--- page 1 ---
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
GLOBAL OFFERING
(A joint stock company incorporated in
the People's Republic of China with limited liability)
Stock Code: 0300
美的集團股份有限公司
Midea Group Co., Ltd.


--- page 2 ---
If you are in any doubt about any of the contents in this document, you should obtain independent professional advice.
Midea Group Co., Ltd.
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under
the Global Offering
: 492,135,100 H Shares (subject to the Offer
Size Adjustment Option and
the Over-allotment Option)
Number of Hong Kong Offer Shares : 24,606,800 H Shares (subject to reallocation
and the Offer Size Adjustment Option)
Number of International Offer Shares : 467,528,300 H Shares (subject to reallocation,
the Offer Size
Adjustment Option and
the Over-allotment Option)
Maximum Offer Price : HK$54.80 per H Share plus brokerage of
1%, SFC transaction levy of 0.0027%,
Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%
(payable in full on application in Hong
Kong dollars and subject to refund)
Nominal value : RMB1.00 per H Share
Stock code : 0300
Joint Sponsors, Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility
for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any l oss howsoever
arising from or in reliance upon the whole or any part of the contents of this document.
A copy of this document, having attached thereto the documents specified in “Documents Delivered to the Registrar of Companies and Available on Displ ay” in
Appendix VII, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong K ong
take no responsibility for the contents of this document or any other document referred to above.
The Offer Price is expected to be fixed by agreement between the Overall Coordinators (for themselves and on behalf of the Underwriters) and us on or bef ore Friday,
13 September 2024 (Hong Kong time). If, for any reason, the Offer Price is not agreed by 12:00 noon on Friday, 13 September 2024 (Hong Kong time) between t he
Overall Coordinators (for themselves and on behalf of the Underwriters) and us, the Global Offering will not proceed and will lapse. The Offer Price wi ll be no more
than HK$54.80 per Offer Share and is currently expected to be no less than HK$52.00 per Offer Share unless otherwise announced.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where considered appropriate and with our consent, reduce the numbe r
of Offer Shares being offered under the Global Offering and/or the Offer Price range below that stated in this document at any time on or prior to the
morning of the last day for lodging applications under the Hong Kong Public Offering. See “Structure of the Global Offering” and “How to Apply for Hong
Kong Offer Shares” for further details.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall Coordinators (for themselves
and on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See “Underwriting — Underwriting Arrangem ents and
Expenses — Hong Kong Public Offering — Grounds for Termination” for further details.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this document, including t he risk factors set
out in the section headed “Risk Factors.”
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws of the United States and may not be off ered or
sold within or to the United States, or to or for the account or benefit of any U.S. person (as defined in Regulation S), except in transactions exempt fro m, or not
subject to, the registration requirements of the U.S. Securities Act. The Offer Shares are being offered and sold (i) solely to QIBs pursuant to an exem ption from
registration under Rule 144A of the U.S. Securities Act and (ii) outside the United States in offshore transactions in accordance with Regulation S.
IMPORTANT
9 September 2024


--- page 3 ---
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of this prospectus in relation to
the Hong Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing
Information ” section, and our website at www.midea.com.cn. Y ou may download
and print from these website addresses if you want a printed copy of this
prospectus.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the White Form eIPO service at www.eipo.com.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian
who is an HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses stated above.
IMPORTANT


--- page 4 ---
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in
this prospectus for further details on the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
Y our application through the White Form eIPO service or the HKSCC EIPO
channel must be made for a minimum of 100 Hong Kong Offer Shares and in multiples
of that number of Hong Kong Offer Shares as set out in the table below. No application
for any other number of Hong Kong Offer Shares will be considered and such an
application is liable to be rejected.
If you are applying through the White Form eIPO service, you may refer to the
table below for the amount payable for the number of H Shares you have selected. Y ou
must pay the respective amount payable on application in full upon application for Hong
Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to
pre-fund your application based on the amount specified by your broker or custodian ,
as determined based on the applicable laws and regulations in Hong Kong.
No. of Hong
Kong Offer
Shares
applied for
Amount
payable (2) on
application
No. of Hong
Kong Offer
Shares
applied for
Amount
payable (2) on
application
No. of Hong
Kong Offer
Shares
applied for
Amount
payable (2) on
application
No. of Hong
Kong Offer
Shares
applied for
Amount
payable (2) on
application
HK$ HK$ HK$ HK$
100 5,535.27 4,000 221,410.63 70,000 3,874,686.05 3,000,000 166,057,974.00
200 11,070.54 5,000 276,763.29 80,000 4,428,212.65 3,500,000 193,734,303.00
300 16,605.79 6,000 332,115.95 90,000 4,981,739.22 4,000,000 221,410,632.00
400 22,141.06 7,000 387,468.61 100,000 5,535,265.80 4,500,000 249,086,961.00
500 27,676.33 8,000 442,821.27 200,000 11,070,531.60 5,000,000 276,763,290.00
600 33,211.60 9,000 498,173.93 300,000 16,605,797.40 6,000,000 332,115,948.00
700 38,746.87 10,000 553,526.58 400,000 22,141,063.20 7,000,000 387,468,606.00
800 44,282.13 20,000 1,107,053.15 500,000 27,676,329.00 8,000,000 442,821,264.00
900 49,817.39 30,000 1,660,579.75 1,000,000 55,352,658.00 9,000,000 498,173,922.00
1,000 55,352.66 40,000 2,214,106.32 1,500,000 83,028,987.00 10,000,000 553,526,580.00
2,000 110,705.31 50,000 2,767,632.90 2,000,000 110,705,316.00 12,303,400
(1) 681,025,892.44
3,000 166,057.98 60,000 3,321,159.48 2,500,000 138,381,645.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of the brokerage, the SFC transaction levy, the Stock Exchange
trading fee and the AFRC transaction levy. If your application is successful, brokerage will be paid to
the Exchange Participants (as defined in the Listing Rules) and the SFC transaction levy, the Stock
Exchange trading fee and AFRC transaction levy are paid to the Stock Exchange (in the case of the SFC
transaction levy, collected by the Stock Exchange on behalf of the SFC; and in the case of the AFRC
transaction levy, collected by the Stock Exchange on behalf of the AFRC).
IMPORTANT


--- page 5 ---
Hong Kong Public Offering commences .............................. .9:00 a.m. on
Monday, 9 September 2024
Latest time for completing electronic applications under
White Form eIPO service through
the designated website at www.eipo.com.hk (2) ....................... 1 1:30 a.m. on
Thursday, 12 September 2024
Application lists open (3) .......................................... 1 1:45 a.m. on
Thursday, 12 September 2024
Latest time for completing payment of White Form eIPO
applications by effecting internet banking transfer(s) or
PPS payment transfer(s) and giving electronic
application instructions to HKSCC
(4) ........................... .12:00 noon on
Thursday, 12 September 2024
If you are instructing your broker or custodian who is an HKSCC Participant to submit
electronic application instructions on your behalf through HKSCC’s FINI system in
accordance with your instruction to apply for the Hong Kong Offer Shares, you are advised to
contact your broker or custodian for the earliest and latest time for giving such instructions,
as this may vary by broker or custodian .
Application lists close
(3) ........................................ .12:00 noon on
Thursday, 12 September 2024
Expected Price Determination Date (5) ..................... .Friday, 13 September 2024
Announcement of the final Offer Price, the level of indications
of interest in the International Offering, the level of applications
in the Hong Kong Public Offering and the basis of allocation of
the Hong Kong Offer Shares to be published on the website of
the Stock Exchange at www.hkexnews.hk and on the website
of our Company at www.midea.com.cn (6) at or before ................1 1:00 p.m. on
Monday, 16 September 2024
EXPECTED TIMETABLE (1)
–i–


--- page 6 ---
Results of allocations in the Hong Kong Public Offering
(with successful applicants’ identification document numbers,
where appropriate) to be available through a variety of channels
as described in the section headed “How to Apply for Hong Kong
Offer Shares – B. Publication of Results” in this prospectus, including:
 in the announcement to be published on the website of
the Stock Exchange at www.hkexnews.hk and on the website
of our Company at www.midea.com.cn (6) at or before ..........1 1:00 p.m. on
Monday, 16 September 2024
 from the designated results of allocations website
at www.iporesults.com.hk
(alternatively: www.eipo.com.hk/eIPOAllotment )
with a “search by ID” function from ........................ 1 1:00 p.m. on
Monday, 16 September 2024
to 12:00 midnight on
Sunday, 22 September 2024
 from the allocation results telephone enquiry
by calling +852 2862 8555 between 9:00 a.m.
and 6:00 p.m. on ...........................T uesday, 17 September 2024,
Thursday, 19 September 2024,
Friday, 20 September 2024 and
Monday, 23 September 2024
Despatch of H Share certificates or deposit of
the H Share certificates into CCASS in respect of wholly or
partially successful applications pursuant to the Hong Kong
Public Offering on or before
(7)(9) ..................... Monday, 16 September 2024
White Form e-Refund payment instructions/refund
checks in respect of wholly or partially successful
applications (if applicable) or wholly or partially
unsuccessful applications pursuant to the
Hong Kong Public Offering to be despatched
or collected on or before
(8)(9) ......................... T uesday, 17 September 2024
Dealings in the H Shares on the Stock Exchange expected
to commence at 9:00 a.m. on ........................T uesday, 17 September 2024
Notes:
(1) All times refer to Hong Kong local time, except as otherwise stated.
EXPECTED TIMETABLE (1)
–i i–


--- page 7 ---
(2) Y ou will not be permitted to submit your application under the White Form eIPO service through the
designated website at www.eipo.com.hk after 11:30 a.m. on the last day for submitting applications. If you
have already submitted your application and obtained an application reference number from the designated
website at or before 11:30 a.m., you will be permitted to continue the application process (by completing
payment of application monies) until 12:00 noon on the last day for submitting applications, when the
application lists close.
(3) If there is/are a tropical cyclone warning signal number 8 or above, a “black” rainstorm warning and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday,
12 September 2024, the application lists will not open or close on that day. Please see “How to Apply for Hong
Kong Offer Shares — E. Severe Weather Arrangements.”
(4) Applicants who apply for Hong Kong Offer Shares by instructing your broker or custodian to apply for on
your behalf via HKSCC EIPO channel should see “How to Apply for Hong Kong Offer Shares — A.
Application for Hong Kong Offer Shares — 2. Application Channels.”
(5) The Price Determination Date is expected to be on or before Friday, 13 September 2024. If, for any reason,
our Company and the Overall Coordinators (for themselves and on behalf of the Underwriters) are unable to
reach agreement on the Offer Price on or before 12:00 noon on Friday, 13 September 2024, the Global Offering
will not proceed and will lapse.
(6) None of the website or any of the information contained on the website forms part of this document.
(7) No temporary documents of title will be issued in respect of the Offer Shares. H Share certificates will only
become valid evidence of title at 8:00 a.m. on Tuesday, 17 September 2024, provided that (1) the Global
Offering has become unconditional in all respects and (2) the Underwriting Agreements have not been
terminated in accordance with their respective terms. Investors who trade H Shares prior to the receipt of H
Share certificates or prior to the H Share certificates becoming valid evidence of title do so entirely at their
own risk.
(8) White Form e-Refund payment instructions/refund checks will be issued in respect of wholly or partially
unsuccessful applications pursuant to the Hong Kong Public Offering and also in respect of wholly or partially
successful applications in the event that the final Offer Price is less than the price payable per Offer Share on
application. Part of the applicant’s Hong Kong identity card number or passport number, or, if the application
is made by joint applicants, part of the Hong Kong identity card number or passport number of the first-named
applicant, provided by the applicant(s) may be printed on the refund check, if any. Such data would also be
transferred to a third party for refund purposes. Banks may require verification of an applicant’s Hong Kong
identity card number or passport number before encashment of the refund check. Inaccurate completion of an
applicant’s Hong Kong identity card number or passport number may invalidate or delay encashment of the
refund check.
(9) Applicants being individuals who are eligible for personal collection must not authorize any other person to
collect on their behalf. Applicants being corporations which are eligible for personal collection must attend by
their authorized representatives bearing a letter of authorization from their corporation stamped with the
corporation’s chop. Both individuals and authorized representatives of corporations (if applicable) must
produce, at the time of collection, evidence of identity acceptable to our Company’s H Share Registrar at the
time of collection.
Applicants who have applied for Hong Kong Offer Shares through HKSCC EIPO channel should refer to the
section headed “How to Apply for Hong Kong Offer Shares — D. Despatch/Collection of H Share Certificates
and Refund of Application Monies” for details.
EXPECTED TIMETABLE (1)
– iii –


--- page 8 ---
Applicants who have applied through the White Form eIPO service and paid their applications monies
through single bank accounts may have refund monies (if any) despatched to the bank account in the form of
White Form e-Refund payment instructions. Applicants who have applied through the White Form eIPO
service and paid their application monies through multiple bank accounts may have refund monies (if any)
despatched to the address as specified in their application instructions in the form of refund checks by ordinary
post at their own risk.
Further information is set out in the section headed “How to Apply for Hong Kong Offer Shares — D.
Despatch/Collection of H Share Certificates and Refund of Application Monies.”
The above expected timetable is a summary only. Y ou should see “Structure of the Global
Offering” and “How to Apply for Hong Kong Offer Shares” for details of the structure of the
Global Offering, including the conditions of the Global Offering, and the procedures for
application for the Hong Kong Offer Shares.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such a case, our Company will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
–i v–


--- page 9 ---
IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This document is issued by us solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Hong Kong Offer Shares by this
document pursuant to the Hong Kong Public Offering. This document may not be used for
the purpose of making, and does not constitute, an offer or invitation in any other
jurisdiction or in any other circumstances. No action has been taken to permit a public
offering of the Hong Kong Offer Shares in any jurisdiction other than Hong Kong and no
action has been taken to permit the distribution of this document in any jurisdiction other
than Hong Kong. The distribution of this document for purposes of a public offering and
the offering and sale of the Hong Kong Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitted under the applicable securities laws
of such jurisdictions pursuant to registration with or authorization by the relevant
securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this document to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this document. We have not
authorized anyone to provide you with information that is different from what is
contained in this document. Any information or representation not contained nor made in
this document must not be relied on by you as having been authorized by us, any of the
Joint Sponsors, the Overall Coordinators, the Capital Market Intermediaries, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, any of the
Underwriters, any of our or their respective directors, officers, employees, agents, or
representatives of any of them or any other parties involved in the Global Offering.
Page
EXPECTED TIMETABLE ............................................ i
CONTENTS ....................................................... v
SUMMARY ....................................................... 1
OVERVIEW OF THE GLOBAL OFFERING ............................. 2 8
DEFINITIONS ..................................................... 3 0
GLOSSARY OF TECHNICAL TERMS ................................. 4 5
FORW ARD-LOOKING STATEMENTS ................................. 4 7
RISK FACTORS ................................................... 4 9
CONTENTS
–v–


--- page 10 ---
W AIVERS AND EXEMPTIONS ....................................... 9 1
INFORMATION ABOUT THIS DOCUMENT AND
THE GLOBAL OFFERING ......................................... 1 1 7
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN
THE GLOBAL OFFERING ......................................... 1 2 1
CORPORATE INFORMATION ....................................... 1 3 0
INDUSTRY OVERVIEW ............................................. 1 3 3
HISTORY AND CORPORATE STRUCTURE ............................ 1 5 7
BUSINESS ........................................................ 1 7 0
FINANCIAL INFORMATION ......................................... 2 4 1
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS ..... 3 1 3
CONNECTED TRANSACTIONS ...................................... 3 2 0
SHARE CAPITAL .................................................. 3 2 7
REGULATORY OVERVIEW ......................................... 3 3 1
SUBSTANTIAL SHAREHOLDERS ..................................... 3 4 5
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT .............. 3 4 6
CORNERSTONE INVESTORS ........................................ 3 6 3
FUTURE PLANS AND USE OF PROCEEDS ............................. 3 7 8
UNDERWRITING .................................................. 3 8 5
STRUCTURE OF THE GLOBAL OFFERING ............................ 3 9 9
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 1 8
APPENDIX I ACCOUNTANT’S REPORT ........................ I - 1
APPENDIX IA UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL INFORMATION ...... IA-1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL
INFORMATION ................................ II-1
APPENDIX III TAXATION AND FOREIGN EXCHANGE ............. III-1
CONTENTS
–v i–


--- page 11 ---
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND
REGULATORY PROVISIONS ..................... I V - 1
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION .... V - 1
APPENDIX VI STATUTORY AND GENERAL INFORMATION ........ VI-1
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY ....... VII-1
CONTENTS
– vii –


--- page 12 ---
This summary aims to give you an overview of the information contained in this
document. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire document carefully before you decide to
invest in the Offer Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the Offer Shares are set out in the section headed “Risk Factors.” You should
read that section carefully before you decide to invest in the Offer Shares.
We are a leading technology-driven global provider of Smart Home Solutions and
Commercial & Industrial Solutions. Under Smart Home Solutions, we offer a wide range of
home appliances for consumers; under Commercial & Industrial Solutions, our offerings cover
various solutions for enterprise customers, such as home appliance compressors and motors,
commercial air conditioners, industrial robots and supply chain services. As a Fortune Global
500 company for nine consecutive years, we operate a global business that reaches over 200
countries and regions, with 33 R&D centers, 43 major manufacturing bases and over 190,000
employees across different continents. During the Track Record Period, we generated the
majority of our revenue from sales of home appliances under Smart Home Solutions.
The chart below demonstrates the highlights of our businesses:
RMB 39 bn
Aggregate R&D Spending
in 2021-2023
Global Presence in
200+
Countries and Regions(1)
No. 1
Commercial AC Provider
in Mainland China(4)
40%+
Revenue from Overseas(2)
A/A2/A
S&P/Moody’s/Fitch
Credit Rating(1)
Big 4
Industrial Robotics
Companies Globally(5)
Top 10
Largest Active Patent Family
Holder Globally(6)
RMB 373.7 bn
2023 Revenue
Largest
Home Appliance
Company Globally(3)
Notes:
(1) As at the Latest Practicable Date
(2) During the Track Record Period
(3) In terms of revenue and sales volume in 2023, capturing a market share of 7.9% in terms of sales volume,
according to Frost & Sullivan
(4) In terms of revenue in 2023, representing a market share of 14.3%, according to Frost & Sullivan
(5) In terms of revenue in 2023, according to Frost & Sullivan
(6) As at 31 December 2023, based on approximately 65,000 active patent families held by us, according to Frost
& Sullivan
SUMMARY
–1–


--- page 13 ---
Our products offered under Smart Home Solutions include residential air conditioners,
refrigerators, washing machines, kitchen appliances, and various other appliances. Our
offerings under Commercial & Industrial Solutions include (i) industrial components such as
compressors and motors and green energy solutions under Energy Solutions & Industrial
Technology; (ii) integrated solutions for buildings, supported by our offerings of commercial
air conditioners, elevators, building energy management and building control software, under
Intelligent Building Technology; (iii) automation solutions including industrial robotics,
production cells, automated systems and automated logistics systems, under Robotics &
Automation; and (iv) Other Businesses, including the digital supply chain services offered by
Annto Smart Logistics, the industrial software and digitalization consulting services offered by
Midea Cloud, and others.
Our business is technology-driven. With 33 R&D centers and more than 23,000 R&D
employees, we invest heavily in R&D, incurring more than RMB39 billion in R&D expenses
from 2021 to 2023. Our R&D efforts enhance the technological sophistication of our offerings
to customers. Under Smart Home Solutions, many of our home appliance products incorporate
AI and other technologies that enable intelligent features, such as “smart control” enabled by
IoT and AI technologies. Through Energy Solutions & Industrial Technology, we provide
technologically advanced industrial components and integrated green energy solutions that
enable the storage and use of renewable energy. Under Intelligent Building Technology, we
offer integrated solutions for intelligent building ecosystems, with the digital platform
iBUILDING at the core of such solutions. This platform digitalizes and connects various
equipment and provides comprehensive data analyses and recommendations to facilitate the
monitoring, control and management of buildings. In addition, KUKA Group provides
sophisticated robotics and automation solutions leveraging its advanced algorithm, ranking
among the world’s “big four” industrial robotics makers. Our Other Businesses are also largely
technology-driven. For example, Annto Smart Logistics delivers end-to-end supply chain
services that leverage data insights to optimize and manage its comprehensive logistics
network, with line scheduling and fulfillment systems based on optimization algorithms.
OUR JOURNEY
Our journey commenced in 1968 in Shunde, China and we have consistently adapted to
the rapidly changing global landscape. Driven by relentless innovation, organic growth,
strategic acquisitions and joint ventures, we have evolved from a business with a singular focus
in one market into a global technology powerhouse with a wide array of product and service
offerings, catering to diverse end-markets around the world. For details of this journey, see
“Business — Our Key Milestones.”
SUMMARY
–2–


--- page 14 ---
Our journey brought us to where we stand today, with numerous extraordinary
achievements associated with the Midea name. To give a few examples (each according to the
Frost & Sullivan Report):
 We are the world’s largest home appliance company in terms of both sales volume
and revenue in 2023, capturing a market share of 7.9% in terms of sales volume. In
2023, in terms of sales volume, we ranked among the top three home appliance
companies in the world in each of residential air conditioners, laundry appliances,
refrigerators, as well as kitchen and other appliances, with a market share of 23.7%,
14.2%, 10.5% and 6.0%, respectively. During the same period, we also ranked
among the top three home appliance companies in these markets in terms of retail
sales value, with a market share of 21.1%, 12.5%, 7.7% and 4.6%, respectively.
Among these markets, we ranked first in residential air conditioners as well as
kitchen and other appliances.
 Our home appliance compressor business ranked No. 1 in the global market in terms
of manufacturing volume in 2023, capturing a market share of 30.3%. Our
residential air conditioner compressor business also ranked No. 1 in the global
market in the same period in terms of manufacturing volume, commanding a global
market share of 45.1%.
 We are the largest commercial air conditioner provider in mainland China, capturing
a market share of 14.3%, and one of the top five globally, capturing a market share
of 6.6%, both in terms of revenue in 2023.
 Our subsidiary KUKA Group is one of the world’s “big four” industrial robotics
companies, and it ranked second in terms of sales volume and revenue of
heavy-payload robots in 2023, capturing a market share of 18.6% and 17.9%,
respectively.
Looking ahead, our fundamental strategies of “technology leadership, direct to users,
digitalization & intelligence driven, and global impact” (༺eᅰ౽ᚨਗeΌ
ॎ) will continue to guide us on our path forward. We aim to bolster our Commercial &
Industrial Solutions as a powerful growth engine while remaining committed to the continual
expansion of our Smart Home Solutions.
SUMMARY
–3–


--- page 15 ---
OUR BUSINESS
Our business is divided primarily into Smart Home Solutions and Commercial &
Industrial Solutions. The following diagram illustrates our current business layout.
Air Conditioners Laundry Appliances
& Refrigerators
Kitchen & Other Appliances
Smart Home Solutions Commercial & Industrial Solutions
Servo and
Motion
Control
Energy Solutions &
Industrial Technology
Compressor Motor Energy
Storage System
Tech-driven
Supply Chain
Services
Industrial
Cloud Service
Medical
Imaging
System
Industrial Robotics
Robotics & Automation Other Businesses
Intelligent
Building Technology
Commercial AC Elevator
and Escalator
Smart Home Solutions
We offer a wide range of home appliances, including air conditioners, refrigerators,
washing machines, kitchen appliances, and various other appliances. Applying technologies
such as IoT and AI, we provide interconnected and comprehensive Smart Home Solutions
ensuring a smooth and differentiated consumer experience. Our IoT-enabled appliances are
equipped with wireless communication modules such as Wi-Fi and Bluetooth that allow them
to connect to the internet, communicate with other devices, and be centrally managed through
the digital platform we provide for consumers. AI technologies in areas such as voice,
language, computer vision and embodied AI infuse intelligence into many of our appliances,
enabling real-time data collection and analysis and automatic adjustment of operational
parameters such as temperature and humidity, as well as other functions such as voice
recognition, resulting in seamless control and personalized experiences.
SUMMARY
–4–


--- page 16 ---
We have curated a broad brand portfolio covering premium, mass and youth markets.
Below is a snapshot of our latest brand portfolio under Smart Home Solutions:
Smart Home Brands
Premium Market Youth MarketMass Market
We have a global sales and distribution network, covering both online and offline
channels. Our Midea Cloud Sales platform digitalizes our offline distribution operations. We
actively utilize online sales channels, including influential e-commerce and livestreaming and
short video platforms such as JD.com, Tmall, Pinduoduo and Douyin. In the four months ended
30 April 2024, online sales accounted for over 50% of our total sales in mainland China under
Smart Home Solutions. Guided by our “direct to users” strategy, we spare no effort to increase
direct connections and interactions with consumers to better understand and respond to their
needs.
Looking into the future, there is a noticeable trend in mainland China towards higher-end
products in major home appliance categories, driven by rising income and consumption levels.
We are ready to capitalize on this trend by upgrading our product portfolio and increasing our
sales of high-end and technologically sophisticated products that command higher prices. In
addition, we are striving to further increase our proportion of overseas revenue, particularly by
promoting our OBM business.
Commercial & Industrial Solutions
Through Commercial & Industrial Solutions, we provide a full range of products and
services across four business units: Energy Solutions & Industrial Technology, Intelligent
Building Technology, Robotics & Automation and Other Businesses. Our revenue from
Commercial & Industrial Solutions exhibited a remarkable CAGR of 15.4% between 2021 and
2023, with its share in our total revenue rising from 21.4% in 2021 to 26.2% in 2023. Going
forward, we believe that Commercial & Industrial Solutions will be an important driver for our
growth.
Energy Solutions & Industrial Technology
Harnessing our expertise from decades of experience in home appliances and commercial
air conditioners, we provide technologically advanced, reliable and eco-friendly core industrial
components including compressors, motors and industrial control systems. Our residential air
conditioner compressor business ranked No. 1 in 2023 in terms of manufacturing volume,
commanding a global market share of 45.1%.
SUMMARY
–5–


--- page 17 ---
We also offer green energy solutions across the energy value chain, including large-scale
energy storage, industrial and commercial energy storage, household energy storage, intelligent
power grids, distributed photovoltaic solutions and new energy vehicle components (such as
thermal management systems) to enable our various global customers to store and use
renewable energy.
Intelligent Building Technology
We provide intelligent and integrated solutions for infrastructure, public premises,
industrial parks, agricultural facilities and more, supported by our offerings of commercial air
conditioners, elevators, building energy management and building control software. We
empower our customers to transform buildings into highly efficient and green spaces,
optimizing energy consumption and enhancing comfort.
We are a market leader in commercial air conditioners. According to the Frost & Sullivan
Report, our commercial air conditioners ranked first in mainland China in terms of revenue in
2023, capturing a market share of 14.3%, and we were among the top five commercial air
conditioner providers globally in terms of revenue in 2023, capturing a market share of 6.6%.
Building on our market leadership in commercial air conditioners, we are well-positioned to
acquire customers with our increasingly comprehensive and competitive product lineups. We
have acquired Winone, a major domestic manufacturer of freight elevators in mainland China.
We also offer building control software that automates building control and building energy
management solutions that help buildings enhance energy efficiency.
Robotics & Automation
Our Robotics & Automation business is operated under KUKA Group, Germany-
headquartered and one of the world’s “big four” industrial robotics makers, with over 120 years
of history. KUKA Group offers one-stop automation solutions including industrial robotics,
production cells, fully automated systems, and automated logistics systems through its
subsidiary Swisslog for end-markets such as automotive, electronics, metal and plastic,
consumer goods, retail, e-commerce and healthcare.
Since we acquired KUKA Group in 2017, its business in China has grown rapidly, making
KUKA China an important contributor to KUKA Group’s overall growth. The revenue
contribution from KUKA China to KUKA Group’s overall business increased from 17.3% in
2021 to 19.6% in 2023, representing impressive growth in the world’s largest industrial
robotics market, where we have established a comprehensive sales and service network and
state-of-the-art manufacturing facilities for robotics.
SUMMARY
–6–


--- page 18 ---
Other Businesses
Our Other Businesses primarily comprise Annto Smart Logistics, Midea Cloud, Midea
Lighting and Wandong Medical.
Over the years, we have developed infrastructure and technological capabilities in areas
such as supply chain and digitalized operations, which have been instrumental to the success
of our Smart Home Solutions and Commercial & Industrial Solutions. We have externalized a
number of such capabilities to serve other customers, including through Annto Smart Logistics.
Annto Smart Logistics is a logistics technology company dedicated to providing customers
with end-to-end digital intelligent supply chain services, assisting enterprises in promoting
channel optimization and improving supply chain efficiency. Annto Smart Logistics provides
services to over 3,000 enterprise customers in home appliances, fast-moving consumer goods,
furniture and other sectors. In the field of digitalized operations, our subsidiary Midea Cloud
provides industrial software and digitalization consulting services for intelligent
manufacturing and industrial interconnection to facilitate the digital transformation of its
customers. In addition, our subsidiary Midea Lighting is principally engaged in the research
and development, manufacturing and sales of lighting and home design appliances, striving to
provide intelligent integrated solutions for our customers.
Besides in-house incubation, we have expanded into new businesses by making strategic
acquisitions in certain high-growth markets. For example, in 2021, we acquired Wandong
Medical, a provider of medical imaging products and services in mainland China to enter the
medical imaging market.
Synergies and Resource Sharing across Businesses
Our diverse and complementary solutions present synergies as well as potential for
resource sharing and coordinated development, from the offering of integrated solutions to
procurement, R&D and manufacturing.
We have developed an industrial internet platform, M IoT (Ꮧ), to serve commercial and
industrial customers in a wide range of sectors and help them build digitalized and smart
manufacturing and supply chain infrastructure. M IoT is designed to integrate certain software,
hardware and services across our Commercial & Industrial Solutions business, including Midea
Cloud, KUKA Group, Annto Smart Logistics, Intelligent Building Technology and others and
offers multiple tools for customers’ different needs. For example, through the smart
manufacturing and digital supply chain software, customers will be able to purchase, monitor
and receive maintenance and other services for hardware equipment such as KUKA robots and
purchase services such as Annto Smart Logistics’ digital supply chain services. Through
integrated solutions like M IoT, we aim to provide one-stop solutions to customers by
combining offerings across different businesses and promote cross-selling.
SUMMARY
–7–


--- page 19 ---
We promote centralized procurement of raw materials and components that are commonly
used by our different businesses, achieving enhanced bargaining power, increasing profitability
and ensuring the quality of supplies. Similarly, we coordinate our R&D and manufacturing
activities across the different businesses, to share expertise, resources, and infrastructure and
optimize operational efficiency. We centralize our R&D efforts for foundational technologies
that are generally applicable to multiple businesses. For example, our decades of know-how in
developing thermal management technologies for home appliances can also be applied to the
development of thermal management systems for the fast-growing new energy vehicle market.
Furthermore, various supporting functions, such as finance, tax, legal and human resources, are
shared across our Group as well.
R&D AND DIGITALIZATION EFFORTS
Our competitiveness is continually strengthened by our unwavering commitment to R&D
and digitalization.
Strong R&D Commitment : We spare no effort to build globally competitive R&D
capabilities. Overall, we had more than 23,000 R&D employees as of 30 June 2024, accounting
for more than half of our non-manufacturing employees. As of the Latest Practicable Date, we
had established 33 R&D centers in 11 countries, among which 17 R&D centers are located
overseas. In 2023, our investment in R&D exceeded RMB14 billion. We have established a
research system including our Corporate Research Center and R&D units and teams at different
business departments, and we aim to develop a reservoir of technology which represents
complete coverage over three different time horizons: (i) the “research generation” that focuses
on long-term fundamental research; (ii) the “reserve generation” that focuses on innovation at
the product platform level to support the next generation of product development; and (iii) the
“development generation” that focuses on product development projects with demonstrated
market demand. Such an approach forms our “three generations” (ɓ˾) R&D model.
Digitalized Operations : We have been advancing the digital transformation of our entire
business process, covering R&D, procurement, manufacturing, supply chain, sales, after-sale
services and other aspects, to ensure seamless information sharing with customers, suppliers,
and partners and further improve our operational efficiency. For example, in manufacturing, we
had five factories that received the “Lighthouse Factory” recognition from the World Economic
Forum, which recognizes a factory’s world-leading capabilities in intelligent manufacturing,
automation, and digitalization. Our digital infrastructure enables flexible manufacturing,
allowing us to match manufacturing with customer demand and maximize our manufacturing
efficiency while minimizing inventory. Digitalization also plays an instrumental role in our
quality control efforts, helping us win the China Quality Award ( ʕ਷ሯඎᆤ) in 2021. For
supply chain management, we have developed an ISC management system, which renders our
supply chain highly flexible, efficient and resilient.
SUMMARY
–8–


--- page 20 ---
OUR CONSUMER-CENTRIC APPROACH
We are committed to reaching consumers to gain a deeper understanding of their
preferences and to offer comprehensive solutions. This is achieved through the reduction of
sales and distribution layers and an emphasis on direct interactions with consumers at various
touchpoints such as mobile apps and customer services. We continually optimize our products
and operations based on our consumer insights to enhance stickiness and improve consumer
satisfaction.
We have been transforming and streamlining our sales and distribution in order to get
closer to consumers. With the launch of the Midea Cloud Sales platform, which enables a large
number of SME retailers to directly order and purchase products from us, we can connect with
SME retailers and react promptly to changes in consumer preferences and market demand.
Direct access generates valuable market insights. Such insights drive our entire
operations from R&D and manufacturing to supply chain and sales. Our extensive knowledge
of consumer preferences not only helps us offer popular products, but also enables us to
improve the efficiency of our operations. For example, we pioneered the “T+3” (order
placement plus material preparation, manufacturing and delivery) model, under which
manufacturing are guided by and matched with consumer demand as informed by our market
insights, allowing us to minimize inventory, maximize manufacturing efficiency and shorten
delivery cycles.
We improve consumer stickiness and brand loyalty through targeted marketing and by
offering value-added services that provide consumers with more benefits, convenience, and
satisfaction. Leveraging our digital tools, we are able to gain a better understanding of
consumer preferences and acquire and retain consumers more effectively. The number of
registered users of M-Smart, our app and Weixin mini-program for consumers to manage our
smart home appliances and enjoy additional benefits and services, exceeded 82 million as of
30 April 2024. Our certified service engineers and experience consultants directly engage with
consumers, addressing their questions and needs in a timely manner.
OUR GLOBALIZATION EFFORTS
We strive to expand our business globally. During the Track Record Period, overseas sales
constituted more than 40% of our total sales. We offer products in more than 200 countries and
regions worldwide.
Beyond product sales, we have 17 overseas R&D centers and 22 overseas major
manufacturing bases, spanning 16 countries, with over 35,000 overseas employees. The
overseas network of R&D centers enables us to develop products that cater to the local needs
of different markets. We aim to deepen our “local for local” strategy by expediting the
localization of manufacturing and supply chains and establishing regional manufacturing bases
for major components and finished products in key overseas markets. Localized manufacturing
increases the efficiency and resilience of our global supply chain.
SUMMARY
–9–


--- page 21 ---
In addition to organic growth, we expand overseas through joint ventures and
acquisitions. In the past, we have established successful joint ventures with leading
international players in countries such as Brazil, Egypt, and India, allowing us to leverage the
market insights and network of our joint venture partners to accelerate market entry. We have
also acquired Toshiba Lifestyle and KUKA Group, among others, and continue to pursue a
proactive and prudent strategy for future overseas acquisitions.
OUR CORPORATE GOVERNANCE AND CULTURE
Our corporate governance features the sharing and a close alignment of responsibility,
authority and reward, enabling us to foster a dynamic culture of entrepreneurship, innovation
and long-term commitment. We are committed to growing talent both internally and attracting
talents externally. Many of our senior managers have been with Midea for more than 20 years.
We encourage our managers to celebrate our achievements, learn from failures, and embrace
change.
We have the utmost care for all our stakeholders. We are committed to sharing our success
with employees and have introduced multi-tier share incentive plans that enable them to benefit
from our growth. We value the long-term trust of our shareholders and have consistently
returned capital to shareholders through dividends and share repurchases. The aggregate
amount of dividends paid to our shareholders and share repurchases during the Track Record
Period was RMB56.2 billion. When it comes to the environment and society, we are keenly
aware of the impact of our activities on the environment and strive to reduce our footprint and
promote sustainability. We are constantly contributing to our communities as a responsible
corporate citizen.
OUR TRACK RECORD
During the Track Record Period, we delivered solid growth and profit margins. For the
years from 2021 to 2023 and the four months ended 30 April 2024, our revenue was RMB343.4
billion, RMB345.7 billion, RMB373.7 billion and RMB145.8 billion, respectively, and our net
profit margin was 8.5%, 8.6%, 9.0% and 9.4%, respectively. Our ROE reached 23.6%, 22.1%,
22.1% and 25.3% in the same periods, respectively. As of the Latest Practicable Date, our
credit ratings were A, A2 and A from S&P Global Ratings, Moody’s Investors Service, and
Fitch Ratings, respectively, among the highest of companies in mainland China.
OUR STRENGTHS
We believe the following strengths position us well to capitalize on future opportunities
and deliver continued growth:
 A leading technology-driven global provider of smart home and commercial and
industrial solutions;
 Leading R&D capabilities enabling continual innovation;
 Operational excellence and digitalization across the entire value chain;
SUMMARY
–1 0–


--- page 22 ---
 Extensive and expanding global presence;
 Commercial & Industrial Solutions driving continued growth; and
 Progressive corporate governance and values.
OUR STRATEGIES
The four pillars of our fundamental growth strategy are “technology leadership, direct to
users, digitalization & intelligence driven, and global impact” (༺eᅰ౽ᚨ
ॎ). We are committed to pursuing these strategies with vigor and determination,
as they are essential for us to solidify our leadership as a global technology company. At the
same time, we will continue to increase our efforts in ESG, focusing on environmental
protection, sustainability, and contributing to our employees, communities and consumers as a
responsible corporate citizen. We are dedicated to improving environmental sustainability
across all aspects of our business: design, procurement, manufacturing, logistics, recycling,
and service, aiming to reach carbon peak by 2030 and carbon neutrality by 2060.
We plan to pursue the following strategies:
 Staying committed to technology leadership;
 Enhancing consumer reach and enriching consumer experience;
 Maximizing efficiency through digitalization;
 Accelerating global expansion; and
 Catalyzing growth with Commercial & Industrial Solutions.
CUSTOMERS AND SUPPLIERS
Our customers primarily consist of our distributors and retailers and ODM/OEM
customers for Smart Home Solutions, and enterprise customers of our Commercial & Industrial
Solutions. Our distributors and retailers include e-commerce platforms, KA distributors, and
SME retailers, among others. See “Business—Our Multi-channel Sales and Distribution
Network” for more details. The combined revenue from our five largest customers for each of
the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2024
accounted for 10.6%, 11.4%, 11.8% and 13.5%, respectively, of our revenues during the same
periods.
We rely on a wide variety of raw materials, parts and components to manufacture our
products. Raw material procurement accounts for the majority of our total cost of sales. During
the Track Record Period, our suppliers primarily included raw material and component
suppliers. Our top five suppliers for each of the years ended 31 December 2021, 2022 and 2023
and the four months ended 30 April 2024 together accounted for 6.3%, 6.4%, 6.1% and 6.5%,
respectively, of our total purchase.
SUMMARY
–1 1–


--- page 23 ---
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following tables set forth summary financial data from our financial information
during the Track Record Period, extracted from the Accountant’s Report set out in Appendix
I to this document. The summary financial data set forth below should be read together with,
and is qualified in its entirety by reference to, our financial statements in this document,
including the related notes. Our consolidated financial information was prepared in accordance
with IFRS.
Summary of Consolidated Statements of Profit or Loss
The following table sets forth a summary of our consolidated statements of profit or loss
with line items, both in absolute amounts and as percentages of our revenue, for the
years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
(unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118(266,450,882) (77.6) (262,321,797) (75.9) (275,320,160) (73.7) (99,348,589) (75.6) (106,469,785) (73.0)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 22.4 83,386,909 24.1 98,389,644 26.3 32,032,493 24.4 39,309,774 27.0
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(28,646,188) (8.3) (28,715,439) (8.3) (34,880,794) (9.3) (11,248,192) (8.6) (14,624,289) (10.0)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,742,475) (3.1) (12,023,970) (3.5) (13,975,965) (3.7) (3,911,452) (3.0) (4,630,693) (3.3)
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,014,891) (3.5) (12,667,099) (3.7) (14,586,346) (3.9) (4,327,729) (3.3) (4,960,679) (3.4)
Net impairment losses on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118(384,501) (0.1) (538,108) (0.2) (235,002) (0.1) (179,526) (0.1) (56,212) (0.0)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H11186,177,047 1.8 7,088,757 2.1 8,120,251 2.2 2,370,278 1.8 2,862,663 2.0
Other gains/(losses), net /H1118/H11182,777,178 0.8 (1,065,436) (0.3) (945,664) (0.3) 271,205 0.2 (2,012,940) (1.4)
Operating profit /H1118/H1118/H1118/H1118/H111834,076,113 9.9 35,465,614 10.3 41,886,124 11.2 15,007,077 11.4 15,887,624 10.9
Finance income /H1118/H1118/H1118/H1118/H1118/H1118401,501 0.1 793,175 0.2 1,085,256 0.3 275,801 0.2 590,833 0.4
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,299,556) (0.4) (1,902,422) (0.6) (3,372,815) (0.9) (1,151,972) (0.9) (485,846) (0.3)
Finance (costs)/income, net /H1118 (898,055) (0.3) (1,109,247) (0.4) (2,287,559) (0.6) (876,171) (0.7) 104,987 0.1
Share of profit of associates
and joint ventures, net /H1118/H1118560,679 0.2 608,278 0.2 680,759 0.2 224,055 0.2 239,455 0.2
Impairment provision for
investments in associates
and joint ventures /H1118/H1118/H1118/H1118– – (6,179) (0.0) – – – – – –
Profit before income tax /H1118/H111833,738,737 9.8 34,958,466 10.1 40,279,324 10.8 14,354,961 10.9 16,232,066 11.2
Income tax expense /H1118/H1118/H1118/H1118(4,707,309) (1.3) (5,146,341) (1.5) (6,532,371) (1.8) (2,229,553) (1.7) (2,585,791) (1.8)
Profit for the year/period /H111829,031,428 8.5 29,812,125 8.6 33,746,953 9.0 12,125,408 9.2 13,646,275 9.4
Attributable to:
Owners of the Company /H1118/H111828,586,980 8.4 29,553,342 8.5 33,721,536 9.0 11,995,920 9.1 13,461,205 9.3
Non-controlling interests /H1118/H1118444,448 0.1 258,783 0.1 25,417 0.0 129,488 0.1 185,070 0.1
SUMMARY
–1 2–


--- page 24 ---
Revenue
The following table sets forth a breakdown of our revenue among Smart Home Solutions,
Commercial & Industrial Solutions and others, including the respective revenue from each
main product category under Smart Home Solutions and each business unit under Commercial
& Industrial Solutions, during the Track Record Period, both in absolute amounts and as
percentages of total revenue, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue
Air conditioners /H1118/H1118/H1118/H1118/H1118/H1118104,108,047 30.3 108,638,571 31.4 112,982,505 30.2 43,060,203 32.8 48,054,657 33.0
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H111862,883,096 18.3 62,713,261 18.1 68,288,642 18.3 24,008,567 18.3 26,551,938 18.2
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H111867,926,859 19.8 61,473,732 17.8 65,080,257 17.4 21,941,156 16.7 24,633,108 16.9
Smart Home Solutions /H1118/H1118234,918,001 68.4 232,825,564 67.3 246,351,404 65.9 89,009,926 67.8 99,239,703 68.1
Energy Solutions &
Industrial Technology /H1118/H111820,111,476 5.9 21,618,496 6.3 27,874,277 7.5 9,512,855 7.2 11,108,348 7.6
Intelligent Building
Technology /H1118/H1118/H1118/H1118/H1118/H1118/H111819,690,855 5.7 22,778,244 6.6 25,914,181 6.9 9,874,995 7.5 10,532,805 7.2
Robotics & Automation /H1118/H1118/H111825,286,615 7.4 27,712,820 8.0 31,053,073 8.3 10,017,504 7.6 9,222,915 6.3
Other Businesses /H1118/H1118/H1118/H1118/H11188,290,412 2.4 11,529,651 3.3 12,939,776 3.5 3,553,030 2.7 4,199,236 2.9
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,379,358 21.4 83,639,210 24.2 97,781,307 26.2 32,958,384 25.0 35,063,304 24.0
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,063,466 10.2 29,243,932 8.5 29,577,093 7.9 9,412,772 7.2 11,476,552 7.9
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
SUMMARY
–1 3–


--- page 25 ---
Gross Profit and Gross Margin
The following table sets forth a breakdown of our gross profit among Smart Home
Solutions, Commercial & Industrial Solutions and others, including the respective gross profit
of each main product category under Smart Home Solutions and each business unit under
Commercial & Industrial Solutions, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
Gross profit
Gross
margin Gross profit
Gross
margin Gross profit
Gross
margin Gross profit
Gross
margin Gross profit
Gross
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Air conditioners /H1118/H1118/H1118/H1118/H1118/H111822,604,340 21.7 25,422,272 23.4 29,452,538 26.1 9,397,106 21.8 12,525,438 26.1
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H111817,049,311 27.1 18,898,848 30.1 22,189,827 32.5 7,650,792 31.9 8,958,800 33.7
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H111819,198,244 28.3 18,499,236 30.1 21,726,330 33.4 6,798,536 31.0 8,236,693 33.4
Smart Home Solutions /H1118/H111858,851,895 25.1 62,820,356 27.0 73,368,695 29.8 23,846,434 26.8 29,720,931 29.9
Energy Solutions &
Industrial Technology /H1118/H11182,439,657 12.1 3,154,867 14.6 5,027,566 18.0 1,467,575 15.4 2,193,884 19.7
Intelligent Building
Technology /H1118/H1118/H1118/H1118/H1118/H1118/H11185,365,588 27.2 6,346,521 27.9 7,744,598 29.9 2,919,927 29.6 3,330,484 31.6
Robotics & Automation /H1118/H1118/H11185,345,136 21.1 5,686,768 20.5 7,373,993 23.7 2,241,729 22.4 2,225,661 24.1
Other Businesses /H1118/H1118/H1118/H1118/H11181,203,039 14.5 1,449,164 12.6 1,672,781 12.9 398,414 11.2 444,561 10.6
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,353,420 19.6 16,637,320 19.9 21,818,938 22.3 7,027,645 21.3 8,194,590 23.4
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,704,628 10.6 3,929,233 13.4 3,202,011 10.8 1,158,414 12.3 1,394,253 12.1
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 22.4 83,386,909 24.1 98,389,644 26.3 32,032,493 24.4 39,309,774 27.0
SUMMARY
–1 4–


--- page 26 ---
Profit for the Y ear/Period
Our profit for the period increased from RMB12.1 billion in the four months ended 30
April 2023 to RMB13.6 billion in the four months ended 30 April 2024. This increase was
mainly due to (i) an increase in our revenue from Smart Home Solutions, primarily driven by
increased consumer demand for our air conditioners, laundry appliances, refrigerators and
kitchen appliances as a result of enhanced product competitiveness from our continued
innovation and upgrades, and (ii) an increase in our revenue from Commercial & Industrial
Solutions, primarily driven by (x) an increase in revenue of our Energy Solutions & Industrial
Technology business driven by increased sales of core industrial components and the
consolidation of Clou Electronics in our financial statements following our acquisition of Clou
Electronics, (y) an increase in revenue of our Intelligent Building Technology, as a result of
strong sales of certain key products, and (z) an increase in revenue of our Other Businesses,
partially offset by (i) an increase in our cost of revenue, primarily due to our increased raw
materials and consumables used, which was generally in line with our growth in revenue, and
(ii) an increase in our expenses, largely driven by our business growth.
Our profit for the year increased from RMB29.8 billion in 2022 to RMB33.7 billion in
2023. This increase was mainly due to an increase in our revenue from Smart Home Solutions,
primarily driven by increased consumer demand for our air conditioners, laundry appliances,
refrigerators and kitchen appliances as a result of enhanced product competitiveness from our
continued innovation and upgrades, partially offset by (i) an increase in our cost of revenue,
primarily due to our increased raw materials and consumables used, which was generally in
line with our growth in revenue, and (ii) an increase in our expenses, largely driven by our
business growth.
Our profit for the year increased from RMB29.0 billion in 2021 to RMB29.8 billion in
2022. This increase was mainly due to (i) an increase in our revenue from Commercial &
Industrial Solutions, primarily driven by (x) an increase in revenue of our Intelligent Building
Technology, as a result of strong growth of overseas heat pump sales, (y) an increase in revenue
of our Robotics & Automation, as a result of strong demand from automotive customers,
particularly in mainland China, and the sales growth of Swisslog’s logistics systems, and (z)
an increase in revenue of our Other Businesses, including the intelligent supply chain business
operated by Annto Smart Logistics, and (ii) a decrease in our cost of revenue partially
attributable to a decline in raw material costs, partially offset by a decline in revenue from
Smart Home Solutions as we proactively streamlined certain product categories and faced
macroeconomic headwind that resulted in a decrease in consumer demand for certain home
appliance products.
For details, see “Financial Information — Period to Period Comparison of Results of
Operations.”
SUMMARY
–1 5–


--- page 27 ---
Summary of Consolidated Statements of Financial Position
The following table sets forth a summary of our consolidated statements of financial
position for the years/periods indicated:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118139,074,597 161,451,641 204,715,035 205,141,554
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118248,864,505 261,099,271 281,320,980 304,016,205
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118387,939,102 422,550,912 486,036,015 509,157,759
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,267,757 64,288,606 60,492,344 61,034,759
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,851,476 206,341,741 251,245,721 279,733,408
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,013,029 54,757,530 30,075,259 24,282,797
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118253,119,233 270,630,347 311,738,065 340,768,167
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,819,869 151,920,565 174,297,950 168,389,592
Share Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,986,564 6,997,273 7,025,769 6,974,933
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,044,550) (14,933,944) (12,871,738) (7,651,734)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,943,657 31,193,091 32,440,770 28,766,505
Retained earnings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,979,342 119,675,616 136,282,362 128,872,334
Equity attributable to owners of our
Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,865,013 142,932,036 162,877,163 156,962,038
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,954,856 8,988,529 11,420,787 11,427,554
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,819,869 151,920,565 174,297,950 168,389,592
For details of our fluctuation in key items of our consolidated statements of financial
position and net current assets during the Track Record Period, see “Financial Information —
Discussion of Certain Key Items of Consolidated Statements of Financial Position.”
Our net assets decreased from RMB174.3 billion as at 31 December 2023 to RMB168.4
billion as at 30 April 2024, mainly due to the declared dividends of RMB20.8 billion in the four
months ended 30 April 2024, partially offset by our profit for the period of RMB13.6 billion
for the four months ended 30 April 2024. We recorded profit for the period of RMB13.6 billion
for the four months end 30 April 2024, mainly as a result of the increases in our revenue from
Smart Home Solutions driven by increased consumer demand and our revenue from multiple
businesses under Commercial & Industry Solutions. See “— Summary of Consolidated
Statements of Profit or Loss — Profit for the Y ear/Period” for details. We incurred dividends
of RMB20.8 billion in the four months ended 30 April 2024 as part of our profit distribution
to shareholders. See “Dividend Policy /H11033for details.
Our net assets increased from RMB151.9 billion as at 31 December 2022 to RMB174.3
billion as at 31 December 2023, mainly due to our profit for the year of RMB33.7 billion in
2023, partially offset by the dividends of RMB17.5 billion in 2023. We recorded profit for the
year of RMB33.7 billion in 2023, mainly as a result of an increase in our revenue from Smart
SUMMARY
–1 6–


--- page 28 ---
Home Solutions driven by increased consumer demand. See “— Summary of Consolidated
Statements of Profit or Loss — Profit for the Y ear” for details. We incurred dividends of
RMB17.5 billion in 2023 as part of our profit distribution to shareholders. See “Dividend
Policy” for details.
Our net assets increased from RMB134.8 billion as at 31 December 2021 to RMB151.9
billion as at 31 December 2022, mainly due to our profit for the year of RMB29.8 billion in
2022, partially offset by the dividends of RMB11.9 billion in 2022. We recorded profit for the
year of RMB29.8 billion in 2022, mainly as a result of an increase in our revenue from
Commercial & Industry Solutions and a decrease in cost of revenue. See “— Summary of
Consolidated Statements of Profit or Loss — Profit for the Y ear” for details. We incurred
dividends of RMB11.9 billion in 2022 as part of our profit distribution to shareholders. See
“Dividend Policy” for details.
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our consolidated statements of cash flows for
the years/periods indicated:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated from
operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H111835,448,953 34,657,828 57,902,611 11,820,270 16,916,694
Net cash generated from/(used
in) investing activities /H1118/H1118/H1118/H1118/H111813,599,586 (13,509,510) (31,219,855) (27,842,393) (8,577,869)
Net cash (used in)/generated
from financing activities /H1118/H1118/H1118(31,561,788) (10,854,881) (17,910,213) 10,785,347 (3,731,916)
Net increase/(decrease) in cash
and cash equivalents /H1118/H1118/H1118/H1118/H1118/H111817,486,751 10,293,437 8,772,543 (5,236,776) 4,606,909
Cash and cash equivalents at
the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,548,508 40,550,039 51,131,968 51,131,968 59,887,260
Exchange (losses)/gains on
cash and cash equivalents /H1118/H1118/H1118(485,220) 288,492 (17,251) (66,853) (241,798)
Cash and cash equivalents at
the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,550,039 51,131,968 59,887,260 45,828,339 64,252,371
SUMMARY
–1 7–


--- page 29 ---
Key Financial Ratios
As at/For the Y ear Ended 31 December
As at/For the
Four Months
Ended
30 April 20242021 2022 2023
Net profit margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188.5% 8.6% 9.0% 9.4%
ROE(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823.6% 22.1% 22.1% 25.3%
Inventory turnover days (2) /H1118/H1118/H1118/H1118/H1118/H1118/H111853 64 62 50
Trade and note receivables
turnover days (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 33 35 36
Operating cash flow conversion
ratio (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.2 1.2 1.7 1.3
Gearing ratio (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.2% 64.0% 64.1% 66.9%
Notes:
(1) ROE is calculated by dividing profit for the year/period attributable to the owners of our Company by the
average balance of equity attributable to owners of our Company. For the four months ended 30 April 2024,
ROE is annualized by multiplying the number by three.
(2) Inventory turnover days is calculated as the average of beginning and ending balance of inventories for the
year/period divided by cost of revenue for that year/period and multiplied by 365 days (for a year) or 121 days
(for the four-month period).
(3) Trade and note receivables turnover days is calculated as the average of beginning and ending balance of trade
and note receivables at amortized cost for the year/period divided by revenue for that year/period and
multiplied by 365 days (for a year) or 121 days (for the four-month period).
(4) Operating cash flow conversion ratio is calculated by dividing net cash generated from operating activities by
profit for the year/period.
(5) Gearing ratio is calculated by dividing total liabilities by total assets of the year/period.
RISK FACTORS
Our operations and the Global Offering involve certain risks and uncertainties, including
(i) risks relating to our business and industries and (ii) risks relating to the Global Offering,
which are set out in the section headed “Risk Factors” in this document. Y ou should read that
section in its entirety carefully before you decide to invest in the Offer Shares. Some of the
major risks we face include, but are not limited to:
 Global markets for our products and services are highly competitive and subject to
rapid technological changes, and we may be unable to compete effectively in these
markets;
 If we are unable to manage our growth or execute our strategies effectively, our
business and prospects may be materially and adversely affected;
SUMMARY
–1 8–


--- page 30 ---
 Maintaining our brand image is critical to our success, and any failure to do so could
severely damage our reputation and brands, which would have a material adverse
effect on our business, financial condition and results of operations;
 We may face risks and challenges in developing our Commercial & Industrial
Solutions;
 Our business may be adversely affected if we fail to introduce new products and
services on a timely basis to adapt to rapidly evolving customer needs and
advancements in technology, and our investments in research and development may
not yield the expected results;
 If we fail to grow or retain our customer base, or if customer satisfaction declines,
our business and operating results may be materially and adversely affected;
 We may face challenges managing our expansion into new products, services and
business activities;
 If we are not able to continue to innovate or if we fail to adapt to changes in our
industry, our business, financial condition and results of operations would be
materially and adversely affected; and
 Our business is subject to legal, regulatory, political, economic, commercial and
other risks associated with conducting operations in various jurisdictions.
RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, up to the date of this document, there has been no material
adverse change in our business, financial condition and results of operations since 30 April
2024, which is the end date of the years/period reported on in the Accountant’s Report in
Appendix I to this document, and there is no event since 30 April 2024 which would materially
affect the information as set out in the Accountant’s Report in Appendix I to this document.
Summary of Unaudited Financial Information for the Six Months Ended 30 June 2024
We are a public company listed on the Shenzhen Stock Exchange and we have disclosed
unaudited key financial information prepared under PRC GAAP as at and for the six months
ended 30 June 2024 pursuant to the relevant PRC securities laws and regulations. We have
included our unaudited interim condensed consolidated financial information prepared in
accordance with IAS 34, Interim Financial Reporting as at and for the six months ended 30
June 2024 in Appendix IA to this document. Our unaudited interim condensed consolidated
financial information as at and for the six months ended 30 June 2024 has been reviewed by
our reporting accountant in accordance with International Standard on Review Engagements
2410, Review of Interim Financial Information Performed by the Independent Auditor of the
Entity . The members of the Board, including those of the Audit Committee, have received and
reviewed the unaudited interim condensed consolidated financial information of the Group for
the six months ended 30 June 2024, as set out in Appendix IA to this document. We have
complied with the code provisions in Part 2 of Appendix C1 to the Listing Rules. We are not
SUMMARY
–1 9–


--- page 31 ---
in breach of our Articles of Association or laws and regulations of the PRC or other regulatory
requirements regarding our obligation to distribute interim reports in accordance with the
requirements under Rule 13.48(1) of the Listing Rules. Pursuant to the Note to Rule 13.48(1)
of the Listing Rules, we do not intend to distribute a separate interim report in respect of the
six months ended 30 June 2024 under the aforementioned Rule.
Our revenue increased by 10.3% from RMB197.8 billion for the six months ended 30 June
2023 to RMB218.1 billion for the six months ended 30 June 2024. Specifically, our revenue
from Smart Home Solutions increased by 11.4% from RMB132.4 billion for the six months
ended 30 June 2023 to RMB147.6 billion for the six months ended 30 June 2024, and our
revenue from Commercial & Industrial Solutions increased by 6.3% from RMB50.3 billion to
RMB53.4 billion during the same period. Our gross profit increased by 18.3% from RMB49.4
billion for the six months ended 30 June 2023 to RMB58.5 billion for the six months ended 30
June 2024, and our overall gross margin increased from 25.0% to 26.8% during the same
period. Specifically, our gross profit for Smart Home Solutions increased by 20.1% from
RMB36.7 billion for the six months ended 30 June 2023 to RMB44.1 billion for the six months
ended 30 June 2024, with gross margin increasing from 27.7% to 29.9% during the same
period, and our gross profit for Commercial & Industrial Solutions increased by 12.6% from
RMB11.1 billion for the six months ended 30 June 2023 to RMB12.5 billion for the six months
ended 30 June 2024, with gross margin increasing from 22.1% to 23.4% during the same
period. Our profit for the period increased by 14.1% from RMB18.5 billion for the six months
ended 30 June 2023 to RMB21.1 billion for the six months ended 30 June 2024. See “Appendix
IA — Unaudited Interim Condensed Consolidated Financial Information” for details and
“Financial Information — Recent Development and No Material Adverse Change — Summary
of Unaudited Financial Information for the Six Months Ended 30 June 2024” for our discussion
of fluctuations of selected line items.
OUR LISTING ON THE SHENZHEN STOCK EXCHANGE
Since 2013, our Company has been listed on the Shenzhen Stock Exchange. As of the
Latest Practicable Date, our Directors confirmed that we had no instances of material
non-compliance with the rules of the Shenzhen Stock Exchange and other applicable securities
laws and regulations of the PRC in any material respects, and, to the best knowledge of our
Directors having made all reasonable enquiries, there was no material matter that should be
brought to the investors’ attention in relation to our compliance record on the Shenzhen Stock
Exchange. Based on the independent due diligence conducted by the Joint Sponsors, nothing
has come to the Joint Sponsors’ attention that would cause them to disagree with our Directors’
confirmation with regard to the compliance records of the Company on the Shenzhen Stock
Exchange.
OUR LARGEST GROUP OF SHAREHOLDERS
As of the Latest Practicable Date, our Company was held as to approximately 31.0% by
Midea Holding, which was in turn held as to 94.5% by Mr. He, the founder of our Company.
Separately, Mr. He also held approximately 0.5% direct interest in our Company, and together
with the Shares held by Midea Holding, Mr. He was interested in approximately 31.5% in our
Company.
SUMMARY
–2 0–


--- page 32 ---
Immediately following the completion of the Global Offering and assuming that the Offer
Size Adjustment Option is not exercised and no new Shares are issued under the Over-
allotment Option and our Share Schemes, and no other changes are made to the issued share
capital of our Company between the Latest Practicable Date and Listing, Midea Holding will
hold approximately 29.0% of the issued share capital of our Company and Mr. He will, directly
and indirectly, hold approximately 29.4% of the issued share capital of our Company.
Accordingly, Midea Holding and Mr. He will be our Largest Group of Shareholders
immediately after the Listing.
For further details about our Largest Group of Shareholders, please see the section headed
“Relationship with our Largest Group of Shareholders”.
GLOBAL OFFERING STATISTICS
The statistics in the following table are based on the assumptions that (i) the Global
Offering has been completed and 492,135,100 H Shares are newly issued in the Global
Offering, (ii) the Offer Size Adjustment Option and the Over-allotment Option for the Global
Offering are not exercised, and (iii) 7,485,265,951 Shares are issued and outstanding following
the completion of the Global Offering:
Based on an Offer
Price of HK$52.00
per H Share
Based on an Offer
Price of HK$54.80
per H Share
Market capitalization of our H Shares /H1118/H1118/H1118/H1118/H1118/H1118HK$25,591.0
million
HK$26,969.0
million
Unaudited pro forma adjusted consolidated
net tangible assets per Share (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HK$20.84
(RMB19.01)
HK$21.03
(RMB19.18)
Notes:
(1) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the
adjustments referred to in the section headed “Unaudited Pro Forma Financial Information” in Appendix
II to this document and on the basis that 7,485,265,951 Shares were in issue, assuming that the Global
Offering had been completed on 30 April 2024 but does not take into account of any Shares which may
be allotted and issued by the Company pursuant to the exercise of the Offer Size Adjustment Option and
the Over-allotment Option, any Shares that may be issued by the Company pursuant to the exercise of
options or the vesting of restricted shares or other awards that have been or may be granted from time
to time under the Share Schemes or any Shares which may be issued or repurchased by the Company
after the Latest Practicable Date.
(2) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of our Group entered into subsequent to 30 April 2024.
For the calculation of the unaudited pro forma adjusted consolidated net tangible assets
per Share, see the section headed “Unaudited Pro Forma Financial Information” in Appendix
II to this document.
SUMMARY
–2 1–


--- page 33 ---
USE OF PROCEEDS
Assuming an Offer Price of HK$53.40 per H Share (being the mid-point of the Offer Price
range of between HK$52.00 and HK$54.80 per H Share), we estimate that we will receive net
proceeds of approximately HK$25,972 million from the Global Offering after deducting the
underwriting commissions and other estimated expenses paid and payable by us in connection
with the Global Offering and assuming that the Offer Size Adjustment Option and the
Over-allotment Option are not exercised. In line with our strategies, we intend to use our
proceeds from the Global Offering for the purposes and in the amounts set forth below:
 approximately 20% of the net proceeds, or approximately HK$5,194 million, is
expected to be used for our worldwide research and development efforts;
 approximately 35% of the net proceeds, or approximately HK$9,090 million, is
expected to be used for continual investment in upgrading our intelligent
manufacturing system and supply chain management;
 approximately 35% of the net proceeds, or approximately HK$9,090 million, is
expected to be used for enhancing our distribution channels and sales network
around the world and increasing our overseas sales under our own brands; and
 approximately 10% of the net proceeds, or approximately HK$2,597 million, is
expected to be used for working capital and general corporate purposes.
See the section headed “Future Plans and Use of Proceeds” in this document for further
information relating to our future plans and use of proceeds from the Global Offering,
including the adjustment on the allocation of the net proceeds in the event that the final Offer
Price is set to be above or below the mid-point of the Offer Price range.
DIVIDEND POLICY
Subject to PRC laws and regulations, including the PRC Company Law ( ʕശɛ͏΍ձ
) and the No. 3 Guideline for the Supervision of Listed Companies – Cash Dividend
Distribution of Listed Companies (2023 Revision) (ˏୋ3໮ Ñɪ̹ʮ̡ତ
ߎ2023ࠈࡌ)), and Articles 156 through 161 of the Articles of Association, we are
required to pay cumulative cash dividends of any three fiscal years that account for not less
than 30% of our average net profits for those three fiscal years which are available for
distribution, calculated in accordance with PRC GAAP . In 2022, our Shareholder Return Plan
for 2022-2024 was adopted. We have strictly implemented this plan, which specifies the
decision-making process for dividend standards, dividend ratios and profit distribution
policies, aiming to ensure a consistent profit distribution policy and to protect the legitimate
interests of minority shareholders.
Future profit distributions may be carried out in the form of cash dividends or stock
dividends or a combination of cash dividends and stock dividends. Any proposed distribution
of dividends is subject to the discretion of our Board and the approval at our Shareholders’
SUMMARY
–2 2–


--- page 34 ---
meetings. Our Board may recommend a distribution of dividends in the future after taking into
account our results of operations, financial condition, operating requirements, capital
requirements, shareholders’ interests and any other conditions that our Board may deem
relevant.
During the Track Record Period, we declared cash dividends to our shareholders as
follows:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Final dividends in respect
of the previous year,
declared or paid during
the year/period (tax
inclusive) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,066,392 11,677,509 17,188,858 – 20,780,278
Dividends of lapsed
restricted shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,663) (25,484) (44,594) (7,242) (3,926)
Dividends provided
during the year
/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,052,729 11,652,025 17,144,264 (7,242) 20,776,352
LISTING EXPENSES
Assuming the Offer Size Adjustment Option and the Over-allotment Option are not
exercised, an Offer Price of HK$53.40 per Offer Share (which is the mid-point of the Offer
Price range) and the full payment of the discretionary incentive fee, if any, we expect to incur
approximately RMB280.8 million (equivalent to HK$307.8 million) of listing expenses
(including (i) underwriting-related expenses, including but not limited to commissions, fees,
SFC transaction levy, AFRC transaction levy and Hong Kong Stock Exchange trading fee,
amounting to approximately RMB193.8 million, and (ii) fees and expenses of legal advisers
and accountants amounted to approximately RMB67.3 million and other fees and expenses
relating to the Global Offering, including but not limited to the listing application fees,
amounted to approximately RMB19.7 million), accounting for approximately 1.2% of the gross
proceeds from the Global Offering. Approximately RMB12.6 million of our listing expenses is
expected to be charged to our consolidated statements of profit or loss and other comprehensive
income and approximately RMB268.2 million is expected to be deducted from equity upon
Listing. During the Track Record Period, we incurred listing expenses of RMB38.3 million, of
which (i) RMB4.3 million was charged to the consolidated statements of profit or loss, and (ii)
RMB34.0 million was directly attributable to the offering and listing of our Offer Shares and
will be deducted from equity upon the Listing. The estimate of listing expenses above are the
latest practicable estimate for reference only, and the actual amount may differ from this
estimate.
SUMMARY
–2 3–


--- page 35 ---
KEY STATISTICS OF GLOBAL OFFERING
Global Offering Global offering of initially 492,135,100 Offer Shares
(subject to the Offer Size Adjustment Option and the
Over-allotment Option) comprising the following:
 the Hong Kong Public Offering of 24,606,800
Shares (subject to reallocation and the Offer Size
Adjustment Option); and
 the International Offering of 467,528,300 Shares
(subject to reallocation, the Offer Size Adjustment
Option and the Over-allotment Option)
Offer Size Adjustment Option Up to 73,820,200 additional Offer Shares representing in
aggregate up to 15.0% of the initial number of Offer
Shares at the Offer Price to cover additional market
demand
Note: The additional Offer Shares will be allocated so as to maintain
the proportionality between the Hong Kong Public Offering and the
International Offering as determined after the application of the
clawback arrangements. However , if the Hong Kong Public Offering is
fully subscribed with no over-subscription, the additional Offer Shares
pursuant to the Offer Size Adjustment Option will all be allocated to
the International Offering due to insufficient demand in the Hong Kong
Public Offering. As a result, the final allocation of the Offer Shares to
the Hong Kong Public Offering will be less than 5.0% of the total
number of Offer Shares in the Global Offering after exercise of the
Offer Size Adjustment Option. See “Structure of the Global Offering —
Offer Size Adjustment Option.”
Over-allotment Option Up to 73,820,200 additional Offer Shares representing
not more than 15% of the number of Offer Shares initially
being offered under the Global Offering (assuming the
Offer Size Adjustment Option is not exercised) or up to
84,893,200 additional Offer Shares representing not more
than 15% of the number of Offer Shares being offered
under the Global Offering (assuming the Offer Size
Adjustment Option is exercised in full) to be issued upon
exercise
Offer Price Range HK$52.00 per Offer Share to HK$54.80 per Offer Share
SUMMARY
–2 4–


--- page 36 ---
Market Capitalization at
Listing
Expected to be between HK$389,233.8 million (based on
the Offer Price of HK$52.00 per Offer Share) and
HK$410,192.6 million (based on the Offer Price of
HK$54.80 per Offer Share) (assuming neither the Offer
Size Adjustment Option nor the Over-allotment Option is
exercised)
Expected to be between HK$393,072.5 million (based on
the Offer Price of HK$52.00 per Offer Share) and
HK$414,237.9 million (based on the Offer Price of
HK$54.80 per Offer Share) (assuming the Offer Size
Adjustment Option is fully exercised and the Over-
allotment Option is not exercised)
Board Lot 100 H Shares
OUR SHAREHOLDING STRUCTURE
The following tables set forth the shareholding structure of the Company showing the
effect of the exercise of the Over-allotment Option in full, (a) assuming that the Offer Size
Adjustment Option is not exercised; and (b) assuming that the Offer Size Adjustment Option
is fully exercised.
(a) Assuming that the Offer Size Adjustment Option is not exercised
The table below sets forth the shareholding structure of the Company assuming that the
Offer Size Adjustment Option is not exercised (a) as of the Listing Date; and (b) as at the end
of the Over-allotment Option exercise period, assuming that the Over-allotment Option is fully
exercised.
As of the Listing Date
(assuming that the
Offer Size Adjustment Option
is not exercised)
As at the end of the
Over-allotment Option exercise
period, assuming that the
Over-allotment Option
is fully exercised
Description
of Shares
Number of
Shares
Approximate
%o ft h e
issued share
capital
Number of
Shares
Approximate
%o ft h e
issued share
capital
Midea Holding (1) /H1118/H1118/H1118/H1118/H1118A Shares 2,169,178,713 29.0% 2,169,178,713 28.7%
Mr. He /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A Shares 31,909,643 0.4% 31,909,643 0.4%
Mr. Fang Hongbo /H1118/H1118/H1118/H1118A Shares 116,990,492 1.6% 116,990,492 1.5%
Other A Shareholders /H1118/H1118A Shares 4,675,052,003 62.5% 4,675,052,003 61.8%
H Shareholders /H1118/H1118/H1118/H1118/H1118/H1118H Shares 492,135,100 6.6% 565,955,300 7.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,485,265,951 100.0% 7,559,086,151 100.0%
Note:
(1) Midea Holding is held as to 94.5% by Mr. He.
SUMMARY
–2 5–


--- page 37 ---
(b) Assuming that the Offer Size Adjustment Option is fully exercised
The table below sets forth the shareholding structure of the Company assuming that the
Offer Size Adjustment Option is fully exercised: (a) as of the Listing Date; and (b) as at the
end of the Over-allotment Option exercise period, assuming that the Over-allotment Option is
fully exercised.
As of the Listing Date
(assuming that the
Offer Size Adjustment Option
is fully exercised)
As at the end of the
Over-allotment Option exercise
period, assuming that the
Over-allotment Option
is fully exercised
Description
of Shares
Number of
Shares
Approximate
%o ft h e
issued share
capital
Number of
Shares
Approximate
%o ft h e
issued share
capital
Midea Holding (1) /H1118/H1118/H1118/H1118/H1118A Shares 2,169,178,713 28.7% 2,169,178,713 28.4%
Mr. He /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A Shares 31,909,643 0.4% 31,909,643 0.4%
Mr. Fang Hongbo /H1118/H1118/H1118/H1118A Shares 116,990,492 1.5% 116,990,492 1.5%
Other A Shareholders /H1118/H1118A Shares 4,675,052,003 61.8% 4,675,052,003 61.2%
H Shareholders /H1118/H1118/H1118/H1118/H1118/H1118H Shares 565,955,300 7.5% 650,848,500 8.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,559,086,151 100.0% 7,643,979,351 100.0%
Note:
(1) Midea Holding is held as to 94.5% by Mr. He.
POTENTIAL SPIN-OFF
Having considered, amongst others, the market conditions, financing needs and
development of the subsidiaries and business, we intend to spin off Annto Smart Logistics and
retain the possibility to spin-off Midea Lighting and certain business under the robotics and
automation system business segment reported in the financial statements of our Company
(“Robotics & Automation System Related Business ”).
We have commenced the preliminary preparatory work of the spin-off Annto Smart
Logistics. In addition, our Company wishes to retain the possibility to spin-off Midea Lighting
and the Robotics & Automation System Related Business within three years after the Listing,
and does not currently have any detailed plan in relation to such potential spin-off.
SUMMARY
–2 6–


--- page 38 ---
The potential spin-off will be subject to compliance with all applicable requirements of
the Hong Kong Listing Rules including, without limitation, Practice Note 15, unless otherwise
waived by the Hong Kong Stock Exchange. We have obtained from the Hong Kong Stock
Exchange a waiver from strict compliance with the three-year restriction requirement under
paragraph 3(b) of Practice Note 15 in relation to the potential spin-offs of Midea Lighting,
Annto Smart Logistics and the Robotics & Automation System Related Business. The potential
spin-offs will remain subject to other requirements of Practice Note 15.
Notwithstanding the above, the potential spin-offs remain highly uncertain and could be
subject to material changes in the future.
SUMMARY
–2 7–


--- page 39 ---
Company Midea Group Co., Ltd. (ʮ̡)
Global Offering Global offering of initially 492,135,100 Offer Shares
(subject to the Offer Size Adjustment Option and the
Over-allotment Option) comprising the following:
 the Hong Kong Public Offering of 24,606,800
Shares (subject to reallocation and the Offer Size
Adjustment Option); and
 the International Offering of 467,528,300 Shares
(subject to reallocation, the Offer Size Adjustment
Option and the Over-allotment Option)
Offer Size Adjustment Option Up to 73,820,200 additional Offer Shares representing in
aggregate up to 15.0% of the initial number of Offer
Shares at the Offer Price to cover additional market
demand. See “Structure of the Global Offering – Offer
size Adjustment Option.”
Over-allotment Option Up to 73,820,200 additional Offer Shares representing
not more than 15% of the number of Offer Shares initially
being offered under the Global Offering (assuming the
Offer Size Adjustment Option is not exercised) or up to
84,893,200 additional Offer Shares representing not more
than 15% of the number of Offer Shares being offered
under the Global Offering (assuming the Offer Size
Adjustment Option is exercised in full) to be issued upon
exercise of the Over-allotment Option
Offer Price Range HK$52.00 per Offer Share to HK$54.80 per Offer Share
Price Determination Date The Offer Price is expected to be determined on or before
Friday, 13 September 2024 and in any event no later than
12:00 noon on Friday, 13 September 2024
OVERVIEW OF THE GLOBAL OFFERING
–2 8–


--- page 40 ---
Lock-up Undertakings  The Company – no issuance of new Shares for six
(6) months from the Listing Date, except (a)
pursuant to the Global Offering (including the Offer
Size Adjustment Option and the Over-allotment
Option); or (b) under any of the circumstances
provided under Rule 10.08 of the Listing Rules
 Largest Group of Shareholders – no disposal of
Shares in the period commencing on the date by
reference to which disclosure of their shareholdings
are made in this prospectus and ending on the date
which is six (6) months from the Listing Date
 Cornerstone Investors – no disposal of H Shares for
six (6) months from the Listing Date
See “Underwriting” and “Cornerstone Investors.”
Market Capitalization at
Listing
Expected to be between HK$389,233.8 million (based on
the Offer Price of HK$52.00 per Offer Share) and
HK$410,192.6 million (based on the Offer Price of
HK$54.80 per Offer Share) (assuming neither the Offer
Size Adjustment Option nor the Over-allotment Option is
exercised)
Expected to be between HK$393,072.5 million (based on
the Offer Price of HK$52.00 per Offer Share) and
HK$414,237.9 million (based on the Offer Price of
HK$54.80 per Offer Share) (assuming the Offer Size
Adjustment Option is fully exercised and the Over-
allotment Option is not exercised)
Board Lot 100 H Shares
Listing and Trading Expected to commence on Tuesday, 17 September 2024
See “Underwriting” and “Structure of the Global Offering.”
OVERVIEW OF THE GLOBAL OFFERING
–2 9–


--- page 41 ---
In this document, unless the context otherwise requires, the following terms shall
have the meanings set forth below. Certain technical terms are explained in “Glossary of
Technical Terms” in this document.
“A Share(s) ” ordinary shares issued by our Company, with a nominal
value of RMB1.00 each, which are listed on the Shenzhen
Stock Exchange and traded in Renminbi
“Accountant’s Report ” the accountant’s report of our Company for the Track
Record Period, as included in Appendix I
“affiliate(s) ” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC ” the Accounting and Financial Reporting Council of Hong
Kong
“Annto Smart Logistics ” Annto Logistics Supply Chain Technology Co., Ltd. ( τ
ʮ̡), a PRC subsidiary of
ours established on 24 February 2011
“Articles ”o r“ Articles of
Association ”
the articles of association of our Company, as amended,
which shall become effective on the Listing Date, a
summary of which is set out in Appendix V to this
document
“associate(s) ” has the meaning ascribed thereto under the Listing Rules
“Audit Committee ” the audit committee of the Board
“big four ” internationally recognized industrial robotics companies,
including KUKA Group
“Board ”o r“ Board of
Directors ”
the board of Directors of our Company
“business day ” a day on which banks in Hong Kong are generally open
to the public for normal banking business and which is
not a Saturday, Sunday or public holiday in Hong Kong
DEFINITIONS
–3 0–


--- page 42 ---
“Capital Market
Intermediaries”
the capital market intermediaries as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
“CCASS ” the Central Clearing and Settlement System established
and operated by HKSCC
“China ”o r“ the PRC ” the People’s Republic of China
“Clivet ” Clivet S.P .A, a company incorporated in Italy on 1 March
1988 and acquired by us in 2016
“Clou Electronics ” Shenzhen CLOU Electronics Co. Ltd (߅
ʮ̡), a PRC company established on
12 August 1996 and acquired by us in 2023, the shares of
which have been listed on the Shenzhen Stock Exchange
(stock code: 002121)
“Companies Ordinance ” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance ”o r“ CWUMPO ”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company ”, “ our Company ”,
or “ the Company ”
Midea Group Co., Ltd. (ʮ̡), a PRC
company established on 7 April 2000, the A Shares of
which have been listed on the Shenzhen Stock Exchange
(stock code: 000333)
“connected person(s) ” has the meaning ascribed to it under the Listing Rules
“connected transaction(s) ” has the meaning ascribed to it under the Listing Rules
“COVID-19 ” a viral respiratory disease caused by the severe acute
respiratory syndrome coronavirus
“CSRC ” the China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Director(s) ” the director(s) of our Company
“EIT” the enterprise income tax
DEFINITIONS
–3 1–


--- page 43 ---
“EIT Law ” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
), which was promulgated on 16 March
2007, came into effect on 1 January 2008, and was most
recently amended on 29 December 2018 becoming
effective on the same date
“Eligible Core Connected
Person Participants ”
Eligible Employees who are directors, supervisors and
chief executives at subsidiary level of the Company
“Eligible Employee(s) ” employees of the Group selected by the Company, who
are also willing to participate in the Employee
Preferential Offering and satisfy the following criteria:
(a) remain to be an employee of the Group as of the date
of this prospectus; (b) are not a core connected person of
the Company (other than by nature of being a director,
supervisor or chief executive of a subsidiary of the
Company, where applicable); (c) are not any person
whose acquisition of securities will be financed directly
or indirectly by a core connected person (other than by
himself/herself where he/she is a director, supervisor or
chief executive of a subsidiary of the Company); (d) are
not any person who is accustomed to take instructions
from a core connected person (other than from
himself/herself where he/she is a director, supervisor or
chief executive of a subsidiary of the Company, where
applicable) in relation to the acquisition, disposal, voting
or other disposition of securities of the Company
registered in his/her name or otherwise held by him/her;
(e) are outside the U.S. and not a U.S. person (as defined
in Rule 902 of Regulation S); and (f) will only participate
in the Global Offering through the subscription of the
Employee Reserved Shares under the Employee
Preferential Offering and will not subscribe for the
Company’s H Shares in the Global Offering through any
other channels
“Employee Preferential
Offering ”
the preferential offering of the Employee Reserved
Shares to the Eligible Employees for subscription at the
Offer Price on a preferential basis, as further described in
“Structure of the Global Offering” in this prospectus
“Employee Reserved Shares ” no more than 46,752,800 International Offer Shares being
offered to Eligible Employees pursuant to the Employee
Preferential Offering
DEFINITIONS
–3 2–


--- page 44 ---
“ESG Committee ” the ESG committee of our Company
“Existing Shareholder
Employee Participants ”
Eligible Employees (or their close associates) who hold
less than 1% of the total number of A Shares in issue of
the Company prior to the completion of the Global
Offering
“Extreme Conditions ” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“FINI ” “Fast Interface for New Issuance,” an online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and
processing of specified information on subscription in
and settlement for all new listings
“Frost & Sullivan ” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an
independent market research and consulting company
“Frost & Sullivan Report ” the report prepared by Frost & Sullivan
“General Rules of HKSCC ” the General Rules of HKSCC as may be amended or
modified from time to time and where the context so
permits, shall include the HKSCC Operational
Procedures
“Global Offering ” the Hong Kong Public Offering and the International
Offering
“Group ”, “ our Group ”,
“the Group ”, “ we”,
“us”, or “ our”
our Company and our subsidiaries from time to time, and
where the context requires, in respect of the period prior
to our Company becoming the holding company of its
present subsidiaries, such subsidiaries as if they were
subsidiaries of our Company at the relevant time
“Guide for New Listing
Applicants ”
the Guide for New Listing Applicants issued by the Stock
Exchange in December 2023
“H Share Registrar ” Computershare Hong Kong Investor Services Limited
DEFINITIONS
–3 3–


--- page 45 ---
“H Share(s) ” shares in the share capital of our Company with a
nominal value of RMB1.00 each, to be listed and traded
on the Hong Kong Stock Exchange
“Hiconics ” Hiconics Eco-energy Technology Co., Ltd. ( ̏ԯΥੰอ
ʮ̡), a PRC company established on
11 June 2003 and acquired by us in 2020, the shares of
which have been listed on the Shenzhen Stock Exchange
(stock code: 300048)
“HK”o r“ Hong Kong ” the Hong Kong Special Administrative Region of the
PRC
“HK$”, “ HK dollars ”o r
“Hong Kong dollars ”
Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC ” Hong Kong Securities Clearing Company Limited, a
wholly owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO ” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your designated
HKSCC Participant’s stock account through causing
HKSCC Nominees to apply on your behalf, including by
instructing your broker or custodian who is an HKSCC
Participant to give electronic application instructions
via HKSCC’s FINI system to apply for the Hong Kong
Offer Shares on your behalf
“HKSCC Nominees ” HKSCC Nominees Limited, a wholly owned subsidiary
of HKSCC
“HKSCC Operational
Procedures ”
the operational procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
“HKSCC Participant(s) ” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
DEFINITIONS
–3 4–


--- page 46 ---
“Hong Kong Offer Shares ” the 24,606,800 H Shares being initially offered for
subscription in the Hong Kong Public Offering (subject
to reallocation and the Offer Size Adjustment Option as
described in “Structure of the Global Offering”)
“Hong Kong Public Offering ” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong at the Offer Price (plus
brokerage of 1%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%) on the terms and subject to the
conditions described in this document, as further
described in “Structure of the Global Offering — The
Hong Kong Public Offering”
“Hong Kong Takeovers Code ”
or “ Takeovers Code ”
Codes on Takeovers and Mergers and Share Buy-backs
issued by the SFC
“Hong Kong Underwriters ” the underwriters of the Hong Kong Public Offering as
listed in “Underwriting — Hong Kong Underwriters”
“Hong Kong Underwriting
Agreement ”
the underwriting agreement, dated 6 September 2024,
relating to the Hong Kong Public Offering, entered into
by, among others, the Overall Coordinators, the Hong
Kong Underwriters and our Company
“IFRS ” IFRS Accounting Standards, as issued by the
International Accounting Standards Board
“Independent Third Party(ies) ” person(s) or company(ies), who/which, to the best of our
Directors’ knowledge, information and belief, is/are not
our connected persons
“International Offer Shares ” the 467,528,300 H Shares being initially offered for
subscription under the International Offering together,
where relevant, with any additional H Shares that may be
issued pursuant to any exercise of the Offer Size
Adjustment Option and/or the Over-allotment Option
(subject to reallocation as described in “Structure of the
Global Offering”)
DEFINITIONS
–3 5–


--- page 47 ---
“International Offering ” the conditional placing of the International Offer Shares
at the Offer Price outside the United States in offshore
transactions in accordance with Regulation S and in the
United States to QIBs only in reliance on Rule 144A or
any other available exemption from the registration
requirements under the U.S. Securities Act, as further
described in “Structure of the Global Offering”
“International Underwriters ” the underwriters expected to enter into the International
Underwriting Agreement relating to the International
Offering
“International Underwriting
Agreement ”
the international underwriting agreement, expected to be
entered into on or about Friday, 13 September 2024,
relating to the International Offering, by, among others,
our Company, the Overall Coordinators and the
International Underwriters in respect of the International
Offering, as further described in “Underwriting —
International Offering”
“Joint Bookrunners ”,
“Joint Global Coordinators ”,
“Joint Lead Managers ”
the joint bookrunners, the joint global coordinators, and
the joint lead managers as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
“Joint Sponsors ” the joint sponsors as named in “Directors, Supervisors
and Parties Involved in the Global Offering”
“KUKA AG ” KUKA Aktiengesellschaft, a stock corporation
incorporated under the laws of the Federal Republic of
Germany and one of our subsidiaries
“KUKA China ” the subsidiaries of KUKA Group in China
“KUKA Group ” KUKA AG and its consolidated subsidiaries
“Largest Group of
Shareholder(s) ”
Midea Holding and Mr. He, collectively the substantial
shareholders of our Company; prior to the Listing and as
at the date of this document, Midea Holding and Mr. He
controlled more than 30% of the total voting rights in our
Company, and upon Listing, Midea Holding and Mr. He
will continue to remain as our Company’s largest group
of shareholders
DEFINITIONS
–3 6–


--- page 48 ---
“Latest Practicable Date ” 30 August 2024, being the latest practicable date for
ascertaining certain information in this document before
its publication
“Listing ” the listing of the H Shares on the Main Board
“Listing Committee ” the Listing Committee of the Hong Kong Stock Exchange
“Listing Date ” the date, expected to be on or about Tuesday,
17 September 2024, on which the H Shares are to be
listed and on which dealings in the H Shares are to be
first permitted to take place on the Hong Kong Stock
Exchange
“Listing Rules ”o r
“Hong Kong Listing Rules ”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited
“Little Swan ” Wuxi Little Swan Co., Ltd. (ʮ̡), a
PRC company established on 29 November 1993 that we
acquired in 2008, and its subsidiaries
“M IoT ” the industrial internet platform developed by us
“Main Board ” the stock exchange (excluding the option market)
operated by the Hong Kong Stock Exchange which is
independent from and operates in parallel with the
Growth Enterprise Market of the Hong Kong Stock
Exchange
“Midea Cloud ” Meicloud Technology Co., Ltd. (ʮ̡),
a PRC subsidiary of ours established on 8 August 2018
“Midea Electric ” GD Midea Holding Co., Ltd. (ʮ
̡), then a PRC company established on 30 March 1992
that was listed on the Shenzhen Stock Exchange (stock
code: 000527) since 1993 until it was merged by our
Company in 2013
“Midea Holding ” Midea Holding Co., Ltd. (ʮ̡), a PRC
company established on 5 August 2002 and a member of
the Largest Group of Shareholders of our Company
DEFINITIONS
–3 7–


--- page 49 ---
“Midea Lighting ” Midea Intelligent Lighting & Controls Technology
Co., Ltd (ʮ̡), a PRC subsidiary
of ours established on 5 January 2001
“Midea Real Estate ” Midea Real Estate Holding Limited (ࠢ
ʮ̡), a company incorporated in the Cayman Islands as
an exempted company with limited liability on 29
November 2017, the ordinary shares of which have been
listed on the Hong Kong Stock Exchange (stock code:
3990) and a connected person of our Company
“Ministry of Finance ”o r
“MOF”
Ministry of Finance of the PRC (௅)
“MOFCOM ” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
“Mr. He ” Mr. He Xiangjian ( ОԮ਄΋͛), the founder of our
Company
“M-Smart ” our app and mini-program for consumers to manage our
smart home appliances and enjoy additional benefits and
services
“NDRC ” National Development and Reform Commission of the
PRC (ึ)
“Nomination Committee ” the nomination committee of the Board
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍
ɽึ)
“Offer Price ” the final offer price per Offer Share (exclusive of
brokerage of 1%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%), expressed in Hong Kong
dollars, at which Hong Kong Offer Shares are to be
subscribed for pursuant to the Hong Kong Public
Offering and International Offer Shares are to be offered
pursuant to the International Offering, to be determined
as described in “Structure of the Global Offering —
Pricing and Allocation”
DEFINITIONS
–3 8–


--- page 50 ---
“Offer Share(s) ” the Hong Kong Offer Shares and the International Offer
Shares, together, where relevant, with any additional H
Shares which may be issued by our Company pursuant to
the exercise of the Offer Size Adjustment Option and/or
the Over-allotment Option
“Offer Size Adjustment Option ” the option under the Hong Kong Underwriting
Agreement, exercisable by the Company with the prior
written agreement between the Company and the Overall
Coordinators (for themselves and on behalf of the
Underwriters) on or before the execution of the Price
Determination Agreement, pursuant to which the
Company may issue and allot up to an aggregate of
73,820,200 additional H Shares (representing in
aggregate approximately 15.0% of the Offer Shares
initially being offered under the Global Offering) at the
Offer Price, to cover additional market demand, as
described in “Structure of the Global Offering — Offer
Size Adjustment Option”
“Overall Coordinators ” the overall coordinators as named in the section headed
“Directors, Supervisors and Parties Involved in the
Global Offering”
“Over-allotment Option ” the option expected to be granted by our Company to the
International Underwriters, exercisable by the Overall
Coordinators on behalf of the International Underwriters
for up to 30 days from the day following the last day for
the lodging of applications under the Hong Kong Public
Offering, to require our Company to allot and issue up to
73,820,200 additional H Shares (representing in
aggregate approximately 15% of the Offer Shares
initially being offered under the Global Offering
assuming the Offer Size Adjustment Option is not
exercised at all) or up to 84,893,200 additional H Shares
(representing in aggregate approximately 15% of the
Offer Shares being offered under the Global Offering
assuming the Offer Size Adjustment Option is exercised
in full) to the International Underwriters to, among other
things, cover over-allocations in the International
Offering, if any, details of which are described in
“Structure of the Global Offering — Over-Allotment
Option”
DEFINITIONS
–3 9–


--- page 51 ---
“PBOC ” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC Company Law ” the Company Law of the PRC, as amended, modified
and/or otherwise supplemented from time to time
“PRC GAAP ” generally accepted accounting principles in mainland
China
“PRC government ”o r“ State ” the central government of the PRC and all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and
instrumentalities thereof or, where the context requires,
any of them
“Price Determination
Agreement ”
the agreement to be entered into between our Company
and the Overall Coordinators (for themselves and on
behalf of the Underwriters) on or about the Price
Determination Date to record and fix the Offer Price
“Price Determination Date ” the date, expected to be on or before Friday,
13 September 2024 and in any event no later than 12:00
noon on Friday, 13 September 2024, on which the Offer
Price is to be fixed for the purposes of the Global
Offering
“province ” a province or, where the context requires, a provincial
level autonomous region or municipality, under the direct
supervision of the central government of the PRC
“QIB” a qualified institutional buyer within the meaning of Rule
144A
“Regulation S ” Regulation S under the U.S. Securities Act
“Remuneration and Evaluation
Committee ”
the remuneration and evaluation committee of the Board
DEFINITIONS
–4 0–


--- page 52 ---
“Restricted Share Incentive
Schemes ”
the 2018 Restricted Share Incentive Scheme, 2019
Restricted Share Incentive Scheme, 2020 Restricted
Share Incentive Scheme, 2021 Restricted Share Incentive
Scheme, 2022 Restricted Share Incentive Scheme and
2023 Restricted Share Incentive Scheme, the principal
terms of which are set out in “Statutory and General
Information — 4. Our Incentive Schemes — B.
Restricted Share Incentive Schemes” in Appendix VI to
this document
“Risk Control Committee ” the risk control committee of our Company
“RMB”o r“ Renminbi ” Renminbi, the lawful currency of mainland China
“Rule 144A ” Rule 144A under the U.S. Securities Act
“SAFE ” the State Administration for Foreign Exchange of the
PRC (̮ි၍ଣ҅)
“SAIC ” the State Administration of Industry and Commerce of
the PRC (၍ଣᐼ҅),
which has now been merged into the SAMR
“SAMR ” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“SAT” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅)
“Securities Law ” the Securities Law of the People’s Republic of China ( ʕ
جas amended, supplemented or
otherwise modified from time to time
“SFC” Securities and Futures Commission of Hong Kong
“SFO”o r“ Securities and
Futures Ordinance ”
Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s) ” ordinary share(s) in the share capital of our Company,
with a nominal value of RMB1.00 each, comprising A
Shares and H Shares
DEFINITIONS
–4 1–


--- page 53 ---
“Share Schemes ” the share schemes adopted by our Company, including
the Stock Option Incentive Plans, Restricted Share
Incentive Schemes and Stock Ownership Schemes
“Shareholder(s) ” holder(s) of the Share(s)
“Shenzhen-Hong Kong
Stock Connect ”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shenzhen Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shenzhen
“Stabilizing Manager ” China International Capital Corporation Hong Kong
Securities Limited
“State Council ” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“Stock Exchange ”o r
“Hong Kong
Stock Exchange ”
The Stock Exchange of Hong Kong Limited
“Stock Option Incentive Plans ” the Fifth Stock Option Incentive Plan, the Sixth Stock
Option Incentive Plan, the Seventh Stock Option
Incentive Plan, the Eighth Stock Option Incentive Plan
and the Ninth Stock Option Incentive Plan, the principal
terms of which are set out in “Statutory and General
Information — 4. Our Incentive Schemes — A. Stock
Option Incentive Plans” in Appendix VI to this document
“Stock Ownership Schemes ” the Fourth and the Fifth Core Management Team and
Business Partner Stock Ownership Schemes, the Seventh
and the Eighth Core Management Team and Global
Partner Stock Ownership Schemes, the 2023 Stock
Ownership Scheme and the 2024 Stock Ownership
Scheme, the principal terms of which are set out in
“Statutory and General Information — 4. Our Incentive
Schemes — C. Stock Ownership Schemes” in Appendix
VI to this document
“Strategy Committee ” the strategy committee of the Board
“subsidiary ”o r“ subsidiaries ” has the meaning ascribed to it in section 15 of the
Companies Ordinance
DEFINITIONS
–4 2–


--- page 54 ---
“substantial shareholder(s) ” has the meaning ascribed to it in the Listing Rules
“Supervisor(s) ” member(s) of Supervisory Committee
“Supervisory Committee ” the supervisory committee of our Company
“Toshiba Lifestyle ” Toshiba Lifestyle Products & Services Corp. (ཥ
ٟa company established in Japan acquired by
us in 2016
“Track Record Period ” the years ended 31 December 2021, 2022 and 2023 and
the four months ended 30 April 2024
“Trial Measures ” the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies (“ ྤʫΆุ
جpromulgated by
the CSRC on 17 February 2023
“U.S. ”, “ US”o r
“United States ”
the United States of America, its territories, its
possessions and all areas subject to its jurisdictions
“U.S. dollars ”, “ US dollars ”
or “ US$”
United States dollars, the lawful currency of the United
States
“U.S. Securities Act ” United States Securities Act of 1933 and the rules and
regulations promulgated thereunder
“Underwriters ” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements ” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“VAT” value-added tax
“W AHIN” Guangzhou Hualing Refrigerating Equipment Co., Ltd.
(ʮ̡), a PRC subsidiary of ours
established on 13 June 2010
“Wandong Medical ” Beijing Wandong Medical Technology Co., Ltd. ( ̏ԯຬ
ʮ̡), a PRC company established
on 12 May 1997 and acquired by us in 2021, the shares
of which have listed on the Shanghai Stock Exchange
(stock code: 600055)
DEFINITIONS
–4 3–


--- page 55 ---
“White Form eIPO ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website of the White Form eIPO Service
Provider at www.eipo.com.hk
“White Form eIPO Service
Provider ”
Computershare Hong Kong Investor Services Limited
“Winone ” WINONE Elevator Company Limited (ʮ
̡), a PRC subsidiary of ours established on 8 February
2002 that we acquired in 2020, and its subsidiaries
“%” per cent
Unless otherwise specified, in this document:
(a) certain amounts and percentage figures have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures preceding them; and
(b) for ease of reference, the names of PRC laws and regulations, governmental
authorities, institutions, nature persons or other entities (including certain of our
subsidiaries) have been included in this document in both the Chinese and English
languages and in the event of any inconsistency, the Chinese versions shall prevail.
English translations of company names and other terms from the Chinese language
are provided for identification purposes only.
DEFINITIONS
–4 4–


--- page 56 ---
This glossary of technical terms contains explanations of certain technical terms
used in this document in connection with our Company and our business. Such
terminology and meanings may not correspond to standard industry meanings or usages
of those terms.
“5G” the fifth generation technology standard for cellular
networks in telecommunications, which cellular phone
companies began deploying worldwide in 2019 as the
planned successor to the 4G networks that provide
connectivity to most current cell phones
“AI” artificial intelligence
“CAGR ” compound annual growth rate
“distributed photovoltaic ” a type of distributed energy resource which converts the
sun’s rays to electricity, and includes all grid-connected
solar that is not centrally controlled
“ESG” environmental, social, and corporate governance
“GWP” global warming potential, a measure of how much
infrared thermal radiation a greenhouse gas added to the
atmosphere would absorb over a given time frame, as a
multiple of the radiation that would be absorbed by the
same mass of added carbon dioxide (CO2)
“HV AC” heating, ventilation, and air conditioning
“industrial internet platform ” a platform encompassing a set of integrated software
capabilities
“IoT” internet of things, the collective network of connected
devices and the technology that facilitates
communication between devices and the cloud, as well as
between devices themselves
“ISC” integrated supply chain, a supply chain management
strategy that seeks to improve the flow of information
and materials between suppliers, factories and stores
“IT” information technology
GLOSSARY OF TECHNICAL TERMS
–4 5–


--- page 57 ---
“motion controllers ” devices used to control and coordinate the motion of
machinery and automation systems
“MSRP ” manufacturer’s suggested retail prices
“NEV” new energy vehicle, automobiles that are fully or
predominantly powered by electric energy
“OBM” original brand manufacturer, a company that sells its
manufactured products under its own brands
“ODM” original design manufacturer, a company that designs and
manufactures products eventually be sold under third-
party brands
“OEM” original equipment manufacturer, a company that
manufactures products eventually be sold under third-
party brands
“R&D” research and development
“ROE” return on equity
“S&OP ” sales and operations planning, an integrated business
management process through which the management
team of companies continually achieves focus, alignment
and synchronization among all organization functions
“servo system ” electromagnetic device that converts electricity into
precise controlled motion by use of negative feedback
mechanisms, mainly including servo motors, servo
drives, feedback devices, encoders and other component
“SME” small and medium enterprises
GLOSSARY OF TECHNICAL TERMS
–4 6–


--- page 58 ---
Certain statements in this document are forward-looking statements that are, by their
nature, subject to significant risks and uncertainties. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions, future events, or
performance (often, but not always, through the use of words or phrases such as “aim”,
“anticipate”, “aspire”, “believe”, “could”, “estimate”, “expect”, “goals”, “going forward”,
“intend”, “may”, “objective”, “ought to”, “outlook”, “plan”, “project”, “projection”, “seek”,
“schedules”, “should”, “target”, “vision”, “will”, “would”) are not historical facts, are
forward-looking and may involve estimates and assumptions and are subject to risks (including
but not limited to the risk factors detailed in this document), uncertainties and other factors
some of which are beyond our Company’s control and which are difficult to predict.
Accordingly, these factors could cause actual results or outcomes to differ materially from
those expressed in the forward-looking statements.
Our forward-looking statements have been based on assumptions and factors concerning
future events that may prove to be inaccurate. Those assumptions and factors are based on
information currently available to us about the businesses that we operate. The risks,
uncertainties and other factors, many of which are beyond our control, that could influence
actual results include, but are not limited to:
 our mission, goals and strategies;
 our future business development, financial conditions and results of operations;
 the expected growth of the home appliance industry, the energy solutions and
industrial technology industry, the intelligent building technology industry and
industrial robotics and automation industry in mainland China and other
jurisdictions in which we operate;
 our expectations regarding demand for and market acceptance of our products and
services;
 our expectations regarding our relationships with customers, business partners,
suppliers and other partners;
 changes in the macro environment, regional and global economy, as well as industry
trends related to our operations;
 our ability to adequately protect our reputation and brand image, as well as our
intellectual property rights;
 our ability to obtain adequate capital resources to fund future development plans;
 our ability to control costs, as well as to achieve and maintain operational efficiency;
 our ability to attract and retain qualified personnel;
FORW ARD-LOOKING STATEMENTS
–4 7–


--- page 59 ---
 competition in the industries and markets in which we operate or into which we
intend to expand;
 our proposed use of proceeds;
 rapid developments in technology and our ability to successfully keep up with
technological advancement;
 changes in currency exchange rates;
 relevant government policies and regulations relating to industries which we operate
in; and
 all other risks and uncertainties described in “Risk Factors.”
Since actual results or outcomes could differ materially from those expressed in any
forward-looking statements, we strongly caution investors against placing undue reliance on
any such forward-looking statements. Any forward-looking statement speaks only as of the
date on which such statement is made, and, except as required by the Listing Rules, we
undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of
unanticipated events. Statements of, or references to, our intentions or those of any of our
Directors are made as at the date of this document. Any such intentions may change in light
of future developments.
All forward-looking statements in this document are expressly qualified by reference to
this cautionary statement.
FORW ARD-LOOKING STATEMENTS
–4 8–


--- page 60 ---
You should carefully consider all of the information in this Listing Document,
including the following risk factors before making any investment decision in relation to
the H Shares. Our business, financial condition or results of operations could be
materially and adversely affected by any of these risks. The market price of the H Shares
could fall significantly due to any of these risks, and you may lose all or part of your
investment.
We believe that there are certain risks involved in our operations, many of which are
beyond our control. Additional risks and uncertainties that are presently not known to us or not
expressed or implied below or that we currently deem immaterial could also harm our business,
financial condition and operating results. Y ou should consider our business and prospects in
light of the challenges we face, including the ones discussed in this section.
RISKS RELATING TO OUR BUSINESS AND INDUSTRIES
Global markets for our products and services are highly competitive and subject to rapid
technological changes, and we may be unable to compete effectively in these markets.
Our products and services compete in highly competitive global markets characterized by
intense price competition, frequent introduction of new products, continual upgrades in
features, design and performance, energy efficiency, evolving industry standards, rapid
adoption of technological and product advancements by competitors, and broad distribution
channels and sales network. Significant new competitors or increased competition from
existing competitors may adversely affect our business, results of operations and financial
condition. We cannot assure you that we will be able to compete effectively in the highly
competitive global markets of our products and services. To illustrate, the global home
appliance market saw an overall growth trend from 2017 to 2023 at a CAGR of 3.5% in terms
of sales value, and yet the number of competitors in this market increased by more than 2,000
from 2017 to 2023, according to Frost & Sullivan.
Our competitors primarily include large Chinese and multinational home appliance
companies and Chinese and global commercial and industrial solutions providers. We have a
variety of local and overseas competitors in each region. We compete with our competitors in
a variety of aspects including market experience, brand recognition, product breadth,
manufacturing scale, cost efficiencies, and financial, sales and marketing, manufacturing,
research and development or technological resources. Some of our competitors may also be
willing to reduce prices and accept lower profit margins to compete with us. As a result of this
competition, we could lose market share and sales, or be forced to reduce our prices to meet
competition, which could adversely impact our margin.
RISK FACTORS
–4 9–


--- page 61 ---
Our competitors may consolidate in the future, which could result in us facing increased
competition and affect our relative market position domestically and globally. Many of our
competitors are increasingly expanding beyond their existing manufacturing footprints,
aggressively price or introduce their products to increase market share and expand into new
geographies, and expanding their presence in the rapidly changing retail environment,
including launching an e-commerce platform to seize the new market opportunities, but we
cannot assure you that we will be able to compete effectively in this highly competitive global
market. Additionally, we face significant competition as competitors imitate our product design
and features, and/or join forces to develop and launch products and services that are more
competitive than those currently available on the market. Our existing competitors and new
market entrants may also seek to develop new product and service offerings, technologies or
capabilities that could render many of the products and services that we offer obsolete or less
competitive, and may adopt more aggressive pricing policies or devote greater resources to
marketing and promotional campaigns than us. The occurrence of any of these circumstances
may result in stronger competition for us, hinder our growth, reduce our market share and harm
our brand recognition. If we fail to respond to these circumstances in a timely and effective
manner, our business, results of operations, financial condition and prospects may be
materially and adversely affected.
If we are unable to manage our growth or execute our strategies effectively, our business and
prospects may be materially and adversely affected.
Our business has continued to grow in recent years, so has our business network and
number of employees. In addition, as we expand our product portfolio, customer base and
geographical markets, we will need to work with a larger number of suppliers and partners
efficiently and maintain and expand mutually-beneficial relationships with our existing and
new suppliers and partners. We also need to continuously enhance and upgrade our
infrastructure and technology, improve control over our operational, financial and management
aspects, strengthen our supplier and sales network management, refine our reporting systems
and procedures, and expand, train and manage our growing employee base. All these efforts
will require significant managerial, financial and human resources. We cannot assure you that
such efforts will reach our expected success. We cannot assure you that we will be able to
effectively manage our growth, that our current infrastructure, systems, procedures and
controls or any new measures to enhance them will be adequate and successful to support our
expanding operations or that our strategies and new business initiatives will be executed
successfully. In addition, changes and developments taking place in industries that we operate
in may also require us to re-evaluate our business model and adopt material changes to our
long-term strategies and business plans. Our failure to innovate and adapt to these changes and
developments may have a materially adverse effect on our business, financial condition and
results of operations. Even if we innovate and adapt to these changes and developments, we
may nevertheless fail to realize the anticipated benefits of changes adopted to our long-term
strategies and business plans or even harm our profitability as a result.
RISK FACTORS
–5 0–


--- page 62 ---
Maintaining our brand image is critical to our success, and any failure to do so could
severely damage our reputation and brands, which would have a material adverse effect on
our business, financial condition and results of operations.
Our brands have worldwide recognition, and our success depends on our ability to
maintain and enhance our brand image and reputation. For example, we currently pursue a
global and multi-tier brand strategy featuring key home appliance brands for our Smart Home
Solutions, including COLMO and Toshiba for the premium market, Midea, Little Swan and
Coolfree for the mass market, and Comfee and W AHIN tailored for the younger consumers.
Under our Commercial & Industrial Solutions, we also possess industry-renowned brands such
as KUKA Group, GMCC (“ٺߕand Welling (“ᜳ”). Our business depends significantly on
the value and reputation of our brands, which, in turn, depends on factors such as the quality,
design, performance, functionality, and durability of our products, marketing efforts, including
advertising and consumer campaigns, product innovation, and customer experience. We intend
to continue making substantial investments in these areas in order to develop, maintain and
enhance our brand image. For example, among selling and marketing expenses, the advertising
and promotion expenses were RMB12.9 billion, RMB12.0 billion, RMB16.0 billion and
RMB8.0 billion for the years ended 31 December 2021, 2022 and 2023 and the four months
ended 30 April 2024, respectively. As a result, costs associated with maintaining our brand
image can be significant, and we may further incur substantial expenses to establish our brand
image in new markets we have decided to or will enter. However, we cannot assure you that
our investments in these areas would be successful, and expenses related to maintaining our
brand image may have an adverse impact on our results of operations and financial condition
if they do not yield the expected results.
Our brands, reputation and product sales could be harmed if, for example, our products
fail to meet expectations of our customers or contain defects or fail. See “— Our products and
services may experience quality problems from time to time that can result in harm to our
reputation. Product-related liability, product recall costs, and significant return or exchange
could also adversely affect our business and financial performance.” In addition, adverse
publicity about regulatory or legal action against us could damage our reputation and brand
image, undermine customer confidence in us and reduce long-term demand for our products.
See “— Unfavorable results of legal and regulatory proceedings could materially adversely
affect our business and financial condition and performance.”
Further, our success in maintaining and improving our brand image depends on our ability
to adapt to a rapidly changing media ecosystem, including our increasing reliance on social
media and online dissemination of advertising campaigns. Negative posts or comments about
us on social networking platforms and other websites that spread rapidly through such forums,
even if it is factually incorrect, could seriously damage our reputation and brand image. See
“— We may be the subject of anti-competitive, harassing, or other detrimental conduct by third
parties including complaints to regulatory agencies, negative social media postings, and the
public dissemination of malicious assessments of our business that could harm our reputation
and cause us to lose market share, customers and revenues.” In order to attract and retain
customers, we may need to substantially increase our expenditures for creating and maintaining
RISK FACTORS
–5 1–


--- page 63 ---
brand loyalty. As a result, our sales and marketing related expenses may increase significantly.
If we are unable to maintain our reputation, enhance our brand recognition or increase positive
awareness of our products and services, it may be difficult to maintain and grow our customer
base, and our business and growth prospects may be materially and adversely affected.
We may face risks and challenges in developing our Commercial & Industrial Solutions.
Our Commercial & Industrial Solutions provide our customers with a full range of
products and services across Energy Solutions & Industrial Technology, Intelligent Building
Technology, Robotics & Automation and Other Businesses. Revenue from Commercial &
Industrial Solutions has experienced rapid growth during the Track Record Period, growing at
a CAGR of 15.4% from 2021 to 2023 and accounting for 26.2% of the total revenue in 2023,
representing an increase from 21.4% in 2021. There is no assurance that we will be able to
maintain the growth rate of our Commercial & Industrial Solutions in future periods. If the
market does not develop as we expect or if we fail to address the dynamic market needs, our
results of operations and financial performance would be materially and adversely impacted.
Any potential future decrease in growth of the commercial and industrial solutions industry in
general or the price and profit margin of our Commercial & Industrial Solutions could result
in material and adverse change to our business, growth and prospects.
Some of our Commercial & Industrial Solutions require longer lead time to develop, and
their competitiveness and market acceptance depend, to a larger extent, on our research in new
technologies that are constantly advancing and evolving in terms of standards and applications,
and frequent introductions of new and continual upgrading or existing products and solutions
that meet the evolving customer demand. In response to the increasing market competition, we
plan to continue to invest in our R&D efforts, as well as our sales and marketing efforts, which
would incur significant capital expenditures. However, it typically takes a long period of time
to realize returns on such investments, if at all. If we are unable to keep up with the
technological developments or if new technologies render our technologies or solutions
obsolete, customers may no longer be attracted to our products and solutions, which could
cause material adverse impact on our business and financial performance.
The customer base of our Commercial & Industrial Solutions is by nature more
concentrated compared with that of our Smart Home Solutions. It is also common practice
among enterprise customers to procure commercial and industrial solutions through tendering
on a case-by-case or project-by-project basis. If any or some of our major customers decide to
purchase less products and/or solutions than they have in the past, or not to purchase products
and/or solutions from us at all, or may decide not to renew existing contracts at all, our revenue
from our Commercial & Industrial Solutions may decline and our financial condition and
results of operations may be adversely affected.
RISK FACTORS
–5 2–


--- page 64 ---
Our business may be adversely affected if we fail to introduce new products and services on
a timely basis to adapt to rapidly evolving customer needs and advancements in technology,
and our investments in research and development may not yield the expected results.
We compete in highly competitive global home appliance and commercial and industrial
solutions markets characterised by iterative technologies, evolving industry standards and
continual improvements in performance characteristics and product features. To be able to
compete effectively, we must continually introduce new products, services and technologies,
enhance existing products and services, and effectively stimulate customer demand for new and
upgraded products and services. The success of new product introductions depends on a
number of factors, such as timely and successful completion of development efforts, successful
production ramp-ups and market acceptance of the products.
Customer demands, preferences and lifestyle trends in mainland China and in our
overseas markets may change from time to time and depend upon various factors, including,
among other things, lifestyle trends, consumption patterns, disposable income, customer
confidence and other factors beyond our control. Our success in turn also depends on our
ability to anticipate, identify and respond in a timely manner to these trends.
Advancements in technology, the introduction of new products and changing customer
demands, preferences and lifestyle trends typically lead to rapid declines in retail volumes for
products made with older technologies and their loss of competitiveness or even obsolescence.
If we are unable to compete successfully by introducing competitive new products that meet
the demands and preferences of customers, our business, results of operations and financial
condition would be adversely affected.
As a result, we seek to continuously design new products, upgrade existing products,
develop new technologies, develop and promote more appealing solutions, and invest in the
marketing of new products and solutions. These investments require significant management
time and a high level of financial and other commitments to research and development. During
the Track Record Period, our R&D expenses increased by 5.4% from RMB12.0 billion in 2021
to RMB12.7 billion in 2022 and further by 15.2% to RMB14.6 billion in 2023, and increased
by 14.6% from RMB4.3 billion in the four months ended 30 April 2023 to RMB5.0 billion in
the four months ended 30 April 2024. We may need to increase expenditure on research and
development in response to changes in customer demand. Further, there can be no assurance
that our investments of research and development resources will yield the desired results. Our
business, results of operations and financial condition may be adversely affected if we fail to
successfully anticipate and react in a timely manner to changes in customer preferences or if
our investments in research and development do not result in successful product introductions.
Following the development of new products, we will also need to invest in promoting such new
products. If we fail to balance the marketing efforts or optimise the pricing strategies of our
existing and new products, we may fail in promoting our new products but increase
competition among our own products, which in turn could lead to overall decrease in sales.
RISK FACTORS
–5 3–


--- page 65 ---
If we fail to grow or retain our customer base, or if customer satisfaction declines, our
business and operating results may be materially and adversely affected.
The size of our customer base and the level of satisfaction are critical to our success. Our
business has been depending and will continue to significantly depend on our customers and
their loyalty in and level of satisfaction with our products and services. If customers no longer
view our products and services as useful and attractive as compared to competing offerings, we
may not be able to increase or maintain our customer base and the level of satisfaction. A
number of factors could negatively affect customer growth, retention and satisfaction,
including:
 despite our continual research, monitoring and analysis of customer needs, we may
be unable to identify and meet evolving customer demands;
 we may not be able to timely develop and introduce new or updated products and
services, or the new or updated products and services we introduce may not be
favorably received by customers;
 we may fail to update existing technology or develop new technology in time to stay
ahead or abreast of market advances;
 we may not be able to continue to successfully drive organic growth of customer
base, which may require us to devote more additional resources to acquire
customers;
 we may be unable to prevent or combat inappropriate use of our products and
services, which may lead to negative public perception of us and damage our brand
or reputation;
 we may encounter technical or other problems that prevent our products and services
from operating in a smooth and reliable manner or otherwise adversely affect
customer experience;
 our competitors may launch or develop similar or disruptive products and services
with better customer experience, which may result in loss of existing customers or
decline in new customers growth;
 we may fail to address customer concerns related to privacy and communication,
data safety, security or other factors; and
 we may be compelled to modify our products and services to address requirements
imposed by legislation, regulations, government policies or requests from
government authorities in manners that may compromise user experience.
RISK FACTORS
–5 4–


--- page 66 ---
We may face challenges managing our expansion into new products, services and business
activities.
We have expanded and will continue to expand our businesses, and our operations will
become more widespread and complex. Expansion of our business activities exposes us to a
number of risks and challenges, including:
 failure of our new products and services to be accepted by our customers or meet the
expected targets;
 insufficient experience or expertise in certain new products and services and dealing
with new counterparties and customers, which may prevent us from effectively
competing in these areas;
 difficulty in materialising synergies among our businesses;
 failure to achieve investment returns from our new businesses;
 failure to make accurate analysis or judgement regarding market conditions facing
our new business;
 increasing difficulty for us in directing and monitoring the day-to-day operations of
our businesses;
 inability to hire additional qualified personnel or to hire and retain personnel on
commercially reasonable terms;
 insufficient financial, operational, management and other human resources to
support our expanded range of products and services;
 failure of our logistics management to support timely delivery;
 failure of sales network management to grow our revenue and profitability;
 failure to enhance our risk management capabilities, internal control capabilities and
information technology systems in a timely manner to support new businesses and
a broader range of products and services;
 stricter regulation and increased credit, market and operational risks;
 regulatory risks relating to our expanding operations domestically and globally,
including those relating to labor, environmental and industry-specific regulations;
 inability to obtain regulatory approvals for our new products or services or to
anticipate legal or government action or changes in legal or regulatory requirements;
RISK FACTORS
–5 5–


--- page 67 ---
 failure to obtain sufficient financing from internal and external sources to support
our business expansion on commercially reasonable terms or at all;
 failure to protect our intellectual property rights across different jurisdictions;
 imitation or replication of our products and services by our competitors; and
 increasing difficulty in preventing and detecting fraud and protecting our assets,
both physical and intangible.
Our planned expansion is based on our assessment of market prospects, among other
considerations. There is no assurance that our assessments will turn out to be accurate. We may
also face challenges to acceptance of our products in new markets or our new products in
markets in which we have been operating. If we are not able to successfully expand into or
grow new products, services and related business areas, our business, financial condition and
results of operations may be materially adversely affected.
Furthermore, we may encounter other risks and difficulties when expanding our business
through acquisitions and other forms of business integration. See “— Investment in new
business strategies, acquisitions and other forms of business integration could disrupt our
ongoing business and present risks not originally contemplated, and we may be unable to
realize the anticipated benefits, synergies, cost savings or efficiencies from acquisitions.”
If we are not able to continue to innovate or if we fail to adapt to changes in our industry,
our business, financial condition and results of operations would be materially and adversely
affected.
Our long-term success in the competitive environment depends on our ability to develop
and commercialize a continuing stream of innovative products. As a result, we continue to
invest significant resources in our infrastructure, research and development and other areas in
order to remain competitive in our businesses and operations, as well as to explore new growth
strategies and introduce new high-quality products and services. During the Track Record
Period, we incurred research and development expenses of RMB12.0 billion, RMB12.7 billion,
RMB14.6 billion and RMB5.0 billion in 2021, 2022, 2023 and the four months ended 30 April
2024, respectively. However, our investments in innovations and new technologies, which may
be significant, may not increase our competitiveness or generate financial returns in the short
term, or at all, and we may not be successful in adopting and implementing new technologies.
New product development and commercialization efforts, including efforts to enter markets or
product categories in which we have limited or no prior experience, have inherent risks. These
risks include the costs involved, such as development and commercialization, product
development or launch delays and the failure of new products to achieve anticipated levels of
market acceptance or growth in sales or operating income. We also face the risk that our
RISK FACTORS
–5 6–


--- page 68 ---
competitors will introduce innovative products that compete with our products and thereby
divert demand for our products to such competitors’ products. In addition, sales generated by
new products could cause a decline in sales of our existing products. If new product
development and commercialization efforts are not successful, our business, financial
condition and results of operations could be adversely affected.
Our business is subject to legal, regulatory, political, economic, commercial and other risks
associated with conducting operations in various jurisdictions.
We derive a significant portion of our revenues from our overseas operations. During the
Track Record Period, we generated over 40% of our revenues outside mainland China. We
expect that overseas sales will continue to account for a significant percentage of our revenues.
Accordingly, we have faced and continue to face numerous risks, including legal, regulatory,
political, economic, commercial and other risks associated with conducting operations in
various jurisdictions, any of which could negatively affect our financial performance. These
risks include the following:
 legal, regulatory, political, economic and commercial instability and uncertainty;
 changes in foreign tax rules, regulations and other requirements, such as changes in
tax rates and statutory and judicial interpretations of tax laws;
 changes in international trade policies and regulations including those in relation to
economic sanctions, export controls, and import restrictions, as well in trade barriers
such as imposition of tariffs;
 difficulty in coping with possible conflict of laws resulting from sanctions and
import/export controls measures of different jurisdictions where we operate;
 changes in foreign country regulatory requirements, including data privacy laws;
 complexities relating to compliance with foreign anti-bribery, anti-corruption and
anti-money laundering regulations and antitrust laws;
 difficulty in obtaining or enforcing intellectual property rights;
 difficulty in enforcing agreements and collecting overdue receivables through local
legal systems;
 changes in geopolitical situations especially those in jurisdictions where we do
business;
 foreign currency exchange rate fluctuations;
 strict foreign exchange controls and cash repatriation restrictions;
RISK FACTORS
–5 7–


--- page 69 ---
 inflation and/or deflation, and changes in interest rates;
 trade customer insolvency and the inability to collect accounts receivable;
 misconduct by our customers beyond our control, including but not limited to
breaching the agreements with them, policies that we require them to adhere to, and
laws and regulations of various jurisdictions that are applicable to them;
 labor disputes and work stoppages at our operations and suppliers; and
 increased costs associated with maintaining the ability to understand local markets
and follow their trends, as well as develop and maintain an effective marketing and
distribution presence.
We are subject to various laws and regulations of mainland China and other jurisdictions
in which we operate and are required to obtain and comply with various permits, licenses,
certificates, consents and other approvals from administrative authorities. Each approval is
dependent on the satisfaction of certain conditions and failure to obtain governmental
approvals could have an adverse effect on our operations. We are also subject to inspections,
examinations, inquiries and audits by governmental authorities as part of the process of
maintaining or renewing our permits, licenses or certificates. There can be no assurance that
we will be able to fulfil the pre-conditions necessary to obtain the required governmental
approvals or that we will be able to adapt to new laws, regulations or policies that may come
into effect from time to time with respect to our operations. There may be delays on the part
of relevant administrative bodies in reviewing our applications and granting approvals.
Furthermore, we are subject to various labor-related laws and regulations in mainland
China and other jurisdictions in which we operate. For example, we are required to contribute
to a number of social insurance funds, including funds for pension insurance, unemployment
insurance, basic medical insurance, work-related injury insurance, maternity insurance and
housing provident fund on behalf of our employees in mainland China. According to the
Regulation on the Administration of Housing Provident Funds (၍ଣૢԷ), we
are required to set up housing provident fund accounts (ሪ˒) and pay the housing
provident fund in time and in full for our employees. According to the PRC Social Insurance
Law (), a mainland China enterprise is required to obtain
social insurance certificates (ᎈ೮াᗇ) for its employees and to pay the social
insurance contributions in time and in full. There is no assurance that our historical and current
practice with respect to the contribution of social insurance plans will at all times be deemed
in full compliance with relevant laws and regulations in mainland China by government
authorities. In the event of any such non-compliance, we may be required to pay any shortfall
in social insurance contributions within a prescribed time period and to pay penalties if we fail
to do so. As advised by Jia Y uan Law Offices, the legal advisor to our Company as to PRC
laws, (i) under the Regulations on Administration of Housing Provident Fund, (a) if we fail to
complete housing provident fund registration before the prescribed deadlines, we may be
subject to a fine ranging from RMB10,000 to RMB50,000 for each non-compliant subsidiary
RISK FACTORS
–5 8–


--- page 70 ---
or branch; and (b) if we fail to pay housing provident fund contributions within the prescribed
deadlines, we may be subject to an order by the relevant people’s court to make such payments;
and (ii) according to the PRC Social Insurance Law, (a) for outstanding social insurance fund
contributions that we did not fully pay within the prescribed deadlines, the relevant PRC
authorities may demand that we pay the outstanding social insurance contributions within a
stipulated deadline and we may be liable for a late payment fee equal to 0.05% of the
outstanding contribution amount for each day of delay; and (b) if we fail to make such
payments, we may be liable to a fine of one to three times the outstanding contribution amount.
A violation by our employees, contractors or agents could occur. In some cases,
compliance with the laws and regulations of one country could violate the laws and regulations
of another country. Violations of these laws and regulations could materially and adversely
affect our brand, overseas growth efforts and business. We may not be able to develop and
implement policies and strategies that address these risks effectively in each location in which
we conduct business, and there can be no assurance that our exposure to such risks, which may
become greater as we expand our operations, will not adversely affect our reputation, business,
results of operations and financial condition or otherwise divert our resources in handling any
lawsuits, legal proceedings or complaints.
Our growth and profitability depend on economic conditions and the level of consumer
spending and corporate investment in mainland China and our other key markets.
Our results of operations depend significantly on economic conditions and non-essential
spending in mainland China and our other key markets. In particular, we derived a majority of
our revenues from our operations in mainland China in 2021, 2022 and 2023 and for the four
months ended 30 April 2024, respectively. Non-essential spending is affected by a number of
economic factors. Economic uncertainty and related factors exacerbate negative trends in
business and consumer spending and may cause certain customers to postpone, cancel or
refrain from placing orders for our products.
Worldwide and regional economic conditions could have a material adverse effect on the
customer demand for our products and services. Demand also could differ materially from our
expectations as a result of currency fluctuations. Other factors that could influence worldwide
or regional demand include changes in fuel and other energy costs, increase in interest rates,
conditions in the real estate and mortgage markets, unemployment, labor and healthcare costs,
access to credit, consumer confidence, corporate willingness to invest or spend, and other
macroeconomic factors affecting the spending behavior of consumers and corporates. These
and other economic factors could materially and adversely affect demand for our products and
services and therefore adversely affect our business, results of operations and financial
condition.
RISK FACTORS
–5 9–


--- page 71 ---
Our intellectual property rights are fundamental to all of our businesses and we may not be
able to prevent others from unauthorized use of our intellectual property, which could harm
our business and competitive position.
We regard our trademarks, copyrights, patents, domain names, know-how, proprietary
technologies, and similar intellectual property as critical to our success, and we rely on a
combination of intellectual property laws and contractual arrangements, including
confidentiality, invention assignment and non-compete agreements with our employees and
others, to protect our proprietary rights. We may become an attractive target to counterfeiting
and intellectual property theft activity because of our brand recognition. Despite these
measures, any of our intellectual property rights could be challenged, invalidated,
circumvented or misappropriated, or such intellectual property may not be sufficient to provide
us with competitive advantages. In addition, there can be no assurance that our patent
applications will be approved, that any issued patents will adequately protect our intellectual
property, or that such patents will not be challenged by third parties or found by a judicial
authority to be invalid or unenforceable. Further, because of the rapid pace of technological
change in our industry, parts of our business rely on technologies developed or licensed by
third parties, and we may not be able to obtain or continue to obtain technologies from these
third parties at all or on reasonable terms.
It is often difficult to register, maintain and enforce intellectual property rights. Statutory
laws and regulations are subject to judicial interpretation and enforcement and may not be
applied consistently due to the lack of clear guidance on statutory interpretation.
Confidentiality, invention assignment and non-compete agreements may be breached by
counterparties, and there may not be adequate remedies available to us for any such breach.
Accordingly, we may not be able to effectively protect our intellectual property rights or to
enforce our contractual rights. Policing any unauthorized use of our intellectual property is
difficult and costly and the steps we take may be inadequate to prevent the infringement or
misappropriation of our intellectual property. In the event that we resort to litigation to enforce
our intellectual property rights, such litigation could result in substantial costs and a diversion
of our managerial and financial resources, and could put our intellectual property at risk of
being invalidated or narrowed in scope. We can provide no assurance that we will prevail in
such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In
addition, our trade secrets may be leaked or otherwise become available to, or be independently
discovered by, our competitors. Any failure in maintaining, protecting or enforcing our
intellectual property rights could have a material adverse effect on our business, financial
condition and results of operations.
RISK FACTORS
–6 0–


--- page 72 ---
V arious other issues may arise with respect to our intellectual property portfolio. We may
not have sufficient intellectual property rights in all countries and regions where unauthorized
third-party copying or use of our proprietary technology may occur and the scope of our
intellectual property might be more limited in certain countries and regions. Our existing and
future patents may not be sufficient to protect our products, services, technologies or designs
and/or may not prevent others from developing competing products, services, technologies or
designs. We cannot predict the validity and enforceability of our patents and other intellectual
property with certainty.
Claims by third parties that we are infringing their intellectual property and other litigation
could adversely affect our business.
Intellectual property rights, such as trademarks, copyrights, patents, domain names,
know-how, and proprietary technologies protect brand images, product formulations and other
valuable rights. We license certain trademarks from other parties and our continual use of such
trademarks depend on the terms of our arrangements with the licensing parties. For example,
we have been granted the rights to use the Toshiba trademark in most home appliances. Our
competitors or other third parties may have intellectual property rights and interests which
could potentially conflict with ours. If any trademark or brand names infringement or other
intellectual property claims against us are successful, we may not have a legal right to continue
to use or sell products that are adjudicated to have infringed third parties’ intellectual property
rights. We may be legally required to expend significant resources to review and revise our
business and operations so that they do not infringe third parties’ intellectual property rights
or we may be required to obtain relevant licenses to avoid further infringements. Intellectual
property litigation against us could significantly disrupt our business, divert our management’s
attention or consume much of our financial resources.
Any interruption in the operation throughout our entire operation process for an extended
period may have an adverse impact on our business.
Our operation process covers from R&D through production, storage, logistics, marketing
and sales to after-sales services. Any interruption or failure in the operation process, which
involves use of raw materials, parts and components supplied by third-party vendors, could
result in product quality or safety problems and other regulatory or environmental risks that
may have an adverse impact on our business. Our operation process may be disrupted by fire,
flood, earthquake, power outage, telecommunications failure, security breach, and other
incidents that are beyond our control. Any interruption in the operation may render us unable
to fulfil the orders placed with us in a timely manner and/or design and manufacture products
to the customer’s satisfaction or at all. In addition, the use of the more advanced, complex and
costly technologies and equipment may further increase our exposure to operational risks and
the difficulty in timely repair or replacement. Any interruption in the operation throughout our
entire operation process for an extended period could cause us to suffer financial loss and
reputational harm, which may adversely affect our business, results of operations and financial
condition.
RISK FACTORS
–6 1–


--- page 73 ---
Future operating results depend upon our ability to obtain raw materials, components and
products in sufficient quantities on commercially reasonable terms from third-party
suppliers, and any disruption in their supply or significant increase in their prices will
negatively affect our business.
Raw materials are the largest component of our total cost of sales. The raw materials that
we mainly use in our products are copper, steel, plastics and aluminium materials for the
manufacturing of our products. The prices of these materials and components containing those
materials are susceptible to significant fluctuations due to supply and demand trends in the
commodities markets, transportation costs, government regulations and tariffs, geopolitical
events, changes in currency exchange rates, price controls, the economic climate and other
unforeseen circumstances. Our supply agreements for raw materials may allow pricing
adjustments depending on the contract. Our results of operations could be adversely affected
if we were unable to obtain adequate supplies of high quality raw materials or components in
a timely manner at reasonable prices or make alternative arrangements for such supplies, or if
there were significant increases in the costs of raw materials or components that we could not
pass on in full.
We rely on the timely supply of raw materials, components and products in order to carry
out our production plans as scheduled. Any delays or disruptions in such supplies from our
suppliers, may have a material and adverse impact on our ability to meet the market demands
and our marketing and sale of our products. In addition, any natural or man-made disasters or
other unanticipated catastrophic events, including adverse weather, fires, technical or
mechanical difficulties, storms, explosions, earthquakes, strikes, acts of terrorism, wars and
outbreaks of pandemics could impair the operations of our suppliers and/or disrupt our
transportation channels and, and impede our ability to manufacture and deliver our products to
customers in a timely manner.
Many raw materials, components and products, including those that are available from
multiple sources, are at times subject to industry-wide shortages and significant commodity
pricing fluctuations. There can be no assurance that we will be able to extend or renew the
agreements that we have entered into for the supply of many raw materials, components and
products on similar terms, or at all. A number of suppliers of raw materials, components and
products may suffer from poor financial conditions, which can lead to business failure for the
supplier or consolidation within a particular industry, further limiting our ability to obtain
sufficient quantities of raw materials, components and products on commercially reasonable
terms. The effects of global or regional economic conditions on our suppliers also could affect
our ability to obtain raw materials, components and products . Although we have entered into
certain futures contracts and hedging transactions to lock the prices for some of the bulk
materials required for manufacturing, we remain subject to significant risks of supply shortages
and price increases, which may adversely affect our business, results of operations and
financial condition.
RISK FACTORS
–6 2–


--- page 74 ---
If our logistics service providers fail to provide reliable and timely logistics services, our
business, financial condition and results of operations may be materially and adversely
affected.
We have outsourced some of our transportation and logistics management, especially in
overseas markets, to third-party logistics service providers over whom we do not have direct
control. Our logistics service providers may experience disruptions in their operations due to
equipment breakdowns, information technology system failures, commercial disputes, labor
shortage or strikes, natural disasters, non-compliance issues or other economic, business, labor,
environmental, public health or political issues. In addition, we may not be able to identify
substitute logistics service providers who are capable of supply logistics services on terms that
are commercially acceptable to us. Any failure of our logistics service providers to provide
reliable and timely logistics services may cause disruptions in the supply and distribution of
our products in a timely manner, which may have a material negative impact on our business
operation and reputation.
Failure to maintain optimal inventory levels could increase our inventory holding costs or
cause us to lose sales.
Our inventory primarily includes finished goods, raw materials and work in progress
products. During the Track Record Period, our inventory turnover days was 53 days, 64 days,
62 days and 50 days in 2021, 2022, 2023 and the four months ended 30 April 2024,
respectively. However, we may not be able to accurately track our inventory level or to identify
any excessive build-up or insufficient stock of inventory at various levels of our global
network. We may misjudge market demand. Inventory levels in excess of customer demand
may result in inventory write-downs or write-offs, and the sale of excess inventory at
discounted prices or in less preferred distribution channels could impair the image of our
brands and harm our gross margin; but if we underestimate the demand for our products,
insufficient stock could result in delays in the shipment of our products, thereby impacting our
ability to generate sales and cause damage to our reputation and relationships with our
customers and distribution partners. Therefore, failure to maintain optimal inventory levels
could increase our inventory holding costs or cause us to lose sales, which could adversely
impact our business, financial condition and results of operations.
Our sales and results of operations are subject to seasonal variations.
Certain of our product categories can be affected by weather due to the nature of the
products, such as air conditioners and electric fans. There are also certain seasonal patterns for
purchases of our products due to holiday-driven promotions. We expect the impact of
seasonality on our business to remain in the future. As a result of these seasonal variations, we
believe that comparisons of our operational results between different quarters within a single
fiscal year or across different fiscal years are not necessarily meaningful and that these
comparisons cannot be relied upon as indicators of our future performance.
RISK FACTORS
–6 3–


--- page 75 ---
Our operations rely on complex information technology systems and networks and our
business and reputation may be impacted by information technology system failures, network
disruptions or cybersecurity breaches.
We rely extensively on information technology systems, some of which are supported by
third party vendors including cloud-based systems and managed service providers, to manage
and operate our business. We invest in new information technology systems designed to
improve our operations. We may have failures of these systems in the future. If these systems
cease to function properly, if these systems experience security breaches or disruptions or if
these systems do not provide the anticipated benefits, our ability to manage our operations
could be impaired, which could have a material adverse impact on our results of operations,
financial condition, and cash flows.
We may be subject to information technology system failures or network disruptions
caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of
terrorism or war, computer viruses, physical or electronic break-ins, or other events or
disruptions. System redundancy and other continuity measures may be ineffective or
inadequate, and our business continuity and disaster recovery planning may not be sufficient
for all eventualities. Such failures or disruptions could adversely impact our business by,
among other things, preventing access to our internet services, interfering with customer
transactions or impeding the assembling and shipping of our products. These events could
materially and adversely affect our reputation, financial condition and operating results.
Our information technology systems have been, and will likely continue to be, subject to
computer viruses or other malicious codes, unauthorized access attempts, phishing and other
cyberattacks. We continue to assess potential threats and make investments seeking to address
and prevent these threats, including monitoring of our networks and systems and upgrading
skills, employee training and security policies for us and our third-party providers. However,
because the techniques used in these cyberattacks change frequently and may be difficult to
detect for periods of time, we may face difficulties in anticipating and implementing adequate
preventative measures. To date, we have seen no material impact on our business or operations
from these attacks; however, we cannot guarantee that our security efforts will prevent
breaches or breakdowns to our or our third-party providers’ databases or systems. If the
information technology systems, networks or service providers we rely upon fail to function
properly or if we or one of our third-party providers suffer a loss, significant unavailability of
or disclosure of our business or stakeholder information and our business continuity plans do
not effectively address these failures on a timely basis, we may be exposed to reputational,
competitive and business harm as well as litigation and regulatory action, including
administrative fines. The costs and operational consequences of responding to breaches and
implementing remediation measures could be significant.
RISK FACTORS
–6 4–


--- page 76 ---
Our business is subject to a variety of local and overseas laws, rules, policies and other
obligations regarding data protection. Any losses or unauthorized access to or releases of
confidential information and personal data could subject us to significant reputational,
financial, legal and operational consequences.
Our business requires us to use and store confidential information, including, among other
things, personally identifiable information (“ PII”) with respect to our customers and
employees. We are subject to local and overseas laws relating to the collection, use, retention,
security and transfer of PII. In many cases, these laws apply not only to third-party
transactions, but also may restrict transfers of PII among us and our overseas subsidiaries.
Several jurisdictions have passed laws in this area, and other jurisdictions are considering
imposing additional restrictions. These laws continue to develop and may be inconsistent from
jurisdiction to jurisdiction. Complying with emerging and changing overseas requirements may
cause us to incur substantial costs or require us to change our business practices. Non-
compliance could result in significant penalties or legal liability.
To ensure our compliance with these laws and regulations relating to the collection, use,
retention, security and transfer of personal information, we have established relevant protocols
and mechanisms with respect to how we collect, store, process and use user personal data and
information. For example, we get consent from users before collecting their personal
information, we notify users the information collected and the purpose of collecting the
information, explain to them what, how and why the personal information may be shared with
third parties and also obtain consent from relevant users. Any failure by us to comply with
these public statements or with other local or overseas privacy-related or data protection laws
and regulations could result in proceedings against us by governmental entities or others. In
addition to reputational impacts, penalties could include ongoing audit requirements and
significant legal liability. We have implemented systems and processes intended to secure our
information technology systems and prevent unauthorized access to or loss of sensitive data,
including through the use of encryption and authentication technologies. As with all
companies, these security measures may not be sufficient for all eventualities and may be
vulnerable to hacking, employee error, malfeasance, system error, faulty password
management or other irregularities. For example, third parties may attempt to fraudulently
induce employees or users into disclosing user names, passwords or other sensitive
information, which may in turn be used to access our information technology systems. To help
protect customers and ourselves, we monitor our services and systems for unusual activity and
may freeze accounts under suspicious circumstances, which, among other things, may result in
the delay or loss of customer orders or impede customer access to our products and services.
RISK FACTORS
–6 5–


--- page 77 ---
We are subject to governmental economic sanctions and export controls laws that could
subject us to liability and impair our ability to compete in overseas markets. Geopolitical
tensions resulting in worsening relationship between countries and regions in which we
operate may further negatively affect our business and results of operations.
Our global operations subject us to various applicable sanctions and export controls
regulations. We have exported our products to a large number of countries and regions and
derive significant sales from exporting to these countries and regions. In the event that any of
these countries or regions which we export to imposes economic sanctions or enforces import
restriction or tariffs in relation to our products, our business and operations may be adversely
affected. Furthermore, we rely on a global network of suppliers to obtain components and raw
materials for the assembling of our products. In the event that any of the countries or regions
where we procure imposes export controls, tariffs, trade restrictions or other trade barriers on
any of the raw materials or components supplied to us, we may not be able to obtain a steady
supply of necessary components or raw materials at competitive prices, and our business and
operations may be materially and adversely affected.
Exports of our products must be made in compliance with various economic sanctions and
export controls laws in different jurisdictions. For example, U.S. economic sanctions prohibit
the provision of products and services to certain countries or regions, governments, and
persons targeted by U.S. sanctions. European Union sanctions also have similar regime to
prohibit the provision of products and services to countries or regions, governments and
persons on their respective target list. We take precautions to prevent our products from being
provided to any target of these sanctions. See “Business — Risk Management and Internal
Control” for more details. However, we cannot assure you that our products would not be
provided to those targets through independent distributors despite such precautions. Any such
provision could have negative consequences, including government investigations, penalties
and reputational harm. We could be subject to future enforcement action with respect to
compliance with governmental economic sanctions and export controls laws that result in
penalties and costs that could have a material effect on our business and operating results.
We have operations in a large number of jurisdictions. Therefore, government policies
restricting international trade and investment, such as capital controls, economic or trade
sanctions, export controls, tariffs or foreign investment filings and approvals, may affect the
demand for our products and services, impact the competitive position of our products, or
prevent us from being able to sell products in certain countries or regions. If any new tariffs,
legislation, or regulations are implemented (including those imposing economic or trade
sanctions, export control restrictions or outbound investments restrictions), or if existing trade
agreements are renegotiated, such changes could adversely affect our business, financial
condition, and results of operations.
RISK FACTORS
–6 6–


--- page 78 ---
In recent years, there have been heightened complexity in international relations. Such
tensions could reduce levels of international trade, investment, technological exchange, and
other economic activities, which would have a material adverse effect on global economic
conditions and the stability of global financial markets. Any of these factors could have a
material adverse effect on our and our customers’ business, prospects, financial condition, and
results of operations. In addition, as our business depends on markets and supplies located
overseas, economic sanctions and trade restriction measures (including tariffs) taken by
government authorities or other trade tensions or unfavorable trade policies may affect the
costs and/or marketability of our products. The current international trade tensions and
political tensions, and any escalation of such tensions, may have a material negative impact on
our ability to secure the supply of raw materials and key components necessary for our
operations and our ability to continue to sell to global customers and further grow our customer
base.
Existing and new anti-monopoly and anti-unfair competition laws and regulations may
impose higher compliance cost on us and may affect our business, financial condition and
results of operations.
We are subject to applicable antitrust and competition laws in the jurisdictions in which
we operate, and we may be subject to certain regulatory scrutiny procedures and investigations,
from time to time, by antitrust or competition regulatory authorities relating to claims of
infringement of antitrust or competition laws, or civil lawsuits and criminal proceedings with
respect to anticompetitive behaviors, in certain of these jurisdictions. Such regulatory scrutiny
procedures and investigations, may be carried out by the relevant antitrust or competition
regulatory authorities on an individual entity or a group of entities within an industry or a
segment of an industry and may relate to a range of activities including acquisitions, pricing
and other behaviors. These investigations and scrutiny procedures may be carried out by
antitrust or competition regulatory authorities in confidence and we may not become aware of
the details of such scrutiny procedures or investigations until we are formally notified of the
outcome. In addition, our competitors may resort to making allegations or complaints against
us to regulators without our knowledge which may give rise to further scrutiny and
investigations. Such scrutiny procedures, investigations, lawsuits and proceedings may result
in fines, civil liability or criminal liabilities or may result in a change in the way we operate.
Further, there can be no assurance that our business, results of operations and financial
condition will not be adversely affected by the introduction of new antirust or competition laws
in the jurisdictions in which we operate, the interpretation of existing antirust or competition
laws, or the enforcement of existing antitrust or competition laws by competent regulatory
authorities or civil antitrust litigation by private parties against us or our subsidiaries.
RISK FACTORS
–6 7–


--- page 79 ---
As we are a company incorporated under the PRC laws, we are subject to anti-monopoly
and anti-unfair competition laws and regulations of mainland China. In March 2018, the SAMR
was formed as a new governmental agency to take over, among other things, the anti-monopoly
enforcement functions from the relevant departments under the Ministry of Commerce, the
NDRC and the SAIC. Since its inception, the SAMR has continued strengthening enforcement
under the PRC Anti-Monopoly Law and the PRC Anti-unfair Competition Law. Pursuant to the
PRC Anti-Monopoly Law, the relevant operators of a concentration of undertakings which
reaches the standard for declaration shall make an advance declaration to the anti-monopoly
law enforcement authority under the State Council. The PRC Anti-Monopoly Law has been
amended in 2022 which further strengthens supervision on concentration of undertakings and
empower the anti-monopoly law enforcement authority of the State Council to require a
declaration for a concentration of undertakings that does not reach the threshold of declaration
as prescribed in certain circumstances. For more information on PRC Anti-Monopoly Law, see
“Regulatory Overview — Laws and Regulations Relating to Anti-unfair Competition” in this
document. We endeavor to comply with the PRC Anti-monopoly Law or the PRC Anti-unfair
Competition Law. Nonetheless, we may be required by competent regulatory authorities to
adjust our business practices or may be subject to penalties, such as confiscation of incomes
or potential fines, if any of our past or future acquisitions or investments, or any other business
practices involving us, is deemed to be non-compliant with the PRC Anti-monopoly Law or the
PRC Anti-unfair Competition Law. We may also be subject to claims from our competitors or
users, which could affect our business and operations. The PRC authorities may keep
supervising the competition compliance issues, and we may receive greater scrutiny and
attention from regulators and more frequent and rigid investigations or reviews by regulators,
which may increase our compliance costs and subject us to heightened risks and challenges. We
may have to spend much more personnel cost and time evaluating and managing these risks and
challenges in connection with our products and services as well as our investments in our
ordinary business course to avoid any failure to comply with these laws and regulations.
In particular, legal proceedings, including regulatory actions, may result from antitrust
scrutiny of market practises for anti-competitive conduct in foreign jurisdictions where we
operate our businesses. As we expand our operations globally, antitrust or competition
regulatory authorities in certain jurisdictions may find our cooperation with other entities, or
our conduct of business with other entities in a coordinated way, is not compliant with certain
antitrust or competition laws and regulations. Consequently, we may be subject to certain
antitrust investigations, lawsuits or regulatory proceedings, and may be subject to fines, civil
liability or criminal liability. Any failure or perceived failure by us to comply with the
anti-monopoly and anti-unfair competition laws and regulations may result in governmental
investigations or enforcement actions, litigations or claims against us and could affect our
business, financial condition and results of operations.
RISK FACTORS
–6 8–


--- page 80 ---
Our success depends largely on the continued service of our senior management and key
technical personnel and our ability to recruit, train or retain qualified personnel or
sufficient workforce while controlling our labor costs.
Much of our future success depends on the continued contributions of our senior
management and other key employees, many of whom are difficult to replace. The loss of the
services of any of our executive officers, our senior management team and other highly skilled
employees could harm our business. Competition for qualified talent is intense. Our future
success depends on our ability to attract a large number of qualified employees and retain
existing key employees. If we are unable to do so, our business and growth may be materially
and adversely affected.
We intend to hire additional qualified employees to support our business operations and
planned expansion. Our future success depends, to a significant extent, on our ability to recruit,
train or retain qualified personnel, particularly technical, marketing and other operational
personnel with experience in the relevant industry. Our experienced mid-level managers are
instrumental in implementing our business strategies, executing our business plans and
supporting our business operations and growth. The effective operation of our managerial and
operating systems also depends on the hard work and quality performance of our management
and employees. Since our industry is characterized by high demand and intense competition for
talent and labor, we can provide no assurance that we will be able to attract or retain qualified
staff or other highly skilled employees that we will need to achieve our strategic objectives.
Labor costs have increased with the economic development of developing countries and labor
shortage and inflation around the world. For example, the annual average wage of urban
employees in private sectors in mainland China rose from RMB45,761 in 2017 to RMB65,237
in 2022, according to National Bureau of Statistics of China. In addition, our ability to train
and integrate new employees into our operations may also be limited and may not meet the
demand for our business growth on a timely fashion, or at all, and rapid expansion may impair
our ability to maintain our corporate culture.
We may not be able to effectively manage any overlap or potential competition among our
different sales channels. Any deterioration of our offline and online distribution channels
could have a material adverse effect on our business and results of operations.
We sell our products through a global distribution network. We have established a
comprehensive multi-channel sales network, which comprises offline and online channels.
However, we cannot assure you that any of our measures to manage overlap or potential
competition among our sales network will be effective. As a result, the expansion of our sales
network may not lead to proportionate increase in our net revenues. Furthermore, adverse
competition or cannibalisation among the various channels may have a negative impact on the
relationship with our distribution partners, which could have a material adverse effect on our
business and results of operations.
RISK FACTORS
–6 9–


--- page 81 ---
Our current agreements with distribution partners generally do not prohibit them from
working with our competitors or from selling competing products. Our competitors may be
more effective in providing incentives to our distribution partners to favor our competitors’
products and promote their sales. In addition, if our distribution partners are not successful in
selling our products due to various reasons, including lower demand, market competition and
decreasing efficiency of distribution network, our revenue may decrease. Pursuing,
establishing and maintaining relationships with our distribution partners require significant
time and resources. We cannot assure you that we will be able to renew our agreements with
our distribution partners upon their expiry or on acceptable terms. If for any reason, our
relationship with our distribution partners deteriorates, our business and results of operations
may be materially and adversely affected.
Investment in new business strategies, acquisitions and other forms of business integration
could disrupt our ongoing business and present risks not originally contemplated, and we
may be unable to realize the anticipated benefits, synergies, cost savings or efficiencies from
acquisitions.
We have invested, and in the future, may invest, in new business strategies or
acquisitions. Throughout the years, we acquired, for example, Toshiba Lifestyle, Clivet and
KUKA Group, to expand our product portfolio, customer base and geographic footprints.
Endeavors of such kinds are inherently risky, and future ventures of such nature may involve
significant risks and uncertainties, including distraction of management from current
operations, greater than expected liabilities and expenses, inadequate return of capital and
unidentified issues not discovered in our due diligence.
We may incur significant acquisition, administrative and other costs in connection with
such transactions, including costs related to the integration of acquired businesses. These costs
may include unanticipated costs or expenses, including post-closing asset impairment charges,
legal, regulatory and contractual costs, and expenses associated with eliminating duplicate
facilities. In addition, upon completion of an investment or acquisition, we may allocate
significant resources to the integration new business into our existing business to realize
synergetic benefits. The integration process involves certain risks and uncertainties, some of
which are outside our control, and there can be no assurance that we will be able to realize the
anticipated benefits, synergies, cost savings or efficiencies. We may also experience difficulties
integrating any investments, acquisitions and/or partnerships into our existing business and
operations. There is no assurance that we will be able to successfully implement these
initiatives or that we will be able to identify successful initiatives in the future.
These acquisitions and business initiatives may also expose us to potential risks,
including risks associated with:
 the integration of new business lines, operations and personnel;
 cultural integration;
RISK FACTORS
–7 0–


--- page 82 ---
 compliance with the laws, regulations and policies that are applicable to the
acquired businesses and local business practises;
 failure to achieve the anticipated synergies, cost savings or revenues, enhancing
opportunities resulting from the acquisition of new businesses and operating those
businesses at a level of profitability acceptable to us;
 difficulty exercising control and supervision over the newly acquired operations,
including failure to implement our risk management procedures;
 the potential loss of, or harm to, relationships with our stakeholders; and
 unforeseen or hidden liabilities.
There can be no assurance that we will be able to identify and acquire, on reasonable
terms, if at all, suitable acquisition candidates or investment opportunities. We could be faced
with increasing competition for attractive acquisition candidates. Compliance with antitrust,
foreign investment review, or any other regulations may delay proposed acquisitions or prevent
us from closing such acquisitions or investments in the manner proposed, if at all. Such delay
or failure to close proposed acquisitions could impair our ability to achieve our strategic
objectives. Failure to successfully identify or undertake future investments, acquisitions,
partnerships and new business lines and strategies may have a material adverse effect on our
business, financial condition and results of operations.
We are subject to credit risk in collecting trade and note receivables due from the customers.
During the Track Record Period, a majority of our trade receivables were outstanding for
less than six months. For a substantial portion of our Smart Home Solutions in mainland China,
we generally require full payment upon delivery of goods. For other businesses, we generally
grant a credit period of 60 days. For certain customers for our Commercial & Industrial
Solutions, we may extend longer credit terms depending on the credit history of our customers
and the transaction value. During the Track Record Period, the trade and note receivables at
amortized cost turnover days of our Group were 31 days, 33 days, 35 days and 36 days for the
years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2024,
respectively. As at 31 December 2021, 2022 and 2023 and 30 April 2024, the carrying amount
of our trade and note receivables at amortized cost were approximately RMB29.4 billion,
RMB33.0 billion, RMB38.4 billion and RMB48.0 billion, respectively, after deducting the
allowance for credit losses of approximately RMB890.8 million, RMB1,394.4 million,
RMB1,548.3 million and RMB1,611.8 million during the respective period. There is no
assurance that all such amounts due to our Group will be settled on time or at all, and we are
subject to credit risk in collecting the trade and note receivables due from the customers. Our
Group’s performance, liquidity and profitability will be adversely affected if significant
amounts due to our Group are not settled on time. The bankruptcy or deterioration of the credit
condition of any of our major customers could also materially and adversely affect our
business.
RISK FACTORS
–7 1–


--- page 83 ---
We recorded significant amount of goodwill, and the impairment of goodwill could have a
material adverse effect on our operating results.
We carried a substantial amount of goodwill on our balance sheet during the Track Record
Period. As of 30 April 2024, we had RMB30.0 billion in goodwill. We test the goodwill and
intangible assets for impairment on an annual basis and when events occur or circumstances
change that indicate that the fair value of the reporting unit may be below its carrying amount.
Fair value determinations require considerable judgment and are sensitive to inherent
uncertainties and changes in estimates and assumptions regarding revenue growth rates, capital
expenditures, working capital requirements, tax rates, benefits associated with a taxable
transaction and synergies available to market participants. Declines in market conditions, a
trend of weaker than anticipated financial performance for our reporting units, a decline in our
share price for a sustained period of time or an increase in the market-based weighted average
cost of capital, among other factors, are indicators that the carrying value of our goodwill.
We are exposed to changes in the fair value of our financial assets measured at fair value
and other financial assets at amortised cost. Fluctuations in their values would affect our
results of operations and financial condition.
As at 31 December 2021, 2022 and 2023 and 30 April 2024, we recorded financial assets
measured at fair value of RMB50.9 billion, RMB45.9 billion, RMB35.6 billion and RMB41.6
billion, respectively. Fair values of financial assets measured at FVPL and FVOCI are
determined based on quoted prices in active markets, other market-observable inputs, or
unobservable inputs using valuation techniques. See note 3.3 to the Accountant’s Report
included in Appendix I to this document for more details.
For financial assets measured at FVPL and FVOCI, factors beyond our control can
significantly influence and cause adverse changes to the market-observable inputs that we use
and thereby affect the fair value of such financial assets. These factors include, but are not
limited to, general economic condition, changes in market interest rates, stability of the capital
markets, shifts in our creditworthiness and other market-driven variables. Any of these factors,
as well as others, could cause the fair values to fluctuate or our estimates to vary from actual
results, which could materially and adversely affect our results of operation and financial
condition. Additionally, judgement and estimation are required in establishing the relevant
valuation techniques where market-observable data for certain financial assets are not readily
available, which inherently involve a certain degree of uncertainty. Changes in assumptions
relating to our valuation could result in the material adjustments to the fair value of such
financial assets, which may in turn have a material adverse effect on our financial position and
results of operations.
In addition to financial assets measured at FVPL and FVOCI, we recorded other financial
assets measured at amortized cost of RMB59.2 billion, RMB111.9 billion, RMB138.4 billion
and RMB133.6 billion as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
Our other financial assets at amortized cost represent the financial products that are held for
collection of contractual cash flows, and the contractual cash flows solely represent payments
RISK FACTORS
–7 2–


--- page 84 ---
of principal and interest. Our other financial assets at amortized cost primarily consist of
constant return financial products, which mainly include term bank deposits with initial terms
over one year, custom deposits and non-transferable certificates of deposits deposited in
financial institutions, which were subsequently measured using the effective interest method.
These financial assets at amortised cost are subject to credit risks. We perform impairment
assessment on these financial assets by considering the risk of default of the counterparties
with reference to credit ratings assigned by international credit-rating agencies. Any failure or
distress of banks or financial institutions with which we have a commercial relationship, or any
events involving limited liquidity, defaults, non-performance or other adverse developments
that affect the financial services industry in general (or any concerns or rumors about events
of these kinds) may cause a substantial decrease in the value of our other financial assets at
amortised cost, which may in turn adversely affect our results of operations and financial
condition.
Our financial assets denominated in foreign currencies are also subject to foreign
currency risks. See “— Fluctuations in exchange rates may result in foreign currency exchange
losses and may have a material adverse effect on your investment” for more information.
We are exposed to fair value changes of other financial liabilities at fair value through profit
or loss.
We operate a technology industry investment fund. For details, see “Financial
Information — Indebtedness — Other Financial Liabilities at Fair V alue Through Profit or
Loss.” For the amount raised from limited partners, we have contractual obligation to settle the
liabilities with the limited partners at the fund’s prevailing fair value and the management
designates such obligation as other financial liabilities at fair value through profit or loss. As
at 31 December 2021, 2022 and 2023 and 30 April 2024, our other financial liabilities at fair
value through profit or loss amounted to nil, RMB1,580.8 million, RMB1,346.7 million and
RMB1,174.0 million, respectively. The determination of the fair value changes requires us to
make significant estimates, which may be subject to material changes, and therefore inherently
involves a certain degree of uncertainty. Factors beyond our control can significantly influence
and cause adverse changes to the estimates we use and thereby affect the fair value of such
liabilities. Any of these factors, as well as others, could cause our estimates to vary from actual
results, which could materially and adversely affect our results of operations and financial
condition.
Our products and services may experience quality problems from time to time that can result
in harm to our reputation. Product-related liability, product recall costs, and significant
return or exchange could also adversely affect our business and financial performance.
We cannot assure you that our quality control measures will be as effective as we expect.
There can be no assurance that we will be able to detect and fix all defects in our products. We
may face the risk of significant monetary exposure to claims if we fail to implement and
maintain our quality control steps and our products do not perform as expected or contain
design and/or manufacturing defects or malfunctions.
RISK FACTORS
–7 3–


--- page 85 ---
If our products are defective, the sale of such products could expose us to product liability
claims relating to personal injury or property damage and may require product recalls or other
actions. Third parties who are subject to such injury or damage may bring claims or legal
proceedings against us. Certain product liability claims may be the result of defects from
components and parts purchased from our suppliers. Attempting to enforce our rights against
such suppliers and manufacturers may be expensive, time-consuming and ultimately futile.
Such suppliers and manufacturers may not be able to indemnify us for the losses resulting from
such defects and product liability claims in full or at all. Further, our insurance coverage might
be insufficient to fully cover all damages sought and the claiming process might be prolonged.
As a result, any material product liability claim or litigation could result in the expenditure of
funds and managerial efforts in defending them and could have a negative impact on our
reputation. We recorded provisions for product liability claims that amounted to RMB772.9
million, RMB1,122.8 million, RMB1,242.2 million and RMB399.2 million in 2021, 2022 and
2023 and for the four months ended 30 April 2024, respectively. Further, a product liability
claim could generate substantial negative publicity about our products and brand, which would
have a material adverse effect on our business prospects and financial condition.
Our reputation could be adversely impacted in the event of a significant product recall or
product-related litigation due to product defects. We are subject to warranty and product
liability claims in the ordinary course of our business. There can be no assurance that we will
not experience material product liability losses arising from such claims in the future and that
these will not have a negative impact on our reputation and, consequently, our sales. There can
be no assurance that such provisions will be adequate for liability ultimately incurred. In
addition, consumer products are becoming increasingly sophisticated and complicated as rapid
advancements in technologies occur. This trend may increase our product quality and liability
exposure. Given the association of our individual products with our overall brand, an issue with
one of our products could negatively affect demand for other products of ours or the reputation
of us as a whole, which could have an adverse impact on the business, results of operations and
financial condition of us. See “— Maintaining our brand image is critical to our success, and
any failure to do so could severely damage our reputation and brands, which would have a
material adverse effect on our business, financial condition and results of operations.”
We adhere to our product return policies and generally do not allow our distributors and
retailers to return products other than due to product quality issues or product returns from
consumers or recalls, which is in line with customary industry practice. However, we may be
required by law to adopt new or amend existing return and exchange policies from time to time.
Should we be the ultimate responsible party for the costs and losses associated with significant
return and exchange, our results of operations may be materially and adversely affected. If our
return and exchange policy is misused by a significant number of consumers, our costs may
increase significantly and our results of operations may be materially and adversely affected.
If we adopt more customer-friendly return and exchange policies, these policies also subject us
to additional costs and expenses which we may not recoup through increased revenue, which
may materially negatively affect our results of operations. If we adopt less customer-friendly
return and exchange policies to reduce such costs and expenses, our users may be dissatisfied,
which may result in loss of existing users or failure to acquire new users at a desirable pace,
which may materially and adversely affect our results of operations.
RISK FACTORS
–7 4–


--- page 86 ---
The strategic priorities and financial performance of many of our businesses are subject to
the market and other dynamics related to carbon neutrality and ESG, which can pose risks
in addition to opportunities.
There is an increasing focus from certain investors, customers and other parties in society
concerning corporate responsibility, specifically related to ESG factors. Accordingly, there is
an increased emphasis on corporate responsibility ratings and a number of third parties provide
reports on companies in order to measure and assess ESG performance, which pose
reputational, regulatory and other risks on us. We believe that it is our responsibility to devote
substantial time and resources to develop technology and products designed to reduce carbon
footprint. In the meantime, given the nature of our businesses and the industries we serve, we
must anticipate and respond to market, technological, regulatory and other changes driven by
broader trends related to decarbonization efforts in response to climate change, and these
changes present both risks and opportunities for our businesses. The process of developing new
technology products and enhancing existing products to mitigate climate change is often
complex, costly and uncertain, and we may pursue strategies or make investments that do not
prove to be commercially successful in the time frames expected, or at all, which could impact
our operating results and financial conditions. Furthermore, our success in advancing
decarbonization objectives across our businesses will depend in part on the actions of
governments, regulators and other market participants to invest in infrastructure, create
appropriate market incentives and to otherwise support the development of new technologies.
In addition, the ESG factors by which companies’ corporate responsibility practices are
assessed may change, which could result in greater expectations of us and cause us to
undertake costly initiatives to satisfy such new criteria. Alternatively, if we are unable to
satisfy such new criteria or we are unable to respond or perceived to be inadequately
responding to sustainability concerns, investors may conclude that our policies with respect to
corporate responsibility are inadequate and choose to purchase products from a competitor of
us. We risk damage to our brands and our reputation in the event that our corporate
responsibility procedures or standards do not meet the standards set by various third parties.
In addition, in the event that we communicate certain initiatives and goals regarding ESG
matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals,
or we could be criticized for the scope of such initiatives or goals. Any of these circumstances
could cause negative publicity and material and adverse effect on our business, financial
condition and results of operations. Moreover, not all of our competitors may seek to establish
climate or other ESG targets and goals, or at a comparable level to ours, which could result in
our competitors achieving competitive advantages through lower costs in supply chain or
operation, which could adversely affect our business, results of operations, financial condition
and prospects.
We are subject to a broad range of increasingly strict laws and regulations relating to,
among other areas, the environment, occupational health and safety and labor practices, in
jurisdictions in which we operate. In particular, in terms of environmental protection, we are
required to comply with laws, regulations and various industry standards relating to air
emissions, discharges of waste water, waste gas and solid waste, noise pollution, toxic
RISK FACTORS
–7 5–


--- page 87 ---
chemicals, waste treatment, and the energy efficiency of certain products, among other things.
We are also subject to periodic monitoring by environmental protection authorities in various
jurisdictions in which we operate. Compliance with these laws and regulations is costly, and
failure to comply could subject us to, among other things, legal liability, fines, suspension of
production, a loss of license to operate certain facilities and other sanctions, unexpected
interruptions to operations, securities litigation and a general loss of investor confidence, any
one of which could have a material adverse impact on our business prospects, financial
condition and results of operations as well as the market value of our Shares. Furthermore,
future developments such as new and more restrictive or changes to existing laws and
regulations relating to, among other areas, the environmental, occupational health and safety
and labor practices, more aggressive enforcement of existing laws and regulations or the
discovery of presently unknown environmental conditions may require us to make material
changes to our products and operations or require additional expenditures, which could have
an adverse effect on our business, financial condition and results of operations.
Our business may be impacted by political events, war, terrorism, public health issues,
natural disasters and other business interruptions.
War, terrorism, geopolitical uncertainties, public health issues and other business
interruptions could cause damage or disruption to international commerce and the global
economy, and thus could have a material adverse effect on us, our suppliers, logistics service
providers, distribution partners and customers. Our business operations are subject to
interruption by, among others, natural disasters, whether as a result of climate change or
otherwise, fire, power shortages and other industrial accidents, terrorist attacks and other
hostile acts, labor disputes, public health issues, demonstrations or strikes, and other events
beyond our control. Such events could decrease demand for our products, make it difficult or
impossible for us to make and deliver products to our customers, or to receive components or
products from our suppliers, and create delays and inefficiencies in our supply chain. While our
suppliers are required to maintain safe working environments and operations, an industrial
accident could occur and could result in disruption to our business and harm to our reputation.
In the event of a natural disaster or major public health issue, we could incur significant losses,
require substantial recovery time and experience significant expenditures in order to resume
operations.
Divestitures of businesses and assets may have a material and adverse effect on our business
and financial condition.
We may undertake in the future, partial or complete divestitures or other disposal
transactions in connection with certain of our businesses and assets, particularly ones that are
not closely related to our core focus areas or might require excessive resources or financial
capital, to help our company meet its objectives. These decisions are largely based on our
management’s assessment of the business models and likelihood of success of these businesses.
RISK FACTORS
–7 6–


--- page 88 ---
However, our judgment could be inaccurate, and we may not achieve the desired strategic and
financial benefits from these transactions. Our financial results could be adversely affected by
the impact from the loss of earnings and corporate overhead contribution/allocation associated
with divested businesses.
Dispositions may also involve continued financial involvement in the divested business,
such as through guarantees, indemnities or other financial obligations. Under these
arrangements, performance by the divested businesses or other conditions outside of our
control could affect our future financial results. We may also be exposed to negative publicity
as a result of the potential misconception that the divested business is still part of our
consolidated group. On the other hand, we cannot assure you that the divesting business would
not pursue opportunities to provide services to our competitors or other opportunities that
would conflict with our interests. If any conflicts of interest that may arise between the
divesting business and us cannot be resolved in our favor, our business, financial condition,
results of operations could be materially and adversely affected.
Furthermore, reducing or eliminating our ownership interests in these businesses might
negatively affect our operations, prospects, or long-term value. We may lose access to
resources or know-how that would have been useful in the development of our own business.
Our ability to diversify or expand our existing businesses or to move into new areas of business
may be reduced, and we may have to modify our business strategy to focus more exclusively
on areas of business where we already possess the necessary expertise. We may sell our
interests too early, and thus forego gains that we otherwise would have received had we not
sold. Selecting businesses to dispose of or spin off, finding buyers for them (or the equity
interests in them to be sold) and negotiating prices for what may be relatively illiquid
ownership interests with no easily ascertainable fair market value will also require significant
attention from our management and may divert resources from our existing business, which in
turn could have an adverse effect on our business operations.
Having considered, amongst others, the market conditions, financing needs and
development of the subsidiaries and business, we intend to spin off Midea Lighting and Annto
Smart Logistics and retain the possibility to spin off the Robotics & Automation System
Related Business. We have obtained from the Hong Kong Stock Exchange a waiver from strict
compliance with the requirements under Practice Note 15 in relation to the spin-off of Midea
Lighting; and a waiver from strict compliance with the three-year restriction requirement under
paragraph 3(b) of Practice Note 15 in relation to the potential spin-offs of Midea Lighting (in
the event that Midea Lighting submits a new listing application to another stock exchange in
the PRC), Annto Smart Logistics and the Robotics & Automation System Related Business. For
additional information, see “Waivers and Exemptions — Waiver in Respect of Strict
Compliance with Practice Note 15 and the Three-Y ear Restriction on Spin-Offs.”
RISK FACTORS
–7 7–


--- page 89 ---
Fluctuations in exchange rates may result in foreign currency exchange losses and may have
a material adverse effect on your investment.
A substantial portion of our revenues and cost of revenue is denominated in RMB.
However, as we operate part of our business in foreign jurisdictions, we are subject to risks
associated with foreign currency exchange fluctuations. Through other gains or losses, we
incurred net foreign exchange gains of RMB733.3 million in 2021, net foreign exchange losses
of RMB435.6 million in 2022 and net foreign exchange losses of RMB340.0 million in 2023
and, through finance cost, we incurred net exchange gains of RMB64.9 million in 2021, net
exchange losses of RMB71.5 million in 2022 and net exchange losses of RMB564.7 million in
2023. Through other gains or losses, we incurred net foreign exchange gains of RMB234.7
million for the four months ended 30 April 2023 and net foreign exchange losses of
RMB2,272.8 million for the four months ended 30 April 2024, respectively, and, through
finance cost, we incurred net foreign exchange losses of RMB326.6 million for the four months
ended 30 April 2023 and net exchange gains of RMB171.6 million for the four months ended
30 April 2024, respectively. In addition, we recognized a currency translation loss of
RMB231.7 million and RMB53.6 million through other comprehensive losses in 2021 and
2023, respectively, and recognized a currency translation gain of RMB1,222.8 million through
other comprehensive income in 2022. For the four months ended 30 April 2023 and 2024, we
recognized a currency translation loss of RMB478.0 million and RMB488.7 million,
respectively, through other comprehensive losses. See “Financial Information — Major Factors
Affecting Our Results of Operations — Foreign Currency Fluctuations.” We cannot guarantee
that future fluctuations of exchange rates would not have a material adverse impact on our
financial condition and results of operations.
Changes in the value of foreign currencies could increase our RMB costs for, or reduce
our RMB revenues from, our foreign operations. The fluctuation of foreign exchange rates also
affects the value of our monetary and other assets and liabilities denominated in foreign
currencies. We cannot guarantee that future fluctuations of exchange rates would not have a
material adverse impact on our financial condition and results of operations.
During the Track Record Period, we have maintained certain hedging policies, such as
leveraging certain derivative instruments, in an effort to reduce our exposure to foreign
exchange risks, and we may maintain, or further enhance, our hedging policies in the future.
Our derivative financial instruments mainly include forwards, options and futures contracts. As
at 31 December 2021, 2022 and 2023 and 30 April 2024, our derivative financial liabilities
amounted to RMB166.6 million, RMB314.5 million, RMB415.5 million and RMB657.1
million, respectively, while our derivative financial assets amounted to RMB1,298.8 million,
RMB5,029.1 million, RMB3,753.1 million and RMB5,708.4 million, respectively. However,
the availability and effectiveness of these hedging measures may be limited, and we may not
be able to adequately cover our exposure or at all.
RISK FACTORS
–7 8–


--- page 90 ---
It is difficult to predict how external factors may impact the exchange rate of RMB to
foreign currencies in the future. There can be no assurance that such exchange rate will remain
stable against USD or other foreign currencies in the market. Any appreciation of RMB against
foreign currencies may affect our overseas operations. Conversely, if we decide to convert our
RMB into Hong Kong dollars for the purpose of making payments for dividends on our H
Shares or for other business purposes, any depreciation of RMB against the Hong Kong dollar
would have a negative effect on the value of, and any dividends payable on, our H Shares.
We are subject to certain regulatory requirements over foreign currency conversion and
remittance.
We receive substantial payments from our operations in mainland China in RMB and may
need to convert Renminbi into other currencies payment of dividends, if any, to holders of our
Shares, and to fund our business activities outside mainland China. The convertibility of RMB
into foreign currencies and, in certain cases, the remittance of currency out of mainland China
are subject to certain regulatory requirements under PRC laws over foreign currency
conversion and remittance. Shortages in the availability of foreign currency may restrict our
ability to remit sufficient foreign currency to pay dividends or other payments, or otherwise
satisfy our foreign currency denominated obligations.
Under existing foreign exchange regulations of mainland China, payment of current
account items, including profit distributions and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior approval from SAFE or its local
branches by complying with certain procedural requirements. However, prior registration and
other procedures with competent government authorities is required where Renminbi is to be
converted into foreign currency and remitted out of mainland China to pay capital expenses.
If we cannot fulfill the regulatory requirements over foreign currency conversion to obtain
sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to
pay dividends in foreign currencies to our Shareholders. Further, there is no assurance that new
regulations will not be promulgated in the future that would have further requirements on the
remittance of Renminbi into or out of mainland China. Any existing and future requirements
on currency exchange may limit our ability to purchase raw materials and components outside
of mainland China or otherwise fund any future business activities that are conducted in
foreign currencies.
We could be subject to changes in our tax rates, the adoption of new local or overseas tax
legislation or exposure to additional tax liabilities.
The PRC EIT Law imposes a tax rate of 25% on business enterprises. Some of our
subsidiaries are entitled to preferential tax treatment. For example, certain of our subsidiaries
in the mainland China were approved as High-tech Enterprises, and they were subject to a
preferential corporate income tax rate of 15% during the Track Record Period. See “Financial
Information — Taxation” in this document. To the extent there are any changes in the laws and
regulations governing preferential tax treatment, or increases in our effective tax rate due to
any other reasons, our tax liability would increase correspondingly. In addition, the PRC
authorities may amend or restate regulations on income, withholding, value-added, and other
RISK FACTORS
–7 9–


