Midea Group Co., Ltd.
Semi-Annual Report 2023
August 2023
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Midea Group Co., Ltd. Semi-Annual Report 2023
Section I Important Statements, Contents and Definitions
The Board of Directors, the Supervisory Committee, directors, supervisors and senior
management of Midea Group Co., Ltd. (hereinafter referred to as the “Company”)
hereby guarantee that the information presented in this report is free of any
misrepresentations, misleading statements or material omissions, and shall together
be wholly liable for the truthfulness, accuracy and completeness of its contents.
Mr. Fang Hongbo, Chairman of the Board and CEO of the Company, Ms. Zhong Zheng,
CFO and Director of Finance of the Company, and Ms. Chen Lihong, head of the
accounting department of the Company, have represented and warranted that the
financial statements in this report are true, accurate and complete.
All directors of the Company attended the Board meeting to review this report.
The future plans and other forward-looking statements mentioned in this report shall
not be considered as promises of the Company to investors. Therefore, investors are
kindly reminded to pay attention to possible investment risks.
The Company plans not to distribute cash dividends or bonus shares or convert
capital reserves into share capital.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
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Midea Group Co., Ltd. Semi-Annual Report 2023
Contents
SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ............................. 2
SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ........................................ 6
SECTION III MANAGEMENT DISCUSSION AND ANALYSIS ................................................. 10
SECTION IV CORPORATE GOVERNANCE ........................................................................ 105
SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ....................................... 118
SECTION VI SIGNIFICANT EVENTS ................................................................................... 142
SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ..... 157
SECTION VIII PREFERENCE SHARES ............................................................................... 163
SECTION IX BONDS ............................................................................................................ 164
SECTION X FINANCIAL REPORT ........................................................................................ 167
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Midea Group Co., Ltd. Semi-Annual Report 2023
Documents Available for Reference
1. The original of The Semi-Annual Report 2023 of Midea Group Co., Ltd. signed by
the legal representative;
2. The financial statements signed and stamped by the legal representative, the CFO
& Director of Finance and the head of the accounting department;
3. The originals of all company documents and announcements that are disclosed to
the public via newspaper designated for information disclosure during the Reporting
Period; and
4. The electronic version of The Semi-Annual Report 2023 that is released on
http://www.cninfo.com.cn.
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Midea Group Co., Ltd. Semi-Annual Report 2023
Definitions
Term Definition
The “Company”, “Midea”, “Midea Group”
Midea Group Co., Ltd.
or the “Group”
Midea Holding Midea Holding Co., Ltd.
TLSC Toshiba Lifestyle Products & Services Corporation
KUKA KUKA Aktiengesellschaft
Hiconics Hiconics Eco-energy Technology Co., Ltd.
WDM Beijing Wandong Medical Technology Co., Ltd.
Clou Electronics ShenZhen Clou Electronics Co., Ltd.
Swisslog Swisslog Holding AG
Servotronix Servotronix Motion Control Ltd.
WINONE WINONE Elevator Company Limited
“TTium” or “TTium Motor” WuHan TTium Motor Technology Co., Ltd.
Reporting Period 1 January 2023 to 30 June 2023
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Midea Group Co., Ltd. Semi-Annual Report 2023
Section II Company Profile and Key Financial Results
1. Corporate Information
Stock name Midea Group Stock code 000333
Stock exchange where the
shares of the Company are Shenzhen Stock Exchange
listed
Name of the Company in
美的集团股份有限公司
Chinese
Abbr. of the Company name
美的集团
in Chinese (if any)
Name of the Company in
Midea Group Co., Ltd.
English (if any)
Abbr. of the Company name
Midea Group
in English (if any)
Legal representative Fang Hongbo
2. Contact Us
Representative for Securities
Board Secretary
Affairs
Name Jiang Peng You Mingyang
Midea Headquarters Building,
Midea Headquarters Building,
No. 6 Midea Avenue, Beijiao
No. 6 Midea Avenue, Beijiao
Address Town, Shunde District, Foshan
Town, Shunde District, Foshan
City, Guangdong Province,
City, Guangdong Province, China
China
Tel. 0757-22607708 0757-23274957
Fax 0757-26605456
E-mail IR@midea.com
3. Other Information
3.1 Ways to Contact the Company
Changes to the registered address, office address and their zip codes, website address and email
address of the Company in the Reporting Period:
□Applicable N/A
No such changes in the Reporting Period. The said information can be found in the 2022 Annual Report.
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Midea Group Co., Ltd. Semi-Annual Report 2023
3.2 Information Disclosure and Place Where the Semi-Annual Report Is Kept
Changes to the media for information disclosure and the place where materials carrying disclosed
information such as this Report were kept in the Reporting Period:
□Applicable N/A
The newspapers designated by the Company for information disclosure, the website designated by the
CSRC for disclosing this Report and the place where materials carrying disclosed information such as
this Report were kept did not change in the Reporting Period. The said information can be found in the
2022 Annual Report.
3.3 Other Information
Changes to other information in the Reporting Period:
□Applicable N/A
4. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□Yes No
H1 2023 H1 2022 Change (%)
Operating revenue (RMB'000) 196,988,402 182,661,009 7.84%
Net profit attributable to shareholders of the
18,232,291 15,995,496 13.98%
Company (RMB'000)
Net profit attributable to shareholders of the
Company before non-recurring gains and 17,651,853 15,691,512 12.49%
losses (RMB'000)
Net cash flows from operating activities
29,784,674 21,394,710 39.22%
(RMB'000)
Basic earnings per share (RMB/share) 2.67 2.34 14.10%
Diluted earnings per share (RMB/share) 2.66 2.34 13.68%
Weighted average ROE (%) 12.14% 12.18% -0.04%
30 June 2023 31 December 2022 Change (%)
Total assets (RMB'000) 462,739,635 422,555,267 9.51%
Net assets attributable to shareholders of
146,368,593 142,935,236 2.40%
the Company (RMB'000)
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Midea Group Co., Ltd. Semi-Annual Report 2023
5. Differences in Accounting Data under Domestic and Overseas Accounting
Standards
5.1 Differences in the net profit and net assets disclosed in the financial reports prepared under
China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□Applicable N/A
No such differences for the Reporting Period.
5.2 Differences in the net profit and net assets disclosed in the financial reports prepared under
CAS and foreign accounting standards
□Applicable N/A
No such differences for the Reporting Period.
5.3 Reasons for differences in accounting data under domestic and overseas accounting
standards
□Applicable N/A
6. Non-recurring Gains and Losses
Applicable □N/A
Unit: RMB'000
Item Amount Note
Gain or loss from disposal of non-current assets 8,525
Except for the effective hedging activities related to the
Group’s ordinary activities, gains or losses on changes in
fair value arising from financial assets held for trading,
derivative financial assets, financial liabilities held for
trading, derivative financial liabilities, other non-current 25,019
financial assets, and investment income from disposal of
financial assets held for trading, derivative financial assets,
financial liabilities held for trading, derivative financial
liabilities, other non-current financial assets
Others (mainly including government grants, reversal of
provision for impairment of receivables tested for
impairment on an individual basis, compensation income, 639,381
penalty income and other non-operating income and
expenses)
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Midea Group Co., Ltd. Semi-Annual Report 2023
Less: Corporate income tax 85,263
Minority interests (after tax) 7,224
Total 580,438 --
Particulars about other items that meet the definition of non-recurring gain/loss:
□Applicable N/A
Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is enumerated
as a non-recurring gain/loss in the :
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2023
Section III Management Discussion and Analysis
1. Industry Overview for the Reporting Period
1.1 Summary of the business scope
Midea is a global technology group comprising the Smart Home, Industrial Technology, Building
Technologies, Robotics & Automation, and Other Innovation businesses. With a business portfolio that is
focused on the coordinated development of the ToC and ToB businesses, Midea offers diversified
products and services. Specifically, the Smart Home Business Group, as the main operating entity of
smart appliances, smart home and related peripheral industries and ecological chains, undertakes the
construction of intelligent scenarios for end users, user operations and data value discovery, and is
committed to providing the best experience of entire-house smart home appliances and service. The
Industrial Technology Business Group, with technology as the core driver, commands key technologies
in intelligent transportation, industrial automation, green energy and consumer appliances. It operates
many brands including GMCC, Welling, HICONICS, SUNYE, SERVOTRONIX, DORNA, MR, TOSHIBA,
Motinova, etc., with its products covering high-precision core components such as compressors, motors,
chips, auto parts, electronic expansion valves, variable frequency drive, servo and motion control systems,
speed reducers and cooling modules. It provides green, efficient and intelligent products and technology
solutions for industrial customers across the world. The Building Technologies Division is responsible for
providing products and services in relation to buildings, as well as the relevant operations. With
iBUILDING, Midea’s digital building service platform, as the core, its business covers HVAC, elevators,
energy, building control, etc. Its primary products include VRF units, large chillers, unitary units, machine
room air conditioners, escalators, passenger elevators, freight elevators, etc., as well as building
automation software and building weak electricity integrated solutions. Supported by “Building Equipment
and Facilities + Digital Technology + Industrial Ecosystem”, it facilitates logistics, information, feeling and
energy flows of buildings to empower buildings with digital and low-carbon technologies and build
sustainable smart space. The Robotics & Automation Division primarily focuses on providing solutions of
industrial robotics, automatic logistics systems, and transmission systems for future factory-related fields,
as well as solutions for health care, entertainment, new consumption, etc. The Other Innovation Business
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Midea Group Co., Ltd. Semi-Annual Report 2023
includes new businesses arising from the transformation of Midea Group’s business models. Among them,
there are Annto, which provides customers with end-to-end digital and intelligent supply chain solutions;
Midea Cloud, which provides industrial software and digitalisation consulting services for intelligent
manufacturing and industrial interconnectivity through its industrial internet platform MIoT; Midea
Lighting, which focuses on the R&D, production, and sales of lighting and intelligent pre-decoration
electrical products; WDM, which is committed to innovation in medical imaging technology, providing
high-quality medical imaging products and services for clinical use; and Midea Finance, which provides
users with industrial chain finance, Midea Pay, consumer finance and other diversified financial services.
With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire Your
Future” as its mission, “Embrace what’s next - Aspiration、Customer First、Innovation、Collaboration、
Dedication” as its values, “High-quality Development and High-performance Operations” as its
management and operation standard, Midea integrates global resources and promotes technological
innovation to create a better life for over 400 million users, major customers and strategic partners in
different areas worldwide every year with satisfying products and services. In face of higher requirements
for products and services in the digital Internet era, Midea continues to promote its strategic focus of
“Technology Leadership, Direct to Users, Digitization & Intelligence Driven, and Global Impact”, so as to
rebuild Midea in the new era. To be specific, it strives to achieve Technology Leadership by building scale
advantages in R&D and strengthening the efforts and investment in core and cutting-edge technologies;
be Direct to Users through direct contact and interaction with users and reinventing product service and
business models; be Digitization & Intelligence Driven through “Comprehensive Digitalization and
Comprehensive Intellectualization”, as well as improving efficiency internally and focusing on users
externally; and achieve Global Impact by seeking breakthroughs in key regions in terms of market,
channel and business model dimensions and serving global users.
Midea, a global operating company, has now established a global platform with around 200 subsidiaries,
31 R&D centers, 40 major manufacturing bases, and more than 160,000 employees. Its business covers
more than 200 countries and regions. Overseas, Midea has 16 R&D centers and 21 major manufacturing
bases in more than ten countries. And 22 currencies are used by Midea in settlement.
1.2 Position in the home appliance industry
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Midea Group Co., Ltd. Semi-Annual Report 2023
Midea Group ranks No. 278 on the Fortune Global 500 list unveiled in August 2023, marking its eighth
consecutive year on the list. Meanwhile, Midea has also been named to the Fortune China ESG Impact
list for its high-value practices in environmental management and social contribution. In June 2023, the
Forbes magazine released its 2023 “Global 2000” list and Midea ranks No. 199, up 18 places from last
year. Also, Midea Group has been named as one of the 2022 Forbes World’s Top Female Friendly
Companies and the 2022 Forbes World’s Best Employers, among others. In March 2023, Midea Group
was selected as one of the ESG Case Companies with Practical Reference Significance according to the
“2023 ESG Inspiring Cases” results released by Forbes China. In the “2022 Forbes China Sustainable
Development Industrial Enterprises Top 50 Selection” held in February 2023, Midea was selected as an
Industry Benchmark for Sustainable Development Industrial Enterprises by virtue of its solid performance
in green manufacturing, carbon neutrality, sustainable development and ESG practices. In July 2023, the
Summit Forum of Top Enterprises in China Light Industry released the 2022 list of “Top 200 Enterprises
in China Light Industry”, and Midea Group once again topped the list with an outstanding score of 98.07.
In March 2023, Midea won the China Industrial Grand Prize at the Seventh China Industrial Grand Prize
Ceremony jointly organized by the China Federation of Industrial Economics and 13 national industry
associations for its excellent performance in technology innovation, quality management and branding,
among others. By June 2023, five of Midea’s factories had been included in the “Global Lighthouse
Network” initiated by the World Economic Forum, covering air conditioners, refrigerators, laundry
appliances, microwave ovens, dishwashers, etc., which demonstrates Midea’s leading position in
intelligent manufacturing and digital development among manufacturers worldwide. Meanwhile, Midea
takes the lead among domestic home appliance makers by ranking No. 39 on the 2023 Brand Finance
China 500 list released by Brand Finance, a British brand assessment institution. Midea has been given
excellent credit ratings by the three major international credit rating agencies, Standard & Poor’s, Fitch
Ratings and Moody’s. The ratings are in a leading position among home appliance manufacturers
worldwide as well as among Chinese non-state-owned enterprises. Particularly, Standard & Poor’s has
raised the credit rating on Midea to “A”, making it the highest-rated private manufacturer in China.
In the first half of 2023, Midea has successfully retained the "Number One Engine" of ToC business on
the domestic market. According to data provider AVC, Midea ranks first in the industry with respect to
both the online and offline domestic market share for seven home appliance categories, namely,
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Midea Group Co., Ltd. Semi-Annual Report 2023
residential air conditioners, countertop pan-microwave ovens, countertop ovens, electric radiators,
induction cookers, electric kettles, and electric fans.
The table below shows the offline market shares and rankings of the Company’s primary home appliance
products (by value of retail sales) in the first half of 2023:
Product category Market share Ranking
Residential air conditioners 36.0% 1
Laundry appliances 25.4% 2
Clothes dryers 20.5% 3
Refrigerators 15.3% 2
Rice cookers 39.9% 1
Electric pressure cookers 41.2% 1
Countertop pan-microwave ovens 62.7% 1
Electric radiators 44.7% 1
Induction cookers 47.9% 1
Water dispensers 27.3% 1
Electric fans 46.5% 1
Countertop ovens 42.1% 1
Electric kettles 42.4% 1
Electric baking pans 34.3% 2
Air fryers 29.8% 2
Blenders 29.2% 2
Water purifiers 18.7% 2
Freezers 13.1% 2
Electric water heaters 20.3% 3
Gas water heaters 10.5% 3
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Midea Group Co., Ltd. Semi-Annual Report 2023
The table below shows the online market shares and rankings of the Company’s primary home appliance
products (by value of retail sales) in the first half of 2023:
Product category Market share Ranking
Residential air conditioners 35.7% 1
Laundry appliances 38.0% 2
Clothes dryers 42.1% 1
Refrigerators 20.3% 2
Countertop pan-microwave ovens 51.6% 1
Induction cookers 53.9% 1
Dishwashers 25.2% 1
Electric fans 23.5% 1
Countertop ovens 25.0% 1
Electric kettles 24.8% 1
Water purifiers 18.8% 1
Air fryers 19.4% 1
Electric water heaters 29.1% 2
Electric radiators 19.2% 1
Rice cookers 26.3% 2
Electric pressure cookers 39.1% 2
Electric baking pans 27.6% 2
Sterilizing cabinets 19.9% 2
Gas water heaters 15.8% 2
Freezers 12.9% 2
Blenders 11.9% 3
Water dispensers 13.8% 3
* Air conditioners refer to floor-standing and wall-mounted ones only.
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Midea Group Co., Ltd. Semi-Annual Report 2023
1.3 Industry Overview
A. Home Appliance Industry
In the first half of 2023, the domestic economy continued its recovery, presenting a year-on-year increase
of 5.5% in the GDP. Concurrently, the consumer market experienced an upturn, particularly notable in the
home appliance industry, where the rebound was swift. Nonetheless, the speed of recovery varied greatly
across industries and sectors. The demand for home appliances and home furnishings and decor
exhibited sluggish growth. Specifically, within the home appliance industry, domestic market trends
corresponded to the macroeconomic landscape, and the pace of recovery accelerated in the second
quarter. Nevertheless, there were significant performance disparities among different segments.
According to the H1 2023 Report on China’s Household Electrical Appliance Industry prepared by the
National Household Appliance Industry Information Center under the guidance of the China Household
Electric Appliance Research Institute (CHEARI), both the exports and domestic sales of the home
appliance industry recorded growth in the first half of 2023. In numerical terms, the exports and domestic
sales reached RMB296.7 billion and RMB371.1 billion, respectively, up 5.2% and 2.8% year on year.
Considering the trend in the domestic home appliance industry, home appliance products are being
upgraded rapidly, with enhancements in basic features and performance. Simultaneously, their
appearance designs are increasingly embracing beauty, health-consciousness, integration, and
embedded functionality. The upgraded product mix has not only boosted the sales of high-quality home
appliances but also increased the end-user market price. Meanwhile, in the medium and long run,
upgrading of the industrial structure, relatively stable increase of household income, diversified
consumption, the national policy support for the green and smart industries, as well as continuous
upgrading of the standards for home appliances will create new opportunities for growth. To stimulate
home furnishing consumption, including the demand for home appliances, the Ministry of Commerce,
along with 11 other departments, issued the Measures for Boosting Home Furnishing Consumption in
July 2023. This document emphasizes that the focus shall be given to green, intelligent, and elderly-
friendly development and urges enterprises to enhance the supply quality, create new consumption
scenarios, improve consumption conditions, and optimize the consumption environment, thereby
eliminating bottlenecks, difficulties, and pain points and promoting the recovery and upgrade of home
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Midea Group Co., Ltd. Semi-Annual Report 2023
furnishing consumption.
According to the data from the National Household Appliance Industry Information Center, the domestic
retail sales of air conditioners were RMB90.7 billion in the first half of 2023, up by 16% year on year. Due
to the high temperature appearing earlier than before in South China and the ongoing high temperature
in the North China Plain, combined with the low sales last year, the sales of air conditioners surged, which
were particularly notable in the entry-level markets in counties and townships with potential for growth. In
terms of product structure, Midea introduced a range of emerging products, such as air machines and
kitchen air conditioners, to respond to segmented demands, including rapid cooling and heating, healthy
and comfortable airflow, improved air quality, as well as catering to various home scenarios. This exhibited
a differentiated approach to innovation in the air conditioning industry, consistently propelling product
iteration and upgrade and increasing the average price of air conditioners in offline stores. In terms of
product functions, the concept of air conditioners kept expanding from the functions of cooling and heating
to fresh air, self-cleaning, dehumidification, odour removal, air purification, etc., and the comfort of product
experience has been focused on.
According to the data from the National Household Appliance Industry Information Center, the domestic
retail sales of laundry appliances were RMB29.6 billion in the first half of 2023, down 1.3% year on year,
with the retail sales of clothes dryers reaching RMB3.4 billion, up 8.4% year on year. In terms of product
types, the share by retail sales of front-loading products in the laundry appliance market exceeded 65%.
Among the front-loading products, the growth in the sales of washing and drying machines slowed down,
as the stand-alone clothes dryers and cleaner-dryer kits exhibited better drying performance, such as
preventing secondary pollution, larger drying capacity, and better wearing experience. By comparison,
the share of retail sales of stand-alone clothes dryers in the total retail sales of front-loading laundry
appliances and stand-alone clothes dryers went up to 11%. In terms of product capacity, large-capacity
products were obviously replacing small-capacity ones, with laundry appliances with a capacity of 10 kg
or above having dominated the market, of which the share in the offline market by retail sales has
exceeded 80%. In terms of product functions, products were further segmented, with the market of the
second household washers continuously being expanded, such as Little Swan Mini Top-loading Washing
Machine allowing sterilization through high-temperature boiling and cleaning and Midea Foldable Mini
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Midea Group Co., Ltd. Semi-Annual Report 2023
Washing Machine that can be carried during trips.
According to the data from the National Household Appliance Industry Information Center, the domestic
retail sales of refrigerators were RMB43.2 billion in the first half of 2023, up slightly by 1% year on year.
The product structure of refrigerators was significantly optimized. In terms of prices, the average online
product price saw a year-on-year increase of 3.4%, whereas offline products witnessed a 7.4% rise. In
terms of capacity and structure, the market share by retail sales of large refrigerators with a capacity of
more than 500-L exhibited consistent and steady growth. Concurrently, side-by-side refrigerators and
multi-door refrigerators with more than four doors experienced an uptick in this regard. In terms of product
features, consumers' intensified willingness to pursue quality life has prompted the refrigerator market to
pivot towards high-end multi-dimensional design, which is mainly manifested as "anti-bacterial and fresh"
and "intelligent" functionality. Additionally, technological advancements, such as the novel foaming
technology, vacuum insulation panels, and aerogels, allowed the "zero built-in" design for refrigerators.
For example, COLMO Zero Built-in Nutritional Retention Refrigerator boasts an ultra-thin 600-mm body
that can seamlessly fit into the standard cabinet.
According to the data from the National Household Appliance Industry Information Center, the domestic
retail sales of kitchen appliances were RMB95.7 billion in the first half of 2023, up by 2.8% year on year.
As dishwashers became more popular on the domestic market, the retail sales reached RMB5.4 billion,
up 6.1% year on year. And product upgrading continued. In terms of functions, functions such as the
integration of functions of washing, sterilization, drying and storage, layered and separate washing, and
automatic recognition and program matching have become mainstream. Integrated stove sales reached
RMB13.6 billion in the domestic market, an increase of 15.8% year on year. Due to the surge in demand
for high-end kitchen appliances, in particular steamers and ovens, integrated stove products trended
towards style diversification and function upgrading. The retail sales of water heaters reached RMB25.5
billion, a year-on-year increase of 1.4%. Specifically, demand for large-capacity products remained
inelastic, with the 60-L electric storage water heaters and 16-L gas water heaters experiencing increases
to 67.3% and 53.1%, respectively, in the offline market share by retail sales. With respect to functions,
aiming at enhancing showering comfort, water heaters equipped with new technologies that allow high
power, dual tanks, water flow control, silence, and sterilization, saw a substantial rise in the share of sales.
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Midea Group Co., Ltd. Semi-Annual Report 2023
On this basis, technologies such as deep cleaning, skin beautification and care, and customization
spearheaded the current trends in product innovation. The retail sales of water purifiers amounted to
RMB13.3 billion, showing a year-on-year uptick of 0.6%. Concerning product specifications, with the
advantages of shorter waiting time and suitability for more daily water purification scenarios, high-flow
rate water purifiers boasting a capacity of 800 G or above witnessed growth to 36.0% and 16.7%,
respectively, in online and offline retail sales. In parallel, reverse osmosis and under-sink water purifiers
continued to dominate the market, with offline market shares by retail sales both above 90%. With respect
to functions, functions such as the integration of water purification and heating, faucet display, and
strontium abundance/mineralization became increasingly sought after, driving products into a new round
of upgrading.
According to the data from the National Household Appliance Industry Information Center, the domestic
sales of small domestic appliances were RMB57.97 billion in the first half of 2023, down 1.5% year on
year. Health-friendly cleaning appliances led the market over the past three years due to the intensified
attribute of health-friendliness. By categories, the robot cleaner industry registered retail sales of RMB5.9
billion, a year-on-year increase of 5.0%, as a result of slow innovation of production functions. Meanwhile,
functions and experience of floor scrubbers have been improved as a result of the advancement of
technology. Floor scrubbers recorded retail sales of RMB4.5 billion, up 9.5% year on year. In the
meantime, product prices experienced a notable decline as the industrial chains and technologies
became increasingly developed, with the online average price falling below RMB2,600. Moreover, the
product trend diverged toward single-function and all-round products that integrated the functions of floor
scrubbers, vacuum cleaners, mite removal devices, and free vacuuming. Electric fans, inelastically
demanded, maintained a steady market scale. Through consistent product optimization and upgrading,
the market share of circulation fans has exceeded 30%. Meanwhile, the online market has shifted its
focus toward intelligent products with a sense of design and suitable for outdoor scenes, whereas the
offline market has focused on high-end products that integrate multiple functions, including purification
and humidification.
According to the data from the National Household Electrical Appliance Industry Information Center, the
online sales of home appliances in the first half of 2023 reached RMB208 billion, up 4.3% from last year,
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Midea Group Co., Ltd. Semi-Annual Report 2023
while the offline sales amounted to RMB163.1 billion, up 1.1% year on year. The online scale continued
to grow, whereas the offline scale slightly recovered. However, in terms of prices, there is a gap between
online and offline prices, as demonstrated by products such as refrigerators, of which the gap in this
regard is up to 2.8 times. The adjustment of the structure of products in the online market is still some
way off. Adhering to a new round of consumption stimulation policies, distributors and brands have
concentrated their efforts on the submerged markets and seen high-quality home appliances as a critical
way to meet consumers' demand for a happy life. Moreover, the consistently diversified healthy and
intelligent functions of home appliances have driven the transition of the domestic consumption view
about home appliances from having home appliances to pursuing high-quality ones. In the future, the
domestic home appliance market will face both pressure and opportunities and is expected to record
slight growth in the overall sales scale of the year.
B. Robotics and Automation Industry
World Robotics 2022 Industrial Robotics released by the International Federation of Robotics (hereinafter
referred to as "IFR") showed that there would be five trends in the robot industry in 2023, which refer to
that the performance of robots will get promoted, it will be easier to operate robots, robots will support
more AI and digital automation technologies, the manufacturing comeback and localised production will
be more significant, and the repair and reuse of robots will be emphasised more. Currently, the domestic
industrial robot industry is transitioning from the market growth explosion phase to a new cycle featuring
existing market share capture and position securing in the segmented incremental markets. Under this
circumstance, the demand side becomes the focal point of the industrial chain. According to the
downstream demands in the first half of 2023, the photovoltaic industry has entered a critical phase of
capacity expansion and technological iteration, thus maintaining a high growth rate. This has made the
industry the principal driver of the growth in the industrial robot industry. Comparatively, industries such
as consumer electronics and general industry have recovered less than expected. Furthermore, their
market demands have exhibited negative growth. Concurrently, due to a slowdown in investment growth,
the automobile and lithium battery industries have also experienced negative growth in market demands.
According to the analysis and forecast of Marketing Intelligence Resource (MIR), In the first half of 2023,
the output of the Chinese industrial robot market is expected to reach 135,000 units, showing a slight
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Midea Group Co., Ltd. Semi-Annual Report 2023
year-on-year increase. By models, both collaborative robotics and vertical multi-joint robotics showed an
output uptick, whereas other models experienced a certain decline in this regard. In 2023 H2, demands
in the downstream industries of the industrial robot market are expected to further polarize, with demands
in the photovoltaic and energy storage industries remaining booming and those in industries such as
automobiles, consumer electronics, and general industry still sluggish. The year-on-year growth rate of
the domestic sales scale of industrial robots in 2023 is expected to be 5% or less.
According to the latest statistics of IFR, in terms of industrial robotic density (the average number of
industrial robotics per 10,000 workers), South Korea ranks No.1 in the world with 1,000 robotics, while
the robotic density of China has increased from 49 robotics in 2015 to 322, surpassing the US for the first
time and making the country a global top five in this respect. Since 2016, China has been the fastest
growing and largest industrial robotics market in the world. Supported by diverse factors such as flexible
demands of the manufacturing sector, declining demographic dividend, emerging markets and the
development of innovative technologies, industrial robotics will be applied to more and more areas, with
great potential and prospects.
C. Smart Building Industry
In the smart building industry, Midea focuses on products, services and related businesses with respect
to buildings. It aims to provide users with comprehensive, intelligent and sustainable building solutions
based on the digital building platform and by facilitating the logistics, information, feeling and energy flows.
The smart building ecosystem mainly includes HVAC, elevator, intelligent building (building automation)
and integrated energy management. From the perspective of the industry competition pattern, domestic
HVAC, elevator and building control have the same pattern and two major characteristics. The first is the
high proportion of foreign and joint venture brands; the second is the low market concentration. According
to the data from HVAC, Industry Online and Changjiang Securities Research Institute, the proportion of
foreign brands of commercial air conditioner in the first half of 2023 was about 45%, and the long tail
effect was obvious as only four manufacturers have a share of more than 10%. For elevator, the data
from the Business Yearbook of Elevator Industry in China and Changjiang Securities Research Institute
indicates that the proportion of foreign and joint venture brands in the elevator market is as high as 70%,
while the revenue scale and market share of the top domestic brands are still low. In 2022, the four major
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brands of Kone, Mitsubishi, Hitachi and OTIS's revenues exceeded RMB20 billion in China. The building
control market is also dominated by Honeywell, Siemens, Johnson Controls, Schneider and other foreign
brands. From the perspective of the market size and development prospects, according to the data from
Industry Online, HVAC and Changjiang Securities Research Institute, the sales revenue (excluding tax)
of domestic commercial air conditioner in the first half of 2023 was RMB74 billion, up 18% year on year,
of which domestic sales accounted for about 90%; the compound growth rate of the industry in the first
halves of the past three years was 22%. The application field of commercial air conditioner is mainly
divided into residential, commercial, industrial and public building. By business type, the sales of ToB
business accounted for more than 70%, and the revenue is expected to surpass RMB100 billion in 2023.
In industrial development, the periodicity of the non-residential part of commercial air conditioner was
smaller than that of residential part, which was more related to infrastructure investment. For example,
government public construction, transportation, data center, culture, education and entertainment,
medicine and other downstream segmentation still maintained a good growth trend, and a long-term high
growth rate. According to the data of National Bureau of Statistics and Changjiang Securities Research
Institute, in the first half of 2023, the production of domestic elevators, escalators and lifts was 745
thousand sets, up approximately 13% year on year, which was mainly for domestic sales. The sector has
returned to strong growth. Judging from the operating data of major manufacturers, the output value of a
single elevator was about RMB200,000, considering the average factory price of a single elevator
equipment and the maintenance business; the annual market size of domestic elevator equipment was
RMB250-300 billion, and the scale of the elevator industry was even larger. The data from EqualOcean
Intelligence and Changjiang Securities Research Institute shows that the current market size of intelligent
building, which was about RMB7.1 billion in 2021, is relatively small. The equipment-based businesses
such as commercial air conditioner and elevator are "organs" in building construction, whereas building
control is the "nervous system" which controls various equipments for the high-efficiency and low-carbon
operation of buildings, and determines the overall quality of building solutions. Overall, the domestic
revenue of the smart building industry alone is nearly RMB400 billion, and the compound annual growth
rate of the industry is between 5% and 10% (revenue caliber). Meanwhile, the marginal improvement of
the real estate policy may bring stronger demand.
New opportunities are ushered into the smart building industry, which are "carbon emission peak and
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carbon neutrality", "digital and intelligent transformation" and "domestic replacement". With the
establishment of the dual-carbon strategy, the intelligent and low-carbon process of building construction
is expected to accelerate. Buildings account for a relatively high proportion of energy consumption and
carbon emissions in China. According to data from the Building Energy Efficiency Research Centre of
Tsinghua University and the Changjiang Securities Research Institute, the carbon emissions of building
operation accounted for about 22% of the total domestic carbon emissions in 2019, and the proportion
will further increase for the growing newly started buildings and the decreasing inventory buildings.
Therefore, as one of the major sources of carbon emissions in the whole society, the low-carbon or even
zero-carbon process in the construction field will undoubtedly be propelled. In 2021, a series of "carbon
emissions peaking and carbon neutrality" policies were successively issued, such as the Opinions on
Implementing the New Development Concept to Achieve Peak Carbon Emissions and Carbon Neutrality
in a Complete, Accurate and Comprehensive Manner, the Opinions on Advancing the Green
Development of Urban and Rural Development, the Action Plan for Peak Carbon Emissions by 2030, and
the 14th Five-Year Plan for Comprehensive Work on Energy Conservation and Emission Reduction.
China’s local governments have issued their action plans for peaking carbon emissions while the
ministries and committees of the central government rolled out documents for the same purpose, such
as the Opinion on Fiscal Support for Peaking Carbon Emissions and Achieving Carbon Neutrality issued
by the Ministry of Finance, and the 14th Five-Year Plan for Building Energy Efficiency and Green Buildings
issued by the Ministry of Housing and Urban-Rural Development. All these policies mention buildings and
constructions, with a view to improving the building energy consumption management system, enhancing
the building energy consumption monitoring capacity, building energy saving management capacity, and
building energy efficiency level, and promoting the large-scale development of ultra-low energy
consumption, near-zero energy consumption, and low-carbon buildings. With stronger policy incentives
and constraints, the building energy-saving upgrading, intelligent operation, and cooperative energy
management are bound to become the main measures for the targets in addition to the construction of
low-carbon building standards and administrative supervision. As to the market side, the electricity price
reform, "power rationing" and other measures have raised the cost and the input-output ratio in building
energy saving renovation, energy management, and digital operation, and thus more and more market
entities begin to positively carry out the “dual carbon” strategy and energy saving renovation. Taken as a
whole, under the background of "dual carbon", the building construction, as one of the main sources of
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energy consumption and carbon emissions in the whole society, accelerates the process of energy
conservation and carbon reduction, and catalyzes the outbreak of demand for efficient low-carbon
building solutions. The demand for digital intelligent building will also increase significantly, as the
development level of buildings is a key link in "smart city" and still lagging behind under the trend of digital
economy. At the same time, with continuous progress of communication, computing power and algorithms,
the system-level control such as HVAC and elevators will move to the building-level control - the first is
the space expansion brought by changes from "control" to "service"; the second is the narrowing gap to
foreign enterprises with first mover advantage. Additionally, the more positive and clear signal comes
from the transformation and upgrading of the elevator industry driven by digital intelligence. In 2018, the
General Office of the State Council issued the Opinions on Strengthening the Quality and Safety of
Elevators for the purpose of promoting the elevator installation on existing residences and the
maintenance of old elevators. Specifically, the maintenance should press for quality, and resources
should be allocated on the basis of fully grasping the operation of elevators, hence the application of
information technology such as big data and IoT is getting more important. In 2020, the State
Administration for Market Regulation divided the maintenance methods of different elevators according
to the standard of "whether there is a remote monitoring system based on IoT". The domestic replacement
of commercial air conditioner has undergone three processes: single unit, multi-split unit, and large chiller.
The share of homegrown brands was approximately 55% in 2023, and that of the homegrown brands of
large chillers, where the barriers are relatively high, is also increasing. The commercial air conditioner
industry has entered the stage of domestic replacement in all aspects, and thus there is a large space for
future growth. Compared with air conditioner, the domestic replacement process of elevator is relatively
slow, but the relevant market pattern will be optimized with the gradually weakened real estate dividend,
the changes in maintenance mode, and the application of IoT. In the medium and long term, there will be
more opportunities and increasing competition in the smart building industry with the market structure of
"high proportion of foreign investment & low market concentration". On the one hand, the policy of "double
carbon" is fostering the energy-saving upgrading and smart operation under the context of high proportion
of carbon emissions and energy consumption by buildings. On the other hand, with the improvement of
digital intelligence, the input-output effect of smart buildings is changing qualitatively.
2. Business Scope in the Reporting Period
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In the first half of 2023, despite the gradual recovery of domestic market demand and the overall rebound
of the economy, the global political and economic environment remained complex and the business
environment remained challenging due to fluctuations in overseas economies, currency movements and
the deterioration of geopolitical conflicts overseas. Against this backdrop, Midea Group held firm to its
operating philosophies, effectively implemented its annual operating principle of “Stabilize Profit & Drive
Growth”, and continued to focus on its core businesses and products. As a result, Midea delivered better-
than-expected operating results, with further improvements in key indicators such as profitability and cash
flow, demonstrating its operational resilience and long-term, high-quality growth. For the first half of 2023,
Midea achieved, on a consolidated basis, total revenue of RMB197.8 billion, up 7.69% YoY; and a net
profit attributable to its shareholders of RMB18.2 billion, up 13.98% YoY.
A. Focused on users and scene-based product planning, and continuously refined the whole
value chain leveraging Midea’s multi-category advantages and digital technologies, so as to
upgrade business scenes, products and services
In order to carry on with the “customer-oriented” strategic reform, the Company creates more user value
in business scenes, products and services which are in direct contact with users. Based on users'
yearning and pursuit for a better life, Midea pursues higher goals such as originality, sustainable selling
points and technology explicitness, and continues to empower itself with the tool of big data, so as to
achieve the vision of "Bring Great Innovations to Life". In addition, based on user needs and consumption
trends with respect to living rooms, balconies, kitchens, bathrooms, among others, Midea offers its own
products and ecosystem products. It provides users with differentiated entire-house smart solutions with
the deep integration of “smart home appliances + smart home”; and launches homegrown core terminals,
such as smart central control and household smart host which deeply integrate home appliances and
smart home systems, making home life more efficient, convenient, healthy and comfortable, and
improving experience and happiness for consumers. By doing so, it aims to lead the way in the innovation
of smart household appliances.
For smart living room scenes:
Midea has consistently increased its investment in R&D across three areas, namely carbon neutrality, air
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value, and smart home. Doing so strives to enhance the competitiveness of products. For the pre-
decoration channel, Midea launched Designer "Long-lasting Aldehyde Removal" Series Residential VRF,
featuring zero-consumable long-lasting aldehyde removal. Moreover, to respond to the market demand
for health and comfort, the whole new Meijia Large Cooling Capacity Breezeless Series Residential Air
Conditioner has been launched, featuring a smart control mode for a large cooling capacity and
comfortable wind. Concerning the entire-house air solutions, Midea Air Conditioner was the first one in
the air conditioning industry to have introduced the 1:1 Air Machine, delivering an all-around healthy air
system that allows professional sterilization, purification, and fresh air. With a clean air delivery rate
(CADR) of 400 m/h and a fresh air flow rate of 210 m/h, the system ensures an ideal comfort sensation
at 0.3 m/s. For the North American market, Midea launched the new-generation American air duct that
passed the Cold-Climate Heat Pump (CCHP) Technology Challenge for extreme cold resistance.
Moreover, for the project of the New York City Housing Authority (NYCHA) on low-carbon heating for
apartment buildings, Midea rolled out the next generation of the window low-temperature heat pump and
invented the inverter heat pump system that allowed free configuration. To create a more comfortable
living environment, Midea continued to research and apply various fan technologies. Midea achieved self-
adaptive comfortable wind adjustment through research on the comfort wind control technology of wind
changing with temperature. Midea realized entire-house 3D surround stereo wind of thermostatic warm
air through research on dual-engine PTC control technology of staggered temperature difference.
Moreover, through research on healthy airflow, Midea applied the disrotatory propeller technology in the
aviation field to the fan field. Additionally, Midea spent two years developing comb-like dual fan blades
with a leading edge imitating the wings of the long-eared owl. This invention is a breakthrough that allows
high airflow while ensuring low noise. Specifically, it allows an air delivery distance of more than 17 m
while achieving a maximum air speed of 270 m/min. Furthermore, it ensures that the noise is not higher
than 56 dB.
For smart balcony scenes:
Midea has launched COLMO Washer-Scrubber, the first solution in the industry that integrates the
functions of a washing machine and a floor scrubber. Specifically, this product is equipped with a shared
water supply and drainage pipe, demonstrating Midea's novel design in the waterway, air path, dust
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collection, and circuit. Moreover, it employs the "Internationally Advanced" AI-powered Light Dry Cleaning
technology. The hot-water-flushing floor scrubber enables potent airflow, penetration, and efficient drying
while boasting a cleaning ratio of the mop as high as 1.10. Additionally, the AUTO-PROTECT chlorine
dioxide slow-release anti-bacterial technology is employed to enable food-level sterilization, safe and
environmentally friendly. This product adopts AI technology to accurately judge the stain scene and
achieve precision mopping through reverse torque. Furthermore, patented technologies, such as the
Auto-Dos dual-chamber self-dispensing system and the Auto-Cut automatic hair-cutting technology, are
used for this product. To be more specific, the Auto-Dos system allows precise dispensing of different
cleaning solutions through automatic proportioning. As for the two chambers, the left chamber is intended
for cleaning solutions for floor and mop cleaning, enabling thorough dissolution of heavy oil and dust. The
right chamber houses an automatic cleaning station and drainage system and enables sterilization and
stain removal. The Auto-Cut technology can accurately identify, suck, and cut the hair at the corner,
effectively preventing hair entanglement and blockages. Also, this product is equipped with a high-
definition camera, which, through large-scale modelling training on the home scene images using AI
technology, allows this product to proactively detect stains on the floor and perform deep cleaning in
specific areas. More importantly, this invention has won the Red Dot Design Award and the iF Design
Award. To respond to the green strategy, Midea made arrangements for the development of the full-life-
cycle green wash and care technology for products. This move made Midea K01 8Kg Washing Machine
the first laundry appliance in China to be certified by the Life Cycle Assessment. Concurrently, this product
reached the highest energy efficiency rating in Europe, attributed to a decrease of 43% in annual
electricity consumption as compared to conventional models. Moreover, the novel ultra-thin platform
reduced the weight of the entire machine by 10%. The parts and components of this product were made
from recyclable materials, and the built-in micro-plastic collection device allowed more than 90% of
chemical fibres to be collected during washing, reducing the ecological impact throughout the whole full
life cycle by approximately 30% as compared with conventional models. To meet demands in the
European market, Midea launched M01 Series Highly Energy-Efficient Front-loading Washing Machine.
This series boasted a large drum diameter and multi-modal washing technology, improving the cleaning
ratio and uniformity. Moreover, equipped with targeted washing technology that can match different
washing temperatures and mechanical forces during washing, this model allowed targeted stain removal,
accelerated dissolution using detergent, and a substantial reduction in water consumption through hot
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water washing technology. With respect to TOSHIBA Zero Built-in Series Washer-Dryer, based on the
ultra-thin and built-in design concept, Midea optimized the parameters of the small-size condenser and
developed a novel ultra-thin system structure. Moreover, the minimization-based design and engineering
applications of the thermal system allowed the product to fit into a 600-mm-deep cabinet. Furthermore,
the anion odour removal clothes wash and care technology employed for the first time enabled this series
to have the best odour removal effect in the industry and achieve a long-lasting anti-bacterial effect on
clothes in the drum for eight hours. Midea Floor Scrubber launched the new-generation Dust-free Floor
Scrubber, GX5, integrates the functions of vacuuming, mopping, and washing, addressing pain points
such as hair entanglement, water residue, and insufficient cleaning. Moreover, the unique dual-layer
brush design allows synchronized scraping, combing, squeezing, and suction when rotating. For the
global markets, Midea launched multiple new floor cleaner models, such as Eureka J9 Active Water-tread
Mop Floor Scrubber, Eco-friendly Cyclone Dust Collection Station Floor Cleaner E10s, and Midea Black
Box V10 and W11 Plus.
For smart kitchen scenes:
COLMO EVOLUTION Tianshu Refrigerator is equipped with the industry's first AI-Door automatic door
opening and closing technology, allowing the 90-degree panoramic door opening. This series is also the
first one in the industry to have employed the -40℃ cryogenic technology, allowing AI molecular-level
nutrient management and thus capable of significantly increasing the anthocyanin content and effectively
inhibiting purine. TOSHIBA Large-capacity Built-in Pear Suite Refrigerator employs the self-developed
vacuum insulation material in combination with the novel horizontal evaporator to ensure small
dimensions but a large capacity. Moreover, the front bottom cooling system and dual-axis free-track hinge
effectively help users maximize space efficiency. The industry's pioneering constant-humidity fruit and
vegetable preservation technology and meat freshness enhancement technology are employed to
accurately provide a suitable storage environment for each type of food ingredient. This series boasts the
industry's quickest 60-minute ice-making function and is equipped with three technologies, namely the
"pulse sterilization technology", "low-oxygen preservation technology", and "purine reduction technology".
Aiming at delivering a more comfortable kitchen environment, Midea starts with the kitchen environment
and cooking smoke and has rolled out kitchen air conditioners and range hoods that enable efficient
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smoke suction. To protect users' health, a range of products, including refrigerators, dishwashers, steam
ovens, and rice cookers, has been introduced to respond to users' demands for food preservation,
kitchenware cleaning and sterilization, and healthy cooking. In 2023, Midea launched the "Cool Kitchen"
series of kitchen air conditioners as a solution to address core pain points in Chinese kitchens. This series
is characterized by "large cooling capacity", "cooking smoke resistance", and "easy-to-install design",
effectively meeting users' demand for a comfortable and cool kitchen. Moreover, it employs a new system
design equipped with technologies such as the graphene thermal conductivity coating, copper pipe
sprayed with anti-corrosion coating, black magic box for oil filtration of the outdoor unit, and water misting,
achieving advantages in new scenes, such as high heat transfer performance, corrosion resistance, and
zero water discharge. Additionally, Midea Smoke-free Series Range Hood employs multiple technologies.
Specifically, the MAX efficient dual air ducts are used to ensure efficient smoke suction; the FCS future
chip power engine is used to achieve the highest suction in the industry of 28 m/min and wind pressure
of 1,200 Pa; the nautilus shell-like design and the aerodynamic streamline wing-like design are
incorporated to reduce the smoke discharge resistance, increase the smoke discharge velocity, and
effectively lower noise; the "patented radio frequency collaboration technology + patented inverter
algorithm" intelligent collaborative cruise technology enables automatic start-up and air volume and wind
pressure regulation; the unique 110℃ high-temperature steam technology is used to deliver a cleaning
and sterilization rate of more than 99%, which, at the same time, has been granted the authoritative "level-
1 smoke removal" certification in the industry.
Midea Sink-Dishwasher XQ20 boasts a large capacity for 13 sets of tableware at a time and the Venturi
residual water removal technology, effectively addressing two pain points of simultaneous washing of
multiple sets of tableware and bacteria and odour removal. This machine integrates a large 304 stainless
steel sink, a Chinese-style sterilizing dishwasher, a flexible hose faucet, a cutting board, and various
standard interfaces, allowing one-stop "washing - draining - preparation - cutting - cleaning". Furthermore,
it enables rapid crushing and discharge of food waste and efficient cleaning and sterilization. Midea Built-
in Smart Eye Series Steamer-Oven-Fryer-Stewer SV5 is equipped with pioneering AI visual ripeness
recognition technology to achieve automatic parameter adjustment during cooking and boasts functions
such as remote viewing of cooking and video sharing. Midea Steamer-Oven-Fryer S6 employs the
industry's pioneering intelligent humidity and temperature control system, allowing the temperature and
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humidity to be automatically regulated during baking according to the food ingredient. At the same time,
the pioneering vortex jet propulsion system is used to allow humidity to be quickly removed within 180
seconds while maintaining an extremely uniform temperature difference. Moreover, the first multi-wing
humidity system is used to achieve a zero-negative pressure gradient design, maximize air exhaust
efficiency, and deliver the industry's lowest chamber humidity. Additionally, the baking and cooking
technology based on intelligent temperature and humidity control and the air frying technology on the
same basis are employed in combination. Midea Microwave-Steamer-Oven-Fryer G21 uses Midea's self-
developed MIX fat-burning technology to combine the steam and baking technology organically and,
through high-temperature fat melting, condensation defatting, and fat drainage, achieve fat stripping. This
contributes to an increase of 72% in fat precipitation rate. The self-developed light-sugar baking recipe
and humidity control curve increase the resistant starch content by over 20% and thus substantially
reduce the carbohydrate intake. COLMO EVOLUTION Series Rice Cooker, through Multi-StageIH
technology in combination with pioneering staged precise control algorithm for boiling, enables unique
dual-temperature-sensor boiling point determination and staged power output through intelligent control.
Furthermore, the series allows accurate boiling point control in both plains and plateaus, and the rice
cooked can reach up to the 6A rating.
For smart bathroom scenes:
COLMO AVANT Waterfall Electric Water Heater is equipped with multiple industry-leading technologies,
including the "AI-Core instantaneous heating engine technology", "full-dimensional thermal field efficiency
enhancement technology", and "five-dimensional temperature sensing", and thus allows heating to be
more uniform and the water output hotter. Moreover, this appliance can also meet the demand for a
continuous output of 1,200-L hot water through "20-fold capacity expansion", thus ensuring a smooth 30-
minute shower. Additionally, the AI power-adaptive function employed can help avoid tripping caused by
overly high power, and the patented PCC mineralization technology can provide mineralized healthy
water rich in strontium. Furthermore, bacteria can be automatically killed by the AI intelligent sterilization
technology according to users' water habits.
B. Adhered to the strategy of “Technology Leadership”, increased R&D investments, built a global
R&D platform for better R&D efficiency, established a digital R&D system for agile innovation, and
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implemented the strategy of “Innovation Patentability, Patent Standardization, Standard
Internationalization and Midea Standard Goes Out”
Midea continued to invest in R&D. Through larger investments in this respect, it aims to achieve
leadership in R&D achievements and product trends, as well as a stronger presence in the industry and
a better R&D environment. The Company made innovations with respect to mechanism, and developed
more leading products through both excellent user experience and differentiated technologies, reform of
the whole value chain of R&D using digital technology, and deep integration of big data analysis and R&D.
It kept reforming its product development model according to the strategic focus of “Leading Products”.
An innovative R&D model featuring a “Three-Tier Technical Committee System” and a “Four-Tier R&D
System” from the organizational dimension and “Three Generations” from the technology dimension has
been put in place and constantly refined to support the fulfillment of the goal of “Being the Number One
or the Only One” in respect of various product categories. Centering on customer needs and based on
different organizations and technologies, the Company carries out innovative product development,
research on cutting-edge platforms, research on core components, creation of differentiated selling points
and improvement of the basic product performance. Through group development of products across the
world, building a global product platform, as well as increasing product development efficiency by way of
group planning and group development, Midea is building “Technology Leadership”. As of June 2023,
Midea boasts ten corporate technology centers/industrial design centers/post-doctoral research centers
at the state level, 19 academicians with long-term cooperation and eight academician
workstations/workshops, in addition to more than 60 corporate technology centers/engineering
centers/industrial design centers/key labs at the ministerial or provincial levels. By doing so, it builds
competitive edges with its strength in technology. Under the guidance of the strategy of “Technology
Leadership”, the innovation platform serves as the core of its technology innovation system and is
responsible for the implementation of technology development strategies and the commercialization and
application of technology innovation achievements, thus driving Midea’s transformation towards a global
technology group in a faster manner.
Midea Group is committed to investing in the research of core technologies and has made significant
breakthroughs in the main tracks and in the field of new industrial technology. Through the project of
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"Research and Industrialization of Key Technologies for Consumable-free Space Purification with
Molecular Catalysis and Power Coordination", Midea has dug deeper into technological breakthrough in
the fields of material synthesis, catalytic technology and energy coordination, provided users with
convenient, safe, healthy and comfortable solutions for indoor air environment systems with multi-
technology coordination, and achieved real consumable-free and high-efficiency indoor space purification.
Through the project of "Research and Application of Key Technologies for Large Cooling Capacity Inverter
Air Conditioners with a Feel of Comfortable Wind", Midea has facilitated the whole-scene, full-temperature
and full-humidity realization of comfortable cooling based on large cooling capacity products without an
obvious feel of wind, and satisfied users' demand for an intelligent, comfortable cooling experience
without an obvious feel of wind. Through the project of "Research and Application of the High-energy
Photon Pulse Sterilization Technology", Midea has adopted the quintuple sterilization synergy to achieve
a sterilization rate of 99.99% against the bacteria on the surface of food in refrigerators, ensure users'
food safety, and fill the corresponding technological gap of the refrigerator industry. Through the project
of "Research and Application of the High Activity ORR-based Ultra-low Oxygen Catalysis Technology",
Midea has created the optimal low-oxygen environment for fruits and vegetables, so as to prevent the
loss of moisture and nutrients of fruits and vegetables, and maintain their freshness and taste. Through
the project of "Research and Application of the Precise Ice Temperature Technology-coordinated Plasma-
based Preservation and Purine Regulation Technology for Aquatic Products in the Home Appliance
Industry", Midea pioneered the precise ice temperature technology-coordinated plasma-based purine-
reducing preservation technology for aquatic products based on the anabolic pathways and regulation
mechanisms of purines in aquatic products, which can significantly reduce the accumulation of
hypoxanthine and create a differentiated product advantage that is "nutritious and healthy". Through the
project of "Technological Research and Application for High-performance Small-sized Heat Exchange
System-based Dryers", Midea has achieved the successful design and engineering application of the
minimization of the heat exchange system and developed a series of ultra-thin 10-kg large-capacity dryers.
Through the project of "Research and Application of Key Technologies for Healthy and Pollution-free
Front-loading Washing Machines with Low Clothes Abrasion", Midea pioneered a new hole-less and
independent structure of the drum of a front-loader to avoid secondary pollution and abrasion against
clothes, which has resulted in a reduction in the abrasion rate of 25%, a benchmarked washing ability
rate of 1.13, and a sterilization rate of more than 99%. Through the project of "Key Equipment and System
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Technologies of Direct Evaporative Cooling and Waste Heat Recovery for High-altitude Data Centers",
Midea has achieved a significant improvement in the efficiency of evaporative cooling at high-altitude
areas and an optimal match between cooling and waste heat recovery in high-altitude data centres, and
greatly expanded the applicable range of free cooling in data centres. Through the "Research and
Application of Key Technologies for Energy-efficient R290 Rotary Compressors", Midea has achieved the
improvement of the efficiency in single R290 rotary compressors and the reduction in residual refrigerants,
promoted the large-scale application of R290 products, and led the green transformation and upgrading
of the industry. Through the "Research and Application of Key Technologies for Green and High-quality
Thin Permanent Magnet Motors", Midea has reached an industry-leading level by effectively reducing the
shaft voltage, ensured long-term reliable operation of motors that are also silent, lightweight and thin. By
June 2023, Midea had won a total of three national science and technology awards, and more than 340
provincial and ministerial science and technology awards, as well as received over 280 "Internationally
Leading/Advanced" certificates for its technologies. In terms of industrial design, Midea leads the way in
user experience and interaction upgrading with ongoing innovations. In the first half of 2023, Midea won
a total of 107 industrial design awards, including 23 Red Dot Design Awards, 37 iF Design Awards, and
47 IDEA Awards.
Midea has strengthened the transformation of R&D achievements while carrying out the core technology
research. By June 2023, Midea (inclusive of TLSC) held more than 80,000 valid patents. In the first half
of 2023, Midea was granted more than 2,000 invention patents around the globe. Midea continues to
improve patent quality. It won multiple awards at the 2023 24th China Patent Awards. To be specific, the
"Frame Components of the Clothing Handling Device and the Clothing Handling Device" won a Silver
Invention Award, the "Stand-alone Air Conditioner (CH)" won a Silver Design Award, and eight Excellence
Awards were received for patents including the "Control Method and Control Device of the Air Conditioner,
the Air Conditioner, and the Storage Medium of the Air Conditioner", the "Rotor Core, the Rotor and the
Motor", the "Control Method, Control Device, Computer Equipment and Storage Medium for Robotic
Motions", the "Magnetic-bearing Compressor, the Air Conditioner and the Setting Method for the
Protective Air Gap Value", the "Range Hood", the "Control Method for Defrosting Food in the Microwave
Oven and the Microwave Oven", the "Air Cylinder, the Compression Mechanism and the Compressor",
and the “Smart Door Lock”.
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In order to provide strong support for the fulfillment of the strategic objective of “Technology Leadership”,
Midea further implements the “3+1” standardization strategy of “Innovation Patentability, Patent
Standardization, Standard Internationalization and Midea Standard Goes Out”, and a two-tier (Group-
business divisions) standardization management system has been put in place. Meanwhile, to ensure
the effective execution of the standardization strategy, the Group has set up a standardization
management committee. With the double drivers of “standard innovation + production innovation”, Midea
shifts innovation achievements to advanced technological standards. Additionally, it endeavors to play a
bigger part with respect to advanced technology standards of the industries, aiming to create more value
for users, partners and industries. During the first half of 2023, Midea took part in the formulation/revision
of 81 technological standards, including three international standards, 24 national standards, 10 industry
standards, and 44 local and group standards, including “Standard for Functional Requirements of
Toolchain for Artificial Intelligence Model Deployment on Edge Devices”, “Ergonomics - Accessible Design
- Part 4: A Method for Estimating Minimum Legible Font Size for People at Any Age”, “Kitchen Air
Conditioners for Home”, “Technical Requirements for Household and Similar Tumble Washer-dryer”,
“Specifications for the Fresh-nourishing Technology by Deep Freezing for Freezers”, “Standard Samples
of Induction Cookers for Thermal Efficiency (86%) Testing”, “Electric Dishwashers for Household Use-
Methods for Measuring the Performance”, “Standard Samples of Reference Microwave Ovens for
Thermal Efficiency Testing”, “Magnetically-suspended Centrifugal Refrigerant Compressors”, and
“Evaluation Requirements for the Organization of Appraisals of Energy Conservation and Carbon
Reduction for Household Appliance Manufacturers”. Additionally, Midea has not only become a member
in two IEEE (Institute of Electrical and Electronics Engineers) Standards Working Groups, and the
secretariat institution of the 3rd Household Appliances Standardization Technical Committee of
Guangdong Province, but also been commissioned to host the 2023 Working Meeting of the National
General Group for Artificial Intelligence Standardization. Currently, Midea has qualified as an expert
institution in more than 100 standardization working groups of the relevant domestic and foreign
organizations.
C. Deepened the channel transformation, further improved the channel efficiency and rebuilt the
retail and ToB service abilities so as to achieve direct connection with customers
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Being customer-oriented, Midea continues to enhance vertical efficiency and horizontal synergy efficiency,
as well as accelerate retail growth and transformation. Through the reform of direct retailing, Midea has
been continuously promoting the "vertical efficiency improvement" of offline channels, and advancing the
transformation of new operator empowerment. By improving operators' digital drive, retail empowerment,
engineering projects and other five capacities, it optimises the operation competence and consistency of
omni-category operators, and realises "One Midea" for all markets, ensuring the consistency of user
service and experience. As online and offline markets integrated at a faster speed, based on different
levels and characteristics of different channels, as well as changes to customers' needs and ways of
spending, Midea drives the retail transformation based on user demands and experience, and keeps
refining the retail operations system, so as to achieve direct connection with retail customers.
In the first half of 2023, online sales (including online sales in lower-tier markets) as a percentage of
Midea's total sales reached over 48%. In terms of e-commerce, Midea continued to push ahead with the
upgrade of the product structure, product suite development, and new services such as "trade-in
activities". Additionally, Midea redoubled its efforts at channel segmentation and made arrangements for
interest-based e-commerce platforms, and finally recorded new growth. During the "18 June" sale in 2023,
Midea ranked first in the industry for 11 consecutive years in terms of total sales online, up over 50%
YoY, and its e-commerce GMV on Douyin exceeded RMB1 billion for the first time, ranking first in the
home appliance industry. Midea also focused on the development and improvement of new capabilities,
such as self-operation, self-live-streaming, and whole-chain marketing. By strengthening content and
digital marketing and gaining an insight into the differentiated needs of different customer groups, Midea
achieved integrated quality and efficiency improvement through the "Digitization & Intelligence Driven"
strategy and accomplished the upgrade-based transformation from traffic operation toward user operation.
Meanwhile, by promoting omni-channel development of Midea's customer system in the e-commerce
ecosystem and constructing standardized supply chains and service self-operation capability, Midea
improved the efficiency of customer operation and met the needs of customers of scenario-based
procurement of a collection of products by giving priority to the development of multi-category ecological
stores. Midea continued to strengthen stores' retail capabilities and, starting from self-run exclusive stores,
improved their whole-chain retail experiences and helped stores carry out digital retail transformation
driven by new systems and tools. First, it upgraded the "Midea Cloud Sales+" ecosystem, developed
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Midea's own retail business platform, realised full upgrade of the "Midea Cloud Sales" system, and
substantially boosted customer experiences. As a result, the "Midea Cloud Sales" App recorded a year-
on-year increase of over 400% in the daily average page views (PV), and the efficiency of direct retail
was significantly boosted. Second, it reconstructed the retail system of stores based on the "Midea Cloud
Sales" App and the "Midea Home Delivery" mini-app to provide service support functions such as store
management, shopping guide, financial instruments and cloud warehouse. Third, to facilitate stores'
online and offline whole-scene marketing and promotions, it provided digital marketing tools for
merchants, thereby empowering stores' customer acquisition and potential customer conversion and
integrating online and offline business. Fourth, it developed a digital and intelligent platform operations
system to improve stores' management efficiency and conducted classified product operation and
hierarchical store management based on the label-based system for products and stores so that retail
data and business activities can be reviewed online and stores can carry out rapid analysis and precise
operation. By providing retail stores with industry-leading digital platform services, Midea has completed
the all-product-category, pre-decoration, and retail transformation of more than 15,000 existing store
outlets, and has established more than 6,000 benchmark stores of digital retail. Midea made vigorous
efforts to expand into the lower-tier markets. As a result, Midea gained the largest overall share of the
core lower-tier channel platforms in the industry and has fully expanded into stores in lower-tier markets,
achieving a product penetration of more than 95%. By displaying samples based on scenarios, it provided
customers in the lower-tier market with entire-house full-set home appliance procurement experience.
Focusing on user demands, Midea has been refining its product distribution. As a result, Midea has
outperformed its peers in terms of the sales of emerging products such as residential central air
conditioners, dishwashers, air fryers, and clothes dryers. Concurrently, Midea has kept delving into new
consumption potential in the lower-tier markets. With the introduction of marketing modes such as
collective procurement and vouchers, it has improved consumption quality. In this context, the average
prices of Midea's home appliance products in all categories have risen by more than 30% in the lower-
tier channels. Meanwhile, by offering cleaning, trade-in and exchange instead of repair in a year services,
Midea has been providing high-quality whole-chain consumer services from pre-sale stage to in-sale and
post-sale stages, and kept strengthening the consumer royalty in lower-tier channels.
Midea promotes brand image enhancement, high-quality marketing activities and digital transformation,
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and redefines entire-house smart appliances with the three major DNAs of "Humanising Technology",
"Humanising AI" and "Humanising Design". It released the world's first INFINI Suite to realise the
evolution from single products to customised smart scenes containing multiple products and covering the
entire house, creating active, comfortable smart home living experience that varies with users.
Highlighting premium-brand product suites, Midea empowers terminals with its resources in high-end
circles, creates user experience value, and cultivates perception and sense of identity and promotes retail
transformation with long-term systematic marketing and promotion activities. High-quality theme
marketing activities and tour exhibitions, such as the "Urban Oasis" program and music festivals, have
been carried out in many cities nationwide, which strengthened the brand awareness. Midea has
launched new products such as “Cool Kitchen Air Conditioner, Dust-free Floor Scrubber, Freshness Air
Machine, Smoke-free Range Hood-Stove Suite, Light Tone Blender, and Real Taste Microwave-
Steamer-Oven, and made them effectively reach users through precision marketing. Midea leverages the
"Digitization & Intelligence Driven" strategy to be "Direct to Users", and initiates a series of business
moves in user experience, user operation and user service from user needs and service scenarios.
