行情中心 沪深京A股 上证指数 板块行情 股市异动 股圈 专题 涨跌情报站 盯盘 港股 研究所 直播 股票开户 智能选股
全球指数
数据中心 资金流向 龙虎榜 融资融券 沪深港通 比价数据 研报数据 公告掘金 新股申购 大宗交易 业绩速递 科技龙头指数

海尔智家:海尔智家股份有限公司2022年半年度报告(英文版)

公告原文类别 2022-09-02 查看全文

Company Code: 600690.SH 690D.DE Short Name: Haier Smart Home

Haier Smart Home Co. Ltd.

2022 Interim Report

Haier Smart Home Co. Ltd. Interim Report 2022Important Notice

I. The Board of Directors the Board of Supervisors directors supervisors and senior

management of Haier Smart Home Co. Ltd. (the “Company”) are individually and collectively

responsible for the content set out therein and hereby assure that the content set out in the

interim report is true accurate and complete and free from any false record misleading

representation or material omission.II. All directors attend the Board of Directors.III. The interim report is unaudited.IV. Li Huagang (legal representative of the Company) Gong Wei (chief financial officer of the

Company) and Ying Ke (the person in charge of accounting department) hereby certify that

the financial report set out in the interim report is true accurate and complete.V. Proposal of profit distribution or proposal of converting capital reserves into share capital for

this reporting period resolved and passed by the Board

No

VI. Disclaimer in respect of forward-looking statements

√ Applicable □ Not Applicable

Forward-looking statements such as future plans development strategies as set out in this report do

not constitute our substantial commitment to investors. Investors are advised to pay attention to

investment risks.VII. Is there any fund occupation by controlling shareholders and their related parties for non-

operational purposes

No

VIII. Is there any provision of external guarantee in violation of prescribed decision-making

procedures?

No

IX. Are there more than half of the Directors could not warrant the truthfulness accuracy and

completeness of the interim report disclosed by the Company

No

X. Important risk warnings

For the possible risks which the Company may encounter please refer to the relevant information set

out in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.Haier Smart Home Co. Ltd. Interim Report 2022 1Important Notice

XI. Others

□ Applicable √ Not Applicable

2 Haier Smart Home Co. Ltd. Interim Report 2022Contents

SECTION I — DEFINITIONS 4

SECTION II — GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS 6

SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS 11

SECTION IV — CORPORATE GOVERNANCE 46

SECTION V — ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES 50

SECTION VI — SIGNIFICANT ISSUES 61

SECTION VII — CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS 76

SECTION VIII — RELEVANT INFORMATION OF PREFERRED SHARES 84

SECTION IX — RELEVANT INFORMATION OF CORPORATE BONDS 85

SECTION X — FINANCIAL REPORT 88

I. 2022 Interim Report of Haier Smart Home Co. Ltd. with signature of the

legal representative.II. Financial statements with signatures or seals of the person in charge of the

Documents Available

entity chief accountant and person in charge of accounting department.for Inspection

III. All documents publicly disclosed on China Securities Journal Shanghai

Securities News Securities Daily Securities Times and the website of

Shanghai Stock Exchange (www.sse.com.cn) during the reporting period.Haier Smart Home Co. Ltd. Interim Report 2022 3Section I Definitions

Unless otherwise stated in context the following terms should have the following meanings in this report:

DEFINITION OF FREQUENTLY USED TERMS

CSRC China Securities Regulatory Commission

SSE Shanghai Stock Exchange

The Company Haier Smart Haier Smart Home Co. Ltd its original name is “Qingdao Haier Co. Ltd.”

Home and the original short name is “Qingdao Haier”

Four Major Securities China Securities Journal Shanghai Securities News Securities Times Securities

Newspapers Daily

Haier Electronics 1169 Haier Electronics Group Co. Ltd. (a company originally listed in Hong Kong

stock code: 01169.HK) a subsidiary as accounted for in the consolidated

statement of the Company. Haier Electronics has been privatized by way of H

shares issuance on 23 December 2020 and became a wholly owned

subsidiary of the Company since then.GEA GE Appliances household appliances assets and business of General Electric

Group have currently been owned by the Company.FPA Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐雪派克) was

established in 1934 and is known as the national appliance brand of New

Zealand the global top-level kitchen appliance brand and the famous luxury

brand of the world. It has products including ventilator gas stove oven

dishwasher microwave oven built-in freezer washing machine clothes dryer

and etc. Its business covers over 50 countries/regions across the world. FPA

is wholly-owned subsidiary of the Company.Candy Candy Group (Candy S.p.A) is an international professional appliances

manufacturer from Italy. Since its establishment in 1945 it has been

committed to enabling the global users to enjoy a higher quality of life

through innovative technologies and quality services. Candy Group has been

prestigious in the global market with users all over the world via its ten self-

owned professional household appliance brands. In January 2019 Candy

became a wholly-owned subsidiary of the Company.CMM China Market Monitor Co. Ltd. as an authoritative market research institute

in Chinese home appliances area was established in 1994 and has been

focusing on research of retail sales in China consumption market ever since.

4 Haier Smart Home Co. Ltd. Interim Report 2022Section I Definitions

Euromonitor Euromonitor established in 1972 is the leading strategic market information

supplier and has over 40-years of experience in respect of publishing market

report commercial reference data and on-line database. They create data and

analysis on thousands of products and services around the world.All View Cloud All View Cloud (AVC) is a big data integrated solution provider to the smart home

field providing enterprises with big data information services regular data

information services and special data services.IEC The International Electrotechnical Commission. Founded in 1906 it is the

world’s first organization for the preparation and publication of international

electrotechnical standardization and is responsible for international

standardization for electrical engineering and electronic engineering. The goals

of the commission include: to effectively meet the needs of the global market;

to ensure that the standards and conformity assessment programs are

applied globally in a prioritized manner and to the greatest extent; to assess

and improve the quality of products and services involved in its standards; to

create conditions for the common use of complicated systems; to improve the

effectiveness of the industrialization process; to improve human health and

safety and to protect the environment.IEEE The Institute of Electrical and Electronics Engineers an international

association of electronic technology and information science engineers is

currently the largest non-profit professional technology society in the world. It

is committed to the development and research of electrical electronic

computer engineering and science-related fields and has now developed into

an international academic organization with great influence in terms of the

fields of space computer telecommunications biomedicine power and

consumer electronics.Model of Rendanheyi The concept of “Achieving win-win via Rendanheyi ( 人 单 合 一 ) “is the(人单合一) guarantee of Haier’s sustainable operation and the driving force of the

Company featuring a self-motivated and empowering corporate culture. “Ren”

is an employee who has the spirit of entrepreneurship and innovation; “Dan”is to create value for users. The “Rendanheyi (人单合一) “management modelencourages employees to create value for users with an entrepreneurial

mindset and to achieve self-value in line with the those of the Company and

its shareholders.“1+3+5+N” Whole House Whole House Intelligence All-Scenario Solutions: 1: Smart Home APP; 3:

Intelligence All-Scenario solutions including whole-house air water intelligence; 5. five intelligent spaces

Solutions including balcony living room kitchen bathroom and bedroom; N: various

personalized intelligent scenario experience.Haier Smart Home Co. Ltd. Interim Report 2022 5Section II General Information of the

Company and Key Financial Indicators

I. INFORMATION OF THE COMPANY

Chinese name 海尔智家股份有限公司

Chinese short name 海尔智家

English name Haier Smart Home Co. Ltd.English short name Haier Smart Home

Legal representative Li Huagang

II. CONTACT PERSON AND CONTACT INFORMATION

Secretary to Representative of Company Secretary

the Board securities affairs (D/H shares) Others

Name Liu Xiaomei Liu Tao Ng Chi Yin Trevor Global Customer

Service Hotline

Address Department of Department of Room 3513 35/F /

Securities of Haier Securities of Haier The Center 99

Smart Home Co. Smart Home Co. Queen’s Road

Ltd. Haier Ltd. Haier Central Central

Information Information Hong Kong

Industrial Park No. Industrial Park No.

1 Haier Road 1 Haier Road

Qingdao City Qingdao City

Tel 0532–88931670 0532–88931670 +852 2169 0000 4006 999 999

Fax 0532–88931689 0532–88931689 +852 2169 0880 /

Email finance@haier.com finance@haier.com ir@haier.hk /

6 Haier Smart Home Co. Ltd. Interim Report 2022Section II General Information of the Company and Key Financial Indicators

III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION

Registered address Haier Industrial Park Laoshan District Qingdao City

Historical change of the Prior to the Company’s listing in 1993 the registered address of the

registered address Company was No.165 Xiaobaigan Road Sifang District Qingdao City

Shandong Province and has changed to the current address since 1994

during which the address name was adjusted in line with the change of

name of the industrial park but the actual site remains

unchanged.Business address Haier Information Industrial Park Laoshan District Qingdao City

Postal code of the 266101

business address

Website https://smart-home.haier.com/cn/

Email 9999@haier.com

Query index for any Not applicable

changes during the

reporting period

IV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE AND

DEPOSIT

Designated newspaper for Shanghai Securities News Securities Times China Securities Journal

information disclosure Securities Daily

Website for publishing www.sse.com.cn

interim report

Other websites for annual https://smart-home.haier.com/cn/ www.xetra.com www.dgap.de

report disclosure https://www.hkexnews.hk

Deposit place of interim Department of Securities of Haier Smart Home Co. Ltd.report Haier Information Industrial Park No. 1 Haier Road Qingdao City

Query index for any Not applicable

changes during the

reporting period

V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY

Stock Short

Stock Exchange of Stock Short Name Before

Type of Shares Shares Listed Name Stock Code Variation

A share Shanghai Stock Haier Smart 600690 Qingdao Haier

Exchange Home

D share Frankfurt Stock Haier Smart 690D Qingdao Haier

Exchange Home

H Share Hong Kong Stock Haier Smart 6690 /

Exchange Home

Haier Smart Home Co. Ltd. Interim Report 2022 7Section II General Information of the Company and Key Financial Indicators

VI. OTHER RELATED INFORMATION

□ Applicable √ Not Applicable

VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE

COMPANY

(I) Key accounting data

Unit and Currency: RMB

Increase/decrease

for the reporting

period compared

with the

For the reporting corresponding

period period of last year

Key accounting data (January-June) The corresponding period of last year (%)

After adjustment Before adjustment

Operating revenue 121857522462.22 111727756211.06 111618822064.73 9.07

Net profit attributable to shareholders

of the listed Company 7949084472.70 6858902854.55 6852271812.97 15.89

Net profit after deduction of

non-recurring profit or loss

attributable to shareholders of the

listed Company 7490693705.38 6269906406.72 6269906406.72 19.47

Net cash flows from operating

activities 5964247657.22 8442195160.31 8423823726.89 –29.35

Increase/

decrease as

at the end of

the reporting

period

As at the end of compared

the reporting As at the end of reporting period of last with that of

period year last year (%)

After adjustment Before adjustment

Net assets attributable to

shareholders of the listed

Company 86251016004.21 79851734427.42 79810927325.55 8.01

Total assets 226652759534.60 217599384435.63 217459494212.74 4.16

8 Haier Smart Home Co. Ltd. Interim Report 2022Section II General Information of the Company and Key Financial Indicators

(II) Key financial indicators

Increase/decrease

for the reporting

period compared

with the

For the reporting corresponding

period period of last year

Key financial indicators (January-June) The corresponding period of last year (%)

After adjustment Before adjustment

Basic earnings per share (RMB/

share) 0.85 0.74 0.74 14.86

Diluted earnings per share (RMB/

share) 0.85 0.73 0.73 16.44

Basic earnings per share after

deducting non-recurring profit or

loss (RMB/share) 0.80 0.68 0.68 17.65

Weighted average return on net decreased by 0.05

assets (%) 9.24 9.29 9.29 percentage point

Weighted average return on net

assets after deducting non- Increased by 0.21

recurring profit or loss (%) 8.71 8.50 8.50 percentage point

Explanation of the key accounting data and financial indicators of the Company

□ Applicable √ Not Applicable

VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND

OVERSEAS ACCOUNTING STANDARDS

√ Applicable □ Not Applicable

(I) Difference in net profit and net assets attributable to shareholders of the listed

company in financial statements as disclosed in accordance with International

Accounting Standards and Chinese Accounting Standards

□ Applicable √ Not Applicable

There is no difference between the net profit and net assets attributable to shareholders of the

listed company presented in the consolidated financial statements as disclosed in accordance

with International Accounting Standards and Chinese Accounting Standards by the Company.(II) Difference in net profit and net assets attributable to shareholders of the listed

company in financial statements as disclosed in accordance with overseas

accounting standards and Chinese Accounting Standards

□ Applicable √ Not Applicable

Apart from the financial statements prepared in accordance with International Accounting

Standards the Company has not prepared financial statements in accordance with other

overseas accounting standards.Haier Smart Home Co. Ltd. Interim Report 2022 9Section II General Information of the Company and Key Financial Indicators

(III) Explanation on difference in domestic and overseas accounting standards

□ Applicable √ Not Applicable

IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT

√ Applicable □ Not Applicable

Unit and Currency: RMB

Non-recurring profit and loss items Amount

Profit and loss on disposal of non-current assets 33807493.39

Government subsidies through the profit and loss except for government subsidies

that are closely related to the Company’s normal business operations comply

with national policies and regulations and continue to be

enjoyed in a fixed amount or fixed quantity according to certain standards 434830465.43

Net profit and loss of subsidiaries arising from business combinations under

common control of the current period from the beginning of the period to the

date of consolidation 4473481.70

Profit and loss from fair value changes of financial assets held for trading

derivative financial assets financial liabilities held for trading and derivative

financial liabilities as well as investment gains arising from disposal of financial

assets held for trading derivative financial assets financial liabilities held for

trading and derivative financial liabilities and other debt investments

except the effective hedging related to the normal operations of the Company 59249736.54

Other non-operating income and expenses except the aforementioned items 34282312.26

reduction: Effect of income tax 98050857.35

Effect of minority equity interest (After Tax) 10201864.65

Total 458390767.32

Explain the reasons for determination of the non-recurring profit and loss items that are in conformity

with the definition of non-recurring profit and loss items as set out in the Explanatory Announcement

on Information Disclosure by Companies Publicly Issuing Securities No. 1 — Non-recurring Profit and

Loss Items

□ Applicable √ Not Applicable

X. OTHERS

□ Applicable √ Not Applicable

10 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and

Analysis

I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES

AND ITS MAJOR BUSINESS DURING THE REPORTING PERIOD

Founded in 1984 the Company is committed to being an enterprise of the times. Through relentless

innovation and iterations the Company seized opportunities in the industry by continuously launching

new products that steer market development. After more than 30 years the Company has become a

global leader in the major home appliance industry as well as a pioneer in global smart home solutions.* Global leader of the major home appliance industry: According to data from Euromonitor — an

authoritative market researcher the Company ranked first in terms of sales volume in global

major appliance market for 13 consecutive years. The Company has a global portfolio of brands

including Haier Casarte Leader GE Appliances Candy Fisher&Paykel and AQUA. From 2008 to

2021 Haier brand refrigeration and laundry appliances ranked first among major home appliance

brands in sales volume for 14 and 13 consecutive years respectively.* Pioneer of global smart home solutions: Capitalizing on the Company’s full-range home appliances

products the Company is recognized by Euromonitor as one of the first in the industry to

introduce smart home solutions. Leveraging the Company’s connected home appliance products

and partners supported by Haier Smart Home APP and Haier Smart Home Experiential Cloud

Platform with integration of experience centres and franchised stores the Company provides

users with smart home solutions for a variety of application scenarios satisfying their pursuit for

a better life.Over the years the Company has established three business segments namely the Smart Home Business

in China the Overseas Smart Home Business and Other Business.Smart Home Business in China

The Company provides a full range of home appliance products and value-added services in China

market through online Haier Smart Home APP supplemented by the Company’s offline experience

centres in order to cater for users’ needs for different lifestyle scenarios. Smart Home Business in

China comprises Household Food Solutions (Internet of Food) Household Clothing Solutions (Internet

of Clothing) Household Air Solutions (Internet of Air) and Household Water Solutions (Internet of

Water).* Household Food Solutions (Internet of Food): The Company provides users with refrigerators

freezers kitchen appliances and other products through domestic market sales and exports.Leveraging the connectivity amongst products the Company is able to provide users with value-

added dietary solutions featuring a combination of products and services including smart cooking

and nutrition planning in order to meet users’ demands for convenience wellbeing and taste.* Household Clothing Solutions (Internet of Clothing): The Company provides users with washing

machines dryers and other products through domestic market sales and exports. Leveraging the

connectivity amongst the Company’s smart products the Company is able to provide users with

value-added laundry solutions featuring a combination of products and services in order to meet

users’ demands for washing and caring of apparels.Haier Smart Home Co. Ltd. Interim Report 2022 11Section III Management Discussion and Analysis

* Household Air Solutions (Internet of Air): The Company provides users with residential air-

conditioners commercial air-conditioners purifiers ventilation systems and other products

through domestic market sales and exports. Leveraging the connectivity amongst the Company’s

smart products the Company is able to provide users with smart air solutions in order to meet

users’ demands for temperature humidity cleanliness and freshness.* Household Water Solutions (Internet of Water): The Company provides users with electric water

heaters gas water heaters solar water heaters heat pump water heaters POE water purifiers

POU water purifiers water softening equipments and other products through domestic market

sales and exports. Leveraging the connectivity amongst the Company’s smart products the

Company is able to provide users with smart water solutions in order to meet users’ demands

for water purification softening and heating.Overseas Smart Home Business

In addition the Company also manufactures and sells a comprehensive portfolio of home appliance

products and provides value-added services in more than 160 countries and regions including North

America Europe South Asia and Southeast Asia Australia and New Zealand Japan Middle East and

Africa.In the overseas market the Company has been manufacturing and selling proprietary appliance

products catering for local users’ demands for more than 20 years. During the time a number of

acquisitions contributed to the Company’s growth including acquisition of Haier Group Corporation’s

overseas white goods business (Sanyo Electric Co. Ltd.’s white goods business in Japan and

Southeast Asia) in 2015 home appliances of GE in the US in 2016 Fisher&Paykel in 2018 and Candy

in 2019. The development of the Company’s overseas smart home businesses has been fuelled by

synergies among its self- developed business and acquired businesses.At present the overseas smart home business of the Company has entered a stage of promising growth

having achieved a multi-brand cross-product and cross-regional presence on a global basis. According

to Euromonitor the Company’s share of the global market (retail volume) for major home appliances in

key regions in 2021 is as follows: ranked first in Asia with a market share of 20.4%; ranked second in

America with a market share of 15.1% and ranked second in Australia and New Zealand with a market

share of 11.6%. The Company ranked third in Middle East and Africa with a market share of 7.4% and

ranked fourth in Europe with a market share of 8.1%.Other Businesses

Building on its established smart home businesses the Company has also developed parts and

components small home appliances channel distribution and other businesses. In particular the parts

and components business mainly involve procurement production and sales of upstream ancillary

components for home appliances. The small home appliance business primarily involves small home

appliances designed by the Company produced by outsourced third-party manufacturers and sold

under the Company’s brands and products serving to enrich the Company’s smart home solutions.The channel distribution business primarily offers distribution services for products such as televisions

and personal electronics products for Haier Group or third-party brands which leverages the

Company’s sales network.

12 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

During the reporting period the Company was once again listed among the Top 500 World’s

Companies by Fortune Magazine in 2022. The Company was named as the ‘2022 World’s Most

Admired Companies’ by the Fortune Magazine. The Company was the only company being selected in

Europe and Asia in the home appliances industry and was the only selected company incorporated

outside the US. Meanwhile the Company is also the world’s only Internet-of-Things (IoT) ecosystem

brand being named again as BrandZTM Top 100 Most Valuable Global Brands in 2022.(I) Industry overview for the first half of 2022

1. The Chinese market

In the first half of 2022 demand was sluggish in the domestic home appliance market due

to economic slowdown weakened consumer confidence real estate market downturn and

pandemic containment measures which impacted offline sales distribution and installation.Data from CMM showed that the retail sales of the China’s home appliance market

(excluding 3C & digital products) in the first half of 2022 was RMB397.951 billion down 9.89%

year-on-year. At the same time high commodity prices have dragged down industry’s profit

margins.Retail sales declined year-on-year in refrigerators washing machines and air

conditioners while emerging categories including tumble dryers continued to grow.

(1) Retail sales of the refrigerator and washing machine industries reached RMB43.667

billion and RMB32.671 billion in the first half of 2022 down 5.26% and 8.34% year-on-

year respectively. Instead of competing over prices leading players’ focus on user

experience and R&D-driven product innovation has contributed to a steady increase in

average prices in particular in offline channels. According to CMM average retail price of

refrigerator and washing machine across online and offline channels have surged 12.87%

and 9.99% respectively. In addition benefiting from the rise in consumer demand for food

storage during the pandemic retail sales of freezer increased 12.12% to RMB7.394 billion.

(2) Air conditioner industry was impacted by the real estate market slowdown and lower

temperature in May and June retail sales reached RMB84.24 billion in the first half of 2022

down 14.09%. After the price war in 2019 competitions have become more rational and

average prices of the industry rose 7.46% year-on-year. (3) Traditional kitchen appliances

such as range hoods and gas stoves recorded negative growths impacted by the cooling

real estate market increasing penetration and competition from integrated stoves. Data from

CMM showed that in the first half of 2022 retail sales of range hood and gas stove dropped

14.95% and 9.41% year-on-year respectively to RMB16.754 billion and RMB10.999 billion. *

Retail sales of integrated stoves amounted to RMB11.783 billion representing an increase of

6.54% year-on-year. (4) The water heater industry was impacted by the downturn of the

real estate market retail sales in the first half of the year amounted to RMB27.327 billion

down 13.90% compared to the same period in 2021. (5) Emerging categories such as tumble

dryers dishwashers and residential central air conditioners continued to grow.According to data from CMM retail sales of dishwashers reached RMB5.567 billion in the

first half of 2022 a growth of 7.43% year-on-year. Retail sales of tumble dryers amounted to

RMB4.361 billion a surge of 41.08% over the same period in 2021. (6) Small kitchen

appliances are consumer discretionary in nature with high penetration industry demand is

cooling. According to AVC retail sales of such products reached RMB26.38 billion in the

first half of 2022 down 4.9% year-on-year.Haier Smart Home Co. Ltd. Interim Report 2022 13Section III Management Discussion and Analysis

Although demand remains suppressed in the short term industry upgrade

continues to happen on health smart and green energy. According to AVC retail

sales of refrigerators above RMB10000 per unit washing machines above RMB10000 per

unit and air conditioners above RMB15000 per unit have grown against the headwind by

10% 12% and 17% respectively in the first half of the year. For instance (1) consumers

increasingly favoured large-size refrigerators and “refrigerator + freezer” combos with

features of freshness preservation sterilization and odour control. According to CMM for

the first half of the year 500 litre refrigerators accounted for 62.3% of the industry’s total

retail sales offline up 7.5 percentage points year-on-year; and accounted for 41.6% of total

retail sales online a year-on-year increase of 5.7 percentage points. Market demand for self-

cleaning disinfection cabin and fresh air features of air conditioners were on the rise too. (2)

Consumer demand for effective space utilization consistency in design and smart

technologies continued to grow with increasing attention on design and installation of

home appliances and decorations. On one hand this has promoted the rapid growth ofnew categories such as “built-in refrigerators built-in washing machines residential centralair conditioners” and according to statistics of China IoL residential central air conditioners’

output reached RMB18.853 billion in the first half of 2022 representing a year-on-year

growth of 7.78%. On the other hand this has contributed to the growth in suite products.In addition young consumers in their twenties and thirties are less willing to engage in

complicated home furnishing resulting in a growing demand for one-stop solutions of home

furnishing home improvement and home appliances.Leading player continued to capture market shares by leveraging technological innovation

brand and extensive distribution network. Industry concentration continued to increase.According to AVC the combined offline shares of the top three players in refrigerator washing

machine air conditioner water heater and range hood reached 70% 80% 84% 60% and 65%

respectively. Those equipped with superior R&D design and distribution capabilities for suite

products were better positioned to acquire and convert user traffic increase user value and

accumulate goodwill.Online retail sales accounting for 53.8% of total sales. Offline chain retailors were

challenged as foot traffic and store expansions were restricted by pandemic containment

measures. Appliance sales in home improvement channels achieved rapid growth

benefitting from user traffic during home renovation and the capability of providing one-stop

solutions integrating appliances with home furnishing. As user’s time is becoming

increasingly fragmented traffic has gradually migrated to content platforms such as TikTok

Kuaishou Xiaohongshu bilibili and Zhihu who have become vibrant sites for product

promotion. In addition consumption preferences continued to differ high-end products gain

significance offline while consumers tend to look for value-for-money items online leading

to faster growth in mid to low-end markets.

14 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

The government issued policies to promote home appliance consumption and

upgrade. Incentive programmes targeting home appliance consumption have been

launched by several municipal governments in the second quarter of 2022. In July 2022the Ministry of Commerce issued the “Notice on Several Measures to Promote theConsumption of Green and Smart Home Appliances” which introduced measures to

encourage consumption upgrade of green and smart home appliances including launching

a nationwide home appliances “trade-in” campaign promoting green and smart home

appliances in villages and townships expanding consumption scenarios to enhance

consumption experience and optimizing the supply of green and smart home appliances.According to statistics from General Administration of Customs China’s total exports of

home appliances in the first half of 2022 amounted to RMB283.3 billion down 8.2% year- on-

year. Refrigerator exports amounted to RMB28.6 billion down 11.8% year-on-year; washing

machine exports reached RMB8.8 billion down 13.2% year-on-year; air-conditioner exports

totalled RMB34.1 billion down 1.6% year-on-year. Such reduction was also due to an extent

the higher base of China’s home appliances exports in the corresponding period in 2021.

2. Overseas markets

In the first half of 2022 consumption volume was weakened by high inflation with

consumer confidence reduced by economic slowdown overseas. The University of

Michigan’s Consumer Sentiment Index dropped from 68.30 in December 2021 to 47.50 in

June 2022. In the second quarter of 2022 shipment of core appliances in European and

U.S. home appliance markets recorded a single-digit decline year-on-year. The rise of product

prices has contributed to growth in the industry’s retail sales.

(1) The U.S.: In the first half of 2022 the home appliance industry was challenged by

supply chain shortages and high inflation. According to AHAM (Association of Home

Appliance Manufacturers) the total shipment of the U.S. home appliance market fell

6.5% year-on-year in the first half of 2022 with the shipment of core appliances

down 5.3%. However total shipment value of home appliances increased 3.8% while

core appliances’ shipment value grew 4.2%.

(2) Europe: Influenced by inflation and rising energy prices products with class A energy-

efficiency were more favoured by consumers. Sales volume remained flat year-on-year

as consumer confidence in Western Europe declined. According to GFK to cover the

cost inflation caused by rising commodity prices average unit prices of white goods

have increased by 9% and retail revenue of the industry has grown 4.9% year-on-

year. Record level temperatures this summer also contributed to the robust revenue

growth of air conditioners.Haier Smart Home Co. Ltd. Interim Report 2022 15Section III Management Discussion and Analysis

(3) South Asia: In India GDP began to rebound in the second quarter of 2022. Health-

conscious and large-size products remained popular and high-end demand was robust.The overall retail sales in Pakistan have tumbled by 8% in the first half of the year with

sales volume dropped by more than 10%. Average prices have hiked 5%– 10% to

mitigate the pressure brought about by currency fluctuations and rising raw material

costs.

(4) Southeast Asia: According to GFK: Thailand’s home appliance industry was sluggish

due to inflation and currency depreciation. Sales volume of refrigerator fell 9.3% in the

first half of the year. Sales volume of residential air conditioner dropped 9.9% in the

first half of the year due to economic downturn and an early monsoon season which

also resulted in 30% volume decline in second quarter. Market demand continued to

polarize with mid to low-end consumers focused on meeting their basic needs while

mid-to high-end market opted for variable-frequency air conditioners large-capacity

refrigerators and washing machines.Retail volume in the Indonesian market grew 8.7% year-on-year.

(5) Australia & New Zealand: According to distributor’s data sales revenue of home

appliance industry in Australia has grown 10% year-on-year. High inflation escalating

shipping cost and supply chain shortages caused the average unit price to surge 20%.GDP fell 0.2% in New Zealand in the first half of 2022 lower consumer confidence

and rising food and fuel prices have forced consumers to cut back on big ticket

items such as home appliances. Distributors’ data estimated that industry sales

revenue have dropped by 2.7%

(6) Japan: The industry was challenged by the sharp depreciation of the yen escalating

prices of energy and food and the decline in disposable income. According to GFK

the combined sales volume and sales revenue of freezer refrigerator and washing

machine increased by 1% and 4% respectively in the first half. Consumers have

increased demand for large-size health-conscious and energy-saving products such

as large refrigerators with outstanding freshness preservation performance a second

freezer and large front-load washers with low noise level.(II) Industry Outlook for the second half of 2022

1. The Chinese Market:

In the second half of 2022 stabilizing economy and the implementation of policy incentives

will help restore market confidence and propel recovery. Commodity prices have slumped

since the second quarter which is conducive to easing cost pressure and improving

profitability. CMM forecasts retail revenue of China’s major home appliance market will

grow 3% reaching RMB320 billion in the second half of 2022.Looking ahead in the second half of 2022 although commodity and shipping costs continue

to drop and foreign trade stabilization policies are gradually taking effect given the high base

volume in 2021 the trend of export market is projected to be neutral.

16 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

2. The Global Market:

In May 2022 the United Nation’s World Economic Situation and Prospects Report lowered

the projected growth rate of the global economy from 4% earlier in the year to 3.1%.Global inflation is expected to jump to 6.7% in 2022 which is twice the average in 2010–

2020. However there are new opportunities amid challenges. Energy-saving and

environmentally friendly home appliances along with alternative energy heat pumps have

become new growth drivers. The trend of smart connectivity is also catching on in the

industry.Chinese home appliance players with comprehensive brand portfolio advanced R&D and

manufacturing capabilities extensive localized distribution networks and efficient management

are positioned to gain share globally.II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING

PERIOD

√ Applicable □ Not Applicable

The Company has established a solid strategic presence and competitive advantage in China and

overseas markets. In China’s major home appliance market the Company has long maintained a

leading position across all product categories. According to CMM’s report the Company has

established a continued leading market position in key major home appliance categories in 2021. In

overseas markets the Company has adhered to its high-end brand creation strategy building capacity

to create leading sustainable growth which has continuously improved its market shares. Building on

this foundation the Company will further consolidate its leadership position in the industry by

leveraging integrated synergies of its global unified platforms through efficiency transformations driven

by digitalization and by leveraging its technological strengths and innovative capabilities. Ascornerstone for sustainable development the Company’s ‘Rendanheyi (人单合一)’ Model also provided

management guidance to the Company to replicate successful experiences. It is believed that the

following advantages will help the Company to continue to strengthen its leading position:

(i) Dominance in China’s high-end market; rapid growth of overseas high-end

brands

Riding the trend of consumption upgrade in China the Company started to develop the high-

end brand Casarte in the Chinese market more than 10 years ago. The creation of high-end

brands required not only focus experience and patience but also continuous innovation of

technological standards and differentiated service capabilities to fulfil user demand for high-quality

experiences. The Casarte brand combined the Company’s global technological strengths product

development capabilities and manufacturing craftsmanship as well as privilege marketing and

differentiation services and has gradually won the trust of users in China’s high-end market.According to statistics from CMM the Casarte brand has assumed a definitive leading position in

China’s high-end major home appliance market ranking first in the retail sales of refrigerator

washing machine and air conditioner categories in the high-end segment. In the first half of 2022

in terms of offline retail sales shares of the Casarte brand of washing machines and refrigerators

reached 75.2% and 38.6% respectively in the market with product price above RMB10000 per unit

in China while its share of air conditioners priced above RMB15000 per unit in the China’s

market reached 31.2%. The Company’s overall average price for refrigerators air conditioners and

washing machines was roughly two to three times the average price of the industry.Haier Smart Home Co. Ltd. Interim Report 2022 17Section III Management Discussion and Analysis

In the North American market the Company owns high-end brands such as Monogram Café

and GE Profile. The Company has enhanced its high-end brand profile through launch of

products such as professional gas range large multi-door refrigerators ultra-fresh dishwashers

with stainless steel interior Opal ice makers and automatic espresso machines. CAFé

BELLISSIMO Espresso Machine was named in CBS News (a renowned media outlet in the United

States) Best Mother’s Gift GE Profile new Kitchen Hub received 30s Choice Award from NKBA

(National kitchen & Bath Association). Through the creation of luxurious customizable and smart

technology-enabled user experience high-end Monogram Café and GE Profile have grown

rapidly. In the first half 2022 three high-end brands recorded over 40% revenue growth.(ii) Smart household solutions that continue to expand and upgrade

As users continued to demand for higher living quality coupled with the development of

technologies such as Internet of Things big data cloud computing and artificial intelligence the

industry has shown a smart and high-end development trend that prioritized product suites

based upon scenarios and home appliances integrated with home furnishings. With leading user

insights extensive product coverage and technological accumulation from intelligent AI

algorithms home big data and IoT equipment technology the Company provided scenario

solutions such as food storage and cooking management clothes laundry and mix-and-match

management whole-house air comfort and purification management and healthy drinking water

management for five major spaces at home including the living room kitchen bathroom

bedroom and balcony thereby ‘Designing a home building a home and serving a home’ for

users.Three-Winged Bird stores provided users with scenario solutions that integrates smart home

appliances and smart home furnishings and through having a service steward to attend to the

needs of users throughout the process through coordination and arranging with the internal

specialised team providing users with a whole-process service that comprised design and

implementation building materials selection as well as installation and fulfilment. For example

the Three-Winged Bird kitchen scenario solution could provide users with a whole-process

service from a suite of smart kitchen appliances to cabinet design delivery installation and

fulfilment.Based on the Haier Smart Home Brain platform users could upgrade the functions of smart

home appliances enjoy services such as professional fitness training recipe recommendations

purchase of ingredients through refrigerator automatic selection of laundry programs and

personalized scenarios through interfaces including the Haier Smart Home App and the Xiaoyou

Speaker. In the future the Company will continue to address the needs of user experience and

to further improve and enrich the smart home solutions provided by the Company. Through

scenario solutions and ecosystem services the Company will provide lifelong services for users

and further enhance users’ loyalty.

18 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

(iii) Extensive and solid global presence with localized operational capability

In addition to success in the Chinese market the Company also prospered in overseas markets.The Company seeks overseas expansion of its own brands as well as synergies with acquired

brands to develop overseas markets. Such business strategy has guided the Company to

establish R&D manufacturing and marketing three-in-one structure across multiple brands

products and regions as well as the model of self-development interconnection and synergized

operation.The Company’s extensive global presence depends on its localized business teams as well as its

flexible and autonomous management mechanisms established in various overseas markets

which have enabled the Company to gain rapid insights and respond swiftly to local user

demands. The Company also proactively integrates into local markets and cultures and has

established a corporate image that is recognized by local communities in the overseas regions

where the Company operates.In 2021 the Company operated 10 R&D centres 122 manufacturing centres and 108 marketing

centres around the world and achieved a coverage of nearly 130000 points of sales in overseas

markets.(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiers

Through organic growth and acquisitions the Company has formed seven brand clusters

including Haier Casarte Leader GE Appliances Candy Fisher&Paykel and AQUA. To address

the needs of users from different tiers in various markets around the world the Company has

adopted a differentiated multi- brand strategy in different regions that centred around users so

as to achieve an extensive and in-depth user coverage. For example in the Chinese market: the

three brands of Casarte Haier and Leader achieved the coverage of high-end mainstream and

niche market groups respectively; in the U.S. market the six major brands such as Monogram

Café GE Profile GE Haier Hotpoint comprehensively covered all segments of high-end mid-

range and low-end markets thereby meeting the preferences and needs of different types of users.(v) Cross-border acquisition and synergy realisation capabilities

The Company has an excellent track record of acquisition and integration. The Company has

acquired Haier Group Corporation’s overseas white goods business including Sanyo Electric Co.Ltd.’s white goods businesses in Japan and Southeast Asia in 2015 the home appliance

business of General Electric in the US in 2016 the New Zealand company Fisher&Paykel (which

has been entrusted by the Haier Group since 2015) in 2018 and the Italian company Candy in

2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all the Company implements the ‘Rendanheyi (人单合一)’ Model in the

acquired companies which is a value-added sharing mechanism for the whole-process team

under a common goal. Such model can motivate the acquired companies and their employees

and enable them to generate more value. Secondly the Company made use of its global

platform to empower the acquired companies in terms of strategic planning R&D and

procurement in order to enhance their competitiveness. Thirdly the Company’s open and

inclusive corporate culture can support the acquired companies in establishing a flexible and

autonomous management mechanism which can easily earn recognition from the acquired

companies and is conducive to the promotion of integration.Haier Smart Home Co. Ltd. Interim Report 2022 19Section III Management Discussion and Analysis

(vi) Comprehensive and in-depth global collaborations and empowerment

The Company has made full use of its global collaborative platform as well as its integrated

functions of R&D product development procurement supply chain sales and brand marketing.It was able to share and expand its successful market development experience to various

markets around the world. By strengthening the synergies among its global businesses the

Company has created a strong driving force for its future development.* Global collaborative R&D: The Company has a global collaborative R&D system and has

established global technology R&D mechanisms to share common modules utilize common

technologies and share patents within the scope of compliance. For example * the

Company successfully applied the direct-drive motor technology developed by

Fisher&Paykel to the Casarte brand of washing machines and achieved satisfactory results.* integrating global R&D platform resources and leveraging technologies around the globe

such as China’s product structures and hydraulic technology Japan’s functional design

technology New Zealand’s driver system and the American control system the Company

launched the GE brand’s large-volume front-load washers in the U.S. market which has led

to increases in both the market share and average price of washing machine products in

the U.S. market.* Global collaborative product development: The Company has established a global product

development mechanism to coordinate global collaborative product development which can

enable regional collaboration and supplementation across product categories. For example

the Company successfully supported GE Appliances to relaunch water heater business: the

development teams in North America and China are highly integrated benchmarking the

differences in standards between Haier and products in North America. Haier’s R&D

advantages were combined with GE Appliance’s quality assurance system to jointly develop

the product. The resulting electric water heater product has achieved industry leadership in

terms of design manufacturing and inspection with annual sales of more than 50000 units

thus providing solid support for GE brand’s water heaters to successfully enter the North

American market.* Global collaborative procurement: The Company’s global procurement activities are

coordinated by its global procurement guidance committee. By leveraging the Company’s

global procurement operations platform the Company’s operating divisions in different

regions can share global procurement resources thereby achieving economies of scale.* Global collaborative supply chain: The Company has a visualizable and digitalized global

supply chain management system which has enabled flexible deployment of global

production capacity and sharing and collaboration in the development of smart

manufacturing technologies.* Global collaborative marketing and brand promotion: The Company operates a multi-level

brand portfolio on a global scale which can realize global collaborative brand promotion.The Company also promotes and introduces successful marketing strategies among

regional markets around the world. For example the Company successfully replicated its

sales and marketing model from third and fourth- tier markets in China in markets such as

India Pakistan and Thailand which have strengthened the Company’s brand image and its

regional market competitiveness.

20 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

(vii) Industry-leading R&D and technological capabilities

To ensure better living experience for users the Company has established a global leading R&D

system under the premise of developing original technologies thereby using original technologies

to support the overall industry-leading positions of the Company’s high-end brands scenario

brands and ecosystem brands.* Leadership in terms of patent quality: As of the end of June 2022 Haier Smart Home has

accumulated more than 83000 patents applications globally of which there were more

than 53000 invention patents which accounted for more than 63%. The number of

overseas invention patents which have been obtained in 30 countries exceeded 15000

making us the Chinese home appliance enterprise with the largest number of overseas

patents.Haier Smart Home won 1 more gold award in the 23rd China Patent Gold Awards. Having

obtained 11 state patent gold awards Haier Smart Home ranked first in the domestic market.In the ‘Global Smart Home Invention Patent Ranking’ in the first half of 2022 Haier outran its

counterparts from all over the world with 2655 published patent applications ranking first in the world

for seven consecutive years. There were 20298 published patents for the smart home segment.* Leadership in terms of international standards: As of June 2022 Haier Smart Home has

cumulatively led and participated in formulation of 82 international standards and has

issued 611 state/industrial standards among which 389 were state standards and 222

were industrial standards.It is the only company in the industry to obtain comprehensive coverage in the five major

international standard organizations namely the IEC ISO IEEE OCF and Matter. It is also the

only enterprise in the world to serve on the Council Board (CB) and Market Strategy Board

(MSB) of IEC its two highest management authorities at the same time which have enabled the

Company to stay actively involved in international standardization work and have a voice in the

formulation of standards.* Leadership in terms of original technologies: The Company has innovated a range of solutions

that exceeded users’ expectations such as the launch of the Casarte’s ‘simultaneous five-

ring fire’ gas stove which enlarged the pot heating area by 40% through the use of multi-

ring uniform combustion system ingredients in the pot could therefore be more evenly and

comprehensively heated. The Company also introduced the Casarte’s Zhongzihemei all-in-

one laundry machine that could perform the three functions of washing fabric-caring and

drying in the same machine; through continuous iteration of original technologies it solved

the three major pain points of high-end washing drying and fabric-caring. We therefore

created a new product category in the laundry industry and has continued to increase our

market share of high-end washing machines.Haier Smart Home Co. Ltd. Interim Report 2022 21Section III Management Discussion and Analysis

In January 2022 the National Development and Reform Commission of China announced the list

of national engineering research centers to incorporate new sequence management. The National

Engineering Research Center for Digital Home Network built by Haier successfully passed the

selection for optimization and integration. The center has achieved a number of breakthroughs in

resolving bottlenecks in core and key technologies constraining the development of smart home

appliance industry especially in the application of three key areas: operating system artificial

intelligence and SOC chips.Our HOPE platform as Haier’s window for external technology collaboration tracks analyses and

researches technologies closely related to industry development that are 3–5 years ahead of time

and promotes the industrialization of related technologies continue to build on the core

methodologies of user insights demand analysis technology analysis and resource assessment

while brings together the supply and demand side of technologies knowledge and creativity

providing interactive scenarios and tools to facilitate the creation and iterations of innovative

products/scenarios. Taking Haier’s air conditioner’s ‘variable shunt technology’ as an example

through collaboration with relevant experts 36 patents have been applied for the technology

including 4 PCT international patents. According to results from a real device test conducted by

CHEARI (Beijing) Certification & Testing Co. Ltd. the energy- efficiency of a 1.5 HP Haier variable

refrigerant flow air conditioner is 12% higher over a period of one year than that of an air conditioner

with the new national standard of first-class energy efficiency with same power level.(viii) Staying committed to the principle of ‘value of people comes first’

‘Value of people comes first’ has always been a guiding principle for Haier’s development. From

the autonomous operation team at the start of the venture to the current ‘Rendanheyi’ ( 人 单 合

一 ) model Haier encourages every employee to maximize their own values while creating values

for users. In Haier’s ‘Rendanheyi’ ( 人 单 合 一 ) model ‘Ren’ refers to creators; ‘Dan’ refers to user

value; ‘Heyi’ refers to the integration of values realized by employees and the values created for

users. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (人单合一) model.Haier Smart Home adheres to the values of recognizing users’ demand as priority and denying

our own perceptions and is committed to the ‘two creative spirits’ of entrepreneurship and

innovation. We turned employees into creators implementers into entrepreneurs and transformed

enterprises into open ecosystem platforms which have supported the Company to become a

global leader of smart home in the Internet of Things era.

22 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

III. DISCUSSION AND ANALYSIS ON OPERATIONS

Amid the challenging first half of 2022 the Company leveraged strengths in high-end brands overseas

proprietary brands while accelerating digital transformation to deliver solid results.In the first half of 2022 the Company realized sales revenue of RMB121.858 billion representing an

increase of 9.1% year-on-year. The growth was driven by: (1) strengths of high-end brands suite

products and scenario-based solutions in the Chinese market which enhanced user value; (2) overseas

market share gain supported by localized “R&D manufacturing & sales” and global integration; (3)

expansion in distribution network and accelerated digitalization which improved customer acquisition

and conversion.In the first half of 2022 net profit attributable to the owners of the parent company reached

RMB7.949 billion representing an increase of 15.9% compared to the same period of 2021.

(1) The Company’s gross profit margin reached 30.2% up 0.2 percentage points year-on-year driven

by product mix upgrade with enhanced competitiveness effective supply chain cost

management streamlined SKUs supported by integrating R&D and distribution; improved

management of tier 2 & 3 suppliers increased level of in-house produced components all of

which aimed at improving the Company’s competitiveness of the entire value chain.

(2) The Company’s selling expense ratio was 14.4% representing a reduction of 0.6 percentage points

year-on-year. The optimization was due to digitalization aiming at improve marketing precision

and efficiency; integrating manufacturing distribution & logistics to improve fulfilment efficiency

and optimize inventory turnover; replacing service dispatch centres with system’s direct matching

of user request and maintenance personnel; accurate prediction of manufacturing and storage of

spare parts & components using algorithm to reduce spare parts expense ratio1.

(3) The Company’s administrative expense ratio was 4.2% representing a reduction of 0.3 percentage

points year-on-year because of digital reform and process redesign.

(4) The Company’s financial expense ratio was –0.2% (represented as financial income for the period)

optimized by 0.5 percentage points year-on-year. This was due to the increase in interest income

from the Company’s improved capital management and the increase in foreign exchange gain

from the optimization of foreign exchange management.

(5) In the first half of 2022 the Company’s net cash inflow from operating activities was RMB5.964

billion a drop of RMB2.478 billion year-on-year; in the second quarter the Company’s net cash

inflow from operating activities amounted to RMB4.809 billion a surge of 316.5% compared to

the first quarter. * In the first quarter the Company’s net cash inflow from operating activities

decreased by RMB1.714 billion year-on-year which was due to increase in commodity inventory

and chips procurements in China reduced payment collection amid pandemic and increased

stockpiling caused by overseas logistics constraints. * The net cash flow generated from

operating activities in the second quarter decreased by RMB764 million on a year-on-year basis

mainly due to the increase in cash expenditure for purchasing goods and services in overseas

business due to the sharp rise in raw material prices and shipping fees as well as the increase

in product and raw material stock due to the growth of overseas business and the construction

of new factories overseas.

1 Spare parts expense ratio: the costs of spare parts used for maintenance divided by revenue.

Haier Smart Home Co. Ltd. Interim Report 2022 23Section III Management Discussion and Analysis

(I) Smart Home Business in China

In the first half of 2022 smart home business in China achieved sales revenue of RMB64.763 billion

representing an increase of 12.7% year-on-year. Operating profit grew by 27.7% to RMB4.944 billion.The revenue growth was attributable to the Company’s increase in market shares across the board

strong momentum of Casarte network expansion and enhancement in customer acquisition and

conversion.

1. Household Food Storage and Cooking Solutions

(1) Refrigerator and Freezer Business

In the first half of 2022 the refrigerator and freezer business achieved sales revenue

of RMB21.744 billion a year-on-year increase of 13.3% with market share gains and

strengthened high-end leadership. According to CMM Haier’s offline market share

increased 2.7 percentage points to 43.3% online market share went up 0.4

percentage points to 39.2% and offline market share of products above RMB15000

per unit amounted to 53.1% up 9.9 percentage points year-on-year.Casarte focused on kitchen aesthetics and cell-level freshness preservation and

introduced the seamless built-in series meetings consumers’ demand for large capacity

appealing design and combination of multiple units. Casarte’s built-in products achieved

revenue growth of 36% year-on-year contributing to RMB1000 increase in average price

per unit.The Company published Built-in Refrigerator Standards 3.0 which upgraded the

standards for seamless built-in refrigerator and spearheaded the development of built-

in products and kitchen aesthetics in the industry. During the reporting period

seamless built-in technology obtained 155 invention patents and passed the UL

certification in the U.S. and consolidated the Company’s advantages with its heat

dissipation efficiency and flexibility in assembling.Haier brand adhered to technological upgrades in precise cooling of storage zones

image recognition and intelligent voice interaction in order to drive the growth of high-

end products such as Boguan ( 博 观 ) series; according to CMM Haier brand alone

accounted for 9.5% of the retail share of products with price per unit above RMB10000.During the reporting period Haier brand pioneered the industry with the launch of a

refrigerator containing a freezing capacity of 265 litres to meet users’ need for larger

storage space. The Company was chiefly responsible for the drafting of IECInternational Refrigerator Preservation Standards and the “Level 1 HealthyPreservation” Standards 2.0 and led the development of preservation technologies

based on international standard to address healthy diet concern. The Company has

made technological breakthrough with the “bottom-based refrigeration system”

featuring “zero-temperature-fluctuation zero-air-blow and zero-delay” to ensure the

freshness of food. This technology has obtained 236 invention patents and passed

the European VDE certification and the American UL certification.

24 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

During the reporting period the Company focused on cell-level freezing and preservation

technology to grasp the surge in demand for upright freezers. Sales revenue of freezers

in the domestic market grew by 15%.The Company also catered to demands for additional refrigeration devices with the

introduction of fridge + freezer (ice bar) and fridge + wine cooler sets.The Company continued to iterate high-end products grasped the market opportunity

for larger volume refrigerators high-end T-door refrigerators and French door

refrigerators accounting for over 70% of total export revenue which helped export

business outperform the industry.

