Company Code: 600690.SH, 690D.DE Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2023 Interim Report
Haier Smart Home Co., Ltd. Interim Report 2023
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (the “Company”) are individually and collectively
responsible for the content set out therein and hereby assure that the content set out in the
interim report is true, accurate and complete, and free from any false record, misleading
representation or material omission.
II. All directors attend the Board of Directors.
III. The interim report is unaudited.
IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of the
Company) and Ying Ke (the person in charge of accounting department) hereby certify that
the financial report set out in the interim report is true, accurate and complete.
V. Proposal of profit distribution or proposal of converting capital reserves into share capital for
this reporting period resolved and passed by the Board
No
VI. Disclaimer in respect of forward-looking statements
√ Applicable Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute our substantial commitment to investors. Investors are advised to pay attention to
investment risks.
VII. Is there any fund occupation by controlling shareholders and other related parties for
non-operational purposes
No
VIII. Is there any provision of external guarantee in violation of prescribed decision-making
procedures?
No
IX. Are there more than half of the Directors could not warrant the truthfulness, accuracy and
completeness of the interim report disclosed by the Company
No
X. Important risk warnings
For the possible risks which the Company may encounter, please refer to the relevant information set
out in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.
Haier Smart Home Co., Ltd. Interim Report 2023 1
Important Notice
XI. Others
Applicable √ Not Applicable
Chairman of the Board: LI Huagang
Haier Smart Home Co., Ltd
30 August 2023
2 Haier Smart Home Co., Ltd. Interim Report 2023
Contents
SECTION I — DEFINITIONS 4
SECTION II — GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS 6
SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS 12
SECTION IV — CORPORATE GOVERNANCE 49
SECTION V — ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES 53
SECTION VI — SIGNIFICANT ISSUES 64
SECTION VII — CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS 77
SECTION VIII — RELEVANT INFORMATION OF PREFERRED SHARES 85
SECTION IX — RELEVANT INFORMATION OF CORPORATE BONDS 86
SECTION X — FINANCIAL REPORT 87
I. 2023 Interim Report of Haier Smart Home Co., Ltd. with signature of the
legal representative.
II. Financial statements with signatures or seals of the person in charge of the
Documents Available
entity, chief accountant and person in charge of accounting department.
for Inspection
III. All documents publicly disclosed on China Securities Journal, Shanghai
Securities News, Securities Daily, Securities Times and the website of
Shanghai Stock Exchange (www.sse.com.cn) during the reporting period.
Haier Smart Home Co., Ltd. Interim Report 2023 3
Section I Definitions
Unless otherwise stated in context, the following terms should have the following meanings in this report:
DEFINITION OF FREQUENTLY USED TERMS
CSRC China Securities Regulatory Commission
SSE Shanghai Stock Exchange
The Company, Haier Smart Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”,
Home and the original short name is “Qingdao Haier”
Four Major Securities China Securities Journal, Shanghai Securities News, Securities Times,
Newspapers Securities Daily
Haier Electronics, 1169 Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong,
stock code: 01169.HK), a subsidiary as accounted for in the consolidated
statement of the Company. Haier Electronics has been privatized by way of H
shares issuance on 23 December 2020 and became a wholly owned
subsidiary of the Company since then.
GEA GE Appliances, household appliances assets and business of General Electric
Group, have currently been owned by the Company.
FPA Fisher & Paykel Appliances Holdings Limited (Chinese Name: ) was
established in 1934 and is known as the national appliance brand of New
Zealand, the global top-level kitchen appliance brand and the famous luxury
brand of the world. It has products including ventilator, gas stove, oven,
dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer
and etc. Its business covers over 50 countries/regions across the world. FPA
is wholly-owned subsidiary of the Company.
Candy Candy Group (Candy S.p.A) is an international professional appliances
manufacturer from Italy. Since its establishment in 1945, it has been
committed to enabling the global users to enjoy a higher quality of life
through innovative technologies and quality services. Candy Group has been
prestigious in the global market with users all over the world via its ten self-
owned professional household appliance brands. In January 2019, Candy
became a wholly-owned subsidiary of the Company.
CMM China Market Monitor Co., Ltd., as an authoritative market research institute
in Chinese home appliances area, was established in 1994 and has been
focusing on research of retail sales in China consumption market ever since.
4 Haier Smart Home Co., Ltd. Interim Report 2023
Section I Definitions
Euromonitor Euromonitor, established in 1972, is the leading strategic market information
supplier and has over 40-years of experience in respect of publishing market
report, commercial reference data and on-line database. They create data and
analysis on thousands of products and services around the world.
All View Cloud All View Cloud (AVC) is a big data integrated solution provider to the smart
home field, providing enterprises with big data information services, regular
data information services and special data services.
IEC The International Electrotechnical Commission. Founded in 1906, it is the
world’s first organization for the preparation and publication of international
electrotechnical standardization and is responsible for international
standardization for electrical engineering and electronic engineering. The goals
of the commission include: to effectively meet the needs of the global market;
to ensure that the standards and conformity assessment programs are
applied globally in a prioritized manner and to the greatest extent; to assess
and improve the quality of products and services involved in its standards; to
create conditions for the common use of complicated systems; to improve the
effectiveness of the industrialization process; to improve human health and
safety, and to protect the environment.
IEEE The Institute of Electrical and Electronics Engineers, an international
association of electronic technology and information science engineers, is
currently the largest non-profit professional technology society in the world. It
is committed to the development and research of electrical, electronic,
computer engineering and science-related fields, and has developed into an
international academic organization with great influence in terms of the fields
of space, computer, telecommunications, biomedicine, power and consumer
electronics.
Model of Rendanheyi The concept of “Achieving win-win via Rendanheyi (人 單 合 一) “is the
(人 單 合 一) guarantee of Haier’s sustainable operation and the driving force of the
Company featuring a self-motivated and empowering corporate culture. “Ren”
is an employee who has the spirit of entrepreneurship and innovation; “Dan”
is to create value for users. The “Rendanheyi (人單合一) “management model
encourages employees to create value for users with an entrepreneurial
mindset, and to achieve self-value in line with the those of the Company and
its shareholders.
COP The ratio of cooling capacity (heating capacity) to input power that the HVAC
system can achieve. The larger the ratio, the more efficient and energy-saving
the system is.
Haier Smart Home Co., Ltd. Interim Report 2023 5
Section II General Information of the
Company and Key Financial Indicators
I. INFORMATION OF THE COMPANY
Chinese name 海尔智家股份有限公司
Chinese short name 海爾智家
English name Haier Smart Home Co., Ltd.
English short name Haier Smart Home
Legal representative Li Huagang
II. CONTACT PERSON AND CONTACT INFORMATION
Secretary to Representative of Company Secretary
the Board securities affairs (D/H shares) Others
Name Liu Xiaomei Liu Tao Ng Chi Yin, Trevor Global Customer
Service Hotline
Address Department of Department of Room 3513, 35/F, /
Securities of Haier Securities of Haier The Center, 99
Smart Home Co., Smart Home Co., Queen’s Road
Ltd. Haier Science Ltd. Haier Science Central, Central,
and Technology and Technology Hong Kong
Innovation Innovation
Ecological Park, Ecological Park,
No. 1 Haier Road, No. 1 Haier Road,
Qingdao City Qingdao City
Tel 0532-88931670 0532-88931670 +852 2169 0000 4006 999 999
Fax 0532-88931689 0532-88931689 +852 2169 0880 /
Email finance@haier.com finance@haier.com ir@haier.hk /
6 Haier Smart Home Co., Ltd. Interim Report 2023
Section II General Information of the Company and Key Financial Indicators
III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION
Registered address Haier Park, Laoshan District, Qingdao City
Historical change of the Prior to the Company’s listing in 1993, the registered address of the
registered address Company was No.165 Xiaobaigan Road, Sifang District, Qingdao City,
Shandong Province, and has changed to the current address since
1994, during which the address name was adjusted in line with the
change of name of the industrial park but the actual site remains
unchanged.
Business address Haier Science and Technology Innovation Ecological Park,
Laoshan District, Qingdao City
Postal code of the 266101
business address
Website https://smart-home.haier.com/cn/
Email 9999@haier.com
Query index for any Not applicable
changes during the
reporting period
IV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE AND
DEPOSIT
Designated newspaper for Shanghai Securities News, Securities Times, China Securities Journal,
information disclosure Securities Daily
Website for publishing www.sse.com.cn
interim report
Other websites for interim https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,
report disclosure https://www.hkexnews.hk
Deposit place of interim Department of Securities of Haier Smart Home Co., Ltd.
report Haier Science and Technology Innovation Ecological Park,
No. 1 Haier Road, Qingdao City
Query index for any Not applicable
changes during the
reporting period
V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
Stock Short
Stock Exchange of Stock Short Name Before
Type of Shares Shares Listed Name Stock Code Variation
A share Shanghai Stock Haier Smart 600690 Qingdao Haier
Exchange Home
D share Frankfurt Stock Haier Smart 690D Qingdao Haier
Exchange Home
H Share Hong Kong Stock Haier Smart 6690 /
Exchange Home
Haier Smart Home Co., Ltd. Interim Report 2023 7
Section II General Information of the Company and Key Financial Indicators
VI. OTHER RELATED INFORMATION
Applicable √ Not Applicable
VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE
COMPANY
(I) Key accounting data
Unit and Currency: RMB
Increase/decrease
for the reporting
period compared
with the
For the reporting The corresponding period of last year corresponding
period After Before period of last year
Key accounting data (January-June) adjustment adjustment (%)
Operating revenue 131,626,581,506.56 121,640,067,379.35 121,857,522,462.22 8.21
Net profit attributable to shareholders
of the listed Company 8,963,875,999.84 7,959,684,042.65 7,949,084,472.70 12.62
Net profit after deduction of
non-recurring profit or loss
attributable to shareholders of the
listed Company 8,603,977,764.58 7,490,693,705.38 7,490,693,705.38 14.86
Net cash flows from operating
activities 6,790,530,462.54 5,965,070,983.86 5,964,247,657.22 13.84
Increase/
decrease as
at the end of
the reporting
As at the end of period
As at the end of reporting period of last year compared
the reporting After Before with that of
period adjustment adjustment last year (%)
Net assets attributable to
shareholders of the listed
Company 96,681,175,780.71 93,454,454,213.67 93,422,647,664.43 3.45
Total assets 246,302,105,777.51 235,938,042,474.57 235,842,254,826.77 4.39
8 Haier Smart Home Co., Ltd. Interim Report 2023
Section II General Information of the Company and Key Financial Indicators
(II) Key financial indicators
Increase/decrease
for the reporting
period compared
with the
For the reporting corresponding
period period of last year
Key financial indicators (January-June) The corresponding period of last year (%)
After Before
adjustment adjustment
Basic earnings per share (RMB/
share) 0.97 0.85 0.85 14.12
Diluted earnings per share (RMB/
share) 0.96 0.85 0.85 12.94
Basic earnings per share after
deducting non-recurring profit or
loss (RMB/share) 0.93 0.80 0.80 16.25
Weighted average return on net
assets (%) 9.16 9.23 9.24 –0.07
Weighted average return on net
assets after deducting non-
recurring profit or loss (%) 8.80 8.71 8.71 0.09
Explanation of the key accounting data and financial indicators of the Company
Applicable √ Not Applicable
VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND
OVERSEAS ACCOUNTING STANDARDS
√ Applicable Not Applicable
(I) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with International
Accounting Standards and Chinese Accounting Standards
Applicable √ Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of the
listed company presented in the consolidated financial statements as disclosed in accordance
with International Accounting Standards and Chinese Accounting Standards by the Company.
Haier Smart Home Co., Ltd. Interim Report 2023 9
Section II General Information of the Company and Key Financial Indicators
(II) Difference in net profit and net assets attributable to shareholders of the listed
company in financial statements as disclosed in accordance with overseas
accounting standards and Chinese Accounting Standards
Applicable √ Not Applicable
Apart from the financial statements prepared in accordance with International Accounting
Standards, the Company has not prepared financial statements in accordance with other
overseas accounting standards.
(III) Explanation on difference in domestic and overseas accounting standards
Applicable √ Not Applicable
IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT
√ Applicable Not Applicable
Unit and Currency: RMB
Non-recurring profit and loss items Amount
Profit and loss on disposal of non-current assets –21,886,978.96
Government subsidies through the profit and loss, except for government
subsidies that are closely related to the Company’s normal business
operations, comply with national policies and regulations, and continue to be
enjoyed in a fixed amount or fixed quantity according to certain standards 409,863,390.47
Profit and loss from fair value changes of financial assets held for trading,
derivative financial assets, financial liabilities held for trading and derivative
financial liabilities, as well as investment gains arising from disposal of
financial assets held for trading, derivative financial assets, financial liabilities
held for trading and derivative financial liabilities and other debt investments,
except the effective hedging related to the normal operations of the Company 31,271,562.35
Other non-operating income and expenses except the aforementioned items 30,661,194.26
Reduction: Effect of income tax –77,663,165.02
Effect of minority equity interest (After Tax) –12,347,767.84
Total 359,898,235.26
10 Haier Smart Home Co., Ltd. Interim Report 2023
Section II General Information of the Company and Key Financial Indicators
For the Company’s designation of extraordinary gain or loss items as defined in the “Explanatory
Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 —
Extraordinary Gains or Losses”, and for extraordinary gain or loss items as illustrated in the
“Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the
Public No.1 — Extraordinary Gains or Losses” designated as recurring gain or loss items, reasons shall
be specified.
Applicable √ Not Applicable
X. OTHERS
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 11
Section III Management Discussion and
Analysis
I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES
AND ITS MAJOR BUSINESS DURING THE REPORTING PERIOD
Founded in 1984, the Company is committed to being an enterprise of the times. Through relentless
innovation and iterations, we seize opportunities in the industry by continuously launching new
products that steer market development. After more than 30 years, the Company has become a global
leader in the major home appliance industry, as well as a pioneer in global smart home solutions.
Global leader of the major home appliance industry: According to data from Euromonitor — an
authoritative market researcher, the Company ranked first in terms of sales volume in global
major appliance market for 14 consecutive years. The Company has a global portfolio of brands,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to
2022, Haier brand refrigerators and washing machines ranked first among global major home
appliance brands in sales volume for 15 and 14 consecutive years respectively.
Pioneer of global smart home solutions: Capitalizing on our full-range home appliances products,
the Company is recognized by Euromonitor as one of the first in the industry to introduce smart
home solutions. SAN YI NIAO focuses on customising smart home experience, by building up five
core competencies in Smart Home Brain, scenario-based solutions, experiential stores, the SAN
YI NIAO interior design tool and the digital platform, we provide end-to-end and full life cycle
services that “design a home, build a home and serve a home” for users.
Over the years, the Company has established three business segments, namely the Chinese Smart
Home Business, the Overseas Home Appliance and Smart Home Business, and Other Business.
Smart Home Business in China
The Company provides a full range of home appliance products and value-added services in China
market through Haier Smart Home APP and SAN YI NIAO APP, supplemented by our offline
experience centres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home
Business in China comprises Household Food Storage and Cooking Solutions (Internet of Food),
Household Laundry Solutions (Internet of Clothing), Air Solutions (Internet of Air), and Household Water
Solutions (Internet of Water).
Household Food Storage and Cooking Solutions (Internet of Food): Through selling in domestic
market and exporting products such as refrigerators, freezers, kitchen appliances, as well as
providing one-stop smart kitchen scenario solutions and ecosystem solutions including smart
cooking and nutrition planning, the Company fully addresses users’ need for convenient, healthy
and tasteful gourmet experiences.
12 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
Household Laundry Solutions (Internet of Clothing): Haier’s washing machine focuses on applying
original technologies to directly solve users’ pain points in home living scenarios, and create new
experiences and value for users. With a product lineup of washing machines, tumble dryers,
all-in-one laundry machines, garment care machines, and heated drying racks, the Company has
evolved from selling individual products to providing scenario-based solutions, and offering
end-to-end laundry care services. For example, the Zhongzihemei ( ) three-in-one washer
combines washing, drying, and fabric care functions into a single unit, and the Essence Wash
washing machine reduces washing time and improves cleaning effectiveness by producing a
highly concentrated detergent solution that can quickly soak into clothes through detergent
pre-mixing and high pressure spraying.
Air Solutions (Internet of Air):
Home air conditioners: Through domestic sales in China and exports, the Company provides products
such as home air-conditioners and fresh air systems, as well as a comprehensive range of full-cycle
solutions including coordination of multiple air-conditioners and purifiers, adaptive air flow, air quality
monitoring and air disinfection, thereby delivering a healthy and comfortable experience at home and
during commute that caters to the user needs in terms of air temperature, humidity and quality.
Smart building: The Company is committed to becoming a leader in efficient, sustainable and smart
building solutions based on the state’s “carbon peaking and carbon neutrality” strategy. Focusing on
the business areas of smart control, environment, energy and system integration of buildings, the
Company provides green and smart building solutions integrating “technology + experience + space”
for government and commercial buildings, railways, schools, and hospitals.
Household Water Solutions (Internet of Water): Through selling in domestic market and exporting,
the Company provides users with electric water heaters, gas water heaters, solar water heaters,
air energy heat pump water heaters, POE water purifiers, POU water purifiers, water softening
equipment, at the same time, we offer smart water solutions including interactions between water
heaters and purifiers, and between heating appliances and water heaters, so as to
comprehensively cater to users’ needs for water purification, softening and heating.
Overseas Home Appliance and Smart Home Business
In addition to China market, the Company also manufactures and sells a comprehensive portfolio of
home appliance products and provides value-added services in more than 200 countries and regions,
including North America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan,
Middle East and Africa.
Haier Smart Home Co., Ltd. Interim Report 2023 13
Section III Management Discussion and Analysis
In the overseas market, the Company has been manufacturing and selling proprietary appliance
products catering for local users’ demands for more than 20 years. During the time, a number of
acquisitions contributed to our growth including acquisition of Haier Group Corporation’s overseas
white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and Southeast Asia)
in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy in 2019. The
development of the Company’s overseas businesses has been fuelled by synergies among our
self-developed business and our acquired businesses.
At present, the overseas business of the Company has entered a stage of promising growth, having
achieved a multi-brand, cross-product and cross-regional presence on a global basis. According to
Euromonitor, the Company’s share of the global market (retail volume) for major home appliances in
key regions in 2021 is as follows: ranked first in Asia in terms of retail volume, with a 21.4% market
share; ranked second in America, with a market share of 15.6%; ranked second in Australia and New
Zealand, with a market share of 12.8%. The Company ranked third in Middle East and Africa with a
market share of 7.5%, and ranked fourth in Europe with a market share of 8.3%.
Other Businesses
Building on our established smart home businesses, the Company has also developed small home
appliances, channel distribution and other businesses. In particular, the small home appliance business
primarily involves small home appliances designed by the Company, produced by outsourced
third-party manufacturers and sold under the Company’s brands, which serve to enrich our smart
home solutions product mix. The channel distribution business primarily offers distribution services for
products such as televisions and user electronics for the Haier Group or third-party brands, which
leverages the Company’s sales network.
In August 2023, the Company was once again listed among the Top 500 World’s Companies. In
February 2023, the Company was named again as the 2023 World’s Most Admired Companies by the
Fortune Magazine. We are the only company being selected in Europe and Asia in the home
appliances industry, and are the only selected company incorporated outside the US. Meanwhile, the
Company is also the world’s only Internet-of-Things (IoT) ecosystem brand being named again as
BrandZtm Top 100 Most Valuable Global Brands in 2022.
During the period, the Company was named again among Fortune’s first China ESG Impact list and
ranked top in the industry; and was named Forbes’ The World’s Best Employers 2022 list. The
Company’s ESG effort has also been recognized by external rating agencies, receiving an MSCI ESG
rating of BBB and a Wind ESG rating of AAA, both of which are at leading levels in China. Thanks to
the above performance, Haier Smart Home was selected into the three major ESG indices of the Hang
Seng Index, including the HSI ESG Enhanced Index, the HSI ESG Enhanced Select Index and the
HSCEI ESG Enhanced Index.
14 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
I. Industry overview for the first half of 2023
(1) The domestic market:
In the first half of 2023, the Chinese home appliance industry recorded a marginal growth.
AVC data showed that the retail sales of home appliances in China reached RMB398.2
billion in the first half of 2023, an increase of 4.4% year-on-year. Growth of various sectors
are as follows:
Home air conditioning industry: Benefiting from continuous hot weather and low industry
inventory levels, growth of the air conditioning category spearheaded the market, with retail
volume amounting to 37.265 million units, up 18.8% year-on-year, and retail sales reaching
RMB130.16 billion, a year-on-year increase of 19.5%.
Refrigerator industry: Product mix upgrades have resulted in an increase in average prices
across the industry. Retail volume of the refrigerator industry reached 14.686 million units,
down 2.6% year-on-year, while retail sales amounted to RMB47.95 billion, up 5.2% year-
on-year.
Washing machine industry: Due to a lag in replacement demand and dependence on
installation, the industry experienced a slow recovery as retail volume dropped 6% to
14.362 million units, and retail sales amounted to RMB29.91 billion, down 3.2% year-on-
year. The tumble dryer industry maintained rapid growth with retail sales reaching RMB4.97
billion, a year-on-year increase of 14.7%.
Kitchen appliance industry: Due to the fulfilment of pent-up demand and product mix
upgrades, the retail sales of range hoods, stoves, and disinfection cabinets reached
RMB24.24 billion, a year-on-year increase of 1.90%. Retail sales of integrated stoves
amounted to RMB12.45 billion, a slight decrease of 0.40% year-on-year. Categories such
as integrated cooking centres and integrated dishwashers continued to experience rapid
growth. Specifically, integrated cooking centres, which combined stove, steaming, and
baking units, recorded a significant 286.4% year-on-year increase in revenue online, and a
surge of 87.8% in revenue offline.
Water heater industry: Due to the rapid growth of demand of gas water heater products,
retail sales of the water heater segment reached RMB22.36 billion, up 6.0% year-on-year.
Water purifier industry: Benefiting from traffic recovery offline and product mix upgrades,
retail sales of the industry continued to grow, with retail revenue reaching RMB9.0 billion,
an increase of 8.0% year-on-year.
Commodity prices in the domestic market have substantially declined compared to the
same period last year; at the same time, market competition has become more rational
with stable prices, all of which have collectively contributed to the industry’s profitability
improvement.
Haier Smart Home Co., Ltd. Interim Report 2023 15
Section III Management Discussion and Analysis
The home appliance market was divided based on purchasing power and consumer
attitudes. The high-end market was largely driven by quality consumption and indulgent
spending. Taking air conditioners for example, in the first half of 2023, high-end wall-
mounted units (priced above RMB3,500) accounted for 12.4% of retail sales, an increase of
3.2 percentage points year-on-year. At the same time, the size of the low-end market was
also growing, with online sales of wall-mounted units priced below RMB2,000 up by 1.6
percentage points to 15.2%.
In terms of distribution network, e-commerce channels continued to gain shares in volume
as consumers have become accustomed to shopping online where services have become
more integrated. According to AVC, the online shares of air conditioner, refrigerator and
washing machine in terms of retail volume reached 57.1%, 71.8% and 71.9% respectively.
Meanwhile, online and offline channels were becoming more integrated, facilitated by live
streaming in stores. This approach represents the future direction of retailing by combining
the convenience of shopping online with immersive offline experience. Short video platforms
like TikTok also accelerated channel fragmentation because of their increasing significance
in user acquisition.
With improvement in living standards and technologies, home appliances are increasingly
integrated with the living space. For example, built-in and integrated appliances are gaining
popularity for better utilisation of the space in the kitchen. The use of tumble dryers
effectively frees up the balcony for other functions. In addition to hosting guests,
entertainment, and family activities, living room appliances are designed with a greater
focus on user interaction and experience.
Export markets:
The global economy experienced a slowdown in 2023, putting pressure on China’s home
appliance exports due to sluggish overseas demand and low orders volumes. Exports to
Europe and the U.S. suffered from reduced demand and inventory destocking; but exports
to Southeast Asia, Middle East and Africa continued to grow. According to data from the
General Administration of Customs, the cumulative export of the home appliance industry
from January to June 2023 amounted to USD 43.1 billion, representing a 2.0% decrease
year-on-year. Exports in RMB term however totalled RMB296.7 billion, up 5.2% year-on-
year, with 3.3% decrease in refrigerators, 29% growth in washing machines and 0.4%
increase in air conditioners.
16 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
(II) Overseas market
In the first half of 2023, competition intensified and volume declined in major overseas
markets due to global economic slowdown, persistent high inflation, and over-draft in
appliances demand.
(1) North America: In the first half of 2023, lingering inflation and demand exceeding
capacity contributed to 3.3% drop in core appliances shipment according to AHAM
(Association of Home Appliance Manufacturers). Profitability remains under pressure as
improvement in gross profit margins resulting from more favourable raw material and
shipping costs was offset by intensifying competitions and promotions.
(2) Europe: Inflationary pressures and Russia-Ukraine conflict caused industry demand to
decline. According to GFK, retail volume of the home appliance industry decreased
8.1% year-on-year in the first half of the year. However, there are still growth
opportunities as consumers have become increasingly attracted to products with class
A energy-efficiency during times of shortages.
(3) South Asia: Driven by gradual economic recovery, home appliances retail volume
experienced a slight year-on-year increase in India. High-end, large-capacity products
with health benefits were popular with expansions of national and regional chain
stores as well as e-commerce platforms. In Pakistan, high inflation severely
weakened purchasing power, resulting in over 30% volume decline in the industry.
(4) Southeast Asia: Thailand experienced a 15% increase in sales volume, benefitting from
strong air conditioner performance during hot weather and demand recovery
facilitated by return of tourists. Markets including Vietnam faced varying degrees of
decline due to economic slowdown and high inflation.
(5) Australia & New Zealand: During the first half of the year, the home appliance industry
was challenged by sluggish demand, intensified competition, and a significant
decrease in new properties sales. According to GFK, the industry’s sales volume
dropped by 7.1%, with retail volume down by over 10%.
(6) Japan: The industry was impacted by currency depreciation and reduced disposable
income caused by higher prices. In the first half of the year, sales volume of
refrigerators, freezers and washing machines dropped 9.5% year-on-year. Driven by
increase in average unit price, sales revenue decreased slightly by 1.3% year-on-year.
Consumer demand for large-capacity, health-boosting, and energy-saving products
continued to rise.
Haier Smart Home Co., Ltd. Interim Report 2023 17
Section III Management Discussion and Analysis
II. Industry Outlook for the second half of 2023
(1) The domestic market:
Economic recovery and policies supporting consumption and real estate will unleash
demand for home appliances and drive industry growth. AVC expects a definitive recovery
for most of home appliance categories in 2023, with industry retail revenue growth of
6.4%.
Export markets:
Export business is expected to remain stable amid ending destocking, favourable shipping
costs and concluding of interest rate hike.
(2) Overseas markets
In the short term, more developed markets will still be challenged by weak demand and
intensified competition, the industry is more likely to turnaround in 2024. Demand in the
South Asian and Southeast Asian markets will gradually recover alongside economic
resurgence.
Home appliance industry remains resilient in the medium to long term. Future Market
Insights believes, global sales revenue will maintain a CAGR of 4.3% from 2022 to 2029.
Furthermore, implementation of the “Belt and Road” initiative could facilitate emerging
markets including South Asia, Southeast Asia, and the Middle East and Africa in becoming
crucial growth hubs. New opportunities still exists in high-end, smart, eco-friendly, and
energy-efficient home appliances.
18 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING
PERIOD
√ Applicable Not Applicable
The Company has established a solid strategic presence and competitive advantage in China and
overseas markets. In China’s major home appliance market, the Company has long maintained a
leading position across all product categories. According to CMM’s report, the Company has
established a continued leading market position in key major home appliance categories in the first half
of 2023. In overseas markets, the Company has adhered to its high-end brand creation strategy,
building capacity to create leading sustainable growth, which has continuously improved its market
share. Building on this foundation, the Company will further consolidate its leadership position in the
industry by leveraging integrated synergies of its global unified platforms, through efficiency
transformation driven by digitalization, and by leveraging its technological strength and innovative
capabilities. As cornerstone for sustainable development, our ‘Rendanheyi ( 單 )’ Model also
provided management guidance to the Company, and enabled us to replicate successful experiences.
It is believed that the following advantages will help the Company to continue to strengthen its leading
position:
(i) Dominance in China’s high-end market; rapid growth of overseas high-end
brands
Riding the trend of consumption upgrade in China, the Company has started to develop the
high-end brand Casarte in the Chinese market more than 10 years ago. The creation of high-end
brands required not only focus, experience and patience, but also continuous innovation of
technological standards and differentiated service capabilities to fulfil user demand for high-quality
experiences. The Casarte brand combined the Company’s global technological strengths, product
development capabilities and manufacturing craftsmanship, as well as privilege marketing and
differentiation services, which has won the trust of users in China’s high-end market. According
to data from CMM, the Casarte brand has assumed a definitive leading position in China’s high-
end major home appliance market in first half of 2023, ranking first in the retail sales of
refrigerator, washing machine and air conditioner categories in the high-end segment.
Specifically, in terms of offline retail sales, shares of the Casarte brand of washing machines and
refrigerators reached 82.9% and 39.4% respectively in the market with product price above
RMB10,000 in China, while its share of air conditioners priced above RMB15,000 in the China’s
market reached 29.2%.
In the North American market, the Company owns high-end brands such as Monogram, Café,
and GE Profile. We achieved our market leader position through launching such key home
appliance innovative products including high-end combo heat pump washing-drying machines and
pizza ovens. Through the creation of luxurious, customizable and smart technology-enabled user
experience, our high-end brands Monogram, Café and GE Profile have grown rapidly.
Haier Smart Home Co., Ltd. Interim Report 2023 19
Section III Management Discussion and Analysis
(ii) Smart household solutions that continue to expand and upgrade
As users continued to demand for higher living quality, coupled with the development of
technologies such as Internet of Things, big data, cloud computing and artificial intelligence, the
industry has shown a smart and high-end development trend that prioritized product suites,
based upon scenarios, and home appliances integrated with home furnishings. With leading user
insights, extensive product coverage and technological accumulation from intelligent AI
algorithms, home big data and IoT equipment technology, the Company was able to provide
users with the “1+3+5+N” differentiation-enabled smart scenario solutions riding on the core
strength of the Smart Home Brain, building around the five major intelligence spaces at home
including living room, kitchen, bathroom, bedroom and balcony, as well as the whole-house
solution of “whole-house’s water usage, air, smart control” with infinite number of smart home
scenarios.
First of all, the Smart Home Brain created the best intelligent experience for users by upgrading
the brain technology system. Through iteration of the whole-house sensing system, we unified
data collection from multiple devices and constructed a whole-house sensing service model. At
the same time, through software and hardware integration and end-to-end cloud integration, we
enabled diversified and multi-modal voice and image interactions which opened up a new form of
multi-dimensional connectivity.
Secondly, in terms of our capabilities in scenario solutions, SAN YI NIAO had converged its
capability of intelligent scenario differentiation with spatial integrated design strength and whole
product package customisation, whilst matching up mainstream household type with home style
and family structure, as well as adapting modern light luxury-style, new Chinese-style, French-
style and other sets of digital sample room into the interior design tool, so as to provide its users
with customised designs for whole-scenario smart-and-cozy household solutions that embodied
concepts of whole space aesthetics, health-technology-nature and genuine smart lifestyle.
In addition, SAN YI NIAO’s interior design tool focused on “building a home”, providing users
with smart home appliances + smart home solutions. It featured a comprehensive collection of
small household design types, smart swift output, preliminary programme functional design and
3D rendering design, empowering designers with speed 3-minute drawings creation and hence
realising the transformation from selection by users to customisation for users.
Finally, SAN YI NIAO’s digital platform continued to strengthen its capabilities in scenario design,
store, user and delivery digitalisation to offer full life cycle service for users, thereby enhancing
the value added to active users and increasing conversion of scenario-based transactions.
(iii) Extensive and solid global presence with localised operational capability
In addition to success in the Chinese market, the Company also prospered in overseas markets.
The Company seeks overseas expansion of its own brands as well as synergies with acquired
brands to develop overseas markets. Such business strategy has guided the Company to
establish R&D, manufacturing and marketing three-in-one structure across multiple brands,
products and regions, as well as the model of self-development, interconnection and synergised
operation.
The Company’s extensive global presence depends on its localised business teams as well as its
flexible and autonomous management mechanisms established in various overseas markets,
which have enabled the Company to gain rapid insights and respond swiftly to local user
20 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
demands. The Company also proactively integrates into local markets and cultures, and has
established a corporate image that is recognised by local communities in the overseas regions
where the Company operates.
The Company established 10+N innovative ecosystems, 122 manufacturing centres, and 108
marketing centres around the world, and achieved a coverage of nearly 230,000 point of sales in
overseas markets.
(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,
including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address
the needs of users from different tiers in various markets around the world, the Company has
adopted a differentiated multi-brand strategy in different regions that centred around users, so as
to achieve an extensive and in-depth user coverage. For example, in the Chinese market: the
four brands of Fisher & Paykel, Casarte, Haier and Leader achieved the coverage of premium,
high-end, mainstream and niche market groups respectively; in North American market, the six
major brands such as Monogram, Café, GE Profile, GE, Haier, Hotpoint comprehensively covered
all segments of high-end, mid-range and low-end markets, thereby meeting the preferences and
needs of different types of users.
(v) Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company has
acquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,
Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliance
business of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (which
has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in
2019. The Company’s capability to perform acquisition and integration is reflected in the
following: First of all, the Company implements the ‘Rendanheyi ( 單 )’ Model in the
acquired companies, which is a value-added sharing mechanism for the whole-process team
under a common goal. Such model can motivate the acquired companies and their employees,
and enable them to generate more value. Secondly, the Company made use of its global
platform to empower the acquired companies in terms of strategic planning, R&D and
procurement in order to enhance their competitiveness. Thirdly, the Company’s open and
inclusive corporate culture can support the acquired companies in establishing a flexible and
autonomous management mechanism, which can easily earn recognition from the acquired
companies and is conducive to the promotion of integration.
Haier Smart Home Co., Ltd. Interim Report 2023 21
Section III Management Discussion and Analysis
(vi) Comprehensive and in-depth global collaborations and empowerment
The Company has made full use of its global collaborative platform, as well as its integrated
functions of R&D, product development, procurement, supply chain, sales and brand marketing.
It was able to share and expand its successful market development experience to various
markets around the world. By strengthening the synergies among its global businesses, the
Company has created a strong driving force for its future development.
Global collaborative R&D: The Company has a global collaborative R&D system and has
established global technology R&D mechanisms to share common modules, utilise common
technologies, and share patents within the scope of compliance. For example, the
Company’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams to
develop the H20 spray technology, which has been applied to freestanding and built-in
dishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening the
Company’s overall leadership in product performance.
Global collaborative product development: The Company has established a global
product development mechanism to coordinate global collaborative product development,
which can enable regional collaboration and supplementation across product categories. For
example, the R&D teams in South Asia and China embarked on a 10-month collaboration,
breaking away from the traditional product development model by innovating on team
organisation, quality control, product testing and cost control leveraging complementary
local resources. The HRT-683 refrigerator jointly developed by this collaboration has
become a local mainstream high-end product.
Global collaborative procurement: The Company has established a global procurement
guidance committee to coordinate global procurement activities. The committee has built a
global digital sourcing platform that brought together partners across industries and regions
to develop an autonomous and controlled global supply chain ecosystem. The committee
also created a global database of preferred suppliers and materials to achieve cost
reduction by aggregating common resources at the Group level. By unifying procurement
rules and processes, the Company established a standardised operating system with
differentiated procurement strategies to enhance procurement efficiency while lowering risks.
We have also developed a Group-level digital procurement platform to enhance shared
capabilities through connecting “materials, businesses, people and mechanisms” to the
platform, thereby improving the resilience of our global supply chain.
Global collaborative supply chain: The Company has built an end-to-end digital
management system for the global supply chain that spanned from marketing to suppliers
to production and logistics. Using intelligent algorithms, the system enabled real-time
flexible deployment of global production capacity, and factories across the globe could
share and develop smart manufacturing technologies to boost manufacturing
competitiveness.
Global collaborative marketing and brand promotion: the Company operates a multi-
level brand portfolio on a global scale, which can realise global collaborative brand
promotion. The Company also promotes and introduces successful marketing strategies
among regional markets around the world. For example, the Company successfully
replicated its sales and marketing model from third and fourth-tier markets in China, in
markets such as India, Pakistan, and Thailand, which have strengthened the Company’s
brand image and its regional market competitiveness.
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Section III Management Discussion and Analysis
(vii) Industry-leading R&D and technological capabilities
To ensure better living experience for users, the Company has established a global leading R&D
system under the premise of developing original technologies. In early 2022, the Company
established a science and technology committee to leverage our technological innovation system
and strengthen our enterprises’ innovation capabilities, which have facilitated our high-end
brands, scenario brands and ecosystem brands to achieve leadership positions.
Leadership in terms of original technologies: In the first half of 2023, the Company has
innovated a range of solutions that exceeded users’ expectations and made technology
more integral to everyday life.
For example, the newly launched Neutron F2 Washing and Drying Machine showcases
industry’s first ever 1.5m optimal height that allows easy and effortless handling. Defying
conventional wisdom, the model’s groundbreaking 3D perspective drying technology
introduces contactless capacitance dryness assessment which enables accurate sensing of
dryness beneath clothing’s surface and thorough drying with single application, thereby
achieving time saving and efficiency.
Researched and developed solely and entirely by the Company and wholly independent
and controllable, the world first ever hydrostatic air suspension central air-conditioner
applies the Bernoulli principle of fluid mechanics where the shaft is lifted and supported by
high-pressure gas, thus enables operation without friction. As a result, the model achieves
6x spindle and 1x efficiency enhancements, and 50% energy saving and 50% carbon
reduction.
Certification from state authorities: For the first half of 2023, the Company received a
total of 16 State Science and Technology Progress Award. Haier Smart Home was among
the first batch of “Leading Digital Enterprises” selected by the Ministry of Industry and
Information Technology. The HOPE Platform was selected by Innovation China as one of
the “Top 10 Industry-Academia Collaboration Organisations” and part of the first batch of
Innovation Bases. The Platform also earned the Golden Bridge Award from the China
Technology Market Association, was named as the only five-star technology service
organisation in the home appliance industry, and became the Model National Public Service
Platforms for Small and Medium-Sized Enterprises.
Leadership in terms of patent quality: For the first half of 2023, Haier Smart Home has
accumulated more than 97,000 patents applications globally, including more than 62,000
invention patents. The number of overseas invention patents exceeded 16,000, covering
more than 30 countries, making us the Chinese home appliance enterprise with the largest
number of overseas patents. The Company also accumulated 12 state patent gold awards,
ranking first in the domestic market. In the ‘Global Smart Home Invention Patent Ranking’
in the first half of 2023, Haier Smart Home once again topped the list with 3,087 published
patent applications, ranking first in the world for the ninth consecutive times.
Haier Smart Home Co., Ltd. Interim Report 2023 23
Section III Management Discussion and Analysis
Leadership in terms of international standards: For the first half of 2023, Haier Smart
Home has cumulatively led and participated in the formulation of 95 international standards
and 67,037 state/industrial standards. We are the only company in the industry to obtain
comprehensive coverage of smart home standards from international organisations including
the IEC, ISO, IEEE, OCF and Matter. We are also the only enterprise in the world to serve
on both the IEC Council Board and the IEC Market Strategy Board, which have enabled
the Company to stay actively involved in international standardisation efforts and have a
voice in the formulation of standards.
Leadership in terms of experience design: Haier Smart Home topped the industry by
earning 6 international design gold awards, 3 being the iF Design Awards and 3 Red Dot
Design Awards. The Company has cumulatively received 3 “China Excellent Industrial
Design Gold Awards” from the Ministry of Industry and Information Technology, making it
the only enterprise that have earned three consecutive gold awards.
(viii) Staying committed to the principle of ‘value of people comes first’
‘Value of people comes first’ has always been a guiding principle for Haier’s development. From
the autonomous operation team at the start of the venture to the current ‘Rendanheyi’ ( 單
) model, Haier encourages every employee to maximise their own values while creating values
for users. In Haier’s ‘Rendanheyi’ ( 單 ) model, ‘Ren’ refers to creators; ‘Dan’ refers to user
value; ‘Heyi’ refers to the integration of values realised by employees and the values created for
users. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ ( 單 ) model.
Haier Smart Home adheres to the values of recognising users’ demand as priority and denying
our own perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship and
innovation. We turned employees into creators, implementers into entrepreneurs, and transformed
enterprises into open ecosystem platforms, which have supported the Company to become a
global leader of smart home in the Internet of Things era.
24 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
III. DISCUSSION AND ANALYSIS ON OPERATIONS
Discussion and analysis of the Company’s operation in the first half of the year
In the first half of 2023, the Company’s sales revenue grew 8.2% to RMB131.627 billion driven by: (1)
the Company’s extensive multi-brand portfolio which capitalised growth opportunities across diverse
market segments; strengthened competitiveness of the design, sales and services of SAN YI NIAO’s
solutions, which boosted sales of scenario-based product sets with increased user value; (2) network
expansion, retailed-oriented digitalisation, and premiumisation fuelled the development of market-
leading products, thereby improving price indices and growing market shares overseas; (3) the
development of new product categories including tumble dryers, dishwashers, home cleaning robots,
HVAC systems and heat pumps, capturing opportunities unlocked by desire to improve living
standards and implement low carbon strategies.
In the first half of 2023, net profit attributable to the shareholders of the parent Company was
RMB8.964 billion, representing an increase of 12.6% compared to the same period in 2022. Net profit
attributable to the shareholders of the parent company after deduction of non-recurring profit or loss
was RMB8.604 billion, up 14.9% year-on-year.
(1) The Company’s gross profit margin in the first half of 2023 reached 30.4%, up 0.2 percentage
points year-on-year. In the domestic market, gross profit margin improved because of lower
commodities prices, digitalisation in procurement and R&D, as well as increased proportion of in-
house manufacturing. In the overseas market, benefits from improved product mix and
production utilisation were offset by intensified competition and accelerated destocking, resulting
in lower gross margin compared with the same period last year; such decline has however
narrowed since last quarter of this year.
(2) In the first half of 2023, the Company’s selling expense ratio was 14.3%, down 0.2 percentage
points as compared with the same period in 2022, largely contributed by digitally enhanced
efficiency in domestic marketing, logistics and warehouse operations; on the other hand,
overseas selling expense ratio increased as intensified competition drove up, spending in channel
expansion, new product promotion and store renovations.
(3) In the first half of 2023, the Company’s administrative expense ratio was 4.2%, down 0.1
percentage points year-on-year, leveraging digitally enhanced operations and improved
efficiencies.
(4) In the first half of 2023, the Company’s financial expense ratio was –0.01% (“+” represents
expenses and “ — ” represents revenue), worsened by 0.2 percentage points year-on-year. The
worsening of the financial expense ratio was mainly due to the increased interest expenses
incurred overseas as a result of interest rate hikes, despite higher interest income achieved
through improved capital management.
Haier Smart Home Co., Ltd. Interim Report 2023 25
Section III Management Discussion and Analysis
The Company’s net cash from operating activities in the first half of 2023 was RMB6.791 billion, an
increase of RMB0.825 billion year-on-year, which was derived from increased operating profit and
enhanced operational efficiency during the period.
(I) Smart Home Business in China
In the first half of 2023, China’s smart home business generated sales revenue of RMB70.353
billion, up 8.6% compared to the same period in 2022. The growth was driven by: retail-
oriented digitalization focusing on optimised store operations and improved consumer
interactions, transactions, and delivery experiences, ultimately boosted acquisition and conversion
of traffic; market shares expansion of refrigerators, washing machines, home air conditioners,
and water heaters, as well as the rapid growth of central air conditioners and heat pumps;
implementation of SAN YI NIAO’s interior design platform for designers to create tailored home
appliance solutions for local consumers, resulting in increased sales of high-end product sets
with higher average ticket price.
1. Household Food Storage and Cooking Solutions (Internet of Food)
(1) Refrigerator and Freezer Business
The refrigerator and freezer business enhanced high-end competitiveness and
promoted retail-oriented digitalisation to capitalise on growth opportunities. During the
reporting period, the business achieved sales revenue of RMB22.245 billion,
representing a year-on-year growth of 2.3%, with revenue in the domestic market
increased by 7.0% year-on-year.
According to CMM, in the first half of 2023, the Company’s offline retail share rose
1.9 percentage points to 45.1%, with 57% market share in products priced above
RMB15,000, up 1.1 percentage points. Online retail share reached 39.3%, up 0.1
percentage points year-on-year.
During the reporting period, Casarte’s refrigerator maintained robust growth through
enhancing its French door series and expanding its portfolio of seamless built-in
products. The sales of built-in refrigerators more than doubled, with the sales
contribution of built-in refrigerators under Casarte brand growing by more than 30
percentage points. Building upon proprietary seamless built-in design, cell-level
freshness, and health-conscious housekeeping systems, the Company’s new F+550L
series featured multiple dedicated compartments and built-in smart control screens to
cater to users’ needs for healthy and compartmentalised storage. The seamless built-
in 603 series were equipped with bottom-mounted circulating air curtains, dual-axis
hinge doors, MRA low-oxygen cellaring freshness preservation and smart dynamic
disinfection and purification technologies. The product offered users dedicated
storage, ultimate freshness, and seamless integration with home furnishings. In the
first half of the year, Casarte brand’s market share in products priced above
RMB15,000 reached 50.5%.
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Section III Management Discussion and Analysis
Haier brand unveiled T-style refrigerator — the latest addition to Boguan ( 觀)
series, featuring compartmentalised storage and full-space freshness preservation
technology. It became the top model in the RMB20,000 price range within 3 weeks
of its launch, thus contributed to a 34% year-on-year revenue increase of the full-
space freshness preservation series (average price RMB6,000). In addition,
seamless built-in series and large freezer series both achieved revenue growth of
over 50%.
Leader brand has launched a new line of practical products with light-coloured
exteriors and minimalist interiors targeting at young customers. It also offered
customisation of the appearance with iCase products, catering to the individual users’
desire for visual appeal and value for money.
The freezer business launched the Xinlan ( 藍) large freezer targeting small and
medium-sized fresh food merchants. This popular product offered unparalleled
freezing power, optimal energy efficiency, and time-saving defrosting capabilities. It
fulfilled users’ need for low-temperature food preservation, thus contributed to a
2.3-percentage-point year-on-year increase in the market share of large freezers.
Export business
During the reporting period, the Company leveraged innovative preservation
technology to upgrade high-end products, including T-door refrigerators, S+
refrigerators, and French door refrigerators, thereby grasping opportunities in the
high-end customised market. According to China IoL, the Company’s cumulative
export volume from January to June 2023 has increased by 22.9% year-on-year.
(2) Kitchen appliance business
During the reporting period, kitchen appliance revenue reached RMB2.138 billion, a
year-on-year increase of 7.5%. According to CMM, the Company’s offline retail share
increased 0.9 percentage points year-on-year to 8.9%, ranking among the top three,
while online retail share rose 0.6 percentage points to 4.6%.
During the period, the Company implemented technology oriented long-term
roadmap, increased R&D investment and accelerated the building of cooking and
gourmet laboratories. In response to growing demand for improved extraction and
precise heat control, the Company increased product competitiveness by integrating
cutting-edge technologies from GEA and FPA with focuses on cooking environment
and cooking performance.
Haier Smart Home Co., Ltd. Interim Report 2023 27
Section III Management Discussion and Analysis
Casarte range hood’s smart air technology has undergone continuous upgrades,
enabling more precise and smarter control of air flow based on the environment and
user habits. During the period, the retail revenue of Casarte’s constant air range hood
surged 45%. Casarte also launched new stove that could expand heating surface
area by 40%, contributing to 118% revenue increase of stoves with five rings.
The Company persistently enhanced high-end products to meet growing demand for
integrated and built-in products. The latest built-in ovens, steamers, and steam ovens
aim at improving effectiveness and fresh steaming, tender roasting, and easy
cleaning, in order to improve cooking effects and convenience. CMM ranks the Group
number four in integrated units with 8.23% retail market share; while steamer oven’s
revenue grew by 249%.
Export business
Export revenue grew by over 50%, benefiting from high-end brand building initiatives
including launching built-in set products to improve market recognition and grow
market share.
2. Household Clothing Solutions
During the reporting period, revenue amounted to RMB15.345 billion, representing a 3.8%
increase compared to the same period in 2022.
According to CMM, the Group’s retail market share reached 47.1% offline and 40.3%
online, up 1.2 percentage points and 0.1 percentage points respectively.
Replacement and upgrade demand continue to drive growth in the laundry sector. To
address consumers’ increasingly sophisticated demand to wash and care for delicate
fabrics and materials, the Company unveiled “Casarte F2 washer & dryer combo” at this
year’s AWE in April. Equipped with industry’s first 3D vision technology and flat built-in
design, this new bestseller monitors and adjusts the drying of each load using 3D
technology, thus significantly reduces drying time for heavy items and improves energy
efficiency performance; and it is made even more user friendly with ultra flat built-in design
and compact height of 150cm. This new product strengthened Casarte’s premium
leadership with market share in units priced above RMB15,000 exceeding 70%.
In the first half this year, the Company consolidated leadership in tumble dryers with 40%
market share offline and 41% online, up 3 and 8 percentage points, respectively. The
Company also started construction of new factory in Shanghai, which is expected to add
two million units in capacity when production ramps up.
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Section III Management Discussion and Analysis
The Company also made considerable progress in developing retail-oriented
competitiveness. Numerous advertising campaigns and promotions are created catering for
new homeowners, urban house renovators and rural users, whose characteristic demands
are profiled, analysed and better captured. In addition, digitally enhanced packages have
been used to improve interaction in order to strengthen presence and capture increasing
foot traffic in shopping malls.
Export market
During the reporting period, export revenue maintained steady growth driven by global
product upgrade, including the successful launch of wash and dry Combo in the US and
H700 series in Europe, leading to the price index reach 144, ranking first in the industry.
3. Air Solutions
During the reporting period, sales revenue reached RMB23.147 billion, a year-on-year
increase of 18.9%.
(1) Home air conditioner business
During the reporting period, the Company recorded domestic revenue growth of 25%,
by accelerating transformation in product innovation, network expansion, retail
development and supply chain cost optimization.
According to CMM, the Group’s retail share of air conditioners (standing & wall-
mounted units) across all channels in the first half of 2023 was 16.4%, up 0.6
percentage points year-on-year. The share in lower-tier channels grew a significant
7.1 percentage points to 22%.
The Company enhanced product competitiveness by leveraging module-driven
capabilities and implementing product iteration systems. During the period, the
Company introduced Casarte Nebula ( 雲) the industry’s first integrated high-energy
air conditioner. This product uses advanced technologies, including twin-tower light air
technology, hydro-oxygen air wash technology, and equilibrium temperature
dehumidification, to achieve large-volume air circulation and long-distance airflow. It
can effectively remove seven types of pollutants and increase two types of healthy
particles in the air, thereby creating a comfortable and healthy environment. The
product drove market share of standing units priced above RMB10,000 to surpass
39%, ranking top in the industry. Casarte’s air conditioners grew rapidly in the first
half of 2023.
Targeting young users of Gen Z, Leader’s new Vitality ( 氣) air conditioner pioneered
dual-wing omnidirectional wind technology, which blows cold air upwards at a 15
angle while sending warm air downwards at 90 angle, minimize the discomfort from
direct cold air blow. This product helped Leader brand achieve over 50% revenue
growth in its air conditioners.
Haier Smart Home Co., Ltd. Interim Report 2023 29
Section III Management Discussion and Analysis
Considering residential central air conditioners’ dependence on installation, the
Company strengthened design, installation, and service capabilities. We were the first
Company in the industry to introduce a 7-star service standard, and our “Residential
Central Air-conditioning Installation Service Standard” was recognised as a benchmark
by air conditioning service industry. The Group also accelerated the establishment of
residential central air conditioner training hubs that incorporate user experience,
employee training, product retailing, and brand image, aiming at redefining user
interactions. In the first half of the year, the Group developed over 1,360 air
conditioner franchise stores, achieved 30% in store conversion rate, and raised
high-end residential central air conditioners’ revenue contribution to 26%.
During the reporting period, the Company focused on enhancing supply chain
network and improving in-house component manufacturing capacities to increase cost
competitiveness. In March 2023, the computer board factory commenced mass
production in Zhengzhou with an annual output of 2 million sets and potential cost
saving of over RMB10 million. In early April 2023, compressor joint venture with
Shanghai Highly officially laid the foundation in Zhengzhou, aiming to establish
integrated compressor supply capabilities.
Export business
The Company made efforts to enhance network presence overseas, including
proactively developing professional HVAC channels and chain retailers in Southeast
Asia, as well as accelerating the construction of distribution networks in fourth and
fifth-tier markets in South Asia to boost retail market share. During the reporting
period, the Company began to introduce solution-based products, including RV air
conditioners and solar-powered air conditioners, to tap into growth opportunities in
niche markets and for energy efficient products. Export revenue remained stable with
a notable improvement in profitability.
(2) Smart building business
During the reporting period, the Company built upon existing HVAC business and
expanded into heat pumps and smart building management, by providing solutions for
“smart and low-carbon architecture”, thereby capitalised on the opportunities
presented by the upgrading of buildings’ energy efficiency standards and the growing
adoption of clean energy.