Adhering to the "Create Value for Users" principle, Midea has deepened the business transformation
toward the retail end. With user experience as a driver, it has pushed ahead with the optimisation of
product iteration, shopping experience, and service experience. It carries out all-around user connection
by relying on media matrices such as WeChat enterprise account, official account, mini-app, and video
account, as well as terminal experience contacts such as service engineers, experience consultants, and
intelligent scenes, and has strengthened private domain operation and improved customer royalty. By
the end of June 2023, the total number of registered members exceeded 160 million. Meanwhile, the
development of Midea's business data analysis capability has been constantly enhanced to further
support digital business decision-making with the analysis of business data, marketing data and user
data. Midea continues to enhance consistent end consumer experiences. Based on the "M-Smart"
platform, it integrates online and offline user services, allowing users to experience products offline and
buy products online, thus strengthening out-of-store marketing capabilities and expanding the coverage
of post-sales services. By doing so, Midea ensures that consumers can achieve the same shopping
experience at franchised stores as they do on e-commerce platforms, improves product promotion of
offline stores and the effect of distribution and traffic direction of online stores, continues to attract offline
customers to visit stores, and strengthens the marketing capabilities of offline stores. In terms of user
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operation, Midea improves the whole chain of user operation, focuses on service and interest
improvement, as well as user experience and customer-end service improvement, and has constructed
the whole-chain digital platform for experience. Centering on net promoter score (NPS) experience
enhancement and industrial benchmarking, it has improved customer services in all directions.
Centering around three types of targets: users, customers, and engineers, Midea perseveres in
reconstructing service procedures, upgrading service standards, improving its capability of offering free
installation services for consumers who buy a collection of products, and providing better high-end brand
services. It deepens the business model change of the user service system to provide one-stop entire-
house smart home appliance service solutions for users and improve service quality and user experience.
First, Midea upgraded service standards based on the peak experience principle, updated the service
procedure and technical process for various categories of home appliances and introduced them to the
public through press conferences and mainstream media. It made ads of full-category service standards
and transmitted them to users through its WeChat official account, which can be automatically sent to
users when users place orders by themselves and allow users to review service standards online at any
time. Second, Midea developed the butler-type service system with differentiated service standards for
different user groups, and created the new whole-chain butler-type service pattern based on subdivided
service scenarios such as pre-installation, complied installation, high-end brand and special groups. It
has provided 53,000 pre-installation users with 1+N butler-type group services, ensuring high-standard
and consistent long-term scenario-based services, has provided 41,000 complied installation users with
1-to-1 butler-type services, guaranteeing contract performance of one-off appointment and one-off door-
to-door service, has provided 250,000 high-end brand users with exclusive customer services, meeting
users' demands in a prompt manner, and has provided 340,000 special group users with green channel
services. Third, Midea improved the service capabilities of complied installation and delivery, optimised
the service experience of users buying a collection of products, and has upgraded more than 2,200
service outlets to complied outlets, realising the full coverage of complied installation business in regional
and county markets nationwide. Engineers' service capabilities covering multiple categories have been
improved. In the first half of 2023, more than 22,000 multi-skill engineers and more than 10,000 all-around
engineers were trained, realising exclusive engineer services for users buying a collection of products
with service network transformation and multi-skill engineer cultivation. Fourth, Midea developed the
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entire-house smart service capacity, appointed competent outlets to provide one-to-one post-sales
service support based on the distribution of entire-house smart sales outlets, selected "Golden Seed"
engineers to establish the professional entire-house smart service team, and realised the full coverage
of entire-house smart services step by step. Fifth, Midea improved the customer service experience of
high-end brands. On the one hand, it boosted its basic service capabilities, including promoting the suite-
based construction of the high-end brand network, selecting high-quality service providers, establishing
suite-based outlets for high-end brands, and setting up specialised high-end brand outlets in some
regions on a pilot basis. Additionally, it put forward higher standards for the authorisation of high-end
brand engineers, selected and trained engineers based on strict standards, and enhanced engineers'
service willingness with an incentive mechanism. On the other, based on the authorisation and
certification mechanism, Midea has set up exclusive customer services, exclusive high-end service
engineer teams, and exclusive service rights of high-end brands, doing so to develop differentiated high-
end brand services. Besides, Midea has raised the standards for high-end brand services by shortening
the response time limit and upgrading service tools and protective measures. It has also created strongly
sensible high-end service experiences by rolling out key projects such as "361 Butler-like Service" and
"High-end Private Care" and maintaining customer royalty during the whole cycle.
Midea has further deepened the transformation of the ToB business model. Based on the well-developed
"1+3+N" business structure of the Group, it has upgraded the business model from traditional hardware
product packages to scene-based solutions targeting customers in the whole industry, so as to enhance
sales and brand presence in the ToB market. Meanwhile, refinements have been carried out for the
existing customer, product and business structures, thus increasing the profitability of the business value
chain. In addition to the traditional home appliance industry, Midea has unfolded coordinated marketing
at the ToB end of the Building Technologies Division, the Robotics & Automation Division, and the Other
Innovation Business through industry-wide solution development and promotion. During the promotion of
the ToB business in the first half of 2023, Midea strengthened horizontal collaboration among business
groups (divisions). To facilitate work in information sharing, business opportunity sharing, channel sharing,
and delivery collaboration, Midea developed a regular collaboration mechanism and project promotion
procedure, and also intensified the implementation and promotion of the Group's strategies, carried out
in-depth operation of major customers in the Building Technologies Division, the Robotics & Automation
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Division, and the Other Innovation Business, and developed a mechanism for communication with
strategic customers. As a result, particular headway was made in intelligent manufacturing and medical
services and health. In terms of intelligent manufacturing, Midea supported localized development
centering on industrial robots and, based on the industrial internet platform MIoT, helped enterprises
realise digital and intelligent production, smart operation and maintenance and digital services. With the
platform's business integration and application innovation functions, it continued to empower different
industries and sectors and drove the coordinated development of the whole industrial chain. The MIoT
platform has been applied by more than 1,000 enterprises in more than 50 segmentations. Meanwhile,
Midea gave priority to the development of comprehensive solutions to new energy whole-vehicle
manufacturing, continued to deepen the cooperation with major customers, and has been providing
various products and integrated systems and services to various industrial sectors. In terms of medical
services and health, Midea continued to further develop solutions and promote the implementation of
these solutions to the medical technology building scenario, the surgery department scenario, the
outpatient pharmacy scenario, the inpatient ward scenario, and the logistics command scenario. Based
on the LIFE2.0 intelligent hospital framework system and joining hands with Midea Medical's medical
industry complexes such as WDM, KUKA Healthcare, Midea Biomedical, Swisslog Healthcare and Midea
Building Technologies, Midea realised business cooperation with key regional customers, initiated
benchmark medical projects, and continued to promote the integration of sectors and channels of Midea
Medical business, so as to realise information sharing, business opportunity sharing and channel sharing
with customers in the medical industry, promote all-around improvement of delivery quality, efficiency
and services, and help the medical industry complete intelligent hospital upgrading.
Annto, a subsidiary of Midea Group, is a technological innovation-based company and is committed to
providing customers with end-to-end digital and intelligent supply chain solutions. Annto deeply fosters
itself in the industrial supply chain service sector and, adhering to the "customer-centric" business
philosophy, provides customers with end-to-end digital and intelligent supply chain solutions ranging from
production and logistics services from raw materials to finished products, a shared inventory system from
online to offline channels, ToB/C integration, to integration services of warehouse distribution logistics
and integration services of delivery and installation. It helps enterprise customers promote channel reform
and supply chain efficiency improvement and improve competitiveness, and keeps supporting customers'
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high-quality growth and sustainable development. With the industry-leading practical experience in
channel reform of major enterprise customers such as Midea and the continuous improvement of the
intelligent warehouse network system for domestic supply chains, Annto has covered thousands of brand
customers in daily chemical, beverage, wine, food, home appliances, home furnishing and new energy
industries, with its market share and brand influence steadily enhancing. Annto continues the
development of the integrated intelligent logistics platform to open up the digital chain from production
and logistics to warehousing and distribution network, transportation and end services. It has realised the
effective application of multiple self-developed digital control capabilities, significantly improved the
efficiency of supplier operation, intelligent warehousing management, whole-process visible distribution,
dynamic scheduling of transport capacity and whole-process control of delivery and installation. With
further combination of supply chain logistics business and digital and intelligent technologies, a whole-
chain end-to-end intelligent logistics platform has been built. In terms of production and logistics, Annto
completed the pre-production and logistics model reform of product sets and quality, realised direct
distribution to stations, and improved lean logistics of incoming materials and reduced factory inventories.
It also supported the digital transformation of suppliers and realised whole-value-chain coordination of
replenishment/pick-up plans, label and bar code management and transport-packaging integration,
lowering logistics costs and enhancing delivery quality and efficiency. In terms of the warehousing and
distribution network, Annto deepened the application of 5G and radio frequency technologies for
warehousing management, realised whole-scene mobile operations with the digital indicator system
based on production elements, enhanced its warehousing network planning capability with warehouse
locating algorithm and warehousing network model planning algorithm, and provided more professional
and efficient warehousing network logistics solutions. In terms of transport capacity management, Annto
has put in place an urban distribution transport capacity scheduling platform, line operation and analysis
platform, logistics network planning platform and other platforms based on intelligent algorithms, and
optimised transport and distribution costs and distribution quality with the whole-process visible, intelligent
transport scheduling application for urban trunk line distribution. By planning vehicle routes and using
algorithms and tools to select superior line operators, it supported the reform of urban distribution
transport capacity resources control of over 80 domestic operation centres, and matched intelligent
algorithms used for the tendering and procurement of scheduling resources to supply and demand. In
terms of end services, Annto focused on online management of outlet and engineer resources, developed
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the intelligent management platform and "Annto Service +" mini-app to output refined services, such as
installation appointment, complied delivery and installation, precise appointment and integration of
delivery and installation of large home appliances, home furnishing products and new energy charging
piles, based on big data and mobile technologies, and to improve customer/user service experience.
Production and logistics are important parts of the manufacturing supply chain under the "1+3" service
model. Centering on the role of an expert in advanced, lean and digital logistics in the manufacturing
industry, Annto applied its experienced "Lighthouse Factory" supply chain solution to manufacturing
customers, and consolidated its core strengths from aspects of lean logistics and digital empowerment.
In the first half of 2023, Annto developed the door-to-door parts pick-up model with HUB consolidation
warehouses in terms of transportation mode and transport capacity. It piloted the model in the Yangtze
River Delta Region, and has established two HUB consolidation warehouses in Changzhou and Wenzhou
that provide door-to-door pick-up services for 14 parts suppliers, with the service efficiency improved by
25% and the average comprehensive cost decreased by 5%. In terms of standardised and unit-based
packaging, Annto formulated the standards for packaging of incoming parts, promoted recyclable
standard lease cartons in response to Midea's green strategy, and has provided tens of customers with
recyclable standard lease carton services. Additionally, it developed on its own the whole-life-cycle
management system for packaging devices for whole-process control from package design, production,
investment to recycle operation, maintenance and scrapping. In terms of digital capacity building, it
focused on the improvement of digital capacity of Midea's Lighthouse Factory, created the service model
of "product set pre-service, quality pre-service and plan pre-service" for the manufacturing supply chain,
and improved the full set rate of material orders of factories, management and control of quality and the
turnover rate of inventories. Upstream parts suppliers were provided with label cloud service to solve their
actual pain points in production delivery and inventory management and optimize the synergistic effect
between upstream and downstream industrial chains. In terms of warehousing capacity building, Annto,
based on warehousing network planning and centering on smart parks and digital operation, developed
whole-scene and whole-chain warehousing operation solutions. Through the self-developed position
determination function and system's online support of integration and optimization of the full-category
warehousing network, the warehousing network plan shortened the single average mileage by 13% and
the single average duration by 11% and lowered the single average cost by 3%. Smart parks have
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extended to warehousing and distribution docking and in-warehouse operations after the arrival of
vehicles, and drove on-demand/sequential operations with the comprehensive appointment management
system and the line shift management system. Meanwhile, whole-process radio frequency identification
automatic acquisition application was piloted in smart parks, covering the whole process from production
line discharge to receipt, putaway, delivery and loading. In terms of digital operation, Annto realised
whole-process mobile operation in warehouses, as well as visible and online business management. It
has built the "Warehouse Compass" digital platform for whole-process, real-time monitoring and analysis
of warehousing operation data, driving continuous improvement of operation quality. On the trunk line
distribution side, Annto integrated line resources, built the line traffic monitoring system and line cost
capacity and supported the optimization of transport capacity and structure as guided by line-based
operation. Leveraging the transport capacity and structure model for core lines and core cities, it found
the optimal transport capacity structure, and constructed line resource capacity. Meanwhile, it promoted
online management of single vehicles, made the whole chain visible online, and built the high-efficiency
whole-vehicle performance platform with individual transport capacity resources. It gave priority to core
cities, promoted product-wise line operation on the basis of line-based operation, continued to improve
operation quality through product marketing, developed the line-based operation model, and constructed
the "zero-carriage" network composed of one-way short chains. Through technical tools and
management reform, Annto promoted online management of business at all links, realised in-transit/node
visibility, official website trajectory inquiry and supplier system inquiry functions, and thus improved
customer experience. On the urban distribution side, Annto adjusted the transport capacity structure and
realised direct control and direct management of vehicles through line route planning, transport capacity
reform and direct-control line isolation, enabling directly controlled transport capacity to carry 35% of the
total traffic. By turning personnel scheduling into line scheduling, constructing organizational capacity,
managing transport capacity process and optimizing vehicle scheduling tools, it improved its scheduling
capability and the utilization of transport capacity. Additionally, Annto further fostered the FMCG sector
and worked with 58 partners to build and share the regional distribution network. Its network, composed
of about 140 operation centres, has covered more than 96% of the towns nationwide, and more than 80%
of the orders can be delivered within 24 hours and more than 94% of the orders can be delivered within
48 hours with ToC direct distribution, the integrated warehousing network and the integrated B/C terminal
network. On the end delivery and installation service side, Annto highlighted the building of terminal
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capabilities, and continued to optimize the delivery and installation management platform and "Annto+"
mini-app. Focusing on home appliances, home furnishing, new energy, healthy travel and life services, it
provided standardised service products, including the integration of delivery and installation of home
appliances, "three-guarantee and five-guarantee" services, new energy-related "surveying, installation,
inspection, and repair" services, and life services, as well as all-around service solutions covering delivery,
installation, maintenance, reverse service, survey and cleaning. As at the end of June 2023, Annto had
more than 3,600 domestic outlets, an increase of about 40% YoY. The delivery and installation
capabilities related to home appliances were improved after service procedures, covering pre-
appointment, user privacy protection, damage control, complied delivery and installation, delivery of the
new and recovery of the old and receipt at designated locations, were improved, with the punctuality of
delivery and installation up over 99% and the percentage of complied delivery orders up to 41.5%. As the
inventory management procedure of outlets was optimized, Annto was able to provide quick receipt and
delivery from stations, prompt distribution and user self-pickup services, and had its capabilities of end
delivery and installation of home furnishing goods improved in all directions.
Annto is committed to creating a customer/user-centric service ecosystem, promoting whole-scene,
whole-chain, online management of business and services, consolidating the foundation for operation,
and improving customer service experience. It has realised online, mobile and visible management of
orders from receipt to completion and provided data support, with the mobile collection rate of orders at
core nodes being 89%. Centering on customers' contractual delivery, it has implemented visible
management of PDCA from problem raising to solution, deepened VOC+VOB operation and facilitated
whole-scene, omni-channel and whole-chain services. Through the customer service window, customers
enjoy more precise and more professional visible delivery, with a whole-scene customer satisfaction of
over 92%. The order access has been unified, the whole-process efficiency system, whole-process
quality monitoring system, comprehensive operation early warning system and integrated order
management platform have been built, realising the transformation from result-oriented management to
process-oriented management, with a significant YoY increase in the whole-process efficiency realisation
rate of orders.
D. Promoted “Global Impact”, enhanced localized operations overseas and accelerated the
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cooperative integration of TLSC
In the first half of 2023, numerous risks and challenges such as fluctuation of macro economy, fierce
change of exchange rate and continuing high inflation were seen in overseas home appliance markets,
yet the overseas business of Midea sustained large-scale growth and stable earnings in performance,
whose operating tenacity was improved. It continued to give priority to the organisations of overseas
business to meet the demands of front-line market, refined the development of organisations and teams
in all overseas regions, and continuously integrated localisation talents into the system of
internationalisation and optimisation talents to ensure continuing development of overseas business.
Meanwhile, Midea built up the core capability system on all fronts, involving studies on front-end users'
demands, definition and development of products, channel expansion, sales and operation, user service,
etc.
Making continuous efforts to make breakthroughs in major markets worldwide, Midea strengthened the
local advantage of supply chain and increased its input of new products in ASEAN market, and deployed
numerous brands in response to various market demands of different countries. With rapid development
of the business of mainstream home appliances in Middle Eastern and African markets, it realized
introduction of numerous categories of home appliances by the advantages of local market and its own
products, and sped up its expansion of blank market. In Latin America, Midea's business presented
steadfast progress and sustained continuous large-scale expansion and stable earnings despite
adversities like local high inflation and exchange fluctuation. In North America, it advanced cooperation
with major channel customers steadily and gradually improved user awareness through continuous
building of localised brands, whose innovative designs of core brands were recognised. Midea sped up
its advancement of marketing operation system toward front-line market, resolutely facilitated the
transformation to front-end digitalisation, improved its region-based systems of organising and operating
step by step, and enhanced the capability building and collaboration mechanism of front-end
organisations featuring effective synergy of market, products and sales; continued to optimise the
visualisation of whole-process information for fulfillment of front-end orders in all regions/countries and
improved user experience through development of continuous iteration; integrated resources of logistics
service network and built up global logistics service platforms to realize intensified whole-process delivery
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at lowest cost and highest efficiency, thus improving its capability of delivery guarantee based on
overseas logistics; continued to develop the system of sales and operation plan (S&OP) system for front-
end and front-line organisations and popularized its planning system geared to application demands, thus
succeeding in launching the system in the markets of Latin America, Europe and other regions and
significantly improving its efficiency in fulfilment and delivery. Midea sped up the expansion and
refinement of its overseas channel layout and used digital tools to empower retail. In the first half of 2023,
it developed more than 10,000 overseas retail outlets, whose number of retail outlets amounted to more
than 100,000. Midea strengthened the retail network in scale and depth, increased the activity of retail
business, improved the display of new products in retail outlets, and enhanced the interaction with
customers and their brand awareness. In regard to the retail network, it strengthened the application of
digital tools, thereby empowering the work in traffic acquisition, transformation and upgrade, user
accumulation and other aspects. Midea continued to improve the coverage of its management system
for purchase, sales and inventory in retail outlets, continuously optimised and enriched application
scenarios of the system to improve the sales efficiency of retail stores, and took advantage of module-
and tool-based system operating model to speed up its iteration of retail stores' promotion tools, thereby
improving flexibility in promotional retail and convenience in retail operation. In the overseas market, it
leveraged new media content-based marketing to enhance the interaction between products and users,
facilitated the generation of apps based on contents from Artificial Intelligence Generated Content (AIGC)
in different pilots, and optimised the contents launched at various contact points in quality and efficiency.
Moreover, Midea further flattened its channels with continuous efforts and accelerated its endeavours to
facilitate the transformation of DTC retail model in North America market, thus achieving an incremental
yield as considerable as tens of millions of dollars in the first half of 2023, up approximately 60% year on
year. Staying committed to exploring overseas e-commerce business and helping independent brands
develop, Midea realised a year-on-year growth of e-commerce sales volume by 8% in the first half of
2023, whose core products remained competitive over its counterparts. Its more than 90 products were
added to the lists of bestsellers of various categories during the e-commerce shopping festivals in
numerous countries. The share of its major categories in the e-commerce market of different countries
continued to increase, among which its dishwashers, microwave ovens and window (unit) residential air
conditioners sustained a vigorous growth momentum in the online market of U.S.A, while the sales of its
microwave ovens, range hoods and other categories was also seen with rapid growth in U.K. and
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Germany. Meanwhile, the structure of its all categories of products continued to be optimised, and the
shares of its microwave ovens, refrigerators, laundry appliances and other products in the high-end
overseas market increased gradually. Midea was engaged in continuing accumulation and improvement
of its capability of e-commerce business and bolstered more accurate and efficient plans of e-commerce
products through data-driven market analysis and demand insight to operate its value chain in a more
efficient manner. By the advantage of global e-commerce platforms and localised e-commerce platforms
in different regions, it realised continuous business development facilitated by two drivers. With the rapid
rise of overseas consumption market for youth, emerging interest- and content-based e-commerce is
expanding in a faster pace. Therefore, Midea continued to focus on the rapid growth of emerging
overseas e-commerce platforms. To strengthen its development of overseas self-owned brands, Midea
sped up its efforts to make breakthroughs in self-owned brands worldwide, facilitated the synergy of
brands, products and services, deepened its access to users in the front-end market, expanded product-
based branding, and enhanced the brand awareness in all links of operation and service. Through the
improvement of brand value in joint efforts with world-famous football clubs, it reached more than
300,000,000 fans, and in conjunction with local advertisement, it conducted 150,000,000 interactions with
these fans. By reference to North America-specific brand development model, Midea strengthened the
influence of its brands from numerous perspectives, including offline retail experience, shopping guide
team development, social media launch and marketing of entire-house collection products, in Asia-Pacific
and Middle Eastern markets. Besides, it boosted online content-based marketing inside and outside its
websites, advanced the building of its brands' official websites, refined the brand matrix, and upgraded
its content planning, visual presentation and shopping experience in all aspects. When the establishment
of marketing resource pool, it cooperated with approximately 400 world-famous key opinion leaders (KOL)
or Internet celebrities, thus drawing attention from tens of millions of users. Midea kept improving the
overseas manufacturing layout and expedited the introduction of the "China-based Supply for the World
+ Local Supply" model. In the first half of 2023, it continued to facilitate the building of manufacturing
bases in Brazil and Mexico, while its laundry appliances production line of the manufacturing base in
Egypt had been put into operation successfully. In addition, it started the Overseas Manufacturing Plants
632 Project and thus realised standardised manufacturing flow and data management. Midea selected
talents of refined manufacturing system, continued to train such talents, drew lessons from successful
practice of domestic lighthouse factories, and carried out pilot work of automation-oriented transformation
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in overseas manufacturing bases, thus improving its manufacturing efficiency and delivery capability.
Meanwhile, it kept enhancing the EHS management system of overseas factories and established the
risk prevention mechanism to ensure safe and stable operation of its overseas manufacturing bases and
improve its tenacity in resisting external risks. Midea continued to deepen the development of IoT
products and application scenarios. In the first half of 2023, approximately 2,000,000 IoT products were
sold in the overseas market, more than 400,000 products were activated, and continuous efforts were
made to promote the launch of the MSmartLife App of its international version in all major markets.
Focusing on the whole-process contact points of user experience, it continued to expand the digital
ecosystem, adhered to the continuous investment in development of users and interaction with users,
and established the management system for user life cycle step by step to improve user experience.
Midea refined its global service system and improved its service capability worldwide to expand the global
service network. With its global spare parts centres being put into operation officially, it realised whole-
process online operation of spare parts' storage and delivery. By accomplishing the construction of
independent packaging system for all core parts, it broke the bottleneck in efficiency of the supply of key
spare parts and continued to shorten the delivery cycle of spare parts, delivering more than 200,000 items
in total. Besides, it sped up its test and popularization of global post sales service system while conducting
service network training in all overseas regions to ensure consistency of the service system, and the
completed parts of the system covered the global customer contact centres in Germany, Mexico, U.S.A,
Canada and other countries. The system of customer services was launched and applied in 10 countries
to impose real-time supervision on service quality and fulfilment of data and parameters, thus improving
its service quality worldwide. Relying on Open AI and internal data analysis platforms, it could extract
valid information fed back from customers to refine its service system.
In the first half of 2023, since the rise of commodity and energy price in Japan inhibited the consumption
of home appliances, the sales volume of mainstream home appliances dropped by 11% year on year,
and the market competition intensified as well. Focusing on the nature of operation consistently, TLSC
stayed cool-headed when handling numerous challenges of uncertainty. By taking multiple measure like
enhancing communication with key customers and strengthening retail in the market, it sustained a stable
growth of market share for refrigerators, microwave ovens and other products. By taking such measures
as stabilizing price and improving products structure, it effectively alleviated the adversity of market scale
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downturn, and further improved its profitability. By strengthening the collaboration with the Group and
related product divisions, it significantly improved the product quality and optimised the product
development flow to ensure launch of new products and supply of products, thus increasing users'
confidence in it. Meanwhile, TLSC continued to boost synergies with the Group and the relevant divisions
on branding, R&D and innovation, supply chain integration, quality improvement, etc., so as to build a
strong product portfolio for the global market together, thereby enabling business of TLSC to expand to
and cover more than 120 countries and regions.
E. Stepped up the comprehensive digitalization to materialize data- and platform-based
operations in the whole value chain, and thus to become more competitive in the digital era
With a focus on the "Digitization & Intelligence Driven" strategy, Midea stepped up the comprehensive
digitalization to materialize data- and platform-based operations in the whole value chain, and thus to
become more competitive in the digital era. In terms of domestic sales, Midea comprehensively improved
the ToC business user service experience through "one-stop reservation, one-stop service, and one-stop
post-sales", and adopted measures such as "end-to-end visible orders in the whole chain " and "online
visible and available, delivery commitment status" to improve the delivery efficiency of ToB business.
With a focus on online and offline omnichannel consumption scenarios, Midea used digital instruments
to assist users in gaining insights and multi-dimensional operations, empowered enterprises to have
whole-value-chain contact with customers, and improved the "non-face-to-face" transaction model of the
Midea Cloud Sales platform. Midea improved the efficiency of entire-house intelligent design by 90% with
the help of entire-house design, improved the accuracy of applying intelligent location selection models
by some stores to 95%, and shortened the average store building cycle by more than five days. Taking
its stores with monopoly system as its core, Midea built a “Midea Cloud Sales +” ecosystem that covered
all levels of the market. Through the building of a new service guarantee system and the empowerment
of new digital instruments, Midea provided customers with industry-leading digital platform services, such
as financial instruments, post-sales reverse mechanism, cloud warehouse services, online services of
logistics, supply and delivery, improving the efficiency of inventory turnover, and store operation of
retailers. By building a digital traffic centre, and taking actively marketing traffic, accurately introducing
traffic, and creating traffic on new platforms as its core, Midea continuously provided traffic support for
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offline stores and provided users with scenario-based and convenient purchasing channels. Midea also
supported the digital transformation of direct retailing, and built a new retail store that completed the pre-
installations, comprehensive upgrades and ecological transformation, and that was able to undertake
global and multi-touch traffic. The number of daily active users of the MSmartLife App increased by more
than five times. In terms of overseas sales, Midea focused on "Global Impact" strategic planning,
deepened the development of digital capabilities of the system driven by the original equipment
manufacturer (OEM) and own branding & manufacturing (OBM), and continued to create innovative
products with business digital perception capability based on user insights, to meet customer needs and
user experience. Midea achieved product planning and development driven by user insights and
technological innovation through digital platforms, formed a business innovation mechanism for the
overseas independent brand, and promoted the building and improvement of organizational capabilities
for independent brand business from insights to products. Midea built an iBOS overseas sales integration
platform based on a brand new technological architecture, achieving intelligent operation warning, risk
control, and automated workflow. Midea also connected the end-to-end digital engineering of overseas
marketing, and continuously optimized sales forecasting models, improving the fulfillment efficiency of
overseas orders. Midea promoted the improvement of the overseas channel management system and
overseas e-commerce platform, and strengthened the architecture system of e-commerce and channel
operation, quickly reaching overseas clients and consumers. Focusing on overseas user service
experience, Midea enhanced the post-sales service experience by developing digital capabilities in global
spare parts centres, overseas post-sales operations, and global contact centres. Midea also optimized
the digital capabilities of overseas manufacturing and completed the digital system building of overseas
manufacturing bases such as Brazilian factories. In terms of R&D, with a focus on the development of
"Three Generations" R&D capabilities, Midea achieved comprehensive online management of the
research, reserve, and development, comprehensively established an integrated knowledge portal for
R&D, and built knowledge engineering and knowledge re-innovation capabilities for R&D. Midea
accelerated the promotion of digital planning instruments and approaches, expanded the application
scenarios of trend analysis, selling point recognition and other functions, continued to promote module-
based platforms, optimized R&D knowledge management, failure mode and effect analysis (FMEA), R&D
efficiency, and further deepened global platform group planning, achieving a year-on-year reduction of
6% in the average product development cycle, and improving benchmark product efficiency. Midea used
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digital models to scientifically predict product sales, analyse product potential, used multiple indicators to
monitor and analyse new product performance, helping improve the hit rate and ramp rate of new product
planning. Midea also developed digital planning instruments for ToB business, improving the hit rate of
ToB product planning. In terms of supply chain and manufacturing, Midea promoted the transformation
toward an end-to-end integrated supply chain, and established integrated supply chain (ISC) platforms,
further strengthening the value-chain synergy of research, manufacturing, supply, and sales. Midea
established a digital collaborative portal and built a long-term operational mechanism, achieving
integrated operation of global planning and orders. Driven by digital S&OP and whole-procedure
intelligent fulfillment of orders, Midea shortened delivery time, providing customers and users with a
"stable, accurate, fast, and intelligent" delivery experience. By building a risk management platform for
supply chain, Midea developed a scientific analysis logic, and formed a strict, reliable, safe, and efficient
supply system. The proportion of centralized procurement for non-raw materials increased to 45%, the
online rate of bulk commodity procurement increased to 90%, the upstream delivery cycle shortened by
40%, and the inventory turnover efficiency of bulk commodity increased by 30%. Midea continued to
promote the building of dark factories, established a manufacturing and operation model centred on
DMS4.0 and built a benchmark model for the factories in Thailand. EHS management in parks achieved
intelligent collection, analysis, early warning, and closed-loop handling of abnormal situations at all
monitoring points. MIoT, Midea’s industrial internet platform, was successfully selected as a "Cross-
industry and Cross-field Industrial Internet Platform" (dual cross platform) by the Ministry of Industry and
Information Technology in 2022. It can provide over 90 solutions covering nine key fields, including safe
manufacturing, energy conservation and emission reduction, quality control, supply chain management,
R&D design, production and manufacturing, operation management, warehousing and logistics, and
operation and maintenance services. Midea served over 400 large enterprises to achieve digital
transformation and upgrading, and was recognized as a leader in the IDC MarketScape: Manufacturing
Vendor Assessment Report for Overall Solution of China Digital Factories.
Midea continued to strengthen the building of digital base and information security, enhanced its capability
in all-weather information security operation through "cloud and ground" collaborative defense, effectively
preventing network attacks, and safeguarding the safe and stable operation of its business. In terms of
infrastructure, the cloud base of Midea in Guian has started construction as planned and the overall
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progress has been more than half. After completion, it can support the computing needs of Midea's digital
transformation in the next ten years. Meanwhile, it continuously optimized the energy consumption of
data centre, with a year-on-year decrease of over 7% in H1. Midea completed the first phase of the
knowledge management platform building, achieving knowledge access and global search capabilities in
five major fields. Midea also completed the first phase of the AIGC application management platform
building, fully integrating programs such as ChatGPT, Coplit, and Midjournal, and empowering the
business in batch document scanning and generation, batch image generation, video generation, live-
stream scene generation, virtual digital live streaming, automatic encoding, and testing.
Midea steadily promoted its data empowerment business around the "Three Generations", focused on
the practical capabilities of digital talents, and strengthened the integration of digitalization in actual
business processes. In the first half of 2023, Midea trained thousands of composite digital personnel,
while also empowering core business scenarios to be digitalised, such as R&D, marketing, supply chain,
manufacturing, and operation, promoting innovation and transformation in various fields. Midea also
expanded its data capabilities to overseas markets and ToB business fields. In the first half of 2023, in
terms of R&D, Midea utilised data methods to discover new concepts, helping to create multiple popular
and innovative products. In terms of marketing, Midea supported the overall scale and efficiency of
content operation from three main business directions of content planning, release, and evaluation,
focusing on the content operation data of interested e-commerce. Midea also introduced privacy
computing platform capabilities, supported core marketing activities, and relied on various mobile data
products to build a domestic offline retail value indicator system for smart homes. In terms of supply chain,
Midea optimized inventory management efficiency by strengthening the digital capability of "shared
inventory system". In terms of business, Midea used digital instruments to help improve the efficiency of
business data processing and significantly save labour costs. In terms of overseas market, Midea created
a quasi real-time perception data base to achieve whole-chain visible orders and process nodes,
continuously connected the whole chain of overseas sales, shipping, manufacturing, and inventory,
providing accurate and effective analysis data for overseas business development. In terms of service,
Midea connected to domestic multi-channel user voice data, built a user voice (VOC) system, and built
an automatic reach capability for Net Promoter Score (NPS) research scenarios. In terms of ToB business,
Midea accurately identified effective information from massive data, assisted in discovering business
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opportunities based on data analysis, and achieved visualization of partial ToB business bulk orders,
enhancing ToB business competitiveness.
Guided by the strategy of "Technology Leadership", Midea AI Innovation Centre deeply engaged in the
research and application of AI technology. Midea AI Innovation Centre put continuous efforts and
achieved application breakthroughs in four fields, namely smart home empowered by AI, smart
manufacturing empowered by AI, smart medical services empowered by AI, and household robots. By
applying AI technology to empower products, Midea achieved comprehensive self-development of whole-
chain voice interaction software and hardware technology, ensured independent and controllable core
technology that can be adapted to major categories such as air conditioners and laundry appliances, thus
improving performance and user experience while achieving cost optimization. Midea continued to
optimize its independently developed instrument chain for edge deployment, Aideget, and preliminarily
completed the RISC-V platform adaptation. It has been applied to products such as air conditioners,
refrigerators, and floor cleaners, and has been launched simultaneously in Github and OpenAI
communities, effectively promoting functional evolution. Midea launched a 360-degree industrial AI full-
inspection product that empowers intelligent manufacturing, achieving multiple inspections for the first
time. The quality inspection modelling time was reduced to two minutes, and all inspections only took five
seconds, effectively improving quality control capabilities. Midea applied AI technology to improve
development efficiency. The robot simulation scenario library has accumulated over 160,000 simulation
models and over 60,000 task scenarios. Midea preliminarily developed capabilities for large model
training of robot control, online simulation verification, and related algorithm development and testing.
Midea seized the trend of technological development, actively built a large voice model in the vertical
field, and promoted its application in different industry scenarios.
Midea promoted the strategy of "Digitization & Intelligence Driven" and accelerated the implementation
of "Comprehensive Intellectualization" to "Customize a Smarter Midea Life for You" In terms of intelligent
products, Midea remained committed to improving the comprehensive user experience of Midea products,
consolidating the entire-house basic guarantee capability, and creating a customer-oriented Midea Smart
Life solutions. In 2023, the MSmartLife App continued to improve its application experience, reducing
device abnormal offline rate by 14%, plugin white screen rate by 30%, and application cold start time by
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20%. The comprehensive performance indexation reached an industry-leading level, creating a stable
and smooth user experience. As at June 2023, the registered users of the MSmartLife App exceeded 50
million, and the monthly active users exceeded 7.3 million. Midea accelerated the layout of the entire-
house intelligence field and launched the development of distributed access devices with "1 (central
control on the large screen) +N (central control on the small screen)", covering sensors, switch panels,
intelligent dimmers, sensor sets, and curtain motors. Midea also improved the entire-house intelligent
product category, connected the entire-house intelligent home appliances and home products with super
gateways as the centre, continuously providing services for users. In addition, Midea actively participated
in the drafting and formulation of relevant industry standards both domestically and internationally. In
order to promote the wider popularization and application of new technologies in the industry and enhance
industry influence, In the first half of 2023, Midea established working groups and assumed the chairman
in the IEEE Computer Society/Artificial Intelligence Standards Committee (C/AISC) and IEEE Robotics
and Automation Society's Standing Committee for Standards Activities (RAS-SCA).
F. In view of consumer stratification, launched multiple brands and diversified product portfolios,
and enhanced the promotion of the core values of these brands to empower retail sales and user
operation
Midea continued to promote the "COLMO+TOSHIBA" dual premium brand strategy, and in the first half
of 2023, the overall retail sales of the dual premium brands increased by 22% year-on-year. COLMO is
committed to serving 1% of the world's super individuals and creating high-end intelligent life solutions
with a full landscape. In terms of products, after nearly five years of development, COLMO's entire-house
high-end smart products has covered multiple categories such as commercial air conditioners, entire-
house water, refrigerators, wine cabinets, clothes dryers, laundry appliances, nursing cabinets, kitchen
appliances, and small domestic appliances. The smart screens of commercial air conditioners have been
upgraded as a new access to entire-house intelligence, fully upholding a new era of entire-house
intelligence. COLMO launched the TURING advanced customised entire-house water system, using AI
intelligent technology to customize the natural high-level water ecosystem through five dimensions of
safety, purity, skin touch, temperature sensation, and taste. Starting from different water usage scenarios,
COLMO has created five major products: TURING pre-filter, central water softener, central water purifier,
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water purifier-heater, and sparkling water direct drinking machine, providing a customizable entire-house
water system solution that comprehensively meets the high-end water living needs of elite users. COLMO
officially rolled out a new access to villa entire-house intelligence called "COLMO AI-powered Villa Smart
Screen", which simultaneously undertook the whole dimensional upgrade of COLMO Smart Villa Expert,
restructuring the industry landscape of entire-house intelligence, and solidifying the industry positioning
of "Smart Villa Expert". COLMO Washer-Scrubber has integrated and upgraded washer-dryers and robot
vacuum cleaners, and they are equipped with AI-powered light dry-cleaning technology, creating a new
form and species in the home appliance industry. Based on a profound insight into the consumption
upgrading and life advancement needs of the elite population, COLMO launched the EVOLUTION New
Image Suite, innovatively creating three major advantages of full hidden aesthetics, advanced
functionality, and intelligent care, covering the full range of needs in COLMO Lifestyle such as nutritional
food, air management, advanced customised natural water use, and exquisite washing. It has a zero-
distance free embedded design and powerful compound functions, which can meet the diverse needs of
the entire family and various regions throughout the day. In terms of brand, COLMO Lifestyle Festival
teamed up with iQiyi variety show Folk 2022 as an entire-house intelligent partner, to accompany folk
elites on the music stage to share their villa intelligent life. The brand's core exposure exceeded 300
million. Midea strengthened the industry position of COLMO's high-end entire-house smart home
appliances through a new product launch event, and invited renowned actor Zhu Zhu as an experience
officer of Smart Villa Expert. The COLMO Elite Life Festival combined the fashion resources and industry
influence of W Magazine and Marie Claire to deeply integrate the cutting-edge technology of COLMO's
entire-house intelligent voice access with the pioneering concept of W Magazine, reconstructing the
intelligent mind of the whole house with high-end reconstruction. Focusing on the designer circle, the
TURING product suite was showcased in "Design Shenzhen" and "Design Shanghai", gathering with top
luxury home brands around the world to showcase WAD "Luxury House Refined Space", and
collaborating with international brands of cabinet, home supplies, and fabrics to showcase more high-end
intelligent and rational aesthetic design concepts for the whole house. COLMO Lifestyle was conceived
through deep interaction with the designer circle. For four consecutive years, COLMO Lifestyle has been
named Wuxi Marathon and has deeply cooperated with the Gobi Challenge, as well as upgraded its
cooperation with the Golf Challenge. Through long-term cooperation with sports challenge events,
COLMO Lifestyle has gradually shaped a spirit of never giving up exploration, reaching over 50,000 elite
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users. According to the data from AVC, the proportion of COLMO products in the high-end market
increased significantly In the first half of 2023, with the water dispenser products occupying more than
65% of the offline high-end market, water purifier products and floor-standing air conditioners
approximately 20%, and dishwashers more than 13%. In terms of sales channels, COLMO further
expanded the high-end whole-scene channel by setting up 340 smart experience pavilions across more
than 144 major cities.
As a world-renowned home appliances brand with a century-old history, upholding meticulous care for
people and life, TOSHIBA is committed to providing users with inspiring, perfect products and services
with the inherited Japanese craftsmanship and craftsmanship aesthetics. TOSHIBA is also committed to
creating a breakthrough star-level lifestyle for consumers, as a pioneer with a century-old historical
accumulation. In recent years, TLSC's increasing sales in China have made it a new choice for high-end
home appliances in the country. In the first half of 2023, the overall retail sales of the TOSHIBA brand in
the domestic market exceeded RMB1.8 billion. During the "618" period, the total online retail sales of
TOSHIBA reached RMB380 million, a year-on-year increase of 92%. In the first half of 2023, TOSHIBA
continued to make efforts in terms of products. It rolled out its first "Cozy Home" suite that covers multiple
scenarios and categories. Focusing on kitchen, water, and bathroom scenarios, TOSHIBA created new
suits of high-quality living with spatial layout, residential feel, and authentic aesthetics as the core
concepts. Specifically, Pear Refrigerator in the suite was well received on the market, with retail sales
exceeding RMB100 million in the first three months. In terms of brand, with a focus on the brand
proposition of "Details Matter", TOSHIBA continued to carry out circle marketing activities targeting
different target user groups, and accurately covering customers to facilitate the continuous flow of market
brands. In terms of channel, TOSHIBA actively promoted retail transformation. Toshiba completed the
cooperation with over 160 brand operators, built 165 star-level life pavilions of TOSHIBA brand, promoted
the realisation of a latest unified terminal image and preliminarily completed the building of the national
retail system.
WAHIN continued breaking the boundaries of traditional home appliance models. The brand insists on
innovation, embracing the Generation Z with "Trendy Designs, Practical Functions and Fun Interactions".
It strengthened the slogan "Young and Daring" for branding, and positioned itself as a brand of "young,
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high-tech and trendy appliances", continuing to provide users with good-looking, interesting and
surprising products with easy-to-use technology. The overall operating revenue of the brand in the first
half of 2023 was close to RMB6 billion. During the "618", the sales of WAHIN products reached close to
RMB2.4 billion. Particularly, WAHIN air conditioning products ranked among the top three in JD.com,
Tmall and Douyin, a year-on-year increase of 400% on the Douyin platform. In terms of brand, on the
2023 Youth Day, WAHIN teamed up with the champion of the China Rally Championship to roll out the
"New Youth Colour", featuring the social colour, e-commerce virtual store content colour, and artist
customised trendy colour of products. The metaverse marketing model represented by virtual stores was
included in the "List of 2023 Metaverse Marketing Innovation Pioneers", with an overall exposure of 640
million UV, attracting 116,000 followers, and increasing the number of visitors on the site by 46% year-
on-year In the first half of 2023. In the spring of 2023, WAHIN entered the campus to hold the "Spring
Pre-sales" themed graffiti art exhibition at the School of Art Management and Education of Central
Academy of Fine Arts. Graffiti artists were invited to create trendy home appliances on WAHIN air
conditioners and refrigerator products at the exhibition. In terms of marketing, In the first half of 2023,
WAHIN Air Conditioners mainly promoted structural models, such as 3-HP floor-standing, 2-HP wall-
mounted and fresh air conditioners, to build the user mind of "WAHIN Magic Machine" series products.
Through the matrix penetration of all-platform introduction of off-site celebrities, the search indexation of
"WAHIN Air Conditioner" in Douyin and Xiaohongshu increased by more than 170% and 400%
respectively year on year, with 180 million UVs of network exposure and close to one million interactions.
The e-commerce search ranking of "WAHIN Air Conditioner" elevated to TOP20, which directly drove
and promoted significant sales growth, achieving dual benefits of product volume and sales.
G. Seized market opportunities amid domestic and international circulations, responded to
China’s goals regarding “carbon emission peak” and “carbon neutrality”, made technological
breakthroughs and innovations, and kept improving the ToB business landscape
Midea Industrial Technology Business Group is a co-builder in digital transformation and green
sustainable development across the global pan-manufacturing sector. With the vision of "Technology
Drives the Whole World”, it provides high-tech, reliable, and eco-friendly industrial products and solutions
in four major fields: intelligent transportation, industrial automation, green energy, and consumer
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appliances. The Industrial Technology Research Institute and a strategic development organisation have
been established in 2021 to focus on both independent development and acquisitions, build a root
technology system with ToB characteristics, and develop modular technology for multiple industries and
technology fields, including heat management technology, drive technology, control technology, energy
technology, chip technology, etc. In the four major areas, a complete industrial chain layout and technical
matrix have been formed, covering information, control, drive, and execution. It continues to increase
investments in the development of key and cutting-edge technologies, with R&D investment exceeding
RMB1 billion in 2022, and over 50% of R&D personnel having master's or doctoral degrees. At the same
time, it continues to increase the recruitment of senior experts in the industry. In the first half of 2023,
Midea Industrial Technology received numerous industry awards, including a first prize of Science and
Technology Progress Award of China National Light Industry Council for the "Research and Application
of Key Technologies for the Variable Capacitor-driven High-efficiency Miniaturized Motor System for
Home Appliances", a first prize of the 2022 National Business Science and Technology Progress Award
from the China General Chamber of Commerce for the "Research and Industrialization of Key
Technologies for Heavy Rare Earth-free High-efficiency Low-noise Inverter Compressors", a second prize
of the 2022 Science and Technology Progress Award of Guangdong Province from Guangdong
Provincial Department of Science and Technology for the "Research and Industrialization of Key
Technologies for the New-generation Cross-category and Low-carbon Motor Systems", and the 2023
AWE Awards for Core Components for "R290 Mini-sized Double-cylinder Large-capacity Inverter
Compressors" and "Novel Ultra-high Power Density DC Brush-less Fans for Large Variable Refrigerant
Flow (VRF) Air Conditioning Systems". Furthermore, four technologies of which the development was led
by Midea Industrial Technology (namely, "Research and Application of Key Technologies for High Power
Density Permanent Magnetic Motors and Compressors", "Research and Application of Key Technologies
for Energy-efficient R290 Rotary Compressors", "Research and Application of Key Technologies for
Green and High-quality Thin Permanent Magnet Motors", and "Research and Application of Key
Technologies for Quasi-dual-stage Reciprocating Compressors and Cooling Systems") have been
recognized by the China National Light Industry Council as "Internationally Advanced". Additionally, two
subsidiaries of Midea Industrial Technology, namely Guangdong Meizhi Precision-Manufacturing Co.,
Ltd. and Guangdong Welling Motor Manufacturing Co., Ltd., were included by the Ministry of Industry and
Information Technology into the 2022 List of Green Manufacturing and recognized as national "Green
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Factories".
By maintaining the focus on the field of consumer appliances, Midea Industrial Technology continued to
consolidate its leading position in the industry. First, according to the H1 2023 data from ChinaIOL.com,
in terms of residential air conditioner compressors, its global market share increased to 46%, continuing
to rank first in the world, while it achieved breakthroughs in overseas markets for scroll compressors, and
launched the brand new product of R290 Heat Pump Compressor in the European region, providing a
new experience that is energy-efficient, safe, reliable, low-carbon and environmentally friendly, and
contributing to the sustainability of the heating, ventilating, and cooling industries. Second, in terms of
refrigerator compressors, its global market share approached 18%, ranking second in the industry, and
breakthroughs were achieved regarding the core customer base in several overseas markets such as the
US, Brazil, and India. Third, in terms of motors, its global sales shares recorded 42% and 21% for
residential air conditioner motors and laundry appliances motors, respectively, maintaining the advantage
as an industrial leader, which, coupled with the launch of a high-efficiency silent product of Household
Fresh-air Outer Rotor Motor, provided a firm support for the expansion of new market segments. The
Foshan Xingtan Base for components of consumer appliances has been established to make a forward-
looking layout in intelligent manufacturing of mechanical and electrical products. Midea has
comprehensively automated, digitalized and intellectualized the production layout, process design and
production management, seeking to build an Industry 4.0 intelligent manufacturing demonstration base
in China. The integration work on the Thai compressor company proceeded well, which has helped
significantly increase the overseas production capacity of refrigerator compressors. The Thai motor
factory's construction has been completed, initially establishing overseas mass production capacity for
ECM motors. Third, through the facilitation of scale production in the manufacturing base in India and the
delivery of its initial batch of orders by the base (which is the first self-built overseas base for A/C
compressors) at the end of 2022, the global supply capacity for the core components continued to
increase. Additionally, Midea Industrial Technology continued to invest more in R&D of chip products and
technologies, as 12 chip products of four major series (namely, master control, touch control, inverter,
and IPM) have been put into mass production, with an internationally advanced performance regarding
the quality indicators for the same type of products. This is followed by the successful supply of these
products to mainstream manufacturers of household appliances, and the earning of the Best MCU of the
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Year of the 2023 China IC Design Achievement Award from AspenCore for MCU MR88F001 (a master
control chip product).
Deepening its focus on intelligent transportation components, Midea Industrial Technology leverages its
solid core technology in the consumer electronics field to quickly develop three major product lines:
Automotive Grade thermal management, electric drive systems, and chassis execution systems. The
existing 10 product lines of the three major systems gradually went into production, and the total sales
volume In the first half of 2023 of 150,000, representing a YoY increase of more than three times. First,
in terms of technological breakthroughs, following the industrial trend of integration, the upgrading from
components to modules has been implemented. Based on the solid mastery of thermal management
technologies for years, Midea launched the Integrated Module for Thermal Management
(Comprehensively Integrated) after the introduction of the water-end integrated modules and the
refrigerant integrated modules, and creatively launched the first rotor-based motor compressor of the A00
series according to the demand for high cost performance of A00-grade vehicles. Second, in terms of
market expansion, 11 new customer-oriented designated cooperation projects were initiated with the
output value of potential orders expected to exceed RMB3.5 billion. Furthermore, the compressor
products have been recognized by multiple customers and have covered all model types of multiple
mainstream automobile manufacturers. Meanwhile, the first customer-oriented designated cooperation
project for the Integrated Module for Thermal Management (Comprehensively Integrated) has been
concluded, with the estimated output value of potential orders exceeding RMB300 million. Additionally,
the independently developed product of the 800V Silicon Carbide High Rotation Speed Motor
Compressor continues to win recognition from more new customers. Third, in terms of capacity
guarantees, the monthly production capacity of compressor products has exceeded 30,000, representing
a YoY increase of 1,700%. Furthermore, the construction of the factory buildings for the new energy
vehicle parts manufacturing base in Anqing was completed, where the mass production of products such
as compressors and valve terminals has been achieved. Fourth, Midea Industrial Technology Business
Group acquired Wuhan TTium Motor in 2022, officially entering the field of two-wheeled travel and
expanding its business in the core components of two-wheeled pedelecs. Furthermore, by introducing
Midea's supply-chain system and advanced experience of large-scale production, it set up modern
factories in China and Vietnam to continuously provide customers with high-quality products. Moreover,
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it successfully pitched to multiple industrial leaders in Europe and concluded agreements with domestic
strategic customers In the first half of 2023. Additionally, as a measure to continue to improve the product
matrix of E-bikes, it launched new products such as large mid-drive motors and wheel hub motors in the
Taipei International Cycle Show, the China International Bicycle Fair in Shanghai, and the Eurobike 2023.
In the field of industrial automation, Midea Industrial Technology's two major brands, Servotronix and
Hiconics, provide complete solutions from the sensing to the control level for customers in the process,
hybrid and discrete industries, helping industrial customers improve quality and efficiency, and achieve
digital transformation and green development. As an integrated solution provider in the field of automation
equipment, Servotronix focuses on the entire industrial automation chain, including software tools,
equipment control, servo drives, servo motors, and encoders, and continuously provides customised
motion control solutions for customers in various fields. In the first half of 2023, its revenue from linear
drive products reported a significant YoY increase. Meanwhile, it continued to enhance the application of
products and technologies in new fields, with a focus on customers from industries such as lithium
batteries, photovoltaics, semiconductors, robots, laser processing, and consumer electronics by
conducting targeted customer pitching campaigns and providing them with integrated solutions. Based
on its advantage of the advanced technological strength, it launched multiple products such as the
Enhanced BDHDE AC Servo System, the CDHD2S Linear Drive, the DC304 Manipulator Control System
for Integrated Display and Control, the SoftMC804 Medium-sized Motion Controller, and the 3D Vision
Industrial Camera within the first half of the year. Additionally, it continued to promote reforms in marketing
management and enhance process management, and used digital information systems to develop the
full-value-chain closed-loop management system from business leads to payment collection, so as to
improve the ability to acquire business leads and achieve their successful conversion. Additionally, as its
independently developed "Harmonic Reducer High Precision Long Life Design Technology Research and
Application" was certified as "Internationally Advanced", Midea Industrial Technology improved its
business layout regarding the reducer products for SCARA robots, six-axis robots and collaborative
robots. While the new factory for reducers has completely put into operation and the previous bottleneck
on the precision processing technology for harmonic reducers has been eliminated, independent
production and delivery of the reducer products have been achieved.
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In the field of green energy, as far as the first half of 2023 is concerned, CLOU Electronics steadily
promoted business development regarding intelligent power grids. It actively participated in the relevant
projects of the State Grid and China Southern Power Grid, as the total bids that CLOU Electronics made
to win the procurement projects of the State Grid on electric energy meters (including information
collection about electricity consumption) for 2023 exceeded RMB240 million. The overseas order intake
in the first half of the year exceeded RMB350 million, representing a significant YoY increase. Moreover,
it tightly grasped opportunities from the global energy storage industries by accelerating localization in
Northern American markets, introducing leading teams from the industry, improving the ability to design
energy storage products and provide localized services, and actively conducting business expansion in
the energy storage markets of Asia, Africa and South America based on the channel advantage of foreign
power grids, so as to achieve the global layout of the energy storage business. As a result, the total
distributed energy of the energy storage business In the first half of 2023 approached 800 MWh, including
485 MWh of the distributed energy for the largest energy storage project in South America. In terms of
products, in the field of intelligent power grids, it has obtained the required certifications for low-voltage
measuring switches, and actively participated in the formulation of the State Grid's technical specifications
for measuring switches for enterprises. Furthermore, it has completed the development, and submission
for inspection and certification, of all series of the standard products for the State Grid and China Southern
Power Grid in 2022, and the R&D of the checking device for the functional and protocol conformance of
the integrated terminals for the State Grid, the simultaneous online checking line for multiple versions of
single-/three-phase electric energy meters, and the remote charging pile checking system. Meanwhile, it
made efforts to accelerate the international certification of new products, as a total of 24 series of new
products for overseas markets have been certified by SGS (a third-party certification authority) and
passed the accelerated life test (ALT). Additionally, in the field of energy storage, the Aero product series
have been integrated into a platform, which supports rapid deployment and installation, thereby greatly
reducing the time needed for on-site grid connection. Moreover, it launched the Aqua series (liquid-
cooling product portfolio) to provide one-stop services for customers from early-stage investment to the
full-life-cycle capacity increase at the DC side. Meanwhile, it is planning for the development of the
second-generation liquid-cooling products in order to provide integrated energy storage solutions. In
terms of the supply chain and manufacturing, the resources of the supply chain were integrated to reduce
the procurement costs. Meanwhile, the reduction in the bids made to win projects related to any category
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of components or parts for intelligent power grids has been achieved. Furthermore, taking the advantage
of large projects, the rapid cost reduction for core energy storage components has been promoted.
Additionally, the cell resources were supplemented, and leading battery suppliers were employed. On the
other hand, the efficiency and automated degree of production was improved by promoting the full-
automation-oriented renovation of the production line for single-phase electric energy meters, and
introducing a fully-automated module production line to the energy storage base in Yichun.
Midea Building Technologies, with the mission of "co-building sustainable smart space" and the vision “to
be a global leader in building technology", has transformed from a commercial air conditioning product
supplier to an integrated solution service provider for intelligent building ecosystems. Currently, Midea
Building Technologies has six major product manufacturing bases and seven R&D centres worldwide,
with a sales network covering global markets. It has formed the largest and most comprehensive
professional smart building product matrix and service network in China. In the domestic market,
according to the data from ChinaIOL.com, Midea Commercial Air Conditioner has continued to rank first
with respect to domestic market share In the first half of 2023. It leads the domestic brands in the VRF
market with a market share exceeding 21%. According to Commercial Air Conditioner Market data, the
market shares of Midea's core products, such as centrifugal units and screw chillers, are the highest
among domestic brands. In the overseas market, data from ChinaIOL.com show that In the first half of
2023, Midea Commercial Air Conditioner accounted for more than 27% of China's total commercial air
conditioning export value, ranking first. According to the European Heat Pump Association's data
forecasts, to achieve the REPowerEU plan, the number of heat pumps in the European market will
increase from the current 17 million units to 60 million units by 2030. Midea Building Technologies is
continuously expanding its heat pump production base in Italy, with a planned annual production capacity
of 300,000 units. This production base is expected to be put into production in 2024. Upon completion,
the delivery cycle of heat pump products will be shortened from five to one month, comprehensively
enhancing Midea's competitiveness in the European market.
Midea Building Technologies launched the "GREEN FOR ONE" strategy and the "Digitalization,
Engineering, Procurement, Construction, and Operation (DEPCO)" model at the 2nd TRUE Building
Technology Summit on the theme "Make iBUILDING Come TRUE" held at the beginning of 2023.
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Specifically, the "GREEN FOR ONE" strategy helps all practitioners to respond to challenges from the
low-carbon industrial transformation from four dimensions, namely products, ecosystem, services, and,
the industry. The DEPCO model is a complete set of service standards and systems to effectively
implement "smart building" projects, which is people-oriented and operating objectives-centred. In the
first half of 2023, Midea Building Technologies participated in domestic and overseas industry exhibitions,
such as AHR EXPO, ISH Frankfurt, the China Heat Pump Exhibition (HPE), the China Refrigeration Expo,
the China International Intelligent Building Exhibition, China International Medical Equipment Fair (CMEF)
(Spring), the China Hospital Construction Conference and International Hospital Build and Infrastructure
Exposition (CHCC), the China Animal Husbandry Expo, the Entrepreneurs Summit of Energy
Conservation Service Industry, the Industrial Green Development Achievements Exhibition, and the
Shanghai International Carbon Neutrality Expo in Technologies, Products and Achievements, to
demonstrate its results in product R&D and solutions and raise its reputation and influence. Specifically,
multiple core heat pump products and the light storage and heat flex integrated solution were
demonstrated, such as the R290 Air-source Heat Pump, the Carbon Neutrality-oriented Air-source Heat
Pump Unit, the M-Thermal Air Source Heat Pump, the Full Variable Frequency Air-source Heat Pump
Unit for Cooling and Heating, the R32 Variable Frequency Air-cooled Module Unit, the Variable Frequency
Direct Heating Circulating Hot Water Unit, the Water-cooled Screw Variable Frequency High-temperature
Heat Pump Unit, the Variable Frequency Air Source Blaze Heating Unit, and the Dual Grade I Sideward
Variable Frequency Blaze Unit. Meanwhile, what was demonstrated also covered the customised HVAC
solutions for scenarios, such as livestock and poultry greenhouses and slaughtering, Midea's
comprehensive energy solutions for low-carbon industrial parks, the Intelligent Operation Center (IOC)
Platform of Midea Building Technologies Jingzhou Factory, the "Clean Operating Department" and the
"WU KONG Smart Ward Solution 2.0" for medical customers, Midea's two brand-new digital carbon
reduction platforms--the "iBUILDING Product Carbon Footprint Management Platform" and the
"iBUILDING Virtual Power Plant Operation and Management Platform", KONG DDC M0 and KONG NZ
Systems, and the three scenario solutions, namely KONG "Meeting Space", the "WU KONG Smart Ward
Solution", and the "HVAC High-efficiency Computer Rooms". Particularly, the integrated energy solution,
based on the iBUILDING Midea Building Digital Platform, enhances the comfort of users through the
building load sensing and prediction technology for HVAC. Concurrently, the coupling control of energy
consumption facilities, such as PV, energy storage, heat pumps, and air conditioners, are achieved to
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satisfy management requirements, such as green energy supply, dynamic power distribution, efficient
power supply, and the interaction between power supply and load, power the whole house with renewable
electricity, and create a healthy and comfortable living environment. The "Clean Operating Department"
creates clean environment and spaces that are safe, intelligent, efficient, and resilient, with own products,
such as HVAC, the building control system, and software platforms. The WU KONG Smart Ward Solution
2.0, based on the 1.0 solution, is a comprehensive solution that embraces the new-generation intelligent
nursing call system with screen control, fully combines medical services and environment control, and
incorporates solutions of medical screens, environment control, and the IoT to achieve the "integration of
medical services and environment control". The iBUILDING Product Carbon Footprint Management
Platform facilitates enterprises to the real-time collection, query, and integrated authentication of data on
carbon footprint throughout the lifecycle of products. Additionally, this platform has multiple functional
modules, such as carbon footprint modelling, carbon footprint analysis, supply chain management,
carbon footprint report management, and supply chain authentication management, establishes strategic
cooperation with authentication agencies, such as SGS and TV SUD, and can generate review reports
in line with requirements of varied authentication agencies. The iBUILDING Virtual Power Plant Operation
and Management Platform, based on Midea's many commercial air conditioning systems for commercial
buildings nationwide, supports the power system in peak shaving. Meanwhile, through Midea Building
Technologies' energy efficiency management solutions, it has accelerated the connection to the water-
cooled air conditioning system, constantly expanded its adjustable load capacity, and provided new paths
and an effective model of orderly and stable power supply to other places. Furthermore, this platform can
assist the government in maintaining reliable power supply to residents and enterprises, support power
companies to achieve peak shaving and ensure the safe and stable operation of power grids, and help
users to obtain benefits of energy conservation, emission reduction, and demand response subsidies.
Moreover, Midea Building Technologies signed the Load Aggregation Platform Cooperation Agreement
with the China Electric Power Research Institute In the first half of 2023 to jointly create an air conditioning
load aggregation platform, which will be promoted to all subsidiaries of State Grid Corporation of China,
promote the digital reform of load management, and support the orderly and stable power supply in all
regions.
With respect to product development, Midea Building Technologies, in the first half of 2023, successively
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launched multiple new products to consolidate its business in areas such as HVAC, building automation,
and elevators. For instance, the self-developed 8kW liquid-cooled unit for energy storage and heat
management marks the breakthrough from zero to one of Midea Building Technologies in energy storage
and heat management and features outstanding reliability and energy-saving efficiency. Meanwhile, it
has passed the Conformite Europeenne (CE) certification, the certification by Underwriter Laboratories
Inc. (UL), and the 6,000V surge test, has a super-wide range of refrigeration operation (-30°C-55°C), and
meets the IPX6 Waterproof Rating, and the corrosion classes C4 and C5. What's more, it can operate at
an elevation of 4,000 meters. The new-generation VRF VC MAX with cooling function only, equipped with
an efficient and powerful scroll compressor with enhanced vapor injection, satisfies refrigeration
requirements within a wide range of temperature. Atom X, specifically designed for the North American
market, integrates 24V unitary units and VRF units, and combines the sideward outdoor unit and the
indoor unit. It can not only reduce the installation space for the outdoor unit, but also maintain the current
interior architectural style. Coupled with the automatic filling of refrigerants, it can be flexibly applied to
the North American market dominated by alternative scenarios. Atom T is a series of multifunctional VRF
units and products that integrate air cooling and heating and water heating functions, adopt the R32
environmentally friendly refrigerant, and are developed for the European Union market. The outdoor units
of the whole series can meet the requirements of diverse family scenarios. Additionally, the series meets
the EU and Australian subsidy requirements for energy efficiency. The MDV Power series of light
commercial air conditioners features fully variable frequency technology, high efficiency, and energy
conservation, satisfies installation requirements through long piping and high drop height. The two options
of indoor units can be applied in multiple commercial scenarios, such as shops, catering, leisure, and
entertainment. The TR+S Pro multi-split products employ the brand-new design of dual wind wheels and
feature an annual performance factor (APF) exceeding Energy Efficiency Grade 1. Its compact body and
super-long piping can adapt to different installation spaces. The KONG-MIO thermostat enables wireless
and intelligent control of multifunctional environmental control, air conditioning, fresh air, and floor heating.
