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海尔智家2019年半年度报告(英文版) 下载公告
公告日期:2019-08-31

Important Notice

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

management of Haier Smart Home Co., Ltd. ('the Company') are individually and collectivelyresponsible for the content set out therein and hereby assure that the content set out in theinterim report is true, accurate and complete, and free from any false record, misleadingrepresentation or material omission.

II. All directors attend the Board of Directors.

III. The interim report is unaudited.

IV. Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer ofthe Company) and Ying Ke (the person in charge of accounting department) hereby certifythat 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 the reporting period examined and reviewed by the Board

Not Applicable

VI. Disclaimer in respect of forward-looking statements

√Applicable ?Not Applicable

Forward-looking statements such as future plans, development strategies as set out in thisreport do not constitute our substantial commitment to investors. Investors are advised to payattention to investment risks.

VII. Is there any fund occupation by controlling shareholders and their related parties fornon-operational purposes?

No

VIII. Is there any provision of external guarantee in violation of prescribeddecision-making procedures?No

IX. Important risk warningsFor the possible risks which the Company may encounter, please refer to the relevantinformation set out in the section of 'DISCUSSION AND ANALYSIS ON OPERATIONS' in thisreport.

X. Others? Applicable√Not Applicable

Chairman of the Board: Liang Haishan

Haier Smart Home Co., Ltd.

29 August 2019

(Note: This Report has been prepared in both Chinese and English. Should there be any discrepanciesor misunderstandings between the two versions, the Chinese version shall prevail.)

Contents

SECTION I DEFINITIONS ...... 5SECTION II GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIALINDICATORS ...... 7

SECTION III SUMMARY OF THE COMPANY'S BUSINESS ...... 11

SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS ...... 19

SECTION V SIGNIFICANT EVENTS ...... 43SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUTSHAREHOLDERS ...... 58

SECTION VII RELEVANT INFORMATION OF PREFERRED SHARES ...... 63

SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT ...... 64

SECTION IX RELEVANT INFORMATION OF CORPORATE BONDS ...... 66

SECTION X RESPONSIBLITY STATEMENT ...... 70

SECTION XI FINANCIAL REPORT ...... 71

SECTION XI DOCUMENTS AVAILABLE FOR INSPECTION ...... 226

SECTION I DEFINITIONS

Unless otherwise stated in context, the following terms should have the following meanings in thisreport:

Definition of frequently used terms
CSRCChina Securities Regulatory Commission
SSEShanghai Stock Exchange
The Company, Haier Smart Home
Four Major Securities NewspapersChina Securities Journal, Shanghai Securities News, Securities Times, Securities Daily
Haier Electrics, 1169Haier Electronics Group Co., Ltd. (a company listed in Hong Kong, stock code: 01169.HK)
GEAGE Appliances, namely household appliances assets and business of General Electric Group, has currently been acquired by the Company.
FPAFisher & Paykel Appliances Holdings Limited 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, freezer, washing machine, clothes dryer and etc. Its business covers over 50 countries/area across the world. In July 2018, the Company completed the acquisition of 100% equity interest in Haier New Zealand Investment Holding Company Limited, thus FPA became a wholly-owned subsidiary of the company.
CandyCandy Group 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 officially became a wholly-owned subsidiary of the Company.
CMMChina Market Monitor Co., Ltd., as a nationally recognized market research institute in appliance area, was established in 1994 and has been focusing on research of retail sales in China consumption market ever since.
EuromonitorEuromonitor, established in 1972, is the leading strategic market information supplier and owns 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 CloudAll View Cloud (AVC) is a big data integrated solution provider perpendicular to the smart home field, providing enterprises with big data information services, regular data information services and special data services.
IECThe 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.
13 Interconnected FactoriesShenyang Refrigerator Interconnected Factory, Foshan Front-Loading
Washing Machine Interconnected Factory, Zhengzhou Air-conditioner Interconnected Factory, Qingdao Mold Interconnected Factory, Qingdao Water Heater Interconnected Factory, Qingdao FPA Electrical Machine Interconnected Factory, Jiaozhou Air-Conditioner Interconnected Factory, Huangdao Central Air-Conditioner Interconnected Factory, Huangdao Smart Kitchen Appliance Range Hood Interconnected Factory, Huangdao Smart Kitchen Appliance Stove Interconnected Factory, Qingdao Front-Loading Washing Machine Interconnected Factory, Qingdao Refrigerator Interconnected Factory, Laiyang Smart Kitchen Appliance Interconnected Factory
'5+7+N' smart full-scene customized full set program'5' refers to five physical spaces where Haier keeps upgrading, including smart living room, smart kitchen, smart bathroom, smart bedroom and smart balcony. '7' represents seven whole-house solutions, namely whole-house air, whole-house water, whole-house cleansing and maintenance, whole-house security, whole-house interaction, whole-house health and whole-house internet, while N refers to variables, i.e. users may customize their own smart living scene freely based on their living habit, realizing unlimited possibilities.
Model of RenDanHeYi'Ren' is an employee who has the spirit of two creations (entrepreneurship, innovation); 'Dan' is the value of users. Each employee creates value for the user in a different self-employed business, thereby realizing his own value, and the corporate value and shareholder value are naturally reflected.
IEEEThe 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.

SECTION II GENERAL INFORMATION OF THE COMPANY AND

KEY FINANCIAL INDICATORSI. Information of the Company

Chinese name海尔智家股份有限公司
Chinese short name海尔智家
English nameHaier Smart Home Co., Ltd.
English short nameHaier Smart Home
Legal representativeLiang Haishan

II. Contact person and contact Information

Secretary to the BoardRepresentative of securities affairsIROthers
NameMing GuozhenLiu TaoSophie (孙瑶)Global Customer Service Hotline
AddressDepartment of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao CityDepartment of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao CityHaier Deutschland GmbH, Hewlett-Packard-Str. 4,61352 Bad Homburg, Germany/
Tel0532-889316700532-88931670+49 160 9469 3601 (Germany)4006 999 999
Fax0532-889316890532-88931689//
Emailfinance@haier.comfinance@haier.comY.sun@haier.de/

III. Summary of the changes in general information

Registered addressHaier Industrial Park, Laoshan District, Qingdao City
Postal code of the registered address266101
Business addressHaier Information Industrial Park, Laoshan District, Qingdao City
Postal code of the business address266101
Websitehttp://www.haier.net/cn/
Email9999@haier.com

IV. Movement of place for information disclosure and deposit

Designated newspaper for information disclosureShanghai Securities News, Securities Times, China Securities Journal, Securities Daily
Website for publishing interim report as designated by the CSRCwww.sse.com.cn
Website for publishing annual report by other websiteswww.xetra.com, www.dgap.de
Deposit place of interim reportDepartment of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No.1 Haier Road, Qingdao City

V. Summarized information of shares of the Company

Type of SharesStock Exchange of Shares ListedStock Short NameStock CodeStock Short Name Before Variation
A shareShanghai Stock ExchangeHaier Smart Home600690Qingdao Haier
D shareFrankfurt Stock ExchangeHaier Smart Home690DQingdao Haier

VI. Other related information

√ Applicable ?Not Applicable

During the reporting period, the Chinese name of the Company changed from '青岛海尔股份有限公司' to '海尔智家股份有限公司', the English name of the Company changed from 'Qingdao Haier Co.,Ltd.' to 'Haier Smart Home Co., Ltd. ', the stock short name of the Company changed from ' QingdaoHaier ' to 'Haier Smart Home', and the English short name of the Company changed from 'QingdaoHaier' to ' Haier Smart Home '.

VII. Key accounting data and financial indicators of the Company(I) Key accounting dataUnit and Currency:RMB

Key accounting dataFor the reporting period (January-June)The corresponding period of last yearIncrease/decrease for the reporting period compared with the corresponding period of last year (%)
After adjustmentBefore Adjustment
Operating revenue98,979,793,121.1690,488,122,206.3188,591,626,626.079.38
Net profit attributable to shareholders of the listed Company5,150,869,558.024,787,943,825.164,858,795,529.427.58
Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company4,703,180,815.004,475,991,565.274,475,991,565.275.08
Net cash flows from operating activities3,633,833,497.745,598,474,992.245,368,385,954.02-35.09
As at the end of the reporting periodAs at the end of last yearIncrease/decrease as at the end of the reporting period compared with the end of last year (%)
After adjustmentBefore adjustment
Net assets attributable to shareholders of the listed Company42,180,337,843.3339,402,350,791.6839,402,350,791.687.05
Total assets181,141,384,287.40166,699,544,243.79166,699,544,243.798.66

(II) Key financial indicators

Key financial indicatorsFor the reporting period (January-June)The corresponding period of last yearIncrease/decrease for the reporting period compared with the corresponding period of last year (%)
After adjustmentBefore adjustment
Basic earnings per share (RMB / share)0.8090.7850.7973.06
Diluted earnings per share (RMB / share)0.7780.7850.786-0.89
Basic earnings per share after deducting non-recurring profit or loss (RMB / share)0.7390.7340.7340.68
Weighted average return on net assets(%)12.2913.4914.10Decrease by 1.20 pct pts
Weighted average return on net assets after deducting non-recurring profit or loss(%)11.2212.9912.99Decrease by 1.77 pct pts

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

IX. Non-recurring profit or loss items and amount

√Applicable ?Not Applicable

Unit and Currency: RMB

Non-recurring profit or loss itemsAmount
Profit or loss from disposal of non-current assets4,303,058.02
Government grants included in current profit or loss, except that closely related to the normal operating business, complied with requirements of the national policies, continued to be granted with the amount and quantity determined under certain standards279,256,033.50
Profit and loss of changes in fair value arising from holding of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities except for valid hedging business relevant to normal business of the company, as well as investment gain realized from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading , derivative financial liabilities and other debt investments156,198,964.91
Other non-operating income and expenses except the aforementioned items164,885,043.50
Effect of minority equity interests-94,052,101.37
Effect of income tax-62,902,255.54
Total447,688,743.02

X. Others? Applicable√Not Applicable

SECTION III SUMMARY OF THE COMPANY'S BUSINESSI. Introduction of major business, operating model of the Company and industry backgroundduring the reporting periodThe Company mainly engages in research, development, production and sales of home applianceswith product portfolios covering refrigerators/freezers, washing machines, air-conditioners, waterheaters, kitchen appliance products, small home appliances, U-home smart home business, etc., offeringcomplete sets of smart home solutions to our consumers through rich portfolio of product and brand tocreate a better life experience, and the Company's channel integration service business mainly providescustomers with full-process services such as distribution, logistic and after-sale service of householdappliances and other products, as well as other value-added services.Since its establishment, the Company has been upholding the concept of 'regarding the user as rightand ourselves as wrong', while adhering to the spirit of entrepreneurship, innovation and the strategy ofkeeping up with new developments of the era. The Company has always adhered to overseasindependent brand building and through its persistent efforts and industry integration, it has successivelyacquired the white goods business of Sanyo of Japan, the household appliances business of GE, Fisher &Paykel business in New Zealand, held 48.41% of equity in MABE in Mexico, and acquired Italy-basedcompany Candy, to construct the global competitiveness of the 3-in-1 layout of 'R&D, manufacturingand marketing'. Through continuous optimization of resource integration capabilities and global strategicsynergies, the Company achieved global layout and operation by combining seven world-class brands,including Haier, Casarte, Leader, GE Appliances in the USA, Fisher & Paykel in New Zealand, AQUAin Japan and Italy-based Candy. In the first half of 2019, revenue from overseas operation represented 47%of the total revenue of the Company, while near 100% of the revenue was generated from self-ownedbrands.According to 2018 global retail sales statistics on the large home appliances published byEuromonitor, a world's leading independent provider of strategic market research, sales volume of Haierlarge home appliances ranked No. 1 in the world for the 10th consecutive year. Meanwhile, global salesof Haier's refrigerators, washing machines, wine cellars and freezers continued to rank No. 1 in theworld. Sales of Haier Health self-cleaning air-conditioner represented a global market share of 40.7%and ranked No. 1 in the world in the year of 2018.Facing opportunities and challenges arising in the Internet of Things ('IoT') era, the Company,through strategic market moves, has initiated the transformation to embrace IoT, continuously focusingon iterations of the best user experience. By offering smart homes solutions and introducing full-rangesmart life experiences to consumers, Haier is dedicating itself to satisfy users’ needs of a better andcustomized life .Industry summary for the first half of 2019

In the first half of 2019, we could find that the global economic growth slowed down, the growthmotivation of developed countries was inadequate, and the growth momentum of emerging economiesdeclined. Unilateral trade protectionism seriously interfered with the operation of global industrialchains. The global economic growth is facing more serious and uncertain external environment. Theglobal manufacturing PMI index initiated by JP Morgan fell to 49.4% in June, the lowest since October2012.In terms of domestic economy, China's real GDP grew by 6.3% as compared with last year in thefirst half of 2019, and the overall operation was stable. Among them, real GDP in Q2 increased by 6.2%as compared with last year. Manufacturing boom declined in the first half of 2019, weak externaldemand and repeated Sino-US trade frictions have a negative impact on exports. It is expected thatChina's economic growth will still face a downturn pressure in the second half of 2019, but will remainwithin the target range of 6.0%-6.5% under the synergy of various counter-cyclical control policies.

(I) Domestic household appliances market

1. In the environment of constantly downward macro-economy, the domestic householdappliances market remained depressed in the first half of 2019. Influenced by many factors such asshrinking demanding scale, high inventory and penetration of E-commerce channels, price wars weremore frequent and competition was further intensified. At the same time, the channel format, producttechnology and consumption trends are also undergoing profound changes. The industry transformationfrom 'mass manufacturing + mass distribution' to 'brand manufacturing + efficient retailing' is imperative,and enterprises must accelerate the transformation from selling single items to providing smart homesfull set solutions.

According to the report of CMM, in the first half of 2019, the total retail sales volume of China'swhole-category household appliances market (excluding 3C) was RMB465.6 billion, decreased by 4.9%from the same period last year, being a new low since 2012. Among them, ①White goods industry.Retail sales of refrigerators, washing machines and air conditioners decreased by 2.3%, 3.9% and 8.2%from the same period last year, respectively. ②Kitchen and bathroom industry. Retail sales of kitchenappliances and water heaters fell by 2.9% and 1.0%, respectively.

2. Increases and decreases in average price varied from household appliances' categories. ①The refrigerator and washing machine industry benefits from the leading companies' continuous effortsto launch innovative products, which promote structural optimization, industry upgrading and averageprices increasing. According to China Market Monitor Co., Ltd (CMM), the average price of refrigeratorand washing machine industry in the offline market increased by 4.7% and 5.0% respectively in the firsthalf of 2019 as compared with last year; ②Affected by price wars, the average offline market price inthe air-conditioning industry dropped by 1.7%; ③The average offline market price of kitchenappliances and water heaters showed a negative growth of 2%.

3. In the market structure, the concentration continued to improve in refrigerator, washing

machine and air-conditioning industries, the concentration declined in kitchen appliances, and theInternet companies entered the home appliance industry to divert users. According to CMM data,the aggregate TOP3 (refrigerators, washing machines and air conditioners) retail sales shares in theoffline market were 58.57%, 63.24% and 74.61% respectively, increased by 2.34, 1.57 and 0.53 pct ptsover the same period of last year. Affected by the weak demand, continuous entry of new brands andlower prices of mid-to-high-end brands, the kitchen appliance market's leading brands share was diluted,TOP3 retail sales share decreased by 1.95 pct pts and market concentration was dispersed. Internetcompanies use 'smart connections' and 'low-cost products' as selling points to divert new users,especially younger users.

4. Channel format changed significantly. ①E-commerce channels broke the existing channelpattern by actively penetrating into third and fourth-tier markets and obtaining user traffic throughlow-cost products, and some small and medium-sized brands entered the township markets throughcommercial channels, thus the competition was intensified. ②The sales of household appliancesincreased significantly in the home market. Under the trend of full decoration and integrated design ofhousehold appliances, the characteristics of one-stop shopping and experiential consumption in homemarket are conducive to the whole-category enterprises to effectively transform traffic through 'scenariocombination, whole-house program', thus improving the unit price and sales of outlets. With the rapidexpansions of large-scale home market, such channel will take a larger proportion in the offline retailsales of household appliances.

(II) Overseas household appliances marketDue to the level of economic development and holding quantity of household appliances in eachregion, the performance of overseas market varied. Among them: ①The US market continued todecline, with the sales volume of major household appliances falling by 5.6% (kitchen appliances,washing machines, dishwashers, refrigerators, freezers and home-use air conditioners falling by 5.5%,

1.3%, 3.2%, 3.6%, 8.6% and 20.3%, respectively) in the first half of 2019. ②The European market wasaffected by the slowdown in overall GDP growth, and the performance was weak. Among them, thesales volume of refrigerators and washing machines increased by 1.1% and 0.6% respectively over thesame period of last year, and the sales volume of kitchen appliances decreased by 1% over the sameperiod of last year. ③South Asia: The Indian market grew by 9% overall, with refrigerator, washingmachine and air-conditioner increased by 9%, 6% and 12% respectively; the Pakistani market wasaffected by such factors as the sharp depreciation of exchange rate by nearly 25% and tax reform, thesales volume of which decreased by 5%. ④The Southeast Asia market grew steadily, in which washingmachines grew by about 3%, and air conditioners increased by 15% due to the stable economic growthand strong demand in hot early summer. ⑤The Japanese market's sales volume of white goods were flatyear-on-year, with sales volume of refrigerator increased by 1.4% and sales volume of washingmachines flat. ⑥The Australian market, which was affected by factors such as economic slowdown,

decline in consumer confidence index, falling consumer spending and house prices, witnessed a negativegrowth in household appliances market and the sales in New Zealand retail market fell by 2.3%.

II. Significant changes of the Company's major assets during the reporting period

? Applicable √Not Applicable

III. Analysis on core competitiveness during the reporting period

√ Applicable ?Not Applicable

Since incorporation in 1984, the Company has always adhered to the principle of driving thesustainable and healthy development with innovation system focusing on user's need, and it hassuccessfully turned itself from a collectively owned small factory which had deficit and was on the vergeof bankruptcy into one of the largest home appliances manufacturers in the world. The Company iscommitted to constantly realizing development across different cycles through continued innovations incorporate development strategy, management method, brand operation, technology R&D, smartmanufacturing and expansion into foreign and domestic markets to achieve competitiveness regardingdynamic market changes.(I) World-renowned brand competitiveness and leading capability for smart homes full setsolutions

1. World-renowned brand competitiveness. According to the data published by Euromonitor,Haier has been ranked No. 1 among global large home appliances brands for 10 consecutive years. Insegments of refrigerators, washing machines, wine cellars and freezers, the Company continues to be No.1 in the world. To meet the personalized and diversified product needs of users, the Company has brokendown the global technical barriers in the household appliances industry and promoted the healthydevelopment of the industry through the global strategic synergy among seven brands of householdappliances, namely Haier, Casarte, Leader, GE Appliances in the U.S., Fisher&Paykel in New Zealand,AQUA in Japan and Candy in Italy, realizing a full coverage in global markets and user communities.The Company is leading the high-end market. From January to June of 2019, Casarte's market share ofair conditioners above RMB10,000 is 50.4%, representing an increase of 1.9 pct pts; the market share ofFisher & Paykel, the world's top household appliance brand, is No. 1 in New Zealand and maintains itsmarket leadership.

2. Leading capability for smart homes full set solutions. Based on the all-round deploymentand leadership of brand, research and development, intellectual building, channel, service, ecologyand U+ smart home platform, Haier has built up one of the world's leading white goods, kitchen andbathroom industry clusters, covering all types of full set products such as refrigerators and freezers,washing machines, air conditioners, water heaters and kitchen appliances, and provides consumers with

'Full set, Customized, Iterative '5+7+N' smart full set solutions. 'Full set' is a one-stop solution to solvethe users' demands of whole-house appliances through a full set service that integrates smart homewhole-house product solutions and household appliances. 'Customized' enables users to customize smarthome whole-house scenes based on Haier's 8 business and 140 product categories. 'Iterative' refers toupgrade and iterate smart home technology, performance and experience by user's habits and scenerequirements, and constantly adapt to user's need by collecting and analyzing product use data with U+smart platform.(II) Industry-leading R&D and technological competitiveness

1. Global R&D resources deployment: Relying on 10 R&D centers across the world and multiple(N) innovation centers that focus on user's pain point, Haier has built a '10+N'open innovation system toform a global network of resources and users, and attracted world-class resources to participate with its'cooperation, win-win and sharing' mechanism. Haier therefore plays a leading role in the developmentof products and technologies in the industry, and realizes the goal that 'R&D of Haier goes to whereveruser's need and innovations resources are', providing users with perfect experience.

2. Leader in the development of international standards: As of June 2019, Haier, as a householdappliance enterprise proposed the most proposals for international standard in China, has participated inpreparation and revision of 60 international standards and submitted 98 international standardpreparation and revision proposals. At the same time, Haier is also the household appliance enterpriseleading the most industry standards in China and has led and participated in 530 national / industrialstandards preparation and revisions cumulatively. In addition, Haier is the only Chinese householdappliance enterprise with a seat in the International Electrotechnical Commission's Market StrategyBureau (IEC/MSB), and the only household appliance enterprise in China that undertakes themembership in International Standards Technical Subcommittee. Haier took the lead in setting up theIEC TC59/SC59M WG4 Refrigerator Preservation International Standard Working Group and led thedevelopment of new international standards for refrigerator preservation. Haier also led the developmentand official release of the world's first AI standard white paper. In addition, the Smart Home, Internet ofClothing, the Internet of Food and other international standard projects under the leadership of Haierwere approved by IEEE.

3. Leadership in technical patents: As of 30 June 2019, Haier has applied for more than 48,000patents cumulatively cover the world, of which over 60% are invention patents, representing a relativelyhigh patent quality. With more than 10,000 overseas invention patents in 28 different countries, Haier isthe household appliance enterprise with the most overseas invention patents in China. The Companyranked No. 1 in '2018 Hurun Report on IP Competitiveness' in China. In the 20th China Patent Awards inNovember 2018, Haier won 1 gold award for patent and 1 gold award for designing, and 12 excellenceawards for patents. In terms of patent awards, Haier has won 7 gold awards cumulatively during pastChina Patent Awards and the total number of gold awards was the highest in the industry, among which,the gold awards for invention patents account for 60% within the industry. In addition, Haier has won 15

State Prizes for Progress in Science and Technology, the highest honor in China's science and technologysector, becoming the household appliance enterprise with the most such prizes, accounting for over halfof the prizes within the industry.

4. Innovative R&D mechanism through the HOPE platform: In parallel to independentinnovation, the Company opened its global resources, built HOPE (an innovation platform) toincorporate users, enterprises and resources into the same interactive ecosystem, to break down barriersbetween users and resources. In addition, Haier continued to make cross-border and disruptiveinnovation achievements through the effective collaboration and zero-distance interaction of differentroles within the community. Currently, the platform offers over 6,000 creative ideas each year,supporting leadership in products / technology of various industries and new fields.(III) Competitiveness of industrial smart manufacturing that leads to changeThe core competitiveness of Haier's smart manufacturing is its commitment to long-term value ofusers through its user-centered approach and the transition from large-scale manufacturing to large-scalecustomization. In practice, Haier has established 13 global-leading interconnected factory pilots, and theinterconnected capabilities and ecological system cover the whole process. Such businesses coverrefrigerators, washing machines, air-conditioners, water heaters, kitchen appliances, electric motors,molds and other fields, fulfilling user's demand for perfect experiences in high-end personalizedproducts and services. Such initiatives resulted in notable effects: the orders from mass customizationwith full user involvement accounted for 19%, and the orders from mass customization with full clientinvolvement accounted for 52%. This achieved a breakthrough, which eliminated or shortened the periodof products in the warehouses. In addition, operational efficiency throughout the process has beenenhanced (e.g. the new product R&D cycle has been shortened by more than 50%).COSMOPlat platform combined Haier's interconnected factory model with the digitization andproductization of knowledge to build an industrial Internet platform with independent intellectualproperty rights, which integrated Haier's existing functionalities, such as intelligent equipment,intelligent control, mold and research institutes, and has already collaborated with relevant companies in15 industries, offered comprehensive solutions and value-added services by the combination of softwareand hardware as well as click-and-mortar for the enterprises' upgrading and smart manufacturingtransformation.(IV) The layout of efficient and in-depth distribution channels and logistics network

1. Through an omni-channel distribution system, the Company has achieved full coverage of thefirst, second, third and fourth-tier domestic markets and provided convenient shopping experienceanywhere, anytime. The Company also maintained strong strategic cooperation with professional chainstores for household appliances, such as Gome and Suning, as well as e-commerce platforms, such asTmall and JD.com. In respect of self-owned channels, Haier has established more than 8,000county-level exclusive stores, and more than 30,000 town-level stores. In the comprehensive store

channel, the Company has established a number of clubs, such as V58 and V140 Clubs, to maintainclose relationship with major regional distribution enterprises of household appliances. In addition, theCompany has accelerated the construction of the front channel contact point including building materialsand home improvement. Relying on the advantage of multi-brand and product, the Company will buildsmart complete-set scenario experience stores to provide a full set of displays, design, sales and servicesin the end-market.

2. A whole-process information system is constructed. 'Jushanghui'(

巨商汇) platform covers theorders management of 100% of dealers' customers to achieve online procurement, sales and settlementand reduce the management cost; 'Yilihuo' (易理货) platform covers purchase, sale and inventorymanagement of over 30,000 township customers and their membership management. The Company hasrealized the direct distribution of logistics to the town through the cloud warehouse system, and hasrealized the provision of services, products, resources, goals, incentives and training to the town throughYilihuo.

3. By the end of June 2019, the storage area of Gooday Logistics occupies an area of 5.40 millionsquare meters with 100,000 registered vehicles. Gooday Logistics offers all-weather 24/7 delivery andinstallation services, and it dedicated to provide users with comprehensive and timely services once andfor all.(V) Excellent global operational capabilityFocusing on 'independent brand building', the Company has completed its deployment of a 3-in-1layout comprising R&D, manufacturing and marketing in overseas markets, and targets to identify andmeet local consumers' demand. The Company is succeeding in transforming from single-brandglobalization to multi-brand cross-production lines cross-regional globalization. The Company targets aleap from 'going out, going in' to 'going up' through the integration of global resources. The Companyhas accelerated the implementation of the transformation of 'RenDanHeYi' overseas, and continued topromote the ignition of leading smart home in the IoT era solutions overseas. In the first half of 2019,revenue from overseas operation represented 47% of the total revenue of the Company while near 100%of the revenue was generated from self-owned brands.(VI) Integrity of corporate culture and the win-win under RenDanHeYi managementIntegrity culture based on quality and service is the inherent gene of Haier's development and thecore driver of Haier's continued success. Leveraging on 'user-oriented' and 'persistent honesty' values,Haier has turned itself from a collectively owned small factory which was on the verge of bankruptcyinto the largest white goods manufacturers in the world, while keeping a leading position in world-wideinnovation in the Internet era. Haier upholds a value of 'the user is always right', and this valuestimulates the spirit of innovation, revolution and entrepreneurship of Haier and motivates Haier tofollow the trend and continuously improve and challenge itself, in order to seize developmentopportunities. The value of 'win-win under RenDanHeYi' is the assurance of sustainable development of

Haier. Haier is the Haier of all stakeholders, mainly including employees, users, shareholders,counterparties and the society. In the era of network, Haier has formed a networked organization jointlywith the sub-suppliers and partners to establish communities of interests which would co-create andshare the win-win value. Only if the continued win-win benefits of all stakeholders are made, Haier canachieve sustainable operation. In order to achieve this goal, Haier continues to carry out innovation onbusiness model, developing and refining the win-win model under RenDanHeYi with Haiercharacteristics. 'Ren' refers to employees who have the spirit of entrepreneurship and innovation, and'Dan' refers to the value of users. Each employee creates value for the users in a different self-employedbusiness, thereby realizing their own value, and the corporate's value and the shareholder's value arenaturally realized.

SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONSI. Discussion and analysis on operationsThe Company followed the strategy of smart home leadership. Driven by the Rendanheyi model,the Company promoted the development of the self-driven system of Ecosystem Micro-community(EMC). Through continued product solution guidance, deepened retail transformation, global operationand multi-brand operation, the Company managed to achieve continuous growth of the revenue andprofit against the adverse economic situation and increase the market share. Facing deep changes of thenew era in the needs of users and in the industry, the Company created competing edge catering to theera and the competing ability to confront the future through deep down revolution. The Company alsoaccelerated the landing of '5+7+N' smart, all-scenario, customized and complete-set solutions; achievedthe transformation from sale of individual goods to complete-set, smart solutions of householdappliances; built efficient retailing system through the integration of 'four networks' and the adoption ofunified warehousing and distribution system; and promoted the transformation from distribution to retail.In the first half of 2019, the revenue of the Company amounted to RMB98.98 billion, representing ayear-on-year increase of 9.38%; and the net profit attributable to owners of the Parent Companyamounted to RMB5.15 billion, representing a year-on-year increase of 7.58%.(I) Rising domestic market share of all products: According to the data from China MarketMonitor Co., Ltd (CMM), the Company's offline and online market shares of refrigerators, washingmachines, home-use air conditioners, water heaters and kitchen appliances have maintained a continuousupward trend. In terms of refrigerators and washing machines, the Company continued to expand itsleading advantages, with the offline market share of refrigerators being 3.1 and 2.0 times as high as thatof the second place, while the online market share of washing machines being 2.0 and 2.1 times as highas that of the second place.

(II) Significant growth on revenue achieved by overseas market: The Company always insiststhe strategy of independent brand building and the construction of a 3-in-1 layout operation ability of'R&D, manufacturing, marketing' to accumulate the momentum for sustained growth and thecontribution to the Company's result is gradually increased in the overseas market. In the first half of2019, the Company's overseas revenue amounted to RMB46.7 billion, representing a year-on-yearincrease of 24% and accounting for 47%, up by 5 pct pts of the Company's overall revenue.(III) Full promotion of smart home strategy, and preliminary results of complete-set smarthousehold appliance:

By creating 'Complete-set', 'customized' and 'iterative' '5+7+N ' smart home solutions, buildingsmart home cloud with cloud brain, cloud chip, UhomeOS operating system and 'Xiaoyou' assistant, andconstructing the experience store, the Company integrated the whole-industry and full-processadvantages, proactively promoted the implementation of smart home network layout. In the first half ofthe year, the average retailing price of the Company's smart home channel whole-network package wasRMB10,271, representing an increase of 9%; the complete-set sales of the Company's smart homeproducts accounted for 28.3% of the overall sales, up by 2.7 pct pts, with sales of the high-end smartcomplete-set products achieving the most significant growth, registering an sequential growth of 24% inthe second quarter; the registration number of intelligent household appliances increased by 54%, andthe number of smart home users increased by 9.6%.

(IV) Honors of the Company: On 10 January 2019, the Company won the certificate of 'GlobalNo. 1 Brand of Large Household Appliances for 10 Consecutive Years (2009-2018) ' awarded byEuromonitor, a world well-known market research institute. On 22 January, the Company was listed inFortune magazine as 'The Most Appreciated Enterprise in the World in 2019', and became the only Asianhousehold appliances company on the list. On 6 May, the Company (as the only listed IOT eco brand)was listed in 'BrandZ? Top 100 Most Valuable Chinese Brands in 2019'. On 22 July, the Company wasre-listed in Fortune 500, ranking ascended by 51.Main achievements in the first half of 2019:

(I) Focusing on original technology, and creating mega-hit productsThe Company continuously promoted the collaboration between global R&D center and innovationcenter, maintained the global leading level in modular technology, products and R&D resources, andensured its market and brand leadership in various regions. Focusing on the competitiveness of mega-hitproducts, the Company enhanced the efficiency of R&D platform, reduced the procurement andmanufacturing costs through modular design, streamlining the number of SKUs and creating mega-hitproducts.

1. Refrigerator/freezer business

As the global leader in the refrigerator industry, the Company genuinely provided users with

healthy, smart and artistic high-quality delicacy solutions through comprehensive and sustainedtechnological innovation and product iteration, thus leading the industry development and trendrevolution in an all-round way. (1) Healthy and fresh-keeping technology was upgraded constantly.Casarte MSA oxygen-controlling and fresh-keeping technology doubled the preservation time byreducing the oxygen concentration in a specific room, and the nutrient loss rate was less than 1/10 of thatin an ordinary refrigerator. The breeze technology pioneered the main control temperature to realize theconstant temperature care of food: with temperature more accurate - fluctuation reduced from 2℃ to

0.2℃; and faster refrigeration effect - refrigeration time shortened from 270 seconds to 0.1 second. (2)Technical investment was strengthened in the field of intelligent and household appliancesintegration to satisfy the deep-seated needs of users for intelligent control and householdintegration. For example, iterative TFT smart screen technology can not only be used as refrigeratorintelligent control center for temperature adjustment, function setting and intelligent reminder, but alsoas family health center to record the health information of family members and provide value-addedservices such as diet plan and healthy recipes. The Company was awarded 'the First Prize for Scientificand Technological Progress' and 'the Second Prize for Scientific and Technological Progress' by ChinaNational Light Industry Council for two projects, namely, 'the R&D and industrialization of themicro-core IOT security operation system and the intelligent IOT technology', and 'the application ofintelligent interactive technology in refrigerators'. (3) The proportion of high-end products wasincreased by leading products. ①A new generation of Casarte Free Embedded 'YingAi (婴爱)' Series551 refrigerators was introduced, which satisfied the food storage needs of parents at different stages ofpregnancy, lactation and infant through infrared constant temperature storage and double sterilizationsolution. The sales of such refrigerators ranked Top 1 in the first launching month. ②Casarte FreeEmbedded 'HunRanTianCheng (浑然天成)' Series satisfied the demands of families where threegenerations live together for large capacity preservation, and drove the share of Casarte refrigerator overRMB30,000 to exceed 84.0%. In the first half of 2019, the revenue of Casarte refrigerators increased by25% against the industry downturn, which increased 2 pct pts in the proportion of domestic sales ofrefrigerators in the Company.

2. Washing machine business

As a global leader in washing industry, the Company created the washing experience of health,intelligence, comfort and energy conservation through original technologies including iterating airwash and direct drive motor. (1) New technologies including IoT, Smart and Artificial Intelligencewere launched and applied to introduce solutions, such as smart and exclusive laundry which canautomatically calculate and match the best washing procedures based on the information of clothing type,material, stain type and water quality and realize the high-grade exclusive wash. (2) Newly-launchedHaier 'XianHe (纤合)' washing machines adopted ultrasonic 'air wash' technology to stimulate theactivity of the fabric fibers and quickly remove wrinkles by transforming water into micron-sized foggyparticles which permeate the fabric fibers layer by layer, and realize no ironing for clothes; Such

washing machines have the largest cylinder diameter (601MM) in the industry, which makes it possibleto wash clothes in a more extending manner; Special care procedures are set for wool, silk, down feather,shirt, mink and large pieces, thus providing comprehensive care from washing to drying and ironing;Haier 'YiRen (颐人)' free-of-cleaning washing machines initiated the technology of 'no barrel', whichsolved the industry problem of dirt accumulation in barrels and avoided the secondary pollution ofclothing, thus creating an experience of 'anti-sensitive health'. (3) The product layout of Leader wasstrengthened to better satisfy the needs of young consumers and serve users with industry-leadinglogistics system, after-sales security, technical reserves, and product quality. ①Based on advantageousresources, the 'Super Excellent Product' series such as 'Super air wash+ smart' and 'large diameter +smart' products were launched, equipped with carrying voice, IOT and other intelligent technologies. ②With super-high cost-performance, 'Happy Mrs. Chick (快乐小鸡)' Series in line with the tastes ofyoung people were launched to build product strength with hard-core strength . In the first half of 2019,the revenue from Leader washing machines increased by 23%.

3. Household air conditioner business

The Company was the first enterprise in the industry to provide a complete range of one-stopand complete-set air solutions. Group research was refined through user interaction and big dataanalysis of Haier Smart Air, to improve the air experience of health, comfort, intelligence, energysaving and environmental protection. (1) Smart self-cleaning, purification self-cleaning and fresh airself-cleaning technologies were updated to satisfy the demands of clean air conditioning, clean air andfresh air. ①The pioneering fresh air conditioners adopted the dual-power air purification technology,and solved the endangering human health problem caused by indoor CO

concentration exceeding thestandard in case of staying indoor. ②The world's first batch of 5G air conditioners were developed andapplied in large-scale commercial use. Haier 5G IoT shared air conditioners provided campus smart airsolutions with the functions of power-on-line, remote online control and authorization sharing withvarious persons, covering more than 300 colleges and universities at the market share of more than 50%.

(2) Innovation, research and development were made for all-dimensional, full-space, full-scenariointelligent and healthy air intelligent adjustment solutions. Indoor temperature, humidity and other airparameters can be tested, and user's habits were analyzed with big data on Haier smart air. Therefore, theself-regulation and self-treatment of air equipment were achieved, and air conditioners realize activeservice. Such solution has been used in Casarte Yunding (云鼎), Casarte TX (天玺), Haier SmartSelf-Cleaning and Haier Fresh Air Self-Cleaning. (3) Brand product combinations were enriched, andthe future development space was expanded. ①Product lineup and price coverage were expanded forCasarte air conditioners to occupy the high-end and middle-end market, and in the first half of 2019,Casarte's air conditioner increased over 40% with the share over RMB15,000 is two times that of thesecond place. Casarte Commander air conditioner cabinet machine won the MWE Design Award. ②Focusing on Internet channels, 'Suprair (小超人)' air conditioners were launched for younger internet

users by virtue of the simple appearance design and the healthy, self-cleaning, intelligence andconvenience.

4. Central air conditioner business

We accelerated product program innovation and core technology layout, and launched aseries of smart IoT, energy-saving and healthy products to enhance market share. In the first halfof 2019, the market share of the central air-conditioning increased by 0.6 pct pt. (1) We deepenedthe R&D layouts of IoT cloud service and NB-IoT. ①The Company established the world's first 'JointLaboratory of IOT 5G Application' with China Household Electrical Appliances Research Institute,China Telecom Institute, China Mobile and Huawei Corporation, focusing on 5G central air conditioner,5G smart building applications and 5G intelligent manufacturing applications. ②We launched a seriesof IOT central air conditioners. ③With APP and WEB clients as the contact points, E + IoT cloudplatform provided users with full-space, full-scenario and full-dimension smart air solutions. (2) Welaunched the first humidifying central air conditioner in the industry, which intelligently regulated indoortemperature and humidity. The maximum humidifying capacity is 870 ml/h, and it is possible tohumidify the full space in only a quarter of an hour. The evaporation humidifier is uniform without anywater mist, and with low operating noise. (3) We introduced Casarte central air conditioner controller,which adopted crystal violet appearance in fashionable design and realized full touch screen operation.The controller was embedded with AI mode and various functions including sleep curve display, faultviewing to optimize user experience. (4) We expanded customers of new industries. We developedseawater source heat pump unit with dual-titanium tube for fishery, which can be used for bothrefrigeration and heating. It adopted multi-head design and achieved the capacity of 160KW for singleunit. The energy can be increased step by step to satisfy waterbody demands of mariculture.

5. Water heater business

Focusing on the whole-house water and heating program, sales volume became No. 1 in termsof online (throughout the internet) and offline (from all channels) shares of water heaters throughfull-category layout (including electric water heaters, gas water heaters, heat pump and solarwater heaters) and brand combination strategy. (1) Electric water heater: ①Relying on the uniquedual-drive quadruple-core heating system and patented advection thermal power system, Casarte Tianmu(天沐) PRO-C series, a fiber-tanked and instant-heating product, had super-large water volume withcapacity increased by 12 times. Through homogeneous fiber tank and VIP vacuum composite insulationtechnology, the thinnest fuselage (278mm) in the industry was created, which can be freely embedded inall kinds of bathroom environment. ②Haier water purification technology upgraded simple bathing tocare by using double-effect scale inhibition and level-III purification technology to remove scale,residual chlorine, impurities and bacteria. ③Haier AI technology-cloud SMART, relying on U+ big dataplatform, automatically obtained information such as water temperature, weather, power price, andlearned user's water use habits. It formed continuously optimized and intelligent heating program under

intelligence, and realized precise customization of water quantity and mode. Users had no need to handlesuch matters, and it helped to save half of power consumption. In March 2019, Tianmu MAX electricwater heaters won the AWE Award for Innovative Products. (2) Gas water heater: CRT8 water heatersof Casarte Waterfall Washing adopted the innovative waterfall washing technology, and the output ofwater was increased by more than 70%. Relying on the hot water power system and AI 'WaterfallWashing' chips to precisely control the proportion of gas, air and water, and to achieve the goal ofconstant temperature and comfort while providing large amount of water. Waterfall washing technologyhas obtained the European three-star certification for the highest level of hot water comfort. Thetechnology of actively eliminating carbon monoxide has obtained the internationally leadingcertification. The technology of waterfall washing with zero-cold water has been awarded the annualtechnical innovation award by CHEARI. (3)Heat pump: Casarte, with all-weather central hot water,used air energy to lead the new technology APF3.6 to provide villa level bath experience, thus realizing'more, fast, good, and saving' . 'More' means more water, more areas, more functions; 'Fast' reafers tofast heating, fast heat transfer, fast preheating; 'Good' stands for good quality, good warranty, goodservice; 'Saving' : save time and worry, save electricity and save money, more use, more saving. In June2019, it won the second prize of China patent award for energy conservation and environmentalprotection. (4) Solar water heater: We introduced space energy water heater based on the technology ofsolar energy and heat pump. The product realized sectional heating through all-weather andhigh-efficiency for heating, being both energy-saving and efficient. COP value of space energy productsis above 4.2, reaching the first-class national energy efficiency standard of air source heat pump.

6. Kitchen appliance business

Adhering to smart, high-end and complete-set development, we integrated FPA and GEA globalleading technology platforms to accelerate our leading position in products layout and to achieve ahigh-end complete intelligent kitchen solution for users. We strengthened the layout of Casarte kitchenappliances, and enhanced the competitiveness in high-end market. High-end products generated anoverall growth in kitchen appliance against a downward trend. Range hoods. Casarte Commander (指挥家) range hoods adopted the latest centrifugal air curtaintechnology, and iteratively optimized the fluid technology through integration of global resources, thusrealizing zero vibration, low noise and more uniform air outflow. 'Zero touch' gesture control of theproduct experienced iterative upgrade upon launching of wind-power range hoods. And throughoptimized algorithm, the product reduced the interference of smoke on the signal, and improved theoperation sensitivity without manual operations. By in-depth integration of global resources and iterativeoptimization and upgrades of the direct-drive and frequency-conversion technology, it increased the airpressure by 14% to 820Pa, thus satisfying the smoke exhaust needs of high-rise residential users, andenhancing the personalized user's experience continuously.Gas stoves. The automatically cooking gas stoves realized the free conversion between large andsmall fires through E-GAS technology. E-GAS system can adjust the internal and external rings of fire at

the same time and NTC sensor was used to detect the bottom temperature of the pot to avoid overflow.Disinfection cabinets. Base on the subdivided user's need, we upgraded the light-wave Pasteurdisinfection cabinet to infant & mom level, and become the only disinfection cabinet passing the infant& mom evaluation by CHEARI in the industry. Casarte Commander Series upgraded the originaltechnology to three-dimensional light source, and integrated Western-style dish warming cabinets intoChinese-style products for the first time, thus realizing the integration of disinfection and storage.Ovens. We were the first to release RF ovens in the industry, which overturned the heating mode ofovens. Casarte Commander series first created the automatic door-opening and closing technology andwireless probe technology in the industry. They also designed multi-recipe guided cooking menus forChinese consumers in three life scenarios: enjoying life, fast life and casual baking/steaming. Privatemenus were customized through OTA(Over the Air) online upgrading technology, and the cookingexperience was updated.

(II) Chinese segment: Deepening channel revolution & retail transformation and multi-brandoperation to facilitate the implementation of high-end smart complete-set solutions.In respond to the profound changes in customer needs, channel formats and sales models, theCompany took integration of four networks which include marketing network, logistics network,after-sales network and information network as the starting point and unified warehousing anddistribution as the key method for organizational reform and better operating efficiency. Based on theadvantages of whole industrial chain operation and multiple product categories, the Company expeditedthe deployment of resources into new front-end channels and the development of five abilities of contactpoints in packaged solutions, covering a whole-process service which ranges from home design todelivery and installation of household appliances. As a result, the user stickiness was enhanced and theyshowed increased willingness to buy complete sets of household appliances. Moreover, the Companydeepened multi-brand operation and segment user groups, leading to multi-dimensional and in-depthcoverage of users group.

1. Integrating marketing network, logistics network, after-sales network and informationnetwork and unifying warehousing and distribution to improve the efficiency. The service system ofintegrating marketing network, logistics network, after-sales network and information network has theability to achieve the interconnection among the information of products, customers, users and staff, andto improve the service quality during the whole process. This system enables marketing activities andmanagement in towns, rapid handling of defective products and visual query of order logisticsinformation during the whole process, thereby enhancing refined operation in village and town marketsthrough the coverage of the unified warehousing and distribution model, and digital operational systemin the market of villages and towns; and the retail competitiveness which drives the service providers tofocus on the village and town market can inspire good word of mouth through the synchronous delivery

and installation services and services to customers in village and town. The Company has completed thetrial implementation of the unified warehousing and distribution model, which is sustainable andreplicable in the first half of the year.