In the first half of 2023, the Company’s smart building business experienced rapid
revenue growth. According to China IoL, our market share grew steadily to 9.6%, up
0.3 percentage points year-on-year, while export market share went up by 0.6
percentage points to 16%.
30 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
The Company remained committed to developing technological innovations including
magnetic levitation, air suspension, and high-efficiency heat exchange. We maintained
leadership in high-speed variable-frequency and smart IoT technologies, and created
energy-efficient solutions. (1) The air-suspending centrifugal chiller utilised air bearing,
oil-free lubrication technologies, resulting in 50% energy savings compared to ordinary
chiller units, with no need for oil system replacement. This design increased reliability
and reduced failure rate by 80%. (2) The introduction of MX-super IoT-based multi-
split units was the industry’s first smart solution for 1,000-square-meter spaces. The
maximum capacity of a single module could reach 24 HP, up to 4 units could run in
parallel to achieve maximum output of 96 HP, while occupying 50% less floor space.
It could be conveniently installed at various locations such as the rooftop, mechanical
floor, refuge floor, podium floor, and the ground floor to enhance the energy
efficiency of building equipment and systems. (3) HVAC plant room scenario-based
solutions utilizes AI smart control while reducing 50% energy usage. To address the
replacement needs of chiller plant rooms, the Group introduced a wireless smart
control solution that facilitated the installation of new equipment under 3 days without
any down times.
To stay at the forefront of the heat pump industry, the Company capitalised on
growing clean energy requirements and expanded product applications. The newly
launched variable frequency high-temperature heat pump could provide 90C hot
water under full working conditions. It could be remotely controlled using Haier Smart
Cloud Platform, and it has been widely used by clients from electroplating,
slaughterhouses, petroleum, food processing, textile printing and dyeing industries, as
well as on urban gentrification projects. During the reporting period, the Company’s
heat pump revenue grew over 20%; China IoL estimated the Group’s domestic
market share to be 17.7%, up 3.9 percentage points year-on-year.
During the reporting period, the Company won the bid for Shenzhen Metro Line 14
with integrated solution of maglev air- and water-cooled chillers, which could achieve
a plant room COP of 5.0 or above. The Company also collaborated with China
Resources Group to provide smart and efficient IoT-based multi-split solutions for
China Resources Land’s office buildings, shopping centres, and hotels.
Export business
The Company continued to expand product portfolio and optimise product mix. For
example, the Company received significant orders from clients in the Middle East for
T3 variable frequency series that could operate under high-temperature. The Group’s
magnetic centrifugal chiller has also been selected by Qinhuai Data Centre project
due for its outstanding energy efficiency and easily detachable structure. In overseas
markets, the Group focused on building sales centres that encompassed user
experience, product display, employee training, and product sales to demonstrate
professionalism. During the reporting period, export revenue grew by over 40%.
Haier Smart Home Co., Ltd. Interim Report 2023 31
Section III Management Discussion and Analysis
4. Household Water Solutions
The water heater and water purifier business is committed to providing users with safe,
smart, and comfortable whole-house water solutions. During the reporting period, sales
revenue amounted to RMB7.478 billion, a year-on-year increase of 10.2%.
The Company’s robust performance is driven by long term focus on user-centric
technologies.
Several new units were added to the established Crystal Tank and Dual Tank series,
featuring water purification and home mineral spa experience, capturing consumers’ specific
demand for water quality, temperature, water volume and attractive design, this product
helps the Group consolidate leadership in electric tanks. Gas tank revenue grew by 19%.
Casarte pioneered dual motor constant temperature technology that controls water
temperature and volume separately, effectively reducing water temperature fluctuation when
shower is interrupted halfway.
During the reporting period, the Company also launched the industry’s first whole house
water solution online design platform, so designers and sales teams in 265 SAN YI NIAO
outlets and 624 home improvement outlets could help millions of users visualise
comprehensive water heater and purification solutions.
During the reporting period, the Company strengthened its water purification business with
several new products that addressing users’ concerns with water quality and mineral levels.
Casarte’s Mineral Spring water purifier helped with expanding market share in products
priced RMB5,000 and above.
5. China operation: accelerating reforms and taking the initiative to achieve sustainable
growth
During the reporting period, the Company accelerated retail-oriented digitalisation through
mechanism reforms, policy restructuring and the development of digital platforms, which
improved acquisition and conversion of user traffic, enhanced management of user assets,
and achieved sustainable growth. In the first half of 2023, the Company’s home appliance
business in China realised a year-on-year revenue growth of over 10%.
In response to fragmentation user traffic, the Group followed users demand and enhanced
presence across online and offline platforms. By implementing full-life-cycle digital
management platforms, the Group was able to devise omnichannel strategies based on
regional user traffic analysis. The management capabilities of sale outlets were significantly
improved leveraging digitally enhanced distributor screening and store planning. During the
reporting period, the Group developed 1,957 stores, realizing additional revenue of over
RMB1 billion.
32 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
Offline channels:
In first and second-tier markets, the Group focused on expansion within shopping malls
and home improvement channels by adding 82 new stores in shopping malls and 143 new
stores in home improvement channels. In third and fourth-tier markets, emphasis was on
building retail capabilities of high-end product suites, facilitated by retail-oriented
digitalisation from selling individual products to offering scenario-based solutions, so as to
improve conversion rates and increase the proportion of sales derived from product suites.
Online channels:
On traditional e-commerce platforms, the Group optimised outlet coverage, improved
product planning, and upgraded store display to enhance resource allocation. The Group
also expanded Casarte’s product offerings on mainstream platforms and launched light-
coloured product lines tailored for young users. On content generating platforms, the Group
focused on content creation and store operation while developing live streaming
capabilities, thereby facilitated user interactions and improved conversions. During June
18th shopping festival, the Company’s retail sales went up by 40% year-on-year, with over
60% growth in retail sales of high-end Casarte products. The Group’s market shares of
refrigerators, washing machines, water heaters, and freezers also topped the industry
online.
The Company expanded multi-brand portfolio catering for user groups including luxury,
high-end, mass market, and Gen Z, capturing opportunities for growth in various market
segments.
Casarte brand grew steadily leveraging product leadership, comprehensive set offerings and
distribution network renovation. During the reporting period, Casarte’s market share went
up 1.4 percentage points reaching 14.2%.
During the reporting period, Casarte also unveiled upgrade plan, redefining high-end
lifestyles for elite users featuring original technologies, spatial experience, and smart
lifestyle. The Company strengthened competitiveness of product sets by launching the
industry’s first white colour range Casarte Light Year White ( ) series, tailored
specifically for wealthy young individuals seeking quality life. The revenue contribution from
set products increased by 6 percentage points in the first half of 2023. The Group also
enhanced presence in shopping malls and developed lifestyle scenarios to accelerate high-
end traffic acquisition and conversion.
During the reporting period, the Company accelerated Fisher & Paykel’s development in
luxury home appliance market in China. Leveraging strong user base, extensive distribution
network, and well-established service coverage, the Group was able to set up experience
stores in luxury building materials market and prestigious shopping malls while collaborating
with renowned architects and designers to provide affluent individuals with social kitchen
and luxury laundry solutions.
Haier Smart Home Co., Ltd. Interim Report 2023 33
Section III Management Discussion and Analysis
6. Inspired by “Smart Living, Better Homes”, SAN YI NIAO offers smart scenario-based
solutions leveraging core competencies in Smart Home Brain, scenario-based
solutions, design tools, in-store operations and digital platform.
During the reporting period, the Company focused on transforming SAN YI NIAO stores
using asset-light approach in collaborating with ecosystem partners and utilizing digital tools
to improve traffic conversion. Nesting Interior Design Platform was developed featuring
intelligent matching, 3D design, VR water and electricity design, to provide designers with
professional support. The platform added 4,000 home appliance models to assist designers
and at store front. Leveraging Casarte’s Light Year series and Haier’s health-conscious
sets, SAN YI NIAO introduced additional 105 new solutions during the reporting period,
with focus on smart kitchen and whole-house smart lighting solutions, all of which helped
with achieving sales of 4,000 sets of Light Year White series.
(II) Overseas home appliances and smart home business
During the reporting period, the Company’s overseas sales revenue was RMB66.917 billion, an
increase of 8.8% compared to the same period in 2022. Revenue growth was mainly driven by
commitment to high-end strategy and launch of leading products with increased price indices, for
instance, Monogram, high-end brand in North America achieved double-digit growth against the
headwind. The Company also capitalised on the demand for energy-efficient products. In the
European market, over 50% of washing machines obtained class A energy-efficiency, while HVAC
revenue grew significantly. The Group also expanded distribution network, improved retail
capabilities, reduced costs and improved efficiency leveraging efficient global collaborative
systems, at the same time, efforts have been made to grow presence along the Belt and Road
Initiative to grasp development opportunities.
1. North America:
Despite macro weaknesses in North America, the Company outgrew the industry with sales
revenue of RMB39.133 billion, up 4.5% year-on-year and expanded market share.
34 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
The Company remained committed to building premium market leadership with successful
launch of innovative products such as GE Profile UltraFast Combo that is designed to
revolutionize the laundry experience by washing and drying a large load in two hours, while
using smart technology combining fast air flow at lower temperatures to maximize care of
fabrics. Since debuting at the Kitchen & Bath Industry Show earlier this year, the UltraFast
Combo has been recognized by several associations and media companies for being an
innovative smart home product. This all-in-one solution was awarded “the Best Home
Technology Product for the 10th annual Best of IBS awards” by the National Association of
Home Builders (NAHB), which recognizes outstanding building products and services based
on the products’ innovation, functionality, design as well as builder and consumer
friendliness. It was also awarded “2023 Sustainable Products of the Year” by Green Builder
for its energy saving capabilities and the “Design Meets Tech Award” by Connected
Design.
The Company continued to develop pro-centric products and differentiated dealer support
programmes under its Air and Water Solutions business. Three new product lines were
showcased at this year’s AHR Expo, including GE Appliances Residential Ducted HAC, GE
Zoneline UltimateV12 and RealMAX atmospheric gas water heaters. In addition, the
Company also launched Pro Solutions Partner Programme to offer dealers financing,
marketing support and extended labour warranties.
In March this year, IoT Breakthrough, a leading market intelligence organization that
recognizes the top companies, technologies and products in the global IoT market
announced GE Appliances as winner of the “Smart Appliance Company of The Year award”
for the fifth time. In August, GE Appliances was named one of the Best Workplaces for
Innovators by Fast Company magazines for encouraging innovations and creating life-
enhancing digital technologies to consumers.
2. Europe:
During the reporting period, the Company achieved sales revenue of RMB13.278 billion in
Europe, up 29.6% year-on-year. Volume market share increased by 1.1 percentage points
to 7.9% and revenue retail share grew 1.7 percentage points reaching 7.1%, ranking 4th
and 5th respectively.
Leveraging product competitiveness, the Company was able to improve brand positioning.
The 525cm ultrathin and standard washing machine from Haier’s H700 series does not only
save space, it is also equipped with Anti-bacterial technology, double spay and
comprehensive range of fabric care solutions. 7,800 units have been sold during the
reporting period, and a total of 31,000 units have been ordered.
Various efforts have also been made to improve marketing and distribution network. In Italy,
the Company formed partnership with premium kitchen distributor Lube and celebrated the
opening of its first 001 Store in Rome; in Spain, the new boutique and 26 store-within-
store specializing in scenario-solutions helped market share grow from 11% to 14% in
MediaMart. The Company also became Official Partner of some of the world’s top tennis
tournaments including Grand Slam tournament Roland Garros, the Nitto ATP Finals, and
ATP Masters tournaments.
Haier Smart Home Co., Ltd. Interim Report 2023 35
Section III Management Discussion and Analysis
Meanwhile, the company remained committed to leveraging IoT technologies and
integrating resources from ecosystem partners. During the reporting period, WashPass, the
first washing ecosystem was launched with Nuncas. Available on hOn APP, this washing
machine comes with a subscription including installation, maintenance, and refill of the
active ingredients to create a professional washing experience at home.
3. Australia & New Zealand:
Home appliances industry was challenged by weak momentum and intensified price
competition in Australia and New Zealand during the reporting period. The Company
realised sales revenue of RMB2.95 billion, down 15.5% year-on-year. Leveraging long term
commitment to technological and product innovations, the Company launched FPA60 built-
in refrigerator and H20 dish washer to add to its modern kitchen solution packages. Haier
brand also introduced the industry’s first and only one-side T door refrigerator with large
fridge and smaller freezer space. This new unit attracted wide interest from leading
distributors immediately after launch. In addition, digital tools were also used in Australia to
facilitate end-to-end order tracking, thus increasing operational efficiency and improving
traffic conversion.
4. South Asia:
During the reporting period, revenue amounted to RMB5.955 billion, an increase of 23.5%
year-on-year.
In India, the Group focused on meeting local demands with launching variable temperature
French door refrigerators that catering for vegetarian diets. This product was recognised as
one of the ‘Annual Most Innovative Products’ by the Indian government, capturing a market
share of 20%. The Group enhanced competitiveness in the supply chain by boosting in-
house components production and establishing a manufacturing base that is both cost-
effective and highly efficient. During the reporting period, the Company’s volume market
share rose 0.7 percentage points to 10.7%, ranking top three in the industry for the first
time.
In Pakistan, the Company continued to hold the top spots in market shares for
refrigerators, freezers, air conditioners and washing machines, with retail volume share
reaching 41%, up 4 percentage points year-on-year. The Group implemented high-end
brand transformation by rolling out the multi-brand strategy of Casarte, Haier and Candy,
catering to the diverse consumer needs, and established 70 high-end experience stores.
The Group strengthened supply chain development to enable local production of kitchen
appliances, and continued to build franchise network in third and fourth-tier markets.
36 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
5. Southeast Asia:
During the reporting period, sales revenue amounted to RMB3.107 billion, up 6.3% year-
on-year.
In Thailand, the Group strengthened product innovation and launched self-cleaning air
conditioners and washing machines, winning local “Product Innovation” awards. The
Group’s market shares of home air conditioners and refrigerators have risen to the first
place. The Group also developed presence in chain retailers and deployed digital tools to
enhance operational efficiency. In Vietnam, the Group launched attractive and easy-to-
operate AI-powered washing machines to meet the needs of female local users, resulting in
washing machine market share leaping to the top of the industry. The Group also swiftly
responded to opportunities in the air conditioning industry and achieved a record high
market share. In the Philippines, the Group focused on the dual-brand strategy of Haier
and Candy, increased the revenue contribution of high-end products, and captured the
largest market share for high-end T-door refrigerators. In Indonesia, the Group promoted
the transformation and upgrades in high-end channels and achieved double-digit growth.
6. Japan:
During the reporting period, revenue amounted to RMB1.947 billion, up 6.0% year-on-year.
During this period, the Company remained committed to the dual-brand strategy of AQUA
and Haier, and enhanced high-end product lineup with differentiated offerings such as the
TZ/TX/icase refrigerators series, front-load/dryer series, and the Slim& deep freezers. This
strategy accelerated the transition to high-end market, as revenue contributed of high-end
products rose to 36%. AQUA heat pump front-load washer and Haier variable-frequency
washer have received the “Best Recommendation Award” from the renowned Japanese
magazine “Smart”. AQUA’s smart community laundry business maintained market
leadership through creating cross-industry scenarios, developing new operation models, and
replicating successful strategies overseas.
During the period, the Company’s combined volume share for freezers, refrigerators and
washing machines continued to top the industry at 18.6%, of which refrigerators ranked
first with 16.8% market share, freezers ranked first with 50.4%, and washing machines
ranked third with market share of 17.7%.
(III) accelerating digitalisations to enhance efficiency and optimise operation
Improving the competitive edge of individual product models by developing digital
platforms for product planning and R&D.
The Company established an integrated R&D digital platform to connect product planning with
the procurement system, thereby enabling smart design and asynchronous development of
modules, promoting the use of common parts, increasing the procurement scale per module, and
reducing purchasing costs. During the reporting period, total number of components was
reduced by 16.6% year-on-year. The Company also developed a digital simulation platform,
which reduced the resources required for physical prototypes and experiments through virtual
diagnosis, design, and verification, thus improving the success rate of initial designs and
shortening development cycles.
Haier Smart Home Co., Ltd. Interim Report 2023 37
Section III Management Discussion and Analysis
Promoting the construction of digital platforms for procurement and supply chain to
enhance cost competitiveness.
The Company created a digital platform to handle the entire supplier journey from introduction to
collaboration and termination of contract, which streamlined business processes, and shortened
the supplier onboarding time by 50%. The Group also implemented online tools such as
shortlisted supplier pools, component costing models, and AI-driven big data analysis for similar
materials to reduce procurement costs.
Leveraging annual production capacity planning, quarterly and monthly production and sales
coordination, and weekly smart order reviews, the Group could instantly respond to orders and
ensure timely delivery, resulting in improved manufacturing efficiency. The Group reformed order
processing system, where production was made based on forecasted orders and shipments were
driven by actual orders, thereby speeding up order response. In the first half of 2023, inventory
turnover days went down by 18%.
The manufacturing platform optimised resource allocation by integrating key elements such as
labour, materials and equipment, thus visualising production processes, to increase the standard
cycle completion rate by 18% year-on-year.
The logistics platform focused on delivering finished products, and achieved end-to-end
visualisation in terms of “production, sales, warehousing, delivery and installation” through
vehicle-cargo matching and digital warehousing, resulting in a 16% increase in warehouse
utilisation.
Promoting the development of user experience cloud platform to enhance user
experience and improve efficiency.
Centring around the journey of “purchase, delivery, installation, usage, and service,” the Group
reconstructed over 240 scenarios and visualised 1,269 indicators to achieve end-to-end
traceability. The Group also integrated 10 business functions, connecting user needs and
complaints to every responsible unit, so as to close gaps and minimise discrepancies, and
increased consumer satisfaction by 14% in the first half of the year. In terms of service
digitalisation, the entire process from user-submitted service requests to servicemen arriving at
the door has been streamlined in order to facilitated smart diagnosis and enhance service
efficiency.
The Group established media centre, content centre, event centre, and business opportunity
management centre to facilitate online activities, user interaction and traffic conversion. In the first
half of the year, revenue contribution from digitally aided retail increased 28%.
The Group accelerated digitalisation and established data-driven management systems, which
enabled the use of digital desktops, automated system scheduling, and improved operational
efficiency of its workforce.
38 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
Development plan for the second half of the year
The Company will continue to strengthen the three-level brand strategy transformation from high-
end brand scenario-based brand ecosystem brand. We will press ahead with digitalisation
for all processes to improve operational efficiency, provide better user experience, and enhance
user value. We will implement profit-oriented mechanism transformations to improve operational
quality.
In the domestic market, we will further the advancement of end-to-end digital transformation,
leveraging digital tools and implementing organisational changes to integrate the entire process
from product definition to R&D, manufacturing, supply chain, sales, and after-sales services,
thereby to facilitate efficient synergies, and increase the percentage of market-leading products.
We will also emphasize the adoption of lean manufacturing principles, and leverage digital tools
to address issues such as low component commonality and to enhance production efficiency.
We will focus on upgrading the Casarte brand to improve its long-term competitiveness and
solidify its foundation for growth. In the home air conditioner business, we will continue to
strengthen our business foundation and improve organisational efficiency to increase market
share and profitability. For SAN YI NIAO, we will continue to invest in its five core capabilities,
including “the Smart Home Brain, scenario-based solutions, design tools, store operations, and
digital platform capabilities”. We will enrich our range of scenario-based solutions, drive the
application of interior design tools at retail end, and foster the upgrade of sales models, to
improve user experience and store output, and enhance the user value we deliver.
In overseas markets, our brand portfolio provides comprehensive coverage of all users and
caters to the needs of different user segments. We will continue to improve the competitiveness
of our high-end brands and enhance the price index and profitability of our products. We will
focus on improving the competitive edge of individual product models and upgrading the product
mix in advantageous industries, as well as seizing opportunities in growing sectors such as home
air conditioning, commercial air conditioning, and kitchen appliances to generate business growth.
We will create meaningful touchpoints, enhance interactions with end users, and improve our
sales capabilities for smart home appliance product sets. We will prioritise profit-oriented end-to-
end management to improve overseas profit margins.
Significant changes in the Company’s operating conditions during the reporting
period, and matters occurring during the reporting period that have and
expected to have a significant impact on the Company’s operating conditions
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 39
Section III Management Discussion and Analysis
IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD
(I) Analysis of principal business
1. Table of movement analysis on the related items in financial statements
Unit and Currency: RMB
Corresponding
period of
Items Current period last year Change (%)
Operating revenue 131,626,581,506.56 121,640,067,379.35 8.21
Operating cost 91,555,264,412.99 84,818,768,956.56 7.94
Selling expenses 18,768,944,057.44 17,606,475,316.07 6.60
Administrative expenses 5,461,681,481.50 5,140,311,538.47 6.25
Financial expenses –9,349,613.72 –200,558,018.91 N/A
R&D expenses 5,025,786,116.64 4,598,032,317.91 9.30
Net cash flow generated from
operating activities 6,790,530,462.54 5,965,070,983.86 13.84
Net cash flow generated from
investing activities –4,333,325,021.19 –4,164,668,747.75 N/A
Net cash flow generated from
financing activities –1,267,997,912.18 2,125,608,361.90 –159.65
Taxes and surcharge 532,576,459.68 357,254,442.59 49.07
Gains on changes in fair value 31,271,562.35 –118,790,175.68 N/A
Credit impairment loss –165,968,929.36 –258,076,846.14 N/A
Gains on disposal of assets –20,647,304.64 31,589,207.10 –165.36
40 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
Reasons for the significant changes:
Reasons for the changes in financial expenses: it was primarily attributable to the increase
in our interest expenses in the current period over the corresponding period.
Reasons for the changes in net cash flow from financing activities: the increase of
159.65% in our net cash flows from financing activities over the corresponding period was
primarily attributable to the new borrowings raised and proceeds from additional issuance
during the corresponding period.
Reasons for the changes in taxes and surcharge: the increase of 49.07% in our taxes and
surcharge over the corresponding period was primarily attributable to the increase in value-
added tax payable and the corresponding increase in taxes and surcharge recognized
during the current period.
Reasons for the gains on changes in fair value: it was primarily attributable to the increase
in fair value change of forward contracts, etc. over the same period.
Reasons for changes in credit impairment loss: it was primarily attributable to the decrease
in the provision for bad debts of receivables in the current period
Reasons for the change in gains on disposal of assets: the decrease of 165.36% in our
gains on disposal of assets over the corresponding period was primarily attributable to the
recognition of losses on disposal of assets in the current period and the recognition of
gains on disposal of assets in the corresponding period.
2. Detailed explanation on significant changes in the operation types and the components of
profit or sources of profit of the Company during the period
Applicable √ Not Applicable
(II) Explanations on the major changes in profits caused by non-principal businesses
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 41
Section III Management Discussion and Analysis
(III) Analysis of assets and liabilities
√ Applicable Not Applicable
1. Assets and liabilities
Unit: RMB
Percentage of Percentage of
amount at the end change in amount
Amount as at the of the from the end of the
Percentage of end of the corresponding corresponding
Amount as at the amount at the end corresponding period of last year period of last year
end of of the period over period of over total assets to current period
Items the period total assets (%) last year (%) (%)
Monetary funds 55,641,485,513.56 22.59 54,161,702,227.39 22.96 2.73
Receivables 21,742,220,596.23 8.83 15,886,628,623.99 6.73 36.86
Inventories 39,026,874,630.78 15.85 41,587,786,307.53 17.63 –6.16
Contract assets 392,384,817.35 0.16 309,930,359.25 0.13 26.60
Investment properties 25,514,429.83 0.01 25,678,492.57 0.01 –0.64
Long-term equity investments 25,183,862,504.91 10.22 24,527,800,290.84 10.40 2.67
Fixed assets 27,270,691,461.27 11.07 27,158,348,424.28 11.51 0.41
Construction in progress 4,675,841,932.96 1.90 4,094,684,500.49 1.74 14.19
Right-of-use assets 4,385,820,465.38 1.78 3,795,225,353.89 1.61 15.56
Short-term borrowings 9,365,184,799.41 3.80 9,672,223,522.36 4.10 –3.17
Contract liabilities 6,251,026,204.67 2.54 9,352,719,895.49 3.96 –33.16
Long-term borrowings 18,366,761,352.03 7.46 13,590,866,873.43 5.76 35.14
Lease liabilities 3,338,912,496.12 1.36 2,824,477,670.61 1.20 18.21
Financial assets held for 734,584,929.88 0.30 519,912,880.91 0.22 41.29
trading
Derivative financial assets 100,132,280.78 0.04 183,185,160.51 0.08 –45.34
Debt investments 2,254,869,444.45 0.92 1,034,222,222.22 0.44 118.03
Development expenses 237,607,781.86 0.10 154,480,515.67 0.07 53.81
Derivative financial liabilities 352,914,936.89 0.14 104,594,040.66 0.04 237.41
Other payable 22,901,109,264.17 9.30 17,517,838,565.99 7.42 30.73
Non-current Liabilities due 3,519,285,132.72 1.43 6,294,750,667.08 2.67 –44.09
within one year
Other non-current liabilities 72,361,573.14 0.03 107,332,101.07 0.05 –32.58
42 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
Explanation of reasons for significant changes:
1) Financial assets held for trading increased by 41.29% as compared to the beginning
of the period, mainly due to the increase in short-term financial management;
2) Derivative financial assets decreased by 45.34% as compared to the beginning of the
period, mainly due to the fluctuation in fair value of forward foreign exchange
contracts;
3) Accounts receivable increased by 36.86% as compared to the beginning of the period,
mainly due to the decrease in factoring business of overseas accounts receivable for
the current period;
4) Debt investments increased by 118.03% as compared to the beginning of the period,
mainly due to the increase in long-term time deposits in order to optimize the deposit
structure and improve the return on funds;
5) Development expenses increased by 53.81% as compared to the beginning of the
period, mainly due to the increase in investment in low-carbon and energy-saving
projects;
6) Derivative financial liabilities increased by 237.41% as compared to the beginning of
the period, mainly due to the fluctuation in fair value of forward foreign exchange
contracts;
7) Contract liabilities decreased by 33.16% as compared to the beginning of the period,
mainly due to the increase in advance payment from customers in the fourth quarter
of 2022, which resulted in revenue for the current period;
8) Other payables increased by 30.73% as compared to the beginning of the period,
mainly due to the distribution of dividends from Smart Home;
9) Non-current liabilities due within one year decreased by 44.09% as compared to the
beginning of the period, mainly due to the repayment of long-term borrowings due
within one year;
10) Long-term borrowings increased by 35.14% as compared to the beginning of the
period, mainly due to the replacement of long-term borrowings due within one year
and new policy borrowings;
11) Other non-current liabilities decreased by 32.58% as compared to the beginning of the
period, mainly due to the purchase of non-current assets to be paid in installments,
which was paid during the current period.
Haier Smart Home Co., Ltd. Interim Report 2023 43
Section III Management Discussion and Analysis
2. Overseas Assets
√ Applicable Not Applicable
(1) Scope of assets
Among the assets, overseas assets amounted to 12,130,795 (unit and currency:
RMB0,000), representing 49.30% of the total assets.
(2) Relevant information on high percentage of overseas assets
√ Applicable Not Applicable
Unit and Currency: RMB0,000
Operating revenue
during the reporting Net profit during the
Name of overseas asset Reason for Formation Operation mode period reporting period
Overseas Home Appliance and Overseas mergers & Localized Operations with the 6,691,737 350,111
Smart Home Business acquisitions and the integration of R&D,
Company’s own manufacturing and marketing
development
Note: Net profit stated in the above table represents operating profit.
3. Restrictions on major assets as of the end of reporting period
Applicable √ Not Applicable
4. Other explanations
Applicable √ Not Applicable
(IV) Analysis of investment
1. Overall analysis on external equity investment
Applicable √ Not Applicable
44 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
(1) Significant equity investment
Applicable √ Not Applicable
(2) Significant non-equity investment
Applicable √ Not Applicable
(3) Items measured at fair value
Profits or Losses Cumulative Provision for
of Changes in Changes in Fair Impairment Sold/Redeemed
Fair Value during Value Included of during Purchases during Amount during
Asset Type Opening Balance the Period in Equity the Period the Period the Period Other Changes Closing Balance
Wealth management products 14,638,968.26 2,626,845.25 428,000,000.00 264,881,193.19 180,384,620.32
Investments in other equity instruments 5,851,882,930.20 29,397,079.24 4,372,766.91 20,000,000.00 46,701,460.44 5,912,354,236.79
Investments in equity instrument held for trading 336,843,065.02 6,761,392.80 1,387,649.45 342,216,808.37
Investment funds 168,430,847.63 23,806,724.21 12,103,931.78 7,641,997.57 211,983,501.19
Derivative financial instruments 61,674,330.75 –118,844,830.95 –199,207,840.57 3,595,684.66 –252,782,656.11
Total 6,433,470,141.86 –85,649,868.69 –169,810,761.33 — 444,476,698.69 286,268,842.64 57,939,142.67 6,394,156,510.56
Note: As of 30 June 2023, the aggregate balance of foreign exchange derivative transaction amounted to
approximately US$1.602 billion.
Investment in securities
√ Applicable Not Applicable
Unit and Currency: RMB
Profit and loss Accumulated
Carrying arising from fair value Investment Carrying
Initial amount at the changes in fair changes Purchases Disposals profit or loss amount at the
Type of Securities investment Sources of beginning of value during included in during the during the during the end of the
Securities Code Securities Abbreviation cost funding the Period the Period equity Period Period period Period Accounting items
Stock 601328 Bank of Communications 1,803,769.50 Self-funding 6,457,074.48 272,357.90 6,729,432.38 Investments in other equity instruments
Stock 600827 Bailian Group 154,770.00 Self-funding 477,382.56 477,382.56 Investments in other equity instruments
Stock 300183 Neusoft Carrier 18,713,562.84 Self-funding 9,419,316.30 9,419,316.30 Investments in other equity instruments
Stock 000959 Beijing Shougang 99,999,996.80 Self-funding 70,074,347.20 –5,018,587.20 65,055,760.00 Financial assets held for trading
Stock 688455 KENGIC 29,450,000.00 Self-funding 157,181,890.00 11,779,980.00 168,961,870.00 Financial assets held for trading
Total / / 150,122,099.14 / 243,610,010.54 6,761,392.80 272,357.90 250,643,761.24 /
Explanation of investment in securities
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 45
Section III Management Discussion and Analysis
Private equity investment
√ Applicable Not Applicable
By the end of the reporting period, the Company has historically invested in private
equity funds as follows: the Company invested 63.13% share in Qingdao Haier SAIF
Smart Home Industry Investment Center (Limited Partnership); Qingdao RRS Huitong
Investment Management Co., Ltd. (青 島 日 日 順 匯 通 投 資 管 理 有 限 公 司), a subsidiary
of the Company, invested 49% share in Guangzhou Heying Investment Partnership
(Limited Partnership); Qingdao Haishang Chuangzhi Investment Co., Ltd. (青島海尚創
智 投 資 有 限 公 司), a subsidiary of the Company, invested 30% share in
Huizhixiangshun Equity Investment Fund (Qingdao) Partnership (Limited Partnership), a
private equity fund, and 50% equity of Qingdao Ririshun Huizhi Investment Co., Ltd.,
a managing partner of funds; Qingdao Haier Technology Investment Co., Ltd. (青島海
爾科技投資有限公司), a subsidiary of the Company, invested in private equity funds:
1.073% share in Beijing-Tianjin-Hebei Industrial Coordinated Development Investment
Fund (Limited Partnership) (京津冀產業協同發展投資基金（有限合伙）), 14.85% share
in Shenzhen TopoScend Capital Phase I Fund (Limited Partnership) (深 圳 市 投 控 東 海
一 期 基 金（有 限 合 伙）), 24% share in Qingdao Haimu Smart Home Investment
Partnership (Limited Partnership), and invested in fund management companies:
5.01% equity of CMG-SDIC Capital Co., Ltd. (國 投 招 商 投 資 管 理 有 限 公 司), 15%
equity of Shenzhen TopoScend Capital Co., Ltd. (深圳市投控東海投資有限公司), 49%
equity of Qingdao Haimu Investment Management Co., Ltd.
Derivative investment
√ Applicable Not Applicable
RMB0,000
Proportion of
closing
investment
Initial Amount amount over
investment purchased Amount sold net assets at Actual profit
amount of Opening during the during the Provision for Closing end of or loss for
Operator name of derivatives derivatives investment reporting reporting impairment investment reporting the reporting
investment Type of derivatives investment investment Starting date Ending date amount period period (if any) amount period period
Bank Forward foreign exchange contract 1,360,076 2023/1/1 2024/6/30 1,360,076 1,157,978 10,680
Bank Interest rate/exchange rate swap 0 2023/1/1 2023/6/30 0 0 0
Funding sources of derivatives investments Own funds of the Company
For changes in the market price or fair value of the invested derivatives products during the Changes in market prices or fair value of products,
reporting period, the specific methodology used and the settings of relevant assumptions and 1. The profit or loss arising from the foreign exchange forward contracts amounted to RMB106.80 million during the reporting period;
parameters should be disclosed in the fair value analysis of the derivatives. 2. The profit or loss arising from the interest rate/exchange rate swap was nil during the reporting period.
The specific methodology used and the related assumptions and parameter settings are based on the forward quotations of foreign exchange and interest rate
swaps of the financial institutions.
46 Haier Smart Home Co., Ltd. Interim Report 2023
Section III Management Discussion and Analysis
(V) Sale of material assets and equity
Applicable √ Not Applicable
(VI) Analysis on major subsidiaries and Investees
Applicable √ Not Applicable
(VII) Structured entities controlled by the Company
Applicable √ Not Applicable
V. OTHER DISCLOSURES
(I) Potential risks
√ Applicable Not Applicable
1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white
goods as durable consumer appliances are subject to users’ income levels and their
expectations of future income growth which will have a certain impact on their willingness
to purchase products. A slowdown in macroeconomic growth causing a decline in users’
purchasing power will have a negative impact on industry growth. In addition, a slowdown
in real estate market will also have a negative impact on market demand, which will
indirectly affect end-user demand for home appliances.
2. Risk of price war caused by intensified industry competitions. The white goods industry
is highly competitive with a high degree of product homogeneity, industry concentration has
continued to increase in recent years. However, decrease in market demand and fiercer
competition in individual sub-sectors may lead to risks such as price wars. Furthermore,
rapid technological advancements, scarce talents in the industry, shortened product life
cycles and ease of imitation are making it increasingly difficult to profit. Although new
products, services and technologies are often associated with higher selling prices, it has
become necessary for the Company to invest more in R&D. The Company will actively
invest in R&D to attract more users through continuous innovation in products and
services, to build a lasting brand awareness.
3. Risk of fluctuations in raw material prices. The Company’s products and core
components use metal raw materials such as steel, aluminium, and copper, as well as
commodities such as plastics and foam. If the prices of raw materials continue to surge, it
will put certain pressure on the Company’s production and operations. In addition, the
Company relies on third party manufacturers and suppliers for key raw materials,
components, and manufacturing equipment, as well as OEM suppliers, and any disruption
in supply or significant price increases by these suppliers will have a negative impact on the
Company’s business. As a leader in the industry, the Company will take measures
including volume & price adjustment mechanism as well as hedging to reduce the risk of
raw material fluctuations on its operations.
Haier Smart Home Co., Ltd. Interim Report 2023 47
Section III Management Discussion and Analysis
4. Operational risks in overseas business. The Company has steadily developed its global
business and has established production bases, R&D centres, and marketing centres in
many parts of the world, with the proportion of overseas revenue increasing year by year.
Overseas markets are subject to political and economic situations (including events such as
military conflicts and wars), legal systems and regulatory regimes of those countries and
regions. Significant changes in these factors will pose certain risks to the Company’s local
operations in these markets. The Company has taken various measures to mitigate the
relevant impacts, including collaborating with suppliers and distributors, improving
production efficiency to offset the impact on the overall cost of sales, potentially expanding
the Company’s supply resources to other countries, and adopting safety measures to
protect its people and assets.
5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the
import and export of the Company’s products involve the exchange of foreign currencies
such as the U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of the
relevant currencies fluctuate, it will have a certain impact on the Company’s financial
position and increase its financial costs. In addition, the Company’s consolidated financial
statements are denominated in Renminbi, while the financial statements of its subsidiaries
are measured and reported in the currency of their primary economic environment in which
the entity operates and are therefore subject to currency exchange risk. In this regard, the
Company uses hedging instruments to reduce its exposure to exchange rate fluctuations.
6. Risk of policy changes. The home appliance industry is closely related to the consumer
market and the real estate market. Changes in macroeconomic policies, consumption
investment policies, real estate policies and relevant laws and regulations will affect product
demand from distributors, which in turn will affect product sales of the Company. The
Company will closely monitor changes in the relevant policies, laws, and regulations, and
make forecasts of market changes, in order to ensure further development of the
Company.
7. Credit risk. There is possibility that the Company will be unable to collect all trade receivables
from its distributors, or distributors are not able to settle the Company’s trade receivables
in a timely manner, in which the Company’s business, financial status, and operation
performance may be affected. In relation to this risk, the Company will maintain flexibility by
offering credit period of 30 to 90 days to certain distributors based on their credit history
and transaction amount.
8. Inventory risk. Excess inventory might occur as the Company cannot always accurately
predict trends and events and maintain appropriate inventory levels; thus, the Company
may be forced to offer discounts or promotions to manage the slow-moving inventory. On
the other hand, a shortage of inventory may lead to loss of sales opportunities for the
Company. However, the Company will manage its inventory and adjust according to market
situation and will conduct regular impairment assessment of its inventory.
(II) Other disclosures
Applicable √ Not Applicable
48 Haier Smart Home Co., Ltd. Interim Report 2023
Section IV Corporate Governance
I. INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS
Index for details of websites designated Date of
Meeting Date for publishing resolutions disclosure Resolutions approved
2022 Annual General 26 June 2023 For details, please refer to the 27 June 2023 Considered and approved the
Meeting Announcement on Resolutions passed at resolutions related to annual
the 2022 Annual General Meeting, 2023 report, internal control audit
2023 First A Shares Class First A Shares Class Meeting, 2023 First report, profit distribution
Meeting D Shares Class Meeting and 2023 First proposal, re-appointment of
H Shares Class Meeting of Haier Smart auditor, external guarantees,
2023 First D Shares Home Co., Ltd. (L2023-027) published routine connected
Class Meeting by the Company on the website of transactions, general
Shanghai Stock Exchange mandate to issue additional
2023 First H Shares Class (www.sse.com.cn) and the four major shares / repurchase shares
Meeting securities newspapers and employee stock
ownership plan, etc.
Considered and approved the
resolutions for general
mandate to repurchase
shares, etc.
Preferred shareholders whose voting rights have been restored requested an
extraordinary general meeting
Applicable √ Not Applicable
Explanation of Shareholders’ general meeting
√ Applicable Not Applicable
The 2022 Annual General Meeting and the 2023 First A/D/H Shares Class Meetings of the
Company was held in successive order by way of on-site voting, off-site voting and network voting by
poll at Room B101, Haier Rendanheyi Research Center, Haier Science and Technology Innovation
Ecological Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 26 June 2023, considering
the annual report and other relevant resolutions. The total number of the shares of the Company
carrying voting right amounted to 9,328,695,050 shares (of which 6,199,132,811 shares were A
shares, 271,013,973 shares were D shares and 2,858,548,266 shares were H shares). 1,031
shareholders and proxies, representing 6,422,740,689 shares or 68.85% of the total number of the
shares of the Company carrying voting right, were present at the 2022 Annual General Meeting. 955
shareholders and proxies, representing 4,126,409,131 shares or 66.56% of the total number of A
shares of the Company carrying voting rights, were present at the 2023 First A Shares Class Meeting;
66 shareholders and proxies, representing 175,964,322 shares or 64.93% of the total number of D
shares of the Company carrying voting rights, were present at the 2023 First D Shares Class Meeting;
9 shareholders and proxies, representing 2,122,075,173 shares or 74.24% of the total number of H
shares of the Company carrying voting rights, were present at the 2023 First H Shares Class Meeting.
The Directors, supervisors, and senior management of the Company as well as the lawyers engaged
by the Company also attended the abovementioned four meetings. The abovementioned meetings were
convened by the Board of the Company and Chairman Mr. Li Huagang presided over the meetings.
The Company had 9 Directors, of whom 9 Directors attended the meetings; the Company had 3
Haier Smart Home Co., Ltd. Interim Report 2023 49
Section IV Corporate Governance
supervisors, of whom 3 supervisors attended the meeting. The secretary to the Board of the Company
attended the abovementioned meetings and other members of senior management of the Company
were invited to attend the abovementioned meetings.
II. CHANGES IN OF DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT OF THE COMPANY
Applicable √ Not Applicable
Explanation of changes in Directors, supervisors and senior management of the
Company
Applicable √ Not Applicable
III. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF
CAPITAL RESERVE
Proposal for interim profit distribution and proposal for reverse conversion into share
capital
Whether distributed or converted No
50 Haier Smart Home Co., Ltd. Interim Report 2023
Section IV Corporate Governance
IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OR
OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF
(I) Relevant incentive events disclosed in provisional announcements but without
subsequent development or changes during implementation
√ Applicable Not Applicable
Summary of Matters Query Index
Cancellation of certain 2021 and 2022 equity For details, please refer to the
incentive options: In view of the fact that the Announcement of Haier Smart
second exercise period of the first/reserved grant Home Co., Ltd on the
portion of the 2021 A Share Option Incentive Scheme Cancellation of Certain Share
and the first exercise period of the 2022 A Share Options in the 2021 A Share
Option Incentive Scheme of the Company did not Option Incentive Scheme, the
meet the exercise conditions, and due to the 2022 A Share Option Incentive
resignation of some of the incentive recipients, the Scheme disclosed by the
Company cancelled the corresponding 11,391,979 Company on 28 April 2023, the
share options and 27,934,987 share options that had Announcement of Haier Smart
been granted but had not yet been exercised. Home Co., Ltd on the
Completion of Cancellation of
Certain Share Options in the
2021 A Share Option Incentive
Scheme, the 2022 A Share
Option Incentive Scheme and
relevant contents disclosed by
the Company on 31 May 2023.
Introduction of New Phase of A Share and H Share For details, please refer to the
Employee Stock Ownership Plan: In order to 2023 A Share Core Employee
further improve the governance mechanism of the Stock Ownership Plan of Haier
Company, create shareholder value and promote the Smart Home Co., Ltd (Draft),
comprehensive implementation of the Company’s IoT the 2023 H Share Core
smart home ecological brand strategy, the Company Employee Stock Ownership Plan
considered and introduced the 2023 H Share Core of Haier Smart Home Co., Ltd
Employee Stock Ownership Plan of Haier Smart (Draft) disclosed by the
Home Co., Ltd (Draft) and the 2023 A Share Core Company on 28 April 2023 and
Employee Stock Ownership Plan of Haier Smart the Announcement of
Home Co., Ltd (Draft) at the 5th meeting of the 11th Resolutions at the General
session of the Board of Directors held by the Meeting and relevant contents
Company on 27 April 2023 and the 2022 Annual disclosed by the Company on
General Meeting held by the Company on 26 June 27 June 2023.
2023. During the reporting period, the Company
promoted the opening of accounts and other related
works for the 2022 A Share and H Share Employee
Stock Ownership Plan.
Haier Smart Home Co., Ltd. Interim Report 2023 51
Section IV Corporate Governance
(II) Incentive events not disclosed in provisional announcements or with subsequent
development
Equity incentive
Applicable √ Not Applicable
Other explanations
Applicable √ Not Applicable
Employee stock ownership plan
Applicable √ Not Applicable
Other Incentives
Applicable √ Not applicable
52 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social
Responsibilities
1. ENVIRONMENTAL INFORMATION
(I) Explanation of the environmental protection status of companies and their
important subsidiaries that are key emission units announced by the
environmental protection department
√ Applicable Not Applicable
1. Information on pollutant discharge
√ Applicable Not Applicable
The Company’s direct/indirect non-wholly owned subsidiaries Hefei Haier Refrigerator Co.,
Ltd. (“Hefei Refrigerator”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao Special
Refrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier
Freezer Co., Ltd. (“Wuhan Freezer”), Wuhan Haier. Electronics Co., Ltd. (“Wuhan Air-
Conditioning”) and Qingdao Haier (Jiaozhou) Air-conditioning Co., Ltd. (“Jiaozhou Air-
Conditioning”) are among the key emission units announced by the local environmental
protection department. The main information on pollutant discharge is as follows:
(1) Hefei Refrigerator
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978-2018),
Development Zone Energy should apply for a pollutant discharge permit and
detect 8 types of pollutants (including specific pollutants), namely, total nitrogen
(as N), total phosphorus (as P), rate of flow, suspended solids, PH, Chemical
oxygen demand (COD), ammonia nitrogen (NH3-N), and five-day biochemical
oxygen demand (BOD5)
Exhaust gas. According to the Volatile Organic Unorganized Emission Control
Standard (GB 37822-1-2019), Development Zone Energy should apply for a
pollutant discharge permit and detect pollutants. Main types of atmospheric
pollutants: particulate matter, non-methane total hydrocarbons
Way of discharge: continuous discharge
Number and distribution of discharge outlets: 1 sewage, at the north entrance
of the refrigerator Park; 23 exhaust gas, at the refrigerator block A(10), block
B(10), and Phase III Factory(3)
Haier Smart Home Co., Ltd. Interim Report 2023 53
Section V Environmental and Social Responsibilities
Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount (2022 data) are as
follows:
Total Approved Whether it is
Name of Concentration amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 99.95 mg/L 37.55 tons 300 tons No
2 Ammonia 12.59 mg/L 4.93 tons 28 tons No
nitrogen
3 total nitrogen 30.28 mg/L 11.69 tons 20 tons No
4 total phosphorus 2.19 mg/L 0.87 tons 5 tons No
Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
(2) Qingdao Special Refrigerator
Main0 Pollutants:
Exhaust gas. According to the Administrative Measures for Pollutant Discharge
Licensing (for Trial Implementation) (HJ 978-2018), Qingdao Special Refrigerator
should apply for a pollutant discharge permit and detect the primary type of
pollutant in the atmosphere, namely non-methane hydrocarbon (VOC), with the
maximum concentration of discharge not exceeding 60mg/m. A qualified third-
party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a quarterly basis.
Wastewater: There is no wastewater generated by the business department, and
the domestic wastewater is discharged into the municipal sewage network
through the sewage pipes in Haier Industrial Park.
Way of discharge: Continuous emission
Number and distribution of discharge outlets: two in total, one for absorption
exhaust port at the west side of the Special Refrigerator plant roof, and one for
foam exhaust port at the west side of the Special Refrigerator plant roof.
54 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Total Approved Whether it is
Name of Concentration amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 Non-methane 4.725 mg/m 0.1423 tons No total No
hydrocarbon amount of
discharge
control
Pollutant discharge standards implemented: Volatile Organic Compounds
Discharge Standards Part 7: Other Industries in Shandong Province
(DB37/2801.7-2019)
(3) Wuhan water heater
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978-2018),
Wuhan water heater should apply for a pollutant discharge permit and detect 9
types of pollutants (including specific pollutants), namely, COD, total zinc,
suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen
demand (BOD5), PH, anionic surface active agent, total phosphorus, and animal
and vegetable oils.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one, on the southwest of the
wastewater treatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Interim Report 2023 55
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Total Approved Whether it is
Name of Concentration amount of total amount excessive
No. pollutant of discharge discharge of discharge discharge
1 COD 40 mg/L 3.012 tons 9.075 ton No
2 Ammonia 0.336 mg/L 0.376 tons 0.9075 ton No
nitrogen
Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
(4) Wuhan freezer
Main pollutants:
Wastewater. According to the Technical Specification for Application and
Issuance of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978-2018),
Wuhan freezer should apply for a pollutant discharge permit and detect 9 types
of pollutants (including specific pollutants), namely, COD, total zinc, suspended
solids, ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5),
PH, anionic surface active agent, total phosphorus, and animal and vegetable
oils.
Way of discharge: indirect discharge
Number and distribution of discharge outlets: one, on the south of the wastewater
treatment plant, pipeline discharge
56 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount of
pollutant discharge subject to approval for the total amount are as follows:
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 COD 17 mg/L 0.61 tons No registration No
management
regarding the
requirement
of the total
amount
2 Ammonia nitrogen 0.552 mg/L 0.02 tons No registration No
management
regarding the
requirement
of the total
amount
Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
(5) Wuhan Air-Conditioning
Main Pollutants
Organic exhaust gas. Exhaust gas pollutant discharge refers to the Integrated
emission standard of air pollutants, and the primary type of pollutant in the
atmosphere detected are namely non-methane hydrocarbon (VOC), with the
maximum concentration of discharge not exceeding 120mg/m. A qualified
third-party testing unit is commissioned to conduct organic exhaust gas
concentration testing and issue a report on a half-yearly basis.
Way of discharge: Continuous discharge
Number and distribution of discharge outlets: Five in total, one degreasing exhaust
port at the south side of the plant roof, and three stamping exhaust ports at the
south side of the plant roof and one spraying exhaust port at the north side of
the spraying workshop
Haier Smart Home Co., Ltd. Interim Report 2023 57
Section V Environmental and Social Responsibilities
Concentration and total amount of discharge and approved total amount of
discharge: No control regarding the total amount of discharge of organic
exhaust gas
Approved Whether it is
Concentration Total amount total amount excessive
No. Name of pollutant of discharge of discharge of discharge discharge
1 VOC 8mg/m 1.53 tons No control no
regarding the
total amount
of discharge
of VOC
Implementation of Grade 2 standards according to Table 2 indicated in the
national Integrated emission standard of air pollutants (GB16297-1996)
(6) Jiaozhou Air-Conditioning
Main Pollutants:
Hazardous waste. According to the national directory, 11 types of hazardous
waste detected are namely: waste oil, sludge, slag powder, computer boards,
activated carbon, cotton filters, lightning tubes, soldering flux buckets, paint
buckets,packaging bags and forklift battery.
Way of discharge: Hazardous waste is transferred to a qualified hazardous waste
disposal unit for disposal
Total amount of discharge and approved total amount of discharge:
Total amount Total amount Whether it is
of transfer of managed excessive
No. Name of hazardous waste (tons) plan (tons) discharge
1 Waste cotton filters 0.15 0.5 No
2 Waste oil 12.54 35 No
3 Soldering flux buckets 0.48 1.5 No
4 Waste forklift battery 18.36 22 No
5 Sludge 29.46 45 No
6 Waste paint buckets 0.96 5 No
7 Waste activated carbon 3.62 8 No
Pollutant discharge standards implemented: Directory of National Hazardous
Wastes (Version 2021), Law of the People’s Republic of China on the
Prevention and Control of Environmental Pollution by Solid Waste
58 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social Responsibilities
2. Construction and operation of pollution prevention and treatment facilities:
√ Applicable Not Applicable
Jiaozhou Air-Conditioning, Wuhan Freezer, Wuhan Water Heater have one, one and two
wastewater treatment plants with a designed treatment capacity of 300 tons/day, 360
tons/day, 300 tons/day and 260 tons/day, respectively. The construction, maintenance and
daily operation of all wastewater treatment facilities are conducted in accordance with the
requirements of national and local environmental laws and regulations. Information on all
wastewater discharge is subject to 24-hour online monitoring and such monitored
information is transmitted to environmental authorities in a real-time manner. All equipment
is operating normally. Wastewater discharge is in compliance with the prescribed
standards. In addition, the Company fully promotes all plants to install exhaust treatment
facilities and VOCs online monitoring facilities. All equipment is operating normally and
exhaust produced is treated by the prevention and treatment facilities before compliant
release and is monitored.
3. Environmental impact assessment of construction projects and other environmental
protection administrative permits
√ Applicable Not Applicable
The Company and its subsidiaries execute construction project implementation and
production in accordance with the requirements of laws and regulations and strictly comply
with the “three simultaneous” principle requirements of environmental protection for
construction projects in the process of environmental impact assessment, and have passed
environmental assessment acceptance and are not involved in any environmental illegal
conducts such as construction before approval.
4. Emergency plans for environmental incidents
√ Applicable Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for Environmental
Incidents in accordance with the requirements of laws and regulations and organized drills,
and continue to improve and upgrade the plans based on drill results.
5. Self-monitoring environmental programs
√ Applicable Not Applicable
All pollutants of the Company are regularly tested and the Company complies with national
and local environmental standard requirements in respect of all pollutant discharge.
Wastewater collected is subject to standard treatment and is released in a compliant
manner. It is under real-time monitoring through the automatic online wastewater
monitoring system, which shares its information with Haier Smart Energy System. In March
2017, the Company passed the upgraded certification in relation to ISO14001 environment
Haier Smart Home Co., Ltd. Interim Report 2023 59
Section V Environmental and Social Responsibilities
management system. In May 2021, a professional certification firm was appointed to
conduct a review and audit on the operation of ISO14001 system in 2020, where
satisfactory results were obtained to demonstrate its good operating condition; In May
2022, a second review and audit was conducted on the operation of the system in 2021;
In May 2023, a third review and audit was conducted on the operation of the system in
2022.