In terms of the digital and intelligent elevator brand, LINVOL, the construction of the Phase I factory of
the Xiaotang Intelligent Manufacturing Base is completed. Additionally, the digital and intelligent
passenger elevator series, "EVIN Standard" Machine Room Less, is released. An intelligent elevator
service system, based on the iBUILDING-based intelligent elevator management platform, offers digital
and intelligent elevator services.
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As building energy consumption is increasing its proportion of the energy consumption of the whole
society in the progress of urbanization, accelerated efforts have been made in the construction of "zero-
carbon buildings" with "green energy system" as the core. In building energy management, the
iBUILDING Midea Building Digital Platform conducts intelligent energy adaptation and management with
a customised design based on the building's characteristics. At present, the iBUILDING smart building
business has stepped into industrial parks, medical institutions like hospitals, and public facilities. In terms
of market expansion, Midea Building Technologies obtained such project orders In the first half of 2023
as the National Museum of Chinese Writing, Wyndham Grand Zhaoqing Downtown, the new studio of
Media Storm, the Cornex New Energy (Wuhan) Lithium Battery Industrial Park, the SEMCORP-Jiangxi
Ruiergy New Material Industrial Park, the JA SOLAR Industrial Park, "Liu Chun Xing Cheng", a
commercial complex in Changting County, Fujian Province, the Shunde Charity Organization Alliance,
Foshan City, the Centralized Procurement Project of China Mobile for High-pressure Chiller Units, the
square of the Yuanjiang Station of the China-Laos Railway, Xi'an TUS-Children's Hospital, Citigroup
Center, and Guangxi Vocational College of Technology and Business. Furthermore, some of its projects
have won awards, resulting in constantly improving market recognition and influence. Particularly, the
three iBUILDING smart building benchmark projects--Midea Headquarter Building, the Jingzhou Factory
of Midea Building Technologies, and the West District of Midea Industrial Park--won the 2023 Asia Design
Prize. Three awards of the 2023 Red Dot Award: Product Design and four awards of the iF Design Award
2023 were granted to Midea Building Technologies' ChillerDoctor Gateway, the Cassette Indoor Unit with
360°Circular Air Exhaust, the R290 Air-source Heat Pump Unit, Midea Headquarters Building Intelligent
Operations Center (IOC), Midea Jingzhou Factory Intelligent Operation Center (IOC), and Midea
Industrial Park West District Intelligent Operation Center (IOC). Midea Headquarters Building, Shanghai
Tongji Hospital, and Midea Smart Building Integrated Digital Management Cloud Platform iBUILDING
Portal each winning the 16th International Design Awards (IDA). The "Midea Rubik's Cube" and
"iBUILDING Edge Engine" of Midea Building Technologies were granted the Expert Award and Industry
Leadership Award for Energy and Industrial Industries of EdgeX Challenge China 2022, respectively.
Midea Building Technologies' "Smart Clean Space Solution" won the titles, "Preferred Solution" and
"Quality Solution" of Operating Room Planning, Design and Construction of the Second "Professional
Promotion Project of High-quality Development of Hospitals in China--Golden Ruyi Award". LINVOL
smart elevators for villas were recognized as the "User Preferred Home Elevator Brand" at the First
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National Home Elevator Summit. Additionally, West District of Midea Industrial Park was included in the
"2022 Excellent Cases of Intelligent Industrial Parks", upon the selection and assessment of the "Review
Meeting of the 2022 Excellent Cases of Intelligent Industrial Parks", led and organized by the Smart City
Standards Task Force of the National Information Security Standardization Technical Committee. In the
West District of Midea Industrial Park, the LIFE Digital Intelligent Industrial Park Solution, centering on
the iBUILDING Midea Building Digital Platform, offers comprehensive services integrating software and
hardware, connects all kinds of equipment, covers intelligent travel, intelligent offices, and intelligent
operation and maintenance, and achieves digital and high-efficiency operation and maintenance as well
as personalized and intelligent offices.
In regard to technological innovation and standardization, Midea Building Technologies continuously
strengthened R&D input and made remarkable results in the first half of 2023. For example, the "Key
Technologies and Industrialization of Wide Temperature Range Full Condition High-efficiency Multi-split
Air Conditioning Systems", led by Midea Building Technologies and jointly completed by Shanghai Jiao
Tong University, Xi'an Jiaotong University, and Guangdong Midea Environmental Technologies Co., Ltd.,
won the First Prize of Industry-university-research Cooperation Innovation of the China Industry-
university-research Cooperation Innovation and Promotion Award. Midea Building Technologies' four
products, namely the "MDV8 Unbounded VRF Unit", the "65kW-R32 Medium- And High-temperature
Commercial Heat Pump Unit", the "Magnetic Levitation Ice Storage Chiller Unit", and the "Smart Building
IoT Controller", were recognized as "Innovative Products of the 2023 China Refrigeration Expo" by the
Organizing Committee of China Refrigeration Expo. Meanwhile, the "MDV8 Unbounded VRF Unit", the
"High-efficiency Magnetic Levitation Inverter Centrifugal Ice Storage Dual-condition Unit", and the "High-
efficiency Distributed Control System with Multiple Intelligent Agents for Computer Rooms and the
Intelligent Operation and Maintenance Cloud Platform" were included in the 2022 China Association of
Refrigeration Energy-saving and Eco-friendly Product Catalog by the Chinese Association of
Refrigeration. What's more, the "Research and Application of Digital High-performance Variable
Frequency Control Technology" of Midea Building Technologies was granted the Third Prize of the 2022
Science and Technology Award of the Chinese Institute of Electronics. The "Research and Application of
MDV-Link Communication Technology" and the "Sealing and Heat Management of IP55 Electric Control
Box and the Application of Its Automated Manufacturing Technology" of Midea Building Technologies
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won the First and Second Prizes of the 2022 Science and Technology Award of the Guangdong Hi-tech
Enterprise Association, respectively. The "Setting Method of the Air Gap Value for Magnetic Bearing
Compressors and Air Conditioners", a patent for invention of Midea Building Technologies, was granted
the 24th China Excellence Awards for Patents. Moreover, the "Magnetic Levitation Inverter Centrifugal
Ice Storage Dual-condition Unit" and the "R32 All DC Inverter High-efficiency Commercial Heat Pump"
won two Gold Awards and the "Air-cooled Variable Frequency Screw" won a Bronze Award at the 48th
Geneva International Inventions Exhibition. With respect to industry standardization, Midea Building
Technologies participated in the formulation or revision of multiple national standards, industry standards,
and group standards, including the national standards of the Water-source High Temperature Heat
Pumps Using The Vapor Compression Cycle and the Chiller (Heat Pump) Units for Energy Storage
Batteries, the industry standards of the Magnetic Levitation Centrifugal Compressors with Refrigerants,
the Air Conditioning Units for Enclosed Space of Communication Base Stations, and the Technical
Specification for Field Measurement of Energy Efficiency and Energy Saving of Multi-split Air Conditioning
System, and the group standards of the Green Intelligent Multi-split Air Conditioning (Heat Pump) Units.
Additionally, Midea Building Technologies won the title, 2023 Organization with Outstanding Contribution
to Heat Pump Standardization of the China Energy Conservation Association.
H. Promoted innovation in robotic product development, accelerated integration and expansion
of the robotics business for the China market
KUKA, a subsidiary of Midea, is a world-renown robotics manufacturer. Relying on its industry-leading
movement algorithm, KUKA can ensure superior movement performance of robotics products throughout
their life cycle, and its mature design concept can continuously give birth to new products able to lead
the market. In the first half of 2023, KUKA continued to promote the innovation of various products and
technologies. In the field of general industry, KUKA launched KR CYBERTECH series of robots, which
are suitable for processing and manufacturing scenarios from grip and handling to polish, oriented to
price sensitive markets, with multiple advantages such as lower costs, higher quality, and more
comprehensive functions, and thus easier for customers of small and medium-sized enterprises to
achieve automation upgrades. Among the series, KR CYBERTECH KR 20 E robots can operate under
different working conditions, with a payload up to 20 kg and an operation distance up to 1820 mm. At the
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International Foundry Trade Fair held in Germany in 2023 (GIFA 2023), KUKA showcased KUKA
cell4_premachining manufacturing cells and KR FORTEC ultra heavy-duty robots for customisable
automation. Among them, the cell4_premachining manufacturing cells have compact modular design,
can be applied in reprocessing casting scenarios such as polish and smoothing, saw cutting, milling,
cleaning, and grinding, and can achieve finishing treatments of different materials, parts, and components
with maximum flexibility and user-friendliness. The robotic manufacturing cells include KR QUANTEC
nano robot, library milling application, powerful motor spindle, quick tool-replacing mechanism, KUKA
three-axis positioner kp3-v2v-3, etc. KR FORTEC ultra heavy-duty robots can carry a payload up to 800
kg, with the shortest cycle time of 0.36 s, can quickly and accurately manipulate large workpieces, and
can be used in such application scenarios as battery pack assembly and integrated car body die casting.
At the Leading Exhibition for Smart Automation and Robotics held in Munich in 2023 (Automatica 2023),
KUKA displayed its latest version of KR QUANTEC series robots. Compared with traditional products,
the series of products can save energy consumption up to 60%, with a payload up to 300 kg and an
operation distance up to 3904 mm, and can be applied in many market segments such as automobile,
casting, and medicine, with such advantages as excellent performance, economy, and flexibility. In the
field of human-robot collaboration, KUKA demonstrated its product mix of LBR iisy collaborative robot
and the new version of operating system iiQKA.OS, and also showcased such products as KMR iisy
mobile collaborative robot. Among the products, LBR iisy is a sensitive, precise, and easy-to-operate
collaborative robot. Its edgeless arm design allows personnel and collaborative robots to work safely side
by side, and all joints are equipped with integrated torque sensors that can instantly detect the slightest
touch. Featuring an ergonomic product design, and being easy to operate, solid and durable, LBR iisy
can carry a payload of 3-15 kg. In comparison, KMR iisy mobile collaborative robot is a mix of collaborative
robot and transport platform that are comprehensively integrated, comprising LBR iisy collaborative robot
with a payload of 11 or 15 kg, and KMP 1500P mobile platform bearing an additional load up to 200 kg.
Fast, safe, and mobile, KMR iisy can be applied in various scenarios such as installation, internal logistics,
and robotic service system. In the medical field, KUKA displayed at the European Robotics Forum 2023
an innovative medical product application, namely "Arthritis Ultrasound Robot", which helps physicians
to quickly diagnose patients' rheumatoid arthritis through ultrasonic imaging by using KUKA's highly
sensitive light-duty LBR Med medical collaborative robotics. Besides, at the International Conference on
Robotics and Automation held in London in 2023 (ICRA 2023), KUKA and its partners demonstrated how
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the LBR Med robotics could be applied in highly complex and sensitive medical scenarios such as brain
tumour biopsies, by simulating tumour biopsies in the real-time tracking models and enabling physicians
to place biopsy needles with the aid of the robotics. In addition, the extra flexible magnetic endoscopy
provided by Atlas Endoscopy can effectively overcome the defects of conventional colonoscopy such as
discomfort, sedation-related complications, and high variability of examination results, and this technique
also mainly applies KUKA LBR Med medical collaborative robotics to achieve operation and examination.
With respect to market development, In the first half of 2023, KUKA and Siemens Healthineers further
expanded their cooperation in such fields as minimally invasive surgery, and in the next two years, KUKA
will provide Siemens Healthineers’ angiography system with 300 robots, of which, KUKA KR QUANTEC
robots will be the core components. Since 2016, globally there have been more than 550 hospitals using
this set of medical system. KUKA also intensified its cooperation with FAW-Volkswagen, whose Foshan
plant functioning as its manufacturing base in southern China, capable of producing 300,000 sets of
battery packs annually, has applied approximately 100 KUKA Robotics in multiple manufacturing links of
battery pack product lines such as weld, bond, and assembly, involving KUKA's multiple series of robot
products such as KR QUANTEC, KR FORTEC, and KR titan.
KUKA continuously promotes the integration and expansion of resources in the Chinese market and
intensifies organizational reform and product iteration with a focus on industrial applications and key
customers. In terms of market, In the first half of 2023, KUKA China once again reached a record high in
production capacity and shipping volume, gradually improved its efficiency of operations, steadily boosted
its profitability, and continued to intensify its cooperation with leading customers in the new energy sector,
such as BYD, Tesla, FAW-Volkswagen, NIO, and CATL, by offering integrated solutions to manufacturing
of mainstream finished new energy vehicles. Meanwhile, KUKA China increased its input of resources
for the post sales service team, so as to continuously boost its quality of post sales service, and increase
customer satisfaction and customer royalty. Regarding products, KUKA China unveiled its multiple
products such as KR3 DELTA-SDR, KR20 SCARA R800/1000/1200, and KR20 R1810 Edition, and thus
has further perfected its product matrix oriented to consumer electronics industry. Meanwhile, KUKA
China proactively made the overall arrangement of the technologies related to its parts and components,
and have made substantive breakthroughs in manufacturing on its own the core parts and components
of such products as KR SCARA robots and KR C5 control cabinet. In the sector of logistic automation,
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KUKA China launched in the first half of the year such products as KMP 400P, KMP 600P-C-U, and
UniStore, achieving market breakthroughs in such industries as chemical engineering and liquor and
spirits. With respect to capacity and supply chain, in May 2023, the second phase of Midea KUKA
Intelligent Manufacturing Science and Technology Park (Shunde, Guangdong) fully went into operation,
with the planned annual capacity of 100,000 robots at most, and will comprehensively promote the
localization of robot supply, and support manufacturing automation and digital transformation. Additionally,
the park proactively introduced upstream suppliers in the industrial chain to improve the layout of the
industrial chain, with many enterprises in the industrial chain stationed in the park at present, covering
the supply of the core parts and components of many models of robots. Furthermore, officially put into
use in 2023, KUKA East China Manufacturing Base (Kunshan, Suzhou) has gathered the three major
business segments of KUKA industrial automation, Swisslog Logistics, and Swisslog Healthcare,
extending the product range to such products as stackers of Swisslog Logistics, AGV robots, and
pneumatic logistic transfer system of Swisslog Healthcare. In terms R&D, In the first half of 2023, the
patented technology independently developed by KUKA China, namely the "control method, device,
computer equipment and storage media for robotics motion", had the honour to win the 24th China Patent
Excellence Award. Besides, KUKA China, with its KR CYBERTECH nano ARC HW Edition arc welding
robotics, had the honour to win the "2023 Ringier Technology Innovation Awards for Metal Processing
Industry". In addition, the KUKA Robotics has been successfully listed into the fifth batch of provincial
industrial design centres by the Department of Industry and Information Technology of Guangdong
Province. Furthermore, KUKA also proactively assisted Midea Group in boosting its intelligent
manufacturing. By June 2023, the robot density of Midea reached 550 units per 10,000 persons, and
Midea Group will further increase its input to boost its intelligent manufacturing capacity.
I. Deepened the long-term incentive and protected the interests of shareholders
In the first half of 2023, Midea continued to encourage the core management to take responsibility for the
Company’s long-term development and growth by further enhancing its long-term incentive schemes.
Midea has launched nine stock option incentive schemes, seven restricted share incentive schemes,
eight global partner stock ownership schemes, five business partner stock ownership schemes and the
2023 stock ownership scheme, which have helped, in a more effective manner, to align the long-term
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interests of senior management and core business backbones with that of all shareholders. Midea Group
protects its shareholders’ interests by ensuring a consistent dividend policy. It shares its growth with
shareholders by putting forward cash dividend plans with a total amount of more than RMB86 billion since
the Group’s listing in 2013. In addition to the consistent dividend payouts, the Company has carried out
a string of share repurchase plans. To further stabilize the market capitalization and protect the
shareholders’ interests, the Company has launched share repurchase plans for four consecutive years
since 2019. And the repurchased shares would be used for equity incentive schemes and employee stock
ownership schemes.
3. Core Competitiveness Analysis
A. As one of the leaders among the global household appliance makers and a dominator in the
major appliance sectors, Midea Group provides high-quality, one-stop home solutions through its
wide product range.
As a home appliance and HVAC system manufacturer with a complete industrial chain and
comprehensive product offerings, Midea Group has developed a complete industrial chain combining
R&D, manufacturing and sales of core components and finished products, supported by an industry-
leading R&D center and manufacturing technologies of core components (such as compressors,
electrical controls, magnetrons and controllers), and ultimately based on its powerful capabilities in
logistics and services. Midea owns top brands of household appliance and HVAC in China. Its dominance
in the major appliance and HVAC markets means that it can provide a wide range of competitive product
sets. It also means internal synergies in brand awareness, price negotiation as a whole, customer needs
research and R&D investments. Compatibility, coordination and interaction among household appliances
have become increasingly important since smart home is gaining popularity. With a full product line, Midea
has had a head start in providing a combined and compatible smart home platform with integrated home
solutions for customers.
B. Adherence to the strategy of “Technology Leadership”, global R&D resource
integration capabilities, a global innovation ecosystem and a scientist system, as well as
continuing lead in R&D and technical innovation
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Midea Group Co., Ltd. Semi-Annual Report 2023
The Group is focused on building a globally competitive R&D capability and system. It has established a
three-tier technical committee system responsible for the formulation and implementation of technology
strategies. And the four-tier R&D system has been improved with an aim to build world-leading R&D
capabilities. The interconnected technology strategies and mid- and long-term product planning serve as
two drivers of growth. Midea currently focuses on 11 technologies in a bid to make breakthroughs with
key technologies and achieve technology leadership. It has invested over RMB50 billion in R&D over the
past five years, with the investment of more than RMB12 billion in 2022. In order to deepen its global
technology ecosystem in a faster way, the Group has set up a total of 31 research centers in 10 countries.
It has over 20,000 R&D personnel. With the “2+4+N” global R&D network, it has gained the advantage
of scale in R&D across the world. Domestically, Midea Global Innovation Center in Shunde District,
Foshan City and Midea Global Innovation Center in Shanghai are the cores of Midea’s R&D arm.
Overseas, with Midea America Research Center, Midea Germany Research Center, Midea Japan
Research Center and Midea Italy Research Center as the cores, Midea makes use of the regional
technological advantages, integrates global R&D resources, and builds complementary global R&D
capabilities. Following the strategy of “Technology Leadership”, it attracts more professional talent and
builds an organic global R&D network.
Midea’s long-term focus on building technology, marketing, design, product and open innovation systems,
building a cutting-edge research system and building reserves in technology for mid/long term, has
provided a solid foundation for the Group to maintain long-term product and technological superiority.
While strengthening its global R&D network, Midea also works on constructing an open platform of
innovative ecosystems. Through deepening the implementation of technology projects to integrate quality
technological resources across the world, a global innovation system has been put in place. By way of
integrating various resources of large companies, technology companies, universities, research institutes
and innovation consulting agencies, a technology ecosystem has been put in place and continuously
expanded, which has access to enormous resources for technological innovation. Additionally, a scientist
system has been established with eight academician workstations/workshops and 19 academicians on
more than 200 cooperation projects. These projects cover green, energy-saving, health, intelligent,
robotics and automaton technologies, among others. In terms of basic research, the Group cooperates
with domestic and foreign scientific research institutions, such as Massachusetts Institute of Technology,
73
Midea Group Co., Ltd. Semi-Annual Report 2023
University of California, Berkeley, University of Illinois at Urbana-Champaign, Stanford, Purdue University,
University of Maryland, The University of Sheffield, Tsinghua University, Shanghai Jiao Tong University,
Zhejiang University, the Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong
University, Huazhong University of Science and Technology and South China University of Technology,
in order to establish joint labs for deepening technological cooperation. The Group also upgrades and
make innovations on cooperation models by carrying out strategic cooperation with tech companies such
as BASF, Honeywell, 3M, and SCHOTT to build a global innovation ecosystem through multiple channels.
C. Stronger Global Impact fueled by Midea’s continual global resource allocation and investments,
globally-advanced manufacturing capabilities and advantage of scale
The success of a series of global acquisitions and new business expansion moves has further solidified
Midea’s global operations and leading advantages in the ToB businesses. Meanwhile, the Company has
a solid foundation in the global home appliance industry, mastering core technologies of various home
appliance categories and possessing outstanding advantages in the field of core components of home
appliances. It continues to upgrade towards intelligent manufacturing on the basis of its world-leading
mass manufacturing capacity. Relying on the advanced technologies and experience of the five factories
included in the “Global Lighthouse Network”, the Company leads the way in the application and
development of intelligent manufacturing in the industrial end across the world, with a competitive edge
of efficient operation throughout the entire value chain. Meanwhile, supported by its diversified product
coverage, manufacturing bases in major overseas markets, expanding matrix of overseas own brands,
and improving overseas channel network, the Company has been able to expand rapidly into the
emerging overseas markets and is becoming a stronger competitor in those mature overseas markets.
The Group is one of the biggest manufacturers in the world for many product categories, which gives it
competitive edges in efficiency improving and cost reducing that its overseas competitors are unable to
replicate. Overseas sales of the Group accounts for more than 40% of the total sales revenue. Its products
have been exported to over 200 countries and regions, and it owns 21 overseas manufacturing bases
and 24 overseas operating agencies. Midea holds firm to the strategy of “Global Impact”. Its global
operation system has been further improved through the reform of international business entities,
accelerated talent development in international entities at the front end, improved local business entities
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Midea Group Co., Ltd. Semi-Annual Report 2023
overseas, and enhanced operational capabilities in various overseas markets. It also increases
investments in overseas business operations, focuses on the needs of local customers and enhances
product competitiveness in a bid to promote significant growth in its Own Branding & Manufacturing (OBM)
business. In addition, with a deep knowledge and understanding on product characteristics and product
demands in overseas market, Midea is promoting worldwide branding and expansion through global
collaboration and cooperation. In this way, the global competitiveness of Midea is increasing steadily.
D. A complete and broad channel network and a well-established smart supply chain system
ensuring the steady growth of Midea on the domestic market
With its continuous efforts over the years, Midea has formed a multi-channel network which has a
complete business layout and covers a wide range of areas, thus meeting the purchase needs of online
and offline consumers for household appliances. Midea continues to improve its offline business layout
around user needs, and has created a network layout of comprehensive household appliance stores,
specialty stores of self-owned products, traditional retailers and e-commerce franchise stores. It provides
easy access to Midea's products and services for individual customers, as well as professional scenario-
based solutions for corporate customers, covering the entire market from first-tier cities to townships.
Particularly, Midea boasts a unique exclusive shop system in the industry with nearly 20,000 outlets,
where various needs of users from new decoration to updates can be met in pre-decoration stores,
flagship stores, professional stores, combo stores and other stores. Midea continuously provides
industry-leading digital platform services to retail stores. It also focuses on expanding and constructing
premium brand stores for COLMO and Toshiba. Centred around "smart suite operation" and "entire-house
renovation solutions", Midea actively cooperates with home decoration, furniture, building materials, and
design channels, seeking to capture front-end traffic. The Company has built over 630 "home decoration
+ appliances" deeply integrated brand stores. Also, it continuously promotes layered operations for pre-
decoration stores, creating an integrated decoration style for home appliances and home decoration, and
providing one-stop services for users. In the first half of 2023, the retail sales on the pre-decoration market
saw a year-on-year increase of over 100%. With exclusive stores as the core, the Company builds a
“Midea Cloud Sales +” ecosystem covering markets at all tiers, establishes an exclusive store system
with core competitiveness for various markets, as well as firmly promotes and transforms the exclusive
75
Midea Group Co., Ltd. Semi-Annual Report 2023
store service, operation, and all-product retailing capabilities, among others.
Annto, a technological innovation-based provider of logistics services under Midea Group, makes full use
of digital and big data technologies to refine and manage its comprehensive logistics network. Annto
gathers data from all aspects of the logistics chain and leverages information technology to optimise
process execution, enabling seamless coordination among people, goods, vehicles, and sites. Through
intelligent management and decision-making related to orders, information, and logistics, building a smart
and digital integrated logistics service platform. Annto creates a supply chain business model that has
been successfully validated through corporate practice while focusing on industry characteristics, deeply
exploring pain points in the entire value chain, and forming a business framework and operation
management system that combines software and hardware capabilities. Annto provides systematic and
in-depth solutions for different industry clients. Annto concentrates its resources on urban and rural
distribution and is able to provide fully visualized direct distribution services covering every town and
village of the country. Relying on approximately 140 urban distribution centers nationwide, it covers more
than 99% of towns and villages across the country. It can finish the delivery to 30,739 (or over 77% of)
towns and villages within 24 hours and to 37,260 (or over 94% of) towns and villages within 48 hours in
the country. Additionally, Annto strengthens the shared inventory system for online and offline channels
and the competitive edge of integrated delivery for the ToB/ToC business, refines its network of integrated
delivery and installation services, drives connectivity through the whole process from manufacturing to
sale, provides quality service solutions for various orders from customers, as well as comprehensively
better the end user experience.
E. A user experience-oriented reform of “Comprehensive Digitalization and Comprehensive
Intellectualization” that focuses on “Digitization & Intelligence Driven” to make Midea a leader in
the IoT era
Midea has put in place and will prioritize the development of the Midea Cloud Sales commercial platform
supported by unified data and technology platforms, the IoT ecosystem platform, and the Industrial
Internet platform of “MIoT”, with an aim to become a world-leading technology group driven by digitization
& intelligence. On one hand, it promotes deep integration of the digital technology and business in the
whole value chain, with the view to becoming an icon in digitalization. On the other hand, with foresight,
76
Midea Group Co., Ltd. Semi-Annual Report 2023
it plans for whole new products, services and business models centering on smart technologies, products
and scenes, so as to outcompete Internet companies. With continual investment and research in artificial
intelligence (AI), silicon chip, sensor, big data, cloud computing and other new technologies, Midea has
built the biggest AI team in the household appliance industry, which is committed to enabling products,
machines, production processes and systems to sense, perceive, understand and judge, driven by the
combination of big data and AI, in order to reduce obstacles for man-machine interaction to the minimum
and create smart appliances without any assistance in interaction. Focusing on “people and their family”,
Midea builds a whole value chain of IoT. Breakthroughs have been made in user data protection, content
operation for smart scenes, smart connection technology, the smart home ecosystem, cloud platforms,
the smart voice function, the big data-based cloud housekeeper services, etc. By doing so, Midea is able
to offer complete smart home solutions for users, as well as to empower its business partners.
Upon years of digital transformation characterized by “One Midea, One System, One Standard”, Midea
has successfully materialized operations driven by software and data through its value chain, connecting
end to end and covering planning and R&D, Product Ordering, intelligent scheduling, flexible
manufacturing, coordinative supply, product quality tracking, logistics, installation & post-sale services,
etc. The Group’s digital platform has made come true C2M flexible manufacturing, platform-based and
modularized R&D, digitalized production techniques and simulation, intelligent logistics, digital marketing,
digital customer service, etc. By way of integrating the IoT capabilities of its AI Innovation Center, Software
Engineering Institute, IT Department, IoT Division, Smart Home Business Group, Robotics & Automation
Division, Building Technologies Division, Other Innovation Business and other organs, Midea has
established a unified IoT technology platform. Its Industrial Internet platform has been upgraded to “MIoT
2.0”, and five of its factories have been included in the “Global Lighthouse Network” initiated by the World
Economic Forum, representing Midea’s powerful technology attribute and strong intelligent manufacturing
capability. These practices are swiftly applied to other Midea manufacturing bases across the world.
Based on these “Lighthouse” factories and the “Lighthouse Network”, Midea brings the relevant
experience and services outside the Group to empower ecosystem partners and facilitate the
transformation of China’s manufacturing sector. It has provided the relevant products and services for
over 1,000 customers in more than 50 market segments. Therefore, it is safe to say that Midea has built
a solid foundation regarding Industrial Internet systems. While driving online systems and digitalization,
77
Midea Group Co., Ltd. Semi-Annual Report 2023
Midea also adopts a systematic data-based approach to governance. A whole new data platform has
been put in place to accumulate data assets, integrate online and offline business data as well as product
and service data, and provide adequate data support for all business lines.
F. Sound corporate governance mechanism and effective incentive scheme to provide a solid
foundation for Midea’s sustained and steady development
Paying close attention to the construction of a governance framework, regarding its corporate control,
centralization and decentralization systems, the Group formed a mature management system for
professional managers. The divisional system has been in operation for many years, and its performance-
oriented evaluation and incentive mechanism featuring full decentralization has become a training and
growth platform for the Group's professional managers. The Group's primary senior management team
consists of professional managers who have been trained and forged in the operational practices of Midea
Group, with an average length of service of over 15 years in the Group. They have rich management
experience and practices in the relevant industries, deep understanding and insights of the relevant
industries with respect to ToC and ToB, and accurate understanding of the industry environment and
corporate operations and management. The Company's advantages in such systems and mechanisms
have laid a solid foundation for the efficient and effective business operations, as well as the promising,
stable and sustainable future development of the Company. So far, the Company has launched nine
Stock Option Incentive Schemes, seven Restricted Share Incentive Schemes, eight Global Partner Stock
Ownership Schemes, five Business Partner Stock Ownership Schemes and the 2023 Stock Ownership
Scheme for key managerial and technical personnel at different levels, in addition to the exploration and
practices with respect to diversified stock ownership schemes of key innovative subordinates. As such, a
governance structure has been put in place that aligns the interests of senior management and core
business backbones with that of all shareholders, as well as comprises long and short-term incentives
and restrains.
4. Analysis of Main Business
Overview
See contents under the heading “2. Business Scope in the Reporting Period” above.
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Midea Group Co., Ltd. Semi-Annual Report 2023
YoY changes in key financial data:
Unit: RMB’000
YoY Change
H1 2023 H1 2022 Main reasons for change
(%)
Operating revenue 196,988,402 182,661,009 7.84%
Cost of sales 147,276,358 140,424,168 4.88%
Increased urban
Taxes and maintenance and
1,040,376 798,939 30.22%
surcharges construction tax and
education surcharge
Selling and
17,133,216 14,698,373 16.57%
distribution expenses
General and
administrative 5,670,400 4,951,069 14.53%
expenses
Research and
development 6,610,954 5,865,033 12.72%
expenses
Finance costs -1,363,661 -1,735,418 -21.42%
Decreased income from the
Investment income 410,154 607,847 -32.52% disposal of derivative
financial assets and liabilities
Changes in the fair value of
Gains/(losses) on
-103,703 -749,742 86.17% equity instrument
changes in fair value
investments
Income tax expenses 3,578,491 2,710,551 32.02% Increased before-tax profit
Net profit attributable Increased profits of non-
296,525 126,901 133.67%
to minority interests wholly-owned subsidiaries
Increased cash received from
Net cash flows from
29,784,674 21,394,710 39.22% sales of goods or rendering
operating activities
of services
Net cash flows from Increased cash paid to
-27,046,688 -6,562,852 -312.12%
investing activities acquire investments
Increased cash payments for
Net cash flows from interest expenses and
-6,437,928 5,783,043 -211.32%
financing activities distribution of dividends or
profits
Net increase in cash Decreased net cash flows
-3,571,173 20,760,688 -117.20%
and cash equivalents from investing activities
Major changes to the profit structure or sources of the Company in the Reporting Period:
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2023
No such cases in the Reporting Period.
Breakdown of operating revenue:
Unit: RMB’000
H1 2023 H1 2022
As a percentage As a percentage
YoY Change (%)
Amount of total operating Amount of total operating
revenue (%) revenue (%)
Total 196,988,402 100% 182,661,009 100% 7.84%
By business segment
Manufacturing 177,405,216 90.06% 163,263,193 89.38% 8.67%
By product category
HVAC 92,006,787 46.71% 83,236,383 45.57% 10.54%
Consumer
68,136,204 34.59% 66,334,685 36.32% 2.73%
appliances
Robotics,
automation
systems and
17,262,225 8.76% 13,692,125 7.50% 26.07%
other
manufactured
products
By geographical segment
PRC 116,452,278 59.12% 104,822,467 57.39% 11.09%
Outside PRC 80,536,124 40.88% 77,838,542 42.61% 3.47%
During the Reporting Period, the industrial technology revenue was RMB13.6 billion, up 12% year-on-
year; the building technologies revenue was RMB14.8 billion, up 21% year-on-year; and the robotics &
automation revenue was RMB15.2 billion, up 24% year-on-year.
Business segments, products or geographical segments contributing over 10% of the operating revenue
or profit
Applicable □N/A
Unit: RMB’000
YoY change YoY change YoY change
Operating Gross profit
Cost of sales of operating of cost of of gross profit
Revenue margin
revenue (%) sales (%) margin (%)
By business segment
Manufacturing 177,405,216 129,949,773 26.75% 8.66% 5.33% 2.32%
By product category
HVAC 92,006,787 70,500,436 23.37% 10.54% 7.29% 2.32%
Consumer 68,136,204 46,339,869 31.99% 2.72% -1.32% 2.78%
80
Midea Group Co., Ltd. Semi-Annual Report 2023
appliances
Robotics,
automation
systems and
17,262,225 13,109,468 24.06% 26.07% 22.51% 2.22%
other
manufactured
products
By geographical segment
PRC 116,452,278 87,499,362 24.86% 11.09% 9.23% 1.28%
Outside PRC 80,536,124 59,776,996 25.78% 3.47% -0.90% 3.28%
Under the circumstances that the statistical standards for the Company's main business data adjusted in
the Reporting Period, the Company's main business data in the recent period is calculated based on
adjusted statistical standards at the end of the Reporting Period
□Applicable N/A
Reason for any over 30% YoY movements in the data above
□Applicable N/A
5. Analysis of Non-Core Business
□Applicable N/A
6. Assets and Liabilities
6.1 Material changes of asset items
Unit: RMB’000
30 June 2023 31 December 2022
Explanation
As a As a Change in
about any
percentage of percentage of percentage
Amount Amount material
total assets total assets (%)
change
(%) (%)
Cash at bank
71,734,919 15.50% 55,270,099 13.08% 2.42%
and on hand
Accounts
36,454,972 7.88% 28,237,973 6.68% 1.20%
receivable
Contract
4,703,917 1.02% 4,498,956 1.06% -0.04%
assets
Inventories 33,693,045 7.28% 46,044,897 10.90% -3.62%
Investment
1,366,242 0.30% 809,936 0.19% 0.11%
properties
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Midea Group Co., Ltd. Semi-Annual Report 2023
Long-term
equity 4,731,210 1.02% 5,188,817 1.23% -0.21%
investments
Fixed assets 28,336,765 6.12% 26,082,992 6.17% -0.05%
Construction
5,414,509 1.17% 3,843,777 0.91% 0.26%
in progress
Right-of-use
2,687,642 0.58% 2,339,878 0.55% 0.03%
assets
Short-term
19,289,107 4.17% 5,169,480 1.22% 2.95%
borrowings
Contract
29,075,185 6.28% 27,960,038 6.62% -0.34%
liabilities
Long-term
39,030,039 8.43% 50,685,948 12.00% -3.57%
borrowings
Lease
1,767,894 0.38% 1,507,480 0.36% 0.02%
liabilities
6.2 Main assets overseas
□Applicable N/A
6.3 Assets and liabilities measured at fair value
Applicable □N/A
Unit: RMB’000
Profit or Amount
Cumulative
loss from provided
fair value Purchased
Opening change in for Sold in the Other Closing
Item change in the
balance fair value impairment period changes balance
recorded in period
during the in the
equity
period period
Financial assets
1. Financial assets held
for trading (excluding
3,284,593 288,323 - - 5,152,835 776,090 244,340 8,194,001
derivative financial
assets)
2. Derivative financial
752,451 -43,898 -71,970 - 1,335,628 194,374 -16,023 1,761,814
assets
3. Receivables
13,526,540 - - - 1,940,394 - - 15,466,934
financing
4. Other debt
17,626,302 - - - 20,000 3,138,348 338,405 14,846,359
investments and others
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Midea Group Co., Ltd. Semi-Annual Report 2023
5. Investments in other
41,359 - - - - - -67 41,292
equity instruments
6. Other non-current
10,625,244 -554,403 199,609 - 159,090 1,730,138 498,473 9,197,875
financial assets
Sub-total of financial
45,856,489 -309,978 127,639 - 8,607,947 5,838,950 1,065,128 49,508,275
assets
Investment properties
Productive living assets
Others
Sub-total of the above 45,856,489 -309,978 127,639 - 8,607,947 5,838,950 1,065,128 49,508,275
Financial liabilities 1,895,310 1,158,936 330,405 - 289,770 307,555 6,609 3,373,475
Contents of other changes
Whether there were any material changes on the measurement attributes of major assets of the Company
during the Reporting Period
□ Yes No
6.4 Restricted asset rights as of the end of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of the
Company were sealed, distrained, frozen, impawned, pledged or limited in any other way.
7. Investment Made
7.1 Total investment amount
Applicable □N/A
Total investment amount of the Total investment amount of the same
YoY Change (%)
Reporting Period (RMB’000) period of last year (RMB’000)
87,829,148 60,554,514 45.04%
7.2 Significant equity investment made in the Reporting Period
□Applicable N/A
7.3 Significant non-equity investments ongoing in the Reporting Period
□Applicable N/A
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Midea Group Co., Ltd. Semi-Annual Report 2023
7.4 Financial investments
7.4.1 Securities investments
Applicable □N/A
Unit: RMB’000
Profit or
Cumula
Mea loss from
tive fair
Type sure change Profit or Fund
Code of Abbreviat Initial Opening value Purchas Sold in Closing
of men in fair loss in Accounting ing
securitie ion of investme carrying change ed in the the carrying
secur t value the title sour
s securities nt cost amount recorde period period amount
ities met during period ce
r in
hod the
equity
period
Fair
Over Financial
valu Own
seas XIAOMI- assets
1810 769,972 e 586,342 -11,730 18,406 -11,730 593,018 fund
listed W held for
met s
stock trading
hod
Fair
Over Financial
valu Own
seas SoundHo assets
SOUN 157,203 e 51,889 81,553 4,948 81,553 138,390 fund
listed und AI held for
met s
stock trading
hod
Dom Fair
Financial
estica valu Own
assets
lly 688165 EFORT 178,534 e 274,120 172,935 -28,893 169,454 414,681 fund
held for
listed met s
trading
stock hod
Dom Fair
Other non-
estica valu Own
current
lly 688322 Orbbec 300,000 e 134,670 153,597 153,597 288,267 fund
financial
listed met s
assets
stock hod
Dom Fair
Financial Rais
estica valu
assets ed
lly 688159 Neoway 31,600 e 29,100 32,225 -21,353 41,728 49,475
held for fund
listed met
trading s
stock hod
84
Midea Group Co., Ltd. Semi-Annual Report 2023
Dom Fair
Financial Rais
estica valu
assets ed
lly 688162 JEE 88,180 e 153,353 -6,514 -6,514 146,839
held for fund
listed met
trading s
stock hod
Dom Fair
Financial Rais
estica valu
Real- assets ed
lly 301135 40,000 e 62,101 15,552 15,552 77,653
Design held for fund
listed met
trading s
stock hod
Dom Fair
Other non- Rais
estica valu
current ed
lly 688097 BOZHON 55,000 e 89,746 9,308 9,308 99,054
financial fund
listed met
assets s
stock hod
Dom Fair
Highpow Other non- Rais
estica valu
er current ed
lly 001283 20,000 e 38,030 -1,458 -1,458 36,572
Technolo financial fund
listed met
gy assets s
stock hod
1,640,48 - 1,419,35 1,843,94
Total 445,468 23,354 - -50,246 451,490 - -
9 1 9
7.4.2 Derivatives investments
Applicable □N/A
Unit: RMB’000
Closing
Gain or
amount as a
loss from Cumulative fair
Initial Purchas Sold in percentage of
change in value change Closing
Type of derivative investmen ed in the the the
fair value recorded in amount
t amount period period Company’s
during the equity
closing net
period
assets
Futures contracts 85,017 - -67,725 - - 17,292 0.0118%
-
Forex contracts 352,895 -1,320,951 -334,650 70,365 37,722 -0.8998%
1,317,003
Cross-currency
interest rate 4,276,688 -214,809 199,609 - - 4,174,908 2.8523%
swaps
Total 4,714,600 -1,535,760 -202,766 70,365 37,722 2,875,197 1.9644%
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Midea Group Co., Ltd. Semi-Annual Report 2023
Explanation of significant changes in
accounting policies and specific financial
accounting principles in respect of the No change
Company's hedges for the period as
compared to the prior period
Actual loss from derivatives investments during the Reporting Period
Actual gain/loss in the period
was RMB-1,851.791 million.
The Company's major risks during the Reporting Period included
foreign exchange risk exposures and raw material price risks. Foreign
exchange risks included foreign currency-denominated asset and
liability exposures arising from overseas sales, raw material purchases,
Results of hedges financing and other operations. And raw material price risks included
exposures to fluctuations in spot trading market prices for bulk material
purchases. These uncertainties arising from currency fluctuations were
effectively hedged against by buying derivative contracts of the same
amount and maturity but in opposite directions.
Source of derivatives investment funds All from the Company’s own funds
For the sake of eliminating the cost risk of the Company's bulk
purchases of raw materials as a result of significant fluctuations in raw
material prices, the Company not only carried out futures business for
some of the bulk materials, but also made use of bank financial
instruments and promoted forex funds business, with the purpose of
avoiding the risks of exchange and interest rate fluctuation, realizing
the preservation and appreciation of forex assets, reducing forex
liabilities, as well as achieving locked-in costs. The Company has
performed sufficient evaluation and control against derivatives
investment and position risks, details of which are described as follows:
1. Legal risk: The Company's futures business and forex funds
Risk analysis of positions held in derivatives businesses shall be conducted in compliance with laws and
during the Reporting Period and explanation regulations, with clearly covenanted responsibility and obligation
of control measures (Including but not limited relationship between the Company and the agencies.
to market risk, liquidity risk, credit risk, Control measures: The Company has designated relevant responsible
operational risk, legal risk, etc.) departments to enhance learning of laws and regulations and market
rules, conducted strict examination and verification of contracts,
defined responsibility and obligation well, and strengthened
compliance check, so as to ensure that the Company's derivatives
investment and position operations meet the requirements of the laws
and regulations and internal management system of the Company.
2. Operational risk: Imperfect internal process, staff, systems and
external issues may cause the Company to suffer from loss during the
course of its futures business and forex funds business.
Control measures: The Company has not only developed relevant
management systems that clearly defined the assignment of
responsibility and approval process for the futures business and forex
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funds business, but also established a comparatively well-developed
monitoring mechanism, aiming to effectively reduce operational risk by
strengthening risk control over the business, decision-making and
trading processes.
3. Market risk: Uncertainties caused by changes in the prices of bulk
commodity and exchange rate fluctuations in foreign exchange market
could lead to greater market risk in the futures business and forex funds
business. Meanwhile, inability to timely raise sufficient funds to
establish and maintain hedging positions in futures operations, or the
forex funds required for performance in forex funds operations being
unable to be credited into account could also result in loss and default
risks.
Control measures: The futures business and forex funds business of
the Company shall always be conducted by adhering to prudent
operation principles. For futures business, the futures transaction
volume and application have been determined strictly according to the
requirements of production & operations, and the stop-loss mechanism
has been implemented. Besides, to determine the prepared margin
amount which may be required to be supplemented, the futures risk
measuring system has been established to measure and calculate the
margin amount occupied, floating gains and losses, margin amount
available and margin amount required for intended positions. As for
forex funds business, a hierarchical management mechanism has been
implemented, whereby the operating unit which has submitted
application for funds business should conduct risk analysis on the
conditions and environment affecting operating profit and loss, evaluate
the possible greatest revenue and loss, and report the greatest
acceptable margin ratio or total margin amount, so that the Company
can update operating status of the funds business on a timely basis to
ensure proper funds arrangement before the expiry dates.
The Company carried out recognition and measurement according to
“Section VII Recognition of Fair Value” in the Accounting Standard No.
22 for Business Enterprises—Recognition and Measurement of
Financial Instruments.
Changes in market prices or fair value of Changes in the fair value of derivatives were recognized at RMB-
derivative products during the Reporting 1,738.526 million during the Reporting Period.
Period, specific methods used and relevant 1. The fair value of futures contracts was determined on the basis of
assumption and parameter settings shall be publicly quoted prices in the futures market.
disclosed for analysis of fair value of 2. The fair value of forex contracts was determined based on banks’
derivatives quoted prices for foreign exchange products.
3. The main parameter assumptions used in the analysis of the fair
value of cross-currency interest rate swaps included interest rate paid,
interest rate received, frequency of interest received, frequency of
interest paid, USD interest rate curve, EUR interest rate curve,
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USD/EUR exchange rate curve, etc.
Litigation involved (if applicable) N/A
Disclosure date of the announcement about
the board’s consent for the derivative 29 April 2023
investment (if any)
Disclosure date of the announcement about
the general meeting’s consent for the 20 May 2023
derivative investment (if any)
The Company's independent directors are of the view that the futures
hedging business is an effective instrument for the Company to
eliminate price volatility and implement risk prevention measures
through enhanced internal control, thereby improving the operation and
Special opinions expressed by independent management of the Company; the Company's foreign exchange risk
directors concerning the Company's management capability can be further improved through the forex
derivatives investment and risk control funds business, so as to maintain and increase the value of foreign
exchange assets and the abovementioned investment in derivatives
can help the Company to fully bring out its competitive advantages.
Therefore, it is practicable for the Company to carry out derivatives
investment business, and the risks are controllable.
7.5 Use of funds raised
□ Applicable N/A
No such cases in the Reporting Period.
8. Sale of Major Assets and Equity Interests
8.1 Sale of major assets
□Applicable N/A
No such cases in the Reporting Period.
8.2 Sale of major equity interests
□Applicable N/A
9. Analysis of Major Subsidiaries
Applicable □N/A
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
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(in RMB million)
Total Net Operating Operating
Net profit
Company Business Registered assets (in assets (in revenue profit (in
Company name (in RMB
type scope capital RMB RMB (in RMB RMB
million)
million) million) million) million)
Guangdong Midea
Manufacturing
Kitchen Appliances USD158.58
Subsidiary of home 25,150 11,484 8,316 1,522 1,324
Manufacturing Co., million
appliances
Ltd.
Manufacturing
Wuhu Maty Air-
of residential RMB830
Conditioning Subsidiary 12,787 4,608 8,411 1,463 1,241
air million
Equipment Co., Ltd.
conditioners
Manufacturing
GD Midea Heating &
of commercial RMB500
Ventilating Equipment Subsidiary 20,158 3,434 12,029 1,189 1,039
air million
Co., Ltd.
conditioners
Manufacturing
Guangzhou Hualing
of residential RMB640
Refrigerating Subsidiary 13,350 4,803 8,286 1,131 974
air million
Equipment Co.,ltd.
conditioners
Acquisition and disposal of subsidiaries during the Reporting Period
Applicable □N/A
The detailed information of major subsidiaries included in the consolidation scope in the current period is
set out in Notes 5 and 6. Entities newly included in the consolidation scope in the current period through
acquisition mainly include ShenZhen CLOU Electronics Co., Ltd. and its subsidiaries (referred to as
“CLOU Electronics”) (please refer to Note 5(1)), while details of those through incorporation can be found
in Note 5(2)(a). The detailed information of subsidiaries no longer included in the consolidation scope in
the current period is set out in Note 5(2)(b).
Particulars about major subsidiaries
N/A
10. Structured Entities Controlled by the Company
Applicable □N/A
As of the end of the Reporting Period, one structured entity was included in the Group’s consolidated
financial statements, which is a private-equity fund controlled by the Group. As a manager and investor
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Midea Group Co., Ltd. Semi-Annual Report 2023
of the structured entity, the Group has relevant management power in and variable returns from the entity,
and has the ability to exercise its management power to impact the returns.
11. Outlook for the Future Development of the Company
Development strategies of the Company
Midea adheres to the strategic focus of “Technology Leadership, Direct to Users, Digitization &
Intelligence Driven, and Global Impact”, focuses on “Comprehensive Digitalization and Comprehensive
Intellectualization”, and drives coordinated development of ToC and ToB businesses under the guidance
of the strategic focus. The "Second Growth Engine" has been fired up. The Company drives profitability
improvement through the enhancement of product strength and core technologies in the ToC end,
providing strategic support for the transformation of the ToB business. Also, it continues to strengthen its
globalisation capability, striving to transform from a China-based company to a global one. While
maintaining its superiority in efficiency, the Company drives growth through innovation and builds product
and technological advantages. Midea are built to grow on the back of advanced governance mechanism,
future-proof values, and managerial mindset growth. Midea will continuously improve the governance
mechanism by empowering responsibilities, rights and obligations, clarify decentralization and
authorization, constantly refine the agent mechanism, optimize the incentive and constraint system,
encourage entrepreneurship and boost organizational vitality, and establish a flat and agile organization
and optimization process. It will also adhere to the values of long-termism and altruism, truly put
employees, users, customers and partners at the center of all things, and improve the EHS governance
and ESG rating. Additionally, the Management will endeavor to achieve all-round growth both spiritually
and intellectually. Meanwhile, Midea will continue to improve the talent structure, build diverse teams that
are inclusive and collaborative, and create a simple, straightforward, flat and equal environment. In the
meantime, it will constantly improve consistency management across the Group, so as to achieve
consistent operations, corporate culture and values and philosophies, which will ensure the sustained
and steady development of the Company.
With strategic certainty, Midea is well prepared for uncertainties in the future. It firmly upgrades its
business models. In terms of the home appliance business, the key is to achieve further growth through
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business model upgrades such as DTC transformation for domestic sales and OBM transformation for
export, and to explore new approaches to continuously drive cost reduction and efficiency improvement
through the combination of the through-value-chain, no-breakpoint, seamless, and people-never-see-
people digitalisation capabilities and lean management. It is also important to insist on structural
upgrading, i.e. adjusting large structures, refining small structures, and creating new structures. The key
is to provide high-quality, differentiated products. The Company continues to invest in and improve the
"Three Generations" R&D system to increase added value and profitability of products, better support
technological research and development and structural upgrading, and continue to invest in the future in
order to achieve stable and sustained high-quality growth. In addition, Midea insists on business
upgrading. By further increasing investment in the ToB business, continuously improving product strength,
realising value chain autonomy, grasping opportunities to quickly seize market share, the Company fully
fires up the "Second Growth Engine". With the customer-oriented principle as the root of corporate
innovation and reform, the Company accelerates DTC breakthroughs. Grasping capital flow, cargo flow,
information flow and other information of the whole value chain through direct contact with
customers/users, the Company is able to deepen the implementation of an online system for policies and
visualisation of the whole order process. By doing so, it can gather retail data in real time, and acquire
first-hand information on customer needs for its reform and innovation. Further, the Company shortens
the factory-to-user process through the development of online capabilities and the further online-offline
integration, so that the products and services can be delivered to the users at the lowest cost and the
fastest speed.
Key operation points in the first half of 2023:
In the second half of 2023, based on the core strategic focus with “Technology Leadership” as the core,
Midea will continue to "refocus and return" at the strategic and operational levels, and firmly promote the
closure, discontinuation, mergers and conversion of non-core businesses. Adhering to the annual
operating principle of “Stabilize Profit & Drive Growth”, it will endeavour to achieve its annual objectives
in a steady and high-quality manner. Meanwhile, further efforts will be made to promote the
decentralisation and improvement of the governance mechanism, develop an internal entrepreneurial
group, and fully stimulate entrepreneurial spirit. Midea will strive to be the best it can be in a long season.
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The Company will look at its own problems and shortcomings in a calm and rational manner, focusing on
"efficiency, performance and results". It will continue to drive business breakthroughs, advance faster with
innovation, as well as explore new approaches, models, products and capabilities. On the product end,
the Company will continue to strengthen the product structure adjustment, the development of new
product categories and breakthroughs in weak product categories; on the channel end, efforts are being
made to promote the expansion of new markets, the use of new approaches, and the development of
new business forms such as interest-based e-commerce; and on the operation end, the Company will
insist on controlling operating risks and expenses, balancing investments and returns, driving higher
profitability and improving cash flow. Key tasks for the second half of 2023 include:
a. Based on the core strategy of “Technology Leadership”, Midea will establish a comprehensive research
organization, increase investment in digitalization and R&D, improve talent structure, carry out the task
of technology innovation, product innovation, technological innovation, business model innovation, and
process innovation, as well as build a mechanism that can support “Technology Leadership”. Midea will
resolutely increase R&D investment, build up R&D scale advantage, and continuously lay out key
technologies, cutting-edge technologies, basic technologies, digitalization and intellectualization. By
virtue of the two drivers of technology strategy and product strategy, as well as innovation mechanism
assurance of the three-tier technical committee and the four-tier R&D system, Midea will enhance the
"Three Generations" system and pool together its R&D strength. It will continue to strengthen overseas
R&D capabilities, give clear functions to overseas R&D bases, and strengthen local management of
overseas entities. Continuous efforts will be made to strengthen localized R&D capabilities in overseas
operations, increase investment in localized R&D, and leverage the advantages of localized R&D to better
serve the local markets. Also, efforts will be made to continuously drive core technology breakthroughs
in green development, energy saving, health, intelligent transformation, robotics & automation, etc. by
adopting a joint innovation model, with an aim to enhance global co-innovation strength. It will actively
respond to China’s dual-carbon strategy and carry on with its "Green Strategy", apply eco-friendly and
low-carbon technology to products by technology innovation, help to save energy and reduce emissions
in the life cycle of products, and lead the formulation of green standards in a deep manner to obtain the
national green product certification of all categories of products. To promote the rapid application of
scientific innovation through standardization, it will implement the "3+1" strategy for standardization, drive
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technological standardization for innovations in green development, energy saving, intelligent
technologies, as well as healthy, comfortable and convenient technologies, etc., and strengthen the
formulation and revision of international standards. For the purpose of making breakthroughs and building
key technology barriers in all the product categories, and promoting innovation of global products, product
structure improvement and high-end strategy, it will continue to implement the "Three Generations"
project, accelerate the application of research results, and retain the "Number One Engine" of ToC
business. In the ToB business, it will continue to promote the industrialisation of innovative technologies,
increase the research on differentiated and innovative technologies in new businesses, improve the
vertical integration of the industrial chain, and join hands with strategic partners in the development of
digital technologies, so as to drive a second growth curve. Also, it will continuously build the scientist
system, attract global research talent, vigorously introduce high-end talent, and constantly refine the R&D
network. Based on regional technology advantages, it will continue to improve the "2+4+N" R&D network,
increase the comprehensive strength of overseas R&D centers, and build an innovation mechanism for
the “Technology Leadership” strategy, so as to maintain technology leadership in a comprehensive
manner.
b. Midea will keep a high-quality development direction and stick to internal, sustained and effective
organic growth. In the process of implementing new strategies to boost new growth areas, the key for
Midea's survival in competition lies in improving operational efficiency. Therefore, Midea will optimize the
delivery cycle, enhance the inventory turnover, improve the cash cycle, and implement the shared
inventory system. Being customer-oriented, Midea will strive to be “Direct to Users” through user research,
user insight, product plan transforming and user operation. Midea will promote the T+3 business model
reform and high-performance operations in the whole value chain in every link from product planning to
after-sales service, so as to increase efficiency in the whole value chain and the data-driven efficiency.
Channel reform will be firmly pushed forward for the front-end market in pursuit of better profitability. In
order to win in competition, it is important to develop high-end products to refine the product mix.
Breakthroughs must be made in a faster manner regarding small appliances and upgrading of the major
appliance business must be accelerated, in addition to the promotion of products catering to new
consumption trends. Midea will plan for, establish and refine business middle platforms, especially data
and technology middle platforms. In the meantime, it will maintain overall consistency by sticking to “One
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Midea Group Co., Ltd. Semi-Annual Report 2023
Midea, One System, One Standard”. In face of common problems such as fluctuations in exchange rates
and prices of bulk raw materials, as well as sourcing management, Midea will firmly promote its internal
coordination and sharing mechanism and keep perfecting the relevant solutions. It will also maintain
effective investments, control non-operating expenses, increase labor productivity, improve human
resource allocation efficiency, promote lean management and provide fresh impetus for continual growth
through relentless innovation.
c. In the domestic market, based on the “Direct to Users” strategy, Midea will continue to deepen the
reform of its organizational structure, improve retail capacity, and develop user insights and back-end
capacity. Midea will also commit itself to intelligent experience terminals and user experience as part of
efforts to connect with users' preferences. In terms of channel reform, the Company will deepen marketing
changes, simplify delivery rules, strengthen retail sales, and set up a professional team with a focus on
retail capability and user operation. While organizing organizational reform, the Company will
continuously strengthen the principle of "One Midea, One System and One Standard", give full play to
collaborative advantages, and do well in result-oriented process control to achieve constant improvement
of operating efficiency. Midea, based on digital systems and tools, is investing in dedicated resources to
ensure the successful implementation of four core projects, namely "Grid-based Layout and High-quality
Store Establishment", "Store Classification and Grading Online with Layered Resource Matching",
"Product Assortment Upgrade", and "Full-Link Retail Operations". The Company aims to develop user
operation capabilities and data analysis decision-making capabilities for the retail platform, supporting
retail transformation. In the online channels, Midea is promoting the construction of a customer ecosystem,
focusing on cultivating all-category and multi-category customer shops, optimizing supply chain models,
and strengthening the capabilities of a shared inventory system, and drop-shipping services. It is also
accelerating the scale expansion of premium brands and the enhancement of online content live-
streaming marketing capabilities. Further, it will promote the new retail transformation of the customer
system, accelerate the integration of online and offline businesses, expand store and product coverage,
stabilise the supply chain system, optimise ToC retailing tools, increase the e-commerce distribution
capabilities of the offline exclusive store system, and cultivate offline live-streaming and content-based
marketing capabilities to enhance the sales conversion rate. With respect to marketing, Midea will
empower the retail end and customers through the refinement of event operations, structured product
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marketing, and standardised retail experience. With consistent online and offline branding, the Company
will strengthen the node integrated marketing capability. By integrated branding strategy, content and
advertising, it is able to strengthen the quality of content and branding effect, increase brand and product
visibility, and reach customers effectively. Meanwhile, the Company will continuously expand the base of
private domain users to enhance user satisfaction and royalty. In terms of user operation and service, the
Company will continue to, centering around the principle of "Create Value for Users" and the orientation
of user experience, improve the iteration of product design and experience of purchase services,
accelerate the establishment of a two-way channel to reach private domain users, and optimise the
membership operation capability. The Company will continue to optimise service process reconstruction,
enhance user participation in closed-loop confirmation rates, and strengthen user satisfaction in the
service process. Midea will continuously upgrade service standards, striving to make Midea's services an
industry benchmark, continuously enhancing the full-category service capabilities, pre-decoration service
capabilities, and entire-house smart professional service capabilities of suite-based service outlets, and
improving the user experience of delivery, installation, product suite and entire-house smart scenario
services. Also, it will further enhance the basic service capabilities of premium brand outlets and service
engineers, and create differentiated service programmes for premium brands. In addition, efforts will be
made to promote service-driven sales, butler-like service, product return and exchange experience
improvement and other reform programmes to provide customers with one-stop service experience. With
regard to the premium brands, Midea will insist on practices in four aspects. The first is to insist on being
retail-oriented, deepening the retail model, accumulating sales driving approaches, strengthening
customer operation, and creating multi-functional entire-house smart stores to offer immersive buyer
experience as an upgrade of the retail model. The second is to insist on building smart experience stores
for the premium brands, introducing high-quality customers, enabling a two-step home delivery service
for customers, as well as improving service and user experience. The third is to insist on promoting entire-
house solutions, deepening the solutions of "entire-house smart systems + home appliances", providing
customers with product suite solutions, and deeply integrating home appliances and smart home systems
through the launch of homegrown core terminals such as smart central control and household smart host.
Finally, Midea will insist on building retail organizations to provide customers with differentiated entire-
house smart solutions that deeply integrate smart home appliances and smart home systems, as well as
on establishing a nationwide technical service system for entire-house smart solutions to support the
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whole process from smart solution design, delivery and installation, debugging, acceptance, to after-sales
service.
d. In the overseas market, Midea will adhere to the front-end organisational system and regionalised
development as the core, accelerate the front-end infrastructure construction, build a front-end market
resource sharing platform, cultivate an international organisation and talent system, firmly invest in its
own brands, and focus on products, retail and channels. In terms of products, continuous efforts will be
made to build localised R&D and design capabilities at the front-end of each regional organisation,
accelerate product structure optimisation and new product iteration by relying on the technological
advantages of core product categories and taking into account the development trends of different
product categories in different regional markets, and build user experience centres based on smart life
scenarios, so as to provide users with a smarter and more convenient smart home experience. At the
retail end, the Company will further expand retail outlets, promote the application and iteration of
empowering tools around retail operation practices, and upgrade the infrastructure of retail outlets to
provide more convenient experience for customers. With regard to channels, actions to be taken include
developing professional channels in regional markets and reach more customers with professional
products and services, with a particular focus on the expansion of professional channels such as HVAC,
built-in appliances and engineering & installation. As for service, the Company will continue to improve
the global spare parts supply and service system by continuously expanding the service coverage of the
global spare parts centre and optimizing the supply efficiency, improve the access efficiency of the global
call centre, connect the global call centre to social media and the brands’ official websites, and promote
the application of new technologies, so as to enhance the comprehensive service capabilities in overseas
markets.
e. Midea will continue to deepen the implementation of its dual premium brands strategy, further
strengthening the dual-engine power of COLMO and Toshiba brands. The COLMO brand will keep
focusing on higher-end entire-house intelligence, catering to the deep needs of elite users, leveraging
the influence of the "Smart Villa Expert" in villa entire-house intelligence, promoting comprehensive high-
end smart living solutions, and leading the entire-house intelligence industry into the era of deep control.
Targeting the segmented high-end market, the Toshiba brand will continue to deploy multiple categories
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such as refrigerators, laundry appliances, small domestic appliances, and kitchen appliances, further
expanding scenarios in entire-house water usage, heating, and kitchen. Meanwhile, it will strengthen
brand consistency, promote multi-category suite-based products to provide a refined living experience,
upgrade brand image and build brand mindset, and deeply focus on layer marketing to strive for a dual
breakthrough in customer base and scale. WAHIN will continue to differentiate and innovate around users,
products and product accessories, build a multi-category product portfolio, and provide consumers with
smart and comfortable experience. It will maintain its focus on forward-looking young consumers,
continuously target young groups through school-enterprise cooperation, explore diversified cross-field
modes during summer graduations and job-hunting seasons, create new shopping scenarios in e-
commerce channels and on new media with more content-driven "virtual stores", and drive sales through
higher brand visibility.
f. Midea will continue to focus on driving the transformation of its core business and digital empowerment,
establishing an online operating system, and building a unified "business, system, and data" system. By
optimizing the top-level architecture, Midea will continuously strengthen the construction of its underlying
digital capabilities. In terms of domestic marketing, the Company is set to further enhance the support of
new product launches through digital capabilities, deepen the application of big data and algorithms, and
explore market opportunities with the help of different-industry data collision and algorithm optimisation.