--- page 91 ---
taxes. Non-compliance with mainland China tax laws and regulations may also result in
penalties or fines imposed by relevant tax authorities. Adjustments or changes to mainland
China tax laws and regulations and tax penalties or fines could affect our businesses, financial
condition and results of operations.
We also operate in countries and regions overseas and are subject to various taxes. See
“Financial Information — Taxation” in this document. Due to the fact that the tax environment
can be different in different jurisdictions and that the regulations regarding various taxes,
including but not limited to corporate income tax, are complex, our overseas operations may
expose us to risks associated with the overseas tax policy changes. Due to economic and
political conditions, tax rates in various jurisdictions may be subject to significant change. Our
effective tax rates could be affected by changes in the mix of earnings in countries with
differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or
changes in tax laws or their interpretation. Dealing with such regulatory complexities and
changes may require us to divert more managerial and financial resources, which in turn could
affect our results of operations.
We are also subject to the examination of our tax returns and other tax matters by local
and overseas tax authorities and governmental bodies. We regularly assess the likelihood of an
adverse outcome resulting from these examinations to determine the adequacy of our provision
for taxes. There can be no assurance as to the outcome of these examinations. If our effective
tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount
in excess of amounts previously accrued, our financial condition, operating results and cash
flows could be adversely affected.
We may need additional capital, and financing may not be available on terms acceptable to
us, or at all.
We primarily rely on cash flow generated from operating activities to fund our current
operations during the Track Record Period. We believe that our current cash and cash
equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated
cash needs for the next 12 months. We may, however, require additional cash resources due to
changed business conditions or other future developments, including any expansion into new
business or geographic markets, marketing initiatives or investments we may decide to pursue.
If our business does not generate sufficient cash flow from operations to fund these activities
and sufficient funds are not otherwise available from our current or future credit facility, we
may need to obtain additional equity or debt financing. If such financing is not available to us
on satisfactory terms or in a timely manner, our ability to operate and expand our business or
to respond to competitive pressures could be harmed. Moreover, if we raise additional capital
by issuing equity securities or securities convertible into equity securities, the ownership of our
existing Shareholders may be diluted. The holders of new securities may also have rights,
preferences or privileges which are senior to those of existing holders of ordinary shares. In
addition, any indebtedness we incur may subject us to covenants that restrict our operations and
our ability to effectuate certain corporate decisions for our business and will require interest
and principal payments that could create additional cash demands and financial risk for us.
RISK FACTORS
–8 0–


--- page 92 ---
We have limited insurance coverage which could expose us to significant costs and business
disruption.
We currently have insurance coverage for our properties and fixed assets, plant and
equipment and inventories, which we consider to be exposed to major business risks. We also
maintain third-party insurance policies covering certain potential risks and liabilities including
product liability and property liability. We do not, however, carry insurance in respect of
certain risks that we believe are not insured under customary industry practise in mainland
China, or which are uninsurable on commercially acceptable terms, if at all, such as those
caused by war, nuclear contamination, tsunami, pollution, acts of terrorism and civil disorder.
Accordingly, there may be circumstances in which we will not be covered or compensated, in
part or at all, for specific losses, damages and liabilities. We cannot guarantee that our
insurance coverage is sufficient to cover potential losses. Nevertheless, we would remain
obliged for any bank borrowings or other financial obligations related to the property.
In addition, we are subject to the risks of losses arising from the misappropriation of cash
or other assets by our employees or third parties, which losses may not be sufficiently covered
by our insurance policies. Any risk that is not adequately covered by insurance may have an
adverse effect on our business, results of operations and financial condition.
It may be complex to effect service of process upon us or our management or to enforce
against them or us any judgments obtained from foreign courts.
We are a company incorporated under the PRC laws and a majority of our assets are
located in mainland China. In addition, most of our Directors, Supervisors and senior
management reside in mainland China. As a result, it may be complex for investors to effect
service of process outside of mainland China upon us, our Directors, Supervisors or senior
management or to enforce judgments obtained against us in courts outside mainland China. A
judgment of a court of another jurisdiction may be reciprocally recognized or enforced in
mainland China only if the jurisdiction has a treaty with mainland China or if the jurisdiction
has been otherwise deemed by the courts of mainland China to satisfy the requirements for
reciprocal recognition, subject to the satisfaction of other requirements. However, mainland
China is not a party to treaties providing for the reciprocal enforcement of judgments of courts
with certain foreign countries such as the United States, and enforcement in mainland China
of judgments of a court in these jurisdictions may consequently be difficult or impossible. On
July 3, 2008, the Supreme People’s Court and the Government of the Hong Kong Special
Administrative Region signed the Arrangement between the Mainland and the HKSAR on
Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases
under Consensual Jurisdiction (ʝႩ̙ձੂБ຅ԫɛ՘ᙄ၍
τર) (the “2008 Arrangement”). Under the 2008 Arrangement, where
any designated court of mainland China or Hong Kong court has made an enforceable final
judgment requiring payment of money in a civil and commercial case pursuant to a choice of
court agreement, the party concerned may apply to the relevant court of mainland China or
Hong Kong court for recognition and enforcement of the judgment. The 2008 Arrangement
took effect on August 1, 2008, but the effectiveness of any action brought under the
RISK FACTORS
–8 1–


--- page 93 ---
arrangement remains uncertain. On January 18, 2019, the Supreme People’s Court and the
Department of Justice under the Government of the Hong Kong Special Administrative Region
signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (τ
ર) (the “2019 Arrangement”), which became effective on 29 January 2024. The 2019
Arrangement regulates, among others, the scope and particulars of judgments, the procedures
and methods of the application for recognition or enforcement, the review of the jurisdiction
of the court that issued the original judgment, the circumstances where the recognition and
enforcement of a judgment shall be refused, and the approaches towards remedies for the
reciprocal recognition and enforcement of judgments in civil and commercial matters between
the courts in mainland China and those in Hong Kong. However, the 2008 Arrangement will
remain applicable to a “choice of court agreement in writing” within the meaning of 2008
Arrangement which is made before the effective date of 2019 Arrangement.
We may be the subject of anti-competitive, harassing, or other detrimental conduct by third
parties including complaints to regulatory agencies, negative social media postings, and the
public dissemination of malicious assessments of our business that could harm our
reputation and cause us to lose market share, customers and revenues.
We may be the target of anti-competitive, harassing, or other detrimental conduct by third
parties. Such conduct includes complaints, anonymous or otherwise, to regulatory agencies. We
may be subject to government or regulatory investigation as a result of such third-party conduct
and may be required to expend significant time and incur substantial costs to address such
third-party conduct, and there is no assurance that we will be able to conclusively refute each
of the allegations within a reasonable period of time, or at all. Additionally, allegations,
directly or indirectly against us, may be posted online by anyone, whether or not related to us,
on an anonymous basis. Customers value readily available information concerning distributors,
retailers, manufacturers, and their products and services and often act on such information
without further investigation or authentication and without regard to its accuracy. The
availability of information on social media is virtually immediate, as is its impact. Social media
immediately publish the content their subscribers and participants post, often without filters or
checks on the accuracy of the content posted. Information posted may be inaccurate and
adverse to us, and it may harm our reputation, business operations and financial performance.
The harm may be immediate without affording us an opportunity for redress or correction. Our
reputation may be negatively affected as a result of the public dissemination of anonymous
allegations or malicious statements about our business, which in turn may cause us to lose
market share, customers and revenues.
RISK FACTORS
–8 2–


--- page 94 ---
Unfavorable results of legal and regulatory proceedings could materially adversely affect
our business and financial condition and performance.
We are or may in the future become subject to a variety of litigation and legal compliance
risks. Unfavorable outcomes regarding these assessments could have a material adverse effect
on our financial statements in any particular reporting period. See “Financial Information —
Contingent Liabilities” fore more details. Results of legal and regulatory proceedings cannot
be predicted with certainty and for some matters, such as class actions, no insurance is
cost-effectively available. Regardless of merit, legal and regulatory proceedings may be both
time-consuming and disruptive to our operations and could divert the attention of our
management and key personnel from our business operations. Such proceedings could also
generate significant adverse publicity and have a negative impact on our reputation and brand
image, regardless of the existence or amount of liability. We estimate loss contingencies and
establish accruals as required by the applicable accounting standard, based on our assessment
of contingencies where liability is deemed probable and reasonably estimable, in light of the
facts and circumstances known to us at a particular point in time. Subsequent developments in
legal proceedings, volatility in foreign currency exchange rates and other factors may affect
our assessment and estimates of the loss contingency recorded and could result in an adverse
effect on our results of operations in the period in which a liability would be recognized or cash
flows for the period in which amounts would be paid. Actual results may significantly vary
from our reserves.
Uncertainties embedded in the legal systems of certain geographic markets where we operate
could affect our business, financial condition and results of operations.
Legal systems of the geographic markets where we operate vary significantly from
jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on written statutes
and others are based on common law. Unlike the common law system, prior court decisions
under the civil law system may be cited for reference but have limited precedential value.
The legal systems of some geographic markets where we operate are consistently
evolving. Laws and regulations that are recently enacted may not sufficiently cover all aspects
of economic activities in such markets. In particular, the interpretation and enforcement of
these laws and regulations are subject to future implementations, and the application of some
of these laws and regulations to our businesses is not settled. Since local administrative and
court authorities are authorized to interpret and implement statutory provisions and contractual
terms, it may be difficult to evaluate the outcome of administrative and court proceedings and
the level of legal protection we have in many of the geographic markets where we operate.
Local courts may have discretion to reject enforcement of foreign awards or arbitration awards.
These uncertainties may affect our judgment on the relevance of legal requirements and our
ability to enforce our contractual rights or claims. In addition, the regulatory uncertainties may
be exploited through unmerited or frivolous legal actions, claims concerning the conduct of
third parties, or threats in attempt to extract payments or benefits from us.
RISK FACTORS
–8 3–


--- page 95 ---
Furthermore, many of the legal systems in the geographic markets where we operate are
based in part on their respective government policies and internal interpretations, some of
which are not published on a timely basis or at all and may have retroactive effects. There are
other circumstances where key regulatory definitions are unclear, imprecise or missing, or
where interpretations that are adopted by regulators are inconsistent with interpretations
adopted by a court in analogous cases. As a result, we may not be aware of our violation of
certain policies or rules until sometime after the violation. In addition, administrative and court
proceedings in certain of our geographic markets may be protracted, resulting in substantial
costs and diversion of resources and management attention.
It is possible that a number of laws and regulations may be adopted or construed to be
applicable to us in our geographic markets and elsewhere that could affect our businesses and
operations. Scrutiny and regulations of the industries in which we operate may further increase,
and we may be required to devote additional legal and other resources to addressing these
regulations. Changes in current laws or regulations or the imposition of new laws and
regulations in our geographic markets may slow the growth of our industries and affect our
business, financial condition and results of operations.
We are a mainland China enterprise and we are subject to mainland China tax on our global
income and any gains on the sales of H Shares and dividends on the H Shares may be subject
to mainland China income taxes.
Under the PRC EIT Law and its implementation rules, subject to any applicable tax treaty
or similar arrangement between the mainland China and a non-mainland China investor’s
jurisdiction of residence that provides for a different income tax arrangement, mainland China
withholding tax at the rate of 10% is normally applicable to dividends from mainland China
sources payable to investors that are non-mainland China resident enterprises, which do not
have an establishment or place of business in mainland China, or which have an establishment
or place of business in mainland China if the relevant income is not effectively connected with
such establishment or place of business. Any gains realized on the transfer of shares by such
investors are subject to a 10% mainland China income tax rate if such gains are regarded as
income from sources within mainland China unless a treaty or similar arrangement provides
otherwise.
Under the PRC Individual Income Tax Law () and its
implementation rules, dividends from sources within mainland China paid to foreign individual
investors who are not mainland China residents are generally subject to a mainland China
withholding tax at a rate of 20% and gains from mainland China sources realized by such
investors on the transfer of shares are generally subject to a 20% mainland China income tax
rate, in each case, subject to any reduction or exemption set forth in applicable tax treaties and
laws in mainland China. Pursuant to the Circular on Questions Concerning the Collection of
Individual Income Tax Following the Repeal of Guo Shui Fa [1993] No. 045 (਷೼೯
[1993]045) (Guo Shui Han [2011] No. 348)
(਷೼Ռ[2011]348 ໮) dated June 28, 2011, issued by the SA T, dividends paid to non-mainland
China resident individual holders of H Shares are generally subject to individual income tax
RISK FACTORS
–8 4–


--- page 96 ---
of mainland China at the withholding tax rate of 10%, in which the non-mainland China
resident individual holder of H Shares resides as well as the tax arrangement between mainland
China and Hong Kong. Non-mainland China resident individual holders who reside in
jurisdictions that have not entered into tax treaties with mainland China are subject to a 20%
withholding tax on dividends received from us. However, pursuant to the Circular Declaring
that Individual Income Tax Continues to be Exempted over Income of Individuals from
Transfer of Shares () issued by the
MOF of mainland China and the SA T on March 30, 1998, gains of individuals derived from the
transfer of listed shares of enterprises may be exempt from individual income tax. In addition,
on December 31, 2009, the MOF, the SA T and the CSRC jointly issued the Circular on
Relevant Issues Concerning the Collection of Individual Income Tax over the Income Received
by Individuals from Transfer of Listed Shares Subject to Sales Limitation (ɛᔷᜫɪ
) (Cai Shui [2009] No. 167) which states
that individuals’ income from the transfer of listed shares on certain domestic exchanges shall
continue to be exempted from individual income tax, except for the relevant shares which are
subject to sales restrictions as defined in the Supplementary Circular on Relevant Issues
Concerning the Collection of Individual Income Tax over the Income Received by Individuals
from Transfer of the Listed Shares Subject to Sales Limitations (ࠢ
) (Cai Shui [2010] No. 70). As of the Latest
Practicable Date, the aforesaid provision has not expressly provided that individual income tax
shall be collected from non-mainland China resident individuals on the sale of shares of
mainland China resident enterprises listed on overseas stock exchanges.
If mainland China income tax is imposed on gains realized from the transfer of our H
Shares or on dividends paid to our non-mainland China resident investors, the value of your
investment in our H Shares may be affected. Furthermore, our Shareholders whose jurisdictions
of residence have tax treaties or arrangements with mainland China may not qualify for
benefits under such tax treaties or arrangements.
RISKS RELATING TO THE GLOBAL OFFERING
We will be concurrently subject to listing and regulatory requirements of mainland China
and Hong Kong .
As we are listed on the Shenzhen Stock Exchange and will be listed on the Main Board
in Hong Kong, we will be required to comply with the listing rules (where applicable) and other
regulatory regimes of both jurisdictions, unless an exemption is available or a waiver has been
obtained. Accordingly, we may incur additional costs and resources in continuously complying
with all sets of listing rules in the two jurisdictions.
RISK FACTORS
–8 5–


--- page 97 ---
The characteristics of the A share and H share markets may differ.
Our A Shares are listed and traded on the Shenzhen Stock Exchange. Following the
Global Offering, our A Shares will continue to be traded on the Shenzhen Stock Exchange and
our H Shares will be traded on the Stock Exchange. Under current laws and regulations of
mainland China, without the approval from the relevant regulatory authorities, our H Shares
and A Shares are neither interchangeable nor fungible, and there is no trading or settlement
between the H Share and A Share markets. With different trading characteristics, the H Share
and A Share markets have divergent trading volumes, liquidity and investor bases, as well as
different levels of retail and institutional investor participation. As a result, the trading
performance of our H Shares and A Shares may not be comparable. Nonetheless, fluctuations
in the price of our A Shares may adversely affect the price of our H Shares, and vice versa. Due
to the different characteristics of the H Share and A Share markets, the historical prices of our
A Shares may not be indicative of the performance of our H Shares. Y ou should therefore not
place undue reliance on the trading history of our A Shares when evaluating the investment
decision in our H Shares.
There has been no prior public market for our H Shares, and an active trading market for
our H Shares may not develop or be sustained.
Prior to the Global Offering, there was no public market for our H Shares. We cannot
assure you that a public market for our H Shares with adequate liquidity and trading volume
will develop and be sustained following the completion of the Global Offering. In addition, the
Offer Price of our H Shares is expected to be fixed by agreement between the Joint Global
Coordinators (for themselves and on behalf of the Underwriters) and us, and may not be an
indication of the market price of our H Shares following the completion of the Global Offering.
If an active public market for our H Shares does not develop following the completion of the
Global Offering, the market price and liquidity of our H Shares may be materially and
adversely affected.
The price and trading volume of our H Shares may be volatile, which could lead to
substantial losses to investors.
The price and trading volume of our H Shares may be subject to significant volatility in
response to various factors beyond our control, including the general market conditions of the
securities in Hong Kong and elsewhere in the world. The Hong Kong Stock Exchange and other
securities markets have, from time to time, experienced significant price and trading volume
volatility that are not related to the operating performance of any particular company. The
business and performance and the market price of the shares of other companies engaging in
similar business may also affect the price and trading volume of our Shares. In addition to
market and industry factors, the price and trading volume of our Shares may be highly volatile
for specific business reasons, such as fluctuations in our revenue, earnings, cash flows,
investments, expenditures, regulatory developments, relationships with our suppliers,
movements or activities of key personnel, or actions taken by competitors. Moreover, shares
of other companies listed on the Hong Kong Stock Exchange have experienced price volatility
in the past, and it is possible that our H Shares may be subject to changes in price not directly
related to our performance.
RISK FACTORS
–8 6–


--- page 98 ---
Future sales or perceived sales of substantial amounts of our H Shares in the public market
could have a material adverse effect on the prevailing market price of our H Shares and our
ability to raise additional capital in the future, or may result in dilution of your
shareholding.
The market price of our H Shares and our ability to raise equity capital in the future at
a time and price that we deem appropriate could be negatively impacted as a result of future
sales of a substantial number of our H Shares or other securities relating to our H Shares in the
public market, especially by our Directors, executive officers and Largest Group of
Shareholders, or the issuance of new shares or other securities, or the perception that such sales
or issuances may occur. In addition, our Shareholders may experience dilution in their holdings
if we issue more securities in the future. Furthermore, we may issue Shares pursuant to any
existing or future share option incentive schemes, which would further dilute our Shareholders’
interests in our Company. New shares or shares-linked securities issued by us may also confer
rights and privileges that take priority over those conferred by the H Shares. Certain amount
of the Shares controlled by our Largest Group of Shareholders are subject to certain lock-up
periods beginning on the date on which trading in our Shares commences on the Hong Kong
Stock Exchange. While we currently are not aware of any intention of such persons to dispose
of significant amounts of their Shares after the expiry of the lock-up periods, we cannot assure
you that they will not dispose of any Shares they may own now or in the future. Market sale
of Shares by such Shareholders and the availability of these Shares for future sale may have
a negative impact on the market price of our Shares.
In addition, while investors subscribing shares in the Global Offering are not subject to
any restrictions on the disposal of the H Shares they subscribed (except as disclosed in the
section headed “Cornerstone Investors”), they may have existing arrangements or agreement to
dispose part or all of the H Shares they hold immediately or within certain period upon
completion of the Global Offering for legal and regulatory, business and market, or other
reasons. Such disposal may occur within a short period or any time or period after the Listing
Date. Any sale of the H Shares subscribed by such investors pursuant to such arrangement or
agreement could adversely affect the market price of our H Shares and any sizeable sale could
have a material and adverse effect on the market price of our H Shares and could cause
substantial volatility in the trading volume of our H Shares.
The interests of our Largest Group of Shareholders may not be aligned with the interests of
other Shareholders.
Immediately following the completion of the Global Offering and assuming the Offer Size
Adjustment Option and the Over-allotment Option are not exercised, our Largest Group of
Shareholders will hold approximately 29.4% of the issued share capital of our Company. This
concentration of ownership may discourage, delay or prevent a change in control of our
Company, which could deprive other Shareholders of an opportunity to receive a premium for
their Shares as part of a sale of our Company and might reduce the price of our H Shares. These
events may occur even if they are opposed by our other Shareholders. In addition, the interests
of our Largest Group of Shareholders may differ from the interests of our other Shareholders.
It is possible that our Largest Group of Shareholders may exercise their substantial influence
over us and cause us to enter into transactions or take, or fail to take, actions or make decisions
that conflict with the best interests of our other Shareholders.
RISK FACTORS
–8 7–


--- page 99 ---
Our historical dividends may not be indicative of our future dividend policy, and there can
be no assurance whether and when we will pay dividends in the future.
We have declared dividends in the past. We protect our Shareholders’ interest by ensuring
a consistent dividend policy. However, there is no assurance that dividends of any amount will
be declared or distributed by us in any year in the future. Under the applicable laws and
regulations of mainland China, the payment of dividends may be subject to certain limitations,
and the calculation of our profit under the Accounting Standards for Business Enterprises may
differ in certain respects from the calculation under IFRS. The declaration, payment and
amount of any future dividends are subject to the discretion of our Directors, after taking into
account various factors, including but not limited to our results of operations, financial
condition, cash flows, capital expenditure requirements, market conditions, our strategic plans
and prospects for business development, regulatory restrictions on the payment of dividends
and other factors as our Directors may deem relevant, and subject to the approval at
Shareholders’ meeting. Any declaration and payment as well as the amount of dividends will
be subject to our constitutional documents and the applicable laws and regulations of mainland
China. See “Financial Information — Dividend Policy” for further details of our dividend
policy. No dividend shall be declared or payable except out of our profits and reserves lawfully
available for distribution. Our historical dividends should not be taken as indicative of our
dividend policy in the future.
Under the existing foreign exchange regulations of mainland China, payments of current
account items, including profit distributions, interest payments and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior SAFE approval
by complying with certain procedural requirements. However, approval from or registration
with competent government authorities is required where RMB is to be converted into foreign
currency and remitted out of mainland China to pay capital expenses such as the repayment of
loans denominated in foreign currencies. If the foreign exchange control system prevents us
from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may
not be able to pay dividends in foreign currencies to our Shareholders. Further, we cannot
assure you that new regulations will not be promulgated in the future that would have the effect
of further restricting the remittance of RMB into or out of mainland China.
Y ou should not place any reliance on any information released by us in connection with the
listing of our A Shares on the Shenzhen Stock Exchange.
As our A Shares are listed on the Shenzhen Stock Exchange, we have been subject to
periodic reporting and other information disclosure requirements in mainland China. As a
result, from time to time, we publicly release information relating to us on the Shenzhen Stock
Exchange or other media outlets designated by the CSRC. However, the information announced
by us in connection with our A Shares listing is based on regulatory requirements of the
securities authorities, industry standards and market practices in mainland China, which are
different from those applicable to the Global Offering. The presentation of financial and
operational information for the Track Record Period disclosed on the Shenzhen Stock
Exchange or other media outlets may not be directly comparable to the financial and
RISK FACTORS
–8 8–


--- page 100 ---
operational information contained in this document. As a result, prospective investors in our H
Shares should be reminded that, in making their investment decisions as to whether to purchase
our H Shares, they should rely only on the financial, operating and other information included
in this document. By applying to purchase our H Shares in the Global Offering, you will be
deemed to have agreed that you will not rely on any information other than that contained in
this document and any formal announcements made by us in Hong Kong with respect to the
Global Offering.
There have been recent media reports indicating that our statutory auditor in mainland
China may face certain penalties, including possibly a business suspension for a period of time.
We are monitoring this development and will assess its potential impact, if any, on our future
financial reporting on the Shenzhen Stock Exchange. We may take certain remedial actions
including, if deemed necessary, engaging a new statutory auditor in mainland China to audit
our future annual financial statements published on the Shenzhen Stock Exchange.
Y ou should read the entire document carefully and only rely on the information included in
this document to make your investment decision, and we strongly caution you not to rely on
any information contained in press articles or other media coverage relating to us, our
Shares or the Global Offering.
We strongly caution our investors not to rely on any information contained in press
articles or other media regarding us, our Shares and the Global Offering. Prior to the
publication of this document, there may be press and media coverage regarding the Global
Offering and us. Such press and media coverage may include references to certain information
that does not appear in this document, including certain operating and financial information
and projections, valuations and other information. We have not authorized the disclosure of any
such information in the press or media and do not accept any responsibility for any such press
or media coverage or the accuracy or completeness of any such information or publication. We
make no representation as to the appropriateness, accuracy, completeness or reliability of any
such information or publication. To the extent that any such information is inconsistent or
conflicts with the information contained in this document, we disclaim responsibility for it and
our investors should not rely on such information.
Certain facts, forecast and other statistics in this document obtained from publicly available
sources have not been independently verified and may not be reliable.
Certain facts, forecast and other statistics in this document are derived from various
government and official resources. However, our Directors cannot guarantee the quality or
reliability of such source materials. We believe that the sources of the said information are
appropriate sources for such information and have taken reasonable care in extracting and
reproducing such information. We have no reason to believe that such information is false or
misleading or that any fact has been omitted that would render such information false or
misleading. Nevertheless, information from official government sources has not been
independently verified by us, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters or any of their
RISK FACTORS
–8 9–


--- page 101 ---
respective affiliates or advisers and, therefore, we make no representation as to the accuracy
of such facts and statistics. Further, we cannot assure our investors that they are stated or
compiled on the same basis or with the same degree of accuracy as similar statistics presented
elsewhere. In all cases, our investors should consider carefully how much weight or importance
should be attached to or placed on such facts or statistics.
Forward-looking statements contained in this document are subject to risks and
uncertainties.
This document contains forward-looking statements with respect to our business
strategies, operating efficiencies, competitive positions, growth opportunities for existing
operations, plans and objectives of management, certain pro forma information and other
matters. The words “aim”, “anticipate”, “believe”, “could”, “predict”, “potential”, “continue”,
“expect”, “intend”, “may”, “might”, “plan”, “seek”, “will”, “would”, “should” and the negative
of these terms and other similar expressions identify a number of these forward-looking
statements. These forward looking statements, including, amongst others, those relating to our
future business prospects, capital expenditure, cash flows, working capital, liquidity and
capital resources are necessarily estimates reflecting the best judgment of our Directors and
management and involve a number of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking statements. As a consequence,
these forward-looking statements should be considered in light of various important factors,
including those set out in this section. Accordingly, such statements are not a guarantee of
future performance and investors should not place undue reliance.
RISK FACTORS
–9 0–


--- page 102 ---
In preparation for the Listing, we have sought the following waivers from strict
compliance with the Listing Rules and exemption from the CWUMPO.
Rules Subject matter
Rules 8.12 and 19A.15 of the
Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Management presence in Hong Kong
Rules 3.28 and 8.17 of the
Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Appointment of joint company secretaries
Paragraph 26 of Appendix D1A to
the Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Particulars of any alterations in the capital of
any member of our Group
Rule 17.02(1)(b) of, and Paragraph
27 of Appendix D1A to the Listing
Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Paragraph 10 of Part I of the Third
Schedule to the CWUMPO /H1118/H1118/H1118/H1118/H1118/H1118
Disclosure requirements in respect of
outstanding share options
Paragraph 3(b) of Practice Note 15 to
the Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Three-year restriction on spin-offs
Rules 4.04(2) and 4.04(4)(a) of the
Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Investments after the Track Record Period
Chapter 14A of the Listing Rules /H1118/H1118/H1118Continuing connected transactions
Rule 8.08(1)(b) of the
Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Minimum public float of the H Shares
Rule 10.04 and Paragraph 5(2) of
Appendix F1 to the Listing Rules /H1118
Subscription for H Shares by existing
shareholders and their close associates
Rules 10.04 and 9.09(b) and
Paragraph 5(2) of Appendix F1 to
the Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Allocations to Existing Shareholder Employee
Participants and restrictions on dealings in
securities by core connected persons during
the listing application process
Paragraph 4.2 of Practice Note 18 of
the Listing Rules /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Clawback mechanism
Paragraph 5(1) of Appendix F1 to the
Listing Rules and Chapter 4.15 of
the Guide for New Listing
Applicants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Proposed subscriptions of H Shares by UBS
AM Singapore and China Structural Reform
Fund through GF Securities AM
W AIVERS AND EXEMPTIONS
–9 1–


--- page 103 ---
W AIVER IN RESPECT OF MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rules 8.12 and 19A.15 of the Listing Rules, an issuer must have sufficient
management presence in Hong Kong. This will normally mean that at least two of its executive
directors must be ordinarily resident in Hong Kong. We do not have sufficient management
presence in Hong Kong for the purposes of Rule 8.12 and Rule 19A.15 of the Listing Rules.
Our Group’s management headquarters, senior management, business operations and
assets are primarily based outside Hong Kong. The Directors consider that the appointment of
executive directors who will be ordinarily resident in Hong Kong would not be beneficial to,
or appropriate for, our Group and therefore would not be in the best interests of our Company
or the Shareholders as a whole. Therefore, our Company does not, and does not contemplate
in the foreseeable future that we will, have sufficient management presence in Hong Kong for
the purpose of satisfying the requirements under the Listing Rules.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from
strict compliance with Rules 8.12 and 19A.15 of the Listing Rules. We will ensure that there
is an effective channel of communication between the Stock Exchange and us by way of the
following arrangements:
(i) pursuant to Rule 3.05 of the Listing Rules, we have appointed and will continue to
maintain two authorised representatives who shall act at all times as the principal
channel of communication with the Stock Exchange. Each of our authorised
representatives will be readily contactable by the Stock Exchange by telephone,
facsimile and/or e-mail to deal promptly with enquiries from the Stock Exchange.
Both of our authorised representatives are authorised to communicate on our behalf
with the Stock Exchange. At present, our two authorised representatives are Mr.
Fang Hongbo, our executive Director, chairman of the Board and the chief executive
officer of our Group, and Ms. Lai Siu Kuen, our joint company secretary;
(ii) pursuant to Rule 3.20 of the Listing Rules, each Director will provide their contact
information to the Stock Exchange and to the authorised representatives. This will
ensure that the Stock Exchange and the authorised representatives should have
means for contacting all Directors promptly at all times as and when required;
(iii) we will endeavour to ensure that each Director who is not ordinarily resident in
Hong Kong possesses or can apply for valid travel documents to visit Hong Kong
and can meet with the Stock Exchange within a reasonable period; and
(iv) pursuant to Rule 3A.19 of the Listing Rules, we have retained the services of Huatai
Financial Holdings (Hong Kong) Limited as compliance adviser (the “ Compliance
Adviser ”), who will act as an additional channel of communication with the Stock
Exchange. We will ensure that the Compliance Adviser will have access at all times
to our authorised representatives, our Directors and other officers. We shall also
ensure that such persons will promptly provide such information and assistance as
W AIVERS AND EXEMPTIONS
–9 2–


--- page 104 ---
the Compliance Adviser may need or may reasonably request in connection with the
performance of the Compliance Adviser’s duties as set forth in Chapter 3A of the
Listing Rules. We shall ensure that there are adequate and efficient means of
communication among our Company, our authorised representatives, our Directors,
and other officers and the Compliance Adviser, and will keep the Compliance
Adviser fully informed of all communications and dealings between us and the
Stock Exchange.
W AIVER IN RESPECT OF JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, the company secretary must be an
individual who, by virtue of their academic or professional qualifications or relevant
experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of
the company secretary.
Pursuant to Note 1 to Rule 3.28 of the Listing Rules, the Hong Kong Stock Exchange
considers the following academic or professional qualifications to be acceptable:
(i) a member of The Hong Kong Chartered Governance Institute;
(ii) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(iii) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing the “relevant
experience”, the Hong Kong Stock Exchange will consider the individual’s:
(i) length of employment with the issuer and other issuers and the roles he/she played;
(ii) familiarity with the Listing Rules and other relevant laws and regulations including
the Securities and Futures Ordinance, the Companies Ordinance, the CWUMPO and
the Takeovers Code;
(iii) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(iv) professional qualifications in other jurisdictions.
W AIVERS AND EXEMPTIONS
–9 3–


--- page 105 ---
Our Company appointed Mr. Jiang Peng, our board secretary, (“ Mr. Jiang ”) and Ms. Lai
Siu Kuen of Tricor Services Limited, (“ Ms. Lai ”) as joint company secretaries of our
Company. For further details, please see the section headed “Directors, Supervisors and Senior
Management — Joint Company Secretaries” for their biographies.
Ms. Lai is a fellow member of both The Hong Kong Chartered Governance Institute and
The Chartered Governance Institute in the United Kingdom and therefore meets the
qualification requirements under Note 1 to Rule 3.28 of the Listing Rules and is in compliance
with Rule 8.17 of the Listing Rules.
Our Company’s principal business activities are outside Hong Kong. Our Company
believes that it would be in the best interests of our Company and the corporate governance of
our Group to have as its joint company secretary a person such as Mr. Jiang, who is an
employee of our Company and who has day-to-day knowledge of our Company’s affairs. Mr.
Jiang has the necessary nexus to the Board and close working relationship with management
of our Company in order to perform the function of a joint company secretary and to take the
necessary actions in the most effective and efficient manner.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from
strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules for a
three-year period from the Listing Date, in accordance with paragraphs 11 to 17 of Chapter
3.10 of the Guide for New Listing Applicants, on the conditions that: (i) Ms. Lai is appointed
as a joint company secretary to assist Mr. Jiang in discharging his functions as a company
secretary and in gaining the relevant experience under Rule 3.28 of the Listing Rules; the
waiver will be revoked immediately if Ms. Lai, during the three-year period, ceases to provide
assistance to Mr. Jiang as the joint company secretary; and (ii) the waiver can be revoked if
there are material breaches of the Listing Rules by our Company. In addition, Mr. Jiang will
comply with the annual professional training requirement under Rule 3.29 of the Listing Rules
and will enhance his knowledge of the Listing Rules during the three-year period from the
Listing Date. Our Company will further ensure that Mr. Jiang has access to the relevant training
and support that would enhance his understanding of the Listing Rules and the duties of a
company secretary of an issuer listed on the Stock Exchange. Before the end of the three-year
period, the qualifications and experience of Mr. Jiang and the need for on-going assistance of
Ms. Lai will be further evaluated by our Company. We will demonstrate Mr. Jiang, having
benefited from the assistance of Ms. Lai for the preceding three years, will have acquired the
skills necessary to carry out the duties of company secretary and the relevant experience within
the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further waiver will not be
necessary.
W AIVERS AND EXEMPTIONS
–9 4–


--- page 106 ---
W AIVER IN RESPECT OF ALTERATION IN SHARE CAPITAL
Paragraph 26 of Appendix D1A to the Listing Rules requires this document to include the
particulars of any alterations in the capital of any member of our Group within the two years
immediately preceding the issue of this document.
As of the Latest Practicable Date, we have more than 400 subsidiaries globally. It would
be unduly burdensome for us to disclose the required information in respect of all of its
subsidiaries as our Company would have to incur additional costs and devote additional
resources in compiling and verifying the relevant information for such disclosure, which would
not be material nor meaningful to investors. The non-disclosure of such information will not
prejudice the interests of our Shareholders or potential investors.
We have identified 32 subsidiaries (collectively, the “ Major Subsidiaries ” and each a
“Major Subsidiary ”) that we consider are material to our operations and/or contributed
significantly to our financial performance during the Track Record Period. None of the
non-Major Subsidiaries is individually material to us in terms of its contribution to our
Company’s total assets, total revenue or total net profits, or holds any major assets and
intellectual property rights. By way of illustration, after intercompany eliminations, as of 31
December 2021, 2022 and 2023 and 30 April 2024, the aggregate assets of the Company and
its Major Subsidiaries represent 78.3%, 78.6%, 76.8% and 76.4% of our total assets and for
each of the financial years ended 31 December 2021, 2022 and 2023 and the four months ended
30 April 2024, and the aggregate revenue of the Company and its Major Subsidiaries represents
71.7%, 70.3%, 64.2% and 52.0% of our total revenue respectively; and the aggregate net
profits of the Company and its Major Subsidiaries (without intercompany eliminations)
represent 121.2%, 109.0%, 113.2% and 51.2% of the Group’s total net profits for each of the
financial years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April
2024. The decrease in the relevant percentage for net profits for the four months ended 30 April
2024 is primarily due to the decrease in dividend income received from the respective
subsidiaries of the relevant entities, the majority of which will only be distributed and
accounted for in the second half of the year. None of the other subsidiaries of our Company
that are not Major Subsidiaries individually contributes to 5% or more of our Group’s total
assets as of 31 December 2021, 2022, or 2023 or 30 April 2024 or 5% or more of our Group’s
revenue or net profits for each of the financial years ended 31 December 2021, 2022 and 2023
and the four months ended 30 April 2024. Accordingly, the remaining subsidiaries which are
not Major Subsidiaries in our Group are relatively insignificant to the overall results of our
Group.
We have disclosed the particulars of the changes in the share capital of our Company and
the Major Subsidiaries in the section headed “Statutory and General Information — 1. Further
Information About Our Group — C. Further Information About Our Major Subsidiaries” in
Appendix VI to this document.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with the requirements under paragraph 26 of Appendix D1A to the Listing Rules, in respect of
disclosing the particulars of any alteration in the capital of any member of our Group within
the two years immediately preceding the issue of this document.
W AIVERS AND EXEMPTIONS
–9 5–


--- page 107 ---
W AIVER AND EXEMPTION IN RELATION TO THE SHARE INCENTIVE PLANS
DISCLOSURE REQUIREMENTS
The Listing Rules and the CWUMPO prescribe certain disclosure requirements in relation
to the share options granted by our Company (the “ ESOP Disclosure Requirements ”):
(a) Rule 17.02(1)(b) of the Listing Rules stipulates that all material terms of a scheme
must be clearly set out in this document. Our Company is also required to disclose
in this document full details of all outstanding options and their potential dilution
effect on the shareholdings upon Listing as well as the impact on the earnings per
share arising from the issue of shares in respect of such outstanding options;
(b) Paragraph 27 of Appendix D1A to the Listing Rules requires our Company to set out
in this document particulars of any capital of any member of our Group that is under
option, or agreed conditionally or unconditionally to be put under option, including
the consideration for which the option was or will be granted and the price and
duration of the option, and the name and address of the grantee; and
(c) Paragraph 10 of Part I of the Third Schedule to the CWUMPO requires our Company
to disclose, amongst others, details of the number, description and amount of any
shares in or debentures of our Company which any person has, or is entitled to be
given, an option to subscribe for, together with the particulars of the option, that is
to say, (a) the period during which it is exercisable; (b) the price to be paid for shares
or debentures subscribed for under it; (c) the consideration (if any) given or to be
given for it or for the right to it; and (d) the names and addresses of the persons to
whom it or the right to it was given or, if given to existing shareholders or debenture
holders as such, the relevant shares or debentures must be specified in the
prospectus.
Pursuant to paragraphs 6 to 7 of Chapter 3.6 of the Guide for New Listing Applicants, the
Stock Exchange would normally grant waivers from disclosing the names and addresses of
certain grantees if the issuer could demonstrate that such disclosures would be irrelevant and
unduly burdensome, subject to certain conditions specified therein.
Our Company and its subsidiaries may, from time to time, adopt share incentive plans.
For details of our Stock Option Incentive Plans which involve the issuance of new A Shares,
see section headed “Appendix VI — Statutory and General Information — 4. Our Incentive
Schemes” in this document.
As of the Latest Practicable Date, our Company had granted outstanding options under the
Stock Option Incentive Plans to 3,073 grantees who are employees of our Group, including two
connected persons who are not Directors, Supervisors or senior management of the our
Company and 3,071 other employees of our Group, to subscribe for an aggregate of
121,837,304 Shares. As of the Latest Practicable Date, among the outstanding options, 142,000
were held by two connected persons and 121,695,304 were held by 3,071 employees of our
W AIVERS AND EXEMPTIONS
–9 6–


--- page 108 ---
Group. The Shares underlying the granted options represent 1.6% of the total number of Shares
in issue immediately after completion of the Global Offering (assuming that the Offer Size
Adjustment Option is not exercised and no new Shares are issued under the Over-allotment
Option and our Shares Schemes, and no other changes are made to the issued share capital of
our Company between the Latest Practicable Date and Listing). None of the grantees is a
Director, Supervisor or senior management of our Company.
We have applied to: (i) the Stock Exchange for a waiver from strict compliance with the
disclosure requirements under Rule 17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the
Listing Rules; and (ii) the SFC for a certificate of exemption under section 342A of the
CWUMPO exempting our Company from strict compliance with paragraph 10(d) of Part I of
the Third Schedule to the CWUMPO, respectively, on the ground that strict compliance with
the above requirements would be unduly burdensome for our Company and the exemption
would not prejudice the interests of the investing public for the following reasons:
(a) given that 3,071 grantees (who are not Directors, Supervisors, members of the senior
management or connected persons of our Company) are involved for the granting of
outstanding options, strict compliance with such disclosure requirements in setting
out full details of all the grantees under the Stock Option Incentive Plans in this
document would be costly and unduly burdensome for us in light of a significant
increase in cost and timing for information compilation and prospectus preparation.
For example, we would need to collect and verify the addresses of a large number
of grantees to meet the disclosure requirement;
(b) the grant and exercise in full of the options under the Stock Option Incentive Plans
will not cause any material adverse impact to the financial position of our Group.
The 3,071 grantees who are not Directors, Supervisors, members of the senior
management or connected persons of our Company have been granted options to
acquire an aggregate of 121,695,304 Shares, representing 1.6% of the total number
of Shares in issue immediately after completion of the Global Offering (assuming
that the Offer Size Adjustment Option is not exercised and no new Shares are issued
under the Over-allotment Option and our Share Schemes, and no other changes are
made to the issued share capital of our Company between the Latest Practicable Date
and Listing), which is not material in the circumstances of our Company;
(c) there will not be any new H Shares issued under the Stock Option Incentive Plans
as the foregoing plans are A-share incentive schemes;
(d) non-compliance with the above disclosure requirements would not prevent us from
providing our potential investors with an informed assessment of the activities,
assets, liabilities, financial position, management and prospects of our Company;
and
W AIVERS AND EXEMPTIONS
–9 7–


--- page 109 ---
(e) material information relating to the shares under the Stock Option Incentive Plans
has been disclosed in this document to provide prospective investors with sufficient
information to make an informed assessment of the potential dilutive effect and
impact on earnings per Share of the options in making their investment decision, and
such information includes:
(i) a summary of the latest terms of the Stock Option Incentive Plans;
(ii) the aggregate number of Shares subject to the options and the percentage of our
Shares of which such number represents;
(iii) the dilutive effect and the impact on earnings per Share upon full exercise of
the options immediately following completion of the Global Offering
(assuming that the Offer Size Adjustment Option is not exercised and no new
Shares are issued under the Over-allotment Option and our Share Schemes, and
no other changes are made to the issued share capital of our Company between
the Latest Practicable Date and Listing);
(iv) full details of the options granted by the Company to Directors, Supervisors,
members of senior management and connected persons (if any) of our
Company, on an individual basis, are disclosed in this document, and such
details include all the particulars required under Rule 17.02(1)(b) of the Listing
Rules, paragraph 27 of Appendix D1A to the Listing Rules and paragraph 10
of Part 1 of the Third Schedule to the CWUMPO;
(v) with respect to the options granted to other grantees (other than those referred
to in (iv) above), disclosure are made on an aggregate basis, categorized into
lots based on the number of Shares underlying each individual grantee, being
(1) 1 to 50,000; (2) 50,001 to 100,000; (3) 100,001 to 150,000 and (4) 150,001
to 221,000 for each lots of Share, the following details are disclosed in this
document, including (1) the aggregate number of such grantees and the number
of Shares subject to the options; (2) the consideration paid for the grant of the
options; and (3) the exercise period of the options and the exercise price for the
options; and
(vi) the particulars of the waiver and exemption granted by the Stock Exchange and
the SFC, respectively.
W AIVERS AND EXEMPTIONS
–9 8–


--- page 110 ---
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with the applicable ESOP Disclosure Requirements on the conditions that:
(i) on an individual basis, full details of the options under the Stock Option Incentive
Plans granted by the Company to each of our Directors, Supervisors, members of
senior management of the Group and connected persons of our Company, will be
disclosed in the section headed “Appendix VI — Statutory and General Information
— 4. Our Incentive Schemes” as required under Rule 17.02(1)(b) of, and paragraph
27 of Appendix D1A to, the Listing Rules, and paragraph 10 of Part I of the Third
Schedule to the CWUMPO;
(ii) in respect of the options under the Stock Option Incentive Plans granted to
remaining grantees (being the other grantees who are not our Directors, Supervisors,
senior management or connected persons of our Company), disclosure will be made,
on an aggregate basis, categorized into lots based on the number of Shares
underlying each individual grantee, being (1) 1 to 50,000; (2) 50,001 to 100,000;
(3) 100,001 to 150,000 and (4) 150,001 to 221,000 for each lots of Share, the
following details are disclosed in this document, including (1) their aggregate
number of grantees and number of Shares underlying the options under the Stock
Option Incentive Plans, (2) the consideration (if any) paid for the grant of the
options under the Stock Option Incentive Plans, and (3) the exercise period of the
options and the exercise price of the options granted under the Stock Option
Incentive Plans;
(iii) aggregate number of Shares underlying the options granted under the Stock Option
Incentive Plans and the percentage to our total issued share capital represented by
such number of Shares as of the Latest Practicable Date;
(iv) the dilutive effect and impact on earnings per Share upon the full exercise of the
options under the Stock Option Incentive Plans will be disclosed in the section
headed “Appendix VI — Statutory and General Information — 4. Our Incentive
Schemes”;
(v) a summary of the major terms of the Stock Option Incentive Plans will be disclosed
in the section headed “Appendix VI — Statutory and General Information — 4. Our
Incentive Schemes”;
(vi) a full list of all the grantees with outstanding options under the Stock Option
Incentive Plans containing all the particulars as required under Rule 17.02(1)(b) of,
and paragraph 27 of Appendix D1A to, the Listing Rules be made available for
public inspection in accordance with “Documents Delivered to the Registrar of
Companies and Available on Display — Document Available for Inspection” in
Appendix VII to this document;
W AIVERS AND EXEMPTIONS
–9 9–


--- page 111 ---
(vii) the grant of a certificate of exemption under the CWUMPO from the SFC exempting
our Company from strict compliance with paragraph 10(d) of Part I of the Third
Schedule to the CWUMPO; and
(viii) the particulars of the waiver will be disclosed in this document.
We have applied for, and the SFC has granted, a certificate of exemption under section
342A of the CWUMPO from strict compliance with paragraph 10(d) of Part I of the Third
Schedule to the CWUMPO on the conditions that:
(i) on an individual basis, full details of the options under the Stock Option Incentive
Plans granted by the Company to each of our Directors, Supervisors, members of
senior management of the Group and connected persons of our Company, will be
disclosed in the section headed “Appendix VI — Statutory and General Information
— 4. Our Incentive Schemes” as required under paragraph 10 of Part I of the Third
Schedule to the CWUMPO;
(ii) in respect of the options under the Stock Option Incentive Plans granted to
remaining grantees (being the other grantees who are not our Directors, Supervisors,
senior management or connected persons of our Company), disclosure will be made,
on an aggregate basis, categorized into lots based on the number of Shares
underlying each individual grantee, being (1) 1 to 50,000; (2) 50,001 to 100,000;
(3) 100,001 to 150,000 and (4) 150,001 to 221,000 for each lots of Share, the
following details are disclosed in this document, including (1) their aggregate
number of grantees and number of Shares underlying the options under the Stock
Option Incentive Plans, (2) the consideration (if any) paid for the grant of the
options under the Stock Option Incentive Plans, and (3) the exercise period of the
options and the exercise price of the options granted under the Stock Option
Incentive Plans;
(iii) a full list of all the grantees with outstanding options under the Stock Option
Incentive Plans, containing all the details as required under paragraph 10 of Part I
of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance be made available for public inspection in accordance with “Documents
Delivered to the Registrar of Companies and Available on Display — Document
Available for Inspection” in Appendix VII to this document; and
(iv) the particulars of the exemption will be disclosed in this document which will be
issued on or before Tuesday, 10 September 2024.
W AIVERS AND EXEMPTIONS
– 100 –


--- page 112 ---
W AIVER IN RESPECT OF STRICT COMPLIANCE WITH PRACTICE NOTE 15 AND
THE THREE-YEAR RESTRICTION ON SPIN-OFFS
Paragraph 3(b) of Practice Note 15 (“ PN15 ”) provides that the Listing Committee would
not normally consider a spin-off application within three years of the date of listing of the
issuer with regard to proposals submitted by issuers to effect the separate listing on the Stock
Exchange or elsewhere of assets or business wholly or partly within their existing groups (the
“spin-offs ”), given the original listing of the issuer will have been approved on the basis of the
issuer’s portfolio of businesses at the time of listing, and that the expectation of investors at
that time would have been that the issuer would continue to develop those businesses.
Given our significant scale of overall business operation, we assess different
opportunities for financing and business operation from time to time with an aim to create
value to our shareholders, including spinning off certain subsidiaries or business, subject to,
amongst others, the market conditions, financing needs and development of the subsidiaries
and business. We have issued an announcement on the Shenzhen Stock Exchange that we have
authorized our management to commence with the preliminary preparatory work of the spin-off
of Annto Smart Logistics, a subsidiary of our Company. Further, we wish to retain the
possibility to spin-off Midea Lighting, a subsidiary of the Company, and certain business under
the robotics and automation system business segment reported in the financial statements of
our Company (“ Robotics & Automation System Related Business ”) within three years from
the Listing.
(A) Midea Lighting
Midea Lighting is principally engaged in the research and development, manufacturing
and sales of lighting and home design appliances, striving to provide intelligent integrated
solutions for our customers. Midea Lighting’s main product offerings include LED lighting,
smart door locks, switch sockets, amongst others. Its products are used at homes, hotels,
commercial complexes, schools, hospitals and other facilities. It integrates intelligent
interaction and control technologies such as wireless communication technology, voice control
technology, lighting control technology, and edge computing technology into product design,
and continues to provide customers with intelligent, safe, convenient, and beautiful lighting
and intelligent front-mounted electrical solutions in order to satisfy customers’ needs.
Midea Lighting previously made an application for initial public offering and listing to
the Shenzhen Stock Exchange, which was accepted by the Shenzhen Stock Exchange on 19
April 2023, and the application was subsequently withdrawn on 19 December 2023 in light of
the market conditions then. The Company wishes to retain the possibility to spin-off Midea
Lighting within three years after the Listing, which will depend on various factors, including,
amongst others, the prevailing market conditions and the strategic development of the Group.
W AIVERS AND EXEMPTIONS
– 101 –


--- page 113 ---
The potential spin-off of Midea Lighting will enhance its core competitiveness and
increase its brand awareness and market penetration in the relevant industry. Through the
spin-off, Midea Lighting can also have access to the capital market platform to tap into new
sources of funding and optimize financing arrangements to reduce the cost of capital,
increasing both the flexibility and efficiency of capital financing. The spin-off is also expected
to unlock the intrinsic value of Midea Lighting and maximize the interest of the shareholders
of Midea Lighting and our Company.
Based on the financial information of both Midea Lighting and our Company as at and for
the year ended 31 December 2023 prepared under PRC GAAP , the total assets, revenue and net
profits of Midea Lighting amounted to approximately RMB1,100 million, RMB1,036 million
and RMB96 million respectively, which represented less than 0.3% of our Company’s total
assets, revenue and net profits, respectively. As Midea Lighting has an immaterial financial
contribution to our Group, the spin-off of Midea Lighting will not have a material impact to
the financial performance or operations of our Group. Based on the financial information of
both Midea Lighting and our Company prepared under PRC GAAP , the net profit attributable
to the shareholders of our Company after deducting the net profit of Midea Lighting
attributable to the shareholders of our Company was approximately RMB28.5 billion,
RMB29.5 billion and RMB33.6 billion for the financial year ended 31 December 2021, 2022
and 2023 respectively. Midea Lighting is expected to remain as a subsidiary of our Company
and the financial performance of Midea Lighting is expected to continue to be consolidated to
the financial statements of our Company after the potential spin-off. Our Company does not
currently have any detailed plan in relation to such potential spin-off, including the timetable
for the spin-off.
The Directors and the Joint Sponsors confirm that, save as disclosed in this document,
they are not aware of anything material that needs to be brought to the attention of the Stock
Exchange in relation to the potential spin-off of Midea Lighting.
(B) Annto Smart Logistics
Annto Smart Logistics is a logistics technology company dedicated to providing
customers with end-to-end digital intelligent supply chain services, assisting enterprises in
promoting channel optimization and improving supply chain efficiency. Annto Smart Logistics
provides services to over 3,000 enterprise customers in home appliances, fast-moving
consumer goods, furniture and other sectors.
We have commenced the preliminary preparatory work of the spin-off Annto Smart
Logistics. The potential spin-off of Annto Smart Logistics can bring clear commercial benefits
for Annto Smart Logistics, our Company and our respective shareholders. After the spin-off
and separate listing, Annto Smart Logistics can formulate its strategies and decisions and
allocate its resources in a more flexible manner which can further improve its overall operating
results; utilize the capital market platform to optimize financing arrangements to fund future
expansion plans and better grasp growth opportunities and expand business scale. Further, the
potential spin-off of Annto Smart Logistics can also provide additional means to attract talents
and incentivize its senior management and employees and enable its senior management and
employees to share the results from the development of its business through participating in its
share incentive schemes.
W AIVERS AND EXEMPTIONS
– 102 –


--- page 114 ---
According to the management accounts of Annto Smart Logistics for the year ended 31
December 2023, the total assets, revenue and net profits of Annto Smart Logistics represented
less than 5% of the total assets, revenue and net profits of our Company for the year ended and
as of 31 December 2023. It is expected that Annto Smart Logistics will remain as a subsidiary
of our Company and will be consolidated to the accounts of our Group after the spin-off. The
spin-off of Annto Smart Logistics will not have a material impact on the overall financial
performance of our Company.
(C) The Robotics & Automation System Related Business
The robotics and automation system business segment focuses on factory-related fields
through providing industrial robotic products, including six-axis robots, four-axis robots,
collaborative robots and mobile robots, providing solutions of automatic logistics systems and
transmission systems, as well as solutions for healthcare and entertainment. Furthermore, in the
fields of industrial automation, our Company provides automation solutions such as motion
controllers, servo drives, servo motors, integrated motors, encoders, high-voltage inverters,
low-voltage inverters and dynamic reactive power compensation devices.
The potential spin-off of the Robotics & Automation System Related Business will help
support its product and technology research and development, attracting and incentivizing
talents, expanding production capacity, conducting mergers and acquisitions, and ultimately
enhancing its core competitiveness. Through spin-off and separate listing, the entity to be spun
off can attract and retain talents through its own share incentive schemes to allow its senior
management, technical team and employees to benefit from the growth and performance of its
business.
For each of the years ended 31 December 2021, 2022 and 2023, as publicly disclosed in
the financial accounts of the Company, the total assets, revenue and profit of robotics and
automation system business segment accounted for less than 10% of the total assets, revenue
and net profit of our Company, respectively. It is expected that the entity to be spun off will
remain to be a subsidiary of our Company and consolidated to the accounts of our Company
after the spin-off. The spin-off of the Robotics & Automation System Related Business will not
have a material impact on our Company’s overall financial performance.
Our Company wishes to retain the possibility to spin-off the Robotics & Automation
System Related Business within three years after the Listing, and does not currently have any
detailed plan in relation to such potential spin-off, including the timetable for spin-off and the
entity to be spun off.
For the avoidance of doubt, there is no assurance as to the timing or the sequence of each
of the potential spin-offs, and the abovementioned potential spin-off listings are not intended
to take place concurrently.
Save as disclosed in this document, as of the Latest Practicable Date, our Company
confirms that there is no material omission of any information relating to any potential
spin-offs in this document.
W AIVERS AND EXEMPTIONS
– 103 –


--- page 115 ---
Safeguards to protect the interests of the Shareholders
Despite the potential spin-offs within three years of Listing, our Company believes that
there are sufficient safeguards to protect the interests of the Shareholders for the following
reasons:
(i) The aggregate financial contribution of the above potential spin-off subjects is
immaterial. Each of the potential spin-off subjects has an immaterial financial
contribution to our Group, with the highest applicable percentage ratio falling below
0.5% for Midea Lighting, 5.0% for Annto Smart Logistics and 10.0% for the
robotics and automation system business segment for the financial year ended 31
December 2023. As the potential spin-off subjects will continue to be subsidiaries
of our Company and consolidated to the financial statements of our Group after the
potential spin-offs, there will not be any material impact on the consolidated
financial statements of our Group after the potential spin-offs.
(ii) Pursuant to Provisions on the Spin-offs of Listed Companies (Trial) ( ɪ̹ʮ̡ʱ
ۆ(༊Б)) (the “ Spin-off Rules ”), any proposed spin-offs, regardless of size,
must be approved by two-thirds of the votes casted by all shareholders (including
both A Shares and, if applicable, H Shares shareholders) entitled to vote at the
general meeting, as well as two-thirds of votes casted by the minority shareholders,
who are not directors, supervisors or senior management of our Company and who
individually or collectively hold less than 5% of the total number of shares in our
Company (the “ Minority Shareholders”) , entitled to vote at the general meeting.
Before any proposed spin-off is submitted to the shareholders for voting, our
Company will disclose the detailed spin-off plan to its shareholders. Hence, the
shareholders of our Company (including the Minority Shareholders) can make an
informed decision as to whether to vote for or against such spin-off plan. As such,
our Company believes the interest of the shareholders and its rights will not be
prejudiced.
(iii) Pursuant to the Spin-off Rules, (i) the net profit of the subsidiary to be spun off, to
which the listed company is entitled under the equity in the consolidated financial
statements of the listed company for the latest financial year, shall not exceed 50%
of the net profit attributable to shareholders of the listed company, and (ii) the net
assets of the subsidiary to be spun off, to which the listed company is entitled under
the equity in the consolidated financial statements of the listed company for the
latest financial year, shall not exceed 30% of the net assets attributable to
shareholders of the listed company. The above regulatory restrictions on the size of
spin-off provides additional safeguard to protect the interests of the shareholders of
our Company.
W AIVERS AND EXEMPTIONS
– 104 –


--- page 116 ---
(iv) Our Directors owe fiduciary duties to our Company, including the duty to act in
good faith and in the best interest of our Company. As such, our Directors will only
pursue a potential spin-off if there are clear commercial benefits for both our
Company and the potential spin-off entities. In addition, our Directors will not direct
our Company to conduct any spin-off if they believe that it will have an adverse
impact on the interests of our Company and the shareholders of our Company.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with the requirements in paragraph 3(b) of PN15 in relation to the potential spin-offs of Midea
Lighting, Annto Smart Logistics and the Robotics & Automation System Related Business
within three years after the Listing on the following conditions:
(i) each of the business of the potential spin-off subjects is distinct from the remaining
business of our Group and the spin-offs will not have any material impact to the
operations of the remaining Group;
(ii) the size of the potential spin-off entities (individually and in aggregate) will be
immaterial to our Company as detailed above, and the total assets, revenue and net
profits of the Robotics & Automation System Related Business to be spun off will
not exceed 20% of our Company’s total assets, revenue and net profits;
(iii) each of the potential spin-off entities will remain as a subsidiary of the Company and
that their financial performance will be consolidated into the accounts of the
Company after the spin-offs;
(iv) the potential spin-offs will not take place concurrently;
(v) the potential spin-offs will not lead to a material change in our Company’s principal
business, and will not result in our Company failing to meet applicable listing
eligibility requirements under the Listing Rules;
(vi) our Company will disclose in this document details of its intention to spin-off Annto
Smart Logistics and the possibility of spinning off Midea Lighting and the Robotics
& Automation System Related Business, including their principal business, the
relevant financial contribution to our Company during the Track Record Period, the
relevant reasons and benefits to our Company and its shareholders, the basis that the
potential spin-offs will not affect our Company’s core business and the progress or
possibility of the spin-offs; and
(vii) such potential spin-offs by our Company will be subject to the requirements of PN15
unless otherwise waived by the Stock Exchange, and the applicable requirements
under Chapter 14 and/or Chapter 14A of the Listing Rules.
W AIVERS AND EXEMPTIONS
– 105 –


--- page 117 ---
Notwithstanding the above waiver, whether or when to proceed with the potential
spin-offs, as well as the sequence of the potential spin-offs, depends on various factors such
as market conditions, the regulatory approval procedure, financial performance and valuation
of business segments. The potential spin-offs remain highly uncertain and could be subject to
material changes in the future.
W AIVER IN RESPECT OF INVESTMENTS AFTER THE TRACK RECORD PERIOD
Pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules, the Accountant’s Report to
be included in a listing document must include the income statements and balance sheets of any
subsidiary or business acquired, agreed to be acquired or proposed to be acquired since the date
to which its latest audited accounts have been made up in respect of each of the three financial
years immediately preceding the issue of the listing document.
Pursuant to Rule 4.02A of the Hong Kong Listing Rules, acquisitions of business include
acquisitions of associates and any equity interest in another company. Pursuant to Note 4 to
Rule 4.04 of the Hong Kong Listing Rules, the Hong Kong Stock Exchange may consider
granting a waiver of the requirements under Rules 4.04(2) and 4.04(4) on a case-by-case basis,
and having regard to all relevant facts and circumstances and subject to certain conditions set
out thereunder.
Acquisitions since 30 April 2024
Since 30 April 2024 and up to the Latest Practicable Date, the Group has proposed to
make the following acquisitions (the “ Acquisitions ”), details of which are set out as below:
No.
Name of
the targets (1)
Acquisition
consideration
(approximately
in EUR million)
Percentage of
shareholding/
equity interest (2)
Principal
business activities
1. /H1118/H1118Climate Division of
Arbonia AG (3)
648.8 100% Production and
distribution of
heating and
ventilation products
2. /H1118/H1118/H1118Teka Industrial,
S.A.
(4)
175.0 97.38% A group of companies
that design and
manufacture
household appliances
and sinks and with
global presence in
over 120 countries,
including 10
factories in Europe,
Asia and America
W AIVERS AND EXEMPTIONS
– 106 –


--- page 118 ---
Notes:
(1) None of the core connected persons of the Company is a controlling shareholder of the targets. To the
best knowledge, information and belief of our Directors and having made all reasonable enquiry, the
targets and their respective ultimate beneficial owners are third parties independent of our Company and
its connected persons.
(2) The percentage of shareholding/equity interest represents the Company’s total shareholding in the
targets after the completion of the Acquisitions.
(3) Arbonia AG is listed on the SIX Swiss Exchange. In April 2024, the Company entered into an agreement
with Arbonia AG to acquire its climate division. As of the Latest Practicable Date, the transaction has
not been completed and is subject to the fulfillment of certain closing conditions including regulatory
approvals.
(4) In June 2024, the Company has reached an agreement with HERITAGE B to acquire Teka Group. As
of the Latest Practicable Date, the transaction has not been completed and is subject to the fulfillment
of certain closing conditions including regulatory approvals.
We confirm that the investment amounts for the Acquisitions have been entered into
through commercial arm’s length negotiations, based on factors including market dynamics, a
mutually agreed valuation, and/or capital need of the relevant company’s operations.
Our Directors believe that, as the principal business activities of the targets are closely
related to the Group’s core business, the Acquisitions will complement the Group’s business.
Accordingly, our Directors believe that the Acquisitions, if consummated, will be fair and
reasonable and in the interests of the Shareholders as a whole. The consideration for the
Acquisitions, if consummated, will be satisfied by the Group’s own source of funds or through
the credit facilities provided by overseas commercial banks.
Conditions for granting the waiver and its scope in respect of the Acquisitions
We have applied for, and the Hong Kong Stock Exchange has granted, a waiver from strict
compliance with Rules 4.04(2) and 4.04(4)(a) of the Hong Kong Listing Rules in respect of the
Acquisitions on the following grounds:
Ordinary and usual course of business
The Company confirms that it makes strategic equity investments in sectors relating to its
business as part of its ordinary and usual course of business. The Company has a history of
making acquisitions and minority investments and have conducted a number of acquisitions
and minority investments during the Track Record Period.
The percentage ratios of the Acquisitions are less than 5% by reference to the most recent
fiscal year of our Company’s Track Record Period
The relevant percentage ratios calculated in accordance with Rule 14.07 of the Hong
Kong Listing Rules for the Acquisitions are all less than 5% by reference to the most recent
fiscal year of the Track Record Period.
W AIVERS AND EXEMPTIONS
– 107 –


--- page 119 ---
Accordingly, we do not expect the Acquisitions to result in any significant changes to our
financial position since 30 April 2024, and all information that is reasonably necessary for
potential investors to make an informed assessment of our activities or financial position has
been included in this document. As such, we consider that a waiver from compliance with the
requirements under Rules 4.04(2) and 4.04(4)(a) of the Hong Kong Listing Rules would not
prejudice the interests of the investors.
The historical financial information of the targets is not available and would be unduly
burdensome to obtain or prepare
Our Company confirms that the targets in respect of the Acquisitions do not have
available historical financial information which is readily available for disclosure in this
document in accordance with the Listing Rules. In addition, it would require considerable time
and resources for our Company and its reporting accountants to fully familiarize ourselves with
the management accounting policies of the targets and compile the necessary financial
information and supporting documents for disclosure in this document. As such, our Company
believes that it would be impractical and unduly burdensome for our Company within the tight
timeframe to disclose the audited financial information of the targets as required under Rules
4.04(2) and 4.04(4)(a) of the Listing Rules.
In addition, having considered the Acquisitions to be immaterial and that our Company
does not expect the Acquisitions to have any material effect on its business, financial condition
or operations, our Company believes that (i) it would not be meaningful and would be unduly
burdensome for it to prepare and include the financial information of the targets during the
Track Record Period in this document, and (ii) the non-disclosure of the required information
pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would not prejudice the interests
of the investors.
Alternative disclosure of the Acquisitions in this document
We have disclosed alternative information about the Acquisitions in this document. Such
information includes those which would be required for a discloseable transaction under
Chapter 14 of the Hong Kong Listing Rules that our Directors consider to be material,
including, for example, descriptions of the targets’ principal business activities, the investment
amounts, and a statement as to whether any core connected person of our Company is a
controlling shareholder of the targets. Since the relevant percentage ratios of the Acquisitions
are less than 5% by reference to the most recent fiscal year of the Company’s Track Record
Period, we believe the current disclosure is adequate for potential investors to form an
informed assessment of us.
W AIVERS AND EXEMPTIONS
– 108 –


--- page 120 ---
CONTINUING CONNECTED TRANSACTIONS
We have entered into certain transactions which will constitute continuing connected
transactions of our Company under the Listing Rules following the completion of the Listing.
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from
strict compliance with the announcement requirements under the Listing Rules. For further
details in this respect, see the section headed “Connected Transactions.”
W AIVER IN RESPECT OF MINIMUM PUBLIC FLOAT OF THE H SHARES
Rule 8.08(1)(a) and (b) (as amended by Rule 19A.13A) of the Listing Rules states that
there must be an open market in the securities for which listing is sought. This will normally
mean that: (a) at least 25% of the issuer’s total number of issued shares must at all times be
held by the public; (b) where an issuer has one class of securities or more apart from the class
of securities for which listing is sought, the total securities of the issuer held by the public (on
all regulated market(s) including the Stock Exchange) at the time of listing must be at least
25% of the issuer’s total number of issued shares. However, the class of securities for which
listing is sought must not be less than 15% of the issuer’s total number of issued shares, having
an expected market capitalisation at the time of listing of not less than HK$125,000,000.
We have applied to the Stock Exchange to request the Stock Exchange to exercise its
discretion under Rule 8.08(1)(b) of the Listing Rules, and the Stock Exchange has granted, a
waiver from strict compliance with Rule 8.08(1)(b) of the Listing Rules that the minimum
percentage of the H Shares of the Company to be held by the public from time to time shall
be no less than 5.00% of the Company’s total issued share capital, subject to the following:
(i) our Company will comply with the public float requirement under Rule 8.08 of the
Listing Rules where at least 25% of the Company’s total number of issued shares (A
Shares and H Shares in aggregate) must be held by the public from time to time;
(ii) our Company will announce the percentage of H Shares held by the public
immediately after the completion of the Global Offering (before any exercise of the
Offer Size Adjustment Option and/or the Over-allotment Option and upon any
exercise of the Offer Size Adjustment Option and/or the Over-allotment Option);
(iii) our Company will confirm the compliance with the public float requirements
prescribed by the Stock Exchange in successive annual reports after the Listing
(with respect to the Rule 8.08(1)(a) only); and
(iv) our Company will maintain a public float of the H Shares no less than 5.00% of the
issued share capital of the Company from time to time even if the percentage of the
number of H Shares held by the public in the total issued share capital of the
Company is reduced as a result of the issuance of A Shares after the Listing.
W AIVERS AND EXEMPTIONS
– 109 –


--- page 121 ---
Furthermore, it is expected that after the Listing, the Company may consider
implementing H Shares share option scheme or other share incentive initiatives involving
issuance of new H Shares, which may increase the total number of and size of the H Shares
and enhance the public float and liquidity of the H Shares after the Listing.
It is also noted that the Company has been from time to time repurchasing its A Shares
on the Shenzhen Stock Exchange. The Company expects to continue repurchase of its A Shares
if and when appropriate, and such repurchases of A Shares will also reduce the potential
fluctuation in the percentage of the number of H Shares in the total issued share capital of the
Company caused by the possible issuance of new A Shares under the A Shares share option
schemes after the Listing.
ALLOCATION OF H SHARES TO EXISTING MINORITY SHAREHOLDERS AND
THEIR CLOSE ASSOCIATES
Rule 10.04 of the Listing Rules requires that a person who is an existing shareholder of
the issuer may only subscribe for or purchase any securities for which listing is sought which
are being marketed by or on behalf of the issuer either in his or its own name or through
nominees if the conditions in Rules 10.03(1) and (2) of the Listing Rules are fulfilled. It is
provided in Rule 10.03(1) of the Listing Rules that no securities may be offered to existing
shareholders on a preferential basis and no preferential treatment may be given to them in the
allocation of the securities; and in Rule 10.03(2) that the minimum prescribed percentage of
public shareholders required by Rule 8.08(1) must be achieved.
Paragraph 5(2) of Appendix F1 to the Listing Rules provides that no allocations will be
permitted to the existing shareholders of the applicant or their close associates, whether in their
own names or through nominees, in the Global Offering unless the conditions set out in Rules
10.03 and 10.04 of the Listing Rules are fulfilled.
Chapter 4.15 of the Guide for New Listing Applicants provides that the Stock Exchange
will consider giving consent and granting waiver from Rule 10.04 of the Listing Rules to an
applicant’s existing shareholders or their close associates to participate in an initial public
offering if any actual or perceived preferential treatment arising from their ability to influence
the applicant during the allocation process can be addressed.
Prior to the Listing, our Company’s share capital comprises entirely A Shares listed on the
Shenzhen Stock Exchange. We have a large and widely dispersed public A Share shareholder
base.
W AIVERS AND EXEMPTIONS
–1 1 0–


--- page 122 ---
We have applied to the Stock Exchange for, and the Stock Exchange has granted to us,
a waiver from strict compliance with the requirements under Rule 10.04 and consent under
Paragraph 5(2) of Appendix F1 to the Listing Rules to permit H Shares in the International
Offering to be placed to certain existing minority Shareholders who (i) hold less than 5% of
the total number of A Shares in issue of our Company prior to the completion of the Global
Offering and (ii) are not and will not become (upon the completion of the Global Offering) core
connected persons of our Company or the close associates of any such core connected person
(together, the “ Existing Minority Shareholders ”), subject to the conditions as follows:
(i) the Joint Sponsors confirm that each Existing Minority Shareholder to whom our
Company may allocate the H Shares in the International Offering holds less than 5%
of the total number of A Shares in issue of our Company before Listing;
(ii) the Joint Sponsors confirm that each Existing Minority Shareholder is not, and will
not be, a core connected person of our Company or any close associate of any such
core connected person immediately prior to or following the Global Offering;
(iii) the Joint Sponsors confirm that none of the Existing Minority Shareholders have the
right to appoint a Director and/or have any other special rights;
(iv) the Joint Sponsors confirm that allocation to the Existing Minority Shareholders or
their close associates will not affect our ability to satisfy the public float
requirement as prescribed by the Stock Exchange under Rule 8.08 of the Listing
Rules or otherwise approved by the Stock Exchange;
(v) the Joint Sponsors confirm to the Stock Exchange in writing that based on (i) their
discussions with our Company and the Overall Coordinators; and (ii) the
confirmations provided to the Stock Exchange by our Company and the Overall
Coordinators (confirmations (vi) and (vii) mentioned below), and to the best of their
knowledge and belief, they have no reason to believe that any of the Existing
Minority Shareholders or their close associates received any preferential treatment,
or is in a position to exert influence on the Company to obtain actual or perceived
preferential treatment in the allocation either as a cornerstone investor or as a placee
by virtue of their relationship with our Company other than the preferential
treatment of assured entitlement under a cornerstone investment following the
principles set out in Chapter 4.15 of the Guide for New Listing Applicants, and
details of the allocation to the Existing Minority Shareholders holding more than 1%
of the issued share capital of the Company immediately prior to the completion of
the Global Offering will be disclosed in this prospectus and/or the allotment results
announcement, as the case may be;
W AIVERS AND EXEMPTIONS
– 111 –


--- page 123 ---
(vi) our Company will confirm to the Stock Exchange in writing that:
a. in the case of participation as cornerstone investors, no preferential treatment
has been, nor will be, given to the Existing Minority Shareholders or their
close associates by virtue of their relationship with our Company, other than
the preferential treatment of assured entitlement under a cornerstone
investment following the principles set out in Chapter 4.15 of the Guide for
New Listing Applicants, nor is the Existing Minority Shareholder in a position
to exert influence on the Company to obtain actual or perceived preferential
treatment, and the Existing Minority Shareholders or their close associates’
cornerstone investment agreements do not contain any material terms which
are more favorable to the Existing Minority Shareholders or their close
associates than those in other cornerstone investment agreements; or
b. in the case of participation as placees, no preferential treatment has been, nor
will be, given to the Existing Minority Shareholders or their close associates,
nor is the Existing Minority Shareholder in a position to exert influence on the
Company to obtain actual or perceived preferential treatment, by virtue of their
relationship with our Company in any allocation in the placing tranche;
(vii) in the case of participation as placees, the Overall Coordinators will confirm to the
Stock Exchange that, to the best of their knowledge and belief, no preferential
treatment has been, nor will be, given to the Existing Minority Shareholders or their
close associates by virtue of their relationship with our Company in any allocation
in the placing tranche.
W AIVER IN RESPECT OF ALLOCATIONS TO EXISTING SHAREHOLDER
EMPLOYEE PARTICIPANTS AND RESTRICTIONS ON DEALINGS IN SECURITIES
BY CORE CONNECTED PERSONS DURING THE LISTING APPLICATION
PROCESS
Rule 10.04 of the Listing Rules provides that a person who is an existing shareholder of
the issuer may only subscribe for or purchase any securities for which listing is sought which
are being marketed by or on behalf of a new applicant either in his or its own name or through
nominees if the conditions set out in Rules 10.03(1) and (2) of the Listing Rules are fulfilled.
Rule 9.09(b) of the Listing Rules provides that in the case of a new applicant, there must
be no dealing in the securities for which listing is sought by any core connected person of the
issuer from four clear business days before the expected hearing date until listing is granted.
Paragraph 5(2) of Appendix F1 to the Listing Rules provides that, without the prior
consent of the Stock Exchange, no allocations will be permitted to directors or existing
shareholders of the applicant or their close associates, whether in their own names or through
nominees unless the conditions set out in Rules 10.03 and 10.04 of the Listing Rules are
fulfilled.
W AIVERS AND EXEMPTIONS
–1 1 2–


--- page 124 ---
We have applied for, and the Stock Exchange has granted, (i) a waiver from strict
compliance with the requirements of Rule 10.04 of the Listing Rules and a consent under
Paragraph 5(2) of Appendix F1 to the Listing Rules in relation to the subscription of the
Employee Reserved Shares by Existing Shareholder Employee Participants, and (ii) a waiver
from strict compliance with Rule 9.09(b) of the Listing Rules in relation to the subscription of
the Employee Reserved Shares by Eligible Core Connected Person Participants on the basis
that, among other things, (i) the maximum subscription amount of H Shares that any individual
Eligible Employee may indirectly apply for under the Employee Preferential Offering will be
limited to RMB4.00 million (including the brokerage, SFC transaction levy, Stock Exchange
trading fee and AFRC transaction levy), representing approximately 0.17% of the Offer Shares
available for subscription under the Employee Preferential Offering and approximately 0.02%
of the Offer Shares initially available for subscription under the Global Offering (based on the
mid-point of the Offer Price range of HK$53.40 per Offer Share and assuming neither the Offer
Size Adjustment Option nor the Over-allotment Option is exercised); (ii) Eligible Core
Connected Person Participants are eligible for the Employee Preferential Offering by virtue of
their capacity as employees and not core connected persons of the Company; (iii) there is no
preferential treatment to Eligible Core Connected Person Participants compared to Eligible
Employees; (iv) there is no preferential treatment to Existing Shareholder Employee
Participants compared to other Eligible Employees; and (v) the Company is able to satisfy the
public float requirement as approved by the Stock Exchange notwithstanding participation by
the Eligible Core Connected Person Participants in the Employee Preferential Offering.
For further information, see “Structure of the Global Offering — Employee Preferential
Offering” in this prospectus.
W AIVER IN RESPECT OF CLA WBACK MECHANISM
Paragraph 4.2 of Practice Note 18 of the Listing Rules requires a clawback mechanism to
be put in place, which would have the effect of increasing the number of Hong Kong Offer
Shares to certain percentages of the total number of Offer Shares offered in the Global Offering
if certain prescribed total demand levels are reached.
Subject to the Stock Exchange granting the waiver described below, the Hong Kong
Public Offering and the International Offering will initially account for 5% and 95% of the
Global Offering, respectively, subject to the clawback mechanism described below. We have
applied for, and the Stock Exchange has granted to us, a waiver from strict compliance with
the requirements of Paragraph 4.2 of Practice Note 18 to the Listing Rules such that the
allocation of the Offer Shares in the Hong Kong Public Offering will be adjusted as follows:
(a) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 9 times or more but less than 18 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering, so that the total number of Offer Shares
W AIVERS AND EXEMPTIONS
–1 1 3–


--- page 125 ---
available under the Hong Kong Public Offering will be 29,528,200 Offer Shares,
representing approximately 6.0% of the Offer Shares initially available under the
Global Offering (assuming the Offer Size Adjustment Option and Over-allotment
Option are not exercised);
(b) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 18 times or more but less than 36 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of Offer Shares to be reallocated to the Hong Kong Public Offering
from the International Offering will be increased so that the total number of the
Offer Shares available under the Hong Kong Public Offering will be 34,449,500
Offer Shares, representing approximately 7.0% of the Offer Shares initially
available under the Global Offering (assuming the Offer Size Adjustment Option
and Over-allotment Option are not exercised); and
(c) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 36 times or more the number of the Offer Shares initially
available for subscription under the Hong Kong Public Offering, then the number of
Offer Shares to be reallocated to the Hong Kong Public Offering from the
International Offering will be increased, so that the total number of the Offer Shares
available under the Hong Kong Public Offering will be 39,370,900 Offer Shares,
representing approximately 8.0% of the Offer Shares initially available under the
Global Offering (assuming the Offer Size Adjustment Option and Over-allotment
Option are not exercised).
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate. In addition, the Overall Coordinators would have discretion to
allocate Offer Shares from the International Offering to the Hong Kong Public Offering to
satisfy valid applications under the Hong Kong Public Offering. On the other hand, if the Hong
Kong Public Offering is not fully subscribed, the unsubscribed Offer Shares under the Hong
Kong Public Offering may be reallocated to the International Offering. See “Structure of the
Global Offering — The Hong Kong Public Offering — Reallocation” for further details.
CONSENT IN RESPECT OF THE PROPOSED SUBSCRIPTION OF H SHARES BY
UBS AM SINGAPORE AND CHINA STRUCTURAL REFORM FUND THROUGH GF
SECURITIES AM
Paragraph 5(1) of Appendix F1 to the Listing Rules provides that no allocations will be
permitted to “connected clients” of the overall coordinator(s), any syndicate member(s) (other
than the overall coordinator(s)) or any distributor(s) (other than syndicate member(s))
(collectively, the “ Distributors ”, and each a “ Distributor ”), without the prior written consent
of the Stock Exchange.
W AIVERS AND EXEMPTIONS
–1 1 4–


--- page 126 ---
Paragraph 13(7) of the Appendix F1 to the Listing Rules states that “connected client” in
relation to an exchange participant means any client which is a member of the same group of
companies as such exchange participant.
As further described in the section headed “Cornerstone Investors” in this prospectus,
UBS Asset Management (Singapore) Limited (“ UBS AM Singapore ”) has entered into a
cornerstone investment agreement with the Company, the Joint Sponsors, the Overall
Coordinators and UBS AG Hong Kong Branch to subscribe for the Offer Shares and will hold
the Offer Shares on a discretionary basis for and on behalf of its underlying clients under the
International Offering. UBS AM Singapore is an investment advisor and a delegate of the
investment manager of its underlying clients. UBS AG Hong Kong Branch (“ UBS HK ”) has
been appointed, amongst others, as one of the Capital Market Intermediaries of the Global
Offering. UBS AM Singapore and UBS HK are members of the same group of companies. As
a result, UBS AM Singapore is a connected client of UBS HK.
For the purpose of the cornerstone investment, China Structural Reform Fund II
Corporation Limited (“ China Structural Reform Fund ”) has engaged GF Securities Asset
Management (Guangdong) Co., Ltd.* ( ᄿ೯൛Վ༟ପ၍ଣ(؇)ʮ̡)( “ GF Securities
AM”), an asset manager that is a qualified domestic institutional investor as approved by the
relevant PRC authority, in the name of GF Capital Management China Structural Reform Fund
II No. 1 Single Asset Management Plan* ( ᄿ೯༟၍਷ሜɚಂ1ྌ)t o
subscribe for and hold such Offer Shares on a non-discretionary basis on behalf of China
Structural Reform Fund. GF Securities (Hong Kong) Brokerage Limited (“ GF Securities
(Hong Kong) Brokerage ”) has been appointed as one of the Capital Market Intermediaries of
the Global Offering. GF Securities AM is a direct wholly-owned subsidiary of GF Securities
Co., Ltd. (Stock Code: 1776) (“ GF Securities ”) and GF Securities (Hong Kong) Brokerage is
an indirect wholly-owned subsidiary of GF Securities. Each of GF Securities AM and GF
Securities (Hong Kong) Brokerage is a member of the same group of companies. As a result,
GF Securities AM is a connected client of GF Securities (Hong Kong) Brokerage for the
purpose of paragraph 13(7) of Appendix F1 to the Listing Rules.
We have applied for, and the Stock Exchange has granted, a consent under paragraph 5(1)
of Appendix F1 to the Listing Rules to permit each of UBS AM Singapore and China Structural
Reform Fund (through GF Securities AM as the asset manager) to participate in the Global
Offering as a cornerstone investor on the following basis and conditions as set out in Paragraph
5 of Chapter 4.15 of the Guide for New Listing Applicants:
(a) any Offer Shares to be allocated to each of UBS AM Singapore and China Structural
Reform Fund (through GF Securities AM as the asset manager) will be held on
behalf of independent third parties;
(b) the cornerstone investment agreements of each of UBS AM Singapore and China
Structural Reform Fund (through GF Securities AM as the asset manager) do not
contain any material terms which are more favourable to UBS AM Singapore and
China Structural Reform Fund (through GF Securities AM as the asset manager) (as
the case may be) than those in other cornerstone investment agreements;
W AIVERS AND EXEMPTIONS
–1 1 5–


--- page 127 ---
(c) UBS HK has not participated, and will not participate, in the decision-making
process or relevant discussions among the Company, the Underwriters and the
Overall Coordinators as to whether Offer Shares will be allocated to UBS AM
Singapore;
(d) no preferential treatment has been, nor will be, given to UBS AM Singapore or
China Structural Reform Fund (through GF Securities AM as the asset manager) by
virtue of their relationship with UBS HK or GF Securities (Hong Kong) Brokerage
(as the case may be) in any allocation of Offer Shares in the International Offering
other than the assured entitlement under the relevant cornerstone investment
agreements;
(e) each of UBS AM Singapore and GF Securities AM confirms that to the best of its
knowledge and belief, it has not received and will not receive preferential treatment
in the allocation of Offer Shares in the Global Offering as a placee by virtue of its
relationship with UBS HK or GF Securities (Hong Kong) Brokerage (as the case
may be) other than the assured entitlement under the relevant cornerstone
investment agreements;
(f) each of the Company, the Overall Coordinators, UBS AM Singapore, UBS HK, GF
Securities AM and GF Securities (Hong Kong) Brokerage has provided the Stock
Exchange with written confirmations in accordance with Chapter 4.15 of the Guide
for New Listing Applicants; and
(g) details of the cornerstone investments and details of the allocations will be disclosed
in this prospectus and the allotment results announcement.
W AIVERS AND EXEMPTIONS
–1 1 6–


--- page 128 ---
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS DOCUMENT
This document, for which our Directors (including any proposed director who is named
as such in this document) collectively and individually accept full responsibility, includes
particulars given in compliance with the Hong Kong Listing Rules, the Companies (Winding
Up and Miscellaneous Provisions) Ordinance and the Securities and Futures (Stock Market
Listing) Rules (Chapter 571V of the Laws of Hong Kong) for the purpose of giving information
with regard to our Group. Our Directors, having made all reasonable enquiries, confirm that to
the best of their knowledge and belief the information contained in this document is accurate
and complete in all material respects and not misleading or deceptive, and there are no other
matters the omission of which would make any statement herein or this document misleading.
RESTRICTIONS ON OFFER AND SALE OF H SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his acquisition of Hong Kong Offer Shares to, confirm that
he is aware of the restrictions on the offer and sale of the Hong Kong Offer Shares described
in this document.
No action has been taken to permit a public offering of the H Shares or the distribution
of this document in any jurisdiction other than Hong Kong. Accordingly, and without limitation
to the following, this document may not be used for the purpose of, and does not constitute,
an offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorized or to any person to whom it is unlawful to make such an offer or
invitation for subscription. The distribution of this document and the offering and sale of the
Offer Shares in other jurisdictions are subject to restrictions and may not be made except as
permitted under the applicable securities laws of such jurisdictions pursuant to registration
with or authorization by the relevant securities regulatory authorities or an exemption
therefrom. In particular, the Offer Shares have not been publicly offered and sold, and will not
be offered and sold, directly or indirectly, in mainland China or the U.S.
CSRC FILING
We have filed the required documents with the CSRC, and we have received a filing
notice from the CSRC dated 23 July 2024, confirming our completion of the filing procedures
pursuant to the new filing regime introduced by the new regulations on filing for the Global
Offering and the application for listing of the H Shares on the Stock Exchange.
INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
–1 1 7–


--- page 129 ---
INFORMATION ON THE GLOBAL OFFERING
This document is published solely in connection with the Hong Kong Public Offering. For
applications under the Hong Kong Public Offering, this document contains the terms and
conditions of the Hong Kong Public Offering. The Global Offering comprises the Hong Kong
Public Offering of initially 24,606,800 Offer Shares and the International Offering of initially
467,528,300 Offer Shares (assuming the Offer Size Adjustment Option and the Over-allotment
Option are not exercised and subject, in each, to reallocation on the basis as set out in
“Structure of the Global Offering”)
The Offer Shares are offered solely on the basis of the information contained and
representations made in this document and on the terms and subject to the conditions set out
herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this document, and any
information or representation not contained herein must not be relied upon as having been
authorized by our Company, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Lead Managers, the Joint Bookrunners, the Underwriters, the Capital
Market Intermediaries, any of our or their affiliates or any of their respective directors,
officers, employees, advisers, agents or representatives, or any other persons or parties
involved in the Global Offering. Neither the delivery of this document nor any subscription or
acquisition made under it shall, under any circumstances, create any implication that there has
been no change in our affairs since the date of this document or that the information in this
document is correct as of any subsequent time.
UNDERWRITING
The Listing is sponsored by the Joint Sponsors and the Global Offering is managed by the
Overall Coordinators. The Hong Kong Public Offering is fully underwritten by the Hong Kong
Underwriters subject to the terms and conditions of the Hong Kong Underwriting Agreement
and is subject to us and the Overall Coordinators (for themselves and on behalf of the
Underwriters) agreeing on the Offer Price. The International Offering is expected to be fully
underwritten by the International Underwriters, subject to the terms and conditions of the
International Underwriting Agreement. See “Underwriting” for further details on the
Underwriters and the underwriting arrangements.
APPLICATION FOR LISTING OF THE H SHARES ON THE HONG KONG STOCK
EXCHANGE
We have applied to the Hong Kong Stock Exchange for the granting of listing of, and
permission to deal in, our H Shares to be issued pursuant to the Global Offering (including any
H Shares which may be issued pursuant to the exercise of the Offer Size Adjustment Option
and the Over-allotment Option). Dealings in the H Shares on the Hong Kong Stock Exchange
are expected to commence on Tuesday, 17 September 2024. Except for the A Shares that have
been listed on the Shenzhen Stock Exchange and our pending application to the Hong Kong
INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
–1 1 8–


--- page 130 ---
Stock Exchange for the listing of, and permission to deal in, the H Shares, no part of our share
or debt securities is listed on or dealt in on the Hong Kong Stock Exchange or any other stock
exchange and no such listing or permission to list is being or proposed to be sought in the near
future.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the H Shares on the Hong Kong Stock Exchange is refused before
the expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to our
Company by or on behalf of the Hong Kong Stock Exchange.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of listing of, and permission to deal in, the H Shares on the Hong
Kong Stock Exchange and our compliance with the stock admission requirements of HKSCC,
the H Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the date of commencement of dealings in the H Shares
on the Hong Kong Stock Exchange or any other date as determined by HKSCC. Settlement of
transactions between participants of the Hong Kong Stock Exchange is required to take place
in CCASS on the second settlement day after any trading day. All activities under CCASS are
subject to the General Rules of HKSCC and HKSCC Operational Procedures in effect from
time to time. Investors should seek the advice of their stockbroker or other professional
advisers for the details of the settlement arrangements as such arrangements may affect their
rights and interests. All necessary arrangements have been made for the H Shares to be
admitted into CCASS.
REGISTER OF MEMBERS AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Global Offering will be
registered on our H Share register to be maintained in Hong Kong by our H Share Registrar,
Computershare Hong Kong Investor Services Limited. Our principal register of members will
be maintained by us at our headquarters in mainland China.
Dealings in the H Shares registered in our H Share Register will be subject to Hong Kong
stamp duty.
DIVIDENDS PAYABLE TO HOLDERS OF H SHARES
Unless determined otherwise by our Company, dividends payable in Hong Kong dollars
in respect of our H Shares will be paid to the shareholders as recorded on the H Share Register
of our Company in Hong Kong and sent by ordinary post, at the shareholders’ risk, to the
registered address of each shareholder of our Company.
INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
–1 1 9–


--- page 131 ---
PROFESSIONAL TAX ADVICE RECOMMENDED
Y ou should consult your professional advisers if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding, disposal of, dealing in or the exercise of
any rights in relation to our H Shares. None of our Company, the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Lead Managers, the Joint Bookrunners,
the Underwriters, the Capital Market Intermediaries, any of our or their affiliates or any of their
respective directors, officers, employees, advisers, agents or representatives, or any other
persons or parties involved in the Global Offering accepts responsibility for any tax effects on,
or liabilities of, any person resulting from the subscription, purchase, holding, disposal of,
dealing in, or the exercise of any rights in relation to, our H Shares.
LANGUAGE
If there is any inconsistency between this document and its Chinese translation, this
document shall prevail. For ease of reference, the names of the Chinese laws and regulations,
government authorities, institutions, natural persons or other entities (including certain of our
subsidiary) have been included in this document in both the Chinese and English languages. In
the event of any inconsistency, the Chinese version shall prevail.
ROUNDING
Certain amounts and percentage figures, such as share ownership and operating data,
included in this document may have been subject to rounding adjustments. Accordingly, figures
shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding
them.
CURRENCY TRANSLATIONS
Solely for your convenience, this document contains translations among certain amounts
denominated in Renminbi, Hong Kong dollars and U.S. dollars.
Unless otherwise specified, this document contains certain translations for convenience
purposes at the following rates: Renminbi into Hong Kong dollars at the rate of RMB1.00 to
HK$1.0962, Renminbi into U.S. dollars at the rate of US$1.00 to RMB7.1124 and Hong Kong
dollars into U.S. dollars at the rate of US$1.00 to HK$7.7968.
No representation is made that any amounts in RMB or Hong Kong dollars can be or
could have been at the relevant dates converted at the above rate or any other rates or at all.
INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
– 120 –


--- page 132 ---
DIRECTORS & SUPERVISORS
Name Position Address Nationality
Mr. Fang Hongbo
(΋͛)
Executive Director 1601, Building A
Xinjing Flower Garden, Y unliang Road
Shunde District, Foshan
Guangdong Province, China
Chinese
Mr. Zhao Jun
(΋͛)
Non-executive
Director
No. 1801, Block 12
Midea Royal Orchid Mont
Beijiao Town
Shunde District, Foshan
Guangdong Province, China
Chinese
Mr. Wang Jianguo
(਷΋͛)
Executive Director 801, Building 2
364 Nanyuan Road
Beijiao Town
Shunde District, Foshan
Guangdong Province, China
Chinese
Mr. Fu Y ongjun
(΋͛)
Executive Director 401, Building 8
Gui Pan Wan
Taigen Road
Shunde District, Foshan
Guangdong Province, China
Chinese
Dr. Gu Y anmin
(͏௹ɻ)
Executive Director 206, Building 16
Xianghe Residential Complex
Wukang Town, Deqing County
Zhejiang Province, China
Chinese
Mr. Guan Jinwei
(ਃ΋͛)
Executive Director 2402, Building 2
Foshan Midea Square
Nanguo East Road
Shunde District, Foshan
Guangdong Province, China
Chinese
Dr. Xiao Geng
(ӽঅ௹ɻ)
Independent
non-executive
Director
21H, Building 16
Double Cove
8 Wu Kai Sha Road
Ma On Shan, New Territories
Hong Kong
Chinese
(Hong
Kong)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 121 –


--- page 133 ---
Name Position Address Nationality
Dr. Xu Dingbo
(௹ɻ)
Independent
non-executive
Director
401, Unit 3, Building 13
Xishan Tingyuan
Tianxiu South 1 Road
Haidian District
Beijing, China
Chinese
Dr. Liu Qiao
(௹ɻ)
Independent
non-executive
Director
96501 Zhongguan Xinyuan
Global Village PKU
126 North Zhongguancun Avenue
Haidian District
Beijing, China
Chinese
(Hong
Kong)
Dr. Qiu Lili
(቞ɢ௹ɻ)
Independent
non-executive
Director
1131 Alley
Changle Road
Xuhui District
Shanghai, China
Chinese
Mr. Dong Wentao
(໨˖ᏹ΋͛)
Supervisor 2 Gangwan Boulevard
Nanshan District
Shenzhen
Guangdong Province, China
Chinese
Ms. Ren Lingyan
(ᜮɾɻ)
Supervisor 2003, Building 9
8 Huming Street
Chancheng District
Foshan
Guangdong Province, China
Chinese
Ms. Liang
Huiming
(૑౉თɾɻ)
Supervisor No. 4, Heng Er Lane
Shui Kou North Street
Beijiao Town
Shunde District, Foshan
Guangdong Province, China
Chinese
See “Directors, Supervisors and Senior Management” for further details.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 122 –


--- page 134 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors and Joint
Sponsor-Overall Coordinators
China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
Overall Coordinators China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
Joint Global Coordinators China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 123 –


--- page 135 ---
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Joint Bookrunners China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 124 –


--- page 136 ---
Huatai Financial Holdings (Hong Kong)
Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Joint Lead Managers China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 125 –


--- page 137 ---
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
BNP Paribas Securities (Asia) Limited
60/F. and 63/F., Two International
Finance Centre
8 Finance Street, Central
Hong Kong
Futu Securities International (Hong Kong)
Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
Capital Market Intermediaries China International Capital Corporation
Hong Kong Securities Limited
29/F One International Finance Centre
1 Harbour View Street
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 126 –


--- page 138 ---
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 127 –


--- page 139 ---
BNP Paribas Securities (Asia) Limited
60/F. and 63/F., Two International
Finance Centre
8 Finance Street, Central
Hong Kong
Futu Securities International (Hong Kong)
Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
Legal advisers to our Company As to Hong Kong and U.S. laws
Skadden, Arps, Slate, Meagher & Flom and
affiliates
42nd Floor, Edinburgh Tower
The Landmark
15 Queen’s Road Central
Hong Kong
As to PRC laws
Jia Yuan Law Offices
F408, Ocean Plaza
158 Fuxing Men Nei Street
Xicheng District
Beijing
PRC
Legal advisers to the Joint Sponsors
and the Underwriters
As to Hong Kong and U.S. laws
Freshfields Bruckhaus Deringer
55th Floor, One Island East
Taikoo Place
Quarry Bay
Hong Kong
As to PRC laws
King & Wood Mallesons
18th Floor, East Tower, World Financial Center
1 Dongsanhuan Zhonglu, Chaoyang District
Beijing, China
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 128 –


--- page 140 ---
Independent Auditor and Reporting
Accountant
PricewaterhouseCoopers
Certified Public Accountants and
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Room 2504, Wheelock Square
1717 West Nanjing Road
Jing’an District
Shanghai
China
Receiving Bank CMB Wing Lung Bank Limited
45 Des V oeux Road
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 129 –


--- page 141 ---
Registered Office and Headquarters in
Mainland China
Midea Headquarters Building
No. 6 Midea Avenue, Beijiao Town
Shunde District
Foshan, Guangdong Province
China
Principal Place of Business in Hong Kong 5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Company Website www.midea.com.cn (the information
contained on this website does not form part
of this document)
Joint Company Secretaries Mr. Jiang Peng ( Ϫᘄ΋͛)
Midea Headquarters Building
No. 6 Midea Avenue, Beijiao Town
Shunde District
Foshan, Guangdong Province
China
Ms. Lai Siu Kuen (ɾɻ)
(Fellow Member of the Hong Kong
Chartered Governance Institute and The
Chartered Governance Institute in the
United Kingdom)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Authorized Representatives Mr. Fang Hongbo (΋͛)
Midea Headquarters Building
No. 6 Midea Avenue, Beijiao Town
Shunde District
Foshan, Guangdong Province
China
Ms. Lai Siu Kuen (ɾɻ)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
CORPORATE INFORMATION
– 130 –


--- page 142 ---
Audit Committee Dr. Xu Dingbo (௹ɻ) (Chairman)
Dr. Xiao Geng ( ӽঅ௹ɻ)
Dr. Liu Qiao (௹ɻ)
Dr. Qiu Lili (቞ɢ௹ɻ)
Remuneration and Evaluation Committee Dr. Xiao Geng ( ӽঅ௹ɻ) (Chairman)
Dr. Xu Dingbo (௹ɻ)
Dr. Liu Qiao (௹ɻ)
Dr. Qiu Lili (቞ɢ௹ɻ)
Nomination Committee Dr. Liu Qiao (௹ɻ) (Chairman)
Dr. Xiao Geng ( ӽঅ௹ɻ)
Dr. Xu Dingbo (௹ɻ)
Dr. Qiu Lili (቞ɢ௹ɻ)
Strategy Committee Mr. Fang Hongbo (΋͛) (Chairman)
Dr. Xiao Geng ( ӽঅ௹ɻ)
Dr. Xu Dingbo (௹ɻ)
Dr. Liu Qiao (௹ɻ)
Dr. Qiu Lili (቞ɢ௹ɻ)
H Share Registrar Computershare Hong Kong Investor
Services Limited
Shops 1712-1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Wan Chai, Hong Kong
Compliance Adviser Huatai Financial Holdings (Hong Kong)
Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
Principal Banks Industrial and Commercial Bank of China
Foshan Beijiao Sub-Branch
4 Y uejin South Road
Beijiao Town, Shunde District
Foshan, Guangdong Province
China
CORPORATE INFORMATION
– 131 –


--- page 143 ---
China Construction Bank
Shunde Beijiao Sub-Branch
A3-A4
1/F, Infore Center
8 Yixing Road
Beijiao Town, Shunde District
Foshan, Guangdong Province
China
Agricultural Bank of China
Shunde Yuejin Sub-Branch
Shop 1-3, Hai Qin Shui An
19 Tianning Road
Beijiao Town, Shunde District
Foshan, Guangdong Province
China
Bank of China
Shunde Beijiao Sub-Branch
Zone B2
1/F, Infore Center
8 Yixing Road
Beijiao Town, Shunde District
Foshan, Guangdong Province
China
CORPORATE INFORMATION
– 132 –


--- page 144 ---
Certain information and statistics presented in this section and elsewhere in this
prospectus were derived from official government publications and other publicly
available sources as well as from the Frost & Sullivan Report, a market research report
prepared by Frost & Sullivan, an independent global consulting firm that was
commissioned by us. We have no reason to believe that such information is false or
misleading or that any part has been omitted that would render such information false or
misleading. The information from official government sources has not been independently
verified by us or any other parties involved in the Global Offering, or any of our or their
respective directors, officers, or representatives. For discussions of risks relating to our
industries, see “Risk Factors — Risks Relating to Our Business and Industries.”
We operate in (i) the home appliance industry through our Smart Home Solutions, and (ii)
a number of industries that include (a) Energy Solutions & Industrial Technology, (b)
Intelligent Building Technology and (c) Robotics & Automation, under our Commercial &
Industrial Solutions.
OVERVIEW OF THE HOME APPLIANCE MARKET
The Overall Global Home Appliance Market
Home appliances consist of (i) “white goods,” such as air conditioners, laundry
appliances and refrigerators, and (ii) kitchen and other appliances, including dishwashers,
water heaters, range hoods, stoves, and other home appliances such as electric fans and electric
kettles. The global home appliance market is of a massive scale, generating RMB3,755.7
billion in sales value and 3,066.5 million units in sales volume in 2023. It is projected to reach
RMB4,423.7 billion in sales value in 2027, representing a CAGR of 4.2% from 2023 to 2027,
and 3,279.8 million units in sales volume in 2027.
Mainland China, North America and Europe are the three largest markets for home
appliances in terms of sales value, together accounting for over 67% of the total global sales
value in 2023, and are expected to grow at a CAGR of 5.2%, 2.1% and 1.4%, respectively, from
2023 to 2027. In particular, China is the largest home appliance market among all countries.
In 2023, the mainland China market generated sales value of RMB854.4 billion and sales
volume of 746.5 million units, accounting for 22.7% and 24.3% of the global market,
respectively. Furthermore, the increasing disposable income level and urbanization rate,
particularly in emerging markets, are expected to further drive the growth of the global home
appliance market.
INDUSTRY OVERVIEW
– 133 –


--- page 145 ---
Sales Value of Global Home Appliance Market by Region, 2017-2027E
Sales Value
(Billi
on RMB)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Mainland China
Europe
North America
Other Countries and Regions
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
991.9 980.31,064.4 1,128.9 1,095.1 1,211.2 1,233.9 1,291.7 1,383.0 1,486.5 1,591.9
623.8 655.8 680.9 692.8 774.6 801.5 823.4 838.1 856.8 874.6 893.1662.2 676.1 693.8 723.3
814.3 830.0 844.0 839.0 855.9 874.2 892.2
775.0 819.1 797.6 744.6
832.8 816.7 854.4 918.1 961.8
1,046.51,004.8
3,052.9 3,215.4 3,301.2 3,141.0
3,516.8 3,659.4 3,755.7 3,886.9 4,057.5 4,240.1 4,423.7
Source: US Census Bureau, China Household Electrical Appliances Association, Frost & Sullivan Report
Sales Volume of Global Home Appliance Market by Region, 2017-2027E
Sales V olume (Million
Units)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Mainland China
Europe
North America
Other Countries and Regions
983.41,066.71,044.6 1,088.2 996.9 1,095.2 1,119.4 1,142.8 1,169.2 1,197.3 1,228.7
538.2 544.3 558.5 529.8 547.2 583.1 581.1 584.1 589.8 597.3 605.4
589.2 598.9 609.2 584.7 609.2 633.5 619.5 615.8 619.4 625.3 633.1
713.8 740.6 790.0 799.6 813.4 753.9 746.5 760.9 778.2 812.6795.9
2,885.8 2,950.5 3,045.9 2,897.5 2,966.7 3,065.7 3,066.5 3,103.6 3,156.6 3,215.8 3,279.8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Source: US Census Bureau, China Household Electrical Appliances Association, Frost & Sullivan Report
In terms of product category, the sales value of each of air conditioners, laundry
appliances, refrigerators, and kitchen and other appliances saw an overall increase from 2017
to 2023 and is expected to grow at a CAGR of 4.7%, 3.1%, 4.2% and 4.2%, respectively, from
2023 to 2027.
INDUSTRY OVERVIEW
– 134 –


--- page 146 ---
Sales Value of Global Home Appliance Market by Category, 2017-2027E
Air Conditioner
Refrigerator
Laundry Appliance
Kitchen and Other Appliance
Sales Value
(Billi
on RMB)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1,427.91,377.0 1,423.81,487.1 1,551.2 1,620.9 1,657.2 1,715.1 1,786.3 1,869.4 1,953.2
393.8 432.3 454.0 460.7 510.0 523.9 516.4 523.4 541.7 561.5 584.2594.8 618.5 628.2 623.7
678.7 694.8 708.6 731.1 766.5 801.9 835.7
687.3 736.7 731.9 632.8
776.9 819.8 873.5 917.3 963.0
1,050.61,007.3
3,052.9 3,215.4 3,301.2 3,141.0
3,516.8 3,659.4 3,755.7 3,886.9 4,057.5 4,240.1 4,423.7
Source: US Census Bureau, China Household Electrical Appliances Association, Frost & Sullivan Report
The Global Market by Product Category
Residential Air Conditioners
The global residential air conditioner market saw an overall growth trend from 2017 to
2023 at a CAGR of 4.1% in terms of sales value, and is expected to grow at a faster pace from
2023 to 2027 at a CAGR of 4.7%, driven partly by the increasing premiumization and
penetration of residential air conditioners. In particular, emerging markets generally witnessed
faster growth from 2017 to 2023, which trend is expected to continue in the near future.
Mainland China is the largest market for residential air conditioners in terms of sales value,
accounting for 40.6% of the global market in 2023, and is expected to grow at a CAGR of 4.7%
from 2023 to 2027, reaching RMB425.6 billion in 2027, which accounts for 40.5% of the
global market.
Sales Value of Global Residential Air Conditioner Market by Region, 2017-2027E
30.3
36.2
33.3 35.2 36.1
45.5 46.8 48.3 48.2 48.7 49.1 49.6
36.8 39.6 42.8
56.8 61.0 67.2 67.1 69.6 72.2 74.6
Mainland China
Europe
North America
Other Countries and Regions
Sales Value
(Billi
on RMB)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
339.6321.5 298.5353.7 373.4 393.4 403.4 429.0 453.6 477.5 500.8
299.3 327.0 303.4
255.4
301.2 318.6 354.6 373.0 391.1
425.6408.5
687.3 736.7 731.9
632.8
776.9 819.8
873.5 917.3 963.0 1,007.3 1,050.6
0
100
200
300
400
500
600
700
800
900
1,000
1,100
Source: Japan Refrigeration and Air Conditioning Industry Association, Frost & Sullivan Report
INDUSTRY OVERVIEW
– 135 –


--- page 147 ---
The growth in the global residential air conditioner market is increasingly driven by the
rapid growth in the sales of central residential air conditioners and premium air conditioners,
which provide consumers with better cooling experiences and generally command higher
per-unit prices.
Laundry Appliances and Refrigerators
The global market for laundry appliances (including washing machines, dryers and
washer-dryers) and refrigerators grew steadily from 2017 to 2023, mainly driven by increases
in disposable income and urbanization, particularly in the emerging markets. The growth was
also driven by consumers’ growing health awareness and demand for high-quality laundry
appliances and refrigerators that facilitate a healthy lifestyle. Going forward, the total sales
value of the global laundry appliances and refrigerator market is expected to grow at a CAGR
of 3.8% from 2023 to 2027. In particular, emerging markets such as South America, Southeast
Asia, and Middle East & North Africa are expected to experience faster growth than the global
average.
Sales Value of Global Market of Laundry Appliances and Refrigerators by Region,
2017-2027E
Mainland China
Europe
North America
Other Countries and Regions
Sales Value
(Billi
on RMB)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
397.0353.9 381.5410.6 405.1 453.1 443.9 453.3 482.1 514.9 548.3
249.4 262.2 272.4 282.6 321.3 315.5 322.9 330.0 341.2 350.0 360.0215.4 217.9 223.3 242.4
266.5 267.7 268.9 271.5 274.4 277.8 281.3
169.9 173.7 175.9 177.9
195.8 182.4 189.3 199.7 210.5
230.3220.7
988.6 1,050.8 1,082.2 1,084.4
1,188.7 1,218.7 1,225.0 1,254.5 1,308.2 1,363.4 1,419.9
0
500
1,000
1,500
Source: Association of Home Appliance Manufacturers, Home Appliance Europe, China Household Electrical
Appliances Association, Frost & Sullivan Report
Laundry appliances saw fast growth from 2017 to 2023, growing at a CAGR of 4.6% in
terms of sales value. Among laundry appliances, the penetration rate of dryers and
washer-dryers remains relatively low in many regions compared with washing machines,
presenting significant market potential. For example, in mainland China, the ownership of
washing machines per household was about 1.0 unit in 2023, while the ownership of dryers and
washer-dryers was less than 0.1 unit per household in the same year. Furthermore, a trend of
premiumization is also witnessed in the markets of refrigerators and washing machine,
reflecting a consumer preference for better user experience.
INDUSTRY OVERVIEW
– 136 –


--- page 148 ---
Kitchen and Other Appliances
The global markets for kitchen and other appliances saw a steady growth from 2017 to
2023, mainly driven by increases in disposable income and urbanization rate, particularly in the
emerging markets, as the result of which consumers increasingly demanded diversified
products, leading to higher penetration rate of kitchen and other appliances. The growth rate
is expected to continue rising going forward.
Sales Value of Global Market of Kitchen and Other Appliances by Region,
2017-2027E
Mainland China
Europe
North America
Other Countries and Regions
Sales Value
(Billi
on RMB)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
327.8316.5 300.3364.6 316.6 364.7 386.6 409.4 447.3 494.1 542.8
344.1 360.3 373.3 374.1 407.8 439.2 452.2 459.9 466.9 475.5 483.5410.6 421.4 430.9 438.1 491.0 501.3 507.9 500.4 511.9 524.2 536.3305.8 318.4 318.3 311.3
335.8 315.7 310.5 345.4 360.2
390.6375.6
1,377.0 1,427.9 1,487.1 1,423.8
1,551.2 1,620.9 1,657.2 1,715.1 1,786.3 1,869.4 1,953.2
0
500
1,000
1,500
2,000
Source: Association of Home Appliance Manufacturers, Home Appliance Europe, China Household Electrical
Appliances Association, Frost & Sullivan Report
Growth Drivers and Trends of the Home Appliance Market
The following factors are the principal factors that have driven and, we expect, will
continue to drive the growth of the global market for home appliances:
 Increasing Populations and Rising Living Standards . With increasing
populations, urbanization, consumer purchasing power and living standards, the
home appliance penetration rate, particularly in emerging markets, continues to rise,
further fueling the growth of the global home appliance market. According to the
United Nations, the global urban population is expected to grow at a CAGR of 1.6%
from 2023 to 2027. The increasing urban population, particularly in emerging
economies, creates a greater demand for home appliances.
 Rising Replacement Demand in Mainland China . Chinese consumers are
increasingly upgrading their household appliances, especially air conditioners,
refrigerators and laundry appliances, to embrace advanced technologies, improved
efficiencies and better designs. This surge in demand for these home appliance
categories is predominantly driven by the need for replacement rather than new
home purchases. According to the National Bureau of Statistics of China, over
75.0% of the total sales of residential air conditioners, refrigerators and washing
machines in 2023 in mainland China were attributed to replacement demand,
reflecting a significant impact of renovation-driven demand on mainland China’s
home appliance market.
INDUSTRY OVERVIEW
– 137 –


--- page 149 ---
 Demand for Products of Better Quality and Functionality . Driven by increasing
disposable income and living standards, consumers are increasingly seeking
superior products that offer a higher level of functionality, convenience and comfort
for their households. As a result, the penetration rates of kitchen and other
appliances are still increasing. According to the International Monetary Fund and the
World Bank, from 2022 to 2027, the per capita annual disposable income of
mainland China, North America and Europe is expected to grow at CAGRs of 6.3%,
4.0% and 4.5%, respectively. As disposable incomes rise, consumers gain more
purchasing power, which enables them to afford a wider range of home appliances,
thereby driving increased demand for higher-end products and enhanced penetration
of kitchen and other appliances. As a result, in mainland China, consumers are
placing greater value on home appliances of better quality and functionality that
contribute to a healthy, comfortable, and eco-friendly home environment. At the
same time, higher-end home appliances, which generally command higher prices,
present additional market potential. For example, in terms of sales value, central
residential air conditioners, which are more sophisticated, provide more comfort and
feature higher prices, are quickly penetrating the global and mainland China’s
residential air conditioner markets, growing from 13.3% in 2017 to 17.8% in 2023
and expected to further grow to 18.2% in 2027 globally, and from 10.2% in 2017 to
14.7% in 2023 and expected to further grow to 16.3% in 2027 in mainland China.
As a result, with the stronger demand for higher-end home appliance products, from
2021 to 2023, the average selling price of residential air conditioners, refrigerators
and laundry appliances in mainland China increased at a CAGR of 4.3%, 3.2% and
1.6%, respectively.
 Demand for Energy-Efficient and Smart Products . As energy costs continue to
rise, consumers are more willing to purchase appliances that can help them save
utility costs and reduce adverse impact on the environment. At the same time, with
advancement in technologies, more smart home appliance products that are
intelligent and interconnected are emerging, particularly in mainland China. Such
growing demand for energy-efficient and smart products drives the sales of home
appliances that are equipped with energy-saving technologies and smart functions,
which in turn contributes to the overall growth of the home appliance market.
Looking forward, we expect that the global market for home appliances will experience
increasing market concentration as global market leaders continue to consolidate the industry.
In addition, the shift from offline sales channels to online sales channels is likely to continue.
The percentage of online sales in the global sales value grew from 22.5% in 2017 to 39.8% in
2023 and is expected to further grow to 42.7% in 2027. Meanwhile, any continued downturn
in the real estate market in mainland China and elsewhere can have a negative impact on
market demand for home appliances in mainland China and then affect the growth of the global
home appliance market.
INDUSTRY OVERVIEW
– 138 –


--- page 150 ---
Competitive Landscape of the Home Appliance Market
Global Market for Home Appliance Companies
The home appliance market we operate in is highly competitive. Our main competitors
include large Chinese and multinational home appliance companies and local and specialized
brands. The global home appliance market is relatively fragmented, with the top 5 players in
aggregate representing approximately 20.8% of the total market share by sales volume. In
2023, the number of market players in the global home appliance market exceeded 60,000.
Among global home appliance companies, we ranked first in terms of both revenue and sales
volume in 2023, capturing a market share of 7.9% in terms of sales volume.
Top 5 Home Appliance Companies by Revenue, Global, 2023
Ranking Company Headquarters Revenue (billion RMB)
1 Our Company Asia 246.4
2 Company A (1) Asia 239.0
3 Company B (2) Asia 163.4
4 Company C (3) Asia 136.7
5 Company D (4) North America 124.5
Notes:
(1) Company A is a listed home appliance company that was included in the 2023 Fortune Global 500 list and that
primarily engages in the manufacturing and sales of refrigerators, washing machines, air conditioners, kitchen
appliances and small appliances.
(2) Company B is a listed company that was included in the 2023 Fortune Global 500 list and that mainly offers
home entertainment, mobile communications, home appliances and air solutions, and vehicle components.
(3) Company C is a listed home appliance company that mainly produces air conditioners and also produces
electric fans, water dispensers, heaters, rice cookers, air purifiers, water kettles, humidifiers and induction
cookers, and other products.
(4) Company D is a listed home appliance company which is a manufacturer and market player of laundry
appliances, kitchen appliances and other home appliance products.
Top 5 Home Appliance Companies by Revenue, China, 2023
Ranking Company Headquarters Revenue (billion RMB)
1 Our Company Asia 141.1
2 Company A (1) Asia 119.0
3 Company C (2) Asia 116.0
4 Company N (3) Asia 39.4
5 Company O (4) Asia 15.1
INDUSTRY OVERVIEW
– 139 –


--- page 151 ---
Notes :
(1) Company A is a listed home appliance company that was included in the 2023 Fortune Global 500 list and that
primarily engages in the manufacturing and sales of refrigerators, washing machines, air conditioners, kitchen
appliances and small appliances.
(2) Company C is a listed home appliance company that mainly produces air conditioners and also produces
electric fans, water dispensers, heaters, rice cookers, air purifiers, water kettles, humidifiers and induction
cookers, and other products.
(3) Company N is a listed home appliance company that mainly offers air conditioners, refrigerators, freezers
beverage coolers and other home appliances.
(4) Company O is a listed home appliance company that mainly offers electric rice cookers, induction hobs,
electric pressure cookers, soymilk makers, blenders, juicers, electric kettles, baked machines and other home
appliances.
Top 5 Home Appliance Companies by Sales Volume, Global, 2023
Ranking Company Headquarters
Sales Volume
(million units) (1) Market Share
1 Our Company Asia 240.8 7.9%
2 Company A (2) Europe 122.6 4.0%
3 Company E (3) Asia 105.9 3.5%
4 Company F (4) Europe 84.0 2.7%
5 Company G (5) North America 81.9 2.7%
Notes:
(1) Including only sales under each company’s own brands.
(2) Company A is a listed home appliance company that was included in the 2023 Fortune Global 500 list and that
primarily engages in the manufacturing and sales of refrigerators, washing machines, air conditioners, kitchen
appliances and small appliances.
(3) Company E is a listed home appliance company that mainly produces consumers electronics products,
including kitchen appliances, ironing and garment care products, and home cleaning appliances, and provides
professional healthcare products, including ultrasound, radiography and others.
(4) Company F is a listed home appliance company that mainly engages in production and sales of small home
appliances, including electric fans, ironing machines, hair removal devices, cookers, food preparation
appliances and others.
(5) Company G is a listed home appliance company that specializes in manufacturing, marketing and distribution
of home appliance products, including kettles, toasters, microwaves and others.
In the home appliance market in mainland China, the top 5 players in aggregate captured
approximately 49.1% of the total market share by sales volume in 2023. The number of market
players of the home appliance market in mainland China was around 40,000 in 2023. In the
mainland China market, we ranked first in terms of sales volume in 2023, representing a market
share of 25.5%.
INDUSTRY OVERVIEW
– 140 –


--- page 152 ---
Top 5 Home Appliance Companies by Sales Volume, Mainland China, 2023
Ranking Company Headquarters
Sales Volume
(million units) (1) Market Share
1 Our Company Asia 190.4 25.5%
2 Company A (2) Asia 57.0 7.6%
3 Company H (3) Asia 48.2 6.5%
4 Company C (4) Asia 39.1 5.2%
5 Company I (5) Asia 32.0 4.3%
Notes:
(1) Including only sales under each company’s own brands.
(2) Company A is a listed home appliance company that was included in the 2023 Fortune Global 500 list and that
primarily engages in the manufacturing and sales of refrigerators, washing machines, air conditioners, kitchen
appliances and small appliances.
(3) Company H is a listed home appliance company that integrating the R&D, manufacturing, and sales of shavers
and personal care electric appliances.
(4) Company C is a listed home appliance company that mainly produces air conditioners and also produces
electric fans, water dispensers, heaters, rice cookers, air purifiers, water kettles, humidifiers and induction
cookers, and other products.
(5) Company I is a listed home appliance company that focuses on small appliances, including vacuum cleaners,
soymilk makers, noodle markers, juice extractors and others.
Global Market for Home Appliance Companies, by Product Type
In 2023, in terms of sales volume, we ranked among the top three home appliance
companies in the world in each of residential air conditioners, laundry appliances,
refrigerators, as well as kitchen and other appliances, with a market share of 23.7%, 14.2%,
10.5% and 6.0%, respectively. During the same period, we also ranked among the top three
home appliance companies in these markets in terms of retail sales value, with a market share
of 21.1%, 12.5%, 7.7% and 4.6%, respectively. Among these markets, we ranked first in
residential air conditioners as well as kitchen and other appliances.
Major Entry Barriers for the Home Appliance Market
New companies looking to enter the home appliance market generally need to overcome
the following barriers:
 R&D: The increasingly smart and technologically sophisticated home appliance
products, and consumers’ growing preference for such products, create a significant
barrier for new entrants to compete with existing market leaders who have over the
years accumulated strong expertise and R&D prowess in the field of home
appliances.
INDUSTRY OVERVIEW
– 141 –


--- page 153 ---
 Manufacturing Capabilities : Established large players enjoy greater abilities to
stay profitable by reducing their average cost through mass production and
centralized procurement and distribution, maintaining a competitive edge against
new entrants and small players.
 Distribution and Service Network : The distribution channels in the global home
appliance market require substantial time and investment to build. In addition, home
appliances makers need to build national or even global service networks to provide
repair and maintenance services. Setting up extensive distribution and service
networks requires significant investments and years of efforts, creating a significant
entry barrier for new players.
 Brand Power : In many markets, global and local market leaders have accumulated
strong brand power and long-term customer loyalty. Even with superior and more
cost-effective products, it is uncertain how much market share a new brand can
capture.
MAIN ADDRESSABLE MARKETS OF OUR COMMERCIAL & INDUSTRIAL
SOLUTIONS
Our Commercial & Industrial Solutions address various sizable markets with substantial
growth potential, including mainly energy solutions and industrial technology, intelligent
building technology, and robotics and automation. In 2023, the global market size in terms of
total sales value of these three markets reached RMB783.4 billion, RMB1,854.4 billion and
RMB1,440.3 billion, respectively.
The aging population, increasing urbanization rate and the growing demand from multiple
end markets in mainland China and elsewhere, alongside global decarbonization trends, are
fueling the demand for solutions in the aforementioned markets. There is an increasing need
for intelligent buildings equipped with energy-efficient systems to support environmental
sustainability. Amid the global trend of decarbonization, the rise in NEV penetration
necessitates energy storage systems and thermal management systems in NEVs to meet the
elevated demand while minimizing adverse environmental impact. Simultaneously, challenges
of an aging population and rising labor costs in many countries and regions are spurring the
adoption of robotics and automation across various sectors to mitigate labor shortages, control
labor costs and enhance overall efficiency. Furthermore, the growth of multiple end markets,
such as NEV and electronics, is driving the demand for solutions that serve these markets.
Overview of Energy Solutions & Industrial Technology Market
Energy solutions and industrial technology refers to various products and solutions for
industrial use and energy management, including home appliance compressors, home appliance
motors, industrial control systems and energy solutions. Energy solutions include, among other
things, energy storage and thermal management systems for new energy vehicles (NEVs).
INDUSTRY OVERVIEW
– 142 –


--- page 154 ---
Overview of Global Market for Home Appliance Compressors and Home Appliance Motors
Market size
A home appliance compressor is a mechanical device designed to increase the pressure of
gas or air by reducing its volume, used in a variety of products such as air conditioners and
refrigeration systems. A home appliance motor is an electrical component that converts
electrical energy into mechanical energy, used in major home appliances including air
conditioners, laundry appliances, and refrigerators. In line with the stable growth of the home
appliance market, the global sales value of home appliance compressors grew from RMB101.8
billion in 2017 to RMB171.7 billion in 2023, and the global sales value of home appliance
motors grew from RMB132.5 billion in 2017 to RMB167.8 billion in 2023. It is expected that
both markets will maintain stable growth, reaching RMB223.0 billion and RMB196.7 billion,
respectively, in 2027.
Global Sales Value of Home Appliance Compressors and Home Appliance Motors,
2017-2027E
132.5
101.8
234.3
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Billion RMB Compressor
Motor
141.1
128.7
269.8
143.5
129.4
272.9
133.3
116.9
250.2
151.2
150.5
301.7
160.0
154.5
314.5
167.8
171.7
339.5
174.8
182.8
357.6
182.2
195.3
377.5
189.6
208.7
398.3
196.7
223.0
419.7
0
100
200
300
400
500
2023-2027E
2017-2023
CAGR
5.4%
6.4%
Total
6.8%
9.1%
Compressor
4.1%
4.0%
Motor
Source: Japan Air Conditioning Heating & Refrigeration News, Chinese Society for Electrical Engineering, Frost &
Sullivan Report
Competitive landscape of the market of home appliance compressors and home appliance
motors
Our home appliance compressor business ranked No. 1 in the global market in terms of
manufacturing volume in 2023, capturing a market share of 30.3%. Among our home appliance
compressor business, our residential air conditioner compressors business also ranked No. 1 in
2023 in terms of manufacturing volume, commanding a market share of 45.1% by
INDUSTRY OVERVIEW
– 143 –


--- page 155 ---
manufacturing volume. For home appliance motors, we ranked first globally in both residential
air conditioner motors and laundry appliance motors in terms of manufacturing volume in
2023, with respective market shares of 40.0% and 22.0%.
Overview of Industrial Control System Market
Market size
Industrial control systems include controlling products such as servo systems and motion
controllers. Servo systems mainly include servo motors, servo drives, feedback devices,
encoders and other components. Motion controllers are devices used to control and coordinate
the motion of machinery and automation systems. Sales value generated by the global
industrial control system market increased from RMB89.0 billion in 2017 to RMB131.2 billion
in 2023 and is expected to grow further and reach RMB152.4 billion in 2027. Sales value
generated from the industrial control market in mainland China increased from RMB29.2
billion in 2017 to RMB45.2 billion in 2023 and is expected to reach RMB55.4 billion in 2027,
accounting for an increasing percentage of the global market.
Sales Value of the Global Industrial Control System Market, 2017-2027E
2023-2027E
2017-2023
CAGR
3.8%
6.7%
Total
5.0%
7.5%
Mainland China
3.8%
6.2%
Other Countries and Regions
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Billion RMB
Mainland China
Other Countries and Regions
0
50
100
150
200
59.8 67.9 80.7 84.4 85.9 80.4 86.0 89.2 92.0 94.6 97.0
29.2
30.9
30.4 35.3 46.1 43.4 45.2 47.8 50.4 53.0 55.4
137.0
89.0
98.8
111.1
119.7
132.0 123.8 131.2
142.5 147.6 152.4
Source: International Society of Automation, Frost & Sullivan Report
Growth drivers and competitive landscape of the industrial control system market
The growth of the industrial control system market is expected to be driven by: (i)
growing demand for industrial automation across various sectors, where industrial control
systems play a pivotal role in providing precise and reliable motion control, particularly for end
markets such as integrated circuit products, consumer electronics and NEVs, with integrated
circuit products and automotive being two major downstream applications of industrial control
systems, each representing approximately 15% and 10% of the end markets of industrial
INDUSTRY OVERVIEW
– 144 –


--- page 156 ---
control systems in terms of revenue in 2023, as evidenced by the significant growth of the
integrated circuit product market and the NEV market in mainland China in terms of sales
value with a CAGR of 10.1% and 18.5% between 2023 and 2027, respectively, according to the
China Semiconductor Industry Association and the International Organization of Motor V ehicle
Manufacturers; (ii) growing demand for energy efficiency, which can be achieved through
industrial control systems that can provide efficient motor control; (iii) technological
advancement in industrial control systems that continue to optimize their performance; and (iv)
growing demand from the emerging markets that are undergoing industrialization.
The global industrial control system market is competitive with more than 2,000 players.
In 2023, the leading companies of the global industrial control system market were
multinational companies based in Japan, Europe and United States. In 2023, we captured the
market share of around 0.9% in the global industrial control system market by revenue.
Overview of the Energy Storage Market
Market size
In terms of value of added installed capacity, the global market of energy storage
increased significantly at a CAGR of 72.2% from 2017 to 2023 and is expected to grow further
at a CAGR of 37.7% from 2023 to 2027, reaching RMB857.0 billion in 2027. Also in terms
of value of added installed capacity, the market size of mainland China’s energy storage market
grew even more significantly at a CAGR of 130.9% from 2017 to 2023, and is expected to
increase at a CAGR of 48.4% from 2023 to 2027, reaching RMB293.9 billion in 2027.
Market Size of the Global Energy Storage Market by Value
of Added Installed Capacity, 2017-2027E
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Billion RMB
14.1 15.9 22.5
2.1
4.8
49.1
125.6 28.3
238.6
88.7
357.1
41.6
99.3
484.8
638.4
857.0
Mainland ChinaTotalCAGR
130.9%72.2%2017-2023
48.4%37.7%2023-2027E
Europe
47.7%
27.5%
North America
63.9%
36.2%
Other Countries
and Regions
79.0%
33.2%
Other Countries and Regions
Mainland China
Europe
North America
293.9
76.9
207.2
279.0
210.3
62.4
147.4
218.3
146.3
51.4
110.9
176.2
83.8
132.4
60.2
29.1
60.6
28.4
34.9
34.0
7.2
7.6
10.79.2
6.4
4.4
6.5
2.8
2.2
3.7
2.9
2.1
9.0 3.1
2.7
2.8
0.4
5.4 23.60
100
200
300
400
500
600
700
800
900
Source: China Energy Storage Alliance, Frost & Sullivan Report
INDUSTRY OVERVIEW
– 145 –


--- page 157 ---
Growth drivers and competitive landscape of the energy storage market
The growth of the energy storage market is expected to be driven by: (i) the increasing
share of sustainable energy sources in the global electricity generation market, which is
projected to rise from 29% in 2020 to 55% in 2050, according to the International Energy
Agency and is expected to stimulate the demand for energy storage systems that can help
ensure a stable supply of sustainable energy; and (ii) favorable government policies from major
economies including the United States, Europe and mainland China that encourage production
and installation of energy storage equipment.
The global energy storage market is relatively competitive with more than 1,000 players.
In 2023, in the global energy storage market, we captured the market share of around 1.6% by
revenue.
Overview of Global Market for Thermal Management Systems for NEVs
Market size
The global NEV market has been growing rapidly and mainland China has become the
world’s largest NEV market. Thermal management systems for NEVs, including
e-compressors, e-water pumps, automotive valves, and more, are important for controlling and
optimizing heat transmissions in NEVs and enhancing NEV performance. The thermal
management market, though currently small in scale, is expected to grow rapidly in the near
future, driven by the growing demand from a fast-growing NEV market. The market of thermal
management systems in mainland China grew at a CAGR of 49.6% from 2017 to 2023 and is
expected to further increase at a CAGR of 32.0% from 2023 to 2027, reaching RMB309.5
billion in 2027.
Market Size of Global NEV Thermal Management System Market, 2017-2027E
9.1
5.7
3.4
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Billion RMB
Other Countries and Regions
Mainland China
13.4
7.8
5.6 15.7
8.6
7.1
16.4
6.8
9.6 40.0
15.4
24.6
77.9
28.3
49.6
102.0
33.2
68.8
159.9
71.1
88.8
105.1
212.7
278.4
309.5
107.6
146.2
132.2
148.5
161.0
2023-2027E
2017-2023
CAGR
32.0%
49.6%
Total
21.2%
65.1%
Mainland China
48.4%
34.1%
Other Countries
and Regions
0
50
100
150
200
250
300
350
Source: China Associate of Automobile Manufacturers, Frost & Sullivan Report
INDUSTRY OVERVIEW
– 146 –


--- page 158 ---
Growth drivers and competitive landscape of the NEV thermal management system market
The growth of the NEV thermal market is expected to be driven by the increasing share
of NEVs, such as electric vehicles and hybrid vehicles, which require efficient thermal
management solutions to ensure optimal performance and longevity. According to Frost &
Sullivan, the sales volume of global and mainland China’s NEV markets grew significantly
from 2023 to 2027, increasing at a CAGR of 31.5% from 13.7 million to 41.0 million globally
and increasing at a CAGR of 20.9% from 9.0 million to 19.3 million in mainland China.
Thermal management systems are more important for NEVs than for traditional internal
combustion engine (ICE) vehicles, given that battery safety and performance is highly sensitive
to temperature and that unlike ICE vehicles, NEVs cannot utilize the waste heat from the
engine for cabin heating. As a result, value of thermal management systems per vehicle of
NEVs is two to three times that of ICE vehicles.
The global NEV thermal management system market is relatively competitive with more
than 1,000 players. In 2023, global brands dominated the global NEV thermal management
market, capturing the majority of the market share, among which the top four industrial
companies accounted the market share of around 50% by revenue. In 2023, we captured the
market share of less than 1.0% in the global NEV thermal management market by revenue.
Overview of Intelligent Building Technology Market
Intelligent building technology refers to technological solutions that help buildings
optimize energy efficiency, enhance occupant comfort and improve security, integrating
hardware and software including commercial air conditioners, elevators, building control
software, and smart fire safety and security systems.
The Global Intelligent Building Technology Market
The global intelligent building technology industry saw a significant increase in revenue
from 2017 to 2023, growing at a CAGR of 9.1% from RMB1,101.0 billion in 2017 to
RMB1,854.4 billion in 2023.
As the wave of urban growth persists and building technologies further advance with the
support of digitalization and enhanced intelligence, the intelligent building technology market
is expected to experience strong growth at a CAGR of 7.2% from 2023 to 2027, reaching
RMB2,453.3 billion in 2027. In 2023, commercial air conditioners accounted for 19.5% of the
global intelligent building technology market in terms of revenue. Commercial air conditioners
play a vital role in the intelligent building technology market as they help maintain a
comfortable indoor environment by regulating temperature, humidity and air quality and
provide several key benefits, including improved indoor air quality, a comfortable indoor
environment and improved energy efficiency for buildings.
INDUSTRY OVERVIEW
– 147 –


--- page 159 ---
Revenue of Global Intelligent Building Technology Market by Region, 2017-2027E
0
500
1000
1500
2000
2500
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
RMB Billion
Other Countries and Regions
2023-2027E
Mainland China
2017-2023
CAGR
7.2%
9.1%
Total
9.6%
8.7%
Mainland China Other Countries and Regions
9.0%
9.6%
2,002.5
2,304.2
2,453.3
2,155.3
0
500
1,000
1,500
2,000
2,500
1,101.0
752.1
348.9
1,252.1
876.0
376.1
1,395.7
430.5
1,329.4
427.4
498.6
1,587.3
1,704.0
513.6
965.2 902.0
1,088.7 1,190.4 1,278.9
1,854.4
575.5
639.3
703.7
1,363.2 1,451.6 1,536.9
767.3
829.8
1,623.5
Source: National Bureau of Statistics of China, China Elevator Industry Business Yearbook, Frost & Sullivan Report
The intelligent building technology market in mainland China is expected to grow fast at
a CAGR of 9.6% from 2023 to 2027, reaching RMB829.8 billion in 2027.
Growth Drivers and Trends of the Intelligent Building Technology Market
The following factors are the principal factors that have driven and, we expect, will
continue to drive the growth of the intelligent building technology market:
 Global Trends of Decarbonization : The global trends of decarbonization drive the
growth of intelligent building technology, as industrial, office and other buildings
are major sources of carbon emissions. Intelligent building technology, which
integrates hardware and software, plays an instrumental role in enhancing energy
efficiency and reducing carbon emissions as well as energy costs for buildings,
helping achieve decarbonization goals. Against this backdrop, mainland China
witnessed a remarkable surge in Leadership in Energy and Environmental Design
(LEED) certifications, one of the most widely used green building rating systems
globally, with 7,119 projects obtaining this certification as at 31 December 2023, as
reported by the U.S. Green Building Council. This figure reflects an increase of
55.6% from 2022, underlining a robust demand for intelligent building solutions in
mainland China.
 Digital Urban Development : The growth of the intelligent building technology
market is also driven by the digital urban development in mainland China and
around the world. For instance, the digital urban development in mainland China has
spurred the transformation of buildings into digitally managed ecosystems,
supported by intelligent building technology such as building control systems.
INDUSTRY OVERVIEW
– 148 –


--- page 160 ---
 Continued Urbanization : Urbanization is also an important driver for the
intelligent building technology market. For example, according to Frost & Sullivan,
the urbanization rate in mainland China is expected to increase from 66.2% in 2023
to 69.8% in 2027. The increasing urbanization rate is driving the demand for
intelligent building technology, as more city dwellers demand better air quality,
energy efficiency, safety and convenience in their living environments.
 Replacement and Upgrade : As buildings age, elevators, air conditioning and other
equipment in the buildings age with them, and there arises a need to replace or
upgrade existing equipment to meet modern standards of efficiency, sustainability
and safety. Building control software is also in need to achieve more efficient and
effective management of the building and its equipment. This further drives the
growth of intelligent technology building.
Going forward, we expect that the global intelligent building technology market will
experience higher demand and wider adoption of building control software, increasing
application of technologies such as 5G, IoT, cloud computing, big data and AI, and a growing
trend towards integrated building solutions that combine hardware and software in an organic
and intelligent manner.
Competitive Landscape of Intelligent Building Technology Market
In the intelligent building technology market, our main competitors include Chinese and
multinational companies offering intelligent building technology solutions. The intelligent
building technology market in mainland China is relatively fragmented, with the top 5 players
in aggregate representing approximately 17.8% of the total market share. In 2023, the number
of market players of intelligent building technology market in mainland China was more than
50,000. In mainland China, we ranked fifth in terms of revenue derived from intelligent
building technology in 2023, capturing a market share of 2.7%.
When it comes to commercial air conditioners, we ranked first in mainland China with a
market share of 14.3% and fifth globally with a market share of 6.6%, both in terms of revenue
in 2023.
Major Entry Barriers for the Intelligent Building Technology Market
New companies looking to enter the intelligent building technology market generally
need to overcome the following barriers:
 Brand Recognition : In the market of complex intelligent building technology, once
customers have established trust in a particular brand, they are unlikely to switch to
alternatives easily. This is particularly true for specialized equipment such as air
conditioners or elevators, where reliability is crucial for comfort and safety. It is
therefore difficult to gain brand recognition by competing against existing players
with an established customer base.
INDUSTRY OVERVIEW
– 149 –


--- page 161 ---
 Qualifications and Certifications : Companies engaged in intelligent building
technology are required to obtain and maintain all necessary permits and
qualifications and undergo rigorous testing, certification and quality audits, in
accordance with local laws, regulations and industry requirements. These
requirements pose another significant challenge.
 Ability to Innovate : Innovation is crucial to the ever-evolving intelligent building
technology market, which is highly dependent on expertise and technical know-how.
Companies need to continuously invest in R&D and technological innovation in
order to maintain a competitive edge, which poses substantial challenges to new
market players without sufficient R&D capabilities or financial resources. There is
also growing demand for talents in this field, and new entrants will need to compete
with existing market players to attract the right talents.
 Ability to Provide Integrated Solutions : Being able to offer integrated and
customized solutions is increasingly key to the success of an intelligent building
technology provider. It will be challenging for a new entrant to compete in the
market if it lacks the requisite diversity in its building technology solutions or the
R&D and sales abilities to offer integrated solutions.
Overview of Robotics and Automation Market
The robotics and automation market includes the robotics market and the market of other
industrial automation solutions, improving production efficiency of the manufacturing process.
With the rising demand for robotics and advancements in technologies, the market size of the
global robotics and automation market increased from RMB784.2 billion in 2017 to
RMB1,440.3 billion in 2023 and is expected to reach RMB2,037.8 billion in 2027.
Robotics generally refers to actuated mechanisms programmable in two or more axes with
a degree of autonomy, moving and performing intended tasks. By application, robotics can be
divided into industrial robots and service robots. The global robotics industry has witnessed
significant growth and advancements in recent years, leading to the widespread deployment of
robots in various industries and applications worldwide. The total revenue generated by the
global robotics market has been on the rise, increasing from RMB180.5 billion in 2017 to
RMB395.8 billion in 2023 and expected to reach RMB584.1 billion in 2027.
Overview of the Global Industrial Robotics Market
Industrial robots are generally used for automating manufacturing and other processes.
The industrial robotics industry has experienced remarkable technological advancements in
recent years. The integration of AI, machine learning and advanced sensor technologies has
empowered industrial robots to execute intricate tasks with enhanced precision and
adaptability. Revenue from the global industrial robotics market grew at a CAGR of 4.3% from
RMB110.2 billion in 2017 to RMB142.1 billion in 2023 and is projected to further grow at a
CAGR of 7.9% from 2023 to 2027, reaching RMB192.5 billion in 2027.
INDUSTRY OVERVIEW
– 150 –


--- page 162 ---
Industrial robotics are generally used in sectors that include electrical/electronics,
automotive, metal and machinery, plastic and chemical products, food and others. The top three
largest applications of industrial robotics are electrical/electronics, automotive and metal and
machinery, together accounting for 62.6% of the total market in 2023, among which automotive
applications are expected to grow fast and become the largest sector of industrial robotics
application by 2024.
The industrial robotics market in mainland China has also experienced remarkable
growth, fueled by various factors such as rising labor costs, advancing technologies in robotics,
and expanding manufacturing activities. The automotive, electrical/electronics, and metal and
machinery manufacturing sectors in mainland China have generated particularly high demand
for industrial robotics. Revenue from the industrial robotics market in mainland China was
RMB67.5 billion in 2023 and is expected to grow at a CAGR of 10.5% from 2023 to 2027,
reaching approximately RMB100.5 billion in 2027.
Market Size of the Global Industrial Robotics Market, 2017-2027E
32.5
77.7
110.2
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
RMB Billion
Other Countries and Regions
Mainland China
35.9
73.5
109.4
39.3
56.1
95.4
41.3
54.6
95.9
50.5
62.4
112.9
60.9
70.3
131.2
67.5
74.6
142.1
76.4
78.2
154.6
83.7
82.2
165.9
91.5 100.5
88.1
179.6
92.0
192.5
0
100
150
200
250
300
50
2023-2027E
2017-2023
CAGR
7.9%
4.3%
Total
10.5%
13.0%
Mainland China
5.4%
-0.7%
Other Countries
and Regions
Source: International Federation of Robotics, Frost & Sullivan Report
Density of Industrial Robotics in Major Regions
In terms of robot density, which is measured by the number of industrial robots per certain
number of manufacturing workers, mainland China had achieved a robot density of 418.7
robots per 10,000 manufacturing workers in 2023, below South Korea (1,112.6), Germany
(432.6), Japan (418.2). Robot density in mainland China is expected to increase further to
617.5 robots per 10,000 employees in 2027, which will be the second highest among all
regions, surpassing Germany and Japan and behind only South Korea.
INDUSTRY OVERVIEW
– 151 –


--- page 163 ---
Robot Density of the Global Industrial Robotics Market in Top 5 Largest Regions,
2017-2027E
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
Robots Installed per
10,000 Manufacture Workers
Mainland China
Japan
US
South Korea
Germany
World Average
2017 2023 2027E
97.0
308.0
200.0
710.0
322.0
85.0
418.7418.2
303.7
1,112.6
432.6
164.6
617.5
502.5
379.5
1,302.8
502.6
217.6
Source: International Federation of Robotics, Frost & Sullivan Report
Growth Drivers and Trends of the Industrial Robotics Market
The following are the principal factors that have driven and, we expect, will continue to
drive the growth of the global industrial robotics market:
 Increasing Demand for Automation Driven by Aging Population and Rising
Labor Costs : Many countries and regions are facing challenges of an aging
population and rising labor costs. For example, in mainland China, the population
aged 65 and older grew from 15.4% of the total population in 2023 to 17.7% in 2027.
The annual average wage of urban employees in private sectors in mainland China
is expected to rise at a CAGR of approximately 4% from 2023 to 2027, according
to Frost & Sullivan. This shift poses challenges for labor-intensive industries, such
as manufacturing industry, where a decline in skilled workers can lead to labor
shortages and the decreased productivity. As a result, many industrial sectors are
moving toward automation in their manufacturing and other operations, causing a
surge in the demand for industrial robotics, particularly in places such as mainland
China. These sectors can greatly benefit from the scalability and speed offered by
industrial robots.
INDUSTRY OVERVIEW
– 152 –


--- page 164 ---
 Technological Advancements : Technological advancements made in or applicable
to the robotics field contribute to the growth of the industrial robotics market. For
example, traditional robots can only perform a single task, while the latest flexible
robots can adapt to different production needs and perform multiple tasks, thus
greatly expanding the applications of industrial robotics. The continued
development in digitalization has also enhanced the performance of industrial
robotics and driven market growth. Digital robots use sensors and data collection
technology to detect various parameters and indicators in the production process in
real time, significantly enhancing production efficiency.
 Rising Demand from Key End Markets : Propelled by technological advancements
and rising consumer demand, the key end markets of industrial robotics, such as
automotive, photovoltaic and electronics industries, have experienced substantial
growth. For instance, the sales volume of NEVs in mainland China surged from 9.0
million in 2023 to 19.3 million in 2027 at a CAGR of 20.9%, according to the Frost
& Sullivan. Similarly, the revenue of the electronics industry in mainland China
increased at a CAGR of approximately 4% from 2023 to 2027, according to Frost
& Sullivan. The electronics and automotive industries are two major downstream
applications of industrial robotics, each representing approximately 33.1% and
23.4% of the end markets of industrial robotics in terms of annual installations in
2023. The growth in automotive, photovoltaic and electronics industries is
indicative of the rising demand for industrial robots, as industrial robots and
automation technology present a compelling solution for these sectors by providing
continuous production and reducing production cycles.
We expect that the global industrial robotics market will witness a continuous shift to
energy-efficient, easy-to-use and customized robots. In addition, we expect that market leaders
will continue to leverage their strengths, collaborate on research and development and offer
comprehensive solutions, which will further strengthen their competitive position.
Competitive Landscape of Industrial Robotics Market
The global industrial robotics market is relatively concentrated and has high entry
barriers. In 2023, the top five industrial robotics companies in aggregate accounted for 42.8%
of the global market in terms of revenue. Other top global industrial automation companies are
our main competitors. Globally, our industrial robotics business ranked third in terms of
revenue in 2023 with a market share of 8.9%. In particular, in terms of sales volume and
revenue in 2023, we ranked second in the global market for heavy payload industrial robotics,
which refers to industrial robots with a payload of more than 100 kg, capturing a market share
of 18.6% and 17.9%, respectively.
INDUSTRY OVERVIEW
– 153 –


--- page 165 ---
Top 5 Industrial Robotics Companies by Revenue, Global, 2023
Ranking Company Headquarters Market Share
1 Company J (1) Asia 11.5%
2 Company K (2) Europe 10.9%
3 Our Company Asia 8.9%
4 Company L
(3) Asia 8.1%
5 Company M (4) Asia 3.4%
Notes:
(1) Company J is a listed company that mainly offers automation products and services, such as robotics and
computer numerical control wireless systems.
(2) Company K is a listed company that mainly offers robotics and automation technology.
(3) Company L is a listed company that mainly offers servos, motion controllers, switches and industrial robots.
(4) Company M is a listed company that mainly offers printers, robots and industrial automation equipment,
sensing systems and other electronic components.
Major Entry Barriers of Industrial Robotics Market
New companies looking to enter the industrial robotics market generally need to
overcome the following barriers:
 Technology and Know-how : Compared with many other industrial products,
robotics requires a higher level of performance, reliability, durability and safety. As
a result, deep technical expertise in various aspects, including robotics engineering,
control systems, AI, machine learning and sensor technology, is crucial for
developing and manufacturing industrial robotics. Accumulating this level of
expertise takes time and resources. In addition, for new market entrants, developing
robotics technologies while avoiding infringement on existing patents and dealing
with legal disputes can be a difficult task as well.
 Brand Power and Customer Relationship : The industrial robotics market is
dominated by a small number of major companies that enjoy economies of scale,
brand recognition, and strong relationships with top customers in key sectors from
years of cooperation, all of which are competitive advantages that are hard to
replicate. As switching suppliers of robotics and automation solutions tends to be
disruptive and costly, customers generally prefer to stay with existing suppliers.
 Established Supplier Network : Industrial robot manufacturers often establish
long-term partnerships with suppliers that provides key components and sub-
systems, making it difficult for new entrants to secure essential supplies.
INDUSTRY OVERVIEW
– 154 –


--- page 166 ---
Historical Price Trends of Major Raw Materials
The major raw materials used in our production include copper, steel, plastic and
aluminum, among others. The prices of these major raw materials were relatively stable from
2017 to 2020 and experienced a notable increase in 2021 as a result of demand-supply
imbalance. The prices then experienced a slight decline in 2022 and 2023, with the exception
of aluminum, which saw an increase in 2022, and copper, which saw an increase in 2023. The
increase of aluminum’s price in 2022 was attributed to production disruptions caused by power
restrictions, and the increase of copper’s price in 2023 was driven by global economic recovery
and increased investment in infrastructure. Increases in raw material costs affect industry
players unevenly. Market leaders are in a better position to leverage their diverse product
portfolio and operational efficiency to alleviate the impact and in general have stronger pricing
power to offset some of the pressure from rising raw material prices by raising prices.
The following graphs set forth historical prices of major raw materials for the periods
indicated:
Prices of Major Raw Materials, 2017-2023
4,426.2 4,658.9 4,468.8 4,467.3 5,640.1 5,091.5 4,715.4
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
20212017 2020 20222018 2019 2023
14,439.1 14,197.4 13,944.2 14,189.9
18,897.4 19,950.6 18,712.0
49,220.8 50,624.5 47,767.7
68,654.6 67,410.3 68,328.3
48,899.2
Rmb/Tonne Copper AluminumSteel
6,948.2 7,146.3 6,743.0 6,902.8
9,691.5 9,515.8 9,645.4
2,038.3 2,004.2 1,968.4 2,003.1 2,667.6 2,816.3 2,641.4
624.8 657.7 630.8 630.6 796.2 718.7 665.6
20212017 2020 20222018 2019 2023
0
2,000
4,000
6,000
8,000
10,000
12,000
USD/Tonne Copper AluminumSteel
1,025.8 1,038.5
970.5
852.0 844.8
2018 20202017 2019 2021 2022 2023
Plastic Price Index(1)
600
700
800
900
1000
1100
600
700
800
900
1,000
1,100
898.2
944.8
Source: London Metal Exchange, China Plastics, Frost & Sullivan Report
Note:
(1) The Plastic Price Index is compiled based on the transaction prices of plastic on the Zhejiang Plastic City
online trading market and transaction prices of plastic spot goods in China Plastic City.
INDUSTRY OVERVIEW
– 155 –


--- page 167 ---
SOURCES OF INFORMATION
We commissioned Frost & Sullivan, an independent global consulting firm that offers
industry research and market strategies and provides growth consulting and corporate training
to conduct a detailed research on and analysis of the global home appliance industry and the
global commercial and industrial industries that include energy solutions and industrial
technology, intelligent building technology and robotics and automation. We have agreed to
pay a fee of RMB816,000 to Frost & Sullivan in connection with the preparation of the Frost
& Sullivan Report. We have extracted certain information from the Frost & Sullivan Report in
this section, as well as in “Summary,” “Risk Factors,” “Business,” “Financial Information,”
and elsewhere in this document to provide our potential investors with a more comprehensive
presentation of the industries where we operate.
During the preparation of the Frost & Sullivan Report, Frost & Sullivan performed both
primary and secondary research, and obtained knowledge, statistics, information, and industry
insights on the industry trends of the target research markets. Primary research involved
discussing the status of the market with leading industry participants and industry experts.
Secondary research involved reviewing company reports, independent research reports and
data based on Frost & Sullivan’s own database. Frost & Sullivan has independently verified the
information, but the accuracy of the conclusions of its review largely relies on the accuracy of
the information collected. Frost & Sullivan’s research may be affected by the accuracy of
assumptions used and the choice of primary and secondary sources.
The Frost & Sullivan Report was compiled based on the following assumptions: (i) the
economy of mainland China and the global economy are likely to maintain steady growth in
the near future; and (ii) the social, economic, and political environment of mainland China and
the world is likely to remain stable from 2023 to 2027.
Our Directors confirm that, after making reasonable enquiries, there is no adverse change
in the market information since the date of the Frost & Sullivan Report that may qualify,
contradict or have a material impact on the information.
INDUSTRY OVERVIEW
– 156 –


--- page 168 ---
OVERVIEW
The history of our Group can be traced back to 1968, when our founder, Mr. He, started
our business in Shunde, Guangdong Province. In 1980, we began the production of electric
fans, marking our entry into home appliance manufacturing. Subsequent to the birth of our
brand “Midea,” we entered the air conditioning industry, starting the continual expansion of
our product portfolio in the home appliances industry.
After over 50 years of growth, we have become a leading technology-driven global
provider of Smart Home Solutions and Commercial & Industrial Solutions. We operate a global
business that reaches over 200 countries and regions. We have achieved market leadership
across different verticals including various home appliances and related core components,
commercial air conditioners, robotics and automation, among others. We have been a Fortune
Global 500 company for nine consecutive years, which demonstrates our global leadership and
excellence.
In 1993, Midea Electric debuted on the Shenzhen Stock Exchange. In September 2013,
our A Shares were listed on the main board of the Shenzhen Stock Exchange (stock code:
000333) by merging with Midea Electric. See “— Major Shareholding Changes of Our
Company — Conversion into Joint Stock Limited Company and Listing on the Shenzhen Stock
Exchange” for more details. As of the Latest Practicable Date, Midea Holding held 31.0% of
our registered capital.
KEY CORPORATE AND BUSINESS DEVELOPMENT MILESTONES
The following is a summary of our Group’s key corporate and business development
milestones:
Y ear Event
1968 /H1118/H1118/H1118/H1118/H1118We started our business in Shunde, China.
1980 /H1118/H1118/H1118/H1118/H1118We entered the home appliance industry with electric fans.
1981 /H1118/H1118/H1118/H1118/H1118The trademark “Midea” was registered.
1985 /H1118/H1118/H1118/H1118/H1118We started to offer air conditioning products.
1993 /H1118/H1118/H1118/H1118/H1118Midea Electric debuted on the Shenzhen Stock Exchange (stock code:
000527).
2002 /H1118/H1118/H1118/H1118/H1118We started to further diversify our product portfolio by entering into other
home appliance markets, such as refrigerators and washing machines.
2007 /H1118/H1118/H1118/H1118/H1118We established our first overseas manufacturing base in Vietnam.
2008 /H1118/H1118/H1118/H1118/H1118We acquired Little Swan, further strengthening our foothold in the washing
machine market.
2013 /H1118/H1118/H1118/H1118/H1118Our Group was listed on the Shenzhen Stock Exchange (stock code: 000333)
by merging with Midea Electric.
2016 /H1118/H1118/H1118/H1118/H1118We acquired a majority interest in Toshiba’s home appliances business,
Toshiba Lifestyle, a Japanese manufacturer of electrical home appliances.
2017 /H1118/H1118/H1118/H1118/H1118We acquired KUKA Group, a robotics manufacturer in Germany.
HISTORY AND CORPORATE STRUCTURE
– 157 –


--- page 169 ---
Y ear Event
2021 /H1118/H1118/H1118/H1118/H1118We became the No. 1 air conditioner provider in mainland China by sales
volume.
2024 /H1118/H1118/H1118/H1118/H1118We have entered the Fortune Global 500 for nine consecutive years.
MAJOR SUBSIDIARIES
The principal business activities and date of establishment of each of our Major
Subsidiaries are shown below:
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
Anhui Meizhi Precision
Manufacturing
Co., Ltd. (ၚ੗Ⴁி
ʮ̡) (“Meizhi
Precision”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of air
conditioner parts,
such as electric
motors, gas
compressors and
mechanical and
electrical
equipment
25 October 2010,
PRC
Annto Smart Logistics
(΅Ϟ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
74% Logistics and
warehousing
services
24 February 2011,
PRC
Chongqing Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡) (“Chongqing
Midea A/C”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of air
conditioners,
refrigerators and
freezers
30 May 2011, PRC
Foshan Shunde Midea
Electrical Heating
Appliances Manufacturing
Co., Ltd. (ٙߕ
ʮ̡)
(“Midea Heating
Appliances”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
small appliances,
such as
electrothermal
steamer pots and
pressure cookers
24 February 2006,
PRC
HISTORY AND CORPORATE STRUCTURE
– 158 –


--- page 170 ---
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
Foshan Shunde Midea
Household Appliances
Industry Co., Ltd.
(ཥྼุ
ʮ̡) (“Midea
Household Appliances”) /H1118/H1118/H1118/H1118
100% Investment holding 25 November 2005,
PRC
Foshan Shunde Midea Washing
Appliances Manufacturing
Co., Ltd. (ٙߕ
ʮ̡)
(“Midea Washing
Appliances”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
kitchen appliances,
such as
dishwashers, range
hoods, ovens,
sterilizers and gas
and heating
appliances
18 January 2000,
PRC
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
(“GD Midea A/C”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
80% Manufacturing and
sales of residential
air conditioners
22 October 2004,
PRC
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡)
(“GD Midea Wuhu A/C”) /H1118/H1118/H1118
100% Manufacturing and
sales of residential
air conditioners
30 April 2000, PRC
GD Midea Heating &
V entilating Equipment Co.,
Ltd. (ࠢ
ʮ̡) (“GD Midea H&V”) /H1118/H1118
100% Manufacturing of
commercial air
conditioners
26 September 2005,
PRC
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) (“GD Midea
Kitchen”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
small appliances,
such as
dishwashers, range
hoods, ovens,
sterilizers and gas
and heating
appliances
4 September 2006,
PRC
HISTORY AND CORPORATE STRUCTURE
– 159 –


--- page 171 ---
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
W AHIN (Ⴁиண௪Ϟ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of residential
air conditioners
13 June 2010, PRC
Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷண௪
ʮ̡) (“Hefei Midea
H/V”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of air
conditioners and
heating and
ventilating
equipment
9 October 2010,
PRC
Hefei Midea Refrigerator
Co., Ltd. (ཥΏᇌϞ
ʮ̡) (“Hefei Midea
Refrig.”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
refrigerators,
freezers and
refrigeration
products
1 September 1996,
PRC
Hubei Midea Refrigerator Co.,
Ltd. (ʮ
̡) (“Hubei Midea Refrig.”)
100% Manufacturing of
refrigerators,
freezers and
refrigeration
products
31 August 1998,
PRC
KUKA AG /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100% Manufacturing and
sales of robots and
robot-based
products and
solutions
8 May 1889,
Germany
Midea Capital Corporation
Limited (௴ุҳ༟၍ଣ
ʮ̡) (“Midea
Capital”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Investment in
companies
providing capital
market and
business-related
services
12 June 2018, PRC
Midea Electric Netherlands (I)
B.V . (ཥኜ(ஃᚆ)ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Investment holding 15 March 2017,
Netherlands
HISTORY AND CORPORATE STRUCTURE
– 160 –


--- page 172 ---
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
Midea Electric Trading
(Singapore) Co. Pte. Ltd.
(ཥኜ(อ̋ս)ࠢ
ʮ̡)(“Midea Singapore”) /H1118/H1118
100% Export trade of
household
appliances
11 January 2008,
Singapore
Midea Group (Shanghai) Co.
Ltd. (ණྠ(ɪऎ)ʮ
̡) (“Midea Shanghai”) /H1118/H1118/H1118/H1118
100% Manufacturing and
sales of intelligent
home appliances
and automation
solutions
2 January 2020,
PRC
Midea Group Finance
Co., Ltd. (ࠢ
ʮ̡) (“Midea Finance”) /H1118/H1118/H1118
100% Providing financial
services for
companies within
the Group
16 July 2010,
PRC
Midea Innovation
Investment Co., Ltd.
(ʮ̡)
(“Midea Innovation”) /H1118/H1118/H1118/H1118/H1118/H1118
100% Investment holding 19 March 2015,
PRC
Midea International
Corporation Company
Limited (ࠢ
ʮ̡) (“Midea
International”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Investment holding 28 July 2004,
Hong Kong
Midea Investment
Development Company
Limited (ࠢ
ʮ̡) (“Midea Investment
Development”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Investment in home
appliances
manufacturers
12 May 2016,
British Virgin
Islands
Ningbo Midea United
Materials Supply
Co. Ltd. (༟
ʮ̡) (“Ningbo
Midea United”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Wholesale and retail
of raw materials
and components
7 January 2011,
PRC
HISTORY AND CORPORATE STRUCTURE
– 161 –


--- page 173 ---
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
Toshiba Lifestyle (ཥ
ٟ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
home and kitchen
appliances, office
appliances, and
industrial
appliances
1 April 1991,
Japan
Toshiba Consumer Marketing
Corporation (ཥኜᐄቖ
ٟ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of home
appliances
2 November 1953,
Japan
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡)
(“Wuhu Maty A/C”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of air
conditioners and
refrigeration
equipment
29 April 2010, PRC
Wuhu Annto Logistics
Technology Co., Ltd. ( ጾಳ
ʮ̡)
(“Wuhu Annto”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
74% Logistics and
warehousing
services
7 December 2010,
PRC
Wuhu Midea Kitchen & Bath
Appliances Mfg. Co., Ltd.
(ࠢ
ʮ̡) (“Wuhu Midea
Kitchen & Bath”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing of
kitchen appliances,
such as range
hoods, gas
appliances,
dishwashers,
garbage disposers,
sterilizers and
water heaters
7 August 2008, PRC
Wuhu Midea Life Appliances
Mfg Co., Ltd. (ݺ
ʮ̡) (“Wuhu
Midea Life Appliances”) /H1118/H1118/H1118
100% Manufacturing and
sales of small and
smart home
appliances
7 August 2008, PRC
Wuxi Little Swan Electric
Co., Ltd. ( ೌ፼ʃ˂ᕰཥኜϞ
ʮ̡) (“Little Swan
Electric”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of laundry
appliances
31 May 2019, PRC
HISTORY AND CORPORATE STRUCTURE
– 162 –


--- page 174 ---
Name of company
Equity interest
attributable
to our Group
Principal
business activities
Date and jurisdiction
of establishment
Zhejiang Meizhi Compressor
Co., Ltd. (ᏀᐵዚϞ
ʮ̡) (“Meizhi
Compressor”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100% Manufacturing and
sales of air
conditioners parts,
such as gas
compressors and
refrigeration,
electrical and
mechanical
equipment
21 January 2014,
PRC
The Company held majority equity interests in the above Major Subsidiaries throughout
the Track Record Period, except for Midea Capital Corporation Limited which became a
wholly owned subsidiary of the Company in January 2022 as a result of acquisition of the
remaining 51% equity interest from its other shareholder by the Group.
See “Appendix VI — Statutory and General Information — C. Further Information about
Our Major Subsidiaries” for more details on share capital changes of the Major Subsidiaries.
MAJOR SHAREHOLDING CHANGES OF OUR COMPANY
Early Development of our Company and Our Founder
Mr. He led a group of Beijiao residents and started our business by establishing a
township enterprise in 1968, mainly producing plastic and metal products, which was the
predecessor of our Group. Mr. He led Midea Electric to go through shareholding reform in
1992 and be listed on the Shenzhen Stock Exchange in 1993, becoming the first listed township
company in mainland China with a modern management system.
Our Company, then known as Shunde Meituo Investment Co., Ltd. (ࠢ
ʮ̡), was incorporated on 7 April, 2000, which later changed the name to Midea Group Co.,
Ltd.
Upon the completion of several rounds of share transfers and capital injection, the
registered share capital of our Company reached RMB100 million, and Mr. He became the
controlling shareholder of our Company. In October 2002, Mr. He and Midea Holding entered
into an equity transfer agreement, transferring all his equity interest in our Company to Midea
Holding, of which Mr. He is the controlling shareholder and ultimate beneficial owner. In July
2003 and December 2007, the then shareholders agreed to inject capital in an aggregate amount
of RMB400 million and RMB500 million to our Company, respectively.
HISTORY AND CORPORATE STRUCTURE
– 163 –


--- page 175 ---
Conversion into Joint Stock Limited Company and Listing on the Shenzhen Stock
Exchange
In August 2012, our Company accomplished all procedures required to convert from a
limited liability company to a joint stock limited company.
In September 2013, we completed the listing of our A Shares on the Shenzhen Stock
Exchange (stock code: 000333) by merging with Midea Electric (the “A-Shares Listing”). As
a result of the merger, Midea Electric was subsequently delisted.
In the A-Shares Listing, we issued an aggregate of 686,323,389 A Shares, accounting for
40.7% of our Company’s then share capital immediately following the listing. Following the
listing, Midea Holding owned approximately 35.5% of our Company’s then share capital.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
We had not carried out any major acquisitions, disposals or mergers during the Track
Record Period and up to the Latest Practicable Date.
OUR LISTING ON THE SHENZHEN STOCK EXCHANGE AND REASONS FOR THE
LISTING ON THE STOCK EXCHANGE
Since 2013, our Company has been listed on the Shenzhen Stock Exchange. As of the
Latest Practicable Date, our Directors confirmed that we had no instances of material
non-compliance with the rules of the Shenzhen Stock Exchange and other applicable securities
laws and regulations of the PRC in any material respects, and, to the best knowledge of our
Directors having made all reasonable enquiries, there was no material matter that should be
brought to the investors’ attention in relation to our compliance record on the Shenzhen Stock
Exchange. Based on the independent due diligence conducted by the Joint Sponsors, nothing
has come to the Joint Sponsors’ attention that would cause them to disagree with our Directors’
confirmation with regard to the compliance records of the Company on the Shenzhen Stock
Exchange.
Our Company seeks to be listed on the Hong Kong Stock Exchange in order to provide
further capital for the development and expansion of our business, provide an additional
fundraising platform for our Company should the need arise, further strengthen our business
profile and market position in the industry, and better attract overseas investors and talents. See
“Business — Our Strategies” and “Future Plans and Use of Proceeds” for more details.
HISTORY AND CORPORATE STRUCTURE
– 164 –


--- page 176 ---
OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding and Corporate structure immediately before the Global Offering
The following chart depicts a simplified shareholding and beneficial ownership structure of our Group immediately prior to the completion of
the Global Offering (assuming that no changes are made to the issued share capital of our Company between the Latest Practicable Date and Listing):
Our Company
Toshiba Consumer
Marketing Corporation
Midea
International
WAHIN
Toshiba
Lifestyle
Midea Washing
Appliances
Wuhu Midea
Kitchen & Bath
Midea Finance
Hefei Midea
Refrig.
Midea Heating
Appliances
Midea
Investment
Development
Wuhu Maty
A/C
Chongqing
Midea A/C
GD Midea
H&V
Hefei Midea
H/V
Midea
Innovation
Wuhu Midea
Life Appliances
Ningbo Midea
United
Midea Singapore
100.00%
2.5%
1.7%
25%
43.8%
25%
100%
100%
100%
100%
100%
100%
100%
100% 100%
25%
97.5%
98.3%
75%
56.2%
75%
75%
100%
100%
Midea
Capital
Midea Electric
Netherlands (II)
B.V.
Midea Electric
Netherlands (I)
B.V.
Annto Smart
Logistics(3)
GD Midea
Wuhu A/C
Other Onshore and
Offshore Subsidiaries of Our Company(5)
GD Midea
A/C(4)
Midea
Shanghai
Hubei Midea
Refrig. KUKA AG
Wuhu Annto
Meizhi
Precision
Meizhi
Compressor
Little Swan
Electric
Midea Household
Appliances
100%
100%
14.3% 85.7%
100%
100%
73.8% 100% 80%
100%
100%
100%
100%
100%
100%
Midea
Holding(1)
Mr. He(1)
94.5%
31.0%0.5%
Mr. Fang
Hongbo(2)
1.7%
Other A
Shareholders
66.8%
GD Midea
Kitchen
100%
HISTORY AND CORPORATE STRUCTURE
– 165 –


--- page 177 ---
Notes:
(1) Mr. He is the founder of our Group and the controlling shareholder and ultimate beneficial owner of Midea Holding. The remaining 5.5% of Midea Holdi ng is held by Ms. Lu
Deyan, daughter-in-law of Mr. He. Ms. Lu Deyan and Mr. He are not parties acting in concert in respect of their respective interest in Midea Holding.
(2) Mr. Fang is the chairman of the Board of Directors and the chief executive officer of our Company. See “Directors, Supervisors and Senior Managemen t — Directors” for more
details.
(3) As of the Latest Practicable Date, the remaining equity interest in Annto Smart Logistics was held by ten domestic employees shareholding platfor m, among which Ningbo Meiyu
V enture Capital Limited Partnership (๬௴ุҳ༟ΥྫΆุ(Υྫ)) and Ningbo Xunchi Enterprise Management Limited Partnership (ԘཱུΆุ၍ଣΥྫΆุ(Ϟ
Υྫ)) each owned 5.3% and 5.1%, respectively, of the equity interest in Annto Smart Logistics, whose executive partners are employees of our Group who are not directors,
supervisors and senior management of our Company. The remaining eight domestic employees shareholding platforms each owned less than 5% of the equit y interest in Annto
Smart Logistics.
(4) As of the Latest Practicable Date, the remaining 20.0% equity interest in GD Midea A/C was held by Toshiba Carrier Corporation, a subsidiary of Carr ier Global Corporation
(NYSE: CARR), a company listed on the New Y ork Stock Exchange.
(5) Other subsidiaries include, in aggregate, over 400 subsidiaries established in various jurisdictions.
HISTORY AND CORPORATE STRUCTURE
– 166 –


--- page 178 ---
Shareholding and Corporate structure immediately following the Global Offering
The following chart depicts the shareholding and beneficial ownership structure of our Group immediately following the completion of the
Global Offering, assuming that the Offer Size Adjustment Option and the Over-allotment Option are not exercised and that no changes are made
to the issued share capital of the Company between the Latest Practicable Date and Listing:
Our Company
Toshiba Consumer
Marketing Corporation
Midea
International
WAHIN
Toshiba
Lifestyle
Midea Washing
Appliances
Wuhu Midea
Kitchen & Bath
Midea Finance
Hefei Midea
Refrig.
Midea Heating
Appliances
Midea
Investment
Development
Wuhu Maty
A/C
Chongqing
Midea A/C
GD Midea
H&V
Hefei Midea
H/V
Midea
Innovation
Wuhu Midea
Life Appliances
Ningbo Midea
United
Midea Singapore
100.00%
2.5%
1.7%
25%
43.8%
25%
100%
100%
100%
100%
100%
100%
100%
100% 100%
25%
97.5%
98.3%
75%
56.2%
75%
75%
100%
100%
Midea
Capital
Midea Electric
Netherlands (II)
B.V.
Midea Electric
Netherlands (I)
B.V.
Annto Smart
Logistics(3)
GD Midea
Wuhu A/C
Other Onshore and
Offshore Subsidiaries of Our Company(5)
GD Midea
A/C(4)
Midea
Shanghai
Hubei Midea
Refrig. KUKA AG
Wuhu Annto
Meizhi
Precision
Meizhi
Compressor
Little Swan
Electric
Midea Household
Appliances
100%
100%
14.3% 85.7%
100%
100%
73.8% 100% 80%
100%
100%
100%
100%
GD Midea
Kitchen
100%
100%
100%
Midea
Holding(1)
29.0%0.4%
Mr. Fang
Hongbo(2)
1.6%
Other A
Shareholders
62.5%
H Shareholders
6.6%
Mr. He(1)
94.5%
Notes (1) to (5): Please refer to the details contained in the preceding page.
HISTORY AND CORPORATE STRUCTURE
– 167 –


--- page 179 ---
The following tables set forth the shareholding structure of the Company showing the
effect of the exercise of the Over-allotment Option in full, (a) assuming that the Offer Size
Adjustment Option is not exercised; and (b) assuming that the Offer Size Adjustment Option
is fully exercised.
(a) Assuming that the Offer Size Adjustment Option is not exercised
The table below sets forth the shareholding structure of the Company assuming that the
Offer Size Adjustment Option is not exercised (a) as of the Listing Date; and (b) as at the end
of the Over-allotment Option exercise period, assuming that the Over-allotment Option is fully
exercised.
As of the Listing Date
(assuming that the
Offer Size Adjustment Option
is not exercised)
As at the end of the
Over-allotment Option exercise
period, assuming that the
Over-allotment Option
is fully exercised
Description
of Shares
Number of
Shares
Approximate
%o ft h e
issued share
capital
Number of
Shares
Approximate
%o ft h e
issued share
capital
Midea Holding (1) /H1118/H1118/H1118/H1118/H1118A Shares 2,169,178,713 29.0% 2,169,178,713 28.7%
Mr. He /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A Shares 31,909,643 0.4% 31,909,643 0.4%
Mr. Fang Hongbo /H1118/H1118/H1118/H1118A Shares 116,990,492 1.6% 116,990,492 1.5%
Other A Shareholders /H1118/H1118A Shares 4,675,052,003 62.5% 4,675,052,003 61.8%
H Shareholders /H1118/H1118/H1118/H1118/H1118/H1118H Shares 492,135,100 6.6% 565,955,300 7.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,485,265,951 100.0% 7,559,086,151 100.0%
Note:
(1) Midea Holding is held as to 94.5% by Mr. He.
HISTORY AND CORPORATE STRUCTURE
– 168 –


--- page 180 ---
(b) Assuming that the Offer Size Adjustment Option is fully exercised
The table below sets forth the shareholding structure of the Company assuming that the
Offer Size Adjustment Option is fully exercised: (a) as of the Listing Date; and (b) as at the
end of the Over-allotment Option exercise period, assuming that the Over-allotment Option is
fully exercised.
As of the Listing Date
(assuming that the
Offer Size Adjustment Option
is fully exercised)
As at the end of the
Over-allotment Option exercise
period, assuming that the
Over-allotment Option
is fully exercised
Description
of Shares
Number of
Shares
Approximate
%o ft h e
issued share
capital
Number of
Shares
Approximate
%o ft h e
issued share
capital
Midea Holding (1) /H1118/H1118/H1118/H1118/H1118A Shares 2,169,178,713 28.7% 2,169,178,713 28.4%
Mr. He /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A Shares 31,909,643 0.4% 31,909,643 0.4%
Mr. Fang Hongbo /H1118/H1118/H1118/H1118A Shares 116,990,492 1.5% 116,990,492 1.5%
Other A Shareholders /H1118/H1118A Shares 4,675,052,003 61.8% 4,675,052,003 61.2%
H Shareholders /H1118/H1118/H1118/H1118/H1118/H1118H Shares 565,955,300 7.5% 650,848,500 8.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,559,086,151 100.0% 7,643,979,351 100.0%
Note:
(1) Midea Holding is held as to 94.5% by Mr. He.
HISTORY AND CORPORATE STRUCTURE
– 169 –