(2) Kitchen appliance business

During the reporting period China’s kitchen appliance recorded revenue of RMB1.988

billion a year-on-year increase of 11.4%. Revenue of Casarte’s kitchen appliances

grew 46.0% year-on-year accounting for 27.1% of domestic kitchen appliance

revenue up 6 percentage points. Dishwasher grew 26.9% year-on-year of which

Casarte’s dishwasher increased 54.4% year-on-year. According to CMM the

Company’s offline retail share of kitchen appliances went up 1 percentage point

reaching 8% in the first half of the year with Casarte’s market share grew by 1.3

percentage points to 3.9%; overall online retail share amounted to 4%.During the period the Company focused on showcasing Casarte’s best-selling

scenarios to increase presence in home improvement channels gaining ground in

retail through forming designers’ alliances and fostering user conversion with cleaning

and replacement services. The Company added 313 new Three-Winged Bird smart

kitchen stores and entered 902 stores in villages and townships.The Company continued to leverage technological expertise from GEA FPA and

Candy to establish differentiated competitiveness and gain user goodwill. (1) Casarte’s

range hood continued to upgrade its smart air technology which solved the problem

of poor smoke exhaust on upper floors and allowed customization of air flow volume

according to users’ environment. (2) The performance of built-in ovens steamers and

integrated steam ovens continued to improve. The precise and constant temperature

control technology enabled consistent baking quality and ensured similar colour and

taste of every layer during multi-layer baking. (3) Casarte’s Zhongzihemei (中子和美)

dishwasher is equipped with FPA direct-drive motor on the upper drawer and a

sterilizer in the lower drawer with medical-grade light wave pasteurization addressing

growing demands for cleansing and caring of fine tableware.Haier Smart Home Co. Ltd. Interim Report 2022 25Section III Management Discussion and Analysis

2. Household Clothing Solutions

During the reporting period the Company’s washing machine business achieved sales

revenue of RMB14.784 billion representing a year-on-year increase of 14.1%. According

to CMM the washing machine business continued to lead the industry in terms of market

share. Online and offline shares by retail revenue were 40.2% and 45.9% respectively of

which the share of offline retail revenue grew 3.3 percentage points year-on-year.During the period the Company launched Casarte’s Zhongzihemei (中子和美) washer and

dryer combo which integrated washing drying and clothes caring functions while sharing

realtime data of each process it was designed to reduce creases wear & tear while using

lower level of energy. Air Wash with negative ion was also used to enhance experience by

removing wrinkles odour and bacteria. Zhongzi series adopted an all-flat design that

perfectly blended in with the home environment. According to CMM the Company has 75%

of market share of washers above RMB10000 per unit demonstrating a leading advantage

in the high-end market.In addition the Company continued to expand the tumble dryer business. In the first half of

the year domestic revenue of dryers grew 94% year-on-year. To solve the pain points of

incomplete drying and tangled laundry the Company pioneered the dual-engine heat pump

technology to keep the laundry untangled and evenly heated thus greatly improved user

experience. In addition the Company has optimized its supply chain and started building a

new dryer factory in Shanghai which is expected to add 2 million units in capacity. During

the period the Company’s dryer business ranked No.1 with offline retail share of 37% up

5 percentage points year-on-year. Online retail sales skyrocketed 108% year-on-year.

During the period despite pandemic outbreak rising shipping costs and currency

fluctuations overseas the washing machine business remained committed to brand

premiumization and product mix upgrade meeting the needs of overseas users with

differentiated products. According to China IoL the Company achieved growth despite

declining revenue and volume in the sector. Export volume rose 11.5% accounting for 26.2%

of market share and export revenue grew 2.7% accounting for 23.9% of market share.

26 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

3. Air Solutions

During the reporting period the Company’s air conditioner business achieved revenue of

RMB19.46 billion an increase of 10.3% from the same period in 2021.

(1) Residential air conditioner business

The residential air conditioner improved operational efficiency by accelerating network

expansion. Online and offline domestic market shares continued to grow. According

to CMM the Company’s offline retail share of air conditioners (standing & wall-

mounted units) increased 3.96 percentage points to 19.84% in the first half of 2022

whereas online retail share rose 0.9 percentage points to 14.1%. Meanwhile retail

share in the offline high-end market (wall-mounted units priced above RMB4000 per

unit and standing units priced above RMB10000 per unit) reached 25.5% an

increase of 6.3 percentage points. Residential central air conditioner continued to

grow rapidly: according to China IoL the Company’s share of residential central air

conditioners was 15.88% an increase of 1.55 percentage points year-on-year.Overseas business also boomed data from China IoL showed that the Company’s

export revenue increased 32.26% in the first half of 2022.During the reporting period the Company launched ‘Haier polymerized ionic Air Wash’

wall-mounted air conditioner with innovative air flow structure for improved experience

and it can remove seven types of air pollutants including PM2.5 while increasing humidity

and negative ions.During the reporting period the Company’s residential central air conditioner recorded

revenue growth of 38%. The Company launched “Tianfudishui” (天氟地水) series with

ultra-low refrigerant noise and high cooling efficiency the air conditioner floor heating

and ventilation system could be controlled on the same screen making this product

the focal point of air solutions at home.The Company improved in-store product display by demonstrating cooling & heating

speed low noise level and sterilization features while gaining goodwill by providing air

conditioner cleaning services in the lower tier market. More than 2800 new franchise

outlets were added in the first half of the year. On the e-commerce channel the Company

concentrated on creating best-sellers such as ‘Machinist’ series to capture mid to high

end markets opportunities. The Company also enhanced presence in lower-tier markets

with 30% increase in the number of outlets.In the first half of the year Haier’s residential air conditioner registered a growth of

32.6% in export revenue. The rapid growth was due to the Company’s commitment

to health-conscious products. The LED-UVC module in Haier’s health-boosting air

conditioners can emit ultraviolet rays it was verified by Texcell in France for its 99.998%

inhibitory effect on the COVID-19 virus. The Company also enhanced competitiveness

of its export business by integrating product platforms and optimizing SKU portfolio.Haier Smart Home Co. Ltd. Interim Report 2022 27Section III Management Discussion and Analysis

Significant improvement in profitability of residential air conditioner was achieved by *

streamlining SKUs through platform integration with 17% increase in revenue

contribution per SKU. * implementing supply chain forward integration to increase

the in-house manufacturing of five modules including circuit boards thus reducing

material cost by 5.5 percentage points. * establishing a full process cost committee

upgrading the databases of material suppliers module suppliers and technical

suppliers and building lean cost models to improve individual model’s gross profit

margin. Taking the components of tube modules as an example introducing lean cost

model has saved over RMB16 million.

(2) Commercial air conditioner business

The Company provided users with customized solutions to quickly grasp market

opportunities leading to a 26.1% revenue increase in the domestic commercial air

conditioner business. In the domestic market the Company’s share increased 0.9

percentage points year-on-year to 10.4% in the first half of the year. The Company

ranked second in the export market with 16% market share up 1.5 percentage

points year-on-year.During the reporting period the Company continued to innovate IoT central air

conditioners and spearheaded the industry development in energy efficiency

performance. The Company also made breakthroughs in compressor and high-speed

frequency invertor technologies. * The Company’s EVI MRV has undergone upgrade

with low-temperature heating performance improved by 30% and stable performance

under 56oC. The application of smart IoT technology not only realized remote control

centralized coordination and separate billing but also performed load prediction and

real-time monitoring of refrigerant quantity through big data analysis. The

600000-square-meter Shandong University Industry Science Park project in Jinan has

a glass structure with high demand for heating and Haier’s customized IoT-based

VRF units perfectly solved the difficulties of significant difference in drop height and

placement of outdoor units and fulfilled the needs for separate billing and intelligent

energy-saving. * The Company introduced the air-cooled modular chiller with room-

temperature unit that can produce heat under the full-working condition of –15oC to

50oC to cater to the heating and cooling demand of offices hotels hospitals schools

and others scenarios whereas the low ambient temperature unit can achieve a water

discharge temperature of 45oC at –35oC meeting heating demand under extremely

cold conditions. * Luxshare ICT’s production site required high precision in

temperature and humidity Haier provided a comprehensive energy-saving solution of

151 water-cooled magnetic bearing centrifugal chiller units thus laying down foundations

for long term strategic partnerships. * In response to the market opportunities from clean

energy replacement initiated by the “carbon peaking and carbon zero” strategy the

Company introduced building energy saving manufacturing engineering energy saving

and waste heat recovery solutions and grew this business by 26% in the first half of the

year.

28 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

Export revenue of the Company’s commercial air conditioners rose 32% in the first

half of the year attributable to: * The implementation of carbon neutrality policy in

the European Union has fuelled consumer demand for heat pumps the Company

quickly seized the market through its comprehensive HVAC channels and doubled its

revenue. * In the American market the Company developed the market for multi-

split products through its localized brands. * In the Southeast Asian market the

Company built a professional workforce to make headway in the water chiller market

and established competitive edge with water-cooled magnetic bearing centrifugal

chiller units in Thailand.

4. Household Water Solutions

During the period the Company’s water heater and water purifier business achieved

revenue of RMB6.786 billion an increase of 15.3% year-on-year.

(1) Water heater

During the reporting period the Company continued to strengthen its leading

advantages. The offline retail share of the Company’s water heater business was

30.6% an increase of 3.5 percentage points year-on-year; online retail share was

33.7% an increase of 3.4 percentage points year-on-year. Casarte consolidated its

high-end market position through differentiated technologies such as crystal tank

seamless titanium tank and gas-electric hybrid system. It is one of the top three

brands in the industry with market share of 13.4%.Following the launch of the limescale-free leakage-free and rust-free Casarte Crystal

Tank Galaxy series the Company expanded its dual-tank product line-up meeting

user demand for small-size appealing design and large-capacity electric water

heaters. During the period the Company’s retail share of electric water heaters

reached 41.7% an increase of 2.2 percentage points year-on-year. Casarte’s retail

share amounted to 15.5% a growth of 1.8 percentage points year-on-year.Gas water heater expanded its edge through technological innovation with revenue

increase of more than 20%. During the period the online retail share of Haier’s gas

water heaters reached 23.3% up 2.1 percentage points compared to the same

period of last year; offline retail share reached 22.4% representing a rise of 3.4

percentage points year-on-year. The Company pioneered the hybrid gas/electric

constant temperature technology that alternates between gas and electricity to solve

users’ pain points of slow heat up and inconsistent temperature by providing water at

constant temperature and create enhanced bathing experience.During the period the Company’s air-sourced heat pump water heater has accelerated

the R&D of health-oriented products which featured high water temperature disinfection

frequency conversion and energy saving. Haier brand has consolidated its leadership with

a cumulative offline retail share of over 70% and an online retail share of 65%. Haier

dominated the industry with nine out of ten best- selling models.Haier Smart Home Co. Ltd. Interim Report 2022 29Section III Management Discussion and Analysis

(2) Water purifier

According to CMM during the period Haier’s water purifier achieved a retail growth

of 14.3% offline with retail share increased by 5 percentage points year-on-year and

ranking the Company amongst the top three brands in the industry.During the period water purifiers strengthened its competitiveness through product

innovation. Following the launch of Casarte’s Yunzun ( 云 鳟 ) mineral water purifier

series that solved users’ pain point of lack of minerals in purified water the Company

iterated the product and introduced Yunlan (云澜) series with easy filter replacement

helping the Company ranking No. 1 in terms of market share of products above

RMB5000 per unit.Water purifier concentrated on supply chain optimization and realized in-house

manufacturing of filters water circuit boards and injection mouldings to facilitate product

development scenario implementation and strong revenue growth.

5. China operation: accelerating reform and taking the initiative to grow against the

headwind.Facing industry downturn in the first half of the year in particular multiple pandemic outbreaks in

the second quarter the Company managed to grow against the headwind by accelerated

digitalization and distribution network expansion as well as capturing opportunities from

government’s consumption incentives. According to CMM the market share of Haier’s major

home appliances reached 27.4% in the first half of 2022 up 2.4 percentage points year-on-year.Selling expense ratio was optimized by 0.9 percentage points in China leveraging reduction

in cost redundancies and improvement in marketing efficiency driven by process reform and

implementation of digital management tools; increase factory-to-DC fulfilment while

reducing inventory and warehousing handling to reduce logistics expenses.Strengthening distribution network to enhance competitiveness.

(1) Revenue from franchised channel grew 8% driven by * store digitalization as of the

end of June more than 8000 franchised stores were operating on the platform

covering 90% of the entire network; digital marketing tools helped conversion rate

reach 19% with total transaction value of RMB21.2 billion. * unlocking the growth

potential of weak areas through targeted deployment of staff products and

marketing resources.

30 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

(2) In the first half of the year retail sales grew by 25% online driven by: * integrated

multiple platforms online and offline facilitating sharing of membership privileges to

maximize user value. * continued product mix optimization during the reporting

period 22 new products were launched online by high-end Casarte brand

contributing to 12% increase in ASP. Tmall flagship store’s revenue from suite

products increased 11 percentage points year-on-year reaching 56% of total. *

implementing order management model using algorithm to improve accuracy of order

forecasting and inventory turnover the proportion of factory-to-DC delivery increased

by 8 percentage points realizing over RMB21 million reduction in expenses. *

strengthened presence on new retail platforms including TikTok and Kuaishou

facilitating promotions with rich contents and increases in private domain traffic. The

Company has become No.1 major home appliance brand on both TikTok and

Kuaishou.

(3) In the first half of 2022 the Company’s retail revenue from home improvement

channels amounted to RMB5.1 billion an increase of 66% year-on-year. During the

reporting period the Company formed strategic partnerships with leading players

including Red Star Macalline and Easyhome Furnishing to share marketing and user

resources. The Company also established additional presence in 69 Red Star

Macalline malls 55 Easyhome Furnishing malls 15 Yuexing Furnishing malls 9

Ouyada malls and 185 local building materials malls.Strengthening multi-brand strategy to meet diversified user demands

(1) Casarte brand continued to lead the high-end market with 38.6% and 75.2% share

in refrigerators and washing machines above RMB10000 per unit as well as 31.2%

share in air conditioners above RMB15000 per unit. In the first half of 2022

Casarte’s revenue increased by 20.8% with a growth of over 30% in the first quarter.Pandemic containment measures put pressure on sales and fulfilment offline in April

and May however momentum restored and growth resumed to 20% in June as the

outbreaks were gradually under control.“Connoisseur series” and “Z series” were introduced targeting high-end and young

consumers while more efforts were made to enhance Casarte’s comprehensive sets

offerings in the first half this year revenue contribution of Casarte’s product suites

reached 38.6% a year-on-year increase of 1.5 percentage points. The Company also

focused on expanding home improvements related products Casarte’s tumble dryer and

dishwasher grew over 50% in the first half of the year the growth of residential central air

conditioners exceeded 80%. The Company accelerated the development in home

improvement channels to better meet high-end users’ needs for one-stop comprehensive

sets of products.Haier Smart Home Co. Ltd. Interim Report 2022 31Section III Management Discussion and Analysis

(2) Positioned as “Gen Z’s home appliances” Leader achieved 7.0% growth against the

headwind. The breakthrough was made with renewed brand image and a collection of

best sellers including “Bigger wind curtain” air conditioner that enjoying popularity with

strong blow technology soft wind blow and smart wind control.

6. The Three-Winged Bird focused on “customizing smart home living” for users andcontinued to grow its capabilities in “scenario solutions the Smart Home Braindigital platforms and the 1+N system” to optimize scenario experience and

enhance user value.The Company continued to iterate its scenario solutions. During the reporting period the

Company launched the “1+3+5+N” whole-house complete-scenario smart solution

leveraging Smart Home Brain and whole house connectivity to fulfil users’ needs in various

living scenarios. During the reporting period sales volume of the Company’s smart devices

grew 14.5% year-on-year; daily active users of smart devices surged 63% year-on-year;

daily active users of scenario solutions soared 88% year-on-year from 1.5 million to 2.83

million.Leveraging scenario experience 1+N capabilities and digital tools the Company enhanced

in-store scenario solutions with increased user value. During the reporting period the

Company added more than 200 new Three-Winged Bird touch points sales per square

metre has increased by 8.2% to RMB21000/year. Sales of high-end products accounted

for 39.74% in Three-Winged Bird stores an increase of 4.65 percentage points year-on-

year.(II) Overseas home appliances and smart home businesses

During the reporting period the Company’s overseas business achieved revenue of RMB61.481

billion up 8.0% year-on-year. Operating profit grew 13.0% year-on-year to RMB3.634 billion

operating profit margin reached 5.9% a growth of 0.2 percentage points year-on-year. The robust

performance exceeding the industry was contributed by the Company’s swift action to grasp high end

market opportunity under the “Rendanheyi (人单合一)” Model i.e. high-end brands’ revenue growth of

over 40% in North America. The Company also accelerated channel expansion in particular in HVAC

channel; strengthened local manufacturing capabilities by leveraging global supply chain platform;

while mitigating the impact from escalating sea freight and chip shortages with global procurement

negotiation resources optimization and joint procurement.

1. America

In the first half sales revenue reached RMB37.434 billion in the American market a growth

of 6.0%. High-end brands recorded 40% sales increase and continued the success in the

marketplace.

32 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

The Company’s growth in a negative industry is attributable to long term commitment of product

innovation and consumer satisfaction. The successful new launches in the marketplace include

Monogram 36 inch integrated panel-ready Column refrigerator GE Profile smart top load and

front load washing machine the first washer with latest Alexa built-in GE Profile UltraFresh

System Dishwasher with Microban Antimicrobial Technology premium brand pro-range and

GE Profile ClearView Energy Star certified window air conditioner all of which effectively

capturing consumers’ demand for improved experience at home.In the meantime the Company dedicated to being agile and to be the easiest to do

business with. The Company established favourable customer relationships in not only

national retail channel Builder Groups & Independents contract channel but also DTC

channel and win the flooring and continuously gain growth. The Company set up 4 special

workgroups specializing in manufacture sourcing etc. respectively to address the rising

cost pressure of H1 through leveraging global synergy platform and resources co-sharing.The Company opened the water heating manufacturing plant in Camden South Carolina.Through a vertical integration of the plant the Company is able to produce high-quality

water heaters out of steel coils serving homes across the U.S. The new plant includes

advanced systems for metal fabrication and welding robotics for material handling and

processing and enamelling of the steel. 140 positions were added in the plant. The

Company also opened new West Coast area distribution centre (ADC) in Dixon California

near Sacramento. This addition to the Company’s distribution network will help ease supply

chain congestion in the Company’s ADC near the Port of Los Angeles and reduce delivery

times by half for customers in northern California southern Oregon and western Nevada

allowing for next day delivery.During the reporting period GEA released its 2021 Corporate Citizenship Report

highlighting the latest progress and five bold new goals that will power the company’s

future work across its five core pillars: Community Engagement Inclusion & Diversity

Operations Sustainability Product Sustainability and Compliance & Ethics. GEA achieved a

perfect score on the Human Rights Campaign’s Corporate Equality Index (CEI) earning the

designation as a “Best Place to Work for LGBTQ Equality” five years in a row.Haier Smart Home Co. Ltd. Interim Report 2022 33Section III Management Discussion and Analysis

2. Europe

During the period the European business achieved revenue of RMB10.245 billion an increase

of 12.7% year-on-year. According to the data from GFK the Company’s market share in Europe

has reached 6.8% up 0.5 percentage points growth in both revenue and volume ranked first in

the market with share expansion in multiple categories including washing machines

refrigerators dishwashers and kitchen appliances. The Company’s washing machines

accounted for 12.7% of the market’s volume an increase of 1.6 percentage points moved one

place up to No. 2 in the industry.During the period challenged by high inflation escalated energy prices and rising shipping

and commodity costs the Company continued to strengthen high-end brand strategy

accumulated consumer insight accelerated the localization of supply chain and enhanced

channel competitiveness to achieve steady growth. The Company met demand for energy-

saving products with technological innovation. During the period 905CD refrigerator and

939 washing machines were launched under Haier brand to raise average prices. Large-

volume and energy saving products such as the new ultra-thin iPro7plus washing machine

and 905 refrigerators have gained market recognition. The production capacity of the

refrigerator factory in Romania was gradually ramping up with accumulated output of

200000 units contributing to the rapid growth of built-in refrigerators. In addition new

factories for dishwashers tumble dryers and kitchen appliances in Turkey were underway.The Company also expanded the room for growth through successive launches of built-in

washing machines and refrigerators in home improvement channels.

3. Australian and New Zealand

The Company remained committed to product premiumization and recorded sales revenue

of RMB3.49 billion in Australia and New Zealand up 0.9% year-on-year a 9.2% growth in

local currency. The share of retail revenue in Australia’s mainstream channels reached

17.5% an increase of 1.7 percentage points while the market share of retail sales in

mainstream channels in New Zealand was 37% an increase of 3 percentage points year- on-

year.Several premium SKUs were launched under both FPA and Haier brands adding to the

competitiveness of comprehensive solutions; the Company also became No.1 in washing

machine category in Australia with 28% market share while best-selling heat pump dryer

achieved a record breaking 4.6 percentage points market share gain in one month.A Specialized team was set up to capture the growth from strong housing market

particular efforts were made to develop new partnerships with interior designers while retail

performance was improved with enhanced offerings featuring connectivity and IoT

technologies. In addition the Company also increased manufacturing capacity and agility of

the factory in Thailand where total output grew by 14% during the reporting period.

34 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

4. South Asia

During the reporting period the Company achieved sales revenue of RMB4.823 billion an

increase of 22.8% year-on-year. Among which

(1) The market share in India increased by 1.2 percentage points to 10.4%. The Company

pressed ahead with brand premiumization and multi-brand strategic implementation

expanded the presence in high-quality channels and improved supply chain

capabilities. * The Company implemented the multi-brand strategy of Casarte Haier

and Candy to increase the share of mid and high-end sales revenue to 46% up 5

percentage points year-on-year. * The Company continued to introduce products

that fulfilled local needs by integrating global design resources the Company

launched the first French door refrigerator. The Company also introduced washing

machines with heating function to address users’ pain points. * The Company

enhanced presence of quality channels and expanded penetration to 70%. * The

Company enhanced operation efficiency of the North Industrial Park and the Pune

Industrial Park and developed the supply chain to improve whole-process

competitiveness.

(2) In Pakistan the Company strengthened leadership in refrigerators freezers air

conditioners and washing machines. The Company’s overall share reached 37% up 2

percentage points year-on-year. The Company grasped the local demand for high-

efficiency and energy-saving products and launched the variable-frequency freshness

preservation refrigerator series. The Company introduced the T3 air conditioner that

can operate under temperature as high as 53oC thus solving the problem of

operation suspension under high temperature condition in the southern region. The

Company also launched large-freezer & small-fridge refrigerator to meet large family’s

demand for more freezing space. The Company’s penetration exceeded 70% in Tier 3

and Tier 4 markets with over 300 franchised stores.

5. Southeast Asia

During the reporting period the Company achieved revenue of RMB2.922 billion an increase

of 11.9% year-on-year. The Company grasped demand for large capacity and health-conscious

sterilization and accelerated new product launches to grow market share.In the Thai market the Company accelerated high-end brand development with the market

share of T-door and French door refrigerators reaching 35% and topped the industry. The

residential air conditioner UV series met the users’ needs for health-conscious sterilization

in the post-pandemic era driving the retail volume share of air conditioners to 13.6%

ranking first in the industry. 601 large front-load washing machine gained leadership in the

industry retail sales of front-load washing machines surged 95% in the first half of the year.The Company upgraded retail channels and seized opportunities online the number of

store presence in Thailand’s chain store channels increased by 40% while the number of

retail touch points in the Philippines grew 51%. In Vietnam the Company streamlined sales

network into district-province-county-township levels and improved the wholesale

capabilities and retail efficiency. In the first half of the year sales revenue grew 80% online

in Southeast Asia market. A flagship store was launched on Lazada in June in Vietnam the

GTM system went live in Malaysia and facilitated digital management of store display a

warehouse management system was also launched in Thailand.Haier Smart Home Co. Ltd. Interim Report 2022 35Section III Management Discussion and Analysis

6. Japan

During the period the Company achieved revenue of RMB1.837 billion in Japan up 3.3%

year-on-year a growth of 17.9% in local currency. The Company’s market share for

freezers refrigerators and washing machines combined reached 15% with 15.2% in

refrigerators and 42.8% in freezers both ranked first in the industry. During the period the

Company accelerated the transformation towards mid- to high-end products and actively

expanded the line-up of medium- and large-sized products. The Company seized the

refrigerators’ market share with Delie series and ultra-thin T-style products under AQUA

brand as well as 468/406 T-door and brand new ultra-narrow 3-door products under Haier

brand. The Company captured the market opportunity of health-conscious laundry brought

about by the pandemic with AQUA’s superior line-up of variable-frequency washing machine

products line-up and high-end heat pump front-load washers as well as Haier’s medium-

and large-size variable-frequency washing machines. The Company strengthened the freezer

product line-up with the differentiated Slim series and the 20th anniversary edition. AQUA’s

high-end revenue contribution grew 5 percentage points to 61% while Haier’s mid to high-

end revenue contribution rose 11 percentage points to 50%.In addition the community laundry business continued to lead the industry with a market

share of 70%. The Company has established more than 100 multi-scenario experience

stores offering laundry maintenance clothing food and transportation solutions with cross-

industry partners including FamilyMart P&G ENEOS petrol stations and MUJI to optimize

user experience.(III) Strengthening digitalization for all processes to improve efficiency.During the reporting period the Company has strengthened its digital transformation focusing on

CRM lean manufacturing and R&D.The development of a digital user operation platform. Centring around full life cycle of

product purchase usage and services the Company leveraged its User Experiential Brain to

integrate marketing logistics after-sales and smart devices so as to visualize user experience

enhance operational efficiency and user satisfaction. In the first half of 2022 26.59 million new

members were added total number of platform users reached 257 million. Average ticket size

per member was 34.3% greater than regular users. * Establishing digital marketing platform to

improve user retention and conversion efficiency. In the first half of 2022 the number of users

with retained information2 amounted to 11.41 million a growth of 219% year-on-year; conversion

reached 18.93% an increase of 58% year-on-year; digital retail3 accounted for 22.6% of total

sales a rise of 112% year-on-year. * Replacing service dispatch centres with system’s direct

matching of user request and maintenance personnel; accurate prediction and manufacturing of

parts & components using algorithm to optimize spare parts expense ratio.

2 Number of users with retained information: users who allow us to manage the information they submit digitally

3 Digital retail: sales revenue generated by users acquired through digital tools divided by total sales revenue

36 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

Lean manufacturing platform:

* The manufacturing platform primarily focused on the implementation of digital order management

and DFX new product introduction to improve manufacturing cost competitiveness and delivery

efficiency. For example establish schedule workbenches which enabled digital management of

scheduling dispatch and logistics coordination resulting in a 92% accuracy of dispatches with

95% on-time delivery of orders.

* Digital procurement service platform facilitated collaborations with third party big data

platforms to dynamically optimized supply side resources increasing the proportion of

shared components to save procurement cost.* Supply chain platform improved management and the accuracy of demand forecasting while

facilitating sharing of inventories. In the first half of the year inventory turnover at regional

headquarter level was optimized by 15%.* The logistics platform targeted end to end optimization of logistics expense by connecting people

cars and data to match vehicles goods and orders. In the first half of 2022 truck loading time

was reduced by 30% and logistics expense ratio was reduced by 10%.Digitalized R&D platform was established to optimize product planning process product life

cycle management and standard system product efficiency4 was improved by 23% in the first

half of the year; in addition it was also used to implement end to end cost optimization based

on modules iterations and facilitate mass application of cost-effective new materials and

processes.Development plan for the second half of the year

In the second half of 2022 the Company will press ahead with the three-level brand upgrade

strategy of “high-end brand scenario-based brand and ecosystem brand”. Amid macro

uncertainties the Company will seize the opportunities of innovation and structural change in the

market through strengthened leadership and forward-looking global deployment. The Company

will define the Company’s second curve development path by strategizing the smart home trend

and building a smart home appliance ecosystem. At the same time the Company will push

forward with digital restructuring to enhance the efficiency throughout the entire value chain.In the domestic market the Company remains committed to high-end brand strategic implementation

to increase Casarte’s market share in all categories continue to improve competitiveness of air

conditioners with a focus on developing core technologies from in-house R&D and strategic alliances;

accelerate growth in consumer robotics and small appliances while grasping the suite-oriented and

home furnishing market trend as well as new opportunities in tumble dryers and dishwashers focus

on creating value for users and distributors with steady performance; accelerate digital reform to

facilitate cost reduction and efficiency enhancement.

4 Product efficiency: Sales revenue divided by quantity of product models

Haier Smart Home Co. Ltd. Interim Report 2022 37Section III Management Discussion and Analysis

The Company will continue to implement high-end brand strategy in the overseas market

meeting the pressing worldwide demand for energy-efficient and green products leveraging global

R&D capabilities introduce differentiated and efficient products; speeding up development in

HVAC channels supported by localized energy efficient facilities; mitigating cost pressure with

global supply chain management platform; with Rendanheyi (人单合一 ) management model and

well-established incentive programmes to inspire employees’ enthusiasm capture growth

opportunities while minimizing market risks.Significant changes in the Company’s operating conditions during the reporting

period and matters occurring during the reporting period that have and

expected to have a significant impact on the Company’s operating conditions

□ Applicable √ Not Applicable

IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD

(I) Analysis of principal business

1. Table of movement analysis on the related items in financial statements

Unit and Currency: RMB

Corresponding

period of

Items Current period last year Change (%)

Operating revenue 121857522462.22 111727756211.06 9.07

Operating cost 85061133319.20 78156467866.57 8.83

Selling expenses 17605612224.80 16731407296.02 5.22

Administrative expenses 5132033156.92 5047535410.71 1.67

Financial expenses –202227082.17 295546337.17 –168.42

R&D expenses 4595691525.07 3738316873.21 22.93

Net cash flow generated from

operating activities 5964247657.22 8442195160.31 –29.35

Net cash flow generated from

investing activities –4160668747.75 –3237011990.71 Not Applicable

Net cash flow generated from

financing activities 2160173397.21 –9607019105.46 Not Applicable

Other income 546242698.94 378116328.72 44.46

Gain on fair value changes –118790175.68 64269511.32 –284.83

Loss on credit impairment –258076846.14 –44031423.21 Not Applicable

Gain from disposal of assets 31589207.10 142414954.25 –77.82

Income tax expenses 2000741926.36 1525749793.00 31.13

38 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

Analysis on the reasons for significant changes in certain indicators:

1) Reasons for changes in financial expenses: the decrease of 168.42% in finance costs

over the corresponding period was primarily due to the increases in the period’s

interest income and exchange gains over the corresponding period;

2) Reasons for changes in net cash flow generated from financing activities: primarily

attributable to the new policy borrowing raised and additional issuance of proceeds

during the period;

3) Reasons for changes in other income: the increase of 44.46% in other gains over the

corresponding period was primarily due the increase in the period’s government

grants over the corresponding period;

4) Reasons for changes in gain on fair value changes: the decrease of 284.83% in gains

on fair value changes over the corresponding period was primarily due to the

decrease in fair value changes in forward contracts over the corresponding period;

5) Reasons for changes in loss on credit impairment: primarily due to the increase in

provision for the bad debt of receivables during the period;

6) Reasons for changes in gain from disposal of assets: the decrease of 77.82% in gains

on property disposal was primarily due to the decrease in the periods’ gains on

property disposal from subsidiaries over the corresponding period;

7) Reasons for changes in income tax expenses: the increase of 31.13% in income tax

over the corresponding period was primarily due to the increase in taxable profit of

the period.

2. Detailed explanation on significant changes in the operation types and the components of

profit or sources of profit of the Company during the period

□ Applicable √ Not Applicable

(II) Explanations on the major changes in profits caused by non-principal businesses

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 39Section III Management Discussion and Analysis

(III) Analysis of assets and liabilities

√ Applicable □ Not Applicable

1. Assets and liabilities

Unit: RMB

Percentage of Percentage of

amount at the end change in amount

Amount as at the of the from the end of the

Percentage of end of the corresponding corresponding

Amount as at the amount at the end corresponding period of last year period of last year

end of of the period over period of over total assets to current period

Items the period total assets (%) last year (%) (%) Explanations

Derivative financial assets 163084726.42 0.07 79819974.01 0.04 104.32 Mainly due to the fluctuation in value

of foreign currency forward

contracts

Bills receivable 8417636171.41 3.71 13354791068.29 6.14 –36.97 Mainly due to the change of

repayment terms for channels

Right-of-use assets 3664479071.10 1.62 2734678906.53 1.26 34.00 Mainly due to the increase in lease

liabilities

Trading financial liabilities 79270648.00 0.03 6294014.40 0.00 1159.46 Mainly due to the fluctuation in value

of foreign currency forward

contracts

Contractual liabilities 5397435938.66 2.38 10027091593.60 4.61 –46.17 Mainly due to the decrease in

advance receipts with

performance obligations

Other current liabilities 1286194473.81 0.57 2238767551.40 1.03 –42.55 Mainly due to the decrease in the

amount of value-added tax to be

transferred to output tax

Long-term borrowings 2119243998.96 0.94 3038573824.53 1.40 –30.26 Mainly due to the reclassification to

non-current liabilities due within

one year

Bonds payable 334730048.82 0.15 –100.00 Mainly due to the reclassification to

non-current liabilities due within

one year

Lease liabilities 2763944633.73 1.22 1960894981.47 0.90 40.95 Mainly due to the increase in lease

liabilities

Long-term payables 49353671.92 0.02 99602707.76 0.05 –50.45 Mainly due to the repayment of long-

term payables

Other equity instruments 81340387.43 0.04 118017507.59 0.05 –31.08 Mainly due to the decrease in the

conversion equity component of

the convertible bonds

Treasury stock 3962689830.07 1.75 2424038819.70 1.11 63.47 Mainly due to the share repurchase

Other comprehensive 1689673248.96 0.75 –1176851699.92 –0.54 243.58 Mainly due to the translation of

income foreign currency financial

statements

40 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

2. Overseas Assets

√ Applicable □ Not Applicable

(1) Scope of assets

Among the assets overseas assets amounted to 10833800 (unit and currency:

RMB10000) representing 47.80% of the total assets.

(2) Relevant information on high percentage of overseas assets

√ Applicable □ Not Applicable

Unit and Currency: RMB

Operating revenue

during the reporting Net profit during the

Name of overseas asset Reason for Formation Operation mode period reporting period

Overseas Home Appliance and Overseas mergers & Localized Operations with the 61480633415.58 3634319014.7

Smart Home Business acquisitions and the integration of R&D

Company’s own manufacturing and marketing

development

Note: Net profit stated in the above table represents operating profit.

3. Restrictions on major assets as of the end of reporting period

□ Applicable √ Not Applicable

4. Other explanations

□ Applicable √ Not Applicable

(IV) Analysis of investment

1. Overall analysis on external equity investment

√ Applicable □ Not Applicable

In order to establish the competitiveness of service robots for household cleaning promote

the development of the Company’s cleaning appliance business as well as to enhance its

corporate governance and reduce routine connected transactions Qingdao Haier Smart Life

Electric Co. Ltd. a wholly-owned subsidiary of the Company proposed to acquire the 100%

equity interest in Qingdao TAB Robot Technology Co. LTD. held by Qingdao Haier

Interconnect Technology Co. Ltd. with a cash consideration of RMB125 million. After the

completion of the transaction Qingdao TAB Robot Technology Co. LTD. has become a

wholly-subsidiary of Haier Smart. As at the end of the reporting period the transaction has

been completed. For details of the investment please refer to the Announcement of Haier

Smart Home Co. Ltd. on the Acquisition of 100% Equity Interest in Qingdao TAB Robot

Technology Co. LTD. by a Subsidiary and Connected Transaction disclosed on 29 April

2022 by the Company.

Haier Smart Home Co. Ltd. Interim Report 2022 41Section III Management Discussion and Analysis

(1) Significant equity investment

√ Applicable □ Not Applicable

Please see the above “1. Overall analysis on external equity investment”.

(2) Significant non-equity investment

√ Applicable □ Not Applicable

In order to further enhance the sustained high-quality growth of Haier refrigerators in

the domestic market optimize the domestic supply chain further strengthen the

market competitiveness in Shandong Southwest and Central China and achieve rapid

growth in Shandong Southwest and Central China the Company invested in the

construction of a project with an annual production capacity of 2 million units of large

refrigerators in Jiulong Industrial Zone Jiaozhou Qingdao through a newly established

subsidiary with a total investment of RMB3.07 billion. The project is currently in

progress. For details of the investment please refer to the Announcement of Haier

Smart Home Co. Ltd. on Investing in Large Refrigerator Project with an Annual

Capacity of 2 Million Units disclosed on 29 April 2022 by the Company.

(3) Financial assets measured at fair value

√ Applicable □ Not Applicable

RMB

Current purchase/ Investment income Changes in fair

Initial sale during the during the reporting value during the

Items investment cost Source of funds reporting period period reporting period

Wealth management products 2142050007.50 Self-owned –15583835.62 42007117.65 1621089.28

Investments in other equity 3587415678.11 Self-owned 2596583.32 –56965311.85

instruments

Investments in trading equity 284382243.23 Self-owned –200041952.15 45206370.39 –24266144.66

instrument

Investment funds 124067582.04 Self-owned 42633245.20 –43056624.92

Derivative financial assets 29450000.00 Self-owned — 132833541.83 89404517.91

Total 6167365510.88 –172992542.57 222643613.19 –33262474.24

Note: As of 30 June 2022 the aggregate balance of foreign exchange derivative transaction amounted to

approximately US$1.579 billion.

42 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

(V) Sale of material assets and equity

√ Applicable □ Not Applicable

In order to focus on the main business of smart home optimize resources allocation and realize

investment income Haier Shareholdings (Hong Kong) Limited a wholly-owned subsidiary of the

Company transferred 25% equity interest in Qingdao Haier Mold Co. Ltd. to Qingdao Haier

Mold Smart Cloud Technology Co. Ltd. for an amount of RMB277 million. After the completion

of the transaction Haier Shareholdings (Hong Kong) Limited will no longer hold any equity

interest in Qingdao Haier Mold Co. Ltd. As at the end of the reporting period the transaction

has been completed. For details of the investment please refer to the Announcement of Haier

Smart Home Co. Ltd. on the Transfer of 25% Equity Interest in Qingdao Haier Mold Co. Ltd. by

a Subsidiary and Connected Transaction disclosed on 29 April 2022 by the Company.(VI) Analysis on major subsidiaries and Investees

□ Applicable √ Not Applicable

(VII) Structured entities controlled by the Company

□ Applicable √ Not Applicable

V. OTHER DISCLOSURES

(I) Potential risks

√ Applicable □ Not Applicable

1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white goods

as durable consumer appliances are subject to users’ income level and their expectations

of future income growth which will have a certain impact on their willingness to purchase

products. A slowdown in macroeconomic growth causing a decline in users’ purchasing

power will have a negative impact on industry growth. In addition a slowdown in real

estate market will also have a negative impact on market demand.

2. Risk of price war caused by intensified industry competitions. The white goods industry is

highly competitive with a high degree of product homogeneity industry concentration has

continued to increase. However the increase in inventory in individual sub-sectors due to

demand-supply imbalance may lead to price war. Furthermore rapid technological

advancements scarce talents in the industry shortened product life cycles and ease of

imitation are making it increasingly difficult to profit. Although new products services and

technologies are often associated with higher selling prices it has become necessary for

the Company to invest more in R&D.Haier Smart Home Co. Ltd. Interim Report 2022 43Section III Management Discussion and Analysis

3. Risk of fluctuations in raw material prices. The Company’s products and core components

use metal such as steel aluminium and copper as well as commodities such as plastics

and foam. If the prices of raw materials continue to rise it will put certain pressure on the

Company’s production and operations. In addition the Company relies on third party

manufacturers and suppliers for key raw materials components and manufacturing

equipment any disruption in supply or significant price increases by these suppliers will

have a negative impact on the Company’s businesses. As a leader in the industry the

Company will take measures including volume & price adjustment mechanism as well as

hedging to reduce the risk of raw material fluctuations on its operations.

4. Operational risk in overseas business. The Company has established production bases R&D

centres and marketing centres in many parts of the world with the proportion of overseas

revenue increasing year by year. Overseas markets are subject to political and economic

situations (including events such as military conflicts) legal systems and regulatory regimes

of those countries and regions. Significant changes in these factors will pose certain risks

to the Company’s local operations in these markets. The Company has taken various

measures to mitigate the relevant impacts including collaborating with suppliers and

distributors improving production efficiency expanding supply chain to other countries and

safety measures to protect its people and assets.

5. Risk of exchange rate fluctuations. As the Company expands its global footprint the import

and export of products involve the exchange of foreign currencies such as the U.S. dollar

the Euro and the Japanese yen. If the exchange rates of relevant currencies fluctuate it

will have a certain impact on the Company’s financial position. In addition the Company’s

consolidated financial statements are denominated in Renminbi while the financial

statements of its subsidiaries are measured and reported in the currency of their primary

economic environment in which the entity operates and are therefore subject to currency

exchange risk. In this regard the Company uses hedging instruments to reduce its

exposure to exchange rate fluctuations.

6. Risk of policy changes. The home appliance industry is closely related to the consumer

market and the real estate market. Changes in macroeconomic policies consumption

investment policies real estate policies and relevant laws and regulations will affect product

demand which in turn will affect product sales of the Company. The Company will closely

monitor changes in policies laws and regulations to ensure stable operation of its

businesses.

7. Risk of uncertainties resulted from COVID-19 outbreak. The COVID-19 outbreak that gradually

spread around the end of 2019 may lead to a further weakening of consumer demand for

home appliances which in turn will affect the Company’s product sales. Lockdowns and

travel restrictions will reduce people’s mobility and hamper the operations of sales networks.Besides the pandemic may also cause disruptions to the operations of distributors logistical

disruptions in the delivery of product could result in distributors’ dissatisfaction with the

Company’s services and consequently reduced demand for the Company’s products. The

Company will leverage its anti-pandemic experience in the Chinese market and coordinate its

global resources to mitigate the impact of the pandemic on its businesses.

44 Haier Smart Home Co. Ltd. Interim Report 2022Section III Management Discussion and Analysis

8. Credit risk. If the Company is not able to collect all trade receivables from its distributors

or distributors are not able to settle the Company’s trade receivables in a timely manner

the Company’s business financial status and operation performance may be adversely

affected. In relation to this risk the Company will maintain flexibility by offering credit period

of 30 to 90 days to certain distributors based on their credit history and transaction amount.

9. Inventory risk. Excess inventory might occur as the Company cannot always accurately predict

trends and events and maintain appropriate inventory levels; thus the Company may be

forced to offer discounts or promotions to manage the slow-moving inventory. On the other

hand a shortage of inventory may lead to loss of sales opportunities for the Company.However the Company will conduct regular impairment assessment of its inventory and

manage its inventory according to market situation.(II) Other disclosures

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 45Section IV Corporate Governance

I. INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS

Meeting Date Index for details of websites designated Date of Resolutions approved

for publishing resolutions disclosure

2021 Annual General 28 June 2022 For details please refer to the 29 June 2022 Considered and approved the

Meeting Announcement on Resolutions passed at resolutions related to annual

the 2021 Annual General Meeting 2022 report internal control audit

First A Shares Class Meeting 2022 First report profit distribution

D Shares Class Meeting and 2022 First proposal re-appointment of

H Shares Class Meeting of Haier Smart auditor external guarantees

Home Co. Ltd. (L2022–042) published routine connected

by the Company on the website of transactions general

Shanghai Stock Exchange (www.sse. mandate to issue additional

com.cn) and the four major securities shares / repurchase shares

newspapers share option incentives

re-election of the Board of

Directors / the Board of

Supervisors and amendment

of the Company’s system

etc.

2022 First A Shares Class Considered and approved the

Meeting resolutions for share option

2022 First D Shares incentives and general

Class Meeting mandate to repurchase

2022 First H Shares Class shares etc.

Meeting

Preferred shareholders whose voting rights have been restored requested an

extraordinary general meeting

□ Applicable √ Not Applicable

Explanation of Shareholders’ general meeting

√ Applicable □ Not Applicable

The 2021 Annual General Meeting and the 2022 First A/D/H Shares Class Meetings of the Company

was held in successive order by way of on-site voting and network voting by poll at Room B101 Haier

Rendanheyi Research Center Haier Information Park No.1 Haier Road Qingdao the PRC in the

afternoon on 28 June 2022 considering the annual report and other relevant resolutions. The total

number of the shares of the Company carrying voting right amounted to 9337037472 shares (of

which 6198798156 shares were A shares 271013973 shares were D shares and 2867225343

shares were H shares). 820 shareholders and proxies representing 6456427607 shares or 69.15% of

the total number of the shares of the Company carrying voting right were present at the 2021 Annual

General Meeting. 770 shareholders and proxies representing 4203253922 shares or 67.81% of the

total number of A shares of the Company carrying voting rights were present at the 2022 First A

Shares Class Meeting; 40 shareholders and proxies representing 147537203 shares or 54.44% of the

total number of D shares of the Company carrying voting rights were present at the 2022 First D

Shares Class Meeting; 9 shareholders and proxies representing 2103823118 shares or 73.37% of

the total number of H shares of the Company carrying voting rights were present at the 2022 First H

46 Haier Smart Home Co. Ltd. Interim Report 2022Section IV Corporate Governance

Shares Class Meeting. The Directors supervisors and senior management of the Company as well as

the lawyers engaged by the Company also attended the abovementioned four meetings. The

abovementioned meetings were convened by the Board of the Company and Chairman Mr. Liang

Haishan presided over the meetings. The Company had 11 Directors of whom 9 Directors attended

the meetings (Directors Xie Juzhi and Wu Qi were unable to attend the meetings due to personal

engagement); the Company had 3 supervisors of whom 3 supervisors attended the meeting. The

secretary to the Board of the Company attended the abovementioned meetings and other members of

senior management of the Company were invited to attend the abovementioned meetings.II. CHANGES IN OF DIRECTORS SUPERVISORS AND SENIOR

MANAGEMENT OF THE COMPANY

√ Applicable □ Not Applicable

Name Position Change Situation

Li Huagang Chairman and President Election

Liang Haishan Chairman Resignation

Shao Xinzhi Vice Chairman Election

Xie Juzhi Vice Chairman Resignation

Gong Wei Director Chief Financial Officer and Vice President Election

Wu Changqi Director Resignation

Lin Sui Director Resignation

Xie Juzhi Vice President Appointment

Song Yujun Vice President Appointment

Zhao Yanfeng Vice President Appointment

Wang Li Vice President Retired

Liu Xiaomei Secretary to the Board Appointment

Ming Guozhen Secretary to the Board Resignation

Explanation of changes in Directors supervisors and senior management of the

Company

√ Applicable □ Not Applicable

During the reporting period the term of office of the 10th session of the Board of Directors the Board

of Supervisors and senior management expired and the 10th session was renewed to the 11th

session. Some members of the directors and senior management or their positions have changed in

the 11th session as compared to the 10th session which is shown in the preceding table (those

without changes are not presented).III. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF

CAPITAL RESERVE

Proposal for interim profit distribution and proposal for reverse conversion into share

capital

Whether distributed or converted No

Haier Smart Home Co. Ltd. Interim Report 2022 47Section IV Corporate Governance

IV. EQUITY INCENTIVE PLAN EMPLOYEE STOCK OWNERSHIP PLAN OR

OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF

(I) Relevant incentive events disclosed in provisional announcements but without

subsequent development or changes during implementation

√ Applicable □ Not Applicable

Summary of Matters Query Index

Completion of registration of grant of reserved For details please refer to the

options under the 2021 A Share Option Incentive Announcement of Haier Smart

Scheme: According to the relevant resolutions of the Home Co. Ltd on the

25th meeting of the 10th session of the Board of Completion of Registration of the

Directors held by the Company on 15 December Grant of the Reserved Share

2021 it was confirmed that the total number of Options under the 2021 A

reserved options granted under the Company’s 2021 Share Option Incentive Scheme

A Share Option Incentive Scheme was 4525214. In disclosed by the Company on

accordance with this resolution the Company 19 January 2022.completed the registration of the aforementioned

grant of shares on 17 January 2022.Introduction of 2022 A Share Option Incentive and For details please refer to the 2022

completion of grant: As the Company is leading the A Share Option Scheme of Haiereffort to upgrade its Internet of Things from “high-end Smart Home Co. Ltd (draft)brands” to “scenario brands” and to “ecological disclosed by the Company on 29brands” the Company needs to have long-term April 2022 the Announcement

planning to ensure the achievement of its strategic on the Adjustment to the

results and also improve its long-term incentive scheme Company’s 2022 A Share Option

in line with the above objectives. Therefore considered Incentive Scheme and Grant of

and approved at the General Meeting and Class 2022 A Share Option to Incentive

Meeting convened on 28 June 2022 the Company Recipients by Haier Smart Home

introduced the 2022 A Share Option Incentive. And as Co. Ltd disclosed by the

considered and approved at the Board Meeting held on Company on 29 June 2022 and

the same date 104756896 options were granted to relevant contents of the

the incentive recipients. announcements of resolutions at

the General Meeting.