Also, it will empower the business team with digital tools, promote digital application, continuously
optimise data quality, and improve the effectiveness of data and digital tool application. Concerning
overseas marketing, Midea is poised to enhance overseas manufacturing capabilities through digital tools,
continuously optimise overseas service capabilities, facilitate overseas branding and brand presence
enhancement, and at the same time strengthen overseas trade compliance and risk control through digital
technologies. In the ToB business, Midea will deepen business reform and data governance, improve the
business continuity operation mechanism, and support the launch of "ToB Salesmart", a digital marketing
platform. Regarding R&D, further efforts will be made to broaden and deepen the application of digital
planning in various business areas, while exploring the application of AIGC in R&D to drive transformation
towards a highly collaborative R&D model. With respect to manufacturing and the supply chain, the
Company will carry on with the integrated supply chain reform campaign, strengthen the construction of
the ISC operation and management system, promote order and production capacity visibility based on
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the customer's perspective, as well as improve the overseas KD delivery efficiency and the delivery
capability of overseas factories to increase customer satisfaction. Also, it will establish planning centres
and order centres to fully deepen the application of integrated supply chain systems and support the
efficient operation of the value chain. More measures to be taken include promoting the continuous
enrichment of the knowledge base of the knowledge management platform, capitalize on AIGC to
empower knowledge Q&A, deepen the application of intelligent logistics, and realise data
interconnectivity of terminals such as access control systems and consumption terminals of Midea’s
industrial parks. Regarding big data, Midea is set to deeply explore the domestic ToC business, the
overseas ToC business and the ToB business, focus on seven major data application areas such as
domestic home appliance retailing, content marketing and global VOC, as well as accelerate business
development through intelligent decision-making, digital tools and algorithms and other means of big data
analysis. In the meantime, it will also further develop the comprehensive digital competence of employees
and create a digital environment across the organization. In terms of digital base construction, Midea will
strengthen the shift-left measure, enhance the endogenous security capacity of the application system,
and provide assurance for safe and stable business operation. Meanwhile, it will see to the on-time
delivery of the Gui'an Midea Cloud Base, create a hybrid cloud deployment architecture featuring global
cloud-ground collaboration, fully incorporate the AIGC capability, and verify the feasibility of self-built
large models.
g. Midea aims to drive further growth in its industrial technology business, continuously expand business
boundaries, and accelerate growth. In the second half of 2023, in the field of core components for
consumer appliances, Midea will continue to enhance digitalisation and data operations, increase
investment in R&D resources, improve the processes and mechanisms of technology and platform
research, optimise the product mix, and driving profitability. Also, it will make continuous breakthroughs
in new products, technologies, and applications, providing customers with eco-friendly, efficient, and
intelligent products and technology solutions. New valve, pump and other products are launched. Valve
products are advancing towards mass production, while dishwasher integrated heat pumps and heat
pump heat circulating pumps have entered mass production. Moreover, the Company will improve
production efficiency and strengthen product cost advantages, bolster its global supply chain capabilities,
enhance global competitiveness by fully leveraging the local advantages of the factories in India and
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Thailand, aiming to establish an Industry 4.0 smart manufacturing demonstration base. Midea will create
an overseas professional service platform, offering one-stop services for small and medium-sized
customers and specialised services for large customers, achieving breakthroughs with overseas key
customers and increasing the global market share of its products. The Company continues to strengthen
the competitiveness of its chips for home appliances. A variety of MCU chip products such as master
control, touch control, and variable frequency chips have been launched to the market, and a non-
inductive FOC low-power IPM module has been developed. Relying on the advantages of the Group's
industrial chain cluster, efforts are also made to attract other major home appliance makers. Regarding
intelligent transportation, Midea will leverage its innovative advantages to achieve comprehensive
improvements in customer base, products, and manufacturing capabilities. Meanwhile, it will continuously
explore markets to attract more major customers at home and abroad, as well as expand the market
coverage of various thermal management products for different car models, so as to ensure rapid sales
growth. More efforts will be made in terms of the development of products and technologies, including
promoting the development of surface-mounted permanent magnet synchronous motors (SPM) and
interior permanent magnet synchronous motors (IPM), materialising mass production and delivery of flat-
wire drive motors, and carrying out next-generation platform, product and technology development, in
pursuit of a development path of "components-modules-systems". In addition, the Company’s efforts will
continue to improve manufacturing capability. It will complete the production ramp-up for electric power
steering (EPS) motors, and advance the construction planning for overseas component factories to
achieve a continuous increase in production capacity. In terms of industrial automation, Midea will further
consolidate its technological expertise in motion control, adapt to market conditions and competitive
strategies, utilise its technological advantages, carry out differentiated research and development, and
provide new products and comprehensive system solutions targeting specific needs in key sub-markets
such as lithium batteries, photovoltaics, semiconductors, robotics, and laser processing. New high-
performance rotary and linear servo drive products, encoders and automated optical inspection (AIO)
products will be launched in the second half of 2023. The Company will also put a number of harmonic
reducer products into production and send testing samples to a number of major customers in the robotics
industry, which has further improved the product portfolio. Swift actions will be taken to reform the
marketing model, expand new channel resources, and explore business opportunities in accordance with
the strategy of "maintain the existing customer base, seize business opportunities, and attract new
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customers". The Company will strengthen the flexible manufacturing capability, improve product delivery
efficiency, improve the entire quality control system through the digitalised information system, complete
the construction of the test centre, and upgrade testing means for production lines. With respect to green
energy, CLOU Electronics will promote internal business integration, explore non-power-grid markets
based on the power grid market, expand the new energy market, work on the overseas market and
overseas localisation, and focus on the large-scale energy storage and industrial and commercial energy
storage markets in Europe. It will continue to promote localised solutions, platform-based R&D, and
product technique optimisation, as well as to accelerate the development and certification of new products
overseas, while leveraging Midea Group's supply chain resources to achieve synergistic integration and
continue to promote cost reduction and efficiency gains. Also, it will increase investment to enhance the
intelligent manufacturing capability, further layout of energy storage capacity, and strive to build a
“Lighthouse” factory in the energy storage industry. And it will optimise the inventory management
capability and improve the quality of operation and management.
h. Media will accelerate project collaboration between the China team and overseas teams, fully
leveraging the advantages of global R&D synergy and Chinese manufacturing capabilities, in order to
enhance KUKA's global operational efficiency. In terms of R&D, Midea will beef up KUKA’s localized
operations and resource integration in China, increase investment in the development and application of
robotics, foster R&D innovation of core components and software systems, as well as accelerate the
promotion and application of new products. In terms of marketing, Midea will take active steps to explore
new areas including new energy, general industrial manufacturing, electronics, medical care and logistics,
services, etc. Meanwhile, it will strengthen resource investment in the technical service team to meet
customer needs with fast and efficient response and competitive system solutions. Concerning operation,
it will concentrate on R&D, supply chain management, high-performance operations and digitalization,
among others, so as to build the core competitiveness of the robotics and industrial automation business
in a faster manner.
i. Midea will adhere to the value positioning of production logistics, deeply explore the two areas of lean
logistics and digital empowerment, strengthen HUB warehouse sharing and route development, promote
the integrated model of reused packaging and transport package, link to more upstream component
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Midea Group Co., Ltd. Semi-Annual Report 2023
suppliers with the help of digital service products, and build a digital collaboration platform for production
logistics, so as to continuously promote the integration of the manufacturing industry and the service
sector. Also, it will continue to deepen the warehouse and distribution B/C integrated business, release
more operational vitality through deep mechanism change, and actively explore new business models to
provide services for more customers.
Risks Faced by the Company and Countermeasures:
a. Risk of macro economy fluctuation
The market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,
among other products, can be easily affected by the economic situation and macro control. If the global
economy encounters a heavy hit and consumer demand slows down in growth, the growth of the
industries in which the Company operates, may slow down accordingly, and as a result, this may affect
the product sales of Midea Group.
b. Risks in the fluctuation of production factors
The raw materials required by Midea Group to manufacture its consumer appliances and core
components primarily include different grades of copper, steel, plastics and aluminum. At present, the
household appliance manufacturing sector belongs to a labor intensive industry. If the price of raw
materials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,
electricity, and land) caused by a change to the macroeconomic environment and policy change, or the
cost reduction resulted from lean production and improved efficiency, as well as the sale prices of end
products cannot offset the total effects of cost fluctuations, the Company’s business will be influenced to
some degree.
c. Risk in global asset allocation and overseas market expansion
Internationalization and global operations is a long-term strategic goal of the Company. The Company
has built joint-venture manufacturing bases in many countries around the world. Progress has been made
day by day regarding the Company’s overseas operations and new business expansion. However, its
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Midea Group Co., Ltd. Semi-Annual Report 2023
efforts in global resource integration may not be able to produce expected synergies; and in overseas
market expansion, there are still unpredictable risks such as local political and economic situations,
significant changes in law and regulation systems, and sharp increases in production costs.
d. Risk in foreign exchange losses caused by exchange rate fluctuation
As Midea carries on with its overseas expansion plan, its overseas sales have accounted for more than
40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative effects on
the overseas operations of the Company, but could also lead to exchange losses and increase its finance
costs.
e. Market risks brought by trade frictions and tariff barriers
Due to the rise of anti-globalization and trade protectionism, China will see more uncertainties in export
in 2023. The trade barriers and frictions of some major markets will affect the export business in the short
run, as well as marketing planning and investment in the medium and long run. Political and compliance
risks are rising in international trade. These can mainly be seen on compulsory safety certificates,
international standards and requirements, and product quality and management systems certification,
energy-saving requirements, the call for increasingly strict environmental protection requirements, as well
as with rigorous requirements for recycling household appliances waste. Trade frictions caused by anti-
dumping measures implemented by some countries and regions aggravate the burden in costs and
expenses for household appliance enterprises, and have brought about new challenges to market
planning and business expansion for enterprises.
In face of the complicated and changeable environment and risks at home and abroad, Midea will strictly
follow the Company Law, the Securities Law, the CSRC regulations and other applicable rules, keep
improving its governance structure for better compliance, and reinforce its internal control system so as
to effectively prevent and control various risks and ensure its sustained, steady and healthy development.
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Section IV Corporate Governance
1. Annual and Extraordinary General Meetings of Shareholders Convened during the
Reporting Period
1.1 General meetings of shareholders convened during the Reporting Period
Investor Resolution of the
Meeting Type Convened date Disclosure date
participation ratio meeting
Announcement No.
2023-001 on
First
Resolutions of First
Extraordinary
Extraordinary
General Meeting Extraordinary 56.99% 6 January 2023 7 January 2023
General Meeting of
of Shareholders
Shareholders of
of 2023
2023, disclosed on
www.cninfo.com.cn
Announcement No.
2023-026 on
Resolutions of
2022 Annual
2022 Annual
General Meeting Annual 57.71% 19 May 2023 20 May 2023
General Meeting of
of Shareholders
Shareholders,
disclosed on
www.cninfo.com.cn
1.2 Extraordinary general meetings of shareholders convened at the request of preference
shareholders with resumed voting rights
□ Applicable N/A
2. Changes in Directors, Supervisors and Senior Management
□ Applicable N/A
The Company’s directors, supervisors and senior management remained unchanged during the
Reporting Period. For their information, see the 2022 Annual Report.
3. Preliminary Plan for Profit Distribution and Converting Capital Reserves into Share
Capital for the Reporting Period
□ Applicable N/A
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The Company plans not to distribute cash dividends or bonus shares or convert capital reserves into
share capital for the first half of 2022.
4. Implementation of any Equity Incentive Scheme, Employee Stock Ownership
Scheme or Other Incentive Measures for Employees
Applicable □N/A
4.1 Equity incentive schemes
A. Overview of the Fifth Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options in the First Grant under the Fifth Stock
Option Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors
on 20 June 2023. As such, 79,180 stock options of 21 awardees that had been unexercised upon expiry
were retired.
b. At the above-mentioned meeting, the Proposal for the Retirement of Unexercised Reserved Stock
Options under the Fifth Stock Option Incentive Scheme upon Expiry was approved. As such, 38,500 stock
options of four awardees that had been unexercised upon expiry were retired.
c. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. As the 2022 Annual Profit Distribution Plan had been carried
out, the exercise price for the first grant under the Fifth Stock Option Incentive Scheme was revised from
RMB50.21 to RMB47.71 per share, and the exercise price for the reserved stock options under the Fifth
Stock Option Incentive Scheme was revised from RMB41.04 to RMB38.54 per share.
d. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. It was agreed to adjust the awardees and their exercisable stock options under the Fifth Stock
Option Incentive Scheme due to the resignation, reassignment, substandard individual or business unit
performance, violation of the Company’s “Red Lines” or other factors of some awardees. Upon the
adjustments, the number of locked-up stock options under the Fifth Stock Option Incentive Scheme was
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reduced from 9,195,000 to 7,325,333.
e. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Fourth Exercise Period for the First Grant under the Fifth Stock Option Incentive Scheme was approved.
As the exercise conditions have been satisfied for the fourth exercise period for the first grant under the
Fifth Stock Option Incentive Scheme, a total of 801 awardees who are eligible for the Fifth Stock Option
Incentive Scheme have been allowed to exercise 7,325,333 stock options in the fourth exercise period
(ended 6 May 2024).
f. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the First Grant under the Fifth Stock Option Incentive Scheme was
approved. It was agreed to adjust the awardee list and their exercisable stock options for the reserved
stock options under the Fifth Stock Option Incentive Scheme due to the resignation, substandard
individual performance, or other factors of some awardees. Upon the adjustments, the number of locked-
up reserved stock options granted to them under the Fifth Stock Option Incentive Scheme was reduced
from 1,890,000 to 1,740,000.
g. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Third Exercise Period for the Reserved Stock Options under the Fifth Stock Option Incentive Scheme
was approved. As the exercise conditions have been satisfied for the third exercise period for the reserved
stock options under the Fifth Stock Option Incentive Scheme, a total of 61 awardees who are eligible for
the Fifth Stock Option Incentive Scheme have been allowed to exercise 860,000 stock options in the third
exercise period (ended 8 March 2024).
During the Reporting Period, 7,111,550 shares were exercised with respect to the first grant under the
Fifth Stock Option Incentive Scheme.
During the Reporting Period, 597,000 shares were exercised with respect to the reserved stock options
under the Fifth Stock Option Incentive Scheme.
B. Overview of the Sixth Stock Option Incentive Scheme
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a. The Proposal for the Retirement of Unexercised Stock Options under the Sixth Stock Option Incentive
Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023.
As such, 40,591 stock options of seven awardees that had been unexercised upon expiry were retired.
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. According to the arrangements in the 2022 Annual Profit
Distribution, the exercise price for the Sixth Stock Option Incentive Scheme was revised from RMB48.04
to RMB45.54 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Sixth Stock Option Incentive Scheme was approved. It was agreed to
adjust the awardee list and their exercisable stock options under the Sixth Stock Option Incentive Scheme
due to the resignation, reassignment, substandard individual/business unit performance or other factors
of some awardees. Upon the adjustments, the number of locked-up stock options granted to them under
the Sixth Stock Option Incentive Scheme was reduced from 18,570,000 to 15,830,667.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Third Exercise Period for the Sixth Stock Option Incentive Scheme was approved. As the exercise
conditions have been satisfied for the third exercise period for the Sixth Stock Option Incentive Scheme,
a total of 762 awardees who are eligible for the Sixth Stock Option Incentive Scheme have been allowed
to exercise 7,339,417 stock options in the third exercise period (ended 29 May 2024).
During the Reporting Period, 6,729,532 shares were exercised under the Sixth Stock Option Incentive
Scheme.
C. Overview of the Seventh Stock Option Incentive Scheme
a. The Proposal for the Retirement of Unexercised Stock Options under the Seventh Stock Option
Incentive Scheme upon Expiry was approved at the 16th Meeting of the Fourth Board of Directors on 20
June 2023. As such, 55,200 stock options of three awardees that had been unexercised upon expiry were
retired.
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Midea Group Co., Ltd. Semi-Annual Report 2023
b. At the above-mentioned meeting, the Proposal for the Adjustment to the Exercise Prices for the Stock
Option Incentive Scheme was approved. According to the arrangements of the 2022 Annual Profit
Distribution, the exercise price for the Seventh Stock Option Incentive Scheme was revised from
RMB47.19 to RMB44.69 per share.
c. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Seventh Stock Option Incentive Scheme was approved. It was agreed
to adjust the number of locked-up stock options granted to the awardees under the Seventh Stock Option
Incentive Scheme from 28,680,000 to 20,867,916 due to the resignation, substandard business unit
performance, substandard individual performance, reassignment or other factors of these awardees.
d. At the above-mentioned meeting, the Proposal for Matters Related to the Stock Option Exercise for the
Third Exercise Period for the Seventh Stock Option Incentive Scheme was approved. As the exercise
conditions have been satisfied for the third exercise period for the Seventh Stock Option Incentive
Scheme, a total of 1,047 awardees who are eligible for the Seventh Stock Option Incentive Scheme have
been allowed to exercise 20,867,916 stock options in the third exercise period (ended 4 June 2024).
During the Reporting Period, 12,927,840 shares were exercised under the Seventh Stock Option
Incentive Scheme.
D. Overview of the Eighth Stock Option Incentive Scheme
a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes was
approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. According to the
arrangements in the 2022 Annual Profit Distribution, the exercise price for the Eighth Stock Option
Incentive Scheme was revised from RMB79.74 to RMB77.24 per share.
b. At the above-mentioned meeting, the Proposal for the Adjustments to the Awardees and Their
Exercisable Stock Options for the Eighth Stock Option Incentive Scheme was approved. It was agreed
to adjust the awardee list and their exercisable stock options under the Eighth Stock Option Incentive
Scheme due to the resignation, substandard company performance, violation of the Company’s “Red
Lines” or other factors of some awardees. Upon the adjustments, the number of locked-up stock options
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Midea Group Co., Ltd. Semi-Annual Report 2023
granted to them under the Eighth Stock Option Incentive Scheme was reduced from 81,740,000 to
45,785,250.
E. Overview of the Ninth Stock Option Incentive Scheme
a. The Proposal for the Adjustments to the Exercise Prices for the Stock Option Incentive Schemes was
approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. According to the
arrangements in the 2022 Annual Profit Distribution, the exercise price for the Ninth Stock Option
Incentive Scheme was revised from RMB54.61 to RMB52.11 per share.
F. Overview of the 2018 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018
Restricted Share Incentive Scheme was approved at the First Extraordinary General Meeting of
Shareholders of 2023 on 6 January 2023. As such, it was agreed to repurchase and retire 218,958
restricted shares that had been granted to 14 awardees but were still in lockup due to the resignation,
reassignment, violation of the Company’s “Red Lines” or other factors of these awardees. The retirement
of the said restricted shares was completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. According
to the 2022 Annual Profit Distribution Plan, the repurchase prices for the first grant under the 2018
Restricted Share Incentive Scheme was revised from RMB21.44 to RMB18.94 per share, and the
repurchase price for the reserved restricted shares under the 2018 Restricted Share Incentive Scheme
from RMB17.46 to RMB14.96 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2018 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 233,146 restricted shares that had been granted to 29 awardees but were still in
lockup due to the resignation, reassignment, substandard 2022 individual/business unit performance or
other factors of these awardees.
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Midea Group Co., Ltd. Semi-Annual Report 2023
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Fourth
Unlocking Period for the First Grant under the 2018 Restricted Share Incentive Scheme was approved.
A total of 172 awardees were eligible for this unlocking, with 2,566,396 restricted shares (0.0365% of the
Company’s total existing share capital) unlocked for public trading, of which 25,000 shares, 25,000 shares,
25,000 shares, and 20,000 shares were unlocked for senior management Guan Jinwei, Zhang Xiaoyi,
Hu Ziqiang, and Zhong Zheng, respectively.
e. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the Reserved Restricted Shares under the 2018 Restricted Share Incentive Scheme
was approved. A total of 18 awardees were eligible for this unlocking, with 324,167 restricted shares
(0.0046% of the Company’s total existing share capital) unlocked for public trading, of which 25,000
shares were unlocked for senior management Zhao Wenxin.
G. Overview of the 2019 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019
Restricted Share Incentive Scheme was approved at the First Extraordinary General Meeting of
Shareholders of 2023 on 6 January 2023. As such, it was agreed to repurchase and retire 431,250
restricted shares that had been granted to 14 awardees but were still in lockup due to the resignation,
reassignment or other factors of these awardees. The retirement of the said restricted shares was
completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. According
to the 2022 Annual Profit Distribution Plan, the repurchase price for the granted restricted shares under
the 2019 Restricted Share Incentive Scheme was revised from RMB20.96 to RMB18.46 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2019 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 694,532 restricted shares that had been granted to 62 awardees but were still in
lockup due to the resignation, reassignment, substandard 2022 individual or business unit performance
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Midea Group Co., Ltd. Semi-Annual Report 2023
or other factors of these awardees. Also, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the 2019 Restricted Share Incentive Scheme was approved. A total of 308 awardees
were eligible for this unlocking, with 4,897,510 restricted shares unlocked for public trading, of which
30,000 shares, 25,000 shares and 25,000 shares were unlocked for senior management Wang Jinliang,
Zhao Wenxin, and Guan Jinwei, respectively.
H. Overview of the 2020 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2020
Restricted Share Incentive Scheme was approved at the First Extraordinary General Meeting of
Shareholders of 2023 on 6 January 2023. As such, it was agreed to repurchase and retire 753,209
restricted shares that had been granted to 25 awardees but were still in lockup due to the resignation,
reassignment, violation of the Company’s “Red Lines” or other factors of these awardees. The retirement
of the said restricted shares was completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. As the
2022 Annual Profit Distribution Plan had been carried out, the repurchase price for the restricted shares
granted under the 2020 Restricted Share Incentive Scheme was revised from RMB21.18 to RMB18.68
per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2020 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 2,939,626 restricted shares that had been granted to 316 awardees but were still
in lockup due to the resignation, reassignment, substandard 2022 individual/business unit performance
and other factors of these awardees.
d. At the above-mentioned meeting, the Proposal on the Satisfaction of the Conditions for the Third
Unlocking Period for the 2020 Restricted Share Incentive Scheme was approved. A total of 394 awardees
were eligible for this unlocking, with 10,851,082 restricted shares unlocked for public trading, of which
48,000 shares, 48,000 shares and 40,000 shares were unlocked for senior management Wang Jinliang,
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Midea Group Co., Ltd. Semi-Annual Report 2023
Zhao Wenxin, and Li Guolin, respectively.
I. Overview of the 2021 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2021
Restricted Share Incentive Scheme was approved at the First Extraordinary General Meeting of
Shareholders of 2023 on 6 January 2023. As such, it was agreed to repurchase and retire 824,500
restricted shares that had been granted to 18 awardees but were still in lockup due to the resignation,
reassignment or other factors of these awardees. The retirement of the said restricted shares was
completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. As the
2022 Annual Profit Distribution Plan had been carried out, the repurchase price for the 2021 Restricted
Share Incentive Scheme was revised from RMB38.25 to RMB35.75 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2021 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 2,576,500 restricted shares that had been granted to 112 awardees but were still
in lockup due to the resignation, reassignment, substandard 2022 company performance or other factors
of these awardees.
J. Overview of the 2022 Restricted Share Incentive Scheme
a. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2022
Restricted Share Incentive Scheme was approved at the First Extraordinary General Meeting of
Shareholders of 2023 on 6 January 2023. As such, it was agreed to repurchase and retire 270,000
restricted shares that had been granted to 10 awardees but were still in lockup due to the resignation,
reassignment or other factors of these awardees. The retirement of the said restricted shares was
completed on 18 April 2023.
b. The Proposal for the Adjustments to the Repurchase Prices for the Restricted Share Incentive
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Midea Group Co., Ltd. Semi-Annual Report 2023
Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023. As the
2022 Annual Profit Distribution Plan had been carried out, the repurchase price for the 2022 Restricted
Share Incentive Scheme was revised from RMB26.47 to RMB23.97 per share.
c. At the above-mentioned meeting, the Proposal on the Repurchase and Retirement of Certain Incentive
Shares under the 2022 Restricted Share Incentive Scheme was approved. As such, it was agreed to
repurchase and retire 1,052,500 restricted shares that had been granted to 24 awardees but were still in
lockup due to the resignation, reassignment or other factors of these awardees.
K. Overview of the 2022 Restricted Share Incentive Scheme
a. The 2023 Restricted Share Incentive Scheme (Draft) and its Abstract was approved at the 15th Meeting
of the Fourth Board of Directors on 27 April 2023. And the awardee list for the 2023 Restricted Share
Incentive Scheme (Draft) was reviewed at the Ninth Meeting of the Fourth Supervisory Committee.
b. The Company convened the 2022 Annual General Meeting of Shareholders on 19 May 2023, at which
the following proposals in relation to the 2023 Restricted Share Incentive Scheme were approved: the
Proposal on the 2023 Restricted Share Incentive Scheme (Draft) and its Abstract, the Proposal on the
Formulation of the Implementation and Appraisal Measures for the 2023 Restricted Share Incentive
Scheme, and the Proposal on the Request to the General Meeting of Shareholders for Authorizing the
Board of Directors to Handle Matters in Relation to the 2023 Restricted Share Incentive Scheme, etc.
c. The Proposal for the Adjustments to the Repurchase Price and the Grant Price for the Restricted Share
Incentive Schemes was approved at the 16th Meeting of the Fourth Board of Directors on 20 June 2023.
According to the 2022 Annual Profit Distribution Plan, the grant price was revised from RMB28.39 to
RMB25.89 per share.
d. On 14 July, the Company granted 18,325,000 restricted shares to 415 awardees with the grant price
being RMB25.89 per share.
4.2 Employee stock ownership schemes
Applicable □N/A
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Midea Group Co., Ltd. Semi-Annual Report 2023
Outstanding employee stock ownership schemes during the Reporting Period
As a percentage
Number of
Scope of employees Total shares held Change of the Company’s Funding source
employees
total share capital
Employees under the
Fourth Global Partner Special fund for the
20 3,318,540 N/A 0.0474%
Stock Ownership scheme
Scheme
Employees under the Special fund for the
First Business Partner scheme and part of the
50 1,779,300 N/A 0.0254%
Stock Ownership performance bonuses for
Scheme senior management
Employees under the
Fifth Global Partner Special fund for the
16 3,732,075 N/A 0.0533%
Stock Ownership scheme
Scheme
Employees under the Special fund for the
Second Business scheme and part of the
45 1,867,845 N/A 0.0267%
Partner Stock performance bonuses for
Ownership Scheme senior management
Employees under the
Sixth Global Partner Special fund for the
17 3,537,663 N/A 0.0506%
Stock Ownership scheme
Scheme
Employees under the Special fund for the
Third Business scheme and part of the
46 1,873,559 N/A 0.0268%
Partner Stock performance bonuses for
Ownership Scheme senior management
Employees under the
Seventh Global Special fund for the
15 2,436,518 N/A 0.0348%
Partner Stock scheme
Ownership Scheme
Employees under the Special fund for the
Fourth Business scheme and part of the
44 1,985,611 N/A 0.0284%
Partner Stock performance bonuses for
Ownership Scheme senior management
Employees under the
Eighth Global Partner Special fund for the
15 3,770,433 N/A 0.0539%
Stock Ownership scheme
Scheme
Special fund for the
Employees under the
55 2,826,759 N/A 0.0404% scheme and part of the
Fifth Business Partner
performance bonuses for
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Midea Group Co., Ltd. Semi-Annual Report 2023
Stock Ownership senior management
Scheme
Shares held by directors, supervisors and senior management under employee stock ownership schemes
during the Reporting Period
Shares held at the As a percentage of the
Shares held at the end
Name Office title beginning of the Company’s total share
of the Reporting Period
Reporting Period capital
Chairman of the Board
Fang Hongbo
and CEO
Director and Vice
Gu Yanmin
President
Director and Vice
Wang Jianguo
President
Zhang Xiaoyi Vice President
Hu Ziqiang Vice President
Wang Jinliang Vice President
7,328,039 2,237,754 0.0319%
Li Guolin Vice President
Fu Yongjun Vice President
Guan Jinwei Vice President
Bai Lin Vice President
Vice President, CFO
Zhong Zheng and Director of
Finance
Zhao Wenxin Chief People Officer
Jiang Peng Board Secretary
Change of asset management organizations during the Reporting Period
□Applicable N/A
Equity changes incurred by disposal of shares by holders, etc. during the Reporting Period
□Applicable N/A
Exercise of shareholder rights during the Reporting Period
During the Reporting Period, holders under employee stock ownership schemes exercised the
shareholder rights to receive the cash dividends for 2022. Other than that, they did not exercise other
shareholder rights such as voting in a meeting of shareholders.
Other information about employee stock ownership schemes during the Reporting Period
□Applicable N/A
Changes in members of the management committees for employee stock ownership schemes
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Midea Group Co., Ltd. Semi-Annual Report 2023
□Applicable N/A
Financial impact of employee stock ownership schemes on the Company during the Reporting Period
and the relevant accounting treatments
Applicable □N/A
As per the Accounting Standard No. 11 for Business Enterprises—Share-based Payments, for equity-
settled share-based payments in exchange for services from employee that are exercisable when
services in the vesting period are completed or specified performance conditions are met, at every
balance sheet date during the vesting period, the services obtained in the current period are included in
the relevant costs/expenses and capital surplus at the fair value of the equity instruments at the grant
date based on the best estimate of the number of exercisable equity instruments. The expense
amortization of the Company’s share-based payment incentive schemes stood at RMB125.79 million for
the first half of 2023, which was included in the relevant expense items and capital surplus.
Termination of employee stock ownership schemes during the Reporting Period
Applicable □N/A
During the Reporting Period, the 3,318,540 shares, 3,732,075 shares, 1,779,300 shares and 1,867,845
shares respectively under the Fourth and Fifth Global Partner Stock Ownership Schemes as well as the
First and Second Business Partner Stock Ownership Schemes were sold by way of centralized bidding
upon the expiry of the respective lock-up periods. According to the relevant provisions in the Fourth Global
Partner Stock Ownership Scheme (Draft), the Fifth Global Partner Stock Ownership Scheme (Draft), the
First Business Partner Stock Ownership Scheme (Draft), and the Second Business Partner Stock
Ownership Scheme (Draft), the implementation of these schemes has been completed, which will be
followed by the liquidation and distribution of assets. The proceeds to which the holders of the schemes
are entitled will be distributed to the holders in proportion to the number of underlying shares vested in
the holders, less relevant taxes.
4.3 Other incentive measures for employees
□Applicable N/A
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Section V Environmental and Social Responsibility
1. Major Environmental Issues
Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities
Yes □ No
Policies and industry standards for environmental protection
The Company has attached great importance to environmental protection. It has been strictly abiding by the Law of the People's Republic of China on
Environmental Protection, the Law of the People's Republic of China on Water Pollution Prevention and Control, the Law of the People's Republic of
China on Air Pollution Prevention and Control, the Law of the People's Republic of China on Noise Pollution Prevention and Control, the Law of the
People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes, the Law of the People's Republic of China on
Environmental Impact Assessment, the Regulations on Administration of Discharge Permits as well as other applicable laws, administrative rules and
regulatory documents. The Company has been taking practical and effective environmental protection measures to protect the ecological environment
and fulfil its corporate responsibility.
In terms of pollutant management, the Company has been in compliance with the existing pollutant discharge standards and limits, which are specified
as follows:
With respect to wastewater management, the Company is subject to the Integrated Wastewater Discharge Standard (GB8978-1996), the Discharge
116
Midea Group Co., Ltd. Semi-Annual Report 2023
Limits of Water Pollutants (DB44/26-2001), the Discharge Standard of Water Pollutants for Electroplating (DB 44/1597-2015), and the Discharge Limits
of Water Pollutants of Guangdong Province (DB44/26-2001), among other standards.
With respect to waste gas management, the Company is subject to the Integrated Emission Standard of Air Pollutants (GB16297-1996), the Emission
Standard of Air Pollutants for Boiler (GB13271-2014), the Emission Control Standard of Volatile Organic Compounds for Industrial Enterprises
(DB13/2322-2016), the Emission Standard of Pollutants for Synthetic Resin Industry (GB31572-2015), the Emission Limits of Air Pollutants (DB44/27-
2001), the Emission Standard of Volatile Organic Compounds for Furniture Manufacturing Operations (DB44/814-2010), and the Emission Standard of
Air Pollutants for Industrial Kiln and Furnace (GB 9078-1996), among other standards.
With respect to noise management, the Company is subject to the Emission Standard for Industrial Enterprises Noise at Boundary (GB12348-2008).
With respect to treatments of solid and hazardous waste, the Company has been in strict compliance with the Law on the Prevention and Control of the
Environmental Pollution of Solid Waste, disposing of solid and hazardous waste in a compliant manner.
Administrative permits in relation to environmental protection
According to the requirements of the applicable environmental protection laws and regulations, all construction projects of the Company fulfil the
procedures of environmental impact assessment and other administrative licensing procedures for environmental protection, and strictly implement the
requirement that facilities for the prevention and control of pollution in construction projects should be designed, constructed and put into operation at
the same time as the construction projects, among other environmental protection measures. After the completion of the project construction, according
to the requirements of the environmental impact assessment documents, the Company commissions a third-party monitoring organisation to test the
project's wastewater, waste gas, noise and other indicators, and applies for a discharge permit in accordance with the Regulations on the Administration
117
Midea Group Co., Ltd. Semi-Annual Report 2023
of Discharge Permits and other regulations and standards.
During the Reporting Period, the existing discharge permits of the Company's subsidiaries were all within the validity period. During the validity period
of the discharge permits, if there are matters such as changes in the basic information of the discharge permits, implementation of revisions in pollutant
discharge standards, changes in the total pollutant discharge limits, etc., the subsidiaries of the Company shall, in accordance with the relevant
requirements, submit an application for change of the discharge permits to the local competent environmental protection authorities within a specified
period of time.
Industry standards for discharges and discharges of pollutants in production and operation activities
Number Approve
Concentration Total
Name of the Company of Distribution of discharge Pollutant discharge d total Excess
Major pollutants Discharge method of the discharge
or subsidiary discharge outlets standards discharg discharge
discharge (ton)
outlets e (ton)
COD 169.5 mg/L 17.1 70.898 No
Ammonia-nitrogen Discharge after being 5.4 mg/L 0.48 2.496 No
Integrated Wastewater
BOD5 treated by wastewater 1 Western gate of the Wuhu 34.8 mg/L 2.8 / No
Discharge Standard
Petroleum treatment system and plant < 0.06 mg/L 0.005 / No
(GB8978-1996)
Total phosphorus reaching the standard 0.8 mg/L 0.06 / No
Fluoride 0.6 mg/L 0.05 / No
Soot 4.6 mg/m Emission Standard of Air 4.63 / No
Wuhu Midea Kitchen & Sulfur dioxide 15m high altitude < 3 mg/m Pollutants for Boiler 0.96 / No
Bath Appliances Mfg. discharge (GB13271-2014)
Oxynitride 6.3 mg/m 0.99 / No
Co., Ltd.
Particles 4.3 mg/m Integrated Emission 1.88 / No
Standard of Air Pollutants
Xylene 45 Plants at each workshop < 0.01 mg/m (GB16297-1996) 0.0001 / No
High altitude discharge
after being treated by
Emission Control Standard
waste gas treatment
for Industrial Enterprises
station
VOCs 5.77 mg/m Volatile Organic 4.04 / No
Compounds (DB13-2322-
2016)
118
Midea Group Co., Ltd. Semi-Annual Report 2023
COD Western gate of the Wuhu 169.5 mg/L 14.83 No
Ammonia-nitrogen plant 5.4 mg/L 0.42 No
BOD5 Discharge after being (Share a wastewater 34.8 mg/L Integrated Wastewater 2.44 / No
Petroleum treated by wastewater treatment station with < 0.06 mg/L Discharge Standard 0.004 / No
1
Total phosphorus treatment system and Wuhu Midea Kitchen & 0.8 mg/m (GB8978-1996) 0.057 / No
reaching the standard Bath Appliances Mfg. Co.,
Fluoride Ltd.) 0.6 mg/m 0.042 / No
Soot 10 4.9 mg/m Emission Standard of Air 2.76 / No
Wuhu Midea Smart Sulfur dioxide 15m high altitude 6 < 3 mg/m Pollutants for Boiler 0.46 / No
Kitchen Appliances discharge (GB13271-2014)
Oxynitride 6 13.3 mg/m 1.05 / No
Manufacturing Co., Ltd.
Dust 6 4.9 mg/m Integrated Emission 0.85 / No
Standard of Air Pollutants
< 0.0015
Xylene 2 Plants at each workshop (GB16297-1996) 0.0002 / No
High altitude discharge mg/m
after being treated by
Emission Control Standard
waste gas treatment
for Industrial Enterprises
station
VOCs 13 6.4 mg/m Volatile Organic 4.09 / No
Compounds (DB13-2322-
2016)
COD 59.17 mg/L 1.634
Ammonia-nitrogen 1.365 mg/L 0.04
BOD5 28.17 mg/L Implementation of the 0.386
Total nitrogen (by takeover standards of the
35.40 mg/L 1.246
N) Discharge after being Western Hefei Group
The eastern side of 1#
Total phosphorus treated by wastewater 1 wastewater treatment plant / No
plant 0.032 mg/L 0.00084
(by P) treatment system and and Integrated Wastewater
Anionic surfactant reaching the standard 0.313 mg/L Discharge Standard 0.00482
Suspended (GB8978-1996) Level 3
11.17 mg/L 0.304
Hefei Midea Heating & matters
Ventilating Equipment Petroleum 0.045 mg/L 0.0012
Co., Ltd. pH value 7.5 /
1 set at the northeastern
side of 3# plant and 1 at
RTO equipment 2 0.91 mg/m 0.0208
the southwestern side of
Integrated Emission
4# plant
NMHC Standard of Air Pollutants No
Water spray + activated 2 sets at 1# plant and 1 /
3 3.27 mg/m GB16279-1996 Level 2 0.378
carbon equipment set at 2# plant
3 at 1# plant, 2 at 2# plant,
Two-stage activated
9 1 at 3# plant, 2 at 4# plant 9.235 mg/m 0.602
carbon equipment
and 1 cyclopentane
119
Midea Group Co., Ltd. Semi-Annual Report 2023
2 at 1# plant, 3 at 2# plant,
Filter cartridge dust
Particles 8 2 at 3# plant and 1 at 4# 6.28 mg/m 1.732 / No
collector
plant
The eastern side of
Implementation of the
COD wastewater treatment 52 mg/L takeover standards of the 3.478 58.150 No
Discharge after being station Western Hefei Group
treated by wastewater 1 wastewater treatment plant
treatment station The eastern side of and Integrated Wastewater
Ammonia-nitrogen wastewater treatment 0.745 mg/L Discharge Standard 0.05 / No
(GB8978-1996) Level 3
station
High altitude discharge
after being treated by
cyclone + filter cartridge
dust collector/High
Particles altitude discharge after Plants at each workshop < 12 mg/m 1.01 / No
Hefei Midea Laundry
Appliance Co., Ltd. being treated by water
(monitored by the spraying + demister +
municipal government)
activated carbon + Table 5 of the Emission
Standard of Pollutants for
activated carbon Synthetic Resin Industry
15
High altitude discharge (GB 31572- 2015): Special
Emission Limit
after being treated by Requirements
water spraying +
demister + activated
NMHC carbon + activated Plants at each workshop 1.80 mg/m 0.93 / No
carbon/High altitude
discharge after being
treated by the two-
stage activated carbon
GD Midea Air- COD Discharge after being 48 mg/L 1.078 9.59 No
The southeastern side of Discharge Limits of Water
Conditioning Ammonia-nitrogen treated by wastewater 1 1.082 mg/L 0.014 / No
4# plant Pollutants (DB44/26-2001)
Equipment Co., Ltd. SS treatment station 14 mg/L 0.211 / No
120
Midea Group Co., Ltd. Semi-Annual Report 2023
Petroleum 0.32 mg/L 0.003 / No
COD 108 mg/L 1.82 9.59 No
Discharge after being
SS The eastern side of 2# 47 mg/L Discharge Limits of Water 0.18 / No
treated by wastewater 1
Ammonia-nitrogen plant 1.832 mg/L Pollutants (DB44/26-2001) 0.008 / No
treatment station
Petroleum 1.99 mg/L 0.001 / No
Emission Standard of
15m high altitude Volatile Organic
discharge after being Compounds for Furniture
VOCs (dusting) 3 4# plant 15.94 mg/m 0.41 No
treated by spray tower Manufacturing (DB44/814-
+ activated carbon 2010) the second time
period
15m high altitude
Emission Standard of
discharge after being
VOCs (Screen Volatile Organic
treated by 4 1# and 9# plants 3.81 mg/m 0.26 No
Printing) Compounds for Printing
environmental
Industry (DB44/815-2010)
protection equipment 14
15m high altitude
Emission Standard of
discharge after being
Volatile Organic
VOCs (electronic) treated by 2 10# plants 1.65 mg/m 2.35 No
Compounds for Printing
environmental
Industry (DB44/815-2010)
protection equipment
15m high altitude
NMHC discharge after being Emission Limits of Air
(evaporator & treated by 5 2#, 5# plants 2.52 mg/m Pollutants (DB44/27- 2001) 0.605 No
condenser) environmental the second time period
protection equipment
COD 76.09 mg/L 1.98 7.5 No
SS 28.04 mg/L Integrated Wastewater 0.73 / No
Discharge after being
The northern side of the Discharge Standard
BOD treated by wastewater 1 31.07 mg/L 0.81 / No
park (GB8978-1996) Table 4,
treatment station
Ammonia-nitrogen 6.92 mg/L Level 3 0.18 0.675 No
Petroleum 2.82 mg/L 0.073 / No
Wuhu Maty Air-
Conditioning Integrated Emission
Equipment Co., Ltd. Particles 5 2# plant 6.14 mg/m Standard of Air Pollutants 3.78 / No
15m high altitude (GB16297-1996)
discharge after being Emission Control Standard
treated by for Industrial Enterprises
VOCs environmental 8 2#, 3# plants 6.17 mg/m Volatile Organic 3.796 / No
protection equipment Compounds (DB13-2322-
2016)
NOx 3 3# plant 1.46 mg/m Integrated Emission 0.896 2.209 No
121
Midea Group Co., Ltd. Semi-Annual Report 2023
Standard of Air Pollutants
SO2 3 3# plant 0.42 mg/m 0.2557 / No
(GB16297-1996)
COD 34 mg/L 6.7032 16.28 No
Suspended
19 mg/L Discharge Standard of 4.1328 / No
matters
Petroleum 0.49 mg/L Water Pollutants for 0.108396 / No
Discharge after being Near the wastewater Electroplating DB 44/1597-
Total phosphorus 0.175 mg/L 0.0594 / No
treated by wastewater 1 treatment station in the 2015
Total zinc ND 0.00648 / No
treatment station north side of the plant
pH value 7.15 / / No
Total nitrogen 2.83 mg/L 0.59414 / No
Ammonia-nitrogen 0.67 mg/L Discharge Limits of Water 0.1507284 2.034 No
Pollutants in Guangdong
Fluoride 0.17 mg/L 0.036144 / No
DB44/26-2001
Emission Limits of Air
15m high altitude
Pollutants (DB44/27-2001)/
discharge after being
Emission Standard of Air
Particles treated by 7 Roof of the plant / No
< 20 mg/m Pollutants for Industrial Kiln 3.6838
environmental
and Furnace (GB 9078-
Guangdong Meizhi protection equipment
1996)
Precision- 15m high altitude
Manufacturing Co., Ltd. discharge after being
3 L (below the
SO2 treated by 4 Roof of the plant 0 0.436 No
detection limit)
environmental
Emission Standard of Air
protection equipment
Pollutants for Boiler
15m high altitude
(DB44/765-2019)
discharge after being
NOx treated by 4 Roof of the plant 6 mg/m 0.48888 2.039 No
environmental
protection equipment
15m high altitude
discharge after being
VOCs treated by 10 Roof of the plant 4.9 mg/m Emission Standard of 2.0046 4.553 No
environmental Volatile Organic
protection equipment Compounds for Surface
15m high altitude Coating of Automobile
discharge after being Manufacturing Industry
Benzene treated by 2 Roof of the plant 0.0625 mg/m (DB44/816-2010) 0.0137976 / No
environmental
protection equipment
122
Midea Group Co., Ltd. Semi-Annual Report 2023
15m high altitude
discharge after being
Total toluene and
treated by Roof of the plant 0.35 mg/m 0.1310805 / No
xylene
environmental
protection equipment
COD 42 mg/L 2.97 6.046 No
Suspended
13 mg/L 1.15 / No
matters The Discharge Standard of
Petroleum Near the wastewater 0.43 mg/L Water Pollutants for 0.036 / No
Discharge after being
Total phosphorus treated by wastewater 1 treatment station in the 0.18 mg/L Electroplating of 0.0225 / No
Total zinc north side of the plant 0.05 mg/L Guangdong Province DB- 0.0045 / No
treatment station
pH value 7.2 441597-2015, before 1 / / No
Total nitrogen 3.03 mg/L September 2012 0.497 / No
Ammonia-nitrogen 0.856 mg/L 0.098 0.756 No
Fluoride 0.071 mg/L 0.024 / No
Total nickel ND 0 0.024 No
Emission Limits of Air
15m high altitude
Pollutants (DB44/27-2001)/
discharge after being
Roof of main plant and Emission Standard of Air
Particles treated by 17 0 mg/m 0 8.705 No
metal plate workshop Pollutants for Industrial Kiln
environmental
and Furnace (GB 9078-
protection equipment
1996)
Guangdong Meizhi 15m high altitude
Compressor Limited discharge after being
Roof of main plant and
SO2 treated by 11 0 mg/m 0 0.799 No
metal plate workshop
environmental
Emission Standard of Air
protection equipment
Pollutants for Boiler
15m high altitude
(DB44/765-2019)
discharge after being
Roof of main plant and
NOx treated by 11 5 mg/m 3.375 7.814 No
metal plate workshop
environmental
protection equipment
15m high altitude
discharge after being
Roof of main plant and
Benzene treated by 2 0.342 mg/m Emission Standard of 0.09 / No
metal plate workshop
environmental Volatile Organic
protection equipment Compounds for Surface
15m high altitude Coating of Automobile
discharge after being Manufacturing Industry
Total toluene and Roof of main plant and
treated by 2 0.817 mg/m (DB44/816-2010) 0.09 / No
xylene metal plate workshop
environmental
protection equipment
123
Midea Group Co., Ltd. Semi-Annual Report 2023
15m high altitude
discharge after being
Roof of main plant and
VOCs treated by 7 2.18 mg/m 1.66 5.718 No
metal plate workshop
environmental
protection equipment
CODcr Discharge after being 47 mg/L Discharge Standard of 3.6786 15.304 No
Waste water treatment
Petroleum treated by wastewater 0.18 mg/L Water Pollutants for 0.0145 / No
2 stations 1 and 2 of 3#
treatment system and Electroplating (DB44/1597-
Ammonia-nitrogen plant 1.795 mg/L 0.1408 1.913 No
reaching the standard 2015)
High altitude discharge Waste gas sprayers 1 and Table 1 of the Emission
Total toluene and after being treated by 2 at 3# plant, outlets 1, 2 Standard of Volatile
0.107 mg/m 0.034 / No
xylene waste gas treatment and 3 for waste gas from Organic Compounds for
station wave-soldering, painting Furniture Manufacturing
8
High altitude discharge and drying at 6# plant, (DB44/814-2010):
after being treated by outlets 1 and 2 for waste Discharge Limits for VOCs
VOCs 1.126 mg/m 3.578 22.72 No
waste gas treatment gas from reflow soldering through Exhaust Funnel/for
station at 6# plant Time Period II
Outlet of injection molding Table 4 of the Emission
Foshan Shunde Midea
High altitude discharge waste gas in the south Standard of Pollutants for
Electrical Heating
after being treated by side of 1# plant, outlet of Synthetic Resin Industry
Appliances NMHC 2 1.63 mg/m 0.1747 / No
waste gas treatment injection molding waste (GB 31572- 2015):
Manufacturing Co., Ltd.
station gas in the south side of 9# Emission Limits of Air
plant Pollutants
Outlets 1 and 2 of sanding
Pulse bag dust waste gas at 3# plant, Table 2 of the Emission
Particles 4 0.4101 mg/m 0.0734 / No
collecting outlets 1 and 2 of polishing Limits of Air Pollutants
waste gas at 3# plant (DB44/27-2001): Emission
High altitude discharge Oxidation wire roof of 3# Limits of Industrial Waste
Sulfur dioxide 3.54 mg/m 0.040 3.8231 No
after being treated by plant Gas (Time Period 2), Level
2
waste gas treatment 2
Oxynitride Drying furnace of 3# plant 2.26 mg/m 0.326 13.132 No
station
Discharge after being Emission Standard of
South and north section
Cooking fume treated by waste gas 2 0.2 mg/m Cooking Fume (Trial) (GB 0.046 / No
canteens
treatment station 18483-2001)
Implementation of the
COD 15 mg/L takeover standards of the 3.457681 / No
Discharge after being The western side of the
Western Hefei Group
Anhui Meizhi treated by wastewater comprehensive
1 wastewater treatment plant
Compressor Co., Ltd. treatment system and wastewater treatment
and Integrated Wastewater
Ammonia-nitrogen reaching the standard station 0.192 mg/L 0.060408 / No
Discharge Standard
(GB8978-1996) Level 3
124
Midea Group Co., Ltd. Semi-Annual Report 2023
No. 1 workshop welding
soot discharge outlet for 2.7 mg/m
Integrated Emission
waste gas
Standard of Air Pollutants
No. 3 workshop discharge
(GB16297-1996)
outlet for the welding 3.9 mg/m
waste gas
Waste gas outlet of 1#
heat-treating furnace at 4.8 mg/m Emission Standard of Air
No. 2 workshop Pollutants for Industrial Kiln
Waste gas outlet of 2# and Furnace (GB9078-
heat-treating furnace at 6.8 mg/m 1996)
No. 2 workshop
Integrated Emission
Waste gas outlet for die
6.0 mg/m Standard of Air Pollutants
casting at No. 2 workshop
(GB16297-1996)
Collected by gas trap
Particles hood + 15m high 10 Waste gas outlet for die Integrated Emission 65.45 No
5.9 mg/m 4.717812
exhaust cylinder casting at No. 4 workshop Standard of Air Pollutants
Waste gas outlet of 1# (GB16297-1996)
heat-treating furnace at 5.5 mg/m Emission Standard of Air
No. 4 workshop Pollutants for Industrial Kiln
and Furnace (GB9078-
1996)
Waste gas outlet of 2#
Emission Standard of Air
heat-treating furnace at 3.4 mg/m
Pollutants for Industrial Kiln
No. 4 workshop
and Furnace (GB9078-
1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 6.1 mg/m Standard of Air Pollutants
at No. 1 workshop (GB16297-1996)
Waste gas outlet for Integrated Emission
electrophoresis and drying 7.3 mg/m Standard of Air Pollutants
at No. 3 workshop (GB16297-1996)
Outlet of 1# heat-treating
49 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
40 mg/m
furnace at No. 2 workshop Integrated Emission
Collected by gas trap
Standard of Air Pollutants
Sulfur dioxide hood + 15m high 6 Waste gas outlet for die 17.42432 112.2 No
4 mg/m (GB16297-1996) Standard
exhaust cylinder casting at No. 2 workshop Level 2
Outlet of 1# heat-treating
94 mg/m
furnace at No. 4 workshop
Outlet of 2# heat-treating
33 mg/m
furnace at No. 4 workshop
125
Midea Group Co., Ltd. Semi-Annual Report 2023
Waste gas outlet for die
57 mg/m
casting at No. 4 workshop
Outlet of 1# heat-treating
10 mg/m
furnace at No. 2 workshop
Outlet of 2# heat-treating
6 mg/m
furnace at No. 2 workshop
Waste gas outlet for die Integrated Emission
Collected by gas trap 9 mg/m
casting at No. 2 workshop Standard of Air Pollutants
Oxynitride hood + 15m high 6 5.697417 33.24 No
Outlet of 1# heat-treating (GB16297-1996) Standard
exhaust cylinder 15 mg/m
furnace at No. 4 workshop Level 2
Outlet of 2# heat-treating
6 mg/m
furnace at No. 4 workshop
Waste gas outlet for die
4 mg/m
casting at No. 4 workshop
Waste gas outlet of the
drying furnace at No. 1 5.97 mg/m
Collected by gas trap workshop Emission Control Standard
hood + 15m high Waste gas outlet of 1# for Industrial Enterprises
exhaust cylinder drying furnace at No. 3 1.80 mg/m Volatile Organic No
VOCs 4 workshop 0.555736 21.6
Direct-fired waste gas Compounds (DB12/ 524-
incinerator + 15m high Die casting at No. 2 2020)
3.11 mg/m
exhaust cylinder workshop
Die casting at No. 4
12.4 mg/m
workshop
Emission Standard of
Volatile Organic
Waste gas outlet around Compounds for Furniture
Benzene Zeolite drum + RTO 1 0 mg/m 0.00 / No
plant C Manufacturing (DB44/814-
2010) the second time
period
Emission Standard of
Volatile Organic
Guangdong Welling
Total toluene and Waste gas outlet around Compounds for Furniture
Motor Manufacturing Zeolite drum + RTO 1 0 mg/m 0.00 / No
xylene plant C Manufacturing (DB44/814-
Co., Ltd.
2010) the second time
period
Emission Standard of
Volatile Organic
Waste gas outlet around Compounds for Furniture
Total VOCs Zeolite drum + RTO 1 2.47 mg/m 0.468 17.09 No
plant C Manufacturing (DB44/814-
2010) the second time
period
126
Midea Group Co., Ltd. Semi-Annual Report 2023
COD Discharge to the 26 mg/L Discharge Limits of Water 2.94 22.77 No
municipal sewage The eastern side of Pollutants in Guangdong
system after being 1 wastewater treatment DB-44/26-2001
Ammonia-nitrogen 0.255 mg/L 0.091 4.554 No
treated by wastewater station in Malong base Emission Standard of
treatment system Volatile Organic
Particles 0.26 mg/m Compounds for Furniture 0.48 / No
Sulfur dioxide 3 mg/m Manufacturing (DB44/814- 0.445 1.055 No
Oxynitride 20m high altitude 4 mg/m 2010)/Emission Standard 2.64 10.314 No
discharge after being of Volatile Organic
Benzene ND 0.108 / No
treated by waste gas Compounds for Surface
Total toluene and
treatment equipment 0.34 mg/m Coating of Automobile 0.761 / No
xylene
and reaching the Manufacturing Industry
Guangdong Midea VOCs standard 26 outlets at A1 plant, 47 3.72 mg/m 6.13 35.051 No
NMHC 3.43 mg/m (DB44/816-2010)/Emission 0.18 / No
Kitchen Appliances outlets at A2 plant, 21
Styrene 2.89 mg/m Standard of Pollutants for 0.327 / No
Manufacturing Co., Ltd. outlets at B2 plant, 9
Synthetic Resin Industry
outlets at C2 plant, 2
112 (GB 31572-
outlets at C3 plant, 1 outlet
2015)/Guangdong
at wastewater treatment
Province Emission Limits
15m high altitude station and 6 outlets at
of Air Pollutants (DB44/27-
discharge after being canteen
2001)/Emission Standard
Fume treated by oil fume 0.3 mg/m of Volatile Organic 0.0589 / No
purification facility and Compounds for Printing
reaching the standard Industry (DB44/815-
2010)/Emission Standard
of Cooking Fume (on Trial)
(GB 18483-2001)
COD 123.5 mg/L 48.549 175.5 No
The south side of Building
Ammonia-nitrogen 12.02 mg/L 4.7 9.3 No
6 for night shift at the north
BOD Discharge after being 49.68 mg/L Integrated Wastewater 19.59 / No
side of the plant area
SS treated by wastewater 28.33 mg/L Discharge Standard 11.36 / No
2
Petroleum treatment system and 0.27 mg/L (GB8978-1996) Table 4, 0.104 / No
Total nickel reaching the standard 0.115 mg/L Level 3 0.038 0.1 No
Outlet in the sewage
Anhui Meizhi Precision Total zinc station 0.187 mg/L 0.055 1.25 No
Manufacturing Co., Ltd.
Collected by gas trap
Outlet for molybdenum- Relevant standard limit
hood + 21m high 3 32.03 mg/m3
containing waste gas requirements in Table 1 of
exhaust cylinder
Shanghai Integrated
NMHC Outlet for waste gas from 8.0778 / No
Collected by gas trap 7 16.17 mg/m Emission Standard of Air
machining
hood + 25m high Pollutants (DB31/933-
Outlet for waste gas from
exhaust cylinder 4 18 mg/m 2015)
coating
127
Midea Group Co., Ltd. Semi-Annual Report 2023
Outlet for heat treatment 8.83 mg/m
Outlet for waste gas from
Collected by gas trap
pre-coating treatment and 11.76 mg/m
hood + 25m high 22 Comprehensive Control
kiln
exhaust cylinder Plan for Air Pollution of
Particles Outlet for waste gas from 7.03574 / No
10.6 mg/m Industrial Furnaces (H.D.Q.
aluminum melting
[2019] No. 56)
Collected by gas trap
Outlet for the welding
hood + 21m high 8 4.11 mg/m
waste gas
exhaust cylinder
Outlet for heat treatment < 3 mg/m
Outlet for waste gas from Comprehensive Control
Collected by gas trap
pre-coating treatment and 4 mg/m Plan for Air Pollution of
Sulfur dioxide hood + 25m high 22 0.82947 / No
kiln Industrial Furnaces (H.D.Q.
exhaust cylinder
Outlet for waste gas from [2019] No. 56)
< 3 mg/m
aluminum melting
Outlet for heat treatment 17.6 mg/m
1# outlet for waste gas Comprehensive Control
Collected by gas trap
from pre-coating treatment 15 mg/m Plan for Air Pollution of
Oxynitride hood + 25m high 22 7.13597 / No
and kiln Industrial Furnaces (H.D.Q.
exhaust cylinder
Outlet for waste gas from [2019] No. 56)
6.5 mg/m
aluminum melting
Gas trap hood + dry Emission Standard of
filtering + UV + During the screen printing Volatile Organic
1 20 mg/m
activated carbon + 15m process of the south plant Compounds for Printing
high altitude discharge Industry (DB44/815-2010)
VOCs 3.827235 / No
Gas trap hood + dry Emission Standard of
filtering + UV + During the screen printing Volatile Organic
1 22.7 mg/m
activated carbon + 15m process of the north plant Compounds for Printing
high altitude discharge Industry (DB44/815-2010)
Gas trap hood + dry Exhaust funnel for waste Emission Standard of
GD Midea Environment
filtering + UV + gas from the baking and Pollutants for Synthetic
Appliances Mfg. Co., 6 12.4 mg/m
activated carbon + 15m injection molding Resin Industry (BG 31572-
Ltd.
high altitude discharge processes 2015)
Gas trap hood + dry Emission Standard of
filtering + UV + Metal plate dusting waste Pollutants for Synthetic
NMHC 3 12.33 mg/m 15.1581 / No
activated carbon + 15m gas exhaust cylinder Resin Industry (BG 31572-
high altitude discharge 2015)
Dry filtering + direct Outlet for waste gas from
combustion of natural dip coating, drying and Emission Limits of Air
1 7.21 mg/m
gas + 15m high altitude hardening of the north Pollutants (DB44/27-2001)
discharge plant
128
Midea Group Co., Ltd. Semi-Annual Report 2023
Outlet for waste gas from
Dry filtering + RCO +
dip coating, drying and Emission Limits of Air
15m high altitude 1 13.6 mg/m
hardening of the south Pollutants (DB44/27-2001)
discharge
plant
Gas trap hood + water
spraying + dry filtering + Emission Limits of Air
Metal plate dusting waste
Particles UV + activated carbon 1 3.9 mg/m Pollutants (DB44/27-2001): 0.262 / No
gas exhaust cylinder
+ 15m high altitude Time Period 2, Level 2
discharge
Fume hood +
Emission Standard of
electrostatic range hood Cooking fume outlet at
Cooking fume 7 0.13 mg/m Cooking Fume GB18483- 0.0169 / No
+ 15m high altitude canteen
2001
discharge
Suspended
3.5 mg/L 0.0839
matters
COD 18.5 mg/L Discharge Standard of 0.410 / No
Oil separation and
Animal and Pollutants for Municipal
slagging - hydrolysis Domestic wastewater 0.07 mg/L 0.00153 / No
vegetable oil 1 Wastewater Treatment
and acidification - treatment station
Ammonia-nitrogen Plant GB18918-2002
contact oxidation - MBR 0.156 mg/L 0.00334 / No
(NH3- N)
pH value 6.6 / / No
Five-day BOD 4.75 mg/L 0.106 / No
Total zinc 0.0045 mg/L 0.000182 0.08 No
COD 5.26 mg/L 0.223 3.9191 No
Suspended
2 mg/L 0.081 / No
matters Coagulation and
pH value sedimentation + 7.5 Discharge Standard of / / No
Total phosphorus hydrolysis and Production wastewater 0.02 mg/L Water Pollutants for 0.000712 / No
1
(by P) acidification + aeration treatment station Electroplating DB 44/1597-
Ammonia-nitrogen + biological tank + MBR 2015
0.0772 mg/L 0.00321 0.6279 No
(NH3-N) + water reuse
Petroleum 0.03 mg/L 0.00121 / No
Total aluminum 0.17225 mg/L 0.0086 / No
Total iron 0.08 mg/L 0.00343 / No
COD 144 mg/L 6.4514352 15 No
1.4192659
Ammonia-nitrogen 15.8 mg/L 2.5 No
6
Discharge to municipal Integrated Wastewater
Outlets for domestic 3.3642033
Hubei Midea BOD domestic sewage 1 28 mg/L Discharge Standard / No
sewage at the plant 6
Refrigerator Co., Ltd. network (GB8978-1996)
SS 10 mg/L 0.9667196 / No
Animal and 0.0914077
1.03 mg/L / No
vegetable oil 7
COD After deep treatment by 1 Freezer waste water outlet 130 mg/L Integrated Wastewater 2.009559 15 No
129
Midea Group Co., Ltd. Semi-Annual Report 2023
industrial waste water Discharge Standard 0.0076722
Ammonia-nitrogen 0.119 mg/L 2.5 No
treatment station, (GB8978-1996) 4
BOD discharge to municipal 54.5 mg/L 0.7825401 / No
SS industrial sewage 18 mg/L 0.174942 / No
network 0.0410203
Petroleum 4.66 mg/L / No
2
Animal and 0.0040659
0.29 mg/L / No
vegetable oil 9
First installation branch
1 / No
waste gas outlets
After photo-catalytic
Second installation branch
oxidation + activated 1 / No
waste gas outlets
carbon, 15m high
Waste gas outlets at the
altitude discharge
1 injection molding / No
workshop
After dry filtering +
NMHC photo-catalytic 26.57 mg/m 9.2322
Waste gas outlets at the
oxidation + activated 1 / No
extrusion workshop Integrated Emission
carbon, 15m high
Standard of Air Pollutants
altitude discharge
(GB16297-1996)
After wet scrubber +
rotating-stream-tray
scrubber + demister + / No
activated carbon, 15m
high altitude discharge Waste gas outlets at the
1
After wet scrubber + freezer branch
rotating-stream-tray
Particles scrubber + demister + 3.8 mg/m 0.05016 / No
activated carbon, 15m
high altitude discharge
123.899
COD 136.5 mg/L 23.28 No
4
SS 56 mg/L 9.55 87.2473 No
Animal and Integrated Wastewater
Wuxi Little Swan Discharge to municipal Exit at the middle gate of
1 2.44 mg/L Discharge Standard 0.41 10.7034 No
Electric Co., Ltd. vegetable oil sewage network the plant
(GB8978-1996)
Total phosphorus 2.11 mg/L 0.35 1.0701 No
Total nitrogen 24.45 mg/L 4.17 11.2612 No
Ammonia-nitrogen 18.75 mg/L 3.19 6.6906 No
130
Midea Group Co., Ltd. Semi-Annual Report 2023
Water spraying + UV
photocatalysis +
activated carbon + filter
cartridge dust collection
+ high altitude
discharge/Two-stage
Particles Plants at each workshop 0.58 mg/m 0.2 2.0696 No
activated carbon + high
altitude discharge/Filter
cartridge dust collection Integrated Emission
+ high altitude Standard of Air Pollutants
discharge/High altitude (GB16297-1996)/
discharge Tianjin Emission Control
Standard for Industrial
Water spraying + UV
Enterprises Volatile
photocatalysis +
Organic Compounds
activated carbon + filter 11
DB12/524-2014/
cartridge dust collection
Emission Standard of
+ high altitude
Pollutants for Synthetic
discharge/Zeolite + CO
Resin Industry (GB 31572-
VOCS + high altitude Plants at each workshop 1.51 mg/m 0.94 1.2218 No
2015)/Emission Standard
discharge/Dry filtering +
of Air Pollutants for Boiler
electrostatic oil removal
(GB13271-2014)
+ high altitude
discharge/Two-stage
activated carbon + high
altitude discharge
Natural gas for the metal
Sulfur dioxide Hight altitude discharge ND 0 0.624 No
plate process
Natural gas for the metal
Oxynitride Hight altitude discharge 6.5 mg/m 0.03 3.38 No
plate process
Bag + activated carbon Integrated Emission
+ high altitude Standard of Air Pollutants
Particles discharge/Activated Buildings A and B 0.33 mg/m (GB16297-1996) for 0.1 0.2859 No
carbon + high altitude particles and chemical
discharge compounds
Wuxi Filin Electronics
4 Subject to Tianjin Emission
Co., Ltd.