2. The Company opened up new front-end channels for user acquisition while continuing totap the potential of the traditional channel and e-commerce channel. ①Development and upgradingof smart home contact point network. Complete-set design in place, complete-set sales and services weremade a reality, enabling the Company to provide 'one-stop, omni-scenario and customized' solutions.User experience at sales outlets was enhanced owing to the demonstration of interconnection betweenvoice and scenarios. In the first half of 2019, The Company actively promotes the layout of smart homenetworks. The average retail price of all smart home channels amounted to RMB10,271, up by 9%; andthe retail sales of comprehensive products accounted for 28.3% of the total sales, up by 2.7 pct pts;retail sales from home decoration and home furnishing channels increased by 50%; ②Tap the potentialof traditional offline channels of outlets. Terminal development was strengthened through the setup ofexhibition stands, training programs and experience marketing. Community air washing, outlet airwashing and members' laundry day and other activities were organized in order to ensure preciseinteraction and user conversion. Dealers were driven to take the initiative to acquire the users. In theurban market, they established direct relationship with community residents by offering 'Aidaojia(爱到家)' door-to-door services; in the rural market, they created user traffic through household appliancereplacement programs; ③E-commerce channel. The Company focused on improving product planningand layout on retail channels expansion of e-commerce, thereby enhancing terminal competitiveness andpromoting geographic expansion. The Company carried out marketing on the company website,improved content construction, and enhanced brand awareness and conversion rate. In the 618 Tmalllive streaming competition, Haier streaming ranked No. 1 among household appliance category and No.2 among all categories; ④B2B business. In the first half of 2019, there were more than 80 strategiccooperation clients in industries such as real estate, hospitality, apartment and education. We receivedmarket recognitions for providing industry-wide complete-set smart product solutions, including'Preferred Smart Home Provider of Top 500 Chinese Real Estate Developers in 2019 and 'PreferredSmart Decoration Brand of China’s Real Estate Industry in 2019'.

3. The strategy of multi-brand operation enables extensive coverage of users. (1) The Casartebrand maintains rapid growth and expands its high-end market share. In the first half of 2019, ourrevenue increased by 15%. In terms of refrigerators and washing machines over RMB10,000, weaccounted for a market share of 39.6% and 78.8%, increased by 3.6 pct pts and 4.9 pct pts; in terms ofdomestic air conditioner over RMB15,000, we accounted for a market share of 36.5%, increased by 7.6pct pts During the reporting period, ①we accelerated the transformation to high-end smart complete-setproducts. The 'Commander' series comprising 21 new products such as refrigerator, wine cabinet,washing machine, air conditioner and kitchen appliance was launched, offering omni-scenario smart

solutions for the elite class; ②We focused on community economy, experience economy and sharingeconomy, and achieved precise interaction and preparing for users' future experience fermentationthrough community based marketing; ③We created warm contact points with our clients at our 'brandcenter, experience center, interaction center and service center', presented them with Casarte smart home'5+7+N' solution and expanded the number of stores. (2) Leader strengthened the brand image of“simplicity, fashion and intelligence” and created the preferred brand for young people in the pursuit ofsmart life. In the first half of 2019, the sales from online channels increased by 37%. The offline channelpromotes the expansion of network from the third- and fourth-tier markets to the first- and second-tiermarkets. We released best sellers on all e-commerce platforms at the same price, leading to strongmarket penetration and significant increase in brand awareness and user loyalty.

(III) Overseas segment : Focusing on high-end brand building to release growth momentumCentering on brand premium and improvement of efficiency, the Company accelerated the high-endbrand building to realize continuous growth. The Company recorded RMB46.7 billion in its overseasrevenue, representing a year-on-year growth of 24%. The revenue increase was 13% if excludingCandy's influence.

(1) Product leadership. Relying on global leading product platform, we created a high-end brandimage. In the first half of 2019, the high-end products of Haier brand increased by 49%, and high-endrevenues of refrigerators, washing machines, air conditioners, and kitchen appliances all had an increaseof over 30%. (2) Brand marketing: w ith its focus on high-end brand building strategy, Haier’sleadership in market was consolidated through continuous brand marketing activities, includinginternational exhibitions, sport events sponsorship and outdoor advertisement and so on. According tothe latest user’s research report of Kantar, the overseas popularity of Haier brand has exceeded 75%. Interms of improving retail competitiveness, Haier established country-region-headquarter three-levelsystem for promter coordinated promotion in overseas markets, significantly enhancing its ability andefficiency in selling middle-end and high-end products. In addition, through constantly strengthenedinteraction with community users, our fans on Facebook platform has exceeded 8.6 million and thenumber of fans in-depth interaction has reached 1.26 million with a year-on-year increase of 62%. (3)Channels: with the goal of increasing the premium of best sellers, we endeavored to optimize thechannel structure and expanding the internet coverage. We heated the network and improved theawareness of Haier brand through the upgrade of retail model. By learning from China's marketingmodel in Southeast Asia, South Asia and Russia, the sales for the first half of 2019 and sales volume ofmid-end and high-end products increased gradually with promoter as the ultimate contact points, drivingregional retail transformation. In Europe, we tried to adopt differentiated display methods and intensifythe training efforts to enhance differentiated competitiveness, thus laying a foundation for realizingbrand premium. (4) IT: the whole value chain operation was upgraded through promoting the digitaltransformation of R&D, supply chain, sale, logistics, service business; we realized the end to end digital

operation management of salesmen, distributors and promoter and built a digital management foundationfor Haier's global marketing through the GTM (Go to Market) project. (5) After-sales service: Takingservice as a part of the brand, we further expanded the direct and franchised service network. The servicespeed in 2019 was increased by 50%. Combining with the development stages and characteristics ofvarious overseas countries, we have established a differentiated service model, and established servicereputation. (6) Integration and Collaboration: we have completed the integration of Haier and Candyin platforms such as logistics, finance, after-sales service and HR. We promoted the procurement andR&D collaboration, so as to realize the high-end differences of Candy&Hoover and enhance the brandimage. In the first half of 2019, Candy achieved revenue goal beyond our budget and it’s market shareexperienced a growth of 0.5 pct pts year on year, and its overall market share (including France, Italy,UK, Ireland and Spain) amounted to 6.5%.The performances of major markets were summarized as follows:

(1) In the North America market, in the downturn of the US household appliance industry, GEAcontinued to grow against the trend and recorded an increase of 12.6% in the first half of 2019 ascompared to the same period in the previous year. According to the data of the third-party organizationStevenson, GEA's core household appliance share increased 2.3 pct pts.GEA continued to explore the IoT transformation of the Internet of Things of traditional householdappliance companies in the process of implementing RenDanHeYi model, and was awarded 'SmartAppliance Company in the Year of 2019' by IoT Breakthrough. In the first half of 2019, the newconnected product Kitchen Hub was launched, which drove the sales of complete-set smart householdappliance. Café brand (high-end brand) sales increased by 30% in the first half of 2019. Furthermore, thenew complete-set glass appearance products were launched to strengthen market competitiveness.

(2) In the European market, the revenue (including Candy) amounted to RMB7.2 billion,representing an increase of 244%. The revenue of Haier brand increased by 22% as compared with thesame period of last year. The market share of washing machines of Haier and Candy ranked No.2 inEurope (except Germany), at 13.1%. It has the fastest growth rate of the washing machine industry.However, in terms of the fastest growing dryer category in the market, dryers of Haier and Candy havethe fastest growth rate and ranked No.1 with market share of 23.8% in the UK; in Italian market, theoverall market share of Haier and Candy household appliance ranked third; in the major countries ofWestern Europe, Haier Brand refrigerators gradually built a high-end brand image with an average priceof 1.35 times over that of the industry, among which multi-door refrigerators have achieved high-enddifferentiation advantages with market share ranking No.1.We determined a multi-brand development strategy collaborating Haier, Candy and Hoover.Focusing on the high-end channel, we endeavored to establish a middle- and high-end brand image.①Candy continued to play a leading role in the dryers, large capacity untra-thin washing machines andwashing and drying machines, launching a series of new products such as intelligent ovens and vacuumcleaner. ②Haier brand continued to expand middle-and high-end products with its refrigeratorsconcentrating on the differentiated services of preservation and convenience. The washing machines can

improve the users’ experience owing to the silence and stability of direct-drive motor of FPA. The newproduct, PuriCool (high-end air conditioners) can realize cooling/heating goal and can purify the airthrough its AC and air purifier integration technology.

(3) In the South Asia market, the revenue amounted to RMB4.2 billion, representing an increaseof 16%. In the Indian market, the refrigerators of BM“no-need-to bow”and Turbo-Cooling technology,washing machines’ partition washing functions and variable-frequency direct-drive technology,intelligence of air conditioners and air purifier integration technology strengthened the leading position.Our service network can make a 24-hour rapid reaction in over 90% of the region. In the Indian Phase IIindustrial park, we completed overall design and carried out the work on schedule. In Pakistan market,we maintained an advantage in the air purification-integrated conditioners and one-button high-endautomatic washing machine we launched.

(4) In the Australia and New Zealand market: we recorded a revenue of RMB2.5 billion,representing an increase of 2.6%. The promotion and installation of FPA global complete kitchen displaywas achieved beyond goal, which increased the transformation rate of sale. We gradually released F&Pbrand 7 series, 9 series OBC embedded oven, 12KG front-loading washing machine, and 9 series fullyembedded refrigerator and freezer into the market. The channel sale of New Zealand constructorsincreased actively. Our top three retail channels consisting of TGG, HarveyNorman and Narta allachieved growth in Australia, with a double-digit increase in Narta.

(5) In the Japanese market: In the first half of 2019, we recorded a revenue of RMB1.5 billion,representing an increase of 6.1%. We launched AQUA ultra-thin TZ series super-big refrigerators andput them into 1500 stores in order to improve our brand image, and the sales of super-big refrigeratorsand major refrigerators increased by 83% and 19% year-on-year in the first half of 2019 respectively.The vertical washing and drying machine grew by 400%, and washing machine of variable frequencyincreased by 22%.

(6) In the Southeast Asian market: In the first half of 2019, we recorded a revenue of RMB2.0billion, representing an increase of 10%. We put T-door and hinged door refrigerators, smartself-cleaning air-conditioners, twin drum washing machine, and 525 big inner tube washing machineinto the market, which drove the share of high-end sales. In Thailand, air conditioners and freezersachieved a TOP3 market share; in Vietnam, refrigerators and washing machines achieved a TOP3 marketshare.

(IV) Smart home life platform: Focusing on smart home solutions, creating the smart home"eco-cloud" leading the world with AI+IoT core competencyThe Company strived to create a "complete", "customized" and "iterative" "5+7+N" smart homesolution by integrating and incorporating industrywide advantages. In the first half of 2019, theCompany’s smart home complete set sales accounted for 28.29%, increased by 2.71pct pts, of which thesales volume of high-end smart complete-set products increased by 24% in the second quarter. The

number of connected appliances increased by 54%, and the number of smart home users increased by

9.6%. The eco revenue from IoT was RMB1.937 billion, representing an increase of 53% year over year.

(1) Focusing on smart home domain solutions, the Company will create a globally-led'eco-cloud' through the active scenario and the integration of ecological services. In the first half of2019, the Company focused on improving the interconnection experience, smart appliance activationsincreased by 30%. It created artificial intelligence voice interaction system and capabilities for smarthomes, built a unified voice interaction platform, and formed differentiated competitiveness in terms ofvoice interaction and comprehension. By transforming traditional capabilities into the core capabilitiesof smart home Cloud, Haier is active through highly frequent scenario with ecological services togenerate eco revenue.

(2) Focusing on the complete set from brand to program, cover all kinds of consumers.Relying on the global layout of seven major brands, the Company continued to iterate the '5+7+N'scenario solutions of home space and smart life and implement the series products of the seven majorbrands: the Chinese Market launched new smart series of Haier Pinzhi Plus (品智+), CasarteCommander and Leader L-two; new smart home programs were locally launched in succession byoverseas markets, such as GE Appliances of the US, AQUA of Japan, Fisher & Paykal of New Zealandand Candy of Italy. The Company has upgraded the display stands and created the real-world experienceof diversified and specialized solutions through intelligent voice and APP functions. In order to satisfythe needs of high-end smart housing, Casarte Commander series cooperated with home improvementbusinesses to promote a integrated solution for home decoration of high-end household appliances.

(3) Focusing on 'IoT+AI' to further upgrade the Smart Home cloud technology platform.Through exclusive chip 'cloud chip', IOT operating system 'UHomeOS', AI assistant 'Xiaoyou (小优)',and AI data intelligent brain "U+cloud brain", Haier smart home is able to realize the functions ofintelligent touch, voice interaction, self-learning, active service and continuous iteration. ①In order toaddress the issue of unstable connection, the product stability has reached the industry leading level byupgrading the networked appliance connection technology, which created simple and convenientoperating experience. ②The Company has created a “personalized” and customized smart scenarioexperience and designed more than 40 sets of core one-button customization scenarios based on theultimate experience of hardware and software services; the Company provided “customized” products ofvarious categories of household appliances and design of household scene solutions according to thestructure and decoration style of the house. Users were granted the right of DIY scenario design throughfamily scene conditions (such as weather, geographical location, etc.). ③The Company researched anddeveloped 5G access technologies and interconnection schemes, established the worldwide first 5GSmart home Laboratory and built solutions of smart complete-sets of household appliances and scenewhich based on 5G technologies. ④By building AI voice interaction system and capability, we haveconstructed a unified voice interaction platform, which has formed differentiated competitive advantages

in voice interaction and comprehension. Moreover, we have gradually voice interaction scene byfocusing on active service. ⑤With regard to the positioning of brand interaction center, home controlcenter and home interaction center, we will optimize the functions of smart home APP to enhance theuser experience.

(4) We will continue the building of eco brand with initiatives such as the Internet of Foodand the Internet of Clothing. ①In terms of the Internet of Food, personalized healthy diet plan hasbeen formulated according to the family movement data and health data generated by users in theprocess of using Haier smart home services. In addition, reliable and traceable food ingredients havebeen provided by integrating authenticated farm, e-commerce of fresh products and other resources. Inthe first half of 2019, the eco revenue increased by 68% as compared with the same period over the lastyear. ②The Internet of Clothing, as the world's first clothing life cycle management platform based onthe Internet of Things, has attracted more than 4,000 eco-resource parties from nearly 13 industries, suchas clothing, household appliances, RFID IoT technology. The Internet of Clothing won the China MostInfluential IoT Ecological Award in 2018 by the IoT Industry Application Alliance. The Encoding Rulesand Specifications of Radio Frequency Identification (RFID) Labels for Clothing Commodities, whichwas formulated under the leadership by the Company, was officially released as a national standard, andbecame the first Internet of Clothing standard approved by IEEE in the world.

(V) COSMOPlat Industrial Internet Platform: Integrating advanced manufacturing with anew generation of artificial intelligence technology to help enterprises transform and upgrade andhelp with ecological empowerment.

During the reporting period, COSMOPlat Industrial Internet Platform established 1(main platform)+7(modules)+N(industries) structure, and realized cross-industry and cross-field applications bypromoting platform innovation, technology innovation and ecological innovation. At present, it canprovide a comprehensive solution of soft and hard integration for enterprises of 15 industries such asceramics, RV and agriculture and cover 60 sub-industries.

1. Deeply empowering enterprises for transformation and upgrading. As of August 2019, 13interconnected factories have been built, with large-scale customization system centered on users in theIoT era, and forming the world's leading benchmark of high-end manufacturing. The seven modulesincluding “user interaction”, “R&D innovation”, “synergic procurement”, “intelligent manufacturing”,“smart logistics”, “precision marketing” and “intelligent service” of the COSMOPlat Industrial InternetPlatform have been digitized to form a complete solution empowering enterprises to transform andupgrade. The five capacities including "pan-IoT", “knowledge accumulation”, “big data analysis”,“ecological aggregation” and “security assurance” have been constructed to realize the continuousiteration of interconnection, digital insight and intelligent optimization of the ecological system. Forexample, COSMOPlat built the first intelligent plant in the RV industry, to solving the problem of

fragmentation of parts procurement in the industry. It provided more value-added services for users inbooking, transportation, travel and housing. In addition, the platform also provides value-added servicesto other enterprises by taking advantages of its centralized procurement system.

2. Research and development of technologies have been made in key fields such asforward-looking intelligent manufacturing, artificial intelligence, virtual reality/augmented reality(VR/AR) and big data, a series of core scientific and technological products have been incubated.Based on its own industry accumulation and innovation practice, COSMOPlat platform launched severalleading products, including IoT platform capability-edge computing, SaaS innovative applications,OpenAPI platform and intelligent solutions of industrial big data. In addition, aiming at theshortcomings in the industrial application, the platform also explored a series of solutions, such as bigdata program of intelligent manufacturing, quality detection for noise (abnormal) sound, and securityprotection system of COSMOPlat platform, thus putting the innovative products into practicalapplication.

3. Seize the leading opportunity of technological innovation to create a world-class industrialInternet eco-brand by virtue of the completion of the world's first intelligent and 5Ginterconnected factory. The world's first intelligent and 5G interconnected factory was launchedofficially by Haier in conjunction with, among others, China Mobile and Huawei. Through data-basedsimulation modeling verification, efficient production collaboration and precise quality control, morescenario-based and intelligent IoT products, intelligent combination solutions and AI technologyapplications have been explored and practiced to achieve the maximum optimization of productivity inproduction efficiency, manufacturing cost and non-warehousing rate. It is expected to achieve theself-perception of full-process information, self-decision of full-factor events and self-iteration offull-cycle scenarios, and strengthen the competitiveness of intelligent manufacturing. For example: ①Through the integration of AI and 5G technologies in the whole process, more than 200 new userexperience modes, such as second-level response, VR roaming and intelligent collaboration, have beencreated to empower the upgrade of user-centered mass customization; ②Through hundreds applicationsof AI and 5G technologies, a innovation system characterized by cross-border integration, ecologicalwin-win and technological iteration has been constructed to satisfy the multi-scenario high-endmanufacturing and empower interconnected factories to make self-decision of full-factor events. At thesame time, through the application of key technologies such as AI and 5G, the networked appliances areenpowered with eco scenarios such as interaction, design, experience, pre-sale, manufacturing anditeration, which boosts the self-iteration of the user experience scenarios.

Haier COSMOPlat was selected as the Excellent Solution of Industrial Internet APP 2018 by MIITand the Ministry of Science and Technology in the 2018 National Key Research and DevelopmentProgram - Network Cooperative Manufacturing and Intelligent Factory; Haier COSMOPlat RV IndustrySolution and Provincial-National Industrial Internet Security Platform Docking with Enterprise wereselected as excellent application in 2018.

(VI) Focusing on corporate social responsibility, insisting on promoting charitable projectssuch as precise poverty alleviation and Hope Project, and exploring the sustainable developmentbetween corporate and society in a harmonious and win-win manner.In 2017 to 2019, Haier initiated a charitable activity in respect of paying attention to left-behindchildren, namely 'Hug Me, Father'('拥抱吧

爸爸'), with 'China Youth Development Foundation' and'China Charities Aid Foundation for Children'. The Company found the left-behind children throughHaier Hope Primary School and the village committee, bringing them to where their parents locatedduring the summer holidays. The Company helped the left-behind children to grow in a physically andmentally healthy manner by making the communicative bridge between the left-behind children andtheir parents.

As of July 2019, Haier assisted in building 305 Hope Primary Schools and 1 Hope Middle Schoolin total, becoming the Chinese enterprise that built the most Hope Schools in the Hope Project of theCenter Committee of Chinese Communist Youth League.

II. Development Plan for the Second Half of the Year(I) Industry outlookDomestic market. Affected by the slowdown of the economic and the controlling of the real estatemarket, domestic household appliances market is expected to continue its existing trend in the secondhalf of 2019. The competition has intensified and the concentration has further enhanced in the stockmarkets. Based on the category of products: ①The penetration rate has reached 97% in the refrigeratorand washing machine industry, with the sales becoming stabilized. The future growth will rely more onconsumption upgrade; ②In the air-conditioning industry: The markets growth will continue toslowdown and the price competition is gradually normalized; ③Water heaters and kitchen appliances isgreatly affected by the real estate market, and the industry is still expected to decline in the second halfof 2019.Overseas market. Uncertainty of global economic growth was exacerbated in 2019. Developedcountries focused on the needs of upgrading and replacing the products, while developing countries stillhave a large growth space in terms of penetration and product structure. (1) US market. The downwardtrend is expected to slow down in the second half of the year. The core household appliances market isexpected to decline by 1.6% throughout the year. (2) European market. It is expected to continue theexisting trend in the first half of the year due to the lack of macro catalyst. (3) South Asia market. TheIndian market continues to grow at a high rate with rapid product restructuring, while the Pakistanimarket is expected to show a negative growth due to the persistent depreciation of exchange rate, highCPI and tax reform; (4) Australian market. The RBA adjusted the interest rate from 1.5% to 1%, and thegovernment intended to reduce the proportion of down payment for the first-home, which will benefit

real estate markets and construction channel are expected to warm up again. (5) Southeast Asia market.Stable economic development, income growth and product upgrading were beneficial to continuing theincreasing trend in the first half of the year. (6) Japanese market. Stable economic increase is expected tocontinue the upgrade trend of the products in the first half of the year.(II) Development plan of the Company for the second half of the yearIn response to the challenges brought by the external environment, the Company will adhere to itsstrategy of product leadership, deepen retail transformation and globalized operations, and continue toenhance our competitiveness, we will expand leadership in the refrigerator, washing machines and waterheater industries, while accelerating the pace of development of the air-conditioner industry and kitchenappliance industry, and to realize growth in our household appliances business; focus on the smart homebusiness, continue to promote the business transformation of the Internet of Things, while promoting theformation of eco system, the creation of eco brands, and the cultivation of eco revenue.Domestic market. We will accelerate the thorough completion of retail transformation through twodirections, unified warehousing and distribution, and smart home. (1) We will complete the pilotreproduction of the unified warehousing and distribution pilot throughout the country for the year, andrealize the comprehensive transformation of rual and township network, service providers, businesspersonnel, and enhance the competitiveness of Four Networks. (2) We will promote the pilotreproduction of Haier Smart Home. Starting from Shanghai Experience Center of Haier Smart Home, wewill realize the experience iterative of Haier “5+7+N” program. In addition, we will realize the one-stopprogram to users through complete interaction, experience and service. Finally, we will construct abrand-new contact point network of Haier Smart Home.Overseas market. We will implement the service strategy of 'specialization and branding' throughthe continuous upgrading of product lineup and promoting the upgrade of terminal transformation in thesecond half of the year. We will construct and upgrade the 360° marketing mode of brand, industry andmarket nodes to realize the marketing of 'mega-hit products' and support the business development.Smart Home Platform. We enhanced the layout and construction of the 'IoT+AI' technologyplatform system to further enhance the value of IoT connectivity and the user's experience ofempowering AI scenarios. We deepened the corporation with industry cloud platform, explored the valueof the scene brought by the interconnection; focused on promoting the implementation of the solutionsof voice interaction in various scenarios to enhance the ability of natural interaction of voice andexperience of distributed interaction; and enhanced the marketization and popularization of activeservice by focusing on data intelligence.COSMOPlat platform. The continuous iteration of new industrial ecology is driven by platforminnovation, technology innovation and ecology innovation. ①Capacity construction: The five corecapacities including 'pan-IOT', 'knowledge accumulation', 'big data analysis', 'ecological aggregation'and 'security assurance' have been constructed. ②Cross-industry and cross-region replication: Focusing

15 industries including agriculture, machinery, health care and energy, the construction of the sixfunctions of the regional center has been promoted to realize the rapid replication.

(I) Analysis of principal business1 Table of movement analysis on the related items in financial statement

Unit and Currency: RMB

ItemsCurrent periodCorresponding period of last yearChange(%)
Operating revenue98,979,793,121.1690,488,122,206.319.38
Operating cost70,174,853,958.9164,057,950,024.039.55
Selling expenses14,596,335,114.0113,522,931,745.647.94
Administrative expenses4,525,786,069.234,033,672,258.1912.20
Financial expenses508,746,781.53485,925,414.674.70
R&D expenses2,741,563,815.812,252,630,555.3821.70
Net cash flow generated from operating activities3,633,833,497.745,598,474,992.24-35.09
Net cash flow generated from investing activities-7,750,867,969.99-2,990,163,496.89-159.21
Net cash flow generated from financing activities904,410,930.30-4,680,026,409.14119.32
Other revenue472,741,856.55224,292,412.02110.77
Gains on changes in fair value57,409,956.8036,661,921.5056.59
Gains on disposal of assets12,706,682.875,505,487.90130.80
Non-operating expense114,206,707.9249,404,445.69131.17

Reasons analysis of changes in indicators that change significantly:

1) Net cash flow generated from operating activities decrease by 35.09% compared to the correspondingperiod of last year, which mainly resulted from the acquisition of Candy.

2) Net cash flow generated from investing activities decrease by 159.21% compared to thecorresponding period of last year, which mainly resulted from the cash expenditure generated from theacquisition of Candy.

3) Net cash flow generated from financing activities increase by 119.32% compared to thecorresponding period of last year, which mainly resulted from the borrowings generated from theacquisition of Candy.

4) Others: the reasons analysis of changes in other indicators that change significantly are stated in therelevant contents of 'Detailed explanation on significant changes in the components of profit or sourcesof profit of the Company' and 'Assets and liabilities' of 'Analysis of assets and liabilities'.2 Others

(1) Detailed explanation on significant changes in the components of profit or sources of profit of

the Company

√ Applicable ?Not Applicable

1) Other revenue increase by 110.77% compared to the corresponding period of last year, which iscaused by the growth of the government grant in the current period.

2) Gains on changes in fair value increase by 56.59% compared to the corresponding period of lastyear, which is caused by the changes in fair value of the forward foreign exchanges trading contract inthe current period.

3) Gains on disposal of assets increase by 130.80% compared to the corresponding period of lastyear, which is caused by the growth of the gains on disposal of assets recognized in the current period.

4) Non-operating expense increase by 131.17% compared to the corresponding period of last year,

which is caused by the growth of one-off expenditures recognized in the current period.

(2) Others

√ Applicable ?Not Applicable

Principle operating activities by products and regions

Unit and Currency: RMB0'000

Principle operating activities by products
By productsOperating revenueOperating costGross profit margin (%)Operating revenue increased/decreased yoy (%)Operating cost increased/de creased yoy (%)Gross profit margin increased/decreased yoy (%)
Refrigerators2,846,886.451,939,298.1131.889.338.000.84
Washing machines2,029,485.071,396,202.7731.2022.9227.32-2.38
Air-conditioners1,795,134.811,242,641.0530.78-6.55-7.080.39
Kitchen appliance products1,393,565.59952,448.6431.6523.5928.58-2.65
Water heater409,994.90235,160.1542.645.897.29-0.75
Equipment components and channel integrated services1,375,046.381,231,670.0410.433.522.540.85
Principle operating activities by regions
By regionsOperating revenueOperating costGross profit margin (%)Operating revenue increased/decreased yoy (%)Operating cost increased/decreased yoy (%)Gross profit margin increased/decreased yoy (%)
Mainland China5,219,358.333,566,541.5731.67-1.01-0.64-0.25
Other countries/regions4,630,754.873,430,879.1925.9123.6022.490.67

Notes:①In the first half of 2019, the gross profit margin of domestic household appliance businessincreased by 0.9 pct pts; ②In the first half of 2019, overseas revenue increased rapidly by 5 pct pts,compared to the corresponding period of last year; The gross profit margin of overseas business is lowerthan domestic gross profit margin, affecting the overall gross profit margin performance structurally.

(II) Explanations on the major changes in profits caused by non-principle businesses? Applicable √Not Applicable

(III) Analysis of assets and liabilities

√ Applicable ?Not Applicable

1. Assets and liabilities

Unit and Currency: RMB

ItemsAmount as at the end of the periodPercentage of amount at the end of the period over total assets (%)Amount as at the end of last periodPercentage of amount at the end of the previous period over total assets (%)Percentage of change in amount from the end of previous period to current period (%)Explanations
Financial assets held for trading985,839,615.70.541,775,648,3881.07-44.48Mainly due to the decrease in short-term wealth management products in the current period
Accounts receivable14,414,459,8077.9610,431,193,4886.2638.19Mainly due to Candy was merged in the current period
Other receivables2,255,319,7571.251,626,975,8650.9838.62Mainly due to Candy was merged in the current period
Other current assets7,173,637,6793.965,079,878,9103.0541.22Mainly due to the increase in bank wealth management in the period
Construction in progress5,195,727,6972.873,873,492,2302.3234.14Mainly due to the fact that the new factory has not been put into use in the current period
Right-of-use assets3,286,464,7101.8100.00100.00Mainly due to the right-of-use assets recognized
under the new lease criteria
Financial liabilities held for trading7,055,018.070.00218,748,280.30.13-96.77Mainly due to the expiration of the forward foreign exchange trading contacts in the current period
Receipts in advance00.0014,681,466.580.01-100.00Mainly due to the completion of the contract in the previous period
Liabilities held for sale14,097,210.090.0132,362,267.880.02-56.44Mainly due to the reduction of the proposed disposal company's liabilities
Non-current liabilities due within one year9,876,686,8105.453,015,060,1061.81227.58Mainly due to the long-term borrowings will due within one year
Lease liabilities2,467,631,6981.3600.00100.00Mainly due to the lease liabilities recognized under the new lease criteria
Deferred income tax liabilities924,391,131.60.51405,343,787.80.24128.05Mainly due to Candy was merged in the current period
Other comprehensive income1,006,256,6150.56772,632,347.40.4630.24Mainly due to Candy was merged in the current period

2. Restrictions on major assets as of the end of reporting period

? Applicable √Not Applicable

3. Other explanations

? Applicable √Not Applicable

(IV) Analysis of investmentI. Overall analysis on external equity investment

√Applicable ?Not Applicable

During the reporting period, the external significant equity investment of the Company amounted toRMB3.805 billion.

Name of investeesMajor operating activitiesPercentage of the equity interest of investees (%)RemarkAmount proposed to invest (RMB)
Candy S.p. AProduction and sale of household appliances100For details, please refer to the Announcement on the Completion of Acquiring 100% Shares of Italian Company Candy by Qingdao Haier Co., Ltd. disclosed on 29 September 2018 as well as relevant announcement of the Board.3.805 billion

Note: The aforementioned amount is calculated based on the average middle RMB exchange rate in theinter-bank foreign exchange market on 28 September 2018 as announced by the People's Bank of China,which is EUR1 to RMB8.0111.

(1) Significant equity investment

√ Applicable ?Not Applicable

Please refer to the content in '1. Overall analysis on external equity investment' as set out above.

(2) Significant non-equity investment

? Applicable √Not Applicable

(3) Financial assets measured at fair value

√ Applicable ?Not Applicable

ItemsInitial investment costSources of fundsCurrent purchase / sale during the reporting periodInvestment income during the reporting periodChanges in fair value during the reporting period
Bank of Communications (601328)1,803,769.50Self-owned40,867.56
BAILIAN (600827)154,770.00Self-owned53,567.68
Eastsoft (300183)18,713,562.84Self-owned3,056,392.26
Wealth management products1,886,310,087.37Self-owned-641,939,521.0672,271,044.7511,905,128.75
Interest rate swap agreementSelf-owned-60,862,333.33
Forward commoditySelf-owned3,965,800.01
contract
Forward foreign exchange contractSelf-owned98,789,008.1163,040,174.65
Others1,426,491,908.20Self-owned7,258,292.1118,421,982.06-31,532,537.76
Total3,333,474,097.91-634,681,228.95189,482,034.92-10,332,940.18

Note: As of 30 June 2019, the aggregate balance of foreign exchange derivative transaction amounted toapproximately US$1.5 billion.

(V) Sale of material assets and equity

√ Applicable ?Not Applicable

Haier COS.mo IOT Ecological Technology Co., LTD. (海尔卡奥斯物联生态科技有限公司)(hereinafter referred to as 'COS.mo'), the subsidiary of the Company, is principally engaged in operationof industrial internet platform, industrial intelligence research, and business segments such as precisionmold, intelligent control, intelligent equipment and automation. Relying on industrial internet platformCOSMOPlat, it provides whole-process and large-scaled customization solutions, interconnected factoryintelligent manufacturing solutions, supply of core software and hardware, IOT system integration, bigdata and product-level IOT, and artificial smart solution services for enterprises. To boost industrial IoTplatform of the Company, COS.mo proposed to acquire the smart power & energy segment held byHaier Group Corporation (hereinafter referred to as 'Haier Group') at a consideration ofRMB375,540,417 by way of private placement of registered capital of RMB74,434,124 to Haier Group,including the 95% equity interests in Qingdao Haier Energy & Power Co., Ltd., the 97.57% equityinterests in Qingdao Economy and Technology Development Zone Haier Energy & Power Co., Ltd., the

95.57% equity interests in Hefei Haier Energy & Power Co., Ltd., and the 80% equity interests in DalianHaier Energy & Power Co., Ltd. (collectively, the 'Target Energy & Power Equity') ; in order to enhanceits financial strength and facilitate the promotion of industrial internet ecological platform; COS.moaccepts that the Private Equity Fund intended to be established by Qingdao HaizhiHuiying EquityInvestment Management Co., Ltd. subscribes for the newly-increased registered capital ofRMB67,827,236 of COS.mo through capital contribution of RMB342,206,865 in cash (collectively, the'Transaction'). The total amount of the Transaction is RMB717,747,282. The pricing of the Transaction isbased on the valuation report issued by Chung RuiWorldunion Assets Appraisal (Beijing) Co., Ltd. (中瑞世联资产评估(北京)有限公司), which is qualified for carrying out businesses related to securitiesand futures, and is deemed fair as negotiated among the relevant parties. Upon completion of theTransaction, COS.mo will be owned by Haier Group and the Private Equity Fund as to 6.40% and

5.83%.

For details of above-mentioned matters, please refer to the Announcement on Acquisition of Assetswith Newly-increased Registered Capital and Introduction of Investors by Controlled Subsidiary andRelated-Party Transaction of Haier Smart Home Co., Ltd. published by the Company on 3 July 2019and other relevant contents disclosed on the same day.

(VI) Analysis on major subsidiaries and Investees

√ Applicable □Not Applicable

Unit and Currency: RMB0'000

Name of companyScope of businessTotal assetsNet assetsNet Profit
Haier Electronics Group Co., Ltd.Production and sale of household appliances4,696,9742,650,676187,712

Remark: The financial data of Haier Electronics Group Co., Ltd. is determined in accordance with theaccounting standards in the PRC and the accounting policies of the Company.

(VII) Structured entities controlled by the Company

□ Applicable √Not Applicable

II. Other disclosures(I) Warning and explanation for any prediction of accumulated net loss from the beginning of the

year to the end of the next reporting period or substantial change in accumulated net profit ascompare to the same period last year

□Applicable √Not Applicable

(II) Potential risks

√Applicable □ Not Applicable

1. Risk of decreased demand due to a slowdown in macro-economic growth. As white homeappliance products fall into the category of durable consumer electronic products, the income level ofconsumers and expectation on future income growth will have influence on the purchase of white homeappliance. In the event of a slowdown in the macro economic growth, which will decrease thepurchasing power of consumers, growth of the industry will be adversely affected. In addition,slow-down in the growth of the real estate market will have some negative effect on market demand,which will in turn have some indirect effect on demand for home appliance products.

2. Price war risk caused by intensifying industry competition. The industry of white goodsproducts has intense competition with a high homogeneity of products. In recent years, the industry hasshown a trend of increasing concentration. In addition, the increase of industry inventory caused byimbalance between supply and demand in individual sub-industries may lead to price wars and otherrisks.

3. Risk of price fluctuation of raw materials. The Company's products and core components aremainly made of metal raw materials such as steel, aluminum and copper, as well as plastics, foamingmaterials and other bulk raw materials. If the prices of raw materials are increasing, they may pose acertain pressure on the Company's production and operation.

4. Operating risk in overseas market. With the stable development of business globalization, theCompany has set up several production bases, research and development centers and marketing centersin a number of countries around the world, leading to the continuous rise of overseas business. As the

overseas market is subject to the impact of local political and economic situation, legal system andsupervisory system, significant changes of such factors would pose risks to the Company's operationlocally. Under the influence of global trade protectionism, the emergence of a series of problems, such assuperpower games, trade frictions, tariff barriers, foreign exchange fluctuations, together with thecomplexity of global politics and economy, will increase the international trade cost, labor cost andforeign exchange transaction cost, as well as the uncertainty of the Company's overseas operations.

5. Risk of fluctuation in foreign currency exchange rate. With the deepening of the Company'sglobal layout, the import and export of Company's products involve the exchange of foreign currenciessuch as US dollars, Euro and Japanese yen. If the exchange rate of relevant currencies fluctuates, theCompany's financial situation may be influenced to some extent and its financial costs may be increased.

6. Risk of policy changes. The industry of household appliances is closely related to the consumergoods market and real estate market. The changes in macroeconomic policy, consumption investmentpolicy, real estate policy and other relevant laws and regulations will influence user's need of products,and in turn may influence sales of the Company's products.

(III) Other disclosures

□Applicable √ Not Applicable

SECTION V SIGNIFICANT EVENTSI. Introduction to the general meeting of shareholders

MeetingDateIndex for details of websites designated for publishing resolutionsDate of disclosure
2018 Annual General Meeting18 June 2019For details, please refer to the Announcement on Resolutions Passed at the 2018 Annual General Meeting of Qingdao Haier Co., Ltd. (L2019-040) published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) and the four major securities newspapers.19 June 2019

Explanation of Shareholders' general meeting

√Applicable □Not Applicable

During the reporting period, the 2018 Annual General Meeting of the Company was held by way ofon-site voting and network voting by poll at Room A108, Haier University, Haier Information Park,No.1 Haier Road, Qingdao, the PRC, in the afternoon on 18 June 2019, considering the annual report ofthe Company and the relevant resolutions on the re-election of the Board of Directors and the Board ofSupervisors. The Company's share capital in aggregate amounted to 6,368,416,700 shares. 314shareholders and proxies attended the meeting, holding a total of 3,732,277,507 shares, representing

58.61% of the total number of shares of the Company with voting rights. The Directors, supervisors andsenior management of the Company as well as the lawyers engaged by the Company also attended themeeting. The 2018 AGM was convened by the Board of the Company. Chairman Mr. Liang Haishan,presided over the 2018 AGM. The Company had 9 Directors, of whom 4 Director attended the 2018AGM (Directors Wu Changqi, Peng Jianfeng, Zhou Hongbo, Wu Cheng and Liu Haifeng David wereunable to attend the 2018 AGM due to personal engagement); the Company had 3 supervisors, all ofwhom attended the 2018 AGM. The secretary to the Board of the Company attended the 2018 AGM andother members of senior management of the Company were invited to attend the 2018 AGM.

II. Proposal of profit distribution or capitalization of capital reserve(I) Proposal for interim profit distribution and proposal for reverse conversion into share capital

Whether distributed or convertedNo

III. Performance on 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

Background of undertakingsType of undertakingsCovenanterContents of undertakingsDate and term of undertakingsAny deadline for performanceWhether performed in a timely and strict way
Undertaking related to significant reorganizationEliminate the right defects in land property etc.Haier Group CorporationDuring the period from September 2006 to May 2007, the Company issued shares to Haier Group Corporation ('Haier Group') to purchase the controlling equity in its four subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司), Guizhou Haier Electronics Co., Ltd. (贵 州海尔电器有限公司). 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 current condition of each Covenantee, Haier Group will constantly assure that Covenantees will lease the land and property owned by Haier Group for free. Haier Group will make compensation in the event that the Covenantees suffer loss due to the unavailability of such land and property.27 September 2006, long-termYesYes
Undertaking related to refinancingEliminate the right defects in land property and etc.Haier Group CorporationHaier Group Corporation undertakes that it will assure Haier Smart Home and its subsidiaries of the constant, stable and unobstructed use of the leased property. In the event that Haier Smart Home or any of its subsidiaries suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all 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 assure24 December 2013, long-termYesYes
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.
Eliminate the right defects in land property etc.Haier Smart Home Co., Ltd.The Company undertakes that it will eliminate the property defects of the Company and main subsidiaries within five years with reasonable business effort since 24 December 2013, to achieve the legality and compliance of the Company and main subsidiaries in terms of land and property. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the 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. During the aforesaid period, the Company has formulated relevant performance guarantee measures, including the re-application by the Company and its main subsidiaries to the competent government department for the property ownership certificate and to procure Haier Group Corporation to make guarantee undertakings in respect of the defective property owned by it and its subsidiaries. As of the expiration date, the Company has resolved the property defects of itself and its eight major subsidiaries, while that of the other remaining five major subsidiaries is in process. The Company will make reasonable business efforts to resolve the property defects of these five major subsidiaries. Because of historical issues and other reasons, the approval procedure involved in solving some defective property problems is complicated, including that of multiple government24 December 2013, eight yearsYesYes
departments, and it takes a long time to handle and coordinate related matters. Due to the above external factors, the Company was unable to complete the above undertakings within the original undertaking period. Therefore, 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.
Other undertakingsAsset injectionHaier Group CorporationInject the assets of Fisher & Paykel to the Company or dispose such assets through other ways according to the requirements of the domestic supervision before June 2020. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment (L2015-015) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 26 May 2015. During the reporting period, after considered and approved by the 13th meeting of the 9th session of the Board of Directors and 2017 Annual General Meeting of the Company, the Group has injected the above assets into the Company and this commitment has been completed.May 2015 to June 2020YesYes
Other undertakingsAsset injectionHaier Group CorporationInject the assets of Haier Photoelectric to the Company or dispose such assets through other ways according to the requirements of the domestic supervision before June 2020. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment of Haier Group Corporation (L2015-063) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015.December 2015 to June 2020YesYes
Other undertakingsProfit forecast and compensationHaier Group CorporationIn December 2015 and January 2016, the meeting of the Board of Directors and general meeting of the shareholders considered and approved the matters in relation to the acquisition of minority equity interest of Mitsubishi Heavy Industries Haier and Carrier Refrigeration Equipment held by Haier Group. The Company signed the Profit Compensation Agreement with Haier Group to forecast the profits to be achieved by the aforementioned two companies in 2015-2018. If the profits are not reached during the commitment period, the difference part will be made up to the Company by Haier Group in cash. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Related-party Transaction (L2015-062) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015.December 2015 to December 2018YesYes

IV. Appointment and dismissal of accounting firmExplanation of appointment and dismissal of accounting firm

√Applicable □Not Applicable

During the reporting period, the Company considered and approved the resolution on there-appointment of accounting firm on the 2018 annual general meeting: in order to ensure the smoothimplementation of the financial and internal auditing and the continuity of the auditing work in 2019, theCompany re-appointed Shandong Hexin Certified Public Accountants (LLP) as the audit institution ofthe financial report and internal control of 2019, and the audit fees amounted to RMB9.60 million (ofwhich, financial report of RMB7.15 million, internal report of RMB2.45 million).

Explanation of change of accounting firm during the auditing period

□Applicable √Not Applicable

Explanation of the Company on the 'non-standard audit report' issued by the accounting firm

□Applicable √Not Applicable

Explanation of the Company on the 'non-standard audit report' issued by the certified public accountantsas set out in the financial report in the annual report last year

□Applicable √Not Applicable

V. Matters relating to bankruptcy and restructuring

□Applicable √Not Applicable

VI. Material litigation and arbitration matters

□Material litigation and arbitration matter during the reporting period √No material litigation andarbitration matters during the reporting period

VII. Punishment and correction on the listed company and its directors, supervisors, seniormanagement, controlling shareholders, ultimate controllers and acquirers and the issue ofrectification

□ Applicable √ Not applicable

VIII. Explanation of the integrity status of the Company and its controlling shareholders andultimate controller during the reporting period

□ Applicable √ Not applicable

IX. The Company's share option incentive scheme, employee shareholding scheme or otheremployee incentive measures and its influence(I) Matters that have been disclosed in temporary announcements and without any subsequent

progress or change

□ Applicable √ Not applicable

(II) Share incentives not disclosed in temporary announcements or with subsequent progressShare Option Incentive

□ Applicable √ Not applicable

Other explanations

□ Applicable √ Not applicable

Employees shareholding scheme

√ Applicable □ Not applicable

(1) The Phase IV Employees Stock Ownership Scheme launched and opened a position: On 29April 2019, the Company considered and approved relevant resolutions such as the Phase IV StockOwnership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd. (Draft)(《青岛海尔股份有限公司核心员工持股计划之第四期持股计划(草案)及摘要》) and it's Summaryat the 27th meeting of the 9th session of the Board of Directors. The 635 staffs who participated into theStock Ownership Scheme are the directors (excluding independent directors), supervisors, seniormanagement of the Company and regular employees who serve at the Company and its subsidiaries andsign employment contracts with the Company or its subsidiaries and receive remuneration from them,together holding RMB273 million in the fund. On 2 July 2019, the Company disclosed theAnnouncement on Implementation Progress of Phase IV Stock Ownership Scheme of Core EmployeesStock Ownership Scheme of Haier Smart Home Co., Ltd. (《海尔智家股份有限公司核心员工持股计划之第四期持股计划实施进展公告》), and the Employees Stock Ownership Scheme has been entrustedto Industrial Securities Assets Management Co., Ltd.(兴证证券资产管理有限公司), who will establisha single asset management plan for the Phase IV Stock Ownership Scheme of Core Employees StockOwnership Scheme of Qingdao Haier Co., Ltd. ('Assets Management Plan') for the management. As of30 June 2019, the Assets Management Plan has purchased an aggregate of 13,613,978 shares of theCompany, representing 0.21% of the total share capitals of the Company through the secondary marketat an average trading price of RMB15.95 per share with a trading volume of RMB 217,193,832.97.

(2)Allocation of the employee stock ownership plan (ESOP): During the reporting period, thesecond vesting of the Company's Phase II ESOPs (Draft) and Summary under Key Employee StockOwnership Plan of Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司核心员工持股计划之第二期持股计划(草案)及摘要》) (referred to as 'Phase II ESOPs') has been completed, and the conditions of thefirst vesting of the Company's Phase III ESOPs (Draft) and Summary under Key Employee StockOwnership Plan of Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司核心员工持股计划之第三期持股计划(草案)及摘要》) (referred to as 'Phase III ESOPs') has been completed. According to the AuditReport of Qingdao Haier Co., Ltd. (《青岛海尔股份有限公司审计报告》) (Hexin Shen Zi. (2019)No.000266) issued by Shandong Hexin Certified Public Accountant LLP, the annual net profits vested inparent company shareholders with allowance for non-recurring gains and losses in 2018 increased by

17.38% compared to 2017.