48 Haier Smart Home Co. Ltd. Interim Report 2022Section IV Corporate Governance

Summary of Matters Query Index

Introduction of New Phase of A Share and H Share For details please refer to the

Employee Stock Ownership Plan: In order to 2022 A Share Core Employee

further improve the governance mechanism of the Stock Ownership Plan of Haier

Company create shareholder value and promote the Smart Home Co. Ltd (Draft)

comprehensive implementation of the Company’s IoT the 2022 H Share Core

smart home ecological brand strategy as considered Employee Stock Ownership Plan

and authorized at the 2020 Annual General Meeting of Haier Smart Home Co. Ltd

held by the Company on 25 June 2021 the (Draft) and relevant contents

Company considered and introduced the 2022 H disclosed by the Company on

Share Core Employee Stock Ownership Plan of Haier 29 April 2022.Smart Home Co. Ltd (Draft) and the 2022 A Share

Core Employee Stock Ownership Plan of Haier Smart

Home Co. Ltd (Draft) at the 28th meeting of the

10th session of the Board of Directors held by the

Company on 28 April 2022. During the reporting

period the Company promoted the opening of

accounts and other related works for the 2022 A

Share and H Share Employee Stock Ownership Plan.(II) Incentive events not disclosed in provisional announcements or with subsequent

development

Equity incentive

□Applicable √ Not Applicable

Other explanations

□ Applicable √ Not Applicable

Employee stock ownership plan

□ Applicable √ Not Applicable

Other Incentives

□ Applicable √ Not applicable

Haier Smart Home Co. Ltd. Interim Report 2022 49Section V Environmental and Social

Responsibilities

1. ENVIRONMENTAL INFORMATION

(I) Explanation of the environmental protection status of companies and their

important subsidiaries that are key emission units announced by the

environmental protection department

√ Applicable □ Not Applicable

1. Information on pollutant discharge

√ Applicable □ Not Applicable

The Company’s indirect non-wholly owned subsidiaries Zhengzhou Haier Air-conditioning

Co. Ltd. (“Zhengzhou Air-conditioning”) Qingdao Jiaonan Haier Washing Machine Co. Ltd.(“Jiaonan Washing Machine”) Hefei Haier Refrigerator Co. Ltd. (“Hefei Refrigerator”)

Wuhan Haier Water Heater Co. Ltd. (“Wuhan Water Heater”) Wuhan Haier Freezer Co.Ltd. (“Wuhan Freezer”) Dalian Haier Refrigerator Co. Ltd. (“Dalian Refrigerator”) Qingdao

Haier (Jiaozhou) Co. Limited (“Jiaozhou Air-Conditioning”) Qingdao Haier Special

Refrigerator Co. Ltd. (“Huangdao Special Refrigerator”) and Tianjin Haier Cleaning Electrical

Appliances Co. Ltd. (“Tianjin Washing Machine”) are among the key emission units

announced by the local environmental protection department.The main information on pollutant discharge is as follows:

(1) Zhengzhou Air-conditioning

* Main pollutants:

Wastewater. According to the Technical Specification for Application and Issuance

of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018)

Development Zone Energy should apply for a pollutant discharge permit and detect

17 types of pollutants (including specific pollutants) namely total cadmium total

chromium total mercury total lead total arsenic hexavalent chromium COD

ammonia nitrogen total phosphorus total nitrogen PH suspended solids chroma

petroleum BOD rate of flow and temperature

* Way of discharge: indirect discharge

* Number and distribution of discharge outlets: one north of the wastewater

treatment plant pipeline discharge

50 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 20.74 mg/L 0.24 tons 6.25 tons No

2 Ammonia 3.72 mg/L 0.02 tons 0.63 tons No

nitrogen

* Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(2) Jiaonan Washing Machine

* Main pollutants:

Wastewater. According to the Technical Specification for Application and Issuance

of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018)

Development Zone Energy should apply for a pollutant discharge permit and detect

17 types of pollutants (including specific pollutants) namely total cadmium total

chromium total mercury total lead total arsenic hexavalent chromium COD

ammonia nitrogen total phosphorus total nitrogen PH suspended solids chroma

petroleum BOD rate of flow and temperature.* Way of discharge: intermittent discharge

* Number and distribution of discharge outlets: one north of the wastewater

treatment plant pipeline discharge

* Concentration and total amount of discharge and approved total amount of

discharge:

According to the discharge permit the concentration and total amount of

pollutant discharge subject to approval for the total amount are as follows:

Total Approved Whether it is

Name of Concentration amount of total amount excessive

No. pollutant of discharge discharge of discharge discharge

1 COD 60.3mg/L 3.091 tons 60 tons No

2 Ammonia 7.67mg/L 0.396 tons 5.48 tons No

nitrogen

Haier Smart Home Co. Ltd. Interim Report 2022 51Section V Environmental and Social Responsibilities

* Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962-2015)

(3) Hefei Refrigerator

* Main pollutants:

Wastewater. According to the Technical Specification for Application and Issuance

of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018)

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; 22 exhaust gas at the refrigerator block A(10) block

B(10) and Phase III Factory(2)

* Concentration of discharge and discharge standard:

According to the discharge permit the concentration and total amount of

pollutant discharge subject to approval for the total amount are as follows:

Total Approved Whether it is

Name of Concentration amount of total amount excessive

No. pollutant of discharge discharge of discharge discharge

1 COD 101.603 mg/L 17.2 tons 300 tons No

2 Ammonia 12.523 mg/L 2.13 tons 28 tons No

nitrogen

3 total nitrogen 33.95 mg/L 5.68 tons 20 tons No

4 total phosphorus 1.635 mg/L 1.082 tons 5 tons No

* Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

52 Haier Smart Home Co. Ltd. Interim Report 2022Section V Environmental and Social Responsibilities

(4) Wuhan water heater

* Main pollutants:

Wastewater. According to the Technical Specification for Application and Issuance

of Pollutant Permit — Wastewater Treatment (for Trial) (HJ 978–2018) 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

* Concentration and total amount of discharge and approved total amount of

discharge:

According to the discharge permit the concentration and total amount of

pollutant discharge subject to approval for the total amount are as follows:

Total Approved Whether it is

Name of Concentration amount of total amount excessive

No. pollutant of discharge discharge of discharge discharge

1 COD 40 mg/L 4.58 tons 9.075 ton No

2 Ammonia 0.336 mg/L 0.0385 tons 0.9075 ton No

nitrogen

* Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(5) 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

Haier Smart Home Co. Ltd. Interim Report 2022 53Section 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 46 mg/L 0.96 tons 4.3628 tons No

2 Ammonia 0.497 mg/L 0.01 tons 0.4365 ton No

nitrogen

* Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(6) Dalian Refrigerator

* Main pollutants:

Wastewater. According to the Environmental Impact Report Form of

Construction Project a total of 6 types of pollutants should be tested namely PH

COD total phosphorus suspended solids total nitrogen and petroleum.* Way of discharge: indirect discharge

* Number and distribution of discharge outlets: one energy wastewater plant

pipeline discharge

* Concentration and total amount of discharge and approved total amount of

discharge:

The concentration and total amount of pollutant discharge subject to approval

for the total amount are as follows:

Whether it is

Name of Concentration of Total amount Approved total amount of excessive

No. pollutant discharge of discharge discharge discharge

1 COD 0mg/L 0 tons Pollutant discharge permit No

management no requirements

regarding the total amount

2 Ammonia 0mg/L 0 tons Pollutant discharge permit No

nitrogen management no requirements

regarding the total amount

* Pollutant discharge standards implemented: Integrated Wastewater Discharge

Standard of Liaoning Province (DB 21/1627–2008)

54 Haier Smart Home Co. Ltd. Interim Report 2022Section V Environmental and Social Responsibilities

(7) Jiaozhou Air-Conditioning

* Main pollutants:

Hazardous waste. According to the national directory 10 types of hazardous waste

detected are namely: waste oil sludge slag powder computer boards activated

carbon cotton filters lightning tubes soldering flux buckets paint buckets and

packaging bags.* 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 of the Whether it is

of transfer management excessive

No. Name of hazardous waste (tons) plan (tons) discharge

1 Packaging bags 0.08 0.5 no

2 Waste oil 17.7 40 no

3 Slag powder 15.48 30 no

4 Forklift battery 17.92 22 no

5 Sludge 3.68 5 no

6 Paint buckets 1 4 no

* Pollutant discharge standards implemented: Directory of National Hazardous

Wastes (Version 2021) Law of the People’s Republic of China on the

Prevention and Control of Environmental Pollution by Solid Waste

(8) Huangdao Special Refrigerator

* Main pollutants:

Organic exhaust gas. According to legislative requirements Development Zone

Energy should apply for a pollutant discharge permit and detect the primary

type of pollutant in the atmosphere namely non-methane hydrocarbon (VOC)

with the maximum concentration of discharge not exceeding 60mg/m3. A

qualified third-party testing unit is commissioned to conduct organic exhaust gas

concentration testing and issue a report on a quarterly basis.* Way of discharge: Continuous discharge

* Number and distribution of discharge outlets: Four in total one absorption exhaust

port at the northeast corner of the plant roof and two welding exhaust ports

and one foam exhaust port at the west side of the plant roof

Haier Smart Home Co. Ltd. Interim Report 2022 55Section 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

Whether it is

Name of Concentration of Total amount Approved total amount of excessive

No. pollutant discharge of discharge discharge discharge

1 VOC 2.8mg/m3 0.52 tons No control regarding the total no

amount of discharge of VOC

* Implementation of the Volatile Organic Compounds Discharge Standards Part 7:

Other Industries in Shandong Province (DB37/2801.7–2019)

(9) Tianjin Washing Machine

* Main pollutants:

Wastewater. According to legislative requirements a pollutant discharge permit

should be applied and enforced and 4 types of pollutants should be tested namely

COD ammonia nitrogen PH and suspended solids.* Way of discharge: Indirect discharge

* Number and distribution of discharge outlets: one the wastewater plant pipeline

discharge

* Concentration and total amount of discharge and approved total amount of

discharge:

According to the discharge permit the concentration and total amount of

pollutant discharge subject to approval for the total amount are as follows:

Whether it is

Name of Concentration of Total amount Approved total amount of excessive

No. pollutant discharge of discharge discharge discharge

1 COD 23mg/L 0.177 tons 34.742 tons no

2 Ammonia 0.628mg/L 0.0048 tons 3.127 tons no

nitrogen

* Pollutant discharge standards implemented: Integrated wastewater discharge

standard (DB12356–2018)

56 Haier Smart Home Co. Ltd. Interim Report 2022Section V Environmental and Social Responsibilities

2. Construction and operation of pollution prevention and treatment facilities:

√ Applicable □ Not Applicable

Zhengzhou Air-conditioning Jiaozhou Air-Conditioning Wuhan Freezer Wuhan Water

Heater and Tianjin Washing Machine have one one one two and one wastewater

treatment plants with a designed treatment capacity of 550 tons/day 300 tons/day 550

tons/day 300 tons/day and 260 tons/day and 300 tons/day respectively; there is one

wastewater treatment plant in Dalian Haier Park responsible for collecting and treating the

wastewater produced by the Dalian Park Companies with a wastewater treatment capacity

of 300 tonnes/day. The construction maintenance and daily operation of all wastewater

treatment facilities are conducted in accordance with the requirements of national and local

environmental laws and regulations. Information on all wastewater discharge is subject to

24-hour online monitoring and such monitored information is transmitted to environmental

authorities in a real-time manner. All equipment is operating normally. In addition the

Company fully promotes all plants to install exhaust treatment facilities and VOCs online

monitoring facilities. All equipment is operating normally and exhaust produced is treated by

the prevention and treatment facilities before compliant release and is monitored.

3. Environmental impact assessment of construction projects and other environmental

protection administrative permits

√ Applicable □ Not Applicable

The Company and its subsidiaries execute construction project implementation and productionin accordance with the requirements of laws and regulations and strictly comply with the “threesimultaneous” requirements of environmental protection for construction projects in the process

of environmental impact assessment and have passed environmental assessment acceptance

and are not involved in any environmental illegal conducts such as construction before approval.

4. Emergency plans for environmental incidents

√ Applicable □ Not Applicable

The Company and its subsidiaries have formulated Emergency Plans for Environmental

Incidents in accordance with the requirements of laws and regulations and organized drills and

continue to improve and upgrade the plans based on drill results.

5. Self-monitoring environmental programs

√ Applicable □ Not Applicable

The Company complies with national and local environmental standard requirements in

respect of all pollutant discharge. Wastewater collected is subject to standard treatment

and is released in a compliant manner. It is under real-time monitoring through the

automatic online wastewater monitoring system which shares its information with Haier

Haier Smart Home Co. Ltd. Interim Report 2022 57Section V Environmental and Social Responsibilities

Smart Energy System. In March 2017 the Company passed the upgraded certification in

relation to ISO14001 environment management system. In May 2021 a professional

certification firm was appointed to conduct a review and audit on the operation of

ISO14001 system in 2020 where satisfactory results were obtained to demonstrate its

good operating condition; In May 2022 a second review and audit was conducted on the

operation of the system in 2021.

6. Administrative penalty due to environmental issues during the Reporting Period

□ Applicable √ Not Applicable

7. Other environmental information that should be disclosed

□ Applicable √ Not Applicable

(II) Explanation on environmental protection of companies other than major

pollutant-emission units

√ Applicable □ Not Applicable

1. Administrative penalty due to environmental issues

□Applicable √ Not Applicable

2. Other environmental information disclosure with reference to major

pollutant-emission units

√ Applicable □ Not Applicable

All division of the Company execute construction project implementation and production in

accordance with the requirements of laws and regulations and strictly comply with the

“three simultaneous” requirements of environmental protection for construction projects in

the process of environmental impact assessment and have passed environmental

assessment acceptance and are not involved in any environmental illegal conducts such as

construction before approval.

58 Haier Smart Home Co. Ltd. Interim Report 2022Section V Environmental and Social Responsibilities

Through Haier Smart Energy Center an industry leading energy big data analysis system the

Company implements centralized dynamic monitoring and digitalized management in respect of

major energy consumption such as water electricity and gas of all plants across the country

by utilizing automatized and informationalized technology and an integrated management

model. It automatically collects precise information on energy resources and completes

prediction and analysis of energy consumption information to optimize energy adjustment

reduce energy consumption per unit production to achieve low-carbon production.

3. Reasons for failure to disclose other environmental information

□Applicable √ Not Applicable

(III) Explanation of the subsequent progress or changes in the disclosure of

environmental information content during the Reporting Period

√ Applicable □ Not Applicable

The Company will continue to maintain and improve existing results and strictly comply with existing

environmental protection and emission standards to achieve compliant emission.(IV) Relevant information favorable to ecological protection pollution prevention and

control and environmental responsibility fulfillment

√ Applicable □ Not Applicable

The Company proactively advances product iteration and upgrade and participates in the

development of ecological environment. The Company took part in the formulation of energy

consumption standard of household appliances organized by Beijing Institute of Standardization

to promote the shift to energy-saving models in the household appliance field. We cooperated

with relevant organizations in relevant refrigerant research and development projects to strive for

the application of refrigerants with lower greenhouse gas emission. Meanwhile the Company and

Haier’s suppliers among others cooperated in the research and development of low-carbon

related technology such as recyclable packaging materials to facilitate environmental protection.The Company proactively responds to the household appliance recycling policies of the NDRC by

launching a household appliance recycling project and investing in the construction of Haier’s

household appliance recycling interconnection factory. With the recycling business as the starting

point we tapped into the disintegration process and implemented extended accountability for

household appliance manufacturers. The measure will significantly boost the efficiency of

resource utilization to achieve sustainable development.Haier Smart Home Co. Ltd. Interim Report 2022 59Section V Environmental and Social Responsibilities

(V) Measures taken during the Reporting Period to reduce its carbon emission and

their effectiveness

√ Applicable □ Not Applicable

As the leading enterprise in the industry the Company proactively seeks ways to achieve carbon

neutrality and carbon peak and optimize industrial structure and energy structure. Currently the

Company has designed and established Haier Zhong De Smart Park Haier’s first “beacon base”

in the world to achieve carbon neutrality and intends to expand its coverage within the

Company in the future with a view to reaching carbon neutrality for Haier Smart Home’s

industrial parks in the PRC within a reasonable time while giving due regards to comprehensive

elements such as costs.

2. Particulars on the efforts to consolidate and expand its achievements in poverty

alleviation and rural area invigoration

√ Applicable □ Not Applicable

In accordance with the national targeted poverty alleviation plan and documentation

requirements the Company emphasizes poverty alleviation and conducts targeted poverty

alleviation within the authority granted on the general meeting in respect of among others

donations.For years the Company has made genuine contributions to education to improve the basic

cultural quality of people in poverty and skills of families in poverty with an emphasis on

shoring up the weak link of the education sector and stopping inter-generational poverty.As of now the Company Haier Group Companies (the effective controller of the Company)

and its subordinate enterprises have constructed over 300 hope primary schools and hope

secondary schools covering 26 provinces municipalities and autonomous regions in the

PRC. It also offers continuous resource assistance to such schools every year to effectively

boost the base education capacity in poverty regions and improve education quality. At the

same time the Company focuses on poverty alleviation in agricultural development and

public welfare fund support to actively respond to the government’s call for social

responsibility fulfillment. In the first half of 2022 the Company spent approximately

RMB6.62 million on targeted poverty alleviation.

60 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

I. FULFILLMENT STATUS OF UNDERTAKINGS

(I) The undertakings made by the ultimate controllers shareholders related parties

acquirer as well as the Company and other relevant parties during or up to the

reporting period

√ Applicable □ Not Applicable

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Undertaking Eliminate the property Haier Group During the period from September 2006 to May 27 September Yes Yes

related to right defects in land Corporation 2007 the Company issued shares to Haier 2006

significant etc. Group Corporation (“Haier Group”) to purchase long-term

reorganization the controlling equity in its four subsidiaries

namely Qingdao Haier Air-Conditioner Electronics

Co. Ltd. (青岛海尔空调电子有限公司 ) Hefei

Haier Air-conditioning Co. Limited (合肥海尔空

调器有限公司 ) Wuhan Haier Electronics Co.Ltd. (武汉海尔电器股份有限公司) Guizhou Haier

Electronics Co. Ltd. (贵州海尔电器有限公司 ).With regard to the land and property required in

the operation of Qingdao Haier Air-Conditioner

Electronics Co. Ltd. (青岛海尔空调电子有限公

司) Hefei Haier Air-conditioning Co. Limited (合

肥海尔空调器有限公司 ) Wuhan Haier

Electronics Co. Ltd. (武汉海尔电器股份有限公

司 ) (the “Covenantees”) Haier Group made an

undertaking (the “2006 Undertaking”). According

to the content of 2006 Undertaking and then

condition of each Covenantee Haier Group will

constantly assure that Covenantees will lease the

land and property owned by Haier Group for

free. Haier Group will make compensation in the

event that the Covenantees suffer loss due to

the unavailability of such land and property.Address competition Haier Smart Home Prior to the Transaction (hereinafter “the 31 July 2020 Yes Yesissues Co. Ltd. Transaction” refers to the transaction in relation long-term

to the privatisation of Haier Electronics by Haier

Smart Home) Haier Electric was a controlling

subsidiary of the Company and did not compete

with the Company; after the completion of the

Transaction Haier Electric became a wholly-

owned or controlling subsidiary of the Company

and no new competition with the Company

existed or will arise. There is no new peer

competition or potential competition between the

Company and other related parties controlled by

the controlling shareholders or the de facto

controllers of the Company.Haier Smart Home Co. Ltd. Interim Report 2022 61Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Address connected Haier Group 1. The Transaction constitutes a connected 29 July 2020 Yes Yes

transactions Corporation transaction and the connected transaction long-term

procedures performed under the Transaction are in

compliance with the relevant regulations. The pricing

of the connected transaction is fair and there are no

circumstances under which the interests of the

listed company and the non-connected

shareholders are prejudiced. 2. Upon completion of

the Transaction the Company and its affiliates will

take lawful and effective measures to minimize and

regulate the connected transactions with the listed

company take the initiative to safeguard the

interests of the listed company and all shareholders

and refrain from taking advantages of connected

transactions for improper benefits. 3. Provided that

there is no conflict with laws and regulations if

connected transactions between the Company and

its affiliates and the listed company occur or exist

which cannot be avoided or for which there are

reasonable reasons the Company and its affiliates

will legally enter into a transaction agreement with

the listed company to ensure strict compliance with

the procedures of connected transactions required

by the laws regulations regulatory documents and

the articles of association of the Company conduct

transactions in accordance with the principles of

marketability and fair prices to ensure the fairness

and compliance of connected transactions and

refrain from taking advantages of such connected

transactions to engage in any acts that are

detrimental to the interests of the listed company or

its minority shareholders and at the same time

comply with the information disclosure obligations in

accordance with relevant regulations.

62 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Address competition Haier Group 1. The Company and its controlling subsidiary Haier 29 July 2020 Yes Yes

issues Corporation COSMO Co. Ltd. were principally engaged in long-term

investment business during the reporting period

and the Company and its controlling subsidiary

Haier COSMO Co. Ltd. (including its subsidiaries

and entities with more than 30% shareholding) have

no real or potential competition with Haier Smart

Home; 2. the domestic and overseas white goods

businesses and assets held by the Company

(including the Company’s subsidiaries and entities

with more than 30% shareholding) have been

injected into Haier Smart Home through asset

consolidation and equity transfer in accordance with

the commitments made by the Company in January

2011 and the requirements for adjusting such

commitments as considered and approved by Haier

Smart Home at its 2014 annual general meeting; 3

Since the acquisition of 100% of Haier New Zealand

Investment Holding Company Limited (which holds

100% of the shares in Fisher & Paykel Appliances

Holdings Limited) by Haier Smart Home’s offshore

subsidiary Haier Singapore Investment Holding Co.Ltd. following the completion in July 2018 the

Company (including the Company’s subsidiaries and

entities with more than 30% shareholding) and Haier

Smart Home do not have any competing

relationship in any business areas both within and

outside the PRC. During the reporting period the

Company (including the Company’s subsidiaries and

entities with more than 30% shareholding) did not

have any new peer competition with Haier Smart

Home; 4. Upon completion of the Transaction the

Company (including the Company’s subsidiaries and

entities with more than 30% shareholding) and its

affiliates do not have any new or potential peer

competition with Haier Smart Home; 5. During the

period when the Company is the controlling

shareholder of Haier Smart Home and the shares of

Haier Smart Home are listed on the Hong Kong

Stock Exchange the Company and its other

subsidiaries and entities with more than 30%

shareholding will not operate any business that

competes with the business engaged by Haier

Smart Home and will not engage in real or potential

competition with Haier Smart Home.Haier Smart Home Co. Ltd. Interim Report 2022 63Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Others Haier Group Upon completion of the Transaction the Company 29 July 2020 Yes Yes

Corporation will strictly comply with the Company Law the long-term

Securities Law the relevant regulations of the

China Securities Regulatory Commission the

Shanghai Stock Exchange and the articles of

association of Haier Smart Home etc. fairly

exercise shareholders’ rights and fulfill

shareholders’ obligations refrain from taking

advantage of its shareholding position for

improper benefits ensure the listed company will

continue to be completely separate from the

Company and other enterprises on which the

Company exercises control and exerts significant

influence in terms of management personnel

assets finance organization and business

operations and maintain the continued

independence of the listed company in terms of

management personnel assets finance

organization and business operations. Upon

completion of the Transaction the Company will

comply with the provisions of the Notice on

Several Issues concerning Regulating Fund

Transactions between Listed Companies and

Their Affiliates and the External Guarantee of

Listed Companies and the Circular of China

Securities Regulatory Commission and China

Banking Regulatory Commission on Regulating

the External Guaranties Provided by Listed

Companies to regulate the external guarantees

by listed companies and their subsidiaries and

will not misappropriate the funds of the listed

company and their subsidiaries. The Company

undertakes to strictly fulfill the above

commitments. In the event that the interests of

the listed company are damaged as a result of

any breach of the above commitments by the

Company and other enterprises on which the

Company exercises control and exerts significant

influence the Company will legally bear the

corresponding liability for damage.

64 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Address connected HCH (HK) 1. The Transaction constitutes a connected 29 July 2020 Yes Yes

transactions INVESTMENT transaction and the connected transaction long-term

MANAGEMENT procedures performed under the Transaction are in

CO. LIMITED compliance with the relevant regulations. The pricing

of the connected transaction is fair and there are no

circumstances under which the interests of the

listed company and the non-connected

shareholders are prejudiced. 2. Upon completion of

the Transaction the Company and other enterprises

on which the Company exercises control will take

lawful and effective measures to minimize and

regulate the connected transactions with the listed

company take the initiative to safeguard the

interests of the listed company and all shareholders

and refrain from taking advantages of connected

transactions for improper benefits. 3. Provided that

there is no conflict with laws and regulations if

connected transactions between the Company and

other enterprises on which the Company exercise

control and the listed company occur or exist which

cannot be avoided or for which there are

reasonable reasons the Company and other

enterprises on which the Company exercises control

will legally enter into a transaction agreement with

the listed company to ensure strict compliance with

the procedures of connected transactions required

by the laws regulations regulatory documents and

the articles of association of the Company conduct

transactions in accordance with the principles of

marketability and fair prices and refrain from taking

advantages of such connected transactions to

engage in any acts that are detrimental to the

interests of the listed company or its minority

shareholders and at the same time comply with the

information disclosure obligations in accordance with

relevant regulations. 4. Any covenants and

arrangements between the Company and other

enterprises on which the Company exercise control

and the listed company in relation to connected

transactions shall not prevent the other party from

conducting business or dealing with any third party

for its own benefit and on equal competitive terms

in the market.Haier Smart Home Co. Ltd. Interim Report 2022 65Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Undertaking Eliminate the property Haier Group Haier Group Corporation undertakes that it will 24 December Yes Yes

related to right defects in land Corporation assure Haier Smart Home and its subsidiaries of 2013

refinancing etc. the constant stable and unobstructed use of the long-term

leased property. In the event that Haier Smart

Home or any of its subsidiaries suffers any

economic loss due to the fact that leased

property has no relevant ownership certificate

Haier Group Corporation will make

compensation to impaired party in a timely and

sufficient way and take all reasonable and

practicable measures to support the impaired

party to recover to normal operation before the

occurrence of loss. Upon the expiration of

relevant leasing period Haier Group Corporation

will grant or take practicable measures to assure

Haier Smart Home and its subsidiaries of priority

to continue to lease the property at a price not

higher than the rent in comparable market at

that time. Haier Group Corporation will assure

Haier Smart Home and its subsidiaries of the

constant stable free and unobstructed use of

self-built property and land of the Group. In the

event that Haier Smart Home or any of its

subsidiaries fails to continue to use self-built

property according to its own will or in original

way due to the fact that self-built property has

no relevant ownership certificate Haier Group

Corporation will take all reasonable and

practicable measures to eliminate obstruction

and impact or will support Haier Smart Home or

its affected subsidiary to obtain alternative

property as soon as possible if Haier Group

Corporation anticipates it is unable to cope with

or eliminate the external obstruction and impact

with its reasonable effort. For details please

refer to the Announcement of Qingdao Haier Co.Ltd. on the Formation Current Situation of the

Defective Property the Influence on Operation of

Issuer Caused by Uncertainty of Ownership

Solution for the Defect and Guarantee Measures

(L2014–005) published by the Company on the

four major securities newspapers and the

website of Shanghai Stock Exchange on 29

March 2014.

66 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

Whether

Date and Any performed in

Background of term of deadline for a timely and

undertakings Type of undertakings Covenanter Contents of undertakings undertakings performance strict way

Eliminate the property Haier Smart Home The Company undertakes that it will eliminate the 24 December Yes Yes

right defects in land Co. Ltd. property rights defects of the Company and main 2013 eight

etc. subsidiaries within five years with reasonable years

business effort since 24 December 2013 to

achieve the legality and compliance of the

Company and main subsidiaries in terms of land

and property. For details please refer to the

Announcement of Qingdao Haier Co. Ltd. on the

Formation Current Situation of the Defective

Property the Influence on Operation of Issuer

Caused by Uncertainty of Ownership Solution

for the Defect and Guarantee Measures (L2014–

005) published by the Company on the four

major securities newspapers and the website of

Shanghai Stock Exchange on 29 March 2014.As at the end of 2018 the Company has

resolved the property defects of itself and its

eight major subsidiaries. After the approval of the

board meeting held by the Company on 5

November 2018 and the general meeting held

on 21 December 2018 the term of the above

undertakings was extended for three years

based on the original deadline. At present the

property defects of the five major subsidiaries

have been properly resolved by applying for

property ownership certificates relocating the

defective properties and categorizing them as

reserve alongside the lands divesting the

defective properties with the equity of the

subsidiaries and other means. The Company has

fulfilled this undertaking.Undertakings Others Haier Smart Home The Company will not provide loans or any other 15 September Yes Yes

related to Co. Ltd forms of financial assistance including 2021/28 June

equity incentive guaranteeing their loans to any incentive 2022 the

recipient for acquiring relevant stock options completion of

under this incentive plan. equity

incentive

implementation

Other Asset injection Haier Group Inject the assets of Haier Photoelectric to the December 2015 Yes Yes

undertakings Corporation Company or dispose such assets through other to June 2025

ways according to the requirements of the

domestic supervision before June 2025. For

more details please refer to the Announcement

of Haier Smart Home Co. Ltd. on the Changes

of Some Commitments on Asset Injection

(L2020–024) published on the four major

securities newspapers and the website of

Shanghai Stock Exchange on 30 April 2020.Haier Smart Home Co. Ltd. Interim Report 2022 67Section VI Significant Issues

II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLING

SHAREHOLDERS AND OTHER RELATED PARTIES DURING THE

REPORTING PERIOD.□ Applicable √ Not Applicable

III. INFORMATION ON NON-COMPLIANCE GUARANTEES

□ Applicable √ Not Applicable

IV. INFORMATION ON INTERIM AUDIT

□ Applicable √ Not Applicable

V. CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDIT

OPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITS

HANDLING

□ Applicable √ Not Applicable

VI. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING

□ Applicable √ Not Applicable

VII. MATERIAL LITIGATION AND ARBITRATION MATTERS

□ Material litigation and arbitration matter during the reporting period

√ No material litigation and arbitration matters during the reporting period

VIII. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITS

DIRECTORS SUPERVISORS SENIOR MANAGEMENT CONTROLLING

SHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECT

OF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION

□ Applicable √ Not applicable

IX. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND

ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLER

DURING THE REPORTING PERIOD

□ Applicable √ Not applicable

68 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 applicablePursuant to the “Resolution on Proposal to the General Meeting to Authorize the Board ofDirectors and its Authorized Persons to Sign the Framework Agreement on ConnectedTransactions for 2020–2022” 《( 关于提请股东大会授权董事会及其授权人士签署2020–2022年关联交易框架协定的议案》) considered and approved at the 10th meeting of the 10th

session of the Board of Directors and the Second Extraordinary General Meeting of 2020the “Resolution on Signing the Framework Agreement on Connected Transactions” 《( 关 于签署关联交易框架协定的议案》) considered and approved at the 14th meeting of the 10thsession of the Board of Directors and the “Resolution of Haier Smart Home Co. Ltd. onRenewing the Framework Agreement on Financial Services with Haier Group Corporationand Estimated Amount of Connected Transactions” 《( 海尔智家股份有限公司关于与海尔集团公司续签〈金融服务框架协定〉暨预计关联交易额度的议案》) considered and approved at

the 18th meeting of the 10th session of the Board of Directors and the 2020 Annual General

Meeting the Company has made estimation on the connected transactions for the

next three years as detailed in the aforesaid announcements regarding the resolutions of

the meetings.For the actual performance of the Company’s connected transactions in the first half of 2022

please refer to “XII. Related parties and related-party transactions” under section X — Financial

and Accounting Report set out in this regular report.

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

Haier Smart Home Co. Ltd. Interim Report 2022 69Section VI Significant Issues

(II) Related-party transactions regarding acquisition or disposal of assets/equity

1. Matters disclosed in temporary announcements and with no subsequent progress

or change

√ Applicable □ Not applicable

Summary of matters Query index

The acquisition of 100% equity interest in For details please refer to the

Qingdao TAB Robot Technology Co. LTD. Announcement of Haier Smart

and connected transaction: In order to Home Co. Ltd. on the

establish the competitiveness of service robots Acquisition of 100% Equity

for household cleaning and promote the Interest in Qingdao TAB Robot

development of the Company’s cleaning Technology Co. LTD. by a

appliance business as well as to enhance its Subsidiary and Connected

corporate governance and reduce routine Transaction disclosed on 29

connected transactions Qingdao Haier Smart April 2022

Life Electric Co. Ltd. a wholly-owned subsidiary

of the Company acquired 100% equity interest

in Qingdao TAB Robot Technology Co. LTD.which was owned by Qingdao Haier Interconnect

Technology Co. Ltd. at a consideration of

RMB125.0 million in cash.The transfer of 25% equity interest in For details please refer to the

Qingdao Haier Mold Co. Ltd. and Announcement of Haier Smart

connected transaction: In order to focus on Home Co. Ltd. on the Transfer

the smart home appliance business optimize of 25% Equity Interest in

resource allocation and generate investment Qingdao Haier Mold Co. Ltd. by

income Haier Shareholdings (Hong Kong) a Subsidiary and Connected

Limited a wholly-owned subsidiary of the Transaction disclosed on 29 April

Company transferred 25% equity interest in 2022

Qingdao Haier Mold Co. Ltd. to Qingdao Haier

Mold Smart Cloud Technology Co. Ltd. at a

consideration of RMB277.0 million in cash.

70 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

2. Matters that have been disclosed in temporary announcements and with subsequent

progress or change

□ Applicable √ Not applicable

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

4. If performance agreement is involved the performance achieved during the reporting

period shall be disclosed

□ Applicable √ Not applicable

(III) Significant related-party transactions of joint external investment

1. Matters that have been disclosed in temporary announcements and with no

subsequent progress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcements and with subsequent

progress or change

□ Applicable √ Not applicable

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

(IV) Amounts due to or from related parties

1. Matters that have been disclosed in temporary announcements and with no

subsequent progress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcement and with subsequent

progress or change

□ Applicable √ Not applicable

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

Haier Smart Home Co. Ltd. Interim Report 2022 71Section VI Significant Issues

(V) Financial business between the Company and the finance company with which

it has a related relationship the company’s controlling finance company and

related parties

√ Applicable □ Not applicable

1. Deposit business

√ Applicable □ Not applicable

Unit and Currency: RMB

Changes of the period

Balance as at the Total amount Total amount

Maximum daily Range of deposit beginning of the deposited during withdrawn during Balance as at the

Related party Relationship deposit limit interest period the period the period end of the period

Haier Finance Co. Subsidiary of Haier 32 billion 0.385% to 3.5% 28744602432.65 225622196116.58 222369714439.54 31997084109.69

Ltd. Group

Total / / / 28744602432.65 225622196116.58 222369714439.54 31997084109.69

2. Lending business

√ Applicable □ Not applicable

Unit and Currency: RMB

Changes of the period

Total amount Total amount

Balance as at deposited withdrawn Balance as at

Range of loan the beginning during the during the the end of the

Related party Relationship Loan limit interest of the period period period period

Haier Finance Subsidiary of 7 billion 1.81%–2.00% 336507659.12 53834130.12 282673529.00

Co. Ltd. Haier Group

Total / / / 336507659.12 53834130.12 282673529.00

72 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

3. Trustee business or other finance businesses

√ Applicable □ Not applicable

Unit and Currency: RMB

Actual number

Related party Relationship Type of business Total amount of occurrence

Haier Finance Co. Subsidiary of Haier Foreign exchange 5.5 billion 188966929.21

Ltd. Group derivatives

products

Haier Finance Co. Subsidiary of Haier Service charge 80 million 13688276.03

Ltd. Group

4. Others

□ Applicable √ Not applicable

(VI) Other material related transactions

□ Applicable √ Not applicable

(VII) Others

□ Applicable √ Not applicable

Haier Smart Home Co. Ltd. Interim Report 2022 73Section VI Significant Issues

XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION

1 Trusteeship contracting and leasing

□ Applicable √ Not applicable

2 Significant guarantees performed and outstanding during the reporting period

√ Applicable □ Not Applicable

Unit and Currency: RMB10’000

External guarantees provided by the Company (excluding guarantees for subsidiaries)

Date of

Relationship occurrence Whether

between the of the Whether the Overdue Whether Related-

guarantor guarantee Commencement Expiry date Status of guarantee Whether the amount of there is a party

and the listed Secured Amount of (date of date of of Type of principle Collateral has been guarantee the counter- guarantee

Guarantor company party guarantee agreement) guarantee guarantee guarantee liabilities (if any) fulfilled is overdue guarantee guarantee or not Relationship

Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)

Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)

Guarantees provided by the Company for subsidiaries

Total amount of guarantees for subsidiaries occurred during the reporting period 1133669

Total balance of guarantees for subsidiaries at the end of the reporting period (B) 1013666

Total amount of guarantees provided by the Company (including guarantees for subsidiaries)

Total amount of guarantee (A + B) 1013666

Ratio of total amount of guarantees to net assets of the Company (%) 11.8

Including:

Amount of guarantees for shareholders ultimate controllers and their related parties (C) 0

Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) 210252

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) 210252

Explanation of possibly bearing related discharge duty for premature guarantees Not applicable

Explanation of guarantee status None

3 Other major contracts

□ Applicable √ Not Applicable

74 Haier Smart Home Co. Ltd. Interim Report 2022Section VI Significant Issues

XII. STATEMENT ON OTHER SIGNIFICANT EVENTS

√ Applicable □ Not Applicable

(1) Entrusted wealth management: By the end of the reporting period the balance of the Company’s

entrusted wealth management amounted to RMB3.692 billion including two parts: * temporarily-

idle fundraising wealth management: at the end of December 2018 the Company’s proceeds for

the issuance of convertible corporate bonds were fully landed. In order to improve the yield of

temporarily-idle funds the Company intended to carry out cash management with the amounts not

exceeding RMB0.5 billion after approved by the Board of Directors. By the end of the reporting

period the balance of the entrusted wealth management amounted to RMB75 million; *

Temporary-idle funds wealth management by the Company and certain subsidiaries: Under the

premise of ensuring sufficient capital required by the principal operating activities and daily

operations the Company and certain subsidiaries purchased some low risk wealth management

products and structured deposits from major commercial banks to improve the yield of temporarily-

idle funds and the return for shareholders within the authority of the president’s office meeting and

under the condition of ensuring fund safety. By the end of the reporting period the balance of

the entrusted wealth management amounted to RMB3.617 billion.

(2) Progress of the A-share repurchase: On 30 March 2022 the Company convened the 27th meeting

of the 10th session of the Board of Directors which considered and approved the Resolution in

Relation to the Repurchase Plan of a Portion of Public A Shares of Haier Smart Home Co. Ltd.It approved the Company to use its own funds to repurchase a portion of A shares of the

Company by way of centralised bidding. The repurchase price is no more than RMB35 per share

and the proposed total repurchase amount is no more than RMB3.0 billion and no less than

RMB1.5 billion. The period of this repurchase is within 12 months from the date the Board

considered and approved the resolution of repurchase of shares. As at the end of the reporting

period the Company had repurchased a total of 55702939 shares representing 0.59% of the

total share capital of the Company. The highest price purchased was RMB26.00 per share and

the lowest price was RMB23.50 per share and the amount paid was RMB1406719792.04. For

details please refer to the announcements on the related progress disclosed by the Company on

a monthly basis.

(3) Progress of the Shareholding Increase by shareholders: On 8 March 2022 Qingdao Haichuangzhi

Management Consulting Enterprise (Limited Partnership) (hereinafter referred to as

“Haichuangzhi”) a concerted actor of Haier Group Corporation (the actual controller of Haier

Smart Home Co. Ltd.) informed the Company that Haichuangzhi intended to increase its

shareholding of the Company’s A shares within the time frame permitted by relevant laws and

regulations in the next 6 months with the amount no less than RMB200 million and no more

than RMB350 million (including the increased shares of the Shareholding Increase). As at the end

of the reporting period the Shareholding Increase was completed. Haichuangzhi’s shareholding of

the Company’s A shares increased by 15712200 accumulatively with an amount of

shareholding increase of approximately RMB347719237.42. For details please refer to the

Announcement of Haier Smart Home Co. Ltd. on the Increase in Shareholding of the Company

by Actual Controller’s Concerted Actor and the Announcement of Haier Smart Home Co. Ltd.on Implementation Result of the Increase in Shareholding of the Company by Actual Controller’s

Concerted Actor disclosed on 9 March 2022 and 19 March 2022 respectively and other related

announcements.Haier Smart Home Co. Ltd. Interim Report 2022 75Section VII Changes in Shares and

Information About Shareholders

I. CHANGES IN SHARE CAPITAL

(I) Table of Changes in shares

1. Table of Changes in shares

Prior to changes Increase/decrease in shares After changes

Issue Reserves

Percentage of new Bonus converted to Percentage

Amount (%) shares shares shares Others Sub-total Amount (%)

I. Restricted shares

1. State-owned

shares — — — — — — — — —

2. Shares held by

state-owned

legal entities — — — — — — — — —

3. Other domestic

entities held

shares — — — — — — — — —

Including:

Shares held by

domestic

non-state-

owned legal

entities — — — — — — — — —

Shares held by

domestic

individuals — — — — — — — — —

4. Shares held by

foreign entities — — — — — — — — —

Including:

Shares held by

offshore

legal entities — — — — — — — — —

Shares held by

offshore

individuals — — — — — — — — —

II. Non-restricted

shares 9398704530 100.00 41413600 — — 6673840 48087440 9446791970 100.00

1. Ordinary shares

in RMB 6308552654 67.12 — — — — — 6308552654 66.78

2. Domestically

listed

foreign-owned

Shares — — — — — — — — —

3. Offshore listed

foreign-owned

Shares 3090151876 32.88 41413600 — — 6673840 48087440 3138239316 33.22

4. Others — — — — — — — — —

III. Total shares 9398704530 100.00 41413600 — — 6673840 48087440 9446791970 100.00

76 Haier Smart Home Co. Ltd. Interim Report 2022Section VII Changes in Shares and Information About Shareholders

2. Statement on the changes in shares

√ Applicable □Not Applicable

(1) H-share convertible bonds: On 27 October 2020 the China Securities RegulatoryCommission issued the “Reply to the Approval of Issuance of Overseas Listed ForeignShares and Convertible Corporate Bonds by Haier Smart Home Co. Ltd.” 《( 关 于 核 准海尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng Jian

Xu Ke [2020] No. 2768) which approved that: (1) the Company to issue not more

than 2856526138 overseas listed foreign shares (including additional shares issued

to holders of convertible corporate bonds not exceeding HK$8.0 billion or equivalent

in foreign currencies upon the exercise of the convertible rights) with a par value of

RMB1 each all of which are ordinary shares. After the completion of this issuance

the Company can be listed on the main board of the Stock Exchange of Hong Kong

Limited (hereinafter referred to as the “Hong Kong Stock Exchange”); (2) the issuance

of corporate bonds not exceeding HK$8.0 billion or equivalent in foreign currencies

that can be converted into the Company’s overseas listed foreign shares by the

overseas wholly-owned subsidiaries guaranteed by the Company. On 23 December

2020 2448279814 H shares of the Company issued for the privatisation of Haier

Electronics (a Hong Kong listed company) were listed and traded on the Main Board

of the Hong Kong Stock Exchange and the related convertible bonds under the H

share convertible bonds scheme amounting to HK$7993 million became valid and in

effect immediately after the listing. During the reporting period HK$124000000 of

the convertible bonds were converted into a total of 6673840 H shares of the

Company and the outstanding amount was HK$275000000.

(2) Placing of H share: Pursuant to the Resolution on Granting General Mandate to the

Board of Directors on Additional Issuance of H shares of the Company considered

and passed at the Company’s 2020 Annual General Meeting the Resolution of Haier

Smart Home Co. Ltd. on the Issue and Listing of New H Shares on the Main Board

of the Stock Exchange of Hong Kong Limited considered and passed at the 23rd

meeting of the 10th session of the Board of Directors of the Company etc. and theChina Securities Regulatory Commission’s “Reply to the Approval of Issuance ofOverseas Listed Foreign Shares by Haier Smart Home Co. Ltd.” 《( 关于核准海尔智家股份有限公司发行境外上市外资股的批复》) (Zheng Jian Xu Ke [2021] No. 4055) the

Company can additionally issue no more than 73000000 overseas listed foreign

shares (H shares) with a par value of RMB1 each all of which are ordinary shares.On the 26th meeting of the 10th session of the Board of Directors of the Company

on 11 January 2022 the Resolution on the Placing of New H Shares Under the

General Mandate of Haier Smart Home Co. Ltd. was considered and passed and

41413600 H shares will be issued by the Company.

Haier Smart Home Co. Ltd. Interim Report 2022 77Section VII Changes in Shares and Information About Shareholders

On 21 January 2022 in accordance with the aforesaid resolutions and reply the

Company issued 41413600 overseas listed foreign shares (H shares). The new

shares accounted for 0.439% of the total number of issued shares and 1.448% of the

total number of H shares respectively upon completion of placing and the Stock

Exchange of Hong Kong Limited has granted the approval for the listing of and

permission to deal in the shares on its Main Board.Based on the above during the reporting period the share capital of the Company

was changed from 9398704530 shares at the beginning of the reporting period to

9446791970 shares.

3. Effect of changes in shares on the financial indicators such as earnings per share

and net assets per share (if any) after the reporting period to the disclosure date

of interim report

√ Applicable □ Not Applicable

For the interim period in 2022 the Company recorded a net profit attributable to

shareholders of the parent company of RMB7949084472.70 and equity attributable to

owners of the parent company as at the end of the reporting period of

RMB86251016004.21 representing earnings per Share of RMB0.841 and net asset per

Share of RMB9.130 based on the total share capital as at the end of the reporting period

of 9446791970 Shares; and earnings per Share of RMB0.841 and net asset per Share of

RMB9.129 based on the total share capital as at the date of disclosure of the interim

report of 9448155076 Shares.

4. Other disclosure deemed necessary by the Company or required by securities

regulatory authorities

□ Applicable √ Not Applicable

(II) Changes in shares with selling restrictions

□ Applicable √ Not Applicable

II. INFORMATION ON SHAREHOLDERS

(I) Total number of shareholders:

Total number of ordinary shareholders by the end of the reporting period 150163

Total numbers of preferential shareholders with restoration of voting rights 0

by the end of the reporting period

78 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 — 2239863660 23.71 — Unknown — Unknown

Haier COSMO Co. Ltd. — 1258684824 13.32 — None — Domestic non-state-

(海尔卡奥斯股份有限公司) owned legal entity

Haier Group Corporation — 1072610764 11.35 — None — Domestic non-state-

owned legal entity

Hong Kong Securities Clearing — 715059902 7.57 — None — Unknown

Co. Ltd.HCH (HK) INVESTMENT — 538560000 5.70 — None — Foreign legal entity

MANAGEMENT CO. LIMITED

China Securities Finance — 182592654 1.93 — None — Unknown

Corporation Limited

Qingdao Haier Venture & — 172252560 1.82 — None — Domestic non-state-

Investment Information Co. owned legal entity

Ltd. (青岛海尔创业投资咨询

有限公司)

Qingdao Haichuangzhi — 118724416 1.26 — None — Domestic non-state-

Management Consulting owned legal entity

Enterprise (Limited

Partnership) (青岛海创智管理

咨询企业(有限合伙))

ALIBABA INVESTMENT LIMITED — 83823993 0.89 — Unknown — Foreign legal entity

China Merchant Bank Co. Ltd. — 78018741 0.83 — None — Unknown

— Xingquan Herun mixed

securities investment fund

Haier Smart Home Co. Ltd. Interim Report 2022 79Section 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 2239863660 Overseas listed foreign 2239863660

LIMITED shares

Haier COSMO Co. Ltd. 1258684824 RMB ordinary 1258684824

(海尔卡奥斯股份有限公

司)

Haier Group 1072610764 RMB ordinary 1072610764

Corporation

Hong Kong Securities 715059902 RMB ordinary 715059902

Clearing Co. Ltd.HCH (HK) INVESTMENT 538560000 Overseas listed foreign 538560000

MANAGEMENT CO. shares

LIMITED

China Securities Finance 182592654 RMB ordinary 182592654

Corporation Limited

Qingdao Haier Venture & 172252560 RMB ordinary 172252560

Investment Information

Co. Ltd.(青岛海尔创业投资咨

询有限公司)

Qingdao Haichuangzhi 118724416 RMB ordinary 118724416

Management

Consulting Enterprise

(Limited Partnership)

(青岛海创智管理咨询企业(有限合伙))

ALIBABA INVESTMENT 83823993 Overseas listed foreign 83823993

LIMITED shares

China Merchant Bank 78018741 RMB ordinary 78018741

Co. Ltd. — Xingquan

Herun mixed

securities investment

fund

Explanation on The repurchase accounts of the Company held a total of

repurchase account of 109754498 shares

top ten shareholders

80 Haier Smart Home Co. Ltd. Interim Report 2022Section VII Changes in Shares and Information About Shareholders

Number of

tradable shares

held without

selling

Name of shareholder restrictions Class and number of shares

Class Number

Explanation on Nil

delegated voting

rights entrusted

voting rights

abstained voting

rights of the above

shareholders

Related parties or (1) Haier COSMO Co. Ltd. ( 海尔卡奥斯股份有限公司 ) is a

parties acting in subsidiary of Haier Group Corporation. Haier Group

concert among the Corporation holds 51.20% of its equity. Qingdao Haier

aforesaid Venture & Investment Information Co. Ltd. (青岛海尔创业投

shareholders 资咨询有限公司 ) HCH (HK) INVESTMENT MANAGEMENT

CO. LIMITED and Qingdao Haichuangzhi Management

Consulting Enterprise (Limited Partnership) (青岛海创智管理咨询企业(有限合伙)) are parties acting in concert with Haier Group

Corporation;

(2) The Company is not aware of the existence of any connections

of other shareholders.Explanation of Not applicable

preferential

shareholders with

restoration of voting

rights and their

shareholdings

Note: (1) HKSCC NOMINEES LIMITED is the Collection Account for the shareholders of the Company’s H-shares which is

the original data provided by the securities registration agency of Hong Kong China to the Company after the

merger according to local market practices and technical settings not representing the ultimate shareholder.

(2) As at the end of the reporting period Qingdao Haichuangzhi Management Consulting Enterprise (Limited

Partnership) (青岛海创智管理咨询企业(有限合伙)) engaged in refinancing and securities lending business

involving a total of 1898000 shares whilst the ownership of which had not been transferred. The actual number

of shares held by it totaled 120622416 shares.Number of shares held by top ten shareholders with selling restrictions and the selling

restrictions

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 81Section VII Changes in Shares and Information About Shareholders

(III) Strategic investors or general legal persons who became the top ten

shareholders due to placing of new shares

□ Applicable √ Not Applicable

III. DIRECTORS SUPERVISORS SENIOR MANAGEMENT

(I) Changes of shareholding of current and retired directors supervisors and senior

management during the reporting period

□ Applicable √ Not Applicable

Other explanations

□ Applicable √ Not Applicable

(II) Incentive share option granted to directors supervisors and senior management

during the reporting period

√ Applicable □ Not Applicable

Unit: 10000 shares

Number of Exercisable Shares from

Number of stock options shares stock option Number of

stock options newly granted options exercised stock options

held at the during the during the during the

held at the

beginning of reporting reporting reporting end of the

Name Position the period period period period period

Li Huagang Director 91.39 0 0 0 91.39

Gong Wei Director 45.70 0 0 0 45.70

Xie Juzhi Senior Management 91.39 0 0 0 91.39

Li Pan Senior Management 45.70 0 0 0 45.70

Song Yujun Senior Management 31.21 0 0 0 31.21

Zhao Yanfeng Senior Management 46.82 0 0 0 46.82

Huang Xiaowu Senior Management 45.70 0 0 0 45.70

Wu Yong Senior Management 22.85 0 0 0 22.85

Li Yang Senior Management 45.70 0 0 0 45.70

Guan Jiangyong Senior Management 22.85 0 0 0 22.85

Liu Xiaomei Senior Management 0 11.65 0 0 11.65

Total / 489.31 11.65 0 0 500.96

82 Haier Smart Home Co. Ltd. Interim Report 2022Section VII Changes in Shares and Information About Shareholders

(III) Other explanations

□ Applicable √ Not Applicable

IV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATE

CONTROLLER

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 83Section VIII Relevant Information of

Preferred Shares

□ Applicable √ Not Applicable

84 Haier Smart Home Co. Ltd. Interim Report 2022Section IX Relevant Information of

Corporate Bonds

I. ENTERPRISE BOND CORPORATE BOND AND NON-FINANCIAL

CORPORATE DEBT FINANCING INSTRUMENTS

□ Applicable √ Not Applicable

II. CONVERTIBLE CORPORATE BOND

√ Applicable □ Not Applicable

(1) Convertible bond issueOn 27 October 2020 CSRC issued “Reply to the Approval of Issuance of Overseas ListedForeign Shares and Convertible Corporate Bonds by Haier Smart Home Co. Ltd.” 《( 关于核准海尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng Jian Xu Ke [2020]

No. 2768) (hereinafter referred to as “CSRC Reply”) to approve: (1) Haier Smart Home to issue

not more than 2856526138 overseas listed foreign shares (including shares to be issued

pursuant to the exercise of conversion rights by the holders of convertible corporate bonds with

an amount of not more than HK$8.0 billion or equivalent in any foreign currency) with a par value

of RMB1 all registered as ordinary shares. Upon the completion of the issue Haier Smart Home

may be listed on the main board of the Hong Kong Stock Exchange; (2) With the guarantee of

Haier Smart Home its wholly-owned foreign subsidiary issued overseas corporate bonds with an

amount of not more than HK$8.0 billion or equivalent in any foreign currency convertible into

overseas listed foreign shares of the issuer. Pursuant to this and approval from relevant parties

2448279814 H-shares and convertible bonds (exchangeable bonds of HK$8.0 billion issued in

November 2017 were converted into convertible bonds resulting in valid convertible bonds of

HK$7.993 billion which were convertible into H-shares of the Company) were issued by the

Company and Harvest International Company a wholly-owned subsidiary of the Company on the

Hong Kong Stock Exchange on 23 December 2020 respectively. Please refer to the prospectus

and other relevant documents disclosed by the Company in the Hong Kong market during the

reporting period and the Report on the Implementation of Significant Asset Acquisition and

Connected Transactions 《( 重大资产购买暨关联交易实施情况报告书》) and other documents

disclosed by the Company on 26 December 2020 for details.For the above-mentioned bonds 105.11% of the remaining par value of the bonds were repaid

in an one-off repayment of principal and interest upon maturity.