6. Administrative penalty due to environmental issues during the Reporting Period
Applicable √ Not Applicable
7. Other environmental information that should be disclosed
Applicable √ Not Applicable
(II) Explanation on environmental protection of companies other than major
pollutant-emission units
√ Applicable Not Applicable
1. Administrative penalty due to environmental issues
Applicable √ Not Applicable
2. Other environmental information disclosure with reference to major
pollutant-emission units
√ Applicable Not Applicable
All division of the Company execute construction project implementation and production in
accordance with the requirements of laws and regulations and strictly comply with the
“three simultaneous” requirements of environmental protection for construction projects in
the process of environmental impact assessment, and have passed environmental
assessment acceptance and are not involved in any environmental illegal conducts such as
construction before approval.
60 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social Responsibilities
Through Haier Smart Energy Center, an industry leading energy big data analysis system,
the Company implements centralized dynamic monitoring and digitalized management in
respect of major energy consumption, such as water, electricity and gas, of all plants
across the country by utilizing automatized and informationalized technology and an
integrated management model. It automatically collects precise information on energy
resources and completes prediction and analysis of energy consumption information to
optimize energy adjustment, reduce energy consumption per unit production to achieve
low-carbon production.
3. Reasons for failure to disclose other environmental information
Applicable √ Not Applicable
(III) Explanation of the subsequent progress or changes in the disclosure of
environmental information content during the Reporting Period
√ Applicable Not Applicable
The Company will continue to maintain and improve existing results and strictly comply with
existing environmental protection and emission standards to achieve compliant emission.
(IV) Relevant information favorable to ecological protection, pollution prevention and
control and environmental responsibility fulfillment
√ Applicable Not Applicable
During the reporting period, Hefei Refrigerator actively participated in the declaration of “Zero-
waste Factories” organised by environmental protection department of the local government. With
an aim to achieve “effective energy conservation, lower energy consumption, less pollution and
higher efficiency”, it firmly stays on the path of green development with priority given to
ecological conservation. The Company and each of its subsidiaries faithfully implement the
national “dual carbon” strategy by integrating low-carbon, recycling, energy conservation and
emission reduction into daily operations, actively exploring the carbon reduction model
throughout the whole product life cycle and continuously promoting green industrial upgrade. As
a leader in green development, we work together with our peers to march towards a greener,
win-win and sustainable future with concerted effort to safeguard our homeland.
Haier Smart Home Co., Ltd. Interim Report 2023 61
Section V Environmental and Social Responsibilities
(V) Measures taken during the Reporting Period to reduce its carbon emission and
their effectiveness
√ Applicable Not Applicable
During the reporting period, all relevant entities of the Company actively carried out its work in
carbon reduction, and some examples of our carbon reduction measures are as follows:
(1) Conducting greenhouse gas inventory: some of our factories have conducted greenhouse
gas inventory, established a greenhouse gas inventory system (ISO14064) and obtained
certificates from accreditation agencies;
(2) Application of solar energy as a form of clean energy: new photovoltaic on-grid power
generation was to replace thermal power to reduce carbon emissions;
(3) Efficient transformation of energy use: reasonable production scheduling was achieved in the
factories in the park to improve the productivity of personnel and production lines and
reduce idle energy consumption losses in production lines, leading to more efficient energy
use;
(4) Intelligent energy management with upgrades in digital technologies: with the master energy
control system, the Company has implemented remote collection of energy data and real-
time monitoring of park production and domestic energy use, which enabled timely warning
of energy wastage at terminals through big data analysis to effectively enhance the
efficiency of energy use, thereby reducing carbon emissions;
(5) Promoting energy saving and emission reduction in the daily operations of offices: As an
important part of the production and operation of the park, the activities of the staff have a
non-negligible impact on carbon emissions. Carbon emission occurs every moment in
clothing, food, housing, transportation, and use of items in daily life, so more promotional
campaigns are organized to enhance the awareness of energy saving and emission
reduction among all staff, such as timely replacement of clothing to reduce the use of air-
conditioning at moderate temperature, replacement of energy-saving lamps in rooms,
double-sided printing of paper, and repeated recycling of tap water.
62 Haier Smart Home Co., Ltd. Interim Report 2023
Section V Environmental and Social Responsibilities
2. Particulars on the efforts to consolidate and expand its achievements in poverty
alleviation and rural area invigoration
√ Applicable Not Applicable
The Company emphasizes poverty alleviation and rural revitalization. In accordance with the
series of national planning and documentation requirements, the Company provides
targeted assistance within the authority granted on the general meeting in respect of,
among others, donations to revitalize the rural areas.
For years, the Company has made genuine contributions to education to improve the basic
cultural quality of people in poverty, with an emphasis on shoring up the weak link of the
education sector and stopping inter-generational poverty. As of now, the Company, Haier
Group Companies (the effective controller of the Company) and its subordinate enterprises
(“Haier Group”) have constructed over 300 hope primary schools and hope secondary
schools, covering 26 provinces, municipalities and autonomous regions in the PRC. It also
offers continuous resource assistance to such schools every year to effectively boost the
base education capacity in poverty regions and improve education quality. During the
reporting period, in order to implement the “Ten thousand enterprises help ten thousand
villages* (萬 企 幫 萬 村)” targeted poverty alleviation programme and assist in poverty
alleviation, the Company’s “Ten thousand enterprises help ten thousand villages* (萬企幫萬
村)” targeted poverty alleviation donation activity and the distribution ceremony of “Benefit
Card” home appliances subsidies were held in the Guanwa Community of Jingshan
Township, which provided the poverty-stricken people with support as much as possible. In
addition, the Company provided financial support to Wuchuan Autonomous County.
In the first half of 2023, the Company spent approximately RMB3.65 million on targeted
poverty alleviation, which was mainly used for education and poverty alleviation, in poverty
regions. The Company actively responded to the government’s call and practiced social
responsibility.
Haier Smart Home Co., Ltd. Interim Report 2023 63
Section VI Significant Issues
I. FULFILLMENT STATUS OF UNDERTAKINGS
(I) The undertakings made by the ultimate controllers, shareholders, related parties,
acquirer as well as the Company and other relevant parties during or up to the
reporting period
√ Applicable Not Applicable
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Undertaking related Eliminate the property right Haier Group During the period from September 2006 to May 2007, 27 September Yes Yes
to significant defects in land etc. Corporation the Company issued shares to Haier Group 2006,
reorganization Corporation (“Haier Group”) to purchase the long-term
controlling equity in its four subsidiaries, namely
Qingdao Haier Air-Conditioner Electronics Co., Ltd.
(青島海爾空調電子有限公司), Hefei Haier
Air-conditioning Co., Limited (合肥海爾空調器有限
公司), Wuhan Haier Electronics Co., Ltd. (武漢海爾
電器股份有限公司), Guizhou Haier Electronics Co.,
Ltd. (貴州海爾電器有限公司). With regard to the
land and property required in the operation of
Qingdao Haier Air-Conditioner Electronics Co., Ltd.
(青島海爾空調電子有限公司), Hefei Haier
Air-conditioning Co., Limited (合肥海爾空調器有限
公司), Wuhan Haier Electronics Co., Ltd. (武漢海爾
電器股份有限公司) (the “Covenantees”), Haier Group
made an undertaking (the “2006 Undertaking”).
According to the content of 2006 Undertaking and
then condition of each Covenantee, Haier Group will
constantly assure that Covenantees will lease the
land and property owned by Haier Group for free.
Haier Group will make compensation in the event
that the Covenantees suffer loss due to the
unavailability of such land and property.
Address competition issues Haier Smart Home Prior to the Transaction (hereinafter “the Transaction” 31 July 2020 Yes Yes
Co., Ltd. refers to the transaction in relation to the long-term
privatisation of Haier Electronics by Haier Smart
Home), Haier Electric was a controlling subsidiary of
the Company and did not compete with the
Company; after the completion of the Transaction,
Haier Electric became a wholly-owned or controlling
subsidiary of the Company and no new competition
with the Company existed or will arise. There is no
new peer competition or potential competition
between the Company and other related parties
controlled by the controlling shareholders or the de
facto controllers of the Company.
64 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address connected Haier Group 1. The Transaction constitutes a connected transaction 29 July 2020, long- Yes Yes
transactions Corporation and the connected transaction procedures performed term
under the Transaction are in compliance with the
relevant regulations. The pricing of the connected
transaction is fair and there are no circumstances under
which the interests of the listed company and the
non-connected shareholders are prejudiced. 2. Upon
completion of the Transaction, the Company and its
affiliates will take lawful and effective measures to
minimize and regulate the connected transactions with
the listed company, take the initiative to safeguard the
interests of the listed company and all shareholders,
and refrain from taking advantages of connected
transactions for improper benefits. 3. Provided that there
is no conflict with laws and regulations, if connected
transactions between the Company and its affiliates and
the listed company occur or exist which cannot be
avoided or for which there are reasonable reasons, the
Company and its affiliates will legally enter into a
transaction agreement with the listed company to
ensure strict compliance with the procedures of
connected transactions required by the laws,
regulations, regulatory documents and the articles of
association of the Company, conduct transactions in
accordance with the principles of marketability and fair
prices to ensure the fairness and compliance of
connected transactions, and refrain from taking
advantages of such connected transactions to engage in
any acts that are detrimental to the interests of the
listed company or its minority shareholders, and at the
same time, comply with the information disclosure
obligations in accordance with relevant regulations.
Haier Smart Home Co., Ltd. Interim Report 2023 65
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address competition issues Haier Group 1. The Company and its controlling subsidiary, Haier 29 July 2020, long- Yes Yes
Corporation COSMO Co., Ltd., were principally engaged in term
investment business during the reporting period, and the
Company and its controlling subsidiary, Haier COSMO
Co., Ltd. (including its subsidiaries and entities with
more than 30% shareholding), have no real or potential
competition with Haier Smart Home; 2. the domestic
and overseas white goods businesses and assets held
by the Company (including the Company’s subsidiaries
and entities with more than 30% shareholding) have
been injected into Haier Smart Home through asset
consolidation and equity transfer in accordance with the
commitments made by the Company in January 2011
and the requirements for adjusting such commitments
as considered and approved by Haier Smart Home at
its 2014 annual general meeting; 3, Since the
acquisition of 100% of Haier New Zealand Investment
Holding Company Limited (which holds 100% of the
shares in Fisher & Paykel Appliances Holdings Limited)
by Haier Smart Home’s offshore subsidiary, Haier
Singapore Investment Holding Co., Ltd., following the
completion in July 2018, the Company (including the
Company’s subsidiaries and entities with more than
30% shareholding) and Haier Smart Home do not have
any competing relationship in any business areas both
within and outside the PRC. During the reporting period,
the Company (including the Company’s subsidiaries and
entities with more than 30% shareholding) did not have
any new peer competition with Haier Smart Home; 4.
Upon completion of the Transaction, the Company
(including the Company’s subsidiaries and entities with
more than 30% shareholding) and its affiliates do not
have any new or potential peer competition with Haier
Smart Home; 5. During the period when the Company
is the controlling shareholder of Haier Smart Home and
the shares of Haier Smart Home are listed on the Hong
Kong Stock Exchange, the Company and its other
subsidiaries and entities with more than 30%
shareholding will not operate any business that
competes with the business engaged by Haier Smart
Home and will not engage in real or potential
competition with Haier Smart Home.
66 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Others Haier Group Upon completion of the Transaction, the Company will 29 July 2020, long- Yes Yes
Corporation strictly comply with the Company Law, the term
Securities Law, the relevant regulations of the China
Securities Regulatory Commission, the Shanghai
Stock Exchange and the articles of association of
Haier Smart Home, etc., fairly exercise shareholders’
rights and fulfill shareholders’ obligations, refrain
from taking advantage of its shareholding position
for improper benefits, ensure the listed company will
continue to be completely separate from the
Company and other enterprises on which the
Company exercises control and exerts significant
influence in terms of management, personnel,
assets, finance, organization and business
operations, and maintain the continued
independence of the listed company in terms of
management, personnel, assets, finance,
organization and business operations. Upon
completion of the Transaction, the Company will
comply with the provisions of the Notice on Several
Issues concerning Regulating Fund Transactions
between Listed Companies and Their Affiliates and
the External Guarantee of Listed Companies and the
Circular of China Securities Regulatory Commission
and China Banking Regulatory Commission on
Regulating the External Guaranties Provided by
Listed Companies to regulate the external
guarantees by listed companies and their
subsidiaries, and will not misappropriate the funds of
the listed company and their subsidiaries. The
Company undertakes to strictly fulfill the above
commitments. In the event that the interests of the
listed company are damaged as a result of any
breach of the above commitments by the Company
and other enterprises on which the Company
exercises control and exerts significant influence, the
Company will legally bear the corresponding liability
for damage.
Haier Smart Home Co., Ltd. Interim Report 2023 67
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Address connected HCH (HK) 1. The Transaction constitutes a connected transaction 29 July 2020, long- Yes Yes
transactions INVESTMENT and the connected transaction procedures performed term
MANAGEMENT under the Transaction are in compliance with the
CO., LIMITED relevant regulations. The pricing of the connected
transaction is fair and there are no circumstances under
which the interests of the listed company and the
non-connected shareholders are prejudiced. 2. Upon
completion of the Transaction, the Company and other
enterprises on which the Company exercises control will
take lawful and effective measures to minimize and
regulate the connected transactions with the listed
company, take the initiative to safeguard the interests of
the listed company and all shareholders, and refrain
from taking advantages of connected transactions for
improper benefits. 3. Provided that there is no conflict
with laws and regulations, if connected transactions
between the Company and other enterprises on which
the Company exercise control and the listed company
occur or exist which cannot be avoided or for which
there are reasonable reasons, the Company and other
enterprises on which the Company exercises control will
legally enter into a transaction agreement with the listed
company to ensure strict compliance with the
procedures of connected transactions required by the
laws, regulations, regulatory documents and the articles
of association of the Company, conduct transactions in
accordance with the principles of marketability and fair
prices, and refrain from taking advantages of such
connected transactions to engage in any acts that are
detrimental to the interests of the listed company or its
minority shareholders, and at the same time, comply
with the information disclosure obligations in
accordance with relevant regulations. 4. Any covenants
and arrangements between the Company and other
enterprises on which the Company exercise control and
the listed company in relation to connected transactions
shall not prevent the other party from conducting
business or dealing with any third party for its own
benefit and on equal competitive terms in the market.
68 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
Whether
Date and Any performed in
Background of term of deadline for a timely and
undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way
Undertaking related Eliminate the property right Haier Group Haier Group Corporation undertakes that it will assure 24 December Yes Yes
to refinancing defects in land etc. Corporation Haier Smart Home and its subsidiaries of the 2013,
constant, stable and unobstructed use of the leased long-term
property. In the event that Haier Smart Home or any
of its subsidiaries suffers any economic loss due to
the fact that leased property has no relevant
ownership certificate, Haier Group Corporation will
make compensation to impaired party in a timely
and sufficient way and take all reasonable and
practicable measures to support the impaired party
to recover to normal operation before the
occurrence of loss. Upon the expiration of relevant
leasing period, Haier Group Corporation will grant or
take practicable measures to assure Haier Smart
Home and its subsidiaries of priority to continue to
lease the property at a price not higher than the rent
in comparable market at that time. Haier Group
Corporation will assure Haier Smart Home and its
subsidiaries of the constant, stable, free and
unobstructed use of self-built property and land of
the Group. In the event that Haier Smart Home or
any of its subsidiaries fails to continue to use
self-built property according to its own will or in
original way due to the fact that self-built property
has no relevant ownership certificate, Haier Group
Corporation will take all reasonable and practicable
measures to eliminate obstruction and impact, or will
support Haier Smart Home or its affected subsidiary
to obtain alternative property as soon as possible, if
Haier Group Corporation anticipates it is unable to
cope with or eliminate the external obstruction and
impact with its reasonable effort. For details, please
refer to the Announcement of Qingdao Haier Co.,
Ltd. on the Formation, Current Situation of the
Defective Property, the Influence on Operation of
Issuer Caused by Uncertainty of Ownership, Solution
for the Defect and Guarantee Measures (L2014-005)
published by the Company on the four major
securities newspapers and the website of Shanghai
Stock Exchange on 29 March 2014.
Undertakings related Others Haier Smart Home The Company will not provide loans or any other forms 15 September Yes Yes
to equity Co., Ltd of financial assistance, including guaranteeing their 2021/28 June
incentive loans, to any incentive recipient for acquiring 2022, the
relevant stock options under this incentive plan. completion of
equity incentive
implementation
Other undertakings Asset injection Haier Group Inject the assets of Haier Photoelectric to the Company December 2015 to Yes Yes
Corporation or dispose such assets through other ways June 2025
according to the requirements of the domestic
supervision before June 2025. For more details,
please refer to the Announcement of Haier Smart
Home Co., Ltd. on the Changes of Some
Commitments on Asset Injection (L2020-024)
published on the four major securities newspapers
and the website of Shanghai Stock Exchange on 30
April 2020.
Haier Smart Home Co., Ltd. Interim Report 2023 69
Section VI Significant Issues
II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLING
SHAREHOLDERS AND OTHER RELATED PARTIES DURING THE
REPORTING PERIOD.
Applicable √ Not Applicable
III. INFORMATION ON NON-COMPLIANCE GUARANTEES
Applicable √ Not Applicable
IV. INFORMATION ON INTERIM AUDIT
Applicable √ Not Applicable
V. CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDIT
OPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITS
HANDLING
Applicable √ Not Applicable
VI. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
Applicable √ Not Applicable
VII. MATERIAL LITIGATION AND ARBITRATION MATTERS
Material litigation and arbitration matter during the reporting period
√ No material litigation and arbitration matters during the reporting period
VIII. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
SHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECT
OF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION
Applicable √ Not applicable
IX. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND
ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER
DURING THE REPORTING PERIOD
Applicable √ Not applicable
70 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
X. SIGNIFICANT RELATED-PARTY TRANSACTIONS
(I) Related-party transactions relating to daily operation
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
√ Applicable Not applicable
Pursuant to the “Product and Materials Purchase Framework Agreement between Haier
Smart Home Co., Ltd. and Haier Group Corporation” ( 海爾智家股份有限公司與海爾集團
公 司 之 產 品 及 物 料 採 購 框 架 協 議 ) and “Service Purchase Framework Agreement between
Haier Smart Home Co., Ltd. and Haier Group Corporation” ( 海 爾 智 家 股 份 有 限 公 司 與 海
爾 集 團 公 司 之 服 務 採 購 框 架 協 議 ) considered and approved at the 28th meeting of the
10th session of the Board of Directors and the 2021 Annual General Meeting, and the
“Resolution of Haier Smart Home Co., Ltd. on Renewing the Framework Agreement on
Financial Services with Haier Group Corporation and Estimated Amount of Connected
Transactions” ( 海爾智家股份有限公司關於與海爾集團公司續簽〈金融服務框架協定〉暨預
計關聯交易額度的議案 ) considered and approved at the 18th meeting of the 10th session
of the Board of Directors and the 2020 Annual General Meeting, the Company has made
estimation on the connected transactions for the next three years, as detailed in the
aforesaid announcements regarding the resolutions of the meetings.
For the actual performance of the Company’s connected transactions in the first half of
2023, please refer to “XII. Related parties and related-party transactions” under section X —
Financial and Accounting Report set out in this regular report.
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2023 71
Section VI Significant Issues
(II) Related-party transactions regarding acquisition or disposal of assets/equity
1. Matters disclosed in temporary announcements and with no subsequent progress
or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
4. If performance agreement is involved, the performance achieved during the reporting
period shall be disclosed
Applicable √ Not applicable
(III) Significant related-party transactions of joint external investment
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcements and with subsequent
progress or change
Applicable √ Not applicable
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
(IV) Amounts due to or from related parties
1. Matters that have been disclosed in temporary announcements and with no
subsequent progress or change
Applicable √ Not applicable
2. Matters that have been disclosed in temporary announcement and with subsequent
progress or change
Applicable √ Not applicable
72 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
3. Matters not disclosed in temporary announcements
Applicable √ Not applicable
(V) Financial business between the Company and the finance company with which
it has a related relationship, the company’s controlling finance company and
related parties
√ Applicable Not applicable
1. Deposit business
√ Applicable Not applicable
Unit and Currency: RMB
Changes of the period
Balance as at the Total amount Total amount
Maximum daily Range of deposit beginning of the deposited during withdrawn during Balance as at the
Related party Relationship deposit limit interest period the period the period end of the period
Haier Finance Co., Subsidiary of Haier 34 billion 0.00012% to 5.32% 31,432,615,224.52 258,505,160,653.43 256,685,459,490.05 33,252,316,387.90
Ltd. Group
Total / / / 31,432,615,224.52 258,505,160,653.43 256,685,459,490.05 33,252,316,387.90
2. Lending business
√ Applicable Not applicable
Unit and Currency: RMB
Changes of the period
Total amount Total amount
Balance as at deposited withdrawn Balance as at
Range of loan the beginning during the during the the end of the
Related party Relationship Loan limit interest of the period period period period
Haier Finance Subsidiary of 10 billion 0–4.5% 60,000,000.00 60,000,000.00 0.00
Co., Ltd. Haier Group
Total / / / 60,000,000.00 60,000,000.00 0.00
Haier Smart Home Co., Ltd. Interim Report 2023 73
Section VI Significant Issues
3. Trustee business or other finance businesses
√ Applicable Not applicable
Unit and Currency: RMB
Actual number
Related party Relationship Type of business Total amount of occurrence
Haier Finance Subsidiary of Haier Foreign exchange 5.5 billion 3,054,405,905.60
Co., Ltd. Group derivatives
products
Haier Finance Subsidiary of Haier Service charge 80 million 7,917,428.19
Co., Ltd. Group
4. Others
Applicable √ Not applicable
(VI) Other material related transactions
Applicable √ Not applicable
(VII) Others
Applicable √ Not applicable
74 Haier Smart Home Co., Ltd. Interim Report 2023
Section VI Significant Issues
XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION
1 Trusteeship, contracting and leasing
Applicable √ Not applicable
During the reporting period, the Company had no material escrow matters. Up to now, the
following entrusted assets that have been approved by the Company’s shareholders’ meeting are
still in effect:
According to Haier Group’s commitment in 2011 on further supporting the development of
Qingdao Haier and resolving peer competition to reduce connected transactions, based on the
fact that Qingdao Haier Optoelectronics Co., Ltd. (青 島 海 爾 光 電 有 限 公 司) and its subsidiaries,
the main body of Haier Group engaging in the color television business, are still in a period of
transformation and integration, and their financial performance has not yet met the Company’s
expectations, Haier Group is unable to complete the transfer before the aforesaid commitment
period. Haier Group intends to entrust the Company with the operation and management of the
escrow assets and pay the Company an annual escrow fee of RMB1 million during the escrow
period.
2 Significant guarantees performed and outstanding during the reporting period
√ Applicable Not Applicable
Unit and Currency: RMB0’000
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date of
Relationship occurrence Whether
between the of the Whether the Overdue Whether Related-
guarantor guarantee Commencement Expiry date Status of guarantee Whether the amount of there is a party
and the listed Secured Amount of (date of date of of Type of principle Collateral has been guarantee the counter- guarantee
Guarantor company party guarantee agreement) guarantee guarantee guarantee liabilities (if any) fulfilled is overdue guarantee guarantee or not Relationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period 1,387,881
Total balance of guarantees for subsidiaries at the end of the reporting period (B) 1,356,958
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B) 1,356,958
Ratio of total amount of guarantees to net assets of the Company (%) 14.5
Including:
Amount of guarantees for shareholders, ultimate controllers and their related parties (C) 0
Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) 728,269
The amount of total amount of guarantee in excess of 50% of net assets (E) 0
Total amount of the above three guarantees (C + D + E) 728,269
Explanation of possibly bearing related discharge duty for premature guarantees Not applicable
Explanation of guarantee status Nil
3 Other major contracts
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 75
Section VI Significant Issues
XII. STATEMENT ON OTHER SIGNIFICANT EVENTS
√ Applicable Not Applicable
(1) Entrusted wealth management: By the end of the reporting period, the balance of the Company’s
entrusted wealth management amounted to RMB5.255 billion. Under the premise of ensuring
sufficient capital required by the principal operating activities and daily operations, the Company
and some of its subsidiaries purchased some low-risk wealth management products and
structured deposits from major commercial banks to improve the yield of temporarily-idle funds
and the return for shareholders within the authority of the president’s office meeting and under
the condition of ensuring fund safety.
(2) Progress of the A-share repurchase: On 27 April 2023, the Company convened the 5th meeting
of the 11th session of the Board of Directors, which considered and approved the Resolution in
Relation to the Repurchase Plan of a Portion of Public A Shares of Haier Smart Home Co., Ltd.
It approved the Company to use its own funds to repurchase a portion of A shares of the
Company by way of centralised bidding. The repurchase price is no more than RMB32 per share
and the proposed total repurchase amount is no more than RMB3.0 billion and no less than
RMB1.5 billion. The period of this repurchase is within 12 months from the date the Board
considered and approved the resolution of repurchase of shares. As at the end of the reporting
period, the Company had repurchased a total of 25,847,600 shares, representing 0.27% of the
total share capital of the Company. The highest price purchased was RMB23.90 per share and
the lowest price was RMB21.20 per share, and the amount paid was RMB579,132,930.98. For
details, please refer to the announcements on the related progress disclosed by the Company on
a monthly basis.
76 Haier Smart Home Co., Ltd. Interim Report 2023
Section VII Changes in Shares and
Information About Shareholders
I. CHANGES IN SHARE CAPITAL
(I) Table of Changes in shares
1. Table of Changes in shares
Unit: share
Prior to changes Increase/decrease in shares After changes
Reserves
Percentage Issue converted to Percentage
Amount (%) of new shares Bonus shares shares Others Sub-total Amount (%)
I. Restricted shares
1. State-owned
shares
2. Shares held by
state-owned legal
entities
3. Other domestic
entities held shares
Including:
Shares held by
domestic non-
state-owned
legal entities
Shares held by
domestic
individuals
4. Shares held by
foreign entities
Including:
Shares held by
offshore legal
entities
Shares held by
offshore
individuals
II. Non-restricted shares 9,446,598,493 100.00 –8,483,600 9,438,114,893
1. Ordinary shares in
RMB 6,308,552,654 66.78 6,308,552,654
2. Domestically listed
foreign-owned
Shares
3. Offshore listed
foreign-owned
Shares 3,138,045,839 33.22 -8,483,600 -8,483,600 3,129,562,239
4. Others
III. Total shares 9,446,598,493 100.00 -8,483,600 -8,483,600 9,438,114,893
Haier Smart Home Co., Ltd. Interim Report 2023 77
Section VII Changes in Shares and Information About Shareholders
2. Statement on the changes in shares
√ Applicable Not Applicable
Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual General
Meeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of 2022 for
D shares and the First Class Meeting of 2022 for H shares of the Company considered and
approved the Resolution on Proposing the General Meeting to Grant the General Mandate
to the Board of Directors to Repurchase not more than 10% of the Total Number of H
shares of the Company in Issue of Haier Smart Home Co., Ltd., in which the Company
intends to repurchase H shares and cancel them within the agreed period. During the
reporting period, the Company repurchased a total of 8,483,600 H shares and all such
shares have been cancelled.
Based on the above, during the reporting period, the share capital of the Company was
changed from 9,446,598,493 shares at the beginning of the reporting period to
9,438,114,893 shares.
78 Haier Smart Home Co., Ltd. Interim Report 2023
Section VII Changes in Shares and Information About Shareholders
3. Effect of changes in shares on the financial indicators such as earnings per share
and net assets per share (if any) after the reporting period to the disclosure date
of interim report
Applicable √ Not Applicable
4. Other disclosure deemed necessary by the Company or required by securities
regulatory authorities
Applicable √ Not Applicable
(II) Changes in shares with selling restrictions
Applicable √ Not Applicable
II. INFORMATION ON SHAREHOLDERS
(I) Total number of shareholders:
Total number of ordinary shareholders by the end of the reporting period 162,489
Total numbers of preferential shareholders with restoration of voting rights 0
by the end of the reporting period
Haier Smart Home Co., Ltd. Interim Report 2023 79
Section VII Changes in Shares and Information About Shareholders
(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable
shares (or shares without selling restrictions) by the end of the reporting
period
Unit: share
Shareholdings of top ten shareholders
Increase/
decrease Number of Number of
during the shares held shares held
Name of shareholder reporting at the end of Percentage with selling Status of shares pledged, Nature of
(full name) period the period (%) restrictions marked or frozen shareholder
Status Number
HKSCC NOMINEES LIMITED 2,231,357,319 23.64 Unknown Unknown
(Note)
Haier COSMO Co., Ltd. 1,258,684,824 13.34 None Domestic non-state-
(海爾卡奧斯股份有限公司) owned legal entity
Haier Group Corporation 1,072,610,764 11.36 None Domestic non-state-
owned legal entity
Hong Kong Securities Clearing 677,016,590 7.17 None Unknown
Co., Ltd.
HCH (HK) INVESTMENT 538,560,000 5.71 None Foreign legal entity
MANAGEMENT CO., LIMITED
China Securities Finance 182,592,654 1.93 None Unknown
Corporation Limited
Qingdao Haier Venture & 172,252,560 1.83 None Domestic non-state-
Investment Information Co., owned legal entity
Ltd. (青島海爾創業投資諮詢
有限公司)
Qingdao Haichuangzhi 133,791,058 1.42 None Domestic non-state-
Management Consulting owned legal entity
Enterprise (Limited
Partnership) (青島海創智管理
諮詢企業（有限合夥）
ALIBABA INVESTMENT LIMITED 83,823,993 0.89 Unknown Foreign legal entity
Agricultural Bank of China 60,843,184 0.64 None Unknown
Limited — Yifangda
Consumer Industry Equity
Securities Investment Fund
80 Haier Smart Home Co., Ltd. Interim Report 2023
Section VII Changes in Shares and Information About Shareholders
Shareholdings of top ten shareholders without selling restrictions
Number of
tradable shares
held without
selling
Name of shareholder restrictions Class and number of shares
Class Number
HKSCC NOMINEES 2,231,357,319 Overseas listed foreign 2,231,357,319
LIMITED shares
Haier COSMO Co., Ltd. 1,258,684,824 RMB ordinary 1,258,684,824
(海爾卡奧斯股份有限
公 司)
Haier Group 1,072,610,764 RMB ordinary 1,072,610,764
Corporation
Hong Kong Securities 677,016,590 RMB ordinary 677,016,590
Clearing Co., Ltd.
HCH (HK) INVESTMENT 538,560,000 Overseas listed foreign 538,560,000
MANAGEMENT CO., shares
LIMITED
China Securities Finance 182,592,654 RMB ordinary 182,592,654
Corporation Limited
Qingdao Haier Venture & 172,252,560 RMB ordinary 172,252,560
Investment
Information Co., Ltd.
(青島海爾創業投資諮
詢 有 限 公 司)
Qingdao Haichuangzhi 133,791,058 RMB ordinary 133,791,058
Management
Consulting Enterprise
(Limited Partnership)
(青島海創智管理諮詢
企 業（有 限 合 夥）
ALIBABA INVESTMENT 83,823,993 Overseas listed foreign 83,823,993
LIMITED shares
Agricultural Bank of 60,843,184 RMB ordinary 60,843,184
China Limited —
Yifangda Consumer
Industry Equity
Securities Investment
Fund
Explanation on As of the end of the reporting period, the repurchase accounts
repurchase account of of the Company held a total of 112,853,243 shares.
top ten shareholders
Haier Smart Home Co., Ltd. Interim Report 2023 81
Section VII Changes in Shares and Information About Shareholders
Number of
tradable shares
held without
selling
Name of shareholder restrictions Class and number of shares
Class Number
Explanation on Nil
delegated voting
rights, entrusted
voting rights,
abstained voting
rights of the above
shareholders
Related parties or (1) Haier COSMO Co., Ltd. (海 爾 卡 奥 斯 股 份 有 限 公 司) is a
parties acting in subsidiary of Haier Group Corporation. Haier Group
concert among the Corporation holds 51.20% of its equity. Qingdao Haier
aforesaid Venture & Investment Information Co., Ltd. (青 島 海 爾 創 業 投
shareholders 資 諮 詢 有 限 公 司), HCH (HK) INVESTMENT MANAGEMENT
CO., LIMITED and Qingdao Haichuangzhi Management
Consulting Enterprise (Limited Partnership) (青島海創智管理諮
詢 企 業（有 限 合 伙） are parties acting in concert with Haier
Group Corporation;
(2) The Company is not aware of the existence of any connections
of other shareholders.
Explanation of Not applicable
preferential
shareholders with
restoration of voting
rights and their
shareholdings
Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the shareholders of the Company’s H-shares, which
is the original data provided by China Hong Kong securities registration agency to the Company after the merger
according to local market practices and technical settings, not representing the ultimate shareholder.
Number of shares held by top ten shareholders with selling restrictions and the selling
restrictions
Applicable √ Not Applicable
(III) Strategic investors or general legal persons who became the top ten
shareholders due to placing of new shares
Applicable √ Not Applicable
82 Haier Smart Home Co., Ltd. Interim Report 2023
Section VII Changes in Shares and Information About Shareholders
III. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT
(I) Changes of shareholding of current and retired directors, supervisors and senior
management during the reporting period
Applicable √ Not Applicable
Other explanations
Applicable √ Not Applicable
(II) Incentive share option granted to directors, supervisors and senior management
during the reporting period
√ Applicable Not Applicable
Unit: 0’000 shares
Number of Exercisable Shares from
Number of stock options shares stock option Number of
stock options newly granted options exercised stock options
held at the during the during the during the held at the
beginning of reporting reporting reporting end of the
Name Position the period period period period period
Li Huagang Director 91.39 0 18.28 0 73.12
Gong Wei Director 45.70 0 9.14 0 36.56
Xie Juzhi Executive 91.39 0 18.28 0 73.12
Li Pan Executive 45.70 0 9.14 0 36.56
Song Yujun Executive 31.21 0 6.24 0 24.97
Zhao Yanfeng Executive 46.82 0 9.36 0 37.46
Huang Xiaowu Executive 45.70 0 9.14 0 36.56
Wu Yong Executive 22.85 0 4.57 0 18.28
Li Yang Executive 45.70 0 9.14 0 36.56
Guan Jiangyong Executive 22.85 0 4.57 0 18.28
Liu Xiaomei Executive 11.65 0 0 0 8.74
Total / 500.96 0 97.86 0 400.21
Haier Smart Home Co., Ltd. Interim Report 2023 83
Section VII Changes in Shares and Information About Shareholders
(III) Other explanations
Applicable √ Not Applicable
IV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATE
CONTROLLER
Applicable √ Not Applicable
84 Haier Smart Home Co., Ltd. Interim Report 2023
Section VIII Relevant Information of
Preferred Shares
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 85
Section IX Relevant Information of
Corporate Bonds
I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIAL
CORPORATE DEBT FINANCING INSTRUMENTS
Applicable √ Not Applicable
II. CONVERTIBLE CORPORATE BOND
Applicable √ Not Applicable
86 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
I. AUDIT REPORT
Applicable √ Not Applicable
II. FINANCIAL STATEMENTS
Consolidated Balance Sheet
30 June 2023
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes 30 June 2023 31 December 2022
Current assets:
Monetary funds VII.1 55,641,485,513.56 54,161,702,227.39
Provision of settlement fund
Funds lent
Financial assets held for trading VII.2 734,584,929.88 519,912,880.91
Derivative financial assets VII.3 100,132,280.78 183,185,160.51
Bills receivable VII.4 10,495,699,695.28 9,624,191,838.15
Accounts receivable VII.5 21,742,220,596.23 15,886,628,623.99
Financing receivables
Prepayments VII.6 1,320,534,071.51 1,109,114,343.41
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables VII.7 2,746,235,275.21 2,401,113,902.55
Including: Interest receivable 706,805,733.78 513,320,376.79
Dividend receivable
Financial assets purchased under resale
agreements
Inventories VII.8 39,026,874,630.78 41,587,786,307.53
Contract assets VII.9 392,384,817.35 309,930,359.25
Assets held for sale
Non-current assets due in one year
Other current assets VII.10 4,089,032,500.27 4,692,946,083.94
Total current assets 136,289,184,310.85 130,476,511,727.63
Non-current assets:
Loans and advances granted
Debt investments VII.11 2,254,869,444.45 1,034,222,222.22
Other debt investments
Long-term receivables 302,494,994.66 305,070,001.45
Long-term equity investments VII.12 25,183,862,504.91 24,527,800,290.84
Investments in other equity instruments VII.13 5,912,354,236.79 5,851,882,930.20
Haier Smart Home Co., Ltd. Interim Report 2023 87
Section X Financial Report
Items Notes 30 June 2023 31 December 2022
Other non-current financial assets
Investment properties VII.14 25,514,429.83 25,678,492.57
Fixed assets VII.15 27,270,691,461.27 27,158,348,424.28
Construction in progress VII.16 4,675,841,932.96 4,094,684,500.49
Biological assets for production
Oil and gas assets
Right-of-use assets VII.17 4,385,820,465.38 3,795,225,353.89
Intangible assets VII.18 10,772,404,503.26 10,505,881,377.21
Development cost VII.19 237,607,781.86 154,480,515.67
Goodwill VII.20 24,639,555,391.77 23,643,595,643.87
Long-term prepaid expenses VII.21 810,071,466.35 759,883,174.20
Deferred income tax assets VII.22 1,209,374,679.11 1,724,040,928.42
Other non-current assets VII.23 2,332,458,174.06 1,880,736,891.63
Total non-current assets 110,012,921,466.66 105,461,530,746.94
Total assets 246,302,105,777.51 235,938,042,474.57
Current liabilities:
Short-term borrowings VII.24 9,365,184,799.41 9,672,223,522.36
Borrowings from central bank
Due to banks and other financial
institutions
Financial liabilities held for trading
Derivative financial liabilities VII.25 352,914,936.89 104,594,040.66
Bills payable VII.26 23,187,832,976.22 25,098,557,730.06
Accounts payable VII.27 47,160,319,625.82 41,878,607,182.94
Receipts in advance
Contract liabilities VII.28 6,251,026,204.67 9,352,719,895.49
Disposal of repurchased financial assets
Absorbing deposit and deposit in inter-
bank market
Customer deposits for trading in securities
Amounts due to issuer for securities
underwriting
Payables for staff’s remuneration VII.29 3,419,419,922.12 4,050,464,754.37
Taxes payable VII.30 3,005,344,046.94 2,876,221,892.91
Other payables VII.31 22,901,109,264.17 17,517,838,565.99
Including: Interest payable
Dividend payable 5,299,410,272.79 1,246,573.35
Fees and commissions payable
Reinsurance Accounts payables
Liabilities held for sale
Non-current liabilities due within one year VII.32 3,519,285,132.72 6,294,750,667.08
Other current liabilities VII.33 1,431,239,433.13 1,850,426,115.79
Total current liabilities 120,593,676,342.09 118,696,404,367.65
88 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Notes 30 June 2023 31 December 2022
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowings VII.34 18,366,761,352.03 13,590,866,873.43
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities VII.35 3,338,912,496.12 2,824,477,670.61
Long-term payables VII.36 43,686,763.73 44,240,087.94
Long-term payables for staff’s
remuneration VII.37 1,074,202,443.83 1,010,547,202.34
Estimated liabilities VII.38 1,761,498,273.35 1,611,029,220.17
Deferred income VII.39 961,687,013.36 948,935,134.05
Deferred income tax liabilities VII.22 2,094,815,467.45 2,358,860,559.19
Other non-current liabilities 72,361,573.14 107,332,101.07
Total non-current liabilities 27,713,925,383.01 22,496,288,848.80
Total liabilities 148,307,601,725.10 141,192,693,216.45
Owners’ equity (or shareholders’
equity):
Paid-in capital (or share capital) VII.40 9,438,114,893.00 9,446,598,493.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve VII.41 23,993,726,933.33 23,877,037,324.76
Less: treasury stock 4,572,635,271.76 3,857,807,196.38
Other comprehensive income VII.42 2,145,734,558.09 1,990,683,498.45
Special reserve
Surplus reserve VII.43 4,014,190,623.24 4,014,190,623.24
General risk provisions
Undistributed profits VII.44 61,662,044,044.81 57,983,751,470.60
Total equity attributable to owners (or
shareholders) of the Parent Company 96,681,175,780.71 93,454,454,213.67
Minority shareholders’ interests 1,313,328,271.70 1,290,895,044.45
Total owners’ equity (or shareholders’
equity) 97,994,504,052.41 94,745,349,258.12
Total liabilities and owners’ equity
(or shareholders’ equity) 246,302,105,777.51 235,938,042,474.57
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2023 89
Section X Financial Report
Balance Sheet of the Parent Company
30 June 2023
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
Items Notes 30 June 2023 31 December 2022
Current Assets:
Monetary funds 7,208,829,680.38 5,747,356,591.19
Financial assets held for trading
Derivative financial assets
Bills receivable
Accounts receivable XVIII.1 1,233,075,337.42 913,643,071.06
Financing receivables
Prepayments 3,115,793.21 3,116,793.21
Other receivables XVIII.2 19,552,192,080.92 14,387,031,657.57
Including: Interest receivable 61,817,349.90 29,783,516.95
Dividend receivable 1,244,013,185.59 1,015,840,000.00
Inventories 4,257,323.34 9,245,507.97
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 1,453,125,718.19 1,642,423,149.85
Total current assets 29,454,595,933.46 22,702,816,770.85
Non-current assets:
Debt investments 1,354,869,444.45 1,034,222,222.22
Other debt investments
Long-term receivables
Long-term equity investments XVIII.3 54,756,983,288.06 52,744,139,527.87
Investments in other equity instruments 1,618,513,056.48 1,618,513,056.48
Other non-current financial assets
Investment properties
Fixed assets 154,921,098.23 167,043,774.16
Construction in progress 10,353,351.08 2,667,680.62
Biological assets for production
Oil and gas assets
Right-of-use assets 357,996.03
Intangible assets 44,773,526.95 48,239,513.12
Development cost
Goodwill
Long-term prepaid expenses 2,912,930.81 3,910,065.39
Deferred income tax assets
Other non-current assets 1,294,805,641.19 1,302,773,743.02
90 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Notes 30 June 2023 31 December 2022
Total non-current assets 59,238,132,337.25 56,921,867,578.91
Total assets 88,692,728,270.71 79,624,684,349.76
Current liabilities:
Short-term borrowings
Financial liabilities held for trading
Derivative financial liabilities
Bills payable
Accounts payables 794,483,497.68 521,733,555.60
Receipts in advance
Contract liabilities 12,605,139.93 13,084,442.85
Payables for staff’s remuneration 4,621,311.00 9,696,654.18
Taxes payable 1,718,888.26 7,479,878.13
Other payables 45,932,717,477.31 32,659,845,830.05
Including: Interest payable
Dividends payable 5,297,529,553.10
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities 9,490,609.56 5,876,886.89
Total current liabilities 46,755,636,923.74 33,217,717,247.70
Non-current liabilities:
Long-term borrowings 3,298,000,000.00 2,195,000,000.00
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term payables for staff’s
remuneration
Estimated liabilities
Deferred income 13,798,300.00 12,355,000.00
Deferred income tax liabilities 420,805,600.57 420,805,600.57
Other non-current liabilities
Total non-current liabilities 3,732,603,900.57 2,628,160,600.57
Total liabilities 50,488,240,824.31 35,845,877,848.27
Owners’ equity (or Shareholders’
equity):
Paid-in capital (or share capital) 9,438,114,893.00 9,446,598,493.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve 27,487,762,552.35 27,300,899,019.76
Less: treasury stock 2,906,103,457.34 2,308,138,558.42
Other comprehensive income 602,091,349.74 602,091,349.74
Special reserve
Surplus reserve 3,409,044,397.79 3,409,044,397.79
Haier Smart Home Co., Ltd. Interim Report 2023 91
Section X Financial Report
Items Notes 30 June 2023 31 December 2022
Undistributed profits 173,577,710.86 5,328,311,799.62
Total owners’ equity (or shareholders’
equity) 38,204,487,446.40 43,778,806,501.49
Total liabilities and owners’ equity
(or shareholders’ equity) 88,692,728,270.71 79,624,684,349.76
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
92 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Consolidated Profit Statement
January-June 2023
Unit and Currency: RMB
Items Notes 2023 Interim 2022 Interim
I. Total operating revenue 131,626,581,506.56 121,640,067,379.35
Including: Operating revenue VII.45 131,626,581,506.56 121,640,067,379.35
Interest income
Insurance premiums earned
Fee and commission income
II. Total cost of operations 121,334,902,914.53 112,320,284,552.69
Including: Operating cost VII.45 91,555,264,412.99 84,818,768,956.56
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance
liability
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharges VII.46 532,576,459.68 357,254,442.59
Selling expenses VII.47 18,768,944,057.44 17,606,475,316.07
Administrative expenses VII.48 5,461,681,481.50 5,140,311,538.47
R&D expenses VII.49 5,025,786,116.64 4,598,032,317.91
Financial expenses VII.50 –9,349,613.72 –200,558,018.91
Including: Interest expenses 875,078,615.27 348,353,122.72
Interest income 614,901,983.30 362,928,829.17
Add: other income VII.51 601,365,025.76 546,249,657.56
investment income (losses are
represented by “–”) VII.52 1,129,768,360.36 1,170,336,743.41
Including: Investment income of
associates and joint ventures 1,078,905,972.36 936,511,207.40
Income generated from the derecognition
of financial assets measured at
amortized cost (losses are represented
by “–”)
Exchange gain (losses are represented by
“–”)
Gains on net exposure hedges (losses are
represented by “–”)
Income from change in fair value (losses
are represented by “–”) VII.53 31,271,562.35 –118,790,175.68
Loss on credit impairment (losses are
represented by “–”) VII.54 –165,968,929.36 –258,076,846.14
Haier Smart Home Co., Ltd. Interim Report 2023 93
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
Loss on assets impairment (losses are
represented by “–”) VII.55 –779,748,575.44 –707,061,947.81
Gain from disposal of assets (losses are
represented by “–”) VII.56 –20,647,304.64 31,589,207.10
III. Operating profit (losses are represented
by “–”) 11,087,718,731.06 9,984,029,465.10
Add: non-operating income VII.57 58,784,451.61 68,907,687.69
Less: non-operating expenses VII.58 32,299,513.21 43,535,551.68
IV. Total profit (total losses are represented
by “–”) 11,114,203,669.46 10,009,401,601.11
Less: income tax expense VII.59 2,069,496,385.86 2,000,315,202.76
V. Net profit (net losses are represented by
“–”) 9,044,707,283.60 8,009,086,398.35
(I) Classification by continuous operation
1. Net profit from continuous operation
(net losses are represented by “–”) 9,044,707,283.60 8,009,086,398.35
2. Net profit from discontinued
operation (net losses are
represented by “–”)
(II) Classification by ownership of the
equity
1. Net profit attributable to shareholders
of the Parent Company (net losses
are represented by “–”) 8,963,875,999.84 7,959,684,042.65
2. Profit or loss attributable to minority
shareholders (net losses are
represented by “–”) 80,831,283.76 49,402,355.70
VI. Other comprehensive income, net of tax VII.60 136,824,101.13 2,864,992,299.95
(I) Other comprehensive income
attributable to owners of the Parent
Company, net of tax 155,051,059.64 2,866,524,948.88
1. Other comprehensive income that
cannot be reclassified into the
profit or loss 36,663,726.03 –45,646,560.54
(1) Changes arising from
re-measurement of defined
benefit plans 32,438,331.87 4,562,166.91
(2) Other comprehensive income
that cannot be transferred into
profit or loss under equity
method
(3) Changes in fair value of
investments in other equity
instruments 4,225,394.16 –50,208,727.45
94 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
(4) Changes in fair value of credit
risks of the enterprise
2. Other comprehensive income to be
reclassified into the profit or loss 118,387,333.61 2,912,171,509.42
(1) Other comprehensive income
that can be transferred into
profit or loss under equity
method –15,508,344.88 108,350,151.43
(2) Changes in fair value of other
debt investments
(3) Reclassified financial assets that
are credited to other
comprehensive income
(4) Credit impairment provision for
other debt investments
(5) Reserve for cash flow hedging –193,755,242.84 25,995,214.10
(6) Exchange differences on
translation of financial
statements denominated in
foreign currencies 327,650,921.33 2,777,826,143.89
(7) Others
(II) Other comprehensive income
attributable to minority shareholders,
net of tax –18,226,958.51 –1,532,648.93
VII. Total comprehensive income 9,181,531,384.73 10,874,078,698.30
(I) Total comprehensive income
attributable to the owners of Parent
Company 9,118,927,059.48 10,826,208,991.53
(II) Total comprehensive income
attributable to the minority
shareholders 62,604,325.25 47,869,706.77
VIII. Earnings per share:
(I) Basic earnings per share (RMB/share) XX.1 0.97 0.85
(II) Diluted earnings per share (RMB/
share) XX.1 0.96 0.85
For business combination under common control occurring in the current period, the net profit of the
acquiree before the combination was RMB0, and the net profit of the acquiree for the previous period
was RMB6,271,553.65.