On 23 May 2019, the ESOPs Management Committee of the Company convened a meeting,determing: (1) 544 holders of Phase III ESOPs to be allocated with 12,248,613 shares according toperformances for the year 2018 and the results of personal assessment, the shares of the remainingholders with unsatisfactory assessment or who resigned were suspended for allocation or adjusted fortheir shares; (2) 616 holders of Phase II ESOPs to be allocated with 5,869,169 shares according toperformances for the year 2018 and the results of personal assessment, the shares of the remainingholders with unsatisfactory assessment or who resigned were suspended for allocation or adjusted fortheir shares; (3) 177,812 shares that were vested suspend before Phase I Core Employees StockOwnership Scheme shall also be vested this time (for details on the progress of Stock OwnershipScheme, please refer to the Announcement in relation to Second Quota Distribution and EquityAllocation in Phase I Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd. announcedby the Company on 15 December 2018). A total of 3,538,840 shares can be allocated to the directors, thesupervisors and the senior managements of the Company this time. Any change of the shares they holdmust be subject to provisions of the Rules Governing the Holding of Shares in the Company by Directors,Supervisors and Senior Managements of Listed Companies and Changes thereof.

In summary, according to the aforementioned resolutions, the Company has completed the transferof relevant stocks at China Securities Depository and Clearing Corporation Shanghai Branch on 29 May2019, with a total of 18,295,594 shares.

Other incentive measures

□ Applicable √ Not applicable

X. Significant related-party transactions(I) Related-party transactions from routine operation

1. Matters that have been disclosed in temporary announcements and with no subsequentprogress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcements and with subsequent progressor change

√ Applicable □ Not applicable

The Company made a forecast on the related-party transaction matters of the Company for the yearof 2019 at the 27th meeting of the 9th session of Board Meeting held on 29 April 2019. For details,please refer to the Announcement of Qingdao Haier Co., Ltd. regarding the Anticipation on the DailyRelated-party Transactions for 2019 and relevant announcement on the resolutions of the Boarddisclosed on 30 April 2019.

For the actual implementation of the Related-party transaction of January to June 2019, please refer to

“XII. Related parties and related-party transactions under section X - Financial and Accounting Reportset out in this regular report.

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

(II) Related-party transactions regarding acquisition or disposal of assets/equity

1. Matters disclosed in temporary announcements and with no subsequent progress or change

√ Applicable □ Not applicable

SummaryIndex for details
Related-party transactions of Acquisition of Assets with Newly-increased Registered Capital and Introduction of Investors by COS.mo: for details, please refer to '(V)Sale of material assets and equity' of 'Section IV Discussion and Analysis on Operations' in this report.For details, please refer to the Haier Smart Home Co., Ltd. Announcement on Acquisition of Assets with Newly-increased Registered Capital and Introduction of Investors by Controlled Subsidiary and Related-Party Transaction of Haier Smart Home Co., Ltd. (L2019-049) and relevant announcements disclosed by the Company on 2 July 2019.

2. Matters that have been disclosed in temporary announcements and with subsequent progressor 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 periodshall 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 subsequentprogress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcements and with subsequent progressor 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 subsequentprogress 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 that haven't been disclosed in temporary announcements

□ Applicable √ Not applicable

(V) Other significant related-party transactions

□ Applicable √ Not applicable

(VI) Others

□ Applicable √ Not applicable

XI. Significant contracts and their execution1 Trusteeship, contracting and leasing

□ Applicable √ Not applicable

2 Guarantee

√Applicable □Not Applicable

Unit and Currency: RMB0'000

External guarantees provided by the Company (excluding guarantees for subsidiaries)
GuarantorRelationship between the guarantor and the listed companySecured partyAmount of guaranteeDate of occurrence of the guarantee (date of agreement))Commencement date of guaranteeExpiry date of guaranteeType of guaranteeWhether the guarantee has been fulfilledWhether the guarantee is overdueOverdue amount of the guaranteeWhether there is a counter-guaranteeWhether Related- party guarantee or notRelationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)0
Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)0
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period3,087,978.05
Total balance of guarantees for subsidiaries at the end of the reporting period (B)2,863,947
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total amount of guarantee (A + B)2,863,947
Ratio of total amount of guarantees to net assets of the Company (%)67.90
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)2,063,422.58
The amount of total amount of guarantee in excess of 50% of net assets (E)754,930.11
Total amount of the above three guarantees (C + D + E)2,818,352.69
Explanation of possibly bearing related discharge duty for premature guarantees
Explanation of guarantee statusThe total amount of the aforementioned guarantees consists of two parts: 1. In 2016, the Company acquired the assets of GEA at a total consideration of US$5.61 billion, which was sourced from self-owned funds and loan for merger, of which, the loan for merger in the amount of US$5.61 billion was applied for by Haier US Appliance Solutions, Inc., a wholly-owned subsidiary of the Company, to China Development Bank Co., Ltd. The loan was fully secured by the Company and Haier Group Corporation, and the amount of which was equivalent to approximately RMB8.875 billion as at the end of the reporting period. The balance of the guarantee amounted to approximately RMB7.645 billion as at the end of the reporting period. The provision of guarantee had been considered and approved by the Board and the general meeting of shareholders of the Company; 2. In June 2019, the resolution on the Expected Provision of Guarantee for subsidiaries in 2019 was passed on the 2018 Annual General Meeting of the Company, according to which, the Company had provided guarantee in respect of the application for comprehensive facility made by certain subsidiaries to financial institutions. During the reporting period, the accumulated amount of guarantee offered by the Company to subsidiaries was approximately RMB22.005 billion. As of the end of the reporting period, the balance guaranteed was RMB20.985 billion.

3 Other Major Contracts

□Applicable √Not Applicable

XII. Information on poverty alleviation of the listed companies

√Applicable □Not Applicable

1. Targeted measures in poverty alleviation plan

√Applicable □Not Applicable

In accordance with the national plan for targeted measures in poverty alleviation and therequirements set out in relevant documents, the Company places great emphasis on poverty alleviation,and carries out initiatives of targeted measures in poverty alleviation within the scope as authorized bythe general meetings on related matters (such as donation). Over the years, the Company has beendevoted to education undertakings and making significant contributions, with a view to targeting theweakest area of education and to blocking the transmission of poverty between generations throughfocused efforts in raising the basic cultural quality in poverty and the skill levels of labor force frompoor families. As of July 2019, the Company and the Haier Group Corporation (its ultimate controller)and its subsidiaries (referred to as the 'Haier Group') has built 305 hope primary schools and 1 hopemiddle school, covering 26 provinces, municipalities directly under the central government andautonomous regions in China, and continuously provide the above-mentioned schools support inmaterials and other respects in each year including the reporting period. These initiatives haveeffectively enhanced the basic educational capabilities in poverty-stricken areas and improved thequality of education.

2. Summary of targeted measures in poverty alleviation during the reporting period

√Applicable □Not Applicable

In the first half of 2019, the Company's expenditures on targeted measures in poverty alleviationwas approximately RMB3.08 million, which was mainly utilized in the education improvement, physicaland mental health development of adolescents and children and social welfare. At the same time, as partof its initiatives in response to the government and the performance of its social responsibilities, HaierGroup has also made investments in many aspects, such as poverty alleviation through agriculturaldevelopment, poverty alleviation through improvement of the health of farmers.

3. Results of targeted measures in poverty alleviation

√Applicable □Not Applicable

Unit and Currency: RMB0'000

IndicatorAmount and the status
I. General information
Including:1.Fund308
II. Breakdown of the use of funds
1.Poverty alleviation through education
1.1 Increase the amount of educational resources invested in poverty-stricken areas102
2.Basic guarantees
2.1 Amount invested in helping poor people with disabilities35
3.Poverty alleviation in the society
3.1 Charity funds for poverty alleviation171

Note: If the above donation occurs in foreign currency, the exchange rate is calculated based on theaverage middle RMB exchange rate in the inter-bank foreign exchange market on 28 June 2019 asannounced by the People's Bank of China.

4. Phased progress in performing social responsibilities of targeted poverty alleviation

√Applicable □Not Applicable

In addition to material input in adolescents' and children's education improvement, physical andmental health development, etc., the Company also explores feasible methods in agricultural povertyalleviation. For example, for rural entrepreneurs, Haier customizes skills improvement solutions forthem, such as Xiaoshun Business School jointly established by RRS Health and Haier University. Amulti-level training system has been developed by centering on rural talent revitalization strategy toenhance farmers' entrepreneurial skills. By providing local platforms and employment opportunities, wehave built a sound brain circulation ecological system that can 'cultivate and retain competent talents'. Inaddition, the Company has customized the entrepreneurial poverty alleviation model for the economicconditions in different rural areas, with programs, platforms, networks and results made, andpracticability to follow. The national targeted poverty alleviation strategy is implemented to fullyadvance rural poverty alleviation.

5. Subsequent targeted measures in poverty alleviation plans

√Applicable □Not Applicable

In the second half of the year, the Company will make concerted efforts with Haier Group andcontinue to implement the proposition of the documents issued by the central government in respect ofpoverty alleviation, dedicate to improve the education in poverty-stricken areas, promote therevitalization of rural talents and other initiatives, and will perform our social responsibilities in aproactive manner.

XIII. Convertible corporation bonds

√Applicable □Not Applicable

(I) Information on the issuance of convertible bonds

On 23 November 2017, the Proposal of the Plan of Public Offering of Convertible CorporateBonds of Qingdao Haier Co., Ltd. was passed at the 2017 First Extraordinary General Meeting of theCompany. In accordance with the resolutions passed at this general meeting and the documents approvedby China Securities Regulatory Commission, the Company has completed the issuance of convertiblecorporate bonds in December 2018, which issued convertible corporate bonds of RMB 3.00749 billionin total. Such bonds have been listed on 18 January 2019, with the listed name 'Haier Convertible Bonds'and the Bonds Code is 110049. For details, please refer to relevant documents, such as the Company'sProspectus on the Public Issuance of the A Share Convertible Corporate Bonds of Qingdao Haier Co.,Ltd. disclosed on 14 December 2018 and the Announcement on the Listing of the Convertible CorporateBonds of Qingdao Haier Co., Ltd. disclosed on 16 January 2019.

(II) Information on holders and guarantors of convertible bonds during the reporting period

Number of convertible bond holders at the end of the period5,137
Guarantor of the convertible bonds of the CompanyNull
Top ten convertible bond holders are as below:
Name of convertible corporate bond holdersBonds held atProportions
the end of the period (RMB)(%)
Specific accounts for bonds repurchase and pledge under the registration and settlement system (Industrial and Commercial Bank of China)205,236,0006.83
Specific accounts for bonds repurchase and pledge under the registration and settlement system (China Construction Bank)165,770,0005.51
GIC PRIVATE LIMITED129,872,0004.32
Specific accounts for bonds repurchase and pledge under the registration and settlement system (Bank of China)125,710,0004.18
Specific accounts for bonds repurchase and pledge under the registration and settlement system (Shenwan Hongyuan Securities Co., Ltd.)100,000,0003.33
Specific accounts for bonds repurchase and pledge under the registration and settlement system (China Merchants Bank Co., Ltd.)77,957,0002.59
Specific accounts for bonds repurchase and pledge under the registration and settlement system (China Minsheng Bank Corp., Ltd.)68,483,0002.28
Hall Capital Limited - Hall Capital China Value - added Funds55,867,0001.86
Ontario Pension Board - private capital53,629,0001.78
UBS AG50,245,0001.67

(III) Information on the change in convertible bonds during the reporting period

Unit and Currency: RMB

Name of convertible corporate bondsPrior to the changeIncrease and decrease of the changeAfter the change
ConversionRedemptionBack-sell
Haier Convertible Bonds3,007,490,000712,0003,006,778,000

(IV) Information on the accumulated number of convertible bonds being converted intoshares during the reporting period

Amount of conversion during the reporting period (RMB)712,000
Converted shares during the reporting period (share)48,856
Accumulated converted shares (share)48,856
Proportion of accumulated converted shares to total issued shares of the Company before conversion (%)0.001
Amount of remaining convertible bonds not converted (RMB)3,006,778,000
Proportion of amount of remaining convertible bonds to total issued convertible bonds (%)99.976

(V) Information on the past adjustment of prices for conversion into shares

Unit and Currency: RMB

Conversion price as of the end of the reporting period14.55

(VI) Information on the indebtedness, changes in creditability of the Company and the cash

arrangement for repayment of debts in the coming yearsAt the end of the reporting period, the Company's liabilities amounted to RMB123,078.3680million in total, including current liabilities of RMB91,483.3243 million and non-current liabilities ofRMB 31,595.0437 million.Through the evaluation of the credit status of the Company and the public issuance of convertible

corporate bonds, United Credit Ratings Co., Ltd. determined the long-term credit rating of the Companyis AAA, the rating outlook is 'stable' and the bond credit rating is AAA.

The Company's operations in all aspects are stable, the asset structure is reasonable, and the creditstatus is good, thus being able to provide stable and sufficient working capital for the payment ofconvertible corporate bonds interest and repayment of principle in the future.

(VII) Explanation on other information regarding convertible bondsNo

XIV. Environmental Information(I) Explanation of the environmental protection status of companies and their importantsubsidiaries that are key emission units announced by the environmental protection department

□Applicable √Not Applicable

(II) Statement on environmental protection information of the companies not on the list ofcritical pollutant dischargers

√Applicable □Not Applicable

Innovation drive and green development are the development goals of modern manufacturing. TheCompany continues to promote green development, actively promote green consumption, enhance theapplication of energy-saving technologies, and integrate low carbon, cycling, energy saving andemission reduction into all aspects of enterprise development. Besides, the Company also continues topromote technological innovation, research and develop the products integrating smart IoT and greendevelopment to strive to increase the green of products at full life span, extend the green supply chain,lead innovation, green, interaction and win-win of the industry, and contribute to the national greendevelopment.All units of the Company perform the implementation and production of construction projectsaccording to the requirements of laws and regulations. We complete environmental impact evaluationprocedures in strict accordance with the Three Simultaneous system for environmental protection ofconstruction projects. They have been approved in the environmental impact assessment. There are noenvironmental violations such as construction without approval.The Company has established Haier Smart Energy Center, an industry-leading energy big dataanalysis system. It uses automation, information technology and centralized management mode toimplement centralized dynamic monitoring and digital management of main energy consumption such aswater, electricity and gas in all factories across the country; automatically and accurately collects energydata, and completes the prediction and analysis of energy consumption data, optimizes energydeployment and reduce the energy consumption of single product production, thus truly achievinglow-carbon production.

(III) Statement on reasons for non-disclosure of environmental information by the companies noton the list of critical pollutant dischargers

□Applicable √Not Applicable

(IV) Statement on subsequent progress or changes in the environmental information disclosedduring the reporting period

√Applicable □Not Applicable

The Company will continue to maintain and keep optimizing existing results and allowsup-to-standard discharge in strict accordance with existing environmental discharge and emissionstandards.

XV. Statement on Other Significant Events(I) Comparing with the last accounting period, information and reasons for the changes inaccounting policies, accounting estimation and accounting method, and their impacts

□Applicable √Not Applicable

(II) Information, the corrected amount, reasons and impacts for retrospective restatement tocorrect major accounting errors during the reporting period

□Applicable √Not Applicable

(III) Others

√Applicable □Not Applicable

Entrusted wealth management: By the end of the reporting period, the balance of the Company'sentrusted wealth management amounted to RMB6.291 billion, including two parts: (1) temporarily-idlefundraising wealth management: at the end of December 2018, the Company's proceeds for theissuance of convertible corporate bonds were fully landed. In order to improve the yield oftemporarily-idle funds, the Company intended to carry out cash management with the amounts notexceed RMB1.5 billion after approved by the Board of Directors. By the end of the reporting period, thebalance of the entrusted wealth management amounted to RMB1.429 billion; (2) wealth managementof the Company's Hong Kong listed subsidiary: Haier Electronics Group Co., Ltd. (hereinafterreferred to as 'Haier Electronics', stock code: 01169.HK), the holding subsidiary of the Company, haspurchased some short-term principal-protected wealth management and structural deposits from thelarge commercial banks as an independently operating Hong Kong listed company in order to increasethe efficiency of the use of idle funds within the authorities of the management and on the premise ofsafeguarding funds security. In the purchase process, all the necessary board reports were subject to theprocedures such as filling and management' s review according to the regulations requirements for HongKong listed company, so as to ensure sufficient funds for the day-to-day operations of the main businessand improve the shareholders' returns. By the end of the reporting period, the balance of the entrustedwealth management amounted to RMB4.861billion.

SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUT SHAREHOLDERS

I. Changes in share capital(I) Table of Changes in shares

1. Table of Changes in shares

Unit: share

Prior to the changeIncrease and decrease of the change (+,-)After the change
NumberPercentage (%)New shares issuedBonus sharesShares converted from reserveOthersSub-totalNumberPercentage (%)
I. Shares with selling restrictions
1. Shares held by the state
2. Shares held by the state-owned legal entities
3. Shares held by other domestic investors
Including: shares held by domestic non-state -owned legal entities
Shares held by domestic individuals
4.Shares held by foreign investors
Including: shares held by foreign legal entities
Shares held by foreign individuals
II. Tradable shares without selling restrictions6,368,416,700100.0048,85648,8566,368,465,556100.00
1. RMB ordinary shares6,097,402,72795.7448,85648,8566,097,451,58395.74
2. Domestic listed foreign shares
3. Overseas listed foreign shares271,013,9734.26271,013,9734.26
4. Others
III. Total shares6,368,416,700100.0048,85648,8566,368,465,556100.00

2. Statement on the changes in shares

√Applicable □Not Applicable

As approved by the Reply on Approving the Public Issuance of Convertible Corporate Bonds by Qingdao Haier Co., Ltd.(Zheng Jian Xu Ke [2018] No. 1912)

issued by the China Securities Regulatory Commission (hereinafter referred to as the 'CSRC'), On 18 December 2018, the Company publicly issued 30,074,900convertible corporate bonds at a par value of RMB 100 each, and the total amount issued of RMB3,007,490,000 for a term of 6 years. With the approval from theShanghai Stock Exchange Self-regulation Decision [2019] No. 14, the convertible corporate bonds of RMB3,007,490,000 issued by the Company will be listed andtraded on Shanghai Stock Exchange on 18 January 2019. The bonds are referred to as 'Haier Convertible Bonds' and the bond code is '110049'.

According to the relevant requirements of Prospectus of Qingdao Haier Co., Ltd. on Public Issuance of A-share Convertible Bonds, Haier Convertible Bond bythe Company in this issuance can be converted into A-share of the Company since 25 June 2019, the conversion period commenced from 25 June 2019 to 17December 2024. By the end of the reporting period, the total number of convertible bonds is 48,856, and the share capital of the Company changed from6,368,416,700 shares to 6,368,465,556 shares. For details, please refer to the Announcement on Results of Conversion of Convertible Bonds and Changes in ShareCapital of Haier Smart Home Co., Ltd. (No.: L2019-051) disclosed on 3 July 2019.

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 thedisclosure date of interim report

√Applicable □Not Applicable

As the Company's convertible bonds are still in the conversion period, the latest announcement (please refer to the Announcement on Results of Conversion ofConvertible Bonds and Changes in Share Capital of Haier Smart Home Co., Ltd. disclosed by the Company on 2 August 2019 for details) before the disclosure ofthis periodic report, a total of 8,976 shares were converted during July 2019, and the share capital of the Company changed from 6,368,465,556 share to6,368,474,532 share.In the first half of 2019, the Company achieved net profit attributable to shareholders of the Parent Company of RMB5,150,869,558.02,equity attributable toowners of the Parent Company of RMB42,180,337,843.33, in terms of total share capital of 6,368,465,556 shares of the Company at the end of the reporting period,revenue was RMB0.809 per share and net asset was RMB6.623 per share accordingly; in terms of total share capital of 6,368,474,532 at the end of July 2019,

revenue was RMB0.809 per share and net asset was RMB6.623 per share accordingly.

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 period164,863
Total numbers of preferential shareholders with restoration of voting rights by the end of the reporting periodNot applicable

(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable shares (or shares without selling restrictions) by the end of thereporting period

Unit: share

Shareholdings of top ten shareholders
Name of shareholder (full name)Increase/ decrease during the reporting periodNumber of shares held at the end of the periodPercentage (%)Number of shares held with selling restrictionsStatus of shares pledged or frozenNature of shareholder
StatusNumber
Haier Electric Appliances International Co., Ltd.1,258,684,82419.76NilDomestic non-state-owned legal entity
Haier Group Corporation1,072,610,76416.84Nil
Hong Kong Securities Clearing Co., Ltd.648,698,18710.19UnknownForeign legal entity
GIC PRIVATE LIMITED202,726,3803.18UnknownForeign legal entity
China Securities Finance Corporation Limited182,592,6972.87UnknownUnknown
Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资咨询有限公司)172,252,5602.70NilDomestic non-state-owned legal entity
CLEARSTREAM BANKING S.A. (note)90,924,8561.43UnknownForeign legal entity
National social security fund, Portfolio 10483,572,6901.31UnknownUnknown
Bank of China Limited- E Fund's small and medium-sized hybrid securities investment funds81,000,0711.27UnknownUnknown
Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership)73,011,0001.15NilUnknown
Shareholdings of top ten shareholders without selling restrictions
Name of shareholderNumber of tradable shares held without selling restrictionsClass and number of shares
ClassNumber
Haier Electric Appliances International Co., Ltd.1,258,684,824RMB ordinary1,258,684,824
Haier Group Corporation1,072,610,764RMB ordinary1,072,610,764
Hong Kong Securities Clearing Co., Ltd.648,698,187RMB ordinary648,698,187
GIC PRIVATE LIMITED202,726,380RMB ordinary202,726,380
China Securities Finance Corporation Limited182,592,697RMB ordinary182,592,697
Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资咨询有限公司)172,252,560RMB ordinary172,252,560
CLEARSTREAM BANKING S.A. (note)90,924,856Overseas listed foreign shares90,924,856
National social security fund, Portfolio 10483,572,690RMB ordinary83,572,690
Bank of China Limited- E Fund's small and medium-sized hybrid securities investment funds81,000,071RMB ordinary81,000,071
Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership)73,011,000RMB ordinary73,011,000
Related-parties or parties acting in concert among the aforesaid shareholders(1) Haier Electric Appliances International Co., Ltd. is a holding subsidiary of Haier Group Corporation. Haier Group Corporation holds 51.20% of its equity. Qingdao Haier Venture & Investment Information Co., Ltd.(青岛海尔创业投资咨询有限公司) and Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) is a party acting in concert with Haier Group Corporation; (2) The Company is not aware of the existence of any connections of other shareholders.
Explanation of preferential shareholders with restoration of voting rights and their shareholdingsNot applicable

Note: This account is the Deutsche Bank collection account for the Company's D shares, which is the original data provided by the Clearstream Bank CollectionAccount to the Company after the merger according to local market practices and technical settings, not representing the ultimate shareholder.

Number of shares held by top ten shareholders with selling restrictions and the selling restrictions? Applicable √Not Applicable

(III) Strategic investors or general legal persons who became the top ten shareholders due to placing of new shares? Applicable √Not Applicable

III. Changes in controlling shareholder and the ultimate controller? Applicable √Not Applicable

SECTION VII RELEVANT INFORMATION OF PREFERRED

SHARES

? Applicable √Not Applicable

SECTION VIII DIRECTORS, SUPERVISORS, SENIOR

MANAGEMENTI. Changes of Shareholding(I) Changes of shareholding of current and retired directors, supervisors and senior managementduring the reporting period

√Applicable ?Not Applicable

Unit: share

NameTitleShareholdings at the beginning of the periodShareholdings at the end of the periodIncrease/ decrease in shares during the reporting periodReason for increase/ decrease
Liang HaishanDirector12,859,06214,483,4661,624,404Employee shareholding plan vested
Tan LixiaDirector6,836,7378,136,2601,299,523
Li HuagangDirector482,214653,306171,092
Wang PeihuaSupervisor91,213144,76453,551
Ming GuoqingSupervisor59,51894,50534,987
Gong WeiSenior management1,450,5561,671,903221,347
Ming GuozhenSenior management1,106,5791,240,515133,936

Other explanations? Applicable √Not Applicable

(II) Incentive share option granted to directors, supervisors and senior management during thereporting period? Applicable √Not Applicable

II. Changes in directors, supervisors and senior management of the Company

√Applicable ?Not Applicable

NamePositionChanges
Peng JianfengDirectorDesignation
Zhou HongboDirectorDesignation
Liu HaifengDirectorDesignation
Wu ChengIndependent directorDesignation
Lin SuiDirectorElection
Yan YanDirectorElection
Li HuagangDirectorElection
Qian DaqunIndependent directorElection
Liang HaishanGeneral managerDesignation
Li HuagangGeneral managerAppointment

Explanations on the change in directors, supervisors and senior management of the Company

√ Applicable ?Not Applicable

During the reporting period, the Ninth session of Board of Directors and Board of Supervisors of theCompany expired. After the deliberation and approval of the Company's 2018 Annual General Meeting,elected new session (10th) of Board of Directors and Board of Supervisors and appointed a new seniormanagement of the Company.

III. Other explanations

? Applicable √Not Applicable

SECTION IX RELEVANT INFORMATION OF CORPORATE BONDS

√ Applicable ?Not Applicable

I. Basic information of corporate bonds

Unit and Currency: RMB0'000

Name of bondsShort nameCodeIssuing dateDate of expiryBalance of bondsInterest rate (%)Method of capital repayment with interestPlaces of transaction
Convertible Corporate Bonds of Hair Smart Home Co., LtdHair Convertible Bonds11004918 December 201817 December 2024300,677.80Interest rates for the first to sixth years are 0.2, 0.5, 1.0, 1.5, 1.8, and 2.0, respectively.On an annual basisShanghai Stock Exchange

Interest payment for corporate bonds

?Applicable √Not Applicable

The interest of convertible corporate bonds in this Issuance is paid on an annual basis, while theprincipal and the interest for the last year of convertible corporate bonds which do not convert to sharesshall be returned when expired. The interest payment day for each year is the date of first anniversary ofthis issuance of convertible corporate bonds. Based on the issuance date, the first interest payment day is18 December 2019. As such, interest payment and repayment within the reporting period is notapplicable.

Other explanations of corporate bonds

? Applicable √Not Applicable

II. Contact person and contact method of corporate bonds trustee manager and contact method ofcredit rating agency

Bonds trustee managerNameUnited Credit Ratings Co., Ltd.
Office address12th Floor, PICC Office Tower, No.2 Jianguomen Outer Street, Chaoyang District, Beijing, China

Other explanations:

? Applicable √Not Applicable

III. Use of funds raised from corporate bonds

√ Applicable ?Not Applicable

The Company received net proceeds of RMB2,983,580,500 from the public issuance of convertiblecorporate bonds (the amount of proceeds of RMB3,007,490,000 net of sponsorship and underwritingfees paid) on 24 December 2018, out of which RMB1,336,148,100 has been used in the first half of

2019. For details, please refer to the Specific Audit Report on the Deposit and Actual use of CapitalRaised in the first half of 2019 of Haier Smart Home Co., Ltd disclosed on the same day of this report.

IV. Information of corporate bonds rating

√ Applicable ?Not Applicable

During the reporting period, the credit rating agency, United Credit Ratings Co., Ltd., of ConvertibleCorporate Bonds of the Company in this issuance issued the Result Announcement of the 2019Follow-up Rating on the Convertible Corporate Bonds of Qingdao Hair Co., Ltd., according to thisrating report, the main credit rating of the Company is AAA and the credit rating of convertiblecorporate bonds is AAA. During the period of convertible corporate bonds, the United Credit RatingsCo., Ltd. will perform regular follow-up rating on an annual basis.

V. Corporate bonds credit enhancement mechanism, solvency plan and others during thereporting period

√ Applicable ?Not Applicable

The interest of convertible corporate bonds in this issuance is paid on an annual basis, while theprincipal and the interest for the last year of convertible corporate bonds which do not convert to sharesshall be returned when expired. The coupon rate of convertible corporate bonds in the issuance is: 0.20%for the first year, 0.50% for the second year, 1.00% for the third year, 1.50% for the fourth year, 1.80%for the fifth year and 2.00% for the sixth year.

VI. Meeting of corporate bondholders

√ Applicable ?Not Applicable

During the reporting period, the first bondholders' meeting in 2019 of the Company was convenedwith both on-site voting and network voting. The meeting was held on the afternoon of 29 May 2019 inroom A108, Haier University, Haier Information Park, No.1 Haier Road, Qingdao City, to review theProposal on Changing Part of the Investment Projects of Funds Raised from Convertible CorporateBonds of Qingdao Haier Co., Ltd. The total number of the convertible corporate bonds is 30,074,900(each with a nominal value of RMB100), and the total number of bondholders and entrusted proxiesattending this bondholders' meeting is 75, representing bonds outstanding for the current period shall be6,062,140 in aggregate, accounting for 20.16% of the aggregate number of the Company's convertiblecorporate bonds. In addition, the supervisors, senior management and attorney appointed by theCompany attended this bondholders' meeting. The general meeting of shareholders was convened by theBoard of Directors of the Company, and the secretary of the Company's Board of Directors presidedover the meeting. The poll results of the above proposal in this meeting were: the number of affirmativevotes is 6,062,140, accounting for 100.00% of the aggregate number of valid voting bonds attending thisbondholders' meeting; the number of dissenting votes is 0, accounting for 0.00% of the aggregatenumber of valid voting bonds attending this bondholders' meeting; the number of abstaining votes is 0,accounting for 0.00% of the aggregate number of valid voting bonds attending this bondholders'

meeting.

VII. Duty fulfillment of corporate bonds trustee manager? Applicable √Not Applicable

VIII. Accounting data and financial indicators as of the end of the reporting period and the end ofprevious year (or as of the reporting period and the corresponding period of previous year)

√ Applicable ?Not Applicable

Unit and Currency: RMB

Key indicatorsAt the end of this reporting periodAt the end of the previous yearIncrease/decrease at the end of the reporting period compared with the end of the last year (%)
Current ratio1.081.14-0.06
Quick ratio0.810.86-0.05
Gearing ratio (%)67.9567.860.12
The reporting period (January - June)The corresponding period of the previous yearIncrease/decrease at the end of the reporting period compared with the corresponding period of last year (%)
EBITDA10,340,752,025.469,056,313,330.8714.18
EBITDA interest coverage ratio11.6813.25-1.57
Interest coverage ratio9.2011.00-1.79

Note: The data involved in the balance sheet in the corresponding period of the previous year wasbased on the data without retrospective adjustment when calculating above indicators.

IX. Notes to overdue debts

? Applicable √Not Applicable

X. Interest payment of other bonds and debt financing instruments of the Company

? Applicable √Not Applicable

XI. Bank credit business of the Company during the reporting period

√Applicable ?Not Applicable

During the reporting period, the Company had bank credit business amounted to RMB77,655.26million.

XII. Execution status of promises or commitments in prospectus of corporate bonds of theCompany during the reporting period

√ Applicable ?Not Applicable

During the reporting period, the Company signed a storage supervision agreement for raised fundsaccount with each of the project implementation entities, sponsor and banks to promote the use of raisedfunds in a compliance manner in accordance with the provisions of the prospectus.

XIII. Major events of the Company and its impact of major events on operating status andsolvency of the Company

? Applicable √Not Applicable

SECTION X RESPONSIBLITY STATEMENT

“As the executive board of Qingdao Haier Co., Ltd, we hereby confirm to the best of ourknowledge, and in accordance with the applicable reporting principles, that the financialstatements give a true and fair view of the assets, liabilities, financial position and profit orloss of the company; and the management report includes a fair review of the developmentand performance of the business including the results and the position of the company,together with a description of the principal opportunities and risks associated with theexpected development of the company.”

Qingdao, 29 April 2019Qingdao Haier Co., LtdThe Board of Management

Liang Haishan __________________Tan Lixia ______________________Li Huagang ____________________Wu Changqi ___________________Lin Sui _______________________Yan Yan ______________________

SECTION XI FINANCIAL REPORTI. Audit report? Applicable √Not Applicable

II. Financial statements

Consolidated Balance Sheet

30 June 2019Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMB

ItemsNotes30 June 201931 December 2018
Current assets:
Monetary fundsVII. 133,735,043,658.2337,456,355,407.28
Provision of settlement fund
Funds lent
Financial assets held for tradingVII. 2985,839,615.671,775,648,387.76
Financial assets measured at fair value and changes of which included in current profit and loss
Derivative financial assetsVII. 370,865,506.6796,723,164.37
Bills receivableVII. 414,526,971,971.9414,220,937,323.02
Accounts receivableVII. 514,414,459,806.7410,431,193,487.50
Financing receivables
PrepaymentsVII. 6702,154,686.43594,555,015.00
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivablesVII. 72,255,319,756.611,626,975,864.98
Including: interest receivables298,632,646.33228,701,210.90
Dividends receivables99,275,355.944,524,472.84
Financial assets purchased under resale agreements
InventoriesVII. 823,867,526,314.7922,377,191,121.53
Contract assetsVII. 9489,724,604.83456,781,406.54
Assets held for saleVII. 10126,669,725.09144,091,213.39
Non-current assets due in one year
Other current assetsVII. 117,173,637,678.575,079,878,909.67
Total current assets98,348,213,325.5794,260,331,301.04
Non-current assets:
Loans and advances granted
Debt investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investments
Long-term receivables312,685,538.19245,791,343.37
Long-term equity investmentsVII. 1214,244,547,862.1013,966,481,596.07
Investments in other equity instrumentsVII. 131,379,193,042.191,400,316,460.34
Other non-current financial assetsVII. 14328,487,584.54327,358,825.57
Investment propertiesVII. 1529,978,648.2330,879,147.42
Fixed assetsVII. 1618,815,614,587.3517,319,638,881.37
Construction in progressVII. 175,195,727,696.623,873,492,230.24
Biological assets for production
Oil and gas assets
Right-of-use assetsVII. 183,286,464,710.49
Intangible assetsVII. 1911,317,290,593.279,209,242,721.71
Development costVII. 20663,309,436.00538,382,288.33
GoodwillVII. 2123,219,540,741.2121,155,552,557.16
Long-term prepaid expensesVII. 22267,669,407.03230,763,172.48
Deferred income tax assetsVII. 231,798,629,815.211,815,624,736.13
Other non-current assetsVII. 241,934,031,299.402,325,688,982.56
Total non-current assets82,793,170,961.8372,439,212,942.75
Total assets181,141,384,287.40166,699,544,243.79
Current liabilities:
Short-term borrowingsVII. 258,108,137,605.856,298,504,892.57
Borrowings from central bank
Funds borrowed
Financial liabilities held for tradingVII. 267,055,018.07218,748,280.33
Financial liabilities measured at fair value and changes of which included in current profit and loss
Derivative financial liabilitiesVII. 2733,952,526.1035,603,754.54
Bills payableVII. 2817,569,622,873.9219,626,099,061.60
Accounts payablesVII. 2930,604,644,390.2727,759,119,079.78
Receipts in advanceVII. 3014,681,466.58
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 remunerationVII. 322,557,362,440.332,651,399,418.05
Taxes payableVII. 331,951,932,360.241,838,440,727.39
Other payablesVII. 3416,413,360,559.1112,685,677,402.91
Including:Interest payables94,121,291.76104,522,208.28
Dividends payables2,914,608,547.77162,205,193.05
Fees and commissions payable
Reinsurance Accounts payables
Contract liabilitiesVII. 313,899,786,072.985,482,325,888.59
Liabilities held for saleVII. 3514,097,210.0932,362,267.88
Non-current liabilities due within one yearVII. 369,876,686,810.403,015,060,105.58
Other current liabilitiesVII. 37446,686,462.78423,638,804.62
Total current liabilities91,483,324,330.1480,081,661,150.42
Non-current liabilities:
Deposits for insurance contracts
Long-term borrowingsVII. 3812,260,679,425.0815,541,466,325.22
Bonds payableVII. 399,353,004,100.049,191,896,302.70
Including: preference shares
perpetual bonds
Lease liabilitiesVII. 402,467,631,697.84
Long-term payablesVII. 41115,402,960.78106,763,243.99
Long-term payables for staff’s remunerationVII. 421,033,636,909.72934,974,735.49
Estimated liabilitiesVII. 432,862,028,886.092,839,741,079.48
Deferred incomeVII. 44664,747,867.34643,551,987.30
Deferred income tax liabilitiesVII. 23924,391,131.64405,343,787.76
Other non-current liabilitiesVII. 451,913,520,681.511,823,866,693.93
Total non-current liabilities31,595,043,660.0431,487,604,155.87
Total liabilities123,078,367,990.18111,569,265,306.29
Owners' equity (or shareholders' equity):
Paid-in capital (or share capital)VII. 466,368,465,556.006,368,416,700.00
Other equity instrumentsVII. 47904,373,795.11904,485,788.71
Including: preference shares
perpetual bonds
Capital reserveVII. 481,893,257,835.042,208,773,474.57
Less: treasury stock
Other comprehensive incomeVII. 491,006,256,614.53772,632,347.35
Special reserve
Surplus reserveVII. 502,288,301,317.102,288,301,317.10
General risk provisions
Undistributed profitsVII. 5129,719,682,725.5526,859,741,163.95
Total equity attributable to owners (or shareholders) of the Parent Company42,180,337,843.3339,402,350,791.68
Minority shareholders' interests15,882,678,453.8915,727,928,145.82
Total owners' equity (or shareholders' equity)58,063,016,297.2255,130,278,937.50
Total liabilities and owners' equity (or shareholders' equity)181,141,384,287.40166,699,544,243.79

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Balance Sheet of the Parent Company

30 June 2019Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMB

ItemsNotes30 June 201931 December 2018
Current Assets:
Monetary funds3,941,079,616.367,068,899,574.96
Financial assets held for trading
Financial assets measured at fair value and changes of which included in current profit and loss
Derivative financial assets
Bills receivable
Accounts receivableXVIII.1214,400,331.67222,622,017.43
Financing receivables
Prepayments12,994,199.4628,809,797.43
Other receivablesXVIII.21,872,471,875.282,082,767,166.58
Including: interest receivables10,294,498.126,292,538.22
dividends receivables867,586,570.571,912,418,382.82
Inventories33,875,920.57124,773,163.23
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets1,727,226,417.60109,865,313.53
Total current assets7,802,048,360.949,637,737,033.16
Non-current assets:
Debt investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investments
Long-term receivables
Long-term equity investmentsXVIII.334,605,975,384.5633,844,234,315.30
Investments in other equity instruments5,341,590.845,262,480.92
Other non-current financial assets
Investment properties
Fixed assets117,280,845.74119,546,157.40
Construction in progress52,398,316.9137,655,076.18
Biological assets for production
Oil and gas assets
Right-of-use assets
Intangible assets16,417,575.2417,186,540.33
Development cost
Goodwill
Long-term prepaid expenses6,176,952.975,779,229.64
Deferred income tax assets81,511,748.0781,511,748.07
Other non-current assets28,632,829.14
Total non-current assets34,885,102,414.3334,139,808,376.98
Total assets42,687,150,775.2743,777,545,410.14
Current liabilities:
Short-term borrowings1,500,000,000.00
Financial liabilities held for trading
Financial liabilities measured at fair value and changes of which included in current profit and loss
Derivative financial liabilities
Bills payable199,892,131.66334,747,358.40
Accounts payables
Receipts in advance
Contract liabilities2,742,714,213.012,391,211,509.89
Payables for staff's remuneration37,317,709.9965,387,056.03
Taxes payable8,644,652.0867,279,606.39
Other payables24,112,050,515.9621,834,869,774.34
Including: interest payable
dividends payable
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities2,383,520.122,089,282.56
Total current liabilities27,103,002,742.8226,195,584,587.61
Non-current liabilities:
Long-term borrowings
Bonds payable2,560,865,849.822,510,530,062.86
Including: preference shares
perpetual bonds
Lease liabilities
Long-term payable20,000,000.0020,000,000.00
Long-term payables for staff's remuneration
Estimated liabilities
Deferred income37,820,000.0067,360,000.00
Deferred income tax liabilities31,576,433.8729,485,678.28
Other non-current liabilities
Total non-current liabilities2,650,262,283.692,627,375,741.14
Total liabilities29,753,265,026.5128,822,960,328.75
Owners' equity (or Shareholders' equity):
Paid-in capital (or share capital)6,368,465,556.006,368,416,700.00
Other equity instruments472,949,271.04473,061,264.64
Including: preference shares
perpetual bonds
Capital reserve4,172,180,788.454,182,825,672.98
Less: treasury stock
Other comprehensive income7,040,098.107,791,344.47
Special reserve
Surplus reserve1,683,155,091.651,683,155,091.65
Undistributed profits230,094,943.522,239,335,007.65
Total owners' equity (or shareholders' equity)12,933,885,748.7614,954,585,081.39
Total liabilities and owners’ equity (or shareholders' equity)42,687,150,775.2743,777,545,410.14

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Consolidated Profit StatementJanuary-June 2019

Unit and Currency: RMB

ItemsNotes2019 Interim2018 Interim
Ⅰ.Total operating revenueVII. 5298,979,793,121.1690,488,122,206.31
Including: Operating revenueVII. 5298,979,793,121.1690,488,122,206.31
Interest income
Insurance premiums earned
Fee and commission income
Ⅱ. Total cost of operations92,948,216,240.1484,761,087,439.43
Including: Operating costVII. 5270,174,853,958.9164,057,950,024.03
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions withdrew for insurance contract
Insurance policy dividend paid
Reinsurance cost
Taxes and surchargesVII. 53400,930,500.65407,977,441.52
Selling expensesVII. 5414,596,335,114.0113,522,931,745.64
Administrative expensesVII. 554,525,786,069.234,033,672,258.19
R&D expensesVII. 562,741,563,815.812,252,630,555.38
Financial expensesVII. 57508,746,781.53485,925,414.67
Including: interest expenses885,683,954.28683,665,504.25
interest income253,967,290.82234,458,811.03
Add: other incomeVII. 58472,741,856.55224,292,412.02
investment income (losses are represented by '-')VII. 59756,051,437.45867,458,988.96
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. 6057,409,956.8036,661,921.50
Loss on credit impairment (losses are represented by '-')VII. 6137,775,605.3940,539,282.27
Loss on assets impairment (losses are represented by '-')VII. 62-257,747,905.20-235,903,037.58
Gain from disposal of assets (losses are represented by '-')VII. 6312,706,682.875,505,487.90
Ⅲ. Operating profit (losses are represented by '-')7,110,514,514.886,665,589,821.95
Add: non-operating incomeVII. 64269,598,148.82218,274,778.87
Less: non-operating expensesVII. 65114,206,707.9249,404,445.69
Ⅳ. Total profit (total losses are represented by '-')7,265,905,955.786,834,460,155.13
Less: income tax expenseVII.661,034,920,088.61966,779,446.64
Ⅴ.Net profit (net losses are represented by '-')6,230,985,867.175,867,680,708.49
(I) Classification by continuous operation
1.Net profit from continuous operation (net losses are represented by '-')6,230,985,867.175,867,680,708.49
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 '-')5,150,869,558.024,787,943,825.16
2. Profit or loss attributable to minority shareholders (net losses are represented by '-')1,080,116,309.151,079,736,883.33
VI. Other comprehensive income, net of taxVII.67206,080,907.09427,574,646.00
Other comprehensive income attributable to owners of the Parent Company, net of tax233,624,267.18303,484,612.59
(I) Other comprehensive income that cannot be reclassified into the profit or loss-12,242,959.1240,631,005.91
1.Changes arising from re-measurement of defined benefit plans-400,317.18-6,952,267.73
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-11,842,641.9447,583,273.64
instruments
4. Changes in fair value of credit risks of the enterprise
(II) Other comprehensive income to be reclassified into the profit or loss245,867,226.30262,853,606.68
1. Other comprehensive income that can be transferred into profit or loss under equity method19,829,612.6586,716,737.89
2. Changes in fair value of other debt investments
3. Profit or loss from changes in fair value of available-for-sale financial assets
4. Reclassified financial assets that are credited to other comprehensive income
5. Profit or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets
6. Credit impairment provision for other debt investments
7. Reserve for cash flow hedging (effective portion of profit or loss arising from cash flow hedging)-25,398,943.7846,856,355.86
8. Exchange differences on translation of financial statements denominated in foreign currencies251,436,557.43129,280,512.93
9. Others
Other comprehensive income attributable to minority shareholders, net of tax-27,543,360.09124,090,033.41
Ⅶ. Total comprehensive income6,437,066,774.266,295,255,354.49
Total comprehensive income attributable to the owners of Parent Company5,384,493,825.205,091,428,437.75
Total comprehensive income attributable to the minority shareholders1,052,572,949.061,203,826,916.74
Ⅷ . Earnings per share:
(I) Basic earnings per share (RMB/share)XIX.10.8090.785
(II) Diluted earnings per share (RMB/share)XIX.10.7780.785

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Profit Statement of the Parent Company

January-June 2019

Unit and Currency: RMB

ItemsNotes2019 Interim2018 Interim
I. Operating incomeXVIII.41,330,869,374.631,624,154,028.46
Less: operating costXVIII.4950,382,533.321,120,062,552.26
Taxes and surcharges8,794,240.929,974,166.62
Selling expenses126,957,909.17125,040,887.94
Administration expenses141,039,328.01185,304,148.28
R&D expenses101,983,328.38102,396,455.62
Financial expenses99,436,940.8061,816,257.99
Including: interest expenses113,544,460.15130,109,539.14
Interest income17,707,954.8872,983,634.41
Add: other income52,472,509.259,510,192.91
investment income (losses are represented by '-')XVIII.5245,568,113.58219,520,069.85
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 '-')987,137.94-96,210,989.68
Loss on assets impairment (losses are represented by '-')
Gain from disposal of assets (losses are represented by '-')51,118.46
II. Operating profit (losses are represented by '-')201,353,973.26152,378,832.83
Add: non-operating income9,412,803.3027,747,401.83
Less: non-operating expenses1,963,024.43253,114.54
III. Total profit (total losses are represented by '-')208,803,752.13179,873,120.12
Less: income tax expenses-17,287,593.90-3,481,743.97
IV. Net profit (net losses are represented by '-')226,091,346.03183,354,864.09
(I) Net profit from continuous operations (net losses are represented by '-')226,091,346.03183,354,864.09
(II) Net profit from discontinued operations (net losses are represented by '-')
V. Other comprehensive income, net of tax-751,246.3714,666,831.86
(I) Other comprehensive income that cannot be reclassified into the profit or loss67,243.43-450,286.03
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 of67,243.43-450,286.03
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-818,489.8015,117,117.89
1. Other comprehensive income that can be transferred into profit or loss under equity method-818,489.8015,117,117.89
2. Changes in fair value of other debt investments
3. Profit or loss from changes in fair value of available-for-sale financial assets
4. Reclassified financial assets that are credited to other comprehensive income
5. Profit or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets
6. Credit impairment provision for other debt investments
7. Reserve for cash flow hedging (effective portion of profit or loss arising from cash flow hedging)
8. Exchange differences on translation of financial statements denominated in foreign currencies
9. Others
VI. Total comprehensive income225,340,099.66198,021,695.95
VII. Earnings per share:
(I) Basic earnings per share (RMB/share)
(II) Diluted earnings per share (RMB/share)

