual
the 2021 Annual General Meeting, 2022 report, internal control audit
First A Shares Class Meeting, 2022 First report, profit distribution
D Shares Class Meeting and 2022 First proposal, re-appointment of
H Shares Class Meeting of Haier Smart auditor, external guarantees,
Home Co., Ltd. (L2022–042) published routine connected
by the Company on the website of transactions, general
Shanghai Stock Exchange (www.sse. mandate to issue additional
com.cn) and the four major securities shares ／ repurchase shares,
newspapers share option incentives,
re-election of the Board of
Directors ／ the Board of
Supervisors and amendment
of the Company’s system,
etc.
2022 First A Shares Class Considered and approved the
Meeting resolutions for share option
2022 First D Shares incentives and general
Class Meeting mandate to repurchase
2022 First H Shares Class shares, etc.
Meeting
Preferred shareholders whose voting rights have been restored requested an
extraordinary general meeting
□ Applicable √ Not Applicable
Explanation of Shareholders’ general meeting
√ Applicable □ Not Applicable
The 2021 Annual General Meeting and the 2022 First A/D/H Shares Class Meetings of the Company
was held in successive order by way of on-site voting and network voting by poll at Room B101, Haier
Rendanheyi Research Center, Haier Information Park, No.1 Haier Road, Qingdao, the PRC, in the
afternoon on 28 June 2022, considering the annual report and other relevant resolutions. The total
number of the shares of the Company carrying voting right amounted to 9,337,037,472 shares (of
which 6,198,798,156 shares were A shares, 271,013,973 shares were D shares and 2,867,225,343
shares were H shares). 820 shareholders and proxies, representing 6,456,427,607 shares or 69.15% of
the total number of the shares of the Company carrying voting right, were present at the 2021 Annual
General Meeting. 770 shareholders and proxies, representing 4,203,253,922 shares or 67.81% of the
total number of A shares of the Company carrying voting rights, were present at the 2022 First A
Shares Class Meeting; 40 shareholders and proxies, representing 147,537,203 shares or 54.44% of the
total number of D shares of the Company carrying voting rights, were present at the 2022 First D
Shares Class Meeting; 9 shareholders and proxies, representing 2,103,823,118 shares or 73.37% of
the total number of H shares of the Company carrying voting rights, were present at the 2022 First H
46 Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
Shares Class Meeting. The Directors, supervisors, and senior management of the Company as well as
the lawyers engaged by the Company also attended the abovementioned four meetings. The
abovementioned meetings were convened by the Board of the Company and Chairman Mr. Liang
Haishan presided over the meetings. The Company had 11 Directors, of whom 9 Directors attended
the meetings (Directors Xie Juzhi and Wu Qi were unable to attend the meetings due to personal
engagement); the Company had 3 supervisors, of whom 3 supervisors attended the meeting. The
secretary to the Board of the Company attended the abovementioned meetings and other members 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
Li Huagang Chairman and President Election
Liang Haishan Chairman Resignation
Shao Xinzhi Vice Chairman Election
Xie Juzhi Vice Chairman Resignation
Gong Wei Director, Chief Financial Officer, and Vice President Election
Wu Changqi Director Resignation
Lin Sui Director Resignation
Xie Juzhi Vice President Appointment
Song Yujun Vice President Appointment
Zhao Yanfeng Vice President Appointment
Wang Li Vice President Retired
Liu Xiaomei Secretary to the Board Appointment
Ming Guozhen Secretary to the Board Resignation
Explanation of changes in Directors, supervisors and senior management of the
Company
√ Applicable □ Not Applicable
During the reporting period, the term of office of the 10th session of the Board of Directors, the Board
of Supervisors, and senior management expired, and the 10th session was renewed to the 11th
session. Some members of the directors and senior management or their positions have changed in
the 11th session as compared to the 10th session, which is shown in the preceding table (those
without changes are not presented).
III. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVE
Proposal for interim profit distribution and proposal for reverse conversion into share
capital
Whether distributed or converted No
Haier Smart Home Co., Ltd. Interim Report 2022 47
Section IV Corporate Governance
IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR
OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF
(I) Relevant incentive events disclosed in provisional announcements but without
subsequent development or changes during implementation
√ Applicable □ Not Applicable
Summary of Matters Query Index
Completion of registration of grant of reserved For details, please refer to the
options under the 2021 A Share Option Incentive Announcement of Haier Smart
Scheme: According to the relevant resolutions of the Home Co., Ltd on the
25th meeting of the 10th session of the Board of Completion of Registration of the
Directors held by the Company on 15 December Grant of the Reserved Share
2021, it was confirmed that the total number of Options under the 2021 A
reserved options granted under the Company’s 2021 Share Option Incentive Scheme
A Share Option Incentive Scheme was 4,525,214. In disclosed by the Company on
accordance with this resolution, the Company 19 January 2022.
completed the registration of the aforementioned
grant of shares on 17 January 2022.
Introduction of 2022 A Share Option Incentive and For details, please refer to the 2022
completion of grant: As the Company is leading the A Share Option Scheme of Haier
effort to upgrade its Internet of Things from “high-end Smart Home Co., Ltd (draft)
brands” to “scenario brands”, and to “ecological disclosed by the Company on 29
brands”, the Company needs to have long-term April 2022, the Announcement
planning to ensure the achievement of its strategic on the Adjustment to the
results and also improve its long-term incentive scheme Company’s 2022 A Share Option
in line with the above objectives. Therefore, considered Incentive Scheme and Grant of
and approved at the General Meeting and Class 2022 A Share Option to Incentive
Meeting convened on 28 June 2022, the Company Recipients by Haier Smart Home
introduced the 2022 A Share Option Incentive. And as Co., Ltd disclosed by the
considered and approved at the Board Meeting held on Company on 29 June 2022, and
the same date, 104,756,896 options were granted to relevant contents of the
the incentive recipients. announcements of resolutions at
the General Meeting.
48 Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
Summary of Matters Query Index
Introduction of New Phase of A Share and H Share For details, please refer to the
Employee Stock Ownership Plan: In order to 2022 A Share Core Employee
further improve the governance mechanism of the Stock Ownership Plan of Haier
Company, create shareholder value and promote the Smart Home Co., Ltd (Draft),
comprehensive implementation of the Company’s IoT the 2022 H Share Core
smart home ecological brand strategy, as considered Employee Stock Ownership Plan
and authorized at the 2020 Annual General Meeting of Haier Smart Home Co., Ltd
held by the Company on 25 June 2021, the (Draft) and relevant contents
Company considered and introduced the 2022 H disclosed by the Company on
Share Core Employee Stock Ownership Plan of Haier 29 April 2022.
Smart Home Co., Ltd (Draft) and the 2022 A Share
Core Employee Stock Ownership Plan of Haier Smart
Home Co., Ltd (Draft) at the 28th meeting of the
10th session of the Board of Directors held by the
Company on 28 April 2022. During the reporting
period, the Company promoted the opening of
accounts and other related works for the 2022 A
Share and H Share Employee Stock Ownership Plan.
(II) Incentive events not disclosed in provisional announcements or with subsequent
development
Equity incentive
□Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Employee stock ownership plan
□ Applicable √ Not Applicable
Other Incentives
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022 49
Section V Environmental and Social
Responsibilities
1. ENVIRONMENTAL INFORMATION
(I) Explanation of the environmental protection status of companies and 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”), Qingdao Jiaonan Haier Washing Machine Co., Ltd.
(“Jiaonan Washing Machine”), Hefei Haier Refrigerator Co., Ltd. (“Hefei Refrigerator”),
Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier Freezer Co.,
Ltd. (“Wuhan Freezer”), Dalian Haier Refrigerator Co., Ltd. (“Dalian Refrigerator”), Qingdao
Haier (Jiaozhou) Co., Limited (“Jiaozhou Air-Conditioning”), Qingdao Haier Special
Refrigerator Co., Ltd. (“Huangdao Special Refrigerator”) and Tianjin Haier Cleaning Electrical
Appliances Co., Ltd. (“Tianjin Washing Machine”) are among the key emission units
announced by the local environmental protection department.
The main information on pollutant discharge is as follows:
(1) 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
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, north of the wastewater
treatment plant, pipeline discharge
50 Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
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 amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 20.74 mg/L 0.24 tons 6.25 tons No
2 Ammonia 3.72 mg/L 0.02 tons 0.63 tons No
nitrogen
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(2) Jiaonan Washing Machine
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.
② Way of discharge: intermittent 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 amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 60.3mg/L 3.091 tons 60 tons No
2 Ammonia 7.67mg/L 0.396 tons 5.48 tons No
nitrogen
Haier Smart Home Co., Ltd. Interim Report 2022 51
Section V Environmental and Social Responsibilities
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
(3) Hefei Refrigerator
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
8 types of pollutants (including specific pollutants), namely, total nitrogen (as N),
total phosphorus (as P), rate of flow, suspended solids, PH, Chemical oxygen
demand (COD), ammonia nitrogen (NH3-N), and five-day biochemical oxygen
demand (BOD5)
Exhaust gas. According to the Volatile Organic Unorganized Emission Control
Standard (GB 37822–1–2019), Development Zone Energy should apply for a
pollutant discharge permit and detect pollutants. Main types of atmospheric
pollutants: particulate matter, non-methane total hydrocarbons
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: 1 sewage, at the north entrance
of the refrigerator Park; 22 exhaust gas, at the refrigerator block A(10), block
B(10), and Phase III Factory(2)
④ Concentration 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:
Total Approved Whether it is
Name of Concentration amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 101.603 mg/L 17.2 tons 300 tons No
2 Ammonia 12.523 mg/L 2.13 tons 28 tons No
nitrogen
3 total nitrogen 33.95 mg/L 5.68 tons 20 tons No
4 total phosphorus 1.635 mg/L 1.082 tons 5 tons No
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
52 Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
(4) Wuhan water heater
① Main 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 (BOD5), PH,
anionic surface active agent, total phosphorus, and animal and vegetable oils.
② Way 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:
Total Approved Whether it is
Name of Concentration amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 40 mg/L 4.58 tons 9.075 ton No
2 Ammonia 0.336 mg/L 0.0385 tons 0.9075 ton No
nitrogen
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(5) Wuhan freezer
① Main 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 (BOD5),
PH, anionic surface active agent, total phosphorus, and animal and vegetable
oils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Interim Report 2022 53
Section V Environmental and Social Responsibilities
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 amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 46 mg/L 0.96 tons 4.3628 tons No
2 Ammonia 0.497 mg/L 0.01 tons 0.4365 ton No
nitrogen
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962–2015)
(6) Dalian Refrigerator
① Main pollutants:
Wastewater. According to the Environmental Impact Report Form of
Construction Project, a total of 6 types of pollutants should be tested, namely, PH,
COD, total phosphorus, suspended solids, total nitrogen and petroleum.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, energy wastewater plant,
pipeline discharge
④ Concentration and total amount of discharge and approved total amount of
discharge:
The concentration and total amount of pollutant discharge subject to approval
for the total amount are as follows:
Whether it is
Name of Concentration of Total amount Approved total amount of excessive
No. pollutant discharge of discharge discharge discharge
1 COD 0mg/L 0 tons Pollutant discharge permit No
management, no requirements
regarding the total amount
2 Ammonia 0mg/L 0 tons Pollutant discharge permit No
nitrogen management, no requirements
regarding the total amount
⑤ Pollutant discharge standards implemented: Integrated Wastewater Discharge
Standard of Liaoning Province (DB 21/1627–2008)
54 Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
(7) Jiaozhou Air-Conditioning
① Main pollutants:
Hazardous waste. According to the national directory, 10 types of hazardous waste
detected are namely: waste oil, sludge, slag powder, computer boards, activated
carbon, cotton filters, lightning tubes, soldering flux buckets, paint buckets and
packaging bags.
② Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposal.
③ Total amount of discharge and approved total amount of discharge:
Total amount
Total amount of the Whether it is
of transfer management excessive
No. Name of hazardous waste (tons) plan (tons) discharge
1 Packaging bags 0.08 0.5 no
2 Waste oil 17.7 40 no
3 Slag powder 15.48 30 no
4 Forklift battery 17.92 22 no
5 Sludge 3.68 5 no
6 Paint buckets 1 4 no
④ Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste
(8) Huangdao Special Refrigerator
① Main pollutants:
Organic exhaust gas. According to legislative requirements, Development Zone
Energy should apply for a pollutant discharge permit and detect the primary
type of pollutant in the atmosphere, namely non-methane hydrocarbon (VOC),
with the maximum concentration of discharge not exceeding 60mg/m A
qualified third-party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a quarterly basis.
② Way of discharge: Continuous discharge
③ Number and distribution of discharge outlets: Four in total, one absorption exhaust
port at the northeast corner of the plant roof, and two welding exhaust ports
and one foam exhaust port at the west side of the plant roof
Haier Smart Home Co., Ltd. Interim Report 2022 55
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount of
discharge: No control regarding the total amount of discharge of organic
exhaust gas
Whether it is
Name of Concentration of Total amount Approved total amount of excessive
No. pollutant discharge of discharge discharge discharge
1 VOC 2.8mg/m 0.52 tons No control regarding the total no
amount of discharge of VOC
⑤ Implementation of the Volatile Organic Compounds Discharge Standards Part 7:
Other Industries in Shandong Province (DB37/2801.7 –2019)
(9) Tianjin Washing Machine
① Main pollutants:
Wastewater. According to legislative requirements, a pollutant discharge permit
should be applied and enforced, and 4 types of pollutants should be tested, namely,
COD, ammonia nitrogen, PH and suspended solids.
② Way of discharge: Indirect discharge
③ Number and distribution of discharge outlets: one, the wastewater 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
Name of Concentration of Total amount Approved total amount of excessive
No. pollutant discharge of discharge discharge discharge
1 COD 23mg/L 0.177 tons 34.742 tons no
2 Ammonia 0.628mg/L 0.0048 tons 3.127 tons no
nitrogen
⑤ Pollutant discharge standards implemented: Integrated wastewater discharge
standard (DB12356–2018)
56 Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
2. Construction and operation of pollution prevention and treatment facilities:
√ Applicable □ Not Applicable
Zhengzhou Air-conditioning, Jiaozhou Air-Conditioning, Wuhan Freezer, Wuhan Water
Heater and Tianjin Washing Machine have one, one, one, two and one wastewater
treatment plants with a designed treatment capacity of 550 tons/day, 300 tons/day, 550
tons/day, 300 tons/day and 260 tons/day, and 300 tons/day, respectively; there is one
wastewater treatment plant in Dalian Haier Park responsible for collecting and treating the
wastewater produced by the Dalian Park Companies with a wastewater treatment capacity
of 300 tonnes/day. The construction, maintenance and daily operation of all wastewater
treatment facilities are conducted in accordance with the requirements of national and local
environmental laws and regulations. Information on all wastewater discharge is subject 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
Company fully promotes all plants to install exhaust treatment facilities and VOCs online
monitoring facilities. All equipment is operating normally and exhaust produced is treated by
the prevention and treatment facilities before compliant release and is monitored.
3. Environmental impact assessment of construction projects and other environmental
protection administrative permits
√ Applicable □ Not Applicable
The Company and its subsidiaries execute construction project implementation 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
Haier Smart Home Co., Ltd. Interim Report 2022 57
Section V Environmental and Social Responsibilities
Smart Energy System. In March 2017, the Company passed the upgraded certification in
relation to ISO14001 environment management system. In May 2021, a professional
certification firm was appointed to conduct a review and audit on the operation of
ISO14001 system in 2020, where satisfactory results were obtained to demonstrate its
good operating condition; In May 2022, a second review and audit was conducted on the
operation of the system in 2021.
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
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.
58 Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
Through Haier Smart Energy Center, an industry leading energy big data analysis system, the
Company implements centralized dynamic monitoring and digitalized management 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 interconnection factory. With the recycling business as the starting
point, we tapped into the disintegration process and implemented extended accountability for
household appliance manufacturers. The measure will significantly boost the efficiency of
resource utilization to achieve sustainable development.
Haier Smart Home Co., Ltd. Interim Report 2022 59
Section V Environmental and Social Responsibilities
(V) Measures taken during the Reporting Period to reduce its carbon emission 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.
2. Particulars on the efforts to consolidate and expand its achievements in poverty
alleviation and rural area invigoration
√ Applicable □ Not Applicable
In accordance with the national targeted poverty alleviation plan and documentation
requirements, the Company emphasizes poverty alleviation and conducts targeted poverty
alleviation within the authority granted on the general meeting in respect of, among others,
donations.
For years, the Company has made genuine contributions to education to improve the basic
cultural quality of people in poverty and skills of families in poverty, with an emphasis on
shoring up the weak link of the education sector and stopping inter-generational poverty.
As of now, the Company, Haier Group Companies (the effective controller of the Company)
and its subordinate enterprises have constructed over 300 hope primary schools and 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 focuses on poverty alleviation in agricultural development and
public welfare fund support to actively respond to the government’s call for social
responsibility fulfillment. In the first half of 2022, the Company spent approximately
RMB6.62 million on targeted poverty alleviation.
60 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
I. FULFILLMENT STATUS OF UNDERTAKINGS
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period
√ Applicable □ Not Applicable
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Undertaking Eliminate the property Haier Group During the period from September 2006 to May 27 September Yes Yes
related to right defects in land Corporation 2007, the Company issued shares to Haier 2006,
significant etc. Group Corporation (“Haier Group”) to purchase long-term
reorganization 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).
With regard to the land and property required in
the operation of 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 ) (the “Covenantees”), Haier Group made an
undertaking (the “2006 Undertaking”). According
to the content of 2006 Undertaking and then
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 competition Haier Smart Home Prior to the Transaction (hereinafter “the 31 July 2020 Yes Yes
issues Co., Ltd. Transaction” refers to the transaction in relation long-term
to the privatisation of Haier Electronics by Haier
Smart Home), Haier Electric was a controlling
subsidiary of the Company and did not compete
with the Company; after the completion of the
Transaction, Haier Electric became a wholly-
owned or controlling subsidiary of the Company
and no new 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.
Haier Smart Home Co., Ltd. Interim Report 2022 61
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address connected Haier Group 1. The Transaction constitutes a connected 29 July 2020, Yes Yes
transactions Corporation transaction and the connected transaction long-term
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 measures to minimize and
regulate the connected transactions with the listed
company, take the initiative to safeguard the
interests of the listed company and all 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 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.
62 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address competition Haier Group 1. The Company and its controlling subsidiary, Haier 29 July 2020, Yes Yes
issues Corporation COSMO Co., Ltd., were principally engaged in long-term
investment business during the reporting period,
and the Company and its controlling subsidiary,
Haier COSMO Co., Ltd. (including its subsidiaries
and entities with more than 30% shareholding), have
no real or potential competition with Haier Smart
Home; 2. the domestic and overseas white goods
businesses and assets held by the Company
(including the Company’s subsidiaries and entities
with more than 30% shareholding) have been
injected into Haier Smart Home through asset
consolidation and equity transfer in accordance with
the 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 Company’s subsidiaries and
entities with more than 30% shareholding) and Haier
Smart Home do not have any 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
competition with Haier Smart Home.
Haier Smart Home Co., Ltd. Interim Report 2022 63
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Others Haier Group Upon completion of the Transaction, the Company 29 July 2020, Yes Yes
Corporation will strictly comply with the Company Law, the long-term
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 shareholders’ rights and fulfill
shareholders’ obligations, refrain from taking
advantage of its shareholding position 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
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
company 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.
64 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address connected HCH (HK) 1. The Transaction constitutes a connected 29 July 2020, Yes Yes
transactions INVESTMENT transaction and the connected transaction long-term
MANAGEMENT procedures performed under the Transaction are in
CO., LIMITED 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 minimize and
regulate the connected transactions with the listed
company, take the initiative to safeguard the
interests of the listed company and all 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
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
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 Smart Home Co., Ltd. Interim Report 2022 65
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Undertaking Eliminate the property Haier Group Haier Group Corporation undertakes that it will 24 December Yes Yes
related to right defects in land Corporation assure Haier Smart Home and its subsidiaries of 2013,
refinancing etc. the constant, stable and unobstructed use of the long-term
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 reasonable and
practicable measures to support the impaired
party to recover to normal operation before the
occurrence of loss. Upon the expiration of
relevant leasing period, Haier Group Corporation
will grant or take practicable measures to assure
Haier Smart Home and its subsidiaries of priority
to continue to lease the property at a price not
higher than the rent in comparable market at
that time. Haier Group Corporation will assure
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 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.
66 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Eliminate the property Haier Smart Home The Company undertakes that it will eliminate the 24 December Yes Yes
right defects in land Co., Ltd. property rights defects of the Company and main 2013, eight
etc. subsidiaries within five years with reasonable years
business effort since 24 December 2013, to
achieve the legality and compliance of the
Company and main subsidiaries in terms of land
and property. For details, please refer to the
Announcement of Qingdao Haier Co., Ltd. on the
Formation, Current Situation of the Defective
Property, the Influence on Operation of Issuer
Caused by Uncertainty of Ownership, Solution
for the Defect and Guarantee Measures (L2014–
005) published by the Company on the four
major securities newspapers and the website of
Shanghai Stock Exchange on 29 March 2014.
As at the end of 2018, the Company has
resolved the property defects of itself and its
eight major subsidiaries. After the approval of 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 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.
Undertakings Others Haier Smart Home The Company will not provide loans or any other 15 September Yes Yes
related to Co., Ltd forms of financial assistance, including 2021/28 June
equity incentive guaranteeing their loans, to any incentive 2022, the
recipient for acquiring relevant stock options completion of
under this incentive plan. equity
incentive
implementation
Other Asset injection Haier Group Inject the assets of Haier Photoelectric to the December 2015 Yes Yes
undertakings Corporation Company or dispose such assets through other to June 2025
ways according to the requirements of the
domestic supervision before June 2025. For
more details, please refer to the Announcement
of Haier Smart Home Co., Ltd. on the Changes
of Some Commitments on Asset Injection
(L2020–024) published on the four major
securities newspapers and the website of
Shanghai Stock Exchange on 30 April 2020.
Haier Smart Home Co., Ltd. Interim Report 2022 67
Section VI Significant Issues
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
68 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
X. SIGNIFICANT RELATED-PARTY TRANSACTIONS
(I) Related-party transactions relating to daily operation
1. Matters that have been disclosed in temporary announcements and with 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” 《 关于提请股东大会授权董事会及其授权人士签署2020–2022
年关联交易框架协定的议案》) 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” 《关 于
签署关联交易框架协定的议案》) 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” 《海尔智家股份有限公司关于与海尔集
团公司续签〈金融服务框架协定〉暨预计关联交易额度的议案》) 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 regarding the resolutions of
the meetings.
For the actual performance of the Company’s connected transactions in the first half of 2022,
please refer to “XII. Related parties and related-party transactions” under section X — Financial
and Accounting Report set out in this regular report.
3. Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022 69
Section VI Significant Issues
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matters disclosed in temporary announcements and with no subsequent progress
or change
√ Applicable □ Not applicable
Summary of matters Query index
The acquisition of 100% equity interest in For details, please refer to the
Qingdao TAB Robot Technology Co., LTD. Announcement of Haier Smart
and connected transaction: In order to Home Co., Ltd. on the
establish the competitiveness of service robots Acquisition of 100% Equity
for household cleaning and promote the Interest in Qingdao TAB Robot
development of the Company’s cleaning Technology Co., LTD. by a
appliance business, as well as to enhance its Subsidiary and Connected
corporate governance and reduce routine Transaction disclosed on 29
connected transactions, Qingdao Haier Smart April 2022
Life Electric Co., Ltd., a wholly-owned subsidiary
of the Company, acquired 100% equity interest
in Qingdao TAB Robot Technology Co., LTD.,
which was owned by Qingdao Haier Interconnect
Technology Co., Ltd., at a consideration of
RMB125.0 million in cash.
The transfer of 25% equity interest in For details, please refer to the
Qingdao Haier Mold Co., Ltd. and Announcement of Haier Smart
connected transaction: In order to focus on Home Co., Ltd. on the Transfer
the smart home appliance business, optimize of 25% Equity Interest in
resource allocation and generate investment Qingdao Haier Mold Co., Ltd. by
income, Haier Shareholdings (Hong Kong) a Subsidiary and Connected
Limited, a wholly-owned subsidiary of the Transaction disclosed on 29 April
Company, transferred 25% equity interest in 2022
Qingdao Haier Mold Co., Ltd. to Qingdao Haier
Mold Smart Cloud Technology Co., Ltd., at a
consideration of RMB277.0 million in cash.
70 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
□ Applicable √ 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
Haier Smart Home Co., Ltd. Interim Report 2022 71
Section VI Significant Issues
(V) Financial business between the Company and the finance company with which
it has a related relationship, the company’s controlling finance company and
related parties
√ Applicable □ Not applicable
1. Deposit business
√ Applicable □ Not applicable
Unit and Currency: RMB
Changes of the period
Balance as at the Total amount Total amount
Maximum daily Range of deposit beginning of the deposited during withdrawn during Balance as at the
Related party Relationship deposit limit interest period the period the period end of the period
Haier Finance Co., Subsidiary of Haier 32 billion 0.385% to 3.5% 28,744,602,432.65 225,622,196,116.58 222,369,714,439.54 31,997,084,109.69
Ltd. Group
Total / / / 28,744,602,432.65 225,622,196,116.58 222,369,714,439.54 31,997,084,109.69
2. Lending business
√ Applicable □ Not applicable
Unit and Currency: RMB
Changes of the period
Total amount Total amount
Balance as at deposited withdrawn Balance as at
Range of loan the beginning during the during the the end of the
Related party Relationship Loan limit interest of the period period period period
Haier Finance Subsidiary of 7 billion 1.81%–2.00% 336,507,659.12 53,834,130.12 282,673,529.00
Co., Ltd. Haier Group
Total / / / 336,507,659.12 53,834,130.12 282,673,529.00
72 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
3. Trustee business or other finance businesses
√ Applicable □ Not applicable
Unit and Currency: RMB
Actual number
Related party Relationship Type of business Total amount of occurrence
Haier Finance Co., Subsidiary of Haier Foreign exchange 5.5 billion 188,966,929.21
Ltd. Group derivatives
products
Haier Finance Co., Subsidiary of Haier Service charge 80 million 13,688,276.03
Ltd. Group
4. Others
□ Applicable √ Not applicable
(VI) Other material related transactions
□ Applicable √ Not applicable
(VII) Others
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022 73
Section VI Significant Issues
XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
1 Trusteeship, contracting and leasing
□ Applicable √ Not applicable
2 Significant guarantees performed and outstanding during the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMB10’000
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date of
Relationship occurrence Whether
between the of the Whether the Overdue Whether Related-
guarantor guarantee Commencement Expiry date Status of guarantee Whether the amount of there is a party
and the listed Secured Amount of (date of date of of Type of principle Collateral has been guarantee the counter- guarantee
Guarantor company party guarantee agreement) guarantee guarantee guarantee liabilities (if any) fulfilled is overdue guarantee guarantee or not Relationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period 1,133,669
Total balance of guarantees for subsidiaries at the end of the reporting period (B) 1,013,666
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B) 1,013,666
Ratio of total amount of guarantees to net assets of the Company (%) 11.8
Including:
Amount of guarantees for shareholders, ultimate controllers and their related parties (C) 0
Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) 210,252
The amount of total amount of guarantee in excess of 50% of net assets (E) 0
Total amount of the above three guarantees (C + D + E) 210,252
Explanation of possibly bearing related discharge duty for premature guarantees Not applicable
Explanation of guarantee status None
3 Other major contracts
□ Applicable √ Not Applicable
74 Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
XII. STATEMENT ON OTHER SIGNIFICANT EVENTS
√ Applicable □ Not Applicable
(1) Entrusted wealth management: By the end of the reporting period, the balance of the Company’s
entrusted wealth management amounted to RMB3.692 billion, including two parts: ① temporarily-
idle fundraising wealth management: at the end of December 2018, the Company’s proceeds for
the issuance of convertible corporate bonds were fully landed. In order to improve the yield of
temporarily-idle funds, the Company intended to carry out cash management with the amounts not
exceeding RMB0.5 billion after approved by the Board of Directors. By the end of the reporting
period, the balance of the entrusted wealth management amounted to RMB75 million; ②
Temporary-idle funds wealth management by the Company and certain subsidiaries: Under the
premise of ensuring sufficient capital required by the principal operating activities and daily
operations, the Company and certain subsidiaries purchased some low risk 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 RMB3.617 billion.
(2) Progress of the A-share repurchase: On 30 March 2022, the Company convened the 27th 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 A Shares of Haier Smart Home Co., Ltd.
It approved the Company to use its own funds to repurchase a portion of A shares of the
Company by way of centralised bidding. The repurchase price is no more than RMB35 per share
and the proposed total repurchase amount is no more than RMB3.0 billion and no less than
RMB1.5 billion. The period of this repurchase is within 12 months from the date the Board
considered and approved the resolution of repurchase of shares. As at the end of the reporting
period, the Company had repurchased a total of 55,702,939 shares, representing 0.59% of the
total share capital of the Company. The highest price purchased was RMB26.00 per share and
the lowest price was RMB23.50 per share, and the amount paid was RMB1,406,719,792.04. For
details, please refer to the announcements on the related progress disclosed by the Company on
a monthly basis.
(3) Progress of the Shareholding Increase by shareholders: On 8 March 2022, Qingdao Haichuangzhi
Management Consulting Enterprise (Limited Partnership) (hereinafter referred to as
“Haichuangzhi”), a concerted actor of Haier Group Corporation (the actual controller of Haier
Smart Home Co., Ltd.), informed the Company that Haichuangzhi intended to increase its
shareholding of the Company’s A shares within the time frame permitted by relevant laws and
regulations in the next 6 months, with the amount no less than RMB200 million and no more
than RMB350 million (including the increased shares of the Shareholding Increase). As at the end
of the reporting period, the Shareholding Increase was completed. Haichuangzhi’s shareholding of
the Company’s A shares increased by 15,712,200 accumulatively, with an amount of
shareholding increase of approximately RMB347,719,237.42. For details, please refer to the
Announcement of Haier Smart Home Co., Ltd. on the Increase in Shareholding of the Company
by Actual Controller’s Concerted Actor, and the Announcement of Haier Smart Home Co., Ltd.
on Implementation Result of the Increase in Shareholding of the Company by Actual Controller’s
Concerted Actor disclosed on 9 March 2022 and 19 March 2022 respectively, and other related
announcements.
Haier Smart Home Co., Ltd. Interim Report 2022 75
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 shares After changes
Issue Reserves
Percentage of new Bonus converted to Percentage
Amount (%) shares shares shares Others Sub-total Amount (%)
I. Restricted shares
1. State-owned
shares — — — — — — — — —
2. Shares held by
state-owned
legal entities — — — — — — — — —
3. Other domestic
entities held
shares — — — — — — — — —
Including:
Shares held by
domestic
non-state-
owned legal
entities — — — — — — — — —
Shares held by
domestic
individuals — — — — — — — — —
4. Shares held by
foreign entities — — — — — — — — —
Including:
Shares held by
offshore
legal entities — — — — — — — — —
Shares held by
offshore
individuals — — — — — — — — —
II. Non-restricted
shares 9,398,704,530 100.00 41,413,600 — — 6,673,840 48,087,440 9,446,791,970 100.00
1. Ordinary shares
in RMB 6,308,552,654 67.12 — — — — — 6,308,552,654 66.78
2. Domestically
listed
foreign-owned
Shares — — — — — — — — —
3. Offshore listed
foreign-owned
Shares 3,090,151,876 32.88 41,413,600 — — 6,673,840 48,087,440 3,138,239,316 33.22
4. Others — — — — — — — — —
III. Total shares 9,398,704,530 100.00 41,413,600 — — 6,673,840 48,087,440 9,446,791,970 100.00
76 Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
2. Statement on the changes in shares
√ Applicable □Not Applicable
(1) H-share convertible bonds: On 27 October 2020, the China Securities Regulatory
Commission issued the “Reply to the Approval of Issuance of Overseas Listed Foreign
Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《关 于 核 准
海尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng Jian
Xu Ke [2020] No. 2768), which approved that: (1) the Company to issue not more
than 2,856,526,138 overseas listed foreign shares (including additional shares issued
to holders of convertible corporate bonds not exceeding HK$8.0 billion or equivalent
in foreign currencies upon the exercise of the convertible rights), with a par value of
RMB1 each, all of which are ordinary shares. After the completion of this issuance,
the Company can be listed on the main board of the Stock Exchange of Hong Kong
Limited (hereinafter referred to as the “Hong Kong Stock Exchange”); (2) the 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
Electronics (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 amounting to HK$7,993 million became valid and in
effect immediately after the listing. During the reporting period, HK$124,000,000 of
the convertible bonds were converted into a total of 6,673,840 H shares of the
Company and the outstanding amount was HK$275,000,000.