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2023 95
Section X Financial Report
Profit Statement of the Parent Company
January-June 2023
Unit and Currency: RMB
Items Notes 2023 Interim 2022 Interim
I. Operating income XVIII.4 327,406,706.84 93,323,883.33
Less: operating cost XVIII.4 286,220,868.43 80,891,389.46
Taxes and surcharges 3,754,801.82 1,171,987.68
Selling expenses 4,603,666.69 4,615,963.20
Administration expenses 377,868,026.53 328,116,657.42
R&D expenses 6,617,045.16 5,806,423.66
Financial expenses –92,308,439.54 –42,487,430.75
Including: Interest expenses 32,509,056.33 4,530,273.29
Interest income 115,693,759.65 53,365,585.67
Add: other income 1,361,535.00 17,240,565.58
investment income (losses are
represented by “–”) XVIII.5 400,717,692.54 548,236,536.95
Including: Investment income of
associates and joint
ventures 144,556,606.76 137,123,178.78
Derecognition income on
financial assets
measured at amortized
cost (losses are
represented by “–”)
Gains on net exposure hedges
(losses are represented by “–”)
Income from change in fair value
(losses are represented by “–”)
Loss on credit impairment (losses
are represented by “–”) 47,441.31 116,871.97
Loss on assets impairment (losses
are represented by “–”)
Gain from disposal of assets (losses
are represented by “–”) 35,074,022.45
II. Operating profit (losses are represented
by “–”) 142,777,406.60 315,876,889.61
Add: non-operating income 97,965.97 204,216.74
Less: non-operating expenses 78,702.83 28,698.02
III. Total profit (total losses are represented
by “–”) 142,796,669.74 316,052,408.33
Less: income tax expenses 1,205.40
IV. Net profit (net losses are represented
by “–”) 142,795,464.34 316,052,408.33
96 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
(I) Net profit from continuous operations
(net losses are represented by “–”) 142,795,464.34 316,052,408.33
(II) Net profit from discontinued operations
(net losses are represented by “–”)
V. Other comprehensive income, net of tax –2,564,158.17
(I) Other comprehensive income that
cannot be reclassified into the profit or
loss
1. Changes arising from
re-measurement of defined benefit
plans
2. Other comprehensive income that
cannot be transferred into profit or
loss under equity method
3. Changes in fair value of investments
in other equity instruments
4. Changes in fair value of credit risks
of the enterprise
(II) Other comprehensive income to be
reclassified into the profit or loss –2,564,158.17
1. Other comprehensive income that
can be transferred into profit or loss
under equity method –2,564,158.17
2. Changes in fair value of other debt
investments
3. Reclassified financial assets that are
credited to other comprehensive
income
4. Credit impairment provision for other
debt investments
5. Reserve for cash flow hedging
6. Exchange differences on translation
of financial statements denominated
in foreign currencies
7. Others
VI. Total comprehensive income 142,795,464.34 313,488,250.16
VII. Earnings per share:
(I) Basic earnings per share (RMB/share)
(II) Diluted earnings per share
(RMB/share)
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2023 97
Section X Financial Report
Consolidated Cash Flow Statement
January-June 2023
Unit and Currency: RMB
Items Notes 2023 Interim 2022 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering services 131,285,030,662.96 125,851,561,877.12
Net increase in customer and inter-bank
deposits
Net increase in borrowing from the
central bank
Net cash increase in borrowing from
other financial institutes
Cash received from premiums under
original insurance contract
Net cash received from reinsurance
business
Net increase in deposits of policy holders
and investment
Cash received from interest, fee and
commissions
Net increase in placement from banks
and other financial institutions
Net increase in cash received from
repurchase operation
Net cash received from customer
deposits for trading in securities
Refunds of taxes 1,055,963,172.82 1,359,618,593.20
Cash received from other related
operating activities VII.61 1,004,688,596.01 841,653,468.08
Sub-total of cash inflows from operating
activities 133,345,682,431.79 128,052,833,938.40
Cash paid on purchase of goods and
services 90,336,797,328.28 89,623,874,730.21
Net increase in loans and advances of
customers
Net increase in deposits in the PBOC and
inter-bank
Cash paid for compensation payments
under original insurance contract
Net increase in cash lent
Cash paid for interest, bank charges and
commissions
98 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
Cash paid for insurance policy dividend
Cash paid to and on behalf of
employees 14,745,533,991.16 13,714,753,125.85
Cash paid for all types of taxes 7,627,692,738.30 5,096,870,980.52
Cash paid to other operation related
activities VII.62 13,845,127,911.51 13,652,264,117.96
Sub-total of cash outflows from operating
activities 126,555,151,969.25 122,087,762,954.54
Net cash flow from operating activities VII.66 6,790,530,462.54 5,965,070,983.86
II. Cash flow from investing activities:
Cash received from recovery of
investments 5,129,042,704.70 4,997,285,703.11
Cash received from return on
investments 484,178,075.61 423,887,380.66
Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets 74,087,510.81 74,590,057.10
Net cash received from disposal of
subsidiaries and other operating
entities 2,000,000.00
Other cash received from investment
activities VII.63 15,362,098.03
Sub-total of cash inflows from investing
activities 5,704,670,389.15 5,495,763,140.87
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 3,727,907,256.47 3,342,824,864.02
Cash paid for investments 6,303,165,775.56 6,274,280,514.60
Net increase in secured loans
Net cash paid on acquisition of
subsidiaries and other operating
entities 37,326,510.00
Other cash paid on investment activities VII.64 6,922,378.31 6,000,000.00
Sub-total of cash outflows from investing
activities 10,037,995,410.34 9,660,431,888.62
Net cash flow from investing activities –4,333,325,021.19 –4,164,668,747.75
Haier Smart Home Co., Ltd. Interim Report 2023 99
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
III. Cash flow from financing activities:
Cash received from capital contributions 986,491,004.94
Including: Cash received from capital
contributions by minority
shareholders of subsidiaries
Cash received from borrowings 11,553,402,031.97 8,047,351,638.86
Other cash received from financing
activities 1,000,235.35
Sub-total of cash inflows from financing
activities 11,553,402,031.97 9,034,842,879.15
Cash paid on repayment of loans 10,428,924,467.65 4,695,505,438.44
Cash paid on distribution of dividends,
profits or repayment of interest
expenses 817,299,422.27 337,151,305.96
Including: Dividend and profit paid to
minority shareholders by
subsidiaries
Other cash paid to financing activities VII.65 1,575,176,054.23 1,876,577,772.85
Sub-total of cash outflows from financing
activities 12,821,399,944.15 6,909,234,517.25
Net cash flow from financing activities –1,267,997,912.18 2,125,608,361.90
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents 482,296,933.74 230,069,372.19
V. Net increase in cash and cash
equivalents 1,671,504,462.91 4,156,079,970.20
Add: balance of cash and cash
equivalents at the beginning of
the period VII.67 53,391,699,929.49 45,204,217,909.49
VI. Balance of cash and cash equivalents
at the end of the period VII.67 55,063,204,392.40 49,360,297,879.69
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
100 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Cash Flow Statement of the Parent Company
January-June 2023
Unit and Currency: RMB
Items Notes 2023 Interim 2022 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods
and rendering of services 33,292,958.65 25,976,480.20
Refunds of taxes 7,799,497.52
Other cash received from operating
activities 65,817,539.47 311,936,036.56
Sub-total of cash inflows from operating
activities 99,110,498.12 345,712,014.28
Cash paid on purchase of goods and
services 80,721,248.11 141,857.64
Cash paid to and on behalf of
employees 27,717,542.52 24,825,638.14
Cash paid for all types of taxes 16,713,598.66 1,578,405.68
Other cash paid to operation activities 27,993,348.41 81,136,892.33
Sub-total of cash outflows from
operating activities 153,145,737.70 107,682,793.79
Net cash flow from operating
activities –54,035,239.58 238,029,220.49
II. Cash flow from investing activities:
Cash received from recovery of
investments 4,623,000,000.00 803,860,000.00
Cash received from return on
investments 81,202,353.24 72,346,255.88
Net cash received from the disposal of
fixed assets, intangible assets and
other long-term assets 35,206,354.85
Net cash received from disposal of
subsidiaries and other operating
entities
Other cash received from investment
activities
Sub-total of cash inflows from investing
activities 4,704,202,353.24 911,412,610.73
Cash paid on purchase of fixed assets,
intangible assets and other long-term
assets 4,137,180.77 15,544,095.62
Cash paid for investments 6,647,572,258.00 2,173,745,507.20
Haier Smart Home Co., Ltd. Interim Report 2023 101
Section X Financial Report
Items Notes 2023 Interim 2022 Interim
Net cash paid on acquisition of
subsidiaries and other operating
entities
Other cash paid on investment activities 1,057,569,045.00 1,521,600,000.00
Sub-total of cash outflows from
investing activities 7,709,278,483.77 3,710,889,602.82
Net cash flow from investing
activities –3,005,076,130.53 –2,799,476,992.09
III. Cash flow from financing activities:
Cash received from capital contributions 940,041,004.94
Cash received from borrowings 1,110,000,000.00 2,100,000,000.00
Other cash received from financing
activities 4,223,807,260.09 1,408,448,043.37
Sub-total of cash inflows from financing
activities 5,333,807,260.09 4,448,489,048.31
Cash paid on repayment of borrowings 7,000,000.00
Cash paid on distribution of dividends,
profits or repayment of interest
expenses 32,820,559.74 3,091,905.56
Other cash paid on financing activities 780,445,507.58 1,409,796,873.02
Sub-total of cash outflows from
financing activities 820,266,067.32 1,412,888,778.58
Net cash flow from financing
activities 4,513,541,192.77 3,035,600,269.73
IV. Effect of fluctuations in exchange
rates on cash and cash equivalents 7,043,266.53 –3,465,214.53
V. Net increase in cash and cash
equivalents 1,461,473,089.19 470,687,283.60
Add: balance of cash and cash
equivalents at the beginning of
the period 5,747,356,591.19 4,043,535,735.48
VI. Balance of cash and cash equivalents
at the end of the period 7,208,829,680.38 4,514,223,019.08
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
102 Haier Smart Home Co., Ltd. Interim Report 2023
Consolidated Statement of Changes in Owner’s Equity
January-June 2023
Unit and Currency: RMB
2023 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital Preference Perpetual Less: treasury comprehensive General risk Undistributed Total owners’
Items (or share capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority equity equity
I. Closing balance for the previous year 9,446,598,493.00 23,852,037,324.76 3,857,807,196.38 1,990,683,498.45 4,014,190,623.24 57,976,944,921.36 93,422,647,664.43 1,290,895,044.45 94,713,542,708.88
Add: changes in accounting policies
Error correction for prior period
Business combination under common
control 25,000,000.00 6,806,549.24 31,806,549.24 31,806,549.24
Others
II. Opening balance for the current year 9,446,598,493.00 23,877,037,324.76 3,857,807,196.38 1,990,683,498.45 4,014,190,623.24 57,983,751,470.60 93,454,454,213.67 1,290,895,044.45 94,745,349,258.12
III. Increase/decrease for the current period
(decrease is represented by “–”) –8,483,600.00 116,689,608.57 714,828,075.38 155,051,059.64 3,678,292,574.21 3,226,721,567.04 22,433,227.25 3,249,154,794.29
(I) Total comprehensive income 155,051,059.64 8,963,875,999.84 9,118,927,059.48 62,604,325.25 9,181,531,384.73
(II) Capital injection and reduction by
owners –8,483,600.00 116,689,608.57 714,828,075.38 –606,622,066.81 –31,896,976.12 –638,519,042.93
1. Ordinary shares invested by owners –31,896,976.12 –31,896,976.12
2. Capital contribution by holders of
other equity instruments
3. Share-based payment included in
owners’ equity 390,681,368.30 390,681,368.30 390,681,368.30
4. Others –8,483,600.00 –273,991,759.73 714,828,075.38 –997,303,435.11 –997,303,435.11
(III) Profit distribution –5,297,529,553.10 –5,297,529,553.10 –8,274,121.88 –5,305,803,674.98
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for general
risks
3. Distribution to owners
(or shareholders) –5,297,529,553.10 –5,297,529,553.10 –8,274,121.88 –5,305,803,674.98
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others 11,946,127.47 11,946,127.47 11,946,127.47
IV.Closing balance for the period 9,438,114,893.00 23,993,726,933.33 4,572,635,271.76 2,145,734,558.09 4,014,190,623.24 61,662,044,044.81 96,681,175,780.71 1,313,328,271.70 97,994,504,052.41
Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
103
104
2022 Interim
Equity attributable to owners of the Parent Company
Other equity instruments
Other
Paid-in capital Preference Perpetual Less: treasury comprehensive General risk Undistributed Total owners’
Items (or share capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority equity equity
I. Closing balance for the previous year 9,398,704,530.00 118,017,507.59 22,665,374,739.46 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 47,965,270,360.79 79,985,092,528.06 1,289,500,808.72 81,274,593,336.78
Add: changes in accounting policies
Error correction for prior period
Business combination under common
control 25,000,000.00 21,254,911.01 46,254,911.01 46,254,911.01
Others
II. Opening balance for the current year 9,398,704,530.00 118,017,507.59 22,690,374,739.46 2,424,038,819.70 –1,176,851,699.92 3,438,615,909.84 47,986,525,271.80 80,031,347,439.07 1,289,500,808.72 81,320,848,247.79
III. Increase/decrease for the current period
(decrease is represented by “–”) 48,087,440.00 –36,677,120.16 1,241,554,898.94 1,538,651,010.37 2,866,524,948.88 3,819,711,634.53 6,400,550,791.82 36,040,777.65 6,436,591,569.47
(I) Total comprehensive income 2,866,524,948.88 7,959,684,042.65 10,826,208,991.53 47,869,706.77 10,874,078,698.30
(II) Capital injection and reduction by
owners 48,087,440.00 –36,677,120.16 1,238,717,313.17 1,538,651,010.37 –288,523,377.36 –11,072,350.20 –299,595,727.56
Section X Financial Report
1. Ordinary shares invested by owners 41,413,600.00 898,627,404.94 940,041,004.94 –11,072,350.20 928,968,654.74
Haier Smart Home Co., Ltd. Interim Report 2023
2. Capital contribution by holders of
other equity instruments 6,673,840.00 –36,677,120.16 134,131,566.36 104,128,286.20 104,128,286.20
3. Share-based payment included in
owners’ equity 332,853,517.66 332,853,517.66 332,853,517.66
4. Others –126,895,175.79 1,538,651,010.37 –1,665,546,186.16 –1,665,546,186.16
(III) Profit distribution –4,320,445,666.86 –4,320,445,666.86 –756,578.92 –4,321,202,245.78
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for general
risks
3. Distribution to owners
(or shareholders) –4,320,445,666.86 –4,320,445,666.86 –756,578.92 –4,321,202,245.78
4. Others
(IV) Internal transfer of owner’s equity
1. Transfer of capital reserves into
capital (or share capital)
2. Transfer of surplus reserves into
capital (or share capital)
3. Surplus reserves used for
remedying loss
4. Changes in defined benefit plans
carried forward to retained
earnings
5. Other comprehensive income
carried forward to retained
earnings
6. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others 2,837,585.77 180,473,258.74 183,310,844.51 183,310,844.51
IV. Closing balance for the period 9,446,791,970.00 81,340,387.43 23,931,929,638.40 3,962,689,830.07 1,689,673,248.96 3,438,615,909.84 51,806,236,906.33 86,431,898,230.89 1,325,541,586.37 87,757,439,817.26
Person in charge of the Company: Li Huagang Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
Section X Financial Report
Statement of Changes in Owners’ Equity of the Parent Company
January-June 2023
Unit and Currency: RMB
2023 Interim
Other equity instruments
Paid-in capital Other
(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’
Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity
I. Closing balance for the
previous year 9,446,598,493.00 27,300,899,019.76 2,308,138,558.42 602,091,349.74 3,409,044,397.79 5,328,311,799.62 43,778,806,501.49
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,446,598,493.00 27,300,899,019.76 2,308,138,558.42 602,091,349.74 3,409,044,397.79 5,328,311,799.62 43,778,806,501.49
III. Increase/decrease for the
current period (decrease is
represented by “–”) –8,483,600.00 186,863,532.59 597,964,898.92 –5,154,734,088.76 –5,574,319,055.09
(I) Total comprehensive income 142,795,464.34 142,795,464.34
(II) Capital injection and
reduction by owners –8,483,600.00 186,863,532.59 597,964,898.92 –419,584,966.33
1. Ordinary shares invested
by owners
2. Capital contribution by
holders of other equity
instruments
3. Share-based payment
included in owners’
equity 360,860,541.25 360,860,541.25
4. Others –8,483,600.00 –173,997,008.66 597,964,898.92 –780,445,507.58
(III) Profit distribution –5,297,529,553.10 –5,297,529,553.10
1. Withdrawal of surplus
reserves
2. Distribution to owners
(or shareholders) –5,297,529,553.10 –5,297,529,553.10
3. Others
(IV) Internal transfer of owner’s
equity
1. Transfer of capital
reserves into capital
(or share capital)
2. Transfer of surplus
reserves into capital
(or share capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carried
forward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the
period
2. Utilization for the period
(VI) Others
IV. Closing balance for the period 9,438,114,893.00 27,487,762,552.35 2,906,103,457.34 602,091,349.74 3,409,044,397.79 173,577,710.86 38,204,487,446.40
Haier Smart Home Co., Ltd. Interim Report 2023 105
Section X Financial Report
2022 Interim
Other equity instruments
Paid-in capital Other
(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’
Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity
I. Closing balance for the previous
year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
Add: changes in accounting
policies
Error correction for prior
period
Others
II. Opening balance for the
current year 9,398,704,530.00 25,802,279,483.13 1,495,170,675.08 621,302,944.83 2,833,469,684.39 4,468,575,626.52 41,629,161,593.79
III. Increase/decrease for the
current period (decrease is
represented by “–”) 48,087,440.00 1,319,643,690.83 1,406,832,569.06 –2,564,158.17 –4,004,393,258.53 –4,046,058,854.93
(I) Total comprehensive
income –2,564,158.17 316,052,408.33 313,488,250.16
(II) Capital injection and
reduction by owners 48,087,440.00 1,319,643,690.83 1,406,832,569.06 –39,101,438.23
1. Ordinary shares invested
by owners 41,413,600.00 898,627,404.94 940,041,004.94
2. Capital contribution by
holders of other equity
instruments 6,673,840.00 97,454,446.20 104,128,286.20
3. Share-based payment
included in owners’
equity 323,222,114.26 323,222,114.26
4. Others 339,725.43 1,406,832,569.06 –1,406,492,843.63
(III) Profit distribution –4,320,445,666.86 –4,320,445,666.86
1. Withdrawal of surplus
reserves
2. Distribution to owners
(or shareholders) –4,320,445,666.86 –4,320,445,666.86
3. Others
(IV) Internal transfer of owner’s
equity
1. Transfer of capital
reserves into capital
(or share capital)
2. Transfer of surplus
reserves into capital
(or share capital)
3. Surplus reserves used
for remedying loss
4. Changes in defined
benefit plans carried
forward to retained
earnings
5. Other comprehensive
income carried forward
to retained earnings
6. Others
(V) Special reserve
1. Withdrawal for the
period
2. Utilization for the period
(VI) Others
IV. Closing balance for the period 9,446,791,970.00 27,121,923,173.96 2,902,003,244.14 618,738,786.66 2,833,469,684.39 464,182,367.99 37,583,102,738.86
Person in charge of the Company: Li Huagang
Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
106 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
III. GENERAL INFORMATION OF THE COMPANY
1. Overview of the Company
√ Applicable Not Applicable
The predecessor of Haier Smart Home Co., Ltd. (herein after referred to as the Company) was
Qingdao Refrigerator Factory, which was established in 1984. As permitted to offering by
People’s Bank of China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai
[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao Refrigerator
Factory, a limited company was set up by directional fund raising of RMB150 million. In March
and September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9
issued by the pilot leading team of Qingdao joint stock company, the Company was converted
from a directional offering company to a public subscription company and issued additional 50
million shares to the public and listed with trading on Shanghai Stock Exchange in November
1993. In October 2018, D-shares in issue of the Company were listed on the China Europe
International Exchange AG. In December 2020, H-shares in issue of the Company were listed on
the Stock Exchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Science and Technology Innovation
Ecological Park of Laoshan District, Qingdao, Shandong Province, and the headquarter is located
at the Haier Science and Technology Innovation Ecological Park of Laoshan District, Qingdao,
Shandong Province.
The Company is mainly engaged in research and development, manufacturing and sales of home
appliances including refrigerators/freezers, kitchen appliances, air- conditioners, laundry
appliances and water appliances, and other smart home business, as well as providing smart
home packaged solutions.
The ultimate holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on
30 August 2023.
2. Scope of consolidated financial statements
√ Applicable Not Applicable
For details of changes in the scope of consolidated financial statements for the current period,
please refer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this
note.
Haier Smart Home Co., Ltd. Interim Report 2023 107
Section X Financial Report
IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1. Basis of Preparation
The financial statements of the Company were prepared on the going concern basis according to
the transactions and matters actually occurred, in accordance with the Accounting Standards for
Business Enterprises — Basic Standards published by the Ministry of Finance, specific
accounting standards, and guidance on application of accounting standards for business
enterprises, interpretations to accounting standards for business enterprises and other relevant
requirements (herein after collectively referred to as the “Accounting Standards for Business
Enterprises”) which issued subsequently, and in combination with the disclosure provisions of the
Rules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities
No.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as the
following significant accounting policies and accounting estimation.
2. Going Concern
√ Applicable Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of the
reporting period and there are no significant events affecting its ability to continue as a going
concern.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
√ Applicable Not Applicable
According to the characteristics of its production and operation, the Company formulated a series of
specific accounting policies and accounting estimates, including the provisions for impairment for
accounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation and
amortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); the
amortization of intangible assets (Note V.18); the criterion for determining of long-term assets
impairment (Note V.19); and the date of revenue recognition (Note V.25), etc.
1. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting
Standards for Business Enterprises, which accurately and completely reflected information
relating to the financial condition as at 30 June 2023, the operating results of January to June
2023 and cash flow of the Company.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same
year in solar calendar.
108 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
3. Operating cycle
√ Applicable Not Applicable
A normal operating cycle refers to the period from the Company’s acquisition of assets for
processing to their realisation in cash or cash equivalents. The Company takes 12 months as an
operating cycle, which is also the classification basis for the liquidity of its assets and liabilities.
4. Recording currency
Renminbi is the recording currency of the Company.
5. Accounting methods of business combinations under common control and not
under common control
√ Applicable Not Applicable
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business combinations
under common control and business combinations not under common control.
(1) Business combinations under common control
A business combination under common control is a business combination in which all the
combining entities are ultimately controlled by the same party or parties both before and
after the combination, and that control is not transitory. For business combination under
common control, the party that obtains the control over the other parties on the
combination date is the acquirer, and other parties involving in the business combination
are the transferors. The combination date is the date on which the acquiring party
effectively obtains the control over the party being acquired.
For business combination under common control, the transferor’s assets and liabilities
obtained by the Company (as the acquirer) in a business combination are accounted for at
the carrying amount of the transferor in the ultimate controller’s consolidated financial
statements as at the date of combination, except for adjustments due to differences in
accounting policies. The difference between the carrying amount of the combination
consideration paid by the Company (or the aggregate nominal value of shares issued) and
the carrying amount of net assets obtained in a business combination shall be adjusted to
capital reserve, in case the capital reserve is insufficient for the elimination, the retained
earnings shall be adjusted.
Intermediary fees (such as audit, legal services and valuation consultancy) and other
relevant management fees incurred in the business combination by the Company (as the
acquirer) are credited in profit or loss in the period when they occurred. Trading expenses
in direct relation to the issuance of equity instrument as the consideration for the
combination is written down to the capital reserve (share premium), where the capital
reserve (share premium) is insufficient, and to surplus reserves and undistributed profits in
order. Trading expenses in direct relation to the issuance of debt instrument as the
consideration for the combination is included in the initial recognition amount of the debt
instrument.
Haier Smart Home Co., Ltd. Interim Report 2023 109
Section X Financial Report
(2) Business combinations not under common control
A business combination not under common control is a business combination in which all
of the combining entities are not ultimately controlled by the same party or parties both
before and after the combination. For business combination not under common control, the
party that obtains the control of the other parties involving in the business combination at
the combination date is the acquirer; other parties involving in the business combination are
the transferors. The combination date is the date on which the acquirer effectively obtains
control of the transferors.
In business combination involving entities not under common control, the cost of
combination of the Company (as the acquirer) shall be the sum of the assets paid,
obligations incurred or assumed and the fair value of the equity securities issued by the
Company for obtaining control of the transferor at the date of acquisition. Intermediary fees
(such as audit, legal services and valuation consultancy) and other relevant management
fees incurred by the Company for the purpose of business combination are credited in
profit or loss in the period when they occurred. Transaction fees for the equity instruments
or debt instruments issued by the Company as combination consideration is included in the
initial recognition amount of such equity instruments or debt instruments. Contingent
consideration involved shall be recorded as the combination cost based on its fair value on
the acquisition date. Should any new or further evidence arise within 12 months after the
acquisition date and makes it necessary to adjust the contingent consideration on the
acquisition date, the goodwill arising from the business combination shall be amended
accordingly.
The cost of combination and identifiable net assets obtained by the Company (as the
acquirer) in a business combination involving entities not under common control are
measured at fair value on the acquisition date. Where the cost of the combination exceeds
the acquirer’s interest in the fair value of the transferor’s identifiable net assets, the
difference is recognized as goodwill; where the cost of combination is lower than the
acquirer’s interest in the fair value of the transferor’s identifiable net assets, the difference
is initially recognized in profit or loss for the current year after the Company conducted a
review of computation for the identifiable assets, liabilities or fair value of contingent
liabilities and combination cost, and where the combination cost is still lower than the fair
value of the identifiable net assets of the transferor obtained during the course of
combination, then the difference is recorded in the profit and loss.
110 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
6. Preparation method of consolidated financial statements
√ Applicable Not Applicable
(1) Scope of consolidated financial statements
The Company incorporated all subsidiaries under its control (including the separate entities
controlled by the Company) into the scope of consolidation financial statements, including
the enterprises under the Company’s control, divisible part in the investees and structured
entities. Control refers to the Company having power over the investee and is entitled to
variable returns from its involvement with the investee and has the ability to use its power
over the investee to affect the amount of those return.
(2) To unify the accounting policies, balance sheets date and accounting periods of the
Company and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries’
accounting policies or accounting periods are different from that of the Company, in
accordance with the Company’s accounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared by the Company on the basis of
the financial statements of the Company and subsidiaries and based on other relevant
information. In preparing the consolidated financial statements, all significant balances,
transactions and unrealized profits between the Company and subsidiaries and among
subsidiaries are eliminated. In preparing the consolidated financial statements, the Company
treats the entire enterprise group as one accounting entity and reflects the overall financial
position, operating results and cash flows of the Group in accordance with the
requirements for recognition, measurement and presentation of relevant accounting
standards for enterprises and consistent accounting policies. The owner’s equity of the
subsidiaries not attributable to the Company shall be presented separately as ‘minority
equity’ under the owner’s equity item in the consolidated balance sheet. The minority equity
attributable to net profit or loss of subsidiaries in the current period shall be presented as
‘minority interest’ under the ‘net profit’ item in the consolidated profit statement. Where the
amount of loss of a subsidiary attributable to the minority shareholders exceeds their share
of the opening balance of owner’s equity of the subsidiary, the excess shall be allocated
against minority equity. The long-term equity investment of the Company held by the
subsidiaries, deemed as treasury stock of the corporate group as well as the reduction of
owners’ equity, shall be presented as ‘Less: Treasury stock’ under the owner’s equity item
in the consolidated balance sheet.
Haier Smart Home Co., Ltd. Interim Report 2023 111
Section X Financial Report
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from business combination under common control of the
Company, the opening amount of the consolidated balance sheet is adjusted, as if the
business combination has taken place since the ultimate controller began its control. The
income, expenses and profits of subsidiaries or business combinations from the beginning
of the current period to the end of the reporting period are included in the consolidated
profit statement. The cash flows from the beginning of the current period to the end of the
reporting period of a subsidiary or business combination are included in the consolidated
cash flow statement, and the related items in the comparative statements are adjusted
Where control can be exercised over the investee under the same control due to additional
investment and other reasons, the Company shall deem the parties participating in the
business combination to have made adjustments in their current status when the ultimate
controller began its control. Equity investments held by the Company before control of the
transferor are recognised for profit or loss, other comprehensive income and other changes
in net assets between the later of the date on which the original equity interest is acquired
and the date on which the Company and the transferor are under the same control and the
date of combination, which are offset against the opening retained earnings or current profit
or loss, respectively, in the period of the comparative statements.
For subsidiaries acquired from business combination under non-common control, the
opening amount of the consolidated balance sheet is not adjusted. The income, expenses
and profits of the subsidiary or business from the date of purchase to the end of the
reporting period are included in the consolidated profit statement. The cash flows of the
subsidiary or business from the date of purchase to the end of the reporting period are
included in the consolidated statement of cash flows. Where control can be exercised over
an investee that is not under the same control due to additional investment or other
reasons, the Company remeasures the equity interest of the investee held before the
purchase date based on the fair value of the equity interest at the purchase date, and the
difference between the fair value and its carrying amount is included in the current
investment income. Where the equity interest in the transferor held before the purchase
date relates to other comprehensive income under the equity method and other changes in
owner’s equity other than net profit or loss, other comprehensive income and profit
distribution, other comprehensive income and other changes in owner’s equity relating
thereto are transferred to investment income of the current period as at the purchase date,
except for other comprehensive income arising from the remeasurement of net liabilities or
changes in net assets of defined benefit plans by the investee.
(5) Dispose of equity interests in subsidiaries achieved in stages until losing control
General treatment
During the Reporting Period, when the Company disposes of a subsidiary or
business, the income, expenses and profits of that subsidiary or business from the
beginning of the period to the date of disposal are included in the consolidated
income statement of the Company; The cash flows from the beginning of the period
to the disposal date of the subsidiary or operation are included in the consolidated
statement of cash flows of the Company.
112 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
When control over the investee is lost due to the disposal of part of the equity
investment or other reasons, the Company remeasures the remaining equity
investment after disposal at its fair value at the date when control is lost. The
difference between the sum of the consideration obtained on disposal of the equity
interest and the fair value of the remaining equity interest, less the sum of the share
of the net assets of the original subsidiary calculated by the Company based on the
original shareholding ratio and goodwill calculated on a continuing basis from the date
of purchase or consolidation, is included in investment income in the period in which
control is lost and goodwill is written off. The Company converts other comprehensive
income relating to the equity investment in the original subsidiary, etc to investment
income in the current period when control is lost.
Disposal of subsidiaries step by step
Where the Company disposed of equity investment in a subsidiary step by step
through multiple transactions until control is lost, for example, the terms, conditions
and economic impact of each transaction that disposes of the equity investment in a
subsidiary meet one or more of the following conditions, the Company accounts for
multiple transactions as a single transaction:
i. The transactions were entered into simultaneously or with mutual influence in
mind;
ii. The transactions as a whole are capable of achieving a complete commercial
outcome;
iii. The occurrence of one transaction depends on the occurrence of at least one
other transaction;
iv. The transaction is uneconomical by itself but economic when considered in
conjunction with other transactions.
Where each transaction that disposes of an equity investment in a subsidiary until
control is lost is a blanket transaction, the Company accounts for each transaction as
a transaction that disposes of the subsidiary and loses control; However, the
Company recognises the difference between each disposal price before the loss of
control and the share of net assets of the subsidiary corresponding to the disposal of
the investment as other comprehensive income in the consolidated financial
statements and is transferred to profit or loss in the period in which control is lost
when control is lost.
Where each transaction that disposes of an equity investment in a subsidiary until the
loss of control is not a blanket transaction, the relevant policy for partial disposal of
an equity investment in a subsidiary without loss of control is accounted for before
the loss of control by the Company; When control is lost, accounting is performed in
the same manner as would be done for a disposal subsidiary.
Haier Smart Home Co., Ltd. Interim Report 2023 113
Section X Financial Report
(6) Purchase of minority interests in subsidiaries
The difference between the Company’s costs of newly acquired long-term equity
investment resulting from the purchase of minority interests and the share of net assets
attributable to the subsidiary calculated on an ongoing basis from the date of purchase (or
the date of combination) based on the newly increased shareholding ratio, the equity
premium in the capital reserve in the consolidated balance sheet is adjusted, and if the
equity premium in the capital reserve is insufficient to offset, the retained earnings is
adjusted.
(7) Partial disposal of equity investments in subsidiaries without loss of control
The Company adjusts the equity premium in the capital reserve in the consolidated balance
sheet for the difference between the disposal price obtained from the partial disposal of the
long-term equity investment in the subsidiary without loss of control and the share of the
net assets of the subsidiary that would continue to be calculated from the purchase date or
the combination date corresponding to the disposal of the long-term equity investment, or
adjust the retained earnings if the equity premium in the capital reserve is insufficient to
offset.
7. Classification of joint arrangement and accounting methods of joint operations
√ Applicable Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In
accordance with the Company’s rights and obligations under a joint arrangement, the Company
classifies joint arrangements into joint operations and joint ventures.
(1) Joint operations
Joint operations refer to a joint arrangement in which the Company is a party and is
entitled to relevant assets and obligations of this arrangement.
The Company recognizes the following items in relation to its interest in a joint operation,
and accounts the same in accordance with relevant accounting standards for business
enterprises: recognize the assets held solely by the Company, and recognize assets
held jointly by the Company in appropriation to the share of the Company; recognize the
obligations assumed solely by the Company, and recognize obligations assumed jointly by
the Company in appropriation to the share of the Company; recognize revenue from
disposal of joint operations in appropriation to the share of the Company; recognize
revenue from disposal of joint operations in appropriation to the share of the Company;
recognize fees solely occurred by the Company and recognize fees from joint operations in
appropriation to the share of the Company.
114 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
When the Company, as a joint venture, invests or sells assets to or purchase assets (the
assets do not constitute a business, the same below) from joint operations, the Company
shall only recognize the part of profit or lost from this transaction attributable to other
parties of joint operations before these assets are sold to a third party. In case of an
impairment loss incurred on these assets which meets the requirements as set out in
“Accounting Standards for Business Enterprises No. 8 — Asset Impairment ”, the Company
shall full recognize the amount of this loss in relation to its investment in or sale of assets
to joint operations or recognize the loss according to the Company’s share of commitment
in relation to its purchase of assets from joint operations.
(2) Joint ventures
Joint ventures refer to a joint arrangement during which the Company only is entitled to net
assets of this arrangement. Investment in joint venture is accounted for using the equity
method according to the accounting policies referred to under “12 Long-term equity
investment” of Note V.
8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available
for payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid
investments held by the Company that are readily convertible to known amounts of cash and
which are subject to an insignificant risk on change in value.
9. Foreign currency businesses and translation of foreign currency statements
√ Applicable Not Applicable
(1) Foreign currency transactions
If foreign currency transactions occur, they are translated into the amount of functional
currency by applying the exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated by the Company into
functional currencies at the rates of exchange ruling at the balance sheet date. All foreign
exchange difference are credited in the profit or loss, except those arising from the funds
denominated in foreign currency specially borrowed for the establishment of the qualifying
assets are treated based on the principal of capitalization of borrowing costs.
Non-monetary items in foreign currency measured at historical cost are translated by the
Company using the spot exchange rate prevailing on the date when transaction occurred
and its functional currency shall remain unchanged. Non-monetary items denominated in
foreign currencies that are measured at fair value are translated using the foreign exchange
rate at the date the fair value is determined; the exchange differences between the
translated and original amounts of functional currencies are recognized in the statement of
profit or loss or other comprehensive income as changes in fair value (including changes in
exchange rate).
Haier Smart Home Co., Ltd. Interim Report 2023 115
Section X Financial Report
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint
ventures and associates under the control of the Company are different from that of the
Company, their financial statements denominated in foreign currencies shall be translated to
perform accounting and prepare the consolidated financial statements.
The assets and liabilities of the foreign currency balance sheet of the Company are
translated using the spot exchange rate at the balance sheet date; all items except for
‘undistributed profits’ of the owner’s equity are translated at the spot exchange rate on the
transaction date. The revenue and expenses in the foreign currency income statement of
the Company are translated using the approximate rate of the spot exchange rate on the
transaction date. Exchange differences on translation of financial statements denominated in
foreign currencies are presented as the ‘other comprehensive income’ in the owner’s equity
of the balance sheet.
Foreign currency cash flow and cash flows of a foreign subsidiary of the Company is
translated using the approximate rate of the spot exchange rate on the date of the cash
flows. The impact of exchange rate changes on cash amount is regarded as a
reconciliation item and reflected separately in the cash flow.
When disposing overseas operations, the translation difference in the foreign currency
financial statements as shown in the owner’s equity of the balance sheet and related to the
overseas operation shall be transferred from owner’s equity to profit or loss in the current
period of disposal. If part of the overseas operations is disposed of, the translation
difference in the foreign currency financial statements of the disposal part shall be
calculated based on the proportion of the disposal and transferred to profit or loss in the
current period of disposal.
10. Financial instruments
√ Applicable Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity. A financial asset or financial liability and
equity instrument is recognized when the Company becomes a party to the contract of a
financial instrument.
(1) Classification, recognition and measurement of financial assets
On initial recognition of a financial asset, according to the business model for managing
financial assets and the contractual cash flow characteristics of financial assets, the
Company classifies financial assets into: Financial assets measured at amortized cost;
financial assets measured at fair value through other comprehensive income; financial
assets measured at fair value through profit or loss of the current period.
116 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Financial assets are measured at fair value upon initial recognition. For financial assets
measured at fair value through profit and loss of the current period, related transaction
costs are directly included in profit and loss of the current period; for other types of
financial assets, related transaction costs are included in their initial recognized amounts.
For the accounts receivable or bills receivable arising from the sale of products or the
provision of labor services that do not contain or consider the significant financing
components, etc, the Company shall take the consideration amount entitled to be received
as the initial recognized amount.
1) The debt instruments held by the Company:
Financial assets measured at amortized cost
The Company’s business model for managing such financial assets is: With the
aim of obtaining contractual cash flow, the contractual cash flow characteristics
of such financial assets shall be consistent with the basic lending arrangements,
that is, the cash flow generated on a specific date is only the payment for the
principal and the interest based on the outstanding principal amount. For such
financial assets, the Company recognizes the interest income in accordance
with the effective interest method. Such financial assets are subsequently
measured at amortised cost. The gains or losses arising from amortisation or
impairment are recognised in profit or loss of the current period. Such financial
assets of the Company mainly include cash and cash equivalents, bills
receivable, accounts receivable, other receivables, creditor’s right investment
and long-term receivables. The Company lists the creditor’s rights investments
and long-term receivables matured within one year (including one year) from the
balance sheet date as non-current assets matured within one year; the
creditor’s rights investments matured within one year (including one year) when
being obtained are listed as other current assets.
Financial assets measured at fair value through other comprehensive income
The Company’s business mode for managing such financial assets is: With the
aim of obtaining contractual cash flow and selling the financial assets, the
contractual cash flow characteristics of such financial assets shall be consistent
with the basic lending arrangements. Such financial assets are measured at fair
value through other comprehensive income, but impairment gains and losses,
exchange gains and losses, and interest income calculated by the effective
interest method are included in profit and loss of the current period. Such
financial assets of the Company mainly include financing receivables and other
creditor’s rights investments. The Company lists other creditor’s rights
investments matured within one year (including one year) from the balance
sheet date as non-current assets matured within one year; other creditor’s
rights investments matured within one year (including one year) when being
obtained are listed as other current assets.
Haier Smart Home Co., Ltd. Interim Report 2023 117
Section X Financial Report
Financial assets measured at fair value through profit or loss of the current period
The Company classifies financial assets other than those above measured at
amortized cost and those measured at fair value through other comprehensive
income as financial assets measured at fair value through profit or loss of the
current period. In addition, at the time of initial recognition, in order to eliminate
or significantly reduce accounting mismatch, the Company designated some
financial assets as financial assets measured at fair value through profit or loss
of the current period. Such financial assets are subsequently measured at fair
value and changes in fair value are included in profit or loss of the current
period. Such financial assets that are matured more than one year and are
expected to be held for more than one year from the balance sheet date are
listed as other non-current financial assets.
2) Equity instrument investments of the Company:
The Company classifies equity instrument investments that have no control, joint
control and significant influence on itself as financial assets measured at fair value
through profit or loss of the current period; investments that are expected to be held
for more than one year from the balance sheet date are listed as other non-current
financial assets.
In addition, the Company designated some non-trading equity instrument investments
as financial assets measured at fair value through other comprehensive income, which
are listed as other equity instrument investments. Such designation cannot be
revoked once made. The Company includes the relevant dividends and interest
income of such financial assets in profit and loss of the current period, and changes
in fair value are included in other comprehensive income. When the financial asset is
derecognised, the Company transfers the cumulative gain or loss previously included
in other comprehensive income directly to retained earnings and is not included in
profit or loss of the current period.
(2) Classification, recognition and measurement of financial liabilities
On initial recognition, financial instruments or their components issued by the Company are
classified into financial liabilities or equity instruments based on the contractual terms of the
financial instruments and the economic nature, rather than solely on its legal form, together
with the definition of financial liability and equity instruments.
The Company classifies financial liabilities as financial liabilities at fair value through profit
and loss of the current period and other financial liabilities at initial recognition.
Financial liabilities at fair value through profit and loss of the current period are
subsequently measured at fair value. Any gains or losses arising from changes in the fair
value and any interest expenses related to the financial liabilities are recognized in profit or
loss of the current period. The financial liabilities at fair value through profit and loss of the
current period of the Company mainly consist of financial liabilities held for trading.
118 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Other financial liabilities are subsequently measured at amortized costs using effective
interest method. Other financial liabilities of the Company are financial liabilities measured at
amortized cost, including bills payable, accounts payable, other payables, borrowings,
bonds payable, etc. Such financial liabilities are recognized initially at fair value less
transaction costs and subsequently measured using the effective interest method. Financial
liabilities with a maturity of less than one year (including one year) are listed as current
liabilities: those with maturity of more than one year but are mature within one year from
the balance sheet date (including one year) are listed as non-current liabilities due within
one year; the rest are presented as non-current liabilities.
(3) Classification and treatment of financial liabilities and equity instruments
The Company classifies financial liabilities and equity instruments on the following
principles: (1) Where the Company is unable to unconditionally avoid delivering cash or
another financial asset to fulfil a contractual obligation, the contractual obligation meets the
definition of a financial liability. Although some financial instruments do not explicitly include
the terms and conditions imposing the contractual obligation to deliver cash or another
financial asset, they may indirectly give rise to the contractual obligation through other
terms and conditions. (2) Where a financial instrument shall or may be settled in the
Company’s own equity instrument, consideration shall be given to whether the Company’s
own equity instrument as used to settle the instrument is a substitute of cash or another
financial asset or the residual interest in the assets of the Company after deducting all of its
liabilities. In the former case, the instrument shall be the Company’s financial liability; in the
latter case, the instrument shall be the equity instrument of the Company. Under certain
circumstances whereby a financial instrument contract stipulates that the Company shall or
may use its own equity instrument to settle the financial instrument, and the amount of the
contractual right or obligation equal to the number of its own equity instruments to be
received or delivered multiplied by their fair value at the time of settlement, the contract
shall be classified as a financial liability, regardless of whether the amount of the
contractual right or obligation is fixed, or fluctuates in full or in partly in response to
changes in a variable other than the market price of the Company’s own equity instruments
(for example an interest rate, a commodity price or a financial instrument price).
When classifying a financial instrument (or a component thereof) in consolidated financial
statements, the Company shall consider all terms and conditions agreed between members
of the Group and the holders of the financial instrument. If the Group as a whole has an
obligation in respect of the instrument to settle it by delivering cash or another financial
asset or in such a way that it would be a financial liability, such instrument shall be
classified as a financial liability.
If the financial instrument or its component is attributable to the financial liability, the
relevant interests, dividends, gains or losses, and gains or losses arising from redemption
or refinancing, shall be recorded in the profit or loss of the current period.
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If the financial instrument or its component is attributable to equity instrument, the
Company treats it as change in equity when it is issued (including refinanced), repurchased,
sold or cancelled. Changes in fair value of equity instrument is not recognized by the
Company. Transaction costs related to equity transactions are deducted from equity. The
Company recognizes the distribution to holders of the equity instruments as distribution of
profits, and dividends paid do not affect total amount of shareholders’ equity.
(4) Recognition and measurement on transfer of financial assets
A financial asset shall be de-recognized when one of the following conditions is met: the
contractual right for receiving cash flows from the financial asset is terminated; the
financial asset is transferred, and the risk and rewards of ownership of the financial asset
have been substantially transferred to the transferee; and the financial asset is
transferred; the Company neither transfers nor retains substantially all the risks and rewards
of ownership of the financial asset, but ceases the control over the financial asset. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset, and the control over the financial asset is not ceased, the financial asset
and the related financial liabilities should be recognized based on the degree of continuing
involvement. The degree of continuing involvement means the level of risks borne by the
Company resulting from the change in value of the financial asset.
On de-recognition of other equity instruments investment, the difference between the
carrying amount and the sum of the consideration received and the cumulative changes in
fair value that had been recognized directly in other comprehensive income is recognized in
the retained earnings. On de-recognition of other financial assets, the difference between
the carrying amount and the sum of the consideration received and the cumulative changes
in fair value that had been recognized directly in other comprehensive income is recognized
in current profit or loss.
For financial assets that are sold with recourse or endorsement, the Company needs to
determine whether the risk and rewards of ownership of the financial asset have been
substantially transferred. If the risk and rewards of ownership of the financial asset have
been substantially transferred, the financial asset shall be derecognized. If the risk and
rewards of ownership of the financial asset have been substantially retained, the financial
asset shall not be de-recognized. If the Company neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset, the Company shall assess
whether the control over the financial asset is retained, and the financial assets shall be
accounted for according to the above paragraphs.
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(5) Derecognition of financial liabilities
If the current obligation of a financial liability (or part of it) has been discharged, the
Company derecognizes the financial liability (or part of the financial liability). The Company
(borrower) enters into an agreement with the lender to replace the original financial liability
in the form of a new financial liability, and if the new financial liability is substantially
different from the original financial liability, the original financial liability is derecognized and
the new financial liability is recognized. If the Company makes substantial changes to the
contractual terms of the original financial liability (or a part thereof), the original financial
liability is derecognized and the new financial liability is recognized in accordance with the
revised terms.
If the financial liability (or a part thereof) is derecognized, the difference between the
carrying amount and the consideration paid (including the transferred non-cash assets or
liabilities assumed) is recognized in current profit or loss.
(6) Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognized financial assets and financial
liabilities, and the legal right can be executed at present, and the Company has a plan to
settle the financial assets and financial liabilities at the same time or at net amount, the
financial assets and financial liabilities can be presented in the balance sheet at net amount
after offsetting. Except for the above circumstances, financial assets and financial liabilities
cannot be offset and shall be presented separately in the balance sheet.
(7) Determination of fair value of financial assets and financial liabilities
Fair value is the amount at which an asset could be sold or a liability could be transferred
between willing parties in an orderly transaction on a measurement date. The fair value of a
financial instrument that is traded in an active market is determined at the quoted price in
the active market. Quoted price in the active market represents quoted price which can be
easily obtained periodically from exchange market, brokers, industry associations or pricing
services agency, etc., which is the transactions amount in arm’s length transactions. The
fair value of a financial instrument that is not traded in an active market is determined by
using a valuation technique. Valuation techniques include using prices of recent market
transactions between knowledgeable and willing parties, reference to the current fair value
of another financial asset that is substantially the same with this instrument, discounted
cash flow analysis and option pricing models, etc. During the valuation, the Company
adopts an applicable valuation technique under current conditions and there are enough
available data and other information to support. Those inputs should be consistent with the
inputs a market participant would use when pricing the asset or liability, and the Company
should maximize the use of relevant observable inputs. When related observable inputs
can’t be acquired or are not feasible to be acquired, then use unobservable inputs.
In summary, the Company categorizes inputs for fair value measurement into three levels
and uses the inputs by the order of Level 1, Level 2 and Level 3. Level 1: quoted prices
(unadjusted) in active markets for identical assets or liabilities at the measurement date.
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.
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(8) Impairment of financial assets
For financial assets measured at amortized cost and debt instrument investments measured
at fair value through other comprehensive income, contract assets and financial guarantee
contracts, the Company recognizes the loss provision based on the expected credit losses.
The Company considers reasonable and reliable information about past events, current
conditions and forecasts of future economic conditions, and takes the risk of default as a
weight, and calculates the probability-weighted amount of the present value of the
difference between the cash flow receivable and the cash flow expected to be received of
the contract to confirm the expected credit losses.
On each balance sheet date, the Company measures the expected credit losses of
financial instruments in different phases. If the credit risk has not increased significantly
since the initial recognition, the financial instruments are in the first phase. The Company
measures the loss provision according to the expected credit losses in the next 12 months;
if credit risk has increased significantly but credit impairment has not yet occurred since the
initial recognition, the financial instruments are in the second phase. The Company
measures the loss provision according to the expected credit losses of the instruments
during the entire duration; if credit impairment has occurred since the initial recognition, the
financial instruments are in the third phase. The Company measures the loss provision
according to the expected credit losses of the instruments during the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Company
measures the loss provision according to the expected credit losses in the next 12 months,
assuming that its credit risk has not increased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financial instruments with
relatively lower credit risk, the Company calculates interest income based on their book
balance before the deduction of impairment provisions and effective interest rate. For
financial instruments in the third phase, the Company calculates interest income based on
their amortized cost after the impairment provision has been deducted from the book
balance and effective interest rate.
For bills receivable, accounts receivable and contractual assets, whether there exist
significant financing components, the Company measures loss provision based on expected
credit loss over the entire duration.
The Company classifies accounts receivable into groups on the basis of shared credit risk
characteristics, and calculates the expected credit losses on groups, the bases of group
determination are as follows:
For each group of bills receivable, the Company applies exposure at default and expected
credit losses rate over the entire duration to calculate the expected credit losses on the
historical credit losses experience, the existing conditions and forecast of future economic
conditions.
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For each group of accounts receivable, the Company makes the comparison of expected
credit losses rates of accounts receivable in overdue days and over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.
For each group of other accounts receivable, the Company applies exposure at default and
expected credit losses rate within the next 12 months or over the entire duration to
calculate the expected credit losses by taking into account the historical credit losses
experience, the existing conditions and forecast of future economic conditions.
The Company recognizes the loss impairment provision or reversed in profit or loss of the
current period. For held debt instruments at fair value through other comprehensive
income, the Company recognizes loss/gain on impairment in profit or loss of the current
period, and adjusts other comprehensive income at the same time.
11. Inventories
√ Applicable Not Applicable
(1) Classification of inventories
Inventory refers to finished products and commodities held by the Company in daily
activities for sale, products in progress, materials and supplies consumed in the process of
production or provision of labour services, including mainly raw materials, turnover
materials, materials for commissioned processing work, packaging materials, products in
progress, semi-finished products through in-house manufacturing, finished products
(products in stock) and project construction, among others.
(2) Pricing of dispatch of inventory
The actual cost of inventories upon delivery is calculated using the weighted average
method.
(3) Impairment provision for inventory
At the balance sheet date, inventory is measured at the lower of cost and net realisable
value.
The net realisable value of inventories that can be directly put to sale, including finished
products, commodities and materials for sale is determined as the estimated selling price of
such inventory less estimated selling expenses and related tax expenses; the net realisable
value of or inventories held for production, is determined as the estimated selling price of
finished products manufactured less estimated cost incurred upon completion, estimated
selling expenses and related tax expenses; the net realisable value of inventory held for the
execution of sales contract or labour contract is computed on the basis of the contract
price. If the quantity of inventories held by the Company is more than the quantity ordered
under a sales contract, the net realisable value of the inventories in excess is computed on
the basis of the general selling price.
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Inventory impairment provision is made on the basis of individual inventory items, provided
that if certain inventories are related to a series of products manufactured and sold in the
same region with identical or similar end uses or purposes and are difficult to measure
separately with other items, their cost and net realisable value may be measured on an
aggregate basis. Inventories The cost and net realizable value of inventories in large
quantity with low unit prices are measured according to inventory types.
At the balance sheet date, if the cost of inventory of the Company is higher than its net
realisable value, impairment provision is made and charged to current profit or loss. If the
factor causing the write-down of inventory value has been removed, the amount of write-
down should be reversed and transferred out of the previous inventory impairment provision
amount. The reversed amount is included in current profit or loss.
(4) Inventory system
The Company adopts the perpetual inventory system as its inventory system.
(5) Amortisation of low-value consumables and packaging materials
The Company adopts one-off amortisation of its low-value consumables and packaging
materials.
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Section X Financial Report
12. Long-term equity investments
√ Applicable Not Applicable
Long-term equity investments in this section refer to equity investments held by the Company
that give it control, joint control or significant influence over the investee.
(1) Recognition of initial cost of investment
For long-term equity investment obtained from business consolidation under common
control, the initial cost is measured at the combining party’s share of the carrying
amount of the equity of the combined party; for a long-term equity investment
obtained from business consolidation not under common control, the initial cost is the
consolidation cost at the date of acquisition;
The Company invested in other equity investment other than long-term equity
investments acquired through combination, the initial investment cost of long-term
equity investments acquired with cash payment is the acquisition price actually paid;
the initial investment cost of long-term equity investments acquired with the issuance
of equity- based securities is represented by the fair value of equity-based securities;
the initial investment cost of long-term equity investments acquired through debt
restructuring is determined in accordance with relevant provisions under “Accounting
Standards for Business Enterprises No.12 — Debt Restructuring”; the initial
investment cost acquired in exchange for non-monetary assets shall be determined in
accordance with relevant provisions of the standard.
(2) Subsequent measurement and recognition of profit or loss
Cost method
Long-term equity investments in which the Company is able to exercise control over
the investee is accounted for using the cost method. Under the cost method, the
carrying value of long-term equity investments, other than additional investment or
recouped investment, shall remain constant. The Company declared the distribution of
profit or cash dividend to the investee and calculated the portion of entitlement,
which is recognised as investment income.
Equity method
The equity method is used by the Company to account for long-term equity
investments in associates and joint ventures. Under the equity method, where the
initial investment cost of a long-term equity investment exceeds the Company’s share
of the fair value of the investee’s identifiable net assets at the time of acquisition, no
adjustment is made to the initial investment cost. Where the initial investment cost is
less than the Company’s share of the fair value of the investee’s identifiable net
assets at the time of acquisition, the difference is recognized in profit or loss for the
period, and the cost of the long-term equity investment is adjusted accordingly.
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Section X Financial Report
Under the equity method, the Company recognizes the investment income and other
comprehensive income according to its share of net profit or loss and other
comprehensive income of the investee, and the carrying amount of the long-term
equity investments shall be adjusted accordingly; the carrying amount of the
investment is reduced by the Company’s share of the profit distribution or cash
dividends declared by an investee; for changes in owner’s equity of the investee other
than those arising from its net profit or loss, other comprehensive income and profit
distribution, the carrying amount of the long-term equity investment shall be adjusted
and recognized to capital reserve. When recognizing attributable share of the net
profit and losses of the investee, the net profit of the investee shall be recognized
after adjustment on the ground of the fair value of all identifiable assets of the
investee when it obtains the investment. If the accounting policies and accounting
periods adopted by the investee are different from those adopted by the Company,
an adjustment shall be made to the financial statements of the investee in
accordance with the accounting policies and accounting periods of the Company and
recognize the investment incomes and other comprehensive income.
The Company’s share of net losses of the investee shall be recognized to the extent
that the carrying amount of the long-term equity investment together with any long-
term interests that in substance form part of the investor’s net investment in the
investee are reduced to zero. If the Company has to assume additional obligations,
the estimated obligation assumed shall be provided for and charged to the profit or
loss as investment loss for the period. Where the investee is making net profits in
subsequent periods, the Company shall resume recognizing its share of profits after
setting off against the share of unrecognized losses.
(3) Change of the accounting methods for long-term equity investments
Change of measurement at fair value to accounting under equity method: where the
equity investment originally held have no control, joint control or significant impact on
the investee, and that are accounted according to the Standards for Recognition and
Measurement of Financial Instruments and can impose common control or place
significant impact on the investee due to addition of investment which resulted in the
increase of shareholding, the investee shall take the fair value of the equity
investment originally held determined in accordance with the Standards for
Recognition and Measurement of Financial Instruments plus the fair value of the
consideration payable for new investment as the initial investment cost accounted
after the equity method is adopted.
Change of measurement at fair value or accounting under equity method to cost
method: the equity investment originally held by the investor with no control, joint
control or significant impact on the investee and accounted according to the
Standards for Recognition and Measurement of Financial Instruments, or the long-
term equity investment originally held in associates or joint ventures that can impose
control over the investee due to addition of investment, shall be accounted as long-
term equity investment formed by combination of relevant enterprises.
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Change of accounting under equity method to measurement at fair value: for the long-
term equity investment originally held with common control or significant impact on
the investee that can no longer impose common control or significant impact on the
investee due to a decrease of shareholding as a result of factors such as partial
disposal, the remaining equity investment shall be accounted in accordance with
Standards for Recognition and Measurement of Financial Instruments, and the
difference between the fair value on the date when the common control or significant
impact no longer exists and the book value is included in profit or loss.