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Consolidated Cash Flow Statement

January-June 2019

Unit and Currency: RMB

ItemsNotes2019 Interim2018 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods and rendering services96,268,046,242.2190,665,692,910.26
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 cash borrowed
Net increase in cash received from repurchase operation
Net cash received from customer deposits for trading in securities
Refunds of taxes637,995,666.18512,976,383.30
Cash received from other related operating activitiesVII. 68620,411,241.60581,816,437.80
Sub-total of cash inflows from operating activities97,526,453,149.9991,760,485,731.36
Cash paid on purchase of goods and services69,957,474,883.3163,905,630,870.53
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 contact
Net increase in financial assets held for trading purpose
Net increase in cash lent
Cash paid for interest, bank charges and commissions
Cash paid for insurance policy dividend
Cash paid to and on behalf of employees10,761,490,344.119,873,261,910.82
Cash paid for all types of taxes4,817,228,531.914,619,636,289.85
Cash paid to other operation related activitiesVII. 698,356,425,892.927,763,481,667.92
Sub-total of cash outflows from operating activities93,892,619,652.2586,162,010,739.12
Net cash flow from operating activitiesVII. 743,633,833,497.745,598,474,992.24
II. Cash flow from investing activities:
Cash received from recovery of investments181,007,285.3912,805,650.00
Cash received from return on investments234,041,242.12243,774,322.52
Net cash received from the disposal of fixed assets, intangible assets and other long-term assets200,884,406.4066,472,237.59
Net cash received from disposal of subsidiaries and other operating entities
Other cash received from investment activitiesVII. 7043,202,970.66102,448,074.88
Sub-total of cash inflows from investing activities659,135,904.57425,500,284.99
Cash paid on purchase of fixed assets, intangible assets and other long-term assets3,585,721,702.922,911,363,874.16
Cash paid for investments2,171,352,767.10469,241,640.23
Net increase in secured loans
Net cash paid on acquisition of subsidiaries and other operating entities2,642,578,338.00
Other cash paid on investment activitiesVII. 7110,351,066.5435,058,267.49
Sub-total of cash outflows from investing activities8,410,003,874.563,415,663,781.88
Net cash flow from investing activities-7,750,867,969.99-2,990,163,496.89
III. Cash flow from financing activities:
Cash received from capital contributions13,662,307.2780,422,640.20
Including: cash received from capital contributions by minority shareholders of subsidiaries
Cash received from borrowings9,175,976,703.384,509,988,283.98
Cash received from issuing bonds
Other cash received from financing activities
Sub-total of cash inflows from financing activities9,189,639,010.654,590,410,924.18
Cash paid on repayment of loans6,680,842,142.486,532,600,142.68
Cash paid on distribution of dividends, profits or repayment of interest expenses223,973,410.362,228,750,068.56
Including: dividend and profit paid to minority shareholders by subsidiaries
Other cash paid to financing activitiesVII. 721,380,412,527.51509,087,122.08
Sub-total of cash outflows from financing activities8,285,228,080.359,270,437,333.32
Net cash flow from financing activities904,410,930.30-4,680,026,409.14
IV. Effect of fluctuations in exchange rates on cash and cash equivalents115,212,720.2734,040,308.53
V. Net increase in cash and cash equivalents-3,097,410,821.68-2,037,674,605.26
Add: balance of cash and cashVII. 7436,044,777,414.0434,861,909,595.62
equivalents at the beginning of the period
VI. Balance of cash and cash equivalents at the end of the periodVII. 7432,947,366,592.3632,824,234,990.36

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Cash Flow Statement of the Parent Company

January-June 2019

Unit and Currency: RMB

ItemsNotes2019 Interim2018 Interim
I. Cash flow from operating activities:
Cash received from the sale of goods and rendering of services918,342,631.751,026,490,616.31
Refunds of taxes25,567,202.8311,759,645.04
Other cash received from operating activities110,143,217.54150,663,743.56
Sub-total of cash inflows from operating activities1,054,053,052.121,188,914,004.91
Cash paid on purchase of goods and services189,337,944.61334,977,272.61
Cash paid to and on behalf of employees567,010,992.25519,466,890.74
Cash paid for all types of taxes95,735,060.62114,511,009.96
Other cash paid to operation activities93,648,702.91213,818,898.29
Sub-total of cash outflows from operating activities945,732,700.391,182,774,071.60
Net cash flow from operating activities108,320,351.736,139,933.31
II. Cash flow from investing activities:
Cash received from recovery of investments78,325.00
Cash received from return on investments1,233,656,109.641,053,181,844.07
Net cash received from the disposal of fixed assets, intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and other operating entities
Other cash received from investment activities136,551,000.00
Sub-total of cash inflows from investing activities1,370,207,109.641,053,260,169.07
Cash paid on purchase of fixed assets, intangible assets and other long-term assets25,031,303.6714,341,911.75
Cash paid for investments2,201,212,503.0965,722,235.00
Net cash paid on acquisition of subsidiaries and other operating entities
Other cash paid on investment activities183,351,121.00
Sub-total of cash outflows from investing activities2,409,594,927.7680,064,146.75
Net cash flow from investing activities-1,039,387,818.12973,196,022.32
III. Cash flow from financing activities:
Cash received from capital injections
Cash received from borrowings1,500,000,000.00
Cash received from issuing bonds
Other cash received from financing activities
Sub-total of cash inflows from financing activities1,500,000,000.00
Cash paid on repayment of borrowings1,500,000,000.00
Cash paid on distribution of dividends, profits or repayment of interest expenses27,105,937.502,089,308,295.14
Other cash paid on financing activities669,109,443.77674,762,474.59
Sub-total of cash outflows from financing activities2,196,215,381.272,764,070,769.73
Net cash flow from financing activities-2,196,215,381.27-1,264,070,769.73
IV. Effect of fluctuations in exchange rates on cash and cash equivalents-537,110.94577.54
V. Net increase in cash and cash equivalents-3,127,819,958.60-284,734,236.56
Add: balance of cash and cash equivalents at the beginning of the period7,068,899,574.962,070,527,802.97
VI. Balance of cash and cash equivalents at the end of the period3,941,079,616.361,785,793,566.41

Legal representative: Liang HaishanPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Consolidated Statement of Changes in Owner's Equity

January-June 2019

Unit and Currency: RMB

Items2019 Interim
Equity attributable to owners of the Parent CompanyMinority equityTotal owners' equity
Paid-in capital (or share capital)Other equity instrumentsCapital reserveLess: treasury stockOther comprehensive incomeSpecial reserveSurplus reserveGeneral risk provisionUndistributed profitsOthersSub-total
preference sharesperpetual bondsOthers
I. Closing balance for the previous year6,368,416,700.00904,485,788.712,208,773,474.57772,632,347.352,288,301,317.1026,859,741,163.9539,402,350,791.6815,727,928,145.8255,130,278,937.50
Add: changes in accounting policies
Error correction for prior period
Business combination under common control
Others
II. Opening balance for the current year6,368,416,700.00904,485,788.712,208,773,474.57772,632,347.352,288,301,317.1026,859,741,163.9539,402,350,791.6815,727,928,145.8255,130,278,937.50
III. Increase/decrease for the current48,856.00-111,993.60-315,515,639.53233,624,267.182,859,941,561.602,777,987,051.65154,750,308.072,932,737,359.72
period (decrease is represented by '-')
(I) Total comprehensive income233,624,267.185,150,869,558.025,384,493,825.201,052,572,949.066,437,066,774.26
(II) Capital injection and reduction by owners48,856.00-111,993.60-315,515,639.53-315,578,777.13-349,305,402.58-664,884,179.71
1. Ordinary shares invested by owners48,856.00-111,993.60-226,635,104.87-226,698,242.47-349,305,402.58-576,003,645.05
2. Capital contribution by holders of other equity instruments
3. Share-based payment included in owners' equity
4. Others-88,880,534.66-88,880,534.66-88,880,534.66
(III) Profit distribution-2,235,331,410.16-2,235,331,410.16-534,534,085.77-2,769,865,495.93
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for general risks
3. Distribution to owners (or shareholders)-2,235,331,410.16-2,235,331,410.16-534,534,085.77-2,769,865,495.93
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-55,596,586.26-55,596,586.26-13,983,152.64-69,579,738.90
Ⅳ. Closing balance for the period6,368,465,556.00904,373,795.111,893,257,835.041,006,256,614.532,288,301,317.1029,719,682,725.5542,180,337,843.3315,882,678,453.8958,063,016,297.22
Items2018 Interim
Equity attributable to owners of the Parent CompanyMinority equityTotal owners' equity
Paid-in capital (or share capital)Other equity instrumentsCapital reserveLess: treasury stockOther comprehensive incomeSpecial reserveSurplus reserveGeneral risk provisionUndistributed profitsOthersSub-total
Preference sharesPerpetual bondsOthers
I. Closing balance for the previous year6,097,402,727.00431,424,524.07826,883,093.84-36,363,809.962,103,057,782.4122,793,110,884.0932,215,515,201.4514,534,490,935.9146,750,006,137.36
Add: changes in accounting policies
Error correction for prior period
Busine1,485,439,1740,787,834.8-442,158,653.1,084,068,3515,129,617.71,099,197,971
ss combination under common control3.246924.185.93
Others
II. Opening balance for the current year6,097,402,727.00431,424,524.072,312,322,267.084,424,024.902,103,057,782.4122,350,952,230.1733,299,583,555.6314,549,620,553.6647,849,204,109.29
III. Increase/decrease for the current period (decrease is represented by '-')47,000,347.59343,712,723.182,627,214,217.633,017,927,288.40805,541,960.073,823,469,248.47
(I) Total comprehensive income303,484,612.594,787,943,825.165,091,428,437.751,203,826,916.746,295,255,354.49
(II) Capital contribution and withdrawal by owners47,000,347.59-4,389.9646,995,957.633,281,460.8450,277,418.47
1. Ordinary shares invested by owners3,281,460.843,281,460.84
2. Capital contribution by holders of other equity instruments
3. Share-based payment included in owners'
equity
4. Others47,000,347.59-4,389.9646,995,957.6346,995,957.63
(III) Profit distribution-2,085,311,732.63-2,085,311,732.63-401,292,446.68-2,486,604,179.31
1. Withdrawal of surplus reserves
2. Withdrawal of provisions for general risks
3. Distribution to owners (or shareholders)-2,085,311,732.63-2,085,311,732.63-401,292,446.68-2,486,604,179.31
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) Others40,232,500.55-75,417,874.90-35,185,374.35-273,970.83-35,459,345.18
Ⅳ. Closing balance for the period6,097,402,727.00431,424,524.072,359,322,614.67348,136,748.082,103,057,782.4124,978,166,447.8036,317,510,844.0315,355,162,513.7351,672,673,357.76

Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke

Statement of Changes in Owners' Equity of the Parent Company

January-June 2019

Unit and Currency: RMB

Items2019 Interim
Paid-in capital (or share capital)Other equity instrumentsCapital reserveLess: treasury stockOther comprehensive incomeSpecial reserveSurplus reserveUndistributed profitsTotal owners' equity
Preference sharesPerpetual bondsOthers
Ⅰ. Closing balance for the previous year6,368,416,700.00473,061,264.644,182,825,672.987,791,344.471,683,155,091.652,239,335,007.6514,954,585,081.39
Add: changes in accounting policies
Error correction for prior period
Others
Ⅱ. Opening balance for the current year6,368,416,700.00473,061,264.644,182,825,672.987,791,344.471,683,155,091.652,239,335,007.6514,954,585,081.39
III. Increase/decrease for the current period (decrease is represented by '-')48,856.00-111,993.60-10,644,884.53-751,246.37-2,009,240,064.13-2,020,699,332.63
(I) Total comprehensive income-751,246.37226,091,346.03225,340,099.66
(II) Capital injection and reduction by owners48,856.00-111,993.6022,728,113.5322,664,975.93
1. Ordinary shares invested by owners48,856.00-111,993.60669,546.35606,408.75
2. Capital
contribution by holders of other equity instruments
3. Share-based payment included in owners' equity
4. Others22,058,567.1822,058,567.18
(III) Profit distribution-2,235,331,410.16-2,235,331,410.16
1. Withdrawal of surplus reserves
2.Distribution to owners (or shareholders)-2,235,331,410.16-2,235,331,410.16
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-33,372,998.06-33,372,998.06
Ⅳ. Closing balance for the period6,368,465,556.00472,949,271.044,172,180,788.457,040,098.101,683,155,091.65230,094,943.5212,933,885,748.76
Items2018 Interim
Paid-in capital (or share capital)Other equity instrumentsCapital reserveLess: treasury stockOther comprehensive incomeSpecial reserveSurplus reserveUndistributed profitsTotal owners' equity
Preference sharesPerpetual bondsOthers
Ⅰ. Closing balance for the previous year6,097,402,727.002,317,907,947.71-43,234,737.771,437,313,649.932,128,502,328.7611,937,891,915.63
Add: changes in accounting policies
Error correction for prior period
Others
Ⅱ. Opening balance for the current year6,097,402,727.002,317,907,947.71-43,234,737.771,437,313,649.932,128,502,328.7611,937,891,915.63
III. Increase/decrease for the253,883.5229,755,847.62-1,930,274,897.33-1,900,265,166.19
current period (decrease is represented by '-')
(I) Total comprehensive income14,666,831.86183,354,864.09198,021,695.95
(II) Capital injection and reduction by owners253,883.52253,883.52
1. Ordinary shares invested by owners
2. Capital contribution by holders of other equity instruments
3. Share-based payment included in owners' equity
4. Others253,883.52253,883.52
(III) Profit distribution-2,085,311,732.63-2,085,311,732.63
1. Withdrawal of surplus reserves
2.Distribution to owners (or shareholders)-2,085,311,732.63-2,085,311,732.63
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) Others15,089,015.76-28,318,028.79-13,229,013.03
Ⅳ. Closing balance for the period6,097,402,727.002,318,161,831.23-13,478,890.151,437,313,649.93198,227,431.4310,037,626,749.44

Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke

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) wasQingdao Refrigerator Factory, which was established in 1984. As permitted to offering by People's Bankof China, Qingdao Branch on 16 December 1989, and approved by Qing TiGai [1989] No.3 on 24March 1989, based on the reconstruction of the original Qingdao Refrigerator Factory, a limitedcompany was set up by directional fund raising of RMB150 million. In March and September 1993, asapproved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9 issued by the pilot leading teamof Qingdao joint stock company, the Company was converted from a directional offering company to apublic subscription company and issued additional 50 million shares to the public and listed with tradingon Shanghai Stock Exchange in November 1993.

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 LaoshanDistrict, Qingdao, Shandong Province.

The Company is mainly engaged in manufacturing and trading as well as R&D of refrigerator,air-conditioner, freezer, washing machine, water heater, dishwashers, gas stove and relevant productsand commercial circulation business.

The ultimate holding company of the Company is Haier Group Corporation ('Haier Corp').

These financial statements have been approved for publication by the Board of the Company on 29August 2019.

2. Scope of consolidated financial statements

√Applicable □Not Applicable

For details of changes in the scope of consolidated financial statements for the current period,please refer to 'VIII. Changes in Consolidation Scope' and 'IX. Interest in Other Entities' of this note.IV. Basis of Preparation of the Financial Statements

1. Basis of Preparation

The financial statements of the Company were prepared on the going concern basis according to thetransactions and matters actually occurred, in accordance with the Accounting Standards for Enterprises– Basic Standards published by the Ministry of Finance, specific accounting standards, and guidance onapplication of accounting standards for enterprises, interpretations to accounting standards forenterprises and other relevant requirements (hereinafter collectively referred to as the 'AccountingStandards for Enterprises') which issued subsequently, and in combination with the disclosure provisionsof the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing SecuritiesNo.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as the followingsignificant accounting policies and accounting estimation.

2. Continuous operation

√Applicable □Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a going concern.V. Significant accounting policies and accounting estimatesTips of specific accounting policies and accounting estimation:

√Applicable □Not Applicable

According to the characteristics of its production and operation, the Company formulated a seriesof specific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); theamortization of intangible assets (Note V.17); the criterion for determining of long-term assetsimpairment (Note V.18); and the date of revenue recognition (Note V.23), etc.

1. Statement of compliance with enterprise accounting standards

The financial statements prepared by the Company meet the requirements of the enterpriseaccounting standards, which accurately and completely reflected information relating to the financialcondition as at 30 June 2019, the operation results and cash flow from January to June 2019 of theCompany.

2. Accounting period

The accounting year of the Company is from 1 January each year to 31 December of the same yearin solar calendar.

3. Operating cycle

√Applicable □Not Applicable

The Company takes 12 months as an operating cycle, which is also the classification basis for theliquidity of its assets and liabilities.

4. Recording currency

Renminbi is the recording currency of the Company.

5. Accounting methods of business combinations under common control and not under

common control

√Applicable □Not Applicable

A business combination is a transaction or event that brings together two or more separate entitiesinto one reporting entity. Business combinations are classified into business combinations undercommon 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 thecombining entities are ultimately controlled by the same party or parties both before and after thecombination, and that control is not transitory. For business combination under common control, theparty that obtains the control over the other parties on the combination date is the acquirer, and otherparties involving in the business combination are the transferors. The combination date is the date onwhich 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 undercommon control is paid by ways of cash, transfer of non-cash assets or assumption of debts, theCompany will regard the share of carrying amounts of the net assets of the transferor in the ultimatecontroller's consolidated financial statements obtained as the initial investment cost of long-term equityinvestments as at the date of combination. For carrying value of net assets of the transferor is negative asat the date of combination, investment cost of long-term equity investment is calculated as zero. In casethe transferor is controlled by the ultimate controller by the business combination not under commoncontrol before combination, the initial investment cost of the long-term equity investment of the acquirerincludes relevant goodwill. The Company should adjust the capital reserve (capital premium or sharepremium) in accordance with the differences between initial investment cost of the long-term equityinvestment 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 theelimination, 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 aggregatenominal value of shares issued will be deemed as the share capital. The difference between the initialinvestment cost of long-term equity investments and aggregate nominal value of shares issued shall beadjusted 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 undistributedprofits shall be used to dilute such expenses in order.

Intermediary fees (such as audit, legal services and valuation consultancy) and other relevantmanagement fees incurred in the business combination by the acquirer are credited in profit or loss in theperiod when they occurred. Trading expenses in direct relation to the issuance of equity instrument asthe consideration for the combination is written down to the capital reserve (share premium), where thecapital 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 thecombination 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, all the transactions are accounted as one transaction that has acquiredthe control; in case of not a package transaction, in the financial statement of parent company the capitalreserve ( share premium) is adjusted by the difference between the initial investment cost and the sum ofthe carrying value of the original long-term equity investment and the book value of the new paymentconsideration for further acquisition of shares with the share of acquirer's owner's equity on the date ofcombination in case calculated on the proportion of shareholding on the date of combination as its initialinvestment cost; where the capital reserve is insufficient, the retained earnings will be used to offset suchexpenses.

In the consolidated financial statements, the long-term equity investment held by the combiningparty before the date of acquiring control of the combined parties, and the profit and loss, the othercomprehensive income and changes in the other owners' equity recognized during the period betweenthe later of the date of acquisition and the date when the combining and the combined parties are underthe common control of the same party and the date of combination, are written down to the retainedearnings 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 thecombining entities are not ultimately controlled by the same party or parties both before and after thecombination. For business combination not under common control, the party that obtains the control of

the other parties at the combination date is the acquirer; other parties involving in the businesscombination are the transferors. The combination date is the date on which the acquirer effectivelyobtains control of the transferors.

In business combination not under common control, the cost of combination shall be the sum of theassets paid, obligations incurred or assumed and the fair value of the equity securities issued by theacquirer 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 acquirerfor 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 combinationconsideration 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 onthe acquisition date. Should any new or further evidence arise within 12 months after the acquisitiondate and makes it necessary to adjust the contingent consideration on the acquisition date, the goodwillarising from the business combination shall be amended accordingly.The cost of combination and identifiable net assets obtained by the acquirer in a businesscombination are measured at fair value on the acquisition date. Where the cost of the combinationexceeds the acquirer's interest in the fair value of the transferor's identifiable net assets, the difference isrecognized as goodwill; where the cost of combination is lower than the acquirer's interest in the fairvalue of the transferor's identifiable net assets, the difference is initially recognized in profit or loss forthe current year after a review of computation for the identifiable assets, liabilities or fair value ofcontingent liabilities and combination cost, and where the combination cost is still lower than the fairvalue of the identifiable net assets of the transferor obtained during the course of combination, then thedifference is recorded in the profit and loss.

In business combination not under common control that is realized in phases through multipleexchange transactions, in the Company individual financial statements, the sum of the book value of theequity investment of the transferor held before the date of acquisition and the cost of new investment onthe 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 ofacquisition is re-measured at the fair value on the date of acquisition, and the difference between the fairvalue and book value is included in current investment income; where the equity of the transferor heldbefore the date of acquisition involves the other comprehensive income, such equity and relevant othercomprehensive income are transferred to current investment income on the date of acquisition, otherthan 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 dateand the fair value of the considerations paid for the acquisition of the new equity on the acquisition dateare regarded as the combination costs of the Company, comparing with acquirer's share of the fair valueon the acquisition date of the transferor's net identifiable assets on the proportion of the shareholding onthe acquisition date to confirm the goodwill that required to be recognized on the acquisition date or theamount that shall be included in the profit or loss.

6. Preparation method of consolidated financial statements

√Applicable □Not Applicable

(1) Scope of consolidated financial statements

The Company incorporated all of its subsidiaries (including the separate entities controlled by theCompany) into the scope of consolidation financial statements, including the enterprises under theCompany's control, divisible part in the investees and structured entities.

(2) To unify the accounting policies, balance sheets date and accounting periods of the Companyand subsidiaries

When preparing consolidated financial statements, adjustments are made if subsidiaries' accountingpolicies or accounting periods are different from that of the Company, in accordance with the Company'saccounting 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 theCompany and subsidiaries, which offset the internal transactions incurred between the Company andsubsidiaries and among subsidiaries. The owner's equity of the subsidiaries not attributable to the

Company shall be presented as 'minority equity' under the owner's equity item in the consolidatedbalance sheet.The long-term equity investment of the Company held by the subsidiaries, deemed as treasury stockof the corporate group as well as the reduction of owners' equity, shall be presented as 'Less: Treasurystock' 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 statementsfrom the beginning of the period in which the combination took place, as if the combination has takensince the ultimate controller began its control. When preparing the consolidated financial statements, forthe subsidiaries acquired from business combination not under common control, separate financialstatement will be adjusted on the basis of their fair values of the identifiable net assets on the date ofacquisition.

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. Inaccordance with the Company's rights and obligations under a joint arrangement, the Company classifiesjoint arrangements into joint operations and joint ventures.

Joint operations refer to a joint arrangement in which the Company is a party and is entitled torelevant assets and obligations of this arrangement. The Company recognizes the following items inrelation to its interest in a joint operation, and accounts the same in accordance with relevant accountingstandards for business enterprises:

(1) recognize the assets held solely by the Company, and recognize assets held jointly by theCompany in appropriation to the share of the Company; (2) recognize the obligations assumed solely bythe Company, and recognize obligations assumed jointly by the Company in appropriation to the shareof the Company; (3) recognize revenue from disposal of joint operations in appropriation to the share ofthe Company; (4) recognize revenue from disposal of joint operations in appropriation to the share of theCompany; (5) recognize fees solely occurred by the Company and recognize fees from joint operationsin 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 notconstitute a business, the same below) from joint operations, the Company shall only recognize the partof profit or lost from this transaction attributable to other parties of joint operations before these assetsare sold to a third party. In case of an impairment loss incurred on these assets which meets therequirements as set out in 'Accounting Standards for Business Enterprises No. 8 – Asset Impairment', theCompany shall full recognize the amount of this loss in relation to its investment in or sale of assets tojoint operations or recognize the loss according to the Company's share of commitment in relation to theits purchase of assets from joint operations.Joint ventures refer to a joint arrangement during which the Company only is entitled to net assetsof this arrangement. Investment in joint venture is accounted for using the equity method according tothe accounting policies referred to under '13 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 forpayment of the Company at any time.

Cash equivalents recognized in the cash flow statements refer to short-term, highly liquidinvestments held by the Company that are readily convertible to known amounts of cash and which aresubject to an insignificant risk on change in value.

9. Foreign currency businesses and translation of foreign currency statements

√Applicable □Not Applicable

(1) Foreign currency transactions

If foreign currency transactions occur, they are translated into the amount of functional currency byapplying the spot exchange rate at the transaction date.

Monetary items denominated in foreign currencies are translated into functional currencies at therates of exchange ruling at the balance sheet date. All foreign exchange difference are credited in theprofit or loss, except ①those arising from the funds denominated in foreign currency speciallyborrowed for the establishment of the qualifying assets are treated based on the principal ofcapitalization of borrowing costs; ②those arising from the other changes in the balance other thanamortized cost of available-for-sale monetary items denominated in foreign currency are recognized inthe other comprehensive income.

Non-monetary items in foreign currency measured at historical cost are translated using the spotexchange rate prevailing on the date when transaction occurred and its functional currency shall remainunchanged. Non-monetary items denominated in foreign currencies that are measured at fair value aretranslated using the foreign exchange rate at the date the fair value is determined; the exchangedifferences between the translated and original amounts of functional currencies are recognized in thestatement of profit or loss or other comprehensive income as changes in fair value (including changes inexchange rate).

(2) Translation of foreign currency financial statements

If the functional currencies used as the bookkeeping base currency by the subsidiaries, jointventures and associates under the control of the Company are different from that of the Company, theirfinancial statements denominated in foreign currencies shall be translated to perform accounting andprepare the consolidated financial statements.

The assets and liabilities of the balance sheet are translated using the spot exchange rate at thebalance sheet date; all items except for 'undistributed profits' of the owner's equity are translated at thespot exchange rate on the transaction date. The revenue and expenses in the income statement aretranslated using the approximate rate of the spot exchange rate on the transaction date. Differencesarising from the translation of foreign currency financial statements are presented as the 'othercomprehensive 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 thetransaction date. The impact of exchange rate changes on cash amount is reflected separately in the cashflow.When disposing overseas operations, converted difference in foreign currency statements related tothe overseas operation shall be transferred together or as the percentage of disposing the overseasoperation to profit or loss in the current period of disposal.

10. Financial instruments

√Applicable □Not Applicable

A financial instrument refers to any contract that gives rise to a financial asset of one entity and afinancial liability or equity instrument of another entity. A financial asset or financial liability isrecognized 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 flowcharacteristics of financial assets, the Company classifies financial assets into: (1) Financial assetsmeasured at amortized cost; (2) financial assets measured at fair value through other comprehensiveincome; (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 atfair value through profit and loss of the current period, related transaction costs are directly included inprofit and loss of the current period; for other types of financial assets, related transaction costs areincluded in their initial recognized amounts. For the accounts receivable or bills receivable arising fromthe sale of products or the provision of labor services that do not contain or consider the significantfinancing components, the Company shall take the consideration amount entitled to be received as theinitial recognized amount.a. Debt instrumentThe debt instruments held by the Company refer to the tools that are in conformity with thedefinition of financial liability from the perspective of the issuing party, which are measured in thefollowing three ways, respectively:

(a) Measured at amortized cost:

The Company's business model for managing such financial assets is: With the aim of obtainingcontractual cash flow, the contractual cash flow characteristics of such financial assets shall beconsistent with the basic lending arrangements, that is, the cash flow generated on a specific date is onlythe payment for the principal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordance with the effective interestmethod. Such financial assets mainly include cash and cash equivalents, bills receivable and accountsreceivable, other receivables, creditor's right investment and long-term receivables. The Company liststhe creditor's rights investments and long-term receivables matured within one year (including one year)from the balance sheet date as non-current assets matured within one year; the creditor's rights

investments matured within one year (including one year) when being obtained are listed as othercurrent assets.(b) Measured at fair value through other comprehensive income:

The Company's business mode for managing such financial assets is: With the aim of obtainingcontractual cash flow and selling the financial assets, the contractual cash flow characteristics of suchfinancial assets shall be consistent with the basic lending arrangements. Such financial assets aremeasured at fair value through other comprehensive income, but impairment gains and losses, exchangegains and losses, and interest income calculated by the effective interest method are included in profitand loss of the current period. Such financial assets are listed as other creditor's rights investments. Othercreditor's rights investments matured within one year (including one year) from the balance sheet dateare listed as non-current assets matured within one year; other creditor's rights investments maturedwithin one year (including one year) 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 fairvalue through other comprehensive income as financial assets held for trading measured at fair valuethrough profit or loss of the current period. At the time of initial recognition, in order to eliminate orsignificantly reduce accounting mismatch, the Company designated some financial assets as financialassets measured at fair value through profit or loss of the current period. Investments that are maturedmore than one year and are expected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.

b. Equity instruments

The Company lists equity instrument investments that have no control, joint control and significantinfluence on itself as financial assets held for trading measured at fair value through profit or loss of thecurrent period; investments that are expected to be held for more than one year from the balance sheetdate are listed as other non-current financial assets.

In addition, the Company designated some non-trading equity instrument investments as financialassets measured at fair value through other comprehensive income, which are listed as other equityinstrument investments. The relevant dividends and interest income of such financial assets are includedin profit and loss of the current period.

②Impairment

For financial assets measured at amortized cost and debt instrument investments measured at fairvalue through other comprehensive income, contract assets and financial guarantee contracts, theCompany recognizes the loss provision based on the expected credit losses.The Company considers reasonable and reliable information about past events, current conditionsand forecasts of future economic conditions, and takes the risk of default as a weight, and calculates theprobability-weighted amount of the present value of the difference between the cash flow receivable andthe 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 financialinstruments in different phases. If the credit risk has not increased significantly since the initialrecognition, the financial instruments are in the first phase. The Company measures the loss provisionaccording to the expected credit losses in the next 12 months; if credit risk has increased significantlybut credit impairment has not yet occurred since the initial recognition, the financial instruments are inthe second phase. The Company measures the loss provision according to the expected credit losses ofthe 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 tothe expected credit losses of the instruments during the entire duration.

For financial instruments with lower credit risk on the balance sheet date, the Company measuresthe loss provision according to the expected credit losses in the next 12 months, assuming that its creditrisk has not increased significantly since the initial recognition.

For financial instruments in the first phase and second phase and financial instruments withrelatively lower credit risk, the Company calculates interest income based on their book balance beforethe deduction of provisions and effective interest rate. For financial instruments in the third phase, theCompany calculates interest income based on their amortized cost after the impairment provision hasbeen deducted from the book balance and effective interest rate.

For bills receivable, accounts receivable and contractual assets, whether there exist significantfinancing components, the Company measures loss provision based on expected credit loss over theentire duration.

The Company classifies accounts receivable into groups on the basis of shared credit riskcharacteristics, and calculates the expected credit losses on groups, the bases of group determination areas follows:

For each group of bills receivable, the Company applies exposure at default and expected creditlosses rate over the entire duration to calculate the expected credit losses by considering the historicalcredit losses experience, the existing conditions and forecast of future economic conditions.For each group of accounts receivable, the Company makes the comparison of expected creditlosses rates of accounts receivable in overdue days and over the entire duration to calculate the expectedcredit losses by taking into account the historical credit losses experience, the existing conditions andforecast of future economic conditions.For each group of other accounts receivable, the Company applies exposure at default and expectedcredit losses rate within the next 12 months or over the entire duration to calculate the expected creditlosses by taking into account the historical credit losses experience, the existing conditions and forecastof future economic conditions.The Company recognizes the loss impairment provision or reversed in profit or loss of the currentperiod. For held debt instruments at fair value through other comprehensive income, the Companyrecognizes loss/gain on impairment in profit or loss of the current period, and adjusts othercomprehensive income at the same time.

③Derecognition

A financial asset is derecognized when any of the below criteria is met: a. the contractual rights toreceive the cash flow from the financial asset have been transferred; b. the financial asset has beentransferred and the Company transfers substantially all the risks and rewards of ownership of thefinancial asset to the transferee; c. the financial asset has been transferred and the Company has notretained control of the financial asset, although the Company neither transfers nor retains substantiallyall the risks and rewards of ownership of the financial asset.

On de-recognition of other equity instruments investment, the difference between the book balanceand the sum of the consideration received and any cumulative profit or loss of fair value that had beenrecognized in other comprehensive income is recognized in the retained earnings. On de-recognition ofother financial assets, the difference between the book balance and the sum of the consideration receivedand any cumulative profit or loss of fair value that had been recognized in other comprehensive incomeis recognized in the profit and loss of the current period.

(2)Financial liabilities

Financial liabilities are classified as financial liabilities measured at amortized cost and financial

liabilities at fair value through profit and 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 financialliabilities are recognized initially at fair value less transaction costs and subsequently measured using theeffective interest method. Financial liabilities with a maturity of less than one year (including one year)are listed as current liabilities: those with maturity of more than one year but are mature within one yearfrom the balance sheet date (including one year) are listed as non-current liabilities due within one year;the rest are presented as non-current liabilities.When all or partial current obligations of financial liabilities have been discharged, such financialliabilities or the part with obligations discharged are derecognized by the Company. The differencebetween the carrying amount of a financial liability de-recognized and the consideration paid isrecognized 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 quotedprice in the active market. The fair value of a financial instrument that is not traded in an active market isdetermined by using a valuation technique. During the valuation, the Company adopts an applicablevaluation technique under current conditions and there are enough available data and other informationto support. Those inputs should be consistent with the inputs a market participant would use whenpricing 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 useunobservable inputs.

(4) Significant accounting estimates and judgments

①Significant accounting estimates and key assumptions

Measurement of expected credit loss

The Company applies exposure at default and expected credit loss rate to calculate expected creditloss, and determines expected credit loss rate based on probability of default and loss given default. Forthe determination of expected credit loss rate, the Company applies data including internal historicalcredit losses experience, and adjusts historical data taking account current conditions andforward-looking information. Regarding forward-looking information, indicators used by the Companyinclude economic downturn risk, growth in expected unemployment rate, changes in external market

environment, technology environment and customer status. The Company monitors and reviewsassumptions related to the calculation of expected credit loss on a regular basis. No major changeoccurred in the above-mentioned estimate techniques and key assumptions in 2018.

② Critical judgments on application of accounting policies

a. Classification of financial assetsOn classification of financial assets, critical judgments considered by the Company include thebusiness mode, an analysis of contractual cash flow characteristics and others.From the dimension of financial asset portfolio, the Company determines the business mode offinancial asset management. Considerations cover assessments, reporting methods of financial assetperformance to key management personnel, risks impacting financial asset performance and relevantmanagement methods, as well as methods of relevant business management personnel receivingremuneration.

In assessing the consistency between contractual cash flow of financial assets and the basic lendingarrangements, the Company makes the following major judgments: Whether the time distribution oramount of the principal changes during the duration of the financial assets due to prepayment, etc.; andwhether the interest includes considerations for the currency time value, credit risk, as well as otherbasic borrowing risks, costs and profits. For example, whether the prepayment amount merely reflectsthe principal unpaid and interest incurred by the principal unpaid, as well as reasonable compensationpaid 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 overduedays 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, actual or expected businessperformance, 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 aremore than 90 days (i.e. default occurred), or that one or more of the following conditions are met: adebtor is under significant financial difficulty; other ongoing debt restructuring or high possibility ofbankruptcy.

11. Inventories

√Applicable □Not Applicable

(1)Classification of inventories

Inventories refer to the finished goods or commodities held for sale in daily activities, goods inprogress in the production process, consumed materials and supplies in the production process orproviding services of the Company, which mainly include raw materials, revolving materials, entrustedprocessed materials, wrap page, low-cost consumables, goods in progress, self-made semi-finishedgoods, finished goods (merchandise inventory) and engineering construction, etc.

(2)Measurement of inventories transferred out

At delivery, inventories are accounted using the weighted average method.

(3)Provision for inventory impairment

At balance sheet date, inventories are stated at the lower of cost or net realizable value.

The net realizable value of inventories (including finished products, merchandize and materials forsale) that can be sold directly is determined using the estimated saleable price of such inventorydeducted by the cost of sales and relevant taxation. The net realizable value of materials in inventory thatare held for production is determined using the estimated saleable price of the finished product deductedby the cost to completion, estimated cost of sales and relevant taxation. The net realizable value ofinventory held for performance of sales contract or labor service contract is determined based on thecontractual 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 using the normal saleable 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 thesame 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 quantityand low value items of inventories, cost and net realizable value of inventories may be determined ontypes of inventories.Provision for impairment of inventories is made and recognized as profit or loss when the cost ishigher than the net realizable value on the balance sheet date. If the factors that give rise to the provisionin prior years are not in effect in current year, provision would be reversed within the impaired cost, andrecognized in the profit or loss.

(4)Inventory system

The Company adopts perpetual inventory system.

(5)Amortization of low-value consumables and packaging

Low-value consumables and packages of the Company are amortized by one-time write-off.

12. Long-term equity investments

√Applicable □Not Applicable

Long-term equity investments in this section refer to equity investments held by the Company thatgive it control, joint control or significant influence over the investee. Long-term equity investmentswhere the Company does not exercise control, joint control or significant influence over the investee areaccounted for as available-for-sale financial assets.

(1)Recognition of initial cost of investment

①For long-term equity investment obtained from business consolidation under common control, theinitial cost is measured at the combining party's share of the carrying amount of the equity of thecombined party; for a long-term equity investment obtained from business consolidation not undercommon control, the initial cost is the consolidation cost at the date of acquisition;

②For the long-term equity investment acquired in a manner other than business combination: theinitial investment cost of the long-term equity investment acquired by payment in cash shall be the totalpurchase price; the initial investment cost of the long-term equity investment acquired by issuing equitysecurities shall be the fair value of the equity securities issued;For long-term equity investment acquiredby debt restructuring, the initial investment cost shall be recognized in accordance with the requirementsunder Accounting Standards for Enterprises No. 12 - Debt Restructuring. For long-term equityinvestment acquired by the exchange of non-monetary assets, the initial investment cost shall berecognized in accordance with relevant requirements under the Rules.

(2)Subsequent measurement and profit or loss recognition

①Cost method

Where the investor has a control over the investee, long-term equity investments are measuredusing cost method. For long-term equity investments using cost method, unless increasing or reducingthe investment, the carrying value is unchanged. The Company's share of the profit distributions or cashdividends declared by the investee are recognized as investment income.

②Equity method

Investor's long-term equity investments in associates and joint ventures are measured using equitymethod. Where part of the equity investments of an investor in its associates are held indirectly throughventure investment institutions, common fund, trust companies or other similar entities includinginvestment linked insurance funds, such part of equity investments indirectly held by the investor shallbe measured at fair value through profit or loss according to relevant requirements of AccountingStandards for Business Enterprises No.22—Recognition and measurement of Financial Instrumentsregardless whether the above entities have significant influence on such part of equity investments,while the remaining part shall be measured using equity method.Under the equity method, where the initial investment cost of a long-term equity investmentexceeds the Company's share of the fair value of the investee's identifiable net assets at the time ofacquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is lessthan the Company's share of the fair value of the investee's identifiable net assets at the time ofacquisition, the difference is recognized in profit or loss for the period, and the cost of the long-termequity investment is adjusted accordingly.For long-term equity investments accounted for using the equity method, the Company recognizesthe investment income and other comprehensive income according to its share of net profit or loss andother comprehensive income of the investee, and the carrying amount of the long-term equityinvestments shall be adjusted accordingly; the carrying amount of the investment is reduced by theCompany's share of the profit distribution or cash dividends declared by an investee; for changes inowner's equity of the investee other than those arising from its net profit or loss, other comprehensiveincome and profit distribution, the carrying amount of the long-term equity investment shall be adjustedand recognized to capital reserve. When recognizing attributable share of the net profit and losses of theinvestee, the net profit of the investee shall be recognized after adjustment on the ground of the fairvalue of all identifiable assets of the investee when it obtains the investment. If the accounting policiesand accounting periods adopted by the investee are different from those adopted by the Company, anadjustment shall be made to the financial statements of the investee in accordance with the accountingpolicies and accounting periods of the Company and recognize the investment incomes and othercomprehensive 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 formpart of the investor's net investment in the investee are reduced to zero. If the Company has to assumeadditional obligations, the estimated obligation assumed shall be provided for and charged to the profitor 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 ofunrecognized losses.

(3)Change of the accounting methods for long-term equity investments

①Change of measurement at fair value to accounting under equity method: where the equityinvestment held have no control, joint control or significant impact on the investee and that areaccounted according to the financial instrument recognition and measurement criteria can carry outcommon control or place significant impact due to addition of investment which resulted in the increaseof shareholding, the investee shall plus the fair value of the equity investment originally held determinedin accordance with the Standards for Recognition and Measurement of Financial Instruments and the fairvalue of the consideration payable for new investment as the initial investment cost accounted underequity method when changing the equity method.

②Change of measurement at fair value or accounting under equity method to cost method: theequity investment of the investee held by the investor with no control, joint control or significant impactand accounted according to the financial instrument recognition and measurement criteria, or thelong-term equity investment in associates or joint venture originally held that can control the investeedue to addition of investment, shall be accounted in accordance with the long-term equity investmentformed by combination of enterprises.

③Change of accounting under equity method to measurement at fair value: the long-term equityinvestment originally held with common control or significant impact on the investee that cannotconduct common control or significant impact on the investee due to the decrease of shareholding as aresult of factors such as partial disposal, shall be accounted in accordance with Standards forRecognition and Measurement of Financial Instruments, and the difference between the fair value on thedate when the common control or significant impact is lost and the book value is included in profit orloss in the relevant year.

④Change of cost method to equity method: where control on the investee change to significantimpact or common control with other investors due to factors such as disposal of investment, the

long-term equity investment cost that ceased to be recognized shall first be carried forward on theproportion of the investment disposed. Then comparing the cost of the remaining long-term equityinvestment with the attributable fair value of the identifiable net assets of the investee at the originalinvestment calculated on proportion of the remaining shareholding, where the former larger than thelater, it belongs to the goodwill as showed in deciding the investment price and will not adjust thecarrying amount of the long-term equity investment; where the former less than the later, the retainedearnings will be adjusted along with the adjustment of the long-term equity investment.

(4)Basis of conclusion for common control and significant influence over the investee

①Joint control over an investee refers to activities which have a significant influence on return ofan arrangement could be decided only by mutual consent of the investing parties sharing the control,which includes the sales and purchase of goods or services, management of financial assets, acquisitionand disposal of assets, research and development activities and financing activities, etc.

②Significant influence on the investee refers to significant influence over the investee exists whenholding more than 20% but less than 50% of the shares with voting rights or even if the holding is below20%, there is still significant influence if any of the following conditions satisfied:

1)There is representative in the board of directors or similar governing body of the investee;

2)Participating in investee's policy setting process;

3)Assign management to investee;

4)The investee relies on the technology or technical information of the investor;

5)Major transactions with the investee.

(5)Impairment test and provision of impairment

At the balance sheet date, the Company reviews whether there is impairment indicator for thelong-term equity investments. When there is impairment indicator, the recoverable amount is determinedthrough impairment test and impairment is provided based on the difference between the recoverableamount and the carrying value. Impairment loss is not reversed once provided.

The recoverable amount is the higher of net fair value of long-term equity investments on disposaland 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 received andthe carrying amount of the disposed investment is recognized in profit or loss. For long-term equity

investment accounted for using the equity method, the part recognized in other comprehensive income isaccounted on pro rata basis upon disposal in the same way as the relevant assets or liabilities aredisposed of directly by the investee.

13. Investment properties

Depreciation or amortization method

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 subsequentmeasurement.The buildings leased out of investment properties of the Company are depreciated over their usefullives using the straight-line method. The specific measurement policy is the same as fixed assets. Forland use rights leased out or held for resale after appreciation in value, they are amortized over theiruseful lives using the straight-line method. The specific measurement policy is the same as that ofintangible assets.At the balance sheet date, the Company reviews whether there is impairment indicator forinvestment properties. When there is impairment indicator, the recoverable amount is recognizedthrough an impairment test and impairment is provided based on the difference between the carryingvalue and the recoverable amount. Impairment is not reversed in subsequent periods.

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 administrative purposes, and have useful life more than one fiscal year, which are recognizedwhen the following conditions are met:

①economic benefits in relation to the fixed assets are very likely to flow into the enterprise;

②the cost of the fixed assets can be measured reliably.

(2). Depreciation method

√Applicable □Not Applicable

The fixed assets of the Company can be divided into: buildings and constructions, productionequipment, transportation equipment and office equipment, etc. The straight-line method over usefullives is used to measure depreciation. The useful lives and the expected net residual value of fixed assetsare determined according to the nature and usage of various fixed assets. At the end of each year, theuseful lives, expected net residual value and depreciation method of fixed assets are reviewed, andadjusted if there is variance with original policies; The Company has made provisions for all the fixedassets except for the fixed assets that have been fully depreciated and still in use.

TypeDepreciation lives (year)Net residual
Land ownership--
Houses and buildings8-40 years0%-5%
Machinery equipment4-20 years0%-5%
Vehicles5-10 years0%-5%
Office equipment and others3-10 years0%-5%

(3). Test method and provision for impairment of fixed assets

At the balance sheet date, the Company reviews whether there is impairment indicator for the fixedassets. When there is an impairment indicator, the recoverable amount is estimated and impairment isprovided based on the difference between the carrying value and the recoverable amount once theimpairment of an asset is recognized, it will not be reversed in the subsequent accounting period.