(2) Convertible bond holders and guarantors for the Reporting Period

Name of convertible corporate bond Harvest International Company

HK$8000000000 Zero Coupon

Guaranteed Convertible Bonds due

2022 (hereafter “H Share ConvertibleBonds”)

Number of convertible bond holders as at the end 1

of the period

Guarantor of the Company’s convertible bonds Haier Smart Home Co. Ltd.Material changes of the profitability asset and Nil

credibility of the guarantor

Haier Smart Home Co. Ltd. Interim Report 2022 85Section IX Relevant Information of Corporate Bonds

Top 10 holders of convertible bonds are as follows:

Holdings as at the Holding

end of the period percentage

Name of holder of corporate convertible bonds (RMB) (%)

HSBC Nominees (Hong Kong) Limited 275000000 100

Note: (1) the aforementioned bonds as at the end of the period are denominated in Hong Kong Dollar; (2) H Share Convertible

Bonds of the Company are held by HSBC Nominees (Hong Kong) Limited as the sole legal holder who is not the

ultimate holder. Information on the ultimate holders of the bonds is only stored in the clearing system and without

the authorization from the ultimate holder the clearing system shall not directly provide the detailed list of ultimate

bond holders to any party.

(3) Conversion of convertible bonds for the Reporting Period

Unit and Currency: HKD

Name of convertible Prior to the After the

corporate bond changes Increase/decrease changes

Conversion Redemption Resale

H Share Convertible

Bonds 399000000 124000000 — — 275000000

(4) Cumulative conversion of convertible bond for the Reporting Period

Currency: HKD

Name of convertible corporate bond H Share Convertible Bonds

Amount of conversion for the Reporting Period (HKD) 124000000

Number of conversion for the Reporting Period (Shares) 6673840

Cumulative number of conversion (Shares) 409884729

Percentage of cumulative number of conversion to total

issued shares of the Company prior to the conversion (%) 4.54

Outstanding amount (HKD) 275000000

Percentage of outstanding amount to total amount of

convertible bonds issued (%) 3.44

(5) Historical adjustment of conversion price

Unit and Currency: HKD

Name of convertible corporate bond H Share Convertible Bonds

Latest conversion price as at the end of the Reporting

Period 18.58

86 Haier Smart Home Co. Ltd. Interim Report 2022Section IX Relevant Information of Corporate Bonds

(6) Liabilities change in credit and cash arrangements of repayment in the coming

year of the Company

As at the end of the reporting period liabilities of the Company amounted to

RMB139076271000 in which current liabilities amounted to RMB127717442200 and non-

current liabilities amounted to RMB11358828800.The Company remains stable in every operating condition with reasonable asset structure and

good credibility and is capable of providing stable and sufficient working capital for the

repayment of the interests and principal of convertible corporate bonds in the coming year.

(7) Other information on convertible bonds

On 23 November 2017 the first 2017 Extraordinary General Meeting of the Company adopted

the Resolution of Qingdao Haier Co. Ltd. on the Scheme for Public Offering of Convertible

Corporate Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to the

resolution at this general meeting and the approval documents of the China Securities Regulatory

Commission and others the Company completed the issue of convertible corporate bonds in

December 2018 with a total issue amount of RMB3007.49 million. The bonds were listed on 18

January 2019 which is referred to as “Haier Convertible Bonds” and its bond code is 110049.For details please refer to the Prospectus for the Public Offering of A-share Convertible

Corporate Bonds by Qingdao Haier Co. Ltd. as disclosed on 14 December 2018 and the

Announcement on the Listing of Convertible Corporate Bonds by Qingdao Haier Co. Ltd. as

disclosed on 16 January 2019 and other relevant documents. As the convertible bonds in 2019

met the redemption conditions and the Board of Directors of the Company decided to exercise

the redemption right after consideration and approval the Company redeemed the balance of the

convertible bonds in full up to the registered amount on redemption registration date. After the

redemption the convertible bonds of the Company were delisted on 17 December 2019. At present

the A-share convertible bonds have ceased to be in existence but the funds raised from the

issuance of the bonds have not been fully utilized. As of 30 June 2022 RMB2791.68 million of

the funds raised from A-share convertible bonds has been utilized with a balance of RMB260.91

million (the account balance includes the income generated from the purchase of wealth

management products interest on demand deposits foreign exchange gains and losses and the

not-yet-invested capital raised). For details of the use of funds please refer to the Special Report

on the Deposit and Actual Use of Raised Funds in the First Half of 2022 of Haier Smart Home Co.Ltd. which was disclosed on the same date as this report.Haier Smart Home Co. Ltd. Interim Report 2022 87Section X Financial Report

I. AUDIT REPORT

□ Applicable √ Not Applicable

II. FINANCIAL STATEMENTS

Consolidated Balance Sheet

30 June 2022

Prepared by: Haier Smart Home Co. Ltd.Unit and Currency: RMB

Items Notes Closing balance Opening balance

Current assets:

Monetary funds VII.1 50316121259.28 45971035763.51

Provision of settlement fund

Funds lent

Financial assets held for trading VII.2 2560172076.58 2786075529.09

Derivative financial assets VII.3 163084726.42 79819974.01

Bills receivable VII.4 8417636171.41 13354791068.29

Accounts receivable VII.5 17920101868.72 14642659450.22

Financing receivables

Prepayments VII.6 868112660.47 857234399.26

Premiums receivable

Reinsurance accounts receivable

Reinsurance contract reserves receivable

Other receivables VII.7 2156760190.99 1956721621.66

Including: Interest receivable 400015260.13 294379438.82

Dividend receivable

Financial assets purchased under resale

agreements

Inventories VII.8 41006635494.22 39901262689.59

Contract assets VII.9 280621191.36 304434294.70

Assets held for sale

Non-current assets due in one year

Other current assets VII.10 4515557117.17 3920750476.57

Total current assets 128204802756.62 123774785266.90

Non-current assets:

Loans and advances granted

Debt investments

Other debt investments

Long-term receivables 306402281.56 308998755.30

Long-term equity investments VII.11 24110645622.66 23200884340.57

Investments in other equity instruments VII.12 4852445212.91 4848709438.96

88 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Items Notes Closing balance Opening balance

Other non-current financial assets

Investment properties VII.13 25624249.19 24964888.48

Fixed assets VII.14 24242589167.64 22307090168.64

Construction in progress VII.15 4858973923.48 4183263398.79

Biological assets for production

Oil and gas assets

Right-of-use assets VII.16 3664479071.10 2734678906.53

Intangible assets VII.17 9578002832.45 9550384743.90

Development cost VII.18 225378688.91 227892229.13

Goodwill VII.19 22746678157.03 21827103060.76

Long-term prepaid expenses VII.20 686383400.01 588796706.24

Deferred income tax assets VII.21 1399363197.75 1857448518.29

Other non-current assets VII.22 1750990973.29 2164384013.14

Total non-current assets 98447956777.98 93824599168.73

Total assets 226652759534.60 217599384435.63

Current liabilities:

Short-term borrowings VII.23 13159569303.47 11226212134.39

Borrowings from central bank

Due to banks and other financial

institutions

Financial liabilities held for trading VII.24 79270648.00 6294014.40

Derivative financial liabilities VII.25 77066966.55 80212433.24

Bills payable VII.26 27955088267.08 25023238406.72

Accounts payable VII.27 38977127139.49 42396109648.76

Receipts in advance

Contract liabilities VII.28 5397435938.66 10027091593.60

Disposal of repurchased financial assets

Absorbing deposit and deposit in inter-

bank market

Customer deposits for trading in securities

Amounts due to issuer for securities

underwriting

Payables for staff’s remuneration VII.29 3155954164.86 4115939635.24

Taxes payable VII.30 2748011705.59 2605508703.56

Other payables VII.31 22391504810.19 17533370017.01

Including: Interest payable

Dividend payable 4321692240.21 10639313.22

Fees and commissions payable

Reinsurance Accounts payables

Liabilities held for sale

Non-current liabilities due within one year VII.32 12490218783.46 9624339170.46

Other current liabilities VII.33 1286194473.81 2238767551.40

Total current liabilities 127717442201.16 124877083308.78

Haier Smart Home Co. Ltd. Interim Report 2022 89Section X Financial Report

Items Notes Closing balance Opening balance

Non-current liabilities:

Deposits for insurance contracts

Long-term borrowings VII.34 2119243998.96 3038573824.53

Bonds payable VII.35 334730048.82

Including: Preference shares

Perpetual bonds

Lease liabilities VII.36 2763944633.73 1960894981.47

Long-term payables VII.37 49353671.92 99602707.76

Long-term payables for staff’s

remuneration VII.38 1172642077.88 1173151761.64

Estimated liabilities VII.39 1776817160.27 1948565477.11

Deferred income VII.40 906543570.12 852794567.20

Deferred income tax liabilities VII.21 2517001943.72 2121803173.83

Other non-current liabilities 53281708.05 49461683.90

Total non-current liabilities 11358828764.65 11579578226.26

Total liabilities 139076270965.81 136456661535.04

Owners’ equity (or shareholders’

equity):

Paid-in capital (or share capital) VII.41 9446791970.00 9398704530.00

Other equity instruments VII.42 81340387.43 118017507.59

Including: Preference shares

Perpetual bonds

Capital reserve VII.43 23820929638.40 22579374739.46

Less: treasury stock 3962689830.07 2424038819.70

Other comprehensive income VII.44 1689673248.96 –1176851699.92

Special reserve

Surplus reserve VII.45 3438615909.84 3438615909.84

General risk provisions

Undistributed profits VII.46 51736354679.65 47917912260.15

Total equity attributable to owners (or

shareholders) of the Parent Company 86251016004.21 79851734427.42

Minority shareholders’ interests 1325472564.58 1290988473.17

Total owners’ equity (or shareholders’

equity) 87576488568.79 81142722900.59

Total liabilities and owners’ equity

(or shareholders’ equity) 226652759534.60 217599384435.63

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

90 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Balance Sheet of the Parent Company

30 June 2022

Prepared by: Haier Smart Home Co. Ltd.Unit and Currency: RMB

Items Notes Closing balance Opening balance

Current Assets:

Monetary funds 4514223019.08 4043535735.48

Financial assets held for trading

Derivative financial assets

Bills receivable

Accounts receivable XVIII.1 594883399.99 546532442.90

Financing receivables

Prepayments 4228627.14 275052864.92

Other receivables XVIII.2 18054815019.15 16245280168.41

Including: Interest receivable 85694396.74 51632471.99

Dividend receivable 4015840000.00 3615840000.00

Inventories 42213555.64 1139135.32

Contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 1576901109.42 337476209.01

Total current assets 24787264730.42 21449016556.04

Non-current assets:

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments XVIII.3 52725448184.23 52513760277.77

Investments in other equity instruments 1615450032.92 1615450032.92

Other non-current financial assets

Investment properties

Fixed assets 181459945.43 179789817.34

Construction in progress 10549969.42 17569516.17

Biological assets for production

Oil and gas assets

Right-of-use assets 787591.26 1217186.49

Intangible assets 51705499.18 55171485.39

Development cost

Goodwill

Long-term prepaid expenses 3120559.80 3781398.54

Deferred income tax assets 159338211.77 159338211.77

Other non-current assets 798000000.00 803323404.28

Haier Smart Home Co. Ltd. Interim Report 2022 91Section X Financial Report

Items Notes Closing balance Opening balance

Total non-current assets 55545859994.01 55349401330.67

Total assets 80333124724.43 76798417886.71

Current liabilities:

Short-term borrowings

Financial liabilities held for trading

Derivative financial liabilities

Bills payable

Accounts payables 282420326.44 183690889.86

Receipts in advance

Contract liabilities 12605139.93 12605139.93

Payables for staff’s remuneration 637966.36 12323670.21

Taxes payable 1539895.66 1747023.87

Other payables 39882708592.97 34484355762.60

Including: Interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due within one year 897357.83 877995.65

Other current liabilities 8517052.13 5420156.55

Total current liabilities 40189326331.32 34701020638.67

Non-current liabilities:

Long-term borrowings 2100000000.00

Bonds payable

Including: Preference shares

Perpetual bonds

Lease liabilities

Long-term payable

Long-term payables for staff’s

remuneration

Estimated liabilities

Deferred income 11730000.00 19270000.00

Deferred income tax liabilities 448965654.25 448965654.25

Other non-current liabilities

Total non-current liabilities 2560695654.25 468235654.25

Total liabilities 42750021985.57 35169256292.92

Owners’ equity (or Shareholders’

equity):

Paid-in capital (or share capital) 9446791970.00 9398704530.00

Other equity instruments

Including: Preference shares

Perpetual bonds

Capital reserve 27121923173.96 25802279483.13

Less: treasury stock 2902003244.14 1495170675.08

Other comprehensive income 618738786.66 621302944.83

Special reserve

Surplus reserve 2833469684.39 2833469684.39

92 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Items Notes Closing balance Opening balance

Undistributed profits 464182367.99 4468575626.52

Total owners’ equity (or shareholders’

equity) 37583102738.86 41629161593.79

Total liabilities and owners’ equity

(or shareholders’ equity) 80333124724.43 76798417886.71

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

Haier Smart Home Co. Ltd. Interim Report 2022 93Section X Financial Report

Consolidated Profit Statement

January-June 2022

Unit and Currency: RMB

Items Notes 2022 Interim 2021 Interim

I. Total operating revenue 121857522462.22 111727756211.06

Including: Operating revenue VII.47 121857522462.22 111727756211.06

Interest income

Insurance premiums earned

Fee and commission income

II. Total cost of operations 112549408749.25 104308762442.84

Including: Operating cost VII.47 85061133319.20 78156467866.57

Interest expenses

Fee and commission expenses

Insurance withdrawal payment

Net payment from indemnity

Net provisions withdrew for insurance

liability

Insurance policy dividend paid

Reinsurance cost

Taxes and surcharges VII.48 357165605.43 339488659.16

Selling expenses VII.49 17605612224.80 16731407296.02

Administrative expenses VII.50 5132033156.92 5047535410.71

R&D expenses VII.51 4595691525.07 3738316873.21

Financial expenses VII.52 –202227082.17 295546337.17

Including: Interest expenses 345810365.32 363287457.45

Interest income 362045401.51 264658985.86

Add: other income VII.53 546242698.94 378116328.72

investment income (losses are

represented by “–”) VII.54 1170336743.41 1136280339.22

Including: Investment income of

associates and joint ventures

Income generated from the derecognition

of financial assets measured at

amortized cost (losses are represented

by “–”)

Exchange gain (losses are represented by

“–”)

Gains on net exposure hedges (losses are

represented by “–”)

Income from change in fair value (losses

are represented by “–”) VII.55 –118790175.68 64269511.32

Loss on credit impairment (losses are

represented by “–”) VII.56 –258076846.14 –44031423.21

94 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Items Notes 2022 Interim 2021 Interim

Loss on assets impairment (losses are

represented by “–”) VII.57 –707061947.81 –653387326.88

Gain from disposal of assets (losses are

represented by “–”) VII.58 31589207.10 142414954.25

III. Operating profit (losses are represented

by “–”) 9972353392.79 8442656151.64

Add: non-operating income VII.59 68854227.41 80167397.14

Less: non-operating expenses VII.60 43535551.68 51064696.04

IV. Total profit (total losses are represented

by “–”) 9997672068.52 8471758852.74

Less: income tax expense VII.61 2000741926.36 1525749793.00

V. Net profit (net losses are represented by

“–”)7996930142.166946009059.74

(I) Classification by continuous operation

1. Net profit from continuous operation

(net losses are represented by “–”) 7996930142.16 6946009059.74

2. Net profit from discontinued

operation (net losses are

represented by “–”)

(II) Classification by ownership of the

equity

1. Net profit attributable to shareholders

of the Parent Company (net losses

are represented by “–”) 7949084472.70 6858902854.55

2. Profit or loss attributable to minority

shareholders (net losses are

represented by “–”) 47845669.46 87106205.19

VI. Other comprehensive income net of tax VII.62 2864992299.95 –296041116.28

(I) Other comprehensive income

attributable to owners of the Parent

Company net of tax 2866524948.88 –293997754.26

1. Other comprehensive income that

cannot be reclassified into the

profit or loss —45646560.54 38290357.71

(1) Changes arising from

re-measurement of defined

benefit plans 4562166.91 –595263.81

(2) Other comprehensive income

that cannot be transferred into

profit or loss under equity

method

(3) Changes in fair value of

investments in other equity

instruments —50208727.45 38885621.52

Haier Smart Home Co. Ltd. Interim Report 2022 95Section X Financial Report

Items Notes 2022 Interim 2021 Interim

(4) Changes in fair value of credit

risks of the enterprise

2. Other comprehensive income to be

reclassified into the profit or loss 2912171509.42 –332288111.97

(1) Other comprehensive income

that can be transferred into

profit or loss under equity

method 108350151.43 55956231.90

(2) Changes in fair value of other

debt investments

(3) Reclassified financial assets that

are credited to other

comprehensive income

(4) Credit impairment provision for

other debt investments

(5) Reserve for cash flow hedging 25995214.10 112586182.47

(6) Exchange differences on

translation of financial

statements denominated in

foreign currencies 2777826143.89 –500830526.34

(7) Others

(II) Other comprehensive income

attributable to minority shareholders

net of tax —1532648.93 –2043362.02

VII. Total comprehensive income 10861922442.11 6649967943.46

(I) Total comprehensive income

attributable to the owners of Parent

Company 10815609421.58 6564905100.29

(II) Total comprehensive income

attributable to the minority

shareholders 46313020.53 85062843.17

VIII. Earnings per share:

(I) Basic earnings per share (RMB/share) XVIII.1 0.85 0.74

(II) Diluted earnings per share (RMB/

share) XVIII.1 0.85 0.73

For business combination under common control occurring in the current period the net profit of the

acquiree before the combination was RMB4473481.70 and the net profit of the acquiree for the previous

period was RMB5535635.66.Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

96 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Profit Statement of the Parent Company

January-June 2022

Unit and Currency: RMB

Items Notes 2022 Interim 2021 Interim

I. Operating income XVIII.4 93323883.33 196151588.84

Less: operating cost XVIII.4 80891389.46 170532414.76

Taxes and surcharges 1171987.68 1174776.60

Selling expenses 4615963.20 1542784.65

Administration expenses 328116657.42 143500790.38

R&D expenses 5806423.66 17296703.96

Financial expenses —42487430.75 –32789762.71

Including: Interest expenses 4530273.29 7372782.23

Interest income 53365585.67 35812614.94

Add: other income 17240565.58 39709407.90

investment income (losses are

represented by “–”) XVIII.5 548236536.95 113153980.76

Including: Investment income of

associates and joint

ventures

Derecognition income on

financial assets

measured at amortized

cost (losses are

represented by “–”)

Gains on net exposure hedges

(losses are represented by “–”)

Income from change in fair value

(losses are represented by “–”)

Loss on credit impairment (losses

are represented by “–”) 116871.97 –7122909.94

Loss on assets impairment (losses

are represented by “–”)

Gain from disposal of assets (losses

are represented by “–”) 35074022.45 142444000.00

II. Operating profit (losses are represented

by “–”) 315876889.61 183078359.92

Add: non-operating income 204216.74 60749.06

Less: non-operating expenses 28698.02 50687.25

III. Total profit (total losses are represented

by “–”) 316052408.33 183088421.73

Less: income tax expenses —15190900.38

IV. Net profit (net losses are represented

by “–”) 316052408.33 198279322.11

Haier Smart Home Co. Ltd. Interim Report 2022 97Section X Financial Report

Items Notes 2022 Interim 2021 Interim

(I) Net profit from continuous operations

(net losses are represented by “–”) 316052408.33 198279322.11

(II) Net profit from discontinued operations

(net losses are represented by “–”)

V. Other comprehensive income net of tax —2564158.17 11664510.69

(I) Other comprehensive income that

cannot be reclassified into the profit or

loss

1. Changes arising from

re-measurement of defined benefit

plans

2. Other comprehensive income that

cannot be transferred into profit or

loss under equity method

3. Changes in fair value of investments

in other equity instruments

4. Changes in fair value of credit risks

of the enterprise

(II) Other comprehensive income to be

reclassified into the profit or loss —2564158.17 11664510.69

1. Other comprehensive income that can

be transferred into profit or loss

under equity method —2564158.17 11664510.69

2. Changes in fair value of other debt

investments

3. Reclassified financial assets that are

credited to other comprehensive

income

4. Credit impairment provision for other

debt investments

5. Reserve for cash flow hedging

6. Exchange differences on translation

of financial statements denominated

in foreign currencies

7. Others

VI. Total comprehensive income 313488250.16 209943832.80

VII. Earnings per share:

(I) Basic earnings per share (RMB/share)

(II) Diluted earnings per share

(RMB/share)

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

98 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Consolidated Cash Flow Statement

January-June 2022

Unit and Currency: RMB

Items Notes 2022 Interim 2021 Interim

I. Cash flow from operating activities:

Cash received from the sale of goods

and rendering services 125785043134.22 117944101751.66

Net increase in customer and inter-bank

deposits

Net increase in borrowing from the

central bank

Net cash increase in borrowing from

other financial institutes

Cash received from premiums under

original insurance contract

Net cash received from reinsurance

business

Net increase in deposits of policy holders

and investment

Cash received from interest fee and

commissions

Net increase in placement from banks

and other financial institutions

Net increase in cash received from

repurchase operation

Net cash received from customer

deposits for trading in securities

Refunds of taxes 1359611570.36 964437758.54

Cash received from other related

operating activities VII.63 841294815.74 737260365.59

Sub-total of cash inflows from operating

activities 127985949520.32 119645799875.79

Cash paid on purchase of goods and

services 89586479170.53 80310181952.46

Net increase in loans and advances of

customers

Net increase in deposits in the PBOC and

inter-bank

Cash paid for compensation payments

under original insurance contract

Net increase in cash lent

Cash paid for interest bank charges and

commissions

Haier Smart Home Co. Ltd. Interim Report 2022 99Section X Financial Report

Items Notes 2022 Interim 2021 Interim

Cash paid for insurance policy dividend

Cash paid to and on behalf of

employees 13701958122.17 12773459633.28

Cash paid for all types of taxes 5091644757.74 5080969771.64

Cash paid to other operation related

activities VII.64 13641619812.66 13038993358.10

Sub-total of cash outflows from operating

activities 122021701863.10 111203604715.48

Net cash flow from operating activities

II. Cash flow from investing activities: VII.67 5964247657.22 8442195160.31

Cash received from recovery of

investments 4997285703.11 2869349936.62

Cash received from return on

investments 421887380.66 313949022.75

Net cash received from the disposal of

fixed assets intangible assets and

other long-term assets 74590057.10 19269652.96

Net cash received from disposal of

subsidiaries and other operating

entities

Other cash received from investment

activities

Sub-total of cash inflows from investing

activities 5493763140.87 3202568612.33

Cash paid on purchase of fixed assets

intangible assets and other long-term

assets 3342824864.02 3155717619.84

Cash paid for investments 6274280514.60 3283612983.20

Net increase in secured loans

Net cash paid on acquisition of

subsidiaries and other operating

entities 37326510.00

Other cash paid on investment activities 250000.00

Sub-total of cash outflows from investing

activities 9654431888.62 6439580603.04

Net cash flow from investing activities —4160668747.75 –3237011990.71

100 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Items Notes 2022 Interim 2021 Interim

III. Cash flow from financing activities:

Cash received from capital contributions 986491004.94 8600000.00

Including: Cash received from capital

contributions by minority

shareholders of subsidiaries

Cash received from borrowings 8044351638.86 4920230964.76

Other cash received from financing

activities VII.65 1000235.35

Sub-total of cash inflows from financing

activities 9031842879.15 4928830964.76

Cash paid on repayment of loans 4667753225.90 11117743195.81

Cash paid on distribution of dividends

profits or repayment of interest

expenses 327338483.19 327295977.88

Including: Dividend and profit paid to

minority shareholders by

subsidiaries

Other cash paid to financing activities VII.66 1876577772.85 3090810896.53

Sub-total of cash outflows from financing

activities 6871669481.94 14535850070.22

Net cash flow from financing activities 2160173397.21 –9607019105.46

IV.Effect of fluctuations in exchange

rates on cash and cash equivalents 230069372.19 –107597142.14

V. Net increase in cash and cash

equivalents 4193821678.87 –4509433078.00

Add: balance of cash and cash

equivalents at the beginning of

the period VII.68 45071366271.21 45738120000.70

VI.Balance of cash and cash equivalents

at the end of the period VII.68 49265187950.08 41228686922.70

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

Haier Smart Home Co. Ltd. Interim Report 2022 101Section X Financial Report

Cash Flow Statement of the Parent Company

January-June 2022

Unit and Currency: RMB

Items Notes 2022 Interim 2021 Interim

I. Cash flow from operating activities:

Cash received from the sale of goods

and rendering of services 25976480.20 4574156292.06

Refunds of taxes 7799497.52 15641231.71

Other cash received from operating

activities 311936036.56 60444554.93

Sub-total of cash inflows from operating

activities 345712014.28 4650242078.70

Cash paid on purchase of goods and

services 141857.64 81405473.91

Cash paid to and on behalf of

employees 24825638.14 138942956.91

Cash paid for all types of taxes 1578405.68 33242176.88

Other cash paid to operation activities 81136892.33 9853987.61

Sub-total of cash outflows from

operating activities 107682793.79 263444595.31

Net cash flow from operating

activities 238029220.49 4386797483.39

II. Cash flow from investing activities:

Cash received from recovery of

investments 803860000.00 273250000.00

Cash received from return on

investments 72346255.88 92194698.15

Net cash received from the disposal of

fixed assets intangible assets and

other long-term assets 35206354.85

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 911412610.73 365444698.15

Cash paid on purchase of fixed assets

intangible assets and other long-term

assets 15544095.62 31022950.45

Cash paid for investments 2173745507.20 231500000.00

102 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Items Notes 2022 Interim 2021 Interim

Net cash paid on acquisition of

subsidiaries and other operating

entities

Other cash paid on investment activities 1521600000.00 75886144.59

Sub-total of cash outflows from

investing activities 3710889602.82 338409095.04

Net cash flow from investing

activities —2799476992.09 27035603.11

III. Cash flow from financing activities:

Cash received from capital contributions 940041004.94

Cash received from borrowings 2100000000.00

Other cash received from financing

activities 1408448043.37

Sub-total of cash inflows from financing

activities 4448489048.31

Cash paid on repayment of borrowings 5520000000.00

Cash paid on distribution of dividends

profits or repayment of interest

expenses 3091905.56 43159752.53

Other cash paid on financing activities 1409796873.02 5359441498.61

Sub-total of cash outflows from

financing activities 1412888778.58 10922601251.14

Net cash flow from financing

activities 3035600269.73 –10922601251.14

IV.Effect of fluctuations in exchange

rates on cash and cash equivalents —3465214.53 5596792.78

V. Net increase in cash and cash

equivalents 470687283.60 –6503171371.86

Add: balance of cash and cash

equivalents at the beginning of

the period 4043535735.48 8286549909.64

VI.Balance of cash and cash equivalents

at the end of the period 4514223019.08 1783378537.78

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

Haier Smart Home Co. Ltd. Interim Report 2022 103Consolidated Statement of Changes in Owner’s Equity

January-June 2022

Unit and Currency: RMB

2022 Interim

Equity attributable to owners of the Parent Company

Other equity instruments

Other

Paid-in capital Preference Perpetual Less: treasury comprehensive General risk Undistributed Total owners’

Items (or share capital) shares bonds Others Capital reserve stock income Special reserve Surplus reserve provision profits Others Sub-total Minority equity equity

I. Closing balance for the previous year 9398704530.00 118017507.59 22549345568.94 2424038819.70 –1176851699.92 3438615909.84 — 47907134328.80 79810927325.55 1272034100.17 81082961425.72

Add: changes in accounting policies

Error correction for prior period

Business combination under common

control 30029170.52 10777931.35 40807101.87 18954373 59761474.87

Others 0.00 0

II. Opening balance for the current year 9398704530.00 118017507.59 22579374739.46 2424038819.70 –1176851699.92 3438615909.84 47917912260.15 79851734427.42 1290988473.17 81142722900.59

III.Increase/decrease for the current period

(decrease is represented by “–”) 48087440.00 –36677120.16 1241554898.94 1538651010.37 2866524948.88 3818442419.50 6399281576.79 34484091.41 6433765668.20

(I) Total comprehensive income 2866524948.88 7949084472.70 10815609421.58 46313020.53 10861922442.11

(II) Capital injection and reduction by

owners 48087440.00 –36677120.16 1238717313.17 1538651010.37 –288523377.36 –11072350.20 –299595727.56

1. Ordinary shares invested by owners 41413600.00 898627404.94 940041004.94 11072350.20 928968654.74

2. Capital contribution by holders of

other equity instruments 6673840.00 –36677120.16 134131566.36 104128286.20 104128286.20

3. Share-based payment included in

owners’ equity 332853517.66 332853517.66 332853517.66

4. Others –126895175.79 1538651010.37 –1665546186.16 –1665546186.16

(III) Profit distribution –4320445666.86 –4320445666.86 –756578.92 –4321202245.78

1. Withdrawal of surplus reserves – 0.00

2. Withdrawal of provisions for general

risks

3. Distribution to owners

(or shareholders) –4320445666.86 –4320445666.86 –756578.92 –4321202245.78

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 2837585.77 189803613.66 192641199.43 192641199.43

IV.Closing balance for the period 9446791970.00 81340387.43 23820929638.40 3962689830.07 1689673248.96 3438615909.84 51736354679.65 86251016004.21 1325472564.58 87576488568.79

Section X Financial Report

104 Haier Smart Home Co. Ltd. Interim Report 20222021 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 9027846441.00 2364195333.79 15007475607.40 28896550.65 –1046216729.06 3045334539.60 38467787059.79 66837525701.87 1294584557.09 68132110258.96

Add: changes in accounting policies 37788663.41 183214768.11 221003431.52 289732.70 221293164.22

Error correction for prior period

Business combination under common

control 30029170.52 7891303.69 37920474.21 17015869.18 54936343.39

Others

II. Opening balance for the current year 9027846441.00 2364195333.79 15037504777.92 28896550.65 –1008428065.65 3045334539.60 38658893131.59 67096449607.60 1311890158.97 68408339766.57

III. Increase/decrease for the current period

(decrease is represented by “–”) 365324040.00 –2215712153.81 7301326543.56 1767258036.36 –293925605.96 3425666565.86 6815421353.29 60278653.37 6875700006.66

(I) Total comprehensive income –293997754.26 6858902854.55 6564905100.29 85062843.17 6649967943.46

(II) Capital injection and reduction by

owners 365324040.00 –2215712153.81 7301398691.86 1767258036.36 3683752541.69 16167229.15 3699919770.84

1. Ordinary shares invested by owners 0.00 0.00

2. Capital contribution by holders of

other equity instruments 397676840.00 –2215712153.81 8095619066.22 6277583752.41 0 6277583752.41

3. Share-based payment included in

owners’ equity

4. Others -32352800.00 –794220374.36 1767258036.36 –2593831210.72 16167229.15 –2577663981.57

(III) Profit distribution –3420918669.85 –3420918669.85 –40951418.95 –3461870088.80

1. Withdrawal of surplus reserves 0.00 0

2. Withdrawal of provisions for general

risks 0.00 0

3. Distribution to owners

(or shareholders) –3420918669.85 –3420918669.85 –40951418.95 –3461870088.80

4. Others

(IV) Internal transfer of owner’s equity

1. Transfer of capital reserves into

capital (or share capital)

2. Transfer of surplus reserves into

capital (or share capital)

3. Surplus reserves used for

remedying loss

4. Changes in defined benefit plans

carried forward to retained

earnings

5. Other comprehensive income

carried forward to retained

earnings

6. Others

(V) Special reserve

1. Withdrawal for the period

2. Utilization for the period

(VI) Others –72148.30 72148.30 –12317618.84 –12317618.84 –12317618.84

IV. Closing balance for the period 9393170481.00 148483179.98 22338831321.48 1796154587.01 –1302353671.61 3045334539.60 42084559697.45 73911870960.89 1372168812.34 75284039773.23

Person in charge of the Company: Li Huagang Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke

Statement of Changes in Owners’ Equity of the Parent Company

January-June 2022

Section X Financial Report

Haier Smart Home Co. Ltd. Interim Report 2022 105Section X Financial Report

Unit and Currency: RMB

2022 Intecim

Other equity instruments

Paid-in capital Other

(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’

Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity

I. Closing balance for the

previous year 9398704530.00 25802279483.13 1495170675.08 621302944.83 2833469684.39 4468575626.52 41629161593.79

Add: changes in accounting

policies

Error correction for prior

period

Others

II. Opening balance for the

current year 9398704530.00 25802279483.13 1495170675.08 621302944.83 2833469684.39 4468575626.52 41629161593.79

III. Increase/decrease for the

current period (decrease is

represented by “–”) 48087440.00 1319643690.83 1406832569.06 –2564158.17 –4004393258.53 –4046058854.93

(I) Total comprehensive income –2564158.17 316052408.33 313488250.16

(II) Capital injection and

reduction by owners 48087440.00 1319643690.83 1406832569.06 –39101438.23

1. Ordinary shares invested

by owners 41413600.00 898627404.94 940041004.94

2. Capital contribution by

holders of other equity

instruments 6673840.00 97454446.20 104128286.20

3. Share-based payment

included in owners’

equity 323222114.26 323222114.26

4. Others 339725.43 1406832569.06 –1406492843.63

(III) Profit distribution –4320445666.86 –4320445666.86

1. Withdrawal of surplus

reserves

2. Distribution to owners

(or shareholders) –4320445666.86 –4320445666.86

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 9446791970.00 27121923173.96 2902003244.14 618738786.66 2833469684.39 464182367.99 37583102738.86

106 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

2021 Interim

Other equity instruments

Paid-in capital Other

(or share Preference Perpetual Less: treasury comprehensive Special Surplus Undistributed Total owners’

Items capital) shares bonds Others Capital reserve stock income reserve reserve profits equity

I. Closing balance for the previous

year 9027846441.00 20408352380.95 –10030704.15 2440188314.15 4349961964.23 36216318396.18

Add: changes in accounting

policies

Error correction for prior

period

Others

II. Opening balance for the

current year 9027846441.00 20408352380.95 –10030704.15 2440188314.15 4349961964.23 36216318396.18

III. Increase/decrease for the

current period (decrease is

represented by “–”) 365324040.00 5085971596.28 1767258036.36 11664510.69 –3222639347.74 473062762.87

(I) Total comprehensive

income 11664510.69 198279322.11 209943832.80

(II) Capital injection and

reduction by owners 365324040.00 5085971596.28 1767258036.36 3684037599.92

1. Ordinary shares invested

by owners -32352800.00 –793935316.13 –826288116.13

2. Capital contribution by

holders of other equity

instruments 397676840.00 5879906912.41 6277583752.41

3. Share-based payment

included in owners’

equity

4. Others 1767258036.36 –1767258036.36

(III) Profit distribution –3420918669.85 –3420918669.85

1. Withdrawal of surplus

reserves

2. Distribution to owners

(or shareholders) –3420918669.85 –3420918669.85

3. Others

(IV) Internal transfer of owner’s

equity

1. Transfer of capital

reserves into capital

(or share capital)

2. Transfer of surplus

reserves into capital

(or share capital)

3. Surplus reserves used

for remedying loss

4. Changes in defined

benefit plans carried

forward to retained

earnings

5. Other comprehensive

income carried forward

to retained earnings

6. Others

(V) Special reserve

1. Withdrawal for the

period

2. Utilization for the period

(VI) Others

IV. Closing balance for the period 9393170481.00 25494323977.23 1767258036.36 1633806.54 2440188314.15 1127322616.49 36689381159.05

Person in charge of the Company: Li Huagang

Person in charge of accounting function: Gong Wei

Person in charge of accounting department: Ying Ke

Haier Smart Home Co. Ltd. Interim Report 2022 107Section X Financial Report

III. GENERAL INFORMATION OF THE COMPANY

1. Overview of the Company

√ Applicable □ Not Applicable

The predecessor of Haier Smart Home Co. Ltd. (herein after referred to as the Company) was

Qingdao Refrigerator Factory which was established in 1984. As permitted to offering by

People’s Bank of China Qingdao Branch on 16 December 1989 and approved by Qing Ti Gai

[1989] No.3 on 24 March 1989 based on the reconstruction of the original Qingdao Refrigerator

Factory a limited company was set up by directional fund raising of RMB150 million. In March

and September 1993 as approved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9

issued by the pilot leading team of Qingdao joint stock company the Company was converted

from a directional offering company to a public subscription company and issued additional 50

million shares to the public and listed with trading on Shanghai Stock Exchange in November 1993.In October 2018 D-shares in issue of the Company were listed on the China Europe International

Exchange AG. In December 2020 H-shares in issue of the Company were listed on the Stock

Exchange of Hong Kong Limited by way of introduction.The Company’s registered office is located at the Haier Industrial Park of Laoshan District Qingdao

Shandong Province and the headquarter is located at the Haier Industrial Park of Laoshan District

Qingdao Shandong Province.The Company is mainly engaged in research and development manufacturing and sales of home

appliances including refrigerators/freezers kitchen appliances air- conditioners laundry

appliances and water appliances and other smart home business as well as providing smart

home packaged solutions.The ultimate holding company of the Company is Haier Group Corporation.These financial statements have been approved for publication by the Board of the Company on

29 August 2022.

2. Scope of consolidated financial statements

√ Applicable □ Not Applicable

For details of changes in the scope of consolidated financial statements for the current period please

refer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this note.

108 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 relevantrequirements (herein after collectively referred to as the “Accounting Standards for BusinessEnterprises”) which issued subsequently and in combination with the disclosure provisions of the

Rules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities

No.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as the

following significant accounting policies and accounting estimation.

2. Going Concern

√ Applicable □ Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of the reporting

period and there are no significant events affecting its ability to continue as a going concern.V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

√ Applicable □ Not Applicable

According to the characteristics of its production and operation the Company formulated a series of

specific accounting policies and accounting estimates including the provisions for impairment for

accounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation and

amortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); the

amortization of intangible assets (Note V.18); the criterion for determining of long-term assets

impairment (Note V.19); and the date of revenue recognition (Note V.25) etc.

1. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements prepared by the Company meet the requirements of the Accounting

Standards for Business Enterprises which accurately and completely reflected information

relating to the financial condition as at 30 June 2022 the operating results of January to June

2022 and cash flow of the Company.

2. Accounting period

The accounting year of the Company is from 1 January each year to 31 December of the same

year in solar calendar.Haier Smart Home Co. Ltd. Interim Report 2022 109Section X Financial Report

3. Operating cycle

√ Applicable □ Not Applicable

The Company takes 12 months as an operating cycle which is also the classification basis for

the liquidity of its assets and liabilities.

4. Recording currency

√ Applicable □ Not Applicable

Renminbi is the recording currency of the Company.

5. Accounting methods of business combinations under common control and not

under common control

√ Applicable □ Not Applicable

A business combination is a transaction or event that brings together two or more separate

entities into one reporting entity. Business combinations are classified into business combinations

under common control and business combinations not under common control.

(1) Business combinations under common control

A business combination under common control is a business combination in which all the

combining entities are ultimately controlled by the same party or parties both before and

after the combination and that control is not transitory. For business combination under

common control the party that obtains the control over the other parties on the

combination date is the acquirer and other parties involving in the business combination

are the transferors. The combination date is the date on which the acquiring party

effectively obtains the control over the party being acquired.In case the consideration for long-term equity investments formed in business combination

under common control is paid by ways of cash transfer of non-cash assets or assumption

of debts the Company will regard the share of carrying amounts of the net assets of the

transferor in the ultimate controller’s consolidated financial statements obtained as the initial

investment cost of long-term equity investments as at the date of combination. For carrying

value of net assets of the transferor is negative as at the date of combination investment

cost of long-term equity investment is calculated as zero. In case the transferor is

controlled by the ultimate controller by the business combination not under common control

before combination the initial investment cost of the long-term equity investment of the

acquirer includes relevant goodwill. The Company should adjust the capital reserve (capital

premium or share premium) in accordance with the differences between initial investment

cost of the long-term equity investment and the cash paid the non-cash assets transferred

and the carrying value of liability assumed; in case the balance of the capital reserve

(capital premium or share premium) is insufficient for the elimination the surplus reserves

and undistributed profits shall be used to dilute such expenses in order. In case the

consideration for the combination is paid by issuance of equity instruments the aggregate

nominal value of shares issued will be deemed as the share capital. The difference between

the initial investment cost of long-term equity investments and aggregate nominal value

of

110 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

shares issued shall be adjusted to capital reserve (capital premium or share premium); in

case the capital reserve (capital premium or share premium) is insufficient for the

elimination the surplus reserves and undistributed profits shall be used to dilute such

expenses in order.Intermediary fees (such as audit legal services and valuation consultancy) and other

relevant management fees incurred in the business combination by the acquirer are

credited in profit or loss in the period when they occurred. Trading expenses in direct

relation to the issuance of equity instrument as the consideration for the combination is

written down to the capital reserve (share premium) where the capital reserve (share

premium) is insufficient and to surplus reserves and undistributed profits in order. Trading

expenses in direct relation to the issuance of debt instrument as the consideration for the

combination is included in the initial recognition amount of the debt instrument.For business combination under common control realized through several transactions step

by step in case of a package transaction each transaction is accounted as one

transaction that has acquired the control; in case of not a package transaction in the

financial statement of parent company the capital reserve (share premium) is adjusted by

the difference between the initial investment cost and the sum of the carrying value of the

original long-term equity investment and the book value of the new payment consideration

for further acquisition of shares with the share of acquirer’s owner’s equity on the date of

combination in case calculated on the proportion of shareholding on the date of

combination as its initial investment cost; where the capital reserve is insufficient the

retained earnings will be used to offset such expenses.In the consolidated financial statements the long-term equity investment held by the

combining party before the date of acquiring control of the combined parties and relevant

profit and loss the other comprehensive income and changes in the other owners’ equity

recognized during the period between the later of the date of acquisition and the date

when the combining and the combined parties are under the common control of the same

party and the date of combination are written down to the retained earnings or profit or

loss at the beginning of the comparative reporting period respectively.

(2) Business combinations not under common control

A business combination not under common control is a business combination in which all

of the combining entities are not ultimately controlled by the same party or parties both

before and after the combination. For business combination not under common control the

party that obtains the control of the other parties involving in the business combination at

the combination date is the acquirer; other parties involving in the business combination are

the transferors. The combination date is the date on which the acquirer effectively obtains

control of the transferors.Haier Smart Home Co. Ltd. Interim Report 2022 111Section X Financial Report

In business combination not under common control the cost of combination shall be the

sum of the assets paid obligations incurred or assumed and the fair value of the equity

securities issued by the acquirer for obtaining control of the transferor at the date of

acquisition. Intermediary fees (such as audit legal services and valuation consultancy) and

other relevant management fees incurred by the acquirer for the purpose of business

combination are credited in profit or loss in the period when they occurred. Transaction

fees for the equity instruments or debt instruments issued by the acquirer as combination

consideration is included in the initial recognition amount of such equity instruments or debt

instruments. Contingent consideration involved shall be recorded as the combination cost

based on its fair value on the acquisition date. Should any new or further evidence arise

within 12 months after the acquisition date and makes it necessary to adjust the

contingent consideration on the acquisition date the goodwill arising from the business

combination shall be amended accordingly.The cost of combination and identifiable net assets obtained by the acquirer in a business

combination are measured at fair value on the acquisition date. Where the cost of the

combination exceeds the acquirer’s interest in the fair value of the transferor’s identifiable

net assets obtained on the acquisition date the difference is recognized as goodwill; where

the cost of combination is lower than the acquirer’s interest in the fair value of the

transferor’s identifiable net assets the difference is initially recognized in profit or loss for

the current year after a review of computation for the identifiable assets liabilities or fair

value of contingent liabilities and combination cost and where the combination cost is still

lower than the acquirer’s interest in the fair value of the identifiable net assets of the

transferor obtained during the course of combination then the difference is recorded in the

profit and loss.In business combination not under common control that is realized in phases through

multiple exchange transactions in the Company individual financial statements the sum of

the book value of the equity investment of the transferor held before the date of acquisition

and the cost of new investment on the date of acquisition are recognized as the initial

investment cost of such investment.In the consolidated financial statement the equity of the transferor held before the date of

acquisition is re-measured at the fair value on the date of acquisition and the difference

between the fair value and book value is included in current investment income; where the

equity of the transferor held before the date of acquisition involves the other comprehensive

income such equity and relevant other comprehensive income are transferred to current

investment income on the date of acquisition other than the other comprehensive income that

cannot be reclassified in the profit or loss.The fair value on the acquisition date of equity interest in the transferor prior to the

acquisition date and the fair value of the considerations paid for the acquisition of the new

equity on the acquisition date are regarded as the combination costs of the Company

comparing with acquirer’s share of the fair value on the acquisition date of the transferor’s

net identifiable assets on the proportion of the shareholding on the acquisition date to

confirm the goodwill that required to be recognized on the acquisition date or the amount

that shall be included in the profit or loss.

112 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

6. Preparation method of consolidated financial statements

√ Applicable □ Not Applicable

(1) Scope of consolidated financial statements

The Company incorporated all of its subsidiaries (including the separate entities controlled

by the Company) into the scope of consolidation financial statements including the

enterprises under the Company’s control divisible part in the investees and structured

entities.

(2) To unify the accounting policies balance sheets date and accounting periods of the

Company and subsidiaries

When preparing consolidated financial statements adjustments are made if subsidiaries’

accounting policies or accounting periods are different from that of the Company in accordance

with the Company’s accounting policies and accounting periods.

(3) Offset matters in the consolidated financial statements

The consolidated financial statements shall be prepared on the basis of the balance sheets

of the Company and subsidiaries which offset the internal transactions incurred between

the Company and subsidiaries and among subsidiaries. The owner’s equity of the

subsidiaries not attributable to the Company shall be presented as “minority interests”

under the owner’s equity item in the consolidated balance sheet.The long-term equity investment of the Company held by the subsidiaries deemed as treasury

stock of the corporate group as well as the reduction of owners’ equity shall be presented as

“Less: Treasury stock” under the owner’s equity item in the consolidated balance sheet.

(4) Accounting treatment of subsidiaries acquired from combination

For subsidiaries acquired from business combination under common control the assets

liabilities operating results and cash flow of the subsidiaries are included in the

consolidated financial statements from the beginning of the period in which the combination

took place as if the combination has taken since the ultimate controller began its control.When preparing the consolidated financial statements for the subsidiaries acquired from

business combination not under common control separate financial statement will be

adjusted on the basis of their fair values of the identifiable net assets on the date of

acquisition.Haier Smart Home Co. Ltd. Interim Report 2022 113Section X Financial Report

7. Classification of joint arrangement and accounting methods of joint operations

√ Applicable □ Not Applicable

A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance

with the Company’s rights and obligations under a joint arrangement the Company classifies joint

arrangements into joint operations and joint ventures.Joint operations refer to a joint arrangement in which the Company is a party and is entitled to

relevant assets and obligations of this arrangement. The Company recognizes the following items

in relation to its interest in a joint operation and accounts the same in accordance with relevant

accounting standards for business enterprises:

(1) recognize the assets held solely by the Company and recognize assets held jointly by the

Company in appropriation to the share of the Company; (2) recognize the obligations

assumed solely by the Company and recognize obligations assumed jointly by the

Company in appropriation to the share of the Company; (3) recognize revenue from

disposal of joint operations in appropriation to the share of the Company; (4) recognize

revenue from disposal of joint operations in appropriation to the share of the Company; (5)

recognize fees solely occurred by the Company and recognize fees from joint operations in

appropriation to the share of the Company.When the Company as a joint venture invests or sells assets to or purchase assets (the

assets do not constitute a business the same below) from joint operations the Company

shall only recognize the part of profit or lost from this transaction attributable to other

parties of joint operations before these assets are sold to a third party. In case of an

impairment loss incurred on these assets which meets the requirements as set out in

“Accounting Standards for Business Enterprises No. 8 — Asset Impairment ” the Company

shall full recognize the amount of this loss in relation to its investment in or sale of assets

to joint operations or recognize the loss according to the Company’s share of commitment

in relation to its purchase of assets from joint operations.Joint ventures refer to a joint arrangement during which the Company only is entitled to net

assets of this arrangement. Investment in joint venture is accounted for using the equity method

according to the accounting policies referred to under “12 Long-term equity investment” of Note

V.

8. Recognition standard for cash and cash equivalents

Cash recognized in the cash flow statements represents the cash on hand and deposits available

for payment of the Company at any time.Cash equivalents recognized in the cash flow statements refer to short-term highly liquid

investments held by the Company that are readily convertible to known amounts of cash and

which are subject to an insignificant risk on change in value.

114 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

9. Foreign currency businesses and translation of foreign currency statements

√ Applicable □ Not Applicable

(1) Foreign currency transactions

If foreign currency transactions occur they are translated into the amount of functional currency

by applying the spot exchange rate at the transaction date.Monetary items denominated in foreign currencies are translated into functional currencies

at the rates of exchange ruling at the balance sheet date. All foreign exchange difference

are credited in the profit or loss except * those arising from the funds denominated in

foreign currency specially borrowed for the establishment of the qualifying assets are

treated based on the principal of capitalization of borrowing costs; * those arising from the

other changes in the balance other than amortized cost of available-for-sale monetary items

denominated in foreign currency are recognized in the other comprehensive income.Non-monetary items in foreign currency measured at historical cost are translated using the

spot exchange rate prevailing on the date when transaction occurred and its functional

currency shall remain unchanged. Non-monetary items denominated in foreign currencies

that are measured at fair value are translated using the foreign exchange rate at the date

the fair value is determined; the exchange differences between the translated and original

amounts of functional currencies are recognized in the statement of profit or loss or other

comprehensive income as changes in fair value (including changes in exchange rate).