--- page 181 ---
MIDEA TODAY
We are a leading technology-driven global provider of Smart Home Solutions and
Commercial & Industrial Solutions. Our product and service offerings cover a wide range of
home appliances for consumers, and solutions for enterprise customers spanning across Energy
Solutions & Industrial Technology, Intelligent Building Technology, Robotics & Automation
and Other Businesses. As a Fortune Global 500 company for nine consecutive years, we
operate a global business that reaches over 200 countries and regions, with 33 R&D centers,
43 major manufacturing bases and over 190,000 employees across different continents.
The chart below demonstrates the highlights of our businesses:
RMB 39 bn
Aggregate R&D Spending
in 2021-2023
Global Presence in
200+
Countries and Regions(1)
No. 1
Commercial AC Provider
in Mainland China(4)
40%+
Revenue from Overseas(2)
A/A2/A
S&P/Moody’s/Fitch
Credit Rating(1)
Big 4
Industrial Robotics
Companies Globally(5)
Top 10
Largest Active Patent Family
Holder Globally(6)
RMB 373.7 bn
2023 Revenue
Largest
Home Appliance
Company Globally(3)
Notes:
(1) As at the Latest Practicable Date
(2) During the Track Record Period
(3) In terms of revenue and sales volume in 2023, capturing a market share of 7.9% in terms of sales volume,
according to Frost & Sullivan
(4) In terms of revenue in 2023, representing a market share of 14.3%, according to Frost & Sullivan
(5) In terms of revenue in 2023, according to Frost & Sullivan
(6) As at 31 December 2023, based on approximately 65,000 active patent families held by us, according to Frost
& Sullivan
BUSINESS
– 170 –


--- page 182 ---
OUR KEY MILESTONES
Our journey commenced in 1968 in Shunde, China and we have consistently adapted to
the rapidly changing global landscape. Driven by relentless innovation, organic growth,
strategic acquisitions and joint ventures, we have evolved from a business with a singular focus
in one market into a global technology powerhouse with a wide array of product and service
offerings, catering to diverse end-markets around the world.
Set out below are our milestones in a nutshell:
1968 to early-1980s:
Startup years
/H185461968: founding of our predecessor that manufactured plastic and metal
products
Early-1980s to late-1990s:
Growth in home appliance
business
/H185461980: entered the home appliance industry with electric fans
/H185461985: started to offer air conditioning products
/H185461993: Midea Electric listed on the Shenzhen Stock Exchange
Late-1990s to mid-2010s:
Horizontal and vertical
expansion and integration
/H185461998: bolstered our capabilities in compressors, the core component of air
conditioners, through acquisition of Macro Toshiba A/C’s compressor factory
(ᆀ); expanded into commercial air conditioners, and subsequently
further enhanced our technology capabilities through the establishment of a
joint venture, Chongqing Midea General Refrigeration Equipment Co., Ltd (ࠠ
ʮ̡)
/H185462000: annual sales surpassed RMB10 billion for the first time
/H185462002: entered the washing machine and refrigerator markets, and subsequently
further strengthened our foothold in the markets by acquiring Little Swan ( ʃ
˂ᕰ) and W AHIN (ࡗ)
H185462013: our Group listed on the Shenzhen Stock Exchange (stock code: 000333)
by merging with Midea Electric
BUSINESS
– 171 –


--- page 183 ---
Mid-2010s to present:
Upgrading Smart Home
Solutions, expanding
Commercial & Industrial
Solutions, and deepening
globalization
/H18546Upgrading Smart Home Solutions:
/L505372018: strengthened our portfolio of premium home appliances by
launching the COLMO brand
/L505372021: became the No. 1 air conditioner provider in mainland China by
sales volume, according to the Frost & Sullivan Report
/H18546Expanding Commercial & Industrial Solutions:
/L505372017: entered robotics and automation market by acquiring KUKA Group
/L505372020: enriched our Intelligent Building Technology product offerings
through the acquisition of elevator maker Winone ( ഷˮ)
/L50537Entered energy storage solution business by acquiring new energy
companies Hiconics ( Υੰอঐ) and Clou Electronics (௔ཥɿ) in 2020
and 2023, respectively
/H18546Deepening globalization and increasing focus on branding:
/L505372016: acquired Toshiba Lifestyle and Italian commercial air conditioning
company Clivet
/L505372017: revenue from overseas markets exceeded RMB100 billion for the
first time
/L505372022: revenue from our OBM (original brand manufacturer) business
exceeded 40% of overseas Smart Home Solutions revenue for the first
time
This journey brought us to where we stand today, with numerous extraordinary
achievements associated with the Midea name. To give a few examples (each according to the
Frost & Sullivan Report):
 We are the world’s largest home appliance company in terms of both sales volume
and revenue in 2023, capturing a market share of 7.9% in terms of sales volume. In
2023, in terms of sales volume, we ranked among the top three home appliance
companies in the world in each of residential air conditioners, laundry appliances,
refrigerators, as well as kitchen and other appliances, with a market share of 23.7%,
14.2%, 10.5% and 6.0%, respectively. During the same period, we also ranked
among the top three home appliance companies in these markets in terms of retail
sales value, with a market share of 21.1%, 12.5%, 7.7% and 4.6%, respectively.
Among these markets, we ranked first in residential air conditioners as well as
kitchen and other appliances.
 Our home appliance compressor business ranked No. 1 in the global market in terms
of manufacturing volume in 2023, capturing a market share of 30.3%. Our
residential air conditioner compressor business also ranked No. 1 in the global
market in the same period in terms of manufacturing volume, commanding a global
market share of 45.1%.
BUSINESS
– 172 –


--- page 184 ---
 We are the largest commercial air conditioner provider in mainland China, capturing
a market share of 14.3%, and one of the top five globally, capturing a market share
of 6.6%, both in terms of revenue in 2023.
 Our subsidiary KUKA Group is one of the world’s “big four” industrial robotics
companies, and it ranked second in terms of sales volume and revenue of
heavy-payload robots in 2023, capturing a market share of 18.6% and 17.9%,
respectively.
Looking ahead, our fundamental strategies of “technology leadership, direct to users,
digitalization & intelligence driven, and global impact” (༺eᅰ౽ᚨਗeΌ
ॎ) will continue to guide us on our path forward. We aim to bolster our Commercial &
Industrial Solutions as a powerful growth engine while remaining committed to the continual
expansion of our Smart Home Solutions.
OUR BUSINESS
Our business is divided primarily into Smart Home Solutions and Commercial &
Industrial Solutions. The following diagram illustrates our current business layout.
Air Conditioners Laundry Appliances
& Refrigerators
Kitchen & Other Appliances
Smart Home Solutions Commercial & Industrial Solutions
Servo and
Motion
Control
Energy Solutions &
Industrial Technology
Compressor Motor Energy
Storage System
Tech-driven
Supply Chain
Services
Industrial
Cloud Service
Medical
Imaging
System
Industrial Robotics
Robotics & Automation Other Businesses
Intelligent
Building Technology
Commercial AC Elevator
and Escalator
Smart Home Solutions
We offer a wide range of home appliances, including air conditioners, refrigerators,
washing machines, kitchen appliances, and various other appliances. Applying technologies
such as IoT and AI, we provide interconnected and comprehensive Smart Home Solutions
ensuring a smooth and differentiated consumer experience. Our IoT-enabled appliances are
equipped with wireless communication modules such as Wi-Fi and Bluetooth that allow them
to connect to the internet, communicate with other devices, and be centrally managed through
BUSINESS
– 173 –


--- page 185 ---
the digital platform we provide for consumers. AI technologies in areas such as voice,
language, computer vision and embodied AI infuse intelligence into many of our appliances,
enabling real-time data collection and analysis and automatic adjustment of operational
parameters such as temperature and humidity, as well as other functions such as voice
recognition, resulting in seamless control and personalized experiences.
We have curated a broad brand portfolio covering premium, mass and youth markets.
Below is a snapshot of our latest brand portfolio under Smart Home Solutions:
Smart Home Brands
Premium Market Youth MarketMass Market
We have a global sales and distribution network, covering both online and offline
channels. Our Midea Cloud Sales platform digitalizes our offline distribution operations. We
actively utilize online sales channels, including influential e-commerce and livestreaming and
short video platforms such as JD.com, Tmall, Pinduoduo and Douyin. In the four months ended
30 April 2024, online sales accounted for over 50% of our total sales in mainland China under
Smart Home Solutions. Guided by our “direct to users” strategy, we spare no effort to increase
direct connections and interactions with consumers to better understand and respond to their
needs.
Looking into the future, there is a noticeable trend in mainland China towards higher-end
products in major home appliance categories, driven by rising income and consumption levels.
We are ready to capitalize on this trend by upgrading our product portfolio and increasing our
sales of high-end and technologically sophisticated products that command higher prices. In
addition, we are striving to further increase our proportion of overseas revenue, particularly by
promoting our OBM business.
Commercial & Industrial Solutions
Through Commercial & Industrial Solutions, we provide a full range of products and
services across four business units: Energy Solutions & Industrial Technology, Intelligent
Building Technology, Robotics & Automation and Other Businesses. Our revenue from
Commercial & Industrial Solutions exhibited a remarkable CAGR of 15.4% between 2021 and
2023, with its share in our total revenue rising from 21.4% in 2021 to 26.2% in 2023. Going
forward, we believe that Commercial & Industrial Solutions will be an important driver for our
growth.
BUSINESS
– 174 –


--- page 186 ---
Energy Solutions & Industrial Technology
Harnessing our expertise from decades of experience in home appliances and commercial
air conditioners, we provide technologically advanced, reliable and eco-friendly core industrial
components including compressors, motors and industrial control systems. Our residential air
conditioner compressor business ranked No. 1 in 2023 in terms of manufacturing volume,
commanding a global market share of 45.1%.
We also offer green energy solutions across the energy value chain, including large-scale
energy storage, industrial and commercial energy storage, household energy storage, intelligent
power grids, distributed photovoltaic solutions and new energy vehicle components (such as
thermal management systems) to enable our various global customers to store and use
renewable energy.
Intelligent Building Technology
We provide intelligent and integrated solutions for infrastructure, public premises,
industrial parks, agricultural facilities and more, supported by our offerings of commercial air
conditioners, elevators, building energy management and building control software. We
empower our customers to transform buildings into highly efficient and green spaces,
optimizing energy consumption and enhancing comfort.
We are a market leader in commercial air conditioners. According to the Frost & Sullivan
Report, our commercial air conditioners ranked first in mainland China in terms of revenue in
2023, capturing a market share of 14.3%, and we were among the top five commercial air
conditioner providers globally in terms of revenue in 2023, capturing a market share of 6.6%.
Building on our market leadership in commercial air conditioners, we are well-positioned to
acquire customers with our increasingly comprehensive and competitive product lineups. We
have acquired Winone, a major domestic manufacturer of freight elevators in mainland China.
We also offer building control software that automates building control and building energy
management solutions that help buildings enhance energy efficiency.
Robotics & Automation
Our Robotics & Automation business is operated under KUKA Group, Germany-
headquartered and one of the world’s “big four” industrial robotics makers, with over 120 years
of history. KUKA Group offers one-stop automation solutions including industrial robotics,
production cells, fully automated systems, and automated logistics systems through its
subsidiary Swisslog for end-markets such as automotive, electronics, metal and plastic,
consumer goods, retail, e-commerce and healthcare.
Since we acquired KUKA Group in 2017, its business in China has grown rapidly, making
KUKA China an important contributor to KUKA Group’s overall growth. The revenue
contribution from KUKA China to KUKA Group’s overall business increased from 17.3% in
2021 to 19.6% in 2023, representing impressive growth in the world’s largest industrial
robotics market, where we have established a comprehensive sales and service network and
state-of-the-art manufacturing facilities for robotics.
BUSINESS
– 175 –


--- page 187 ---
Other Businesses
Our Other Businesses primarily comprise Annto Smart Logistics, Midea Cloud, Midea
Lighting and Wandong Medical.
Over the years, we have developed infrastructure and technological capabilities in areas
such as supply chain and digitalized operations, which have been instrumental to the success
of our Smart Home Solutions and Commercial & Industrial Solutions. We have externalized a
number of such capabilities to serve other customers, including through Annto Smart Logistics.
Annto Smart Logistics is a logistics technology company dedicated to providing customers
with end-to-end digital intelligent supply chain services, assisting enterprises in promoting
channel optimization and improving supply chain efficiency. Annto Smart Logistics provides
services to over 3,000 enterprise customers in home appliances, fast-moving consumer goods,
furniture and other sectors. In the field of digitalized operations, our subsidiary Midea Cloud
provides industrial software and digitalization consulting services for intelligent
manufacturing and industrial interconnection to facilitate the digital transformation of its
customers. In addition, our subsidiary Midea Lighting is principally engaged in the research
and development, manufacturing and sales of lighting and home design appliances, striving to
provide intelligent integrated solutions for our customers.
Besides in-house incubation, we have expanded into new businesses by making strategic
acquisitions in certain high-growth markets. For example, in 2021, we acquired Wandong
Medical, a provider of medical imaging products and services in mainland China to enter the
medical imaging market.
Synergies and Resource Sharing across Businesses
Our diverse and complementary solutions present synergies as well as potential for
resource sharing and coordinated development, from the offering of integrated solutions to
procurement, R&D and manufacturing.
We have developed an industrial internet platform, M IoT (Ꮧ), to serve commercial and
industrial customers in a wide range of sectors and help them build digitalized and smart
manufacturing and supply chain infrastructure. M IoT is designed to integrate certain software,
hardware and services across our Commercial & Industrial Solutions business, including Midea
Cloud, KUKA Group, Annto Smart Logistics, Intelligent Building Technology and others and
offers multiple tools for customers’ different needs. For example, through the smart
manufacturing and digital supply chain software, customers will be able to purchase, monitor
and receive maintenance and other services for hardware equipment such as KUKA robots and
purchase services such as Annto Smart Logistics’ digital supply chain services. Through
integrated solutions like M IoT, we aim to provide one-stop solutions to customers by
combining offerings across different businesses and promote cross-selling.
BUSINESS
– 176 –


--- page 188 ---
We promote centralized procurement of raw materials and components that are commonly
used by our different businesses, achieving enhanced bargaining power, increasing profitability
and ensuring the quality of supplies. Similarly, we coordinate our R&D and manufacturing
activities across the different businesses, to share expertise, resources, and infrastructure and
optimize operational efficiency. We centralize our R&D efforts for foundational technologies
that are generally applicable to multiple businesses. For example, our decades of know-how in
developing thermal management technologies for home appliances can also be applied to the
development of thermal management systems for the fast-growing new energy vehicle market.
Furthermore, various supporting functions, such as finance, tax, legal and human resources, are
shared across our Group as well.
R&D AND DIGITALIZATION EFFORTS
Our competitiveness is continually strengthened by our unwavering commitment to R&D
and digitalization.
Strong R&D Commitment : We spare no effort to build globally competitive R&D
capabilities. Overall, we had more than 23,000 R&D employees as of 30 June 2024, accounting
for more than half of our non-manufacturing employees. As of the Latest Practicable Date, we
had established 33 R&D centers in 11 countries, among which 17 R&D centers are located
overseas. In 2023, our investment in R&D exceeded RMB14 billion. We have established a
research system including our Corporate Research Center and R&D units and teams at different
business departments, and we aim to develop a reservoir of technology which represents
complete coverage over three different time horizons: (i) the “research generation” that focuses
on long-term fundamental research; (ii) the “reserve generation” that focuses on innovation at
the product platform level to support the next generation of product development; and (iii) the
“development generation” that focuses on product development projects with demonstrated
market demand. Such an approach forms our “three generations” (ɓ˾) R&D model.
Digitalized Operations : We have been advancing the digital transformation of our entire
business process, covering R&D, procurement, manufacturing, supply chain, sales, after-sale
services and other aspects, to ensure seamless information sharing with customers, suppliers,
and partners and further improve our operational efficiency. For example, in manufacturing, we
had five factories that received the “Lighthouse Factory” recognition from the World Economic
Forum, which recognizes a factory’s world-leading capabilities in intelligent manufacturing,
automation, and digitalization. Our digital infrastructure enables flexible manufacturing,
allowing us to match manufacturing with customer demand and maximize our manufacturing
efficiency while minimizing inventory. Digitalization also plays an instrumental role in our
quality control efforts, helping us win the China Quality Award ( ʕ਷ሯඎᆤ) in 2021. For
supply chain management, we have developed an ISC management system, which renders our
supply chain highly flexible, efficient and resilient.
BUSINESS
– 177 –


--- page 189 ---
OUR CONSUMER-CENTRIC APPROACH
We are committed to reaching consumers to gain a deeper understanding of their
preferences and to offer comprehensive solutions. This is achieved through the reduction of
sales and distribution layers and an emphasis on direct interactions with consumers at various
touchpoints such as mobile apps and customer services. We continually optimize our products
and operations based on our consumer insights to enhance stickiness and improve consumer
satisfaction.
We have been transforming and streamlining our sales and distribution in order to get
closer to consumers. With the launch of the Midea Cloud Sales platform, which enables a large
number of SME retailers to directly order and purchase products from us, we can connect with
SME retailers and react promptly to changes in consumer preferences and market demand.
Direct access generates valuable market insights. Such insights drive our entire
operations from R&D and manufacturing to supply chain and sales. Our extensive knowledge
of consumer preferences not only helps us offer popular products, but also enables us to
improve the efficiency of our operations. For example, we pioneered the “T+3” (order
placement plus material preparation, manufacturing and delivery) model, under which
manufacturing are guided by and matched with consumer demand as informed by our market
insights, allowing us to minimize inventory, maximize manufacturing efficiency and shorten
delivery cycles.
We improve consumer stickiness and brand loyalty through targeted marketing and by
offering value-added services that provide consumers with more benefits, convenience, and
satisfaction. Leveraging our digital tools, we are able to gain a better understanding of
consumer preferences and acquire and retain consumers more effectively. The number of
registered users of M-Smart, our app and Weixin mini-program for consumers to manage our
smart home appliances and enjoy additional benefits and services, exceeded 82 million as of
30 April 2024. Our certified service engineers and experience consultants directly engage with
consumers, addressing their questions and needs in a timely manner.
OUR GLOBALIZATION EFFORTS
We strive to expand our business globally. During the Track Record Period, overseas sales
constituted more than 40% of our total sales. We offer products in more than 200 countries and
regions worldwide.
Beyond product sales, we have 17 overseas R&D centers and 22 overseas major
manufacturing bases, spanning 16 countries, with over 35,000 overseas employees. The
overseas network of R&D centers enables us to develop products that cater to the local needs
of different markets. We aim to deepen our “local for local” strategy by expediting the
localization of manufacturing and supply chains and establishing regional manufacturing bases
for major components and finished products in key overseas markets. Localized manufacturing
increases the efficiency and resilience of our global supply chain.
BUSINESS
– 178 –


--- page 190 ---
In addition to organic growth, we expand overseas through joint ventures and
acquisitions. In the past, we have established successful joint ventures with leading
international players in countries such as Brazil, Egypt, and India, allowing us to leverage the
market insights and network of our joint venture partners to accelerate market entry. We have
also acquired Toshiba Lifestyle and KUKA Group, among others, and continue to pursue a
proactive and prudent strategy for future overseas acquisitions.
OUR CORPORATE GOVERNANCE AND CULTURE
Our corporate governance features the sharing and a close alignment of responsibility,
authority and reward, enabling us to foster a dynamic culture of entrepreneurship, innovation
and long-term commitment. We are committed to growing talent both internally and attracting
talents externally. Many of our senior managers have been with Midea for more than 20 years.
We encourage our managers to celebrate our achievements, learn from failures, and embrace
change.
We have the utmost care for all our stakeholders. We are committed to sharing our success
with employees and have introduced multi-tier share incentive plans that enable them to benefit
from our growth. We value the long-term trust of our shareholders and have consistently
returned capital to shareholders through dividends and share repurchases. The aggregate
amount of dividends paid to our shareholders and share repurchases during the Track Record
Period was RMB56.2 billion. When it comes to the environment and society, we are keenly
aware of the impact of our activities on the environment and strive to reduce our footprint and
promote sustainability. We are constantly contributing to our communities as a responsible
corporate citizen.
OUR TRACK RECORD
During the Track Record Period, we delivered solid growth and profit margins. For the
years from 2021 to 2023 and the four months ended 30 April 2024, our revenue was RMB343.4
billion, RMB345.7 billion, RMB373.7 billion and RMB145.8 billion, respectively, and our net
profit margin was 8.5%, 8.6%, 9.0% and 9.4%, respectively. Our ROE reached 23.6%, 22.1%,
22.1% and 25.3% in the same periods, respectively. As of the Latest Practicable Date, our
credit ratings were A, A2 and A from S&P Global Ratings, Moody’s Investors Service, and
Fitch Ratings, respectively, among the highest of companies in mainland China.
OUR STRENGTHS
We believe the following strengths position us well to capitalize on future opportunities
and deliver continued growth.
BUSINESS
– 179 –


--- page 191 ---
A leading technology-driven global provider of smart home and commercial and
industrial solutions
We are a leading technology-driven global provider of Smart Home Solutions and
Commercial & Industrial Solutions serving customers in more than 200 countries and regions.
We have achieved market leadership across different verticals including various home
appliances and related core components, commercial air conditioners, and robotics and
automation, among others. In 2023, our revenue reached RMB373.7 billion, representing a
CAGR of 4.3% from 2021. We have been a Fortune Global 500 company for nine consecutive
years, which demonstrates our global leadership and excellence.
We have worked tirelessly to solidify our market leadership in the global home appliance
industry. We are the world’s largest home appliance provider in terms of both sales volume and
revenue in 2023, capturing a market share of 7.9% in terms of sales volume, according to the
Frost & Sullivan Report. We have built a broad brand portfolio targeting premium, mass and
youth markets. We offer a wide range of smart home appliances, ranking among the top three
home appliance companies in the world in 2023 in terms of sales volume in each of residential
air conditioners, laundry appliances, refrigerators, as well as kitchen and other appliances, with
a market share of 23.7%, 14.2%, 10.5% and 6.0%, respectively. During the same period, we
also ranked among the top three home appliance companies in these markets in terms of retail
sales value, with a market share of 21.1%, 12.5%, 7.7% and 4.6%, respectively. Among these
markets, we ranked first in residential air conditioners as well as kitchen and other appliances.
We are an established provider of commercial and industrial solutions, achieving market
leadership in multiple fields and growing at a CAGR of 15.4% from 2021 to 2023. Our
residential air conditioner compressor business ranked No. 1 in 2023 in terms of manufacturing
volume, commanding a global market share of 45.1%, and our motors for residential air
conditioners and laundry appliances also ranked first with a global market share of 40.0% and
22.0%, respectively, in terms of manufacturing volume. According to the Frost & Sullivan
Report, we are the No. 1 commercial air conditioner provider in mainland China, capturing a
market share of 14.3%, and one of the top five globally, capturing a market share of 6.6%, both
in terms of revenue in 2023. Furthermore, our subsidiary KUKA Group is one of the “big four”
industrial robotics companies in the world, and the second largest heavy-payload robotics
company in the world in terms of sales volume and revenue in 2023, capturing a market share
of 18.6% and 17.9%, respectively, according to the Frost & Sullivan Report.
Leading R&D capabilities enabling continual innovation
We have leading R&D capabilities and are committed to dedicating significant resources
towards R&D. From 2021 to 2023, our R&D investment exhibited a steady growth and
amounted to approximately RMB39 billion in total. As of 30 June 2024, we had more than
23,000 R&D personnel worldwide, accounting for over 50% of our non-manufacturing
personnel. According to the Frost & Sullivan Report, as of 31 December 2023, we ranked
among the top ten companies in the world in terms of total number of patent families. As of
the Latest Practicable Date, we had over 32,200 invention patents.
BUSINESS
– 180 –


--- page 192 ---
We have established a research system encompassing our Corporate Research Center and
the R&D units and teams at different business departments. Based on insights in customers and
market trends, we have formulated the “three-generation” (ɓ˾) R&D model to achieve
sustained competitive advantages in product and technology. We are committed to building
sustained product technology advantages and leveraging our scale through an extensive global
R&D network. We benefit from the strong synergies in R&D among our different businesses.
For example, generally applicable technologies, such as those in noise reduction, are widely
used in air conditioners, laundry appliances, kitchen appliances, thermal management systems
for new energy vehicles, and industrial robotics, across our Smart Home Solutions, Energy
Solutions & Industrial Technology, and Robotics & Automation, among others.
Our R&D efforts have resulted in continual technological breakthroughs and product
innovations. Our R&D achievements have not only improved our products and elevated our
brand image, but also contributed to the advancement of science and technology in the industry.
For example, in 2022, we launched R290 new Energy Efficiency Grade 1 air conditioners
achieving an APF (annual performance factor) of 5.29, significantly higher than Energy
Efficiency Grade 1 of China’s national standards. Moreover, these air conditioners have
obtained the TÜV Süd energy efficiency label certification, exceeding the highest level of
energy efficiency in the European Union. In industrial technology, we have developed 800V ,
12,000RPM electric compressors for vehicles that enable super charging and low noise levels.
These compressors have been adopted in over 30 new energy vehicle models by leading
Chinese and global auto makers. In intelligent building technology, our air source heat pumps
have represent breakthroughs in key technologies for multi-grade high-efficiency heat energy
supply, allowing us to achieve a 23% share in mainland China’s exports of air source heat
pumps in terms of sales volume in 2023, according to the Frost & Sullivan Report. In robotics
and automation, the KR QUANTEC series developed by KUKA Group excels in reach and
payload, while LBR iiwa is a technologically advanced series of lightweight robots
specializing in delicate assembly work.
Operational excellence and digitalization across the entire value chain
Every aspect of our operations, including supply chain, manufacturing, sales, and product
development, entails complex procedures and massive scale. We procure raw materials and
components worth more than a hundred billion RMB each year from over 5,000 suppliers and
sell more than 200 product categories to tens of thousands of SME retailers and other
customers. Given the complex and interdependent nature of each key aspect of our operations,
digitalization is of paramount importance. As of 30 June 2024, over 5,000 professionals within
our organization dedicate themselves to digitalization.
Supply chain management : Our ISC management system epitomizes operational
excellence in supply chain management and serves as the infrastructure underpinning our
efficient order fulfillment and global supply chain management capabilities. The ISC
management system enables intelligent replenishment, accelerates inventory turnover, and
facilitates efficient coordination along the value chain. By seamlessly connecting with
suppliers using the ISC management system, we aim to automate the entire procurement
BUSINESS
– 181 –


--- page 193 ---
process based on our sales and inventory levels. Thanks to our highly efficient supply chain,
and through intelligent stocking and replenishment using big data, we are able to complete the
stocking and replenishment of an entire warehouse in an efficient manner, which greatly
bolsters efficient manufacturing.
Manufacturing : Leveraging digital technology, we are able to build highly efficient
green factories specializing in high-quality, flexible and environmentally friendly
manufacturing. Five of our factories have received the “Lighthouse Factory” recognition. We
have achieved significantly enhanced manufacturing efficiency in these factories. For example,
in our air conditioner factory in Nansha, Guangdong, we were able to lower operation costs by
23% and increase manufacturing efficiency by 36% as a result of our digitalization efforts. We
are expanding the high standard and efficiency in our “Lighthouse Factories” to other
manufacturing bases. Our intelligent manufacturing capabilities, together with our efficient
supply chain, allow us to respond promptly to customer needs and achieve flexible and lean
manufacturing, matching manufacturing with customer demand and maximizing our
manufacturing efficiency while minimizing inventory.
Sales channel : With the goal of streamlining our distribution channel and directly
connecting with an extensive network of SME retailers by using digital and data technologies,
we have launched the Midea Cloud Sales platform, which enables SME retailers to directly
order and purchase products from us, and learn about our new products to facilitate sales. We
continue to enhance the functionality of Midea Cloud Sales to build it into a comprehensive
platform on which we can track the sales and inventory of retailers in real time and promptly
react to changes in consumer preferences and market demand.
Product development: Digitalization has significantly improved our product development
capabilities. We have established a digital planning platform to rapidly convert technology into
products meeting customer needs. We continually promote platform modularization and
increase the hit rate of product planning. We have shortened our project development cycle,
measured by the average time spent from project launch to completion, by approximately 16%
from 2021 to 2023. In addition, our comprehensive product portfolio and large scale, coupled
with digitalized consumer engagement, gives us rich and profound insights into consumer
preferences. Such consumer insights point us to efficient R&D strategies to develop practical
technologies and solutions.
Operational excellence across the value chain, coupled with our global scale, reinforces
our deep competitive moat. Our “T+3” model is made possible by our fully digitalized and
highly efficient supply chain management, manufacturing, and sales channels. Our excellence
is evidenced by positive trends in a number of efficiency indicators. For example, our average
time spent from customer order placement to delivery in mainland China decreased from 21
days in 2021 to 14 days in 2022 and further to 12.5 days in 2023. Our inventory turnover days
were 53 days, 64 days, 62 days and 50 days in 2021, 2022 and 2023 and the four months ended
30 April 2024, respectively, which are meaningfully below industry averages.
BUSINESS
– 182 –


--- page 194 ---
Extensive and expanding global presence
We have assembled a global R&D, manufacturing and sales network, laying a strong
foundation for further worldwide expansion. Our R&D activities are supported by 33 R&D
centers, including 17 located in 10 overseas countries, where we harness the talents and
resources of the global community. Our manufacturing is primarily carried out in 43 major
manufacturing bases worldwide, including 22 overseas in 12 countries, enabling us to produce
and deliver globally and enjoy the growth opportunities of such overseas markets. In terms of
sales, we have established a comprehensive online and offline sales network in many overseas
markets, with approximately 5,000 after-sales service outlets as of the Latest Practicable Date.
We also continue to deepen the penetration of our digital sales platform, Midea Cloud Sales,
in overseas markets. For example, as of the Latest Practicable Date, over 9,000 retailers in
Southeast Asia had been onboarded to our overseas sales platform. As of 30 June 2024, we had
over 35,000 overseas employees. We have also deepened our global presence through strategic
acquisitions and joint ventures.
We are witnessing remarkable growth in our overseas OBM business. The proportion of
our overseas Smart Home Solutions revenue contributed by our OBM business, primarily under
the Toshiba, Midea and Comfee brands, exceeded 40% in 2023. Our OBM products have
demonstrated their competitiveness in many overseas markets. During the events of Amazon
Prime Day, Black Friday and Cyber Monday in 2023, we had over 100 products that made
Amazon’s “best-sellers” list of respective categories. On Amazon United States, the market
share of the window air conditioners and microwave ovens under our brands were
approximately 28% and 44%, respectively, in 2023. In addition, as a testament to our ability
to integrate and operate global brands, we turned Toshiba Lifestyle from a loss-making
company to a profitable business within approximately three years after the completion of the
acquisition.
Commercial & Industrial Solutions driving continued growth
We have built a fast-growing Commercial & Industrial Solutions business at scale. In
2021, 2022 and 2023 and the four months ended 30 April 2024, the revenue from our
Commercial & Industrial Solutions accounted for 21.4%, 24.2%, 26.2% and 24.0% of our total
revenue, respectively. In 2023, our revenue from Commercial & Industrial Solutions reached
RMB97.8 billion, representing a CAGR of 15.4% from 2021 to 2023. Commercial & Industrial
Solutions are an increasingly powerful growth engine for our business.
Energy Solutions & Industrial Technology : We are committed to providing
technologically advanced core industrial components and building strong and comprehensive
industrial technology capabilities. We continue to deepen our collaboration with customers in
high-growth fields. In 2023, one of our invention patents for compressors won the top prize by
the China Patent Award ( ʕ਷ਖ਼лᆤᎴӸᆤ). In addition, we entered the energy storage
industry that presents significant market potential by acquiring new energy companies
Hiconics and Clou Electronics.
BUSINESS
– 183 –


--- page 195 ---
Intelligent Building Technology : We provide holistic intelligent building solutions for
diverse end-markets encompassing infrastructure, public premises, industrial parks, agriculture
facilities and more. Our integrated digital and intelligent solutions mainly include low carbon
(ᅰ౽Э၁), transportation (ʹ), hospital ( ᅰ౽ᔼ৫), and industrial park ( ᅰ౽෤ਜ).
iBUILDING, our building digital platform, digitalizes and connects building equipment,
enhancing overall operational and management efficiency. We have successfully applied
Intelligent Building Technology solutions to high-profile facilities such as Indonesia’s
Jakarta-Bandung high-speed railway and the Beijing National Stadium (also known as the
Bird’s Nest ( ௢੫)).
Robotics & Automation : Since our acquisition, KUKA Group has solidified its market
leadership in several robotics and automation solutions, with its products continuing to deliver
high performance for customers of various sectors. In 2023, KUKA Group achieved record
revenue and number of orders, with its revenue reaching RMB31.1 billion. In particular, it has
delivered outstanding results in China, with revenue contribution from KUKA China increasing
from 17.3% in 2021 to 19.6% in 2023.
Leveraging the breadth of our Commercial & Industrial Solutions, we offer integrated
solutions to our customers across numerous industries. We have expanded horizontally,
continually broadening our product categories and solidifying our scale and efficiency
advantages. We have also expanded vertically, developing compressors, motors and other core
industrial components and entering frontier fields such as servo systems and industrial robotics
through acquisitions. We have created extensive and significant synergies through such
horizontal and vertical expansion, laying a strong foundation and building strong momentum
for the continued growth of our Commercial & Industrial Solutions.
Progressive corporate governance and values
Advanced corporate governance (ଣዚՓ), adaptive values and ideas (ආ
ׂand the growth of our management’s mindset (ڗare the
cornerstones of our long-lasting growth. Our corporate governance emphasizes the sharing and
a close alignment of responsibility, authority and reward, as well as the cultivation of
entrepreneurship.
We are committed to maximizing value for employees, customers, shareholders and
society.
Employees : We believe that our success is built on the collective efforts and achievements
of our employees, and we are committed to rewarding them for their contributions and to
recognizing their performance. To that end, we have devised a multi-tier long-term incentive
mechanism primarily based on share incentives. As of 30 April 2024, we had launched nine
stock option incentive plans, seven restricted share incentive plans and fifteen stock ownership
schemes, targeting management teams and core employees at various levels.
BUSINESS
– 184 –


--- page 196 ---
Customers : We are passionate about delivering the best experience possible to our
customers. We strive to gain a deeper understanding of customer needs and preferences and
carry out our business activities accordingly. While both our product portfolio and customer
base have evolved over the years, we remain steadfast in addressing the latest customer
preferences.
Shareholders : We are grateful for the trust and support of our shareholders, who have
been instrumental in our growth and success. We are committed to sharing our achievements
and value creation with our shareholders. Since becoming a public company in 2013, we have
paid out cash dividends totalling RMB107.5 billion. The annual dividends to our shareholders
accounted for 41%, 58% and 62% of our net profit attributable to shareholders in 2021, 2022
and 2023, respectively. Furthermore, the cumulative value of our share repurchases since 2013
has exceeded RMB27.1 billion.
Society : We are conscious of our responsibility and impact on the environment and
society and dedicate ourselves to pursuing sustainable development. As a testament to our
commitment to and excellence in ESG causes, we were selected as one of the “2022 Forbes
China Top 50 Sustainable Development Industrial Enterprises (ʈุΆ
ุTop 50),” an industry benchmark for sustainable development, and named to the “2023
FORTUNE China ESG Impact List (2023 ϋৌబʕ਷ESGᅂᚤɢ࿮).” Additionally, in the
“Forbes China’s ESG Inspirational Case Study for 2023,” we were chosen as an exemplary
enterprise with outstanding ESG practices.
OUR STRATEGIES
The four pillars of our fundamental growth strategy are “technology leadership, direct to
users, digitalization & intelligence driven, and global impact” (༺eᅰ౽ᚨ
ॎ). We are committed to pursuing these strategies with vigor and determination,
as they are essential for us to solidify our leadership as a global technology company. At the
same time, we will continue to increase our efforts in ESG, focusing on environmental
protection, sustainability, and contributing to our employees, communities and consumers as a
responsible corporate citizen. We are dedicated to improving environmental sustainability
across all aspects of our business: design, procurement, manufacturing, logistics, recycling,
and service, aiming to reach carbon peak by 2030 and carbon neutrality by 2060.
We plan to pursue the following strategies:
Staying Committed to Technology Leadership
We intend to increase our R&D investments and attract global R&D talents in order to
strengthen our leadership in technology. In particular, we will continue to invest in innovative
products and disruptive technologies with the goal of capturing additional market share and
increasing our revenue from premium products.
BUSINESS
– 185 –


--- page 197 ---
Our R&D for Smart Home Solutions will focus on upgrading our products, further
enhancing their functionality and smart features. We have seen a rapid growth in our premium
home appliance products and believe that continued investment in developing such products
will further enhance our product differentiation, attain new growth opportunities, and improve
our profit margins. For Commercial & Industrial Solutions, we will focus on differentiating and
innovative technologies in emerging industry sectors, aiming to further strengthen our
capabilities in core components and break through key technological barriers. In addition to
continued investment in hardware development, we will also enhance our software capabilities
to empower and further upgrade hardware products, and strive to provide green, efficient, and
intelligent integrated solutions customized for different market segments.
Besides product development, and through our R&D centers, we will continue to
strengthen our medium-term and long-term research on (i) general-use and fundamental
technologies, such as acoustics, materials science, thermodynamics, fluid mechanics, and solid
mechanics; and (ii) frontier technologies, such as next-generation energy storage technology,
robotics and related core components, advanced medical diagnostics and imaging technology,
and intelligent manufacturing technology, with the goal of building long-term technical
reserves for potentially future game-changing products, and ensure our leading position.
Enhancing Consumer Reach and Enriching Consumer Experience
We seek to bring consumers closer to us and win their hearts and minds with our products
and services, enhancing loyalty and satisfaction and achieving better consumer acquisition and
retention, including through the following efforts:
 continuing to streamline our distribution channels and boost our channel efficiency
through digitalization;
 empowering our distributors and SME retailers with digital tools to enhance their
sales;
 continuing to deepen our consumer reach and improve consumer stickiness through
our digital tools, such as M-Smart (֢ߕ;)
 promoting our high-end brands and products and providing high-quality products
and solutions;
 expanding our service network, enhancing our service engineers’ skills, elevating
our service standards and improving our brand recognition; and
 conducting more in-depth research on customer preferences and behaviors and tailor
our product design, manufacturing, and sales to meet customer needs.
BUSINESS
– 186 –


--- page 198 ---
Maximizing Efficiency through Digitalization
We have created a new blueprint for digitalization, aiming to deploy in overseas markets
our digital experience and systems developed in mainland China, covering R&D,
manufacturing, sales, supply chain, and service, thus achieving integrated digital management
of our global business. We will further expand our smart manufacturing capabilities to overseas
markets. We will also apply the ISC management system to a wider range of overseas markets
to support efficient production on a global scale. In addition, we will leverage the capabilities
in market analysis that we have developed in mainland China to gain deeper insights on our
overseas markets.
We seek to accelerate the digitalization of our Commercial & Industrial Solutions in the
next three to five years to support their long-term growth. Our Commercial & Industrial
Solutions are often project-based and require a high level of customization, sophistication and
expertise. Accordingly, we will invest in building and continually upgrading digital platforms
dedicated to our Commercial & Industrial Solutions. By doing so, we intend to enhance the
end-to-end digitalization and standardization of our Commercial & Industrial Solutions,
especially for large and complex projects.
For Smart Home Solutions, we will adhere to the “direct to users” strategy, bringing
consumers closer to us, gaining visibility on capital flow, product flow and information flow
throughout the value chain, and visualizing the whole process. We seek to monitor retail data
in real time and deepen our understanding of consumer preferences in order to continue to
innovate and satisfy the evolving consumer needs.
Accelerating Global Expansion
We are committed to continuing our expansion in overseas markets, which represent
important and diverse growth opportunities, by:
 developing products that cater to the local markets and customer preferences
through our overseas R&D centers and enhancing our localized design capabilities
and competitiveness.
 enhancing our global branding by investing in strategic markets, strengthening our
front-end retail network, and driving customer growth through digital marketing. We
hope to increase the proportion of OBM sales and boost our overall revenue growth.
 constructing and producing in our manufacturing bases in Brazil, Egypt and Mexico,
and optimizing capacity planning for key markets and further promoting supply
chain localization.
BUSINESS
– 187 –


--- page 199 ---
 building a global team, cultivating local talents, and providing overseas employees
with long-term career opportunities and incentives.
 following a proactive and judicious approach for overseas acquisitions, and
potentially acquiring targets with strong competitiveness in brand, technology or
sales channels.
Catalyzing Growth with Commercial & Industrial Solutions
We aim to bolster our Commercial & Industrial Solutions as an important engine for
future growth. We hope to increase its revenue share and achieve balanced development with
our Smart Home Solutions.
Energy Solutions & Industrial Technology : We will focus on large-scale energy storage,
industrial and commercial energy storage, household energy storage, intelligent power grids
and distributed photovoltaic solutions, developing new products and increasing market share
there. We will also explore the energy grid and storage markets in Asia, Africa, South America
and other regions to globalize our energy store business. Furthermore, we will integrate our
household energy storage products with home appliances to create efficient and safe household
energy storage solutions for our customers. In terms of manufacturing, we will expand
manufacturing capacity to support our growth in the energy storage market. Seeing great
potential in the new energy vehicle sector, we will accelerate the mass production of our new
energy vehicle components with an aim of increasing our dollar content per vehicle, expand our
customer base to cover more leading new energy vehicle brands, and increase our market share.
Intelligent Building Technology : We will improve and enrich our products and services,
particularly in the areas with significant room for our market share expansion such as elevators
and building control software, so that we can offer comprehensive and compelling intelligent
building solutions. We will target end-markets with high growth potential, such as industrial,
medical, culture and sports and transportation, both in mainland China and overseas.
Furthermore, we will continue to optimize our iBUILDING-based digital platform for energy
management to capture the enormous market opportunities created by the global “carbon
neutrality” trend.
Robotics & Automation : We will broaden the applications of KUKA Group’s products
and in particular promote applications in key sectors with promising outlook such as new
energy, general industrials, electronics, medical and logistics. Capturing the growing demand
in China for domestically manufactured robotics and automation products, we will further grow
KUKA Group’s operations in China.
BUSINESS
– 188 –


--- page 200 ---
OUR OFFERINGS
During the Track Record Period, our Smart Home Solutions and Commercial & Industrial
Solutions delivered sustained and solid growth. Revenue from Commercial & Industrial
Solutions, in particular, grew at a CAGR of 15.4% from 2021 to 2023, and accounted for 24.0%
of the total revenue in the first four months of 2024, representing a notable increase from
21.4% in 2021. Our revenue derived from overseas markets accounted for more than 40% of
the total revenue during the Track Record Period. The following table sets forth a breakdown
of our total revenue by business, both in absolute amounts and as percentages of total revenue,
for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Smart Home Solutions /H1118/H1118/H1118234,918,001 68.4 232,825,564 67.3 246,351,404 65.9 89,009,926 67.8 99,239,703 68.1
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,379,358 21.4 83,639,210 24.2 97,781,307 26.2 32,958,384 25.0 35,063,304 24.0
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,063,466 10.2 29,243,932 8.5 29,577,093 7.9 9,412,772 7.2 11,476,552 7.9
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
Note:
(1) Revenue generated from sales of raw material and others. See “— Other Business.”
The following table sets forth a breakdown of our revenue by geographic locations, both
in absolute amounts and as percentages of total revenue, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 (1) 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue
Mainland China /H1118/H1118/H1118/H1118/H1118/H1118205,706,997 59.9 203,063,764 58.7 222,804,120 59.6 77,948,366 59.3 85,755,297 58.8
Europe, Middle East and
Africa (EMEA) /H1118/H1118/H1118/H1118/H111849,711,834 14.5 53,211,026 15.4 58,723,433 15.7 21,981,344 16.7 23,773,824 16.3
Americas /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,040,161 14.6 51,506,811 14.9 54,277,913 14.5 18,132,543 13.8 21,022,144 14.4
Asia Pacific (excluding
mainland China) /H1118/H1118/H1118/H1118/H111837,901,833 11.0 37,927,105 11.0 37,904,338 10.2 13,318,829 10.2 15,228,294 10.5
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
Note:
(1) In 2022, our revenue from mainland China experienced a slight decline due to reduced demand for home
appliances, influenced by macroeconomic headwind stemming from the impacts of COVID-19. In contrast, our
revenue from other regions witnessed an increase in 2022, partially attributable to a rebound in consumer
demand driven by the economic recovery and the relaxation of COVID-related measures in overseas markets.
BUSINESS
– 189 –


--- page 201 ---
Smart Home Solutions
We are committed to offering high-quality home appliance products that provide the best
experience to consumers. We are a market leader in a broad range of home appliances, with a
comprehensive brand portfolio.
According to the Frost & Sullivan Report, we are the world’s largest home appliance
provider in terms of both sales volume and revenue in 2023, capturing a market share of 7.9%
in terms of sales volume. In 2023, in terms of sales volume, we ranked among the top three
home appliance companies in the world in each of residential air conditioners, laundry
appliances, refrigerators, as well as kitchen and other appliances, with a market share of 23.7%,
14.2%, 10.5% and 6.0%, respectively. During the same period, we also ranked among the top
three home appliance companies in these markets in terms of retail sales value, with a market
share of 21.1%, 12.5%, 7.7% and 4.6%, respectively. Among these markets, we ranked first in
residential air conditioners as well as kitchen and other appliances. During the events of
Amazon Prime Day, Black Friday and Cyber Monday in 2023, we had over 100 products that
made Amazon’s “best-sellers” list of respective categories. On Amazon United States, the
market share of the window air conditioners and microwave ovens under our brands exceeded
28% and 44%, respectively, in 2023.
The following table sets forth a breakdown of our revenue from the main product
categories of our Smart Home Solutions during the Track Record Period, in absolute amounts
and as percentages of our total revenue from Smart Home Solutions:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Air conditioners /H1118/H1118/H1118/H1118/H1118/H1118104,108,047 44.3 108,638,571 46.7 112,982,505 45.9 43,060,203 48.4 48,054,657 48.4
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H111862,883,096 26.8 62,713,261 26.9 68,288,642 27.7 24,008,567 26.9 26,551,938 26.8
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H111867,926,859 28.9 61,473,732 26.4 65,080,257 26.4 21,941,156 24.7 24,633,108 24.8
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118234,918,001 100.0 232,825,564 100.0 246,351,404 100.0 89,009,926 100.0 99,239,703 100.0
BUSINESS
– 190 –


--- page 202 ---
The following table sets forth the average selling price and sales volume of each main
product category of our Smart Home Solutions during the Track Record Period:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
Average
selling price
Sales
volume
Average
selling price
Sales
volume
Average
selling price
Sales
volume
Average
selling price
Sales
volume
Average
selling price
Sales
volume
RMB thousand
units
RMB thousand
units
RMB thousand
units
RMB thousand
units
RMB thousand
units
Air conditioners /H1118/H1118/H1118/H1118/H1118/H11181,691 61,571 1,877 57,877 1,908 59,227 1,878 22,928 1,875 25,628
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H11181,268 49,578 1,372 45,719 1,362 50,156 1,332 18,025 1,362 19,500
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H1118289 235,101 316 194,548 306 212,965 293 74,862 294 83,806
As a world-leading home appliance manufacturer, we will continue to optimize our
multi-tier brand portfolio and invest in R&D to introduce new products and solutions that
satisfy the needs of consumers around the world.
Brand Portfolio
We pursue a global and multi-tier brand strategy featuring key home appliance brands
including COLMO and Toshiba for the premium market, Midea, Little Swan and Coolfree for
the mass market, and Comfee and W AHIN tailored for younger consumers. Our brand portfolio
is strategically deployed across mainland China and overseas markets to ensure broad and
in-depth consumer coverage through our multi-brand operations. In overseas markets, we offer
smart home products primarily under Toshiba, Midea and Comfee.
We have built significant brand equity and consumer mind share over time. We ranked
36th on the Brand Finance Tech 100 2023 brand value ranking league table and 38th on the list
of Kantar Brand Z
TM Top 100 Most V aluable Chinese Brands 2023. Within our broad brand
portfolio, we continue to pursue a premiumization strategy for our Smart Home Solutions in
mainland China, by upgrading our product mix and increasing premium brand sales
contribution. In overseas markets, we are committed to developing our OBM business.
Product Offering
We offer a broad array of home appliances, including (i) air conditioners, (ii) laundry
appliances and refrigerators, and (iii) kitchen and other appliances.
BUSINESS
– 191 –


--- page 203 ---
Air conditioners
We offer air conditioners at different price levels and for different geographic regions,
primarily under the COLMO, Toshiba, Midea, W AHIN, Comfee, and Coolfree brands. In terms
of product type, we offer residential central air conditioners, wall mounted air conditioners,
floor-standing air conditioners, window air conditioners, mobile air conditioners and kitchen
air conditioners. According to the Frost & Sullivan Report, we are the No. 1 residential air
conditioner manufacturer globally in terms of sales volume and retail sales value in 2023, with
a market share of 23.7% and 21.1%, respectively.
Drawing on decades of experience in R&D and consumer engagement, we are able to
offer air conditioning products equipped with latest technologies in intelligence, energy
efficiency and environmental sustainability, and air quality.
Intelligence . Intelligent appliances anticipate consumer needs and consumers are able to
control them effortlessly. In 2022, we launched the COLMO A V ANT Air Conditioner series,
which is equipped with advanced airflow technology and intelligent control software. This
AI-powered software enables the air conditioner to automatically adjust temperature, humidity
and air purification levels and generate fresh air by sensing changes in the environment
including user activities, providing a high level of comfort. Moreover, the voice recognition
technology used in this series can set distinct modes and operational parameters for different
family members. The COLMO AI-powered Villa Central Air Conditioner, also launched in
2022, is equipped with 135 sensors, enabling a comprehensive and multi-dimensional
perception of its surroundings. This allows it to intelligently adjust the temperature and
humidity level of the air based on real-time data from these sensors. Our interactive intelligent
control center and the built-in algorithm then automatically regulates the air and provides the
best air conditioning solution for the entire house.
Energy efficiency and environmental sustainability . We are committed to developing
the next generation of cooling technology that saves energy and minimizes environmental
impact, and have stayed focused on the low-GWP (global warming potential) refrigerant field,
such as R454B and carbon dioxide. We took the lead in developing and producing a new
efficient product using R454B, a new environmentally-friendly refrigerant. The resulting
product was certified by the Air-Conditioning, Heating, and Refrigeration Institute and
received the international safety certification from the Underwriters Laboratories Inc. In
addition, we developed the first residential air conditioner prototypes with carbon dioxide as
the refrigerant in the residential air conditioner industry, replacing traditional refrigerants with
carbon dioxide to achieve fluorine-free and environmentally-friendly refrigeration.
Air quality . We have expanded the functions of air conditioning from just cooling and
heating to fresh air, dehumidification, odor removal and air purification, among other things,
and integrate these functions in our air conditioners. For example, we have introduced the 1:1
Air Machine, which delivers an all-around healthy air system that allows professional
sterilization, purification, and fresh air. With a CADR (clean air delivery rate) of 400 m
3/h and
a fresh air flow rate of 210 m 3/h, the system ensures an ideal comfort sensation at 0.3 m/s.
BUSINESS
– 192 –


--- page 204 ---
Among different types of air conditioners, residential central air conditioners are gaining
popularity, thanks to their superior cooling performance and energy efficiency. To capitalize on
this trend, we are dedicating substantial efforts to growing the sales of our residential central
air conditioners, which feature consistent cooling, low noise levels, high air quality, and high
energy efficiency. Our residential central air conditioners have achieved significant growth in
recent years, becoming an important driver for the continued growth of our Smart Home
Solutions.
Kitchen air conditioners are a new air conditioning product that we launched in early
2023. Kitchens are often unfit for installing traditional air conditioners due to size and design
constraints. Cooking in the summer can be a grueling experience. To address this pain point,
we launched the “Cool Kitchen” series of kitchen air conditioners, which is characterized by
an easy-to-install design, smoke resistance and a large cooling capacity. It also employs
technologies including graphene thermal conductivity coating, copper pipe sprayed with
anti-corrosion coating, black magic box for oil filtration of the outdoor unit, and water misting,
which allow high heat transfer performance, corrosion resistance, and zero water discharge.
Laundry appliances and refrigerators
Laundry appliances
Our laundry appliances make washing and drying easy and efficient. We ranked third in
the global laundry appliance market in terms of sales volume and retail sales value in 2023,
with a market share of 14.2% and 12.5%, respectively, according to the Frost & Sullivan
Report.
We continually develop new technologies and features to improve our laundry appliances.
For example, our Light Dry Cleaning 2.0 steam care technology offers an efficient solution to
odor elimination. It can complete odor elimination in five minutes, and can achieve
low-temperature bacteria removal in a temperature of no more than 60°C with a removal rate
of 99.9%. Our innovative hole-free tub washing machine technology introduces a new water
inlet to rinse clothes with running water in a dynamic manner and prevent dirt from flowing
back.
Compared with washing machines, the penetration rate of dryers and washer-dryers
remains relatively low in many places, presenting significant market potential. To capture such
market opportunity, we strive to develop advanced drying technologies to offer best-in-class
drying appliances. For example, we have developed a new drying technology that uses a
compact dual engine system of two-appliance coordination and electric auxiliary heating to
meet the demand for fast drying, lean design and cost optimization.
BUSINESS
– 193 –


--- page 205 ---
We recently launched our washer-scrubber, the first solution in the industry that integrates
the functions of a washer-dryer and a robotic vacuum cleaner. As minimalism emerges as a
trend of the future home, home appliances are increasingly expected to be more efficient,
integrated and versatile. Our washer-scrubber responds to this trend by integrating two
machines to save space and enable sharing of water supply and drainage pipe. The
hot-water-flushing robotic vacuum cleaner enables potent airflow, penetration, and efficient
drying. This product also adopts AI technology to accurately assess stains and achieve precise
mopping.
COLMO Washer-Scrubber
Refrigerators
Our latest refrigerators represent our breakthroughs in multiple technologies that optimize
food preservation, energy efficiency, sustainability, and consumer experience. Our rapid
purification technology, for example, is a first-class purification and healthy preservation
technology and is instrumental in helping the refrigerator create an optimal storage
environment. To increase the energy efficiency of small-capacity refrigerators, we have
developed mini, micro, and nano inverter platforms to fit different sizes and help them save
energy. We have also developed a series of “zero built-in” refrigerators to help consumers save
space. This series is equipped with heat dissipation systems at the bottom, so that no extra
space is necessary on the sides or the back to allow for heat dissipation. It boasts an ultra-thin
600-mm body, with gaps as small as 2mm between each side and the wall. The refrigerator is
thus seamlessly and aesthetically integrated into the kitchen space.
BUSINESS
– 194 –


--- page 206 ---
Our nutrition enhancement technology can induce a high level of expression of
anthocyanin genes using a 450 nm high-energy blue light, increasing anthocyanin content by
more than 220%. It also incorporates an intelligent sensing moisture control technology that
can accurately identify food categories and match the food with the best storage humidity, so
as to ensure seven-day freshness of fruits and vegetables.
The Toshiba 479 and 429 series of refrigerators feature small sizes but large refrigeration
capacity to meet consumer needs for space-saving and energy-efficient refrigerators with
aesthetic design. Since their launch in 2022, these series have been popular among consumers.
The 479 series ranked first among six-door refrigerators in mainland China in terms of sales
volume in 2023, capturing a market share of 19.8%, according to the Frost & Sullivan Report.
Kitchen and other appliances
We offer a rich variety of kitchen and other appliances, including cooking appliances,
dishwashers, range hoods, water heaters, cleaning appliances, electric fans and more.
According to the Frost & Sullivan Report, we ranked No. 1 in the global kitchen and other
appliances market in terms of sales volume and retail sales value in 2023, with a market share
of 6.0% and 4.6%, respectively.
Cooking appliances
We have introduced various cooking appliances and continually upgrade our products and
optimize their performance by powering them with new technologies.
For example, the Midea Steamer-Oven-Fryer S6 employs an intelligent humidity and
temperature control system, allowing automatic regulation of temperature and humidity during
cooking. At the same time, the vortex jet propulsion system is used to allow humidity to be
quickly removed within 180 seconds while maintaining consistent temperature control. The
Midea Microwave-Steamer-Oven-Fryer G21 uses our MIX fat-burning technology to
organically combine steam and baking technologies, and defats food through melting,
condensation and drainage. The COLMO EVOLUTION Series Rice Cooker, with its
Multi-StageIH technology and staged precise control algorithm for boiling, is equipped with
unique capabilities of dual-temperature-sensor for boiling point detection and staged power
output through intelligent control.
Dishwashers
Dishwashers traditionally have a low penetration rate in mainland China but are emerging
as an increasingly popular category. To capitalize on this trend, we have developed dishwashers
equipped with multiple technologies. The Jingyan ( ౺ೋ) deep-drying series is equipped with
a dynamic mixed air drying system and intelligent adaptive control technology, with a 96.3%
drying rate. It received the “First-Class Quick Drying” certificate from the China Household
Electric Appliance Research Institute. It also features a three-layer five-arm zoned washing
technology that can remove heavy oil stains from pots and pans, which makes it particularly
suitable for Chinese cooking, as well as strong bacterial removal capabilities that can satisfy
consumer needs for deep cleaning of tableware.
BUSINESS
– 195 –


--- page 207 ---
Range hoods
We offer multiple series of range hoods. The Midea Smoke-free Series Range Hood, for
example, employs multiple advanced technologies. The efficient dual air ducts are used to
ensure effective smoke suction. The engine used in our latest range hoods can achieve the
highest suction in the industry of 28 m
3/minute and wind pressure of 1,200 Pa. A nautilus
shell-like design is incorporated to reduce smoke discharge resistance, increase smoke
discharge velocity, and effectively lower noise.
Water heaters
The traditional pain points in using water heaters are fluctuating temperatures and loud
noises, which we seek to tackle with two products we launched in 2022 — the Midea
“Coldness-free” and “Level-1 Silence” series. The Midea Coldness-free Gas Water Heater is
equipped with an anti-disturbance thermostatic system as well as innovative thermostatic
technologies. It effectively resolves the issue of water temperature fluctuation. The Midea
New-generation Silent Gas Water Heater reduces noise levels to 40 dB.
Cleaning appliances
We offer cleaning appliances including robotic vacuum cleaners, floor washers and
others. For example, we have launched a new generation of dust-free floor washer GX5, which
integrates the functions of suction, mopping and washing to achieve optimal floor cleaning. Its
unique double-layer brush allows cleaning and rotating at the same time. In 2023, our floor
washers ranked second and third, respectively, in the offline and online channels in mainland
China in terms of sales volume, with respective market shares of 17.0% and 11.1%.
Electric fans
We continue to develop multifunctional electric fans with increased airflow, comfort and
value-add functionalities such as air sterilization. For example, our adaptive airflow control
technology allows the electric fan to automatically adjust airflow based on the temperature of
the surroundings. We also spent years developing comb-like dual fan blades, which is a
breakthrough that achieves high airflow while ensuring minimal noise levels, allowing an air
delivery distance of approximately 17 meters while achieving a maximum air speed of 270
m
3/minute and maintaining a noise level less than 56 dB. In addition, our latest electric fan is
equipped with an internal water circulation system that continuously filters out dust and
impurities in the air, providing a refreshed airflow that is 99.99% sterilized.
BUSINESS
– 196 –


--- page 208 ---
Smart Control
We consider smart control a key feature of our ideal of the smart home, as it creates
additional value by bringing customers greater convenience and better experience.
Enabled by IoT and AI technologies, many of our latest appliances located in different
rooms of the house are interconnected digitally. Consumers can manage Midea home
appliances centrally and intelligently on M-Smart. For example, they can control the Midea
appliances at home remotely, such as air conditioners, refrigerators, washing machines and
water heaters, on the interface of M-Smart and can monitor the water and electricity usage of
some appliances. They can also receive online customer support and make requests for
installation, repair, exchange and other services. In addition, M-Smart provides promotions,
useful information and other benefits to its users. As of April 2024, M-Smart, consisting of a
mobile app and a Weixin mini-program, boasted a total of over 82 million registered users, with
more than 12 million monthly active users on the app. As we connect to more consumers by
introducing more value-added services and benefits through our digital platform, we are able
to gain further insight into our consumer preferences and needs.
Number of
Connected
Devices Product
Promotion
Info of
Connected
Devices
XXXX
Key
Product
Functions
Customized
Program
Water and
Electricity
Usage
M-Smart APP Little Swan Application
In addition, our full-stack voice recognition technology also makes it easier for
consumers to control the appliances and receive customized services from us and has been
applied to our major intelligent home appliances.
Overseas Smart Home Business
As of the Latest Practicable Date, we provided smart home products to over 200 countries
and regions. We began exporting our products to overseas markets in 1980s. In 2007, we built
our first overseas factory in Vietnam. In 2015, we established our first overseas R&D center
in the United States. Since then, we have accelerated our global presence across different
regions. Today, we enjoy an extensive global network of operations.
BUSINESS
– 197 –


--- page 209 ---
In addition to our overseas ODM/OEM business, we are increasingly focused on our
OBM business to promote the sale of smart home appliances under our own brands. We have
launched special branding campaigns in some key overseas markets to enhance the global
impact of our brands. As a result of our continued effort, revenue from our OBM business
accounted for approximately 40% of our overseas Smart Home Solutions revenue in each of
2021, 2022, 2023 and the first four months ended 30 April 2024, while ODM/OEM business
constituted approximately 60% in the same periods.
Another key aspect of our globalization efforts in recent years is localization. With our
overseas R&D and manufacturing bases, and supported by our large force of overseas talents,
we have been striving to offer products with localized features that cater to the demand and
preferences of the local markets. To that end, we have developed and launched home appliance
products tailor-made for local customers. For example, in the United States, window air
conditioners have been a staple for decades, but the traditional rectangular window units are
cumbersome and noisy and block window access. We launched a U-shaped window air
conditioner in 2020, which is easy to install and insulates the living space from the compressor
noise by separating the indoor part of the air conditioner with the outer compressor with an
openable window. Our U-shaped window air conditioner also features an inverter-driven,
variable-speed compressor that makes it more energy efficient and better at maintaining a
stable level of temperature and humidity. This product received recognition from the U.S.
media platform CNN (Cable News Network, Inc.) as the Best Window AC in 2020.
Midea U-Shaped Window Air Conditioner
BUSINESS
– 198 –


--- page 210 ---
Over the years, we have also acquired a number of global home appliance brands,
including the iconic Japanese home appliance brand Toshiba, which serves as the perfect
example that demonstrates our capabilities in successfully integrating businesses post-
acquisition. The business had been loss-making prior to the acquisition, but we were able to
turn the business profitable within approximately three years after our acquisition through
synergies created in supply chain management, operations, R&D and sales channels. Our
successful international acquisitions have accelerated the growth of our overseas Smart Home
Solutions.
Commercial & Industrial Solutions
Our Commercial & Industrial Solutions consist of Energy Solutions & Industrial
Technology, Intelligent Building Technology, Robotics & Automation, and Other Businesses.
Our Commercial & Industrial Solutions have experienced rapid growth during the Track
Record Period. Below is a table showing our respective revenues from Energy Solutions &
Industrial Technology, Intelligent Building Technology, Robotics & Automation, and Other
Businesses for the years/periods indicated.
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Energy Solutions &
Industrial Technology /H1118/H111820,111,476 27.4 21,618,496 25.8 27,874,277 28.5 9,512,855 28.9 11,108,348 31.7
Intelligent Building
Technology /H1118/H1118/H1118/H1118/H1118/H1118/H111819,690,855 26.8 22,778,244 27.2 25,914,181 26.5 9,874,995 30.0 10,532,805 30.0
Robotics & Automation /H1118/H1118/H111825,286,615 34.5 27,712,820 33.1 31,053,073 31.8 10,017,504 30.4 9,222,915 26.3
Other Businesses /H1118/H1118/H1118/H1118/H11188,290,412 11.3 11,529,651 13.9 12,939,776 13.2 3,553,030 10.7 4,199,236 12.0
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,379,358 100.0 83,639,210 100.0 97,781,307 100.0 32,958,384 100.0 35,063,304 100.0
Energy Solutions & Industrial Technology
We have built a successful Energy Solutions & Industrial Technology business that offers
technologically advanced, reliable, and eco-friendly industrial components and various green
energy solutions, serving customers across the world.
We manufacture and offer a range of core industrial components such as home appliance
compressors, home appliance motors and industrial control systems. We are a market leader in
compressors for home appliances including air conditioners and refrigerators. Our residential
air conditioner compressor business also ranked No. 1 in 2023 in terms of manufacturing
volume, commanding a global market share of 45.1%. We are also a market leader in motors
for air conditioners and laundry appliances. In 2023, both our air conditioner motors and
BUSINESS
– 199 –


--- page 211 ---
laundry appliance motors ranked first globally in terms of manufacturing volume, achieving
respective market shares of 40.0% and 22.0%, according the Frost & Sullivan Report. We
generate revenue from the sales of our industrial component products to customers including
home appliance manufacturers and other industrial companies. During the Track Record
Period, the unit selling price of our major products under Energy Solutions & Industrial
Technology varied, ranging from RMB10 for a home appliance motor at the low-end to
approximately RMB4,500 for an air conditioner compressor at the high-end. In 2021, 2022,
2023 and the four months ended 30 April 2024, the sales volume for these products were
159,251 thousand, 162,923 thousand, 187,325 thousand and 81,308 thousand, respectively.
We are committed to offering green energy solutions, providing equipment, software and
services across the energy value chain, including the generation, distribution, consumption and
storage of electricity. Among our green energy solutions, we offer customized distributed
photovoltaic power generation systems and related equipment to be installed in buildings and
other facilities to generate solar power which is more environmentally friendly and energy-
efficient than fossil fuel power, and power transmission and distribution systems and
equipment such as smart switches and energy controllers that can regulate electricity use to
help customers minimize energy waste and cost. We also offer high-voltage inverters and
low-voltage inverters that significantly increase energy efficiency and energy storage solutions
including storage devices, software and systems such as residential energy storage systems that
help ensure a stable supply of electrical power. Furthermore, we provide intelligent energy
measurement solutions to monitor and measure electricity consumption. We generate revenue
from sales to customers consisting primarily of companies operating in electric power-related
industries, such as fossil fuel and new energy power stations, electric power distribution
companies, and power storage station operators.
Our integrated green energy solutions are customized to fulfill each customer’s energy
needs. For example, before providing customers with the energy storage system, we engage in
discussions with them regarding grid connection, the intended deployment locations, and the
expected operating modes, among other things, which helps us better design our solutions to
meet the specific requirements of our customers. Our services encompass every aspect of the
process, including design, component procurement, installation and deployment, testing,
personnel training (for customers’ employees to ensure smooth operations of the system) and
maintenance.
In addition, we offer thermal management systems and electric motors for new energy
vehicles, which is a fast-growing end-market. We generate revenue from the sales of those
products to new energy vehicle companies. We are continually enhancing our R&D and
manufacturing capabilities and expanding our customer base to cover the major electric vehicle
makers in the market. To support our expansion, we commenced operations at our
manufacturing base for electric vehicle components in Anqing, Anhui in 2022.
BUSINESS
– 200 –


--- page 212 ---
The prices of our offerings under Energy Solutions & Industrial Technology are
determined mainly based on our production cost, market conditions, and arm’s length
negotiations with our customers. Our suppliers for Energy Solutions & Industrial Technology
include mainly suppliers of raw materials such as copper, steel, plastic and aluminum.
Intelligent Building Technology
With the mission of “building sustainable and smart spaces,” our Intelligent Building
Technology business has evolved from supplying commercial air conditioners to providing
integrated solutions for intelligent building ecosystems.
We provide holistic building solutions for diverse end-markets encompassing
infrastructure, public premises, industrial parks, agricultural facilities and more. Customers
seek comprehensive, integrated solutions that blend hardware, software, and services tailored
to the unique conditions and requirements of the buildings, and increasingly focus on digital
and intelligent building management to optimize efficiency. Moreover, there is a growing
emphasis on ESG considerations such as the carbon emissions of buildings. We seek to provide
such integrated and tailored solutions to address the unique needs of each building. Our
building solutions integrate hardware, such as commercial air conditioners and elevators, and
software, including building control systems, and services such as installation, testing and
maintenance, which are tailored for the unique features of each building we serve. Our
integrated digital and intelligent solutions mainly include low carbon ( ᅰ౽Э၁),
transportation (ʹ), hospitals ( ᅰ౽ᔼ৫), and industrial parks ( ᅰ౽෤ਜ) and consist of
diverse offerings across commercial air conditioners, elevators, building control software and
energy management. During the Track Record Period, the unit selling price of our major
products under Intelligent Building Technology varied, ranging from RMB300 for an indoor
central air conditioner unit at the low-end to around RMB3,300,000 at the high-end for a large
centrifuge used in large facilities such as shopping centers, airports and factories. In 2021,
2022, 2023 and the four months ended 30 April 2024, the sales volume for these products were
7,425 thousand, 7,375 thousand, 8,170 thousand and 3,958 thousand, respectively. The sales
volume takes into account products that were sold on a standalone basis and as part of a
solution.
We usually conduct site survey to identify the building’s specific needs and challenges,
before preparing a thorough and customized proposal for the customer’s review. For instance,
in a renovation project in Shanghai in 2023 (see “— Case Studies”), the building was a busy
office tower nestled in the center of a business district. The request was to replace its aging and
inefficient air conditioning system and the main challenge was that the renovation work could
not impede the daily work of tenants in the building. We formulated a comprehensive solution
to address these needs, including a new air conditioning system with high energy efficiency and
a unique process of swift on-site assembly using prefabricated components, which minimized
the usual disruptions to tenants and building operations throughout the construction process.
BUSINESS
– 201 –


--- page 213 ---
At the core of Intelligent Building Technology is “iBUILDING,” our building digital
platform that digitalizes and connects equipment in buildings such as commercial air
conditioners, elevators and control systems, overcoming the pain point of data silos and
enhancing overall operational and management efficiency. iBUILDING can serve as an
intelligent operation center that visualizes a wide range of building data such as energy
consumption, carbon emission, equipment status, incidents, occupancy, in-door air quality and
security and provides comprehensive analyses of those data, allowing building managers to
closely monitor various aspects of the building and promptly make necessary adjustments to
optimize the operation and management of the building. Below is a screenshot of the interface
of our iBUILDING platform:
BuildingA
Area: 4,000m2
Floors: 4
EnergyConsump/g415on
No.ofIncidents
No.ofDevices OﬃceOccupancy
No.ofPeople IndoorAirQuality
MideaIndustrialTown
Area: 10,000m2
FactoryB
Area: 5,000m2
Floors: 3
We have built six main manufacturing bases and six R&D centers worldwide dedicated
to Intelligent Building Technology, with a sales network covering the global markets.
Products and solutions
Commercial air conditioners . According to Frost & Sullivan, in 2023, our commercial air
conditioners ranked first in mainland China, with a market share of 14.3%, and among the top
five globally, with a market share of 6.6%, in terms of revenue.
We continually upgrade and improve our commercial air conditioners with technological
innovations. In 2022, we launched two innovative products under the new chiller brand “K
WING.” Of these two products, the magnetic levitation ice storage dual-mode unit uses an
industry-first horizontally-opposed compression technology to help bearings overcome
disturbance caused by inertial forces from compressor operation. The other product, the air
levitation centrifugal unit, adopts the industry’s first non-equal height foil oil-free air-floating
bearing, solving the problem of low bearing capacity in traditional units, increasing the overall
bearing capacity by over 50%.
BUSINESS
– 202 –


--- page 214 ---
In 2016, we acquired Clivet, a provider of commercial air conditioners in Europe.
Through this acquisition, we boosted the competitiveness of our commercial air conditioners
in Europe and globally and gained a strong foothold in the premium market.
Elevators . We operate our elevator business under LINVOL and Winone, which
continually roll out new elevator products, including escalators, passenger elevators, and
freight elevators. To further expand and upgrade this product category, we have launched villa
elevators and passenger elevators with smart features such as remote monitoring and face
recognition. In addition, we also launched an iBUILDING-based intelligent elevator
management platform in 2022, which empowers building traffic with new digital and
intelligent solutions.
Building energy management . We have seen sustained efforts around the world in the
construction of “zero-carbon buildings” with “green energy systems.” Our iBUILDING
platform conducts intelligent energy adaptation and management with a customized design for
each building. Leveraging our expertise in building hardware and software as well as our
digital capabilities, our building energy management solutions focus on helping buildings save
energy and reduce carbon emissions and feature (i) advanced load-sensing and detection
technologies for assessing the respective HV AC consumption needs for each unit space within
the building, and (ii) coupling control of energy facilities such as photovoltaic devices, power
storage, heat pumps and air conditioners for real-time adjustment of energy consumption.
These technologies allow our solutions to help create a comfortable, intelligent and sustainable
living environment while optimizing energy efficiency.
Building control software . We offer building control software that automates building
control and the accompanying hardware, providing a range of building control functions, such
as data management, elevator traffic optimization and security control. We have launched the
building intelligent control system “KONG NZ” with cloud-edge collaborative capabilities that
significantly improve the automation of building management. We also offer the “WU KONG
Smart Ward Solution” that integrates software, data and service and applies IoT technology to
hospitals.
We generate revenue from selling the hardware on a standalone basis or hardware and
software products described above as integrated solutions. The prices of such offerings are
determined based on a variety of factors, such as market demand, the complexity of the
solutions, the product model, customer purchase volume, and relationship with the customer,
and are subject to negotiation with customers. Our end customers are mainly owners,
contractors or operators of commercial or industrial buildings and other facilities, and our
suppliers are mainly suppliers of raw materials, components including electronic components,
and ancillary materials.
BUSINESS
– 203 –


--- page 215 ---
Case studies
Grade A Office Building in Pudong, Shanghai . In 2023, we completed the green
transformation of a Grade A 42-floor office building located in the center of Shanghai’s
financial district in 120 days. After 18 years of service, the aging air condition system in the
building was operating with poor efficiency, significantly increasing the building’s operational
costs. With our comprehensive energy management solution, including hardware such as our
advanced K WING centrifuge and software including the iBUILDING platform and the Chiller
Doctor digital control system, we completely rebuilt the air conditioning machine room of the
building and raised its annual energy efficiency to 5.5W/W, saving operational costs by over
40%.
Indonesia’s Jakarta-Bandung High Speed Railway. As a landmark project under China’s
Belt and Road Initiative, the 142-kilometer Jakarta-Bandung high speed railway connects
Indonesia’s capital city and its fourth largest city with a maximum speed of 350 kilometers per
hour. As a market leader in the global commercial HV AC industry, we were selected as the
air-conditioning system supplier for the railway, providing integrated air-conditioning
solutions in design, equipment supply, electromechanical installation, and repairing and
maintenance services for multiple clusters of buildings close to the railway. We also supplied
and installed approximately 260 sets of multi-split outdoor air conditioner units, over 1,100
sets of indoor air conditioner units and 14 sets of machine room precision air conditioners in
the railway stations, helping create a cool and comfortable environment equipped with reliable
and durable air-conditioning devices.
Robotics & Automation
We conduct our Robotics & Automation business through KUKA Group, a Germany-
headquartered, world-renowned automation specialist with over 120 years of history. We
acquired KUKA Group in 2017 and privatized it in 2022. KUKA Group is one of the world’s
“big four” industrial robotics makers and supports its customers in the holistic optimization of
their value creation by providing comprehensive automation solutions.
KUKA Group offers one-stop automation solutions including:
 Industrial robots , which are the core components of the automated production
process. KUKA Group provides customers with industrial robots suitable for
different manufacturing scenarios and under different working conditions,
controlled with smart software.
 Automated manufacturing systems , which enable adaptable, modular and automated
manufacturing processes with offerings ranging from individual system
components, tools and fixtures to complete turnkey systems for the automotive
industry, battery production plants and other non-automotive sectors.
BUSINESS
– 204 –


--- page 216 ---
 Swisslog automated logistics systems offer a tailored logistics portfolio of flexible
and modular technologies plus software, such as automated storage and retrieval
systems, automated transport and conveyor systems, and picking and palletizing
systems, providing an integrated automation solution for warehouses and
distribution centers.
 Swisslog medical distribution systems provide automation solutions for modern
hospitals with an aim to boost overall efficiency, such as pharmacy automation
systems that automate time-consuming tasks like medication packaging, dispensing,
storage and retrieval, and transport automation systems that help move medical
materials like medication and blood specimens safely and swiftly.
KUKA Robots at Work
Tailoring to customer requirements, KUKA Group provides comprehensive support,
including design, installation, testing and fine-tuning of the system, and may offer personnel
training and regular maintenance services subject to customer’s requests.
KUKA Group generates revenue mainly from the sales of robotics and automation
products and solutions, and related services such as installation, maintenance and technical
support. The solutions offered by KUKA Group cover the entire value chain, from designing
production processes, providing and installing individual system components, tools and
fixtures to complete turnkey systems in automated manufacturing, logistics and medical
distribution systems. In the case of turnkey solutions, KUKA Group not only provides robotics
and automation products but also integrates various components from third parties, such as
conveyors and sensors, to form a production line that is ready-to-use, thus bringing
convenience to the customers. KUKA Group aligns its product offerings with customer needs
BUSINESS
– 205 –


--- page 217 ---
gleaned from each customer’s specific operations, such as its manufacturing processes, the
types of products being produced, the layout of the production line and specific production
requirements like cleanliness. In addition, KUKA Group provides tailored installation services
based on the unique environment at the customer’s site, such as when configuring the motion
trajectory of robotic arms, and when addressing the integration requirements with the
customers’ existing ERP or other software systems. The prices of KUKA Group’s products and
solutions and the fees charged for its services are determined based on a variety of factors, such
as the complexity and functionality of the product or solution, market demand, market price,
and relationship with the customer. During the Track Record Period, the unit selling price of
our major products under Robotics & Automation varied, ranging from approximately
RMB23,500 at the low-end to around RMB1,700,000 at the high-end for industrial robots with
different payloads. In 2021, 2022, 2023 and the four months ended 30 April 2024, the sales
volume for such products were 37 thousand, 42 thousand, 42 thousand and 13 thousand,
respectively. The sales volume takes into account products that were sold on a standalone basis
and as part of a solution. Our customers are mainly manufacturing companies in various sectors
and healthcare institutions, such as hospitals, and our suppliers are mainly suppliers of core
components such as reducers and servo motors as well as raw materials.
Market leadership
Relying on its advanced movement algorithm, KUKA Group’s robotics products are able
to deliver strong and durable performance. KUKA Group is one of the “big four” industrial
robotics company in the world, and ranks second among heavy-payload robotics makers in the
world in terms of sales volume and revenue in 2023, capturing a market share of 18.6% and
17.9%, respectively, according to the Frost & Sullivan Report.
Leveraging its strong R&D team globally, KUKA Group continues to develop new and
advanced products and solutions that help a broad range of sectors automate their production
and other processes.
 Automotive . Highly sophisticated and smart manufacturing systems, combined with
flexible logistics capabilities, are increasingly important for the automotive
industry, owing to its complexity and dynamic nature. KUKA Group’s robotics and
automation products help auto makers build such systems and achieve adaptable,
modular and automated production and logistics processes. In particular, the
fast-growing electric vehicle sector is an increasingly important growth driver that
KUKA Group is well-positioned to capture. For example, KUKA Group empowered
an automaking factory of a leading China-Germany joint venture with
manufacturing capacity of 300,000 battery packs per year, equipping it with 100
KUKA robots to engage in welding, gluing, and packing in the assembly line.
Furthermore, in 2022, KUKA Group introduced four standard products and three
cleanroom versions of KR SCARA robots that are capable of handling loads of up
to 12kg for the electric vehicle and other sectors.
BUSINESS
– 206 –


--- page 218 ---
 Healthcare . The healthcare sector is one of the most important growth markets.
Demographic change, medical innovations and the development of healthcare
systems in emerging countries, as well the shortage of skilled workers and the
increasing cost awareness of healthcare facilities, are creating a need for new
automation solutions, with the aim to boost efficiency and increase patient safety.
Applications for KUKA robots range from X-ray imaging to radiation therapy,
patient positioning and robot-based assistance systems for surgical procedures in
operating rooms, or as a supporting partner in the field of rehabilitation.
 Consumer electronics . In light of the increasing demand for electronic devices and
the growing shortage of skilled workers, the automation of electronics
manufacturing processes is inevitable. By using robots, production processes can be
adapted both flexibly and easily to meet the rapid changes in the market. Targeting
the consumer electronics sector, KUKA Group has introduced a full series of
four-axis robots, KR SCARA CS, with compact, minimalist, intelligent, and
easy-to-use controllers and a new-generation operating system. This series is
designed for factories making consumer electronics, with payloads of 3 kg to 20kg,
a maximum working distance of 1,200mm, and high-speed handling and high-
precision picking capabilities.
 General industrial sectors . Applications in general industrial sectors require highly
adaptable and flexible robotics. The KR CYBERTECH nano E series six-axis robot,
with two models catering to different demands and multiple process packages, is
designed for the general use of different industries. Its compact structure and hollow
arm are tailor-made for arc welding. Its optimized body design improves hardness
and effectively prevents welding jitter, which, combined with high trajectory
accuracy, ensures satisfactory welding results.
KUKA China
Since joining the Midea family, KUKA Group has experienced sustained and rapid growth
in China. The revenue contribution from KUKA China to KUKA Group’s overall business grew
from 17.3% in 2021 to 19.6% in 2023. Our rich experience and know-how in industrial
automation enhances our ability to lead KUKA China’s growth.
To better serve the Chinese market, KUKA China has established R&D centers in Shunde
and Shanghai and large manufacturing bases in Shunde, Kunshan (in Jiangsu Province) and
Shanghai. The manufacturing facilities in Shunde are the largest manufacturing base for robot
bodies in South China.
BUSINESS
– 207 –


--- page 219 ---
KUKA China has benefited from the sustained growth of China’s robotics and automation
market, driven by rising labor cost, growing manufacturing capabilities and rapid development
of AI and digitalization. It has also sought to increase its penetration in new energy vehicle and
electronics sectors in China by building and continuing to deepen relationships with leading
new energy vehicle and electronics makers in China, providing them with comprehensive
automation solutions tailored for the manufacturing of their products.
Other Businesses under Commercial & Industrial Solutions
We have developed infrastructure and technological capabilities in areas such as supply
chain and digitalization, which significantly contributed to our success. Over the years, we
have made such capabilities available to serve external customers.
For example, Annto Smart Logistics provides end-to-end digital intelligent supply chain
services in home appliances, fast-moving consumer goods, furniture and other sectors,
enabling its customers to achieve efficient operations that integrate delivery and installation
with manufacturing and logistics. Annto Smart Logistics does so by employing digital and big
data technologies to refine and manage its comprehensive logistics network. It leverages
information technology to optimize process execution, enabling seamless coordination among
people, goods, vehicles, and sites. By developing an intelligent logistics platform that
integrates the whole logistical chain, including manufacturing, warehousing, line haul, urban
distribution, and delivery and installation, Annto Smart Logistics provides customers with
digitalized solutions that help customers enhance supply chain efficiency and optimization.
Furthermore, Annto Smart Logistics has developed a strong expertise in urban and rural
distribution. Relying on approximately 120 operation centers nationwide, Annto Smart
Logistics is able to provide nationwide distribution services. Annto Smart Logistics generates
revenue mainly from various supply chain services and solutions such as end-to-end logistics
for manufacturing companies from raw material delivery to product delivery, integrated
warehousing, line haul and distribution services, and one-stop delivery and installation
services.
Midea Cloud is a provider of industrial software and digitalization consulting services
established based on our strategy to digitalize our operations. Midea Cloud offers digitalization
solutions in four categories: R&D digitalization, smart manufacturing, supply chain
digitalization, and operational digitalization. The sectors it serves range from automotive and
electronics to food, among others. It also provides after-sale operation and maintenance
services. Midea Cloud generates revenue mainly from the sales of its software products,
licensing fees, and fees charged for consulting, operation, maintenance and other services.
BUSINESS
– 208 –


--- page 220 ---
In addition, Midea Cloud provides consulting services including digitalization planning
services and digitalization coaching services for its customers. Midea Cloud collaborates with
customers to define the digitalization goals and analyze the workflow, from R&D and
procurement to production activities, to identify areas of improvement. To enhance operational
efficiency, Midea Cloud offers recommendations on workflow and procedural changes, as well
as the use of digital and technological tools, such as certain software for managing workflow.
Additionally, it provides training for customers’ personnel to help them adapt to the newly
digitalized operation.
Midea Lighting is principally engaged in the research and development, manufacturing
and sales of lighting and home design appliances, striving to provide intelligent integrated
solutions for our customers. Midea Lighting generates revenue from the sales of its lighting and
other products to customers.
Over the years, we have also made strategic acquisitions in fields where we see great
growth potential. We acquired Wandong Medical, which provides innovative and high-quality
medical imaging products for clinical use and ultrasound diagnostic equipment. It also provides
integrated solutions for medical institutes with advanced and reliable diagnostic equipment and
services.
Customers mainly include companies in different sectors with needs for smart supply
chain services or digitalized manufacturing, among other things. Suppliers mainly include
transportation and warehouse providers, delivery and installation service outlets, software
developers, IT system and data center suppliers, among others. The prices of our service and
product offerings under Other Businesses are determined based on a variety of factors, such as
market demand, complexity of the services, relationship with the customer, product models and
manufacturing costs.
Other Business
Apart from Smart Home Solutions and Commercial & Industrial Solutions, which are our
main businesses, we engage in certain other business consisting primarily of raw material sales
to our suppliers, including copper, steel, plastic and aluminum. We leverage our large scale and
the efficient sharing of resources among our businesses to centralize the procurement of raw
materials and lower the average cost. This allows us to help our suppliers lower their
manufacturing costs by purchasing raw materials from us, deepening our long-term
relationship with suppliers and ultimately enabling us to reduce our manufacturing costs as
well.
OUR MULTI-CHANNEL SALES AND DISTRIBUTION NETWORK
Given the significant breadth and large volume of our product offering, we have a global
multi-channel sales and distribution network comprising online distributors, offline
distributors and direct sales.
BUSINESS
– 209 –


--- page 221 ---
In 2021, 2022, 2023 and the four months ended 30 April 2024, our total revenue from
sales to online and offline distributors accounted for 43.0%, 45.9%, 45.6% and 48.0% of our
total revenue, respectively. The table below sets forth the revenue contribution from our major
sales channels, in absolute amounts and as percentages of our total revenue, during the Track
Record Period:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2024
RMB’000
%o f
total
revenue RMB’000
%o f
total
revenue RMB’000
%o f
total
revenue RMB’000
%o f
total
revenue
Distributors: (1)
– Online /H1118/H1118/H1118/H111842,487,693 12.4 49,922,299 14.5 53,872,191 14.4 22,763,695 15.6
– Offline /H1118/H1118/H1118/H1118105,306,272 30.7 108,907,380 31.5 116,601,425 31.2 47,189,797 32.4
Direct sales:
– Online /H1118/H1118/H1118/H111819,616,194 5.7 18,090,056 5.2 23,458,647 6.3 7,218,467 5.0
– Offline /H1118/H1118/H1118/H1118175,950,666 51.2 168,788,971 48.8 179,777,541 48.1 68,607,601 47.0
Note:
(1) Distributors primarily consist of (i) e-commerce platforms, KA distributors and SME retailers in mainland
China and distributors in overseas markets of our Smart Home Solutions; and (ii) distributors of our
Commercial & Industrial Solutions.
The following table sets forth the total number of distributors of our Group, including
distributors of our online and offline sales network in mainland China and overseas markets,
as at the dates indicated and the movements during the Track Record Period:
For the Y ear Ended 31 December
For the
Four Months
Ended
30 April
20242021 2022 2023
As at the beginning of
the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,159 90,636 89,087 80,487
Addition of new distributors /H1118 27,438 18,116 15,864 9,663
Inactive (1)/terminated
distributors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,961 19,665 24,464 6,628
Net increase/(decrease) in
distributors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,477 (1,549) (8,600) 3,035
As at the end of the period (2) /H1118/H111890,636 89,087 80,487 83,522
Notes:
(1) Inactive distributors are distributors from whom no revenue was derived during the preceding 12-month
period.
(2) Over 97% of our distributors during the Track Record Period are offline distributors.
BUSINESS
– 210 –


--- page 222 ---
The majority of our distributors are engaged for our Smart Home Solutions business in
mainland China. Adapting to the evolving home appliances market in mainland China, we
undertook various measures to optimize our distribution network prior to and during the Track
Record Period. The total number of our distributors grew from thousands prior to the launch
of Midea Cloud Sales platform in 2018 to 78,159 at the beginning of 2021 as we flattened our
sales and distribution network to directly face more SME retailers instead of working through
regional distributors. The total number of distributors further increased in 2021 before
stabilising and decreasing as we focused more on the quality of SME retailers. During the
Track Record Period, we strategically focused more on engaging with SME retailers who
demonstrated robust sales performance, simultaneously encouraging SME retailers to diversify
their ranges with our multiple product categories. This strategic shift led us to discontinue
partnerships with certain low-performing SME retailers or those who maintained a narrow
selection of our product offerings, resulting in the general reduction in the total number of
distributors during the Track Record Period. See “— Optimization of Our Distribution
Channels in Mainland China” below for more details.
Smart Home Solutions
For our Smart Home Solutions, we have a comprehensive online and offline sales network
in mainland China and overseas markets. Below is a summary of our main sales channels for
Smart Home Solutions in mainland China:
Online channels
Our online channels for Smart Home Solutions in mainland China primarily include
e-commerce platforms and direct online sales.
 E-commerce platforms are online distributors who purchase products from us to
resell to their own customers.
 Direct online sales include sales to consumers (i) through stores we operate on
third-party online platforms, or (ii) through our own shopping platforms such as
Midea E-Store.
Offline channels
Our offline channels for Smart Home Solutions in mainland China primarily include key
account distributors (“KA distributors”), SME retailers and direct offline sales.
 KA distributors , mainly include: (i) national retailers , who purchase products from
us and resell to consumers at their nationwide chain stores; (ii) regional retailers ,
such as regional chain stores, department stores and supermarket operators that
purchase products from us and resell to consumers; and (iii) regional distributors ,
who purchase products from us and resell to smaller distributors and/or retailers.
BUSINESS
–2 1 1–


--- page 223 ---
 SME retailers purchase products from us primarily through our Midea Cloud Sales
platform, our sales portal for SME retailers, and primarily resell to consumers.
 Direct offline sales are primarily direct sales to enterprise customers.
In our overseas markets for Smart Home Solutions, we sell directly to ODM/OEM
customers, who then resell the products we manufacture under their own brands, and we
primarily sell our OBM products through local online and offline retailers and distributors.
The table below sets forth a breakdown of the revenue for our Smart Home Solutions
among the main sales channels, both in absolute amounts and as percentages of total revenue
for our Smart Home Solutions, during the Track Record Period:
For the Y ear Ended 31 December
For the
Four Months Ended
30 April
20242021 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Mainland China
Online channels
E-commerce platforms /H1118/H111839,539,843 16.8 46,861,922 20.1 50,168,493 20.4 21,311,156 21.5
Direct online sales /H1118/H1118/H1118/H111819,500,380 8.3 17,830,913 7.7 23,179,179 9.4 7,108,741 7.2
Offline channels (1)
KA distributors /H1118/H1118/H1118/H1118/H1118/H111841,341,297 17.6 36,470,446 15.7 35,648,337 14.5 5,249,104 5.3 (2)
SME retailers /H1118/H1118/H1118/H1118/H1118/H1118/H111818,569,370 7.9 19,635,386 8.4 22,233,455 9.0 17,112,679 17.2 (2)
Direct offline sales /H1118/H1118/H1118/H111811,910,925 5.1 8,491,350 3.6 9,907,399 4.0 4,785,986 4.8
Overseas
Direct online sales (3) /H1118/H1118/H1118115,813 0.0 259,144 0.1 279,469 0.1 109,725 0.1
Direct offline sales /H1118/H1118/H1118/H111869,927,287 29.8 65,558,065 28.2 64,475,127 26.2 26,542,141 26.7
Retailers and
distributors /H1118/H1118/H1118/H1118/H1118/H1118/H111834,013,086 14.5 37,718,338 16.2 40,459,945 16.4 17,020,171 17.1
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118234,918,001 100.0 232,825,564 100.0 246,351,404 100.0 99,239,703 100.0
Notes:
(1) In 2022, the revenue contribution from offline channels in mainland China generally declined, which
was partly due to the COVID-19 outbreaks and the restrictions imposed that limited offline sales
activities.
(2) As we continued to implement our strategy to flatten our sales and distribution network, our business
with KA distributors significantly reduced in the second half of 2023 as more SME retailers directly
cooperated with us. As a result of this shift, the revenue contribution from KA distributors decreased,
while the revenue contribution from SME retailers increased, in the four months ended 30 April 2024.
(3) Our direct online sales in overseas markets include sales to consumers (i) through stores we operate on
third-party online platforms, and (ii) through our own shopping platforms such as Midea E-Store.
BUSINESS
– 212 –


--- page 224 ---
Optimization of Our Distribution Channels in Mainland China
Different regions of mainland China may vary significantly in terms of infrastructure,
climate, market conditions and consumer preferences. In addition, the sheer size of the market
makes it difficult for us to interface with a large number of SME retailers directly. As a result,
we have traditionally used a multi-layer distribution model for the offline distribution of our
smart home products in mainland China, which is in line with the industry norm. Under this
model, we sell our products to regional distributors who then resell to other smaller distributors
and/or retailers before such products are purchased by consumers. As our business grew and
mainland China’s home appliance market matured, we became acutely aware of the
inefficiencies of this model, such as delayed feedback on consumer preferences, a lack of direct
visibility on end-market demand, higher logistical costs, and margins forfeited to intermediate
distributors.
To address these inefficiencies and as part of our “direct to users” strategy, we have
invested significantly in our Midea Cloud Sales platform, which has enabled us to interface and
transact with a large number of SME retailers directly. The Midea Cloud Sales platform,
launched in 2018, is regularly updated. As a result, the total number of our distributors
increased from thousands before the launch of Midea Cloud Sales to tens of thousands during
the Track Record Period. Under this new model, we are able to directly connect with and sell
products to SME retailers, better understand the manner in which our products are marketed,
and react promptly to changes in consumer preferences and market demand. Coupled with our
digitalized supply chain and robust logistical capabilities, we are able to gain a better
understanding of consumer needs and conduct more accurate manufacturing and inventory
planning, among other things. During the Track Record Period, we also strategically placed
more emphasis on those SME retailers with better sales performance and encouraged SME
retailers to carry multiple product categories from us. Consequently, we ceased business
relationships with certain SME retailers with low performance or those who only carried a
limited number of products from us, resulting in the general reduction in the total number of
distributors during the Track Record Period.
Relationship with Distributors
To the best of our knowledge, all of our online and offline distributors in mainland China
and overseas during the Track Record Period are Independent Third Parties. There were certain
instances during the Track Record Period of our former employees becoming shareholders or
employees of certain distributors. Our transactions with such distributors were conducted on an
arm’s length basis. Our relationship with our distributors is a buyer and seller relationship.
They are our customers and they do not act on our behalf when dealing with their own
customers, and we have no management control over their order placement, inventory
management, or resale activities. They place orders with us if, when and for amounts they deem
appropriate.
Some of our distributors may use sub-distributors. They typically further enter into
agreements with the sub-distributors, and we generally do not enter into agreements or directly
establish relationships with the sub-distributors. Consequently, we have no control over the
sub-distributors.
BUSINESS
– 213 –


--- page 225 ---
During the Track Record Period and up to the Latest Practicable Date, to the best of our
knowledge, there was no material non-compliance with the terms and conditions of our
agreements with distributors.
Contractual and other arrangements with distributors
We use distributors and retailers for our Smart Home Solutions to expand the geographic
coverage and consumer reach of our products. Our distribution models are in line with the
industry norm in mainland China and the relevant overseas market. We enter into contracts
with distributors and retailers that set forth each party’s rights and obligations, with terms
subject to individual negotiation depending on specific circumstances.
Below is a summary of some key contractual and other arrangements with different
distributors and retailers:
E-commerce platforms
 Selection criteria : We partner with China’s leading e-commerce platforms with a large
consumer base.
 Revenue recognition : Revenue from sales of goods is recognized once we have delivered
products to the location as specified in the contract and the e-commerce platform has
confirmed the acceptance.
 Evaluation : We evaluate the performance of e-commerce platforms based on a variety of
factors and do not set a mandatory minimum sales requirement.
 Product delivery : We bear the costs and risks related to the shipment of ordered products
to the e-commerce platforms. We are generally obligated to deliver the products to them
within a pre-determined period of time after they place orders with us, depending on
factors such as the distance and the size, type, and quantity of the products.
 Product return : We adhere to our product return policies and generally do not allow
e-commerce platforms to return products other than due to product quality issues, product
returns from consumers or recalls or other specified circumstances, which is in line with
customary industry practice.
 Intellectual property : E-commerce platforms are prohibited to use our intellectual
property without our authorization or beyond the duration of the respective contract.
 Duration : Duration of contract varies ranging from one year to several years, subject to
individual commercial negotiation.
BUSINESS
– 214 –


--- page 226 ---
KA distributors
 Selection criteria : We select KA distributors based on their national and regional
coverage, sales channels and financial condition.
 Revenue recognition : Revenue from sales of goods is recognized once we have delivered
products to the location as specified in the contract and the distributor has confirmed the
acceptance.
 Evaluation and support : We evaluate the performance of KA distributors based on a
variety of factors and do not set a mandatory minimum sales requirement. Our employees
are assigned to some KA distributors to assist them with maintaining our brand image.
 Product delivery : We bear the costs and risks related to the shipment of ordered products
to the KA distributors.
 Product return : We adhere to our product return policies and generally do not allow KA
distributors to return products other than due to product quality issues, product recalls or
other specified circumstances, which is in line with customary industry practice.
 Intellectual property : KA distributors are prohibited to use our intellectual property
without our authorization or beyond the duration of the respective contract.
 Duration : Duration of contract varies ranging from one year to several years, subject to
individual commercial negotiation.
SME retailers
During the Track Record Period, the vast majority of our distributors were SME retailers.
 Selection criteria : We select SME retailers based on their market coverage, retail
experience, local resources, and financial condition.
 Revenue recognition : For domestic sales, revenue from sales of goods is recognized
once we have delivered products to the location as specified in the contract and the
SME retailers has confirmed the acceptance. For overseas sales, revenue from sales
of good is recognized once the products have been declared to the customs and
shipped out of the port in accordance with the contract.
 Evaluation and support : We evaluate the performance of SME retailers based on a
variety of factors and generally do not set a minimum sales requirement.
 Product delivery : We bear the costs and risks related to the shipment of ordered
products to SME retailers.
BUSINESS
– 215 –


--- page 227 ---
 Product return : We adhere to our product return policies and generally do not allow
our SME retailers to return products other than due to product quality issues,
product recalls or other specified circumstances, which is in line with customary
industry practice.
 Intellectual property : SME retailers are prohibited to use our intellectual property
without our authorization or beyond the duration of the respective contract.
 Duration : Duration of contract varies ranging from one year to several years, subject
to individual commercial negotiation.
Pricing
For our Smart Home Solutions, our wholesale prices for distributors are generally
determined based on the market dynamics of the relevant distribution channel, taking into
account the scale of the distributor, the logistical requirement for delivery, market positioning,
regional differences, and manufacturing costs, among other factors. In order to establish a
nationwide retail pricing benchmark as a reference for retailers and consumers, we provide
MSRP for our products. Our distributors are allowed to offer discounts from the MSRP at their
discretion. Our sales management team may conduct market research and adjust our pricing
policies based on end-market information.
Commercial & Industrial Solutions
For our Commercial & Industrial Solutions, in both mainland China and overseas
markets, we sell the majority of our products directly to enterprise customers, in line with our
goal of providing integrated solutions to customers based on a deep understanding of customer
needs gained through direct interactions.
Sales and Marketing
We invest in sales and marketing to strengthen our leadership position in the global
markets and promote our Smart Home Solutions and Commercial & Industrial Solutions.
For Smart Home Solutions, we utilize a variety of marketing channels, from online
channels including social media, livestreaming and short video platform to offline branding
campaigns targeting specific geographic markets. One of our key sales and marketing strategies
is to focus more on the premium markets and improve our brand recognition in overseas
markets. We also leverage feedback received from our sales channels and information collected
through our digital platforms to identify potential consumers for premium brands and products,
and use targeted product and brand image marketing activities in our core markets to promote
those brands and products.
BUSINESS
– 216 –


--- page 228 ---
For our Commercial & Industrial Solutions, we participate in various industry events such
as trade fairs and exhibitions to promote our solutions and brand name. We conduct
coordinated marketing among the various businesses within Commercial & Industrial Solutions
and have strengthened horizontal collaboration to facilitate cross-business sharing of market
information, business opportunity and marketing channels.
Sales Rebates
For our Smart Home Solutions business, we primarily rely on distributors as our sales
channel. In order to promote the sales of our products by our distributors, we provide sales
rebates from time to time in order to incentivize our distributors. We primarily design our sales
rebate policies to achieve below goals:
 Product wise , to incentivize our distributors to promote certain types of products
during certain period of time, such as newly launched products or more eco-friendly
products;
 Channel wise , to incentivize our online and/or offline distributors to increase the
sales volume through a particular channel;
 Competition wise , to quickly respond and adapt to changes in the market condition
when needed, and to increase the attractiveness of our products to consumers; and
 Inventory turnover wise , to incentivize our distributors to clear stocks of older
models or slower-moving goods when needed so as to maintain the overall
efficiency of our sales and distribution network.
Our sales rebate is typically calculated as a percentage of the overall sales value of the
applicable products and is generally applied to subsequent purchases by the respective
distributor as credits instead of being provided in cash. The actual sales rebate amounts vary
greatly from time to time and from policy to policy, which depends on a number of factors
including market conditions, seasonality, competition, nature of the underlying products and
others.
MANUFACTURING AND QUALITY CONTROL
As of Latest Practicable Date, we had 43 major manufacturing bases worldwide. Our
overseas manufacturing bases, which are strategically located and produce products sold in the
local markets and globally, are central to our efforts to promote global manufacturing.
BUSINESS
– 217 –


--- page 229 ---
The following table set forth the designed capacity, manufacturing volume and capacity utilization of our main manufacturing facilities for main
product categories during the Track Record Period:
For the Y ear Ended 31 December For the Four Months Ended 30 April
20242021 2022 2023
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
(thousand units) (thousand units) (thousand units) (thousand units)
Mainland China manufacturing
facilities
Smart Home Solutions:
Air conditioners /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111892,947 62,673 67.4% 87,667 54,554 62.2% (6) 88,014 55,826 63.4% (7) 33,148 24,213 73.0% (7)
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,611 48,715 83.1% 61,736 41,272 66.9% (6) 68,606 48,352 70.5% (7) 23,097 17,694 76.6% (7)
Kitchen and other appliances /H1118/H1118/H1118333,021 204,337 61.4% 342,905 148,922 43.4% (6) 296,682 168,352 56.7% (7) 103,313 60,135 58.2% (7)
Commercial & Industrial
Solutions:
Energy Solutions & Industrial
Technology (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118497,131 379,740 76.4% 497,560 352,659 70.9% (8) 525,381 404,431 77.0% (9) 200,629 149,073 74.3%
Intelligent Building
Technology (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,258 7,312 79.0% 11,097 6,943 62.6% (8) 12,863 7,776 60.5% 5,065 3,150 62.2%
Robotics & Automation (5) /H1118/H1118/H1118/H111825 20 79.3% 30 26 86.9% (10) 30 19 61.7% (11) 10 8 76.5% (15)
Overseas manufacturing facilities*
Smart Home Solutions:
Air conditioners /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 210 143 68.3% 1,800 1,614 89.7% (13) 2,300 1,150 50.0% (14)
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,839 1,399 76.1% 3,107 1,422 45.8% (12) 2,314 1,814 78.4% (13) 825 755 91.5% (13)
Kitchen and other appliances /H1118/H1118/H11186,751 5,350 79.3% 9,064 6,368 70.3% (12) 9,493 7,483 78.8% (13) 3,149 2,365 75.1%
BUSINESS
– 218 –


--- page 230 ---
For the Y ear Ended 31 December For the Four Months Ended 30 April
20242021 2022 2023
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
Designed
Capacity (1)
Manufacturing
Volume
Utilization
Rate (2)
(thousand units) (thousand units) (thousand units) (thousand units)
Commercial & Industrial
Solutions:
Energy Solutions & Industrial
Technology (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–– – –– – –– – –– –
Intelligent Building
Technology (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–– – –– – –– – –– –
Robotics & Automation (5) /H1118/H1118/H1118/H111830 19 61.7% 30 20 65.7% (10) 30 19 63.4% 10 6 64.9%
Notes:
* The locations of our major overseas manufacturing bases includes, among others, Brazil, Japan, Thailand, Vietnam, Germany, Egypt and Italy.
(1) For all product categories presented in the table other than Robotics & Automation, the designed capacity of the year/period is calculated assumi ng the production lines are
functioning at full capacity as planned in terms of working days, hours per day and pace of production, after taking into account the theoretical time r equired for routine
maintenance and replacement of machinery and equipment. For Robotics & Automation, the designed capacity of the year/period is calculated by aggreg ating the manufacturing
capacity of each manufacturing facility for Robotics & Automation in the relevant period.
(2) The utilization rate equals to the manufacturing volume divided by the designed capacity during the same period. During the Track Record Period, w e experienced fluctuations
in the utilization rate of the manufacturing facilities of certain product categories, mainly as a result of fluctuations in manufacturing volume an d changes in capacity, as further
explained below.
(3) Includes only home appliance compressors and home appliance motors, the two main products under Energy Solutions & Industrial Technology.
(4) Includes only commercial air conditioners and elevators.
(5) Includes only industrial robots and automated guided vehicles.
BUSINESS
– 219 –


--- page 231 ---
(6) The utilization rate declined in 2022, primarily due to the COVID-19 outbreaks and the restrictions imposed in response at the time that affected t he supply chain and the market
demand for home appliances, which in turn affected our manufacturing volume. The manufacturing volume and utilization rate of kitchen and other appl iances were also affected
by our strategic streamlining of product categories to focus on core products.
(7) The utilization rate increased in 2023 and the four months ended 30 April 2024, mainly due to increased consumer demand for our products, driven by e nhanced product
competitiveness from our continued innovation and upgrades, as a result of which the manufacturing volume increased.
(8) The utilization rate declined in 2022, mainly due to the COVID-19 pandemic and related restrictions that affected the supply chain and the market d emand for our products
in these categories, which in turn affected our manufacturing volume.
(9) The utilization rate increased in 2023, mainly due to the increase in sales volume of core industrial components such as compressors and motors for home appliances, which
benefited from the recovery of the overall home appliance market and resulted in an increase in our manufacturing volume.
(10) The utilization rate increased in 2022, mainly driven by strong demand from automotive customers during this period, as a result of which our manu facturing volume increased.
(11) The utilization rate declined in 2023, mainly due to a slight decline in the growth of customer demand for industrial robots in 2023, which affecte d our manufacturing volume
(although the sales volume remained relatively stable in 2023 as it partially came from the inventory produced in the previous year).
(12) The utilization rate declined in 2022, largely due to increases in the manufacturing capacity as a result of accelerated pace of production, desp ite increased manufacturing volume
driven by the growing demand for our products in the overseas markets as the economy recovered from COVID-19 and the related policies were relaxed in ov erseas markets.
(13) The utilization rate increased, mainly driven by the growing demand for our products in overseas markets, as a result of which our manufacturing v olume increased.
(14) The utilization rate declined in the four months ended 30 April 2024, largely due to a significant increase in the manufacturing capacity as a resu lt of an upgrade in our overseas
production capabilities, despite increased manufacturing volume driven by the growing demand for our products in the overseas markets.
(15) The utilization rate increased in the four months ended 30 April 2024, mainly driven by increased orders from customers in the consumer electroni cs sector in mainland China
during this period, as a result of which our manufacturing volume increased.
BUSINESS
– 220 –


--- page 232 ---
Features of Our Manufacturing Process
Our manufacturing process is characterized by end-to-end digitalization and centralized
procurement.
Our operation is digitalized throughout the value chain, which enables efficient
coordination among procurement, manufacturing, and sales and distribution. For example, our
digital infrastructure provides real-time insight on the efficiency and performance of each core
machine on the manufacturing line, which allows us to resolve issues in a timely manner and
implement preventive maintenance. It is this powerful digitalized and interconnected operation
that allows us to adopt the “T+3” model, which is a highly efficient model to manage the
process from order placement (“T”) to the three steps before the order is fulfilled (“+3”):
material preparation, manufacturing and delivery. Under this model, manufacturing is guided
by customer demand and carried out accordingly, thereby enabling accurate, flexible and fast
manufacturing and allowing us to minimize inventory, maximize manufacturing efficiency and
improve customer experience.
Our large scale and the efficient sharing of resources among our many businesses enable
us to centralize the procurement of raw materials, components and ancillary materials, which
significantly lowers our procurement costs. Resources such as copper, steel, plastics and
aluminum and commonly used components such as electronics are shared among businesses in
their manufacturing.
Quality Control
We have established a digital and smart quality assurance system, covering analysis,
warning of quality issues, monitoring and management to oversee the manufacturing process
and collect feedback on product quality on a real-time basis. Our product categories undergo
strict internal sample testing and safety assessment at our manufacturing bases regarding their
safety, performance and reliability before being introduced to the market. We have assembled
a dedicated team responsible for product quality control to ensure strict compliance with the
applicable laws and regulations, the industry standards and our internal policies. The ratio of
our products sent back for repair within one year of sale decreased from 0.21% in 2021 to
0.17% in 2023, demonstrating the effectiveness of our quality control measures.
RESEARCH AND DEVELOPMENT
Our R&D Strategy and System
Our group-wide research system includes our Corporate Research Center and R&D units
and teams at different business departments. Across business departments, we have established
dedicated R&D teams to leverage their first-hand knowledge on products and the market to
develop solutions that address the immediate customer needs.
BUSINESS
– 221 –


--- page 233 ---
This research system is designed to serve our goal of developing a reservoir of technology
spanning three generations (ɓ˾) which represents complete coverage over different time
horizons: (i) the “research generation” that focuses on long-term fundamental research; (ii) the
“reserve generation” that focuses on innovation at the product platform level to support the
next generation of product development; and (iii) the “development generation” that focuses on
product development projects with clear market demand.
Our “2+4+N” global R&D network includes two core R&D centers in Shunde and
Shanghai, four major overseas R&D centers in the United States, Germany, Japan and Italy, and
a number of other R&D centers. Overall, we had more than 23,000 R&D employees as of
30 June 2024. As of the Latest Practicable Date, we had established 33 research centers in 11
countries, among which 17 R&D centers are located in overseas markets. Our overseas R&D
centers focus on localized R&D that cater to the local markets and play an increasingly
important role in our overall globalization strategy.
One of our R&D areas is AI technologies, which are integrated into many of our home
appliances and are becoming increasingly important to our offerings. According to the Frost
and Sullivan Report, AI technologies can generally be categorized into discriminative AI
technology and generative AI technology. For example, discriminative AI technology
empowers our products such as our COLMO AI-powered Villa Central Air Conditioner to sense
the environment and analyse data collected from sensors, enabling intelligent adjustments to
temperature and humidity levels. Generative AI technology is utilized in our M-Smart app,
which is trained to generate responses to user inputs in the context of customer service,
facilitating interaction between users and products. The generative AI technology we currently
adopt is subject to certain regulatory requirements, including the Interim Measures for the
Management of Generative Artificial Intelligence Services (ਕ၍ଣᅲБ፬
جof China. As advised by Jia Y uan Law Offices, our legal advisor as to PRC laws, as of the
Latest Practicable Date, we have established an algorithm security management system and
completed the necessary filings to follow these regulatory requirements.
Collaboration with Academic Institutions
In addition to utilizing our in-house R&D resources, we also collaborate with external
institutions in mainland China and abroad as part of our R&D efforts. In mainland China, we
have established strategic partnerships with top universities including Shanghai Jiao Tong
University, Xi’an Jiaotong University, Tsinghua University (Future Laboratory) and East China
Normal University. We have set up joint technology labs with Zhejiang University, Huazhong
University of Science and Technology, South China University of Technology and Xi’an
Jiaotong University, for explorative research mainly on advanced manufacturing, advanced
preservation technology, and energy efficiency technologies. Internationally, we cooperate
with globally renowned universities such as the Massachusetts Institute of Technology and the
University of Illinois for research in various subjects, including anti-corrosion, green and
environmentally friendly materials, indoor air quality and refrigerant substitutes.
BUSINESS
– 222 –


--- page 234 ---
Increasing R&D Spending
During the Track Record Period, our R&D expenses increased by 5.4% from RMB12.0
billion in 2021 to RMB12.7 billion in 2022, and further by 15.2% to RMB14.6 billion in 2023,
and increased by 14.6% from RMB4.3 billion in the four months ended 30 April 2023 to
RMB5.0 billion in the four months ended 30 April 2024. We continue to invest in hiring and
retaining the best R&D talent to strengthen our R&D capabilities.
CUSTOMERS AND SUPPLIERS
Our customers primarily consist of our distributors and retailers and ODM/OEM
customers for Smart Home Solutions, and enterprise customers of our Commercial & Industrial
Solutions. Our distributors and retailers include e-commerce platforms, KA distributors, and
SME retailers, among others. See “— Our Multi-channel Sales and Distribution Network” for
more details. The combined revenue from our five largest customers for each of the years ended
31 December 2021, 2022 and 2023 and the four months ended 30 April 2024 accounted for
10.6%, 11.4%, 11.8% and 13.5%, respectively, of our revenues during the same periods.
During the Track Record Period, our suppliers primarily included raw material and
component suppliers. Our top five suppliers for each of the years ended 31 December 2021,
2022 and 2023 and the four months ended 30 April 2024 together accounted for 6.3%, 6.4%,
6.1% and 6.5%, respectively, of our total purchase. We generally do not use OEM suppliers or
other manufacturing subcontractors.
We rely on a wide variety of raw materials, parts and components to manufacture our
products. Raw material procurement accounts for the majority of our total cost of sales.
We select our suppliers based on their qualification, compliance with laws and
regulations, product quality, brand names, reliability, manufacturing capacity and cost
management. We conduct supplier evaluations, examine their business licenses, quality
management system certificates and environmental assessment certificates, evaluate their
operating capacity, product quality, environmental and safety management, and social
responsibility, and conduct sampling on-site visits and verification. We have a dedicated team
assigned to the monitoring and management of our suppliers on our platform with respect to
product quality, sales, logistics services and aftersales services, among others.
Under our supplier management framework, we typically seek to enter into framework
agreements with strategic suppliers for stable procurement of raw materials or components on
terms more favorable to us. At the same time, supply chain safety has been an important focus
in our supplier management strategy. For each important material or component for which we
rely on external sourcing, we make sure that we have at least two suppliers so as to mitigate
the concentration risks and maintain our pricing competitiveness. However, the price of various
commodities may be volatile and negatively affected by factors beyond our control. See “Risk
Factors — Risks Relating to Our Business and Industries — Future operating results depend
upon our ability to obtain raw materials, components and products in sufficient quantities on
commercially reasonable terms from third-party suppliers, and any disruption in their supply
or significant increase in their prices will negatively affect our business.”
BUSINESS
– 223 –


--- page 235 ---
During the Track Record Period and up to the Latest Practicable Date, to the best of our
knowledge, none of our Directors, their associates or any of our shareholders (who owned or
to the knowledge of our Directors had owned more than five percent of our issued share
capital) had any interest in any of our five largest customers or suppliers. No major customer
is also a supplier of us during the Track Record Period or vice versa.
AFTER-SALES SERVICES
We believe that the accessibility of high-quality after-sales services is an important
consideration behind a consumer’s purchase decision. Therefore, for our Smart Home
Solutions, we maintain a global service network in mainland China and our overseas markets.
As of the Latest Practicable Date, this network included approximately 6,000 and 5,000 outlets
providing after-sales services in mainland China and overseas, respectively.
Our after-sales services cover delivery and installation, repair, return and exchange of
defective products. These services are delivered at service outlets, in person through home
visits and, increasingly, via M-Smart, our online platform with live chat features. After-sales
representatives are required to attend regular training sessions to improve their knowledge and
skills. To ensure the quality of our after-sales services, we conduct regular appraisals on
representatives with regards to their performance.
For enterprise customers of our Commercial & Industrial Solutions, we typically deploy
dedicated teams to provide installation, maintenance and other services, seeking to enhance
customer loyalty and build customer trust through excellent services.
INVENTORY MANAGEMENT AND LOGISTICS
Our inventory includes finished products, semi-finished goods, components and raw
materials. Our digitalized supply chain allows us to manage our inventory intelligently and
efficiently, maintain a level of inventory that matches demand and achieve fast inventory
turnover. Our inventory turnover days were 53 days, 64 days, 62 days and 50 days in 2021,
2022, 2023 and the four months ended 30 April 2024, respectively, which are meaningfully
below the industry average, according to the Frost & Sullivan Report.
To improve our inventory efficiency, we have adopted a unified warehousing and
distribution system and continuously enhance inventory turnover. In order to minimize
obsolete inventory, avoid product damage during the warehousing and distribution process, and
facilitate interactions with our customers and business partners, we have established an ISC
management system. We have developed strong capabilities in regard to order execution,
global supply chain management and efficient delivery, and have built the sales and operations
planning cockpit and the commitment mechanism of sales and manufacturing with order
pre-scheduling rules.
BUSINESS
– 224 –


--- page 236 ---
We have adopted a cloud-based inventory management approach that enables us to
manage our inventory and facilitate our order requests to our suppliers. Our suppliers are
provided with improved demand planning through analyses of transaction activities, which
allows us to make reasonable forecasts and maintain efficient manufacturing or procurement
processes. Furthermore, we have built the iBOS platform for the integration of overseas sales.
With the collaborative planning, forecasting and replenishment model, visualization of
overseas orders, and other features, the iBOS platform can improve the execution and delivery
efficiency of overseas orders at a much lower cost, better positioning us to maintain an optimal
inventory level to satisfy market demand in a timely manner.
INTELLECTUAL PROPERTY
As of the Latest Practicable Date, we had over 82,800 registered patents and over 1,800
software copyrights in mainland China, over 2,800 registered patents in Japan, over 1,300
registered patents in the United States, over 1,000 registered patents in Germany, and over
4,600 registered patents in other countries and regions. We had applied for registration of over
31,000 patents in mainland China, over 1,200 patents in Japan, over 800 patents in the United
States, over 2,000 registered patents in other countries and regions, and over 6,400 patent
applications pending under the Patent Cooperation Treaty. Among our registered patents and
patent applications pending approval, over 32,200 and 34,700 were invention related patent
registrations and applications, over 46,100 and 4,700 were utility model related patent
registrations and applications, and over 14,500 and 2,200 were product design related patent
registrations and applications, respectively, as of the Latest Practicable Date. In addition, as of
the Latest Practicable Date, we were the registered owner of over 10,000 trademarks and 500
domain names. We had also applied for the registration of over 1,400 trademarks.
As of the Latest Practicable Date, our Directors believe that there is no legal impediment
for the renewal of the above patents, copyrights, trademarks and domain names that would
materially and adversely affect our business. For details, please refer to the paragraph headed
“Appendix VI — Statutory and general information — 2. Further Information about Our
Business — B. Our Material Intellectual Property Rights” in this document.
To protect and enforce our intellectual property rights, we enter into framework
agreements with our suppliers imposing confidentiality obligations to protect our intellectual
property rights during the manufacturing.
We have adopted a number of internal control policies and measures to protect our
intellectual property rights and trade secrets. For example, we deploy a group-level digital
platform to monitor and manage the full lifecycle of our patents, trademarks, copyrights,
domain names and other intellectual property rights. Our intellectual property team proactively
take initiatives to identify potential infringement upon our intellectual property rights and take
appropriate actions based on our findings. We rely on confidentiality agreements to safeguard
our interests in proprietary know-how that are not patentable and manufacturing processes for
which patents are difficult to enforce. The contracts we entered into with our employees,
suppliers, distributors, and other strategic partners are subject to review and approval by our
BUSINESS
– 225 –


--- page 237 ---
in-house legal team, who is tasked with ensuring that sufficient protection is built into the
contracts to prevent unauthorized disclosure. However, there is no guarantee that we will
prevail on patent infringement claims against third parties, and we cannot assure you that our
products do not infringe patents held by others or that they will not in the future. See “Risk
Factors — Our intellectual property rights are fundamental to all of our businesses and we may
not be able to prevent others from unauthorized use of our intellectual property, which could
harm our business and competitive position” and “— Claims by third parties that we are
infringing their intellectual property and other litigation could adversely affect our business.”
To the best of our knowledge, information and belief, during the Track Record Period and up
to the Latest Practicable Date, we had not been subject to any material intellectual property
rights claims by third parties.
COMPETITION
The markets that we engage in are highly competitive and we are faced with intense
competition in all aspects of our business. Our current and potential competitors include large
Chinese and multinational home appliance companies, local and specialized brands, and
Chinese and global commercial and industrial solutions providers. We anticipate that the home
appliances and commercial and industrial solutions markets will continuously evolve and
experience changes in technology, industry standards and customer preferences. We must
continually innovate to remain competitive. We believe that the principal competitive factors
in our industry are:
 brand recognition and reputation;
 innovative technology and digitalization capabilities;
 comprehensiveness and effectiveness of solutions;
 ability to reduce costs and enhance efficiency;
 product quality and assortment;
 extensive and reliable sales channels;
 visionary and experienced management capability; and
 pricing.
We believe that we are well-positioned to effectively compete on the basis of the factors
listed above. However, some of our current or future competitors may have longer operating
histories, greater brand recognition, better supplier relationships, larger customer bases or
greater financial, technical or marketing resources than we do. We build our competitive edges
with our strength in technology and have been dedicated to the expansion of our global
presence and the improvement in operating efficiency.
BUSINESS
– 226 –


--- page 238 ---
SEASONALITY
Certain of our product categories can be affected by weather due to the nature of the
products, such as air conditioners. There are also certain seasonal patterns for purchases of our
products due to holiday-driven promotions. We expect the impact of seasonality on our
business to remain in the future, although by leveraging our diverse product portfolio, we
generally do not experience material seasonal fluctuations with respect to our results of
operations and financial conditions for our Group as a whole.
DATA PRIV ACY AND PROTECTION
Our businesses generate and process a large quantity of transaction, consumer
demographic and behavioral data. We face risks inherent in handling large volumes of data and
in protecting the security of such data. See “— Our business is subject to a variety of local and
overseas laws, rules, policies and other obligations regarding data protection. Any losses or
unauthorized access to or releases of confidential information and personal data could subject
us to significant reputational, financial, legal and operational consequences.” We understand
the importance of the personal data and privacy to our customers and treats data protection with
the utmost seriousness, and implement measures to ensure our compliance with relevant legal
requirements in mainland China and other jurisdictions where we operate to protect their legal
rights. To protect data privacy, appropriate physical, administrative and technical measures are
in place to prevent unauthorized access to and use of such data. For example, we restrict access
to these data to a minimal percentage to prevent data leakage; we also use encryption
technology to protect these data and has network security protection mechanisms in place to
protect the data from malicious attacks and thefts. We hold regular trainings for our employees
to strengthen their awareness of the importance of data protection.
We have built and continually improve our smart home security system for data privacy
and security. To minimize the risk of data loss, we conduct regular data backup and data
recovery tests. Our database can only be accessed by certain designated and authorized
personnel after assessment and approval procedures, whose actions are recorded and
monitored. We have data disaster recovery procedures in place and have established and
continually improved our data centers.
ESG
Since our founding, we have been committed to contributing to society through not only
innovative products and services, but also socially and environmentally responsible operations.
ESG Governance
We have established a tiered, comprehensive ESG management framework. Our ESG
Committee is responsible for establishing, adopting and reviewing our ESG strategies and
goals, and evaluating, determining and addressing our near-term, medium-term and long-term
ESG-related risks. We have formulated a dedicated in-house team of ESG experts, and engaged
BUSINESS
– 227 –


--- page 239 ---
independent third parties for assistance, to evaluate ESG-related risks and review our existing
strategies, goals and internal control measures from time to time. Under their supervision, we
actively identify and monitor actual and potential impact of environmental, social and
climate-related risks on our business, strategy and financial performance, and incorporate
considerations of these issues into our business, strategic and financial planning. We also
prepare and issue annual ESG reports to keep all stakeholders informed of our ESG initiatives
and risks and any developments that may have an impact on our business, financial
performance and results of operation. This report is used to direct our dialogue with
stakeholders regarding ESG matters.
In 2022, we received an “AA” ESG rating released by the China Securities Index, which
is a rating used to reflect the ESG performance of the evaluated companies compared with their
peers in the same industry. We were recognized as an Exemplary Industrial Enterprise to
Achieve Sustainable Development in the selection of Forbes China Top 50 Sustainable
Development Industrial Enterprises (
ʈุΆุTOP50) in 2022 and
listed on the Fortune China ESG Impact List ( ৌబʕ਷ESGᅂᚤɢ࿮) in 2023.
Identifying ESG Risks
We maintain a close relationship with our stakeholders as they play a crucial role in
maintaining our business sustainability. Key stakeholders of our business include our
customers, suppliers, employees, governments, communities and shareholders. Through
continuous engagement, we collect their views and opinions which help us to identify
ESG-related risks and formulate the sustainability framework to address those risks.
Taking into consideration of the stakeholder input, we discuss internally with our
management and in-house ESG experts and from time to time consult external advisers to
identify potential material ESG topics which may affect our business and stakeholders based
on our actual development and the evolving characteristics of our industries. We continually
monitor our ESG metrics with reference to applicable industry standards and other leading
industry players.
Managing ESG Risks
We have dedicated personnel to identify the laws, regulations, rules and industry
standards applicable to us in relation to various ESG-related risks, such as environmental
protection, production safety, employee well-being, consumer rights, anti-corruption,
community support and others, to ensure that we comply with the relevant legal requirements
and stay in line with or above the industry standard. We also set short-term/medium-term/long-
term targets for our ESG-related initiatives, gather and submit data in connection with the
implementation of these initiatives, and regularly review the progress.
BUSINESS
– 228 –


--- page 240 ---
Metrics and Targets
We are committed to reaching carbon peak by 2030, with each factory in mainland China
recognized as a National Green Factory (ॴၠЍʈᅀ˥๟), and achieving carbon
neutrality by 2060. We also target to increase our percentage of green electricity usage to 10%
by 2025 and to 30% by 2030.
We collect and analyze quantitative information as part of our review of ESG-related
risks. To illustrate, our total greenhouse gas (“GHG”) emission in 2023 was 2,298,311 tonnes
of CO
2 equivalent or 0.061 tonne of CO 2 equivalent per RMB10,000 worth of product output.
By comparison, the average greenhouse gas emission of selected listed home appliance
companies
1 was 0.0590 tonne of CO 2 equivalent per RMB10,000 worth of product output in
2022, according to the Frost & Sullivan Report. Our photovoltaic power stations generated a
total of 220,760 mWh in 2023, marking our increasing usage of renewable electricity in the
manufacturing process.
Our manufacturing plants have adopted energy management systems and 36 of them have
obtained the ISO 50001 certification. We have dedicated personnel to collect and compare our
emissions data against various evolving industry standards associated with pollutant discharge
during the production process. We strictly abide by PRC Environmental Protection Law, PRC
Water Pollution Prevention and Control Law, PRC Atmospheric Pollution Prevention and
Control Law, PRC Noise Pollution Prevention and Control Law, PRC Solid Waste Pollution
Prevention and Control Law, PRC Environmental Impact Assessment Law, Regulation on the
Administration of Permitting of Pollutant Discharges and other relevant laws, administrative
rules and regulations. We take effective environmental protection measures to protect our
environment and ecosystem and fulfill our corporate social responsibility. In terms of pollutant
management, we strictly comply with the current pollutant emission standards and limits
applicable to our business and industry as follows:
 Waste water management: Integrated Wastewater Discharge Standard (“ Ϯ˥ၝΥર
ᅺ๟”) (GB8978-1996), Discharge Limits of Water Pollutants (“ࠢ׳
࠽DB44/26-2001), Electroplating Water Pollutant Discharge Standard (“ ཥᒜ˥
ᅺ๟”) (DB 44/1597-2015), Guangdong Provincial Water Pollutant
Discharge Limits Standard (“ᅺ๟”) (DB44/26-2001) and
other standards.
1 Including four listed leading home appliance companies, namely Haier Smart Home Co., Ltd., LG Electronics
Inc., Hisense Home Appliances Group Co., Ltd., and Zhejiang Supor Co., Ltd.
BUSINESS
– 229 –


--- page 241 ---
 Air pollutant management: Integrated Emission Standard of Air Pollutants (“ ɽंϮ
ᅺ๟”) (GB16297-1996), Emission Standard of Air Pollutants for
Boiler (“ᅺ๟”) (GB13271-2014), Emission Control Standard
of V olatile Organic Compounds from Industrial Enterprises (“Ϟዚ
છՓᅺ๟”) (DB13/2322-2016), Emission Standard of Pollutants for
Synthetic Resin Industry (“ᅺ๟”) (GB31572-2015),
Emission Limit of Air Pollutants (“࠽ࠢ׳DB44/27-2001),
Emission Standard of V olatile Organic Chemicals of Furniture Manufacturing
Industry (“ᅺ๟”) (DB44/814-2010), and
Emission Standards for Air Pollutants from Industrial Furnaces and Kilns (“ ʈุᘟ
ᅺ๟”) (GB 9078-1996), among others.
 Noise management: Emission Standard for Industrial Enterprises Noise at Boundary
(“ᅺ๟”) (GB12348-2008).
 Solid and Hazardous Waste Disposal: PRC Solid Waste Pollution Prevention and
Control Law.
Environment
In 2021, we adopted our “Green” strategy focusing on clean environment, happy
community, beneficial technologies, and prosperous ecosystem to manage our ESG risks. We
are dedicated to improving the environmental sustainability across all aspects of our business:
design, procurement, manufacturing, logistics, recycling, and service.
Green Design
We conduct a full-cycle evaluation of the carbon footprint of our products, from raw
material procurement and manufacturing, to use, recycling and disposal. Our low-carbon
design initiatives primarily include (i) using eco-friendly refrigerants for our products to lower
direct greenhouse gas emissions; (ii) enhancing the energy efficiency of our products pursuant
to the China Green Refrigeration Action Plan; and (iii) digitalizing manufacturing lines to
enhance production efficiency and minimize the energy consumption. We estimate and monitor
the aggregate emission amount for a product category via digital toolkits to achieve
comprehensive monitoring and analyses spanning the whole value chain. We strive that all new
product designs will meet the criteria for green design products (Άุᅺ๟)
starting no later than 2030.
We are also dedicated to the R&D, promotion and application of eco-friendly refrigerant
products, and have formulated the first benchmark production line of Multilateral Fund for the
Implementation of the Montreal Protocol, an international treaty designed to protect the ozone
layer. We pioneered low-GWP refrigerant products that earned the first global certificate from
the Air-Conditioning, Heating, and Refrigeration Institute.
BUSINESS
– 230 –


--- page 242 ---
Green Procurement
In selecting our suppliers, we take into consideration their carbon footprints. For
example, we completed the collection of the carbon emission data of over 4,000 suppliers in
2022, including direct greenhouse gas emissions, such as emissions from various combustion
sources and direct fugitive emissions, and indirect greenhouse gas emissions, including
emissions resulting from the use of electricity, heating, cooling and compressed air. We also
educate our suppliers on various green strategies and have established a monitoring and
assessment system to grade and guide our suppliers to reduce their carbon footprints. As of the
Latest Practicable Date, we conducted training sessions for over 5,000 suppliers with regards
to various environmental and social risks along the supply chain. We set in place a social
responsibility assessment system for suppliers, which is standardized, transparent, cooperative,
reciprocal, long-standing and forward-looking. Six red lines of social responsibilities have
been specified for our suppliers, which cover the prohibitive rules on child labor, forced labor,
bribery and extortion, and the occurrence of major safety, fire and environmental protection
incidents. Violation of the red lines will be punished according to the severity by restricting the
procurement amount or terminating the cooperation. We conduct social responsibility
self-assessment for all new suppliers, so as to assess their capability to comply with laws,
regulations and sustainable development agreements. High-risk suppliers which fail the on-site
social responsibility assessment will not be accepted, and we will continue to supervise and
assist our suppliers in rectifying any deficiency we identified and continuously improving their
ESG management framework. We strive to procure eco-friendly materials in our
manufacturing, such as recycled plastics and recycled scrap steel. We strive to have at least ten
National Green Supply Chain Enterprises (ॴၠЍԶᏐᗡΆุ) as our suppliers by 2030,
and promote our Midea Sustainable Development Proposals (ࣣto all of
our raw material suppliers.
In terms of supply chain management, we require materials supplied by all of our
suppliers to comply with requirements of Restriction of Hazardous Substances Directive, or
ROHS, and Registration, Evaluation, Authorisation and Restriction of Chemicals, or REACH,
satisfy the environmental directives or certifications required by national and local regulations
and the government, and meet our environmental directive requirements and the above-
mentioned green design requirements. A quality management system has been put in place for
this purpose. Suppliers also need to provide material testing reports on hazardous substances
restricted by environmental protection regulations according to our requirements. The testing
reports should be valid for one year, and the suppliers should keep testing reports, drawings,
management regulations and other technical documents and quality records related to the RoHS
and the REACH regulation for ten years.
Green Manufacturing
We are dedicated to reducing waste, pollution and energy consumption in our
manufacturing process. All our subsidiaries have set up effective waste treatment for water and
gas. Through regular monitoring and third-party evaluations, we ensure that the discharge of
waste water, waste gas and solid waste during the manufacturing and operation process meets
the requirements under national and local laws and regulations.
BUSINESS
– 231 –


--- page 243 ---
Green Logistics
We make full use of our IoT, cloud computing, artificial intelligence and other
technologies to optimize transportation routes and reduce the mileage and frequency of
transportation, with the goal of saving energy and reducing emissions. In addition, we actively
promote green and low-carbon transportation vehicles.
Green Recycling
We have built a nationwide recycling network through online and offline platforms.
Consumers can recycle and trade in used products through our retail outlets, our Weixin mini
program, service lines and other channels. In 2023 alone, we recycled approximately 3.1
million units of disposed appliances and cooperated with dismantling enterprises to dismantle
disposed appliances for resource reuse, energy conservation and emission reduction.
Green Service
We provide green service through a variety of means, including our energy solutions that
help customers adopt renewable energy, reduce pollution and improve energy efficiency, and
our Intelligent Building Technology that helps customers transform buildings into highly
efficient and green ecosystems. See “Our Offerings — Commercial & Industrial Solutions” for
more details.
Social Responsibility
As a socially responsible corporate citizen, we actively share the fruits of our
development with our employees and the community.
Employees
Striving to form a fair, open and inclusive organizational culture, we are committed to
safeguarding and protecting the rights and interests of all of our employees and creating a
working environment that makes employees feel cared for and motivated. As a global
employer, we adhere to the equal employment principle and strictly prohibit discrimination of
any kind to ensure that the rights and interests of our employees around the world are
adequately protected. In addition, we have adopted measures to prohibit the use of child labor
and forced labor and proactively protect the rights and interests of female employees. In
November 2023, we were selected by Forbes as one of the World’s Top Companies for Women.
As of 30 June 2024, we had over 190,000 employees from over 70 countries.
We have implemented principle of openness, fairness and impartiality when conducting
recruitment and has policies on compensation, equal opportunities, diversity and anti-
discrimination. Accordingly, we give each job applicant an equal opportunity and we have an
internal policy in place to ensure that there is no discrimination as to nationality, region, gender
and ethnicity. We also offered our employees competitive compensation packages. See
“Business — Employees” for more details on remuneration and benefits.
BUSINESS
– 232 –


--- page 244 ---
We care about the physical and mental health of employees. We have established a fund
dedicated to extending financial assistance to our employees who endure economic hardships
due to illness or accidents. In 2023, we provided financial assistance through this fund to
approximately 220 employees in an aggregate amount of over RMB19.2 million. We have also
provided free legal counseling services for approximately 1,900 employees since 2021.
Committed to creating a corporate culture that encourages lifelong learning, we have
established a sound talent training system to help our employees realize their potential and
improve their professional and general skills. Our professional online learning platform,
M-Learning, empowers all our employees through unique courses and practical trainings for
their growth. This platform features over 30,000 e-learning courses as at 30 April 2024,
including over 1,200 new courses added in 2024.
Community
We care about community and actively fulfill our corporate social responsibility by
contributing to the development of local communities, giving back to society with concrete
actions, and creating sustainable value in a responsible manner. We have contributed to local
education in Shunde, where our headquarters are located, and to the establishment of the East
China Normal University Affiliated Shunde Midea School (“ࣧsince
2021 through donations and by mobilizing other resources. In April 2023, we began to help
establish the Second Affiliated Midea High School of the East China Normal University (“ ശ
৷ʕ”), on which we expect to spend over RMB140 million.
Corporate Governance
Advanced corporate governance (ଣዚՓ), adaptive values and ideas (ආ
ׂand the growth of our management’s mindset (ڗare the
cornerstones of our long-lasting growth. Our corporate governance emphasizes the sharing and
a close alignment of responsibility, authority and reward, as well as the cultivation of
entrepreneurship.
Anti-bribery and Anti-corruption
We published and set in place an anti-bribery and anti-corruption policy in 2018 to
safeguard our business against any fraud, bribe or corruption. The policy specifies potential
bribery and corruption conduct and our anti-bribery and anti-corruption measures. We make
our internal reporting channel open and available for our staff to report any suspected bribery
and corruption conduct. In 2021, we further developed a whistle-blower program on a group
level to ensure that such prohibited conduct would be reported without fear of retaliation,
investigated by an independent third party, and that the identity of the whistle-blower along
with other sensitive information will be kept confidential. We also provide regular anti-
corruption and anti-bribery compliance trainings for employees and publish articles on related
topics on one of our internal platforms, “Midea Compliance,” which is accessible to all our
employees, in order to cultivate a good compliance culture.
BUSINESS
– 233 –


--- page 245 ---
EMPLOYEES
The strength and talent of our workforce are critical to the success of our businesses, and
we continually strive to attract, develop and retain personnel commensurate with the needs of
our businesses in their operating environments. As of 30 June 2024, we had a total of 198,609
full-time employees, including 163,602 located in mainland China and 35,007 located
overseas. The following table sets forth the numbers of our employees in mainland China and
overseas categorized by function as of 30 June 2024:
Function
Number of
Employees
Manufacturing /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118153,544
Research and Development /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,482
Sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,407
Administrative /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,176
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118198,609
Our employees are located in more than 70 countries around the world. The following
table sets forth the numbers of our employees categorized by location as of 30 June 2024:
Location
Number of
Employees
Mainland China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118163,602
Asia Pacific (excluding mainland China) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,256
Europe, Middle East and Africa (EMEA) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,367
Americas /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,384
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118198,609
Sharing our successes with and empowering our employees is a key aspect of our
corporate culture. We always strive to provide employees with comprehensive social benefits,
a safe work environment and a wide range of career development opportunities. Furthermore,
we are committed to strictly complying with applicable laws, regulations and standards in
different countries and regions related to workplace safety, providing a safe and healthy
workplace for our employees and implementing an effective management system to help ensure
employee safety and well-being.
As required by laws and regulations in mainland China, we participate in various
employee social security plans, including pension, medical insurance, unemployment
insurance, maternity insurance, on-the-job injury insurance and housing fund plans.
BUSINESS
– 234 –


--- page 246 ---
We are committed to establishing a competitive and fair remuneration. In order to
effectively motivate our staff, we continually refine our remuneration and incentive policies.
We conduct performance evaluation for our employees regularly to provide feedback on their
performance. Compensation for our staff typically consists of base salary and a performance-
based salary. We decide the base salary of employees based on position value and evaluation
performances and decide the performance-based salary based on performance of our Company
and the employee. The remuneration distribution shows more consideration for strategic talent
and ensures the market competitiveness in the salary of core talent. We make dynamic
adjustments to our staff remuneration policy based on various factors, including regional
differences, talent supply, staff turnover, changes in the industry and financial conditions of our
Company.
We typically enter into employment agreements, confidentiality agreements and non-
compete agreements with our senior management and core employees. These employees are
prohibited from joining companies that compete with us or our affiliates during their
employment and for a certain period of time thereafter. We maintain a good working
relationship with our employees, and have not experienced any material labor disputes.
PROPERTIES
Our corporate headquarters are located in Shunde, Guangdong Province, China. As of 30
April 2024, our Company and Major Subsidiaries in mainland China owned land use rights of
56 parcels of land, each occupying over 1,000 square meters, with an aggregate site area of
approximately 6.04 million square meters. All of these land parcels have been granted land use
right certificates. For the land with land use certificates, we have the right to legally occupy,
use, transfer, lease, mortgage, or otherwise dispose of such land and there is no restriction on
the seizure, mortgage and other forms of rights in the ownership of such lands or existence of
any third-party rights during the Track Record Period.
We also own or lease certain properties in mainland China and overseas. As of 30 April
2024, we owned over 190 properties with an aggregate site area of over 12.6 million square
meters. As of 30 April 2024, we leased over 100 properties with an aggregate site area of over
2.6 million square meters. The properties we own and lease are primarily used for office,
manufacturing and warehousing functions. As of the Latest Practicable Date, we had not
received any claims from third-parties disputing the ownership of our properties.
As of 30 April 2024, we did not have any single property with a book value accounting
for 15% or more of our total assets. According to Chapter 5 of the Hong Kong Listing Rules
and section 6(2) of the Companies Ordinance (Exemption of Companies and Prospectuses from
Compliance with Provisions) Notice, this prospectus is exempt from the requirements of
section 342(1)(b) of the Companies (Winding up and Miscellaneous Provisions) Ordinance to
include all interests in land or buildings in a valuation report as described under paragraph
34(2) of the Third Schedule to the Companies (Winding up and Miscellaneous Provisions)
Ordinance.
We believe that our existing facilities are generally adequate to meet our current needs.
BUSINESS
– 235 –


--- page 247 ---
INSURANCE
We consider our insurance coverage to be adequate and in accordance with the
commercial practices in the industries in which we operate. We have purchased property
insurance covering all risks of physical loss, destruction or damage to the inventory of our
products and our fixed assets. We maintain third-party insurance policies covering certain
potential risks and liabilities including product liability and property liability. We mitigate our
credit risks by insuring certain sales to our distributors and retailers, protecting us from
non-payment of commercial debts, covering business-to-business accounts and trade
receivables. We have also purchased information technology insurance mitigating risks
associated with technology errors and omissions and cybersecurity breaches, among others. We
provide social security insurance, including pension insurance, unemployment insurance,
work-related injury insurance, maternity insurance and medical insurance for our employees in
mainland China and statutorily required insurance coverage for overseas employees. In
addition, we have defined benefit plans for employees of certain overseas subsidiaries,
providing supplemental retirement benefits beyond the national regulatory insurance system.
Our management will evaluate the adequacy of our insurance coverage from time to time and
purchase additional insurance policies as needed.
LEGAL PROCEEDINGS AND COMPLIANCE
Legal Proceedings
During the Track Record Period and up to the Latest Practicable Date, we had not been
and were not a party to any material legal, arbitral or administrative proceedings, and we were
not aware of any pending or threatened legal, arbitral or administrative proceedings against us
or our Directors that could, individually or in the aggregate, have a material adverse effect on
our business, financial condition and results of operations.
Our Brazilian subsidiary, in which we acquired a majority interest in 2011, is involved in
certain tax disputes which had been initiated before our acquisition. As at the Latest Practicable
Date, the relevant cases (other than some disputes that have been resolved) were still ongoing.
With reference to judgements of third-party attorneys, our management believes that the
probability of losing the relevant lawsuits and paying compensation is low. We started
negotiating the terms for the acquisition with the original shareholders of this Brazilian
subsidiary in 2011. Consistent with customary practice, the original shareholders of this
Brazilian subsidiary negotiated with us about the indemnification terms pertaining to the
pending tax disputes involving this Brazilian subsidiary prior to our acquisition. Consequently,
for the relevant disputes, they agreed to indemnify us up to a certain amount in accordance with
the final verdicts in the share purchase agreement that we entered into for the acquisition in
August 2011. See “Financial Information — Contingent Liabilities” for more details.
BUSINESS
– 236 –


--- page 248 ---
Compliance
During the Track Record Period and up to the Latest Practicable Date, we had not been
and were not involved in any material non-compliance incidents that have led to fines,
enforcement actions or other penalties that could, individually or in the aggregate, have a
material adverse effect on our business, financial condition and results of operations.
RISK MANAGEMENT AND INTERNAL CONTROL
We have adopted and implemented various policies and procedures to ensure rigorous risk
management and internal control, and we are dedicated to continually improving these policies
and procedures. Pursuant to our risk management policy, our key risk management objectives
include: (i) identifying different types of risks; (ii) analyzing the identified risks, setting
appropriate risk resistant level, and designing responsive policies and procedures; (iii)
establishing a risk control and compliance management professionals organization; (iv)
leveraging our IT systems to improve the accuracy and efficiency of related controls; (v)
regularly reviewing risk management policies and relevant internal control systems to adapt to
changes in regulatory updates, market conditions or our operating activities; and (vi)
monitoring implementation of those designed policies and procedures.
Our risk management and internal control policies and procedures cover various aspects
of our business operations, such as quality control, financial reporting, information disclosure,
information system, internal control, human resources and regulatory risk management. We
have taken various internal control measures and will continue to monitor and enhance our
internal control policies to ensure our compliance with the requirements under the listing rules
of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. We have formulated and
implemented the Policy on Inside Information and Securities Dealing, which provides that (a)
the Directors, officers or employees of the Company shall keep inside information confidential;
and (b) the Company’s financial results or forecasts, its annual, half-year and quarterly reports,
or related information shall not be disclosed prior to the publication of announcements by the
Company. Among others, the Policy on Information Disclosure we set in place, which will take
effect upon the Listing, provides that (i) a shareholder holding 5% or more of the shares of the
Company shall notify us in the event of any change in its shareholding of the Company, any
major change in its control of the Company or any other circumstances as required under the
listing rules of the Company’s place of listing, and (ii) the Directors, Supervisors, senior
management and other staff who have access to material non-public information of the
Company shall keep such information confidential and no inside information may be disclosed
in the press conferences for the financial results, meetings with analysts, roadshow, meetings
with potential investors or other meetings or communications in respect of the operations,
financial conditions or other matters of the Company. Furthermore, the Directors, Supervisors
and senior management of the Company have attended and will continue to attend trainings on
securities laws and continuing compliance obligations under the listing rules of the Shenzhen
Stock Exchange and the Hong Kong Stock Exchange. We have also engaged a compliance
adviser and will continue to engage PRC and Hong Kong legal advisers to advise us on the
compliance with the applicable laws, regulations and listing rules.
BUSINESS
– 237 –


--- page 249 ---
To comply with applicable sanctions and export controls regulations, we maintain a trade
compliance program which includes policies, standard operating procedures, automated control
systems, compliance governance organization and an inquiry and reporting mechanism. We
have been continually investing resources to enhance the program over the past years. As part
of this compliance program, we generally screen our customers and suppliers against
consolidated sanctions lists. We have also incorporated sanctions compliance controls into our
IT systems, which, for example, do not allow orders from or destinated to certain sanctioned
countries.
We have established a Risk Control Committee to monitor the implementation of our risk
management policies across our group on an ongoing basis to ensure that our internal control
system is effective in identifying, managing and mitigating risks involved in our business
operations. The Risk Control Committee currently comprises 16 members, 12 of whom are our
executive Directors and/or members of senior management. The Risk Control Committee meets
from time to time to discuss, analyze and make decisions on different risk management issues.
The Risk Control Committee also discusses with and reports issues to the executive committee.
Under the leadership of the Risk Control Committee, we have adopted the
“three-lines-of-defense” mechanism for risk management. Business units, functional
departments at the Group level, and our internal audit department each constitute “risk defense
line” and are assigned different responsibilities.
Our business and financial performance may be influenced by geopolitical risks.
Geopolitical tensions have resulted in and may continue to cause changes in international trade
policies and additional barriers to trade such as increased tariffs and export restrictions. During
the Track Record Period, a number of our products exported to the United States, mainly under
Smart Home Solutions and Intelligent Building Technology, were subject to tariffs imposed by
the U.S. government, ranging from 2.0% to 25.0%. The tariff rates for most of the categories
of our products subject to U.S. tariffs remained stable during the Track Record Period. In 2023
and the four months ended 30 April 2024, our products exported from mainland China to the
United States that were subject to U.S. tariffs contributed to less than 6% of our total revenue.
The tariffs imposed by the U.S. government may affect the competitiveness of our products in
the U.S. market. In terms of export control, we generally import less than 0.3% of the raw
materials and components we use from the United States, and the majority of the raw materials
and components that we import from the United States are currently not subject to U.S. export
restrictions. The raw materials and components we import from the United States consist
primarily of compressors and integrated circuits. A portion of the integrated circuits from the
United Sates, which makes up approximately 1.3% of the our total integrated circuit purchases
in terms of value, is currently subject to U.S. export control. During the Track Record Period,
we consistently complied with the applicable licensing, documentation and other requirements
in accordance with U.S. export control rules and did not encounter any material issue related
to U.S. export control measures including with respect to obtaining and renewing necessary
licenses and fulfilling other requirements, as applicable. Our trade compliance program helps
us adhere to U.S. export control requirements. In addition, we actively monitor and manage our
supply chain risks, striving to diversify our supply sources. Overall, the U.S. export control
BUSINESS
– 238 –


--- page 250 ---
measures currently in place have no material impact on our business and financial performance.
Future developments in geopolitics could have further impacts on our business and financial
performance. See “Risk Factors — Risks Relating to Our Business and Industry — We are
subject to governmental economic sanctions and export controls laws that could subject us to
liability and impair our ability to compete in overseas markets. Geopolitical tensions resulting
in worsening relationship between countries and regions in which we operate may further
negatively affect our business and results of operations.”
LICENSES, APPROV ALS AND PERMITS
During the Track Record Period and up to the Latest Practicable Date, we have obtained
all licenses, approvals, permits and certificates that are material and necessary for our business
operations in jurisdictions where we operate, and such licenses, permits, approvals and
certificates are valid and subsisting.
A W ARDS AND RECOGNITIONS
During the Track Record Period, we received numerous recognitions for our technologies
as well as our products and services. Some of the significant awards and recognition we
received are set forth below.
Award Y ear Award/Recognition Awarding Institution/Authority
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 236th, World’s Top 500
Most V aluable Brands ( Όଢ௰Ո
೐500੶)
Brand Finance
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Science and Technology Progress
Award (ኪҦஔආӉᆤ)
China National Light Industry
Council
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118First Prize, Awards of Contribution
to Technological Development
(্ᘠᆤɓഃᆤ)
China Private Technology
Promotion Association
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Listed on the Innovation
Application Cases of Industrial
Internet Platform ( ʈุʝᑌၣ̻
Է)
Ministry of Industry and
Information Technology of the
People’s Republic of China
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182024 German National Design
Award
German Design Council
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118iF Design Award iF Design Foundation
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Silver Award, China Patent Awards
(ʕ਷ਖ਼лვᆤ)
China National Intellectual Property
Administration
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Silver Award, China Design Awards
(ვᆤ)
China National Intellectual Property
Administration
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Excellence Award, China Patent
Awards ( ʕ਷ਖ਼лᎴӸᆤ)
China National Intellectual Property
Administration
BUSINESS
– 239 –


--- page 251 ---
Award Y ear Award/Recognition Awarding Institution/Authority
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Listed on the Fortune 2023 China
ESG Impact List
Fortune
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Listed on the Most Admired
Chinese Companies in 2023
Fortune
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 199th, Forbes Global 2000
List 2023
Forbes
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118TIME World’s Best Companies
2023
Time Magazine
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 1st, 2022 China Top 200
Enterprises in Light Industry
(2022ʕ਷Ⴠʈุɚϵ੶Άุ)
China Light Industry Top 100
Enterprises Summit
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 7th, China Grand Awards
for Industry ( ʕ਷ʈุɽᆤ)
China Federation Of Industrial
Economics
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Gold Awards of International
Exhibition of Inventions of
Geneva (ᆤ)
International Exhibition of
Inventions of Geneva organized
by Swiss Confederation, etc.
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 30th, Google x Kantar
BrandZ Chinese Global Brands
(Google x Kantar BrandZ
೐)
Google and Kantar
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Ranked 6th, 2022 Top 100 Chinese
Large Enterprises in Innovation
China Enterprise Confederation,
China Enterprise Directors
Association
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187th China Grand Awards for
Industry ( ʕ਷ʈุɽᆤ)
China Federation Of Industrial
Economics
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118National Green Factory (ၠЍʈ
ᅀ)
Ministry of Industry and
Information Technology
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118China Quality Award ( ʕ਷ሯඎᆤ) State Administration for Market
Regulation
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Science and Technology Progress
Award (ኪҦஔආӉᆤ)
The State Council of the People’s
Republic of China
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Listed on China New Growth –
ESG Innovation Practices ( ʕ਷อ
ڗESG ௴อྼስ࿮)
Harvard Business Review
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Award for Outstanding Contribution
to Environmental Protection ( ௫
̈ᐑྤ্ᘠᆤ)
United Nations Industrial
Development Organization
2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Gold Award, China Patent Awards
(ᆤ)
China National Intellectual Property
Administration
BUSINESS
– 240 –


--- page 252 ---
The following discussion and our analysis should be read in conjunction with our
consolidated financial statements included in “Appendix I — Accountant’ s Report,”
together with the accompanying notes. Our consolidated financial statements have been
prepared in accordance with IFRS.
The following discussion and analysis contains forward-looking statements that
involve risks and uncertainties. These statements are based on assumptions and analysis
that we make in light of our experience and perception of historical trends, current
conditions and expected future developments, as well as other factors we believe are
appropriate under the circumstances. However , our actual results may differ significantly
from those projected in the forward-looking statements. Factors that might cause future
results to differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed in “Risk Factors” and “Forward-Looking
Statements” and elsewhere in this document.
OVERVIEW
We are a leading technology-driven global provider of Smart Home Solutions and
Commercial & Industrial Solutions. Our product and service offerings cover a wide range of
home appliances for consumers, and solutions for enterprise customers spanning across Energy
Solutions & Industrial Technology, Intelligent Building Technology, Robotics & Automation
and Other Businesses. As a Fortune Global 500 company for nine consecutive years, we
operate a global business that reaches over 200 countries and regions, with 33 R&D centers,
43 major manufacturing bases and over 190,000 employees across different continents.
We achieved sustained growth in our revenue and profit during the Track Record Period,
driven by the growth of Smart Home Solutions and Commercial & Industrial Solutions. In
2021, 2022 and 2023, our revenue amounted to RMB343.4 billion, RMB345.7 billion and
RMB373.7 billion, respectively, representing a CAGR of 4.3%, and our profit for the year
amounted to RMB29.0 billion, RMB29.8 billion and RMB33.7 billion, respectively. From the
four months ended 30 April 2023 to the same period of 2024, our revenue increased by 11.0%
from RMB131.4 billion to RMB145.8 billion, and our profit for the period increased by 12.5%
from RMB12.1 billion to RMB13.6 billion.
BASIS OF PREPARATION
The principal accounting policies applied in the preparation of our historical financial
information are in accordance with IFRS Accounting Standards, or IFRS, issued by the
International Accounting Standards Board, or IASB. Our historical financial information has
been prepared on a historical cost basis, except for certain financial assets at fair value through
other comprehensive income, or FVOCI, financial assets and financial liabilities at fair value
through profit or loss, or FVPL, and derivative financial instruments, which are carried at fair
value.
FINANCIAL INFORMATION
– 241 –


--- page 253 ---
The preparation of historical financial information in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying our Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the historical financial information are disclosed in Note 4 of the Accountant’s
Report in Appendix I to this document.
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
The following factors are the principal factors that have affected and, we expect, will
continue to affect our business, financial condition, results of operations and prospects.
Global Economic Conditions and Consumer and Business Spending
We operate a business that reaches more than 200 countries and regions around the world.
Our business and operating results are therefore affected by the global economic conditions,
including the overall global economic growth and level of per capita disposable income,
growth of end-markets, international trade policies and tariffs, among other things.
Unfavorable changes in the global economic conditions and consumer and business spending
could negatively affect demand for our products and services and materially and adversely
affect our results of operations.
Our Smart Home Solutions are significantly affected by consumer spending.
Macroeconomic factors that influence consumer confidence, demand and spending behavior
include, among other things, the level of inflation and unemployment, fluctuations in energy
prices, real estate market conditions, and the overall global economic conditions. In recent
years, our Smart Home Solutions business has been significantly influenced by the need for
replacement rather than new home purchases. According to the National Bureau of Statistics
of China, over 75.0% of the total sales of residential air conditioners, refrigerators and washing
machines in 2023 in mainland China were attributed to replacement demand, reflecting the
significant impact of renovation-driven demand on mainland China’s home appliance market.
Our diverse product portfolio, encompassing brands and products for both premium and mass
markets, is critical for us to navigate shifts in the global economy and consumer spending.
Our Commercial & Industrial Solutions are affected by business expenditures, driven by
customer demand for our products and services, which in turn depends largely on the
end-markets in which our customers operate. These end-markets are prone to fluctuations in
supply and demand, and overall weakness in these markets could temper demand for our
products and services.
Demand for Our Smart Home Solutions
A majority of our revenue is derived from sales of Smart Home Solutions in mainland
China and overseas. Revenue growth in our Smart Home Solutions in recent years was
primarily driven by consumer demand for our products and, in particular, a growing preference
towards premium brands and more sophisticated products.
FINANCIAL INFORMATION
– 242 –


--- page 254 ---
The demand for our Smart Home Solutions is driven by different factors in different
markets. In mainland China, our ability to improve product mix and successfully implement
our premiumization strategy is critical to our business performance, which in turn depends on
the successful introduction of new products with more technologically sophisticated features,
developing and growing the sales of our high-end brands, and allocating more sales and
marketing resources to higher-end products. To continually do so, our ability to directly reach
and stay close to consumers and adapt quickly to the rapidly changing consumer preferences
and behaviors is critical. Our ability to diversify our sales channels is critical for us to capture
consumer demand and reach more consumers. In overseas markets, our ability to continually
expand and deepen our global sales network to extend our customer reach, localize R&D and
production and strengthen our branding in overseas markets is critical for us to deepen the
market penetration for our products. We seek further growth in overseas markets through
continued global expansion, product and technology development, and the digitalization and
optimization of our sales network and logistical infrastructure.
Growth of Our Commercial & Industrial Solutions
Our Commercial & Industrial Solutions business grew at a fast pace during the Track
Record Period and has become an increasingly important driver for our overall growth.
Compared to Smart Home Solutions, some of our Commercial & Industrial Solutions require
longer lead time to ramp up, but may also come with higher customer stickiness and entry
barriers.
The growth of our Commercial & Industrial Solutions ultimately depends on the breadth
and quality of our product and service offerings and the size of our customer base. We currently
offer our commercial and industrial customers a wide range of products and services under
Energy Solutions & Industrial Technology, Intelligent Building Technology, Robotics &
Automation, and Other Businesses. In each of these businesses, we seek to continually expand
and upgrade our offerings to provide comprehensive and high-quality solutions for customers.
Our sustained efforts in R&D lay a strong foundation for our continued innovation in product
and service categories and functionalities. In terms of customer base, we strive to extend our
reach to a wider variety of sectors and customers, while deepening our relationships
particularly with industry leaders and fast-growing sectors with great potential. For example,
our Intelligent Building Technology business today serves not only commercial and office
buildings, but increasingly more complex facilities such as industrial parks and hospitals that
often require more sophisticated and comprehensive solutions. KUKA Group’s Robotics &
Automation business, on the other hand, continues to solidify its leading position in the
automotive industry and strengthen its collaboration with leading automotive brands, while
developing strong relationships in sectors such as consumer electronics, healthcare and general
industrial sectors, which it traditionally had less focused on.
FINANCIAL INFORMATION
– 243 –


--- page 255 ---
Expansion and Penetration in Overseas Markets
We provide products and solutions in over 200 countries and regions across the world. In
2021, 2022, 2023 and the four months ended 30 April 2024, revenue from countries and regions
other than mainland China accounted for more than 40% of our total revenue. We have built
17 R&D centers and 22 major manufacturing bases overseas, localizing R&D and production
to better serve the local markets.
We believe there remains vast opportunities for us in the global markets, and we will
continue to expand our presence through organic growth and acquisitions, deepen our
penetration, broaden our sales channels, enhance our branding efforts, and invest in
infrastructure and personnel to support our globalization strategy. We believe our large scale,
decades of experience in manufacturing and track record for successful acquisitions bring us
considerable competitive advantages that will continue to serve us well in our pursuit of
globalization. We intend to leverage our strong execution abilities to bring our digitalized and
highly efficient manufacturing capabilities to strategic overseas markets. Branding is also an
important focus of our broader globalization strategy, and we will enhance our efforts to
promote the sales of products of our own brands. In terms of personnel, we intend to continue
to strengthen our global workforce and cultivate local talent. However, there is no guarantee
that these efforts will succeed, and if we fail to capture future opportunities in overseas
markets, our results of operations and growth prospects may be materially and adversely
affected.
Competitive Landscape
We compete in highly competitive global markets characterized by intense price
competition, frequent introduction of new products, rapid adoption of technological and
product advancements, continual upgrades in features, design and performance, energy
efficiency, rapidly changing customer preferences, evolving industry standards, and broad
distribution channels and sales network.
The success of our Smart Home Solutions depends in part on our ability to compete
effectively with our competitors. In mainland China, we face competition in most of our
product lines from a number of Chinese and international home appliance manufacturers that
compete on price, product quality, brand recognition, and service. Our major competitors in the
overseas markets also include a broad array of competitors ranging from large multinational
brands to local and specialized brands. Competition in many commercial and industrial
solutions markets is similarly intense. For example, in our Intelligent Building Technology
business, we face competition from a number of global and Chinese providers of commercial
air conditioners and elevators who may have stronger brand positioning, more experience or
resources than we do. KUKA Group also faces competition from established and new players
in the Robotics & Automation market who may be able to offer robotics and automation
solutions at more attractive prices.
FINANCIAL INFORMATION
– 244 –


--- page 256 ---
We believe our competitiveness lies in the value we offer. In both Smart Home Solutions
and Commercial & Industrial Solutions, we strive to offer a full suite of high-quality products
and services integrated with advanced technology. In addition, we have been relentlessly
improving customer experience through timely adaptation to evolving customer needs.
We expect that the competition in most of the markets in which we operate will likely
remain intense, although the competitive landscape may evolve over time. See “Industry
Overview” and “Risk Factors — Risks Relating to Our Business and Industries — Global
markets for our products and services are highly competitive and subject to rapid technological
changes, and we may be unable to compete effectively in these markets.”
Management of Raw Material Costs and Supply Chain
Our ability to manage raw material costs and maintain supply chain resilience is critical
to our operations.
The majority of our cost of revenue in 2021, 2022, 2023 and the four months ended 30
April 2023 and 2024 consisted of raw materials and consumables that we used in product
manufacturing, such as copper, steel, plastic and aluminum. Many factors beyond our control
can affect the prices of these materials, including fluctuations in the market supply of and
demand for these materials, international trade policies and tariffs, transportation costs, and
fluctuations in currency exchange rates.
We manage our raw material costs through hedging measures and centralized
procurement. To mitigate the impact of raw material price fluctuations, we have implemented
hedging strategies and utilized financial instruments to reduce potential losses resulting from
price fluctuations. Our large scale and the efficient sharing of resources among our many
businesses enable us to centralize the procurement of many raw materials and components and
lower costs. We have also adopted big data technology for intelligent inventory stocking and
replenishment, which allows us to match the scale of procurement with manufacturing and
minimize waste. In addition, we typically seek to enter into framework agreements with
strategic suppliers for stable procurement of raw materials or components on terms and
accumulate inventories when commodity prices are low, and continually optimize our supplier
base to obtain raw material supplies at competitive prices as well as strengthen the resilience
of our supply chain. Our ability to adopt a local-for-local business model for overseas markets
is also key to improving our supply chain resilience.
FINANCIAL INFORMATION
– 245 –


--- page 257 ---
Investment in People and Technology
As we continue to expand our business globally, investment in people and R&D for the
expansion and upgrade of our product and service offerings, broadening our sales channels, and
talent attraction and retention are critical to our business, operations and growth prospects. We
have made, and will continue to make, significant investments in people and technology, to
solidify our market leadership and provide great customer experience.
In addition, we have dedicated and will continue to dedicate significant resources to
research and development. Our research and development expenses increased from RMB12.0
billion in 2021 to RMB12.7 billion in 2022 and further to RMB14.6 billion in 2023, and
increased from RMB4.3 billion for the four months ended 30 April 2023 to RMB5.0 billion for
the four months ended 30 April 2024. The significant investment has translated to outstanding
R&D results. Going forward, we expect to continue to invest in foundational research and
product development and believe that R&D will continue to be a key driver for our sustained
growth.
Foreign Currency Fluctuations
Due to the global presence of our business, our results of operations are affected by
foreign exchange rate movements, both on a translational and transactional basis.
Translational effects of exchange rate fluctuations arise because financial results of our
subsidiaries are measured in their respective functional currencies, i.e., the currency of the
primary economy in which a subsidiary operates. The results of operations of our global
subsidiaries are, therefore, measured in currencies other than Renminbi and are then translated
into Renminbi for presentation of our financial results in the consolidated financial statements.
Consequently, fluctuations in the applicable foreign currency exchange rates may increase or
decrease the Renminbi value of our non-Renminbi assets, liabilities, revenues and costs, even
if their value has not changed in their local functional currency. The exchange differences are
generated when the results and financial position of all applicable entities within our Group
that use a functional currency different from our Company’s presentation currency are
translated into our Company’s presentation currency. The differences are recognized as the
currency translation differences of foreign operations in other comprehensive loss or income.
Transactional effects of exchange rate fluctuations arise when one of our subsidiaries
enters into a sale or purchase transaction in a currency other than its functional currency. We
have a professional team within the finance department to manage risks arising from
transactional effects of exchange rate fluctuations, utilizing the natural hedge for settling
currencies and forward foreign exchange hedging contracts, while controlling the scale of
foreign currency assets and liabilities. See Note 3.1(a)(i) of the Accountant’s Report in
Appendix I to this document for more details of the foreign exchange risk.
FINANCIAL INFORMATION
– 246 –


--- page 258 ---
MATERIAL ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
Revenue Recognition
Revenue is recognized when or as the control of the goods or services is transferred to a
customer. Depending on the terms of the contract and the laws that apply to the contract,
control of the goods and services may be transferred over time or at a point in time. Control
of the goods and services is transferred over time if our performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as we perform; or
 does not create an asset with an alternative use to us and we have an enforceable
right to payment for performance completed to date.
If control of the asset transfers over time, revenue is recognized over the period of the
contract by reference to the progress towards complete satisfaction of that performance
obligation. Otherwise, revenue is recognized at a point in time when the customer obtains
control of the asset.
Incremental costs incurred to obtain a contract, if recoverable, are capitalized as contract
assets and subsequently amortized when the related revenue is recognized.
Sales of goods
We are principally engaged in the design, manufacturing and sales of residential
air conditioners, commercial air conditioners, heating and ventilation systems, elevators,
kitchen appliances, refrigerators, washing machines, various small appliances, high-voltage
inverters, low-voltage inverters, medical imaging products, robotics and automation systems,
and other products and materials to buyers.
Revenue from domestic sales of goods is recognized when we have delivered products to
the location specified in the sales contract and the buyer has confirmed the acceptance of the
products, and the delivery order is signed by both parties. Upon confirming the acceptance, the
buyer has the right to sell the products at its discretion and takes the risks of any price
fluctuations and obsolescence and loss of the products.
Revenue from overseas sales of goods is recognized when the products have been
declared to the customs and shipped out of the port in accordance with the sales contract.
FINANCIAL INFORMATION
– 247 –


--- page 259 ---
The credit period granted to customers by us is determined based on their credit risk
characteristics, which is consistent with industry practice, and there is no significant financing
component involved. We base our estimates of sales return on historical results, taking into
consideration of the type of customers, the type of transactions and the specifics of each
arrangement.
We provide distributors and retailers with sales rebate and discount, and the relevant
revenue is recognized based on contract consideration net of the rebate and discount amount
estimated.
The periods and terms of product quality warranty are provided in accordance with the
laws and regulations related to the products. We have not provided any additional services or
product quality warranty, so the product quality warranty does not constitute a separate
performance obligation.
The rights to receive considerations for transferring goods to the customer (and such
rights depend on factors other than the passage of time) are recognized as contract assets. Our
obligation to transfer products to customers for consideration received or receivable is
presented as contract liabilities.
Rendering of services
We provide robotics and automation system construction services, intelligent logistics
integration solutions, storage services, delivery services, installation services and
transportation services, which are recognized in a certain period of time based on the stage of
completion. On the balance sheet date, we re-estimate the stage of completion to reflect the
actual status of contract performance.
When we recognize revenue based on the progress towards complete satisfaction of a
performance obligation, the amount with unconditional right to consideration obtained by us
is recognized as trade receivables, and the rest is recognized as contract assets. Meanwhile,
provision for trade receivables and contract assets is recognized on the basis of expected credit
losses. See Note 50.10(iv) to the Accountant’s Report in Appendix I to this document. If the
contract consideration received or receivable exceeds the progress of the service performed,
the excess portion will be recognized as contract liabilities. Contract assets and contract
liabilities under the same contract are presented on a net basis.
Contract costs include costs to fulfil a contract and costs to obtain a contract. Costs
incurred for provision of the aforesaid services are recognized as costs to fulfil a contract,
which is carried forward to the cost of revenue when revenue recognized based on the progress
of the service performed. Incremental costs incurred by us for the acquisition of the aforesaid
service contract are recognized as the costs to obtain a contract. For the costs to obtain a
contract with the amortization period within one year, the costs are charged to profit or loss
when incurred. For the costs to obtain a contract with the amortization period beyond one year,
the costs are charged in the profit or loss on the same basis as aforesaid revenue of rendering
FINANCIAL INFORMATION
– 248 –


--- page 260 ---
of services recognized under the relevant contract. If the carrying amount of the contract costs
is higher than the remaining consideration expected to be obtained by rendering of the service
net of the estimated cost to be incurred, we make provision for impairment on the excess
portion and recognizes it as asset impairment losses. As at the date of the end of the reporting
period, based on whether the amortization period of the costs to fulfil a contract is more than
one year when initially recognized, the amount of our costs to fulfil a contract net of related
provision for asset impairment is presented as inventories or other non-current assets. For costs
to obtain a contract with amortization period beyond one year at the initial recognition, the
amount net of related provision for asset impairment is presented as other non-current assets.
Impairment of Goodwill
We test annually whether goodwill has suffered any impairment. The recoverable amount
of the asset group or groups of asset groups that contain the apportioned goodwill is determined
by the higher value between the present value of the future cash flows and the net value that
is calculated by the fair value less the disposal costs. Accounting estimate is required for the
calculation of the recoverable amount. The impairment testing is performed by assessing the
recoverable amount of the asset group or groups of asset groups containing the relevant
goodwill, based on the present value of cash flows forecasts. Key assumptions adopted in the
impairment testing of goodwill included revenue annual growth rate, certain profitability
metric, perpetual annual growth rate, pre-tax discount rate, etc. which involves critical
accounting estimates and judgement.
If our management revises the revenue annual growth rate and perpetual annual growth
rate that are used in the calculation of the future cash flows of asset groups or groups of asset
groups, and the revised rates are lower than the current rates, we would need to recognize
further impairment against goodwill.
If our management revises the profitability metric that is used in the calculation of the
future cash flows of asset groups or groups of asset groups, and the revised metric is lower than
the current one, we would need to recognize further impairment against goodwill.
If our management revises the pre-tax discount rate applied to the discounted cash flows,
and the revised pre-tax discount rate is higher than the one currently applied, we would need
to recognize further impairment against goodwill.
If the actual revenue annual growth rate, perpetual annual growth rate and the
profitability metric are higher or the actual pre-tax discount rate is lower than management’s
estimates, the impairment loss of goodwill previously provided for is not allowed to be
reversed by us.
FINANCIAL INFORMATION
– 249 –


--- page 261 ---
Uncertain tax position and recognition of current and deferred income tax assets
We are subject to enterprise income tax in numerous jurisdictions. There are many
transactions and events for which the ultimate tax determination is uncertain during the
ordinary course of business. Significant judgement is required from us in determining the
provision for income taxes in each of these jurisdictions. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact
the income tax and deferred tax provisions in the period in which such determination is made.
As stated in Note 11 to the Accountant’s Report in Appendix I to this document, some of
our subsidiaries are high-tech enterprises. The “High-Tech Enterprise Certificate” is effective
for three years. Upon expiration, application for high-tech enterprise assessment should be
submitted again to the relevant government authorities. Based on the past experience of
reassessment for high-tech enterprise upon expiration and the actual condition of the
subsidiaries, we consider that the subsidiaries are able to obtain the qualification for high-tech
enterprises in future years, and therefore a preferential tax rate of 15% is used to calculate the
corresponding deferred income tax. If some subsidiaries cannot obtain the qualification for
high-tech enterprise upon expiration, then the subsidiaries are subject to a statutory tax rate of
25% for the calculation of the income tax, which further influences the recognized deferred tax
assets, deferred tax liabilities and income tax expenses.
IMPACT OF COVID-19 ON OUR OPERATIONS
At its height, the COVID-19 pandemic had a severe impact on mainland China and the
rest of the world. In response to the pandemic, countries and regions around the world,
including mainland China, imposed various measures to contain the spread of the virus, such
as social distancing and travel restrictions, quarantine and remote work, among others. During
the pandemic, repeated outbreaks affected the demand for and production and sale of our
products and services, and the pandemic control measures taken in many countries, reduced
customer mobility and led to limited production and operations in some regions, the shutdown
of some retail outlets, suspended operations of some of our customers in some regions, and
increased logistics costs. Our operations, including production, supply chain, sales and
marketing, product delivery and R&D, were at times interrupted by the restrictive measures
imposed in response to the pandemic. All these factors had an impact on our results of
operations and financial condition. During certain periods of the pandemic, the market demand
for home appliances declined, which adversely affected the industry including us. For example,
in 2022, the sales volume of air conditioners, laundry appliances, refrigerators, and kitchen and
other appliances in mainland China decreased by 0.6%, 9.9%, 8.9%, and 7.9%, respectively,
according to the Frost & Sullivan Report. Our revenue from Smart Home Solutions was also
affected, decreasing from RMB234.9 billion in 2021 to RMB232.8 billion in 2022, in contrast
with an increase from 2020 the 2021. In addition, our product delivery was affected by the
disruptions on international and domestic transportation caused by the pandemic, resulting in,
for example, over 20 days of delay in the delivery of certain orders for refrigerator compressors
to our Southeast Asia market in March and April 2022. To mitigate such impact, we took
measures across all stages of our operations from procurement, manufacturing to sales and
distributions, to minimize the impact of COVID-19 on our business and operations.
FINANCIAL INFORMATION
– 250 –