(2) Placing of H share: Pursuant to the Resolution on Granting General Mandate to the
Board of Directors on Additional Issuance of H shares of the Company considered
and passed at the Company’s 2020 Annual General Meeting, the Resolution of Haier
Smart Home Co., Ltd. on the Issue and Listing of New H Shares on the Main Board
of the Stock Exchange of Hong Kong Limited considered and passed at the 23rd
meeting of the 10th session of the Board of Directors of the Company, etc. and the
China Securities Regulatory Commission’s “Reply to the Approval of Issuance of
Overseas Listed Foreign Shares by Haier Smart Home Co., Ltd.” 《关于核准海尔智家
股份有限公司发行境外上市外资股的批复》) (Zheng Jian Xu Ke [2021] No. 4055), the
Company can additionally issue no more than 73,000,000 overseas listed foreign
shares (H shares), with a par value of RMB1 each, all of which are ordinary shares.
On the 26th meeting of the 10th session of the Board of Directors of the Company
on 11 January 2022, the Resolution on the Placing of New H Shares Under the
General Mandate of Haier Smart Home Co., Ltd. was considered and passed and
41,413,600 H shares will be issued by the Company.
Haier Smart Home Co., Ltd. Interim Report 2022 77
Section VII Changes in Shares and Information About Shareholders
On 21 January 2022, in accordance with the aforesaid resolutions and reply, the
Company issued 41,413,600 overseas listed foreign shares (H shares). The new
shares accounted for 0.439% of the total number of issued shares and 1.448% of the
total number of H shares, respectively, upon completion of placing and the Stock
Exchange of Hong Kong Limited has granted the approval for the listing of and
permission to deal in the shares on its Main Board.
Based on the above, during the reporting period, the share capital of the Company
was changed from 9,398,704,530 shares at the beginning of the reporting period to
9,446,791,970 shares.
3. Effect of changes in shares on the financial indicators such as earnings per 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 2022, the Company recorded a net profit attributable to
shareholders of the parent company of RMB7,949,084,472.70 and equity attributable to
owners of the parent company as at the end of the reporting period of
RMB86,251,016,004.21, representing earnings per Share of RMB0.841 and net asset per
Share of RMB9.130, based on the total share capital as at the end of the reporting period
of 9,446,791,970 Shares; and earnings per Share of RMB0.841 and net asset per Share of
RMB9.129, based on the total share capital as at the date of disclosure of the interim
report of 9,448,155,076 Shares.
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
□ Applicable √ Not Applicable
(II) Changes in shares with selling restrictions
□ Applicable √ Not Applicable
II. INFORMATION ON SHAREHOLDERS
(I) Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period 150,163
Total numbers of preferential shareholders with restoration of voting rights 0
by the end of the reporting period
78 Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable
shares (or shares without selling restrictions) by the end of the reporting
period
Unit: share
Shareholdings of top ten shareholders
Increase/
decrease Number of Number of
during the shares held shares held
Name of shareholder reporting at the end of Percentage with selling Status of shares pledged, Nature of
(full name) period the period (%) restrictions marked or frozen shareholder
Status Number
HKSCC NOMINEES LIMITED — 2,239,863,660 23.71 — Unknown — Unknown
Haier COSMO Co., Ltd. — 1,258,684,824 13.32 — None — Domestic non-state-
(海尔卡奥斯股份有限公司) owned legal entity
Haier Group Corporation — 1,072,610,764 11.35 — None — Domestic non-state-
owned legal entity
Hong Kong Securities Clearing — 715,059,902 7.57 — None — Unknown
Co., Ltd.
HCH (HK) INVESTMENT — 538,560,000 5.70 — None — Foreign legal entity
MANAGEMENT CO., LIMITED
China Securities Finance — 182,592,654 1.93 — None — Unknown
Corporation Limited
Qingdao Haier Venture & — 172,252,560 1.82 — None — Domestic non-state-
Investment Information Co., owned legal entity
Ltd. (青岛海尔创业投资咨询
有限公司)
Qingdao Haichuangzhi — 118,724,416 1.26 — None — Domestic non-state-
Management Consulting owned legal entity
Enterprise (Limited
Partnership) (青岛海创智管理
咨询企业（有限合伙）)
ALIBABA INVESTMENT LIMITED — 83,823,993 0.89 — Unknown — Foreign legal entity
China Merchant Bank Co., Ltd. — 78,018,741 0.83 — None — Unknown
— Xingquan Herun mixed
securities investment fund
Haier Smart Home Co., Ltd. Interim Report 2022 79
Section VII Changes in Shares and Information About Shareholders
Shareholdings of top ten shareholders without selling restrictions
Number of
tradable shares
held without
selling
Name of shareholder restrictions Class and number of shares
Class Number
HKSCC NOMINEES 2,239,863,660 Overseas listed foreign 2,239,863,660
LIMITED shares
Haier COSMO Co., Ltd. 1,258,684,824 RMB ordinary 1,258,684,824
(海尔卡奥斯股份有限公
司)
Haier Group 1,072,610,764 RMB ordinary 1,072,610,764
Corporation
Hong Kong Securities 715,059,902 RMB ordinary 715,059,902
Clearing Co., Ltd.
HCH (HK) INVESTMENT 538,560,000 Overseas listed foreign 538,560,000
MANAGEMENT CO., shares
LIMITED
China Securities Finance 182,592,654 RMB ordinary 182,592,654
Corporation Limited
Qingdao Haier Venture & 172,252,560 RMB ordinary 172,252,560
Investment Information
Co., Ltd.
(青岛海尔创业投资咨
询有限公司)
Qingdao Haichuangzhi 118,724,416 RMB ordinary 118,724,416
Management
Consulting Enterprise
(Limited Partnership)
(青岛海创智管理咨询
企业（有限合伙）)
ALIBABA INVESTMENT 83,823,993 Overseas listed foreign 83,823,993
LIMITED shares
China Merchant Bank 78,018,741 RMB ordinary 78,018,741
Co., Ltd. — Xingquan
Herun mixed
securities investment
fund
Explanation on The repurchase accounts of the Company held a total of
repurchase account of 109,754,498 shares
top ten shareholders
80 Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
Number of
tradable shares
held without
selling
Name of shareholder restrictions Class and number of shares
Class Number
Explanation on Nil
delegated voting
rights, entrusted
voting rights,
abstained voting
rights of the above
shareholders
Related parties or (1) Haier COSMO Co., Ltd. ( 海 尔 卡 奥 斯 股 份 有 限 公 司 ) is a
parties acting in subsidiary of Haier Group Corporation. Haier Group
concert among the Corporation holds 51.20% of its equity. Qingdao Haier
aforesaid Venture & Investment Information Co., Ltd. (青 岛 海 尔 创 业 投
shareholders 资 咨 询有 限公 司 ), HCH (HK) INVESTMENT MANAGEMENT
CO., LIMITED and Qingdao Haichuangzhi Management
Consulting Enterprise (Limited Partnership) (青岛海创智管理咨询
企业（有限合伙）) 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: (1) HKSCC NOMINEES LIMITED is the Collection Account for the shareholders of the Company’s H-shares, which is
the original data provided by the securities registration agency of Hong Kong, China to the Company after the
merger according to local market practices and technical settings, not representing the ultimate shareholder.
(2) As at the end of the reporting period, Qingdao Haichuangzhi Management Consulting Enterprise (Limited
Partnership) ( 青岛 海创 智管 理咨 询 企业 （有 限 合 伙 ）) engaged in refinancing and securities lending business,
involving a total of 1,898,000 shares, whilst the ownership of which had not been transferred. The actual number
of shares held by it totaled 120,622,416 shares.
Number of shares held by top ten shareholders with selling restrictions and the selling
restrictions
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 81
Section VII Changes in Shares and Information About Shareholders
(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares
□ Applicable √ Not Applicable
III. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT
(I) Changes of shareholding of current and retired directors, supervisors and senior
management during the reporting period
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
(II) Incentive share option granted to directors, supervisors and senior management
during the reporting period
√ Applicable □ Not Applicable
Unit: 10,000 shares
Number of Exercisable Shares from
Number of stock options shares stock option Number of
stock options newly granted options exercised stock options
held at the during the during the during the held at the
beginning of reporting reporting reporting end of the
Name Position the period period period period period
Li Huagang Director 91.39 0 0 0 91.39
Gong Wei Director 45.70 0 0 0 45.70
Xie Juzhi Senior Management 91.39 0 0 0 91.39
Li Pan Senior Management 45.70 0 0 0 45.70
Song Yujun Senior Management 31.21 0 0 0 31.21
Zhao Yanfeng Senior Management 46.82 0 0 0 46.82
Huang Xiaowu Senior Management 45.70 0 0 0 45.70
Wu Yong Senior Management 22.85 0 0 0 22.85
Li Yang Senior Management 45.70 0 0 0 45.70
Guan Jiangyong Senior Management 22.85 0 0 0 22.85
Liu Xiaomei Senior Management 0 11.65 0 0 11.65
Total / 489.31 11.65 0 0 500.96
82 Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
(III) Other explanations
□ Applicable √ Not Applicable
IV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATE
CONTROLLER
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 83
Section VIII Relevant Information of
Preferred Shares
□ Applicable √ Not Applicable
84 Haier Smart Home Co., Ltd. Interim Report 2022
Section IX Relevant Information of
Corporate Bonds
I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIAL
CORPORATE DEBT FINANCING INSTRUMENTS
□ Applicable √ Not Applicable
II. CONVERTIBLE CORPORATE BOND
√ Applicable □ Not Applicable
(1) Convertible bond issue
On 27 October 2020, CSRC issued “Reply to the Approval of Issuance of Overseas Listed
Foreign Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《关于核准海
尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng Jian Xu Ke [2020]
No. 2768) (hereinafter referred to as “CSRC Reply”) to approve: (1) Haier Smart Home to issue
not more than 2,856,526,138 overseas listed foreign shares (including shares to be issued
pursuant to the exercise of conversion rights by the holders of convertible corporate bonds with
an amount of not more than HK$8.0 billion or equivalent in any foreign currency) with a par 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$8.0 billion or equivalent in any foreign currency, convertible into
overseas listed foreign shares of the issuer. Pursuant to this and approval from relevant parties,
2,448,279,814 H-shares and convertible bonds (exchangeable bonds of HK$8.0 billion issued in
November 2017 were converted into convertible bonds, resulting in valid convertible bonds of
HK$7.993 billion, which were convertible into H-shares of the Company) were issued by the
Company and Harvest International Company, a wholly-owned subsidiary of the Company, on the
Hong Kong Stock Exchange on 23 December 2020, respectively. Please refer to the prospectus
and other relevant documents disclosed by the Company in the Hong Kong market during the
reporting period and the Report on the Implementation of Significant Asset Acquisition and
Connected Transactions 《重大资产购买暨关联交易实施情况报告书》) and other documents
disclosed by the Company on 26 December 2020 for details.
For the above-mentioned bonds, 105.11% of the remaining par value of the bonds were repaid
in an one-off repayment of principal and interest upon maturity.
(2) Convertible bond holders and guarantors for the Reporting Period
Name of convertible corporate bond Harvest International Company
HK$8,000,000,000 Zero Coupon
Guaranteed Convertible Bonds due
2022 (hereafter, “H Share Convertible
Bonds”)
Number of convertible bond holders as at the end 1
of the period
Guarantor of the Company’s convertible bonds Haier Smart Home Co., Ltd.
Material changes of the profitability, asset and Nil
credibility of the guarantor
Haier Smart Home Co., Ltd. Interim Report 2022 85
Section IX Relevant Information of Corporate Bonds
Top 10 holders of convertible bonds are as follows:
Holdings as at the Holding
end of the period percentage
Name of holder of corporate convertible bonds (RMB) (%)
HSBC Nominees (Hong Kong) Limited 275,000,000 100
Note: (1) the aforementioned bonds as at the end of the period are denominated in Hong Kong Dollar; (2) H Share Convertible
Bonds of the Company are held by HSBC Nominees (Hong Kong) Limited as the sole legal holder, who is not 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 party.
(3) Conversion of convertible bonds for the Reporting Period
Unit and Currency: HKD
Name of convertible Prior to the After the
corporate bond changes Increase/decrease changes
Conversion Redemption Resale
H Share Convertible
Bonds 399,000,000 124,000,000 — — 275,000,000
(4) Cumulative conversion of convertible bond for the Reporting Period
Currency: HKD
Name of convertible corporate bond H Share Convertible Bonds
Amount of conversion for the Reporting Period (HKD) 124,000,000
Number of conversion for the Reporting Period (Shares) 6,673,840
Cumulative number of conversion (Shares) 409,884,729
Percentage of cumulative number of conversion to total
issued shares of the Company prior to the conversion (%) 4.54
Outstanding amount (HKD) 275,000,000
Percentage of outstanding amount to total amount of
convertible bonds issued (%) 3.44
(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 of the Reporting
Period 18.58
86 Haier Smart Home Co., Ltd. Interim Report 2022
Section IX Relevant Information of Corporate Bonds
(6) Liabilities, change in credit and cash arrangements of repayment in the coming
year of the Company
As at the end of the reporting period, liabilities of the Company amounted to
RMB139,076,271,000, in which current liabilities amounted to RMB127,717,442,200 and non-
current liabilities amounted to RMB11,358,828,800.
The Company remains stable in every operating condition with reasonable asset structure and
good credibility, and is capable of providing stable and sufficient working capital for the
repayment of the interests and principal of convertible corporate bonds in the coming year.
(7) Other information on convertible bonds
On 23 November 2017, the first 2017 Extraordinary General Meeting of the Company adopted
the Resolution of Qingdao Haier Co., Ltd. on the Scheme for Public Offering of Convertible
Corporate Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to the
resolution at this general meeting and the approval documents of the China Securities Regulatory
Commission and others, the Company completed the issue of convertible corporate bonds in
December 2018, with a total issue amount of RMB3,007.49 million. The bonds were listed on 18
January 2019, which is referred to as “Haier Convertible Bonds” and its bond code is 110049.
For details, please refer to the Prospectus for the Public Offering of A-share Convertible
Corporate Bonds by Qingdao Haier Co., Ltd. as disclosed on 14 December 2018, and the
Announcement on the Listing of Convertible Corporate Bonds by Qingdao Haier Co., Ltd. as
disclosed on 16 January 2019 and other relevant documents. As the convertible bonds in 2019
met the redemption conditions and the Board of Directors of the Company decided to exercise
the redemption right after consideration and approval, the Company redeemed the balance of the
convertible bonds in full up to the registered amount on redemption registration date. After the
redemption, the convertible bonds of the Company were delisted on 17 December 2019. At present,
the A-share convertible bonds have ceased to be in existence, but the funds raised from the
issuance of the bonds have not been fully utilized. As of 30 June 2022, RMB2,791.68 million of
the funds raised from A-share convertible bonds has been utilized, with a balance of RMB260.91
million (the account balance includes the income generated from the purchase of wealth
management products, interest on demand deposits, foreign exchange gains and losses and the
not-yet-invested capital raised). For details of the use of funds, please refer to the Special Report
on the Deposit and Actual Use of Raised Funds in the First Half of 2022 of Haier Smart Home Co.,
Ltd., which was disclosed on the same date as this report.
Haier Smart Home Co., Ltd. Interim Report 2022 87
Section X Financial Report
I. AUDIT REPORT
□ Applicable √ Not Applicable
II. FINANCIAL STATEMENTS
Consolidated Balance Sheet
30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes Closing balance Opening balance
Current assets:
Monetary funds VII.1 50,316,121,259.28 45,971,035,763.51
Provision of settlement fund
Funds lent
Financial assets held for trading VII.2 2,560,172,076.58 2,786,075,529.09
Derivative financial assets VII.3 163,084,726.42 79,819,974.01
Bills receivable VII.4 8,417,636,171.41 13,354,791,068.29
Accounts receivable VII.5 17,920,101,868.72 14,642,659,450.22
Financing receivables
Prepayments VII.6 868,112,660.47 857,234,399.26
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables VII.7 2,156,760,190.99 1,956,721,621.66
Including: Interest receivable 400,015,260.13 294,379,438.82
Dividend receivable
Financial assets purchased under resale
agreements
Inventories VII.8 41,006,635,494.22 39,901,262,689.59
Contract assets VII.9 280,621,191.36 304,434,294.70
Assets held for sale
Non-current assets due in one year
Other current assets VII.10 4,515,557,117.17 3,920,750,476.57
Total current assets 128,204,802,756.62 123,774,785,266.90
Non-current assets:
Loans and advances granted
Debt investments
Other debt investments
Long-term receivables 306,402,281.56 308,998,755.30
Long-term equity investments VII.11 24,110,645,622.66 23,200,884,340.57
Investments in other equity instruments VII.12 4,852,445,212.91 4,848,709,438.96
88 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Notes Closing balance Opening balance
Other non-current financial assets
Investment properties VII.13 25,624,249.19 24,964,888.48
Fixed assets VII.14 24,242,589,167.64 22,307,090,168.64
Construction in progress VII.15 4,858,973,923.48 4,183,263,398.79
Biological assets for production
Oil and gas assets
Right-of-use assets VII.16 3,664,479,071.10 2,734,678,906.53
Intangible assets VII.17 9,578,002,832.45 9,550,384,743.90
Development cost VII.18 225,378,688.91 227,892,229.13
Goodwill VII.19 22,746,678,157.03 21,827,103,060.76
Long-term prepaid expenses VII.20 686,383,400.01 588,796,706.24
Deferred income tax assets VII.21 1,399,363,197.75 1,857,448,518.29
Other non-current assets VII.22 1,750,990,973.29 2,164,384,013.14
Total non-current assets 98,447,956,777.98 93,824,599,168.73
Total assets 226,652,759,534.60 217,599,384,435.63
Current liabilities:
Short-term borrowings VII.23 13,159,569,303.47 11,226,212,134.39
Borrowings from central bank
Due to banks and other financial
institutions
Financial liabilities held for trading VII.24 79,270,648.00 6,294,014.40
Derivative financial liabilities VII.25 77,066,966.55 80,212,433.24
Bills payable VII.26 27,955,088,267.08 25,023,238,406.72
Accounts payable VII.27 38,977,127,139.49 42,396,109,648.76
Receipts in advance
Contract liabilities VII.28 5,397,435,938.66 10,027,091,593.60
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 3,155,954,164.86 4,115,939,635.24
Taxes payable VII.30 2,748,011,705.59 2,605,508,703.56
Other payables VII.31 22,391,504,810.19 17,533,370,017.01
Including: Interest payable
Dividend payable 4,321,692,240.21 10,639,313.22
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for sale
Non-current liabilities due within one year VII.32 12,490,218,783.46 9,624,339,170.46
Other current liabilities VII.33 1,286,194,473.81 2,238,767,551.40
Total current liabilities 127,717,442,201.16 124,877,083,308.78
Haier Smart Home Co., Ltd. Interim Report 2022 89
Section X Financial Report
Items Notes Closing balance Opening balance
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings VII.34 2,119,243,998.96 3,038,573,824.53
Bonds payable VII.35 334,730,048.82
Including: Preference shares
Perpetual bonds
Lease liabilities VII.36 2,763,944,633.73 1,960,894,981.47
Long-term payables VII.37 49,353,671.92 99,602,707.76
Long-term payables for staff’s
remuneration VII.38 1,172,642,077.88 1,173,151,761.64
Estimated liabilities VII.39 1,776,817,160.27 1,948,565,477.11
Deferred income VII.40 906,543,570.12 852,794,567.20
Deferred income tax liabilities VII.21 2,517,001,943.72 2,121,803,173.83
Other non-current liabilities 53,281,708.05 49,461,683.90
Total non-current liabilities 11,358,828,764.65 11,579,578,226.26
Total liabilities 139,076,270,965.81 136,456,661,535.04
Owners’ equity (or shareholders’
equity):
Paid-in capital (or share capital) VII.41 9,446,791,970.00 9,398,704,530.00
Other equity instruments VII.42 81,340,387.43 118,017,507.59
Including: Preference shares
Perpetual bonds
Capital reserve VII.43 23,820,929,638.40 22,579,374,739.46
Less: treasury stock 3,962,689,830.07 2,424,038,819.70
Other comprehensive income VII.44 1,689,673,248.96 –1,176,851,699.92
Special reserve
Surplus reserve VII.45 3,438,615,909.84 3,438,615,909.84
General risk provisions
Undistributed profits VII.46 51,736,354,679.65 47,917,912,260.15
Total equity attributable to owners (or
shareholders) of the Parent Company 86,251,016,004.21 79,851,734,427.42
Minority shareholders’ interests 1,325,472,564.58 1,290,988,473.17
Total owners’ equity (or shareholders’
equity) 87,576,488,568.79 81,142,722,900.59
Total liabilities and owners’ equity
(or shareholders’ equity) 226,652,759,534.60 217,599,384,435.63
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
90 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Balance Sheet of the Parent Company
30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes Closing balance Opening balance
Current Assets:
Monetary funds 4,514,223,019.08 4,043,535,735.48
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable XVIII.1 594,883,399.99 546,532,442.90
Financing receivables
Prepayments 4,228,627.14 275,052,864.92
Other receivables XVIII.2 18,054,815,019.15 16,245,280,168.41
Including: Interest receivable 85,694,396.74 51,632,471.99
Dividend receivable 4,015,840,000.00 3,615,840,000.00
Inventories 42,213,555.64 1,139,135.32
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 1,576,901,109.42 337,476,209.01
Total current assets 24,787,264,730.42 21,449,016,556.04
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments XVIII.3 52,725,448,184.23 52,513,760,277.77
Investments in other equity instruments 1,615,450,032.92 1,615,450,032.92
Other non-current financial assets
Investment properties
Fixed assets 181,459,945.43 179,789,817.34
Construction in progress 10,549,969.42 17,569,516.17
Biological assets for production
Oil and gas assets
Right-of-use assets 787,591.26 1,217,186.49
Intangible assets 51,705,499.18 55,171,485.39
Development cost
Goodwill
Long-term prepaid expenses 3,120,559.80 3,781,398.54
Deferred income tax assets 159,338,211.77 159,338,211.77
Other non-current assets 798,000,000.00 803,323,404.28
Haier Smart Home Co., Ltd. Interim Report 2022 91
Section X Financial Report
Items Notes Closing balance Opening balance
Total non-current assets 55,545,859,994.01 55,349,401,330.67
Total assets 80,333,124,724.43 76,798,417,886.71
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables 282,420,326.44 183,690,889.86
Receipts in advance
Contract liabilities 12,605,139.93 12,605,139.93
Payables for staff’s remuneration 637,966.36 12,323,670.21
Taxes payable 1,539,895.66 1,747,023.87
Other payables 39,882,708,592.97 34,484,355,762.60
Including: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year 897,357.83 877,995.65
Other current liabilities 8,517,052.13 5,420,156.55
Total current liabilities 40,189,326,331.32 34,701,020,638.67
Non-current liabilities:
Long-term borrowings 2,100,000,000.00
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income 11,730,000.00 19,270,000.00
Deferred income tax liabilities 448,965,654.25 448,965,654.25
Other non-current liabilities
Total non-current liabilities 2,560,695,654.25 468,235,654.25
Total liabilities 42,750,021,985.57 35,169,256,292.92
Owners’ equity (or Shareholders’
equity):
Paid-in capital (or share capital) 9,446,791,970.00 9,398,704,530.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 27,121,923,173.96 25,802,279,483.13
Less: treasury stock 2,902,003,244.14 1,495,170,675.08
Other comprehensive income 618,738,786.66 621,302,944.83
Special reserve
Surplus reserve 2,833,469,684.39 2,833,469,684.39
92 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Notes Closing balance Opening balance
Undistributed profits 464,182,367.99 4,468,575,626.52
Total owners’ equity (or shareholders’
equity) 37,583,102,738.86 41,629,161,593.79
Total liabilities and owners’ equity
(or shareholders’ equity) 80,333,124,724.43 76,798,417,886.71
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022 93
Section X Financial Report
Consolidated Profit Statement
January-June 2022
Unit and Currency: RMB
Items Notes 2022 Interim 2021 Interim
I. Total operating revenue 121,857,522,462.22 111,727,756,211.06
Including: Operating revenue VII.47 121,857,522,462.22 111,727,756,211.06
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations 112,549,408,749.25 104,308,762,442.84
Including: Operating cost VII.47 85,061,133,319.20 78,156,467,866.57
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance
liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges VII.48 357,165,605.43 339,488,659.16
Selling expenses VII.49 17,605,612,224.80 16,731,407,296.02
Administrative expenses VII.50 5,132,033,156.92 5,047,535,410.71
R&D expenses VII.51 4,595,691,525.07 3,738,316,873.21
Financial expenses VII.52 –202,227,082.17 295,546,337.17
Including: Interest expenses 345,810,365.32 363,287,457.45
Interest income 362,045,401.51 264,658,985.86
Add: other income VII.53 546,242,698.94 378,116,328.72
investment income (losses are
represented by “–”) VII.54 1,170,336,743.41 1,136,280,339.22
Including: Investment income 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
are represented by “–”) VII.55 –118,790,175.68 64,269,511.32
Loss on credit impairment (losses are
represented by “–”) VII.56 –258,076,846.14 –44,031,423.21
94 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
Loss on assets impairment (losses are
represented by “–”) VII.57 –707,061,947.81 –653,387,326.88
Gain from disposal of assets (losses are
represented by “–”) VII.58 31,589,207.10 142,414,954.25
III. Operating profit (losses are represented
by “–”) 9,972,353,392.79 8,442,656,151.64
Add: non-operating income VII.59 68,854,227.41 80,167,397.14
Less: non-operating expenses VII.60 43,535,551.68 51,064,696.04
IV. Total profit (total losses are represented
by “–”) 9,997,672,068.52 8,471,758,852.74
Less: income tax expense VII.61 2,000,741,926.36 1,525,749,793.00
V. Net profit (net losses are represented by
“–”) 7,996,930,142.16 6,946,009,059.74
(I) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by “–”) 7,996,930,142.16 6,946,009,059.74
2. Net profit from discontinued
operation (net losses are
represented by “–”)
(II) Classification by ownership of the
equity
1. Net profit attributable to shareholders
of the Parent Company (net losses
are represented by “–”) 7,949,084,472.70 6,858,902,854.55
2. Profit or loss attributable to minority
shareholders (net losses are
represented by “–”) 47,845,669.46 87,106,205.19
VI. Other comprehensive income, net of tax VII.62 2,864,992,299.95 –296,041,116.28
(I) Other comprehensive income
attributable to owners of the Parent
Company, net of tax 2,866,524,948.88 –293,997,754.26
1. Other comprehensive income that
cannot be reclassified into the
profit or loss —45,646,560.54 38,290,357.71
(1) Changes arising from
re-measurement of defined
benefit plans 4,562,166.91 –595,263.81
(2) Other comprehensive income
that cannot be transferred into
profit or loss under equity
method
(3) Changes in fair value of
investments in other equity
instruments —50,208,727.45 38,885,621.52
Haier Smart Home Co., Ltd. Interim Report 2022 95
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss 2,912,171,509.42 –332,288,111.97
(1) Other comprehensive income
that can be transferred into
profit or loss under equity
method 108,350,151.43 55,956,231.90
(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 25,995,214.10 112,586,182.47
(6) Exchange differences on
translation of financial
statements denominated in
foreign currencies 2,777,826,143.89 –500,830,526.34
(7) Others
(II) Other comprehensive income
attributable to minority shareholders,
net of tax —1,532,648.93 –2,043,362.02
VII. Total comprehensive income 10,861,922,442.11 6,649,967,943.46
(I) Total comprehensive income
attributable to the owners of Parent
Company 10,815,609,421.58 6,564,905,100.29
(II) Total comprehensive income
attributable to the minority
shareholders 46,313,020.53 85,062,843.17
VIII. Earnings per share:
(I) Basic earnings per share (RMB/share) XVIII.1 0.85 0.74
(II) Diluted earnings per share (RMB/
share) XVIII.1 0.85 0.73
For business combination under common control occurring in the current period, the net profit of the
acquiree before the combination was RMB4,473,481.70, and the net profit of the acquiree for the previous
period was RMB5,535,635.66.