(2) Translation of foreign currency financial statements

If the functional currencies used as the bookkeeping base currency by the subsidiaries joint

ventures and associates under the control of the Company are different from that of the

Company their financial statements denominated in foreign currencies shall be translated to

perform accounting and prepare the consolidated financial statements.The assets and liabilities of the balance sheet are translated using the spot exchange rate

at the balance sheet date; all items except for “undistributed profits” of the owner’s equity

are translated at the spot exchange rate on the transaction date. The revenue and

expenses in the income statement are translated using the approximate rate of the spot

exchange rate on the transaction date. Differences arising from the translation of foreign

currency financial statements are presented as the “other comprehensive income” in the

owner’s equity of the balance sheet.Foreign currency cash flow is translated using the approximate rate of the spot exchange

rate on the transaction date. The impact of exchange rate changes on cash amount is

reflected separately in the cash flow.When disposing overseas operations converted difference in foreign currency statements

related to the overseas operation shall be transferred together or as the percentage of

disposing the overseas operation to profit or loss in the current period of disposal.Haier Smart Home Co. Ltd. Interim Report 2022 115Section X Financial Report

10. Financial instruments

√ Applicable □ Not Applicable

A financial instrument refers to any contract that gives rise to a financial asset of one entity and

a financial liability or equity instrument of another entity. A financial asset or financial liability is

recognized when the Company becomes a party to the contract of a financial instrument.

(1) Financial assets

1 Classification and measurement

According to the business model for managing financial assets and the contractual cash

flow characteristics of financial assets the Company classifies financial assets into: (1)

Financial assets measured at amortized cost; (2) financial assets measured at fair value

through other comprehensive income; (3) financial assets measured at fair value through

profit or loss of the current period.Financial assets are measured at fair value upon initial recognition. For financial

assets measured at fair value through profit or loss of the current period related

transaction costs are directly included in profit and loss of the current period; for

other types of financial assets related transaction costs are included in their initial

recognized amounts. For the accounts receivable or bills receivable arising from the

sale of products or the provision of labor services that do not contain or consider the

significant financing components the Company shall take the consideration amount

entitled to be received as the initial recognized amount.a. Debt instrument

The debt instruments held by the Company refer to the tools that are in conformity

with the definition of financial liability from the perspective of the issuing party

which are measured in the following three ways respectively:

(a) Measured at amortized cost:

The Company’s business model for managing such financial assets is: with

the aim of obtaining contractual cash flow the contractual cash flow

characteristics of such financial assets shall be consistent with the basic

lending arrangements that is the cash flow generated on a specific date

is only the payment for the principal and the interest based on the

outstanding principal amount. For such financial assets the Company

recognizes the interest income in accordance with the effective interest

method. Such financial assets mainly include cash and cash equivalents

bills receivable and accounts receivable other receivables creditor’s right

investment and long-term receivables. The Company lists the creditor’s

rights investments and long-term receivables matured within one year

(inclusive) from the balance sheet date as non-current assets matured

within one year; the creditor’s rights investments matured within one year

(inclusive) when being obtained are listed as other current assets.

116 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(b) Measured at fair value through other comprehensive income:

The Company’s business mode for managing such financial assets is: with

the aim of obtaining contractual cash flow and selling the financial assets

the contractual cash flow characteristics of such financial assets shall be

consistent with the basic lending arrangements. Such financial assets are

measured at fair value through other comprehensive income but

impairment gains and losses exchange gains and losses and interest

income calculated by the effective interest method are included in profit

and loss of the current period. Such financial assets are listed as other

creditor’s rights investments. Other creditor’s rights investments matured

within one year (inclusive) from the balance sheet date are listed as non-

current assets matured within one year; other creditor’s rights investments

matured within one year (inclusive) when being obtained are listed as

other current assets.(c) Measured at fair value through profit or loss of the current period:

The Company lists its held debt instruments that are neither measured at

amortized cost nor at fair value through other comprehensive income as

financial assets held for trading measured at fair value through profit or

loss of the current period. At the time of initial recognition in order to

eliminate or significantly reduce accounting mismatch the Company

designated some financial assets as financial assets measured at fair value

through profit or loss of the current period. Investments that are matured

more than one year and are expected to be held for more than one year

from the balance sheet date are listed as other non-current financial assets.b. Equity instruments

The Company lists equity instrument investments that have no control joint

control and significant influence on itself as financial assets held for trading

measured at fair value through profit or loss of the current period; investments

that are expected to be held for more than one year from the balance sheet

date are listed as other non-current financial assets.In addition the Company designated some non-trading equity instrument

investments as financial assets measured at fair value through other

comprehensive income which are listed as other equity instrument investments.The relevant dividends and interest income of such financial assets are included

in profit and loss of the current period.* Impairment

For financial assets measured at amortized cost and debt instrument

investments measured at fair value through other comprehensive income

contract assets and financial guarantee contracts the Company recognizes

the loss provision based on the expected credit losses.Haier Smart Home Co. Ltd. Interim Report 2022 117Section X Financial Report

The Company considers reasonable and reliable information about past

events current conditions and forecasts of future economic conditions

and takes the risk of default as a weight and calculates the probability-

weighted amount of the present value of the difference between the cash

flow receivable and the cash flow expected to be received of the contract

to confirm the expected credit losses.On each balance sheet date the Company measures the expected credit

losses of financial instruments in different phases. If the credit risk has not

increased significantly since the initial recognition the financial instruments

are in the first phase. The Company measures the loss provision

according to the expected credit losses in the next 12 months; if credit

risk has increased significantly but credit impairment has not yet occurred

since the initial recognition the financial instruments are in the second

phase. The Company measures the loss provision according to the

expected credit losses of the instruments during the entire duration; if

credit impairment has occurred since the initial recognition the financial

instruments are in the third phase. The Company measures the loss

provision according to the expected credit losses of the instruments

during the entire duration.For financial instruments with lower credit risk on the balance sheet date

the Company measures the loss provision according to the expected

credit losses in the next 12 months assuming that its credit risk has not

increased significantly since the initial recognition.For financial instruments in the first phase and second phase and financial

instruments with relatively lower credit risk the Company calculates interest

income based on their book balance before the deduction of impairment

provisions and effective interest rate. For financial instruments in the third

phase the Company calculates interest income based on their amortized cost

after the impairment provision has been deducted from the book balance and

effective interest rate.For bills receivable accounts receivable and contractual assets whether

there exist significant financing components the Company measures loss

provision based on expected credit loss over the entire duration.The Company classifies accounts receivable into groups on the basis of

shared credit risk characteristics and calculates the expected credit

losses on groups the bases of group determination are as follows:

118 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

For each group of bills receivable the Company applies exposure at

default and expected credit losses rate over the entire duration to

calculate the expected credit losses on the historical credit losses

experience the existing conditions and forecast of future economic

conditions.For each group of accounts receivable the Company makes the comparison

of expected credit losses rates of accounts receivable in overdue days and

over the entire duration to calculate the expected credit losses by taking into

account the historical credit losses experience the existing conditions and

forecast of future economic conditions.For each group of other accounts receivable the Company applies

exposure at default and expected credit losses rate within the next 12

months or over the entire duration to calculate the expected credit losses

by taking into account the historical credit losses experience the existing

conditions and forecast of future economic conditions.The Company recognizes the loss impairment provision or reversed in

profit or loss of the current period. For held debt instruments at fair value

through other comprehensive income the Company recognizes loss/gain

on impairment in profit or loss of the current period and adjusts other

comprehensive income at the same time.* Derecognition

A financial asset is derecognized when any of the below criteria is met: a.the contractual rights to receive the cash flow from the financial asset

have been terminated; b. the financial asset has been transferred and the

Company transfers substantially all the risks and rewards of ownership of

the financial asset to the transferee; c. the financial asset has been

transferred and the Company has not retained control of the financial

asset although the Company neither transfers nor retains substantially all

the risks and rewards of ownership of the financial asset.On de-recognition of other equity instruments investment the difference

between the book balance and the sum of the consideration received and

any cumulative profit or loss of fair value that had been recognized in

other comprehensive income is recognized in the retained earnings. On de-

recognition of other financial assets the difference between the book

balance and the sum of the consideration received and any cumulative

profit or loss of fair value that had been recognized in other

comprehensive income is recognized in the profit and loss of the current

period.Haier Smart Home Co. Ltd. Interim Report 2022 119Section X Financial Report

(2) Financial liabilities

Financial liabilities are classified as financial liabilities measured at amortized cost and

financial liabilities at fair value through profit or loss of the current period at initial

recognition.The financial liabilities of the Company are financial liabilities measured at amortized cost

including bills payable accounts payable other payables borrowings bonds payable etc.Such financial liabilities are recognized initially at fair value less transaction costs and

subsequently measured using the effective interest method. Financial liabilities with a

maturity of less than one year (inclusive) are listed as current liabilities: those with maturity

of more than one year but are mature within one year from the balance sheet date

(inclusive) are listed as non-current liabilities due within one year; the rest are presented as

non-current liabilities.When all or partial current obligations of financial liabilities have been discharged such

financial liabilities or the part with obligations discharged are derecognized by the Company.The difference between the carrying amount of a financial liability de-recognized and the

consideration paid is recognized in the profit and loss of the current period.

(3) Determination of fair value of financial instruments

The fair value of a financial instrument that is traded in an active market is determined at

the quoted price in the active market. The fair value of a financial instrument that is not

traded in an active market is determined by using a valuation technique. During the

valuation the Company adopts an applicable valuation technique under current conditions

and there are enough available data and other information to support. Those inputs should

be consistent with the inputs a market participant would use when trading the asset or

liability and the Company should maximize the use of relevant observable inputs. When

related observable inputs can’t be acquired or are not feasible to be acquired then use

unobservable inputs.

(4) Significant accounting estimates and judgments

* Significant accounting estimates and key assumptions

Measurement of expected credit loss

The Company applies exposure at default and expected credit loss rate to calculate

expected credit loss and determines expected credit loss rate based on probability of

default and loss given default. For the determination of expected credit loss rate the

Company applies data including internal historical credit losses experience and adjusts

historical data taking account current conditions and forward-looking information. Regarding

forward-looking information indicators used by the Company include economic downturn

risk growth in expected unemployment rate changes in external market environment

technology environment and customer status. The Company monitors and reviews

assumptions related to the calculation of expected credit loss on a regular basis. No major

change occurred in the above-mentioned estimate techniques and key assumptions in this

year.

120 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

2 Critical judgments on application of accounting policies

a. Classification of financial assets

On classification of financial assets critical judgments considered by the Company

include the business mode an analysis of contractual cash flow characteristics and

others.From the dimension of financial asset portfolio the Company determines the

business mode of financial asset management. Considerations cover assessments

reporting methods of financial asset performance to key management personnel

risks impacting financial asset performance and relevant management methods as

well as methods of relevant business management personnel receiving

remuneration.In assessing the consistency between contractual cash flow of financial assets and

the basic lending arrangements the Company makes the following major

judgments: whether the time distribution or amount of the principal changes during

the duration of the financial assets due to prepayment etc.; and whether the

interest includes considerations for the currency time value credit risk as well as

other basic borrowing risks costs and profits. For example whether the

prepayment amount merely reflects the principal unpaid and interest incurred by the

principal unpaid as well as reasonable compensation paid due to premature

termination of contracts.b. Judgment that credit risk increases significantly

The main standards for the Company to judge significant increase in credit risk

are that overdue days are more than 30 days or that significant changes occur

in one or more of the following indicators: business environment of debtors

internal and external credit rating the significant change of actual or expected

business performance value of collaterals or significant drop in credit rating of

guarantors.The main standards for the Company to judge incurred credit impairment are

that overdue days are more than 90 days (i.e. default occurred) or that one or

more of the following conditions are met: a debtor is under significant financial

difficulty; other ongoing debt restructuring or high possibility of bankruptcy.

11. Inventories

√ Applicable □ Not Applicable

(1) Classification of inventories

Inventories refer to the finished goods or commodities held for sale in daily activities goods

in progress in the production process consumed materials and supplies in the production

process or providing services of the Company which mainly include raw materials

revolving materials entrusted processed materials wrap page goods in progress self-

made semi-finished goods finished goods (merchandise inventory) and engineering

construction etc.Haier Smart Home Co. Ltd. Interim Report 2022 121Section X Financial Report

(2) Measurement of inventories transferred out

At delivery inventories are accounted using the weighted average method.

(3) Provision for inventory impairment

At balance sheet date inventories are measured at the lower of cost or net realizable

value.The net realizable value of inventories (including finished products merchandize and

materials for sale) that can be sold directly is determined based on the estimated selling

price of such inventory deducted by the estimated selling expenses and relevant taxes. The

net realizable value of materials held for production is determined based on the estimated

selling price of the finished product deducted by the estimated cost to be incurred upon

completion estimated selling expenses and relevant taxes. The net realizable value of

inventory held for performance of sales contract or labor service contract is determined

based on the contractual price; in case the amount of inventory held by the enterprise

exceeds the contractual amount the net realizable value of the excess portion of inventory

is calculated based on the general selling price.Provision for impairment of inventories is made for individual inventory. For items of

inventories that is produced and marketed in the same geographical area and with the

same or similar end uses or purposes which cannot be practicable evaluated separately

from other items cost and net realizable value of inventories may be determined on an

aggregate basis. For large quantity and low value items of inventories cost and net

realizable value of inventories may be determined on types of inventories.Provision for inventory impairment is made and recognized as profit or loss when the cost

is higher than the net realizable value on the balance sheet date. If the factors that give

rise to the provision in prior years are not in effect in current year provision would be

reversed within the amount of provision for inventory impairment originally recognized and

the reversed amount shall be recognized in the profit or loss.

(4) Inventory system

The Company adopts perpetual inventory system.

(5) Amortization of low-value consumables and packaging

Low-value consumables and packages of the Company are amortized by one-time write-

off.

122 Haier Smart Home Co. Ltd. Interim Report 2022Section 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. Long-term equity

investments where the Company does not exercise control joint control or significant influence

over the investee are accounted for as other equity instrument investments.

(1) Recognition of initial cost of investment

* 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;

* For the long-term equity investment acquired in a manner other than business

combination: the initial investment cost of the long-term equity investment acquired by

payment in cash shall be the purchase price actually paid; the initial investment cost

of the long-term equity investment acquired by issuing equity securities shall be the

fair value of the equity securities issued; for long-term equity investment acquired by

debt restructuring the initial investment cost shall be determined in accordance with

the relevant requirements under Accounting Standards for Enterprises No. 12 — Debt

Restructuring ; for long-term equity investment acquired by the exchange of non-

monetary assets the initial investment cost shall be determined in accordance with

relevant requirements under the Rules.

(2) Subsequent measurement and profit or loss recognition

* Cost method

Where the investor has a control over the investee long-term equity investments are

measured using cost method. For long-term equity investments using cost method unless

increasing or recovering the investment the carrying value is generally unchanged. The

profit distributions or cash dividends declared by the investee attributable to the Company

are recognized as investment income.* Equity method

Investor’s long-term equity investments in associates and joint ventures are measured

using equity method. Where part of the equity investments of an investor in its

associates are held indirectly through venture investment institutions common fund

trust companies or other similar entities including investment linked insurance funds

such part of equity investments indirectly held by the investor shall be measured at

fair value through profit or loss according to relevant requirements of Accounting

Standards for Business Enterprises No. 22 — Recognition and measurement of

Financial Instruments regardless whether the above entities have significant influence

on such part of equity investments while the remaining part shall be measured using

equity method.Haier Smart Home Co. Ltd. Interim Report 2022 123Section X Financial Report

Under the equity method where the initial investment cost of a long-term equity

investment exceeds the Company’s share of the fair value of the investee’s

identifiable net assets at the time of acquisition no adjustment is made to the initial

investment cost. Where the initial investment cost is less than the Company’s share

of the fair value of the investee’s identifiable net assets at the time of acquisition the

difference is recognized in profit or loss for the period and the cost of the long-term

equity investment is adjusted accordingly.For long-term equity investments accounted for using the equity method the

Company recognizes the investment income and other comprehensive income

according to its share of net profit or loss and other comprehensive income of the

investee and the carrying amount of the long-term equity investments shall be

adjusted accordingly; the carrying amount of the investment is reduced by the

Company’s share of the profit distribution or cash dividends declared by an investee;

for changes in owner’s equity of the investee other than those arising from its net

profit or loss other comprehensive income and profit distribution the carrying amount

of the long-term equity investment shall be adjusted and recognized to capital reserve.When recognizing attributable share of the net profit and losses of the investee the net

profit of the investee shall be recognized after adjustment on the ground of the fair

value of all identifiable assets of the investee when it obtains the investment. If the

accounting policies and accounting periods adopted by the investee are different from

those adopted by the Company an adjustment shall be made to the financial

statements of the investee in accordance with the accounting policies and accounting

periods of the Company and recognize the investment incomes and other

comprehensive income.The Company’s share of net losses of the investee shall be recognized to the extent

that the carrying amount of the long-term equity investment together with any long-

term interests that in substance form part of the investor’s net investment in the

investee are reduced to zero. If the Company has to assume additional obligations

the estimated obligation assumed shall be provided for and charged to the profit or

loss as investment loss for the period. Where the investee is making net profits in

subsequent periods the Company shall resume recognizing its share of profits after

setting off against the share of unrecognized losses.

(3) Change of the accounting methods for long-term equity investments

* 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.

124 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

* 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.* 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 withrelevant 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 relevantrequirements of “Accounting Standards for Business Enterprises No. 33 — CombinedFinancial Statements”.

(4) Basis of conclusion for common control and significant impact over the investee

* Joint control over an investee means that activities which have a significant impact on

the return of a certain arrangement could be decided only by mutual consent of the

investing parties sharing the right of control which includes the sales and purchase of

goods or services management of financial assets acquisition and disposal of assets

research and development activities and financing activities etc.* Significant impact on the investee exists when the investing parties hold more than 20%

but less than 50% of the shares with voting rights in the investee or if the investing

parties hold less than 20% shares in the investee they:

1) have representatives in the board of directors or similar governing body of the

investee;

Haier Smart Home Co. Ltd. Interim Report 2022 125Section X Financial Report

2) participate in the investee’s policy formulation;

3) assign management personnel to the investee;

4) provide technology or technical information that the investor is dependent on;

5) have major transactions with the investee.

(5) methods of impairment test and provision for impairment

At the balance sheet date the Company reviews whether there are signs for the

impairment of long-term equity investments. If yes the recoverable amount is determined

through impairment test and provision for impairment is made based on the difference

between the recoverable amount and the carrying value. Impairment loss will not be

reversed in subsequent accounting periods once provision is made for it.The recoverable amount is the higher of net fair value of long-term equity investments on

disposal and the present value of estimated future cash flow.

(6) Disposal of long-term equity investments

For disposal of long-term equity investment the difference between the considerations

actually received and the carrying value of the disposed investment is recognized in current

profit or loss. For long-term equity investment accounted for using the equity method the

part previously recognized in other comprehensive income is accounted on pro rata basis

upon disposal in the same way as the relevant assets or liabilities are disposed of directly

by the investee.

13. Investment properties

Investment properties of the Company include leased land use rights and leased buildings.An investment property is initially measured at cost and cost method is adopted for subsequent

measurement.The buildings leased out of investment properties of the Company are depreciated over their

useful lives using the straight-line method. The specific measurement policy is the same as that

of fixed assets. For land use rights leased out of investment properties or held for resale after

appreciation in value they are amortized using the straight-line method. The specific

measurement policy is the same as that of intangible assets.At the balance sheet date the Company reviews whether there are signs for impairment of

investment properties. If yes the recoverable amount is recognized through an impairment test

and provision for impairment is made based on the difference between the carrying value and the

recoverable amount. Impairment loss will not be reversed in subsequent accounting periods once

provision is made for it.

126 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

14. Fixed assets

(1). Recognition criteria

√ Applicable □ Not Applicable

Fixed assets are tangible assets that are held for production of goods provision of labor

services leasing or operation and management purposes and have a useful life of more

than one fiscal year which are recognized when the following conditions are met:

1 economic benefits in relation to the fixed assets are very likely to flow into the enterprise;

2 the cost of the fixed assets can be measured reliably.

(2). Depreciation method

The fixed assets of the Company can be divided into: houses and buildings production

equipment transportation equipment office equipment etc. The straight-line method over

useful lives is used to measure depreciation. The useful lives and the expected net residual

value of fixed assets are determined according to the nature and usage of various fixed assets.At the end of each year the useful lives expected net residual value and depreciation method

of fixed assets are reviewed and adjusted if there is variance with original estimates. The

Company has made provisions for all the fixed assets except for the fixed assets that have

been fully depreciated and still in use.Depreciation

Type life (year) Residual ratio

Land ownership — —

Buildings 8–40 years 0%-5%

Machinery equipment 4–20 years 0%-5%

Transportation equipment 5–10 years 0%-5%

Office equipment and others 3–10 years 0%-5%

(3). Method of test and provision for impairment of fixed assets

At the balance sheet date the Company reviews whether there are signs for impairment of

the fixed assets. If yes the recoverable amount is recognized through an impairment test

and provision for impairment is made based on the difference between the carrying value

and the recoverable amount. Impairment loss will not be reversed in subsequent

accounting periods once provision is made for it.

(4). Disposal of fixed assets

When fixed assets are disposed of or are expected to fail to generate economic benefits

after the use or disposal the fixed assets shall be derecognized. The difference of the

income from sales transfer retirement or damage of fixed assets deducting the book value

and related taxes should be included in the current profit and loss.Haier Smart Home Co. Ltd. Interim Report 2022 127Section X Financial Report

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;

* 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.

128 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

16. Borrowing costs

√ Applicable □ Not Applicable

(1) Recognition principles for capitalization of borrowing costs

The Company’s borrowing costs that are directly attributable to the acquisition

construction or production of a qualifying asset are capitalized into the cost of relevant

assets. Other borrowing costs are recognized as expenses in current profit or loss based

on the amount incurred. Qualifying assets for capitalization include fixed assets investment

properties and inventories that necessarily take a substantial period of time for acquisition

construction or production to get ready for their intended use or for sale.

(2) Computation of capitalized amount

Period of capitalization refers to the period from the commencement to the cessation of

capitalization timing of borrowing costs excluding the periods in which capitalization of

borrowing costs is suspended.Period of suspended capitalization: Capitalization of borrowing costs is suspended during

periods in which the acquisition construction or production of a qualifying asset is

suspended abnormally and the suspension lasts for more than 3 months.Computation of capitalized amount: * 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 shall

recognize the right-of-use assets and lease liabilities for the lease except for short-term leases

and low value assets leases which are treated with practical expedient. The commencement date

of the lease term refers to the start date when the lessor provides the leased assets to make it

available to the lessee.Haier Smart Home Co. Ltd. Interim Report 2022 129Section X Financial Report

The Company’s right-of-use assets shall be initially measured at the costs. The costs include:

(1) initial measurement amount of the lease liability;

(2) a lease payment paid on or before the date of commencement of the lease period where

there was lease incentive such incentives shall be deducted;

(3) initial direct costs incurred by the Company as lessee;

(4) costs expected to be incurred by the Company for demolition and removal of leased assets

restoration of the premises where the leased assets are located or restoration of the

leased assets to the conditions of the lease terms.The Company refers to the relevant depreciation provisions of Accounting Standards for Business

Enterprises No. 4 — Fixed Assets to accrue depreciation for right-of-use assets. If the Company

can reasonably determine that the ownership of the leased asset can be acquired at the

expiration of the lease term the leased asset shall be depreciated within its remaining useful life.If the Company cannot reasonably determine that the ownership of the leased asset can be

acquired at the expiration of the lease term the leased asset shall be depreciated within the

lease term or its remaining useful life (whichever is shorter).The Company determines whether the right-of-use assets are impaired in accordance with the

provisions of Accounting Standards for Business Enterprises No. 8 — Asset Impairment and performs

accounting treatment on the identified impairment losses.When the lease liabilities are remeasured in accordance with the Standards the Company

adjusts the book value of the right-of-use assets accordingly. If the book value of the right-of-

use assets is reduced to zero but needs a further reduction in the measurement of the lease

liabilities the Company recognizes any remaining amount of the remeasurement in current profit

or loss.If the lease change results in a narrower lease or a shorter lease term the Company reduces the

book value of the right-of-use assets accordingly and recognizes the related gains or losses of

the partially terminated or completely terminated leases into current profit and loss. For other

lease changes which result in the remeasurement of lease liabilities the Company adjusts the

book value of the right-of-use assets accordingly.

130 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

18. Intangible assets

√ Applicable □ Not Applicable

Intangible assets are the identifiable non-monetary assets which have no physical form and are

possessed or controlled by the Company.

(1) Measurement of intangible assets

Intangible assets of the Company are initially recognized at costs. The actual costs of

purchased intangible assets include the consideration and relevant expenses actually paid.For intangible assets contributed by investors relevant actual costs are determined based

on the value agreed in the investment contract or agreement. But if the value agreed in the

investment contract or agreement is not a fair value the actual costs should be determined

based on the fair value. The cost of a self-developed intangible asset is the total

expenditure incurred in bringing the asset to its intended use.Subsequent measurement of intangible assets of the Company: * Intangible assets with

finite useful lives are amortized on a straight-line basis; their useful lives and amortization

methods are reviewed at the end of each year and adjusted accordingly if there is any

variance with the previous estimates; * Intangible assets with indefinite useful lives are not

amortized and their useful lives are reviewed at the end of each year. If there is an

objective evidence that the useful life of an intangible asset is finite an estimation should

be made on the useful life and the intangible asset should be amortized using the straight-

line method.

(2) Criterion of determining indefinite useful life

The useful life of an intangible asset is indefinite if the period in which the asset brings

economic benefits for the Company is unforeseeable or the useful life could not be ascertained.Criterion of determining indefinite useful lives: * the period is derived from contractual

rights or other legal rights and there are no explicit years of use stipulated in the contract

or laws and regulations; * the period in which the intangible assets generate benefits for

the Company still could not be estimated after considering the industrial practice or

relevant expert opinions.At the end of each year the useful lives of the intangible assets with indefinite useful lives

are reviewed. The assessment is primarily reviewed by relevant departments that use the

intangible assets using the down-to-top approach to determine if there are changes to the

determination basis of indefinite useful lives.Haier Smart Home Co. Ltd. Interim Report 2022 131Section X Financial Report

(3) Methods of test and provision for impairment of intangible assets

At the balance sheet date the Company reviews intangible assets to check whether there

is any sign of impairment. If yes the recoverable amount is recognized through an

impairment test and provision for impairment is made based on the difference between the

carrying value and the recoverable amount. Impairment loss will not be reversed in

subsequent accounting periods once provision is made for it.The recoverable amount of intangible assets should be based on the higher of the net fair

value of the assets less the disposal expense and the present value of estimated future

cash flow of the assets.

(4) Basis for research and development phases for internal research and development

project and basis for capitalization of expenditure incurred in development stage

As for an internal research and development project expenditure incurred in the research

stage is recognized in the profit or loss as incurred. Expenses incurred in the development

stage are recognized as intangible assets if all of the following conditions are met: * the

technical feasibility of completing the intangible assets so that they will be available for use

or for sale; * the intention to complete the intangible assets for use or for sale; * how the

intangible assets will generate economic benefits including there is evidence that the

products produced by the intangible assets has a market or the intangible assets

themselves have a market; if the intangible assets are for internal use there is evidence

that there exists usage for the intangible assets; * the availability of adequate technical

financial and other resources to complete the development and gain the ability to use or

sell the intangible assets; * the capability to reliably measure the expenditures attributable

to the development stage of the intangible assets.Specific standards for distinguishing research stage and development stage of an internal

research and development project: research stage refers to the stage of planned

investigation and search for obtaining new technology and knowledge which features

planning and exploration; before commercial production or other uses the stage of

applying the research achievements and other knowledge in a plan or design to produce

new or substantially improved materials equipment and products is regarded as

development stage which features pertinence and is very likely to form results.All the expenditures incurred on research and development which cannot be distinguished

between research stage and development stage are recognized in the profit or loss.

132 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

19. Impairment of long-term assets

√ Applicable □ Not Applicable

Long-term equity investment investment properties measured based on cost model fixed assets

construction in progress intangible assets and other long-term assets are tested for impairment

if there is any sign of impairment at the balance sheet date. If the result of the impairment test

indicates that the recoverable amount of the assets is less than the carrying amount a provision

for impairment will be made based on the difference and will be recorded in impairment loss. The

recoverable amount is the higher of the net fair value of the assets less the disposal expense

and the present value of estimated future cash flow of the assets. Provision for asset impairment

is calculated and recognized on the individual asset basis. If it is not possible to estimate the

recoverable amount of an individual asset the recoverable amount of the asset group to which

the asset belongs is determined. An asset group is the smallest asset portfolio that can generate

cash inflows independently.Goodwill is tested for impairment at least at the end of each year.In terms of impairment test of the goodwill of the Company the carrying amount of the goodwill

arising from business combination shall be allocated to the related asset groups on reasonable

basis since the acquisition date or to the related asset group portfolios if it is difficult to be

allocated to the related asset groups. When the carrying amount of the goodwill is allocated to

the related asset groups or asset group portfolios it shall be allocated in the proportion of the

fair value of each asset group or asset group portfolio against the total fair value of related asset

groups or asset group portfolios. If it is difficult to measure the fair value reliably it shall be

allocated in the proportion of the carrying amount of each asset group or asset group portfolio

against the total carrying amount of related asset groups or asset group portfolios.When impairment test is made to the related asset groups or asset group portfolios including

goodwill if there is a sign that the related asset groups or asset group portfolios are prone to

impair the Company shall first conduct impairment test on the asset groups or asset group

portfolios excluding goodwill calculate the recoverable amount and recognize the corresponding

impairment loss by comparing with its carrying amount. The Company shall then conduct

impairment test on the asset groups or asset group portfolios including goodwill and compare

the carrying amount (including the carrying amount of allocated goodwill) of related asset groups

or asset group portfolios with the recoverable amount thereof. Impairment loss on goodwill shall

be recognized when the recoverable amount of the related asset groups or asset group

portfolios is lower than the carrying amount thereof.Once the above impairment loss on assets is recognized it shall not be reversed in any subsequent

accounting period.

20. Long-term prepaid expense

√ Applicable □ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 133Section X Financial Report

Long-term prepaid expenses of the Company are expenditures which have incurred but the

benefit period of which is more than one year (exclusive). They are amortized by installments over

the benefit period based on each item under the expenses. If items under the long-term pre-paid

expenses are no longer beneficial to the subsequent accounting periods the amortized value of

such unamortized items is then fully transferred to the profit or loss.

21. Staff’s remuneration

(1). Accounting treatment of short-term remuneration

√ Applicable □ Not Applicable

Staff’s remunerations are all forms of compensation and other relevant expenditure given by the

Company in exchange for services rendered by employees including short-term remunerations

post-employment benefits termination benefits and other long-term benefits.Short-term remunerations include short-term salaries bonus allowance subsidies

employee welfare housing provident fund labor union fee and education fee medical

insurance premiums work-related injury insurance premiums maternity insurance premiums

short-term compensated leave short-term profit-sharing plans etc. During the accounting

period when employees render services short-term remunerations that actually incurred

shall be recognized as liabilities and credited into the current profit or loss or the cost of

relevant assets on an accrual basis by the benefit objects.

(2). Accounting treatment of post-employment benefits

√ Applicable □ Not Applicable

Post-employment benefits mainly include the basic pension insurance enterprise annuity

etc. In accordance with the risks and obligations undertaken by the Company the post-

employment benefits are classified as defined contribution plans and defined benefit plans.Defined contribution plans: the Company shall recognize the sinking funds paid on the

balance sheet date to individual entities in exchange for services from employees in the

accounting period as liabilities and shall credit such funds into the profit or loss or the cost

of relevant assets in accordance with the benefit objects. Defined benefit plans: the cost for

providing benefits is determined using the expected cumulative welfare unit method with

actuarial valuations being carried out by independent actuary at the interim and annual

balance sheet date. The costs for staff’s remunerations incurred by the defined benefit plans

of the Group are categorized as follows: (1) service cost including current period service cost

past service cost and settlement profit or loss. Specifically current period service cost means

the increase of the present value of defined benefit obligations resulted from the current

period services offered by employees. Past service cost means the increase or decrease of

the present value of defined benefit obligations resulted from the revision of the defined

benefit plans related to the prior period services offered by employees; (2) interest expenses

of defined benefit plans; (3) changes caused by the remeasurement of liabilities for defined

benefit plans. Unless other accounting standards require or permit the credit of the costs for

employee welfare into the cost of assets the Company will credit (1) and (2) above into the

profit or loss; and recognize (3) above as other comprehensive income and will not transfer

it back to the profit or loss in subsequent accounting periods.

(3). Accounting treatment of termination benefits

√ Applicable □ Not Applicable

134 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Termination benefits: The indemnity proposal provided by the Company for employees for

the purpose of terminating labor relations with employees before expiry of the labor

contracts or encouraging employees to accept downsizing voluntarily. When the following

conditions are met the Company will recognize and credit into the profit or loss the

accrued liabilities arising from the indemnity as a result of terminating labor relations with

the employees: the Company has made a formal plan for termination of labor relations or

has made an offer for voluntary redundancy which will be implemented immediately; and the

Company could not unilaterally withdraw the plan for termination of labor relations or the

redundancy offer. Early retirement plans for employees will be handled in the principle the

same as the termination benefits above. The Company will credit the salaries and social

insurance premiums to be paid to the early retirees during the period from the date of early

retirement to the normal retirement date to the profit or loss when recognition conditions for

estimated liabilities are met.

(4). Accounting treatment of other long-term employee benefits

□ Applicable √ Not Applicable

22. Lease liabilities

√ Applicable □ Not Applicable

On the commencement date of the lease term the Company as the lessee shall recognize the

right-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initially

measured at the present value of the lease payment that has not been paid on the

commencement date of the lease term.When calculating the present value of the lease payment the Company adopts interest rate

implicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease

the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discount rate.The interest rate implicit in lease refers to the interest rate that makes the sum of the present

value of the lessor’s lease receivable amount and the present value of the unguaranteed residual

value equal to the sum of the fair value of the leased asset and the initial direct cost of the lessor.The lessee’s incremental borrowing rate refers to the interest rate that the lessee is required to

pay for borrowing funds under similar mortgage conditions in a similar economic environment in

order to obtain assets close to the value of the right-of-use assets during a similar period.The Company shall calculate the interest expenses of lease liabilities over the lease term at the fixed

periodic interest rate and include it into current profit or loss or assets cost.Haier Smart Home Co. Ltd. Interim Report 2022 135Section X Financial Report

After the commencement date of the lease term where the assessment results of the renewal of

the option the termination of the lease option and the purchase option have changed the

Company re-determines the lease payment and re-measures the lease liabilities in accordance

with the present value of the lease payment after changes and the revised discount rate.After the commencement date of the lease term in the event that the future lease payment

changes due to a change in expected payment under a guaranteed remaining value or changes

in an index or rate used in determining the lease payments the Company shall re-measure lease

liabilities based on present value of the lease payment after changes. In such cases the

discount rate adopted by the Company shall remain unchanged; however if the change in lease

payment results from a change in floating interest rates the Company shall use a revised

discount rate.

23. Estimated liability

√ Applicable □ Not Applicable

(1) Criterion for determining of estimated liability

If an obligation in relation to contingencies such as external guarantees discounting of

commercial acceptance bills pending litigation or arbitration and product quality assurance

is the present obligation of the Company and the performance of such obligation is likely to

lead to an outflow of economic interests and its amount can be reliably measured such

obligation shall be recognized as an estimated liability.

(2) Measurement of estimated liability

The estimated liability shall be initially measured according to the best estimate of the

necessary expenses for the performance of the present obligation. If there is a continuous

range for the necessary expenses and if all the outcomes within this range are equally likely

to occur the best estimate shall be determined according to the middle estimate within the

range.; if there are two or more items involved the best estimate should be determined

according to all possible outcomes and relevant probabilities.At the balance sheet date the carrying value of estimated liabilities should be reviewed. If there

is objective evidence that the carrying value could not reflect in the current best estimate the

carrying value shall be adjusted to reflect the current best estimate.

24. Share-based payments

√ Applicable □ Not Applicable

For equity-settled share-based payment transaction in return for services from employees it shall

be measured at the fair value of equity instruments granted to the employees at the grant date.For the payment of such fair value that may only be exercised if services are fulfilled during the

vesting period or the specified performance condition is achieved the amount of such fair value

shall based on the best estimate of the number of exercisable equity instruments during the

vesting period be recognized in relevant costs or expenses in straight-line method with the

increase in the capital reserve accordingly.

136 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

The cash-settled share-based payment shall be measured at the fair value of liability assumed by

the Company which is determined based on the shares or other equity instruments. For the cash-

settled share-based payment that may be exercised immediately after the grant the fair value of

the liability assumed by the Company shall on the date of the grant be recognized in relevant

costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based

payment that may be exercised if services are fulfilled during the vesting period or the specified

performance condition is achieved on each balance sheet date within the vesting period the

services acquired in the current period shall based on the best estimate of exercise be

recognized in relevant costs or expenses at the fair value of the liability assumed by the Company

and the liabilities shall be adjusted correspondingly.At each balanced sheet date and the settlement date prior to the settlement of liabilities the fair value

of the liability is re-measured with its change consolidated in profit/loss.When there are changes to the Company’s share-based payment plans if the modification

increases the fair value of the equity instruments granted corresponding recognition of service

increase in accordance with the increase in the fair value of the equity instruments; if the

modification increases the number of equity instruments granted the increase in fair value of the

equity instruments is recognized as a corresponding increase in service achieved. Increase in the

fair value of equity instruments refer to the difference between the fair values of the equity

instrument on the modified date before or after the modification. If the Company modifies the

vesting conditions in such manner conductive to the employees including the shortening of the

vesting period change or cancellation of the performance conditions (rather than market

conditions) the Company shall consider the modified vesting conditions upon the disposal of

vesting conditions. If the modification reduces the total fair value of shares paid or the Company

uses other methods not conductive to employees to modify the terms and conditions of share-

based payment plans it will continue to be accounted for the services obtained in the

accounting treatment as if the change had not occurred unless the Company cancelled some or

all of the equity instruments granted.During the vesting period if the Company cancel equity instruments granted which will be treated

as accelerating the exercise of rights and any amount to be charged over the remaining vesting

period should be recognized immediately in the profit or loss while at the same time recognize

the capital reserve. Employees or other parties can choose to meet non-vesting conditions but

for those that are not met in the vesting period the Company will treat it as cancellation of

equity instruments granted.

25. Revenue

√ Applicable □ Not Applicable

Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries

during day-to-day operations which might lead to increase of shareholders’ equity and be

irrelevant to capital invested by shareholders.The Company and its subsidiaries performed performance obligations stated in the contract i.e.recognized revenue when the client obtains the control right of relevant goods or services.Haier Smart Home Co. Ltd. Interim Report 2022 137Section X Financial Report

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.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;

138 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

* 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.

(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.Haier Smart Home Co. Ltd. Interim Report 2022 139Section X Financial Report

(3) Warranty obligations

According to contractual agreement and regulations of laws the Company provides quality

assurance for goods sold and project constructed. For guarantee-type quality assurance in

order to ensure the client that goods sold comply with existing standards the Company

conducts accounting treatment in accordance with estimated liabilities. For service-type

quality assurance in order to ensure the client that we also provide a separate service other

than that the goods sold comply with existing standards the Company takes it as a

separate performance obligation and allocates partial transaction price to service-type

quality assurance in accordance with the relevant proportion of separate selling price of

goods and service-type quality assurance and recognizes revenue when the client obtains

control right over services. When assessing whether quality assurance provides a separate

service other than ensuring the client that the goods sold comply with existing standards

the Company shall consider factors such as whether such quality assurance is under

statutory requirements or industrial practices the term of quality assurance and the nature

of the Company’s commitment to perform the tasks.

26. Government grants

√ Applicable □ Not Applicable

(1) Types of government grants

Government grants refer to the gratuitous monetary assets or non-monetary assets

obtained by the Company from the government excluding the capital invested by the

government as an owner. The government grants are mainly divided into asset-related

government grants and revenue-related government grants.

(2) Accounting treatment of government grants

Asset-related government grants shall be recognized as deferred income in current profit or

loss on an even basis over the useful life of relevant assets; government grants measured

at nominal amount shall be recognized directly in current profit or loss. Revenue-related

government grants shall be treated as follows: * 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.

140 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

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.

27. Deferred income tax assets/deferred income tax liabilities

√ Applicable □ Not Applicable

Deferred income tax assets and deferred income tax liabilities of the Company are recognized:

(1) Based on the difference between the carrying amount and the tax base amount of an asset

or a liability (items not recognized as assets and liabilities but their tax base is ascertained

by the tax laws and regulations the tax base is the difference) deferred income tax asset

or deferred income tax liability is calculated using the applicable tax rate prevailing at the

expected time of recovering the asset or discharging the liability.

(2) Deferred income tax asset is recognized to the extent that there is enough taxable income

for the deduction of the deductible temporary difference. At the balance sheet date if there

is sufficient evidence that there will be enough taxable income in the future for the

deduction of the deductible temporary difference the deferred income tax asset not

recognized in previous accounting period is recognized. If there is no sufficient evidence

that there will be enough taxable income in the future for the deduction of the deferred

income tax asset the carrying value of the deferred income tax asset is reduced.Haier Smart Home Co. Ltd. Interim Report 2022 141Section X Financial Report

(3) Deferred income tax liability is recognized for taxable temporary difference arising from

investments in subsidiaries and associated companies unless the Company could control

the time of reversal of the temporary differences and the temporary differences would not

be probably reversed in the foreseeable future. For deductible temporary differences arising

from investments in subsidiaries and associated companies deferred income tax asset is

recognized if the temporary difference will be very probably reversed in the foreseeable

future and it is highly probable that taxable income will be available in the future to deduct

the deductible temporary difference.

(4) No deferred income tax liability is recognized for a temporary difference arising from the initial

recognition of goodwill. No deferred income tax asset or deferred income tax liability is

recognized for the temporary differences resulting from the initial recognition of assets or

liabilities due to a transaction other than a business combination which affects neither

accounting profit nor taxable income (or deductible loss). At the balance sheet date

deferred income tax assets and deferred income tax liabilities are measured at the tax rates

that apply to the period when the asset is expected to be recovered or the liability is

expected to be settled.

28. Other significant accounting policies and accounting estimations

√ Applicable □ Not Applicable

(1) Asset securitization business

Some of the Company’s receivables are securitized. The Company’s underlying assets are

trusted to a special purpose entity which issues securities to investors. The Company serves

as the asset service supplier providing services including asset maintenance and its daily

management formulation of the annual asset disposal plan formulation and implementation of

the asset disposal plan signing relevant asset disposal agreements and periodic preparation of

asset service report.The Company has evaluated the extent to which it transfers the risks and rewards of

assets to other entities and the extent it exercises control over such entities while applying

the accounting policy in respect of securitization of financial assets:

* 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.

142 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(2) Hedge accounting

Hedge refers to risk management activities that enterprises designate financial instruments

as hedge instruments in order to manage risk exposure caused by specific risks such as

foreign exchange risk interest rate risk price risk and credit risk allowing to expect

changes in fair value or cash flow of hedge instruments to offset all or partial changes in

fair value or cash flow of hedged items.Hedged items refer to items which make enterprises face risks of changes in fair value or cash

flow and are designated as hedged objects and can be reliably measured.A hedging instrument is a financial instrument designated by an enterprise for the purpose

of hedging whose fair value or cash flow changes are expected to offset the change in the

fair value or cash flow of the hedged items.The Company continuously conducts assessment over whether hedge relationship complies

with requirements of hedge effectiveness on the starting date of hedge and during follow-

on period. Hedge effectiveness refers to the extent that changes in fair value or cash flow

of hedge instruments can offset that of hedged items caused by the risks of being hedged.The portion that the changes in fair value or cash flow of hedge instruments is greater or

less than that of hedged items is the ineffective portion of hedge.

(3) Explanations on significant accounting estimates

Judgments estimates and assumptions shall be made to book value of the financial

statements items which could not be measured accurately due to the inherent

uncertainties of operating activities while applying accounting policy. Such judgments

estimates and assumptions were based on the management’s historical experience and

made after other various factors are considered. These judgments estimates and

assumptions will influence the amount of revenues expenses assets and liabilities

presented in financial reports and the disclosure of contingent liabilities on the balance

sheet date. However the actual results caused by the uncertainties of these estimations

may be different from the current estimates of the management and thus cause a material

adjustment to the carrying amounts of assets and liabilities affected in the future. The

judgments estimates and assumptions mentioned above shall be reviewed on a going

concern basis. If the revisions to accounting estimates only affect the current period the

amount affected shall be recognized in the current period; if the revisions affect both the

current and future periods the amount affected shall be recognized in both the current and

future periods.Haier Smart Home Co. Ltd. Interim Report 2022 143Section X Financial Report

On the balance sheet date the Company needs to have judgments estimates and assumptions

about the following items on the financial statements:

* 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.* Provision of expected credit losses

The Company calculates the expected credit losses in accordance with breach risk

exposure and expected credit loss rate and confirms expected credit loss rate on the

basis of breach possibilities and breach loss rate. When confirming expected credit loss

rate the Company uses data such as internal historical credit loss experiences and

conducts adjustments over historical data in combination with current status and forward-

looking information. When considering forward-looking information indexes used by the

Company include risks such as economic downturn growth of expected unemployment

rate changes in external market environment technological environment and client

conditions. The Company regularly monitors and reviews relevant assumptions relating to

calculation of expected credit losses. The aforesaid estimation techniques and key

assumptions have not changed substantially in this year.

144 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

* 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.* 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.Haier Smart Home Co. Ltd. Interim Report 2022 145Section X Financial Report

* 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.* 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.

146 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

* 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.

29. Changes in the significant accounting policies and accounting estimates

(1). Changes in the significant accounting policies

□ Applicable √ Not Applicable

(2). Changes in the significant accounting estimates

□ Applicable √ Not Applicable

VI. TAXATION

1. Main tax categories and rates

Main tax categories and rates

√ Applicable □ Not Applicable

Tax categories Basis of taxation Tax rate

Value-added tax Taxable revenue from sales of 6% 9% 13%

goods or rendering services

City maintenance and construction tax Circulation Taxes payable 7%

Enterprise income tax Taxable income Statutory tax rate

or preferential

rates as follows

(Local) education surcharge Circulation Taxes payable 1% 2% 3%

Disclosure of tax entities with different enterprise income tax rates

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 147Section X Financial Report

2. Preferential tax

√ Applicable □ Not Applicable

Companies subjected to preferential tax:

Name of company Tax rate Preferential tax

Qingdao Haier Refrigerator Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Special Refrigerator Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Haier Dishwasher Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Special Freezer Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Intelligent Home 15.00% entitled to the preferential taxation

Appliance Technology Co. Ltd. policies as a hi-tech enterprise

Wuhan Haier Electronics Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Wuhan Haier Freezer Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Hefei Haier Refrigerator Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Hefei Haier Air-conditioning Co. Limited 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Zhengzhou Haier Air-conditioning Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Shenyang Haier Refrigerator Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Air-Conditioner 15.00% entitled to the preferential taxation

Electronics Co. Ltd. policies as a hi-tech enterprise

Qingdao Meier Plastic Powder Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Hai Gao Design and 15.00% entitled to the preferential taxation

Manufacture Co. Ltd. policies as a hi-tech enterprise

Qingdao Hairi Hi-Tech Model Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier (Jiaozhou) 15.00% entitled to the preferential taxation

Air-conditioning Co. Limited policies as a hi-tech enterprise

Qingdao Haier Intelligent Technology 15.00% entitled to the preferential taxation

Development Co. Ltd. policies as a hi-tech enterprise

148 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Name of company Tax rate Preferential tax

Foshan Haier Freezer Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Central Air Conditioning 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Air Conditioner Gen 15.00% entitled to the preferential taxation

Corp. Ltd. policies as a hi-tech enterprise

Haier U+smart Intelligent Technology 15.00% entitled to the preferential taxation

(Beijing) Co. Ltd. policies as a hi-tech enterprise

Beijing Zero Micro Technology Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Hefei Haier Washing Machine Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Haier Washing Machine Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Jiaonan Haier Washing 15.00% entitled to the preferential taxation

Machine Co. Ltd. policies as a hi-tech enterprise

Foshan Shunde Haier Electric Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Tianjin Haier Washing Appliance Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Economic and Technological 15.00% entitled to the preferential taxation

Development Zone Haier Water policies as a hi-tech enterprise

Heater Co. Ltd.Wuhan Haier Water Heater Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Foshan Drum Washing Machine Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Strauss Water Equipment Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Haier Smart Living Appliances 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier New Energy Electric 15.00% entitled to the preferential taxation

Appliance Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Washing Appliance Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Qingdao Ririshun Lexin Cloud 15.00% entitled to the preferential taxation

Technology Co. Ltd. policies as a hi-tech enterprise

Hefei Haier Drum Washing Machine Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Zhengzhou Haier New Energy 15.00% entitled to the preferential taxation

Technology Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Electronic Plastic Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Haier Smart Home Co. Ltd. Interim Report 2022 149Section X Financial Report

Name of company Tax rate Preferential tax

Qingdao Wei Xi Intelligent Technology 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Special Refrigerating 15.00% entitled to the preferential taxation

Appliance Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Hefei Haier Air-conditioning Co. Limited 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Beijing Lingli Technology Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Hairuijiejing Electronics Co. 15.00% entitled to the preferential taxation

Ltd. policies as a hi-tech enterprise

Shanghai Haier Medical Technology 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Qingdao Yunshang Yuyi IOT Technology 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Haier (Shanghai) Home Appliance 15.00% entitled to the preferential taxation

Research and Development Center policies as a hi-tech enterprise

Co. Ltd.Haier (Shenzhen) R&D Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Qingdao Ririshun Lejia IOT Technology 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Qingdao Haier Smart Electrical 15.00% entitled to the preferential taxation

Equipment Limited policies as a hi-tech enterprise

Laiyang Haier Smart Kitchen Appliance 15.00% entitled to the preferential taxation

Co. Ltd. policies as a hi-tech enterprise

Guangdong Heilong Intelligent 15.00% entitled to the preferential taxation

Technology Co. Ltd policies as a hi-tech enterprise

Dalian Haier Refrigerator Co. Ltd. 15.00% entitled to the preferential taxation

policies as a hi-tech enterprise

Chongqing Haier Electronics Sales Co. 15.00% entitled to the preferential taxation

Ltd. and some Western companies policies under the Western

Development initiative of the PRC

Chongqing Xin Ririshun Electric Sales 15.00% entitled to the preferential taxation

Co. Ltd. and some Western policies under the Western

companies Development initiative of the PRC

Chongqing Haier Air-conditioning Co. 15.00% entitled to the preferential taxation

Ltd. policies under the Western

Development initiative of the PRC

Chongqing Haier Refrigeration 15.00% entitled to the preferential taxation

Appliance Co. Ltd. policies under the Western

Development initiative of the PRC

150 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Name of company Tax rate Preferential tax

Guizhou Haier Electronics Co. Ltd. 15.00% entitled to the preferential taxation

policies under the Western

Development initiative of the PRC

Chongqing Haier Washing Machine Co. 15.00% entitled to the preferential taxation

Ltd policies under the Western

Development initiative of the PRC

Chongqing Haier Water Heater Co. Ltd 15.00% entitled to the preferential taxation

policies under the Western

Development initiative of the PRC

Chongqing Haier Drum Washing 15.00% entitled to the preferential taxation

Machine Co. Ltd policies under the Western

Development initiative of the PRC

Qingdao Haier Technology Co. Ltd. 10.00% entitled to half deduction the

preferential taxation policies as a

key software enterprise

Haier Smart Home Co. Ltd. Interim Report 2022 151Section X Financial Report

VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIAL

STATEMENTS

Unless otherwise specified the following closing balance refers to the amount as of 30 June 2022.The opening balance refers to the amount as of 31 December 2021. The amount for the current period

refers to the amount in the period from 1 January to 30 June 2022. The amount of the previous period

refers to the amount of the period from 1 January to 30 June 2021.