--- page 262 ---
DESCRIPTION OF MAJOR COMPONENTS OF OUR RESULTS OF OPERATIONS
The following table sets forth our consolidated statements of profit or loss with line items
in absolute amounts and as percentages of our revenue for the years/periods indicated. This
information should be read together with our consolidated financial statements and related
notes included in the Accountant’s Report set out in Appendix I to this document. The results
of operations in any period are not necessarily indicative of the results that may be expected
for any future period.
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
(unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118(266,450,882) (77.6) (262,321,797) (75.9) (275,320,160) (73.7) (99,348,589) (75.6) (106,469,785) (73.0)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 22.4 83,386,909 24.1 98,389,644 26.3 32,032,493 24.4 39,309,774 27.0
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(28,646,188) (8.3) (28,715,439) (8.3) (34,880,794) (9.3) (11,248,192) (8.6) (14,624,289) (10.0)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,742,475) (3.1) (12,023,970) (3.5) (13,975,965) (3.7) (3,911,452) (3.0) (4,630,693) (3.3)
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,014,891) (3.5) (12,667,099) (3.7) (14,586,346) (3.9) (4,327,729) (3.3) (4,960,679) (3.4)
Net impairment losses on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118(384,501) (0.1) (538,108) (0.2) (235,002) (0.1) (179,526) (0.1) (56,212) (0.0)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H11186,177,047 1.8 7,088,757 2.1 8,120,251 2.2 2,370,278 1.8 2,862,663 2.0
Other gains/(losses), net /H1118/H11182,777,178 0.8 (1,065,436) (0.3) (945,664) (0.3) 271,205 0.2 (2,012,940) (1.4)
Operating profit /H1118/H1118/H1118/H1118/H111834,076,113 9.9 35,465,614 10.3 41,886,124 11.2 15,007,077 11.4 15,887,624 10.9
Finance income /H1118/H1118/H1118/H1118/H1118/H1118401,501 0.1 793,175 0.2 1,085,256 0.3 275,801 0.2 590,833 0.4
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,299,556) (0.4) (1,902,422) (0.6) (3,372,815) (0.9) (1,151,972) (0.9) (485,846) (0.3)
Finance (costs)/income, net /H1118 (898,055) (0.3) (1,109,247) (0.4) (2,287,559) (0.6) (876,171) (0.7) 104,987 0.1
Share of profit of associates
and joint ventures, net /H1118/H1118560,679 0.2 608,278 0.2 680,759 0.2 224,055 0.2 239,455 0.2
Impairment provision for
investments in associates
and joint ventures /H1118/H1118/H1118/H1118– – (6,179) (0.0) – – – – – –
Profit before income tax /H1118/H111833,738,737 9.8 34,958,466 10.1 40,279,324 10.8 14,354,961 10.9 16,232,066 11.2
Income tax expense /H1118/H1118/H1118/H1118(4,707,309) (1.3) (5,146,341) (1.5) (6,532,371) (1.8) (2,229,553) (1.7) (2,585,791) (1.8)
Profit for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H111829,031,428 8.5 29,812,125 8.6 33,746,953 9.0 12,125,408 9.2 13,646,275 9.4
Attributable to:
Owners of the Company /H1118/H111828,586,980 8.4 29,553,342 8.5 33,721,536 9.0 11,995,920 9.1 13,461,205 9.3
Non-controlling interests /H1118/H1118444,448 0.1 258,783 0.1 25,417 0.0 129,488 0.1 185,070 0.1
FINANCIAL INFORMATION
– 251 –


--- page 263 ---
Revenue
We primarily offer Smart Home Solutions for consumers and Commercial & Industrial
Solutions for enterprise customers. To a significantly lesser extent, we generate certain revenue
through sales of raw materials and others. The following table sets forth a breakdown of our
revenue among Smart Home Solutions, Commercial & Industrial Solutions and others,
including the respective revenue from each main product category under Smart Home
Solutions and each business unit under Commercial & Industrial Solutions, during the Track
Record Period, both in absolute amounts and as percentages of total revenue, for the
years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue
Air conditioners /H1118/H1118/H1118/H1118/H1118/H1118104,108,047 30.3 108,638,571 31.4 112,982,505 30.2 43,060,203 32.8 48,054,657 33.0
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H111862,883,096 18.3 62,713,261 18.1 68,288,642 18.3 24,008,567 18.3 26,551,938 18.2
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H111867,926,859 19.8 61,473,732 17.8 65,080,257 17.4 21,941,156 16.7 24,633,108 16.9
Smart Home Solutions /H1118/H1118234,918,001 68.4 232,825,564 67.3 246,351,404 65.9 89,009,926 67.8 99,239,703 68.1
Energy Solutions &
Industrial Technology /H1118/H111820,111,476 5.9 21,618,496 6.3 27,874,277 7.5 9,512,855 7.2 11,108,348 7.6
Intelligent Building
Technology /H1118/H1118/H1118/H1118/H1118/H1118/H111819,690,855 5.7 22,778,244 6.6 25,914,181 6.9 9,874,995 7.5 10,532,805 7.2
Robotics & Automation /H1118/H1118/H111825,286,615 7.4 27,712,820 8.0 31,053,073 8.3 10,017,504 7.6 9,222,915 6.3
Other Businesses /H1118/H1118/H1118/H1118/H11188,290,412 2.4 11,529,651 3.3 12,939,776 3.5 3,553,030 2.7 4,199,236 2.9
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,379,358 21.4 83,639,210 24.2 97,781,307 26.2 32,958,384 25.0 35,063,304 24.0
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,063,466 10.2 29,243,932 8.5 29,577,093 7.9 9,412,772 7.2 11,476,552 7.9
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
FINANCIAL INFORMATION
– 252 –


--- page 264 ---
In addition to the above, in our consolidated financial statements, our results of
operations are also reported based on the nature of the products and services offered: (i) heating
& ventilation, and air conditioner (HV AC), (ii) consumer appliances, (iii) robotics and
automation system, and (iv) others. The following table sets forth a breakdown of our revenue,
both in absolute amounts and as percentages of total revenue, for the years/periods indicated.
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
HV AC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,428,603 48.2 167,072,126 48.3 177,572,832 47.5 67,743,289 51.6 73,633,924 50.4
Consumer appliances /H1118/H1118/H1118/H1118140,406,787 40.9 135,631,425 39.2 145,857,207 39.0 48,921,474 37.2 55,768,450 38.3
Robotics and automation
system /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,545,334 8.0 30,203,793 8.7 33,408,425 8.9 10,808,814 8.2 10,606,891 7.3
Other segments and
unallocated /H1118/H1118/H1118/H1118/H1118/H1118/H11189,980,101 2.9 12,801,362 3.8 16,871,340 4.6 3,907,505 3.0 5,770,294 4.0
Total revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118343,360,825 100.0 345,708,706 100.0 373,709,804 100.0 131,381,082 100.0 145,779,559 100.0
Cost of Revenue
The following table sets forth the breakdown of our cost of revenue by its major
components, both in absolute amounts and as percentages of total revenue, for the
years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue RMB’000
%o f
revenue
(unaudited)
Cost of revenue
Raw materials and
consumables used /H1118/H1118/H1118/H1118221,124,402 64.4 212,264,850 61.4 219,556,360 58.8 80,974,507 61.6 86,630,288 59.4
Employee benefit expenses /H111817,092,171 5.0 18,298,853 5.3 20,754,874 5.6 6,496,237 4.9 6,735,315 4.6
Installation and
transportation cost /H1118/H1118/H1118/H111816,932,307 4.9 18,161,353 5.3 20,957,914 5.6 5,980,559 4.6 7,547,662 5.2
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H11183,618,389 1.1 3,753,173 1.1 4,182,835 1.1 1,291,966 1.0 1,437,678 1.0
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,683,613 2.2 9,843,568 2.8 9,868,177 2.6 4,605,320 3.5 4,118,842 2.8
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118266,450,882 77.6 262,321,797 75.9 275,320,160 73.7 99,348,589 75.6 106,469,785 73.0
Raw materials and consumables used constitutes the majority of our cost of revenue and
includes the raw materials used in the manufacturing of our products, primarily including
copper, steel, plastic and aluminum.
FINANCIAL INFORMATION
– 253 –


--- page 265 ---
Gross Profit and Gross Margin
The following table sets forth the breakdown of our gross profit among Smart Home
Solutions, Commercial & Industrial Solutions and others, including the respective gross profit
of each main product category under Smart Home Solutions and each business unit under
Commercial & Industrial Solutions, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Air conditioners /H1118/H1118/H1118/H1118/H1118/H111822,604,340 21.7 25,422,272 23.4 29,452,538 26.1 9,397,106 21.8 12,525,438 26.1
Laundry appliances and
refrigerators /H1118/H1118/H1118/H1118/H1118/H1118/H111817,049,311 27.1 18,898,848 30.1 22,189,827 32.5 7,650,792 31.9 8,958,800 33.7
Kitchen and other
appliances /H1118/H1118/H1118/H1118/H1118/H1118/H111819,198,244 28.3 18,499,236 30.1 21,726,330 33.4 6,798,536 31.0 8,236,693 33.4
Smart Home Solutions /H1118/H111858,851,895 25.1 62,820,356 27.0 73,368,695 29.8 23,846,434 26.8 29,720,931 29.9
Energy Solutions &
Industrial Technology /H1118/H11182,439,657 12.1 3,154,867 14.6 5,027,566 18.0 1,467,575 15.4 2,193,884 19.7
Intelligent Building
Technology /H1118/H1118/H1118/H1118/H1118/H1118/H11185,365,588 27.2 6,346,521 27.9 7,744,598 29.9 2,919,927 29.6 3,330,484 31.6
Robotics & Automation /H1118/H1118/H11185,345,136 21.1 5,686,768 20.5 7,373,993 23.7 2,241,729 22.4 2,225,661 24.1
Other Businesses /H1118/H1118/H1118/H1118/H11181,203,039 14.5 1,449,164 12.6 1,672,781 12.9 398,414 11.2 444,561 10.6
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,353,420 19.6 16,637,320 19.9 21,818,938 22.3 7,027,645 21.3 8,194,590 23.4
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,704,628 10.6 3,929,233 13.4 3,202,011 10.8 1,158,414 12.3 1,394,253 12.1
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 22.4 83,386,909 24.1 98,389,644 26.3 32,032,493 24.4 39,309,774 27.0
For Smart Home Solutions, we recorded gross profit of RMB58.9 billion, RMB62.8
billion, RMB73.4 billion, RMB23.8 billion and RMB29.7 billion, and gross margin of 25.1%,
27.0%, 29.8%, 26.8% and 29.9% for the years ended 31 December 2021, 2022 and 2023 and
the four months ended 30 April 2023 and 2024, respectively.
For Commercial & Industrial Solutions, we recorded gross profit of RMB14.4 billion,
RMB16.6 billion, RMB21.8 billion, RMB7.0 billion and RMB8.2 billion, and gross margin of
19.6%, 19.9%, 22.3%, 21.3% and 23.4% for the years ended 31 December 2021, 2022 and 2023
and the four months ended 30 April 2023 and 2024, respectively.
For others, we recorded gross profit of RMB3.7 billion, RMB3.9 billion, RMB3.2 billion,
RMB1.2 billion and RMB1.4 billion, and gross margin of 10.6%, 13.4%, 10.8%, 12.3% and
12.1% for the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2023 and 2024, respectively.
FINANCIAL INFORMATION
– 254 –


--- page 266 ---
As a result of the foregoing, we recorded total gross profit of RMB76.9 billion, RMB83.4
billion, RMB98.4 billion, RMB32.0 billion and RMB39.3 billion, and gross margin of 22.4%,
24.1%, 26.3%, 24.4% and 27.0% for the years ended 31 December 2021, 2022 and 2023 and
the four months ended 30 April 2023 and 2024, respectively.
The following table sets forth the breakdown of our gross profit by geographical location
for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
Gross
profit
Gross
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Mainland China /H1118/H1118/H1118/H1118/H1118/H111847,557,328 23.1 50,296,156 24.8 57,682,260 25.9 18,968,005 24.3 22,821,531 26.6
Other countries or regions /H111829,352,615 21.3 33,090,753 23.2 40,707,384 27.0 13,064,488 24.5 16,488,243 27.5
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 22.4 83,386,909 24.1 98,389,644 26.3 32,032,493 24.4 39,309,774 27.0
Selling and Marketing Expenses
Our selling and marketing expenses consist primarily of advertising and promotion
expenses, transportation and after-sales expenses, employee benefit expenses, lease and
administrative expenses and others. The following table sets forth a breakdown of our selling
and marketing expenses, in absolute amounts and as percentages of total selling and marketing
expenses, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Selling and marketing
expenses
Advertising and promotion
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,900,425 45.0 12,031,875 41.9 15,981,191 45.8 5,777,504 51.4 8,039,356 55.0
Transportation and after-
sales expenses /H1118/H1118/H1118/H1118/H1118/H11187,200,912 25.1 7,587,358 26.4 7,390,558 21.2 2,182,898 19.4 2,434,381 16.6
Employee benefit expenses /H1118 4,423,053 15.4 4,839,443 16.9 6,548,019 18.8 1,832,260 16.3 2,354,573 16.1
Lease and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,000,493 7.0 2,193,289 7.6 2,818,752 8.1 820,551 7.3 989,783 6.8
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,121,305 7.5 2,063,474 7.2 2,142,274 6.1 634,979 5.6 806,196 5.5
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,646,188 100.0 28,715,439 100.0 34,880,794 100.0 11,248,192 100.0 14,624,289 100.0
FINANCIAL INFORMATION
– 255 –


--- page 267 ---
Advertising and promotion expenses primarily relate to our advertising activities, such as
offline promotion expenses, service fees paid to online platforms and expenses related to brand
promotion, stores and product marketing. Transportation and after-sales expenses primarily
include freight fees for transportation and delivery of our products, spare parts expenses and
provisions for warranty services. Employee benefit expenses primarily include salaries,
pension scheme contributions and other social welfare payments for our sales and marketing
employees. Lease and administrative expenses primarily include property rental expenses,
travel and conference expenses, and general office expenses.
In the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April
2023 and 2024, our selling and marketing expenses represented 8.3%, 8.3%, 9.3%, 8.6% and
10.0% of our revenue, respectively.
General and Administrative Expenses
Our general and administrative expenses primarily include employee benefit expenses,
depreciation and amortization, administrative expenses, auditors’ remuneration, and other
general administrative expenses. The following table sets forth a breakdown of our general and
administrative expenses, in absolute amounts and as percentages of total general and
administrative expenses, for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
General and administrative
expenses
Employee benefit
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,649,408 61.9 7,154,199 59.5 8,180,408 58.5 2,610,911 66.8 3,053,797 65.9
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H11181,933,954 18.0 1,842,227 15.3 1,956,923 14.0 632,430 16.2 692,215 14.9
Administrative expenses /H1118/H1118724,085 6.7 760,818 6.3 913,974 6.5 246,512 6.3 273,069 5.9
Auditors’ remuneration /H1118/H1118/H111853,320 0.5 52,198 0.4 55,872 0.4 2,897 0.1 3,686 0.1
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,381,708 12.9 2,214,528 18.5 2,868,788 20.6 418,702 10.6 607,926 13.2
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,742,475 100.0 12,023,970 100.0 13,975,965 100.0 3,911,452 100.0 4,630,693 100.0
Note:
(1) Others mainly include IT system expenses and lease and property management expenses.
In the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April
2023 and 2024, our general and administrative expenses represented 3.1%, 3.5%, 3.7%, 3.0%
and 3.3% of our revenue, respectively.
FINANCIAL INFORMATION
– 256 –


--- page 268 ---
Research and Development Expenses
Our research and development expenses primarily include employee benefit expenses,
material consumption and external institutional fees, depreciation and amortization, and others.
The following table sets forth a breakdown of our research and development expenses, in
absolute amounts and as percentages of total research and development expenses, for the
years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Research and development
expenses
Employee benefit expenses /H1118 6,554,504 54.6 7,057,889 55.7 7,727,547 53.0 2,191,933 50.6 2,683,228 54.1
Material consumption and
external institutional fees /H1118 4,670,298 38.9 4,675,304 36.9 5,293,667 36.3 1,758,320 40.6 1,786,334 36.0
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118544,227 4.5 539,674 4.3 749,604 5.1 196,757 4.5 233,909 4.7
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118245,862 2.0 394,232 3.1 815,528 5.6 180,719 4.3 257,208 5.2
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,014,891 100.0 12,667,099 100.0 14,586,346 100.0 4,327,729 100.0 4,960,679 100.0
Note:
(1) Others mainly include tooling and proto charges, utilities and IT system expenses.
In the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April
2023 and 2024, our research and development expenses represented 3.5%, 3.7%, 3.9%, 3.3%
and 3.4% of our revenue, respectively.
Net Impairment Losses on Financial Assets and Contract Assets
Our net impairment losses on financial assets and contract assets consist primarily of
impairment losses for movement in loss allowance for trade and note receivables at amortized
cost, and movement in loss allowance for other receivables and other assets. For the years
ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024,
our net impairment losses on financial assets and contract assets amounted to RMB384.5
million, RMB538.1 million, RMB235.0 million, RMB179.5 million and RMB56.2 million,
respectively.
FINANCIAL INFORMATION
– 257 –


--- page 269 ---
Other Income
Our other income primarily consists of (i) interest income, (ii) government grants and (iii)
additional deduction for value-added tax, or V A T. The following table sets forth a breakdown
of our other income for the years/periods indicated:
For the Y ear Ended 31 December For the Four Months Ended 30 April
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Other income
Interest income /H1118/H1118/H1118/H1118/H1118/H11184,780,157 77.4 5,081,372 71.7 5,977,068 73.6 1,858,654 78.4 1,926,114 67.3
Government grants /H1118/H1118/H1118/H1118/H11181,396,890 22.6 2,007,385 28.3 1,892,262 23.3 511,624 21.6 371,640 13.0
Additional deduction for
VAT /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 250,921 3.1 – – 564,909 19.7
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,177,047 100.0 7,088,757 100.0 8,120,251 100.0 2,370,278 100.0 2,862,663 100.0
Interest income mainly comprises interest income on our deposits classified as financial
assets at amortized cost and financial assets at fair value through other comprehensive income
calculated using the effective interest method.
Government grants mainly comprise incentives provided by local government authorities
in mainland China, including various forms of government financial incentives to reward our
continuous support and contribution for the development of local economies. As at 31
December 2021, 2022 and 2023 and 30 April 2024, there were no unfulfilled conditions or
contingencies relating to these government grants.
Additional deduction for V A T represents the additional V A T deduction certain of our
subsidiaries are entitled to. Pursuant to the relevant rules issued in 2023 by the competent
authorities, advanced manufacturing enterprises such as us are eligible for a 5% additional V A T
deduction based on deductible input V A T in the current year from 1 January 2023 to 31
December 2027.
FINANCIAL INFORMATION
– 258 –


--- page 270 ---
Other Gains/(Losses), Net
Our other gains/(losses), net primarily reflect (i) net gains or losses on financial
instruments, (ii) net foreign exchange gains or losses, (iii) net gains or losses on disposal of
property, plant and equipment and other assets, and (iv) others. The following table sets forth
a breakdown of our other gains/(losses), net for the years/periods indicated:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Other gains/(losses),
net
Net gains/(losses) on
financial
instruments /H1118/H1118/H1118/H1118/H1118/H11181,731,713 (519,286) (262,395) 5,092 79,239
Net foreign exchange
gains/(losses) /H1118/H1118/H1118/H1118/H1118733,270 (435,574) (340,027) 234,710 (2,272,829)
Net gains/(losses) on
disposal of
property, plant and
equipment and
other assets /H1118/H1118/H1118/H1118/H1118/H111858,257 (59,854) (60,868) 12,331 72,859
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118253,938 (50,722) (282,374) 19,072 107,791
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,777,178 (1,065,436) (945,664) 271,205 (2,012,940)
Finance (Costs)/Income, Net
Our finance income mainly represents interest income from financial assets held for cash
management purposes, which include bank balances and term deposits. Our finance costs
primarily consist of (i) interest and finance charges paid/payable for borrowings, (ii) interest
and finance charges paid/payable for lease liabilities, and (iii) net exchange gains or losses on
foreign currency borrowings.
FINANCIAL INFORMATION
– 259 –


--- page 271 ---
The following table sets forth a breakdown of our finance income and costs for the
years/periods indicated:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Finance income:
Interest income from
financial assets held for
cash management
purposes
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118401,501 756,341 974,378 239,504 553,972
Reclassification from cost
of hedge reserves (2) /H1118/H1118/H1118 – 36,834 110,878 36,297 36,861
401,501 793,175 1,085,256 275,801 590,833
Finance costs:
Interest and finance
charges paid/payable for
borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,252,661) (1,719,142) (2,656,770) (788,127) (607,600)
Interest and finance
charges paid/payable for
lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118(111,745) (111,773) (151,334) (37,238) (49,871)
Net exchange
gains/(losses) on foreign
currency borrowings /H1118/H1118/H111864,850 (71,507) (564,711) (326,607) 171,625
(1,299,556) (1,902,422) (3,372,815) (1,151,972) (485,846)
Finance (costs)/income,
net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(898,055) (1,109,247) (2,287,559) (876,171) 104,987
Notes:
(1) Interest income represents interest income from cash and cash equivalent, including bank balances and
term deposits with initial terms within three months.
(2) Reclassification from cost of hedge reserves mainly represents the amortization of the foreign currency
basis spread. The foreign currency basis spread was separated from cross-currency interest rate swaps,
or CCIRSs, and excluded from the designation of the CCIRSs as hedging instruments which hedge
time-period relate hedged items. According to IFRS 9, the foreign currency basis spread from the
CCIRSs at the date of designation was recognized in other comprehensive income to the extent that it
related to the hedged item and amortized on a systematic and rational basis over the period during which
the hedge adjustment for the value of the CCIRSs could affect profit or loss. During the Track Record
Period, the amortization was reclassified from the other comprehensive income into profit or loss as a
reclassification adjustment.
FINANCIAL INFORMATION
– 260 –


--- page 272 ---
Share of Profit of Associates and Joint Ventures, Net
Our share of profit of associates and joint ventures, net primarily represents our share of
profits or losses from our long-term investments in our associates and joint ventures. For the
years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and
2024, our share of profit of associates and joint ventures, net amounted to RMB560.7 million,
RMB608.3 million, RMB680.8 million, RMB224.1 million and RMB239.5 million,
respectively.
Taxation
Our income tax expense primarily consists of (i) current income tax and (ii) deferred
income tax. During the Track Record Period, certain entities within our Group enjoyed
preferential tax treatments. In 2021, 2022, 2023 and the four months ended 30 April 2023 and
2024, we recorded income tax expense of RMB4.7 billion, RMB5.1 billion, RMB6.5 billion,
RMB2.2 billion and RMB2.6 billion, respectively. We are subject to varying tax rates in
different jurisdictions. See Note 11 to the Accountant’s Report set out in Appendix I to this
document.
In mainland China, pursuant to the Enterprise Income Tax Law and Implementation
Regulation of the Enterprise Income Tax Law, the tax rate of our Company and our subsidiaries
in mainland China was 25% for the years ended 31 December 2021, 2022 and 2023 and the four
months ended 30 April 2024. Certain of our subsidiaries in mainland China enjoyed
preferential tax treatments, mainly including tax rate of 15% due to preferential tax policies for
being approved as high-tech enterprises. Certain of our subsidiaries in mainland China enjoyed
other tax concessions, including tax rate of 15% due to some subsidiaries located in certain
areas of mainland China upon fulfilment of certain requirements of the respective local
governments and additional pre-tax deduction. Certain of our subsidiaries in mainland China
enjoy additional tax deduction on their research and development expenses.
Profit for the Y ears/Periods
We recorded profit for the year/period of RMB29.0 billion, RMB29.8 billion, RMB33.7
billion, RMB12.1 billion and RMB13.6 billion for the years ended 31 December 2021, 2022
and 2023 and the four months ended 30 April 2023 and 2024, respectively, representing 8.5%,
8.6%, 9.0%, 9.2% and 9.4% of our revenue in the respective years/periods.
The increase in profit for the period from the four months ended 30 April 2023 to the four
months ended 30 April 2024 was mainly due to (i) an increase in our revenue from Smart Home
Solutions, primarily driven by increased consumer demand for our air conditioners, laundry
appliances, refrigerators and kitchen appliances as a result of enhanced product
competitiveness from our continued innovation and upgrades, and (ii) an increase in our
revenue from Commercial & Industrial Solutions, primarily driven by (x) an increase in
revenue of our Energy Solutions & Industrial Technology business due to increased sales of
core industrial components and the consolidation of Clou Electronics in our financial
statements following our acquisition of Clou Electronics, (y) an increase in revenue of our
Intelligent Building Technology, as a result of strong sales of certain key products, (z) an
FINANCIAL INFORMATION
– 261 –


--- page 273 ---
increase in revenue of our Other Businesses, partially offset by (i) an increase in our cost of
revenue, primarily due to our increased raw materials and consumables used, which was
generally in line with our growth in revenue, and (ii) an increase in our expenses, largely driven
by our business growth.
This increase in profit for the year from 2022 to 2023 was mainly due to an increase in
our revenue from Smart Home Solutions, primarily driven by increased consumer demand for
our air conditioners, laundry appliances, refrigerators and kitchen appliances as a result of
enhanced product competitiveness from our continued innovation and upgrades, partially offset
by (i) an increase in our cost of revenue, primarily due to our increased raw materials and
consumables used, which was generally in line with our growth in revenue, and (ii) an increase
in our expenses, largely driven by our business growth.
This increase in profit for the year from 2021 to 2022 was mainly due to (i) an increase
in our revenue from Commercial & Industrial Solutions, primarily driven by (x) an increase in
revenue of our Intelligent Building Technology, as a result of strong growth of overseas heat
pump sales, (y) an increase in revenue of our Robotics & Automation, as a result of strong
demand from automotive customers, particularly in mainland China, and the sales growth of
Swisslog’s logistics systems, and (z) an increase in revenue of our Other Businesses, including
the intelligent supply chain business operated by Annto Smart Logistics, and (ii) a decrease in
our cost of revenue partially attributable to a decline in raw material costs, partially offset by
a decline in revenue from Smart Home Solutions as we proactively streamlined certain product
categories and faced macroeconomic headwind that resulted in a decrease in consumer demand
for certain home appliance products.
For details, see “— Period to Period Comparison of Results of Operations.”
PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS
Four Months Ended 30 April 2024 Compared to Four Months Ended 30 April 2023
Revenue
Our revenue increased by 11.0% from RMB131.4 billion for the four months ended 30
April 2023 to RMB145.8 billion for the four months ended 30 April 2024. Specifically, our
revenue from Smart Home Solutions increased by 11.5% from RMB89.0 billion for the four
months ended 30 April 2023 to RMB99.2 billion for the four months ended 30 April 2024,
which was primarily due to (i) sales in air conditioners increasing by 11.6% from RMB43.1
billion for the four months ended 30 April 2023 to RMB48.1 billion for the four months ended
30 April 2024, as a result of the increase in sales volume by 11.8% from 22,928 thousand units
for the four months ended 30 April 2023 to 25,628 thousand units for the four months ended
30 April 2024, (ii) sales in laundry appliances and refrigerators increasing by 10.6% from
RMB24.0 billion for the four months ended 30 April 2023 to RMB26.6 billion for the four
months ended 30 April 2024, primarily as a result of both the increase in sales volume by 8.2%
from 18,025 thousand units for the four months ended 30 April 2023 to 19,500 thousand units
for the four months ended 30 April 2024 and the increase in average selling price by 2.2% from
RMB1,332 for the four months ended 30 April 2023 to RMB1,362 for the four months ended
FINANCIAL INFORMATION
– 262 –


--- page 274 ---
30 April 2024, and (iii) sales in kitchen and other appliances increasing by 12.3% from
RMB21.9 billion for the four months ended 30 April 2023 to RMB24.5 billion for the four
months ended 30 April 2024, primarily as a result of the increase in sales volume by 11.9%
from 74,862 thousand units for the four months ended 30 April 2023 to 83,799 thousand units
for the four months ended 30 April 2024. The primary driver is the increased consumer demand
for our products in Smart Home Solutions, as a result of enhanced product competitiveness
from our continued innovation and upgrades. Our revenue from Commercial & Industrial
Solutions increased by 6.4% from RMB33.0 billion for the four months ended 30 April 2023
to RMB35.1 billion for the four months ended 30 April 2024, which was primarily due to (i)
growth of our Energy Solutions & Industrial Technology business, with revenue increasing by
16.8% from RMB9.5 billion for the four months ended 30 April 2023 to RMB11.1 billion for
the four months ended 30 April 2024, driven by increased sales of core industrial components
and the consolidation of Clou Electronics in our financial statements following our acquisition
of Clou Electronics; (ii) growth of our Intelligent Building Technology business, with revenue
increasing by 6.7% from RMB9.9 billion for the four months ended 30 April 2023 to RMB10.5
billion for the four months ended 30 April 2024, driven by strong sales of certain key products;
and (iii) growth of our Other Businesses. Our revenue from others increased from RMB9.4
billion for the four months ended 30 April 2023 to RMB11.5 billion for the four months ended
30 April 2024.
Cost of revenue
Our cost of revenue increased by 7.2% from RMB99.3 billion for the four months ended
30 April 2023 to RMB106.5 billion for the four months ended 30 April 2024, primarily due to
our increased raw materials and consumables used from RMB81.0 billion for the four months
ended 30 April 2023 to RMB86.6 billion for the four months ended 30 April 2024, which was
generally in line with our growth in revenue.
Gross profit
As a result of the foregoing, our gross profit increased by 22.7% from RMB32.0 billion
for the four months ended 30 April 2023 to RMB39.3 billion for the four months ended 30 April
2024, and our overall gross profit margin increased from 24.4% for the four months ended 30
April 2023 to 27.0% for the four months ended 30 April 2024.
Our gross profit for Smart Home Solutions increased by 24.6% from RMB23.8 billion for
the four months ended 30 April 2023 to RMB29.7 billion for the four months ended 30 April
2024, with gross margin increasing from 26.8% to 29.9% in the same periods. The increase in
gross margin was primarily caused by an increase in the gross margin of air conditioners from
21.8% to 26.1%, an increase in the gross margin of laundry appliances and refrigerators from
31.9% to 33.7%, and an increase in the gross margin of kitchen and other appliances from
31.0% to 33.4%, due to (i) the continued improvement in our product mix, such as launching
products with more technologically sophisticated features as part of our premiumization
strategy and (ii) our active and efficient management of all costs (including raw material costs),
achieved via improving intelligent manufacturing capability and continued digitization efforts.
FINANCIAL INFORMATION
– 263 –


--- page 275 ---
Our gross profit for Commercial & Industrial Solutions increased by 16.6% from RMB7.0
billion for the four months ended 30 April 2023 to RMB8.2 billion for the four months ended
30 April 2024, with gross margin increasing from 21.3% to 23.4% in the same periods. The
increase in gross margin was primarily caused by an increase in the gross margin of Energy
Solutions & Industrial Technology from 15.4% to 19.7%, an increase in the gross margin of
Intelligent Building Technology from 29.6% to 31.6%, and an increase in the gross margin of
Robotics & Automation from 22.4% to 24.1%, due to continued product upgrades and our
active and efficient management of all costs, including raw materials.
Selling and marketing expenses
Our selling and marketing expenses increased by 30.0% from RMB11.2 billion for the
four months ended 30 April 2023 to RMB14.6 billion for the four months ended 30 April 2024,
primarily due to (i) an increase in advertising and promotion expenses from RMB5.8 billion for
the four months ended 30 April 2023 to RMB8.0 billion for the four months ended 30 April
2024 as we increased marketing efforts to promote our brand name and deepen our reach to
consumers as we continued to promote the “direct to users” strategy, and (ii) an increase in
employee benefit expenses from RMB1.8 billion for the four months ended 30 April 2023 to
RMB2.4 billion for the four months ended 30 April 2024, driven by our business growth. Our
selling and marketing expenses as a percentage of revenue was 8.6% and 10.0% for the four
months ended 30 April 2023 and 2024, respectively.
General and administrative expenses
Our general and administrative expenses increased by 18.4% from RMB3.9 billion for the
four months ended 30 April 2023 to RMB4.6 billion for the four months ended 30 April 2024,
primarily due to the increase in employee benefit expenses, in line with our business growth.
Our general and administrative expenses as a percentage of revenue remained stable at 3.0%
and 3.3% for the four months ended 30 April 2023 and 2024, respectively.
Research and development expenses
Our research and development expenses increased by 14.6% from RMB4.3 billion for the
four months ended 30 April 2023 to RMB5.0 billion for the four months ended 30 April 2024,
in line with our business expansion. Our research and development expenses as a percentage
of revenue remained stable at 3.3% and 3.4% for the four months ended 30 April 2023 and
2024, respectively.
Other income
Our other income increased by 20.8% from RMB2.4 billion for the four months ended 30
April 2023 to RMB2.9 billion for the four months ended 30 April 2024, primarily due to an
increase in additional deduction for V A T as a result of taxation rules issued in 2023.
FINANCIAL INFORMATION
– 264 –


--- page 276 ---
Other gains/(losses), net
We recorded other gains, net of RMB271.2 million for the four months ended 30 April
2023 and other losses, net of RMB2.0 billion for the four months ended 30 April 2024,
primarily due to net foreign exchange losses due to fluctuations in currency exchange rates.
Finance (costs)/income, net
We recorded finance costs, net of RMB876.2 million for the four months ended 30 April
2023 and finance income, net of RMB105.0 million for the four months ended 30 April 2024,
primarily due to (i) an increase in finance income, driven primarily by an increase in average
balance of cash and cash equivalents, and (ii) a decrease in finance costs, driven primarily by
a decrease in exchange losses on foreign currency borrowings as the result of foreign currency
exchange rate fluctuation.
Income tax expense
We recorded income tax expense of RMB2.2 billion and RMB2.6 billion for the four
months ended 30 April 2023 and 2024, respectively. Our income tax expense as a percentage
of our profit before income tax increased from 15.5% for the four months ended 30 April 2023
to 15.9% for the four months ended 30 April 2024.
Profit for the period
As a result of the foregoing, our profit for the period increased by 12.5% from RMB12.1
billion for the four months ended 30 April 2023 to RMB13.6 billion for the four months ended
30 April 2024.
Y ear Ended 31 December 2023 Compared to Y ear Ended 31 December 2022
Revenue
Our revenue increased by 8.1% from RMB345.7 billion in 2022 to RMB373.7 billion in
2023. Specifically, our revenue from Smart Home Solutions increased by 5.8% from
RMB232.8 billion in 2022 to RMB246.4 billion in 2023, which was primarily due to (i) sales
in air conditioners increasing by 4.0% from RMB108.6 billion in 2022 to RMB113.0 billion in
2023, as a result of both the increase in average selling price by 1.6% from RMB1,877 in 2022
to RMB1,908 in 2023 and the increase in sales volume by 2.3% from 57,877 thousand units
in 2022 to 59,227 thousand units in 2023, (ii) sales in laundry appliances and refrigerators
increasing by 8.9% from RMB62.7 billion in 2022 to RMB68.3 billion in 2023, primarily as
a result of the increase in sales volume by 9.7% from 45,719 thousand units in 2022 to 50,156
thousand units in 2023, and (iii) sales in kitchen and other appliances increasing by 5.9% from
RMB61.5 billion in 2022 to RMB65.1 billion in 2023, primarily as a result of the increase in
sales volume by 9.5% from 194,548 thousand units in 2022 to 212,965 thousand units in 2023.
The primary driver is the increased consumer demand for our products in Smart Home
FINANCIAL INFORMATION
– 265 –


--- page 277 ---
Solutions, as a result of enhanced product competitiveness from our continued innovation and
upgrades. Our revenue from Commercial & Industrial Solutions increased by 16.9% from
RMB83.6 billion in 2022 to RMB97.8 billion in 2023, which was primarily due to (i) growth
of our Energy Solutions & Industrial Technology business, with revenue increasing by 28.9%
from RMB21.6 billion in 2022 to RMB27.9 billion in 2023, driven by increased sales of core
industrial components and the consolidation of Clou Electronics in our financial statements
following our acquisition of Clou Electronics; (ii) growth of our Robotics & Automation, with
revenue increasing by 12.1% from RMB27.7 billion in 2022 to RMB31.1 billion in 2023,
driven by increased demand for automation in certain end-markets; (iii) growth of our
Intelligent Building Technology business, with revenue increasing by 13.8% from RMB22.8
billion in 2022 to RMB25.9 billion in 2023, driven by strong overseas sales of heat pumps and
the growth of domestic sales due to products upgrades, and (iv) growth of our Other Businesses
primarily driven by the growth of Annto Smart Logistics business. Our revenue from others
remained stable at RMB29.2 billion in 2022 and RMB29.6 billion in 2023.
Cost of revenue
Our cost of revenue increased by 5.0% from RMB262.3 billion in 2022 to RMB275.3
billion in 2023, primarily due to our increased raw materials and consumables used from
RMB212.3 billion in 2022 to RMB219.6 billion in 2023, which was generally in line with our
growth in revenue.
Gross profit
As a result of the foregoing, our gross profit increased by 18.0% from RMB83.4 billion
in 2022 to RMB98.4 billion in 2023, and our overall gross profit margin increased from 24.1%
in 2022 to 26.3% in 2023.
Our gross profit for Smart Home Solutions increased by 16.8% from RMB62.8 billion in
2022 to RMB73.4 billion in 2023, with gross margin increasing from 27.0% to 29.8% in the
same periods. The increase in gross margin was primarily caused by an increase in the gross
margin of air conditioners from 23.4% to 26.1%, an increase in the gross margin of laundry
appliances and refrigerators from 30.1% to 32.5%, and an increase in the gross margin of
kitchen and other appliances from 30.1% to 33.4%, due to (i) the continued improvement in our
product mix, such as launching products with more technologically sophisticated features as
part of our premiumization strategy, and (ii) a reduction in the price of certain raw materials
during this period, as well as our active and efficient management of all costs (including raw
material costs) achieved via improving intelligent manufacturing capability and continued
digitization efforts.
Our gross profit for Commercial & Industrial Solutions increased by 31.1% from
RMB16.6 billion in 2022 to RMB21.8 billion in 2023, with gross margin increasing from
19.9% to 22.3% in the same periods. The increase in gross margin was primarily caused by an
increase in the gross margin of Intelligent Building Technology from 27.9% to 29.9%, an
increase in the gross margin of Energy Solutions & Industrial Technology from 14.6% to
FINANCIAL INFORMATION
– 266 –


--- page 278 ---
18.0%, and an increase in the gross margin of Robotics & Automation from 20.5% to 23.7%,
due to (i) price increases in certain models of our commercial air conditioners and robotics,
resulting from upgraded functionalities, and (ii) a reduction in the price of certain raw
materials during this period and our active and efficient management of all costs, including raw
material costs.
Selling and marketing expenses
Our selling and marketing expenses increased by 21.5% from RMB28.7 billion in 2022
to RMB34.9 billion in 2023, primarily due to (i) an increase in advertising and promotion
expenses from RMB12.0 billion in 2022 to RMB16.0 billion in 2023 as we increased marketing
efforts to promote our brand name and deepen our reach to consumers as we continued to
promote the “direct to users” strategy, and (ii) an increase in employee benefit expenses from
RMB4.8 billion in 2022 to RMB6.5 billion in 2023, driven by the expansion of our sales team
and our business growth. Our selling and marketing expenses as a percentage of revenue was
8.3% and 9.3% in 2022 and 2023, respectively.
General and administrative expenses
Our general and administrative expenses increased by 16.2% from RMB12.0 billion in
2022 to RMB14.0 billion in 2023, primarily due to the increase in employee benefit expenses,
in line with our business growth. Our general and administrative expenses as a percentage of
revenue remained stable at 3.5% and 3.7% in 2022 and 2023, respectively.
Research and development expenses
Our research and development expenses increased by 15.2% from RMB12.7 billion in
2022 to RMB14.6 billion in 2023, in line with our business expansion. Our research and
development expenses as a percentage of revenue remained stable at 3.7% and 3.9% in 2022
and 2023, respectively.
Other income
Our other income increased by 14.6% from RMB7.1 billion in 2022 to RMB8.1 billion
in 2023, primarily due to an increase in interest income driven by higher balance of relevant
deposits.
Other losses, net
Our other losses, net decreased from RMB1.1 billion in 2022 to RMB0.9 billion in 2023,
primarily due to (i) a decrease of fair value changes of financial assets, which is driven by the
market value fluctuation experienced by certain companies in which we hold equity interests
and derivative instruments, and (ii) net foreign exchange losses due to fluctuations in currency
exchange rates.
FINANCIAL INFORMATION
– 267 –


--- page 279 ---
Finance costs, net
Our finance costs, net increased from RMB1.1 billion in 2022 to RMB2.3 billion in 2023,
primarily due to an increase in finance costs, driven primarily by an increase in outstanding
amount of our borrowings and an increase in interest rates for overseas borrowings, partially
offset by an increase in finance income from RMB793.2 million in 2022 to RMB1.1 billion in
2023, primarily due to an increase in average balance of cash and cash equivalents.
Income tax expense
We recorded income tax of RMB5.1 billion and RMB6.5 billion in 2022 and 2023,
respectively. Our income tax expense as a percentage of our profit before income tax increased
from 14.7% in 2022 to 16.2% in 2023, primarily due to the increased profit contribution from
subsidiaries subject to higher income tax rates.
Profit for the year
As a result of the foregoing, our profit for the year increased by 13.2% from RMB29.8
billion in 2022 to RMB33.7 billion in 2023.
Y ear Ended 31 December 2022 Compared to Y ear Ended 31 December 2021
Revenue
Our revenue increased slightly from RMB343.4 billion in 2021 to RMB345.7 billion in
2022. Specifically, our revenue from Smart Home Solutions decreased slightly from
RMB234.9 billion in 2021 to RMB232.8 billion in 2022, which was primarily due to (i) a
decline of 9.5% in sales of kitchen and other appliances from RMB67.9 billion in 2021 to
RMB61.5 billion in 2022, primarily as a result of the decrease in sales volume by 17.2% from
235,101 thousand units in 2021 to 194,548 thousand units as we proactively streamlined our
product categories to focus on core products; (ii) a slight decrease of 0.3% in sales of laundry
appliances and refrigerators from RMB62.9 billion in 2021 to RMB62.7 billion in 2022,
primarily as a result of the decrease in sales volume by 7.8% from 49,578 thousand units in
2021 to 45,719 thousand units in 2022 due to a decline in demand for home appliances from
macroeconomic headwind, partially offset by an increase of 4.4% in sales from air conditioners
from RMB104.1 billion in 2021 to RMB108.6 billion in 2022, primarily due to the increase in
the average selling price by 11.0% from RMB1,691 in 2021 to RMB1,877 in 2022 as a result
of our continued efforts in product innovation and upgrades. Our revenue from Commercial &
Industrial Solutions increased by 14.0% from RMB73.4 billion in 2021 to RMB83.6 billion in
2022, primarily driven by (i) an increase of 15.7% in revenue of our Intelligent Building
Technology from RMB19.7 billion in 2021 to RMB22.8 billion in 2022, due to strong growth
of overseas heat pump sales, (ii) an increase of 9.6% in revenue of our Robotics & Automation
from RMB25.3 billion in 2021 to RMB27.7 billion in 2022, driven by strong demand from
automotive customers, particularly in mainland China, and the sales growth of Swisslog’s
logistics systems, and (iii) an increase in revenue of our Other Businesses, including the
intelligent supply chain business operated by Annto Smart Logistics.
FINANCIAL INFORMATION
– 268 –


--- page 280 ---
Cost of revenue
Our cost of revenue decreased by 1.5% from RMB266.5 billion in 2021 to RMB262.3
billion in 2022, which is generally in line with our revenue trend during the same period and
partially contributed by the decline in raw material costs. Our raw materials and consumables
used decreased by 4.0% from RMB221.1 billion for 2021 to RMB212.3 billion for 2022, due
to the general decline in raw material prices.
Gross profit
As a result of the foregoing, our gross profit increased by 8.4% from RMB76.9 billion in
2021 to RMB83.4 billion in 2022, and our overall gross profit margin increased from 22.4%
in 2021 to 24.1% in 2022.
Our gross profit for Smart Home Solutions increased by 6.7% from RMB58.9 billion for
2021 to RMB62.8 billion for 2022, with gross margin increasing from 25.1% to 27.0% in the
same periods. The increase in gross margin was primarily caused by an increase in the gross
margin of air conditioners from 21.7% to 23.4%, an increase in the gross margin of laundry
appliances and refrigerators from 27.1% to 30.1%, and an increase in the gross margin of
kitchen and other appliances from 28.3% to 30.1%, due to (i) the continued improvement in our
product mix, such as launching products with more technologically sophisticated features as
part of our premiumization strategy, and (ii) a reduction in the price of certain raw materials
during this period, as well as our active and efficient management of all costs (including raw
material costs) achieved via improving intelligent manufacturing capability and continued
digitization efforts.
Our gross profit for Commercial & Industrial Solutions increased by 15.9% from
RMB14.4 billion for 2021 to RMB16.6 billion for 2022, with gross margin increasing slightly
from 19.6% to 19.9% in the same periods. The slight increase in gross profit margin was
primarily caused by an increase in the gross margin of Intelligent Building Technology from
27.2% to 27.9% and an increase in the gross margin of Energy Solutions & Industrial
Technology from 12.1% to 14.6%, due to a general decline in raw material prices, as well as
our active and efficient management of all costs, including raw materials costs, partially offset
by a slight decrease in the gross margin of Robotics & Automation from 21.1% to 20.5% as a
result of price increases in certain key components.
Selling and marketing expenses
Our selling and marketing expenses remained stable, amounting to RMB28.6 billion in
2021 and RMB28.7 billion in 2022, representing 8.3% of our revenue in both years.
General and administrative expenses
Our general and administrative expenses increased by 11.9% from RMB10.7 billion in
2021 to RMB12.0 billion in 2022, primarily due to the increase in employee benefit expenses.
Our general and administrative expenses as a percentage of revenue was 3.1% and 3.5% in
2021 and 2022 respectively.
FINANCIAL INFORMATION
– 269 –


--- page 281 ---
Research and development expenses
Our research and development expenses increased by 5.4% from RMB12.0 billion in 2021
to RMB12.7 billion in 2022, primarily due to (i) an increase in employee benefit expenses, and
(ii) an increase in technical development expenses. Our research and development expenses as
a percentage of revenue remained generally stable at 3.5% and 3.7% in 2021 and 2022
respectively.
Net impairment losses on financial assets and contract assets
Our net impairment losses on financial assets and contract assets increased by 39.9% from
RMB384.5 million in 2021 to RMB538.1 million in 2022, primarily due to increases in
provisions made for receivables from certain customers deemed in financial distress.
Other income
Our other income increased by 14.8% from RMB6.2 billion in 2021 to RMB7.1 billion
in 2022, primarily due to an increase in interest income driven by higher balance of relevant
deposits.
Other gains/(losses), net
We recorded other gains, net of RMB2.8 billion in 2021, in comparison with other losses,
net of RMB1.1 billion in 2022, primarily due to (i) a decrease of fair value of financial assets,
which is driven by the market value fluctuation experienced by the companies in which we hold
equity interests, and (ii) the net foreign exchange losses in 2022 in comparison with the net
foreign exchange gains in 2021, which were driven by fluctuations in currency exchange rates.
Finance costs, net
Our finance costs, net remained relatively stable at RMB0.9 billion in 2021 and RMB1.1
billion in 2022.
Income tax expense
We recorded income tax expense of RMB4.7 billion and RMB5.1 billion in 2021 and
2022, respectively. Our income tax expense as a percentage of our profit before income tax
remained relatively stable at 14.0% in 2021 as compared to 14.7% in 2022.
Profit for the year
As a result of the foregoing, our profit for the year increased by 2.7% from RMB29.0
billion in 2021 to RMB29.8 billion in 2022.
FINANCIAL INFORMATION
– 270 –


--- page 282 ---
DISCUSSION OF CERTAIN KEY ITEMS OF CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
The following table sets forth the breakdown of our current assets and current liabilities
as at the dates indicated:
As at 31 December As at
30 April
2024
As at
31 July
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,924,439 46,044,897 47,339,255 41,117,853 39,149,838
Contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,823,476 4,498,956 4,045,925 3,937,221 3,769,507
Trade and note receivables at
amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,421,354 32,996,102 38,406,699 47,982,254 48,358,232
Trade and note receivables at
fair value through other
comprehensive income /H1118/H1118/H111810,273,552 13,526,540 13,330,008 21,385,125 14,691,125
Prepayments, other
receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,424,299 14,181,573 14,796,946 14,736,706 14,627,112
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,656,600 14,138,756 14,296,958 14,916,523 11,164,447
Derivative financial
instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,298,815 752,451 1,670,754 2,602,799 670,000
Other financial assets at
amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,696,825 69,873,261 59,275,572 53,671,064 51,639,452
Other financial assets at fair
value through other
comprehensive income /H1118/H1118/H111819,590,387 6,532,043 4,694,429 1,282,936 1,827,300
Other financial assets at fair
value through profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,879,202 3,284,593 1,790,588 1,585,485 7,056,029
Term deposits and restricted
cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,325,517 4,138,131 21,786,586 36,545,868 62,220,822
Cash and cash equivalents /H1118/H111840,550,039 51,131,968 59,887,260 64,252,371 54,433,044
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118248,864,505 261,099,271 281,320,980 304,016,205 309,606,908
FINANCIAL INFORMATION
– 271 –


--- page 283 ---
As at 31 December As at
30 April
2024
As at
31 July
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current liabilities
Trade and note payables /H1118/H1118/H111898,735,566 89,805,646 94,238,073 106,294,118 108,615,873
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,916,595 27,960,038 41,765,475 35,510,113 38,847,545
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,647,538 11,417,964 22,109,985 17,891,000 29,849,818
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118860,503 992,142 1,166,901 1,149,267 1,123,639
Customer deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,180 77,469 88,960 77,200 76,003
Derivative financial
instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166,649 314,539 413,222 636,508 528,138
Other financial liabilities at
fair value through profit
or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,580,771 1,346,674 1,174,016 1,067,216
Current tax liabilities /H1118/H1118/H1118/H1118/H1118/H11182,972,040 2,813,522 3,477,253 3,712,902 3,112,865
Other payables and accruals /H111862,474,405 71,379,650 86,639,178 113,288,284 97,907,811
Total current liabilities /H1118/H1118/H1118222,851,476 206,341,741 251,245,721 279,733,408 281,128,908
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H111826,013,029 54,757,530 30,075,259 24,282,797 28,478,000
We had net current assets positions as at 31 December 2021, 2022 and 2023, 30 April
2024 and 31 July 2024.
Our net current assets increased from RMB24.3 billion as at 30 April 2024 to RMB28.5
billion as at 31 July 2024, mainly due to a net increase in current assets, which is primarily a
result of an increase in term deposits and restricted cash driven primarily by an increase in
profit, partially offset by a net increase in current liabilities primarily as a result of an increase
in borrowings due to bank loans borrowed and the maturity date of our borrowings falling
within one year.
Our net current assets decreased from RMB30.1 billion as at 31 December 2023 to
RMB24.3 billion as at 30 April 2024, mainly due to a net increase in current liabilities which
is primarily a result of (i) an increase of cash dividends payables of RMB20.8 billion and (ii)
an increase in trade and note payables driven by our business growth, partially offset by a net
increase in current assets, which is primarily a result of (x) an increase in balance of term
deposits and restricted cash, driven primarily by an increase in profit (see our consolidated
statement of changes in equity included in Appendix I to this document), and (y) an increase
in trade and note receivables as a result of an increase in sales.
Our net current assets decreased from RMB54.8 billion as at 31 December 2022 to
RMB30.1 billion as at 31 December 2023, mainly due to a net increase in current liabilities
primarily as a result of (i) an increase in other payables and accruals mainly due to our
enhanced promotion efforts that resulted in an increase in sales rebate, (ii) an increase in
contract liabilities primarily as a result of an increase in advances on sales and services driven
FINANCIAL INFORMATION
– 272 –


--- page 284 ---
by our business growth, and (iii) an increase in borrowings due to new bank loans borrowed
and the maturity date of certain of our borrowings falling within one year, partially offset by
a net increase in current assets primarily as a result of (x) increases in cash, cash equivalents
and other deposits driven primarily by an increase in profit (see our consolidated statements of
changes in equity included in Appendix I to this document), and (y) an increase in trade and
note receivables at amortized cost primarily as a result of an increase in sales.
Our net current assets increased from RMB26.0 billion as at 31 December 2021 to
RMB54.8 billion as at 31 December 2022, due to (i) a net increase in current assets primarily
as a result of (a) the increase in balance of cash and cash equivalents driven primarily by an
increase in profit (see our consolidated statements of changes in equity included in Appendix
I to this document), and (b) net increase in balance of the current portion of our other financial
assets at amortized cost primarily as a result of changes of our investment portfolio; and (ii)
a net decrease in current liabilities primarily as a result of refinancing activities where we
replaced certain of our short-term borrowings with long-term borrowings in 2022.
Non-Current Assets and Non-Current Liabilities
The following table sets forth the breakdown of our non-current assets and non-current
liabilities as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment /H1118/H1118/H111825,996,426 30,516,233 36,382,765 36,562,524
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,264,315 10,485,657 11,501,892 11,239,167
Investment properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118859,195 809,936 1,293,629 1,263,150
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,073,861 37,307,434 40,860,697 39,485,598
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,192,309 10,244,296 12,771,150 13,633,849
Prepayments, other receivables
and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,701,909 2,412,405 2,705,275 2,715,755
Investments in associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,796,705 5,188,817 4,976,109 5,053,245
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118851,927 693,294 975,272 518,630
Derivative financial instruments /H1118/H1118 – 4,276,688 2,082,347 3,105,590
Other financial assets at
amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,485,395 42,032,707 79,121,387 79,926,465
Other financial assets at fair
value through other
comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H11187,939,682 11,135,618 6,356,921 6,235,029
Other financial assets at fair
value through profit or loss /H1118/H1118/H11185,912,873 6,348,556 5,687,591 5,402,552
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118139,074,597 161,451,641 204,715,035 205,141,554
FINANCIAL INFORMATION
– 273 –


--- page 285 ---
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-current liabilities
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,734,020 53,849,564 49,356,705 50,008,478
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,533,552 1,507,480 2,047,319 2,007,395
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,948,450 4,646,555 5,097,810 4,919,505
Other payables and accruals /H1118/H1118/H1118/H1118/H11182,823,276 2,563,915 2,253,296 2,382,391
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,228,459 1,721,092 1,734,932 1,696,417
Derivative financial instruments /H1118/H1118 – – 2,282 20,573
Total non-current liabilities /H1118/H1118/H1118/H111830,267,757 64,288,606 60,492,344 61,034,759
Inventories
The following table sets forth details of our inventories as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Inventories
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,636,462 34,753,459 35,291,863 28,852,990
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,592,914 8,675,143 8,572,689 9,641,426
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,406,866 2,519,241 3,170,699 2,524,293
Consigned processing materials /H1118/H1118596,531 427,838 444,995 446,144
Contract fulfilment costs (1) /H1118/H1118/H1118/H1118/H1118/H1118232,049 368,584 556,540 413,652
46,464,822 46,744,265 48,036,786 41,878,505
Less: Provision for impairment
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(540,383) (699,368) (697,531) (760,652)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,924,439 46,044,897 47,339,255 41,117,853
Note:
(1) Contract fulfillment costs mainly represent the costs incurred to fulfill the obligations under a product
purchase contract, primarily attributable to our Smart Home Solutions and our Other Businesses under
Commercial & Industrial Solutions.
Our inventories decreased from RMB47.3 billion as at 31 December 2023 to RMB41.1
billion as at 30 April 2024, primarily due to a decrease in finished goods as the result of
seasonality as our operations generally have higher inventory needs at year-end to prepare for
increased sales activities during the Chinese New Y ear.
FINANCIAL INFORMATION
– 274 –


--- page 286 ---
Our inventories remained stable at RMB45.9 billion as at 31 December 2021, RMB46.0
billion as at 31 December 2022 and RMB47.3 billion as at 31 December 2023.
The following is an aging analysis of our inventories:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,134,603 40,513,813 41,744,610 35,952,489
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H11182,286,602 2,881,609 2,641,078 2,660,889
Between 6 months and 1 year /H1118/H1118/H11181,195,872 2,069,949 1,940,581 1,495,637
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118587,074 963,561 1,249,814 1,246,907
Over 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118260,671 315,333 460,703 522,583
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,464,822 46,744,265 48,036,786 41,878,505
The following table sets forth our inventory turnover days for the years/period indicated:
For the Y ear Ended 31 December
For the
Four Months
Ended
30 April
20242021 2022 2023
Inventory turnover days (1) /H1118/H1118/H1118/H1118/H1118/H111853 64 62 50
Note:
(1) Calculated as the average of beginning and ending balance of inventories for the year/period divided by
cost of revenue for that year/period and multiplied by 365 days (for a year) or 121 days (for the
four-month period).
Our inventory turnover days were 53 days, 64 days, 62 days and 50 days in 2021, 2022
and 2023 and the four months ended 30 April 2024, respectively, which are meaningfully below
industry averages. The decrease in inventory turnover days for the four months ended 30 April
2024 was primarily due to aforementioned seasonality factor. The increase in inventory
turnover days for 2022, despite having similar year-end inventories amount compared to that
of 2021, was primarily due to a higher beginning inventories balance as compared to that of
2021 as a result of a material increase in various raw material prices which caused higher
carrying value of finished goods and raw materials in 2021.
As at 31 July 2024, we had used or sold approximately RMB30.8 billion, or 73.4% of our
balance of inventories as at 30 April 2024.
FINANCIAL INFORMATION
– 275 –


--- page 287 ---
Trade and Note Receivables at Amortized Cost
The following table sets forth details of our trade and note receivables at amortized cost
as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables
at amortized cost
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,495,619 29,570,582 34,367,460 44,618,742
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,816,538 4,819,885 5,587,562 4,975,310
30,312,157 34,390,467 39,955,022 49,594,052
Less: allowance for credit losses
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(859,179) (1,332,609) (1,482,721) (1,548,984)
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(31,624) (61,756) (65,602) (62,814)
(890,803) (1,394,365) (1,548,323) (1,611,798)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,421,354 32,996,102 38,406,699 47,982,254
Our trade and note receivables at amortized cost increased by 24.9% from RMB38.4
billion as at 31 December 2023 to RMB48.0 billion as at 30 April 2024 and increased by 16.4%
from RMB33.0 billion as at 31 December 2022 to RMB38.4 billion as at 31 December 2023,
as a result of the growth of our overseas business, which generally features longer credit terms
compared with domestic business. Our trade and note receivables at amortized cost remained
relatively stable at RMB29.4 billion and RMB33.0 billion as at 31 December 2021 and 2022,
respectively.
As at 31 July 2024, RMB35.8 billion, or 80.3% of our trade receivables at amortized cost
as at 30 April 2024 had been settled.
The following table sets forth a breakdown of our trade and note receivables at amortized
cost by business as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables at
amortized cost
Smart Home Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,099,644 17,774,243 21,255,123 27,908,763
Commercial & Industrial
Solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,122,444 14,979,441 16,840,871 19,951,803
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118199,266 242,418 310,705 121,688
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,421,354 32,996,102 38,406,699 47,982,254
FINANCIAL INFORMATION
– 276 –


--- page 288 ---
The following is an aging analysis of our trade receivables at amortized cost based on the
invoice date as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables at amortized
cost
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,985,394 24,927,697 29,183,011 39,339,270
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H11181,638,277 1,627,320 2,047,141 2,362,524
Between 6 months and 1 year /H1118/H1118/H1118942,730 1,587,150 1,378,882 1,181,015
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,355 1,099,842 1,114,153 1,065,931
Over 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118311,863 328,573 644,273 670,002
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,495,619 29,570,582 34,367,460 44,618,742
During the Track Record Period, a majority of our trade receivables at amortized cost
were outstanding for less than six months. For a substantial portion of our Smart Home
Solutions in mainland China, we generally require full payment upon delivery of goods. For
other businesses, we generally grant a credit period of 60 days. For certain customers for our
Commercial & Industrial Solutions, we may extend longer credit terms depending on the credit
history of our customers and the transaction value.
The following table sets forth our trade and note receivables at amortized cost turnover
days in terms of Smart Home Resolutions and Commercial & Industrial Solutions, respectively,
for the years/periods indicated:
For the Y ear Ended 31 December
For the
Four Months
Ended
30 April
20242021 2022 2023
Trade and note receivables
at amortized cost turnover
days /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 33 35 36
Smart Home Solutions
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H111827 27 29 33
Commercial & Industrial
Solutions (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855 59 59 63
Note:
(1) Calculated as the average of beginning and ending balance of trade and note receivables at amortized
cost for the year/period divided by revenue for that year/period and multiplied by 365 days (for a year)
or 121 days (for the four-month period).
FINANCIAL INFORMATION
– 277 –


--- page 289 ---
Our trade and note receivables at amortized cost turnover days increased from 31 days in
2021 to 33 days in 2022, 35 days in 2023 and further to 36 days in the four months ended 30
April 2024, primarily as a result of (i) the expansion of our overseas business, which generally
features longer credit terms than our domestic business, and (ii) the growth of our Commercial
& Industrial Solutions, which generally features longer credit terms compared to Smart Home
Solutions.
Trade and Note Receivables at Fair Value Through Other Comprehensive Income
(“FVOCI”)
Our trade and note receivables at FVOCI represent the accounts receivable and bank
acceptance notes held for collection of contractual cash flows and for selling. During the Track
Record Period, our trade and note receivables at FVOCI were mainly note receivables. Our
trade and note receivables at FVOCI were RMB10.3 billion, RMB13.5 billion, RMB13.3
billion and RMB21.4 billion as at 31 December 2021, 2022 and 2023 and 30 April 2024,
respectively.
Prepayments, Other Receivables and Other Assets
The following table sets forth details of our prepayments, other receivables and other
assets as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments, other receivables
and other assets
Prepayments and other assets
Prepayments
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,241,768 5,174,583 4,767,457 5,373,898
Deductible value-added tax /H1118/H1118/H1118/H1118/H11186,137,776 3,875,519 5,852,464 4,931,827
Prepaid expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118828,675 856,455 1,047,492 1,065,640
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 30,876 33,989
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,711,806 2,100,042 2,060,175 2,522,141
13,920,025 12,006,599 13,758,464 13,927,495
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,830,553) (1,797,807) (2,454,756) (2,532,062)
12,089,472 10,208,792 11,303,708 11,395,433
Other receivables and other assets
Other receivables (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,147,595 2,249,186 2,233,595 2,011,003
Long-term receivables (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,371,022 1,176,968 1,050,627 997,145
Futures margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118739,557 1,208,013 632,773 677,969
5,258,174 4,634,167 3,916,995 3,686,117
FINANCIAL INFORMATION
– 278 –


--- page 290 ---
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Less: provision for impairment
– Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(43,530) (38,009) (51,717) (43,505)
– Long-term receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,461) (8,779) (121,521) (117,646)
(51,991) (46,788) (173,238) (161,151)
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(871,356) (614,598) (250,519) (183,693)
4,334,827 3,972,781 3,493,238 3,341,273
16,424,299 14,181,573 14,796,946 14,736,706
Notes:
(1) The prepayments mainly consists of advance payment for raw material and equipment.
(2) The majority of other receivables are security deposit and guarantee, current accounts, petty cash to staff
and receivables related to stock options.
(3) Long-term receivables mainly consist of finance lease receivables.
Loan Receivables
Our loan receivables represent loan receivables to individuals and corporations. The
following table sets forth details of our loan receivables as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Loan receivables
Loan receivables to individuals /H1118/H1118/H11182,217,220 1,820,952 1,555,477 1,274,387
Loan receivables to corporations /H1118/H111819,744,034 13,475,027 14,073,508 14,548,808
21,961,254 15,295,979 15,628,985 15,823,195
Less: Provision for impairment /H1118/H1118/H1118(452,727) (463,929) (356,755) (388,042)
21,508,527 14,832,050 15,272,230 15,435,153
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(851,927) (693,294) (975,272) (518,630)
20,656,600 14,138,756 14,296,958 14,916,523
FINANCIAL INFORMATION
– 279 –


--- page 291 ---
Derivative Financial Instruments
Our derivative financial instruments mainly represent forwards, options and futures
contracts. The following table sets forth details of our derivative financial instruments as at the
dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Derivative financial instruments
Assets:
– Cross-currency interest rate
swaps – used for hedging /H1118/H1118/H1118/H1118– 3,374,926 1,924,092 2,843,256
– Cross-currency interest rate
swaps – held for trading /H1118/H1118/H1118/H1118/H1118/H1118– 901,762 1,213,625 1,740,912
– Foreign currency and futures
contracts – used for hedging /H1118/H1118752,950 86,967 392,593 339,285
– Others – held for trading /H1118/H1118/H1118/H1118/H1118545,865 665,484 222,791 784,936
1,298,815 5,029,139 3,753,101 5,708,389
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118– (4,276,688) (2,082,347) (3,105,590)
1,298,815 752,451 1,670,754 2,602,799
Liabilities:
– Cross-currency interest rate
swaps – held for trading /H1118/H1118/H1118/H1118/H1118– – – 20,895
– Foreign currency and futures
contracts – used for hedging /H1118/H11189,047 79,933 155,554 182,870
– Others – held for trading /H1118/H1118/H1118/H1118/H1118157,602 234,606 259,950 453,316
166,649 314,539 415,504 657,081
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118– – (2,282) (20,573)
166,649 314,539 413,222 636,508
For our hedging strategy, see “— Indebtedness — Derivative Financial Instruments.”
FINANCIAL INFORMATION
– 280 –


--- page 292 ---
Other Financial Assets at Amortized Cost
Our other financial assets at amortized cost represent the financial products that are held
for collection of contractual cash flows, and the contractual cash flows solely represent
payments of principal and interest. Our other financial assets at amortized cost primarily
consist of constant return financial products, which mainly include term bank deposits with
initial terms over one year, custom deposits and non-transferable certificates of deposits
deposited in financial institutions, which were subsequently measured at amortized cost.
The following table sets forth details of our other financial assets at amortized cost as at
the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Other financial assets at
amortized cost
Constant Return Financial
Products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,182,220 111,905,968 138,396,959 133,597,529
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118(35,485,395) (42,032,707) (79,121,387) (79,926,465)
23,696,825 69,873,261 59,275,572 53,671,064
Other Financial Assets at Fair Value Through Other Comprehensive Income (“FVOCI”)
Our other financial assets at FVOCI primarily consist of transferable certificate of
deposits and equity securities, among which transferable certificate of deposits represented the
majority of other financial assets at FVOCI during the Track Record Period. Our other financial
assets at FVOCI was RMB27.5 billion, RMB17.7 billion, RMB11.1 billion and RMB7.5 billion
as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
Other Financial Assets at Fair Value Through Profit or Loss (“FVPL”)
Our other financial assets at FVPL primarily consist of equity securities, structured
deposits, listed securities and others.
FINANCIAL INFORMATION
– 281 –


--- page 293 ---
The following table sets forth details of our other financial assets at FVPL as at the dates
indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Other financial assets at FVPL
Non-current:
– Equity securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,912,873 6,348,556 5,687,591 5,402,552
Current:
– Structured deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,285,607 1,606,608 53,750 175,000
– Listed securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,319,470 1,264,595 1,726,584 1,400,190
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118274,125 413,390 10,254 10,295
5,879,202 3,284,593 1,790,588 1,585,485
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,792,075 9,633,149 7,478,179 6,988,037
Our investment policies and strategies with respect to financial products mainly include:
(i) we minimize financial risks by matching the maturities of the portfolio with anticipated
operating cash needs, while aiming to generate reasonable investment returns for the benefits
of our shareholders; (ii) investment in high-risk products is not allowed; (iii) the proposed
investment must not interfere with our business operations or capital expenditures; and (iv) the
financial products we invest in should guarantee returns and should be issued by a reputable
bank. We primarily invest in financial products issued by major commercial banks in mainland
China with low risks and a short-to-mid-term. We make investment decisions related to
financial products on a case-by-case basis after thoroughly considering a number of factors,
including but not limited to the macro-economic environment, general market conditions, the
risk control and credit levels of the issuing banks, our working capital needs, and the expected
profit or potential loss of the investment.
To monitor and control the investment risks associated with our financial product
portfolio, we have adopted a comprehensive set of internal procedures to manage our
investment in financial products. With the authorization of the Board and the supervision by
our chief financial officer, our investment panel, which is comprised by certain members of our
finance department with financial and cash management capabilities as well as prior work
experience in investment funds and financial institutions, is responsible for analysing,
evaluating and determining the investment plans with respect to financial products in
accordance with our cash management policies and internal approval process. Prior to
modifying our existing investment portfolio, the proposal must be approved by our chief
financial officer or designated senior members of the finance department. For details of our
chief financial officer’s expertise in this regard, see “Directors, Supervisors and Senior
Management.”
After Listing, our investments in financial products will be subject to compliance with
Chapter 14 of the Listing Rules.
FINANCIAL INFORMATION
– 282 –


--- page 294 ---
Intangible Assets
Our intangible assets primarily consist of goodwill, patents and non-patent technologies,
trademark rights and others.
The following table sets forth details of our intangible assets as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Intangible assets
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,874,752 28,548,653 30,858,237 29,991,509
Patents and non-patent
technologies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,169,910 1,952,359 2,814,995 2,711,475
Trademark rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,608,913 4,674,769 4,827,900 4,679,778
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,420,286 2,131,653 2,359,565 2,102,836
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,073,861 37,307,434 40,860,697 39,485,598
Our intangible assets remained relatively stable at RMB37.1 billion, RMB37.3 billion,
RMB40.9 billion and RMB39.5 billion as at 31 December 2021, 2022 and 2023 and 30 April
2024, respectively.
Impairment tests for goodwill and trademark rights with an indefinite useful life
The carrying amount of goodwill and trademark rights with an indefinite useful life are
allocated to groups of cash-generating units, or CGUs, including (i) KUKA Group, (ii) the
TLSC group, which mainly represents Toshiba Lifestyle and its subsidiaries, (iii) Little Swan
and (iv) others. The following sets forth details of the carrying amount of goodwill and
trademark rights with an indefinite useful life allocated to groups of CGUs as at the dates
indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
KUKA Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,544,697 21,122,932 22,364,486 21,757,226
TLSC group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,580,274 2,437,914 2,338,037 2,131,160
Little Swan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,361,306 1,361,306 1,361,306 1,361,306
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,893,186 4,149,906 5,327,237 5,276,467
28,379,463 29,072,058 31,391,066 30,526,159
Less: Impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(504,711) (523,405) (532,829) (534,650)
27,874,752 28,548,653 30,858,237 29,991,509
FINANCIAL INFORMATION
– 283 –


--- page 295 ---
The trademark rights with an indefinite useful life of our Group are used by KUKA Group
for its robotics and automation system business, the carrying amounts of which are
RMB4,019,207,000, RMB4,132,328,000, RMB4,375,217,000 and RMB4,256,417,000 as at 31
December 2021, 2022 and 2023 and 30 April 2024, respectively.
Impairment reviews on our goodwill and trademark rights with an indefinite useful life
have been conducted by our management as at 31 December 2021, 2022 and 2023 and 30 April
2024. For the purposes of impairment review, the recoverable amounts of CGU or group of
CGUs, are determined based on value in use, or VIU, calculations by using the discounted cash
flow method.
The key assumptions used by our management for VIU calculation for the impairment test
of KUKA Group as at 31 December 2021, 2022 and 2023 and 30 April 2024, included: the
revenue annual growth rates of 4.10%~17.21%, 0.18%~12.94%, 4.73%~15.43%, and
3.57%~15.43%; the gross margins of 22.71%~24.59%, 22.76%~23.60%, 22.79%~23.60%, and
22.78%~23.60%; the perpetual annual growth rates of 2.00%, 2.00%, 2.00% and 2.00%; and
the pre-tax discount rates of 9.32%, 10.74%, 10.73% and 11.60%, respectively.
The key assumptions used by our management for VIU calculation for the impairment test
of the TLSC group as at 31 December 2021, 2022 and 2023 and 30 April 2024, included: the
revenue annual growth rates of 2.89%~5.21%, 2.94%~5.26%, 2.89%~7.00%, and
2.89%~7.01%; the gross margins of 27.52%~30.80%, 26.52%~30.82%, 26.22%~29.00%, and
26.22%~29.01%; the perpetual annual growth rates of 1.00%, 1.00%, 1.00% and 1.00%; and
the pre-tax discount rates of 15.13%, 15.62%, 14.92% and 14.99%, respectively.
The key assumptions used by our management for VIU calculation for the impairment test
of Little Swan as at 31 December 2021, 2022 and 2023 and 30 April 2024, included: the
revenue annual growth rates of 2.00%~11.80%, 2.00%~10.00%, 3.00%~8.70%, and 3.00%~
8.70%; the gross margins of 28.34%~28.86%, 29.47%~30.06%, 31.79%~34.17%, and 31.80%~
33.59%; the perpetual annual growth rates of 2.00%, 2.00%, 2.00% and 2.00%; and the pre-tax
discount rates of 13.17%, 12.83%, 12.41% and 12.31%, respectively.
FINANCIAL INFORMATION
– 284 –


--- page 296 ---
Our management has determined the values assigned to each of the above key
assumptions as follows:
Assumption Approach used to determine values
Revenue annual growth rate /H1118Revenue annual growth rate is estimated over the
five-year or six-year forecast period based on past
performance and our management’s expectations of
market development. The management of us used a
six-year period as the projection period for the cash
flow forecast, which was in line with the period length
used in the corresponding strategic planning and long-
term budgeting purpose for many years. Based on the
industry knowledge and understanding of the market
and business cycle, the management considered that
before the projections move into a long term stable
period, such six-year period projection was reasonable
and supportable
Gross margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Based on past performance and our management’s
expectations for the future
Perpetual annual growth rate /H1118This is the weighted average growth rate used to
extrapolate cash flows beyond the forecast period. The
rates are determined after making reference to long term
inflation rate of the countries in which they operate. The
perpetual annual growth rates remained stable which
was due to the fact that the long term inflation rates of
the relevant countries were relatively stable during the
Track Record Period.
Pre-tax discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118Estimated by using the weighted average cost of capital
(“W ACC”) method. The W ACC was calculated by
referring to public market data including risk free rate,
market return, beta of comparable public companies etc.
and the specific risk of the business
Impact of possible changes in key assumptions
For the sensitivity analysis of KUKA Group conducted during the impairment review, had
there been reasonably possible changes with reduction of the revenue annual growth rate of
each year during the forecast period by 3.00%, or a reduction of the gross margin of each year
during the forecast period by 2.00%, or an increase in pre-tax discount rate by 0.50%, or a
reduction of perpetual annual growth rate by 0.50%, it would cause the reduction of the
recoverable amount of KUKA Group as follows, if one of the key assumptions was to change
while other variable held constant: As at 31 December 2021, the recoverable amount would
decrease by RMB1.8 billion, RMB2.4 billion, RMB2.8 billion and RMB2.0 billion. As at 31
December 2022, the recoverable amount would decrease by RMB1.4 billion, RMB2.3 billion,
RMB2.4 billion and RMB1.6 billion. As at 31 December 2023, the recoverable amount would
FINANCIAL INFORMATION
– 285 –


--- page 297 ---
decrease by RMB2.0 billion, RMB2.8 billion, RMB2.5 billion and RMB1.6 billion. As at 30
April 2024, the recoverable amount would decrease by RMB2.0 billion, RMB2.4 billion,
RMB2.2 billion and RMB1.4 billion.
For the sensitivity analysis of TLSC Group conducted during the impairment review, had
there been reasonably possible changes with reduction of the revenue annual growth rate of
each year during the forecast period by 3.00%, or a reduction of the gross margin of each year
during the forecast period by 2.00%, or an increase in pre-tax discount rate by 0.50%, or a
reduction of perpetual annual growth rate by 0.50%, it would cause the reduction of the
recoverable amount of TLSC Group as follows, if one of the key assumptions was to change
while other variable held constant: As at 31 December 2021, the recoverable amount would
decrease by RMB206.8 million, RMB842.8 million, RMB265.1 million and RMB158.9
million. As at 31 December 2022, the recoverable amount would decrease by RMB213.3
million, RMB867.8 million, RMB301.9 million and RMB192.5 million. As at 31 December
2023, the recoverable amount would decrease by RMB209.7 million, RMB851.7 million,
RMB294.9 million and RMB167.6 million. As at 30 April 2024, the recoverable amount would
decrease by RMB204.6 million, RMB832.0 million, RMB276.2 million and RMB175.2
million.
For the sensitivity analysis of Little Swan conducted during the impairment review, had
there been reasonably possible changes with reduction of the revenue annual growth rate of
each year during the forecast period by 3.00%, or a reduction of the gross margin of each year
during the forecast period by 2.00%, or an increase in pre-tax discount rate by 0.50%, or a
reduction of perpetual annual growth rate by 0.50%, it would cause the reduction of the
recoverable amount of Little Swan as follows, if one of the key assumptions was to change
while other variable held constant: As at 31 December 2021, the recoverable amount would
decrease by RMB938.5 million, RMB2.1 billion, RMB1.1 billion and RMB720.1 million. As
at 31 December 2022, the recoverable amount would decrease by RMB651.1 million, RMB1.9
billion, RMB1.7 billion and RMB1.0 billion. As at 31 December 2023, the recoverable amount
would decrease by RMB654.8 million, RMB2.3 billion, RMB1.7 billion and RMB1.1 billion.
As at 30 April 2024, the recoverable amount would decrease by RMB721.5 million, RMB2.4
billion, RMB1.6 billion and RMB1.1 billion.
We have considered and assessed reasonably possible changes for the key assumptions
and have not identified any instances that would cause the carrying amounts of the above CGUs
to exceed their recoverable amounts as at 31 December 2021, 2022 and 2023 and 30 April
2024, respectively.
Investments in Associates and Joint Ventures
Our investments in associates and joint ventures represent our investments in entities in
which we have significant influence or joint control. During the Track Record Period, our
investments in associates and joint ventures mainly include our investments in companies, such
as Guangdong Shunde Rural Commercial Bank Co., Ltd., Hefei Royalstar Motor Co., Ltd.,
Carrier Midea North America LLC, Foshan Micro Midea Filter Mfg. Co., Ltd, Concepcion
Midea Inc., TWENTYTHREEC LLC, ShenZhen CEGN Co., Ltd. and T.G. Battery Co. (Hong
Kong) Ltd.
FINANCIAL INFORMATION
– 286 –


--- page 298 ---
As at 31 December 2021, 2022 and 2023 and 30 April 2024, we recorded investments in
associates and joint ventures of RMB3.8 billion, RMB5.2 billion, RMB5.0 billion and RMB5.1
billion, respectively.
Trade and Note Payables
The following table sets forth details of our trade and note payables as at the dates
indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note payables
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,983,559 64,233,225 72,530,465 83,048,129
Note payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,752,007 25,572,421 21,707,608 23,245,989
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,735,566 89,805,646 94,238,073 106,294,118
Our trade and note payables remained relatively stable at RMB98.7 billion as at 31
December 2021, RMB89.8 billion as at 31 December 2022, RMB94.2 billion as at 31
December 2023 and RMB106.3 billion as at 30 April 2024.
As at 31 July 2024, RMB60.0 billion, or 72.3% of our trade payables as at 30 April 2024
had been settled.
The following is an aging analysis of our trade payables based on the invoice date as at
the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,571,240 58,401,404 67,421,139 74,548,097
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H11182,269,335 2,561,447 1,838,583 4,936,835
Between 6 months and 1 year /H1118/H1118/H11181,871,896 2,102,026 1,597,946 1,757,631
Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,271,088 1,168,348 1,672,797 1,805,566
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,983,559 64,233,225 72,530,465 83,048,129
During the Track Record Period, over 90% of our trade payables were outstanding for less
than six months. For suppliers who grant us a credit period, the typical term is up to 180 days.
FINANCIAL INFORMATION
– 287 –


--- page 299 ---
The following table sets forth our trade and note payables turnover days for the
years/periods indicated:
For the Y ear Ended 31 December
For the
Four Months
Ended
30 April
20242021 2022 2023
Trade and note payables turnover
days (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124 131 122 114
Note:
(1) Calculated as the average of beginning and ending balance of trade and note payables for the year/period
divided by cost of revenue for the year/period and multiplied by 365 days (for a year) or 121 days (for
the four-month period).
Our trade and note payables turnover days remained relatively stable at 124 days, 131
days, 122 days and 114 days in 2021, 2022 and 2023 and 30 April 2024, respectively.
Contract Liabilities
Our contract liabilities represent the liabilities recognized when the measure of the
remaining performance obligations of a contract exceeds the measure of the remaining rights,
primarily consisting of advances on sales and services and advances for construction projects.
The following table sets forth details of our contract liabilities as at the dates indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities
Advances on sales and services /H1118/H111821,319,800 25,143,337 38,549,278 32,430,882
Advances for construction
projects /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,596,795 2,816,701 3,216,197 3,079,231
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,916,595 27,960,038 41,765,475 35,510,113
Our contract liabilities decreased from RMB41.8 billion as at 31 December 2023 to
RMB35.5 billion as at 30 April 2024, primarily due to the decrease of RMB6.1 billion in
advances on sales and services as the result of our contract fulfillment in the four months ended
30 April 2024. Our contract liabilities increased significantly from RMB28.0 billion as at 31
December 2022 to RMB41.8 billion as at 31 December 2023, primarily due to the increase of
FINANCIAL INFORMATION
– 288 –


--- page 300 ---
RMB13.4 billion in advances on sales and services as the result of the enhancement of product
portfolio and the increasing advance payments made by our customers. Our contract liabilities
remained relatively stable at RMB23.9 billion as at 31 December 2021 and RMB28.0 billion
as at 31 December 2022.
As at 31 July 2024, RMB23.5 billion, or 66.2%, of our contract liabilities as at 30 April
2024 were subsequently recognized as revenue.
Other Payables and Accruals
Our other payables and accruals mainly consist of sales rebate and others. Sales rebate
primarily represents the rebates we granted to customers as part of our promotion strategies.
The following table sets forth details of our other payables and accruals as at the dates
indicated:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Other payables and accruals
Sales rebate accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,307,753 40,041,953 48,311,934 56,537,490
Marketing and transportation
expenses accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,689,733 6,118,002 7,908,952 9,915,737
Salaries, wages and benefits /H1118/H1118/H1118/H1118/H11189,360,184 8,640,673 10,509,901 7,082,501
Endorsed note receivables
without been derecognized and
not yet due
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,002,446 2,647,855 2,951,899 2,082,267
Other taxes payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,432,227 2,141,813 1,977,849 2,740,787
Other payables (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,288,104 4,322,025 4,442,928 25,276,916
Others (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,217,234 10,031,244 12,789,011 12,034,977
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,297,681 73,943,565 88,892,474 115,670,675
Less: non-current portion
– Salaries, wages and benefits /H1118/H1118/H1118(1,825,016) (1,488,456) (1,433,874) (1,310,411)
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(998,260) (1,075,459) (819,422) (1,071,980)
62,474,405 71,379,650 86,639,178 113,288,284
Notes:
(1) Endorsed note receivables without been derecognized and not yet due represent bank acceptance notes
that have been transferred and not yet due, excluding those meets the criteria for derecognition.
(2) Other payables primarily consist of dividend payables, restricted stock repurchase obligations and
deposits.
(3) Others mainly represent (i) warranty and (ii) output tax to be declared.
FINANCIAL INFORMATION
– 289 –


--- page 301 ---
Our other payables and accruals increased by 30.1% from RMB88.9 billion as at 31
December 2023 to RMB115.7 billion as at 30 April 2024, primarily due to (i) an increase of
RMB20.8 billion in dividend payables as the result of our declared cash dividends in the four
months ended 30 April 2024, and (ii) an increase of RMB8.2 billion in sales rebate as the result
of our enhanced promotion efforts and the growth of our revenue in the four months ended 30
April 2024.
Our other payables and accruals increased by 20.2% from RMB73.9 billion as at 31
December 2022 to RMB88.9 billion as at 31 December 2023, primarily due to an increase of
RMB8.3 billion in sales rebate as the result of our enhanced promotion efforts and the growth
of our revenue in 2023.
Our other payables and accruals increased by 13.2% from RMB65.3 billion as at 31
December 2021 to RMB73.9 billion as at 31 December 2022, primarily due to the increase of
RMB8.7 billion in sales rebate as the result of our enhanced promotion efforts in 2022.
KEY FINANCIAL RATIOS
As at/For the Y ear Ended 31 December
As at/For the
Four Months
Ended
30 April
20242021 2022 2023
Net profit margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188.5% 8.6% 9.0% 9.4%
ROE(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823.6% 22.1% 22.1% 25.3%
Inventory turnover days (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853 64 62 50
Trade and note receivables turnover
days (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 33 35 36
Operating cash flow conversion
ratio (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.2 1.2 1.7 1.3
Gearing ratio (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.2% 64.0% 64.1% 66.9%
Notes:
(1) ROE is calculated by dividing profit for the year attributable to the owners of our Company by the average
balance of equity attributable to owners of our Company. For the four months ended 30 April 2024, ROE is
annualized by multiplying the number by three.
(2) Inventory turnover days is calculated as the average of beginning and ending balance of inventories for the
year/period divided by cost of revenue for that year/period and multiplied by 365 days (for a year) or 121 days
(for the four-month period).
(3) Trade and note receivables turnover days is calculated as the average of beginning and ending balance of trade
and note receivables at amortized cost for the year/period divided by revenue for that year/period and
multiplied by 365 days (for a year) or 121 days (for the four-month period).
(4) Operating cash flow conversion ratio is calculated by dividing net cash generated from operating activities by
profit for the year/period.
(5) Gearing ratio is calculated by dividing total liabilities by total assets of the year/period.
FINANCIAL INFORMATION
– 290 –


--- page 302 ---
LIQUIDITY AND CAPITAL RESOURCES
Overview
During the Track Record Period and up to the Latest Practicable Date, we have funded our
working capital primarily from cash generated from our business operation, and to a lesser
extent, external indebtedness. We do not anticipate any material changes to the availability of
financing to fund our operations in the future.
Our Directors are of the view that, taking into account the financial resources available
to us, including cash and cash equivalents, our available banking facilities, cash flows from
operating activities and net proceeds from the Global Offering, we have sufficient working
capital for at least 12 months from the date of this document.
Our cash and cash equivalents primarily consist of cash at bank and in hand, short-term
deposits with initial terms within three months. We had cash and cash equivalents of RMB40.6
billion, RMB51.1 billion, RMB59.9 billion and RMB64.3 billion as at 31 December 2021,
2022 and 2023 and 30 April 2024, respectively. In addition, we have other deposits of terms
longer than three months, which is also an important part of our capital resources.
The following table sets forth a summary of our cash flows for the years/periods
indicated.
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated from
operating activities /H1118/H1118/H1118/H1118/H1118/H111835,448,953 34,657,828 57,902,611 11,820,270 16,916,694
Net cash generated from/(used
in) investing activities /H1118/H1118/H1118/H111813,599,586 (13,509,510) (31,219,855) (27,842,393) (8,577,869)
Net cash (used in)/generated
from financing activities /H1118/H1118/H1118(31,561,788) (10,854,881) (17,910,213) 10,785,347 (3,731,916)
Net increase in cash and
cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,486,751 10,293,437 8,772,543 (5,236,776) 4,606,909
Cash and cash equivalents
at the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,548,508 40,550,039 51,131,968 51,131,968 59,887,260
Exchange (losses)/gains on
cash and cash equivalents /H1118/H1118(485,220) 288,492 (17,251) (66,853) (241,798)
Cash and cash equivalents
at the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,550,039 51,131,968 59,887,260 45,828,339 64,252,371
FINANCIAL INFORMATION
– 291 –


--- page 303 ---
Net cash generated from operating activities
Net cash generated from operating activities for the four months ended 30 April 2024 was
RMB16.9 billion. The difference between net cash generated from operating activities and the
profit before income tax of RMB16.2 billion was the result of (i) adjustments, which primarily
consist of depreciation and amortization of non-current assets of RMB2.5 billion and
share-based compensation expenses and others of RMB556.0 million, and (ii) changes in
working capital, which primarily consist of an increase in trade and note payables of RMB12.1
billion, an increase in other payables and accruals of RMB7.0 billion, and a decrease in
inventories of RMB5.9 billion, partially offset by an increase in trade and note receivables of
RMB18.6 billion and a decrease in contract liabilities of RMB6.0 billion.
Net cash generated from operating activities in 2023 was RMB57.9 billion. The
difference between net cash generated from operating activities and the profit before income
tax of RMB40.3 billion was the result of (i) adjustments, which primarily consist of
depreciation and amortization of non-current assets of RMB7.3 billion and finance cost, net of
RMB2.3 billion, and (ii) changes in working capital, which primarily consist of an increase in
other payables and accruals of RMB14.2 billion and an increase in contract liabilities of
RMB12.3 billion, partially offset by an increase in trade and note receivables of RMB8.0
billion.
Net cash generated from operating activities in 2022 was RMB34.7 billion. The
difference between net cash generated from operating activities and the profit before income
tax of RMB35.0 billion was the result of (i) adjustments, which primarily consist of
depreciation and amortization of non-current assets of RMB6.5 billion, finance cost, net of
RMB1.1 billion and share-based compensation expenses and others of RMB1.0 billion, and (ii)
changes in working capital, which primarily consist of an increase in other payables and
accruals of RMB13.5 billion and a decrease in loan receivables of RMB6.7 billion, partially
offset by an increase in trade and note receivables of RMB10.1 billion and a decrease in trade
and note payables of RMB9.1 billion.
Net cash generated from operating activities in 2021 was RMB35.4 billion. The
difference between net cash generated from operating activities and the profit before income
tax of RMB33.7 billion was the result of (i) adjustments, which primarily consist of
depreciation and amortization of non-current assets of RMB6.5 billion and share-based
compensation expenses and others of RMB1.6 billion, and (ii) changes in working capital,
which primarily consist of an increase in trade and note payables of RMB13.1 billion and an
increase in contract liabilities of RMB9.4 billion, partially offset by an increase in inventories
of RMB15.2 billion.
FINANCIAL INFORMATION
– 292 –


--- page 304 ---
Net cash generated from/(used in) investing activities
Net cash used in investing activities for the four months ended 30 April 2024 was
RMB8.6 billion, primarily due to net payments for purchase of financial assets (payments for
purchase of financial assets minus proceeds from disposal of financial assets and interest
received) of RMB6.8 billion, and net payments for purchase of property, plant and equipment,
intangible assets and other non-current assets (payments for purchase of property, plant and
equipment, intangible assets and other non-current assets minus proceeds from disposal of
these assets) of RMB2.0 billion.
Net cash used in investing activities in 2023 was RMB31.2 billion, primarily due to net
payments for purchase of financial assets (payments for purchase of financial assets minus
proceeds from disposal of financial assets and interest received) of RMB26.0 billion, and net
payments for purchase of property, plant and equipment, intangible assets and other
non-current assets of RMB5.9 billion.
Net cash used in investing activities in 2022 was RMB13.5 billion, primarily due to net
payments for purchase of financial assets (payments for purchase of financial assets minus
proceeds from disposal of financial assets and interest received) of RMB6.1 billion and net
payments for purchase of property, plant and equipment, intangible assets and other
non-current assets of RMB7.1 billion.
Net cash generated from investing activities in 2021 was RMB13.6 billion, primarily due
to net proceeds from disposal of financial assets (the aggregate of proceeds from disposal of
financial assets and interest received minus payments for purchase of financial assets) of
RMB21.7 billion, partially offset by net payments for purchase of property, plant and
equipment, intangible assets and other non-current assets of RMB6.5 billion.
Net cash used in financing activities
Net cash used in financing activities for the four months ended 30 April 2024 was
RMB3.7 billion, primarily due to repayment of borrowings of RMB11.7 billion, partially offset
by proceeds from borrowings of RMB8.2 billion.
Net cash used in financing activities in 2023 was RMB17.9 billion, primarily due to
repayments of borrowings of RMB33.1 billion and dividends paid to our shareholders of
RMB17.2 billion, partially offset by proceeds from borrowings of RMB33.9 billion.
Net cash used in financing activities in 2022 was RMB10.9 billion, primarily due to
repayments of borrowings of RMB44.9 billion and dividends paid to our shareholders of
RMB11.7 billion, partially offset by proceeds from borrowings of RMB53.3 billion.
Net cash used in financing activities in 2021 was RMB31.6 billion, primarily due to
repayments of borrowings of RMB24.2 billion, payments for repurchase of shares and refund
the exercise price of lapsed restricted shares of RMB13.8 billion and dividends paid to our
shareholders of RMB11.1 billion, partially offset by proceeds from borrowings of RMB19.0
billion.
FINANCIAL INFORMATION
– 293 –


--- page 305 ---
INDEBTEDNESS
Borrowings
Other than our operating cash flow, we also finance our working capital with bank loans
and other borrowings. As at 31 July 2024, the latest date for determining our indebtedness, the
aggregate balance of our borrowings was RMB73.0 billion.
The following table sets forth the breakdown of our borrowings as at the dates indicated:
As at 31 December As at
30 April
2024
As at
31 July
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Non-current:
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,734,020 50,685,948 46,138,736 46,795,636 39,862,455
Debentures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,163,616 3,217,969 3,212,842 3,249,453
19,734,020 53,849,564 49,356,705 50,008,478 43,111,908
Current:
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,647,538 11,417,964 22,109,985 17,891,000 29,849,818
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,381,558 65,267,528 71,466,690 67,899,478 72,961,726
Our non-current borrowings decreased from RMB50.0 billion as at 30 April 2024 to
RMB43.1 billion as at 31 July 2024, primarily due to the remaining term of certain of our
borrowings becoming less than one year. Our non-current borrowings remained relatively
stable at RMB49.4 billion as at 31 December 2023 and RMB50.0 billion as at 30 April 2024.
Our non-current borrowings decreased from RMB53.8 billion as at 31 December 2022 to
RMB49.4 billion as at 31 December 2023, primarily due to the remaining term of certain of our
borrowings becoming less than one year. Our non-current borrowings increased from RMB19.7
billion as at 31 December 2021 to RMB53.8 billion as at 31 December 2022, primarily as a
result of refinancing activities where we replaced certain of our short-term borrowings with
long-term borrowings in 2022.
Our current borrowings increased from RMB17.9 billion as at 30 April 2024 to RMB29.8
billion as at 31 July 2024, primarily as the result of (i) the changes in non-current borrowings
and (ii) an increase in financing activities. Our current borrowings decreased from RMB22.1
billion as at 31 December 2023 to RMB17.9 billion as at 30 April 2024, primarily due to the
repayments of borrowings. Our current borrowings increased from RMB11.4 billion as at 31
December 2022 to RMB22.1 billion as at 31 December 2023, primarily due to (i) the changes
in non-current borrowings, and (ii) the consolidation of Clou Electronics in our financial
FINANCIAL INFORMATION
– 294 –


--- page 306 ---
statements following our acquisition of Clou Electronics. Our current borrowings decreased
from RMB33.6 billion as at 31 December 2021 to RMB11.4 billion as at 31 December 2022,
primarily due to the repayments of borrowings.
Bank loans
Our bank loans amounted to RMB53.4 billion, RMB62.1 billion, RMB68.2 billion,
RMB64.7 billion and RMB69.7 billion as at 31 December 2021, 2022 and 2023, 30 April 2024
and 31 July 2024, respectively.
The following table sets forth a breakdown of our bank loans obtained in mainland China
and overseas as at the dates indicated:
As at 31 December As at
30 April
2024
As at
31 July
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Bank loans
– Mainland China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,936,758 23,524,764 28,604,958 24,335,792 34,987,236
– Overseas /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,444,800 38,579,148 39,643,763 40,350,844 34,725,037
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,381,558 62,103,912 68,248,721 64,686,636 69,712,273
During the Track Record Period, our bank loans came from mainland China and foreign
commercial banks and financial institutions bearing effective interest rates in the range of
0.30% to 28.50% per annum. The majority of our bank borrowings were unsecured as of 30
April 2024. Additionally, we maintain facilities with a number of commercial banks in support
of our operations. As at 31 July 2024, we had bank facilities of approximately RMB229.1
billion, of which RMB128.9 billion remained unutilized.
Debentures
Our debentures amounted to nil, RMB3.2 billion, RMB3.2 billion, RMB3.2 billion and
RMB3.2 billion as at 31 December 2021, 2022 and 2023, 30 April 2024 and 31 July 2024,
respectively.
In February 2022, our subsidiary Midea Investment Development Company Limited
issued a five-year US dollar-denominated corporate bond, with face value of US$450.0 million
and carried a coupon interest rate of 2.88% per annum payable semi-annually. From the date
of the issuance to 31 July 2024, Midea Investment Development Company Limited paid an
aggregate of US$25.9 million in interest payments related to the corporate bond.
Subsequent to 31 July 2024, we did not issue any material corporate bonds or debentures.
FINANCIAL INFORMATION
– 295 –


--- page 307 ---
Lease Liabilities
As required by IFRS 16, at the commencement of a lease, a lessee will recognize a
liability to make lease payments, namely, the lease liabilities, and an asset representing the
right to use the underlying asset during the lease term, namely, the right-of-use assets. During
the Track Record Period, we entered into leases primarily for our manufacturing facilities,
offices and warehouses.
The following table sets forth the remaining contractual maturities of our lease liabilities
as at the dates indicated:
As at 31 December As at
30 April
2024
As at
31 July
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118860,503 992,142 1,166,901 1,149,267 1,123,639
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,533,552 1,507,480 2,047,319 2,007,395 1,923,276
Total lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,394,055 2,499,622 3,214,220 3,156,662 3,046,915
Derivative Financial Instruments
Our derivative financial instruments mainly include forwards, options and futures. During
the Track Record Period, we used a combination of these derivative financial instruments to
hedge the fluctuations of foreign exchange rate, interest rate and raw material price. During the
Track Record Period, a professional team within our finance department, together with our
overseas sales team and our supply chain team, implemented measures to manage our hedge
activities, including but not limited to, (i) a monthly assessment of our hedge needs, taking into
account factors such as foreign exchange rate movements, interest rate movements, the extent
of exposure to foreign exchange risk caused by overseas sales, raw material procurement,
financing and other business activities, spot market price of raw materials, the estimated
amount of bank deposits and cash, equity investments, bank loans and intercompany balances
in our functional currencies, prevailing foreign exchange market condition and
recommendations from institutions, and (ii) obtaining relevant market information, analysing
hedge instruments and determining the derivative instruments.
As at 31 December 2021, 2022 and 2023, 30 April 2024 and 31 July 2024, our derivative
financial instruments amounted to RMB166.6 million, RMB314.5 million, RMB415.5 million,
RMB657.1 million and RMB528.1 million, respectively.
FINANCIAL INFORMATION
– 296 –


--- page 308 ---
Other Financial Liabilities at Fair Value Through Profit or Loss
We operate a technology industry investment fund, which was incorporated in November
2018 and consolidated to the financial statements of our Group since 2022, with a paid-in
capital of RMB2.08 billion. The fund mainly allocates its investments to advanced
manufacturing and technological innovation sectors, intelligent manufacturing and smart home
solutions sectors, new retail sector, new energy sector and other relevant sectors. For the
amount raised from limited partners, we have contractual obligation to settle the liabilities with
the limited partners at the fund’s prevailing fair value and the management designates such
obligation as other financial liabilities at fair value through profit or loss. As at 31 December
2021, 2022 and 2023, 30 April 2024 and 31 July 2024, our other financial liabilities at fair
value through profit or loss amounted to nil, RMB1,580.8 million, RMB1,346.7 million,
RMB1,174.0 million and RMB1,067.2 million, respectively.
Contingent Liabilities
During the Track Record Period, our contingent liabilities mainly relate to tax disputes
involving our Brazilian subsidiary, which had been initiated before we acquired equity interest
of this Brazilian subsidiary from its original shareholders pursuant to a share purchase
agreement dated 5 August 2011. As at 31 December 2021, 2022 and 2023, 30 April 2024 and
31 July 2024, the amounts of the maximum potential loss on a cumulative basis in outstanding
tax disputes involving this Brazilian subsidiary, in which we hold 51% equity interest, were
about BRL614.2 million (equivalent to RMB701.7 million), BRL741.9 million (equivalent to
RMB990.3 million), BRL735.1 million (equivalent to RMB1,075.4 million), BRL733.0 million
(equivalent to RMB1,007.2 million) and BRL649.8 million (equivalent to RMB818.8 million),
respectively, including the tax amount in dispute, penalty, interest, etc., payable to the
Brazilian government. The decrease in the amount of the maximum potential loss from 31
December 2022 to 31 July 2024 was primarily due to the resolution of some of the disputes.
We started negotiating the terms for the acquisition with the original shareholders of this
Brazilian subsidiary in 2011. Consistent with customary practice, the original shareholders of
this Brazilian subsidiary negotiated with us about the indemnification terms pertaining to the
pending tax disputes involving this Brazilian subsidiary prior to our acquisition. Consequently,
for the relevant disputes, in the share purchase agreement that we entered into in August 2011,
they agreed to indemnify us in an amount not exceeding BRL157.5 million (equivalent to
RMB179.4 million, RMB209.6 million, RMB230.4 million, RMB216.4 million and RMB198.5
million as at 31 December 2021, 2022 and 2023, 30 April 2024 and 31 July 2024, respectively)
in accordance with the final verdicts. As at the Latest Practicable Date, the relevant cases (other
than some disputes that have been resolved) were still ongoing. With reference to judgments
of third-party attorneys, our management believes that the probability of losing the relevant
lawsuits and paying compensation is low, and has accrued sufficient amount of provisions
based on that probability. The amount of provisions for the potential compensation for the
relevant lawsuits, based on our best estimate, was RMB13.4 million, RMB26.8 million,
RMB35.4 million, RMB33.8 million and RMB15.7 million as at 31 December 2021, 2022 and
2023, 30 April 2024 and 31 July 2024, respectively.
FINANCIAL INFORMATION
– 297 –


--- page 309 ---
Our Directors confirm that as of the Latest Practicable Date, there was no material
covenant on any of our outstanding debt and there was no breach of any covenant during the
Track Record Period and up to the Latest Practicable Date. Our Directors further confirm that
we did not experience any difficulty in obtaining bank loans and debentures or default in
payment of bank loans and debentures during the Track Record Period and up to the Latest
Practicable Date.
Save as disclosed above, we did not have any bank loans and debentures, or any loan
capital issued and outstanding or agreed to be issued, bank overdraft, borrowing or similar
indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits,
debentures, mortgages, charges, hire purchases or finance lease commitments, guarantees or
other material contingent liabilities as of 31 July 2024, the latest date for determining our
indebtedness. Our Directors confirm that there has not been any material change in our
indebtedness since 31 July 2024, the latest date for determining our indebtedness, up to the date
of this document.
CAPITAL COMMITMENT
Our capital commitments are related to contracted, but not provided for purchase of
property, plant and equipment and the acquisition consideration to be paid. The details of our
capital commitments as at the dates indicated are set forth below:
As at 31 December As at
30 April
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided for
purchase of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,990,809 5,145,982 4,005,911 2,872,559
In April 2024, we entered into an agreement with Arbonia AG, a company listed on the
SIX Swiss Exchange, to acquire all equity interest in its climate division. Subject to the
fulfillment of certain closing conditions, the acquisition consideration of the transaction is
EUR648.8 million. As at the Latest Practicable Date, the payment of the consideration has not
been made, and the transaction has not been completed, subject to the fulfillment of certain
closing conditions including regulatory approvals.
In June 2024, we entered into an agreement with HERITAGE B to acquire 97.38% equity
interests of Teka Industrial, S.A. The acquisition consideration of the transaction is EUR175
million. As at the Latest Practicable Date, the payment of the consideration has not been made,
and the transaction has not been completed, subject to the fulfillment of certain closing
conditions including regulatory approvals.
FINANCIAL INFORMATION
– 298 –


--- page 310 ---
CAPITAL EXPENDITURES
Our capital expenditures consist of buildings, overseas land, machinery and equipment,
motor vehicles, electronic equipment and others, construction in progress, leasehold
improvements and land use rights. The following table sets forth details of our capital
expenditures for the years/periods presented:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118706,350 468,401 1,381,338 91,794 116,847
Overseas land /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,364 29,246 64,694 – 99,715
Machinery and equipment /H11182,219,034 3,148,615 3,429,407 721,942 817,280
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,775 66,129 168,436 8,692 25,168
Electronic equipment and
others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118775,815 1,112,476 1,410,092 295,030 338,348
Construction in progress /H1118/H11182,381,015 3,294,350 4,386,848 782,768 916,008
Leasehold improvements /H1118/H1118288,260 388,110 524,305 129,287 172,946
Land use rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,382,182 510,764 759,883 4,563 5,529
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,811,795 9,018,091 12,125,003 2,034,076 2,491,841
We funded these expenditures primarily with our operating cash flow, and we expect to
fund our capital expenditures with our operating cash flow and proceeds from the Global
Offering.
RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time. For details relating
to our related party transactions, see “Connected Transactions” and Note 45 to the Accountant’s
Report set out in Appendix I to this document. In particular, in terms of the balance with related
parties, term deposits, other financial assets at amortized cost and other financial assets at
FVOCI were non-trade in nature, while trade and note receivables at amortized cost, trade and
note payables, contract liabilities, prepayments, other receivables and other assets and other
payables and accruals were trade in nature. We intend to settle the outstanding balances in
accordance with the terms of deposits. The non-trade balances as of 30 April 2024 are term
deposits placed by us with Guangdong Shunde Rural Commercial Bank Co., Ltd.
(“Guangdong Shunde Rural Commercial Bank ”), which as of the Latest Practicable Date is
not our connected person and such term deposits do not constitute our connected transactions
upon the Listing. The term deposits were also placed with Guangdong Shunde Rural
Commercial Bank in our ordinary course of business and on normal commercial terms. As such
we are not required by the Listing Rules to settle these term deposits before the Listing. Our
FINANCIAL INFORMATION
– 299 –


--- page 311 ---
Directors believe that our transactions with related parties during the Track Record Period were
conducted in the ordinary course of business and on an arm’s length basis, and they did not
distort our results of operations or make our historical results not reflective of our future
performance.
OFF-BALANCE SHEET ARRANGEMENTS
As at the Latest Practicable Date, we did not have any outstanding off-balance sheet
arrangements.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT FINANCIAL RISKS
We are exposed to a variety of financial risks, including market risk (including foreign
exchange risk, other price risk and interest rate risk), credit risk and liquidity risk. For details,
see Note 3 to the Accountant’s Report set out in Appendix I to this document.
Market Risk
Foreign exchange risk
We operate internationally and are exposed to foreign exchange risk arising from various
currency exposures. Foreign exchange risk arises when future commercial transactions or
recognized assets and liabilities are denominated in a currency that is not the respective
functional currency of our subsidiaries.
Our finance department has a professional team to manage the risk arising of fluctuation
of exchange rate, with approach of the natural hedge for settling currencies, signing forward
foreign exchange hedging contracts and controlling the scale of foreign currency assets and
liabilities, to minimise foreign exchange risk, and to reduce the impact of exchange rate
fluctuations on business performance.
Other price risk
We are exposed to equity price risk mainly arising from investments held by us that are
classified either FVPL or FVOCI. To manage our price risk arising from the investments, we
diversify our investment portfolio. The investments are made either for strategic purposes, or
for the purpose of achieving investment yield and balancing our liquidity level simultaneously.
Each investment is managed by management on a case by case basis.
Sensitivity analysis is performed by management to assess the exposure of our financial
results to equity price risk of FVPL and FVOCI at the end of each reporting period.
FINANCIAL INFORMATION
– 300 –


--- page 312 ---
Interest rate risk
Our interest rate risk primarily arises from long-term interest-bearing borrowings and
bonds. Long-term borrowings issued at floating rates expose us to cash flow interest rate risk.
Borrowings and bonds issued at fixed rates expose us to fair value interest rate risk. We
determine the proportion of borrowings and bonds issued at floating rates and fixed rates based
on the market environment.
We have been monitoring the level of interest rates. The increase in the interest rates will
increase the interest costs of borrowings and finance leases issued at floating rates, which will
further impact our performance. To hedge against the variability in the cash flows arising from
a change in market interest rates, we have entered into certain interest rate swaps to swap
floating rates into fixed rates.
Credit Risk
We are exposed to credit risk primarily in relation to its contract assets, trade and note
receivables at amortized cost, trade and note receivables at FVOCI, loan receivables, other
financial assets at amortized cost, other financial assets at FVOCI (excluding unlisted
securities), term deposits and restricted cash, cash and cash equivalents. The carrying amounts
of each class of the above financial assets represent our maximum exposure to credit risk in
relation to financial assets.
(i) Risk management
To manage this risk arising from other financial assets at FVOCI (excluding unlisted
securities), constant return financial products in other financial assets at amortized cost, term
deposits and restricted cash, cash and cash equivalents, we mainly transact with the People’s
Bank of China, state-owned banks or other reputable listed banks with high credit rating. There
has been no recent history of default in relation to those financial institutions.
For contract assets, trade and note receivables at amortized cost, loan receivables and
other financial assets at amortized cost (excluding constant return financial products), we
assess the credit quality of and sets credit limits on our customers by taking into account their
financial position, the availability of guarantee from third parties, their credit history and other
factors such as current market conditions. The credit history of the customers is regularly
monitored by us. In respect of customers with a poor credit history, we will use written
payment reminders, or shorten or cancel credit periods, to ensure our overall credit risk is
limited to a controllable extent.
In addition, for loans receivables, we determine the amount and type of collateral required
based on the credit risk assessment of the counterparty. The pledged collateral of the loan
mainly includes receivables and inventories. We monitor the market value of the collateral,
requests additional collateral in accordance with the relevant agreements, and monitors
FINANCIAL INFORMATION
– 301 –


--- page 313 ---
changes in the market value of the collateral in the context of the adequacy review of the
provision for impairment. As at 31 December 2021, 2022 and 2023 and 30 April 2024, we had
no other material collateral held for debtors or other credit enhancements.
(ii) Impairment of financial assets
We have eight types of assets that are subject to the expected credit loss model:
 Contract assets;
 Trade and note receivables at amortized cost;
 Trade and note receivables at fair value through other comprehensive income;
 Other receivables and other assets;
 Loan receivables;
 Other financial assets at amortized cost;
 Other financial assets at fair value through other comprehensive income (excluding
unlisted securities); and
 Cash and cash equivalents, term deposits and restricted cash.
While cash and cash equivalents, term deposits and restricted cash are also subject to the
impairment requirements of IFRS 9, the identified impairment loss was immaterial as at 31
December 2021, 2022 and 2023 and 30 April 2024.
Contract assets, trade and note receivables at amortized cost and trade and note
receivables at FVOCI
We apply the IFRS 9 simplified approach to measuring expected credit losses, or
ECL, which uses a lifetime expected loss allowance for all contract assets, trade and note
receivables at amortized cost and trade and note receivables at FVOCI.
To measure the ECL, contract assets, trade and note receivables at amortized cost
have been grouped based on shared credit risk characteristics and aging. The contract
assets relate to unbilled work in progress and have substantially the same risk
characteristics as the trade receivables for the same types of contracts. We have therefore
concluded that the expected loss rates for trade and note receivables at amortized cost are
a reasonable approximation of the loss rates for the contract assets. We also made
individual assessment on the recoverability of its contract assets and trade and note
receivables at amortized cost for certain customer based on historical settlement record.
FINANCIAL INFORMATION
– 302 –


--- page 314 ---
The historical loss rates are determined by reference to the credit rating analysis of
respective customers and external data or based on the payment profiles of sales over a
period before the respective period ends and the corresponding historical credit losses
experienced within these periods. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. We have identified the Total Retail Sales of Consumer
goods and the Gross Domestic Product or GDP , of the countries in which it sells its goods
and services to be the most relevant factors, and accordingly adjusts the historical loss
rates based on expected changes in these factors.
(i) Contract assets
For contract assets, we measure the loss provision based on the lifetime ECL
regardless of whether there exists a significant financing component.
We individually assessed the recoverability of the balance with certain customers as
significant increase in credit risk were identified as at 31 December 2021, 2022 and 2023
and 30 April 2024. An impairment loss of RMB3.1 million, RMB51.8 million and
RMB52.3 million were individually recognized for contract asset and gross carrying
amount were RMB11.4 million and RMB71.4 million and RMB68.7 million as at 31
December 2021 and 2023 and 30 April 2024, respectively. There was no significant
concentrations of credit risk as at 31 December 2021, 2022 and 2023 and 30 April 2024.
(ii) Trade receivables at amortized cost
We individually assessed the recoverability of the balance with certain customers as
at 31 December, 2021, 2022 and 2023 and 30 April 2024 as significant increase in credit
risk were identified.
(iii) Note receivables at amortized cost and trade and note receivables at FVOCI
As at 31 December 2021, 2022 and 2023 and 30 April 2024, we measured provision
for impairment based on the lifetime ECL and expected that there was no significant
credit risk associated with our bank acceptance notes and did not expect that there would
be any significant losses from non-performance by these banks.
FINANCIAL INFORMATION
– 303 –


--- page 315 ---
Other receivables and other assets and loan receivables
We consider the probability of default upon initial recognition of asset and whether
there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period. To assess whether there is a significant increase in credit risk in other
receivables and other assets and loan receivables, we compare the risk of a default
occurring on the assets at the end of each reporting period with the risk of default at the
date of initial recognition. We consider available, reasonable, supportive forward-looking
information. Especially, the following indicators are incorporated:
 external credit rating of the counterparty (as far as available);
 actual or expected significant adverse changes in business, financial or
economic conditions that are expected to cause a significant change to the
counterparty’s ability to meet its obligations;
 actual or expected significant changes in the operating results of the
counterparty; and
 significant expected changes in the performance and behavior of the
counterparty, including changes in the payment status of the counterparty and
changes in the operating results of the counterparty.
We account for our credit risk by appropriately providing for expected credit losses
on a timely basis. In calculating the expected credit loss rates, we consider historical loss
rates for each category of receivables and adjusts for forward looking macroeconomic
data.
Other financial assets at amortized cost and other financial assets at FVOCI (excluding
unlisted securities)
As at 31 December 2021, 2022 and 2023 and 30 April 2024, we considered that there
was no significant increase in credit risk of constant return financial products and
transferable certificate of deposit since initial recognition, and made provision for loss
based on 12-month ECL. we considered that there was no significant credit risk
associated with constant return financial products and transferable certificate of deposit
and did not expect that there would be any significant losses from non-performance by
these financial institutions.
FINANCIAL INFORMATION
– 304 –


--- page 316 ---
Net impairment losses on financial assets and contract assets recognized in profit or loss
During the Track Record Period, the provision/reversal of loss allowances were
recognised in profit or loss in “Net impairment losses on financial assets and contract
assets” in relation to the impaired financial assets and contract assets.
Financial assets and contract assets are written off where there is no reasonable
expectation of recovery. Indicators that there is no reasonable expectation of recovery
amongst others, include the failure of a debtor to engage in a repayment plan with us.
Liquidity Risk
We aim to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the
underlying businesses, we maintain flexibility in funding by maintaining adequate balances of
such.
DIVIDEND POLICY
Subject to PRC laws and regulations, including the PRC Company Law ( ʕശɛ͏΍ձ
) and the No. 3 Guideline for the Supervision of Listed Companies – Cash Dividend
Distribution of Listed Companies (2023 Revision) (ˏୋ3໮ Ñɪ̹ʮ̡ତ
ߎ2023ࠈࡌ)), and Articles 156 through 161 of the Articles of Association, we are
required to pay cumulative cash dividends of any three fiscal years that account for not less
than 30% of our average net profits for those three fiscal years which are available for
distribution, calculated in accordance with PRC GAAP . In 2022, our Shareholder Return Plan
for 2022-2024 was adopted. We have strictly implemented this plan, which specifies the
decision-making process for dividend standards, dividend ratios and profit distribution
policies, aiming to ensure a consistent profit distribution policy and to protect the legitimate
interests of minority shareholders.
Future profit distributions may be carried out in the form of cash dividends or stock
dividends or a combination of cash dividends and stock dividends. Any proposed distribution
of dividends is subject to the discretion of our Board and the approval at our Shareholders’
meetings. Our Board may recommend a distribution of dividends in the future after taking into
account our results of operations, financial condition, operating requirements, capital
requirements, shareholders’ interests and any other conditions that our Board may deem
relevant.
FINANCIAL INFORMATION
– 305 –


--- page 317 ---
During the Track Record Period, we declared cash dividends to our shareholders as
follows:
For the Y ear Ended 31 December
For the Four Months
Ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Final dividends in respect of the
previous year, declared or paid
during the year/period
(tax inclusive) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,066,392 11,677,509 17,188,858 – 20,780,278
Dividends of lapsed restricted
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,663) (25,484) (44,594) (7,242) (3,926)
Dividends provided during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,052,729 11,652,025 17,144,264 (7,242) 20,776,352
DISTRIBUTABLE RESERVES
As at 30 April 2024, we had approximately RMB128.9 billion of retained earnings
available for distribution to our shareholders.
LISTING EXPENSES
Assuming the Offer Size Adjustment Option and the Over-allotment Option are not
exercised, an Offer Price of HK$53.40 per Offer Share (which is the mid-point of the Offer
Price range) and the full payment of the discretionary incentive fee, if any, we expect to incur
approximately RMB280.8 million (equivalent to HK$307.8 million) of listing expenses
(including (i) underwriting-related expenses, including but not limited to commissions, fees,
SFC transaction levy, AFRC transaction levy and Hong Kong Stock Exchange trading fee,
amounting to approximately RMB193.8 million, and (ii) fees and expenses of legal advisers
and accountants amounted to approximately RMB67.3 million and other fees and expenses
relating to the Global Offering, including but not limited to the listing application fees,
amounting to approximately RMB19.7 million), accounting for approximately 1.2% of the
gross proceeds from the Global Offering. Approximately RMB12.6 million of our listing
expenses is expected to be charged to our consolidated statements of profit or loss and other
comprehensive income and approximately RMB268.2 million is expected to be deducted from
equity upon Listing. During the Track Record Period, we incurred listing expenses of RMB38.3
million, of which (i) RMB4.3 million was charged to the consolidated statements of profit or
loss, and (ii) RMB34.0 million was directly attributable to the offering and listing of our Offer
Shares and will be deducted from equity upon the Listing. The estimate of listing expenses
above are the latest practicable estimate for reference only, and the actual amount may differ
from this estimate.
FINANCIAL INFORMATION
– 306 –


--- page 318 ---
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
which has been prepared in accordance with paragraph 4.29 of the Listing Rules for the
purpose of illustrating the effect of the Global Offering as if it had taken place on 30 April 2024
and based on the audited consolidated net tangible assets of our Group attributable to the
owners of our Company as at 30 April 2024 as derived from the Accountant’s Report, the text
of which is set out in Appendix I to this document, and adjusted as described below.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purposes only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets of our Group had the Global Offering been
completed as at 30 April 2024 or any future dates.
Audited
consolidated net
tangible assets
of our Group
attributable to
the owners of
our Company as
at 30 April 2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
of the Group
attributable to
the owners of
our Company as
at 30 April 2024
Unaudited pro forma
adjusted consolidated
net tangible assets
per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(note 1) (note 2) (note 3) (note 4)
Based on an Offer
Price of HK$
52.00 per
H Share /H1118/H1118/H1118/H1118/H1118119,258,506 23,073,289 142,331,795 19.01 20.84
Based on an Offer
Price of HK$
54.80 per
H Share /H1118/H1118/H1118/H1118/H1118/H1118119,258,506 24,320,146 143,578,652 19.18 21.03
Notes:
(1) The audited consolidated net tangible assets of our Group attributable to the owners of our Company
as at 30 April 2024 is derived from the Accountant’s Report as set out in Appendix I to this document,
which is based on the audited consolidated net assets of our Group attributable to the owners of our
Company as at 30 April 2024 of approximately RMB156,962,038,000, with an adjustment for the
intangible assets attributable to the owners of our Company as at 30 April 2024 of approximately
RMB37,703,532,000.
(2) The estimated net proceeds from the Global Offering are based on 492,135,100 Offer Shares and the
indicative Offer Price of HK$52.00 and HK$54.80 per H Share respectively, after deduction of the
underwriting fees and other related listing expenses (excluding listing expenses of RMB4,339,000
which have been accounted for in the consolidated statements of profit or loss prior to 30 April 2024)
and takes no account of any Shares which may be allotted and issued by the Company pursuant to the
exercise of the Offer Size Adjustment Option and/or the Over-allotment Option, any Shares that may be
issued by the Company pursuant to the exercise of options or the vesting of restricted shares or other
awards that have been or may be granted from time to time under the Share Schemes or any Shares
which may be issued or repurchased by the Company after the Latest Practicable Date.
FINANCIAL INFORMATION
– 307 –


--- page 319 ---
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the
adjustments referred to in the preceding paragraph and on the basis that 7,485,265,951 Shares were in
issue, assuming that the Global Offering had been completed on 30 April 2024 but does not take into
account of any Shares which may be allotted and issued by our Company pursuant to the exercise of the
Offer Size Adjustment Option and/or the Over-allotment Option, any Shares that may be issued by the
Company pursuant to the exercise of options or the vesting of restricted shares or other awards that have
been or may be granted from time to time under the Share Schemes or any Shares which may be issued
or repurchased by the Company after the Latest Practicable Date.
(4) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets per
Share, the translation of Renminbi amounts into Hong Kong dollars was at the rate of RMB1.00 to
HK$1.0962. No representation is made that Renminbi amounts have been, could have been or may be
converted to Hong Kong dollars, or vice versa, at that date.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of our Group entered into subsequent to 30 April 2024.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
No Material Adverse Change
Our Directors confirm that, up to the date of this document, there has been no material
adverse change in our business, financial condition and results of operations since 30 April
2024, which is the end date of the years/period reported on in the Accountant’s Report in
Appendix I to this document, and there is no event since 30 April 2024 which would materially
affect the information as set out in the Accountant’s Report in Appendix I to this document.
Summary of Unaudited Financial Information for the Six Months Ended 30 June 2024
We are a public company listed on the Shenzhen Stock Exchange and we have disclosed
unaudited key financial information prepared under PRC GAAP as at and for the six months
ended 30 June 2024 pursuant to the relevant PRC securities laws and regulations. We have
included our unaudited interim condensed consolidated financial information prepared in
accordance with IAS 34, Interim Financial Reporting as at and for the six months ended 30
June 2024 in Appendix IA to this document. Our unaudited interim condensed consolidated
financial information as at and for the six months ended 30 June 2024 has been reviewed by
our reporting accountant in accordance with International Standard on Review Engagements
2410, Review of Interim Financial Information Performed by the Independent Auditor of the
Entity . The members of the Board, including those of the Audit Committee, have received and
reviewed the unaudited interim condensed consolidated financial information of the Group for
the six months ended 30 June 2024, as set out in Appendix IA to this document. We have
complied with the code provisions in Part 2 of Appendix C1 to the Listing Rules. We are not
in breach of our Articles of Association or laws and regulations of the PRC or other regulatory
requirements regarding our obligation to distribute interim reports in accordance with the
requirements under Rule 13.48(1) of the Listing Rules. Pursuant to the Note to Rule 13.48(1)
of the Listing Rules, we do not intend to distribute a separate interim report in respect of the
six months ended 30 June 2024 under the aforementioned Rule. See “Appendix IA —
Unaudited Interim Condensed Consolidated Financial Information” for details. The following
is a discussion of fluctuations of selected line items.
FINANCIAL INFORMATION
– 308 –


--- page 320 ---
Summary of Consolidated Statements of Profit or Loss
The following table sets forth our consolidated statements of profit or loss with line items
in absolute amounts and as percentages of our revenue for the periods indicated:
For the Six Months Ended 30 June
2023 2024
RMB’000
%o f
revenue RMB’000
%o f
revenue
(unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118197,795,614 100.0 218,121,839 100.0
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(148,352,436) (75.0) (159,630,449) (73.2)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,443,178 25.0 58,491,390 26.8
Selling and marketing expenses /H1118/H1118/H1118(17,133,161) (8.7) (21,455,813) (9.8)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,904,217) (3.0) (6,964,685) (3.2)
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,613,944) (3.3) (7,662,534) (3.5)
Net impairment losses on financial
assets and contract assets /H1118/H1118/H1118/H1118/H1118/H1118(219,212) (0.1) (35,208) (0.1)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,652,611 1.8 4,426,954 2.0
Other gains/(losses), net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118160,218 0.1 (1,611,408) (0.7)
Operating profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,385,473 11.8 25,188,696 11.5
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118471,856 0.2 697,281 0.3
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,097,825) (1.0) (866,073) (0.4)
Finance costs, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,625,969) (0.8) (168,792) (0.1)
Share of profit of associates and
joint ventures, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118348,545 0.2 431,939 0.3
Profit before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H111822,108,049 11.2 25,451,843 11.7
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,578,648) (1.8) (4,310,369) (2.0)
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,529,401 9.4 21,141,474 9.7
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,232,839 9.3 20,804,395 9.5
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118296,562 0.1 337,079 0.2
Revenue
Our revenue increased by 10.3% from RMB197.8 billion for the six months ended 30 June
2023 to RMB218.1 billion for the six months ended 30 June 2024. Specifically, our revenue
from Smart Home Solutions increased by 11.4% from RMB132.4 billion for the six months
ended 30 June 2023 to RMB147.6 billion for the six months ended 30 June 2024, which was
due to increased sales in all main product categories under Smart Home Solutions driven by
the growing consumer demand for our home appliance products, primarily as a result of
FINANCIAL INFORMATION
– 309 –


--- page 321 ---
enhanced product competitiveness from our continued innovation and upgrades. Our revenue
from Commercial & Industrial Solutions increased by 6.3% from RMB50.3 billion for the six
months ended 30 June 2023 to RMB53.4 billion for the six months ended 30 June 2024,
primarily driven by the growth of our Energy Solutions & Industrial Technology business. Our
revenue from others increased from RMB15.1 billion for the six months ended 30 June 2023
to RMB17.1 billion for the six months ended 30 June 2024.
Cost of revenue
Our cost of revenue increased by 7.6% from RMB148.4 billion for the six months ended
30 June 2023 to RMB159.6 billion for the six months ended 30 June 2024, primarily due to our
increased raw materials and consumables used from RMB120.8 billion for the six months
ended 30 June 2023 to RMB130.6 billion for the six months ended 30 June 2024, which was
generally in line with our growth in revenue.
Gross profit
Our gross profit increased by 18.3% from RMB49.4 billion for the six months ended 30
June 2023 to RMB58.5 billion for the six months ended 30 June 2024, and our overall gross
margin increased from 25.0% for the six months ended 30 June 2023 to 26.8% for the six
months ended 30 June 2024. Specifically, our gross profit for Smart Home Solutions increased
by 20.1% from RMB36.7 billion for the six months ended 30 June 2023 to RMB44.1 billion
for the six months ended 30 June 2024, with gross margin increasing from 27.7% for the six
months ended 30 June 2023 to 29.9% for the six months ended 30 June 2024. This increase in
the gross margin of Smart Home Solutions was primarily due to the continued improvement in
our overall product mix and our active and efficient management of all costs, including raw
material costs. Our gross profit for Commercial & Industrial Solutions increased by 12.6%
from RMB11.1 billion for the six months ended 30 June 2023 to RMB12.5 billion for the six
months ended 30 June 2024, with gross margin increasing from 22.1% for the six months ended
30 June 2023 to 23.4% for the six months ended 30 June 2024. The increase in the gross margin
of Commercial & Industrial Solutions was primarily due to continued product upgrades and our
active and efficient management of all costs, including raw materials.
Selling and marketing expenses
Our selling and marketing expenses increased by 25.2% from RMB17.1 billion for the six
months ended 30 June 2023 to RMB21.5 billion for the six months ended 30 June 2024,
primarily due to (i) an increase in advertising and promotion expenses from RMB8.2 billion for
the six months ended 30 June 2023 to RMB11.2 billion for the six months ended 30 June 2024
as we increased marketing efforts to promote our brand name and deepen our reach to
consumers as we continued to promote the “direct to users” strategy, and (ii) an increase in
employee benefit expenses from RMB2.9 billion for the six months ended 30 June 2023 to
RMB3.6 billion for the six months ended 30 June 2024, driven by the expansion of our sales
team and our business growth. Our selling and marketing expenses as a percentage of revenue
was 8.7% and 9.8% for the six months ended 30 June 2023 and 2024, respectively.
FINANCIAL INFORMATION
– 310 –


--- page 322 ---
Profit for the period
As a result of the foregoing, our profit for the period increased by 14.1% from RMB18.5
billion for the six months ended 30 June 2023 to RMB21.1 billion for the six months ended 30
June 2024.
Summary of Consolidated Statements of Financial Position
The following table sets forth summary information from our consolidated statements of
financial position as at the dates indicated:
As at
31 December
As at
30 June
2023 2024
RMB’000 RMB’000
(unaudited)
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118204,715,035 204,842,425
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118281,320,980 301,787,598
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118486,036,015 506,630,023
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,492,344 53,980,507
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118251,245,721 276,365,642
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,075,259 25,421,956
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118311,738,065 330,346,149
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118174,297,950 176,283,874
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,025,769 6,980,152
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,871,738) (6,497,464)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,440,770 28,162,413
Retained earnings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118136,282,362 136,151,033
Equity attributable to owners of the Company /H1118/H1118/H1118/H1118162,877,163 164,796,134
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,420,787 11,487,740
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118174,297,950 176,283,874
Our net current assets decreased from RMB30.1 billion as at 31 December 2023 to
RMB25.4 billion as at 30 June 2024, mainly due to a net increase in current liabilities primarily
as a result of an increase in trade and note payables primarily driven by our business growth
and an increase in other payables and accruals mainly due to our enhanced promotion efforts
that resulted in an increase in sales rebate, partially offset by a net increase in current assets
primarily as a result of an increase in term deposits and restricted cash primarily by an increase
in profit (see our consolidated statements of changes in equity included in Appendix IA to this
document) and an increase in trade and note receivables at amortized cost primarily as a result
of an increase in sales.
FINANCIAL INFORMATION
–3 1 1–


--- page 323 ---
Our net assets increased from RMB174.3 billion as at 31 December 2023 to RMB176.3
billion as at 30 June 2024, mainly due to the profit of RMB21.1 billion for the six months
ended 30 June 2024, partially offset by the dividends of RMB20.8 billion during the same
period.
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our consolidated statements of cash flows for
the periods indicated:
For the Six Months Ended 30 June
2023 2024
RMB’000 RMB’000
(unaudited)
Net cash generated from operating activities /H1118/H1118/H1118/H1118/H111829,784,674 33,488,170
Net cash used in investing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(27,046,688) (20,635,554)
Net cash used in financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,437,928) (20,977,156)
Net decrease in cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,699,942) (8,124,540)
Cash and cash equivalents at beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,131,968 59,887,260
Exchange gains/(losses) on cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118128,769 (262,006)
Cash and cash equivalents at end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,560,795 51,500,714
We recorded net cash generated from operating activities of RMB33.5 billion for the six
months ended 30 June 2024. The difference between net cash generated from operating
activities and the profit before income tax of RMB25.5 billion was the result of (i) adjustments,
which primarily consist of depreciation and amortization of non-current assets of RMB3.8
billion, and (ii) changes in working capital, which primarily consist of an increase in trade and
note payables of RMB14.4 billion, an increase in other payables and accruals of RMB13.2
billion and a decrease in inventories of RMB6.7 billion, partially offset by an increase in trade
and note receivables of RMB19.8 billion and a decrease in contract liabilities of RMB6.9
billion.
DISCLOSURE REQUIRED UNDER THE HONG KONG LISTING RULES
Our Directors have confirmed that as at the Latest Practicable Date, there are no
circumstances that would give rise to a disclosure requirement under Rule 13.13 to Rule 13.19
of the Hong Kong Listing Rules.
FINANCIAL INFORMATION
– 312 –


--- page 324 ---
OUR LARGEST GROUP OF SHAREHOLDERS
As of the Latest Practicable Date, our Company was held as to approximately 31.0% by
Midea Holding, which was in turn held as to 94.5% by Mr. He, the founder of our Company.
Separately, Mr. He also held approximately 0.5% direct interest in our Company, and together
with the Shares held by Midea Holding, Mr. He was interested in approximately 31.5% in our
Company.
Immediately following the completion of the Global Offering and assuming that the Offer
Size Adjustment Option is not exercised and no new Shares are issued under the Over-
allotment Option and our Share Schemes, and no other changes are made to the issued share
capital of our Company between the Latest Practicable Date and Listing, Midea Holding will
hold approximately 29.0% of the issued share capital of our Company and Mr. He will, directly
and indirectly, hold approximately 29.4% of the issued share capital of our Company.
Accordingly, Midea Holding and Mr. He will be our Largest Group of Shareholders
immediately upon the Listing.
CLEAR BUSINESS DELINEATION
Our Business
We are a leading technology-driven global provider of Smart Home Solutions and
Commercial & Industrial Solutions. Our product and service offerings cover a wide range of
home appliances for consumers, and solutions for enterprise customers spanning across Energy
Solutions & Industrial Technology, Intelligent Building Technology, Robotics & Automation
and Other Businesses. As a Fortune Global 500 company for nine consecutive years, we
operate a global business that reaches over 200 countries and regions, with 33 R&D centers,
43 major manufacturing bases and over 190,000 employees across different continents.
The Business of our Largest Group of Shareholders
Midea Holding is an investment holding company incorporated under the laws of the PRC
on 5 August 2002. Apart from the business of our Company, the Largest Group of Shareholders
also control companies which engage in, amongst others, investment management, property
management, hotel management, hospital management, healthcare management services and
arts and cultural business.
Midea Holding and Mr. He do not currently have any interest in a business (save for the
business of our Group) that competes or is likely to compete, whether directly or indirectly,
with our Group’s business, which would otherwise require disclosure under Rule 8.10 of the
Listing Rules.
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 313 –


--- page 325 ---
NON-COMPETE UNDERTAKINGS
Midea Holding and Mr. He have executed certain non-competition undertakings on 28
March 2013 that, in order to avoid possible competition within the industry between Midea
Holding and its controlled enterprises as well as Mr. He, his immediate family and his
controlled companies (the “ Relevant Parties ”) and our Company, Midea Holding and Mr. He
have undertaken that:
(a) none of the Relevant Parties is or will be engaged in the same or similar business
as the existing main business of our Company and its controlled companies. They
are not or will not be engaged or participate in such business that competes with the
existing main business of our Company and its controlled companies by controlling
other economic entities, institutions or economic organisations;
(b) if our Company and its controlled entities expand their scope of business from the
existing business to business where the Relevant Parties have already commenced
production and operations, for so long as Midea Holding and Mr. He remain the
controlling shareholder and the actual controller of our Company, they agree to
resolve the potential competition within a reasonable period;
(c) if our Company and its controlled companies expand their scope of business from
the existing business to business where the Relevant Parties have not commenced
production or operation, for so long as Midea Holding and Mr. He remain the
controlling shareholder and the actual controller of our Company, they will not
engage in such new business which competes with the business of our Company and
its controlled entities;
(d) for so long as Midea Holding and Mr. He remain the controlling shareholder and the
actual controller of our Company pursuant to the effective PRC laws, regulation and
regulatory documents, Midea Holding and Mr. He will not amend or terminate this
undertaking; and
(e) Midea Holding and Mr. He shall faithfully fulfil the undertaking and assume the
corresponding legal responsibilities. In the event that they fail to fulfil their
obligations and responsibilities conferred by the undertaking, they will bear the
corresponding legal consequences pursuant to the relevant laws, rules, regulations
and regulatory documents.
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 314 –


--- page 326 ---
INDEPENDENCE FROM OUR LARGEST GROUP OF SHAREHOLDERS
Management independence
Our business is managed and conducted by our Board and senior management. Upon
listing, our Board will consist of 10 Directors, comprising five executive Directors, one
non-executive Director and four independent non-executive Directors, and we also have three
Supervisors and 14 senior management members (of which five are executive Directors). Each
of our Directors, Supervisors and senior management possesses relevant management,
financial or industry-related experience to contribute to the management of our business. For
further information on the qualifications and experience of our Directors, Supervisors and
senior management, see “Directors, Supervisors and Senior Management” in this document.
Save for Mr. Zhao Jun (our non-executive Director) who is also the executive president
of Midea Holding and a non-executive director of Midea Real Estate and Ms. Ren Lingyan (our
Supervisor) who is also the finance director of Midea Holding, none of our Directors,
Supervisors and senior management has any executive position in Midea Holding or its close
associates. Our Company and Midea Holding and its close associates are managed by separate
management teams. Hence, we have sufficient management team members, who are
independent from Midea Holding and/or its close associates and have adequate relevant
experience to ensure the normal operation of the day-to-day business and management of our
Group.
In addition, our Directors consider that our Board, Supervisors and senior management of
our Company are capable of functioning independently of our Largest Group of Shareholders
for the following reasons:
(a) save for Mr. Zhao Jun, a non-executive Director, and Ms. Ren Lingyan, a
Supervisor, all of our Directors, Supervisors and senior management do not hold any
position in Midea Holding or its close associates, and are capable to contribute
sufficient time and efforts to manage the daily operations of our Group. In addition,
the management personnel of our Company have clear reporting lines, and
ultimately the management team reports to the executive Directors, who are
responsible for reporting to our Board. Our Board supervises and monitors the
performance of our Company’s management team generally through the regular
reports made by our executive Directors to our Board, regular meetings of our Board
and ad hoc meetings of our Board to consider, deliberate and approve material
matters which exceed the delegated authorities of management team, as well as the
regular updates of operational and financial data and information that are provided
to our Directors;
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 315 –


--- page 327 ---
(b) we have appointed four independent non-executive Directors, comprising more than
one-third of the total members of the Board, who have sufficient knowledge,
experience and competence, so that there is a balanced composition of executive,
non-executive Directors and independent non-executive Directors to ensure the
independence of the Board in making decisions affecting our Company and to
promote the interests of our Company and the Shareholders as a whole. In particular,
the four independent non-executive Directors possess the relevant qualifications and
industry experiences to safeguard the interests of the minority Shareholders of our
Company by, among other things, reviewing and opining on connected transactions
of our Company, including those between our Company and our Largest Group of
Shareholders and/or their close associates. Please refer to the section headed
“Directors, Supervisors and Senior Management” for details of the biographies of
the independent non-executive Directors;
(c) each Director is aware of his/her fiduciary duties as a director which require, among
others, that he/her must act for the benefit and in the interest of our Company and
not allow any conflict between their duties as a Director and his/her personal
interests;
(d) our Company is an A-share listed company and has established internal control
mechanisms to identify connected transactions to ensure that our Shareholders or
Directors with conflicting interests in a proposed transaction will abstain from
voting on the relevant resolutions. In the event that there is a potential conflict of
interest arising out of any transaction to be entered into between our Company and
our Directors or their respective close associates, the interested Director is obliged
to declare and fully disclose such potential conflict of interest and shall abstain from
voting at the relevant Board meetings of our Company in respect of such
transactions and shall not be counted;
(e) each of Midea Holding and Mr. He has entered into an undertaking in favour of our
Company to maintain the independence of our Company, which particularly
enshrines the independence of personnel of our Company; and
(f) we have adopted other corporate governance measures to manage potential conflicts
of interest, if any, between our Group and our Largest Group of Shareholders, which
would enhance our independent management, as detailed in the sub-section headed
“— Corporate governance measures” below.
Based on the above, our Directors believe that our business is managed independently
from our Largest Group of Shareholders.
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 316 –


--- page 328 ---
Operational independence
Our Company will continue to operate independently form our Largest Group of
Shareholders after the Listing. Our Company makes and implements operational decisions
independently of our Largest Group of Shareholders and has our own organisational structure
with independent departments, each with specific areas of responsibility. Furthermore, we have
independent production capabilities and technology relating to our Group’s business and do not
rely on the operations of our Largest Group of Shareholders. Our Company also maintains a
set of comprehensive internal control measures to facilitate the effective operation of our
business. Our Company has independent channels to access our customers and is not dependent
on the Largest Group of Shareholders with respect to suppliers for our business operations. Our
Company has its own employees to operate the business and can independently manage its
human resources. We have obtained relevant licences, approvals and permits from relevant
regulatory authorities which are material to our operations in mainland China.
We entered into certain continuing connected transactions with our connected persons.
See section headed “Connected Transactions” for more details. Considering that the amounts
of the relevant transactions during the Track Record Period are not significant to our Group,
our Directors believe that such transactions will not have any impact on the operational
independence of our Group.
Based on the above, our Directors believe that our business is operationally independent
of our Largest Group of Shareholders.
Financial independence
We have adopted our own independent internal control and financial management systems
and we also have an independent accounting and finance department responsible for
discharging relevant financial and treasury function with relevant finance personnel. We make
financial decisions and determine our use of funds according to our own business needs. We
have adequate internal resources and a strong credit profile to support our daily operation.
Moreover, our Board has established the Audit Committee to provide independent oversight to,
among others, our accounting and financial reporting processes.
We open and manage our bank accounts independently, and have not shared any bank
account with Midea Holding and Mr. He. We are also capable of obtaining financing from third
parties, if necessary, without reliance on Largest Group of Shareholders. We do not expect to
rely on our Largest Group of Shareholders or any of their close associates for financing after
the Listing as we expect that our working capital will be primarily funded by cash generated
from our business operation, and to a lesser extent, external indebtedness.
No loan or guarantee has been provided by, or granted to, Midea Holding, Mr. He or their
respective associates during the Track Record Period and as of the Latest Practicable Date.
In light of the above, our Directors are of the view that we are able to maintain financial
independence from our Largest Group of Shareholders.
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 317 –


--- page 329 ---
Independence undertaking
As part of its commitment to uphold the management independence, financial
independence and operational independence of our Group, Midea Holding and Mr. He have
executed certain independence undertaking on 28 March 2013, pursuant to which Midea
Holding and Mr. He have undertaken that:
(a) Midea Holding, Mr. He and their controlled enterprises will remain independent from our
Group in respect of personnel, finance, assets, business and institutions, in accordance
with relevant laws, regulations and regulatory documents; and
(b) they will faithfully fulfil the undertaking and assume the corresponding legal liability. If
they fail to fulfil their obligations and responsibilities conferred by the undertaking, they
will bear the corresponding legal liabilities according to the relevant laws, regulations and
regulatory documents.
CORPORATE GOVERNANCE MEASURES
Our Directors recognise the importance of good corporate governance in protecting our
Shareholders’ interests. Our Company will comply with the provisions of the Corporate
Governance Code and Corporate Governance Report set out in Appendix C1 to the Listing
Rules, which set out principles of good corporate governance in relation to, among other
matters, directors, the chairperson and chief executive officer, board composition, the
appointment, re-election and removal of directors, their responsibilities and remuneration and
communications with Shareholders. We have adopted/will adopt the following corporate
governance measures to resolve actual or potential conflict of interests between our Group and
the Largest Group of Shareholders:
(a) under the Articles, where a Shareholders’ meeting is held to consider proposed
transactions in which Midea Holding and/or Mr. He are, under the Listing Rules,
required to abstain, Midea Holding and/or Mr. He shall abstain from voting and their
votes shall not be counted in respect of such transactions;
(b) our Company has established internal control mechanisms to identify connected
transactions. Upon Listing, if our Company enters into connected transactions with
Midea Holding, Mr. He or any of their respective associates, our Company will
comply with the applicable requirements under the Listing Rules;
(c) our Board consists of a balanced composition of executive, non-executive and
independent non-executive Directors, with not less than one-third of independent
non-executive Directors to ensure that our Board is able to effectively exercise
independent judgment in its decision-making process and provide independent
advice to our Shareholders. Our independent non-executive Directors, details of
whom are set out in the section headed “Directors, Supervisors and Senior
Management”, individually and collectively possess the requisite knowledge and
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 318 –


--- page 330 ---
experience to perform their roles. They will review whether there is any conflict of
interests between our Group and our Largest Group of Shareholders and provide
impartial and professional advice to protect the interest of our minority
Shareholders;
(d) our independent non-executive Directors will continuously review the compliance
of the non-competition and independence undertakings provided by the Largest
Group of Shareholders;
(e) in the event that our independent non-executive Directors are requested to review
any conflict of interests circumstances between our Group, on one hand, and Midea
Holding, Mr. He and/or our Directors, on the other hand, Midea Holding, Mr. He
and/or our Directors shall provide our independent non-executive Directors with all
necessary information for consideration. Where our independent non-executive
Directors reasonably request the advice of independent professionals, such as
financial advisers, to help them make the judgement, the appointment of such
independent professionals will be made at the expense of our Company; and
(f) we have appointed Huatai Financial Holdings (Hong Kong) Limited as our
compliance adviser to provide advice and guidance to us in respect of compliance
with the applicable laws and regulations, as well as the Listing Rules, including
various requirements relating to corporate governance.
RELATIONSHIP WITH OUR LARGEST GROUP OF SHAREHOLDERS
– 319 –


--- page 331 ---
Upon Listing, certain transactions between us and our connected persons will constitute
continuing connected transactions under Chapter 14A of the Listing Rules.
OUR CONNECTED PERSONS
We have entered into certain transactions in the ordinary and normal course of our
business with the following connected persons, which will constitute continuing connected
transactions upon the Listing:
Names of our connected persons Connected Relationship
Midea Real Estate (together with its
subsidiaries, the “ Midea Real
Estate Group ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
As of the Latest Practicable Date, Midea Real Estate
is indirectly owned as to 79.04% by Ms. Lu Deyan.
Ms. Lu Deyan and Mr. He, our founder and a
member of our Largest Group of Shareholders, are
parties acting-in-concert in respect of their
interests in Midea Real Estate pursuant to a Deed
of Acting-in-concert entered into between Ms. Lu
Deyan and Mr. He dated 14 May 2018. As such,
Mr. He is deemed to be interested in Ms. Lu
Deyan’s interest in Midea Real Estate.
Furthermore, Ms. Lu Deyan is the spouse of Mr. He
Jianfeng, our non-executive Director in the last 12
months before the Listing. Accordingly, Midea
Real Estate is an associate of both Mr. He and Mr.
He Jianfeng and constitutes a connected person of
our Company under the Listing Rules.
Midea Construction (Hong Kong)
Limited (ุ(ಥ)ʮ̡)
(“Midea Construction (HK) ”) /H1118/H1118/H1118
Midea Construction (HK) is an indirect wholly-
owned subsidiary of Midea Real Estate. As Midea
Real Estate is an associate of Mr. He and Mr. He
Jianfeng, Midea Construction (HK) constitutes a
connected person of our Company under the
Listing Rules.
Carrier Global Corporation
(“Carrier Global ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Carrier Global, through its subsidiary Toshiba Carrier
Corporation, holds 20.0% of the issued share
capital of GD Midea Air-Conditioning Equipment
Co., Ltd. (ʮ̡), which is a
significant subsidiary of the Company. Carrier
Global is therefore a connected person at the
subsidiary level of the Company.
CONNECTED TRANSACTIONS
– 320 –


--- page 332 ---
SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS
Transaction Counterparty
Category
of
continuing
connected
transaction
Applicable
Listing Rule
Waiver
sought
Proposed annual cap for
the years ending
December 31,
2024 2025 2026
(RMB in billion)
Trademark licensing
agreement with Midea
Construction (HK) and
Midea Real Estate
Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Midea Real Estate
and Midea
Construction
(HK)
Fully-exempt Rule 14A.76(1) N/A N/A N/A N/A
Provision of Technology
Products to Midea Real
Estate Group /H1118/H1118/H1118/H1118/H1118/H1118
Midea Real Estate Fully-exempt Rule 14A.76(1) N/A N/A N/A N/A
Supply of products
framework agreement
with Carrier Global /H1118/H1118
Carrier Global Partially-
exempt
Rule 14A.35
Rule 14A.101
Announcement 5.0 5.6 6.6
FULLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
1. Trademark licensing agreement
Our Company has entered into a trademark licensing agreement with Midea Construction
(HK) on 18 January 2018 and a supplemental trademark licensing agreement with Midea Real
Estate and Midea Construction (HK) in March 2022 (collectively, the “ Trademark Licensing
Agreements ”), pursuant to which we agreed to grant Midea Construction (HK) and other
members of Midea Real Estate Group the right to use certain trademarks in mainland China and
Hong Kong, at a total consideration of HK$10 million annually payable in RMB (collectively,
the “ Trademark Licenses ”) on a non-exclusive basis for an initial term of 10 years
commencing from 1 January 2018. The Trademark Licensing Agreements will be renewed
automatically every 10 years from the initial expiry date to the extent permissible under the
Listing Rules and relevant laws and regulations.
The licensing fees have been arrived at after arm’s length negotiations between our Group
and Midea Real Estate and Midea Construction (HK) with reference to, among other things, the
brand value and the intended use of the trademarks.
Over the years, we have developed the “Midea” (ٙߕbrand into a well-known and
famous brand in the household appliances and electronic products market in the PRC and
globally. Midea Real Estate Group is a large renowned national property developer in the PRC
and listed on the Hong Kong Stock Exchange (stock code: 3990). By licensing the trademark
to Midea Real Estate Group, we are able to further leverage on the national footprint of Midea
Real Estate Group to reach out to additional potential consumers. Our Directors are of the view
CONNECTED TRANSACTIONS
– 321 –


--- page 333 ---
that the Trademark Licensing Agreements have been arrived at after arm’s length negotiations
and that the terms are fair and reasonable, on normal commercial terms or better and are in the
interest of our Company and Shareholders as a whole. The Joint Sponsors are of the view that
it is normal business practice for the similar Trademark Licensing Agreements to be of a term
greater than three years.
As the applicable percentage ratios calculated under Chapter 14A of the Listing Rules will
be less than 0.1%, the Trademark Licensing Agreements will be fully exempt from all of the
reporting, annual review, announcement, circular and independent shareholders’ approval
requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.76(1) of the Listing
Rules.
2. Provision of technology products
On 28 December 2023, our Company, for itself and on behalf of its subsidiaries, entered
into a framework agreement (“ Technology Products Framework Sales Agreement ”) with
Midea Real Estate, pursuant to which we will supply to Midea Real Estate Group household
appliances, including kitchen appliances, water heating machines, water purification
equipment, washing machines and air conditioning machines, smart home products and
elevator products, as well as other related ancillary products (collectively, “ Technology
Products ”). Pursuant to the Technology Products Framework Sales Agreement, we will supply
Technology Products to Midea Real Estate Group according to the separate agreements in
respect of each of the transactions to be entered into by the relevant members of our Group with
the relevant members of Midea Real Estate Group from time to time. The pricing of the
Technology Products is to be determined by our Group and Midea Real Estate Group on normal
commercial terms, negotiated on arm’s length basis, subject to applicable laws and regulations
and with reference to, among others, the costs, the quantities, quality and reliability of the
Technology Products, the prevailing market conditions and the principle of fairness. The initial
term of the Technology Products Framework Sales Agreement will commence on 1 January
2024 and end on 31 December 2026 (both days inclusive), subject to renewal upon the mutual
consent of both parties and compliance with the requirements of the Listing Rules and
applicable laws and regulations.
As the applicable percentage ratios calculated under Chapter 14A of the Listing Rules will
be less than 0.1%, the Technology Products Framework Sales Agreement will be fully exempt
from all of the reporting, annual review, announcement, circular and independent shareholders’
approval requirements under Chapter 14A of the Listing Rules pursuant to Rule 14A.76(1) of
the Listing Rules.
CONNECTED TRANSACTIONS
– 322 –


--- page 334 ---
PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTION
3. Supply of Products Framework Agreement
On September 3, 2024, our Company, for itself and on behalf of its subsidiaries, entered
into a framework agreement (the “ Supply of Products Framework Agreement ”) with Carrier
Global, for itself and on behalf of its associates, pursuant to which, our Group would supply
to Carrier Global and its associates electrical appliances (including but not limited to: (i)
HV AC products and dehumidifiers; (ii) multi-split outdoor air conditioner units, water heaters
and water engines; and (iii) air conditioner compressors and motors), parts and components,
and ancillary products and services (collectively, the “ Products ”) as they may require from
time to time.
The initial term of the Supply of Products Framework Agreement will commence on the
Listing Date and end on December 31, 2026. Both parties or their respective subsidiaries or
associates will enter into separate underlying agreements which will set out the specific terms
and conditions for the supply of Products according to the principles provided in the Supply
of Products Framework Agreement.
Reasons for the transaction
Carrier Global, a corporation organized and existing under the laws of the State of
Delaware, is a global leader in intelligent climate and energy solutions with a focus on
providing differentiated, digitally-enabled lifecycle solutions to its customers with its shares
listed on the New Y ork Stock Exchange under the symbol “CARR”.
Our Group has a long-term and stable business relationship with Carrier Global. Our
Group is familiar with Carrier Global’s business needs, quality standards and operational
requirements in respect of the Products. The supply of Products to Carrier Global and its
associates helps to increase the sale scale and the sales revenue of our Group.
Consideration and pricing policies
The fees to be charged by our Group for the Products to be supplied to Carrier Global and
its associates pursuant to the Supply of Products Framework Agreement shall be determined by
commercial negotiation between the parties according to the principles of fairness and
reasonableness, taking into account various factors including but not limited to the type of
products, transaction volume and the prices for the supply of products of similar nature, type
and quantity by our Group to other Independent Third Parties in the market.
CONNECTED TRANSACTIONS
– 323 –


--- page 335 ---
Historical amounts
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2024, the historical transaction amounts with respect to the supply of Products by our
Group to Carrier Global and its associates were approximately RMB2,592.8 million,
RMB2,638.3 million, RMB3,721.9 million and RMB1,606.8 million, respectively.
Annual caps
The following table sets forth the proposed annual caps for the annual transaction
amounts to be paid to us by Carrier Global and its associates under the Supply of Products
Framework Agreement:
For the years ending December 31,
2024 2025 2026
(RMB in billion)
Total fees to be paid to us by Carrier
Global and its associates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.0 5.6 6.6
The proposed annual caps are determined based on:
(i) the historical amounts of the transactions between our Group and Carrier Global and
its associates during the Track Record Period in respect of our supply of the
Products;
(ii) the existing contract value and the projected level of supply of the Products by our
Group to Carrier Global and its associates to meet the needs of their future business
development; and
(iii) other factors including but not limited to the expected unit prices of our Products,
taking into account the costs and expenses relating to raw materials, labour etc.,
exchange rate fluctuations as well as market trends.
Listing Rules implications
As the highest applicable percentage ratio of the transactions under the Supply of
Products Framework Agreement for each of the three years ending December 31, 2026
calculated for the purpose of Chapter 14A of the Listing Rules is higher than 1% but below 5%
and the transactions are between our Group and a connected person at the subsidiary level, such
transactions will, upon the Listing, constitute continuing connected transactions of our
Company subject to the annual reporting requirement under Rules 14A.49 and 14A.71 of the
Listing Rules and the announcement requirement under Rule 14A.35 of the Listing Rules but
exempt from the independent Shareholders’ approval requirements under Rule 14A.36 of the
Listing Rules.
CONNECTED TRANSACTIONS
– 324 –


--- page 336 ---
INTERNAL CONTROL PROCEDURES ADOPTED BY THE COMPANY IN RESPECT
OF THE IMPLEMENTATION OF CONTINUING CONNECTED TRANSACTION
FRAMEWORK AGREEMENT
Our Group adopts the following internal control measures to ensure that the transactions
will be carried out in accordance with the terms of the Supply of Products Framework
Agreement, including the pricing policies, and in compliance with all the applicable
requirements under the Listing Rules:
 we have adopted a connected transactions management policy for the purpose of
ensuring that connected transactions will be conducted in a fair manner, on normal
commercial terms and in the interests of our Company and our Shareholders as a
whole;
 prior to the execution of the underlying agreements for the supply of Products to
Carrier Global and/or its associates, the operation department of the relevant
business sector of our Group will compare the terms of the proposed transactions
(including pricing and other contractual terms) with those similar transactions
entered with Independent Third Parties or the terms offered to Independent Third
Parties (as the case may be) to ensure that the supply of Products to Carrier Global
and/or its associates shall be on terms no less favourable to our Group than those
offered by our Group to Independent Third Parties;
 the finance team of our Group shall regularly examine the pricing of the transactions
under the Supply of Products Framework Agreement to ensure that those
transactions are conducted in accordance with the pricing terms therein;
 the internal control team of our Group shall periodically review the pricing of the
transactions under the Supply of Products Framework Agreement against the prices
negotiated between our Group and Independent Third Parties for similar products,
to ensure that the terms of the underlying agreements for supply of the Products to
Carrier Global and its associates are not less favorable to our Group than terms
between our Group and the Independent Third Parties;
 the finance and business teams of our Group shall periodically monitor the
transaction amount under the Supply of Products Framework Agreement and, when
it is expected that the transaction amount might exceed the annual cap, promptly
report in accordance with our Group’s connected transactions management policy to
ensure that the Company complies with all the applicable requirements under the
Listing Rules, including to revise the relevant annual cap when appropriate;
CONNECTED TRANSACTIONS
– 325 –


--- page 337 ---
 the legal team of our Group has reviewed the terms of the Supply of Products
Framework Agreement and shall in case of any proposed change to the major terms
of the transactions, ensure that the Company complies with all the applicable
requirements under the Listing Rules, including but not limited to publishing an
announcement; and
 our independent non-executive Directors and auditors will conduct annual review of
the continuing connected transactions under the framework agreements and provide
annual confirmations in accordance with Rules 14A.55 and 14A.56 of the Listing
Rules.
W AIVER
In respect of the transactions as contemplated under the Supply of Products Framework
Agreement as described above, we have applied for, and the Stock Exchange has granted us,
a waiver from strict compliance with the announcement requirements under the Listing Rules
pursuant to Rule 14A.105 of the Listing Rules.
DIRECTORS’ CONFIRMATION
Our Directors (including independent non-executive Directors) are of the view that: (i)
the continuing connected transactions set out above have been and will be entered into in our
ordinary and usual course of business on normal commercial terms or better, on terms that are
fair and reasonable, and in the interests of our Company and our Shareholders as a whole, and
(ii) the proposed annual caps for these transactions are fair and reasonable and in the interests
of our Company and the Shareholders as a whole.
JOINT SPONSORS’ CONFIRMATION
The Joint Sponsors have (i) reviewed the relevant documents and information provided
by our Company in relation to the above partially-exempt continuing connected transaction;
(ii) obtained necessary representations and confirmations from our Company and the Directors,
and (iii) participated in the due diligence and discussions with the management of our Group.
Based on the above, the Joint Sponsors are of the view that the aforesaid partially-exempt
continuing connected transaction, for which a waiver has been sought, has been entered into
in the ordinary and usual course of our business on normal commercial terms or better terms,
are fair and reasonable and in the interests of our Company and our Shareholders as a whole,
and that the proposed annual caps in respect of the partially-exempt continuing connected
transaction are fair and reasonable and in the interests of our Company and our Shareholders
as a whole.
CONNECTED TRANSACTIONS
– 326 –


--- page 338 ---
BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date, the total issued share capital of our Company was
6,993,130,851 A Shares of nominal value of RMB1.00 each, which are all listed on the main
board of the Shenzhen Stock Exchange.
Description of Shares Number of Shares
Approximate %
of issued share
capital
A Shares in issue* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,993,130,851 100.0%
Note:
* Including 28,452,226 A Shares repurchased by our Company pursuant to the repurchase mandates
approved by Shareholders, accounting for approximately 0.41% of the total number of A Shares in issue
as of the Latest Practicable Date.
UPON COMPLETION OF THE GLOBAL OFFERING
Immediately following the completion of the Global Offering, assuming that the Offer
Size Adjustment Option and the Over-allotment Option are not exercised, the share capital of
our Company will be as follows.
Description of Shares Number of Shares
Approximate %
of the enlarged
issued share
capital
A Shares in issue* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,993,130,851 93.4%
H Shares to be issued pursuant to the
Global Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118492,135,100 6.6%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,485,265,951 100.0%
Immediately following the completion of the Global Offering, assuming that the Offer
Size Adjustment Option is fully exercised but the Over-allotment option is not exercised, the
share capital of our Company will be as follows.
Description of share Number of Shares
Approximate %
of the enlarged
issued share
capital
A Shares in issue* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,993,130,851 92.5%
H Shares to be issued pursuant to the
Global Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118565,955,300 7.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,559,086,151 100.0%
SHARE CAPITAL
– 327 –


--- page 339 ---
Note:
* Including 28,452,226 A Shares repurchased by our Company pursuant to the repurchase mandates
approved by Shareholders.
Immediately following the completion of the Global Offering, assuming that the
Over-allotment Option is fully exercised but the Offer Size Adjustment Option is not exercised,
the share capital of our Company will be as follows.
Description of share Number of Shares
Approximate %
of the enlarged
issued share
capital
A Shares in issue* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,993,130,851 92.5%
H Shares to be issued pursuant to the
Global Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118565,955,300 7.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,559,086,151 100.0%
Note:
* Including 28,452,226 A Shares repurchased by our Company pursuant to the repurchase mandates
approved by Shareholders.
Immediately following the completion of the Global Offering, assuming that the Offer
Size Adjustment Option and the Over-allotment option are fully exercised, the share capital of
our Company will be as follows.
Description of share Number of Shares
Approximate %
of the enlarged
issued share
capital
A Shares in issue* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,993,130,851 91.5%
H Shares to be issued pursuant to the
Global Offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118650,848,500 8.5%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,643,979,351 100.0%
Note:
* Including 28,452,226 A Shares repurchased by our Company pursuant to the repurchase mandates
approved by Shareholders.
SHARE CAPITAL
– 328 –


--- page 340 ---
OUR SHARES
Our H Shares in issue upon completion of the Global Offering, and our A Shares, are
ordinary Shares in our share capital and are considered as one class of Shares. Shenzhen-Hong
Kong Stock Connect has established a stock connect mechanism between mainland China and
Hong Kong. Our A Shares can be subscribed for and traded by mainland Chinese investors,
qualified foreign institutional investors or qualified foreign strategic investors and must be
traded in Renminbi. As our A Shares are eligible securities under the Northbound Trading Link,
they can also be subscribed for and traded by Hong Kong and other overseas investors pursuant
to the rules and limits of Shenzhen-Hong Kong Stock Connect. Our H Shares can be subscribed
for or traded by Hong Kong and other overseas investors and qualified domestic institutional
investors. If our H Shares are eligible securities under the Southbound Trading Link, they can
also be subscribed for and traded by mainland Chinese investors in accordance with the rules
and limits of Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect.
RANKING
Our H Shares and our A Shares are regarded as one class of Shares under our Articles of
Association and will rank pari passu with each other in all other respects and, in particular, will
rank equally for all dividends or distributions declared, paid or made after the date of this
document. All dividends in respect of our H Shares are to be paid by us in Hong Kong dollars
whereas all dividends in respect of our A Shares are to be paid by us in Renminbi. In addition
to cash, dividends may also be distributed in the form of Shares. Holders of our H Shares will
receive share dividends in the form of H Shares, and holders of our A Shares will receive share
dividends in the form of A Shares.
NO CONVERSION OF OUR A SHARES INTO H SHARES FOR LISTING AND
TRADING ON THE HONG KONG STOCK EXCHANGE
Our A Shares and our H Shares are generally neither interchangeable nor fungible, and the
market prices of our A Shares and our H Shares may be different after the Global Offering. The
Guidelines on Application for “Full Circulation” of Domestic Unlisted Shares of H-share
Companies ( H΅͡ሗ“ஷ”ˏ) announced by the CSRC are
not applicable to companies dual listed in the PRC and on the Hong Kong Stock Exchange. As
of the Latest Practicable Date, there were no relevant rules or guidelines from the CSRC
providing that A Shareholders may convert A shares held by them into H shares for listing and
trading on the Hong Kong Stock Exchange.
SHARE CAPITAL
– 329 –


--- page 341 ---
APPROV AL FROM HOLDERS OF A SHARES REGARDING THE GLOBAL
OFFERING
Approval from holders of A Shares is required for our Company to issue H Shares and
seek the listing of H Shares on the Hong Kong Stock Exchange. Such approval was obtained
by us at the shareholders’ general meeting of our Company held on 11 October 2023 and is
subject to the following conditions:
(i) Size of the offer . The proposed number of H Shares to be offered shall not exceed
10% of the total issued share capital enlarged by the H Shares to be issued pursuant
to the Global Offering (before the exercise of the Over-allotment Option). The
number of H Shares to be issued pursuant to the full exercise of the Over-allotment
Option shall not exceed 15% of the total number of H Shares to be offered initially
under the Global Offering.
(ii) Method of offering. The method of offering shall be by way of an international
offering to institutional investors and a public offer for subscription in Hong Kong.
(iii) Target investors. The H Shares shall be issued to public investors in Hong Kong
under the Hong Kong Public Offering and international investors, qualified domestic
institutional investors in mainland China and other investors who are approved by
mainland Chinese regulatory bodies to invest abroad in International Offering.
(iv) Price determination basis. The issue price of the H Shares will be determined,
among others, after due consideration of the interests of existing shareholders of our
Company, acceptance of investors and the risks related to the offering, according to
international practice, through the demands for orders and book building process,
subject to the domestic and overseas capital market conditions and by reference to
the valuation level of comparable companies in domestic and overseas markets.
(v) V alidity period. The issue of H Shares and listing of H Shares on the Hong Kong
Stock Exchange shall be completed within 18 months from the date when the
shareholders’ meeting was held on 11 October 2023.
There is no other approved offering plans for our Shares except the Global Offering.
SHAREHOLDERS’ GENERAL MEETINGS
For details of circumstance under which our shareholders’ general meeting is required,
see “Summary of Articles of Association — Shareholders and Shareholders’ General Meetings”
in Appendix V to this document.
SHARES SCHEMES
Certain employees of our Company and our subsidiaries are eligible to subscribe in
interests of our Shares through the Share Schemes. For details, please refer to “Statutory and
General Information — 4. Our Incentive Schemes” in Appendix VI to this document.
SHARE CAPITAL
– 330 –


--- page 342 ---
The laws and regulations in mainland China that have a significant impact on our business
operations are set out below:
LA WS AND REGULATIONS RELATING TO FOREIGN INVESTMENT AND
OVERSEAS INVESTMENT
Company Law
The PRC Company Law () was promulgated by the Standing
Committee of the National People’s Congress, or the SCNPC, on 29 December 1993 and
implemented on 1 July 1994, and last revised on 29 December 2023, which came into effect
on 1 July 2024. Under the PRC Company Law, companies are generally classified into two
categories, namely, limited liability companies and joint stock limited companies. The PRC
Company Law also applies to foreign-invested enterprises. Pursuant to the PRC Company Law,
where laws on foreign investment have other stipulations, such stipulations shall prevail. The
major amendments of the latest PRC Company Law, which came into effect on 1 July 2024,
include improving the company establishment and exit regime, optimizing the organizational
structures of companies, improving the capital system of companies, strengthening the
responsibilities of controlling shareholder and management, and reinforcing the social
responsibilities of companies, among others. We do not expect the amendments to have any
material adverse effect on our operational and financial performance.
Foreign Investment
Investment activities in mainland China by foreign investors are principally governed by
the Catalog of Encouraged Industries for Foreign Investment ( ོᎸ̮ਠҳ༟ପุͦ፽), or
the Encouraged Catalog, and the Special Administrative Measures (Negative List) for Foreign
Investment Access (݄(૶ఊ)), or the Negative List, which
are promulgated and amended from time to time by the Ministry of Commerce, or the
MOFCOM, and the National Development and Reform Commission, or the NDRC, and
together with the PRC Foreign Investment Law (), or the
Foreign Investment Law, and its respective implementation rules and ancillary regulations.
The Foreign Investment Law was promulgated by NPC in March 2019 and came into
effect on 1 January 2020, which replaced three then existing laws on foreign investments in
mainland China, namely, the PRC Sino-Foreign Equity Joint V enture Enterprise Law ( ʕശ
), the Sino-Foreign Cooperative Joint V enture Enterprise
Law of PRC () and the Wholly Foreign-owned
Enterprise Law of PRC (). The Foreign Investment Law, by
means of legislation, establishes the basic framework for the access, promotion, protection and
administration of foreign investment in view of investment protection and fair competition.
According to the Foreign Investment Law, foreign investment shall enjoy pre-entry national
treatment, except for those foreign invested entities that operate in industries deemed to be
either “restricted” or “prohibited” in the Negative List, which is promulgate or approve by the
State Council. To ensure the effective implementation of the Foreign Investment Law, the
REGULATORY OVERVIEW
– 331 –


--- page 343 ---
Regulations on Implementing the Foreign Investment Law of PRC ( ʕശɛ͏΍ձ਷̮ਠҳ
ૢԷ), or the Foreign Investment Implementation Regulations, was promulgated by
State Council in December 2019 and came into effect on 1 January 2020, which further
clarified that the state encourages and promotes foreign investment, protects the lawful rights
and interests of foreign investors, regulates foreign investment administration, continues to
optimize foreign investment environment and advances a higher-level opening.
The NDRC and the MOFCOM jointly issued the Special Administrative Measures
(Negative List) for Foreign Investment Access (2021 version) (݄
(૶ఊ)(2021و)), or the 2021 Negative List, on 27 December 2021, to replace the
previous encouraging catalog and negative list thereunder. Pursuant to the Foreign Investment
Law, the Foreign Investment Implementation Regulations and the 2021 Negative List, foreign
investors shall not make investments in prohibited industries as specified in the Negative List,
while foreign investments must satisfy certain conditions stipulated in the Negative List for
investment in restricted industries. Industries not listed in the Negative List are generally
deemed “permitted” for foreign investments.
Overseas Investment
Pursuant to the Administrative Measures for Outbound Investment ( ྤ̮ҳ༟၍ଣ፬
) promulgated by the MOFCOM on 6 September 2014 and implemented on 6 October
2014, the MOFCOM and provincial competent commerce authorities shall carry out
administration either by record-filing or approval, depending on different circumstances of
outbound investment by enterprises. Outbound investment by enterprises that involves
sensitive countries and regions or sensitive industries shall be subject to administration by
approval. Outbound investment by enterprises that falls in any other circumstances shall be
subject to administration by record-filing.
Pursuant to the Administrative Measures for Outbound Investment of Enterprises ( Άุ
) promulgated by the NDRC on 26 December 2017 and implemented on
1 March 2018, a domestic enterprise, or the Investor, making an outbound investment shall
obtain approval, conduct record-filing or other procedures applicable to outbound investment
projects, or the Projects, report relevant information, and cooperate with the supervision and
inspection. Sensitive Projects carried out by Investors directly or through overseas enterprises
controlled by them shall be subject to approval; non-sensitive Projects directly carried out by
Investors, namely, non-sensitive projects involving investors’ direct contribution of assets or
rights and interests or provision of financing or guarantee shall be subject to record-filing. The
aforementioned “sensitive project” means a project involving a sensitive country or region or
a sensitive industry. The NDRC shall promulgate the catalogue of sensitive industries. The
currently effective sensitive industry catalogue is the Catalogue of Sensitive Sectors for
Outbound Investment (2018 Edition) ( ྤ̮ҳ༟ઽชБุͦ፽(2018و)), effective on 1
March 2018.
REGULATORY OVERVIEW
– 332 –


--- page 344 ---
LA WS AND REGULATIONS RELATING TO PRODUCT QUALITY
Product Quality Responsibility
According to the Product Quality Law of the PRC (), or
the Product Quality Law, which was promulgated by the SCNPC on 22 February 1993 and
implemented on 1 September 1993, and last revised on 29 December 2018, the engagement in
product manufacturing and sales activities within the territory of mainland China shall comply
with the Product Quality Law. Producers shall be responsible for the quality of the products
they produce and sell. Quality of products shall meet the following requirements: (i) the
products shall be free from any unreasonable threats to personal safety or safety of property,
and shall conform to national standards or trade standards for ensuring human health and
personal or property safety if there are such standards; (ii) the products shall have the functions
they are supposed to have, except where there are explanations about the functional defects;
and (iii) the products shall meet the standards specified on the products or packages thereof and
the quality condition specified by way of product instructions or samples. In case of violation
of the Product Quality Law, the market regulatory authorities have the right to order producers
and sellers to stop production and sales, confiscate the products which are illegally produced
or sold and impose fines. In case of serious violations, the business license of a producer or
seller will be revoked, and if the violation is so serious as to have constituted a crime, the
producer or seller will be prosecuted for criminal liability.
Pursuant to the PRC Civil Code (Պ), which was promulgated
by the NPC on 28 May 2020 and became effective on 1 January 2021, in the event of damages
caused to other party due to the defects in a product, the infringed party may seek
compensation from the manufacturer or the seller of such product and shall have the right to
request the manufacturer and the seller to bear tortious liabilities, such as cessation of
infringement, removal of obstruction, and elimination of danger.
Consumer Protection
Pursuant to the Law of the PRC on Protection of Consumer Rights and Interests ( ʕശ
) which was promulgated by the SCNPC on 31 October 1993
and implemented on 1 January 1994, and last revised on 25 October 2013, the operators to
provide consumers with the goods they produce or sell or to provide services shall comply with
the Law on the Protection of the Rights and Interests of Consumer. Operators shall bear civil
liability under the following circumstances: (i) a defect exists in a product or service; (ii) a
product does not possess the functions it is supposed to possess, and no declaration thereof is
made at the time of sale; (iii) the product standards indicated on a product or on the package
of such product are not met; (iv) the quality condition indicated by way of product description
or physical sample, etc. is not met; (v) products that have been formally declared by the state
to be obsolete are produced or expired or deteriorated products are sold; (vi) the products sold
are short on quantity; (vii) the contents and costs of the services are in violation of the
agreement; or (viii) consumers’ requests for repair, redoing, replacement, return, making up the
quantity of a product, refund of payment for the products or services, or claims for
REGULATORY OVERVIEW
– 333 –