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
96 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Profit Statement of the Parent Company
January-June 2022
Unit and Currency: RMB
Items Notes 2022 Interim 2021 Interim
I. Operating income XVIII.4 93,323,883.33 196,151,588.84
Less: operating cost XVIII.4 80,891,389.46 170,532,414.76
Taxes and surcharges 1,171,987.68 1,174,776.60
Selling expenses 4,615,963.20 1,542,784.65
Administration expenses 328,116,657.42 143,500,790.38
R&D expenses 5,806,423.66 17,296,703.96
Financial expenses —42,487,430.75 –32,789,762.71
Including: Interest expenses 4,530,273.29 7,372,782.23
Interest income 53,365,585.67 35,812,614.94
Add: other income 17,240,565.58 39,709,407.90
investment income (losses are
represented by “–”) XVIII.5 548,236,536.95 113,153,980.76
Including: Investment income of
associates and joint
ventures
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 (losses
are represented by “–”) 116,871.97 –7,122,909.94
Loss on assets impairment (losses
are represented by “–”)
Gain from disposal of assets (losses
are represented by “–”) 35,074,022.45 142,444,000.00
II. Operating profit (losses are represented
by “–”) 315,876,889.61 183,078,359.92
Add: non-operating income 204,216.74 60,749.06
Less: non-operating expenses 28,698.02 50,687.25
III. Total profit (total losses are represented
by “–”) 316,052,408.33 183,088,421.73
Less: income tax expenses —15,190,900.38
IV. Net profit (net losses are represented
by “–”) 316,052,408.33 198,279,322.11
Haier Smart Home Co., Ltd. Interim Report 2022 97
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
(I) Net profit from continuous operations
(net losses are represented by “–”) 316,052,408.33 198,279,322.11
(II) Net profit from discontinued operations
(net losses are represented by “–”)
V. Other comprehensive income, net of tax —2,564,158.17 11,664,510.69
(I) Other comprehensive income that
cannot be reclassified into the 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 instruments
4. Changes in fair value of credit risks
of the enterprise
(II) Other comprehensive income to be
reclassified into the profit or loss —2,564,158.17 11,664,510.69
1. Other comprehensive income that can
be transferred into profit or loss
under equity method —2,564,158.17 11,664,510.69
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 313,488,250.16 209,943,832.80
VII. Earnings per share:
(I) Basic earnings per share (RMB/share)
(II) Diluted earnings per share
(RMB/share)
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
98 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Consolidated Cash Flow Statement
January-June 2022
Unit and Currency: RMB
Items Notes 2022 Interim 2021 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering services 125,785,043,134.22 117,944,101,751.66
Net increase in customer and inter-bank
deposits
Net increase in borrowing from the
central bank
Net cash increase in borrowing from
other financial institutes
Cash received from premiums under
original insurance contract
Net cash received from reinsurance
business
Net increase in deposits of policy holders
and investment
Cash received from interest, fee and
commissions
Net increase in 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 1,359,611,570.36 964,437,758.54
Cash received from other related
operating activities VII.63 841,294,815.74 737,260,365.59
Sub-total of cash inflows from operating
activities 127,985,949,520.32 119,645,799,875.79
Cash paid on purchase of goods and
services 89,586,479,170.53 80,310,181,952.46
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
Haier Smart Home Co., Ltd. Interim Report 2022 99
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
Cash paid for insurance policy dividend
Cash paid to and on behalf of
employees 13,701,958,122.17 12,773,459,633.28
Cash paid for all types of taxes 5,091,644,757.74 5,080,969,771.64
Cash paid to other operation related
activities VII.64 13,641,619,812.66 13,038,993,358.10
Sub-total of cash outflows from operating
activities 122,021,701,863.10 111,203,604,715.48
Net cash flow from operating activities
II. Cash flow from investing activities: VII.67 5,964,247,657.22 8,442,195,160.31
Cash received from recovery of
investments 4,997,285,703.11 2,869,349,936.62
Cash received from return on
investments 421,887,380.66 313,949,022.75
Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets 74,590,057.10 19,269,652.96
Net cash received from disposal of
subsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities 5,493,763,140.87 3,202,568,612.33
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 3,342,824,864.02 3,155,717,619.84
Cash paid for investments 6,274,280,514.60 3,283,612,983.20
Net increase in secured loans
Net cash paid on acquisition of
subsidiaries and other operating
entities 37,326,510.00
Other cash paid on investment activities 250,000.00
Sub-total of cash outflows from investing
activities 9,654,431,888.62 6,439,580,603.04
Net cash flow from investing activities —4,160,668,747.75 –3,237,011,990.71
100 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
III. Cash flow from financing activities:
Cash received from capital contributions 986,491,004.94 8,600,000.00
Including: Cash received from capital
contributions by minority
shareholders of subsidiaries
Cash received from borrowings 8,044,351,638.86 4,920,230,964.76
Other cash received from financing
activities VII.65 1,000,235.35
Sub-total of cash inflows from financing
activities 9,031,842,879.15 4,928,830,964.76
Cash paid on repayment of loans 4,667,753,225.90 11,117,743,195.81
Cash paid on distribution of dividends,
profits or repayment of interest
expenses 327,338,483.19 327,295,977.88
Including: Dividend and profit paid to
minority shareholders by
subsidiaries
Other cash paid to financing activities VII.66 1,876,577,772.85 3,090,810,896.53
Sub-total of cash outflows from financing
activities 6,871,669,481.94 14,535,850,070.22
Net cash flow from financing activities 2,160,173,397.21 –9,607,019,105.46
IV.Effect of fluctuations in exchange
rates on cash and cash equivalents 230,069,372.19 –107,597,142.14
V. Net increase in cash and cash
equivalents 4,193,821,678.87 –4,509,433,078.00
Add: balance of cash and cash
equivalents at the beginning of
the period VII.68 45,071,366,271.21 45,738,120,000.70
VI.Balance of cash and cash equivalents
at the end of the period VII.68 49,265,187,950.08 41,228,686,922.70
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022 101
Section X Financial Report
Cash Flow Statement of the Parent Company
January-June 2022
Unit and Currency: RMB
Items Notes 2022 Interim 2021 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services 25,976,480.20 4,574,156,292.06
Refunds of taxes 7,799,497.52 15,641,231.71
Other cash received from operating
activities 311,936,036.56 60,444,554.93
Sub-total of cash inflows from operating
activities 345,712,014.28 4,650,242,078.70
Cash paid on purchase of goods and
services 141,857.64 81,405,473.91
Cash paid to and on behalf of
employees 24,825,638.14 138,942,956.91
Cash paid for all types of taxes 1,578,405.68 33,242,176.88
Other cash paid to operation activities 81,136,892.33 9,853,987.61
Sub-total of cash outflows from
operating activities 107,682,793.79 263,444,595.31
Net cash flow from operating
activities 238,029,220.49 4,386,797,483.39
II. Cash flow from investing activities:
Cash received from recovery of
investments 803,860,000.00 273,250,000.00
Cash received from return on
investments 72,346,255.88 92,194,698.15
Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets 35,206,354.85
Net cash received from disposal of
subsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities 911,412,610.73 365,444,698.15
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 15,544,095.62 31,022,950.45
Cash paid for investments 2,173,745,507.20 231,500,000.00
102 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Notes 2022 Interim 2021 Interim
Net cash paid on acquisition of
subsidiaries and other operating
entities
Other cash paid on investment activities 1,521,600,000.00 75,886,144.59
Sub-total of cash outflows from
investing activities 3,710,889,602.82 338,409,095.04
Net cash flow from investing
activities —2,799,476,992.09 27,035,603.11
III. Cash flow from financing activities:
Cash received from capital contributions 940,041,004.94
Cash received from borrowings 2,100,000,000.00
Other cash received from financing
activities 1,408,448,043.37
Sub-total of cash inflows from financing
activities 4,448,489,048.31
Cash paid on repayment of borrowings 5,520,000,000.00
Cash paid on distribution of dividends,
profits or repayment of interest
expenses 3,091,905.56 43,159,752.53
Other cash paid on financing activities 1,409,796,873.02 5,359,441,498.61
Sub-total of cash outflows from
financing activities 1,412,888,778.58 10,922,601,251.14
Net cash flow from financing
activities 3,035,600,269.73 –10,922,601,251.14
IV.Effect of fluctuations in exchange
rates on cash and cash equivalents —3,465,214.53 5,596,792.78
V. Net increase in cash and cash
equivalents 470,687,283.60 –6,503,171,371.86
Add: balance of cash and cash
equivalents at the beginning of
the period 4,043,535,735.48 8,286,549,909.64
VI.Balance of cash and cash equivalents
at the end of the period 4,514,223,019.08 1,783,378,537.78
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022 103
104
Consolidated Statement of Changes in Owner’s Equity
Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
January-June 2022
Unit and Currency: RMB
2022 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital Preference Perpetual Less: treasury comprehensive General risk Undistributed Total owners’
Items (or share capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority equity equity
I. Closing balance for the previous year 9,398,704,530.00 118,017,507.59 22,549,345,568.94 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 — 47,907,134,328.80 79,810,927,325.55 1,272,034,100.17 81,082,961,425.72
Add: changes in accounting policies
Error correction for prior period
Business combination under common
control 30,029,170.52 10,777,931.35 40,807,101.87 18954373 59761474.87
Others 0.00 0
II. Opening balance for the current year 9,398,704,530.00 118,017,507.59 22,579,374,739.46 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 47,917,912,260.15 79,851,734,427.42 1,290,988,473.17 81,142,722,900.59
III.Increase/decrease for the current period
(decrease is represented by “–”) 48,087,440.00 –36,677,120.16 1,241,554,898.94 1,538,651,010.37 2,866,524,948.88 3,818,442,419.50 6,399,281,576.79 34,484,091.41 6,433,765,668.20
(I) Total comprehensive income 2,866,524,948.88 7,949,084,472.70 10,815,609,421.58 46,313,020.53 10,861,922,442.11
(II) Capital injection and reduction by
owners 48,087,440.00 –36,677,120.16 1,238,717,313.17 1,538,651,010.37 –288,523,377.36 –11,072,350.20 –299,595,727.56
1. Ordinary shares invested by owners 41,413,600.00 898,627,404.94 940,041,004.94 11,072,350.20 928,968,654.74
2. Capital contribution by holders of
other equity instruments 6,673,840.00 –36,677,120.16 134,131,566.36 104,128,286.20 104,128,286.20
3. Share-based payment included in
owners’ equity 332,853,517.66 332,853,517.66 332,853,517.66
4. Others –126,895,175.79 1,538,651,010.37 –1,665,546,186.16 –1,665,546,186.16
(III) Profit distribution –4,320,445,666.86 –4,320,445,666.86 –756,578.92 –4,321,202,245.78
1. Withdrawal of surplus reserves – 0.00
2. Withdrawal of provisions for general
risks
3. Distribution to owners
(or shareholders) –4,320,445,666.86 –4,320,445,666.86 –756,578.92 –4,321,202,245.78
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 period
(VI) Others 2,837,585.77 189,803,613.66 192,641,199.43 192,641,199.43
IV.Closing balance for the period 9,446,791,970.00 81,340,387.43 23,820,929,638.40 3,962,689,830.07 1,689,673,248.96 3,438,615,909.84 51,736,354,679.65 86,251,016,004.21 1,325,472,564.58 87,576,488,568.79
2021 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital Preference Perpetual Less: treasury comprehensive General risk Undistributed Total owners’
Items (or share capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority equity equity
I. Closing balance for the previous year 9,027,846,441.00 2,364,195,333.79 15,007,475,607.40 28,896,550.65 –1,046,216,729.06 3,045,334,539.60 38,467,787,059.79 66,837,525,701.87 1,294,584,557.09 68,132,110,258.96
Add: changes in accounting policies 37,788,663.41 183,214,768.11 221,003,431.52 289,732.70 221,293,164.22
Error correction for prior period
Business combination under common
control 30,029,170.52 7,891,303.69 37,920,474.21 17015869.18 54936343.39
Others
II. Opening balance for the current year 9,027,846,441.00 2,364,195,333.79 15,037,504,777.92 28,896,550.65 –1,008,428,065.65 3,045,334,539.60 38,658,893,131.59 67,096,449,607.60 1,311,890,158.97 68,408,339,766.57
III. Increase/decrease for the current period
(decrease is represented by “–”) 365,324,040.00 –2,215,712,153.81 7,301,326,543.56 1,767,258,036.36 –293,925,605.96 3,425,666,565.86 6,815,421,353.29 60,278,653.37 6,875,700,006.66
(I) Total comprehensive income –293,997,754.26 6,858,902,854.55 6,564,905,100.29 85,062,843.17 6,649,967,943.46
(II) Capital injection and reduction by
owners 365,324,040.00 –2,215,712,153.81 7,301,398,691.86 1,767,258,036.36 3,683,752,541.69 16,167,229.15 3,699,919,770.84
1. Ordinary shares invested by owners 0.00 0.00
2. Capital contribution by holders of
other equity instruments 397,676,840.00 –2,215,712,153.81 8,095,619,066.22 6,277,583,752.41 0 6,277,583,752.41
3. Share-based payment included in
owners’ equity
4. Others -32,352,800.00 –794,220,374.36 1,767,258,036.36 –2,593,831,210.72 16167229.15 –2,577,663,981.57
(III) Profit distribution –3,420,918,669.85 –3,420,918,669.85 –40,951,418.95 –3,461,870,088.80
1. Withdrawal of surplus reserves 0.00 0
2. Withdrawal of provisions for general
risks 0.00 0
3. Distribution to owners
(or shareholders) –3,420,918,669.85 –3,420,918,669.85 –40,951,418.95 –3,461,870,088.80
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
Haier Smart Home Co., Ltd. Interim Report 2022
remedying loss
Section X Financial Report
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 –72,148.30 72,148.30 –12,317,618.84 –12,317,618.84 –12,317,618.84
IV. Closing balance for the period 9,393,170,481.00 148,483,179.98 22,338,831,321.48 1,796,154,587.01 –1,302,353,671.61 3,045,334,539.60 42,084,559,697.45 73,911,870,960.89 1,372,168,812.34 75,284,039,773.23
Person in charge of the Company: Li Huagang 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 2022
105
Section X Financial Report
Unit and Currency: RMB
2022 Intecim
Other equity instruments
Paid-in capital Other
(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’
Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity
I. Closing balance for the
previous year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
III. Increase/decrease for the
current period (decrease is
represented by “–”) 48,087,440.00 1,319,643,690.83 1,406,832,569.06 –2,564,158.17 –4,004,393,258.53 –4,046,058,854.93
(I) Total comprehensive income –2,564,158.17 316,052,408.33 313,488,250.16
(II) Capital injection and
reduction by owners 48,087,440.00 1,319,643,690.83 1,406,832,569.06 –39,101,438.23
1. Ordinary shares invested
by owners 41,413,600.00 898,627,404.94 940,041,004.94
2. Capital contribution by
holders of other equity
instruments 6,673,840.00 97,454,446.20 104,128,286.20
3. Share-based payment
included in owners’
equity 323,222,114.26 323,222,114.26
4. Others 339,725.43 1,406,832,569.06 –1,406,492,843.63
(III) Profit distribution –4,320,445,666.86 –4,320,445,666.86
1. Withdrawal of surplus
reserves
2. Distribution to owners
(or shareholders) –4,320,445,666.86 –4,320,445,666.86
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
IV. Closing balance for the period 9,446,791,970.00 27,121,923,173.96 2,902,003,244.14 618,738,786.66 2,833,469,684.39 464,182,367.99 37,583,102,738.86
106 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
2021 Interim
Other equity instruments
Paid-in capital Other
(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’
Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity
I. Closing balance for the previous
year 9,027,846,441.00 20,408,352,380.95 –10,030,704.15 2,440,188,314.15 4,349,961,964.23 36,216,318,396.18
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,027,846,441.00 20,408,352,380.95 –10,030,704.15 2,440,188,314.15 4,349,961,964.23 36,216,318,396.18
III. Increase/decrease for the
current period (decrease is
represented by “–”) 365,324,040.00 5,085,971,596.28 1,767,258,036.36 11,664,510.69 –3,222,639,347.74 473,062,762.87
(I) Total comprehensive
income 11,664,510.69 198,279,322.11 209,943,832.80
(II) Capital injection and
reduction by owners 365,324,040.00 5,085,971,596.28 1,767,258,036.36 3,684,037,599.92
1. Ordinary shares invested
by owners -32,352,800.00 –793,935,316.13 –826,288,116.13
2. Capital contribution by
holders of other equity
instruments 397,676,840.00 5,879,906,912.41 6,277,583,752.41
3. Share-based payment
included in owners’
equity
4. Others 1,767,258,036.36 –1,767,258,036.36
(III) Profit distribution –3,420,918,669.85 –3,420,918,669.85
1. Withdrawal of surplus
reserves
2. Distribution to owners
(or shareholders) –3,420,918,669.85 –3,420,918,669.85
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
IV. Closing balance for the period 9,393,170,481.00 25,494,323,977.23 1,767,258,036.36 1,633,806.54 2,440,188,314.15 1,127,322,616.49 36,689,381,159.05
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022 107
Section X Financial Report
III. GENERAL INFORMATION OF THE COMPANY
1. Overview of the Company
√ Applicable □ Not Applicable
The predecessor of Haier Smart Home Co., Ltd. (herein after referred to as the Company) was
Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by
People’s Bank of China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai
[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao Refrigerator
Factory, a limited company was set up by directional fund raising of RMB150 million. In 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 research and development, manufacturing and sales of home
appliances including refrigerators/freezers, kitchen appliances, air- conditioners, laundry
appliances and water appliances, and other smart home business, as well as providing smart
home packaged solutions.
The ultimate holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
29 August 2022.
2. Scope of consolidated financial statements
√ Applicable □ Not Applicable
For details of changes in the scope of consolidated financial statements for the current period, please
refer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this note.
108 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis according to
the transactions and matters actually occurred, in accordance with the Accounting Standards for
Business Enterprises — Basic Standards published by the Ministry of Finance, 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 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
√ 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 as at 30 June 2022, the operating results of January to June
2022 and cash flow of the Company.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.
Haier Smart Home Co., Ltd. Interim Report 2022 109
Section X Financial Report
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
√ Applicable □ Not Applicable
Renminbi is the recording currency of the Company.
5. Accounting methods of business combinations under common control and not
under common control
√ Applicable □ Not Applicable
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under common control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all 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
110 Haier Smart Home Co., Ltd. Interim Report 2022
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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 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.
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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 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.
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6. Preparation method of consolidated financial statements
√ Applicable □ Not Applicable
(1) Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled
by the Company) into the scope of consolidation financial statements, including the
enterprises under the Company’s control, divisible part in the investees and structured
entities.
(2) To unify the accounting policies, balance sheets date and accounting periods of the
Company and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in accordance
with the Company’s accounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheets
of the Company and subsidiaries, which offset the internal transactions incurred between
the Company and subsidiaries and among subsidiaries. The owner’s equity of the
subsidiaries not attributable to the Company shall be presented as “minority 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.
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Section X Financial Report
7. Classification of joint arrangement and accounting methods of joint operations
√ Applicable □ Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance
with the Company’s rights and obligations under a joint arrangement, the Company classifies joint
arrangements into joint operations and joint ventures.
Joint operations refer to a joint arrangement in which the Company is a party and is entitled to
relevant assets and obligations of this arrangement. The Company recognizes the following items
in relation to its interest in a joint operation, and accounts the same in accordance with relevant
accounting standards for business enterprises:
(1) recognize the assets held solely by the Company, and recognize assets held jointly by the
Company in appropriation to the share of the Company; (2) recognize the obligations
assumed solely by the Company, and recognize obligations assumed jointly by the
Company in appropriation to the share of the Company; (3) recognize revenue from
disposal of joint operations in appropriation to the share of the Company; (4) recognize
revenue from disposal of joint operations in appropriation to the share of the Company; (5)
recognize fees solely occurred by the Company and recognize fees from joint operations in
appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the
assets do not constitute a business, the same below) from joint operations, the Company
shall only recognize the part of profit or lost from this transaction attributable to other
parties of joint operations before these assets are sold to a third party. In case of an
impairment loss incurred on these assets which meets the requirements as set out in
“Accounting Standards for Business Enterprises No. 8 — Asset Impairment ”, the Company
shall full recognize the amount of this loss in relation to its investment in or sale of assets
to joint operations or recognize the loss according to the Company’s share of commitment
in relation to 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.
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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 ①those 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.
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.
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Section X Financial Report
10. Financial instruments
√ Applicable □ Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity 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:
(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.
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(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 such financial assets are included
in profit and loss of the current period.
② Impairment
For financial assets measured at amortized cost and debt instrument
investments measured at fair value through other comprehensive income,
contract assets and financial guarantee contracts, the Company recognizes
the loss provision based on the expected credit losses.
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Section X Financial Report
The Company considers reasonable and reliable information about past
events, current conditions and forecasts of future economic conditions,
and takes the risk of default as a weight, and calculates the 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:
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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.
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.
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(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 pa yable, 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-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
① Significant accounting estimates and key assumptions
Measurement of expected credit loss
The Company applies exposure at default and expected credit loss rate to calculate
expected credit loss, and determines expected credit loss rate based on probability 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.
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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. 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.
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(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
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.
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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
① Cost 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.
② Equity method
Investor’s long-term equity investments in associates and joint ventures are measured
using equity method. Where part of the equity investments of an investor in its
associates are held indirectly through venture investment institutions, common fund,
trust companies or other similar entities including investment linked insurance funds,
such part of equity investments indirectly held by the investor shall be measured 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.
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Section X Financial Report
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 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.
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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
① Joint control over an investee means that activities which have a significant impact on
the return of a certain arrangement could be decided only by mutual consent of 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.
② Significant impact on the investee exists when the investing parties hold more than 20%
but less than 50% of the shares with voting rights in the investee or, if 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;
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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 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.
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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
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
Type life (year) Residual ratio
Land ownership — —
Buildings 8–40 years 0%-5%
Machinery equipment 4–20 years 0%-5%
Transportation equipment 5–10 years 0%-5%
Office equipment and others 3–10 years 0%-5%
(3). Method of test and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there are signs for impairment of
the fixed assets. If yes, the recoverable amount is recognized through an impairment test
and provision for impairment is made based on the difference between the carrying value
and the recoverable amount. Impairment loss will not be reversed in 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.
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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:
① The construction of the fixed assets (including installation) has been completed or
substantially completed;
② The fixed asset has been used for trial production or operation and it is evidenced 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;
③ Further expenditure incurred for construction of the fixed asset is very minimal or
remote;
④ The constructed fixed asset reaches or almost reaches the design or contractual
requirements, or complies with the design or contractual requirements.
(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.
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.
128 Haier Smart Home Co., Ltd. Interim Report 2022
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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.
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The Company’s right-of-use assets shall be initially measured at the costs. The costs include:
(1) initial measurement amount of the lease liability;
(2) a lease payment paid on or before the date of commencement of the lease period, where
there was lease incentive, such incentives shall be deducted;
(3) initial direct costs incurred by the Company as lessee;
(4) costs expected to be incurred by the Company for demolition and removal of leased assets,
restoration of the premises where the leased assets are located, or restoration of 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.
130 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
18. Intangible assets
√ Applicable □ Not Applicable
Intangible assets are the identifiable non-monetary assets which have no physical form and are
possessed or controlled by the Company.
(1) Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs of
purchased intangible assets include the consideration and relevant expenses actually paid.
For intangible assets contributed by investors, relevant actual costs are determined based
on the value agreed in the investment contract or agreement. But if the value agreed in the
investment contract or agreement is not a fair value, the actual costs should be determined
based on the fair value. The cost of a self-developed intangible asset is the total
expenditure incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: 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.
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(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount. Impairment loss will not be reversed in
subsequent accounting periods once provision is made for it.
The recoverable amount of intangible assets should be based on the higher of the net fair
value of the assets less the disposal expense and the present value of estimated future
cash flow of the assets.
(4) Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research
stage is recognized in the profit or loss as incurred. Expenses incurred in the development
stage are recognized as intangible assets if all of the following conditions are met: 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 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.
132 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
19. Impairment of long-term assets
√ Applicable □ Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,
construction in progress, intangible assets and other long-term assets are tested for impairment
if there is any sign of impairment at the balance sheet date. If the result of the impairment test
indicates that the recoverable amount of the assets is less than the carrying amount, a provision
for impairment will be made based on the difference and will be recorded in impairment loss. The
recoverable amount is the higher of the net fair value of the assets less the disposal expense
and the present value of estimated future cash flow of the assets. Provision for asset impairment
is calculated and recognized on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of the asset group to which
the asset belongs is determined. An asset group is the smallest asset portfolio that can generate
cash inflows independently.
Goodwill is tested for impairment at least at the end of each year.
In terms of impairment test of the goodwill of the Company, the carrying amount of the goodwill,
arising from business combination, shall be allocated to the related asset groups on reasonable
basis since the acquisition date, or to the related asset group portfolios if it is difficult to be
allocated to the related asset groups. When the carrying amount of the goodwill is allocated to
the related asset groups or asset group portfolios, it shall be allocated in the proportion of the
fair value of each asset group or asset group portfolio against the total fair value of related asset
groups or asset group portfolios. If it is difficult to measure the fair value reliably, it shall be
allocated in the proportion of the carrying amount of each asset group or asset group portfolio
against the total carrying amount of related asset groups or asset group portfolios.
When impairment test is made to the related asset groups or asset group portfolios including
goodwill, if there is a sign that the related asset groups or asset group portfolios are prone to
impair, the Company shall first conduct impairment test on the asset groups or asset group
portfolios excluding goodwill, calculate the recoverable amount and recognize the corresponding
impairment loss by comparing with its carrying amount. The Company shall then conduct
impairment test on the asset groups or asset group portfolios including goodwill and compare
the carrying amount (including the carrying amount of allocated goodwill) of related asset groups
or asset group portfolios with the recoverable amount thereof. Impairment loss on goodwill shall
be recognized when the recoverable amount of the related asset groups or asset group
portfolios is lower than the carrying amount thereof.
Once the above impairment loss on assets is recognized, it shall not be reversed in any subsequent
accounting period.
20. Long-term prepaid expense
√ Applicable □ Not Applicable
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Long-term prepaid expenses of the Company are expenditures which have incurred but the
benefit period of which is more than one year (exclusive). They are amortized by installments over
the benefit period based on each item under the expenses. If items under the long-term pre-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value of
such unamortized items is then fully transferred to the profit or loss.
21. Staff’s remuneration
(1). Accounting treatment of short-term remuneration
√ Applicable □ Not Applicable
Staff’s remunerations are all forms of compensation and other relevant expenditure given by the
Company in exchange for services rendered by employees, including short-term remunerations,
post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies,
employee welfare, housing provident fund, labor union fee and education fee, medical
insurance premiums, work-related injury insurance premiums, maternity insurance premiums,
short-term compensated leave, short-term profit-sharing plans, etc. During the accounting
period when employees render services, short-term remunerations that actually incurred
shall be recognized as liabilities and credited into the current profit or loss or the cost of
relevant assets on an accrual basis by the benefit objects.
(2). Accounting treatment of post-employment benefits
√ Applicable □ Not Applicable
Post-employment benefits mainly include the basic pension insurance, enterprise annuity,
etc., In accordance with the risks and obligations undertaken by the Company, the post-
employment benefits are classified as defined contribution plans and defined benefit plans.
Defined contribution plans: the Company shall recognize the sinking funds paid on the
balance sheet date to individual entities in exchange for services from employees in the
accounting period as liabilities, and shall credit such funds into the profit or loss or the cost
of relevant assets in accordance with the benefit objects. Defined benefit plans: the cost for
providing benefits is determined using the expected cumulative welfare unit method, with
actuarial valuations being carried out by independent actuary at the interim and annual
balance sheet date. The costs for staff’s remunerations incurred by the defined benefit plans
of the Group are categorized as follows: (1) service cost, including current period service cost,
past service cost and settlement profit or loss. Specifically, current period service cost means
the increase of the present value of defined benefit obligations resulted from the current
period services offered by employees. Past service cost means the increase or decrease of
the present value of defined benefit obligations resulted from the revision of the defined
benefit plans related to the prior period services offered by employees; (2) interest expenses
of defined benefit plans; (3) changes caused by the remeasurement of liabilities for defined
benefit plans. Unless other accounting standards require or permit the credit of the costs for
employee welfare into the cost of assets, the Company will credit (1) and (2) above into the
profit or loss; and recognize (3) above as other comprehensive income and will not transfer
it back to the profit or loss in subsequent accounting periods.
(3). Accounting treatment of termination benefits
√ Applicable □ Not Applicable
134 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Termination benefits: The indemnity proposal provided by the Company for employees for
the purpose of terminating labor relations with employees before expiry of the labor
contracts or encouraging employees to accept downsizing voluntarily. When the following
conditions are met, the Company will recognize and credit into the profit or loss the
accrued liabilities arising from the indemnity as a result of terminating labor relations with
the employees: the Company has made a formal plan for termination of labor relations or
has made an offer for voluntary redundancy which will be implemented immediately; and the
Company could not unilaterally withdraw the plan for termination of labor relations or the
redundancy offer. Early retirement plans for employees will be handled in the principle the
same as the termination benefits above. The Company will credit the salaries and social
insurance premiums to be paid to the early retirees during the period from the date of early
retirement to the normal retirement date to the profit or loss when recognition conditions for
estimated liabilities are met.
(4). Accounting treatment of other long-term employee benefits
□ Applicable √ Not Applicable
22. Lease liabilities
√ Applicable □ Not Applicable
On the commencement date of the lease term, the Company as the lessee shall recognize the
right-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initially
measured at the present value of the lease payment that has not been paid on the
commencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rate
implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,
the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discount rate.
The interest rate implicit in lease refers to the interest rate that makes the sum of the present
value of the lessor’s lease receivable amount and the present value of the unguaranteed residual
value equal to the sum of the fair value of the leased asset and the initial direct cost of the lessor.
The lessee’s incremental borrowing rate refers to the interest rate that the lessee is required to
pay for borrowing funds under similar mortgage conditions in a similar economic environment in
order to obtain assets close to the value of the right-of-use assets during a similar period.
The Company shall calculate the interest expenses of lease liabilities over the lease term at the fixed
periodic interest rate, and include it into current profit or loss or assets cost.
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After the commencement date of the lease term, where the assessment results of the renewal of
the option, the termination of the lease option and the purchase option have changed, the
Company re-determines the lease payment and re-measures the lease liabilities in accordance
with the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease payment
changes due to a change in expected payment under a guaranteed remaining value or changes
in an index or rate used in determining the lease payments, the Company shall re-measure lease
liabilities based on present value of the lease payment after changes. In such cases, the
discount rate adopted by the Company shall remain unchanged; however, if the change in lease
payment results from a change in floating interest rates, the Company shall use a revised
discount rate.
23. Estimated liability
√ Applicable □ Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of
commercial acceptance bills, pending litigation or arbitration and product quality assurance
is the present obligation of the Company and the performance of such obligation is likely to
lead to an outflow of economic interests and its amount can be reliably measured, such
obligation shall be recognized as an estimated liability.
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of the
necessary expenses for the performance of the present obligation. If there is a continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to occur, the best estimate shall be determined according to the middle estimate within the
range.; if there are two or more items involved, the best estimate should be determined
according to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If there
is objective evidence that the carrying value could not reflect in the current best estimate, the
carrying value shall be adjusted to reflect the current best estimate.
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.
136 Haier Smart Home Co., Ltd. Interim Report 2022
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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
Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries
during day-to-day operations which might lead to increase of shareholders’ equity and be
irrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,
recognized revenue when the client obtains the control right of relevant goods or services.
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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:
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;
138 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
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.
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Section X Financial Report
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides quality
assurance for goods sold and project constructed. For guarantee-type quality assurance 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.
140 Haier Smart Home Co., Ltd. Interim Report 2022
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Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:
① Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shall
be reviewed and modified if necessary on each balance sheet date;
② Government grant shall be categorized as revenue-related if its usage is described in
general statement and no specific project is specified in the relevant government
document.
(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.
Haier Smart Home Co., Ltd. Interim Report 2022 141
Section X Financial Report
(3) Deferred income tax liability is recognized for taxable temporary difference arising from
investments in subsidiaries and associated companies, unless the Company could control
the time of reversal of the temporary differences and the temporary differences would not
be probably reversed in the foreseeable future. For deductible temporary differences arising
from investments in subsidiaries and associated companies, deferred income tax asset is
recognized if the temporary difference will be very probably reversed in the foreseeable
future and it is highly probable that taxable income will be available in the future to deduct
the deductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill. No deferred income tax asset or deferred income tax liability is
recognized for the temporary differences resulting from the initial recognition of assets or
liabilities due to a transaction other than a business combination, which affects neither
accounting profit nor taxable income (or deductible loss). At the balance sheet date,
deferred income tax assets and deferred income tax liabilities are measured at the tax rates
that apply to the period when the asset is expected to be recovered or the liability is
expected to be settled.
28. Other significant accounting policies and accounting 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:
① The 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.
142 Haier Smart Home Co., Ltd. Interim Report 2022
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(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.
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.
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Section X Financial Report
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 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.
144 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
③ Impairment 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.
④ Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine
their fair value through a variety of valuation methods. Such valuation methods
include discounted cash flow analysis. In the valuation, the Company shall estimate
the future cash flow, credit risk, market volatility and correlation, and select the
appropriate discount rate. Such related assumptions are uncertain, and their changes
may affect the fair value of financial instruments.
⑤ Impairment of investment in other equity instruments
The Company largely relies on judgments and assumptions of the management when
determining whether investments of other equity instruments are impaired 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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Section X Financial Report
⑥ Provision of long-term assets impairment
As at the balance sheet date, the Company shall judge whether there is any possible
indication of impairment against non-current assets other than financial assets. The
intangible assets with indefinite useful life must be tested for impairment on an annual
basis as well as when there is any indication of impairment. Other non-current assets
other than financial assets shall be tested for impairment when there is an indication
showing that the carrying value is not recoverable. Impairment occurs while 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.
⑦ Depreciation 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.
⑧ Deferred 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.
146 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
⑨ Income 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
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.
⑩ Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers.