1. Monetary funds

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Items balance Opening balance

Cash on hand 912949.13 3085964.28

Deposit in bank 48618833840.21 44884013498.57

Other monetary funds 1696374469.94 1083936300.66

Total 50316121259.28 45971035763.51

Including: Total amount deposit overseas 8844868035.47 8966246518.74

Other explanations:

Other monetary funds mainly were the investment fund the deposit on third party payment platforms

security deposit and other restricted fund etc.

2. Financial assets held for trading

Closing

Items balance Opening balance

Short-term wealth management products 2153399840.01 2168622090.00

Investment in equity instruments 106249514.01 330557610.82

Investment fund 158003403.16 150516274.37

Forward foreign exchange contracts 142519319.40 136379553.90

Total 2560172076.58 2786075529.09

152 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

3. Derivative financial assets

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Items balance Opening balance

Forward foreign exchange contracts 151624141.73 72822190.59

Interest rate swap agreement 11460584.69

Forward commodity contracts 6997783.42

Total 163084726.42 79819974.01

4. Bills receivable

(1) Details of bills receivable

Closing

Items balance Opening balance

Bank acceptance notes 8200648941.32 13053809505.49

Commercially acceptance notes 282194019.57 368076810.80

Balance of bills receivable 8482842960.89 13421886316.29

Allowance for bad debts 65206789.48 67095248.00

Bills receivable net 8417636171.41 13354791068.29

(2) Changes in allowance for bad debts of bills receivable in the current period

√ Applicable □ Not Applicable

Opening Increase for the Decrease for the Closing

Items balance current period current period balance

Write-off/

Other other

Provision increases Reversal movement

Allowance for bad debts 67095248.00 35478414.82 3986104.53 33380768.81 65206789.48

Total 67095248.00 35478414.82 3986104.53 33380768.81 65206789.48

The Company’s bills receivable was mainly generated from daily operation activities such as

sales of commodity provision of labor etc. and the allowance for bad debts was measured

based on expected credit loss over the entire duration whether there exist significant financing

components.The bills receivable pledged by the Company at the end of the period was

RMB7905189214.59 (amount at the beginning of the period: RMB12526757275.50).Haier Smart Home Co. Ltd. Interim Report 2022 153Section X Financial Report

5. Accounts receivable

* Accounts receivable are disclosed by aging as follows:

Closing

Aging balance Opening balance

Within one year 17992836678.82 14794015085.51

1–2 years 632122299.07 376187052.43

2–3 years 187957672.11 78861353.76

Over 3 years 106770894.99 135768657.33

Accounts receivable balance 18919687544.99 15384832149.03

Allowance for bad debts 999585676.27 742172698.81

Accounts receivable net 17920101868.72 14642659450.22

* 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 523300149.88 517255653.38 98.84 6044496.50

Account receivables

subject to provision for

bad debts on a

collective basis 18396387395.11 482330022.89 2.62 17914057372.22

Total 18919687544.99 999585676.27 5.28 17920101868.72

154 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 381406983.17 320303932.13 83.98 61103051.04

Account receivables subject

to provision for bad

debts on a collective

basis 15003425165.86 421868766.68 2.81 14581556399.18

Total 15384832149.03 742172698.81 4.82 14642659450.22

* Account receivables subject to provision for bad debts on a collective basis

√ Applicable □ Not Applicable

Items Balance as at the end of the period

Allowance for Percentage of

Book Balance bad debts provision (%)

Within 1 year 17789646425.90 386576175.00 2.17

1–2 years 439466228.58 10765414.88 2.45

2–3 years 74455469.23 21507533.99 28.89

Over 3 years 92819271.40 63480899.02 68.39

Total 18396387395.11 482330022.89 2.62

(continued)

Items Balance as at the beginning of the period

Allowance for Percentage of

Book Balance bad debts provision (%)

Within 1 year 14566776731.02 312565470.27 2.15

1–2 years 229160440.39 9396866.15 4.10

2–3 years 76516782.74 23388497.43 30.57

Over 3 years 130971211.71 76517932.83 58.42

Total 15003425165.86 421868766.68 2.81

Haier Smart Home Co. Ltd. Interim Report 2022 155Section 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 movement Reversal movement

Allowance for bad debts 742172698.81 264092566.49 33380768.81 41415511.37 –1355153.53 999585676.27

* The aggregate amount of the top 5 account receivables as at the end of the period was

RMB4500321373.99 (amount at the beginning of the period: RMB3856035612.12)

accounting for 23.79% of the book balance of account receivables (as at the beginning of

the period: 25.06%).* Actual write-off of accounts receivable in the current period The amount of accounts

receivable actually written off in the current period is RMB13058370.53 (amount for the

corresponding period: RMB10143124.34) 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 RMB5148671077.42 (amount at the beginning of the

period: RMB4127671197.04) 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 RMB2848722579.01

(amount at the beginning of the period: RMB1913582226.30).

156 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

6. Prepayments

(1) Prepayments are disclosed by aging as follows:

Closing

Aging balance Opening balance

Within one year 820552086.75 816906386.84

1–2 years 31756515.81 22367994.84

2–3 years 9516658.41 9728842.63

Over 3 years 6287399.50 8231174.95

Total 868112660.47 857234399.26

(2) The amount of the top 5 in the prepayments at the end of the period totals

RMB88045020.96 which accounts for 10.14% of the book balance of prepayment

(amount at the beginning of the period: RMB174076576.41 accounting for 20.31%).

7. Other receivables

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Items balance Opening balance

Interest receivable 400015260.13 294379438.82

Other receivables 1756744930.86 1662342182.84

Total 2156760190.99 1956721621.66

Other explanations:

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 157Section X Financial Report

(1) Interest receivable

Closing

Aging balance Opening balance

Within one year 266633376.88 231011687.28

1–2 years 79940828.30 47983727.86

2–3 years 45391054.95 15384023.68

Over 3 years 8050000.00

Total 400015260.13 294379438.82

(2) Other receivables

* Other receivables are disclosed by aging as follows:

Closing

Aging balance Opening balance

Within one year 1348982183.92 1274872226.90

1–2 years 118830576.45 109677138.52

2–3 years 361449614.43 355219038.13

Over 3 years 127053718.52 113213998.61

Other receivables balance 1956316093.32 1852982402.16

Allowance for bad debts 199571162.46 190640219.32

Other receivables net 1756744930.86 1662342182.84

* The total amount of the top 5 other receivables at the end of the period is

RMB776125043.70 (amount at the beginning of the period: RMB588207363.50) which

accounts for 39.67% of the book balance of other receivables (at the beginning of the

period: 31.74%).

158 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 112022673.37 78617545.95 190640219.32

Provision for the

current period 9354271.38 9354271.38

Reversal for the current

period 5446790.65 5446790.65

Write-off and others for

the current period –5076162.41 52700.00 –5023462.41

Balance as at the end

of the period 121006316.51 78564845.95 199571162.46

* Changes in allowance for bad debt provision of other receivables in the current period

Opening Increase for the Decrease for the Closing

Items balance current period current period balance

Provision

for the Write-off/

current Other other

period movement Reversal movement

Allowance for bad

debts 190640219.32 9354271.38 5446790.65 –5023462.41 199571162.46

* Other receivables written off during the period

The amount of other receivables actually written off in the current period is RMB306025.66

(amount for the corresponding period: RMB4293611.04) 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 2022 159Section 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 5505526057.02 129495787.11 5160836755.15 117428681.85

Work in progress 148110212.49 115676026.77

Finished goods 36906925191.71 1424430179.89 35990645130.23 1248466540.71

Total 42560561461.22 1553925967.00 41267157912.15 1365895222.56

(2) Impairment provision of inventories

Opening Increase for Decrease for Closing

Items balance the period the period balance

Other Write-off/other

Provision Increases Reversal movement

Raw material 117428681.85 13180554.37 1113449.11 129495787.11

Work in progress

Finished goods 1248466540.71 372249744.36 13571021.80 182715083.38 1424430179.89

Total 1365895222.56 385430298.73 13571021.80 183828532.49 1553925967.00

9. Contract assets

(1) Details

Items Closing balance Opening balance

Book value Impairment Book value Impairment

balance Provision balance Provision

Relating to construction

service contract 280621191.36 304434294.70

Total 280621191.36 304434294.70

160 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 1551745385.00 316590333.42

Taxes to be deducted 2588443347.96 3275762776.66

Return cost receivable 657641276.81 336533252.53 585140752.69 328552987.70

Others 54260359.93 71809601.50

Total 4852090369.70 336533252.53 4249303464.27 328552987.70

(2) Impairment provision

Opening Increase for Decrease for Closing

Items balance the period the period balance

Other Write-off/other

Provision Increases Reversal movement

Return cost receivables 328552987.70 336533252.53 1330581.65 327222406.05 336533252.53

Total 328552987.70 336533252.53 1330581.65 327222406.05 336533252.53

Haier Smart Home Co. Ltd. Interim Report 2022 161Section X Financial Report

11. Long-term equity investments

√ Applicable □ Not Applicable

Investees Opening balance Increase/decrease for the period

Adjustment in

Investment profit other Declaration of

Investment recognized under comprehensive Other changes in cash dividends or

increase equity method income equity profits

Associate:

Haier Group Finance Co. Ltd. 7108709375.38 318680094.64 7661131.00 –218400000.00

Bank of Qingdao Co. Ltd. 2654248436.12 352102643.20 165347683.41 –6472692.99 7483342.53 –76288906.40

Wolong Electric (Jinan) Motor

Co. Ltd. 151837378.99 12237610.99

Qingdao Hegang New Material

Technology Co. Ltd. 312493256.21 10746218.86

Qingdao Haier SAIF Smart

Home Industry Investment

Center (Limited Partnership) 393598372.59 –904601.39 –17199060.82

Mitsubishi Heavy Industries

Haier (Qingdao)

Air-conditioners Co. Ltd. 682901976.73 52979520.61

Qingdao Haier Carrier

Refrigeration Equipment

Co. Ltd. 409053808.05 10936464.63 –17900226.81

Qingdao Haier multimedia Co.Ltd. 277102563.88 –14629468.29

Qingdao Haier Moulds Co. Ltd. 269158534.54 –272577907.92 3419373.38

Hefei Feier Smart Technology

Co. Ltd. 265106.27 –265106.27

Anhui Kunhe Intelligent

Technology Co. Ltd.* 1877574.14 109595.88

Zhejiang Futeng Fluid

Technology Co. Ltd.* 82098847.75

Beijing Mr. Hi Network

Technology Company

Limited 7507759.75

Beijing Xiaobei Technology Co.Ltd. 2687341.82 –2687341.82

Beijing ASU Tech Co. Ltd. 15529700.01 –12256393.21 9809616.09

Shenzhen Genyuan Environment

al Protection Technology

Co. Ltd. 6914487.73 681807.62

Qingdao Haimu Investment

Management Co. Ltd. 2465299.70 –53862.77

Qingdao Haimu Smart Home

Investment Partnership

(Limited Partnership) 59424662.44 –100251.06

* For identification purposes only

162 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Investees Opening balance Increase/decrease for the period

Adjustment in

Investment profit other Declaration of

Investment recognized under comprehensive Other changes in cash dividends or

increase equity method income equity profits

Guangzhou Heying Investment

Partnership (Limited

Partnership) 285793577.87

Qingdao Home Wow Cloud

Network Technology Co.Ltd. 2600050.50 –34037.86

Bingji (Shanghai) Corporate

Management Co. Ltd. 972200487.88 23218909.91

Youjin (Shanghai) Corporate

Management Co. Ltd 1766819068.86 42216199.84

RRS (Shanghai) Investment Co.Ltd. 3211580125.21 76756726.98

Haier Best Water Technology

Co. Ltd. 79785557.39 –1432974.65

Huizhixiangshun Equity

Investment Fund (Qingdao)

Partnership (Limited

Partnership) 119008967.03 119797980.61

Qingdao Ririshun Huizhi

Investment Co. Ltd. 2083482.78 2000000.00

Qingdao Xinshenghui

Technology Co. Ltd. 9964773.52 –953012.17

Meiling Candy Washing Machine

Co. Ltd. 22752232.07 –92564.23

EuropaltersItaliaS.r.l. 9361965.48

OryginLLC 13494211.65

Konan Electronic Co. Ltd. 69273712.61 305414.02 –7882359.76 –237150.00

HNR Company (Private) Limited 114055318.97 17731336.90 –7497761.95

HPZ LIMITED 71269048.97 6432609.47 2444486.30

Haier Raya Electric S.A.E 10568507.40 –716353.69

CONTROLADORAMABES.A.deC.V. 4131983673.10 246779790.69 119156456.19 –47111575.26

Middle East Airconditioning

Company Limited 10318898.13 –2475341.75 465090.46

Total 23327293929.87 212129585.72 954665390.49 107874349.25 17292958.62 –377136919.29

Haier Smart Home Co. Ltd. Interim Report 2022 163Section 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. 7216650601.02

Bank of Qingdao Co. Ltd. 3096420505.87

Wolong Electric (Jinan)

Motor Co. Ltd. 164074989.98

Qingdao Hegang New

Material Technology Co.Ltd. 323239475.07

Qingdao Haier SAIF Smart

Home Industry

Investment Center

(Limited Partnership) 375494710.38

Mitsubishi Heavy Industries

Haier (Qingdao) Air-

conditioners Co. Ltd. 735881497.34

Qingdao Haier Carrier

Refrigeration Equipment

Co. Ltd. 402090045.87 –21000000.00

Qingdao Haier Multimedia

Co. Ltd 262473095.59 –88300000.00

Qingdao Haier Moulds Co.Ltd

Hefei Feier Smart

Technology Co. Ltd.Anhui Kunhe Intelligent

Technology Co. Ltd.* 1987170.02

Zhejiang Futeng Fluid

Technology Co. Ltd.* 82098847.75

Beijing Mr. Hi Network

Technology Company

Limited 7507759.75 –7507759.75

Beijing Xiaobei Technology

Co. Ltd.Beijing ASU Tech Co. Ltd. 13082922.89

Shenzhen Genyuan

Environmental Protection

Technology Co. Ltd. 7596295.35 –6914487.73

Qingdao Haimu Investment

Management Co. Ltd. 2411436.93

Qingdao Haimu Zhijia

Investment Partnership

(Limited Partnership) 59324411.38

* For identification purposes only

164 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Impairment

provision

Investees Increase/decrease for the period Closing balance Closing balance

Other Disposal of the

movement investment

Guangzhou Heying

Investment Partnership

(Limited Partnership) 285793577.87

Qingdao Home Wow Cloud

Network Technology Co.Ltd. 2566012.64

Bingji (Shanghai) Corporate

Management Co. Ltd. 995419397.79

Youjin (Shanghai) Corporate

Management Co. Ltd 1809035268.70

RRS (Shanghai) Investment

Co. Ltd. 3288336852.19

Haier Best Water

Technology Co. Ltd. 78352582.74

Huizhixiangshun Equity

Investment Fund

(Qingdao) Partnership

(Limited Partnership) 238806947.64

Qingdao Ririshun Huizhi

Investment Co. Ltd. 4083482.78

Qingdao Xinshenghui

Technology Co. Ltd. 9011761.35

Meiling Candy Washing

Machine Co. Ltd. 22659667.84

EuropaltersItaliaS.r.l. 9361965.48

OryginLLC 13494211.65

Konan Electronic Co. Ltd. 61459616.87

HNR Company (Private)

Limited 124288893.92

HPZ LIMITED 80146144.74

HaierRayaElectricS.A.E 9852153.71

CONTROLADORAMABES.A.deC.V. –7751424.52 4443056920.20

Middle East Airconditioning

Company Limited 8308646.84

Total –7751424.52 24234367870.14 –123722247.48

Haier Smart Home Co. Ltd. Interim Report 2022 165Section X Financial Report

12. Investment in other equity instruments

(1) Details of investment in other equity instruments:

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Items balance Opening balance

SINOPEC Fuel Oil Sales Corporation Limited 1285836952.03 1290487901.40

Haier COSMO IOT Ecosystem Technology

Co. Ltd. 2812000000.00 2812000000.00

Others 754608260.88 746221537.56

Total 4852445212.91 4848709438.96

(2) Dividends from investment in other equity during the current period:

Items Amount for the current period

Others — Shenzhen Toposcend Capital etc. 2596583.32

Total 2596583.32

13. Investment properties

Measure mode for investment properties

(1) The changes in investment properties measured at cost for this year are as follows:

Houses and

Items buildings Land use rights Total

I. Original book value

1. Opening balance 34022711.50 2128550.51 36151262.01

2. Increase for the period

(1) Outsourced

(2) Inventories\fixed

assets\construction in

progress transferred in

(3) Increase in business

combinations

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

166 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Houses and

Items buildings Land use rights Total

4. Converted difference in

foreign currency

statements 1594734.05 1594734.05

5. Closing balance 35617445.55 2128550.51 37745996.06

II. Accumulated depreciation

and accumulated

amortization

1. Opening balance 10555753.15 630620.38 11186373.53

2. Increase for the period

(1) Provision or

amortization 649271.97 20118.11 669390.08

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

4. Converted difference in

foreign currency

statements 265983.26 265983.26

5. Closing balance 11471008.38 650738.49 12121746.87

III. Impairment provision

1. Opening balance

2. Increase for the period

(1) Provision

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

4. Converted difference in

foreign currency

statements

5. Closing balance

IV. Book value

1. Closing book value 24146437.17 1477812.02 25624249.19

2. Opening book value 23466958.35 1497930.13 24964888.48

(2) The depreciation and amortization amount charge for the period is RMB669390.08 (amount

for the corresponding period: RMB920365.49).

(3) The recoverable amount of the investment real estate of the Company at the end of the

period is not less than its book value so no provision for impairment is made.Haier Smart Home Co. Ltd. Interim Report 2022 167Section X Financial Report

14. Fixed assets

Presented as

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Items balance Opening balance

Fixed assets 24238045798.12 22302546799.12

Disposals of fixed assets 4543369.52 4543369.52

Total 24242589167.64 22307090168.64

Fixed assets

(1) Fixed assets:

Houses and Production Transportation

Items buildings equipment equipment

I. Original book value

1. Opening balance 11353869023.33 26553243290.47 179083687.93

2. Increase for the period

(1) Acquisition 24855788.90 648692116.07 890259.74

(2) Construction in progress

transferred in 473266969.36 1316653800.21 6815087.61

(3) Increase in business combinations

3. Decrease for the period

(1) Disposal or Write-off 13836783.88 275325898.20 3042808.78

(2) Disposal of subsidiary 754649.79

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements 362938367.98 1035957018.26 4804656.26

5. Closing balance 12201093365.69 29279220326.81 187796232.97

II. Accumulated depreciation

1. Opening balance 3922452407.13 13208010163.95 107950259.30

2. Increase for the period

(1) Provision 266310942.35 1250733974.65 9978627.44

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or write-off 7174156.14 212276135.09 2883264.99

(2) Disposal of subsidiary 645746.91

(3) Transfer to hold for sale

168 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Houses and Production Transportation

Items buildings equipment equipment

4. Converted difference in foreign

currency statements 38318137.17 478123536.12 1941465.37

5. Closing balance 4219907330.51 14724591539.63 116341340.21

III. Impairment provision

1. Opening balance 29499438.21 21647562.09 173485.13

2. Increase for the period

(1) Provision

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or Write-off 20287.80

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements –2488257.57 –263526.91 –10241.16

5. Closing balance 27011180.64 21363747.38 163243.97

IV. Book value

1. Closing book value 7954174854.54 14533265039.80 71291648.79

2. Opening book value 7401917177.99 13323585564.43 70959943.50

(Continued)

Items Office furniture Others Total

I. Original book value

1. Opening balance 1030764014.90 2464395005.90 41581355022.53

2. Increase for the period

(1) Acquisition 78881852.21 34929055.41 788249072.33

(2) Construction in progress

transferred in 84566124.47 162827779.57 2044129761.22

(3) Increase in business combinations

3. Decrease for the period

(1) Disposal or Write-off 25668390.60 52084817.45 369958698.91

(2) Disposal of subsidiary 37980.00 792629.79

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements 19135686.09 149484827.72 1572320556.31

5. Closing balance 1187679287.07 2759513871.15 45615303083.69

II. Accumulated depreciation

1. Opening balance 565204246.86 1418493692.20 19222110769.44

2. Increase for the period

Haier Smart Home Co. Ltd. Interim Report 2022 169Section X Financial Report

Items Office furniture Others Total

(1) Provision 142392072.66 125203692.69 1794619309.79

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or Write-off 13259061.00 14233168.34 249825785.56

(2) Disposal of subsidiary 36090.25 681837.16

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements 7271653.01 31510438.78 557165230.45

5. Closing balance 701608911.53 1560938565.08 21323387686.96

III. Impairment provision

1. Opening balance 258528.08 5118440.46 56697453.97

2. Increase for the period

(1) Provision

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or Write-off 4406.40 24694.20

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements –27194.93 –13940.59 –2803161.16

5. Closing balance 226926.75 5104499.87 53869598.61

IV. Book Value

1. Closing book value 485843448.79 1193470806.20 24238045798.12

2. Opening book value 465301239.96 1040782873.24 22302546799.12

(2) In the current period the balance of the construction in progress transferred to the original

value of the fixed assets is total RMB2044129761.22 (amount for the corresponding

period: RMB1484788584.15).

170 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(3) There was no mortgage secured by the fixed assets mortgage at the end of the period and

there was no mortgage secured by the fixed assets mortgage at the beginning of the

period.

(4) Disposals of fixed assets

Reason for

Closing Opening transferring to

Items balance balance disposal

Relocation of Qingdao

Industrial Park 4543369.52 4543369.52 Demolition

Total 4543369.52 4543369.52

15. Construction in progress

Presented as

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing Opening

Items balance balance

Construction in progress 4858973923.48 4183263398.79

Construction materials

Total 4858973923.48 4183263398.79

Haier Smart Home Co. Ltd. Interim Report 2022 171Section X Financial Report

Construction in progress

(1) Details of construction in progress

√ Applicable □ Not Applicable

Unit and Currency: RMB

Projects Closing balance Opening balance

Impairment Impairment

Book balance provision Book value Book balance provision Book value

Smart Home Appliance

Technology Project 822506153.78 822506153.78 598122551.15 598122551.15

Eastern Europe Project 410516576.87 410516576.87 182497069.58 182497069.58

Shanghai Haier Washing

Appliance Project 304975083.42 304975083.42 4756839.22 4756839.22

Europe Candy Project 431710887.15 431710887.15 153117404.68 153117404.68

Special Freezer Project 222065402.53 222065402.53 220203225.72 220203225.72

America GEA Project 221394829.44 221394829.44 722008600.99 722008600.99

Qingdao Jiaozhou

Washing Appliance

Project 192445321.17 192445321.17 167168.14 167168.14

Hailvyuan Recycling

Technology Project 186280749.74 186280749.74 58589285.46 58589285.46

Zhengzhou New Energy

Project 163699647.98 163699647.98 125734579.67 125734579.67

New Zealand FPA Project 161190432.03 161190432.03 111516266.46 111516266.46

Qingdao Haier Washing

Machine Project 140224507.71 140224507.71 139065246.00 139065246.00

Haier India Project 127636129.62 127636129.62 179479688.03 179479688.03

Foshan Freezer Project 114194193.12 114194193.12 199726996.70 199726996.70

Haier Dishwasher Project 112460548.93 112460548.93 91964708.57 91964708.57

Wuhan Haier Freezer

Project 89806704.07 89806704.07 103052450.36 103052450.36

Hefei Haier Drum

Washing Machine

Project 87599984.93 87599984.93 54949612.93 54949612.93

Hefei Refrigerator Project 69449237.57 69449237.57 208080465.14 208080465.14

Qingdao Smart Appliance

Equipment Project 62138638.82 62138638.82 39116050.61 39116050.61

Tianjin Haier Washing

Appliance Project 51851612.74 51851612.74 59409379.45 59409379.45

Foshan Drum Washing

Machine Project 46487983.76 46487983.76 35705132.24 35705132.24

Special Refrigerator

Project 44668942.12 44668942.12 55838238.24 55838238.24

Others 796764668.50 1094312.52 795670355.98 841367421.17 1204981.72 840162439.45

Total 4860068236.00 1094312.52 4858973923.48 4184468380.51 1204981.72 4183263398.79

172 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(2) Details of significant changes of construction in progress for the period

Converted

difference in

Increase for foreign

Opening the current Transfer to currency Closing

Project Name balance period fixed tax Other decrease statements balance Source of fund

Smart home appliance

technology project 598122551.15 224383602.63 822506153.78 Self-funding

Eastern Europe Project 182497069.58 311848282.34 214893401.62 131064626.57 410516576.87 Self-funding

Shanghai Haier Washing

Appliance Project 4756839.22 300218244.20 304975083.42 Self-funding

Europe Candy Project 153117404.68 225876944.09 61928761.17 114645299.55 431710887.15 Self-funding

Special freezer Project 220203225.72 30677004.00 28814827.19 222065402.53 Self-funding

America GEA Project 722008600.99 156597708.77 677235170.56 20023690.24 221394829.44 Self-funding

Qingdao Jiaozhou

Washing Appliance

Project 167168.14 192445321.17 167168.14 192445321.17 Self-funding

Hailvyuan Recycling

Technology Project 58589285.46 127691464.28 186280749.74 Self-funding

Zhengzhou New Energy

Project 125734579.67 67690537.98 29725469.67 163699647.98 Self-funding

New Zealand FPA Project 111516266.46 97733306.99 45251422.96 –2807718.46 161190432.03 Self-funding

Qingdao Haier Washing

Machine Project 139065246.00 3628288.25 2469026.54 140224507.71 Self-funding

Self-funding/fund

Haier Indian Project 179479688.03 50251103.87 –1592454.54 127636129.62 raising

Foshan freezer Project 199726996.70 28921954.44 114454758.02 114194193.12 Self-funding

Haier Dishwasher Project 91964708.57 64617999.76 44122159.40 112460548.93 Self-funding

Wuhan Haier Freezer

Project 103052450.36 14019389.30 27265135.59 89806704.07 Self-funding

Hefei Haier Drum

Washing Machine

Project 54949612.93 54785576.69 22135204.69 87599984.93 Self-funding

Hefei Refrigerator Project 208080465.14 24729111.19 163360338.76 69449237.57 Self-funding

Qingdao Smart Appliance

Equipment Project 39116050.61 24324358.55 1301770.34 62138638.82 Self-funding

Tianjin Haier Washing

Appliance Project 59409379.45 16185270.24 23743036.95 51851612.74 Self-funding

Foshan Drum Washing

Machine Project 35705132.24 19869545.53 9086694.01 46487983.76 Self-funding

Special Refrigerator

Project 55838238.24 20579388.16 31748684.28 44668942.12 Self-funding

Self-funding/fund

Others 841367421.17 454583937.62 496286027.46 –2900662.83 796764668.50 raising

Total 4184468380.51 2461407236.18 2044240161.22 258432780.53 4860068236.00

Haier Smart Home Co. Ltd. Interim Report 2022 173Section X Financial Report

(3) Impairment provision of construction in progress

Opening Increase for Transfer to Other Exchange Closing

Project name balance the period fixed assets decrease differences balance

Lejia IOT Project 837735.85 837735.85

Other 367245.87 110400.00 –269.20 256576.67

Total 1204981.72 110400.00 –269.20 1094312.52

16. Right-of-use assets

Houses and Production Transportation

Items buildings equipment equipment

I. Original book value:

1. Opening balance 3565296279.05 43142180.40 205005241.06

2. Increase for the current period

(1) Increase 1161271114.89 301257.21 25412104.57

3. Decrease for the current period

(1) Disposal 611788508.76 795530.81 20112631.09

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements 156242728.76 –8765414.49 –8987426.53

5. Closing balance 4271021613.94 33882492.31 201317288.01

II. Accumulated amortization

1. Opening balance 1186766506.57 18538537.80 104827622.22

2. Increase for the current period

(1) Provision 323725547.97 4949946.49 34038164.63

3. Decrease for the current period

(1) Disposal 588472607.50 795530.81 19949709.83

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements 9634131.77 –1636435.14 –7304649.12

5. Closing balance 931653578.81 21056518.34 111611427.90

III. Impairment provision

1. Opening balance

2. Increase for the current period

(1) Provision

3. Decrease for the current period

(1) Disposal

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements

5. Closing balance

IV. Book Value

1. Closing book value 3339368035.13 12825973.97 89705860.11

2. Opening book value 2378529772.48 24603642.60 100177618.84

174 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(Continued)

Items Office furniture Other Total

I. Original book value:

1. Opening balance 56885631.59 392228761.08 4262558093.18

2. Increase for the current period

(1) Increase 8136184.29 33108576.29 1228229237.25

3. Decrease for the current period

(1) Disposal 1559558.19 202958067.53 837214296.38

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements —13517335.54 14659575.00 139632127.20

5. Closing balance 49944922.15 237038844.84 4793205161.25

II. Accumulated amortization

1. Opening balance 17981428.91 199765091.15 1527879186.65

2. Increase for the current period

(1) Provision 5060790.35 43718264.38 411492713.82

3. Decrease for the current period

(1) Disposal 1559558.19 202958067.53 813735473.86

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements —2593846.00 4990462.03 3089663.54

5. Closing balance 18888815.07 45515750.03 1128726090.15

III. Impairment provision

1. Opening balance

2. Increase for the current period

(1) Provision

3. Decrease for the current period

(1) Disposal

(2) Disposal of subsidiary

4. Converted difference in foreign

currency statements

5. Closing balance

IV. Book Value

1. Closing book value 31056107.08 191523094.81 3664479071.10

2. Opening book value 38904202.68 192463669.93 2734678906.53

Haier Smart Home Co. Ltd. Interim Report 2022 175Section X Financial Report

17. Intangible assets

√ Applicable □ Not Applicable

Proprietary Licenses and

Items technology franchises Land use rights

I. Original book value

1. Opening balance 1852677632.57 4242396745.16 1266446332.10

2. Increase for the current period

(1) Purchase 1037735.83 961872.37 46392458.56

(2) Internal research and

development 67576805.41

(3) Increase in business

combination

3. Decrease for the current period

(1) Disposal 20192568.03 60749402.91

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements –2494817.42 200306753.65 –500060.67

5. Closing balance 1918797356.39 4423472803.15 1251589327.08

II. Accumulated amortization

1. Opening balance 946309396.14 822985645.24 215300271.80

2. Increase for the current period

(1) Provision 102719184.79 15472631.47 15366965.82

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal 17102272.21 656357.40

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements 3510077.04 72622670.10 52947.00

5. Closing balance 1052538657.97 893978674.60 230063827.22

176 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Proprietary Licenses and

Items technology franchises Land use rights

III. Impairment provision

1. Opening balance

2. Increase for the current period

(1) Provision

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements

5. Closing balance

IV. Book Value

1. Closing book value 866258698.42 3529494128.55 1021525499.86

2. Opening book value 906368236.43 3419411099.92 1051146060.30

(Continued)

Application

management

software and

Items Trademark rights others Total

I. Original book value

1. Opening balance 2475717142.63 4195088908.80 14032326761.26

2. Increase in the current period

(1) Purchase 72126713.97 120518780.73

(2) Internal research and

development 232742532.42 300319337.83

(3) Increase in business

combination

3. Decrease for the current period

(1) Disposal 35194.39 25688952.22 106666117.55

(2) Disposal of subsidiary

(3) Transfer to hold for sale

Haier Smart Home Co. Ltd. Interim Report 2022 177Section X Financial Report

Application

management

software and

Items Trademark rights others Total

4. Converted difference in foreign

currency statements –21246625.22 85326599.51 261391849.85

5. Closing balance 2454435323.02 4559595802.48 14607890612.12

II. Accumulated amortization

1. Opening balance 2441416170.95 4426011484.13

2. Increase in the current period

(1) Provision 312603464.66 446162246.74

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal 17946662.17 35705291.78

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements 61303113.21 137488807.35

5. Closing balance 2797376086.65 4973957246.44

III. Impairment provision

1. Opening balance 55930533.23 55930533.23

2. Increase in the current period

(1) Provision

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Converted difference in foreign

currency statements

5. Closing balance 55930533.23 55930533.23

IV. Book value

1. Closing book value 2454435323.02 1706289182.60 9578002832.45

2. Opening book value 2475717142.63 1697742204.62 9550384743.90

At the end of the period the intangible assets developed through the Company accounted for 18.76%

of the original value (at the beginning of the period:17.06%).

178 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

18. Development cost

Converted

difference in

foreign

Opening Increase for currency Closing

Items balance the period Decrease for the period statements balance

Confirmed as Included in

an intangible Current profit Disposal of

asset and loss subsidiaries

91ABD.ERP IT

Program 41946252.47 37987997.64 49262205.87 1818982.22 32491026.46

IOT Project 110027251.84 151890695.99 161537475.35 12660213.46 87720259.02

Others 75918724.82 210205140.79 89519656.61 76108815.49 –15327990.08 105167403.43

Total 227892229.13 400083834.42 300319337.83 88769028.95 –13509007.86 225378688.91

19. Goodwill

Impact of

fluctuation in

Increase for Decrease for exchange rate

Items Opening balance the period the period for the period Closing balance

GEA 18938463729.43 993795916.39 19932259645.82

Candy 1877121985.56 –19282820.54 1857839165.02

Others 1011517345.77 –54937999.58 956579346.19

Total 21827103060.76 919575096.27 22746678157.03

In the case of a goodwill impairment test the Company compares the carrying amount of the

relevant asset group or asset group combination (including goodwill) with its recoverable amount.If the recoverable amount is less than the book value corresponding difference will be

recognized in profit or loss.The recoverable amount of the asset group (including goodwill) is calculated with discounted

estimated future cash flow method based on a management-approved 5–15 years budget. Future

cash flows beyond the budget period are estimated using the estimated perpetual annual growth

rate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistent

with industry forecast data and does not exceed the long-term average growth rate of each

product. The management determines the compound income growth rate (mainly 3%- 15.54%)

and the EBITDA profit margin (mainly 3%–14%) based on historical experience and market

development forecasts and adopts the pre-tax interest rate that can reflect the specific risks of

the relevant asset group as the discount rate (mainly 9.42%–17.85%). The management analyzes

the recoverable amount of each asset group based on these assumptions and believes that there

is no need to make provision for goodwill.Haier Smart Home Co. Ltd. Interim Report 2022 179Section X Financial Report

20. Long-term prepaid expenses

Converted

Increase for Amortization for difference in

the current the current foreign currency

Items Opening balance period period Other decrease statements Closing balance

Renovation 341401034.69 221864471.45 147742517.01 49069.43 415572058.56

Improvement on leased

property 153829229.13 6586874.52 11665192.70 1337698.99 150088609.94

Others 93566442.42 49364367.49 24090767.44 1882689.04 120722731.51

Total 588796706.24 277815713.46 183498477.15 3269457.46 686383400.01

21. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets before elimination

Closing

Items balance Opening balance

Provision for assets impairment 455770682.35 354806051.43

Liabilities 1199049482.58 1405119092.59

Internal unrealized earnings eliminated due to

combination 412996571.07 619291715.60

Government grants 65451012.87 163806221.87

Uncovered losses 827520243.52 817306157.01

Others 306999705.89 286586600.19

Total 3267787698.28 3646915838.69

(2) Deferred income tax liabilities before elimination

Closing

Item balance Opening balance

Asset amortisation 2612909276.23 2318829386.48

Remeasurement of fair value of the

remaining equity interest on the date of

loss of control 878623804.46 878623804.46

Changes in fair value of investments in other

equity instruments 292550406.68 292476080.49

Others 601342956.88 421341222.80

Total 4385426444.25 3911270494.23

(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end

of this period was RMB1868424500.53 (amount at the beginning of the period:

RMB1789467320.40).

180 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

22. Other non-current assets

Closing Opening

Item balance balance

Prepayments for equipment and land 1493069487.59 1859693694.07

Others 257921485.70 304690319.07

Total 1750990973.29 2164384013.14

23. Short-term borrowings

(1) Classification of short-term borrowings

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Item balance Opening balance

Borrowings — secured by pledge 132610219.46 255103925.36

Borrowings - secured by gurantee 287673529.00 304896830.40

Borrowings — unsecured 12728578402.59 10661927352.96

Interest payable for short-term borrowings 10707152.42 4284025.67

Total 13159569303.47 11226212134.39

24. Financial liabilities held for trading

Closing

Item balance Opening balance

Forward foreign exchange contracts 79270648.00 6294014.40

Total 79270648.00 6294014.40

25. Derivative financial liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Item balance Opening balance

Forward foreign exchange contracts 50925674.51 60527532.76

Forward commodity contracts 24918179.06

Interest rate swap agreement 1223112.98 19684900.48

Total 77066966.55 80212433.24

Haier Smart Home Co. Ltd. Interim Report 2022 181Section X Financial Report

26. Bills payable

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Item balance Opening balance

Commercially acceptance notes 3942641684.10 3022602833.31

Bank acceptance notes 24012446582.98 22000635573.41

Total 27955088267.08 25023238406.72

27. Accounts payable

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Item balance Opening balance

Accounts payable 38977127139.49 42396109648.76

Total 38977127139.49 42396109648.76

The ending book balance is mainly the advance payment that has been collected and has not

yet performed the contractual obligations.

28. Contract liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Closing

Item balance Opening balance

Contract liabilities 5397435938.66 10027091593.60

Total 5397435938.66 10027091593.60

The book balance at the end of the period was mainly due to the advance payment that has

been collected and has not yet performed the contractual obligations.

182 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 3985572611.32 12372081213.66 13380927669.30 2976726155.68

II. Post-employment

benefits-defined

contribution plan 18949702.17 692714047.99 636031124.88 75632625.28

III. Termination benefits 9818188.41 1385509.59 1385509.59 9818188.41

IV. Other benefits due

within one year 101599133.34 56162753.31 63984691.16 93777195.49

Total 4115939635.24 13122343524.55 14082328994.93 3155954164.86

(2) Short-term remuneration

√ Applicable □ Not Applicable

Unit and Currency: RMB

Increase for the Decrease for the

Items Opening balance current period current period Closing balance

I. Salaries bonus

allowance and

benefit 2845636628.83 9253069040.11 10202853922.29 1895851746.65

II. Employee welfare 321996794.22 449278231.27 455875857.26 315399168.23

III. Social benefit 171645833.66 798357880.79 778939560.28 191064154.17

IV. Housing fund 11137621.51 249412342.32 222501879.20 38048084.63

V. Labor union fee and

education fee 3512041.39 50357157.86 50352259.63 3516939.62

VI. Short-term

compensated

absences 268213164.85 245925928.71 238516364.01 275622729.55

VII. Others 363430526.86 1325680632.60 1431887826.63 257223332.83

Total 3985572611.32 12372081213.66 13380927669.30 2976726155.68

Haier Smart Home Co. Ltd. Interim Report 2022 183Section 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 18396477.11 651265918.55 595881144.31 73781251.35

II. Unemployment

insurance 132417.35 16469204.68 16153403.18 448218.85

III. Enterprise annuity

payment 420807.71 24978924.76 23996577.39 1403155.08

Total 18949702.17 692714047.99 636031124.88 75632625.28

(4) Termination benefits

Opening

Items Closing balance balance

Termination compensation 9818188.41 9818188.41

Total 9818188.41 9818188.41

30. Taxes payable

√ Applicable □ Not Applicable

Unit and Currency: RMB

Opening

Items Closing balance balance

Value-added tax 1132740094.75 961177432.39

Enterprise income tax 1359436105.72 1307101572.02

Individual income tax 56493685.90 94881505.62

City maintenance and construction tax 31212179.57 40370470.70

Education surcharge 13646982.77 16171169.66

The electrical and electronic products waste

treatment fund 80351158.58 95522090.50

Other taxes 74131498.30 90284462.67

Total 2748011705.59 2605508703.56

184 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

31. Other payables

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Closing balance Opening balance

Dividends payable 4321692240.21 10639313.22

Other payables 18069812569.98 17522730703.79

Total 22391504810.19 17533370017.01

(1) Dividends payable:

Name of company Closing balance Opening balance

Haier Group Corporation 494859702.08

Haier Cosmo Co. Limited 580706830.40

Other Shareholders of Social Shares 3246125707.73 10639313.22

Total 4321692240.21 10639313.22

(2) Other payables

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Closing balance Opening balance

Other payables 18069812569.98 17522730703.79

Total 18069812569.98 17522730703.79

The closing balance at the end of the period mainly included the incurred but unpaid costs.Haier Smart Home Co. Ltd. Interim Report 2022 185Section 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 9321663925.51 6745950334.20

Lease liabilities due within one year 830251373.67 687991183.42

Estimated liabilities due within one year 2093647663.56 2190397652.84

Bond payables due within one year 244655820.72

Total 12490218783.46 9624339170.46

33. Other current liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Closing balance Opening balance

Payable refund 641035214.33 655801519.33

Tax amount to be written off 633816441.43 1568670492.94

Super-short-term bonds

Others 11342818.05 14295539.13

Total 1286194473.81 2238767551.40

Other explanations:

□ Applicable √ Not Applicable

34. Long-term borrowings

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Closing balance Opening balance

Borrowings — unsecured 2119243998.96 3038573824.53

Total 2119243998.96 3038573824.53

Interest rates of long-term loans of the Company ranged from 1.54% to 5.00%.

186 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

35. Bonds payable

In November 2017 Harvest International Company the Company’s wholly-owned subsidiary

issued HK$8 billion five-year exchangeable corporate bonds with a coupon rate of zero and a

rate on investment of 1%. In September 2020 the Company approved the plan to convert the

exchangeable bonds into convertible bonds pursuant to which target shares of the original

exchangeable bonds were changed from shares of Haier Electrics to newly issued H Shares of

Haier Smart Home (the “EB-to-CB Proposal”). On 23 December 2020 H Shares of Haier Smart

Home was listed and the EB-to-CB Proposal became effective. The outstanding principal of the

original exchangeable bonds amounted to HK$7.993 billion and the maturity coupon rate and

rate on investment remained unchanged. The convertible bonds were divided into liabilities and

equities on initial recognition:

Exchangeable corporate bonds

Items issued on 23 December 2020

Initial recognition: 9105660619.93

Including:

Equity portion of the exchangeable bond 2364195333.79

Liability portion of the exchangeable bond 6741465286.14

(1) Changes in the liability portion of corporate bonds in the current period:

Less: Bond

Accrued bond interest paid for Shares Shares redeemed

Increase for the interest for the the current Exchange rate converted in the in the current

Items Opening balance current period current period period impact current period period Closing balance

Convertible corporate

bonds (“CB”) 334730048.82 3645444.33 104128286.20 10408613.77 244655820.72

Total 334730048.82 3645444.33 104128286.20 10408613.77 244655820.72

(2) Closing balance of bond payables

Items Closing balance Opening balance

Bond payables 244655820.72 334730048.82

Less: bond payables due within one year 244655820.72

Total — 334730048.82

Haier Smart Home Co. Ltd. Interim Report 2022 187Section X Financial Report

36. Lease liabilities

Items Closing balance Opening balance

Lease liabilities 3594196007.40 2648886164.89

Less: lease liabilities due within one year 830251373.67 687991183.42

Total 2763944633.73 1960894981.47

37. Long-term payables

Items Closing balance Opening balance

Investment from CDB development fund 36500000.00 36500000.00

Others 12853671.92 63102707.76

Less: long-term payables due within one year

Total 49353671.92 99602707.76

Under the Investment Contract of China Development Fund executed by the Company and its

subsidiaries including Qingdao Haier Air Conditioner Gen Corp. Ltd. Qingdao Haier (Jiaozhou)

Air-conditioning Co. Limited together with China Development Fund Co. Ltd. in 2015 and 2016

China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou) Air-

conditioning Co. Limited. China Development Fund Co. Ltd. obtained an annual return of 1.2%

by means of dividends or buyback premium for the above investments. As at 30 June 2022

subsidiaries of the Company repurchased RMB36.50 million.

38. Long-term payables for staff’s remuneration

√ Applicable □ Not Applicable

(1) Long-term payables for staff’s remuneration

√ Applicable □ Not Applicable

Unit and Currency: RMB

Opening

Items Closing balance balance

I. Post-employment benefits-net liability of defined

benefit plan 543028353.07 517077143.43

II. Termination benefits 427728738.99 453425129.57

III. Other long-term benefits

IV. Provision for work-related injury compensation 201884985.82 202649488.64

Total 1172642077.88 1173151761.64

188 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 279152422.12

II. Defined benefit cost recognized in current profit or loss 8127898.84

1. Current service cost 8127898.84

2. Past service cost

3. Settlement gains (loss indicated in “–”)

4. Interest expenses

III. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “–”)

IV. Other changes –32185093.79

1. The consideration paid at the time of settlement

2. Benefits paid

3. Exchange differences –32185093.79

V. Closing balance 255095227.17

Haier Smart Home Co. Ltd. Interim Report 2022 189Section X Financial Report

Fair value of plan assets

Items Amount

I. Opening balance 337081685.24

II. Defined benefit cost recognized in current profit or loss

1. Interest income

III. Defined benefit cost recognized in other comprehensive

income

1. Return on plan assets (except those included in net

interests)

2. Changes in impact of asset cap (except those included in

net interests)

IV. Other changes –29042363.63

1. Employer contributions 9822252.35

2. Benefits paid

3. Exchange differences –38864615.98

V. Closing balance 308039321.61

Neither the Company’s ordinary shares or bonds nor the properties occupied by the

Company are included in the plan assets.Net liability (net asset) of defined benefit plan

Items Amount

I. Opening balance –57929263.12

II. Defined benefit cost recognized in current profit or loss 8127898.84

III. Defined benefit cost recognized in other comprehensive

income

IV. Other changes –3142730.16

V. Closing balance –52944094.44

The average term for the defined benefit obligation is 11.73 years at the balance

sheet date.

190 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 2.91%

Present value of defined benefit obligations

Item Amount

I. Opening balance 128979684.17

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 11151712.37

1. Current period service cost 7729103.67

2. Past service cost

3. Settlement gains ((loss indicated in “–”)

4. Interest expenses 3422608.70

IV. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “–”)

V. Other changes –442300.02

1. The consideration paid at the time of settlement

2. Benefits paid –7364356.69

3. Exchange differences 6922056.67

VI. Closing balance 139689096.52

Net liability (net asset) of defined benefit plan

Items Amount

I. Opening balance 128979684.17

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 11151712.37

IV. Defined benefit cost recognized in other comprehensive

income

V. Other changes –442300.02

VI. Closing balance 139689096.52

The average term for the defined benefit obligation is 10.68 years at the balance

sheet date.Haier Smart Home Co. Ltd. Interim Report 2022 191Section 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 2.62%

Present value of defined benefit obligations

Items Amount

I. Opening balance 221602455.52

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 14160180.44

1. Current period service cost 11302750.80

2. Past service cost

3. Settlement gains (loss indicated in “–”)

4. Interest expenses 2857429.64

IV. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “–”)

V. Other changes –14185489.79

1. The consideration paid at the time of settlement

2. Benefits paid –25462931.24

3. Exchange differences 11277441.45

VI. Closing balance 221577146.17

Net liability (net asset) of defined benefit plan

Items Amount

I. Opening balance 221602455.52

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 14160180.44

IV. Defined benefit cost recognized in other comprehensive

income

V. Other changes –14185489.79

VI. Closing balance 221577146.17

192 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 2.61%

Present value of defined benefit obligations

Items Amount

I. Opening balance 166510439.87

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 5234493.60

1. Current service cost 4697968.57

2. Past service cost

3. Settlement gains (loss indicated in “–”)

4. Interest expenses 536525.03

IV. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “–”)

V. Other changes –25682890.10

1. The consideration paid at the time of settlement

2. Benefits paid –33474257.78

3. Exchange differences 7791367.68

VI. Closing balance 146062043.37

Haier Smart Home Co. Ltd. Interim Report 2022 193Section X Financial Report

Fair value of plan assets

Items Amount

I. Opening balance 126020077.85

II. Defined benefit cost recognized in current profit or loss 1415308.99

1. Interest income 1415308.99

III. Defined benefit cost recognized in other comprehensive

income

1. Return on plan assets (except those included in net

interests)

2. Changes in impact of asset cap (except those included in

net interests)

IV. Other changes –24249168.88

1. Employer contributions 3574130.55

2. Benefits paid –33474257.78

3. Exchange differences 5650958.35

V. Closing balance 103186217.96

Net liability (net asset) of defined benefit plan

Items Amount

I. Opening balance 40490362.02

II. Business combination not under common control

III. Defined benefit cost recognized in current profit or loss 3819184.61

IV. Defined benefit cost recognized in other comprehensive

income

V. Other changes –1433721.22

VI. Closing balance 42875825.41

194 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 202649488.64

II. Business combination not under common control

III. Compensation recognized in current profit and loss 42595195.29

IV. Actual compensation paid in the current period –31089549.42

V. Other changes –12270148.69

VI. Closing balance 201884985.82

Classification of the balance of defined benefit plan

Items Closing balance Opening balance

Short-term salary 20343350.71 32502729.33

Long-term salary 543028353.07 517077143.43

Total 563371703.78 549579872.76

39. Estimated liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Opening balance Closing balance

Pending litigation 29259869.48 28403516.67

Others 252996489.56 237072214.65

Projection of three guarantees and installation fees 1666309118.07 1511341428.95

Total 1948565477.11 1776817160.27

Significant assumption and estimation relating to projection of three guarantees and installation

fees: the Company reasonably estimated the three guarantees and installation fee rate based on

its actual expenses on the three guarantees and installation fees as well as sales data in the past.The Company estimated the three guarantees and installation fees that are likely to be incurred in

the future according to its policies on the three guarantees and installation fees as well as the

actual sales data.Haier Smart Home Co. Ltd. Interim Report 2022 195Section X Financial Report

40. Deferred income

√ Applicable □ Not Applicable

Unit and Currency: RMB

Increase for the Decrease for the

Items Opening balance current period current period Closing balance

Government grants 852794567.20 121524102.45 67775099.53 906543570.12

Total 852794567.20 121524102.45 67775099.53 906543570.12

41. Share capital

Increase for Decrease for

Opening the current the current Closing

Categories of shares balance period period balance

I. Restricted shares

1. State-owned shares

2. Shares held by

domestic non-state-

owned legal entities

3. Shares held by

domestic individuals

4. Shares held by

offshore non-state-

owned legal entities

II. Non-restricted shares 9398704530 48087440 9446791970

1. Ordinary shares in

RMB 6308552654 6308552654

2. Domestic listed

foreign Shares

3. Offshore listed foreign

Shares 3090151876 48087440 3138239316

4. Others

III. Total shares 9398704530 48087440 9446791970

196 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

42. Other equity instruments

Increase for the Decrease for the

Items Opening balance current period current period Closing balance

Equity portion of convertible

bonds 118017507.59 36677120.16 81340387.43

Total 118017507.59 36677120.16 81340387.43

43. Capital reserve

√ Applicable □ Not Applicable

Unit and Currency: RMB

Increase for the Decrease for the

Items Opening balance current period current period Closing balance

Capital premium (share capital

premium) 21504525556.91 1061307365.80 155443570.29 22410389352.42

Other capital reserve 1074849182.55 350146476.28 14455372.85 1410540285.98

Total 22579374739.46 1411453842.08 169898943.14 23820929638.40

The main reasons for the change in share premium: The non-public offering of H shares during

the period resulted in the increase in share premium of RMB898627404.94; the conversion of

CB shares during the period resulted in the increase in share premium of RMB134131566.36;

the common control combination occurred during the period resulted in the decrease in share

premium by RMB152818769.28.The main reasons for the change in other capital reserve: The amortized share-based payment

for the period included in other capital reserve was RMB332853517.66.Haier Smart Home Co. Ltd. Interim Report 2022 197Section X Financial Report

44. Other comprehensive income

Items Amount for the current period

Amount

Amount attributable to

Amount before Deduction of attributable to the minority

income tax in the impact on parent company shareholders after

Opening balance current period income tax after tax tax Others Closing balance

a –341470688.45 108350151.43 108350151.43 –233120537.02

b 1618386.47 44150892.48 –13269887.07 25995214.10 4885791.31 27613600.57

c –1916614455.79 2771447499.33 2777826143.89 –6378644.56 861211688.10

d 1005776349.60 —56688764.76 6440238.56 –50208727.45 –39798.75 955567622.15

e 73838708.25 5026518.27 –464348.29 4562166.91 3.07 78400875.16

Total –1176851699.92 2872286296.75 –7293996.80 2866524948.88 –1532648.93 1689673248.96

Notes:

(1) Items a b and c are other comprehensive income that will be reclassified into profit or loss the details are as follows:

Item a represents other comprehensive income classified into profit and loss under the equity method.Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge). Item c

represents the balance arising from translation of foreign currency financial statements.