(4). Basis for recognition, measurement and depreciation method of fixed assets held under

finance lease

√Applicable □Not Applicable

Basis for recognition of fixed assets held under finance lease: leases that transfer all the risks andrewards related to the ownership of the relevant assets. The asset is recognized if one or more of thefollowing criteria is met: ①upon expiry of the lease term, the ownership of the leased asset istransferred to the lessee; ②the lessee has the option to purchase the leased asset at a price expected tobe sufficiently lower than the fair value of the leased asset when the option is exercised and at theinception of the lease, it is reasonably certain that the lessee will exercise the option; ③the lease termapproximates the useful life of the leased asset even if the ownership is not transferred; ④at theinception of the lease, the present value of the minimum lease payments is substantially equivalent to the

fair value of the leased asset; ⑤the leased assets are of such a specialized nature that only the lessee canuse them without major modification.

Measurement of fixed assets held under finance lease: fixed assets held under finance lease areinitially recognized at the lower of fair value of the leased assets at the inception of lease and the presentvalue of minimum lease payments.

Subsequent measurement of fixed assets held under finance lease is accounted for using thedepreciation and impairment policies of owned fixed assets.

15. Construction in progress

√Applicable □Not Applicable

(1)Types of construction in progress

Construction in progress for the Company is self-operated construction.

(2)Standard and date of transfer from construction in progress to fixed assets

The construction in progress of the Company is transferred to fixed assets when the project iscompleted and ready for its intended use, which shall satisfy one of the following conditions:

①The construction of the fixed assets (including installation) has been completed or substantiallycompleted;

②The fixed asset has been used for trial operation and it is evidenced that the asset can operateordinarily or produce steadily qualified products; or the result of trial operation proves that it can operatenormally;

③Further expenditure incurred for construction is very minimal or remote;

④The constructed fixed asset reaches or almost reaches the design or the requirements of contract,or complies with the design or the requirements of contract.

(3)Impairment test and provision of impairment of construction in progress

At the balance sheet date, the Company reviews the construction in progress to check whether thereis any sign of impairment and an impairment test is needed to recognize the recoverable amount whenthere are signs that construction in progress may impair. The impairment loss should be the lower of thecarrying value and recoverable amount and impairment loss cannot be reversed in the followingaccounting period if it has been provided.

The recoverable amount of construction in progress should base on the higher value between fairvalue of asset less disposal expense and present value of estimated cash flow in the future.

16. Borrowing costs

√Applicable □Not Applicable

(1)Recognition principles for borrowing cost capitalization

The Company's borrowing costs that are directly attributable to the acquisition or production of aqualifying asset are capitalized into the cost of relevant assets. Other borrowing costs are recognized asexpenses in the current profit and loss when incurred. Qualifying assets for capitalization include fixedassets, investment properties and inventories that necessarily take a substantial period of time foracquisition, construction or production to get ready for their intended use or sale.

(2)Computation of capitalized amount of borrowing costs

Capitalization period refers to the period from the commencement to the cessation of capitalizationof borrowing costs, excluding the periods in which capitalization of borrowing costs is suspended.

Capitalization interruption period: Capitalization of borrowing costs is suspended during periods inwhich the acquisition or construction of a qualifying asset is interrupted abnormally and the interruptionlasts for more than 3 months.

Computation of capitalized amount of borrowing costs: ①Specific borrowings will be recordedbased on the actual interest expense incurred in the period of special borrowings less the interest incomefrom unutilized borrowings placed at banks or investment gain from temporary investment; ②Normalborrowings utilized are calculated based on the weighted average of expenses of the aggregate assetexceeding the asset expenses of the portion of special borrowings multiplied by the capitalization ratioof the normal borrowings utilized. Capitalization ratio is calculated based on weighted average interestrate of normal borrowings; ③For borrowings with discount or premium, the discount or premium wasamortized over the accounting periods borrowings to adjust the interest in every period using theeffective interest rates.

17. Intangible assets

Intangible assets are the identifiable non-monetary assets which have no physical shape and arepossessed or controlled by the Company.

(1)Valuation method of intangible assets

Intangible assets are initially recognized at costs. The actual costs of purchased intangible assetsinclude the consideration and relevant expenses paid. For intangible asset contributed by investors, thevalue agreed in the investment contract or agreement is the actual cost of the intangible asset. But if thevalue agreed in the investment contract or agreement is not a fair value, the fair value of the intangibleasset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditureincurred in bringing the asset to its intended use.Subsequent measurement of intangible assets of the Company: ①Intangible assets with finiteuseful lives are amortized on a straight-line basis; at the end of each year, the useful lives andamortization policy are reviewed, and adjusted if there is any variance with original policies; ②Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at eachyear end date. If there is objective evidence that the useful life of an intangible asset is finite, theintangible asset is amortized using the straight-line method according to the estimated useful life.

(2)Criterion of determining indefinite useful life

The useful life of an intangible asset is indefinite if the period in which the future economicbenefits generated by the intangible asset could not be determined, or the useful life could not beascertained.

Criterion of determining intangible assets with indefinite useful lives: ①For intangible assetsderived from contractual rights or other legal rights and there are no explicit years of use stipulated inthe contract or laws and regulations; ②the period in which generating benefits for the Company stillcould not be estimated after considering the industrial practice or relevant expert opinion.

At the end of each year, the useful lives of the intangible assets with indefinite useful lives arereviewed. The assessment is performed by the departments that use the intangible assets, using thedown-to-top approach, to determine if there are changes to the determining basis of indefinite usefullives.

(3)Methods for impairment test and provision for impairment of intangible assets

As at the balance sheet date, the Company reviews the intangible assets to check whether there is anindication of impairment and an impairment test is needed to recognize the recoverable amount whenthere are signs that intangible assets may impair. The impairment provision should be the lower of therecoverable amount and carrying value and provision for impairment loss cannot be reversed in thefollowing accounting periods once it has been provided.

The recoverable amount of intangible assets should be based on the higher value between the net offair value of asset less disposal expense and present value of estimated cash flow of assets in the future.

(4)Basis for research and development stage for internal research and development project andbasis for capitalization of expenditure incurred in development stage

As for an internal research and development project, expenditure incurred in the research stage isrecognized in profit or loss in the period as incurred. Expenses incurred in the development stage arerecognized as intangible assets if all of the following conditions are met: ①the technical feasibility ofcompleting the intangible asset so that it will be available for use or for sale; ②the intention to completethe intangible asset for use or for sale; ③how the intangible asset will generate economic benefits,including there is evidence that the products produced by the intangible asset has a market or theintangible asset itself has a market; if the intangible asset is for internal use, there is evidence that thereexists usage for the intangible asset; ④the availability of adequate technical, financial and otherresources to complete the development and the ability to use or sell the intangible asset; ⑤theexpenditures attributable to the development of the intangible asset could be reliably measured.

Basis for distinguishing research stage and development stage of an internal research anddevelopment project: research stage refers to the activities carried out for the planned investigation andsearch for obtaining new technology and knowledge, which has the characteristics of planning andexploration; before commercial production or other uses, the application of achievements and otherknowledge obtained from the research stage in a plan or design to produce new or substantiallyimproved materials, equipment and products is regarded as development stage, which has thecharacteristics of pinpointing and is very likely to form results. All the expenditures on research anddevelopment which cannot be distinguished between research stage and development stage arerecognized in the profit or loss when incurred.

18. 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 isany indication that an asset may be impaired at the balance date. If the result of the impairment testindicates that the recoverable amount of the asset is less than its carrying amount, a provision for

impairment will be made for the difference will be recorded in impairment loss. The recoverable amountis the higher of the net of the asset's fair value less disposal costs and the present value of the future cashflow expected to be derived from the asset. Provision for asset impairment is determined and recognizedon the individual asset basis. If it is not possible to estimate the recoverable amount of an individualasset, the recoverable amount of a group of assets to which the asset belongs is determined. A group ofassets is the smallest group of assets that can generate independent cash inflows.

Goodwill is tested for impairment at least at each year end.In terms of impairment test of the goodwill, the carrying amount of the goodwill, arising frombusiness combination, shall be allocated to the related asset groups on reasonable basis since theacquisition date, or to the related asset group portfolios if it is difficult to be allocated to the related assetgroups. When the carrying amount of the goodwill is allocated to the related asset groups or asset groupportfolios, it shall be allocated in the proportion of the fair value of each asset group or asset groupportfolio against the total fair value of related asset groups or asset group portfolios. If it is difficult tomeasure the fair value reliably, it shall be allocated in the proportion of the carrying amount of eachasset group or asset group portfolio against the total carrying amount of related asset groups or assetgroup portfolios.

When impairment test is made to the related asset groups or asset group portfolios includinggoodwill, if there is an indication that the related asset groups or asset group portfolios are prone toimpair, the Company shall firstly test for impairment for the asset groups or asset group portfoliosexcluding goodwill and calculate the recoverable amount and recognize the impairment loss accordinglyby comparing with its carrying amount. The Company shall then test for impairment for the asset groupsor asset group portfolios including goodwill and compare the carrying amount (including the carryingamount of allocated goodwill) with its recoverable amount of related asset groups or asset groupportfolios. Provision for impairment loss shall be recognized when the recoverable amount of the relatedasset groups or asset group portfolios is lower than its carrying amount.Once the above impairment loss of assets is recognized, it shall not be reversed in any subsequentaccounting period.

19. Long-term prepaid expense

√Applicable □Not Applicable

Long-term prepaid expenses are expenditures which have incurred but the benefit period is morethan one year (excluding one year). They are amortized evenly over the benefit period of each item ofexpenses. If the long-term prepayments are no longer beneficial to the subsequent accounting periods,the unamortized balance is then fully transferred to profit or loss for the period.

20. Staff's remuneration

Payables for staff's remuneration are all forms of compensation and other relevant expenditure givenby the Company in exchange for services rendered by employees, including short-term Payables forstaff's remuneration, post-employment benefits, termination benefits and other long-term benefits.

Short-term Payables for staff's remuneration include short-term salaries, bonus, allowance, subsidies,staff's welfare, housing provident fund, union funds and employee education funds, medical insurancefees, injury insurance fees, maternity insurance fees, short-term paid absence, short-term profit-sharingplans, etc. During the accounting period when employees render services, short-term benefits payablethat actually incurred shall be recognized as liabilities and credited into profit and loss or relevant assetscost on an accrual basis for the benefit objects.

Post-employment benefits mainly include the basic pension insurance, supplementary pension, etc.,In accordance with the risks and obligations undertaken by the Company, the post-employment benefitsare classified as defined contribution plans and defined benefit pension plans. Defined contribution plans:

the Company shall recognize the sinking fund paid to individual entity on balance sheet date as aliability in exchange of services from the employee in accounting period, and credited into profits orlosses or related assets costs in accordance with the benefit objects. Defined benefit plans: the cost ofproviding benefits is determined using the projected unit credit method, with actuarial valuations beingcarried out by independent actuary at the interim and the annual balance sheet date. Staffs' benefit costsincurred by the defined benefit plan of the Group are categorized as follows: (1) service cost, includecurrent period service cost, past-service cost and settlement profit or loss. Current period service costmeans the increase of the present value of defined benefit obligation resulted from the current periodservice offered by employee. Past-service cost means the increase or decrease of the present value ofdefined benefit obligation resulted from the revision of the defined benefit plans related to the priorperiod service offered by employee; (2) interest costs of defined benefit plans; (3) changes related to the

remeasurement of defined benefit plans liabilities. Unless other accounting standards require or permit tocharge the Payables for staff's remuneration into assets cost, the Company charges (1) and (2) above intoprofit or loss; and recognized (3) above as other comprehensive income without transferring to profit orloss in subsequent accounting periods.

Termination benefits: the indemnity proposal provided by the Company for employees for thepurpose of terminating labor relation with the employees before the expiry of the labor contract orencouraging employees to accept downsizing voluntarily, when the following conditions are met,recognize and at the same time credited into profit or loss the accrued liabilities arising from theindemnity as a result of terminating labor relation with the employees: the Company has made a formalplan for termination of employment relationship or has made an offer for voluntary redundancy whichwill be implemented immediately; and the Company could not unilaterally withdraw from thetermination plan or the redundancy offer. Early retirement benefits will adopt same principles as thetermination benefit. The Company will credit the salaries and social benefits intend to pay for these earlyretirees during the periods from the date of early retirement to the normal retirement date to profit or losswhen recognition conditions for accrued liabilities are met.

21. Estimated liability

√Applicable □Not Applicable

(1)Criterion for determining of estimated liability

If an obligation in relation to contingencies such as external guarantees, discounting ofcommercial acceptance bills, pending litigation or arbitration and product quality assurance is thepresent obligation of the Company and the performance of such obligation is likely to lead to anoutflow of economic interests and its amount can be reliably measured, such obligation shall berecognized as an estimated liability.

(2)Measurement of estimated liability

The best estimate of the expenditure from the performance of the current obligation is initiallyrecorded as accrued liability. When the necessary expenditures fall within a range and theprobability of each result in the range are identical, the best estimate is the median of the range; ifthere are severable items involved, every possible result and relevant probability are considered forthe best estimation.

At the balance sheet date, the carrying value of estimated liabilities is reviewed. If there isobjective evidence that the carrying value could not reflect the current best estimate, the carryingvalue is adjusted to the best estimated value.

22. Share-based payments

√Applicable □Not Applicable

For equity-settled share-based payment transaction in return for services from employees, itshall be measured at the fair value of equity instruments granted to the employees. For the paymentof such fair value that may only be exercised if services are fulfilled during the vesting period or thespecified performance is achieved, the fair value shall, based on the best estimate of the number ofexercisable instruments during the vesting period, be recognized in relevant costs or expenses instraight-line method with the increase in the capital reserve accordingly.

The cash-settled share-based payment shall be measured at the fair value of liability assumedby the Company, which is calculated and determined based on the shares or other equityinstruments. For the cash-settled share-based payment that may be exercised immediately after thegrant, the fair value of the liability assumed by the Company shall, on the date of the grant, berecognized in relevant costs or expenses and the liabilities shall be increased accordingly. Forcash-settled share-based payment that may be exercised if services are fulfilled during the vestingperiod or the specified performance is achieved, on each balance sheet date within the vestingperiod, the services acquired in the current period shall, based on the best estimate of exercise, berecognized 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 fairvalue of the liability is re-measured with its change consolidated in profit/loss.

When there is changes to the Company's share-based payment plans, if the modificationincreases the fair value of the equity instruments granted, corresponding recognition of serviceincrease in accordance with the increase in the fair value of the equity instruments; if themodification increases the number of equity instruments granted, the increase in fair value of theequity instruments is recognized as a corresponding increase in service achieved. Increase in the fairvalue of equity instruments refer to the difference between the fair values of the equity instrumenton the modified date before or after the modification. If the Company modifies the exercisable

conditions in such manner conductive to the employees, including the shortening of the vestingperiod, change or cancellation of the performance conditions (rather than market conditions), theCompany shall consider the modified exercisable conditions upon the disposal of exercisableconditions. If the modification reduces the total fair value of shares paid or the Company uses othermethods not conductive to employees to modify the terms and conditions of share-based paymentplans, it will continue to be accounted for the services obtained in the accounting treatment, as if thechange had not occurred, unless the Company cancelled some or all of the equity instrumentsgranted.During the vesting period, if the Company cancel equity instruments granted will be treated asaccelerating the exercise of rights and the remaining vesting period should be recognizedimmediately in the profit or loss, while at the same time recognize the capital reserve. Employees orother parties can choose to meet non-vesting conditions, but for those that are not met in the vestingperiod, the Company will treat it as cancellation of equity instruments granted.

23. Revenue

√Applicable□ Not Applicable

Revenue is the total inflow of economic benefits formed by the Company and its subsidiaries duringday-to-day operations which might lead to increase of shareholders' equity and be irrelevant to capitalinvested by shareholders.The Company and its subsidiaries performed performance obligations stated in the contract, i.e,recognized revenue when the client obtains the control right of relevant goods or services.Where the contract includes two or several performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various single performanceobligation in accordance with the relevant proportion of separate selling price of goods or servicespromised by various single performance obligation, and measure revenue in accordance with transactionprice allocated to various single performance obligation.

Transaction price is the amount of consideration that the Company and its subsidiaries are expectedto be entitled to collect due to transfer of goods and services transferred to the client, excluding theamount collected for any third party. The transaction price recognized by the Company and itssubsidiaries 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 theclient 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 performperformance obligations during a certain time horizon, otherwise, it belongs to fulfilling performanceobligations at a certain time point:

① The client obtains and consumes economic benefits brought by performance of the Companyand its subsidiaries when the Company and its subsidiaries perform the contract;

② The client is able to control goods under construction during the process of performance of the

Company and its subsidiaries;

③ Goods produced by the Company and its subsidiaries during the process of performance have

the non-replaceable usages, and the Company and its subsidiaries are entitled to collect theamount for the cumulative completed and performed portion till now during the entirecontractual period.For the performance obligations performed during a certain time horizon, the Company and itssubsidiaries 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 beenincurred by the Company and its subsidiaries are estimated to be compensated, revenue shall berecognized in accordance with the amount of costs that has been incurred until the schedule ofperformance can be reasonably confirmed.For performance obligations performed during a certain time point, the Company and itssubsidiaries recognize revenue at the time point when the client obtains the control right of relevantgoods or services. When judging whether the client has obtained control right over goods or services, theCompany and its subsidiaries will consider the following signs:

①The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;

②The Company and its subsidiaries have transferred the material objects of such goods to theclient;

③The Company and its subsidiaries have transferred statutory ownership right of the goods ormajor risks and remuneration of the ownership right to the client;

④ The client has accepted such goods or service.

The right that the Company and its subsidiaries are entitled to collect the consideration for havingtransferred 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 ofexpected credit losses. The right owned by and unconditionally collected from the client by theCompany 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 theclient 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 obtainrevenue are described as follows:

(1) Sale of goods

Generally, contracts for sale of goods between the Company and its clients only includeperformance obligation of transferring the whole machine of home appliance. Generally, on the basis oftaking into account the following factors comprehensively, the Company recognizes the revenue at thetime point of transfer of control right of goods: the right of instant collection for obtaining goods,transfer of major risks and remuneration on ownership right of goods, transfer of statutory ownershipright 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 performanceobligations of construction and installation of commercial air-conditioner and smart home, because theclient is able to control goods under construction during the Company's performance process, theCompany takes them as performance obligations performed during a certain time horizon, andrecognizes revenue in accordance with the schedule of performance, and it is an exemption when theschedule of performance can't be reasonably confirmed. The Company confirms the schedule ofperformance of services provided in accordance with the investment approach. When the schedule ofperformance can't be reasonably confirmed, where the costs of the Company that have been incurred can

be compensated, the revenue will be recognized in accordance with the amount of costs that has beenincurred until the schedule of performance can be reasonably confirmed.

(3) Warranty obligations

According to contractual rules and regulations of laws, the Company provides quality assurance forgoods sold and project constructed. For assurance class of quality assurance in order to ensure the clientthat goods sold comply with existing standards, the Company conducts accounting treatment inaccordance with estimated liabilities. For service class of quality assurance in order to ensure the clientto provide a separate service other than that the goods sold comply with existing standards, the Companytakes it as a separate performance obligation, and allocates partial transaction price to service class ofquality assurance in accordance with the relevant proportion of separate selling price of goods andservices class of quality assurance, and recognizes revenue when the client obtains control right overservices. When assessing whether quality assurance provides a separate service other than ensuring theclient that the goods sold comply with existing standards, the company shall consider factors such aswhether such quality assurance is statutory requirements or industrial practices, term of qualityassurance and the nature of the company's promise for performing tasks.

24. Government grant

√Applicable□ Not Applicable

(1) Types of government grants

Government grants refer to the monetary assets or non-monetary assets obtained by the Companyfrom the government for free, not including the capital invested by the government as an owner. Thegovernment grants are mainly divided into asset-related government grants and revenue-relatedgovernment grants.

(2) Accounting treatment of government grants

Asset-related government grants shall be recognized as deferred income in current profit or loss onan even basis over the useful life of the asset; government grants measured at nominal amount shall berecorded directly in current profit or loss. Revenue-related government grants shall be treated as follows:

①those used to compensate relevant expenses or losses to be incurred by the enterprise in subsequentperiods are recognized as deferred income and recorded in current profit or loss when such expenses are

recognized; ②those used to compensate relevant expenses or losses that have been incurred by theenterprise are recorded directly in current profit or loss.

(3) Basis for determination of asset-related government grant and revenue-related government grantIf the government grant received by the Company is used for construction or other project that formsa 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 asrevenue-related government grant.Government grant received without clear objective shall be classified as asset-related governmentgrant or revenue-related government grant by:

①Government grant subject to a certain project shall be separated according to the proportion ofexpenditure budget and capitalization budget, and the proportion shall be reviewed and modified ifnecessary on the balance sheet date;

②Government grant shall be categorized as revenue-related if its usage is just subject to generalstatement and no specific project in relevant government document.

(4) Amortization method and determination of amortization period of deferred revenue related togovernment grants

Asset-related government grant received by the Company is recognized as deferred revenue and isevenly amortized to the profit or loss in the current period over the estimated useful life of the relevantasset starting from the date the asset is available for use.

(5) Recognition of government grants

Government grant measured at the amounts receivable is recognized at the end of period when thereis clear evidence that the conditions set out in the financial subsidy policies and regulation are fulfilledand the receipt of such financial subsidy is assured.

Other government grants other than those measured at the accounts receivable is recognized uponactual receipt of such subsidies.

25. 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 aliability (items not recognized as assets and liabilities but their tax base is ascertained by the current taxlaws and regulation, the tax base is the difference), deferred income tax asset or deferred incometax-liability is calculated using the applicable tax rate prevailing at the expected time of recovering therelevant asset or discharging the relevant liability.

(2) Deferred income tax asset is recognized to the extent that there is enough taxable income for thededuction of the deductible temporary difference. At the balance sheet date, if there is sufficientevidence that there would be enough taxable benefit for the deduction of the deductible temporarydifference, the deferred income tax asset not recognizedin previous accounting period is recognized. Ifthere is no sufficient evidence that there would be enough future taxable income for the deduction of thedeferred income tax asset, the carrying value of the deferred income tax asset is reduced.

(3) Deferred income tax liability is recognized for taxable temporary difference arising frominvestments in subsidiaries and associated companies, unless the Company could control the time ofreversal of the temporary differences and the temporary differences would not be probably reversed inthe foreseeable future. For deductible temporary differences arising from investments in subsidiaries andassociated companies, deferred income tax asset is recognized if the temporary difference will be veryprobably reversed in foreseeable future and there will be sufficient future taxable profit to deduct thedeductible temporary difference.

(4) No deferred income tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill. No deferred income tax asset or deferred income tax liability is recognized forthe temporary differences resulting from the initial recognition of assets or liabilities due to a transactionother than a business combination, which affects neither accounting profit nor taxable profit (ordeductible loss). At the balance sheet date, deferred income tax assets and deferred income tax liabilitiesare measured at the tax rates that are estimated to apply to the period when the asset is realized or theliability is settled.

26. Lease

(1) Accounting method for operating lease

√Applicable □ Not Applicable

On the commencement date of the lease term, the lessee shall recognize the right-of-use assets andleased liabilities for the lease, except for short-term leases and low value assets leases which are treatedwith practical expedient.

①Use-of-rights assets shall be initially measured at the costs. The costs include:

(I) initial amount of the lease liability;

(II) for lease payment on or before the date of commencement of the lease period, where there waslease incentive, such incentives shall be deducted;

(III) initial direct costs incurred by the lessee;

(IV) costs expected to be incurred by the lessee 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.

②The lease liability is initially measured at the present value of the lease payments that are not paidat the commencement date.

After the commencement date of the lease term, the lessee shall adopt the cost model to conductsubsequent calculation on right-of-use assets, and calculate interest expenses in each period during thelease term based on a constant periodic rate of interest, and the assets shall be accounted in profit or lossin the current period.

(2) Accounting method for finance lease

√Applicable □ Not Applicable

①When the Company is a lessee, the leased asset is recorded at the amounts equal to the lower ofthe fair value of the leased asset and the present value of the minimum lease payments on thecommencement date of the lease and the long-term payables is recorded at the amounts of the minimumlease payments. The difference between the recorded amount of the leased asset and the minimum leasepayments is accounted for as unrecognized finance expenses.

The unrecognized finance charge is amortized using the effective interest method over the period ofthe lease and accounted in finance expenses. Initial direct costs incurred by the Company are credited invalue of leased assets.

②When the Company is a lessor, the difference between sum of the lease receivables andunguaranteed residual value and its present value is accounted for as unrealized finance income on thecommencement date of the lease and is recognized as rental income over the period of receiving rental.Initial direct costs attributable to lease transaction incurred by the Company shall be accounted in theinitial measurement of finance lease receivables and reduced the amount of revenue recognized duringperiod of the lease.

27. 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 toa special purpose entity which issues securities to investors. The Company serves as the asset servicesupplier, providing services including asset maintenance and its daily management, formulation of theannual asset disposal plan, formulation and implementation of the asset disposal plan, signing relevantasset disposal agreements and periodic preparation of asset service report.

The Company evaluates the extent to which it transfers the risks and rewards of ownership of theassets to the other entities and determines whether it retains control while applying the accounting policyin respect of asset securitization.

①The financial asset is derecognized when the Company transfers substantially all the risks andrewards of ownership of the financial asset;

②The financial asset is continued to recognize when the Company retains substantially all the risksand rewards of ownership of the financial asset;

③When the Company neither transfers nor retains substantially all the risks and rewards ofownership of the financial asset, the Company evaluates whether it retains control over the financialasset. If the Company does not retain control, it derecognizes the financial asset and recognizesseparately as assets or liabilities any rights and obligations created or retained in the transfer. If theCompany retains control, it continues to recognize the financial asset to the extent of its continuinginvolvement in the financial asset.

(2) Hedge accounting

Hedge refers to risk management activities that enterprises designate financial instruments as hedgeinstruments in order to manage risk exposure caused by specific risks such as foreign exchange risk,interest rate risk and credit risk, allow to expect changes in fair value or cash flow of hedge instrumentsto offset all or partial changes in fair value or cash flow of hedged items.Hedged items refer to projects which make enterprises face risks of changes in fair value or cashflow and are designated as hedge objects and can be reliably measured.A hedging instrument is a financial instrument designated by an enterprise for the purpose ofhedging, whose fair value or cash flow changes are expected to offset the change in the fair value or cashflow of the hedged items.The company continuously conducts assessment over whether hedge relationship complies withrequirements of hedge effectiveness on the starting date of hedge and follow-on period. Hedgeeffectiveness refers to the extent that changes in fair value or cash flow of hedge instruments can offsetthat of hedged items caused by the risks of being hedged. The portion that the changes in fair value orcash flow of hedge instruments is greater or less than that of hedged items is the ineffective portion ofhedge.

(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, whileapplying accounting policy. Such judgments, estimates and assumptions were based on themanagement's historical experience and made after considered other various factors. These judgments,estimates and assumptions will influence the amount of revenues, expenses, assets and liabilitiespresented 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 thecurrent estimates of the management, and thus cause a material adjustment to the carrying amounts ofassets and liabilities affected in the future. The judgments, estimates and assumptions mentioned aboveshall be reviewed on a going concern basis. If the revisions to accounting estimates only affected thecurrent period, relevant adjustment because shall be recognized in the current period; if the revisionaffects both the current and future period, the effect shall be recognized in the current and future period.

On the balance sheet date, the significant fields involving judgments, estimates and assumptionsabout financial report items are listed as follows:

①Estimated liabilities

Provision for product quality guarantee, estimated onerous contracts, and other estimates shall berecognized in accordance with the terms of contract, current knowledge and historical experience. If thecontingent event has formed a practical obligation which probably results in outflow of economicbenefits from the Company, an estimated liability shall be recognized on the basis of the best estimate ofthe expenditures to settle relevant practical obligation. Recognition and measurement of the estimatedliability significantly rely on the management's judgments. In the process of judgment, the Companytakes into consideration the assessment of relevant risks, uncertainties, time value of money and otherfactors related to the contingent events. Among them, the Company will undertake estimated liabilitieswith respect to the after-sales services provided for the return, maintenance and installation of goods.When estimating liabilities, the Company has considered the maintenance information in recent years,but the previous maintenance experiences may fail to reflect the future circumstances. Any increase ordecrease in this provision is likely to affect the profits and losses of the next year.

②Provision of expected credit losses

The company calculates the expected credit losses in accordance with breach risk exposure andexpected credit loss rate, and confirms credit loss rate on the basis of breach possibilities and breach lossrate. When confirming expected credit loss rate, the company uses data such as internal historical creditloss experiences, and conducts adjustments over historical data in combination with current status andforward-looking information. When considering forward-looking information, indexes used by thecompany include risks such as economic downturn, growth of expected unemployment rate, externalmarket environment, technological environment and changes in client conditions. The companyregularly monitors and reviews relevant assumptions relating to calculation of expected credit losses.The aforesaid techniques and key assumptions have not changed substantially in 2018.

③Provision for decline in value of inventories

Inventories are measured by lower of cost and net realizable value according to the accountingpolicies of inventories; for obsolete and unsalable inventories or whose costs are higher than the netrealizable value, and the provision for decline in value of inventories shall be incurred. The carryingvalue of inventory shall be written down to the net realizable value on the basis of the evaluation of thesalability of inventories and the net realizable value. Authenticating inventory impairment requires themanagement's obtaining of solid evidence, and their judgments and estimations made after consideringthe purpose of holding inventories and the effect of events after the balanced sheet date and etc. Thedifference between the actual outcome and the previously estimated outcome will influence the carryingvalue of inventories and the provision or reversal of provision for decline in value of inventories duringthe period accounting estimates are changed.

④Fair value of financial instruments

For financial instruments where there is no active market, the Company will determine the fair valuethrough 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 andcorrelation, and select the appropriate discount rate. Such related assumptions are uncertain, and theirchanges may affect the fair value of financial instruments.

⑤Impairment of investment in other equity instruments

The company largely relies on judgments and assumptions of the management when determiningwhether investments of other equity instruments are impaired to determine whether it is needed toconfirm impairment. During the process of conducting judgments or making assumptions, the companyshall assess the extent and duration period that the fair value of such investments is below the cost, aswell as financial conditions and short-term business prospects of the invested objects, including industryconditions, technological reform, credit rating, breach rate and risks of counterparties.

⑥Provision of long-term assets impairment

On the balance sheet date, the Company shall judge whether there is any possible indication ofimpairment against non-current assets other than financial assets. The intangible assets with indefiniteuseful life must be tested for impairment on an annual basis as well as when there is any indication ofimpairment. 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 thecarrying value of an asset or asset group is higher than the recoverable value, which is the higher of thenet of fair value deducted disposal expenses and the present value of expected future cash flow. The netof fair value deducted by disposal expenditure is determined with reference to the price in the saleagreement regarding analogous asset, and observable market price less the increase of cost that directlyattributable to the disposal of assets. Significant judgments regarding the production amount, sales price,relevant operating costs of the assets (or assets group) and the discount rate used to calculate the presentvalue shall be made when determining the present value of future cash flow. Recoverable amount shallbe estimated by using all accessible relevant information, including production amount, sales price, andrelevant operating costs predictions made based on reasonable and supportive assumptions. TheCompany shall test for goodwill impairment at least every year. This requires the Company to estimatethe present value of future cash flow for such assets groups or asset group portfolios allocated withgoodwill. When estimating the present value of future cash flow, the Company shall not only estimatethe future cash flow generated by such asset groups or asset group portfolios, and select the appropriatediscount rate to determine the present value of such future cash flow.

⑦Depreciation and amortization

Investment properties, fixed assets and intangible assets are depreciated and amortized by astraight-line approach over their estimated useful life by taking into consideration the residual value.Useful life shall be periodically reviewed to determine the depreciation and amortization expenses foreach reporting period and be determined on the basis of historical experience regarding analogous assetsand the expected technological innovation. Significant changes to previous accounting estimates willresult in adjustments against depreciation and amortization expenses in the future periods.

⑧Deferred income tax assets

Deferred income tax asset is recognized for all the uncompensated tax losses to the extent that thereis sufficient taxable income for the deduction of loss. In order to determine the amount of deferredincome tax assets, the management of the Company needs to predict the timing and the amount oftaxable profits in the future by taking into account a large amount of judgment, as well as the strategy oftax planning.

⑨Income tax

There are certain transactions the tax treatment and calculations undertaken during the ordinarycourse of business for which the ultimate tax determination is uncertain. Whether some items could bepresented before taxation shall be approved by relevant tax authorities. Where the final tax outcome ofthese matters is different from the initial estimated amount, such differences will impact the current anddeferred tax in the period of confirmation.⑩Provisions for sales rebatesThe Company and its subsidiaries adopt the policy of sales rebates for all consumers. According tothe 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 estimateand accrue rebate on a regular basis with reference to the completion of agreed assessment indexes.Rebate accrual involve the judgment and estimates of the management. In case of any significantchanges in the previous estimates, the difference above will have an impact on the rebate during theperiod when significant changes occur.

28. Significant changes on accounting policies and accounting estimates

(1). Significant changes on accounting policies

√Applicable □ Not Applicable

Ministry of Finance promulgated Accounting Standard for Business Enterprises No. 21 —Leases inDecember 2018, and promulgated the Notice of the Ministry of Finance on Revising and Issuing theFormat of Financial Statements of General Enterprises for 2019 (《财政部关于修订印发2019年度一般企业财务报表格式的通知》) (Cai Kuai (2019) No.6) in May 2019. The Company and its subsidiarieshave started to implement the above amendments to the Accounting Standards for Business Enterprisesand the Notice, and adjusted the relevant contents of accounting policies and financial statementsaccordingly since 1 January 2019.

The Company and its subsidiaries prepared the 2019 financial statements in accordance with thefinancial statements format specified in Cai Kuai (2019) No. 6, and changed the presentation of relevantfinancial statements using the retrospective adjustment method.

The impact of the related presentation adjustment on the consolidated balance sheet at the beginningof the period is as follows:

ItemsBook value on 31 December 2018 (Before adjustment)Presentation impact of financial statementItemsBook value on 1 January 2019(After adjustmen)
Bills receivable and accounts receivable24,652,130,810.52-24,652,130,810.52Not Applicable-
Not Applicable14,220,937,323.02Bills receivable14,220,937,323.02
Not Applicable10,431,193,487.50Accounts receivable10,431,193,487.50
Bills payable and accounts payable47,385,218,141.38-47,385,218,141.38Not Applicable-
Not Applicable19,626,099,061.60Bills payable19,626,099,061.60
Not Applicable27,759,119,079.78Accounts payable27,759,119,079.78

The impact of the related presentation adjustment on the parent company's opening balance sheet isas follows:

ItemsBook value on 31 December 2018 (Before adjustment)Presentation impact of financial statementItemsBook value on 1 January 2019 (After adjustment)
Bills receivable and accounts receivable222,622,017.43-222,622,017.43Not Applicable-
Not Applicable222,622,017.43Accounts receivable222,622,017.43
Bills payable and accounts payable334,747,358.40-334,747,358.40Not Applicable-
Not Applicable334,747,358.40Accounts payable334,747,358.40

(2). Significant changes on accounting estimates

□Applicable √Not Applicable

(3). Adjustment to relevant items in the financial statements at the beginning of the year inwhich the new Financial Instrument Standard, New Revenue Standards and New Standards onLeases are initially implemented

□Applicable √Not Applicable

(4). Explanation on retroactive adjustments to comparative data in the previous periodsupon initial adoption of New Financial Instrument Standard and New Lease Standard

□Applicable √Not Applicable

29. Others

□Applicable √Not Applicable

VI. Taxation

1. Main tax categories and rates

Main tax categories and rates

√Applicable □Not Applicable

Tax categoriesBasis of taxationTax rate
Value-added taxTaxable revenue from sales of goods or rendering services6%, 9%, 13%
City maintenance and construction taxCirculation Taxes payable7%
EITTaxable incomeStatutory tax rate or preferential rates as follows
(Local) Education surchargeCirculation Taxes payable1%, 2%, 3%

Disclosure of tax entities with different EIT rates

□Applicable √Not Applicable

2. Preferential tax

√Applicable □Not Applicable

Companies subjected to preferential tax:

Name of companyTax ratePreferential tax
Haier Smart Home Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Refrigerator Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Intelligent Electronics Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Special Refrigerator Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Dishwasher Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Special Freezer Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Intelligent Home Appliance Technology Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Wuhan Haier Electronics Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Wuhan Haier Freezer Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Hefei Haier Refrigerator Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Hefei Haier Air-conditioning Co., Limited15%entitled to the preferential taxation policies as a hi-tech enterprise
Zhengzhou Haier Air-conditioning Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Shenyang Haier Refrigerator Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Air-Conditioner Electronics Co.,Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Moulds Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Meier Plastic Powder Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Hai Gao Design and Manufacture Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Hairi Hi-Tech Model Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier (Jiaozhou) Air-conditioning Co.,Limited15%entitled to the preferential taxation policies as a hi-tech enterprise
Beijing Haier Guangke Digital Technology Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Intelligent Technology Development Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Foshan Haier Freezer Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Industry Intelligence Research Institute Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Central Air Conditioning Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Air Conditioner Gen Corp., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Household Appliance Technology and Equipment Research Institute15%entitled to the preferential taxation policies as a hi-tech enterprise
Beijing ASU Tech Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Haier U+smart Intelligent Technology (Beijing) Co.,Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Beijing Zero Micro Technology Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Hefei Haier Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Jiaonan Haier Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Drum Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Foshan Shunde Haier Electric Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Economic and Technological Development Zone Haier Water Heater Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Wuhan Haier Water Heater Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Foshan Drum Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Goodaymart Supply Chains Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier New Energy Electric Appliance Co.,Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Foshan Shunde Haier Intelligent Electronics Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Washing Appliance Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Goodaymart Lexin Cloud Technology Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Hefei Haier Drum Washing Machine Co., Ltd.15%entitled to the preferential taxation policies as a hi-tech enterprise
Qingdao Haier Technology Co., Ltd.10%significant software enterprise tax preferential
Wuhan Haier Energy and Power Co., Ltd.10%entitled to the preferential policies as a microenterprise
Qingdao Haier Zhiyan Investment Management Co.,Ltd.10%entitled to the preferential policies as a microenterprise
Chongqing Haier Electronics Sales Co., Ltd. and some Western companies15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Xin Ri Ri Shun Electric Sales Co., Ltd. And some Western companies15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Air-conditioning Co., Ltd.15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Refrigeration Appliance Co., Ltd.15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Guizhou Haier Electronics Co., Ltd.15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Precision Plastic Co., Ltd.15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Intelligent Electronics Co., Ltd.15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Washing Machine Co., Ltd15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Water Heater Co., Ltd15%entitled to the preferential taxation policies under the Western Development initiative of the PRC
Chongqing Haier Drum Washing Machine Co., Ltd15%entitled to the preferential taxation policies under the Western Development initiative of the PRC

VII. Explanatory Notes for Items in Consolidated Financial Statements

Unless otherwise specified, the following closing balance refers to the amount as of 30 June 2019.The opening balance refers to the amount as of 31 December 2018. The amount for the current periodrefers to the amount in the period from 1 January to 30 June 2019. The amount of the previous periodrefers to the amount of the period from 1 January to 30 June 2018.

1. Monetary funds

√ Applicable □ Not Applicable Unit and Currency: RMB

ItemsClosing balanceOpening balance
Cash on hand1,879,695.701,380,614.79
Cash in bank32,481,704,511.3535,483,724,835.69
Other cash balances1,251,459,451.181,971,249,956.80
Total33,735,043,658.2337,456,355,407.28
Including: total amount deposit overseas8,103,894,274.569,093,415,529.92

Other explanation:

The cash deposited in Haier Group Finance Co., Ltd. was RMB12,848,045,762.26 on 30 June 2019,the balance of which included a fixed deposit of RMB1,816,600,000.00. The investment fund in theclosing balance of other cash balances was RMB328,933,304.59, deposit in third party paymentplatform was RMB134,849,080.72 and the security deposit was RMB787,677,065.87.

2. Financial assets held for trading

ItemsClosing balanceOpening balance
Foreign exchange contracts22,386,862.99188,677,068.41
Short-term wealth management products936,485,756.721,567,648,908.00
Investment in other equity instruments26,966,995.9619,322,411.35
Total985,839,615.671,775,648,387.76

3. Derivative financial assets

√ Applicable □ Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
cash flow hedging-Interest rate swap agreement3,990,489.0557,228,769.39
Foreign exchange contracts66,875,017.6239,494,394.98
Total70,865,506.6796,723,164.37

4. Bills receivable

(1). Classification of the bills receivable

√ Applicable □ Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Bank acceptance bills1,038,018,601.14837,437,547.70
Commercially acceptance bills13,488,953,370.8013,383,499,775.32
Total14,526,971,971.9414,220,937,323.02

The Bills receivable pledged by the Company at the end of the period was RMB12,497,904,298.50.

(2). Classifation and disclosure according to the method of drawing bad debts

□ Applicable √ Not Applicable

5. Accounts receivable

① Accounts receivable are disclosed by aging as follows:

AgingClosing balanceOpening balance
Within one year14,317,298,758.4410,263,880,759.15
1-2 years239,747,125.61271,695,855.39
2-3 years124,418,317.67103,360,570.79
Over 3 years139,586,013.49136,030,844.12
Accounts receivable balance14,821,050,215.2110,774,968,029.45
Allowance for bad debts406,590,408.47343,774,541.95
Accounts receivable, net14,414,459,806.7410,431,193,487.50

② The total amount of the top 5 accounts receivable at the end of the period is

RMB3,062,968,632.66, accounting for 20.67% of the book balance of accounts receivable.

③ Changes in bad debts of accounts receivable in the current period:

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
ProvisionOther movementReversalWrite-off/ other movement
Allowance for bad debts343,774,541.9599,026,080.61124,275,603.66135,342,821.2425,142,996.51406,590,408.47

④ Actual write-off of accounts receivable in the current period

The amount of accounts receivable actually written off in the current period is RMB31,892,623.69,and there is no important bad debt write-off of accounts receivable.

⑤ The company's accounts receivable that were terminated due to the transfer of financial assets in

the current period.In the current period, the amount of accounts receivable that the company terminated due to thetransfer of financial assets was RMB5,615,416,345.64, and the transfer method was selling-typefactoring/asset securitization.

⑥ Current limited accounts receivable

The amount of accounts receivable pledged at the end of the period is RMB1,233,521,193.34.

6. Prepayments

(1)Prepayments are disclosed by aging as follows:

AgingClosing balanceOpening balance
Within one year500,856,261.77519,750,663.00
1-2 years171,483,118.3833,047,876.47
2-3 years17,363,120.3939,033,032.18
Over 3 years12,452,185.892,723,443.35
Total702,154,686.43594,555,015.00

(2) The amount of the top 5 in the prepayments at the end of the period totalsRMB240,280,485.73, which accounts for 34.22% of the prepayment balance.

7. Other receivables

Presentation

√ Applicable □ Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Interest receivable298,632,646.33228,701,210.90
Dividend receivable99,275,355.944,524,472.84
Other receivables1,857,411,754.341,393,750,181.24
Total2,255,319,756.611,626,975,864.98

Other explanation:

□ Applicable √ Not Applicable

(1)Interest receivable

AgingClosing balanceOpening balance
Book value balanceProportionBook value balanceProportion
Within one year277,268,646.3492.85%173,671,073.9175.94%
1-2 years21,363,999.997.15%55,030,136.9924.06%
Total298,632,646.33100.00%228,701,210.90100.00%

(2)Dividend receivable

AgingClosing balanceOpening balance
Book value balanceProportionBook value balanceProportion
Within one year94,750,883.1095.44%
1-2 years
2-3 years
Over 3 years4,524,472.844.56%4,524,472.84100.00%
Total99,275,355.94100.00%4,524,472.84100.00%

Other receivables

(3)Other receivables

① Other receivables are disclosed by aging as follows:

AgingClosing balanceOpening balance
Within one year1,465,188,290.231,312,078,849.50
1-2 years368,920,640.5149,455,084.68
2-3 years45,815,367.8931,974,245.15
Over 3 years50,638,515.7776,587,635.07
Other receivables balance1,930,562,814.401,470,095,814.40
Allowance for bad debts73,151,060.0676,345,633.16
Other receivables, net1,857,411,754.341,393,750,181.24

② The total amount of the top 5 other receivables at the end of the period is RMB407,279,879.25,which accounts for 21.10% of the book balance of other receivables.

③ Changes in bad debt provision for other receivables in the current period

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
ProvisionOther movementReversalWrite-off/ other movement
Allowance for bad debts76,345,633.162,138,750.13591,011.563,597,614.892,326,719.9073,151,060.06

④ Other receivables written off during the period

The amount of other receivables actually written off in the current period is RMB2,202,035.59, andno significant other receivables are written off for bad debts. Other receivables mainly include deposits,quality guarantees, employee loans, tax refunds, and advance payments, etc.

8. Inventories

(1)Details of Inventories

ItemsClosing balanceOpening balance
Book value balanceImpairment provisionBook value balanceImpairment provision
Raw material3,043,632,633.57112,607,169.182,530,152,656.3390,663,625.24
Work in progress150,075,160.43197,994,231.57
Finished goods21,518,156,053.64731,730,363.6720,518,186,150.85778,478,291.98
Total24,711,863,847.64844,337,532.8523,246,333,038.75869,141,917.22

(2)Provision for decline in value of inventories

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
ProvisionOther movementReversalWrite-off/ other movement
Raw material90,663,625.2422,910,130.9816,557,255.283,352,733.6614,171,108.66112,607,169.18
Finished goods778,478,291.98292,168,509.5876,690,196.9561,841,476.83353,765,158.01731,730,363.67
Total869,141,917.22315,078,640.5693,247,452.2365,194,210.49367,936,266.67844,337,532.85

9. Contract assets

ItemsClosing balanceOpening balance
Contract assets489,724,604.83456,781,406.54
Total489,724,604.83456,781,406.54

10. Assets held for sale

ItemsClosing balanceOpening balance
7.71% equity of Shengfeng Logistics Group Co., Ltd106,010,000.00106,010,000.00
Assets in Shanghai Guangfulai Co., Ltd.18,801,586.1138,081,213.39
Others1,858,138.98
Total126,669,725.09144,091,213.39

In 2018, Haier Electronics Group Co., Ltd., a subsidiary of the Company, agreed to sell all of its

58.08% shares held by Shengfeng Logistics Group Co., Ltd in RMB798,354,000, of which 50.37% wasdisposed of in 2018, and the remaining 7.71% was planned to be disposed of in 2019. The fair value ofthe remaining shares is RMB106,010,000, which will be transferred to the account for assets held forsale at the end of the period.In 2018, Haier Electronics Group Co., Ltd., a subsidiary of the company, agreed to sell all of its

67.45% shares held by Shanghai Guangfulai Co., Ltd. (indirect subsidiary) in RMB5,059,000. Thetransaction plan was completed in 2019. At the end of the period, the assets of Shanghai GuangfulaiCo., Ltd. will be transferred to the account for holding assets for sale.