According to the relevant conventions in the sales agreement, the review of 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 categories Basis of taxation Tax rate
Value-added tax Taxable revenue from sales of 6%, 9%, 13%
goods or rendering services
City maintenance and construction tax Circulation Taxes payable 7%
Enterprise income tax Taxable income Statutory tax rate
or preferential
rates as follows
(Local) education surcharge Circulation Taxes payable 1%, 2%, 3%
Disclosure of tax entities with different enterprise income tax rates
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 147
Section X Financial Report
2. Preferential tax
√ Applicable □ Not Applicable
Companies subjected to preferential tax:
Name of company Tax rate Preferential tax
Qingdao Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Refrigerator Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Dishwasher Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Intelligent Home 15.00% entitled to the preferential taxation
Appliance Technology Co., Ltd. policies as a hi-tech enterprise
Wuhan Haier Electronics Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Wuhan Haier Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Air-conditioning Co., Limited 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Zhengzhou Haier Air-conditioning Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Shenyang Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Air-Conditioner 15.00% entitled to the preferential taxation
Electronics Co., Ltd. policies as a hi-tech enterprise
Qingdao Meier Plastic Powder Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Hai Gao Design and 15.00% entitled to the preferential taxation
Manufacture Co., Ltd. policies as a hi-tech enterprise
Qingdao Hairi Hi-Tech Model Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier (Jiaozhou) 15.00% entitled to the preferential taxation
Air-conditioning Co., Limited policies as a hi-tech enterprise
Qingdao Haier Intelligent Technology 15.00% entitled to the preferential taxation
Development Co., Ltd. policies as a hi-tech enterprise
148 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Name of company Tax rate Preferential tax
Foshan Haier Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Central Air Conditioning 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Air Conditioner Gen 15.00% entitled to the preferential taxation
Corp., Ltd. policies as a hi-tech enterprise
Haier U+smart Intelligent Technology 15.00% entitled to the preferential taxation
(Beijing) Co., Ltd. policies as a hi-tech enterprise
Beijing Zero Micro Technology Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Washing Machine Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Jiaonan Haier Washing 15.00% entitled to the preferential taxation
Machine Co., Ltd. policies as a hi-tech enterprise
Foshan Shunde Haier Electric Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Tianjin Haier Washing Appliance Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Economic and Technological 15.00% entitled to the preferential taxation
Development Zone Haier Water policies as a hi-tech enterprise
Heater Co., Ltd.
Wuhan Haier Water Heater Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Foshan Drum Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Strauss Water Equipment Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Living Appliances 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier New Energy Electric 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Washing Appliance Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Ririshun Lexin Cloud 15.00% entitled to the preferential taxation
Technology Co., Ltd. policies as a hi-tech enterprise
Hefei Haier Drum Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Zhengzhou Haier New Energy 15.00% entitled to the preferential taxation
Technology Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Electronic Plastic Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Haier Smart Home Co., Ltd. Interim Report 2022 149
Section X Financial Report
Name of company Tax rate Preferential tax
Qingdao Wei Xi Intelligent Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Special Refrigerating 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Hefei Haier Air-conditioning Co., Limited 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Beijing Lingli Technology Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Hairuijiejing Electronics Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Shanghai Haier Medical Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Yunshang Yuyi IOT Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Haier (Shanghai) Home Appliance 15.00% entitled to the preferential taxation
Research and Development Center policies as a hi-tech enterprise
Co., Ltd.
Haier (Shenzhen) R&D Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Ririshun Lejia IOT Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Electrical 15.00% entitled to the preferential taxation
Equipment Limited policies as a hi-tech enterprise
Laiyang Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Guangdong Heilong Intelligent 15.00% entitled to the preferential taxation
Technology Co. Ltd policies as a hi-tech enterprise
Dalian Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Chongqing Haier Electronics Sales Co., 15.00% entitled to the preferential taxation
Ltd. and some Western companies policies under the Western
Development initiative of the PRC
Chongqing Xin Ririshun Electric Sales 15.00% entitled to the preferential taxation
Co., Ltd. and some Western policies under the Western
companies Development initiative of the PRC
Chongqing Haier Air-conditioning Co., 15.00% entitled to the preferential taxation
Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Refrigeration 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies under the Western
Development initiative of the PRC
150 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Name of company Tax rate Preferential tax
Guizhou Haier Electronics Co., Ltd. 15.00% entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
Chongqing Haier Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd policies under the Western
Development initiative of the PRC
Chongqing Haier Water Heater Co., Ltd 15.00% entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
Chongqing Haier Drum Washing 15.00% entitled to the preferential taxation
Machine Co., Ltd policies under the Western
Development initiative of the PRC
Qingdao Haier Technology Co., Ltd. 10.00% entitled to half deduction the
preferential taxation policies as a
key software enterprise
Haier Smart Home Co., Ltd. Interim Report 2022 151
Section X Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
Unless otherwise specified, the following closing balance refers to the amount as of 30 June 2022.
The opening balance refers to the amount as of 31 December 2021. The amount for the current period
refers to the amount in the period from 1 January to 30 June 2022. The amount of the previous period
refers to the amount of the period from 1 January to 30 June 2021.
1. Monetary funds
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Cash on hand 912,949.13 3,085,964.28
Deposit in bank 48,618,833,840.21 44,884,013,498.57
Other monetary funds 1,696,374,469.94 1,083,936,300.66
Total 50,316,121,259.28 45,971,035,763.51
Including: Total amount deposit overseas 8,844,868,035.47 8,966,246,518.74
Other explanations:
Other monetary funds mainly were the investment fund, the deposit on third party payment platforms,
security deposit and other restricted fund, etc.
2. Financial assets held for trading
Closing
Items balance Opening balance
Short-term wealth management products 2,153,399,840.01 2,168,622,090.00
Investment in equity instruments 106,249,514.01 330,557,610.82
Investment fund 158,003,403.16 150,516,274.37
Forward foreign exchange contracts 142,519,319.40 136,379,553.90
Total 2,560,172,076.58 2,786,075,529.09
152 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
3. Derivative financial assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Forward foreign exchange contracts 151,624,141.73 72,822,190.59
Interest rate swap agreement 11,460,584.69
Forward commodity contracts 6,997,783.42
Total 163,084,726.42 79,819,974.01
4. Bills receivable
(1) Details of bills receivable
Closing
Items balance Opening balance
Bank acceptance notes 8,200,648,941.32 13,053,809,505.49
Commercially acceptance notes 282,194,019.57 368,076,810.80
Balance of bills receivable 8,482,842,960.89 13,421,886,316.29
Allowance for bad debts 65,206,789.48 67,095,248.00
Bills receivable, net 8,417,636,171.41 13,354,791,068.29
(2) Changes in allowance for bad debts of bills receivable in the current period
√ Applicable □ Not Applicable
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Write-off/
Other other
Provision increases Reversal movement
Allowance for bad debts 67,095,248.00 35,478,414.82 3,986,104.53 33,380,768.81 65,206,789.48
Total 67,095,248.00 35,478,414.82 3,986,104.53 33,380,768.81 65,206,789.48
The Company’s bills receivable was mainly generated from daily operation activities such as
sales of commodity, provision of labor, etc., and the allowance for bad debts was measured
based on expected credit loss over the entire duration whether there exist significant financing
components.
The bills receivable pledged by the Company at the end of the period was
RMB7,905,189,214.59 (amount at the beginning of the period: RMB12,526,757,275.50).
Haier Smart Home Co., Ltd. Interim Report 2022 153
Section X Financial Report
5. Accounts receivable
① Accounts receivable are disclosed by aging as follows:
Closing
Aging balance Opening balance
Within one year 17,992,836,678.82 14,794,015,085.51
1–2 years 632,122,299.07 376,187,052.43
2–3 years 187,957,672.11 78,861,353.76
Over 3 years 106,770,894.99 135,768,657.33
Accounts receivable, balance 18,919,687,544.99 15,384,832,149.03
Allowance for bad debts 999,585,676.27 742,172,698.81
Accounts receivable, net 17,920,101,868.72 14,642,659,450.22
② By method of provision of allowance for bad debts
√ Applicable □ Not Applicable
Categories Closing balance
Allowance for Percentage of
Book balance bad debts provision (%) Carrying value
Account receivables
subject to provision for
bad debts on a
separate basis 523,300,149.88 517,255,653.38 98.84 6,044,496.50
Account receivables
subject to provision for
bad debts on a
collective basis 18,396,387,395.11 482,330,022.89 2.62 17,914,057,372.22
Total 18,919,687,544.99 999,585,676.27 5.28 17,920,101,868.72
154 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(continued)
Categories Opening balance
Allowance for bad Percentage of
Book balance debts provision (%) Carrying value
Account receivables subject
to provision for bad
debts on a separate
basis 381,406,983.17 320,303,932.13 83.98 61,103,051.04
Account receivables subject
to provision for bad
debts on a collective
basis 15,003,425,165.86 421,868,766.68 2.81 14,581,556,399.18
Total 15,384,832,149.03 742,172,698.81 4.82 14,642,659,450.22
③ Account receivables subject to provision for bad debts on a collective basis
√ Applicable □ Not Applicable
Items Balance as at the end of the period
Allowance for Percentage of
Book Balance bad debts provision (%)
Within 1 year 17,789,646,425.90 386,576,175.00 2.17
1–2 years 439,466,228.58 10,765,414.88 2.45
2–3 years 74,455,469.23 21,507,533.99 28.89
Over 3 years 92,819,271.40 63,480,899.02 68.39
Total 18,396,387,395.11 482,330,022.89 2.62
(continued)
Items Balance as at the beginning of the period
Allowance for Percentage of
Book Balance bad debts provision (%)
Within 1 year 14,566,776,731.02 312,565,470.27 2.15
1–2 years 229,160,440.39 9,396,866.15 4.10
2–3 years 76,516,782.74 23,388,497.43 30.57
Over 3 years 130,971,211.71 76,517,932.83 58.42
Total 15,003,425,165.86 421,868,766.68 2.81
Haier Smart Home Co., Ltd. Interim Report 2022 155
Section X Financial Report
④ Changes in allowance for bad debts of accounts receivable in the current period:
Items Opening balance Increase for the current period Decrease for the current period Closing balance
Provision for the Write-off/other
current period Other movement Reversal movement
Allowance for bad debts 742,172,698.81 264,092,566.49 33,380,768.81 41,415,511.37 –1,355,153.53 999,585,676.27
⑤ The aggregate amount of the top 5 account receivables as at the end of the period was
RMB4,500,321,373.99 (amount at the beginning of the period: RMB3,856,035,612.12),
accounting for 23.79% of the book balance of account receivables (as at the beginning of
the period: 25.06%).
⑥ Actual write-off of accounts receivable in the current period The amount of accounts
receivable actually written off in the current period is RMB13,058,370.53 (amount for the
corresponding period: RMB10,143,124.34) and there is no important bad debt write-off of
accounts receivable.
⑦ The company’s accounts receivable that were terminated due to the transfer of financial
assets in the current period.
At the end of the period, the amount of accounts receivable that were terminated due to
the transfer of financial assets was RMB5,148,671,077.42 (amount at the beginning of the
period: RMB4,127,671,197.04) and the transfer method was outright sale factoring/asset
securitization.
⑧ Restricted accounts receivable in the current period
The amount of accounts receivable restricted at the end of the period is RMB2,848,722,579.01
(amount at the beginning of the period: RMB1,913,582,226.30).
156 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
6. Prepayments
(1) Prepayments are disclosed by aging as follows:
Closing
Aging balance Opening balance
Within one year 820,552,086.75 816,906,386.84
1–2 years 31,756,515.81 22,367,994.84
2–3 years 9,516,658.41 9,728,842.63
Over 3 years 6,287,399.50 8,231,174.95
Total 868,112,660.47 857,234,399.26
(2) The amount of the top 5 in the prepayments at the end of the period totals
RMB88,045,020.96, which accounts for 10.14% of the book balance of prepayment
(amount at the beginning of the period: RMB174,076,576.41, accounting for 20.31%).
7. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Interest receivable 400,015,260.13 294,379,438.82
Other receivables 1,756,744,930.86 1,662,342,182.84
Total 2,156,760,190.99 1,956,721,621.66
Other explanations:
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 157
Section X Financial Report
(1) Interest receivable
Closing
Aging balance Opening balance
Within one year 266,633,376.88 231,011,687.28
1–2 years 79,940,828.30 47,983,727.86
2–3 years 45,391,054.95 15,384,023.68
Over 3 years 8,050,000.00
Total 400,015,260.13 294,379,438.82
(2) Other receivables
① Other receivables are disclosed by aging as follows:
Closing
Aging balance Opening balance
Within one year 1,348,982,183.92 1,274,872,226.90
1–2 years 118,830,576.45 109,677,138.52
2–3 years 361,449,614.43 355,219,038.13
Over 3 years 127,053,718.52 113,213,998.61
Other receivables balance 1,956,316,093.32 1,852,982,402.16
Allowance for bad debts 199,571,162.46 190,640,219.32
Other receivables, net 1,756,744,930.86 1,662,342,182.84
② The total amount of the top 5 other receivables at the end of the period is
RMB776,125,043.70 (amount at the beginning of the period: RMB588,207,363.50), which
accounts for 39.67% of the book balance of other receivables (at the beginning of the
period: 31.74%).
158 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
③ Provision of allowance for bad debts
Allowance for bad
debts Stage 1 Stage 2 Stage 3 Total
Lifetime Lifetime
Expected expected expected
credit losses credit losses credit losses
for the coming (not credit- (credit-
12 months impaired) impaired)
Balance as at the
beginning of the
period 112,022,673.37 78,617,545.95 190,640,219.32
Provision for the
current period 9,354,271.38 9,354,271.38
Reversal for the current
period 5,446,790.65 5,446,790.65
Write-off and others for
the current period –5,076,162.41 52,700.00 –5,023,462.41
Balance as at the end
of the period 121,006,316.51 78,564,845.95 199,571,162.46
④ Changes in allowance for bad debt provision of other receivables in the current period
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Provision
for the Write-off/
current Other other
period movement Reversal movement
Allowance for bad
debts 190,640,219.32 9,354,271.38 5,446,790.65 –5,023,462.41 199,571,162.46
⑤ Other receivables written off during the period
The amount of other receivables actually written off in the current period is RMB306,025.66
(amount for the corresponding period: RMB4,293,611.04), and no significant other receivables
are written off for bad debts.
⑥ Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.
Haier Smart Home Co., Ltd. Interim Report 2022 159
Section X Financial Report
8. Inventories
(1) Details of Inventories
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance provision balance provision
Raw material 5,505,526,057.02 129,495,787.11 5,160,836,755.15 117,428,681.85
Work in progress 148,110,212.49 115,676,026.77
Finished goods 36,906,925,191.71 1,424,430,179.89 35,990,645,130.23 1,248,466,540.71
Total 42,560,561,461.22 1,553,925,967.00 41,267,157,912.15 1,365,895,222.56
(2) Impairment provision of inventories
Opening Increase for Decrease for Closing
Items balance the period the period balance
Other Write-off/other
Provision Increases Reversal movement
Raw material 117,428,681.85 13,180,554.37 1,113,449.11 129,495,787.11
Work in progress
Finished goods 1,248,466,540.71 372,249,744.36 13,571,021.80 182,715,083.38 1,424,430,179.89
Total 1,365,895,222.56 385,430,298.73 13,571,021.80 183,828,532.49 1,553,925,967.00
9. Contract assets
(1) Details
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance Provision balance Provision
Relating to construction
service contract 280,621,191.36 304,434,294.70
Total 280,621,191.36 304,434,294.70
160 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
10. Other current assets
(1) Details
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance provision balance provision
Bank deposit for financial
products 1,551,745,385.00 316,590,333.42
Taxes to be deducted 2,588,443,347.96 3,275,762,776.66
Return cost receivable 657,641,276.81 336,533,252.53 585,140,752.69 328,552,987.70
Others 54,260,359.93 71,809,601.50
Total 4,852,090,369.70 336,533,252.53 4,249,303,464.27 328,552,987.70
(2) Impairment provision
Opening Increase for Decrease for Closing
Items balance the period the period balance
Other Write-off/other
Provision Increases Reversal movement
Return cost receivables 328,552,987.70 336,533,252.53 1,330,581.65 327,222,406.05 336,533,252.53
Total 328,552,987.70 336,533,252.53 1,330,581.65 327,222,406.05 336,533,252.53
Haier Smart Home Co., Ltd. Interim Report 2022 161
Section X Financial Report
11. Long-term equity investments
√ Applicable □ Not Applicable
Investees Opening balance Increase/decrease for the period
Adjustment in
Investment profit other Declaration of
Investment recognized under comprehensive Other changes in cash dividends or
increase equity method income equity profits
Associate:
Haier Group Finance Co., Ltd. 7,108,709,375.38 318,680,094.64 7,661,131.00 –218,400,000.00
Bank of Qingdao Co., Ltd. 2,654,248,436.12 352,102,643.20 165,347,683.41 –6,472,692.99 7,483,342.53 –76,288,906.40
Wolong Electric (Jinan) Motor
Co., Ltd. 151,837,378.99 12,237,610.99
Qingdao Hegang New Material
Technology Co., Ltd. 312,493,256.21 10,746,218.86
Qingdao Haier SAIF Smart
Home Industry Investment
Center (Limited Partnership) 393,598,372.59 –904,601.39 –17,199,060.82
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co., Ltd. 682,901,976.73 52,979,520.61
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 409,053,808.05 10,936,464.63 –17,900,226.81
Qingdao Haier multimedia Co.,
Ltd. 277,102,563.88 –14,629,468.29
Qingdao Haier Moulds Co., Ltd. 269,158,534.54 –272,577,907.92 3,419,373.38
Hefei Feier Smart Technology
Co., Ltd. 265,106.27 –265,106.27
Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,877,574.14 109,595.88
Zhejiang Futeng Fluid
Technology Co., Ltd.* 82,098,847.75
Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75
Beijing Xiaobei Technology Co.,
Ltd. 2,687,341.82 –2,687,341.82
Beijing ASU Tech Co., Ltd. 15,529,700.01 –12,256,393.21 9,809,616.09
Shenzhen Genyuan Environment
al Protection Technology
Co., Ltd. 6,914,487.73 681,807.62
Qingdao Haimu Investment
Management Co., Ltd. 2,465,299.70 –53,862.77
Qingdao Haimu Smart Home
Investment Partnership
(Limited Partnership) 59,424,662.44 –100,251.06
* For identification purposes only
162 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Investees Opening balance Increase/decrease for the period
Adjustment in
Investment profit other Declaration of
Investment recognized under comprehensive Other changes in cash dividends or
increase equity method income equity profits
Guangzhou Heying Investment
Partnership (Limited
Partnership) 285,793,577.87
Qingdao Home Wow Cloud
Network Technology Co.,
Ltd. 2,600,050.50 –34,037.86
Bingji (Shanghai) Corporate
Management Co., Ltd. 972,200,487.88 23,218,909.91
Youjin (Shanghai) Corporate
Management Co., Ltd 1,766,819,068.86 42,216,199.84
RRS (Shanghai) Investment Co.,
Ltd. 3,211,580,125.21 76,756,726.98
Haier Best Water Technology
Co., Ltd. 79,785,557.39 –1,432,974.65
Huizhixiangshun Equity
Investment Fund (Qingdao)
Partnership (Limited
Partnership) 119,008,967.03 119,797,980.61
Qingdao Ririshun Huizhi
Investment Co., Ltd. 2,083,482.78 2,000,000.00
Qingdao Xinshenghui
Technology Co., Ltd. 9,964,773.52 –953,012.17
Meiling Candy Washing Machine
Co., Ltd. 22,752,232.07 –92,564.23
EuropaltersItaliaS.r.l. 9,361,965.48
OryginLLC 13,494,211.65
Konan Electronic Co., Ltd. 69,273,712.61 305,414.02 –7,882,359.76 –237,150.00
HNR Company (Private) Limited 114,055,318.97 17,731,336.90 –7,497,761.95
HPZ LIMITED 71,269,048.97 6,432,609.47 2,444,486.30
Haier Raya Electric S.A.E 10,568,507.40 –716,353.69
CONTROLADORAMABES.
A.deC.V. 4,131,983,673.10 246,779,790.69 119,156,456.19 –47,111,575.26
Middle East Airconditioning
Company, Limited 10,318,898.13 –2,475,341.75 465,090.46
Total 23,327,293,929.87 212,129,585.72 954,665,390.49 107,874,349.25 17,292,958.62 –377,136,919.29
Haier Smart Home Co., Ltd. Interim Report 2022 163
Section X Financial Report
(Continued)
Impairment
provision
Investees Increase/decrease for the period Closing balance Closing balance
Other Disposal of the
movement investment
Associate:
Haier Finance Co., Ltd. 7,216,650,601.02
Bank of Qingdao Co., Ltd. 3,096,420,505.87
Wolong Electric (Jinan)
Motor Co., Ltd. 164,074,989.98
Qingdao Hegang New
Material Technology Co.,
Ltd. 323,239,475.07
Qingdao Haier SAIF Smart
Home Industry
Investment Center
(Limited Partnership) 375,494,710.38
Mitsubishi Heavy Industries
Haier (Qingdao) Air-
conditioners Co., Ltd. 735,881,497.34
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 402,090,045.87 –21,000,000.00
Qingdao Haier Multimedia
Co., Ltd 262,473,095.59 –88,300,000.00
Qingdao Haier Moulds Co.,
Ltd
Hefei Feier Smart
Technology Co., Ltd.
Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,987,170.02
Zhejiang Futeng Fluid
Technology Co., Ltd.* 82,098,847.75
Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75 –7,507,759.75
Beijing Xiaobei Technology
Co., Ltd.
Beijing ASU Tech Co., Ltd. 13,082,922.89
Shenzhen Genyuan
Environmental Protection
Technology Co., Ltd. 7,596,295.35 –6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,411,436.93
Qingdao Haimu Zhijia
Investment Partnership
(Limited Partnership) 59,324,411.38
* For identification purposes only
164 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Impairment
provision
Investees Increase/decrease for the period Closing balance Closing balance
Other Disposal of the
movement investment
Guangzhou Heying
Investment Partnership
(Limited Partnership) 285,793,577.87
Qingdao Home Wow Cloud
Network Technology Co.,
Ltd. 2,566,012.64
Bingji (Shanghai) Corporate
Management Co., Ltd. 995,419,397.79
Youjin (Shanghai) Corporate
Management Co., Ltd 1,809,035,268.70
RRS (Shanghai) Investment
Co., Ltd. 3,288,336,852.19
Haier Best Water
Technology Co., Ltd. 78,352,582.74
Huizhixiangshun Equity
Investment Fund
(Qingdao) Partnership
(Limited Partnership) 238,806,947.64
Qingdao Ririshun Huizhi
Investment Co., Ltd. 4,083,482.78
Qingdao Xinshenghui
Technology Co., Ltd. 9,011,761.35
Meiling Candy Washing
Machine Co., Ltd. 22,659,667.84
EuropaltersItaliaS.r.l. 9,361,965.48
OryginLLC 13,494,211.65
Konan Electronic Co., Ltd. 61,459,616.87
HNR Company (Private)
Limited 124,288,893.92
HPZ LIMITED 80,146,144.74
HaierRayaElectricS.A.E 9,852,153.71
CONTROLADORAMABES.
A.deC.V. –7,751,424.52 4,443,056,920.20
Middle East Airconditioning
Company, Limited 8,308,646.84
Total –7,751,424.52 24,234,367,870.14 –123,722,247.48
Haier Smart Home Co., Ltd. Interim Report 2022 165
Section X Financial Report
12. Investment in other equity instruments
(1) Details of investment in other equity instruments:
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
SINOPEC Fuel Oil Sales Corporation Limited 1,285,836,952.03 1,290,487,901.40
Haier COSMO IOT Ecosystem Technology
Co., Ltd. 2,812,000,000.00 2,812,000,000.00
Others 754,608,260.88 746,221,537.56
Total 4,852,445,212.91 4,848,709,438.96
(2) Dividends from investment in other equity during the current period:
Items Amount for the current period
Others — Shenzhen Toposcend Capital, etc. 2,596,583.32
Total 2,596,583.32
13. Investment properties
Measure mode for investment properties
(1) The changes in investment properties measured at cost for this year are as follows:
Houses and
Items buildings Land use rights Total
I. Original book value
1. Opening balance 34,022,711.50 2,128,550.51 36,151,262.01
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
166 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Houses and
Items buildings Land use rights Total
4. Converted difference in
foreign currency
statements 1,594,734.05 1,594,734.05
5. Closing balance 35,617,445.55 2,128,550.51 37,745,996.06
II. Accumulated depreciation
and accumulated
amortization
1. Opening balance 10,555,753.15 630,620.38 11,186,373.53
2. Increase for the period
(1) Provision or
amortization 649,271.97 20,118.11 669,390.08
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Converted difference in
foreign currency
statements 265,983.26 265,983.26
5. Closing balance 11,471,008.38 650,738.49 12,121,746.87
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 24,146,437.17 1,477,812.02 25,624,249.19
2. Opening book value 23,466,958.35 1,497,930.13 24,964,888.48
(2) The depreciation and amortization amount charge for the period is RMB669,390.08 (amount
for the corresponding period: 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.
Haier Smart Home Co., Ltd. Interim Report 2022 167
Section X Financial Report
14. Fixed assets
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Fixed assets 24,238,045,798.12 22,302,546,799.12
Disposals of fixed assets 4,543,369.52 4,543,369.52
Total 24,242,589,167.64 22,307,090,168.64
Fixed assets
(1) Fixed assets:
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value
1. Opening balance 11,353,869,023.33 26,553,243,290.47 179,083,687.93
2. Increase for the period
(1) Acquisition 24,855,788.90 648,692,116.07 890,259.74
(2) Construction in progress
transferred in 473,266,969.36 1,316,653,800.21 6,815,087.61
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal or Write-off 13,836,783.88 275,325,898.20 3,042,808.78
(2) Disposal of subsidiary 754,649.79
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements 362,938,367.98 1,035,957,018.26 4,804,656.26
5. Closing balance 12,201,093,365.69 29,279,220,326.81 187,796,232.97
II. Accumulated depreciation
1. Opening balance 3,922,452,407.13 13,208,010,163.95 107,950,259.30
2. Increase for the period
(1) Provision 266,310,942.35 1,250,733,974.65 9,978,627.44
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off 7,174,156.14 212,276,135.09 2,883,264.99
(2) Disposal of subsidiary 645,746.91
(3) Transfer to hold for sale
168 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Houses and Production Transportation
Items buildings equipment equipment
4. Converted difference in foreign
currency statements 38,318,137.17 478,123,536.12 1,941,465.37
5. Closing balance 4,219,907,330.51 14,724,591,539.63 116,341,340.21
III. Impairment provision
1. Opening balance 29,499,438.21 21,647,562.09 173,485.13
2. Increase for the period
(1) Provision
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or Write-off 20,287.80
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements –2,488,257.57 –263,526.91 –10,241.16
5. Closing balance 27,011,180.64 21,363,747.38 163,243.97
IV. Book value
1. Closing book value 7,954,174,854.54 14,533,265,039.80 71,291,648.79
2. Opening book value 7,401,917,177.99 13,323,585,564.43 70,959,943.50
(Continued)
Items Office furniture Others Total
I. Original book value
1. Opening balance 1,030,764,014.90 2,464,395,005.90 41,581,355,022.53
2. Increase for the period
(1) Acquisition 78,881,852.21 34,929,055.41 788,249,072.33
(2) Construction in progress
transferred in 84,566,124.47 162,827,779.57 2,044,129,761.22
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal or Write-off 25,668,390.60 52,084,817.45 369,958,698.91
(2) Disposal of subsidiary 37,980.00 792,629.79
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements 19,135,686.09 149,484,827.72 1,572,320,556.31
5. Closing balance 1,187,679,287.07 2,759,513,871.15 45,615,303,083.69
II. Accumulated depreciation
1. Opening balance 565,204,246.86 1,418,493,692.20 19,222,110,769.44
2. Increase for the period
Haier Smart Home Co., Ltd. Interim Report 2022 169
Section X Financial Report
Items Office furniture Others Total
(1) Provision 142,392,072.66 125,203,692.69 1,794,619,309.79
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or Write-off 13,259,061.00 14,233,168.34 249,825,785.56
(2) Disposal of subsidiary 36,090.25 681,837.16
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements 7,271,653.01 31,510,438.78 557,165,230.45
5. Closing balance 701,608,911.53 1,560,938,565.08 21,323,387,686.96
III. Impairment provision
1. Opening balance 258,528.08 5,118,440.46 56,697,453.97
2. Increase for the period
(1) Provision
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or Write-off 4,406.40 24,694.20
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements –27,194.93 –13,940.59 –2,803,161.16
5. Closing balance 226,926.75 5,104,499.87 53,869,598.61
IV. Book Value
1. Closing book value 485,843,448.79 1,193,470,806.20 24,238,045,798.12
2. Opening book value 465,301,239.96 1,040,782,873.24 22,302,546,799.12
(2) In the current period, the balance of the construction in progress transferred to the original
value of the fixed assets is total RMB2,044,129,761.22 (amount for the corresponding
period: RMB1,484,788,584.15).
170 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(3) There was no mortgage secured by the fixed assets mortgage at the end of the period, and
there was no mortgage secured by the fixed assets mortgage at the beginning of the
period.