Activated carbon + high Control Standard for
altitude discharge/Bag Industrial Enterprises
VOCS Buildings A and B 2.77 mg/m 1.0242 2.6389 No
+ activated carbon + Volatile Organic
high altitude discharge Compounds (DB12/524-
2014)
131
Midea Group Co., Ltd. Semi-Annual Report 2023
1#: Two-stage activated Integrated Emission
DA007, DA008, and
Particles carbon; 2.47 mg/m Standard of Air Pollutants 0.43 2.697 No
DA009
5#: Grade 3 filtering + (GB16297-1996)
honeycomb zeolite + Integrated Emission
DA001, DA005, DA006,
NMHC CO; 2.58 mg/m Standard of Air Pollutants 0.95 1.3853 No
DA008, and DA010
6#: Electrostatic (GB16297-1996)
demisting + grade 2
filtering + activated
Huaian Welling Motor
carbon; 7
Manufacturing Co., Ltd.
7#: Spray tower +
plasma; Emission Standards for
Styrene 8#: Grade 2 filtering + DA005 and DA008 6.38 mg/m Odor Pollutants (GB14554- 1.073 / No
two-stage activated 93)
carbon;
9#: Bag filtering;
10#: Two-stage
activated carbon.
pH value 7.3 / / No
COD 36 mg/L 0.969075 9.951 No
Ammonia-nitrogen 0.529 mg/L 0.020038 1.0021 No
Suspended
18 mg/L 0.364236 / No
matters Discharge after being Integrated Wastewater
West Gate 2 of 4# plant on
Petroleum treated by wastewater 1.1 mg/L Discharge Standard 0.0117746 / No
1 the west side of plant
treatment station and GB8978-1996
areas
Total phosphorus reaching the standard 0.04 mg/L 0.0024366 / No
Fluoride 5.37 mg/L 0.0677961 / No
Midea Group Wuhan
Refrigeration Total zinc 4.79 mg/L 0.0484695 / No
Equipment Co., Ltd. BOD5 9 mg/L 0.2051322 / No
Particles 21 20 mg/m 0.0273972 4.21 No
1# plant, 3# plant, 4#
Sulfur dioxide 16 0.311 mg/m 0.4050330 1.68 No
plant, 5# plant
Oxynitride Discharge after being 16 6 mg/m Integrated Emission 1.2960330 7.59 No
treated by Standard of Air Pollutants
Tin and its 0.1139*10-
environmental 3 4*10-4 mg/m (GB16297-1996) / No
compounds 3
protection equipment 3# plant
Acrylonitrile 3 0.2 mg/m 0.02 / No
Styrene 3 0.145 mg/m 0.01932 / No
VOCs 10 1# plant 0.311 mg/m 0.0446292 / No
132
Midea Group Co., Ltd. Semi-Annual Report 2023
NMHC 9 1#, 2# plants 5.72 mg/m 1) NMHC: Implementation 5.46 / No
Particles 7 1#, 2# plants 1.8 mg/m of the emission 0.55 / No
Oxynitride 7 1#, 2# plants 6.27 mg/m concentration limits on 1.59 / No
Sulfur dioxide 7 1#, 2# plants < 3 mg/m organic chemicals in Table 0.94 3.241 No
1 of Emission Control
Standard for Industrial
Enterprises Volatile
Organic Compounds
(DB13/2322-2016)
15m high altitude 2) Sulfur dioxide/nitrogen
discharge after being oxides/particles:
treated by Implementation of the new
environmental furnace standards in Table
Tin and its protection equipment < 3 × 10-6 1 and Table 2 of Emission 7.83 * 10-7
4 2# plant / No
compounds mg/m Standard of Air Pollutants
for Industrial Kiln and
Handan Midea Air- Furnace (DB13/1640-2012)
Conditioning 3) Tin and its compounds:
Equipment Co., Ltd. Implementation of the
requirements of Level 2 in
the Integrated Emission
Standard of Air Pollutants
(GB16297-1996)
COD 137 mg/L Requirements for inflow 1.6 8.97 No
water quality of wastewater
Ammonia-nitrogen 4.53 mg/L 0.05 0.7 No
treatment plant in Handan
pH Discharge after being 7.2 Economic and / / No
Suspended treated by wastewater Technological
North side of the power 45 mg/L 0.52 / No
matters treatment system and 1 Development Zone
house
reaching the standard Integrated Wastewater
Petroleum 0.5 mg/L 0.0058 / No
Discharge Standard
(GB8978-1996) Table 4,
Fluoride 6.9 mg/L Level 3 0.08 / No
pH 7.5 / / No
Integrated Wastewater
COD Treatment by waste 173 mg/L 2.82 76.63 No
Chongqing Midea Air- Discharge Standard (GB/T
water treatment station
Conditioning SS 1 West gate 34 mg/L 8978-1996) Table 4, Level 0.599 / No
and reaching the
Equipment Co., Ltd. 3
NH3-N standard 23.1 mg/L 0.389 5.32 No
Petroleum 0.17 mg/L 0.002 / No
133
Midea Group Co., Ltd. Semi-Annual Report 2023
Fluoride 0.76 mg/L 0.146 / No
BOD5 51 mg/L 0.85 / No
LAS 0.082 mg/L 0.001 / No
Total zinc 0.034 mg/L 0 / No
Animal and
0.08 mg/L 0.002 / No
vegetable oil
Particles After treatment by 5.9 mg/m 3.769 / No
SO2 environmental 5 mg/m Integrated Emission 0.355 / No
protection and Standard of Air Pollutants
NOX East, west, south and 12 mg/m 0.885 / No
treatment facilities and 11 DB 50/418-2016 Table 1
north corners of the plant
Tin and its reaching the standard, Central Downtown
0.94 mg/m 0.394 / No
compounds 25m high altitude
NMHC discharge 10.6 mg/m 2.747 / No
pH 7.3 / / No
SS 8.5 mg/L 0.5786 / No
COD 61 mg/L 4.1522 / No
Ammonia-nitrogen Discharge to municipal 6.31 mg/L 0.4295 / No
Integrated Wastewater
Petroleum wastewater treatment 2.03 mg/L 0.1382 / No
General sewage discharge Discharge Standard
plant after being treated 1
BOD5 exit of plant areas 24.6 mg/L (GB8978-1996) Table 4, 1.6745 / No
by the wastewater
Level 3
LAS treatment system 0.0815 mg/L 0.0055 / No
Phosphate 0.115 mg/L 0.0078 / No
Chongqing Midea
General Refrigeration Fluoride (by F-) 2.265 mg/L 0.1542 / No
Equipment Co., Ltd. Copper 0 mg/L 0 / No
Particles High altitude discharge 11.73 mg/m Integrated Emission 1.302 / No
after being treated by 2 sets for paint waste gas Standard of Air Pollutants
5
NMHC waste gas treatment of 1# and 4# plants each 1.261 mg/m DB 50/418-2016 Table 1 0.135 / No
station Central Downtown
Sulfuric acid mist Lye spray towers (one 1.34 mg/m 0.0016 / No
is out of service, and Integrated Emission
Acid pickling waste gas
the other one is used Standard of Air Pollutants
2 outlets for 1# and 4#
Hydrogen chloride for occasional 9.395 mg/m DB 50/418-2016 Table 1 0.006 / No
plants
emergency cleaning of Central Downtown
abnormal materials)
Particles 1 set for direct 2 Volatile oil drying waste 6.25 mg/m Integrated Emission 0.3060 / No
134
Midea Group Co., Ltd. Semi-Annual Report 2023
Sulfur dioxide discharge (already out gas outlet 4.5 mg/m Standard of Air Pollutants 0.2100 / No
of service) DB 50/418-2016 Table 1
Oxynitride 1 set of RTO 13.5 mg/m Central Downtown 0.6540 / No
NMHC 1.455 mg/m Emission Standard of Air 0.0540 / No
Pollutants for Industrial Kiln
Ringelmann and Furnace DB 50/659-
<1 2016 Table 1/2 / / No
emittance
Waste mineral oil,
waste oil-
containing liquid,
Guangzhou Hualing waste packaging, Treatment entrusted to
Refrigerating waste activated third-party qualified N/A N/A N/A N/A 78.48 151.523 No
Equipment Co., Ltd. carbon, waste enterprise
lead battery, waste
filter cotton, waste
circuit board, etc
Treatment of pollutants
During the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no major
environmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,
supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste during
the production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary, which is in
compliance with the relevant requirements of the environment administrations.
Contingency plans for environmental accidents
All subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms for
environmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents has
been enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote a
135
Midea Group Co., Ltd. Semi-Annual Report 2023
comprehensive, coordinated and sustainable development of the society.
According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,
commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.
Spending on environmental management and protection and payment of environmental protection tax
All subsidiaries strictly observe the laws and regulations governing environmental protection, and all construction projects are in compliance with the
environmental effect requirements and other rules, with no misdeeds during the Reporting Period. Once a construction project is finished, a third-party
testing institution is hired to examine indexes including waste water, waste gas and noise, and the compilation and approval of the environmental effect
evaluation report is finished in time.
Environment self-monitoring plans
All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, which include: 1)
Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis. Major
discharge points are equipped with an online pollution discharge monitoring system for stationary pollution sources to produce and upload real-time
data to Midea Environmental Protection Online Monitoring Platform; 2) Waste water pollution source monitoring: Samples are fetched at intake and
outlet ports of waste water treatment stations to monitor changes of pollution source of waste water and up-to-standard emission of waste water after
being treated at the waste water treatment stations. Monitoring items include CODcr, SS and petroleum, etc. The data is uploaded to the governmental
monitoring authority online and the government authority conducts real-time monitoring; 3) Noise monitoring: Noise monitoring points are set at noise
sensitive points and on the border of factories. Noise is monitored once in spring and summer respectively and at daytime and at nighttime respectively
136
Midea Group Co., Ltd. Semi-Annual Report 2023
each time; 4) Solid waste pollution source monitoring: Hazardous waste produced from the subsidiaries is handed over to the units with qualifications
for treatment, monitoring systems are established, and related management forms and accounts are set up.
Administrative penalties received during the Reporting Period due to environmental issues
No such cases during the Reporting Period.
Other environment-related information that should be made public
None
Measures taken to reduce carbon emissions during the Reporting Period and the results
Applicable □ N/A
a. 21 distributed PV projects have been completed across the Company's manufacturing bases by the first half of 2023, with a total designed installed
capacity of 173MW. There are 13 such projects under construction, with a total installed capacity of 101MW. Upon completion of these projects, it is
expected that the annual power generation will be about 290,000,000 kWh, and the annual carbon emission will be reduced by about 232,000 tons of
carbon dioxide.
b. The Company has been comprehensively promoting the construction of a green manufacturing system. As of August, 14 of its factories have been
recognized as “National-level Green Factory” and three enterprises within the Group have been recognized as “National-level Green Supply Chain”. All
manufacturing plants kept improving their energy management systems and carried out work related to ISO 50001 (GB23331) certification. As of August,
137
Midea Group Co., Ltd. Semi-Annual Report 2023
34 plants have been certified. The certification of the energy management systems has greatly improved the energy management level of these plants.
By carrying out energy saving diagnosis, these plants are able to enhance leakage identification and the closed-loop management.
c. Greater efforts have been made in the research and development of green technologies, as well as the implementation of the related projects. Energy
saving and emission reduction projects are promoted from the dimensions such as compressed air, waste heat recovery, combustion efficiency, power
quality and central air conditioning. The energy saving and emission reduction projects produced an income of over RMB65.34 million.
2. Fulfillment of Corporate Social Responsibility (CSR)
2.1 Exploring new models for rural revitalisation
In this May, Midea Group organised a staff visit to the First Primary School of Guansuo Street, Guanling Buyi and Miao Autonomous County, Anshun
City, Guizhou Province, to carry out public welfare activities under the theme of "Build Dreams together with Midea through Technology". At the event,
Midea Group donated funds to assist in the construction of a science laboratory at the school and provided 600 science experiment kits to the local
community.
In addition, Midea Group continued to implement the East China and West China coordination mechanism. It spent RMB1 million in Qiandongnan
Prefecture, Guizhou Province as awards for teachers and students, motivating them to bear in mind the original mission of education, and driving high-
quality development in the local education.
2.2 Keeping to the plan of “Talent First, Education First”
In this April, Midea Group donated RMB70 million to support the introduction of the Second Affiliated Midea High School of the East China Normal
138
Midea Group Co., Ltd. Semi-Annual Report 2023
University into Beijiao, Shunde. As such, Midea has established cooperation with the East China Normal University on high-quality education from
primary school, middle school, to high school. When the school is put into use, it will provide more than 6,000 places in the primary, middle, and high
schools to meet the local demand for quality education resources and make a greater contribution to the local economic and scientific and technological
development.
2.3 Subsequent plans
It is Midea Group’s vision to “Bring Great Innovations to Life”. The Company hopes to deliver the power of science and technology through public welfare
activities, keep to the plan of “Talent First, Education First”, adhere to the sustainable long-termism, as well as promote both rural revitalisation and
talent development, so as to play its part in creating more value for society.
139
Midea Group Co., Ltd. Semi-Annual Report 2023
Section VI Significant Events
1. Undertakings of the Company’s Actual Controller, Shareholders, Related Parties
and Acquirer, as well as the Company and Other Commitment Makers Fulfilled in the
Reporting Period or Overdue at the Period-end
□Applicable N/A
No such cases in the Reporting Period.
2. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□Applicable N/A
No such cases in the Reporting Period.
3. Illegal Provision of Guarantees for External Parties
□Applicable N/A
No such cases in the Reporting Period.
4. Engagement and Disengagement of CPA Firm
Have the semi-annual financial statements been audited by a CPA firm?
□ Yes No
The semi-annual financial statements are unaudited by a CPA firm.
5. Explanation of the Board of Directors and the Supervisory Committee Regarding
the "Non-standard Audit Opinion" for the Reporting Period
□Applicable N/A
6. Explanation of the Board of Directors Regarding the "Non-standard Audit Opinion"
for Last Year
□Applicable N/A
140
Midea Group Co., Ltd. Semi-Annual Report 2023
7. Bankruptcy and Reorganization
□Applicable N/A
No such cases in the Reporting Period.
8. Litigation
Material litigation and arbitration:
□Applicable N/A
No such cases in the Reporting Period.
Other legal matters:
□Applicable N/A
9. Punishments and Rectifications
□Applicable N/A
No such cases in the Reporting Period.
10. Credit Conditions of the Company as well as Its Controlling Shareholder and
Actual Controller
□Applicable N/A
11. Significant Related Transactions
11.1 Continuing related transactions
Applicable □N/A
Proporti
Obtaina
on in
ble
the
Approv market Index
Transac total
Related Type of Content ed Mode price to the
Pricing Transa tion amount Over Disclos
transac Relatio the s of the transac of for the disclo
principl ction amount s of approv ure
tion n transac transac tion line settlem transac sed
e price (RMB’0 transac ed line date
party tion tion (RMB’0 ent tion of inform
00) tion of
00) the ation
the
same
same
kind
kind
141
Midea Group Co., Ltd. Semi-Annual Report 2023
(%)
Controll
ed by
Orinko family
Advanc membe www.
Procure Payme
ed r of Procure Market 1,900,0 30 April cninfo
ment of - 658,784 0.53% No nt after -
Plastics Compa ment price 00 2023 .com.
goods delivery
Co., ny’s cn
Ltd. actual
controll
er
Controll
Midea ed by
www.
Real Compa Payme
Sale of Market 720,53 30 April cninfo
Estate ny’s Sale - 108,564 0.06% No nt after -
goods price 0 2023 .com.
Holding actual delivery
cn
Limited controll
er
Details of any sales return of a
Zero
large amount
Give the actual situation in the
Reporting Period (if any) where a
The line for continuing related transactions between the Company and the related
forecast had been made for the
parties and their subsidiaries did not exceed the total amount of continuing related
total amounts of continuing
transactions estimated by the Company by type.
related-party transactions by type
to occur in the current period
Reason for any significant
difference between the
N/A
transaction price and the market
reference price (if applicable)
11.2 Related transactions regarding purchase or sales of assets or equity interests
□Applicable N/A
No such cases in the Reporting Period.
11.3 Related transactions arising from joint investments in external parties
□Applicable N/A
No such cases in the Reporting Period.
142
Midea Group Co., Ltd. Semi-Annual Report 2023
11.4 Credits and liabilities with related parties
□Applicable N/A
No such cases in the Reporting Period.
11.5 Transactions with related finance companies
□Applicable N/A
The Company did not make deposits in, receive loans or credit from and was not involved in any other
finance business with any related finance company or any of its related parties.
11.6 Transactions between finance companies controlled by the Company and related parties
□Applicable N/A
No related parties made deposits in, received loans or credit from or was involved in any other finance
business with any finance company controlled by the Company.
11.7 Other significant related transactions
□Applicable N/A
No such cases in the Reporting Period.
12. Significant Contracts and Their Execution
12.1 Trusteeship, contracting and leasing
12.1.1 Trusteeship
□Applicable N/A
No such cases in the Reporting Period.
12.1.2 Contracting
□Applicable N/A
12.1.3 Leasing
□Applicable N/A
143
Midea Group Co., Ltd. Semi-Annual Report 2023
12.2 Major guarantees
Applicable □N/A
Unit: RMB'000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosur Guar
Actual
e date of antee
occurrence Term
the Line of Actual for a
date (date Type of of Due
Guaranteed party guarante guarante guarante relate
of guarantee guara or not
e line e e amount d
agreement ntee
announce party
signing)
ment or not
No such cases
Total actual external
Total external guarantee line approved during the
0 guarantee amount during 0
Reporting Period (A1)
the Reporting Period (A2)
Total actual external
Total approved external guarantee line at the end of guarantee balance at the
0 0
the Reporting Period (A3) end of the Reporting
Period (A4)
Guarantees provided by the Company for its subsidiaries
Disclosur Guar
Actual
e date of antee
occurrence Term
the Line of Actual for a
date (date Type of of Due
Guaranteed party guarante guarante guarante relate
of guarantee guara or not
e line e e amount d
agreement ntee
announce party
signing)
ment or not
2023/4/2 2,000,00 One
Midea Group Finance Co., Ltd. 2023/1/30 - Joint liability No No
9 0 year
GD Midea Air-Conditioning Equipment 2023/4/2 12,400,0 2,195,88 One
2023/1/6 Joint liability No No
Co., Ltd. 9 00 0 year
Guangzhou Hualing Refrigerating 2023/4/2 2,400,00 One
2023/1/6 740 Joint liability No No
Equipment Co., Ltd. 9 0 year
Foshan Midea Carrier Air-Conditioning 2023/4/2 One
350,000 2023/1/6 - Joint liability No No
Equipment Co., Ltd. 9 year
GD Midea Group Wuhu Air-Conditioning 2023/4/2 4,100,00 One
- Joint liability No No
Equipment Co., Ltd. 9 0 year
Wuhu Maty Air-Conditioning Equipment 2023/4/2 One
600,000 2023/1/6 - Joint liability No No
Co., Ltd. 9 year
Midea Group Wuhan Refrigeration 2023/4/2 One
550,000 - Joint liability No No
Equipment Co., Ltd. 9 year
Guangdong Midea Precision Molding 2023/4/2 50,000 - Joint liability One No No
144
Midea Group Co., Ltd. Semi-Annual Report 2023
Technology Co., Ltd. 9 year
Handan Midea Air-Conditioning 2023/4/2 One
500,000 - Joint liability No No
Equipment Co., Ltd. 9 year
Chongqing Midea Air-Conditioning 2023/4/2 One
850,000 2023/4/25 80 Joint liability No No
Equipment Co., Ltd. 9 year
Midea Group Wuhan Heating & 2023/4/2 One
150,000 - Joint liability No No
Ventilating Equipment Co., Ltd. 9 year
Foshan Welling Washer Motor 2023/4/2 One
170,000 2023/4/21 390 Joint liability No No
Manufacturing Co., Ltd. 9 year
Guangdong Welling Motor Manufacturing 2023/4/2 1,070,00 One
2023/1/17 125,370 Joint liability No No
Co., Ltd. 9 0 year
Welling (Wuhu) Motor Manufacturing Co., 2023/4/2 One
130,000 - Joint liability No No
Ltd. 9 year
Huaian Welling Motor Manufacturing Co., 2023/4/2 One
110,000 - Joint liability No No
Ltd. 9 year
2023/4/2 1,900,00 One
Wuhu Welling Motor Sales Co., Ltd. 2023/2/27 470,000 Joint liability No No
9 0 year
2023/4/2 One
Hainan Welling Motor Sales Co., Ltd. 500,000 - Joint liability No No
9 year
2023/4/2 One
Anhui Welling Auto Parts Co., Ltd. 150,000 - Joint liability No No
9 year
2023/4/2 One
Anqing Welling Auto Parts Co., Ltd. 200,000 - Joint liability No No
9 year
2023/4/2 1,130,00 One
Guangdong Meizhi Compressor Limited 2023/1/17 181,780 Joint liability No No
9 0 year
Guangdong Meizhi Precision- 2023/4/2 One
515,000 2023/4/18 19,000 Joint liability No No
Manufacturing Co., Ltd. 9 year
2023/4/2 One
Anhui Meizhi Compressor Co., Ltd. 420,000 - Joint liability No No
9 year
Anhui Meizhi Precision Manufacturing 2023/4/2 One
50,000 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 4,500,00 One
Zhejiang Meizhi Compressor Co., Ltd. 2023/2/23 570,000 Joint liability No No
9 0 year
Guangdong Midea Environmental 2023/4/2 One
20,000 - Joint liability No No
Technologies Co., Ltd. 9 year
Guangdong Midea Intelligent 2023/4/2 One
150,000 - Joint liability No No
Technologies Co., Ltd. 9 year
2023/4/2 One
Dorna Technology Co., Ltd. 50,000 - Joint liability No No
9 year
Guangdong Midea Electromechanical 2023/4/2 One
150,000 - Joint liability No No
Technology Co., Ltd. 9 year
Guangdong Jiya Precision Machinery 2023/4/2 One
150,000 - Joint liability No No
Technology Co., Ltd. 9 year
145
Midea Group Co., Ltd. Semi-Annual Report 2023
MiSiliconn SemiConductor Technologies 2023/4/2 One
60,000 - Joint liability No No
Co., Ltd. 9 year
Servotronix Motion Technology 2023/4/2 One
50,000 - Joint liability No No
Development (Shenzhen) Ltd. 9 year
Guangdong Midea Kitchen Appliances 2023/4/2 6,417,97 1,643,38 One
2023/1/4 Joint liability No No
Manufacturing Co., Ltd. 9 0 0 year
Guangdong Witol Vacuum Electronic 2023/4/2 One
85,000 2023/2/24 340 Joint liability No No
Manufacture Co., Ltd. 9 year
Jiangsu Midea Cleaning Appliances Co., 2023/4/2 One
760,000 2023/1/9 3420 Joint liability No No
Ltd 9 year
Wuhu Midea Kitchen Appliances 2023/4/2 2,000,00 One
- Joint liability No No
Manufacturing Co., Ltd. 9 0 year
GD Midea Heating & Ventilating 2023/4/2 4,370,00 One
2023/1/12 131,250 Joint liability No No
Equipment Co., Ltd. 9 0 year
Hefei Midea Heating & Ventilating 2023/4/2 One
45,000 - Joint liability No No
Equipment Co., Ltd. 9 year
Chongqing Midea General Refrigeration 2023/4/2 One
160,000 2023/2/20 7350 Joint liability No No
Equipment Co., Ltd. 9 year
Meitong Energy Technology (Chongqing) 2023/4/2 One
120,000 - Joint liability No No
Co., Ltd. 9 year
Guangdong MeiKong Intelligent Building 2023/4/2 One
80,000 - Joint liability No No
Co., Ltd. 9 year
Shanghai M-BMS Intelligent Construction 2023/4/2 One
80,000 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 One
Winone Elevator Company Limited 790,000 2023/1/12 68,930 Joint liability No No
9 year
Hubei Midea Building Technology Co., 2023/4/2 One
30,000 - Joint liability No No
Ltd. 9 year
Ningbo Midea United Materials Supply 2023/4/2 5,040,00 One
2023/1/10 45,750 Joint liability No No
Co. Ltd. 9 0 year
Guangzhou Kaizhao Commercial and 2023/4/2 One
20,000 - Joint liability No No
Trading Co., Ltd 9 year
Guangdong Midea Consumer Electric 2023/4/2 One
200,000 2023/1/9 - Joint liability No No
Manufacturing Co., Ltd. 9 year
Foshan Shunde Midea Electrical Heating 2023/4/2 1,670,00 One
2023/1/9 157,110 Joint liability No No
Appliances Manufacturing Co., Ltd. 9 0 year
GD Midea Environment Appliances Mfg. 2023/4/2 1,400,00 One
2023/1/9 - Joint liability No No
Co., Ltd. 9 0 year
Wuhu Midea Life Appliances Mfg Co., 2023/4/2 2,200,00 One
2023/2/23 475,200 Joint liability No No
Ltd. 9 0 year
Foshan Midea Chungho Water 2023/4/2 One
130,000 - Joint liability No No
Purification Equipment. Co., Ltd. 9 year
Foshan Shunde Midea Washing 2023/4/2 2,500,00 One
2023/1/30 104,420 Joint liability No No
Appliances Manufacturing Co., Ltd. 9 0 year
146
Midea Group Co., Ltd. Semi-Annual Report 2023
Wuhu Midea Kitchen & Bath Appliances 2023/4/2 2,400,00 One
2023/1/13 490,770 Joint liability No No
Mfg. Co., Ltd. 9 0 year
Wuhu Midea Smart Kitchen Appliance 2023/4/2 One
66,000 2023/2/21 - Joint liability No No
Manufacturing Co., Ltd. 9 year
Foshan Shunde Midea Water Dispenser 2023/4/2 One
310,000 2023/3/8 12,420 Joint liability No No
Manufacturing Company Limited 9 year
2023/4/2 One
Hubei Midea Laundry Appliance Co., Ltd. 50,000 - Joint liability No No
9 year
2023/4/2 1,930,00 One
Hefei Midea Laundry Appliance Co., Ltd. 2023/1/16 288,850 Joint liability No No
9 0 year
2023/4/2 One
Wuxi Filin Electronics Co., Ltd. 200,000 - Joint liability No No
9 year
2023/4/2 4,345,00 One
Wuxi Little Swan Electric Co., Ltd. 2023/1/10 249,900 Joint liability No No
9 0 year
2023/4/2 3,000,00 1,338,66 One
Hefei Midea Refrigerator Co., Ltd. 2023/1/13 Joint liability No No
9 0 0 year
2023/4/2 One
Hefei Hualing Co., Ltd. 700,000 2023/1/30 320,250 Joint liability No No
9 year
2023/4/2 One
Hubei Midea Refrigerator Co., Ltd. 520,000 - Joint liability No No
9 year
Guangzhou Midea Hualing Refrigerator C 2023/4/2 One
700,000 2023/3/22 247,950 Joint liability No No
o., Ltd. 9 year
Little Swan (Jing Zhou) Sanjin Electronic 2023/4/2 One
50,000 - Joint liability No No
Appliances Limited 9 year
Toshiba Home Appliances Manufacturing 2023/4/2 One
100,000 - Joint liability No No
(Nanhai) Co., Ltd 9 year
2023/4/2 One
Midea Group E-Commerce Co., Ltd. 160,000 - Joint liability No No
9 year
Guangdong Midea Smart Link 2023/4/2 One
390,000 2023/1/1 1960 Joint liability No No
Technologies Co., Ltd. 9 year
2023/4/2 One
Reis Robotics (Kunshan) Co., Ltd. 200,000 2023/1/16 30,870 Joint liability No No
9 year
2023/4/2 One
KUKA Systems (China) CO., Ltd. 400,000 2023/1/5 93,810 Joint liability No No
9 year
KUKA Robotics Manufacturing China 2023/4/2 One
100,000 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 One
KUKA Robotics Guangdong Co., Ltd 200,000 - Joint liability No No
9 year
2023/4/2 One
KUKA Robotics (Shanghai) Co.,Ltd. 300,000 2023/1/1 46,760 Joint liability No No
9 year
2023/4/2 One
Shanghai Swisslog Healthcare Co., Ltd. 65,000 2023/2/22 19,440 Joint liability No No
9 year
Guangdong Swisslog Technology Co., 2023/4/2 One
40,000 - Joint liability No No
Ltd. 9 year
147
Midea Group Co., Ltd. Semi-Annual Report 2023
2023/4/2 One
Swisslog (Shanghai) Co., Ltd. 80,000 2023/1/1 8790 Joint liability No No
9 year
2023/4/2 One
Shanghai Swisslog Technology Co., Ltd. 200,000 2023/1/6 88,060 Joint liability No No
9 year
Guangdong Midea Intelligent Robotics 2023/4/2 One
100,000 - Joint liability No No
Co., Ltd. 9 year
Guangdong Midea-SIIX Electronics Co., 2023/4/2 One
100,000 2023/1/1 60 Joint liability No No
Ltd. 9 year
2023/4/2 One
Hefei Midea-SIIX Electronics Co., Ltd. 150,000 - Joint liability No No
9 year
Guangdong Meichuangxi Technology 2023/4/2 One
500,000 - Joint liability No No
Co., Ltd. 9 year
Guangdong Meicloud Technology Co., 2023/4/2 One
120,000 - Joint liability No No
Ltd. 9 year
2023/4/2 One
Foshan Meicloud Technology Co., Ltd. 30,000 - Joint liability No No
9 year
Guangdong Yueyun Industrial Internet 2023/4/2 One
10,000 - Joint liability No No
Innovative Technology Co., Ltd. 9 year
Midea International Corporation 2023/4/2 15,705,0 10,734,3 One
2023/1/1 Joint liability No No
Company Limited 9 00 40 year
Midea Investment Development 2023/4/2 8,100,00 3,251,61 One
2023/1/1 Joint liability No No
Company Limited 9 0 0 year
2023/4/2 One
Welling International (Hong Kong) Ltd 250,000 - Joint liability No No
9 year
Midea International Trading Company 2023/4/2 One
650,000 - Joint liability No No
Limited 9 year
Midea Electric Trading (Singapore) 2023/4/2 6,375,00 One
- Joint liability No No
Co.,Pte. Ltd. 9 0 year
Toshiba Lifestyle Products & Services 2023/4/2 1,154,40 One
2023/1/1 295,140 Joint liability No No
Corporation 9 0 year
2023/4/2 One
Toshiba Thailand Co., Ltd 152,400 - Joint liability No No
9 year
Toshiba Vietnam Consumer Products 2023/4/2 One
66,190 2023/2/23 - Joint liability No No
Co., Ltd 9 year
Toshiba Lifestyle Electronics Trading 2023/4/2 One
10,090 2023/1/1 910 Joint liability No No
Co., Ltd 9 year
Toshiba consumer products (THAILAND) 2023/4/2 One
243,310 2023/1/1 300,840 Joint liability No No
Co.,ltd 9 year
2023/4/2 One
Thai Toshiba Electric Industries Co., Ltd 17,760 2023/1/1 1490 Joint liability No No
9 year
2023/4/2 One
Control Component Co., Ltd 14,310 2023/1/1 120 Joint liability No No
9 year
2023/4/2 One
Clivet S.p.A. 100,000 - Joint liability No No
9 year
148
Midea Group Co., Ltd. Semi-Annual Report 2023
Midea (Egypt) Kitchen & water heater 2023/4/2 One
70,000 - Joint liability No No
appliances Co., Ltd 9 year
2023/4/2 25,000,0 23,631,3 One
Midea Electric Netherlands (I) B.V. 2023/1/1 Joint liability No No
9 00 00 year
Total actual guarantee
Total guarantee line for subsidiaries approved amount for subsidiaries
138,947,430 54,109,220
during the Reporting Period (B1) during the Reporting
Period (B2)
Total actual guarantee
Total approved guarantee line for subsidiaries at the balance for subsidiaries
138,947,430 47,654,690
end of the Reporting Period (B3) at the end of the
Reporting Period (B4)
Guarantees provided by subsidiaries for their subsidiaries
Disclosur Guar
Actual
e date of antee
occurrence Term
the Line of Actual for a
date (date Type of of Due
Guaranteed party guarante guarante guarante relate
of guarantee guara or not
e line e e amount d
agreement ntee
announce party
signing)
ment or not
2023/4/2 One
Toshiba Sales & Services Sdn. Bhd. 202,500 2023/1/5 4.7 Joint liability No No
9 year
2023/4/2 One
Toshiba Home Technology Corporation 7,630 2023/1/1 24,440 Joint liability No No
9 year
2023/4/2 One
Midea America Corp. 400,000 Joint liability No No
9 year
2023/4/2 One
Midea America (Canada) Corp 67,500 Joint liability No No
9 year
2023/4/2 One
Midea Mexico, S. DE R.L. DE C.V. 168,750 Joint liability No No
9 year
2023/4/2 One
Midea Consumer Appliances DMCC 33,750 Joint liability No No
9 year
2023/4/2 One
Orient Household Appliances Ltd.(Orient) 202,500 Joint liability No No
9 year
2023/4/2 One
Midea Italia S.r.l. 13,500 Joint liability No No
9 year
2023/4/2 One
Midea Europe GmbH 67,500 Joint liability No No
9 year
2023/4/2 One
Midea Electrics France 13,500 Joint liability No No
9 year
2023/4/2 One
Midea Home Appliances UK Ltd 13,500 Joint liability No No
9 year
2023/4/2 One
Midea Electrics Egypt 175,500 Joint liability No No
9 year
149
Midea Group Co., Ltd. Semi-Annual Report 2023
2023/4/2 One
Midea Electric Espana S.R.L. 13,500 Joint liability No No
9 year
2023/4/2 One
Concepcion Midea Inc. 50,000 Joint liability No No
9 year
Midea Scott & English Electronics Sdn. 2023/4/2 One
120,000 Joint liability No No
Bhd 9 year
2023/4/2 One
Pt. Midea Planet Indonesia 102,900 Joint liability No No
9 year
2023/4/2 One
Midea (Japan) Co., Ltd. 20,250 Joint liability No No
9 year
2023/4/2 One
MC Innovation Center Co., Ltd. 20,250 Joint liability No No
9 year
2023/4/2 One
Midea Electronics Australia Co Pty Ltd 13,500 Joint liability No No
9 year
2023/4/2 One
Meco Innovations Technology, LLC 6,700 Joint liability No No
9 year
2023/4/2 One
Midea India Private Limited 33,750 Joint liability No No
9 year
GMCC and Welling Appliance 2023/4/2 One
40,000 Joint liability No No
Component (Thailand) Co., Ltd. 9 year
2023/4/2 One
Wuhu Midea Annto Logistics Co., Ltd. 800,000 2023/1/5 12,740 Joint liability No No
9 year
2023/4/2 One
Ningbo Annto Logistics Co., Ltd. 300,000 - Joint liability No No
9 year
Hainan Annto Logistics Supply Chain 2023/4/2 One
200,000 - Joint liability No No
Management Co., Ltd. 9 year
Total actual guarantee
Total line for guarantees provided by subsidiaries for amount provided by
their subsidiaries approved during the Reporting 3,086,980 subsidiaries for their 37,190
Period (C1) subsidiaries during the
Reporting Period (C2)
Total actual guarantee
Total approved line for guarantees provided by balance provided by
subsidiaries for their subsidiaries at the end of the 3,086,980 subsidiaries for their 37,190
Reporting Period (C3) subsidiaries at the end of
the Reporting Period (C4)
Guarantees provided with the Company’s asset pool
Disclosur Guar
Actual
e date of antee
occurrence Term
the Line of Actual for a
date (date Type of of Due
Guaranteed party guarante guarante guarante relate
of guarantee guara or not
e line e e amount d
agreement ntee
announce party
signing)
ment or not
150
Midea Group Co., Ltd. Semi-Annual Report 2023
GD Midea Group Wuhu Air-Conditioning 2023/4/2 2,016,00 One
Joint liability No No
Equipment Co.,Ltd. 9 0 - year
GD Midea Air-Conditioning Equipment 2023/4/2 2,688,00 1,827,53 One
2023/2/15 Joint liability No No
Co.,Ltd. 9 0 0 year
Midea Group Wuhan Refrigeration 2023/4/2 One
672,000 - Joint liability No No
Equipment Co.,Ltd. 9 year
Wuhu Maty Air-Conditioning Equipment 2023/4/2 One
672,000 - Joint liability No No
Co., Ltd 9 year
2023/4/2 One
Anhui Welling Auto Parts Co., Ltd. 30,240 - Joint liability No No
9 year
2023/4/2 One
Anqing Welling Auto Parts Co., Ltd. 30,240 - Joint liability No No
9 year
2023/4/2 One
Dorna Technology Co., Ltd. 30,240 - Joint liability No No
9 year
Servotronix Motion Technology 2023/4/2 One
30,240 - Joint liability No No
Development (Shenzhen) Ltd. 9 year
Guangdong Jiya Precision Machinery 2023/4/2 One
75,600 - Joint liability No No
Technology Co., Ltd. 9 year
Guangdong Midea Electromechanical 2023/4/2 One
0 - Joint liability No No
Technology Co., Ltd. 9 year
MiSiliconn SemiConductor Technologies 2023/4/2 One
30,240 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 One
Wuhu Welling Motor Sales Co., Ltd. 756,020 2023/5/23 217,740 Joint liability No No
9 year
2023/4/2 1,028,18 One
Zhejiang Meizhi Compressor Co., Ltd. 2023/4/27 357,750 Joint liability No No
9 0 year
Guangdong Midea Kitchen Appliances 2023/4/2 1,361,00 One
2023/4/12 680,820 Joint liability No No
Manufacturing Co., Ltd. 9 0 year
Jiangsu Midea Cleaning Appliances Co., 2023/4/2 One
454,000 2023/4/25 183,160 Joint liability No No
Ltd 9 year
Wuhu Midea Kitchen Appliances 2023/4/2 One
454,000 Joint liability No No
Manufacturing Co., Ltd. 9 - year
2023/4/2 1,361,00 One
Hefei Midea Laundry Appliance Co., Ltd. Joint liability No No
9 0 - year
2023/4/2 1,361,00 One
Wuxi Little Swan Electric Co., Ltd. 2023/5/15 350,000 Joint liability No No
9 0 year
Guangzhou Midea Hualing Refrigerator C 2023/4/2 One
91,000 Joint liability No No
o., Ltd. 9 - year
2023/4/2 1,815,00 One
Hefei Midea Refrigerator Co., Ltd. - Joint liability No No
9 0 year
Guangdong Midea Intelligent Robotics 2023/4/2 One
30,000 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 One
Reis Robotics (Kunshan) Co., Ltd. 30,000 Joint liability No No
9 - year
151
Midea Group Co., Ltd. Semi-Annual Report 2023
2023/4/2 One
KUKA Robotics Guangdong Co., Ltd 10,000 Joint liability No No
9 - year
KUKA Robotics Manufacturing China 2023/4/2 One
0 Joint liability No No
Co.,Ltd 9 - year
2023/4/2 One
KUKA Systems (China) CO., Ltd. 10,000 - Joint liability No No
9 year
2023/4/2 One
Shanghai Swisslog Healthcare Co., Ltd. 20,000 - Joint liability No No
9 year
Ningbo Midea United Materials Supply 2023/4/2 One
520,000 2023/6/29 74,940 Joint liability No No
Co. Ltd. 9 year
Foshan Shunde Midea Washing 2023/4/2 One
665,000 2023/4/26 235,130 Joint liability No No
Appliances Manufacturing Co., Ltd. 9 year
Wuhu Midea Kitchen & Bath Appliances 2023/4/2 One
907,000 - Joint liability No No
Mfg. Co., Ltd. 9 year
2023/4/2 One
Midea Group E-Commerce Co., Ltd. 53,000 - Joint liability No No
9 year
Guangdong Midea Smart Link 2023/4/2 One
268,000 - Joint liability No No
Technologies Co., Ltd. 9 year
GD Midea Heating & Ventilating 2023/4/2 One
368,000 - Joint liability No No
Equipment Co., Ltd. 9 year
Hefei Midea Heating & Ventilating 2023/4/2 One
73,000 Joint liability No No
Equipment Co., Ltd. 9 - year
Chongqing Midea General Refrigeration 2023/4/2 One
49,000 Joint liability No No
Equipment Co., Ltd. 9 - year
Foshan Shunde Midea Electrical Heating 2023/4/2 One
302,000 Joint liability No No
Appliances Manufacturing Co., Ltd. 9 - year
Guangdong Meichuangxi Technology 2023/4/2 One
15,000 - Joint liability No No
Co., Ltd. 9 year
GD Midea Environment Appliances Mfg. 2023/4/2 One
363,000 2023/4/27 226,560 Joint liability No No
Co.,Ltd. 9 year
Wuhu Midea Life Appliances Mfg Co., 2023/4/2 1,361,00 One
- Joint liability No No
Ltd. 9 0 year
Hainan Annto Logistics Supply Chain 2023/4/2 One
150,000 - Joint liability No No
Management Co., Ltd. 9 year
2023/4/2 One
Ningbo Annto Logistics Co., Ltd. 100,000 2023/2/2 1270 Joint liability No No
9 year
Shenyang Annto Logistics Technology 2023/4/2 One
20,000 Joint liability No No
Co., Ltd. 9 - year
Guiyang Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
Wuhan Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
2023/4/2 One
Nanjing Meian Logistics Co., Ltd. 20,000 - Joint liability No No
9 year
152
Midea Group Co., Ltd. Semi-Annual Report 2023
Shanghai Annto Logistics Supply Chain 2023/4/2 One
20,000 2023/4/25 90 Joint liability No No
Technology Co., Ltd. 9 year
Jingzhou Meian Warehousing and 2023/4/2 One
20,000 - Joint liability No No
Transportation Co., Ltd. 9 year
Qihe Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
Hefei Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
Tianjin Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
Xuzhou Annto Logistics Technology Co., 2023/4/2 One
20,000 - Joint liability No No
Ltd. 9 year
Zhengzhou Annto Logistics Technology 2023/4/2 One
20,000 - Joint liability No No
Co., Ltd. 9 year
Chongqing Annto Logistics Technology 2023/4/2 One
20,000 - Joint liability No No
Co., Ltd. 9 year
2023/4/2 One
Wuhu Midea Annto Logistics Co., Ltd. 160,000 2023/1/13 8,120 Joint liability No No
9 year
Total actual guarantee
Total line for guarantees provided with the amount provided with the
Company’s asset pool approved during the 20,650,000 Company’s asset pool 4,163,110
Reporting Period (D1) during the Reporting
Period (D2)
Total actual guarantee
Total approved line for guarantees provided with the balance provided with the
Company’s asset pool at the end of the Reporting 20,650,000 Company’s asset pool at 4,163,110
Period (D3) the end of the Reporting
Period (D4)
Total guarantee amount (total of the above-mentioned four kinds of guarantees)
Total actual guarantee
Total guarantee line approved during the Reporting amount during the
162,684,410 58,309,520
Period (A1+B1+C1+D1) Reporting Period
(A2+B2+C2+D2)
Total actual guarantee
Total approved guarantee line at the end of the balance at the end of the
162,684,410 51,854,990
Reporting Period (A3+B3+C3+D3) Reporting Period
(A4+B4+C4+D4)
Proportion of the total actual guarantee amount (A4+B4+C4+D4) in net
35.43%
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and
0
their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities with a
47,100,910
liability-to-asset ratio over 70% (E)
153
Midea Group Co., Ltd. Semi-Annual Report 2023
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total amount of the three kinds of guarantees above (D+E+F) 47,100,910
Joint responsibilities possibly borne for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if
N/A
any)
12.3 Entrusted asset management
□ Applicable N/A
No such cases in the Reporting Period.
12.4 Other significant contracts
□ Applicable N/A
No such cases in the Reporting Period.
13. Other Significant Events
□ Applicable N/A
14. Significant Events of Subsidiaries
Applicable □ N/A
The designated placement of 252,467,541 shares offered to the Company by its subsidiary, CLOU
Electronics, were listed on the main board of the Shenzhen Stock Exchange on 2 June 2023. Upon the
said ownership change, the Company becomes the controlling shareholder of CLOU Electronics and
holds a total of 378,514,789 shares (or 22.79%) in it.
154
Midea Group Co., Ltd. Semi-Annual Report 2023
Section VII Changes in Shares and Information about
Shareholders
1. Changes in Shares
1.1 Changes in shares
Unit: share
Increase/decrease in Reporting
Before After
Period (+/-)
Percentag Percenta
Shares New issue Others Subtotal Shares
e (%) ge (%)
- -
1. Restricted shares 143,615,016 2.05 138,585,703 1.97
5,029,313 5,029,313
1.1 Shares held by
the state
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
- -
other domestic 141,131,474 2.02 136,319,411 1.94
4,812,063 4,812,063
investors
Among which:
Shares held by
2,363,601 0.03 2,363,601 0.03
domestic
corporations
Shares held by - -
138,767,873 1.98 133,955,810 1.91
domestic individuals 4,812,063 4,812,063
1.4 Shares held by
2,483,542 0.04 -217,250 -217,250 2,266,292 0.03
foreign investors
Among which:
Shares held by
foreign corporations
Shares held by
2,483,542 0.04 -217,250 -217,250 2,266,292 0.03
foreign individuals
2. Non-restricted 6,853,658,0 27,406,13 29,937,52 6,883,595,5
97.95 2,531,396 98.03
shares 60 2 8 88
2.1 RMB common 6,853,658,0 27,406,13 29,937,52 6,883,595,5
97.95 2,531,396 98.03
shares 60 2 8 88
2.2 Domestically
listed foreign shares
155
Midea Group Co., Ltd. Semi-Annual Report 2023
2.3 Overseas listed
foreign shares
2.4 Other
6,997,273,0 27,406,13 - 24,908,21 7,022,181,2
3. Total shares 100.00 100.00
76 2 2,497,917 5 91
Reasons for the changes in shares
Applicable □N/A
a. For the reasons of certain awardees’ resignation, violation of the Company’s “Red Lines”, being
reassigned or other factors, on 18 April 2023, the Company repurchased and retired 218,958 shares of
14 awardees under the 2018 Restricted Share Incentive Scheme, 431,250 shares of 14 awardees under
the 2019 Restricted Share Incentive Scheme, 753,209 shares of 25 awardees under the 2020 Restricted
Share Incentive Scheme, 824,500 shares of 18 awardees under the 2021 Restricted Share Incentive
Scheme, and 270,000 shares of 10 awardees under the 2022 Restricted Share Incentive Scheme,
totaling 2,497,917 restricted shares.
b. The 2,566,396 restricted shares of a total of 172 eligible awardees for the fourth unlocking period of
the first grant under the 2018 Restricted Share Incentive Scheme were unlocked on 3 July 2023, including
144,750 restricted shares of foreign employees.
c. In the Reporting Period, the awardees of stock options chose to exercise 27,406,132 shares, which
have been registered into the Company’s share capital.
d. In the Reporting Period, locked-up shares held by senior management increased by 35,000 shares.
Approval of share changes
□Applicable N/A
Transfer of share ownership
□Applicable N/A
Progress of any share repurchase
Applicable □N/A
As of 10 March 2023, the Company cumulatively repurchased 48,558,888 shares (0.6927% of the
156
Midea Group Co., Ltd. Semi-Annual Report 2023
Company’s total share capital). With the highest trading price being RMB60.05/share and the lowest
being RMB48.08/share, the total payment amounted to RMB2,636,704,772.26 (exclusive of transaction
costs). As such, the implementation of this share repurchase plan has been completed.
Progress of any repurchased share reduction through centralized price bidding
□Applicable N/A
Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and the last Reporting Period
□Applicable N/A
Other contents that the Company considers necessary or is required by the securities regulatory
authorities to disclose
□Applicable √N/A
1.2 Changes in restricted shares
Applicable □N/A
Unit: share
Increase Repurch
Opening Unlocked Closing
Name of d in ased Reason for Date of
restricted in current restricted
shareholder current and change unlocking
shares period shares
period retired
Awardees of the
first grant of Locked up
2,566,39
2018 Restricted 2,947,667 0 148,125 233,146 according to 3 July 2023
6
Share Incentive the Scheme
Scheme
Locked up for
Zhong Zheng 187,114 0 20,000 0 207,114 senior -
management
Locked up for
Zhao Wenxin 60,000 20,000 0 0 40,000 senior -
management
Locked up for
Zhang Xiaoyi 211,431 0 25,000 0 236,431 senior -
management
Locked up for
Wang Jinliang 35,000 20,000 0 0 15,000 senior -
management
157
Midea Group Co., Ltd. Semi-Annual Report 2023
Locked up for
Jiang Peng 139,675 20,000 0 0 119,675 senior -
management
Locked up for
Guan Jinwei 234,000 0 25,000 0 259,000 senior -
management
Locked up for
Hu Ziqiang 275,000 0 25,000 0 300,000 senior -
management
2,626,39
Total 4,089,887 95,000 148,125 1,410,366 -- --
6
2. Issuance and Listing of Securities
□Applicable √N/A
3. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number
of preference
shareholders
Total number of common
339,281 with resumed 0
shareholders at the period-end
voting rights at
the period-end
(if any)
5% or greater common shareholders or top 10 common shareholders
Number Shares in pledge
Shareh Total Increase/d Number of
of or frozen
Nature of olding common ecrease non-
Name of restricted
sharehold percen shares held during the restricted
shareholder common Stat
er tage at the Reporting common Shares
shares us
(%) period-end Period shares held
held
Domestic
non-state- In
Midea Holding 30.89 2,169,178,7 2,169,178,7 100,000,00
owned - 0 pled
Co., Ltd. % 13 13 0
corporatio ge
n
Hong Kong Foreign
19.72 1,384,550,0 - 1,384,550,0
Securities Clearing corporatio 0
% 34 48,164,542 34
Company Limited n
China Securities Domestic
2.82% 198,145,134 - 0 198,145,134
Finance Co., Ltd. non-state-
158
Midea Group Co., Ltd. Semi-Annual Report 2023
owned
corporatio
n
Domestic 87,742,8
Fang Hongbo 1.67% 116,990,492 - 29,247,623
individual 69
State-
Central Huijin
owned
Asset 1.26% 88,260,460 - 0 88,260,460
corporatio
Management Ltd.
n
Domestic
Huang Jian 1.23% 86,170,000 30,000 0 86,170,000
individual
Canada Pension
Plan Investment Foreign
Board－ own corporatio 0.84% 58,703,400 -3,210,503 0 58,703,400
funds (stock n
exchange)
Foreign
UBS AG corporatio 0.78% 54,464,241 34,297,436 0 54,464,241
n
Foreign
Li Jianwei 0.66% 46,154,545 -110,000 0 46,154,545
individual
In
Domestic
Huang Xiaoxiang 0.54% 37,835,332 0 0 37,835,332 pled 20,147,914
individual
ge
Strategic investors or general
corporations becoming top-ten
N/A
common shareholders due to
placing of new shares
Related-parties or acting-in-
concert parties among the N/A
shareholders above
Explain if any of the
shareholders above was
involved in entrusting/being N/A
entrusted with voting rights or
waiving voting rights
Special account for repurchased 146,638,028 shares (or 2.09% of the Company’s total share capital) were held in the
shares among the top 10 special account for repurchased shares of Midea Group Co., Ltd. at the end of the
shareholders Reporting Period.
Top 10 non-restricted common shareholders
Number of non-restricted common shares Type of shares
Name of shareholder
held at the period-end Type Shares
RMB common
Midea Holding Co., Ltd. 2,169,178,713 2,169,178,713
stock
159
Midea Group Co., Ltd. Semi-Annual Report 2023
Hong Kong Securities Clearing RMB common
1,384,550,034 1,384,550,034
Company Limited stock
China Securities Finance Co., RMB common
198,145,134 198,145,134
Ltd. stock
Central Huijin Asset RMB common
88,260,460 88,260,460
Management Ltd. stock
RMB common
Huang Jian 86,170,000 86,170,000
stock
Canada Pension Plan
RMB common
Investment Board－own funds 58,703,400 58,703,400
stock
(stock exchange)
RMB common
UBS AG 54,464,241 54,464,241
stock
RMB common
Li Jianwei 46,154,545 46,154,545
stock
RMB common
Huang Xiaoxiang 37,835,332 37,835,332
stock
RMB common
Merrill Lynch International 36,806,075 36,806,075
stock
Related-parties or acting-in-
concert parties among the top
ten non-restricted common
shareholders and between the N/A
top ten non-restricted common
shareholders and the top ten
common shareholders
Explanation on the top 10 The Company’s shareholder Huang Xiaoxiang holds 28,635,332 shares in the Company
common shareholders through his common securities account and 9,200,000 shares in the Company through
participating in securities margin his account of collateral securities for margin trading, representing a total holding of
trading (if any) (see Note 4) 37,835,332 shares in the Company.
Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the
Company conduct any promissory repurchase during the Reporting Period
□Yes No
4. Changes in Shareholdings of Directors, Supervisors and Senior Management
□Applicable √N/A
No changes occurred to the shareholdings of the Company’s directors, supervisors and senior
management during the Reporting Period. For further information, see the 2022 Annual Report.
160
Midea Group Co., Ltd. Semi-Annual Report 2023
5. Change of Controlling Shareholder or Actual Controller in the Reporting Period
Change of the controlling shareholder during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
Change of the actual controller during the Reporting Period
□Applicable √N/A
No such cases in the Reporting Period.
161
Midea Group Co., Ltd. Semi-Annual Report 2023
Section VIII Preference Shares
□ Applicable N/A
No such cases in the Reporting Period.
162
Midea Group Co., Ltd. Semi-Annual Report 2023
Section IX Bonds
1. Enterprise Bonds
□ Applicable N/A
No such cases in the Reporting Period.
2. Corporate Bonds
Applicable □ N/A
2.1 General information on corporate bonds
Way of
principal
Outstand
Bond Bond Date of Value Interest repayme Place of
Abbr. Maturity ing
name code issuance date rate nt and trading
balance
interest
payment
Midea Interest
Investme payable
nt on a
The
Develop half-year
MIDEAZ Stock
ment ISIN basis,
2.88% 2022-02- 2022-02- 2027-02- USD450 Exchang
Compan XS24321 2.88% with the
02/24/20 16 24 24 million e of
y Limited 30453 principal
27 Hong
2.88% repayabl
Kong
Secured e in full
Notes upon
2027 maturity
Investor eligibility arrangements
N/A
(if any)
Trading system applicable N/A
Risk of termination of listing and
trading (if any) and No such risk
countermeasures
Overdue bonds
□ Applicable N/A
2.2 Triggering and execution of issuer or investor option clauses and investor protection clauses
□ Applicable N/A
163
Midea Group Co., Ltd. Semi-Annual Report 2023
2.3 Changes in credit ratings in the Reporting Period
□ Applicable N/A
2.4 Execution and changes with respect to guarantees, repayment plans and other repayment-
ensuring measures in the Reporting Period, as well as the impact on the interests of bond holders
□ Applicable N/A
3. Debt Instruments as a Non-financial Enterprise
□ Applicable N/A
No such cases in the Reporting Period.
4. Convertible Corporate Bonds
□ Applicable N/A
No such cases in the Reporting Period.
5. Consolidated Loss of the Reporting Period Over 10% of Net Assets as at the End
of Last Year
□ Applicable N/A
6. Key Financial Information of the Company in the Past Two Years
Unit: RMB’000
Item 30 June 2023 31 December 2022 Change
Current ratio 111.46% 126.54% -15.08%
Debt/asset ratio 65.80% 64.05% 1.76%
Quick ratio 95.00% 98.38% -3.38%
H1 2023 H1 2022 Change
Net profit before non-
17,941,154 15,792,300 13.61%
recurring gains and losses
EBITDA/debt ratio 28.21% 23.02% 5.20%
Interest cover (times) 15.49 22.70 -31.76%
Cash-to-interest cover (times) 38.01 31.11 22.20%
EBITDA-to-interest cover
17.65 26.45 -33.25%
(times)
Loan repayment ratio (%) 100% 100% 0%
Interest payment ratio (%) 100% 100% 0%
164
Midea Group Co., Ltd. Semi-Annual Report 2023
Section X Financial Report
1. Auditor’s Report
Have the semi-annual financial statements been audited by a CPA firm?
□ Yes No
The semi-annual financial statements are unaudited by a CPA firm.