11. Other current assets

(1)Details

ItemsClosing balanceOpening balance
Book value balanceImpairment provisionBook value balanceImpairment provision
Bank deposit for financial products4,961,057,059.112,838,231,840.90
Taxes to be deducted1,353,318,888.115,489,980.821,658,820,457.085,489,980.82
Return cost receivable325,113,583.34170,862,153.66322,726,264.39162,998,678.53
Others710,500,282.49428,589,006.65
Total7,349,989,813.05176,352,134.485,248,367,569.02168,488,659.35

(2)Impairment provision

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
ProvisionOther movementReversalWrite-off / other movement
Deductible input tax5,489,980.825,489,980.82
Return cost receivables162,998,678.537,863,475.13170,862,153.66
Total168,488,659.357,863,475.13176,352,134.48

12. Long-term equity investments

√ Applicable □ Not Applicable

InvesteesOpening balanceIncrease/decrease for the period
Investment increaseInvestment profit recognized under equityAdjustment in other comprehensive incomeOther changes in equityDeclaration of cash dividends or profits
method
Associate:
Haier Group Finance Co., Ltd.5,405,958,339.07343,456,216.41-68,157.26-126,000,000.00
Bank of Qingdao Co., Ltd.2,592,829,635.67124,391,880.94-2,196,826.43-89,573,156.06-77,995,640.00
Hefei Feier Smart Technology Co., Ltd.4,000,000.00
Wolong Electric (Jinan) Motor Co., Ltd.123,281,802.394,246,034.28
Qingdao Haier Software Investment Co., Ltd.18,193,519.15
Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership)362,380,221.2913,859,260.69
Mitsubishi Heavy Industries Haier (Qingdao) Air-condition ers Co., Ltd.622,643,614.6641,493,411.38
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd.332,723,126.501,330,936.46
Beijing Mr. Hi Network Technology Company Limited3,757,759.75
Qingdao Haier multimedia Co., Ltd.555,084,616.71-52,247,454.76
Beijing Xiaobei Technology Co., Ltd.2,687,341.82-
Beijing ASU Tech Co., Ltd.30,062,027.79-4,991,335.21-
Shenzhen Genyuan Environment al Protection Technology Co., Ltd.7,849,992.00-
Qingdao HBIS New Material Technology Co., Ltd.262,284,357.659,015,140.24
Qingdao Haimu Investment Management Co., Ltd.2,078,341.37-
Qingdao Haimu Smart48,001,070.25-
Home Investment Partnership (Limited Partnership)
Guangzhou Heying Investment Partnership (Limited Partnership)176,064,809.68-222,969.30
Qingdao Java Cloud Network Technology Co., Ltd.1,216,581.32
Beijing Cangxiaowei Supply Chain Management Co., Ltd.791,316.97
Others37,979,437.49-4,730,841.67
Hunan Electronic Co., Ltd.74,799,791.293,412,015.182,438,569.52-275,121.00
HNR Company (Private) Limited91,076,038.8010,245,709.0911,492,764.45
HPZ LIMITED88,800,332.55-673,739.21335,704.84
CONTROLADORAMABES.A.deC.V.3,173,153,937.0053,100,830.797,639,020.96-32,367,659.70
MIDDLEEASTAIRCONDITIONINGCOMPANY,LIMITED18,208,123.96923,811.8048,422.11
Total13,993,926,697.6441,979,437.49542,608,907.1119,689,498.19-89,573,156.06-236,638,420.70

(Continued)

InvesteesIncrease/decrease for the periodClosing balanceImpairment provision Closing balance
Other movementDisposal of the investment
Associate:
Haier Group Finance Co., Ltd.5,623,346,398.22
Bank of Qingdao Co., Ltd.2,547,455,894.12
Hefei Feier Smart Technology Co., Ltd.4,000,000.00
Wolong Electric (Jinan) Motor Co., Ltd.127,527,836.67
Qingdao Haier Software Investment Co., Ltd.18,193,519.15
Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership)376,239,481.98
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.664,137,026.04
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd.334,054,062.96-21,000,000.00
Beijing Mr. Hi Network Technology Company Limited3,757,759.75-3,757,759.75
Qingdao Haier multimedia Co., Ltd.502,837,161.95
Beijing Xiaobao Technology Co., Ltd.2,687,341.82-2,687,341.82
Beijing ASU Tech Co., Ltd.25,070,692.58
Shenzhen Genyuan Environmental Protection Technology Co., Ltd.7,849,992.00
Qingdao HBIS New Material Technology Co., Ltd.271,299,497.89
Qingdao Haimu Investment Management Co., Ltd.2,078,341.37
Qingdao Haimu Zhijia Investment Partnership (Limited Partnership)48,001,070.25
Guangzhou Heying Investment Partnership (Limited Partnership)175,841,840.38
Qingdao Java Cloud Network Technology Co., Ltd.1,216,581.32
Beijing Cangxiaowei Supply Chain Management Co., Ltd.791,316.97
Others33,248,595.82
Konan Electronic Co., Ltd.80,375,254.99
HNR Company (Private) Limited112,814,512.34
HPZ LIMITED88,462,298.18
CONTROLADORA MABE S.A.de C.V.3,201,526,129.05
MIDDLEEAST AIRCONDITIONING COMPANY, LIMITED19,180,357.87
Total--14,271,992,963.67-27,445,101.57

13. Investment in other equity instruments

(1). Investment in other equity instruments:

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
China Petroleum & Chemical Corporation1,237,167,273.481,261,564,000.00
Others142,025,768.71138,752,460.34
Total1,379,193,042.191,400,316,460.34

(2)Dividends from investment in other equity during current period:

ItemsAmount for the current period
China Petroleum & Chemical Corporation18,401,836.39
Others20,145.67
Total18,421,982.06

14. Other non-current financial assets

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Long-term wealth management products328,487,584.54327,358,825.57
Total328,487,584.54327,358,825.57

15. Investment properties

(1)The changes in investment properties measured at cost this year are as follows:

ItemsHouses and buildingsLand use rightsTotal
I. Original book value
1.Opening balance45,999,732.782,128,550.5148,128,283.29
2.Increase for the period
(1) Outsourced
(2) Inventories\fixed assets\construction in progress transferred in
(3) Increase in business combinations
3. Decrease for the period
(1)Disposal
(2)Disposal of subsidiary
(3)Other transferring out
4. Converted difference in foreign currency statements12,793.1612,793.16
5. Closing balance46,012,525.942,128,550.5148,141,076.45
II. Accumulated depreciation and accumulated amortization
1.Opening balance16,739,224.15509,911.7217,249,135.87
2.Increase for the period
(1)Provision or amortization884,079.5920,118.11904,197.70
3. Decrease for the period
(1)Disposal
(2)Disposal of subsidiary
(3)Other transferring out
4. Converted difference in foreign currency statements9,094.659,094.65
5. Closing balance17,632,398.39530,029.8318,162,428.22
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 value28,380,127.551,598,520.6829,978,648.23
2. Opening book value29,260,508.631,618,638.7930,879,147.42

(2)The depreciation and amortization amount charge for the period is RMB904,197.70.

(3)The recoverable amount of the investment real estate of the Company at the end of the period isnot less than its book value, so no provision for impairment is made.

16. Fixed assets

Presentation

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Fixed assets18,763,290,574.7317,319,507,210.44
Disposals of fixed assets52,324,012.62131,670.93
Total18,815,614,587.3517,319,638,881.37

(1) Fixed assets:

ItemsHouses and buildingsProduction equipmentTransportation equipment
I. Original book value
1.Opening balance9,335,094,391.5418,902,226,400.84233,560,448.01
2.Increase for the period
(1)Acquisition235,311,272.15237,218,734.481,555,468.04
(2)Construction in progress transferred in233,006,941.411,135,345,885.1513,283,394.77
(3)Increase in business combinations1,029,171,666.471,131,316,810.1321,696,615.52
3.Decrease for the period
(1)Disposal or Write-off187,594,576.60703,932,293.486,142,986.09
(2)Disposal of subsidiary10,707,659.82
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements45,116,100.5596,418,737.70-148,921.71
5.Closing balance10,690,105,795.5220,787,886,615.00263,804,018.54
II. Accumulated depreciation
1.Opening balance2,974,767,554.448,633,379,050.57150,492,577.67
2.Increase for the period
(1)Provision238,601,240.171,049,347,585.2212,567,759.03
(2)Increase in business combinations411,084,801.78778,451,036.2317,166,864.92
3.Decrease for the period
(1)Disposal or write-off126,013,212.89446,414,787.554,833,851.92
(2)Disposal of subsidiary4,902,299.50
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements15,586,936.6543,476,236.3233,839.20
5.Closing balance3,514,027,320.1510,053,336,821.29175,427,188.90
III. Impairment provision
1.Opening balance32,900,098.0616,389,633.592,132.47
2.Increase for the period
(1)Provision
(2)Increase in business combinations11,173,363.2178,041.16
3.Decrease for the period
(1)Disposal or Write-off13,626,928.39
(2)Disposal of subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements1,182,964.60368,868.6226,578.86
5.Closing balance34,083,062.6614,304,937.03106,752.49
IV. Book Value
1.Closing book value7,141,995,412.7110,720,244,856.6888,270,077.15
2.Opening book value6,327,426,739.0410,252,457,716.6883,065,737.87

(Continued)

ItemsOffice furnitureOthersTotal
I. Original book value
1.Opening balance538,058,650.92857,902,128.1729,866,842,019.48
2.Increase for the period
(1)Acquisition52,904,865.6143,128,461.18570,118,801.46
(2)Construction in progress transferred in43,105,790.68109,042,090.361,533,784,102.37
(3)Increase in business combinations116,727,054.31825,983,835.923,124,895,982.35
3.Decrease for the period
(1)Disposal or Write-off17,008,539.8238,532,478.11953,210,874.10
(2)Disposal of subsidiary97,339.0010,804,998.82
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements5,107,955.75-7,717,058.13138,776,814.16
5.Closing balance738,798,438.451,789,806,979.3934,270,401,846.90
II. Accumulated depreciation
1.Opening balance309,994,211.94425,494,667.0412,494,128,061.66
2.Increase for the period
(1)Provision48,555,251.3979,892,689.111,428,964,524.92
(2)Increase in business combinations81,252,884.17797,741,017.352,085,696,604.45
3.Decrease for the period
(1)Disposal or Write-off11,260,132.7121,689,983.30610,211,968.37
(2)Disposal of subsidiary44,427.644,946,727.14
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements-652,979.41-5,422,879.9553,021,152.81
5.Closing balance427,844,807.741,276,015,510.2515,446,651,648.33
III. Impairment provision
1.Opening balance153,069.073,761,814.1953,206,747.38
2.Increase for the period
(1)Provision
(2)Increase in business combinations7,836,595.3319,087,999.70
3.Decrease for the period
(1)Disposal or Write-off80,230.5513,707,158.94
(2)Disposal of subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements5,627.64287,995.981,872,035.70
5.Closing balance78,466.1611,886,405.5060,459,623.84
IV. Book Value
1.Closing book value310,875,164.55501,905,063.6418,763,290,574.73
2.Opening book value227,911,369.91428,645,646.9417,319,507,210.44

(2)In the current period, the balance of the construction in progress transferred to the originalvalue of the fixed assets is total RMB1,533,784,102.37.

(3)The amount of fixed assets mortgage at the end of the period is RMB62,265,570.11.

(4)Disposals of fixed assets

ItemsClosing balanceOpening balanceReason for transferring to disposal
Air conditioner Project52,323,543.60Demolition
Europe Trade Project469.02Scrap cleanup
Wuhan Energy Project131,670.93Scrap cleanup
Total52,324,012.62131,670.93

17. Construction in progress

Presentation

√Applicable □Not Applicable Unit and Currency: RMB

ItemsClosing balanceOpening balance
Construction in progress5,195,727,696.623,873,492,230.24
Construction materials
Total5,195,727,696.623,873,492,230.24

(1)Balance of construction in progress

ItemsClosing balanceOpening balance
Book balanceImpairment provisionBook ValueBook balanceImpairment provisionBook Value
Goodaymart Logistics Supply Chain625,066,753.12625,066,753.12522,865,557.84522,865,557.84
Tianjin ririxin594,207,744.83594,207,744.83386,754,022.65386,754,022.65
Qingdao Washing appliance570,339,188.79570,339,188.79352,667,044.20352,667,044.20
Qingdao Special Refrigeration Appliances568,522,368.47568,522,368.47409,431,912.37409,431,912.37
America GEA226,041,033.579,469,292.10216,571,741.47328,202,831.6823,930,767.80304,272,063.88
Russia washing machine192,009,870.71192,009,870.7114,943,410.8714,943,410.87
Laiyang Smart kitchen Appliances188,564,540.99188,564,540.9964,617,334.9764,617,334.97
New Zealand FPA147,803,611.76147,803,611.76113,126,924.77113,126,924.77
Foshan roller131,876,890.87131,876,890.8736,614,210.7636,614,210.76
Qingdao Smart kitchen Appliances130,106,851.63130,106,851.63138,005,302.27138,005,302.27
Chongqing roller119,356,686.28119,356,686.28114,749,141.48114,749,141.48
Qingdao Smart appliance106,151,742.61106,151,742.6151,044,968.2251,044,968.22
Hefei drum washing machine99,521,882.8999,521,882.8997,615,033.9697,615,033.96
Shunde washing machine82,139,236.8782,139,236.8712,298,279.2812,298,279.28
Qingdao Air Conditioning Electronics72,937,402.7472,937,402.7414,567,091.5814,567,091.58
Haier Dishwasher60,055,285.3660,055,285.3653,552,923.1453,552,923.14
Hefei washing machine58,062,625.3558,062,625.3536,571,889.2336,571,889.23
Vietnam appliance55,812,115.6755,812,115.6731,642,712.6431,642,712.64
Qingdao Haier refrigerator53,527,690.7453,527,690.7434,451,440.9834,451,440.98
Europe CANDY52,362,018.1652,362,018.16
Hefei air conditioner48,516,076.1848,516,076.1895,282,014.9795,282,014.97
others1,022,215,371.131,022,215,371.13988,418,950.18988,418,950.18
Total5,205,196,988.729,469,292.105,195,727,696.623,897,422,998.0423,930,767.803,873,492,230.24

(2)Details of significant changes of construction in progress for the period

Project nameOpening balanceIncrease for the periodTransfer to fixed assetsOther decreaseExchange difference sClosing balanceSource of fund
Goodaymart Logistics Supply Chain522,865,557.84179,085,288.2276,884,092.94625,066,753.12Self-fundi ng
Tianjin ririxin386,754,022.65211,283,349.003,829,626.82594,207,744.83Self-fundi ng
Qingdao Washing appliance352,667,044.20232,806,465.7515,134,321.16570,339,188.79Self-fundi ng
Qingdao Special Refrigeration Appliances409,431,912.37162,387,398.633,296,942.53568,522,368.47Self-funding and fund-raising
America GEA328,202,831.68527,539,419.57629,384,080.23-317,137.45226,041,033.57Self-fundi ng
Russia washing machine14,943,410.87167,090,946.95202,912.0310,178,424.92192,009,870.71Self-funding and fund-raising
Laiyang Smart kitchen appliances64,617,334.97123,947,206.02188,564,540.99Self-funding and fund-raising
New Zealand FPA113,126,924.7734,049,378.38627,308.61147,803,611.76Self-fundi ng
Foshan roller36,614,210.7697,870,199.802,607,519.69131,876,890.87Self-fundi ng
Qingdao Smart kitchen appliances138,005,302.2748,831,888.5156,730,339.15130,106,851.63Self-funding and fund-raising
Chongqing roller114,749,141.4821,998,753.9217,391,209.12119,356,686.28Self-fundi ng
Qingdao Smart appliances51,044,968.2258,802,336.193,695,561.80106,151,742.61Self-fundi ng
Hefei drum washing machine97,615,033.965,846,454.983,939,606.0599,521,882.89Self-fundi ng
Shunde washing machine12,298,279.2885,808,646.7415,967,689.1582,139,236.87Self-fundi ng
Qingdao air conditioning electronics14,567,091.5899,753,181.0841,382,869.9272,937,402.74Self-fundi ng
Haier dishwasher53,552,923.1420,645,256.8114,142,894.5960,055,285.36Self-fundi ng
Hefei washing machine36,571,889.2325,591,369.474,100,633.3558,062,625.35Self-fundi ng
Vietnam appliance31,642,712.6424,817,186.20647,783.1755,812,115.67Self-funding and fund-raising
Qingdao Haier refrigerator34,451,440.9834,362,543.2115,286,293.4553,527,690.74Self-fundi ng
Europe CANDY79,269,762.0224,963,453.45-1,944,290.4152,362,018.16Self-fundi ng
Hefei air conditioner95,282,014.9723,000,057.1169,765,995.9048,516,076.18Self-funding and fund-raising
others988,418,950.18563,358,666.40534,430,277.87216,384.275,084,416.691,022,215,371.13Self-fundi ng
Total3,897,422,998.042,828,145,754.961,533,784,102.37216,384.2713,628,722.365,205,196,988.72

(3)Impairment of construction in progress

Project nameOpening balanceIncrease for the periodTransfer to fixed assetsOther decreaseExchange differencesClosing Balance
America GEA project23,930,767.8014,131,636.29-329,839.419,469,292.10

18. Right-of-use assets

ItemsOpening balanceIncrease for the periodDecrease for the periodConverted difference in foreign currency statementsClosing balance
Original book value3,628,717,407.8832,953,292.103,661,670,699.98
Accumulated depreciation373,529,944.121,676,045.37375,205,989.49
Impairment provision
Book value3,255,187,463.7631,277,246.733,286,464,710.49

The categories of the right-of-use assets of the Company are mainly buildings used for offices andwarehouses.

19. Intangible assets

(1). Intangible assets

√Applicable □Not Applicable

ItemsProprietary technologyLicenses use rightsLand use rights
I. Original book value
1.Opening balance1,593,770,408.633,919,106,283.712,076,393,458.34
2.Increase in the current period
(1)Purchase17,586,343.8223,377,366.53222,419,495.67
(2)Internal research and development49,763,458.91
(3)Increase in business combination261,754,149.7884,322,584.62314,293,405.09
3.Decrease for the current period
(1)Disposal
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements8,605,781.156,134,924.87-168,811.55
5.Closing balance1,931,480,142.294,032,941,159.732,612,937,547.55
II. Accumulated amortization
1.Opening balance543,957,689.12267,233,764.32209,708,139.26
2.Increase in the current period
(1)Provision79,305,532.8072,057,562.5923,895,426.78
(2)Increase in business combination13,087,711.0073,639,382.30
3.Decrease for the current period
(1)Disposal
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements10,856,957.131,142,386.21235,367.90
5.Closing balance647,207,890.05414,073,095.42233,838,933.94
III. Impairment provision
1.Opening balance
2.Increase in the current period
(1)Provision
3.Decrease for the current period
(1)Disposal
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements
5.Closing balance
IV. Book Value
1.Closing balance1,284,272,252.243,618,868,064.312,379,098,613.61
2.Opening balance1,049,812,719.513,651,872,519.391,866,685,319.08

(Continued)

ItemsTrademark rightsApplication management software and othersTotal
I. Original book value
1.Opening balance1,253,711,579.882,334,774,502.0511,177,756,232.61
2.Increase in the current period
(1)Purchase34,583,157.93297,966,363.95
(2)Internal research and development43,132,972.5792,896,431.48
(3)Increase in business combination1,426,152,500.43130,871,096.282,217,393,736.20
3.Decrease for the current period
(1)Disposal12,285,769.1012,285,769.10
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements23,467,737.415,382,923.0743,422,554.95
5.Closing balance2,703,331,817.722,536,458,882.8013,817,149,550.09
II. Accumulated amortization
1.Opening balance1,978.77937,646,831.471,958,548,402.94
2.Increase in the current period
(1)Provision3,957.55191,765,000.09367,027,479.81
(2)Increase in business combination64,060,552.70150,787,646.00
3.Decrease for the current period
(1)Disposal947,515.73947,515.73
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements2,243,124.6014,477,835.84
5.Closing balance5,936.321,194,767,993.132,489,893,848.86
III. Impairment provision
1.Opening balance9,965,107.969,965,107.96
2.Increase in the current period
(1)Provision
3.Decrease for the current period
(1)Disposal
(2)Disposal subsidiary
(3)Transfer to hold for sale
4. Converted difference in foreign currency statements
5.Closing balance9,965,107.969,965,107.96
IV. Book Value
1.Closing balance2,703,325,881.401,331,725,781.7111,317,290,593.27
2.Opening balance1,253,709,601.111,387,162,562.629,209,242,721.71

At the end of the period, the intangible assets developed through the Company accounted for the

10.08% of the original value at the end of the period.

20. Development cost

ItemsOpening balanceIncrease for the periodDecrease for the periodConverted difference in foreign currency statementsClosing balance
Confirmed as an intangible assetIncluded in current profit and loss
91ABD.ERPPROGRAM508,299,234.90104,502,503.2220,936,855.121,962,177.34593,827,060.34
Others30,083,053.43211,320,331.1371,959,576.3698,737,571.83-1,223,860.7169,482,375.66
Total538,382,288.33315,822,834.3592,896,431.4898,737,571.83738,316.63663,309,436.00

21. Goodwill

ItemsOpening balanceIncrease for the periodDecrease for the periodImpact of fluctuation in exchange rate for the periodClosing balance
GEA20,390,297,236.5935,090,966.2620,425,388,202.85
Candy2,014,258,269.63-7,777,455.362,006,480,814.27
Others765,255,320.5721,085,434.411,330,969.11787,671,724.09
Total21,155,552,557.162,035,343,704.0428,644,480.0123,219,540,741.21

In the case of a goodwill impairment test, the Group compares the carrying amount of the relevantasset group or asset group combination (including goodwill) with its recoverable amount. If therecoverable amount is less than the book value, corresponding difference will be recognized in profit or

loss. The recoverable amount of the asset group or asset group combination is based on amanagement-approved 5-10 year budget, which is then estimated based on discounted future cash flowmethod with a fixed growth rate.

Key assumptions for discounted future cash flow discount method for material goodwill at the endof the period:

ItemsGEA
Forecast period growth rate4.84%-5.50%
Forecast period profit rate5.44%-6.18%
Forecast period10 years
Stable period growth rate2%
Discounting rate before tax10.84%

22. Long-term prepaid expenses

ItemsOpening balanceIncrease for the periodAmortizationOther decreaseConverted difference in foreign currency statementsClosing balance
Renovation6,887,635.081,304,227.98984,987.597,206,875.47
Improvement on leased property167,271,750.2044,458,178.6910,472,776.25660,967.51769,687.59201,365,872.72
Others56,603,787.208,866,543.816,374,007.31335.1459,096,658.84
Total230,763,172.4854,628,950.4817,831,771.15660,967.51770,022.73267,669,407.03

23. Deferred income tax assets and Deferred income tax liabilities

(1)Deferred income tax assets before elimination

ItemsClosing balanceOpening balance
Provision for assets impairment267,930,395.42240,924,037.86
Liabilities1,485,097,638.431,444,791,976.30
Internal unrealized earnings eliminated due to combination482,114,988.22464,499,951.47
Others812,123,457.39668,254,961.84
Total3,047,266,479.462,818,470,927.47

(2)Deferred income tax liabilities before elimination

ItemsClosing balanceOpening balance
Increase in valuation of long-term assets due to mergers and acquisitions640,844,817.67151,412,213.82
Disposal of subsidiaries and movement of investments in other equity instruments95,111,005.0994,972,688.60
Withholding income tax of overseas enterprises77,190,532.3277,190,532.32
Depreciation and amortization of assets1,206,122,832.47995,433,739.85
Changes of the fair value27,829,352.844,416,607.36
Others125,929,255.5084,764,197.15
Total2,173,027,795.891,408,189,979.10

(3)The deferred income tax assets and the deferred income tax liabilities eliminated at the end ofthis period is RMB1,248,636,664.25.

24. Other non-current assets

ItemsClosing balanceOpening balance
Prepayments for equipment and land1,777,731,595.262,118,776,080.18
Others156,299,704.14206,912,902.38
Total1,934,031,299.402,325,688,982.56

25. Short-term borrowings

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Borrowings - secured by pledge193,371,187.70359,230,849.08
Borrowings - secured by mortgage39,424,722.4246,843,046.04
Borrowings - secured by guarantor3,406,622,840.883,983,541,155.25
Borrowings - unsecured4,468,718,854.851,908,889,842.20
Total8,108,137,605.856,298,504,892.57

26. Financial liabilities held for trading

ItemsClosing balanceOpening balance
Forward foreign exchange trading contracts7,055,018.07211,934,956.99
Forward foreign exchange option6,813,323.34
Total7,055,018.07218,748,280.33

27. Derivative financial liabilities

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Forward foreign exchange trading contracts23,360,638.6524,384,482.19
Forward commodity contracts2,967,834.4611,219,272.35
Cash flow hedging instruments-Interest rate swap agreement7,624,052.99
Total33,952,526.1035,603,754.54

28. Bills payable

√Applicable □Not Applicable

Unit and Currency: RMB

CategoriesClosing balanceOpening balance
Commercially acceptance bill2,538,328,070.952,402,746,892.66
Bank acceptance bill15,031,294,802.9717,223,352,168.94
Total17,569,622,873.9219,626,099,061.60

29. Accounts payable

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Accounts payable30,604,644,390.2727,759,119,079.78
Total30,604,644,390.2727,759,119,079.78

The book balance at the end of the period was mainly the unpaid expenditures on material,equipment and labor.

30. Receipts in advance

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Receipts in advance14,681,466.58
Total14,681,466.58

31. Contract liabilities

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Contract liabilities3,899,786,072.985,482,325,888.59
Total3,899,786,072.985,482,325,888.59

32. Payables for staff's remuneration

(1). Payables for staff's remuneration

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
I.Short-term remuneration2,450,735,641.2910,242,674,095.8410,299,722,603.692,393,687,133.44
II.Post-employment benefits-defined contribution plan29,226,680.54738,689,444.00748,552,060.0519,364,064.49
III.Termination benefits14,228,664.4723,689,894.5312,594,387.0225,324,171.98
IV.Other welfare due within one year157,208,431.7538,221,361.33118,987,070.42
Total2,651,399,418.0511,005,053,434.3711,099,090,412.092,557,362,440.33

(2). Short-term remuneration

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
I.Salaries, bonus, allowance and benefit1,474,447,812.667,099,334,515.277,330,653,864.131,243,128,463.80
II.Employee welfare296,427,580.74317,017,111.85169,192,942.42444,251,750.17
III.Social benefit159,316,261.40941,114,664.06915,784,409.27184,646,516.19
IV.Housing fund5,980,242.92171,237,787.17170,193,428.787,024,601.31
V.Labor union fee and education fee3,670,855.6740,039,790.1541,457,103.092,253,542.73
VI.Short-term compensated leave233,150,647.10116,286,340.33163,051,274.67186,385,712.76
Others277,742,240.801,557,643,887.011,509,389,581.33325,996,546.48
Total2,450,735,641.2910,242,674,095.8410,299,722,603.692,393,687,133.44

(3). Defined contribution plan

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
1.Basic pension insurance28,741,410.94708,339,434.12718,927,481.0018,153,364.06
2.Unemployment insurance290,564.7012,473,221.3812,550,820.89212,965.19
3.Enterprise annuity payment194,704.9017,876,788.5017,073,758.16997,735.24
Total29,226,680.54738,689,444.00748,552,060.0519,364,064.49

(4). Termination benefits

ItemsClosing balanceOpening balance
Termination compensation25,324,171.9814,228,664.47
Total25,324,171.9814,228,664.47

33. Taxes payable

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
VAT659,742,443.85441,010,016.22
Enterprise income tax1,107,483,693.371,184,505,048.56
Individual income tax37,031,724.9878,544,332.63
Municipal maintenance tax7,702,803.052,414,582.49
Education surcharge3,372,871.113,839,538.40
The electrical and electronic products waste treatment fund64,280,469.5067,359,180.79
Additional taxes72,318,354.3860,768,028.30
Total1,951,932,360.241,838,440,727.39

34. Other payables

Items presented

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Interests payable94,121,291.76104,522,208.28
Dividends payable2,914,608,547.77162,205,193.05
Other payables13,404,630,719.5812,418,950,001.58
Total16,413,360,559.1112,685,677,402.91

(1)Interests payable:

ItemsClosing balanceOpening balance
Interest of long-term borrowings24,011,186.7357,626,542.89
Interest of short-term borrowings70,110,105.0346,895,665.39
Total94,121,291.76104,522,208.28

(2)Dividends payable:

Name of companyClosing balanceOpening balance
BRAVE LION (HK) LIMITED122,756,874.10122,756,874.10
Haier Electric Appliances International Co., Ltd.441,798,373.22
Haier Group Corporation376,486,378.16
Qingdao Haier Venture & Investment Information Co., Ltd.60,460,648.56
Others1,913,106,273.7339,448,318.95
Total2,914,608,547.77162,205,193.05

(3)Other payables:

ItemsClosing balanceOpening balance
Other payables13,404,630,719.5812,418,950,001.58
Total13,404,630,719.5812,418,950,001.58

The book value balance at the end of the period mainly included the incurred but unpaid costs.

35. Liabilities held for sale

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Liabilities of Shanghai Guangfulai Co., Ltd.(上海广富来有限公司)14,097,210.0932,362,267.88
Total14,097,210.0932,362,267.88

In 2018, Haier Electric Group Co., Ltd., a subsidiary of the Company, agreed to sell all of its 67.45%shares of Shanghai Guangfulai Co., Ltd.(上海广富来有限公司) (indirect subsidiary) at RMB 5,059,000.The transaction is expected to complete in 2019. At the end of the period, the liabilities of ShanghaiGuangfulai Co., Ltd. are treated as liabilities held-for-sale.

36. Non-current liabilities due within one year

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Long-term borrowings due within one year8,902,956,811.043,015,060,105.58
Lease liabilities due within one year973,729,999.36
Total9,876,686,810.403,015,060,105.58

37. Other current liabilities

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Payable refund439,291,572.38402,932,170.91
Unrealized output value added tax6,341,120.9218,593,499.79
Others1,053,769.482,113,133.92
Total446,686,462.78423,638,804.62

38. Long-term borrowings

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Borrowings - secured by mortgage22,458,964.8223,574,659.91
Borrowings - secured by guarantor3,734,606,528.249,213,273,265.96
Borrowings - unsecured3,681,441,309.8890,511,272.46
Borrowings - secured by guarantor and mortgage4,822,172,622.146,214,107,126.89
Total12,260,679,425.0815,541,466,325.22

Interest rate on long-term borrowings – secured by guarantor is the one as provided in the agreementplus LIBOR.Interest rate on domestic long-term borrowings – unsecured is the benchmark rate published by thePeople's Bank of China.Interest rate on offshore long-term borrowings – unsecured is the one as provided in the agreement plusLIBOR.Interest rate on long-term borrowings – secured by mortgage is the one as provided in the agreementplus LIBOR.

39. Bonds payable

On 21 November 2017, HARVEST INTERNATIONAL COMPANY, the Company'swholly-owned subsidiary, issued a 5-year HK$8 billion exchangeable corporate bond, coupon rate iszero and rate of return is 1%.On 18 December 2018, the Company issued an RMB 3 billion convertible corporate bond. Theconvertible bonds issued has a maturity of 6 years. The coupon rate is 0.2% in the first year, 0.5% in thesecond year, and 1.0% in the third year, 1.5% in the fourth year, 1.8% in the fifth year, and 2.0% in thesixth year.The bond was divided into liabilities and equities on initial recognition:

ItemsExchangeable bonds issued in 2017Convertible bonds issued in 2018
Initial recognition:6,731,131,007.132,980,024,754.50
Including:
Equities of the bonds431,424,524.07473,061,264.64
Liabilities of the bonds6,299,706,483.062,506,963,489.86

Changes in the liability portion of corporate bonds in the current period:

ItemsOpening balanceIncrease for the current periodAccrued Bond interest for the current periodLess: Bond interest paid for the current periodExchange rate impactShares converted in the current periodClosing balance
Exchangeable corporate bonds issued in 20176,681,366,239.8482,712,220.1728,059,790.216,792,138,250.22
Convertible corporate bonds issued in 20182,510,530,062.8650,942,195.71606,408.752,560,865,849.82
Total9,191,896,302.70133,654,415.8828,059,790.21606,408.759,353,004,100.04

40. Lease liabilities

ItemsClosing balanceOpening balance
Lease liabilities3,441,361,697.20
Less: due within one year973,729,999.36
Total2,467,631,697.84

Interest expenditure in lease liabilities in the current period is RMB73,922,402.15.

41. Long-term payables

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
CDB development fund investment fund93,000,000.0093,000,000.00
Others22,402,960.7813,763,243.99
Total115,402,960.78106,763,243.99

Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Refrigerator Co., Ltd., Qingdao Haier Air Conditioner Gen Corp.,Ltd., Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited together with China Development FundCo. Ltd. in 2015 and 2016, China Development Fund Co. Ltd. invested RMB20 million in Qingdao

Haier Refrigerator Co., Ltd., and RMB73 million in Qingdao Haier (Jiaozhou) Air-conditioning Co.,Limited. China Development Fund Co. Ltd. obtains 1.2% of the earnings every year in dividend orthrough call premium. From 2020 to 2027, the Company and its subsidiaries will repurchase theinvestments made by China Development Fund Co. Ltd. to the subsidiary of the Company.

42. Long-term payables for staff's remuneration

√Applicable □Not Applicable

(1)Table of long-term payables for staff's remuneration

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
I.Post-employment benefits- net liability of defined benefit plan404,951,753.73456,055,879.38
II.Termination benefits390,016,196.09230,752,405.39
III.Other long-term benefits
IV.Provision for work-related injury compensation238,668,959.90248,166,450.72
Total1,033,636,909.72934,974,735.49

(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 benefitplans.

These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary andother risks.

The recent actuarial evaluation of the assets and the present value of defined benefit obligationsunder such plans are determined by using the expected cumulative welfare unit method.

①The defined benefit plan of Haier Asia Co., Ltd. (海尔亚洲株式会社), a subsidiary of theCompany.Actuarial assumption used in the defined benefit plan

ItemsRate
Discount rate0.50%
Expected rate of return2.00%

Present value of defined benefit obligations

ItemsAmount
I. Opening balance324,545,002.06
II. Defined benefit cost in current profit or loss
1.Current period service cost
2.Past service cost
3.Settlement profit (losses are represented by '-')
4.Interest expenses
III. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss ('-' represents 'gains')
IV. Other changes9,961,801.35
1. The consideration paid at the time of settlement
2. Benefit paid
3. Exchange differences9,961,801.35
V. Closing balance334,506,803.41

Change in fair value of plan assets

ItemsAmount
Ⅰ. Opening balance326,403,548.13
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 changes10,018,848.81
1.Employer contributions
2. Benefit paid
3. Exchange differences10,018,848.81
V. Closing balance336,422,396.94

Neither the Company's ordinary shares or bonds, nor the properties occupied by the Company areincluded in the plan assets.Net liability (net asset) of defined benefit plan

ItemsAmount
Ⅰ. Opening balance-1,858,546.07
II. Defined benefit cost recognized in current profit or loss
III. Defined benefit cost recognized in other comprehensive income
IV. Other changes-57,047.46
V. Closing balance-1,915,593.53

The average term for the defined benefit obligation is 14.70 years at the balance sheet date.

②The defined benefit plan of ROPER CORPORATION, a subsidiary of the CompanyROPER CORPORATION, a subsidiary of the Company, has provided post-employment definedbenefit plan of health care benefits to eligible employees.Actuarial assumptions used in defined benefit plans

ItemsRate
Discount rate4.30%

Present vaule of defined benefit obligations

ItemsAmount
I. Opening balance118,346,193.16
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss2,720,835.53
1. Current period service cost5,383,093.68
2. Past service cost-2,662,258.15
3. Settlement gains (losses are represented by '-')
4. Interest cost
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss ('-' represents 'gains')
V. Other changes-2,143,064.58
1. The consideration paid at the time of settlement
2. Benefit paid-7,221,611.77
3. Exchange differences5,078,547.19
VI. Closing balance118,923,964.11

Net liability (net asset) of defined benefit plan

ItemsAmount
I. Opening balance118,346,193.16
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss2,720,835.53
IV. Defined benefit cost recognized in other comprehensive income
V. Other changes-2,143,064.58
VI. Closing balance118,923,964.11

The average term for the defined benefit obligation is 12.14 years at the balance sheet date.

① 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 post-retirement defined benefit plan of health care benefits for the eligibleemployees.

Actuarial assumptions used in defined benefit plans

ItemsRate
Discount rate4.13%

Present value of defined benefit obligations

ItemsAmount
I. Opening balance326,812,839.04
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss4,593,616.42
1. Current period service cost
2. Past service cost-1,224,690.45
3. Settlement gains (losses are represented by '-')
4. Interest cost5,818,306.87
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss ('-' represents 'gains')
V. Other changes-28,975,085.07
1. The consideration paid at the time of settlement
2. Benefit paid-29,195,609.94
3. Exchange differences220,524.87
VI. Closing balance302,431,370.39

Net liability (net asset) of defined benefit plan

ItemsAmount
I. Opening balance326,812,839.04
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss4,593,616.42
IV. Defined benefit cost recognized in other comprehensive income
V. Other changes-28,975,085.07
VI. Closing balance302,431,370.39

②The defined benefit plan of HAIER U.S. APPLIANCE SOLUTIONS, INC., a subsidiary of theCompany. HAIER U.S. APPLIANCE SOLUTIONS, INC., a subsidiary of the Company, hasprovided defined benefit plan of pension for the eligible employees.

Actuarial assumptions used in defined benefit plans

ItemsRate
Discount rate4.00%

Present value of defined benefit obligations

ItemsAmount
I. Opening balance284,892,248.72
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss
1. Current period service cost
2. Past service cost
3. Settlement gains (losses are represented by '-')
4. Interest cost
IV. Defined benefit cost recognized in other comprehensive income
1. Actuarial loss ('-' represents 'gains')
V. Other changes-53,915,342.53
1. The consideration paid at the time of settlement
2. Benefits paid-53,679,045.41
3. Exchange differences-236,297.12
VI. Closing balance230,976,906.19

Changes in fair value of plan assets

ItemsAmount
I. Opening balance201,739,810.80
II. Defined benefit cost recognized in current profit or loss-2,240,425.08
1.Interest income-2,240,425.08
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-54,084,459.50
1. Employer contributions
2. Benefits paid-53,679,045.41
3. Exchange differences-405,414.09
V. Closing balance145,414,926.22

Net liability (net asset) of defined benefit plan

ItemsAmount
I. Opening balance83,152,437.92
II. Business combination not under common control
III. Defined benefit cost recognized in current profit or loss2,240,425.08
IV. Defined benefit cost recognized in other comprehensive income
V. Other changes169,116.97
VI.Closing balance85,561,979.97

(3)Provision for work-related injury compensation

HAIER U.S. APPLIANCE SOLUTIONS, INC., a subsidiary of the Company, made a provision forthe occupational injury claims filed by the injured due to production accidents starting from 1 January1991 to cover the claims for injured staffs in the accident. The provision was calculated byBEECHERCARLSON INSURANCE SERVICES, LLC., based on actuarial method. The discount rateused in the actuary is 3.72%.

ItemsAmount
I. Opening balance248,166,450.72
II. Business combination not under common control
III. Compensation recognized in current profit and loss44,422,504.97
IV. Actual compensation paid in the current period-33,363,771.87
V. Other changes-20,556,223.92
VI. Closing balance238,668,959.90

Classification of the balance of defined benefit plan

ItemsClosing balanceOpening balance
Short-term salary118,987,070.4289,343,078.64
Long-term salary404,951,753.73456,055,879.38
Total523,938,824.15545,398,958.02

43. Estimated liabilities

ItemsClosing balanceOpening balance
Projection of three guarantees and installation fees2,822,216,231.672,821,651,293.65
Active litigation39,812,654.4217,898,125.83
Others191,660.00
Total2,862,028,886.092,839,741,079.48

Projection of significant assumption and estimation relating to three guarantees and installation fees:

the company projected three guarantees and installation fees rate reasonably based on previous actualexpense on three guarantees and installation fees as well as sales data. The company projected threeguarantees and installation fees that are likely to be incurred going forward according to therequirements of three guarantees and installation policies of the Company as well as the actual salesdata.

44. Deferred income

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balanceReasons
Government grants643,551,987.30112,838,750.7091,642,870.66664,747,867.34
Total643,551,987.30112,838,750.7091,642,870.66664,747,867.34/

45. Other non-current liabilities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsClosing balanceOpening balance
Obligation of repurchasing the minority equity rights1,827,098,290.671,792,322,337.19
Contingent consideration5,705,307.28
Others86,422,390.8425,839,049.46
Total1,913,520,681.511,823,866,693.93

46. Share capital

CategoriesOpening balanceIncrease for the periodDecrease for the periodClosing 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 shares6,368,416,70048,8566,368,465,556
1. Ordinary shares in RMB6,097,402,72748,8566,097,451,583
2. Domestic listed foreign Shares
3. Offshore listed foreign Shares271,013,973271,013,973
4.Others
III. Total shares6,368,416,70048,8566,368,465,556

47. Other equity instruments

48. Capital reserve

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
Capital premium (Share premium)1,359,553,836.5622,728,113.53249,363,218.401,132,918,731.69
ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
Equity portion of exchangeable bonds431,424,524.07431,424,524.07
Equity portion of convertible bonds473,061,264.64111,993.60472,949,271.04
Total904,485,788.71111,993.60904,373,795.11
Other capital reserve reserve849,219,638.0188,880,534.66760,339,103.35
Total2,208,773,474.5722,728,113.53338,243,753.061,893,257,835.04

Other explanations, including the changes in the current period and the reasons for the changes:

The main reasons for the change in capital premium: ①the Company converted part of convertiblebonds to shares in the current period, increasing the capital reserve RMB669,546.35; ②Acquisition ofminority shareholding in the current period , increasing the share premium RMB22,058,567.18; andnon-proportional capital injection in subsidiaries in the current period, reducing the share premiumRMB249,363,218.40.

The main reasons for the change in other capital reserve: Changes on other equity of the investeeaccounted for using equity method, which results from proportionate movement of other capital reserveby the Company.

49. Other comprehensive income

ItemsOpening balanceAmount for the current periodClosing balance
Amount before current income tax for the current periodLess: income tax expensesAttributable to the parent company, after taxAttributable to minority shareholders, after taxOthers
a-66,156,965.0219,689,498.1919,829,612.65-140,114.46-46,327,352.37
b39,349,747.72-39,259,415.51-13,860,471.73-25,398,943.7813,950,803.94
c754,824,347.90241,049,960.25251,436,557.43-10,386,597.181,006,260,905.33
d-25,555,254.57-28,381,710.26472,624.13-11,842,641.94-17,011,692.45-37,397,896.51
e70,170,471.32-488,918.94-83,645.76-400,317.18-4,956.0069,770,154.14
Total772,632,347.35192,609,413.73-13,471,493.36233,624,267.18-27,543,360.09-1,006,256,614.53

Notes:

(1) Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the detailsare asfollows:

Item a represents other comprehensive income classified to profit and loss under the equity method.Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).Item c represents exchange differences from translation of foreign currency financial statements.

(2) Item d and e are other comprehensive income that cannot be reclassified into profit or loss. Detailsare 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.

50. Surplus reserve

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
Statutory surplus reserve2,240,644,515.512,240,644,515.51
Discretionary surplus reserve26,042,290.4826,042,290.48
Reserve fund11,322,880.6411,322,880.64
Enterprise expansion fund10,291,630.4710,291,630.47
Others
Total2,288,301,317.102,288,301,317.10

Pursuant to the Company Law of the People's Republic of China and the articles of association, theCompany is required to appropriate the statutory surplus reserve at 10% of its net profit.

51. Undistributed profits

√Applicable □Not Applicable

ItemsAmount
Undistributed profits at the end of previous year26,859,741,163.95
Add: correction of accounting errors
Adjustment due to implementation of enterprise accounting standard
Adjustment due to business combination under common control
Undistributed profits at the beginning of the year26,859,741,163.95
Add: net profit attributable to owners of the Parent Company5,150,869,558.02
Profit available for appropriation for the year32,010,610,721.97
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares2,235,331,410.16
Adjustment due to implement of enterprise accounting standard55,596,586.26
Undistributed profits at the end of period29,719,682,725.55

52. Operating income and operating cost

(1) Operating income

ItemsAmount for the current periodAmount for the previous period
Primary business98,501,132,026.7490,190,276,014.88
Other business478,661,094.42297,846,191.43
Total98,979,793,121.1690,488,122,206.31

(2) Primary business income and primary business cost by product category

CategoriesAmount for the current periodAmount for the previous period
Primary business incomePrimary business costPrimary business incomePrimary business cost
Air conditioner17,951,348,135.7712,426,410,510.3219,210,576,338.113,372,837,288.5
57
Refrigerator28,468,864,532.2319,392,981,129.6826,038,635,458.5917,956,692,254.14
Kitchen appliance13,935,655,862.999,524,486,399.0811,275,476,503.207,407,653,898.69
Water heater4,099,948,994.862,351,601,469.293,871,786,733.032,191,843,437.52
Washing machine20,294,850,737.8913,962,027,731.4316,511,074,163.2310,965,693,830.31
Equipment and Integrated channel services business and others13,750,463,763.0012,316,700,364.4113,282,726,818.6812,011,157,819.96
Total98,501,132,026.7469,974,207,604.2190,190,276,014.8863,905,878,529.19

53. Taxes and surcharge

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
City maintenance and construction tax142,297,554.55136,407,185.16
Education surcharge101,361,172.2492,066,486.02
Property tax33,285,947.6433,206,469.98
Land use tax16,802,921.5020,661,100.58
Stamp duty85,161,265.13106,036,603.21
Others22,021,639.5919,599,596.57
Total400,930,500.65407,977,441.52

54. Selling expenses

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
Selling expenses14,596,335,114.0113,522,931,745.64
Total14,596,335,114.0113,522,931,745.64

The Company's selling expenses are mainly salary expenses, transportation and storage fees, advertisingand promotion fees, and after-sales expenses etc.