(4) Disposals of fixed assets
Reason for
Closing Opening transferring to
Items balance balance disposal
Relocation of Qingdao
Industrial Park 4,543,369.52 4,543,369.52 Demolition
Total 4,543,369.52 4,543,369.52
15. Construction in progress
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Construction in progress 4,858,973,923.48 4,183,263,398.79
Construction materials
Total 4,858,973,923.48 4,183,263,398.79
Haier Smart Home Co., Ltd. Interim Report 2022 171
Section X Financial Report
Construction in progress
(1) Details of construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMB
Projects Closing balance Opening balance
Impairment Impairment
Book balance provision Book value Book balance provision Book value
Smart Home Appliance
Technology Project 822,506,153.78 822,506,153.78 598,122,551.15 598,122,551.15
Eastern Europe Project 410,516,576.87 410,516,576.87 182,497,069.58 182,497,069.58
Shanghai Haier Washing
Appliance Project 304,975,083.42 304,975,083.42 4,756,839.22 4,756,839.22
Europe Candy Project 431,710,887.15 431,710,887.15 153,117,404.68 153,117,404.68
Special Freezer Project 222,065,402.53 222,065,402.53 220,203,225.72 220,203,225.72
America GEA Project 221,394,829.44 221,394,829.44 722,008,600.99 722,008,600.99
Qingdao Jiaozhou
Washing Appliance
Project 192,445,321.17 192,445,321.17 167,168.14 167,168.14
Hailvyuan Recycling
Technology Project 186,280,749.74 186,280,749.74 58,589,285.46 58,589,285.46
Zhengzhou New Energy
Project 163,699,647.98 163,699,647.98 125,734,579.67 125,734,579.67
New Zealand FPA Project 161,190,432.03 161,190,432.03 111,516,266.46 111,516,266.46
Qingdao Haier Washing
Machine Project 140,224,507.71 140,224,507.71 139,065,246.00 139,065,246.00
Haier India Project 127,636,129.62 127,636,129.62 179,479,688.03 179,479,688.03
Foshan Freezer Project 114,194,193.12 114,194,193.12 199,726,996.70 199,726,996.70
Haier Dishwasher Project 112,460,548.93 112,460,548.93 91,964,708.57 91,964,708.57
Wuhan Haier Freezer
Project 89,806,704.07 89,806,704.07 103,052,450.36 103,052,450.36
Hefei Haier Drum
Washing Machine
Project 87,599,984.93 87,599,984.93 54,949,612.93 54,949,612.93
Hefei Refrigerator Project 69,449,237.57 69,449,237.57 208,080,465.14 208,080,465.14
Qingdao Smart Appliance
Equipment Project 62,138,638.82 62,138,638.82 39,116,050.61 39,116,050.61
Tianjin Haier Washing
Appliance Project 51,851,612.74 51,851,612.74 59,409,379.45 59,409,379.45
Foshan Drum Washing
Machine Project 46,487,983.76 46,487,983.76 35,705,132.24 35,705,132.24
Special Refrigerator
Project 44,668,942.12 44,668,942.12 55,838,238.24 55,838,238.24
Others 796,764,668.50 1,094,312.52 795,670,355.98 841,367,421.17 1,204,981.72 840,162,439.45
Total 4,860,068,236.00 1,094,312.52 4,858,973,923.48 4,184,468,380.51 1,204,981.72 4,183,263,398.79
172 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(2) Details of significant changes of construction in progress for the period
Converted
difference in
Increase for foreign
Opening the current Transfer to currency Closing
Project Name balance period fixed tax Other decrease statements balance Source of fund
Smart home appliance
technology project 598,122,551.15 224,383,602.63 822,506,153.78 Self-funding
Eastern Europe Project 182,497,069.58 311,848,282.34 214,893,401.62 131,064,626.57 410,516,576.87 Self-funding
Shanghai Haier Washing
Appliance Project 4,756,839.22 300,218,244.20 304,975,083.42 Self-funding
Europe Candy Project 153,117,404.68 225,876,944.09 61,928,761.17 114,645,299.55 431,710,887.15 Self-funding
Special freezer Project 220,203,225.72 30,677,004.00 28,814,827.19 222,065,402.53 Self-funding
America GEA Project 722,008,600.99 156,597,708.77 677,235,170.56 20,023,690.24 221,394,829.44 Self-funding
Qingdao Jiaozhou
Washing Appliance
Project 167,168.14 192,445,321.17 167,168.14 192,445,321.17 Self-funding
Hailvyuan Recycling
Technology Project 58,589,285.46 127,691,464.28 186,280,749.74 Self-funding
Zhengzhou New Energy
Project 125,734,579.67 67,690,537.98 29,725,469.67 163,699,647.98 Self-funding
New Zealand FPA Project 111,516,266.46 97,733,306.99 45,251,422.96 –2,807,718.46 161,190,432.03 Self-funding
Qingdao Haier Washing
Machine Project 139,065,246.00 3,628,288.25 2,469,026.54 140,224,507.71 Self-funding
Self-funding/fund
Haier Indian Project 179,479,688.03 50,251,103.87 –1,592,454.54 127,636,129.62 raising
Foshan freezer Project 199,726,996.70 28,921,954.44 114,454,758.02 114,194,193.12 Self-funding
Haier Dishwasher Project 91,964,708.57 64,617,999.76 44,122,159.40 112,460,548.93 Self-funding
Wuhan Haier Freezer
Project 103,052,450.36 14,019,389.30 27,265,135.59 89,806,704.07 Self-funding
Hefei Haier Drum
Washing Machine
Project 54,949,612.93 54,785,576.69 22,135,204.69 87,599,984.93 Self-funding
Hefei Refrigerator Project 208,080,465.14 24,729,111.19 163,360,338.76 69,449,237.57 Self-funding
Qingdao Smart Appliance
Equipment Project 39,116,050.61 24,324,358.55 1,301,770.34 62,138,638.82 Self-funding
Tianjin Haier Washing
Appliance Project 59,409,379.45 16,185,270.24 23,743,036.95 51,851,612.74 Self-funding
Foshan Drum Washing
Machine Project 35,705,132.24 19,869,545.53 9,086,694.01 46,487,983.76 Self-funding
Special Refrigerator
Project 55,838,238.24 20,579,388.16 31,748,684.28 44,668,942.12 Self-funding
Self-funding/fund
Others 841,367,421.17 454,583,937.62 496,286,027.46 –2,900,662.83 796,764,668.50 raising
Total 4,184,468,380.51 2,461,407,236.18 2,044,240,161.22 258,432,780.53 4,860,068,236.00
Haier Smart Home Co., Ltd. Interim Report 2022 173
Section X Financial Report
(3) Impairment provision of construction in progress
Opening Increase for Transfer to Other Exchange Closing
Project name balance the period fixed assets decrease differences balance
Lejia IOT Project 837,735.85 837,735.85
Other 367,245.87 110,400.00 –269.20 256,576.67
Total 1,204,981.72 110,400.00 –269.20 1,094,312.52
16. Right-of-use assets
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 3,565,296,279.05 43,142,180.40 205,005,241.06
2. Increase for the current period
(1) Increase 1,161,271,114.89 301,257.21 25,412,104.57
3. Decrease for the current period
(1) Disposal 611,788,508.76 795,530.81 20,112,631.09
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements 156,242,728.76 –8,765,414.49 –8,987,426.53
5. Closing balance 4,271,021,613.94 33,882,492.31 201,317,288.01
II. Accumulated amortization
1. Opening balance 1,186,766,506.57 18,538,537.80 104,827,622.22
2. Increase for the current period
(1) Provision 323,725,547.97 4,949,946.49 34,038,164.63
3. Decrease for the current period
(1) Disposal 588,472,607.50 795,530.81 19,949,709.83
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements 9,634,131.77 –1,636,435.14 –7,304,649.12
5. Closing balance 931,653,578.81 21,056,518.34 111,611,427.90
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value 3,339,368,035.13 12,825,973.97 89,705,860.11
2. Opening book value 2,378,529,772.48 24,603,642.60 100,177,618.84
174 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(Continued)
Items Office furniture Other Total
I. Original book value:
1. Opening balance 56,885,631.59 392,228,761.08 4,262,558,093.18
2. Increase for the current period
(1) Increase 8,136,184.29 33,108,576.29 1,228,229,237.25
3. Decrease for the current period
(1) Disposal 1,559,558.19 202,958,067.53 837,214,296.38
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements —13,517,335.54 14,659,575.00 139,632,127.20
5. Closing balance 49,944,922.15 237,038,844.84 4,793,205,161.25
II. Accumulated amortization
1. Opening balance 17,981,428.91 199,765,091.15 1,527,879,186.65
2. Increase for the current period
(1) Provision 5,060,790.35 43,718,264.38 411,492,713.82
3. Decrease for the current period
(1) Disposal 1,559,558.19 202,958,067.53 813,735,473.86
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements —2,593,846.00 4,990,462.03 3,089,663.54
5. Closing balance 18,888,815.07 45,515,750.03 1,128,726,090.15
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Converted difference in foreign
currency statements
5. Closing balance
IV. Book Value
1. Closing book value 31,056,107.08 191,523,094.81 3,664,479,071.10
2. Opening book value 38,904,202.68 192,463,669.93 2,734,678,906.53
Haier Smart Home Co., Ltd. Interim Report 2022 175
Section X Financial Report
17. Intangible assets
√ Applicable □ Not Applicable
Proprietary Licenses and
Items technology franchises Land use rights
I. Original book value
1. Opening balance 1,852,677,632.57 4,242,396,745.16 1,266,446,332.10
2. Increase for the current period
(1) Purchase 1,037,735.83 961,872.37 46,392,458.56
(2) Internal research and
development 67,576,805.41
(3) Increase in business
combination
3. Decrease for the current period
(1) Disposal 20,192,568.03 60,749,402.91
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements –2,494,817.42 200,306,753.65 –500,060.67
5. Closing balance 1,918,797,356.39 4,423,472,803.15 1,251,589,327.08
II. Accumulated amortization
1. Opening balance 946,309,396.14 822,985,645.24 215,300,271.80
2. Increase for the current period
(1) Provision 102,719,184.79 15,472,631.47 15,366,965.82
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal 17,102,272.21 656,357.40
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements 3,510,077.04 72,622,670.10 52,947.00
5. Closing balance 1,052,538,657.97 893,978,674.60 230,063,827.22
176 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Proprietary Licenses and
Items technology franchises Land use rights
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreig n
currency statements
5. Closing balance
IV. Book Value
1. Closing book value 866,258,698.42 3,529,494,128.55 1,021,525,499.86
2. Opening book value 906,368,236.43 3,419,411,099.92 1,051,146,060.30
(Continued)
Application
management
software and
Items Trademark rights others Total
I. Original book value
1. Opening balance 2,475,717,142.63 4,195,088,908.80 14,032,326,761.26
2. Increase in the current period
(1) Purchase 72,126,713.97 120,518,780.73
(2) Internal research and
development 232,742,532.42 300,319,337.83
(3) Increase in business
combination
3. Decrease for the current period
(1) Disposal 35,194.39 25,688,952.22 106,666,117.55
(2) Disposal of subsidiary
(3) Transfer to hold for sale
Haier Smart Home Co., Ltd. Interim Report 2022 177
Section X Financial Report
Application
management
software and
Items Trademark rights others Total
4. Converted difference in foreign
currency statements –21,246,625.22 85,326,599.51 261,391,849.85
5. Closing balance 2,454,435,323.02 4,559,595,802.48 14,607,890,612.12
II. Accumulated amortization
1. Opening balance 2,441,416,170.95 4,426,011,484.13
2. Increase in the current period
(1) Provision 312,603,464.66 446,162,246.74
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal 17,946,662.17 35,705,291.78
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements 61,303,113.21 137,488,807.35
5. Closing balance 2,797,376,086.65 4,973,957,246.44
III. Impairment provision
1. Opening balance 55,930,533.23 55,930,533.23
2. Increase in the current period
(1) Provision
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Converted difference in foreign
currency statements
5. Closing balance 55,930,533.23 55,930,533.23
IV. Book value
1. Closing book value 2,454,435,323.02 1,706,289,182.60 9,578,002,832.45
2. Opening book value 2,475,717,142.63 1,697,742,204.62 9,550,384,743.90
At the end of the period, the intangible assets developed through the Company accounted for 18.76%
of the original value (at the beginning of the period：17.06%).
178 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
18. Development cost
Converted
difference in
foreign
Opening Increase for currency Closing
Items balance the period Decrease for the period statements balance
Confirmed as Included in
an intangible Current profit Disposal of
asset and loss subsidiaries
91ABD.ERP IT
Program 41,946,252.47 37,987,997.64 49,262,205.87 1,818,982.22 32,491,026.46
IOT Project 110,027,251.84 151,890,695.99 161,537,475.35 12,660,213.46 87,720,259.02
Others 75,918,724.82 210,205,140.79 89,519,656.61 76,108,815.49 –15,327,990.08 105,167,403.43
Total 227,892,229.13 400,083,834.42 300,319,337.83 88,769,028.95 –13,509,007.86 225,378,688.91
19. Goodwill
Impact of
fluctuation in
Increase for Decrease for exchange rate
Items Opening balance the period the period for the period Closing balance
GEA 18,938,463,729.43 993,795,916.39 19,932,259,645.82
Candy 1,877,121,985.56 –19,282,820.54 1,857,839,165.02
Others 1,011,517,345.77 –54,937,999.58 956,579,346.19
Total 21,827,103,060.76 919,575,096.27 22,746,678,157.03
In the case of a goodwill impairment test, the Company compares the carrying amount of the
relevant asset group or asset group combination (including goodwill) with its recoverable amount.
If the recoverable amount is less than the book value, corresponding difference will be
recognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discounted
estimated future cash flow method based on a management-approved 5–15 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growth
rate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistent
with industry forecast data and does not exceed the long-term average growth rate of each
product. The management determines the compound income growth rate (mainly 3%- 15.54%)
and the EBITDA profit margin (mainly 3%–14%) based on historical experience and market
development forecasts, and adopts the pre-tax interest rate that can reflect the specific risks of
the relevant asset group as the discount rate (mainly 9.42% –17.85%). The management analyzes
the recoverable amount of each asset group based on these assumptions and believes that there
is no need to make provision for goodwill.
Haier Smart Home Co., Ltd. Interim Report 2022 179
Section X Financial Report
20. Long-term prepaid expenses
Converted
Increase for Amortization for difference in
the current the current foreign currency
Items Opening balance period period Other decrease statements Closing balance
Renovation 341,401,034.69 221,864,471.45 147,742,517.01 49,069.43 415,572,058.56
Improvement on leased
property 153,829,229.13 6,586,874.52 11,665,192.70 1,337,698.99 150,088,609.94
Others 93,566,442.42 49,364,367.49 24,090,767.44 1,882,689.04 120,722,731.51
Total 588,796,706.24 277,815,713.46 183,498,477.15 3,269,457.46 686,383,400.01
21. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets before elimination
Closing
Items balance Opening balance
Provision for assets impairment 455,770,682.35 354,806,051.43
Liabilities 1,199,049,482.58 1,405,119,092.59
Internal unrealized earnings eliminated due to
combination 412,996,571.07 619,291,715.60
Government grants 65,451,012.87 163,806,221.87
Uncovered losses 827,520,243.52 817,306,157.01
Others 306,999,705.89 286,586,600.19
Total 3,267,787,698.28 3,646,915,838.69
(2) Deferred income tax liabilities before elimination
Closing
Item balance Opening balance
Asset amortisation 2,612,909,276.23 2,318,829,386.48
Remeasurement of fair value of the
remaining equity interest on the date of
loss of control 878,623,804.46 878,623,804.46
Changes in fair value of investments in other
equity instruments 292,550,406.68 292,476,080.49
Others 601,342,956.88 421,341,222.80
Total 4,385,426,444.25 3,911,270,494.23
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of this period was RMB1,868,424,500.53 (amount at the beginning of the period:
RMB1,789,467,320.40).
180 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
22. Other non-current assets
Closing Opening
Item balance balance
Prepayments for equipment and land 1,493,069,487.59 1,859,693,694.07
Others 257,921,485.70 304,690,319.07
Total 1,750,990,973.29 2,164,384,013.14
23. Short-term borrowings
(1) Classification of short-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Borrowings — secured by pledge 132,610,219.46 255,103,925.36
Borrowings － secured by gurantee 287,673,529.00 304,896,830.40
Borrowings — unsecured 12,728,578,402.59 10,661,927,352.96
Interest payable for short-term borrowings 10,707,152.42 4,284,025.67
Total 13,159,569,303.47 11,226,212,134.39
24. Financial liabilities held for trading
Closing
Item balance Opening balance
Forward foreign exchange contracts 79,270,648.00 6,294,014.40
Total 79,270,648.00 6,294,014.40
25. Derivative financial liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Forward foreign exchange contracts 50,925,674.51 60,527,532.76
Forward commodity contracts 24,918,179.06
Interest rate swap agreement 1,223,112.98 19,684,900.48
Total 77,066,966.55 80,212,433.24
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26. Bills payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Commercially acceptance notes 3,942,641,684.10 3,022,602,833.31
Bank acceptance notes 24,012,446,582.98 22,000,635,573.41
Total 27,955,088,267.08 25,023,238,406.72
27. Accounts payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Accounts payable 38,977,127,139.49 42,396,109,648.76
Total 38,977,127,139.49 42,396,109,648.76
The ending book balance is mainly the advance payment that has been collected and has not
yet performed the contractual obligations.
28. Contract liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Contract liabilities 5,397,435,938.66 10,027,091,593.60
Total 5,397,435,938.66 10,027,091,593.60
The book balance at the end of the period was mainly due to the advance payment that has
been collected and has not yet performed the contractual obligations.
182 Haier Smart Home Co., Ltd. Interim Report 2022
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29. Payables for staff’s remuneration
(1) Payables for staff’s remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
I. Short-term remuneration 3,985,572,611.32 12,372,081,213.66 13,380,927,669.30 2,976,726,155.68
II. Post-employment
benefits-defined
contribution plan 18,949,702.17 692,714,047.99 636,031,124.88 75,632,625.28
III. Termination benefits 9,818,188.41 1,385,509.59 1,385,509.59 9,818,188.41
IV. Other benefits due
within one year 101,599,133.34 56,162,753.31 63,984,691.16 93,777,195.49
Total 4,115,939,635.24 13,122,343,524.55 14,082,328,994.93 3,155,954,164.86
(2) Short-term remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
I. Salaries, bonus,
allowance and
benefit 2,845,636,628.83 9,253,069,040.11 10,202,853,922.29 1,895,851,746.65
II. Employee welfare 321,996,794.22 449,278,231.27 455,875,857.26 315,399,168.23
III. Social benefit 171,645,833.66 798,357,880.79 778,939,560.28 191,064,154.17
IV. Housing fund 11,137,621.51 249,412,342.32 222,501,879.20 38,048,084.63
V. Labor union fee and
education fee 3,512,041.39 50,357,157.86 50,352,259.63 3,516,939.62
VI. Short-term
compensated
absences 268,213,164.85 245,925,928.71 238,516,364.01 275,622,729.55
VII. Others 363,430,526.86 1,325,680,632.60 1,431,887,826.63 257,223,332.83
Total 3,985,572,611.32 12,372,081,213.66 13,380,927,669.30 2,976,726,155.68
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(3) Defined contribution plan
√ Applicable □ Not Applicable
Unit and Currency: RMB
Decrease for
Increase for the current the
Items Opening balance current period period Closing balance
I. Basic pension insurance 18,396,477.11 651,265,918.55 595,881,144.31 73,781,251.35
II. Unemployment
insurance 132,417.35 16,469,204.68 16,153,403.18 448,218.85
III. Enterprise annuity
payment 420,807.71 24,978,924.76 23,996,577.39 1,403,155.08
Total 18,949,702.17 692,714,047.99 636,031,124.88 75,632,625.28
(4) Termination benefits
Opening
Items Closing balance 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
Opening
Items Closing balance balance
Value-added tax 1,132,740,094.75 961,177,432.39
Enterprise income tax 1,359,436,105.72 1,307,101,572.02
Individual income tax 56,493,685.90 94,881,505.62
City maintenance and construction tax 31,212,179.57 40,370,470.70
Education surcharge 13,646,982.77 16,171,169.66
The electrical and electronic products waste
treatment fund 80,351,158.58 95,522,090.50
Other taxes 74,131,498.30 90,284,462.67
Total 2,748,011,705.59 2,605,508,703.56
184 Haier Smart Home Co., Ltd. Interim Report 2022
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31. Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Dividends payable 4,321,692,240.21 10,639,313.22
Other payables 18,069,812,569.98 17,522,730,703.79
Total 22,391,504,810.19 17,533,370,017.01
(1) Dividends payable:
Name of company Closing balance Opening balance
Haier Group Corporation 494,859,702.08
Haier Cosmo Co., Limited 580,706,830.40
Other Shareholders of Social Shares 3,246,125,707.73 10,639,313.22
Total 4,321,692,240.21 10,639,313.22
(2) Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Other payables 18,069,812,569.98 17,522,730,703.79
Total 18,069,812,569.98 17,522,730,703.79
The closing balance at the end of the period mainly included the incurred but unpaid costs.
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32. Non-current liabilities due within one year
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Long-term borrowings due within one year 9,321,663,925.51 6,745,950,334.20
Lease liabilities due within one year 830,251,373.67 687,991,183.42
Estimated liabilities due within one year 2,093,647,663.56 2,190,397,652.84
Bond payables due within one year 244,655,820.72
Total 12,490,218,783.46 9,624,339,170.46
33. Other current liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Payable refund 641,035,214.33 655,801,519.33
Tax amount to be written off 633,816,441.43 1,568,670,492.94
Super-short-term bonds
Others 11,342,818.05 14,295,539.13
Total 1,286,194,473.81 2,238,767,551.40
Other explanations:
□ Applicable √ Not Applicable
34. Long-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings — unsecured 2,119,243,998.96 3,038,573,824.53
Total 2,119,243,998.96 3,038,573,824.53
Interest rates of long-term loans of the Company ranged from 1.54% to 5.00%.
186 Haier Smart Home Co., Ltd. Interim Report 2022
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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 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:
Exchangeable corporate bonds
Items 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
(1) Changes in the liability portion of corporate bonds in the current period:
Less: Bond
Accrued bond interest paid for Shares Shares redeemed
Increase for the interest for the the current Exchange rate converted in the in the current
Items Opening balance current period current period period impact current period period Closing balance
Convertible corporate
bonds (“CB”) 334,730,048.82 3,645,444.33 104,128,286.20 10,408,613.77 244,655,820.72
Total 334,730,048.82 3,645,444.33 104,128,286.20 10,408,613.77 244,655,820.72
(2) Closing balance of bond payables
Items Closing balance Opening balance
Bond payables 244,655,820.72 334,730,048.82
Less: bond payables due within one year 244,655,820.72
Total — 334,730,048.82
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36. Lease liabilities
Items Closing balance Opening balance
Lease liabilities 3,594,196,007.40 2,648,886,164.89
Less: lease liabilities due within one year 830,251,373.67 687,991,183.42
Total 2,763,944,633.73 1,960,894,981.47
37. Long-term payables
Items Closing balance Opening balance
Investment from CDB development fund 36,500,000.00 36,500,000.00
Others 12,853,671.92 63,102,707.76
Less: long-term payables due within one year
Total 49,353,671.92 99,602,707.76
Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,
China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou) 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 2022,
subsidiaries of the Company repurchased RMB36.50 million.
38. Long-term payables for staff’s remuneration
√ Applicable □ Not Applicable
(1) Long-term payables for staff’s remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
Opening
Items Closing balance balance
I. Post-employment benefits-net liability of defined
benefit plan 543,028,353.07 517,077,143.43
II. Termination benefits 427,728,738.99 453,425,129.57
III. Other long-term benefits
IV. Provision for work-related injury compensation 201,884,985.82 202,649,488.64
Total 1,172,642,077.88 1,173,151,761.64
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(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 279,152,422.12
II. Defined benefit cost recognized in current profit or loss 8,127,898.84
1. Current service cost 8,127,898.84
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses
III. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
IV. Other changes –32,185,093.79
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences –32,185,093.79
V. Closing balance 255,095,227.17
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Fair value of plan assets
Items Amount
I. Opening balance 337,081,685.24
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 –29,042,363.63
1. Employer contributions 9,822,252.35
2. Benefits paid
3. Exchange differences –38,864,615.98
V. Closing balance 308,039,321.61
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 –57,929,263.12
II. Defined benefit cost recognized in current profit or loss 8,127,898.84
III. Defined benefit cost recognized in other comprehensive
income
IV. Other changes –3,142,730.16
V. Closing balance –52,944,094.44
The average term for the defined benefit obligation is 11.73 years at the balance
sheet date.
190 Haier Smart Home Co., Ltd. Interim Report 2022
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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
defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 2.91%
Present value of defined benefit obligations
Item Amount
I. Opening balance 128,979,684.17
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 11,151,712.37
1. Current period service cost 7,729,103.67
2. Past service cost
3. Settlement gains ((loss indicated in “–”)
4. Interest expenses 3,422,608.70
IV. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
V. Other changes –442,300.02
1. The consideration paid at the time of settlement
2. Benefits paid –7,364,356.69
3. Exchange differences 6,922,056.67
VI. Closing balance 139,689,096.52
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 128,979,684.17
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 11,151,712.37
IV. Defined benefit cost recognized in other comprehensive
income
V. Other changes –442,300.02
VI. Closing balance 139,689,096.52
The average term for the defined benefit obligation is 10.68 years at the balance
sheet date.
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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.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 2.62%
Present value of defined benefit obligations
Items Amount
I. Opening balance 221,602,455.52
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 14,160,180.44
1. Current period service cost 11,302,750.80
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses 2,857,429.64
IV. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
V. Other changes –14,185,489.79
1. The consideration paid at the time of settlement
2. Benefits paid –25,462,931.24
3. Exchange differences 11,277,441.45
VI. Closing balance 221,577,146.17
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 221,602,455.52
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 14,160,180.44
IV. Defined benefit cost recognized in other comprehensive
income
V. Other changes –14,185,489.79
VI. Closing balance 221,577,146.17
192 Haier Smart Home Co., Ltd. Interim Report 2022
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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 2.61%
Present value of defined benefit obligations
Items Amount
I. Opening balance 166,510,439.87
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 5,234,493.60
1. Current service cost 4,697,968.57
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses 536,525.03
IV. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
V. Other changes –25,682,890.10
1. The consideration paid at the time of settlement
2. Benefits paid –33,474,257.78
3. Exchange differences 7,791,367.68
VI. Closing balance 146,062,043.37
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Fair value of plan assets
Items Amount
I. Opening balance 126,020,077.85
II. Defined benefit cost recognized in current profit or loss 1,415,308.99
1. Interest income 1,415,308.99
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 –24,249,168.88
1. Employer contributions 3,574,130.55
2. Benefits paid –33,474,257.78
3. Exchange differences 5,650,958.35
V. Closing balance 103,186,217.96
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 40,490,362.02
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 3,819,184.61
IV. Defined benefit cost recognized in other comprehensive
income
V. Other changes –1,433,721.22
VI. Closing balance 42,875,825.41
194 Haier Smart Home Co., Ltd. Interim Report 2022
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(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 202,649,488.64
II. Business combination not under common control
III. Compensation recognized in current profit and loss 42,595,195.29
IV. Actual compensation paid in the current period –31,089,549.42
V. Other changes –12,270,148.69
VI. Closing balance 201,884,985.82
Classification of the balance of defined benefit plan
Items Closing balance Opening balance
Short-term salary 20,343,350.71 32,502,729.33
Long-term salary 543,028,353.07 517,077,143.43
Total 563,371,703.78 549,579,872.76
39. Estimated liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Opening balance Closing balance
Pending litigation 29,259,869.48 28,403,516.67
Others 252,996,489.56 237,072,214.65
Projection of three guarantees and installation fees 1,666,309,118.07 1,511,341,428.95
Total 1,948,565,477.11 1,776,817,160.27
Significant assumption and estimation relating to projection of three guarantees and installation
fees: the Company reasonably estimated the three guarantees and installation fee rate based on
its actual expenses on the three guarantees and installation fees as well as sales data in 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.
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40. Deferred income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Government grants 852,794,567.20 121,524,102.45 67,775,099.53 906,543,570.12
Total 852,794,567.20 121,524,102.45 67,775,099.53 906,543,570.12
41. Share capital
Increase for Decrease for
Opening the current the current Closing
Categories of shares balance period period balance
I. Restricted shares
1. State-owned shares
2. Shares held by
domestic non-state-
owned legal entities
3. Shares held by
domestic individuals
4. Shares held by
offshore non-state-
owned legal entities
II. Non-restricted shares 9,398,704,530 48,087,440 9,446,791,970
1. Ordinary shares in
RMB 6,308,552,654 6,308,552,654
2. Domestic listed
foreign Shares
3. Offshore listed foreign
Shares 3,090,151,876 48,087,440 3,138,239,316
4. Others
III. Total shares 9,398,704,530 48,087,440 9,446,791,970
196 Haier Smart Home Co., Ltd. Interim Report 2022
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42. Other equity instruments
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Equity portion of convertible
bonds 118,017,507.59 36,677,120.16 81,340,387.43
Total 118,017,507.59 36,677,120.16 81,340,387.43
43. Capital reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Capital premium (share capital
premium) 21,504,525,556.91 1,061,307,365.80 155,443,570.29 22,410,389,352.42
Other capital reserve 1,074,849,182.55 350,146,476.28 14,455,372.85 1,410,540,285.98
Total 22,579,374,739.46 1,411,453,842.08 169,898,943.14 23,820,929,638.40
The main reasons for the change in share premium: The non-public offering of H shares during
the period resulted in the increase in share premium of RMB898,627,404.94; the conversion of
CB shares during the period resulted in the increase in share premium of RMB134,131,566.36;
the common control combination occurred during the period resulted in the decrease in share
premium by RMB152,818,769.28.
The main reasons for the change in other capital reserve: The amortized share-based payment
for the period included in other capital reserve was RMB332,853,517.66.
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44. Other comprehensive income
Items Amount for the current period
Amount
Amount attributable to
Amount before Deduction of attributable to the minority
income tax in the impact on parent company shareholders after
Opening balance current period income tax after tax tax Others Closing balance
a –341,470,688.45 108,350,151.43 108,350,151.43 –233,120,537.02
b 1,618,386.47 44,150,892.48 –13,269,887.07 25,995,214.10 4,885,791.31 27,613,600.57
c –1,916,614,455.79 2,771,447,499.33 2,777,826,143.89 –6,378,644.56 861,211,688.10
d 1,005,776,349.60 —56,688,764.76 6,440,238.56 –50,208,727.45 –39,798.75 955,567,622.15
e 73,838,708.25 5,026,518.27 –464,348.29 4,562,166.91 3.07 78,400,875.16
Total –1,176,851,699.92 2,872,286,296.75 –7,293,996.80 2,866,524,948.88 –1,532,648.93 1,689,673,248.96
Notes:
(1) Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, the details are as follows:
Item a represents other comprehensive income classified into profit and loss under the equity method.
Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge). Item c
represents the balance arising from translation of foreign currency financial statements.
(2) Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
198 Haier Smart Home Co., Ltd. Interim Report 2022
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45. Surplus reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Statutory surplus reserve 3,390,959,108.25 3,390,959,108.25
Discretionary surplus reserve 26,042,290.48 26,042,290.48
Reserve fund 11,322,880.64 11,322,880.64
Enterprise development fund 10,291,630.47 10,291,630.47
Total 3,438,615,909.84 3,438,615,909.84
46. Undistributed profits
√ Applicable □ Not Applicable
Items Amounts
Undistributed profits at the end of previous year 47,907,134,328.80
Changes in accounting policies
Business combination under common control 10,777,931.35
Undistributed profits at the beginning of the year 47,917,912,260.15
Add: net profit attributable to owners of the parent company 7,949,084,472.70
Other transfer in 189,803,613.66
Adjustment due to implementation of enterprise accounting standard①
Profit available for appropriation for the year 56,056,800,346.51
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares –4,320,445,666.86
Undistributed profits at the end of period 51,736,354,679.65
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47. Operating income and operating cost
(1) Operating income
Amount for the Amount for the
Items current period previous period
Primary business 121,248,482,590.74 111,070,737,835.16
Other business 609,039,871.48 657,018,375.90
Total 121,857,522,462.22 111,727,756,211.06
(2) Primary business income and primary business cost by product category
Amount for the Amount for the
current period previous period
Primary business Primary business Primary business Primary business
Categories income cost income cost
Air conditioner 23,670,538,686.34 17,107,788,658.52 21,626,942,343.55 15,570,568,221.85
Refrigerator 37,913,367,317.50 26,475,741,807.66 33,637,015,872.13 23,400,300,288.46
Kitchen appliance 18,750,037,462.88 12,816,780,100.13 16,918,040,488.85 11,715,172,134.94
Water appliance 6,713,300,912.43 3,934,510,287.34 5,778,983,645.59 3,336,143,841.42
Washing machine 26,516,919,361.82 17,907,657,332.94 24,988,233,426.16 16,920,815,831.58
Equipment product and
integrated channel
services 7,684,318,849.77 6,682,457,643.78 8,121,522,058.88 7,069,369,377.40
Total 121,248,482,590.74 84,924,935,830.37 111,070,737,835.16 78,012,369,695.65
200 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
48. Taxes and surcharge
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
City construction tax 122,226,136.72 117,279,029.59
Education surcharge 88,480,235.93 85,175,835.15
Property tax 28,716,064.84 25,464,790.86
Land use tax 7,536,240.97 7,635,139.14
Stamp duty 91,371,622.87 84,907,708.18
Others 18,835,304.10 19,026,156.24
Total 357,165,605.43 339,488,659.16
49. Selling expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Selling expenses 17,605,612,224.80 16,731,407,296.02
Total 17,605,612,224.80 16,731,407,296.02
The Company’s selling expenses are mainly salary expenses, transportation and storage expenses,
advertising and promotion expenses, and after-sales expenses etc.
50. Administrative expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Administrative expenses 5,132,033,156.92 5,047,535,410.71
Total 5,132,033,156.92 5,047,535,410.71
The Company’s management expenses are mainly salary expenses, administrative office expenses,
depreciation and amortization of assets fees, etc.
Haier Smart Home Co., Ltd. Interim Report 2022 201
Section X Financial Report
51. R&D expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Item current period previous period
R&D expenses 4,595,691,525.07 3,738,316,873.21
Total 4,595,691,525.07 3,738,316,873.21
The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspection
and testing fees.
52. Financial expenses
Amount for the Amount for the
Items current period previous period
Interest expenses 345,810,365.32 363,287,457.45
Less: Interest income 362,045,401.51 264,658,985.86
Less: Cash discount 79,106,314.27 82,709,178.40
Exchange gains and losses –169,143,266.33 211,633,480.85
Others 62,257,534.62 67,993,563.13
Total –202,227,082.17 295,546,337.17
Interest expenditure in lease liabilities in the current period is RMB37,109,559.27 (interest expenditure
in lease liabilities in the corresponding period: RMB50,962,914.77).