Change of cost method to equity method or measured at fair value: For loss of control
in the invested company due to reasons such as partial disposal of equity investment,
in the preparation of separate financial statements, the residual equity which can
apply common control or impose significant influence to the invested company after
disposal shall be accounted for under equity method. Such residual equity shall be
treated as accounting for under equity method since the equity is obtained and
adjusted. For residual equity which cannot apply common control or impose
significant influence after disposal, it shall be accounted for in accordance with
relevant requirements of “Accounting Standards for Business Enterprises No. 22 —
Recognition and Measurement of Financial Instrument”, and the difference between
the fair value and the carrying value of residual equity on the date loss of control shall
be included in the profit or loss for such period. In the preparation of combined
financial statements, it shall be accounted for in accordance with relevant
requirements of “Accounting Standards for Business Enterprises No. 33 — Combined
Financial Statements”.
(4) Basis of conclusion for common control and significant impact over the investee
Joint control is the contractually agreed sharing of control over an arrangement, which
relevant activities of such arrangement must be decided by unanimously agreement from
parties who share control. If all the parties or a group of parties must act in concert to
decide on the relevant activities of certain arrangement, it can be considered that all parties
or a group of parties have collective control over the arrangement. When determining if
there is any joint control, it should first be determined if the arrangement is controlled
collectively by all parties or a combination of parties, and then determined whether
decisions about activities related to the arrangement must be made by the unanimous
agreement of those parties who have collective control over the arrangement. If there are
two or more party groups that can collectively control certain arrangement, it does not
constitute joint control. When determining if there is any joint control, the relevant
protection rights will not be taken into account.
Significant influence is the power of the investor to participate in the decision-making of an
investee’s financial and operational policies, but neither control nor jointly control the
formulation of such policies with other parties. When determining if there is any significant
influence on the investee, the influence of the voting shares of the investee held directly or
indirectly and the potential voting rights held by the Company and other parties which are
exercisable in the current period and converted to the equity of the investee, including the
warrants, stock options and convertible bonds that are issued by the investee and can be
converted in the current period, shall be taken into account by the Company.
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When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to
50% of the voting shares of the investee, it is generally considered to have significant
influence on the investee, unless there is concrete evidence to prove that it cannot
participate in the production and operational decisions of the investee and cannot pose
significant influence in this situation.
The Company usually determines whether there is significant influence on the investee
through the following one or several circumstances:
Representation at the board or similar authority of the investee.
Participation in the decision-making process of the investee’s financial and operational
policies.
Having important transactions with the investee.
Posting of management personnel at the investee.
Providing key technical data to the investee.
Having one or several of the above circumstances does not mean that the Company must
have significant influence on the investee. The Company needs to comprehensively
consider all the facts and circumstances to make an appropriate judgment.
(5) Methods of impairment test and provision for impairment
At the balance sheet date, the Company reviews whether there are signs for the
impairment of long-term equity investments. If yes, the recoverable amount is determined
through impairment test and provision for impairment is made based on the difference
between the recoverable amount and the carrying value. Impairment loss will not be
reversed in subsequent accounting periods once provision is made for it. The recoverable
amount is the higher of net fair value of long-term equity investments on disposal and the
present value of estimated future cash flow.
(6) Disposal of long-term equity investments
Upon the Company’s disposal of long-term equity investment, the difference between the
considerations actually received and the carrying value of the disposed investment is
recognized in current profit or loss. For long-term equity investment accounted for using the
equity method, the part previously recognized in other comprehensive income is accounted
on pro rata basis upon disposal in the same way as the relevant assets or liabilities are
disposed of directly by the investee.
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Section X Financial Report
13. Investment properties
(1) Types and measurement models of investment properties
The Company’s investment properties include the following types: leased land-use rights,
leased buildings and land-use rights held for transfer upon appreciation.
An investment property is initially measured at cost, and cost method is adopted for
subsequent measurement.
(2) Adoption of cost model as accounting policy
The buildings leased out of investment properties of the Company are depreciated over
their useful lives using the straight-line method. The specific measurement policy is the
same as that of fixed assets. For land use rights leased out of investment properties or
held for resale after appreciation in value, they are amortized using the straight-line
method. The specific measurement policy is the same as that of intangible assets.
At the balance sheet date, the Company reviews whether there are signs for impairment of
investment properties. If yes, the recoverable amount is recognized through an impairment
test and provision for impairment is made based on the difference between the carrying
value and the recoverable amount. Impairment loss will not be reversed in subsequent
accounting periods once provision is made for it.
Where the investment properties are sold, transferred, retired or damaged, the differences
from disposal after deducting the carrying amount and related taxes are recognised in profit
or loss for the current period by the Company. When the Company has evidence indicating
the self-occupied houses and buildings are converted to leasing or leasing out its
properties held for sale under operating leases, the carrying amount of such fixed assets,
intangible assets or inventories before the conversion are transferred to investment
properties. When the Company has evidence indicating the property held to earn rentals or
for capital appreciation are converted to self-occupation or the property intended for
operating lease purpose are open for sale, the carrying amount of such properties before
the conversion are transferred to fixed assets, intangible asset or inventories.
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14. Fixed assets
(1). Recognition criteria and measurement of fixed assets
The Company’s fixed assets are tangible assets that are held for production of goods,
provision of labor services, leasing or operation and management purposes, and have a
useful life of more than one fiscal year, which are recognized when the following conditions
are met:
economic benefits in relation to the fixed assets are very likely to flow into the Company;
the cost of the fixed assets can be measured reliably.
Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shall
be included in the cost of the fixed asset, and the carrying amount of the component of
the fixed asset that is replaced shall be derecognised. Otherwise, such expenditure shall be
recognised in profit or loss for the period in which it is incurred.
Fixed assets of the Company are initially measured at cost. The purchase cost of a fixed
asset comprises its purchase price, related taxes and any directly attributable expenditure
for bringing the asset to its working condition for its intended use, such as transportation
costs and installation expenses. If the payment for a purchased fixed asset is deferred
beyond the normal credit terms, the cost of the fixed asset shall be determined based on
the present value of the instalment payments. The difference between the actual payment
and the present value of the purchase price is recognised in profit or loss over the credit
period, except for such difference that is capitalised according to Accounting Standard for
Business Enterprises No. 17 — Borrowing Costs (ASBE No. 17).
(2). Classification of fixed assets and depreciation method
The Company’s fixed assets are mainly classified into: buildings, machinery equipment,
transportation equipment and office and other equipment; depreciation is conducted on a
straight-line basis. The useful life and estimated net residual value of fixed assets are
determined based on the nature and use of the fixed assets. At the end of the year, the
useful life and estimated residual value of and depreciation method for fixed assets are
reviewed, and adjustment is made for any difference with the original estimated amount.
Other than fully depreciated fixed assets which remain in use and the land which is
separately priced and recorded, the Company measures depreciation for all fixed assets.
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The type, depreciation method, estimated useful lives, estimated residual ratio and yearly
depreciation of the Company’s fixed assets are as follows:
Estimated Estimated
useful lives net residual
Type of asset Depreciation method (years) ratio
Buildings Life average method 8–40 0–5%
Machinery equipment Life average method 4–20 0–5%
Transportation equipment Life average method 5–10 0–5%
Office and other equipment Life average method 3–10 0–5%
(3). Method of test and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there are signs for impairment of
the fixed assets. If yes, the recoverable amount is recognized through an impairment test
and provision for impairment is made based on the difference between the carrying value
and the recoverable amount. Impairment loss will not be reversed in subsequent
accounting periods once provision is made for it.
(4). Disposal of fixed assets
When fixed assets are disposed of or are expected to fail to generate economic benefits
after the use or disposal, the fixed assets shall be derecognized. The difference of the
income from sales, transfer, retirement or damage of fixed assets deducting the book value
and related taxes should be included in the current profit and loss.
15. Construction in progress
√ Applicable Not Applicable
(1) Measurement of construction in progress
Costs of construction in progress are recognised based on actual construction expense,
including various necessary construction expenses incurred during construction, borrowing
costs to be capitalised before reaching estimated usable status and other relevant fees.
(2) Standard and timing of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when the
project is completed and ready for its intended use, which shall satisfy one of the following
conditions:
The construction of the fixed assets (including installation) has been completed or
substantially completed;
The fixed asset has been used for trial production or operation and it is evidenced that
the asset can operate ordinarily or steadily produce qualified products; or the result of
trial operation proves that it can operate normally or be opened for business;
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Further expenditure incurred for construction of the fixed asset is very minimal or
remote;
The constructed fixed asset reaches or almost reaches the design or contractual
requirements, or complies with the design or contractual requirements.
(3) Method of test and provision for impairment of impairment of construction in
progress
At the balance sheet date, the Company reviews the construction in progress to check
whether there is any sign of impairment. If yes, the recoverable amount is recognized
through an impairment test and provision for impairment is made based on the difference
between the carrying value and the recoverable amount. Impairment loss will not be
reversed in subsequent accounting periods once provision is made for it.
The recoverable amount of construction in progress should base on the higher of net fair
value of asset less disposal expense and the present value of estimated future cash flow of
the asset.
16. Borrowing costs
√ Applicable Not Applicable
(1) Recognition principles for capitalization of borrowing costs
The Company’s borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized into the cost of relevant
assets. Other borrowing costs are recognized as expenses in current profit or loss based
on the amount incurred. Qualifying assets for capitalization include fixed assets, investment
properties and inventories that necessarily take a substantial period of time for acquisition,
construction or production to get ready for their intended use or for sale.
(2) Computation of capitalized amount
Period of capitalization refers to the period from the commencement to the cessation of
capitalization timing of borrowing costs, excluding the periods in which capitalization of
borrowing costs is suspended.
Period of suspended capitalization: Capitalization of borrowing costs is suspended during
periods in which the acquisition, construction or production of a qualifying asset is
suspended abnormally and the suspension lasts for more than 3 months.
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Computation of capitalized amount: Specific borrowings will be determined based on the
actual interest expense incurred in the current period of the special borrowings less the
interest income from unutilized borrowings deposited in banks or investment income from
temporary investment; Normal borrowings utilized are calculated based on the weighted
average of the asset expenses accumulated exceeding the asset expenses of the portion of
special borrowings multiplied by the capitalization ratio of the normal borrowings utilized.
Capitalization ratio is calculated based on weighted average interest rate of normal
borrowings; For borrowings with discount or premium, the discount or premium which
should be amortized in each accounting period is determined based on the effective
interest rate method and an adjustment should be made to the amount of interests in each
period.
17. Right-of-use assets
√ Applicable Not Applicable
Right-of-use assets are the right of the Company as a lessee to use leased assets during the
lease term. On the commencement date of the lease term, the Company as lessee recognizes
the right-of-use assets and lease liabilities for the lease, except for short-term leases and low
value assets leases which are treated with practical expedient.
The Company’s right-of-use assets shall be initially measured at the costs. The costs include:
(1) initial measurement amount of the lease liability;
(2) a lease payment paid on or before the date of commencement of the lease period, where
there was lease incentive, such incentives shall be deducted;
(3) initial direct costs incurred by the Company as lessee;
(4) costs expected to be incurred by the Company for demolition and removal of leased assets,
restoration of the premises where the leased assets are located, or restoration of the
leased assets to the conditions of the lease terms.
The Company accrues depreciation for right-of-use assets using the life average method. If the
Company can reasonably determine that the ownership of the leased asset can be acquired at
the expiration of the lease term, the leased asset shall be depreciated within its remaining useful
life. If the Company cannot reasonably determine that the ownership of the leased asset can be
acquired at the expiration of the lease term, the leased asset shall be depreciated within the
lease term or its remaining useful life (whichever is shorter).
The Company determines whether the right-of-use assets are impaired in accordance with the
provisions of Accounting Standards for Business Enterprises No. 8 — Asset Impairment and
performs accounting treatment on the identified impairment losses.
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When the lease liabilities are remeasured in accordance with the Standards, the Company
adjusts the book value of the right-of-use assets accordingly. If the book value of the right-of-
use assets is reduced to zero, but needs a further reduction in the measurement of the lease
liabilities, the Company recognizes any remaining amount of the remeasurement in current profit
or loss.
If the lease change results in a narrower lease or a shorter lease term, the Company reduces the
book value of the right-of-use assets accordingly and recognizes the related gains or losses of
the partially terminated or completely terminated leases into current profit and loss. For other
lease changes which result in the remeasurement of lease liabilities, the Company adjusts the
book value of the right-of-use assets accordingly.
18. Intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical form and are
possessed or controlled by the Company, and are recognized when the following conditions are
met:
it is probable that economic benefits attributable to the intangible assets will flow into the
Company;
the costs of the intangible assets can be measured reliably.
(1) Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs of
purchased intangible assets include the consideration and relevant expenses actually paid.
For intangible assets contributed by investors, relevant actual costs are determined based
on the value agreed in the investment contract or agreement. But if the value agreed in the
investment contract or agreement is not a fair value, the actual costs should be determined
based on the fair value. The cost of a self-developed intangible asset is the total
expenditure incurred in bringing the asset to its intended use. Intangible assets acquired in
a business combination not under common control that are owned by the acquiree but not
recognised in its financial statements are recognised as intangible assets at fair value on
initial recognition of the acquiree’s assets.
Subsequent measurement of intangible assets of the Company: Intangible assets with
finite useful lives are amortized on a straight-line basis; their useful lives and amortization
methods are reviewed at the end of each year, and adjusted accordingly if there is any
variance with the previous estimates; Intangible assets with indefinite useful lives are not
amortized and their useful lives are reviewed at the end of each year. If there is an
objective evidence that the useful life of an intangible asset is finite, an estimation should
be made on the useful life and the intangible asset should be amortized using the straight-
line method.
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(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the asset brings
economic benefits for the Company is unforeseeable, or the useful life could not be
ascertained.
Criterion of determining indefinite useful lives: the period is derived from contractual
rights or other legal rights and there are no explicit years of use stipulated in the contract
or laws and regulations; the period in which the intangible assets generate benefits for
the Company still could not be estimated after considering the industrial practice or
relevant expert opinions.
At the end of each year, the Company reviews the useful lives of the intangible assets with
indefinite useful lives. The assessment is primarily reviewed by relevant departments that
use the intangible assets, using the down-to-top approach, to determine if there are
changes to the determination basis of indefinite useful lives.
(3) Methods of test and provision for impairment of intangible assets
At the balance sheet date, the Company reviews intangible assets to check whether there
is any sign of impairment. If yes, the recoverable amount is recognized through an
impairment test and provision for impairment is made based on the difference between the
carrying value and the recoverable amount. Impairment loss will not be reversed in
subsequent accounting periods once provision is made for it.
The recoverable amount of intangible assets should be based on the higher of the net fair
value of the assets less the disposal expense and the present value of estimated future
cash flow of the assets.
(4) Basis for research and development phases for internal research and development
project and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred by the Company
in the research stage is recognized in the profit or loss as incurred. Expenses incurred by
the Company in the development stage are capitalized only if all of the following conditions
are met: the technical feasibility of completing the intangible assets so that they will be
available for use or for sale; the intention to complete the intangible assets for use or for
sale; how the intangible assets will generate economic benefits, including there is
evidence that the products produced by the intangible assets has a market or the
intangible assets themselves have a market; if the intangible assets are for internal use,
there is evidence that there exists usage for the intangible assets; the availability of
adequate technical, financial and other resources to complete the development and gain
the ability to use or sell the intangible assets; the capability to reliably measure the
expenditures attributable to the development stage of the intangible assets.
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Specific standards of the Company for distinguishing research stage and development
stage of an internal research and development project: research stage of the Company
refers to the stage of planned investigation and search for obtaining new technology and
knowledge, which features planning and exploration; before commercial production or other
uses, the stage of applying the research achievements and other knowledge in a plan or
design to produce new or substantially improved materials, equipment and products is
regarded as development stage of the Company, which features pertinence and is very
likely to form results.
All the expenditures incurred by the Company on research and development which cannot
be distinguished between research stage and development stage are recognized in the
profit or loss.
19. Impairment of long-term assets
√ Applicable Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,
construction in progress, intangible assets and other long-term assets are tested for impairment
by the Company if there is any sign of impairment at the balance sheet date. If the result of the
impairment test indicates that the recoverable amount of the assets is less than the carrying
amount, a provision for impairment will be made based on the difference and will be recorded in
impairment loss. The recoverable amount is the higher of the net fair value of the assets less the
disposal expense and the present value of estimated future cash flow of the assets. Provision for
asset impairment is calculated and recognized on the individual asset basis. If it is not possible
to estimate the recoverable amount of an individual asset, the recoverable amount of the asset
group to which the asset belongs is determined. An asset group is the smallest asset portfolio
that can generate cash inflows independently.
Goodwill arising from a business combination and an intangible asset with an indefinite useful life
is tested for impairment at least at each year end, irrespective of whether there is any indication
that the asset may be impaired. Intangible assets that have not been ready for intended use are
tested for impairment each year.
When the Company carries out impairment test of the goodwill, the carrying amount of the
goodwill, arising from business combination, shall be allocated to the related asset groups on
reasonable basis since the acquisition date, or to the related asset group portfolios if it is difficult
to be allocated to the related asset groups. When the carrying amount of the goodwill is
allocated to the related asset groups or asset group portfolios, it shall be allocated in the
proportion of the fair value of each asset group or asset group portfolio against the total fair
value of related asset groups or asset group portfolios. If it is difficult to measure the fair value
reliably, it shall be allocated in the proportion of the carrying amount of each asset group or
asset group portfolio against the total carrying amount of related asset groups or asset group
portfolios. When impairment test is made by the Company to the related asset groups or asset
group portfolios including goodwill, if there is a sign that the related asset groups or asset group
portfolios are prone to impair, the Company shall first conduct impairment test on the asset
136 Haier Smart Home Co., Ltd. Interim Report 2023
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groups or asset group portfolios excluding goodwill, calculate the recoverable amount and
recognize the corresponding impairment loss by comparing with its carrying amount. The
Company shall then conduct impairment test on the asset groups or asset group portfolios
including goodwill and compare the carrying amount (including the carrying amount of allocated
goodwill) of related asset groups or asset group portfolios with the recoverable amount thereof.
Impairment loss shall be recognized in accordance with the differences when the recoverable
amount of the related asset groups or asset group portfolios is lower than the carrying amount
thereof. The amount of the impairment loss is first reduced by the carrying amount of the
goodwill allocated to the asset group or set of asset groups, and then the carrying amount of
other assets (other than the goodwill) within the asset group or set of asset groups, pro rata
based on the carrying amount of each asset.
Once the above impairment loss on assets is recognized, it shall not be reversed by the
Company in any subsequent accounting period.
20. Long-term prepaid expense
√ Applicable Not Applicable
Long-term prepaid expenses of the Company are expenditures which have incurred but the
benefit period of which is more than one year (exclusive). They are amortized by installments over
the benefit period based on each item under the expenses. If items under the long-term pre-paid
expenses are no longer beneficial to the subsequent accounting periods, the amortized value of
such unamortized items is then fully transferred to the profit or loss.
21. Staff’s remuneration
Staff’s remunerations are all forms of compensation and other relevant expenditure given by the
Company in exchange for services rendered by employees, including short-term remunerations,
post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies, employee
welfare, housing provident fund, labor union fee and education fee, medical insurance premiums,
work-related injury insurance premiums, maternity insurance premiums, short-term compensated
leave, short-term profit-sharing plans, etc. During the accounting period when employees render
services, short-term remunerations that actually incurred shall be recognized as liabilities and
credited into the current profit or loss or the cost of relevant assets on an accrual basis by the
benefit objects.
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Post-employment benefits mainly include the basic pension insurance, enterprise annuity, etc., In
accordance with the risks and obligations undertaken by the Company, the post-employment
benefits are classified as defined contribution plans and defined benefit plans. Defined
contribution plans: the Company shall recognize the sinking funds paid on the balance sheet date
to individual entities in exchange for services from employees in the accounting period as
liabilities, and shall credit such funds into the profit or loss or the cost of relevant assets in
accordance with the benefit objects. Defined benefit plans: the cost for providing benefits is
determined using the expected cumulative welfare unit method, with actuarial valuations being
carried out by independent actuary at the interim and annual balance sheet date. The costs for
staff’s remunerations incurred by the defined benefit plans of the Group are categorized as
follows: (1) service cost, including current period service cost, past service cost and settlement
profit or loss. Specifically, current period service cost means the increase of the present value of
defined benefit obligations resulted from the current period services offered by employees. Past
service cost means the increase or decrease of the present value of defined benefit obligations
resulted from the revision of the defined benefit plans related to the prior period services offered
by employees; (2) interest expenses of defined benefit plans; (3) changes caused by the
remeasurement of liabilities for defined benefit plans. Unless other accounting standards require or
permit the credit of the costs for employee welfare into the cost of assets, the Company will
credit (1) and (2) above into the profit or loss; and recognize (3) above as other comprehensive
income and will not transfer it back to the profit or loss in subsequent accounting periods.
Termination benefits: The indemnity proposal provided by the Company for employees for the
purpose of terminating labor relations with employees before expiry of the labor contracts or
encouraging employees to accept downsizing voluntarily. When the following conditions are met,
the Company will recognize and credit into the profit or loss the accrued liabilities arising from the
indemnity as a result of terminating labor relations with the employees: the Company has made a
formal plan for termination of labor relations or has made an offer for voluntary redundancy which
will be implemented immediately; and the Company could not unilaterally withdraw the plan for
termination of labor relations or the redundancy offer. Early retirement plans for employees will be
handled in the principle the same as the termination benefits above. The Company will credit the
salaries and social insurance premiums to be paid to the early retirees during the period from the
date of early retirement to the normal retirement date to the profit or loss when recognition
conditions for estimated liabilities are met.
22. Lease liabilities
√ Applicable Not Applicable
On the commencement date of the lease term, the Company as the lessee shall recognize the
right-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initially
measured at the present value of the lease payment that has not been paid on the
commencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rate
implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,
the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discount
rate.
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The interest rate implicit in lease refers to the interest rate that makes the sum of the present
value of the lessor’s lease receivable amount and the present value of the unguaranteed residual
value equal to the sum of the fair value of the leased asset and the initial direct cost of the
lessor. The lessee’s incremental borrowing rate refers to the interest rate that the lessee is
required to pay for borrowing funds under similar mortgage conditions in a similar economic
environment in order to obtain assets close to the value of the right-of-use assets during a
similar period.
The Company shall calculate the interest expenses of lease liabilities over the lease term at the
fixed periodic interest rate, and include it into current profit or loss or assets cost.
After the commencement date of the lease term, where the assessment results of the renewal of
the option, the termination of the lease option and the purchase option have changed, the
Company re-determines the lease payment and re-measures the lease liabilities in accordance
with the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease payment
changes due to a change in expected payment under a guaranteed remaining value or changes
in an index or rate used in determining the lease payments, the Company shall re-measure lease
liabilities based on present value of the lease payment after changes. In such cases, the
discount rate adopted by the Company shall remain unchanged; however, if the change in lease
payment results from a change in floating interest rates, the Company shall use a revised
discount rate.
23. Estimated liability
√ Applicable Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of
commercial acceptance bills, pending litigation or arbitration and product quality assurance
is the present obligation of the Company and the performance of such obligation is likely to
lead to an outflow of economic interests and its amount can be reliably measured, such
obligation shall be recognized as an estimated liability.
(2) Measurement of estimated liability
The estimated liability shall be initially measured according to the best estimate of the
necessary expenses for the performance of the present obligation. If there is a continuous
range for the necessary expenses and if all the outcomes within this range are equally likely
to occur, the best estimate shall be determined according to the middle estimate within the
range.; if there are two or more items involved, the best estimate should be determined
according to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If
there is objective evidence that the carrying value could not reflect in the current best
estimate, the carrying value shall be adjusted to reflect the current best estimate.
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24. Share-based payments
√ Applicable Not Applicable
For equity-settled share-based payment transaction in return for services from employees, it shall
be measured at the fair value of equity instruments granted to the employees at the grant date.
For the payment of such fair value that may only be exercised if services are fulfilled during the
vesting period or the specified performance condition is achieved, the amount of such fair value
shall, based on the best estimate of the number of exercisable equity instruments during the
vesting period, be recognized in relevant costs or expenses in straight-line method with the
increase in the capital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumed by
the Company, which is determined based on the shares or other equity instruments. For the
cash-settled share-based payment that may be exercised immediately after the grant, the fair
value of the liability assumed by the Company shall, on the date of the grant, be recognized in
relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled
share-based payment that may be exercised if services are fulfilled during the vesting period or
the specified performance condition is achieved, on each balance sheet date within the vesting
period, the services acquired in the current period shall, based on the best estimate of exercise,
be recognized in relevant costs or expenses at the fair value of the liability assumed by the
Company, and the liabilities shall be adjusted correspondingly.
At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fair
value of the liability is re-measured with its change consolidated in profit/loss.
When there are changes to the Company’s share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if the
modification increases the number of equity instruments granted, the increase in fair value of the
equity instruments is recognized as a corresponding increase in service achieved. Increase in the
fair value of equity instruments refer to the difference between the fair values of the equity
instrument on the modified date before or after the modification. If the Company modifies the
vesting conditions in such manner conductive to the employees, including the shortening of the
vesting period, change or cancellation of the performance conditions (rather than market
conditions), the Company shall consider the modified vesting conditions upon the disposal of
vesting conditions. If the modification reduces the total fair value of shares paid or the Company
uses other methods not conductive to employees to modify the terms and conditions of share-
based payment plans, it will continue to be accounted for the services obtained in the
accounting treatment, as if the change had not occurred, unless the Company cancelled some or
all of the equity instruments granted.
During the vesting period, if the Company cancel equity instruments granted which will be treated
as accelerating the exercise of rights and any amount to be charged over the remaining vesting
period should be recognized immediately in the profit or loss, while at the same time recognize
the capital reserve. Employees or other parties can choose to meet non-vesting conditions, but
for those that are not met in the vesting period, the Company will treat it as cancellation of
equity instruments granted.
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25. Revenue
√ Applicable Not Applicable
Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries
during day-to-day operations which might lead to increase of shareholders’ equity and be
irrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,
recognized revenue when the client obtains the control right of relevant goods or services.
Where the contract includes two or more performance obligations, during the starting date of the
contract, the Company and its subsidiaries allocate transaction price to various single
performance obligation in accordance with the relevant proportion of separate selling price of
goods or services promised by various single performance obligation, and measure revenue in
accordance with transaction price allocated to various single performance obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries are
expected to be entitled to collect due to transfer of goods and services transferred to the client,
excluding the amount collected for any third party. The transaction price recognized by the
Company and its subsidiaries does not exceed the amount of recognized revenue when relevant
uncertainties are eliminated and might not incur material carrying back. The amount that is
expected to be returned to the client is taken as liability of returned goods and is not recorded
in transaction price.
When one of the following conditions is met, the Company and its subsidiaries perform
performance obligations during a certain time horizon, otherwise, it belongs to fulfilling
performance obligations at a certain time point:
The client simultaneously obtains and consumes economic benefits as the Company and its
subsidiaries perform the contract;
The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;
Goods produced by the Company and its subsidiaries during the process of performance
have no alternative use, and the Company and its subsidiaries are entitled to collect the
amount for the cumulative completed and performed portion to date during the entire
contractual period.
For the performance obligations performed during a certain time horizon, the Company and its
subsidiaries recognize revenue in accordance with the schedule of performance during such time
horizon. When the schedule of performance can’t be reasonably recognized, where the costs that
have been incurred by the Company and its subsidiaries are estimated to be compensated,
revenue shall be recognized in accordance with the amount of costs that has been incurred until
the schedule of performance can be reasonably confirmed.
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For performance obligations performed at a certain time point, the Company and its subsidiaries
recognize revenue at the time point when the client obtains the control right of relevant goods or
services. When judging whether the client has obtained control right over goods or services, the
Company and its subsidiaries will consider the following signs:
The Company and its subsidiaries enjoy the right of instant collection over such goods and
services;
The Company and its subsidiaries have transferred the material objects of such goods to
the client;
The Company and its subsidiaries have transferred statutory ownership right of the goods
or major risks and rewards of the ownership to the client;
The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration for
having transferred goods or services to the client (and such right depends on other factors other
than time lapse) is presented as contractual asset, and contractual asset is provisioned
impairment on the basis of expected credit losses. The right owned by and unconditionally
collected from the client by the Company and its subsidiaries (only depend on time lapse) shall
be presented as accounts receivable. Obligations that the Company and its subsidiaries have
collected or shall collect consideration from the client and shall transfer goods or services to the
client are presented as contractual obligations.
Specific accounting policies relating to major activities that the Company and its subsidiaries
obtain revenue are described as follows:
(1) Sale of goods
Generally, contracts for sale of goods between the Company and its clients only include
performance obligation of transferring the whole machine of home appliance. Generally, on
the basis of taking into account the following factors comprehensively, the Company
recognizes the revenue at the time point of transfer of control right of goods: the right of
instant collection for obtaining goods, transfer of major risks and rewards on ownership of
goods, transfer of statutory ownership of goods, transfer of assets of material objects of
goods, the client’s acceptance of such goods.
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(2) Construction contract income
Construction contract between the Company and the client generally includes performance
obligations of construction and installation of commercial air-conditioner and smart home,
because the client is able to control goods under construction during the Company’s
performance process, the Company takes them as performance obligations performed
during a certain time horizon, and recognizes revenue in accordance with the schedule of
performance, and it is an exemption when the schedule of performance can’t be
reasonably confirmed. The Company confirms the schedule of performance of services
provided in accordance with the input method. When the schedule of performance can’t be
reasonably confirmed, where the costs that have been incurred by the Company are
estimated to be compensated, the revenue will be recognized in accordance with the
amount of costs that has been incurred until the schedule of performance can be
reasonably confirmed.
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides quality
assurance for goods sold and project constructed. For guarantee-type quality assurance in
order to ensure the client that goods sold comply with existing standards, the Company
conducts accounting treatment in accordance with estimated liabilities. For service-type
quality assurance in order to ensure the client that we also provide a separate service other
than that the goods sold comply with existing standards, the Company takes it as a
separate performance obligation, and allocates partial transaction price to service-type
quality assurance in accordance with the relevant proportion of separate selling price of
goods and service-type quality assurance, and recognizes revenue when the client obtains
control right over services. When assessing whether quality assurance provides a separate
service other than ensuring the client that the goods sold comply with existing standards,
the Company shall consider factors such as whether such quality assurance is under
statutory requirements or industrial practices, the term of quality assurance and the nature
of the Company’s commitment to perform the tasks.
26. Government grants
√ Applicable Not Applicable
(1) Types of government grants
Government grants refer to the gratuitous monetary assets or non-monetary assets
obtained by the Company from the government, excluding the capital invested by the
government as an owner. The government grants are mainly divided into asset-related
government grants and revenue-related government grants.
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(2) Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in current profit or
loss on an even basis over the useful life of relevant assets; government grants measured
at nominal amount shall be recognized directly in current profit or loss. Revenue-related
government grants shall be treated as follows: those used to compensate relevant
expenses or losses to be incurred by the enterprise in subsequent periods are recognized
as deferred income and recorded in current profit or loss when such expenses are
recognized; those used to compensate relevant expenses or losses that have been
incurred by the enterprise are recorded directly in current profit or loss.
(3) Basis for determination of asset-related government grant and revenue-related
government grant
If the government grant received by the Company is used for purchase, construction or
other project that forms a long-term asset, it is recognized as asset-related government
grant.
If the government grant received by the Company is not asset-related, it is recognized as
revenue-related government grant.
Government grant received without clear objective shall be classified as asset-related
government grant or revenue-related government grant by:
Government grant subject to a certain project shall be separated according to the
proportion of expenditure budget and capitalization budget, and the proportion shall
be reviewed and modified if necessary on each balance sheet date;
Government grant shall be categorized as revenue-related if its usage is described in
general statement and no specific project is specified in the relevant government
document.
(4) Amortization method and determination of amortization period of deferred revenue
related to government grants
Asset-related government grant received by the Company is recognized as deferred
revenue and is evenly amortized to the profit or loss in the current period over the
estimated useful life of the relevant asset starting from the date when the asset is available
for use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of the
period when there is clear evidence that the relevant conditions set out in the financial
subsidy policies and regulations are fulfilled and the receipt of such financial subsidy is
assured.
Other government grants other than those measured at the account receivable is
recognized upon actual receipt of such subsidies.
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27. Deferred income tax assets/deferred income tax liabilities
√ Applicable Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are recognized:
(1) Based on the difference between the carrying amount and the tax base amount of an asset
or a liability (items not recognized as assets and liabilities but their tax base is ascertained
by the tax laws and regulations, the tax base is the difference), deferred income tax asset
or deferred income tax liability is calculated using the applicable tax rate prevailing at the
expected time of recovering the asset or discharging the liability.
(2) Deferred income tax asset is recognized to the extent that there is enough taxable income
for the deduction of the deductible temporary difference. At the balance sheet date, if there
is sufficient evidence that there will be enough taxable income in the future for the
deduction of the deductible temporary difference, the deferred income tax asset not
recognized in previous accounting period is recognized. If there is no sufficient evidence
that there will be enough taxable income in the future for the deduction of the deferred
income tax asset, the carrying value of the deferred income tax asset is reduced.
(3) Deferred income tax liability is recognized for taxable temporary difference arising from
investments in subsidiaries and associated companies, unless the Company could control
the time of reversal of the temporary differences and the temporary differences would not
be probably reversed in the foreseeable future. For deductible temporary differences arising
from investments in subsidiaries and associated companies, deferred income tax asset is
recognized if the temporary difference will be very probably reversed in the foreseeable
future and it is highly probable that taxable income will be available in the future to deduct
the deductible temporary difference.
(4) No deferred income tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill. No deferred income tax asset or deferred income tax liability is
recognized for the temporary differences resulting from the initial recognition of assets or
liabilities due to a transaction other than a business combination, which affects neither
accounting profit nor taxable income (or deductible loss). At the balance sheet date,
deferred income tax assets and deferred income tax liabilities are measured at the tax rates
that apply to the period when the asset is expected to be recovered or the liability is
expected to be settled.
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28. Other significant accounting policies and accounting estimations
√ Applicable Not Applicable
(1) Asset securitization business
Some of the Company’s receivables are securitized. The Company’s underlying assets are
trusted to a special purpose entity which issues securities to investors. The Company
serves as the asset service supplier, providing services including asset maintenance and its
daily management, formulation of the annual asset disposal plan, formulation and
implementation of the asset disposal plan, signing relevant asset disposal agreements and
periodic preparation of asset service report.
The Company has evaluated the extent to which it transfers the risks and rewards of
assets to other entities and the extent it exercises control over such entities while applying
the accounting policy in respect of securitization of financial assets:
The financial asset is derecognized when the Company transfers substantially all the
risks and rewards of ownership of the financial asset;
Recognition of the financial asset is continued when the Company retains substantially
all the risks and rewards of ownership of the financial asset;
When the Company neither transfers nor retains substantially all the risks and rewards
of ownership of the financial asset, the Company evaluates whether it retains control
over the financial asset. If the Company does not retain control, it derecognizes the
financial asset and recognizes separately as assets or liabilities any rights and
obligations created or retained in the transfer. If the Company retains control, it
continues to recognize the financial asset to the extent of its continuing involvement
in the financial asset.
(2) Hedge accounting
Hedge refers to risk management activities that enterprises designate financial instruments
as hedge instruments in order to manage risk exposure caused by specific risks such as
foreign exchange risk, interest rate risk, price risk and credit risk, allowing to expect
changes in fair value or cash flow of hedge instruments to offset all or partial changes in
fair value or cash flow of hedged items.
Hedged items refer to items which make enterprises face risks of changes in fair value or
cash flow and are designated as hedged objects and can be reliably measured.
A hedging instrument is a financial instrument designated by an enterprise for the purpose
of hedging, whose fair value or cash flow changes are expected to offset the change in the
fair value or cash flow of the hedged items.
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The Company continuously conducts assessment over whether hedge relationship complies
with requirements of hedge effectiveness on the starting date of hedge and during follow-
on period. Hedge effectiveness refers to the extent that changes in fair value or cash flow
of hedge instruments can offset that of hedged items caused by the risks of being hedged.
The portion that the changes in fair value or cash flow of hedge instruments is greater or
less than that of hedged items is the ineffective portion of hedge.
(3) Explanations on significant accounting estimates
Judgments, estimates and assumptions shall be made to book value of the financial
statements items, which could not be measured accurately, due to the inherent
uncertainties of operating activities, while applying accounting policy. Such judgments,
estimates and assumptions were based on the management’s historical experience and
made after other various factors are considered. These judgments, estimates and
assumptions will influence the amount of revenues, expenses, assets and liabilities
presented in financial reports and the disclosure of contingent liabilities on the balance
sheet date. However, the actual results caused by the uncertainties of these estimations
may be different from the current estimates of the management, and thus cause a material
adjustment to the carrying amounts of assets and liabilities affected in the future. The
judgments, estimates and assumptions mentioned above shall be reviewed on a going
concern basis. If the revisions to accounting estimates only affect the current period, the
amount affected shall be recognized in the current period; if the revisions affect both the
current and future periods, the amount affected shall be recognized in both the current and
future periods.
On the balance sheet date, the Company needs to have judgments, estimates and
assumptions about the following items on the financial statements:
Estimated liabilities
Provision for product quality guarantee, expected contract losses, and other estimates
shall be made in accordance with the terms of contracts, current knowledge and
historical experience. If the contingent event has formed a present obligation the
performance of which is very probable to result in outflow of economic benefits from
the Company, an estimated liability shall be recognized by the Company on the basis
of the best estimate of the expenditures to settle relevant present obligation.
Recognition and measurement of the estimated liability significantly rely to a great
extent on the management’s judgments. In the process of judgment, the Company
takes into consideration the assessment of relevant risks, uncertainties, time value of
money and other factors related to the contingent events. Among them, the Company
will undertake estimated liabilities with respect to the after-sales services provided for
the return, maintenance and installation of goods. When estimating liabilities, the
Company has considered the empirical data on maintenance in recent years, but the
previous maintenance experiences may fail to reflect the future circumstances. Any
increase or decrease in this provision is likely to affect the profits and losses of the
next year.
Haier Smart Home Co., Ltd. Interim Report 2023 147
Section X Financial Report
Provision of expected credit losses
The Company calculates the expected credit losses in accordance with breach risk
exposure and expected credit loss rate, and confirms expected credit loss rate on the
basis of breach possibilities and breach loss rate. When confirming expected credit
loss rate, the Company uses data such as internal historical credit loss experiences,
and conducts adjustments over historical data in combination with current status and
forward-looking information. When considering forward-looking information, indexes
used by the Company include risks such as economic downturn, growth of expected
unemployment rate, changes in external market environment, technological
environment and client conditions. The Company regularly monitors and reviews
relevant assumptions relating to calculation of expected credit losses. The aforesaid
estimation techniques and key assumptions have not changed substantially in this
year.
Impairment provision of inventories
Inventories are measured by lower of cost and net realizable value according to the
accounting policies of inventories; for inventories whose costs are higher than the net
realizable value or those obsolete and unsalable, the impairment provision of
inventories shall be made. The carrying value of inventory shall be written down to the
net realizable value on the basis of the evaluation of the salability of inventories and
the net realizable value thereof. Authenticating inventory impairment requires the
management’s obtaining of solid evidence, and their judgments and estimations made
after considering the purpose of holding inventories and the effect of events after the
balanced sheet date and etc. The difference between the actual outcome and the
previously estimated outcome will influence the carrying value of inventories and the
provision or reversal of impairment provision of inventories during the period when the
estimates are changed.
Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine
their fair value through a variety of valuation methods. Such valuation methods
include discounted cash flow analysis. In the valuation, the Company shall estimate
the future cash flow, credit risk, market volatility and correlation, and select the
appropriate discount rate. Such related assumptions are uncertain, and their changes
may affect the fair value of financial instruments.
148 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Impairment of investment in other equity instruments
The Company largely relies on judgments and assumptions of the management when
determining whether investments of other equity instruments are impaired to
determine whether it is needed to recognize their impairment. During the process of
conducting judgments or making assumptions, the Company shall assess the extent
and duration period that the fair value of such investments is below the cost, as well
as financial conditions and short-term business prospects of the invested objects,
including industry conditions, technological reform, credit rating, breach rate and risks
of counterparties.
Provision of long-term assets impairment
As at the balance sheet date, the Company shall judge whether there is any possible
indication of impairment against non-current assets other than financial assets. The
intangible assets with indefinite useful life must be tested for impairment on an annual
basis as well as when there is any indication of impairment. Other non-current assets
other than financial assets shall be tested for impairment when there is an indication
showing that the carrying value is not recoverable. Impairment occurs while the
carrying value of an asset or asset group is higher than the recoverable value, which
is the higher of the net of fair value less disposal expenses and the present value of
expected future cash flow. The net of fair value less disposal expenses is determined
with reference to the price in the sale agreement regarding analogous asset in fair
transactions or the observable market price less the increase of cost that is directly
attributable to the disposal of assets. Significant judgments regarding the output,
sales price, relevant operating costs of the assets (or assets group) and the discount
rate used to calculate the present value shall be made when estimating the present
value of future cash flow. Recoverable amount shall be estimated by the Company
using all accessible relevant information, including predictions made on the output,
sales price, and relevant operating costs based on reasonable and supportive
assumptions. The Company shall test for goodwill impairment at least every year. This
requires the Company to estimate the present value of future cash flow for such
assets groups or asset group portfolios allocated with goodwill. When estimating the
present value of future cash flow, the Company shall not only estimate the future
cash flow generated by such asset groups or asset group portfolios, but also select
the appropriate discount rate to determine the present value of such future cash flow.
Haier Smart Home Co., Ltd. Interim Report 2023 149
Section X Financial Report
Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and
amortized by the Company with a straight-line approach over their useful life by
taking into consideration the residual value. Useful life shall be periodically reviewed
by the Company to determine the amount of depreciation and amortization expenses
for each reporting period and be determined on the basis of historical experience
regarding analogous assets and the expected technological updates. Significant
changes to previous accounting estimates will result in adjustments against
depreciation and amortization expenses in the future periods.
Deferred income tax assets
Deferred income tax asset is recognized by the Company for all the uncompensated
tax losses to the extent that there is sufficient taxable profit for the deduction of loss.
In order to determine the amount of deferred income tax assets, the management of
the Company needs to predict the timing and the amount of taxable profits in the
future by making abundant judgments, as well as through the strategy of tax
planning.
Income tax
In the ordinary course of business of the Company, the ultimate tax treatment and
calculations of some transactions are uncertain. Whether some items could be
presented before taxation shall be approved by relevant tax authorities. Where there
are differences between the final tax outcome of these items and the initial estimated
amount, such differences will impact the current and deferred tax in the period of final
confirmation.
Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers.
According to the relevant conventions in the sales agreement, the review of specific
transactions, the market situation, the pipeline inventory levels and the historical
experiences, the Company and its subsidiaries estimate and accrue sales rebate on a
regular basis with reference to the completion of agreed assessment indexes by
customers. Accrual of sales rebate involves the judgment and estimates of the
management. In case of any significant changes in the previous estimates, the
difference above will have an impact on the sales rebate during the period when
relevant changes in estimates occur.
150 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
29. Changes in the significant accounting policies and accounting estimates
√ Applicable Not Applicable
Particulars of and reasons for
changes in accounting policies Date of issue Date of adoption
Accounting Standards for Business November 2022 1 January 2023
Enterprises Interpretation No. 16
(“Interpretation No. 16”)
The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on
1 January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilities
and right-of-use assets related to a single transaction at the beginning of the earliest period
when the Interpretation No. 16 was adopted for the presentation of the financial statements, the
net amount of the deferred tax assets and liabilities after offsetting was equal to the amounts
originally recognised on a net basis, with no impact on the consolidated balance sheet items
presented at the net amount after offsetting. The impact of the changes in accounting policies on
deferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was as
follows:
Before policy Impact of After policy
Item changes changes changes
Deferred tax assets
before offsetting 4,038,915,158.86 868,657,062.49 4,907,572,221.35
Deferred tax liabilities
before offsetting 4,673,734,789.63 868,657,062.49 5,542,391,852.12
Offset amount –2,314,874,230.44 –868,657,062.49 –3,183,531,292.93
Deferred tax assets
after offsetting 1,724,040,928.42 1,724,040,928.42
Deferred tax liabilities
after offsetting 2,358,860,559.19 2,358,860,559.19
VI. TAXATION
1. Main tax categories and rates
Tax categories Basis of taxation Tax rate
Value-added tax Taxable revenue from sales of 6%, 9%, 13%
goods or rendering services
City maintenance and construction tax Circulation Taxes payable 7%
(Local) education surcharge Circulation Taxes payable 1%, 2%, 3%
Enterprise income tax Taxable income Statutory tax rate
or preferential
rates as follows
Haier Smart Home Co., Ltd. Interim Report 2023 151
Section X Financial Report
2. Preferential tax
√ Applicable Not Applicable
Companies subjected to preferential tax:
Name of company Tax rate Preferential tax
Qingdao Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Refrigerator Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Dishwasher Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Special Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Intelligent Home 15.00% entitled to the preferential taxation
Appliance Technology Co., Ltd. policies as a hi-tech enterprise
Wuhan Haier Electronics Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Wuhan Haier Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Air-conditioning Co., Limited 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Zhengzhou Haier Air-conditioning Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Shenyang Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Air-Conditioner 15.00% entitled to the preferential taxation
Electronics Co., Ltd. policies as a hi-tech enterprise
Qingdao Meier Plastic Powder Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Hai Gao Design and 15.00% entitled to the preferential taxation
Manufacture Co., Ltd. policies as a hi-tech enterprise
Qingdao Hairi Hi-Tech Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier (Jiaozhou) 15.00% entitled to the preferential taxation
Air-conditioning Co., Limited policies as a hi-tech enterprise
Qingdao Haier Intelligent Technology 15.00% entitled to the preferential taxation
Development Co., Ltd. policies as a hi-tech enterprise
Foshan Haier Freezer Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Central Air Conditioning 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
152 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Name of company Tax rate Preferential tax
Haier U+smart Intelligent Technology 15.00% entitled to the preferential taxation
(Beijing) Co., Ltd. policies as a hi-tech enterprise
Beijing Zero Micro Technology Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Electronic Plastic Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Wei Xi Intelligent Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Special Refrigerating 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Hefei Haier Air Conditioning Electronics 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Beijing Lingli Technology Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Shanghai Haier Medical Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Shanghai Haier Smart Technology Co., 15.00% entitled to the preferential taxation
Ltd. ( ) policies as a hi-tech enterprise
Qingdao Yunshang Yuyi IOT Technology 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Haier (Shanghai) Home Appliance 15.00% entitled to the preferential taxation
Research and Development Center policies as a hi-tech enterprise
Co., Ltd.
Haier (Shenzhen) R&D Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Laiyang Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation
Co., Ltd. policies as a hi-tech enterprise
Guangdong Heilong Intelligent 15.00% entitled to the preferential taxation
Technology Co. Ltd. policies as a hi-tech enterprise
Dalian Haier Refrigerator Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Hefei Haier Washing Machine Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Qingdao Haier Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Jiaonan Haier Washing 15.00% entitled to the preferential taxation
Machine Co., Ltd. policies as a hi-tech enterprise
Foshan Shunde Haier Electric Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Tianjin Haier Cleaning Electrical 15.00% entitled to the preferential taxation
Appliances Co., Ltd. policies as a hi-tech enterprise
(天 津 海 爾 洗 滌 電 器 有 限 公 司)
Haier Smart Home Co., Ltd. Interim Report 2023 153
Section X Financial Report
Name of company Tax rate Preferential tax
Qingdao Economic and Technological 15.00% entitled to the preferential taxation
Development Zone Haier Water policies as a hi-tech enterprise
Heater Co., Ltd.
Wuhan Haier Water Heater Co., Ltd. 15.00% entitled to the preferential taxation
policies as a hi-tech enterprise
Foshan Drum Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Strauss Water Equipment Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Strauss Technology Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier New Energy Electric 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies as a hi-tech enterprise
Qingdao Haier Washing Appliance Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Lexin Cloud Technology 15.00% entitled to the preferential taxation
Co., Ltd. (青 島 海 爾 樂 信 雲 科 技 有 限 policies as a hi-tech enterprise
公 司)
Hefei Haier Drum Washing Machine Co., 15.00% entitled to the preferential taxation
Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Electrics 15.00% entitled to the preferential taxation
Equipment Co. Ltd. policies as a hi-tech enterprise
Qingdao Haier Smart Living Appliance 15.00% entitled to the preferential taxation
Co. Ltd. (青島海爾智慧生活電器有限 policies as a hi-tech enterprise
公 司)
Jiangxi Haier Medical Technology Co., 15.00% entitled to the preferential taxation
Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Electrical Appliance 15.00% entitled to the preferential taxation
Sales Co., Ltd. and some Western policies under the Western
companies Development initiative of the PRC
Chongqing Haier Air-conditioning Co., 15.00% entitled to the preferential taxation
Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Refrigeration 15.00% entitled to the preferential taxation
Appliance Co., Ltd. policies under the Western
Development initiative of the PRC
Guizhou Haier Electronics Co., Ltd. 15.00% entitled to the preferential taxation
policies under the Western
Development initiative of the PRC
Chongqing Hairishun Home Appliance 15.00% entitled to the preferential taxation
Sales Co., Ltd. (重慶海日順家電銷售 policies under the Western
有 限 公 司) and some Western Development initiative of the PRC
companies
154 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Name of company Tax rate Preferential tax
Chongqing Haier Washing Machine 15.00% entitled to the preferential taxation
Co., Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Water Heater Co., 15.00% entitled to the preferential taxation
Ltd. policies under the Western
Development initiative of the PRC
Chongqing Haier Drum Washing 15.00% entitled to the preferential taxation
Machine Co., Ltd. policies under the Western
Development initiative of the PRC
Qingdao Haier Technology Co., Ltd. 10.00% entitled to the preferential taxation
policies as a key software
enterprise
Haier Smart Home Co., Ltd. Interim Report 2023 155
Section X Financial Report
VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL
STATEMENTS
1. Monetary funds
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Cash on hand 9,276,508.90 5,312,391.11
Deposit in bank 54,386,531,893.78 52,978,303,924.04
Other monetary funds 1,245,677,110.88 1,178,085,912.24
Total 55,641,485,513.56 54,161,702,227.39
Including: Total amount deposit overseas 13,222,758,823.10 11,963,648,575.80
2. Financial assets held for trading
Closing
Items balance Opening balance
Short-term wealth management products 180,384,620.32 14,638,968.26
Investment in equity instruments 342,216,808.37 336,843,065.02
Investment fund 211,983,501.19 168,430,847.63
Total 734,584,929.88 519,912,880.91
156 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
3. Derivative financial assets
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Forward foreign exchange contracts 98,319,153.53 178,992,877.32
Forward commodity contracts 1,813,127.25 4,192,283.19
Total 100,132,280.78 183,185,160.51
4. Bills receivable
(1) Details of bills receivable
Closing
Items balance Opening balance
Bank acceptance notes 10,239,074,495.52 9,390,227,149.92
Commercially acceptance notes 260,562,885.61 237,902,374.08
Balance of bills receivable 10,499,637,381.13 9,628,129,524.00
Allowance for bad debts 3,937,685.85 3,937,685.85
Bills receivable, net 10,495,699,695.28 9,624,191,838.15
(2) Changes in allowance for bad debts of bills receivable in the current period
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Write-off/
Other other
Provision increases Reversal movement
Allowance for bad debts 3,937,685.85 3,937,685.85
Total 3,937,685.85 3,937,685.85
The Company’s bills receivable was mainly generated from daily operation activities such as
sales of commodity, provision of labor, etc., and the allowance for bad debts was
measured based on expected credit loss over the entire duration whether there exist
significant financing components.
The bills receivable pledged by the Company at the end of the period was
RMB8,131,377,594.61 (amount at the beginning of the period: RMB8,716,194,311.64).