55. Administrative expenses

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
Administrative expenses4,525,786,069.234,033,672,258.19
Total4,525,786,069.234,033,672,258.19

The Company's management expenses are mainly salary expenses, administrative office fees, rental fees,

etc.

56. R&D expenses

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
R&D expenses2,741,563,815.812,252,630,555.38
Total2,741,563,815.812,252,630,555.38

The Company's R&D expenses are mainly salary expenses, research and development equipmentexpenses, inspection and testing fees.

57. Financial expenses

ItemsAmount for the current periodAmount for the previous period
Interest expense885,683,954.28683,665,504.25
Less: Interest income253,967,290.82234,458,811.03
Less: Cash discount87,147,629.4572,886,733.41
Exchange gains and losses-107,341,950.8841,699,660.18
Others71,519,698.4067,905,794.68
Total508,746,781.53485,925,414.67

58. Other income

ItemsAmount for the current periodAmount for the previous periodRelated to assets/ revenue
Government grants443,747,043.01214,614,016.20Related to revenue
Government grants28,994,813.549,678,395.82Related to assets
Total472,741,856.55224,292,412.02

59. Investment income

ItemsAmount for the current periodAmount for the previous period
Long-term equity investments income calculated by the equity method542,608,907.11580,932,950.31
Investment income from disposal of long-term equity investments1,089,977.7518,266,787.10
Investment income from other equity instrument investments during holding period18,421,982.0675,468,156.04
Income from wealth management products95,141,562.4236,192,415.80
Investment income from disposal of financial assets measured at fair value with changes included in current profit and loss98,789,008.11156,598,679.71
Total756,051,437.45867,458,988.96

60. Gains on changes in fair value

ItemsAmount for the current periodAmount for the previous period
Changes in fair value of forward foreign exchange trading contracts45,504,828.0527,545,288.39
Changes in fair value of wealth management products11,905,128.759,116,633.11
Total57,409,956.8036,661,921.50

61. Credit impairment loss (losses are reperented by '-')

ItemsAmount for the current periodAmount for the previous period
Loss on bad debts37,775,605.3940,539,282.27
Total37,775,605.3940,539,282.27

62. Impairment loss on assets (losses are reperented by '-')

ItemsAmount for the current periodAmount for the previous period
Loss from reducing inventory-249,884,430.07-227,922,058.93
Impairment losses on other current assets-7,863,475.13-7,980,978.65
Total-257,747,905.20-235,903,037.58

63. Gains on disposal of assets

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
Gains on disposal of non-current assets18,867,410.776,918,487.21
Losses on disposal of non-current assets-6,160,727.90-1,412,999.31
Total12,706,682.875,505,487.90

Other explanations:

□Applicable √Not Applicable

64. Non-operating income

√Applicable □Not Applicable

ItemsAmount for the current periodAmount for the previous period
Gains on disposal of non-current assets7,143,791.101,998,891.62
Quality claims and fines249,594,910.91188,459,248.12
Others12,859,446.8127,816,639.13
Total269,598,148.82218,274,778.87

65. Non-operating expenses

ItemsAmount for the current periodAmount for the previous period
Losses on disposal of non-current assets16,637,393.7023,192,643.17
Donation expenses3,036,369.049,112,854.70
Others94,532,945.1817,098,947.82
Total114,206,707.9249,404,445.69

66. Income tax expenses

(1)Statement of income tax expenses

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current periodAmount for the previous period
Current income tax expenses1,182,998,979.441,017,300,436.73
Deferred income tax expenses-148,078,890.83-50,520,990.09
Total1,034,920,088.61966,779,446.64

(2) Reconciliation between accounting profit and income tax expenses

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Total profit7,265,905,955.78
Income tax expenses calculated pursuant to statutory/applicable tax rate(s)1,816,476,488.95
Impact from different tax rates applicable to subsidiaries-454,758,888.32
Impact from adjustment to income tax in prior periods-111,874,867.68
Impact from non-taxable income-90,492,737.70
Impact from non-deductible cost, expense and loss-8,716,516.04
Impact from using deductible losses of previously unrecognized deferred income tax assets34,948,402.10
Others-150,661,792.70
Total income tax expense1,034,920,088.61

Other explanations:

□Applicable √Not Applicable

67. Other comprehensive income

√Applicable □Not Applicable

Please refer to Note VII. 49 for details.

68. Cash received from other operating activities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Deposits and securities243,369,971.95
Government grants55,819,129.55
Non-operating income excluding government grants125,553,362.18
Interest income162,910,290.90
Others32,758,487.02
Total620,411,241.60

69. Cash paid to other operating activities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Operating expenses5,075,066,390.65
Administrative and R&D expenses3,181,890,577.26
Financial expenses57,834,792.93
Non-operating expenses14,536,564.10
Others27,097,567.98
Total8,356,425,892.92

70. Other cash received from investing activities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Net cash inflow on acquisition of subsidiaries4,628,544.77
Gains on disposal of lock-exchange instruments38,574,425.89
Total43,202,970.66

71. Other cash paid to other investing activities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Net cash outflow on disposal of subsidiaries10,351,066.54
Total10,351,066.54

72. Cash paid to other financing activities

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsAmount for the current period
Lease payment410,618,444.00
Acquisition of minority shareholding652,532,203.09
Others317,261,880.42
Total1,380,412,527.51

73. Information of net profit adjusted to cash flow of operating activities

Net profit adjusted to cash flow of operating activitiesAmount for the current periodAmount for the previous period
1. Net profit6,230,985,867.175,867,680,708.49
Add: impairment provision for assets219,972,299.81197,876,735.99
Depreciation of fixed assets1,803,398,666.741,267,068,872.91
Amortization of intangible assets367,027,479.81242,897,053.11
Amortization of long-term expenses payable17,831,771.1527,350,569.61
Losses on disposal of fixed assets, intangible assets and other long-term assets ('-' represents 'gains')49,110,463.3315,688,263.65
Loss and gains on change of fair value ('-' represents 'gains')-64,023,425.00-36,661,921.50
Financial expenses ('-' represents 'gains' )885,683,954.28643,613,162.95
Loss on investments('-' represents 'gains')-756,051,437.45-867,458,988.96
Decrease in deferred income tax assets ('-' represents 'increase')35,740,049.78110,034,637.01
Increase of deferred income tax liabilities ('-' represents 'decrease')-183,818,940.61-160,555,627.10
Decrease in inventories ('-' represents 'increase')-1,490,335,193.26-1,353,147,972.39
Decrease of operational account receivables ('-' represents 'increase')-4,953,126,704.40-4,083,585,510.15
Increase of operational account payables ('-' represents 'decrease')1,069,380,472.313,591,737,646.77
Others402,058,174.08135,937,361.85
Net cash flow generated from operational activities3,633,833,497.745,598,474,992.24
2. Significant investment and financing activities not involving cash inflows and outflows:
Capital transferred from debts
Convertible corporate bonds due within one year
Fixed assets under finance lease
3. Net changes of cash and cash equivalents:
Cash balance at the end of the period32,947,366,592.3632,824,234,990.36
Less: cash balance at the beginning of the period36,044,777,414.0434,861,909,595.62
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-3,097,410,821.68-2,037,674,605.26

74. Cash and cash equivalents

ItemsClosing balanceOpening balance
I. Cash32,947,366,592.3636,044,777,414.04
Including: Cash on hand1,879,695.701,380,614.79
Bank deposits always available for payment32,481,704,511.3535,483,724,835.69
Other monetary funds always available for payment463,782,385.31559,671,963.56
II. Cash equivalents
Including: bond investments due within three months
III. Closing balance of cash and cash equivalents32,947,366,592.3636,044,777,414.04
Including: cash and cash equivalents, the use of which by the parent or subsidiaries of the Group is restricted

75. Monetary items in foreign currency

ItemsClosing BalanceOpening Balance
Balance in foreign currencyExchange rateBalance in RMBBalance in foreign currencyExchange rateBalance in RMB
Monetary funds
USD797,461,585.166.87475,482,309,159.501,067,804,067.536.86327,328,552,876.29
EUR125,835,766.947.8170983,658,190.1848,497,251.177.8473380,572,479.12
JPY3,172,544,932.620.063816202,459,127.422,269,981,380.740.061887140,482,337.71
HKD621,017,975.570.8797546,309,513.11596,825,742.940.8762522,938,715.96
Others1,799,637,389.811,381,212,756.03
Sub-total9,014,373,380.029,753,759,165.11
Accounts receivable
USD420,048,497.146.87472,887,707,403.28344,469,847.016.86322,364,165,453.98
EUR396,322,720.707.81703,098,054,707.7356,772,642.747.8473445,511,959.37
JPY5,186,652,290.150.063816330,991,402.554,349,404,743.030.061887269,171,611.33
Others3,636,371,298.682,186,781,156.28
Sub-total9,953,124,812.245,265,630,180.96
Short-term borrowings
USD495,201,396.716.87473,404,361,041.97492,713,050.436.86323,381,588,207.73
EUR327,414,015.917.81702,559,395,362.389,554,106.327.847374,973,938.51
JPY2,715,225,346.620.063816173,274,820.723,084,656,064.620.0619190,940,210.40
Others73,180,480.0730,737,573.90
Sub-total6,210,211,705.143,678,239,930.54
Accounts payable
USD914,276,845.506.87476,285,379,029.76807,248,013.946.86325,540,304,569.25
EUR270,492,364.637.81702,114,438,814.3211,066,031.537.847386,838,469.23
JPY1,420,679,730.480.06381690,662,097.683,127,541,332.150.0619193,594,808.46
Others1,490,304,058.431,546,898,716.82
Sub-total9,980,784,000.197,367,636,563.76
Non-current liabilities due within one year
USD1,277,906,408.376.87478,785,223,185.62409,319,900.196.86322,809,244,338.98
RUB2,523,135,880.000.109275,021,810.922,087,381,000.000.0986205,815,766.60
EUR48,591,096.007.8170379,836,597.44
Others93,151,462.75
Sub-total9,533,233,056.733,015,060,105.58
Long-term borrowings
USD1,201,437,535.046.87478,259,522,622.142,208,809,964.666.863215,159,504,549.45
EUR409,317,069.607.81703,199,631,533.03
JPY10,825,390,235.050.063816690,833,103.244,327,558,051.700.0619267,875,843.40
Others69,484,946.6772,878,712.37
Sub-total12,219,472,205.0815,500,259,105.22

VIII. Changes of consolidation scope

1. Business combination not under common control

√Applicable □Not Applicable

(1). Business consolidation not under common control occurring in the current period

√Applicable □Not Applicable

Unit and Currency:RMB

Acquiree NameTime of equity acquisitionEquity acquisition costInterest acquired (% )Equity acquisition methodEquity acquisition dateRecognition basis of acquisition datesAcquiree's revenue from acquisition date to the end of current periodAcquiree's net profit from acquisition date to the end of current period
CANDY S.p.AJanuary 2019EUR 467,211,498.32100%AcquisitionJanuary 2019shareholding transferred4,661,486,158.89-125,206,463.19
Shanghai Firs International Logistics Co., Ltd.March 201925,950,868.3551%AcquisitionMarch 2019shareholding transferred101,475,377.351,577,204.07

Remark: CANDY's net profit for the period was RMB -125 million, which was mainly affected byfactors such as integration expenses, sales seasonality,interest expense on M&A loans and fluctuationon exchange rate during the integration period of M&A; the release of synergies in future M&A, theincrease of plant operational efficiency, the optimization of financial cost and the upcoming season ofsales in the second half of the year (especially the fourth quarter) and other factors will have a positiveimpact on the operating profit.

(2). Combination cost and goodwill

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsCANDY S.p.A(EUR)Shanghai Firs International Logistics Co., Ltd.
------ Cash467,211,498.3220,000,000.00
------ Contingent consideration5,950,868.35
Total combination cost467,211,498.3225,950,868.35
Less: fair value of identifiable net assets acquired210,529,802.754,865,433.94
Goodwill256,681,695.5721,085,434.41

(3). Acquiree's identifiable assets and liabilities at acquisition date

√Applicable □Not Applicable

Unit and Currency:RMB

ItemsCANDY S.p.A
Fair value(EUR)Book Value(EUR)
Monetary funds124,315,613.00124,315,613.00
Accounts receivable167,835,082.00167,835,082.00
Other receivables79,933,406.0079,933,406.00
Non-current assets due within one year28,611,614.0028,611,614.00
Inventories249,471,277.00249,471,277.00
Long-term equity investments4,716,766.004,716,766.00
Fixed assets140,988,930.00129,758,594.00
Construction in progress7,379,785.007,379,785.00
Intangible assets268,887,832.4048,423,547.00
Deferred income tax assets33,253,774.0033,253,774.00
Other non-current assets10,427,618.0010,427,618.00
Accounts payable-387,396,637.73-387,396,637.73
Taxes payable-18,425,859.00-18,425,859.00
Other payables-89,711,804.00-89,711,804.00
Contract liabilities-1,779,450.00-1,779,450.00
Long-term borrowings due within one year-108,045,273.00-108,045,273.00
Long-term borrowings-159,707,998.00-159,707,998.00
Long-term payables-16,232,217.00-16,232,217.00
Deferred income tax liabilities-122,538,522.92-22,692,115.00
Other non-current liabilities-1,454,133.00-
Net assets210,529,802.7580,135,722.27
Less:Minority equity interests
Net assets obtained210,529,802.7580,135,722.27
ItemsShanghai Firs International Logistics Co., Ltd.
Fair valueBook Value
Monetary funds4,628,544.734,628,544.73
Accounts receivable58,534,640.8458,534,640.84
Bills receivable1,868,857.041,868,857.04
Other receivables9,655,435.069,655,435.06
Prepayments4,207,402.804,207,402.80
Fixed assets1,856,760.061,856,760.06
Intangible assets2,346,858.392,346,858.39
Other current assets2,989,330.422,989,330.42
Short-term borrowings-15,026,666.63-15,026,666.63
Accounts payable-15,269,603.51-15,269,603.51
Taxes payable-67,637.73-67,637.73
Payables for staff's remuneration-1,551,221.84-1,551,221.84
Expected refund liabilities –short term-1,540,316.20-1,540,316.20
Other payables-38,495,776.20-38,495,776.20
Contract liabilities-2,810,706.25-2,810,706.25
Other current liabilities-1,785,834.44-1,785,834.44
Net assets9,540,066.549,540,066.54
Less:Minority equity interests
Net assets obtained9,540,066.549,540,066.54

2. Business combination under common control

□Applicable √Not Applicable

3. Disposal of subsidiary

Whether there is a single disposal of the investment in the subsidiary (that is, the loss of control):

ItemsCixi Yunlian Bailing Logistics Co., Ltd.Qingdao Goodaymart Haichang Logistic Co., Ltd.
Equity disposal price1,000,000.00
Proportion of equity disposal51%100%
Equity disposal methodDisposalDeregistration
Date of loss-of-control2019/1/312019/1/3
Basis for determination of date of loss-of-controlTransferDeregistration
Difference between consideration and its share of net assets of the subsidiary in the consolidated financial statement as respect to the disposal of investment-3,515,418.58-

4. Changes of consolidation scope due to other reasons

√Applicable □Not Applicable

(1)Qingdao Haier Intelligent Electronics Co., Ltd., a subsidiary of the Company, established asubsidiary Qingdao Haiduv Health Technology Co., Ltd. for the period with a shareholding of 70% atthe end of the period.

(2)Qingdao Haier Technology Investment Co., Ltd., a subsidiary of the Company, established asubsidiary Qingdao Jijia Cloud Intelligent Technology Co., Ltd. for the period with a shareholding of 80%at the end of the period.

IX. Interests in other entities

1. Interests in subsidiaries

(1) Composition of the Group

Name of subsidiaryPrincipal place of businessPlace of registrationNature of businessShareholding (%)Proportion of the voting rights (%)Method
DirectIndirect
Haier Electronics Group Co., Ltd.Mainland of China and Hong KongBermudaGroup company, which mainly engage in investment holding, the production and sale of washing machines and water heaters, distribution service and logistics service14.0131.6357.65Business combination under common control
WONDER GLOBAL(BVI) INVESTMENT LIMITEDThe US and other overseas areasBritish Virgin IslandsGroup company, which mainly engage in household appliances production and distribution business100.00100.00Establishment
Haier Singapore Investment Holding Co., Ltd.Singapore and other overseas areasSingaporeGroup company, which mainly engage in household appliances production and distribution business100.00100.00Business combination under common control
HAIER NEWZEALAND INVESTMENT HOLDING COMPANY LIMITEDNew ZealandNew ZealandGroup company, which mainly engaged in the production and distribution of household appliances100.00100.00Business combination under common control
CANDY S.p.AEuropeItalyGroup company, which mainly engaged in the production and distribution of household appliances100.00100.00Business combination not under common control
Qingdao Haier Air Conditioner Gen Corp., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneManufacture and sale of household air-conditioners100.00100.00Business combination under common control
Guizhou Haier Electronics Co., Ltd..Huichuan District, Zunyi City, GuizhouHuichuan District, Zunyi City, GuizhouManufacture and sale of refrigerator59.0059.00Business combination under common
ProvinceProvincecontrol
Hefei Haier Air-conditioning Co., LimitedHefei Haier Industrial ParkHefei Haier Industrial ParkManufacture and sale of air-conditioners100.00100.00Business combination under common control
Wuhan Haier Electronics Co., Ltd.Wuhan Haier Industrial ParkWuhan Haier Industrial ParkManufacture and sale of air-conditioners60.0060.00Business combination under common control
Qingdao Haier Air-Conditioner Electronics Co., Ltd.Qingdao Development ZoneQingdao Development ZoneManufacture and sale of air-conditioners100.00100.00Business combination under common control
Qingdao Haier Information Plastic Development Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneManufacturing of plastic products100.00100.00Business combination under common control
Dalian Haier Precision Products Co., Ltd.Dalian Export Expressing ZoneDalian Export Expressing ZoneManufacture and sale of precise plastics90.0090.00Business combination under common control
Hefei Haier Plastic Co., Ltd.Hefei Economic & Technological Development AreaHefei Economic & Technological Development AreaManufacture and sale of plastic parts94.125.88100.00Business combination under common control
Qingdao Haier Moulds Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneR&D and manufacture of precise mold and product75.0025.00100.00Business combination under common control
Qingdao Meier Plastic Powder Co., Ltd.Qingdao Development ZoneQingdao Development ZoneManufacture of plastic powder, plastic sheet and high-performance coatings40.0060.00100.00Business combination under common control
Chongqing Haier Precision Plastic Co., Ltd.Jiangbei District, Chongqing CityJiangbei District, Chongqing CityPlastic products, sheet metal work, electronics and hardware90.0010.00100.00Business combination under common control
Chongqing Haier Intelligent Electronics Co., Ltd.Jiangbei District, Chongqing CityJiangbei District, Chongqing CityManufacture and sale of electronics and automatic control system equipment90.0010.00100.00Business combination under common control
Qingdao Haier Robot Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneR&D, manufacture and sale of robot50.0050.00Business combination
under common control
Qingdao Haier Refrigerator Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneManufacture and production of fluorine-free refrigerators100.00100.00Establishment
Qingdao Haier Refrigerator (International) Co., Ltd.Pingdu Development Zone, QingdaoPingdu Development Zone, QingdaoManufacture of refrigerators100.00100.00Establishment
Qingdao Household Appliance Technology and Equipment Research InstituteQingdao High-tech ZoneQingdao High-tech ZoneResearch and development of home appliances mold and technological equipment100.00100.00Establishment
Qingdao Haier Whole Set Home Appliance Service Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneResearch, development and sales of health-related small home appliance98.3398.33Establishment
Qingdao Haier Intelligent Electronics Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneDesign, R&D of electronics and automatic control system100.00100.00Establishment
Qingdao Haier Special Refrigerator Co., Ltd.Qingdao Development ZoneQingdao Development ZoneManufacture and sales of fluorine-free refrigerators100.00100.00Establishment
Qingdao Haier Dishwasher Co., Ltd.Qingdao Development ZoneQingdao Development ZoneManufacture of dish washing machine and gas stove100.00100.00Establishment
Qingdao Haier Special Freezer Co., Ltd.Qingdao Development ZoneQingdao Development ZoneResearch, manufacture and sales of freezer and other refrigeration products96.0696.06Establishment
Dalian Haier Air-conditioning Co., Ltd.Dalian Export Expressing ZoneDalian Export Expressing ZoneAir conditioner processing and manufacturing90.0090.00Establishment
Dalian Haier Refrigerator Co., Ltd.Dalian Export Expressing ZoneDalian Export Expressing ZoneRefrigerator processing and manufacturing90.0090.00Establishment
Qingdao Haier Electronic Plastic Co., Ltd.Qingdao Development ZoneQingdao Development ZoneDevelopment, assembling and sales of plastics, electronics and products80.0080.00Establishment
Wuhan Haier Freezer Co., Ltd.Wuhan Economic & Technological Development Zone High-tech IndustrialWuhan Economic & Technological Development Zone High-tech IndustrialResearch, manufacture and sales of freezer and other refrigeration products95.005.00100.00Establishment
ParkPark
Qingdao Haidarui Procurement Service Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneDevelop, purchase and sell electrical products and components98.002.00100.00Establishment
Qingdao Haier Intelligent Home Appliance Technology Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneDevelopment and application of household appliances, communication, electronics and network engineering technology98.911.09100.00Establishment
Chongqing Haier Air-conditioning Co., Ltd.Jiangbei District, Chongqing CityJiangbei District, Chongqing CityManufacture and sales of air conditioners76.9223.08100.00Establishment
Qingdao Haier Precision Products Co., Ltd.Qianwangang Road, Jiaonan CityQianwangang Road, Jiaonan CityDevelopment and manufacture of precise plastic, metal plate, mold and electronic products for household appliances70.0070.00Establishment
Qingdao Haier Air Conditioning Equipment Co., Ltd.Jiaonan City, QingdaoJiaonan City, QingdaoManufacture of household appliances and electronics100.00100.00Establishment
Dalian Free Trade Zone Haier Air-conditioning Trading Co., Ltd.Dalian Export Expressing ZoneDalian Export Expressing ZoneDomestic trade100.00100.00Establishment
Dalian Free Trade Zone Haier Refrigerator Trading Co., Ltd.Dalian Export Expressing ZoneDalian Export Expressing ZoneDomestic trade100.00100.00Establishment
Qingdao Ding Xin Electronics Technology Co., Ltd.Qingdao Development ZoneQingdao Development ZoneManufacturing and sales of electronic components100.00100.00Establishment
Chongqing Haier Electronics Sales Co., Ltd.Jiangbei District, Chongqing CityJiangbei District, Chongqing CitySales of household appliances95.005.00100.00Establishment
Chongqing Haier Refrigeration Appliance Co., Ltd.Jiangbei District, Chongqing CityJiangbei District, Chongqing CityProcessing and manufacturing of refrigerator84.9515.05100.00Establishment
Hefei Haier Refrigerator Co., Ltd.Hefei Haier Industrial ParkHefei Haier Industrial ParkProcessing and manufacturing of refrigerator100.00100.00Establishment
Wuhan Haier Energy and Power Co., Ltd.Wuhan Haier Industrial ParkWuhan Haier Industrial ParkEnergy service75.0075.00Establishment
Qingdao Haier HVAC Engineering Co., Ltd.Qingdao Development ZoneQingdao Development ZoneAir-conditioning engineer100.00100.00Establishment
Chongqing Goodaymart ElectricJiangbei District,Jiangbei District,Sales of household51.0051.00Establishment
Appliance Sale Co., Ltd.Chongqing CityChongqing Cityappliances and electronics
Qingdao Haier (Jiaozhou) Air-conditioning Co., LimitedJiaozhou City, QingdaoJiaozhou City, QingdaoManufacture and sale of air-conditioners100.00100.00Establishment
Qingdao Haier Component Co., Ltd.Jiaozhou City, QingdaoJiaozhou City, QingdaoManufacture and sales of plastic and precise sheet metal products100.00100.00Establishment
Haier Shareholdings (Hong Kong) LimitedHong KongHong KongInvestment100.00100.00Establishment
HARVEST INTERNATIONAL COMPANYCayman IslandsCayman IslandsInvestment100.00100.00Establishment
Shenyang Haier Refrigerator Co., Ltd.Shenbei New Area, Shenyang CityShenbei New Area, Shenyang CityManufacture and sales of refrigerator100.00100.00Establishment
Foshan Haier Freezer Co., Ltd.Sanshui District, Foshan CitySanshui District, Foshan CityManufacture and sales of freezer100.00100.00Establishment
Zhengzhou Haier Air-conditioning Co., Ltd.Zhengzhou Economic and Technological Development ZoneZhengzhou Economic and Technological Development ZoneManufacture and sales of air conditioner100.00100.00Establishment
Qingdao Haidayuan Procurement Service Co., Ltd.Qingdao Development ZoneQingdao Development ZoneDevelop, purchase and sell electrical products and components100.00100.00Establishment
Qingdao Haier Intelligent Technology Development Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneDevelopment and research of household appliance products100.00100.00Establishment
Qingdao Hairi Hi-Tech Model Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneDesign, manufacture and sales of product model and mould100.00100.00Business combination under common control
Qingdao Hai Gao Design and Manufacture Co., Ltd.Qingdao High-tech ZoneQingdao High-tech ZoneIndustrial design and prototype production75.0075.00Business combination under common control
Beijing Haier Guangke Digital Technology Co., Ltd.BeijingBeijingDevelopment, promotion and transfer of technology55.0055.00Business combination under common control
Shanghai Haier Medical Technology Co., Ltd.ShanghaiShanghaiWholesale and retail of medical facility100.00100.00Establishment
Qingdao Haier Technology Co., Ltd.QingdaoQingdaoDevelopment and sales of software and information product100.00100.00Business combination under common control
Qingdao Haier Technology Investment Co., Ltd.QingdaoQingdaoEntrepreneurship investment and consulting100.00100.00Establishment
Qingdao Casarte Smart Living Appliances Co., Ltd.QingdaoQingdaoDevelopment, production and sales of appliances100.00100.00Establishment
Qingdao Haichuangyuan Appliances Sales Co., Ltd.QingdaoQingdaoSales of household appliances and digital products100.00100.00Establishment
Haier Overseas Electric Appliance Co., Ltd.QingdaoQingdaoSales of household appliances, international freight forwarding100.00100.00Establishment
Haier Group (Dalian) Electrical Appliances Industry Co., Ltd.DalianDalianSales of household appliances, international freight forwarding100.00100.00Business combination under common control
Qingdao Haier Central Air Conditioning Co., Ltd.QingdaoQingdaoProduction and sales of air conditioners and refrigeration equipment100.00100.00Establishment
Beijing Haier Yun Kitchen Technology Co., Ltd.BeijingBeijingTechnology development promotion and transfer95.7795.77Establishment
Chongqing Haier Home Appliance Sale Hefei Co., Ltd.HefeiHefeiSales of household appliances100.00100.00Establishment
Beijing Haier Zhongyou Netmedia Co., Ltd.BeijingBeijingRadio and television program51.0051.00Establishment
Qingdao Weixi Smart Technology Co., Ltd.QingdaoQingdaoIntelligent sanitary ware71.4371.43Establishment
Haier U+smart Intelligent Technology (Beijing) Co., Ltd.BeijingBeijingSoftware development100.00100.00Establishment
Qingdao Haier Industry Intelligence Research Institute Co., Ltd.QingdaoQingdaoIndustrial intelligence technology100.00100.00Establishment
Haier (Shanghai) Electronics Co., Ltd.ShanghaiShanghaiSales, research and development of household appliances100.00100.00Establishment
Haier Shanghai Zhongzhi Fang Chuang Ke Management Co., Ltd.ShanghaiShanghaiBusiness management consulting, chuangke management100.00100.00Establishment
Haier Kaaosi IOT Ecosystem Technology LimitedQingdaoQingdaoIndustrial investment, robotics and100.00100.00Establishment
automation R&D, etc.
Maniiq (Qingdao) Intelligent Equipment Co., Ltd.QingdaoQingdaoInternet of things, robot and automation research and development, design, etc.100.00100.00Establishment
Haier digital technology (Shanghai) Co., Ltd.ShanghaiShanghaiTechnology development promotes, transfer, material sales, etc.100.00100.00Establishment
Qingdao Haier Smart Kitchen Appliance Co., Ltd.QingdaoQingdaoProduction and sales of kitchen smart home appliances100.00100.00Establishment
JIYI Appliance (Shanghai) Co., Ltd.ShanghaiShanghaiSales of household appliances100.00100.00Establishment
Qingdao Hao Pin Hai Rui Information Technology Co., Ltd.QingdaoQingdaoDevelop, purchase and sales of electrical products and components100.00100.00Establishment
FISHER&PAYKEL PRODUCTION MACHINERY LIMITEDNew ZealandNew ZealandManufacturing of automation and customization special equipment100.00100.00Business combination under common control
MANIIQ(SINGAPORE INTELLIGENT EQUIPMENT CO. LTD.SingaporeSingaporeInvestment management100.00100.00Establishment
MANIIQ(HK) INTELLIGENT EQUIPMENT CO. LTD.Hong KongHong KongInvestment management100.00100.00Establishment
Qingdao Haier special refrigerating Appliance Co., Ltd.QingdaoQingdaoProduction and sales of household appliances100.00100.00Establishment
Beijing Zero Micro Technology Co., Ltd.BeijingBeijingPromotion of technological development55.0055.00Establishment
Laiyang Haier Smart Kitchen Appliance Co., Ltd.LaiyangLaiyangProduction and sales of household appliances100.00100.00Establishment
Aituling (Shanghai) Information Technology Co., Ltd.ShanghaiShanghaiPromotion of technological development72.2272.22Establishment
Qingdao Blue Whale Technology Co., Ltd.QingdaoQingdaoIndustrial intelligence technology67.0067.00Establishment
Qingdao Hailian Rongchuang Technology Co., Ltd.QingdaoQingdaoIndustrial intelligence technology100.00100.00Establishment
Hefei Haier Air Conditioning Electronics Co., Ltd.HefeiHefeiProduction and sales of household appliances100.00100.00Establishment
Taizhou Haier Medical Technology Co., Ltd.TaizhouTaizhouPromotion of medical research and development100.00100.00Establishment
Haier (Shanghai) Home Appliance Research and DevelopmentShanghaiShanghaiResearch and development of household100.00100.00Establishment
Center Co., Ltd.appliances
Haier (Shenzhen) R&D Co., Ltd.ShenzhenShenzhenDevelopment, research and technical services of household and commercial electrical100.00100.00Establishment
Guangzhou Haier Air Conditioner Co., Ltd.Guangdon gGuangdon gManufacturing of refrigeration and air conditioning equipment100.00100.00Establishment
Qingdao Haier Institute of Investment Management Co., Ltd.QingdaoQingdaoVenture Capital business70.0070.00Establishment
Tianjin Haiyun Chuang Digital Technology Co., Ltd.TianjinTianjinResearch and development of digital technology100.00100.00Establishment
Haier Digital Technology (Qindao) Co., Ltd.QingdaoQingdaoResearch and development of digital technology100.00100.00Establishment
Haier Digital Technology (Nanjing) Co., Ltd.NanjingNanjingResearch and development of digital technology100.00100.00Establishment
Haier Digital Technology (Wuxi) Co., Ltd.WuxiWuxiResearch and development of digital technology100.00100.00Establishment
Haier Digital Technology (Xi'an) Co., Ltd.Xi'anXi'anResearch and development of digital technology100.00100.00Establishment
Ficoteng Intelligent Technology (Qingdao) Co., Ltd.QingdaoQingdaoIntelligent device integrated service100.00100.00Establishment
Qingdao Yunshang Yuyi Technology Co., Ltd.QingdaoQingdaoIoT technology research and development, sales of household appliances, digital products and accessories, clothing shoes and hats, textiles, daily necessities, and furniture70.0070.00Establishment
Haiyu (Shanghai) Intelligent Technology Co., Ltd.ShanghaiShanghaiRental of apartments, intelligent equipment, etc.70.0070.00Establishment
Tianjin Haier Zhikong Electronics Co., Ltd.TianjinTianjinDevelopment and manufacturing of automatic control system100.00100.00Establishment
Hefei Haier Intelligent Electronics Co., Ltd.HefeiHefeiDevelopment and manufacturing of automatic control system100.00100.00Establishment
Qingdao Haizhi Investment Management Co., Ltd.QingdaoQingdaoAsset management, equity investment.100.00100.00Establishment
Qingdao Haiduv Health Technology Co., Ltd.QingdaoQingdaoDesign and development of household appliance7070Establishment
Qingdao Jijia Cloud Intelligent Technology Co., Ltd.QingdaoQingdaoR&D and sales of lighting appliances8080Establishment
Microenterprises such as Qingdao Hai Heng Feng Electrical Appliances Sale & Service Co., Ltd.All over the countryAll over the countrySales of household appliancesEstablishment

Reasons for including subsidiaries which the Company has 50% or less of the equity into the scopeof consolidated financial statements:

At the end of the reporting period, the Company had substantial control over the finance andoperation of Haier Electronics Group Co., Ltd., and microenterprises like Qingdao Hai Heng FengElectrical Appliances Sale & Service Co., Ltd, which were included into the scope of consolidatedfinancial statements.

Reason for the ratio of voting rights higher than the ratio of shareholding of Haier ElectronicsGroup Co., Ltd.: on 10 July 2015, HCH(HK) INVESTMENT MANAGEMENT CO., LIMITED(hereinafter referred to as 'HCH') signed a Shareholder Voting Right Entrustment Agreement with theCompany. HCH entrusted the Company to exercise the underlying shareholder voting rights of336,600,000 shares of Haier Electronics Group Co., Ltd. Both parties agreed that HCH will not revokethe entrustment and authorization to the Company unless the Company issues a written notice ofrevoking trustee to HCH.

(2)Material non-wholly owned subsidiaries

Name of subsidiaryShareholding of minority shareholdersProfit or loss attributable to minority shareholders in the current periodDistribute dividends to minority shareholders in the current periodBalance of minority shareholders' equity at the end of the period
Haier Electronics Group Co., Ltd.54.36%1,053,061,122.36512,274,085.7715,341,363,395.56
Guizhou Haier Electronics Co., Ltd.41.00%5,798,906.0310,660,000.00105,206,966.09
Wuhan Haier Electronics Co., Ltd.40.00%12,575,002.848,000,000.00252,518,034.72

(3)Summarized financial information in respect of material non-wholly owned subsidiaries

Name of subsidiaryClosing balance
Current assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilities
Haier Electronics Group Co., Ltd.34,817,929,971.9812,151,814,283.8346,969,744,255.8116,766,293,984.133,696,692,919.4920,462,986,903.62
Guizhou Haier Electronics Co., Ltd.494,021,343.8737,235,016.62531,256,360.49273,554,004.221,100,000.00274,654,004.22
Wuhan Haier Electronics Co., Ltd.1,017,125,508.95150,728,338.941,167,853,847.89541,878,536.63541,878,536.63

(Continued)

Name of subsidiaryOpening balance
Current assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilities
Haier Electronics Group Co., Ltd.36,493,282,147.1710,443,489,712.5546,936,771,859.7218,022,551,867.683,165,936,277.9421,188,488,145.62
Guizhou Haier522,694,157.3349,721,058.77572,415,216.10302,856,533.061,100,000.00303,956,533.06
Electronics Co., Ltd.
Wuhan Haier Electronics Co., Ltd.941,594,837.71149,527,217.841,091,122,055.55471,264,475.86471,264,475.86
Name of subsidiaryAmount for the current period
Operating revenueNet profitTotal comprehensive incomeCash flow from operating activities
Haier Electronics Group Co., Ltd.41,184,277,708.881,877,120,308.521,845,523,782.722,316,260,742.85
Guizhou Haier Electronics Co., Ltd.657,983,753.0414,143,673.2314,143,673.2385,092,387.46
Wuhan Haier Electronics Co., Ltd.1,097,872,964.2129,993,585.3029,993,585.30263,391,235.42

(Continued)

Name of subsidiaryAmount for the previous period
Operating revenueNet profitTotal comprehensive incomeCash flow from operating activities
Haier Electronics Group Co., Ltd.42,389,647,175.111,793,614,855.392,019,002,389.181,839,859,233.08
Guizhou Haier Electronics Co., Ltd.652,944,777.3013,422,624.5213,422,624.5223,036,480.98
Wuhan Haier Electronics Co., Ltd.1,533,784,050.6734,955,617.1434,955,617.14-89,385,955.23

2. Transactions leading to the change of shareholding in subsidiaries but not losing the control

√Applicable □Not Applicable

(1). Description of changes in the share of owners' equity in subsidiaries

√Applicable □Not Applicable

The Company purchased the equity interest of a subsidiary, Haier Electronics Group Co., Ltd. froma secondary market, and its minority shareholders' exercise for the current period or reduced capital,which leads to changes in the Company's shareholding ratio. Capital contribution not proportional to theoriginal shareholding results in changes of shareholding ratio in the subsidiary Haier electric (India) Co.,Ltd.. The Company and the subsidiary of the Company acquired minority shareholding, which results inchanges in the Company's shareholding ratio.

(2). Impact of the transactions on minority interest and the equity interest attributable to

shareholders of the Parent Company:

ItemsHaier Electronics Group Co., Ltd.Others
Total Consideration for acquisition/disposal343,958,769.09207,962,827.00
Less: share of net assets of subsidiaries in respect to the shareholding proportion acquired/disposed97,745,349.77226,871,595.10
Difference-246,213,419.3218,908,768.10
Including: capital reserve adjustment-246,213,419.3218,908,768.10

3. Interests in joint ventures and associates

√Applicable □Not Applicable

(1)Associates

Name of associatesPrincipal place of businessPlace of registrati onNature of businessShareholding (%)Accounting treatment of investment
Wolong Electric (Jinan) Motor Co., Ltd.JinanJinanMotor Manufacturing30.00Equity method
Qingdao HBIS New Material Technology Co., Ltd.QingdaoQingdaoSteel plate Manufacturing25.65Equity method
Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership)QingdaoQingdaoVenture Capital63.00Equity method
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.QingdaoQingdaoManufacturing of household appliances45.00Equity method
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd.QingdaoQingdaoManufacturing of household appliances49.00Equity method
Haier Group Finance Co., Ltd.QingdaoQingdaoFinancial services42.00Equity method
Qingdao Haier Software Investment Co., Ltd.QingdaoQingdaoSoftware development25.00Equity method
Beijing Mr. Hi Network Technology Company LimitedBeijingBeijingTechnology development29.03Equity method
Hefei Feier Smart Technology Co., Ltd.HefeiHefeiTechnology development40.00Equity method
Bank of Qingdao Co., Ltd.QingdaoQingdaoCommercial Bank8.65Equity method
Beijing Xiaobei Technology Co., Ltd.BeijingBeijingSales of household appliances42.75Equity method
Qingdao Haier multimedia Co., Ltd.QingdaoQingdaoR&D and sales of television20.20Equity method
Beijing ASU Tech Co.LtdBeijingBeijingTechnical service import and export business42.61Equity method
Shanghai Genyuan Environmental Protection Technology Co., Ltd.ShanghaiShanghaiTechnical advisory services20.40Equity method
Qingdao Haimu Investment Management Co., Ltd.QingdaoQingdaoInvestment Management49.00Equity method
Qingdao Haimu Smart Home Investment Partnership (Limited Partnership)QingdaoQingdaoInvestment Management24.00Equity method
Guangzhou Heying Investment Partnership (Limited Partnership)GuangzhouGuangzhouInvestment50.00Equity method
Qingdao Java Cloud Network Technology Co., Ltd.QingdaoQingdaoHome online service24.93Equity method
Beijing Cangxiaowei Supply Chain Management Co., Ltd.QingdaoQingdaoE-commerce platform24.02Equity method
Hunan Electronic Co., Ltd.HunanHunanMotor Manufacturing50.00Equity method
HPZ LIMITEDNigeriaNigeriaManufacturing of household appliances25.01Equity method
HNR COMPANY (PRIVATE) LIMITEDPakistanPakistanManufacturing of household appliances31.72Equity method
CONTROLADORA MABE S.A.de C.V.MexicoMexicoManufacturing of household appliances48.41Equity method
MIDDLEEAST AIRCONDITIONING COMPANY, LIMITEDSaudi ArabiaSaudi ArabiaSales of household appliances49.00Equity method

(1). Major financial information of significant joint ventures

□Applicable □√Not Applicable

(2). Major financial information of significant associates

√Applicable □Not Applicable

①Basic information of significant associates:

a. Haier Group Finance Co., Ltd.(hereinafter referred to as 'Finance company')was established byHaier Group Corporation and its three affiliates. Registration place and principal place of business:

No.178-2 Haier Road, Laoshan District, Qingdao City. The Company's subsidiaries hold an aggregateof 42.00% equity interest in Finance Company.

b. General Electric Company has participated in the capital contribution to the establishment ofCONTROLADORA MABE S.A.de C.V. (hereinafter referred to as 'MABE'). In June 2016, a subsidiaryof the Company acquired 48.41% of equity interests in MABE held by General Electric Company. Theregistered address and principal place of business of MABE is Mexico. The subsidiaries of the Companyhold approximately 48.41% of equity interests in MABE in total.

c. Bank of Qingdao Co., Ltd. (hereinafter referred to as 'Qingdao Bank'), one of the first citycommercial banks in China, was established in November 1996. The registered place and principal placeof business of Qingdao Bank is No.68 Hong Kong Middle Road, Shinan District, Qingdao, ShandongProvince. The Company and its subsidiaries hold approximately 8.65% of equity interests in QingdaoBank in total at the end of the period.

Unit and Currency:RMB

② Financial information of significant associates:

ItemsFinance company
Closing balance/ Amount for the current periodOpening balance/ Amount for the previous period
Current assets49,188,829,675.6059,524,840,580.99
Non-current assets10,202,219,723.686,772,155,247.83
Total assets59,391,049,399.2866,296,995,828.82
Current liabilities45,781,428,238.1651,568,658,834.34
Non-current liabilities220,701,165.551,857,007,615.76
Total liabilities46,002,129,403.7153,425,666,450.10
Minority equity interests
Equity interest attributable to shareholders of the Parent Company13,388,919,995.5712,871,329,378.72
Including: share of net assets calculated based on shareholding percentage5,623,346,398.225,405,958,339.07
Operating income1,300,482,943.401,297,821,635.65
Net profit817,752,896.21783,377,652.09
Other comprehensive income-162,279.2055,144,072.53
Total comprehensive income817,590,617.01838,521,724.62
Dividend received from associates for the year126,000,000.00

(Continued)

ItemsMABE
Closing balance/ Amount for the current periodOpening balance/ Amount for the previous period
Current assets6,236,368,636.936,401,986,096.80
Non-current assets11,583,251,670.7110,722,377,360.00
Total assets17,819,620,307.6417,124,363,456.80
Current liabilities8,612,904,785.258,729,901,178.40
Non-current liabilities5,515,702,841.784,762,051,909.60
Total liabilities14,128,607,627.0313,491,953,088.00
Minority equity interests
Equity interest attributable to shareholders of the Parent Company3,691,012,680.613,632,410,368.80
Including: share of net assets calculated based on shareholding percentage1,786,996,407.291,758,624,215.23
Operating income10,480,026,514.099,150,137,891.10
Net profit109,678,922.1387,751,088.45
Other comprehensive income15,778,276.4051,596,329.94
Total comprehensive income125,457,198.53139,347,418.39
Dividend received from associates for the year32,367,659.70

(Continued)

ItemsQingdao Bank
Closing balance/ Amount for the current periodOpening balance/ Amount for the previous period
Current assets183,966,402,000.00181,349,759,000.00
Non-current assets161,264,544,000.00136,308,743,000.00
Total assets345,230,946,000.00317,658,502,000.00
Current liabilities236,613,058,000.00223,355,408,000.00
Non-current liabilities78,619,807,000.0066,806,370,000.00
Total liabilities315,232,865,000.00290,161,778,000.00
Minority equity interests539,418,000.00511,751,000.00
Equity interest attributable to shareholders of the Parent Company29,458,663,000.0026,984,973,000.00
Including: share of net assets calculated based on shareholding percentage2,547,455,894.122,592,829,635.67
Operating income3,725,353,000.003,131,390,000.00
Net profit1,438,462,000.001,321,444,000.00
Other comprehensive income-25,404,000.00421,494,000.00
Total comprehensive income1,413,058,000.001,742,938,000.00
Dividend received from associates for the year77,995,640.0077,995,640.00

(3). Summarized financial information of insignificant associates

Investment to associatesClosing balance/ Amount for the current periodOpening balance/ Amount for the previous
period
Wolong Electric (Jinan) Motor Co., Ltd.127,527,836.67123,281,802.39
Qingdao HBIS New Material Technology Co., Ltd.271,299,497.89262,284,357.65
Hefei Feier Smart Technology Co., Ltd.4,000,000.00
Qingdao Haier multimedia Co., Ltd.502,837,161.95555,084,616.71
Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership)376,239,481.98362,380,221.29
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.664,137,026.04622,643,614.66
Qingdao Haier Carrier Refrigeration Equipment Co., Ltd.334,054,062.96332,723,126.50
Qingdao Haier Software Investment Co., Ltd.18,193,519.1518,193,519.15
Beijing Mr. Hi Network Technology Company Limited3,757,759.753,757,759.75
Beijing Xiaobei Technology Co., Ltd.2,687,341.822,687,341.82
Guangzhou Heying Investment Partnership (Limited Partnership)175,841,840.38176,064,809.68
Beijing ASU Tech Co.Ltd25,070,692.5830,062,027.79
Shenzhen Genyuan Environmental Protection Technology Co., Ltd.7,849,992.007,849,992.00
Qingdao Haimu Investment Management Co., Ltd.2,078,341.372,078,341.37
Qingdao Haimu Smart Home Investment Partnership (Limited Partnership)48,001,070.2548,001,070.25
Others33,248,595.82
Qingdao Java Cloud Network Technology Co., Ltd.1,216,581.321,216,581.32
Beijing Cangxiaowei Supply Chain Management Co., Ltd.791,316.97791,316.97
Hunan Electronic Co., Ltd.80,375,254.9974,799,791.29
HNR COMPANY (PRIVATE) LIMITED112,814,512.3491,076,038.80
HPZ LIMITED88,462,298.1888,800,332.55
MIDDLEEAST AIRCONDITIONIN GCOMPANY, LIMITED19,180,357.8718,208,123.96
Total book value of investment2,899,664,542.282,821,984,785.90
Total amount of the following items of associates' financial amounts calculated based on shareholding percentage
--Net profit21,659,978.9782,459,925.23
-- Other comprehensive income14,315,460.92-1,637,894.45
-- Total comprehensive income35,975,439.8980,822,030.78

X. Segment Report

(1) . Determining basis and accounting policy of reporting segment

√Applicable □Not Applicable

The Company principally engaged in manufacture and sales of household appliances and relevantservices business, manufacture of upstream household appliances parts business and distribution ofproducts of third-party, logistics and after-sale business. The Company has 7 business segments,including refrigerator segment, air-conditioner segment, washing machine segment, kitchen appliancesegment, water heater segment, equipment components segment, integrated channel services segment

and other segment. The management of the Company assesses operating performance of each segmentand allocates resources according to the division. Sales between segments were mainly based on marketprice.