53. Other income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Government grants related to revenue 493,172,631.97 338,438,305.23
Government grants related to assets 53,070,066.97 39,678,023.49
Total 546,242,698.94 378,116,328.72
202 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
54. Investment income
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Income from long-term equity investment
calculated by equity method 936,511,207.40 942,666,393.83
Investment income from disposal of long-term
equity investment 11,181,922.82
Dividend income from other equity instruments
investment during holding period 2,596,583.32 440,255.20
Income from wealth management products 42,007,117.65 28,216,179.52
Investment income from disposal of financial
assets at fair value through profit or loss 178,039,912.22 164,957,510.67
Total 1,170,336,743.41 1,136,280,339.22
55. Gains on changes in fair value (losses are represented by “-”)
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Changes in fair value of forward foreign exchange
contracts –53,088,495.38 46,929,961.72
Changes in fair value of equity instrument
investments –67,322,769.58 15,457,768.79
Changes in fair value of wealth management
products 1,621,089.28 1,881,780.81
Total –118,790,175.68 64,269,511.32
Haier Smart Home Co., Ltd. Interim Report 2022 203
Section X Financial Report
56. Credit impairment loss
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Bad debts losses on bills receivable –31,492,310.29 156,696.60
Bad debts losses on accounts receivable –222,677,055.12 –33,122,995.20
Bad debts losses on other receivables –3,907,480.73 –11,065,124.61
Total –258,076,846.14 –44,031,423.21
57. Impairment loss on assets (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Impairment losses on inventory –371,859,276.93 –402,766,436.32
Impairment losses on other current assets –335,202,670.88 –228,869,824.32
Impairment losses on fixed assets –21,751,066.24
Total –707,061,947.81 –653,387,326.88
58. Gains on disposal of assets (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 38,409,742.18 157,808,087.44
Losses on disposal of non-current assets –6,820,535.08 –15,393,133.19
Total 31,589,207.10 142,414,954.25
204 Haier Smart Home Co., Ltd. Interim Report 2022
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59. Non-operating income
√ Applicable □ Not Applicable
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 96,551.42 924,615.55
Quality claims and fines 25,959,518.87 19,559,885.95
Others 42,798,157.12 59,682,895.64
Total 68,854,227.41 80,167,397.14
60. Non-operating expenses
Amount for the Amount for the
Items current period previous period
Losses on disposal of non-current assets 9,060,187.94 7,928,197.15
Others 34,475,363.74 43,136,498.89
Total 43,535,551.68 51,064,696.04
61. Income tax expenses
(1) Statement of income tax expenses
Amount for the Amount for the
Items current period previous period
Current income tax expenses 1,240,831,826.79 985,282,651.38
Deferred income tax expenses 759,910,099.57 540,467,141.62
Total 2,000,741,926.36 1,525,749,793.00
Haier Smart Home Co., Ltd. Interim Report 2022 205
Section X Financial Report
(2) Current reconciliation between accounting profit and income tax expenses
Items Amounts
Total accounting profit 9,997,672,068.52
Income tax expenses calculated pursuant to statutory tax rate(s) 2,499,418,017.12
Impact from different tax rates applicable to subsidiaries –544,232,640.78
Impact from adjustment to income tax in prior periods –162,828,321.06
Impact from non-taxable income –224,434,783.55
Impact from non-deductible cost, expense and loss 67,350,658.86
Impact from deductible provisional differences or deductible losses of
unrecognized deferred tax 434,970,684.94
Others –69,501,689.17
Total income tax expense 2,000,741,926.36
62. Other comprehensive income
√ Applicable □ Not Applicable
Please refer to Note VII. 44 for details.
63. Other cash received from operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Deposits and securities 93,387,920.50
Government grants 373,042,872.09
Non-operating income excluding government grants 26,813,348.55
Interest income 258,507,374.28
Others 89,543,300.32
Total 841,294,815.74
206 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
64. Other cash paid to operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Cash paid on selling expenses 10,010,028,996.55
Cash paid on administrative and R&D expenses 3,442,392,616.83
Cash paid on financial expenses 68,146,435.16
Non-operating expenses 3,136,224.43
Others 117,915,539.69
Total 13,641,619,812.66
65. Other cash received from financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Others 1,000,235.35
Total 1,000,235.35
66. Other cash paid to financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Cash paid to lease 333,323,858.52
Repurchase of shares 1,538,651,010.37
Expenses from issuance of H-shares 2,964,303.96
Others 1,638,600.00
Total 1,876,577,772.85
Haier Smart Home Co., Ltd. Interim Report 2022 207
Section X Financial Report
67. Net profit adjusted to cash flow of operating activities
Net profit adjusted to cash flow of operating Amount for the Amount for the
activities current period previous period
1. Net profit 7,996,930,142.16 6,946,009,059.74
Add: impairment provision for assets 965,138,793.95 697,418,750.09
Depreciation of fixed assets 2,206,781,413.69 2,112,591,601.45
Amortization of intangible assets 446,162,246.74 465,527,405.85
Amortization of long-term prepaid expenses 183,498,477.15 110,874,756.18
Losses on disposal of fixed assets, intangible
assets and other long-term assets (‘-’
represents ‘gains’) –22,625,570.58 –135,411,372.65
Loss and gains on change of fair value (‘-’
represents ‘gains’) 118,790,175.68 –64,269,511.32
Financial expenses (‘-’ represents ‘gains’) 176,667,098.99 574,900,097.68
Loss on investments (‘-’ represents ‘gains’) –1,170,336,743.41 –1,136,280,339.22
Decrease in deferred income tax assets (‘-’
represents ‘increase’) 404,639,263.48 549,883,365.96
Increase of deferred income tax liabilities (‘-’
represents ‘decrease’) 355,270,836.09 –9,416,224.31
Decrease in inventories (‘-’ represents ‘increase’) –1,477,232,081.57 –3,760,150,208.14
Decrease of operational account receivables (‘-’
represents ‘increase’) –3,324,723,794.98 –2,216,760,781.29
Increase of operational account payables (‘-’
represents ‘decrease’) –1,281,315,120.75 4,323,142,646.68
Others 386,602,520.58 –15,864,086.39
Net cash flow generated from operational activities 5,964,247,657.22 8,442,195,160.31
2. Significant investment and financing
activities
not involving cash inflows and outflows:
Capital transferred from debts 104,128,286.20 6,277,583,752.41
Convertible corporate bonds due within one year 244,655,820.72
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period 49,265,187,950.08 41,228,686,922.70
Less: cash balance at the beginning of the period 45,071,366,271.21 45,738,120,000.70
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 4,193,821,678.87 —4,509,433,078.00
208 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
68. Cash and cash equivalents
Items Closing balance Opening balance
I. Cash 49,265,187,950.08 45,071,366,271.21
Including: cash on hand 912,949.13 3,085,964.28
Bank deposits always available for payment 48,618,833,840.21 44,884,013,498.57
Other monetary funds always available for
payment 645,441,160.74 184,266,808.36
II. Cash equivalents
Including: Bond investments due within three
months
III. Closing balance of cash and cash equivalents 49,265,187,950.08 45,071,366,271.21
Haier Smart Home Co., Ltd. Interim Report 2022 209
Section X Financial Report
69. Monetary items in foreign currency
Items Closing balance Opening balance
Balance in Balance in
foreign Exchange Balance foreign Exchange Balance
currency rate in RMB currency rate in RMB
Monetary funds
USD 821,482,280.28 6.7114 5,513,296,175.84 850,630,647.69 6.3757 5,423,365,820.48
EUR 78,855,228.66 7.0084 552,648,984.57 149,225,110.60 7.2197 1,077,360,530.99
JPY 5,996,642,282.85 0.049136 294,651,015.21 10,520,503,841.74 0.055415 582,993,720.39
HKD 556,953,838.73 0.8552 476,306,922.88 483,444,582.35 0.8176 395,264,290.53
Others 2,832,750,561.34 2,955,290,563.22
Subtotal 9,669,653,659.84 10,434,274,925.61
Accounts receivables
USD 954,504,870.98 6.7114 6,406,063,991.10 721,343,093.77 6.3757 4,599,067,162.94
EUR 451,436,990.50 7.0084 3,163,851,004.22 413,528,990.85 7.2197 2,985,555,255.25
JPY 4,145,366,008.83 0.049136 203,686,704.21 4,064,574,659.93 0.055415 225,238,404.78
Others 4,219,899,122.68 3,668,237,038.46
Subtotal 13,993,500,822.21 11,478,097,861.43
Short-term borrowings
USD 389,158,946.13 6.7114 2,611,801,351.09 347,844,969.69 6.3757 2,217,755,173.25
EUR 1,044,112,198.27 7.0084 7,317,555,930.38 883,863,602.21 7.2197 6,381,230,048.85
JPY 740,035,110.71 0.049136 36,362,365.20 623,360,869.80 0.055415 34,543,542.60
HKD 2,600,000,000.00 0.8552 2,223,520,000.00 2,600,000,000.00 0.8176 2,125,760,000.00
Others 752,120,202.25 328,850,057.11
Subtotal 12,941,359,848.92 11,088,138,821.81
Accounts payables
USD 2,215,683,621.44 6.7114 14,870,339,056.95 2,033,952,669.54 6.3757 12,967,872,035.21
EUR 617,905,515.03 7.0084 4,330,529,011.55 640,851,532.98 7.2197 4,626,755,812.65
JPY 6,923,831,822.49 0.049136 340,209,400.43 8,161,874,338.90 0.055415 452,290,266.49
NZD 207,421,161.10 4.1771 866,418,932.05 151,371,298.46 4.3553 659,267,416.20
Others 3,422,870,500.22 3,268,885,987.84
Subtotal 23,830,366,901.20 21,975,071,518.39
Non-current liabilities due in one year
USD 1,088,778,232.77 6.7114 7,307,226,231.42 757,148,488.12 6.3757 4,827,351,615.72
EUR 172,986,633.48 7.0084 1,212,359,522.06 214,053,730.55 7.2197 1,545,403,718.47
JPY 1,664,720,591.01 0.049136 81,797,710.96 3,705,244,389.61 0.055415 205,326,117.85
RUB 532,452,480.00 0.1285 68,420,143.68 651,073,870.06 0.0855 55,666,815.89
Others 1,535,283,774.82 1,589,397,292.33
Subtotal 10,205,087,382.94 8,223,145,560.26
210 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Items Closing balance Opening balance
Balance in Balance in
foreign Exchange Balance foreign Exchange Balance
currency rate in RMB currency rate in RMB
Long-term borrowings
USD 52,000,000.00 6.7114 348,992,800.00 403,838,717.50 6.3757 2,574,754,511.17
EUR 34,145,508.68 7.0084 239,305,383.00 37,498,911.17 7.2197 270,730,888.98
RUB 250,000,000.00 0.1285 32,125,000.00 186,061,000.00 0.0855 15,908,215.50
JPY 2,640,540,340.48 0.049136 129,745,590.17 3,197,333,012.36 0.055415 177,180,208.88
Subtotal 750,168,773.17 3,038,573,824.53
VIII. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
√ Applicable □ Not Applicable
2. Business consolidation under common control
√ Applicable □ Not Applicable
(1). Business combination under common control occurring in the current period
The basis for
the transaction
The proportion of constituting
of equity business Recognition
acquired in the combination basis of
Name of the business under common Combination combination
acquiree combination control date date
Qingdao Ririshun 100.00% Controlled by 2022.6 Subject equity-
Service Co., Ltd. Haier Group related right and
Corporation obligation
before and after transferred to the
combination Company
Qingdao TAB Robot 100.00% Controlled by 2022.6 Subject equity-
Technology Co., Haier Group related right and
LTD. Corporation obligation
before and after transferred to the
combination Company
Haier Smart Home Co., Ltd. Interim Report 2022 211
Section X Financial Report
(Continued)
The income of Net profit of
the acquiree the acquiree
from the from the
beginning of beginning of The income of Net profit of
the current the current the acquiree the acquiree
period to period to during the during the
Name of the combination combination comparison comparison
acquiree date date period period
Qingdao Ririshun 37,211.90 1,421,013.21 66,451,627.95 1,008,319.99
Service Co., Ltd.
Qingdao TAB Robot 205,120,142.19 3,052,468.49 94,431,139.69 4,527,315.67
Technology Co.,
LTD.
(2). Combination cost
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000
Qingdao Ririshun Qingdao TAB Robot
Combination cost Service Co., Ltd. Technology Co., LTD.
—Cash 5,095.78 12,500.00
—Equity 3,216.91 /
(3). Book value of acquiree’s assets and liabilities as at the combination date
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Qingdao Ririshun Service Co., Ltd.
Combination End of the
date previous period
Monetary funds 46,604,249.71 59,493,989.32
Accounts receivables 1,041,138.30 1,144,058.93
Inventories 1,837,248.48 1,879,270.49
Other current assets 4,840.17 778,605.93
Less: Accounts payables 12,023,461.45 26,719,700.69
Payables for staff’s remuneration 65,143.90 988,310.00
Taxes payable 383,755.86 337.90
Other current liabilities 118,797.58 112,271.42
Net assets 36,896,317.87 35,475,304.66
212 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Qingdao TAB Robot
Items Technology Co., LTD.
Combination End of the
date previous period
Monetary funds 70,965,249.26 54,371,498.79
Accounts receivables 35,633,561.58 32,228,299.73
Inventories 64,895,694.34 36,212,378.79
Other current assets 990,753.45
Long-term assets 742,124.92 1,559,671.95
Deferred income tax assets 2,638,785.39 2,638,785.39
Less: Accounts payables 108,357,839.93 64,054,579.25
Payables for staff’s remuneration 997,688.00 1,069,738.28
Taxes payable 2,702,903.89 1,824,903.82
Non-current liabilities due in one year 647,508.67 1,324,322.70
Other current liabilities 3,514,317.62 4,125,155.16
Net assets 58,655,157.38 55,602,688.89
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Yantai Ririshun
Electronics
Items Co., Ltd.
Equity disposal price 26,139,242.23
Proportion of equity disposal 81%
Method of equity disposal Disposal
Time of loss-of-control 2022.1
Basis for determination the time of loss-of-control Transfer
Difference between consideration and its share of net assets of the
subsidiary as respect to the disposal in the consolidated level –4,432,192.08
4. Changes of consolidation scope due to other reasons
√ Applicable □ Not Applicable
(1) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established
a subsidiary, Chengdu Yunshang Meier Yilian Technology Co., Ltd. (成都云裳美尔衣联科技
有限公司) for the period.
(2) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established
a subsidiary, Beijing Yunshang Yilian Technology Co., Ltd. (北京云裳衣联科技有限公司) for
the period.
(3) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established
a wholly-owned subsidiary, Chengdu Yunshang Yilian Technology Co., Ltd. (成 都 云 裳 衣 联
科 技 有限 公司 ) for the period.
(4) Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company, established a wholly-
owned subsidiary, Qingdao Haier Water Ecology Technology Co., Ltd. (青 岛 海 尔 水 生 态 科
技 有 限公 司) for the period.
Haier Smart Home Co., Ltd. Interim Report 2022 213
Section X Financial Report
IX. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1). Composition of the Group
√ Applicable □ Not Applicable
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Flourishing Reach Mainland of China British Virgin Group company, which 100.00 100.00 Establishment
Limited Islands mainly engage in
investment holding, the
production and sale of
washing machines and
water heaters,
distribution service
Haier Electronics Mainland of China Bermuda Group company, which 100.00 100.00 Establishment
Group Co., Ltd. and Hong Kong mainly engage in
investment holding, the
production and sale of
water equipment,
distribution service
Haier U.S. Appliance the United States the United Group company, which 100.00 100.00 Establishment
Solutions, Inc. States mainly engage in home
appliances production
and distribution
business
Haier Singapore Singapore and Singapore Group company, which 100.00 100.00 Business
Investment Holding other overseas mainly engage in home combination
Co., Ltd. areas appliances production under common
and distribution control
business
Haier New Zealand New Zealand New Zealand Group company, which 100.00 100.00 Business
Investment Holding mainly engage in home combination
Company Limited appliances production under common
and distribution control
business
Candy S.p.A Europe Italy Group company, which 100.00 100.00 Business
mainly engage in home combination not
appliances production under common
and distribution control
business
Qingdao Haier Air Qingdao High-tech Qingdao Manufacture and sale of 100.00 100.00 Business
Conditioner Gen Zone High-tech household air- combination
Corp., Ltd.* Zone conditioners under common
control
Guizhou Haier Huichuan District, Huichuan Manufacture and sale of 59.00 59.00 Business
Electronics Co., Zunyi City, District, Zunyi refrigerator combination
Ltd.* Guizhou Province City, Guizhou under common
Province control
Hefei Haier Air- Hefei Haier Hefei Haier Manufacture and sale of 99.22 99.22 Business
conditioning Co., Industrial Park Industrial Park air- conditioners combination
Limited* under common
control
* For identification purposes only
214 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Wuhan Haier Wuhan Haier Wuhan Haier Manufacture and sale of 60.00 60.00 Business
Electronics Holding Industrial Park Industrial Park air- conditioners combination
Co., Ltd.* under common
control
Qingdao Haier Qingdao Qingdao Manufacture and sale of 100.00 100.00 Business
Air- Conditioner Development Development air- conditioners combination
Electronics Co., Zone Zone under common
Ltd.* control
Qingdao Haier Qingdao High-tech Qingdao Manufacturing of plastic 100.00 100.00 Business
Information Plastic Zone High-tech products combination
Development Co., Zone under common
Ltd.* control
Dalian Haier Precision Dalian Export Dalian Export Manufacture and sale of 90.00 90.00 Business
Products Co., Ltd.* Expressing Zone Expressing precise plastics combination
Zone under common
control
Hefei Haier Plastic Hefei Economic & Hefei Economic Manufacture and sale of 77.36 4.83 82.19 Business
Co., Ltd.* Technological & plastic parts combination
Development Technological under common
Area Development control
Area
Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic 40.00 60.00 100.00 Business
Powder Co., Ltd.* Development Development powder, plastic sheet combination
Zone Zone and high-performance under common
coatings control
Chongqing Haier Jiangbei District, Jiangbei District, Plastic products, sheet 90.00 10.00 100.00 Business
Precision Plastic Chongqing City Chongqing metal work, electronics combination
Co., Ltd.* City and hardware under common
control
Qingdao Haier Qingdao High-tech Qingdao Manufacture and 100.00 100.00 Establishment
Refrigerator Co., Zone High-tech production of
Ltd.* Zone fluorine-free
refrigerators
Qingdao Haier Pingdu Pingdu Manufacture of 100.00 100.00 Establishment
Refrigerator Development Development refrigerators
(International) Co., Zone, Qingdao Zone, Qingdao
Ltd.*
Qingdao Household Qingdao High-tech Qingdao Research and 100.00 100.00 Establishment
Appliance Zone High-tech development of home
Technology and Zone appliances mold and
Equipment Research technological equipment
Institute*
Qingdao Haier Whole Qingdao High-tech Qingdao Research, development 98.33 98.33 Establishment
Set Home Appliance Zone High-tech and sales of
Service Co., Ltd.* Zone health- related small
home appliance
Qingdao Haier Special Qingdao Qingdao Manufacture and sales of 100.00 100.00 Establishment
Refrigerator Co., Development Development fluorine-free
Ltd.* Zone Zone refrigerators
Qingdao Haier Qingdao Qingdao Manufacture of dish 100.00 100.00 Establishment
Dishwasher Co., Development Development washing machine and
Ltd.* Zone Zone gas stove
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 215
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Qingdao Haier Special Qingdao Qingdao Research, manufacture 100.00 100.00 Establishment
Freezer Co., Ltd.* Development Development and sales of freezer and
Zone Zone other refrigeration
products
Dalian Haier Dalian Export Dalian Export Air conditioner processing 90.00 90.00 Establishment
Air- conditioning Expressing Zone Expressing and manufacturing
Co., Ltd.* Zone
Dalian Haier Dalian Export Dalian Export Refrigerator processing 100.00 100.00 Establishment
Refrigerator Co., Expressing Zone Expressing and manufacturing
Ltd.* Zone
Qingdao Haier Qingdao Qingdao Development, assembling 100.00 100.00 Establishment
Electronic Plastic Development Development and sales of plastics,
Co., Ltd.* Zone Zone electronics and
products
Wuhan Haier Freezer Wuhan Economic & Wuhan Economic Research, manufacture 95.00 5.00 100.00 Establishment
Co., Ltd* Technological & and sales of freezer and
Development Technological other refrigeration
Zone High-tech Development products
Industrial Park Zone High-tech
Industrial Park
Qingdao Haidarui Qingdao High-tech Qingdao Development, purchase 98.00 2.00 100.00 Establishment
Procurement Service Zone High-tech and sale of electrical
Co., Ltd.* Zone products and
components
Qingdao Haier Qingdao High-tech Qingdao Development and 98.91 1.09 100.00 Establishment
Intelligent Home Zone High-tech application of home
Appliance Zone appliances,
Technology Co., communication,
Ltd.* electronics and network
engineering technology
Chongqing Haier Jiangbei District, Jiangbei District, Manufacture and sales of 76.92 23.08 100.00 Establishment
Air- conditioning Chongqing City Chongqing air conditioners
Co., Ltd.* City
Qingdao Haier Qianwang ang Qianwang ang Development and 70.00 70.00 Establishment
Precision Products Road, Jiaonan Road, Jiaonan manufacture of precise
Co., Ltd.* City City plastic, metal plate,
mold and electronic
products for home
appliances
Qingdao Haier Air Jiaonan City, Jiaonan City, Manufacture of home 100.00 100.00 Establishment
Conditioning Qingdao Qingdao appliances and
Equipment Co., electronics
Ltd.*
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00 100.00 Establishment
Zone Haier Expressing Zone Expressing
Air-conditioning Zone
Trading Co., Ltd.*
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00 100.00 Establishment
Zone Haier Expressing Zone Expressing
Refrigerator Trading Zone
Co., Ltd.*
Chongqing Haier Jiangbei District, Jiangbei District, Sales of home appliances 95.00 5.00 100.00 Establishment
Electronics Sales Chongqing City Chongqing
Co., Ltd.* City
* For identification purposes only
216 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Chongqing Haier Jiangbei District, Jiangbei District, Processing and 84.95 15.05 100.00 Establishment
Refrigeration Chongqing City Chongqing manufacturing of
Appliance Co., Ltd.* City refrigerator
Hefei Haier Hefei Haier Hefei Haier Processing and 100.00 100.00 Establishment
Refrigerator Co., Industrial Park Industrial Park manufacturing of
Ltd.* refrigerator
Qingdao Haier HVAC Qingdao Qingdao Air-conditioning engineer 100.00 100.00 Establishment
Engineering Co., Development Development
Ltd.* Zone Zone
Chongqing Jiangbei District, Jiangbei District, Sales of home appliances 51.00 51.00 Establishment
Goodaymart Electric Chongqing City Chongqing and electronics
Appliance Sale Co., City
Ltd.*
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sale of 100.00 100.00 Establishment
(Jiaozhou) Qingdao Qingdao air- conditioners
Air-conditioning Co.,
Limited*
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sales of 100.00 100.00 Establishment
Component Co., Qingdao Qingdao plastic and precise
Ltd.* sheet metal products
Haier Shareholdings Hong Kong Hong Kong Investment 100.00 100.00 Establishment
(Hong Kong)
Limited*
Harvest International Cayman Islands Cayman Islands Investment 100.00 100.00 Establishment
Company*
Shenyang Haier Shenbei New Area, Shenbei New Manufacture and sales of 100.00 100.00 Establishment
Refrigerator Co., Shenyang City Area, refrigerator
Ltd.* Shenyang City
Foshan Haier Freezer Sanshui District, Sanshui District, Manufacture and sales of 100.00 100.00 Establishment
Co., Ltd.* Foshan City Foshan City freezer
Zhengzhou Haier Zhengzhou Zhengzhou Manufacture and sales of 100.00 100.00 Establishment
Air- conditioning Economic and Economic and air conditioner
Co., Ltd.* Technological Technological
Development Development
Zone Zone
Qingdao Haidayuan Qingdao Qingdao Development, purchase 100.00 100.00 Establishment
Procurement Service Development Development and sale of electrical
Co., Ltd.* Zone Zone products and
components
Qingdao Haier Qingdao High-tech Qingdao Development and 100.00 100.00 Establishment
Intelligent Zone High-tech research of home
Technology Zone appliance products
Development Co.,
Ltd.*
Qingdao Hairi Hi-Tech Qingdao High-tech Qingdao Design, manufacture and 100.00 100.00 Business
Model Co., Ltd.* Zone High-tech sales of product model combination
Zone and mould under common
control
Qingdao Hai Gao Qingdao High-tech Qingdao Industrial design and 75.00 75.00 Business
Design and Zone High-tech prototype production combination
Manufacture Co., Zone under common
Ltd.* control
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 217
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Beijing Haier Guangke Beijing Beijing Development, promotion 55.00 55.00 Business
Digital Technology and transfer of combination
Co., Ltd.* technology under common
control
Shanghai Haier Medical Shanghai Shanghai Wholesale and retail of 80.93 80.93 Establishment
Technology Co., Ltd.* medical facility
Qingdao Haier Qingdao Qingdao Development and sales of 100.00 100.00 Business
Technology Co., Ltd.* software and information combination
product under common
control
Qingdao Haier Qingdao Qingdao Entrepreneurship 100.00 100.00 Establishment
Technology investment and
Investment Co., Ltd.* consulting
Qingdao Casarte Smart Qingdao Qingdao Development, production 100.00 100.00 Establishment
Living Appliances Co., and sales of appliances
Ltd.*
Qingdao Haichuangyuan Qingdao Qingdao Sales of home appliances 100.00 100.00 Establishment
Appliances Sales Co., and digital products
Ltd.*
Haier Overseas Electric Qingdao Qingdao Sales of home appliances, 100.00 100.00 Establishment
Appliance Co., Ltd.* international freight
forwarding
Haier Group (Dalian) Dalian Dalian Sales of home appliances, 100.00 100.00 Business
Electrical Appliances international freight combination
Industry Co., Ltd.* forwarding under common
control
Qingdao Haier Central Qingdao Qingdao Production and sales of 100.00 100.00 Establishment
Air Conditioning Co., air conditioners and
Ltd.* refrigeration equipment
Chongqing Haier Home Hefei Hefei Sales of home appliances 100.00 100.00 Establishment
Appliance Sale Hefei
Co., Ltd.*
Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware 71.43 71.43 Establishment
Technology Co., Ltd.*
Haier U+smart Beijing Beijing Software development 100.00 100.00 Establishment
Intelligent Technology
(Beijing) Co., Ltd.*
Haier (Shanghai) Shanghai Shanghai Sales, research and 100.00 100.00 Establishment
Electronics Co., Ltd.* development of home
appliances
Shanghai Haier Shanghai Shanghai Business management 100.00 100.00 Establishment
Zhongzhi Fang consulting, chuangke
Chuang Ke management
Management Co.,
Ltd.*
Qingdao Haier Smart Qingdao Qingdao Production and sales of 100.00 100.00 Establishment
Kitchen Appliance kitchen smart home
Co., Ltd.* appliances
GE Appliance Shanghai Shanghai Sales of home appliances 100.00 100.00 Establishment
(Shanghai) Co., Ltd.*
Qingdao Haier Special Qingdao Qingdao Production and sales of 100.00 100.00 Establishment
Refrigerating home appliances
Appliance Co., Ltd.*
* For identification purposes only
218 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Beijing Zero Micro Beijing Beijing Promotion of 55.00 55.00 Establishment
Technology Co., technological
Ltd.* development
Laiyang Haier Smart Laiyang Laiyang Production and sales of 100.00 100.00 Establishment
Kitchen Appliance home appliances
Co., Ltd.*
Hefei Haier Air Hefei Hefei Production and sales of 100.00 100.00 Establishment
Conditioning home appliances
Electronics Co.,
Ltd.*
Haier (Shanghai) Shanghai Shanghai Research and 100.00 100.00 Establishment
Home Appliance development of home
Research and appliances
Development Center
Co., Ltd.*
Haier (Shenzhen) R&D Shenzhen Shenzhen Development, research 100.00 100.00 Establishment
Co., Ltd.* and technical services of
household and
commercial electrical
appliances
Guangzhou Haier Air Guangdong Guangdong Manufacturing of 100.00 100.00 Establishment
Conditioner Co., refrigeration and air
Ltd.* conditioning equipment
Qingdao Yunshang Qingdao Qingdao IoT technology research 70.00 70.00 Establishment
Yuyi IOT Technology and development
Co., Ltd.*
Qingdao Haizhi Qingdao Qingdao Asset management, 100.00 100.00 Establishment
Investment equity investment
Management Co.,
Ltd.*
Qingdao Jijia Cloud Qingdao Qingdao R&D and sales of lighting 80.00 80.00 Establishment
Intelligent appliances
Technology Co.,
Ltd.*
Qingdao Haimeihui Qingdao Qingdao Leasing and business 100.00 100.00 Establishment
Management services
Consulting Co., Ltd.
Wuxi Yunshang Wuxi Wuxi Internet of Things 100.00 100.00 Establishment
Internet of Clothing technology R & D
Technology Co.,
Ltd.*
Hangzhou Gandao Hangzhou Hangzhou Technology development, 52.58 52.58 Establishment
Intelligent service
Technology Co.,
Ltd.*
Qingdao Haidacheng Qingdao Qingdao Development, purchase 100.00 100.00 Establishment
Procurement Service and sale of electrical
Co., Ltd.* products and
components
Guangdong Heilong Guangzhou Guangzhou Scientific research and 76.72 76.72 Business
Intelligent technology service combination not
Technology Co. Ltd* sector under common
control
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 219
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Beijing Haixianghui Beijing Beijing Scientific research and 100.00 100.00 Establishment
Technology Co., technology service
Ltd.* sector
Qingdao Hairuijiejing Qingdao Qingdao Electronic equipment 51.00 51.00 Business
Electronics Co., technology research, combination not
Ltd.* development, transfer, under common
consulting and services control
Haier Smart Home Qingdao Qingdao Technology development 100.00 100.00 Establishment
Experience Cloud of smart home
Ecological products, whole
Technology Co., furniture customization,
Ltd.* etc.
Haier Smart Home Qingdao Qingdao Technical services, 100.00 100.00 Establishment
(Qingdao) Network development,
Co., Ltd.* consulting, transfer, etc.
Haier Smart Home Qingdao Qingdao Residential interior 100.00 100.00 Establishment
(Qingdao) Network decoration, professional
Operation Co., Ltd.* construction operation,
special equipment
installation, upgrading
and repair, etc.
Qingdao Internet of Qingdao Qingdao Urban distribution and 100.00 100.00 Establishment
Wine Technology transportation services,
Co., Ltd.* import and export of
goods, technology
import and export and
food business, etc.
Qingdao Linghai Air Qingdao Qingdao Manufacture and 100.00 100.00 Establishment
Conditioning production of air
Equipment Co., conditioner and
Ltd.* refrigeration equipment
Chongqing Yunshang Chongqing Chongqing Food business, 100.00 100.00 Establishment
Yilian Technology commodity import and
Co., Ltd.* export, technology
import and export,
Internet information
services, etc.