Haier Smart Home Co., Ltd. Interim Report 2023 157
Section X Financial Report
5. Accounts receivable
Accounts receivable are disclosed by aging as follows:
Closing
Aging balance Opening balance
Within one year 21,731,301,617.76 15,940,556,486.40
1–2 years 896,282,247.63 744,911,486.13
2–3 years 298,064,719.69 277,269,661.37
Over 3 years 181,809,877.16 129,303,240.96
Accounts receivable, balance 23,107,458,462.24 17,092,040,874.86
Allowance for bad debts 1,365,237,866.01 1,205,412,250.87
Accounts receivable, net 21,742,220,596.23 15,886,628,623.99
By method of provision of allowance for bad debts
√ Applicable Not Applicable
Categories Closing balance
Allowance for Percentage of
Book balance bad debts provision (%) Carrying value
Account receivables
subject to provision for
bad debts on a
separate basis 668,670,134.13 659,660,046.48 98.65 9,010,087.65
Account receivables
subject to provision for
bad debts on a
collective basis 22,438,788,328.11 705,577,819.53 3.14 21,733,210,508.58
Total 23,107,458,462.24 1,365,237,866.01 5.91 21,742,220,596.23
158 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(continued)
Categories Opening balance
Allowance for bad Percentage of
Book balance debts provision (%) Carrying value
Account receivables subject
to provision for bad
debts on a separate
basis 669,106,556.78 658,051,988.70 98.35 11,054,568.08
Account receivables subject
to provision for bad
debts on a collective
basis 16,422,934,318.08 547,360,262.17 3.33 15,875,574,055.91
Total 17,092,040,874.86 1,205,412,250.87 7.05 15,886,628,623.99
Account receivables subject to provision for bad debts on a collective basis
√ Applicable Not Applicable
Aging Balance as at the end of the period
Allowance for Percentage of
Book Balance bad debts provision (%)
Within 1 year 21,536,299,514.37 460,150,811.39 2.14
1–2 years 521,218,109.16 46,563,866.96 8.93
2–3 years 229,765,584.36 100,367,802.68 43.68
Over 3 years 151,505,120.22 98,495,338.50 65.01
Total 22,438,788,328.11 705,577,819.53 3.14
(continued)
Aging Balance as at the beginning of the period
Allowance for Percentage of
Book Balance bad debts provision (%)
Within 1 year 15,627,590,996.07 340,620,524.49 2.18
1–2 years 445,226,708.15 33,709,717.14 7.57
2–3 years 231,744,330.03 90,123,931.89 38.89
Over 3 years 118,372,283.83 82,906,088.65 70.04
Total 16,422,934,318.08 547,360,262.17 3.33
Haier Smart Home Co., Ltd. Interim Report 2023 159
Section X Financial Report
Changes in allowance for bad debts of accounts receivable in the current period:
Items Opening balance Increase for the current period Decrease for the current period Closing balance
Provision for the Write-off/other
current period Other increase Reversal movement
Allowance for bad debts 1,205,412,250.87 266,868,732.80 91,621,780.14 15,421,337.52 1,365,237,866.01
The aggregate amount of the top 5 account receivables as at the end of the period was
RMB7,814,725,596.81, accounting for 33.82% of the book balance of account receivables
(amount at the beginning of the period: RMB3,981,240,561.25, accounting for 23.29%).
Actual write-off of accounts receivable in the current period
The amount of accounts receivable actually written off in the current period is
RMB22,054,320.92 (amount for the corresponding period: RMB13,058,370.53) and there is
no important bad debt write-off of accounts receivable.
The company’s accounts receivable that were terminated due to the transfer of financial
assets in the current period.
At the end of the period, the amount of accounts receivable that were terminated due to
the transfer of financial assets was RMB4,607,639,593.81 (amount at the beginning of the
period: RMB7,752,646,133.49) and the transfer method was outright sale factoring/asset
securitization.
Restricted accounts receivable in the current period
The amount of accounts receivable restricted at the end of the period is RMB2,138,633,123.64
(amount at the beginning of the period: RMB1,944,980,392.98).
160 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
6. Prepayments
(1) Prepayments are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 1,224,019,867.00 1,085,953,965.16
1–2 years 82,909,151.02 9,481,169.76
2–3 years 9,426,694.14 7,826,299.09
Over 3 years 4,178,359.35 5,852,909.40
Total 1,320,534,071.51 1,109,114,343.41
(2) The amount of the top 5 in the prepayments at the end of the period totals
RMB180,818,230.92, which accounts for 13.69% of the book balance of prepayment
(amount at the beginning of the period: RMB285,279,364.51, accounting for 25.72%).
7. Other receivables
Items Closing balance Opening balance
Interest receivable 706,805,733.78 513,320,376.79
Other receivables 2,039,429,541.43 1,887,793,525.76
Total 2,746,235,275.21 2,401,113,902.55
Haier Smart Home Co., Ltd. Interim Report 2023 161
Section X Financial Report
Interest receivable
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Within one year 453,749,959.10 365,716,532.95
1–2 years 193,664,120.98 117,786,419.18
2–3 years 38,804,913.97 19,790,000.00
Over 3 years 20,586,739.73 10,027,424.66
Total 706,805,733.78 513,320,376.79
(1) Other receivables
Other receivables are disclosed by aging as follows:
Aging Closing balance Opening balance
Within one year 1,390,633,305.80 1,415,479,963.79
1–2 years 296,629,907.75 217,023,682.62
2–3 years 98,020,174.79 23,617,332.57
Over 3 years 385,330,257.74 387,192,496.32
Other receivables balance 2,170,613,646.08 2,043,313,475.30
Allowance for bad debts 131,184,104.65 155,519,949.54
Other receivables, net 2,039,429,541.43 1,887,793,525.76
The total amount of the top 5 other receivables at the end of the period is
RMB676,333,122.65, which accounts for 31.16% of the book balance of other receivables
(amount at the beginning of the period: RMB913,820,290.12, accounting for 44.72%).
162 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Provision of allowance for bad debts
Allowance for bad
debts Stage 1 Stage 2 Stage 3 Total
Lifetime Lifetime
Expected expected expected
credit losses credit losses credit losses
for the coming (not credit- (credit-
12 months impaired) impaired)
Balance as at the
beginning of the
period 133,616,436.54 21,903,513.00 155,519,949.54
Provision for the
current period 4,490,945.92 4,490,945.92
Reversal for the current
period 12,384,884.27 1,384,084.95 13,768,969.22
Write-off and others for
the current period –3,808,093.46 18,865,915.05 15,057,821.59
Balance as at the end
of the period 129,530,591.65 1,653,513.00 131,184,104.65
Changes in allowance for bad debt provision of other receivables in the current period
Opening Increase for the Decrease for the Closing
Items balance current period current period balance
Provision
for the Write-off/
current Other other
period increase Reversal movement
Allowance for bad
debts 155,519,949.54 4,490,945.92 13,768,969.22 15,057,821.59 131,184,104.65
Other receivables written off during the period
The amount of other receivables actually written off in the current period is
RMB18,910,375.10 (amount for the corresponding period: RMB306,025.66), and no
significant other receivables are written off for bad debts.
Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.
Haier Smart Home Co., Ltd. Interim Report 2023 163
Section X Financial Report
8. Inventories
(1) Details of Inventories
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance provision balance provision
Raw material 5,696,796,547.03 188,164,385.65 6,220,344,034.47 171,673,251.23
Work in progress 116,094,591.24 74,028,876.21
Finished goods 34,764,879,936.79 1,362,732,058.63 36,903,949,735.10 1,438,863,087.02
Total 40,577,771,075.06 1,550,896,444.28 43,198,322,645.78 1,610,536,338.25
(2) Impairment provision of inventories
Opening Increase for Decrease for Closing
Items balance the period the period balance
Write-off/other
Provision Other Increase Reversal movement
Raw material 171,673,251.23 23,446,084.85 3,849,498.32 3,105,452.11 188,164,385.65
Work in progress
Finished goods 1,438,863,087.02 588,926,551.80 109,022,234.74 556,035,345.45 1,362,732,058.63
Total 1,610,536,338.25 612,372,636.65 112,871,733.06 559,140,797.56 1,550,896,444.28
9. Contract assets
(1) Details
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance Provision balance Provision
Relating to construction
service contract 466,471,066.00 74,086,248.65 379,905,624.96 69,975,265.71
Total 466,471,066.00 74,086,248.65 379,905,624.96 69,975,265.71
(2) Impairment provision
Opening Increase for Decrease for Closing
Items balance the current period the current period balance
Provision for
the current Write-off/other
period Other increase Reversal movement
Relating to construction
service contract 69,975,265.71 4,110,982.94 74,086,248.65
Total 69,975,265.71 4,110,982.94 74,086,248.65
164 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
10. Other current assets
(1) Details
Items Closing balance Opening balance
Book value Impairment Book value Impairment
balance provision balance provision
Bank deposit for financial
products 1,447,066,286.66 1,642,421,944.45
Taxes to be deducted 2,286,276,696.84 2,710,565,806.36
Return cost receivable 559,241,779.17 269,894,630.51 563,233,565.88 280,818,239.06
Others 66,342,368.11 57,543,006.31
Total 4,358,927,130.78 269,894,630.51 4,973,764,323.00 280,818,239.06
(2) Impairment provision
Opening Increase for Decrease for Closing
Items balance the period the period balance
Write-off/other
Provision Other Increase Reversal movement
Return cost receivables 280,818,239.06 269,894,630.51 280,818,239.06 269,894,630.51
Total 280,818,239.06 269,894,630.51 280,818,239.06 269,894,630.51
11. Debt investments
Items Closing balance Opening balance
Principal Interest Principal Interest
Time deposit — long-term 2,200,000,000.00 54,869,444.45 1,000,000,000.00 34,222,222.22
Total 2,200,000,000.00 54,869,444.45 1,000,000,000.00 34,222,222.22
Haier Smart Home Co., Ltd. Interim Report 2023 165
Section X Financial Report
12. Long-term equity investments
√ Applicable Not Applicable
Investees Opening balance Increase/decrease for the period
Adjustment in
Investment profit other Declaration of
Investment recognized under comprehensive Other changes in cash dividends or
increase equity method income equity profits
Associate:
Haier Group Finance Co., Ltd. 7,560,187,324.04 316,482,151.52 –9,220,365.69 –235,200,000.00
Bank of Qingdao Co., Ltd. 2,934,085,854.00 190,867,189.68 –76,288,906.40
Wolong Electric (Jinan) Motor
Co., Ltd. 174,697,807.74 12,444,173.12
Qingdao Hegang New Material
Technology Co., Ltd. 314,802,331.45 6,618,828.26
Qingdao Haier SAIF Smart
Home Industry Investment
Center (Limited Partnership) 319,245,649.36 890,827.17 –9,552,551.66
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co., Ltd. 715,461,260.26 59,119,761.19
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 413,367,540.80 6,280,892.60 –17,510,692.75
Qingdao Haier multimedia Co.,
Ltd. 153,550,234.50 –16,852,864.55
Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,997,782.61
Zhejiang Futeng Fluid
Technology Co., Ltd.* 77,807,408.84
Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75
Hongtong Environmental
Technology (Guangzhou)
Co., Ltd.* 4,500,000.00
Beijing ASU Tech Co., Ltd. 12,829,433.78 –11,232,376.16
Shenzhen Genyuan Environment
al Protection Technology
Co., Ltd. 6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,521,766.42 –22,008.54
Qingdao Haimu Smart Home
Investment Partnership
(Limited Partnership) 58,905,912.88 –238,863.11
Haineng Wanjia (Shanghai)
Technology Development
Co., Ltd.* 772,938.88
Qingdao Guochuang Intelligent
Home Appliance Research
Institute Co., Ltd. 45,016,334.20 2,477,779.47
Guangzhou Heying Investment
Partnership (Limited
Partnership) 285,793,577.87 –21,503,315.00
Qingdao Home Wow Cloud
Network Technology Co.,
Ltd. 2,547,217.00 –336,971.16
* For identification purposes only
166 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Investees Opening balance Increase/decrease for the period
Adjustment in
Investment profit other Declaration of
Investment recognized under comprehensive Other changes in cash dividends or
increase equity method income equity profits
Bingji (Shanghai) Corporate
Management Co., Ltd. 1,014,425,293.04 20,868,519.47
Youjin (Shanghai) Corporate
Management Co., Ltd 1,843,591,441.88 37,942,762.66
RRS (Shanghai) Investment Co.,
Ltd. 3,351,166,257.98 68,986,841.20
Haier Best Water Technology
Co., Ltd. 148,369,638.40 5,286,278.08
Huizhixiangshun Equity
Investment Fund (Qingdao)
Partnership (Limited
Partnership) 238,806,947.64 20,415,567.30
Qingdao Ririshun Huizhi
Investment Co., Ltd. 4,083,482.78
Qingdao Xinshenghui
Technology Co., Ltd. 8,598,002.89 –218,930.32
EuropaltersItaliaS.r.l. 15,760,505.28 –15,760,505.28
OryginLLC 13,918,442.26 9,512,519.87
Konan Electronic Co., Ltd. 67,770,092.99 382,702.68 –2,978,193.94 –230,850.00
HNR Company (Private) Limited 74,366,909.55 23,481,658.71 –6,813,630.42
HPZ LIMITED 88,751,047.98 –20,901,562.28 –19,632,307.56
CONTROLADORAMABES.
A.deC.V. 4,685,927,386.53 390,599,106.00 23,869,702.77 –12,600,608.82 –67,531,073.10
Middle East Airconditioning
Company, Limited 8,820,101.55 –692,668.60 354,197.66
Total 24,652,368,172.86 –1,747,985.41 1,092,233,227.09 –15,508,344.88 –12,600,608.82 –406,314,073.91
Haier Smart Home Co., Ltd. Interim Report 2023 167
Section X Financial Report
(Continued)
Impairment
provision
Investees Increase/decrease for the period Closing balance Closing balance
Other Disposal of the
movement investment
Associate:
Haier Finance Co., Ltd. 7,632,249,109.87
Bank of Qingdao Co., Ltd. 3,048,664,137.28
Wolong Electric (Jinan)
Motor Co., Ltd. 187,141,980.86
Qingdao Hegang New
Material Technology Co.,
Ltd. 321,421,159.71
Qingdao Haier SAIF Smart
Home Industry
Investment Center
(Limited Partnership) 310,583,924.87
Mitsubishi Heavy Industries
Haier (Qingdao) Air-
conditioners Co., Ltd. 774,581,021.45
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 402,137,740.65 –21,000,000.00
Qingdao Haier Multimedia
Co., Ltd 136,697,369.95 –88,300,000.00
Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,997,782.61
Zhejiang Futeng Fluid
Technology Co., Ltd.* 77,807,408.84
Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75 –7,507,759.75
Hongtong Environmental
Technology (Guangzhou)
Co., Ltd.* 4,500,000.00
Beijing ASU Tech Co., Ltd. 1,597,057.62
Shenzhen Genyuan
Environmental Protection
Technology Co., Ltd. –6,914,487.73
Qingdao Haimu Investment
Management Co., Ltd. 2,499,757.88
Qingdao Haimu Zhijia
Investment Partnership
(Limited Partnership) 58,667,049.77
Haineng Wanjia (Shanghai)
Technology Development
Co., Ltd.* 772,938.88
168 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Impairment
provision
Investees Increase/decrease for the period Closing balance Closing balance
Other Disposal of the
movement investment
Qingdao Guochuang
Intelligent Home
Appliance Research
Institute Co., Ltd. 47,494,113.67
Guangzhou Heying
Investment Partnership
(Limited Partnership) 264,290,262.87
Qingdao Home Wow Cloud
Network Technology Co.,
Ltd. 2,210,245.84
Bingji (Shanghai) Corporate
Management Co., Ltd. 1,035,293,812.51
Youjin (Shanghai) Corporate
Management Co., Ltd 1,881,534,204.54
RRS (Shanghai) Investment
Co., Ltd. 3,420,153,099.18
Haier Best Water
Technology Co., Ltd. 153,655,916.48
Huizhixiangshun Equity
Investment Fund
(Qingdao) Partnership
(Limited Partnership) 259,222,514.94
Qingdao Ririshun Huizhi
Investment Co., Ltd. 4,083,482.78
Qingdao Xinshenghui
Technology Co., Ltd. 8,379,072.57
EuropaltersItaliaS.r.l.
OryginLLC 23,430,962.13
Konan Electronic Co., Ltd. 64,943,751.73
HNR Company (Private)
Limited 91,034,937.84
HPZ LIMITED 48,217,178.14
CONTROLADORAMABES.
A.deC.V. 5,020,264,513.38
Middle East Airconditioning
Company, Limited 8,481,630.61 –845,634.54
Total –6,914,487.73 25,301,515,899.20 –117,653,394.29
Haier Smart Home Co., Ltd. Interim Report 2023 169
Section X Financial Report
13. Investment in other equity instruments
√ Applicable Not Applicable
(1) Details of investment in other equity instruments at the end of the period:
Unit and Currency: RMB
Closing
Items balance Opening balance
SINOPEC Fuel Oil Sales Corporation Limited 1,519,232,955.16 1,234,500,000.00
COSMO IOT Technology Co., Ltd. 2,817,408,000.00 2,817,408,000.00
Others 1,575,713,281.63 1,799,974,930.20
Total 5,912,354,236.79 5,851,882,930.20
(2) Dividends from investment in other equity during the current period:
Items Amount for the current period
SINOPEC Fuel Oil Sales Corporation Limited 16,008,958.50
Others 1,910,251.35
Total 17,919,209.85
14. Investment properties
(1) The changes in investment properties measured at cost for this year are as follows:
Houses and
Items buildings Land use rights Total
I. Original book value
1. Opening balance 36,651,784.35 2,128,550.51 38,780,334.86
2. Increase for the period
(1) Outsourced
(2) Inventories\fixed
assets\construction in
progress transferred in
(3) Increase in business
combinations
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Change in foreign
exchange rate and others 779,147.60 779,147.60
5. Closing balance 37,430,931.95 2,128,550.51 39,559,482.46
170 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Houses and
Items buildings Land use rights Total
II. Accumulated depreciation
and accumulated
amortization
1. Opening balance 12,430,985.69 670,856.60 13,101,842.29
2. Increase for the period
(1) Provision or
amortization 681,981.80 20,118.11 702,099.91
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Change in foreign
exchange rate and others 241,110.43 241,110.43
5. Closing balance 13,354,077.92 690,974.71 14,045,052.63
III. Impairment provision
1. Opening balance
2. Increase for the period
(1) Provision
3. Decrease for the period
(1) Disposal
(2) Disposal of subsidiary
(3) Other transferring out
4. Change in foreign
exchange rate and others
5. Closing balance
IV. Book value
1. Closing book value 24,076,854.03 1,437,575.80 25,514,429.83
2. Opening book value 24,220,798.66 1,457,693.91 25,678,492.57
(2) The depreciation and amortization amount charge for the period is RMB702,099.91 (amount
for the corresponding period: RMB669,390.08).
(3) The recoverable amount of the investment real estate of the Company at the end of the
period is not less than its book value, so no provision for impairment is made.
Haier Smart Home Co., Ltd. Interim Report 2023 171
Section X Financial Report
15. Fixed assets
Overall presented as
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Items balance Opening balance
Fixed assets 27,270,243,076.11 27,158,348,424.28
Disposals of fixed assets 448,385.16
Total 27,270,691,461.27 27,158,348,424.28
(1) Fixed assets:
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value
1. Opening balance 14,637,131,005.80 31,324,534,257.57 193,143,213.57
2. Increase for the period
(1) Acquisition 151,416.09 407,110,085.54 1,248,468.37
(2) Construction in progress
transferred in 306,068,742.04 869,590,717.83 10,844,589.49
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal or Write-off 37,097,971.20 235,453,121.81 4,855,444.54
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 102,235,305.91 549,422,765.51 –2,398,985.90
5. Closing balance 15,008,488,498.64 32,915,204,704.64 197,981,840.99
II. Accumulated depreciation
1. Opening balance 4,538,423,308.23 16,035,153,335.30 119,070,640.87
2. Increase for the period
(1) Provision 322,561,141.52 1,374,247,641.39 11,479,245.38
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or write-off 19,172,410.25 195,778,380.25 4,426,024.15
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 61,177,815.76 297,557,504.05 841,482.33
5. Closing balance 4,902,989,855.26 17,511,180,100.49 126,965,344.43
172 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Houses and Production Transportation
Items buildings equipment equipment
III. Impairment provision
1. Opening balance 28,586,023.90 16,202,770.28 110,029.00
2. Increase for the period
(1) Provision 1,106,322.83 5,068,356.22
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or Write-off 1,305,299.85
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others –873,442.87 –22,342.32 –2,105.56
5. Closing balance 28,818,903.86 19,943,484.33 107,923.44
IV. Book value
1. Closing book value 10,076,679,739.52 15,384,081,119.82 70,908,573.12
2. Opening book value 10,070,121,673.67 15,273,178,151.99 73,962,543.70
(Continued)
Items Office furniture Others Total
I. Original book value
1. Opening balance 1,324,636,809.03 2,916,743,458.84 50,396,188,744.81
2. Increase for the period
(1) Acquisition 13,619,927.16 38,873,697.67 461,003,594.83
(2) Construction in progress
transferred in 68,368,453.97 132,648,182.44 1,387,520,685.77
(3) Increase in business combinations
3. Decrease for the period
(1) Disposal or Write-off 8,958,773.71 109,615,778.70 395,981,089.96
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 11,409,715.13 38,806,040.77 699,474,841.42
5. Closing balance 1,409,076,131.58 3,017,455,601.02 52,548,206,776.87
II. Accumulated depreciation
1. Opening balance 788,864,149.17 1,708,674,462.66 23,190,185,896.23
2. Increase for the period
(1) Provision 95,726,548.18 132,785,364.84 1,936,799,941.31
(2) Increase in business
combinations
Haier Smart Home Co., Ltd. Interim Report 2023 173
Section X Financial Report
Items Office furniture Others Total
3. Decrease for the period
(1) Disposal or Write-off 7,622,726.62 77,985,761.72 304,985,302.99
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others 9,146,682.19 35,731,433.43 404,454,917.76
5. Closing balance 886,114,652.92 1,799,205,499.21 25,226,455,452.31
III. Impairment provision
1. Opening balance 243,387.38 2,512,213.74 47,654,424.30
2. Increase for the period
(1) Provision 39,067.78 6,213,746.83
(2) Increase in business
combinations
3. Decrease for the period
(1) Disposal or Write-off 4,080.32 1,309,380.17
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate and
others –7,821.69 –144,830.07 –1,050,542.51
5. Closing balance 270,553.15 2,367,383.67 51,508,248.45
IV. Book Value
1. Closing book value 522,690,925.51 1,215,882,718.14 27,270,243,076.11
2. Opening book value 535,529,272.48 1,205,556,782.44 27,158,348,424.28
(2) In the current period, the balance of the construction in progress transferred to the original
value of the fixed assets is in total RMB1,387,520,685.77 (amount for the corresponding
period: RMB2,044,129,761.22).
174 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(3) As at 30 June 2023, the net book value of the buildings for which the Company has not yet
obtained certificates of title was RMB1.857 billion (opening amount of RMB2.037 billion), of
which RMB1.826 billion was put into use at the end of 2022 and the relevant certificates of
title were being processed. The Company can legally and effectively occupy and operate
the above-mentioned buildings for which no certificates of title have been obtained.
(4) There was no mortgage secured by the fixed assets mortgage at the end of the period, and
there was no mortgage secured by the fixed assets mortgage at the beginning of the
period.
(5) Disposals of fixed assets
Reason for
Closing Opening transferring to
Items balance balance disposal
Others 448,385.16 Retirement
Total 448,385.16
16. Construction in progress
√ Applicable Not Applicable
Unit and Currency: RMB
Closing Opening
Items balance balance
Construction in progress 4,675,841,932.96 4,094,684,500.49
Construction materials
Total 4,675,841,932.96 4,094,684,500.49
Haier Smart Home Co., Ltd. Interim Report 2023 175
Section X Financial Report
(1) Balance of construction in progress
√ Applicable Not Applicable
Unit and Currency: RMB
Projects Closing balance Opening balance
Impairment Impairment
Book balance provision Book value Book balance provision Book value
Europe Candy Project 664,994,525.97 664,994,525.97 467,370,049.46 467,370,049.46
Qingdao Air Conditioning
Electronics Project 360,505,021.09 360,505,021.09 313,855,913.14 313,855,913.14
America GEA Project 347,979,805.43 347,979,805.43 338,096,215.95 338,096,215.95
Shanghai Washing
Appliances Project 338,248,596.70 338,248,596.70 315,004,188.48 315,004,188.48
Qingdao HVAC Project 278,456,642.72 278,456,642.72 365,555.56 365,555.56
Eastern European Project 254,146,857.47 254,146,857.47 392,579,594.60 392,579,594.60
Zhengzhou New Energy
Project 225,758,431.82 225,758,431.82 197,524,472.64 197,524,472.64
Qingdao Water Ecology
Technology Project 213,649,684.86 213,649,684.86 92,905,882.13 92,905,882.13
New Zealand FPA Project 169,081,527.98 169,081,527.98 176,619,361.43 176,619,361.43
Qingdao Jiaozhou
Washing Appliances
Project 130,940,468.79 130,940,468.79 93,825,106.07 93,825,106.07
Chongqing Water Heater
Project 103,009,444.62 103,009,444.62 61,350,349.63 61,350,349.63
Hefei Drum Washing
Machine Project 84,647,805.15 84,647,805.15 98,411,863.30 98,411,863.30
Foshan Freezer Project 74,637,240.12 74,637,240.12 97,616,741.69 97,616,741.69
Special Refrigerator
Project 71,737,926.03 71,737,926.03 66,136,656.59 66,136,656.59
Hailvyuan Recycling
Technology Project 69,708,484.47 69,708,484.47 75,470,633.24 75,470,633.24
Chongqing Washing
Appliances Project 69,020,092.98 69,020,092.98 59,889,999.86 59,889,999.86
Qingdao Central Air
Conditioner Project 61,594,348.96 61,594,348.96 29,216,265.88 29,216,265.88
Qingdao Dishwasher
Project 60,639,123.39 60,639,123.39 64,842,812.91 64,842,812.91
Qingdao Smart
Appliances Project 53,964,974.70 53,964,974.70 67,092,916.99 67,092,916.99
Tianjin Washing
Appliances Project 49,250,077.45 49,250,077.45 59,146,925.20 59,146,925.20
Zhengzhou Air
Conditioner Project 46,113,903.60 46,113,903.60 546,460.15 546,460.15
Others 948,855,669.26 1,098,720.60 947,756,948.66 1,028,027,154.51 1,210,618.92 1,026,816,535.59
Total 4,676,940,653.56 1,098,720.60 4,675,841,932.96 4,095,895,119.41 1,210,618.92 4,094,684,500.49
176 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(2) Details of significant changes of construction in progress for the period
Change in
Increase for foreign
Opening the current Transfer to exchange rate Closing
Project Name balance period fixed tax Other decrease and others balance Source of fund
Europe Candy Project 467,370,049.46 540,757,295.31 211,569,369.22 –131,563,449.58 664,994,525.97 Self-funding
Qingdao Air Conditioning
Electronics Project 313,855,913.14 51,742,568.97 5,093,461.02 360,505,021.09 Self-funding
America GEA Project 338,096,215.95 156,988,345.60 159,685,180.55 12,580,424.43 347,979,805.43 Self-funding
Shanghai Washing
Appliances Project 315,004,188.48 23,244,408.22 338,248,596.70 Self-funding
Qingdao HVAC Project 365,555.56 278,091,087.16 278,456,642.72 Self-funding
Eastern European Project 392,579,594.60 116,858,497.57 217,851,214.05 –37,440,020.65 254,146,857.47 Self-funding
Zhengzhou New Energy
Project 197,524,472.64 41,579,582.26 13,345,623.08 225,758,431.82 Self-funding
Qingdao Water Ecology
Technology Project 92,905,882.13 120,743,802.73 213,649,684.86 Self-funding
New Zealand FPA Project 176,619,361.43 83,156,754.04 91,564,951.03 870,363.54 169,081,527.98 Self-funding
Qingdao Jiaozhou
Washing Appliances
Project 93,825,106.07 37,115,362.72 130,940,468.79 Self-funding
Chongqing Water Heater
Project 61,350,349.63 53,200,000.96 11,540,905.97 103,009,444.62 Self-funding
Hefei Drum Washing
Machine Project 98,411,863.30 5,396,985.97 19,161,044.12 84,647,805.15 Self-funding
Foshan Freezer Project 97,616,741.69 6,449,691.15 29,429,192.72 74,637,240.12 Self-funding
Special Refrigerator
Project 66,136,656.59 25,679,345.43 20,078,075.99 71,737,926.03 Self-funding
Hailvyuan Recycling
Technology Project 75,470,633.24 14,506,226.47 20,268,375.24 69,708,484.47 Self-funding
Chongqing Washing
Appliances Project 59,889,999.86 13,012,405.40 3,882,312.28 69,020,092.98 Self-funding
Qingdao Central Air
Conditioner Project 29,216,265.88 40,485,605.18 8,107,522.10 61,594,348.96 Self-funding
Qingdao Dishwasher
Project 64,842,812.91 3,770,475.26 7,974,164.78 60,639,123.39 Self-funding
Qingdao Smart
Appliances Project 67,092,916.99 9,619,713.03 22,747,655.32 53,964,974.70 Self-funding
Tianjin Washing
Appliances Project 59,146,925.20 3,238,445.14 13,135,292.89 49,250,077.45 Self-funding
Zhengzhou Air Self-funding/fund
Conditioner Project 546,460.15 46,174,601.59 607,158.14 46,113,903.60 raising
Self-funding/fund
Others 1,028,027,154.51 451,511,089.59 531,586,711.17 904,136.33 948,855,669.26 raising
Total 4,095,895,119.41 2,123,322,289.75 1,387,628,209.67 –154,648,545.93 4,676,940,653.56
Haier Smart Home Co., Ltd. Interim Report 2023 177
Section X Financial Report
(3) Impairment provision of construction in progress
Change in
foreign
exchange
Opening Increase for Transfer to Other rate and Closing
Project name balance the period fixed assets decrease others balance
Lejia IOT Project 837,735.85 837,735.85
Other 372,883.07 107,523.90 –4,374.42 260,984.75
Total 1,210,618.92 107,523.90 –4,374.42 1,098,720.60
17. Right-of-use assets
Houses and Production Transportation
Items buildings equipment equipment
I. Original book value:
1. Opening balance 4,673,699,908.83 37,374,188.44 213,211,277.75
2. Increase for the current period
(1) Increase 766,981,092.95 573,908.00 38,057,315.40
3. Decrease for the current period
(1) Disposal 270,408,600.92 1,104,153.96 23,249,569.32
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 109,994,689.30 257,443.86 2,366,209.94
5. Closing balance 5,280,267,090.16 37,101,386.34 230,385,233.77
II. Accumulated amortization
1. Opening balance 1,284,083,200.17 18,972,328.56 125,499,329.46
2. Increase for the current period
(1) Provision 460,362,630.22 2,560,133.55 33,983,793.47
3. Decrease for the current period
(1) Disposal 170,330,845.22 1,104,153.96 22,455,647.53
(2) Disposal of subsidiary
4. Change in foreign exchange
rate and others 30,721,312.40 86,274.62 –3,967,299.01
5. Closing balance 1,604,836,297.57 20,514,582.77 133,060,176.39
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange
rate and others
5. Closing balance
IV. Book Value
1. Closing book value 3,675,430,792.59 16,586,803.57 97,325,057.38
2. Opening book value 3,389,616,708.66 18,401,859.88 87,711,948.29
178 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(Continued)
Items Office furniture Other Total
I. Original book value:
1. Opening balance 53,135,501.06 364,530,322.79 5,341,951,198.87
2. Increase for the current period
(1) Increase 232,812,790.34 105,558,304.02 1,143,983,410.71
3. Decrease for the current period
(1) Disposal 679,880.54 295,442,204.74
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 7,759,892.58 17,484,855.37 137,863,091.05
5. Closing balance 293,028,303.44 487,573,482.18 6,328,355,495.89
II. Accumulated amortization
1. Opening balance 22,851,405.90 95,319,580.89 1,546,725,844.98
2. Increase for the current period
(1) Provision 10,340,096.44 50,335,427.89 557,582,081.57
3. Decrease for the current period
(1) Disposal 679,880.54 194,570,527.25
(2) Disposal of subsidiary
4. Change in foreign exchange rate
and others 561,792.36 5,395,550.84 32,797,631.21
5. Closing balance 33,073,414.16 151,050,559.62 1,942,535,030.51
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
4. Change in foreign exchange
rate and others
5. Closing balance
IV. Book Value
1. Closing book value 259,954,889.28 336,522,922.56 4,385,820,465.38
2. Opening book value 30,284,095.16 269,210,741.90 3,795,225,353.89
Haier Smart Home Co., Ltd. Interim Report 2023 179
Section X Financial Report
18. Intangible assets
√ Applicable Not Applicable
Proprietary Licenses and
Items technology franchises Land use rights
I. Original book value
1. Opening balance 2,045,745,341.24 4,641,652,220.77 1,617,778,038.37
2. Increase for the current period
(1) Purchase 127,234.88 217,056,009.69
(2) Internal research and
development 67,033,935.23
(3) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 28,872,015.88 227,865,976.69 5,278,068.76
5. Closing balance 2,141,651,292.35 4,869,645,432.34 1,840,112,116.82
II. Accumulated amortization
1. Opening balance 1,177,726,697.55 1,012,993,222.17 246,593,605.24
2. Increase for the current period
(1) Provision 104,395,920.96 90,044,784.44 38,937,948.60
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 21,804,973.30 46,609,316.21 756,325.61
5. Closing balance 1,303,927,591.81 1,149,647,322.82 286,287,879.45
III. Impairment provision
1. Opening balance
2. Increase for the current period
(1) Provision
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others
180 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Proprietary Licenses and
Items technology franchises Land use rights
5. Closing balance
IV. Book Value
1. Closing book value 837,723,700.54 3,719,998,109.52 1,553,824,237.37
2. Opening book value 868,018,643.69 3,628,658,998.60 1,371,184,433.13
(Continued)
Application
management
software and
Items Trademark rights others Total
I. Original book value
1. Opening balance 2,582,976,744.57 5,344,358,234.62 16,232,510,579.57
2. Increase in the current period
(1) Purchase 156,084,629.39 373,267,873.96
(2) Internal research and
development 173,599,388.36 240,633,323.59
(3) Increase in business
combination
3. Decrease for the current period
(1) Disposal 63,204,022.79 63,204,022.79
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 111,038,637.85 99,408,981.47 472,463,680.65
5. Closing balance 2,694,015,382.42 5,710,247,211.05 17,255,671,434.98
II. Accumulated amortization
1. Opening balance 3,265,730,771.74 5,703,044,296.70
2. Increase in the current period
(1) Provision 391,213,427.35 624,592,081.35
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal 33,039,874.28 33,039,874.28
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 95,885,383.38 165,055,998.50
5. Closing balance 3,719,789,708.19 6,459,652,502.27
Haier Smart Home Co., Ltd. Interim Report 2023 181
Section X Financial Report
Application
management
software and
Items Trademark rights others Total
III. Impairment provision
1. Opening balance 23,584,905.66 23,584,905.66
2. Increase in the current period
(1) Provision 28,311.57 28,311.57
(2) Increase in business
combination
3. Decrease for the current period
(1) Disposal
(2) Disposal of subsidiary
(3) Transfer to hold for sale
4. Change in foreign exchange rate
and others 1,212.22 1,212.22
5. Closing balance 23,614,429.45 23,614,429.45
IV. Book value
1. Closing book value 2,694,015,382.42 1,966,843,073.41 10,772,404,503.26
2. Opening book value 2,582,976,744.57 2,055,042,557.22 10,505,881,377.21
At the end of the period, the intangible assets developed through the Company accounted for
20.74% of the original value (at the beginning of the period 20.47%).
182 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
19. Development cost
Change in
foreign
Opening Increase for exchange rate Closing
Items balance the period Decrease for the period and others balance
Confirmed as Included in
an intangible Current profit Disposal of
asset and loss subsidiaries
91ABD.ERP IT
Program 7,539,118.42 15,735,011.57 7,471,378.12 587,691.83 16,390,443.70
low-carbon and
energy-saving
Project 77,643,503.53 77,643,503.53
Others 146,941,397.25 346,050,812.15 233,161,945.47 100,345,093.76 –15,911,335.54 143,573,834.63
Total 154,480,515.67 439,429,327.25 240,633,323.59 100,345,093.76 –15,323,643.71 237,607,781.86
20. Goodwill
Change in foreign
Increase for Decrease for exchange rate
Items Opening balance the period the period and others Closing balance
GEA 20,681,717,264.22 776,368,136.04 21,458,085,400.26
Candy 1,929,953,985.15 118,091,999.09 2,048,045,984.24
Others 1,031,924,394.50 102,436,911.98 –937,299.21 1,133,424,007.27
Total 23,643,595,643.87 102,436,911.98 893,522,835.92 24,639,555,391.77
In the case of a goodwill impairment test, the Company compares the carrying amount of the
relevant asset group or asset group combination (including goodwill) with its recoverable amount.
If the recoverable amount is less than the book value, corresponding difference will be
recognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discounted
estimated future cash flow method based on a management-approved 5–15 years budget. Future
cash flows beyond the budget period are estimated using the estimated perpetual annual growth
rate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistent
with industry forecast data and does not exceed the long-term average growth rate of each
product. The management determines the compound income growth rate (mainly 2.29%–6.50%)
and the EBITDA profit margin (mainly 5.11%–13.15%) based on historical experience and market
development forecasts, and adopts the pre-tax interest rate that can reflect the specific risks of
the relevant asset group as the discount rate (mainly 10.4%–16.25%). The management analyzes
the recoverable amount of each asset group based on these assumptions and believes that there
is no need to make provision for goodwill.
Haier Smart Home Co., Ltd. Interim Report 2023 183
Section X Financial Report
21. Long-term prepaid expenses
Change in
Increase for Amortization for foreign
the current the current exchange rate
Items Opening balance period period Other decrease and others Closing balance
Renovation 457,806,490.36 229,016,427.22 214,133,432.57 3,970.33 472,693,455.34
Improvement on leased
property 146,458,109.22 31,832,639.54 15,544,173.80 1,259,574.93 164,006,149.89
Others 155,618,574.62 48,769,049.92 28,293,692.22 –2,722,071.20 173,371,861.12
Total 759,883,174.20 309,618,116.68 257,971,298.59 –1,458,525.94 810,071,466.35
22. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets before elimination
Closing
Items balance Opening balance
Provision for assets impairment 459,216,865.16 486,504,423.79
Liabilities 2,643,585,609.13 2,392,703,222.82
Internal unrealized earnings eliminated due
to combination 426,881,409.73 848,773,608.23
Uncovered losses 232,784,216.45 217,344,490.61
R&D expenses 866,307,772.03 615,110,766.72
Others 302,013,820.85 347,135,709.18
Total 4,930,789,693.35 4,907,572,221.35
(2) Deferred income tax liabilities before elimination
Closing
Item balance Opening balance
Asset amortisation 4,099,895,099.19 3,875,255,150.79
Remeasurement of fair value of the
remaining equity interest on the date of
loss of control 878,623,804.46 878,623,804.46
Changes in fair value of investments in other
equity instruments 293,193,619.84 293,662,487.81
Others 544,517,958.20 494,850,409.06
Total 5,816,230,481.69 5,542,391,852.12
(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end
of this period was RMB3,721,415,014.24 (amount at the beginning of the period:
RMB3,183,531,292.93).
184 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
23. Other non-current assets
Closing Opening
Item balance balance
Prepayments for equipment and land 2,118,960,332.56 1,671,590,606.02
Others 213,497,841.50 209,146,285.61
Total 2,332,458,174.06 1,880,736,891.63
24. Short-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Borrowings — secured by pledge 180,484,052.01 82,727,127.97
Borrowings secured by guarantee 7,000,000.00 101,506,733.93
Borrowings — unsecured 9,114,905,384.70 9,479,489,787.33
Interest payable for short-term borrowings 62,795,362.70 8,499,873.13
Total 9,365,184,799.41 9,672,223,522.36
25. Derivative financial liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Forward foreign exchange contracts 346,817,213.83 92,580,419.48
Forward commodity contracts 6,097,723.06 12,013,621.18
Total 352,914,936.89 104,594,040.66
Haier Smart Home Co., Ltd. Interim Report 2023 185
Section X Financial Report
26. Bills payable
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Commercially acceptance notes 51,885,099.14 2,212,721,304.36
Bank acceptance notes 23,135,947,877.08 22,885,836,425.70
Total 23,187,832,976.22 25,098,557,730.06
27. Accounts payable
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Accounts payable 47,160,319,625.82 41,878,607,182.94
Total 47,160,319,625.82 41,878,607,182.94
The ending book balance is mainly the unpaid expenditures on material and labour.
28. Contract liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Closing
Item balance Opening balance
Contract liabilities 6,251,026,204.67 9,352,719,895.49
Total 6,251,026,204.67 9,352,719,895.49
The book balance at the end of the period was mainly due to the advance payment that has
been collected and has not yet performed the contractual obligations.
186 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
29. Payables for staff’s remuneration
(1) Payables for staff’s remuneration
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
I. Short-term remuneration 3,815,730,531.14 13,491,231,398.22 14,115,423,960.44 3,191,537,968.92
II. Post-employment
benefits-defined
contribution plan 65,446,167.35 728,655,472.93 699,112,731.92 94,988,908.36
III. Termination benefits 35,166,874.40 277,307,461.54 304,204,085.49 8,270,250.45
IV. Other benefits due
within one year 134,121,181.48 18,167,078.79 27,665,465.88 124,622,794.39
Total 4,050,464,754.37 14,515,361,411.48 15,146,406,243.73 3,419,419,922.12
(2) Short-term remuneration
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
I. Salaries, bonus,
allowance and
benefit 2,659,565,504.91 10,002,795,704.30 10,616,686,791.02 2,045,674,418.19
II. Employee welfare 333,049,384.20 473,562,865.35 495,677,161.57 310,935,087.98
III. Social benefit 224,360,701.36 927,072,638.54 942,422,351.56 209,010,988.34
IV. Housing fund 5,036,607.14 295,062,937.57 261,872,382.72 38,227,161.99
V. Labor union fee and
education fee 9,025,442.26 54,429,387.97 59,735,051.64 3,719,778.59
VI. Short-term
compensated
absences 260,622,518.13 268,276,739.50 269,886,159.15 259,013,098.48
VII. Others 324,070,373.14 1,470,031,124.99 1,469,144,062.78 324,957,435.35
Total 3,815,730,531.14 13,491,231,398.22 14,115,423,960.44 3,191,537,968.92
Haier Smart Home Co., Ltd. Interim Report 2023 187
Section X Financial Report
(3) Defined contribution plan
√ Applicable Not Applicable
Unit and Currency: RMB
Decrease for
Increase for the current the
Items Opening balance current period period Closing balance
I. Basic pension insurance 64,162,379.08 678,566,464.02 662,438,086.89 80,290,756.21
II. Unemployment
insurance 346,829.94 17,866,223.49 17,748,148.00 464,905.43
III. Enterprise annuity
payment 936,958.33 32,222,785.42 18,926,497.03 14,233,246.72
Total 65,446,167.35 728,655,472.93 699,112,731.92 94,988,908.36
(4) Termination benefits
Opening
Items Closing balance balance
Termination compensation 8,270,250.45 35,166,874.40
Total 8,270,250.45 35,166,874.40
30. Taxes payable
√ Applicable Not Applicable
Unit and Currency: RMB
Opening
Items Closing balance balance
Value-added tax 1,113,053,099.21 860,587,585.73
Enterprise income tax 1,569,022,348.60 1,704,621,792.80
Individual income tax 95,323,159.10 100,208,772.52
City maintenance and construction tax 40,061,438.67 28,891,872.00
Education surcharge 18,238,161.65 14,945,658.71
The electrical and electronic products waste
treatment fund 91,159,372.00 97,068,373.00
Other taxes 78,486,467.71 69,897,838.15
Total 3,005,344,046.94 2,876,221,892.91
188 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
31. Other payables
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Dividends payable 5,299,410,272.79 1,246,573.35
Other payables 17,601,698,991.38 17,516,591,992.64
Total 22,901,109,264.17 17,517,838,565.99
(1) Dividends payables
Name of company Closing balance Opening balance
Haier Cosmo Co., Limited 712,415,610.38
Haier Group Corporation 607,097,692.42
Other Shareholders of Social Shares 3,979,896,969.99 1,246,573.35
Total 5,299,410,272.79 1,246,573.35
(2) Other payables
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Other payables 17,601,698,991.38 17,516,591,992.64
Total 17,601,698,991.38 17,516,591,992.64
The closing balance at the end of the period mainly included the incurred but unpaid costs.
Haier Smart Home Co., Ltd. Interim Report 2023 189
Section X Financial Report
32. Non-current liabilities due within one year
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Long-term borrowings due within one year 19,143,918.09 2,854,446,929.32
Lease liabilities due within one year 979,431,504.82 903,249,632.59
Estimated liabilities due within one year 2,520,709,709.81 2,537,054,105.17
Total 3,519,285,132.72 6,294,750,667.08
33. Other current liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Payable refund 580,015,990.29 624,887,787.38
Tax amount to be written off 825,061,115.54 1,198,555,405.78
Others 26,162,327.30 26,982,922.63
Total 1,431,239,433.13 1,850,426,115.79
34. Long-term borrowings
√ Applicable Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Borrowings — secured by guarantee 23,550,000.00
Borrowings — unsecured 18,366,761,352.03 13,567,316,873.43
Total 18,366,761,352.03 13,590,866,873.43
Interest rates of long-term loans of the Company ranged from 2.20% to 6.30%.
190 Haier Smart Home Co., Ltd. Interim Report 2023
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35. Lease liabilities
Items Closing balance Opening balance
Lease liabilities 4,318,344,000.94 3,727,727,303.20
Less: lease liabilities due within one year 979,431,504.82 903,249,632.59
Total 3,338,912,496.12 2,824,477,670.61
36. Long-term payables
Items Closing balance Opening balance
Investment from CDB development fund 36,500,000.00 36,500,000.00
Others 7,186,763.73 7,740,087.94
Less: long-term payables due within one year
Total 43,686,763.73 44,240,087.94
Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)
Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,
China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou) Air-
conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of 1.2%
by means of dividends or buyback premium for the above investments. As at the end of the
period, subsidiaries of the Company repurchased RMB36.50 million.
37. Long-term payables for staff’s remuneration
√ Applicable Not Applicable
(1) Long-term payables for staff’s remuneration
√ Applicable Not Applicable
Unit and Currency: RMB
Opening
Items Closing balance balance
I. Post-employment benefits-net liability of defined
benefit plan 391,834,022.84 417,072,669.76
II. Termination benefits 467,975,538.86 386,522,704.17
III. Provision for work-related injury compensation 214,392,882.13 206,951,828.41
Total 1,074,202,443.83 1,010,547,202.34
Haier Smart Home Co., Ltd. Interim Report 2023 191
Section X Financial Report
(2) Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified
staff. Under these plans, the employees are entitled to the retirement benefits agreed in
such defined benefit plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary
and other risks.
The recent actuarial evaluation of the assets and the present value of defined benefit
obligations under such plans are determined by using the projected unit credit method.
The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company.
Actuarial assumption used in the defined benefit plan
Items Rate
Discount rate 0.50%
Expected rate of return 2.00%
Present value of defined benefit obligations
Items Amount
I. Opening balance 253,301,981.31
II. Defined benefit cost recognized in current profit or loss –928,052.75
1. Current service cost –928,052.75
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses
III. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
IV. Other changes –10,930,430.49
1. The consideration paid at the time of settlement
2. Benefits paid
3. Exchange differences –10,930,430.49
V. Closing balance 241,443,498.07
192 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Fair value of plan assets
Items Amount
I. Opening balance 293,745,142.73
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
income
1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes –18,169,503.70
1. Employer contributions –600,443.06
2. Benefits paid –5,003,405.32
3. Exchange differences –12,565,655.32
V. Closing balance 275,575,639.03
Neither the Company’s ordinary shares or bonds, nor the properties occupied by the
Company are included in the plan assets.
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance –40,443,161.42
II. Defined benefit cost recognized in current profit or loss –928,052.75
III. Defined benefit cost recognized in other comprehensive
income
IV. Other changes 7,239,073.21
V. Closing balance –34,132,140.96
The average term for the defined benefit obligation is 11.73 years at the balance
sheet date.
Haier Smart Home Co., Ltd. Interim Report 2023 193
Section X Financial Report
The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided qualified staff with
defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 5.59%
Present value of defined benefit obligations
Item Amount
I. Opening balance 123,777,420.24
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,687,091.34
1. Current period service cost 5,277,772.41
2. Past service cost
3. Settlement gains ((loss indicated in “–”)
4. Interest expenses 4,409,318.93
IV. Defined benefit cost recognized in other comprehensive
income –45,267,739.89
1. Actuarial loss (gain indicated in “–”) –45,267,739.89
V. Other changes –5,382,153.84
1. The consideration paid at the time of settlement
2. Benefits paid –8,401,002.70
3. Exchange differences 3,018,848.86
VI. Closing balance 82,814,617.85
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 123,777,420.24
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,687,091.34
IV. Defined benefit cost recognized in other comprehensive
income –45,267,739.89
V. Other changes –5,382,153.84
VI. Closing balance 82,814,617.85
The average term for the defined benefit obligation is 11.22 years at the balance
sheet date.
194 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of the Company.
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
qualified staff with defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 5.51%
Present value of defined benefit obligations
Items Amount
I. Opening balance 195,104,194.13
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,994,742.42
1. Current period service cost
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses 9,994,742.42
IV. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
V. Other changes –21,370,853.88
1. The consideration paid at the time of settlement
2. Benefits paid –28,022,650.00
3. Exchange differences 6,651,796.12
VI. Closing balance 183,728,082.67
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 195,104,194.13
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 9,994,742.42
IV. Defined benefit cost recognized in other comprehensive
income
V. Other changes –21,370,853.88
VI. Closing balance 183,728,082.67
Haier Smart Home Co., Ltd. Interim Report 2023 195
Section X Financial Report
The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of the Company.
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided
qualified staff with defined benefit plan for post-retirement pension.
Actuarial assumptions used in defined benefit plans
Item Rate
Discount rate 5.51%
Present value of defined benefit obligations
Items Amount
I. Opening balance 126,866,875.02
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,303,537.72
1. Current service cost 136,528.81
2. Past service cost
3. Settlement gains (loss indicated in “–”)
4. Interest expenses 6,167,008.91
IV. Defined benefit cost recognized in other comprehensive
income
1. Actuarial loss (gain indicated in “–”)
V. Other changes –36,510,318.91
1. The consideration paid at the time of settlement
2. Benefits paid –40,023,767.34
3. Exchange differences 3,513,448.43
VI. Closing balance 96,660,093.83
196 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Fair value of plan assets
Items Amount
I. Opening balance 92,039,772.87
II. Defined benefit cost recognized in current profit or loss
1. Interest income
III. Defined benefit cost recognized in other comprehensive
income
1. Return on plan assets (except those included in net
interests)
2. Changes in impact of asset cap (except those included in
net interests)
IV. Other changes –25,257,079.47
1. Employer contributions 4,263,284.95
2. Benefits paid –31,950,334.14
3. Exchange differences 2,429,969.72
V. Closing balance 66,782,693.40
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 34,827,102.15
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss 6,303,537.72
IV. Defined benefit cost recognized in other comprehensive
income
V. Other changes –11,253,239.44
VI. Closing balance 29,877,400.43
Haier Smart Home Co., Ltd. Interim Report 2023 197
Section X Financial Report
(3) Provision for work-related injury compensation
Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision for
work-related injury claims for the staff injured during the production accidents from 1
January 1991, which was used to pay for the claim made by the injured staff. The
provision was calculated by Beechercarlson Insurance Services, LLC., based on actuarial
method and a discount rate of 3.72%.
Items Amount
I. Opening balance 206,951,828.41
II. Business combination not under common control
III. Compensation recognized in current profit and loss 46,154,353.19
IV. Actual compensation paid in the current period –46,463,403.63
V. Other changes 7,750,104.16
VI. Closing balance 214,392,882.13
Classification of the balance of defined benefit plan
Items Closing balance Opening balance
Short-term salary 23,283,167.71 36,444,790.69
Long-term salary 391,834,022.84 417,072,669.76
Total 415,117,190.55 453,517,460.45
38. Estimated liabilities
√ Applicable Not Applicable
Unit and Currency: RMB
Items Opening balance Closing balance
Pending litigation 18,469,174.18 32,333,083.62
Others 262,077,808.56 299,431,322.56
Projection of three guarantees and installation fees 1,330,482,237.43 1,429,733,867.17
Total 1,611,029,220.17 1,761,498,273.35
Significant assumption and estimation relating to projection of three guarantees and installation
fees: the Company reasonably estimated the three guarantees and installation fee rate based on
its actual expenses on the three guarantees and installation fees as well as sales data in the
past. The Company estimated the three guarantees and installation fees that are likely to be
incurred in the future according to its policies on the three guarantees and installation fees, as
well as the actual sales data.
198 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
39. Deferred income
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Government grants 948,935,134.05 72,999,793.50 60,247,914.19 961,687,013.36
Total 948,935,134.05 72,999,793.50 60,247,914.19 961,687,013.36
40. Share capital
Increase for Decrease for
Opening the current the current Closing
Categories of shares balance period period balance
I. Restricted shares
1. State-owned shares
2. Shares held by
domestic non-state-
owned legal entities
3. Shares held by
domestic individuals
4. Shares held by
offshore non-state-
owned legal entities
II. Non-restricted shares 9,446,598,493 8,483,600 9,438,114,893
1. Ordinary shares in
RMB 6,308,552,654 6,308,552,654
2. Domestic listed
foreign Shares
3. Offshore listed foreign
Shares 3,138,045,839 8,483,600 3,129,562,239
4. Others
III. Total shares 9,446,598,493 8,483,600 9,438,114,893
Haier Smart Home Co., Ltd. Interim Report 2023 199
Section X Financial Report
41. Capital reserve
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Capital premium (share capital
premium) 22,275,237,959.89 273,991,759.73 22,001,246,200.16
Other capital reserve 1,601,799,364.87 390,681,368.30 1,992,480,733.17
Total 23,877,037,324.76 390,681,368.30 273,991,759.73 23,993,726,933.33
The main reasons for the change in share premium:
The cancellation of treasury stock during the period resulted in the decrease in share premium of
RMB173,997,008.66; the common control combination occurred during the period resulted in the
decrease in share premium by RMB70,000,000.00.
The main reasons for the change in other capital reserve: The amortized share-based payment
for the period included in other capital reserve was RMB390,681,368.30.