2. Financial Statements
(All amounts in RMB’000 Yuan unless otherwise stated)
165
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
30 June 31 December 30 June 31 December
2023 2022 2023 2022
ASSETS Note Consolidated Consolidated Company Company
Current assets:
Cash at bank and on hand 4(1) 71,734,919 55,270,099 29,731,163 28,492,401
Financial assets held for
trading 4(2) 8,194,001 3,284,593 414,681 274,120
Derivative financial assets 512,686 665,484 - -
Notes receivable 4(3) 6,914,310 4,758,129 - -
Accounts receivable 4(4) 36,454,972 28,237,973 - -
Receivables financing 4(6) 15,466,934 13,526,540 - -
Advances to suppliers 4(7) 4,471,677 4,367,211 28,348 34,724
Contract assets 4(8) 4,703,917 4,498,956 - -
Loans and advances 4(9) 16,752,838 14,138,756 - -
Other receivables 4(5), 17(1) 1,862,865 2,211,177 24,272,900 26,175,101
Inventories 4(10) 33,693,045 46,044,897 - -
Current portion of non-
current assets 4(11) 36,895,538 37,553,078 31,984,594 33,168,421
Other current assets 4(12) 42,644,014 46,542,378 31,580,726 33,476,601
Total current assets 280,301,716 261,099,271 118,012,412 121,621,368
Non-current assets:
Other debt investments 4(13) 6,212,062 11,094,259 3,278,230 7,215,301
Long-term receivables 4(14) 621,598 614,598 - -
Loans and advances 4(9) 1,393,851 693,294 - -
Long-term equity
investments 4(15), 17(2) 4,731,210 5,188,817 74,427,719 73,103,569
Investments in other equity
instruments 41,292 41,359 - -
Other non-current financial 9,197,875
assets 4(16) 10,625,244 300,325 347,698
Investment properties 1,366,242 809,936 365,853 386,435
Fixed assets 4(17) 28,336,765 26,082,992 1,406,330 1,223,553
Construction in progress 4(18) 5,414,509 3,843,777 538,168 504,757
Right-of-use assets 4(19) 2,687,642 2,339,878 4,207 8,040
Intangible assets 4(20) 18,953,786 16,908,915 645,400 653,320
Goodwill 4(21) 30,925,071 28,548,653 - -
Long-term prepaid expenses 4(22) 1,613,099 1,579,899 78,183 85,109
Deferred tax assets 4(23) 12,439,908 10,244,296 270,370 327,251
Other non-current assets 4(24) 58,503,009 42,840,079 49,649,040 35,423,939
Total non-current assets 182,437,919 161,455,996 130,963,825 119,278,972
TOTAL ASSETS 462,739,635 422,555,267 248,976,237 240,900,340
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
-1-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)
AS AT 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
30 June 31 December 30 June 31 December
LIABILITIES AND 2023 2022 2023 2022
SHAREHOLDERS’ EQUITY Note Consolidated Consolidated Company Company
Current liabilities：
Short-term borrowings 4(27) 19,289,107 5,169,480 400,000 -
Customer deposits and deposits
from banks and other
financial institutions 47,551 77,469 - -
Financial liabilities held for
trading 1,434,319 1,580,771 - -
Derivative financial liabilities 584,017 234,606 - -
Notes payable 4(28) 14,236,566 25,572,421 - -
Accounts payable 4(29) 71,684,891 64,233,225 - -
Contract liabilities 4(30) 29,636,542 27,960,038 - -
Employee benefits payable 4(31) 6,160,366 7,152,217 83,773 173,824
Taxes payable 4(32) 6,343,751 4,955,335 566,374 718,181
Other payables 4(33) 4,941,956 4,322,025 181,629,265 159,953,351
Current portion of non-current
liabilities 4(34) 21,798,602 7,240,626 12,424,968 5,896,701
Other current liabilities 4(35) 75,314,120 57,843,528 57,946 77,066
Total current liabilities 251,471,788 206,341,741 195,162,326 166,819,123
Non-current liabilities:
Long-term borrowings 4(36) 39,030,039 50,685,948 9,000,000 15,619,900
Debentures payable 4(37) 3,281,840 3,163,616 - -
Lease liabilities 4(38) 1,767,894 1,507,480 - 2,350
Provisions 650,873 394,977 - -
Deferred income 4(39) 1,772,248 1,721,092 190,941 152,548
Long-term employee benefits
payable 4(40) 1,410,678 1,488,456 - -
Deferred tax liabilities 4(23) 5,081,727 4,647,673 - -
Other non-current liabilities 30,033 680,482 - -
Total non-current liabilities 53,025,332 64,289,724 9,190,941 15,774,798
Total liabilities 304,497,120 270,631,465 204,353,267 182,593,921
Shareholders' equity:
Share capital 4(41) 7,022,181 6,997,273 7,022,181 6,997,273
Capital surplus 4(43) 20,918,536 19,693,139 29,136,349 27,826,208
Less: Treasury stock 4(42) (13,819,040) (14,933,944) (13,819,040) (14,933,944)
Other comprehensive income 4(44) 125,391 108,289 11,701 (5,679)
General risk reserve 677,971 671,999 - -
Special reserve 16,721 16,350 - -
Surplus reserve 4(45) 10,702,928 10,702,928 10,702,928 10,702,928
Undistributed profits 4(46) 120,723,905 119,679,202 11,568,851 27,719,633
Total equity attributable to
shareholders of the Company 146,368,593 142,935,236 44,622,970 58,306,419
Minority interests 11,873,922 8,988,566 - -
Total shareholders' equity 158,242,515 151,923,802 44,622,970 58,306,419
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 462,739,635 422,555,267 248,976,237 240,900,340
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
-2-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
For the six months For the six months For the six For the six
ended 30 June ended 30 June months ended months ended
2023 2022 30 June 2023 30 June 2022
Item Note Consolidated Consolidated Company Company
Total revenue 197,795,614 183,663,399 552,756 824,660
Including: Operating revenue 4(47), 17(3) 196,988,402 182,661,009 552,756 824,660
Interest income 4(48) 806,891 1,001,960 - -
Fee and commission income 321 430 - -
Total operating cost (176,388,077) (165,037,325) 411,775 206,836
Including: Cost of sales 4(47) (147,276,358) (140,424,168) (20,582) (20,820)
Interest costs 4(48) (19,681) (33,643) - -
Fee and commission expenses (753) (1,518) - -
Taxes and surcharges 4(49) (1,040,376) (798,939) (11,951) (10,053)
Selling and distribution expenses 4(50) (17,133,216) (14,698,373) - -
General and administrative expenses 4(51) (5,670,400) (4,951,069) (579,154) (785,386)
Research and development expenses 4(52) (6,610,954) (5,865,033) - -
Finance income 4(53) 1,363,661 1,735,418 1,023,462 1,023,095
Including: Interest expenses (1,525,683) (867,954) (1,445,938) (1,264,787)
Interest income 3,280,782 2,764,267 2,471,387 2,294,576
Add: Other income 4(59) 772,764 644,525 23,448 18,782
Investment income 4(57), 17(4) 410,154 607,847 189,439 272,392
Including: Investment income from associates
and joint ventures 348,545 263,014 124,458 126,297
Gains/(Losses) on changes in fair value 4(56) (103,703) (749,742) 126,469 (80,116)
Asset impairment losses 4(54) (189,060) (230,679) - -
Credit impairment losses 4(55) (221,424) (192,891) 551 (567)
Losses on disposal of assets 4(58) 8,525 18,962 (65) (280)
Operating profit 22,084,793 18,724,096 1,304,373 1,241,707
Add: Non-operating income 124,256 162,480 1,715 27,359
Less: Non-operating expenses (101,742) (53,628) (333) (247)
Total profit 22,107,307 18,832,948 1,305,755 1,268,819
Less: Income tax expenses 4(60) (3,578,491) (2,710,551) (274,921) (364,840)
Net profit 18,528,816 16,122,397 1,030,834 903,979
(1) Classified by continuity of operations
Net profit from continuing operations 18,528,816 16,122,397 1,030,834 903,979
Net profit from discontinued operations - - - -
(2) Classified by ownership of the equity
Attributable to shareholders of the Company 18,232,291 15,995,496 1,030,834 903,979
Minority interests 296,525 126,901 - -
Other comprehensive income, net of tax 36,373 406,142 17,380 1,021
Other comprehensive income attributable to equity
owners of the Company, net of tax 17,102 470,720 17,380 1,021
(1) Other comprehensive income items which will not be
reclassified subsequently to profit or loss (21,788) 185,263 - -
1) Changes arising from remeasurement of defined
benefit plan (21,788) 183,574 - -
2) Changes in fair value of investments in other equity
instruments - 1,689 - -
(2) Other comprehensive income items which will be
reclassified subsequently to profit or loss 38,890 285,457 17,380 1,021
1) Other comprehensive income that will be
transferred subsequently to profit or loss under the
equity method 35,908 47 17,380 1,021
2) Cash flow hedging reserve (124,535) (613,659) - -
3) Differences on translation of foreign currency
financial statements 153,161 899,069 - -
4) Others (25,644)
Other comprehensive income attributable to minority
shareholders, net of tax 19,271 (64,578) - -
Total comprehensive income 18,565,189 16,528,539 1,048,214 905,000
Attributable to equity owners of the Company 18,249,393 16,466,216 1,048,214 905,000
Attributable to minority interests 315,796 62,323 - -
Earnings per share
(1) Basic earnings per share 4(61) 2.67 2.34 Not applicable Not applicable
(2) Diluted earnings per share 4(61) 2.66 2.34 Not applicable Not applicable
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
-3-
MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
For the six For the six months For the six For the six
months ended 30 ended 30 June months ended months ended
June 2023 2022 30 June 2023 30 June 2022
Item Note Consolidated Consolidated Company Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services 174,235,446 153,366,180 - -
Net increase in customer deposits and deposits from banks and
other financial institutions - 20,646 - -
Net decrease in loans and advances - 4,692,117 - -
Net decrease in deposits with the Central Bank, banks and
other financial institutions - 7,470 - -
Net increase in borrowings from the Central Bank - 70,261 - -
Cash received from interest, fee and commission 816,416 1,000,789 - -
Refund of taxes and surcharges 4,053,564 5,236,807 - -
Cash received relating to other operating activities 4(62)(a) 3,291,850 3,354,892 24,634,108 30,323,333
Sub-total of cash inflows 182,397,276 167,749,162 24,634,108 30,323,333
Cash paid for goods and services (100,290,626) (104,212,384) - -
Net increase in loans and advances (3,312,680) - - -
Net decrease in customer deposits and deposits from banks
and other financial institutions (29,918) - - -
Net increase in deposits with the Central Bank (251,030) - - -
Cash paid for interest, fee and commission (20,434) (35,840) - -
Cash paid to and on behalf of employees (20,253,369) (18,431,348) (271,129) (241,178)
Payments of taxes and surcharges (9,975,407) (8,683,607) (333,143) (352,102)
Cash paid relating to other operating activities 4(62)(b) (18,479,138) (14,991,273) (1,193,353) (1,107,662)
Sub-total of cash outflows (152,612,602) (146,354,452) (1,797,625) (1,700,942)
Net cash flows from operating activities 4(62)(c) 29,784,674 21,394,710 22,836,483 28,622,391
2. Cash flows from investing activities：
Cash received from disposal of investments 56,866,188 50,554,179 44,664,000 33,400,000
Cash received from returns on investments 3,426,440 3,023,041 2,811,327 1,889,667
Net cash received from disposal of fixed assets, intangible -
assets and other long-term assets 113,016 64,531 23
Net cash received from disposal of subsidiaries and other -
business units 3,000 14,829 6,500
Cash received relating to other investing activities 373,816 335,082 - -
Sub-total of cash inflows 60,782,460 53,991,662 47,475,327 35,296,190
Cash paid to acquire fixed assets, intangible assets and other
long-term assets (2,794,669) (2,868,894) (340,029) (283,430)
Cash paid to acquire investments (84,960,686) (57,309,340) (53,052,212) (41,670,159)
Net cash paid to acquire subsidiaries and other business units - (376,280) - -
Cash paid relating to other investing activities (73,793) - - -
Sub-total of cash outflows (87,829,148) (60,554,514) (53,392,241) (41,953,589)
Net cash flows from investing activities (27,046,688) (6,562,852) (5,916,914) (6,657,399)
3. Cash flows from financing activities：
Cash received from capital contributions 1,870,241 1,134,582 1,859,226 1,133,582
Including: Cash received from capital contributions by minority
shareholders of subsidiaries 11,015 1,000 - -
Cash received from borrowings 14,310,153 16,025,436 400,000 4,000,000
Cash received from issuance of medium-term debentures - 2,841,690 - -
Cash received from issuance of short-term financing bonds - 3,999,500 - 3,999,500
Cash received relating to other financing activities 282,897 89,498 - -
Sub-total of cash inflows 16,463,291 24,090,706 2,259,226 9,133,082
Cash repayments of borrowings (3,772,807) (3,916,525) (89,900) (89,900)
Cash paid for repayment of short-term financing bonds - - - -
Cash payments for interest expenses and distribution of
dividends or profits (18,167,904) (12,537,953) (18,760,464) (13,313,757)
Including: Cash payments for dividends or profit to
minority shareholders of subsidiaries (100,216) (49,705) - -
Cash payments relating to other financing activities (960,508) (1,853,185) (69,822) (1,357,933)
Sub-total of cash outflows (22,901,219) (18,307,663) (18,920,186) (14,761,590)
Net cash flows from financing activities (6,437,928) 5,783,043 (16,660,960) (5,628,508)
4. Effect of foreign exchange rate changes on cash and
cash equivalents 128,769 145,787 - -
5. Net increase in cash and cash equivalents (3,571,173) 20,760,688 258,609 16,336,484
Add: Cash and cash equivalents at the beginning of
the period 51,131,968 40,550,039 27,904,229 21,957,042
6. Cash and cash equivalents at the end of the period 4(62)(d) 47,560,795 61,310,727 28,162,838 38,293,526
Legal representative: Principal in charge of accounting: Head of accounting department:
Fang Hongbo Zhong Zheng Chen Lihong
-4-
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the current period
Attributable to equity owners of the Company
Other
Less: Treasury comprehensive Undistributed Total shareholders'
Item Share capital Capital surplus stock income General risk reserve Special reserve Surplus reserve profits Minority interests equity
Balance at the end of the prior year 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
Add: Changes in accounting policies - - - - - - - - - -
Balance at the beginning of the current
year 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
Movements for the current period 24,908 1,225,397 1,114,904 17,102 5,972 371 - 1,044,703 2,885,356 6,318,713
(1) Total comprehensive income - - - 17,102 - - - 18,232,291 315,796 18,565,189
(2) Capital contribution and withdrawal
by shareholders 24,908 1,302,058 1,114,904 - - - - - 2,563,748 5,005,618
1). Capital contribution by
shareholders 27,406 1,660,427 - - - - - - 17,897 1,705,730
2). Business combinations - - - - - - - - 2,551,324 2,551,324
3). Share-based payment
included in shareholders’
equity - 187,687 - - - - - - 21,862 209,549
4) Others (2,498) (546,056) 1,114,904 - - - - - (27,335) 539,015
(3) Profit distribution - - - - 5,972 - - (17,187,588) (62,054) (17,243,670)
1). Appropriation to surplus reserve - - - - - - - - - -
2). Appropriation to general risk
reserve - - - - 5,972 - - (5,972) - -
3). Profit distribution to shareholders - - - - - - - (17,181,616) (62,054) (17,243,670)
4) Others - - - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - - - -
1). Transfer from capital surplus to
share capital - - - - - - - - - -
2). Transfer from surplus reserve to
share capital - - - - - - - - - -
3). Surplus reserve used to offset
accumulated losses - - - - - - - - - -
4) Others - - - - - - - - - -
(5) Specific reserve - - - - - 371 - - 123 494
1). Appropriation in the current
period - - - - - 1,768 - - 472 2,240
2).Use in the current period - - - - - (1,397) - - (349) (1,746)
(6) Others - (76,661) - - - - - - 67,743 (8,918)
Balance at the end of the current period 7,022,181 20,918,536 (13,819,040) 125,391 677,971 16,721 10,702,928 120,723,905 11,873,922 158,242,515
Legal representative: Fang Hongbo Principal in charge of accounting: Zhong Zheng Head of accounting department: Chen Lihong
-5-
Fang Hongbo
MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the prior year
Attributable to equity owners of the Company
Other
Less: Treasury comprehensive Undistributed Total shareholders'
Item Share capital Capital surplus stock income General risk reserve Special reserve Surplus reserve profits Minority interests equity
Balance at the end of the prior year 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Add: Changes in accounting policies - - - - - - - - - -
Balance at the beginning of the current
year 6,986,564 20,516,930 (14,044,550) (1,758,948) 719,922 15,542 9,449,901 102,982,763 9,956,952 134,825,076
Movements for the current year 10,709 (823,791) (889,394) 1,867,237 (47,923) 808 1,253,027 16,696,439 (968,386) 17,098,726
(1) Total comprehensive income - - - 1,865,886 - - - 29,553,507 283,760 31,703,153
(2) Capital contribution and withdrawal
by shareholders 10,709 680,417 (889,394) - - - - - (969,698) (1,167,966)
1). Capital contribution by
shareholders 18,602 1,123,649 - - - - - - 26,815 1,169,066
2). Business combinations - - - - - - - - 89,520 89,520.00
3). Share-based payment included in
shareholders’ equity - 765,914 - - - - - - 45,583 811,497
4) Others (7,893) (1,209,146) (889,394) - - - - - (1,131,616) (3,238,049)
(3) Profit distribution - - - - (47,923) - 1,253,027 (12,857,129) (291,638) (11,943,663)
1). Appropriation to surplus reserve - - - - - - 1,253,027 (1,253,027) - -
2). Appropriation to general risk reserve - - - - (47,923) - - 47,923 - -
3). Profit distribution to shareholders - - - - - - - (11,652,025) (291,638) (11,943,663)
4) Others - - - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - - - -
1). Transfer from capital surplus to share
capital - - - - - - - - - -
2). Transfer from surplus reserve to share
capital - - - - - - - - - -
3). Surplus reserve used to offset
accumulated losses - - - - - - - - - -
4) Others - - - - - - - - - -
(5) Specific reserve - - - - - 808 - - 202 1,010
1). Appropriation in the current period - - - - - 3,313 - - 828 4,141
2). Use in the current period - - - - - (2,505) - - (626) (3,131)
(6) Others - (1,504,208) - 1,351 - - - 61 8,988 (1,493,808)
Balance at the end of the current year 6,997,273 19,693,139 (14,933,944) 108,289 671,999 16,350 10,702,928 119,679,202 8,988,566 151,923,802
Legal representative: Fang Hongbo Principal in charge of accounting: Zhong Zheng Head of accounting department: Chen Lihong
-6-
Fang Hongbo
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the current period
Other
Less: Treasury comprehensive Undistributed Total shareholders'
Item Share capital Capital surplus stock income Special reserve Surplus reserve profits equity
Balance at the end of the prior year 6,997,273 27,826,208 (14,933,944) (5,679) - 10,702,928 27,719,633 58,306,419
Add: Changes in accounting policies - - - - - - - -
Balance at the beginning of the current
year 6,997,273 27,826,208 (14,933,944) (5,679) - 10,702,928 27,719,633 58,306,419
Movements for the current period 24,908 1,310,141 1,114,904 17,380 - - (16,150,782) (13,683,449)
(1) Total comprehensive income - - - 17,380 - - 1,030,834 1,048,214
(2) Capital contribution and withdrawal by
shareholders 24,908 1,310,189 1,114,904 - - - - 2,450,001
1). Capital contribution by shareholders 27,406 1,660,427 - - - - - 1,687,833
2). Capital contribution by holders of
other equity instruments - - - - - - - -
3). Share-based payment included in
owners’ equity - 197,769 - - - - - 197,769
4) Others (2,498) (548,007) 1,114,904 - - - - 564,399
(3) Profit distribution - - - - - - (17,181,616) (17,181,616)
1). Appropriation to surplus reserve - - - - - - - -
2). Profit distribution to shareholders - - - - - - (17,181,616) (17,181,616)
3) Others - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - -
1). Transfer from capital surplus to
share capital - - - - - - - -
2). Transfer from surplus reserve to
share capital - - - - - - - -
3). Surplus reserve used to offset
accumulated losses - - - - - - - -
4) Others - - - - - - - -
(5) Specific reserve - - - - - - - -
1). Appropriation in the current year - - - - - - - -
2). Use in the current year - - - - - - - -
(6) Others - (48) - - - - - (48)
Balance at the end of the current period 7,022,181 29,136,349 (13,819,040) 11,701 - 10,702,928 11,568,851 44,622,970
Legal representative: Fang Hongbo Principal in charge of accounting: Zhong Zheng Head of accounting department: Chen Lihong
-7-
MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
Amount in the prior year
Other
Less: Treasury comprehensive Undistributed Total shareholders'
Item Share capital Capital surplus stock income Special reserve Surplus reserve profits equity
Balance at the end of the prior year 6,986,564 27,105,153 (14,044,550) (7,295) - 9,449,901 28,094,420 57,584,193
Add: Changes in accounting policies - - - - - - - -
Balance at the beginning of the current
year 6,986,564 27,105,153 (14,044,550) (7,295) - 9,449,901 28,094,420 57,584,193
Movements for the current year 10,709 721,055 (889,394) 1,616 - 1,253,027 (374,787) 722,226
(1) Total comprehensive income - - - 1,616 - - 12,530,265 12,531,881
(2) Capital contribution and withdrawal by
shareholders 10,709 704,352 (889,394) - - - - (174,333)
1). Capital contribution by shareholders 18,602 1,123,649 - - - - - 1,142,251
2). Capital contribution by holders of other
equity instruments - - - - - - - -
3). Share-based payment included in
owners’ equity - 789,849 - - - - - 789,849
4) Others (7,893) (1,209,146) (889,394) - - - - (2,106,433)
(3) Profit distribution - - - - - 1,253,027 (12,905,052) (11,652,025)
1). Appropriation to surplus reserve - - - - - 1,253,027 (1,253,027) -
2). Profit distribution to shareholders - - - - - - (11,652,025) (11,652,025)
3) Others - - - - - - - -
(4) Transfer within shareholders’ equity - - - - - - - -
1). Transfer from capital surplus to share
capital - - - - - - - -
2). Transfer from surplus reserve to share
capital - - - - - - - -
3). Surplus reserve used to offset
accumulated losses - - - - - - - -
4) Others - - - - - - - -
(5) Specific reserve - - - - - - - -
1). Appropriation in the current year - - - - - - - -
2). Use in the current year - - - - - - - -
(6) Others - 16,703 - - - - - 16,703
Balance at the end of the current year 6,997,273 27,826,208 (14,933,944) (5,679) - 10,702,928 27,719,633 58,306,419
Legal representative: Fang Hongbo Principal in charge of accounting: Zhong Zheng Head of accounting department: Chen Lihong
Fang Hongbo Zhong Zheng -8- Chen Lihong
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
1 General information
The principal business activities of Midea Group Co., Ltd. (hereinafter referred to as “the
Company”) and its subsidiaries (hereinafter collectively referred to as “the Group”) include
residential air-conditioners, central air-conditioners, heating and ventilation systems, kitchen
appliances, refrigerators, washing machines and various small appliances, robotics and
automation systems. Other services include the smart supply chain; sales, wholesale and
processing of raw materials of household electrical appliances; and financial business
involving customer deposits, interbank lendings and borrowings, consumption credits,
buyers’ credits and finance leases.
The Company was set up by the Council of Trade Unions of GD Midea Group Co., Ltd. and
was registered in Market Safety Supervision Bureau of Shunde District, Foshan on 7 April
2000, with its headquarters located in Foshan, Guangdong. On 30 August 2012, the
Company was transformed into a limited liability company. On 29 July 2013, the Company
was approved to merge and acquire Guangdong Midea Electric Co., Ltd., which was listed
on Shenzhen Stock Exchange. On 18 September 2013, the Company’s shares were listed
on Shenzhen Stock Exchange.
As at 30 June 2023, the Company’s share capital was RMB 7,022,181,291, and the total
number of shares in issue was 7,022,181,291, of which 138,585,703 shares were restricted
tradable A shares and 6,883,595,588 shares were unrestricted tradable A shares.
The detailed information of major subsidiaries included in the consolidation scope in the
current year is set out in Note 5 and Note 6. Subsidiaries newly included in the consolidation
scope via acquisition in the current year mainly included Shenzhen Clou Electronics Co.,
Ltd. and its subsidiaries (hereinafter referred to as “Clou Electronics”), and are detailed in
Note 5(1); subsidiaries newly included in the consolidation scope via establishment in the
current year are detailed in Note 5(2)(a); subsidiaries no longer included in the consolidation
scope in the current year are detailed in Note 5(2)(b).
These financial statements were authorised for issue by the Company’s Board of Directors
on 30 August 2023.
2 Summary of significant accounting policies and accounting estimates
The Group determines specific accounting policies and accounting estimates based on the
features of production and operation, mainly including the measurement of expected credit
loss (“ECL”) on receivables and contract assets (Note 2(9)(a)), valuation method of
inventories (Note 2(10)), depreciation of fixed assets, amortisation of intangible assets and
right-of-use assets (Note 2(13), (16), (28)), impairment of long-term assets (Note 2(18)), and
recognition and measurement of revenue (Note 2(25)).
Key judgements and critical accounting estimates and key assumptions applied by the
Group on the determination of significant accounting policies are set out in Note 2(30).
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for
Business Enterprises - Basic Standard, and the specific accounting standards and other
relevant regulations issued by the Ministry of Finance on 15 February 2006 and in
subsequent periods (hereinafter collectively referred to as the “Accounting Standards for
Business Enterprises” or “CASs”) and the disclosure requirements in the Compilation Rules
for Information Disclosure by Companies Offering Securities to the Public No. 15 - General
Rules on Financial Reporting issued by the China Securities Regulatory Commission
(“CSRC”).
-9-
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(1) Basis of preparation (Cont’d)
The financial statements are prepared on a going concern basis.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the six months ended 30 June 2023 are in
compliance with the Accounting Standards for Business Enterprises, and truly and
completely present the consolidated and company’s financial position of the Company as at
30 June 2023 and their financial performance, cash flows and other information for the six
months then ended.
(3) Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Functional currency
The functional currency of the Company is Renminbi (“RMB”). The subsidiaries determine
their functional currencies based on the primary economic environment in which the
business is operated, mainly including EUR, JPY, USD and HKD. The financial statements
are presented in RMB.
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the Group in a business combination are
measured at the carrying amount. If the absorbed party was bought by the ultimate
controller from a third party in prior years, the value of its assets and liabilities (including
goodwill generated due to the combination) are based on the carrying amount in the
ultimate controller’s consolidated financial statements. The difference between the carrying
amount of the net assets obtained by the Group and the carrying amount of the
consideration paid for the combination is treated as an adjustment to capital surplus (share
premium). If the capital surplus (share premium) is not sufficient to absorb the difference,
the remaining balance is adjusted against retained earnings. Costs directly attributable to
the combination are included in profit or loss in the period in which they are incurred.
Transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the Group in a business
combination are measured at fair value at the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognised as goodwill; where the cost of combination is lower than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference
is recognised in profit or loss for the current period. Costs directly attributable to the
combination are included in profit or loss in the period in which they are incurred.
Transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognised amounts of the equity or debt securities.
- 10 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(5) Business combinations (Cont’d)
(b) Business combinations involving enterprises not under common control (Cont’d)
For business combinations achieved by stages involving enterprises not under common
control, previously-held equity in the acquiree is remeasured at its fair value at the
acquisition dates. For the equity interest held in the acquiree before the acquisition date
under equity method, the difference between its fair value and carrying amount is
recognised as investment income for the current period; for the other comprehensive
income under the equity method and shareholders’ equity changes other than those arising
from the net profit or loss, other comprehensive income and profit distribution, the related
other comprehensive income and other shareholders' equity changes are transferred into
profit or loss for the current period to which the acquisition dates belong, excluding those
arising from changes in the investee's remeasurements of net liability or net asset related to
the defined benefit plan, and those arising from accumulative changes in fair value of
investments in equity instruments not held for trading that are held by investees and
designated as at fair value through other comprehensive income. For previously-held equity
in the acquiree categorised as financial assets at fair value through profit or loss, the
difference between its fair value and carrying amount is transferred to investment income
under the cost method; for previously-held equity in the acquiree categorised as
investments in equity instruments not held for trading at fair value through other
comprehensive income, its accumulative changes in fair value that are originally recognised
in other comprehensive income are directly reclassified to retained earnings. The excess of
the sum of fair value of the previously-held equity and fair value of the consideration paid at
the acquisition date over share of fair value of identifiable net assets acquired from the
subsidiary is recognised as goodwill.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company
and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-
consolidated from the date that such control ceases. For a subsidiary that is acquired in a
business combination involving enterprises under common control, it is included in the
consolidated financial statements from the date when it, together with the Company, comes
under common control of the ultimate controlling party. The portion of the net profits realised
before the combination date is presented separately in the consolidated income statement.
- 11 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(6) Preparation of consolidated financial statements (Cont’d)
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial
statements of the subsidiaries are adjusted in accordance with the accounting policies and
the accounting period of the Company. For subsidiaries acquired from business
combinations involving enterprises not under common control, the individual financial
statements of the subsidiaries are adjusted based on the fair value of the identifiable net
assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of subsidiaries’ shareholders’ equity and the
portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not
attributable to the Company are recognised as minority interests, net profit attributed to
minority interests and total comprehensive income attributed to minority interests and
presented separately in the consolidated financial statements under shareholders’ equity,
net profit and total comprehensive income respectively. Where the loss for the current
period attributable to the minority shareholders of the subsidiaries exceeds the share of the
minority interests in the opening balance of owners’ equity, the excess is deducted against
minority interests. Unrealised profits and losses resulting from the sales of assets by the
Company to its subsidiaries are fully eliminated against net profit attributable to
shareholders of the parent company. Unrealised profits and losses resulting from the sales
of assets by a subsidiary to the Company are eliminated and allocated between net profit
attributable to shareholders of the parent company and net profit attributable to minority
interests in accordance with the allocation proportion of the parent company in the
subsidiary. Unrealised profits and losses resulting from the sales of assets by one
subsidiary to another are eliminated and allocated between net profit attributable to
shareholders of the parent company and net profit attributable to minority interests in
accordance with the allocation proportion of the parent company in the subsidiary.
If the accounting treatment of a transaction is inconsistent in the financial statements at the
Group level and at the Company or its subsidiary level, adjustment will be made from the
perspective of the Group.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on
demand, and short-term and highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
(8) Foreign currency translation
(a) Foreign currency transactions
Foreign currency transactions are translated into functional currency using the exchange
rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated
into functional currency using the spot exchange rates on the balance sheet date. Exchange
differences arising from these translations are recognised in profit or loss for the current
period, except for those attributable to foreign currency borrowings that have been taken out
specifically for acquisition or construction of qualifying assets, which are capitalised as part
of the cost of those assets. Non-monetary items denominated in foreign currencies that are
measured at historical costs are translated at the balance sheet date using the spot
exchange rates at the date of the transactions. The effect of exchange rate changes on
cash is presented separately in the cash flow statement.
- 12 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(8) Foreign currency translation (Cont’d)
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at
the spot exchange rates on the balance sheet date. Among the equity items, the items other
than undistributed profits are translated at the spot exchange rates of the transaction dates.
The income and expense items in the income statements of overseas operations are
translated at the spot exchange rates of the transaction dates. The differences arising from
the above translation are recognised in other comprehensive income. The cash flows of
overseas operations are translated at the spot exchange rates on the dates of the cash
flows. The effect of exchange rate changes on cash is presented separately in the cash flow
statement.
(9) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. A financial asset or a financial liability
is recognised when the Group becomes a party to the contractual provisions of the
instrument.
(a) Financial assets
(i) Classification and measurement
Based on the Group’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets, financial assets are classified as: (1)
financial assets at amortised cost; (2) financial assets at fair value through other
comprehensive income; (3) financial assets at fair value through profit or loss.
The financial assets are measured at fair value at initial recognition. Related transaction
costs that are attributable to the acquisition of the financial assets are included in the initially
recognised amounts, except for the financial assets at fair value through profit or loss, the
related transaction costs of which are recognised directly in profit or loss for the current
period. Accounts receivable or notes receivable arising from sales of products or rendering
of services (excluding or without regard to significant financing components) are initially
recognised at the consideration that is entitled to be charged by the Group as expected.
(i-1) Debt instruments
The debt instruments held by the Group refer to the instruments that meet the definition of
financial liabilities from the perspective of the issuer, and are measured in the following
three ways:
- 13 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-1) Debt instruments (Cont’d)
Measured at amortised cost:
The objective of the Group’s business model is to hold the financial assets to collect the
contractual cash flows, and the contractual cash flow characteristics are consistent with a
basic lending arrangement, which gives rise on specified dates to the contractual cash flows
that are solely payments of principal and interest on the principal amount outstanding. The
interest income of such financial assets is recognised using the effective interest rate
method. Such financial assets mainly comprise cash at bank and on hand, loans and
advances, notes receivable, accounts receivable, other receivables, other current assets,
debt investments, long-term receivables and other non-current assets. Debt investments
and long-term receivables that are due within one year (inclusive) as from the balance sheet
date are included in the current portion of non-current assets; debt investments with
maturities of no more than one year (inclusive) at the time of acquisition are included in
other current assets.
Measured at fair value through other comprehensive income:
The objective of the Group’s business model is to hold the financial assets to both collect
the contractual cash flows and sell such financial assets, and the contractual cash flow
characteristics are consistent with a basic lending arrangement. Such financial assets are
measured at fair value through other comprehensive income, except for the impairment
gains or losses, foreign exchange gains and losses, and interest income calculated using
the effective interest rate method which are recognised in profit or loss for the current
period. Such financial assets mainly include receivables financing and other debt
investments. Other debt investments of the Group that are due within one year (inclusive)
as from the balance sheet date are included in the current portion of non-current assets;
other debt investments with maturities no more than one year (inclusive) at the time of
acquisition are included in other current assets.
Measured at fair value through profit or loss:
Debt instruments held by the Group that are not divided into those at amortised cost, or
those measured at fair value through other comprehensive income, are measured at fair
value through profit or loss. At initial recognition, the Group designates a portion of financial
assets as at fair value through profit or loss to eliminate or significantly reduce an
accounting mismatch. Financial assets that are due over one year as from the balance
sheet date and are expected to be held over one year are included in other non-current
financial assets. Others are included in financial assets held for trading.
- 14 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-2) Equity instruments
Investments in equity instruments, over which the Group has no control, joint control or
significant influence, are measured at fair value through profit or loss under financial assets
held for trading; investments in equity instruments expected to be held over one year as
from the balance sheet date are included in other non-current financial assets.
In addition, at initial recognition, a portion of certain investments in equity instruments not
held for trading are designated as financial assets at fair value through other
comprehensive income under investments in other equity instruments. The relevant
dividend income of such financial assets is recognised in profit or loss for the current period.
(i-3) Derivative financial instruments
The derivative financial instruments held by the Group are mainly used in controlling risk
exposures. Derivative financial instruments are initially recognised at fair value on the day
when derivatives transaction contract was signed, and subsequently measured at fair value.
The derivative financial instruments are recorded as assets when they have a positive fair
value and as liabilities when they have a negative fair value.
The method for recognising changes in fair value of the derivative financial instrument
depends on whether the derivative financial instrument is designated as a hedging
instrument and meets the requirement for it, and if so, the nature of the item being hedged.
For derivative financial instruments that are not designated as hedging instruments and fail
to meet requirements on hedging instruments, including those held for the purpose of
providing hedging against specific risks in interest rate and foreign exchange but not
conforming with requirements of hedge accounting, the changes in fair value are recorded
in gains or losses on changes in fair value in the consolidated income statement.
Cash flow hedge
At the inception of the hedge, the Group has completed relevant hedge documents,
including the relationship between hedged items and hedging instruments, and risk
management objectives and strategies corresponding to various hedging transactions. At
the inception of the hedge and in subsequent periods, the Group continuously records
whether the hedge is effectively evaluated, that is, whether the hedging instruments can
largely offset the changes in the fair value or cash flows of hedged items.
- 15 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(i) Classification and measurement (Cont’d)
(i-3) Derivative financial instruments (Cont’d)
Cash flow hedge (Cont’d)
The effective portion of changes in fair value on hedging instruments is recognised in other
comprehensive income as cash flow hedging reserve, while the gains or losses related to
the ineffective portion of the hedge are recognised in profit or loss for the current period.
Where the hedge is a forecast transaction which subsequently results in the recognition of a
non-financial asset or liability, the amount originally recognised in other comprehensive
income is transferred and included in the initially recognised amount of the asset or liability.
For cash flow hedge beyond the foregoing scope, the amount originally recognised in other
comprehensive income is transferred and included in profit or loss for the current period
during the same time in which the profit or loss is influenced by the hedged expected cash
flow. However, if all or part of net loss recognised directly in other comprehensive income
will not be recovered in future accounting periods, the amount not expected to be recovered
should be transferred to profit or loss for the current period. When the Group revokes the
designation of a hedge, a hedging instrument expires or is sold, terminated or exercised, or
the hedge no longer meets the criteria for hedge accounting, the Group will discontinue the
hedge accounting treatments prospectively. Where the Group discontinues the hedge
accounting treatment for cash flow hedging, for hedged future cash flows that will still
happen, the accumulated gains or losses that have been recognised in other
comprehensive income are retained and subject to accounting treatment under the
subsequent treatment method of aforesaid cash flow hedging reserve; for hedged future
cash flows that the forecast transaction will never happen, the accumulated gains or losses
that have been recognised in other comprehensive income are transferred immediately and
included in profit or loss for the current period.
(ii) Impairment
Loss provision for financial assets at amortised cost, investments in debt instruments at fair
value through other comprehensive income, as well as contract assets and lease
receivables is recognised on the basis of ECL.
Giving consideration to reasonable and supportable information on past events, current
conditions, forecasts of future economic conditions that is available without undue cost or
effort at the balance sheet date, and weighted by the risk of default, the Group recognises
the ECL as the probability-weighted amount of the present value of the difference between
the cash flows receivable from the contract and the cash flows expected to collect.
- 16 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
For notes receivable, accounts receivable, receivables financing, lease receivables and
contract assets arising from sales of goods and rendering of services in the ordinary course
of operating activities, the Group recognises the lifetime ECL provision regardless of
whether there exists a significant financing component. Since contract assets are mainly
related to work on the stage of completion without invoice, essentially, their credit risk
characteristics are similar to the accounts receivable for the same kind of contracts.
Therefore, the ECL rate of the contract assets is an approximation to that of accounts
receivable.
Except for the above notes receivable, accounts receivable, receivables financing, lease
receivables and contract assets, at each balance sheet date, the ECL of financial
instruments at different stages are measured respectively. 12-month ECL provision is
recognised for financial instruments in Stage 1 that have not had a significant increase in
credit risk since initial recognition; lifetime ECL provision is recognised for financial
instruments in Stage 2 that have had a significant increase in credit risk yet without credit
impairment since initial recognition; and lifetime ECL provision is recognised for financial
instruments in Stage 3 that have had credit impairment since initial recognition.
For the financial instruments with lower credit risk on the balance sheet date, the Group
assumes there is no significant increase in credit risk since initial recognition. The Group
treats them as financial instruments in Stage 1 and recognises a 12-month ECL.
For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest
income by applying the effective interest rate to the book balance (before deduction of the
impairment provision). For the financial instruments in Stage 3, the interest income is
calculated by applying the effective interest rate to the amortised cost (after deduction of the
impairment provision from the book balance).
In case the ECL of an individually assessed financial asset cannot be evaluated with
reasonable cost, the Group divides the receivables and contract assets into certain
groupings based on credit risk characteristics, then pursuant to which, calculates the ECL.
Basis and provision method for determining groupings are as follows:
- 17 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(ii) Impairment (Cont’d)
Grouping of notes receivable 1 Bank acceptance notes grouping
Grouping of notes receivable 2 Trade acceptance notes grouping
Grouping of accounts receivable 1 Overseas business grouping
Grouping of accounts receivable 2 Domestic business grouping
Grouping of contract assets 1 Overseas business grouping
Grouping of contract assets 2 Domestic business grouping
Security deposit and guarantee receivables
Grouping of other receivables 1 grouping
Grouping of other receivables 2 Receivables from related parties grouping
Grouping of other receivables 3 Other receivables grouping
Grouping of long-term receivables Finance lease receivables grouping
Grouping of loans and advances Loans business grouping
The Group, on the basis of the exposure at default and the lifetime ECL rate, calculates
the ECL of notes receivable and receivables financing that are classified into groupings
with consideration to historical credit losses experience, current conditions and forecasts
of future economic conditions.
With consideration to historical credit loss experience, current conditions and forecasts of
future economic conditions, the Group prepares the cross-reference between the number
of overdue days of accounts receivable and the lifetime ECL rate, and calculates the ECL
of accounts receivable that are classified into groupings.
The Group, on the basis of the exposure at default and the 12-month or lifetime ECL rate,
calculates the ECL of other receivables, loans and advances that are classified into
groupings with consideration to historical credit losses experience, the current conditions
and forecasts of future economic conditions.
The Group recognises the loss provision made or reversed into profit or loss for the
current period. For debt instruments held at fair value through other comprehensive
income, the Group adjusts other comprehensive income while the impairment loss or gain
is recognised in profit or loss for the current period.
- 18 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(a) Financial assets (Cont’d)
(iii) Derecognition of financial assets
A financial asset is derecognised when: (1) the contractual rights to the cash flows from
the financial asset expire, (2) the financial asset has been transferred and the Group
transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee, or (3) the financial asset has been transferred and the Group has not retained
control of the financial asset, although the Group neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset.
When a financial asset is derecognised, the difference between the carrying amount and
the sum of the consideration received and the cumulative changes in fair value that are
previously recognised directly in other comprehensive income is recognised in profit or
loss for the current period, except for those as investments in other equity instruments, the
difference aforementioned is recognised in retained earnings instead.
(b) Financial liabilities
Financial liabilities are classified as financial liabilities at amortised cost and financial
liabilities at fair value through profit or loss at initial recognition.
Financial liabilities of the Group mainly comprise financial liabilities at amortised cost,
including notes payable, accounts payable, other payables, borrowings, debentures
payable and short-term financing bonds payable in other current liabilities, customer
deposits and deposits from banks and other financial institutions, borrowings from the
Central Bank, and long-term payables. Such financial liabilities are initially recognised at
fair value, net of transaction costs incurred, and subsequently measured using the
effective interest rate method. Financial liabilities that are due within one year (inclusive)
are classified as current liabilities; those with maturities over one year but are due within
one year (inclusive) as from the balance sheet date are classified as current portion of
non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognised or partly derecognised when the underlying present
obligation is discharged or partly discharged. The difference between the carrying amount
of the derecognised part of the financial liability and the consideration paid is recognised in
profit or loss for the current period.
- 19 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instruments (Cont’d)
(c) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at
the quoted price in the active market. The fair value of a financial instrument that is not
traded in an active market is determined by using a valuation technique. In valuation, the
Group adopts valuation techniques applicable in the current situation and supported by
adequate available data and other information, selects inputs with the same characteristics
as those of assets or liabilities considered in relevant transactions of assets or liabilities by
market participants, and gives priority to the use of relevant observable inputs. When
relevant observable inputs are not available or feasible, unobservable inputs are adopted.
(10) Inventories
(a) Classification of inventories
Inventories, including finished goods, raw materials, work in progress, consigned
processing materials and low value consumables, are measured at the lower of cost and
net realisable value.
(b) Costing of inventories
Cost is determined using the first-in, first-out method when issued. The cost of finished
goods and work in progress comprises raw materials, direct labour and systematically
allocated production overhead based on the normal production capacity.
(c) Basis for determining net realisable values of inventories and method for making provision
for decline in the value of inventories
Inventories are initially measured at cost. The cost of inventories comprises purchase cost,
processing cost and other expenditures to bring the inventories to current site and
condition.
On the balance sheet date, inventories are measured at the lower of cost and net
realisable value.
Net realisable value is determined based on the estimated selling price in the ordinary
course of business, less the estimated costs to completion and estimated contract
fulfilment costs and costs necessary to make the sale and related taxes and expenditures.
Provision for decline in the value of inventories is determined at the excess amount of the
cost as calculated based on the classification of inventories over their net realisable value,
and are recognised in profit or loss for the current period.
- 20 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Inventories (Cont'd)
(d) Inventory system
The Group adopts the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Low value consumables are expensed in full when issued and recognised in cost of
related assets or in profit or loss for the current period.
(11) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its
subsidiaries, and the Group’s long-term equity investments in its associates and joint
ventures.
Subsidiaries are the investees over which the Company is able to exercise control. A joint
venture is a joint arrangement which is structured through a separate vehicle over which
the Group has joint control together with other parties and only has rights to the net assets
of the arrangement based on legal forms, contractual terms and other facts and
circumstances. An associate is an investee that the Group has significant influence on
their financial and operating policies.
Investments in subsidiaries are presented in the Company’s financial statements using the
cost method, and are adjusted to the equity method when preparing the consolidated
financial statements. Investments in joint ventures and associates are accounted for using
the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination involving
enterprises under common control, the investment cost shall be the absorbing party’s
share of the carrying amount of owners’ equity of the party being absorbed at the
combination date; for long-term equity investment acquired through a business
combination involving enterprises not under common control, the investment cost shall be
the combination cost.
For business combinations achieved by stages involving enterprises not under common
control, the initial investment cost accounted for using the cost method is the sum of
carrying amount of previously-held equity investment and additional investment cost. For
previously-held equity investments accounted for using the equity method, the accounting
treatment of related other comprehensive income from disposal of the equity is carried out
on a same basis with the investee’s direct disposal of related assets or liabilities. Owners’
equity, which is recognised due to changes in investee’s owners’ equity other than those
arising from the net profit or loss, other comprehensive income and profit distribution, is
accordingly transferred into profit or loss for the period in which the investment is
disposed.
- 21 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Long-term equity investments (Cont’d)
(a) Determination of investment cost (Cont’d)
For the investments in previously-held equity without significant influence or common
control that previously recognised as financial assets at fair value through profit or loss,
the difference between the fair value and carrying amount is transferred to investment
income for the current period under cost method; for the investments previously
recognised as investments in equity instruments not held for trading at fair value through
other comprehensive income, the difference between the fair value and carrying amount
and accumulated changes in fair value previously recognised in other comprehensive
income are directly transferred to retained earnings.
For long-term equity investments acquired not through a business combination, the long-
term equity investments acquired by payment in cash, the initial investment cost shall be
the purchase price actually paid; for long-term equity investments acquired by issuing
equity securities, the initial investment cost shall be the fair value of the equity securities
issued.
(b) Subsequent measurement and recognition methods of gains and losses
For long-term equity investments accounted for using the cost method, they are measured
at the initial investment costs, and cash dividends or profit distribution declared by the
investees are recognised as investment income in profit or loss for the current period.
For long-term equity investments accounted for using the equity method, where the initial
investment cost of a long-term equity investment exceeds the Group’s share of the fair
value of the investee’s identifiable net assets at the acquisition date, the long-term equity
investment is measured at the initial investment cost; where the initial investment cost is
less than the Group’s share of the fair value of the investee’s identifiable net assets at the
acquisition date, the difference is included in profit or loss and the cost of the long-term
equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group
recognises the investment income according to its share of net profit or loss of the
investee. The Group discontinues recognising its share of the net losses of an investee
after the carrying amount of the long-term equity investment together with any long-term
interests that in substance form part of the investor’s net investment in the investee are
reduced to zero. However, if the Group has obligations for additional losses and the
criteria with respect to recognition of provisions are satisfied, the Group continues
recognising the investment losses and the provisions at the amount it expects to
undertake. The changes of the Group’s share in investee’s owners’ equity other than those
arising from the net profit or loss, other comprehensive income and profit distribution are
recognised in capital surplus with a corresponding adjustment to the carrying amount of
the long-term equity investment. The carrying amount of the investment is reduced by the
Group’s share of the profit distribution or cash dividends declared by the investees. The
unrealised profits or losses arising from the transactions between the Group and its
investees are eliminated in proportion to the Group’s equity interest in the investees,
based on which the investment gain or losses are recognised. Any losses resulting from
transactions between the Group and its investees attributable to asset impairment losses
are not eliminated.
- 22 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Long-term equity investments (Cont’d)
(c) Basis for determining existence of control, joint control, significant influence over investees
Control is the power to govern an investee and obtain variable returns from participating
the investee’s activities, and the ability to utilise the power of an investee to affect its
returns.
Joint control is the contractually agreed sharing of control over an arrangement, and
relevant economic activity can be arranged upon the unanimous approval of the Group
and other participants sharing of control rights.
Significant influence is the power to participate in the financial and operating policy
decisions of the investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries, joint ventures and
associates are reduced to the recoverable amounts when the recoverable amounts are
below their carrying amounts (Note 2(18)).
(12) Investment properties
Investment properties, including land use rights that have already been leased out,
buildings that are held for the purpose of leasing and buildings that are being constructed
or developed for future use for leasing, are measured initially at cost. Subsequent
expenditures incurred in relation to an investment property are included in the cost of the
investment property when it is probable that the associated economic benefits will flow to
the Group and their costs can be reliably measured; otherwise, the expenditures are
recognised in profit or loss for the period in which they are incurred.
The Group adopts the cost model for subsequent measurement of investment properties.
Buildings and land use rights are depreciated or amortised to their estimated net residual
values over their estimated useful lives. The estimated useful lives, the estimated net
residual values that are expressed as a percentage of cost and the annual depreciation
(amortisation) rates of investment properties are as follows:
Annual
Estimated net depreciation
Estimated useful lives residual values (amortisation) rates
Buildings 20 to 40 years 5% to 10% 2.25% to 4.75%
Land use rights 30 to 50 years - 2% to 3.33%
When an investment property is transferred to owner-occupied properties, it is reclassified
as fixed asset or intangible asset at the date of the transfer. When an owner-occupied
property is transferred out for earning rentals or for capital appreciation, the fixed asset or
intangible asset is reclassified as investment properties at the date of the transfer. At the
time of transfer, the property is recognised based on the carrying amount before transfer.
- 23 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB ’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(12) Investment properties (Cont’d)
The investment properties’ estimated useful lives, the estimated net residual values and
the depreciation (amortisation) methods applied are reviewed and adjusted as appropriate
at each year-end.
An investment property is derecognised on disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The net amount of proceeds from sale, transfer, retirement or damage of an
investment property after its carrying amount and related taxes and expenses is
recognised in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the
recoverable amount is below the carrying amount.
(13) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, overseas land, machinery and equipment, motor
vehicles, electronic equipment and others.
Fixed assets are recognised when it is probable that the related economic benefits will
flow to the Group and the cost can be reliably measured. The initial cost of purchased
fixed assets include purchase price, related taxes and expenditures that are attributable to
the assets incurred before the assets are ready for their intended use. The initial cost of
self-constructed fixed assets is determined based on Note 2(14).
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed
asset when it is probable that the associated economic benefits will flow to the Group and
the related cost can be reliably measured. The carrying amount of the replaced part is
derecognised. All the other subsequent expenditures are recognised in profit or loss for
the period in which they are incurred.
(b) Depreciation method of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the
assets to their estimated net residual values over their estimated useful lives. For the fixed
assets that have been provided for impairment loss, the related depreciation charge is
prospectively determined based upon the adjusted carrying amounts over their remaining
useful lives.
- 24 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(13) Fixed assets (Cont’d)
(b) Depreciation method of fixed assets (Cont’d)
The estimated useful lives, the estimated net residual values expressed as a percentage
of cost and the annual depreciation rates of the Group’s fixed assets are as follows:
Estimated Estimated net Annual
Categories useful lives residual values depreciation rates
Buildings 15 to 50 years 0% to 10% 6.7% to 1.8%
Machinery and equipment 2 to 25 years 0% to 10% 50% to 3.6%
Motor vehicles 2 to 20 years 0% to 10% 50% to 4.5%
Electronic equipment and
others 2 to 20 years 0% to 10% 50% to 4.5%
Overseas land Permanent Not applicable Not applicable
The estimated useful lives and the estimated net residual values of the Group’s fixed
assets and the depreciation methods applied to the assets are reviewed, and adjusted as
appropriate at each year-end.
(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the
recoverable amount is below the carrying amount (Note 2(18)).
(d) Disposal of fixed assets
A fixed asset is derecognised on disposal or when no future economic benefits are
expected from its use or disposal. The amount of proceeds from disposals on sale,
transfer, retirement or damage of a fixed asset net of its carrying amount and related
taxes and expenses is recognised in profit or loss for the current period.
(14) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction
costs, installation costs, borrowing costs that are eligible for capitalisation and other costs
necessary to bring the construction in progress ready for their intended use. Construction
in progress is transferred to fixed assets when the assets are ready for their intended use,
and depreciation begins from the following month. The carrying amount of construction in
progress is reduced to the recoverable amount when the recoverable amount is below its
carrying amount (Note 2(18)).
- 25 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(15) Borrowing costs
The borrowing costs that are directly attributable to acquisition and construction of a fixed
asset that needs a substantially long period of time for its intended use commence to be
capitalised and recorded as part of the cost of the asset when expenditures for the asset
and borrowing costs have been incurred, and the activities relating to the acquisition and
construction that are necessary to prepare the asset for its intended use have
commenced. The capitalisation of borrowing costs ceases when the asset under
acquisition or construction becomes ready for its intended use and the borrowing costs
incurred thereafter are recognised in profit or loss for the current period. Capitalisation of
borrowing costs is suspended during periods in which the acquisition or construction of an
asset is interrupted abnormally and the interruption lasts for more than 3 months, until the
acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a fixed asset
qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is
determined by actual interest expenses deducting any interest income earned from
depositing the unused specific borrowings in the banks or any investment income arising
on the temporary investment of those borrowings during the capitalisation period.
For the general borrowings obtained for the acquisition or construction of a fixed asset
qualifying for capitalisation, the amount of general borrowing costs eligible for
capitalisation is determined by applying the weighted average effective interest rate of
general borrowings, to the weighted average of the excess amount of cumulative
expenditures on the asset over the amount of specific borrowings. The effective interest
rate is the rate at which the future cash flows during the period of expected duration of the
borrowings or applicable shorter period are discounted to the initial amount of the
borrowings.
(16) Intangible assets
Intangible assets include land use rights, patents and non-patent technologies, trademark
rights, trademark use rights and others, are measured at cost.
(a) Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of
30 to 50 years. If the acquisition costs of the land use rights and the buildings located
thereon cannot be reasonably allocated between the land use rights and the buildings, all
of the acquisition costs are recognised as fixed assets.
(b) Patents and non-patent technologies
Patents are amortised on a straight-line basis over the statutory period of validity, the
period as stipulated by contracts or the beneficial period.
- 26 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(16) Intangible assets (Cont’d)
(c) Trademark rights
The trademark rights are measured at cost when acquired and are amortised over the
estimated useful life of 4 to 30 years. The cost of trademark rights obtained in the business
combinations involving enterprises not under common control is measured at fair value. As
some of the trademarks are expected to attract net cash inflows injected into the Group,
management considers that these trademarks have an indefinite useful life and are
presented based upon the carrying amount after deducting the provision for impairment
(Note 4(20)).
(d) Trademark use rights
The trademark use rights are measured at cost when acquired. The cost of trademark use
rights obtained in the business combinations involving enterprises not under common
control is measured at fair value, and is amortised over the estimated useful life of 40
years.
(e) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation
method is performed at each year-end, with adjustment made as appropriate.
(f) Research and development (R&D)
The expenditure on an internal research and development project is classified into
expenditure on the research phase and expenditure on the development phase based on
its nature and whether there is material uncertainty that the research and development
activities can form an intangible asset at the end of the project.
Expenditure on the planned investigation, evaluation and selection for the research of
production processes or products is categorised as expenditure on the research phase,
and it is recognised in profit or loss when it is incurred. Expenditure on design and test for
the final application of the development of production processes or products before mass
production is categorised as expenditure on the development phase, which is capitalised
only if all of the following conditions are satisfied:
The development of production processes or products has been fully justified by
technical team;
The budget on the development of production processes or products has been
approved by management;
There is market research analysis that demonstrates the product produced by the
production process or product has the ability of marketing;
There are sufficient technical and financial resources to support the development
of production processes or products and subsequent mass production; and
Expenditure attributable to the development of production processes or products
can be reliably measured.
- 27 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(16) Intangible assets (Cont’d)
(f) Research and development (R&D) (Cont’d)
Other development expenditures that do not meet the conditions above are recognised in
profit or loss in the period in which they are incurred. Development costs previously
recognised as expenses are not recognised as an asset in a subsequent period.
Capitalised expenditure on the development phase is presented as development costs in
the balance sheet and transferred to intangible assets at the date that the asset is ready
for its intended use.
(g) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the
recoverable amount is below the carrying amount (Note 2(18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to right-of-use
assets, and other expenditures that have been incurred but should be recognised as
expenses over more than one year in the current and subsequent periods. Long- term
prepaid expenses are amortised on the straight-line basis over the expected beneficial
period and are presented at actual expenditure net of accumulated amortisation.
(18) Impairment of long-term assets
Fixed assets, construction in progress, right-of-use assets, intangible assets with finite
useful lives, investment properties measured using the cost model and long-term equity
investments in subsidiaries, joint ventures and associates are tested for impairment if there
is any indication that the assets may be impaired at the balance sheet date. Intangible
assets not ready for their intended use, intangible assets with infinite useful lives and
overseas land are tested at least annually for impairment, irrespective of whether there is
any indication that it may be impaired. If the result of the impairment test indicates that the
recoverable amount of an asset is less than its carrying amount, a provision for impairment
and an impairment loss are recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and the present value of the future cash flows expected to be
derived from the asset. Provision for asset impairment is determined and recognised on the
individual asset basis. If it is not possible to estimate the recoverable amount of an
individual asset, the recoverable amount of an asset group to which the asset belongs is
determined. An asset group is the smallest group of asset groups that is able to generate
independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually
for impairment, irrespective of whether there is any indication that it may be impaired. In
conducting the test, the carrying value of goodwill is allocated to the related asset group or
groups of asset groups which are expected to benefit from the synergies of the business
combination. If the result of the test indicates that the recoverable amount of an asset
group or a group of asset groups, including the allocated goodwill, is lower than its
carrying amount, the corresponding impairment loss is recognised. The impairment loss is
first deducted from the carrying amount of goodwill that is allocated to the asset group or
group of asset groups, and then deducted from the carrying amounts of other assets within
the asset group or group of asset groups in proportion to the carrying amounts of assets
other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value
recovered in the subsequent periods.
- 28 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(19) Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group
in exchange for service rendered by employees or for termination of employment
relationship, which include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits.
(a) Short-term employee benefits
Short-term employee benefits include wages and salaries, bonus, allowances and
subsidies, staff welfare, premiums or contributions on medical insurance, work injury
insurance, maternity insurance, housing funds, labour union funds and employee
education funds and short-term paid absences. The short-term employee benefits actually
occurred are recognised as a liability in the accounting period in which the service is
rendered by the employees, with a corresponding charge to the profit or loss for the
current period or the cost of relevant assets. Non-monetary benefits are measured at fair
value.
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under
which the Group pays fixed contributions into a separate fund and will have no obligation
to pay further contributions; and defined benefit plans are post-employment benefit plans
other than defined contribution plans. During the reporting period, the Group’s defined
contribution plans mainly include basic pensions and unemployment insurance, while the
defined benefit plans are Toshiba Lifestyle Products & Services Corporation (“TLSC”) and
its subsidiaries (“TLSC Group”) and KUKA Aktiengesellschaft (“KUKA”) and its
subsidiaries (“KUKA Group”), etc. provide supplemental retirement benefits beyond the
national regulatory insurance system.
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by
local authorities of Ministry of Human Resource and Social Security. Monthly payments of
premiums on the basic pensions are calculated according to the bases and percentage
prescribed by the relevant local authorities. When employees retire, the relevant local
authorities are obliged to pay the basic pensions to them. The amounts based on the
above calculations are recognised as liabilities in the accounting period in which the
service has been rendered by the employees, with a corresponding charge to the profit or
loss for the current period or the cost of relevant assets.
Supplementary retirement benefits
The liability recognised in the balance sheet in respect of defined benefit pension plans is
the present value of the defined benefit obligations less the fair value of the plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method at the interest rate of treasury bonds with similar obligation
term and currency. The charges related to supplementary retirement benefits (including
current service costs, historical service costs and gains or losses on settlement) and net
interest are recognised in profit or loss for the current period or included in the cost of an
asset, and the changes arising from remeasurement in net liabilities or net assets of
defined benefit plans are recognised in other comprehensive income.
- 29 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(19) Employee benefits (Cont’d)
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with
employees before the end of the employment contracts or as an offer to encourage
employees to accept voluntary redundancy before the end of the employment contracts.
The Group recognises a liability arising from compensation for termination of the
employment relationship with employees, with a corresponding charge to profit or loss for
the current period at the earlier of the following dates: 1) when the Group cannot
unilaterally withdraw an employment termination plan or a curtailment proposal; 2) when
the Group recognises costs or expenses related to a restructuring that involves the
payment of termination benefits.
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security
contributions to be paid to and for the employees who accept voluntary retirement before
the normal retirement date prescribed by the State, as approved by management. The
Group pays early retirement benefits to those early retired employees from the early
retirement date until the normal retirement date. The Group accounts for the early
retirement benefits in accordance with the treatment for termination benefits, in which the
salaries and social security contributions to be paid to and for the early retired employees
from the off-duty date to the normal retirement date are recognised as liabilities with a
corresponding charge to the profit or loss for the current period. The differences arising
from the changes in the respective actuarial assumptions of the early retirement benefits
and the adjustments of benefit standards are recognised in profit or loss in the period in
which they occur.
The termination benefits expected to be settled within one year since the balance sheet
date are classified as current liabilities.
(20) General risk reserve
General risk reserve is the reserve appropriated from undistributed profits to cover part of
unidentified potential losses, on the basis of the estimated potential risk value of risk
assets assessed by the standardised approach, which is deducted from recognised
provision for impairment losses on loans. Risk assets include loans and advances, long-
term equity investments, deposits with banks and other financial institutions and other
receivables of subsidiaries engaged in financial business.
(21) Dividends distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved
by the shareholders’ meeting.
- 30 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(22) Provisions
Provisions for product warranties, onerous contracts, etc. are recognised when the Group
has a present obligation, it is probable that an outflow of economic benefits will be required
to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle
the related present obligation. Factors surrounding a contingency, such as the risks,
uncertainties and the time value of money, are taken into account as a whole in reaching
the best estimate of a provision. Where the effect of the time value of money is material,
the best estimate is determined by discounting the related future cash outflows. The
increase in the discounted amount of the provision arising from passage of time is
recognised as interest expenses.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to
reflect the current best estimate.
The provisions expected to be settled within one year since the balance sheet date are
classified as current liabilities.
(23) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from
employees as consideration for equity instruments of the entity or by incurring liabilities for
amounts based on the equity instruments. Equity instruments include equity instruments of
the Company, its parent company or other accounting entities of the Group. Share-based
payments are divided into equity-settled and cash-settled payments. The Group’s share-
based payments are equity-settled payments.
Equity-settled share-based payment
The Group’s equity-settled share-based payment contains share option incentive plan,
restricted share plan and employee stock ownership plan. These plans are measured at
the fair value of the equity instruments at grant date and the equity instruments are
tradable or exercisable when services in vesting period are completed or specified
performance conditions are met. In the vesting period, the services obtained in the current
period are included in relevant cost and expenses at the fair value of the equity
instruments at grant date based on the best estimate of the number of tradable or
exercisable equity instruments, and capital surplus is increased accordingly. If the
subsequent information indicates the number of tradable or exercisable equity instruments
differs from the previous estimate, an adjustment is made and, on the exercise or
desterilisation date, the estimate is revised to equal to the number of actual vested equity
instruments.
- 31 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(23) Share-based payment (Cont’d)
(b) Determination of fair value of equity instruments
The Group determines the fair value of share options using option pricing model, which is
Black - Scholes option pricing model.
The fair value of other equity instruments is based on the share prices, which exclude the
price that incentive objects pay, and the number of the shares on the grant date, taking
into account the effects of clause of the Group’s relevant plans.
(c) Basis for determining best estimate of tradable or exercisable equity instruments
As at each balance sheet date in the vesting period, the Group would make best estimate
in accordance with the newly acquired information such as changes in the number of
employees entitled with exercisable or tradable equity instruments, and amend the
estimated number of exercisable or tradable equity instruments. On the exercise or
desterilisation date, the final number of estimated exercisable or tradable equity
instruments is consistent with the actual number of exercisable or tradable equity
instruments.
(24) Treasury stock
The Group’s treasury stock mainly comes from the repurchase of equity instruments, the
issuance of restricted shares, etc.
Consideration and transaction costs paid by the Group for repurchasing equity instruments
are deducted from owners’ equity and not recognised as financial assets. The
considerations paid by the Group for repurchasing equity instruments are presented as
treasury stock, and the related transaction costs are recognised in owners’ equity.
On the deregistration day of shares, relevant share capital and treasury stock are reversed
with the difference included in capital surplus (share premium) based on actual
deregistration results.
On the grant day of restricted shares, the Group recognises bank deposits when receiving
subscription from the employees and measures the repurchase obligation as liability. On
the desterilisation date of restricted shares, relevant treasury stocks, liabilities and capital
surplus recognised in the vesting period are reversed based on the actual vesting results.
(25) Revenue
The Group recognises revenue at the amount of the consideration which the Group is
expected to receive when the customer obtains control over relevant goods or services.
Revenue is stated net of discounts, rebates and returns.
- 32 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
When any of the following conditions is met, the Group is subject to performance
obligations within a period of time; otherwise, at a point in time:
(1) Customers obtain and consume economic benefits coming from the Group’s
performance of contract while the Group performs the contract.
(2) Customers can control goods under construction during the Group’s performance
of contract.
(3) Goods produced during the Group’s performance of contract are irreplaceable.
During the whole contract period, the Group is entitled to collect payments for
those which have been accumulated up to now.
For a contract obligation within a period of time, the Group recognises the revenue based
on the progress of the obligation fulfilment within that period of time, except where the
progress of the obligation fulfilment cannot be determined reasonably.
Where the status of completion cannot be reasonably determined, revenue is recognised
at the amount of cost incurred if it is predicted that the cost can be compensated till the
progress of the obligation fulfilment can be reasonably determined.
For a contract obligation at a point in time, the Group recognises the revenue when a
customer is in control of the underlying goods.
(a) Sales of goods
The Group are principally engaged in the manufacturing of heating & ventilation, as well as
air-conditioner (hereinafter referred to as “HVAC”) (mainly comprises residential air
conditioner, central air-conditioner, heating and ventilation systems) and consumer
appliances (mainly comprise kitchen appliances, refrigerators, washing machines and
various small appliances), and robotics and automation system and sales of products and
materials to buyers.
Revenue from domestic sales of HVAC and consumer appliances is recognised when the
Group has delivered products to the location specified in the sales contract and the buyer
has confirmed the acceptance of the products, and the delivery order is signed by both
parties. Upon confirming the acceptance, the buyer has the right to sell the products at its
discretion and takes the risks of any price fluctuations and obsolescence and loss of the
products.
Revenue from overseas sales of HVAC and consumer appliances is recognised when the
products have been declared to the customs and shipped out of the port in accordance
with the sales contract.
Revenue from sales of robotics and automation system is recognised when the Group has
delivered products to the location specified in the sales contract and the buyer has
confirmed the acceptance of the products, and the delivery order is signed by both parties.
- 33 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
(a) Sales of goods (Cont’d)
Revenue from sales of materials is recognised when the buyer has confirmed the
acceptance of the products, and the delivery order is signed by both parties.
The credit period granted to distributors by the Group is determined based on their credit
risk characteristics, which is consistent with industry practice, and there is no significant
financing component. Generally, the retail customers of the Group are entitled to return the
products within 7 days after the confirmation of receipt.
The Group provides distributors with sales discount, and the relevant revenue is
recognised at contract consideration net of the discount amount estimated.
The periods and terms of product quality warranty are provided in accordance with the
laws and regulations related to the products. The Group has not provided any additional
services or product quality warranty, so the product quality warranty does not constitute a
separate performance obligation.
The rights to receive considerations for transferring goods to the customer (and such
rights depend on factors other than the passage of time) are recognised as contract
assets. The Group’s obligation to transfer products to customers for consideration
received or receivable is presented as contract liabilities.
(b) Rendering of services
The Group provides robotics and automation system construction services, intelligent
logistics integration solution, storage services, delivery services, installation services and
transportation services, which are recognised in a certain period of time based on the
stage of completion. On the balance sheet date, the Group re-estimates the stage of
completion to reflect the actual status of contract performance.
When the Group recognises revenue based on the stage of completion, the amount with
unconditional collection right obtained by the Group is recognised as accounts receivable,
and the rest is recognised as contract assets. Meanwhile, loss provision for accounts
receivable and contract assets are recognised on the basis of ECL (Note 2(9)). If the
contract price received or receivable exceeds the amount for the completed services, the
excess portion will be recognised as contract liabilities. Contract assets and contract
liabilities under the same contract are presented on a net basis.