Shenzhen Yunshang Shenzhen Shenzhen Import and export 100.00 100.00 Establishment
Yilian Technology business, Internet,
Co., Ltd.* Internet of things, big
data, AI, AR and
technical services
operation
Qingdao Haixiangxue Qingdao Qingdao Professional intermediary 100.00 100.00 Establishment
Human Resources activities
Co., Ltd.*
Jiangxi Haier Medical Jiangxi Jiangxi Wholesale and retail of 100.00 100.00 Establishment
Technology Co., medical equipment
Ltd.*
Qingdao Haizhi Qingdao Qingdao Technical service 100.00 100.00 Establishment
Shenlan Technology development
Co., Ltd.*
Qingdao Haishengze Qingdao Qingdao Air conditioning 100.00 100.00 Establishment
Technology Co., equipment technical
Ltd.* services
* For identification purposes only
220 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Qingdao Hailvyuan Qingdao Qingdao Electrical and electronic 100.00 100.00 Establishment
Recycling products waste
Technology Co., treatment
Ltd.*
Tianjin Internet of Tianjin Tianjin IoT technology 100.00 100.00 Establishment
clothes Ecological development
Technology Co.,
Ltd.*
Qingdao Haier HVAC Qingdao Qingdao Manufacture and sale of 100.00 100.00 Establishment
Equipment Co., air- conditioners
Ltd.*
Qingdao Haier Home Qingdao Qingdao Integrated service of AI 100.00 100.00 Establishment
AI Industry industry application
Innovation Center system
Co., Ltd.*
Zhejiang Weixi IoT Zhejiang Zhejiang IoT application service 100.00 100.00 Establishment
Technology Co.,
Ltd.*
Qingdao Haier Quality Qingdao Qingdao Inspection and testing of 100.00 100.00 Business
Inspection Co., Ltd.* home appliance combination
under common
control
Qingdao Qingdao Qingdao Product certification 100.00 100.00 Business
Haiyongcheng service combination
Certification Service under common
Co., Ltd* control
Qingdao Zhonghai Qingdao Qingdao Home appliance testing 100.00 100.00 Business
Borui Testing and technology combination
Technology Service consulting under common
Co., Ltd* controls
Qingdao Haixianghui Qingdao Qingdao Software development 100.00 100.00 Establishment
Technology Co., and sale of daily
Ltd.* necessities
Haier Smart Home Qingdao Qingdao Promotion of energy- 100.00 100.00 Establishment
(Xiongan, Hebei) saving technology
Technology Co.,
Ltd.*
Qingdao Ruibo Qingdao Qingdao Environmental and AI 100.00 100.00 Establishment
Ecological technology consulting
Environmental
Technology Co.,
Ltd.*
Qingdao Sanyiniao Qingdao Qingdao Technology service and 100.00 100.00 Establishment
Technology Co., advertisement design
Ltd.*
Qingdao Jingzhi Qingdao Qingdao Operation of dangerous 100.00 100.00 Establishment
Recycle waste
Environmental
Technology Co.,
Ltd.*
Qingdao Yunshang Qingdao Qingdao Professional cleaning and 51.00 51.00 Establishment
Jieshen Yilian sale of daily necessities
Technology Co.,
Ltd.*
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 221
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method
Direct Indirect
Shanghai Yunshang Shanghai Shanghai Professional cleaning and 51.00 51.00 Establishment
Yuyi IoT Technology sale of daily necessities
Co., Ltd.*
Shijiazhuang Shijiazhuang Shijiazhuang Professional cleaning and 51.00 51.00 Establishment
Yunshang Yilian sale of daily necessities
Technology Co.,
Ltd.*
Nanjing Yunshang Nanjing Nanjing Professional cleaning and 51.00 51.00 Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Yunshang Zhonglian Shanghai Shanghai Professional cleaning and 51.00 51.00 Establishment
Technology sale of daily necessities
(Shanghai) Co.,
Ltd.*
Shanxi Yunshang Shanxi Shanxi Professional cleaning and 51.00 51.00 Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Tianjin Yunshang Tianjin Tianjin Professional cleaning and 51.00 51.00 Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Chongqing Yunshang Chongqing Chongqing Professional cleaning and 51.00 51.00 Establishment
Haihong Yilian sale of daily necessities
Technology Co.,
Ltd.*
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 51.00 51.00 Establishment
Meier Yilian sale of daily necessities
Technology Co.,
Ltd.
Beijing Yunshang Beijing Beijing Professional cleaning and 51.00 51.00 Establishment
Yilian Technology sale of daily necessities
Co., Ltd.
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 100.00 100.00 Establishment
Yilian Technology sale of daily necessities
Co., Ltd.
Qingdao Haier Water Qingdao Qingdao Technical services, 100.00 100.00 Establishment
Ecology Technology development, consulting
Co., Ltd.
Qingdao Haixiangmian Qingdao Qingdao Sale of food and daily 100.00 100.00 Establishment
Technology Co., necessities
Ltd.*
Qingdao Haier Kitchen Qingdao Qingdao Technology service and 100.00 100.00 Establishment
IoT Technology Co., sale of daily necessities
Ltd.*
Tibet Haifeng Tibet Tibet Development of software 100.00 100.00 Establishment
Intelligent Innovation and medical equipment
Technology Co.,
Ltd.*
Microenterprises such All over the All over the Sales of home appliances Establishment
as Qingdao Hai country country
Heng Feng Electrical
Appliances Sale &
Service Co., Ltd.*
* For identification purposes only
222 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Reasons for including subsidiaries in which the Company has 50% or less of the equity into the
scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the 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.
(2). Material non-wholly owned subsidiaries
Dividends
Profit or loss announced to
attributable be distributed Balance of
to minority to minority minority
Shareholding shareholders shareholders interests at
Name of of minority in the current in the current the end of the
subsidiary shareholders period period period
Guizhou Haier
Electronics Co.,
Ltd.* 41.00% 5,369,901.24 114,047,911.86
Wuhan Haier
Electronics Co.,
Ltd.* 40.00% 925,353.74 249,848,547.86
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 223
Section X Financial Report
(3). Summarized financial information in respect of material non-wholly owned
subsidiaries
Name of
subsidiary Closing balance
Current Non-current Current Non-current
assets Assets Total assets liabilities liabilities Total liabilities
Guizhou Haier
Electronics
Co., Ltd.* 395,923,946.65 83,135,071.60 479,059,018.25 193,634,661.14 7,258,718.48 200,893,379.62
Wuhan Haier
Electronics
Co., Ltd.* 733,916,522.83 137,255,826.48 871,172,349.31 246,550,979.65 246,550,979.65
(continued)
Name of
Subsidiary Opening balance
Current Non-current Current Non-current
assets Assets Total assets liabilities liabilities Total liabilities
Guizhou Haier
Electronics
Co., Ltd.* 548,369,499.75 90,003,558.19 638,373,057.94 368,134,127.34 5,170,612.06 373,304,739.40
Wuhan Haier
Electronics
Co., Ltd.* 795,204,982.68 144,368,337.05 939,573,319.73 317,265,334.43 — 317,265,334.43
Name of subsidiary Amount for the current period
Total Cash flow from
Operating comprehensive operating
revenue Net profit income activities
Guizhou Haier Electronics
Co., Ltd.* 687,283,541.12 13,097,320.09 13,097,320.09 –258,232,502.08
Wuhan Haier Electronics
Co., Ltd.* 820,118,983.24 2,313,384.36 2,313,384.36 –40,171,033.70
(continued)
Name of subsidiary Amount for the previous period
Total Cash flow from
Operating comprehensive operating
revenue Net profit income activities
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
* For identification purposes only
224 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
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
Less: share of net assets of subsidiaries in respect to the
shareholding proportion acquired/disposed –28,548,394.50
Difference 28,548,394.50
Including: capital reserve adjustment 28,548,394.50
Haier Smart Home Co., Ltd. Interim Report 2022 225
Section X Financial Report
3. Interests in joint ventures or associates
√ Applicable □ Not Applicable
(1) Joint ventures or associates
Principal place of Place of Accounting treatment
business registration of investment
Name of joint ventures or associates Nature of business Shareholding
Haier Finance Co., Ltd.* Qingdao Qingdao Financial services 42.00% Equity method
Bank of Qingdao Co., Ltd.* Qingdao Qingdao Commercial Bank 8.19% Equity method
Wolong Electric (Jinan) Motor Co., Ltd.* Jinan Jinan Motor Manufacturing 30.00% Equity method
Qingdao Hegang New Material Technology Qingdao Qingdao Steel plate Manufacturing 23.94% Equity method
Co., Ltd.* Venture Capital
Qingdao Haier SAIF Smart Home Industry Qingdao Qingdao Manufacturing of 63.13% Equity method
Investment Center (Limited Partnership)* Qingdao Qingdao household appliances Equity method
Mitsubishi Heavy Industries Haier (Qingdao) Qingdao Qingdao Manufacturing of 45.00% Equity method
Air-conditioners Co., Ltd.* Qingdao Qingdao household appliances Equity method
Qingdao Haier Carrier Refrigeration Hefei Hefei R&D and sales of 49.00% Equity method
Equipment Co., Ltd.* Hefei Hefei televisions Equity method
Qingdao Haier Multimedia Co., Ltd.* Technology development
20.20%
Electrical equipment R&D
Huzhou Huzhou Equity method
Hefei Feier Smart Technology Co., Ltd.*
Anhui Kunhe Intelligent Technology Co., 40.00%
Gas compression 30.00%
Ltd.* machinery 48.00%
Zhejiang Futeng Fluid Technology Co., Ltd.* Beijing Beijing development and 36.29% Equity method
Beijing Beijing manufacturing 36.45% Equity method
Beijing Mr. Hi Network Technology Technology development
Company Limited* Technical service import and
Beijing ASU Tech Co. Ltd* export business
Shenzhen Genyuan Environmental Protection Shenzhen Shenzhen Technical advisory 14.70% Equity method
Technology Co., Ltd.* services
Qingdao Haimu Investment Management Qingdao Qingdao Investment Management 49.00% Equity method
Co., Ltd.*
Qingdao Haimu Smart Home Investment Qingdao Qingdao Investment Management 24.00% Equity method
Partnership (Limited Partnership)*
Qingdao Guochuang Intelligent Household Qingdao Qingdao Development of 35.51% Equity method
Appliance Research Institute Co., Ltd.* Technology
Guangzhou Heying Investment Partnership Guangzhou Guangzhou Investment 49.00% Equity method
(Limited Partnership)*
Qingdao Java Cloud Network Technology Qingdao Qingdao Home online service 24.93% Equity method
Co., Ltd.*
Bingji (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd.*
Youjin (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd.*
RRS (Shanghai) Investment Co., Ltd.* Shanghai Shanghai Investment management 45.00% Equity method
Haier Best Water Technology Co., Ltd.* Qingdao Qingdao Water equipment technology 49.00% Equity method
development service
* For identification purposes only
226 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Principal place of Place of Accounting treatment
Name of joint ventures or associates business registration Nature of business Shareholding of investment
Huizhi Xiangshun Equity Investment Fund Qingdao Qingdao Investment management 30.00% Equity method
(Qingdao) Partnership (Limited
Partnership)*
Qingdao RRS Huizhi Investment Co., Ltd.* Qingdao Qingdao Investment management 50.00% Equity method
Qingdao Xinshenghui Technology Co., Ltd.* Qingdao Qingdao Technology service 20.00% Equity method
development
Meiling Candy Washing Machine Co., Ltd.* Hefei Hefei Manufacturing of home 40.00% Equity method
appliances
Konan Electronic Co., Ltd. Japan Japan Motor Manufacturing 50.00% Equity method
HPZ LIMITED Nigeria Nigeria Manufacturing of 25.01% Equity method
household appliances
HNR Company (Private) Limited Pakistan Pakistan Manufacturing of 31.72% Equity method
household appliances
Haier Raya Electric S.A.E Egypt Egypt Manufacturing of home 15.00% Equity method
appliances
Controladora Mabe S.A.deC.V. Mexico Mexico Manufacturing of 48.41% Equity method
household appliances
Middle East Air conditioning Company, Saudi Arabia Saudi Arabia Sales of household 49.00 % Equity method
Limited appliances
(1). Major financial information of significant joi n ventures
□ Applicable √ Not Applicable
(2). Major financial information of signifi c nt associates
√ Applicable □ Not Applicable
① Basic 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.
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 227
Section X Financial Report
② Financial Information of significant associates:
Unit and Currency: RMB
Items Finance company
Closing balance/ Opening balance/
Amount for the Amount for the
current period previous period
Current assets 63,774,900,733.81 61,294,606,916.47
Non-current assets 10,659,822,054.73 9,404,030,263.35
Total assets 74,434,722,788.54 70,698,637,179.82
Current liabilities 57,002,029,453.95 53,403,515,414.15
Non-current liabilities 250,191,903.78 369,623,253.07
Total liabilities 57,252,221,357.73 53,773,138,667.22
Minority equity interests
Equity interest attributable to shareholders
of the Parent Company 17,182,501,430.81 16,925,498,512.60
Including: share of net assets calculated based
on shareholding percentage 7,216,650,600.94 7,108,709,375.29
Operating income 1,033,551,173.17 1,071,931,150.97
Net profit 758,762,130.10 790,600,102.99
Other comprehensive income 18,240,788.11 73,947,771.60
Total comprehensive income 777,002,918.21 864,547,874.59
Dividend received from associates for the year 218,400,000.00 126,000,000.00
(3). Summarized financial information of insignificant joint ventures or associates
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in Associates current period previous period
Bank of Qingdao Co., Ltd.* 3,096,420,505.87 2,654,248,436.12
Wolong Electric (Jinan) Motor Co., Ltd.* 164,074,989.98 151,837,378.99
Qingdao Hegang New Material Technology Co., Ltd.* 323,239,475.07 312,493,256.21
Qingdao Haier SAIF Smart Home Industry Investment
Center (Limited Partnership)* 375,494,710.38 393,598,372.59
Mitsubishi Heavy Industries Haier (Qingdao)
Air Conditioner Co., Ltd.* 735,881,497.34 682,901,976.73
Qingdao Haier Carrier Refrigeration Equipment
Co., Ltd.* 402,090,045.87 409,053,808.05
Qingdao Haier Multimedia Co., Ltd.* 262,473,095.59 277,102,563.88
Qingdao Haier Moulds Co., Ltd.* 269,158,534.54
Hefei Feier Smart Technology Co., Ltd.* 265,106.27
* For identification purposes only
228 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in Associates current period previous period
Anhui Kunhe Intelligent Technology Co., Ltd.* 1,987,170.02 1,877,574.14
Zhejiang Futeng Fluid Technology Co., Ltd.* 82,098,847.75 82,098,847.75
Beijing Mr. Hi Network Technology Company Limited* 7,507,759.75 7,507,759.75
Beijing Xiaobei Technology Co., Ltd.* 2,687,341.82
Beijing ASU Tech Co., Ltd.* 13,082,922.89 15,529,700.01
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd.* 7,596,295.35 6,914,487.73
Qingdao Haimu Investment Management Co., Ltd.* 2,411,436.93 2,465,299.70
Qingdao Haimu Smart Home Investment Partnership
(Limited Partnership)* 59,324,411.38 59,424,662.44
Guangzhou Heying Investment Partnership
(Limited Partnership)* 285,793,577.87 285,793,577.87
Qingdao Java Cloud Network Technology Co., Ltd.* 2,566,012.64 2,600,050.50
Bingji (Shanghai) Corporate Management Co., Ltd.* 995,419,397.79 972,200,487.88
Youjin (Shanghai) Corporate Management Co., Ltd.* 1,809,035,268.70 1,766,819,068.86
RRS (Shanghai) Investment Co., Ltd.* 3,288,336,852.19 3,211,580,125.21
Haier Best Water Technology Co., Ltd.* 78,352,582.74 79,785,557.39
Huizhi Xiangshun Equity Investment Fund (Qingdao)
Partnership (Limited Partnership)* 238,806,947.64 119,008,967.03
Qingdao RRS Huizhi Investment Co., Ltd.* 4,083,482.78 2,083,482.78
Qingdao Xinshenghui Technology Co., Ltd.* 9,011,761.35 9,964,773.52
Meiling Candy Washing Machine Co., Ltd.* 22,659,667.84 22,752,232.07
Europalters Italia S.r.l. 9,361,965.48 9,361,965.48
Orygin LLC 13,494,211.65
Konan Electronic Co., Ltd. 61,459,616.87 69,273,712.61
HNR Company (Private) Limited 124,288,893.92 114,055,318.97
HPZ LIMITED 80,146,144.74 71,269,048.97
Haier Raya Electric S.A.E 9,852,153.71 10,568,507.40
Controladora Mabe S.A.deC.V. 4,443,056,920.20 4,131,983,673.10
Middle East Airconditioning Company, Limited 8,308,646.84 10,318,898.13
Total book value of investment 17,017,717,269.12 16,218,584,554.49
Total amount of the following financial data of
associates calculated based on shareholding
percentage
Net profit 635,985,295.85 610,614,350.57
Other comprehensive income 100,213,218.25 25,022,215.72
Total comprehensive income 736,198,514.10 635,636,566.29
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022 229
Section X Financial Report
X. SEGMENT REPORT
√ Applicable □ Not Applicable
The Company principally engaged in manufacture and sales of household appliances and relevant
services business, manufacture of upstream household appliances parts business and distribution of
products of third-party and after-sale business. The Company has three business segments: (1) China
smart home business segment; (2) Overseas home appliance and smart home business segment; (3)
Other business segments. The management of the Company assesses operating performance of 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.
② Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.
③ Air energy solutions: mainly engages in production and sales of air conditioners products.
④ Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.
(2) Overseas home appliance and smart home business segment mainly includes overseas business
segments such as GEA, FPA, Candy, etc.
(3) Other business segments: mainly include channel, equipment components, small home appliance
business and others.
Due to centralized management under the headquarters or exclusion from the assessment scope of
segment management, the total assets of segments exclude monetary funds, financial assets held for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, other equity instruments investment, long-term accounts receivable, long-term equity
investment, goodwill and deferred income tax assets; the total liabilities of segments exclude long-term
and short-term borrowings, financial liabilities held for trading, derivative financial liabilities, taxes
payable, interests payable, dividends payable, held-for-sale liabilities, bonds payable, deferred income
tax liabilities and other non-current liabilities; profits of segments exclude financial expenses, profit 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.
230 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(1) Information of reportable segments
Segment information for the current period
Segment information China smart home business
Air energy Internet of Whole house
Internet of Food solutions solutions clothing solutions water solutions
Refrigerator/ Kitchen Water home
freezers appliances Air conditioners Washing machine appliances
Segment revenue 21,744,034,195.34 1,988,398,642.99 19,460,445,551.54 14,783,761,779.19 6,786,264,746.43
Including: external revenue 19,263,438,400.09 1,655,732,227.00 15,920,771,259.18 12,473,357,903.20 6,677,037,998.51
Inter-segment revenue 2,480,595,795.25 332,666,415.99 3,539,674,292.36 2,310,403,875.99 109,226,747.92
Total segment operating cost 19,442,607,634.74 1,943,862,296.11 19,004,620,002.77 13,489,839,349.11 5,938,407,699.27
Segment operating profit 2,301,426,560.60 44,536,346.88 455,825,548.77 1,293,922,430.08 847,857,047.16
Total segment assets 13,947,960,634.62 2,336,367,873.37 18,574,611,480.04 12,119,100,356.71 4,696,763,365.04
Total segment liabilities 33,573,717,325.74 2,007,978,966.42 10,793,012,958.08 6,106,984,807.46 4,328,337,137.59
(Continued)
Overseas home
appliance and smart Inter-segment
Segment information home business Other businesses offsetting Total
Segment revenue 61,480,633,415.58 43,031,566,226.70 –47,417,582,095.55 121,857,522,462.22
Including: external revenue 61,195,622,271.60 4,671,562,402.64 — 121,857,522,462.22
Inter-segment revenue 285,011,143.98 38,360,003,824.06 –47,417,582,095.55 —
Total segment operating cost 57,846,314,400.88 43,496,297,716.75 –47,556,586,707.77 113,605,362,391.86
Segment operating profit 3,634,319,014.70 –464,731,490.05 139,004,612.22 8,252,160,070.36
Total segment assets 68,392,051,106.40 44,008,099,650.93 –48,392,664,583.87 115,682,289,883.24
Total segment liabilities 38,284,912,733.13 57,501,775,867.52 –48,204,054,758.87 104,392,665,037.07
Haier Smart Home Co., Ltd. Interim Report 2022 231
Section X Financial Report
Segment information for the corresponding period of last year
Segment information China smart home business
Air energy Internet of Whole house
Internet of Food solutions solutions Clothing solutions water solutions
Refrigerator/ Kitchen Water home
freezers appliances Air conditioners Washing machine appliances
Segment revenue 19,188,607,407.17 1,784,628,763.28 17,645,069,189.02 12,958,083,453.07 5,884,989,693.13
Including: external revenue 16,898,259,985.27 1,495,140,647.14 15,095,177,397.57 10,900,998,372.57 5,806,336,225.56
Inter-segment revenue 2,290,347,421.90 289,488,116.14 2,549,891,791.45 2,057,085,080.50 78,653,467.57
Total segment operating cost 17,158,967,925.84 1,746,319,577.28 17,416,889,248.90 12,111,188,820.80 5,157,901,538.45
Segment operating profit 2,029,639,481.33 38,309,186.00 228,179,940.12 846,894,632.27 727,088,154.68
Total segment assets 17,849,098,835.46 2,547,615,110.79 17,958,004,697.79 20,919,506,189.82 8,406,963,618.39
Total segment liabilities 42,593,142,081.38 2,371,416,306.28 15,600,383,361.76 11,249,225,999.71 7,865,505,122.98
(Continued)
Overseas home
appliance and smart Inter-segment
Segment information home business Other business offsetting Total
Segment revenue 56,916,219,464.44 43,378,230,663.00 -46,028,072,422.05 111,727,756,211.06
Including: external revenue 56,669,104,381.43 4,862,739,201.52 111,727,756,211.06
Inter-segment revenue 247,115,083.01 38,515,491,461.48 -46,028,072,422.05 —
Total segment operating cost 53,698,944,763.59 43,451,860,533.69 -46,125,082,855.89 104,616,989,552.66
Segment operating profit 3,217,274,700.85 -73,629,870.69 97,010,433.84 7,110,766,658.40
Total segment assets 57,368,272,498.73 51,142,515,604.10 -63,393,417,976.51 112,798,558,578.57
Total segment liabilities 33,874,070,274.78 59,762,657,521.50 -63,126,518,841.51 110,189,881,826.88
(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.
232 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
External transaction revenue
Amount for the Amount for the
Items current period previous period
Mainland China 59,357,352,517.26 53,700,041,129.00
Other countries/regions 62,500,169,944.96 58,027,715,082.06
Including:
America 37,433,676,787.86 35,324,883,693.09
Australia 3,489,830,122.80 3,458,819,500.44
South Asia 4,822,648,942.01 3,925,925,777.81
Europe 10,245,305,312.81 9,093,752,866.83
Southeast Asia 2,922,334,445.85 2,610,757,476.24
Central East and Africa 1,163,078,229.45 909,684,097.45
Japan 1,836,927,420.37 1,778,184,357.59
Others 586,368,683.81 925,707,312.61
Total 121,857,522,462.22 111,727,756,211.06
Total non-current assets
Items Closing balance Opening balance
Mainland China 17,488,703,477.71 16,572,158,325.12
Other countries/regions 27,543,718,828.36 25,209,296,729.73
Total 45,032,422,306.07 41,781,455,054.85
The total non-current assets exclude other equity instruments investment, long-term accounts
receivable, long-term equity investment, goodwill, deferred income tax assets and other 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.
Haier Smart Home Co., Ltd. Interim Report 2022 233
Section X Financial Report
At the end of the period
Items Inputs used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 158,003,403.16 2,295,919,159.41 106,249,514.01 2,560,172,076.58
Including: Bank wealth management
products 2,153,399,840.01 2,153,399,840.01
Forward foreign exchange contract 142,519,319.40 142,519,319.40
Investment funds 158,003,403.16 158,003,403.16
Equity instruments investment 106,249,514.01 106,249,514.01
Derivative financial assets 163,084,726.42 163,084,726.42
Including: Forward foreign exchange
contract 151,624,141.73 151,624,141.73
Interest rate swap agreement 11,460,584.69 11,460,584.69
Other equity instruments 21,244,171.82 2,812,000,000.00 2,019,201,041.09 4,852,445,212.91
Including: Equity instruments measured
at fair value through other
comprehensive income 21,244,171.82 2,812,000,000.00 2,019,201,041.09 4,852,445,212.91
Other non-current assets 46,832,494.61 46,832,494.61
Including: Other non-current financial
assets 46,832,494.61 46,832,494.61
Financial liabilities held for trading 79,270,648.00 79,270,648.00
Including: Forward foreign exchange
contract 79,270,648.00 79,270,648.00
Derivative financial liabilities 77,066,966.55 77,066,966.55
Including: Forward foreign exchange
contract 50,925,674.51 50,925,674.51
Forward commodity contract 24,918,179.06 24,918,179.06
Interest rate swap agreement 1,223,112.98 1,223,112.98
234 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
At the beginning of the period
Items Input used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair value
Financial assets held for trading 374,782,417.76 2,305,001,643.90 106,291,467.43 2,786,075,529.09
Including: Bank wealth management
products 2,168,622,090.00 2,168,622,090.00
Forward foreign exchange contract 136,379,553.90 136,379,553.90
Investment funds 150,516,274.37 150,516,274.37
Investment in equity instruments 224,266,143.39 106,291,467.43 330,557,610.82
Derivative financial assets 79,819,974.01 79,819,974.01
Including: Forward foreign exchange
contract 72,822,190.59 72,822,190.59
Forward commodity contract 6,997,783.42 6,997,783.42
Other equity instruments 21,055,159.54 2,812,000,000.00 2,015,654,279.42 4,848,709,438.96
Including: Equity instruments measured at
fair value and changes of which
included in other comprehensive
income 21,055,159.54 2,812,000,000.00 2,015,654,279.42 4,848,709,438.96
Other non-current assets 46,832,494.61 46,832,494.61
Including: Other non-current financial
assets 46,832,494.61 46,832,494.61
Financial liabilities held for trading 6,294,014.40 6,294,014.40
Including: Forward foreign exchange
contract 6,294,014.40 6,294,014.40
Derivative financial liabilities 80,212,433.24 80,212,433.24
Including: Forward foreign exchange
contract 60,527,532.76 60,527,532.76
Interest rate swap agreement 19,684,900.48 19,684,900.48
For financial instruments traded in an active market, the Company determines its fair value based
on its quotes in an active market; for financial instruments not traded in an active market, the
Company uses valuation techniques to determine its fair value.
Haier Smart Home Co., Ltd. Interim Report 2022 235
Section X Financial Report
2. Continual and non-continual Level 2 fair value measurement items, the valuation
techniques adopted and the qualitative and quantitative information of
important parameters
√ Applicable □ Not Applicable
Closing
Items fair value Valuation techniques
Financial assets held for trading
Including: Bank wealth management 2,153,399,840.01 Discounted cash flow
products
Forward exchange contract 142,519,319.40 Discounted cash flow
Derivative financial assets
Including: Forward exchange contract 151,624,141.73 Discounted cash flow
Interest rate swap agreement 11,460,584.69 Discounted cash flow
Other equity instruments investment
Including: Equity instruments measured 2,812,000,000.00 Recent transaction method
at fair value and changes of which
included in other comprehensive
income
Financial liabilities held for trading
Including: Forward exchange contract 79,270,648.00 Discounted cash flow
Derivative financial liabilities
Including: Forward exchange contract 50,925,674.51 Discounted cash flow
Forward commodity contract 24,918,179.06 Discounted cash flow
Interest rate swap agreement 1,223,112.98 Discounted cash flow
236 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
3. Continual and non-continual Level 3 fair value measurement items, the valuation
techniques adopted and the qualitative and quantitative information of
important parameters
√ Applicable □ Not Applicable
Fair value at the Valuation Significant Sensitivity of the input
Items end of the period technique unobservable input Range to fair value
Other equity
Instruments
Including: 1,285,836,952.03 Market approach 1. Average P/E 1. 17.77–18.13 1. 1% increase
1. SINOPEC Fuel multiple of (decrease) in average
Oil Sales peers 2. 11%–13% P/E multiple of the
Corporation Comparable
Limited 2. Discount for Companies would
lack of result in increase
marketability (decrease) in fair
value by
RMB11,177,000.00.
2. 1% increase
(decrease) in the
lack of marketability
would result in
decrease (increase)
in fair value by
RMB12,701,000.00.
4. Fair value of financial assets and financial liabilities not measured at fair value
√ Applicable □ Not Applicable
Closing Closing
Items book value fair value
Bonds payable (convertible corporate bonds) 244,655,820.72 355,949,322.87
Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long -term and short-term
borrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,
etc. Except for the difference between the book value and the fair value of bonds payable
disclosed above, the difference between the book value and the fair value of financial assets and
financial liabilities not measured at fair value at the end of the period is small.
Haier Smart Home Co., Ltd. Interim Report 2022 237
Section X Financial Report
XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
(I) Explanation for basis of identifying related party
According to Accounting Standards for Business Enterprises No. 36 — Related Party Disclosures,
parties are considered to be related if one party has the ability to control or jointly control 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. 182), related legal entity or individual will be
identified as related parties in certain occasions.
(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the
Company
Interest Voting rights
Type of Registered Legal Relations hips with in the to the
Name of enterprise enterprise Registered place capital representative the Company Company Company
Haier Group Collective Qingdao High-tech 311,180,000 Zhou Yunjie Parent Company 11.35% 11.35%
Corporation ownership Zone Haier Park
company
Haier COSMO Co., Joint-stock Qingdao High-tech 631,930,000 Zhou Yunjie Subsidiary of 13.32% 13.32%
Ltd. company Zone Haier Park Parent
Company
HCH (HK) Investment Private Hong Kong HKD 10,000 / Parties acting in 5.70% 5.70%
Management company concert of
Co.,Limited Parent
Company
Qingdao Haier Venture Company with Qingdao Free Trade 923,000,000 Zhou Yunjie Parties acting in 1.82% 1.82%
& Investment limited Zone concert of
Information Co., liability Parent
Ltd. Company
Qingdao Haichuangzhi Limited Qingdao High-tech 118,924,416 Zhang Parties acting in 1.28% 1.28%
Management partnership Zone Haier Park Ruimin concert of
Consulting Parent
Enterprise (Limited Company
Partnership)
Haier International Private Hong Kong HKD 2 / Parties acting in 0.62% 0.62%
Co., Limited company concert of
Parent
Company
2. Subsidiaries of the Company
√ Applicable □ Not Applicable
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure of
interests in subsidiaries
238 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
3. Associates and joint ventures
The details of associates and joint ventures of the Company are detailed in Note VII. 11
and Note IX. 3.
4. Related company with no controlling relationship
Name of company Relationship with the Company
Qingdao Haier Parts Procurement Co., Ltd. Subsidiary of Haier Group
Gooday Supply Chain Technologies Co., Ltd. Subsidiary of Haier Group
Chongqing Haier Electrical Appliances Sales Subsidiary of Haier Group
Co., Ltd.
Shanghai Cotai Supply Chain Management Subsidiary of Haier Group
Co., Ltd.
Hotoem Information Technology Subsidiary of Haier Group
Cosmoplat Chuangzhi IOT Technology Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier Moulds Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Trading Co., Ltd. Subsidiary of Haier Group
Qingdao Haier Special Plastic Development Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier International Travel Agency Subsidiary of Haier Group
Co., Ltd.
Qingdao Haina Cloud Intelligent System Subsidiary of Haier Group
Co., Ltd.
Chongqing Haier Smart Electronics Co., Ltd. Subsidiary of Haier Group
Chongqing Zhonglian Energy Technology Subsidiary of Haier Group
Co., Ltd.
Shanghai Zhiyu Technology Co., Ltd. Subsidiary of Haier Group
Qingdao Haiyongda Property Management Subsidiary of Haier Group
Co., Ltd.
Qingdao Oasis Technology Co., Ltd. Subsidiary of Haier Group
Qingdao Haier Energy and Power Co., Ltd. Subsidiary of Haier Group
Dalian Haier International Trade Co., Ltd. Subsidiary of Haier Group
Qingdao Goodaymart Supply Chains Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier Brothers Animation Industry Subsidiary of Haier Group
Co., Ltd.
Qingdao Manniq Intelligent Technology Subsidiary of Haier Group
Co., Ltd.
Qingdao Manniq Intelligent Equipment Subsidiary of Haier Group
Co., Ltd.
Qingdao Ding Xin Electronics Technology Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier New Materials R & D Subsidiary and associate of Haier
Co., Ltd. Group
Controladora Mabe S.A.deC.V. Associate
HNR Company (Private) Limited Associate
Haier Smart Home Co., Ltd. Interim Report 2022 239
Section X Financial Report
Name of company Relationship with the Company
Qingdao Haier Multimedia Co., Ltd. Associate
HPZ Limited Associate
Wolong Electric (Jinan) Motor Co., Ltd. Associate
Qingdao Hegang New Material Technology Associate
Co., Ltd.