--- page 345 ---
compensation have been deliberately delayed or unreasonably rejected. Operators who fail to
fulfil the security obligations and causes harm to consumers shall bear tort liability. If an
operator’s provision of goods or services violates the provisions of the Law on the Protection
of the Rights and Interests of Consumer and infringes upon the legitimate rights and interests
of consumers, which constitutes a crime, the operator shall be subject to criminal liability
according to the law.
Laws and Regulations Relating to Production Safety
Pursuant to the Production Safety Law of the PRC (), or
the Production Safety Law, promulgated by the SCNPC on 29 June 2002 and implemented on
1 November 2002, and last revised on 10 June 2021, entities engaged in production and
business activities in mainland China shall comply with the Production Safety Law and other
laws and regulations related to production safety. Entities shall strengthen the management,
establish and improve responsibility systems and polices, improve conditions, promote the
development of production safety standards, and improve the production level to ensure their
production safety. The primary persons in charge of the production and operation entities are
fully responsible for the production safety of their entities. Violation of the Production Safety
Law may result in imposition of fines and penalties, suspension of operation, an order to cease
operation, or even criminal liability in severe cases.
LA WS AND REGULATIONS ON E-COMMERCE AND ONLINE TRANSACTION
E-Commerce
The E-commerce Law of the PRC (), or the E-Commerce
Law, enacted by the SCNPC on 31 August 2018, and implemented from 1 January 2019,
establishes fundamental guidelines for e-commerce operators engaging in commercial
activities. The E-Commerce Law proposes a series of requirements on e-commerce operators,
including third-party e-commerce platform operators, registered product or service providers
of platforms, and online business operators operating through a self-built website or any other
network.
According to the E-Commerce Law, e-commerce operators are obligated to uphold
principles of voluntariness, equality, fairness, and good faith in their business dealings. They
are further mandated to comply with legal provisions and business ethics, participate equitably
in market competition, fulfill responsibilities pertaining to consumer rights protection,
environmental preservation, intellectual property safeguarding, network security, and personal
information confidentiality. E-commerce operators are also held accountable for the quality of
their products and services.
REGULATORY OVERVIEW
– 334 –


--- page 346 ---
In instances where e-commerce operators fail to meet their contractual obligations, breach
agreed-upon terms, or cause harm to others, they are liable for civil consequences as stipulated
by the law. Moreover, e-commerce entities conducting business activities without obtaining
required administrative permits, offering goods or services prohibited by laws or
administrative regulations, or neglecting their obligations to provide necessary information,
may incur penalties imposed by the market supervision and management authorities, in
accordance with pertinent laws and administrative regulations.
Online Transaction
The Measures for the Supervision and Administration of Online Transactions ( ၣഖʹ
), or the SAMR, enacted by the State Administration for Market Regulation
on 15 March 2021, and implemented from 1 May 2021, to regulate all business activities
involving sales of commodities or provision of services through the internet and other
information networks as well as the supervision and administration thereof by market
regulatory departments within the territory of mainland China. No online transaction business
may engage in business operations without a license or permit in violation of any law,
regulation or decision of the State Council. Except under the circumstances where registration
is not required as prescribed in Article 10 of the E-Commerce Law, an online transaction
business shall undergo market entity registration in accordance with the law. In addition, an
online transaction business shall disclose commodity or service information in a
comprehensive, truthful, accurate and timely manner, and protect consumers’ right to know and
right to choose.
Online Live-Streaming Marketing
The Administrative Provisions on Online Live- Streaming Services (ਕ၍
) was enacted by the Cyberspace Administration of China, or the CAC, on 4
November 2016, and implemented starting from 1 December 2016. Pursuant to the
Administrative Provisions on Online Live- Streaming Services, “online live streaming” refers
to the activities of continuously releasing real-time information to the public based on the
internet in forms such as video, audio, images and texts.
On 5 November 2020, the SAMR promulgated the Guiding Opinions of the State
Administration for Market Regulation on Strengthening the Regulation of Online Live-
streaming Marketing Activities (ኬจ
Ԉ), or the Guiding Opinions. According to the Guiding Opinions, commodity operators
selling commodities or providing services through online live-streaming shall abide by the
relevant laws and regulations, and establish and implement system for inspection and
acceptance of purchased goods. Pursuant to the Guiding Opinions, it is not allowed to use
online live-streaming to sell goods or services whose production or sale is prohibited by laws
and regulations; it is not allowed to use online live-streaming to release commercial
advertisements whose publication in mass media is prohibited by laws and regulations; and it
is not allowed to use online live-streaming to sell goods or services whose trading is prohibited
on the Internet.
REGULATORY OVERVIEW
– 335 –


--- page 347 ---
On 23 April 2021, the CAC and other six PRC regulatory authorities jointly issued the
Administrative Measures for Online Live-Streaming Marketing (Trial Implementation) ( ၣ
ج(༊Б)), or the Measures for Online Live-Streaming Marketing, which
became effective on 25 May 2021. According to the Measures for Online Live-Streaming
Marketing, live-streaming studio operators refer to individuals, legal persons, and other
organizations that establish live-streaming studios to engage in online marketing activities by
registering accounts on a live-streaming marketing platform or through self-built websites or
other network services. Live-streaming marketing personnel refer to individuals that directly
engage in marketing to the public in online live-streaming marketing. Operators of live studios
and live-streaming marketing personnel engaging in online live-streaming marketing activities
shall comply with laws and regulations, follow public order and good customs, and truthfully,
accurately and comprehensively release information on goods or services, and shall not commit
acts such as publicizing false or misleading information, marketing counterfeit or shoddy
goods and fabricating or tampering with data traffic including transactions, attention, number
of views, number of comments.
LA WS AND REGULATIONS IN RELATION TO EXPORTATION OF GOODS
Import and Export Management
According to the Regulations of the PRC on the Administration of Import and Export of
Goods (ආ̈ɹ၍ଣૢԷ) promulgated by the State Council on 10
December 2001 which came into effect on 1 January 2002 and was last amended on 10 March
2024, with the latest amendment being effective on 1 May 2024, the Foreign Trade Law of the
PRC () promulgated by the SCNPC on 12 May 1994 which
came into effect on 1 July 1994 and last amended on 30 December 2022, the Customs Law of
the PRC () promulgated by the SCNPC on 22 January 1987 which
came into effect on 1 July 1987 and last amended on 29 April 2021, the Measures for Record
Filing and Registration by Foreign Trade Dealer ()
promulgated by MOFCOM on 25 June 2004, which came into effect on 1 July 2004 and last
amended on 10 May 2021 and the Administrative Provisions of the Customs of the People’s
Republic of China on Record-filing of Customs Declaration Entities ( ʕശɛ͏΍ձ਷ऎᗫ
) promulgated by the General Administration of Customs of the PRC
on 19 November 2021 which came into effect on 1 January 2022, foreign trade business
operators engaging in the import or export of goods or technology must go through the record
filing and registration formalities with the MOFCOM or the agency entrusted by the
MOFCOM. Unless otherwise provided, the declaration of import or export goods and the
payment of duties may be made by the consignees or consignors themselves, or by entrusted
customs brokers. Customs declaration entities refer to consignees or consignors of imported or
exported goods or customs brokers that have filed for record with Customs. Customs
declaration entities may conduct customs declaration business within the customs territory of
the PRC.
REGULATORY OVERVIEW
– 336 –


--- page 348 ---
Imported and Exported Commodities Inspection
According to the Law of the PRC on Import and Export Commodity Inspection ( ʕശ
) which was promulgated by the SCNPC on 21 February 1989
and implemented on 1 August 1989, and last revised on 29 April 2021, and the Regulations for
the Implementation of the Law of the PRC on Import and Export Commodity Inspection ( ʕ
ૢԷ) which was promulgated by the State Council on
31 August 2005 and implemented on 1 December 2005, and last revised on 29 March 2022, the
General Administration of Customs is responsible for inspection of import and export
commodities. The entry- exit inspection and quarantine authorities shall conduct inspection on
the import and export commodities listed in the catalogue and other import and export
commodities that shall be subject to the inspection of the entry-exit inspection organs as
prescribed by laws and administrative regulations. For the import and export commodities
other than those that are subject to statutory inspection by the entry-exit inspection and
quarantine authorities as mentioned above, the entry-exit inspection and quarantine authorities
may conduct random inspection in accordance with state regulations. No import commodity
subject to statutory inspection that has not been inspected could be sold or used. No export
commodity subject to statutory inspection that has not been inspected or fails to pass the
inspection could be exported.
LA WS AND REGULATIONS RELATING TO ANTI-UNFAIR COMPETITION
Anti-Monopoly Law
According to the Anti-Monopoly Law of the PRC (), or the
Anti-Monopoly Law, which was promulgated by the SCNPC on 30 August 2007 and
implemented on 1 August 2008, and last revised on 24 June 2022, the Anti-Monopoly Law
applies to the monopolistic practices in domestic economic activities in mainland China as well
as the monopolistic practices outside mainland China which have exclusion or restriction
effects on domestic market competitions. The monopolistic practices under the Anti-Monopoly
Law include any monopoly agreement reached by any operators, abuse of market-dominating
position by any operators and any concentration of operators which has eliminated or limited
or may eliminate or limit the market competition. The antimonopoly law enforcement agencies
designated by the State Council are responsible for enforcement of the Anti-Monopoly Law in
accordance with the provisions of the Anti-Monopoly Law. The antimonopoly law enforcement
agencies of the State Council may, according to the needs of their work, authorise the
corresponding agencies of the people’s governments of provinces, autonomous regions, and
municipalities to be responsible for enforcement of the Anti-Monopoly Law. Operators who
violate the provisions of the Anti-Monopoly Law will be ordered by the anti-monopoly law
enforcement agencies to stop the illegal act and be imposed a fine.
REGULATORY OVERVIEW
– 337 –


--- page 349 ---
Anti-Unfair Competition Law
According to the Anti-unfair Competition Law of the PRC ( ʕശɛ͏΍ձ਷ˀʔ͍຅
), or the Anti-unfair Competition Law, which was promulgated by the SCNPC on 2
September 1993 and implemented on 1 December 1993, and last revised on 23 April 2019,
operators shall comply with the principle of voluntariness, equality, impartiality, integrity and
abide by laws and business ethics in market transactions. Under the Anti-unfair Competition
Law, unfair competition refers to an operator disrupts the market competition order and
damages the legitimate rights and interests of other operators or consumers in violation of the
provisions of the Anti-unfair Competition Law in the production and operating activities.
Operators who violate of the Anti-unfair Competition Law shall bear corresponding civil,
administrative or criminal responsibilities depending on the specific circumstances.
LA WS AND REGULATIONS RELATING TO ENVIRONMENT PROTECTION
According to the Environmental Protection Law of the PRC (ᚐ
) promulgated by the SCNPC on 26 December 1989 and implemented on the same date,
and subsequently revised on 24 April 2014, enterprises, public institutions and other producers
and operators shall prevent and reduce environmental pollution and ecological damage, and
shall take the liabilities for the damages caused according to the laws. The state adopts the
pollution discharge permit management system. Enterprises, public institutions and other
producers and operators which are subject to the pollution discharge permit management shall
discharge pollutants according to the requirements of the pollution discharge permit; and those
that fail to obtain the pollution discharge permit shall not discharge pollutants.
According to the Environmental Impact Assessment Law of the PRC ( ʕശɛ͏΍ձ਷
) promulgated by the SCNPC on 28 October 2002 and implemented on 1
September 2003, and last revised on 29 December 2018, and the Regulations on the
Administration of Construction Project Environmental Protection (ᚐ၍ଣૢ
Է) promulgated by the State Council on 29 November 1998 and implemented on the same
date, and subsequently revised on 16 July 2017, the state implements a system to assess the
environment impact of construction projects. If the construction project may result in a
material impact on the environment, a thorough environmental impact report on the potential
environmental impact is required; if the construction project may result in only slight impact
on the environment, an environmental impact statement of analysing or special evaluation will
be required; if the construction project may only result in very little impact on the environment
and no environmental impact appraisal is required, a registration form of environmental impact
shall be filed. Construction projects without undergoing assessment for environmental impact
according to the laws cannot commence construction. After the completion of the construction
projects for which environment effect report and environment effect statement was prepared,
a construction unit shall, according to the standards and procedures formulated by the
competent administrative department for environment protection under the State Council,
conduct inspection and acceptance of supplementary environment protection facilities, and
prepare inspection and acceptance report. No supplementary facilities of such projects may be
put into production or use until such facilities pass inspection and acceptance; no
supplementary facilities that failed to undergo or pass the inspection and acceptance procedure
may be put into production or use.
REGULATORY OVERVIEW
– 338 –


--- page 350 ---
If an enterprise violates the provisions of the aforesaid laws and regulations, the
environmental protection administrative departments at the county level or above may order it
to stop production or construction, impose a fine and order it to conduct rehabilitation; if the
violation constitutes a crime, the enterprise may be held criminally liable according to law.
LA WS AND REGULATIONS RELATING TO LARGE-SCALE EQUIPMENT
RENEW ALS AND TRADE-IN
According to the Action Plan for Promoting Large-scale Equipment Renewals and
Trade-ins of Consumer Goods (), or the
Action Plan, which was promulgated by the State Council on 7 March 2024, measures
including equipment renewal, trade-ins of consumer goods, recycling, and utilization,
improving standards, and strengthening policy guarantee will be taken to promote investment
and consumption. In the field of trade-in of household appliances, the Action Plan supports
household appliance sales enterprises to carry out trade-in promotional activities with
production enterprises and recycling enterprises, to set up online and offline home appliance
trade-in zones, and give preferential treatment to consumers who exchange old household
appliances for energy-saving household appliances. The Action Plan encourages subsidized
consumers to purchase green smart home appliances and accelerates the implementation of
after-sales service improvement actions for household appliances.
According to the Several Measures on Supporting Large-scale Equipment Renewals and
Trade-ins of Consumer Goods (ʍણ
), which was promulgated by the NDRC and the Ministry of Finance on 24 July 2024,
approximately RMB300 billion in ultra-long special treasury bonds will be earmarked to boost
large-scale equipment renewals and replace old consumer goods with new ones. Individual
consumers will enjoy trade-in subsidies for 8 types of household appliances such as
refrigerators, washing machines, televisions, air conditioners, computers, water heaters,
household stoves, and range hoods with energy efficiency or water efficiency standards of level
2 or above. The subsidy standard is 15% of the product’s sales price, and an additional 5%
subsidy will be given to purchase products with energy efficiency or water efficiency standards
of level 1 and above. Each consumer can subsidize 1 piece of each type of product, and the
subsidy for each piece does not exceed RMB2,000.
REGULATORY OVERVIEW
– 339 –


--- page 351 ---
LA WS AND REGULATIONS RELATING TO TAXATION
Income Tax
Pursuant to the Enterprise Income Tax Law of the PRC (੻೼
), or the EIT Law, promulgated by the SCNPC on 16 March 2007 and implemented on 1
January 2008 and last revised on 29 December 2018 and the Implementation Rules of the EIT
Law (ૢԷ) promulgated by the State Council on 6 December 2007 and
came into effect on 1 January 2008 and revised on 23 April 2019, a domestic enterprise which
is established within the PRC in accordance with the laws or established in accordance with
any laws of foreign country or region but with an actual management entity within the PRC
shall be regarded as a resident enterprise. A resident enterprise shall be subject to an EIT of
25% of any income generated within or outside the PRC. A preferential EIT rate shall be
applicable to any key industry or project which is supported or encouraged by the State. Key
high-tech enterprises which are supported by the State may enjoy a reduced EIT rate of 15%.
Value-Added Tax
According to the Interim Regulations of the PRC on V alue-added Tax ( ʕശɛ͏΍ձ
೼ᅲБૢԷ), which was promulgated by the State Council on 13 December 1993 and
last revised on 19 November 2017, and the Detailed Rules for the Implementation of the
Interim Regulations of the PRC on V alue-added Tax (݄
), which was promulgated by the Ministry of Finance on 25 December 1993 and last
amended on 28 October 2011, entities and individuals that sell goods or labor services of
processing, repair or replacement, sell services, intangible assets, or immovables, or import
goods within the territory of mainland China are taxpayers of value-added tax, or the V A T, and
shall pay V A T in accordance with law. Unless otherwise stipulated, the V A T rate is 17% for
taxpayers selling goods, labour services, or tangible movable property leasing services or
importing goods; 11% for taxpayers selling transportation, postal, basic telecommunications,
construction, or immovable leasing services, selling immovables, transferring land use rights,
or selling or importing specific goods; unless otherwise stipulated, 6% for taxpayers selling
services or intangible assets.
According to the Circular of the MOF and the SA T on Adjusting V alue-added Tax Rate
(), which was promulgated by the MOF and
the SA T on 4 April 2018 and became effective on 1 May 2018, the tax rates for the taxable sales
or goods import activity, which were subject to the tax rates of 17% and 11% respectively, were
adjusted to 16% and 10% respectively.
According to the Circular on Policies in Relation to the Deepening of V alue-added Tax
Reforms (ʮѓ), which was jointly promulgated by the
MOF, the SA T and the General Administration of Customs on 20 March 2019, the tax rate of
16% and 10% originally applicable to general V A T taxpayers’ V A T taxable sales or goods
import shall be adjusted to 13% and 9%, respectively.
REGULATORY OVERVIEW
– 340 –


--- page 352 ---
LA WS AND REGULATIONS RELATING TO LABOR AND SOCIAL SECURITY
Labor Law and Labor Contract Law
According to the Labor Law of the PRC (), which was
promulgated by the SCNPC on 5 July 1994, came into effect on 1 January 1995 and last revised
on 29 December 2018, and the Labor Contract Law of the PRC ( ʕശɛ͏΍ձ਷௶ਗΥΝ
), which was promulgated on 29 June 2007, revised on 28 December 2012 and came into
effect on 1 July 2013, written labor contracts shall be executed between an entity and its
employees if an employment relationship is established. Employers are required to inform their
employees about their job responsibilities, working conditions, occupational hazards,
remuneration and other matters with which the employees may be concerned. Employers shall
pay remuneration to employees on time and in full in accordance with the commitments set
forth in their employment contracts and the relevant PRC laws and regulations.
Social Insurance and Housing Provident Fund
Pursuant to the Social Insurance Law of the PRC (),
which was promulgated by the SCNPC on 28 October 2010, came into effect on 1 July 2011
and last revised on 29 December 2018, the Interim Regulations on Collection and Payment of
Social Insurance Premiums (ᎈ൬ᅄᖮᅲБૢԷ), which was implemented on 22
January 1999 and revised on 24 March 2019, the Trial Measures for Enterprise Staff Maternity
Insurance (), which was implemented on 1 January 1995, the
Regulations on Work-Related Injury Insurance (ᎈૢԷ), which was implemented
on 1 January 2004, amended on 20 December 2010 and came into effect on 1 January 2011,
and the Regulations on Management of Housing Provident Fund (၍ଣૢԷ),
which was promulgated on 3 April 1999 and last revised on 24 March 2019, employers in
mainland China shall provide their employees with welfare schemes covering basic pension
insurance, basic medical insurance, unemployment insurance, maternity insurance,
occupational injury insurance and housing provident fund. Employers who fail to contribute to
the above social insurance and housing provident funds may be subject to a fine and ordered
to make full payment within a prescribed time period. If an employing entity fails to make the
payment towards the social insurance and housing provident funds within a prescribed time
limit, an application may be made to a people’s court for enforcement.
LA WS AND REGULATIONS RELATING TO INTELLECTUAL PROPERTY RIGHTS
Patent
According to the Patent Law of the PRC (), which was
promulgated by the SCNPC on 12 March 1984 and implemented on 1 April 1985, and last
revised on 17 October 2020 and came into effect on 1 June 2021, and the Implementation
Regulations of the Patent Law of the PRC (), which was
promulgated by the State Council on 15 June 2001, implemented on 1 July 2001 and last
amended on 11 December 2023, with the latest amendment being effective on 20 January 2024,
REGULATORY OVERVIEW
– 341 –


--- page 353 ---
patents in mainland China are divided into invention patent, utility patent and design patent.
Invention patent shall be valid for 20 years from the date of application, while utility patent
shall be valid for 10 years and design patent shall be valid for 15 years from the date of
application respectively. The patent right entitled to its owner shall be protected by the laws.
Any person shall be licensed or authorized by the patent owner before using such patent.
Otherwise, the use constitutes an infringement of the patent right.
Trademark
According to the Trademark Law of the PRC, or the Trademark Law, was promulgated by
the Standing Committee on 23 August 1982 and became effective on 1 March 1983 and last
revised on 23 April 2019 and implemented on 1 November 2019 and the Implementation
Regulations of the Trademark Law of the PRC (ૢԷ), which
was promulgated by the State Council on 3 August 2002 and implemented on 15 September
2002, and amended on 29 April 2014, a trademark registered by the Trademark Office is a
registered trademark, including the commodity trademark, service trademark, collective
trademark and certification trademark. The valid period of a registered trademark shall be 10
years, commencing from the date of approval of the registration. The trademark registrant shall
apply for renewal within 12 months before the expiry date for further use of the registered
trademark. The valid period for each renewal of registration is 10 years, counted from the next
day of the expiration day of the last term.
Copyright
Pursuant to the Copyright Law of the PRC (), or the
Copyright Law, promulgated by the SCNPC on 7 September 1990 and implemented on 1 June
1991, and last revised on 11 November 2020 and came into effect on 1 June 2021, Chinese
citizens, legal persons or other organizations shall, whether published or not, enjoy copyright
in their works, which include, among others, works of literature, art, natural science, social
science, engineering technology and computer software created in writing or oral or other
forms. A copyright holder shall enjoy a number of rights, including the right of publication, the
right of authorship and the right of reproduction.
Pursuant to the Measures for the Registration of Computer Software Copyright (ၑ
) promulgated by the National Copyright Administration on 20
February 2002 and the Regulation on Computers Software Protection (ᚐૢ
Է) amended by the State Council on 30 January 2013 and came into effect on 1 March 2013,
the National Copyright Administration is mainly responsible for the registration and
management of software copyright in mainland China and recognizes the China Copyright
Protection Centre as the software registration organization. The China Copyright Protection
Centre shall grant certificates of registration to computer software copyright applicants in
compliance with the regulations of the Measures for the Registration of Computer Software
Copyright and the Regulation on Computers Software Protection.
REGULATORY OVERVIEW
– 342 –


--- page 354 ---
Domain Names
Domain names are protected under the Administrative Measures on Internet Domain
Names () which was promulgated by the Ministry of Industry and
Information Technology of the PRC on 24 August 2017 and came into effect on 1 November
2017. Domain name registrations are handled through domain name service agencies
established under the relevant regulations, and applicants become domain name holders upon
successful registration.
LA WS AND REGULATIONS ON SECURITIES AND OVERSEAS LISTINGS
Securities Laws and Regulations
The Securities Law of the People’s Republic of China (),
which was promulgated by the SCNPC on 29 December 1998, and was latest amended on 28
December 2019 and took effect on 1 March 2020, comprehensively regulating activities in the
mainland China securities market including issuance and trading of securities, takeovers by
listed companies, securities exchanges, securities companies and the duties and responsibilities
of securities regulatory authorities, etc. The Securities Law further regulates that a domestic
enterprise issuing securities overseas directly or indirectly or listing their securities overseas
shall comply with the relevant provisions of the State Council and for subscription and trading
of shares of domestic companies using foreign currencies, detailed measures shall be stipulated
by the State Council separately. The CSRC is the securities regulatory body set up by the State
Council to supervise and administer the securities market according to law, maintain order in
the market, and ensure the market operates in a lawful manner. Currently, the issue and trading
of H shares are principally governed by the regulations and rules promulgated by the State
Council and the CSRC.
Overseas Listings
On 17 February 2023, the CSRC released several regulations regarding the management
of filings for overseas offerings and listings by domestic companies, including the Trial
Measures for the Administration on Overseas Securities Offering and Listing by Domestic
Companies (), or the Overseas Listing Trial
Measures, together with several supporting guidelines (together with the Overseas Listing Trial
Measures, collectively referred to as the “Overseas Listing Regulations”). Under Overseas
Listing Regulations, mainland China domestic companies that seek to offer and list securities
in overseas markets, either in direct or indirect means, are required to file the required
documents with the CSRC within three working days after its application for overseas listing
is submitted.
REGULATORY OVERVIEW
– 343 –


--- page 355 ---
The Overseas Listing Regulations provides that no overseas offering and listing shall be
made under any of the following circumstances: (i) such securities offering and listing is
explicitly prohibited by provisions in laws, administrative regulations and relevant state rules;
(ii) the intended securities offering and listing may endanger national security as reviewed and
determined by competent authorities under the State Council in accordance with law; (iii) the
domestic company intending to make the securities offering and listing, or its controlling
shareholders and the actual controller, have committed crimes such as corruption, bribery,
embezzlement, misappropriation of property or undermining the order of the socialist market
economy during the latest three years; (iv) the domestic company intending to make the
securities offering and listing is suspected of committing crimes or major violations of laws
and regulations, and is under investigation according to law and no conclusion has yet been
made thereof; or (v) there are material ownership disputes over equity held by the domestic
company’s controlling shareholder or by other shareholders that are controlled by the
controlling shareholder and/or actual controller. Additionally, the Overseas Listing Regulations
stipulates that after an issuer has offering and listing securities in an overseas market, the issuer
shall submit a report to the CSRC within three working days after the occurrence and public
disclosure of (i) a change of control thereof, (ii) investigations of or sanctions imposed on the
issuer by overseas securities regulators or relevant competent authorities, (iii) changes of
listing status or transfers of listing segment, and (iv) a voluntary or mandatory delisting.
Overseas offering and listing by domestic companies shall be made in strict compliance with
relevant laws, administrative regulations and rules concerning national security in spheres of
foreign investment, cybersecurity, data security and etc., and duly fulfill their obligations to
protect national security.
On 24 February 2023, the CSRC and three other relevant government authorities jointly
promulgated the Provisions on Strengthening the Confidentiality and Archives Administration
Related to the Overseas Securities Offering and Listing by Domestic Enterprises (̋੶
). Pursuant to the Provisions
on Strengthening the Confidentiality and Archives Administration Related to the Overseas
Securities Offering and Listing by Domestic Enterprises, where a domestic enterprise provides
or publicly discloses any document or material that involving state secrets and working secrets
of state agencies to the relevant securities companies, securities service institutions, overseas
regulatory authorities and other entities and individuals, it shall report to the competent
department with the examination and approval authority for approval in accordance with the
law, and submit to the secrecy administration department of the same level for filing. The
working papers formed within the territory of mainland China by the securities companies and
securities service agencies that provide corresponding services for the overseas issuance and
listing of domestic enterprises shall be kept within the territory of mainland China.
Cross-border transfer shall go through the examination and approval formalities in accordance
with the relevant provisions of the State.
REGULATORY OVERVIEW
– 344 –


--- page 356 ---
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following completion of the Global
Offering and no other changes are made to the issued share capital of our Company between
the Latest Practicable Date and Listing, the following persons will have an interest or short
position (as applicable) in our Shares or underlying Shares which would fall to be disclosed to
us under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, will be, directly or
indirectly, interested in 10% or more of the issued voting shares of our Company or any other
member of our Group:
Substantial shareholders of our Company
Assuming that the Offer Size
Adjustment Option and the Over-
allotment Option are not exercised
Assuming that the Offer Size
Adjustment Option and the Over-
allotment Option are fully exercised
Shareholder Nature of interest
Description
of Shares
Number of
Shares
directly or
indirectly held
Approximate %
of shareholding
in our A Shares
immediately after
the Global
Offering
Approximate %
of shareholding
in the total share
capital of our
Company
immediately after
the Global
Offering
Approximate %
of shareholding
in our A Shares
immediately after
the Global
Offering
Approximate %
of shareholding
in the total share
capital of our
Company
immediately after
the Global
Offering
Midea Holding /H1118/H1118Beneficial owner A Shares 2,169,178,713 31.0% 29.0% 31.0% 28.4%
Mr. He (1) /H1118/H1118/H1118/H1118/H1118Interest in
controlled
corporation
A Shares 2,169,178,713 31.0% 29.0% 31.0% 28.4%
Beneficial owner A Shares 31,909,643 0.5% 0.4% 0.5% 0.4%
Note:
(1) Mr. He is interested in approximately 94.5% of Midea Holding and is deemed to be interested in all the A
Shares held by Midea Holding.
For further information on any other person who will be, immediately following
completion of the Global Offering, directly or indirectly, interested in 10% or more of the
issued voting shares of any other member of our Group, see section headed “Statutory and
General Information — 3. Further Information About Our Directors and Supervisors — C.
Disclosure of Interests — (iii) Interests of Substantial Shareholders in Members of Our Group
(excluding our Company)” in Appendix VI to this document.
SUBSTANTIAL SHAREHOLDERS
– 345 –


--- page 357 ---
OVERVIEW
Upon Listing, our Board will consist of 10 Directors, comprising five executive Directors,
one non-executive Director and four independent non-executive Directors. Our Directors are
appointed for a term of three years and are eligible for re-election upon expiry of their term
of office. The independent non-executive Directors shall not hold office for more than six
consecutive years pursuant to the relevant PRC laws and regulations.
The PRC Company Law requires a joint stock company to establish a board of supervisors
that is primarily responsible for supervising the performance of the Board and senior
management and the financial operations, internal control and risk management. Our
Supervisory Committee consists of three Supervisors including one employee representative
Supervisor. Our Supervisors are elected for a term of three years and may be subject to
re-election.
DIRECTORS
The following table provides information about our Directors:
Name Age Positions
Date of joining
our Group
Date of
appointment
as a Director
Roles and
responsibilities
Mr. Fang
Hongbo ( ˙
΋͛) /H1118/H1118
57 Executive Director,
Chairman of the
Board and Chief
Executive
Officer
November 1992 August 2012 Overall strategic
planning, business
development and
management of
our Group.
Mr. Zhao Jun
(΋͛) /H1118/H1118
48 Non-executive
Director
March 2000 July 2024 Providing advice on
the operation and
management of
our Group.
Mr. Wang
Jianguo ( ˮ
਷΋͛) /H1118/H1118
47 Executive Director
and Vice
President
July 1999 September 2021 Overall strategic
planning and
management of
our Group.
Mr. Fu
Y ongjun ( Ϳ
΋͛) /H1118/H1118
55 Executive Director
and Vice
President
October 1999 July 2023 Overall strategic
planning and
management of
our Group.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 346 –


--- page 358 ---
Name Age Positions
Date of joining
our Group
Date of
appointment
as a Director
Roles and
responsibilities
Dr. Gu Y anmin
(͏௹
ɻ) /H1118/H1118/H1118/H1118/H1118/H1118
60 Executive Director
and Vice
President
June 2000 April 2014 Overall strategic
planning and
management of
our Group.
Mr. Guan
Jinwei (ږ
ਃ΋͛)/H1118/H1118/H1118/H1118
45 Executive Director
and Vice
President
July 2002 July 2024 Responsible for the
overall strategy
and operations of
Intelligent
Building
Technology.
Dr. Xiao Geng
(ӽঅ௹ɻ) /H1118/H1118
61 Independent non-
executive
Director
July 2024 July 2024 Supervising and
providing
independent
opinion and
judgment to the
Board.
Dr. Xu Dingbo
(௹
ɻ) /H1118/H1118/H1118/H1118/H1118/H1118
61 Independent non-
executive
Director
July 2024 July 2024 Supervising and
providing
independent
opinion and
judgment to the
Board.
Dr. Liu Qiao
(௹ɻ) /H1118/H1118
54 Independent non-
executive
Director
July 2024 July 2024 Supervising and
providing
independent
opinion and
judgment to the
Board.
Dr. Qiu Lili
(቞ɢ௹
ɻ) /H1118/H1118/H1118/H1118/H1118/H1118
49 Independent non-
executive
Director
July 2024 July 2024 Supervising and
providing
independent
opinion and
judgment to the
Board.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 347 –


--- page 359 ---
None of our Directors, Supervisors and members of senior management is related to other
Directors, Supervisors or members of senior management. Save as disclosed in this section, (i)
none of our Directors held any directorships in public companies, the securities of which are
listed on any securities market in Hong Kong or overseas in the last three years immediately
preceding the date of this document; (ii) to the best knowledge, information and belief of the
Directors having made all reasonable inquiries, there were no other matters with respect to the
appointment of the Directors that need to be brought to the attention of the Shareholders and
there was no information relating to our Directors that is required to be disclosed pursuant to
Rule 13.51(2) of the Listing Rules.
Directors
Mr. Fang Hongbo (΋͛), aged 57, is our Director, chairman of the Board and the
chief executive officer. Mr. Fang is responsible for the overall strategic planning, business
development and management of our Group, and serving as the chairman of the Strategy
Committee.
Mr. Fang joined our Group in November 1992 and held several positions in our Group,
including the general manager of our air-conditioning division, the president of our
refrigeration and electrical appliances group, and the chairman of the board and chief executive
officer of Midea Electric. Mr. Fang received his doctoral degree in Corporation Management
from Nanjing University (ԯɽኪ) in 2009, his MBA degree from National University of
Singapore in 2002 and his bachelor’s degree in history from East China Normal University ( ശ
ᇍɽኪ) in 1987.
In February 2019, Mr. Fang received a warning letter from the CSRC Guangdong
Regulatory Bureau (the “ Warning Letter ”) in relation to an incident involving his oversight
in inadvertently mentioning the Company’s estimated profit before tax for 2018 during a forum
event prior to the official announcement of the Company’s profit estimate for 2018. Our PRC
Legal Adviser has advised that the Warning Letter is a non-punitive regulatory measure
implemented by the CSRC, which does not constitute an administrative penalty or public
censure under PRC laws, regulations or rules. Furthermore, given that this incident took place
before the Track Record Period and Mr. Fang has not experienced any similar incident since
then, our Directors are of the view that the above incident does not impugn the integrity or
suitability of Mr. Fang to serve as a director of our Company.
Mr. Zhao Jun (΋͛), aged 48, has been our Director since July 2024 and is
primarily responsible for providing advice on the operation and management of our Group.
Mr. Zhao joined our Group in March 2000. Mr. Zhao has served as a director of
Guangzhou SiE Consulting Co., Ltd. (ʮ̡) (SZSE: 300687) since
December 2015. He has also served as the executive president of Midea Holding since March
2020, a non-executive director of Midea Real Estate (HKEX: 3990) since May 2018, and the
vice chairman of Midea Real Estate November 2012. He also assumed multiple directorship in
subsidiaries of Midea Real Estate, including Midea Construction (Hong Kong) Limited (ٙߕ
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 348 –


--- page 360 ---
ุ(ಥ)ʮ̡). From July 2004 to September 2012, Mr. Zhao held several positions in
Midea Electric, including the head of finance and accounting department. Mr. Zhao is a
certified public accountant conferred by the Treasury Certified Public Accountants
Examination Committee (ึ). Mr. Zhao received his master’s
degree in accounting from the Chinese University of Hong Kong in Hong Kong in 2008 and
his another master’s degree business administration from China Europe International Business
School ( ʕᆄ਷ყʈਠኪ৫) in 2013, and received his bachelor’s degree in accounting from
Northeastern University at Qinhuangdao (ࣧin 1997.
Mr. Wang Jianguo (਷΋͛), aged 47, has been our Director since September 2021
and our vice president since December 2017. Mr. Wang also serves as the president of our
Smart Home Solutions and the president of our international business. He is also in charge of
the legal affairs of our Group.
Mr. Wang joined our Group in July 1999 and held several positions in our Group,
including the head of supply chain management department of our residential air-conditioning
division, the head of our administration and human resources department, and the general
manager of our refrigerator division. Mr. Wang received his EMBA degree from China Europe
International Business School ( ʕᆄ਷ყʈਠኪ৫) in 2008 and his bachelor’s degree in
accounting from Zhengzhou University of Light Industry ( ቍψჀʈุɽኪ) in 1999.
Mr. Fu Y ongjun (΋͛), aged 55, has been our Director since July 2023 and our
vice president since September 2021. Mr. Fu also serves as the president of our industrial
technology business.
Mr. Fu joined our Group in October 1999 and held several positions in our Group,
including the general manager of our environmental electrical appliances division, the general
manager of our components division, and the president of our electromechanical devices
division. Prior to joining our Group, Mr. Fu served as the head of manufacturing of assembly
workshops at Macro Toshiba A/C’s compressor factory (ᆀ) from June 1991 to
February 1998. Mr. Fu received his EMBA from Tsinghua University ( ૶ശɽኪ) in 2010 and
his bachelor’s degree in engineering from Huazhong University of Science and Technology ( ശ
Ҧɽኪ) in 1991.
Dr. Gu Y anmin (͏௹ɻ), aged 60, has been our Director and vice president since
April 2014. Dr. Gu also serves as the president of our Robotics & Automation business and the
chairman of the supervisory board of KUKA Group.
Dr. Gu joined our Group in June 2000 and held several positions in our Group, including
the head of our planning and investment department, the head of overseas strategy and
development department of our refrigeration and electrical appliances group, the vice president
of our refrigeration and electrical appliances group, the marketing head of our overseas
business and the head of our overseas strategy department. Dr. Gu received his doctoral degree
in sociology from Cornell University in the United States in 1998 after he graduated from
Hangzhou University (ψɽኪ) in 1983.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 349 –


--- page 361 ---
Mr. Guan Jinwei (ਃ΋͛), aged 45, has been our Director since July 2024 and our
vice president since September 2021. He is also the president of our Intelligent Building
Technology. Mr. Guan is primarily responsible for the overall strategy and operations of
Intelligent Building Technology.
Mr. Guan joined our Group in July 2002. He previously served as the deputy general
manager of our central air-conditioning division as well as the general manager of our overseas
sales & marketing company, and the president of our international business as well as the
general manager of our ASEAN business. Mr. Guan received his EMBA degree from Peking
University ( ̏ԯɽኪ) in 2022, his master’s degree in business administration from Nanjing
University (ԯɽኪ) in 2013 and his bachelor’s degree in mechanical engineering and
automation from Kunming University of Science and Technology (ଣʈɽኪ) in 2002.
Dr. Xiao Geng ( ӽঅ௹ɻ), aged 61, has been our independent Director since July 2024,
primarily responsible for supervising and providing independent opinion and judgment to the
Board and serving as the chairman of the Remuneration and Evaluation Committee and a
member of the Audit Committee, the Nomination Committee and the Strategy Committee of the
Board.
Dr. Xiao has served as an independent director at Tsingtao Brewery Company Limited (ڡ
ʮ̡) (HKEX: 00168; SSE: 600600) since June 2020 and an independent
director at Bank of Jinzhou Co., Ltd. (ʮ̡) (HKEX: 00416) since January
2020. Since August 2021, Dr. Xiao has served as a professor of practice at the Chinese
University of Hong Kong, Shenzhen and the director of the Institute of Policy and Practice at
Shenzhen Finance Institute (Ӻ৫). From August 2018 to July 2021, Dr. Xiao
served as a professor and a director at Peking University HSBC Business School ( ̏ɽ䁩ᔮਠ
ኪ৫). From August 2011 to July 2015, he served as the vice president of the Fung Global
Institute (Ӻ৫). Prior to that, Dr. Xiao served as a director at Columbia
University Global Center in Beijing (ˢԭɽኪ̏ԯΌଢʕː) from July 2010 to July 2011
and a director at Brookings-Tsinghua Center for Public Policy ( ૶ശ-Ӻʕ
ː). Dr. Xiao was a professor at the University of Hong Kong from July 2015 to June 2018.
Dr. Xiao received his doctoral degree in economics in 1991 and his master’s degree in
economics in 1987, both from University of California at Los Angeles in the United States. He
received his bachelor’s degree in systems science and management science from the University
of Science and Technology of China (ኪҦஔɽኪ) in 1985.
Dr. Xu Dingbo (௹ɻ), aged 61, has been our independent Director since July
2024. Dr. Xu is primarily responsible for supervising and providing independent opinion and
judgment to the Board and serving as the chairman of the Audit Committee and a member of
the Remuneration and Evaluation Committee, the Nomination Committee and the Strategy
Committee of the Board.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 350 –


--- page 362 ---
Dr. Xu has served as a faculty member and professor in highly-respected universities for
more than two decades and has extensive knowledge of and experience in accounting and
finance. He is currently Essilor Chair Professor in accounting and associate dean at China
Europe International Business School ( ʕᆄ਷ყʈਠኪ৫). Previously, he was a part-time
professor at Peking University ( ̏ԯɽኪ) from 1999 to 2009, an assistant professor at the
Hong Kong University of Science and Technology from September 1996 to December 2003. In
addition to his academic positions, Dr. Xu is the vice president of the China Association of
Chief Financial Officers (՘ึ). He has served as an independent director, a
member of audit committee and the chairman of nomination committee of JD.com, Inc.
(NASDAQ: JD; HKEX: 9618) since May 2018. In addition to that, he previously served as an
independent director on the board and the audit committee of various public companies,
including Kweichow Moutai Co. Ltd. (ʮ̡) (SSE: 600519) from
September 2016 to September 2022, China Cinda Asset Management Co., Ltd. (༺༟ପ
ʮ̡) (HKEX: 1359) from June 2013 to September 2019, Sany Heavy Industry
Co., Ltd. (ʮ̡) (SSE: 600031) from January 2013 to August 2019,
Shanghai Shyndec Pharmaceutical Co., Ltd. (ʮ̡) (SSE: 600420) from
December 2012 to February 2019, The People’s Insurance Company of China Limited ( ʕ਷
ʮ̡) (HKEX: 1339; SSE: 601319) from September 2009 to May 2018,
Dong Yi Ri Sheng Home Decoration Group Co., Ltd. (ʮ̡)
(SZSE: 002713) from December 2010 to July 2017, and Sanjiang Shopping Club Co., Ltd. ( ɧ
ʮ̡) (SSE: 601116) from December 2009 to November 2011. Among
these public companies, Dr. Xu served as the chair of audit committees of multiple of them,
such as Kweichow Moutai Co. Ltd., China Cinda Asset Management Co., Ltd., Sany Heavy
Industry Co., Ltd., Shanghai Shyndec Pharmaceutical Co., Ltd., The People’s Insurance
Company of China Limited and Sanjiang Shopping Club Co., Ltd. He has also served as an
independent director of China Trust Protection Fund Co., Ltd. (ப΂
ʮ̡) since September 2022. From January 2016 to March 2023, Dr. Xu was an independent
director of Societe Generale (China) Limited (਷ጳุვБ(ʕ਷)ʮ̡).
Dr. Xu went through doctoral studies in accounting received his doctoral degree of
philosophy in business administration from the University of Minnesota in the United States
in 1996. He received his master’s degree in business administration in 1986 and his bachelor’s
degree in mathematics in 1983, both from Wuhan University (ဏɽኪ).
Dr. Liu Qiao (௹ɻ), aged 54, has been our independent Director since July 2024. Dr.
Liu is primarily responsible for supervising and providing independent opinion and judgment
to the Board and serving as the chairman of the Nomination Committee and a member of the
Audit Committee, the Remuneration and Evaluation Committee and the Strategy Committee of
the Board.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 351 –


--- page 363 ---
Dr. Liu has an extensive academic background. With over two decades of experience, he
has held key roles at prestigious universities. Currently, Dr. Liu is a professor at Peking
University Guanghua School of Management ( ̏ԯɽኪΈശ၍ଣኪ৫) and has served as the
Dean of the school since January 2017. Since September 2000 to December 2001, and again
from July 2003, Dr. Liu has been a faculty member of School of Business and Economics of
the University of Hong Kong, where he currently holds the position of a visiting professor.
From September 2000 to December 2001, Dr. Liu was an assistant professor at School of
Economics and Finance of the University of Hong Kong. Dr. Liu has served as an independent
non-executive director at China Merchants Bank Co., Ltd. (ʮ̡) (HKEX:
3968; SSE: 600036) since November 2018. He served as an independent non-executive director
on the board of multiple companies, including Beijing Capital Eco-Environment Protection
Group Co., Ltd. (ʮ̡) (previously known as Beijing Capital
Co., Ltd., SSE: 600008) from December 2017 to February 2024, CSC Financial Co., Ltd. ( ʕ
ʮ̡) (HKEX: 6066; SSE: 601066) from September 2016 to September
2022, and Zensun Enterprises Limited (ʮ̡) (previously known as ZH
International Holdings Limited, HKEX: 0185) from July 2015 to October 2021.
Dr. Liu received his doctoral degree in economics from University of California at Los
Angeles in the United States in 2000, a master’s degree in international finance from the
Graduate School of the People’s Bank of China in 1994 and a bachelor’s degree in economics
and applied mathematics from Renmin University of China ( ʕ਷ɛ͏ɽኪ) in 1991.
Dr. Qiu Lili (቞ɢ௹ɻ), aged 49, has been our independent Director since July 2024.
Dr. Qiu is primarily responsible for supervising and providing independent opinion and
judgment to the Board and serving as a member of the Audit Committee, the Remuneration and
Evaluation Committee, the Nomination Committee and the Strategy Committee of the Board.
Dr. Qiu has served as the assistant managing director of Microsoft Research Asia since
January 2022 and is mainly responsible for overseeing the research, as well as the collaboration
with industries, universities, and research institutes, at Microsoft Research Asia — Shanghai.
She is a professor in computer science at the University of Texas at Austin in the United States.
She served as a researcher in the systems and networking group at Microsoft Research
Redmond from 2001 to 2004. Dr. Qiu has been recognized as one of the NAI Fellows by the
National Academy of Inventors (NAI) in 2022, one of the ACM Fellows by the Association for
Computing Machinery (ACM) in 2018, and one of the IEEE Fellows by the Institute of
Electrical and Electronics Engineers (IEEE) in 2017.
Dr. Qiu received her doctoral degree in 2001 and master’s degree in 1999, both in
computer science from Cornell University in the United States. She received her bachelor’s
degree in computer science and physics from University of Bridgeport in the United States in
1996.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 352 –


--- page 364 ---
SUPERVISORS
The following table provides information about our Supervisors:
Name Age Position
Date of joining
our Group
Roles and
responsibilities
Mr. Dong Wentao
(໨˖ᏹ΋͛) /H1118/H1118/H1118/H1118
39 Chairman of the
Supervisory
Committee
January 2016 Supervise the
finances of our
Group and exercise
supervision over
the directors and
senior management.
Ms. Ren Lingyan
(ᜮɾɻ) /H1118/H1118/H1118
40 Supervisor July 2006 Supervise the
finances of our
Group and exercise
supervision over
the directors and
senior management.
Ms. Liang Huiming
(૑౉თɾɻ) /H1118/H1118/H1118/H1118
41 Employee Supervisor July 2007 Supervise the
finances of our
Group and exercise
supervision over
the Directors and
senior management.
Mr. Dong Wentao ( ໨˖ᏹ΋͛), aged 39, is the chairman of our Supervisory Committee.
He was appointed as a Supervisor in October 2020 and is primarily responsible for supervision
of the finances of our Group and supervision over the Directors and senior management.
Mr. Dong has extensive experience in legal affairs, risk control, market value
management and capital operations. He joined our Group in January 2016. He has served as a
director of our subsidiary Annto Smart Logistics since August 2023 and a director of our
subsidiary Midea Lighting since September 2020. He has also served in the investor relations
department of our Group since April 2018. Prior to that, Mr. Dong worked in the legal
department of our Group from January 2016 to April 2018. Prior to joining our Group, Mr.
Dong worked at China International Marine Containers (Group) Co., Ltd. ( ʕ਷਷ყऎ༶ණༀ
ᇌ(ණྠ)ʮ̡) (HKEX: 2039; SZSE: 000039) responsible for intellectual property
protection and advocacy from January 2011 to June 2014 and served as an intellectual property
lawyer in ZTE Corporation (ʮ̡) (HKEX: 763; SZSE: 000063) from July
2014 to January 2016. Mr. Dong received his master’s degree in law from Xiamen University
(ɽኪ) in 2011 and his bachelor’s degree in mechanical engineering and automation from
Nanjing University of Science and Technology (ԯଣʈɽኪ) in 2008.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 353 –


--- page 365 ---
Ms. Ren Lingyan (ᜮɾɻ), age 40, is our Supervisor. She was appointed as a
Supervisor in July 2024 and is primarily responsible for supervision of the finances of our
Group and supervision over the Directors and senior management.
Ms. Ren joined our Group in July 2006 and held several positions in the finance
departments of our Group, including the finance manager of our Group. Since April 2012, Ms.
Ren has served several positions in the finance department of Midea Holding, including the
head of finance department. She was certified as an intermediate accountant by the Department
of Human Resources and Social Security of Guangdong Province (ღ
ᝂ) in 2016. Ms. Ren received her master’s degree in accounting from The Chinese University
of Hong Kong in 2020 and her bachelor’s degree in accounting from Xiangtan University in
2006.
Ms. Liang Huiming ( ૑౉თɾɻ), aged 41, is our Employee Supervisor. She was
appointed as an Employee Supervisor in March 2017 and is primarily responsible for
supervision of the finances of our Group and supervision over the Directors and senior
management on behalf of our employees. She is also in charge of the property rights
management of our Group.
Ms. Liang joined our Group in July 2007 and previously served as the chief business
administration commissioner in our Group’s administration and human resources department.
Ms. Liang received her bachelor’s degree in business administration from Wuhan University of
Science and Technology (Ҧɽኪ) in 2007.
SENIOR MANAGEMENT
The following table provides information about members of the senior management of our
Company (other than our executive Directors):
Name Age Positions
Date of joining
our Group
Roles and
responsibilities
Mr. Bai Lin
(΋͛) /H1118/H1118/H1118
42 Vice President July 2003 Responsible for the
domestic sales of
our Smart Home
Solutions.
Mr. Zhao Lei
(Ⴛᆾ΋͛) /H1118/H1118/H1118
39 Vice President July 2018 Responsible for the
overall strategy and
operations of our
residential air-
conditioning
division.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 354 –


--- page 366 ---
Name Age Positions
Date of joining
our Group
Roles and
responsibilities
Ms. Zhong Zheng
(ᙒ፾ɾɻ) /H1118/H1118/H1118
42 Vice President, Chief
Financial Officer
and Finance
Director
July 2002 Responsible for the
overall finance
strategy,
accounting, tax,
treasury related
matters and finance
business of our
Group.
Mr. Zhang Xiaoyi
(ੵʃᛄ΋͛) /H1118/H1118
51 Vice President and
Chief Digital
Officer
August 2010 Responsible for
digital
transformation and
system
development of
our Group.
Mr. Li Guolin
(΋͛) /H1118/H1118
47 Vice President and
Chairperson of the
ESG Committee
July 1998 Responsible for
intelligent
manufacturing and
quality control of
our Group.
Mr. Wang
Jinliang (ږ
΋͛)/H1118/H1118/H1118/H1118/H1118/H1118
57 Vice President October 1995 Responsible for brand
communication and
public relations of
our Group.
Dr. Wei Chang
(ሊᬅ௹ɻ) /H1118/H1118/H1118
60 Vice President and
Chief Technology
Officer
August 2022 Responsible for
technology strategy
and technical
operations of our
Group.
Ms. Zhao Wenxin
(Ⴛ˖ːɾɻ) /H1118/H1118
41 Chief People Officer July 2004 Responsible for the
overall strategy and
management of
human resources of
our Group.
Mr. Jiang Peng
(Ϫᘄ΋͛) /H1118/H1118/H1118
50 Board Secretary October 2007 Responsible for Board
related matters,
capital markets,
and corporate
governance of our
Group.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 355 –


--- page 367 ---
Mr. Bai Lin (΋͛), aged 42, is our vice president. He is primarily responsible for
the domestic sales of our Smart Home Solutions. Mr. Bai joined our Group in July 2003. He
previously served as the Asia Pacific general manager of our refrigeration group, the general
manager of sales & marketing of our refrigerators division, and the president of our
refrigerators division. Mr. Bai received his bachelor’s degree in international economics and
trade from Huazhong University of Science and Technology (Ҧɽኪ) in 2003.
Mr. Zhao Lei ( Ⴛᆾ΋͛), aged 39, is our vice president. He also serves as the president
of our residential air-conditioning division. He is primarily responsible for the overall strategy
and operations of our residential air-conditioning division. Mr. Zhao joined our Group in July
2018. He held several positions in our Group, including the director of domestic retail sales,
the general manager of domestic sales & marketing of our washing machines division, and the
president of our washing machines division. Mr. Zhao received his master’s degree in
enterprise management in 2011 and his bachelor’s degree in international economics and trade
in 2006, both from Xi’an University of Technology.
Ms. Zhong Zheng ( ᙒ፾ɾɻ), aged 42, is our vice president, chief financial officer and
finance director of our Group. She is primarily responsible for overall finance strategy,
accounting, tax, treasury related matters and finance business of our Group. Ms. Zhong joined
our Group in July 2002. She previously served as a director of finance of our financial centre
and components division and the audit director of our Group. Ms. Zhong received her MBA
degree from Nanjing University (ԯɽኪ) in 2015 and her bachelor’s degree in accounting
from Harbin Institute of Technology (ဧᏵʈุɽኪ) in 2002.
Mr. Zhang Xiaoyi ( ੵʃᛄ΋͛), aged 51, is our vice president and the chief digital
officer. He is primarily responsible for the digital transformation and system development of
our Group. Mr. Zhang joined our Group in August 2010. He previously served as the head of
our overseas IT department, the head of our supply chain system department, and a director of
our information technology department. Prior to joining our Group, Mr. Zhang served as an
executive director of the IT department at Lenovo from July 2007 to August 2010. Prior to that,
he worked at Dell from April 1998 to July 2007. Mr. Zhang received his MBA from University
of Wales, New Port in the United Kingdom in 2007 and his bachelor’s degree in mechanical
manufacturing process and equipment from Nanjing University of Aeronautics and
Astronautics (ঘ˂ɽኪ) in 1993.
Mr. Li Guolin (΋͛), aged 47, is our vice president. He also serves as the director
of quality control, intelligent manufacturing and supply chain management of our Group and
the chairman of our ESG Committee. Mr. Li joined our Group in July 1998. He previously
served as the vice president of our residential air-conditioning division and the president of our
lifestyle electrical appliances. Mr. Li received his EMBA degree from Peking University ( ̏
ԯɽኪ) in 2007, his master’s degree in engineering from Xi’an Jiaotong University ( Гτʹஷ
ɽኪ) in 2006 and his bachelor’s degree in heating ventilation and air conditioning from
Xiangtan Engineering College ( ಱᆐʈኪ৫) in 1998.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 356 –


--- page 368 ---
Mr. Wang Jinliang (΋͛), aged 57, is our vice president. He is primarily
responsible for brand communication and public relations of our Group. Mr. Wang joined our
Group in October 1995 and held several positions in our Group, including the vice president
of domestic sales department and the vice president and head of marketing department in
Midea Electric. Mr. Wang received his EMBA degree from National University of Singapore
in 2005.
Dr. Wei Chang ( ሊᬅ௹ɻ), aged 60, is our vice president and chief technology officer.
He is primarily responsible for the technology strategy and technical operations of our Group.
Dr. Wei joined our Group in August 2022. Prior to joining our Group, Dr. Wei served as the
president of the National Institute of Clean-and-Low-Carbon Energy, a research and
development institute affiliated to China Energy Investment Corporation Ltd. (ঐ๕ණྠ
Ӻ৫) from April 2014 to August 2022. Prior to that, Dr. Wei held several
positions at General Electric Company (NYSE: GE) from 1995 to April 2014, such as the
product manager of GE Water & Process Technologies for greater China and business program
manager of GE Global Research. Dr. Wei received his doctoral degree in science in 1990 and
his bachelor’s degree in chemistry in 1984, both from Fudan University ( ూ͇ɽኪ).
Ms. Zhao Wenxin ( Ⴛ˖ːɾɻ), aged 41, is our chief people officer. She is also the
director of human resources of our Group. She is primarily responsible for the overall strategy
and management of human resources of our Group. Ms. Zhao joined our Group in July 2004.
She previously served as a deputy general manager of our residential air-conditioning division
as well as the general manager of our overseas sales & marketing business and a vice president
for our international business. Ms. Zhao received her MBA degree from Carlson Management
School, University of Minnesota in the United States in 2015 and her bachelor’s degree in
German from Y anbian University (ᗙɽኪ) in 2004.
Mr. Jiang Peng ( Ϫᘄ΋͛), aged 50, is our Board secretary. He has also served as the
director of investor relations department since 2013. He joined our Group in October 2007. Mr.
Jiang previously served as the representative for securities affairs and the board secretary for
Midea Electric from 2007 to 2013. Prior to joining our Group, Mr. Jiang served as the board
secretary at Star Lake Bioscience Co, Inc. Zhaoqing Guangdong (΅
ʮ̡) from April 2005 to October 2007. Mr. Jiang received his master’s degree in
accounting from The Chinese University of Hong Kong in 2015 and his bachelor’s degree in
investment economics administration from Shanxi University of Finance and Economy ( ʆГ
ৌ຾ɽኪ) in 1997.
For the biographies of our executive Directors, including Mr. Fang Hongbo, Dr. Gu
Y anmin, Mr. Wang Jianguo and Mr. Fu Y ongjun, see the section headed “Directors —
Executive Directors” above.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 357 –


--- page 369 ---
JOINT COMPANY SECRETARIES
Mr. Jiang Peng ( Ϫᘄ΋͛) has been appointed as our joint company secretary. See
“— Senior Management” above for Mr. Jiang’s biography.
Ms. Lai Siu Kuen (ɾɻ) has been appointed as our joint company secretary. Ms.
Lai is a director of Company Secretarial Services of Tricor Services Limited, a global
professional services provider specializing in integrated business, corporate and investor
services. She has over 25 years of experience in the corporate secretarial field. Ms. Lai is
currently the company secretary of several companies listed on the Hong Kong Stock
Exchange, including CGN Mining Company Limited (ʮ̡) (HKEX: 1164),
Shanghai Junshi Biosciences Co., Ltd. (ʮ̡) (HKEX: 1877)
and Y angtze Optical Fiber and Cable Joint Stock Limited Company (ʮ
̡) (HKEX: 6869). Ms. Lai is a fellow member of both The Hong Kong Chartered Governance
Institute and The Chartered Governance Institute in the United Kingdom. Ms. Lai holds a
bachelor’s degree in accounting.
CONFIRMATION FROM OUR DIRECTORS
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Listing Rules in October 2023, June 2024 and July 2024, and (ii)
understands his or her obligations as a director of a listed issuer under the Listing Rules.
Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors has confirmed (i) his or her
independence as regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing
Rules, (ii) he or she has no past or present financial or other interest in the business of the
Company or its subsidiaries or any connection with any core connected person of the Company
under the Listing Rules as of the Latest Practicable Date, and (iii) that there are no other factors
that may affect his or her independence at the time of his/her appointments.
DISCLOSURE UNDER RULE 8.10(2) OF THE LISTING RULES
As of the Latest Practicable Date, none of our Directors had interests in any business,
which competes directly or indirectly with our business for the purpose of Rule 8.10(2) of the
Hong Kong Listing Rules.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 358 –


--- page 370 ---
MANAGEMENT AND CORPORATE GOVERNANCE
Board Committees
We have established four Board Committees in accordance with the relevant laws and
regulations in mainland China, the Articles and the code of corporate governance practices
under the Listing Rules, namely the Audit Committee, the Remuneration and Evaluation
Committee, the Nomination Committee and the Strategy Committee. The functions of the four
committees are summarized as follows:
Audit Committee
We have established the Audit Committee with written terms of reference in compliance
with Rule 3.21 of the Listing Rules and the Corporate Governance Code set out in Appendix
C1 to the Listing Rules. The primary duties of the Audit Committee are to review and supervise
the financial reporting process and internal controls system of our Group, review and approve
connected transactions and provide advice and comments to the Board. The Audit Committee
comprises four members, namely Dr. Xu Dingbo, Dr. Xiao Geng, Dr. Liu Qiao and Dr. Qiu Lili
as the members of the Audit Committee, with Dr. Xu Dingbo as the chairperson of the Audit
Committee and is the director appropriately qualified as required under Rules 3.10(2) and 3.21
of the Listing Rules.
Remuneration and Evaluation Committee
We have established the Remuneration and Evaluation Committee with written terms of
reference in compliance with Rule 3.25 of the Listing Rules and the Corporate Governance
Code set out in Appendix C1 to the Listing Rules. The primary duties of the Remuneration and
Evaluation Committee are to review and make recommendations to the Board on the terms of
remuneration packages, bonuses and other compensation payable to our Directors and other
senior management. The Remuneration and Evaluation Committee comprises four members,
namely Dr. Xiao Geng, Dr. Xu Dingbo, Dr. Liu Qiao and Dr. Qiu Lili, with Dr. Xiao Geng as
the chairperson of the Remuneration and Evaluation Committee.
Nomination Committee
We have established a Nomination Committee with written terms of reference in
compliance with the Code on Corporate Governance in Appendix C1 to the Listing Rules. The
primary duties of the Nomination Committee are to make recommendations to our Board on the
appointment of Directors and management of Board succession. The Nomination Committee
comprises four members, namely Dr. Liu Qiao, Dr. Xiao Geng, Dr. Xu Dingbo and Dr. Qiu Lili,
with Dr. Liu Qiao as the chairperson of the Nomination Committee.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 359 –


--- page 371 ---
Strategy Committee
We have established a Strategy Committee with written terms of reference. The primary
duties of the Strategy Committee are to make recommendations to our Board on the long-term
development strategy and major investments and projects of our Company. The Strategy
Committee comprises five members, namely Mr. Fang Hongbo, Dr. Xiao Geng, Dr. Xu Dingbo,
Dr. Liu Qiao and Dr. Qiu Lili, with Mr. Fang Hongbo as the chairperson of the Strategy
Committee.
Corporate Governance Code
We aim to implement a high standard of corporate governance, which we believe is
crucial to safeguard the interests of our Shareholders. To accomplish this, we expect to comply
with the Corporate Governance Code set out in Appendix C1 of the Listing Rules after the
Listing, save that Mr. Fang Hongbo will serve as both our chairman and chief executive officer
as discussed below.
Pursuant to code provision A.2.1 of the Corporate Governance Code, companies listed on
the Hong Kong Stock Exchange are expected to comply with, but may choose to deviate from
the requirement that the responsibilities between the chairman and the chief executive officer
should be segregated and should not be performed by the same individual. We do not have a
separate chairman and chief executive officer and Mr. Fang currently performs these two roles.
The Board believes that vesting the roles of both chairman and chief executive officer in the
same person has the benefit of ensuring consistent leadership within our Group and enables
more effective and efficient overall strategic planning for our Group. The Board considers that
the balance of power and authority for the present arrangement will not be impaired, and this
structure will enable our Company to make and implement decisions promptly and effectively.
The Board will continue to review and consider splitting the roles of chairman of the Board and
the chief executive officer of our Company if and when it is appropriate taking into account
the circumstances of our Group as a whole.
Board diversity
Our Company has adopted a board diversity policy which sets out the approach to achieve
diversity of the Board. Our Company recognizes and embraces the benefits of having a diverse
Board and sees increasing diversity at the Board level, including gender diversity, as an
essential element in maintaining our Company’s competitive advantage and enhancing our
ability to attract, retain and motivate employees from the widest possible pool of available
talent. Pursuant to the board diversity policy, in reviewing and assessing suitable candidates to
serve as a director of our Company, the Nomination Committee will consider a number of
aspects, including but not limited to gender, age, cultural and educational background,
professional qualifications, skills, knowledge, and industry and regional experience. In
particular, our Company currently has one female Director in the Board and will continue to
work towards enhancing the gender diversity of the Board. Our Directors have a balanced mix
of knowledge and skills, and we have five non-executive Directors, including four independent
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 360 –


--- page 372 ---
non-executive Directors, with different industry backgrounds. Taking into account our existing
business model and specific needs as well as the different background of our Directors, the
composition of our Board satisfies our board diversity policy. Pursuant to the board diversity
policy, the Nomination Committee will discuss periodically and when necessary, agree on the
measurable objectives for achieving diversity, including gender diversity, on the Board and
recommend them to the Board for formal adoption.
Management presence
Pursuant to Rule 8.12 of the Listing Rules, an issuer must have a sufficient management
presence in Hong Kong. This will normally mean that at least two of its executive directors
must be ordinarily resident in Hong Kong. We do not have sufficient management presence in
Hong Kong for the purposes of Rule 8.12 of the Listing Rules.
Accordingly, we have applied for, and the Hong Kong Stock Exchange has granted, a
waiver from strict compliance with Rule 8.12 of the Listing Rules. See “Waivers from Strict
Compliance with the Listing Rules” for further details.
REMUNERATION
Our Directors, Supervisors and senior management receive their remuneration in the form
of basic annual payments and performance-related annual payments, including fees, salaries,
share-based compensation, pension schemes contribution and other benefits in kind.
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2024, the total remuneration paid to our Directors amounted to RMB114.9 million,
RMB107.1 million, RMB113.4 million and RMB34.4 million, respectively.
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2024, the total remuneration paid to our Supervisors amounted to RMB1.1 million,
RMB1.0 million, RMB1.4 million and RMB0.2 million, respectively.
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2024, the total emoluments paid to the five highest paid individuals (including Directors)
by us amounted to RMB158.9 million, RMB146.9 million, RMB160.5 million and RMB40.8
million, respectively.
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30
April 2024, no payment was made by us to any of the Directors or the five highest paid
individuals as an inducement to join us or as compensation for loss of office. Our Supervisors
receive remuneration from our Company. None of the Directors or Supervisors waived their
remuneration during the relevant period.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 361 –


--- page 373 ---
The remuneration of our Directors, Supervisors and senior management is determined
with reference to factors including the responsibility, risk and commitment of our Directors,
Supervisors and senior management, the completion rate of our corporate profit, the assessment
result of our target responsibility system, the performance evaluation structure of each of our
corporate departments and the salaries paid by comparable companies.
Save as disclosed above and in “Financial Information,” “Accountant’s Report” and
“Statutory and General Information,” no other payments have been paid or are payable in
respect of the Track Record Period to our Directors, Supervisors and senior management by our
Group. Under the arrangements currently in force, we estimate the aggregate remuneration,
excluding discretionary bonus, of our Directors and Supervisors for the year ending 31
December 2024 to be approximately RMB124 million.
See the Accountant’s Report in Appendix I for details on remuneration paid to our
Directors, Supervisors and senior management and, on an aggregate basis, the five highest paid
individuals of our Group during the Track Record Period, and paragraphs headed “Statutory
and General Information — 4. Our Incentive Schemes” in Appendix VI for details regarding
the incentive plans for our Directors, Supervisors and senior management.
COMPLIANCE ADVISER
We have appointed Huatai Financial Holdings (Hong Kong) Limited as our compliance
adviser pursuant to Rule 3A.19 of the Listing Rules. The compliance adviser will provide us
with guidance and advice as to compliance with the requirements under the Listing Rules and
applicable Hong Kong laws. Pursuant to Rule 3A.23 of the Listing Rules, the compliance
adviser will advise our Company, among others, in the following circumstances:
(a) before the publication of any regulatory announcement, circular, or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this document or where the business activities, development or
results of our Group deviate from any forecast, estimate or other information in this
document; and
(d) where the Hong Kong Stock Exchange makes an inquiry to our Company regarding
unusual movements in the price or trading volume of its listed securities or any other
matters in accordance with Rule 13.10 of the Listing Rules.
The term of appointment of the compliance adviser shall commence on the Listing Date
and is expected to end on the date on which we comply with Rule 13.46 of the Listing Rules
in respect of our financial results for the first full financial year commencing after the Listing
Date and such appointment may be subject to extension by mutual agreement.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
– 362 –


--- page 374 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the
cornerstone investors set out below (each a “ Cornerstone Investor ”, and together the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to,
subject to certain conditions, subscribe, or cause their designated entities to subscribe, at the
Offer Price for such number of Offer Shares (rounded down to the nearest whole board lot of
100 H Shares) that may be purchased for an aggregate amount of approximately US$1,255.65
million (or approximately HK$9,790.05 million, calculated based on an exchange rate of
US$1.00 to HK$7.7968) (assuming an Offer Price of HK$53.40 per H Share (being the
mid-point of the Offer Price range) and exclusive of brokerage fee, the SFC transaction levy,
the AFRC transaction levy and the Stock Exchange trading fee) (the “ Cornerstone Placing ”).
Based on the Offer Price of HK$54.80 per Offer Share, being the high-end of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 179,032,700. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering.
Assuming the Offer Size Adjustment Option is not exercised Assuming the Offer Size Adjustment Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
36.45% 2.40% 31.70% 2.37% 31.70% 2.37% 27.56% 2.35%
Based on the Offer Price of HK$53.40 per Offer Share, being the mid-point of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 183,333,100. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering.
Assuming the Offer Size Adjustment Option is not exercised Assuming the Offer Size Adjustment Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
37.25% 2.45% 32.39% 2.43% 32.39% 2.43% 28.17% 2.40%
CORNERSTONE INVESTORS
– 363 –


--- page 375 ---
Based on the Offer Price of HK$52.00 per Offer Share, being the low-end of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 187,865,500. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering.
Assuming the Offer Size Adjustment Option is not exercised Assuming the Offer Size Adjustment Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
total issued
share capital
38.17% 2.51% 33.19% 2.49% 33.19% 2.49% 28.86% 2.46%
We believe that the Cornerstone Placing demonstrates our Cornerstone Investors’
confidence in our Company and its business prospect, and that the Cornerstone Placing will
help to raise the profile of our Company. Our Company became acquainted with each of the
Cornerstone Investors in its ordinary course of operation through the Group’s business network
or through introduction by the Company’s business partners/the Overall Coordinators in the
Global Offering.
The Cornerstone Placing will form part of the International Offering, and, save as
otherwise obtained consent from the Stock Exchange, the Cornerstone Investors (and, for
Cornerstone Investors who will subscribe for our Offer Shares through qualified domestic
institutional investor (“ QDII ”), the QDIIs) and their respective close associates will not
subscribe for any Offer Shares under the Global Offering (other than pursuant to the
Cornerstone Investment Agreements). The Offer Shares to be subscribed by the Cornerstone
Investors (and, for Cornerstone Investors who will subscribe for our Offer Shares through
QDII, the QDIIs) will rank pari passu in all respects with the fully paid H Shares in issue
following the Global Offering of the Company and will be counted towards the public float of
our Company under Rule 8.08 of the Listing Rules. Immediately following the completion of
the Global Offering, the Cornerstone Investors or their close associates will not, by virtue of
their cornerstone investments, have any Board representation in our Company; and none of the
Cornerstone Investors and their close associates will become a substantial Shareholder of our
Company. Other than a guaranteed allocation of the relevant Offer Shares at the final Offer
Price, the Cornerstone Investors do not have any preferential rights under each of their
respective Cornerstone Investment Agreements, as compared with other public Shareholders.
There are no side arrangements or agreements between our Company and the Cornerstone
Investors or any benefit, direct or indirect, conferred on the Cornerstone Investors by virtue of
or in relation to the Listing, other than a guaranteed allocation of the relevant Offer Shares at
the final Offer Price, following the principles as set out in Chapter 4.15 of the Guide for New
Listing Applicants.
CORNERSTONE INVESTORS
– 364 –


--- page 376 ---
Among the Cornerstone Investors, Foresight Funds, UBS AM Singapore, Dajia Life,
Enreal AM and Jump Trading are existing minority Shareholders of the Company or their close
associates. The Stock Exchange has granted a waiver from strict compliance with the
requirements under Rule 10.04 and consent under Paragraph 5(2) of Appendix F1 to the Listing
Rules to permit H Shares in the International Offering to be placed to certain existing minority
Shareholders. For further details, please refer to the section headed “Waivers and Exemptions
— Subscription for H Shares by Existing Shareholders and Their Close Associates”. Save as
otherwise disclosed, to the best knowledge of our Company, each of the Cornerstone Investors
(and, for Cornerstone Investors who will subscribe for our Offer Shares through a QDII, each
of such QDIIs) is (i) not accustomed to take instructions from our Company or any of our
Directors, Supervisors, chief executive, our Largest Group of Shareholders, substantial
Shareholders or existing Shareholders or any of its subsidiaries or their respective close
associates in relation to the acquisition, disposal, voting or other disposition of the Shares
registered in their name or otherwise held by them; (ii) not financed by our Company or any
of our Directors, Supervisors, chief executive of our Company, our Largest Group of
Shareholders, substantial Shareholders, existing Shareholders or any of its subsidiaries or their
respective close associates; and (iii) independent of the other Cornerstone Investors, our
Group, our connected persons and their respective associates, and is not an existing
Shareholder or a close associate of our Group. In addition, to the best knowledge of our
Company, each of the Cornerstone Investors is independent from each other and makes
independent investment decisions.
To the best knowledge of the Overall Coordinators and based on the indicative interest of
investment of the Cornerstone Investors and/or their close associates as of the date of this
prospectus, certain Cornerstone Investors (including UBS AM Singapore, Splendor Achieve,
HCEP , CPE Investment, Dajia Life, Enreal AM, Jump Trading, MY Asian Opportunities, Athos
Capital and Pamalican) and/or their close associates may participate in the International
Offering as placees and subscribe for further Offer Shares in the Global Offering. The
Company will seek the Stock Exchange’s consent and/or waiver to allow the Cornerstone
Investors and/or their close associates to participate in the International Offering as placees
pursuant to Chapter 4.15 of the Guide for New Listing Applicants. Whether such Cornerstone
Investors and/or their associates will place orders in the International Offering and the
allocation to such investors as placees in the International Offering are uncertain and will be
subject to the final investment decisions of such investors and the terms and conditions of the
Global Offering.
As confirmed by each of the Cornerstone Investors, its subscription under the Cornerstone
Placing would be financed by its own internal financial resources, financial resources of its
shareholders or the assets managed for its investors (in the case of Cornerstone Investors which
are funds or investment managers) and it has sufficient funds to settle its respective investment
under the Cornerstone Placing. Each of the Cornerstone Investors has confirmed that all
necessary approvals have been obtained with respect to the Cornerstone Placing and that no
specific approval from any stock exchange (if relevant) is required for the relevant Cornerstone
Placing.
CORNERSTONE INVESTORS
– 365 –


--- page 377 ---
The Cornerstone Investors have agreed to pay for the relevant Offer Shares that they have
subscribed before dealings in the Company’s H Shares commence on the Stock Exchange.
Where delayed delivery takes place, each Cornerstone Investor that may be affected by such
delayed delivery has agreed that it shall nevertheless pay for the relevant Offer Shares before
the Listing.
The total number of Offer Shares to be subscribed by the Cornerstone Investors (and, for
Cornerstone Investors who will subscribe for our Offer Shares through QDII, the QDIIs) may
be affected by reallocation of the Offer Shares between the International Offering and the Hong
Kong Public Offering. If the total demand for H shares in the Hong Kong Public Offering falls
within the circumstance as set out in the section headed “Structure of the Global Offering —
The Hong Kong Public Offering — Reallocation” in this prospectus, our Company and the
Overall Coordinators have the absolute discretion, but not obliged, to deduct the number of
Offer Shares to be subscribed by the Cornerstone Investors on a pro rata basis under the Hong
Kong Public Offering pursuant to Practice Note 18 of the Listing Rules. Details of the actual
number of Offer Shares to be allocated to the Cornerstone Investors will be disclosed in the
allotment results announcement of our Company to be published on or around Monday, 16
September 2024.
THE CORNERSTONE INVESTORS
The table below sets forth details of the Cornerstone Placing:
Assuming an Offer Price of HK$52.00 per H Share (being the low-end of the Offer Price range)
Assuming the Offer Size Adjustment
Option is not exercised
Assuming the Offer Size Adjustment
Option is exercised in full
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
(USD in
millions)
COSCO SHIPPING
Holdings (Hong Kong)
Limited
(“COSCO SHIPPING
Holdings (Hong
Kong) ”) /H1118/H1118/H1118/H1118/H1118/H1118281.20
(2) 42,162,500 8.57% 0.56% 7.45% 0.56% 7.45% 0.56% 6.48% 0.55%
UBS Asset Management
(Singapore) Ltd. (“ UBS
AM Singapore ”) /H1118/H1118/H1118100.00 14,993,800 3.05% 0.20% 2.65% 0.20% 2.65% 0.20% 2.30% 0.20%
CORNERSTONE INVESTORS
– 366 –


--- page 378 ---
Assuming an Offer Price of HK$52.00 per H Share (being the low-end of the Offer Price range)
Assuming the Offer Size Adjustment
Option is not exercised
Assuming the Offer Size Adjustment
Option is exercised in full
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
(USD in
millions)
China Structural Reform
Fund II Corporation
Limited* ( ʕ਷਷ϞΆุ
΅Ϟ
ʮ̡,“China
Structural Reform
Fund II ”) /H1118/H1118/H1118/H1118/H1118/H111896.19
(2) 14,423,000 2.93% 0.19% 2.55% 0.19% 2.55% 0.19% 2.22% 0.19%
Golden Link Worldwide
Limited (“ Golden
Link ”) /H1118/H1118/H1118/H1118/H1118/H1118/H111899.00 14,844,100 3.02% 0.20% 2.62% 0.20% 2.62% 0.20% 2.28% 0.19%
Splendor Achieve Limited
(“Splendor Achieve ”) /H1118 100.04 (3) 15,000,000 3.05% 0.20% 2.65% 0.20% 2.65% 0.20% 2.30% 0.20%
Supercluster Universe
Limited (“ Supercluster
Universe ”) /H1118/H1118/H1118/H1118/H1118100.00 14,993,800 3.05% 0.20% 2.65% 0.20% 2.65% 0.20% 2.30% 0.20%
HCEP Master Fund
(“HCEP ”) /H1118/H1118/H1118/H1118/H1118/H111850.00 7,496,900 1.52% 0.10% 1.32% 0.10% 1.32% 0.10% 1.15% 0.10%
Foresight Global Superior
Choice SPC — Global
Superior Choice Series
Fund 1 SP (“ GSC Fund
1”) and Foresight Global
Superior Choice SPC —
Vision Fund 1 SP
(“Vision Fund 1 ”,
together “ Foresight
Funds ”) /H1118/H1118/H1118/H1118/H1118/H111850.02
(2) 7,500,000 1.52% 0.10% 1.33% 0.10% 1.33% 0.10% 1.15% 0.10%
CPE Investment
XVI Limited
(“CPE Investment ”) /H1118/H1118 50.00 7,496,900 1.52% 0.10% 1.32% 0.10% 1.32% 0.10% 1.15% 0.10%
Dajia Life Insurance Co.,
Ltd (“ Dajia Life ”)/H1118/H1118/H1118 50.00 7,496,900 1.52% 0.10% 1.32% 0.10% 1.32% 0.10% 1.15% 0.10%
CORNERSTONE INVESTORS
– 367 –


--- page 379 ---
Assuming an Offer Price of HK$52.00 per H Share (being the low-end of the Offer Price range)
Assuming the Offer Size Adjustment
Option is not exercised
Assuming the Offer Size Adjustment
Option is exercised in full
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
(USD in
millions)
Metazone Link (HK)
Limited (“ Metazone ”) /H1118 50.00 7,496,900 1.52% 0.10% 1.32% 0.10% 1.32% 0.10% 1.15% 0.10%
Enreal Asset Management
Limited (“ Enreal AM ”) /H1118 35.00 5,247,800 1.07% 0.07% 0.93% 0.07% 0.93% 0.07% 0.81% 0.07%
V anguard Focus Limited
(“Vanguard Focus ”) /H1118/H1118 15.00 2,249,000 0.46% 0.03% 0.40% 0.03% 0.40% 0.03% 0.35% 0.03%
PSBC Wealth Management
(“PSBC Wealth ”) /H1118/H1118/H1118 28.50 4,273,200 0.87% 0.06% 0.76% 0.06% 0.76% 0.06% 0.66% 0.06%
Jump Trading Pacific Pte.
Ltd. (“ Jump Trading ”) /H1118 50.00 7,496,900 1.52% 0.10% 1.32% 0.10% 1.32% 0.10% 1.15% 0.10%
MY Asian Opportunities
Master Fund, L.P . (“ MY
Asian Opportunities
Fund ”) /H1118/H1118/H1118/H1118/H1118/H1118/H111838.00 5,697,600 1.16% 0.08% 1.01% 0.08% 1.01% 0.08% 0.88% 0.07%
Athos Capital Limited
(“Athos Capital ”) /H1118/H1118/H1118 30.00 4,498,100 0.91% 0.06% 0.79% 0.06% 0.79% 0.06% 0.69% 0.06%
Pamalican Fund Ltd
(“Pamalican ”) /H1118/H1118/H1118/H111830.00 4,498,100 0.91% 0.06% 0.79% 0.06% 0.79% 0.06% 0.69% 0.06%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,252.95 187,865,500 38.17% 2.51% 33.19% 2.49% 33.19% 2.49% 28.86% 2.46%
CORNERSTONE INVESTORS
– 368 –


--- page 380 ---
Assuming an Offer Price of HK$53.40 per H Share (being the mid-point of the Offer Price range)
Assuming the Offer Size Adjustment
Option is not exercised
Assuming the Offer Size Adjustment
Option is exercised in full
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
(USD in
millions)
COSCO SHIPPING
Holdings
(Hong Kong) /H1118/H1118/H1118/H1118281.20
(2) 41,057,100 8.34% 0.55% 7.25% 0.54% 7.25% 0.54% 6.31% 0.54%
UBS AM Singapore /H1118/H1118/H1118100.00 14,600,700 2.97% 0.20% 2.58% 0.19% 2.58% 0.19% 2.24% 0.19%
China Structural Reform
Fund II /H1118/H1118/H1118/H1118/H1118/H1118/H111896.19 (2) 14,044,900 2.85% 0.19% 2.48% 0.19% 2.48% 0.19% 2.16% 0.18%
Golden Link /H1118/H1118/H1118/H1118/H1118/H111899.00 14,454,900 2.94% 0.19% 2.55% 0.19% 2.55% 0.19% 2.22% 0.19%
Splendor Achieve /H1118/H1118/H1118/H1118102.73 (3) 15,000,000 3.05% 0.20% 2.65% 0.20% 2.65% 0.20% 2.30% 0.20%
Supercluster Universe /H1118/H1118 100.00 14,600,700 2.97% 0.20% 2.58% 0.19% 2.58% 0.19% 2.24% 0.19%
HCEP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,300,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
Foresight Funds /H1118/H1118/H1118/H111850.02 (2) 7,303,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
CPE Investment /H1118/H1118/H1118/H111850.00 7,300,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
Dajia Life /H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,300,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
Metazone /H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,300,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
Enreal AM /H1118/H1118/H1118/H1118/H1118/H111835.00 5,110,200 1.04% 0.07% 0.90% 0.07% 0.90% 0.07% 0.79% 0.07%
V anguard Focus /H1118/H1118/H1118/H111815.00 2,190,100 0.45% 0.03% 0.39% 0.03% 0.39% 0.03% 0.34% 0.03%
PSBC Wealth /H1118/H1118/H1118/H1118/H111828.50 4,161,100 0.85% 0.06% 0.74% 0.06% 0.74% 0.06% 0.64% 0.05%
Jump Trading /H1118/H1118/H1118/H1118/H111850.00 7,300,300 1.48% 0.10% 1.29% 0.10% 1.29% 0.10% 1.12% 0.10%
MY Asian Opportunities
Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838.00 5,548,200 1.13% 0.07% 0.98% 0.07% 0.98% 0.07% 0.85% 0.07%
Athos Capital /H1118/H1118/H1118/H1118/H111830.00 4,380,200 0.89% 0.06% 0.77% 0.06% 0.77% 0.06% 0.67% 0.06%
Pamalican /H1118/H1118/H1118/H1118/H1118/H1118/H111830.00 4,380,200 0.89% 0.06% 0.77% 0.06% 0.77% 0.06% 0.67% 0.06%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,255.65 183,333,100 37.25% 2.45% 32.39% 2.43% 32.39% 2.43% 28.17% 2.40%
CORNERSTONE INVESTORS
– 369 –


--- page 381 ---
Assuming an Offer Price of HK$54.80 per H Share (being the high-end of the Offer Price range)
Assuming the Offer Size Adjustment
Option is not exercised
Assuming the Offer Size Adjustment
Option is exercised in full
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Assuming the
Over-allotment Option
is not exercised
Assuming the
Over-allotment Option
is exercised in full
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
Approximate
%o ft h e
Offer
Shares
Approximate
%o ft h e
issued share
capital
(USD in
millions)
COSCO SHIPPING
Holdings
(Hong Kong) /H1118/H1118/H1118/H1118281.20
(2) 40,008,200 8.13% 0.53% 7.07% 0.53% 7.07% 0.53% 6.15% 0.52%
UBS AM Singapore /H1118/H1118/H1118100.00 14,227,700 2.89% 0.19% 2.51% 0.19% 2.51% 0.19% 2.19% 0.19%
China Structural Reform
Fund II /H1118/H1118/H1118/H1118/H1118/H1118/H111896.19 (2) 13,686,100 2.78% 0.18% 2.42% 0.18% 2.42% 0.18% 2.10% 0.18%
Golden Link /H1118/H1118/H1118/H1118/H1118/H111899.00 14,085,600 2.86% 0.19% 2.49% 0.19% 2.49% 0.19% 2.16% 0.18%
Splendor Achieve /H1118/H1118/H1118/H1118105.43 (3) 15,000,000 3.05% 0.20% 2.65% 0.20% 2.65% 0.20% 2.30% 0.20%
Supercluster Universe /H1118/H1118 100.00 14,227,700 2.89% 0.19% 2.51% 0.19% 2.51% 0.19% 2.19% 0.19%
HCEP /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,113,800 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
Foresight Funds /H1118/H1118/H1118/H111850.02 (2) 7,116,700 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
CPE Investment /H1118/H1118/H1118/H111850.00 7,113,800 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
Dajia Life /H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,113,800 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
Metazone /H1118/H1118/H1118/H1118/H1118/H1118/H111850.00 7,113,800 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
Enreal AM /H1118/H1118/H1118/H1118/H1118/H111835.00 4,979,700 1.01% 0.07% 0.88% 0.07% 0.88% 0.07% 0.77% 0.07%
V anguard Focus /H1118/H1118/H1118/H111815.00 2,134,100 0.43% 0.03% 0.38% 0.03% 0.38% 0.03% 0.33% 0.03%
PSBC Wealth /H1118/H1118/H1118/H1118/H111828.50 4,054,800 0.82% 0.05% 0.72% 0.05% 0.72% 0.05% 0.62% 0.05%
Jump Trading /H1118/H1118/H1118/H1118/H111850.00 7,113,800 1.45% 0.10% 1.26% 0.09% 1.26% 0.09% 1.09% 0.09%
MY Asian Opportunities
Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838.00 5,406,500 1.10% 0.07% 0.96% 0.07% 0.96% 0.07% 0.83% 0.07%
Athos Capital /H1118/H1118/H1118/H1118/H111830.00 4,268,300 0.87% 0.06% 0.75% 0.06% 0.75% 0.06% 0.66% 0.06%
Pamalican /H1118/H1118/H1118/H1118/H1118/H1118/H111830.00 4,268,300 0.87% 0.06% 0.75% 0.06% 0.75% 0.06% 0.66% 0.06%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,258.34 179,032,700 36.45% 2.40% 31.70% 2.37% 31.70% 2.37% 27.56% 2.35%
Notes:
(1) Subject to rounding down to the nearest whole board lot of 100 Offer Shares. Calculated based on the exchange
rate set out in the section headed “Information about this document and the Global Offering — Currency
Translations”.
(2) Calculated based on an exchange rate of US$1.0000: HK$7.7968. The actual investment amount is
denominated in Hong Kong dollars.
(3) Splendor Achieve has agreed to subscribe for 15,000,000 H Shares, and the investment amount shall be
calculated based on the Offer Price accordingly. Save for Splendor Achieve, the subscription amount for
investments from other Cornerstone Investors are fixed.
CORNERSTONE INVESTORS
– 370 –


--- page 382 ---
The information about our Cornerstone Investors set forth below has been provided by the
Cornerstone Investors in connection with the Cornerstone Placing.
COSCO SHIPPING Holdings (Hong Kong)
COSCO SHIPPING Holdings (Hong Kong) is a wholly-owned subsidiary of COSCO
SHIPPING Holdings Co., Ltd (“ COSCO SHIPPING Holdings ”) which is ultimately
controlled by the State-owned Assets Supervision and Administration Commission of the State
Council. COSCO SHIPPING Holdings is listed on the Hong Kong Stock Exchange (stock code:
1919) and the Shanghai Stock Exchange (stock code: 601919). COSCO SHIPPING Holdings
is currently positioned as a global digital supply chain operation and investment platform with
container shipping as the core. It is the core company which undertakes the vision of China
COSCO SHIPPING Corporation Limited and its subsidiaries to “accelerate creation of a
world-class shipping technology enterprise”, and is committed to providing customers with a
full-link solution of “container shipping + port + related logistics services”.
UBS AM Singapore
UBS AM Singapore, a company incorporated in Singapore in December 1993, has entered
into a cornerstone investment agreement with the Company and the Joint Sponsors, in its
capacity as the delegate of the investment manager for and on behalf of the following fund(s):
(i) UBS (LUX) EQUITY FUND — GREA TER CHINA (USD); (ii) UBS (LUX) EQUITY
FUND — CHINA OPPORTUNITY (USD); (iii) UBS (HK) FUND SERIES — CHINA
OPPORTUNITY EQUITY (USD); (iv) UBS (LUX) EQUITY SICA V — ALL CHINA (USD);
(v) UBS (LUX) KEY SELECTION SICA V — CHINA ALLOCA TION OPPORTUNITY (USD).
No single ultimate beneficial owner holds 30% or more interests in those funds.
UBS AM Singapore is a wholly owned subsidiary of UBS Asset Management AG (“ UBS
Asset Management ”), an investment management company, which is wholly ultimately owned
by UBS Group AG, which is a company organized under Swiss law as a corporation that has
issued shares of common stock to investors. UBS Group AG’s shares are listed on the SIX
Swiss Exchange (stock code: UBSG) and the New Y ork Stock Exchange (stock code: UBS).
UBS Asset Management is a business division of UBS Group AG and is operated as a dedicated
asset management business with independence in all investment decision making. UBS Asset
Management is a global large-scale and diversified asset manager, with a presence in 23
markets. UBS Asset Management offers investment capabilities and styles across all major
traditional and alternative asset classes as well as advisory support to institutions, wholesale
intermediaries and its global wealth management clients. As at June 30, 2024, invested assets
under management of UBS Asset Management globally totalled USD1.7 trillion. UBS AM
Singapore’s shareholders’ and New Y ork Stock Exchange’s approval are not required for UBS
AM Singapore’s subscription for the Investor Shares.
CORNERSTONE INVESTORS
– 371 –


--- page 383 ---
China Structural Reform Fund II
China Structural Reform Fund II, a company incorporated in the People’s Republic of
China, is indirectly and ultimately controlled by the State-owned Assets Supervision and
Administration Commission of the State Council (“ SASAC ”). China Chengtong Holdings
Group Ltd. (ʮ̡), a company controlled by SASAC, holds
approximately 35.29% equity interest of China Structural Reform Fund II. CCT Fund
Management Co., Ltd. (ʮ̡), a wholly-owned subsidiary of China
Chengtong Holdings Group Ltd., is the manager of China Structural Reform Fund II and is
responsible for its fund management and general affairs. China Structural Reform Fund II is
engaged in equity investment, investment management and asset management and other
businesses with private equity funds, with a registered capital of RMB62.7 billion.
China Structural Reform Fund II’s investment into the Company would be completed
through QDII programs in the PRC.
Golden Link
Golden Link is a limited liability company registered in the British Virgin Islands, with
its shares wholly-owned by BYD (H.K.) Co., Limited which is in turn a wholly-owned
subsidiary of BYD Company Limited (ʮ̡,“ BYD”). BYD is a company
based in Shenzhen which is principally engaged in automotive business, mainly focused on
new energy vehicles, mobile phone parts and assembly business, rechargeable batteries and
photovoltaic business. BYD is a listed company on the Shenzhen Stock Exchange (stock code:
002594) and the Hong Kong Stock Exchange (stock code: 1211). Midea Group and BYD have
established business cooperation relationship, with Midea Group providing central air
conditioner, KUKA robot products and other products to BYD, and BYD providing IGBT and
other products to Midea Group. No single ultimate beneficial owner holds 30% or more
interests in Golden Link.
Splendor Achieve
Splendor Achieve is indirectly wholly-owned by Mr. Y ang Shaopeng. As at the Latest
Practicable Date, Mr. Y ang Shaopeng is the controlling shareholder and honorary life chairman
of SITC International Holdings Company Limited (“ SITC ”) and was previously its executive
director and chairman of its board of directors up to his retirement in March 2024. SITC is
listed on the Hong Kong Stock Exchange (stock code: 1308), mainly engaged in shipping and
integrated logistics business. SITC ranks the 13th among international container shipping
companies in terms of shipping capacity, its trade lanes and land-based integrated logistics
business network covered 84 major ports in various countries and regions in Asia. SITC is
committed to build an integrated sea-land service value chain and strive for the goal in
becoming a world-class integrated logistics service solution provider.
CORNERSTONE INVESTORS
– 372 –


--- page 384 ---
Supercluster Universe
Supercluster Universe Limited is an exempted company incorporated under the laws of
the Cayman Islands and a controlled subsidiary of Boyu Capital Opportunities Master Fund.
Boyu Capital Opportunities Master Fund is an exempted company incorporated under the laws
of the Cayman Island and an investment fund managed by Boyu Capital Management
(Singapore) Pte. Ltd., a member of Boyu group. Boyu provides growth and transformational
capital for leading businesses and entrepreneurs in areas that include technology, healthcare,
consumer and business services. There is no single investor holding 30% or more interest in
Supercluster Universe Limited.
HCEP
HCEP is an exempted company with limited liability incorporated under the laws of the
Cayman Islands. The investment manager of HCEP is HCEP Management Limited, which is in
turn wholly-owned by HCEP Management Holding Limited. HCEP is an investment fund
whose primary purpose is to make China-related equity investments. HCEP Management
Limited was incorporated under the laws of Hong Kong in 2020. There is no participating
shareholder holding 30% or more shares in HCEP .
Foresight Funds
GSC Fund 1 and Vision Fund 1, together the Foresight Funds, are both sub funds of
Foresight Global Superior Choice SPC, which was incorporated in the Cayman Islands on
October 17, 2016. The Foresight Funds are currently managed in full discretion by Foresight
Fund (Hong Kong) Limited (“Foresight HK”), a wholly owned subsidiary of Foresight Fund
Management Company. Foresight HK was incorporated in Hong Kong in April 26, 2022, and
has been a licensed corporation as defined under the SFO for Type 4 (Advising on Securities)
and Type 9 (Asset management) since March 24, 2023. Foresight Fund Management Company
is the investment advisor of the Foresight Funds and is a Shanghai-based asset management
company and was founded by Mr. Chen Guangming. No ultimate beneficial owner of any
limited partner or general partner holds more than 30% interests in Foresight Funds.
CPE Investment
CPE Investment is a business company incorporated under the laws of the BVI and its
primary business activity is investment holding. It is wholly owned by CPE Global
Opportunities Fund II, L.P . (“ CPE GOF II ”), an exempted limited partnership formed under
the laws of the Cayman Islands. The general partner of CPE GOF II is CPE GOF GP Limited,
a company incorporated in the Cayman Islands with limited liability. CPE GOF GP Limited is
directly and wholly owned by CPE Management International Limited, which is in turn wholly
owned by CPE Management International II Limited, both of which are companies
incorporated in the Cayman Islands with limited liability. CPE Management International II
Limited is owned by a number of shareholders that are natural persons, none of whom controls
CPE Management International II Limited. CPE GOF II’s investor base comprises both
corporate and entrepreneurial investors. No ultimate beneficial owner of any limited partner or
general partner holds more than 30% interests in CPE Investment.
CORNERSTONE INVESTORS
– 373 –


--- page 385 ---
Dajia Life
Dajia Life is a professional life insurance company which is a subsidiary of Dajia
Insurance Group which is ultimately controlled by China Insurance Security Fund Company
Limited. It was established in June 2010 and headquartered in Beijing. It is a limited liability
company with a registered capital of RMB30.79 billion. Dajia Life mainly engages in various
personal insurance businesses such as life insurance, health insurance, accident insurance,
reinsurance business of the above-mentioned businesses, and other businesses approved by the
National Financial Regulatory Administration. Currently, Dajia Life has a total of 19
provincial-level branches in operation.
Metazone
Metazone is a wholly owned subsidiary of TCL Industries Holdings Co., Ltd. TCL
Industries Holdings Co., Ltd is a company established under the laws of the PRC, and it is one
of the major home appliance and consumer electronics conglomerates with a global presence.
Mr. Li Dongsheng is the Chairman and the ultimate beneficial owner of TCL Industries
Holdings Co., Ltd.
Enreal AM
Enreal AM is a licensed corporation established in Hong Kong to carry out type 9
regulated activities under the SFO in Hong Kong and serves as investment manager to Enreal
China Master Fund and Forreal China V alue Fund. These two funds are focused on investing
in technology-driven opportunities in China. Specifically, they invest in the Hong
Kong/mainland China equity market as well as ADRs, and mainly covers sectors including
TMT, Advanced Manufacturing, Consumer and Healthcare etc. The ultimate beneficial owner
of Enreal China Master Fund and Forreal China V alue Fund holding 30% or more of its interest
is a global institutional investor not an individual investor.
Vanguard Focus
V anguard Focus is a business company incorporated in the British Virgin Islands on June
8, 2020. It is an investment holding company of IDG Capital. V anguard Focus is wholly-owned
by a senior executive of IDG Capital, who is independent from the Company. Founded in 1992,
IDG Capital is a pioneer in introducing foreign venture capital into China. During its over 30
years of operation, IDG Capital brings a strong combination of global perspective and local
experience to investment management, and its highly skilled team has an in-depth
understanding of the China market with close relationships with many accomplished
entrepreneurs and influential business leaders.
CORNERSTONE INVESTORS
– 374 –


--- page 386 ---
PSBC Wealth
PSBC Wealth was established on December 18, 2019, with a registered capital of RMB8.0
billion, in which Postal Savings Bank of China Co., Ltd. (stock code: 1658) holds a 100% stake
and is ultimately controlled by China Post Group Corporation Limited. Its business scope is
public issuance of wealth management products to the general public, investment and
management of entrusted assets for investors; non-public issuance of wealth management
products to eligible investors, investment and management of entrusted assets for investors;
financial advisory and consulting services, etc. PSBC Wealth remained firmly committed to
balanced development of scale, quality and profitability, aimed at fostering core
competitiveness, deepened investment analysis, marketing, internal control, operational
reforms and digital transformation, and continued to improve the rule-based, specialized and
market-oriented development of wealth management business.
PSBC Wealth’s investment in the total amount of US$28.5 million into the Company
would be completed through QDII programs in the PRC, of which it has engaged Industrial
Securities Assets Management Co., Ltd. (ʮ̡), an asset manager that
is a QDII, to subscribe for such Offer Shares at the Offer Price in the aggregate amount of the
Hong Kong dollar equivalent of US$7.5 million on behalf of PSBC Wealth, and the remaining
investment in the amount of US$21 million would be completed through separate QDII
program in the PRC.
Jump Trading
Jump Trading is a member of the Jump Trading Group. Founded in 1999, Jump Trading
Group is one of the largest global financial trading groups. Jump Trading Group is
headquartered in Chicago and has offices in Chicago, New Y ork, London, Hong Kong,
Shanghai, Singapore in addition to other major financial centers. As part of its investment
activities, the capital markets investment team of Jump Trading Group engages and invests in
high-quality companies through equity raisings, and relies on the firm’s best-in-class execution
and strong corporate governance to make strategic investments. The capital markets
investments team is based in Hong Kong and consists of seasoned investment professionals
with strong focus and understanding of company fundamentals. The team focusses and invests
extensively across the Asia Pacific region. No ultimate beneficial owner of any limited partner
or general partner holds more than 30% interests in Jump Trading.
MY Asian Opportunities Fund
MY Asian Opportunities Fund is a fund established in the Cayman Islands and managed
by MY .Alpha Management HK Advisors Limited (“ MY.Alpha ”). MY .Alpha is headquartered
in Hong Kong and manages assets on behalf of institutions, endowments, foundations, funds
of funds, wealthy individuals and their families. The fund’s investment strategy is to invest in
Asian companies using a catalyst-driven, fundamental value approach and to provide
consistent, superior risk-adjusted investment returns relatively independent of the overall
market. There is no single investor who holds 30% or more in MY Asian Opportunities Fund
from a beneficial ownership perspective.
CORNERSTONE INVESTORS
– 375 –


--- page 387 ---
Athos Capital
Athos Capital serves as the investment manager of each of Athos Asia Event Driven
Master Fund, New Holland Tactical Alpha Fund LP and BlueHarbour MAP I LP . Athos Capital
manages assets on behalf of a global institutional investor base, including sovereign wealth
funds, university endowments, foundations and family offices. Founded in 2011, Athos Capital
pursues a variety of investment strategies with a view to providing superior and sustainable
long term returns for its clients. Athos Capital is wholly-owned by Mr. Matthew Love Moskey
and Mr. Friedrich Bela Schulte-Hillen, who also serve as the two responsible officers of Athos
Capital.
Pamalican
Pamalican Asset Management Limited serves as the investment manager of Pamalican
with a team of 13 professionals across investing and operations. Pamalican is an exempted
company incorporated with limited liability in the Cayman Islands. Pamalican Asset
Management Limited manages gross assets of approximately US$1 billion on behalf of a global
institutional investor base, and pursues a variety of investment strategies with a view to
providing superior and sustainable long term returns for its clients. Pamalican Asset
Management Limited is licensed by the SFC for the regulated activity of asset management
(CE: BUT781) and is a US Securities and Exchange Commission Exempt Reporting Advisor
(CRD: 331819). No ultimate beneficial owner holds more than 30% interests in Pamalican.
CLOSING CONDITIONS
The obligation of each Cornerstone Investor or each QDII (as applicable) to subscribe for
the Offer Shares under the respective Cornerstone Investment Agreement is subject to, among
other things, the following closing conditions:
(a) the Underwriting Agreements for the Hong Kong Public Offering and the
International Offering being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the aforesaid
Underwriting Agreements having been terminated;
(b) the Offer Price having been agreed upon between our Company and the Overall
Coordinators (for themselves and on behalf of the underwriters of the Global
Offering);
(c) the Listing Committee of the Stock Exchange having granted the approval for the
listing of, and permission to deal in, the H Shares (including the H Shares subscribed
for by the Cornerstone Investors) as well as other applicable waivers and approvals,
and such approval, permission or waiver having not been revoked prior to the
commencement of dealings in the H Shares on the Stock Exchange;
CORNERSTONE INVESTORS
– 376 –


--- page 388 ---
(d) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or in the respective Cornerstone Investment Agreements and there shall be
no orders or injunctions from a court of competent jurisdiction in effect precluding
or prohibiting consummation of such transactions; and
(e) the respective acknowledgements, representations, warranties, undertakings and
confirmations of relevant Cornerstone Investor under the respective Cornerstone
Investment Agreement are accurate and true in all respects and not misleading and
that there is no material breach of the Cornerstone Investment Agreement on the part
of the relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, and will cause its affiliates
not to, whether directly or indirectly, at any time during the period of six months from (and
inclusive of) the Listing Date (the “ Lock-up Period ”), dispose of, in any way, any of the Offer
Shares or any interest in any company or entity holding such Offer Shares that they have
purchased pursuant to the relevant Cornerstone Investment Agreement, save for certain limited
circumstances, such as transfers to any of its wholly-owned subsidiaries who will be bound by
the same obligations of such Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
– 377 –


--- page 389 ---
FUTURE PLANS
See “Business — Our Strategies” in this document for a detailed description of our future
plans.
USE OF PROCEEDS
The net proceeds from the Global Offering that we will receive, after deducting the
underwriting commissions and other estimated expenses paid and payable by us in connection
with the Global Offering if there is no exercise of the Over-allotment Option at all, will be:
Net proceeds if no exercise of the Over-allotment Option at all:
Net proceeds (in HK$ million)
(a) Assuming the
Offer Size
Adjustment
Option is not
exercised at all
(b) Assuming the
Offer Size
Adjustment
Option is
exercised in full
Assuming an Offer Price of HK$52.00 per H Share
(being the minimum Offer Price) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,289 29,096
Assuming an Offer Price of HK$53.40 per H Share
(being the mid-point of the Offer Price range) /H1118/H1118/H1118/H1118/H1118/H111825,972 29,882
Assuming an Offer Price of HK$54.80 per H Share
(being the maximum Offer Price) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,656 30,701
If the Over-allotment Option is exercised in full, after deducting the relevant underwriting
commissions, the additional net proceeds which we will receive from such exercise of the
Over-allotment Option will be:
Additional net proceeds from the Over-allotment Option, if exercised in full:
Additional net proceeds
(in HK$ million) from the exercise
of the Over-allotment Option in full:
(a) Assuming the
Offer Size
Adjustment
Option is not
exercised at all
(b) Assuming the
Offer Size
Adjustment
Option is
exercised in full
Assuming an Offer Price of HK$52.00 per H Share
(being the minimum Offer Price) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,808 4,379
Assuming an Offer Price of HK$53.40 per H Share
(being the mid-point of the Offer Price range) /H1118/H1118/H1118/H1118/H1118/H11183,910 4,497
Assuming an Offer Price of HK$54.80 per H Share
(being the maximum Offer Price) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,013 4,582
FUTURE PLANS AND USE OF PROCEEDS
– 378 –


--- page 390 ---
Assuming an Offer Price of HK$53.40 per H Share (being the mid-point of the Offer Price
range of between HK$52.00 and HK$54.80 per H Share) and that the Offer Size Adjustment
Option and the Over-allotment Option are not exercised, in line with our strategies, we intend
to use our proceeds from the Global Offering for the purposes and in the amounts set forth
below:
For the
period from
the Latest
Practicable
Date to
31 December
2024
For the
period from
1 January
2025 to
31 December
2025
For the
period from
1 January
2026 to
31 December
2026
After
1 January
2027
Total
(HK$ million)
Approximate
%o ft h e
total
Worldwide research and
development efforts /H1118/H1118/H111830% 30% 40% – 5,194 20%
Upgrading our
intelligent
manufacturing system
and supply chain
management /H1118/H1118/H1118/H1118/H1118/H1118/H111825% 20% 25% 30% 9,090 35%
Enhancing our
distribution channels
and sales network
around the world and
increasing our
overseas sales under
our own brands /H1118/H1118/H1118/H1118/H111823% 30% 30% 17% 9,090 35%
Working capital and
general corporate
purposes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820% 25% 25% 30% 2,597 10%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825% 26% 30% 19% 25,972 100%
 approximately 20% of the net proceeds, or approximately HK$5,194 million, is
expected to be used for our worldwide research and development efforts in the
following one to three years, including (i) the “research generation” that focuses on
long-term fundamental research; (ii) the “reserve generation” that focuses on
innovation at the product platform level to support the next generation of product
development; and (iii) the “development generation” that focuses on product
development projects with demonstrated market demand. We will expand our
research and development team around the world, attracting and retaining R&D
talents with relevant academic backgrounds and industry experience by offering
competitive compensation packages. We plan to recruit 1,000 to 1,500 R&D talents
globally, out of which 900 to 1,350 are expected to have master’s or above degrees
and/or qualification and 150 to 225 will be recruited overseas. Major relevant
research fields of these talents include fluid and solid mechanics, thermodynamics,
FUTURE PLANS AND USE OF PROCEEDS
– 379 –


--- page 391 ---
material sciences, healthcare, noise technology and electromagnetic technology. We
will also further expand the footprints of our global research centres to enhance our
ability to localize our product portfolio. Specifically, we will primarily deploy the
R&D funds in the following fields:
/H18537approximately 10% of the net proceeds, or approximately HK$2,597 million,
is expected to be used for the research and development of new products and
the continual upgrading of our existing products:
▪ Our R&D efforts in Smart Home Solutions will primarily focus on
developing more intelligent, premium and environmentally-friendly
products, including but not limited to: (i) improving the sensing
capability of our full-suite home appliances in measuring vision, sound,
temperature, force, and other modalities and the analytics capability, so
that the appliances can perform their functions (e.g. temperature
adjustment, cleaning, cooking, etc.) more automatically and intelligently
with high efficiency and effectiveness; (ii) improving our proprietary
smart home control systems with the goal to deepen the integration of
various appliances at home; (iii) improving our AI-powered interactive
technologies to optimize the user experience with our Smart Home
Solutions; and (iv) improving energy efficiency, reducing emission, and
adopting more environmentally-friendly materials to achieve the overall
goal of decarbonization. The research and development of the above
technologies will help us provide smarter, more integrated and more
energy-saving home appliances so as to improve our product
competitiveness and realize a more premium product matrix, which will
further increase our market share and revenue.
▪ Our R&D efforts in Commercial & Industrial Solutions primarily include
expanding our research initiatives on core cutting-edge technologies,
enhancing our product matrix, and improving the performance of our
products by continually upgrading both the underlying hardware and
software control systems:
 We will upgrade features and functionalities of the hardware. To
illustrate with our Intelligent Building technology, we will continue
to develop central air conditioners, elevators, and energy
management systems with higher energy efficiency, better
performance, and enhanced reliability to further expand our product
offerings and ensure their global-leading functionality and quality.
We will also continue to ride on the industry trend towards carbon
neutrality to earn recognition from a larger number of commercial
and industrial customers, with a goal to further increase our market
share and revenue.
FUTURE PLANS AND USE OF PROCEEDS
– 380 –


--- page 392 ---
 We will continue to upgrade our digital software platforms. For
example, we will continue to upgrade the iBUILDING digital
platform to connect with a broader array of appliances and devices,
enhance the corresponding control over the building, and better
realize a one-stop management solution. We will also continue to
upgrade our industrial internet platform, M IoT, which integrates
our various capabilities across KUKA Group and intelligent
building and industrial technologies, among others. Our M IoT
empowers the digital transformation of our industrial customers
spanning their whole value chain. The research and development of
the above softwares and platforms will help us achieve higher added
values associated with our products and thereby enhance our
profitability. The interconnectivity among different business units
that are accessible on a single digital platform could also provide
cross-selling opportunities to further accelerate the revenue growth.
/H18537approximately 10% of the net proceeds, or approximately HK$2,597 million,
is expected to be used for middle-to-long-term research and development
efforts, including: (i) fundamental research, such as acoustics, materials
science, thermodynamics, fluid mechanics, and solid mechanics; and (ii)
frontier technologies, such as next-generation energy storage technology,
robotics and related core components, advanced medical diagnostics and
imaging technology, and intelligent manufacturing technology, with the goal to
build our long-term technical reserves for potentially future game-changing
products, and ensure our leading position.
 approximately 35% of the net proceeds, or approximately HK$9,090 million, is
expected to be used for continual investment in upgrading our intelligent
manufacturing system and supply chain management in the following one to four
years:
/H18537approximately 20% of the net proceeds, or approximately HK$5,194 million is
expected to be used for expanding our manufacturing capacity overseas:
▪ Specifically, we will expand our capacity in large home appliance
markets or markets with high growth potential such as Europe, Latin
America, Africa, India, and Southeast Asia, through a combination of our
own capital expenditure, joint venture investment, and acquisitions, to
enhance the scale and quality of our overseas production and meet the
demand of local customers for our Smart Home Solutions and
Commercial & Industrial Solutions.
FUTURE PLANS AND USE OF PROCEEDS
– 381 –


--- page 393 ---
 The following table summarizes a non-exhaustive list detailing our key
planned manufacturing bases:
Expected Time for
Commencement of
Commercial
Production
Geographic
Location Key Products
Smart Home Solutions
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118India Kitchen appliance
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Indonesia Residential AC
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Brazil Refrigerator, washing
machine
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Indonesia Refrigerator, washing
machine
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Thailand Refrigerator
2026 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Egypt Washing machine
Commercial & Industrial Solutions
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Italy Heat pump
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Thailand Commercial AC
 These manufacturing bases for Smart Home Solutions and
Commercial & Industrial Solutions are expected to have an annual
production value of around RMB12.0 billion in aggregate, when the
capacity is fully ramped up.
▪ Along with expanding our capacity for manufacturing products, we will
also expand our component manufacturing centres, raw material
procurement centres and others to increase the proportion of local supply
in overseas markets, thus enhancing the stability and efficiency of our
supply chain.
/H18537approximately 15% of the net proceeds, or approximately HK$3,896 million is
expected to be used for enhancing the level of digitalization and intelligence
for our manufacturing infrastructure and supply chain:
▪ approximately 10% of the net proceeds, or approximately HK$2,597
million is expected to be used for enhancing our manufacturing
infrastructure. The ultimate goal is to realize full-fledged automation,
digitalization, and intelligentization of industrial design, manufacturing,
and quality assurance. To achieve this goal, we will continue to digitalize
more manufacturing processes so that they can be brought online for
real-time monitoring and analysis. With such data insights, we strive to
constantly optimize the manufacturing flow and model to enhance
FUTURE PLANS AND USE OF PROCEEDS
– 382 –


--- page 394 ---
efficiency. Besides, we aim to improve the automation rate of our
production lines for higher productivity and better profitability in the
long term. Overall, we will use our “Lighthouse Factories” as the
benchmark to continually upgrade our production plants. We will invest
in enhancing our flexible and lean manufacturing system to quickly
respond to the evolving customer demand with high flexibility.
▪ approximately 5% of the net proceeds, or approximately HK$1,299
million is expected to be used for improving our digital and intelligent
supply chain management. We will continue to promote the use of our
ISC management system to more suppliers and expand the raw materials
categories for centralized procurement, so as to further enhance supply
efficiency and reduce procurement costs.
 approximately 35% of the net proceeds, or approximately HK$9,090 million, is
expected to be used for enhancing our distribution channels and sales network
around the world and increasing our overseas sales under our own brands in the
following one to five years:
/H18537approximately 20% of the net proceeds, or approximately HK$5,194 million is
expected to be used for building and strengthening our brand and product
portfolio in overseas markets:
▪ approximately 8% of the net proceeds, or approximately HK$2,078
million is expected to be used for increasing the promotion and
advertisement of our own brands and products on social media, and
collaborating more broadly with globally well-known KOLs.
▪ approximately 12% of the net proceeds, or approximately HK$3,117
million is expected to be used for investing in or acquiring targets, if
available, related to our Smart Home Solutions and Commercial &
Industrial Solutions that have (i) strong brand value, such as mid-
to-high-end home appliance and commercial air conditioner brands
overseas, especially in Europe and the United States, (ii) complementary
product offerings, such as western kitchenware for Smart Home Solutions
and elevators and heating equipment for Commercial & Industrial
Solutions, and (iii) extensive sales channel and high-quality customer
base in overseas markets. Regarding the size of the potential targets, we
typically aim to acquire targets with an annual revenue exceeding
US$100.0 million. At the same time, potential targets are expected to
have solid track record of operations and financials and maintain a good
internal control mechanism and compliance history, with an operating
history of over 5 years. According to Frost & Sullivan, in 2023, there
were over 500 of such potential targets globally. We will continue to
source potential acquisition targets that may fit our criteria.
FUTURE PLANS AND USE OF PROCEEDS
– 383 –


--- page 395 ---
/H18537approximately 15% of the net proceeds, or approximately HK$3,896 million is
expected to be used for expanding and upgrading our sales network around the
world:
▪ approximately 5% of the net proceeds, or approximately HK$1,299
million is expected to be used for upgrading our Midea Cloud Sales
platform to accurately and efficiently track product sales of our
distributors and retailers. We will also provide distributors and retailers
with more advanced digital toolkits for their efficient store operation and
target marketing.
▪ approximately 10% of the net proceeds, or approximately HK$2,597
million is expected to be used for expanding and upgrading our sales
network in overseas markets. The initiatives will include building a larger
overseas sales team, expanding the dedicated sales and distribution
channel for premium brands, establishing more experience stores in
overseas markets, and building and improving our self-operated
e-commerce channels.
 approximately 10% of the net proceeds, or approximately HK$2,597 million, is
expected to be used for working capital and general corporate purposes.
In the event that the Offer Price is set at the maximum offer price or the minimum offer
price of the indicative Offer Price range, the net proceeds of the Global Offering will increase
or decrease by approximately HK$683 million, respectively. If we make an upward or
downward offer price adjustment to set the final Offer Price to be above or below the mid-point
of the Offer Price range, we will increase or decrease the allocation of the net proceeds to the
above purposes on a pro rata basis.
The additional net proceeds that we would receive if the Offer Size Adjustment Option
and the Over-allotment Option were exercised in full would be (i) HK$8,627 million (assuming
an Offer Price of HK$54.80 per H Share, being the maximum Offer Price), (ii) HK$8,407
million (assuming an Offer Price of HK$53.40 per H Share, being the mid-point of the Offer
Price range) and (iii) HK$8,186 million (assuming an Offer Price of HK$52.00 per H Share,
being the minimum Offer Price).
To the extent that the net proceeds from the Global Offering (including the net proceeds
from the exercise of the Offer Size Adjustment Option and the Over-allotment Option) are
either more or less than expected, we may adjust our allocation of the net proceeds for the
above purposes on a pro rata basis.
We will only place the net proceeds of the Global Offering that are not immediately
required for the above purposes in short-term interest-bearing accounts at licensed commercial
banks and/or authorised financial institutions as defined under the Securities and Futures
Ordinance or applicable laws and regulations in other jurisdictions so long as it is deemed to
be in the best interests of our Company. In such event, we will comply with the appropriate
disclosure requirements under the Listing Rules.
FUTURE PLANS AND USE OF PROCEEDS
– 384 –


--- page 396 ---
HONG KONG UNDERWRITERS
China International Capital Corporation Hong Kong Securities Limited
Merrill Lynch (Asia Pacific) Limited
UBS AG Hong Kong Branch
CLSA Limited
Goldman Sachs (Asia) L.L.C.
Huatai Financial Holdings (Hong Kong) Limited
GF Securities (Hong Kong) Brokerage Limited
CMB International Capital Limited
BNP Paribas Securities (Asia) Limited
Futu Securities International (Hong Kong) Limited
UNDERWRITING
This document is published solely in connection with the Hong Kong Public Offering.
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis. Our Company expects the International Offering to be fully underwritten by
the International Underwriters. If, for any reason, the Offer Price is not agreed between the
Overall Coordinators (for themselves and on behalf of the Underwriters) and our Company, the
Global Offering will not proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 24,606,800
Hong Kong Offer Shares and the International Offering of initially 467,528,300 International
Offer Shares, subject, in each case, to reallocation on the basis as described in “Structure of
the Global Offering” in this document as well as to the Offer Size Adjustment Option and the
Over-allotment Option (in the case of the International Offering).
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering the Hong
Kong Offer Shares for subscription on the terms and conditions set out in this document and
the Hong Kong Underwriting Agreement at the Offer Price.
Subject to (a) the Stock Exchange granting approval for the listing of, and permission to
deal in, the H Shares to be issued pursuant to the Global Offering (including the H Shares
which may be issued pursuant to the exercise of the Offer Size Adjustment Option and the
Over-allotment Option), on the Main Board of the Stock Exchange and such approval not
having been withdrawn and (b) certain other conditions set out in the Hong Kong Underwriting
Agreement, the Hong Kong Underwriters have agreed severally but not jointly to procure
UNDERWRITING
– 385 –


--- page 397 ---
subscribers for, or themselves to subscribe for, their respective applicable proportions of the
Hong Kong Offer Shares being offered which are not taken up under the Hong Kong Public
Offering on the terms and conditions set out in this document and the Hong Kong Underwriting
Agreement.
The Hong Kong Underwriting Agreement is conditional on, among other things, the
International Underwriting Agreement having been executed and becoming unconditional and
not having been terminated in accordance with its terms.
Grounds for Termination
The Overall Coordinators (for themselves and on behalf of the Hong Kong Underwriters),
in their sole and absolute discretion, shall have the right by giving a notice to our Company
to terminate the Hong Kong Underwriting Agreement with immediate effect if prior to 8:00
a.m. on the Listing Date:
(a) there shall develop, occur, exist or come into effect:
(i) any event, or series of events, in the nature of force majeure (including,
without limitation, any acts of government, declaration of a local, national,
regional or international emergency or war, calamity, crisis, epidemic,
pandemic, outbreaks, escalation, adverse mutation or aggravation of diseases
(including, without limitation, COVID-19, Severe Acute Respiratory
Syndrome (SARS), swine or avian flu, H5N1, H1N1, H7N9, Ebola virus,
Middle East respiratory syndrome and such related/mutated forms),
comprehensive sanctions, economic sanctions, strikes, labour disputes, lock-
outs, other industrial actions, fire, explosion, flooding, earthquake, tsunami,
volcanic eruption, civil commotion, rebellion, riots, public disorder, acts of
war, outbreak or escalation of hostilities (whether or not war is declared), acts
of God, acts of terrorism (whether or not responsibility has been claimed),
paralysis in government operations, interruptions or delay in transportation) in
or affecting Hong Kong, the PRC, the United States, the United Kingdom, the
European Union (or any member thereof), Singapore, Germany, Netherlands,
Japan or any other jurisdiction relevant to the Group (each a “ Relevant
Jurisdiction ” and collectively, the “ Relevant Jurisdictions ”);
(ii) any change or development involving a prospective change, or any event or
circumstances or series of events likely to result in any change or development
involving a prospective change, in any local, national, regional or international
financial, economic, political, military, industrial, legal, fiscal, regulatory,
currency, credit or market matters or conditions, equity securities or exchange
control or any monetary or trading settlement system or other financial markets
(including, without limitation, conditions in the stock and bond markets,
money and foreign exchange markets, interbank markets and credit markets),
in or affecting any of the Relevant Jurisdictions;
UNDERWRITING
– 386 –


--- page 398 ---
(iii) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the Stock Exchange, the New
Y ork Stock Exchange, the NASDAQ Global Market, the London Stock
Exchange, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the
Tokyo Stock Exchange or the Singapore Stock Exchange;
(iv) any general moratorium on commercial banking activities in the PRC (imposed
by the People’s Bank of China), Hong Kong (imposed by the Financial
Secretary or the Hong Kong Monetary Authority or other competent authority),
New Y ork (imposed at the U.S. Federal or New Y ork State level or by any other
competent authority), London, the European Union (or any member thereof) or
any of the other Relevant Jurisdictions (declared by any relevant competent
authority) or any disruption in commercial banking or foreign exchange
trading or securities settlement or clearance services, procedures or matters in
or affecting any of the Relevant Jurisdictions;
(v) any new law or regulation or any change or development involving a
prospective change in existing laws or regulations or any change or
development involving a prospective change in the interpretation or
application thereof by any court or any other competent governmental
authority in or affecting any of the Relevant Jurisdictions;
(vi) the imposition of comprehensive sanctions under any sanctions laws or
regulations, or the withdrawal of trading privileges which existed on the date
of the Hong Kong Underwriting Agreement, in whatever form, directly or
indirectly, by or for any of the Relevant Jurisdictions or relevant to the
business operations of the Company or any member of the Group;
(vii) any change or development involving a prospective change or amendment in
or affecting taxation or foreign exchange control, currency exchange rates or
foreign investment regulations (including, without limitation, a devaluation of
the United States dollar, the Hong Kong dollar or RMB against any foreign
currencies or a change in the system under which the value of the Hong Kong
dollar is linked to that of the United States dollar or RMB is linked to any
foreign currency or currencies), or the implementation of any exchange
control, in any of the Relevant Jurisdictions or affecting an investment in the
Offer Shares;
UNDERWRITING
– 387 –


--- page 399 ---
(viii) other than with the prior written consent of the Joint Sponsors and the Overall
Coordinators, the issue or requirement to issue by the Company of a
supplement or an amendment to this prospectus, the offering circular, the
filings to the CSRC or other documents in connection with the offer and sale
of the Offer Shares pursuant to the Companies (WUMP) Ordinance or the
Listing Rules or upon any requirement or request of the Stock Exchange, the
CSRC and/or the SFC;
(ix) any demand by creditors for repayment of indebtedness or an order or petition
for the winding up or liquidation of any major subsidiary of the Group or any
composition or arrangement made by any major subsidiary of the Group with
its creditors or a scheme of arrangement entered into by any major subsidiary
of the Group or any resolution for the winding-up of any major subsidiary of
the Group or the appointment of a provisional liquidator, receiver or manager
over all or part of the assets or undertaking of any major subsidiary of the
Group or anything analogous thereto occurring in respect of any major
subsidiary of the Group;
(x) any chief executive officer, chief financial officer, any Director, Supervisors or
any member of the senior management of the Company is vacating his or her
office;
(xi) any litigation, dispute, proceeding, legal action or claim or regulatory or
administrative investigation or action being threatened, instigated or
announced against any member of the Group, any Director, Supervisor or any
member of the senior management of the Company;
(xii) any contravention by any member of the Group or any Director or any member
of the senior management of the Company of any applicable laws and
regulations, including the Listing Rules, the Companies Ordinance, the
Companies (WUMP) Ordinance and the PRC Company Law; or
UNDERWRITING
– 388 –


--- page 400 ---
(xiii) any non-compliance of this prospectus or the filings to the CSRC (or any other
documents used in connection with the contemplated subscription and sale of
the Offer Shares or any aspect of the Global Offering) with the Listing Rules
or any other applicable laws and regulations (including, without limitation, the
Listing Rules, the Companies Ordinance, the Companies (WUMP) Ordinance
and the relevant rules of the CSRC);
which, individually or in the aggregate, in the sole and absolute opinion of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters):
(1) has or will have or is likely to have a material adverse effect or any
development involving a prospective material adverse effect, on or affecting
the assets, liabilities, business, general affairs, management, prospects,
shareholders’ equity, profits, losses, earnings, solvency, liquidity position,
funding, results of operations, position or condition, financial, operational or
otherwise, or performance of the Group, taken as a whole;
(2) has or will have or is likely to have a material adverse effect on the success or
marketability of the Global Offering or the level of applications for or the
distribution of the Offer Shares under the Hong Kong Public Offering or the
level of interest under the International Offering;
(3) makes or will make or is likely to make it inadvisable, inexpedient,
impracticable or incapable for the Hong Kong Public Offering and/or the
International Offering to proceed or to market the Global Offering or the
delivery or distribution of the Offer Shares on the terms and in the manner
contemplated by the Offer Related Documents (as defined below); or
(4) has or will have or is likely to have the effect of making any part of the Hong
Kong Underwriting Agreement (including underwriting the Hong Kong Public
Offering) incapable or impracticable of performance in accordance with its
terms or preventing or delaying the processing of applications and/or payments
pursuant to the Global Offering or pursuant to the underwriting thereof; or
(b) there has come to the notice of the Joint Sponsors and/or the Overall Coordinators
that:
(i) any statement contained in any of this prospectus, the post-hearing information
pack and the formal notice of the Company, the filings to the CSRC and/or any
notices, announcements, advertisements, communications or other documents
(including any announcement, circular, document or other communication
pursuant to the Hong Kong Underwriting Agreement) issued by or on behalf of
the Company in connection with the Global Offering (including any
supplement or amendment thereto but excluding names and addresses of the
UNDERWRITING
– 389 –


--- page 401 ---
Underwriters) (the “ Offer Related Documents ”) was, when it was issued, or
has become, untrue, incorrect, inaccurate or incomplete in any material
respects or misleading or deceptive, or that any estimate, forecast, expression
of opinion, intention or expectation contained in any of such documents
(including any supplement or amendment thereto) is not fair and honest and
based on reasonable grounds or, where appropriate, based on reasonable
assumptions with reference to the facts and circumstances then subsisting;
(ii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitute a material
misstatement in, or omission from any of the Offer Related Documents;
(iii) there is a breach of, or any event or circumstance rendering untrue, incorrect,
incomplete or misleading in any respect, any of the representations or
warranties given by the Company in the Hong Kong Underwriting Agreement
or the International Underwriting Agreement (including any supplement or
amendment thereto), as applicable;
(iv) there is a material breach of any of the obligations imposed upon the Company
under the Hong Kong Underwriting Agreement or the International
Underwriting Agreement (including any supplement or amendment thereto), as
applicable;
(v) there is an event, act or omission which gives or is likely to give rise to any
liability of the Company pursuant to the indemnities given by any of them
under the Hong Kong Underwriting Agreement or the International
Underwriting Agreement (including any supplement or amendment thereto), as
applicable;
(vi) there is any material adverse effect or any development involving a prospective
material adverse effect, on or affecting the assets, liabilities, business, general
affairs, management, prospects, shareholders’ equity, profits, losses, earnings,
solvency, liquidity position, funding, results of operations, position or
condition, financial, operational or otherwise, or performance of the Group,
taken as a whole;
(vii) the approval of the Stock Exchange of the listing of, and permission to deal in,
the H Shares in issue and to be issued pursuant to the Global Offering
(including pursuant to any exercise of the Offer Size Adjustment Option and
the Over-allotment Option), other than subject to any applicable conditions, is
refused or not granted on or before the Listing Date, or if granted, the approval
is subsequently withdrawn, cancelled, qualified (other than by any applicable
conditions), revoked or withheld;
UNDERWRITING
– 390 –


--- page 402 ---
(viii) the notice of acceptance of the filings to the CSRC issued by the CSRC and/or
the results of the filings to the CSRC published on the website of the CSRC is
rejected, withdrawn, revoked or invalidated;
(ix) any person (other than any of the Joint Sponsors) has withdrawn its consent to
the issue of this prospectus with the inclusion of its reports, letters and/or legal
opinions (as the case may be) and references to its name included in the form
and context in which it respectively appears;
(x) the Company withdraws this prospectus (and/or any other documents issued or
used in connection with Global Offering) or the Global Offering;
(xi) there is a prohibition on the Company for whatever reason from offering,
allotting, issuing or selling any of the Offer Shares (including pursuant to any
exercise of the Offer Size Adjustment Option and the Over-Allotment Option)
pursuant to the terms of the Global Offering;
(xii) any Director, Supervisor or member of senior management of the Company is
being charged with an indictable offence or is prohibited by operation of law
or otherwise disqualified from taking part in the management of a company or
taking a directorship of a company, or there is a commencement by any
governmental, political or regulatory body of any investigation or other action
against any Director, Supervisor or member of senior management of the
Company in his or her capacity as such or any member of the Group or an
announcement by any governmental, political or regulatory body that it intends
to commence any such investigation or take any such action; or
(xiii) there is an order or petition for the winding-up of any major subsidiary of the
Group or any composition or arrangement made by any major subsidiary of the
Group with its creditors or a scheme of arrangement entered into by any major
subsidiary of the Group or any resolution for the winding-up of any major
subsidiary of the Group or the appointment of a provisional liquidator, receiver
or manager over all or part of the assets or undertaking of any major subsidiary
of the Group or anything analogous thereto occurring in respect of any major
subsidiary of the Group.
Undertakings to the Stock Exchange pursuant to the Listing Rules
(A) Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange that it will not exercise its power to issue any further Shares, or securities
convertible into Shares (whether or not of a class already listed) or enter into any agreement
to such an issue within six months from the Listing Date (whether or not such issue of Shares
or securities will be completed within six months from the Listing Date), except (a) pursuant
to the Global Offering (including the Offer Size Adjustment Option and the Over-allotment
Option); or (b) under any of the circumstances provided under Rule 10.08 of the Listing Rules.
UNDERWRITING
– 391 –


--- page 403 ---
(B) Undertakings by the Largest Group of Shareholders
In accordance with Rule 10.07(1) of the Listing Rules and Paragraph 7 of Chapter 4.13
of the Guide to New Listing Applicants, the Largest Group of Shareholders have undertaken
to our Company and the Stock Exchange that, they shall not and shall procure that the
registered holders controlled by the Largest Group of Shareholders shall not, in the period
commencing on the date by reference to which disclosure of their shareholdings are made in
this prospectus and ending on the date which is six (6) months from the Listing Date (the “ First
Six-month Period ”), either directly or indirectly, dispose of, enter into any agreement to
dispose of or otherwise create any options, rights, interests or encumbrances in respect of any
of the securities of our Company in respect of which they are shown in this prospectus to be
the beneficial owner(s) (the “ Relevant Securities ”) (save for a pledge or charge of any
Relevant Securities as security in favour of an authorized institution (as defined in the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan in
accordance with Note (2) to Rule 10.07(2) of the Listing Rules, or a share lending arrangement
entered into by them pursuant to Rule 10.07(3) of the Listing Rules).
In addition, in accordance with Note 3 to Rule 10.07(2) of the Listing Rules, the Largest
Group of Shareholders have undertaken to our Company and the Stock Exchange that, during
the First Six-month Period, they will and will procure that the relevant registered holder(s)
will:
(1) when any of them pledges or charges any Relevant Securities in favour of an
authorized institution (as defined in the Banking Ordinance (Chapter 155 of the
Laws of Hong Kong)) for a bona fide commercial loan in accordance with Note (2)
to Rule 10.07(2) of the Listing Rules, immediately inform our Company in writing
of such pledge or charge together with the number of the Relevant Securities so
pledged or charged; and
(2) when it receives indications, either verbal or written, from the pledgee or chargee
that any of the pledged or charged securities will be disposed of, immediately inform
our Company in writing of such indications.
Our Company will inform the Stock Exchange as soon as it has been informed of the
matters referred to in paragraphs (1) and (2) above (if any) by any of the Largest Group of
Shareholders and subject to the then applicable requirements of the Listing Rules disclose such
matters by way of an announcement.
UNDERWRITING
– 392 –


--- page 404 ---
Undertakings Pursuant to the Hong Kong Underwriting Agreement
Undertakings by our Company
Pursuant to the Hong Kong Underwriting Agreement, save for the issue, offer or sale of
the Offer Shares by our Company pursuant to the Global Offering (including pursuant to the
exercise of the Offer Size Adjustment Option and the Over-allotment Option), at any time
during the period commencing on the date of the Hong Kong Underwriting Agreement and
ending on, and including, the date falling six months after the Listing Date (the “ First
Six-Month Period ”), our Company has undertaken to each of the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Hong Kong Underwriters and the Capital Market Intermediaries not to, without the prior
written consent of the Joint Sponsors and the the Overall Coordinators (for themselves and on
behalf of the Hong Kong Underwriters) and unless in compliance with the Hong Kong Listing
Rules:
(i) offer, allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract
or agree to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, lend,
grant, agree to grant or sell any option, warrant, right or contract or right to
subscribe for or purchase, grant, agree to grant or purchase any option, warrant,
contract or right to allot, issue or sell, or otherwise transfer or dispose of or create
an encumbrance over, or agree to transfer or dispose of or create an encumbrance
over, either directly or indirectly, conditionally or unconditionally, any legal or
beneficial interest in any H Shares or other securities of the Company, or any
interests in any of the foregoing (including, but not limited to, any securities that are
convertible into or exercisable or exchangeable for, or that represent the right to
receive, or any warrants or other rights to purchase, any H Shares or other securities
of the Company or any interest in any of the foregoing), or deposit any H Shares or
other securities of the Company, with a depositary in connection with the issue of
depositary receipts;
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of subscription or ownership (legal or
beneficial) of any H Shares or other securities of the Company, or any interest
therein, or any interest in any of the foregoing (including, without limitation, any
securities which are convertible into or exchangeable or exercisable for, or that
represent the right to receive, or any warrants or other rights to purchase, any H
Shares or other securities of the Company or any interest in any of the foregoing);
or
(iii) enter into any transaction with the same economic effect as any transaction
described in paragraphs (i) or (ii) above; or
(iv) offer to or contract to or agree to announce, or publicly disclose that our Company
will or may enter into any transaction described in paragraphs (i), (ii) or (iii) above,
UNDERWRITING
– 393 –


--- page 405 ---
in each case, whether any of the transactions described in paragraphs (i), (ii) or (iii) above is
to be settled by delivery of any H Shares or other securities of our Company or, in cash or
otherwise (whether or not the issue of such H Shares or other securities will be completed
within the First Six-Month Period). For the avoidance of doubt, paragraph (i) above shall not
apply to any issue of debt securities by our Company which are not convertible into equity
securities of our Company or of any other member of our Group.
In the event that, at any time during the period of six months immediately following the
expiry of the First Six-Month Period and ending on and including the date that is six months
from the last day of the First Six-Month Period (the “ Second Six-Month Period ”), our
Company enters into any such transactions or offers or agrees or contracts to, or announces, or
publicly discloses, any intention to, enter into any such transactions described in paragraphs
(i), (ii) or (iii) above, our Company shall take all reasonable steps to ensure that it will not
create a disorderly or false market in the H Shares or other securities of our Company.
Hong Kong Underwriters’ Interests in our Company
Save for their respective obligations under the Hong Kong Underwriting Agreement, as
of the Latest Practicable Date, none of the Hong Kong Underwriters was interested, legally or
beneficially, directly or indirectly, in any H Shares or any securities of any member of our
Group or had any right or option (whether legally enforceable or not) to subscribe for or
purchase, or to nominate persons to subscribe for or purchase, any H Shares or any securities
of any member of our Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of our Company’s H Shares as a result of
fulfilling their respective obligations under the Hong Kong Underwriting Agreement.
International Offering
International Underwriting Agreement
In connection with the International Offering, our Company expects to enter into the
International Underwriting Agreement with the International Underwriters on or around the
Price Determination Date. Under the International Underwriting Agreement and subject to the
Offer Size Adjustment Option and the Over-allotment Option, the International Underwriters
would, subject to certain conditions set out therein, agree severally but not jointly to procure
subscribers for, or themselves to subscribe for, their respective applicable proportions of the
International Offer Shares initially being offered pursuant to the International Offering. It is
expected that the International Underwriting Agreement may be terminated on similar grounds
as the Hong Kong Underwriting Agreement. Potential investors should note that in the event
that the International Underwriting Agreement is not entered into, the Global Offering will not
proceed. See “Structure of the Global Offering — The International Offering.”
UNDERWRITING
– 394 –


--- page 406 ---
Over-allotment Option
Our Company is expected to grant to the International Underwriters the Over-allotment
Option, exercisable by the Overall Coordinators on behalf of the International Underwriters at
any time from the Listing Date until 30 days after the last day for lodging applications under
the Hong Kong Public Offering, pursuant to which our Company may be required to issue up
to an aggregate of 73,820,200 H Shares, representing not more than 15% of the number of
Offer Shares initially available under the Global Offering (assuming the Offer Size Adjustment
Option is not exercised at all) or up to an aggregate of 84,893,200 H Shares, representing not
more than 15% of the number of Offer Shares available under the Global Offering (assuming
the Offer Size Adjustment Option is exercised in full), at the Offer Price, to cover
over-allocations in the International Offering, if any. We will delay delivery of the Offer Shares
allocated to certain investors under the International Offering in order to cover over-allocation
of the Offer Shares before exercise of the Over-allotment Option. See “Structure of the Global
Offering — Over-allotment Option.”
Offer Size Adjustment Option
The Company has an Offer Size Adjustment Option under the Hong Kong Underwriting
Agreement, exercisable by the Company with the prior written agreement between the
Company and the Overall Coordinators (for themselves and on behalf of the Underwriters) on
or before the time of execution of the Price Determination Agreement and will lapse
immediately thereafter. Upon the exercise of the Offer Size Adjustment Option, the Company
may issue up to 73,820,200 additional Offer Shares (being 15.0% of the Offer Shares initially
available under the Global Offering) at the Offer Price. The Offer Size Adjustment Option
provides flexibility to increase the number of Offer Shares available for purchase under the
Global Offering to cover additional market demand.
The exercise of the Offer Size Adjustment Option is also subject to the reallocation
arrangement as described in “Structure of the Global Offering — The Hong Kong Public
Offering — Reallocation.”
Under the Offer Size Adjustment Option, the Company may issue and allot such number
of H Shares up to an aggregate of 73,820,200 additional Offer Shares (being 15.0% of the Offer
Shares initially available under the Global Offering) at the Offer Price. See “Structure of the
Global Offering — Offer Size Adjustment Option.”
Commissions and Expenses
The Capital Market Intermediaries will receive an underwriting commission of 0.6% of
the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued
pursuant to the exercise of the Offer Size Adjustment Option and the Over-allotment Option),
out of which they will pay any sub-underwriting commissions and other fees.
UNDERWRITING
– 395 –


--- page 407 ---
The Capital Market Intermediaries may receive a discretionary incentive fee of up to
0.2% of the aggregate Offer Price of all the Offer Shares to be issued by our Company under
the Global Offering (including any Offer Shares to be issued pursuant to the exercise of the
Offer Size Adjustment Option and the Over-allotment Option).
Assuming full payment of the discretionary incentive fee, the fixed fees and the
discretionary fees payable to the Underwriters represent approximately 37.5% and 62.5%,
respectively, of the aggregate fees payable to the Capital Market Intermediaries in total in
connection with the Global Offering.
For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering,
the underwriting commission will not be paid to the Hong Kong Underwriters but will instead
be paid, at the rate applicable to the International Offering, to the relevant International
Underwriters.
The aggregate underwriting commissions payable to the Capital Market Intermediaries in
relation to the Global Offering (assuming (i) an indicative offer price of HK$53.40 per Offer
Share (which is the mid-point of the Offer Price range), (ii) the full payment of the
discretionary incentive fee, (iii) the Offer Size Adjustment Option is not exercised at all and
(iv) the exercise of the Over-allotment Option in full) will be approximately HK$241.8 million.
The aggregate underwriting commissions and fees together with the Stock Exchange
listing fees, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy, legal and other professional fees and printing and all other expenses relating to the Global
Offering are estimated to be approximately HK$339.7 million (assuming (i) an indicative offer
price of HK$53.40 per Offer Share (which is the mid-point of the Offer Price range), (ii) the
full payment of the discretionary incentive fee, (iii) the Offer Size Adjustment Option is not
exercised at all and (iv) the exercise of the Over-allotment Option in full) and will be paid by
our Company.
Indemnity
Our Company has agreed to indemnify the Hong Kong Underwriters for certain losses
which they may suffer or incur, including losses arising from their performance of their
obligations under the Hong Kong Underwriting Agreement and any breach by our Company of
the Hong Kong Underwriting Agreement.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting or
stabilizing process.
UNDERWRITING
– 396 –


--- page 408 ---
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, loan financing, brokerage, funds management, trading,
hedging, investing and other activities for their own account and for the account of others. In
the ordinary course of their various business activities, the Syndicate Members and their
respective affiliates may purchase, sell or hold a broad array of investments and actively trade
securities, derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments of members of
our Group and/or persons and entities with relationships with our Company and may also
include swaps and other financial instruments entered into for hedging purposes in connection
with our Group’s loans and other debt.
In relation to the H Shares, the activities of the Syndicate Members and their affiliates
could include acting as agent for buyers and sellers of the H Shares, entering into transactions
with those buyers and sellers in a principal capacity, including as a lender to initial purchasers
of the H Shares (which financing may be secured by the H Shares) in the Global Offering,
proprietary trading in the H Shares, and entering into over the counter or listed derivative
transactions or listed or unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Such transactions may be carried out as bilateral agreements or trades
with selected counterparties. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares, which may have a
negative impact on the trading price of the H Shares. All such activities could occur in Hong
Kong and elsewhere in the world and may result in the Syndicate Members and their affiliates
holding long and/or short positions in the H Shares, in baskets of securities or indices including
the H Shares, in units of funds that may purchase the H Shares, or in derivatives related to any
of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the H Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the rules of the stock exchange may require the issuer of those securities
(or one of its affiliates or agents) to act as a market maker or liquidity provider in the security,
and this will also result in hedging activity in the H Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period
described in “Structure of the Global Offering.” Such activities may affect the market price or
value of the H Shares, the liquidity or trading volume in the H Shares and the volatility of the
price of the H Shares, and the extent to which this occurs from day to day cannot be estimated.
UNDERWRITING
– 397 –


--- page 409 ---
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
 the Syndicate Members (other than the Stabilizing Manager or any person acting for
it) must not, in connection with the distribution of the Offer Shares, effect any
transactions (including issuing or entering into any option or other derivative
transactions relating to the Offer Shares), whether in the open market or otherwise,
with a view to stabilizing or maintaining the market price of any of the Offer Shares
at levels other than those which might otherwise prevail in the open market; and
 the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time
to time, and expect to provide in the future, investment banking, loan financing and other
services to our Company and its affiliates for which such Syndicate Members or their
respective affiliates have received or will receive customary fees and commissions.
In addition, the Syndicate Members or their respective affiliates may provide financing to
investors to finance their subscriptions of the Offer Shares in the Global Offering.
UNDERWRITING
– 398 –


--- page 410 ---
THE GLOBAL OFFERING
This document is published in connection with the Hong Kong Public Offering as part of
the Global Offering.
The listing of the H Shares on the Main Board of the Stock Exchange is sponsored by the
Joint Sponsors. The Joint Sponsors have made an application on behalf of our Company to the
Stock Exchange for the listing of, and permission to deal in, the H Shares to be issued as
mentioned in this document.
492,135,100 Offer Shares will initially be made available under the Global Offering
comprising:
 the Hong Kong Public Offering of initially 24,606,800 Offer Shares (subject to
reallocation and the Offer Size Adjustment Option) in Hong Kong as described in
“— The Hong Kong Public Offering” below; and
 the International Offering of initially 467,528,300 Offer Shares (subject to
reallocation, the Offer Size Adjustment Option and the Over-allotment Option) (i) in
the United States solely to QIBs in reliance on Rule 144A or another exemption
from, or in a transaction not subject to, the registration requirements of the U.S.
Securities Act and (ii) outside the United States (including to professional and
institutional investors within Hong Kong) in offshore transactions in reliance on
Regulation S, as described in “— The International Offering” below.
Investors may either (i) apply for Hong Kong Offer Shares under the Hong Kong Public
Offering; or (ii) apply for or indicate an interest for International Offer Shares under the
International Offering, but may not do both.
The Offer Shares will represent approximately 6.6% of the enlarged issued share capital
of our Company immediately following the completion of the Global Offering, assuming the
Offer Size Adjustment Option and the Over-allotment Option are not exercised. If the
Over-allotment Option is exercised in full, the Offer Shares will represent approximately 7.5%
of the enlarged issued share capital of our Company (assuming the Offer Size Adjustment
Option is not exercised at all) or approximately 8.5% of the enlarged issued share capital of
our Company (assuming the Offer Size Adjustment Option is exercised in full) immediately
following the completion of the Global Offering.
References in this document to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 399 –


--- page 411 ---
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
Our Company is initially offering 24,606,800 Offer Shares for subscription by the public
in Hong Kong at the Offer Price, representing approximately 5.0% of the total number of Offer
Shares initially available under the Global Offering. The number of Offer Shares initially
offered under the Hong Kong Public Offering, subject to any reallocation of Offer Shares
between the International Offering and the Hong Kong Public Offering and the Offer Size
Adjustment Option, will represent approximately 0.3% of the enlarged issued share capital our
Company immediately following the completion of the Global Offering (assuming the Offer
Size Adjustment Option and the Over-allotment Option are not exercised).
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities that regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions set out in
“— Conditions of the Global Offering” below.
Allocation
Allocation of Offer Shares to investors under the Hong Kong Public Offering will be
based solely on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
could mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of Hong Kong Offer Shares available under
the Hong Kong Public Offering (after taking into account any reallocation referred to below)
will be divided equally (to the nearest board lot) into two pools: pool A and pool B (with any
odd lot being allocated to pool A). The Hong Kong Offer Shares in pool A will be allocated
on an equitable basis to applicants who have applied for Hong Kong Offer Shares with an
aggregate price of HK$5 million (excluding the brokerage, the SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy payable) or less. The Hong Kong Offer
Shares in pool B will be allocated on an equitable basis to applicants who have applied for
Hong Kong Offer Shares with an aggregate price of more than HK$5 million (excluding the
brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy payable) and up to the total value in pool B.
STRUCTURE OF THE GLOBAL OFFERING
– 400 –


--- page 412 ---
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the
pools are unsubscribed, such unsubscribed Hong Kong Offer Shares will be transferred to the
other pool to satisfy demand in that other pool and be allocated accordingly. For the purpose
of the immediately preceding paragraph only, the “price” for Hong Kong Offer Shares means
the price payable on application therefor (without regard to the Offer Price as finally
determined). Applicants can only receive an allocation of Hong Kong Offer Shares from either
pool A or pool B and not from both pools. Multiple or suspected multiple applications under
the Hong Kong Public Offering and any application for more than 12,303,400 Hong Kong
Offer Shares (being approximately 50% of the Hong Kong Offer Shares initially available
under the Hong Kong Public Offering assuming the Offer Size Adjustment Option is not
exercised) is liable to be rejected.
Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the
Listing Rules requires a clawback mechanism to be put in place which would have the effect
of increasing the number of Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares offered under the Global Offering if certain
prescribed total demand levels are reached.
We have applied for, and the Stock Exchange has granted us, a waiver from stock
compliance with paragraph 4.2 of Practice Note 18 of the Hong Kong Listing Rules to the
effect as further described below.
24,606,800 Offer Shares are initially available in the Hong Kong Public Offering,
representing approximately 5.0% of the Offer Shares initially available for subscription under
the Global Offering. If the number of Offer Shares validly applied for under the Hong Kong
Public Offering represents (a) 9 times or more but less than 18 times, (b) 18 times or more but
less than 36 times and (c) 36 times or more of the total number of Offer Shares initially
available under the Hong Kong Public Offering, then Offer Shares will be reallocated to the
Hong Kong Public Offering from the International Offering. As a result of such reallocation,
the total number of Offer Shares available under the Hong Kong Public Offering will be
increased to 29,528,200 Offer Shares (in the case of (a)), 34,449,500 Offer Shares (in the case
of (b)) and 39,370,900 Offer Shares (in the case of (c)), representing approximately 6.0%, 7.0%
and 8.0% of the total number of Offer Shares initially available under the Global Offering,
respectively (before any exercise of the Offer Size Adjustment Option and the Over-allotment
Option). In each case, the additional Offer Shares reallocated to the Hong Kong Public
Offering will be allocated between pool A and pool B and the number of Offer Shares allocated
to the International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate.
STRUCTURE OF THE GLOBAL OFFERING
– 401 –


--- page 413 ---
In addition, the Overall Coordinators may allocate Offer Shares from the International
Offering to the Hong Kong Public Offering to satisfy valid applications under the Hong Kong
Public Offering.
If the Hong Kong Public Offering is not fully subscribed, the Overall Coordinators may
reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering, in
such proportions as they deem appropriate.
The Overall Coordinators may, at their discretion, reallocate Offer Shares initially
allocated for the International Offering to the Hong Kong Public Offering to satisfy valid
applications in pool A and pool B under the Hong Kong Public Offering in accordance with
Chapter 4.14 of the Guide for New Listing Applicants. In the event that (i) the International
Offer Shares are undersubscribed and the Hong Kong Offer Shares are fully subscribed or
oversubscribed irrespective of the number of times; or (ii) the International Offer Shares are
fully subscribed or oversubscribed and the Hong Kong Offer Shares are fully subscribed or
oversubscribed as to less than 9 times of the number of Hong Kong Offer Shares initially
available under the Hong Kong Public Offering, and provided that the Offer Price would be set
at HK$52.00 (low-end of the Offer Price range), up to 24,606,800 Offer Shares may be
reallocated to the Hong Kong Public Offering from the International Offering, so that the total
number of the Offer Shares available under the Hong Kong Public Offering will be increased
to up to 49,213,600 Offer Shares, representing approximately twice the number of the Offer
Shares initially available under the Hong Kong Public Offering (before any exercise of the
Offer Size Adjustment Option and the Over-allotment Option).
Applications
Each applicant under the Hong Kong Public Offering will be required to give an
undertaking and confirmation in the application submitted by him/her that he/she and any
person(s) for whose benefit he/she is making the application has not applied for or taken up,
or indicated an interest for, and will not apply for or take up, or indicate an interest for, any
International Offer Shares under the International Offering. Such applicant’s application is
liable to be rejected if such undertaking and/or confirmation is/are breached and/or untrue (as
the case may be) or if he/she has been or will be placed or allocated International Offer Shares
under the International Offering.
Applicants under the Hong Kong Public Offering are required to pay, on application
(subject to application channel), the maximum Offer Price in addition to the brokerage, the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy payable
on each Offer Share, amounting to a total of HK$5,535.27 for one board lot of 100 Offer
Shares. If the Offer Price, as finally determined in the manner described in “— Pricing and
Allocation” below, is less than the maximum Offer Price, appropriate refund payments
(including the brokerage, the SFC transaction levy, the Stock Exchange trading fee and the
AFRC transaction levy attributable to the surplus application monies) will be made to
successful applicants, without interest. Further details are set out in “How to Apply for Hong
Kong Offer Shares.”
STRUCTURE OF THE GLOBAL OFFERING
– 402 –


--- page 414 ---
THE INTERNATIONAL OFFERING
Number of Offer Shares initially offered
The International Offering will consist of an offering of initially 467,528,300 Offer
Shares offered by our Company (subject to reallocation, the Offer Size Adjustment Option and
the Over-allotment Option), representing approximately 95.0% of the total number of Offer
Shares initially available under the Global Offering. The number of Offer Shares initially
offered under the International Offering, subject to any reallocation of Offer Shares between
the International Offering and the Hong Kong Public Offering, will represent approximately
6.2% of the enlarged issued share capital of our Company immediately following the
completion of the Global Offering (assuming the Offer Size Adjustment Option and the
Over-allotment Option are not exercised).
Allocation
The International Offering will include selective marketing of Offer Shares to QIBs in the
United States as well as institutional and professional investors and other investors anticipated
to have a sizeable demand for such Offer Shares in Hong Kong and other jurisdictions outside
the United States in reliance on Regulation S. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities that regularly invest in shares and other
securities. Allocation of Offer Shares pursuant to the International Offering will be effected in
accordance with the “book-building” process described in the subsection headed “Pricing and
Allocation” below and based on a number of factors, including the level and timing of demand,
the total size of the relevant investor’s invested assets or equity assets in the relevant sector and
whether or not it is expected that the relevant investor is likely to buy further H Shares and/or
hold or sell its H Shares after the Listing. Such allocation is intended to result in a distribution
of the H Shares on a basis which would lead to the establishment of a solid professional and
institutional shareholder base to the benefit of our Group and the Shareholders as a whole.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may require
any investor who has been offered Offer Shares under the International Offering and who has
made an application under the Hong Kong Public Offering to provide sufficient information to
the Overall Coordinators so as to allow them to identify the relevant applications under the
Hong Kong Public Offering and to ensure that they are excluded from any allocation of Offer
Shares under the Hong Kong Public Offering.
Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International
Offering may change as a result of the clawback arrangement described in “— The Hong Kong
Public Offering — Reallocation” above, the exercise of the Offer Size Adjustment Option and
the Over-allotment Option in whole or in part and/or any reallocation of unsubscribed Offer
Shares originally included in the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 403 –


--- page 415 ---
OFFER SIZE ADJUSTMENT OPTION
In order to provide the Company with the flexibility to increase the number of Offer
Shares available under the Global Offering to cover additional demand, the Company has an
Offer Size Adjustment Option which will allow the Company to issue up to 73,820,200
additional Offer Shares (representing 15.0% of the Offer Shares initially being offered under
the Global Offering) (the “ Offer Size Adjustment Option Shares ”) at the Offer Price.
The Offer Size Adjustment Option is contained in the Hong Kong Underwriting
Agreement and is exercisable by the Company with the prior written agreement between the
Company and the Overall Coordinators (for themselves and on behalf of the Underwriters) on
or before the time of the execution of the Price Determination Agreement. If it is not exercised
by such time, then the Offer Size Adjustment Option will lapse.
In considering whether to exercise the Offer Size Adjustment Option, the Company and
the Overall Coordinators will take into account a number of factors, including, among other
things:
(i) whether the level of interest expressed by prospective professional and institutional
investors during the book-building process under the International Offering is
sufficient to cover:
(a) the total number of Offer Shares, which represents the aggregate of the Offer
Shares initially available under the Global Offering and the additional Offer
Shares upon any exercise of the Offer Size Adjustment Option; and
(b) the corresponding number of H Shares under the Over-allotment Option;
(ii) the prices at which prospective professional and institutional investors have
indicated they would be prepared to acquire the Offer Shares in the course of the
book-building process;
(iii) the quality of investors, with a view to establishing a solid professional institutional
and investor shareholder base to the benefit of the Company and its Shareholders as
a whole;
(iv) the level of subscriptions by the valid applications in the Hong Kong Public
Offering; and
(v) general market conditions.
STRUCTURE OF THE GLOBAL OFFERING
– 404 –


--- page 416 ---
These Offer Size Adjustment Option Shares, if any, will be allocated in such manner as
closely as practicable to maintain the proportionality between the Hong Kong Public Offering
and the International Offering following the application of the clawback arrangement described
in “— The Hong Kong Public Offering — Reallocation” above and the Overall Coordinators
shall allocate additional H Shares to be offered by our Company pursuant to the International
Offering to the Hong Kong Public Offering in order to maintain such proportionality and the
relevant number of Offer Size Adjustment Option Shares shall be allocated to the International
Offering to maintain such proportionality, i.e., the initial proportion of 5.0%:95.0% between
the Hong Kong Public Offering and the International Offering, except for the scenario where
excess additional Offer Shares are not taken up by retail investors under the Hong Kong Public
Offering and will then be reallocated to International Offering to satisfy excess demand in the
International Offering as described in details below, in which case the final allocation of Offer
Shares to the Hong Kong Public Offering will be less than 5.0% of the total number of Offer
Shares in the Global Offering after the exercise of the Offer Size Adjustment Option.
Furthermore, the Company and the Overall Coordinators will only exercise the Offer Size
Adjustment Option to the extent that the Offer Size Adjustment Option Shares to be allocated
to the International Offering in order to maintain the proportionality between the Hong Kong
Public Offering and the International Offering following the application of the clawback
arrangement described in “— The Hong Kong Public Offering — Reallocation” above will be
fully subscribed to ensure no Offer Size Adjustment Option Shares allocated to the
International Offering will be reallocated to the Hong Kong Public Offering.
In the event that the Offer Size Adjustment Option is exercised in full,
(a) if the Hong Kong Public Offering is oversubscribed by at least 0.15 time (being the
percentage which the additional Offer Shares issued pursuant to the Offer Size
Adjustment Option represent as a percentage to the number of the initial Offer
Shares), the additional Offer Shares will be allocated so as to maintain the
proportionality between the Hong Kong Public Offering and the International
Offering as determined after the application of the clawback arrangements described
in “— The Hong Kong Public Offering — Reallocation” above;
(b) if the Hong Kong Public Offering is oversubscribed by less than 0.15 time, the
additional Offer Shares will first be allocated to maintain, to the extent possible, the
initial proportion of 5.0%:95.0% between the Hong Kong Public Offering (5.0%)
and the International Offering (95.0%). Any excess additional Offer Shares not
taken up by retail investors under the Hong Kong Public Offering will then be
reallocated to International Offering to satisfy excess demand in the International
Offering. In such a case, the final allocation of Offer Shares to the Hong Kong
Public Offering will be less than 5.0% of the total number of Offer Shares in the
Global Offering after the exercise of the Offer Size Adjustment Option.
STRUCTURE OF THE GLOBAL OFFERING
– 405 –


--- page 417 ---
In the event that the Offer Size Adjustment Option is exercised in part,
(a) if the Hong Kong Public Offering is oversubscribed by at least the relevant multiple
(being the percentage which the additional Offer Shares issued pursuant to the Offer
Size Adjustment Option represent as a percentage to the number of the initial Offer
Shares), the additional Offer Shares will be allocated so as to maintain the
proportionality between the Hong Kong Public Offering and the International
Offering as determined after the application of the clawback arrangements described
in “— The Hong Kong Public Offering — Reallocation” above;
(b) if the Hong Kong Public Offering is oversubscribed by less than the relevant
multiple (being the percentage which the additional Offer Shares issued pursuant to
the Offer Size Adjustment Option represent as a percentage to the number of the
initial Offer Shares), the additional Offer Shares will first be allocated to maintain,
to the extent possible, the initial proportion of 5.0%:95.0% between the Hong Kong
Public Offering (5.0%) and the International Offering (95.0%). Any excess
additional Offer Shares not taken up by retail investors under the Hong Kong Public
Offering will then be reallocated to International Offering to satisfy excess demand
in the International Offering. In such a case, the final allocation of Offer Shares to
the Hong Kong Public Offering will be less than 5.0% of the total number of Offer
Shares in the Global Offering after the exercise of the Offer Size Adjustment Option.
In the event that the Hong Kong Public Offering is undersubscribed, all the additional
Offer Shares will be allocated to the International Offering. In such a case, the final allocation
of Offer Shares to the Hong Kong Public Offering will be less than 5.0% of the total number
of Offer Shares in the Global Offering after the exercise of the Offer Size Adjustment Option.
The table below sets out the final allocation of Offer Shares between the Hong Kong
Public Offering and the International Offering for illustration purpose only. The actual final
allocation will depend on the actual additional number of Offer Shares to be issued upon the
exercise of the Offer Size Adjustment Option.
STRUCTURE OF THE GLOBAL OFFERING
– 406 –


--- page 418 ---
In the event that the Offer Size Adjustment Option is exercised in full, so that 73,820,200 additional Offer Shares (representing in aggregate
up to 15.0% of the initial number of Offer Shares available for subscription under the Global Offering) will be issued at the Offer Price (2)
If the Hong Kong
Public Offering is
oversubscribed by At least 9 times
At least 0.15
(1) time but
less than 9 times Less than 0.15 (1) time
The Hong Kong
Public Offering is
undersubscribed
Final allocation
of Offer Shares
between
International
Offering and
Hong Kong
Public
Offering /H1118/H1118/H1118/H1118
If the oversubscription is
at least 9 times, the
clawback arrangement
will be triggered. The
additional Offer Shares
to be issued pursuant to
the Offer Size
Adjustment Option will
be allocated between
the International
Offering and the Hong
Kong Public Offering
according to the
applicable clawback
ratio (94:6 or 93:7 or
92:8) as described in
the “— The Hong
Kong Public Offering
— Reallocation.”
If the oversubscription is
less than 9 times, no
clawback arrangement
will be triggered. The
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will be allocated
between the
International Offering
and the Hong Kong
Public Offering
according to the
95:5 ratio.
(3)
If the oversubscription is
less than 0.15 times, no
clawback arrangement
will be triggered. The
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will be allocated
between the
International Offering
and the Hong Kong
Public Offering
according to the
95:5 ratio. However, as
the demand in the
Hong Kong Public
Offering is insufficient
to take up all the
additional Offer Shares,
the excess additional
Offer Shares will be
reallocated to the
International Offering
only. As a result, the
final allocation of the
Offer Shares to the
Hong Kong Public
Offering will be less
than 5.0% of the total
number of Offer
Shares.
If the Hong Kong Public
Offering is fully
subscribed with no
over-subscription, the
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will all be allocated to
the International
offering due to
insufficient demand in
the Hong Kong Public
Offering. As a result,
the final allocation of
the Offer Shares to the
Hong Kong Public
Offering will be
approximately 4.3% of
the total number of
Offer Shares.
The unsubscribed Offer
Shares under the Hong
Kong Public Offering
will be reallocated to
the International
Offering. The
additional Offer Shares
to be issued pursuant to
the Offer Size
Adjustment Option will
be allocated to the
International Offering
only due to insufficient
demand in the Hong
Kong Public Offering.
As a result, the final
allocation of the Offer
Shares to the Hong
Kong Public Offering
will be less than 5.0%
of the total number of
Offer Shares.
STRUCTURE OF THE GLOBAL OFFERING
– 407 –


--- page 419 ---
In the event that the Offer Size Adjustment Option is exercised in half, so that 36,910,100 additional Offer Shares (representing in
aggregate up to 7.5% of the initial number of Offer Shares available for subscription under the Global Offering) will be issued at the Offer
Price
(2)
If the Hong Kong
Public Offering is
oversubscribed by At least 9 times
At least 0.075
(1) time but
less than 9 times Less than 0.075 (1) time
The Hong Kong
Public Offering is
undersubscribed
Final allocation
of Offer Shares
between
International
Offering and
Hong Kong
Public
Offering /H1118/H1118/H1118/H1118
If the oversubscription is
at least 9 times, the
clawback arrangement
will be triggered. The
additional Offer Shares
to be issued pursuant to
the Offer Size
Adjustment Option will
be allocated between
the International
Offering and the Hong
Kong Public Offering
according to the
applicable clawback
ratio (94:6 or 93:7 or
92:8) as described in
the “— The Hong
Kong Public Offering
— Reallocation.”
If the oversubscription is
less than 9 times, no
clawback arrangement
will be triggered. The
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will be allocated
between the
International Offering
and the Hong Kong
Public Offering
according to the
95:5 ratio.
(3)
If the oversubscription is
less than 0.075 times,
no clawback
arrangement will be
triggered. The
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will be allocated
between the
International Offering
and the Hong Kong
Public Offering
according to the
95:5 ratio. However, as
the demand in the
Hong Kong Public
Offering is insufficient
to take up all the
additional Offer Shares,
the excess additional
Offer Shares will be
reallocated to the
International Offering
only. As a result, the
final allocation of the
Offer Shares to the
Hong Kong Public
Offering will be less
than 5.0% of the total
number of Offer
Shares.
If the Hong Kong Public
Offering is fully
subscribed with no
over-subscription, the
additional Offer Shares
pursuant to the Offer
Size Adjustment Option
will all be allocated to
the International
offering due to
insufficient demand in
the Hong Kong Public
Offering. As a result,
the final allocation of
the Offer Shares to the
Hong Kong Public
Offering will be
approximately 4.7% of
the total number of
Offer Shares.
The unsubscribed Offer
Shares under the Hong
Kong Public Offering
will be reallocated to
the International
Offering. The
additional Offer Shares
to be issued pursuant to
the Offer Size
Adjustment Option will
be allocated to the
International Offering
only due to insufficient
demand in the Hong
Kong Public Offering.
As a result, the final
allocation of the Offer
Shares to the Hong
Kong Public Offering
will be less than 5.0%
of the total number of
Offer Shares.
STRUCTURE OF THE GLOBAL OFFERING
– 408 –


--- page 420 ---
Notes:
(1) being the percentage which the additional Offer Shares issued pursuant to the Offer Size Adjustment Option
represent as a percentage to the number of the initial Offer Shares.
(2) assuming the Over-allotment Option is not exercised.
(3) assuming the reallocation pursuant to Chapter 4.14 of the Guide for New Listing Applicants as described in
“— The Hong Kong Public Offering — Reallocation” is not exercised.
If the Offer Size Adjustment Option is exercised in full, the additional Offer Shares to be
issued pursuant thereto will represent approximately 1.0% of our enlarged issued share capital
immediately following the completion of the Global Offering (assuming the Over-allotment
Option is not exercised). The dilution effect of the Offer Size Adjustment Option (assuming the
Over-allotment Option is not exercised) is set out below:
Number of H Shares
issued under the
Global Offering before
the exercise of
the Offer Size
Adjustment Option
(the “Original
Subscribers”)
Approximate
percentage of total
issued share capital
held by the Original
Subscribers before
the exercise of
the Offer Size
Adjustment Option
Number of H Shares
issued under the
Global Offering after
the exercise of
the Offer Size
Adjustment Option
in full
Approximate
percentage of total
issued share capital
held by the Original
Subscribers after
the exercise of
the Offer Size
Adjustment Option
in full
492,135,100 6.6 565,955,300 6.5
The Offer Size Adjustment Option will not be used for price stabilization purposes and
will not be subject to the provisions of the Securities and Futures (Price Stabilizing) Rules
(Chapter 571W of the Laws of Hong Kong). The Offer Size Adjustment Option will be in
addition to the Over-allotment Option.
The Company will disclose in its allotment results announcement if and to what extent the
Offer Size Adjustment Option has been exercised, the final allocation of Offer Shares between
the Hong Kong Public Offering and the International Offering and the use of the additional
proceeds received, or will confirm that if the Offer Size Adjustment Option has not been
exercised by the Price Determination Date, it will lapse and cannot be exercised at any future
date.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, our Company is expected to grant the
Over-allotment Option to the International Underwriters, exercisable by the Overall
Coordinators (on behalf of the International Underwriters).
STRUCTURE OF THE GLOBAL OFFERING
– 409 –


--- page 421 ---
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Overall Coordinators (on behalf of the International Underwriters) at any
time from the Listing Date until 30 days after the last day for lodging applications under the
Hong Kong Public Offering, to require our Company to issue up to an aggregate of 73,820,200
additional H Shares (assuming the Offer Size Adjustment Option is not exercised) or an
aggregate of 84,893,200 additional H Shares (assuming the Offer Size Adjustment Option is
exercised in full), representing not more than 15% of the total number of Offer Shares available
under the Global Offering, at the Offer Price under the International Offering to, among other
things, cover over-allocations in the International Offering, if any. We will delay delivery of
the Offer Shares allocated to certain investors under the International Offering in order to cover
over-allocation of the Offer Shares before exercise of the Over-allotment Option.
If the Offer Size Adjustment Option is not exercised and the Over-allotment Option is
exercised in full, the additional Offer Shares to be issued pursuant thereto will represent
approximately 1.0% of the enlarged issued share capital of our Company immediately
following the completion of the Global Offering. If the Offer Size Adjustment Option and the
Over-allotment Option are exercised in full, the additional Offer Shares to be issued pursuant
to the Over-allotment Option will represent approximately 1.1% of the enlarged issued share
capital of our Company immediately following the completion of the Global Offering. If the
Over-allotment Option is exercised, an announcement will be made.
EMPLOYEE PREFERENTIAL OFFERING
Of the 467,528,300 Offer Shares initially being offered under the International Offering,
no more than 46,752,800 Offer Shares, representing approximately 10% of the Offer Shares
initially available for subscription under the International Offering, are available for
subscription as Employee Reserved Shares by the Eligible Employees on a preferential basis
under the Employee Preferential Offering according to Rule 10.01 of the Listing Rules.
The Employee Reserved Shares are being offered out of the International Offer Shares but
will not be subject to the clawback mechanism as set out in “— The Hong Kong Public
Offering — Reallocation.”
The Eligible Employees are selected by the Company by taking into consideration, among
others, their seniority, current position as well as contribution made to the Group. Since all the
Eligible Employees will be PRC residents and could not directly participate in the Employee
Preferential Offering according to relevant applicable PRC laws and regulations, it is currently
expected that the Company will engage relevant third-party intermediaries to facilitate the
Eligible Employees to participate in the Employee Preferential Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 410 –


--- page 422 ---
The Eligible Employees will subscribe to set up trusts managed by a licensed and
independent financial institution, i.e. the Huaneng Guicheng Trust — Meicheng No. 1 Trust
Fund (ৄ—༐1ৄ), the Huaneng Guicheng Trust — Meicheng No. 2 Trust
Fund (ৄ—༐2ৄ) and the Huaneng Guicheng Trust — Meicheng No. 3
Trust Fund (ৄ—༐3ৄ) (collectively, the “ Trust”), which will in turn invest
in a QDII fund (the “ QDII Fund ”) managed by an independent and qualified domestic
institutional investor, i.e., GF Securities Asset Management (Guangdong) Co., Ltd. ( ᄿ೯ᗇՎ
༟ପ၍ଣ(؇)ʮ̡). The QDII Fund will then subscribe to and invest in structured notes
(the “ Structured Notes ”) to be issued by Platinum Sunflower Limited (the “ Structured Notes
Issuer ”), an independent third party of the Company. The Employee Reserved Shares will be
allocated to the Structured Notes Issuer, as a placee in the International Offering, to facilitate
the Eligible Employees in participating in the economic exposure to the initial public offering
of the Company’s H Shares under the Employee Preferential Offering. In the event that the
subscription by the Eligible Employees raises more funds than the amount required to
subscribe for the total number of Employee Reserved Shares, all Employee Reserved Shares
will be allocated to the Structured Notes Issuer. The Structured Notes Issuer will hold the legal
interest in the Employee Reserved Shares for and on behalf of the Eligible Employees while
the economic risks and returns of the underlying H Shares will be borne by the relevant Eligible
Employees, subject to customary fees and commissions in accordance with applicable laws and
regulations.
Although the Structured Notes Issuer will hold the title of the Employee Reserved Shares
by itself, it will not exercise the voting right of the Employee Reserved Shares during the terms
of the Structured Notes, which are currently expected to be two years and subject to extension.
At the termination of the Structured Notes, the investment returns from the purchase of the
Company’s Offer Shares in the Global Offering will be passed through to the Eligible
Employees.
The maximum subscription amount of H Shares that any individual Eligible Employee
may indirectly apply for under the Employee Preferential Offering will be limited to RMB4.00
million (including the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy), representing approximately 0.17% of the Offer Shares available for
subscription under the Employee Preferential Offering and approximately 0.02% of the Offer
Shares initially available for subscription under the Global Offering (based on the mid-point
of the Offer Price range of HK$53.40 per Offer Share and assuming neither the Offer Size
Adjustment Option nor the Over-allotment Option is exercised). Such measures will help to
ensure that no single Eligible Employee would hold an excessively large number of H Shares
under the Employee Preferential Offering to the disadvantage of the other Eligible Employees.
Each Eligible Employee will also confirm that he/she:
(a) is and remains an employee as of the date of this prospectus;
STRUCTURE OF THE GLOBAL OFFERING
–4 1 1–


--- page 423 ---
(b) is not a core connected person of the Company (other than by nature of being a
director, supervisor or chief executive of a subsidiary of the Company, where
applicable);
(c) is not any person whose acquisition of securities will be financed directly or
indirectly by a core connected person (other than by himself/herself where he/she is
a director, supervisor or chief executive of a subsidiary of the Company);
(d) is not any person who is accustomed to take instructions from a core connected
person (other than from himself/herself where he/she is a director, supervisor or
chief executive of a subsidiary of the Company, where applicable) in relation to the
acquisition, disposal, voting or other disposition of securities of the Company
registered in his/her name or otherwise held by him/her;
(e) is outside the U.S. and not a U.S. person (as defined in Rule 902 of Regulation S);
and
(f) will only participate in the Global Offering through the subscription of the
Employee Reserved Shares under the Employee Preferential Offering and will not
subscribe for the Company’s H Shares in the Global Offering through any other
channels.
Any Employee Reserved Shares not subscribed for by the Eligible Employees will be
available for subscription by other investors in the International Offering after the reallocation
as described in “— The Hong Kong Public Offering” in this prospectus.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the securities
in the secondary market during a specified period of time, to retard and, if possible, prevent
a decline in the initial public market price of the securities below the offer price. Such
transactions may be effected in all jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulatory requirements, including those of Hong
Kong. In Hong Kong, the price at which stabilization is effected is not permitted to exceed the
offer price.
In connection with the Global Offering, the Stabilizing Manager (or any person acting for
it), on behalf of the Underwriters, may over-allocate or effect transactions with a view to
stabilizing or supporting the market price of the H Shares at a level higher than that which
might otherwise prevail for a limited period after the Listing Date. However, there is no
obligation on the Stabilizing Manager (or any person acting for it) to conduct any such
stabilizing action. Such stabilizing action, if taken, (a) will be conducted at the absolute
discretion of the Stabilizing Manager (or any person acting for it) and in what the Stabilizing
STRUCTURE OF THE GLOBAL OFFERING
– 412 –