(2) Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:

Item d represents the change in fair value of investments in other equity instruments.Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.

198 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

45. Surplus reserve

√ Applicable □ Not Applicable

Unit and Currency: RMB

Increase for the Decrease for the

Items Opening balance current period current period Closing balance

Statutory surplus reserve 3390959108.25 3390959108.25

Discretionary surplus reserve 26042290.48 26042290.48

Reserve fund 11322880.64 11322880.64

Enterprise development fund 10291630.47 10291630.47

Total 3438615909.84 3438615909.84

46. Undistributed profits

√ Applicable □ Not Applicable

Items Amounts

Undistributed profits at the end of previous year 47907134328.80

Changes in accounting policies

Business combination under common control 10777931.35

Undistributed profits at the beginning of the year 47917912260.15

Add: net profit attributable to owners of the parent company 7949084472.70

Other transfer in 189803613.66

Adjustment due to implementation of enterprise accounting standard*

Profit available for appropriation for the year 56056800346.51

Less: appropriation of statutory surplus reserve

Appropriation of staff incentive and welfare fund

Dividend payable for ordinary shares –4320445666.86

Undistributed profits at the end of period 51736354679.65

Haier Smart Home Co. Ltd. Interim Report 2022 199Section X Financial Report

47. Operating income and operating cost

(1) Operating income

Amount for the Amount for the

Items current period previous period

Primary business 121248482590.74 111070737835.16

Other business 609039871.48 657018375.90

Total 121857522462.22 111727756211.06

(2) Primary business income and primary business cost by product category

Amount for the Amount for the

current period previous period

Primary business Primary business Primary business Primary business

Categories income cost income cost

Air conditioner 23670538686.34 17107788658.52 21626942343.55 15570568221.85

Refrigerator 37913367317.50 26475741807.66 33637015872.13 23400300288.46

Kitchen appliance 18750037462.88 12816780100.13 16918040488.85 11715172134.94

Water appliance 6713300912.43 3934510287.34 5778983645.59 3336143841.42

Washing machine 26516919361.82 17907657332.94 24988233426.16 16920815831.58

Equipment product and

integrated channel

services 7684318849.77 6682457643.78 8121522058.88 7069369377.40

Total 121248482590.74 84924935830.37 111070737835.16 78012369695.65

200 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

48. Taxes and surcharge

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

City construction tax 122226136.72 117279029.59

Education surcharge 88480235.93 85175835.15

Property tax 28716064.84 25464790.86

Land use tax 7536240.97 7635139.14

Stamp duty 91371622.87 84907708.18

Others 18835304.10 19026156.24

Total 357165605.43 339488659.16

49. Selling expenses

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Selling expenses 17605612224.80 16731407296.02

Total 17605612224.80 16731407296.02

The Company’s selling expenses are mainly salary expenses transportation and storage expenses

advertising and promotion expenses and after-sales expenses etc.

50. Administrative expenses

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Administrative expenses 5132033156.92 5047535410.71

Total 5132033156.92 5047535410.71

The Company’s management expenses are mainly salary expenses administrative office expenses

depreciation and amortization of assets fees etc.Haier Smart Home Co. Ltd. Interim Report 2022 201Section X Financial Report

51. R&D expenses

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Item current period previous period

R&D expenses 4595691525.07 3738316873.21

Total 4595691525.07 3738316873.21

The Company’s R&D expenses are mainly salary expenses R&D equipment expenses inspection

and testing fees.

52. Financial expenses

Amount for the Amount for the

Items current period previous period

Interest expenses 345810365.32 363287457.45

Less: Interest income 362045401.51 264658985.86

Less: Cash discount 79106314.27 82709178.40

Exchange gains and losses –169143266.33 211633480.85

Others 62257534.62 67993563.13

Total –202227082.17 295546337.17

Interest expenditure in lease liabilities in the current period is RMB37109559.27 (interest expenditure

in lease liabilities in the corresponding period: RMB50962914.77).

53. Other income

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Government grants related to revenue 493172631.97 338438305.23

Government grants related to assets 53070066.97 39678023.49

Total 546242698.94 378116328.72

202 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

54. Investment income

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Income from long-term equity investment

calculated by equity method 936511207.40 942666393.83

Investment income from disposal of long-term

equity investment 11181922.82

Dividend income from other equity instruments

investment during holding period 2596583.32 440255.20

Income from wealth management products 42007117.65 28216179.52

Investment income from disposal of financial

assets at fair value through profit or loss 178039912.22 164957510.67

Total 1170336743.41 1136280339.22

55. Gains on changes in fair value (losses are represented by “-”)

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Changes in fair value of forward foreign exchange

contracts –53088495.38 46929961.72

Changes in fair value of equity instrument

investments –67322769.58 15457768.79

Changes in fair value of wealth management

products 1621089.28 1881780.81

Total –118790175.68 64269511.32

Haier Smart Home Co. Ltd. Interim Report 2022 203Section X Financial Report

56. Credit impairment loss

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the Amount for the

Items current period previous period

Bad debts losses on bills receivable –31492310.29 156696.60

Bad debts losses on accounts receivable –222677055.12 –33122995.20

Bad debts losses on other receivables –3907480.73 –11065124.61

Total –258076846.14 –44031423.21

57. Impairment loss on assets (losses are represented by “-”)

Amount for the Amount for the

Items current period previous period

Impairment losses on inventory –371859276.93 –402766436.32

Impairment losses on other current assets –335202670.88 –228869824.32

Impairment losses on fixed assets –21751066.24

Total –707061947.81 –653387326.88

58. Gains on disposal of assets (losses are represented by “-”)

Amount for the Amount for the

Items current period previous period

Gains on disposal of non-current assets 38409742.18 157808087.44

Losses on disposal of non-current assets –6820535.08 –15393133.19

Total 31589207.10 142414954.25

204 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

59. Non-operating income

√ Applicable □ Not Applicable

Amount for the Amount for the

Items current period previous period

Gains on disposal of non-current assets 96551.42 924615.55

Quality claims and fines 25959518.87 19559885.95

Others 42798157.12 59682895.64

Total 68854227.41 80167397.14

60. Non-operating expenses

Amount for the Amount for the

Items current period previous period

Losses on disposal of non-current assets 9060187.94 7928197.15

Others 34475363.74 43136498.89

Total 43535551.68 51064696.04

61. Income tax expenses

(1) Statement of income tax expenses

Amount for the Amount for the

Items current period previous period

Current income tax expenses 1240831826.79 985282651.38

Deferred income tax expenses 759910099.57 540467141.62

Total 2000741926.36 1525749793.00

Haier Smart Home Co. Ltd. Interim Report 2022 205Section X Financial Report

(2) Current reconciliation between accounting profit and income tax expenses

Items Amounts

Total accounting profit 9997672068.52

Income tax expenses calculated pursuant to statutory tax rate(s) 2499418017.12

Impact from different tax rates applicable to subsidiaries –544232640.78

Impact from adjustment to income tax in prior periods –162828321.06

Impact from non-taxable income –224434783.55

Impact from non-deductible cost expense and loss 67350658.86

Impact from deductible provisional differences or deductible losses of

unrecognized deferred tax 434970684.94

Others –69501689.17

Total income tax expense 2000741926.36

62. Other comprehensive income

√ Applicable □ Not Applicable

Please refer to Note VII. 44 for details.

63. Other cash received from operating activities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the

Items current period

Deposits and securities 93387920.50

Government grants 373042872.09

Non-operating income excluding government grants 26813348.55

Interest income 258507374.28

Others 89543300.32

Total 841294815.74

206 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

64. Other cash paid to operating activities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the

Items current period

Cash paid on selling expenses 10010028996.55

Cash paid on administrative and R&D expenses 3442392616.83

Cash paid on financial expenses 68146435.16

Non-operating expenses 3136224.43

Others 117915539.69

Total 13641619812.66

65. Other cash received from financing activities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the

Items current period

Others 1000235.35

Total 1000235.35

66. Other cash paid to financing activities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount for the

Items current period

Cash paid to lease 333323858.52

Repurchase of shares 1538651010.37

Expenses from issuance of H-shares 2964303.96

Others 1638600.00

Total 1876577772.85

Haier Smart Home Co. Ltd. Interim Report 2022 207Section X Financial Report

67. Net profit adjusted to cash flow of operating activities

Net profit adjusted to cash flow of operating Amount for the Amount for the

activities current period previous period

1. Net profit 7996930142.16 6946009059.74

Add: impairment provision for assets 965138793.95 697418750.09

Depreciation of fixed assets 2206781413.69 2112591601.45

Amortization of intangible assets 446162246.74 465527405.85

Amortization of long-term prepaid expenses 183498477.15 110874756.18

Losses on disposal of fixed assets intangible

assets and other long-term assets (‘-’

represents ‘gains’) –22625570.58 –135411372.65

Loss and gains on change of fair value (‘-’

represents ‘gains’) 118790175.68 –64269511.32

Financial expenses (‘-’ represents ‘gains’) 176667098.99 574900097.68

Loss on investments (‘-’ represents ‘gains’) –1170336743.41 –1136280339.22

Decrease in deferred income tax assets (‘-’

represents ‘increase’) 404639263.48 549883365.96

Increase of deferred income tax liabilities (‘-’

represents ‘decrease’) 355270836.09 –9416224.31

Decrease in inventories (‘-’ represents ‘increase’) –1477232081.57 –3760150208.14

Decrease of operational account receivables (‘-’

represents ‘increase’) –3324723794.98 –2216760781.29

Increase of operational account payables (‘-’

represents ‘decrease’) –1281315120.75 4323142646.68

Others 386602520.58 –15864086.39

Net cash flow generated from operational activities 5964247657.22 8442195160.31

2. Significant investment and financing

activities

not involving cash inflows and outflows:

Capital transferred from debts 104128286.20 6277583752.41

Convertible corporate bonds due within one year 244655820.72

Fixed assets under finance lease

3. Net changes of cash and cash equivalents:

Cash balance at the end of the period 49265187950.08 41228686922.70

Less: cash balance at the beginning of the period 45071366271.21 45738120000.70

Add: cash equivalents balance at the end of the

period

Less: cash equivalents balance at the beginning of

the period

Net increase of cash and cash equivalents 4193821678.87 —4509433078.00

208 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

68. Cash and cash equivalents

Items Closing balance Opening balance

I. Cash 49265187950.08 45071366271.21

Including: cash on hand 912949.13 3085964.28

Bank deposits always available for payment 48618833840.21 44884013498.57

Other monetary funds always available for

payment 645441160.74 184266808.36

II. Cash equivalents

Including: Bond investments due within three

months

III. Closing balance of cash and cash equivalents 49265187950.08 45071366271.21

Haier Smart Home Co. Ltd. Interim Report 2022 209Section X Financial Report

69. Monetary items in foreign currency

Items Closing balance Opening balance

Balance in Balance in

foreign Exchange Balance foreign Exchange Balance

currency rate in RMB currency rate in RMB

Monetary funds

USD 821482280.28 6.7114 5513296175.84 850630647.69 6.3757 5423365820.48

EUR 78855228.66 7.0084 552648984.57 149225110.60 7.2197 1077360530.99

JPY 5996642282.85 0.049136 294651015.21 10520503841.74 0.055415 582993720.39

HKD 556953838.73 0.8552 476306922.88 483444582.35 0.8176 395264290.53

Others 2832750561.34 2955290563.22

Subtotal 9669653659.84 10434274925.61

Accounts receivables

USD 954504870.98 6.7114 6406063991.10 721343093.77 6.3757 4599067162.94

EUR 451436990.50 7.0084 3163851004.22 413528990.85 7.2197 2985555255.25

JPY 4145366008.83 0.049136 203686704.21 4064574659.93 0.055415 225238404.78

Others 4219899122.68 3668237038.46

Subtotal 13993500822.21 11478097861.43

Short-term borrowings

USD 389158946.13 6.7114 2611801351.09 347844969.69 6.3757 2217755173.25

EUR 1044112198.27 7.0084 7317555930.38 883863602.21 7.2197 6381230048.85

JPY 740035110.71 0.049136 36362365.20 623360869.80 0.055415 34543542.60

HKD 2600000000.00 0.8552 2223520000.00 2600000000.00 0.8176 2125760000.00

Others 752120202.25 328850057.11

Subtotal 12941359848.92 11088138821.81

Accounts payables

USD 2215683621.44 6.7114 14870339056.95 2033952669.54 6.3757 12967872035.21

EUR 617905515.03 7.0084 4330529011.55 640851532.98 7.2197 4626755812.65

JPY 6923831822.49 0.049136 340209400.43 8161874338.90 0.055415 452290266.49

NZD 207421161.10 4.1771 866418932.05 151371298.46 4.3553 659267416.20

Others 3422870500.22 3268885987.84

Subtotal 23830366901.20 21975071518.39

Non-current liabilities due in one year

USD 1088778232.77 6.7114 7307226231.42 757148488.12 6.3757 4827351615.72

EUR 172986633.48 7.0084 1212359522.06 214053730.55 7.2197 1545403718.47

JPY 1664720591.01 0.049136 81797710.96 3705244389.61 0.055415 205326117.85

RUB 532452480.00 0.1285 68420143.68 651073870.06 0.0855 55666815.89

Others 1535283774.82 1589397292.33

Subtotal 10205087382.94 8223145560.26

210 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 52000000.00 6.7114 348992800.00 403838717.50 6.3757 2574754511.17

EUR 34145508.68 7.0084 239305383.00 37498911.17 7.2197 270730888.98

RUB 250000000.00 0.1285 32125000.00 186061000.00 0.0855 15908215.50

JPY 2640540340.48 0.049136 129745590.17 3197333012.36 0.055415 177180208.88

Subtotal 750168773.17 3038573824.53

VIII. CHANGES OF CONSOLIDATION SCOPE

1. Business combination not under common control

√ Applicable □ Not Applicable

2. Business consolidation under common control

√ Applicable □ Not Applicable

(1). Business combination under common control occurring in the current period

The basis for

the transaction

The proportion of constituting

of equity business Recognition

acquired in the combination basis of

Name of the business under common Combination combination

acquiree combination control date date

Qingdao Ririshun 100.00% Controlled by 2022.6 Subject equity-

Service Co. Ltd. Haier Group related right and

Corporation obligation

before and after transferred to the

combination Company

Qingdao TAB Robot 100.00% Controlled by 2022.6 Subject equity-

Technology Co. Haier Group related right and

LTD. Corporation obligation

before and after transferred to the

combination Company

Haier Smart Home Co. Ltd. Interim Report 2022 211Section X Financial Report

(Continued)

The income of Net profit of

the acquiree the acquiree

from the from the

beginning of beginning of The income of Net profit of

the current the current the acquiree the acquiree

period to period to during the during the

Name of the combination combination comparison comparison

acquiree date date period period

Qingdao Ririshun 37211.90 1421013.21 66451627.95 1008319.99

Service Co. Ltd.Qingdao TAB Robot 205120142.19 3052468.49 94431139.69 4527315.67

Technology Co.LTD.

(2). Combination cost

√ Applicable □ Not Applicable

Unit and Currency: RMB10000

Qingdao Ririshun Qingdao TAB Robot

Combination cost Service Co. Ltd. Technology Co. LTD.—Cash 5095.78 12500.00

—Equity 3216.91 /

(3). Book value of acquiree’s assets and liabilities as at the combination date

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Qingdao Ririshun Service Co. Ltd.Combination End of the

date previous period

Monetary funds 46604249.71 59493989.32

Accounts receivables 1041138.30 1144058.93

Inventories 1837248.48 1879270.49

Other current assets 4840.17 778605.93

Less: Accounts payables 12023461.45 26719700.69

Payables for staff’s remuneration 65143.90 988310.00

Taxes payable 383755.86 337.90

Other current liabilities 118797.58 112271.42

Net assets 36896317.87 35475304.66

212 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Qingdao TAB Robot

Items Technology Co. LTD.Combination End of the

date previous period

Monetary funds 70965249.26 54371498.79

Accounts receivables 35633561.58 32228299.73

Inventories 64895694.34 36212378.79

Other current assets 990753.45

Long-term assets 742124.92 1559671.95

Deferred income tax assets 2638785.39 2638785.39

Less: Accounts payables 108357839.93 64054579.25

Payables for staff’s remuneration 997688.00 1069738.28

Taxes payable 2702903.89 1824903.82

Non-current liabilities due in one year 647508.67 1324322.70

Other current liabilities 3514317.62 4125155.16

Net assets 58655157.38 55602688.89

3. Disposal of subsidiary

Whether single disposal of investment in subsidiary will result in losing control power:

Yantai Ririshun

Electronics

Items Co. Ltd.Equity disposal price 26139242.23

Proportion of equity disposal 81%

Method of equity disposal Disposal

Time of loss-of-control 2022.1

Basis for determination the time of loss-of-control Transfer

Difference between consideration and its share of net assets of the

subsidiary as respect to the disposal in the consolidated level –4432192.08

4. Changes of consolidation scope due to other reasons

√ Applicable □ Not Applicable

(1) Chongqing Yunshang Yilian Technology Co. Ltd. a subsidiary of the Company established

a subsidiary Chengdu Yunshang Meier Yilian Technology Co. Ltd. (成都云裳美尔衣联科技

有限公司) for the period.

(2) Chongqing Yunshang Yilian Technology Co. Ltd. a subsidiary of the Company established

a subsidiary Beijing Yunshang Yilian Technology Co. Ltd. (北京云裳衣联科技有限公司) for

the period.

(3) Chongqing Yunshang Yilian Technology Co. Ltd. a subsidiary of the Company established

a wholly-owned subsidiary Chengdu Yunshang Yilian Technology Co. Ltd. (成都云裳衣联

科技有限公司 ) for the period.

(4) Chongqing Haier Water Heater Co. Ltd. a subsidiary of the Company established a wholly-

owned subsidiary Qingdao Haier Water Ecology Technology Co. Ltd. (青岛海尔水生态科

技有限公司 ) for the period.Haier Smart Home Co. Ltd. Interim Report 2022 213Section X Financial Report

IX. INTERESTS IN OTHER ENTITIES

1. Interests in subsidiaries

(1). Composition of the Group

√ Applicable □ Not Applicable

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Flourishing Reach Mainland of China British Virgin Group company which 100.00 100.00 Establishment

Limited Islands mainly engage in

investment holding the

production and sale of

washing machines and

water heaters

distribution service

Haier Electronics Mainland of China Bermuda Group company which 100.00 100.00 Establishment

Group Co. Ltd. and Hong Kong mainly engage in

investment holding the

production and sale of

water equipment

distribution service

Haier U.S. Appliance the United States the United Group company which 100.00 100.00 Establishment

Solutions Inc. States mainly engage in home

appliances production

and distribution

business

Haier Singapore Singapore and Singapore Group company which 100.00 100.00 Business

Investment Holding other overseas mainly engage in home combination

Co. Ltd. areas appliances production under common

and distribution control

business

Haier New Zealand New Zealand New Zealand Group company which 100.00 100.00 Business

Investment Holding mainly engage in home combination

Company Limited appliances production under common

and distribution control

business

Candy S.p.A Europe Italy Group company which 100.00 100.00 Business

mainly engage in home combination not

appliances production under common

and distribution control

business

Qingdao Haier Air Qingdao High-tech Qingdao Manufacture and sale of 100.00 100.00 Business

Conditioner Gen Zone High-tech household air- combination

Corp. Ltd.* Zone conditioners under common

control

Guizhou Haier Huichuan District Huichuan Manufacture and sale of 59.00 59.00 Business

Electronics Co. Zunyi City District Zunyi refrigerator combination

Ltd.* Guizhou Province City Guizhou under common

Province control

Hefei Haier Air- Hefei Haier Hefei Haier Manufacture and sale of 99.22 99.22 Business

conditioning Co. Industrial Park Industrial Park air- conditioners combination

Limited* under common

control

* For identification purposes only

214 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Wuhan Haier Wuhan Haier Wuhan Haier Manufacture and sale of 60.00 60.00 Business

Electronics Holding Industrial Park Industrial Park air- conditioners combination

Co. Ltd.* under common

control

Qingdao Haier Qingdao Qingdao Manufacture and sale of 100.00 100.00 Business

Air- Conditioner Development Development air- conditioners combination

Electronics Co. Zone Zone under common

Ltd.* control

Qingdao Haier Qingdao High-tech Qingdao Manufacturing of plastic 100.00 100.00 Business

Information Plastic Zone High-tech products combination

Development Co. Zone under common

Ltd.* control

Dalian Haier Precision Dalian Export Dalian Export Manufacture and sale of 90.00 90.00 Business

Products Co. Ltd.* Expressing Zone Expressing precise plastics combination

Zone under common

control

Hefei Haier Plastic Hefei Economic & Hefei Economic Manufacture and sale of 77.36 4.83 82.19 Business

Co. Ltd.* Technological & plastic parts combination

Development Technological under common

Area Development control

Area

Qingdao Meier Plastic Qingdao Qingdao Manufacture of plastic 40.00 60.00 100.00 Business

Powder Co. Ltd.* Development Development powder plastic sheet combination

Zone Zone and high-performance under common

coatings control

Chongqing Haier Jiangbei District Jiangbei District Plastic products sheet 90.00 10.00 100.00 Business

Precision Plastic Chongqing City Chongqing metal work electronics combination

Co. Ltd.* City and hardware under common

control

Qingdao Haier Qingdao High-tech Qingdao Manufacture and 100.00 100.00 Establishment

Refrigerator Co. Zone High-tech production of

Ltd.* Zone fluorine-free

refrigerators

Qingdao Haier Pingdu Pingdu Manufacture of 100.00 100.00 Establishment

Refrigerator Development Development refrigerators

(International) Co. Zone Qingdao Zone Qingdao

Ltd.*

Qingdao Household Qingdao High-tech Qingdao Research and 100.00 100.00 Establishment

Appliance Zone High-tech development of home

Technology and Zone appliances mold and

Equipment Research technological equipment

Institute*

Qingdao Haier Whole Qingdao High-tech Qingdao Research development 98.33 98.33 Establishment

Set Home Appliance Zone High-tech and sales of

Service Co. Ltd.* Zone health- related small

home appliance

Qingdao Haier Special Qingdao Qingdao Manufacture and sales of 100.00 100.00 Establishment

Refrigerator Co. Development Development fluorine-free

Ltd.* Zone Zone refrigerators

Qingdao Haier Qingdao Qingdao Manufacture of dish 100.00 100.00 Establishment

Dishwasher Co. Development Development washing machine and

Ltd.* Zone Zone gas stove

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 215Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Qingdao Haier Special Qingdao Qingdao Research manufacture 100.00 100.00 Establishment

Freezer Co. Ltd.* Development Development and sales of freezer and

Zone Zone other refrigeration

products

Dalian Haier Dalian Export Dalian Export Air conditioner processing 90.00 90.00 Establishment

Air- conditioning Expressing Zone Expressing and manufacturing

Co. Ltd.* Zone

Dalian Haier Dalian Export Dalian Export Refrigerator processing 100.00 100.00 Establishment

Refrigerator Co. Expressing Zone Expressing and manufacturing

Ltd.* Zone

Qingdao Haier Qingdao Qingdao Development assembling 100.00 100.00 Establishment

Electronic Plastic Development Development and sales of plastics

Co. Ltd.* Zone Zone electronics and

products

Wuhan Haier Freezer Wuhan Economic & Wuhan Economic Research manufacture 95.00 5.00 100.00 Establishment

Co. Ltd* Technological & and sales of freezer and

Development Technological other refrigeration

Zone High-tech Development products

Industrial Park Zone High-tech

Industrial Park

Qingdao Haidarui Qingdao High-tech Qingdao Development purchase 98.00 2.00 100.00 Establishment

Procurement Service Zone High-tech and sale of electrical

Co. Ltd.* Zone products and

components

Qingdao Haier Qingdao High-tech Qingdao Development and 98.91 1.09 100.00 Establishment

Intelligent Home Zone High-tech application of home

Appliance Zone appliances

Technology Co. communication

Ltd.* electronics and network

engineering technology

Chongqing Haier Jiangbei District Jiangbei District Manufacture and sales of 76.92 23.08 100.00 Establishment

Air- conditioning Chongqing City Chongqing air conditioners

Co. Ltd.* City

Qingdao Haier Qianwang ang Qianwang ang Development and 70.00 70.00 Establishment

Precision Products Road Jiaonan Road Jiaonan manufacture of precise

Co. Ltd.* City City plastic metal plate

mold and electronic

products for home

appliances

Qingdao Haier Air Jiaonan City Jiaonan City Manufacture of home 100.00 100.00 Establishment

Conditioning Qingdao Qingdao appliances and

Equipment Co. electronics

Ltd.*

Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00 100.00 Establishment

Zone Haier Expressing Zone Expressing

Air-conditioning Zone

Trading Co. Ltd.*

Dalian Free Trade Dalian Export Dalian Export Domestic trade 100.00 100.00 Establishment

Zone Haier Expressing Zone Expressing

Refrigerator Trading Zone

Co. Ltd.*

Chongqing Haier Jiangbei District Jiangbei District Sales of home appliances 95.00 5.00 100.00 Establishment

Electronics Sales Chongqing City Chongqing

Co. Ltd.* City

* For identification purposes only

216 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Chongqing Haier Jiangbei District Jiangbei District Processing and 84.95 15.05 100.00 Establishment

Refrigeration Chongqing City Chongqing manufacturing of

Appliance Co. Ltd.* City refrigerator

Hefei Haier Hefei Haier Hefei Haier Processing and 100.00 100.00 Establishment

Refrigerator Co. Industrial Park Industrial Park manufacturing of

Ltd.* refrigerator

Qingdao Haier HVAC Qingdao Qingdao Air-conditioning engineer 100.00 100.00 Establishment

Engineering Co. Development Development

Ltd.* Zone Zone

Chongqing Jiangbei District Jiangbei District Sales of home appliances 51.00 51.00 Establishment

Goodaymart Electric Chongqing City Chongqing and electronics

Appliance Sale Co. City

Ltd.*

Qingdao Haier Jiaozhou City Jiaozhou City Manufacture and sale of 100.00 100.00 Establishment

(Jiaozhou) Qingdao Qingdao air- conditioners

Air-conditioning Co.Limited*

Qingdao Haier Jiaozhou City Jiaozhou City Manufacture and sales of 100.00 100.00 Establishment

Component Co. Qingdao Qingdao plastic and precise

Ltd.* sheet metal products

Haier Shareholdings Hong Kong Hong Kong Investment 100.00 100.00 Establishment

(Hong Kong)

Limited*

Harvest International Cayman Islands Cayman Islands Investment 100.00 100.00 Establishment

Company*

Shenyang Haier Shenbei New Area Shenbei New Manufacture and sales of 100.00 100.00 Establishment

Refrigerator Co. Shenyang City Area refrigerator

Ltd.* Shenyang City

Foshan Haier Freezer Sanshui District Sanshui District Manufacture and sales of 100.00 100.00 Establishment

Co. Ltd.* Foshan City Foshan City freezer

Zhengzhou Haier Zhengzhou Zhengzhou Manufacture and sales of 100.00 100.00 Establishment

Air- conditioning Economic and Economic and air conditioner

Co. Ltd.* Technological Technological

Development Development

Zone Zone

Qingdao Haidayuan Qingdao Qingdao Development purchase 100.00 100.00 Establishment

Procurement Service Development Development and sale of electrical

Co. Ltd.* Zone Zone products and

components

Qingdao Haier Qingdao High-tech Qingdao Development and 100.00 100.00 Establishment

Intelligent Zone High-tech research of home

Technology Zone appliance products

Development Co.Ltd.*

Qingdao Hairi Hi-Tech Qingdao High-tech Qingdao Design manufacture and 100.00 100.00 Business

Model Co. Ltd.* Zone High-tech sales of product model combination

Zone and mould under common

control

Qingdao Hai Gao Qingdao High-tech Qingdao Industrial design and 75.00 75.00 Business

Design and Zone High-tech prototype production combination

Manufacture Co. Zone under common

Ltd.* control

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 217Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Beijing Haier Guangke Beijing Beijing Development promotion 55.00 55.00 Business

Digital Technology and transfer of combination

Co. Ltd.* technology under common

control

Shanghai Haier Medical Shanghai Shanghai Wholesale and retail of 80.93 80.93 Establishment

Technology Co. Ltd.* medical facility

Qingdao Haier Qingdao Qingdao Development and sales of 100.00 100.00 Business

Technology Co. Ltd.* software and information combination

product under common

control

Qingdao Haier Qingdao Qingdao Entrepreneurship 100.00 100.00 Establishment

Technology investment and

Investment Co. Ltd.* consulting

Qingdao Casarte Smart Qingdao Qingdao Development production 100.00 100.00 Establishment

Living Appliances Co. and sales of appliances

Ltd.*

Qingdao Haichuangyuan Qingdao Qingdao Sales of home appliances 100.00 100.00 Establishment

Appliances Sales Co. and digital products

Ltd.*

Haier Overseas Electric Qingdao Qingdao Sales of home appliances 100.00 100.00 Establishment

Appliance Co. Ltd.* international freight

forwarding

Haier Group (Dalian) Dalian Dalian Sales of home appliances 100.00 100.00 Business

Electrical Appliances international freight combination

Industry Co. Ltd.* forwarding under common

control

Qingdao Haier Central Qingdao Qingdao Production and sales of 100.00 100.00 Establishment

Air Conditioning Co. air conditioners and

Ltd.* refrigeration equipment

Chongqing Haier Home Hefei Hefei Sales of home appliances 100.00 100.00 Establishment

Appliance Sale Hefei

Co. Ltd.*

Qingdao Weixi Smart Qingdao Qingdao Intelligent sanitary ware 71.43 71.43 Establishment

Technology Co. Ltd.*

Haier U+smart Beijing Beijing Software development 100.00 100.00 Establishment

Intelligent Technology

(Beijing) Co. Ltd.*

Haier (Shanghai) Shanghai Shanghai Sales research and 100.00 100.00 Establishment

Electronics Co. Ltd.* development of home

appliances

Shanghai Haier Shanghai Shanghai Business management 100.00 100.00 Establishment

Zhongzhi Fang consulting chuangke

Chuang Ke management

Management Co.Ltd.*

Qingdao Haier Smart Qingdao Qingdao Production and sales of 100.00 100.00 Establishment

Kitchen Appliance kitchen smart home

Co. Ltd.* appliances

GE Appliance Shanghai Shanghai Sales of home appliances 100.00 100.00 Establishment

(Shanghai) Co. Ltd.*

Qingdao Haier Special Qingdao Qingdao Production and sales of 100.00 100.00 Establishment

Refrigerating home appliances

Appliance Co. Ltd.*

* For identification purposes only

218 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Beijing Zero Micro Beijing Beijing Promotion of 55.00 55.00 Establishment

Technology Co. technological

Ltd.* development

Laiyang Haier Smart Laiyang Laiyang Production and sales of 100.00 100.00 Establishment

Kitchen Appliance home appliances

Co. Ltd.*

Hefei Haier Air Hefei Hefei Production and sales of 100.00 100.00 Establishment

Conditioning home appliances

Electronics Co.Ltd.*

Haier (Shanghai) Shanghai Shanghai Research and 100.00 100.00 Establishment

Home Appliance development of home

Research and appliances

Development Center

Co. Ltd.*

Haier (Shenzhen) R&D Shenzhen Shenzhen Development research 100.00 100.00 Establishment

Co. Ltd.* and technical services of

household and

commercial electrical

appliances

Guangzhou Haier Air Guangdong Guangdong Manufacturing of 100.00 100.00 Establishment

Conditioner Co. refrigeration and air

Ltd.* conditioning equipment

Qingdao Yunshang Qingdao Qingdao IoT technology research 70.00 70.00 Establishment

Yuyi IOT Technology and development

Co. Ltd.*

Qingdao Haizhi Qingdao Qingdao Asset management 100.00 100.00 Establishment

Investment equity investment

Management Co.Ltd.*

Qingdao Jijia Cloud Qingdao Qingdao R&D and sales of lighting 80.00 80.00 Establishment

Intelligent appliances

Technology Co.Ltd.*

Qingdao Haimeihui Qingdao Qingdao Leasing and business 100.00 100.00 Establishment

Management services

Consulting Co. Ltd.Wuxi Yunshang Wuxi Wuxi Internet of Things 100.00 100.00 Establishment

Internet of Clothing technology R & D

Technology Co.Ltd.*

Hangzhou Gandao Hangzhou Hangzhou Technology development 52.58 52.58 Establishment

Intelligent service

Technology Co.Ltd.*

Qingdao Haidacheng Qingdao Qingdao Development purchase 100.00 100.00 Establishment

Procurement Service and sale of electrical

Co. Ltd.* products and

components

Guangdong Heilong Guangzhou Guangzhou Scientific research and 76.72 76.72 Business

Intelligent technology service combination not

Technology Co. Ltd* sector under common

control

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 219Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Beijing Haixianghui Beijing Beijing Scientific research and 100.00 100.00 Establishment

Technology Co. technology service

Ltd.* sector

Qingdao Hairuijiejing Qingdao Qingdao Electronic equipment 51.00 51.00 Business

Electronics Co. technology research combination not

Ltd.* development transfer under common

consulting and services control

Haier Smart Home Qingdao Qingdao Technology development 100.00 100.00 Establishment

Experience Cloud of smart home

Ecological products whole

Technology Co. furniture customization

Ltd.* etc.Haier Smart Home Qingdao Qingdao Technical services 100.00 100.00 Establishment

(Qingdao) Network development

Co. Ltd.* consulting transfer etc.Haier Smart Home Qingdao Qingdao Residential interior 100.00 100.00 Establishment

(Qingdao) Network decoration professional

Operation Co. Ltd.* construction operation

special equipment

installation upgrading

and repair etc.Qingdao Internet of Qingdao Qingdao Urban distribution and 100.00 100.00 Establishment

Wine Technology transportation services

Co. Ltd.* import and export of

goods technology

import and export and

food business etc.Qingdao Linghai Air Qingdao Qingdao Manufacture and 100.00 100.00 Establishment

Conditioning production of air

Equipment Co. conditioner and

Ltd.* refrigeration equipment

Chongqing Yunshang Chongqing Chongqing Food business 100.00 100.00 Establishment

Yilian Technology commodity import and

Co. Ltd.* export technology

import and export

Internet information

services etc.Shenzhen Yunshang Shenzhen Shenzhen Import and export 100.00 100.00 Establishment

Yilian Technology business Internet

Co. Ltd.* Internet of things big

data AI AR and

technical services

operation

Qingdao Haixiangxue Qingdao Qingdao Professional intermediary 100.00 100.00 Establishment

Human Resources activities

Co. Ltd.*

Jiangxi Haier Medical Jiangxi Jiangxi Wholesale and retail of 100.00 100.00 Establishment

Technology Co. medical equipment

Ltd.*

Qingdao Haizhi Qingdao Qingdao Technical service 100.00 100.00 Establishment

Shenlan Technology development

Co. Ltd.*

Qingdao Haishengze Qingdao Qingdao Air conditioning 100.00 100.00 Establishment

Technology Co. equipment technical

Ltd.* services

* For identification purposes only

220 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Qingdao Hailvyuan Qingdao Qingdao Electrical and electronic 100.00 100.00 Establishment

Recycling products waste

Technology Co. treatment

Ltd.*

Tianjin Internet of Tianjin Tianjin IoT technology 100.00 100.00 Establishment

clothes Ecological development

Technology Co.Ltd.*

Qingdao Haier HVAC Qingdao Qingdao Manufacture and sale of 100.00 100.00 Establishment

Equipment Co. air- conditioners

Ltd.*

Qingdao Haier Home Qingdao Qingdao Integrated service of AI 100.00 100.00 Establishment

AI Industry industry application

Innovation Center system

Co. Ltd.*

Zhejiang Weixi IoT Zhejiang Zhejiang IoT application service 100.00 100.00 Establishment

Technology Co.Ltd.*

Qingdao Haier Quality Qingdao Qingdao Inspection and testing of 100.00 100.00 Business

Inspection Co. Ltd.* home appliance combination

under common

control

Qingdao Qingdao Qingdao Product certification 100.00 100.00 Business

Haiyongcheng service combination

Certification Service under common

Co. Ltd* control

Qingdao Zhonghai Qingdao Qingdao Home appliance testing 100.00 100.00 Business

Borui Testing and technology combination

Technology Service consulting under common

Co. Ltd* controls

Qingdao Haixianghui Qingdao Qingdao Software development 100.00 100.00 Establishment

Technology Co. and sale of daily

Ltd.* necessities

Haier Smart Home Qingdao Qingdao Promotion of energy- 100.00 100.00 Establishment

(Xiongan Hebei) saving technology

Technology Co.Ltd.*

Qingdao Ruibo Qingdao Qingdao Environmental and AI 100.00 100.00 Establishment

Ecological technology consulting

Environmental

Technology Co.Ltd.*

Qingdao Sanyiniao Qingdao Qingdao Technology service and 100.00 100.00 Establishment

Technology Co. advertisement design

Ltd.*

Qingdao Jingzhi Qingdao Qingdao Operation of dangerous 100.00 100.00 Establishment

Recycle waste

Environmental

Technology Co.Ltd.*

Qingdao Yunshang Qingdao Qingdao Professional cleaning and 51.00 51.00 Establishment

Jieshen Yilian sale of daily necessities

Technology Co.Ltd.*

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 221Section X Financial Report

% of the

Principal place of Place of voting

Name of subsidiary business registration Nature of business Shareholding (%) rights (%) Acquiring method

Direct Indirect

Shanghai Yunshang Shanghai Shanghai Professional cleaning and 51.00 51.00 Establishment

Yuyi IoT Technology sale of daily necessities

Co. Ltd.*

Shijiazhuang Shijiazhuang Shijiazhuang Professional cleaning and 51.00 51.00 Establishment

Yunshang Yilian sale of daily necessities

Technology Co.Ltd.*

Nanjing Yunshang Nanjing Nanjing Professional cleaning and 51.00 51.00 Establishment

Yilian Technology sale of daily necessities

Co. Ltd.*

Yunshang Zhonglian Shanghai Shanghai Professional cleaning and 51.00 51.00 Establishment

Technology sale of daily necessities

(Shanghai) Co.Ltd.*

Shanxi Yunshang Shanxi Shanxi Professional cleaning and 51.00 51.00 Establishment

Yilian Technology sale of daily necessities

Co. Ltd.*

Tianjin Yunshang Tianjin Tianjin Professional cleaning and 51.00 51.00 Establishment

Yilian Technology sale of daily necessities

Co. Ltd.*

Chongqing Yunshang Chongqing Chongqing Professional cleaning and 51.00 51.00 Establishment

Haihong Yilian sale of daily necessities

Technology Co.Ltd.*

Chengdu Yunshang Chengdu Chengdu Professional cleaning and 51.00 51.00 Establishment

Meier Yilian sale of daily necessities

Technology Co.Ltd.Beijing Yunshang Beijing Beijing Professional cleaning and 51.00 51.00 Establishment

Yilian Technology sale of daily necessities

Co. Ltd.Chengdu Yunshang Chengdu Chengdu Professional cleaning and 100.00 100.00 Establishment

Yilian Technology sale of daily necessities

Co. Ltd.Qingdao Haier Water Qingdao Qingdao Technical services 100.00 100.00 Establishment

Ecology Technology development consulting

Co. Ltd.Qingdao Haixiangmian Qingdao Qingdao Sale of food and daily 100.00 100.00 Establishment

Technology Co. necessities

Ltd.*

Qingdao Haier Kitchen Qingdao Qingdao Technology service and 100.00 100.00 Establishment

IoT Technology Co. sale of daily necessities

Ltd.*

Tibet Haifeng Tibet Tibet Development of software 100.00 100.00 Establishment

Intelligent Innovation and medical equipment

Technology Co.Ltd.*

Microenterprises such All over the All over the Sales of home appliances Establishment

as Qingdao Hai country country

Heng Feng Electrical

Appliances Sale &

Service Co. Ltd.*

* For identification purposes only

222 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Reasons for including subsidiaries in which the Company has 50% or less of the equity into the

scope of consolidated financial statements:

At the end of the reporting period the Company had substantial control over the finance

and operation decisions of microenterprises such as Qingdao Hai Heng Feng Electrical

Appliances Sale & Service Co. Ltd* which were included into the scope of consolidated

financial statements.

(2). Material non-wholly owned subsidiaries

Dividends

Profit or loss announced to

attributable be distributed Balance of

to minority to minority minority

Shareholding shareholders shareholders interests at

Name of of minority in the current in the current the end of the

subsidiary shareholders period period period

Guizhou Haier

Electronics Co.Ltd.* 41.00% 5369901.24 114047911.86

Wuhan Haier

Electronics Co.Ltd.* 40.00% 925353.74 249848547.86

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 223Section 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.* 395923946.65 83135071.60 479059018.25 193634661.14 7258718.48 200893379.62

Wuhan Haier

Electronics

Co. Ltd.* 733916522.83 137255826.48 871172349.31 246550979.65 246550979.65

(continued)

Name of

Subsidiary Opening balance

Current Non-current Current Non-current

assets Assets Total assets liabilities liabilities Total liabilities

Guizhou Haier

Electronics

Co. Ltd.* 548369499.75 90003558.19 638373057.94 368134127.34 5170612.06 373304739.40

Wuhan Haier

Electronics

Co. Ltd.* 795204982.68 144368337.05 939573319.73 317265334.43 — 317265334.43

Name of subsidiary Amount for the current period

Total Cash flow from

Operating comprehensive operating

revenue Net profit income activities

Guizhou Haier Electronics

Co. Ltd.* 687283541.12 13097320.09 13097320.09 –258232502.08

Wuhan Haier Electronics

Co. Ltd.* 820118983.24 2313384.36 2313384.36 –40171033.70

(continued)

Name of subsidiary Amount for the previous period

Total Cash flow from

Operating comprehensive operating

revenue Net profit income activities

Guizhou Haier Electronics

Co. Ltd.* 662890916.60 15818829.01 15818829.01 –96960642.56

Wuhan Haier Electronics

Co. Ltd.* 1116565155.40 9676024.48 9676024.48 146467762.05

* For identification purposes only

224 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

2. Control over subsidiaries’ transactions despite change in owners’ equity in

subsidiaries

√ Applicable □ Not Applicable

(1). Descriptions of change in owners’ equity in subsidiaries

√ Applicable □ Not Applicable

Capital increase by minority shareholders of the Company’s subsidiaries resulted in the change

in the Company’s shareholding ratio.

(2). Impact of the transactions on minority interests and the equity attributable to

shareholders of the Parent Company:

Items Others

Total consideration for acquisition/disposal

Less: share of net assets of subsidiaries in respect to the

shareholding proportion acquired/disposed –28548394.50

Difference 28548394.50

Including: capital reserve adjustment 28548394.50

Haier Smart Home Co. Ltd. Interim Report 2022 225Section X Financial Report

3. Interests in joint ventures or associates

√ Applicable □ Not Applicable

(1) Joint ventures or associates

Principal place of Place of Accounting treatment

business registration of investment

Name of joint ventures or associates Nature of business Shareholding

Haier Finance Co. Ltd.* Qingdao Qingdao Financial services 42.00% Equity method

Bank of Qingdao Co. Ltd.* Qingdao Qingdao Commercial Bank 8.19% Equity method

Wolong Electric (Jinan) Motor Co. Ltd.* Jinan Jinan Motor Manufacturing 30.00% Equity method

Qingdao Hegang New Material Technology Qingdao Qingdao Steel plate Manufacturing 23.94% Equity method

Co. Ltd.* Venture Capital

Qingdao Haier SAIF Smart Home Industry Qingdao Qingdao Manufacturing of 63.13% Equity method

Investment Center (Limited Partnership)* Qingdao Qingdao household appliances Equity method

Mitsubishi Heavy Industries Haier (Qingdao) Qingdao Qingdao Manufacturing of 45.00% Equity method

Air-conditioners Co. Ltd.* Qingdao Qingdao household appliances Equity method

Qingdao Haier Carrier Refrigeration Hefei Hefei R&D and sales of 49.00% Equity method

Equipment Co. Ltd.* Hefei Hefei televisions Equity method

Qingdao Haier Multimedia Co. Ltd.* Technology development

20.20% Electrical equipment R&D

Huzhou Huzhou Equity method

Hefei Feier Smart Technology Co. Ltd.*

40.00%

Anhui Kunhe Intelligent Technology Co. Gas compression

Ltd.* 30.00% machinery 48.00%

Zhejiang Futeng Fluid Technology Co. Ltd.* Beijing Beijing development and 36.29% Equity method

Beijing Beijing manufacturing 36.45% Equity method

Beijing Mr. Hi Network Technology Technology development

Company Limited* Technical service import and

Beijing ASU Tech Co. Ltd* export business

Shenzhen Genyuan Environmental Protection Shenzhen Shenzhen Technical advisory 14.70% Equity method

Technology Co. Ltd.* services

Qingdao Haimu Investment Management Qingdao Qingdao Investment Management 49.00% Equity method

Co. Ltd.*

Qingdao Haimu Smart Home Investment Qingdao Qingdao Investment Management 24.00% Equity method

Partnership (Limited Partnership)*

Qingdao Guochuang Intelligent Household Qingdao Qingdao Development of 35.51% Equity method

Appliance Research Institute Co. Ltd.* Technology

Guangzhou Heying Investment Partnership Guangzhou Guangzhou Investment 49.00% Equity method

(Limited Partnership)*

Qingdao Java Cloud Network Technology Qingdao Qingdao Home online service 24.93% Equity method

Co. Ltd.*

Bingji (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method

Co. Ltd.*

Youjin (Shanghai) Corporate Management Shanghai Shanghai Investment management 45.00% Equity method

Co. Ltd.*

RRS (Shanghai) Investment Co. Ltd.* Shanghai Shanghai Investment management 45.00% Equity method

Haier Best Water Technology Co. Ltd.* Qingdao Qingdao Water equipment technology 49.00% Equity method

development service

* For identification purposes only

226 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Principal place of Place of Accounting treatment

Name of joint ventures or associates business registration Nature of business Shareholding of investment

Huizhi Xiangshun Equity Investment Fund Qingdao Qingdao Investment management 30.00% Equity method

(Qingdao) Partnership (Limited

Partnership)*

Qingdao RRS Huizhi Investment Co. Ltd.* Qingdao Qingdao Investment management 50.00% Equity method

Qingdao Xinshenghui Technology Co. Ltd.* Qingdao Qingdao Technology service 20.00% Equity method

development

Meiling Candy Washing Machine Co. Ltd.* Hefei Hefei Manufacturing of home 40.00% Equity method

appliances

Konan Electronic Co. Ltd. Japan Japan Motor Manufacturing 50.00% Equity method

HPZ LIMITED Nigeria Nigeria Manufacturing of 25.01% Equity method

household appliances

HNR Company (Private) Limited Pakistan Pakistan Manufacturing of 31.72% Equity method

household appliances

Haier Raya Electric S.A.E Egypt Egypt Manufacturing of home 15.00% Equity method

appliances

Controladora Mabe S.A.deC.V. Mexico Mexico Manufacturing of 48.41% Equity method

household appliances

Middle East Air conditioning Company Saudi Arabia Saudi Arabia Sales of household 49.00 % Equity method

Limited appliances

(1). Major financial information of significant joi nt ventures

□ Applicable √ Not Applicable

(2). Major financial information of signifi cant associates

√ Applicable □ Not Applicable

* Basic information of significant associates:

Haier Finance Co. Ltd. (hereinafter referred to as “Finance Company”) was

established by Haier Group Corporation and its three affiliates via capital contribution. The

place of registration and principal place of business of the Finance Company is Yulong

International Center No.178-2 Haier Road Laoshan District Qingdao City. The

Company’s subsidiaries hold an aggregate of 42.00% equity in the Finance Company.* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 227Section X Financial Report

* Financial Information of significant associates:

Unit and Currency: RMB

Items Finance company

Closing balance/ Opening balance/

Amount for the Amount for the

current period previous period

Current assets 63774900733.81 61294606916.47

Non-current assets 10659822054.73 9404030263.35

Total assets 74434722788.54 70698637179.82

Current liabilities 57002029453.95 53403515414.15

Non-current liabilities 250191903.78 369623253.07

Total liabilities 57252221357.73 53773138667.22

Minority equity interests

Equity interest attributable to shareholders

of the Parent Company 17182501430.81 16925498512.60

Including: share of net assets calculated based

on shareholding percentage 7216650600.94 7108709375.29

Operating income 1033551173.17 1071931150.97

Net profit 758762130.10 790600102.99

Other comprehensive income 18240788.11 73947771.60

Total comprehensive income 777002918.21 864547874.59

Dividend received from associates for the year 218400000.00 126000000.00

(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.* 3096420505.87 2654248436.12

Wolong Electric (Jinan) Motor Co. Ltd.* 164074989.98 151837378.99

Qingdao Hegang New Material Technology Co. Ltd.* 323239475.07 312493256.21

Qingdao Haier SAIF Smart Home Industry Investment

Center (Limited Partnership)* 375494710.38 393598372.59

Mitsubishi Heavy Industries Haier (Qingdao)

Air Conditioner Co. Ltd.* 735881497.34 682901976.73

Qingdao Haier Carrier Refrigeration Equipment

Co. Ltd.* 402090045.87 409053808.05

Qingdao Haier Multimedia Co. Ltd.* 262473095.59 277102563.88

Qingdao Haier Moulds Co. Ltd.* 269158534.54

Hefei Feier Smart Technology Co. Ltd.* 265106.27

* For identification purposes only

228 Haier Smart Home Co. Ltd. Interim Report 2022Section 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.* 1987170.02 1877574.14

Zhejiang Futeng Fluid Technology Co. Ltd.* 82098847.75 82098847.75

Beijing Mr. Hi Network Technology Company Limited* 7507759.75 7507759.75

Beijing Xiaobei Technology Co. Ltd.* 2687341.82

Beijing ASU Tech Co. Ltd.* 13082922.89 15529700.01

Shenzhen Genyuan Environmental Protection

Technology Co. Ltd.* 7596295.35 6914487.73

Qingdao Haimu Investment Management Co. Ltd.* 2411436.93 2465299.70

Qingdao Haimu Smart Home Investment Partnership

(Limited Partnership)* 59324411.38 59424662.44

Guangzhou Heying Investment Partnership

(Limited Partnership)* 285793577.87 285793577.87

Qingdao Java Cloud Network Technology Co. Ltd.* 2566012.64 2600050.50

Bingji (Shanghai) Corporate Management Co. Ltd.* 995419397.79 972200487.88

Youjin (Shanghai) Corporate Management Co. Ltd.* 1809035268.70 1766819068.86

RRS (Shanghai) Investment Co. Ltd.* 3288336852.19 3211580125.21

Haier Best Water Technology Co. Ltd.* 78352582.74 79785557.39

Huizhi Xiangshun Equity Investment Fund (Qingdao)

Partnership (Limited Partnership)* 238806947.64 119008967.03

Qingdao RRS Huizhi Investment Co. Ltd.* 4083482.78 2083482.78

Qingdao Xinshenghui Technology Co. Ltd.* 9011761.35 9964773.52

Meiling Candy Washing Machine Co. Ltd.* 22659667.84 22752232.07

Europalters Italia S.r.l. 9361965.48 9361965.48

Orygin LLC 13494211.65

Konan Electronic Co. Ltd. 61459616.87 69273712.61

HNR Company (Private) Limited 124288893.92 114055318.97

HPZ LIMITED 80146144.74 71269048.97

Haier Raya Electric S.A.E 9852153.71 10568507.40

Controladora Mabe S.A.deC.V. 4443056920.20 4131983673.10

Middle East Airconditioning Company Limited 8308646.84 10318898.13

Total book value of investment 17017717269.12 16218584554.49

Total amount of the following financial data of

associates calculated based on shareholding

percentage

Net profit 635985295.85 610614350.57

Other comprehensive income 100213218.25 25022215.72

Total comprehensive income 736198514.10 635636566.29

* For identification purposes only

Haier Smart Home Co. Ltd. Interim Report 2022 229Section 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 other equity instruments investment long-term accounts receivable long-term equity

investment goodwill and deferred income tax assets; the total liabilities of segments exclude long-term

and short-term borrowings financial liabilities held for trading derivative financial liabilities taxes

payable interests payable dividends payable held-for-sale liabilities bonds payable deferred income

tax liabilities and other non-current liabilities; profits of segments exclude financial expenses profit or

loss in fair value changes income from investment and income on disposal of assets Non-value-

added tax refundable upon imposition component of other income non-operating incomes and

expenses and income tax.