Hefei Hegang New Material Technology Subsidiary of associate
Co., Ltd.
Qingdao HBIS Composite New Material Subsidiary of associate
Co., Ltd.
(III) Related party transactions
1. Details of the goods and services purchased by the Company from the related parties
are as follows:
Amount for the Amount for the
Related parties current period previous period
Controladora Mabe S.A.deC.V. 5,992,396,585.28 5,919,857,050.59
Qingdao Haier Parts Procurement Co., Ltd. 3,437,294,477.05 243,004,611.97
Gooday Supply Chain Technologies Co., Ltd. 2,566,807,694.51 1,795,893,473.89
HNR Company (Private) Limited 2,225,964,262.84 1,753,260,194.66
Chongqing Haier Electrical Appliances Sales
Co., Ltd. 1,428,396,771.15 1,735,448,645.80
Shanghai Cotai Supply Chain Management
Co., Ltd. 760,063,618.26 837,090,677.39
Hotoem Information Technology 323,614,793.49 15,780,675.02
Cosmoplat Chuangzhi IOT Technology
Co., Ltd. 306,393,628.09 1,007,738,751.14
Qingdao Haier Moulds Co., Ltd. 264,629,834.22 283,420,737.56
Wolong Electric (Jinan) Motor Co., Ltd. 218,455,947.50 494,269,324.67
Qingdao HBIS Composite New Material
Co., Ltd. 155,274,371.48 392,032,148.49
Qingdao Ding Xin Electronics Technology
Co., Ltd. 125,203,847.62 429,570,435.77
Chongqing Haier Intelligent Electronics
Co., Ltd. 119,484,178.14 493,639,084.84
Hefei Hegang New Material Technology
Co., Ltd. 117,399,517.14 474,928,583.73
Qingdao Haier Special Plastic Development
Co., Ltd. 66,199,048.27 217,734,562.12
Other related parties 1,868,504,632.15 2,534,023,594.60
Total 19,976,083,207.19 18,627,692,552.24
240 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
2. Details of the Company’s sales of goods to the related parties are as follows:
Amount for the Amount for the
Related parties current period previous period
Controladora Mabe S.A.deC.V. 540,669,324.96 468,040,995.25
HNR Company (Private) Limited 371,766,028.14 314,817,192.25
Qingdao Haier Special Plastic Development
Co., Ltd. 273,537,316.50 324,988,575.86
Qingdao Haier International Trading Co., Ltd. 231,644,878.27 312,037,256.25
Qingdao Haier International Travel Agency
Co., Ltd. 118,333,617.35 105,505,398.38
Qingdao Haier Multimedia Co., Ltd. 62,200,352.87 25,743,020.75
HPZ Limited 46,402,303.46 85,694,941.35
Other related parties 383,482,730.84 451,160,486.74
Total 2,028,036,552.39 2,087,987,866.83
Haier Smart Home Co., Ltd. Interim Report 2022 241
Section X Financial Report
3. Amount for outstanding items of related parties
Closing Opening
Items and name of customers Balance Balance
Bills receivable:
Qingdao Haier Special Plastic Development Co.,
Ltd. 35,258,514.73
Qingdao Haina Cloud Intelligent System Co., Ltd. 18,392,400.67 21,511,057.07
Chongqing Haier Smart Electronics Co., Ltd. 10,693,195.91 2,528,394.74
Qingdao Haier Moulds Co., Ltd. 6,220,430.00 600,000.00
Cosmoplat Chuangzhi IOT Technology Co., Ltd. 5,710,000.00 13,520,000.00
Other related parties 18,803,440.35 20,326,664.87
Accounts receivable:
HNR Company (Private) Limited 692,724,378.50 588,605,242.72
Qingdao Haier International Travel Agency
Co., Ltd. 87,754,866.94 99,648,729.88
Qingdao Haier Special Plastic Development
Co., Ltd. 59,912,071.24 39,101,648.72
HPZ Limited 59,823,027.70 —
Controladora Mabe S.A.deC.V. 56,877,475.23 123,524,843.42
Chongqing Zhonglian Energy Technology
Co., Ltd. 51,648,147.74 45,405,801.21
Qingdao Haier International Trading Co., Ltd. 51,507,251.38 34,295,519.63
Shanghai Zhiyu Technology Co., Ltd. 43,917,268.67 43,349,588.61
Qingdao Haina Cloud Intelligent System Co., Ltd. 31,656,497.71 31,824,063.09
Other related parties 198,063,150.61 223,239,739.94
Prepayments:
Qingdao Haier International Travel Agency
Co., Ltd. 23,158,794.37 23,936,807.36
Qingdao Haiyongda Property Management
Co., Ltd. 16,886,792.00 17,069,128.00
Qingdao Oasis Technology Co., Ltd. 15,085,363.44 —
Qingdao Haier Moulds Co., Ltd. 13,664,084.98 7,287,661.33
Other related parties 27,520,134.41 152,967,725.88
Other receivables:
Controladora Mabe S.A.deC.V. 23,141,410.56 16,260,655.41
Gooday Supply Chain Technologies Co., Ltd. 19,979,917.89 27,180,000.00
Qingdao Haier International Trading Co., Ltd. 16,291,509.07 16,601,596.21
Qingdao Haier Energy and Power Co., Ltd. 15,515,825.00 15,315,825.00
Other related parties 65,933,332.86 71,877,028.63
Closing Opening
Items and name of suppliers Balance Balance
Bills payable:
Qingdao Haier New Materials R & D Co., Ltd. 304,428,684.81 90,348,253.59
Wolong Electric (Jinan) Motor Co., Ltd. 44,870,947.00 4,127,872.00
Other related parties 57,995,232.71 50,019,985.82
242 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
Closing Opening
Items and name of customers Balance Balance
Accounts payable:
Controladora Mabe S.A.deC.V. 1,437,362,278.03 941,545,815.41
Qingdao Haier Parts Procurement Co., Ltd. 1,270,602,288.35 1,985,902,077.10
Qingdao Haier International Trading Co., Ltd. 198,134,907.93 106,344,044.12
Dalian Haier International Trade Co., Ltd. 146,623,099.52 175,739,251.85
Chongqing Haier Electrical Appliances Sales
Co., Ltd. 126,873,182.47 332,415,203.41
Qingdao Haier New Materials R & D Co., Ltd. 117,832,792.95 21,654,400.63
Qingdao Haier Moulds Co., Ltd. 79,707,945.36 136,685,798.49
Cosmoplat Chuangzhi IOT Technology Co., Ltd. 49,049,546.13 268,605,818.56
Wolong Electric (Jinan) Motor Co., Ltd. 47,439,179.69 117,800,983.85
Qingdao HBIS Composite New Material Co., Ltd. 44,967,206.10 161,242,782.98
Qingdao Hegang New Material Technology
Co., Ltd. 30,430,316.84 72,015,400.20
Other related parties 71,230,012.81 1,223,019,630.13
Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd. 15,133,132.31 21,373,101.27
Qingdao Haier Parts Procurement Co., Ltd. 7,939,821.15 91,082,063.05
Chongqing Haier Electrical Appliances Sales
Co., Ltd. 4,897,848.16 779,853.29
Other related parties 13,395,732.42 41,359,339.35
Dividends payable:
Haier COSMO Co., Ltd. 580,706,830.40
Haier Group Corporation 494,859,702.08
HCH (HK) Investment Management Co., Limited 248,470,041.60
Other related parties 161,942,052.03
Other payables:
Gooday Supply Chain Technologies Co., Ltd. 1,013,756,001.98 687,378,382.22
Shanghai Cotai Supply Chain Management
Co., Ltd. 317,902,528.95 154,351,301.35
Qingdao Goodaymart Supply Chains Co., Ltd. 69,476,766.47 72,545,343.35
Qingdao Haier Brothers Animation Industry
Co., Ltd. 40,538,987.00 —
Qingdao Manniq Intelligent Technology Co., Ltd. 32,559,033.02 —
Qingdao Haier Moulds Co., Ltd. 29,846,291.87 21,298,170.87
Qingdao Manniq Intelligent Equipment Co., Ltd. 26,540,689.73 18,114,339.24
Qingdao Haier International Travel Agency
Co., Ltd. 22,412,379.87 16,372,400.80
Dalian Haier International Trade Co., Ltd. 21,800,000.00 21,800,000.00
Other related parties 120,035,044.34 184,728,610.07
Haier Smart Home Co., Ltd. Interim Report 2022 243
Section X Financial Report
4. Other related party transactions
(1) On 29 April 2021, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services Framework
Agreement, and the “Resolution on the Renewal of the Financial Services Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation and
the Estimated Amount of Connected Transaction” was considered and passed at the
2020 Annual General Meeting held on 25 June 2021. The Financial Services
Framework Agreement became effective from the passing of the resolution at the
general meeting.
Various current balances of the Company and the Finance Company are as follows:
Closing Opening
Items Balance Balance
Monetary funds deposited at the Finance
Company 31,997,084,109.69 28,744,602,432.65
Interest receivable from the Finance Company 359,448,232.39 260,262,550.46
Loans of the Finance Company 282,673,529.00 336,507,659.12
Interest payable to the Finance Company 3,921,345.84 1,813,534.66
Bank acceptance note issued 23,758,244,622.90 21,697,666,574.19
Foreign exchange derivatives of the Finance
Company 111,771,387.14 1,577,848.15
Various balances of the Company and the Finance Company are as follows:
Amount for the Amount for the
Items current period previous period
Interest income of the Finance Company 260,517,401.68 131,478,780.14
Interest expense of the Finance Company 4,004,749.21 6,396,052.75
Service fee of the Finance Company 13,688,276.03 11,729,401.16
(2) The lease expense of the Company and its subsidiaries for production and operation
leased from related parties for the current period was RMB60 million (amount for the
corresponding period: RMB60 million).
(3) Related information on the guarantor of the Company’s guaranteed borrowings as a
related party at the end of period:
Lender Closing Balance Opening Balance Guarantor
Haier Russian Electric 282,673,529.00 304,896,830.40 Haier Group
Co., Ltd. Corporation
Total 282,673,529.00 304,896,830.40
244 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(4) Haier Group Corporation provided joint liability guarantee for certain bills payable of
the s u b s i d i a r i e s of the C ompan y with the g u a ra n te e d amo unt of
RMB1,805,486,348.06 at the end of the period.
(IV) Pricing policy
1. Related party sales
Some related parties purchase components through the independent procurement platform
of the Company, purchase electrical appliances for sales from the Company, and receive
after-sales services, R&D service, housing rental and other business provided by the
company due to their business needs. In November 2020, according to the implementation
of connected transactions in the early stage and the relevant listing requirements in Hong
Kong, the Company and Haier Group Corporation revised and signed the Product and
Materials Sales Framework Agreement, the Service Provision Framework Agreement and the
Property Leasing Framework Agreement on the basis of the original execution contract,
which agreed on the financial connected transactions. The pricing principle included that
both parties should agree on the price which is not less favourable than those provided by
the Company to the Independent Third Parties on arm’s length to ensure the fairness and
reasonableness of connected transactions. The valid term of the agreement commenced
from the listing date to 31 December 2022, which can be renewed for another three years
upon expire.
2. Related parties Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover, the
Company entrusted Haier Group Corporation and its subsidiaries to provide the Company
with logistics and distribution, energy and power, basic research and testing, equipment
leasing, house leasing and maintenance, greening and cleaning, gift procurement, design,
consulting, various ticket booking and other services. In November 2020, according to the
implementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and signed
the Product and Materials Sales Framework Agreement, the Service Provision Framework
Agreement and the Property Leasing Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included that both parties should agree on the price which is not less favourable
than those provided by the Company to the Independent Third Parties on arm’s length to
ensure the fairness and reasonableness of connected transactions. The valid term of the
agreement commenced from the listing date to 31 December 2022, which can be renewed
for another three years upon expire.
Haier Smart Home Co., Ltd. Interim Report 2022 245
Section X Financial Report
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
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.
246 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
XIII. SHARE-BASED PAYMENTS
(1) Share Options
According to the “Resolution on Adjustment to the 2022 A Share Option Incentive Scheme of
Haier Smart Home Co., Ltd.” and the “Resolution on the Grant of Share Option to the Incentive
Target of Haier Smart Home Co., Ltd.” passed on the 1st meeting of the 11th session of the
Board of Directors of the Company on 28 June 2022, it was agreed that on the date of the
grant on 28 June 2022, 104,756,896 share options would be granted to 1,834 qualifying
incentive targets at the exercise price of RMB23.86 per Share.
Number for the Number for the
Share Options current period previous period
At the beginning of the period 50,525,214.00
Granted during the period 104,756,896.00 50,525,214.00
Vested during the period
Lapsed during the period
At the end of the period 155,282,110.00 50,525,214.00
(2) Restricted Shares
Number for the Number for the
Number of restricted shares current period previous period
At the beginning of the period 4,438,027.00
Granted during the period 4,438,027.00
Vested during the period
Lapsed during the period
At the end of the period 4,438,027.00 4,438,027.00
(3) Method of determining the fair value of equity instrument on the date of grant:
The Company has adopted the B-S model to determine the fair value of the share options.
The B-S model is subject to six variables: current price of the target share (S), exercise price of
the option (K), risk-free rate (r), valid term of the option (t), expected volatility of the share price
(σ), and the dividend rate of the target share (i).
Parameters selected for the calculation of the value of the option of the Company are as follows:
① share price (S): RMB27.01 per share (closing price on the date of grant on 28 June 2022).
② exercise price (K): RMB23.86 per share.
Haier Smart Home Co., Ltd. Interim Report 2022 247
Section X Financial Report
③ risk-free rate (r): according to the maturity yield rate of the China Government Bonds from
Bloomberg’s system, the risk-free rate for one year was1.997%; 2.358% for two years; 2.452%
for three years; 2.561% for four years; and 2.67% for five years, where the risk- free rate
for the fourth year was calculated as the arithmetic average of the risk-free rate of the third
and fifth year.
④ lifetime of the option (t): 1 year, 2 years, 3 years and 4 years, respectively (from the date of
grant to the deadline of the first exercisable date of each tranche).
⑤ historical volatility rate (σ): 0.3677 (1 year); 0.4016 (2 years); 0.3783 (3 years); 0.3795 (4
years). The interval adopted for the calculation of historical volatility was the continuous
closing price of the Company in the preceding four years. At the same time, the historical
volatility for the preceding 1, 2, 3, and 4 years was calculated, respectively based on the
differences in waiting period.
⑥ yield rate (i) 1.7031% based on the yield rate shown in Bloomberg’s system on the valuation
date (28 June 2022), dividing the dividend per share by the closing price on the date of grant.
According to the calculation under the above pricing model, the theoretical aggregate
value of the 10,475.6896 share options granted under this incentive plan of the Company
amounted to RMB777,000,000.
(4) Based on the latest available subsequent information, such as change in number of vesting
employee, result condition of the Company and evaluation of personal performance appraisal of
incentive targets, the Company makes the best estimation of the number of vesting equity
instruments, based on which, the Company includes services received for the current period in
relevant costs of expenses in accordance with the fair value of the equity instrument on the date
of grant, and accordingly included in the capital reserve.
Expense recognized in respect of the share-based payment incentive plan for the period:
RMB251,000,000 for the stock ownership plan; RMB73,000,000 for the share options; and
HKD10,000,000 for the restricted shares.
On 30 June 2022, balance associated with the above share-based payment incentive plans provided
in the capital reserve amounted to RMB594,000,000.
XIV. CONTINGENCIES
√ Applicable □ Not Applicable
As of 29 August 2022, the Company has no significant contingencies that need to be disclosed.
XV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
√ Applicable □ Not Applicable
As of 29 August 2022, the Company has no significant events subsequent to the balance sheet date
that need to be disclosed.
248 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable □ Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
Items Closing balance
Financial assets Financial assets
measured at fair measured at fair
value and value and
changes of which changes of which
included included in other
in current profit Measured at comprehensive
and loss amortized cost income Total
Monetary funds 50,316,121,259.28 50,316,121,259.28
Financial assets held for trading 2,560,172,076.58 2,560,172,076.58
Derivative financial assets 163,084,726.42 163,084,726.42
Bills receivable 8,417,636,171.41 8,417,636,171.41
Accounts receivable 17,920,101,868.72 17,920,101,868.72
Other receivables 2,156,760,190.99 2,156,760,190.99
Other current assets 1,551,745,385.00 1,551,745,385.00
Long-term receivables 306,402,281.56 306,402,281.56
Other equity instruments 4,852,445,212.91 4,852,445,212.91
Other non-current assets 46,832,494.61 46,832,494.61
Financial assets (Continued)
Items Opening balance
Financial assets Financial assets
measured at fair measured at fair
value and value and
changes of which changes of which
included included in other
in current profit Measured at comprehensive
and loss amortized cost income Total
Monetary funds 45,971,035,763.51 45,971,035,763.51
Financial assets held for trading 2,786,075,529.09 2,786,075,529.09
Derivative financial assets 79,819,974.01 79,819,974.01
Bills receivable 13,354,791,068.29 13,354,791,068.29
Accounts receivable 14,642,659,450.22 14,642,659,450.22
Other receivables 1,956,721,621.66 1,956,721,621.66
Other current assets 316,590,333.42 316,590,333.42
Long-term receivables 308,998,755.30 308,998,755.30
Other equity instruments 4,848,709,438.96 4,848,709,438.96
Other non-current assets 46,832,494.61 46,832,494.61
Haier Smart Home Co., Ltd. Interim Report 2022 249
Section X Financial Report
Financial liabilities
Items Closing balance
Financial Financial
liabilities liabilities
measured at measured at
fair value amortized cost Total
Short-term borrowings 13,159,569,303.47 13,159,569,303.47
Financial liabilities held for trading 79,270,648.00 79,270,648.00
Derivative financial liabilities 77,066,966.55 77,066,966.55
Bills payable 27,955,088,267.08 27,955,088,267.08
Accounts payable 38,977,127,139.49 38,977,127,139.49
Other payables 22,391,504,810.19 22,391,504,810.19
Non-current liabilities due within one year 9,566,319,746.23 9,566,319,746.23
Long-term borrowings 2,119,243,998.96 2,119,243,998.96
Long-term payables 49,353,671.92 49,353,671.92
Financial liabilities (Continued)
Items Opening balance
Financial Financial
liabilities liabilities
measured at measured at
fair value amortized cost Total
Short-term borrowings 11,226,212,134.39 11,226,212,134.39
Financial liabilities held for trading 6,294,014.40 6,294,014.40
Derivative financial liabilities 80,212,433.24 80,212,433.24
Bills payable 25,023,238,406.72 25,023,238,406.72
Accounts payable 42,396,109,648.76 42,396,109,648.76
Other payables 17,533,370,017.01 17,533,370,017.01
Non-current liabilities due within one year 6,745,950,334.20 6,745,950,334.20
Long-term borrowings 3,038,573,824.53 3,038,573,824.53
Bonds payable 334,730,048.82 334,730,048.82
Long-term payables 99,602,707.76 99,602,707.76
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.
250 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts receivable,
interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks. The
interest receivables are mainly the accrued interests from fixed deposits which are deposited in
the above banks. The Group does not believe there is any significant credit risk due to defaults
of its counterparties which would cause any significant loss. (2) Accounts receivable and bills
receivable: The Company only trades with approved and reputable third parties. All customers
who are traded by credit are subject to credit assessment according to the policies of the Company,
and the payment terms shall be determined on a reasonable basis. The Company monitors the
balances of accounts receivable on an ongoing basis and purchases credit insurance for
receivables of large-amount credit customers in order to ensure the Company is free from
material bad debts risks. (3) Other receivables of the Company mainly include export tax refund,
borrowings and contingency provision. The Company strengthened its management and
continuous monitoring in respect of these receivables and relevant economic business based on
historical data, so as to ensure that the Company’s significant risk of bad debts is controllable
and will be further reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, South Asia,
central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other currencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well as
transactions to be settled in foreign currencies expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions in
foreign currencies and assets and liabilities denominated in foreign currencies to minimize the risk
of exposure to fluctuation in exchange rate; the Company resorts the way of signing forward
foreign exchange contracts to avoid the risk of exchange fluctuation.
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short-term bank loans and bonds
payables which are interest-bearing debts. Financial liabilities with floating interest rates expose the
Company to cash flow interest rate risk, while financial liabilities with fixed interest rates expose the
Company to fair value interest rate risk. The Group determines the relative proportion of fixed-interest
rate and floating interest rate contracts in light of the prevailing market conditions.
Haier Smart Home Co., Ltd. Interim Report 2022 251
Section X Financial Report
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
Opening
Aging Closing balance balance
Within 1 year 62,789,403.13 546,532,442.90
1-2 years 532,093,996.86
2-3 years
Over 3 years
Accounts receivable, balance 594,883,399.99 546,532,442.90
Allowance for bad debts
Accounts receivable, net 594,883,399.99 546,532,442.90
Changes in allowance for bad debts of accounts receivable during the current period:
Opening Increase for the current Decrease for the current Closing
Items Balance period period Balance
Provision for Write-off
the current Other and other
period increase Reversal movement
Allowance for bad
debts
252 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
2. Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Interest receivable 85,694,396.74 51,632,471.99
Dividend receivable 4,015,840,000.00 3,615,840,000.00
Other receivables 13,953,280,622.41 12,577,807,696.42
Total 18,054,815,019.15 16,245,280,168.41
(1) Interest receivable:
Items Closing balance Opening balance
Within 1 year 85,694,396.74 51,632,471.99
Over 1 year
Total 85,694,396.74 51,632,471.99
(2) Dividend receivable
Aging Closing Balance Opening Balance
Within 1 year 4,015,840,000.00 3,615,840,000.00
More than 1 year
Total 4,015,840,000.00 3,615,840,000.00
Haier Smart Home Co., Ltd. Interim Report 2022 253
Section X Financial Report
(3) Other receivables:
① The disclosure of other receivables by aging is as follows:
Aging Closing balance Opening balance
Within one year 12,789,835,911.72 12,040,141,153.64
Over 1 year 1,163,452,674.94 537,791,379.00
Other receivables, balance 13,953,288,586.66 12,577,932,532.64
Allowance for bad debts 7,964.25 124,836.22
Other receivables, net 13,953,280,622.41 12,577,807,696.42
② Changes in allowance for bad debt of other receivables in the current period:
Increase for the Decrease for the
current period current period
Provision for Write-off and
Opening the current Other other Closing
Items balance period increase Reversal movement balance
Allowance
for bad
debts 124,836.22 116,871.97 7,964.25
3. Long-term equity investment
√ Applicable □ Not Applicable
(1) Details of long-term equity investments:
Closing balance Opening balance
Provision for Book Provision for
Items Book balance impairment balance impairment
Long-term equity investments
Including: long-term equity investments in
subsidiaries 49,377,425,428.31 7,100,000.00 49,377,425,428.31 7,100,000.00
Long-term equity investments in
associates 3,464,422,755.92 109,300,000.00 3,252,734,849.46 109,300,000.00
Total 52,841,848,184.23 116,400,000.00 52,630,160,277.77 116,400,000.00
254 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(2) Long-term equity investments in subsidiaries
Impairment
Increase/ provisions at
Decrease for the end of the
the current period
Name of investee Opening balance period Closing balance provisions
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd. 9,500,000.00 9,500,000.00
Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd 34,735,489.79 34,735,489.79
Qingdao Haier Refrigerator Co., Ltd. 402,667,504.64 402,667,504.64
Qingdao Haier Special Refrigerator Co., Ltd. 329,832,047.28 329,832,047.28
Qingdao Haier Information Plastic Development
Co., Ltd 102,888,407.30 102,888,407.30
Dalian Haier Precision Products Co., Ltd. 41,836,159.33 41,836,159.33
Hefei Haier Plastic Co., Ltd. 42,660,583.21 42,660,583.21
Qingdao Haier Technology Co., Ltd. 16,817,162.03 16,817,162.03
Qingdao Household Appliance Technology and
Equipment Research Institute 66,778,810.80 66,778,810.80
Qingdao Meier Plastic Powder Co., Ltd. 24,327,257.77 24,327,257.77
Chongqing Haier Precision Plastic Co., Ltd. 47,811,283.24 47,811,283.24
Qingdao Haier Electronic Plastic Co., Ltd. 69,200,000.00 69,200,000.00
Dalian Haier Refrigerator Co., Ltd. 138,600,000.00 138,600,000.00
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., Limited 67,110,323.85 67,110,323.85
Qingdao Haier Refrigerator (International) Co.,
Ltd. 238,758,240.85 238,758,240.85
Qingdao Haier Air-Condition Electronic Co., Ltd. 1,131,107,944.51 1,131,107,944.51
Qingdao Haier Air Conditioner General Corp.,
Ltd. 220,636,306.02 220,636,306.02
Qingdao Haier Special Freezer Co., Ltd. 471,530,562.76 471,530,562.76
Qingdao Haier Dishwasher Co., Ltd. 206,594,292.82 206,594,292.82
Wuhan Haier Freezer Co., Ltd. 47,310,000.00 47,310,000.00
Wuhan Haier Electronics 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 Appliances
Services Co., Ltd. 118,000,000.00 118,000,000.00
Chongqing Haier Refrigeration Appliance Co.,
Ltd. 91,750,000.00 91,750,000.00
Shanghai Haier Zhongzhi Fang Chuang Ke Space
Management Co., Ltd. 2,000,000.00 2,000,000.00
Qingdao Haier Special Refrigerating Appliance
Co., Ltd. 100,000,000.00 100,000,000.00
Haier Shareholdings (Hong Kong) Limited 26,022,782,526.24 26,022,782,526.24
Haier Smart Home Co., Ltd. Interim Report 2022 255
Section X Financial Report
Impairment
Increase/ provisions at
Decrease for the end of the
the current period
Name of investee Opening balance period Closing balance provisions
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 Service Co.,
Ltd. 20,000,000.00 20,000,000.00
Qingdao Haier Intelligent Technology
Development Co., Ltd. 130,000,000.00 130,000,000.00
Qingdao Haier Technology Investment Co., Ltd. 367,505,635.00 367,505,635.00
Qingdao Casarte Smart Living Appliances Co.,
Ltd. 10,000,000.00 10,000,000.00
Haier Overseas Electric Appliance Co., Ltd. 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 (Beijing)
Co., Ltd. 143,000,000.00 143,000,000.00
Haier Electronics Group Co., Ltd. 3,979,407,602.61 3,979,407,602.61 7,100,000.00
Flourishing Reach Limited (SPVX) 12,751,300,336.02 12,751,300,336.02
Qingdao Haidarui Procurement Service Co., Ltd. 107,800,000.00 107,800,000.00
Qingdao Haier Intelligent Household Appliances
Co., Ltd. 326,400,000.00 326,400,000.00
Qingdao Haidacheng Procurement Service Co.,
Ltd. 100,000,000.00 100,000,000.00
Qingdao Haier Quality Inspection Co. Ltd. 18,657,135.49 18,657,135.49
Qingdao Haier Home AI Industry Innovation
Center Co. Ltd. 20,000,000.00 20,000,000.00
Haier Smart Home Experience Cloud Ecological
Technology Co., Ltd. 100,000,000.00 100,000,000.00
Total 49,377,425,428.31 49,377,425,428.31 7,100,000.00
256 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
(3) Long-term equity investments in associates
Increase/decrease for the current period
Recognized
Increase/ investment Impairment
decrease for the income under provisions at the
Name of investee Opening balance current period equity method Others Closing balance end of the period
Wolong Electric (Jinan)
Motor Co., Ltd. 145,209,273.31 12,492,538.14 157,701,811.45
Qingdao Haier SAIF Smart
Home Industry
Investment Center
(Limited Partnership) 393,598,372.59 –904,601.39 –17,199,060.82 375,494,710.38
Bank of Qingdao Co., Ltd. 1,051,480,863.27 139,485,507.20 65,502,506.22 –29,821,491.89 1,226,647,384.80
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co.,
Ltd. 682,901,976.73 52,979,520.61 735,881,497.34
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 409,053,808.05 10,936,464.63 –17,900,226.81 402,090,045.87 21,000,000.00
Qingdao Haier Multimedia
Co., Ltd. 277,102,563.87 –14,629,468.29 262,473,095.58 88,300,000.00
Qingdao HBIS New Material
Technology Co., Ltd. 293,387,991.64 10,746,218.86 304,134,210.50
Total 3,252,734,849.46 139,485,507.20 137,123,178.78 –64,920,779.52 3,464,422,755.92 109,300,000.00
4. Operating revenue and operating cost
√ Applicable □ Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
current period previous period
Items Revenue Cost Revenue Cost
Primary business 53,149,966.60 46,742,634.57 100,011,103.11 93,685,159.99
Other business 40,173,916.73 34,148,754.89 96,140,485.73 76,847,254.77
Total 93,323,883.33 80,891,389.46 196,151,588.84 170,532,414.76
Haier Smart Home Co., Ltd. Interim Report 2022 257
Section X Financial Report
5. Investment income
Amount for the Amount for the
Items current period previous period
Investment income from long-term equity investment
accounted for using equity method 137,123,178.78 89,661,570.77
Investment income generated from disposal of long-
term equity investment
Investment income from long-term equity investments
accounted for using cost method 400,000,000.00 17,700,000.00
Income from wealth management products 11,113,358.17 5,792,409.99
Investment income from investment in other equity
instrument during the holding period
Total 548,236,536.95 113,153,980.76
XIX. APPROVAL OF FINANCIAL REPORT
This financial report was approved for publication by the Directors of the Company on 29 August
2022.
XX. OTHER SUPPLEMENTARY INFORMATION
1. Basic earnings per share and diluted earnings per share
Amount for the current period Amount for the previous period
Earnings per share Earnings per share
(RMB) (RMB)
Weighted Weighted
average average
return rate Basic Diluted return rate Basic Diluted
on net earnings earnings on net earnings earnings
Items assets per share per share assets per share per share
Net profit attributable to ordinary
shareholders of the Parent
Company 9.24% 0.85 0.85 9.29% 0.74 0.73
Net profit attributable to ordinary
shareholders of the Parent
Company after deduction of non-
recurring profit or loss 8.71% 0.80 0.80 8.50% 0.68 0.67
258 Haier Smart Home Co., Ltd. Interim Report 2022
Section X Financial Report
2. Non-recurring profit or loss
Amount for the Amount for the
Items current period previous period
Net profit attributable to ordinary shareholders of the Parent
Company 7,949,084,472.70 6,858,902,854.55
Less: non-recurring profit or loss 458,390,767.32 588,996,447.83
Net profit attributable to ordinary shareholders of the Parent
Company after deduction of non-recurring profit or loss 7,490,693,705.38 6,269,906,406.72
Statement of non-recurring profit or loss for the current period
Non-recurring profit and loss items Amount for the current period
Profit and loss on disposal of non-current assets 33,807,493.39
Government subsidies through the profit and loss, except
for government subsidies that are closely related to the
Company’s normal business operations, comply with
national policies and regulations, and continue to be
enjoyed in a fixed amount or fixed quantity according to
certain standards 434,830,465.43
Gains on investments in subsidiaries, associates and joint
ventures in which the investment cost was less than the
fair value of identifiable net assets of the investees at
the time of acquisition
Profit and loss from fair value changes of financial assets
held for trading and financial liabilities held for trading, as
well as investment gains arising from disposal of financial
assets held for trading, financial liabilities held for trading
and financial assets held for sale, except the effective
hedging related to the normal operations of the
Company 59,249,736.54
Other non-operating income and expenses except the
aforementioned items 34,282,312.26
Effect of minority equity interest (After Tax) –10,201,864.65
Effect of income tax –98,050,857.35
Effect of profit from business combination under common
control 4,473,481.70
Total 458,390,767.32
Chairman of the Board: LI Huagang
Date of approval for publication by the Board: 29 August 2022
Information of amendment
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 259