--- page 424 ---
Manager (or any person acting for it) reasonably regards as the best interest of our Company,
(b) may be discontinued at any time, and (c) is required to be brought to an end within 30 days
after the last day for lodging applications under the Hong Kong Public Offering.
Stabilization action permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (a) over-allocating for the purpose of preventing or
minimizing any reduction in the market price of the H Shares, (b) selling or agreeing to sell
the H Shares so as to establish a short position in them for the purpose of preventing or
minimizing any reduction in the market price of the H Shares, (c) purchasing, or agreeing to
purchase, the H Shares pursuant to the Over-allotment Option in order to close out any position
established under paragraph (a) or (b) above, (d) purchasing, or agreeing to purchase, any of
the H Shares for the sole purpose of preventing or minimizing any reduction in the market price
of the H Shares, (e) selling or agreeing to sell any H Shares in order to liquidate any position
established as a result of those purchases and (f) offering or attempting to do anything as
described in clauses (b), (c), (d) or (e) above.
Specifically, prospective applicants for and investors in the Offer Shares should note that:
 the Stabilizing Manager (or any person acting for it) may, in connection with the
stabilizing action, maintain a long position in the H Shares;
 there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
 liquidation of any such long position by the Stabilizing Manager (or any person
acting for it) and selling in the open market may have an adverse impact on the
market price of the H Shares;
 no stabilizing action can be taken to support the price of the H Shares for longer than
the stabilization period, which will begin on the Listing Date, and is expected to
expire on Saturday, 12 October 2024, being the 30th day after the last day for
lodging applications under the Hong Kong Public Offering. After this date, when no
further stabilizing action may be taken, demand for the H Shares, and therefore the
price of the H Shares, could fall;
 the price of the H Shares cannot be assured to stay at or above the Offer Price by
the taking of any stabilizing action; and
 stabilizing bids or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price and can, therefore, be done at a
price below the price paid by applicants for, or investors in, the Offer Shares.
Our Company will ensure that an announcement in compliance with the Securities and
Futures (Price Stabilizing) Rules of the SFO will be made within seven days of the expiration
of the stabilization period.
STRUCTURE OF THE GLOBAL OFFERING
– 413 –


--- page 425 ---
Over-allocation
Following any over-allocation of H Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may cover such over-allocations by, among
others, exercising the Over-allotment Option in full or in part, using H Shares purchased by the
Stabilizing Manager (or any person acting for it) in the secondary market at prices that do not
exceed the Offer Price or a combination of these means.
PRICING AND ALLOCATION
Determining the Pricing of the Offer Shares
Pricing for the Offer Shares for the purpose of the various offerings under the Global
Offering will be determined on the Price Determination Date, which is expected to be on or
before Friday, 13 September 2024 and, in any event, no later than 12:00 noon on Friday, 13
September 2024, by agreement between the Overall Coordinators (for themselves and on behalf
of the Underwriters) and our Company, and the number of Offer Shares to be allocated under
the various offerings will be determined shortly thereafter.
The Offer Price will not be more than HK$54.80 per Offer Share and is expected to be
not less than HK$52.00 per Offer Share, unless otherwise announced, as further explained
below. Applicants under the Hong Kong Public Offering are required to pay, on application
(subject to application channel), the maximum Offer Price plus brokerage of 1.0%, SFC
transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction
levy of 0.00015%, amounting to a total of HK$5,535.27 for one board lot of 100 Offer Shares.
Prospective investors should be aware that the Offer Price to be determined on the Price
Determination Date may be, but is not expected to be, lower than the minimum Offer
Price stated in this document.
The International Underwriters will be soliciting from prospective investors’ indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building,” is expected to continue up to, and to
cease on or about, the last day for lodging applications under the Hong Kong Public Offering.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where
they deem appropriate, based on the level of interest expressed by prospective investors during
the book-building process in respect of the International Offering, and with the prior consent
of our Company, reduce the number of Offer Shares offered and/or the Offer Price range as
stated in this document at any time on or prior to the morning of the last day for lodging
applications under the Hong Kong Public Offering. In such a case, our Company will, as soon
as practicable following the decision to make such reduction, and in any event not later than
the morning of the last day for lodging applications under the Hong Kong Public Offering,
cause to be published on the websites of our Company and the Stock Exchange at
STRUCTURE OF THE GLOBAL OFFERING
– 414 –


--- page 426 ---
www.midea.com.cn and www.hkexnews.hk , respectively, notices of the reduction. Our
Company will also, as soon as practicable following the decision to make such change, issue
a supplemental prospectus updating investors of the change in the number of Offer Shares
being offered under the Global Offering and/or the Offer Price. The Global Offering must first
be canceled and subsequently relaunched on FINI pursuant to the supplemental prospectus.
Upon the issue of such a notice and supplemental prospectus, the revised number of Offer
Shares and/or the Offer Price range will be final and conclusive and the Offer Price, if agreed
upon by the Overall Coordinators (for themselves and on behalf of the Underwriters) and our
Company, will be fixed within such revised Offer Price range.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
and/or Offer Price range may not be made until the last day for lodging applications under the
Hong Kong Public Offering. Such notice will also include confirmation or revision, as
appropriate, of the working capital statement and the Global Offering statistics as currently set
out in this document, and any other financial information which may change as a result of any
such reduction. In the absence of any such notice so published, the number of Offer Shares will
not be reduced and/or the Offer Price, if agreed upon by the Overall Coordinators (for
themselves and on behalf of the Underwriters) and our Company, will under no circumstances
be set outside the Offer Price range as stated in this document.
Announcement of Final Pricing of the Offer Shares
The final Offer Price, the level of indications of interest in the International Offering, the
level of applications in the Hong Kong Public Offering, the basis of allocations of the Hong
Kong Offer Shares and the results of allocations in the Hong Kong Public Offering are
expected to be made available through a variety of channels in the manner described in “How
to Apply for Hong Kong Offer Shares — B. Publication of Results.”
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms and conditions of the Hong Kong Underwriting Agreement and is subject to,
among other things, the Overall Coordinators (for themselves and on behalf of the
Underwriters) and our Company agreeing on the Offer Price.
Our Company expects to enter into the International Underwriting Agreement relating to
the International Offering on or around the Price Determination Date.
These underwriting arrangements, including the Underwriting Agreements, are
summarized in “Underwriting.”
STRUCTURE OF THE GLOBAL OFFERING
– 415 –


--- page 427 ---
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
 the Stock Exchange granting approval for the listing of, and permission to deal in,
the H Shares to be issued (including any H Shares that may be issued pursuant to
the exercise of the Offer Size Adjustment Option and the Over-allotment Option)
pursuant to the Global Offering on the Main Board of the Stock Exchange and such
approval not subsequently having been withdrawn or revoked prior to the Listing
Date;
 the Offer Price having been agreed between the Overall Coordinators (for
themselves and on behalf of the Underwriters) and our Company;
 the execution and delivery of the International Underwriting Agreement on or
around the Price Determination Date; and
 the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming and remaining unconditional and
not having been terminated in accordance with the terms of the respective
agreements,
in each case on or before the dates and times specified in the respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such
dates and times) and, in any event, not later than the date which is 30 days after the date of
this document.
If, for any reason, the Offer Price is not agreed between the Overall Coordinators (for
themselves and on behalf of the Underwriters) and our Company by 12:00 noon on Friday,
13 September 2024, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
STRUCTURE OF THE GLOBAL OFFERING
– 416 –


--- page 428 ---
If the above conditions are not fulfilled or waived prior to the dates and times specified,
the Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of
the lapse of the Hong Kong Public Offering will be published by our Company on the websites
of our Company and the Stock Exchange at www.midea.com.cn and www.hkexnews.hk ,
respectively, on the next day following such lapse. In such a situation, all application monies
will be returned, without interest, on the terms set out in “How to Apply for Hong Kong Offer
Shares — D. Despatch/Collection of H Share Certificates and Refund of Application Monies.”
In the meantime, all application monies will be held in separate bank account(s) with the
receiving bank or other bank(s) in Hong Kong licensed under the Banking Ordinance (Chapter
155 of the Laws of Hong Kong).
H Share certificates for the Offer Shares will only become valid evidence of title at 8:00
a.m. on Tuesday, 17 September 2024, provided that the Global Offering has become
unconditional in all respects at or before that time.
DEALINGS IN THE H SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Tuesday, 17 September 2024, it is expected that dealings in the H Shares
on the Stock Exchange will commence at 9:00 a.m. on Tuesday, 17 September 2024.
The H Shares will be traded in board lots of 100 H Shares each and the stock code of the
H Shares will be 0300.
STRUCTURE OF THE GLOBAL OFFERING
– 417 –


--- page 429 ---
IMPORTANT NOTICE TO INVESTORS OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
Our Company has adopted a fully electronic application process for the Hong
Kong Public Offering and below are the procedures for application.
This document is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing Information”
section, and our Company’s website at www.midea.com.cn.
The contents of this document are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 have a Hong Kong address (for the White Form eIPO Service only) ; and
 are outside the United States (within the meaning of Regulation S) or are a person
described in paragraph (h)(3) of Rule 902 of Regulation S.
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Stock Exchange to our Company, you cannot apply for any Hong Kong Offer Shares if you or
the person(s) for whose benefit you are applying for:
 are an existing Shareholder of our Company;
 are a Director, Supervisor or chief executive of our Company and/or a director,
supervisor or chief executive of any of its subsidiaries;
 are a close associate (as defined in the Listing Rules) of any of the above persons;
 are a connected person (as defined in the Listing Rules) of our Company or will
become a connected person of our Company immediately upon the completion of the
Global Offering; or
 have been allocated or have applied for or indicated an interest in any International
Offer Shares or otherwise participate in the International Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 418 –


--- page 430 ---
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Monday, 9 September
2024 and end at 12:00 noon on Thursday, 12 September 2024 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application Channel Platform Target Investors Application Time
White Form eIPO
service
www.eipo.com.hk Investors who would like
to receive a physical H
Share certificate.
Hong Kong Offer Shares
successfully applied for
will be allotted and
issued in your own name.
Y ou may submit your
application through the
White Form eIPO
service through the
designated website at
www.eipo.com.hk
(24 hours daily, except
on the last day for
applications) from 9:00
a.m. on Monday,
9 September 2024 until
11:30 a.m. on Thursday,
12 September 2024 and
the latest time for
completing full payment
of application monies in
respect of such
applications will be
12:00 noon on Thursday,
12 September 2024, the
last day for applications,
or such later time as
described in “— E.
Severe Weather
Arrangements” below.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 419 –


--- page 431 ---
Application Channel Platform Target Investors Application Time
HKSCC EIPO channel Y our broker or custodian who
is a HKSCC Participant will
submit electronic application
instructions on your behalf
through HKSCC’s FINI system
in accordance with your
instruction
Investors who would not
like to receive a physical
H Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated HKSCC
Participant’s stock
account.
Contact your broker or
custodian for the earliest
and latest time for giving
such instructions, as this
may vary by broker or
custodian .
The White Form eIPO service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the
last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the White Form eIPO service, once you complete payment
in respect of any application instructions given by you or for your benefit through the White
Form eIPO service to make an application for Hong Kong Offer Shares, an actual application
shall be deemed to have been made. If you are a person for whose benefit the electronic
application instructions are given, you shall be deemed to have declared that only one set of
electronic application instructions has been given for your benefit. If you are an agent for
another person, you shall be deemed to have declared that you have only given one set of
electronic application instructions for the benefit of the person for whom you are an agent
and that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the White Form eIPO
service more than once and obtaining different application reference numbers without effecting
full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the White Form eIPO service, you are deemed to have authorized
the White Form eIPO Service Provider to apply on the terms and conditions in this document,
as supplemented and amended by the terms and conditions of the White Form eIPO service.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 420 –


--- page 432 ---
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong
Kong Offer Shares on your behalf and to do on your behalf all the things stated in this
document and any supplement to it.
For those applying through the HKSCC EIPO channel, an actual application will be
deemed to have been made for any application instructions given by you or for your benefit to
HKSCC (in which case an application will be made by HKSCC Nominees on your behalf)
provided such application instruction has not been withdrawn or otherwise invalidated before
the closing time of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this document.
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual/Joint Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country or
jurisdiction
 Identity document’s issuing country or
jurisdiction
 Identity document type, with order of
priority:
i. HKID card; or
ii. National identification document;
or
iii. Passport; and
 Identity document number
 Identity document type, with order of
priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate; or
iv. Other equivalent document; and
 Identity document number
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 421 –


--- page 433 ---
Notes:
1. If you are applying through the White Form eIPO service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong address. Y ou are also required to declare that the
identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for Hong Kong Offer
Shares. Similarly for corporate applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint applicants on FINI is capped at 4 in accordance with market practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii)
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through the HKSCC EIPO channel, and making an application under
a power of attorney, the Company and the Overall Coordinators, as the Company’s agent, have
discretion to consider whether to accept it on any conditions the Company thinks fit, including
evidence of the attorney’s authority.
Failing to provide any required information may result in your application being rejected.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 422 –


--- page 434 ---
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 100 H Shares
Permitted number of
Hong Kong Offer Shares
for application and
amount payable on
application/successful
allotment
: Hong Kong Offer Shares are available for application
in specified board lot sizes only. Please refer to the
amount payable associated with each specified board
lot size in the table below.
The maximum Offer Price is HK$54.80 per H Share.
If you are applying through the HKSCC EIPO
channel, you are required to pre-fund your
application based on the amount specified by your
broker or custodian , as determined based on the
applicable laws and regulations in Hong Kong.
By instructing your broker or custodian to apply for
the Hong Kong Offer Shares on your behalf through
the HKSCC EIPO channel, you (and, if you are joint
applicants, each of you jointly and severally) are
deemed to have instructed and authorized HKSCC to
cause HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange payment of
the final Offer Price, brokerage, SFC transaction
levy, the Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the designated bank for your broker
or custodian .
If you are applying through the White Form eIPO
service, you may refer to the table below for the
amount payable for the number of H Shares you have
selected. Y ou must pay the respective maximum
amount payable on application in full upon
application for Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 423 –


--- page 435 ---
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2)
on application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2)
on application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2)
on application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2)
on application
HK$ HK$ HK$ HK$
100 5,535.27 4,000 221,410.63 70,000 3,874,686.05 3,000,000 166,057,974.00
200 11,070.54 5,000 276,763.29 80,000 4,428,212.65 3,500,000 193,734,303.00
300 16,605.79 6,000 332,115.95 90,000 4,981,739.22 4,000,000 221,410,632.00
400 22,141.06 7,000 387,468.61 100,000 5,535,265.80 4,500,000 249,086,961.00
500 27,676.33 8,000 442,821.27 200,000 11,070,531.60 5,000,000 276,763,290.00
600 33,211.60 9,000 498,173.93 300,000 16,605,797.40 6,000,000 332,115,948.00
700 38,746.87 10,000 553,526.58 400,000 22,141,063.20 7,000,000 387,468,606.00
800 44,282.13 20,000 1,107,053.15 500,000 27,676,329.00 8,000,000 442,821,264.00
900 49,817.39 30,000 1,660,579.75 1,000,000 55,352,658.00 9,000,000 498,173,922.00
1,000 55,352.66 40,000 2,214,106.32 1,500,000 83,028,987.00 10,000,000 553,526,580.00
2,000 110,705.31 50,000 2,767,632.90 2,000,000 110,705,316.00 12,303,400
(1) 681,025,892.44
3,000 166,057.98 60,000 3,321,159.48 2,500,000 138,381,645.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of the brokerage, the SFC transaction levy, the Stock Exchange trading fee
and the AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) and the SFC transaction levy, the Stock Exchange trading fee and
AFRC transaction levy are paid to the Stock Exchange (in the case of the SFC transaction levy, collected by
the Stock Exchange on behalf of the SFC; and in the case of the AFRC transaction levy, collected by the Stock
Exchange on behalf of the AFRC).
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “— A. Application for Hong Kong
Offer Shares — 3. Information Required to Apply” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the White Form eIPO service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you
have made an application through the White Form eIPO service or HKSCC EIPO channel,
you or the person(s) for whose benefit you have made the application shall not apply for any
International Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 424 –


--- page 436 ---
Since applications are subject to personal information collection statements, beneficial
owner identification codes displayed are redacted. Applicants with beneficial names only but
not identification document numbers are not disclosed due to personal privacy issue.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the White Form eIPO service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorize the Company
and/or the Overall Coordinators, as the Company’s agents, to execute any documents
for you and to do on your behalf all things necessary to register any Hong Kong
Offer Shares allocated to you in your name or in the name of HKSCC Nominees as
required by the Articles of Association, and (if you are applying through the HKSCC
EIPO channel) to deposit the allotted Hong Kong Offer Shares directly into CCASS
for the credit of your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this document and the designated website of the White Form
eIPO service (or as the case may be, the agreement you entered into with your
broker or custodian ), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker
or custodian and HKSCC and observe the General Rules of HKSCC and the
HKSCC Operational Procedures for giving application instructions to apply for
Hong Kong Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of H Shares set out
in this document and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(v) confirm that you have read this document and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 425 –


--- page 437 ---
(vi) agree that the Company, the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Capital
Market Intermediaries, the Underwriters, any of their respective directors, officers,
employees, partners, agents, advisers and any other parties involved in the Global
Offering (the “ Relevant Persons ”), the H Share Registrar and HKSCC will not be
liable for any information and representations not in this document and any
supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to the Company, the Relevant Persons, the H Share
Registrar, HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other
statutory regulatory or governmental bodies or otherwise as required by laws, rules
or regulations, for the purposes under the paragraph headed “— G. Personal Data —
3. Purposes” and “— 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “— B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed “— C.
Circumstances In Which Y ou Will Not Be Allocated Hong Kong Offer Shares” in
this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither the
Company nor the Relevant Persons will breach any law inside and/or outside Hong
Kong as a result of the acceptance of your offer to purchase, or any action arising
from your rights and obligations under the terms and conditions contained in this
document;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 426 –


--- page 438 ---
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors,
supervisors, chief executives, substantial shareholder(s) or existing shareholder(s)
of the Company or any of its subsidiaries or any of their respective close associates;
and (b) you are not accustomed or will not be accustomed to taking instructions from
the Company, any of the directors, supervisors, chief executives, substantial
shareholder(s) or existing shareholder(s) of the Company or any of its subsidiaries
or any of their respective close associates in relation to the acquisition, disposal,
voting or other disposition of the H Shares registered in your name or otherwise held
by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that the Company and the Overall Coordinators will
rely on your declarations and representations in deciding whether or not to allocate
any Hong Kong Offer Shares to you and that you may be prosecuted for making a
false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the White Form eIPO
service or by any one as your agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and (2)
you have due authority to give electronic application instructions on behalf of that
other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 427 –


--- page 439 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through White Form eIPO service or HKSCC EIPO channel :
Website The designated results of allocation
website at www.iporesults.com.hk
(alternatively:
www.eipo.com.hk/eIPOAllotment ) with
a “search by ID” function.
24 hours, from 11:00 p.m. on
Monday, 16 September 2024
to 12:00 midnight on Sunday,
22 September 2024 (Hong
Kong time)
The full list of (i) wholly or partially
successful applicants using the White
Form eIPO service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally allotted
to them, among other things, will be
displayed on the “Allotment Results”
page of the White Form eIPO service at
www.iporesults.com.hk (alternatively:
www.eipo.com.hk/eIPOAllotment ).
The Stock Exchange’s website at
www.hkexnews.hk and the Company’s
website at www.midea.com.cn which
will provide links to the above
mentioned websites of the H Share
Registrar.
No later than 11:00 p.m. on
Monday, 16 September 2024
(Hong Kong time)
Telephone +852 2862 8555 — the allocation results
telephone enquiry line provided by the
H Share Registrar
between 9:00 a.m. and
6:00 p.m. on Tuesday,
17 September 2024, Thursday,
19 September 2024, Friday,
20 September 2024 and
Monday, 23 September 2024
For those applying through the HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Friday, 13 September 2024 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 428 –


--- page 440 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Friday, 13 September 2024 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
The Company expects to announce the results of the final Offer Price, the level of
indications of interest in the International Offering, the level of applications in the Hong Kong
Public Offering and the basis of allocations of Hong Kong Offer Shares on the Stock
Exchange’s website at www.hkexnews.hk and the Company’s website at www.midea.com.cn
by no later than 11:00 p.m. on Monday, 16 September 2024 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If the Company or its agents exercise their discretion to reject your application:
The Company, the Overall Coordinators, the H Share Registrar and their respective agents
and nominees have full discretion to reject or accept any application, or to accept only part of
any application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the H Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies the
Company of that longer period within three weeks of the closing date of the
application lists.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 429 –


--- page 441 ---
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “— A. Application for Hong Kong Offer Shares — 5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 the Company or the Overall Coordinators believe that by accepting your application,
it or the Company would violate applicable securities or other laws, rules or
regulations.
5. If there is money settlement failure for allotted Offer Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
designated bank before balloting. After balloting of Hong Kong Offer Shares, the receiving
bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their designated bank.
There is a risk of money settlement failure . In the extreme event of money settlement
failure by a HKSCC Participant (or its designated bank), who is acting on your behalf in
settling payment for your allotted Offer Shares, HKSCC will contact the defaulting HKSCC
Participant and its designated bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the International Offering. Hong Kong Offer
Shares applied for by you through the broker or custodian may be affected to the extent of
the settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer
Shares due to the money settlement failure by such HKSCC Participant. None of the Company,
the Relevant Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer
Shares are not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 430 –


--- page 442 ---
No temporary document of title will be issued in respect of the Offer Shares. No receipt
will be issued for sums paid on application.
H Share certificates will only become valid evidence of title at 8:00 a.m. on Tuesday, 17
September 2024 (Hong Kong time), provided that the Global Offering has become
unconditional and the right of termination described in the section headed “Underwriting” has
not been exercised. Investors who trade H Shares prior to the receipt of H Share certificates
or the H Share certificates becoming valid do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
White Form eIPO service HKSCC EIPO channel
Despatch/collection of H Share certificate 1
For physical share
certificates of
1,000,000 or more
Offer Shares issued
under your own
name
Collection in person from the H
Share Registrar, Computershare
Hong Kong Investor Services
Limited, at Shops 1712-1716,
17th Floor, Hopewell Centre,
183 Queen’s Road East, Wanchai,
Hong Kong
Time : from 9:00 a.m. to
1:00 p.m. on Tuesday,
17 September 2024 (Hong Kong
time), or any other place or date
notified by the Company
If you are an individual, you
must not authorize any other
person to collect for you. If you
are a corporate applicant, your
authorized representative must
bear a letter of authorization
from your corporation stamped
with your corporation’s chop.
H Share certificate(s) will
be issued in the name of
HKSCC Nominees,
deposited into CCASS and
credited to your designated
HKSCC Participant’s stock
account
No action by you is required
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 431 –


--- page 443 ---
White Form eIPO service HKSCC EIPO channel
Both individuals and authorized
representatives must produce, at
the time of collection, evidence
of identity acceptable to the H
Share Registrar.
Note: If you do not collect Y our
H Share certificate(s) personally
within the time above, it/they
will be sent to the address
specified in your application
instructions by ordinary post at
your own risk
For physical share
certificates of less
than 1,000,000
Offer Shares issued
under your own
name
Y our H Share certificate(s) will
be sent to the address specified
in your application instructions
by ordinary post at your own risk
Time : Monday, 16 September
2024
Refund mechanism for surplus application monies paid by you
Date Tuesday, 17 September 2024 Subject to the arrangement
between you and your
broker or custodian
Responsible party H Share Registrar Y our broker or custodian
Application monies
paid through single
bank account
White Form e-Refund payment
instructions to your designated
bank account
Y our broker or custodian
will arrange refund to your
designated bank account
subject to the arrangement
between you and itApplication monies
paid through
multiple bank
accounts
Refund check(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk
Note:
1. Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or
an Extreme Conditions issued after a super typhoon in force in Hong Kong in the morning on Monday,
16 September 2024 rendering it impossible for the relevant H Share certificates to be despatched to HKSCC
in a timely manner, the Company shall procure the H Share Registrar to arrange for delivery of the supporting
documents and H Share certificates in accordance with the contingency arrangements as agreed between them.
Y ou may refer to “— E. Severe Weather Arrangements” in this section.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 432 –


--- page 444 ---
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Thursday, 12 September 2024 if, there
is/are:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 an Extreme Condition,
(collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday,
12 September 2024.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Severe Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the Listing Date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this document, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and the Company’s website at www.midea.com.cn of the revised
timetable.
If a Severe Weather Signal is hoisted on Monday, 16 September 2024, the H Share
Registrar will make appropriate arrangements for the delivery of the H Share certificates to the
CCASS Depository’s service counter so that they would be available for trading on Tuesday,
17 September 2024.
If a Severe Weather Signal is hoisted on Monday, 16 September 2024:
 for physical H Share certificates of less than 1,000,000 Offer Shares issued under
your own name, despatch will be made by ordinary post when the post office
re-opens after the Severe Weather Signal is lowered or cancelled (e.g. in the
afternoon of Monday, 16 September 2024 or on Tuesday, 17 September 2024).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 433 –


--- page 445 ---
If a Severe Weather Signal is hoisted on Tuesday, 17 September 2024:
 for physical H Share certificates of 1,000,000 or more Offer Shares issued under
your own name, you may pick them up from the H Share Registrar’s office after the
Severe Weather Signal is lowered or cancelled (e.g. in the afternoon of Tuesday,
17 September 2024 or on Thursday, 19 September 2024).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
F. ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the
Stock Exchange and the Company complies with the stock admission requirements of HKSCC,
the H Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the date of commencement of dealings in the H Shares
on the Stock Exchange or any other date HKSCC chooses. Settlement of transactions between
Exchange Participants is required to take place in CCASS on the second settlement day after
any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional adviser for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the H Share Registrar, the receiving bank and the Relevant
Persons about you in the same way as it applies to personal data about applicants other than
HKSCC Nominees. This personal data may include client identifier(s) and your identification
information. By giving application instructions to HKSCC, you acknowledge that you have
read, understood and agree to all of the terms of the Personal Information Collection Statement
below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 434 –


--- page 446 ---
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the H Share Registrar immediately of any inaccuracies in the personal data
supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund check and White Form e-Refund payment
instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this document and announcing results of allocation
of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the H
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the H Shares and identifying any
duplicate applications for the H Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the H Shares, such as dividends,
rights issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the H Shares;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 435 –


--- page 447 ---
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the H Shares and/or regulators and/or any other purposes to which
applicants and holders of the H Shares may from time to time agree.
4. Transfer of personal data
Personal data held by the Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but the Company and the
H Share Registrar may, to the extent necessary for achieving any of the above purposes,
disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to, from
or with any of the following:
 the Company’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar for the purposes of providing its services or
facilities or performing its functions in accordance with its rules or procedures and
operating FINI and CCASS (including where applicants for the Hong Kong Offer
Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the H
Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the H Share Registrar will keep the personal data of the applicants and
holders of Hong Kong Offer Shares for as long as necessary to fulfil the purposes for which
the personal data were collected. Personal data which is no longer required will be destroyed
or dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 436 –


--- page 448 ---
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. The Company and the H Share Registrar have the
right to charge a reasonable fee for the processing of such requests. All requests for access to
data or correction of data should be addressed to the Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate information” in this
document or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 437 –


--- page 449 ---
The following is the text of a report set out on pages I-1 to I-3, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed
to the directors of the Company and to the Joint Sponsors pursuant to the requirements of
HKSIR 200, Accountants’ Reports on Historical Financial Information in Investment Circulars
issued by the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF MIDEA GROUP CO., LTD. AND CHINA INTERNATIONAL CAPITAL
CORPORATION HONG KONG SECURITIES LIMITED AND MERRILL LYNCH
(ASIA PACIFIC) LIMITED
Introduction
We report on the historical financial information of Midea Group Co., Ltd. (the
“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-135, which
comprises the consolidated statements of financial position as at 31 December 2021, 2022 and
2023 and 30 April 2024, the Company statements of financial position as at 31 December 2021,
2022 and 2023 and 30 April 2024, and the consolidated statements of profit or loss, the
consolidated statements of comprehensive income, the consolidated statements of changes in
equity and the consolidated statements of cash flows for each of the years ended 31 December
2021, 2022 and 2023 and the four months ended 30 April 2024 (the “Track Record Period”) and
material accounting policy information and other explanatory information (together, the
“Historical Financial Information”). The Historical Financial Information set out on pages I-4
to I-135 forms an integral part of this report, which has been prepared for inclusion in the
prospectus of the Company dated 9 September 2024 (the “Prospectus”) in connection with the
initial listing of H Shares of the Company on the Main Board of The Stock Exchange of Hong
Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation set out
in Note 2.1 to the Historical Financial Information, and for such internal control as the
directors determine is necessary to enable the preparation of Historical Financial Information
that is free from material misstatement, whether due to fraud or error.
APPENDIX I ACCOUNTANT’S REPORT
– I-1 –


--- page 450 ---
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards
and plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in Note 2.1 to the Historical Financial Information in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountant’s report, a true and fair view of the financial position of the Company as at 31
December 2021, 2022 and 2023 and 30 April 2024 and the consolidated financial position of
the Group as at 31 December 2021, 2022 and 2023 and 30 April 2024 and of its consolidated
financial performance and its consolidated cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2.1 to the Historical Financial
Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of profit or loss, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the four months ended 30 April 2023 and other explanatory
information (the “Stub Period Comparative Financial Information”). The directors of the
Company are responsible for the presentation and preparation of the Stub Period Comparative
Financial Information in accordance with the basis of preparation set out in Note 2.1 to the
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 451 ---
Historical Financial Information. Our responsibility is to express a conclusion on the Stub
Period Comparative Financial Information based on our review. We conducted our review in
accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
International Auditing and Assurance Standards Board (“IAASB”). A review consists of
making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on
our review, nothing has come to our attention that causes us to believe that the Stub Period
Comparative Financial Information, for the purposes of the accountant’s report, is not
prepared, in all material respects, in accordance with the basis of preparation set out in Note
2.1 to the Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 12 to the Historical Financial Information which contains information
about the dividends paid by the Company in respect of the Track Record Period.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
9 September 2024
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 452 ---
I. HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the historical financial information as at 31 December 2021, 2022 and
2023 and 30 April 2024 and for the years/periods then ended (the “Track Record Period”) (the
“Historical Financial Information”) which forms an integral part of this accountant’s report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with International Standards on Auditing issued by IAASB (“Underlying Financial
Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 453 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Y ear ended 31 December
Four months ended
30 April
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 343,360,825 345,708,706 373,709,804 131,381,082 145,779,559
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 (266,450,882) (262,321,797) (275,320,160) (99,348,589) (106,469,785)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,909,943 83,386,909 98,389,644 32,032,493 39,309,774
Selling and marketing expenses /H1118 8 (28,646,188) (28,715,439) (34,880,794) (11,248,192) (14,624,289)
General and administrative
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 (10,742,475) (12,023,970) (13,975,965) (3,911,452) (4,630,693)
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 (12,014,891) (12,667,099) (14,586,346) (4,327,729) (4,960,679)
Net impairment losses on
financial assets and contract
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1(b) (384,501) (538,108) (235,002) (179,526) (56,212)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 6,177,047 7,088,757 8,120,251 2,370,278 2,862,663
Other gains/(losses), net /H1118/H1118/H1118/H1118/H11187 2,777,178 (1,065,436) (945,664) 271,205 (2,012,940)
Operating profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,076,113 35,465,614 41,886,124 15,007,077 15,887,624
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 401,501 793,175 1,085,256 275,801 590,833
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 (1,299,556) (1,902,422) (3,372,815) (1,151,972) (485,846)
Finance (costs)/income, net /H1118/H1118/H1118 (898,055) (1,109,247) (2,287,559) (876,171) 104,987
Share of profit of associates and
joint ventures, net /H1118/H1118/H1118/H1118/H1118/H1118/H111821 560,679 608,278 680,759 224,055 239,455
Impairment provision for
investments in associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (6,179) – – –
Profit before income tax /H1118/H1118/H1118/H111833,738,737 34,958,466 40,279,324 14,354,961 16,232,066
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 (4,707,309) (5,146,341) (6,532,371) (2,229,553) (2,585,791)
Profit for the year/period /H1118/H1118/H1118 29,031,428 29,812,125 33,746,953 12,125,408 13,646,275
Attributable to:
Owners of the Company /H1118/H1118/H1118/H111828,586,980 29,553,342 33,721,536 11,995,920 13,461,205
Non-controlling interests /H1118/H1118/H1118 444,448 258,783 25,417 129,488 185,070
29,031,428 29,812,125 33,746,953 12,125,408 13,646,275
Earnings per share for profit
attributable to owners of the
Company: 13
– Basic (RMB per share) /H1118/H1118/H1118/H1118 4.17 4.34 4.93 1.77 1.94
– Diluted (RMB per share) /H1118/H1118/H1118 4.14 4.33 4.92 1.76 1.94
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 454 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Y ear ended 31 December
Four months ended
30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,031,428 29,812,125 33,746,953 12,125,408 13,646,275
Other comprehensive (loss)/income:
Items that may be reclassified to profit or
loss, net of tax
– Other comprehensive (loss)/income that
will be transferred subsequently to
profit or loss under the equity method,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,032) 17,391 7,751 17,318 12,450
– Cash flow hedging reserves,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,370) 365,978 (139,710) (144,837) 233,822
– Currency translation differences of
foreign operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(231,698) 1,222,797 (53,552) (478,016) (488,725)
– Others, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 69,882 25,033 (25,450) (5,315)
Items that will not be reclassified to
profit or loss, net of tax
– Changes arising from remeasurement of
defined benefit plan, net of tax /H1118/H1118/H1118/H1118/H1118(1,029) 219,408 (88,017) (5,539) 12,860
– Changes in fair value of investments in
other equity instruments, net of tax /H1118/H1118/H11182,238 (2,458) (1,025) – 98
Other comprehensive (loss)/income for
the year/period, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118(236,891) 1,892,998 (249,520) (636,524) (234,810)
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(206,664) 1,865,962 (272,554) (562,696) (41,328)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(30,227) 27,036 23,034 (73,828) (193,482)
Total comprehensive income for
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,794,537 31,705,123 33,497,433 11,488,884 13,411,465
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,380,316 31,419,304 33,448,982 11,433,224 13,419,877
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118414,221 285,819 48,451 55,660 (8,412)
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 455 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
As at
30 April
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 25,996,426 30,516,233 36,382,765 36,562,524
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 10,264,315 10,485,657 11,501,892 11,239,167
Investment properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118859,195 809,936 1,293,629 1,263,150
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 37,073,861 37,307,434 40,860,697 39,485,598
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 8,192,309 10,244,296 12,771,150 13,633,849
Prepayments, other receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 2,701,909 2,412,405 2,705,275 2,715,755
Investments in associates and joint
ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 3,796,705 5,188,817 4,976,109 5,053,245
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 851,927 693,294 975,272 518,630
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H111825 – 4,276,688 2,082,347 3,105,590
Other financial assets at amortized cost /H1118/H1118/H111823 35,485,395 42,032,707 79,121,387 79,926,465
Other financial assets at fair value through
other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 7,939,682 11,135,618 6,356,921 6,235,029
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 5,912,873 6,348,556 5,687,591 5,402,552
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118139,074,597 161,451,641 204,715,035 205,141,554
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 45,924,439 46,044,897 47,339,255 41,117,853
Contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 3,823,476 4,498,956 4,045,925 3,937,221
Trade and note receivables at amortized
cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 29,421,354 32,996,102 38,406,699 47,982,254
Trade and note receivables at fair value
through other comprehensive income /H1118/H1118/H111819 10,273,552 13,526,540 13,330,008 21,385,125
Prepayments, other receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 16,424,299 14,181,573 14,796,946 14,736,706
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 20,656,600 14,138,756 14,296,958 14,916,523
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H111825 1,298,815 752,451 1,670,754 2,602,799
Other financial assets at amortized cost /H1118/H1118/H111823 23,696,825 69,873,261 59,275,572 53,671,064
Other financial assets at fair value through
other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 19,590,387 6,532,043 4,694,429 1,282,936
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 5,879,202 3,284,593 1,790,588 1,585,485
Term deposits and restricted cash /H1118/H1118/H1118/H1118/H1118/H111829 31,325,517 4,138,131 21,786,586 36,545,868
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 40,550,039 51,131,968 59,887,260 64,252,371
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118248,864,505 261,099,271 281,320,980 304,016,205
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118387,939,102 422,550,912 486,036,015 509,157,759
APPENDIX I ACCOUNTANT’S REPORT
– I-7 –


--- page 456 ---
As at 31 December
As at
30 April
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 19,734,020 53,849,564 49,356,705 50,008,478
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 1,533,552 1,507,480 2,047,319 2,007,395
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 4,948,450 4,646,555 5,097,810 4,919,505
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 2,823,276 2,563,915 2,253,296 2,382,391
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835 1,228,459 1,721,092 1,734,932 1,696,417
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H111825 – – 2,282 20,573
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,267,757 64,288,606 60,492,344 61,034,759
Current liabilities
Trade and note payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 98,735,566 89,805,646 94,238,073 106,294,118
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 23,916,595 27,960,038 41,765,475 35,510,113
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 33,647,538 11,417,964 22,109,985 17,891,000
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 860,503 992,142 1,166,901 1,149,267
Customer deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,180 77,469 88,960 77,200
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H111825 166,649 314,539 413,222 636,508
Other financial liabilities at fair value
through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834 – 1,580,771 1,346,674 1,174,016
Current tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,972,040 2,813,522 3,477,253 3,712,902
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 62,474,405 71,379,650 86,639,178 113,288,284
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,851,476 206,341,741 251,245,721 279,733,408
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118253,119,233 270,630,347 311,738,065 340,768,167
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836 6,986,564 6,997,273 7,025,769 6,974,933
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837 (14,044,550) (14,933,944) (12,871,738) (7,651,734)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 28,943,657 31,193,091 32,440,770 28,766,505
Retained earnings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838 102,979,342 119,675,616 136,282,362 128,872,334
Equity attributable to owners of the
Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,865,013 142,932,036 162,877,163 156,962,038
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,954,856 8,988,529 11,420,787 11,427,554
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118134,819,869 151,920,565 174,297,950 168,389,592
Total equity and liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118387,939,102 422,550,912 486,036,015 509,157,759
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 457 ---
COMPANY STATEMENTS OF FINANCIAL POSITION
As at 31 December
As at
30 April
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 1,461,935 1,728,310 2,050,932 2,161,643
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118671,703 661,360 585,397 582,684
Investment properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118428,460 386,435 393,988 380,346
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118272,946 327,251 289,426 302,820
Prepayments, other receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 83,722 85,154 324,180 419,233
Investments in associates and joint
ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 2,428,841 3,398,523 3,559,731 3,530,962
Investments in subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849 64,376,850 69,705,046 72,398,113 72,065,685
Other financial assets at amortized cost /H1118/H1118/H111823 33,019,381 35,423,894 70,880,635 69,067,190
Other financial assets at fair value through
other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 6,034,563 7,215,301 3,334,059 3,178,619
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 537,214 347,698 285,170 245,918
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118109,315,615 119,278,972 154,101,631 151,935,100
Current assets
Prepayments, other receivables and other
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 31,845,837 26,500,974 20,019,238 23,272,250
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118157,501 – – –
Other financial assets at amortized cost /H1118/H1118/H111823 11,422,032 61,117,250 48,703,727 42,508,511
Other financial assets at fair value through
other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 19,095,262 5,236,623 4,049,224 630,279
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 3,442,317 274,120 299,001 239,514
Term deposits and restricted cash /H1118/H1118/H1118/H1118/H1118/H111829 26,196,955 588,172 977,444 1,384,242
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 21,957,042 27,904,229 29,283,158 32,932,756
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118114,116,946 121,621,368 103,331,792 100,967,552
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118223,432,561 240,900,340 257,433,423 252,902,652
APPENDIX I ACCOUNTANT’S REPORT
– I-9 –


--- page 458 ---
As at 31 December
As at
30 April
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 12,509,900 15,619,900 16,600,000 14,600,000
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,350 – 2,240
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118154,015 152,548 157,917 163,917
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,663,915 15,774,798 16,757,917 14,766,157
Current liabilities
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 90,000 5,890,000 7,019,900 2,419,900
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,647 6,701 2,010 1,408
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 153,091,836 160,922,422 171,422,566 192,325,864
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118153,184,483 166,819,123 178,444,476 194,747,172
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,848,398 182,593,921 195,202,393 209,513,329
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836 6,986,564 6,997,273 7,025,769 6,974,933
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837 (14,044,550) (14,933,944) (12,871,738) (7,651,734)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 36,547,759 38,523,457 40,175,469 36,460,731
Retained earnings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838 28,094,390 27,719,633 27,901,530 7,605,393
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111857,584,163 58,306,419 62,231,030 43,389,323
Total equity and liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118223,432,561 240,900,340 257,433,423 252,902,652
APPENDIX I ACCOUNTANT’S REPORT
– I-10 –


--- page 459 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36) (Note 37) (Note 39) (Note 38)
Balance at 1 January 2021 /H1118/H1118/H1118/H11187,029,976 (6,094,347) 29,506,073 87,057,702 117,499,404 6,716,022 124,215,426
Comprehensive income:
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 28,586,980 28,586,980 444,448 29,031,428
Other comprehensive loss /H1118/H1118/H1118/H1118/H1118– – (206,664) – (206,664) (30,227) (236,891)
Total comprehensive
(loss)/income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (206,664) 28,586,980 28,380,316 414,221 28,794,537
Transactions with owners
Capital injection
(Note 36, Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,437 – 1,169,089 – 1,203,526 587,480 1,791,006
Non-controlling interests arising
from business combinations
(Note 42) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– 3,189,892 3,189,892
Share-based compensation expenses
(Note 40(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,516,039 – 1,516,039 62,031 1,578,070
Appropriation to general reserves /H1118/H1118 – – 131,938 (131,938) – – –
Profit appropriations to statutory
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,483,539 (1,483,539) – – –
Dividends (Note 12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (11,052,729) (11,052,729) (401,397) (11,454,126)
Appropriation to special reserves /H1118/H1118 – – 2,812 – 2,812 703 3,515
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 36, Note 37,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,873) 714,945 (250,110) – 458,962 – 458,962
Repurchase of shares (Note 37) /H1118/H1118/H1118 – (13,665,744) – – (13,665,744) – (13,665,744)
Cancellation of shares (Note 36,
Note 37, Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(71,976) 5,000,596 (4,928,620) ––––
Transaction with NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 100,012 – 100,012 (449,682) (349,670)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 419,549 2,866 422,415 (164,414) 258,001
Balance at 31 December 2021 /H1118/H1118/H11186,986,564 (14,044,550) 28,943,657 102,979,342 124,865,013 9,954,856 134,819,869
APPENDIX I ACCOUNTANT’S REPORT
– I-11 –


--- page 460 ---
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36) (Note 37) (Note 39) (Note 38)
Balance at 1 January 2022 /H1118/H1118/H1118/H11186,986,564 (14,044,550) 28,943,657 102,979,342 124,865,013 9,954,856 134,819,869
Comprehensive income:
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 29,553,342 29,553,342 258,783 29,812,125
Other comprehensive income /H1118/H1118/H1118/H1118– – 1,865,962 – 1,865,962 27,036 1,892,998
Total comprehensive income /H1118/H1118/H1118 – – 1,865,962 29,553,342 31,419,304 285,819 31,705,123
Transactions with owners
Capital injection (Note 36,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,602 – 906,196 – 924,798 26,815 951,613
Non-controlling interests arising
from business combinations
(Note 42) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– 89,520 89,520
Share-based compensation expenses
(Note 40(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 983,367 – 983,367 45,583 1,028,950
Reversal of general reserves /H1118/H1118/H1118/H1118– – (47,923) 47,92 3–––
Profit appropriations to statutory
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,253,027 (1,253,027) – – –
Dividends (Note 12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (11,652,025) (11,652,025) (291,638) (11,943,663)
Appropriation to special reserves /H1118/H1118 – – 3,313 – 3,313 828 4,141
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (2,505) – (2,505) (626) (3,131)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 36, Note 37,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(7,893) 1,747,627 (1,209,146) – 530,588 – 530,588
Repurchase of shares (Note 37) /H1118/H1118/H1118 – (2,637,021) – – (2,637,021) – (2,637,021)
Transaction with NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (1,513,804) – (1,513,804) (1,131,616) (2,645,420)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 10,947 61 11,008 8,988 19,996
Balance at 31 December 2022 /H1118/H1118/H11186,997,273 (14,933,944) 31,193,091 119,675,616 142,932,036 8,988,529 151,920,565
APPENDIX I ACCOUNTANT’S REPORT
– I-12 –


--- page 461 ---
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36) (Note 37) (Note 39) (Note 38)
Balance at 1 January 2023 /H1118/H1118/H1118/H11186,997,273 (14,933,944) 31,193,091 119,675,616 142,932,036 8,988,529 151,920,565
Comprehensive income:
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 33,721,536 33,721,536 25,417 33,746,953
Other comprehensive (loss)/income /H1118 – – (272,554) – (272,554) 23,034 (249,520)
Total comprehensive
(loss)/income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (272,554) 33,721,536 33,448,982 48,451 33,497,433
Transactions with owners
Capital injection (Note 36,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,490 – 1,781,144 – 1,819,634 45,581 1,865,215
Non-controlling interests arising
from business combinations
(Note 42) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– 2,563,374 2,563,374
Share-based compensation expenses
(Note 40(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,208,095 – 1,208,095 37,361 1,245,456
Appropriation to general reserves /H1118/H1118 – – 19,678 (19,678) – – –
Reversal of general reserves /H1118/H1118/H1118/H1118– – (49,152) 49,15 2–––
Dividends (Note 12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (17,144,264) (17,144,264) (349,745) (17,494,009)
Appropriation to special reserves /H1118/H1118 – – 7,227 – 7,227 11,500 18,727
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (7,537) – (7,537) (11,464) (19,001)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 36, Note 37,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,994) 2,062,206 (1,373,096) – 679,116 – 679,116
Transaction with NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (54,307) – (54,307) 12,666 (41,641)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (11,819) – (11,819) 74,534 62,715
Balance at 31 December 2023 /H1118/H1118/H11187,025,769 (12,871,738) 32,440,770 136,282,362 162,877,163 11,420,787 174,297,950
APPENDIX I ACCOUNTANT’S REPORT
– I-13 –


--- page 462 ---
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36) (Note 37) (Note 39) (Note 38)
Four months ended 30 April 2023
(unaudited)
Balance at 1 January 2023 /H1118/H1118/H1118/H11186,997,273 (14,933,944) 31,193,091 119,675,616 142,932,036 8,988,529 151,920,565
Comprehensive income:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 11,995,920 11,995,920 129,488 12,125,408
Other comprehensive loss /H1118/H1118/H1118/H1118/H1118– – (562,696) – (562,696) (73,828) (636,524)
Total comprehensive income /H1118/H1118/H1118 – – (562,696) 11,995,920 11,433,224 55,660 11,488,884
Transactions with owners
Capital injection (Note 36,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,924 – 1,266,034 – 1,292,958 11,015 1,303,973
Share-based compensation expenses
(Note 40(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 486,402 – 486,402 13,259 499,661
Reversal of general reserves /H1118/H1118/H1118/H1118– – (9,699) 9,69 9–––
Dividends /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 7,242 7,242 (173) 7,069
Appropriation to special reserves /H1118/H1118 – – 929 – 929 232 1,161
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (497) – (497) (124) (621)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 36, Note 37,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,498) 148,456 (89,058) – 56,900 – 56,900
Transaction with NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (57,475) – (57,475) – (57,475)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (133) – (133) 59,638 59,505
Balance at 30 April 2023 /H1118/H1118/H1118/H1118/H11187,021,699 (14,785,488) 32,226,898 131,688,477 156,151,586 9,128,036 165,279,622
APPENDIX I ACCOUNTANT’S REPORT
– I-14 –


--- page 463 ---
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36) (Note 37) (Note 39) (Note 38)
Balance at 1 January 2024 /H1118/H1118/H1118/H11187,025,769 (12,871,738) 32,440,770 136,282,362 162,877,163 11,420,787 174,297,950
Comprehensive income:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 13,461,205 13,461,205 185,070 13,646,275
Other comprehensive income/(loss) /H1118 – – (41,328) – (41,328) (193,482) (234,810)
Total comprehensive income /H1118/H1118/H1118 – – (41,328) 13,461,205 13,419,877 (8,412) 13,411,465
Transactions with owners
Capital injection (Note 36,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,893 – 884,540 – 904,433 – 904,433
Share-based compensation expenses
(Note 40(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 539,944 – 539,944 16,376 556,320
Appropriation to general reserves /H1118/H1118 – – 98,266 (98,266) – – –
Reversal of general reserves /H1118/H1118/H1118/H1118– – (3,385) 3,38 5–––
Cancellation of shares (Note 36,
Note 37, Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(69,808) 5,159,408 (5,089,600) ––––
Dividends (Note 12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (20,776,352) (20,776,352) (1,893) (20,778,245)
Appropriation to special reserves /H1118/H1118 – – 1,602 – 1,602 486 2,088
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (758) – (758) (250) (1,008)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 36, Note 37,
Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(921) 60,596 (63,601) – (3,926) – (3,926)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 55 – 55 460 515
Balance at 30 April 2024 /H1118/H1118/H1118/H1118/H11186,974,933 (7,651,734) 28,766,505 128,872,334 156,962,038 11,427,554 168,389,592
APPENDIX I ACCOUNTANT’S REPORT
– I-15 –


--- page 464 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
Four months ended
30 April
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from operating
activities
Cash generated from operations /H111841(a) 40,548,210 41,456,166 64,551,866 14,165,565 19,706,052
Interest received /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118401,501 756,341 974,378 239,504 553,972
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,500,758) (7,554,679) (7,623,633) (2,584,799) (3,343,330)
Net cash generated from
operating activities /H1118/H1118/H1118/H1118/H1118/H111835,448,953 34,657,828 57,902,611 11,820,270 16,916,694
Cash flows from investing
activities:
Proceeds from/(payments for)
disposal of subsidiaries, net
of cash acquired/(disposed) /H1118/H1118 188,490 14,829 (83,019) (1) –
(Payments for)/proceeds from
acquisition of subsidiaries,
net of cash
(disposed)/acquired /H1118/H1118/H1118/H1118/H1118/H1118(2,028,912) 209,888 373,104 – –
Proceeds from disposal of
investments in associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,646 3,151 97,579 – 25,419
Payments for purchase of
investments in associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(46,446) (837,048) (6,348) – –
Proceeds from disposal of
financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118121,590,502 98,561,565 115,977,114 33,136,808 46,437,564
Payments for purchase of
financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(105,300,800) (108,149,101) (146,991,826) (61,061,461) (54,270,954)
Proceeds from disposal of
property, plant and
equipment, intangible assets
and other non-current assets /H1118 336,186 239,226 391,359 47,032 276,702
Payments for purchase of
property, plant and
equipment, intangible assets
and other non-current assets /H1118 (6,825,357) (7,352,115) (6,314,051) (1,885,027) (2,248,169)
Interest received and others /H1118/H1118/H1118 5,361,610 3,450,802 4,975,483 1,787,288 1,064,659
Dividends received from
associates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 286,667 349,293 360,750 132,968 136,910
Net cash generated from/(used
in) investing activities /H1118/H1118/H1118/H111813,599,586 (13,509,510) (31,219,855) (27,842,393) (8,577,869)
APPENDIX I ACCOUNTANT’S REPORT
– I-16 –


--- page 465 ---
Y ear ended 31 December
Four months ended
30 April
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from financing
activities:
Proceeds from share schemes /H1118/H1118 1,481,558 1,397,746 2,647,263 1,360,916 731,954
Payments for repurchase of
shares and refund the exercise
price of lapsed restricted
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(13,802,839) (2,831,545) (257,576) (68,089) (22,768)
Transactions with non-
controlling interests /H1118/H1118/H1118/H1118/H1118/H1118156,934 (2,876,898) 24,812 11,015 –
Proceeds from borrowings /H1118/H1118/H1118/H111819,033,432 53,321,016 33,888,703 12,708,597 8,233,542
Repayments of borrowings /H1118/H1118/H1118 (24,225,351) (44,920,787) (33,114,644) (2,232,105) (11,683,580)
Interests paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,400,786) (1,783,312) (2,121,654) (444,560) (441,904)
Dividends paid to the
Company’s shareholders /H1118/H1118/H1118/H1118(11,066,392) (11,677,509) (17,188,858) – –
Dividends paid to non-
controlling interests in
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(426,947) (279,216) (333,316) (37,529) (34,679)
Related payments of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,315,418) (1,198,421) (1,553,852) (511,898) (502,946)
Listing expenses paid /H1118/H1118/H1118/H1118/H1118/H1118 – – (30,876) – (3,113)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,021 (5,955) 129,785 (1,000) (8,422)
Net cash (used in)/generated
from financing activities /H1118/H1118/H1118 (31,561,788) (10,854,881) (17,910,213) 10,785,347 (3,731,916)
Net increase/(decrease) in cash
and cash equivalents /H1118/H1118/H1118/H1118/H111817,486,751 10,293,437 8,772,543 (5,236,776) 4,606,909
Cash and cash equivalents at
beginning of the year/period /H1118 23,548,508 40,550,039 51,131,968 51,131,968 59,887,260
Exchange (losses)/gains on cash
and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118(485,220) 288,492 (17,251) (66,853) (241,798)
Cash and cash equivalents at
end of the year/period /H1118/H1118/H1118/H111829 40,550,039 51,131,968 59,887,260 45,828,339 64,252,371
APPENDIX I ACCOUNTANT’S REPORT
– I-17 –


--- page 466 ---
II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
Midea Group Co., Ltd. (hereinafter referred to as “the Company”), was set up by the Council of Trade Unions
of GD Midea Group Co., Ltd. and was registered in Market Safety Supervision Bureau of Shunde District, Foshan,
PRC on 7 April 2000, with its headquarters located in Foshan, Guangdong. On 30 August 2012, the Company was
transformed into a limited liability company. On 29 July 2013, the Company was approved to merge and acquire
Guangdong Midea Electric Co., Ltd., which was listed on Shenzhen Stock Exchange. On 18 September 2013, the
Company’s A Shares were listed on Shenzhen Stock Exchange.
The Company and its subsidiaries (hereinafter collectively referred to as “the Group”) are principally engaged
in manufacturing and sales of residential air-conditioner, central air-conditioner, heating and ventilation systems,
kitchen appliances, refrigerators, washing machines and various small appliances, elevators, high-voltage inverters,
low-voltage inverters, medical imaging products, robotics and automation system. The Group also carried out other
businesses including provision of the smart supply chain; sale, wholesale and processing of raw materials of
household electrical appliances; and financial businesses involving customer deposits, interbank lending and
borrowings, consumption credits, buyer’s credits and finance leases.
2. BASIS OF PREPARATION
2.1 Basis of preparation
The Historical Financial Information has been prepared in accordance with IFRS Accounting Standards
(“IFRS”). IFRS Accounting Standards comprise the following authoritative literature:
 IFRS Accounting Standards.
 IAS Standards.
 Interpretations developed by the IFRS Interpretations Committee (IFRIC Interpretations) or its
predecessor body, the Standing Interpretations Committee (SIC Interpretations).
The Historical Financial Information has been prepared on a historical cost basis, except for certain financial
assets at fair value through other comprehensive income (“FVOCI”), financial assets and financial liabilities at fair
value through profit or loss (“FVPL”) and derivative financial instruments, which are carried at fair value.
The preparation of Historical Financial Information in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the Historical Financial Information are disclosed in Note 4.
The material accounting policies applied in the preparation of the Historical Financial Information have been
consistently applied to all the years/period presented, unless otherwise stated.
Other than those material accounting policies information as disclosed elsewhere in this Historical Financial
Information, a summary of the other accounting policies information has been set out in Note 50 to this Historical
Financial Information.
2.2 New standards and interpretations adopted
The adoption of new and amended standards and interpretation as described below.
Effective for annual
periods beginning on
or after
Amendments to IAS 1 /H1118/H1118/H1118/H1118Classification of Liabilities as Current or
Non-current
1 January 2024
Amendments to IAS 1 /H1118/H1118/H1118/H1118Non-current Liabilities with Covenants 1 January 2024
Amendments to IFRS 16 /H1118/H1118/H1118Lease Liability in a sales and Leaseback 1 January 2024
Amendments to IAS 7
and IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Supplier Finance Arrangements 1 January 2024
The adoption of new and amended standards and interpretation did not have any material impact on the
financial information.
APPENDIX I ACCOUNTANT’S REPORT
– I-18 –


--- page 467 ---
2.3 New standards and interpretations not yet been adopted
Amended standards that have been issued but not yet effective and have not been early adopted:
Effective for annual
periods beginning on
or after
Amendments to IAS 21 /H1118/H1118/H1118Lack of Exchangeability 1 January 2025
Amendments to IFRS 9 and
IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Financial Instruments Standards 1 January 2026
IFRS 18 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Presentation and Disclosure in Financial Statements 1 January 2027
IFRS 19 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Subsidiaries without Public Accountability:
Disclosures
1 January 2027
Amendments to IFRS 10
and IAS 28 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Sale or Contribution of Assets between an Investor
and its Associate or Joint venture
To be determined
The Group has already commenced an assessment of the impact of these amendments, certain of which are
relevant to the Group’s operations. According to the preliminary assessment made by the directors, no significant
impact on the financial performance and positions of the Group is expected when they become effective.
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
other price risk, interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s
financial performance. Risk management is carried out by the directors and senior management of the Group.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to United States Dollar (“USD”), RMB and Euro (“EUR”). Foreign
exchange risk arises when future commercial transactions or recognized assets and liabilities are denominated
in a currency that is not the respective functional currency of the Group’s subsidiaries.
The Group’s finance department has a professional team to manage the risk arising of fluctuation of
exchange rate, with approach of the natural hedge for settling currencies, signing forward foreign exchange
hedging contracts and controlling the scale of foreign currency assets and liabilities, to minimize foreign
exchange risk, and to reduce the impact of exchange rate fluctuations on business performance.
As at 31 December 2021, 2022 and 2023, for the USD financial assets and USD financial liabilities, if
the functional currencies appreciates or depreciates by 5% against the USD and other factors remain
unchanged, the Group will increase or reduce its pre-tax profit by approximately RMB986,852,000,
RMB607,437,000 and RMB1,051,858,000, respectively. As at 30 April 2024, for the USD financial assets and
USD financial liabilities, if the functional currencies appreciates or depreciates by 5% against the USD and
other factors remain unchanged, the Group will reduce or increase its pre-tax profit by approximately
RMB229,357,000.
As at 31 December 2021 and 30 April 2024, for the EUR financial assets and EUR financial liabilities,
if the functional currencies appreciates or depreciates by 5% against the EUR and other factors remain
unchanged, the pre-tax profit of the Group will reduce or increase by approximately RMB85,400,000 and
RMB219,705,000. As at 31 December 2022 and 2023, for the EUR financial assets and EUR financial
liabilities, if the functional currencies appreciates or depreciates by 5% against the EUR and other factors
remain unchanged, the pre-tax profit of the Group will increase or reduce by approximately RMB39,468,000
and RMB27,850,000.
APPENDIX I ACCOUNTANT’S REPORT
– I-19 –


--- page 468 ---
As at 31 December 2021, 2022 and 2023 and 30 April 2024, for the RMB financial assets and RMB
financial liabilities, if the functional currencies appreciates or depreciates by 5% against the RMB and other
factors remain unchanged, the Group will reduce or increase its pre-tax profit by approximately
RMB178,860,000, RMB266,658,000, RMB317,553,000 and RMB143,805,000, respectively.
Other foreign currencies of changes have no significant impact on foreign exchange risk.
The aggregate net foreign exchange gains/(losses) recognized in profit or loss were:
Y ear ended 31 December
Four months ended
30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net foreign exchange
gains/(losses) included in
other gains/(losses), net
(Note 7) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118733,270 (435,574) (340,027) 234,710 (2,272,829)
Exchange gains/(losses) on
foreign currency
borrowings included in
finance costs (Note 10) /H1118/H1118/H111864,850 (71,507) (564,711) (326,607) 171,625
Total net foreign exchange
gains/(losses) recognized in
profit before income tax for
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118798,120 (507,081) (904,738) (91,897) (2,101,204)
(ii) Other price risk
The Group is exposed to equity price risk mainly arising from investments held by the Group that are
classified as either FVPL or FVOCI. To manage its price risk arising from the investments, the Group
diversifies its investment portfolio. The investments are made either for strategic purposes, or for the purpose
of achieving investment yield and balancing the Group’s liquidity level simultaneously. Each investment is
managed by management on a case by case basis.
Sensitivity analysis is performed by management to assess the exposure of the Group’s financial results
to equity price risk of FVPL and FVOCI at the end of each reporting period. If prices of the respective
instruments held by the Group had increased/decreased by 10% as at 31 December 2021, 2022 and 2023 and
30 April 2024, with all other variable held constant, pre-tax profit would increase/decrease approximately
RMB723,234,000, RMB761,315,000, RMB606,750,000 and RMB562,873,000, respectively as a result of
gains/losses on financial instruments classified as FVPL, other comprehensive income would increase/decrease
approximately RMB4,574,700, RMB4,136,000, RMB3,787,000 and RMB3,778,000, respectively, as a result of
gains/losses on financial instruments classified as FVOCI.
(iii) Interest rate risk
The Group’s interest rate risk primarily arises from long-term interest-bearing borrowings and bonds.
Long-term borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings and
bonds issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the
proportion of borrowings and bonds issued at floating rates and fixed rates based on the market environment.
The Group has been monitoring the level of interest rates. The increase in the interest rates will increase
the interest costs of borrowings and finance leases issued at floating rates, which will further impact the
performance of the Group. To hedge against the variability in the cash flows arising from a change in market
interest rates, the Group has entered into certain interest rate swaps to swap floating rates into fixed rates.
APPENDIX I ACCOUNTANT’S REPORT
– I-20 –


--- page 469 ---
As at 31 December 2021, 2022 and 2023 and 30 April 2024, total borrowings of the Group which were
bearing at floating rates amounted to approximately RMB891,817,000, RMB347,729,000, nil and
RMB9,575,000, respectively.
If interest rate had been 50 basis points higher or lower with all other variables held constant, the profit
before tax would decrease/increase approximately RMB4,459,000, RMB1,739,000, nil and RMB48,000, as at
31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
The interest rate of cash and cash equivalents and fair value interest rate risk arises from financial assets
and liabilities carried at fixed rates is not significant for the Group and the Company.
(b) Credit risk
The Group is exposed to credit risk primarily in relation to its contract assets, trade and note receivables at
amortized cost, trade and note receivables at FVOCI, loan receivables, other financial assets at amortized cost, other
financial assets at FVOCI (excluding unlisted securities), term deposits and restricted cash, cash and cash
equivalents. The carrying amounts of each class of the above financial assets represent the Group’s maximum
exposure to credit risk in relation to financial assets.
(i) Risk management
To manage this risk arising from other financial assets at FVOCI (excluding unlisted securities),
constant return financial products in other financial assets at amortized cost, term deposits and restricted cash,
cash and cash equivalents, the Group mainly transacts with the People’s Bank of China, state-owned banks or
other reputable listed banks with high credit rating. There has been no recent history of default in relation to
those financial institutions.
For contract assets, trade and note receivables at amortized cost, loan receivables and other financial
assets at amortized cost (excluding constant return financial products), the Group assesses the credit quality
of and sets credit limits on its customers by taking into account their financial position, the availability of
guarantee from third parties, their credit history and other factors such as current market conditions. The credit
history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history,
the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit
risk of the Group is limited to a controllable extent.
In addition, for loans receivables, the Group determines the amount and type of collateral required based
on the credit risk assessment of the counterparty. The pledged collateral of the loan mainly includes receivables
and inventories. The Group monitors the market value of the collateral, requests additional collateral in
accordance with the relevant agreements, and monitors changes in the market value of the collateral in the
context of the adequacy review of the provision for impairment. As at 31 December 2021, 2022 and 2023 and
30 April 2024, the Group had no other material collateral held for debtors or other credit enhancements.
(ii) Impairment of financial assets
The Group has eight types of assets that are subject to the expected credit loss model:
 Contract assets;
 Trade and note receivables at amortized cost;
 Trade and note receivables at FVOCI;
 Other receivables and other assets;
 Loan receivables;
 Other financial assets at amortized cost;
 Other financial assets at FVOCI (excluding unlisted securities);
 Cash and cash equivalents, term deposits and restricted cash.
APPENDIX I ACCOUNTANT’S REPORT
– I-21 –


--- page 470 ---
While cash and cash equivalents, term deposits and restricted cash are also subject to the impairment
requirements of IFRS 9, the identified impairment loss was immaterial as at 31 December 2021, 2022 and 2023
and 30 April 2024.
Contract assets, trade and note receivables at amortized cost and trade and note receivables at FVOCI
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (“ECL”), which
uses a lifetime expected loss allowance for all contract assets, trade and note receivables at amortized cost and
trade and note receivables at FVOCI.
To measure the ECL, contract assets, trade and note receivables at amortized cost have been grouped
based on shared credit risk characteristics and aging. The contract assets relate to unbilled work in progress
and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The
Group has therefore concluded that the expected loss rates for trade and note receivables at amortized cost are
a reasonable approximation of the loss rates for the contract assets. The Group also made individual assessment
on the recoverability of its contract assets and trade and note receivables at amortized cost for certain customer
based on historical settlement record.
The historical loss rates are determined by reference to the credit rating analysis of respective customers
and external data or based on the payment profiles of sales over a period before the respective period ends and
the corresponding historical credit losses experienced within these periods. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of
the customers to settle the receivables. The Group has identified the Total Retail Sales of Consumer goods and
the Gross Domestic Product (“GDP”) of the countries in which it sells its goods and services to be the most
relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.
(i) Contract assets
For contract assets, the Group measures the loss provision based on the lifetime ECL regardless of
whether there exists a significant financing component. Set out below is the information about credit risk
exposure on the Group’s contract assets:
As at 31 December As at 30 April
2021 2022 2023 2024
Assessed based on grouping:
Domestic business grouping
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.22% 2.80% 2.31% 1.94%
Gross carrying amount (RMB’000) /H1118 840,430 1,469,430 1,359,776 1,543,129
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,436) (41,155) (31,467) (29,974)
Overseas business grouping
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.27% 1.03% 1.25% 1.16%
Gross carrying amount (RMB’000) /H1118 3,018,369 3,102,747 2,732,050 2,436,031
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,275) (32,066) (34,103) (28,342)
The Group individually assessed the recoverability of the balance with certain customers as significant
increase in credit risk were identified as at 31 December 2021, 2022 and 2023 and 30 April 2024. An
impairment loss of RMB3,056,000, RMB51,772,000 and RMB52,286,000 were individually recognized for
contract asset and gross carrying amount were RMB11,444,000, RMB71,441,000 and RMB68,663,000 as at 31
December 2021, 2023 and 30 April 2024, respectively. There was no significant concentrations of credit risk
as at 31 December 2021, 2022 and 2023 and 30 April 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-22 –


--- page 471 ---
(ii) Trade receivables
Set out below is the information about credit risk exposure on the Group’s trade receivables:
Below
3 months
Between
3a n d
6 months
Between
6 months
and 1 year
1t o
2 years
Over
2 years Total
Assessed based on grouping:
Domestic business grouping
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.40% 1.49% 1.41% 22.04% 64.45% 3.08%
Gross carrying amount ( RMB’000) /H1118/H111810,347,343 1,019,832 790,335 291,252 240,740 12,689,502
Loss allowance provision (RMB’000) /H1118 (145,029) (15,187) (11,138) (64,192) (155,155) (390,701)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.84% 0.78% 1.15% 10.96% 63.38% 2.72%
Gross carrying amount (RMB’000) /H1118/H11189,710,527 819,575 920,819 801,307 242,364 12,494,592
Loss allowance provision (RMB’000) /H1118 (81,715) (6,383) (10,585) (87,793) (153,608) (340,084)
At 31 December 2023
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.06% 1.51% 1.37% 17.27% 32.29% 3.00%
Gross carrying amount (RMB’000) /H1118/H111811,039,635 1,275,132 718,204 712,320 489,575 14,234,866
Loss allowance provision (RMB’000) /H1118 (117,239) (19,270) (9,832) (123,052) (158,079) (427,472)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.10% 1.58% 1.55% 19.27% 37.30% 2.43%
Gross carrying amount (RMB’000) /H1118/H111819,375,544 1,630,709 934,556 664,139 477,209 23,082,157
Loss allowance provision (RMB’000) /H1118 (213,698) (25,699) (14,503) (127,988) (178,019) (559,907)
At 31 December 2021, 2022 and 2023, the expected loss rate of trade receivables assessed based on
domestic business grouping for time band “over 2 years” continue to decrease mainly due to the addition of
newly acquired trade receivables stated at fair values at acquisition dates, the expected loss rate of such trade
receivables were lower than the Group’s existing expected loss rate.
Below
3 months
Between
3a n d
6 months
Between
6 months
and 1 year
1t o
2 years
Over
2 years Total
Assessed based on grouping:
Overseas business grouping
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.34% 1.62% 0.71% 60.96% 95.34% 3.27%
Gross carrying amount (RMB’000) /H1118/H111811,637,737 603,319 76,335 320,915 55,807 12,694,113
Loss allowance provision (RMB’000) /H1118 (155,526) (9,795) (540) (195,644) (53,204) (414,709)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.85% 2.78% 1.60% 49.23% 99.67% 2.61%
Gross carrying amount ( RMB’000) /H1118/H111814,785,757 667,395 346,342 142,698 50,162 15,992,354
Loss allowance provision (RMB’000) /H1118 (273,154) (18,541) (5,547) (70,245) (49,995) (417,482)
At 31 December 2023
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.14% 2.13% 2.00% 34.39% 96.78% 1.45%
Gross carrying amount ( RMB’000) /H1118/H111817,436,536 757,279 591,411 28,378 37,645 18,851,249
Loss allowance provision (RMB’000) /H1118 (198,892) (16,104) (11,833) (9,758) (36,431) (273,018)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.18% 2.16% 2.03% 42.83% 97.07% 1.40%
Gross carrying amount ( RMB’000) /H1118/H111819,630,023 728,965 210,354 55,564 13,971 20,638,877
Loss allowance provision (RMB’000) /H1118 (230,791) (15,773) (4,275) (23,800) (13,561) (288,200)
APPENDIX I ACCOUNTANT’S REPORT
– I-23 –


--- page 472 ---
At 31 December 2021, 2022 and 2023, the expected loss rate of trade receivables assessed based on
overseas business grouping for time band “1 to 2 years” continued to decrease mainly due to the improved
repayment and collection data of the corresponding period.
As at 31 December As at 30 April
2021 2022 2023 2024
Assessed individually:
Domestic business grouping
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847.74% 52.13% 89.86% 90.85%
Gross carrying amount (RMB’000) /H1118/H1118/H1118/H1118/H1118111,443 1,061,199 656,920 700,196
Loss allowance provision (RMB’000) /H1118/H1118/H1118(53,208) (553,196) (590,325) (636,094)
Overseas business grouping
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100.00% 97.37% 30.73% 32.80%
Gross carrying amount (RMB’000) /H1118/H1118/H1118/H1118/H1118561 22,437 624,425 197,512
Loss allowance provision (RMB’000) /H1118/H1118/H1118 (561) (21,847) (191,906) (64,783)
The Group individually assessed the recoverability of the balance with certain customers as at
31 December 2021, 2022 and 2023 and 30 April 2024 as significant increase in credit risk were identified.
Changes in the expected loss rate of trade receivables assessed individually are mainly due to its customers’
financial condition, operation results and ability to repay.
(iii) Note receivables at amortized cost and trade and note receivables at FVOCI
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the Group measured provision for
impairment based on the lifetime ECL and expected that there was no significant credit risk associated with
its bank acceptance notes and did not expect that there would be any significant losses from non-performance
by these banks.
Other receivables and other assets and loan receivables
The Group considers the probability of default upon initial recognition of asset and whether there has
been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess
whether there is a significant increase in credit risk in other receivables and other assets and loan receivables,
the Group compares the risk of a default occurring on the assets at the end of each reporting period with the
risk of default at the date of initial recognition. It considers available, reasonable, supportive forward-looking
information. Especially, the following indicators are incorporated:
 external credit rating of the counterparty (as far as available);
 actual or expected significant adverse changes in business, financial or economic conditions that
are expected to cause a significant change to the counterparty’s ability to meet its obligations;
 actual or expected significant changes in the operating results of the counterparty; and
 significant expected changes in the performance and behavior of the counterparty, including
changes in the payment status of the counterparty and changes in the operating results of the
counterparty.
The Group accounts for its credit risk by appropriately providing for expected credit losses on a timely
basis. In calculating the expected credit loss rates, the Group considers historical loss rates for each category
of receivables and adjusts for forward looking macroeconomic data.
APPENDIX I ACCOUNTANT’S REPORT
– I-24 –


--- page 473 ---
Set out below is the information about credit risk exposure on the Group’s other receivables:
Stage 1
(12-month
ECL)
Stage 2
(Lifetime ECL
(non-credit
impaired))
Stage 3
(Lifetime ECL
(credit
impaired)) Total
Other receivables
Assessed based on grouping:
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.28% – – 1.28%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,992,048 – – 2,992,048
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(38,263) – – (38,263)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.55% – – 1.55%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,176,965 – – 2,176,965
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,747) – – (33,747)
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.19% – – 2.19%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,074,507 – – 2,074,507
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(45,385) – – (45,385)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.19% – – 2.19%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,678,981 – – 1,678,981
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,717) – – (36,717)
Assessed individually:
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 100.00% 3.39%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150,280 – 5,267 155,547
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (5,267) (5,267)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 100.00% 5.90%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,959 – 4,262 72,221
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (4,262) (4,262)
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 100.00% 3.98%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118152,756 – 6,332 159,088
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (6,332) (6,332)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 100.00% 2.04%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118325,234 – 6,788 332,022
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (6,788) (6,788)
APPENDIX I ACCOUNTANT’S REPORT
– I-25 –


--- page 474 ---
As at 31 December 2021, 2022 and 2023 and 30 April 2024, other receivables for which the related
provision for bad debts was provided on the grouping basis were all at stage 1 in accordance with IFRS 9.
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the loss allowance provision for long-term
receivables and futures margin were not material and set out in Note 18.
Set out below is the information about credit risk exposure on the Group’s loan receivables:
Stage 1
(12-month ECL)
Stage 2
(Lifetime ECL
(non-credit
impaired))
Stage 3
(Lifetime ECL
(credit impaired)) Total
Loan receivables
Assessed based on grouping
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.40% 22.24% 74.68% 1.63%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,465,289 159,075 3,929 15,628,293
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(216,222) (35,378) (2,934) (254,534)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.36% 20.31% 70.68% 2.80%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,804,092 24,289 265,206 13,093,587
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(173,982) (4,933) (187,449) (366,364)
At 31 December 2023
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.36% 20.31% 74.60% 2.35%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,322,554 72,574 150,320 12,545,448
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(167,586) (14,740) (112,136) (294,462)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.36% 20.31% 96.03% 2.51%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,486,917 64,645 152,936 13,704,498
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(183,422) (13,129) (146,862) (343,413)
Assessed individually
At 31 December 2021
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.13% – – 3.13%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,332,961 – – 6,332,961
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(198,193) – – (198,193)
At 31 December 2022
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.43% – – 4.43%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,202,392 – – 2,202,392
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(97,565) – – (97,565)
APPENDIX I ACCOUNTANT’S REPORT
– I-26 –


--- page 475 ---
Stage 1
(12-month ECL)
Stage 2
(Lifetime ECL
(non-credit
impaired))
Stage 3
(Lifetime ECL
(credit impaired)) Total
At 31 December 2023
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.02% – – 2.02%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,083,537 – – 3,083,537
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(62,293) – – (62,293)
At 30 April 2024
Expected loss rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.11% – – 2.11%
Gross carrying amount
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,118,697 – – 2,118,697
Loss allowance provision
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(44,629) – – (44,629)
Other financial assets at amortized cost and other financial assets at FVOCI (excluding unlisted securities)
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the Group considered that there was no
significant increase in credit risk of constant return financial products and transferable certificate of deposit
since initial recognition, and made provision for loss based on 12-month ECL. The Group considered that there
was no significant credit risk associated with constant return financial products and transferable certificate of
deposit and did not expect that there would be any significant losses from non-performance by these financial
institutions.
Net impairment losses on financial assets and contract assets recognized in profit or loss
During the Track Record Period, the following gains/(losses) were recognized in profit or loss in relation
to impaired financial assets and contract assets:
Y ear ended 31 December
Four months ended
30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Impairment losses
– movement in loss allowance for trade and
note receivables at amortized cost /H1118/H1118/H1118/H1118/H1118(205,124) (741,275) (594,362) (334,941) (236,950)
– movement in loss allowance for contract
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,022) (28,475) (47,814) (722) (3,940)
– movement in loss allowance for other
receivables and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(168,049) (36,745) (146,971) (39,178) (16,444)
– movement in loss allowance for loan
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(144,691) (25,814) (44,273) (7,620) (60,859)
Reversal of previous impairment losses
– movement in reversal for trade and note
receivables at amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H111888,658 235,786 402,822 137,911 202,140
– movement in reversal for contract assets /H1118 3,972 4,053 11,436 3,696 8,807
– movement in reversal for other receivables
and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844,007 39,750 13,886 24,167 21,490
– movement in reversal for loan receivables /H1118 1,748 14,612 170,274 37,161 29,544
Net impairment losses on financial assets
and contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(384,501) (538,108) (235,002) (179,526) (56,212)
During the Track Record Period, the provision/reversal of loss allowances were recognized in profit or
loss in “Net impairment losses on financial assets and contract assets” in relation to the impaired financial
assets and contract assets.
APPENDIX I ACCOUNTANT’S REPORT
– I-27 –


--- page 476 ---
Financial assets and contract assets are written off where there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery amongst others, include the failure of a debtor
to engage in a repayment plan with the Group.
(c) Liquidity risk
The Group aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the underlying
businesses, the Group maintains flexibility in funding by maintaining adequate balances of such.
The table below analyses the Group’s financial liabilities by relevant maturity groupings based on the
remaining period since the end of the reporting period to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows or the carrying amount of the financial assets to be delivered after
taking into account relevant cross-currency interest rate swaps.
On demand
or less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2021
Trade and other payables
(excluding Salaries, wages and
benefits payables, tax payables
and other non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118103,023,670 – 687,689 – 103,711,359 103,711,359
Customer deposit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,235 – – – 78,235 78,180
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,287,675 6,656,015 13,726,837 – 54,670,527 53,381,558
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118908,208 667,710 879,105 143,316 2,598,339 2,394,055
Derivative financial liabilities /H1118/H1118/H1118166,649 – – – 166,649 166,649
138,464,437 7,323,725 15,293,631 143,316 161,225,109 159,731,801
At 31 December 2022
Trade and other payables
(excluding Salaries, wages and
benefits payables, tax payables
and other non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,127,671 – 680,482 – 94,808,153 94,808,153
Customer deposit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,523 – – – 77,523 77,469
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,353,101 12,820,830 39,715,818 – 64,889,749 65,267,528
Other financial liabilities at FVPL /H1118 1,580,771 – – – 1,580,771 1,580,771
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,079,026 659,201 778,483 312,797 2,829,507 2,499,622
Derivative financial liabilities /H1118/H1118/H1118314,539 – – – 314,539 314,539
109,532,631 13,480,031 41,174,783 312,797 164,500,242 164,548,082
At 31 December 2023
Trade and other payables
(excluding Salaries, wages and
benefits payables, tax payables
and other non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,681,001 – 36,883 – 98,717,884 98,717,884
Customer deposit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111889,022 – – – 89,022 88,960
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,896,135 38,351,043 11,137,826 154,216 71,539,220 71,466,690
Other financial liabilities at FVPL /H1118 1,346,674 – – – 1,346,674 1,346,674
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,227,125 815,583 1,069,277 446,468 3,558,453 3,214,220
Derivative financial liabilities /H1118/H1118413,222 2,218 64 – 415,504 415,504
123,653,179 39,168,844 12,244,050 600,684 175,666,757 175,249,932
APPENDIX I ACCOUNTANT’S REPORT
– I-28 –


--- page 477 ---
On demand
or less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 30 April 2024
Trade and other payables
(excluding Salaries, wages and
benefits payables, tax payables
and other non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,571,034 – 52,872 – 131,623,906 131,623,906
Customer deposit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,200 – – – 77,200 77,200
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,310,718 35,437,665 13,828,064 150,465 66,726,912 67,899,478
Other financial liabilities at FVPL /H1118 1,174,016 – – – 1,174,016 1,174,016
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,240,036 850,895 1,027,337 400,162 3,518,430 3,156,662
Derivative financial liabilities /H1118/H1118/H1118636,508 3,939 16,634 – 657,081 657,081
152,009,512 36,292,499 14,924,907 550,627 203,777,545 204,588,343
As at 31 December 2021, 2022 and 2023, the Group also provided loan guarantees to facilitate the borrowing
of an associate. Besides, no guarantee demand was made to the Group.
3.2 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2024.
The Group monitors capital on the basis of the asset-liability ratio and the asset-liability ratio as at
31 December 2021, 2022, 2023 and 30 April 2024 were as follows:
As at 31 December As at 30 April
2021 2022 2023 2024
Total assets (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118387,939,102 422,550,912 486,036,015 509,157,759
Total liabilities (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118253,119,233 270,630,347 311,738,065 340,768,167
Asset-liability ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.25% 64.05% 64.14% 66.93%
3.3 Fair value estimation
The table below analyses the Group’s financial instruments carried at fair value as at 31 December 2021, 2022
and 2023 and 30 April 2024 by level of the inputs to valuation techniques used to measure fair value. Such inputs
are categorized into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
APPENDIX I ACCOUNTANT’S REPORT
– I-29 –


--- page 478 ---
(a) Fair value hierarchy
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the financial assets and liabilities measured at fair
value on a recurring basis by the above three levels were analyzed below:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2021
Financial assets:
Trade and note receivables at
FVOCI (Note 19) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 10,273,552 – 10,273,552
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,298,815 – 1,298,815
Other financial assets at FVPL
(Note 24(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,319,470 4,559,732 5,912,873 11,792,075
Other financial assets at FVOCI
(Note 24(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 27,484,322 45,747 27,530,069
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,319,470 43,616,421 5,958,620 50,894,511
Financial liabilities:
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 166,649 – 166,649
As at 31 December 2022
Financial assets:
Trade and note receivables at
FVOCI (Note 19) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,526,540 – 13,526,540
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,029,139 – 5,029,139
Other financial assets at FVPL
(Note 24(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,264,595 2,019,998 6,348,556 9,633,149
Other financial assets at FVOCI
(Note 24(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 17,626,302 41,359 17,667,661
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,264,595 38,201,979 6,389,915 45,856,489
Financial liabilities:
Other financial liabilities at FVPL
(Note 34) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,580,771 1,580,771
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 314,539 – 314,539
Total financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 314,539 1,580,771 1,895,310
As at 31 December 2023
Financial assets:
Trade and note receivables at
FVOCI (Note 19) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,330,008 – 13,330,008
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,753,101 – 3,753,101
Other financial assets at FVPL
(Note 24(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,726,584 64,004 5,687,591 7,478,179
Other financial assets at FVOCI
(Note 24(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,013,476 37,874 11,051,350
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,726,584 28,160,589 5,725,465 35,612,638
Financial liabilities:
Other financial liabilities at FVPL
(Note 34) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,346,674 1,346,674
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 415,504 – 415,504
Total financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 415,504 1,346,674 1,762,178
APPENDIX I ACCOUNTANT’S REPORT
– I-30 –


--- page 479 ---
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 30 April 2024
Financial assets:
Trade and note receivables at
FVOCI (Note 19) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 21,385,125 – 21,385,125
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,708,389 – 5,708,389
Other financial assets at FVPL
(Note 24(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,400,190 185,295 5,402,552 6,988,037
Other financial assets at FVOCI
(Note 24(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,480,185 37,780 7,517,965
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,400,190 34,758,994 5,440,332 41,599,516
Financial liabilities:
Other financial liabilities at FVPL
(Note 34) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,174,016 1,174,016
Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 657,081 – 657,081
Total financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 657,081 1,174,016 1,831,097
The timing of transfers is determined at the date of the event or change in circumstances that caused the
transfers. During the Track Record Period, there was no transfer between Level 1 and Level 2.
(b) V aluation techniques used to determine fair values
The fair value of financial instruments traded in an active market is determined at the quoted market price; and
the fair value of those not traded in an active market is determined by the Group using valuation technique. The
valuation models used mainly comprise discounted cash flow approach, market comparable company approach and
net assets approach. The inputs of the valuation technique mainly include risk-free interest rate, floating rate, foreign
exchange rate, volatility, financial data of target companies, market multiple of comparable companies and discount
for lack of marketability.
Assets and liabilities subject to Level 2 fair value measurement were mainly included trade and note
receivables at FVOCI, structured deposits in other financial assets at FVPL, transferable certificate of deposit in other
financial assets at FVOCI and derivative financial instruments are evaluated by discounted cash flows approach,
market approach and income approach.
Assets and liabilities subject to Level 3 fair value measurement were mainly included unlisted securities of
other financial assets at FVPL and other financial assets at FVOCI, and financial liabilities at FVPL. These assets
and liabilities were measured mainly using market approach, net asset value and consensus pricing. The judgement
of Level 3 of the fair value hierarchy is based on the materiality of unobservable inputs towards calculation of whole
fair value. Significant unobservable inputs mainly include the financial data of targeted companies, market multiple
of comparable companies and discount for lack of marketability.
The Group did not change any valuation techniques in determining the level 2 and level 3 fair values.
APPENDIX I ACCOUNTANT’S REPORT
– I-31 –


--- page 480 ---
The following table presents the changes in level 3 items for the years ended 31 December 2021, 2022 and
2023 and the four months ended 30 April 2023 and 2024:
Reconciliation of Level 3 fair value
measurements Financial assets at FVOCI and FVPL
Y ears ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Opening balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,407,500 5,958,620 6,389,915 6,389,915 5,725,465
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,492,898 1,746,172 172,008 48 –
Disposals/settlements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(869,794) (190,586) (282,046) (3,392) (9,930)
Transfer into Level 3 (a) /H1118/H1118/H1118/H1118/H1118/H111828,666 ––––
Transfer out of Level 3 (b) /H1118/H1118/H1118/H1118– (838,345) (375,466) – –
Changes in fair value recognized
in other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,238 (2,482) (1,025) – 98
Changes in fair value recognized
in profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118943,969 (409,005) (199,037) (116,200) (275,655)
Currency translation differences /H1118 (46,857) 125,541 21,116 (20,524) 354
Closing balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,958,620 6,389,915 5,725,465 6,249,847 5,440,332
(a) For the year ended 31 December 2021, certain financial assets were transferred from level 1 to level 3
fair value hierarchy classifications due to delisting.
(b) For the years ended 31 December 2022 and 2023, certain financial assets were transferred out of level
3 of fair value hierarchy classifications mainly as a result of the conversion of restricted listed securities
into tradable listed securities.
Reconciliation of Level 3 fair value
measurements Other financial liabilities at FVPL
Y ears ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Opening balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,580,771 1,580,771 1,346,674
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,766,953 – – –
Disposals/settlements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (99,876) (364,272) – (8,422)
Changes in fair value recognized
in profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (86,306) 130,175 (22,302) (164,236)
Closing balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,580,771 1,346,674 1,558,469 1,174,016
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024,
the Group’s own credit risk on other financial liabilities at FVPL was not considered to be a significant input factor.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 481 ---
(c) V aluation inputs and relationships to fair value
The following table summarises the quantitative information about the significant unobservable inputs of major financial assets and liabilities u sed in level 3 fair value
measurements:
Fair value
Valuation technique(s) Unobservable inputs
Range of inputs
Sensitivity of fair value to the inputDescription
As at 31 December
As at
30 April As at 31 December
As at
30 April
2021 2022 2023 2024 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Equity securities /H1118/H1118/H1118/H1118/H1118/H1118/H11182,128,250 3,665,369 3,149,305 2,925,015 Market approach Price Earnings Ratio 19.95 –
29.73
7.12 –
29.28
1.82 –
16.98
1.60 -
14.91
1% increase (decrease) in price earnings ratio would result in
increase (decrease) in fair value by
2021: RMB18,037,000 (RMB18,037,000)
2022: RMB23,864,000 (RMB23,864,000)
2023: RMB4,490,000 (RMB4,490,000)
30 April 2024: RMB3,708,000 (RMB3,708,000)
Price Sales Ratio 17.40 1.66 –
12.67
2.21 –
13.39
0.44-11.69 1% increase (decrease) in Price sales ratio would result in
increase (decrease) in fair value by
2021: RMB3,245,000 (RMB3,245,000)
2022: RMB9,544,000 (RMB9,544,000)
2023: RMB10,243,000 (RMB10,243,000)
30 April 2024: RMB11,471,000 (RMB11,471,000)
Discount for lack of
marketability
(“DLOM”)
15% –
60%
4% – 60% 4% – 40% 1% - 40% 1% increase (decrease) in DLOM would result in (decrease)
increase in fair value by
2021: (RMB25,291,000) RMB25,291,000
2022: (RMB33,697,000) RMB33,697,000
2023: (RMB19,406,000) RMB19,406,000
30 April 2024: (RMB5,786,000) RMB5,786,000
2,302,916 1,694,977 1,792,884 1,733,369 Net asset value
(Note (a))
N/A N/A N/A N/A N/A N/A
1,050,000 431,874 458,865 458,865 Consensus pricing Offered quotes 2.22 –
36.60
16.67 –
67.94
11.01 –
214.44
11.01 -
214.44
1% increase (decrease) in offered quotes would result in
increase (decrease) in fair value by
2021: RMB10,500,000 (RMB10,500,000)
2022: RMB4,319,000 (RMB4,319,000)
2023: RMB4,589,000 (RMB4,589,000)
30 April 2024: RMB4,589,000 (RMB4,589,000)
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 482 ---
Fair value
Valuation technique(s) Unobservable inputs
Range of inputs
Sensitivity of fair value to the inputDescription
As at 31 December
As at
30 April As at 31 December
As at
30 April
2021 2022 2023 2024 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
– 243,750 119,994 130,187 Option model Expected volatility N/A 30% –
73%
38% –
43%
35% –
51%
5% increase (decrease) in expected volatility would result in
increase (decrease) in fair value by
2021: RMBNil
2022: RMB1,313,000 (RMB1,276,000)
2023: RMB197,000 (RMB140,000)
30 April 2024: RMB30,000 (RMB16,000)
Risk-free rate N/A 2% 2% 2% 1% increase (decrease) in risk-free interest rate would result in
(decrease) increase in fair value by
2021: RMBNil
2022: (RMB3,932,000) RMB4,026,000
2023: (RMB1,746,000) RMB1,777,000
30 April 2024: (RMB1,596,000) RMB1,620,000
Liabilities to fund investors /H1118/H1118– 1,580,771 1,346,674 1,174,016 Net asset value
(Note (a))
N/A N/A N/A N/A N/A N/A
(a) The Group determines the fair value as at the reporting date based on the reported net asset values.
(b) Other than described above, there were no significant unobservable inputs that materially affect its fair values.
APPENDIX I ACCOUNTANT’S REPORT
– I-34 –


--- page 483 ---
(d) V aluation processes
The Group has a team that performs the valuations of non-property items required for financial reporting
purposes, including level 3 fair values. This team reports the valuation results to the management and Audit
Committee. Discussions of valuation processes and results are held by valuation team at least once every three
months, in line with the Group’s quarterly reporting periods.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group continually evaluates the critical accounting estimates and key judgements applied based on
historical experience and other factors, including expectations of future events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(a) Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of the asset
group or group of asset groups that contain the apportioned goodwill is determined by the higher value between the
present value of the future cash flows and the net value that is calculated by the fair value less the disposal costs.
Accounting estimate is required for the calculation of the recoverable amount. The impairment testing is performed
by assessing the recoverable amount of the asset group or group of asset groups containing the relevant goodwill,
based on the present value of cash flows forecasts. Key assumptions adopted in the impairment testing of goodwill
included revenue annual growth rate, gross margin, perpetual annual growth rate, pre-tax discount rate, etc. which
involved critical accounting estimates and judgement.
If management revises the revenue annual growth rate and perpetual annual growth rate that are used in the
calculation of the future cash flows of asset groups or groups of asset groups, and the revised rates are lower than
the current rates, the Group would need to recognize further impairment against goodwill.
If management revises the gross margin that is used in the calculation of the future cash flows of asset groups
or groups of asset groups, and the revised gross margin is lower than the current one, the Group would need to
recognize further impairment against goodwill.
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised pre-tax
discount rate is higher than the one currently applied, the Group would need to recognize further impairment against
goodwill.
If the actual revenue annual growth rate, perpetual annual growth rate and gross margin are higher or the actual
pre-tax discount rate is lower than management’s estimates, the impairment loss of goodwill previously provided for
is not allowed to be reversed by the Group.
(b) Uncertain tax position and recognition of current and deferred income tax assets
The Group is subject to enterprise income tax in numerous jurisdictions. There are many transactions and
events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant
judgement is required from the Group in determining the provision for income taxes in each of these jurisdictions.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
As stated in Note 11, some subsidiaries of the Group are high-tech enterprises. The “High-Tech Enterprise
Certificate” is effective for three years. Upon expiration, application for high-tech enterprise assessment should be
submitted again to the relevant government authorities. Based on the past experience of reassessment for high-tech
enterprise upon expiration and the actual condition of the subsidiaries, the Group considers that the subsidiaries are
able to obtain the qualification for high-tech enterprises in future years, and therefore a preferential tax rate of 15%
is used to calculate the corresponding deferred income tax. If some subsidiaries cannot obtain the qualification for
high-tech enterprise upon expiration, then the subsidiaries are subject to a statutory tax rate of 25% for the calculation
of the income tax, which further influences the recognized deferred tax assets, deferred tax liabilities and income tax
expenses.
APPENDIX I ACCOUNTANT’S REPORT
– I-35 –


--- page 484 ---
(c) Fair value measurement of financial assets and liabilities at level 3 fair value hierarchy
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based
on market conditions existing at the end of each reporting period. For details of the valuation techniques, inputs and
key assumptions used in the determination of the fair value of financial assets and liabilities at level 3 fair value
hierarchy see Note 3.3.
5. SEGMENT INFORMATION AND REVENUE
(a) Description of segments and principal activities
The Group’s strategic steering committee, consisting of the chief executive officer, the chief financial officer
and the manager for corporate planning, examines the Group’s performance both from a product and geographic
perspective and has identified four reportable segments of its business:
 Heating & ventilation, as well as air-conditioner (hereinafter referred to as “HV AC”): this part of the
business comprises manufacturing and sales of household air-conditioner, central air-conditioner,
heating and ventilation system and other related products in domestic and other countries.
 Consumer appliances: this part of the business manufacturing and sales of kitchen appliances,
refrigerators, washing machines, all kinds of small household appliances and other related products in
domestic and other countries.
 Robotics and automation system: this part of the business manufacturing and sales of robots, automation
systems, inverter and elevator servo systems, new energy vehicles parts and other related products in
domestic and other countries.
 Others: this part of the business includes a) Annto Logistics service platform of intelligent supply chain
business integration solution; b) Wandong Medical, engaged in medical device products and related
services; c) the entire value chain of the industrial internet service platform which performs home
appliance raw material sales and wholesale; and d) financial services such as deposits taking, inter-bank
borrowing, consumer credit, loan receiving and financial leasing mainly in China.
Management monitors the results of the Group’s operating segments separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on
reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before
tax is measured consistently with the Group’s profit before tax except that net impairment losses on financial assets
and contract assets, other income (excluding interest income), other gains/losses (excluding net foreign exchange
gains/losses), share of profit of associates and joint ventures, impairment provision for inventories and other assets
and impairment provision for investments in associates and joint ventures are excluded from such measurement.
(b) Segment information
The Group derives revenue from the transfer of goods and services over time and at a point in time in the
following major product lines:
Segment information for the year ended 31 December 2021 is as follows:
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,428,603 140,406,787 27,545,334 9,980,101 – 343,360,825
Inter-segment revenue /H1118/H1118/H11183,548,892 497,761 255,284 8,032,181 (12,334,118) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(155,063,218) (127,382,007) (27,349,247) (15,268,871) 12,306,649 (312,756,694)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H111813,914,277 13,522,541 451,371 2,743,411 (27,469) 30,604,131
Other profit or loss /H1118/H1118/H1118/H1118 3,134,606
Total profit before income
tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 33,738,737
APPENDIX I ACCOUNTANT’S REPORT
– I-36 –


--- page 485 ---
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118159,918,857 150,195,125 34,442,640 186,560,724 (143,178,244) 387,939,102
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118116,532,801 115,846,742 23,383,691 167,207,749 (169,851,750) 253,119,233
Long-term equity
investments in associates
and joint ventures /H1118/H1118/H1118/H1118312,249 109,982 36,564 3,337,910 – 3,796,705
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118185,835 5,976 2,182 366,686 – 560,679
Increase in non-current
assets (excluding long-
term equity investments,
financial assets,
goodwill and deferred
tax assets) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,946,978 2,923,405 981,504 3,996,272 – 12,848,159
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H111876,301 (84,444) 83,193 383,414 (73,963) 384,501
Depreciation and
amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H11182,161,132 1,620,182 1,437,521 1,272,504 – 6,491,339
Segment information for the year ended 31 December 2022 is as follows:
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118167,072,126 135,631,425 30,203,793 12,801,362 – 345,708,706
Inter-segment revenue /H1118/H1118/H11183,674,995 902,151 373,373 7,288,925 (12,239,444) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(155,056,130) (121,215,869) (30,107,864) (17,489,643) 12,180,514 (311,688,992)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H111815,690,991 15,317,707 469,302 2,600,644 (58,930) 34,019,714
Other profit or loss /H1118/H1118/H1118/H1118 938,752
Total profit before income
tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 34,958,466
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118173,411,787 160,850,931 41,186,669 203,099,901 (155,998,376) 422,550,912
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118122,573,126 126,523,130 33,478,351 186,476,986 (198,421,246) 270,630,347
Long-term equity
investments in associates
and joint ventures /H1118/H1118/H1118/H1118396,327 113,029 39,183 4,640,278 – 5,188,817
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118254,487 (134) 1,220 352,705 – 608,278
APPENDIX I ACCOUNTANT’S REPORT
– I-37 –


--- page 486 ---
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Increase in non-current
assets (excluding long-
term equity investments,
financial assets, goodwill
and deferred tax assets) /H1118 4,663,285 3,318,915 1,303,041 2,021,440 – 11,306,681
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118(26,109) 468,842 35,033 29,377 30,965 538,108
Depreciation and
amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H11182,215,346 1,824,042 1,275,870 1,197,647 (7,520) 6,505,385
Segment information for the year ended 31 December 2023 is as follows:
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177,572,832 145,857,207 33,408,425 16,871,340 – 373,709,804
Inter-segment revenue /H1118/H1118/H11184,509,170 1,042,635 416,740 7,224,604 (13,193,149) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(161,701,396) (130,268,374) (33,235,551) (22,670,295) 12,865,232 (335,010,384)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H111820,380,606 16,631,468 589,614 1,425,649 (327,917) 38,699,420
Other profit or loss /H1118/H1118/H1118/H1118 1,579,904
Total profit before income
tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 40,279,324
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118201,058,084 192,501,525 42,735,142 244,916,833 (195,175,569) 486,036,015
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118144,033,849 147,020,837 35,887,893 221,727,484 (236,931,998) 311,738,065
Long-term equity
investments in associates
and joint ventures /H1118/H1118/H1118/H1118648,200 130,710 13,371 4,183,828 – 4,976,109
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118460,163 11,392 349 208,855 – 680,759
Increase in non-current
assets (excluding long-
term equity investments,
financial assets,
goodwill and deferred
tax assets) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,710,263 2,381,335 1,588,442 8,286,200 – 16,966,240
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H111858,756 82,463 151,138 (159,446) 102,091 235,002
Depreciation and
amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H11182,393,575 1,812,801 1,396,549 1,746,348 (2,513) 7,346,760
APPENDIX I ACCOUNTANT’S REPORT
– I-38 –


--- page 487 ---
Segment information for the four months ended 30 April 2023 is as follows:
(unaudited)
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,743,289 48,921,474 10,808,814 3,907,505 – 131,381,082
Inter-segment revenue /H1118/H1118/H1118983,846 278,513 122,424 2,894,442 (4,279,225) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(61,098,527) (43,431,496) (10,699,876) (5,921,947) 3,735,421 (117,416,425)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H11187,628,608 5,768,491 231,362 880,000 (543,804) 13,964,657
Other profit or loss /H1118/H1118/H1118/H1118 390,304
Total profit before income
tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 14,354,961
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118112,828 3,683 (55) 107,599 – 224,055
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118128,218 68,522 (11,434) (144,225) 138,445 179,526
Depreciation and
amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118742,801 637,725 423,834 445,892 (1,081) 2,249,171
Segment information for the four months ended 30 April 2024 is as follows:
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,633,924 55,768,450 10,606,891 5,770,294 – 145,779,559
Inter-segment revenue /H1118/H1118/H1118839,311 320,882 106,155 3,145,602 (4,411,950) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(65,987,435) (49,849,355) (10,731,085) (8,321,495) 4,180,765 (130,708,605)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H11188,485,800 6,239,977 (18,039) 594,401 (231,185) 15,070,954
Other profit or loss /H1118/H1118/H1118/H1118 1,161,112
Total profit before income
tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 16,232,066
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118226,520,787 196,063,221 41,736,954 254,093,471 (209,256,674) 509,157,759
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118162,498,263 142,171,373 34,444,796 250,591,210 (248,937,475) 340,768,167
Long-term equity
investments in associates
and joint ventures /H1118/H1118/H1118/H1118789,342 130,096 9,054 4,124,753 – 5,053,245
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118144,699 83 108 94,565 – 239,455
APPENDIX I ACCOUNTANT’S REPORT
– I-39 –


--- page 488 ---
Heating &
ventilation, as
well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Increase in non-current
assets (excluding long-
term equity investments,
financial assets,
goodwill and deferred
tax assets) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,176,198 718,307 271,439 1,074,880 – 3,240,824
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H111830,744 (24,586) (3,641) 84,950 (31,255) 56,212
Depreciation and
amortisation /H1118/H1118/H1118/H1118/H1118/H1118/H1118817,402 606,610 466,276 637,640 (1,572) 2,526,356
Revenue from external customers is derived from sales of the Heating & ventilation, air conditioner, consumer
appliances, robotics and automation system, and other businesses.
There was no customer who individually contributed 10% or more of the Group’s revenue for the Track Record
Period.
The timing of revenue recognition is shown in the table below:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue recognized at
a point in time
Heating & ventilation, as well
as air-conditioner /H1118/H1118/H1118/H1118/H1118/H1118/H1118165,099,877 166,918,926 177,344,959 67,656,805 73,498,275
Consumer appliances /H1118/H1118/H1118/H1118/H1118/H1118140,391,986 135,621,495 145,841,574 48,917,035 55,762,011
Robotics and automation
system /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,251,834 13,790,400 14,916,864 5,120,208 5,260,447
Other segments and
unallocated /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,491,410 9,201,492 13,320,756 3,051,602 4,866,753
Revenue recognized over time
Robotics and automation
system /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,268,950 16,387,408 18,465,147 5,679,838 5,338,071
Heating & ventilation, as well
as air-conditioner /H1118/H1118/H1118/H1118/H1118/H1118/H1118322,419 145,268 214,027 79,981 132,916
Other segments and
unallocated /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,317,673 1,743,925 1,805,451 350,802 360,918
The Company is domiciled in Mainland China. The amount of the Group’s revenue from external customers
by location of the customers is shown in the table below:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Mainland China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118205,706,997 203,063,764 222,804,120 77,948,366 85,755,297
Other countries or regions /H1118/H1118/H1118/H1118137,653,828 142,644,942 150,905,684 53,432,716 60,024,262
343,360,825 345,708,706 373,709,804 131,381,082 145,779,559
APPENDIX I ACCOUNTANT’S REPORT
– I-40 –


--- page 489 ---
(c) Assets and liabilities related to contracts with customers
The assets and liabilities related to contracts with customers refer to Note 27 and Note 32.
(d) Unsatisfied long-term contracts
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the transaction price allocated to the performance
obligations that are unsatisfied or partially unsatisfied, mainly relating to the robotics and automation system
contracts, amounted to approximately RMB13,661,087,000, RMB13,957,617,000, RMB13,546,344,000 and
RMB13,267,790,000, respectively. The Group will recognize the expected revenue of substantially all of the
long-term contracts over the next 3 years upon the products or services are provided. The amounts disclosed do not
include variable consideration which is constrained.
All other contracts are for periods of one year or less. As permitted under IFRS 15, the transaction price
allocated to these unsatisfied contracts is not disclosed.
(e) Accounting policies of revenue recognition
Revenue is recognized when or as the control of the goods or services is transferred to a customer. Depending
on the terms of the contract and the laws that apply to the contract, control of the goods and services may be
transferred over time or at a point in time. Control of the goods and services is transferred over time if the Group’s
performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as the Group performs; or
 does not create an asset with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
If control of the asset transfers over time, revenue is recognized over the period of the contract by reference
to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a
point in time when the customer obtains control of the asset.
Incremental costs incurred to obtain a contract, if recoverable, are capitalised as contract assets and
subsequently amortized when the related revenue is recognized.
(i) Sales of goods
The Group are principally engaged in the design, manufacturing and sales of residential air conditioner, central
air-conditioner, heating and ventilation systems, kitchen appliances, refrigerators, washing machines and various
small appliances, elevators, high-voltage inverters, low-voltage inverters, medical imaging products, robotics and
automation system, other products and materials to buyers.
Revenue from domestic sales of goods is recognized when the Group has delivered products to the location
specified in the sales contract and the buyer has confirmed the acceptance of the products, and the delivery order is
signed by both parties. Upon confirming the acceptance, the buyer has the right to sell the products at its discretion
and takes the risks of any price fluctuations and obsolescence and loss of the products.
Revenue from overseas sales of goods is recognized when the products have been declared to the customs and
shipped out of the port in accordance with the sales contract.
The credit period granted to customers by the Group is determined based on their credit risk characteristics,
which is consistent with industry practice, and there is no significant financing component. The Group bases its
estimates of sales return on historical results, taking into consideration the type of customers, the type of transactions
and the specifics of each arrangement.
APPENDIX I ACCOUNTANT’S REPORT
– I-41 –


--- page 490 ---
The Group provides distributors and retailers with sales rebate and discount, and the relevant revenue is
recognized based on contract consideration net of the rebate and discount amount estimated.
The periods and terms of product quality warranty are provided in accordance with the laws and regulations
related to the products. The Group has not provided any additional services or product quality warranty, so the
product quality warranty does not constitute a separate performance obligation.
The rights to receive considerations for transferring goods to the customer (and such rights depend on factors
other than the passage of time) are recognized as contract assets. The Group’s obligation to transfer products to
customers for consideration received or receivable is presented as contract liabilities.
(ii) Rendering of services
The Group provides robotics and automation system construction service, intelligent logistics integration
solution, storage services, delivery services, installation services and transportation service, which are recognized in
a certain period of time based on the progress towards complete satisfaction of a performance obligation. On the
balance sheet date, the Group re-estimates the stage of the progress towards complete satisfaction of a performance
obligation, which is mainly measured based on input method to reflect the actual status of contract performance.
When the Group recognizes revenue based on the progress towards complete satisfaction of a performance
obligation, the amount with unconditional right to consideration obtained by the Group is recognized as trade
receivables, and the rest is recognized as contract assets. Meanwhile, provision for trade receivables and contract
assets is recognized on the basis of expected credit losses (Note 50.10(iv)). If the contract consideration received or
receivable exceeds the progress of the service performed, the excess portion will be recognized as contract liabilities.
Contract assets and contract liabilities under the same contract are presented on a net basis.
Contract costs include costs to fulfil a contract and costs to obtain a contract. Costs incurred for provision of
the aforesaid services are recognized as costs to fulfil a contract, which is carried forward to the cost of revenue when
revenue recognized based on the progress of the service performed. Incremental costs incurred by the Group for the
acquisition of the aforesaid service contract are recognized as the costs to obtain a contract. For the costs to obtain
a contract with the amortization period within one year, the costs are charged to profit or loss when incurred. For the
costs to obtain a contract with the amortization period beyond one year, the costs are charged in the profit or loss
on the same basis as aforesaid revenue of rendering of services recognized under the relevant contract. If the carrying
amount of the contract costs is higher than the remaining consideration expected to be obtained by rendering of the
service net of the estimated cost to be incurred, the Group makes provision for impairment on the excess portion and
recognizes it as asset impairment losses. As at the date of the end of the reporting period, based on whether the
amortization period of the costs to fulfil a contract is more than one year when initially recognized, the amount of
the Group’s costs to fulfil a contract net of related provision for asset impairment is presented as inventories or other
non-current assets. For costs to obtain a contract with amortization period beyond one year at the initial recognition,
the amount net of related provision for asset impairment is presented as other non-current assets.
6. OTHER INCOME
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest income (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,780,157 5,081,372 5,977,068 1,858,654 1,926,114
Government grants (b) /H1118/H1118/H1118/H1118/H1118/H11181,396,890 2,007,385 1,892,262 511,624 371,640
Additional Deduction for
VAT (c) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 250,921 – 564,909
6,177,047 7,088,757 8,120,251 2,370,278 2,862,663
(a) Interest income
Interest income from other financial assets at FVPL is included in the net fair value gains on these assets, see
Note 7 below. Interest income on other financial assets at amortized cost and other financial assets at FVOCI
calculated using the effective interest method is recognized in profit or loss as part of other income.
APPENDIX I ACCOUNTANT’S REPORT
– I-42 –


--- page 491 ---
(b) Government grants
The government grants were mainly incentives provided by local government authorities in the PRC, including
various forms of government financial incentives and preferential tax treatments, to reward the Group’s support and
contribution for the development of local economies. As at 31 December 2021, 2022 and 2023 and 30 April 2024,
there were no unfulfilled conditions or contingencies relating to these government grants.
(c) Pursuant to the Notice on the Additional V alue-added Tax (“V A T”) Credit Policy for Advanced Manufacturing
Enterprises (Announcement [2023] No. 43) issued by the Ministry of Finance and the State Taxation
Administration in September 2023, advanced manufacturing enterprises are eligible for a 5% additional V A T
deduction based on deductible input V A T.
7. OTHER GAINS/(LOSSES), NET
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net gains/(losses) on financial
instruments (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,731,713 (519,286) (262,395) 5,092 79,239
Net foreign exchange
gains/(losses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118733,270 (435,574) (340,027) 234,710 (2,272,829)
Net gains/(losses) on disposal of
property, plant and equipment
and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,257 (59,854) (60,868) 12,331 72,859
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118253,938 (50,722) (282,374) 19,072 107,791
2,777,178 (1,065,436) (945,664) 271,205 (2,012,940)
(a) Net gains/(losses) on financial instruments mainly include net gains/(losses) on derivative financial
instruments, other financial assets at FVPL and other financial liabilities at FVPL.
8. EXPENSES BY NATURE
Expenses included in cost of revenue, selling and marketing expenses, general and administrative expenses and
research and development expenses are analyzed as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Raw materials and
consumables used /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118221,124,402 212,264,850 219,556,360 80,974,507 86,630,288
Employee benefit expenses /H1118/H1118/H1118/H111834,719,136 37,350,384 43,210,848 13,131,341 14,826,913
Installation and after-sales
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,175,312 9,578,756 11,692,876 2,744,386 3,085,200
Transportation and insurance
charges /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,957,907 16,169,955 16,656,570 5,419,071 6,896,843
Advertising and promotion
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,013,741 12,079,701 16,024,801 5,791,203 8,058,246
Depreciation and amortization /H1118/H11186,491,339 6,505,385 7,346,760 2,249,171 2,526,356
Auditors’ remuneration /H1118/H1118/H1118/H1118/H1118/H111853,320 52,198 55,872 2,897 3,686
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,060 – 1,279
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,319,279 21,727,076 24,216,118 8,523,386 8,656,635
317,854,436 315,728,305 338,763,265 118,835,962 130,685,446
APPENDIX I ACCOUNTANT’S REPORT
– I-43 –


--- page 492 ---
9. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses are analyzed as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, wages and bonuses /H1118/H1118/H111827,071,702 29,439,271 33,546,497 10,099,325 11,542,630
Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,578,070 1,028,950 1,245,456 499,661 556,320
Pension costs – defined
contribution plans (a) /H1118/H1118/H1118/H1118/H1118/H11181,565,424 1,764,080 2,019,454 612,522 732,196
Pension costs – defined benefit
plans (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111870,348 77,003 59,925 25,989 23,357
Other employee benefits /H1118/H1118/H1118/H1118/H11184,433,592 5,041,080 6,339,516 1,893,844 1,972,410
34,719,136 37,350,384 43,210,848 13,131,341 14,826,913
(a) Defined contribution plans
Employees of the subsidiaries in the PRC participate in employee social insurance plans established in the
PRC, which cover pension and other welfare benefits. The plans are organized and administered by the government
authorities. Except for the contributions made to these social insurance plans, the Group has no other commitments
owing to the employees. According to the relevant regulations, the contributions that should be borne by the
companies within the Group as required by the above social insurance plans are principally determined based on
percentages of the basic salaries of employees, subject to certain ceilings imposed. These contributions are expensed
as incurred.
No forfeited contributions were utilized by the Group to reduce its contributions to the abovementioned social
insurance plan during the Track Record Period.
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the contributions payable in respect of the
abovementioned social insurance plan amounted to RMB104,573,000, RMB110,244,000, RMB103,515,000 and
RMB101,006,000, respectively.
(b) Defined benefit pension plans
The Group sponsors funded defined benefit plans for qualifying employees of Toshiba Lifestyle Products &
Services Corp. (“TLSC”) and its subsidiaries (together, the “TLSC Group”) and other subsidiaries in Japan, Germany,
Switzerland and other countries. The defined benefit plans are administered by separate funds that are legally
separated from the subsidiaries. The boards of the pension funds are composed of an equal number of representatives
from both employers and (former) employees. The boards of the pension funds are required by law and by its articles
of association to act in the interest of the fund and of all relevant stakeholders in the scheme, i.e. active employees,
inactive employees, retirees, employers, which are responsible for the investment policy with regard to the assets of
the fund.
The defined benefit plan requires contributions from employers and employees. Contributions are based on the
number of years of service or fixed percentage of salary of the employees. Employees can also make discretionary
contributions to the plan.
Supplementary retirement benefits obligation of the Group recognized on the balance sheet date is calculated
using the projected unit credit method, and reviewed by external independent actuary institution.
APPENDIX I ACCOUNTANT’S REPORT
– I-44 –


--- page 493 ---
The net liability disclosed above is as follows:
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Present value of obligation /H1118/H1118/H1118/H11183,572,482 3,209,466 3,208,084 3,011,525 2,894,732
Less: Fair value of plan assets /H1118(1,867,042) (1,840,953) (1,905,589) (1,713,910) (1,726,539)
Defined benefit liabilities /H1118/H1118/H1118/H1118/H11181,705,440 1,368,513 1,302,495 1,297,615 1,168,193
The net liability disclosed by subsidiaries is as follows:
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
TLSC Group (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118975,350 841,298 746,082 818,823 663,783
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118730,090 527,215 556,413 478,792 504,410
1,705,440 1,368,513 1,302,495 1,297,615 1,168,193
The actuarial assumptions used to determine the present value of defined benefit obligation are as follows:
As at 31 December As at 30 April
2021 2022 2023 2023 2024
(unaudited)
Discount rate (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.06%-
7.75%
0.02%-
9.25%
0.22%~
10.00%
0.02%~
9.25%
0.37%~
10.00%
Inflation rate (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.00% 1.07% 1.23% 1.07% 1.23%
Salary growth rates (%) /H1118/H1118/H1118/H1118/H1118/H11180.50%-
6.90%
0.50%-
6.60%
0.00%~
6.20%
0.00%~
6.60%
0.00%~
6.20%
Pension dynamics (%) /H1118/H1118/H1118/H1118/H1118/H1118/H11180.00%-
3.70%
1.00%-
3.55%
1.10%~
2.50%
1.10%~
3.55%
0.00%~
2.50%
Early retirement rate (%) /H1118/H1118/H1118/H1118/H11180.00%-
11.60%
0.00%-
12.90%
0.00%~
11.60%
0.00%~
12.90%
0.00%~
11.60%
Changes in cost of medical
services (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
6.25% 7.50% 8.25% 7.50% 8.25%
(i) TLSC Group
Movements in the present value of the defined benefit obligations during the Track Record Period were as
follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,667,046 1,566,671 1,370,625 1,370,625 1,311,041
Current service cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,220 36,440 29,063 14,446 9,684
Gains on curtailment and
settlement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,361) – (454) – –
Interest expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,846 4,801 11,071 3,977 3,421
Remeasurement losses/(gains) /H1118/H1118170,058 (66,545) 44,686 – 29,324
Exchange realignment on
foreign plans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(212,458) (88,215) (56,149) (17,115) (116,410)
Payments made /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(111,680) (82,527) (87,801) (26,598) (28,672)
At the end of the year/period /H1118/H11181,566,671 1,370,625 1,311,041 1,345,335 1,208,388
APPENDIX I ACCOUNTANT’S REPORT
– I-45 –


--- page 494 ---
Movements in the fair value of the plan assets during the Track Record Period were as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(604,522) (591,321) (529,327) (529,327) (564,959)
Interest income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,901) (2,774) (6,355) (2,342) (2,216)
Remeasurement (gains)/losses /H1118/H1118(20,644) 42,663 (53,718) – (30,987)
Exchange realignment on
foreign plans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,330 33,057 21,735 6,409 50,889
Contributions from
the employer /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(83,899) (43,478) (29,063) (10,631) (8,775)
Payments made /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,315 32,526 31,769 9,379 11,443
At the end of the year/period /H1118/H1118(591,321) (529,327) (564,959) (526,512) (544,605)
The major categories of plan assets are as follows:
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Equity instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118214,474 204,080 240,214 216,974 240,156
Debt instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118310,310 249,556 238,608 237,327 218,473
Other instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111866,537 75,691 86,137 72,211 85,976
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118591,321 529,327 564,959 526,512 544,605
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Increase in
assumption
Increase/(decrease) impact on
defined benefit obligation
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% (10,736) (8,031) (7,241) (7,934) (6,194)
Inflation rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% 2,196 1,595 1,668 1,575 1,476
Salary growth rates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% 719 439 242 433 217
Early retirement rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% (1,402) (881) (826) (870) (935)
Decrease in
assumption
Increase/(decrease) impact on defined benefit obligation
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% 10,901 8,141 7,342 8,043 6,280
Inflation rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% (2,172) (1,567) (1,640) (1,548) (1,455)
Salary growth rates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% (706) (651) (246) (643) (221)
Early retirement rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.10% 1,248 709 694 701 800
APPENDIX I ACCOUNTANT’S REPORT
– I-46 –


--- page 495 ---
(c) Directors’ and supervisors’ remuneration
Directors’ and supervisors’ remuneration for the Track Record Period is as follows:
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended 31 December 2021
Executive Directors
Mr. Fang Hongbo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,060 58,924 69,984
Mr. Yin Bitong /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,282 21,328 28,610
Mr. Wang Jianguo (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,159 2,340 3,499
Dr. Gu Y anmin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,636 5,416 11,052
Non-executive Directors
Dr. Y u Gang /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Mr. He Jianfeng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Independent non-executive
Directors
Dr. Xue Y unkui /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Guan Qingyou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Han Jian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Supervisors
Mr. Dong Wentao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 797 – 797
Ms. Liang Huiming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 263 – 263
Mr. Zhao Jun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,800 26,197 88,008 116,005
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended 31 December 2022
Executive Directors
Mr. Fang Hongbo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,301 47,283 58,584
Dr. Gu Y anmin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,684 7,197 14,881
Mr. Wang Jianguo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 6,195 7,237 13,432
Mr. Yin Bitong (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,572 8,832 18,404
Non-executive Directors
Dr. Y u Gang /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Mr. He Jianfeng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Independent non-executive
Directors
Dr. Xue Y unkui /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Guan Qingyou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Han Jian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Supervisors
Mr. Dong Wentao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 751 – 751
Ms. Liang Huiming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 295 – 295
Mr. Zhao Jun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,800 35,798 70,549 108,147
APPENDIX I ACCOUNTANT’S REPORT
– I-47 –


--- page 496 ---
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended 31 December 2023
Executive Directors
Mr. Fang Hongbo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,539 51,105 64,644
Dr. Gu Y anmin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,878 6,181 16,059
Mr. Wang Jianguo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,427 8,102 19,529
Mr. Fu Y ongjun (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,771 5,616 11,387
Non-executive Directors
Dr. Y u Gang /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Mr. He Jianfeng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Independent non-executive
Directors
Dr. Xue Y unkui /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Guan Qingyou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Han Jian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118450 – – 450
Dr. Xiao Geng (iv) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Supervisors
Mr. Dong Wentao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 958 – 958
Ms. Liang Huiming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 417 – 417
Mr. Zhao Jun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,800 41,990 71,004 114,794
Four months ended 30 April 2023
(unaudited)
Executive Directors
Mr. Fang Hongbo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,066 18,056 20,122
Dr. Gu Y anmin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,058 2,623 3,681
Mr. Wang Jianguo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,032 2,629 3,661
Non-executive Directors
Dr. Y u Gang /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Mr. He Jianfeng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Independent non-executive
Directors
Dr. Xue Y unkui /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Dr. Guan Qingyou /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Dr. Han Jian /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Supervisors
Mr. Dong Wentao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 126 – 126
Ms. Liang Huiming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–8 2 –8 2
Mr. Zhao Jun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118600 4,364 23,308 28,272
APPENDIX I ACCOUNTANT’S REPORT
– I-48 –


--- page 497 ---
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Four months ended 30 April 2024
Executive Directors
Mr. Fang Hongbo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,046 18,716 20,762
Dr. Gu Y anmin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,064 2,747 3,811
Mr. Wang Jianguo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,027 3,343 4,370
Mr. Fu Y ongjun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,041 3,858 4,899
Non-executive Directors
Dr. Y u Gang (v) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Mr. He Jianfeng (v) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Independent non-executive
Directors
Dr. Xue Y unkui (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Dr. Guan Qingyou (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Dr. Han Jian (vii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118150 – – 150
Dr. Xiao Geng (iv) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Supervisors
Mr. Dong Wentao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 145 – 145
Ms. Liang Huiming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–9 3 –9 3
Mr. Zhao Jun (vi) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118600 5,416 28,664 34,680
(i) Mr. Wang Jianguo was appointed as executive director of the Company in September 2021.
(ii) Mr. Yin Bitong resigned as executive director of the Company in December 2022.
(iii) Mr. Fu Y ongjun was appointed as executive director of the Company in July 2023.
(iv) Dr. Xiao Geng was appointed as independent non-executive director of the Company in July 2024.
During the Track Record Period, he had not been yet appointed and received no emolument.
(v) Dr. Y u Gang and Mr. He Jianfeng resigned as non-executive directors of the Company in July 2024.
(vi) Mr. Zhao Jun resigned as supervisor and was appointed as non-executive director of the Company in
July 2024.
(vii) Dr. Xue Y unkui, Dr. Guan Qingyou and Dr. Han Jian resigned as independent non-executive directors
of the Company in July 2024.
(viii) Mr. Guan Jinwei was appointed as executive director of the Company in July 2024. Dr. Xu Dingbo, Dr.
Liu Qiao and Dr. Qiu Lili were appointed as independent non-executive directors of the Company in
July 2024. Ms. Ren Lingyan was appointed as supervisor of the Company in July 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-49 –


--- page 498 ---
During the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024,
the executive directors (including Mr. Fang Hongbo, Mr. Yin Bitong, Dr. Gu Y anmin, Mr. Wang Jianguo and Mr. Fu
Y ongjun) and the supervisors (including Mr. Dong Wentao and Ms. Liang Huiming) have provided management
services in connection with the management of the affairs of the Company or its subsidiaries undertaking. Since the
emoluments as directors, supervisors or management cannot be distinguished from each other, emoluments as the
mentioned roles are combined disclosed together.
The emoluments of Mr. Zhao Jun in relation to his services rendered for the Group were borne by the holding
company and not allocated to the Group as management of the Company considers there is no reasonable basis for
such allocation during the Track Record Period.
(d) Directors’ and supervisors’ other benefits
No retirement and termination benefits were paid to the directors and supervisors of the Company by the Group
in respect of the director’s services as a director and a supervisor of the Group or other services in connection with
the management of the affairs of the Group during the Track Record Period.
No consideration provided to third parties for making available directors’ and supervisors’ services subsisted
at the end of each reporting period or at any time during the Track Record Period.
There were no loans, quasi-loans or other dealings entered into in favor of directors, controlled bodies
corporate by and connected entities with such directors during the Track Record Period.
Save as disclosed in Note 45, there were no significant transactions, arrangements and contracts in relation to
the Group’s business to which the Company was a party and in which a director and a supervisor of the Company
had a material interest, whether directly or indirectly, subsisted during the Track Record Period.
(e) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the years ended 31 December 2021,
2022 and 2023 and the four months ended 30 April 2023 and 2024 include 2, 2, 2, 1 and 2 directors respectively
whose emoluments are reflected in the analysis shown in Note 9(c). The emoluments paid to the remaining 3, 3, 3,
4 and 3 individuals during the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April
2023 and 2024, respectively, are as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, wages, bonuses and
benefits in kind (including
contributions to pension
plans) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,595 53,573 50,919 11,196 7,950
Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,736 16,382 25,360 10,088 7,180
60,331 69,955 76,279 21,284 15,130
APPENDIX I ACCOUNTANT’S REPORT
– I-50 –


--- page 499 ---
The emoluments of the above individuals fell within the following bands:
Number of individuals
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(unaudited)
HK$3,000,000 to
HK$5,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––11
HK$5,000,000 to
HK$10,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––32
HK$10,000,000 to
HK$15,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
HK$15,000,000 to
HK$20,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––
HK$20,000,000 to
HK$25,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821–––
HK$25,000,000 to
HK$30,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–23––
HK$30,000,000 to
HK$35,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181––––
10. FINANCE (COSTS)/INCOME, NET
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Finance income:
Interest income from financial
assets held for cash
management purposes (a) /H1118/H1118/H1118401,501 756,341 974,378 239,504 553,972
Reclassification from cost of
hedge reserves (Note 25 (c))
(b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 36,834 110,878 36,297 36,861
401,501 793,175 1,085,256 275,801 590,833
Finance costs:
Interest and finance charges
paid/payable for borrowings /H1118/H1118(1,252,661) (1,719,142) (2,656,770) (788,127) (607,600)
Interest and finance charges
paid/payable for lease
liabilities (Note 15 (b)) /H1118/H1118/H1118/H1118/H1118(111,745) (111,773) (151,334) (37,238) (49,871)
Net exchange gains/(losses) on
foreign currency borrowings /H1118 64,850 (71,507) (564,711) (326,607) 171,625
(1,299,556) (1,902,422) (3,372,815) (1,151,972) (485,846)
Finance (costs)/income, net /H1118/H1118/H1118(898,055) (1,109,247) (2,287,559) (876,171) 104,987
APPENDIX I ACCOUNTANT’S REPORT
– I-51 –


--- page 500 ---
(a) Interest income represents interest income from cash and cash equivalent, including bank balances and
term deposits with initial terms within three months.
(b) Reclassification from cost of hedge reserves mainly represents the amortization of the foreign currency
basis spread. The foreign currency basis spread was separated from a cross-currency interest rate swaps,
or CCIRSs, and excluded from the designation of the CCIRSs as hedging instruments which hedge
time-period relate hedged items. According to IFRS 9, the foreign currency basis spread from the
CCIRSs at the date of designation was recognized in other comprehensive income to the extent that it
related to the hedged item and amortized on a systematic and rational basis over the period during which
the hedge adjustment for the value of the CCIRSs could affect profit or loss. During the Track Record
Period, the amortization was reclassified from the other comprehensive income into profit or loss as a
reclassification adjustment.
11. TAXATION
(a) Income tax expense
Income tax expense is recognized based on management’s best knowledge of the income tax rates expected for
the financial year.
(i) PRC corporate income tax (“CIT”)
The income tax provision of the Group in respect of its operations in mainland China was calculated at tax rate
of 25% on the assessable profits for the periods presented, based on the existing legislation, interpretation and
practices in respect thereof.
Certain subsidiaries of the Company in the Mainland of China were approved as high-tech Enterprise, and they
were subject to a preferential corporate income tax rate of 15% for the Track Record Period.
Certain subsidiaries of the Company were entitled to other tax concessions, mainly including the preferential
tax rate of 15% applicable to some subsidiaries located in certain areas of the Mainland of China upon fulfillment
of certain requirements of the respective local governments application conditions of relevant preferential policies.
During the Track Record Period, certain subsidiaries of the Company located in mainland China fulfill the
micro and small enterprises qualification under Chinese corporate income tax system. Therefore, these subsidiaries
were subject to the effective income tax rate from 2.5% to 10%.
The Company’s subsidiaries in Mainland China other than those mentioned above are subject to enterprise
income tax at the rate of 25%.
(ii) Cayman Islands and British Virgin Islands corporate income tax
Under the current laws of the British Virgin Islands, entities incorporated in British Virgin Islands are not
subject to tax on their income or capital gains.
(iii) Hong Kong profits tax
Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profits for the
Track Record Period.
(iv) Corporate income tax in other jurisdictions
The income tax rates of the subsidiaries in Singapore, Brazil, Japan, Italy, Germany, Israel, Egypt, USA and
Vietnam are 17%, 34%, 34.01%, 24%, 32%, 23%, 22.5%, 21% and 20%, respectively.
Midea Electric Trading (Singapore) Co., Pte Ltd., the Company’s subsidiary, was awarded with the Certificate
of Honor for Development and Expansion (No. 587) by the Singapore Economic Development Board and subject to
the applicable preferential income tax rate of 5.5%, 5.5%, 6% and 6% during the years ended 31 December 2021,
2022 and 2023 and the four months ended 30 April 2024, respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-52 –


--- page 501 ---
Under the investment preferential BOI policy of the Thailand Board of Investment, eligible subsidiaries in
Thailand are not subject to tax on their BOI business income which belongs to the preferential policy for the Track
Record Period.
Income tax on profit arising from other jurisdictions, including Singapore, Brazil, Japan, Italy, Germany,
Israel, Egypt, the USA and Vietnam had been calculated on the estimated assessable profit for the year at the
respective rates prevailing in the relevant jurisdictions.
(v) Additional Deduction for research and development expense
According to the relevant laws and regulations promulgated by the State Council of the People’s Republic of
China that was effective from 2008 onwards, enterprises engaging in research and development activities were
entitled to claim 150% of their research and development expenses so incurred as tax deductible expenses when
determining their assessable profits for that year (“Additional Deduction”). The State Taxation Administration of The
People’s Republic of China (“STA”) further announced in March 2021 that manufacturing enterprises engaging in
research and development activities would entitle to claim 200% of their research and development expenses as
Accelerated Deduction since 1 January 2021. The STA further announced in March 2023 that eligible enterprises
would entitle to claim 200% of their research and development expenses as Additional Deduction since 1 January
2023. The Group has made its best estimate for the Additional Deduction to be claimed for the Group’s entities in
ascertaining their assessable profits during the period.
(vi) Withholding tax (“WHT”)
According to the New Enterprise Income Tax Law (“New EIT Law”), distribution of profits earned by
companies in mainland China since January 1, 2008 to foreign investors is subject to withholding tax of 10% or treaty
tax rate, depending on the country of incorporation of the foreign investors, upon the distribution of profits to
overseas-incorporated immediate holding companies. As at 31 December 2021, 2022 and 2023 and 30 April 2024,
the Group has recognized deferred tax liabilities in relation to withholding taxes for the earnings of the Mainland
China subsidiaries to be remitted in the foreseeable future.
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the Group does not have plans to require some
overseas subsidiaries to distribute their unremitted earnings in the foreseeable future, and intends to retain them to
operate and expand its business in overseas. Accordingly, no deferred income tax liability related to WHT on
unremitted earnings of these subsidiaries was accrued as at the end of each reporting period.
(vii) OECD Pillar Two model rules
The Organisation for Economic Co-operation and Development (“OECD”) published Pillar Two model rules
in December 2021, with the effect that a jurisdiction may enact domestic tax laws (“Pillar Two legislation”) to
implement the Pillar Two model rules on a globally agreed common approach. Pillar Two legislation applies to a
member of a multinational group within the scope of the Pillar Two model rules, which the Group is reasonably
expected to fall into. As at 30 April 2024, the Group mainly operates in the Mainland of China, in which exposures
to Pillar Two income taxes might exist although the legislation is not yet substantively enacted or enacted. Besides,
certain subsidiaries of the Company are located in jurisdictions mainly including Netherlands, Japan, Germany and
Italy where Pillar Two legislation had been enacted and come to effect from 1 January 2024.
Since certain subsidiaries of the Company are within the scope of the OECD Pillar Two model rules, and it
applies the IAS 12 exception to recognizing and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes. The Group expects to incur top-up taxes due to the Pillar Two legislation that was
effective from 1 January 2024. Under the legislation, the Group is liable to pay a top-up tax for the difference between
its GloBE effective tax rate each jurisdiction and the 15% minimum rate.
Due to the complexities in applying the legislation and calculating GloBE income, the quantitative impact of
the enacted or substantively enacted legislation is not yet reasonably estimable. Therefore, even for those entities
with an accounting effective tax rate above 15%, there may still be Pillar Two tax implications. The entity is currently
engaged with tax specialists to assist them with applying the legislation and determining the related impact.
APPENDIX I ACCOUNTANT’S REPORT
– I-53 –


--- page 502 ---
The following table sets forth the component of income tax expenses of the Group for the years ended 31
December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current income tax /H1118/H1118/H1118/H1118/H11185,959,551 7,500,259 8,474,651 3,235,331 3,644,889
Deferred income tax
(Note (17)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,252,242) (2,353,918) (1,942,280) (1,005,778) (1,059,098)
4,707,309 5,146,341 6,532,371 2,229,553 2,585,791
Reconciliation between income tax expenses and profit before income tax at applicable tax rates for the years
ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit before income tax /H1118/H1118/H1118/H1118/H111833,738,737 34,958,466 40,279,324 14,354,961 16,232,066
Tax at the statutory tax rate
of 25% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,434,684 8,739,617 10,069,831 3,588,740 4,058,017
Effect of different tax rates
applicable to subsidiaries /H1118/H1118/H1118(2,703,750) (2,302,968) (2,932,107) (1,054,794) (1,367,498)
Adjustments of prior years /H1118/H1118/H1118 1,453 (45,762) 36,833 7,857 26,729
Tax effect of non-taxable
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(566,876) (544,607) (387,848) (80,657) (100,185)
Tax effect of non-deductible
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118476,697 486,777 642,991 162,905 236,576
Utilization of previously
unrecognized tax losses and
temporary differences /H1118/H1118/H1118/H1118/H1118(75,134) (106,106) (304,850) (60,819) (69,816)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(859,765) (1,080,610) (592,479) (333,679) (198,032)
4,707,309 5,146,341 6,532,371 2,229,553 2,585,791
12. DIVIDENDS
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Ordinary A shares
Final dividends in respect
of the previous year,
declared or paid during
the year/period (tax
inclusive) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,066,392 11,677,509 17,188,858 – 20,780,278
Dividends of lapsed
restricted shares /H1118/H1118/H1118/H1118/H1118/H1118(13,663) (25,484) (44,594) (7,242) (3,926)
11,052,729 11,652,025 17,144,264 (7,242) 20,776,352
APPENDIX I ACCOUNTANT’S REPORT
– I-54 –


--- page 503 ---
The final dividends of RMB16, RMB17, RMB25 and RMB30 per 10 shares (tax inclusive) in respect of the
years ended 31 December 2020, 2021, 2022 and 2023 were approved by the Annual General Meeting of the Company.
The final dividend distribution of RMB 20,780,278,000 in respect of the year ended 31 December 2023
approved by the Annual General Meeting in April 2024 was subsequently paid in May 2024.
13. EARNINGS PER SHARE
(a) Basic
Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the Track Record Period, excluding ordinary
shares held for share schemes as these shares are not considered outstanding for earnings per share calculation
purposes.
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(unaudited)
Profit attributable to
owners of the Company
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,586,980 29,553,342 33,721,536 11,995,920 13,461,205
Less: Dividends payable to
expected vested
restricted shares
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(82,152) (63,556) (66,155) – (158,836)
Profit attributable to
owners of the Company
used in calculating basic
EPS (RMB’000) /H1118/H1118/H1118/H1118/H111828,504,828 29,489,786 33,655,381 11,995,920 13,302,369
Weighted average number
of ordinary shares in
issue (thousand shares) /H1118 6,837,497 6,790,926 6,824,100 6,793,908 6,859,107
Basic EPS (RMB per
share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.17 4.34 4.93 1.77 1.94
(b) Diluted
The share schemes granted by the Company and the subsidiaries have potential dilutive effect on the EPS.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding by the assumption
of the conversion of all potential dilutive ordinary shares arising from share schemes (collectively forming the
denominator for computing the diluted EPS).
For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024,
the Restricted Share Incentive Schemes and Stock Ownership Schemes granted by the Group’s subsidiaries had either
anti-dilutive effect or insignificant dilutive effect to the Group’s diluted earnings per share.
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(unaudited)
Adjusted profit attributable
to owners of the
Company used in
calculating diluted EPS
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,586,980 29,553,083 33,715,846 11,995,920 13,303,154
Weighted average number
of ordinary shares in
issue (thousand shares) /H1118 6,837,497 6,790,926 6,824,100 6,793,908 6,859,107
APPENDIX I ACCOUNTANT’S REPORT
– I-55 –


--- page 504 ---
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(unaudited)
Adjustments for potential
shares arising from share
schemes (thousand
shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868,827 28,297 25,141 22,678 7,332
Weighted average number
of ordinary shares used
in calculating diluted
EPS (thousand shares) /H1118/H11186,906,324 6,819,223 6,849,241 6,816,586 6,866,439
Diluted EPS (RMB per
share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184.14 4.33 4.92 1.76 1.94
14. PROPERTY, PLANT AND EQUIPMENT
The Group
Buildings
Overseas
land
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
and others
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,012,262 1,394,439 20,794,332 812,751 5,003,386 1,526,618 1,081,942 49,625,730
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(8,186,412) (5,892) (12,424,804) (593,305) (3,593,891) (49,316) (663,932) (25,517,552)
Net book amount /H1118/H1118/H1118/H111810,825,850 1,388,547 8,369,528 219,446 1,409,495 1,477,302 418,010 24,108,178
Y ear ended
31 December 2021
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,825,850 1,388,547 8,369,528 219,446 1,409,495 1,477,302 418,010 24,108,178
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118706,350 29,364 2,219,034 29,775 775,815 2,381,015 288,260 6,429,613
Transfer from
construction in
progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H1118911,993 – 151,920 1,846 29,347 (1,096,773) 1,667 –
Disposals and others /H1118/H1118(140,039) (11,628) (204,679) (26,919) (36,138) (6,678) (16,039) (442,120)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118(275,436) (80,896) (157,316) (712) (51,650) (28,914) (4,956) (599,880)
Depreciation charge /H1118/H1118(929,597) – (1,538,606) (57,105) (704,741) – (234,294) (3,464,343)
Impairment loss /H1118/H1118/H1118/H1118––––– (35,022) – (35,022)
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,099,121 1,325,387 8,839,881 166,331 1,422,128 2,690,930 452,648 25,996,426
At 31 December 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,108,658 1,330,856 22,182,072 758,743 5,497,346 2,724,118 1,355,388 53,957,181
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(9,009,537) (5,469) (13,342,191) (592,412) (4,075,218) (33,188) (902,740) (27,960,755)
Net book amount /H1118/H1118/H1118/H111811,099,121 1,325,387 8,839,881 166,331 1,422,128 2,690,930 452,648 25,996,426
APPENDIX I ACCOUNTANT’S REPORT
– I-56 –


--- page 505 ---
Buildings
Overseas
land
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
and others
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended
31 December 2022
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,099,121 1,325,387 8,839,881 166,331 1,422,128 2,690,930 452,648 25,996,426
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118468,401 29,246 3,148,615 66,129 1,112,476 3,294,350 388,110 8,507,327
Transfer from
construction in
progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H11181,587,541 – 419,909 104 103,356 (2,114,555) 3,645 –
Disposals and others /H1118/H1118(56,216) (215) (202,227) (2,062) (30,671) (20,978) (3,322) (315,691)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H11182,744 (24,506) (33,383) 1,147 10,779 (5,970) 5,597 (43,592)
Depreciation charge /H1118/H1118(987,149) – (1,537,048) (31,365) (809,883) – (257,214) (3,622,659)
Impairment loss /H1118/H1118/H1118/H1118(3,281) – (2,297) – – – – (5,578)
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,111,161 1,329,912 10,633,450 200,284 1,808,185 3,843,777 589,464 30,516,233
At 31 December 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,049,136 1,335,277 24,331,913 773,893 6,376,643 3,877,919 826,496 59,571,277
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(9,937,975) (5,365) (13,698,463) (573,609) (4,568,458) (34,142) (237,032) (29,055,044)
Net book amount /H1118/H1118/H1118/H111812,111,161 1,329,912 10,633,450 200,284 1,808,185 3,843,777 589,464 30,516,233
Y ear ended
31 December 2023
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,111,161 1,329,912 10,633,450 200,284 1,808,185 3,843,777 589,464 30,516,233
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,381,338 64,694 3,429,407 168,436 1,410,092 4,386,848 524,305 11,365,120
Transfer from
construction in
progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H11183,266,288 – 126,355 – 73,969 (3,483,975) 17,363 –
Disposals and others /H1118/H1118(274,718) (19,673) (904,400) (19,958) (139,816) (46,274) (36,109) (1,440,948)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H111817,020 7,477 (11,348) (880) 17,923 (725) 4,740 34,207
Depreciation charge /H1118/H1118(1,100,853) – (1,565,697) (99,145) (937,590) – (336,181) (4,039,466)
Impairment loss /H1118/H1118/H1118/H1118(9,978) – (20,555) – (3,417) (18,431) – (52,381)
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,390,258 1,382,410 11,687,212 248,737 2,229,346 4,681,220 763,582 36,382,765
At 31 December 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,431,255 1,387,628 26,110,126 890,849 7,352,388 4,735,799 1,302,832 68,210,877
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(11,040,997) (5,218) (14,422,914) (642,112) (5,123,042) (54,579) (539,250) (31,828,112)
Net book amount /H1118/H1118/H1118/H111815,390,258 1,382,410 11,687,212 248,737 2,229,346 4,681,220 763,582 36,382,765
APPENDIX I ACCOUNTANT’S REPORT
– I-57 –


--- page 506 ---
(unaudited) Buildings
Overseas
land
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
and others
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,049,136 1,335,277 24,331,913 773,893 6,376,643 3,877,919 826,496 59,571,277
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(9,937,975) (5,365) (13,698,463) (573,609) (4,568,458) (34,142) (237,032) (29,055,044)
Net book amount /H1118/H1118/H1118/H111812,111,161 1,329,912 10,633,450 200,284 1,808,185 3,843,777 589,464 30,516,233
Four months ended
30 April 2023
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,111,161 1,329,912 10,633,450 200,284 1,808,185 3,843,777 589,464 30,516,233
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111891,794 – 721,942 8,692 295,030 782,768 129,287 2,029,513
Transfer from
construction in
progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H1118338,626 – 39,135 – 16,983 (395,212) 468 –
Disposals and others /H1118/H1118(11,524) – (60,526) (1,522) (17,885) (31,594) (13,447) (136,498)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H111816,864 (6,145) (5,433) (833) 5,253 7,024 (1,614) 15,116
Depreciation charge /H1118/H1118(339,714) – (519,978) (10,507) (285,907) – (104,886) (1,260,992)
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,207,207 1,323,767 10,808,590 196,114 1,821,659 4,206,763 599,272 31,163,372
At 30 April 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,486,748 1,329,043 24,804,158 771,528 6,629,622 4,241,885 932,442 61,195,426
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(10,279,541) (5,276) (13,995,568) (575,414) (4,807,963) (35,122) (333,170) (30,032,054)
Net book amount /H1118/H1118/H1118/H111812,207,207 1,323,767 10,808,590 196,114 1,821,659 4,206,763 599,272 31,163,372
APPENDIX I ACCOUNTANT’S REPORT
– I-58 –


--- page 507 ---
Buildings
Overseas
land
Machinery
and
equipment
Motor
vehicles
Electronic
equipment
and others
Construction
in progress
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,431,255 1,387,628 26,110,126 890,849 7,352,388 4,735,799 1,302,832 68,210,877
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(11,040,997) (5,218) (14,422,914) (642,112) (5,123,042) (54,579) (539,250) (31,828,112)
Net book amount /H1118/H1118/H1118/H111815,390,258 1,382,410 11,687,212 248,737 2,229,346 4,681,220 763,582 36,382,765
Four months ended
30 April 2024
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,390,258 1,382,410 11,687,212 248,737 2,229,346 4,681,220 763,582 36,382,765
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118116,847 99,715 817,280 25,168 338,348 916,008 172,946 2,486,312
Transfer from
construction in
progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H11181,235,889 – 65,413 – 28,496 (1,343,301) 13,503 –
Disposals and others /H1118/H1118(38,919) – (301,045) (24,048) (16,733) (56,836) (16,439) (454,020)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118(178,367) (76,644) (109,681) (1,966) (29,780) (24,218) 151 (420,505)
Depreciation charge /H1118/H1118(405,839) – (529,235) (18,179) (336,490) – (142,285) (1,432,028)
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,119,869 1,405,481 11,629,944 229,712 2,213,187 4,172,873 791,458 36,562,524
At 30 April 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,458,081 1,410,311 26,191,640 875,159 7,543,627 4,226,471 1,451,381 69,156,670
Accumulated
depreciation and
impairment /H1118/H1118/H1118/H1118/H1118/H1118(11,338,212) (4,830) (14,561,696) (645,447) (5,330,440) (53,598) (659,923) (32,594,146)
Net book amount /H1118/H1118/H1118/H111816,119,869 1,405,481 11,629,944 229,712 2,213,187 4,172,873 791,458 36,562,524
APPENDIX I ACCOUNTANT’S REPORT
– I-59 –


--- page 508 ---
(a) Certain property, plant and equipment as at 31 December 2021, 2022 and 2023 and the four months ended 30
April 2023 and 2024 respectively, were pledged as securities for bank loan facilities and financing lease.
(b) Depreciation of the Group’s property, plant and equipment has been recognized as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H11182,243,657 2,441,336 2,344,088 744,797 820,299
Administration expenses
and research and
development expenses /H1118/H1118927,658 910,848 1,402,729 422,440 512,138
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118293,028 270,475 292,649 93,755 99,591
3,464,343 3,622,659 4,039,466 1,260,992 1,432,028
The Company
Buildings
Machinery
and equipment Motor vehicles
Electronic
equipment and
others
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,617,055 139,154 354,544 348,490 204,304 2,663,547
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(958,861) (123,535) (307,815) (319,197) – (1,709,408)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118658,194 15,619 46,729 29,293 204,304 954,139
Y ear ended 31 December
2021
Opening net book amount /H1118/H1118658,194 15,619 46,729 29,293 204,304 954,139
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 548 6 50,013 599,380 649,947
Transfer from construction
in progress to buildings,
net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,44 1––– (3,441) –
Disposals and others /H1118/H1118/H1118/H1118/H1118– – – (979) – (979)
Depreciation charge /H1118/H1118/H1118/H1118/H1118/H1118(103,056) (1,244) (28,122) (8,750) – (141,172)
Closing net book amount /H1118/H1118558,579 14,923 18,613 69,577 800,243 1,461,935
At 31 December 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,620,496 139,702 354,550 397,524 800,243 3,312,515
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,061,917) (124,779) (335,937) (327,947) – (1,850,580)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118558,579 14,923 18,613 69,577 800,243 1,461,935
APPENDIX I ACCOUNTANT’S REPORT
– I-60 –


--- page 509 ---
Buildings
Machinery
and equipment Motor vehicles
Electronic
equipment and
others
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended 31 December
2022
Opening net book amount /H1118/H1118558,579 14,923 18,613 69,577 800,243 1,461,935
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,183 678 – 24,898 386,412 413,171
Transfer from construction
in progress to other
property, plant and
equipment, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118681,017 881 – – (681,898) –
Disposals and others /H1118/H1118/H1118/H1118/H1118– – – (319) – (319)
Depreciation charge /H1118/H1118/H1118/H1118/H1118/H1118(118,497) (1,284) (566) (26,130) – (146,477)
Closing net book amount /H1118/H11181,122,282 15,198 18,047 68,026 504,757 1,728,310
At 31 December 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,302,696 141,261 354,550 422,103 504,757 3,725,367
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,180,414) (126,063) (336,503) (354,077) – (1,997,057)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11181,122,282 15,198 18,047 68,026 504,757 1,728,310
Y ear ended 31 December
2023
Opening net book amount /H1118/H11181,122,282 15,198 18,047 68,026 504,757 1,728,310
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,708 218 542 13,538 496,601 527,607
Transfer from construction
in progress to buildings,
net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118251,424 – – – (251,424) –
Disposals and others /H1118/H1118/H1118/H1118/H1118(26,566) – (109) (99) – (26,774)
Depreciation charge /H1118/H1118/H1118/H1118/H1118/H1118(148,173) (1,357) (299) (28,382) – (178,211)
Closing net book amount /H1118/H11181,215,675 14,059 18,181 53,083 749,934 2,050,932
At 31 December 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,576,593 141,478 352,802 372,113 749,934 4,192,920
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,360,918) (127,419) (334,621) (319,030) – (2,141,988)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11181,215,675 14,059 18,181 53,083 749,934 2,050,932
APPENDIX I ACCOUNTANT’S REPORT
– I-61 –


--- page 510 ---
(unaudited) Buildings
Machinery
and equipment Motor vehicles
Electronic
equipment and
others
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,302,696 141,261 354,550 422,103 504,757 3,725,367
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,180,414) (126,063) (336,503) (354,077) – (1,997,057)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11181,122,282 15,198 18,047 68,026 504,757 1,728,310
Four months ended
30 April 2023
Opening net book amount /H1118/H11181,122,282 15,198 18,047 68,026 504,757 1,728,310
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,439 58 9 147 205,878 214,531
Disposals and others /H1118/H1118/H1118/H1118/H1118– – – (9) – (9)
Depreciation charge /H1118/H1118/H1118/H1118/H1118/H1118(40,447) (451) (132) (9,462) – (50,492)
Closing net book amount /H1118/H11181,090,274 14,805 17,924 58,702 710,635 1,892,340
At 30 April 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,311,135 141,319 354,559 422,070 710,635 3,939,718
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,220,861) (126,514) (336,635) (363,368) – (2,047,378)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11181,090,274 14,805 17,924 58,702 710,635 1,892,340
At 1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,576,593 141,478 352,802 372,113 749,934 4,192,920
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,360,918) (127,419) (334,621) (319,030) – (2,141,988)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11181,215,675 14,059 18,181 53,083 749,934 2,050,932
Four months ended
30 April 2024
Opening net book amount /H1118/H11181,215,675 14,059 18,181 53,083 749,934 2,050,932
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852,487 712 – 9,199 100,363 162,761
Transfer from construction
in progress to buildings,
net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118817,533 – – – (817,533) –
Disposals and others /H1118/H1118/H1118/H1118/H1118– – – (2) – (2)
Depreciation charge /H1118/H1118/H1118/H1118/H1118/H1118(42,219) (469) (73) (9,287) – (52,048)
Closing net book amount /H1118/H11182,043,476 14,302 18,108 52,993 32,764 2,161,643
At 30 April 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,446,613 142,190 352,802 381,287 32,764 4,355,656
Accumulated depreciation
and impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,403,137) (127,888) (334,694) (328,294) – (2,194,013)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H11182,043,476 14,302 18,108 52,993 32,764 2,161,643
(i) Depreciation amounting to approximately RMB141,172,000, RMB146,477,000, RMB178,211,000,
RMB50,492,000 and RMB52,048,000 respectively, had been recognized in general and administrative
expenses, for the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and
2024, respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-62 –


--- page 511 ---
(a) Depreciation methods and useful lives
Property, plant and equipment are stated at historical costs less accumulated depreciation and accumulated
impairment charges. Historical costs include expenditures that are directly attributable to the acquisition of the items.
Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their
costs to their residual values, over their estimated useful lives or, in the case of leasehold improvements, the shorter
lease term as follows:
Overseas land /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Permanent
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 to 50 years
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 to 25 years
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 to 20 years
Electronic equipment and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 to 20 years
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Shorter of their useful lives and the lease
term
See Note 50.6 for the other accounting policies relevant to property, plant and equipment.
15. LEASE
This note provides information for leases where the Group is a lessee.
(a) Amounts recognized in the consolidated statements of financial position
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,095,036 2,147,152 2,804,826 2,771,441
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118104,019 99,263 157,036 165,029
Land use rights and others /H1118/H1118/H1118/H1118/H1118/H1118/H11186,111,609 6,434,563 6,845,052 6,775,193
Trademark use rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,953,651 1,804,679 1,694,978 1,527,504
10,264,315 10,485,657 11,501,892 11,239,167
Lease liabilities
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118860,503 992,142 1,166,901 1,149,267
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,533,552 1,507,480 2,047,319 2,007,395
2,394,055 2,499,622 3,214,220 3,156,662
Additions to the right-of-use assets during the years ended 31 December 2021, 2022 and 2023 and the four
months ended 30 April 2023 and 2024 were approximately RMB3,628,730,000, RMB1,784,120,000,
RMB3,044,727,000, RMB683,532,000 and RMB520,978,000 respectively.
Certain Leasehold land and land use rights were pledged as securities for bank loan facilities as at 31 December
2023 and 30 April 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-63 –


--- page 512 ---
(b) Amounts recognized in the consolidated statements of profit or loss
The consolidated statements of profit or loss shows the following amounts relating to leases:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation charge of
right-of-use assets
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,107,663 1,069,481 1,182,850 374,608 405,296
Machinery and equipment /H1118 90,266 83,938 100,858 18,825 32,932
Land use rights and others /H1118 169,446 168,314 218,928 55,954 63,436
Trademark use rights /H1118/H1118/H1118/H111842,478 54,413 52,334 17,057 15,091
1,409,853 1,376,146 1,554,970 466,444 516,755
Interest expense (included
in finance cost) /H1118/H1118/H1118/H1118/H1118/H1118111,745 111,773 151,334 37,238 49,871
Expense relating to short-
term leases (included
in cost of goods sold
and administrative
expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118803,982 778,995 821,277 317,836 363,096
Expense relating to leases
of low-value assets that
are not shown above as
short-term leases
(included in operating
expenses and
administrative
expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,898 4,680 3,524 1,445 2,456
Expense relating to
variable lease payments
not included in lease
liabilities (included in
operating expenses and
administrative
expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118271,346 297,344 348,469 125,186 151,199
The total cash outflow for leases during the years ended 31 December 2021, 2022 and 2023 and the four
months ended 30 April 2023 and 2024 were approximately RMB2,487,643,000, RMB2,368,811,000,
RMB2,823,561,000, RMB992,256,000 and RMB1,060,058,000, respectively.
(c) Operating lease proceeds after the date of statement of financial position
No material operating lease proceeds after the date of statement of financial position.
(d) The Group’s leasing activities and how these are accounted for
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
APPENDIX I ACCOUNTANT’S REPORT
– I-64 –


--- page 513 ---
To determine the incremental borrowing rate, the Group:
 where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received;
 uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held
by the Group, which does not have recent third party financing; and
 makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect. When adjustments to lease payments based on an index
or rate take effect, the lease liability is reassessed and adjusted against the right-of use asset.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life. The trademark use rights are measured at cost when acquired. The
trademark use rights are acquired in the business combinations involving enterprises not under common control, and
are amortized over the estimated useful life of 40 years.
Payments associated with short-term leases and all leases of low-value assets are recognized as expenses in
profit or loss. Short-term leases are leases with a lease term of 12 months or less.
See Note 50.5 for the other accounting policies relevant to leases.
(e) Extension and termination
Options Lease payments to be made under reasonably certain extension options are included in the
measurement. No termination options are included in building leases across the Group.
(f) Residual value guarantees
No residual value guarantees are provided in relation to leases.
16. INTANGIBLE ASSETS
Goodwill
Patents and
non-patent
technologies
Trademark
rights Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,073,740 2,191,179 5,259,116 5,481,621 43,005,656
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(516,522) (890,036) (113,266) (2,650,366) (4,170,190)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111829,557,218 1,301,143 5,145,850 2,831,255 38,835,466
Y ear ended
31 December 2021
Opening net book amount /H1118 29,557,218 1,301,143 5,145,850 2,831,255 38,835,466
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,106,701 1,194,149 – 582,701 2,883,551
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (9,581) – (52,766) (62,347)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,789,167) (93,364) (479,307) (197,326) (3,559,164)
Amortization charge /H1118/H1118/H1118/H1118– (222,437) (57,630) (743,578) (1,023,645)
Closing net book amount /H1118 27,874,752 2,169,910 4,608,913 2,420,286 37,073,861
APPENDIX I ACCOUNTANT’S REPORT
– I-65 –


--- page 514 ---
Goodwill
Patents and
non-patent
technologies
Trademark
rights Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,379,463 3,199,777 4,769,814 5,576,295 41,925,349
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(504,711) (1,029,867) (160,901) (3,156,009) (4,851,488)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111827,874,752 2,169,910 4,608,913 2,420,286 37,073,861
Y ear ended
31 December 2022
Opening net book amount /H1118 27,874,752 2,169,910 4,608,913 2,420,286 37,073,861
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,655 5,736 9,121 337,175 471,687
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (7,228) – (16,322) (23,550)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118554,246 16,086 114,205 (38,780) 645,757
Amortization charge /H1118/H1118/H1118/H1118– (232,145) (57,470) (522,113) (811,728)
Impairment loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (48,593) (48,593)
Closing net book amount /H1118 28,548,653 1,952,359 4,674,769 2,131,653 37,307,434
At 31 December 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,072,058 3,232,374 4,894,654 5,841,999 43,041,085
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(523,405) (1,280,015) (219,885) (3,710,346) (5,733,651)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111828,548,653 1,952,359 4,674,769 2,131,653 37,307,434
Goodwill
Patents and
non-patent
technologies
Trademark
rights Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended
31 December 2023 /H1118/H1118/H1118/H1118
Opening net book amount /H1118 28,548,653 1,952,359 4,674,769 2,131,653 37,307,434
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,074,462 1,136,056 – 769,191 2,979,709
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (776) – (31,222) (31,998)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,235,122 22,934 220,100 104,731 1,582,887
Amortization charge /H1118/H1118/H1118/H1118– (295,578) (66,969) (589,146) (951,693)
Impairment loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (25,642) (25,642)
Closing net book amount /H1118 30,858,237 2,814,995 4,827,900 2,359,565 40,860,697
At 31 December 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,391,066 4,415,503 5,116,437 6,408,543 47,331,549
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(532,829) (1,600,508) (288,537) (4,048,978) (6,470,852)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111830,858,237 2,814,995 4,827,900 2,359,565 40,860,697
APPENDIX I ACCOUNTANT’S REPORT
– I-66 –


--- page 515 ---
(unaudited) Goodwill
Patents and
non-patent
technologies
Trademark
rights Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,072,058 3,232,374 4,894,654 5,841,999 43,041,085
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(523,405) (1,280,015) (219,885) (3,710,346) (5,733,651)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111828,548,653 1,952,359 4,674,769 2,131,653 37,307,434
Four months ended
30 April 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Opening net book amount /H1118 28,548,653 1,952,359 4,674,769 2,131,653 37,307,434
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,115 – 94,533 96,648
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (178) – (2,339) (2,517)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118607,682 17,321 119,362 6,104 750,469
Amortization charge /H1118/H1118/H1118/H1118– (77,050) (22,906) (173,253) (273,209)
Closing net book amount /H1118 29,156,335 1,894,567 4,771,225 2,056,698 37,878,825
At 30 April 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,676,564 3,262,382 5,014,120 5,953,043 43,906,109
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(520,229) (1,367,815) (242,895) (3,896,345) (6,027,284)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111829,156,335 1,894,567 4,771,225 2,056,698 37,878,825
Goodwill
Patents and
non-patent
technologies
Trademark
rights Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,391,066 4,415,503 5,116,437 6,408,543 47,331,549
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(532,829) (1,600,508) (288,537) (4,048,978) (6,470,852)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111830,858,237 2,814,995 4,827,900 2,359,565 40,860,697
Four months ended
30 April 2024
Opening net book amount /H1118 30,858,237 2,814,995 4,827,900 2,359,565 40,860,697
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,647 – 85,780 98,427
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (550) – (1,215) (1,765)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(866,728) (12,814) (124,880) (142,073) (1,146,495)
Amortization charge /H1118/H1118/H1118/H1118– (102,803) (23,242) (199,221) (325,266)
Closing net book amount /H1118 29,991,509 2,711,475 4,679,778 2,102,836 39,485,598
At 30 April 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,526,159 4,371,277 4,986,630 6,053,030 45,937,096
Accumulated amortization
and impairment /H1118/H1118/H1118/H1118/H1118/H1118(534,650) (1,659,802) (306,852) (3,950,194) (6,451,498)
Net book amount /H1118/H1118/H1118/H1118/H1118/H111829,991,509 2,711,475 4,679,778 2,102,836 39,485,598
APPENDIX I ACCOUNTANT’S REPORT
– I-67 –


--- page 516 ---
(a) Amortization of the Group’s intangible assets has been recognized as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118884,879 673,001 832,292 232,709 283,073
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,800 9,747 10,009 3,146 3,210
Administration expenses /H1118/H1118105,966 128,980 109,392 37,354 38,983
1,023,645 811,728 951,693 273,209 325,266
(b) Impairment tests for goodwill and trademark rights with an indefinite useful life
The carrying amount of goodwill allocated to the group of Cash-Generating Units (“CGU” or “CGUs”) are as
follows:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
KUKA Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,544,697 21,122,932 22,364,486 21,757,226
TLSC Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,580,274 2,437,914 2,338,037 2,131,160
Little Swan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,361,306 1,361,306 1,361,306 1,361,306
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,893,186 4,149,906 5,327,237 5,276,467
28,379,463 29,072,058 31,391,066 30,526,159
Less: Impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(504,711) (523,405) (532,829) (534,650)
27,874,752 28,548,653 30,858,237 29,991,509
The trademark rights with an indefinite useful life of the Group are used by KUKA Group for its robotics and
automation system business, the carrying amounts of which are RMB4,019,207,000, RMB4,132,328,000,
RMB4,375,217,000 and RMB4,256,417,000 as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
Impairment reviews on the goodwill and trademark rights with an indefinite useful life of the Group have been
conducted by the management as at 31 December 2021, 2022 and 2023 and 30 April 2024, according to IAS 36
“Impairment of assets”. For the purposes of impairment review, the recoverable amounts of CGU or group of CGUs
are determined based on value in use (“VIU”) calculations by using the discounted cash flow method.
The key assumptions used by management for VIU calculation for the impairment test of KUKA Group as at
31 December 2021, 2022 and 2023 and 30 April 2024, included: the revenue annual growth rates of 4.10%~17.21%,
0.18%~12.94%, 4.73%~15.43%, and 3.57%~15.43%; the gross margins of 22.71%~24.59%, 22.76%~23.60%,
22.79%~23.60%, and 22.78%~23.60%; the perpetual annual growth rates of 2.00%, 2.00%, 2.00% and 2.00%; and
the pre-tax discount rates of 9.32%, 10.74%, 10.73% and 11.60%, respectively.
The key assumptions used by management for VIU calculation for the impairment test of TLSC Group as at
31 December 2021, 2022 and 2023 and 30 April 2024, included: the revenue annual growth rates of 2.89%~5.21%,
2.94%~5.26%, 2.89%~7.00%, and 2.89%~7.01%; the gross margins of 27.52%~30.80%, 26.52%~30.82%,
26.22%~29.00%, and 26.22%~29.01%; the perpetual annual growth rates of 1.00%, 1.00%, 1.00% and 1.00%; and
the pre-tax discount rates of 15.13%, 15.62%, 14.92% and 14.99%, respectively.
The key assumptions used by management for VIU calculation for the impairment test of Little Swan as at 31
December 2021, 2022 and 2023 and 30 April 2024, included: the revenue annual growth rates of 2.00%~11.80%,
2.00%~10.00%, 3.00%~8.70%, and 3.00%~8.70%; the gross margins of 28.34%~28.86%, 29.47%~30.06%,
31.79%~34.17%, and 31.80%~33.59%; the perpetual annual growth rates of 2.00%, 2.00%, 2.00% and 2.00%; and
the pre-tax discount rates of 13.17%, 12.83%, 12.41% and 12.31%, respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-68 –


--- page 517 ---
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption Approach used to determine values
Revenue annual growth rate /H1118/H1118/H1118/H1118/H1118/H1118Revenue annual growth rate is estimated over the five-year or
six-year forecast period; based on past performance and
management’s expectations of market development. The management
of the Group used a six-year period as the projection period for the
cash flow forecast, which was in line with the period length used in
the corresponding strategic planning and long-term budgeting
purpose for many years. Based on the industry knowledge and
understanding of the market and business cycle, the management
considered that before the projections move into a long term stable
period, such six-year period projection was reasonable and
supportable.
Gross margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Based on past performance and management’s expectations for the
future.
Perpetual annual growth rate /H1118/H1118/H1118/H1118/H1118This is the weighted average growth rate used to extrapolate cash
flows beyond the forecast period. The rates are determined after
making reference to long term inflation rate of the countries in which
they operate. The perpetual annual growth rates remained stable
which was due to the fact that the long term inflation rates of the
relevant countries were relatively stable during the Track Record
Period.
Pre-tax discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Estimated by using the weighted average cost of capital (“W ACC”)
method. The W ACC was calculated by referring to public market data
including risk free rate, market return, beta of comparable public
companies etc. and the specific risk of the business.
(c) Impact of possible changes in key assumptions
Based on management’s assessment on the recoverable amounts, the headroom of KUKA Group, TLSC Group
and Little Swan as follows:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
KUKA Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,979,426 2,717,753 2,963,925 2,949,224
TLSC Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,006,797 1,521,649 1,682,908 1,570,820
Little Swan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,731,467 24,965,476 27,501,707 30,130,378
For the sensitivity analysis of KUKA Group conducted during the impairment review, had there been
reasonably possible changes with reduction of the revenue annual growth rate of each year during the forecast period
by 3.00%, or a reduction of the gross margin of each year during the forecast period by 2.00%, or an increase in
pre-tax discount rate by 0.50%, or a reduction of perpetual annual growth rate by 0.50%, it would cause the reduction
of the recoverable amount of KUKA Group as follows, if one of the key assumptions was to change while other
variable held constant: As at 31 December 2021, the recoverable amount would decrease by RMB1,786,583,000,
RMB2,431,230,000, RMB2,764,894,000 and RMB1,957,374,000. As at 31 December 2022, the recoverable amount
would decrease by RMB1,384,969,000, RMB2,287,651,000, RMB2,415,974,000 and RMB1,601,096,000. As at 31
December 2023, the recoverable amount would decrease by RMB2,038,488,000, RMB2,755,119,000,
RMB2,483,750,000 and RMB1,602,729,000. As at 30 April 2024, the recoverable amount would decrease by
RMB1,986,374,000, RMB2,420,519,000, RMB2,239,873,000 and RMB1,401,751,000.
For the sensitivity analysis of TLSC Group conducted during the impairment review, had there been reasonably
possible changes with reduction of the revenue annual growth rate of each year during the forecast period by 3.00%,
or a reduction of the gross margin of each year during the forecast period by 2.00%, or an increase in pre-tax discount
rate by 0.50%, or a reduction of perpetual annual growth rate by 0.50%, it would cause the reduction of the
recoverable amount of TLSC Group as follows, if one of the key assumptions was to change while other variable held
constant: As at 31 December 2021, the recoverable amount would decrease by RMB206,849,000, RMB842,829,000,
APPENDIX I ACCOUNTANT’S REPORT
– I-69 –


--- page 518 ---
RMB265,076,000 and RMB158,882,000. As at 31 December 2022, the recoverable amount would decrease by
RMB213,343,000, RMB867,839,000, RMB301,900,000 and RMB192,539,000. As at 31 December 2023, the
recoverable amount would decrease by RMB209,664,000, RMB851,739,000, RMB294,897,000 and
RMB167,586,000. As at 30 April 2024, the recoverable amount would decrease by RMB204,612,000,
RMB832,034,000, RMB276,181,000 and RMB175,233,000.
For the sensitivity analysis of Little Swan conducted during the impairment review, had there been reasonably
possible changes with reduction of the revenue annual growth rate of each year during the forecast period by 3.00%,
or a reduction of the gross margin of each year during the forecast period by 2.00%, or an increase in pre-tax discount
rate by 0.50%, or a reduction of perpetual annual growth rate by 0.50%, it would cause the reduction of the
recoverable amount of Little Swan as follows, if one of the key assumptions was to change while other variable held
constant: As at 31 December 2021, the recoverable amount would decrease by RMB938,503,000,
RMB2,085,850,000, RMB1,080,510,000 and RMB720,077,000. As at 31 December 2022, the recoverable amount
would decrease by RMB651,084,000, RMB1,926,141,000, RMB1,742,909,000 and RMB1,032,012,000. As at 31
December 2023, the recoverable amount would decrease by RMB654,842,000, RMB2,276,090,000,
RMB1,724,920,000 and RMB1,094,880,000. As at 30 April 2024, the recoverable amount would decrease by
RMB721,472,000, RMB2,370,080,000, RMB1,631,080,000 and RMB1,052,210,000.
As disclosed above, the management has considered and assessed reasonably possible changes for the key
assumptions and has not identified any instances that would cause the carrying amounts of the CGUs to exceed their
recoverable amounts as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
(d) Amortisation methods and periods
The Group amortizes intangible assets with a limited useful life using the straight-line method over the
following:
(i) Goodwill
Goodwill is measured as described in Note 50.2. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the operating segments.
(ii) Trademark rights
The trademark rights are measured at cost when acquired and are amortized over the estimated useful life of
4 to 30 years. The cost of trademark rights obtained in the business combinations involving enterprises not under
common control is measured at fair value. As some of the trademarks are expected to attract net cash inflows injected
into the Group, management considers that these trademarks have an indefinite useful life and are presented based
upon the carrying amount after deducting the provision for impairment.
(iii) Patents and non-patent technologies
Patents are amortized on a straight-line basis based on the statutory period of validity, the period as stipulated
by contracts or the beneficial period over their estimated useful life of 2 to 20 years.
(iv) Other intangible assets
Other intangible assets mainly represent the customer relationships, concessions, software, etc. They are
recognized at cost or fair value at the date of the acquisition and are subsequently amortized on a straight-line basis
over their estimated useful life of 2 to 25 years.
See Note 50.8 for the other accounting policies relevant to intangible assets.
APPENDIX I ACCOUNTANT’S REPORT
– I-70 –


--- page 519 ---
17. DEFERRED TAX
Deferred tax assets and liabilities are offset when there is a legally enforceable right of offsetting and when
the deferred income taxes relate to the same authority. The net amounts of deferred tax assets and liabilities after
offsetting are as follows:
As at 31 December As at 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Gross deferred tax assets:
– to be recovered after
more than 12 months /H1118/H11182,770,591 3,457,647 4,084,927 3,515,174 4,288,099
– to be recovered within
12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,205,683 8,754,919 10,595,710 9,796,726 11,355,513
9,976,274 12,212,566 14,680,637 13,311,900 15,643,612
Offsetting against deferred
tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,783,965) (1,968,270) (1,909,487) (1,985,191) (2,009,763)
Net deferred tax assets /H1118/H1118/H11188,192,309 10,244,296 12,771,150 11,326,709 13,633,849
Gross deferred tax
liabilities
– to be recovered after
more than 12 months /H1118/H11185,464,949 5,393,222 5,848,421 5,380,057 5,655,609
– to be recovered within
12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,267,466 1,221,603 1,158,876 1,281,388 1,273,659
6,732,415 6,614,825 7,007,297 6,661,445 6,929,268
Offsetting against deferred
tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,783,965) (1,968,270) (1,909,487) (1,985,191) (2,009,763)
Net deferred tax liabilities /H1118 4,948,450 4,646,555 5,097,810 4,676,254 4,919,505
(i) Deferred tax assets
The movements in deferred tax assets before offsetting for the years ended 31 December 2021, 2022 and 2023
and the four months ended 30 April 2023 and 2024 are as follows:
Tax Losses
Loss
allowance
and
impairment
provision
Employee
benefits
Accrued
expenses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118693,098 409,576 426,845 5,305,009 1,787,467 8,621,995
Acquisition of subsidiaries /H1118/H11188,904 23,606 3,679 – 14,154 50,343
Credited/(charged) to
consolidated statement of
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118689,665 169,658 (145,010) 328,249 510,466 1,553,028
Credited to other
comprehensive income /H1118/H1118/H1118/H1118– – 19,213 – – 19,213
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20,639) (6,077) (19,464) (102,088) (120,037) (268,305)
At 31 December 2021 /H1118/H1118/H1118/H1118/H11181,371,028 596,763 285,263 5,531,170 2,192,050 9,976,274
APPENDIX I ACCOUNTANT’S REPORT
– I-71 –