42. Other comprehensive income
Items Amount for the current period
Amount
Amount attributable to
Amount before Deduction of attributable to the minority
income tax in the impact on parent company shareholders after
Opening balance current period income tax after tax tax Others Closing balance
a –241,549,088.46 –15,508,344.88 –15,508,344.88 –257,057,433.34
b 3,926,810.45 –205,933,491.47 9,483,229.06 –193,755,242.84 –2,695,019.57 –189,828,432.39
c 1,251,780,016.89 312,200,171.06 327,650,921.33 –15,450,750.27 1,579,430,938.22
d 869,623,580.17 29,397,079.24 –25,252,906.68 4,225,394.16 –81,221.60 873,848,974.33
e 106,902,179.40 41,736,048.01 –9,297,683.21 32,438,331.87 32.93 139,340,511.27
Total 1,990,683,498.45 161,891,461.96 –25,067,360.83 155,051,059.64 –18,226,958.51 2,145,734,558.09
Notes:
(1) Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, the details are as follows:
Item a represents other comprehensive income classified into profit and loss under the equity method.
Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge).
Item c represents the balance arising from translation of foreign currency financial statements.
(2) Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.
Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
200 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
43. Surplus reserve
√ Applicable Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance current period current period Closing balance
Statutory surplus reserve 3,966,533,821.65 3,966,533,821.65
Discretionary surplus reserve 26,042,290.48 26,042,290.48
Reserve fund 11,322,880.64 11,322,880.64
Enterprise development fund 10,291,630.47 10,291,630.47
Total 4,014,190,623.24 4,014,190,623.24
Pursuant to the Company Law of the People’s Republic of China and the Articles of Association,
the Company is required to appropriate the statutory surplus reserve at 10% of its net profit of
current year.
44. Undistributed profits
√ Applicable Not Applicable
Items Amounts
Undistributed profits at the end of previous year 57,976,944,921.36
Changes in accounting policies
Business combination under common control 6,806,549.24
Undistributed profits at the beginning of the year 57,983,751,470.60
Add: net profit attributable to owners of the parent company 8,963,875,999.84
Other transfer in 11,946,127.47
Adjustment due to implementation of enterprise accounting standard
Profit available for appropriation for the year 66,959,573,597.91
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares 5,297,529,553.10
Undistributed profits at the end of period 61,662,044,044.81
Haier Smart Home Co., Ltd. Interim Report 2023 201
Section X Financial Report
45. Operating income and operating cost
(1) Operating income
Amount for the Amount for the
Items current period previous period
Primary business 130,794,605,634.37 121,030,459,783.59
Other business 831,975,872.19 609,607,595.76
Total 131,626,581,506.56 121,640,067,379.35
(2) Primary business income and primary business cost by product category
Amount for the Amount for the
current period previous period
Primary business Primary business Primary business Primary business
Categories income cost income cost
Air conditioner 27,990,491,459.04 19,980,348,155.19 23,670,538,686.34 17,107,788,658.52
Refrigerator 40,302,800,944.89 27,987,308,901.78 37,913,367,317.50 26,475,741,807.66
Kitchen appliance 19,700,572,437.04 13,561,433,684.52 18,750,037,462.88 12,816,780,100.13
Water appliance 7,458,185,872.45 4,356,557,669.16 6,713,300,912.43 3,934,510,287.34
Washing machine 28,125,479,757.35 18,950,800,863.91 26,516,919,361.82 17,907,657,332.94
Equipment product and
integrated channel
services 7,217,075,163.60 6,540,223,461.39 7,466,296,042.62 6,440,093,281.13
Total 130,794,605,634.37 91,376,672,735.95 121,030,459,783.59 84,682,571,467.72
46. Taxes and surcharge
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
City construction tax 211,267,062.08 122,226,136.72
Education surcharge 129,147,500.90 88,480,235.93
Property tax 37,815,087.40 28,716,064.84
Land use tax 10,889,390.91 7,536,240.97
Stamp duty 118,585,679.99 91,460,460.03
Others 24,871,738.40 18,835,304.10
Total 532,576,459.68 357,254,442.59
202 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
47. Selling expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Selling expenses 18,768,944,057.44 17,606,475,316.07
Total 18,768,944,057.44 17,606,475,316.07
The Company’s selling expenses are mainly salary expenses, logistic and storage expenses,
advertising and promotion expenses, and after-sales expenses etc.
48. Administrative expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Administrative expenses 5,461,681,481.50 5,140,311,538.47
Total 5,461,681,481.50 5,140,311,538.47
The Company’s management expenses are mainly salary expenses, administrative office
expenses, depreciation and amortization of assets fees, etc.
49. R&D expenses
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Item current period previous period
R&D expenses 5,025,786,116.64 4,598,032,317.91
Total 5,025,786,116.64 4,598,032,317.91
The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, design
and R&D fees.
Haier Smart Home Co., Ltd. Interim Report 2023 203
Section X Financial Report
50. Financial expenses
Amount for the Amount for the
Items current period previous period
Interest expenses 875,078,615.27 348,353,122.72
Less: Interest income 614,901,983.30 362,928,829.17
Less: Cash discount 59,172,643.28 79,106,314.27
Exchange gains and losses
(gains are represented by ‘-’) –288,204,003.86 –169,143,266.33
Others 77,850,401.45 62,267,268.14
Total –9,349,613.72 –200,558,018.91
Interest expenditure in lease liabilities in the current period is RMB54,418,808.15 (amount for the
corresponding period: RMB37,961,657.33).
51. Other income
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Government grants related to revenue 557,482,171.75 493,179,590.59
Government grants related to assets 43,882,854.01 53,070,066.97
Total 601,365,025.76 546,249,657.56
52. Investment income (losses are represented by ‘-’)
Amount for the Amount for the
Items current period previous period
Income from long-term equity investment
calculated by equity method 1,078,905,972.36 936,511,207.40
Investment income from disposal of long-term
equity investment 2,936,581.54 11,181,922.82
Investment income from other equity instrument
investments during holding period 17,919,209.85 2,596,583.32
Income from wealth management products 30,006,596.61 42,007,117.65
Investment income from disposal of financial
assets at fair value through profit or loss 178,039,912.22
Total 1,129,768,360.36 1,170,336,743.41
204 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
53. Gains on changes in fair value (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Changes in fair value of forward foreign exchange
contracts –53,088,495.38
Changes in fair value of equity investments 6,761,392.80 –24,266,144.66
Changes in fair value of fund investments
products 23,806,724.21 –43,056,624.92
Others 703,445.34 1,621,089.28
Total 31,271,562.35 –118,790,175.68
54. Credit impairment loss (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Bad debts losses on accounts receivable –175,246,952.66 –222,677,055.12
Bad debts losses on other receivables 9,278,023.30 –3,907,480.73
Bad debts losses on bills receivable –31,492,310.29
Total –165,968,929.36 –258,076,846.14
55. Impairment loss on assets (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Impairment losses on inventory –499,500,903.59 –371,859,276.93
Impairment losses on other current assets –269,894,630.51 –335,202,670.88
Impairment losses on fixed assets –6,213,746.83
Impairment losses on construction in progress
Impairment losses on intangible assets –28,311.57
Impairment losses on long-term equity investment
Impairment losses on contract assets –4,110,982.94
Total –779,748,575.44 –707,061,947.81
Haier Smart Home Co., Ltd. Interim Report 2023 205
Section X Financial Report
56. Gains on disposal of assets (losses are represented by “-”)
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 9,697,510.22 38,409,742.18
Losses on disposal of non-current assets –30,344,814.86 –6,820,535.08
Total –20,647,304.64 31,589,207.10
57. Non-operating income
√ Applicable Not Applicable
Amount for the Amount for the
Items current period previous period
Gains on disposal of non-current assets 810,466.84 96,551.42
Quality claims and fines 18,063,839.13 26,011,423.15
Others 39,910,145.64 42,799,713.12
Total 58,784,451.61 68,907,687.69
58. Non-operating expenses
Amount for the Amount for the
Items current period previous period
Losses on disposal of non-current assets 4,986,722.70 9,060,187.94
Others 27,312,790.51 34,475,363.74
Total 32,299,513.21 43,535,551.68
206 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
59. Income tax expenses
(1) Statement of income tax expenses
Amount for the Amount for the
Items current period previous period
Current income tax expenses 1,878,888,468.16 1,240,405,103.19
Deferred income tax expenses 190,607,917.70 759,910,099.57
Total 2,069,496,385.86 2,000,315,202.76
(2) Current reconciliation between accounting profit and income tax expenses
Items Amounts
Total accounting profit 11,114,203,669.46
Income tax expenses calculated pursuant to statutory tax rate(s) 2,778,550,917.37
Impact from different tax rates applicable to subsidiaries –849,083,080.82
Impact from adjustment to income tax in prior periods –172,683,764.29
Impact from non-taxable income –302,592,522.82
Impact from non-deductible cost, expense and loss 109,517,247.44
Impact from deductible provisional differences or deductible losses of
unrecognized deferred tax 581,291,307.14
Others –75,503,718.16
Total income tax expense 2,069,496,385.86
60. Other comprehensive income
√ Applicable Not Applicable
Please refer to Note VII. 42 for details.
Haier Smart Home Co., Ltd. Interim Report 2023 207
Section X Financial Report
61. Other cash received from operating activities
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Deposits and securities 97,555,295.08
Government grants 387,142,763.36
Non-operating income excluding government grants 26,511,078.87
Interest income 411,472,201.42
Others 82,007,257.28
Total 1,004,688,596.01
62. Other cash paid to operating activities
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Cash paid on selling expenses 10,249,268,213.42
Cash paid on administrative and R&D expenses 3,474,855,473.01
Cash paid on financial expenses 57,225,034.72
Non-operating expenses 3,765,039.59
Others 60,014,150.77
Total 13,845,127,911.51
63. Other cash received from investment activities
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Acquisition of subsidiaries 15,265,835.02
Others 96,263.01
Total 15,362,098.03
208 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
64. Other cash paid to investment activities
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Disposal of subsidiaries 6,922,378.31
Total 6,922,378.31
65. Other cash paid to financing activities
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the
Items current period
Repurchase of shares 897,308,684.04
Cash paid to lease 549,040,170.19
Cash paid for acquisition of subsidiaries through business combination
under common control 70,000,000.00
Purchase of minority interests in subsidiaries 26,677,200.00
Capital reduction of minority shareholders 32,150,000.00
Total 1,575,176,054.23
Haier Smart Home Co., Ltd. Interim Report 2023 209
Section X Financial Report
66. Net profit adjusted to cash flow of operating activities
Net profit adjusted to cash flow of operating Amount for the Amount for the
activities current period previous period
1. Net profit 9,044,707,283.60 8,009,086,398.35
Add: impairment provision for assets 945,717,504.80 965,138,793.95
Depreciation of fixed assets 2,495,084,122.79 2,206,879,661.56
Amortization of intangible assets 624,592,081.35 446,162,246.74
Amortization of long-term prepaid expenses 257,971,298.59 183,520,989.34
Losses on disposal of fixed assets, intangible
assets and other long-term assets
(‘-’ represents ‘gains’) 24,823,560.50 –22,625,570.58
Loss and gains on change of fair value
(‘-’ represents ‘gains’) –31,271,562.35 118,790,175.68
Financial expenses (‘-’ represents ‘gains’) 586,874,611.41 179,187,219.23
Loss on investments (‘-’ represents ‘gains’) –1,129,768,360.36 –1,170,336,743.41
Decrease in deferred income tax assets
(‘-’ represents ‘increase’) 167,338,912.59 404,639,263.48
Increase of deferred income tax liabilities
(‘-’ represents ‘decrease’) 23,269,005.11 355,270,836.09
Decrease in inventories (‘-’ represents ‘increase’) 2,061,410,773.14 –1,486,709,880.77
Decrease of operational account receivables
(‘-’ represents ‘increase’) –7,214,512,184.59 –3,327,019,952.50
Increase of operational account payables
(‘-’ represents ‘decrease’) –1,469,139,831.65 –1,283,514,973.88
Others 403,433,247.61 386,602,520.58
Net cash flow generated from operational activities 6,790,530,462.54 5,965,070,983.86
2. Significant investment and financing
activities not involving cash inflows and
outflows:
Capital transferred from debts 104,128,286.20
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period 55,063,204,392.40 49,360,297,879.69
Less: cash balance at the beginning of the period 53,391,699,929.49 45,204,217,909.49
Add: cash equivalents balance at the end of the
period
Less: cash equivalents balance at the beginning of
the period
Net increase of cash and cash equivalents 1,671,504,462.91 4,156,079,970.20
210 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
67. Cash and cash equivalents
Items Closing balance Opening balance
I. Cash 55,063,204,392.40 53,391,699,929.49
Including: cash on hand 9,276,508.90 5,312,391.11
Bank deposits always available for payment 54,386,531,893.78 52,978,303,924.04
Other monetary funds always available for
payment 667,395,989.72 408,083,614.34
II. Cash equivalents
Including: Bond investments due within three
months
III. Closing balance of cash and cash equivalents 55,063,204,392.40 53,391,699,929.49
Haier Smart Home Co., Ltd. Interim Report 2023 211
Section X Financial Report
68. Monetary items in foreign currency
Items Closing balance Opening balance
Balance in Balance in
foreign Exchange Balance foreign Exchange Balance
currency rate in RMB currency rate in RMB
Monetary funds
USD 1,357,885,660.37 7.2258 9,811,810,204.70 1,290,843,958.56 6.9646 8,990,211,833.81
EUR 62,657,160.60 7.8771 493,556,719.76 47,915,506.82 7.4229 355,672,015.56
JPY 4,788,688,694.25 0.050094 239,884,571.45 2,642,036,348.79 0.052358 138,331,739.15
HKD 386,478,386.16 0.9220 356,333,072.04 647,479,463.24 0.8933 578,393,404.51
Others 2,964,318,986.93 2,630,279,781.27
Subtotal 13,865,903,554.88 12,692,888,774.30
Accounts receivables
USD 1,212,869,716.78 7.2258 8,763,953,999.52 770,735,456.70 6.9649 5,368,095,382.34
EUR 493,845,255.84 7.8771 3,890,068,464.78 480,679,854.02 7.4229 3,568,038,488.40
JPY 3,198,713,044.48 0.050094 160,236,331.25 4,448,523,930.25 0.052358 232,915,815.94
Others 5,577,933,729.78 3,648,407,445.01
Subtotal 18,392,192,525.33 12,817,457,131.69
Short-term borrowings
USD 337,613,289.30 7.2258 2,439,526,105.79 337,460,553.02 6.9646 2,350,277,767.57
EUR 451,793,222.38 7.8771 3,558,820,391.98 551,092,544.77 7.4229 4,090,704,850.58
JPY 2,062,700,922.27 0.050094 103,328,940.00 0.052358
HKD 2,600,762,515.57 0.9220 2,397,903,039.36 2,600,000,000.00 0.8933 2,322,580,000.00
Others 436,936,714.60 518,039,984.83
Subtotal 8,936,515,191.73 9,281,602,602.98
Accounts payables
USD 1,981,247,523.00 7.2258 14,316,098,351.69 1,941,535,383.62 6.9646 13,522,017,332.77
EUR 278,613,968.27 7.8771 2,194,670,089.44 626,564,863.63 7.4229 4,650,928,326.21
JPY 7,207,385,924.26 0.050094 361,046,790.49 7,649,104,013.60 0.052358 400,491,787.94
NZD 157,171,385.01 4.4003 691,601,245.45 150,709,317.71 4.4162 665,562,488.87
Others 3,558,778,339.29 3,276,292,812.40
Subtotal 21,122,194,816.36 22,515,292,748.19
Non-current liabilities due in one year
USD 144,292,967.06 7.2258 1,042,632,121.38 501,395,115.52 6.9646 3,492,016,421.53
EUR 92,658,787.96 7.8771 729,882,538.61 82,207,419.42 7.4229 610,217,453.64
JPY 142,631,071.19 0.050094 7,144,960.88 2,057,044,588.88 0.052358 107,702,740.58
RUB 603,084,790.09 0.0834 50,297,271.49 471,424,350.04 0.0942 44,408,173.77
Others 353,602,255.21 86,526,344.63
Subtotal 2,183,559,147.57 4,340,871,134.15
212 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Items Closing balance Opening balance
Balance in Balance in
foreign Exchange Balance foreign Exchange Balance
currency rate in RMB currency rate in RMB
Long-term borrowings
USD 1,266,360,000.00 7.2258 9,150,464,088.00 742,230,000.00 6.9646 5,169,335,058.00
EUR 596,367,832.17 7.8771 4,697,649,050.76 698,254,017.68 7.4229 5,183,069,747.86
RUB 250,000,000.00 0.0942 23,550,000.00
Others 1,011,421,765.20 1,014,924,067.59
Subtotal 14,859,534,903.96 11,390,878,873.45
VIII. CHANGES OF CONSOLIDATION SCOPE
1. Business combination not under common control
√ Applicable Not Applicable
(1) Business combination not under common control occurring in the current period
√ Applicable Not Applicable
Unit and Currency: EUR
The Basis for Revenue of the Net profit of the
proportion determining acquiree from acquiree from
Point of time of Cost for of equity Method of the acquisition date acquisition date
Name of acquisition of acquisition acquired acquisition Acquisition acquisition to the end of to the end of
the acquiree equity of equity (%) of equity date date the period the period
Europaltners Italia Srl April 2023 2,292,460 100 Acquisition April 2023 Equity delivery 4,308,308 –205,872
(2) Combination cost and goodwill
√ Applicable Not Applicable
Unit and Currency: EUR
Items Europaltners Italia Srl
— Cash EUR 2,292,460.00
— Contingent consideration
Total combination cost EUR 2,292,460.00
Less: acquired share of fair value of net identifiable assets EUR –10,711,934.00
Amount of goodwill EUR 13,004,394.00
Haier Smart Home Co., Ltd. Interim Report 2023 213
Section X Financial Report
(3) Identifiable assets and liabilities of the acquiree on the combination date
√ Applicable Not Applicable
Unit and Currency: EUR
Europaltners Italia Srl
Items Fair value (EUR) Book value (EUR)
Monetary funds 97,231.00 97,231.00
Accounts receivables 4,470,509.00 4,470,509.00
Inventories 516,481.00 516,481.00
Other current assets 934,716.00 934,716.00
Long-term asset 339,897.00 339,897.00
Short-term borrowings –3,026,876.00 –3,026,876.00
Accounts payables –173,081.00 –173,081.00
Taxes payable –33,253.00 –33,253.00
Payables for staff’s remuneration –418,771.00 –418,771.00
Other payables –10,189,660.00 –10,189,660.00
Estimated liabilities –2,784,819.00 –2,784,819.00
Lease liabilities –120,569.00 –120,569.00
Long-term payables for staff’s remuneration –323,739.00 –323,739.00
Net assets –10,711,934.00 –10,711,934.00
Less: minority interests
Net assets acquired –10,711,934.00 –10,711,934.00
2. Business consolidation under common control
√ Applicable Not Applicable
(1). Business combination under common control occurring in the current period
The basis for
the transaction
The proportion of constituting
of equity business Recognition
acquired in the combination basis of
Name of the business under common Combination combination
acquiree combination control date date
Shanghai Haier Smart 100.00% Controlled by 2023.1 Subject equity-
Technology Co., Haier Group related right and
Limited Corporation obligation
before and after transferred to the
combination Company
214 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(Continued)
The income of Net profit of
the acquiree the acquiree
from the from the
beginning of beginning of The income of Net profit of
the current the current the acquiree the acquiree
period to period to during the during the
Name of the combination combination comparison comparison
acquiree date date period period
Shanghai Haier Smart N/A N/A 60,386,152.68 6,271,553.65
Technology Co.,
Limited
(2). Combination cost
√ Applicable Not Applicable
Unit and Currency: RMB
Combination cost Cash Equity
Shanghai Haier Smart
Technology Co., Limited 70,000,000.00 N/A
(3). Assets and liabilities of the acquiree
√ Applicable Not Applicable
Unit and Currency: RMB
Shanghai Haier Smart
Items Technology Co., Limited
Combination End of the
date previous period
Monetary funds 22,886,544.88 22,886,544.88
Accounts receivables 183,024,484.05 183,024,484.05
Inventories 45,073,195.71 45,073,195.71
Other current assets 530,506.71 530,506.71
Deferred income tax assets 1,817,890.71 1,817,890.71
Less: Accounts payables 189,302,217.18 189,302,217.18
Short-term borrowings 28,848,789.90 28,848,789.90
Taxes payable 3,375,065.74 3,375,065.74
Net assets 31,806,549.24 31,806,549.24
Haier Smart Home Co., Ltd. Interim Report 2023 215
Section X Financial Report
3. Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
Qingdao
Haishuzhi
Enterprise
Consulting
Service
Items Co., Ltd.
Equity disposal price
Proportion of equity disposal 100%
Method of equity disposal Cancellation
Time of loss-of-control 2023.1
Basis for determination the time of loss-of-control Cancellation
Difference between consideration and its share of net assets of the
subsidiary as respect to the disposal in the consolidated level –733.51
4. Changes of consolidation scope due to other reasons
√ Applicable Not Applicable
(1) During the period, Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company,
established a wholly-owned subsidiary, Qingdao Jingxiang Precision Manufacturing Co. (青
島 淨 享 精 密 製 造 有 限 公 司).
(2) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd. established
a wholly-owned subsidiary, Qingdao Haier Yikang Technology Co., Ltd. (青島海爾益康科技
有 限 公 司).
216 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
IX. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1). Composition of the Group
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Flourishing Reach Mainland of China British Virgin Group company, which 100.00% 100.00% Establishment
Limited Islands mainly engage in
investment holding, the
production and sale of
washing machines and
water heaters,
distribution service
Haier Electronics Mainland of China Bermuda Group company, which 100.00% 100.00% Establishment
Group Co., Ltd. and Hong Kong mainly engage in
investment holding, the
production and sale of
water equipment,
distribution service
Haier U.S. Appliance the United States the United Group company, which 100.00% 100.00% Establishment
Solutions, Inc. States mainly engage in home
appliances production
and distribution
business
Haier Singapore Singapore and Singapore Group company, which 100.00% 100.00% Business
Investment Holding other overseas mainly engage in home combination
Co., Ltd. areas appliances production under common
and distribution control
business
Haier New Zealand New Zealand New Zealand Group company, which 100.00% 100.00% Business
Investment Holding mainly engage in home combination
Company Limited appliances production under common
and distribution control
business
Candy S.p.A Europe Italy Group company, which 100.00% 100.00% Business
mainly engage in home combination not
appliances production under common
and distribution control
business
Qingdao Haier Air Qingdao High-tech Qingdao Manufacture and sale of 100.00% 100.00% Business
Conditioner Gen Zone High-tech household air- combination
Corp., Ltd.* Zone conditioners under common
control
Guizhou Haier Huichuan District, Huichuan Manufacture and sale of 59.00% 59.00% Business
Electronics Co., Zunyi City, District, Zunyi refrigerator combination
Ltd.* Guizhou Province City, Guizhou under common
Province control
Hefei Haier Air- Hefei Haier Hefei Haier Manufacture and sale of 100.00% 100.00% Business
conditioning Co., Industrial Park Industrial Park air- conditioners combination
Limited* under common
control
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 217
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Wuhan Haier Wuhan Haier Wuhan Haier Manufacture and sale of 60.00% 60.00% Business
Electronics Holding Industrial Park Industrial Park air- conditioners combination
Co., Ltd.* under common
control
Qingdao Haier Qingdao Qingdao Manufacture and sale of 100.00% 100.00% Business
Air- Conditioner Development Development air- conditioners combination
Electronics Co., Zone Zone under common
Ltd.* control
Qingdao Haier Qingdao High-tech Qingdao Manufacturing of plastic 100.00% 100.00% Business
Information Plastic Zone High-tech products combination
Development Co., Zone under common
Ltd.* control
Dalian Haier Precision Dalian Export Dalian Export Manufacture and sale of 90.00% 90.00% Business
Products Co., Ltd.* Expressing Zone Expressing precise plastics combination
Zone under common
control
Hefei Haier Plastic Hefei Economic & Hefei Economic Manufacture and sale of 95.17% 4.83% 100.00% Business
Co., Ltd.* Technological & plastic parts combination
Development Technological under common
Area Development control
Area
Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic 40.00% 60.00% 100.00% Business
Powder Co., Ltd.* Development Development powder, plastic sheet combination
Zone Zone and high-performance under common
coatings control
Chongqing Haier Jiangbei District, Jiangbei District, Plastic products, sheet 90.00% 10.00% 100.00% Business
Precision Plastic Chongqing City Chongqing metal work, electronics combination
Co., Ltd.* City and hardware under common
control
Qingdao Haier Qingdao High-tech Qingdao Manufacture and 100.00% 100.00% Establishment
Refrigerator Co., Zone High-tech production of
Ltd.* Zone fluorine-free
refrigerators
Qingdao Haier Pingdu Pingdu Manufacture of 100.00% 100.00% Establishment
Refrigerator Development Development refrigerators
(International) Co., Zone, Qingdao Zone, Qingdao
Ltd.*
Qingdao Household Qingdao High-tech Qingdao Research and 100.00% 100.00% Establishment
Appliance Zone High-tech development of home
Technology and Zone appliances mold and
Equipment Research technological equipment
Institute*
Qingdao Haier Whole Qingdao High-tech Qingdao Research, development 98.33% 98.33% Establishment
Set Home Appliance Zone High-tech and sales of
Service Co., Ltd.* Zone health- related small
home appliance
Qingdao Haier Special Qingdao Qingdao Manufacture and sales of 100.00% 100.00% Establishment
Refrigerator Co., Development Development fluorine-free
Ltd.* Zone Zone refrigerators
Qingdao Haier Qingdao Qingdao Manufacture of dish 100.00% 100.00% Establishment
Dishwasher Co., Development Development washing machine and
Ltd.* Zone Zone gas stove
* For identification purposes only
218 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Qingdao Haier Special Qingdao Qingdao Research, manufacture 100.00% 100.00% Establishment
Freezer Co., Ltd.* Development Development and sales of freezer and
Zone Zone other refrigeration
products
Dalian Haier Dalian Export Dalian Export Air conditioner processing 90.00% 90.00% Establishment
Air- conditioning Expressing Zone Expressing and manufacturing
Co., Ltd.* Zone
Dalian Haier Dalian Export Dalian Export Refrigerator processing 100.00% 100.00% Establishment
Refrigerator Co., Expressing Zone Expressing and manufacturing
Ltd.* Zone
Qingdao Haier Qingdao Qingdao Development, assembling 100.00% 100.00% Establishment
Electronic Plastic Development Development and sales of plastics,
Co., Ltd.* Zone Zone electronics and
products
Wuhan Haier Freezer Wuhan Economic & Wuhan Economic Research, manufacture 95.00% 5.00% 100.00% Establishment
Co., Ltd* Technological & and sales of freezer and
Development Technological other refrigeration
Zone High-tech Development products
Industrial Park Zone High-tech
Industrial Park
Qingdao Haidarui Qingdao High-tech Qingdao Development, purchase 98.00% 2.00% 100.00% Establishment
Procurement Service Zone High-tech and sale of electrical
Co., Ltd.* Zone products and
components
Qingdao Haier Qingdao High-tech Qingdao Development and 91.46% 1.01% 92.74% Establishment
Intelligent Home Zone High-tech application of home
Appliance Zone appliances,
Technology Co., communication,
Ltd.* electronics and network
engineering technology
Chongqing Haier Jiangbei District, Jiangbei District, Manufacture and sales of 76.92% 23.08% 100.00% Establishment
Air- conditioning Chongqing City Chongqing air conditioners
Co., Ltd.* City
Qingdao Haier Qianwang ang Qianwang ang Development and 70.00% 70.00% Establishment
Precision Products Road, Jiaonan Road, Jiaonan manufacture of precise
Co., Ltd.* City City plastic, metal plate,
mold and electronic
products for home
appliances
Qingdao Haier Air Jiaonan City, Jiaonan City, Manufacture of home 100.00% 100.00% Establishment
Conditioning Qingdao Qingdao appliances and
Equipment Co., electronics
Ltd.*
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00% 100.00% Establishment
Zone Haier Expressing Zone Expressing
Air-conditioning Zone
Trading Co., Ltd.*
Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00% 100.00% Establishment
Zone Haier Expressing Zone Expressing
Refrigerator Trading Zone
Co., Ltd.*
Chongqing Haier Jiangbei District, Jiangbei District, Sales of home appliances 95.00% 5.00% 100.00% Establishment
Electronics Sales Chongqing City Chongqing
Co., Ltd.* City
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 219
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Chongqing Haier Jiangbei District, Jiangbei District, Processing and 84.95% 15.05% 100.00% Establishment
Refrigeration Chongqing City Chongqing manufacturing of
Appliance Co., Ltd.* City refrigerator
Hefei Haier Hefei Haier Hefei Haier Processing and 100.00% 100.00% Establishment
Refrigerator Co., Industrial Park Industrial Park manufacturing of
Ltd.* refrigerator
Qingdao Haier Qingdao Qingdao Air-conditioning engineer 100.00% 100.00% Establishment
Intelligent Building Development Development
Technology Co., Zone Zone
Ltd.*
Chongqing Jiangbei District, Jiangbei District, Sales of home appliances 51.00% 51.00% Establishment
Goodaymart Electric Chongqing City Chongqing and electronics
Appliance Sale Co., City
Ltd.*
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sale of 100.00% 100.00% Establishment
(Jiaozhou) Qingdao Qingdao air- conditioners
Air-conditioning Co.,
Limited*
Qingdao Haier Jiaozhou City, Jiaozhou City, Manufacture and sales of 100.00% 100.00% Establishment
Component Co., Qingdao Qingdao plastic and precise
Ltd.* sheet metal products
Haier Shareholdings Hong Kong Hong Kong Investment 100.00% 100.00% Establishment
(Hong Kong)
Limited*
Harvest International Cayman Islands Cayman Islands Investment 100.00% 100.00% Establishment
Company*
Shenyang Haier Shenbei New Area, Shenbei New Manufacture and sales of 100.00% 100.00% Establishment
Refrigerator Co., Shenyang City Area, refrigerator
Ltd.* Shenyang City
Foshan Haier Freezer Sanshui District, Sanshui District, Manufacture and sales of 100.00% 100.00% Establishment
Co., Ltd.* Foshan City Foshan City freezer
Zhengzhou Haier Zhengzhou Zhengzhou Manufacture and sales of 100.00% 100.00% Establishment
Air- conditioning Economic and Economic and air conditioner
Co., Ltd.* Technological Technological
Development Development
Zone Zone
Qingdao Haidayuan Qingdao Qingdao Development, purchase 100.00% 100.00% Establishment
Procurement Service Development Development and sale of electrical
Co., Ltd.* Zone Zone products and
components
Qingdao Haier Qingdao High-tech Qingdao Development and 100.00% 100.00% Establishment
Intelligent Zone High-tech research of home
Technology Zone appliance products
Development Co.,
Ltd.*
Qingdao Hairi High Qingdao High-tech Qingdao Design, manufacture and 100.00% 100.00% Business
Technology Co., Zone High-tech sales of product model combination
Ltd.* Zone and mould under common
control
Qingdao Hai Gao Qingdao High-tech Qingdao Industrial design and 75.00% 75.00% Business
Design and Zone High-tech prototype production combination
Manufacture Co., Zone under common
Ltd.* control
* For identification purposes only
220 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Beijing Haier Guangke Beijing Beijing Development, promotion 55.00% 55.00% Business
Digital Technology and transfer of combination
Co., Ltd.* technology under common
control
Shanghai Haier Medical Shanghai Shanghai Wholesale and retail of 66.87% 66.87% Establishment
Technology Co., Ltd.* medical facility
Qingdao Haier Qingdao Qingdao Development and sales of 100.00% 100.00% Business
Technology Co., Ltd.* software and information combination
product under common
control
Qingdao Haier Qingdao Qingdao Entrepreneurship 100.00% 100.00% Establishment
Technology investment and
Investment Co., Ltd.* consulting
Qingdao Casarte Smart Qingdao Qingdao Development, production 100.00% 100.00% Establishment
Living Appliances Co., and sales of appliances
Ltd.*
Qingdao Haichuangyuan Qingdao Qingdao Sales of home appliances 100.00% 100.00% Establishment
Appliances Sales Co., and digital products
Ltd.*
Haier Overseas Electric Qingdao Qingdao Sales of home appliances, 100.00% 100.00% Establishment
Appliance Co., Ltd.* international freight
forwarding
Haier Group (Dalian) Dalian Dalian Sales of home appliances, 100.00% 100.00% Business
Electrical Appliances international freight combination
Industry Co., Ltd.* forwarding under common
control
Qingdao Haier Central Qingdao Qingdao Production and sales of 100.00% 100.00% Establishment
Air Conditioning Co., air conditioners and
Ltd.* refrigeration equipment
Chongqing Haier Home Hefei Hefei Sales of home appliances 100.00% 100.00% Establishment
Appliance Sale Hefei
Co., Ltd.*
Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware 71.43% 71.43% Establishment
Technology Co., Ltd.*
Haier U+smart Beijing Beijing Software development 100.00% 100.00% Establishment
Intelligent Technology
(Beijing) Co., Ltd.*
Haier (Shanghai) Shanghai Shanghai Sales, research and 100.00% 100.00% Establishment
Electronics Co., Ltd.* development of home
appliances
Shanghai Haier Shanghai Shanghai Business management 100.00% 100.00% Establishment
Zhongzhi Fang consulting, chuangke
Chuang Ke management
Management Co.,
Ltd.*
Qingdao Haier Smart Qingdao Qingdao Production and sales of 100.00% 100.00% Establishment
Kitchen Appliance kitchen smart home
Co., Ltd.* appliances
GE Appliance Shanghai Shanghai Sales of home appliances 100.00% 100.00% Establishment
(Shanghai) Co., Ltd.*
Qingdao Haier Special Qingdao Qingdao Production and sales of 100.00% 100.00% Establishment
Refrigerating home appliances
Appliance Co., Ltd.*
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 221
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Beijing Zero Micro Beijing Beijing Promotion of 55.00% 55.00% Establishment
Technology Co., technological
Ltd.* development
Laiyang Haier Smart Laiyang Laiyang Production and sales of 100.00% 100.00% Establishment
Kitchen Appliance home appliances
Co., Ltd.*
Hefei Haier Air Hefei Hefei Production and sales of 100.00% 100.00% Establishment
Conditioning home appliances
Electronics Co.,
Ltd.*
Haier (Shanghai) Shanghai Shanghai Research and 100.00% 100.00% Establishment
Home Appliance development of home
Research and appliances
Development Center
Co., Ltd.*
Haier (Shenzhen) R&D Shenzhen Shenzhen Development, research 100.00% 100.00% Establishment
Co., Ltd.* and technical services of
household and
commercial electrical
appliances
Guangzhou Haier Air Guangdong Guangdong Manufacturing of 100.00% 100.00% Establishment
Conditioner Co., refrigeration and air
Ltd.* conditioning equipment
Qingdao Yunshang Qingdao Qingdao IoT technology research 60.00% 60.00% Establishment
Yuyi IOT Technology and development
Co., Ltd.*
Qingdao Haizhi Qingdao Qingdao Asset management, 100.00% 100.00% Establishment
Robotics Co., Ltd.* equity investment
Qingdao Jijia Cloud Qingdao Qingdao R&D and sales of lighting 80.00% 80.00% Establishment
Intelligent appliances
Technology Co.,
Ltd.*
Qingdao Haimeihui Qingdao Qingdao Leasing and business 100.00% 100.00% Establishment
Management services
Consulting Co., Ltd.
Wuxi Yunshang Wuxi Wuxi Internet of Things 100.00% 100.00% Establishment
Internet of Clothing technology R & D
Technology Co.,
Ltd.*
Qingdao Haidacheng Qingdao Qingdao Development, purchase 100.00% 100.00% Establishment
Procurement Service and sale of electrical
Co., Ltd.* products and
components
Guangdong Heilong Guangzhou Guangzhou Scientific research and 76.72% 76.72% Business
Intelligent technology service combination not
Technology Co. Ltd* sector under common
control
Beijing Haixianghui Beijing Beijing Scientific research and 100.00% 100.00% Establishment
Technology Co., technology service
Ltd.* sector
Qingdao Hairuijiejing Qingdao Qingdao Electronic equipment 51.00% 51.00% Business
Electronics Co., technology research, combination not
Ltd.* development, transfer, under common
consulting and services control
* For identification purposes only
222 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Haier Smart Home Qingdao Qingdao Technology development 100.00% 100.00% Establishment
Experience Cloud of smart home
Ecological products, whole
Technology Co., furniture customization,
Ltd.* etc.
Haier Smart Home Qingdao Qingdao Technical services, 100.00% 100.00% Establishment
(Qingdao) Network development,
Co., Ltd.* consulting, transfer, etc.
Haier Smart Home Qingdao Qingdao Residential interior 100.00% 100.00% Establishment
(Qingdao) Network decoration, professional
Operation Co., Ltd.* construction operation,
special equipment
installation, upgrading
and repair, etc.
Qingdao Internet of Qingdao Qingdao Urban distribution and 100.00% 100.00% Establishment
Wine Technology transportation services,
Co., Ltd.* import and export of
goods, technology
import and export and
food business, etc.
Qingdao Linghai Air Qingdao Qingdao Manufacture and 100.00% 100.00% Establishment
Conditioning production of air
Equipment Co., conditioner and
Ltd.* refrigeration equipment
Shenzhen Yunshang Shenzhen Shenzhen Import and export 100.00% 100.00% Establishment
Internet of Clothes business, Internet,
Technology Co., Internet of things, big
Ltd.* data, AI, AR and
technical services
operation
Qingdao Haixiangxue Qingdao Qingdao Professional intermediary 100.00% 100.00% Establishment
Human Resources activities
Co., Ltd.*
Jiangxi Haier Medical Jiangxi Jiangxi Wholesale and retail of 100.00% 100.00% Establishment
Technology Co., medical equipment
Ltd.*
Qingdao Haizhi Qingdao Qingdao Technical service 100.00% 100.00% Establishment
Yunlan Technology development
Co., Ltd.*
Qingdao Haishengze Qingdao Qingdao Air conditioning 100.00% 100.00% Establishment
Technology Co., equipment technical
Ltd.* services
Qingdao Hailvyuan Qingdao Qingdao Electrical and electronic 100.00% 100.00% Establishment
Recycling products waste
Technology Co., treatment
Ltd.*
Qingdao Haier HVAC Qingdao Qingdao Manufacture and sale of 75.00% 25.00% 100.00% Establishment
Equipment Co., air- conditioners
Ltd.*
Qingdao Haier Home Qingdao Qingdao Integrated service of AI 100.00% 100.00% Establishment
AI Industry industry application
Innovation Center system
Co., Ltd.*
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 223
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Zhejiang Weixi IoT Zhejiang Zhejiang IoT application service 100.00% 100.00% Establishment
Technology Co.,
Ltd.*
Qingdao Haier Quality Qingdao Qingdao Inspection and testing of 100.00% 100.00% Business
Inspection Co., Ltd.* home appliance combination
under common
control
Qingdao Qingdao Qingdao Product certification 100.00% 100.00% Business
Haiyongcheng service combination
Certification Service under common
Co., Ltd* control
Qingdao Zhonghai Qingdao Qingdao Home appliance testing 100.00% 100.00% Business
Borui Testing and technology combination
Technology Service consulting under common
Co., Ltd* controls
Qingdao Haier Special Qingdao Qingdao Manufacture and sale of 100.00% 100.00% Business
Plastic Development refrigerator doors combination
Co., Ltd.* under common
controls
Haier Robot Qingdao Qingdao Manufacture and sale of 100.00% 100.00% Business
Technology service robots combination
(Qingdao) Co., Ltd.* under common
controls
Qingdao Ririshun Qingdao Qingdao After-sale service of home 100.00% 100.00% Business
Service Co., Ltd.* appliances combination
under common
controls
Qingdao Haizhiling Air Qingdao Qingdao Software development 100.00% 100.00% Establishment
Conditioning and sale of daily
Engineering Co., necessities
Ltd.*
Haier Smart Home Qingdao Qingdao Promotion of energy- 100.00% 100.00% Establishment
(Xiongan, Hebei) saving technology
Technology Co.,
Ltd.*
Qingdao Ruibo Qingdao Qingdao Environmental and AI 100.00% 100.00% Establishment
Ecological technology consulting
Environmental
Technology Co.,
Ltd.*
Qingdao Sanyiniao Qingdao Qingdao Technology service and 100.00% 100.00% Establishment
Technology Co., advertisement design
Ltd.*
Qingdao Jingzhi Qingdao Qingdao Operation of dangerous 100.00% 100.00% Establishment
Recycle waste
Environmental
Technology Co.,
Ltd.*
Qingdao Yunshang Qingdao Qingdao Professional cleaning and 51.00% 51.00% Establishment
Jieshen Yilian sale of daily necessities
Technology Co.,
Ltd.*
Shanghai Yunshang Shanghai Shanghai Professional cleaning and 100.00% 100.00% Establishment
Yuyi IoT Technology sale of daily necessities
Co., Ltd.*
* For identification purposes only
224 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
% of the
Principal place of Place of voting
Name of subsidiary business registration Nature of business Shareholding rights Acquiring method
Direct Indirect
Shijiazhuang Shijiazhuang Shijiazhuang Professional cleaning and 51.00% 51.00% Establishment
Yunshang Yilian sale of daily necessities
Technology Co.,
Ltd.*
Nanjing Yunshang Nanjing Nanjing Professional cleaning and 80.00% 80.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Shanxi Yunshang Shanxi Shanxi Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Tianjin Yunshang Tianjin Tianjin Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd.*
Chongqing Yunshang Chongqing Chongqing Professional cleaning and 51.00% 51.00% Establishment
Haihong Yilian sale of daily necessities
Technology Co.,
Ltd.*
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 51.00% 51.00% Establishment
Meier Yilian sale of daily necessities
Technology Co.,
Ltd.
Beijing Yunshang Beijing Beijing Professional cleaning and 51.00% 51.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd.
Chengdu Yunshang Chengdu Chengdu Professional cleaning and 100.00% 100.00% Establishment
Yilian Technology sale of daily necessities
Co., Ltd.
Qingdao Haier Water Qingdao Qingdao Technical services, 100.00% 100.00% Establishment
Ecology Technology development, consulting
Co., Ltd.
Qingdao Haixiangmian Qingdao Qingdao Sale of food and daily 100.00% 100.00% Establishment
Technology Co., necessities
Ltd.*
Qingdao Haier Kitchen Qingdao Qingdao Technology service and 100.00% 100.00% Establishment
IoT Technology Co., sale of daily necessities
Ltd.*
Tibet Haifeng Tibet Tibet Development of software 100.00% 100.00% Establishment
Intelligent Innovation and medical equipment
Technology Co.,
Ltd.*
Qingdao Haixiangzhi Qingdao Qingdao Manufacturing of home 100.00% 100.00% Establishment
Technology Co., appliances
Ltd.*
Qingdao Haier Qingdao Qingdao Manufacturing of home 100.00% 100.00% Establishment
Refrigeration appliances
Appliance Co., Ltd.*
Chongqing Haier Chongqing Chongqing Manufacturing of home 100.00% 100.00% Establishment
Washing Appliance appliances
Co., Ltd.*
Microenterprises such All over the All over the Sales of home appliances Establishment
as Qingdao Hai country country
Heng Feng Electrical
Appliances Sale &
Service Co., Ltd.*
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 225
Section X Financial Report
Reasons for including subsidiaries in which the Company has 50% or less of the equity into
the scope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the finance
and operation decisions of enterprises such as Qingdao Hai Heng Feng Electrical
Appliances Sale & Service Co., Ltd*, which were included into the scope of consolidated
financial statements.
(2). Material non-wholly owned subsidiaries
Dividends
Profit or loss announced to
attributable be distributed Balance of
to minority to minority minority
Shareholding shareholders shareholders interests at
Name of of minority in the current in the current the end of the
subsidiary shareholders period period period
Guizhou Haier
Electronics Co.,
Ltd.* 41.00% 7,804,274.43 121,526,167.98
Wuhan Haier
Electronics Co.,
Ltd.* 40.00% 5,916,977.69 –8,000,000.00 253,353,839.37
* For identification purposes only
226 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(3). Summarized financial information in respect of material non-wholly owned
subsidiaries
Name of
subsidiary Closing balance
Current Non-current Current Non-current
assets Assets Total assets liabilities liabilities Total liabilities
Guizhou Haier
Electronics
Co., Ltd.* 504,363,908.40 79,788,445.71 584,152,354.11 281,754,066.42 5,993,000.00 287,747,066.42
Wuhan Haier
Electronics
Co., Ltd.* 1,047,819,707.79 128,389,588.18 1,176,209,295.97 542,824,697.54 542,824,697.54
(continued)
Name of
Subsidiary Opening balance
Current Non-current Current Non-current
assets Assets Total assets liabilities liabilities Total liabilities
Guizhou Haier
Electronics
Co., Ltd.* 470,967,911.51 74,062,299.71 545,030,211.22 261,666,739.20 5,993,000.00 267,659,739.20
Wuhan Haier
Electronics
Co., Ltd.* 924,844,806.17 133,143,608.30 1,057,988,414.47 412,163,241.37 412,163,241.37
Name of subsidiary Amount for the current period
Total Cash flow from
Operating comprehensive operating
revenue Net profit income activities
Guizhou Haier Electronics
Co., Ltd.* 714,552,506.74 19,034,815.67 19,034,815.67 –27,399,823.80
Wuhan Haier Electronics
Co., Ltd.* 1,297,917,803.23 14,792,444.23 14,792,444.23 –121,090,029.67
(continued)
Name of subsidiary Amount for the previous period
Total Cash flow from
Operating comprehensive operating
revenue Net profit income activities
Guizhou Haier Electronics
Co., Ltd.* 687,283,541.12 13,097,320.09 13,097,320.09 –258,232,502.08
Wuhan Haier Electronics
Co., Ltd.* 820,118,983.24 2,313,384.36 2,313,384.36 –40,171,033.70
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 227
Section X Financial Report
2. Control over subsidiaries’ transactions despite change in owners’ equity in
subsidiaries
√ Applicable Not Applicable
(1). Descriptions of change in owners’ equity in subsidiaries: capital increase by minority
shareholders of the Company’s subsidiaries resulted in the change in the Company’s
shareholding ratio.
(2). Impact of the transactions on minority interests and the equity attributable to shareholders
of the Parent Company:
Items Others
Total consideration for acquisition/disposal 58,827,200.00
Less: share of net assets of subsidiaries in respect to the
shareholding proportion acquired/disposed 88,821,951.07
Difference –29,994,751.07
Including: capital reserve adjustment –29,994,751.07
228 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
3. Interests in joint ventures or associates
√ Applicable Not Applicable
(1) Joint ventures or associates
Principal place of Place of Accounting treatment
Name of joint ventures or associates business registration Nature of business Shareholding of investment
Haier Finance Co., Ltd.* Qingdao Qingdao Financial services 42.00% Equity method
Bank of Qingdao Co., Ltd.* Qingdao Qingdao Commercial Bank 8.19% Equity method
Wolong Electric (Jinan) Motor Co., Ltd.* Jinan Jinan Motor Manufacturing 30.00% Equity method
Qingdao Hegang New Material Technology Qingdao Qingdao Steel plate Manufacturing 23.94% Equity method
Co., Ltd.*
Qingdao Haier SAIF Smart Home Industry Qingdao Qingdao Venture Capital 63.13% Equity method
Investment Center (Limited Partnership)*
Mitsubishi Heavy Industries Haier (Qingdao) Qingdao Qingdao Manufacturing of 45.00% Equity method
Air-conditioners Co., Ltd.* household appliances
Qingdao Haier Carrier Refrigeration Qingdao Qingdao Manufacturing of 49.00% Equity method
Equipment Co., Ltd.* household appliances
Qingdao Haier Multimedia Co., Ltd.* Qingdao Qingdao R&D and sales of 20.20% Equity method
televisions
Anhui Kunhe Intelligent Technology Co., Hefei Hefei Electrical equipment R&D 30.00% Equity method
Ltd.*
Zhejiang Futeng Fluid Technology Co., Ltd.* Huzhou Huzhou Gas compression 48.00% Equity method
machinery
development and
manufacturing
Hongtong Environmental Technology Guangzhou Guangzhou Machinery and equipment 15.00% Equity method
(Guangzhou) Co., Ltd* development and
manufacturing
Beijing ASU Tech Co. Ltd* Beijing Beijing Technical service import 34.15% Equity method
and export business
Qingdao Haimu Investment Management Qingdao Qingdao Investment Management 49.00% Equity method
Co., Ltd.*
Qingdao Haimu Smart Home Investment Qingdao Qingdao Investment Management 24.00% Equity method
Partnership (Limited Partnership)*
Haineng Wanjia (Shanghai) Technology Shanghai Shanghai Construction 20.00% Equity method
Development Co., Ltd.*
Qingdao Guochuang Intelligent Household Qingdao Qingdao Development of home 35.51% Equity method
Appliance Research Institute Co., Ltd.* appliances
Guangzhou Heying Investment Partnership Guangzhou Guangzhou Investment 49.00% Equity method
(Limited Partnership)*
Qingdao Java Cloud Network Technology Qingdao Qingdao Home online service 22.10% Equity method
Co., Ltd.*
Bingji (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd.*
Youjin (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method
Co., Ltd.*
RRS (Shanghai) Investment Co., Ltd.* Shanghai Shanghai Investment management 45.00% Equity method
Haier Best Water Technology Co., Ltd.* Qingdao Qingdao Water equipment 49.00% Equity method
technology
development service
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 229
Section X Financial Report
Principal place of Place of Accounting treatment
Name of joint ventures or associates business registration Nature of business Shareholding of investment
Huizhi Xiangshun Equity Investment Fund Qingdao Qingdao Investment management 30.00% Equity method
(Qingdao) Partnership (Limited
Partnership)*
Qingdao RRS Huizhi Investment Co., Ltd.* Qingdao Qingdao Investment management 50.00% Equity method
Qingdao Xinshenghui Technology Co., Ltd.* Qingdao Qingdao Technology service 20.00% Equity method
development
Konan Electronic Co., Ltd. Japan Japan Motor Manufacturing 50.00% Equity method
HPZ LIMITED Nigeria Nigeria Manufacturing of 25.01% Equity method
household appliances
HNR Company (Private) Limited Pakistan Pakistan Manufacturing of 31.72% Equity method
household appliances
Controladora Mabe S.A.deC.V. Mexico Mexico Manufacturing of 48.41% Equity method
household appliances
Middle East Air conditioning Company, Saudi Arabia Saudi Arabia Sales of household 49.00% Equity method
Limited appliances
(2). Major financial information of significant associates
√ Applicable Not Applicable
Unit and Currency: RMB
Basic information of significant associates:
Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) was
established by Haier Group Corporation and its three affiliates via capital contribution.
The place of registration and principal place of business of the Finance Company is
Yulong International Center, No.178-2 Haier Road, Laoshan District, Qingdao City. The
Company’s subsidiaries hold an aggregate of 42.00% equity in the Finance Company.