? Refrigerator segment mainly engaged in manufacture and sales of refrigerator and freezers

products.

? Air-conditioner segment mainly engaged in manufacture and sales of household air conditionersand commercial air conditioners.

? Washing machine segment mainly engaged in manufacture and sales of washing machine products.

? Kitchen appliance segment mainly engaged in manufacture and sales of kitchen appliancesproducts.

? Water heater segment mainly engaged in manufacture and sales of water heater products.

? Equipment components segment mainly engaged in procurement, manufacture and sales of

upstream matching accessories for household appliances, manufacture and sales of mould.

? Integrated channel services segment and other segment mainly engaged in distribution business,logistics business, after-sale business, small home appliance business and others.

The Company's third and fourth tier markets channel business is treated as integrated channelservices segment and other segment and assessed separately. Accordingly, operating profit from thirdand fourth tier markets of refrigerator, air-conditioner, kitchen appliance, water heater, washing machinebusiness segment was not reflected in operating profit of each segment.As the centralized management under the headquarters or not being included in the assessmentscope of segment management, the total assets of segment exclude monetary funds, financial assets heldfor trading, derivative financial assets, dividends receivable, held-for-sale financial assets, other currentassets, other equity instruments investment, long-term accounts receivable, long-term equity investment,goodwill and deferred income tax assets; the total liabilities of segment exclude long-term andshort-term borrowings, financial liabilities held for trading, derivative financial liabilities, dividendspayables, taxes payable, held-for-sale liabilities, bonds payable, deferred income tax liabilities and othernon-current liabilities; profit of segment exclude financial expenses, profit or loss in fair value changes,income from investment, and income on disposal of assets, Non-VAT refundable upon impositioncomponent of other income, non-operating incomes and expenses and income tax.

(1) Information of reportable segments

Segment information for the period

Segment informationAir-conditioner segmentRefrigerator segmentKitchen appliance segmentWater heater segmentWashing machine segment
Segment revenue17,273,455,231.1626,267,173,276.7013,639,871,024.703,455,235,657.1018,840,427,809.78
Including: external revenue6,770,907,290.6615,344,436,784.4112,682,361,739.90745,551,180.1411,097,373,705.56
Inter-segment revenue10,502,547,940.5010,922,736,492.29957,509,284.802,709,684,476.967,743,054,104.22
Total segment cost16,432,658,912.8923,850,129,910.0212,982,012,876.433,104,962,854.0317,504,813,223.47
Segment profit840,796,318.272,417,043,366.68657,858,148.27350,272,803.071,335,614,586.31
Total segment assets18,053,117,284.0617,716,407,966.6515,077,839,054.121,846,208,397.5118,006,854,200.40
Total segment liabilities8,764,831,957.3227,646,123,021.857,676,466,815.231,339,199,452.358,580,253,500.96

(Continued)

Segment informationEquipment components segmentIntegrated channel services segment and other segmentInter-segment eliminationTotal
Segment revenue26,337,221,356.0558,591,214,342.96-65,231,319,754.2499,173,278,944.21
Including: external revenue612,706,168.6951,919,942,074.85-99,173,278,944.21
Inter-segment revenue25,724,515,187.366,671,272,268.11-65,231,319,754.24-
Total segment cost26,186,893,622.3358,025,612,127.06-65,427,641,767.8192,659,441,758.42
Segment profit150,327,733.72565,602,215.90196,322,013.576,513,837,185.79
Total segment assets33,343,399,233.6938,817,212,074.56-45,194,070,047.2097,666,968,163.79
Total segment liabilities32,646,492,580.0936,376,177,269.35-47,755,928,486.5475,273,616,110.61

Segment information for the corresponding period of last year

Segment informationAir-conditioner segmentRefrigerator segmentKitchen appliance segmentWater heater segmentWashing machine segment
Segment revenue20,028,990,381.3224,072,480,075.1310,980,918,355.843,299,177,229.0214,964,116,561.43
Including: external revenue6,888,783,677.6613,881,225,039.7910,133,840,449.89720,592,747.717,763,717,464.58
Inter-segment revenue13,140,206,703.6610,191,255,035.34847,077,905.962,578,584,481.317,200,399,096.85
Total segment cost18,851,953,171.6322,188,915,044.4310,357,024,076.732,947,615,022.7213,646,106,501.50
Segment profit1,177,037,209.691,883,565,030.70623,894,279.11351,562,206.301,318,010,059.93
Total segment assets16,206,841,690.1615,115,039,922.9011,633,383,101.302,149,982,914.9612,962,546,971.94
Total segment liabilities9,406,713,768.6627,576,047,193.295,878,879,147.561,594,837,680.886,024,455,060.65

(Continued)

Segment informationEquipment components segmentIntegrated channel services segment and other segmentInter-segment eliminationTotal
Segment revenue30,397,624,212.0056,665,720,359.13-69,833,760,054.2990,575,267,119.59
Including: external revenue1,377,578,092.6049,809,529,647.36-90,575,267,119.59
Inter-segment revenue29,020,046,119.406,856,190,711.78-69,833,760,054.29-
Total segment cost30,159,338,365.4855,896,558,393.88-69,576,984,796.3084,470,525,780.07
Segment profit238,285,846.52769,161,965.25-256,775,257.996,104,741,339.52
Total segment assets31,649,227,709.9234,254,650,591.45-40,740,475,732.7983,231,197,169.84
Total segment liabilities33,059,154,103.4629,653,710,215.11-40,611,668,998.8972,582,128,170.72

(2) Geographical information

'Other countries/regions' in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for the purposeof information disclosure.

External transaction revenue

ItemsAmount for the current periodAmount for the previous period
Mainland China52,460,560,625.0152,883,967,008.10
Other countries/regions46,712,718,319.2037,691,300,111.49
Including:
America27,693,537,889.1524,591,376,962.53
Australia2,534,236,838.152,469,571,262.22
South Asia4,249,663,938.663,667,158,750.06
Europe7,221,130,297.042,100,469,382.35
Southeast Asia1,970,496,955.141,799,158,536.02
Central East and Africa690,928,785.10621,133,808.23
Japan1,546,013,513.311,456,458,576.65
Others806,710,102.66985,972,833.43
Total99,173,278,944.2190,575,267,119.59

Total non-current assets

ItemsClosing balanceOpening balance
Mainland China17,561,764,080.9015,279,950,318.66
Other countries/regions23,948,322,297.4918,248,137,105.45
Total41,510,086,378.3933,528,087,424.11

The total non-current assets exclude other equity instruments investment, long-term accountsreceivable, long-term equity investment, goodwill, deferred income tax assets and other non-currentfinancial assets.XI. Disclosure of fair value

1. Assets and liabilities measured at fair value

√Applicable □Not Applicable

The level to which the fair value measurement result belongs is determined by the lowest level towhich inputs 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 forLevel 1 inputs.

Level 3: Unobservable inputs of related assets or liabilities.

Unit and Currency:RMB

At the end of the period

ItemsInputs used for fair value measurement
Quotes in an active market (Level 1)Important observable input (Level 2)Important unobservable input(Level 3)Total
Continuously measured at fair value
Financial assets held for trading520,083.09958,872,619.7126,446,912.87985,839,615.67
Including: Bank wealth management products936,485,756.72936,485,756.72
Forward foreign exchange contract22,386,862.9922,386,862.99
Investment in equity instruments520,083.0926,446,912.8726,966,995.96
Derivative financial assets70,865,506.6770,865,506.67
Including: Forward foreign exchange66,875,017.6266,875,017.62
contract
Interest rate swap agreement3,990,489.053,990,489.05
Other equity instruments20,571,539.401,358,621,502.791,379,193,042.19
Including: Equity instruments measured at fair value and changes of which included in other comprehensive income20,571,539.401,358,621,502.791,379,193,042.19
Other non-current financial assets328,487,584.54328,487,584.54
Including: Bank wealth management products328,487,584.54328,487,584.54
Other non-current assets39,800,000.0049,450,000.0089,250,000.00
Including: Other non-current financial assets39,800,000.0049,450,000.0089,250,000.00
Financial liabilities held for trading7,055,018.077,055,018.07
Including: Forward foreign exchange contract7,055,018.077,055,018.07
Derivative financial liabilities33,952,526.1033,952,526.10
Including: Forward foreign exchange contract23,360,638.6523,360,638.65
Forward commodity contract2,967,834.462,967,834.46
Interest rate swap agreement7,624,052.997,624,052.99
Other current liabilities
Including: Contingent consideration
Other non-current liabilities1,622,204,476.70204,893,813.971,827,098,290.67
Including: Obligation of repurchasing the minority equity rights1,622,204,476.70204,893,813.971,827,098,290.67
Contingent consideration

At the beginning of the period

ItemsInputs used for fair value measurement
Quotes in an active market (Level 1)Important observable input (Level 2)Important unobservable input(Level 3)Total
Continuously measured at fair value
Financial assets held for trading519,213.091,756,325,976.4118,803,198.261,775,648,387.76
Including: Bank wealth management products1,567,648,908.001,567,648,908.00
Forward foreign exchange contract188,677,068.41188,677,068.41
Investment in equity instruments519,213.0918,803,198.2619,322,411.35
Derivative financial assets96,723,164.3796,723,164.37
Including: Forward foreign exchange contract39,494,394.9839,494,394.98
Interest rate swap agreement57,228,769.3957,228,769.39
Other equity instruments17,420,711.901,382,895,748.441,400,316,460.34
Including: Equity instruments measured at fair value and changes of which included in other comprehensive income17,420,711.901,382,895,748.441,400,316,460.34
Other non-current financial assets327,358,825.57327,358,825.57
Including: Bank wealth management products327,358,825.57327,358,825.57
Other non-current assets49,499,757.9646,019,000.0095,518,757.96
Including: Other non-current financial assets49,499,757.9646,019,000.0095,518,757.96
Financial liabilities held for trading218,748,280.33218,748,280.33
Including: Forward foreign exchange contract211,934,956.99211,934,956.99
Forward foreign exchange options6,813,323.346,813,323.34
Derivative financial liabilities35,603,754.5435,603,754.54
Including: Forward foreign exchange contract24,384,482.1924,384,482.19
Forward commodity11,219,272.3511,219,272.35
contract
Other non-current liabilities1,587,403,337.19210,624,307.281,798,027,644.47
Including: Obligation of repurchasing the minority equity rights1,587,403,337.19204,919,000.001,792,322,337.19
Contingent consideration5,705,307.285,705,307.28

The fair value of financial instruments traded in active markets is based on its quoted prices inactive markets. The fair value of financial instruments that are not traded in an active market isdetermined by valuation techniques.2.The basis for determining the fair value of the continual Level 2 fair value measurement items

ItemsClosing fair valueValuation techniques
Financial assets held for trading
Including: Bank wealth management products936,485,756.72Bank quote for similar products
Forward foreign exchange contract22,386,862.99Bank quote for similar products
Derivative financial assets
Including: Forward foreign exchange contract66,875,017.62Bank quote for similar products
Interest rate swap agreement3,990,489.05Bank quote for similar products
Other non-current financial assets
Including: Bank wealth management products328,487,584.54Bank quote for similar products
Other non-current assets
Including: Other non-current financial assets39,800,000.00Discounted cash flow model
Financial liabilities held for trading
Including: Forward foreign exchange contract7,055,018.07Bank quote for similar products
Derivative financial liabilities
Including: Forward foreign exchange contract23,360,638.65Bank quote for similar products
Forward commodity contract2,967,834.46Futures exchange quote for similar products
Interest rate swap agreement7,624,052.99Bank quote for similar products
Other non-current liabilities
Including: Obligation of repurchasing the minority equity rights1,622,204,476.70Discounted cash flow

3.Continual Level 3 fair value measurement major items, the valuation techniques adopted andinformation of important parameters

ItemsClosing fair valueValuation techniquesSignificant unobserva ble inputRangeSensitivity of the input to fair value
Other equity instruments
Including: China Petrochemical Marketing Co., Ltd.1,237,167,273.48Valuation multiples1. Average P/E multiple of peers 2. Discount for lack of marketabilit y1.15.61-15.92 2. 14%-16%1. 1% increase (decrease) in multiple would result in increase (decrease) in fair value by RMB12,615,000. 2. 1% increase (decrease) in the risk-free interest rate would result in decrease (increase) in fair value by RMB14,841,000.
Other non-current liabilities
Including: Obligation of repurchasing the minority equity rights204,893,813.97Monte Carlo Simulat ion1. Risk-free interest rate 2. Median volatility of comparable companies 3. Weighted average cost of capital1.0.47%-1.47% 2.14.14%-16.14% 3.12.11%-14.11%1. 0.5% increase (decrease) in the risk-free interest rate would result in decrease (increase) in fair value by RMB285,000. 2. 1% increase (decrease) in the median volatility of comparable companies would result in increase (decrease) in fair value by RMB7,113,000. 3. 1% increase (decrease) in WACC would result in decrease (increase) in fair value by RMB9,131,000.

4. Financial instruments not measured at fair value

ItemsClosing book valueClosing fair value
Bonds payable (Exchangeable corporate bonds issued in 2017)6,792,138,250.226,629,825,951.00
Bonds payable (Convertible corporate bonds issued in 2018)2,560,865,849.822,530,580,951.00

Financial assets and financial liabilities that are not measured at fair value include: monetary funds,bills receivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, 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 thatare not measured at fair value at the end of this period is insignificant.

XII. Related parties and related-party transactions

(I) Explanation for basis of identifying related partyAccording 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 partyor 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 otherparty.

According to Management Practices for Information Disclosure of Listed Company (ChinaSecurities Regulatory Commission Order No. 40), related legal entity or related natural person will beidentified as related parties in certain occasions.(II) Relationships between related parties

1. Information about the parent company and other companies holding shares of theCompany

Name of enterpriseType of enterpriseRegistered placeRegistered capitalLegal representativeRelations hips with the CompanyEquity interest of the CompanyVoting rights to the Company
Haier Group CorporationCollective ownership enterpriseQingdao High-tech Zone Haier Park311,180,000Zhang RuiminParent Company16.84%16.84%
Haier Electric Appliances International Co., Ltd.Joint-stock companyQingdao High-tech Zone Haier Park631,930,635Zhang RuiminSubsidiar y of Parent Company19.76%19.76%
Qingdao Haier Venture & Investment Information Co., Ltd.Company with limited liabilityQingdao Free Trade Zone923,000,000Zhou YunjieParties acting in concert of Parent Company2.70%2.70%
Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership)Limited partnershipQingdao High-tech Zone Haier Park1,053,306,000Zhang RuiminParties acting in concert of Parent Company1.15%1.15%

2. Subsidiaries of the Company

The details of the subsidiaries of the Company are detailed in Note IX.1 the disclosure of interests insubsidiaries.

□Applicable √Not Applicable

3. Joint ventures and associates of the Compay

The details of the joint ventures or associates of the Company are detailed in Notes VII. 12 andNotes IX. 3.

□Applicable √Not Applicable

Other joint ventures or associates that have related party transactions with the Company for thecurrent period or have related party transactions with the Company for the previous period and haveformed balances are as follows

□Applicable √Not Applicable

4. Related company with no controlling relationship

Name of companyRelationship with the Company
HAIER INTERNATIONAL(HK) LTD.Subsidiary of Haier Group
HAIER INTERNATIONAL CO.,LTDSubsidiary of Haier Group
Haier Group Finance Co., Ltd.Subsidiary of Haier Group
Haier Group Electric Appliance Industry Co., Ltd.Subsidiary of Haier Group
Haier Energy & Power Co., Ltd.Subsidiary of Haier Group
Haier Brothers Animation Industry Co., Ltd.Subsidiary of Haier Group
Hefei Haier Logistics Co., LimitedSubsidiary of Haier Group
Laiyang Haier Electrical Co. Ltd.Subsidiary of Haier Group
Qingdao Haier Whole House Home Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Tooling Development and Manufacturing Co., Ltd.Subsidiary of Haier Group
Qingdao Haier International Travel Agency Co., Ltd.Subsidiary of Haier Group
Qingdao Haier International Trading Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Household Integration Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Parts Procurement Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Strauss Water Equipment Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Special Plastic Development Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Communications Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Logistics Consulting Co., Ltd.Subsidiary of Haier Group
Qingdao Haiyongda Property Management Co., Ltd.Subsidiary of Haier Group
Brave Lion (HK) limitedSubsidiary of Haier Group
Chongqing Haier Electrical Appliances Sales Co., Ltd.Subsidiary of Haier Group
Chongqing Haier Logistics Co., Ltd.Subsidiary of Haier Group
Suzhou Hai Xin InfoTech LtdSubsidiary of Haier Group
Haier finance leasing (China) Co., Ltd.Subsidiary of Haier Group
Qingdao Haier Industry and City Innovation Group Co., Ltd.Subsidiary of Haier Group
Hefei Huadong Packing Co., Ltd.Subsidiary of Haier Group
Xingyang International Co., Ltd.Subsidiary of Haier Group
Qingdao Haier New Materials R & D Co., Ltd.Associate
CONTROLADORA MABE S.A.de C.V.Associate
Bank of Qingdao Co., Ltd.Associate
HNR Company (Private) LimitedAssociate
Qingdao Haier Software Investment Co., Ltd.Associate
Qingdao HBIS Composite New Material Technology Co., Ltd.Associate
Hefei Hegang New Material Technology Co., Ltd.Associate
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.Associate
Wolong Electric (Jinan) Motor Co., Ltd.Associate

5. Related-party transactions

(1) The table of procurement of goods/acceptance of labor services

√Applicable □Not Applicable

Unit and Currency: RMB

Name of related partiesAmount for the current periodAmount for the previous period
CONTROLADORA MABE S.A.de C.V.5,464,515,041.243,797,313,988.61
Qingdao Haier Parts Procurement Co., Ltd.2,837,415,037.842,737,668,714.18
Chongqing Haier Electrical Appliances Sales Co., Ltd.1,476,163,477.812,117,428,201.15
HNR Company (Private) Limited1,429,096,343.191,258,923,720.84
Chongqing Haier Logistics Co., Ltd.1,051,553,656.771,028,328,519.82
Hefei Haier Logistics Co., Limited892,337,984.63747,478,902.47
Qingdao Haier International Trading Co., Ltd.539,532,451.15683,580,146.91
Qingdao Haier Strauss Water Equipment Co., Ltd.505,713,318.79405,789,607.19
Hefei Hegang New Material Technology Co., Ltd.412,953,069.36372,624,744.03
Qingdao Haier Special Plastic Development Co., Ltd.321,899,079.51357,967,509.26
Wolong Electric (Jinan) Motor Co., Ltd.293,778,828.75364,904,854.05
Qingdao HBIS Composite New Material Technology Co., Ltd.283,067,913.51313,670,642.04
Haier Energy & Power Co., Ltd.209,825,656.06198,826,409.67
Dalian Haier International Trade Co., Ltd.185,031,961.194,920,359.02
Qingdao Haier International Travel Agency Co., Ltd.88,298,910.2179,609,324.69
Laiyang Haier Electrical Co. Ltd.36,567,109.8562,261,854.36
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.33,990,109.5031,785,595.57
HAIER INTERNATIONAL CO., LTD30,821,100.3534,081,851.31
Qingdao Haiyongda Property Management Co., Ltd.26,510,903.4536,231,346.33
Qingdao Haier Tooling Development and Manufacturing Co., Ltd.21,906,112.32165,704,463.60
Qingdao Haier Communications Co., Ltd.4,811,024.7350,908,272.82
Qingdao Haier Household Integration Co.,Ltd.3,986,703.8927,538,593.82
Qingdao Haier Whole House Home Co., Ltd.1,221,309.5556,987,019.04
Other related-party1,065,972,288.48899,376,813.00
Total17,216,969,392.1315,833,911,453.78

(2) The table of sale of goods/provision of labor services

□Applicable √Not Applicable

Unit and Currency: RMB

Related partiesAmount for the current periodAmount for the previous period
Qingdao Haier Special Plastic Development Co., Ltd.287,905,105.77338,525,883.67
Qingdao Haier International Trading Co., Ltd.268,434,363.24365,258,871.55
Qingdao Haier New Materials R & D Co., Ltd.192,841,505.74185,265,679.09
Wolong Electric (Jinan) Motor Co., Ltd.146,756,467.18174,636,996.00
CONTROLADORA MABE S.A.de C.V.121,852,991.92411,595,719.20
Qingdao HBIS Composite New Material Technology Co., Ltd.87,743,947.93119,670,204.88
Hefei Hegang New Material Technology Co., Ltd.65,960,255.44200,819,911.53
Qingdao Haier International Travel Agency Co., Ltd.37,294,684.3539,380,799.45
Qingdao Haier Tooling Development and Manufacturing Co., Ltd.13,121,830.7493,196,412.80
Qingdao Haier Parts Procurement Co., Ltd.8,231,117.732,373,425.04
Other related-party217,062,815.65282,926,713.09
Total1,447,205,085.692,213,650,616.30

Description of related party transactions for the purchase and sale of goods, provision andacceptance of labor services

□Applicable √Not Applicable

(3) Related-party balances

Items and name of customersClosing BalanceOpening Balance
Bills receivable:
Qingdao Haier New Materials R & D Co., Ltd.230,000.0034,632,882.73
Other related-party1,522,026.727,356,564.87
Dividend receivable:
Bank of Qingdao Co., Ltd.77,995,640.00
Qingdao Haier Software Investment Co., Ltd.4,524,472.844,524,472.84
Other related-party16,755,243.10
Accounts receivable:
Haier Group Electric Appliance Industry Co., Ltd.108,247,720.70115,044,945.15
Qingdao Haier Parts Procurement Co., Ltd.95,818,176.4423,987,017.43
Haier finance leasing (China) Co., Ltd.72,277,564.1280,643,117.12
Qingdao Haier International Travel Agency Co., Ltd.49,857,674.0582,564,510.88
CONTROLADORA MABE S.A.de C.V.46,086,434.91149,908,002.70
Qingdao Haier Special Plastic Development Co., Ltd.26,578,284.7631,769,104.04
Qingdao Haier Household Integration Co., Ltd.13,084,922.4310,567,963.70
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.6,929,171.292,638,782.98
Haier Group Corporation6,693,216.6614,363,320.57
Qingdao Haier New Materials R & D Co., Ltd.6,165,558.511,207,127.26
Qingdao HBIS Composite New Material Technology Co., Ltd.3,921,074.26754,727.54
Qingdao Haier Tooling Development and Manufacturing Co., Ltd.2,861,656.9312,254,812.27
Chongqing Hai'er Property Management Co., Ltd.2,848,104.6811,445,371.17
Hefei Hegang New Material Technology Co., Ltd.2,194,759.4412,430,653.04
HNR Company (Private) Limited280,435,010.88
Haier International Co.,Ltd.21,866,762.90
Suzhou Haixin Information Technology Co., Ltd.10,878,625.30
Other related-party274,961,122.45187,957,558.68
Prepayments:
Qingdao Haier International Trading Co., Ltd.140,457,012.3552,377,466.40
Haier Electrical App Co., Ltd.32,202,383.2936,250,083.22
Qingdao Haier Parts Procurement Co., Ltd.18,413,389.216,232,019.51
Other related-party59,819,043.5536,146,173.00
Interest receivable:
Haier Group Finance Co., Ltd.16,649,853.568,558,831.18
Other receivables:
Qingdao Haier Industry and City Innovation Group Co., Ltd.88,640,000.0069,280,000.00
Haier Group Electric Appliance Industry Co., Ltd.15,105.714,932,361.04
Other related-party123,139,386.0981,410,902.63
Bills payable:
Laiyang Haier Electrical Co. Ltd.29,167,677.0760,572,756.31
Qingdao Haier New Materials R & D Co., Ltd.27,534,845.0511,747,585.16
Accounts payable:
Qingdao Haier Parts Procurement Co., Ltd.1,957,235,227.721,709,722,192.99
Chongqing Haier Electrical Appliances Sales Co., Ltd.747,221,556.39887,619,722.87
CONTROLADORA MABE S.A.de C.V.552,502,090.09448,791,729.31
HNR Company (Private) Limited374,281,964.1583,263,372.49
Qingdao Haier International Trading Co., Ltd.172,452,150.18206,304,134.91
Qingdao Haier Strauss Water Equipment Co., Ltd.117,247,028.0383,405,508.45
Dalian Haier International Trade Co., Ltd.104,600,333.3785,369,608.45
Chongqing Haier Logistics Co., Ltd.62,782,270.8776,661,148.51
Hefei Haier Logistics Co., Limited35,674,751.5322,752,588.26
Qingdao Haier Special Plastic Development Co., Ltd.31,023,375.8243,902,377.09
HAIER INTERNATIONAL CO., LTD16,238,184.5196,592,512.06
Laiyang Haier Electrical Co., Ltd.13,724,362.8614,480,111.50
Qingdao HBIS Composite New Material Technology Co., Ltd.10,521,817.8166,411,374.50
HAIER INFORMATION APPLIANCES S.R.L.6,117,244.866,140,956.33
Qingdao Haier Tooling Development and Manufacturing Co., Ltd.2,484,606.3123,124,924.59
Qingdao Haier Communications Co., Ltd.2,287,987.8048,474,102.93
Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.286,615.7228,603,458.79
Hefei Huadong Packing Co., Ltd.59,264,205.80
Hefei Hegang New Material Technology Co., Ltd.50,571,741.10
Other related-party217,801,752.96114,012,421.08
Receipts in advance:
Haier Group Electric Appliance Industry Co., Ltd.1,397.00
Other related-party6,521,502.55
Other payables:
Haier Brothers Animation Industry Co., Ltd.252,090,812.98259,873,164.57
Qingdao Haier International Trading Co., Ltd.61,738,470.808,815,157.08
Chongqing Haier Logistics Co., Ltd.51,830,739.0651,830,739.06
Dalian Haier International Trade Co., Ltd.21,800,000.0010,202,729.90
Xingyang International Co., Ltd.13,885,076.4013,885,076.40
Qingdao Haier Investment and Development Co., Ltd.10,311,777.96
Haier Energy & Power Co., Ltd.1,628,865.2819,548,568.72
Other related-party50,567,891.22163,207,257.63
Interest payable:
Haier Group Finance Co., Ltd.6,112,562.115,911,859.39
Dividends payable:
Brave Lion (HK) limited122,756,874.10122,756,874.10
Haier Electric Appliances International Co., Ltd.441,798,373.22
Haier Group Corporation376,486,378.16
Qingdao Haier Venture & Investment Information Co., Ltd.60,460,648.56
Other related-party47,102,752.7839,448,318.95

(4) Other related-party transactions

√Applicable □Not Applicable

(1)Certain of the Company's subsidiaries entered into loan contracts with Haier Group FinanceCo., Ltd.. The loan balance as of 30 June 2019 was RMB2.355 billion and the aggregate interest expensepayable by the subsidiaries to Haier Group Finance Co., Ltd. for the current period was RMB24 million.

(2)Information of the guarantor (as a related party) of the Company's guaranteed loan at the end ofthe period:

BorrowerLoan amountGuarantor
HAIER U.S.APPLIANCESOLUTIONS,INC.13,135,884,139.98Haier Group Corporation
Haier Singapore Investment Holding Co., Ltd.7,141,229,369.12Haier Group Corporation
Total20,277,113,509.10

(3)The interest income of deposits received by the Company and subsidiaries from Haier GroupFinance Co., Ltd. for the current period was RMB41 million.

(4)HAIER PAKISTAN (PRIVATE) LIMITED, a Company's subsidiary, lend an amount ofRMB0.278 billion to HNR COMPANY (PRIVATE) LIMITED, the Company's associate at the end ofthe period. HAIER ELECTRICAL APPLIANCES RUS LIMITED lend an amount of RMB19 million toHAIER RUSSIAN TRADING COMPANY LLC, a related party.

(5) Qingdao Haier Goodaymart Logistic Co., Ltd., a subsidiary of the Company and othercompanies provided logistics services to other related companies within Haier Group, the logisticsincome for the current period was RMB93 million.

(6)Leasing

LesseesLessorsUses for leased assetsLease expense recognized for the period
Subsidiaries of the CompanyQingdao Haier Investment and Development Co., Ltd. and its subsidiariesProduction and operation15,610,742.75
Subsidiaries of the CompanyOther companies of Haier GroupProduction and operation65,723,555.06
Total81,334,297.81

6. Pricing policy

(1) Related-party sales

Following the acquisition of the overseas white goods assets, the Company's original overseas salesmodel, being exports through the Group's exporting platform, was changed. The trading company underthe company holding overseas white goods assets was fully responsible for sales of export-orientedproducts. Meanwhile, the trading company was also responsible for the overseas sales of some of theGroup's products (such as brown goods). As such, the Company entered into a Sales FrameworkAgreement with Haier Group Corporation. Under which, it was agreed that the Company and HaierGroup Corporation will sell products and provide sales-related services (including but not limited toagency sales services, after-sales services and technical support) on a reciprocal basis for a term of threeyears.

Related-party sales among Haier Electronics Group Co., Ltd. (hereinafter referred to as'HaierElectronics'), a holding subsidiary of the Company, Qingdao Haier Investment and Development Co.,Ltd, Haier Group Corporation are carried out according to relevant provisions of Goods ExportAgreement, After-sales Service Agreement, Logistics Service Agreement entered into among parties.

(2) Related-party Procurement

In addition to independent procurement platform, the Company entrusted Haier Group Corporationand its subsidiaries for procurements and delivery of part of raw materials, which is conducted accordingto the Purchase and Distribution Contract entered among the Company, Haier Group Corporation andother parties. The Company, Haier Group Corporation and its subsidiaries purchase materials fromagents. They purchase and distribute goods for production and non-production use according to thespecific material procurement target proposed by the Company. After procurement and delivery, thesupply price consists of the actual purchase price and the agency fee, of which the agency fee was

calculated by 1.25% of the actual purchase price, while in principle the supply price should not be higherthan the price that the Company independently purchases from the market.Related-party procurements among Haier Electronics, Qingdao Haier Investment and DevelopmentCo., Ltd, Haier Group Corporation are carried out according to relevant provisions of MaterialsProcurement Agreement and Production and Experimental Equipment Procurement Agreement enteredamong parties.

(3) Related-party Transactions on Financial and Logistics Services

Some of the financial services such as deposit and loan service, discounting service and foreignexchange derivatives needed by the Company are provided by Haier Group Corporation and itssubsidiaries. According to the Financial Service Agreement entered among the Company, Haier GroupCorporation and other parties, the price of financial services is determined by the principle of not lessfavorable than market value fair. The Company is entitled to decide whether to keep cooperationrelationship with them with the knowledge of the price prevailing in the market and in combination withits own interests. While performing the agreement, the Company could also require other financialservice institutions to provide related financial services basing on actual situation. In order to meet theCompany's demands such as the avoidance of foreign exchange fluctuation risk, the Company maychoose Haier Group Finance Co., Ltd. ( hereinafter referred to as 'Finance Company') to provide someforeign exchange derivative business after comparing with comparable companies. The Company willuphold the safe and sound, appropriate and reasonable principle, under which all foreign exchangecapital business shall have a normal and reasonable business background to eliminate speculativeoperation. 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 toeradicate the risks of operation by persons and improved its response speed to risks on the premise thatthe risks are effectively controlled.Related-party transactions of financial services among Haier Electronics, Finance Company,Qingdao Haier Investment and Development Co., Ltd and Haier Group Corporation are carried outaccording to relevant provisions of Financial Service Agreement entered into among parties.

In order to further standardize the logistics services provided by the related companies of HaierGroup Corporation, the Company signed the Logistics and Service Agreement with Qingdao HaierInvestment and Development Co., Ltd and Haier Group Corporation, the Company entrusted thesubsidiaries of Haier Group to provide energy and power, basic research and detection, equipmentleasing, house rental and maintenance, landscaping and sanitation, gift purchasing, design, consultation,all kinds of ticket booking and other services.

In accordance with the Comprehensive Service Agreement, Promotion Agreement, ProductResearch and Development Agreement entered into among Haier Electronics, Qingdao Haier Investmentand Development Co., Ltd and Haier Group Corporation, Haier Electronics entrusted subsidiaries ofHaier Group to provide Haier Electronics with hydropower energy and related support; meeting,accommodation, ticket agent; integrated services such as product certification, software, food andbeverage agent, property decoration, house lease, finance and marketing, product research anddevelopment services.

(4) Others

In order to expand the sales businesses in the third and fourth-tier markets, Haier Electronicsrenewed the Products Procurement Agreement and Internal Sales Agreement with Qingdao HaierInvestment and Development Co., Ltd and Haier Group Corporation, according to which, while HaierElectronics purchases products from contract parties, the purchasing price shall be determined basing onthe prices at which Haier Electronics purchases the same type of product in similar transactions fromindependent third parties in the market, and shall be determined not less favorable than the terms andconditions provided by the independent third parties to Haier Electronics; while Haier Electronics sellproducts to contract parties for their own use or distribution on sales network, the selling price shall bedetermined basing on the prices at which Haier Electronics sells the same type of product in similartransactions to independent third parties in the market, and shall be determined not less favorable thanthe terms and conditions provided by Haier Electronics to independent third parties.

The Company and its subsidiaries entered into a series of contracts, including the Framework

Agreement Regarding the Procurement of Modular Products with Wolong Electric (Jinan) Motor Co.,Ltd. and other companies. Pursuant to which, they agreed to supply modular products to the Company atthe most favorable price which is no higher than the price it offered to other clients.

The Company and its subsidiaries entered into a series of contracts, including the ContractArrangement Regarding the Procurement of Special Steel Plate Products with Qingdao Qingdao HBISNew Material Technology Co., Ltd.. Under which, it is agreed that they shall supply goods to theCompany on terms which are not less favorable than terms offered by other suppliers.

XIII. Share-based payments

□Applicable √Not Applicable

XIV. Commitments and Contingencies

□Applicable √Not Applicable

As of 30 June 2019, the Company has no significant contingencies that need to be disclosed.

XV. Events subsequent to the balance sheet date

√Applicable □Not Applicable

1. On 7 August 2019,a cash dividend of RMB0.351 (inclusive of tax) will be distributed for eachshare based on the Company's total number of 6,097,460,559 A shares, with total cash dividends paidamounting to RMB2,140,208,656.21. A cash dividend of EUR0.045 (inclusive of tax) will be distributedfor each share based on the Company's total number of 271,013,973 D shares, with total cash dividendspaid amounting to EUR12,202,137.

2. As at 30 August 2018, Haier Electronics Group Co., Ltd. (hereinafter referred to as 'HaierElectronics'), a subsidiary of the Company, entered into an asset swap agreement with Haier ElectricAppliances International Co., Ltd ( hereinafter referred to as 'Haier International'), the subsidiary ofHaier Group Corporation (our parent Company), pursuant to which, Guanmei (Shanghai) CorporateManagement Co., Ltd (hereinafter referred to as 'Guanmei'), an indirect wholly-owned subsidiary ofHaier Electronics, has agreed to acquire and Haier International has agreed to sell 51% equity ofQingdao HSW Water Appliance Co., Ltd.(青岛海施水设备有限公司) (hereinafter referred to as'Qingdao HSW'), at a consideration of RMB1,074,000,000, and Guanmei has agreed to swap 55% equityof Bingji (Shanghai) Corporate Management Co., Ltd,(冰戟(上海)企业管理有限公司)( hereinafterreferred to as 'Bingji'), a wholly-owned subsidiary of Guanmei, to Haier International at the sameconsideration as aforementioned. Qingdao HSW is principally engaged in the R&D and sale ofhousehold water purifying solutions. Bingji is an investment holding company that indirectly controlsGooday's Logistics (mainly including the logistics' business segment of Haier Electronics). Theaforementioned transactions has been approved by Directors at the special general meeting of HaierElectronics held on 21 November 2018, approved by the relevant governmental authorities on 18 July2019 and been settled on 26 July 2019. The net revenue from the disposal of Haier Electronics resultingfrom the transaction is approximately RMB3.16 billion.

3. The Company has no other significant events subsequent to the balance sheet date that need tobe disclosed.

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

ItemsClosing balance
Financial assets measured at fair value and changes of which included in current profit and lossMeasured at amortized costFinancial assets measured at fair value and changes of which included in other comprehensive incomeTotal
Monetary funds33,735,043,658.2333,735,043,658.23
Financial assets held for trading985,839,615.67985,839,615.67
Derivative financial assets70,865,506.6770,865,506.67
Bills receivable and accounts receivable28,941,431,778.6828,941,431,778.68
Other receivables2,255,319,756.612,255,319,756.61
Other current assets4,961,057,059.114,961,057,059.11
Other equity instruments1,379,193,042.191,379,193,042.19
Other non-current financial assets328,487,584.54328,487,584.54
Other non-current assets89,250,000.0089,250,000.00

Financial assets (Continued)

ItemsOpening balance
Financial assets measured at fair value and changes of which included in current profit and lossMeasured at amortized costFinancial assets measured at fair value and changes of which included in other comprehensive incomeTotal
Monetary funds37,456,355,407.2837,456,355,407.28
Financial assets held for trading1,775,648,387.761,775,648,387.76
Derivative financial assets96,723,164.3796,723,164.37
Bills receivable and accounts receivable24,652,130,810.5224,652,130,810.52
Other receivables1,626,975,864.981,626,975,864.98
Other current assets2,838,231,840.902,838,231,840.90
Other equity instruments1,400,316,460.341,400,316,460.34
Other non-current financial assets327,358,825.57327,358,825.57
Other non-current assets95,518,757.9695,518,757.96

Financial liabilities

ItemsClosing balance
Financial liabilities measured at fair value and changes of which included in current profit and lossFinancial liabilities measured at amortized costFinancial liabilities measured at fair value and changes of which included in other comprehensiveTotal
income
Short-term borrowings8,108,137,605.858,108,137,605.85
Financial liabilities held for trading7,055,018.077,055,018.07
Derivative financial liabilities33,952,526.1033,952,526.10
Bills payable17,569,622,873.9217,569,622,873.92
Accounts payable30,604,644,390.2730,604,644,390.27
Other payables16,413,360,559.1116,413,360,559.11
Non-current liabilities due within one year8,902,956,811.058,902,956,811.05
Other current liabilities
Long-term borrowings12,260,679,425.0812,260,679,425.08
Bonds payable9,353,004,100.049,353,004,100.04
Long-term payables115,402,960.78115,402,960.78
Other non-current liabilities1,827,098,290.671,827,098,290.67

Financial liabilities (Continued)

ItemsOpening balance
Financial liabilities measured at fair value and changes of which included in current profit and lossFinancial liabilities measured at amortized costFinancial liabilities measured at fair value and changes of which included in other comprehensive incomeTotal
Short-term borrowings6,298,504,892.576,298,504,892.57
Financial liabilities held for trading218,748,280.33218,748,280.33
Derivative financial liabilities35,603,754.5435,603,754.54
Bills payable19,626,099,061.6019,626,099,061.60
Accounts payable27,759,119,079.7827,759,119,079.78
Other payables12,685,677,402.9112,685,677,402.91
Non-current liabilities due within one year3,015,060,105.583,015,060,105.58
Long-term borrowings15,541,466,325.2215,541,466,325.22
Bonds payable9,191,896,302.709,191,896,302.70
Long-term payables106,763,243.99106,763,243.99
Other non-current liabilities1,798,027,644.471,798,027,644.47

Details on each of the financial instruments of the Company are disclosed in Note VII. Risksrelated to these financial instruments and the risk management policies to mitigate these risks aresummarized as below. The management of the Company manages and monitors these risk exposures toensure above risks are well under control.

1. Credit risk

The credit risk of the Company is mainly arised from cash in bank, notes receivable, accountsreceivable, interest receivable, other receivable and financial products.

(1) The Company's bank deposits and financial products are mainly deposited in Haier GroupFinance Co., Ltd., state-owned banks and other large and medium sized listed banks. The interestreceivables are mainly the accrued interest from fixed deposits which are deposited in above banks. TheGroup doesn't believe there is any significant credit risk due to defaults of its counter parties whichwould cause significant loss.

(2) Accounts receivable and notes receivable: The Company only trades with approved andreputable third parties. All consumers who are traded by credit are subject to credit assessment, and thepayment terms shall be determined on a reasonable basis. The Company monitors the balances ofaccounts receivable on an ongoing basis and purchase credit insurance for receivables of large-amountcredit 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 andcontingency provision. The Company strengthened its management and continuous monitoring to thesereceivables and relevant economy business based on historical data, so as to ensure that the Company'ssignificant risk of bad debts are controllable and futher to be reduced.

2. Liquidity risk

Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfillingobligations associated with financial liabilities. The Company utilize various financing methods such asnotes and bank loans, to strive for a balance between sustainable and flexible financing. It also hasobtained bank credit facilities from several commercial banks to satisfy its needs for working capital andcapital expenditures.

3. Exchange rate risk

The Company's businesses are based in mainland China, USA, Japan, Southeast Asia, SouthAsia,central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and othercurrencies.

The Company's overseas assets and liabilities denominated in foreign currencies as well astransactions settled in foreign currencies expose the Company to fluctuations in exchange rates. TheCompany's finance department is responsible for monitoring the size of transactions in foreigncurrencies and assets and liabilities denominated in foreign currencies and maximally reduce theexposed fluctuation risk of exchange rate; the Company resorts the way of signing the long-term foreignexchange contracts to avoid the risk of exchange fluctuation.

4. Interest rate risk

The Company's interest rate risk arised from its long- and short- term bank loans and bondspayables which are interest-bearing. Financial liabilities with floating interest rates expose the Companyto cash flow interest rate risk, while financial liabilities with fixed interest rates expose the Company tofair value interest rate risk. The Group determines the corresponding percentage of fixed-interest rateand floating interest rate contracts in light of the prevailing market conditions.

XVII. Other Significant Events

The Company has no other significant events that need to be disclosed

XVIII. Notes to Main Items of Financial Statements of the Parent Company

1. Accounts receivable

(1). The disclosure of accounts receivable by ageing is as follows:

AgingClosing balanceOpening balance
Within one year213,447,137.70205,461,418.79
1-2 years9,306,599.70
2-3years857,235.458,649,467.83
Over 3 years159,822.00
Accounts receivable balance214,464,195.15223,417,486.32
Allowance for bad debts63,863.48795,468.89
Accounts receivable, net214,400,331.67222,622,017.43

(2). The disclosure by bad debt provision method

□Applicable √Not Applicable

(3). Changes in bad debt provision

√Applicable □Not Applicable

ItemsOpening balanceIncrease for the current periodDecrease for the current periodClosing balance
ProvisionOther movementReversalWrite-off / other movement
Allowance for bad debts795,468.89731,605.4163,863.48

(4). The total amount of the top 5 accounts receivable at the end of the period was

RMB204,943,385.12, accounting for 95.56% of book balance of the accounts receivable.

2. Other receivables

Items presentation

√Applicable □Not Applicable

Unit and Currency: RMB

ItemsClosing balanceOpening balance
Interest receivable10,294,498.126,292,538.22
Dividend receivable867,586,570.571,912,418,382.82
Other receivables994,590,806.59164,056,245.54
Total1,872,471,875.282,082,767,166.58

Other Explanations:

□Applicable √Not Applicable

Interest receivable

AgingClosing balanceOpening balance
Within one year10,294,498.126,292,538.22
Over 1 year
Total10,294,498.126,292,538.22

Dividend receivable

AgingClosing balanceOpening balance
Within one year867,586,570.571,912,418,382.82
Over 1 year
Total867,586,570.571,912,418,382.82

Other receivables

The disclosure of other receivables by ageing is as follows:

AgingClosing balanceOpening balance
Within one year994,598,306.59164,319,278.07
Over 1 year
Other receivables balance994,598,306.59164,319,278.07
Allowance for bad debts7,500.00263,032.53
Other receivables, net994,590,806.59164,056,245.54

① The total amount of the top 5 other receivables at the end of the period is RMB671,072,647.87,accounting for 67.47% of book balance of other receivables.

② Changes in bad debt provision for other receivables in the current period:

ItemsOpening balanceIncrease for the periodDecrease for the periodClosing balance
ProvisionOther movementReversalWrite-off / other movement
Allowance for bad debts263,032.53255,532.537,500.00

3. Long-term equity investment

√Applicable □Not Applicable

(1) Details of long-term equity investments:

ItemsClosing balanceOpening balance
Book value balanceProvision for impairmentBook value balanceProvision for impairment
Long-term equity investments
Including: long-term equity investments to subsidiaries31,435,861,600.667,100,000.0030,675,167,530.397,100,000.00
Long-term equity investments to associates3,198,213,783.9021,000,000.003,197,166,784.9121,000,000.00
Total34,634,075,384.5628,100,000.0033,872,334,315.3028,100,000.00

(2) Long-term equity investments to subsidiaries

Name of investeeOpening balanceIncrease / Decrease for the periodClosing balanceImpairment provisions