- 34 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
(b) Rendering of services (Cont’d)
Contract costs include contract performance costs and contract acquisition costs. The
costs incurred by the Group for the rendering of services are recognised as contract
performance costs. The recognised revenue is carried forward to the cost of sales from
main operations based on the stage of completion. Incremental costs incurred by the
Group for the acquisition of contract are recognised as the costs to obtain a contract. For
the costs to obtain a contract with the amortisation period within one year, the costs are
charged to profit or loss when incurred. For the costs to obtain a contract with the
amortisation period beyond one year, the costs are charged in the current profit or loss on
the same basis as aforesaid revenue of rendering of services recognised under the
relevant contract. If the carrying amount of the contract costs is higher than the remaining
consideration expected to be obtained by rendering of the service net of the estimated cost
to be incurred, the Group makes provision for impairment on the excess portion and
recognises it as asset impairment losses. As at the balance sheet date, based on whether
the amortisation period of the costs to fulfil a contract is more than one year when initially
recognised, the amount of the Group’s costs to fulfil a contract net of related provision for
asset impairment is presented as inventories or other non-current assets. For costs to
obtain a contract with amortisation period beyond one year at the initial recognition, the
amount net of related provision for asset impairment is presented as other non-current
assets.
(c) Interest income
Interest income from financial instruments is calculated by effective interest rate method
and recognised in profit or loss for the current period. Interest income comprises premiums
or discounts, or the amortisation based on effective rates of other difference between the
initial carrying amount and the due amount of interest-earning assets.
The effective interest rate method is a method of calculating the amortised cost of a
financial asset or liability and the interest income or interest costs based on effective rates.
The effective interest rate is the rate at which the estimated future cash flows during the
period of expected duration of the financial instruments or applicable shorter period are
discounted to the current carrying amount of the financial instruments. When calculating
the effective interest rate, the Group estimates cash flows by considering all contractual
terms of the financial instruments (e.g., early repayment options, similar options, etc.), but
without considering future credit losses. The calculation includes all fees and interest paid
or received that are an integral part of the effective interest rate, transaction costs, and all
other premiums or discounts.
Interest income from impaired financial assets is calculated at the interest rate that is used
for discounting estimated future cash flow when measuring the impairment loss.
(d) Dividend income
Dividend income is recognised when the right to receive dividend payment is established.
(e) Rental income
Rental income from investment prosperities is recognised in the income statement on a
straight-line basis over the lease period.
- 35 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Revenue (Cont’d)
(f) Fee and commission income
Fee and commission income is recognised in profit or loss for the current period when the
service is provided. The Group defers the initial charge income or commitment fee income
arising from the forming or acquisition of financial assets as the adjustment to effective
interest rate. If the loans are not lent when the loan commitment period is expired, related
charges are recognised as fee and commission income.
(26) Government grants
Government grants are transfers of monetary or non-monetary assets from the
government to the Group at nil consideration, including refund of taxes and financial
subsidies.
A government grant is recognised when the conditions attached to it can be complied with
and the government grant can be received. For a government grant in the form of transfer
of monetary assets, the grant is measured at the amount received or receivable. For a
government grant in the form of transfer of non-monetary assets, it is measured at fair
value; if the fair value is not reliably determinable, the grant is measured at nominal
amount.
Government grants related to assets are grants that are acquired by the Group and used
for acquisition, construction or forming long-term assets in other ways. Government grants
related to income refer to the government grants other than those related to assets.
Government grants related to assets are recorded as deferred income reasonably and
systematically amortised to profit or loss over the useful life of the related asset.
For government grants related to income, where the grant is a compensation for related
expenses or losses to be incurred by the Group in the subsequent periods, the grant is
recognised as deferred income, and included in profit or loss over the periods in which the
related costs are recognised; where the grant is a compensation for related expenses or
losses already incurred by the Group, the grant is recognised directly in profit or loss for the
current period.
The same kind of government grants are presented with the same method.
Those related to ordinary activities are recorded into operating profit while the other in
non- operating income and expenses.
Loans to the Group at political preferential rate are recorded at the actual amount
received, and the related borrowing costs are calculated based on the principal and the
political preferential rate. Finance discounts directly received offset related borrowing
costs.
- 36 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(27) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the
differences arising between the tax bases of assets and liabilities and their carrying
amounts (temporary differences). Deferred tax asset is recognised for the deductible
losses that can be carried forward to subsequent years for deduction of the taxable profit
in accordance with the tax laws. No deferred tax liability is recognised for a temporary
difference arising from the initial recognition of goodwill. No deferred tax asset or deferred
tax liability is recognised for the temporary differences resulting from the initial recognition
of assets or liabilities due to a transaction other than a business combination, which
affects neither accounting profit nor taxable profit (or deductible losses) and whose initially
recognised assets and liabilities do not result in equal taxable temporary differences and
deductible temporary differences. At the balance sheet date, deferred tax assets and
deferred tax liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible
losses and tax credits to the extent that it is probable that taxable profit will be available in
the future against which the deductible temporary differences, deductible losses and tax
credits can be utilised.
Deferred tax liabilities are recognised for temporary differences arising from investments in
subsidiaries, associates and joint ventures, except where the Group is able to control the
timing of reversal of the temporary difference, and it is probable that the temporary
differences will not be reversed in the foreseeable future. When it is probable that the
temporary differences arising from investments in subsidiaries, associates and joint
ventures will be reversed in the foreseeable future and that the taxable profit will be
available in the future against which the temporary differences can be utilised, the
corresponding deferred tax assets are recognised.
Deferred tax assets and deferred tax liabilities are offset when:
the deferred tax assets and deferred tax liabilities are related to the same tax
payer within the Group and the same taxation authority; and,
that tax payer within the Group has a legally enforceable right to offset current tax
assets against current tax liabilities.
(28) Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
- 37 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(28) Leases (Cont’d)
The Group as the lessee
At the lease commencement date, the Group recognises the right-of-use asset and
measures the lease liability at the present value of the lease payments that are not paid at
that date. Lease payments include fixed payments, the exercise price of a purchase option
if the lessee is reasonably certain to exercise that option, and payments of penalties for
terminating the lease if the lessee exercises an option to terminate the lease. Variable
lease payments in proportion to sales are excluded from lease payments and recognised
in profit or loss as incurred. Lease liabilities that are due within one year (inclusive) as from
the balance sheet date are included in the current portion of non-current liabilities.
Right-of-use assets of the Group comprise leased buildings, machinery and equipment
and motor vehicles. Right-of-use assets are measured initially at cost which comprises the
amount of the initial measurement of lease liabilities, any lease payments made at or
before the commencement date and any initial direct costs, less any lease incentives
received. If there is reasonable certainty that the Group will obtain ownership of the
underlying asset by the end of the lease term, the asset is depreciated over its remaining
useful life; otherwise the asset is depreciated over the shorter of the lease term and its
remaining useful life. The carrying amount of the right-of-use asset is reduced to the
recoverable amount when the recoverable amount is below the carrying amount.
For short-term leases with a term of 12 months or less and leases of an individual asset
(when new) of low value, the Group chooses to include the lease payments in the cost of
the underlying assets or in the profit or loss for the current period on a straight-line basis
over the lease term, instead of recognising right-of-use assets and lease liabilities.
The Group accounts for a lease modification as a separate lease if both: (1) the
modification increases the scope of the lease by adding the right to use one or more
underlying assets; (2) the consideration for the lease increases by an amount
commensurate with the stand-alone price for the increase in scope and any appropriate
adjustments to that stand-alone price to reflect the circumstances of the contract.
For a lease modification that is not accounted for as a separate lease, the Group
redetermines the lease term at the effective date of the lease modification, and
remeasures the lease liability by discounting the revised lease payments using a revised
discount rate, except the contract changes that may apply the practical expedient as
specified by the Ministry of Finance. For a lease modification which decreases the scope
of the lease or shortens the lease term, the Group correspondingly decreases the carrying
amount of the right-of-use asset, and recognises in profit or loss any gain or loss relating
to the partial or full termination of the lease. For other lease modifications which lead to
the remeasurement of lease liabilities, the Group correspondingly adjusts the carrying
amount of the right-of-use asset.
For the qualified rent concessions agreed on existing lease contracts, the Group applies
the practical expedient and records the undiscounted concessions in profit or loss when
the agreement is reached to discharge the original payment obligation with corresponding
adjustment of lease liabilities.
- 38 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(28) Leases (Cont’d)
The Group as the lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. An operating lease is a lease other than a
finance lease.
(a) Operating leases
Where the Group leases out self-owned buildings, machinery and equipment, and motor
vehicles under operating leases, rental income therefrom is recognised on a straight-line
basis over the lease term. Variable rental that is linked to a certain percentage of sales is
recognised in rental income as incurred.
For the qualified rent concessions agreed on existing lease contracts, the Group applies
the practical expedient to account for the concessions as variable lease payments and
record the concessions in profit or loss during the waiving period.
Except the above contract changes that are accounted for by applying the practical
expedient, for a lease modification, the Group accounts for it as a new lease from the
effective date of the modification, and considers any lease payments received in advance
and receivable relating to the lease before modification as receivables of the new lease.
(b) Finance leases
At the lease commencement date, the Group recognises the lease payments receivable
under a finance lease and derecognises relevant assets. The lease payments receivable
under a finance lease are presented as long-term receivables; the lease payments
receivable under a finance lease due within one year (inclusive) as from the balance sheet
date are included in the current portion of non-current assets.
(29) Segment information
The Group identifies operating segments based on the internal organisation structure,
management requirements and internal reporting system, and discloses segment
information of reportable segments which is determined on the basis of operating
segments.
An operating segment is a component of the Group that satisfies all of the following
conditions: (1) the component is able to earn revenue and incur expenses from its ordinary
activities; (2) whose operating results are regularly reviewed by the Group’s management
to make decisions about resources to be allocated to the segment and to assess its
performance, and (3) for which the information on financial position, operating results and
cash flows is available to the Group. Two or more operating segments that have similar
economic characteristics and satisfy certain conditions can be aggregated into one single
operating segment.
- 39 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(30) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements
applied based on historical experience and other factors, including expectations of future
events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the
next accounting year are outlined below:
(i) Provision for impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable
amount of the asset group or group of asset groups that contain the apportioned goodwill
is determined by the higher value between the present value of the future cash flows and
the net value that is calculated by the fair value less the disposal costs. Accounting
estimate is required for the calculation of the recoverable amount. The impairment testing
is performed by assessing the recoverable amount of the asset group or group of asset
groups containing the relevant goodwill, based on the present value of cash flows
forecasts. Key assumptions adopted in the impairment testing of goodwill included
estimated revenue growth rate, EBITDA margin, perpetual annual growth rate and
discount rate, which involved critical accounting estimates and judgements.
If management revises the estimated revenue growth rate and perpetual annual growth
rate that are used in the calculation of the future cash flows of asset groups or groups of
asset groups, and the revised rates are lower than the current rates, the Group would
need to recognise further impairment against goodwill.
If management revises the EBITDA margin that is used in the calculation of the future
cash flows of asset groups or groups of asset groups, and the revised EBITDA margin is
lower than the current one, the Group would need to recognise further impairment against
goodwill.
If management revises the pre-tax discount rate applied to the discounted cash flows, and
the revised pre-tax discount rate is higher than the one currently applied, the Group would
need to recognise further impairment against goodwill.
- 40 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(30) Critical accounting estimates and judgements (Cont’d)
(i) Provision for impairment of goodwill (Cont’d)
If the actual estimated revenue growth rate, perpetual annual growth rate and EBITDA
margin are higher or the actual pre-tax discount rate is lower than management’s
estimates, the impairment loss of goodwill previously provided for is not allowed to be
reversed by the Group.
(ii) Income tax and deferred income tax
The Group is subject to enterprise income tax in numerous jurisdictions. There are many
transactions and events for which the ultimate tax determination is uncertain during the
ordinary course of business. Significant judgement is required from the Group in
determining the provision for income taxes in each of these jurisdictions. Where the final
tax outcome of these matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
As stated in Note 3(1), some subsidiaries of the Group are high-tech enterprises. The
“High-Tech Enterprise Certificate” is effective for three years. Upon expiration, application
for high-tech enterprise assessment should be submitted again to the relevant government
authorities. Based on the past experience of reassessment for high-tech enterprise upon
expiration and the actual condition of the subsidiaries, the Group considers that the
subsidiaries are able to obtain the qualification for high-tech enterprises in future years,
and therefore a preferential tax rate of 15% is used to calculate the corresponding
deferred income tax. If some subsidiaries cannot obtain the qualification for high-tech
enterprise upon expiration, then the subsidiaries are subject to a statutory tax rate of 25%
for the calculation of the income tax, which further influences the recognised deferred tax
assets, deferred tax liabilities and income tax expenses.
Deferred tax assets are recognised for the deductible losses that can be carried forward to
subsequent years to the extent that it is probable that taxable profit will be available in the
future against which the deductible losses can be utilised. Taxable profit that will be
available in the future includes the taxable profit that will be realised through normal
operations and the taxable profit that will be increased upon the reversal of taxable
temporary differences incurred in prior periods. Judgements and estimates are required to
determine the time and amounts of taxable profit in the future. Any differences between
the reality and the estimate may result in adjustment to the carrying amount of deferred tax
assets.
- 41 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(31) Significant changes in accounting policies
The Ministry of Finance released the Circular on Issuing Interpretation No. 16 of
Accounting Standards for Business Enterprises in 2022，in which the provision "On the
inapplicability of exemption at initial recognition to the accounting treatment of deferred
income tax related to assets and liabilities arising from individual transactions" took effect
on 1 January 2023. The Ministry of Finance released the Q&A on Implementation of
Accounting Standards for Business Enterprises in 2023. The financial statements for the
six months ended 30 June 2023 have been prepared by the Group and the Company in
accordance with the above circular and Q&A. The revisions have no significant impacts on
the financial statements of the Group and the Company.
3 Taxation
(1) Main tax category and rate
Category Tax base Tax rate
Enterprise income tax Levied based on taxable income Note (a)
Value-added tax (“VAT”) Taxable value-added amount (Tax Note (b)
payable is calculated using the
taxable sales amount multiplied by
the applicable tax rate less deductible
input VAT of the current period)
City maintenance and The amount of VAT paid 1% or 5% or 7%
construction tax
Educational surcharge The amount of VAT paid 3% or 5%
Local educational surcharge The amount of VAT paid 2%
Property tax Price-based property is subject to a 1.2% or 12%
1.2% tax rate after a 30% cut in the
original price of property; rental-
based property is subject to a 12%
tax rate for the rental income.
- 42 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of
15% in 2023 as they qualified as high-tech enterprises and obtained the High-tech
Enterprise Certificate:
No. of the High-tech Term of
Name of taxpayer Enterprise Certificate Dates of issuance validity
Jiangsu Midea Cleaning Appliances Co.,
Ltd. GR202032012131 2 December 2020 3 years
GD Midea Environment Appliances Mfg.
Co., Ltd. GR202244008573 22 December 2022 3 years
Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. GR202144008574 20 December 2021 3 years
Guangdong Witol Vacuum Electronic
Manufacture Co., Ltd. GR202044001986 1 December 2020 3 years
Foshan Shunde Midea Washing
Appliances Manufacturing Co., Ltd. GR202044003557 9 December 2020 3 years
Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. GR202144012791 31 December 2021 3 years
Foshan Shunde Midea Electric Science
and Technology Co., Ltd. GR202244002733 19 December 2022 3 years
GD Midea Heating & Ventilating Equipment
Co., Ltd. GR202144001270 20 December 2021 3 years
Hefei Midea Heating & Ventilating
Equipment Co., Ltd. GR202234002343 18 October 2022 3 years
Anhui Meizhi Precision Manufacturing Co.,
Ltd. GR202134004969 18 September 2021 3 years
Guangzhou Midea Hualing Refrigerator
Co., Ltd. GR202244004828 19 December 2022 3 years
Guangdong Welling Motor Manufacturing
Co., Ltd. GR202044006087 9 December 2020 3 years
Foshan Welling Washer Motor
Manufacturing Co., Ltd. GR202044005425 9 December 2020 3 years
Huaian Welling Motor Manufacturing Co.,
Ltd. GR202232018102 12 December 2022 3 years
Wuxi Filin Electronics Co., Ltd. GR202132000964 3 November 2021 3 years
GD Midea Air-Conditioning Equipment Co.,
Ltd. GR202044003059 1 December 2020 3 years
Handan Midea Air-Conditioning Equipment
Co., Ltd. GR202013000191 27 September 2020 3 years
Midea Group Wuhan Refrigeration
Equipment Co., Ltd. GR202042000684 1 December 2020 3 years
Guangzhou Hualing Refrigerating
Equipment Co., Ltd. GR202044001953 1 December 2020 3 years
Guangdong Swisslog Technology Co., Ltd. GR202144005648 20 December 2021 3 years
Wuhu Maty Air-Conditioning Equipment
Co., Ltd. GR202034001383 17 August 2020 3 years
Chongqing Midea General Refrigeration
Equipment Co., Ltd. GR202051100347 9 October 2020 3 years
Guangdong Meizhi Compressor Limited GR202044004270 9 December 2020 3 years
Hubei Midea Refrigerator Co., Ltd. GR202042000745 1 December 2020 3 years
Guangdong Midea Consumer Electric
Manufacturing Co., Ltd. GR202044007232 9 December 2020 3 years
- 43 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of
15% in 2023 as they qualified as high-tech enterprises and obtained the High-tech
Enterprise Certificate (Cont’d):
No. of the High-tech Term of
Name of taxpayer Enterprise Certificate Dates of issuance validity
Anhui Meizhi Compressor Co., Ltd. GR202234002700 18 October 2022 3 years
Foshan Shunde Midea Water Dispenser
Manufacturing Co., Ltd. GR202044004098 9 December 2020 3 years
Midea Welling Motor Technology
(Shanghai) Co., Ltd. GR202031001304 12 November 2020 3 years
Welling (Wuhu) Motor Manufacturing Co.,
Ltd. GR202134003666 18 November 2021 3 years
Hefei Midea Laundry Appliance Co., Ltd. GR202134003561 18 September 2021 3 years
Foshan Midea Chungho Water Purification
Equipment. Co., Ltd. GR202144010400 31 December 2021 3 years
Toshiba HA Manufacturing (Nanhai) Co.,
Ltd. GR202144002672 20 December 2021 3 years
Guangdong Meizhi Precision-
Manufacturing Co., Ltd. GR202144003890 20 December 2021 3 years
Wuhu Midea Kitchen & Bath Appliances
Mfg. Co., Ltd. GR202134003382 18 September 2021 3 years
Guangdong Midea Intelligent Technologies
Co., Ltd. GR202144008039 20 December 2021 3 years
WINONE ELEVATOR COMPANY LIMITED GR202144006432 20 December 2021 3 years
Midea Group Wuhan HVAC Equipment
Co., Ltd. GR202242004390 29 November 2022 3 years
Beijing Hiconics Eco-energy Frequency
Conversion Technology Co., Ltd. GR202011003365 21 October 2020 3 years
Changsha Sunye Electric Co., Ltd. GR202143000846 18 September 2021 3 years
Beijing Huatairunda Energy Saving Co.,
Ltd. GR202111004112 17 December 2021 3 years
Dorna Technology Co., Ltd. GR202033006717 1 December 2020 3 years
Wuxi Little Swan Electric Co., Ltd. GR202032006759 2 December 2020 3 years
KUKA Robotics Manufacturing China Co.,
Ltd. GR202231004961 14 December 2022 3 years
KUKA Robotics Guangdong Co., Ltd. GR202044003841 9 December 2020 3 years
Reis Robotics (Kunshan) Co., Ltd. GR202132000238 3 November 2021 3 years
Midea Intelligent Lighting & Controls
Technology Co., Ltd. GR202036000935 14 September 2020 3 years
Beijing Wandong Medical Technology Co.,
Ltd. GR202011009515 2 December 2020 3 years
Wanliyun Medical Information Technology
(Beijing) Co., Ltd. GR202211008024 30 December 2022 3 years
Guangdong Midea Environmental
Technologies Co., Ltd. GR202144004692 20 December 2021 3 years
MR Semiconductor Ltd. GR202131000701 9 October 2021 3 years
Anhui Welling Auto Parts Corporation
Limited GR202134002578 18 September 2021 3 years
Meicloud Technology Co., Ltd. GR202144008715 20 December 2021 3 years
- 44 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-1) The following subsidiaries of the Group are subject to an enterprise income tax rate of
15% in 2023 as they qualified as high-tech enterprises and obtained the High-tech
Enterprise Certificate (Cont’d):
No. of the High-
tech Enterprise Term of
Name of taxpayer Certificate Dates of issuance validity
Wuhan TTium Motor Technology Co.,
Ltd. GR202242004712 29 November 2022 3 years
WDM Esaote (Suzhou) Medical
Technology Co., Ltd. GR202232006635 18 November 2022 3 years
Western-style Electric Products
Company GR202244017262 22 December 2022 3 years
Hefei Hualing Co., Ltd. GR202134000541 18 September 2021 3 years
Guangdong Yueyun Industrial Internet
Innovation Technology Co., Ltd. GR202244006484 22 December 2022 3 years
Shenzhen Midea Payment Technology
Co., Ltd. GR202244208053 19 December 2022 3 years
Shenzhen Clou Electronics Co., Ltd. GR202044203594 11 December 2020 3 years
Shenzhen Clou Intelligent Industry Co., GR202144200806 23 December 2021 3 years
Ltd.
Shenzhen Hongzhi Software Co., Ltd. GR202144200284 23 December 2021 3 years
Sichuan Clou New Energy and Electric GR202051003762 3 December 2020 3 years
Co., Ltd.
Guangdong Shunde Switch Factory GR202044005703 9 December 2020 3 years
Co., Ltd.
Suzhou Clou Dongzi Electric Co., Ltd. GR202032007954 2 December 2020 3 years
Shenzhen Clou Precision Instruments GR202144202249 23 December 2021 3 years
Co., Ltd.
Clou Global Technology Co., Ltd. GR202144206543 23 December 2021 3 years
- 45 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-2) According to the Notice of the Ministry of Finance, the State Taxation Administration on
Preferential Enterprise Income Tax Policies for Hainan Free-trade Port (Cai Shui [2020] No.
31), the Company’s certain subsidiary in Hainan is subject to enterprise income tax at a rate of
15% from 1 January 2020 to 31 December 2024.
(a-3) Pursuant to the Notice on Extending the Preferential Enterprise Income Tax Policies for
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen,
enterprises that meet the notice requirements are subject to a reduced enterprise income tax
rate of 15%. Therefore, Midea Commercial Factoring Co., Ltd., a subsidiary of the Company,
is subject to enterprise income tax at a rate of 15% from 1 January 2021 to 31 December
2025.
(a-4) According to the Announcement on Continuing the Enterprise Income Tax Policies for the
Development of Western China jointly issued by the Ministry of Finance, the State Taxation
Administration and the National Development and Reform Commission on 23 April 2020,
Chongqing Midea Air-Conditioning Equipment Co., Ltd., Chongqing Midea Commercial
Factoring Co., Ltd., Chongqing Annto Logistics Technology Co., Ltd. and Guiyang Annto
Logistics Technology Co., Ltd., subsidiaries of the Company, are subject to enterprise income
tax at a rate of 15% from 1 January 2021 to 31 December 2030.
(a-5) According to the Administration on Further Implementing the Preferential Income Tax Policies
for Small Low-Profit Enterprises (Cai Shui [2022], No. 13) and the Announcement on the
Matters Concerning the Implementation of Preferential Income Tax Policies for the
Development of Small Low-Profit Enterprises and Individual Industrial and Commercial
Households (Cai Shui [2023], No. 6) jointly issued by the Ministry of Finance and the State
Taxation Administration, for Shenzhen Midea Capital Corporation Limited, Guangdong
Lingmei Technology Co., Ltd., Shanghai Mei'an Logistics Co., Ltd., Foshan Annto Logistics
Technology Co., Ltd., Shenzhen Annto Intelligent Technology Co., Ltd., Tianjin Annto Network
Technology Co., Ltd., Jingzhou Meian Storage and Transportation Co., Ltd. and Hangzhou
Long-termism Tech Co., Ltd., subsidiaries of the Company and qualified as small low-profit
enterprises, in 2023, EIT is based on a 20% rate applied to 25% of its annual taxable income
amount.
- 46 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-6) The Company's subsidiaries in the Chinese mainland other than those mentioned in (a-1) to
(a-5) are subject to enterprise income tax at the rate of 25%.
(a-7) In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,
was awarded with the Certificate of Honour for Development and Expansion (No. 587) by the
Singapore Economic Development Board and is subject to the applicable preferential income
tax rate of 5.5% for 2023. Lifestyle Orchestra Co., Pte. Ltd. and Little Swan International
(Singapore) Co., Pte. Ltd., the Company's subsidiaries, are subject to enterprise income tax at
the rate of 17%.
(a-8) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate of
16.5%. Such subsidiaries include Midea International Trading Company Limited, Midea
International Corporation Company Limited, Midea Home Appliances Investments (Hong
Kong) Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited,
Midea Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling International Hong
Kong Ltd., Chairing Holding Limited, Main Power Electrical Factory Limited and Midea
Investment (Asia) Company Limited.
(a-9) The Company's subsidiaries in BVI and Cayman Islands are exempted from enterprise income
tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni Investments
Development Ltd., Midea Investment Holding (BVI) Limited, Midea Electric Investment (BVI)
Limited, Welling Holding (BVI) Ltd., Midea Holding (Cayman Islands) Limited and Midea
Investment Development Company Limited.
(a-10) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise
income tax at the rate of 34%.
(a-11) Some subsidiaries of TLSC, the Company's subsidiary in Japan, are subject to Japan
enterprise income tax at the rate of 34.01%.
(a-12) Clivet S.P.A (“Clivet”), the Company's subsidiaries in Italy, are subject to Italy enterprise
income tax at the rate between 20% and 31.4%.
(a-13) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise income
tax at the rate of 32%.
(a-14) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to
Israel enterprise income tax at the rate of 23%.
(a-15) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's
subsidiary in Egypt, is subject to Egypt enterprise income tax at the rate of 22.5%.
- 47 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
3 Taxation (Cont’d)
(1) Main tax category and rate (Cont’d)
(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates
(Cont’d)
(a-16) Midea America Corp., the Company's subsidiary in the USA, is subject to the USA enterprise
income tax at the rate of 21%.
(a-17) Midea Consumer Electric (Vietnam) Co., Ltd., the Company's subsidiary in Vietnam, is subject
to Vietnam enterprise income tax at the rate of 20%.
(a-18) Midea Refrigeration Equipment (Thailand) Co., Ltd., the Company's subsidiary in Thailand, is
exempt from enterprise income tax under the investment promotion policy of the Thailand
Board of Investment.
(b) Notes to the VAT rate of the principal tax payers with different tax rates
(b-1) Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax Reform
(Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the State Taxation
Administration and the General Administration of Customs and relevant regulations, the
applicable tax rate of revenue arising from sales of goods and rendering of repairing and
replacement services of the Company’s certain subsidiaries is 13% from 1 April 2019, and that
of revenue arising from real estate leasing and transportation services of the Company’s
certain subsidiaries is 9%.
(b-2) Financial services, consulting services and storage services provided by the Company and
certain subsidiaries are subject to VAT at the rate of 6%.
(b-3) Rental revenue of the Company’s certain subsidiaries is subject to easy levy of VAT at the rate
of 5%.
(b-4) Pursuant to the Announcement on Exempting Small-Scale Value-Added Tax Taxpayers from
Value-Added Tax (Cai Shui [2023] No. 1) jointly issued by the Ministry of Finance and the
State Taxation Administration, certain subsidiaries of the Company engaged in the production
service sector are eligible for a 5% additional VAT deduction based on deductible input VAT in
the current year from 1 January 2023 to 31 December 2023.
(b-5) Pursuant to the Notice on Further Supporting and Promoting the Business Start-up and
Employment of Priority Groups (Cai Shui [2019] No. 22) issued by the Ministry of Finance, the
State Taxation Administration, the Ministry of Human Resources and Social Security and the
State Council Leading Group Office of Poverty Alleviation and Development and the
Announcement on Extending the Implementation Period of Certain Preferential Tax Policies
for Poverty Alleviation (Announcement [2021] No. 18 of the Ministry of Finance, the State
Taxation Administration, the Ministry of Human Resources and Social Security and the
National Rural Revitalisation Administration) issued by the Ministry of Finance, the State
Taxation Administration, the Ministry of Human Resources and Social Security and the
National Rural Revitalisation Administration, for certain subsidiaries of the Company that
employ the listed poverty-stricken people, since the month of signing the labour contracts of
more than 1 year and paying the social security contributions, their VAT, city maintenance and
construction tax, educational surcharge, local educational surcharge and enterprise income
tax will be deducted in sequence and based on quota in accordance with the actual number of
employees in 3 years, and the period of validity will be until 31 December 2025.
- 48 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
Item Ending balance Opening balance
Cash on hand 3,894 1,645
Cash at bank (a) 40,724,931 28,581,529
Other cash balances (b) 2,554,672 1,688,278
Statutory reserve with the Central Bank (c) 579,439 328,409
Surplus reserve with the Central Bank 179,898 172,394
Deposits with banks and other financial
institutions (d) 27,348,448 24,287,610
Accrued interest 343,637 210,234
Total 71,734,919 55,270,099
Including: Total amounts deposited with
banks overseas (including
Hong Kong, China, Macau,
China, Singapore, Japan, Italy,
Brazil and Germany) 10,318,654 7,133,785
(a) As at 30 June 2023, cash at bank included fixed deposits with the term of over 3 months but
less than 1 year, amounting to RMB 20,696,376,000 (31 December 2022: RMB
1,911,210,000).
(b) Other cash balances mainly include deposits for letters of guarantee, bank acceptance notes
and letters of credit.
(c) Statutory reserve with the Central Bank represents the statutory reserve deposited in People’s
Bank of China by the financial enterprise in accordance with relevant regulations. They are not
available for use in the Group’s daily operations.
(d) Surplus reserve with the Central Bank represents the excess over the required statutory
reserve paid by financial institutions in the Central Bank, and it is bank deposit that can be
readily drawn on demand.
(2) Financial assets held for trading
Item Ending balance Opening balance
Structural deposits (a) 6,090,706 1,606,608
Investments in equity instrument held for
trading (b) 1,537,870 1,264,595
Others 565,425 413,390
Total 8,194,001 3,284,593
(a) As at 30 June 2023, structural deposits were deposits with financial institutions due within 1
year, which were measured at fair value through profit or loss.
(b) As at 30 June 2023, investments in equity instrument held for trading referred to equity
investments in listed companies, which were measured at fair value through profit or loss.
- 49 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(3) Notes receivable
Item Ending balance Opening balance
Bank acceptance notes 6,783,260 4,705,290
Trade acceptance notes 185,261 114,595
Less: Provision for bad debts (a) (54,211) (61,756)
Total 6,914,310 4,758,129
(a) Provision for bad debts
For notes receivable of the Group arising from sales of goods or rendering of services in the
ordinary course of business, the Group measures loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component. As at 30 June 2023, the
Group considered that there was no significant credit risk associated with its bank acceptance
notes and did not expect that there would be any significant losses from non-performance by
these banks.
(b) As at 30 June 2023, notes receivable endorsed or discounted but unmatured are as follows:
Item Derecognised Not derecognised
Bank acceptance notes 66,060 4,274,053
(4) Accounts receivable
Item Ending balance Opening balance
Accounts receivable 38,000,493 29,570,582
Less: Provision for bad debts (1,545,521) (1,332,609)
Total 36,454,972 28,237,973
(a) The ageing of accounts receivable is analysed as follows:
Ageing Ending balance Opening balance
Within 1 year 36,698,872 28,142,167
1 to 2 years 857,602 1,099,842
2 to 3 years 207,209 140,153
3 to 5 years 159,151 101,202
Over 5 years 77,659 87,218
Sub-total 38,000,493 29,570,582
As at 30 June 2023, the Group had no significant overdue accounts receivable.
- 50 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(4) Accounts receivable (Cont’d)
(b) Under the new financial instruments standards, the Group measures the loss provision for
accounts receivable based on the lifetime ECL.
As at 30 June 2023, accounts receivable for which the related provision for bad debts was
provided on an individual basis are analysed as follows:
Ending balance
Lifetime ECL Provision for
Category Book balance rate bad debts Reason
The debtor encountered
Domestic customers 748,236 86.86% (649,952) financial distress, etc.
The debtor encountered
Overseas customers 15,504 100.00% (15,504) financial distress, etc.
Total 763,740 (665,456)
As at 30 June 2023, accounts receivable for which the related provision for bad debts was
provided on the grouping basis are analysed as follows:
Ending balance
Book balance Provision for bad debts
Category Amount Lifetime ECL rate Amount
Domestic business
grouping 15,256,863 2.71% (413,459)
Overseas business
grouping 21,979,890 2.12% (466,606)
Total 37,236,753 (880,065)
(c) For the six months ended 30 June 2023, the provision for bad debts reversed amounted to
RMB 206,610,000.
For the six months ended 30 June 2023, the accounts receivable written off by the Group were
arising from transactions with third parties and no accounts receivable with significant amounts
were written off.
(d) As at 30 June 2023, the five largest accounts receivable aggregated by debtor are summarised
and analysed as follows:
Provision for bad
Item Amount debts % of total balance
Total amount of the five
largest accounts
receivable 2,296,018 (57,400) 6.04%
(5) Other receivables
Item Ending balance Opening balance
Other receivables 1,904,198 2,249,186
Less: Provision for bad debts (41,333) (38,009)
Total 1,862,865 2,211,177
(a) Other receivables mainly include security deposit and guarantee, receivables related to share
options, current accounts and petty cash to staff.
The ageing of other receivables is analysed as follows:
- 51 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont’d)
Ageing Ending balance Opening balance
Within 1 year 1,523,828 1,932,646
1 to 2 years 123,417 137,213
2 to 3 years 114,406 97,205
3 to 5 years 85,506 48,616
Over 5 years 57,041 33,506
Sub-total 1,904,198 2,249,186
(b) Provision for bad debts and changes in book balance statement
Stage 1 Stage 3
12-month ECL 12-month ECL Lifetime ECL
(Grouping) (Individual) (Credit impaired) Sub-total
Provision Provision Provision Provision
Book for bad Book for bad Book for bad for bad
Item balance debts balance debts balance debts debts
1 January 2023 2,176,965 33,747 67,959 - 4,262 4,262 38,009
Transfer to Stage 3 (1,876) (188) - - 1,876 188 -
Net (decrease)/increase in the
current year (305,692) 5,876 (39,066) - (230) 1,367 7,243
Including: Written-off in the
current period - - - - (230) (230) (230)
Derecognition - - - - - - -
Differences on translation of
foreign currency financial
statements (4,010) - 91 (3,919)
30 June 2023 1,869,397 35,425 28,893 - 5,908 5,908 41,333
(i) As at 30 June 2023, other receivables for which the related provision for bad debts was
provided on an individual basis are analysed as follows:
Provision for bad
Book balance 12-month ECL rate debts Reason
Low risk of expected
Stage 1 28,893 0% - losses
Provision for bad
Book balance 12-month ECL rate debts Reason
The debtor encountered
Stage 3 5,908 100.00% (5,908) financial distress, etc.
(ii) As at 30 June 2023, other receivables for which the related provision for bad debts was
provided on the grouping basis were all at Stage 1, which are analysed as follows:
Ending balance Opening balance
Book balance Provision for bad debts Book balance Provision for bad debts
Stage 1 Amount Amount Provision ratio Amount Amount Provision ratio
Security
deposit/guarantee
and other
receivables
grouping 1,869,397 (35,425) 1.89% 2,176,965 (33,747) 1.55%
(c) For the six months ended 30 June 2023, the provision for bad debts reversed amounted to
RMB 23,567,000.
For the six months ended 30 June 2023, no other receivables with significant amounts were
written off.
(d) As at 30 June 2023, the five largest other receivables aggregated by debtor are summarised
and analysed as follows:
Item Amount Provision for bad debts % of total balance
Total amount of the five largest other receivables 179,285 (4,865) 9.42%
(e) As at 30 June 2023, the Group had no significant government grants recognised at amounts
receivable.
- 52 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(6) Receivables financing
Item Ending balance Opening balance
Receivables financing 15,466,934 13,526,540
The Group’s receivables financing were mainly bank acceptance notes transferred, discounted
and endorsed for the purpose of daily treasury management and were qualified for
derecognition.
As at 30 June 2023 and 31 December 2022, the Group measured provision for bad debts
based on the lifetime ECL. As the credit risk characteristics of these bank acceptance notes
were similar, no provision for impairment was made individually. The Group expected that
there was no significant credit risk associated with its bank acceptance notes and did not
expect that there would be any significant losses from non-performance by these banks.
As at 30 June 2023, the Group’s bank acceptance notes endorsed or discounted but not
matured that were presented in receivables financing are as follows:
Item Derecognised Not derecognised
Receivables financing 22,299,376 -
(7) Advances to suppliers
Item Ending balance Opening balance
Prepayments for raw
materials and others 4,471,677 4,367,211
(a) The ageing of advances to suppliers is analysed below:
Ending balance Opening balance
% of total % of total
Ageing Amount balance Amount balance
Within 1 year 4,346,531 97.20% 4,238,120 97.04%
1 to 2 years 68,310 1.53% 83,905 1.92%
2 to 3 years 19,951 0.45% 17,820 0.41%
Over 3 years 36,885 0.82% 27,366 0.63%
Total 4,471,677 100.00% 4,367,211 100.00%
As at 30 June 2023, advances to suppliers with ageing over 1 year with a carrying amount of
RMB 125,146,000 (31 December 2022: RMB 129,091,000) were mainly unsettled
prepayments for raw materials.
As at 30 June 2023, the five largest advances to suppliers aggregated by debtor are
summarised and analysed as follows:
Item Amount % of total balance
Total amount of the five
largest advances to
suppliers 1,000,990 22.39%
- 53 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(8) Contract assets
Item Ending balance Opening balance
Contract assets 4,779,910 4,572,177
Less: Provision for
impairment of
contract assets (75,993) (73,221)
Total 4,703,917 4,498,956
For contract assets, the Group measures the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
As at 30 June 2023, contract assets for which the related provision for bad debts was
provided on the grouping basis are analysed as follows:
Ending balance
Provision for bad
Grouping Book balance Lifetime ECL rate debts
Domestic business
grouping 1,371,191 3.00% (41,091)
Overseas business
grouping 3,408,719 1.02% (34,902)
Total 4,779,910 (75,993)
(9) Loans and advances
(a) By individual and corporation:
Item Ending balance Opening balance
Loans and advances
measured at amortised
cost
Loans and advances to
individuals 1,947,940 1,820,952
Loans and advances to
corporations 16,662,316 13,475,027
Including: Loans 10,391,343 11,138,739
Note discounting 6,270,973 2,336,288
Sub-total 18,610,256 15,295,979
Less: Provision for loan
losses (463,567) (463,929)
Total 18,146,689 14,832,050
As at 30 June 2023, loans and advances over 1 year amounted to RMB 1,393,851,000 (31
December 2022: RMB 693,294,000).
- 54 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(9) Loans and advances (Cont’d)
(b) By type of collateral held:
Item Ending balance Opening balance
Unsecured loans 1,947,508 1,818,768
Guaranteed loans 512,890 598,437
Pledged loans 16,149,858 12,878,774
Sub-total 18,610,256 15,295,979
Less: Provision for loan losses (463,567) (463,929)
Total 18,146,689 14,832,050
(10) Inventories
(a) Inventories are summarised by category as follows:
Ending balance Opening balance
Provision for Provision for
decline in the decline in the
value of Carrying value of Carrying
Item Book balance inventories amount Book balance inventories amount
Finished goods 22,718,188 (308,087) 22,410,101 34,753,459 (458,121) 34,295,338
Raw materials 8,714,024 (339,837) 8,374,187 8,675,143 (241,247) 8,433,896
Work in
progress 2,259,214 - 2,259,214 2,519,241 - 2,519,241
Consigned
processing
materials 385,740 - 385,740 427,838 - 427,838
Contract
fulfilment
costs 263,803 263,803 368,584 368,584
Total 34,340,969 (647,924) 33,693,045 46,744,265 (699,368) 46,044,897
(b) Analysis of provision for decline in the value of inventories is as follows:
Differences on
translation of
Decrease in foreign
Increase in reversal or write- currency
provision for the off for the current financial Ending
Item Opening balance current period period statements balance
Finished goods 458,121 83,915 (249,902) 15,953 308,087
Raw materials 241,247 108,900 (27,508) 17,198 339,837
Total 699,368 192,815 (277,410) 33,151 647,924
(c) Provision for decline in the value of inventories is as follows:
Reason for write-off of provision for
Basis of provision for decline in the decline in the value of inventories in the
Item value of inventories current period
Stated at the lower of cost and net
Finished goods realisable value Sales
Stated at the lower of cost and net
Raw materials and others realisable value Requisition for production
(11) Current portion of non-current assets
Item Ending balance Opening balance
Long-term receivables due within 1 year 477,613 553,591
Other debt investments due within 1 year 8,481,151 5,875,076
Current portion of other non-current assets 27,936,774 31,124,411
Total 36,895,538 37,553,078
- 55 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(12) Other current assets
Item Ending balance Opening balance
Fixed-income products (a) 35,248,611 38,748,850
Input VAT to be deducted 3,259,529 3,875,519
Prepaid expenses 1,196,588 856,455
Others 2,939,286 3,061,554
Total 42,644,014 46,542,378
(a) As at 30 June 2023, fixed-income products were mainly monetary investment products which
were deposited in financial institutions with maturities of no more than 1 year at the time of
acquisition, which were subsequently measured at amortised cost.
(b) As at 30 June 2023, the Group's transferable certificates of deposit due within 1 year since
the time of acquisition amounted to approximately RMB 153,146,000 (31 December 2022:
RMB 656,967,000), and were measured at fair value through other comprehensive income.
(c) As at 30 June 2023, the Group considered that there was no significant increase in credit
risk of fixed-income products and transferable certificates of deposit since initial recognition,
and made provision for loss based on 12-month ECL. The Group considered that there was
no significant credit risk associated with them, and did not expect that there would be any
significant losses from non-performance by these financial institutions.
(13) Other debt investments
Item Ending balance Opening balance
Fair value through other comprehensive income
- Transferable certificates of deposit 14,693,213 16,969,335
Less: Other debt investments due
within 1 year (8,481,151) (5,875,076)
Total 6,212,062 11,094,259
As at 30 June 2023, the cost of the Group’s transferable certificates of deposit approximated
its fair value.
As at 30 June 2023, the Group expected that there was no significant increase in credit risk
of transferable certificates of deposit since initial recognition, and made provision for loss
based on 12-month ECL. The Group considered that there was no significant credit risk
associated with transferable certificates of deposit, and did not expect that there would be
any significant losses from non-performance by these banks.
(14) Long-term receivables
Item Ending balance Opening balance
Long-term receivables 1,108,299 1,176,968
Less: Provision for bad debts (9,088) (8,779)
Total 1,099,211 1,168,189
Less: Long-term receivables due
within 1 year (477,613) (553,591)
Total 621,598 614,598
The Group’s long-term receivables are mainly presented in net amount of finance lease
receivables after offsetting the unrealised financing income.
- 56 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(15) Long-term equity investments
Long-term equity investments are classified as follows:
Item Ending balance Opening balance
Investments in associates (a) 4,731,210 5,188,817
Less: Provision for impairment of
long-term equity
investments - -
Total 4,731,210 5,188,817
(a) Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd., ShenZhen CEGN Co.,Ltd. and Hefei Royalstar Motor Co., Ltd.
and other enterprises by the Group.
(b) For the six months ended 30 June 2023, the Group's revenue from sales to associates
accounted for approximately 1% of the operating revenue for the reporting period, and the
balance of the Group's receivable from associates at the end of the period accounted for
approximately 2% of the balance of accounts receivable. These transactions are negotiated
on normal commercial terms with reference to market prices.
(16) Other non-current financial assets
Item Ending balance Opening balance
Measured at fair value
——Equity investments 6,145,336 6,348,556
——Others 3,052,539 4,276,688
Total 9,197,875 10,625,244
(a) As at 30 June 2023, the main information of the Group’s unmatured cross-currency interest
rate swaps is set out in Note 4(37).
- 57 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(17) Fixed assets
Electronic
Overseas Machinery and Motor equipment and
Item Buildings land equipment vehicles others Total
Original carrying amount
Opening balance 22,049,136 1,335,277 24,331,913 773,893 6,376,643 54,866,862
Increase in the current 1,553,598 4,420,199
period 2,133,308 - 102,993 630,300
1) Purchase 24,728 - 1,111,575 12,362 476,679 1,625,344
2) Transfer from construction
in progress 1,009,940 - 74,962 - 45,084 1,129,986
3) Increase by business
combinations 1,083,399 - 367,061 90,631 108,537 1,649,628
4) Others 15,241 - - - - 15,241
Decrease in the current
period (182,358) (19,377) (576,835) (24,111) (210,382) (1,013,063)
1) Disposal or retirement (55,339) - (442,117) (24,111) (116,541) (638,108)
2) Others (127,019) (19,377) (134,718) - (93,841) (374,955)
Differences on translation of
foreign currency financial
statements 79,996 6,392 54,428 (1,139) 52,117 191,794
Ending balance 24,080,082 1,322,292 25,363,104 851,636 6,848,678 58,465,792
Accumulated depreciation
Opening balance 9,928,550 - 13,686,225 552,718 4,560,855 28,728,348
Increase in the current
period 541,003 - 829,076 17,914 449,754 1,837,747
1) Provision 530,061 - 829,076 17,914 449,754 1,826,805
2) Others 10,942 - - - - 10,942
Decrease in the current
period (90,833) - (348,496) (13,250) (108,198) (560,777)
1) Disposal or retirement (34,681) - (330,833) (13,250) (77,653) (456,417)
2) Others (56,152) - (17,663) - (30,545) (104,360)
Differences on translation of
foreign currency financial
statements 8,788 - 27,671 (566) 30,381 66,274
Ending balance 10,387,508 - 14,194,476 556,816 4,932,792 30,071,592
Provision for impairment
Opening balance 9,425 5,365 12,238 20,891 7,603 55,522
Increase in the current
period - - 4,501 - - 4,501
1) Provision - - 4,501 - - 4,501
Decrease in the current
period - - (433) - (2,084) (2,517)
1) Disposal or retirement - - (433) - (2,084) (2,517)
Differences on translation of
foreign currency financial
statements (127) (63) (8) 4 123 (71)
Ending balance 9,298 5,302 16,298 20,895 5,642 57,435
Carrying amount at the end
of the period 13,683,276 1,316,990 11,152,330 273,925 1,910,244 28,336,765
Carrying amount at the
beginning of the period 12,111,161 1,329,912 10,633,450 200,284 1,808,185 26,082,992
(a) For the six months ended 30 June 2023, the depreciation of fixed assets amounted to RMB
1,826,805,000 (for the six months ended 30 June 2022: RMB 1,575,791,000) and was
included in the income statement in full amount.
(b) As at 30 June 2023, the Company was still in the course of obtaining the ownership
certificate for the fixed asset with a carrying amount of RMB 1,543,547,000 (31 December
2022: RMB 1,359,215,000).
- 58 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress
Ending balance Opening balance
Provision for Carrying Provision for Carrying
Project name Book balance impairment amount Book balance impairment amount
Shanghai Global
Innovation Center
Project 1,622,667 - 1,622,667 1,427,405 - 1,427,405
Intelligent Energy
Industrial Park 1,267,264 - 1,267,264 - - -
Midea
Headquarters
A08 Land Parcel
Project 537,888 - 537,888 357,612 - 357,612
Thailand Factories 371,247 - 371,247 347,207 - 347,207
Midea Xingtan
Industrial Park
Project 269,220 - 269,220 153,893 - 153,893
Welling Auto Parts
Project 178,578 - 178,578 152,457 - 152,457
Midea
Headquarters
A04 Land Parcel
Project 278 278 147,143 147,143
Midea Digital
Factory Project 314,853 314,853 142,595 142,595
Other projects 888,724 (36,210) 852,514 1,149,607 (34,142) 1,115,465
Total 5,450,719 (36,210) 5,414,509 3,877,919 (34,142) 3,843,777
- 59 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(18) Construction in progress (Cont’d)
(a) Movements of significant projects of construction in progress
Translation of
foreign currency
Opening Increase in the Transfer to Other financial Ending Source of
Project name balance current period fixed assets decreases statements balance funds
Shanghai Global Innovation Center
Project 1,427,405 195,262 - - - 1,622,667 Self-financing
Intelligent Energy Industrial Park - 1,267,264 - - - 1,267,264 Self-financing
Midea Headquarters A08 Land
Parcel Project 357,612 180,276 - - - 537,888 Self-financing
Thailand Factories 347,207 20,300 - - 3,740 371,247 Self-financing
Midea Xingtan Industrial Park
Project 153,893 115,327 - - - 269,220 Self-financing
Welling Auto Parts Project 152,457 26,121 - - - 178,578 Self-financing
Midea Headquarters A04 Land
Parcel Project 147,143 99,075 (245,940) - - 278 Self-financing
Borrowings/
Midea Digital Factory Project 142,595 172,258 - - - 314,853 Self-financing
Other projects 1,149,607 662,398 (884,046) (40,862) 1,627 888,724 Self-financing
Total 3,877,919 2,738,281 (1,129,986) (40,862) 5,367 5,450,719
(i) For the six months ended 30 June 2023, no significant borrowing costs were capitalised.
(ii) As at 30 June 2023, the cost of construction in progress matched the budget amount, and the projects were carried out on schedule.
- 60 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(19) Right-of-use assets
Machinery and Land use rights
Item Buildings equipment and others Total
Original carrying amount
Opening balance 3,542,397 292,273 121,807 3,956,477
Increase in the current
period 1,023,709 72,534 28,079 1,124,322
1) New lease contracts 1,005,456 45,296 26,187 1,076,939
2) Lease modifications and
others 18,253 27,238 1,892 47,383
Decrease in the current
period (695,597) (60,109) (25,783) (781,489)
1) Expiration of lease
contract (444,451) (36,388) (11,639) (492,478)
2) Lease modifications and
others (251,146) (23,721) (14,144) (289,011)
Differences on translation of
foreign currency financial
statements 52,976 11,981 836 65,793
Ending balance 3,923,485 316,679 124,939 4,365,103
Accumulated depreciation
Opening balance 1,391,933 189,696 34,970 1,616,599
Increase in the current
period 500,627 43,053 15,244 558,924
1) Provision 500,627 43,053 15,244 558,924
Decrease in the current
period (460,246) (47,175) (14,345) (521,766)
1) Expiration of lease
contract (444,451) (36,388) (11,639) (492,478)
2) Lease modifications and
others (15,795) (10,787) (2,706) (29,288)
Differences on translation of
foreign currency financial
statements 16,296 7,490 (82) 23,704
Ending balance 1,448,610 193,064 35,787 1,677,461
Carrying amount at the end
of the period 2,474,875 123,615 89,152 2,687,642
Carrying amount at the
beginning of the period 2,150,464 102,577 86,837 2,339,878
- 61 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(20) Intangible assets
Patents and non-
Land use patent Trademark Trademark
Item rights technologies rights use rights Others Total
Original carrying
amount
Opening balance 7,623,704 3,232,374 4,894,654 2,188,283 5,841,999 23,781,014
Increase in the current
period 602,875 1,055,483 - - 612,854 2,271,212
1) Purchase 62,870 2,115 - - 5,329 70,314
2) Increase by
business
combinations 538,827 1,053,368 - - 474,111 2,066,306
3) Others 1,178 - - - 133,414 134,592
Decrease in the current
period - (6,832) - - (176,818) (183,650)
1) Disposal - (6,832) - - (146,829) (153,661)
2) Others - - - - (29,989) (29,989)
Differences on
translation of foreign
currency financial
statements (806) 85,599 294,619 (94,294) 235,347 520,465
Ending balance 8,225,773 4,366,624 5,189,273 2,093,989 6,513,382 26,389,041
Accumulated
amortisation
Opening balance 1,278,249 1,172,588 219,885 383,604 3,589,984 6,644,310
Increase in the current
period 77,152 120,574 35,761 25,307 251,829 510,623
1) Provision 76,123 120,574 35,761 25,307 251,829 509,594
2) Others 1,029 - - - - 1,029
Decrease in the current
period - (6,381) - - (146,289) (152,670)
1) Disposal - (6,381) - - (128,080) (134,461)
2) Others - - - - (18,209) (18,209)
Differences on
translation of foreign
currency financial
statements 49 44,531 11,442 (14,948) 146,471 187,545
Ending balance 1,355,450 1,331,312 267,088 393,963 3,841,995 7,189,808
Provision for
impairment
Opening balance - 107,427 - - 120,362 227,789
Increase in the current
period - - - - 2,989 2,989
1) Provision - - - - 2,989 2,989
Decrease in the current
period - - - - - -
1) Disposal - - - - - -
Differences on
translation of foreign
currency financial
statements - 4,354 - - 10,315 14,669
Ending balance - 111,781 - - 133,666 245,447
Carrying amount at the
end of the period 6,870,323 2,923,531 4,922,185 1,700,026 2,537,721 18,953,786
Carrying amount at the
beginning of the
period 6,345,455 1,952,359 4,674,769 1,804,679 2,131,653 16,908,915
(a) For the six months ended 30 June 2023, the amortisation of intangible assets amounted to
RMB 509,594,000 (for the six months ended 30 June 2022: RMB 518,387,000) and was
included in the income statement in full amount.
(b) As at 30 June 2023, the Company had no significant intangible assets which were still in
the course of obtaining the ownership certificate (31 December 2022: the carrying amount
was RMB 33,814,900).
- 62 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(21) Goodwill
The Group’s goodwill had been allocated to the relevant cash generating unit and cash
generating units at the acquisition date, and the allocation is as follows:
Name of investee Ending balance Opening balance
KUKA Group 22,415,423 21,122,932
TLSC Group 2,332,497 2,437,914
Little Swan 1,361,306 1,361,306
Others 5,387,851 4,149,906
Sub-total 31,497,077 29,072,058
Less: Provision for impairment (572,006) (523,405)
Total 30,925,071 28,548,653
(22) Long-term prepaid expenses
Long-term prepaid expenses mainly include expenses prepaid for software and project
reconstruction.
(23) Deferred tax assets and deferred tax liabilities
(a) Deferred tax assets before offsetting
Ending balance Opening balance
Deductible Deductible
temporary temporary
differences and Deferred differences and Deferred
Item deductible losses tax assets deductible losses tax assets
Deductible losses 8,503,051 1,800,470 6,424,498 1,500,622
Provision for asset
impairment 4,975,452 1,030,122 3,562,556 753,511
Employee benefits
payable 745,461 150,233 931,503 190,398
Other current
liabilities 41,892,650 7,804,468 35,502,379 6,534,476
Others 17,091,205 3,493,678 14,889,531 3,233,559
Total 73,207,819 14,278,971 61,310,467 12,212,566
(b) Deferred tax liabilities before offsetting
Ending balance Opening balance
Taxable temporary Deferred tax Taxable temporary Deferred tax
Deferred tax liabilities differences liabilities differences liabilities
Changes in fair value 845,422 207,792 1,043,209 236,440
Business combinations
involving enterprises
not under common
control 13,708,467 3,351,386 10,898,558 2,921,290
Others 16,277,483 3,361,612 16,872,927 3,458,213
Total 30,831,372 6,920,790 28,814,694 6,615,943
- 63 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(23) Deferred tax assets and deferred tax liabilities (Cont’d)
(c) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as
follows:
Balance after offsetting Balance after offsetting at
Item at the end of the period the beginning of the period
Deferred tax assets 12,439,908 10,244,296
Deferred tax liabilities 5,081,727 4,647,673
(24) Other non-current assets
Item Ending balance Opening balance
Fixed-income products (a) 85,282,339 73,157,118
Less: Fixed-income products due
within 1 year (27,936,774) (31,124,411)
Sub-total 57,345,565 42,032,707
Others 1,157,444 807,372
Total 58,503,009 42,840,079
(a) As at 30 June 2023, fixed-income products were mainly monetary investment products which
were deposited in financial institutions with maturities of more than 1 year at the time of
acquisition, and were subsequently measured at amortised cost.
- 64 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(25) Asset impairment and provision for loss
Decrease in the current period Differences on
translation of
foreign currency
financial
Increase in the statements and
Item 1 January 2023 current period Reversal Write-off others 30 June 2023
Provision for bad debts 1,905,082 465,333 (243,909) (19,166) 6,380 2,113,720
Including: Provision for bad debts of 429,568 1,545,521
accounts receivable 1,332,609 (206,610) (18,936) 8,890
Provision for losses of loans and
advances 463,929 - (1,907) - 1,545 463,567
Provision for bad debts of notes
receivable 61,756 1,375 (8,920) - - 54,211
Provision for bad debts of other
receivables 38,009 31,040 (23,567) (230) (3,919) 41,333
Provision for bad debts of long-
term receivables 8,779 3,350 (2,905) - (136) 9,088
Provision for decline in the value of 192,815 647,924
inventories 699,368 (9,033) (268,377) 33,151
Provision for impairment of fixed assets 55,522 4,501 - (2,517) (71) 57,435
Provision for impairment of intangible assets 227,789 2,989 - - 14,669 245,447
Provision for impairment of contract assets 73,221 1,624 (3,836) - 4,984 75,993
Provision for impairment of investment
properties 12,576 - - - - 12,576
Provision for impairment of construction in
progress 34,142 - - - 2,068 36,210
Provision for impairment of goodwill 523,405 - - - 48,601 572,006
Total 3,531,105 667,262 (256,778) (290,060) 109,782 3,761,311
- 65 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(26) Main assets with use rights restricted
As at 30 June 2023, main assets with use rights restricted are as follows:
Item Ending balance Opening balance
Cash at bank and on hand
Including: Cash at bank (Note 4(1)) 20,696,376 1,911,210
Other cash balances (Note 4(1)) 2,554,672 1,688,278
Statutory reserve with the Central Bank
(Note 4(1)) 579,439 328,409
Total 23,830,487 3,927,897
(27) Short-term borrowings
Item Ending balance Opening balance
Unsecured borrowings 7,838,055 3,192,163
Guaranteed borrowings 8,154,543 1,399,219
Pledged borrowings 3,246,509 578,098
Mortgage borrowings 50,000 -
Total 19,289,107 5,169,480
As at 30 June 2023, the annual interest rate range of short-term borrowings was 1.40% to
16.01% (31 December 2022: 1.40% to 15.45%).
(28) Notes payable
Item Ending balance Opening balance
Bank acceptance notes 14,236,566 25,572,421
(29) Accounts payable
Item Ending balance Opening balance
Materials cost payable 65,767,401 59,880,772
Others 5,917,490 4,352,453
Total 71,684,891 64,233,225
As at 30 June 2023, accounts payable with ageing over 1 year with a carrying amount of
RMB 1,218,518,000 (31 December 2022: RMB 1,168,348,000) were mainly unsettled
accounts payable for materials.
(30) Contract liabilities
Item Ending balance Opening balance
Advances on sales and services, etc. 26,184,214 25,143,337
Advances for construction projects 2,890,971 2,816,701
Total 29,075,185 27,960,038
- 66 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(31) Employee benefits payable
Item Ending balance Opening balance
Short-term employee benefits payable (a) 6,037,790 7,041,973
Others 122,576 110,244
Total 6,160,366 7,152,217
(a) Short-term employee benefits
Increase in the Decrease in the
Item Opening balance current period current period Ending balance
Wages and salaries,
bonus, allowances and
subsidies 6,539,923 15,255,769 (16,393,705) 5,401,987
Staff welfare 326,811 1,132,989 (1,018,027) 441,773
Social security
contributions 79,340 1,111,990 (1,093,924) 97,406
Including: Medical
insurance 78,163 1,071,905 (1,054,272) 95,796
Work injury
insurance 778 26,877 (26,625) 1,030
Maternity
insurance 399 13,208 (13,027) 580
Housing funds 25,687 352,910 (358,741) 19,856
Labour union funds and
employee education
funds 22,002 68,867 (66,235) 24,634
Other short-term
employee benefits 48,210 375,533 (371,609) 52,134
Sub-total 7,041,973 18,298,058 (19,302,241) 6,037,790
(32) Taxes payable
Item Ending balance Opening balance
Enterprise income tax payable 3,525,337 2,813,522
Unpaid VAT 1,642,236 975,035
Others 1,176,178 1,166,778
Total 6,343,751 4,955,335
(33) Other payables
Item Ending balance Opening balance
Other payables 4,941,956 4,322,025
(a) Other payables are mainly restricted share repurchase obligation, deposit and security
deposit payable and reimbursed logistics expense.
(b) As at 30 June 2023, other payables with ageing over 1 year with a carrying amount of RMB
1,297,284,000 (31 December 2022: RMB 1,538,928,000) were mainly those recognised for
performing equity incentive plan and deposit and security deposit payable, which were
unsettled since related projects were uncompleted.
- 67 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(34) Current portion of non-current liabilities
Item Ending balance Opening balance
Current portion of long-term borrowings 19,540,780 6,248,484
Current portion of lease liabilities 1,069,977 992,142
Current portion of equity purchase 662,773 -
payables
Current portion of debentures payable 525,072 -
Total 21,798,602 7,240,626
(35) Other current liabilities
Item Ending balance Opening balance
Accrued sale rebates 51,625,736 40,041,953
Others 23,688,384 17,801,575
Total 75,314,120 57,843,528
(36) Long-term borrowings
Ending Opening
Item balance balance
Guaranteed, mortgage and pledged
borrowings (a) 36,784,462 35,073,994
Unsecured borrowings 21,786,357 21,860,438
Total 58,570,819 56,934,432
Less: Current portion of guaranteed,
mortgage and pledged
borrowings (6,758,395) (10,755)
Current portion of unsecured
borrowings (12,782,385) (6,237,729)
Total 39,030,039 50,685,948
(a) As at 30 June 2023, bank guaranteed borrowings mainly included: (i) guaranteed borrowings
equivalent to RMB 2,134,694,000 guaranteed by the Company, interest is calculated at a
fixed rate with interest paid every quarter, which will be due in April 2024; (ii) guaranteed
borrowings equivalent to RMB 4,581,157,000 guaranteed by the Company, interest is
calculated at a floating rate with interest paid every month, which will be due in May 2024; (iii)
guaranteed borrowings equivalent to RMB 1,209,599,000 guaranteed by the Company,
interest is calculated at a floating rate with interest paid every month, which will be due in
June 2025; (iv) After deducting the bank fee, guaranteed borrowings equivalent to RMB
24,626,477,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every quarter, which will be due in August 2025; and (v) guaranteed borrowings
equivalent to RMB 3,938,550,000 guaranteed by the Company, interest is calculated at a
fixed rate with interest paid every quarter, which will be due in May 2025.
- 68 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(36) Long-term borrowings (Cont’d)
As at 31 December 2022, bank guaranteed borrowings mainly included: (i) guaranteed
borrowings equivalent to RMB 2,011,606,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in April 2024; (ii)
guaranteed borrowings equivalent to RMB 4,415,556,000 guaranteed by the Company,
interest is calculated at a floating rate with interest paid every month, which will be due in May
2024; (iii) guaranteed borrowings equivalent to RMB 1,165,874,000 guaranteed by the
Company, interest is calculated at a floating rate with interest paid every month, which will be
due in June 2025; (iv) After deducting the bank fee, guaranteed borrowings equivalent to
RMB 23,718,315,000 guaranteed by the Company, interest is calculated at a floating rate
with interest paid every quarter, which will be due in August 2025; and (v) guaranteed
borrowings equivalent to RMB 3,711,450,000 guaranteed by the Company, interest is
calculated at a fixed rate with interest paid every quarter, which will be due in May 2025.
(b) As at 30 June 2023, the annual interest rate range of long-term borrowings was 0.30% to
5.99% (31 December 2022: 0.30% to 5.99%).