* For identification purposes only
230 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Financial Information of significant associates:
Items Finance company
Closing balance/ Opening balance/
Amount for the Amount for the
current period previous period
Current assets 60,760,261,748.08 62,367,859,305.44
Non-current assets 14,106,525,430.12 12,622,422,390.73
Total assets 74,866,787,178.20 74,990,281,696.17
Current liabilities 56,217,272,559.98 56,509,751,262.74
Non-current liabilities 477,492,928.25 480,084,424.03
Total liabilities 56,694,765,488.23 56,989,835,686.77
Minority equity interests
Equity interest attributable to shareholders
of the Parent Company 18,172,021,689.97 18,000,446,009.40
Including: share of net assets calculated based
on shareholding percentage 7,632,249,109.79 7,560,187,323.95
Operating income 903,641,445.71 1,033,551,173.17
Net profit 753,528,932.20 758,762,130.10
Other comprehensive income –21,953,251.63 18,240,788.11
Total comprehensive income 731,575,680.57 777,002,918.21
Dividend received from associates for the year 235,200,000.00 218,400,000.00
(3). Summarized financial information of insignificant joint ventures or associates
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in Associates current period previous period
Bank of Qingdao Co., Ltd.* 3,048,664,137.28 2,934,085,854.00
Wolong Electric (Jinan) Motor Co., Ltd.* 187,141,980.86 174,697,807.74
Qingdao Hegang New Material Technology Co., Ltd.* 321,421,159.71 314,802,331.45
Qingdao Haier SAIF Smart Home Industry Investment
Center (Limited Partnership)* 310,583,924.87 319,245,649.36
Mitsubishi Heavy Industries Haier (Qingdao)
Air Conditioner Co., Ltd.* 774,581,021.45 715,461,260.26
Qingdao Haier Carrier Refrigeration Equipment
Co., Ltd.* 402,137,740.65 413,367,540.80
Qingdao Haier Multimedia Co., Ltd.* 136,697,369.95 153,550,234.50
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2023 231
Section X Financial Report
Closing balance/ Opening balance/
Amount for the Amount for the
Investment in Associates current period previous period
Anhui Kunhe Intelligent Technology Co., Ltd.* 1,997,782.61 1,997,782.61
Zhejiang Futeng Fluid Technology Co., Ltd.* 77,807,408.84 77,807,408.84
Beijing Mr. Hi Network Technology Company Limited* 7,507,759.75 7,507,759.75
Hongtong Environmental Technology (Guangzhou)
Co., Ltd* 4,500,000.00
Beijing ASU Tech Co., Ltd.* 1,597,057.62 12,829,433.78
Shenzhen Genyuan Environmental Protection
Technology Co., Ltd.* 6,914,487.73
Qingdao Haimu Investment Management Co., Ltd.* 2,499,757.88 2,521,766.42
Qingdao Haimu Smart Home Investment Partnership
(Limited Partnership)* 58,667,049.77 58,905,912.88
Haineng Wanjia (Shanghai) Technology Development
Co., Ltd.* 772,938.88 772,938.88
Qingdao Guochuang Intelligent Home Appliance
Research Institute Co., Ltd. 47,494,113.67 45,016,334.20
Guangzhou Heying Investment Partnership
(Limited Partnership)* 264,290,262.87 285,793,577.87
Qingdao Java Cloud Network Technology Co., Ltd.* 2,210,245.84 2,547,217.00
Bingji (Shanghai) Corporate Management Co., Ltd.* 1,035,293,812.51 1,014,425,293.04
Youjin (Shanghai) Corporate Management Co., Ltd.* 1,881,534,204.54 1,843,591,441.88
RRS (Shanghai) Investment Co., Ltd.* 3,420,153,099.18 3,351,166,257.98
Haier Best Water Technology Co., Ltd.* 153,655,916.48 148,369,638.40
Huizhi Xiangshun Equity Investment Fund (Qingdao)
Partnership (Limited Partnership)* 259,222,514.94 238,806,947.64
Qingdao RRS Huizhi Investment Co., Ltd.* 4,083,482.78 4,083,482.78
Qingdao Xinshenghui Technology Co., Ltd.* 8,379,072.57 8,598,002.89
Europalters Italia S.r.l. 15,760,505.28
Orygin LLC 23,430,962.13 13,918,442.26
Konan Electronic Co., Ltd. 64,943,751.73 67,770,092.99
HNR Company (Private) Limited 91,034,937.84 74,366,909.55
HPZ LIMITED 48,217,178.14 88,751,047.98
Controladora Mabe S.A.deC.V. 5,020,264,513.38 4,685,927,386.53
Middle East Airconditioning Company, Limited 8,481,630.61 8,820,101.55
Total book value of investment 17,669,266,789.33 17,092,180,848.82
Total amount of the following financial data of
associates calculated based on shareholding
percentage
Net profit 775,751,075.57 635,985,295.85
Other comprehensive income –6,287,979.19 100,213,218.25
Total comprehensive income 769,463,096.38 736,198,514.10
* For identification purposes only
232 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
X. SEGMENT REPORT
√ Applicable Not Applicable
The Company principally engaged in manufacture and sales of household appliances and relevant
services business, manufacture of upstream household appliances parts business and distribution of
products of third-party and after-sale business. The Company has three business segments: (1) China
smart home business segment; (2) Overseas home appliance and smart home business segment; (3)
Other business segments. The management of the Company assesses operating performance of each
segment and allocates resources according to the division. Sales between segments were mainly
based on market price.
(1) China smart home business segment consists of:
Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers
and kitchen appliances.
Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.
Air energy solutions: mainly engages in production and sales of air conditioners products.
Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.
(2) Overseas home appliance and smart home business segment mainly includes overseas business
segments such as GEA, FPA, Candy, etc.
(3) Other business segments: mainly include channel, equipment components, small home appliance
business and others.
Due to centralized management under the headquarters or exclusion from the assessment scope of
segment management, the total assets of segments exclude monetary funds, financial assets held for
trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other current
assets, debt investment, long-term accounts receivable, long-term equity investment, other equity
instruments investment, other non-current financial assets, goodwill and deferred income tax assets;
the total liabilities of segments exclude long-term and short-term borrowings, financial liabilities held for
trading, derivative financial liabilities, taxes payable, interests payable, dividends payable, held-for-sale
liabilities, bonds payable, deferred income tax liabilities and other non-current liabilities; profits of
segments exclude financial expenses, profit or loss in fair value changes, income from investment, and
income on disposal of assets, Non-value-added tax refundable upon imposition component of other
income, non-operating incomes and expenses and income tax.
Haier Smart Home Co., Ltd. Interim Report 2023 233
Section X Financial Report
(1) Information of reportable segments
Segment information for the current period
Segment information China smart home business
Air energy Internet of Whole house
Internet of Food solutions solutions clothing solutions water solutions
Refrigerator/ Kitchen Water home
freezers appliances Air conditioners Washing machine appliances
Segment revenue 22,245,174,494.04 2,137,875,956.42 23,146,792,438.69 15,344,804,539.96 7,478,162,983.32
Including: external revenue 20,513,039,963.72 1,738,705,376.32 19,538,642,151.26 12,481,254,443.51 7,304,415,738.43
Inter-segment revenue 1,732,134,530.32 399,170,580.10 3,608,150,287.43 2,863,550,096.45 173,747,244.89
Total segment operating cost 19,468,041,944.43 2,063,803,199.86 22,051,219,308.62 13,846,392,069.50 6,459,188,854.83
Segment operating profit 2,777,132,549.61 74,072,756.56 1,095,573,130.07 1,498,412,470.46 1,018,974,128.49
Total segment assets 23,239,854,352.77 3,000,416,287.43 14,759,714,231.41 12,535,668,264.43 6,684,219,823.16
Total segment liabilities 44,871,598,818.76 2,314,305,595.34 13,561,034,973.63 6,801,347,597.38 6,343,307,329.15
(Continued)
Overseas home
appliance and smart Inter-segment
Segment information home business Other businesses offsetting Total
Segment revenue 66,917,369,665.27 40,977,428,705.79 –46,621,027,276.93 131,626,581,506.56
Including: external revenue 66,733,299,471.80 3,317,224,361.52 131,626,581,506.56
Inter-segment revenue 184,070,193.47 37,660,204,344.27 –46,621,027,276.93
Total segment operating cost 63,416,259,276.82 41,489,657,369.91 –46,696,093,626.21 122,098,468,397.76
Segment operating profit 3,501,110,388.45 –512,228,664.12 75,066,349.28 9,528,113,108.80
Total segment assets 72,929,283,142.22 60,477,592,830.12 –67,392,389,630.21 126,234,359,301.33
Total segment liabilities 41,765,578,113.59 61,273,983,045.51 –67,248,139,515.21 109,683,015,958.15
234 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Segment information for the corresponding period of last year
Segment information China smart home business
Air energy Internet of Whole house
Internet of Food solutions solutions Clothing solutions water solutions
Refrigerator/ Kitchen Water home
freezers appliances Air conditioners Washing machine appliances
Segment revenue 21,744,034,195.34 1,988,398,642.99 19,460,445,551.54 14,783,761,779.19 6,786,264,746.43
Including: external revenue 19,263,438,400.09 1,655,732,227.00 15,920,771,259.18 12,473,357,903.20 6,677,037,998.51
Inter-segment revenue 2,480,595,795.25 332,666,415.99 3,539,674,292.36 2,310,403,875.99 109,226,747.92
Total segment operating cost 19,442,607,634.74 1,943,862,296.11 19,004,620,002.77 13,489,839,349.11 5,938,407,699.27
Segment operating profit 2,301,426,560.60 44,536,346.88 455,825,548.77 1,293,922,430.08 847,857,047.16
Total segment assets 14,577,249,272.86 2,326,675,305.96 15,101,978,985.73 14,156,800,879.35 6,504,143,011.57
Total segment liabilities 34,825,770,806.25 1,674,425,538.49 11,709,730,530.33 8,711,401,637.34 5,287,383,764.72
(Continued)
Overseas home
appliance and smart Inter-segment
Segment information home business Other business offsetting Total
Segment revenue 61,480,633,415.58 43,401,983,597.38 –48,005,454,549.10 121,640,067,379.35
Including: external revenue 61,195,622,271.60 4,454,107,319.77 121,640,067,379.35
Inter-segment revenue 285,011,143.98 38,947,876,277.61 –48,005,454,549.10
Total segment operating cost 57,846,314,400.88 43,853,376,910.48 –48,144,459,161.32 113,374,569,132.04
Segment operating profit 3,634,319,014.70 –451,393,313.10 139,004,612.22 8,265,498,247.31
Total segment assets 64,106,295,908.67 46,347,928,710.47 –43,827,387,969.79 119,293,684,104.82
Total segment liabilities 34,773,662,612.50 56,195,162,275.64 –43,594,453,939.48 109,583,083,225.79
(2) Geographical information
“Other countries/regions” in this report refers to all other countries/regions (including Hong Kong
and Macau Special Administration Region and Taiwan) other than the mainland China for the
purpose of information disclosure.
Haier Smart Home Co., Ltd. Interim Report 2023 235
Section X Financial Report
External transaction revenue
Amount for the Amount for the
Items current period previous period
Mainland China 63,324,130,550.55 59,139,897,434.39
Other countries/regions 68,302,450,956.01 62,500,169,944.96
Including:
America 39,133,384,718.31 37,433,676,787.86
Australia 2,949,512,878.44 3,489,830,122.80
South Asia 5,954,521,760.73 4,822,648,942.01
Europe 13,278,015,975.79 10,245,305,312.81
Southeast Asia 3,107,279,065.87 2,922,334,445.85
Central East and Africa 1,162,600,377.18 1,163,078,229.45
Japan 1,947,027,593.72 1,836,927,420.37
Others 770,108,585.97 586,368,683.81
Total 131,626,581,506.56 121,640,067,379.35
Total non-current assets
Items Closing balance Opening balance
Mainland China 63,324,130,550.55 59,139,897,434.39
Other countries/regions 68,302,450,956.01 62,500,169,944.96
Total 131,626,581,506.56 121,640,067,379.35
The total non-current assets exclude debt investment, long-term accounts receivable, long-term
equity investment, other equity instrument investments, other non-current financial assets,
goodwill and deferred income tax assets.
XI. DISCLOSURE OF FAIR VALUE
1. Assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level of
inputs which are significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except
for Level 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
236 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
At the end of the period
Items Inputs used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair
value
Financial assets held for trading 446,001,131.19 180,384,620.32 108,199,178.37 734,584,929.88
Including: Bank wealth management
products 180,384,620.32 180,384,620.32
Investment fund 211,983,501.19 211,983,501.19
Investment in equity
instruments 234,017,630.00 108,199,178.37 342,216,808.37
Derivative financial assets 100,132,280.78 100,132,280.78
Including: Forward foreign exchange
contract 98,319,153.53 98,319,153.53
Forward commodity contract 1,813,127.25 1,813,127.25
Other equity instruments 16,626,131.24 5,895,728,105.55 5,912,354,236.79
Including: Equity instruments measured
at fair value and changes
of which included in other
comprehensive income 16,626,131.24 5,895,728,105.55 5,912,354,236.79
Derivative financial liabilities 352,914,936.89 352,914,936.89
Including: Forward foreign exchange
contract 346,817,213.83 346,817,213.83
Forward commodity
contracts 6,097,723.06 6,097,723.06
Haier Smart Home Co., Ltd. Interim Report 2023 237
Section X Financial Report
At the beginning of the period
Items Input used for fair value measurement
Important Important
Quotes in an observable unobservable
active market input input
(Level 1) (Level 2) (Level 3) Total
Continuously measured at fair value
Financial assets held for trading 395,687,084.83 14,638,968.26 109,586,827.82 519,912,880.91
Including: Bank wealth management
products 14,638,968.26 14,638,968.26
Investment fund 168,430,847.63 168,430,847.63
Investment in equity
instruments 227,256,237.20 109,586,827.82 336,843,065.02
Derivative financial assets 183,185,160.51 183,185,160.51
Including: Forward foreign exchange
contract 178,992,877.32 178,992,877.32
Forward commodity contract 4,192,283.19 4,192,283.19
Other equity instruments 16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20
Including: Equity instruments measured at
fair value and changes of
which included in other
comprehensive income 16,353,773.34 1,027,550,923.67 4,807,978,233.19 5,851,882,930.20
Derivative financial liabilities 104,594,040.66 104,594,040.66
Including: Forward foreign exchange
contract 92,580,419.48 92,580,419.48
Forward commodity contracts 12,013,621.18 12,013,621.18
Other non-current liabilities 16,916,789.10 16,916,789.10
Including: put option liability 16,916,789.10 16,916,789.10
For financial instruments traded in an active market, the Company determines its fair value based
on its quotes in an active market; for financial instruments not traded in an active market, the
Company uses valuation techniques to determine its fair value.
238 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
2. The basis for determining the fair value of the continual Level 2 fair value
measurement items
Closing
Items fair value Valuation techniques
Financial assets held for trading
Including: Bank wealth management 180,384,620.32 Discounted cash flow
products
Derivative financial assets
Including: Forward exchange contract 98,319,153.53 Discounted cash flow
Forward commodity contract 1,813,127.25 Discounted cash flow
Derivative financial liabilities
Including: Forward exchange contract 346,817,213.83 Discounted cash flow
Forward commodity contract 6,097,723.06 Discounted cash flow
3. Continual Level 3 fair value measurement major items, the valuation techniques
adopted and information of important parameters
Fair value at the Valuation Significant Sensitivity of fair value
Items end of the period technique unobservable input Range to the input
Other equity
instruments
Including: 1. 2,817,408,000.00 Market approach 1. Average EV/ 1. 1.46 to 1.48 1. 1% increase
COSMO IoT Sales multiple (decrease) in average
Technology of peers EV/Sales multiple of
Co., LTD. (卡奥 the Comparable
斯物聯科技股 Companies would
份有限公司) result in increase
(decrease) in fair
value by RMB116
million.
2. Discount for 2. 19% to 21% 2. 1% increase
lack of (decrease) in the
marketability lack of marketability
would result in
decrease (increase)
in fair value by
RMB146 million.
Haier Smart Home Co., Ltd. Interim Report 2023 239
Section X Financial Report
Fair value at the Valuation Significant Sensitivity of fair value
Items end of the period technique unobservable input Range to the input
2. SINOPEC Fuel 1,519,232,955.16 Market approach 1. Average P/E 1. 33.07 to 1. 1% increase
Oil Sales multiple of 33.73 (decrease) in average
Corporation peers P/E multiple of the
Limited (中國石 Comparable
化銷售股份有 Companies would
限公司) result in increase
(decrease) in fair
value by RMB15.19
million.
2. Discount for 2. 25.23% to 2. 1% increase
lack of 27.23% (decrease) in the
marketability lack of marketability
would result in
decrease (increase)
in fair value by
RMB20.59 million.
4. Financial instruments not measured at fair value
Financial assets and financial liabilities not measured at fair value include: monetary funds, bills
receivable, accounts receivable, other receivables, other current assets, long-term and short-term
borrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,
etc. The difference between the book value and the fair value of financial assets and financial
liabilities not measured at fair value at the end of the period is small.
240 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
(I) Explanation for basis of identifying related party
According to Accounting Standards for Business Enterprises No. 36 — Related Party Disclosures,
parties are considered to be related if one party has the ability to control or jointly control the
other party or exercise significant influence over the other party. Parties (two or more than two)
are also considered to be related if they are subject to common control, joint control or
significant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (China
Securities Regulatory Commission Order No. 182), related legal entity or individual will be
identified as related parties in certain occasions.
(II) Relationships between related parties
1. Information about the parent company and other companies holding shares of the
Company
Interest Voting rights
Type of Registered Legal Relations hips with in the to the
Name of enterprise enterprise Registered place capital representative the Company Company Company
Haier Group Collective Qingdao High-tech 311,180,000 Zhou Yunjie Parent Company 11.36% 11.36%
Corporation ownership Zone Haier Park
company
Haier COSMO Co., Joint-stock Qingdao High-tech 631,930,000 Zhou Yunjie Subsidiary of 13.34% 13.34%
Ltd. company Zone Haier Park Parent
Company
HCH (HK) Investment Private Hong Kong HKD 10,000 / Parties acting in 5.71% 5.71%
Management company concert of
Co.,Limited Parent
Company
Qingdao Haier Venture Company with Qingdao Free Trade 923,000,000 Zhou Yunjie Parties acting in 1.83% 1.83%
& Investment limited Zone concert of
Information Co., liability Parent
Ltd. Company
Qingdao Haichuangzhi Limited Qingdao High-tech 118,924,416 / Parties acting in 1.42% 1.42%
Management partnership Zone Haier Park concert of
Consulting Parent
Enterprise (Limited Company
Partnership)
Haier International Private Hong Kong HKD 2 / Parties acting in 0.62% 0.62%
Co., Limited company concert of
Parent
Company
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure of
interests in subsidiaries
Haier Smart Home Co., Ltd. Interim Report 2023 241
Section X Financial Report
3. Joint ventures and associates of the Company
The information of material joint ventures or associates of the Company are detailed in Note
VII. 12 and Note IX. 3.
4. Related company with no controlling relationship
Name of company Relationship with the Company
Chongqing Zhonglian Energy Technology Subsidiary of Haier Group
Co., Ltd.
Chongqing Haier Electrical Appliances Sales Subsidiary of Haier Group
Co., Ltd.
Hongkong Gooday Supply Chain Subsidiary of Haier Group
Management Limited
Shanghai Cotai Supply Chain Management Subsidiary of Haier Group
Co., Ltd.
Shandong COSMO Smart Carbon Subsidiary of Haier Group
Technology Co., Ltd.
(山 東 卡 奧 斯 智 碳 科 技 有 限 公 司)
Gooday Supply Chain Technologies Co., Ltd. Subsidiary of Haier Group
Gooday (Qingdao) International Supply Chain Subsidiary of Haier Group
Service Co., Ltd.
Qingdao Goodaymart Supply Chains Subsidiary of Haier Group
Co., Ltd.
Qingdao Manniq Intelligent Technology Subsidiary of Haier Group
Co., Ltd.
Qingdao Maidirui Ecological Environment Subsidiary of Haier Group
Technology Co., Ltd.
(青 島 邁 帝 瑞 生 態 環 境 科 技 有 限 公 司)
Qingdao Oasis Technology Co., Ltd. Subsidiary of Haier Group
Qingdao Haina Cloud Intelligent System Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier Parts Procurement Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Trading Co., Ltd. Subsidiary of Haier Group
Qingdao Haier International Travel Agency Subsidiary of Haier Group
Co., Ltd.
COSMO Energy Technology Co., Ltd. Subsidiary of Haier Group
(卡 奧 斯 能 源 科 技 有 限 公 司)
COSMO Moulds (Qingdao) Co., Ltd. Subsidiary of Haier Group
(卡 奧 斯 模 具（青 島）有 限 公 司)
242 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Name of company Relationship with the Company
Henan Ririshun Electronics Co., Ltd. Subsidiary of Haier Group
(河 南 日 日 順 電 器 有 限 公 司)
Haier Digital Technology (Qingdao) Co., Ltd. Subsidiary of Haier Group
(海 爾 數 字 科 技（青 島）有 限 公 司)
Feiketeng Intelligent Technology (Qingdao) Subsidiary of Haier Group
Co., Ltd. (斐 科 騰 智 能 科 技（青 島）有 限
公 司)
Dalian Haier International Trade Co., Ltd. Subsidiary of Haier Group
Chongqing Zhonglian Energy Technology Subsidiary of Haier Group
Co., Ltd.
Qingdao Haier International Trade Co., Ltd. Subsidiary of Haier Group
Qingdao Dingteng Industrial Technology Co., Subsidiary of Haier Group
Ltd. (青 島 頂 騰 工 業 科 技 有 限 公 司)
Haier International Co., Ltd. Subsidiary of Haier Group
Qingdao Haironghui Commercial Factoring Subsidiary of Haier Group
Co., Ltd. (青 島 海 融 匯 商 業 保 理 有 限 公 司)
Qingdao Haier New Materials R&D Co., Ltd. Subsidiary and associate of Haier
Group
Qingdao Haier Multi-media Co., Ltd. Associate
Controladora Mabe S.A.de C.V. Associate
HNR Company (Private) Limited Associate
HPZ Limited Associate
Mitsubishi Heavy Industry Haier (Qingdao) Associate
Air Conditioner Co., Ltd.
Wolong Electric (Jinan) Motor Co., Ltd. Associate
Qingdao HBIS Composite New Material Subsidiary of associate
Co., Ltd.
Hefei Hegang New Material Technology Subsidiary of associate
Co., Ltd.
Haier Smart Home Co., Ltd. Interim Report 2023 243
Section X Financial Report
(III) Related party transactions
1. Details of the goods and services purchased by the Company from the related parties
are as follows:
Amount for the Amount for the
Related parties current period previous period
Controladora Mabe S.A.de C.V. 5,353,771,339.60 5,992,396,585.28
Qingdao Haier Parts Procurement Co., Ltd. 3,608,931,862.86 3,457,957,900.64
HNR Company (Private) Limited 1,642,887,548.69 2,225,964,262.84
Gooday Supply Chain Technologies Co., Ltd. 1,635,118,057.32 2,566,920,774.21
Shanghai Cotai Supply Chain Management
Co., Ltd. 710,764,662.41 760,063,618.26
Chongqing Haier Electrical Appliances Sales
Co., Ltd. 623,669,202.51 1,428,396,771.15
Dalian Haier International Trade Co., Ltd. 239,260,166.14 208,746,767.78
Hongkong Gooday Supply Chain
Management Limited 230,897,560.82
Qingdao Haier International Travel Agency
Co., Ltd. 89,089,979.11 61,297,205.85
COSMO Energy Technology Co., Ltd.
( ) 76,761,901.60 69,569,511.99
Shandong COSMO Smart Carbon
Technology Co., Ltd. (山 東 卡 奥 斯 智 碳
科 技 有 限 公 司) 64,696,625.16 80,950,701.68
Other related parties 2,136,924,689.06 3,081,357,658.81
Total 16,412,773,595.28 19,933,621,758.48
2. Details of the Company’s sales of goods to the related parties are as follows:
Amount for the Amount for the
Related parties current period previous period
HNR Company (Private) Limited 910,139,552.47 371,766,028.14
Controladora Mabe S.A.de C.V. 641,206,803.16 540,669,324.96
Qingdao Haier International Trade Co., Ltd. 372,641,570.39 231,644,878.27
Qingdao Haier Parts Procurement Co., Ltd. 278,395,066.75 244,922,357.53
Qingdao Oasis Technology Co., Ltd. 67,494,605.40 35,266,249.63
HPZ Limited 64,486,834.50 46,402,303.46
Qingdao Haier Multi-media Co., Ltd. 59,259,332.48 62,200,352.87
Qingdao Maidirui Ecological Environment
Technology Co., Ltd. (青 島 邁 帝 瑞 生 態 環 境
科 技 有 限 公 司) 23,449,912.73 13,919,083.64
Other related parties 157,593,684.21 477,834,122.77
Total 2,574,667,362.09 2,024,624,701.27
244 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
3. Payables and receivables from related parties
Closing Opening
Items and name of customers Balance Balance
Bills receivable:
Qingdao Haier International Trade Co., Ltd. 16,080,000.00
Qingdao Haina Cloud Intelligent System Co., Ltd. 14,611,877.83 9,196,905.30
Haier Digital Technology (Qingdao) Co., Ltd.
(海 爾 數 字 科 技（青 島）有 限 公 司) 3,781,061.75 2,338,177.61
Other related parties 8,774,282.17 110,146,954.46
Accounts receivable:
HNR Company (Private) Limited 1,616,118,570.73 887,316,060.44
Controladora Mabe S.A.de C.V. 211,439,142.79 155,980,651.90
HPZ Limited 107,438,423.43 117,899,486.73
Qingdao Haier Parts Procurement Co., Ltd. 73,740,269.15 155,500,553.65
Mitsubishi Heavy Industry Haier (Qingdao) Air
Conditioner Co., Ltd. 31,140,335.33 5,022,843.27
Qingdao Haier International Trade Co., Ltd. 29,370,484.20 147,208,453.41
Qingdao Haina Cloud Intelligent System Co., Ltd. 28,427,659.21 24,917,701.10
Qingdao Maidirui Ecological Environment
Technology Co., Ltd. (青 島 邁 帝 瑞 生 態 環 境
科 技 有 限 公 司) 22,384,360.62 12,210,497.95
Chongqing Zhonglian Energy Technology Co.,
Ltd. 20,861,198.77 48,870,443.21
Other related parties 105,082,043.85 155,667,307.33
Prepayments:
Qingdao Haier New Materials R&D Co., Ltd. 6,306,045.31 8,445,024.12
HNR Company (Private) Limited 110,370,091.99
Other related parties 31,742,435.43 37,160,925.21
Other receivables:
Qingdao Haier International Trade Co., Ltd. 50,907,797.74 3,055,976.92
Controladora Mabe S.A.de C.V. 12,511,805.09 12,158,833.50
Other related parties 57,447,464.36 64,740,632.55
Bills payable:
Qingdao Haier New Materials R&D Co., Ltd. 290,861,916.47 386,075,771.04
Hefei Hegang New Material Technology Co., Ltd. 14,910,195.07 24,471,564.49
Qingdao HBIS Composite New Material Co., Ltd. 21,961,066.66 12,149,382.48
Wolong Electric (Jinan) Motor Co., Ltd. 35,185,356.00 37,773,640.00
Other related parties 181,325,558.83
Haier Smart Home Co., Ltd. Interim Report 2023 245
Section X Financial Report
Closing Opening
Items and name of customers Balance Balance
Accounts payable:
Controladora Mabe S.A.de C.V. 1,434,091,790.96 1,299,452,149.83
HNR Company (Private) Limited 617,699,398.96
Qingdao Haironghui Commercial Factoring Co.,
Ltd. (青 島 海 融 匯 商 業 保 理 有 限 公 司) 233,892,380.58
Dalian Haier International Trade Co., Ltd. 183,356,349.75 150,178,673.56
Qingdao Haier International Trade Co., Ltd. 174,144,261.90 257,531,848.99
Hongkong Gooday Supply Chain Management
Limited 156,672,005.81 250,478,107.49
Qingdao Haier Parts Procurement Co., Ltd. 112,362,213.86 1,860,747,884.39
Qingdao Haier New Materials R&D Co., Ltd. 101,368,554.33 101,958,410.60
Other related parties 470,317,218.34 500,560,356.11
Contract liabilities:
Wolong Electric (Jinan) Motor Co., Ltd. 46,079,010.86 51,422,207.69
Chongqing Zhonglian Energy Technology Co.,
Ltd. 17,217,306.92 17,215,206.92
Other related parties 11,849,997.26 13,569,890.19
Other payables:
Gooday Supply Chain Technologies Co., Ltd. 683,802,257.28 485,473,357.04
Shanghai Cotai Supply Chain Management Co.,
Ltd. 159,364,583.86 113,720,815.14
Gooday (Qingdao) International Supply Chain
Service Co., Ltd. 88,152,940.91 140,136,176.89
Qingdao Goodaymart Supply Chains Co., Ltd. 60,775,443.02 30,669,122.96
Feiketeng Intelligent Technology (Qingdao) Co.,
Ltd. (斐 科 騰 智 能 科 技（青 島）有 限 公 司) 54,577,602.50 759,000.00
Other related parties 256,634,889.13 315,114,706.81
4. Other related party transactions
(1) On 29 April 2021, Haier Group Corporation and Haier Group Finance Co., Ltd.
(hereafter, the “Finance Company”) renewed the Financial Services Framework
Agreement, and the “Resolution on the Renewal of the Financial Services Framework
Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation and
the Estimated Amount of Connected Transaction” was considered and passed at the
2020 Annual General Meeting held on 25 June 2021. The Financial Services
Framework Agreement became effective from the passing of the resolution at the
general meeting.
246 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
Various current balances of the Company and the Finance Company are as follows:
Closing Opening
Items Balance Balance
Monetary funds deposited at the Finance
Company 33,252,316,387.90 31,432,615,224.52
Interest receivable from the Finance Company 661,964,473.38 468,636,097.70
Loans of the Finance Company 60,000,000.00
Interest payable to the Finance Company 46,158.00
Bank acceptance note issued 14,699,167,787.91 21,620,704,761.58
Foreign exchange derivatives of the Finance
Company –11,020,984.32 –2,293,511.73
Various balances of the Company and the Finance Company are as follows:
Amount for the Amount for the
Items current period previous period
Interest income of the Finance Company 353,842,566.54 260,517,401.68
Interest expense of the Finance Company 413,964.86 4,004,749.21
Service fee of the Finance Company 7,917,428.19 13,688,276.03
Spot foreign exchange business
(foreign exchange settlement and sale) 3,287,657,392.00 2,373,997,630.96
(2) The lease expense of the Company and its subsidiaries for production and operation
leased from related parties for the current period was RMB49 million (amount for the
corresponding period: RMB60 million).
(3) Related information on the guarantor of the Company’s guaranteed borrowings as a
related party at the end of period:
Lender Closing Balance Opening Balance Guarantor
Haier Russian Industries 60,000,000.00 Haier Group
Ltd. Corporation
Shanghai Haier Smart 7,000,000.00 Senior
Technology Co., Ltd. management
( of a
) subsidiary
Total 7,000,000.00 60,000,000.00
Haier Smart Home Co., Ltd. Interim Report 2023 247
Section X Financial Report
(4) Haier Group Corporation provided joint liability guarantee for certain bills payable of
the subsidiaries of the Company with the guaranteed amount of RMB1,775 million at
the end of the period (amount at the beginning of the period: RMB2,311 million).
(IV) Pricing policy
1. Related party sales
Some related parties purchase components through the independent procurement platform
of the Company, purchase electrical appliances for sales from the Company, and receive
after-sales services, R&D service, housing rental and other business provided by the
company due to their business needs. In April 2022, according to the implementation of
connected transactions in the early stage and the relevant listing requirements in Hong
Kong, the Company and Haier Group Corporation revised and signed the Product and
Materials Sales Framework Agreement, the Service Provision Framework Agreement and the
Property Leasing Framework Agreement on the basis of the original execution contract,
which agreed on the financial connected transactions. The pricing principle included that
both parties should agree on the price which is not less favourable than those provided by
the Company to the Independent Third Parties on arm’s length to ensure the fairness and
reasonableness of connected transactions. The valid term of the agreement commenced
from 1 January 2023 31 December 2025, which can be renewed for another three years
upon expire.
2. Related parties Procurement
In addition to independent procurement platform, the Company entrusted Haier Group
Corporation and its subsidiaries for procurements of part of raw materials. Moreover, the
Company entrusted Haier Group Corporation and its subsidiaries to provide the Company
with logistics and distribution, energy and power, basic research and testing, equipment
leasing, house leasing and maintenance, greening and cleaning, gift procurement, design,
consulting, various ticket booking and other services. In April 2022, according to the
implementation of connected transactions in the early stage and the relevant listing
requirements in Hong Kong, the Company and Haier Group Corporation revised and signed
the Product and Materials Sales Framework Agreement, the Service Provision Framework
Agreement and the Property Leasing Framework Agreement on the basis of the original
execution contract, which agreed on the financial connected transactions. The pricing
principle included that both parties should agree on the price which is not less favourable
than those provided by the Company to the Independent Third Parties on arm’s length to
ensure the fairness and reasonableness of connected transactions. The valid term of the
agreement commenced from 1 January 2023 to 31 December 2025, which can be
renewed for another three years upon expire.
248 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
3. Financial aspect
Some of the financial services such as deposit and loan service, discounting service and
foreign exchange derivatives needed by the Company are provided by Haier Group
Corporation, its subsidiaries and other companies. According to the Financial Service
Agreement entered among the Company, Haier Group Corporation and other parties, the
price of financial services is determined by the principle of not less favourable than market
value fair. The Company is entitled to decide whether to keep cooperation relationship with
them with the knowledge of the price prevailing in the market and in combination with its
own interests. While performing the agreement, the Company could also require other
financial service institutions to provide related financial services basing on actual situation.
In order to meet the Company’s demands such as the avoidance of foreign exchange
fluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide some
foreign exchange derivative business after comparing with comparable companies. The
Company will uphold the safe and sound, appropriate and reasonable principle, under
which all foreign exchange capital business shall have a normal and reasonable business
background to eliminate speculative operation. At the same time, the Company has
specified the examination and permission rights, management positions and responsibilities
at all levels for its foreign exchange capital business to eradicate the risks of operation by
persons and improved its response speed to risks on the premise that the risks are
effectively controlled. In June 2021, the Company and Haier Group Corporation signed the
Financial Services Framework Agreement on the basis of the original execution contract,
which agreed on the financial connected transactions. The pricing principle included the
deposit interest rate not lower than the maximum interest rate of major banks listed and
the loan interest rate not less favourable than the market price to ensure the fairness and
reasonableness of connected transactions. The valid term of the agreement expires at 31
December 2023, which can be renewed for another three years upon expire.
4. Others
The Company signed the Intellectual Property Licensing Framework Agreement with Haier
Group Corporation in November 2020. According to the agreement, Haier Group has
agreed to grant or procure its subsidiaries and contact persons to grant the license to the
Company at nil consideration to use all its intellectual property rights, including but not
limited to trademarks, patents, copyrights and logos for the products, packaging, services
and business introduction documents of the Company. The date of the Intellectual Property
Licensing Framework Agreement shall be permanently effective from the H Share listing
date. When such specific intellectual property rights expire and are not renewed by Haier
Group, our right to use certain intellectual property rights under the Intellectual Property
Licensing Framework Agreement will terminate.
Haier Smart Home Co., Ltd. Interim Report 2023 249
Section X Financial Report
XIII. SHARE-BASED PAYMENTS
(1) Share Options
Number for the
Number of Share Options current period
At the beginning of the period 155,282,110.00
Granted during the period
Vested during the period
Lapsed during the period –39,326,966.00
At the end of the period 115,955,144.00
(2) Restricted Shares
Number for the Number for the
Number of restricted shares current period previous period
At the beginning of the period 8,765,875.00 4,438,027.00
Granted during the period 6,139,263.00
Vested during the period
Lapsed during the period
At the end of the period 14,905,138.00 4,438,027.00
(3) Based on the latest available subsequent information, such as change in number of vesting
employee, result condition of the Company and evaluation of personal performance appraisal of
incentive targets, the Company makes the best estimation of the number of vesting equity
instruments, based on which, the Company includes services received for the current period in
relevant costs of expenses in accordance with the fair value of the equity instrument on the date
of grant, and accordingly included in the capital reserve.
Expense recognized in respect of the share-based payment incentive plan for the period:
RMB340,000,000 for the stock ownership plan; RMB21,000,000 for the share options; and
HKD31,000,000 for the restricted shares.
As of the end of the period, balance associated with the above share-based payment incentive
plans provided in the capital reserve amounted to RMB1,346,000,000.
XIV. CONTINGENCIES
Applicable √ Not Applicable
As of 30 August 2023, the Company has no significant contingencies that need to be disclosed.
XV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
As of 30 August 2023, the Company has no significant events subsequent to the balance sheet date
that need to be disclosed.
250 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
Items Closing balance
Financial assets
Financial assets measured at fair
measured at fair value and changes
value and changes of which included
of which included in other
in current profit Measured at comprehensive
and loss amortized cost income Total
Monetary funds 55,641,485,513.56 55,641,485,513.56
Financial assets held for trading 734,584,929.88 734,584,929.88
Derivative financial assets 100,132,280.78 100,132,280.78
Bills receivable 10,495,699,695.28 10,495,699,695.28
Accounts receivable 21,742,220,596.23 21,742,220,596.23
Other receivables 2,746,235,275.21 2,746,235,275.21
Other current assets 1,447,066,286.66 1,447,066,286.66
Debt investments 2,254,869,444.45 2,254,869,444.45
Long-term receivables 302,494,994.66 302,494,994.66
Other equity instruments 5,912,354,236.79 5,912,354,236.79
Financial assets (Continued)
Items Opening balance
Financial assets
Financial assets measured at fair
measured at fair value and changes
value and changes of which included
of which included in other
in current profit Measured at comprehensive
and loss amortized cost income Total
Monetary funds 54,161,702,227.39 54,161,702,227.39
Financial assets held for trading 519,912,880.91 519,912,880.91
Derivative financial assets 183,185,160.51 183,185,160.51
Bills receivable 9,624,191,838.15 9,624,191,838.15
Accounts receivable 15,886,628,623.99 15,886,628,623.99
Other receivables 2,401,113,902.55 2,401,113,902.55
Other current assets 1,642,421,944.45 1,642,421,944.45
Debt investments 1,034,222,222.22 1,034,222,222.22
Long-term receivables 305,070,001.45 305,070,001.45
Other equity instruments 5,851,882,930.20 5,851,882,930.20
Haier Smart Home Co., Ltd. Interim Report 2023 251
Section X Financial Report
Financial liabilities
Items Closing balance
Financial liabilities Financial liabilities
measured at measured at
fair value amortized cost Total
Short-term borrowings 9,365,184,799.41 9,365,184,799.41
Derivative financial liabilities 352,914,936.89 352,914,936.89
Bills payable 23,187,832,976.22 23,187,832,976.22
Accounts payable 47,160,319,625.82 47,160,319,625.82
Other payables 22,901,109,264.17 22,901,109,264.17
Non-current liabilities due within one year 19,143,918.09 19,143,918.09
Long-term borrowings 18,366,761,352.03 18,366,761,352.03
Long-term payables 43,686,763.73 43,686,763.73
Financial liabilities (Continued)
Items Opening balance
Financial liabilities Financial liabilities
measured at measured at
fair value amortized cost Total
Short-term borrowings 9,672,223,522.36 9,672,223,522.36
Derivative financial liabilities 104,594,040.66 104,594,040.66
Bills payable 25,098,557,730.06 25,098,557,730.06
Accounts payable 41,878,607,182.94 41,878,607,182.94
Other payables 17,517,838,565.99 17,517,838,565.99
Non-current liabilities due within one year 2,854,446,929.32 2,854,446,929.32
Long-term borrowings 13,590,866,873.43 13,590,866,873.43
Long-term payables 44,240,087.94 44,240,087.94
Other non-current liabilities 16,916,789.10 16,916,789.10
Please refer to related items in Note VII for details on each of the financial instruments of the
Company. Risks related to these financial instruments and the risk management policies taken by the
Company to mitigate these risks are summarized below. The management of the Company manages
and monitors these risk exposures to ensure the above risks are well under control.
252 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
1. Credit risk
The credit risk of the Company mainly arises from bank deposits, bills receivable, accounts
receivable, interest receivable, other receivables and wealth management products.
(1) The Company’s bank deposits and wealth management products are mainly deposited in
Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks. The
interest receivables are mainly the accrued interests from fixed deposits which are deposited in
the above banks. The Group does not believe there is any significant credit risk due to defaults
of its counterparties which would cause any significant loss. (2) Accounts receivable and bills
receivable: The Company only trades with approved and reputable third parties. All customers
who are traded by credit are subject to credit assessment according to the policies of the
Company, and the payment terms shall be determined on a reasonable basis. The Company
monitors the balances of accounts receivable on an ongoing basis and purchases credit
insurance for receivables of large-amount credit customers in order to ensure the Company is
free from material bad debts risks. (3) Other receivables of the Company mainly include export
tax refund, borrowings and contingency provision. The Company strengthened its management
and continuous monitoring in respect of these receivables and relevant economic business based
on historical data, so as to ensure that the Company’s significant risk of bad debts is
controllable and will be further reduced.
2. Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling
obligations associated with financial liabilities. To control such risk, the Company utilizes various
financing methods such as notes settlement and bank loans to strive for a balance between
sustainable and flexible financing. It also has obtained bank credit facilities from several
commercial banks to satisfy its needs for working capital and capital expenditures.
3. Exchange rate risk
The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, South
Asia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other
currencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well as
transactions to be settled in foreign currencies expose the Company to fluctuations in exchange
rates. The Company’s finance department is responsible for monitoring the size of transactions in
foreign currencies and assets and liabilities denominated in foreign currencies to minimize the risk
of exposure to fluctuation in exchange rate; the Company resorts the way of signing forward
foreign exchange contracts to avoid the risk of exchange fluctuation.
4. Interest rate risk
The Company’s interest rate risk arises primarily from its long- and short-term bank loans and
bonds payables which are interest-bearing debts. Financial liabilities with floating interest rates
expose the Company to cash flow interest rate risk, while financial liabilities with fixed interest
rates expose the Company to fair value interest rate risk. The Group determines the relative
proportion of fixed-interest rate and floating interest rate contracts in light of the prevailing market
conditions.
Haier Smart Home Co., Ltd. Interim Report 2023 253
Section X Financial Report
XVII. OTHER SIGNIFICANT EVENTS
The Company has no other significant events that need to be disclosed.
XVIII. NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENT
COMPANY
1. Accounts receivable
Opening
Aging Closing balance balance
Within 1 year 639,733,948.19 379,679,227.77
1-2 years 185,637,967.37 533,963,843.29
2-3 years 407,731,056.68
Over 3 years
Accounts receivable, balance 1,233,102,972.24 913,643,071.06
Allowance for bad debts 27,634.82
Accounts receivable, net 1,233,075,337.42 913,643,071.06
Changes in allowance for bad debts of accounts receivable during the current period:
Opening Increase for the current Decrease for the current Closing
Items Balance period period Balance
Provision for Write-off
the current Other and other
period increase Reversal movement
Allowance for bad
debts 27,634.82 27,634.82
Opening Increase for the current Decrease for the current Closing
Items Balance period period Balance
Provision for Write-off
the current Other and other
period increase Reversal movement
Allowance for bad
debts 27,634.82 27,634.82
254 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
2. Other receivables
Items Closing balance Opening balance
Interest receivable 61,817,349.90 29,783,516.95
Dividend receivable 1,244,013,185.59 1,015,840,000.00
Other receivables 18,246,361,545.43 13,341,408,140.62
Total 19,552,192,080.92 14,387,031,657.57
(1) Interest receivable:
Items Closing balance Opening balance
Within 1 year 61,817,349.90 29,783,516.95
Over 1 year
Total 61,817,349.90 29,783,516.95
(2) Dividend receivable:
Aging Closing Balance Opening Balance
Within 1 year 1,228,173,185.59 1,000,000,000.00
More than 1 year 15,840,000.00 15,840,000.00
Total 1,244,013,185.59 1,015,840,000.00
Haier Smart Home Co., Ltd. Interim Report 2023 255
Section X Financial Report
(3) Other receivables:
The disclosure of other receivables by aging is as follows:
Aging Closing balance Opening balance
Within 1 year 9,535,068,221.86 6,278,019,144.67
Over 1 year 8,714,658,206.46 7,066,828,954.97
Other receivables, balance 18,249,726,428.32 13,344,848,099.64
Allowance for bad debts 3,364,882.89 3,439,959.02
Other receivables, net 18,246,361,545.43 13,341,408,140.62
Changes in allowance for bad debt of other receivables in the current period:
Increase for the Decrease for the
current period current period
Provision for Write-off and
Opening the current Other other Closing
Items balance period increase Reversal movement balance
Allowance for
bad debts 3,439,959.02 75,076.13 3,364,882.89
3. Long-term equity investment
√ Applicable Not Applicable
(1) Details of long-term equity investments:
Closing balance Opening balance
Provision for Book Provision for
Items Book balance impairment balance impairment
Long-term equity investments
Including: long-term equity investments in
subsidiaries 51,557,871,986.31 7,100,000.00 49,632,299,728.31 7,100,000.00
Long-term equity investments in
associates 3,315,511,301.75 109,300,000.00 3,228,239,799.56 109,300,000.00
Total 54,873,383,288.06 116,400,000.00 52,860,539,527.87 116,400,000.00
256 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(2) Long-term equity investments in subsidiaries
Impairment
Increase/ provisions at
Decrease for the end of the
the current period
Name of investee Opening balance period Closing balance provisions
I. Subsidiaries:
Chongqing Haier Electronics Sales Co., Ltd. 9,500,000.00 9,500,000.00
Haier Group (Dalian) Electrical Appliances
Industry Co., Ltd 34,735,489.79 34,735,489.79
Qingdao Haier Refrigerator Co., Ltd. 402,667,504.64 402,667,504.64
Qingdao Haier Special Refrigerator Co., Ltd. 426,736,418.99 426,736,418.99
Qingdao Haier Information Plastic Development
Co., Ltd 102,888,407.30 102,888,407.30
Dalian Haier Precision Products Co., Ltd. 41,836,159.33 41,836,159.33
Hefei Haier Plastic Co., Ltd. 72,350,283.21 72,350,283.21
Qingdao Haier Technology Co., Ltd. 16,817,162.03 16,817,162.03
Qingdao Household Appliance Technology and
Equipment Research Institute 66,778,810.80 66,778,810.80
Qingdao Meier Plastic Powder Co., Ltd. 24,327,257.77 24,327,257.77
Chongqing Haier Precision Plastic Co., Ltd. 47,811,283.24 47,811,283.24
Qingdao Haier Electronic Plastic Co., Ltd. 69,200,000.00 69,200,000.00
Dalian Haier Refrigerator Co., Ltd. 138,600,000.00 138,600,000.00
Dalian Haier Air Conditioner Co., Ltd. 99,000,000.00 99,000,000.00
Hefei Haier Air-conditioning Co., Limited 79,403,123.85 79,403,123.85
Qingdao Haier Refrigerator (International) Co.,
Ltd. 238,758,240.85 238,758,240.85
Qingdao Haier Air-Condition Electronic Co., Ltd. 1,131,107,944.51 1,131,107,944.51
Qingdao Haier Air Conditioner General Corp.,
Ltd. 220,636,306.02 220,636,306.02
Qingdao Haier Special Freezer Co., Ltd. 471,530,562.76 471,530,562.76
Qingdao Haier Dishwasher Co., Ltd. 206,594,292.82 206,594,292.82
Wuhan Haier Freezer Co., Ltd. 47,310,000.00 47,310,000.00
Wuhan Haier Electronics Co., Ltd. 100,715,445.04 100,715,445.04
Chongqing Haier Air Conditioner Co., Ltd. 100,000,000.00 100,000,000.00
Hefei Haier Refrigerator Co., Ltd. 49,000,000.00 49,000,000.00
Qingdao Haier Whole Set Home Appliances
Services Co., Ltd. 118,000,000.00 118,000,000.00
Chongqing Haier Refrigeration Appliance Co.,
Ltd. 91,750,000.00 91,750,000.00
Shanghai Haier Zhongzhi Fang Chuang Ke Space
Management Co., Ltd. 2,000,000.00 2,000,000.00
Qingdao Haier Special Refrigerating Appliance
Co., Ltd. 100,000,000.00 100,000,000.00
Haier Shareholdings (Hong Kong) Limited 26,180,674,326.24 1,802,702,258.00 27,983,376,584.24
Haier Smart Home Co., Ltd. Interim Report 2023 257
Section X Financial Report
Impairment
Increase/ provisions at
Decrease for the end of the
the current period
Name of investee Opening balance period Closing balance provisions
Shenyang Haier Refrigerator Co., Ltd. 100,000,000.00 100,000,000.00
Foshan Haier Freezer Co., Ltd. 100,000,000.00 100,000,000.00
Zhengzhou Haier Air Conditioner Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Haidayuan Procurement Service Co.,
Ltd. 20,000,000.00 20,000,000.00
Qingdao Haier Intelligent Technology
Development Co., Ltd. 130,000,000.00 130,000,000.00
Qingdao Haier Technology Investment Co., Ltd. 367,505,635.00 42,870,000.00 410,375,635.00
Qingdao Casarte Smart Living Appliances Co.,
Ltd. 10,000,000.00 10,000,000.00
Haier Overseas Electric Appliance Co., Ltd. 500,000,000.00 500,000,000.00
Haier (Shanghai) Electronics Co., Ltd. 12,500,000.00 12,500,000.00
Haier U+smart Intelligent Technology (Beijing)
Co., Ltd. 143,000,000.00 143,000,000.00
Haier Electronics Group Co., Ltd. 3,979,407,602.61 3,979,407,602.61 7,100,000.00
Flourishing Reach Limited (SPVX) 12,751,300,336.02 12,751,300,336.02
Qingdao Haidarui Procurement Service Co., Ltd. 107,800,000.00 107,800,000.00
Qingdao Haier Intelligent Household Appliances
Co., Ltd. 326,400,000.00 326,400,000.00
Qingdao Haidacheng Procurement Service Co.,
Ltd. 100,000,000.00 100,000,000.00
Qingdao Haier Quality Inspection Co. Ltd. 18,657,135.49 18,657,135.49
Qingdao Haier Home AI Industry Innovation
Center Co. Ltd. 20,000,000.00 80,000,000.00 100,000,000.00
Haier Smart Home Experience Cloud Ecological
Technology Co., Ltd. 100,000,000.00 100,000,000.00
Qingdao Ruibo Ecological Environmental
Technology Co., Ltd. 55,000,000.00 55,000,000.00
Total 49,632,299,728.31 1,925,572,258.00 51,557,871,986.31 7,100,000.00
258 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
(3) Long-term equity investments in associates
Increase/decrease for the current period
Recognized
Increase/ investment Impairment
decrease for the income under provisions at the
Name of investee Opening balance current period equity method Others Closing balance end of the period
Wolong Electric (Jinan)
Motor Co., Ltd. 168,579,556.35 12,699,100.26 181,278,656.61
Qingdao Haier SAIF Smart
Home Industry
Investment Center
(Limited Partnership) 319,245,649.36 890,827.17 –9,552,551.66 310,583,924.87
Bank of Qingdao Co., Ltd. 1,162,338,491.42 75,800,061.82 –30,221,860.16 1,207,916,693.08
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co.,
Ltd. 715,461,260.26 59,119,761.19 774,581,021.45
Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd. 413,367,540.80 6,280,892.60 –17,510,692.75 402,137,740.65 21,000,000.00
Qingdao Haier Multimedia
Co., Ltd. 153,550,234.49 –16,852,864.54 136,697,369.95 88,300,000.00
Qingdao HBIS New Material
Technology Co., Ltd. 295,697,066.88 6,618,828.26 302,315,895.14
Total 3,228,239,799.56 144,556,606.76 –57,285,104.57 3,315,511,301.75 109,300,000.00
4. Operating revenue and operating cost
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
current period previous period
Items Revenue Cost Revenue Cost
Primary business 284,845,756.66 247,445,754.14 53,149,966.60 46,742,634.57
Other business 42,560,950.18 38,775,114.29 40,173,916.73 34,148,754.89
Total 327,406,706.84 286,220,868.43 93,323,883.33 80,891,389.46
Haier Smart Home Co., Ltd. Interim Report 2023 259
Section X Financial Report
5. Investment income
√ Applicable Not Applicable
Unit and Currency: RMB
Amount for the Amount for the
Items current period previous period
Investment income from long-term equity investments
accounted for using cost method 228,173,185.59 400,000,000.00
Investment income from long-term equity investment
accounted for using equity method 144,556,606.76 137,123,178.78
Income from wealth management products 27,987,900.19 11,113,358.17
Investment income from investment in other equity
instrument during the holding period
Total 400,717,692.54 548,236,536.95
XIX. APPROVAL OF FINANCIAL REPORT
This financial report was approved for publication by the Directors of the Company on 30 August
2023.
XX. SUPPLEMENTARY INFORMATION
1. Basic earnings per share and diluted earnings per share
Amount for the current period Amount for the previous period
Earnings per share Earnings per share
(RMB) (RMB)
Weighted Weighted
average average
return rate Basic Diluted return rate Basic Diluted
on net earnings earnings on net earnings earnings
Items assets per share per share assets per share per share
Net profit attributable to ordinary
shareholders of the Parent
Company 9.16% 0.97 0.96 9.23% 0.85 0.85
Net profit attributable to ordinary
shareholders of the Parent
Company after deduction of non-
recurring profit or loss 8.80% 0.93 0.92 8.71% 0.80 0.80
260 Haier Smart Home Co., Ltd. Interim Report 2023
Section X Financial Report
2. Non-recurring profit or loss
Amount for the Amount for the
Items current period previous period
Net profit attributable to ordinary shareholders of the Parent
Company 8,963,875,999.84 7,959,684,042.65
Less: non-recurring profit or loss 359,898,235.26 468,990,337.27
Net profit attributable to ordinary shareholders of the Parent
Company after deduction of non-recurring profit or loss 8,603,977,764.58 7,490,693,705.38
Statement of non-recurring profit or loss for the current period
Non-recurring profit and loss items Amount for the current period
Profit and loss on disposal of non-current assets –21,886,978.96
Government subsidies through the profit and loss, except
for government subsidies that are closely related to the
Company’s normal business operations, comply with
national policies and regulations, and continue to be
enjoyed in a fixed amount or fixed quantity according
to certain standards 409,863,390.47
Gains on investments in subsidiaries, associates and joint
ventures in which the investment cost was less than the
fair value of identifiable net assets of the investees at
the time of acquisition
Profit and loss from fair value changes of financial assets
held for trading and financial liabilities held for trading,
as well as investment gains arising from disposal of
financial assets held for trading, financial liabilities held
for trading and financial assets held for sale, except the
effective hedging related to the normal operations of the
Company 31,271,562.35
Other non-operating income and expenses except the
aforementioned items 30,661,194.26
Effect of minority equity interest (After Tax) –12,347,767.84
Effect of income tax –77,663,165.02
Effect of profit from business combination under common
control
Total 359,898,235.26
Chairman of the Board: LI Huagang
Date of approval for publication by the Board: 30 August 2023
Information of amendment
Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2023 261