230 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 21744034195.34 1988398642.99 19460445551.54 14783761779.19 6786264746.43

Including: external revenue 19263438400.09 1655732227.00 15920771259.18 12473357903.20 6677037998.51

Inter-segment revenue 2480595795.25 332666415.99 3539674292.36 2310403875.99 109226747.92

Total segment operating cost 19442607634.74 1943862296.11 19004620002.77 13489839349.11 5938407699.27

Segment operating profit 2301426560.60 44536346.88 455825548.77 1293922430.08 847857047.16

Total segment assets 13947960634.62 2336367873.37 18574611480.04 12119100356.71 4696763365.04

Total segment liabilities 33573717325.74 2007978966.42 10793012958.08 6106984807.46 4328337137.59

(Continued)

Overseas home

appliance and smart Inter-segment

Segment information home business Other businesses offsetting Total

Segment revenue 61480633415.58 43031566226.70 –47417582095.55 121857522462.22

Including: external revenue 61195622271.60 4671562402.64 — 121857522462.22

Inter-segment revenue 285011143.98 38360003824.06 –47417582095.55 —

Total segment operating cost 57846314400.88 43496297716.75 –47556586707.77 113605362391.86

Segment operating profit 3634319014.70 –464731490.05 139004612.22 8252160070.36

Total segment assets 68392051106.40 44008099650.93 –48392664583.87 115682289883.24

Total segment liabilities 38284912733.13 57501775867.52 –48204054758.87 104392665037.07

Haier Smart Home Co. Ltd. Interim Report 2022 231Section 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 19188607407.17 1784628763.28 17645069189.02 12958083453.07 5884989693.13

Including: external revenue 16898259985.27 1495140647.14 15095177397.57 10900998372.57 5806336225.56

Inter-segment revenue 2290347421.90 289488116.14 2549891791.45 2057085080.50 78653467.57

Total segment operating cost 17158967925.84 1746319577.28 17416889248.90 12111188820.80 5157901538.45

Segment operating profit 2029639481.33 38309186.00 228179940.12 846894632.27 727088154.68

Total segment assets 17849098835.46 2547615110.79 17958004697.79 20919506189.82 8406963618.39

Total segment liabilities 42593142081.38 2371416306.28 15600383361.76 11249225999.71 7865505122.98

(Continued)

Overseas home

appliance and smart Inter-segment

Segment information home business Other business offsetting Total

Segment revenue 56916219464.44 43378230663.00 -46028072422.05 111727756211.06

Including: external revenue 56669104381.43 4862739201.52 111727756211.06

Inter-segment revenue 247115083.01 38515491461.48 -46028072422.05 —

Total segment operating cost 53698944763.59 43451860533.69 -46125082855.89 104616989552.66

Segment operating profit 3217274700.85 -73629870.69 97010433.84 7110766658.40

Total segment assets 57368272498.73 51142515604.10 -63393417976.51 112798558578.57

Total segment liabilities 33874070274.78 59762657521.50 -63126518841.51 110189881826.88

(2) Geographical information

“Other countries/regions” in this report refers to all other countries/regions (including Hong Kong and

Macau Special Administration Region and Taiwan) other than the mainland China for the purpose of

information disclosure.

232 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

External transaction revenue

Amount for the Amount for the

Items current period previous period

Mainland China 59357352517.26 53700041129.00

Other countries/regions 62500169944.96 58027715082.06

Including:

America 37433676787.86 35324883693.09

Australia 3489830122.80 3458819500.44

South Asia 4822648942.01 3925925777.81

Europe 10245305312.81 9093752866.83

Southeast Asia 2922334445.85 2610757476.24

Central East and Africa 1163078229.45 909684097.45

Japan 1836927420.37 1778184357.59

Others 586368683.81 925707312.61

Total 121857522462.22 111727756211.06

Total non-current assets

Items Closing balance Opening balance

Mainland China 17488703477.71 16572158325.12

Other countries/regions 27543718828.36 25209296729.73

Total 45032422306.07 41781455054.85

The total non-current assets exclude other equity instruments investment long-term accounts

receivable long-term equity investment goodwill deferred income tax assets and other non- current

financial assets.XI. DISCLOSURE OF FAIR VALUE

1. Assets and liabilities measured at fair value

The level to which the fair value measurement result belongs is determined by the lowest level of

inputs which are significant to the fair value measurement as a whole:

Level 1: Unadjusted quotes for the same asset or liability in an active market

Level 2: Inputs that are directly or indirectly observable for related assets or liabilities except

for Level 1 inputs.Level 3: Unobservable inputs of related assets or liabilities.Haier Smart Home Co. Ltd. Interim Report 2022 233Section 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 158003403.16 2295919159.41 106249514.01 2560172076.58

Including: Bank wealth management

products 2153399840.01 2153399840.01

Forward foreign exchange contract 142519319.40 142519319.40

Investment funds 158003403.16 158003403.16

Equity instruments investment 106249514.01 106249514.01

Derivative financial assets 163084726.42 163084726.42

Including: Forward foreign exchange

contract 151624141.73 151624141.73

Interest rate swap agreement 11460584.69 11460584.69

Other equity instruments 21244171.82 2812000000.00 2019201041.09 4852445212.91

Including: Equity instruments measured

at fair value through other

comprehensive income 21244171.82 2812000000.00 2019201041.09 4852445212.91

Other non-current assets 46832494.61 46832494.61

Including: Other non-current financial

assets 46832494.61 46832494.61

Financial liabilities held for trading 79270648.00 79270648.00

Including: Forward foreign exchange

contract 79270648.00 79270648.00

Derivative financial liabilities 77066966.55 77066966.55

Including: Forward foreign exchange

contract 50925674.51 50925674.51

Forward commodity contract 24918179.06 24918179.06

Interest rate swap agreement 1223112.98 1223112.98

234 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 374782417.76 2305001643.90 106291467.43 2786075529.09

Including: Bank wealth management

products 2168622090.00 2168622090.00

Forward foreign exchange contract 136379553.90 136379553.90

Investment funds 150516274.37 150516274.37

Investment in equity instruments 224266143.39 106291467.43 330557610.82

Derivative financial assets 79819974.01 79819974.01

Including: Forward foreign exchange

contract 72822190.59 72822190.59

Forward commodity contract 6997783.42 6997783.42

Other equity instruments 21055159.54 2812000000.00 2015654279.42 4848709438.96

Including: Equity instruments measured at

fair value and changes of which

included in other comprehensive

income 21055159.54 2812000000.00 2015654279.42 4848709438.96

Other non-current assets 46832494.61 46832494.61

Including: Other non-current financial

assets 46832494.61 46832494.61

Financial liabilities held for trading 6294014.40 6294014.40

Including: Forward foreign exchange

contract 6294014.40 6294014.40

Derivative financial liabilities 80212433.24 80212433.24

Including: Forward foreign exchange

contract 60527532.76 60527532.76

Interest rate swap agreement 19684900.48 19684900.48

For financial instruments traded in an active market the Company determines its fair value based

on its quotes in an active market; for financial instruments not traded in an active market the

Company uses valuation techniques to determine its fair value.Haier Smart Home Co. Ltd. Interim Report 2022 235Section X Financial Report

2. Continual and non-continual Level 2 fair value measurement items the valuation

techniques adopted and the qualitative and quantitative information of

important parameters

√ Applicable □ Not Applicable

Closing

Items fair value Valuation techniques

Financial assets held for trading

Including: Bank wealth management 2153399840.01 Discounted cash flow

products

Forward exchange contract 142519319.40 Discounted cash flow

Derivative financial assets

Including: Forward exchange contract 151624141.73 Discounted cash flow

Interest rate swap agreement 11460584.69 Discounted cash flow

Other equity instruments investment

Including: Equity instruments measured 2812000000.00 Recent transaction method

at fair value and changes of which

included in other comprehensive

income

Financial liabilities held for trading

Including: Forward exchange contract 79270648.00 Discounted cash flow

Derivative financial liabilities

Including: Forward exchange contract 50925674.51 Discounted cash flow

Forward commodity contract 24918179.06 Discounted cash flow

Interest rate swap agreement 1223112.98 Discounted cash flow

236 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

3. Continual and non-continual Level 3 fair value measurement items the valuation

techniques adopted and the qualitative and quantitative information of

important parameters

√ Applicable □ Not Applicable

Fair value at the Valuation Significant Sensitivity of the input

Items end of the period technique unobservable input Range to fair value

Other equity

Instruments

Including: 1285836952.03 Market approach 1. Average P/E 1. 17.77–18.13 1. 1% increase

1. SINOPEC Fuel multiple of (decrease) in average

Oil Sales peers 2. 11%–13% P/E multiple of the

Corporation Comparable

Limited 2. Discount for Companies would

lack of result in increase

marketability (decrease) in fair

value by

RMB11177000.00.

2. 1% increase

(decrease) in the

lack of marketability

would result in

decrease (increase)

in fair value by

RMB12701000.00.

4. Fair value of financial assets and financial liabilities not measured at fair value

√ Applicable □ Not Applicable

Closing Closing

Items book value fair value

Bonds payable (convertible corporate bonds) 244655820.72 355949322.87

Financial assets and financial liabilities not measured at fair value include: monetary funds bills

receivable accounts receivable other receivables other current assets long-term and short-term

borrowings bills payable accounts payable other payables long-term payables bonds payable

etc. Except for the difference between the book value and the fair value of bonds payable

disclosed above the difference between the book value and the fair value of financial assets and

financial liabilities not measured at fair value at the end of the period is small.Haier Smart Home Co. Ltd. Interim Report 2022 237Section 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 311180000 Zhou Yunjie Parent Company 11.35% 11.35%

Corporation ownership Zone Haier Park

company

Haier COSMO Co. Joint-stock Qingdao High-tech 631930000 Zhou Yunjie Subsidiary of 13.32% 13.32%

Ltd. company Zone Haier Park Parent

Company

HCH (HK) Investment Private Hong Kong HKD 10000 / Parties acting in 5.70% 5.70%

Management company concert of

Co.Limited Parent

Company

Qingdao Haier Venture Company with Qingdao Free Trade 923000000 Zhou Yunjie Parties acting in 1.82% 1.82%

& Investment limited Zone concert of

Information Co. liability Parent

Ltd. Company

Qingdao Haichuangzhi Limited Qingdao High-tech 118924416 Zhang Parties acting in 1.28% 1.28%

Management partnership Zone Haier Park Ruimin concert of

Consulting Parent

Enterprise (Limited Company

Partnership)

Haier International Private Hong Kong HKD 2 / Parties acting in 0.62% 0.62%

Co. Limited company concert of

Parent

Company

2. Subsidiaries of the Company

√ Applicable □ Not Applicable

The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure of

interests in subsidiaries

238 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

3. Associates and joint ventures

The details of associates and joint ventures of the Company are detailed in Note VII. 11

and Note IX. 3.

4. Related company with no controlling relationship

Name of company Relationship with the Company

Qingdao Haier Parts Procurement Co. Ltd. Subsidiary of Haier Group

Gooday Supply Chain Technologies Co. Ltd. Subsidiary of Haier Group

Chongqing Haier Electrical Appliances Sales Subsidiary of Haier Group

Co. Ltd.Shanghai Cotai Supply Chain Management Subsidiary of Haier Group

Co. Ltd.Hotoem Information Technology Subsidiary of Haier Group

Cosmoplat Chuangzhi IOT Technology Subsidiary of Haier Group

Co. Ltd.Qingdao Haier Moulds Co. Ltd. Subsidiary of Haier Group

Qingdao Haier International Trading Co. Ltd. Subsidiary of Haier Group

Qingdao Haier Special Plastic Development Subsidiary of Haier Group

Co. Ltd.Qingdao Haier International Travel Agency Subsidiary of Haier Group

Co. Ltd.Qingdao Haina Cloud Intelligent System Subsidiary of Haier Group

Co. Ltd.Chongqing Haier Smart Electronics Co. Ltd. Subsidiary of Haier Group

Chongqing Zhonglian Energy Technology Subsidiary of Haier Group

Co. Ltd.Shanghai Zhiyu Technology Co. Ltd. Subsidiary of Haier Group

Qingdao Haiyongda Property Management Subsidiary of Haier Group

Co. Ltd.Qingdao Oasis Technology Co. Ltd. Subsidiary of Haier Group

Qingdao Haier Energy and Power Co. Ltd. Subsidiary of Haier Group

Dalian Haier International Trade Co. Ltd. Subsidiary of Haier Group

Qingdao Goodaymart Supply Chains Subsidiary of Haier Group

Co. Ltd.Qingdao Haier Brothers Animation Industry Subsidiary of Haier Group

Co. Ltd.Qingdao Manniq Intelligent Technology Subsidiary of Haier Group

Co. Ltd.Qingdao Manniq Intelligent Equipment Subsidiary of Haier Group

Co. Ltd.Qingdao Ding Xin Electronics Technology Subsidiary of Haier Group

Co. Ltd.Qingdao Haier New Materials R & D Subsidiary and associate of Haier

Co. Ltd. Group

Controladora Mabe S.A.deC.V. Associate

HNR Company (Private) Limited Associate

Haier Smart Home Co. Ltd. Interim Report 2022 239Section X Financial Report

Name of company Relationship with the Company

Qingdao Haier Multimedia Co. Ltd. Associate

HPZ Limited Associate

Wolong Electric (Jinan) Motor Co. Ltd. Associate

Qingdao Hegang New Material Technology Associate

Co. Ltd.Hefei Hegang New Material Technology Subsidiary of associate

Co. Ltd.Qingdao HBIS Composite New Material Subsidiary of associate

Co. Ltd.(III) Related party transactions

1. Details of the goods and services purchased by the Company from the related parties

are as follows:

Amount for the Amount for the

Related parties current period previous period

Controladora Mabe S.A.deC.V. 5992396585.28 5919857050.59

Qingdao Haier Parts Procurement Co. Ltd. 3437294477.05 243004611.97

Gooday Supply Chain Technologies Co. Ltd. 2566807694.51 1795893473.89

HNR Company (Private) Limited 2225964262.84 1753260194.66

Chongqing Haier Electrical Appliances Sales

Co. Ltd. 1428396771.15 1735448645.80

Shanghai Cotai Supply Chain Management

Co. Ltd. 760063618.26 837090677.39

Hotoem Information Technology 323614793.49 15780675.02

Cosmoplat Chuangzhi IOT Technology

Co. Ltd. 306393628.09 1007738751.14

Qingdao Haier Moulds Co. Ltd. 264629834.22 283420737.56

Wolong Electric (Jinan) Motor Co. Ltd. 218455947.50 494269324.67

Qingdao HBIS Composite New Material

Co. Ltd. 155274371.48 392032148.49

Qingdao Ding Xin Electronics Technology

Co. Ltd. 125203847.62 429570435.77

Chongqing Haier Intelligent Electronics

Co. Ltd. 119484178.14 493639084.84

Hefei Hegang New Material Technology

Co. Ltd. 117399517.14 474928583.73

Qingdao Haier Special Plastic Development

Co. Ltd. 66199048.27 217734562.12

Other related parties 1868504632.15 2534023594.60

Total 19976083207.19 18627692552.24

240 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

2. Details of the Company’s sales of goods to the related parties are as follows:

Amount for the Amount for the

Related parties current period previous period

Controladora Mabe S.A.deC.V. 540669324.96 468040995.25

HNR Company (Private) Limited 371766028.14 314817192.25

Qingdao Haier Special Plastic Development

Co. Ltd. 273537316.50 324988575.86

Qingdao Haier International Trading Co. Ltd. 231644878.27 312037256.25

Qingdao Haier International Travel Agency

Co. Ltd. 118333617.35 105505398.38

Qingdao Haier Multimedia Co. Ltd. 62200352.87 25743020.75

HPZ Limited 46402303.46 85694941.35

Other related parties 383482730.84 451160486.74

Total 2028036552.39 2087987866.83

Haier Smart Home Co. Ltd. Interim Report 2022 241Section X Financial Report

3. Amount for outstanding items of related parties

Closing Opening

Items and name of customers Balance Balance

Bills receivable:

Qingdao Haier Special Plastic Development Co.Ltd. 35258514.73

Qingdao Haina Cloud Intelligent System Co. Ltd. 18392400.67 21511057.07

Chongqing Haier Smart Electronics Co. Ltd. 10693195.91 2528394.74

Qingdao Haier Moulds Co. Ltd. 6220430.00 600000.00

Cosmoplat Chuangzhi IOT Technology Co. Ltd. 5710000.00 13520000.00

Other related parties 18803440.35 20326664.87

Accounts receivable:

HNR Company (Private) Limited 692724378.50 588605242.72

Qingdao Haier International Travel Agency

Co. Ltd. 87754866.94 99648729.88

Qingdao Haier Special Plastic Development

Co. Ltd. 59912071.24 39101648.72

HPZ Limited 59823027.70 —

Controladora Mabe S.A.deC.V. 56877475.23 123524843.42

Chongqing Zhonglian Energy Technology

Co. Ltd. 51648147.74 45405801.21

Qingdao Haier International Trading Co. Ltd. 51507251.38 34295519.63

Shanghai Zhiyu Technology Co. Ltd. 43917268.67 43349588.61

Qingdao Haina Cloud Intelligent System Co. Ltd. 31656497.71 31824063.09

Other related parties 198063150.61 223239739.94

Prepayments:

Qingdao Haier International Travel Agency

Co. Ltd. 23158794.37 23936807.36

Qingdao Haiyongda Property Management

Co. Ltd. 16886792.00 17069128.00

Qingdao Oasis Technology Co. Ltd. 15085363.44 —

Qingdao Haier Moulds Co. Ltd. 13664084.98 7287661.33

Other related parties 27520134.41 152967725.88

Other receivables:

Controladora Mabe S.A.deC.V. 23141410.56 16260655.41

Gooday Supply Chain Technologies Co. Ltd. 19979917.89 27180000.00

Qingdao Haier International Trading Co. Ltd. 16291509.07 16601596.21

Qingdao Haier Energy and Power Co. Ltd. 15515825.00 15315825.00

Other related parties 65933332.86 71877028.63

Closing Opening

Items and name of suppliers Balance Balance

Bills payable:

Qingdao Haier New Materials R & D Co. Ltd. 304428684.81 90348253.59

Wolong Electric (Jinan) Motor Co. Ltd. 44870947.00 4127872.00

Other related parties 57995232.71 50019985.82

242 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

Closing Opening

Items and name of customers Balance Balance

Accounts payable:

Controladora Mabe S.A.deC.V. 1437362278.03 941545815.41

Qingdao Haier Parts Procurement Co. Ltd. 1270602288.35 1985902077.10

Qingdao Haier International Trading Co. Ltd. 198134907.93 106344044.12

Dalian Haier International Trade Co. Ltd. 146623099.52 175739251.85

Chongqing Haier Electrical Appliances Sales

Co. Ltd. 126873182.47 332415203.41

Qingdao Haier New Materials R & D Co. Ltd. 117832792.95 21654400.63

Qingdao Haier Moulds Co. Ltd. 79707945.36 136685798.49

Cosmoplat Chuangzhi IOT Technology Co. Ltd. 49049546.13 268605818.56

Wolong Electric (Jinan) Motor Co. Ltd. 47439179.69 117800983.85

Qingdao HBIS Composite New Material Co. Ltd. 44967206.10 161242782.98

Qingdao Hegang New Material Technology

Co. Ltd. 30430316.84 72015400.20

Other related parties 71230012.81 1223019630.13

Contract liabilities:

Wolong Electric (Jinan) Motor Co. Ltd. 15133132.31 21373101.27

Qingdao Haier Parts Procurement Co. Ltd. 7939821.15 91082063.05

Chongqing Haier Electrical Appliances Sales

Co. Ltd. 4897848.16 779853.29

Other related parties 13395732.42 41359339.35

Dividends payable:

Haier COSMO Co. Ltd. 580706830.40

Haier Group Corporation 494859702.08

HCH (HK) Investment Management Co. Limited 248470041.60

Other related parties 161942052.03

Other payables:

Gooday Supply Chain Technologies Co. Ltd. 1013756001.98 687378382.22

Shanghai Cotai Supply Chain Management

Co. Ltd. 317902528.95 154351301.35

Qingdao Goodaymart Supply Chains Co. Ltd. 69476766.47 72545343.35

Qingdao Haier Brothers Animation Industry

Co. Ltd. 40538987.00 —

Qingdao Manniq Intelligent Technology Co. Ltd. 32559033.02 —

Qingdao Haier Moulds Co. Ltd. 29846291.87 21298170.87

Qingdao Manniq Intelligent Equipment Co. Ltd. 26540689.73 18114339.24

Qingdao Haier International Travel Agency

Co. Ltd. 22412379.87 16372400.80

Dalian Haier International Trade Co. Ltd. 21800000.00 21800000.00

Other related parties 120035044.34 184728610.07

Haier Smart Home Co. Ltd. Interim Report 2022 243Section X Financial Report

4. Other related party transactions

(1) On 29 April 2021 Haier Group Corporation and Haier Group Finance Co. Ltd.

(hereafter the “Finance Company”) renewed the Financial Services FrameworkAgreement and the “Resolution on the Renewal of the Financial Services FrameworkAgreement between Haier Smart Home Co. Ltd. and Haier Group Corporation andthe Estimated Amount of Connected Transaction” was considered and passed at the

2020 Annual General Meeting held on 25 June 2021. The Financial Services

Framework Agreement became effective from the passing of the resolution at the

general meeting.Various current balances of the Company and the Finance Company are as follows:

Closing Opening

Items Balance Balance

Monetary funds deposited at the Finance

Company 31997084109.69 28744602432.65

Interest receivable from the Finance Company 359448232.39 260262550.46

Loans of the Finance Company 282673529.00 336507659.12

Interest payable to the Finance Company 3921345.84 1813534.66

Bank acceptance note issued 23758244622.90 21697666574.19

Foreign exchange derivatives of the Finance

Company 111771387.14 1577848.15

Various balances of the Company and the Finance Company are as follows:

Amount for the Amount for the

Items current period previous period

Interest income of the Finance Company 260517401.68 131478780.14

Interest expense of the Finance Company 4004749.21 6396052.75

Service fee of the Finance Company 13688276.03 11729401.16

(2) The lease expense of the Company and its subsidiaries for production and operation

leased from related parties for the current period was RMB60 million (amount for the

corresponding period: RMB60 million).

(3) Related information on the guarantor of the Company’s guaranteed borrowings as a

related party at the end of period:

Lender Closing Balance Opening Balance Guarantor

Haier Russian Electric 282673529.00 304896830.40 Haier Group

Co. Ltd. Corporation

Total 282673529.00 304896830.40

244 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

(4) Haier Group Corporation provided joint liability guarantee for certain bills payable of

the subs id iar ies of the Company with the guaranteed amount of

RMB1805486348.06 at the end of the period.(IV) Pricing policy

1. Related party sales

Some related parties purchase components through the independent procurement platform

of the Company purchase electrical appliances for sales from the Company and receive

after-sales services R&D service housing rental and other business provided by the

company due to their business needs. In November 2020 according to the implementation

of connected transactions in the early stage and the relevant listing requirements in Hong

Kong the Company and Haier Group Corporation revised and signed the Product and

Materials Sales Framework Agreement the Service Provision Framework Agreement and the

Property Leasing Framework Agreement on the basis of the original execution contract

which agreed on the financial connected transactions. The pricing principle included that

both parties should agree on the price which is not less favourable than those provided by

the Company to the Independent Third Parties on arm’s length to ensure the fairness and

reasonableness of connected transactions. The valid term of the agreement commenced

from the listing date to 31 December 2022 which can be renewed for another three years

upon expire.

2. Related parties Procurement

In addition to independent procurement platform the Company entrusted Haier Group

Corporation and its subsidiaries for procurements of part of raw materials. Moreover the

Company entrusted Haier Group Corporation and its subsidiaries to provide the Company

with logistics and distribution energy and power basic research and testing equipment

leasing house leasing and maintenance greening and cleaning gift procurement design

consulting various ticket booking and other services. In November 2020 according to the

implementation of connected transactions in the early stage and the relevant listing

requirements in Hong Kong the Company and Haier Group Corporation revised and signed

the Product and Materials Sales Framework Agreement the Service Provision Framework

Agreement and the Property Leasing Framework Agreement on the basis of the original

execution contract which agreed on the financial connected transactions. The pricing

principle included that both parties should agree on the price which is not less favourable

than those provided by the Company to the Independent Third Parties on arm’s length to

ensure the fairness and reasonableness of connected transactions. The valid term of the

agreement commenced from the listing date to 31 December 2022 which can be renewed

for another three years upon expire.Haier Smart Home Co. Ltd. Interim Report 2022 245Section X Financial Report

3. Financial aspect

Some of the financial services such as deposit and loan service discounting service and

foreign exchange derivatives needed by the Company are provided by Haier Group

Corporation its subsidiaries and other companies. According to the Financial Service

Agreement entered among the Company Haier Group Corporation and other parties the

price of financial services is determined by the principle of not less favourable than market

value fair. The Company is entitled to decide whether to keep cooperation relationship with

them with the knowledge of the price prevailing in the market and in combination with its

own interests. While performing the agreement the Company could also require other

financial service institutions to provide related financial services basing on actual situation.In order to meet the Company’s demands such as the avoidance of foreign exchange

fluctuation risk the Company may choose Haier Group Finance Co. Ltd. to provide some

foreign exchange derivative business after comparing with comparable companies. The

Company will uphold the safe and sound appropriate and reasonable principle under

which all foreign exchange capital business shall have a normal and reasonable business

background to eliminate speculative operation. At the same time the Company has

specified the examination and permission rights management positions and responsibilities

at all levels for its foreign exchange capital business to eradicate the risks of operation by

persons and improved its response speed to risks on the premise that the risks are

effectively controlled. In June 2021 the Company and Haier Group Corporation signed the

Financial Services Framework Agreement on the basis of the original execution contract

which agreed on the financial connected transactions. The pricing principle included the

deposit interest rate not lower than the maximum interest rate of major banks listed and

the loan interest rate not less favourable than the market price to ensure the fairness and

reasonableness of connected transactions. The valid term of the agreement expires at 31

December 2023 which can be renewed for another three years upon expire.

4. Others

The Company signed the Intellectual Property Licensing Framework Agreement with Haier

Group Corporation in November 2020. According to the agreement Haier Group has

agreed to grant or procure its subsidiaries and contact persons to grant the license to the

Company at nil consideration to use all its intellectual property rights including but not

limited to trademarks patents copyrights and logos for the products packaging services

and business introduction documents of the Company. The date of the Intellectual Property

Licensing Framework Agreement shall be permanently effective from the H Share listing

date. When such specific intellectual property rights expire and are not renewed by Haier

Group our right to use certain intellectual property rights under the Intellectual Property

Licensing Framework Agreement will terminate.

246 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

XIII. SHARE-BASED PAYMENTS

(1) Share OptionsAccording to the “Resolution on Adjustment to the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co. Ltd.” and the “Resolution on the Grant of Share Option to the IncentiveTarget of Haier Smart Home Co. Ltd.” passed on the 1st meeting of the 11th session of the

Board of Directors of the Company on 28 June 2022 it was agreed that on the date of the

grant on 28 June 2022 104756896 share options would be granted to 1834 qualifying

incentive targets at the exercise price of RMB23.86 per Share.Number for the Number for the

Share Options current period previous period

At the beginning of the period 50525214.00

Granted during the period 104756896.00 50525214.00

Vested during the period

Lapsed during the period

At the end of the period 155282110.00 50525214.00

(2) Restricted Shares

Number for the Number for the

Number of restricted shares current period previous period

At the beginning of the period 4438027.00

Granted during the period 4438027.00

Vested during the period

Lapsed during the period

At the end of the period 4438027.00 4438027.00

(3) Method of determining the fair value of equity instrument on the date of grant:

The Company has adopted the B-S model to determine the fair value of the share options.The B-S model is subject to six variables: current price of the target share (S) exercise price of

the option (K) risk-free rate (r) valid term of the option (t) expected volatility of the share price

(σ) and the dividend rate of the target share (i).Parameters selected for the calculation of the value of the option of the Company are as follows:

* share price (S): RMB27.01 per share (closing price on the date of grant on 28 June 2022).* exercise price (K): RMB23.86 per share.Haier Smart Home Co. Ltd. Interim Report 2022 247Section X Financial Report

* risk-free rate (r): according to the maturity yield rate of the China Government Bonds from

Bloomberg’s system the risk-free rate for one year was1.997%; 2.358% for two years; 2.452%

for three years; 2.561% for four years; and 2.67% for five years where the risk- free rate

for the fourth year was calculated as the arithmetic average of the risk-free rate of the third

and fifth year.* lifetime of the option (t): 1 year 2 years 3 years and 4 years respectively (from the date of

grant to the deadline of the first exercisable date of each tranche).* historical volatility rate (σ): 0.3677 (1 year); 0.4016 (2 years); 0.3783 (3 years); 0.3795 (4

years). The interval adopted for the calculation of historical volatility was the continuous

closing price of the Company in the preceding four years. At the same time the historical

volatility for the preceding 1 2 3 and 4 years was calculated respectively based on the

differences in waiting period.* yield rate (i) 1.7031% based on the yield rate shown in Bloomberg’s system on the valuation

date (28 June 2022) dividing the dividend per share by the closing price on the date of grant.According to the calculation under the above pricing model the theoretical aggregate

value of the 10475.6896 share options granted under this incentive plan of the Company

amounted to RMB777000000.

(4) Based on the latest available subsequent information such as change in number of vesting

employee result condition of the Company and evaluation of personal performance appraisal of

incentive targets the Company makes the best estimation of the number of vesting equity

instruments based on which the Company includes services received for the current period in

relevant costs of expenses in accordance with the fair value of the equity instrument on the date

of grant and accordingly included in the capital reserve.Expense recognized in respect of the share-based payment incentive plan for the period:

RMB251000000 for the stock ownership plan; RMB73000000 for the share options; and

HKD10000000 for the restricted shares.On 30 June 2022 balance associated with the above share-based payment incentive plans provided

in the capital reserve amounted to RMB594000000.XIV. CONTINGENCIES

√ Applicable □ Not Applicable

As of 29 August 2022 the Company has no significant contingencies that need to be disclosed.XV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

√ Applicable □ Not Applicable

As of 29 August 2022 the Company has no significant events subsequent to the balance sheet date

that need to be disclosed.

248 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS

√ Applicable □ Not Applicable

The book value of various financial instruments on the balance sheet date is as follows:

Financial assets

Items Closing balance

Financial assets Financial assets

measured at fair measured at fair

value and value and

changes of which changes of which

included included in other

in current profit Measured at comprehensive

and loss amortized cost income Total

Monetary funds 50316121259.28 50316121259.28

Financial assets held for trading 2560172076.58 2560172076.58

Derivative financial assets 163084726.42 163084726.42

Bills receivable 8417636171.41 8417636171.41

Accounts receivable 17920101868.72 17920101868.72

Other receivables 2156760190.99 2156760190.99

Other current assets 1551745385.00 1551745385.00

Long-term receivables 306402281.56 306402281.56

Other equity instruments 4852445212.91 4852445212.91

Other non-current assets 46832494.61 46832494.61

Financial assets (Continued)

Items Opening balance

Financial assets Financial assets

measured at fair measured at fair

value and value and

changes of which changes of which

included included in other

in current profit Measured at comprehensive

and loss amortized cost income Total

Monetary funds 45971035763.51 45971035763.51

Financial assets held for trading 2786075529.09 2786075529.09

Derivative financial assets 79819974.01 79819974.01

Bills receivable 13354791068.29 13354791068.29

Accounts receivable 14642659450.22 14642659450.22

Other receivables 1956721621.66 1956721621.66

Other current assets 316590333.42 316590333.42

Long-term receivables 308998755.30 308998755.30

Other equity instruments 4848709438.96 4848709438.96

Other non-current assets 46832494.61 46832494.61

Haier Smart Home Co. Ltd. Interim Report 2022 249Section X Financial Report

Financial liabilities

Items Closing balance

Financial Financial

liabilities liabilities

measured at measured at

fair value amortized cost Total

Short-term borrowings 13159569303.47 13159569303.47

Financial liabilities held for trading 79270648.00 79270648.00

Derivative financial liabilities 77066966.55 77066966.55

Bills payable 27955088267.08 27955088267.08

Accounts payable 38977127139.49 38977127139.49

Other payables 22391504810.19 22391504810.19

Non-current liabilities due within one year 9566319746.23 9566319746.23

Long-term borrowings 2119243998.96 2119243998.96

Long-term payables 49353671.92 49353671.92

Financial liabilities (Continued)

Items Opening balance

Financial Financial

liabilities liabilities

measured at measured at

fair value amortized cost Total

Short-term borrowings 11226212134.39 11226212134.39

Financial liabilities held for trading 6294014.40 6294014.40

Derivative financial liabilities 80212433.24 80212433.24

Bills payable 25023238406.72 25023238406.72

Accounts payable 42396109648.76 42396109648.76

Other payables 17533370017.01 17533370017.01

Non-current liabilities due within one year 6745950334.20 6745950334.20

Long-term borrowings 3038573824.53 3038573824.53

Bonds payable 334730048.82 334730048.82

Long-term payables 99602707.76 99602707.76

Please refer to related items in Note VII for details on each of the financial instruments of the Company.Risks related to these financial instruments and the risk management policies taken by the Company to

mitigate these risks are summarized below. The management of the Company manages and monitors

these risk exposures to ensure the above risks are well under control.

250 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

1. Credit risk

The credit risk of the Company mainly arises from bank deposits bills receivable accounts receivable

interest receivable other receivables and wealth management products.

(1) The Company’s bank deposits and wealth management products are mainly deposited in

Haier Finance Co. Ltd. state-owned banks and other large and medium-sized listed banks. The

interest receivables are mainly the accrued interests from fixed deposits which are deposited in

the above banks. The Group does not believe there is any significant credit risk due to defaults

of its counterparties which would cause any significant loss. (2) Accounts receivable and bills

receivable: The Company only trades with approved and reputable third parties. All customers

who are traded by credit are subject to credit assessment according to the policies of the Company

and the payment terms shall be determined on a reasonable basis. The Company monitors the

balances of accounts receivable on an ongoing basis and purchases credit insurance for

receivables of large-amount credit customers in order to ensure the Company is free from

material bad debts risks. (3) Other receivables of the Company mainly include export tax refund

borrowings and contingency provision. The Company strengthened its management and

continuous monitoring in respect of these receivables and relevant economic business based on

historical data so as to ensure that the Company’s significant risk of bad debts is controllable

and will be further reduced.

2. Liquidity risk

Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling

obligations associated with financial liabilities. To control such risk the Company utilizes various

financing methods such as notes settlement and bank loans to strive for a balance between

sustainable and flexible financing. It also has obtained bank credit facilities from several

commercial banks to satisfy its needs for working capital and capital expenditures.

3. Exchange rate risk

The Company’s businesses are based in mainland China USA Japan Southeast Asia South Asia

central and east Africa Europe and Australia etc. and are settled in RMB USD and other currencies.The Company’s overseas assets and liabilities denominated in foreign currencies as well as

transactions to be settled in foreign currencies expose the Company to fluctuations in exchange

rates. The Company’s finance department is responsible for monitoring the size of transactions in

foreign currencies and assets and liabilities denominated in foreign currencies to minimize the risk

of exposure to fluctuation in exchange rate; the Company resorts the way of signing forward

foreign exchange contracts to avoid the risk of exchange fluctuation.

4. Interest rate risk

The Company’s interest rate risk arises primarily from its long- and short-term bank loans and bonds

payables which are interest-bearing debts. Financial liabilities with floating interest rates expose the

Company to cash flow interest rate risk while financial liabilities with fixed interest rates expose the

Company to fair value interest rate risk. The Group determines the relative proportion of fixed-interest

rate and floating interest rate contracts in light of the prevailing market conditions.Haier Smart Home Co. Ltd. Interim Report 2022 251Section 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 62789403.13 546532442.90

1-2 years 532093996.86

2-3 years

Over 3 years

Accounts receivable balance 594883399.99 546532442.90

Allowance for bad debts

Accounts receivable net 594883399.99 546532442.90

Changes in allowance for bad debts of accounts receivable during the current period:

Opening Increase for the current Decrease for the current Closing

Items Balance period period Balance

Provision for Write-off

the current Other and other

period increase Reversal movement

Allowance for bad

debts

252 Haier Smart Home Co. Ltd. Interim Report 2022Section X Financial Report

2. Other receivables

√ Applicable □ Not Applicable

Unit and Currency: RMB

Items Closing balance Opening balance

Interest receivable 85694396.74 51632471.99

Dividend receivable 4015840000.00 3615840000.00

Other receivables 13953280622.41 12577807696.42

Total 18054815019.15 16245280168.41

(1) Interest receivable:

Items Closing balance Opening balance

Within 1 year 85694396.74 51632471.99

Over 1 year

Total 85694396.74 51632471.99

(2) Dividend receivable

Aging Closing Balance Opening Balance

Within 1 year 4015840000.00 3615840000.00

More than 1 year

Total 4015840000.00 3615840000.00

Haier Smart Home Co. Ltd. Interim Report 2022 253Section X Financial Report

(3) Other receivables:

* The disclosure of other receivables by aging is as follows:

Aging Closing balance Opening balance

Within one year 12789835911.72 12040141153.64

Over 1 year 1163452674.94 537791379.00

Other receivables balance 13953288586.66 12577932532.64

Allowance for bad debts 7964.25 124836.22

Other receivables net 13953280622.41 12577807696.42

* 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 124836.22 116871.97 7964.25

3. Long-term equity investment

√ Applicable □ Not Applicable

(1) Details of long-term equity investments:

Closing balance Opening balance

Provision for Book Provision for

Items Book balance impairment balance impairment

Long-term equity investments

Including: long-term equity investments in

subsidiaries 49377425428.31 7100000.00 49377425428.31 7100000.00

Long-term equity investments in

associates 3464422755.92 109300000.00 3252734849.46 109300000.00

Total 52841848184.23 116400000.00 52630160277.77 116400000.00

254 Haier Smart Home Co. Ltd. Interim Report 2022Section 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. 9500000.00 9500000.00

Haier Group (Dalian) Electrical Appliances

Industry Co. Ltd 34735489.79 34735489.79

Qingdao Haier Refrigerator Co. Ltd. 402667504.64 402667504.64

Qingdao Haier Special Refrigerator Co. Ltd. 329832047.28 329832047.28

Qingdao Haier Information Plastic Development

Co. Ltd 102888407.30 102888407.30

Dalian Haier Precision Products Co. Ltd. 41836159.33 41836159.33

Hefei Haier Plastic Co. Ltd. 42660583.21 42660583.21

Qingdao Haier Technology Co. Ltd. 16817162.03 16817162.03

Qingdao Household Appliance Technology and

Equipment Research Institute 66778810.80 66778810.80

Qingdao Meier Plastic Powder Co. Ltd. 24327257.77 24327257.77

Chongqing Haier Precision Plastic Co. Ltd. 47811283.24 47811283.24

Qingdao Haier Electronic Plastic Co. Ltd. 69200000.00 69200000.00

Dalian Haier Refrigerator Co. Ltd. 138600000.00 138600000.00

Dalian Haier Air Conditioner Co. Ltd. 99000000.00 99000000.00

Guizhou Haier Electronics Co. Ltd. 96904371.71 96904371.71

Hefei Haier Air-conditioning Co. Limited 67110323.85 67110323.85

Qingdao Haier Refrigerator (International) Co.Ltd. 238758240.85 238758240.85

Qingdao Haier Air-Condition Electronic Co. Ltd. 1131107944.51 1131107944.51

Qingdao Haier Air Conditioner General Corp.Ltd. 220636306.02 220636306.02

Qingdao Haier Special Freezer Co. Ltd. 471530562.76 471530562.76

Qingdao Haier Dishwasher Co. Ltd. 206594292.82 206594292.82

Wuhan Haier Freezer Co. Ltd. 47310000.00 47310000.00

Wuhan Haier Electronics Co. Ltd. 100715445.04 100715445.04

Chongqing Haier Air Conditioner Co. Ltd. 100000000.00 100000000.00

Hefei Haier Refrigerator Co. Ltd. 49000000.00 49000000.00

Qingdao Haier Whole Set Home Appliances

Services Co. Ltd. 118000000.00 118000000.00

Chongqing Haier Refrigeration Appliance Co.Ltd. 91750000.00 91750000.00

Shanghai Haier Zhongzhi Fang Chuang Ke Space

Management Co. Ltd. 2000000.00 2000000.00

Qingdao Haier Special Refrigerating Appliance

Co. Ltd. 100000000.00 100000000.00

Haier Shareholdings (Hong Kong) Limited 26022782526.24 26022782526.24

Haier Smart Home Co. Ltd. Interim Report 2022 255Section 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. 100000000.00 100000000.00

Foshan Haier Freezer Co. Ltd. 100000000.00 100000000.00

Zhengzhou Haier Air Conditioner Co. Ltd. 100000000.00 100000000.00

Qingdao Haidayuan Procurement Service Co.Ltd. 20000000.00 20000000.00

Qingdao Haier Intelligent Technology

Development Co. Ltd. 130000000.00 130000000.00

Qingdao Haier Technology Investment Co. Ltd. 367505635.00 367505635.00

Qingdao Casarte Smart Living Appliances Co.Ltd. 10000000.00 10000000.00

Haier Overseas Electric Appliance Co. Ltd. 500000000.00 500000000.00

Haier (Shanghai) Electronics Co. Ltd. 12500000.00 12500000.00

Haier U+smart Intelligent Technology (Beijing)

Co. Ltd. 143000000.00 143000000.00

Haier Electronics Group Co. Ltd. 3979407602.61 3979407602.61 7100000.00

Flourishing Reach Limited (SPVX) 12751300336.02 12751300336.02

Qingdao Haidarui Procurement Service Co. Ltd. 107800000.00 107800000.00

Qingdao Haier Intelligent Household Appliances

Co. Ltd. 326400000.00 326400000.00

Qingdao Haidacheng Procurement Service Co.Ltd. 100000000.00 100000000.00

Qingdao Haier Quality Inspection Co. Ltd. 18657135.49 18657135.49

Qingdao Haier Home AI Industry Innovation

Center Co. Ltd. 20000000.00 20000000.00

Haier Smart Home Experience Cloud Ecological

Technology Co. Ltd. 100000000.00 100000000.00

Total 49377425428.31 49377425428.31 7100000.00

256 Haier Smart Home Co. Ltd. Interim Report 2022Section 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. 145209273.31 12492538.14 157701811.45

Qingdao Haier SAIF Smart

Home Industry

Investment Center

(Limited Partnership) 393598372.59 –904601.39 –17199060.82 375494710.38

Bank of Qingdao Co. Ltd. 1051480863.27 139485507.20 65502506.22 –29821491.89 1226647384.80

Mitsubishi Heavy Industries

Haier (Qingdao)

Air-conditioners Co.Ltd. 682901976.73 52979520.61 735881497.34

Qingdao Haier Carrier

Refrigeration Equipment

Co. Ltd. 409053808.05 10936464.63 –17900226.81 402090045.87 21000000.00

Qingdao Haier Multimedia

Co. Ltd. 277102563.87 –14629468.29 262473095.58 88300000.00

Qingdao HBIS New Material

Technology Co. Ltd. 293387991.64 10746218.86 304134210.50

Total 3252734849.46 139485507.20 137123178.78 –64920779.52 3464422755.92 109300000.00

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 53149966.60 46742634.57 100011103.11 93685159.99

Other business 40173916.73 34148754.89 96140485.73 76847254.77

Total 93323883.33 80891389.46 196151588.84 170532414.76

Haier Smart Home Co. Ltd. Interim Report 2022 257Section X Financial Report

5. Investment income

Amount for the Amount for the

Items current period previous period

Investment income from long-term equity investment

accounted for using equity method 137123178.78 89661570.77

Investment income generated from disposal of long-

term equity investment

Investment income from long-term equity investments

accounted for using cost method 400000000.00 17700000.00

Income from wealth management products 11113358.17 5792409.99

Investment income from investment in other equity

instrument during the holding period

Total 548236536.95 113153980.76

XIX. APPROVAL OF FINANCIAL REPORT

This financial report was approved for publication by the Directors of the Company on 29 August

2022.

XX. OTHER SUPPLEMENTARY INFORMATION

1. Basic earnings per share and diluted earnings per share

Amount for the current period Amount for the previous period

Earnings per share Earnings per share

(RMB) (RMB)

Weighted Weighted

average average

return rate Basic Diluted return rate Basic Diluted

on net earnings earnings on net earnings earnings

Items assets per share per share assets per share per share

Net profit attributable to ordinary

shareholders of the Parent

Company 9.24% 0.85 0.85 9.29% 0.74 0.73

Net profit attributable to ordinary

shareholders of the Parent

Company after deduction of non-

recurring profit or loss 8.71% 0.80 0.80 8.50% 0.68 0.67

258 Haier Smart Home Co. Ltd. Interim Report 2022Section 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 7949084472.70 6858902854.55

Less: non-recurring profit or loss 458390767.32 588996447.83

Net profit attributable to ordinary shareholders of the Parent

Company after deduction of non-recurring profit or loss 7490693705.38 6269906406.72

Statement of non-recurring profit or loss for the current period

Non-recurring profit and loss items Amount for the current period

Profit and loss on disposal of non-current assets 33807493.39

Government subsidies through the profit and loss except

for government subsidies that are closely related to the

Company’s normal business operations comply with

national policies and regulations and continue to be

enjoyed in a fixed amount or fixed quantity according to

certain standards 434830465.43

Gains on investments in subsidiaries associates and joint

ventures in which the investment cost was less than the

fair value of identifiable net assets of the investees at

the time of acquisition

Profit and loss from fair value changes of financial assets

held for trading and financial liabilities held for trading as

well as investment gains arising from disposal of financial

assets held for trading financial liabilities held for trading

and financial assets held for sale except the effective

hedging related to the normal operations of the

Company 59249736.54

Other non-operating income and expenses except the

aforementioned items 34282312.26

Effect of minority equity interest (After Tax) –10201864.65

Effect of income tax –98050857.35

Effect of profit from business combination under common

control 4473481.70

Total 458390767.32

Chairman of the Board: LI Huagang

Date of approval for publication by the Board: 29 August 2022

Information of amendment

□ Applicable √ Not Applicable

Haier Smart Home Co. Ltd. Interim Report 2022 259

免责声明

以上内容仅供您参考和学习使用,任何投资建议均不作为您的投资依据;您需自主做出决策,自行承担风险和损失。九方智投提醒您,市场有风险,投资需谨慎。

推荐阅读

相关股票

相关板块

  • 板块名称
  • 最新价
  • 涨跌幅

相关资讯

扫码下载

九方智投app

扫码关注

九方智投公众号

头条热搜

涨幅排行榜

  • 上证A股
  • 深证A股
  • 科创板
  • 排名
  • 股票名称
  • 最新价
  • 涨跌幅
  • 股圈