--- page 520 ---
Tax Losses
Loss
allowance
and
impairment
provision
Employee
benefits
Accrued
expenses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,371,028 596,763 285,263 5,531,170 2,192,050 9,976,274
Credited/(charged) to
consolidated statement of
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115,352 139,193 (35,182) 953,431 1,014,248 2,187,042
Charged to other
comprehensive income /H1118/H1118/H1118/H1118– – (62,980) – – (62,980)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,242 17,555 3,297 49,875 27,261 112,230
At 31 December 2022 /H1118/H1118/H1118/H1118/H11181,500,622 753,511 190,398 6,534,476 3,233,559 12,212,566
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,500,622 753,511 190,398 6,534,476 3,233,559 12,212,566
Acquisition of subsidiaries /H1118/H1118339,503 205,877 – – 5,401 550,781
Credited to consolidated
statement of profit or loss /H1118252,277 70,839 674 807,158 604,633 1,735,581
Credited to other
comprehensive income /H1118/H1118/H1118/H1118– – 15,751 – 1,211 16,962
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,164 8,711 6,222 45,262 70,388 164,747
At 31 December 2023 /H1118/H1118/H1118/H1118/H11182,126,566 1,038,938 213,045 7,386,896 3,915,192 14,680,637
(unaudited)
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,500,622 753,511 190,398 6,534,476 3,233,559 12,212,566
Credited/(charged) to
consolidated statement of
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,005 28,690 (34,898) 887,409 80,630 1,003,836
Credited to other
comprehensive income /H1118/H1118/H1118/H1118– – 2,142 – 1,779 3,921
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,883 6,534 2,374 17,715 49,071 91,577
At 30 April 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,558,510 788,735 160,016 7,439,600 3,365,039 13,311,900
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H11182,126,566 1,038,938 213,045 7,386,896 3,915,192 14,680,637
Credited/(charged) to
consolidated statement of
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,873 82,456 (25,405) 959,258 (39,627) 1,056,555
Credited to other
comprehensive income /H1118/H1118/H1118/H1118– – (4,722) – (1,137) (5,859)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20,790) (13,790) (3,445) (30,066) (19,630) (87,721)
At 30 April 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,185,649 1,107,604 179,473 8,316,088 3,854,798 15,643,612
APPENDIX I ACCOUNTANT’S REPORT
– I-72 –


--- page 521 ---
(ii) Deferred tax liabilities
The movements in deferred tax liabilities before offsetting for the years ended 31 December 2021, 2022 and
2023 and the four months ended 30 April 2023 and 2024 are as follows:
Business
combinations
Changes in
fair value Others Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,415,470 205,628 3,009,098 6,630,196
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118309,189 870 – 310,059
(Credited)/Charged to consolidated
statement of profit or loss /H1118/H1118/H1118/H1118/H1118(244,033) 131,690 413,129 300,786
Charged to other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 14,976 – 14,976
Currency translation differences /H1118/H1118/H1118(335,344) (3,956) (184,302) (523,602)
At 31 December 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,145,282 349,208 3,237,925 6,732,415
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,145,282 349,208 3,237,925 6,732,415
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H111812,403 – – 12,403
(Credited)/Charged to consolidated
statement of profit or loss /H1118/H1118/H1118/H1118/H1118(190,637) (72,730) 96,491 (166,876)
Credited to other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (39,513) – (39,513)
Currency translation differences /H1118/H1118/H1118(45,758) (525) 122,679 76,396
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,921,290 236,440 3,457,095 6,614,825
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,921,290 236,440 3,457,095 6,614,825
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118437,873 – – 437,873
(Credited)/Charged to consolidated
statement of profit or loss /H1118/H1118/H1118/H1118/H1118(282,397) (48,220) 123,918 (206,699)
Charged to other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,769 18,344 32,113
Currency translation differences /H1118/H1118/H111847,981 268 80,936 129,185
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,124,747 202,257 3,680,293 7,007,297
(unaudited)
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,921,290 236,440 3,457,095 6,614,825
(Credited)/Charged to consolidated
statement of profit or loss /H1118/H1118/H1118/H1118/H1118(55,345) (41,900) 95,303 (1,942)
Charged to other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (15,685) – (15,685)
Currency translation differences /H1118/H1118/H111814,979 (261) 49,529 64,247
At 30 April 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,880,924 178,594 3,601,927 6,661,445
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,124,747 202,257 3,680,293 7,007,297
(Credited)/Charged to consolidated
statement of profit or loss /H1118/H1118/H1118/H1118/H1118(90,726) 6,528 81,655 (2,543)
Charged to other comprehensive
income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 16,095 – 16,095
Currency translation differences /H1118/H1118/H1118(24,086) (386) (67,109) (91,581)
At 30 April 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,009,935 224,494 3,694,839 6,929,268
APPENDIX I ACCOUNTANT’S REPORT
– I-73 –


--- page 522 ---
(iii) Deferred tax assets not recognized
The Group has not recognized deferred tax assets in respect of the items below, which were incurred by certain
subsidiaries that were not likely to generate taxable:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Tax losses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,144,541 13,187,089 13,498,350 13,276,515
Deductible temporary differences /H1118/H1118 351,814 504,142 1,692,317 1,551,439
13,496,355 13,691,231 15,190,667 14,827,954
The tax losses not recognized deferred tax assets can be carried forward in future years. As at 31 December
2021, 2022 and 2023 and 30 April 2024, the following table shows unused tax losses based on its expected expiry
date:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Expiring within 1 year
(including 1 year) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874,057 95,687 264,348 146,974
Expiring within 2 years
(including 2 years) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118188,005 142,962 495,325 447,165
Expiring within 3 years
(including 3 years) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118228,217 316,508 702,361 680,621
Expiring within 4 years
(including 4 years) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118385,821 591,687 991,896 975,910
Expiring after 4 years
(excluding 4 years) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,268,441 12,040,245 11,044,420 11,025,845
13,144,541 13,187,089 13,498,350 13,276,515
18. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments and other assets
Prepayments (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,241,768 5,174,583 4,767,457 5,373,898
Deductible value-added tax /H1118/H1118/H1118/H1118/H1118/H11186,137,776 3,875,519 5,852,464 4,931,827
Prepaid expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118828,675 856,455 1,047,492 1,065,640
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 30,876 33,989
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,711,806 2,100,042 2,060,175 2,522,141
13,920,025 12,006,599 13,758,464 13,927,495
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,830,553) (1,797,807) (2,454,756) (2,532,062)
12,089,472 10,208,792 11,303,708 11,395,433
APPENDIX I ACCOUNTANT’S REPORT
– I-74 –


--- page 523 ---
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Other receivables and other assets
Other receivables (d) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,147,595 2,249,186 2,233,595 2,011,003
Long-term receivables (b) /H1118/H1118/H1118/H1118/H1118/H1118/H11181,371,022 1,176,968 1,050,627 997,145
Futures margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118739,557 1,208,013 632,773 677,969
5,258,174 4,634,167 3,916,995 3,686,117
Less: provision for impairment
– Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(43,530) (38,009) (51,717) (43,505)
– Long-term receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,461) (8,779) (121,521) (117,646)
(51,991) (46,788) (173,238) (161,151)
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(871,356) (614,598) (250,519) (183,693)
4,334,827 3,972,781 3,493,238 3,341,273
Prepayments, other receivables and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,424,299 14,181,573 14,796,946 14,736,706
(a) The non-current portion of prepayments mainly comprise prepaid construction equipment.
(b) Long-term receivables mainly comprise finance lease receivables.
(c) Movements on the Group’s allowance for impairment of other receivables and other assets are as
follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H111853,025 51,991 46,788 46,788 173,238
Allowance for
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118168,049 36,745 146,971 39,178 16,444
Written off and
written down /H1118/H1118/H1118/H1118/H1118(124,041) (1,565) (4,096) (195) (2,324)
Reversal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(44,007) (39,750) (13,886) (24,167) (21,490)
Exchange adjustment /H1118/H1118(1,035) (633) (2,539) (3,432) (4,717)
At the end of
the year/period /H1118/H1118/H1118/H1118/H111851,991 46,788 173,238 58,172 161,151
(d) Classification as other receivables
Other receivables are recognized initially at fair value. Majority of other receivables are security deposit and
guarantee, current accounts, petty cash to staff and receivables related to stock options. The Group holds the other
receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at
amortized cost using the effective interest method, less provision for impairment. See Note 50.10 for a description
of the Group’s impairment policies.
The Company
The prepayments, other receivables and other assets of the Company mainly comprise the amounts due
from related parties.
APPENDIX I ACCOUNTANT’S REPORT
– I-75 –


--- page 524 ---
19. TRADE AND NOTE RECEIV ABLES AT FAIR V ALUE THROUGH OTHER COMPREHENSIVE
INCOME
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables at
FVOCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,273,552 13,526,540 13,330,008 21,385,125
Trade and note receivables at FVOCI were mainly accounts receivable and bank acceptance notes transferred,
discounted and endorsed for the purpose of daily treasury management and were qualified for derecognition.
The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9. Details
are disclosed in Note 3.1(b)(ii).
20. LOAN RECEIV ABLES
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Loan receivables to individuals /H1118/H1118/H1118/H11182,217,220 1,820,952 1,555,477 1,274,387
Loan receivables to corporations /H1118/H1118/H111819,744,034 13,475,027 14,073,508 14,548,808
21,961,254 15,295,979 15,628,985 15,823,195
Less: Provision for impairment /H1118/H1118/H1118/H1118(452,727) (463,929) (356,755) (388,042)
21,508,527 14,832,050 15,272,230 15,435,153
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(851,927) (693,294) (975,272) (518,630)
20,656,600 14,138,756 14,296,958 14,916,523
By type of collateral held:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Unsecured loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,211,108 1,818,768 1,553,285 1,272,349
Guaranteed loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118587,936 598,437 481,542 428,683
Pledged loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,162,210 12,878,774 13,594,158 14,122,163
21,961,254 15,295,979 15,628,985 15,823,195
APPENDIX I ACCOUNTANT’S REPORT
– I-76 –


--- page 525 ---
Movement of impairment of loan receivables is analyzed as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118312,854 452,727 463,929 463,929 356,755
Increase in the current
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118144,691 25,814 44,273 7,620 60,859
Reversal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,748) (14,612) (170,274) (37,161) (29,544)
Write-off /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,070) – (9,466) – (422)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 28,293 1,325 394
At the end of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118452,727 463,929 356,755 435,713 388,042
Loan receivables is subject to the impairment assessment according to IFRS 9, details are disclosed in Note
3.1(b)(ii).
21. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Movement of investments in associates and joint ventures is analyzed as follows:
The Group
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H11182,901,337 3,796,705 5,188,817 5,188,817 4,976,109
Additions and transfers /H1118/H1118/H1118645,837 1,129,210 15,348 – –
Disposals and transfers /H1118/H1118/H1118(41,691) (32,421) (936,303) – (29,813)
Business combination /H1118/H1118/H1118/H111817,294 – 366,938 – –
Share of profit, net /H1118/H1118/H1118/H1118/H1118560,679 608,278 680,759 224,055 239,455
Share of other
comprehensive income /H1118/H1118 (3,032) 17,391 8,031 17,318 12,450
Share of other equity
movement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,577) (1,834) 3,412 (41) –
Dividends /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(286,667) (349,293) (360,750) (132,968) (136,910)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,525 20,781 9,857 3,190 (8,046)
3,796,705 5,188,817 4,976,109 5,300,371 5,053,245
Less: Impairment loss /H1118/H1118/H1118 –––––
At the end of
the year/period /H1118/H1118/H1118/H1118/H1118/H11183,796,705 5,188,817 4,976,109 5,300,371 5,053,245
Investments in associates and joint ventures of the Group mainly included the investments in Guangdong
Shunde Rural Commercial Bank Co., Ltd., Hefei Royalstar Motor Co., Ltd., Carrier Midea North America LLC,
Foshan Micro Midea Filter Mfg. Co., Ltd, Concepcion Midea Inc., TWENTYTHREEC LLC, ShenZhen CEGN Co.,
Ltd. and T.G. Battery Co. (Hong Kong) Ltd..
APPENDIX I ACCOUNTANT’S REPORT
– I-77 –


--- page 526 ---
The Company
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H11181,670,583 2,428,841 3,398,523 3,398,523 3,559,731
Additions and transfers /H1118/H1118/H1118601,761 836,954 942,444 – –
Disposals and transfers /H1118/H1118(14,205) (20,305) (832,614) – –
Share of profit, net /H1118/H1118/H1118/H1118/H1118271,367 260,651 157,844 76,937 98,276
Share of other
comprehensive income /H1118/H1118 8,714 1,616 (960) 12,639 997
Share of other equity
movement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,535) (1,625) (1,455) (41) –
Dividends /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(107,844) (107,609) (104,051) (96,051) (128,042)
2,428,841 3,398,523 3,559,731 3,392,007 3,530,962
Less: Impairment loss /H1118/H1118/H1118 –––––
At the end of
the year/period /H1118/H1118/H1118/H1118/H1118/H11182,428,841 3,398,523 3,559,731 3,392,007 3,530,962
Investments in associates of the Company mainly included the investments in Guangdong Shunde Rural
Commercial Bank Co., Ltd. and Hefei Royalstar Motor Co., Ltd..
Management has assessed the level of influence that the Group and the Company exercises on certain
associates and determined that it has significant influence through the board representation and other relevant facts
and circumstances, even though the respective shareholding of some investments is below 20%. Accordingly, these
investments have been classified as associates. In the opinion of the directors, no investments in associate are
material to the Group and the Company.
The Group has interests in a number of individually immaterial associates and joint ventures that are accounted
for using the equity method. The carrying amount and the Group’s share of the results of individually immaterial
associates and joint ventures are shown in aggregate as below:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Aggregate carrying amount of
individually immaterial associates
and joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,796,705 5,188,817 4,976,109 5,053,245
Aggregate amounts of the Group’s
share of:
Profit from operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118560,679 608,278 680,759 239,455
Other comprehensive income /H1118/H1118/H1118/H1118/H1118(3,032) 17,391 8,031 12,450
Total comprehensive income /H1118/H1118/H1118/H1118/H1118557,647 625,669 688,790 251,905
APPENDIX I ACCOUNTANT’S REPORT
– I-78 –


--- page 527 ---
The Company has interests in a number of individually immaterial associates that are accounted for using the
equity method. The carrying amount and the Company’s share of the results of individually immaterial associates are
shown in aggregate as below:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Aggregate carrying amount of
individually immaterial associates /H1118 2,428,841 3,398,523 3,559,731 3,530,962
Aggregate amounts of the
Company’s share of:
Profit from operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118271,367 260,651 157,844 98,276
Other comprehensive income /H1118/H1118/H1118/H1118/H11188,714 1,616 (960) 997
Total comprehensive income /H1118/H1118/H1118/H1118/H1118280,081 262,267 156,884 99,273
The associates and joint ventures of the Group and the Company have been accounted for by using equity
method based on the financial information of the associates and joint ventures prepared under the accounting policies
generally consistent with those of the Group.
There are no commitment or contingent liabilities relating to the Group and the Company’s interest in the
associates and joint ventures.
22. FINANCIAL INSTRUMENTS BY CATEGORY
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Assets as per consolidated
statements of financial position
Financial assets at fair value:
– Other financial assets at FVPL
(Note 24) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,792,075 9,633,149 7,478,179 6,988,037
– Other financial assets at FVOCI
(Note 24) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,530,069 17,667,661 11,051,350 7,517,965
– Trade and note receivables at
FVOCI (Note 19) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,273,552 13,526,540 13,330,008 21,385,125
– Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,298,815 5,029,139 3,753,101 5,708,389
Financial assets at amortized
costs:
– Trade and note receivables
(Note 28) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,421,354 32,996,102 38,406,699 47,982,254
– Loan receivables (Note 20) /H1118/H1118/H1118/H1118/H111821,508,527 14,832,050 15,272,230 15,435,153
– Other receivables (Note 18) /H1118/H1118/H1118/H1118/H11183,104,065 2,211,177 2,181,878 1,967,498
– Long-term receivables and futures
margin (Note 18) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,102,118 2,376,202 1,561,879 1,557,468
– Other Financial assets at
amortized cost (Note 23) /H1118/H1118/H1118/H1118/H1118/H111859,182,220 111,905,968 138,396,959 133,597,529
– Term deposits and restricted cash
(Note 29(b) ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,325,517 4,138,131 21,786,586 36,545,868
– Cash and cash equivalents
(Note 29(a) ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,550,039 51,131,968 59,887,260 64,252,371
APPENDIX I ACCOUNTANT’S REPORT
– I-79 –


--- page 528 ---
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Liabilities as per consolidated
statements of financial position
Financial liabilities at fair value
– Other financial liabilities at FVPL
(Note 34) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,580,771 1,346,674 1,174,016
– Derivative financial instruments
(Note 25) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166,649 314,539 415,504 657,081
Financial liabilities at amortized
cost:
– Trade and note payables
(Note 31) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111898,735,566 89,805,646 94,238,073 106,294,118
– Other payables (Note 33) /H1118/H1118/H1118/H1118/H1118/H11184,288,104 4,322,025 4,442,928 25,276,916
– Borrowings (Note 30) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,381,558 65,267,528 71,466,690 67,899,478
– Lease liabilities (Note 15) /H1118/H1118/H1118/H1118/H1118/H11182,394,055 2,499,622 3,214,220 3,156,662
23. OTHER FINANCIAL ASSETS AT AMORTIZED COST
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Constant Return Financial Products /H1118 59,182,220 111,905,968 138,396,959 133,597,529
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,485,395) (42,032,707) (79,121,387) (79,926,465)
23,696,825 69,873,261 59,275,572 53,671,064
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Constant Return Financial Products /H1118 44,441,413 96,541,144 119,584,362 111,575,701
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,019,381) (35,423,894) (70,880,635) (69,067,190)
11,422,032 61,117,250 48,703,727 42,508,511
As at 31 December 2021, 2022 and 2023 and 30 April 2024, constant return financial products of the Group
and the Company were mainly included term bank deposits with initial terms over one year, custom deposits and
certificates of deposits deposited in financial institutions, which were subsequently measured at amortized cost.
Certain other financial assets at amortized cost were pledged as guaranteed deposits for notes payables as at
31 December 2023 and 30 April 2024.
Other Financial assets at amortized cost is subject to the impairment assessment according to IFRS 9, the
identified impairment loss was immaterial as at 31 December 2021, 2022 and 2023 and 30 April 2024. Details are
disclosed in Note 3.1(b)(ii).
APPENDIX I ACCOUNTANT’S REPORT
– I-80 –


--- page 529 ---
24. OTHER FINANCIAL ASSETS AT FVPL AND FVOCI
(a) Other financial assets at FVPL
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Equity securities (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,912,873 6,348,556 5,687,591 5,402,552
Current:
– Structured deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,285,607 1,606,608 53,750 175,000
– Listed securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,319,470 1,264,595 1,726,584 1,400,190
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118274,125 413,390 10,254 10,295
5,879,202 3,284,593 1,790,588 1,585,485
11,792,075 9,633,149 7,478,179 6,988,037
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Equity securities (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118537,214 347,698 285,170 245,918
Current:
– Structured deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,050,005 – – –
– Listed securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118392,312 274,120 299,001 239,514
3,442,317 274,120 299,001 239,514
3,979,531 621,818 584,171 485,432
(a) Equity securities mainly comprise unlisted securities. The fair values of these equity securities are
measured using a valuation technique with unobservable inputs and hence classified as Level 3 of the
fair value hierarchy. The major assumptions used in the valuation refer to Note 3.3.
(b) Other Financial assets at FVOCI
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Equity securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,747 41,359 37,874 37,780
– Transferable certificate of
deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,893,935 11,094,259 6,319,047 6,197,249
7,939,682 11,135,618 6,356,921 6,235,029
Current:
– Transferable certificate of
deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,590,387 6,532,043 4,694,429 1,282,936
27,530,069 17,667,661 11,051,350 7,517,965
APPENDIX I ACCOUNTANT’S REPORT
– I-81 –


--- page 530 ---
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Transferable certificate of deposit /H1118 6,034,563 7,215,301 3,334,059 3,178,619
Current:
– Transferable certificate of deposit /H1118 19,095,262 5,236,623 4,049,224 630,279
25,129,825 12,451,924 7,383,283 3,808,898
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the cost of the Group’s and the Company’s
transferable certificate of deposits approximated its fair value.
Other financial assets at FVOCI is subject to the impairment requirements of IFRS 9, the identified impairment
loss was immaterial as at 31 December 2021, 2022 and 2023 and 30 April 2024. Details are disclosed in Note
3.1(b)(ii).
25. DERIV ATIVE FINANCIAL INSTRUMENTS
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Assets:
– Cross-currency interest rate swaps
– used for hedging (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,374,926 1,924,092 2,843,256
– Cross-currency interest rate swaps
– held for trading /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 901,762 1,213,625 1,740,912
– Foreign currency and futures
contracts – used for hedging (b) /H1118/H1118 752,950 86,967 392,593 339,285
– Others – held for trading (c) /H1118/H1118/H1118/H1118545,865 665,484 222,791 784,936
1,298,815 5,029,139 3,753,101 5,708,389
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118– (4,276,688) (2,082,347) (3,105,590)
1,298,815 752,451 1,670,754 2,602,799
Liabilities:
– Cross-currency interest rate swaps
– held for trading /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 20,895
– Foreign currency and futures
contracts – used for hedging (b) /H1118/H1118 9,047 79,933 155,554 182,870
– Others – held for trading (c) /H1118/H1118/H1118/H1118157,602 234,606 259,950 453,316
166,649 314,539 415,504 657,081
Less: Non-current portion /H1118/H1118/H1118/H1118/H1118/H1118– – (2,282) (20,573)
166,649 314,539 413,222 636,508
Derivatives are used for economic hedging purposes and not as speculative investments. However, where
derivatives do not meet the hedge accounting criteria, they are classified as “held for trading” for accounting purposes
and are accounted for at FVPL. The full fair value of hedging derivatives is classified as a non-current asset or
liability when the remaining maturity of the hedged item is more than 12 months. It is classified as a current asset
or liability when the remaining maturity of the hedged item is less than 12 months. For information about the methods
and assumptions used in determining the fair value of derivatives please refer to Note 3.3.
APPENDIX I ACCOUNTANT’S REPORT
– I-82 –


--- page 531 ---
(a) In 2022, the Group purchased cross-currency interest rate swap to mitigate the cash flow risk associated
with the guaranteed borrowings with principal of USD3,419,058,000. Under the swap, a nominal
amount of USD3,419,058,000 was exchanged for EUR at an agreed exchange rate, and the USD floating
rate (SOFR+0.55% p.a.) was exchanged for the agreed EUR fixed rate. The agreed swap period was
scheduled to start in August 2022 and end in August 2025. The Group designated such borrowings as
the hedged item, and the change in the value of cross-currency interest rate swap (excluding the foreign
currency basis spread) as the hedging instrument for cash flow hedge. There was an economic
relationship between the hedging instrument and the hedged item. The cross-currency interest rate swap
matched the currency, notional amount and other major terms of borrowings denominated in USD.
The Group included the effective part of the changes in fair value of the cross-currency interest rate
swap (excluding the foreign currency basis spread) in “Reserve – cash flow hedges reserve” and
transferred them from other comprehensive income to financial cost, net in the period in which the
hedging relationship affected profit or loss, in a bid to offset the effect of hedged item on profit or loss
for the current period. The changes in fair value of foreign currency basis spread were recorded in
“Reserve – Costs of hedging reserve” and the foreign currency basis spread was transferred from other
comprehensive income to financial cost, net in the period in which the hedging relationship affected
profit or loss.
(b) Foreign currency and futures contracts mainly included foreign currency forwards, foreign currency
options and futures contracts.
(c) Others mainly included foreign currency forwards, foreign currency options, futures contracts and
cross-currency swaps.
(d) The effects of applying hedge accounting on the Group’s reserve are as follows:
Cash flow hedge reserve
Cost of hedging
reserve
Cross-currency
interest rate
swaps Others
Total hedge
reserves
Opening balance
1 January 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 311,341 311,341
Add: Change in fair value
recognized in OCI /H1118/H1118/H1118/H1118/H1118/H1118– – 343,708 343,708
Less: Reclassified from OCI
to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (336,420) (336,420)
Less: Deferred tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (14,285) (14,285)
Closing balance
31 December 2021 /H1118/H1118/H1118/H1118/H1118/H1118– – 304,344 304,344
Add: Change in fair value of
hedging instrument
recognized in OCI /H1118/H1118/H1118/H1118/H1118/H1118– (651,358) 41,627 (609,731)
Add: Costs of hedging
deferred and recognized in
OCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118106,716 – – 106,716
Less: Reclassified from OCI
to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,834) 1,314,415 (342,112) 935,469
Less: Deferred tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 33,045 33,045
Closing balance
31 December 2022 /H1118/H1118/H1118/H1118/H1118/H111869,882 663,057 36,904 769,843
APPENDIX I ACCOUNTANT’S REPORT
– I-83 –


--- page 532 ---
Cash flow hedge reserve
Cost of hedging
reserve
Cross-currency
interest rate
swaps Others
Total hedge
reserves
Add: Change in fair value of
hedging instrument
recognized in OCI /H1118/H1118/H1118/H1118/H1118/H1118– (578,010) 167,862 (410,148)
Add: Costs of hedging
deferred and recognized in
OCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,911 – – 135,911
Less: Reclassified from OCI
to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(110,878) 286,281 (23) 175,380
Less: Deferred tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (11,314) (11,314)
Closing balance
31 December 2023 /H1118/H1118/H1118/H1118/H1118/H111894,915 371,328 193,429 659,672
Opening balance
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869,882 663,057 36,904 769,843
Add: Change in fair value of
hedging instrument
recognized in OCI /H1118/H1118/H1118/H1118/H1118/H1118– (638,209) (142,232) (780,441)
Add: Costs of hedging
deferred and recognized
in OCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,847 – – 10,847
Less: Reclassified from OCI
to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,297) 651,425 (21,081) 594,047
Less: Deferred tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 16,657 16,657
Closing balance
30 April 2023 (unaudited) /H1118 44,432 676,273 (109,752) 610,953
Opening balance
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,915 371,328 193,429 659,672
Add: Change in fair value of
hedging instrument
recognized in OCI /H1118/H1118/H1118/H1118/H1118/H1118– 1,271,351 173,542 1,444,893
Add: Costs of hedging
deferred and recognized
in OCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,546 – – 31,546
Less: Reclassified from OCI
to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,861) (1,071,492) (137,460) (1,245,813)
Less: Deferred tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (14,371) (14,371)
Closing balance
30 April 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111889,600 571,187 215,140 875,927
APPENDIX I ACCOUNTANT’S REPORT
– I-84 –


--- page 533 ---
26. INVENTORIES
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,636,462 34,753,459 35,291,863 28,852,990
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,592,914 8,675,143 8,572,689 9,641,426
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,406,866 2,519,241 3,170,699 2,524,293
Consigned processing materials /H1118/H1118/H1118/H1118596,531 427,838 444,995 446,144
Contract fulfilment costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118232,049 368,584 556,540 413,652
46,464,822 46,744,265 48,036,786 41,878,505
Less: Provision for impairment loss /H1118 (540,383) (699,368) (697,531) (760,652)
45,924,439 46,044,897 47,339,255 41,117,853
(i) The cost of inventories carried forward to the profit or loss during the year/period is mainly
recognized as the cost of revenue. The cost of inventories carried forward to the cost of revenue for the
years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024
amounted to approximately RMB264,561,559,000, RMB260,175,525,000, RMB272,756,390,000,
RMB98,602,057,000 and RMB105,744,012,000, respectively.
27. CONTRACT ASSETS
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contract assets (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,870,243 4,572,177 4,163,267 4,047,823
Less: allowance for credit losses /H1118/H1118/H1118(46,767) (73,221) (117,342) (110,602)
3,823,476 4,498,956 4,045,925 3,937,221
(i) Contract assets are mainly related to robotics and automation system construction service.
(a) Contract assets is subject to the impairment assessment according to IFRS 9, details are disclosed in
Note 3.1(b)(ii).
28. TRADE AND NOTE RECEIV ABLES AT AMORTIZED COST
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,495,619 29,570,582 34,367,460 44,618,742
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,816,538 4,819,885 5,587,562 4,975,310
30,312,157 34,390,467 39,955,022 49,594,052
Less: allowance for credit losses
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(859,179) (1,332,609) (1,482,721) (1,548,984)
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(31,624) (61,756) (65,602) (62,814)
(890,803) (1,394,365) (1,548,323) (1,611,798)
29,421,354 32,996,102 38,406,699 47,982,254
APPENDIX I ACCOUNTANT’S REPORT
– I-85 –


--- page 534 ---
(a) The Group has various credit policies for different business operations depending on the requirements of the
markets and businesses. The aging analysis of trade receivables based on the invoice date was as follows:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,985,394 24,927,697 29,183,011 39,339,270
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,638,277 1,627,320 2,047,141 2,362,524
Between 6 months and 1 year /H1118/H1118/H1118/H1118/H1118942,730 1,587,150 1,378,882 1,181,015
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118617,355 1,099,842 1,114,153 1,065,931
Over 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118311,863 328,573 644,273 670,002
25,495,619 29,570,582 34,367,460 44,618,742
There was no concentration of credit risk with respect to trade receivables, as the Group has a large number
of customers.
Certain trade and note receivables at amortized cost were pledged for bank loan facilities, notes receivable
discounted and notes payables as at 31 December 2021, 2022 and 2023 and 30 April 2024 respectively.
(b) The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9. Details
are disclosed in Note 3.1(b)(ii).
Movements on the provision for impairment of trade and note receivables at amortized cost are as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118876,920 890,803 1,394,365 1,394,365 1,548,323
Allowance for impairment /H1118 205,124 741,275 594,362 334,941 236,950
Written off and written
down /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(92,215) (55,411) (75,948) (4,961) (11,642)
Reversal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(88,658) (235,786) (402,822) (137,911) (202,140)
Exchange adjustment /H1118/H1118/H1118/H1118(10,368) 53,484 38,366 (280) 40,307
At the end of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118890,803 1,394,365 1,548,323 1,586,154 1,611,798
(c) The carrying amount of trade receivables approximated their fair values. The provision and reversal of
provision for impairment of receivables have been included in the consolidated statements of profit or loss.
Amounts charged to the allowance account are written off when there is no expectation of recovery.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables
mentioned above.
(d) Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. They are generally due for settlement within 60 days and are therefore all classified as current. Trade
receivables are recognized initially at the amount of consideration that is unconditional, unless they contain
significant financing components, when they are recognized at fair value. The Group holds the trade receivables with
the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost
using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss
allowance are provided in Note 3.1(b).
APPENDIX I ACCOUNTANT’S REPORT
– I-86 –


--- page 535 ---
29. CASH AND CASH EQUIV ALENTS, TERM DEPOSITS AND RESTRICTED CASH
(a) Cash and cash equivalents
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks and in hand /H1118/H1118/H1118/H1118/H1118/H1118/H111838,892,189 50,513,570 57,783,145 57,301,637
Short-term bank deposits with initial
terms within three months /H1118/H1118/H1118/H1118/H11181,384,901 446,004 1,956,144 6,137,852
Surplus reserve deposits with the
Central Bank /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118272,949 172,394 147,971 812,882
40,550,039 51,131,968 59,887,260 64,252,371
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks and in hand /H1118/H1118/H1118/H1118/H1118/H1118/H111821,957,042 27,904,229 29,283,158 32,932,756
(i) Classification as cash equivalents
For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents
includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the consolidated statements of financial position. Term deposits are presented as
cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with
24 hours’ notice with no loss of interest.
(b) Term deposits and restricted cash
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Term bank deposits (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,767,516 1,911,210 16,848,494 33,499,111
Guarantee deposits (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118443,893 1,688,278 4,072,963 2,033,671
Statutory reserve deposits with the
Central Bank for banking
operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118419,718 328,409 415,070 401,383
Interest receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118694,390 210,234 450,059 611,703
31,325,517 4,138,131 21,786,586 36,545,868
APPENDIX I ACCOUNTANT’S REPORT
– I-87 –


--- page 536 ---
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Term bank deposits (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,150,000 – – –
Guarantee deposits (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118381,737 588,172 977,444 1,303,456
Interest receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118665,218 – – 80,786
26,196,955 588,172 977,444 1,384,242
(i) Term bank deposits are bank deposits with original maturities over three months and due within one
year.
(ii) Guarantee deposits mainly included letter of bank acceptance notes, letters of guarantee and letters of
credit.
30. BORROWINGS
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
Current
Non-
current Total Current
Non-
current Total Current
Non-
current Total Current
Non-
current Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Secured
Bank loans (b) /H1118/H111828,771,097 14,716 28,785,813 588,853 – 588,853 3,094,159 152,966 3,247,125 6,817,970 143,637 6,961,607
Unsecured
Bank loans (c) /H1118/H11184,876,441 19,719,304 24,595,745 10,829,111 50,685,948 61,515,059 19,015,826 45,985,770 65,001,596 11,073,030 46,651,999 57,725,029
Debentures /H1118/H1118/H1118 –––– 3,163,616 3,163,616 – 3,217,969 3,217,969 – 3,212,842 3,212,842
Total unsecured
borrowings /H1118/H11184,876,441 19,719,304 24,595,745 10,829,111 53,849,564 64,678,675 19,015,826 49,203,739 68,219,565 11,073,030 49,864,841 60,937,871
Total borrowings /H111833,647,538 19,734,020 53,381,558 11,417,964 53,849,564 65,267,528 22,109,985 49,356,705 71,466,690 17,891,000 50,008,478 67,899,478
(a) As at 31 December 2021, 2022 and 2023 and 30 April 2024, the annual interest rate of short-term borrowings
were ranged from 0.41% to 9.75%, 1.40% to 15.45%, 2.20% to 7.04% and 2.80% to 28.50%, respectively.
As at 31 December 2021, 2022 and 2023 and 30 April 2024, the annual interest rate range of long-term
borrowings were ranged from 0.49% to 5.50%, 0.30% to 5.99%, 0.30% to 4.50% and 0.33% to 4.50%,
respectively.
(b) As at 31 December 2021, secured bank loans mainly included a mortgage borrowing with a principal
equivalent to approximately RMB26,617,999,000, pledged by 81.04% equity of KUKA Group. Interest was
paid on a semi-annual basis, and the principal was due in August 2022 and was reclassified to current liability
as at 31 December 2021.
(c) As at 31 December 2021, guaranteed bank borrowings mainly included: (i) borrowings with a principal
equivalent to approximately RMB1,956,539,000 guaranteed by the Company, with interest paid every quarter,
matured in April 2024; (ii) borrowings with a principal equivalent to approximately RMB3,849,126,000
guaranteed by the Company, with interest paid on a monthly basis, matured in May 2024; (iii) borrowings with
a principal equivalent to approximately RMB1,082,955,000 guaranteed by the Company, with interest paid on
a monthly basis, matured in June 2025.
APPENDIX I ACCOUNTANT’S REPORT
– I-88 –


--- page 537 ---
As at 31 December 2022, guaranteed bank borrowings mainly included: (i) borrowings with a principal
equivalent to approximately RMB2,011,606,000 guaranteed by the Company, interest is calculated at a fixed
rate with interest paid every quarter, matured in April 2024; (ii) borrowings with a principal equivalent to
approximately RMB4,415,556,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every month, matured in May 2024; (iii) borrowings with a principal equivalent to approximately
RMB1,165,874,000 guaranteed by the Company, interest is calculated at a floating rate with interest paid every
month, matured in June 2025; (iv) after deducting the bank fee, borrowings with a principal equivalent to
approximately RMB23,718,315,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every quarter, matured in August 2025; and (v) borrowings with a principal equivalent to
approximately RMB3,711,450,000 guaranteed by the Company, interest is calculated at a fixed rate with
interest paid every quarter, matured in May 2025.
As at 31 December 2023, guaranteed bank borrowings mainly included: (i) borrowings with a principal
equivalent to RMB2,129,843,000 guaranteed by the Company, interest is calculated at a fixed rate with interest
paid every quarter, matured in April 2024; (ii) borrowings with a principal equivalent to approximately
RMB4,490,432,000 guaranteed by the Company, interest is calculated at a floating rate with interest paid every
month, matured in May 2024; (iii) borrowings with a principal equivalent to approximately
RMB1,185,644,000 guaranteed by the Company, interest is calculated at a floating rate with interest paid every
month, matured in June 2025; (iv) after deducting the bank fee, borrowings with a principal equivalent to
approximately RMB24,157,339,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every quarter, matured in August 2025; and (v) borrowings with a principal equivalent to
approximately RMB3,929,600,000 guaranteed by the Company, interest is calculated at a fixed rate with
interest paid every quarter, matured in May 2025.
As at 30 April 2024, guaranteed bank borrowings mainly included: (i) borrowings with a principal equivalent
to approximately RMB4,505,394,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every month, matured in May 2024; (ii) borrowings with a principal equivalent to approximately
RMB1,189,595,000 guaranteed by the Company, interest is calculated at a floating rate with interest paid every
month, matured in June 2025; (iii) after deducting the bank fee, borrowings with a principal equivalent to
approximately RMB24,250,083,000 guaranteed by the Company, interest is calculated at a floating rate with
interest paid every quarter, matured in August 2025; (iv) borrowings with a principal equivalent to
approximately RMB3,822,900,000 guaranteed by the Company, interest is calculated at a fixed rate with
interest paid every quarter, matured in May 2025; and (v) borrowings with a principal equivalent to
approximately RMB2,750,000,000 guaranteed by the Company, interest is calculated at a fixed rate with
interest paid every quarter, matured in April 2027.
(d) At 31 December 2021 and 2022 and 2023 and 30 April 2024, the Group’s borrowings were repayable as
follows:
Borrowings
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,647,538 11,417,964 22,109,985 17,891,000
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,225,500 13,047,462 38,383,925 36,273,600
Between 2 and 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,508,520 40,802,102 10,839,625 13,601,723
Over 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 133,155 133,155
53,381,558 65,267,528 71,466,690 67,899,478
(e) Fair value
For the majority of the borrowings, the fair values are not materially different from their carrying amounts,
since either the interest payable on those borrowings is close to current market rates, or the borrowings are of a
short-term nature.
APPENDIX I ACCOUNTANT’S REPORT
– I-89 –


--- page 538 ---
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
Current
Non-
current Total Current
Non-
current Total Current
Non-
current Total Current
Non-
current Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Bank loans /H1118/H1118/H111890,000 12,509,900 12,599,900 5,890,000 15,619,900 21,509,900 7,019,900 16,600,000 23,619,900 2,419,900 14,600,000 17,019,900
31. TRADE AND NOTE PAYABLES
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note payables
– Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,983,559 64,233,225 72,530,465 83,048,129
– Notes payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,752,007 25,572,421 21,707,608 23,245,989
98,735,566 89,805,646 94,238,073 106,294,118
An aging analysis of the trade payables based on the invoice date as at the end of the reporting period was as
follows:
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,571,240 58,401,404 67,421,139 74,548,097
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,269,335 2,561,447 1,838,583 4,936,835
Between 6 months and 1 year /H1118/H1118/H1118/H1118/H11181,871,896 2,102,026 1,597,946 1,757,631
Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,271,088 1,168,348 1,672,797 1,805,566
65,983,559 64,233,225 72,530,465 83,048,129
32. CONTRACT LIABILITIES
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities
– advances on sales and services /H1118/H1118/H111821,319,800 25,143,337 38,549,278 32,430,882
– advances for construction projects /H1118 2,596,795 2,816,701 3,216,197 3,079,231
23,916,595 27,960,038 41,765,475 35,510,113
(i) More than 90% of contract liabilities included in the carrying amount as at 31 December 2021, 2022 and
2023, were transferred to operating revenue in following year/period.
(ii) For the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2024, more
than 4% of the revenue recognized relates to carried-forward contract liabilities.
APPENDIX I ACCOUNTANT’S REPORT
– I-90 –


--- page 539 ---
33. OTHER PAYABLES AND ACCRUALS
The Group
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Sales rebate accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,307,753 40,041,953 48,311,934 56,537,490
Marketing and transportation
expenses accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,689,733 6,118,002 7,908,952 9,915,737
Salaries, wages and benefits /H1118/H1118/H1118/H1118/H1118/H11189,360,184 8,640,673 10,509,901 7,082,501
Endorsed note receivables without
been derecognized and not yet
due /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,002,446 2,647,855 2,951,899 2,082,267
Other taxes payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,432,227 2,141,813 1,977,849 2,740,787
Other payables (a)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,288,104 4,322,025 4,442,928 25,276,916
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,217,234 10,031,244 12,789,011 12,034,977
65,297,681 73,943,565 88,892,474 115,670,675
Less: non-current portion
– Salaries, wages and benefits /H1118/H1118/H1118/H1118(1,825,016) (1,488,456) (1,433,874) (1,310,411)
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(998,260) (1,075,459) (819,422) (1,071,980)
62,474,405 71,379,650 86,639,178 113,288,284
(a) Other payables mainly comprise dividend payables, restricted stock repurchase obligations and deposits.
As at 30 April 2024, the dividend expected to be paid to the owners of the Company amounted to
RMB20,780,278,000, which was paid in May 2024.
The Company
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Payments payable to subsidiaries /H1118/H1118/H1118148,430,832 157,685,237 168,758,484 168,959,415
Dividend payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 20,780,278
Restricted share repurchase
obligations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,563,155 1,269,309 1,020,323 997,555
Taxes payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,184,813 718,181 411,715 357,868
Interest payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,027,834 597,500 628,620 759,537
Accrued expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835,932 77,066 147,552 83,809
Salaries, wages and employee
benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118420,536 173,824 169,349 76,581
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118428,734 401,305 286,523 310,821
153,091,836 160,922,422 171,422,566 192,325,864
34. OTHER FINANCIAL LIABILITIES AT FAIR V ALUE THROUGH PROFIT OR LOSS
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Liabilities to fund investors /H1118/H1118/H1118/H1118/H1118/H1118– 1,580,771 1,346,674 1,174,016
The Group controls a technology industry investment fund, which is a structured entity managed and invested
by the Group, as the Group has power over, is exposed to and has rights to variable returns from its involvement with
the fund and has the ability to affect those returns through its power over the fund.
For the amount raised from limited partners of the fund, the Group has contractual obligation to settle the
liability with the limited partners and the management designates it as a financial liability at FVPL.
APPENDIX I ACCOUNTANT’S REPORT
– I-91 –


--- page 540 ---
35. DEFERRED INCOME
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Government grant /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,228,459 1,721,092 1,734,932 1,696,417
36. SHARE CAPITAL AND SHARE HELD FOR EMPLOYEE SHARE SCHEME
(a) Share capital
Y ear ended 31 December
2021 2022
Share capital Number of shares Share capital Number of shares
(RMB’000) (’000) (RMB’000) (’000)
At the beginning of the year /H1118/H1118/H1118/H11187,029,976 7,029,976 6,986,564 6,986,564
Issue of shares under share schemes /H1118 34,437 34,437 18,602 18,602
Treasury shares cancelled under
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,873) (5,873) (7,893) (7,893)
Cancellation of shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(71,976) (71,976) – –
At the end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,986,564 6,986,564 6,997,273 6,997,273
Y ear ended 31 December 2023
Share capital Number of shares
(RMB’000) (’000)
At the beginning of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,997,273 6,997,273
Issue of shares under share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,490 38,490
Treasury shares cancelled under share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,994) (9,994)
At the end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,025,769 7,025,769
Four months ended 30 April
2023 2024
Share capital Number of shares Share capital Number of shares
(RMB’000) (’000) (RMB’000) (’000)
(unaudited) (unaudited)
At the beginning of the period /H1118/H1118/H11186,997,273 6,997,273 7,025,769 7,025,769
Issue of shares under share schemes /H1118 26,924 26,924 19,893 19,893
Treasury shares cancelled under
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,498) (2,498) (921) (921)
Cancellation of shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (69,808) (69,808)
At the end of the period /H1118/H1118/H1118/H1118/H1118/H1118/H11187,021,699 7,021,699 6,974,933 6,974,933
(i) The Capital Injection stated in the consolidated statements of changes in equity represents the increase
in shareholders’ equity resulted from share-based payments and contributions by minority shareholders
of subsidiaries.
APPENDIX I ACCOUNTANT’S REPORT
– I-92 –


--- page 541 ---
(b) Shares held for share schemes
As at 31 December As at 30 April
2021 2022 2023 2024
Shares held for share schemes
(’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118194,529 213,279 174,179 103,450
Details Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(unaudited)
At the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118116,284 194,529 213,279 213,279 174,179
Repurchased shares (’000) /H1118/H1118/H1118100,000 48,559 – – –
Exercised shares (’000) /H1118/H1118/H1118/H1118/H1118(15,882) (20,200) (26,151) – –
Lapsed shares (’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,873) (9,609) (12,949) (2,498) (921)
Cancellation of shares (’000) /H1118 –––– (69,808)
At the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118194,529 213,279 174,179 210,781 103,450
37. TREASURY SHARES
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,094,347 14,044,550 14,933,944 14,933,944 12,871,738
Repurchase of shares for
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H11188,665,148 2,637,02 1–––
Repurchase of shares (to
be cancelled) /H1118/H1118/H1118/H1118/H1118/H1118/H11185,000,59 6––––
Cancellation of shares /H1118/H1118/H1118(5,000,596) – – – (5,159,408)
Treasury shares transferred
to the grantees or
cancelled under share
schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(714,945) (1,747,627) (2,062,206) (148,456) (60,596)
At the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,044,550 14,933,944 12,871,738 14,785,488 7,651,734
(i) In 2021, the Group’s repurchased treasury stock amounting to approximately RMB13,665,744,000. As
at 31 December 2021, treasury stock mainly comprised treasury stock of approximately
RMB9,662,644,000 used for share schemes, as well as restricted share incentive schemes and stock
ownership schemes amounting to approximately RMB4,381,906,000 that have not met vesting
condition, amounting to approximately RMB14,044,550,000 in total.
(ii) In 2022, the Group’s repurchased treasury stock amounting to approximately RMB2,637,021,000. As at
31 December 2022, treasury stock mainly comprised treasury stock of approximately
RMB10,837,824,000 used for share schemes, as well as restricted share incentive schemes and stock
ownership schemes amounting to approximately RMB4,096,120,000 that have not met vesting
condition, amounting to approximately RMB14,933,944,000 in total.
APPENDIX I ACCOUNTANT’S REPORT
– I-93 –


--- page 542 ---
(iii) As at 31 December 2023, treasury stock mainly comprised treasury stock of approximately
RMB8,748,331,000 used for share schemes, as well as restricted share incentive schemes and stock
ownership schemes amounting to approximately RMB4,123,407,000 that have not met vesting
condition, amounting to approximately RMB12,871,738,000 in total.
(iv) As at 30 April 2024, treasury stock mainly comprised treasury stock of approximately
RMB3,588,924,000 used for share schemes, as well as restricted share incentive schemes and stock
ownership schemes amounting to approximately RMB4,062,810,000 that have not met vesting
condition, amounting to approximately RMB7,651,734,000 in total.
(v) Pursuant to the resolutions of shareholder’s meeting on 29 January 2024, the use of 69,808,000
repurchased shares have been changed from used for share schemes to cancel and reduce the Company’s
registered capital. On 7 February 2024, the 69,808,000 repurchased shares have been cancelled, the
Company recognized a decrease of RMB69,808,000 in share capital, RMB5,159,408,000 in treasury
shares and RMB5,089,600,000 in reserves.
38. RETAINED EARNINGS
The Group
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111887,057,702 102,979,342 119,675,616 119,675,616 136,282,362
Net profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,586,980 29,553,342 33,721,536 11,995,920 13,461,205
Transfer from other
comprehensive income
(Note 39) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,866 (1,351) – – –
Dividends (Note 12) /H1118/H1118/H1118/H1118(11,052,729) (11,652,025) (17,144,264) 7,242 (20,776,352)
Appropriation to general
reserves (Note 39) /H1118/H1118/H1118/H1118(131,938) – (19,678) – (98,266)
Reversal of general
reserves (Note 39) /H1118/H1118/H1118/H1118– 47,923 49,152 9,699 3,385
Appropriation to statutory
reserves (Note 39) /H1118/H1118/H1118/H1118(1,483,539) (1,253,027) – – –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,41 2–––
At the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,979,342 119,675,616 136,282,362 131,688,477 128,872,334
The Company
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,795,178 28,094,390 27,719,633 27,719,633 27,901,530
Net profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,835,480 12,530,295 17,326,161 451,165 480,215
Dividends (Note 12) /H1118/H1118/H1118/H1118(11,052,729) (11,652,025) (17,144,264) 7,242 (20,776,352)
Appropriation to statutory
reserves (Note 39) /H1118/H1118/H1118/H1118(1,483,539) (1,253,027) – – –
At the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,094,390 27,719,633 27,901,530 28,178,040 7,605,393
APPENDIX I ACCOUNTANT’S REPORT
– I-94 –


--- page 543 ---
39. RESERVES
The Group
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 /H1118/H1118/H1118/H1118/H1118/H11181,414,842 18,185,028 7,966,362 587,984 12,730 311,341 (1,793,971) 2,821,757 29,506,073
Appropriation to statutory
reserves (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,483,539 ––––– 1,483,539
Appropriation to general
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 131,938 –––– 131,938
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 2,812 – – – 2,812
Cancellation of shares /H1118/H1118/H1118/H1118/H1118– (4,928,620) –––––– (4,928,620)
Share-based payment:
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,516,039 ––––––– 1,516,039
– Exercise of the stock option /H1118(325,915) 1,495,004 –––––– 1,169,089
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118(443,612) 193,502 –––––– (250,110)
Share of OCI of investments in
associates, net of tax /H1118/H1118/H1118/H1118/H1118––––––– (3,032) (3,032)
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– (6,997) – – (6,997)
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– (7,172) (7,172)
Other financial assets at FVOCI,
net of tax
– Fair value changes /H1118/H1118/H1118/H1118/H1118/H1118––––––– 4 2 4 4 2 4
– Other comprehensive income
transfer to retained earnings /H1118 ––––––– (2,866) (2,866)
Transaction with NCI
(Note (44)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 100,012 100,012
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (189,887) – (189,887)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 422,415 422,415
At 31 December 2021 /H1118/H1118/H1118/H1118/H11182,161,354 14,944,914 9,449,901 719,922 15,542 304,344 (1,983,858) 3,331,538 28,943,657
APPENDIX I ACCOUNTANT’S REPORT
– I-95 –


--- page 544 ---
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H11182,161,354 14,944,914 9,449,901 719,922 15,542 304,344 (1,983,858) 3,331,538 28,943,657
Appropriation to statutory
reserves (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,253,027 ––––– 1,253,027
Reversal of general reserves /H1118/H1118 – – – (47,923) –––– (47,923)
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 3,313 – – – 3,313
Special reserves utilization /H1118/H1118/H1118 –––– (2,505) – – – (2,505)
Share-based payment:
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118983,367 ––––––– 983,367
– Exercise of the stock option /H1118(217,453) 1,123,649 –––––– 906,196
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118(648,160) (560,986) –––––– (1,209,146)
Share of OCI of investments in
associates, net of tax /H1118/H1118/H1118/H1118/H1118––––––– 17,391 17,391
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– 395,617 – – 395,617
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– 69,882 – – 69,882
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– 208,349 208,349
Other financial assets at FVOCI,
net of tax
– Fair value changes /H1118/H1118/H1118/H1118/H1118/H1118––––––– (892) (892)
– Other comprehensive income
transfer to retained earnings /H1118 ––––––– 1,351 1,351
Transaction with NCI
(Note (44)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– (1,513,804) (1,513,804)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– 1,175,615 – 1,175,615
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 9,596 9,596
At 31 December 2022 /H1118/H1118/H1118/H1118/H11182,279,108 15,507,577 10,702,928 671,999 16,350 769,843 (808,243) 2,053,529 31,193,091
APPENDIX I ACCOUNTANT’S REPORT
– I-96 –


--- page 545 ---
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H11182,279,108 15,507,577 10,702,928 671,999 16,350 769,843 (808,243) 2,053,529 31,193,091
Appropriation to general
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 19,678 –––– 19,678
Reversal of general reserves /H1118/H1118 – – – (49,152) –––– (49,152)
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 7,227 – – – 7,227
Special reserves utilization /H1118/H1118/H1118 –––– (7,537) – – – (7,537)
Share-based payment:
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,208,095 ––––––– 1,208,095
– Exercise of the stock option /H1118(536,639) 2,317,783 –––––– 1,781,144
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118(929,959) (443,137) –––––– (1,373,096)
Share of OCI of investments in
associates and joint ventures
and OCI reclassified to profit
and loss, net of tax /H1118/H1118/H1118/H1118/H1118––––––– 7,751 7,751
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– (135,204) – – (135,204)
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– 25,033 – – 25,033
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– (87,280) (87,280)
Other financial assets at FVOCI,
net of tax
– Fair value changes /H1118/H1118/H1118/H1118/H1118/H1118––––––– 1,516 1,516
Transaction with NCI
(Note (44)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– (54,307) (54,307)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (84,370) – (84,370)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– ( 1 1,819) (11,819)
At 31 December 2023 /H1118/H1118/H1118/H1118/H11182,020,605 17,382,223 10,702,928 642,525 16,040 659,672 (892,613) 1,909,390 32,440,770
APPENDIX I ACCOUNTANT’S REPORT
– I-97 –


--- page 546 ---
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H11182,279,108 15,507,577 10,702,928 671,999 16,350 769,843 (808,243) 2,053,529 31,193,091
Reversal of general reserves /H1118/H1118 – – – (9,699) –––– (9,699)
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 9 2 9––– 9 2 9
Special reserves utilization /H1118/H1118/H1118 –––– (497) – – – (497)
Share-based payment:
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118486,402 ––––––– 486,402
– Exercise of the stock option /H1118(364,647) 1,630,681 –––––– 1,266,034
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118– (89,058) –––––– (89,058)
Share of OCI of investments in
associates and joint ventures,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 17,318 17,318
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– (133,440) – – (133,440)
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– (25,450) – – (25,450)
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– (5,539) (5,539)
Transaction with NCI
(Note (44)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– (57,475) (57,475)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (415,585) – (415,585)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– (133) (133)
At 30 April 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11182,400,863 17,049,200 10,702,928 662,300 16,782 610,953 (1,223,828) 2,007,700 32,226,898
APPENDIX I ACCOUNTANT’S REPORT
– I-98 –


--- page 547 ---
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H11182,020,605 17,382,223 10,702,928 642,525 16,040 659,672 (892,613) 1,909,390 32,440,770
Appropriation to general
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 98,266 –––– 98,266
Reversal of general reserves /H1118/H1118 – – – (3,385) –––– (3,385)
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 1,602 – – – 1,602
Special reserves utilization /H1118/H1118/H1118 –––– (758) – – – (758)
Cancellation of shares /H1118/H1118/H1118/H1118/H1118– (5,089,600) –––––– (5,089,600)
Share-based payment:
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118539,944 ––––––– 539,944
– Exercise of the stock option /H1118(299,300) 1,183,840 –––––– 884,540
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118– (63,601) –––––– (63,601)
Share of OCI of investments in
associates and joint ventures,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 12,450 12,450
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– 221,570 – – 221,570
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– (5,315) – – (5,315)
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– 12,860 12,860
Other financial assets at FVOCI,
net of tax
– Fair value changes /H1118/H1118/H1118/H1118/H1118/H1118––––––– 1 2 1 2
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– (282,905) – (282,905)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 5 5 5 5
At 30 April 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H11182,261,249 13,412,862 10,702,928 737,406 16,884 875,927 (1,175,518) 1,934,767 28,766,505
APPENDIX I ACCOUNTANT’S REPORT
– I-99 –


--- page 548 ---
The Company
Share-based
payments
reserves Share premium
Statutory
reserves Other reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 /H1118/H1118/H1118/H1118/H11181,991,079 27,137,117 7,966,362 (20,658) 37,073,900
Appropriation to statutory
reserves (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,483,539 – 1,483,539
Cancellation of shares /H1118/H1118/H1118 – (4,928,620) – – (4,928,620)
Share-based payment:
– Share-based
compensation expenses /H1118 1,557,204 – – – 1,557,204
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(325,915) 1,495,004 – – 1,169,089
– Exercise or lapse of
other share schemes /H1118/H1118/H1118(443,612) 193,502 – – (250,110)
Share of OCI of
investments in
associates, net of tax /H1118/H1118/H1118 – – – 8,714 8,714
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 434,043 434,043
At 31 December 2021 /H1118/H1118/H11182,778,756 23,897,003 9,449,901 422,099 36,547,759
At 1 January 2022 /H1118/H1118/H1118/H1118/H11182,778,756 23,897,003 9,449,901 422,099 36,547,759
Appropriation to statutory
reserves (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,253,027 – 1,253,027
Share-based payment:
– Share-based
compensation expenses /H1118 1,014,631 – – – 1,014,631
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(217,453) 1,116,321 – – 898,868
– Exercise or lapse of
other share schemes /H1118/H1118/H1118(648,160) (560,986) – – (1,209,146)
Share of OCI of
investments in
associates, net of tax /H1118/H1118/H1118 – – – 1,616 1,616
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 16,702 16,702
At 31 December 2022 /H1118/H1118/H11182,927,774 24,452,338 10,702,928 440,417 38,523,457
At 1 January 2023 /H1118/H1118/H1118/H1118/H11182,927,774 24,452,338 10,702,928 440,417 38,523,457
Share-based payment:
– Share-based
compensation expenses /H1118 1,244,929 – – – 1,244,929
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(536,639) 2,317,783 – – 1,781,144
– Exercise or lapse of
other share schemes /H1118/H1118/H1118(929,959) (445,614) – – (1,375,573)
Share of OCI of
investments in associates
and joint ventures, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (960) (960)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 2,472 2,472
At 31 December 2023 /H1118/H1118/H11182,706,105 26,324,507 10,702,928 441,929 40,175,469
APPENDIX I ACCOUNTANT’S REPORT
– I-100 –


--- page 549 ---
Share-based
payments
reserves Share premium
Statutory
reserves Other reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At 1 January 2023 /H1118/H1118/H1118/H1118/H11182,927,774 24,452,338 10,702,928 440,417 38,523,457
Share-based payment:
– Share-based
compensation expenses /H1118 496,94 0––– 496,940
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(364,647) 1,630,681 – – 1,266,034
– Exercise or lapse of
other share schemes /H1118/H1118/H1118 – (89,058) – – (89,058)
Share of OCI of
investments in associates
and joint ventures, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 12,639 12,639
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (41) (41)
At 30 April 2023 /H1118/H1118/H1118/H1118/H1118/H11183,060,067 25,993,961 10,702,928 453,015 40,209,971
At 1 January 2024 /H1118/H1118/H1118/H1118/H11182,706,105 26,324,507 10,702,928 441,929 40,175,469
Cancellation of shares /H1118/H1118/H1118 – (5,089,600) – – (5,089,600)
Share-based payment:
– Share-based
compensation expenses /H1118 552,92 6––– 552,926
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(299,300) 1,183,840 – – 884,540
– Exercise or lapse of
other share schemes /H1118/H1118/H1118 – (63,601) – – (63,601)
Share of OCI of
investments in associates
and joint ventures, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 997 997
At 30 April 2024 /H1118/H1118/H1118/H1118/H1118/H11182,959,731 22,355,146 10,702,928 442,926 36,460,731
(a) In accordance with the Company Law of the People’s Republic of China and the Company’s Articles of
Association, the Company should appropriate 10% of net profit for the year to the statutory reserves,
and the Company can cease appropriation when the statutory reserves accumulated to more than 50%
of the registered capital. The statutory reserves can be used to make up for the losses or increase the
share capital after approval from the appropriate authorities.
According to a resolution at the Board of Directors’ meeting, the Company appropriated 10% of net
profit for the year, amounting to approximately RMB1,483,539,000 and RMB1,253,027,000 to the
statutory reserves, respectively, for the years ended 31 December 2021 and 2022.
APPENDIX I ACCOUNTANT’S REPORT
– I-101 –


--- page 550 ---
40. SHARE-BASED PAYMENT
Equity-Settled shared-based payment arrangement
(i) Stock Option Incentive Plans
Pursuant to the eighth stock option incentive plan (the “Eighth Stock Option Incentive Plan”) approved at the
2020 annual shareholders’ meeting on 21 May 2021, the Company granted 82,260,000 share options to 1,897
incentive participants. The grant date was 4 June 2021, and the exercise price was RMB81.41 per share. The vesting
periods for the Eighth Stock Option Incentive Plan are 2 years, 3 years and 4 years from the grant date. According
to the Company’s performance appraisal and individual performance appraisal, 30%, 30% and 40% of shares will be
exercisable respectively.
Pursuant to the ninth stock option incentive plan (the “Ninth Stock Option Incentive Plan”) approved at the
2021 annual shareholders’ meeting on 20 May 2022, the Company granted 107,693,000 share options to 2,813
incentive participants. The grant date was 8 June 2022, and the exercise price was RMB54.61 per share. The vesting
periods for the Ninth Stock Option Incentive Plan are 2 years, 3 years and 4 years from the grant date. According
to the Company’s performance appraisal and individual performance appraisal, 30%, 30% and 40% of shares will be
exercisable respectively.
Based on fair value of the underlying ordinary shares of the Company, the Group has used Black-Scholes
Model to determine the fair value of the share option as at the grant date. Key assumptions are set as below:
Eighth Stock Option
Incentive Plan
Ninth Stock Option
Incentive Plan
Exercise price: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB81.41 RMB54.61
Effective period: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years 5 years
Current price of underlying shares: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118RMB77.73 RMB52.99
Estimated fluctuation rate of share price: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835.78% 35.70%
Estimated dividend rate: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.42% 2.17%
Risk-free interest rate within effective period: /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.34% 2.00%
The fair value of granted shares was RMB1,457,678,000 and RMB1,334,978,000 for the Eighth Stock Option
Incentive Plan and Ninth Stock Option Incentive Plan, respectively.
Y ear ended 31 December
2021 2022
Average exercise
price per share
option
Number of
options
Average exercise
price per share
option
Number of
options
(RMB) (’000) (RMB) (’000)
Outstanding as at the beginning
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849.54 168,231 64.26 198,770
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881.41 82,260 54.61 107,693
Exercised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838.91 (34,437) 52.76 (18,602)
Lapsed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853.11 (17,284) 52.28 (12,313)
Outstanding as at the end
of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864.26 198,770 61.80 275,548
APPENDIX I ACCOUNTANT’S REPORT
– I-102 –


--- page 551 ---
Y ear ended 31 December
2023
Average exercise price
per share option Number of options
(RMB) (’000)
Outstanding as at the beginning of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861.80 275,548
Exercised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852.40 (38,490)
Lapsed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873.56 (48,900)
Outstanding as at the end of the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860.66 188,158
Four months ended 30 April
2023 2024
Average exercise
price per share
option
Number of
options
Average exercise
price per share
option
Number of
options
(RMB) (’000) (RMB) (’000)
(unaudited) (unaudited)
Outstanding as at the beginning
of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861.80 275,548 60.66 188,158
Exercised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852.45 (26,924) 52.28 (19,893)
Outstanding as at the end
of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862.81 248,624 61.65 168,265
Share options outstanding at the end of the year/period have the following expiry date and exercise prices:
Grant Date Expiry date
Exercise
price (a)
Share options
As at 31 December
As at
30 April
2021 2022 2023 2024
(’000) (’000) (’000) (’000)
7 May 2018 /H1118/H1118/H11186 May 2024 56.34 24,669 16,401 4,883 62
11 March 2019 /H111810 March 2025 47.17 3,936 2,641 1,409 1,010
30 May 2019 /H1118/H111829 May 2025 52.87 34,171 25,352 13,341 9,441
5 June 2020 /H1118/H1118/H11184 June 2024 50.43 54,254 41,721 15,047 4,274
4 June 2021 /H1118/H1118/H11183 June 2026 81.41 81,740 81,740 45,785 45,785
8 June 2022 /H1118/H1118/H11187 June 2027 54.61 – 107,693 107,693 107,693
198,770 275,548 188,158 168,265
(a) According to the stock option incentive plans, the exercise prices shall be adjusted in accordance with
relevant matters between the grant date and the exercise date, including but not limited to the dividends
distribution.
The weighted-average remaining contract life for outstanding share options was 3.42 years, 3.29 years, 2.71
years and 2.62 years as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively.
(ii) Restricted Share Incentive Schemes
Pursuant to the restricted shares incentive scheme for 2021 approved at the 2020 annual shareholders’ meeting
on 21 May 2021 (the “2021 Restricted Shares Incentive Scheme”), the Company granted 9,940,000 restricted shares
to 139 incentive participants. The grant date was 4 June 2021, and the granted price was RMB39.92 per share. The
vesting periods for restricted shares granted are 2 years, 3 years and 4 years from the grant date. According to the
Company’s performance appraisal and individual performance appraisal, 30%, 30% and 40% of restricted shares will
be vested respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-103 –


--- page 552 ---
Pursuant to the restricted shares incentive scheme for 2022 approved at the 2021 annual shareholders’ meeting
on 20 May 2022 (the “2022 Restricted Shares Incentive Scheme”), the Company granted 12,152,500 restricted shares
to 191 incentive participants. The grant date was 8 June 2022, and the granted price was RMB26.47 per share. The
vesting periods for restricted shares granted are 2 years, 3 years and 4 years from the grant date. According to the
Company’s performance appraisal and individual performance appraisal, 30%, 30% and 40% of restricted shares will
be vested respectively.
Pursuant to the restricted shares incentive scheme for 2023 approved at the 2022 annual shareholders’ meeting
on 19 May 2023 (the “2023 Restricted Shares Incentive Scheme”), the Company granted 18,325,000 restricted shares
to 415 incentive participants. The grant date was 20 June 2023, and the granted price was RMB25.89 per share. The
vesting periods for restricted shares granted are 1 year, 2 years and 3 years from the grant date. According to the
Company’s performance appraisal and individual performance appraisal, 40%, 30% and 30% of restricted shares will
be vested respectively.
The number of restricted shares granted to the Group’s incentive participants is summarized as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
(’000) (’000) (’000) (’000) (’000)
(unaudited)
Outstanding as at the beginning of
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874,082 62,267 50,211 50,211 39,903
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,940 12,153 18,325 – –
V ested /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(15,882) (16,316) (18,639) – –
Lapsed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,873) (7,893) (9,994) (2,498) (921)
Outstanding as at the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,267 50,211 39,903 47,713 38,982
The Group determines the fair value of restricted shares on the basis of the single-day closing price of the
circulating shares on the date when the equity instruments are granted, less the exercise price.
The fair value of granted shares was RMB393,602,000, RMB330,174,000 and RMB580,719,000 for the
Restricted Shares Incentive Scheme for 2021, Restricted Shares Incentive Scheme for 2022 and Restricted Shares
Incentive Scheme for 2023, respectively.
(iii) Stock Ownership Schemes
Pursuant to the Seventh Global Partner Stock Ownership Scheme approved at the 2020 annual shareholders’
meeting on 21 May 2021, the Company granted 2,437,000 shares to incentive participants. The grant date was 21 May
2021, and the granted price was RMB82.70 per share. The vesting periods for employee shares granted are 1 year,
2 years and 3 years from the grant date. According to the Company’s performance appraisal and individual
performance appraisal, 40%, 30% and 30% of employee shares plan will be vested respectively.
Pursuant to the Fourth Core Management Team Stock Ownership Scheme approved at the 2020 annual
shareholders’ meeting on 21 May 2021, the Company granted 1,986,000 shares to incentive participants. The vesting
periods for employee shares granted are 1 year, 2 years and 3 years from the grant date. According to the Company’s
performance appraisal and individual performance appraisal, 40%, 30% and 30% of employee shares plan will be
vested respectively.
Pursuant to the Eighth Global Partner Stock Ownership Scheme approved at the 2021 annual shareholders’
meeting on 20 May 2022, the Company granted 3,770,000 shares to incentive participants. The vesting periods for
employee shares granted are 1 year, 2 years and 3 years from the grant date. According to the Company’s performance
appraisal and individual performance appraisal, 40%, 30% and 30% of employee shares plan will be vested
respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-104 –


--- page 553 ---
Pursuant to the Fifth Core Management Team Stock Ownership Scheme approved at the 2021 annual
shareholders’ meeting on 20 May 2022, the Company granted 2,827,000 shares to incentive participants. The vesting
periods for employee shares granted are 1 year, 2 years and 3 years from the granted date. According to the
Company’s performance appraisal and individual performance appraisal, 40%, 30% and 30% of employee shares plan
will be vested respectively.
Pursuant to the 2023 Stock Ownership Scheme approved at the 2022 annual shareholders’ meeting on 19 May
2023, the Company granted 9,946,000 shares to incentive participants. The vesting periods for employee shares
granted are 1 year, 2 years and 3 years from the granted date. According to the Company’s performance appraisal and
individual performance appraisal, 40%, 30% and 30% of employee shares plan will be vested respectively.
Pursuant to the 2024 Stock Ownership Scheme approved at the 2023 annual shareholders’ meeting on 19 April
2024, the Company granted 20,107,000 shares to incentive participants. The vesting periods for employee shares
granted are 2 years, 3 years and 4 years from the granted date. According to the Company’s performance appraisal
and individual performance appraisal, 40%, 30% and 30% of employee shares plan will be vested respectively.
The granted shares of stock ownership scheme are derived from the shares repurchased from the secondary
market under the special securities account of the Company. The Group determines the fair value of the shares on
the basis of the single-day closing price of the circulating shares on the date when the equity instruments are granted,
less the exercise price.
The fair value of granted shares were RMB201,500,000, RMB212,200,000, RMB564,849,000 and
RMB1,347,548,000 for Seventh Global Partner Stock Ownership Scheme, Eighth Global Partner Stock Ownership
Scheme, 2023 Stock Ownership Scheme and 2024 Stock Ownership Scheme, respectively. The fair value of granted
shares were RMB164,210,000 and RMB159,090,000 for the Fourth Core Management Team Stock Ownership
Scheme and the Fifth Core Management Team Stock Ownership Scheme, respectively.
(iv) Share-based compensation expenses
The expense arising from equity-settled share-based payments for the years ended 31 December 2021, 2022
and 2023 and the four months ended 30 April 2023 and 2024 were RMB1,578,070,000, RMB1,028,950,000,
RMB1,245,456,000, RMB499,661,000 and RMB556,320,000, respectively.
An accumulated amount of RMB2,161,354,000, RMB2,279,108,000, RMB2,020,605,000, RMB2,400,863,000
and RMB2,261,249,000 respectively, for the years ended 31 December 2021, 2022 and 2023 and the four months
ended 30 April 2023 and 2024 has been recognized as share-based payments reserves.
41. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Reconciliation of profit before income tax to net cash generated from operations:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit before income tax for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,738,737 34,958,466 40,279,324 14,354,961 16,232,066
Adjustments for:
Interest income (Note (6)) /H1118/H1118/H1118/H1118/H1118(4,780,157) (5,081,372) (5,977,068) (1,858,654) (1,926,114)
Finance cost – net (Note (10)) /H1118/H1118898,055 1,109,247 2,287,559 876,171 (104,987)
Depreciation and amortization of
non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,491,339 6,505,385 7,346,760 2,249,171 2,526,356
Net (gains)/losses on disposal of
property, plant and equipment
and other non-current assets
(Note (7)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,257) 59,854 60,868 (12,331) (72,859)
Net impairment losses on
financial assets and contract
assets (Note (3.1)(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118384,501 538,108 235,002 179,526 56,212
APPENDIX I ACCOUNTANT’S REPORT
– I-105 –


--- page 554 ---
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Impairment provision for
investments in associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 6,179 – – –
Impairment provision for
inventories and other assets /H1118/H1118/H1118482,370 502,762 403,399 202,343 218,570
Share of profit of associates and
joint ventures, net (Note (21)) /H1118 (560,679) (608,278) (680,759) (224,055) (239,455)
Net (gains)/losses on financial
instruments (Note (7)) /H1118/H1118/H1118/H1118/H1118/H1118(1,731,713) 519,286 262,395 (5,092) (79,239)
Net losses on other assets /H1118/H1118/H1118/H1118/H111893,025 132,109 181,295 2,827 (352)
Net foreign exchange
losses/(gains) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118485,220 (288,492) 17,251 66,853 241,798
Share-based compensation
expenses and others /H1118/H1118/H1118/H1118/H1118/H1118/H11181,578,169 1,028,950 1,261,836 496,220 556,038
Changes in working capital:
Increase in trade and note
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,022,166) (10,141,150) (8,012,781) (11,510,261) (18,611,026)
(Increase)/decrease in contract
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(670,733) (269,229) 547,562 (54,829) 39,118
(Increase)/decrease in loan
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,065,830) 6,665,275 (333,006) (2,172,095) (194,209)
(Increase)/decrease in
inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(15,201,834) (423,933) 206,064 13,880,552 5,898,851
Increase/(decrease) in trade and
note payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,081,493 (9,089,349) 1,989,270 (10,096,786) 12,092,542
Increase/(decrease) in contract
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,424,503 2,573,501 12,251,616 (2,679,505) (6,000,934)
Increase in other payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,436,864 13,543,384 14,174,995 10,307,784 6,987,753
Changes in other assets and
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118545,303 (784,537) (1,949,716) 162,765 2,085,923
Cash generated from operations /H1118/H111840,548,210 41,456,166 64,551,866 14,165,565 19,706,052
(b) Non-cash activities
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Purchase of inventories and long-
term assets by bank acceptance
notes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,462,970 55,682,577 65,413,361 20,258,441 19,825,947
Addition of right-of-use assets /H1118/H11183,628,730 1,784,120 3,044,727 683,532 520,978
66,091,700 57,466,697 68,458,088 20,941,973 20,346,925
APPENDIX I ACCOUNTANT’S REPORT
– I-106 –


--- page 555 ---
(c) Net debt reconciliation
Liabilities from financing activities
Bank borrowings
and others Debentures Leases liabilities Total
At 1 January 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,243,062 3,030,785 2,492,539 64,766,386
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,191,548) (3,000,371) (1,210,462) (6,402,381)
Operating cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118178,878 – – 178,878
Interest paid for borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,328,444) (72,342) – (1,400,786)
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,420 3,420
Interest expense accrued /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,210,733 41,928 111,745 1,364,406
Other non-cash movements (i) /H1118/H1118/H1118/H1118/H1118/H1118(3,587,612) – 996,813 (2,590,799)
At 31 December 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,525,069 – 2,394,055 55,919,124
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,525,069 – 2,394,055 55,919,124
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,555,533 2,844,696 (1,102,503) 7,297,726
Operating cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(178,878) – – (178,878)
Interest paid for borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,696,802) (86,510) – (1,783,312)
Interest expense accrued /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,600,220 118,922 111,773 1,830,915
Other non-cash movements (i) /H1118/H1118/H1118/H1118/H1118/H11183,545,368 286,508 1,096,297 4,928,173
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,350,510 3,163,616 2,499,622 68,013,748
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,350,510 3,163,616 2,499,622 68,013,748
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,274,059 (500,000) (1,430,001) (655,942)
Interest paid for borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,002,477) (119,177) – (2,121,654)
Acquisition of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,425,076 522,497 56,876 4,004,449
Interest expense accrued /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,559,961 96,809 151,334 2,808,104
Other non-cash movements (i) /H1118/H1118/H1118/H1118/H1118/H1118880,697 54,224 1,936,389 2,871,310
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868,487,826 3,217,969 3,214,220 74,920,015
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,350,510 3,163,616 2,499,622 68,013,748
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,476,492 – (473,030) 10,003,462
Interest paid for borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(400,944) (43,616) – (444,560)
Interest expense accrued /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118759,284 28,843 37,238 825,365
Other non-cash movements (i) /H1118/H1118/H1118/H1118/H1118/H1118(474,456) (19,398) 590,151 96,297
At 30 April 2023 (unaudited) /H1118/H1118/H1118/H1118/H1118/H111872,710,886 3,129,445 2,653,981 78,494,312
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868,487,826 3,217,969 3,214,220 74,920,015
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,450,038) – (462,457) (3,912,495)
Interest paid for borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(395,627) (46,277) – (441,904)
Interest expense accrued /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118577,438 30,162 49,871 657,471
Other non-cash movements (i) /H1118/H1118/H1118/H1118/H1118/H1118(121,325) 10,988 355,028 244,691
At 30 April 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,098,274 3,212,842 3,156,662 71,467,778
(i) The other non-cash movement included borrowings mainly resulted from currency translation
differences and lease liability mainly resulted from the new leases contract entered during the years
ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-107 –


--- page 556 ---
42. BUSINESS COMBINATIONS
(a) Acquisition during the year ended 31 December 2021
Beijing Wandong Medical Technology Co., Ltd. (“Wandong Medical”)
In May 2021, the Group acquired 29.09% equity interests of Wandong Medical at a cash consideration
of RMB2,297,093,000 from a third party. The transaction was made as part of the Group’s strategy to develop
its medical equipment business. The Group actually obtained the control right of Wandong Medical.
The fair value of the net assets acquired was RMB4,380,284,000 at the acquisition date, resulting an
increase in goodwill of RMB1,106,701,000 and an increase in non-controlling interests of RMB3,189,892,000
The goodwill is attributable to the market prospect arising from entering into the medical equipment industry
sector. It will not be deductible for tax purposes.
The acquired business contributed a total revenue of RMB765,625,000 and net profit of
RMB57,053,000 to the Group for the period from the acquisition date to 31 December 2021. If the acquisition
had occurred on 1 January 2021, revenue and net profit of Wandong Medical for the year ended 31 December
2021 would be RMB1,156,175,000 and RMB33,460,000, respectively.
The total net cash outflow from the acquisition of Wandong Medical was RMB1,693,766,000.
Acquisition-related costs of RMB4,883,000 were included in general and administrative expenses in the
consolidated statements of profit or loss and in operating cash flows in the consolidated statements of cash
flows.
In addition to disclosed above, there were no material acquisitions during the year ended 31 December
2021 individually and collectively.
(b) Acquisition during the year ended 31 December 2022
The Group acquired Midea Capital Corporation Limited and its subsidiaries (including structured entities) in
January 2022, Wuhan TTium Motor Technology Co., Ltd. and its subsidiaries in April 2022 and KONG Intelligent
Environment (Xi’an) Co., Ltd (formerly known as Shanxi Construction Investment Co., Ltd.) in May 2022. The
Group actually obtained the control right of these companies.
The aggregated cash considerations were RMB268,563,000 and the aggregated fair value of the net assets
acquired were RMB235,077,000 at the acquisition date, resulting an aggregated increase in goodwill of
RMB118,239,000 and an aggregated increase in non-controlling interests of RMB84,753,000. The goodwill is
attributable to the market prospect arising from entering into new industry sector. It will not be deductible for tax
purposes.
The acquired businesses contributed an aggregated total revenue of RMB31,626,000 and aggregated net loss
of RMB27,512,000 to the Group for the period from the acquisition date to 31 December 2022. If these acquisitions
had occurred on 1 January 2022, the aggregated contributed revenue and net loss for the year ended 31 December
2022 would be RMB34,045,000 and RMB31,140,000, respectively.
The aggregated net cash inflow from these acquisitions was RMB303,252,000.
Aggregated acquisition-related costs of RMB778,000 were included in general and administrative expenses in
the consolidated statements of profit or loss and in operating cash flows in the consolidated statements of cash flows.
In addition to disclosed above, there were no other acquisitions during the year ended 31 December 2022.
APPENDIX I ACCOUNTANT’S REPORT
– I-108 –


--- page 557 ---
(c) Acquisition during the year ended 31 December 2023
Shenzhen Clou
In November 2022, the Group acquired 8.95% equity interests of Shenzhen Clou at a cash consideration
of RMB836,954,000 from a third party. The transaction was made as part of the Group’s strategy to further
develop its green energy solutions business. The Group has significant influence over Shenzhen Clou.
In May 2023, the Group further acquired 13.84% issued non-public share of Shenzhen Clou at a cash
consideration of RMB828,094,000, and obtained the control right of Shenzhen Clou.
The investments of 8.95% in Shenzhen Clou before acquisition date were deemed as having been
disposed and were remeasured to fair value at the date of deemed disposal, the resulting gains of
RMB147,899,000 from the remeasurements were recognized in the profit or loss in accordance with IFRS 3
— Business Combinations. The acquisition-date fair value of the previously held 8.95% equity interests were
RMB981,908,000 and the total acquisition consideration were RMB1,810,002,000.
The fair value of the net assets acquired was RMB3,298,914,000 at the acquisition date, resulting an
increase in goodwill of RMB1,074,462,000 and an increase in non-controlling interests of RMB2,563,374,000.
The goodwill is attributable to the synergy effects be derived from integration with the green energy solutions
sector. It will not be deductible for tax purposes.
The acquired business contributed a total revenue of RMB3,090,363,000 and net loss of
RMB433,904,000 to the Group for the period from the acquisition date to 31 December 2023. If the acquisition
had occurred on 1 January 2023, revenue and net loss of Shenzhen Clou for the year ended 31 December 2023
would be RMB4,199,965,000 and RMB890,689,000, respectively.
The total net outflow of cash from the acquisition of Shenzhen Clou was RMB463,137,000.
Acquisition-related costs of RMB5,841,000 were included in general and administrative expenses in the
consolidated statements of profit or loss and in operating cash flows in the consolidated statements of cash
flows.
In addition to disclosed above, there were no material acquisition during the year ended 31 December
2023.
For Wandong Medical and Shenzhen Clou, the Group obtains de facto control over them and accounted
for these investees as subsidiaries of the Group under IFRS 10, even if the Group owns less than 51% of the
equity interest. The Group can own a majority of the effective voting rights amongst the shareholders who
actively participate in shareholders’ meetings and has the practical ability to direct the relevant activities of
these investees after considering all the relevant facts and circumstances, including but not limited to: i) the
Group is the single largest shareholder of Wandong Medical and Shenzhen Clou; ii) the commitment of the
second largest shareholder not to obtain shares, nor to expand voting rights through concerted action agreement
or any other way; iii) relative size of the remaining dispersed shareholdings and their past voting patterns; and
iv) right to nominate four out of the six executive directors and most key management personnel.
(d) Accounting policy choice for non-controlling interests
For the non-controlling interests in aforementioned acquirees, the Group elected to recognize the non-
controlling interests at its proportionate share of the acquired net identifiable assets.
43. DISPOSAL OF SUBSIDIARIES
Major transactions of disposal of subsidiaries during the Track Record Period had no significant impact on the
Group’s consolidated financial statements.
APPENDIX I ACCOUNTANT’S REPORT
– I-109 –


--- page 558 ---
44. TRANSACTIONS WITH NON-CONTROLLING INTERESTS
The Group acquired certain equity interests of certain subsidiaries from non-controlling shareholders, and the
difference between consideration paid and the carrying amount of equity interest acquired was recognized as an
increase of RMB100,012,000 in reserves for the year ended 31 December 2021 and a decrease of RMB1,513,804,000,
RMB54,307,000, RMB57,475,000 and Nil in reserves for the year ended 31 December 2022 and 2023 and the four
months ended 30 April 2023 and 2024, respectively. Major transactions during the Track Record Period as follows:
(a) Major transactions during the year ended 31 December 2021
In July 2021, the Group acquired additional 20% equity interests of GD Midea Group Wuhu Air-Conditioning
Equipment Co., Ltd., 20% equity interests of Anhui Meizhi Compressor Co., Ltd. and 20% equity interests of
Guangdong Midea Commercial Air-Conditioning Equipment Co., Ltd. from non-controlling interests at a
consideration of RMB359,708,000. The Group recognized a decrease in other reserves of RMB106,958,000 and
decrease in non-controlling interests of RMB252,750,000.
(b) Major transactions during the year ended 31 December 2022
In March 2022, the Group acquired additional 16.37% equity interests of Wandong Medical through the
non-public shares issued. The Group injected RMB2,062,132,000, recognized a decrease in other reserves of
RMB463,965,000 and an increase in non-controlling interests of RMB448,120,000.
In June 2022, the Group acquired additional 40% equity interests of Guangdong Meizhi Compressor Limited
and 40% equity interests of Guangdong Meizhi Precision-Manufacturing Co., from non-controlling interests at a
consideration of RMB1,641,063,000. The Group recognized a decrease in other reserves of RMB447,237,000 and
decrease in non-controlling interests of RMB1,193,826,000.
For the year ended 31 December 2022, the Group acquired additional 4.69% equity interests of KUKA AG
from non-controlling interests at a consideration of RMB1,167,262,000. The Group recognized a decrease in other
reserves of RMB656,235,000 and decrease in non-controlling interests of RMB511,027,000.
(c) Major transactions during the year ended 31 December 2023
In March 2023, Midea Innovation Investment Co., Ltd. injected RMB200,000,000 in Guangdong Meicloud
Technology Co., Ltd. to acquire its 13.54% equity interests. The Group recognized a decrease in other reserves of
RMB63,830,000 and an increase in non-controlling interests of RMB63,830,000.
Except for the aforementioned non-controlling interests’ transactions, other transactions made no significant
impact on the Group’s Historical Financial Information.
45. RELATED PARTY TRANSACTIONS
(a) Parent entities
Name Type
Place of
incorporation Ownership interest
As at 31 December
As at
30 April
2021 2022 2023 2024
Midea Holding Co., Ltd. /H1118/H1118/H1118Ultimate parent
entity
Foshan 31.05% 31.00% 30.87% 31.10%
The Company’s ultimate holding company is Midea Holding Co., Ltd., and the ultimate controlling person is
Mr. He Xiangjian.
APPENDIX I ACCOUNTANT’S REPORT
– I-110 –


--- page 559 ---
(b) Names and relationships with related parties
Related parties are those parties that have the ability to control, jointly control or exercise significant influence
over the other party in holding power over the investee; exposure or rights, to variable returns from its involvement
with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
Parties are also considered to be related if they are subject to common control or joint control. Related parties maybe
individuals or other entities.
The directors of the Company are of the view that the following parties were significant related parties of the
Group that had transactions or balances with the Group for the years ended 31 December 2021, 2022 and 2023 and
the four months ended 30 April 2023 and 2024:
Name of the related party Relationship with the Group
Orinko Advanced Plastics Co., Ltd. and
its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by immediate family members of the Company’s
ultimate controlling shareholder
Infore Group Co., Ltd and its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by immediate family members of the Company’s
ultimate controlling shareholder
Midea Real Estate Holding Limited and
its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by the Company’s ultimate controlling shareholder
Carrier Global Corporation and its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries
The following transactions and balances were carried out between the Group and its related parties during the
Track Record Period. In the opinion of the directors of the Company, the related party transactions were carried out
in the normal course of business and at terms negotiated between the Group and the respective related parties. In
addition to those disclosed elsewhere in the Historical Financial Information, the Group has the following
transactions with related parties:
(c) Transactions with related parties
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Purchases of goods and
services:
Controlled by immediate family
members of the Company’s
ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,013,798 1,422,368 1,442,426 424,115 447,525
Associates and joint ventures of
the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118654,657 658,775 859,288 217,112 290,556
Holding company of a principal
subsidiary’s substantial
shareholder together with its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118468,195 395,726 358,684 193,686 227,054
Controlled by the Company’s
ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,149 24,045 36,915 9,221 12,382
4,144,799 2,500,914 2,697,313 844,134 977,517
APPENDIX I ACCOUNTANT’S REPORT
– I-111 –


--- page 560 ---
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods and rendering of
services:
Holding company of a principal
subsidiary’s substantial
shareholder together with its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,592,759 2,638,339 3,721,933 1,465,288 1,606,797
Associates and joint ventures of
the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118691,182 792,561 939,683 454,008 344,076
Controlled by the Company’s
ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,778 252,484 474,962 152,870 145,019
Controlled by immediate family
members of the Company’s
ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,304 9,196 11,270 6,108 19,086
3,512,023 3,692,580 5,147,848 2,078,274 2,114,978
Interest income:
Associates and joint ventures of
the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118223,659 366,918 293,347 99,974 109,335
Dividend income:
Associates and joint ventures of
the Group
(Note (21)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118286,667 349,293 360,750 132,968 136,910
(d) Balance with related parties
As at 31 December
As at
30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash and cash equivalents
Associates and joint ventures of the Group /H1118/H11184,214,084 8,518,339 4,604,976 4,365,245
Other financial assets at amortized cost
Associates and joint ventures of the Group /H1118/H1118 – 2,658,912 5,900,564 5,966,846
Other financial assets at FVOCI
Associates and joint ventures of the Group /H1118/H11182,004,554 – – –
Trade and note receivables at amortized
cost
Holding company of a principal subsidiary’s
substantial shareholder together with its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118491,902 220,187 283,153 601,237
Associates and joint ventures of the Group /H1118/H1118181,981 233,308 183,835 255,701
Controlled by the Company’s ultimate
controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860 7,652 75,472 94,481
Controlled by immediate family members of
the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,516 28,189 3,222 20,752
676,459 489,336 545,682 972,171
APPENDIX I ACCOUNTANT’S REPORT
– I-112 –


--- page 561 ---
As at 31 December
As at
30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note payables
Holding company of a principal subsidiary’s
substantial shareholder together with its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,130 142,300 106,645 177,869
Associates and joint ventures of the Group /H1118/H1118119,310 98,202 269,155 230,086
Controlled by immediate family members of
the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118497,519 103,743 204,348 69,845
Controlled by the Company’s ultimate
controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118610 516 897 1,739
649,569 344,761 581,045 479,539
Contract liabilities
Controlled by the Company’s ultimate
controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,760 20,520 7,693 10,556
Controlled by immediate family members of
the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,290 2,307 534 3,901
Associates and joint ventures of the Group /H1118/H1118 5,016 8,114 28,588 10,598
17,066 30,941 36,815 25,055
Prepayments, other receivables and
other assets
Associates and joint ventures of the Group /H1118/H1118 5,455 800 1,777 5,057
Other payables and accruals
Controlled by the Company’s ultimate
controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,699 3,328 1,600 2,372
Controlled by immediate family members of
the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118367 502 69 1,208
Associates and joint ventures of the Group /H1118/H1118 1,462 1,601 18,873 2,876
3,528 5,431 20,542 6,456
Other financial assets at amortized cost and other financial assets at FVOCI were non-trade in nature. Trade
and note receivables at amortized cost, trade and note payables, contract liabilities, prepayments, other receivables
and other assets and other payables and accruals were trade in nature.
The non-trade in nature balances as at 30 April 2024 are other financial assets at amortized cost, which will
be mature until July 2026 according to the agreements. The Group intends to settle the balances in accordance with
the terms of deposits after the completion of the initial listing of H Shares of the Company on the Main Board of The
Stock Exchange of Hong Kong Limited.
APPENDIX I ACCOUNTANT’S REPORT
– I-113 –


--- page 562 ---
(e) Key management compensation
Compensation of the key management personnel of the Group, including amounts paid to the Company’s
Directors as disclosed in Note 9, was as follows:
Y ear ended 31 December Four months ended 30 April
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fee /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,800 1,800 1,800 600 600
Salaries, wages, bonuses and
benefits in kind (including
contributions to pension plans) /H1118 69,345 95,076 120,684 14,315 15,563
Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118118,993 114,805 124,707 43,210 51,445
190,138 211,681 247,191 58,125 67,608
The short-term benefits disclosed above include RMB36,170,000, RMB16,990,000, RMB73,726,000,
RMB3,124,000 and RMB3,645,000 of bonuses payable under a short-term incentive scheme which were unpaid as
at year/period end and are included in other payables and accruals. The share-based payments provided to key
management personnel consist of stock option incentive plans, restricted share incentive schemes and stock
ownership schemes which are equity-settled, see note 40.
46. COMMITMENTS
Capital Commitments
As at 31 December As at 30 April
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided for
purchase of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,990,809 5,145,982 4,005,911 2,872,559
In April 2024, the Group entered into an agreement with Arbonia AG to acquire all the equity interests of
climate division. The acquisition consideration of the transaction is EUR648.8 million. The payment of the
consideration has not been made and the transaction has not been completed up to the date of this report, which is
subject to the fulfillment of certain closing conditions including regulatory approvals.
47. CONTINGENCIES
As at 31 December 2021, 2022 and 2023 and 30 April 2024 the amounts of the maximum potential loss in tax
disputes involving Brazilian subsidiary with 51% interests held by the Company were approximately BRL614 million
(equivalent to RMB702 million), BRL741 million (equivalent to RMB990 million), BRL735 million (equivalent to
RMB1,075 million) and BRL733 million (equivalent to RMB1,007 million), respectively, some cases have lasted for
more than 10 years. The above amounts included the principal, penalty, interest, etc. The original shareholders of
Brazilian subsidiary have agreed to compensate the Company according to verdict results of the above tax disputes.
The maximum compensation amount is about BRL157 million (equivalent to RMB179 million, RMB210 million,
RMB230 million and RMB216 million as at 31 December 2021, 2022 and 2023 and 30 April 2024, respectively). As
at the date of this report, the relevant cases were still ongoing. Upon consulting the Group’s external legal counsel,
management believes that the probability of losing the lawsuits is low. Accordingly, management has made necessary
provision based on its best estimate.
48. SUBSEQUENT EVENTS
In June 2024, the Group entered an agreement with HERITAGE B to acquire 97.38% equity interests of Teka
Industrial, S.A. which design and manufacture household appliances and sinks. The acquisition consideration of the
transaction is EUR175 million. The transaction has not been completed up to the date of this report and is subject
to the required approvals by relevant regulators.
APPENDIX I ACCOUNTANT’S REPORT
– I-114 –


--- page 563 ---
49. INVESTMENTS IN SUBSIDIARIES
As at the date of this report and during the Track Record Period, the Company’s principal subsidiaries are as follows:
Percentage of equity interest
As at 31 December As at 30 April
As at
the date of this report
Name
Place of
Incorporation and
Operation Principal Activities
Issued
ordinary/registered
share capital
2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(’000)
Anhui Meizhi Precision
Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of air conditioner
parts, such as electric
motors, gas
compressors and
mechanical and
electrical equipment
RMB842,105 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00%
Annto Logistics Supply
Chain Technology Co.,
Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Logistics and
warehousing services
RMB540,000 – 75.61% – 75.61% – 73.85% – 73.85% – 73.85%
Chongqing Midea Air-
Conditioning Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of air conditioners,
refrigerators and
freezers
RMB50,000 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00%
Foshan Shunde Midea
Electrical Heating
Appliances Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing of small
appliances, such as
electrothermal steamer
pots and pressure
cookers
USD42,000 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Foshan Shunde Midea
Household Appliances
Industry Co., Ltd. /H1118/H1118/H1118/H1118
Mainland China Investment holding RMB5,500,000 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
Foshan Shunde Midea
Washing Appliances
Manufacturing Co., Ltd. /H1118/H1118
Mainland China Manufacturing of
kitchen appliances,
such as dishwashers,
range hoods, ovens,
sterilizers and gas and
heating appliances
USD46,000 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00%
APPENDIX I ACCOUNTANT’S REPORT
– I-115 –


--- page 564 ---
Percentage of equity interest
As at 31 December As at 30 April
As at
the date of this report
Name
Place of
Incorporation and
Operation Principal Activities
Issued
ordinary/registered
share capital
2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(’000)
GD Midea Air-Conditioning
Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of residential air
conditioners
RMB854,000 73.00% 7.00% 73.00% 7.00% 73.00% 7.00% 73.00% 7.00% 73.00% 7.00%
GD Midea Group Wuhu Air-
Conditioning Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of residential air
conditioners
USD6,928 93.00% 7.00% 93.00% 7.00% 93.00% 7.00% 93.00% 7.00% 93.00% 7.00%
GD Midea Heating &
V entilating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing of
commercial air
conditioners
RMB500,000 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00%
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing of small
appliances, such as
dishwashers, range
hoods, ovens,
sterilizers and gas and
heating appliances
RMB1,055,224 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Guangzhou Hualing
Refrigerating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of residential air
conditioners
RMB640,000 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00%
Hefei Midea Heating &
V entilating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of air conditioners and
heating and ventilating
equipment
RMB1,060,000 99.00% 1.00% 99.00% 1.00% 99.00% 1.00% 99.00% 1.00% 99.00% 1.00%
Hefei Midea Refrigerator
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing of
refrigerators, freezers
and refrigeration
products
USD92,110 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00% 75.00% 25.00%
APPENDIX I ACCOUNTANT’S REPORT
– I-116 –


--- page 565 ---
Percentage of equity interest
As at 31 December As at 30 April
As at
the date of this report
Name
Place of
Incorporation and
Operation Principal Activities
Issued
ordinary/registered
share capital
2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(’000)
Hubei Midea Refrigerator
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing of
refrigerators, freezers
and refrigeration
products
RMB850,000 97.00% 3.00% 97.00% 3.00% 97.00% 3.00% 97.00% 3.00% 97.00% 3.00%
KUKA AG /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Germany Manufacturing and sales
of robots and robot-
based products and
solutions
EUR103,416 – 95.00% – 100.00% – 100.00% – 100.00% – 100.00%
Midea Capital Corporation
Limited (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Investment in companies
providing capital
market and business-
related services
RMB50,000 49.00% – 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00%
Midea Electric Netherlands
(I) B.V . /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Netherlands Investment holding EUR25 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Midea Electric Trading
(Singapore)
Co. Pte. Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Singapore Export trade of
household appliances
SGD479,712 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Midea Group (Shanghai)
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of intelligent home
appliances and
automation solutions
RMB1,000,000 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00%
Midea Group Finance Co.,
Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Providing financial
services for companies
within the Group
RMB3,500,000 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00% 95.00% 5.00%
Midea Innovation Investment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Investment holding RMB100,000 85.00% 15.00% 85.00% 15.00% 85.00% 15.00% 85.00% 15.00% 85.00% 15.00%
Midea International
Corporation Company
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Hong Kong Investment holding USD23,800 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
APPENDIX I ACCOUNTANT’S REPORT
– I-117 –


--- page 566 ---
Percentage of equity interest
As at 31 December As at 30 April
As at
the date of this report
Name
Place of
Incorporation and
Operation Principal Activities
Issued
ordinary/registered
share capital
2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(’000)
Midea Investment
Development Company
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
British Virgin
Islands
Investment in home
appliances
manufacturers
Nil – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Ningbo Midea United
Materials Supply
Co. Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Wholesale and retail of
raw materials and
components
RMB480,000 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
TLSC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Japan Manufacturing of home
and kitchen
appliances, office
appliances, and
industrial appliances
JPY100,000 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Toshiba Consumer Marketing
Corporation /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Japan Manufacturing and sales
of home appliances
JPY100,000 – 100.00% – 100.00% – 100.00% – 100.00% – 100.00%
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. /H1118/H1118/H1118
Mainland China Manufacturing of air
conditioners and
refrigeration
equipment
RMB830,000 87.00% 13.00% 87.00% 13.00% 87.00% 13.00% 87.00% 13.00% 87.00% 13.00%
Wuhu Annto Logistics
Technology Co., Ltd. /H1118/H1118/H1118
Mainland China Logistics and
warehousing services
RMB198,063 – 75.61% – 75.61% – 73.85% – 73.85% – 73.85%
Wuhu Midea Kitchen & Bath
Appliances Mfg. Co., Ltd. /H1118
Mainland China Manufacturing of
kitchen appliances,
such as range hoods,
gas appliances,
dishwashers, garbage
disposers, sterilizers
and water heaters
RMB60,000 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00% 90.00% 10.00%
Wuhu Midea Life Appliances
Mfg Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of small and smart
home appliances
RMB60,000 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
APPENDIX I ACCOUNTANT’S REPORT
– I-118 –


--- page 567 ---
Percentage of equity interest
As at 31 December As at 30 April
As at
the date of this report
Name
Place of
Incorporation and
Operation Principal Activities
Issued
ordinary/registered
share capital
2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
(’000)
Wuxi Little Swan Electric
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of laundry appliances
RMB732,488 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
Zhejiang Meizhi Compressor
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainland China Manufacturing and sales
of air conditioner
parts, such as gas
compressors and
refrigeration, electrical
and mechanical
equipment
RMB50,000 100.00% – 100.00% – 100.00% – 100.00% – 100.00% –
(a) The Group held 49% equity interest in Midea Capital Corporation Limited (“Midea Capital”) which accounted for as an investment in associate under equity method as
at 31 December 2021. In January 2022, the Group further acquired 51% equity interest of Midea Capital. Upon the completion of above acquisition, the Gr oup increased
its shareholding in Midea Capital from 49% to 100% and Midea Capital became a consolidated subsidiary of the Group.
(b) During the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2023 and 2024, the increase of the investments in subsidiari es was mainly
due to the capital injections, addition of new subsidiaries and deemed investments arising from share-based compensation.
APPENDIX I ACCOUNTANT’S REPORT
– I-119 –


--- page 568 ---
The statutory auditors of the subsidiaries of the Group during the Track Record Period are set out below:
Name of statutory auditors
Company name Note 2021 2022 2023
Anhui Meizhi Precision
Manufacturing Co., Ltd. /H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Annto Logistics Supply Chain
Technology Co., Ltd. /H1118/H1118/H1118/H1118
Grant Thornton Zhitong Certified
Public Accountants LLP
Grant Thornton Zhitong Certified
Public Accountants LLP
Grant Thornton Zhitong Certified
Public Accountants LLP
Chongqing Midea Air-
Conditioning Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Foshan Shunde Midea
Electrical Heating
Appliances Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Foshan Shunde Midea
Household Appliances
Industry Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
RSM China CPA LLP RSM China CPA LLP RSM China CPA LLP
Foshan Shunde Midea Washing
Appliances Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
GD Midea Air-Conditioning
Equipment Co., Ltd. /H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
GD Midea Group Wuhu Air-
Conditioning Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
GD Midea Heating &
V entilating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
RSM China CPA LLP RSM China CPA LLP RSM China CPA LLP
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Guangzhou Hualing
Refrigerating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Hefei Midea Heating &
V entilating Equipment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Hefei Midea Refrigerator
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Hubei Midea Refrigerator
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Hubei Zhibo Certified Public
Accountants
KUKA AG /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Midea Capital Corporation
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
ZhongHui Certified Public
Accountants LLP
ZhongHui Certified Public
Accountants LLP
ZhongHui Certified Public
Accountants LLP
Midea Electric Netherlands (I)
B.V . /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
(a) –––
Midea Electric Trading
(Singapore) Co. Pte. Ltd. /H1118/H1118
PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
Midea Group (Shanghai)
Co. Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
RSM China CPA LLP RSM China CPA LLP RSM China CPA LLP
Midea Group Finance
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Midea Innovation Investment
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
RSM China CPA LLP RSM China CPA LLP RSM China CPA LLP
APPENDIX I ACCOUNTANT’S REPORT
– I-120 –


--- page 569 ---
Name of statutory auditors
Company name Note 2021 2022 2023
Midea International
Corporation Company
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers PricewaterhouseCoopers PricewaterhouseCoopers
Midea Investment Development
Company Limited /H1118/H1118/H1118/H1118/H1118/H1118
(a) –––
Ningbo Midea United
Materials Supply Co. Ltd. /H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
TLSC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118PricewaterhouseCoopers Aarata
LLC
PricewaterhouseCoopers Aarata
LLC
PricewaterhouseCoopers Japan
LLC
Toshiba Consumer Marketing
Corporation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Aarata
LLC
PricewaterhouseCoopers Aarata
LLC
PricewaterhouseCoopers Japan
LLC
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. /H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Wuhu Annto Logistics
Technology Co., Ltd. /H1118/H1118/H1118/H1118
Grant Thornton Zhitong Certified
Public Accountants LLP
Grant Thornton Zhitong Certified
Public Accountants LLP
Grant Thornton Zhitong Certified
Public Accountants LLP
Wuhu Midea Kitchen & Bath
Appliances Mfg. Co., Ltd. /H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Wuhu Midea Life Appliances
Mfg Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Wuxi Little Swan Electric
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
Zhejiang Meizhi Compressor
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
PricewaterhouseCoopers Zhong
Tian LLP
(a) No audited financial statements were issued for these companies for the years ended 31 December 2021, 2022
and 2023 as they were not required to issue audited financial statements under the statutory requirements of
their places of incorporation.
(b) The English names of the Mainland China companies are direct translation or transliteration of their Chinese
registered names.
(c) The above table lists the subsidiaries of the Company which, in the opinion of the directors of the Company,
principally affected the results or assets and liabilities of the Group. To give details of other subsidiaries
would, in the opinion of the directors of the Company, result in particulars of excessive length.
(d) In the opinion of the directors, no non-controlling interests in subsidiaries are material to the Group.
50. SUMMARY OF OTHER ACCOUNTING POLICIES
50.1 Principles of consolidation and equity accounting
(a) Subsidiaries
Subsidiaries are entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date
on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer to
Note 50.2).
Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
APPENDIX I ACCOUNTANT’S REPORT
– I-121 –


--- page 570 ---
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes
in equity and consolidated statement of financial position respectively.
(b) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This
is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting (see (d) below), after initially being recognized at cost.
(c) Joint ventures
Interests in joint ventures are accounted for using the equity method (see (d) below), after initially being
recognized at cost in the consolidated statement of financial position.
(d) Equity method
Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter
to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the
Group’s share of movements in other comprehensive income of the investee in other comprehensive income.
Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the
investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognize further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in Note 50.9.
(e) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the
carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary.
Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognized in a separate reserve within equity attributable to owners of the Company.
When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint
control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in
carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts
previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other
comprehensive income are reclassified to profit or loss or transferred to another category of equity as
specified/permitted by applicable IFRS.
If the ownership interest in an associate is reduced but joint control or significant influence is retained, only
a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit
or loss where appropriate.
APPENDIX I ACCOUNTANT’S REPORT
– I-122 –


--- page 571 ---
50.2 Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
 fair values of the assets transferred
 liabilities incurred to the former owners of the acquired business
 equity interests issued by the Group
 fair value of any asset or liability resulting from a contingent consideration arrangement, and
 fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes any
non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and
acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable
assets of the business acquired, the difference is recognized directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability.
Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair value
recognized in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses
arising from such remeasurement are recognized in profit or loss.
50.3 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs
of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and
receivable.
Impairment test of the investments in subsidiaries is required upon receiving a dividend from these investments
if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or
if the carrying amount of the investment in the separate financial statements exceeds the carrying amount of the
investee’s net assets including goodwill.
50.4 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”). Since the majority of the
assets and operations of the Group are located in the PRC, the Historical Financial Information are presented in RMB,
which is also the Company’s functional and the Group’s presentation currency.
APPENDIX I ACCOUNTANT’S REPORT
– I-123 –


--- page 572 ---
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognized in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets
and liabilities such as equities held at FVPL are recognized in profit or loss as part of the fair value gain or loss and
translation differences on non-monetary assets such as equities classified as fair value through other comprehensive
income are recognized in other comprehensive income.
(iii) Group companies
The results and financial position of all the Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
 assets and liabilities for each statement of financial position of the Group’s entities are translated at the
closing rate at the end of the reporting period;
 income and expenses for each income statement of the Group’s entities are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions); and
 all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations
are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange
differences that were recorded in equity are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
50.5 Leases
(i) The Group as the lessee:
The Group’s accounting policy for leases is explained in Note 15.
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable
 variable lease payment that are based on an index or a rate, initially measured using the index or rate
as at the commencement date
 amounts expected to be payable by the Group under residual value guarantees
 the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
APPENDIX I ACCOUNTANT’S REPORT
– I-124 –


--- page 573 ---
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability
 any lease payments made at or before the commencement date less any lease incentives received
 any initial direct costs, and
 restoration costs.
The Group also has interests in leasehold land and land use rights for use in its operations. Lump sum payments
were made upfront to acquire these land interests from their previous registered owners or governments in the
jurisdictions where the land is located. There are no ongoing payments to be made under the term of the land leases,
other than insignificant lease renewal costs or payments based on rateables value set by the relevant government
authorities. These payments are stated at cost and are amortized over the term of the lease which includes the renewal
period if the lease can be renewed by the Group without significant cost.
(ii) The Group as the lessor:
When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each
of its leases as either an operating lease or a finance lease.
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of
an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group
allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental
income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of
profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental
income. Contingent rents are recognized as revenue in the period in which they are earned.
Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to
the lessee are accounted for as finance leases.
50.6 Property, plant and equipment
The Group’s accounting policy for property, plant and equipment is explained in Note 14. All property, plant
and equipment are stated at historical costs less accumulated depreciation and accumulated impairment charges.
Historical costs include expenditures that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and
maintenance are charged to the consolidated statement of comprehensive income during the periods in which they are
incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 50.9).
Gains and losses on disposal are determined by comparing the proceeds with the carrying amounts. These are
included in the consolidated statement of comprehensive income.
Construction in progress mainly represents property, plant and equipment under construction and is stated at
cost less impairment losses. It will be reclassified to the relevant property, plant and equipment category upon
completion and depreciation begins when the relevant assets are available for use.
APPENDIX I ACCOUNTANT’S REPORT
– I-125 –


--- page 574 ---
50.7 Investment properties
Investment properties are interests in land and buildings held to earn rental income and/or for capital
appreciation, including properties under construction for such purpose, rather than for use in the production or supply
of goods or services or for administrative purposes, or for sale in the ordinary course of business. Such properties
are measured initially at cost, including related transaction costs. After initial recognition, the Group chooses the cost
model to measure all of its investment properties.
Depreciation is calculated on the straight-line basis to write off the cost to its residual value over its estimated
useful life. The estimated useful lives are as follows:
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 to 40 years
Land use rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 to 50 years
The carrying amounts of investment properties measured using the cost method are reviewed for impairment
when events or changes in circumstances indicate that the carrying amounts may not be recoverable. As at 31
December 2021, 2022 and 2023 and 30 April 2024, the fair values are not materially different from their original cost.
Any gains or losses on the retirement or disposal of an investment property are recognized in profit or loss in
the year of the retirement or disposal.
50.8 Intangible assets
The Group’s accounting policy for intangible assets is explained in Note 16.
Research and development
All research costs are charged to the statement of profit or loss as incurred.
Development costs are capitalised only when all the following conditions are met:
 the Group can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale; and
 its intention to complete and its ability to use or sell the asset; and
 how the asset will generate economic benefits (including demonstration that the product derived
from the intangible asset or the intangible asset itself will be marketable or, in the case of internal
use, the usefulness of the intangible asset as such); and
 the availability of technical and financial resources to complete the project and procure the use
or sale of the intangible asset; and
 the ability to measure reliably the expenditure during the development.
Self-developed systems and software, when the development is done and ready for use, are stated at cost
less any impairment losses. The development costs are amortized using the straight-line basis over the
commercial lives of the underlying products not exceeding ten years.
50.9 Impairment of non-financial assets
Assets that have an indefinite useful life or are not yet available for use are not subject to amortization and
are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might
be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be fully recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
APPENDIX I ACCOUNTANT’S REPORT
– I-126 –


--- page 575 ---
50.10 Financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through other comprehensive income, or through
profit or loss), and
 those to be measured at amortized cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in equity instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (“FVOCI”).
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs
of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Group classifies its debt instruments:
 Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows
represent solely payments of principal and interest, are measured at amortized cost. Interest income
from these financial assets is included in finance income using the effective interest rate method. Any
gain or loss arising on derecognition is recognized directly in profit or loss and presented in other
gains/(losses), net together with foreign exchange gains and losses. Impairment losses are presented as
separate line item in the statement of profit or loss.
 FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange gains and losses, which are recognized in profit
or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in
OCI is reclassified from equity to profit or loss and recognized in other gains/(losses), net. Interest
income from these financial assets is included in finance income using the effective interest rate method.
Foreign exchange gains and losses are presented in other gains/(losses), net, and impairment expenses
are presented as separate line item in the statement of profit or loss.
 FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain
or loss on a debt investment that is subsequently measured at FVPL is recognized in profit or loss and
presented net within other gains/(losses), net in the period in which it arises.
APPENDIX I ACCOUNTANT’S REPORT
– I-127 –


--- page 576 ---
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management
has elected to present fair value gains and losses on equity investments in other comprehensive income, there
is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of
the investment. Dividends from such investments continue to be recognized in profit or loss as other income
when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognized in ‘other (losses)/gains, net’ in
profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other changes in fair value.
(iv) Impairment of financial assets
The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation
of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognized in three stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default
events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk since initial recognition, a loss allowance is required for
credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a
lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When making the assessment, the Group compares the risk of
a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on
the financial instrument as at the date of initial recognition and considers reasonable and supportable
information that is available without undue cost or effort, including historical and forward-looking
information.
The Group considers a financial asset in default when contractual payments are past due. However, in
certain cases, the Group may also consider a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual cash flows.
Debt investments at fair value through other comprehensive income and financial assets at amortized
cost are subject to impairment under the general approach and they are classified within the following stages
for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach
as detailed below.
Stag e 1 – Financial instruments for which credit risk has not increased significantly since initial
recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs
Stag e 2 – Financial instruments for which credit risk has increased significantly since initial recognition
but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount
equal to lifetime ECLs
Stag e 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs
Simplified approach
For trade receivables and contract assets that do not contain a significant financing component or when
the Group applies the practical expedient of not adjusting the effect of a significant financing component, the
Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not
track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting
date. The Group has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment.
APPENDIX I ACCOUNTANT’S REPORT
– I-128 –


--- page 577 ---
50.11 Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain derivatives as either:
 hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedges)
 hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly
probable forecast transactions (cash flow hedges), or
 hedges of a net investment in a foreign operation (net investment hedges).
At the inception of the hedging, the Group documents the economic, relationship between hedging instruments
and hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset
changes in the cash flows of hedges items. The Group documents its risk management objective and strategy for
undertaking its hedge transactions.
The fair values of derivative financial instruments designated in hedge relationships are disclosed in Note 25.
Movements in the hedging reserve in shareholders’ equity are shown in Note 39.
(i) Cash flow hedge that quantity for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is
recognized immediately in profit or loss within other income or other gains/(losses), net.
Where option contracts are used to hedge forecast transactions, the Group designates only the intrinsic value
of the options as the hedging instrument.
Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized
in the cash flow hedge reserve within equity. The changes in the time value of the options that relate to the hedged
item (‘aligned time value’) are recognized within OCI in the costs of hedging reserve within equity.
When forward contracts are used to hedge forecast transactions, the Group generally designates only the
change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses
relating to the effective portion of the change in the spot component of the forward contracts are recognized in the
cash flow hedge reserve within equity. The change in the forward element of the contract that relates to the hedged
item (‘aligned forward element’) is recognized within OCI in the costs of hedging reserve within equity. In some
cases, the entity may designate the full change in fair value of the forward contract (including forward points) as the
hedging instrument. In such cases, the gains or losses relating to the effective portion of the change in fair value of
the entire forward contract are recognized in the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as
follows:
 Where the hedged item subsequently results in the recognition of a non-financial asset (such as
inventory), both the deferred hedging gains and losses and the deferred time value of the option
contracts or deferred forward points, if any, are included within the initial cost of the asset. The deferred
amounts are ultimately recognized in profit or loss as the hedged item affects profit or loss (for example
through cost of sales).
 The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate
borrowings is recognized in profit or loss within finance cost at the same time as the interest expense
on the hedged borrowings.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains
in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory.
When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of
hedging that were reported in equity are immediately reclassified to profit or loss.
APPENDIX I ACCOUNTANT’S REPORT
– I-129 –


--- page 578 ---
(ii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are recognized immediately in profit or loss and are included
in other gains/(losses), net.
50.12 Financial liabilities
Financial liabilities are classified as financial liabilities at amortized cost and financial liabilities at FVPL at
initial recognition.
Financial liabilities of the Group mainly comprise financial liabilities at amortized cost, including trade and
note payables, other payables and accruals, borrowings and customer deposit. Such financial liabilities are initially
recognized at fair value, net of transaction costs incurred, and subsequently measured using the effective interest
method. Financial liabilities that are due within one year (inclusive) are classified as current liabilities; those with
maturities over one year but are due within one year (inclusive) as from the balance sheet date are classified as current
portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognized or partly derecognized when the underlying present obligation is
discharged or partly discharged. The difference between the carrying amount of the derecognized part of the financial
liability and the consideration paid is recognized in profit or loss for the current period.
50.13 Inventories
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out method when issued. Cost comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the
basis of normal operating capacity. Cost includes the reclassification from equity of any gains or losses on qualifying
cash flow hedges relating to purchases of raw material but excludes borrowing costs. Costs of purchased inventory
are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
(i) Assigning costs to inventories
The costs of individual items of inventory are determined using first-in-first-out method.
50.14 Contract assets and contract liabilities
Upon entering into a contract with a customer, the Group obtains rights to receive consideration from the
customer and assumes performance obligations to transfer goods or provide services to the customer. The
combination of those rights and performance obligations gives rise to a net asset or a net liability depending on the
relationship between the remaining rights and the performance obligations. The contract is an asset and recognized
as contract assets if the measure of the remaining rights exceeds the measure of the remaining performance
obligations. Conversely, the contract is a liability and recognized as contract liabilities if the measure of the
remaining performance obligations exceeds the measure of the remaining rights.
50.15 Cash and cash equivalents
Cash and cash equivalents includes cash at bank and in hand, short-term bank deposits with initial terms within
three months and surplus reserve deposits with the Central Bank. Bank overdrafts are shown within borrowings in
current liabilities in the balance sheet.
Restricted and pledged bank deposits are not included in cash and cash equivalents.
50.16 Share capital and capital reserve
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds.
APPENDIX I ACCOUNTANT’S REPORT
– I-130 –


--- page 579 ---
Where any group company purchases the Company’s equity instruments, for example as the result of a share
buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental costs
(net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the
shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received,
net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to the owners of the Company.
50.17 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
period which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within
12 months after the reporting period. They are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method.
50.18 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and amortized over the period of the facility to
which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract
is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognized in profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor
to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognized in profit or loss, which
is measured as the difference between the carrying amount of the financial liability and the fair value of the equity
instruments issued.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
50.19 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for
its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
50.20 Provisions
Provisions for legal claims, service warranties and make good obligations are recognized when the Group has
a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will
be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
APPENDIX I ACCOUNTANT’S REPORT
– I-131 –


--- page 580 ---
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present value
is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability. The increase in the provision due to the passage of time is recognized as interest expense.
50.21 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
(i) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the Company and its subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely
amount or the expected value, depending on which method provides a better prediction of the resolution of the
uncertainty.
(ii) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the Historical Financial Information. However,
deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax
is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does
not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount
and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future (Note 17).
(iii) Offsetting
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized
in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive
income or directly in equity, respectively.
50.22 Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
that are expected to be settled wholly within 12 months after the end of the period in which the employees render
the related service are recognized in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the statement of financial position.
APPENDIX I ACCOUNTANT’S REPORT
– I-132 –


--- page 581 ---
(ii) Housing funds, medical insurances and other social insurances
Employees of the Group in the PRC are entitled to participate in various government-supervised housing funds,
medical insurance and other employee social insurance plan. The Group contributes on a monthly basis to these funds
based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s liability in
respect of these funds is limited to the contributions payable in each year. Contributions to the housing funds, medical
insurances and other social insurances are expensed as incurred.
(iii) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit
plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions
into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are
post-employment benefit plans other than defined contribution plans. During the reporting period, the Group’s
defined contribution plans mainly include basic pensions and unemployment insurance, while the defined benefit
plans are TLSC Group and KUKA Group, etc. provide supplemental retirement benefits beyond the national
regulatory insurance system.
(iv) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes
termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of
those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS 37 and
involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the
termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling
due more than 12 months after the end of the reporting period are discounted to their present value.
(v) Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local authorities of
Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are
calculated according to prescribed bases and percentage by the relevant local authorities. When employees retire, the
relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations
are recognized as liabilities in the accounting period in which the service has been rendered by the employees, with
a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
(vi) Supplementary retirement benefits
The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value
of the defined benefit obligations less the fair value of the plan assets. The defined benefit obligation is calculated
annually by independent actuaries using the projected unit credit method at the interest rate of treasury bonds with
similar obligation term and currency. The charges related to supplementary retirement benefits (including current
service costs, historical service costs and gains or losses on settlement) and net interest are recognized in profit or
loss for the current period or included in the cost of an asset, and the changes arising from remeasurement in net
liabilities or net assets of defined benefit plans are recognized in other comprehensive income.
50.23 Share-based payments
Share-based payments can be distinguished into equity-settled share-based payments and cash-settled
share-based payments. Equity-settled share-based payments are transactions of the Group settled through the payment
of shares or other equity instruments in consideration for receiving services.
Equity-settled share-based payments made in exchange for services rendered by employees are measured at the
fair value of equity instruments granted to employees. Instruments which are vested immediately upon the grant are
charged to relevant costs or expenses at the fair value on the date of grant and the capital reserve is credited
accordingly. Instruments of which vesting is conditional upon completion of services or fulfillment of performance
conditions are measured by recognizing services rendered during the period in relevant costs or expenses and
crediting the capital reserve accordingly at the fair value on the date of grant according to the best estimates
conducted by the Group at each date of the end of the reporting period during the pending period. The fair value of
equity instruments is determined using the binomial option pricing model. For details see Note 40. Share-based
payment.
APPENDIX I ACCOUNTANT’S REPORT
– I-133 –


--- page 582 ---
No expense is recognized for awards that do not ultimately vest due to non-fulfillment of non-market
conditions and/or vesting conditions. For the market or non-vesting condition under the share-based payments
agreement, it should be treated as vesting irrespective of whether or not the market or non-vesting condition is
satisfied, provided that other performance condition and/or vesting conditions are satisfied.
Where the terms of an equity-settled share-based payment are modified, as a minimum, services obtained are
recognized as if the terms had not been modified. In addition, an expense is recognized for any modification which
increases the total fair value of the instrument ranted or is otherwise beneficial to the employee as measured at the
date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognized for the award is recognized immediately. Where employees or other parties are permitted
to choose to fulfill non-vesting conditions but have not fulfilled during the pending period, equity-settled share-based
payments are deemed cancelled. However, if a new award is substituted for the cancelled award, and designated as
a replacement award on the date that it is granted, the new awards are treated as if they were a modification of the
original award.
50.24 Dividend distribution
Dividend distribution to the shareholders is recognized as a liability in the Historical Financial Information in
the period in which the dividends are approved by the entities’ shareholders or directors, where appropriate.
50.25 Interest income
Interest income from financial assets at FVPL is included in the net fair value gains/(losses) on these assets,
see Note 7 below. Interest income on financial assets at amortized cost and financial assets at FVOCI calculated using
the effective interest method is recognized in profit or loss as part of other income.
Interest income from financial instruments is calculated by effective interest method and recognized in profit
or loss for the current period. Interest income comprises premiums or discounts, or the amortization based on
effective rates of other difference between the initial carrying amount and the due amount of interest-earning assets.
The effective interest method is a method of calculating the amortized cost of a financial asset or liability and
the interest income or interest costs based on effective rates. The effective interest rate is the rate at which the
estimated future cash flows during the period of expected duration of the financial instruments or applicable shorter
period are discounted to the current carrying amount of the financial instruments. When calculating the effective
interest rate, the Group estimates cash flows by considering all contractual terms of the financial instrument (e.g.,
early repayment options, similar options, etc.), but without considering future credit losses. The calculation includes
all fees and interest paid or received that are an integral part of the effective interest rate, transaction costs, and all
other premiums or discounts.
Interest income from impaired financial assets is calculated at the interest rate that is used for discounting
estimated future cash flow when measuring the impairment loss.
50.26 Dividend income
Dividend income is recognized when the right to receive dividend payment is established.
50.27 Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
 the profit attributable to owners of the Company, excluding any costs of servicing equity other than
ordinary shares
 by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year and excluding treasury shares.
APPENDIX I ACCOUNTANT’S REPORT
– I-134 –


--- page 583 ---
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
 the after-income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares, and
 the weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
50.28 Government grants
Government grants relating to costs are deferred and recognized in profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and they are credited to profit or loss on a straight-line basis over the expected lives
of the related assets.
50.29 Related party
A related party is a person or entity that is related to the entity that is preparing its financial statements (in
this Standard referred to as the ‘reporting entity’).
(a) A person or a close member of that person’s family is related to a reporting entity if that person:
(i) has control or joint control of the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the
reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate of the other entity (or a associate of a member of a group of which the
other entity is a member).
(iii) The entity is a post-employment benefit plan for the benefit of employees of either the reporting
entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the
sponsoring employers are also related to the reporting entity.
(iv) The entity is controlled or jointly controlled by a person identified in (a).
(v) A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(vi) The entity, or any member of a group of which it is a part, provides key management personnel
services to the reporting entity or to the parent of the reporting entity.
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the
companies now comprising the Group in respect of any period subsequent to 30 April 2024 and
up to the date of this report.
APPENDIX I ACCOUNTANT’S REPORT
– I-135 –


--- page 584 ---
The following is the text of a report set out on pages IA-1 to IA-2, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. The information set out below
is the unaudited interim condensed consolidated financial information of the Group for the six
months ended 30 June 2024 and does not form part of the Accountant’ s Report from the
reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, as
set out in Appendix I to this prospectus, and is included herein for information purpose only.
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
TO THE DIRECTORS OF MIDEA GROUP CO., LTD.
(Incorporated in the People’ s Republic of China with limited liability)
Introduction
We have reviewed the interim financial information set out on pages IA-3 to IA-39, which
comprises the interim condensed consolidated statement of financial position of Midea Group
Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) as at 30 June 2024 and
the interim condensed consolidated statement of profit or loss, the interim condensed
consolidated statement of comprehensive income, the interim condensed consolidated
statement of changes in equity and the interim condensed consolidated statement of cash flows
for the six-month period then ended and selected explanatory notes (together, the “Interim
Financial Information”). The directors of the Company are responsible for the preparation and
presentation of the Interim Financial Information in accordance with International Accounting
Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on the
Interim Financial Information based on our review and to report our conclusion solely to you,
as a body, in accordance with our agreed terms of engagement and for no other purpose. We
do not assume responsibility towards or accept liability to any other person for the contents of
this report.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410 “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity”. A review of the Interim Financial Information consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-1 –


--- page 585 ---
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
Interim Financial Information of the Group is not prepared, in all material respects, in
accordance with International Accounting Standard 34 “Interim Financial Reporting”.
Other Matter
The comparative information for the interim condensed consolidated statement of
financial position is based on the audited financial statements as at 31 December 2023. The
comparative information for the interim condensed consolidated statement of profit or loss, the
interim condensed consolidated statement of comprehensive income, the interim condensed
consolidated statement of changes in equity and the interim condensed consolidated statement
of cash flows, and related explanatory notes, for the period ended 30 June 2023 has not been
audited or reviewed.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
9 September 2024
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-2 –


--- page 586 ---
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Six months ended 30 June
Note 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 218,121,839 197,795,614
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (159,630,449) (148,352,436)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,491,390 49,443,178
Selling and marketing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (21,455,813) (17,133,161)
General and administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (6,964,685) (5,904,217)
Research and development expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 (7,662,534) (6,613,944)
Net impairment losses on financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,208) (219,212)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 4,426,954 3,652,611
Other (losses)/gains, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 (1,611,408) 160,218
Operating profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,188,696 23,385,473
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 697,281 471,856
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 (866,073) (2,097,825)
Finance costs, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(168,792) (1,625,969)
Share of profit of associates and
joint ventures, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 431,939 348,545
Profit before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,451,843 22,108,049
Income tax expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 (4,310,369) (3,578,648)
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,141,474 18,529,401
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,804,395 18,232,839
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118337,079 296,562
21,141,474 18,529,401
Earnings per share for profit attributable to
owners of the Company: 11
– Basic (RMB per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.02 2.67
– Diluted (RMB per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.01 2.66
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-3 –


--- page 587 ---
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,141,474 18,529,401
Other comprehensive loss:
Items that may be reclassified to profit or loss,
net of tax
– Other comprehensive income that will be transferred
subsequently to profit or loss under the equity
method, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,565 35,908
– Cash flow hedging reserves, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(214,144) (133,849)
– Currency translation differences of foreign
operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(542,790) 181,669
– Others, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(22,748) (25,644)
Items that will not be reclassified to profit or loss,
net of tax
– Changes arising from remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,515 (21,788)
– Changes in fair value of investments in other equity
instruments, net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111848 –
Other comprehensive (loss)/income for the period,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(751,554) 36,296
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(491,428) 17,025
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(260,126) 19,271
Total comprehensive income for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,389,920 18,565,697
Attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,312,967 18,249,864
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,953 315,833
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-4 –


--- page 588 ---
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
30 June
As at
31 December
Note 2024 2023
RMB’000 RMB’000
(Unaudited)
ASSETS
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 37,055,607 36,382,765
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 11,024,196 11,501,892
Investment properties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,234,600 1,293,629
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 39,393,006 40,860,697
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,806,344 12,771,150
Prepayments, other receivables and other assets /H1118/H111815 2,915,946 2,705,275
Investments in associates and joint ventures /H1118/H1118/H1118/H1118/H111818 4,840,550 4,976,109
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 564,901 975,272
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 2,931,156 2,082,347
Other financial assets at amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 81,596,068 79,121,387
Other financial assets at fair value through other
comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 5,175,236 6,356,921
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 4,304,815 5,687,591
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118204,842,425 204,715,035
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 40,329,230 47,339,255
Contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 3,617,571 4,045,925
Trade and note receivables at amortized cost /H1118/H1118/H1118/H1118/H111824 49,799,076 38,406,699
Trade and note receivables at fair value through
other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 19,892,103 13,330,008
Prepayments, other receivables and other assets /H1118/H111815 14,510,502 14,796,946
Loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 13,958,685 14,296,958
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 1,556,841 1,670,754
Other financial assets at amortized cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 52,141,221 59,275,572
Other financial assets at fair value through other
comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 1,287,344 4,694,429
Other financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 2,745,091 1,790,588
Term deposits and restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 50,449,220 21,786,586
Cash and cash equivalents
/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 51,500,714 59,887,260
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118301,787,598 281,320,980
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118506,630,023 486,036,015
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-5 –


--- page 589 ---
As at
30 June
As at
31 December
Note 2024 2023
RMB’000 RMB’000
(Unaudited)
LIABILITIES
Non-current liabilities
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 43,070,309 49,356,705
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 1,911,438 2,047,319
Deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,911,543 5,097,810
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 2,343,846 2,253,296
Deferred income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831 1,740,573 1,734,932
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 2,798 2,282
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,980,507 60,492,344
Current liabilities
Trade and note payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 108,203,156 94,238,073
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 34,683,769 41,765,475
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 27,682,979 22,109,985
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 1,130,176 1,166,901
Customer deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,932 88,960
Derivative financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 699,476 413,222
Other financial liabilities at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 1,075,388 1,346,674
Current tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,785,921 3,477,253
Other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 99,044,845 86,639,178
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118276,365,642 251,245,721
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,346,149 311,738,065
EQUITY
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 6,980,152 7,025,769
Treasury shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833 (6,497,464) (12,871,738)
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835 28,162,413 32,440,770
Retained earnings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834 136,151,033 136,282,362
Equity attributable to owners of the Company /H1118/H1118/H1118/H1118164,796,134 162,877,163
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,487,740 11,420,787
Total equity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118176,283,874 174,297,950
Total equity and liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118506,630,023 486,036,015
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-6 –


--- page 590 ---
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 32) (Note 33) (Note 35) (Note 34)
Six months ended 30 June 2024
(Unaudited)
Balance at 1 January 2024 /H1118/H1118/H1118/H11187,025,769 (12,871,738) 32,440,770 136,282,362 162,877,163 11,420,787 174,297,950
Comprehensive income:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 20,804,395 20,804,395 337,079 21,141,474
Other comprehensive loss /H1118/H1118/H1118/H1118/H1118– – (491,428) – (491,428) (260,126) (751,554)
Total comprehensive
(loss)/income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (491,428) 20,804,395 20,312,967 76,953 20,389,920
Transactions with owners
Capital injection (Note 32,
Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,112 – 1,098,850 – 1,123,962 30,064 1,154,026
Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 780,439 – 780,439 24,906 805,345
Appropriation to general reserves /H1118/H1118 – – 162,738 (162,738) – – –
Reversal of general reserves /H1118/H1118/H1118/H1118– – (3,366) 3,36 6–––
Cancellation of shares (Note 32,
Note 33, Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(69,808) 5,159,408 (5,089,600) ––––
Dividends (Note 10) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (20,776,352) (20,776,352) (63,746) (20,840,098)
Appropriation to special reserves /H1118/H1118 – – 4,638 – 4,638 10,445 15,083
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (3,361) – (3,361) (10,095) (13,456)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 32, Note 33,
Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(921) 1,214,866 (740,707) – 473,238 – 473,238
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,440 – 3,440 (1,574) 1,866
Balance at 30 June 2024 /H1118/H1118/H1118/H1118/H11186,980,152 (6,497,464) 28,162,413 136,151,033 164,796,134 11,487,740 176,283,874
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-7 –


--- page 591 ---
Attributable to owners of the Company
Share
capital
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 32) (Note 33) (Note 35) (Note 34)
Six months ended 30 June 2023
(Unaudited)
Balance at 1 January 2023 /H1118/H1118/H1118/H11186,997,273 (14,933,944) 31,193,091 119,675,616 142,932,036 8,988,529 151,920,565
Comprehensive income:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 18,232,839 18,232,839 296,562 18,529,401
Other comprehensive income /H1118/H1118/H1118/H1118– – 17,025 – 17,025 19,271 36,296
Total comprehensive income /H1118/H1118/H1118 – – 17,025 18,232,839 18,249,864 315,833 18,565,697
Transactions with owners
Capital injection (Note 32,
Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,406 – 1,289,426 – 1,316,832 17,897 1,334,729
Non-controlling interests arising
from business combinations /H1118/H1118/H1118 ––––– 2,551,324 2,551,324
Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 558,688 – 558,688 21,862 580,550
Appropriation to general reserves /H1118/H1118 – – 5,972 (5,972) – – –
Dividends (Note 10) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (17,181,616) (17,181,616) (62,054) (17,243,670)
Appropriation to special reserves /H1118/H1118 – – 1,768 – 1,768 472 2,240
Special reserves utilization /H1118/H1118/H1118/H1118/H1118– – (1,397) – (1,397) (349) (1,746)
Exercise or lapse (repurchases and
cancellation) of other share
schemes (Note 32, Note 33,
Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,498) 1,114,904 (546,056) – 566,350 – 566,350
Transaction with NCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (64,559) – (64,559) (27,335) (91,894)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (12,102) – (12,102) 67,743 55,641
Balance at 30 June 2023 /H1118/H1118/H1118/H1118/H11187,022,181 (13,819,040) 32,441,856 120,720,867 146,365,864 11,873,922 158,239,786
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-8 –


--- page 592 ---
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June
Note 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836(a) 38,100,311 33,667,847
Interest received /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118641,822 417,700
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,253,963) (4,300,873)
Net cash generated from operating activities /H1118/H1118/H1118 33,488,170 29,784,674
Cash flows from investing activities:
Disposal of subsidiaries, net of cash disposed /H1118/H1118/H1118/H1118(215,770) (66,892)
Proceeds from acquisition of subsidiaries,
net of cash acquired /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 373,816
Proceeds from disposal of investments in
associates and joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,015 –
Proceeds from disposal of financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H111858,932,362 56,866,188
Payments for purchase of financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118(78,156,904) (84,964,587)
Proceeds from disposal of property, plant and
equipment, intangible assets and
other non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118382,397 113,016
Payments for purchase of property, plant and
equipment, intangible assets and
other non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,734,576) (2,794,669)
Interest received and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,550,444 3,065,690
Dividends received from associates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118580,478 360,750
Net cash used in investing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20,635,554) (27,046,688)
Cash flows from financing activities:
Proceeds from share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,167,830 1,877,123
Payments for repurchase of shares and refund the
exercise price of lapsed restricted shares /H1118/H1118/H1118/H1118/H1118/H1118(22,768) (68,089)
Transactions with non-controlling interests /H1118/H1118/H1118/H1118/H1118/H111820,000 (166,562)
Proceeds from borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,407,555 14,310,153
Repayments of borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(19,083,158) (3,772,807)
Receipt from the deposit related to the bond
insurance of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 265,000
Interests paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(805,920) (878,830)
Dividends paid to the Company’s shareholders /H1118/H1118/H1118 (20,780,278) (17,188,858)
Dividends paid to non-controlling interests
in subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(84,424) (100,216)
Related payments of lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(726,899) (728,765)
Listing expenses paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,224) –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(63,870) 13,923
Net cash used in financing activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20,977,156) (6,437,928)
Net decrease in cash and cash equivalents /H1118/H1118/H1118/H1118/H1118(8,124,540) (3,699,942)
Cash and cash equivalents at beginning of
the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,887,260 51,131,968
Exchange (losses)/gains on cash and cash
equivalents
/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(262,006) 128,769
Cash and cash equivalents at end of the period /H1118 25 51,500,714 47,560,795
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-9 –


--- page 593 ---
I. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
1. GENERAL INFORMATION OF THE GROUP
Midea Group Co., Ltd. (hereinafter referred to as “the Company”), was set up by the Council of Trade Unions
of GD Midea Group Co., Ltd. and was registered in Market Safety Supervision Bureau of Shunde District, Foshan,
PRC on 7 April 2000, with its headquarters located in Foshan, Guangdong. On 30 August 2012, the Company was
transformed into a limited liability company. On 29 July 2013, the Company was approved to merge and acquire
Guangdong Midea Electric Co., Ltd., which was listed on Shenzhen Stock Exchange. On 18 September 2013, the
Company’s A Shares were listed on Shenzhen Stock Exchange.
The Company and its subsidiaries (hereinafter collectively referred to as “the Group”) are principally engaged
in manufacturing and sales of residential air-conditioner, central air-conditioner, heating and ventilation systems,
kitchen appliances, refrigerators, washing machines and various small appliances, elevators, high-voltage inverters,
low-voltage inverters, medical imaging products, robotics and automation system. The Group also carried out other
businesses including provision of the smart supply chain; sale, wholesale and processing of raw materials of
household electrical appliances; and financial businesses involving customer deposits, interbank lending and
borrowings, consumption credits, buyer’s credits and finance leases.
2. BASIS OF PREPARATION AND PRESENTATION
2.1 Basis of preparation
This interim condensed consolidated financial information, comprising interim condensed consolidated
statement of financial position as at 30 June 2024, the interim condensed consolidated statement of profit or loss and
other comprehensive income, the interim condensed consolidated statement of changes in equity and the interim
condensed consolidated statement of cash flows for the six months ended 30 June 2024 (collectively referred to as
the “Interim Financial Information”), has been prepared in accordance with International Accounting Standard
(“IAS”) 34, “Interim Financial Reporting” issued by the International Accounting Standard Board (“IASB”).
The Interim Financial Information has been prepared in accordance with the same accounting policies adopted
in the historical financial information for the years ended 31 December 2021, 2022 and 2023 and the four months
ended 30 April 2024 (the “Historical Financial Information”) as disclosed in Appendix I to the prospectus issued by
the Company.
This Interim Financial Information contains consolidated financial statements and selected explanatory notes.
The selected notes are included to explain events and transactions that are significant to an understanding of the
changes in financial position and performance of the Group since the latest annual consolidated financial statements
as at and for the year ended 31 December 2023. The condensed consolidated interim financial statements and notes
thereon do not include all of the information required for a full set of financial statements prepared in accordance
with IFRS Accounting Standards (“IFRS”). Accordingly, these unaudited condensed consolidated financial
statements should be read in conjunction with the Historical Financial Information and notes thereto.
2.2 New standards and interpretations adopted
The adoption of new and amended standards and interpretation as described below.
Effective for annual
periods beginning on
or after
Amendments to IAS 1 /H1118/H1118/H1118/H1118Classification of Liabilities as Current or
Non-current
1 January 2024
Amendments to IAS 1 /H1118/H1118/H1118/H1118Non-current Liabilities with Covenants 1 January 2024
Amendments to IFRS 16 /H1118/H1118/H1118Lease Liability in a sales and Leaseback 1 January 2024
Amendments to IAS 7 and
IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Supplier Finance Arrangements 1 January 2024
The adoption of new and amended standards and interpretation did not have material impact on the Interim
Financial Information.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-10 –


--- page 594 ---
2.3 New standards and interpretations not yet been adopted
Amended standards that have been issued but not yet effective and have not been early adopted:
Effective for annual
periods beginning on
or after
Amendments to IAS 21 /H1118/H1118/H1118Lack of Exchangeability 1 January 2025
Amendments to IFRS 9 and
IFRS 7 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Financial Instruments Standards 1 January 2026
IFRS 18 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Presentation and Disclosure in Financial Statements 1 January 2027
IFRS 19 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Subsidiaries without Public Accountability:
Disclosures
1 January 2027
Amendments to IFRS 10
and IAS 28 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Sale or Contribution of Assets between an Investor
and its Associate or Joint venture
To be determined
The above new standards, new interpretations and amended standards are not expected to have a material
impact on the Group in the current or future reporting periods and on foreseeable future transactions.
2.4 Critical Accounting Estimates and Judgements
The preparation of the interim financial information in conformity with IAS 34 requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
In preparing the Interim Financial Information, the significant judgments made by management in applying the
Group’s accounting policies and the key sources of estimation uncertainty are the same as those applied to the
Historical Financial Information.
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
other price risk, interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s
financial performance. Risk management is carried out by the directors and senior management of the Group.
The Interim Financial Information does not include all financial risk management information and disclosures
required in the annual consolidated financial statements and should be read in conjunction with the Historical
Financial Information. There were no significant changes in any material risk management policies during the six
months ended 30 June 2024.
3.2 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the year ended 31 December 2023 and the six months ended 30 June 2024.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-11 –


--- page 595 ---
The Group monitors capital on the basis of the asset-liability ratio and the asset-liability ratio as at 30 June
2024 and 31 December 2023 were as follows:
As at 30 June As at 31 December
2024 2023
(Unaudited)
Total assets (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118506,630,023 486,036,015
Total liabilities (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,346,149 311,738,065
Asset-liability ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865.20% 64.14%
3.3 Fair value estimation
The table below analyses the Group’s financial instruments carried at fair value as at 30 June 2024 and 31
December 2023 by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorized
into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
(a) Fair value hierarchy
As at 30 June 2024 and 31 December 2023, the financial assets and liabilities measured at fair value on a
recurring basis by the above three levels were analyzed below:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
As at 30 June 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Financial assets:
Trade and note receivables at
FVOCI (Note 16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 19,892,103 – 19,892,103
Derivative financial instruments
(Note 21) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4,487,997 – 4,487,997
Other financial assets at FVPL
(Note 20(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,258,780 486,311 4,304,815 7,049,906
Other financial assets at FVOCI
(Note 20(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 6,424,870 37,710 6,462,580
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,258,780 31,291,281 4,342,525 37,892,586
Financial liabilities:
Other financial liabilities at FVPL
(Note 30) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,075,388 1,075,388
Derivative financial instruments
(Note 21) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 702,274 – 702,274
Total financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 702,274 1,075,388 1,777,662
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-12 –


--- page 596 ---
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2023
Financial assets:
Trade and note receivables at
FVOCI (Note 16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,330,008 – 13,330,008
Derivative financial instruments
(Note 21) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,753,101 – 3,753,101
Other financial assets at FVPL
(Note 20(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,726,584 64,004 5,687,591 7,478,179
Other financial assets at FVOCI
(Note 20(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 11,013,476 37,874 11,051,350
Total financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,726,584 28,160,589 5,725,465 35,612,638
Financial liabilities:
Other financial liabilities at FVPL
(Note 30) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,346,674 1,346,674
Derivative financial instruments
(Note 21) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 415,504 – 415,504
Total financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 415,504 1,346,674 1,762,178
The timing of transfers is determined at the date of the event or change in circumstances that caused the
transfers. During the period, there was no transfer between Level 1 and Level 2 or between Level 2 and Level 3.
(b) V aluation techniques used to determine fair values
The fair value of financial instruments traded in an active market is determined at the quoted market price; and
the fair value of those not traded in an active market is determined by the Group using valuation technique. The
valuation models used mainly comprise discounted cash flow approach, market comparable company approach and
net assets approach. The inputs of the valuation technique mainly include risk-free interest rate, floating rate, foreign
exchange rate, volatility, financial data of target companies, market multiple of comparable companies and discount
for lack of marketability.
Assets and liabilities subject to Level 2 fair value measurement were mainly included trade and note
receivables at FVOCI, structured deposits in other financial assets at FVPL, transferable certificate of deposit in other
financial assets at FVOCI and derivative financial instruments are evaluated by discounted cash flows approach,
market approach and income approach.
Assets and liabilities subject to Level 3 fair value measurement were mainly included unlisted securities of
other financial assets at FVPL and other financial assets at FVOCI, and financial liabilities at FVPL. These assets
and liabilities were measured mainly using market approach, net asset value and consensus pricing. The judgement
of Level 3 of the fair value hierarchy is based on the materiality of unobservable inputs towards calculation of whole
fair value. Significant unobservable inputs mainly include the financial data of targeted companies, market multiple
of comparable companies and discount for lack of marketability.
The Group did not change any valuation techniques in determining the level 2 and level 3 fair values.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-13 –


--- page 597 ---
The following table presents the changes in level 3 items:
Reconciliation of Level 3 fair value measurements Financial assets at FVOCI and FVPL
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Opening balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,725,465 6,389,915
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 159,090
Disposals/settlements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(67,227) (160,792)
Transfer out of Level 3 (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,345,172) (69,044)
Changes in fair value recognized in other
comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111848 –
Changes in fair value recognized in profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,922 (171,611)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,489 39,070
Closing balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,342,525 6,186,628
Reconciliation of Level 3 fair value measurements Other financial liabilities at FVPL
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Opening balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,346,674 1,580,771
Disposals/settlements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(63,870) (150,903)
Changes in fair value recognized in profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(207,416) 4,451
Closing balance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,075,388 1,434,319
(a) For the six months ended 30 June 2024 and 2023, certain financial assets were transferred out of level
3 of fair value hierarchy classifications mainly as a result of the conversion of restricted listed securities
into tradable listed securities.
(b) For the six months ended 30 June 2024, the Group’s own credit risk on other financial liabilities at FVPL
was not considered to be a significant input factor.
4. SEGMENT INFORMATION AND REVENUE
(a) Description of segments and principal activities
The Group’s strategic steering committee, consisting of the chief executive officer, the chief financial officer
and the manager for corporate planning, examines the Group’s performance both from a product and geographic
perspective and has identified four reportable segments of its business:
 Heating & ventilation, as well as air-conditioner (hereinafter referred to as “HV AC”): this part of the
business comprises manufacturing and sales of household air-conditioner, central air-conditioner,
heating and ventilation system and other related products in domestic and other countries.
 Consumer appliances: this part of the business manufacturing and sales of kitchen appliances,
refrigerators, washing machines, all kinds of small household appliances and other related products in
domestic and other countries.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-14 –


--- page 598 ---
 Robotics and automation system: this part of the business manufacturing and sales of robots, automation
systems, inverter and elevator servo systems, new energy vehicles parts and other related products in
domestic and other countries.
 Others: this part of the business includes a) Annto Logistics service platform of intelligent supply chain
business integration solution; b) Wandong Medical, engaged in medical device products and related
services; c) the entire value chain of the industrial internet service platform which performs home
appliance raw material sales and wholesale; and d) financial services such as deposits taking, inter-bank
borrowing, consumer credit, loan receiving and financial leasing mainly in China.
Management monitors the results of the Group’s operating segments separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on
reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before
tax is measured consistently with the Group’s profit before tax except that net impairment losses on financial assets
and contract assets, other income (excluding interest income), other gains/losses (excluding net foreign exchange
gains/losses), share of profit of associates and joint ventures, impairment provision for inventories and other assets
and impairment provision for investments in associates and joint ventures are excluded from such measurement.
(b) Segment information
The Group derives revenue from the transfer of goods and services over time and at a point in time in the
following major product lines:
Segment information for the six months ended 30 June 2024 is as follows:
(Unaudited)
Heating &
ventilation,
as well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111,400,967 81,564,415 16,016,279 9,140,178 – 218,121,839
Inter-segment revenue /H1118/H1118/H11182,226,979 450,163 316,178 4,851,504 (7,844,824) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(100,223,126) (72,827,039) (16,131,918) (13,089,474) 7,555,413 (194,716,144)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H111813,404,820 9,187,539 200,539 902,208 (289,411) 23,405,695
Other profit or loss /H1118/H1118/H1118/H1118 2,046,148
Total profit before
income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118 25,451,843
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,906,262 193,792,328 51,374,621 253,562,975 (220,006,163) 506,630,023
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118162,792,152 141,948,534 34,297,072 258,616,781 (267,308,390) 330,346,149
Investments in associates
and joint ventures /H1118/H1118/H1118/H1118490,991 124,297 43,698 4,181,564 – 4,840,550
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118279,988 1,871 (244) 150,324 – 431,939
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H11186,262 (33,927) 4,347 109,672 (51,146) 35,208
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118/H11181,238,444 941,895 718,340 941,576 (4,473) 3,835,782
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-15 –


--- page 599 ---
Segment information for the six months ended 30 June 2023 is as follows:
(Unaudited)
Heating &
ventilation,
as well as
air-conditioner
Consumer
appliances
Robotics and
automation
system
Other
segments and
unallocated
Inter-segment
elimination Total
Revenue from external
customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,081,554 72,090,725 16,415,970 7,207,365 – 197,795,614
Inter-segment revenue /H1118/H1118/H11181,700,542 431,191 207,239 3,143,282 (5,482,254) –
Operating costs and
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(91,806,007) (64,097,603) (16,569,793) (9,179,970) 5,266,038 (176,387,335)
Segment profit /H1118/H1118/H1118/H1118/H1118/H1118/H111811,976,089 8,424,313 53,416 1,170,677 (216,216) 21,408,279
Other profit or loss /H1118/H1118/H1118/H1118 699,770
Total profit before
income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118 22,108,049
Share of profit of
associates and joint
ventures, net /H1118/H1118/H1118/H1118/H1118/H1118176,833 1,860 1,014 168,838 – 348,545
Net impairment
losses/(reversal) on
financial assets and
contract assets /H1118/H1118/H1118/H1118/H1118/H1118109,005 73,334 (16,427) 19,570 33,730 219,212
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118/H11181,111,247 991,929 619,591 548,159 28,881 3,299,807
Revenue from external customers is derived from sales of the Heating & ventilation, air conditioner, consumer
appliances, robotics and automation system, and other businesses.
There was no customer who individually contributed 10% or more of the Group’s revenue for the period.
The timing of revenue recognition is shown in the table below.
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Revenue recognized at a point in time
Heating & ventilation, as well as air-conditioner /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111,133,446 101,964,051
Consumer appliances /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881,552,187 72,082,444
Robotics and automation system /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,988,683 7,868,157
Other segments and unallocated /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,689,796 5,458,158
Revenue recognized over time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Robotics and automation system /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,014,833 8,535,080
Heating & ventilation, as well as air-conditioner /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262,581 109,313
Other segments and unallocated /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118574,427 912,290
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-16 –


--- page 600 ---
The Company is domiciled in Mainland China. The amount of the Group’s revenue from external customers
by location of the customers is shown in the table below:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Mainland China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127,045,708 117,259,490
Other countries or regions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111891,076,131 80,536,124
218,121,839 197,795,614
(c) Assets and liabilities related to contracts with customers
The assets and liabilities related to contracts with customers refer to Note 23 and Note 28.
5. OTHER INCOME
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Interest income (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,042,813 2,863,080
Government grants (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118687,887 789,531
Additional deduction for V A T (c) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118696,254 –
4,426,954 3,652,611
(a) Interest income
Interest income from other financial assets at FVPL is included in the net fair value gains/(losses) on these
assets, see Note 6 below. Interest income on other financial assets at amortized cost and other financial assets at
FVOCI calculated using the effective interest method is recognized in profit or loss as part of other income.
(b) Government grants
The government grants were mainly incentives provided by local government authorities in the PRC, including
various forms of government financial incentives and preferential tax treatments, to reward the Group’s support and
contribution for the development of local economies. As at 30 June 2024 and 31 December 2023, there were no
unfulfilled conditions or contingencies relating to these government grants.
(c) Additional deduction for V AT
Pursuant to the Notice on the Additional V alue-added Tax (“V A T”) Credit Policy for Advanced Manufacturing
Enterprises (Announcement [2023] No. 43) issued by the Ministry of Finance and the State Taxation Administration
in September 2023, advanced manufacturing enterprises are eligible for a 5% additional V A T deduction based on
deductible input V A T.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-17 –


--- page 601 ---
6. OTHER (LOSSES)/GAINS, NET
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Net gains on financial instruments (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118375,360 45,265
Net foreign exchange (losses)/gains /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,209,120) 188,039
Net gains on disposal of property, plant and equipment and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118114,007 8,525
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108,345 (81,611)
(1,611,408) 160,218
(a) Net gains on financial instruments mainly include net gains on derivative financial instruments, other
financial assets at FVPL and other financial liabilities at FVPL.
7. EXPENSES BY NATURE
Expenses included in cost of revenue, selling and marketing expenses, general and administrative expenses and
research and development expenses are analyzed as follows:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Raw materials and consumables used /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118130,636,444 120,842,630
Employee benefit expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,784,419 19,789,282
Installation and after-sales expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,007,967 4,856,446
Transportation and insurance charges /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,447,979 8,332,156
Advertising and promotion expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,269,849 8,202,326
Depreciation and amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,835,782 3,299,807
Auditors’ remuneration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,275 3,405
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,414 –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,724,352 12,677,706
195,713,481 178,003,758
8. FINANCE COSTS, NET
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Finance income:
Interest income from financial assets held for cash
management purposes (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118641,822 417,700
Reclassification from cost of hedge reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855,459 54,156
697,281 471,856
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-18 –


--- page 602 ---
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Finance costs:
Interest and finance charges paid/payable for borrowings /H1118/H1118/H1118/H1118(990,207) (1,466,460)
Interest and finance charges paid/payable for lease liabilities
(Note 13(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(74,478) (59,223)
Net exchange gains/(losses) on foreign currency borrowings /H1118/H1118 198,612 (572,142)
(866,073) (2,097,825)
Finance costs, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(168,792) (1,625,969)
(a) Interest income represents interest income from cash and cash equivalent, including bank balances and
term deposits with initial terms within three months.
9. TAXATION
(a) Income tax expense
Income tax expense is recognized based on management’s best knowledge of the income tax rates expected for
the financial year.
The following table sets forth the component of income tax expenses of the Group for the six months ended
30 June 2024 and 2023:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Current income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,625,048 5,274,130
Deferred income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,314,679) (1,695,482)
4,310,369 3,578,648
(i) PRC corporate income tax (“CIT”)
The income tax provision of the Group in respect of its operations in mainland China was calculated at tax rate
of 25% on the assessable profits for the periods presented, based on the existing legislation, interpretation and
practices in respect thereof.
Certain subsidiaries of the Company in the Mainland of China were approved as high-tech Enterprise, and they
were subject to a preferential corporate income tax rate of 15% during the period.
Certain subsidiaries of the Company were entitled to other tax concessions, mainly including the preferential
tax rate of 15% applicable to some subsidiaries located in certain areas of the Mainland of China upon fulfillment
of certain requirements of the respective local governments application conditions of relevant preferential policies.
During the period, certain subsidiaries of the Company located in mainland China fulfill the micro and small
enterprises qualification under Chinese corporate income tax system. Therefore, these subsidiaries were subject to the
effective income tax rate of 5%.
The Company’s subsidiaries in Mainland China other than those mentioned above are subject to enterprise
income tax at the rate of 25%.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-19 –


--- page 603 ---
(ii) Cayman Islands and British Virgin Islands corporate income tax
Under the current laws of the British Virgin Islands, entities incorporated in British Virgin Islands are not
subject to tax on their income or capital gains.
(iii) Hong Kong profits tax
Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profits during
the period.
(iv) Corporate income tax in other jurisdictions
The income tax rates of the subsidiaries in Singapore, Brazil, Japan, Italy, Germany, Israel, Egypt, USA and
Vietnam are 17%, 34%, 34.01%, 24%, 32%, 23%, 22.5%, 21% and 20%, respectively.
Midea Electric Trading (Singapore) Co., Pte Ltd., the Company’s subsidiary, was awarded with the Certificate
of Honor for Development and Expansion (No. 587) by the Singapore Economic Development Board and subject to
the applicable preferential income tax rate of 6% during the period.
Under the investment preferential BOI policy of the Thailand Board of Investment, eligible subsidiaries in
Thailand are not subject to tax on their BOI business income which belongs to the preferential policy during the
period.
Income tax on profit arising from other jurisdictions, including Singapore, Brazil, Japan, Italy, Germany,
Israel, Egypt, the USA and Vietnam had been calculated on the estimated assessable profit for the period at the
respective rates prevailing in the relevant jurisdictions.
(v) Additional Deduction for research and development expense
According to the relevant laws and regulations promulgated by the State Council of the People’s Republic of
China that was effective from 2008 onwards, enterprises engaging in research and development activities were
entitled to claim 150% of their research and development expenses so incurred as tax deductible expenses when
determining their assessable profits for that year (“Additional Deduction”). The State Taxation Administration of The
People’s Republic of China (“STA”) further announced in March 2021 that manufacturing enterprises engaging in
research and development activities would entitle to claim 200% of their research and development expenses as
Accelerated Deduction since 1 January 2021. The STA further announced in March 2023 that eligible enterprises
would entitle to claim 200% of their research and development expenses as Additional Deduction since 1 January
2023. The Group has made its best estimate for the Additional Deduction to be claimed for the Group’s entities in
ascertaining their assessable profits during the period.
(vi) Withholding tax (“WHT”)
According to the New Enterprise Income Tax Law (“New EIT Law”), distribution of profits earned by
companies in mainland China since January 1, 2008 to foreign investors is subject to withholding tax of 10% or treaty
tax rate, depending on the country of incorporation of the foreign investors, upon the distribution of profits to
overseas-incorporated immediate holding companies. As at 30 June 2024 and 31 December 2023, the Group has
recognized deferred tax liabilities in relation to withholding taxes for the earnings of the Mainland China subsidiaries
to be remitted in the foreseeable future.
As at 30 June 2024 and 31 December 2023, the Group does not have plans to require some overseas
subsidiaries to distribute their unremitted earnings in the foreseeable future, and intends to retain them to operate and
expand its business in overseas. Accordingly, no deferred income tax liability related to WHT on unremitted earnings
of these subsidiaries was accrued as at the end of each reporting period.
(vii) OECD Pillar Two model rules
The Organisation for Economic Co-operation and Development (“OECD”) published Pillar Two model rules
in December 2021, with the effect that a jurisdiction may enact domestic tax laws (“Pillar Two legislation”) to
implement the Pillar Two model rules on a globally agreed common approach. Pillar Two legislation applies to a
member of a multinational group within the scope of the Pillar Two model rules, which the Group is reasonably
expected to fall into. It imposes a top-up tax on profits arising in a jurisdiction whenever the effective tax rate
determined by the Pillar Two model rules on a jurisdictional basis is below a minimum rate of 15%.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-20 –


--- page 604 ---
The Group has reviewed its corporate structure in light of the introduction of Pillar Two model rules in various
jurisdictions and engaged external tax specialists to assist them with applying the legislation and determining the
related impact.
As at 30 June 2024, the Group mainly operates in the Mainland of China, in which exposures to Pillar Two
income taxes might exist although the legislation is not yet substantively enacted or enacted. The Group applies the
IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar
Two income taxes.
For those jurisdictions where the Pillar Two legislation was enacted but not effective at the reporting date, the
Group has no related current tax exposure. However, certain subsidiaries of the Company are located in jurisdictions
mainly including Netherlands, Japan, Germany and Italy where Pillar Two legislation was effective since 1 January
2024, and the Group’s assessment indicates that there is no material related current tax exposure in these jurisdictions
for the six months ended 30 June 2024.
10. DIVIDENDS
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Ordinary A shares
Final dividends in respect of the previous year, declared and
paid during the period (tax inclusive) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,780,278 17,188,858
Dividends of lapsed restricted shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,926) (7,242)
20,776,352 17,181,616
The final dividends of RMB25 and RMB30 per 10 shares (tax inclusive) in respect of the years ended 31
December 2022 and 2023 were approved by the Annual General Meeting of the Company.
11. EARNINGS PER SHARE
(a) Basic
Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the six months ended 30 June 2024 and 2023,
excluding ordinary shares held for share schemes as these shares are not considered outstanding for earnings per share
calculation purposes.
Six months ended 30 June
2024 2023
(Unaudited) (Unaudited)
Profit attributable to owners of the Company (RMB’000) /H1118/H1118/H111820,804,395 18,232,839
Less: Dividends payable to expected vested restricted shares
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(105,952) (78,122)
Profit attributable to owners of the Company used in
calculating basic EPS (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,698,443 18,154,717
Weighted average number of ordinary shares in issue
(thousand shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,863,659 6,802,764
Basic EPS (RMB per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.02 2.67
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-21 –


--- page 605 ---
(b) Diluted
The share schemes granted by the Company and the subsidiaries have potential dilutive effect on the EPS.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding by the assumption
of the conversion of all potential dilutive ordinary shares arising from share schemes (collectively forming the
denominator for computing the diluted EPS).
For the six months ended 30 June 2024 and 2023, the Restricted Share Incentive Schemes and Stock Ownership
Schemes granted by the Group’s subsidiaries had either anti-dilutive effect or insignificant dilutive effect to the
Group’s diluted earnings per share.
Six months ended 30 June
2024 2023
(Unaudited) (Unaudited)
Adjusted profit attributable to owners of the Company used in
calculating diluted EPS (RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,722,969 18,164,127
Weighted average number of ordinary shares in issue
(thousand shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,863,659 6,802,764
Adjustments for potential shares arising from share schemes
(thousand shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,075 13,202
Weighted average number of ordinary shares used in
calculating diluted EPS (thousand shares) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,884,734 6,815,966
Diluted EPS (RMB per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.01 2.66
12. PROPERTY, PLANT AND EQUIPMENT
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,834,001 15,390,258
Overseas land /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,413,436 1,382,410
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,800,881 11,687,212
Motor vehicles /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118236,294 248,737
Electronic equipment and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,250,819 2,229,346
Construction in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,774,313 4,681,220
Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118745,863 763,582
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,055,607 36,382,765
(a) Certain property, plant and equipment as at 30 June 2024 and 31 December 2023 respectively, were pledged
as securities for bank loan facilities and financing lease.
(b) Depreciation of the Group’s property, plant and equipment has been recognized as follows:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,261,643 1,147,212
General and administration expenses and research and
development expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118786,551 685,799
Selling and marketing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118149,050 148,708
2,197,244 1,981,719
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-22 –


--- page 606 ---
13. LEASE
This note provides information for leases where the Group is a lessee.
(a) Amounts recognized in the consolidated statement of financial position
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Right-of-use assets
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,643,768 2,804,826
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118171,280 157,036
Land use rights and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,724,078 6,845,052
Trademark use rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,485,070 1,694,978
11,024,196 11,501,892
Lease liabilities
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,130,176 1,166,901
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,911,438 2,047,319
3,041,614 3,214,220
Certain Leasehold land and land use rights were pledged as securities for bank loan facilities as at 30 June 2024
and 31 December 2023.
(b) Amounts recognized in the consolidated statement of profit or loss
The consolidated statement of profit or loss shows the following amounts relating to leases:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Depreciation charge of right-of-use assets
Buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118589,676 499,888
Machinery and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851,336 43,043
Land use rights and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108,607 91,374
Trademark use rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,640 25,307
772,259 659,612
Interest expense (included in finance cost) (Note 8) /H1118/H1118/H1118/H1118/H1118/H1118/H111874,478 59,223
Expense relating to short-term leases (included in cost of
goods sold and administrative expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118524,111 444,830
Expense relating to leases of low-value assets that are not
shown above as short-term leases (included in operating
expenses and administrative expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,317 2,301
Expense relating to variable lease payments not included in
lease liabilities (included in operating expenses and
administrative expenses) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,062 172,775
The total cash outflow for leases during the six months ended 30 June 2024 and 2023 were approximately
RMB1,536,961,000 and RMB1,400,080,000, respectively.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-23 –


--- page 607 ---
14. INTANGIBLE ASSETS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Goodwill /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,986,897 30,858,237
Patents and non-patent technologies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,663,541 2,814,995
Trademark rights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,678,034 4,827,900
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,064,534 2,359,565
39,393,006 40,860,697
(a) Amortization of the Group’s intangible assets has been recognized as follows:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cost of revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118428,016 348,719
Research and development expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,842 4,822
General and administration expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,998 54,623
493,856 408,164
15. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Prepayments and other assets
Prepayments (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,840,158 4,767,457
Deductible value-added tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,023,914 5,852,464
Prepaid expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,065,480 1,047,492
Deferred listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853,671 30,876
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,451,781 2,060,175
14,435,004 13,758,464
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,780,657) (2,454,756)
11,654,347 11,303,708
Other receivables and other assets
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,906,339 2,233,595
Long-term receivables (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118940,680 1,050,627
Futures margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118320,764 632,773
3,167,783 3,916,995
Less: provision for impairment
– Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,584) (51,717)
– Long-term receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(117,755) (121,521)
(176,339) (173,238)
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(135,289) (250,519)
2,856,155 3,493,238
Prepayments, other receivables and other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,510,502 14,796,946
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-24 –


--- page 608 ---
(a) The non-current portion of prepayments mainly comprise prepaid construction equipment.
(b) Long-term receivables mainly comprise finance lease receivables.
16. TRADE AND NOTE RECEIV ABLES AT FAIR V ALUE THROUGH OTHER COMPREHENSIVE
INCOME
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Trade and note receivables at FVOCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,892,103 13,330,008
Trade and note receivables at FVOCI were mainly accounts receivable and bank acceptance notes transferred,
discounted and endorsed for the purpose of daily treasury management and were qualified for derecognition.
The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9.
17. LOAN RECEIV ABLES
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Loan receivables to individuals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,228,100 1,555,477
Loan receivables to corporations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,606,455 14,073,508
14,834,555 15,628,985
Less: provision for impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(310,969) (356,755)
14,523,586 15,272,230
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(564,901) (975,272)
13,958,685 14,296,958
By type of collateral held:
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Unsecured loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,224,871 1,553,285
Guaranteed loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118416,680 481,542
Pledged loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,193,004 13,594,158
14,834,555 15,628,985
Impairment on loan receivables is measured as either 12-month expected credit losses or lifetime credit loss.
On such basis, the Group’s loan receivables was mainly concentrated in Stage 1.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-25 –


--- page 609 ---
18. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Movement of investments in associates and joint ventures is analyzed as follows:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
At the beginning of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,976,109 5,188,817
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,819 –
Disposals and transfers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(29,813) (866,729)
Business combination /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 372,439
Share of profit, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118431,939 348,545
Share of other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,565 36,188
Share of other equity movement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,488 471
Dividends /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(585,221) (360,750)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,336) 12,229
4,840,550 4,731,210
Less: impairment loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––
At the end of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,840,550 4,731,210
Investments in associates and joint ventures of the Group mainly included the investments in Guangdong
Shunde Rural Commercial Bank Co., Ltd., Hefei Royalstar Motor Co., Ltd., Carrier Midea North America LLC,
Foshan Micro Midea Filter Mfg. Co., Ltd, Concepcion Midea Inc., TWENTYTHREEC LLC, ShenZhen CEGN Co.,
Ltd. and T.G. Battery Co. (Hong Kong) Ltd..
There was no associate nor joint venture of the Group as at 30 June 2024 which, in the opinion of the directors,
was material to the Group.
19. OTHER FINANCIAL ASSETS AT AMORTIZED COST
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Constant Return Financial Products /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133,737,289 138,396,959
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(81,596,068) (79,121,387)
52,141,221 59,275,572
As at 30 June 2024 and 31 December 2023, constant return financial products of the Group were mainly
included term bank deposits with initial terms of over one year, custom deposits and certificates of deposits deposited
in financial institutions, which were subsequently measured at amortized cost.
Certain other financial assets at amortized cost were pledged as guaranteed deposits for notes payables as at
30 June 2024 and 31 December 2023.
Other Financial assets at amortized cost are subject to the impairment assessment according to IFRS 9, the
identified impairment loss was immaterial as at 30 June 2024 and 31 December 2023.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-26 –


--- page 610 ---
20. OTHER FINANCIAL ASSETS AT FVPL AND FVOCI
(a) Other financial assets at FVPL
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Non-current:
– Equity securities (a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,304,815 5,687,591
Current:
– Structured deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118425,937 53,750
– Listed securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,258,780 1,726,584
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,374 10,254
2,745,091 1,790,588
7,049,906 7,478,179
(a) Equity securities mainly comprise unlisted securities. The fair values of these equity securities are
measured using a valuation technique with unobservable inputs and hence classified as Level 3 of the
fair value hierarchy.
(b) Other Financial assets at FVOCI
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Non-current:
– Equity securities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,710 37,874
– Transferable certificate of deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,137,526 6,319,047
5,175,236 6,356,921
Current:
– Transferable certificate of deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,287,344 4,694,429
6,462,580 11,051,350
As at 30 June 2024 and 31 December 2023, the cost of the Group’s transferable certificate of deposits
approximated its fair value.
Other financial assets at FVOCI is subject to the impairment requirements of IFRS 9, the identified impairment
loss was immaterial as at 30 June 2024 and 31 December 2023.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-27 –


--- page 611 ---
21. DERIV ATIVE FINANCIAL INSTRUMENTS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Assets:
– Cross-currency interest rate swaps – used for hedging (a) /H1118/H1118 2,480,383 1,924,092
– Cross-currency interest rate swaps – held for trading /H1118/H1118/H1118/H1118/H1118638,821 1,213,625
– Foreign currency and futures contracts – used for
hedging (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118590,216 392,593
– Others – held for trading (c) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118778,577 222,791
4,487,997 3,753,101
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,931,156) (2,082,347)
1,556,841 1,670,754
Liabilities:
– Cross-currency interest rate swaps – held for trading /H1118/H1118/H1118/H1118/H111812,041 –
– Foreign currency and futures contracts – used for
hedging (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,782 155,554
– Others – held for trading (c) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118649,451 259,950
702,274 415,504
Less: non-current portion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,798) (2,282)
699,476 413,222
(a) In 2022, the Group purchased cross-currency interest rate swap to mitigate the cash flow risk associated
with the guaranteed borrowings with principal of USD3,419,058,000. Under the swap, a nominal
amount of USD3,419,058,000 was exchanged for EUR at an agreed exchange rate, and the USD floating
rate (SOFR+0.55% p.a.) was exchanged for the agreed EUR fixed rate. The agreed swap period was
scheduled to start in August 2022 and end in August 2025. The Group designated such borrowings as
the hedged item, and the change in the value of cross-currency interest rate swap (excluding the foreign
currency basis spread) as the hedging instrument for cash flow hedge. There was an economic
relationship between the hedging instrument and the hedged item. The cross-currency interest rate swap
matched the currency, notional amount and other major terms of borrowings denominated in USD.
(b) Foreign currency and futures contracts mainly included foreign currency forwards, foreign currency
options and futures contracts.
(c) Others mainly included foreign currency forwards, foreign currency options, futures contracts and
cross-currency swaps.
22. INVENTORIES
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,841,855 35,291,863
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,076,934 8,572,689
Work in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,230,292 3,170,699
Consigned processing materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118487,216 444,995
Contract fulfilment costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118433,345 556,540
41,069,642 48,036,786
Less: provision for impairment loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(740,412) (697,531)
40,329,230 47,339,255
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-28 –


--- page 612 ---
23. CONTRACT ASSETS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Contract assets (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,726,090 4,163,267
Less: allowance for credit losses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(108,519) (117,342)
3,617,571 4,045,925
(i) Contract assets are mainly related to robotics and automation system construction service.
(a) The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9.
24. TRADE AND NOTE RECEIV ABLES AT AMORTIZED COST
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Trade and note receivables
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,356,052 34,367,460
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,998,161 5,587,562
51,354,213 39,955,022
Less: allowance for credit losses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
– Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,496,825) (1,482,721)
– Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(58,312) (65,602)
(1,555,137) (1,548,323)
49,799,076 38,406,699
(a) The Group has various credit policies for different business operations depending on the requirements of the
markets and businesses. The aging analysis of trade receivables based on the invoice date was as follows:
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,072,709 29,183,011
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,617,254 2,047,141
Between 6 months and 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118989,585 1,378,882
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118992,616 1,114,153
Over 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118683,888 644,273
45,356,052 34,367,460
There was no concentration of credit risk with respect to trade receivables, as the Group has a large
number of customers.
Certain trade and note receivables at amortized cost were pledged for bank loan facilities, notes
receivable discounted and notes payables as at 30 June 2024 and 31 December 2023, respectively.
(b) The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-29 –


--- page 613 ---
(c) The carrying amount of trade receivables approximated their fair values. The provision and reversal of
provision for impairment of receivables have been included in the consolidated statement of profit or loss.
Amounts charged to the allowance account are written off when there is no expectation of recovery.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables
mentioned above.
25. CASH AND CASH EQUIV ALENTS, TERM DEPOSITS AND RESTRICTED CASH
(a) Cash and cash equivalents
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Cash at banks and in hand /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,763,532 57,783,145
Short-term bank deposits with initial terms
within three months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,659,719 1,956,144
Surplus reserve deposits with the Central Bank /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,463 147,971
51,500,714 59,887,260
(b) Term deposits and restricted cash
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Term bank deposits (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,484,306 16,848,494
Guarantee deposits (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,445,616 4,072,963
Statutory reserve deposits with the Central Bank
for banking operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,008,560 415,070
Interest receivable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118510,738 450,059
50,449,220 21,786,586
(i) Term bank deposits are bank deposits with original maturities of over three months and due within one
year.
(ii) Guarantee deposits mainly included letter of bank acceptance notes, letters of guarantee and letters of
credit.
26. BORROWINGS
As at 30 June 2024 As at 31 December 2023
Current Non-current Total Current Non-current Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited)
Secured
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,334,467 153,302 10,487,769 3,094,159 152,966 3,247,125
Unsecured
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,348,512 39,679,123 57,027,635 19,015,826 45,985,770 65,001,596
Debentures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,237,884 3,237,884 – 3,217,969 3,217,969
Total unsecured
borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H111817,348,512 42,917,007 60,265,519 19,015,826 49,203,739 68,219,565
Total borrowings /H1118/H1118/H1118/H1118/H111827,682,979 43,070,309 70,753,288 22,109,985 49,356,705 71,466,690
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-30 –