(c) In 2022, the Group purchased cross-currency interest rate swap to mitigate the cash flow risk
associated with the above-mentioned guaranteed borrowings ((a)(iv)) equivalent to USD
3,419,058,000 of principal. Under the swap, a nominal amount of USD 3,419,058,000 was
converted into EUR at an agreed exchange rate, and the USD floating rate (SOFR+0.55%
p.a.) was converted into the agreed EUR fixed rate. The agreed swap period was scheduled
to start in August 2022 and end in August 2025. The Group designated such borrowings as
the hedged item, and the change in the value of cross-currency interest rate swap (after
excluding the foreign currency basis spread) as the hedging instrument for cash flow hedge.
There was an economic relationship between the hedging instrument and the hedged item.
The cross-currency interest rate swap matched the currency, amount and other major terms
of financial liabilities denominated in USD.
For the six months ended 30 June 2023, the Group included the effective part of the changes
in fair value of the cross-currency interest rate swap (after excluding the foreign exchange
basis spread) in “Other comprehensive income - cash flow hedges”, and transferred them
from other comprehensive income to financial expenses in the period in which the hedging
relationship affected profit or loss, in a bid to offset the effect of hedged item on profit or loss
for the current period. The changes in fair value of foreign currency basis spread were
recorded in “Other comprehensive income - others”, and the foreign currency basis spread
was transferred from other comprehensive income to financial expenses in the period in
which the hedging relationship affected profit or loss.
(37) Debentures payable
Issuance Opening Ending
Name of debentures Par value Value date Maturity amount Coupon rate balance balance
Debentures 3,281,840
denominated in
USD (a) 2,848,500 24 February 2022 5 years 2,848,500 2.88% 3,163,616
2022 corporate
debentures (b) 500,000 5 August 2022 2 years 500,000 6.00% - 525,072
Sub-total 3,163,616 3,806,912
Less: Current
portion of
debentures
payable - (525,072)
Total 3,163,616 3,281,840
(a) The Group issued 5-year USD corporate debentures guaranteed by the Company on 24
February 2022 amounting to USD 450,000,000 (equivalent to RMB 2,848,500,000) with a
fixed coupon rate of 2.88%, and the interest is paid semi-annually.
(b) The corporate debentures were issued in 2022 by the Company’s subsidiary, Clou
Electronics, and were expected to be redeemed within one year.
- 69 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(38) Lease liabilities
Item Ending balance Opening balance
Lease liabilities 2,837,871 2,499,622
Less: Current portion of lease liabilities (1,069,977) (992,142)
1,767,894 1,507,480
(39) Deferred income
Increase in Decrease in
Opening the current the current Ending
Item balance period period balance
Government grants 1,721,092 177,068 (125,912) 1,772,248
Increase in Decrease in
Opening the current the current Ending Asset related/
Item balance period period balance Income related
Government grants
related to industrial
upgrading 1,394,882 140,803 (122,622) 1,413,063 Asset related
Other government Asset related/
grants 326,210 36,265 (3,290) 359,185 Income related
1,721,092 177,068 (125,912) 1,772,248
(40) Long-term employee benefits payable
Item Ending balance Opening balance
Supplementary retirement benefits 1,294,306 1,368,513
Others 116,372 119,943
Total 1,410,678 1,488,456
(41) Share capital
Movements in the current period
Share-based
Opening payment Repurchases Ending
Item balance incentive plan Desterilisation and write-offs Sub-total balance
RMB-denominated ordinary
shares -
RMB-denominated ordinary
shares subject to trading
restriction 143,615 - (2,531) (2,498) (5,029) 138,586
RMB-denominated ordinary
shares not subject to
trading restriction 6,853,658 27,406 2,531 - 29,937 6,883,595
Total 6,997,273 27,406 - (2,498) 24,908 7,022,181
(a) For the six months ended 30 June 2023, the share-based payment incentive plan increased
the share capital by 27,406,000 shares.
- 70 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
(42) Treasury stock
Movements in the current period
Increase in the Decrease in the Ending
Item Opening balance current period current period balance
Treasury stock used for share-based (1,114,904) 13,819,040
payment incentive plan 14,933,944 -
Total 14,933,944 - (1,114,904) 13,819,040
The restricted shares and employee stock ownership plans granted for the six months ended
30 June 2023 were approximately RMB 2,089,493,000. As at 30 June 2023, treasury stock
mainly comprised treasury stock of approximately RMB 8,748,331,000 used for share-based
payment incentive plan, as well as treasury stock amounting to approximately RMB
5,070,709,000 recognised by share-based payment incentive plan that has not met unlock
condition, amounting to approximately RMB 13,819,040,000 in total.
(43) Capital surplus
Increase in the Decrease in the
Item Opening balance current period current period Ending balance
Share premium (a) 15,507,577 2,288,260 (570,496) 17,225,341
Share-based payment incentive 558,688 (974,394) 1,863,402
plan (b) 2,279,108
Others 1,906,454 8,073 (84,734) 1,829,793
Total 19,693,139 2,855,021 (1,629,624) 20,918,536
(a) The increase in share premium arose from the exercise of share options with the amount of
approximately RMB 1,660,427,000, the unlocking of restricted shares and employee stock
ownership plans with the amount of approximately RMB 627,833,000; the decrease in share
premium arose from the repurchase and cancellation of restricted shares with the amount of
approximately RMB 153,201,000. The unlocking of restricted shares and employee stock
ownership plans decreased by approximately RMB 417,295,000.
(b) The increase of share-based payment incentive plan arose from expenses attributable to
shareholders' equity of the parent company in the share-based payment incentive plan with
the amount of approximately RMB 558,688,000, while the decrease arose from the transfer
of approximately RMB 974,394,000 to share premium due to exercise of share-based
payment incentive plan.
(c) Others in capital surplus mainly included the impact of the Group's capital injection on
Guangdong Meicloud Technology Co., Ltd., a non-wholly-owned subsidiary of the Group.
- 71 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(44) Other comprehensive income
Other comprehensive income in the balance sheet Other comprehensive income in the income statement
Amount Less:
Other arising Reclassification
comprehensive before of previous
Attributable to income income tax other Attributable to Attributable
the parent transferred to for the comprehensive the parent to minority
Opening company after retained Ending current income to profit Less: Income company shareholders
Item balance tax earnings balance period or loss tax expenses after tax after tax
Other comprehensive income items which
will not be reclassified to profit or loss
Changes arising from remeasurement
of defined benefit plan 220,387 (21,788) - 198,599 (26,101) - 4,313 (21,788) -
Changes in fair value of investments in
other equity instruments (1,490) - - (1,490) - - - - -
Other comprehensive income items which
will be reclassified to profit or loss
Other comprehensive income that will 35,908 (35,914) 36,188 (280) - 35,908
be transferred subsequently to profit
or loss under the equity method (71,822) - -
Effective portion of gains or losses on (124,535) 575,426 (457,329) 280,206 43,274 (124,535)
hedging instruments in a cash flow
hedge (Note 4(36)) 699,961 - (9,314)
Differences on translation of foreign 153,161 (655,468) 181,746 - - 153,161
currency financial statements (808,629) - 28,585
Others (Note 4(36)) 69,882 (25,644) - 44,238 (28,512) (54,156) - (25,644) -
Total 108,289 17,102 - 125,391 (236,984) 225,770 47,587 17,102 19,271
- 72 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(45) Surplus reserve
Increase in the Decrease in the
Item Opening balance current period current period Ending balance
Statutory surplus
reserve 10,702,928 - - 10,702,928
(46) Undistributed profits
Item Current period Same period of prior year
Undistributed profits at the beginning of 119,679,202
the period 102,982,763
Add: Net profit attributable to owners of 18,232,291
the parent company for the
current period 15,995,496
Others - 33,631
Less: Ordinary share dividends payable (17,181,616)
(a) (11,671,286)
Appropriation to general risk (5,972)
reserve -
Undistributed profits at the end of the 120,723,905
period 107,340,604
(a) Ordinary share dividends distributed in the current year
In accordance with the resolution at the Board of Shareholders’ meeting, dated 19 May 2023,
the Company distributed a cash dividend to the shareholders at RMB 2.50 per share,
amounting to approximately RMB 17,188,858,000 calculated by 6,875,543,000 issued shares
less those repurchased; 2,498,000 repurchased incentive shares in the restricted shares
incentive plan were written off (Note 4(41)), and cash dividend amounting to approximately
RMB 7,242,000 was cancelled. The actual cash dividend distributed in the current year
amounted to approximately RMB 17,181,616,000.
(47) Operating revenue and cost of sales
Item Current period Same period of prior year
Revenue from main operations 182,685,148 167,496,125
Revenue from other operations 14,303,254 15,164,884
Sub-total 196,988,402 182,661,009
Item Current period Same period of prior year
Cost of sales from main operations 134,877,274 127,456,627
Cost of sales from other operations 12,399,084 12,967,541
Sub-total 147,276,358 140,424,168
(a) Revenue and cost of sales from main operations
Product or business Current period Same period of prior year
category Revenue Cost of sales Revenue Cost of sales
HVAC 92,006,787 70,500,436 83,236,383 65,712,490
Consumer
appliances 68,136,204 46,339,869 66,334,685 46,958,140
Robotics and
automation
system 16,240,463 12,457,600 13,259,483 10,447,185
Others 6,301,694 5,579,369 4,665,574 4,338,812
Sub-total 182,685,148 134,877,274 167,496,125 127,456,627
- 73 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(47) Operating revenue and cost of sales (Cont’d)
(a) Revenue and cost of sales from main operations (Cont’d)
For the six months ended 30 June 2023, cost of sales from main operations was mainly
material costs and labour costs, which accounted for over 80% of total cost of sales from main
operations (for the six months ended 30 June 2022: over 80%).
(b) Revenue and cost of sales from other operations
Current period Same period of prior year
Item Revenue Cost of sales Revenue Cost of sales
Revenue from sales of materials 12,589,004 11,883,071 13,451,028 12,600,574
Others 1,714,250 516,013 1,713,856 366,967
Sub-total 14,303,254 12,399,084 15,164,884 12,967,541
For the six months ended 30 June 2023, cost of sales from other operations was mainly
material costs, which accounted for over 80% of total cost of sales from other operations (for
the six months ended 30 June 2022: over 80%).
(c) For the six months ended 30 June 2023, above 90% of the total amount of the Group’s
revenue from main operations was recognised at a point in time, and the amount recognised
within a certain period of time mainly included revenue from main operations of robotics and
automation system segment. The Group’s revenue from other operations was recognised at a
point in time.
(48) Interest income and interest costs
The Group’s interest income and expenses arising from financial business are presented as
follows:
Item Current period Same period of prior year
Interest income from loans and advances 706,004 910,289
Including: Interest income from loans and advances to 659,331
corporations and individuals 873,969
Interest income from note discounting 46,673 36,320
Interest income from deposits with banks, other financial 100,887
institutions and the Central Bank 91,671
Interest income 806,891 1,001,960
Interest costs (19,681) (33,643)
(49) Taxes and surcharges
Item Current period Same period of prior year
City maintenance and construction tax 379,949 288,461
Educational surcharge 283,215 212,661
Others 377,212 297,817
Total 1,040,376 798,939
(50) Selling and distribution expenses
Item Current period Same period of prior year
Selling and distribution expenses 17,133,216 14,698,373
For the six months ended 30 June 2023, selling and distribution expenses were mainly
maintenance expenses, advertisement and promotion fee, employee benefits, E-commerce
service fee, storage service fee and property management expenses, which accounted for
over 70% of total selling and distribution expenses (for the six months ended 30 June 2022:
over 70%).
- 74 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(51) General and administrative expenses
Item Current period Same period of prior year
General and administrative
expenses 5,670,400 4,951,069
For the six months ended 30 June 2023, general and administrative expenses were mainly
employee benefits, depreciation and amortisation expenses, technical maintenance
expenses, administrative office expenses, storage service fee and property management
expenses, which accounted for over 70% of total general and administrative expenses (for
the six months ended 30 June 2022: over 70%).
(52) R&D expenses
Item Current period Same period of prior year
R&D expenses 6,610,954 5,865,033
For the six months ended 30 June 2023, R&D expenses were mainly employee benefits,
depreciation and amortisation expenses and trial products and material inputs expenses,
which accounted for over 80% of total R&D expenses (for the six months ended 30 June
2022: over 80%).
(53) Financial income
The Group's financial income, other than those arising from financial business (Note 4(48)),
are presented as follows:
Item Current period Same period of prior year
Interest expenses (1,525,683) (867,954)
Less: Interest income 3,280,782 2,764,267
Add: Exchange gains or losses (384,103) (71,019)
Add: Others (7,335) (89,876)
Total 1,363,661 1,735,418
(54) Asset impairment losses
Item Current period Same period of prior year
Losses on decline in the value of
inventories (Note 4(10)) 183,782 200,660
Impairment losses on contract (2,212)
assets (Note 4(8)) 23,619
Impairment losses on fixed 4,501
assets (Note 4(17)) -
Impairment losses on intangible 2,989
assets (Note 4(20)) 6,400
Total 189,060 230,679
- 75 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(55) Credit impairment losses
Item Current period Same period of prior year
Losses on bad debts of accounts 222,958
receivable (Note 4(4)) 95,157
Losses on bad debts of other 7,473
receivables (Note 4(5)) (8,878)
Impairment losses on notes (7,545)
receivable (Note 4(3)) 60,481
Impairment losses on loans and (1,907)
advances (Note 4(9)) 38,619
Losses on impairment of long-term 445
receivables (Note 4(14)) 7,512
Total 221,424 192,891
(56) Gains/(Losses) on changes in fair value
Item Current period Same period of prior year
Derivative financial instruments (170,550) (62,667)
Investments in equity instruments 6,370 (658,058)
Others 60,477 (29,017)
Total (103,703) (749,742)
(57) Investment income
Item Current period Same period of prior year
Investment income from holding of
financial assets held for trading 27,261 107,261
Investment income from disposal of
derivative financial assets and
liabilities 70,165 257,463
Investment income from associates
and joint ventures 348,545 263,014
Others (35,817) (19,891)
Total 410,154 607,847
There is no significant restriction on recovery of investment income of the Group.
(58) Losses on disposal of assets
Item Current period Same period of prior year
Gains on disposal of non-current
assets 38,188 53,776
Losses on disposal of non-
current assets (29,663) (34,814)
Total 8,525 18,962
(59) Other income
Same period of Asset related/
Item Current period prior year Income related
Special subsidy, etc. 772,764 644,525 Income related
- 76 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(60) Income tax expenses
Item Current period Same period of prior year
Current income tax expenses calculated based on tax
law and related regulations 5,274,130 4,089,024
Deferred income tax (1,695,639) (1,378,473)
Total 3,578,491 2,710,551
The reconciliation from income tax calculated based on the applicable tax rates and total
profit presented in the consolidated income statement to the income tax expenses is listed
below:
Item Current period Same period of prior year
Total profit 22,107,307 18,832,948
Income tax calculated at tax rate of 25% 5,526,827 4,708,237
Effect of different tax rates applicable to subsidiaries (1,306,414) (1,493,631)
Effect of income tax annual filing for prior periods 82,378 (166,848)
Income not subject to tax (174,666) (163,217)
Costs, expenses and losses not deductible for tax
purposes 283,154 276,483
Utilisation of previous temporary differences or
deductible losses for which no deferred tax assets
were recognised in prior periods (73,589) (43,536)
Others (759,199) (406,937)
Income tax expenses 3,578,491 2,710,551
(61) Calculation of basic and diluted earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing consolidated net profit attributable to
ordinary shareholders of the Company by the weighted average number of outstanding
ordinary shares:
Item Unit Current period Same period of prior year
Consolidated net profit attributable to ordinary
shareholders of the parent company RMB’000 18,232,291 15,995,496
Less: Dividends affected by the share-based
payment incentive plan RMB’000 (78,122) (94,081)
Consolidated net profit attributable to ordinary
shareholders of the parent company (net of
share-based payment incentive plan) RMB’000 18,154,169 15,901,415
Weighted average number of outstanding
ordinary shares Thousand shares 6,802,764 6,794,724
Basic earnings per share RMB Yuan/share 2.67 2.34
(b) Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the diluted weighted average number of
outstanding ordinary shares:
Item Unit Current period Same period of prior year
Adjusted consolidated net profit attributable
to ordinary shareholders of the parent
company RMB’000 18,163,579 15,995,496
Weighted average number of outstanding
ordinary shares Thousand shares 6,802,764 6,794,724
Weighted average number of ordinary
shares increased from the share-based
payment incentive plan Thousand shares 13,202 35,505
Weighted average number of diluted
outstanding ordinary shares Thousand shares 6,815,966 6,830,229
Diluted earnings per share RMB Yuan/share 2.66 2.34
- 77 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Notes to the cash flow statement
(a) Cash received relating to other operating activities
Same period of prior
Item Current period year
Non-operating income 117,370 148,065
Other income 1,039,322 929,267
Revenue from other operations 1,639,020 1,637,751
Financial interest income 288,732 317,399
Others 207,406 322,410
Total 3,291,850 3,354,892
(b) Cash paid relating to other operating activities
Same period of prior
Item Current period year
General and administrative expenses and
R&D expenses (excluding employee
benefits and taxes and surcharges) 4,104,482 4,113,948
Selling and distribution expenses (excluding
employee benefits and taxes and
surcharges) 11,919,414 10,355,366
Others 2,455,242 521,959
Total 18,479,138 14,991,273
(c) Supplementary information to the cash flow statement
Reconciliation of net profit to cash flows from operating activities is as follows:
- 78 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(62) Notes to the cash flow statement (Cont’d)
(c) Supplementary information to the cash flow statement (Cont’d)
Supplementary information Current period Same period of prior year
1) Reconciliation of net profit to cash flows
from operating activities:
Net profit 18,528,816 16,122,397
Add: Asset impairment losses 189,060 230,679
Credit impairment losses 221,424 192,891
Depreciation and amortisation 3,300,549 3,255,456
Losses on disposal of assets (8,525) (18,962)
Losses on changes in fair value 103,703 749,742
Financial expenses (1,653,898) (1,557,613)
Investment income (410,154) (607,847)
Decrease in deferred tax assets (1,561,223) (892,692)
Increase in deferred tax liabilities (99,937) (353,888)
Decrease in inventories 14,200,052 8,541,659
Decrease in operating receivables (13,908,092) (5,945,656)
Increase in operating payables 10,301,904 843,457
Share-based payments and 580,995
others 835,087
Net cash flows from operating activities 29,784,674 21,394,710
2) Net increase/(decrease) in cash and
cash equivalents:
Cash and cash equivalents at the end 47,560,795
of the period 61,310,727
Less: Cash and cash equivalents at (51,131,968)
the beginning of the period (40,550,039)
Net increase in cash and cash (3,571,173)
equivalents 20,760,688
(d) Composition of cash and cash equivalents
Item Current period Same period of prior year
Cash on hand 3,894 2,447
Cash at bank that can be readily drawn on 20,028,555
demand 32,996,806
Deposits with the Central Bank that can
be readily drawn on demand 179,898 154,409
Deposits with banks and other financial
institutions 27,348,448 28,157,065
Cash and cash equivalents at the end of
the period 47,560,795 61,310,727
- 79 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies
30 June 2023
Foreign currency
Item balance Exchange rate RMB balance
Cash at bank and on
hand
USD 1,426,630 7.2258 10,308,543
JPY 52,840,400 0.0501 2,646,987
HKD 12,745,027 0.9220 11,750,660
EUR 96,713 7.8771 761,818
BRL 67,344 1.4994 100,974
VND 393,160,000 0.0003 117,948
Other currencies Not applicable Not applicable 2,340,288
Sub-total 28,027,218
Accounts receivable
USD 1,722,042 7.2258 12,443,131
JPY 16,103,286 0.0501 806,678
HKD 71,837 0.9220 66,232
EUR 569,835 7.8771 4,488,644
BRL 991,182 1.4994 1,486,155
VND 947,770,000 0.0003 284,331
Other currencies Not applicable Not applicable 3,015,290
Sub-total 22,590,461
Other receivables
USD 47,975 7.2258 346,655
JPY 1,376,173 0.0501 68,938
HKD 28,630 0.9220 26,396
EUR 29,524 7.8771 232,563
BRL 54,990 1.4994 82,451
Other currencies Not applicable Not applicable 298,161
Sub-total 1,055,164
Total 51,672,843
- 80 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
30 June 2023
Foreign currency
Item balance Exchange rate RMB balance
Short-term borrowings
USD 1,366,000 7.2258 9,870,443
EUR 279,479 7.8771 2,201,484
Other currencies Not applicable Not applicable 2,334,186
Sub-total 14,406,113
Accounts payable
USD 228,110 7.2258 1,648,277
JPY 4,545,095 0.0501 227,682
HKD 19,906 0.9220 18,353
EUR 259,500 7.8771 2,044,107
BRL 56,197 1.4994 84,260
Other currencies Not applicable Not applicable 2,046,129
Sub-total 6,068,808
Other payables
USD 3,853 7.2258 27,840
JPY 5,417,036 0.0501 271,361
HKD 1,810 0.9220 1,669
EUR 615 7.8771 4,846
Other currencies Not applicable Not applicable 121,573
Sub-total 427,289
Current portion of non-
current liabilities
EUR 304,783 7.8771 2,400,806
USD 684,543 7.2258 4,946,371
Other currencies Not applicable Not applicable 100,465
Sub-total 7,447,642
Long-term borrowings
USD 3,575,532 7.2258 25,836,076
Other currencies Not applicable Not applicable 3,941,481
Sub-total 29,777,557
Debentures payable
USD 454,184 7.2258 3,281,840
Sub-total 3,281,840
Lease liabilities
EUR 90,928 7.8771 716,250
JPY 1,234,839 0.0501 61,858
Other currencies Not applicable Not applicable 72,150
Sub-total 850,258
Total 62,259,507
- 81 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
31 December 2022
Foreign currency
Item balance Exchange rate RMB balance
Cash at bank and on
hand
USD 609,434 6.9646 4,244,463
JPY 16,255,134 0.0524 851,769
HKD 1,425,846 0.8933 1,273,708
EUR 193,599 7.4229 1,437,066
BRL 42,876 1.3348 57,231
VND 368,026,667 0.0003 110,408
Other currencies Not applicable Not applicable 1,871,026
Sub-total 9,845,671
Accounts receivable
USD 1,100,260 6.9646 7,662,872
JPY 11,525,763 0.0524 603,950
HKD 36,138 0.8933 32,282
EUR 474,305 7.4229 3,520,717
BRL 1,304,874 1.3348 1,741,746
VND 1,219,460,000 0.0003 365,838
Other currencies Not applicable Not applicable 2,718,768
Sub-total 16,646,173
Other receivables
USD 50,652 6.9646 352,771
JPY 1,510,344 0.0524 79,142
HKD 3,427 0.8933 3,061
EUR 28,835 7.4229 214,039
BRL 76,722 1.3348 102,409
Other currencies Not applicable Not applicable 270,417
Sub-total 1,021,839
Total 27,513,683
- 82 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
4 Notes to the consolidated financial statements (Cont’d)
(63) Monetary items denominated in foreign currencies (Cont’d)
31 December 2022
Item Foreign currency
balance Exchange rate RMB balance
Short-term borrowings
USD 84,705 6.9646 589,938
EUR 430,826 7.4229 3,197,982
BRL 176,101 1.3348 235,059
Other currencies Not applicable Not applicable 198,248
Sub-total 4,221,227
Accounts payable
USD 296,297 6.9646 2,063,593
JPY 6,228,492 0.0524 326,373
HKD 15,264 0.8933 13,635
EUR 268,679 7.4229 1,994,377
BRL 341,988 1.3348 456,486
Other currencies Not applicable Not applicable 1,714,350
Sub-total 6,568,814
Other payables
USD 13,402 6.9646 93,341
JPY 8,671,927 0.0524 454,409
HKD 1,863 0.8933 1,664
EUR 1,049 7.4229 7,784
Other currencies Not applicable Not applicable 100,053
Sub-total 657,251
Current portion of non-
current liabilities
EUR 33,566 7.4229 249,157
USD 50,031 6.9646 348,445
Other currencies Not applicable Not applicable 116,437
Sub-total 714,039
Long-term borrowings
USD 3,405,553 6.9646 23,718,315
Other currencies Not applicable Not applicable 11,307,295
Sub-total 35,025,610
Lease liabilities
EUR 91,819 7.4229 681,561
JPY 1,649,676 0.0524 86,443
Other currencies Not applicable Not applicable 74,986
Sub-total 842,990
Total 48,029,931
- 83 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
5 Changes of consolidation scope
(1) Business combinations involving enterprises not under common control
(a) Business combinations involving enterprises not under common control in the current year
The Group acquired Clou Electronics and its subsidiaries in May 2023.
The acquisition has no significant impact on the Group's consolidated financial statements.
(2) Changes of consolidation scope due to other reasons
(a) Increase of consolidation scope
Nil.
(b) Decrease of consolidation scope
Decrease of consolidation scope in the current period mainly includes deregistration and
disposal of subsidiaries. Details are as follows:
Disposal method of Disposal time-point
Name of entity the equity of the equity
Swisslog Technology Center
Netherlands B.V. Deregistration January 2023
Shenzhen Hekang Motor
System Co., Ltd. Change of equity March 2023
Wuhu Midea Washing
Appliance Manufacturing
Co., Ltd. Change of equity May 2023
Verkauf Reis Holding GmbH Change of equity June 2023
Verkauf KUKA lndustries
GmbH & Co. KG Change of equity June 2023
- 84 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities
(1) Interests in subsidiaries
(a) Composition of significant subsidiaries
Shareholding (%)
Subsidiaries Major business location Place of incorporation Nature of business Direct Indirect Acquisition method
Business combinations involving enterprises not
GD Midea Air-Conditioning Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture and sales of air conditioners 73% 7% under common control
Business combinations involving enterprises not
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture and sales of air conditioners 93% 7% under common control
Wuhu Maty Air-Conditioning Equipment Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioners 87% 13% Establishment
Chongqing Midea Air-Conditioning Equipment Co., Ltd. Chongqing, PRC Chongqing, PRC Manufacture and sales of air conditioners 95% 5% Establishment
GD Midea Heating & Ventilating Equipment Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of air conditioners 90% 10% Establishment
Zhejiang Meizhi Compressor Co., Ltd. Ningbo, PRC Ningbo, PRC Manufacture of air conditioners 100% - Establishment
Business combinations involving enterprises not under
Hefei Midea Refrigerator Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of refrigerators 75% 25% common control
Guangdong Midea Kitchen Appliances Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of small household appliances - 100% Establishment
Foshan Shunde Midea Washing Appliances Manufacturing
Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of small household appliances 75% 25% Establishment
Foshan Shunde Midea Electrical Heating Appliances
Manufacturing Co., Ltd. Foshan, PRC Foshan, PRC Manufacture of small household appliances - 100% Establishment
Business combinations involving enterprises under
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of small household appliances 90% 10% common control
Wuxi Little Swan Electric Co., Ltd. Wuxi, PRC Wuxi, PRC Manufacture of washing machines 100% - Establishment
Hefei Midea Heating & Ventilating Equipment Co., Ltd. Hefei, PRC Hefei, PRC Manufacture of air conditioner 99% 1% Establishment
Guangzhou Hualing Refrigerating Equipment Co.,ltd. Guangzhou, PRC Guangzhou, PRC Manufacture and sales of air conditioners 75% 25% Establishment
Wuhu Midea Life Appliances Mfg Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of small household appliances 100% - Establishment
Midea Electric Trading (Singapore) Co., Pte. Ltd. Singapore Singapore Export trade - 100% Establishment
Midea Group Finance Co., Ltd. Foshan, PRC Foshan, PRC Financial industry 95% 5% Establishment
Foshan Shunde Midea Household Appliances Industry
Co.,Ltd. Foshan, PRC Foshan, PRC Investment 100% - Establishment
Midea International Corporation Company Limited Hong Kong Hong Kong Investment holding 100% - Establishment
Midea Electric Netherlands (I) B.V. Netherlands Netherlands Investment holding - 100% Establishment
Business combinations involving enterprises not under
Toshiba Consumer Marketing Corporation Japan Japan Manufacture of household appliances - 100% common control
Business combinations involving enterprises not under
TLSC Japan Japan Manufacture of household appliances - 100% common control
Business combinations involving enterprises not under
KUKA Germany Germany Manufacture and sales of robots - 100% common control
Ningbo Midea United Materials Supply Co., Ltd. Ningbo, PRC Ningbo, PRC Wholesale and retail 100% - Establishment
Annto Logistics Supply Chain Technology Co., Ltd. Wuhu, PRC Wuhu, PRC Investment holding - 77% Establishment
Business combinations involving enterprises not under
Midea Capital Corporation Limited Foshan, PRC Foshan, PRC Investment 95% 5% common control
Midea Innovation Investment Co., Ltd. Shenzhen, PRC Shenzhen, PRC Investment holding 85% 15% Establishment
Manufacture and sales of intelligent
Midea Group (Shanghai) Co. Ltd. Shanghai, PRC Shanghai, PRC household appliances 90% 10% Establishment
Midea Investment Development Company Limited British Virgin Islands British Virgin Islands Investment - 100% Establishment
Anhui Meizhi Precision Manufacturing Co., Ltd. Wuhu, PRC Wuhu, PRC Manufacture of air conditioner 95% 5% Establishment
Hubei Midea Refrigerator Co., Ltd. Jingzhou, PRC Jingzhou, PRC Manufacture of refrigerator 97% 3% Establishment
- 85 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
6 Interests in other entities (Cont’d)
(2) Interests in associates ventures
The associates ventures of the Group have no significant influence on the Group and are
summarised as follows:
Item Current period Same period of prior year
Aggregated carrying amount of
investments 4,731,210 3,769,304
Aggregate of the following items
in proportion
Net profit (i) 348,545 263,014
Other comprehensive income (i) 36,188 47
Total comprehensive income 384,733 263,061
(i) The net profit and other comprehensive income have taken into account the impacts of both
the fair value of the identifiable assets and liabilities upon the acquisition of investment in
associates and joint ventures and the unification of accounting policies adopted by the
associates and joint ventures to those adopted by the Company.
(3) Structured entities not included in the consolidation scope
The Group had no significant structured entities not included in the consolidation scope.
7 Segment information
The reportable segments of the Group are the business units that provide different products
or services, or operate in different areas. Different businesses or areas require different
technologies and marketing strategies, the Group, therefore, separately manages the
production and operation of each reportable segment and evaluates their operating results
respectively, in order to make decisions about resources to be allocated to these segments
and to assess their performance.
The Group identified 4 reportable segments as follows:
- Heating & ventilation, as well as air-conditioner
- Consumer appliances
- Robotics and automation system
- Others
Inter-segment transfer prices are determined with reference to selling prices for third parties.
The assets are allocated based on the operations of the segments and the physical locations
of the assets. The liabilities are allocated based on the operations of the segments. Expenses
indirectly attributable to the segments are allocated based on the proportion of each
segment’s revenue.
Operating expenses include cost of sales, interest costs, fee and commission expenses, taxes
and surcharges, selling and distribution expenses, general and administrative expenses, R&D
expenses and financial expenses.
- 86 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting
(a) Information on the profit or loss, assets and liabilities of reported segment
Segment information as at and for the six months ended 30 June 2023 is as follows:
Current period
Heating & ventilation,
Item
as well as air- Consumer Robotics and Other segments and
conditioner appliances automation system unallocated Offsetting Total
Revenue from external customers 102,081,554 72,090,725 16,415,970 7,207,365 - 197,795,614
Inter-segment revenue 1,700,542 431,191 207,239 3,143,282 (5,482,254) -
Operating expenses (91,806,494) (64,098,118) (16,569,793) (9,179,710) 5,266,038 (176,388,077)
Segment profit 11,975,602 8,423,798 53,416 1,170,937 (216,216) 21,407,537
Other profit or loss 699,770
Total profit 22,107,307
Total assets 206,653,458 174,772,080 42,413,492 238,278,221 (199,377,616) 462,739,635
Total liabilities 145,053,148 131,067,029 35,217,226 232,764,048 (239,604,331) 304,497,120
Long-term equity investments in
associates and joint ventures 372,493 121,024 6,675 4,231,018 - 4,731,210
Investment income from
associates and joint ventures 176,833 1,860 1,014 168,838 - 348,545
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax
assets) 2,614,762 1.018,190 445,409 6,309,441 - 10,387,802
Losses on/(Reversal of) asset
impairment 127,243 (50,654) 102,331 10,140 - 189,060
Losses on/(Reversal of) credit
impairment 109,005 73,334 (14,215) 19,570 33,730 221,424
Depreciation of right-of-use assets 48,125 69,121 118,900 293,897 28,881 558,924
Depreciation and amortisation
expenses 1,058,084 923,273 500,692 259,576 - 2,741,625
- 88 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont'd)
(a) Information on the profit or loss, assets and liabilities of reported segment (Cont'd)
Segment information as at and for the six months ended 30 June 2022 is as follows:
Same period of prior year
Item Heating & ventilation, as Consumer Robotics and Other segments and
well as air-conditioner appliances automation system unallocated Offsetting Total
Revenue from external customers 93,948,227 70,340,259 13,426,372 5,948,541 - 183,663,399
Inter-segment revenue 1,657,240 370,055 190,159 3,832,595 (6,050,049) -
Operating expenses (86,626,933) (62,098,046) (13,412,943) (8,868,417) 5,969,014 (165,037,325)
Segment profit 8,978,534 8,612,268 203,588 912,719 (81,035) 18,626,074
Other profit or loss 206,874
Total profit 18,832,948
Total assets 179,930,301 158,277,514 35,267,424 210,934,435 (171,305,529) 413,104,145
Total liabilities 127,693,219 115,379,530 25,961,405 203,275,449 (199,603,928) 272,705,675
Long-term equity investments in
associates and joint ventures 276,107 115,248 36,620 3,341,329 - 3,769,304
Investment income from associates
and joint ventures 92,873 (2,111) 665 171,587 - 263,014
Increase in non-current assets
(excluding long-term equity
investments, financial assets,
goodwill and deferred tax
assets) 2,338,948 1,837,378 386,462 518,570 - 5,081,358
Losses on/(Reversal of) asset
impairment 114,138 46,838 69,703 - - 230,679
Losses on/(Reversal of) credit
impairment 88,037 53,919 (1,980) 95,022 (42,107) 192,891
Depreciation of right-of-use assets 51,085 63,381 118,900 298,677 - 532,043
519,771
Depreciation and amortisation
expenses 1,114,427 957,254 131,961 - 2,723,413
- 89 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
8 Segment reporting (Cont'd)
(b) Geographical area information
The Group’s revenue from external customers domestically and in foreign countries or
geographical areas, and the total non-current assets other than long-term equity investments,
financial assets, goodwill and deferred tax assets located domestically and in foreign
countries or geographical areas (including Germany, Japan, Hong Kong, Macau, Singapore
and Brazil) are as follows:
Revenue from external
customers Current period Same period of prior year
Domestic 117,259,490 105,824,857
In other countries/geographical
areas 80,536,124 77,838,542
Total 197,795,614 183,663,399
Total non-current assets Current period Same period of prior year
Domestic 41,274,102 32,732,170
In other countries/geographical
areas 18,255,385 16,821,780
Total 59,529,487 49,553,950
9 Related parties and significant related party transactions
(1) Information of the parent company
(a) General information of the parent company
Name of the parent company Relationship Place of incorporation Nature of business
Controlling
Midea Holding Co., Ltd. shareholder Shunde District, Foshan Commercial
The Company’s ultimate controlling person is Mr. He Xiangjian.
(b) Registered capital and changes in registered capital of the parent company
Name of the parent company Registered capital
Midea Holding Co., Ltd. 330,000
(c) The percentages of shareholding and voting rights in the Company held by the parent company
Ending Opening
Name of the parent Shareholding (%) Voting rights Shareholding (%) Voting rights
company Direct Indirect (%) Direct Indirect (%)
Midea Holding Co.,
Ltd. 30.89% - 30.89% 31.00% - 31.00%
(2) Information of the Company's subsidiaries
Please refer to Note 6(1) for the information of the Company’s main subsidiaries.
- 90 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
9 Related parties and significant related party transactions (Cont’d)
(3) Information of other related parties
Name of other related parties Relationship
Controlled by direct relatives of the Company’s ultimate
Orinko Advanced Plastics Co., Ltd. controlling shareholder
Controlled by the Company’s ultimate controlling
Guangdong Ruizhu Intelligent Technology Co., Ltd. shareholder
Foshan Micro Midea Filter Mfg. Co., Ltd. Associate of the Company
Guangdong Shunde Rural Commercial Bank Co., Ltd. Associate of the Company
(4) Information of related party transactions
The following primary related party transactions are conducted in accordance with normal
commercial terms at agreed price by reference to the market price.
(a) Purchase of goods
Content of related
Related parties party transactions Current period Same period of prior year
Orinko Advanced Plastics 658,784
Co., Ltd. Purchase of goods 697,804
Foshan Micro Midea Filter 158,878
Mfg. Co., Ltd. Purchase of goods 161,191
Total 817,662 858,995
(b) Sales of goods:
Content of related
Related parties party transactions Current period Same period of prior year
Guangdong Ruizhu Intelligent
Technology Co., Ltd. Sales of goods 90,344 74,357
(c) Investment income and interest income of monetary products
Related parties Current period Same period of prior year
Guangdong Shunde Rural Commercial
Bank Co., Ltd. 145,197 159,386
(5) Receivables from and payables to related parties
Receivables from related parties:
Item Related parties Ending Balance Opening balance
Cash at bank and on hand, other
current assets and other non- Guangdong Shunde Rural
current assets, etc. Commercial Bank Co., Ltd. 5,497,221 11,177,251
Payables to related parties:
Item Related parties Ending Balance Opening balance
Orinko Advanced Plastics Co., Ltd. 38,832 93,665
Accounts payable Foshan Micro Midea Filter Mfg. Co., Ltd. 82,766 65,207
Total 121,598 158,872
- 91 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment
(1) Share option incentive plan
(a) Movements in share options during the six months ended 30 June 2023
For the six months ended 30 June
Item 2023 (Share in thousands)
Share options issued at the beginning of the year 275,548
Share options granted during the period -
Share options exercised during the period (27,406)
Share options lapsed during the period (48,900)
Share options issued at the end of the period 199,242
As at 30 June 2023, the residual contractual maturity date of the Fifth Share Option Incentive
Plan is on 6 May 2024. The residual contractual maturity date of the Fifth Reserved Share
Option Incentive Plan is on 10 March 2025. The residual contractual maturity date of the Sixth
Share Option Incentive Plan is on 29 May 2025. The residual contractual maturity date of the
Seventh Share Option Incentive Plan is on 4 June 2024. The residual contractual maturity
date of the Eighth Share Option Incentive Plan is on 3 June 2026. The residual contractual
maturity date of the Ninth Share Option Incentive Plan is on 7 June 2027.
(2) Restricted share plan
(a) Pursuant to the restricted shares incentive plan for 2023 approved at the 2022 annual
shareholders’ meeting in 2023 (the "Restricted Shares Incentive Plan for 2023"), the Company
granted 18,325,000 restricted shares with exercise price of RMB 25.89 to 415 incentive
recipients. Under the circumstance that the Company meets expected performance, 40%,
30% and 30% of the total restricted shares granted will be unlocked after 1 year, 2 years and
3 years respectively since 20 June 2023. The listing date for the granted restricted shares of
this plan is 14 July 2023.
(b) Movements in restricted shares during the six months ended 30 June 2023
For the six months ended 30
Item June 2023 (Share in thousands)
Restricted shares issued at the beginning of the year 50,211
Restricted shares granted during the period 18,325
Restricted shares unlocked during the period (18,639)
Restricted shares lapsed during the period (9,994)
Restricted shares issued at the end of the period 39,903
The Company held the 16th session of the 4th Board of Directors on 20 June 2023, at which,
the Proposal of the Accomplishment of the Unlocking Conditions of the Lock-up Period for the
Restricted Shares was reviewed. 2,566,396 restricted shares in 2018, which were listed for
trade on 3 July 2023, were applied for unlocking; 324,167 shares under the restricted share
incentive plan in 2018, which were listed for trade on 7 July 2023, were applied for unlocking;
4,897,510 shares under the restricted share incentive plan in 2019, which were listed for trade
on 13 July 2023, were applied for unlocking; and 10,851,082 shares under the restricted share
incentive plan in 2020, which were listed for trade on 18 July 2023, were applied for unlocking.
- 92 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
10 Share-based payment (Cont’d)
(3) Employee stock ownership plan
Pursuant to the 2023 stock ownership plan of the Midea Group (the “2023 Stock Ownership
Plan”) approved at the shareholders' meeting for the year ended 31 December 2022 held
during the year 2023, the Company repurchased 9,946,276 shares of Midea Group over the
securities account for repurchase, with an average purchase price of RMB 56.79 per share.
The purchase fund was the performance bonus of approximately RMB 564,849,000 accrued
by the Company.
(4) For the six months ended 30 June 2023, the total expenses due to the above share-based
payment incentive plan were RMB 580,550,000. As at 30 June 2023, the balance relating to
the share-based payment incentive plan and accrued from capital surplus was
approximately RMB 1,863,402,000.
11 Contingencies
As at 30 June 2023, the amount in tax disputes involving Brazilian subsidiary with 51%
interests held by the Company was about BRL 764 million (equivalent to RMB 1,145 million)
(Some cases have lasted for more than 10 years. The above amount included the principal
and interest). As at 30 June 2023, relevant cases were still at court. In addition, original
shareholders of Brazilian subsidiary have agreed to compensate the Company according to
verdict results of the above tax disputes. The maximum compensation amount is about BRL
157 million (equivalent to RMB 235 million). With reference to judgements of third-party
attorneys, management believes that the probability of losing lawsuits and making
compensation is small, and expects no significant risk of tax violation.
12 Commitments
The Group had no significant commitments at the balance sheet date.
13 Events after the balance sheet date
Nil.
14 Financial risk
The Group is exposed to various financial risks in the ordinary course of business, mainly
including:
Market risk (mainly including foreign exchange risk, interest rate risk and other price risk)
Credit risk
Liquidity risk
The following mainly relates to the above risk exposures and relevant causes, objectives,
policies and process of risk management, method of risk measurement, etc.
The objective of the Group's risk management is to seek balance between risk and income,
minimising the adverse impact of financial risks on the Group's financial performance.
Pursuant to the risk management objective, the Group has made risk management policies to
identify and analyse the risks it is exposed to and set appropriate risk resistant level and
design relevant internal control procedures to monitor the Group’s risk level. The Group
reviews regularly these risk management policies and relevant internal control systems to
adapt to changes in market condition or its operating activities.
- 93 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk (Cont’d)
(1) Market risk
(a) Foreign exchange risk
The Group mainly operates in China, Europe, the USA, Asia, South America and Africa for the
manufacturing, sales, investments and financing activities. Any foreign currency denominated
monetary assets and liabilities other than in RMB would subject the Group to the risk arising
from fluctuation of exchange rate.
The Group’s finance department has a professional team to manage the risk arising of
fluctuation of exchange rate, with approach of the natural hedge for settling currencies,
signing forward foreign exchange hedging contracts and controlling the scale of foreign
currency assets and liabilities, to minimise foreign exchange risk, and to reduce the impact of
exchange rate fluctuations on business performance.
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term
borrowings and debentures payable. Financial liabilities issued at floating rates expose the
Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the
Group to fair value interest rate risk. The Group determines the relative proportions of its fixed
rate and floating rate contracts depending on the prevailing market conditions. As at 30 June
2023, the Group’s long-term interest bearing borrowings at floating rate were certain long-term
borrowings.
The Group’s finance department at its headquarters continuously monitors the interest rate
position of the Group. Increases in interest rates will increase the cost of new borrowing and
the interest costs with respect to the Group’s outstanding floating rate borrowings, and
therefore could have a material adverse effect on the Group’s financial performance.
Management makes adjustments timely with reference to the latest market conditions and
may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.
(c) Other price risk
The Group's other price risk mainly arises from financial instruments measured at fair value.
As at 30 June 2023, if expected price of the investments held by the Group fluctuated, the
Group's gains or losses on changes in fair value would be affected accordingly.
(2) Credit risk
Credit risk is managed on the grouping basis. The Group’s credit risk mainly arises from cash
at bank, deposits with the Central Bank, deposits with banks and other financial institutions,
notes receivable, accounts receivable, receivables financing, loans and advances, other
receivables, contract assets, lease receivables, other debt investments, other current assets
and other non-current assets, and derivative financial assets at fair value through profit or loss
that are not included in the impairment assessment scope.
The Group expects that there is no significant credit risk associated with cash at bank,
deposits with the Central Bank and deposits with banks and other financial institutions since
they are deposited at state-owned banks and other medium or large size listed banks with
good reputation and high credit rating. The Group does not expect that there will be any
significant losses from non-performance by these banks.
- 94 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk (Cont’d)
(2) Credit risk (Cont’d)
The Group has policies to limit the credit exposure on notes receivable, accounts receivable,
contract assets, loans and advances, other receivables, lease receivables, fixed-income
products in other current assets, other debt investments and fixed-income products in other
non-current assets. The Group assesses the credit quality of and sets credit limits on its
customers by taking into account their financial position, the availability of guarantee from
third parties, their credit history and other factors such as current market conditions. The
credit history of the customers is regularly monitored by the Group. In respect of customers
with a poor credit history, the Group will use written payment reminders, or shorten or cancel
credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
In addition, for loans and advances, the amount and type of collateral required depend on an
assessment of the credit risk of the counterparty. The collaterals for loans mainly include
receivables and inventories. The Group monitors the market value of the collateral, requests
additional collateral when needed according to contracts and performs and valuation for
impairment valuation assessment when applicable. As at 30 June 2023, the Group had no
other significant collateral or other credit enhancements held as securities from debtors.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the
Group’s finance department in its headquarters. The Group’s finance department at its
headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity
requirements to ensure it has sufficient cash and securities that are readily convertible to cash
to meet operational needs, while maintaining sufficient headroom on its undrawn committed
borrowing facilities from major financial institutions so that the Group does not breach
borrowing limits or covenants on any of its borrowing facilities to meet the short-term and
long-term liquidity requirements.
- 95 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
14 Financial risk (Cont’d)
(3) Liquidity risk (Cont’d)
The financial liabilities of the Group at the balance sheet date are analysed by their maturity
dates below at their undiscounted contractual cash flows:
30 June 2023
Item Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 19,693,457 - - - 19,693,457
Customer deposits and
deposits from banks and
other financial institutions
(including interest) 47,584 - - - 47,584
Notes payable 14,236,566 - - - 14,236,566
Accounts payable 71,684,891 - - - 71,684,891
Other payables 4,941,956 - - - 4,941,956
Financial liabilities held for
trading 1,434,319 - - - 1,434,319
Derivative financial liabilities 584,017 - - - 584,017
Other current liabilities 23,688,384 - - - 23,688,384
Current portion of non-
current liabilities
(including interest) 21,026,155 - - - 21,026,155
Long-term borrowings
(including interest) 462,911 9,593,819 28,763,693 155,750 38,976,173
Debentures payable
(including interest) 93,646 93,646 3,314,041 - 3,501,333
Lease liabilities (including
interest) - 822,053 971,876 390,597 2,184,526
Other non-current liabilities - - 30,033 - 30,033
Sub-total 157,893,886 10,509,518 33,079,643 546,347 202,029,394
31 December 2022
Ending Balance Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings
(including interest) 5,239,105 - - - 5,239,105
Customer deposits and
deposits from banks and
other financial institutions
(including interest) 77,523 - - - 77,523
Notes payable 25,572,421 - - - 25,572,421
Accounts payable 64,233,225 - - - 64,233,225
Other payables 4,322,025 - - - 4,322,025
Financial liabilities held for
trading 1,580,771 - - - 1,580,771
Derivative financial liabilities 234,606 - - - 234,606
Other current liabilities 17,801,575 - - - 17,801,575
Current portion of non-
current liabilities
(including interest) 7,508,788 - - - 7,508,788
Long-term borrowings
(including interest) 593,936 12,730,569 36,356,095 - 49,680,600
Debentures payable
(including interest) 90,261 90,261 3,359,723 - 3,540,245
Lease liabilities (including
interest) - 659,201 778,483 312,797 1,750,481
Other non-current liabilities - - 680,482 - 680,482
Sub-total 127,254,236 13,480,031 41,174,783 312,797 182,221,847
- 96 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the fair
value hierarchy of the lowest level input that is significant to the entire fair value measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
(1) Assets and liabilities measured at fair value on a recurring basis
As at 30 June 2023, the financial assets and liabilities measured at fair value on a recurring
basis by the above three levels are analysed below:
Fair value at the end of the period
Level 1 Level 2 Level 3 Total
Financial assets measured at
fair value -
Financial assets held for
trading 1,537,870 6,656,131 - 8,194,001
Derivative financial assets - 512,686 - 512,686
Receivables financing - 15,466,934 - 15,466,934
Other current assets -
hedging instruments and
transferable certificates of
deposit - 1,402,274 - 1,402,274
Other debt investments - 14,693,213 - 14,693,213
Investments in other equity
instruments - - 41,292 41,292
Other non-current financial
assets - 3,052,539 6,145,336 9,197,875
Total assets 1,537,870 41,783,777 6,186,628 49,508,275
Financial liabilities measured
at fair value -
Financial liabilities held for
trading - - 1,434,319 1,434,319
Derivative financial liabilities - 584,017 - 584,017
Other current liabilities -
hedging instruments - 1,355,139 - 1,355,139
Total liabilities - 1,939,156 1,434,319 3,373,475
- 97 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
As at 31 December 2022, the financial assets and liabilities measured at fair value on a
recurring basis by the above three levels are analysed below:
Fair value at the beginning of the year
Item Level 1 Level 2 Level 3 Total
Financial assets measured at fair
value -
Financial assets held for trading 1,264,595 2,019,998 - 3,284,593
Derivative financial assets - 665,484 - 665,484
Receivables financing - 13,526,540 - 13,526,540
Other current assets - hedging
instruments and transferable
certificates of deposit - 743,934 - 743,934
Other debt investments - 16,969,335 - 16,969,335
Investments in other equity
instruments - - 41,359 41,359
Other non-current financial assets - 4,276,688 6,348,556 10,625,244
Total assets 1,264,595 38,201,979 6,389,915 45,856,489
Financial liabilities measured at fair
value -
Financial liabilities held for trading - 1,580,771 1,580,771
Derivative financial liabilities - 234,606 - 234,606
Other current liabilities - hedging
instruments - 79,933 - 79,933
Total liabilities - 314,539 1,580,771 1,895,310
The Group takes the date on which events causing the transfers between the levels take place
as the timing specific for recognising the transfers. There was no significant transfer of fair
value measurement level of the above financial instruments.
The fair value of financial instruments traded in an active market is determined at the quoted
market price; and the fair value of those not traded in an active market is determined by the
Group using valuation technique. The valuation models used mainly comprise discounted cash
flow model and market comparable corporate model. Inputs of valuation technique mainly
comprise risk-free interest rate, estimated interest rate and estimated annual yield.
There were no changes in the valuation technique for the fair value of the Group’s financial
instruments in the current year.
The changes in Level 3 assets and liabilities are analysed below:
Investments in other
equity instruments and
other non-current financial Financial liabilities held for
Item assets trading
1 January 2023 6,389,915 (1,580,771)
Increase 159,090 -
Decrease (160,792) 150,903
Transfer out of Level 3 (69,044) -
Total gains for the current period
Investment (loss)/income recognised in the income
statement (171,611) (4,451)
Gains recognised in other comprehensive income 39,070 -
30 June 2023 6,186,628 (1,434,319)
- 98 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
15 Fair value estimates (Cont’d)
(1) Assets and liabilities measured at fair value on a recurring basis (Cont’d)
The changes in Level 3 assets and liabilities are analysed below (Cont’d):
Investments in other equity
instruments and other non- Financial liabilities held for
Item current financial assets trading
1 January 2022 5,958,620 -
Increase 1,746,172 (1,766,953)
Decrease (190,586) 99,876
Transfer into Level 3 (838,345) -
Total gains for the current period
Investment income recognised in the income
statement (409,005) 86,306
Losses recognised in other comprehensive
income 123,059 -
31 December 2022 6,389,915 (1,580,771)
(a) The fair value of this part of other non-current financial assets, investments in other equity
instruments and financial liabilities held for trading is measured using discounted cash flows
approach and market comparable companies approach. The judgement of Level 3 of the fair
value hierarchy is based on the materiality of unobservable inputs towards calculation of
whole fair value. Significant unobservable inputs mainly include the financial data of targeted
company, market multiple of comparable companies and risk adjusted discount rates.
Assets and liabilities subject to Level 2 fair value measurement are mainly receivables
financing, structural deposits, transferable certificates of deposit and cross-currency interest
rate swaps, and are evaluated by discounted cash flows approach, market approach and
income approach.
(2) Assets and liabilities not measured at fair value but for which the fair value is disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly
include: cash at bank and on hand, deposits with the Central Bank, deposits with banks and
other financial institutions, notes receivable, accounts receivable, contract assets, loans and
advances, other receivables, lease receivables, current portion of non-current assets
(excluding other debt investments due within one year mentioned in Note 4(11)), other current
assets (excluding those mentioned in Note 16(1)), notes payable, accounts payable, contract
liabilities, short-term borrowings, lease liabilities, long-term borrowings, debentures payable,
current portion of non-current liabilities, customer deposits and deposits from banks and other
financial institutions, other payables and other current liabilities.
Carrying amounts of the Group’s financial assets and financial liabilities measured at
amortised cost as at 30 June 2023 and 31 December 2022 approximated to their fair value.
16 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders,
and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, refund capital to shareholders, issue new shares or sell assets
to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital
structure on the basis of debt-to-asset ratio (total liabilities divide total assets).
- 99 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
16 Capital management (Cont’d)
As at 30 June 2023 and 31 December 2022, the Group's debt-to-asset ratio is as follows:
Item Ending balance Opening balance
Total liabilities 304,497,120 270,631,465
Total assets 462,739,635 422,555,267
Debt-to-asset ratio 65.80% 64.05%
17 Notes to the Company’s financial statements
(1) Other receivables
Item Ending balance Opening balance
Other receivables 24,280,173 26,182,925
Less: Provision for bad debts (7,273) (7,824)
Total 24,272,900 26,175,101
(a) The ageing of other receivables is analysed as follows:
Ageing Ending balance Opening balance
Within 1 year 24,239,923 26,069,074
1 to 2 years 26,230 110,631
Over 2 years 14,020 3,220
Total 24,280,173 26,182,925
(b) Provision for losses and changes in book balance statement
Stage 1 Stage 3
12-month ECL (Grouping) 12-month ECL (Individual) Lifetime ECL (Credit impaired) Sub-total
Item
Book Provision for Provision for Provision for Provision for
balance bad debts Book balance bad debts Book balance bad debts bad debts
1 January 2023 26,114,966 7,824 67,959 - - - 7,824
Transfer to
Stage 3 in
the current
year - - - - - - -
Net increase in (1,863,686) (551) (39,066) - - - (551)
the current
period
Including: - - - - - - -
Write-off in
the current
period
Derecognition - - - - - - -
30 June 2023 24,251,280 7,273 28,893 - - - 7,273
(c) As at 30 June 2023, other receivables of the Company at Stage 1 are analysed as follows:
(i) As at 30 June 2023, other receivables in Stage 1 for which the related provision for bad debts was
provided on an individual basis are analysed as follows:
Ending
balance
12-month ECL Provision for
Category Book balance rates bad debts Reason
The risk of
expected loss is
Stage 1 28,893 0% - low
- 100 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the Company’s financial statements (Cont’d)
(1) Other receivables (Cont’d)
(c) As at 30 June 2023, other receivables of the Company at Stage 1 are analysed as follows (Cont’d):
(ii) As at 30 June 2023, other receivables for which the related provision for bad debts was provided on
the grouping basis were all at Stage 1, which are analysed as follows:
Ending balance Opening balance
Book Provision for bad Book Provision for bad
balance debts balance debts
Provision Provision
Stage 1 Amount Amount ratio Amount Amount ratio
Security
deposit/guarantee
and other
receivables
grouping 24,251,280 (7,273) 0.03% 26,114,966 (7,824) 0.03%
(d) As at 30 June 2023, the five largest other receivables aggregated by debtor are analysed as follows:
Nature of Book % of total Provision for
Name of entity payment balance Ageing balance bad debts
Current
Company A accounts 21,650,000 Within 1 year 89.17% (6,495)
Current
Company B accounts 1,248,000 Within 1 year 5.14% (374)
Current
Company C accounts 478,672 Within 1 year 1.97% (144)
Current
Company D accounts 245,000 Within 1 year 1.01% (74)
Current
Company E accounts 144,998 Within 1 year 0.60% (43)
Sub-total 23,766,670 97.89% (7,130)
(2) Long-term equity investments
Long-term equity investments are classified as follows:
Item Ending balance Opening balance
Subsidiaries (a) 71,827,998 69,705,046
Associates (b) 2,599,721 3,398,523
Sub-total 74,427,719 73,103,569
Less: Provision for impairment - -
Total 74,427,719 73,103,569
- 101 -
MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(a) Subsidiaries
Movements in the current period Cash dividends attributable to the parent
Name of investee Opening balance Increase in investment Decrease in investment Others Ending Balance company declared in the current period
Wuxi Little Swan Electric Co., Ltd. 20,313,623 - - 28,651 20,342,274 -
Foshan Shunde Midea Household Appliances Industry Co., Ltd. 5,950,999 - - 868 5,951,867 -
Guangdong Midea Electric Co., Ltd. 5,001,072 - - 656 5,001,728 -
Beijing Wandong Medical Technology Co., Ltd. 4,349,003 - - - 4,349,003 38,350
Midea Group Finance Co., Ltd. 3,363,479 - - 832 3,364,311 -
Midea Innovation Investment Co., Ltd. 2,135,000 - - - 2,135,000 -
GD Midea Air-Conditioning Equipment Co., Ltd. 1,987,281 - - 49,309 2,036,590 -
Guangdong Midea Microwave Oven Manufacturing Co., Ltd. 1,880,041 - - - 1,880,041 -
Guangdong Midea Intelligent Technologies Co., Ltd. 1,860,540 - - 536 1,861,076 -
Shenzhen Clou Electronics Co., Ltd. - 828,094 - 832,614 1,660,708 -
Guangdong Meizhi Compressor Co., Ltd. 1,418,863 - - 13,008 1,431,871 -
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 1,201,861 - - 19,231 1,221,092 -
Hefei Midea Heating & Ventilating Equipment Co., Ltd. 1,083,420 - - 2,012 1,085,432 -
Hainan Midea Building Technology Co., Ltd. 921,500 - - - 921,500 -
Midea Group (Shanghai) Co. Ltd. 920,427 - - 6,096 926,523 -
GD Midea Heating & Ventilating Equipment Co., Ltd. 899,435 - - 26,520 925,955 -
Hubei Midea Refrigerator Co., Ltd. 885,138 - - 6,154 891,292 -
Anhui Meizhi Precision Manufacturing Co., Ltd. 834,812 - - 1,959 836,771 -
Wuhu Maty Air-Conditioning Equipment Co., Ltd. 776,756 - - 2,601 779,357 -
Guangdong Midea Building Technology Co., Ltd. 769,430 - - - 769,430 -
Wuhu Xinhe Technology Co., Ltd. 742,684 - - - 742,684 -
Guangdong Meizhi Precision-Manufacturing Co., Ltd. 625,877 - - 6,689 632,566 -
Foshan Shunde Midea Washing Appliances Manufacturing Co.,
Ltd. 595,045 - - 15,304 610,349 -
Hefei Midea Refrigerator Co., Ltd. 556,199 - - 3,660 559,859 -
Guangzhou Hualing Refrigerating Equipment Co., Ltd. 533,343 - - 4,140 537,483 -
Ningbo Midea United Materials Supply Co., Ltd. 503,420 - - 1,204 504,624 -
Guangdong Midea Electromechanical Technology Co., Ltd. 500,000 - - - 500,000 -
GD Midea Group Wuhu Air-Conditioning Equipment Co., Ltd. 481,769 - - - 481,769 -
Guangzhou Midea Hualing Refrigerator Co., Ltd. 444,415 - - 1,657 446,072 -
GD Midea Environment Appliances Mfg. Co., Ltd. 417,382 - - 4,634 422,016 -
Anhui Meizhi Compressor Co., Ltd. 391,518 - - 4,857 396,375 -
Others 7,360,714 1,119 (9,000) 269,547 7,622,380 18,000
Total 69,705,046 829,213 (9,000) 1,302,739 71,827,998 56,350
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MIDEA GROUP CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
(All amounts in RMB’000 Yuan unless otherwise stated)
[English translation for reference only]
17 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(b) Associates
Investments in associates mainly refer to the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd. and Hefei Royalstar Motor Co., Ltd. and other enterprises by the
Company.
(3) Operating revenue
Operating revenue mainly comprises other operating revenue including the trademark royalty
income, rental income and management fee income, obtained by the Company from the
subsidiaries.
(4) Investment income
Item Current period Same period of prior year
Income from long-term equity
investments under cost method 56,350 52,799
Investment income from holding of
financial assets held for trading 7,389 95,277
Income from long-term equity
investments under equity
method 124,458 126,297
Others 1,242 (1,981)
Total 189,439 272,392
There is no significant restriction on repatriation of the Company's investment income.
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1 Details of non-recurring profit or loss
Same period of prior
Item Current period year
Profit or loss from disposals of non-current assets, including the
write-off portion for which provision for asset impairment has
been made (169,544) 22,156
Except for the effective hedging activities related to the
Company’s ordinary activities, gains or losses on changes in
fair value arising from financial assets held for trading,
derivative financial assets, financial liabilities held for trading,
derivative financial liabilities and other non-current financial
assets, and investment income from disposal of financial
assets held for trading, derivative financial assets, financial
liabilities held for trading, derivative financial liabilities and
other non-current financial assets 25,019 (434,341)
Others (mainly including government grants, , reversal of
provision for impairment of receivables tested for impairment
on an individual basis, compensation income, penalty income
and other non-operating income and expenses) 817,450 772,377
Sub-total 672,925 360,192
Less: Effect of enterprise income tax (85,263) (30,095)
Effect of minority interests (after tax) (7,224) (26,113)
Net non-recurring profit or loss attributable to equity owners of the
Company 580,438 303,984
Basis of preparation of details of non-recurring profit or loss:
Under the requirements of the Explanatory Announcement No. 1 on Information Disclosure by
Companies Offering Securities to the Public - Non-recurring Profit or Loss [2008] from CSRC,
non-recurring profit or loss refers to that arises from transactions and events that are not
directly relevant to ordinary activities, or that is relevant to ordinary activities, but is
extraordinary and not expected to recur frequently that would have an influence on users of
financial statements making economic decisions on the financial performance and profitability
of an enterprise.
2 Return on net assets and earnings per share
The Group's return on net asset and earnings per share calculated pursuant to the
Compilation Rules for Information Disclosure of Companies Offering Securities to the Public
No. 9 - Calculation and Disclosure of Return on Net Asset and Earnings per Share (revised in
2010) issued by CSRC and relevant requirements of accounting standards are as follows:
Earnings per share (RMB/share)
Diluted earnings per
Weighted average return on net assets Basic earnings per share share
Same period of prior Same period of prior Current Same period of
Item Current period year Current period year period prior year
Net profit attributable to ordinary 12.14% 12.18% 2.67 2.34 2.66 2.34
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company,
net of non-recurring profit or loss
11.76% 11.95% 2.58 2.30 2.58 2.30
3 Differences in accounting data under domestic and overseas accounting standards
(1) Differences in the net profit and net assets disclosed in the financial reports prepared under
China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□ Applicable √ Not applicable
(2) Differences in the net profit and net assets disclosed in the financial reports prepared under
CAS and foreign accounting standards
□ Applicable √ Not applicable
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