--- page 614 ---
(a) As at 30 June 2024 and 31 December 2023, the annual interest rate of short-term borrowings were ranged from
1.20% to 6.29%, and 2.20% to 7.04%, respectively.
As at 30 June 2024 and 31 December 2023, the annual interest rate range of long-term borrowings were ranged
from 0.33% to 4.50% and 0.30% to 4.50%, respectively.
(b) At 30 June 2024 and 31 December 2023, the Group’s borrowings were repayable as follows:
Borrowings
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,682,979 22,109,985
Between 1 and 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,346,379 38,383,925
Between 2 and 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,590,775 10,839,625
Over 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133,155 133,155
70,753,288 71,466,690
(c) Fair value
For the majority of the borrowings, the fair values are not materially different from their carrying amounts,
since either the interest payable on those borrowings is close to current market rates, or the borrowings are of a
short-term nature.
27. TRADE AND NOTE PAYABLES
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Trade and note payables
– Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111884,966,347 72,530,465
– Notes payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,236,809 21,707,608
108,203,156 94,238,073
An aging analysis of the trade payables based on the invoice date as at the end of the reporting period was as
follows:
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Below 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,817,556 67,421,139
Between 3 and 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,045,302 1,838,583
Between 6 months and 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,174,366 1,597,946
Over 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,929,123 1,672,797
84,966,347 72,530,465
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-31 –


--- page 615 ---
28. CONTRACT LIABILITIES
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Contract liabilities
– advances on sales and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,482,850 38,549,278
– advances for construction projects /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,200,919 3,216,197
34,683,769 41,765,475
(i) More than 90% of contract liabilities included in the carrying amount as at 31 December 2023 were
transferred to operating revenue during the period.
29. OTHER PAYABLES AND ACCRUALS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Sales rebate accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859,921,101 48,311,934
Marketing and transportation expenses accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,248,829 7,908,952
Salaries, wages and benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,852,629 10,509,901
Endorsed note receivables without been derecognized and not
yet due /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,380,315 2,951,899
Other taxes payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,072,070 1,977,849
Other payables (a)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,031,055 4,442,928
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,882,692 12,789,011
101,388,691 88,892,474
Less: non-current portion
– Salaries, wages and benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,282,442) (1,433,874)
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,061,404) (819,422)
99,044,845 86,639,178
(a) Other payables mainly comprise restricted stock repurchase obligations and deposits.
30. OTHER FINANCIAL LIABILITIES AT FAIR V ALUE THROUGH PROFIT OR LOSS
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Liabilities to fund investors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,075,388 1,346,674
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-32 –


--- page 616 ---
31. DEFERRED INCOME
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Government grants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,740,573 1,734,932
32. SHARE CAPITAL
Six months ended 30 June
2024 2023
Share capital Number of shares Share capital Number of shares
(RMB’000) (’000) (RMB’000) (’000)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
At the beginning of the period /H1118/H1118/H11187,025,769 7,025,769 6,997,273 6,997,273
Issue of shares under share schemes /H1118 25,112 25,112 27,406 27,406
Treasury shares cancelled under
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(921) (921) (2,498) (2,498)
Cancellation of shares (Note 33(i)) /H1118 (69,808) (69,808) – –
At the end of the period /H1118/H1118/H1118/H1118/H1118/H1118/H11186,980,152 6,980,152 7,022,181 7,022,181
33. TREASURY SHARES
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
At the beginning of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,871,738 14,933,944
Cancellation of shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,159,408) –
Treasury shares transferred to the grantees or cancelled under
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,214,866) (1,114,904)
At the end of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,497,464 13,819,040
(i) Pursuant to the resolutions of shareholder’s meeting on 29 January 2024, the use of 69,808,000
repurchased shares have been changed from used for share schemes to cancel and reduce the Company’s
registered capital. On 7 February 2024, the 69,808,000 repurchased shares have been cancelled, the
Company recognized a decrease of RMB69,808,000 in share capital, RMB5,159,408,000 in treasury
shares and RMB5,089,600,000 in reserves.
(ii) As at 30 June 2024, treasury stock mainly comprised treasury stock of approximately
RMB2,102,866,000 (As at 31 December 2023: RMB8,748,331,000) used for share schemes, as well as
restricted shares and employee share incentive plan amounting to approximately RMB4,394,598,000
(As at 31 December 2023: RMB4,123,407,000) that have not met vesting condition, amounting to
approximately RMB6,497,464,000 (As at 31 December 2023: RMB12,871,738,000) in total.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-33 –


--- page 617 ---
34. RETAINED EARNINGS
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
At the beginning of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118136,282,362 119,675,616
Net profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,804,395 18,232,839
Dividends (Note 10) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20,776,352) (17,181,616)
Appropriation to general reserves (Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(162,738) (5,972)
Reversal of general reserves (Note 35) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,366 –
At the end of the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118136,151,033 120,720,867
35. RESERVES
Six months ended
30 June 2024 (Unaudited)
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H11182,020,605 17,382,223 10,702,928 642,525 16,040 659,672 (892,613) 1,909,390 32,440,770
Appropriation to general
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 162,738 –––– 162,738
Reversal of general reserves /H1118/H1118 – – – (3,366) –––– (3,366)
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 4,638 – – – 4,638
Special reserves utilization /H1118/H1118/H1118 –––– (3,361) – – – (3,361)
Cancellation of shares
(Note 33(i)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (5,089,600) –––––– (5,089,600)
Share-based payment: /H1118/H1118/H1118/H1118/H1118
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118780,439 ––––––– 780,439
– Exercise of the stock
option /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(381,130) 1,479,980 –––––– 1,098,850
– Exercise or lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118(487,140) (253,567) –––––– (740,707)
Share of OCI of investments in
associates and joint ventures,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 12,565 12,565
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– (208,372) – – (208,372)
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– (22,748) – – (22,748)
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– 15,515 15,515
Other financial assets at FVOCI,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
– Fair value changes /H1118/H1118/H1118/H1118/H1118/H1118––––––– (38) (38)
Currency translation differences /H1118 –––––– (288,350) – (288,350)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 3,440 3,440
At 30 June 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,932,774 13,519,036 10,702,928 801,897 17,317 428,552 (1,180,963) 1,940,872 28,162,413
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-34 –


--- page 618 ---
Six months ended
30 June 2023 (Unaudited)
Share-
based
payments
reserves
Share
premium
Statutory
reserves
General
reserves
Special
reserves Hedging
Foreign
currency
translation
Other
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H11182,279,108 15,507,577 10,702,928 671,999 16,350 769,843 (808,243) 2,053,529 31,193,091
Appropriation to general
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 5,972 –––– 5,972
Appropriation to special
reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 1,768 – – – 1,768
Special reserves utilization /H1118/H1118/H1118 –––– (1,397) – – – (1,397)
Share-based payment: /H1118/H1118/H1118/H1118/H1118
– Share-based compensation
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118558,688 ––––––– 558,688
– Exercise of the stock option /H1118(371,001) 1,660,427 –––––– 1,289,426
– Exercise of lapse of other
share schemes /H1118/H1118/H1118/H1118/H1118/H1118/H1118(603,393) 57,337 –––––– (546,056)
Share of OCI of investments in
associates and joint ventures,
net of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– 35,908 35,908
Cash flow hedging reserve, net
of tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––– (124,535) – – (124,535)
Cost of hedging, net of tax /H1118/H1118/H1118 ––––– (25,644) – – (25,644)
Remeasurement of defined
benefit plan, net of tax /H1118/H1118/H1118/H1118––––––– (21,788) (21,788)
Transaction with NCI /H1118/H1118/H1118/H1118/H1118––––––– (64,559) (64,559)
Currency translation differences /H1118 –––––– 153,084 – 153,084
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––– (12,102) (12,102)
At 30 June 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,863,402 17,225,341 10,702,928 677,971 16,721 619,664 (655,159) 1,990,988 32,441,856
(i) Pursuant to the 2024 Stock Ownership Scheme approved at the 2023 annual shareholders’ meeting on
19 April 2024, the Company granted a total of 20,107,000 shares to incentive participants. The vesting
periods for the employee shares granted are 2 year, 3 years and 4 years from the granted date. According
to the Company’s performance appraisal and individual performance appraisal, 40%, 30% and 30% of
employee shares plan will be vested respectively.
36. NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation of profit before income tax to net cash generated from operations:
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Profit before income tax for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,451,843 22,108,049
Adjustments for:
Interest income (Note 5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,042,813) (2,863,080)
Finance costs, net (Note 8) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118168,792 1,625,969
Depreciation and amortization of non-current assets (Note 7) /H1118 3,835,782 3,299,807
Net gains on disposal of property, plant and equipment and
other assets (Note 6) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(114,007) (8,525)
Net impairment losses on financial assets and contract assets /H1118 35,208 219,212
Impairment provision for inventories and other assets /H1118/H1118/H1118/H1118/H1118/H1118332,436 191,272
Share of profit of associates and joint ventures, net (Note 18) /H1118 (431,939) (348,545)
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-35 –


--- page 619 ---
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Net gains on financial instruments (Note 6) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(375,360) (45,265)
Net losses on other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,030 87,359
Net foreign exchange losses/(gains) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262,006 (128,769)
Share-based compensation expenses and others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118805,708 580,995
Changes in working capital:
Increase in trade and note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(19,761,614) (11,913,343)
Decrease/(increase) in contract assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118363,287 (231,754)
Decrease/(increase) in loan receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118794,430 (3,314,277)
Decrease in inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,703,865 14,200,052
Increase/(decrease) in trade and note payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,444,386 (6,022,479)
Decrease in contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,945,681) (797,210)
Increase in other payables and accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,152,448 16,471,919
Changes in other assets and liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,408,504 556,460
Cash generated from operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,100,311 33,667,847
37. RELATED PARTY TRANSACTIONS
(a) Parent entities
Name Type
Place of
incorporation Ownership interest
As at 30 June As at 31 December
2024 2023
(Unaudited)
Midea Holding
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118
Ultimate parent entity Foshan 31.08% 30.87%
The Company’s ultimate holding company is Midea Holding Co., Ltd., and the ultimate controlling person is
Mr. He Xiangjian.
(b) Names and relationships with related parties
Related parties are those parties that have the ability to control, jointly control or exercise significant influence
over the other party in holding power over the investee; exposure or rights, to variable returns from its involvement
with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
Parties are also considered to be related if they are subject to common control or joint control. Related parties maybe
individuals or other entities.
The directors of the Company are of the view that the following parties were significant related parties of the
Group that had transactions or balances with the Group during the period:
Name of the related party Relationship with the Group
Orinko Advanced Plastics Co., Ltd. and
its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by immediate family members of the Company’s
ultimate controlling shareholder
Infore Group Co., Ltd and its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by immediate family members of the Company’s
ultimate controlling shareholder
Midea Real Estate Holding Limited and
its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Controlled by the Company’s ultimate controlling shareholder
Carrier Global Corporation and its
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-36 –


--- page 620 ---
(c) Transactions with related parties
The following transactions were carried out between the Group and its related parties during the six months
ended 30 June 2024 and 2023. In the opinion of the directors of the Company, the related party transactions were
carried out in the normal course of business and at terms negotiated between the Group and the respective related
parties.
Six months ended 30 June
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Purchases of goods and services:
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118642,188 670,333
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118459,963 352,810
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118281,522 232,006
Controlled by the Company’s ultimate controlling shareholder /H1118 20,822 17,491
1,404,495 1,272,640
Sales of goods and rendering of services:
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,677,848 1,985,541
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118555,646 574,775
Controlled by the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118195,917 208,288
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,230 16,772
3,468,641 2,785,376
Interest income:
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118167,993 145,197
Dividend income:
Associates and joint ventures of the Group (Note 18) /H1118/H1118/H1118/H1118/H1118/H1118585,221 360,750
(d) Balance with related parties
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Cash and cash equivalents
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,891,067 4,604,976
Other financial assets at amortized cost
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,000,260 5,900,564
Trade and note receivables at amortized cost
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,017,508 283,153
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118296,764 183,835
Controlled by the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111887,427 75,472
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,268 3,222
1,418,967 545,682
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-37 –


--- page 621 ---
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Trade and note payables
Holding company of a principal subsidiary’s substantial
shareholder together with its subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118137,076 106,645
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118264,982 269,155
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,560 204,348
Controlled by the Company’s ultimate controlling shareholder /H1118 2,472 897
472,090 581,045
Contract liabilities
Controlled by the Company’s ultimate controlling shareholder /H1118 9,836 7,693
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,147 534
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,397 28,588
31,380 36,815
Prepayments, other receivables and other assets
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,160 1,777
Controlled by the Company’s ultimate controlling shareholder /H1118 2,093 283
5,253 2,060
Other payables and accruals
Controlled by the Company’s ultimate controlling
shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,995 1,600
Controlled by immediate family members of the Company’s
ultimate controlling shareholder /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,376 69
Associates and joint ventures of the Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,031 18,873
6,402 20,542
38. CONTINGENCIES
As at 30 June 2024, the amount of the maximum potential loss in tax disputes involving Brazilian subsidiary
with 51% interests held by the Company was approximately BRL697 million (equivalent to RMB894 million), and
some cases have lasted for more than 10 years. The above amount included the principal, penalty, interest, etc. The
original shareholders of Brazilian subsidiary have agreed to compensate the Company according to verdict results of
the above tax disputes. The maximum compensation amount is about BRL157 million (equivalent to RMB202
million). As at the date of this report, the relevant cases were still ongoing. Upon consulting the Group’s external
legal counsel, management believes that the probability of losing the lawsuits is low. Accordingly, management has
made necessary provision based on its best estimate.
39. COMMITMENTS
(a) Capital Commitments
As at 30 June As at 31 December
2024 2023
RMB’000 RMB’000
(Unaudited)
Contracted, but not provided for purchase of property, plant
and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,867,051 4,005,911
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-38 –


--- page 622 ---
In April 2024, the Group entered into an agreement with Arbonia AG to acquire all the equity interests of
climate division. The acquisition consideration of the transaction is EUR648.8 million. In June 2024, the Group
entered into an agreement with HERITAGE B to acquire 97.38% equity interests of Teka Industrial, S.A.. The
acquisition consideration of the transaction is EUR175 million. The payments of these considerations have not been
made and these transactions have not been completed up to the date of this report, which are subject to the fulfillment
of certain closing conditions including regulatory approvals.
40. SUBSEQUENT EVENTS
Except for the above events as disclosed elsewhere in this report, there are no other significant events that
occurred subsequent to 30 June 2024.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-39 –


--- page 623 ---
The following information set out in this Appendix does not form part of the Accountant’ s
Report from PricewaterhouseCoopers, Certified Public Accountants, the Company’ s reporting
accountant, as set out in Appendix I to this document, and is included herein for illustrative
purpose only. The unaudited pro forma financial information should be read in conjunction
with the section headed “Financial Information” in this document and the Accountant’ s Report
set out in Appendix I to this document.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
which has been prepared in accordance with paragraph 4.29 of the Listing Rules for the
purpose of illustrating the effect of the Global Offering as if it had taken place on 30 April 2024
and based on the audited consolidated net tangible assets of the Group attributable to the
owners of the Company as at 30 April 2024 as derived from the Accountant’s Report, the text
of which is set out in Appendix I to this document, and adjusted as described below.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purposes only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets of the Group had the Global Offering been
completed as at 30 April 2024 or any future dates:
Audited
consolidated
net tangible
assets of
the Group
attributable to
owners of the
Company as at
30 April 2024
Estimated net
proceeds from
the Global
Offering
Unaudited
pro forma
adjusted
consolidated
net tangible
assets of the
Group
attributable to
the owners of
the Company
as at 30 April
2024
Unaudited pro forma adjusted
consolidated net tangible assets
per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer
Price of
HK$52.00 per
H Share /H1118/H1118/H1118/H1118/H1118119,258,506 23,073,289 142,331,795 19.01 20.84
Based on an Offer
Price of
HK$54.80 per
H Share /H1118/H1118/H1118/H1118/H1118119,258,506 24,320,146 143,578,652 19.18 21.03
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 624 ---
Notes:
(1) The audited consolidated net tangible assets of the Group attributable to the owners of the Company as
at 30 April 2024 is derived from the Accountant’s Report as set out in Appendix I to this document,
which is based on the audited consolidated net assets of the Group attributable to the owners of the
Company as at 30 April 2024 of approximately RMB156,962,038,000, with an adjustment for the
intangible assets attributable to the owners of the Company as at 30 April 2024 of approximately
RMB37,703,532,000.
(2) The estimated net proceeds from the Global Offering are based on 492,135,100 Offer Shares and the
indicative Offer Price of HK$52.00 and HK$54.80 per H Share respectively, after deduction of the
underwriting fees and other related listing expenses (excluding listing expenses of RMB4,339,000
which have been accounted for in the consolidated statements of profit or loss prior to 30 April 2024)
and takes no account of any Shares which may be allotted and issued by the Company pursuant to the
exercise of the Offer Size Adjustment Option and/or the Over-allotment Option, any Shares that may be
issued by the Company pursuant to the exercise of options or the vesting of restricted shares or other
awards that have been or may be granted from time to time under the Share Schemes or any Shares
which may be issued or repurchased by the Company after the Latest Practicable Date.
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the
adjustments referred to in the preceding paragraph and on the basis that 7,485,265,951 Shares were in
issue, assuming that the Global Offering had been completed on 30 April 2024 but does not take into
account of any Shares which may be allotted and issued by the Company pursuant to the exercise of the
Offer Size Adjustment Option and/or the Over-allotment Option, any Shares that may be issued by the
Company pursuant to the exercise of options or the vesting of restricted shares or other awards that have
been or may be granted from time to time under the Share Schemes or any Shares which may be issued
or repurchased by the Company after the Latest Practicable Date.
(4) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets per
Share, the translation of Renminbi amounts into Hong Kong dollars was at the rate of RMB1.00 to
HK$1.0962. No representation is made that Renminbi amounts have been, could have been or may be
converted to Hong Kong dollars, or vice versa, at that date.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of the Group entered into subsequent to 30 April 2024.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 625 ---
B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified
Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Midea Group Co., Ltd.
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of Midea Group Co., Ltd. (the “Company”) and its subsidiaries
(collectively the “Group”) by the directors of the Company (the “Directors”) for illustrative
purposes only. The unaudited pro forma financial information consists of the unaudited pro
forma statement of adjusted consolidated net tangible assets of the Group as at 30 April 2024
and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages II-1
to II-2 of the Company’s prospectus dated 9 September 2024, in connection with the proposed
initial public offering of the H Shares of the Company (the “Prospectus”). The applicable
criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial
Information are described on pages II-1 to II-2 of the Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed initial public offering of the H Shares on the Group’s
financial position as at 30 April 2024 as if the proposed initial public offering of the H Shares
had taken place at 30 April 2024. As part of this process, information about the Group’s
financial position has been extracted by the Directors from the Group’s financial information
for the four months ended 30 April 2024 on which an accountant’s report has been published.
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to
Accounting Guideline 7, Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars (“AG 7”) issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 626 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements , issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies or
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the Unaudited Pro Forma Financial
Information beyond that owed to those to whom those reports were addressed by us at the dates
of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus , issued by the HKICPA. This standard requires
that the reporting accountant plans and performs procedures to obtain reasonable assurance
about whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the Unaudited Pro Forma
Financial Information.
The purpose of unaudited pro forma financial information included in a prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the proposed initial public offering of the H Shares at
30 April 2024 would have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 627 ---
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the directors
in the compilation of the unaudited pro forma financial information provide a reasonable basis
for presenting the significant effects directly attributable to the event or transaction, and to
obtain sufficient appropriate evidence about whether:
 The related pro forma adjustments give appropriate effect to those criteria; and
 The unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgment, having regard to
the reporting accountant’s understanding of the nature of the company, the event or transaction
in respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Our work has not been carried out in accordance with auditing standards or other
standards and practices generally accepted in the United States of America or auditing
standards of the Public Company Accounting Oversight Board (United States) or standards and
practices of any professional body in any other overseas jurisdiction and accordingly should
not be relied upon as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
9 September 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 628 ---
TAXATION OF SECURITY HOLDERS
Income tax and capital gains tax of holders of the H shares is subject to the laws and
practices of the PRC and of jurisdictions in which holders of the H shares are resident or
otherwise subject to tax. The following summary of certain relevant taxation provisions is
based on current laws and practices, and has not taken in to account the expected change or
amendment to the relevant laws or policies and does not constitute any opinion or advice. The
discussion does not deal with all possible tax consequences relating to an investment in the H
shares, nor does it take into account the specific circumstances of any particular investor, some
of which may be subject to special regulation. Accordingly, you should consult your own tax
adviser regarding the tax consequences of an investment in the H shares. The discussion is
based upon laws and relevant interpretations in effect as of the Latest Practicable Date, all of
which are subject to change or adjustment and may have retrospective effect.
This discussion does not address any aspects of PRC taxation other than income tax,
capital gains tax and profits tax, sales tax, value-added tax, stamp duty and estate duty.
Prospective investors are urged to consult their financial advisers regarding the PRC and other
tax consequences of owning and disposing of the H shares.
Taxation In mainland China
Tax on Dividends
Individual Investors
According to the Individual Income Tax Law of the PRC (੻೼
), or the Individual Income Tax Law, amended by the SCNPC on 31 August 2018 and
effective on 1 January 2019, and the Implementation Rules of the Individual Income Tax Law
of the People’s Republic of China (ૢԷ) amended by
the State Council on 18 December 2018 and effective on 1 January 2019, dividends paid by
PRC companies to individual investors are ordinarily subject to a withholding income tax
levied at a flat rate of 20%. Meanwhile, according to the Notice on Issues Concerning
Differentiated Individual Income Tax Policies on Dividends and Bonus of Listed Companies
() issued by the Ministry of
Finance, the State Administration of Taxation and the CSRC on 7 September 2015 and effective
on 8 September 2015, where an individual holds the shares of a listed company obtained from
the public offering for more than one year and transfers the stock of the listed company on the
stock market, the dividend and bonus income shall be temporarily exempted from individual
income tax. Where an individual acquires shares of a listed company from the public offering
and transfers the stock of the listed company on the stock market, if the holding period is
within one month (inclusive), the dividend income shall be included in the taxable income in
full; if the holding period is more than one month but less than one year (inclusive), the
dividend income shall be included in the taxable income at the rate of 50%; the aforesaid
income shall be subject to individual income tax at a uniform rate of 20%.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 629 ---
Pursuant to the Arrangement between the Mainland China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ೼
τર), or the Arrangement for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income, executed on 21 August 2006,
the PRC government may impose tax on dividends paid by a PRC company to a Hong Kong
resident (including natural person and legal entity), but such tax shall not exceed 10% of the
total amount of dividends payable. If a Hong Kong resident directly holds 25% or more of the
equity interests in a PRC company and the Hong Kong resident is the beneficial owner of the
dividends and meets other conditions, such tax shall not exceed 5% of the total amount of
dividends payable by the PRC company. The Fifth Protocol to the Arrangement between the
Mainland China and the Hong Kong Special Administrative Region for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income ( ਷
׵<τર >ୋʞ
), or the Fifth Protocol, issued by The State Administration of Taxation and effective
on 6 December 2019 provides that such provisions shall not apply to arrangements or
transactions made for one of the primary purposes of obtaining such tax benefits.
Enterprise Investors
Pursuant to the Enterprise Income Tax Law of the PRC (੻೼
), or the EIT Law, amended by the SCNPC and effective on 29 December 2018, and the
Implementation Rules of the Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ਷Άุ
ૢԷ), or the Implementation Rules of the EIT Law, amended by the State
Council and effective on 23 April 2019, a non-resident enterprise is subject to a 10% enterprise
income tax on PRC-sourced income, including dividends paid by a PRC resident enterprise that
issues and lists shares in Hong Kong, if such non-resident enterprise does not have an
establishment or place of business in the PRC or has an establishment or place of business in
the PRC but the PRC-sourced income is not actually connected with such establishment or
place of business in the PRC. The aforesaid income tax payable by non-resident enterprises
shall be withheld at source, and the payer shall be the withholding agent, and the tax shall be
withheld by the withholding agent from the payment or due payment every time it is paid or
due. Such tax may be reduced or exempted pursuant to an applicable treaty for the avoidance
of double taxation.
Pursuant to the Notice on the Issues Concerning Withholding the Enterprise Income Tax
on the Dividends Paid by Chinese Resident Enterprises to H Share Holders Which Are
Overseas Non-resident Enterprises (͏ΆุΣྤ̮Hࢹٰ
) issued by the State Administration of Taxation and
effective on 6 November 2008, a PRC resident enterprise is required to withhold enterprise
income tax at a rate of 10% on dividends paid to non-PRC resident enterprise holders of H
Shares which are derived out of profit generated since 2008. The Reply on the Collection of
Enterprise Income Tax on Dividends Received by Non-resident Enterprises from Holding B
Shares and Other Shares (͏Άุ՟੻Bҭ
ᔧ) promulgated by the State Administration of Taxation and effective 24 July 2009 further
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 630 ---
provides that PRC-resident enterprises listed on Chinese and overseas stock exchanges by
issuing stocks (including A shares, B shares and overseas shares) must withhold enterprise
income tax at a flat rate of 10% on dividends of 2008 and onwards that it distributes to
non-resident enterprise shareholders. Such tax rates may be further modified pursuant to the
tax treaty or agreement that China has concluded with a relevant jurisdiction, where applicable.
According to the Arrangement for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to Taxes on Income (τ
ર), the PRC government may impose tax on dividends paid by a PRC company to a Hong
Kong resident (including natural person and legal entity), but such tax shall not exceed 10%
of the total dividends payable by the PRC company. If a Hong Kong resident directly holds
25% or more of equity interest in a PRC company and the Hong Kong resident is the beneficial
owner of the dividends and meets other conditions, such tax shall not exceed 5% of the total
dividends payable by the PRC company. The Fifth Protocol provides that such provisions shall
not apply to arrangements or transactions made for one of the primary purposes of obtaining
such tax benefits.
Pursuant to applicable regulations, we intend to withhold tax at a rate of 10% from
dividends paid to non-PRC resident enterprise holders of our H Shares (including HKSCC
Nominees). Non-PRC resident enterprises that are entitled to be taxed at a reduced rate under
an applicable income tax treaty will be required to apply to the PRC tax authorities for a refund
of any amount withheld in excess of the applicable treaty rate, and payment of such refund will
be subject to the PRC tax authorities’ verification.
Tax related to equity transfer income
Individual Investors
Under the Individual Income Tax Law and its implementation rules, individuals are
subject to individual income tax at a rate of 20% on gains realized on the sale of equity
interests in PRC resident enterprises. Pursuant to the Circular on Continuing the Temporary
Exemption of Individual Income Tax on Gains from Share Transfers by Individuals (ࡈ׵
), which was promulgated by the MOF and
The State Administration of Taxation and became effective on 30 March 1998, from 1 January
1997, income of individuals from the transfer of shares in listed companies continues to be
temporarily exempted from individual income tax. The State Administration of Taxation does
not specify whether to continue to exempt individuals from personal income tax on the income
from the transfer of shares in listed company in the newly revised EIT Law and Implementation
Rules of the EIT Law.
Enterprise Investors
Under the EIT Law and its implementation rules, a non-PRC resident enterprise is subject
to enterprise income tax at the rate of 10% with respect to PRC-sourced income, including
gains derived from the disposal of shares in a PRC resident enterprise, if it does not have an
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-3 –


--- page 631 ---
establishment or premises in the PRC or has an establishment or premises in the PRC but the
PRC-sourced income is not actually connected with such establishment or premises in the PRC.
The aforementioned income tax payable by non- PRC resident enterprises is subject to source
withholding, and the payer is the withholding agent. The tax shall be withheld by the
withholding agent from the payment or due payment every time it is paid or due. Such tax may
be reduced or exempted under applicable tax treaties or arrangements.
Shanghai-Hong Kong Stock Connect Taxation Policy
Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the
Shanghai-Hong Kong Stock Connect (݁
) promulgated by the Ministry of Finance, the State Administration of Taxation and
the CSRC on 31 October 2014 and effective on 17 November 2014, transfer spread income
derived by mainland enterprises from stock investment listed on the Hong Kong Stock
Exchange through Shanghai-Hong Kong Stock Connect shall be included in their total income
and subject to enterprise income tax according to law. For dividends and bonuses received by
mainland individual investors from investing in H shares listed on the Hong Kong Stock
Exchange through Shanghai-Hong Kong Stock Connect, the H-share companies shall apply to
CSDCC for providing the register of mainland individual investors to the H-share companies
and withhold individual income tax at the rate of 20% on behalf of the H-share companies.
Pursuant to the Announcement on Extending the Implementation of the Individual Income
Tax Policies Concerning the Shanghai-Hong Kong Stock Connect and the Shenzhen- Hong
Kong Stock Connect and the Mainland-Hong Kong Mutual Recognition of Funds (ᚃ
ʮ
ѓ) which promulgated on 21 August 2023 and implemented on the same date, the transfer
spread income derived by mainland individual investors from investing in shares listed on the
Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect shall be exempted
from individual income tax from 5 December 2019 to 31 December 2027.
Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the
Shanghai-Hong Kong Stock Connect (݁
), dividends derived by mainland enterprises from investing in shares listed on the
Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect are included in their
total income and subject to Enterprise Income Tax according to law. Pursuant to which,
dividend income obtained by mainland resident enterprises from holding H shares for 12
consecutive months shall be exempted from enterprise income tax according to law. H-share
companies shall not withhold income tax on dividends and bonus income for mainland
enterprises investors. The tax payable shall be declared and paid by the enterprise itself.
Shenzhen-Hong Kong Stock Connect Taxation Policy
Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the
Shenzhen-Hong Kong Stock Connect (݁
) promulgated by the Ministry of Finance, the State Administration of Taxation and
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-4 –


--- page 632 ---
the CSRC on 5 November 2016 and effective on 5 December 2016, transfer spread income
derived by mainland enterprises from stock investment listed on the Hong Kong Stock
Exchange through Shenzhen-Hong Kong Stock Connect shall be included in their total income
and subject to enterprise income tax according to law. For dividends and bonuses received by
mainland individual investors from investing in H shares listed on the Hong Kong Stock
Exchange through Shenzhen-Hong Kong Stock Connect, the H-share companies shall apply to
CSDCC for providing the register of mainland individual investors to the H- share companies
and the H-share companies shall withhold individual income tax at the rate of 20% on behalf
of the investors.
Pursuant to the Announcement on Continuing the Implementation of the Individual
Income Tax Policies Concerning the Shanghai-Hong Kong Stock Connect and the Shenzhen-
Hong Kong Stock Connect and the Mainland-Hong Kong Mutual Recognition of Funds
promulgated by the Ministry of Finance, the State Administration of Taxation and the CSRC
on 4 December 2019 and effective on 5 December 2019 and the Announcement on Extending
the Implementation of the Individual Income Tax Policies Concerning the Shanghai-Hong
Kong Stock Connect and the Shenzhen- Hong Kong Stock Connect and the Mainland-Hong
Kong Mutual Recognition of Funds which promulgated on 21 August 2023 and implemented
on the same date, the transfer spread income derived by mainland individual investors from
investing in shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong
Stock Connect shall be exempted from individual income tax from 5 December 2019 to 31
December 2027.
Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the
Shenzhen-Hong Kong Stock Connect (݁
), dividends derived by mainland enterprises investors from investing in shares
listed on the Hong Kong Stock Exchange through Shenzhen-Hong Kong Stock Connect are
included in their total income and subject to Enterprise Income Tax according to law. In
particular, dividend and bonus income obtained by mainland resident enterprises from holding
H shares for 12 consecutive months shall be exempted from enterprise income tax according
to law. H-share companies shall not withhold income tax on dividends and bonus income for
mainland enterprises. The tax payable shall be declared and paid by the enterprise itself.
Stamp Duty
According to the Stamp Duty Law of the People’s Republic of China ( ʕശɛ͏΍ձ਷
), which was promulgated on 10 June 2021 and came into effect on 1 July 2022, the
disposal of H Shares by non-mainland China investors outside of the mainland China is not
subject to the requirements of the Stamp Duty Law of the People’s Republic of China.
Estate duty
According to PRC law, no estate duty is currently levied in the mainland China.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-5 –


--- page 633 ---
MAJOR TAXATION OF OUR COMPANY IN THE PRC
Enterprise Income Tax
According to the Enterprise Income Tax Law of the People’s Republic of China ( ʕശɛ
جenterprises and other income-generating organizations (hereinafter
collectively referred to as “enterprises”) within the territory of the People’s Republic of China
are the taxpayers of enterprise income tax and shall pay enterprise income tax in accordance
with the provisions of the EIT Law. The Enterprise Income Tax rate is 25%.
Enterprises are classified into resident enterprises and non-resident enterprises. A
non-resident enterprise that does not have an establishment or place of business in the PRC, or
has an establishment or place of business in the PRC but the income has no actual connection
to such establishment or place of business, shall pay enterprise income tax on its income within
the PRC and withhold at source, where the payer is the withholding agent. The tax shall be
withheld by the withholding agent from the payment or due payment every time it is paid or
due. Meanwhile, any gains realized on the transfer of shares by such investors are subject to
enterprise income tax and shall be withheld at source if such gains are regarded as income
derived from the transfer of property within the PRC.
Value-added tax
Pursuant to the Provisional Regulations on V alue-added Tax of the PRC ( ʕശɛ͏΍ձ
೼ᅲБૢԷ) amended by the State Council and became effective on 19 November 2017
and the Detailed Rules for the Implementation of the Provisional Regulations on V alue-added
Tax of the PRC (ۆamended by the MOF on 28
October 2011 and effective on 1 November 2011, all entities and individuals in the PRC
engaging in the sale of goods, the provision of processing, repairs and replacement services,
and the importation of goods are required to pay value-added tax. For taxpayers selling or
importing goods, the general tax rate shall be 17% unless otherwise specified in the aforesaid
regulations.
According to the Notice on the Adjustment to V A T Rates (ஷ
) (Cai Shui [2018] No. 32), promulgated by the MOF and the State Administration of
Taxation on 4 April 2018, and became effective as of 1 May 2018, the V A T rates of 17% and
11% applicable to the taxpayers who have V A T taxable sales activities or imported goods are
adjusted to 16% and 10%, respectively.
According to the Announcement on Relevant Policies for Deepening V alue-Added Tax
Reform (ʮѓ) (2019 No. 39 of MOF, State
Administration of Taxation and General Administration of Customs), promulgated by the MOF,
the State Administration of Taxation and the General Administration of Customs on 20 March
2019 and became effective on 1 April 2019, the V A T rates of 16% and 10% applicable to the
taxpayers who have V A T taxable sales activities or imported goods are adjusted to 13% and
9%, respectively.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-6 –


--- page 634 ---
FOREIGN EXCHANGE ADMINISTRATION IN THE PRC
The lawful currency of the PRC is the Renminbi. The SAFE, authorized by the PBOC, is
empowered with the functions of administering all matters relating to foreign exchange,
including the enforcement of foreign exchange regulations.
Pursuant to the Regulations of the People’s Republic of China on Foreign Exchange
Control ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ) amended by the State Council and became
effective on 5 August 2008, all international payments and transfers are classified into current
account items and capital account items. The PRC does not impose restrictions on international
payments and transfers under current account items. Foreign exchange income from the current
account of PRC enterprises may be retained or sold to financial institutions engaged in the
settlement and sale of foreign exchange in accordance with relevant provisions of the State.
The retention or sale of foreign exchange receipts under capital accounts to financial
institutions engaging in settlement and sale of foreign exchange shall be subject to the approval
of foreign exchange administrative authorities, unless otherwise stipulated by the State.
Pursuant to the Regulations for the Administration of Settlement, Sale and Payment of
Foreign Exchange () promulgated by the PBOC on 20 June
1996 and became effective on 1 July 1996, the remaining restrictions on convertibility of
foreign exchange in respect of current account items are abolished while the existing
restrictions on foreign exchange transactions in respect of capital account items are retained.
According to relevant laws and regulations of the PRC, PRC enterprises (including
foreign-invested enterprises) which require foreign exchange for transactions relating to
current account items, may, without the approval of SAFE, effect payment from their foreign
exchange accounts at the designated foreign exchange banks, on the strength of valid receipts
and proof of transactions. Foreign-invested enterprise that need to distribute profits to their
shareholders in foreign exchange and Chinese enterprise that need to pay fixed dividends in
foreign exchange in accordance with the requirements shall pay from its foreign exchange
account or pay at the designated foreign exchange bank by a resolution of the board of directors
on the distribution of profits.
According to the Decision of the State Council on Canceling and Adjusting a Group of
Administrative Approval Items and Other Matters (ᄲҭධͦ
֛promulgated by the State Council and effective on 23 October 2014, the
administrative approval of the SAFE and its branches on matters concerning the repatriation
and settlement of foreign exchange of overseas-raised funds through overseas listing has been
canceled.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-7 –


--- page 635 ---
According to the Circular of the SAFE on Relevant Issues Concerning the Foreign
Exchange Administration of Overseas Listing (ྤ̮ɪ̹̮ි၍ଣϞᗫਪ
ٝpromulgated by the SAFE and became effective on 26 December 2014, the relevant
provisions on foreign exchange administration of domestic joint stock companies (hereinafter
referred to as “domestic companies”) listed overseas are as follows:
(i) The SAFE and its branches and the Foreign Exchange Management Department, or
the Foreign Exchange Bureau, supervise, manage and inspect the business
registration, account opening and use, cross-border income and expenditure, and
capital exchange involved in the overseas listing of domestic companies.
(ii) A domestic company shall, within 15 working days after the completion of the
overseas listing and issuance, register the overseas listing with the Foreign
Exchange Bureau at the place where it is registered with relevant material.
(iii) After the overseas listing of a domestic company, its domestic shareholders who
intend to increase or reduce their shareholding in an overseas listed company
according to relevant regulations shall register the overseas shareholding with the
local foreign exchange bureau at the place where the domestic shareholders are
located within 20 working days prior to the proposed increase or reduction of
shareholding with relevant materials.
(iv) A domestic company (other than banking financial institutions) shall, by virtue of its
registration certificate for overseas listing business, open a “special foreign
exchange account for overseas listing of domestic companies” with a domestic bank
for its initial offering (or additional offering) and repurchase business to handle the
remittance and transfer of funds for the relevant business.
According to the Notice of the State Administration of Foreign Exchange on Further
Simplifying and Improving Policies for the Foreign Exchange Administration of Direct
Investment ()
issued on 13 February 2015 and came into effect on 1 June 2015, the SAFE has cancelled the
confirmation of foreign exchange registration under domestic direct investment and the
confirmation of foreign exchange registration under overseas direct investment, instead, banks
shall directly examine and handle foreign exchange registration under domestic direct
investment and foreign exchange registration under overseas direct investment, and the SAFE
and its branch offices shall indirectly regulate the foreign exchange registration of direct
investment through banks.
According to the Notice of the State Administration of Foreign Exchange of the PRC on
Revolutionize and Regulate Capital Account Settlement Management Policies (̮ි၍
) issued and implemented by the SAFE
on 9 June 2016, foreign currency earnings in capital account that relevant policies of
willingness exchange settlement have been clearly implemented on (including the recalling of
raised capital by overseas listing) may undertake foreign exchange settlement in the banks
according to actual business needs of the domestic institutions. The tentative percentage of
foreign exchange settlement for foreign currency earnings in capital account of domestic
institutions is 100%, subject to adjustment by the SAFE in due time in accordance with
international revenue and expenditure situations.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-8 –


--- page 636 ---
This Appendix summarizes certain aspects of PRC laws and regulations which are
relevant to our Company’s operations and business. Laws and regulations relating to taxation
in the PRC are discussed separately in “Appendix III – Taxation and Foreign Exchange” to this
document. This Appendix also contains a summary of laws and regulatory provisions of the
PRC Company Law. The principal objective of this summary is to provide potential investors
with an overview of the principal laws and regulatory provisions applicable to our Company.
This summary is not intended to include all the information which is important to the potential
investors. For a discussion of laws and regulations which are relevant to our Company’s
business, see “Regulatory Overview” in this document.
THE PRC LEGAL SYSTEM
The PRC legal system is based on the PRC Constitution (), or
the Constitution, and is made up of written laws, administrative regulations, local regulations,
separate regulations, rules and regulations of departments of the State Council, rules and
regulations of local governments, autonomous regulations, separate regulations of autonomous
regions, special administrative region law and international treaties and other regulatory
documents signed by the PRC government. Court decisions do not constitute binding
precedents, although they are used for the purposes of judicial reference and guidance.
According to the Constitution and the Legislation Law of the People’s Republic of China
(), or the Legislation Law, which was amended by the NPC on 13
March 2023 and became effective on 15 March 2023, the NPC and the SCNPC are empowered
to exercise the legislative power of the State. The NPC has the power to formulate and amend
basic laws governing criminal and civil matters, state organs and other matters. The SCNPC is
empowered to formulate and amend laws other than those required to be enacted by the NPC
and to supplement and amend any parts of laws enacted by the NPC during the adjournment
of the NPC, provided such supplements and amendments are not in conflict with the basic
principles of such laws.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws. The people’s
congresses of provinces, autonomous regions and municipalities and their respective standing
committees may formulate local regulations based on the specific circumstances and actual
needs of their respective administrative areas, provided that such local regulations do not
contravene any provision of the Constitution, laws or administrative regulations. The people’s
congresses of cities divided into districts and their standing committees may formulate local
regulations on matters such as urban and rural construction and management, environmental
protection and historical and cultural protection based on the specific circumstances and actual
needs of such cities, provided that such local regulations do not contravene any provision of
the Constitution, laws, administrative regulations and local regulations of such provinces or
autonomous regions. Where laws have other stipulations on matters of local regulations
formulated by cities divided into districts, such stipulations shall prevail. The local regulations
of cities divided into autonomous regions for approval before implementation.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-1 –


--- page 637 ---
The standing committees of the people’s congresses of provinces or autonomous regions
shall examine the legality of local regulations submitted for approval, and such approval
should be granted within four months if they are not in conflict with the Constitution, laws,
administrative regulations and local regulations of their respective provinces or autonomous
regions. People’s congresses of national autonomous areas have the power to enact autonomous
regulations and separate regulations in the light of the political, economic and cultural
characteristics of the nationality (nationalities) in the areas concerned. The ministries,
commissions, PBOC, NAO of the State Council and institutions with administrative functions
directly under the State Council may formulate rules and regulations within the jurisdiction of
their respective departments based on the laws and the administrative regulations, decisions
and rulings of the State Council.
The Constitution has supreme legal authority and no laws, administrative regulations,
local regulations, autonomous regulations or separate regulations or rules may contravene the
Constitution. The authority of laws is greater than that of administrative regulations, local
regulations and rules. The authority of administrative regulations is greater than that of local
regulations and rules. The authority of the rules enacted by the people’s governments of the
provinces and autonomous regions is greater than that of the rules enacted by the people’s
governments of the cities divided into districts within their respective administrative regions.
The NPC has the power to alter or annul any inappropriate laws enacted by the SCNPC,
and to annul any autonomous regulations and separate regulations which have been approved
by the SCNPC but which contravene the Constitution and the Legislation Law; the SCNPC has
the power to annul administrative regulations that contravene the Constitution and laws, to
annul local regulations that contravene the Constitution, laws and administrative regulations,
and to annul autonomous regulations and separate regulations which have been approved by the
standing committees of the people’s congresses of the relevant provinces, autonomous regions
or municipalities directly under the Central Government, but which contravene the
Constitution and the Legislation Law; the State Council has the power to alter or annul any
inappropriate ministerial rules and rules of local governments; the people’s congresses of
provinces, autonomous regions and municipalities directly under the Central Government have
the power to alter or annul any inappropriate local regulations enacted or approved by their
respective standing committees; the standing committees of the local people’s congresses have
the power to annul inappropriate rules enacted by the people’s governments at the
corresponding level; the people’s governments of provinces and autonomous regions have the
power to alter or annul any inappropriate rules enacted by the people’s governments at a lower
level.
According to the Constitution and the Legislation Law, the power to interpret laws is
vested in the SCNPC. According to the Decision of the SCNPC Regarding the Strengthening
of Interpretation of Laws (Ӕᙄ)
passed by the SCNPC and effective on 10 June 1981, the Supreme People’s Court shall give
interpretation on questions involving the specific application of laws and decrees in court
trials. The Supreme People’s Procuratorate shall interpret all issues involving the specific
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-2 –


--- page 638 ---
application of laws and decrees in the procuratorial work. Interpretation of questions involving
the specific application of laws and decrees in areas unrelated to judicial and procuratorial
work shall be provided by the State Council and competent authorities.
Where the scope of local regulations needs to be further defined or additional stipulations
need to be made, the standing committees of the people’s congresses of provinces, autonomous
regions and municipalities directly under the Central Government which have enacted these
regulations shall provide the interpretations or make the stipulations. Interpretation of
questions involving the specific application of local regulations shall be provided by the
competent departments of the people’s governments of provinces, autonomous regions and
municipalities.
PRC JUDICIAL SYSTEM
According to the Constitution and the Law of the PRC of Organization of the People’s
Courts () amended by the SCNPC on 26 October 2018
and becoming effective on 1 January 2019, the PRC People’s Court is made up of the Supreme
People’s Court, the local people’s courts, and other special people’s courts. The local people’s
courts are divided into three levels, namely the basic people’s courts, the intermediate people’s
courts and the higher people’s courts. The basic people’s courts may set up certain people’s
tribunals based on the status of the region, population and cases. The Supreme People’s Court
shall be the highest judicial organ of the state. The Supreme People’s Court shall supervise the
administration of justice by the local people’s courts at all levels and by the special people’s
courts. The people’s courts at a higher level shall supervise the judicial work of the people’s
courts at lower levels.
According to the Constitution and the Law of Organization of the People’s Procuratorate
of the PRC () revised by SCNPC on 26 October 2018
and taking effect on 1 January 2019, the People’s Procuratorate is the law supervision organ
of the state. The Supreme People’s Procuratorate shall be the highest procuratorial organ. The
Supreme People’s Procuratorate shall direct the work of the local people’s procuratorates at all
levels and of the special people’s procuratorates; the people’s procuratorates at higher levels
shall direct the work of those at lower levels.
The people’s courts employ a two-tier appellate system, and judgments or rulings of the
second instance at the people’s courts are final. A party may appeal against the judgment or
ruling of the first instance of a local people’s courts. The people’s procuratorate may present
a protest to the people’s courts at the next higher level in accordance with the procedures
stipulated by the laws. In the absence of any appeal by the parties and any protest by the
people’s procuratorate within the stipulated period, the judgments or rulings of the people’s
courts are final. Judgments or rulings of the second instance of the intermediate people’s
courts, the higher people’s courts and the Supreme People’s Court and those of the first
instance of the Supreme People’s Court are final. However, if the Supreme People’s Court or
the people’s courts at the next higher level finds any definite errors in a legally effective final
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-3 –


--- page 639 ---
judgment or ruling of the people’s court at a lower level, or if the chief judge of a people’s court
at any level finds any definite errors in a legally effective final judgment or ruling of such
court, the case can be retried according to judicial supervision procedures.
The PRC Civil Procedure Law (ج2023ࠈࡌ)), or the
PRC Civil Procedure Law, adopted by the SCNPC on 1 September 2023 and effective on
1 January 2024 sets forth the requirements for instituting a civil action, the jurisdiction of the
people’s courts, the procedures to be followed for conducting a civil action and the procedures
for enforcement of a civil judgment or order. All parties to a civil action conducted within the
PRC must comply with the PRC Civil Procedure Law. Civil cases are generally heard by the
courts where the defendants are located. The court of jurisdiction in a civil action may be
chosen by express agreement between the parties, provided that the court is located at a place
that has direct connection with the dispute, such as the plaintiff’s or the defendant’s place of
domicile, the place where the contract is performed or signed or the object of the action is
located. However, the choice of the court cannot be in conflict with the regulations of different
jurisdictions and exclusive jurisdictions in any case.
A foreign individual, a person without nationality, a foreign-invested enterprise or a
foreign organization must have the same litigation rights and obligations as a PRC citizen,
legal person or other organizations when initiating or defending any proceedings at a people’s
court. If a foreign court limits the litigation rights of PRC citizens and enterprises, the PRC
court may apply the same limitations to the citizens and enterprises of such foreign country.
A foreign individual, a person without nationality, a foreign-invested enterprise or a foreign
organization must engage a PRC lawyer if such person needs to engage a lawyer in initiating
or defending any proceedings at a people’s court. Under an international treaty or the principle
of reciprocity signed or acceded to by the PRC, the people’s court and foreign courts may
require each other to act on their behalf to serve documents, conduct investigations, collect
evidence and take other actions on behalf of each other. If the request by a foreign court would
result in the violation of the PRC’s sovereignty, security or public interest, the people’s court
shall decline the request.
All parties must comply with legally effective civil judgments and rulings. If any party
to a civil action refuse to comply with a judgment or order made by a people’s court or an
award made by an arbitration tribunal in the PRC, the other party may apply to the people’s
court for enforcement within two years. Suspension or disruption of the time limit for applying
for such enforcement shall comply with the provisions of the applicable law concerning the
suspension or disruption of the time-barring of actions.
When a party applies to a people’s court for enforcing an effective judgment or ruling by
a people’s court against a party who is not located within the territory of the PRC or whose
property is not within the PRC, the party may apply to a foreign court with proper jurisdiction
for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may
also be recognized and enforced by the people’s court according to the PRC enforcement
procedures if the PRC has entered into, or acceded to, an international treaty with the relevant
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-4 –


--- page 640 ---
foreign country, which provides for such recognition and enforcement, or if the judgment or
ruling satisfies the court’s examination according to the principle of reciprocity, unless among
other exceptions, the people’s court finds that the recognition or enforcement of such judgment
or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or
security, or for reasons of social and public interests.
THE PRC COMPANY LA W, TRIAL MEASURES AND GUIDELINES FOR ARTICLES
OF ASSOCIATION
A joint stock limited company established in the PRC seeking a listing on The Stock
Exchange of Hong Kong Limited is mainly subject to the following laws and regulations of the
PRC.
The PRC Company Law (), or the Company Law, was
adopted by the Fifth Standing Committee Meeting of the Eighth NPC on 29 December 1993
and came into effect on 1 July 1994, and was amended on 25 December 1999, 28 August 2004,
27 October 2005, 28 December 2013, 26 October 2018 and 29 December 2023. The latest
revised Company Law came into effect on 1 July 2024.
The Trial Measures and its five interpretative guidelines promulgated by the CSRC on 17
February 2023 came into effect on 31 March 2023 and were applicable to the direct and indirect
overseas share subscription and listing of domestic companies.
According to the Trial Measures and its interpretative guidelines, where a domestic
company directly offering and listing overseas, it shall formulate its articles of association in
line with the Guidelines for Articles of Association of Listed Companies (ܸ
ˏ), or the Guidelines for Articles of Association, in place of the Mandatory Provisions for
Articles of Association of Companies to be Listed Overseas which ceased to apply from 31
March 2023. The Guidelines for Articles of Association were promulgated by the CSRC on 16
December 1997 and last amended on 15 December 2023.
Set out below is a summary of the major provisions of the Company Law, the Trial
Measures and the Guidelines for Articles of Association which are applicable to our Company.
General Provisions
“A joint stock limited company” means a corporate legal person incorporated under the
Company Law, whose registered capital is divided into shares of equal par value. The liability
of its shareholders is limited to the extent of the shares held by them and the liability of a
company is limited to the full value of all the property owned by it.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-5 –


--- page 641 ---
A company must conduct its business in accordance with laws as well as public and
commercial ethics. A company may invest in other limited liability companies. The liabilities
of the company to such invested companies are limited to the amount invested. Unless
otherwise provided by laws, a company cannot be the capital contributor who has the joint
liabilities associated with the debts of the invested enterprises.
Incorporation
A joint stock limited company may be incorporated by promotion or subscription. A joint
stock limited company may be incorporated by a minimum of one but not more than 200
promoters, and at least half of the promoters must have residence within the PRC.
The promoters shall convene an inaugural meeting of the company within 30 days after
the share capital has been paid-up and shall notified all subscribers the date of the meeting or
make an announcement in this regard 15 days before the meeting. The inaugural meeting may
be held only the presence of promoters and subscribers holding more than 50% of the total
number of shares. Powers to be exercised at the inaugural meeting include but not limited to
the adoption of articles of association and the election of members of the board of directors and
the supervisory committee of a company. The aforesaid matters shall be resolved by more than
50% of the votes to be casted by subscribers presented at the meeting.
Within 30 days after the conclusion of the inaugural meeting, the board of directors shall
apply to the registration authority for registration of the incorporation of the joint stock limited
company. A company is formally established and has the status of a legal person after the
business license has been issued by the relevant registration authority.
Registered Shares
Under the Company Law, shareholders may make capital contributions in cash, or with
non-monetary property that may be valued in money and legally transferred, such as
contribution in kind or with an intellectual property rights, land use rights, shareholding or
claims.
The Trial Measures provides that domestic enterprises that are listed overseas may raise
funds and distribute dividends in foreign currencies or Renminbi.
Under the Trial Measures, for a domestic company directly offering and listing overseas,
shareholders of its domestic unlisted shares applying to convert such shares into shares listed
and traded on an overseas trading venue shall conform to relevant regulations promulgated by
the CSRC, and authorize the domestic company to file with the CSRC on their behalf. The
domestic unlisted shares mentioned in the preceding paragraph refer to the shares that have
been issued by domestic enterprises but have not been listed or listed for trading on domestic
exchanges. Domestic unlisted shares shall be centrally registered and deposited with domestic
securities registration and settlement institutions. The registration and settlement arrangements
of overseas listed shares shall be subject to the provisions of overseas listing places.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-6 –


--- page 642 ---
Under the Company Law, a joint stock limited company is required to maintain a register
of shareholders, detailing the following information: (i) the name and domicile of each
shareholder; (ii) the class and number of shares subscribed for by each shareholder; (iii) the
serial number of shares if issued in paper form; and (iv) the date on which each shareholder
acquired the shares.
Allotment and Issue of Shares
All issue of shares of a joint stock limited company shall be based on the principles of
equality and fairness. The same class of shares must carry equal rights. Shares issued at the
same time and within the same class must be issued on the same conditions and at the same
price. It may issue shares at par value or at a premium, but it may not issue shares below the
par value.
Domestic enterprises issued and listed overseas shall file with the CSRC in accordance
with Trial Measures, submit filing reports, legal opinions and other relevant materials, and
truthfully, accurately and completely explain shareholder information and other information.
Where a domestic enterprise directly issues and is listed overseas, the issuer shall file with the
CSRC. If a domestic enterprise is indirectly listed overseas, the issuer shall designate a major
domestic operating entity as the domestic responsible person and file with the CSRC.
Increase in Share Capital
Under the Company Law, in the case of a joint stock limited company issuing new shares,
resolutions shall be passed at the shareholders’ general meeting in respect of the class and
number of new shares, the issue price of the new shares, the commencement and end dates for
the issuance of new shares and the class and number of the new shares proposed to be issued
to existing shareholders, if any. If no par value stock is issued, the proceeds from the issuance
of the new stocks shall be included into the registered capital. Additionally, if a company
intends to make public offering of shares, it is required to complete the registration with the
securities regulatory authority of the State Council and announce the prospectus.
Reduction of Share Capital
A company may reduce its registered capital in accordance with the following procedures
prescribed by the Company Law:
(i) to prepare a balance sheet and a property list;
(ii) a company makes a resolution at shareholders’ general meeting to reduce its
registered capital;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-7 –


--- page 643 ---
(iii) a company shall inform its creditors within 10 days and publish an announcement
in newspapers or the National Enterprise Credit Information Publicity System within
30 days after the approval of resolution of reducing registered capital;
(iv) the creditors shall have the right to require a company to repay its debts or provide
corresponding guarantees within 30 days after receiving the notice or within 45 days
after the announcement if the creditors have not received the notice;
(v) when a company reduces its registered capital, it shall register the change with a
company registration authority in accordance with the law.
When a company reduces its registered capital, it must reduce the amount of capital
contribution or shares in proportion to the capital contribution or shares held by the
shareholders, unless otherwise prescribed by any law, or agreed upon by all the shareholders
of a limited liability company, or as specified in the articles of association of a joint stock
limited company.
Share Buy-Back
Under the Company Law, a company shall not purchase its own shares. Except for any
following circumstances:
(i) reducing the registered capital;
(ii) merging with other company that holds the shares of the company;
(iii) using the shares for employee stocks plan or equity incentives;
(iv) with respect to shareholders voting against any resolution adopted at the
shareholders’ general meeting on the merger or division of our Company, the right
to demand our Company to acquire the shares held by them;
(v) using the shares for the conversion of convertible corporate bonds issued by the
listed company;
(vi) as required for maintenance of the corporate value and shareholders’ rights and
interests of a listed company.
The purchase of shares of a company for reasons specified in the case of (i) to (ii) above
shall be subject to the resolution of the general meeting; the purchase of shares of a company
for reasons specified in the case of (iii), (v) and (vi) above shall be subject to the resolution
of the Board meeting attended by more than two-thirds of the directors in accordance with the
provisions of the articles of association or the authorization from the general meeting.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-8 –


--- page 644 ---
Following the purchase of a company’s shares by a company in accordance with the above
provisions, such shares shall be canceled within 10 days from the date of buy-back in the case
of item (i) above; such shares shall be transferred or canceled within six months in the case of
items (ii) and (iv) above; the total numbers of share of our Company held by a company shall
not exceed 10% of the total issued shares of a company, and shall be transferred or canceled
within three years in the case of items (iii), (v) and (vi) above.
Transfer of Shares
Shares held by a shareholder may be transferred according to the law. Under the Company
Law, a shareholder should affect a transfer of his shares on securities established exchange
according to the law or by any other means as required by the State Council. Registered shares
may be transferred by endorsement of shareholders or by other means stipulated by laws or
administrative regulations. After the transfer, a company shall record the name and address of
the transferee in the register of shareholders. No changes of registration in the share register
provided in the foregoing requirement shall be affected during a period of 20 days prior to the
convening of shareholder’s general meeting or 5 days prior to the record date for a company’s
distribution of dividends. If any law, administrative regulation, or any provision by the
securities regulatory authority of the State Council specifies otherwise for the modification of
the register of shareholders of a listed company, such provisions should prevail.
Under the Company Law, shares issued by a company prior to the public offering of
shares shall not be transferred within one year from the date on which the shares of accompany
are listed and traded on a securities exchange. The directors, supervisors and senior
management of the company should declare to the company the shares they hold and the
changes thereof. During the term of office as determined when they assume the posts, the
shares transferred each year should not exceed 25% of the total shares they hold of the
company. Shares of a company held by its directors, supervisors and senior management shall
not be transferred within one year from the date of a company’s listing on a securities
exchange, nor within six months after their resignation from their positions with a company.
If the shares are pledged within the time limit for restricted transfer as provided for by
laws and administrative regulations, the pledgee cannot exercise the pledge right within such
restricted period.
Shareholders
Under the Company Law and Guidelines for Articles of Association the rights of a
shareholder of ordinary shares of a company include:
(i) to receive dividends and other forms of distributions in proportion to their
shareholdings;
(ii) to attend or appoint a proxy to attend shareholders’ general meetings and to exercise
voting rights;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-9 –


--- page 645 ---
(iii) to supervise and manage a company’s business operations, and to present proposals
or to raise inquiries;
(iv) to transfer shares in accordance with laws, administrative regulations and the
provisions of the articles of association;
(v) to inspect the company’s articles of association, share register, counterfoil of
company debentures, minutes of shareholder’s general meetings, resolutions of
meetings of the board of directors, resolutions of meetings of the board of
supervisors and financial and accounting reports and to make proposals or enquiries
on the company’s operations;
(vi) in the event of the winding-up or liquidation of a company, to participate in the
distribution of remaining property of a company in proportion to the number of
shares held;
(vii) other rights conferred by laws, administrative regulations and the articles of
association.
The obligations of a shareholder of ordinary shares of a company include:
(i) to comply with the articles of association;
(ii) to pay subscription money according to the number of shares subscribed and the
method of subscription;
(iii) not to abuse their shareholders’ rights to damage the interests of a company or other
shareholders; not to abuse the independent legal person status of a company and the
limited liability of shareholders to damage the interests of the creditors of a
company;
(iv) other obligations conferred by laws, administrative regulations and the articles of
association.
Shareholder’s General Meetings
Under the Company Law, the shareholders’ general meeting of a joint stock limited
company is made up of all shareholders. The shareholders’ general meeting is the organ of
authority of a company, which exercises the following functions and powers:
(i) to elect and replace directors and supervisors and to decide on matters relating to the
remuneration of directors and supervisors;
(ii) to examine and approve reports of the board of directors;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-10 –


--- page 646 ---
(iii) to examine and approve reports of the supervisory committee;
(iv) to examine and approve a company’s profit distribution plans and loss recovery
plans;
(v) to resolve on the increase or reduction of a company’s registered capital;
(vi) to resolve on the issuance of corporate bonds;
(vii) to resolve on the merger, division, dissolution, liquidation or change of corporate
form of a company;
(viii) to amend the company’s articles of association;
(ix) other functions and powers specified in provision of the articles of association.
Under the Company Law, annual shareholders’ general meetings are required to be held
once every year. An extraordinary shareholders’ general meeting is required to be held within
two months after the occurrence of any of the following circumstances:
(i) the number of directors is less than the number stipulated in the Company Law or
less than two-thirds of the number specified in the articles of association;
(ii) when the unrecovered losses of a company amount to one-third of the total paid-up
share capital;
(iii) shareholders individually or jointly holding 10% or more of the company’s shares
request;
(iv) when deemed necessary by the Board;
(v) the Supervisory Committee proposes to convene the meeting;
(vi) other circumstances as stipulated in the articles of association.
Shareholders’ general meetings shall be convened by the board of directors, and presided
over by the chairman of the board of directors. In the event that the chairman is incapable of
performing or not performing his duties, the meeting shall be presided over by the vice
chairman. In the event that the vice chairman is incapable of performing or not performing his
duties, a director nominated by more than half of directors shall preside over the meeting.
If the board of directors is incapable of performing or is not performing its duties to
convene the general meeting, the supervisory board should convene and preside over
shareholders’ general meeting in a timely manner. If the supervisory board fails to convene and
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-11 –


--- page 647 ---
preside over shareholders’ general meeting, shareholders individually or in aggregate holding
10% or more of the company’s shares for 90 days or more consecutively may unilaterally
convene and preside over shareholders’ general meeting.
If the shareholders who separately or aggregately hold more than 10% of the shares of the
company request to convene an interim shareholders’ meeting, the board of directors and the
board of supervisors should, within 10 days after the receipt of such request, decide whether
to hold an interim shareholders’ meeting and reply to the shareholders in writing.
Notice of general meeting shall state the time and venue of and matters to be considered
at the meeting and shall be given to all shareholders 20 days before the meeting. A notice of
extraordinary general meeting shall be given to all shareholders 15 days prior to the meeting.
For the issuance of bearer share certificates, the time and venue of and matters to be considered
at the meeting shall be announced 30 days before the meeting.
Shareholders who individually or jointly hold more than 1% of the company’s shares may
put forward interim proposals and submit them to the convener in writing 10 days before the
general meeting of shareholders. The convener shall issue a supplementary notice of the
general meeting of shareholders within two days after receiving the proposal and announce the
contents of the interim proposal.
Under the Company Law, a shareholder may entrust a proxy to attend a shareholders’
general meeting, and it should clarify the matters, power and time limit of the proxy. The proxy
shall present a written power of attorney issued by the shareholder to a company and shall
exercise his voting rights within the scope of authorization. There is no specific provision in
the Company Law regarding the number of shareholders constituting a quorum in a
shareholders’ general meeting.
Under the Company Law, shareholders present at a shareholders’ general meeting have
one vote for each share they hold, except the shareholders of classified shares. However, shares
held by the company itself are not entitled to any voting rights.
The cumulative voting system may be adopted for the election of directors and
supervisors at the shareholders’ general meeting in accordance with the provisions of the
articles of association or the resolutions of the shareholders’ general meeting. Under the
accumulative voting system, each share shall have the same number of voting rights as the
number of directors or supervisors to be elected at the shareholders’ general meeting, and
shareholders may consolidate their voting rights when casting a vote.
Under the Company Law and the Guidelines for Articles of Association, the passing of
any resolution requires affirmative votes of shareholders representing more than half of the
voting rights represented by the shareholders who attend the shareholders’ general meeting.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-12 –


--- page 648 ---
Matters relating to merger, division or dissolution of a company, increase or reduction of
registered capital, change of corporate form or amendments to the articles of association must
be approved by more than two-thirds of the voting rights held by the shareholders present at
the meeting.
Directors
Under the Company Law, a joint stock limited company should have a board of directors,
which consists of more than three members. The term of office of a director shall be stipulated
in the articles of association, but each term of office shall not exceed three years. Directors may
serve consecutive terms if re-elected.
Meetings of the board of directors shall be convened at least twice a year. All directors
and supervisors shall be noticed 10 days before the meeting for every meeting. The Board
exercises the following functions and powers:
(i) to convene shareholder’s general meetings and report its work to the shareholder’s
general meetings;
(ii) to implement the resolutions of the shareholder’s general meeting;
(iii) to decide on a company’s business plans and investment plans;
(iv) to formulate a company’s profit distribution plan and loss recovery plan;
(v) to formulate proposals for the increase or reduction of a company’s registered
capital and the issue of corporate bonds;
(vi) to formulate plans for cake, division, dissolution or change of corporate form of a
company;
(vii) to decide on the internal management structure of a company;
(viii) to decide on the appointment or dismissal of the manager of a company and their
remuneration;
(ix) To decide on the appointment or dismissal of the deputy manager and financial
officer of a company based on the nomination of the manager and as well as
remuneration;
(x) to formulate a company’s basic management system;
(xi) other functions and powers specified in the articles of association or granted by the
shareholders’ meeting.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-13 –


--- page 649 ---
Board meetings shall be held only if more than half of the directors are present. If a
director is unable to attend a board meeting, he may appoint another director by a power of
attorney specifying the scope of the authorization for another director to attend the meeting on
his behalf. If a resolution of the board of directors violates the laws, administrative regulations
or the articles of association, and as a result of which the company suffers serious losses, the
directors participating in the resolution shall be liable to compensate the company. However,
if it can be proved that a director expressly objected to the resolution when the resolution was
voted on, and that such objection was recorded in the minutes of the meeting, such director may
be exempt from such liability.
Under the Company Law, a person may not serve as a director of a company if he/she is:
(i) a person without capacity or with restricted capacity;
(ii) a person who has been sentenced to any criminal penalty due to an offence of
corruption, bribery, encroachment of property, misappropriation of property, or
disrupting the order of the socialist market economy, or has been deprived of
political rights due to a crime, where a five-year period has not elapsed since the
date of completion of the sentence; if he/she is pronounced for suspension of
sentence, a two-year period has not elapsed since the expiration of the suspension
period;
(iii) a person who was a director, factory manager or manager of a company or enterprise
which has entered into insolvent liquidation and who was personally liable for the
insolvency of such company or enterprise, where less than three years have elapsed
since the date of the completion of the insolvency and liquidation of such company
or enterprise;
(iv) persons who were legal representatives of a company or enterprise which had its
business license revoked due to violation of the law and had been closed down by
order, and who were personally liable, where less than three years have elapsed
since the date of the revocation of the business license of the company or enterprise
or the order for closure; and
(v) being listed as one of “dishonest persons subject to enforcement” by the people’s
court due to his/her failure to pay off a relatively large amount of due debts.
The board of directors shall have one chairman, who shall be elected by more than half
of all the directors. The chairman shall exercise the following functions and powers (including
but not limited to):
(i) to preside over shareholders’ general meetings and convene and preside over board
meetings;
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-14 –


--- page 650 ---
(ii) to examine the implementation of resolutions of the Board;
(iii) to sign the securities issued by a company;
(iv) to exercise other powers conferred by the Board.
Supervisors
Under the Company Law, a joint stock limited company shall have a supervisory
committee composed of not less than three members. The supervisory committee shall
comprise shareholder representatives and an appropriate proportion of the company’s staff
representatives, of which the proportion of staff representatives shall not be less than one-third
and the specific proportion shall be stipulated in the articles of association. Employee
representatives of the supervisory committee shall be democratically elected by the company’s
employees at the employee representative assembly, employee general meeting or otherwise.
Directors or senior management may not act concurrently as supervisors.
The Supervisory Committee exercises the following powers:
(i) to examine the company’s financial affairs;
(ii) to supervise the directors and senior management in their performance of their
duties and to propose the removal of directors and senior management who have
violated laws, administrative regulations, the articles of association or resolutions of
shareholders’ general meetings;
(iii) to demand rectification by a director or senior management when the acts of such
persons are harmful to the company’s interest;
(iv) to propose the convening of extraordinary general meetings, and to convene and
preside over shareholders’ general meetings when the Board fails to perform the
duty of convening and presiding over shareholders’ general meetings under the
Company Law;
(v) to submit proposals to the shareholders’ general meeting;
(vi) to initiate legal proceedings against directors and senior management in accordance
with the Company Law;
(vii) other functions and powers specified in the articles of association.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-15 –


--- page 651 ---
Managers and Senior Management
Under the Company Law, a company should have a manager who is appointed or removed
by the board of directors. The manager is responsible to the board of directors and exercise
his/her functions and powers according to the Articles of Association or the authorization of the
board of directors. The manager attends the meetings of the board of directors as a non-voting
member.
According to the Company Law, senior management shall refer to the manager, deputy
manager(s), financial controller, secretary of the board of directors and other personnel as
stipulated in the articles of association of the company.
Duties of Directors, Supervisors and Senior Management
Directors, supervisors and senior management of the company are required under the
Company Law to comply with the relevant laws, regulations and the articles of association, and
have fiduciary and diligent duties to the company. Directors, supervisors and senior
management are prohibited from abusing their powers to accept bribes or other unlawful
income and from misappropriating the company’s properties.
Directors, supervisors and senior management are prohibited from:
(i) embezzling the company’s property or misappropriating of the company’s capital;
(ii) depositing the company’s capital into accounts under his own name or the name of
other individuals;
(iii) giving bribes or accepting any other illegal proceeds by taking advantage of their
power;
(iv) accept and possess commissions paid by a third party for transactions conducted
with the company;
(v) unauthorized divulgence of confidential business information of the company; or
(vi) other acts in violation of their fiduciary duty to the company.
If any director, supervisor or senior management directly or indirectly concludes a
contract or conducts a transaction with the company, he/she should report the matters relating
to the conclusion of the contract or transaction to the board of directors or shareholders’
meeting, subject to the approval of the board of directors or shareholders according to the
articles of association.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-16 –


--- page 652 ---
The provisions of the preceding paragraph shall apply if any near relatives of the
directors, supervisors or senior management, or any of the enterprises directly or indirectly
controlled by the directors, supervisors or senior management or any of their near relatives, or
any related parties with any other related-party relationship with the directors, supervisors or
senior management, concludes a contract or conducts a transaction with the company.
Neither director, supervisor or senior management may take advantage of his/her position
to seek any business opportunity that belongs to the company for himself/herself or any other
person except under any of the following circumstances:
(i) where he/she has reported to the board of directors or the shareholders’ meeting and
has been approved by a resolution of the board of directors or the shareholders’
meeting according to the Articles of Association; or
(ii) where the company cannot make use of the business opportunity as stipulated by
laws, administrative regulations or the Articles of Association.
Where any director, supervisor or senior management fails to report to the board of
directors or the shareholders’ meeting and obtain an approval by resolution of the board of
directors or the shareholders’ meeting according to the articles of association, he/she may not
engage in any business that is similar to that of the company where he/she holds office for
himself/herself or for any other person.
A director, supervisor or senior management who contravenes any law, regulation or the
company’s articles of association in the performance of his duties resulting in any loss to the
company shall be personally liable for the damages to the company.
Finance and Accounting
Under the Company Law, a company shall establish its financial and accounting systems
according to laws, administrative regulations and the regulations of the financial department of
the State Council. At the end of each fiscal year, the company shall prepare a financial and
accounting reports which shall be audited by an accounting firm in accordance with the law.
The financial and accounting reports shall be prepared in accordance with the laws,
administrative regulations and the regulations of the financial department of the State Council.
A joint stock limited company shall make its financial and accounting reports available
at the company for inspection by the shareholders 20 days before the convening of an annual
general meeting of shareholders. A joint stock limited company issuing its shares in public
must publish its financial and accounting reports.
When distributing each year’s after-tax profits, the company shall set aside 10% of its
profits into its statutory reserve fund. The company can no longer withdraw statutory reserve
fund if it has accumulated to more than 50% of the registered capital. If the statutory reserve
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-17 –


--- page 653 ---
fund of the company is insufficient to make up for the losses of the previous years, the current
year profits shall be used to make up for the losses before making allocations to the statutory
reserve in accordance with the preceding paragraph. After the company has made an allocation
to the statutory reserve fund from its after-tax profit, it may also make an allocation to the
discretionary reserve fund from its after-tax profit upon a resolution of the general meeting or
the shareholders’ general meeting.
A joint stock limited company may distribute profits in proportion to the number of shares
held by its shareholders, except for profit distributions that are not in proportion to the number
of shares held in accordance with the provisions of the Articles of Association of the joint stock
limited company.
The premium over the nominal value of the shares of a joint stock limited company from
the issue of shares, the amount of share proceeds from the issuance of no-par shares that have
not been credited to the registered capital and other incomes required by the financial
department of the State Council to be treated as the capital reserve fund shall be accounted for
as the capital reserve fund of the company.
The reserve fund of the company shall be used to make up losses of the company, expand
the production and operation of the company or increase the capital of the company. Where the
reserve fund of a company is used for making up losses, the discretionary reserve and statutory
reserve shall be firstly used. If losses still cannot be made up, the capital reserve can be used
according to the relevant provisions. When the statutory reserve fund is converted to increase
registered capital, the balance of the statutory reserve shall not be less than 25% of the
registered capital before such conversion.
The company shall not keep accounts other than those provided by law.
Appointment and Dismissal of Accounting Firms
Pursuant to the Company Law, the engagement or dismissal of an accounting firm
responsible for the company’s auditing shall be determined by a shareholders’ general meeting,
the board of directors or the board of supervisors in accordance with the articles of association.
The accounting firm should be allowed to make representations when the general meeting, the
board of directors or the board of supervisors conduct a vote on the dismissal of the accounting
firm. The company should provide true and complete accounting evidence, accounting books,
financial and accounting reports and other accounting information to the engaged accounting
firm without any refusal or withholding or falsification of information.
The Guidelines for Articles of Association provides that the company guarantees to
provide true and complete accounting vouchers, accounting books, financial accounting reports
and other accounting materials to the employed accounting firm, and shall not refuse, conceal
or falsely report. And the audit fee of the accounting firm shall be decided by the general
meeting of shareholders.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-18 –


--- page 654 ---
Profit Distribution
Where a company distributes profits to shareholders in violation of the provisions of the
Company Law, the shareholders shall refund the profits distributed to the company, and the
shareholders, directors, supervisors, and senior management personnel who are responsible for
causing losses to the company shall bear compensation liability.
Dissolution and Liquidation
According to the Company Law, a company shall be dissolved for the following reasons:
(i) the term of business stipulated in the Articles of Association has expired or other
events of dissolution specified in the Articles of Association have occurred;
(ii) the general meeting or the shareholders’ general meeting resolves to dissolve the
company;
(iii) dissolution is necessary due to a merger or division of the company;
(iv) the business license is revoked, or the business license is ordered to be closed or
revoked in accordance with laws;
(v) where the company encounters serious difficulties in its operation and management
and its continuance shall cause a significant loss in the interest of shareholders, and
where this cannot be resolved through other means, shareholders who hold more
than 10% of the total shareholders’ voting rights of the company may present a
petition to a people’s court for the dissolution of the company with the support of
the judgment.
If any of the situations as mentioned in the preceding paragraph arises, a company shall
publicize the situations through the National Enterprise Credit Information Publicity System
within ten days.
Where the company is dissolved in accordance with sub-paragraph (i) above, it may carry
on its existence by amending its articles of association or upon a resolution of the shareholders’
meeting, which must be approved by more than two-thirds of the voting rights held by the
shareholders present at the shareholders’ general meeting. Where the company is dissolved
pursuant to sub-paragraphs (i), (ii), (iv) or (v) above, it shall be liquidated. The directors, who
are the liquidation obligors of the company, shall form a liquidation group to carry out
liquidation within 15 days from the date of occurrence of the cause of dissolution. The
liquidation group shall be composed of the directors, unless it is otherwise provided for in the
company’s Articles of Association or it is otherwise elected by the shareholders’ meeting. The
liquidation obligors shall be liable for compensation if they fail to fulfill their obligations of
liquidation in a timely manner, and thus any loss is caused to the company or the creditors.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-19 –


--- page 655 ---
The liquidation group fails to be formed within the time limit or fails to carry out the
liquidation after its formation, any interested party may request the people’s court to designate
relevant persons to form a liquidation group. The people’s court shall accept such request and
organize a liquidation group to carry out the liquidation in a timely manner.
The liquidation committee shall exercise the following functions and powers during the
liquidation period:
(i) to liquidate the company’s property and respectively prepare balance sheet and list
of property;
(ii) to notify creditors by notice or public announcement;
(iii) to deal with the outstanding business of the company involved in the liquidation;
(iv) to pay all outstanding taxes and taxes arising in the course of liquidation;
(v) to liquidate claims and debts;
(vi) distributing the remaining property of the company after paying off debts;
(vii) to participate in civil litigations on behalf of the company.
The liquidation group shall notify the company’s creditors within ten days as of its
formation and shall make a public announcement in the newspaper or on the National
Enterprise Credit Information Publicity System within 60 days. The creditors shall file their
proofs of claim with the liquidation group within 30 days as of the receipt of the notice or
within 45 days as of the issuance of the public announcement in the case of failing to receive
such notice.
The remaining property of the company after the payment of liquidation expenses,
employees’ wages, social insurance expenses and statutory compensation, outstanding taxes
and the company’s debts, shall be distributed to shareholders in proportion to their
shareholdings.
During the liquidation period, the company shall continue to exist but shall not carry out
any business activities unrelated to the liquidation. The company’s assets shall not be
distributed to the shareholders before the liquidation in accordance with the preceding
paragraph.
If the liquidation committee, having thoroughly examined the company’s assets and
having prepared a balance sheet and an inventory of assets, discovers that the company’s assets
are insufficient to pay its debts in full, it shall file an application to a people’s court for
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-20 –


--- page 656 ---
bankruptcy liquidation. After the people’s court accepts the application for bankruptcy, the
liquidation group shall hand over the liquidation matters to the bankruptcy administrator
designated by the people’s court.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation
report to be submitted to the shareholders’ general meeting or the people’s court for
confirmation, and submit to the company registration authority to apply for cancelation of the
company’s registration.
The members of the liquidation group performing their duties of liquidation are obliged
to loyalty and diligence. Any member of the liquidation group who neglects to fulfill his/her
liquidation duties, thus causing any loss to the company shall be liable for compensation, and
any member of the liquidation group who cause any loss to any creditor due to his/her
intentional or gross negligence shall be liable for compensation.
Where, after three years since the business license of a company is revoked, or the
company is ordered to close down or is revoked, the company fails to apply for its
deregistration with the company registration authority, the said authority may announce the
company’s deregistration through the National Enterprise Credit Information Publicity System
for a period of no less than 60 days. If there is no objection after the announcement period
expires, the company registration authority may deregister the company.
Overseas Listing
According to the Trial Measures, where an issuer makes an overseas initial public offering
or listing, it shall file with the CSRC within 3 working days after submitting the application
documents for overseas issuance and listing. If an issuer issues securities in the same overseas
market after overseas issuance and listing, it shall file with the CSRC within 3 working days
after the completion of the issuance. If an issuer issues and lists in other overseas markets after
overseas issuance and listing, it shall be filed in accordance with the provisions of the first
paragraph of this article. Moreover, if the filing materials are complete and meet the
requirements, the CSRC shall complete the filing within 20 working days from the date of
receiving the filing materials, and publicize the filing information through the website. If the
filing materials are incomplete or do not meet the requirements, the CSRC shall inform the
issuer of the materials to be supplemented within 5 working days after receiving the filing
materials. The issuer shall supplement the materials within 30 working days.
Loss of Share Certificates
A shareholder may, in accordance with the public notice procedures set out in the PRC
Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is
either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid.
After the people’s court declared that such certificate(s) will no longer be valid, the shareholder
may apply to the company for the issue of a replacement certificate(s).
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-21 –


--- page 657 ---
Suspension and Termination of Listing
The Company Law has deleted provisions governing suspension and termination of
listing. The PRC Securities Law (2019 revision) (ج2019ࠈࡌ))
has also deleted provisions regarding suspension of listing. Where listed securities fall under
the delisting circumstances stipulated by the stock exchange, the stock exchange shall
terminate its listing and trading in accordance with the business rules.
According to the Trial Measures, in case of active or compulsory termination of listing,
the issuer shall report the specific situation to the CSRC within 3 working days from the date
of occurrence and announcement of the relevant matters.
SECURITIES LA W AND REGULATIONS
In October 1992, the State Council established the Securities Committee and the CSRC.
The Securities Committee is responsible for coordinating the drafting of securities regulations,
formulating securities-related policies, planning the development of securities markets,
directing, coordinating and supervising all securities-related institutions in the PRC and
administering the CSRC. The CSRC is the regulatory arm of the Securities Committee and is
responsible for the drafting of regulatory provisions of securities markets, supervising
securities companies, regulating public offers of securities by Chinese companies in the
mainland China or overseas, regulating the trading of securities, compiling securities-related
statistics and undertaking research and analysis. On 29 March 1998, the State Council
consolidated the above two departments and reformed the CSRC.
The Provisional Regulations Concerning the Issue and Trading of Shares (ୃ೯Бၾ
၍ଣᅲБૢԷ) promulgated by the State Council and effective on 22 April 1993 provide
the application and approval procedures for public offerings of shares, trading in shares, the
acquisition of listed companies, the deposit, settlement and transfer of listed shares, the
disclosure of information with respect to a listed company, investigation and penalties and
dispute arbitration.
The Regulations of the State Council Concerning the Domestic Listed Foreign Shares of
Joint Stock Limited Companies (), which
were promulgated by the State Council and came into effect on 25 December 1995, mainly
provide for the issue, subscription, trading and payment of dividends of domestic listed foreign
shares and disclosure of information of joint stock limited companies with domestic listed
foreign shares.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-22 –


--- page 658 ---
The Securities Law of the People’s Republic of China (), or
the PRC Securities Law, which was amended by the Standing Committee of the NPC on 28
December 2019 and came into effect on 1 March 2020, provides a series of provisions
regulating, among other things, the issue and trading of securities, takeovers by listed
companies, securities exchanges, securities companies and the duties and responsibilities of the
State Council’s securities regulatory authorities in the PRC, and comprehensively regulates
activities in the PRC securities market. The PRC Securities Law provides that a domestic
enterprise must comply with the relevant provisions of the State Council in issuing securities
directly or indirectly outside the PRC or listing and trading its securities outside the PRC.
Currently, the issue and trading of foreign issued shares are mainly governed by the rules and
regulations promulgated by the State Council and the CSRC.
ARBITRATION AND ENFORCEMENT OF ARBITRAL A W ARDS
Under the Arbitration Law of the People’s Republic of China ( ʕശɛ͏΍ձ਷΀൒
), or the Arbitration Law, amended by the Standing Committee of the NPC on September
1 2017 and effective on January 1 2018, the Arbitration Law is applicable to economic disputes
involving foreign parties, and all parties have entered into a written agreement to refer the
matter to an arbitration committee constituted in accordance with the Arbitration Law. An
arbitration committee may, before the promulgation by the PRC Arbitration Association of
arbitration regulations, formulate interim arbitration rules in accordance with relevant
regulations under the Arbitration Law and the PRC Civil Procedure Law. Where both parties
have agreed to settle disputes by means of arbitration, the people’s court will refuse to take
legal action brought by a party in the people’s court.
Under the Arbitration Law, an arbitral award is final and binding on the parties. If a party
fails to comply with an award, the other party to the award may apply to the people’s court for
enforcement according to the PRC Civil Procedure Law. A people’s court may refuse to enforce
an arbitral award made by an arbitration commission if there is any procedural irregularity
(including irregularity in the composition of the arbitration committee or the making of an
award on matters beyond the scope of the arbitration agreement or the jurisdiction of the
arbitration commission). A party seeking to enforce an arbitral award of foreign arbitration
commission against a party who or whose property is not within the PRC shall apply to a
foreign court with jurisdiction over the case for recognition and enforcement. Similarly, an
arbitral award made by a foreign arbitration body may be recognized and enforced by the
people’s court in accordance with the principles of reciprocity or any international treaty
concluded or acceded to by the PRC.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-23 –


--- page 659 ---
According to the Arrangement of the Supreme People’s Court on Mutual Enforcement of
Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region
(τર) promulgated by the
Supreme People’s Court on 24 January 2000 and effective on 1 February 2000, and the
Supplementary Arrangement of the Supreme People’s Court on Mutual Enforcement of Arbitral
Awards between the Mainland and the Hong Kong Special Administrative Region ( ௰৷ɛ
໾̂τર) promulgated by the
Supreme People’s Court on 26 November 2020 and effective on 27 November 2020, awards
made by PRC arbitral authorities can be enforced in Hong Kong, and Hong Kong arbitration
awards are also enforceable in the PRC.
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL
AND REGULATORY PROVISIONS
– IV-24 –


--- page 660 ---
This Appendix mainly provides investors with an overview of the Articles of Association.
As the following information is in summary form, it does not contain all the information that
may be important to investors.
SHARES AND REGISTERED CAPITAL
The shares of the Company shall be issued in an open, fair and equal manner. Each share
of the same class shall rank pari passu with each other. Shares of a class in each issuance shall
be issued under the same terms and at the same price. Each of the shares shall be subscribed
for at the same price by any entity or individual.
INCREASE, DECREASE, REPURCHASE AND TRANSFER OF SHARES
Increase and Decrease of Shares
According to the operation and development needs of the Company, subject to the laws
and regulations, the Company may increase the capital by the following ways upon approval
of special resolutions at the Shareholders’ general meeting:
(i) Public issuance of shares;
(ii) Non-public issuance of shares;
(iii) Distribution of bonus shares to existing shareholders;
(iv) Converting the reserve funds into share capital;
(v) Other means approved by the laws, administrative regulations or approved by the
CSRC.
Our Company may decrease our registered share capital and shall comply with the
procedures stipulated in Company Law of the PRC and the Articles of Association.
Repurchase of Shares
Company shall not to repurchase its own shares, unless otherwise under the
circumstances:
(i) Reduce our Company’s registered capital;
(ii) Merger with other companies which hold our shares;
(iii) Using the shares as an employee stock ownership plan or equity incentive plan;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-1 –


--- page 661 ---
(iv) Purchasing its shares from Shareholders who have voted against the resolutions on
the merger or division of the Company at a Shareholders’ general meeting upon their
request;
(v) Use of shares for conversion of convertible corporate bonds issued by the Company;
(vi) Necessary for the Company to maintain its value and protect the interests of the
shareholders.
A resolution shall be passed at the Shareholders’ general meeting when the Company is
to repurchase its own shares under the circumstances (i) and (ii) set out above. In case of the
circumstances stipulated in (iii), (v) and (vi) above, a resolution of the Company’s Board shall
be passed by more than two-thirds of the Directors attending the Board meeting. After the
Company has repurchased its own shares in accordance with the circumstances above, the
shares so repurchased shall be canceled within ten days from the date of purchase (under the
circumstance set out in (i) above), or shall be transferred or canceled within six months (under
the circumstances set out in (ii) and (iv) above). If the Company repurchases its shares under
the circumstances set out in (iii), (v) and (vi) above, the total number of shares held by the
Company shall not exceed 10% of the total issued shares of the Company, and such shares shall
be transferred or canceled within three years.
If the share repurchase is made under the circumstances stipulated in (iii), (v) or (vi)
above, it shall be conducted by way of open centralized trading.
Transfer of Shares
Shares of the Company held by the founders shall not be transferred within one year from
the date of incorporation of the Company. Shares of the Company that were issued prior to a
public issue shall not be transferred within one year from the date on which shares of the
Company are listed and traded on the stock exchange.
The Directors, Supervisors and senior management of the Company shall notify the
Company of their holdings of shares in the Company and the changes therein. The shares
transferrable by them during each year of their tenures shall not exceed 25% of their total
holdings of shares in the Company. The shares in the Company held by them shall not be
transferred within one year from the date on which the Company’s shares are listed for trading.
The shares in the Company held by them shall not be transferred within half a year from their
departure from the Company. Where the listing rules of the place where the Company’s shares
are listed provide otherwise in respect of the restrictions on the transfer, such rules shall
prevail.
Any gains from sale of Company’s shares or other securities with an equity nature by the
Directors, Supervisors and senior management members or shareholders holding 5% or more
of the Company’s shares within six months after their purchase of the same, and any gains from
the purchase of the shares or other securities with an equity nature by any of the aforesaid
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-2 –


--- page 662 ---
parties within six months after sale of the same shall be disgorged and paid to the Company,
and the Board of Directors of the Company shall be responsible for recovering such gains from
the abovementioned parties. However, a securities company which holds 5% or more of the
Company’s shares as a result of its undertaking of the untaken shares in an offer, sale those
Company’s shares shall not be subject to the six-month time limit as set out above.
Shares or other securities with the nature of equity held by Directors, Supervisors, senior
executives and individual shareholders as mentioned in the preceding paragraph include shares
or other securities with the nature of equity held by their spouses, parents or children, or held
by them by using other people’s accounts.
If the Board of Directors of the Company fails to comply with the above paragraph of this
Article, the Shareholders are entitled to request the Board of Directors to do so within 30 days.
If the Board of Directors of the Company fails to comply within the aforesaid period, the
Shareholders are entitled to initiate litigation directly in the People’s Court in their own names
for the interest of the Company. And if the Board of Directors fails to implement the provisions
set forth in this Article, the responsible Directors shall bear joint and several liability in
accordance with law.
SHAREHOLDERS AND SHAREHOLDERS’ GENERAL MEETINGS
Shareholders
The Company shall make a register of shareholders in accordance with evidentiary
documents provided by the securities registration authorities. The register of Shareholders is
sufficient evidence to prove that the Shareholders hold the Company’s Shares. The original
register of Shareholders of overseas listed foreign shares listed in Hong Kong is kept in Hong
Kong and is available for inspection by Shareholders, but the Company may suspend the
registration of Shareholders in accordance with applicable laws and regulations and the
securities regulatory rules of the place where the Company’s Shares are listed. Shareholders
shall enjoy rights and assume obligations according to the class of shares they hold.
Shareholders holding shares of the same class shall enjoy the same rights and assume the same
obligations.
The rights of our shareholders are as follows:
(i) To receive distribution of dividends and other forms of benefits according to the
number of shares held;
(ii) To legally require, convene, preside over, participate in or authorize proxies of
Shareholders to attend the General Meeting and exercise corresponding voting
rights;
(iii) To supervise operational activities of our Company, provide suggestions or submit
queries;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-3 –


--- page 663 ---
(iv) To transfer, grant and pledge the Company’s shares held according to the provisions
of the laws, administrative regulations and the Articles of Association;
(v) To read the Articles of Association, the list of Shareholders, Company bond stubs,
General Meeting minutes, resolutions of meetings of the Board of Directors,
resolutions of meetings of the Board of Supervisors and financial and accounting
reports;
(vi) To participate in the distribution of the remaining assets of our Company according
to the proportion of shares held upon our termination or liquidation;
(vii) To require our Company to acquire the shares from Shareholders voting against any
resolutions adopted at the General Meeting concerning the merger and division of
the Company;
(viii) Other rights conferred by laws, administrative regulations, regulations of the
authorities, regulatory rules where our Company’s shares are listed, or the Articles
of Association.
Where any Shareholder demands to read the relevant information or obtain any of the
aforesaid materials, he shall submit to the Company written documents proving the class(es)
and number of shares he holds. The Company shall provide the relevant information or
materials in accordance with the Shareholder’s demand after verifying the Shareholder’s
identity.
In the event that any resolution of the Shareholders’ general meeting or resolution of the
Board of Directors violates laws or administrative regulations, the Shareholder is entitled to
request the People’s Court to deem it as invalid. In the event that the convening procedure or
voting method of the Shareholders’ general meeting or the Board meeting violates any of laws,
administrative regulations or the Articles of Association, or any resolution of which violates
the Articles of Association, the Shareholder is entitled to request the People’s Court to overturn
the resolution within 60 days upon the resolution was adopted.
The obligations of Shareholders are as follows:
(i) To abide by laws, administrative regulations and the Articles of Association;
(ii) To provide Share capital according to the Shares subscribed for and Share
participation methods;
(iii) Not to return Shares unless prescribed otherwise in laws and administrative
regulations;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-4 –


--- page 664 ---
(iv) Not to abuse Shareholders’ rights to infringe upon the interests of the Company or
other Shareholders; not to abuse the Company’s status as an independent legal entity
or the limited liability of Shareholders to damage the interests of the Company’s
creditors;
(v) To perform other duties prescribed in laws, administrative regulations and the
Articles of Association.
Any company Shareholder who abuses Shareholders’ rights and causes the Company or
other Shareholders to suffer a loss shall be liable for making compensation in accordance with
the law. Any Shareholder who abuses the status of the Company as an independent legal entity
or the limited liability of Shareholders to evade debts and seriously damages the interests of
the Company’s creditors shall assume joint and several liability for the Company’s debts.
In the event of any loss caused to our Company as a result of violation of any laws,
administrative regulations or Articles of Association by the Directors or senior management
when performing their duties in our Company, the Shareholders holding more than 1% shares
separately or jointly for over 180 consecutive days may submit a written request to the Board
of Supervisors to file an action with the people’s court. Where supervisors violate laws,
administrative regulations or the Articles of Association in their duty performance and cause
loss to our Company, the Shareholders may submit a written request to the Board of Directors
to file an action with the people’s court.
In the event that the Board of Supervisors or the Board of Directors refuse to file an action
upon receipt of the Shareholders’ written request specified in the preceding paragraph, or fail
to file an action within 30 days upon receipt thereof, or in the event that the failure to
immediately file an action in an emergency case will cause irreparable damage to the interests
of our Company, the Shareholder(s) specified in the preceding paragraph may, in their own
name, directly file an action to the court for the interest of our Company.
In the event of any other person infringes upon the legitimate rights and interests of our
Company and causes losses thereto, the shareholder(s) specified in this Articles of Association
may file an action with the court pursuant to the provisions of the preceding two paragraphs.
In the event of a director or senior management person violates laws, administrative
regulations or our Company’s Articles of Association, thereby damaging the interests of the
Shareholder(s), the Shareholder(s) may file an action with the court.
The controlling Shareholders and actual controllers of the Company shall not use their
connected relationship to damage the legitimate interests of the Company; Who violate Articles
of Association and cause losses to the Company shall be liable for compensation.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-5 –


--- page 665 ---
Controlling Shareholders and ultimate controllers of the Company shall have a duty of
care to the Company and Public Shareholders. Controlling Shareholders shall exercise their
investors’ rights in strict accordance with the law and shall not damage the lawful interests of
the Company or of public Shareholders in any way such as via the distribution of profits, an
asset reorganization, external investments, the use of Company’s funds or the provision of a
loan guarantee, nor shall they abuse their controlling positions to damage the interests of the
Company or of public Shareholders.
General Provisions for Shareholders’ General Meetings
The General Meetings are divided into annual general Shareholders’ meetings and
extraordinary general Shareholders’ meetings. The annual general shareholders’ meeting shall
be convened once a year and be held within six months of the end of the previous fiscal year.
The Shareholders’ general meeting is the organ of authority of the Company, which
exercises its powers in accordance with the PRC Company Law:
(i) To decide on the Company’s operational policies and investment plans;
(ii) To elect or remove the Directors and Supervisors (other than the employee
representatives) and to decide on matters relating to the remuneration of Directors
and Supervisors;
(iii) To examine and approve reports of the Board of Directors;
(iv) To examine and approve reports of the Board of Supervisors;
(v) To examine and approve the Company’s proposed annual financial budget and final
accounts;
(vi) To examine and approve the Company’s proposals for profit distribution plans and
loss recovery plans;
(vii) To decide on any increase or decrease of the Company’s registered capital;
(viii) To decide on the issue of corporate bonds by the Company;
(ix) To decide on matters such as merger, division, dissolution and liquidation or change
of corporate form of the Company;
(x) To amend the Articles of Association;
(xi) Resolution on appointment and dismissal of an accounting firm by the Company;
(xii) To examine and approve the provision of guarantees stipulated in Article 42;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-6 –


--- page 666 ---
(xiii) To examine matters relating to the purchases and disposals of the Company’s
material assets within one year, which exceed 30% of the Company’s latest audited
total assets;
(xiv) To examine and approve matters relating to changes in the use of proceeds;
(xv) To examine and approve the equity incentive plans and employee stock ownership
plans;
(xvi) To examine adjustments to the profit distribution plan;
(xvii) To decide on the purchase of the Company’s shares under the circumstances
stipulated in Article 24 (1) and (2) of the Company’s Articles of Association;
(xviii) To examine other matters as required by the laws, administrative regulations,
departmental rules, the Articles of Association of the Company or the securities
regulatory rules of the place where the Company’s shares are listed, which shall be
decided by the Shareholders’ general meeting.
The external guarantee matters of the Company shall be submitted to the Board of
Directors or the General Meeting for deliberation. The following acts of external guarantee of
the Company shall be submitted to the General Meeting for deliberation and approval:
(i) Any guarantee to be provided after the total amount of external guarantees provided
by the Company and the subsidiaries it controls has at least or exceeded 50% of the
Company’s net assets as audited in the latest period;
(ii) Basis of the cumulative guarantee amount in the last 12 months, the total amount of
external guarantees provided by the Company has exceeded 30% of the Company’s
latest audited total assets in the latest period;
(iii) Basis of the cumulative guarantee amount in the last 12 months, the total amount of
external guarantees provided by the Company has exceeded 50% of the Company’s
net assets audited in the latest period, and the absolute value exceeded RMB50
million;
(iv) Any guarantee to be provided for a party whose ratio of liabilities to assets exceeds
70%;
(v) The single guarantee for an amount more than 10% of the Company’s net assets
audited in the latest period;
(vi) The guarantee to be provided to a Shareholder, or to an ultimate controller or related
party thereof;
(vii) Other guarantees required by the relevant laws or administrative regulations that
shall be considered by the Shareholders’ general meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-7 –


--- page 667 ---
The guarantee in item (2) of the preceding paragraph shall be approved by special
resolution at the General Meeting.
The Company shall convene an extraordinary general meeting within two months from
the date of the occurrence of any of the following circumstances:
(i) The number of directors is less than the number provided for in the Company Law
or less than two-thirds of the number prescribed in these Articles of Association;
(ii) The uncovered losses of our Company reach one-third of its total paid-in share
capital;
(iii) The Shareholders with 10% or more shares of the Company separately or jointly
request;
(iv) The Board of Directors considers it necessary;
(v) The Board of Supervisors proposes that such a meeting shall be held;
(vi) Other circumstances conferred by the laws, administrative regulations, departmental
rules, securities regulatory rules of the place where the Company’s shares are listed
and the Articles of Association.
Convening of Shareholders’ General Meetings
Shareholders who individually or collectively hold more than 10% of the shares of the
Company shall have the right to request the Board of Directors to convene an extraordinary
general meeting, and shall submit such request in writing to the Board of Directors. The Board
of Directors shall in accordance with the provisions of laws, administrative regulations and the
Articles of Association, provide written feedback on whether or not to convene the
extraordinary general meeting within 10 days after receiving the request.
Where the Board of Directors agrees to convene an extraordinary general meeting, it shall
issue a notice of convening the general meeting within 5 days after the resolution of the Board
of Directors is made, and changes to the original request in the notice shall be subject to the
consent of the relevant shareholders. Where the Board of Directors does not agree to convene
an extraordinary general meeting, or fails to give feedback within 10 days after receiving the
request, shareholders who individually or collectively hold more than 10% of the Company’s
shares have the right to propose to the Board of Supervisors to hold an extraordinary general
meeting, and shall make a written request to the Board of Supervisors.
Where the Board of Supervisors agrees to convene an extraordinary general meeting, it
shall issue a notice of convening the general meeting within 5 days of receiving the request,
and any changes to the original request in the notice shall be subject to the consent of the
relevant shareholders. Where the Board of Supervisors fails to issue a notice of the general
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-8 –


--- page 668 ---
meeting within the prescribed time limit, it shall be deemed that the Board of Supervisors has
not convened and presided over the general meeting, and shareholders who individually or
collectively hold more than 10% of the Company’s shares for more than 90 consecutive days
may convene and preside over it on their own.
Where the Board of Supervisors or shareholders decide to convene a Shareholders’
general meeting by themselves, they shall notify the Board of Directors in writing and file with
the relevant branch office of the CSRC where the Company locates and Shenzhen Stock
Exchange at the same time. Prior to the announcement of the resolution of the Shareholders’
general meeting, the shareholding ratio of the convening shareholders shall not be less than
10%. The Board of Supervisors or the convening shareholders shall submit relevant supporting
materials to the relevant branch office of the CSRC where the Company locates and Shenzhen
Stock Exchange when issuing the notice of the general meeting and the announcement of the
resolutions of the Shareholders’ general meeting.
The expenses necessary for the Shareholders’ general meeting convened by the Board of
Supervisors or the shareholders themselves shall be borne by the Company.
Notice of Shareholders’ General Meeting
The notice of a Shareholders’ general meeting includes the following:
(i) The time, place and duration of the meeting;
(ii) The matters and proposals to be discussed at the meeting;
(iii) In plain language: all Shareholders have the right to attend the general meeting of
shareholders, and may entrust a proxy in writing to attend the meeting and vote.
Such a proxy does not need to be a shareholder of the Company;
(iv) The shareholding registration date of the Shareholders entitled to attend the general
meeting;
(v) name and telephone number of the permanent contact person for conference affairs.
The notice of the General Meeting and the supplementary notice shall fully and
completely disclose all the specific contents of all proposals. If the matter to be discussed
needs the opinion of Independent Directors, the opinions and reasons of Independent Directors
will be disclosed at the same time when the notice of General Meeting or supplementary notice
is issued. The start time of voting by network or other means at the General Meeting shall not
be earlier than 9:15 a.m. on the day of the on-site General Meeting, nor later than 9:30 a.m.
on the day of the on-site General Meeting, and the end time shall not be earlier than 3:00 p.m.
on the day of the on-site General Meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-9 –


--- page 669 ---
The convener shall notify all Shareholders by way of announcement 21 days prior to the
convening of the annual general meeting, and each Shareholder shall be notified by way of
announcement 15 days prior to the convening of the extraordinary general meeting.
The interval between the equity registration date and the meeting date shall be no more
than 7 working days. Once the equity registration date is confirmed, it cannot be changed.
Proposals at Shareholders’ General Meetings
The Board of Directors, the Board of Supervisors and Shareholders who individually or
jointly hold more than 3% of the shares of the Company shall have the right to put forward
proposals to the Company. Shareholders who individually or collectively hold more than 3%
of the shares of the Company may submit an interim proposal in writing to the convener 10
days prior to the convening of the Shareholders’ general meeting. The convener shall issue a
supplementary notice of the Shareholders’ general meeting within 2 days after receiving the
proposal, and announce the contents of the interim proposal. Where the Shareholders’ general
meeting is postponed in accordance with the requirements of the securities regulatory rules of
the place where the Company’s shares are listed due to the issuance of a supplementary notice
of the Shareholders’ general meeting, the convening of the Shareholders’ general meeting shall
be postponed in accordance with the provisions of the securities regulatory rules of the place
where the Company’s shares are listed.
Proxy for the Shareholders’ General Meeting
A shareholder may attend and vote at the shareholders’ general meeting in person or by
proxy.
Individual shareholders attending the meeting in person shall present their personal
identity cards or other valid certificates or documents or proof of shareholding. Proxies
attending the meeting shall present their personal identity cards and the proxy statements from
the shareholder.
Corporate shareholders shall be represented by its legal representative or proxies
authorized by the legal representative. Legal representatives attending the meeting shall
present their personal identity cards or valid documents that can prove its identity as the legal
representative. Proxies authorized to attend the meeting shall present their personal identity
cards or the written proxy statement legally issued by the legal representative of the legal
person shareholder, except for shareholders who are a recognized clearing house as defined in
the relevant ordinances in force from time to time under the laws of Hong Kong or the
securities regulatory rules of the place where the shares of the Company are listed (hereinafter
referred to as the “Recognized Clearing House”) or its proxy.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-10 –


--- page 670 ---
If the shareholder is a Recognized Clearing House (or their proxies), the shareholder may
authorize its company representative or one or more persons as it deems appropriate to act as
its representative at any General Meeting or any class of shareholders; however, if more than
one person is authorized, the power of attorney shall specify the number and class of shares in
respect of which each such person is so authorized. A person so authorized may act on behalf
of the Recognized Clearing House (or their proxies) as if such person were an individual
shareholder of the Company (without presenting a shareholding certificate, notarized
authorization and/or further evidence confirming its duly authorization).
Voting at the Shareholders’ General Meeting
The resolutions of the Shareholders’ meeting divided into ordinary resolutions and special
resolutions. An ordinary resolution at a shareholders’ general meeting shall be passed by more
than half of the voting rights held by the shareholders present at the shareholders’ general
meeting (including proxies). A special resolution at a shareholders’ general meeting shall be
passed by at least two-thirds of the voting rights held by the shareholders present at the
shareholders’ general meeting (including proxies).
Shareholders (including proxies) shall exercise voting rights based on the number of
shares with voting rights held by them, and each share shall be entitled to one vote.
Where material issues affecting the interests of minority shareholders are considered at
the shareholders’ general meeting, the votes of minority shareholders shall be counted
separately. The separate votes counting results shall be disclosed publicly in a timely manner.
The shares held by the Company shall have no voting right, and shall not be included in
the total number of shares with voting rights of shareholders present at the shareholders’
general meeting. If a shareholder purchases shares with voting rights of the Company in
violation of the provisions of Article 63(1) and (2) of the Securities Law, the voting rights of
such shares in excess of the prescribed proportion shall not be exercised and shall not be
counted towards the total number of shares with voting rights present at the shareholders’
general meeting for thirty-six months after the purchase.
If any shareholder, under applicable laws and regulations and Hong Kong Listing Rules,
is required to abstain from voting on any particular matter being considered or is restricted to
voting only for or only against any particular matter being considered, any votes cast by or on
behalf of such shareholder in contravention of such requirement or restriction shall not be
counted.
The Board of Directors, independent Directors, shareholders holding more than one per
cent of the shares with voting rights or investor protection agencies established in accordance
with laws as the solicit person. Except for statutory conditions, the Company shall not impose
minimum shareholding restrictions on the solicitation of voting rights.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-11 –


--- page 671 ---
The resolution of the General Meeting includes ordinary resolution and special resolution.
The following matters shall be approved by the General Meeting through ordinary resolutions:
(i) Work report of the Board of Directors and the Board of Supervisors;
(ii) Plans of earnings distribution and loss make-up schemes drafted by the Board of
Directors;
(iii) Appointment or dismissal of the members of the Board of Directors and the Board
of Supervisors, and their payment and payment methods;
(iv) Annual budgets plan and final accounts plan of the Company;
(v) Annual report of the Company;
(vi) Other matters other than those approved by special resolution stipulated in the laws,
administrative regulations, securities regulatory rules of the place where the
Company’s Shares are listed or the Articles of Association.
The following matters shall be approved by special resolution at the General Meeting:
(i) The increase or reduction of the registered capital of the Company;
(ii) The division, spin-off, merger, dissolution and liquidation of the Company or
change of company form;
(iii) Any amendment to the Articles of Association;
(iv) Purchase or sale of significant assets within a year which exceeds 30% of the
Company’s audited total assets for the latest period;
(v) Basis of the cumulative guarantee amount in the last 12 months, the total amount of
external guarantees provided by the Company has exceeded 30% of the Company’s
latest audited total assets;
(vi) Share option incentive plan;
(vii) Adjustments to the profit distribution plan;
(viii) The connected transaction which shall be discussed at the Shareholders’ general
meeting (exclusive of ordinary connected transactions);
(ix) Issuance of shares, convertible corporate bonds, preferred Stock or other category of
securities recognize by the CSRC;
(x) When the Company is to repurchase its own shares under the circumstances 24(1)
and (2) of Articles of Association set out;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-12 –


--- page 672 ---
(xi) Significant asset reorganization;
(xii) A resolution of the Shareholders’ general meeting of company to voluntarily
withdraw the listing of its shares from trading on the Shenzhen Stock Exchange
and/or the Hong Kong Stock Exchange, and to decide not to trade on the Exchange
or to apply for trading or transfer of its shares to other trading venues;
(xiii) Other matters as required by the laws, administrative regulations, other securities
regulatory rules of the place where the Company’s Shares are listed and the Articles
of Association, and matters approved by ordinary resolution of the General Meeting
which are believed could materially affect our Company and need to be approved by
special resolution.
DIRECTORS AND BOARD OF DIRECTORS
Directors
Directors’ term of office shall be three years. Upon expiration of the term, the Director
may be re-elected. Director can be the general manager or other senior management personnel.
However, provided that the total number of Directors who concurrently serve as general
manager or other Senior Management Members and Directors who are employee’s
representatives shall not exceed half (1/2) of the total number of Directors of the Company.
The Company has independent directors and the Board of Directors should not be less
than three or one-third independent directors. Independent directors shall faithfully perform
their duties and safeguard the interests of the Company, with particular attention to ensuring
that the legitimate rights and interests of public shareholders are not jeopardized.
The directors shall abide by laws, administrative regulations and the Articles of
Association, and bear fiduciary obligations towards the Company:
(i) Shall not abuse their authority to accept bribes or other illegal income and shall not
misappropriate the properties of the Company;
(ii) Shall not misappropriate company funds;
(iii) The assets of the Company shall not be deposited in any personal account;
(iv) Shall not, in violation of the Articles of Association, loan Company’s funds to any
other person or provide guarantees to any other person without the approval of the
General Meeting or the Board of Directors;
(v) Shall not conclude any contract or engage in any transaction with the Company
either in violation of the Articles of Association or without the approval of the
General Meeting;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-13 –


--- page 673 ---
(vi) Shall not use the advantages provided by their own positions to pursue business
opportunities that properly belong to the Company to engage in the same business
as the Company either for their own account or for the account of any other person
without the approval of the General Meeting;
(vii) Shall not accept commissions paid by others for transactions conducted with the
Company as their own;
(viii) Shall not disclose confidential Company’s information without authorization;
(ix) Shall not abuse their connected relationships to damage the Company’s interests;
(x) Other fiduciary obligations stipulated in laws, administrative regulations,
departmental rules, other securities regulatory rules of the place where the
company’s shares are listed and the Articles of Association.
The income obtained by the director in violation of above article shall belong to the
Company; If losses are caused to the Company, it shall be liable for compensation.
Directors shall abide by laws, administrative regulations and the Articles of Association,
and have the following diligent obligations to the Company:
(i) Shall prudently, earnestly and diligently exercise the powers the Company grants to
them to ensure that the Company conducts its commercial activities in a manner that
complies with the requirements of state laws, administrative regulations and
government economic policies, and that the Company’s commercial activities do not
go beyond the scope of the business activities stipulated in the Company’s business
license;
(ii) Shall treat all Shareholders fairly;
(iii) Shall maintain a timely awareness of the operation and management of the
Company;
(iv) Shall sign written statements confirming the regular reports of the Company, and
ensure that the information disclosed by the Company is true, accurate and
complete;
(v) Shall provide information and materials to the Board of Supervisors and shall not
obstruct the Board of Supervisors or individual Supervisors from performing its or
their duties;
(vi) Other obligations of diligence stipulated in the laws, administrative regulations,
departmental rules, other securities regulatory rules of the place where the
Company’s Shares are listed, and Articles of Association.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-14 –


--- page 674 ---
The fiduciary duty assumed by the Directors shall not be automatically relieved within a
reasonable period after the resignation report has not come into effect or has come into effect
after the end of the term of office. The duty of confidentiality of the Company’s business
secrets shall remain valid after the end of the term of office, until the secrets become public
information.
Without the provisions of the Articles of Association or the lawful authorization of the
Board of Directors, no Director shall act in his own name on behalf of the Company or the
Board of Directors. When a Director acts in his/her own name, the Director shall declare
his/her position and identity in advance if the third party reasonably believes that the Director
is acting on behalf of the Company or the Board of Directors.
Chairman
The Board of Directors shall appoint a Chairman. The Chairman and vice chairman shall
be elected by more than one half of all Directors.
Board of Directors
The Board of Directors consists of ten Directors, four of whom are independent Directors
and has one chairman. Directors shall be elected or replaced at a shareholders’ general meeting.
The Board of Directors exercises the following powers:
(i) To convene the general Shareholders’ meeting and report on work to the General
Meeting;
(ii) Implement the resolutions of the General Meeting;
(iii) Determine the business and investment plans of our Company;
(iv) Devise the annual financial budget and closing account plans of our Company;
(v) Devise the earnings distribution and loss offset plans of our Company;
(vi) Formulate the plans for increasing or decreasing our Company’s registered capital,
the issuance of corporate bonds or other securities, as well as the listing of the stock
of our Company;
(vii) Formulate plans for major acquisitions of the Company, in case of the circumstances
stipulated of the Articles of Association the buy-back of shares of our Company,
corporate merger, separation, dissolution and changing the form of our Company;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-15 –


--- page 675 ---
(viii) Determine such matters as the Company’s external investment, purchase or sale of
assets, asset pledge, external guarantee, entrusting wealth management, connected
transaction and external donation within the scope authorized by the General
Shareholders’ Meeting;
(ix) Decide on the setup of our Company’s internal management organization;
(x) To decide on matters such as appointment or dismissal of the Company’s general
manager, secretary to the Board of Directors and other senior officers and on their
compensation and incentives/disincentives; to decide on matters such as
appointment or dismissal of the Company’s vice general manager, chief financial
officer and other senior management and on their compensation and
incentives/disincentives based on the nominations by the general manager;
(xi) Set the basic management systems of our Company;
(xii) Make the modification plan to the Articles of Association;
(xiii) Manage the disclosure of company information;
(xiv) Request to the general meeting of shareholders to hire or replace the accounting firm
auditing for the company;
(xv) Attend to the work report of our Company’s general manager and review the work
of the general manager;
(xvi) To formulate the plan of share option incentive plan;
(xvii) Decide on the setup of special committees;
(xviii) Subject to compliance with securities regulatory rules of the place where the shares
of our Company are listed, to decide on the acquisition of the shares of our Company
(due to circumstances provided in the Articles of Association);
(xix) Other powers and duties authorized by the laws, administrative regulations,
regulations of the authorities, other securities regulatory rules of the place where the
Company’s Shares are listed and the Articles of Association.
Meetings of the Board of Directors shall be attended by more than one-half of the
Directors before the Board of Directors meeting can be convened.
The Board of Directors shall determine the authority of external investment, acquisition
and sale of assets, asset mortgage, external guarantee matters, entrusted financial management,
connected transactions, external donations, and establish strict review and decision-making
procedures; major investment projects shall be reviewed by relevant experts and professionals
and reported to the shareholders’ meeting for approval.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-16 –


--- page 676 ---
If any Director has connection with the enterprise involved in the resolution made at a
Board meeting, the said Director shall not vote on the said resolution for himself/herself or on
behalf of another Director. The Board meeting may be held when more than half of the
non-connected Directors attend the meeting. The resolution of the Board meeting shall be
passed by more than half of the non-connected Directors. If the number of non-connected
Directors attending the meetings is less than three, the issue shall be submitted to the
shareholders’ general meeting for consideration. If there are any additional restrictions on
Directors’ participation in and voting at Board meetings in accordance with laws and
regulations and the securities regulatory rules of the place where the Company’s shares are
listed, such provisions shall prevail.
Special Committees under the Board
The special committees shall be responsible to the Board of Directors, and perform their
duties according to the Articles of Association and the authorization granted by the Board of
Directors.
Secretary to the Board
The Company shall have a Secretary to the Board of Directors, and shall be responsible
for the preparation of the shareholders’ general meeting and Board meeting and shall deal with
information disclosure and other matters. The Secretary to the Board of Directors shall comply
with the relevant provisions of the laws, administrative regulations, departmental rules and the
Articles of Association.
General Manager and Other Senior Management Members
Our Company has one general manager, appointed or dismissed by the Board of Directors.
The general manager of our Company is responsible to the Board of Directors and exercises
the following powers:
(i) To be in charge of the Company’s production, operation and management, and to
organize and implement the resolutions of the Board of Directors and report on
works to the Board of Directors;
(ii) To organize and implement the Company’s annual business plan and investment
proposals;
(iii) In accordance with the instruction of the Board of Directors to draft the annual
financial budget and closing account plans of our Company;
(iv) To draft plans for the subsidiaries of merger, division and reorganization;
(v) To draft plans for the employee of salaries, benefits and incentives/disincentives
policy and plans;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-17 –


--- page 677 ---
(vi) To draft plans for the establishment of the Company’s internal management
organizations;
(vii) To draft plans for the establishment of the Company’s branches;
(viii) To draft the Company’s basic management system;
(ix) To formulate specific rules and regulations for the Company;
(x) To propose to the Board of Directors on the appointment or dismissal of deputy
general manager, financial officer and other senior management of the Company;
(xi) To appoint or dismiss management personnel other than those required to be
appointed or dismissed by the Board of Directors;
(xii) Other functions and powers conferred by the Articles of Association or the Board of
Directors.
SUPERVISORS AND BOARD OF SUPERVISORS
Supervisors
Each Supervisor shall serve for a term of three years. Upon expiry of the term, the
Supervisor may be re-appointed upon re-election. The Directors, general manager and other
senior management members shall not act concurrently as Supervisors.
The Supervisors may attend the meetings of the Board of Directors.
Board of Supervisors
The Company shall have a Board of Supervisors. The Board of Supervisors shall consist
of three Supervisors and one chairman. The chairman of the Board of Supervisors shall be
elected by a simple majority of all Supervisors. The Board of Supervisors shall consist of
Shareholder’s representatives and employee’s representatives.
The Board of Supervisors shall exercise the following functions and powers:
(i) To examine regular reports and document of stock issue prepared by the Board of
Directors and propose written examination suggestions, supervisors Shall sign
written statements confirming the regular reports and document of stock issue;
(ii) To review the Company’s financial position;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-18 –


--- page 678 ---
(iii) To supervise the Directors and senior management members’ acts in performing
their duties in the Company, and to propose a removal of any Director or senior
management member in violation of any laws, administrative regulations, the
Articles of Association or resolutions adopted at the shareholders’ general meeting;
(iv) To demand any Director or senior management member who acts in a manner which
is harmful to the Company’s interest to rectify such behavior;
(v) To propose to convene an extraordinary general meeting, and to convene and preside
over shareholders’ general meetings where the Board of Directors fails to perform
its duty to do so as required by the Company Law;
(vi) To submit proposals to shareholders’ general meetings;
(vii) To initiate legal proceedings against any Director or senior management member
according to Article 189 of the Company Law;
(viii) To investigate into unusual operation of the Company and if necessary, to engage an
accounting firm, a law firm or other professional institutions to assist in its work at
the expenses of the Company.
QUALIFICATIONS AND RESPONSIBILITIES OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
None of the following persons shall serve as our Director, Supervisor or senior
management:
(i) A person who has no civil capacity or has limited civil capacity;
(ii) A person who has committed an offense of corruption, bribery, infringement of
property, misappropriation of property or disruption of the socialism economic order
and has been punished because of committing such offense where less than five
years have lapsed following the completion of the implementation of the
punishment; or who has been deprived of his/her political rights for committing an
offense where less than five years have lapsed following such deprivation;
(iii) A person who is a former director, factory manager or manager or enterprise which
has entered into insolvent liquidation and is personally liable for the insolvency of
such company or enterprise, where less than three years have lapsed following the
date of the completion of the insolvency and liquidation of such company or
enterprise;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-19 –


--- page 679 ---
(iv) A person who is a former legal representative of a company or enterprise which had
its business license revoked or had been ordered to close down due to violation of
the laws and has incurred personal liability, where less than three years have lapsed
since the date of the revocation of such business license;
(v) A person who has a relatively large sum of debt, which was not paid at maturity;
(vi) A person who is currently being prohibited from participating in the securities
market by the CSRC and such barring period has not elapsed;
(vii) Any other circumstances stipulated by laws, administrative regulations or
departmental rules are listed.
FINANCIAL AND ACCOUNTING SYSTEM
The Company shall establish its financial and accounting system in accordance with the
laws, administrative regulations and the provisions stipulated by the relevant authorities of the
PRC. The Company shall adopt the Gregorian calendar year for its fiscal year, i.e. the fiscal
year shall be from January 1 to December 31.
The Company shall submit and disclose its annual reports to the CSRC and the stock
exchange in the place where the Company’s shares are listed within four months from the end
of each fiscal year, and its interim reports to the relevant branch office of the CSRC and the
stock exchange in the place where the Company’s shares are listed within two months from the
end of the first half of each fiscal year.
The financial and accounting reports shall be prepared in accordance with relevant laws,
administrative regulations and requirements of the CSRC and the stock exchange in the place
where the Company’s shares are listed.
The Company will not establish account books other than the statutory account books.
The assets of the Company shall not be deposited in any personal account.
The Company is required to withdraw 10% of its profits into its statutory reserve fund
when distributing each year’s after-tax profits. When the cumulated amount of the statutory
reserve fund of the Company has reached 50% or more of its registered capital, no further
withdrawal is required.
Where the statutory reserve fund of the Company is insufficient to make up the losses of
the Company for the preceding year, profits of the current year shall be applied to make up the
losses before any allocation to the statutory reserve fund in accordance with the provisions in
the preceding paragraph. Subject to a resolution of the shareholders’ general meeting, after
withdrawal has been made to the Company’s statutory reserve fund from its after-tax profits,
the Company may set aside funds for the discretionary reserve fund.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-20 –


--- page 680 ---
After making up of losses and appropriation to reserve funds, balance of the profit after
tax shall be distributed to shareholders in proportion to their shareholdings, unless otherwise
stipulated in the Articles of Association.
If the General Meeting violates the above provisions and profits are distributed to the
Shareholders before the Company makes up for losses or makes allocations to the statutory
reserve fund, the profits distributed in violation of the provisions must be returned by such
Shareholders to the Company.
No profit shall be distributed in respect of the shares of the Company which are held by
the Company. The Company shall appoint one or more collection agents for H shareholders in
Hong Kong. The collection agents shall collect on behalf of the relevant H shareholders the
dividends distributed and other funds payable by the Company in respect of the H shares, and
hold such monies in their custody pending payment to the H shareholders concerned. The
collection agents appointed by the Company shall meet the requirements of the laws,
regulations and the securities regulatory rules of the place where the Company’s shares are
listed.
Reserve funds of the Company are used for recovering losses of the Company and
expanding scale of operation of the Company or conversion into its capital, but capital reserve
fund shall not be used for making up the Company’s losses. When the statutory reserve funds
are converted into capital, the remaining balance of such reserve fund must not be less than
25% of its registered capital before such conversion.
The Company implements a continuous and stable profit distribution policy. The profit
distribution of the Company attaches importance to the reporting of investment and reasonable
investment and takes into account the sustainable development of the Company.
After the General Meeting of our Company make a resolution on profit distribution plan,
the Board of Directors shall complete the distribution within 2 months after the convening of
the General Meeting. The specific profit distribution plan can be adjusted in accordance with
such provisions and the actual situation when cannot be implemented within 2 months due to
the provisions of laws and regulations and securities regulatory rules of the place where the
Company’s shares are listed.
The Company has implemented an internal audit system and established the internal audit
department equipped with full-time auditors to conduct internal audit and supervision on the
Company’s financial revenues and expenditures and economic activities. The internal audit
system of the Company and the duties of the auditors shall be implemented upon approval by
the Board. The person in charge of audit shall be accountable and report to the Board.
The Company shall appoint such accounting firm which has complied with the Securities
Law for carrying out the audit for the accounting statements, net asset verification and other
relevant consultancy services. The term of appointment is one (1) year and can be re-appointed.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-21 –


--- page 681 ---
The appointment of accounting firm by the Company shall be subject to the approval of
the shareholders’ general meetings. The Board of Directors may not appoint accounting firm
before the approval of the shareholders’ general meeting.
The Company guarantees that it shall provide the appointed accounting firm with true and
complete accounting vouchers, accounting books, financial and accounting reports and other
accounting information, and that it engages without any refusal, withholding, and
misrepresentation.
The audit fees of an accounting firm shall be determined at the shareholders’ general
meeting.
If the Company removes or no longer re-appoints the accounting firm, it shall notify such
accounting firm thirty days in advance. When shareholders vote for the removal of such
accounting firm, such accounting firm shall be entitled to state its opinions at the shareholders’
general meeting.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
(i) Expiry of term of business stipulated in the Articles of Association or occurrence of
any other trigger for dissolution stipulated in the Articles of Association;
(ii) The General Meeting adopts a resolution to dissolve our Company;
(iii) Our Company needs to be dissolved for the purpose of merger or division;
(iv) The business license is revoked, or our Company is ordered to close or be eliminated
according to applicable law;
(v) Where our Company encounters significant difficulties in business and management,
continuous survival may be significantly detrimental to the interests of the
shareholders, and the difficulties may not be overcome through other means,
shareholders who hold more than 10% of all voting rights of the Company’s
shareholders may request the People’s Court to dissolve the Company.
Where our Company is dissolved due to the provisions set forth in i, ii, iv, v above, the
liquidation team shall be established within 15 days from the date of the event leading to
liquidation to commence dissolution. The personnel of the liquidation team shall consist of the
persons determined by the Directors or the General Meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-22 –


--- page 682 ---
Within 10 days of the establishment of the liquidation team, the creditors shall be notified
and an announcement shall be published in the qualified media and Hong Kong Stock
Exchange (www.hkexnews.hk) within 60 days. The creditors shall declare their claims to the
liquidation team within 30 days of the date on which the notice is received or 45 days of the
date of announcement if the notice is not received.
Creditors who declare claims shall state relevant issues related to the claims and provide
proofs. The liquidation team shall carry out registration of the claims. During the period for
declaration of claims, the liquidation group shall not make any repayment to the creditors.
During the liquidation, our Company shall continue to exist, but shall not carry out
business activities irrelevant to the liquidation. The property of our Company shall not be
distributed to any shareholder before full payments have been made out of the property
according to the aforesaid provision.
In the event the liquidation team finds that, after taking stock of our Company’s property
and preparing the balance sheet and list of property, that the assets are insufficient to pay the
debts, it shall apply to the people’s court to declare bankruptcy to the law.
After our Company is declared bankrupt by ruling of the people’s court, according to the
law of insolvency of company implement insolvency and liquidation.
AMENDMENT TO THE ARTICLES OF ASSOCIATION
Under any of the following circumstances, the Company shall amend the Articles of
Association:
(i) Following the revision of the Company Law or relevant laws and administrative
regulations, the matters stipulated in the Articles of Association contradict the
provisions of the revised laws and administrative regulations;
(ii) There is any change to the Company’s particulars which result in inconsistency with
the matters set out in the Articles of Association;
(iii) A Shareholders’ General Meeting has decided on making amendments to the Articles
of Association.
If the amendment to the Articles of Association adopted by resolution of the shareholders’
general meeting is subject to the approval of the competent authority, it shall be reported to the
competent authority for approval; if it involves matters of company registration, the
registration of the changes shall be made with the company registration authority in accordance
with the law.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-23 –


--- page 683 ---
1. FURTHER INFORMATION ABOUT OUR GROUP
A. Incorporation
Our Company, then known as Shunde Meituo Investment Co., Ltd. (ࠢ
ʮ̡), was incorporated on 7 April, 2000, which later changed its name to Midea Group Co.,
Ltd. Our Company was converted to a joint stock company on 30 August 2012 and completed
the listing of our A Shares on the Shenzhen Stock Exchange (stock code: 000333) in September
2013 through an absorption merger with Midea Electric (the “ A-Shares Listing ”), our then
subsidiary listed on the Shenzhen Stock Exchange (stock code: 000527) since 1993. As a result
of the absorption merger, Midea Electric was subsequently delisted and became our
wholly-owned subsidiary. For further details of the A-Shares Listing, see “History and
Corporate Structure — Major Shareholding Changes of Our Company — Conversion into Joint
Stock Limited Company and Listing on the Shenzhen Stock Exchange” in this document.
Our registered office is located at Midea Headquarters Building, No. 6 Midea Avenue,
Beijiao Town, Shunde District, Foshan, Guangdong Province, China. We were registered as a
non-Hong Kong company in Hong Kong under Part 16 of the Companies Ordinance on 25
January 2017, and our principal place of business in Hong Kong is at 5/F, Manulife Place, 348
Kwun Tong Road, Kowloon, Hong Kong. Ms. Lai Siu Kuen has been appointed as the
authorised representative of our Company for the acceptance of service of process and notices
on behalf of our Company in Hong Kong. The address for service of process on our Company
in Hong Kong is the same as our principal place of business in Hong Kong as set out above.
As our Company was established in PRC, its operations are subject to the relevant laws
and regulations of mainland China. A summary of the relevant aspects of laws and regulations
of mainland China and the Articles of Association is set out in Appendices IV and V to this
document, respectively.
B. CHANGES IN SHARE CAPITAL OF OUR COMPANY
Save as disclosed below, there has been no alteration in our share capital within two years
immediately preceding the date of this document.
A repurchase mandate for the repurchase of A Shares for the purpose of our Company’s
employee share incentive scheme was approved by the sixth meeting of the fourth session of
the Board on 10 March 2022. The repurchase mandate was valid for 12 months from the date
of approval of the repurchase mandate by the Board. As of 10 March 2023, the repurchase of
A Shares was completed under the repurchase mandate with a total of 48,558,888 A Shares
repurchased pursuant to transactions conducted between 14 March 2022 and 10 March 2023,
at an average price of RMB54.30 per A Share. Upon repurchase, the repurchased A Shares are
held under our Company stock repurchase account and do not carry any shareholders’ rights,
including but not limited to voting rights at the Shareholders’ meeting and dividend rights. Any
repurchased A Shares not granted to employees within 36 months after the completion of the
repurchase shall be cancelled.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 684 ---
As approved by the ninth meeting of the fourth session of the Board on 8 June 2022,
5,130,962 A Shares repurchased by our Company under a repurchase mandate for 2018
Restricted Share Incentive Scheme, 2019 Restricted Share Incentive Scheme, 2020 Restricted
Share Incentive Scheme and 2021 Restricted Share Incentive Scheme were cancelled on 24
October 2022. The total issued share capital of our Company was then decreased from
RMB7,000,880,049 comprising 7,000,880,049 A Shares of nominal value of RMB1.00 each to
RMB6,995,749,087 comprising 6,995,749,087 A Shares of nominal value of RMB1.00 each.
As approved by the fourteenth meeting of the fourth session of the Board on 16 December
2022, 2,497,917 A Shares repurchased by our Company under a repurchase mandate for 2018
Restricted Share Incentive Scheme, 2019 Restricted Share Incentive Scheme, 2020 Restricted
Share Incentive Scheme, 2021 Restricted Share Incentive Scheme and 2022 Restricted Share
Incentive Scheme were cancelled on 18 April 2023. The total issued share capital of our
Company was then decreased from RMB7,024,196,673 comprising 7,024,196,673 A Shares of
nominal value of RMB1.00 each to RMB7,021,698,756 comprising 7,021,698,756 A Shares of
nominal value of RMB1.00 each.
As approved by the sixteenth meeting of the fourth session of the Board on 20 June 2023,
7,496,304 A Shares repurchased by our Company under a repurchase mandate for 2018
Restricted Share Incentive Scheme, 2019 Restricted Share Incentive Scheme, 2020 Restricted
Share Incentive Scheme, 2021 Restricted Share Incentive Scheme and 2022 Restricted Share
Incentive Scheme were cancelled on 10 November 2023. The total issued share capital of our
Company was then decreased from RMB7,031,711,304 comprising 7,031,711,304 A Shares of
nominal value of RMB1.00 each to RMB7,024,215,000 comprising 7,024,215,000 A Shares of
nominal value of RMB1.00 each.
As approved by the twenty-fourth meeting of the fourth session of the Board on 10
January 2024, 69,807,864 A Shares repurchased by our Company between 25 February 2021
and 2 April 2021 under a repurchase mandate approved by the Board on 23 February 2021 were
cancelled on 7 February 2024. The total issued share capital of our Company was then
decreased from RMB7,031,556,841 comprising 7,031,556,841 A Shares of nominal value of
RMB1.00 each to RMB6,961,748,977 comprising 6,961,748,977 A Shares of nominal value of
RMB1.00 each.
As approved by the twenty-fourth meeting of the fourth session of the Board on 10
January 2024, 920,814 A Shares repurchased by our Company under a repurchase mandate for
2018 Restricted Share Incentive Scheme, 2019 Restricted Share Incentive Scheme, 2020
Restricted Share Incentive Scheme, 2021 Restricted Share Incentive Scheme, 2022 Restricted
Share Incentive Scheme and 2023 Restricted Share Incentive Scheme were cancelled on 25
March 2024. The total issued share capital of our Company was then decreased from
RMB6,969,871,538 comprising 6,969,871,538 A Shares of nominal value of RMB1.00 each to
RMB6,968,950,724 comprising 6,968,950,724 A Shares of nominal value of RMB1.00 each.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 685 ---
C. Further Information about Our Major Subsidiaries
We have applied to the Stock Exchange for, and the Stock Exchange has granted us a
waiver from strict compliance with the requirements of paragraph 26 of Appendix D1A to the
Listing Rules in relation to the disclosure of information relating to the changes in the share
capital of any member of our Group within the two years immediately preceding the date of
this document. For details, see “Waivers and Exemptions — Waiver in respect of alteration in
share capital” in this document.
Save as disclosed below, no alteration in the registered capital of our major subsidiaries
has taken place within the two years preceding the date of this document.
Guangdong Midea Kitchen Appliances Manufacturing Co., Ltd. (
ࠢ
ʮ̡)
On 15 April 2024, the registered share capital of Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. decreased from US$158,580,000 to RMB1,055,224,242.
D. Resolutions Passed by Our Shareholders’ General Meeting of Our Company in
Relation to the Global Offering
Pursuant to the shareholders’ meeting held on 11 October 2023, the following resolutions,
among others, were duly passed:
(a) the issue by our Company of H Shares of nominal value of RMB1.00 each and such
H Shares be listed on the Hong Kong Stock Exchange;
(b) the number of H Shares to be issued before the exercise of the Over-allotment
Option shall not exceed 10% of the enlarged share capital of our Company upon
completion of the Global Offering and granting the Underwriters the Over-allotment
Option of no more than 15% of the above number of H Shares to be issued;
(c) subject to the completion of the Global Offering, the conditional adoption of the
Articles of Association, which shall become effective on Listing Date; and
(d) authorization of the Board and its authorized person to handle relevant matters
relating to, among other things, the Global Offering, the issue and listing of the H
Shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 686 ---
2. FURTHER INFORMATION ABOUT OUR BUSINESS
A. Summary of Our Material Contracts
The following are contracts (not being contracts entered into in the ordinary course of
business) entered into by any member of our Group within the two years immediately
preceding the date of this document that are or may be material:
(a) a cornerstone investment agreement dated 6 September 2024 entered into among our
Company, COSCO SHIPPING Holdings (Hong Kong) Limited, China International
Capital Corporation Hong Kong Securities Limited and Merrill Lynch (Asia Pacific)
Limited, pursuant to which COSCO SHIPPING Holdings (Hong Kong) Limited
agreed to subscribe for H Shares at the Offer Price in the aggregate amount of
HK$2,192,453,574.8;
(b) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, UBS Asset Management (Singapore) Ltd., China International Capital
Corporation Hong Kong Securities Limited, Merrill Lynch (Asia Pacific) Limited
and UBS AG Hong Kong Branch, pursuant to which UBS Asset Management
(Singapore) Ltd. on behalf of its relevant investors agreed to subscribe for H Shares,
at the Offer Price in the aggregate amount of the Hong Kong dollar equivalent of
US$100 million;
(c) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, China Structural Reform Fund II Corporation Limited, China
International Capital Corporation Hong Kong Securities Limited and Merrill Lynch
(Asia Pacific) Limited, pursuant to which China Structural Reform Fund II
Corporation Limited agreed to subscribe or procure a qualified domestic
institutional investor to subscribe for H Shares at the Offer Price in the aggregate
amount of HK$750,000,000;
(d) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Golden Link Worldwide Limited, China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which Golden Link Worldwide Limited agreed to subscribe for H Shares at the
Offer Price in the aggregate amount of the Hong Kong dollar equivalent of
US$99,001,569;
(e) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Splendor Achieve Limited, China International Capital Corporation Hong
Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant to
which Splendor Achieve Limited agreed to subscribe for 15,000,000 H Shares;
(f) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Supercluster Universe Limited, China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which Supercluster Universe Limited agreed to subscribe for H Shares at the
Offer Price in the aggregate amount of the Hong Kong dollar equivalent of
US$100,000,000;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 687 ---
(g) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, HCEP Management Limited, China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which HCEP Management Limited on behalf of its relevant investor agreed to
subscribe for H Shares at the Offer Price in the aggregate amount of the Hong Kong
dollar equivalent of US$50,000,000;
(h) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Foresight Global Superior Choice SPC – Global Superior Choice Fund 1
SP , Foresight Global Superior Choice SPC – Vision Fund 1 SP , China International
Capital Corporation Hong Kong Securities Limited and Merrill Lynch (Asia Pacific)
Limited, pursuant to which Foresight Global Superior Choice SPC – Global Superior
Choice Fund 1 SP and Foresight Global Superior Choice SPC – Vision Fund 1 SP
agreed to subscribe for H Shares at the Offer Price in the aggregate amount of
HK$390,000,000;
(i) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, CPE Investment XVI Limited, China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which CPE Investment XVI Limited agreed to subscribe for H Shares at the Offer
Price in the aggregate amount of the Hong Kong dollar equivalent of
US$50,000,000;
(j) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Dajia Life Insurance Co., Ltd (ʮ̡), China
International Capital Corporation Hong Kong Securities Limited and Merrill Lynch
(Asia Pacific) Limited, pursuant to which Dajia Life Insurance Co., Ltd (ɛྪ
ʮ̡) agreed to subscribe for H Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$50,000,000;
(k) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Metazone Link (HK) Limited, China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which Metazone Link (HK) Limited agreed to subscribe for H Shares at the Offer
Price in the aggregate amount of the Hong Kong dollar equivalent of
US$50,000,000;
(l) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Enreal Asset Management Limited, China International Capital
Corporation Hong Kong Securities Limited and Merrill Lynch (Asia Pacific)
Limited, pursuant to which Enreal Asset Management Limited agreed to subscribe
for H Shares at the Offer Price in the aggregate amount of the Hong Kong dollar
equivalent of US$35,000,000;
(m) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, V anguard Focus Limited, China International Capital Corporation Hong
Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant to
which V anguard Focus Limited agreed to subscribe for H Shares at the Offer Price
in the aggregate amount of the Hong Kong dollar equivalent of US$15,000,000;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 688 ---
(n) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, PSBC Wealth Management Co., Ltd. (ப΂ʮ̡), China
International Capital Corporation Hong Kong Securities Limited and Merrill Lynch
(Asia Pacific) Limited, pursuant to which PSBC Wealth Management Co., Ltd. ( ʕ
ப΂ʮ̡) agreed to subscribe or procure a qualified domestic
institutional investor to subscribe for H Shares at the Offer Price in the aggregate
amount of the Hong Kong dollar equivalent of US$21 million;
(o) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, PSBC Wealth Management Co., Ltd. (ப΂ʮ̡), Industrial
Securities Assets Management Co., Ltd. (ʮ̡), China
International Capital Corporation Hong Kong Securities Limited and Merrill Lynch
(Asia Pacific) Limited, pursuant to which Industrial Securities Assets Management
Co., Ltd. (ʮ̡) agreed to subscribe as a qualified domestic
institutional investor on behalf of PSBC Wealth Management Co., Ltd. ( ʕඉଣৌϞ
ப΂ʮ̡), failing which PSBC Wealth Management Co., Ltd. (ப΂
ʮ̡) will subscribe for H Shares at the Offer Price in the aggregate amount of the
Hong Kong dollar equivalent of US$7.5 million;
(p) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Jump Trading Pacific Pte. Ltd., China International Capital Corporation
Hong Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant
to which Jump Trading Pacific Pte. Ltd. agreed to subscribe for H Shares at the Offer
Price in the aggregate amount of the Hong Kong dollar equivalent of US$50 million;
(q) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, MY Asian Opportunities Master Fund, L.P ., China International Capital
Corporation Hong Kong Securities Limited and Merrill Lynch (Asia Pacific)
Limited, pursuant to which MY Asian Opportunities Master Fund, L.P . agreed to
subscribe for H Shares at the Offer Price in the aggregate amount of the Hong Kong
dollar equivalent of US$38,000,000;
(r) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Athos Capital Limited, China International Capital Corporation Hong
Kong Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant to
which Athos Capital Limited on behalf of its relevant investors agreed to subscribe
for H Shares at the Offer Price in the aggregate amount of the Hong Kong dollar
equivalent of US$30 million;
(s) a cornerstone investment agreement dated 5 September 2024 entered into among our
Company, Pamalican Fund Ltd, China International Capital Corporation Hong Kong
Securities Limited and Merrill Lynch (Asia Pacific) Limited, pursuant to which
Pamalican Fund Ltd agreed to subscribe for H Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$30 million; and
(t) the Hong Kong Underwriting Agreement.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 689 ---
B. Our Material Intellectual Property Rights
Save as disclosed below, as of the Latest Practicable Date, there were no other intellectual
property rights which are or may be material in relation to our business.
(a) Trademarks
(i) Registered Trademarks
As of the Latest Practicable Date, our Group had registered the following
trademarks which we consider to be or may be material to our business:
No. Trademark Registered owner
Place of
registration
1.
 the Company PRC
2.
 the Company PRC
3.
 the Company PRC
4.
 the Company PRC
5.
 GD Midea Air-Conditioning Equipment Co.,
Ltd. (ʮ̡)
PRC
6.
 GD Midea Air-Conditioning Equipment Co.,
Ltd. (ʮ̡)
PRC
7.
 Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. (ཥ
ʮ̡)
PRC
8.
 Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. (ཥ
ʮ̡)
PRC
9.
 Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. (ཥ
ʮ̡)
PRC
10.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
11.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 690 ---
No. Trademark Registered owner
Place of
registration
12.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
13.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
14.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
15.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
16.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
17.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
18.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
19.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
20.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
21.
 Foshan Shunde Midea Electrical Heating
Appliances Manufacturing Co., Ltd. ( Нʆ
ʮ̡)
PRC
22.
 Wuhu Annto Smart Logistics Technology
Co., Ltd (ʮ̡)
PRC
23.
 Wuhu Annto Smart Logistics Technology
Co., Ltd (ʮ̡)
PRC
24.
 Wuhu Annto Smart Logistics Technology
Co., Ltd (ʮ̡)
PRC
25.
 Wuhu Annto Smart Logistics Technology
Co., Ltd (ʮ̡)
PRC
26.
 Wuhu Annto Smart Logistics Technology
Co., Ltd (ʮ̡)
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 691 ---
No. Trademark Registered owner
Place of
registration
27.
 Hefei Midea Refrigerator Co., Ltd. (ߕ٭
ʮ̡)
PRC
28.
 Hefei Midea Refrigerator Co., Ltd. (ߕ٭
ʮ̡)
PRC
29.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
30.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
31.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
32.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
33.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
34.
 Wuxi Little Swan Electric Co., Ltd. ( ೌ፼ʃ
ʮ̡)
PRC
35.
 our Company PRC
36.
 the Company PRC
37.
 the Company PRC
38.
 the Company PRC
(b) Patents
(i) Registered Patents
As of the Latest Practicable Date, we had registered the ownership of and/or had the
right to use the following patents which we consider to be or may be material to our
business:
No. Patent Patent Owner
Patent
category
Place of
Registration
1. Heating plate, heating
pipe, electric
appliance
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) and our
Company
Invention
patent
PRC
2. Monitoring method and
device of cooking
condition, intelligent
terminal and cooking
equipment
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) and our
Company
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 692 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
3. Control method and
device for intelligent
cooking equipment,
and intelligent cooking
equipment
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡), our Company
and Jiangsu Midea Cleaning
Electric Co., Ltd. (૶
ʮ̡)
Invention
patent
PRC
4. Electronic transformer
and microwave
cooking appliance
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) and our
Company
Invention
patent
PRC
5. High frequency heating
equipment and the
control method and
device for its power
supply
Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) and our
Company
Invention
patent
PRC
6. Control method for
thawing food of
microwave oven and
microwave oven
Jiangsu Midea Cleaning Electric
Co., Ltd. (૶ᆎཥኜ
ʮ̡), Guangdong
Midea Kitchen Appliances
Manufacturing Co., Ltd. (؇
ʮ̡)
and our Company
Invention
patent
PRC
7. Microwave oven Guangdong Midea Kitchen
Appliances Manufacturing
Co., Ltd. (ཥኜ
ʮ̡) and our
Company
Invention
patent
PRC
8. Environmental-friendly,
effective and multi-
component foaming
agent for PU rigid
foamed plastics
Hefei Midea Refrigerator Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
9. Energy-saving method
and system for
controlling cooling
device, cooling device
Hefei Midea Refrigerator Co.,
Ltd. (ʮ
̡) and Hefei Hualing Co.,
Ltd.(ʮ̡)
Invention
patent
PRC
10. Foaming agent
composition,
polyurethane rigid
foam and
manufacturing method,
cooling device, heat
preservation
component
Hefei Midea Refrigerator Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 693 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
11. Refrigerator with inverter
and control method of
refrigerator with
inverter
Hefei Midea Refrigerator Co.,
Ltd. (ʮ
̡) and our Company
Invention
patent
PRC
12. Polyurethane foam with
low density and low
thermal conduction
rate and its
manufacturing method
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company and Hefei Midea
Biomedical Co., Ltd. (ߕ٭
ʮ̡)
Invention
patent
PRC
13. Control method for
preventing super-
cooling and keeping
fresh of meat,
controller and
refrigerator
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company
Invention
patent
PRC
14. Control method, control
device and refrigerator
for preventing food
from freezing
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company and Hefei Midea
Biomedical Co., Ltd. (ߕ٭
ʮ̡)
Invention
patent
PRC
15. Humidification control
method and system for
air-cooled refrigerator
and freezer
compartment
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company
Invention
patent
PRC
16. Refrigerator with
separate ice making
system
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company
Invention
patent
PRC
17. Refrigerator with
separate ice making
system
Hefei Hualing Co., Ltd. (ശ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡) and our
Company
Invention
patent
PRC
18. Electric rice cooker
(MB-FZ4094)
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Design PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 694 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
19. Electromagnetic heating
device and its heating
control circuit
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Utility
model
PRC
20. Control method, control
device and cooking
appliance
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Invention
license
PRC
21. Control method of
magnetic knob,
cooking device and
computer readable
storage medium
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Invention
license
PRC
22. Microwave oven Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡) and our Company
Design PRC
23. Cooking control method,
device, cooking
equipment and
computer readable
storage medium
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Invention
license
PRC
24. Electromagnetic cooking
appliance and its
power control method
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡)
Invention
license
PRC
25. Steamer of electric rice
cooker, electric rice
cooker and its control
method
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡) and Wuhu Midea Life
Appliances Mfg Co., Ltd ( ጾ
ʮ̡)
Invention
license
PRC
26. Fan GD Midea Environment
Appliances Mfg. Co., Ltd. ( ᄿ
ʮ̡)
and Wuhu Midea Life
Appliances Mfg Co., Ltd ( ጾ
ʮ̡)
Design PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 695 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
27. Electric rice cooker and
rice cooking control
method of electric rice
cooker
Foshan Shunde Midea Electrical
Heating Appliances
Manufacturing Co., Ltd. ( Нʆ
ཥᆠཥኜႡிϞ
ʮ̡) and Wuhu Midea Life
Appliances Mfg Co., Ltd ( ጾ
ʮ̡)
Invention
license
PRC
28. Counter-rotating fan GD Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡) and our Company
Utility
model
PRC
29. Heat exchanger and
electrical equipment
GD Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡) and our Company
Invention
patent
PRC
30. A heating circuit GD Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡) and our Company
Invention
patent
PRC
31. Water purification system
and water purification
equipment
GD Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡), Foshan Shunde
Midea Washing Appliances
Manufacturing Co., Ltd. ( Нʆ
ဟཥኜႡிϞ
ʮ̡) and our Company
Utility
model
PRC
32. A box component and
cooling device
GD Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡), Hefei Midea
Refrigerator Co., Ltd. (ߕ٭
ʮ̡), Hefei
Hualing Co., Ltd.(ٰࡗ
ʮ̡) and our Company
Utility
model
PRC
33. Packaging components Midea Group (Shanghai) Limited
(ණྠ(ɪऎ)ʮ̡), our
Company and GD Midea Air-
Conditioning Equipment Co.,
Ltd. (ʮ
̡)
Utility
model
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 696 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
34. A plasma generating
device, purifying
device and air
conditioning system
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡), GD
Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡), GD
Midea White Home
Appliances Technology
Innovation Center Co., Ltd.
(ཥҦஔ௴อʕ
ʮ̡) and our Company
Utility
model
PRC
35. Air conditioner and its
control method and
device
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡) and our
Company
Invention
patent
PRC
36. Sealing device and a
window air
conditioner with the
sealing device
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡) and our
Company
Invention
patent
PRC
37. Air conditioner indoor
unit and air
conditioner
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
38. Air conditioner indoor
unit and air
conditioner
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
39. Air guide plate
components, air
conditioner indoor
units and control
method of air
conditioner indoor
units
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
40. Air conditioner indoor
units
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
41. Air guide plate
components, air
conditioner indoor
units and control
method of air
conditioner indoor
units
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
42. Control method and
system of air
conditioner and air
conditioner
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 697 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
43. Air conditioner and its
control method and
device
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
44. Air conditioner and its
self-cleaning control
method and control
device
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
45. Air conditioner and its
control method and
device
GD Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
46. Air conditioner
controller, air
conditioner and its
control method and
storage medium
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡)
Invention
patent
PRC
47. Shutdown control method
and device of air
conditioner and air
conditioner
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡) and our
Company
Invention
patent
PRC
48. Control method for
human body amenity
of air conditioning
system and air
conditioner
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡) and GD
Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
49. Air conditioner Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡) and our
Company
Invention
patent
PRC
50. Air conditioner indoor
unit and its control
method
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡) and our
Company
Invention
patent
PRC
51. Air conditioner indoor
unit and its control
method
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡) and our
Company
Invention
patent
PRC
52. Display box and air
conditioner indoor unit
Wuhu Maty Air-Conditioning
Equipment Co., Ltd. (ߕ
ʮ̡)
Invention
patent
PRC
53. Control method of air
conditioner
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡) and our
Company
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-15 –


--- page 698 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
54. Defrosting control
method of air
conditioner
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡) and our
Company
Invention
patent
PRC
55. Outdoor heat exchangers
and air conditioners
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡) and our
Company
Invention
patent
PRC
56. Defrosting method of air
conditioner
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡) and our
Company
Invention
patent
PRC
57. Control device and
control method of
inverter air
conditioner and
inverter air
conditioner
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡)
Invention
patent
PRC
58. Air conditioner control
method and system,
and air conditioner
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡)
Invention
patent
PRC
59. Audio signal coding
method and system
GD Midea Group Wuhu
Air-Conditioning Equipment
Co., Ltd. (ණྠጾಳ
ʮ̡)
Invention
patent
PRC
60. Sterilization control
method, sterilization
module and air
treatment device
Chongqing Midea Refrigeration
Equipment Co., Ltd. (ߕ
ʮ̡) and GD
Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
61. Double-mode starting
control method and
system for DC
inverter air-
conditioning
compressor
Chongqing Midea Refrigeration
Equipment Co., Ltd. (ߕ
ʮ̡) and GD
Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
62. Air conditioning system
and air processing
method
Chongqing Midea Refrigeration
Equipment Co., Ltd. (ߕ
ʮ̡) and GD
Midea Air-Conditioning
Equipment Co., Ltd. (ߕ؇
ʮ̡
)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-16 –


--- page 699 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
63. Control method of air
conditioner, control
device, air conditioner
and readable storage
medium
Chongqing Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡) and GD Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡)
Invention
patent
PRC
64. Home appliance and its
motor control method,
device and storage
medium
Chongqing Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡) and GD Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡)
Invention
patent
PRC
65. Control method of
kitchen air
conditioner, controller
of kitchen air
conditioner and
kitchen air conditioner
Chongqing Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡) and GD Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡)
Invention
patent
PRC
66. An air quality control
method, device,
equipment and storage
medium
Chongqing Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡) and GD Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡)
Invention
patent
PRC
67. Heat exchange fins,
multi-fold heat
exchangers and air
conditioners
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡) and our Company
Invention
patent
PRC
68. Drive control circuit,
drive control method,
circuit board and air
conditioner
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡)
Invention
patent
PRC
69. Operation detection
method, operation
detection device,
vehicle air conditioner
and storage medium
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡)
Invention
patent
PRC
70. Drive control module
and vehicle air
conditioner
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-17 –


--- page 700 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
71. Operation detection
method, operation
detection device,
vehicle air conditioner
and storage medium
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡)
Invention
patent
PRC
72. Control circuit of AC fan
and detection method
of the state of air
conditioner AC fan
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡) and GD Midea
Air-Conditioning Equipment
Co., Ltd. (Ⴁиண௪
ʮ̡)
Invention
patent
PRC
73. Air guide device for air
conditioner and
cabinet type air
conditioner
Guangzhou Hualing
Refrigerating Equipment Co.,
Ltd (ʮ
̡) and our Company
Invention
patent
PRC
74. Method, device, storage
medium and processor
for zero-cold-water
gas water heater
Wuhu Midea Kitchen & Bath
Appliances Mfg. Co., Ltd. ( ጾ
ʮ̡)
and our Company
Invention
patent
PRC
75. Gas water heater and
heat exchanger for gas
water heater
Wuhu Midea Kitchen & Bath
Appliances Mfg. Co., Ltd. ( ጾ
ʮ̡)
and our Company
Invention
patent
PRC
76. Frame components of
laundry treatment
device and laundry
treatment device
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
77. Box components of
clothes handling
equipment and clothes
handling equipment
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
78. Clothes treating device Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
79. Front closing door of
clothes handling
equipment and clothes
handling equipment
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
80. Drum washing machine
and washing control
method thereof
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
81. Electrolysis components
and clothes treatment
equipment
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-18 –


--- page 701 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
82. Drum washing machine
and washing control
method thereof
Wuxi Little Swan Electric Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
83. Defrosting control
method of air
conditioner, defrosting
control device and air
conditioner
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
84. Heat pump water heater Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
85. Duct type air conditioner
and its control method
and control device
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
86. Air conditioner, air
return plate assembly
of air conditioner and
its control method
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
87. Integral heat pump water
heater and outlet
temperature control
method
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
88. Outlet water temperature
adjusting device,
air-energy water
heater and method for
automatically
adjusting outlet water
temperature
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
89. Air energy water heater
and its heating control
method and device
Hefei Midea Heating &
V entilating Equipment Co.,
Ltd. (ʮ
̡)
Invention
patent
PRC
90. Method and device for
detecting starting state
of compressor and
centrifugal compressor
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
91. Control method of multi-
line air-conditioning
system, multi-line
air-conditioning
system and medium
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-19 –


--- page 702 ---
No. Patent Patent Owner
Patent
category
Place of
Registration
92. Control method, control
device of multi-line
system and multi-line
system
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
93. Inverter air conditioner
and its units radiator
sealant as control
measure
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
94. Air-conditioning system
and its compressor
control measures and
device
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
95. Multi-line air-
conditioning system
and its communication
method
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
96. Control method of multi-
line air-conditioning
units
GD Midea Heating & V entilating
Equipment Co., Ltd. (ߕ؇
ʮ̡)
Invention
patent
PRC
(c) Software Copyrights
As of the Latest Practicable Date, our Group had registered the following software
copyrights which we consider to be material to our business:
No. Software name
Place of
Registration Registered owner
1. Midea SaleSmart APP PRC the Company
2. Zhihuipiao Fully Electronic Output
Management System ( ౽ිୃΌཥቖ
ධ၍ଣӻ୕)
PRC the Company
3. Midea Smart Home APP (࢕
APP)
PRC the Company
4. M-Smart Password Service System
(M-Smartਕӻ୕)
PRC the Company
5. Midea Decryption Tool Software for
IoT Device Certificates
(༆੗ʈՈழ΁)
PRC the Company
6. IoTTest Test Case Management
Platform (IoTTest ಻༊͜Է၍ଣ̨̻)
PRC the Company
7. IoT-Edge Computing Platform
(ᑌၣ-ၑ̨̻)
PRC the Company
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-20 –


--- page 703 ---
No. Software name
Place of
Registration Registered owner
8. 3D Model Processing and Rendering
Platform (3D̨̻)
PRC the Company
9. Midea Blockchain Traceability Service
Platform (ਕ̨̻)
PRC the Company
10. Midea Blockchain Technology Service
Platform (ਕ̨̻)
PRC the Company
11. Midea Data Self-learning Platform
(ᅰኽІኪ୦̨̻)
PRC the Company
12. Midea PaaS Mid-office System
(ٙߕPaaS ʕ̨ӻ୕)
PRC the Company
13. Midea MDV Official Website System
(ٙߕMDVၣӻ୕)
PRC the Company
14. Midea Cloud Certification – IAM
System Software (ႩᗇථIAMӻ
୕ழ΁)
PRC the Company
15. Midea Cloud T-DCS System Software
(ථT-DCSӻ୕ழ΁)
PRC the Company
16. Midea LetsLink System
(ٙߕLetsLink ӻ୕)
PRC the Company
17. DJS Distributed Task Scheduling
Platform (DJS̨̻)
PRC the Company
18. Microservice Governance Platform
System (ଣ̨̻ӻ୕)
PRC the Company
19. CBPM Process Engine Software
(CBPM೻ˏᏗழ΁)
PRC the Company
20. Midea Open Search System Software
(ฤ॰ӻ୕ழ΁)
PRC the Company
21. Digital Process Management System
Software ( ᅰοʷʈᖵ၍ଣӻ୕ழ΁)
PRC the Company
22. Laboratory Information Management
System (၍ଣӻ୕)
PRC the Company
23. Midea Product Demand Management
System (ცӋ၍ଣӻ୕)
PRC the Company
24. EV A Platform Management System
(̨̻၍ଣӻ୕)
PRC the Company
25. Midea T+3 V alue Chain Mobile
Application (ٙߕT+3ᗡ୅ਗᏐ
͜ழ΁)
PRC the Company
26. Manufacturing Execution System
(ႡிੂБӻ୕)
PRC the Company
27. Midea Remote Data Acquisition and
Monitoring System (Ⴣ೻ᅰኽમ
ණၾ္છӻ୕)
PRC the Company
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-21 –


--- page 704 ---
No. Software name
Place of
Registration Registered owner
28. Enterprise Asset Management System
(Άุ༟ପ၍ଣӻ୕)
PRC the Company
29. Midea Bearing Housing AI Quality
Inspection System (ࢭוAIሯ
Ꮸӻ୕)
PRC the Company
30. Full Data Lake System
(Όඎᅰኽಳӻ୕)
PRC the Company
31. Global Supplier Cloud System
(ΌଢԶᏐਠථӻ୕)
PRC the Company
32. C-IMS Domestic Sales System
(C-IMS ʫቖቖਯӻ୕)
PRC the Company
33. Quality Management System
(ሯඎ၍ଣӻ୕)
PRC the Company
34. Industrial Cloud System ( ʈุථӻ୕) PRC the Company
35. Supply Chain Platform ( ԶᏐᗡ̨̻) PRC the Company
36. Full V alue Chain Data Operation and
Monitoring System (ᗡᅰኽ༶
ᐄ္છӻ୕)
PRC the Company
37. Advanced Factory Scheduling System
(৷ॴʈᅀર೻ӻ୕)
PRC the Company
38. Midea Channel Collaboration System
(ಬ༸՘Νӻ୕)
PRC the Company
39. Configure-to-Order Management
System (ఊ፯ৣ၍ଣӻ୕)
PRC the Company
40. Meiyunxiao APP (ථቖAPPӻ୕) PRC the Company
41. Advanced Intelligent Scheduling
System ( ৷ॴ౽ঐર೻ӻ୕)
PRC the Company
42. Customer Relationship Management
Cloud Software (၍ଣථழ
΁)
PRC the Company
43. MDI-NX Integrated Online Design
System (MDI-NXӻ୕)
PRC the Company
44. Midea PLM Management System
(Midea PLM ၍ଣӻ୕)
PRC the Company
45. Zhihuiqian Electronic Signature
Service Platform Software
(ਕ̨̻ழ΁)
PRC the Company
46. Factory Energy Management System
(ʈᅀঐ๕၍ଣӻ୕)
PRC the Company
47. Midea Meiju APP (Android) (֢ߕٙߕ
Androidழ΁)
PRC the Company
48. Midea Meiju APP (iOS) (֢ߕٙߕIOS
ழ΁)
PRC the Company
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-22 –


--- page 705 ---
No. Software name
Place of
Registration Registered owner
49. Midea Group IoT Cloud Platform
System (ණྠIoTථ̨̻ӻ୕)
PRC the Company
50. Midea Mall APP (Android) (۬
APPழ΁(Androidو))
PRC the Company
51. Midea Blockchain Preservation Service
Platform (ਕ̨̻)
PRC the Company
52. Midea Mall APP Software (for iOS)
(۬APPழ΁(iOSو))
PRC the Company
53. Midea Supply Chain Data Platform
System (ԶᏐᗡᅰኽ̨̻ӻ୕)
PRC the Company
54. Midea Blockchain Technology Service
Platform (ਕ̨̻)
PRC the Company
55. Midea Blockchain Traceability Service
Platform (ਕ̨̻)
PRC the Company
56. Material Requirement Planning System
(ྌӻ୕)
PRC the Company
57. Midea Supplier Relationship
Management System (ԶᏐਠᗫ
၍ଣӻ୕)
PRC the Company
58. Midea Multi-Burner IoT Access
Software (ᑌၣટɝழ
΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
59. Software for Midea Bluetooth
Temperature and Humidity Sensor
(ෂชኜழ΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
60. Recipe Search System for Gourmet
Stew (ᗅฤ॰ӻ୕)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
61. KOL Recipe System for Gourmet Stew
(ᗅӻ୕)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-23 –


--- page 706 ---
No. Software name
Place of
Registration Registered owner
62. Midea Home Appliance Product
Manual System (׼
ӻ୕)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
63. Meishao Home Appliance Control
System (ཥછՓӻ୕)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
64. IH Control Software for Midea
Induction Cooker (ཥှᘟIHછՓ
ழ΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
65. IH Control Software for Midea Electric
Cooker (ٙߕIHཥඵ⑾છՓழ΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
66. Control Software for Midea Smart
Electric Cooker (౽ঐཥඵ⑾છ
Փழ΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
67. Control Software for Midea Electric
Pressure Cooker (ཥᆠཥᏀɢᒢ
છՓழ΁)
PRC Foshan Shunde Midea
Electrical Heating
Appliances
Manufacturing Co., Ltd.
(ཥᆠ
ʮ̡)
68. Digital System for Midea Microwave
and Cleaning Division (ฆ૶ԫ
ุ௅ᅰοʷӻ୕)
PRC Guangdong Midea Kitchen
Appliances
Manufacturing Co., Ltd.
(ཥኜႡி
ʮ̡)
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-24 –


--- page 707 ---
No. Software name
Place of
Registration Registered owner
69. iBUILDING Water Engine Official
Website System (iBUILDING֜
ၣӻ୕)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
70. iBUILDING Mini Program of e-call
elevator (iBUILDING ˓ዚխ૒ʃ೻
ҏ)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
71. iBUILDING Unified Equipment
Management System (iBUILDING ୕
ɓண௪၍ଣӻ୕)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
72. iBUILDING TRUE SPACE ӻ୕
(iBUILDING TRUE SPACE System)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
73. MDV Cloud Butler APP (MDV࢕
APP)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
74. iBUILDING Smart Charging System
(iBUILDING ౽ᅆ̂ཥӻ୕)
PRC GD Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
75. Structural Simulation Grid Automatic
Modeling and Intelligent
Optimization Software for Midea
RAC (Midea RACІਗ
ᅼձ౽ঐᎴʷழ΁)
PRC GD Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
76. Structural Simulation Connection
Intelligent Identification and
Modeling Software for Midea RAC
(Midea RAC ഐ࿴ͷॆஹટ౽ঐᗆй
ᅼழ΁)
PRC GD Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
77. Midea Air Conditioning Intelligent Big
Data Industry Competition System
(ӻ୕)
PRC GD Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
78. Midea Mould Supply Chain Data
Collaboration Management Platform
(ᅼՈԶᏐᗡᅰኽ՘Ν၍ଣ̻ၽ)
PRC GD Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-25 –


--- page 708 ---
No. Software name
Place of
Registration Registered owner
79. Xinyue Small Multi-connected Internal
Machine Product Software
(ழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
80. Xinyue Big Multi-connected Internal
Machine Product Software
(ழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
81. Big Multi-connected Unit Internal
Machine Control Software
(ɽεᑌዚଡ଼ʫዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
82. V ariable-frequency 10-HP Unit
External Machine Control Software
(ᜊ᎖ɤʸዚଡ଼̮ዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
83. Unit Series Control Software
(ఊʩዚଡ଼ӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
84. Small Multi-connected Unit Internal
Machine Control Software
(ʃεᑌዚଡ଼ʫዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
85. Big Multi-connected Unit External
Machine Control Software
(ɽεᑌዚଡ଼̮ዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
86. Big Multi-connected Unit External
Machine Control Software
(ʃεᑌዚଡ଼̮ዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
87. Split-type Unit Internal Machine
Control Software (ɓዚଡ଼ʫዚӻ
ΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
88. Big Multi-connected Unit External
Machine Control Software
(ɽεᑌዚଡ଼̮ዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-26 –


--- page 709 ---
No. Software name
Place of
Registration Registered owner
89. Small Multi-connected Unit Internal
Machine Control Software
(ʃεᑌዚଡ଼ʫዚӻΐછՓழ΁)
PRC Hefei Midea Heating &
V entilating Equipment
Co., Ltd. (าஷ
ʮ̡)
90. Midea Washing Machine Digital Twin
Platform (Вዚᅰοᛀ̻͛ၽ)
PRC Wuxi Little Swan Electric
Co., Ltd. ( ೌ፼ʃ˂ᕰཥ
ʮ̡)
91. Product Management System
(၍ଣӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
92. Anzhi Cloud Warehouse WMS
Warehouse Management System
(ࡑWMSᎷ၍ଣӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
93. Xiaoan Care APP (࢕APP) PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
94. Logistics Cloud Zhitongbao Mobile
Platform (ஷᘒ୅ਗ̻ၽ)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
95. ANNTO Production Logistics System
(ӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
96. ANNTO Delivery & Installation
System ( τ੻৔ༀӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
97. ANNTO Transportation Management
System ( τ੻༶፩၍ଣӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
98. ANNTO Network Freight Platform
(τ੻ၣഖ஬༶̻ၽ)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
99. ANNTO Supplier Management System
(τ੻ԶᏐਠ၍ଣӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-27 –


--- page 710 ---
No. Software name
Place of
Registration Registered owner
100. Home Delivery & Installation Order
Management System (ఊ
၍ଣӻ୕)
PRC Wuhu Annto Smart
Logistics Technology
Co., Ltd ( ጾಳτ੻౽ᑌ
ʮ̡)
101. Midea Wall Air Conditioner Control
Software (ሜછՓழ΁)
PRC Chongqing Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
102. Midea Fission Air Conditioning
Control Software (ሜછՓ
ழ΁)
PRC Chongqing Midea Air-
Conditioning Equipment
Co., Ltd. (Ⴁи
ʮ̡)
(d) Domain Name
As of the Latest Practicable Date, our Group had registered the following domain
names which we consider to be or may be material to our business:
No. Domain name
1. midea.com.cn
2. midea.com
3. midea-group.com
3. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUPERVISORS
A. Particulars of Directors’ and Supervisors’ Service Contracts and Appointment
Letters
We have entered into a service contract or appointment letter with each of the Directors
and Supervisors. The principal particulars of these service contracts and appointment letters
comprise (a) the term of the service; (b) subject to termination in accordance with their
respective term; and (c) a dispute resolution provision. The service contracts and appointment
letters may be renewed in accordance with our Articles of Association and the applicable laws,
rules and regulations from time to time.
Save as disclosed above, none of the Directors or Supervisors has or is proposed to have
a service contract with any member of our Group (other than contracts expiring or determinable
by the relevant employer within one year without the payment of compensation (other than
statutory compensation)).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-28 –


--- page 711 ---
B. Remuneration of Directors and Supervisors
The aggregate remuneration (including fees, salaries, wages, share-based compensation,
contributions to pension plans, benefits-in-kind and discretionary bonuses) for our Directors
and Supervisors for the years ended 31 December 2021, 2022 and 2023 and the four months
ended 30 April 2024 were approximately RMB116.0 million, RMB108.1 million, RMB114.8
million and RMB34.7 million, respectively.
Based on the current arrangements in force as of the Latest Practicable Date, it is
estimated that the total remuneration for our Directors (including independent non-executive
Directors) and Supervisors for the year ending 31 December 2024 will be approximately
RMB124 million. The actual total remuneration of Directors and Supervisors for the year
ending 31 December 2024 may be different from the expected remuneration as the
discretionary bonuses will be determined based on the results of our Company for the year
ending 31 December 2024.
During the Track Record Period, no remuneration was paid by us to, or receivable by, our
Directors, Supervisors or the five highest paid individuals as an inducement to join or upon
joining our Company. No compensation was paid by us to, or receivable by, our Directors,
former Directors, Supervisors, former Supervisors or the five highest-paid individuals for each
of the Track Record Period for the loss of any office in connection with the management of the
affairs of any members of our Group. Furthermore, none of the Directors or Supervisors had
waived or agreed to waive any emoluments during the same periods.
Save as disclosed above, no other payments have been made or are payable in respect of
the years ended 31 December 2021, 2022 and 2023 and the four months ended 30 April 2024
by any member of our Group to any of our Directors.
C. Disclosure of Interests
Save as disclosed below, immediately following the completion of the Global Offering
and assuming that the Offer Size Adjustment Option is not exercised and no new Shares are
issued under the Over-allotment Option and our Share Schemes, and no other changes are made
to the issued share capital of our Company between the Latest Practicable Date and Listing,
none of our Directors or Supervisors has any interest and/or short position in the Shares,
underlying Shares and debentures of our Company or our associated corporations (within the
meaning of Part XV of the SFO) which will be required to be notified to our Company and the
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or
short position which they were taken or deemed to have under such provisions of the SFO) or
which will be required, pursuant to section 352 of the SFO, to be entered in the register referred
to therein, or which will be required, pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules to be notified to
our Company, once the H Shares are listed on the Hong Kong Stock Exchange.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-29 –


--- page 712 ---
(i) Interest in Shares of our Company
Name of
Director or
Supervisor Position
Shares to be
held after the
Global
Offering
Nature of
interest
Number of
Shares
Approximate %
interest in Shares of
our Company
immediately after
the Global
Offering
(1)
Mr. Fang
Hongbo /H1118/H1118/H1118
Executive Director,
Chairman of the
Board and Chief
Executive Officer
A Shares Beneficial Owner 116,990,492 1.6%
Mr. Fu
Y ongjun /H1118/H1118
Executive Director,
Mechanical and
electrical
department
president
A Shares Beneficial Owner 200,000 0.003%
Mr. Guan
Jinwei /H1118/H1118/H1118
Executive Director
and Vice President
A Shares Beneficial Owner
and Interest of
Spouse
538,500
(2) 0.007%
Ms. Ren
Lingyan /H1118/H1118
Supervisor A Shares Interest of Spouse 8,100 (3) 0.0001%
Notes:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised
and no new Shares are issued under the Over-allotment Option and our Share Schemes, and no
other changes are made to the issued share capital of our Company between the Latest Practicable
Date and Listing.
(2) The spouse of Mr. Guan holds 3,500 A Shares and Mr. Guan is deemed to be interested in the A
Shares held by his spouse.
(3) The spouse of Ms. Ren holds 8,100 A Shares and Ms. Ren is deemed to be interested in the A
Shares held by her spouse.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-30 –


--- page 713 ---
(ii) Interest in our Associated Corporations
Name of Director or
Supervisor Position
Nature of
Interest
Member of
our Group
Approximate %
of Shareholding
Mr. Fang Hongbo (1) /H1118/H1118/H1118/H1118Executive Director,
Chairman of the Board
and Chief Executive
Officer
Interest in
controlled
corporation
Midea Robozone
Technology
Co., Ltd.
6.5%
Mr. Fang Hongbo
(2) /H1118/H1118/H1118/H1118Executive Director,
Chairman of the Board
and Chief Executive
Officer
Interest in
controlled
corporation
Meicloud
Technology
Co., Ltd.
5.3%
Mr. Fang Hongbo
(3) /H1118/H1118/H1118/H1118Executive Director,
Chairman of the Board
and Chief Executive
Officer
Interest in
controlled
corporation
Annto Smart
Logistics
Technology
Co., Ltd
3.3%
Mr. Fang Hongbo
(4) /H1118/H1118/H1118/H1118Executive Director,
Chairman of the Board
and Chief Executive
Officer
Interest in
controlled
corporation
Guangdong Midea
Smart
Technology
Industry
Investment
Fund (LLP)
5.4%
Notes:
(1) Ningbo Meiyue V enture Capital Partnership (Limited Partnership) is interested in 6.5% of the
equity interest of Midea Robozone Technology Co., Ltd. Mr. Fang Hongbo holds 38.7% interest
in Ningbo Meiyue V enture Capital Partnership (Limited Partnership), an employee shareholding
platform. As such, Mr. Fang is deemed to be interested in the shares held by Ningbo Meiyue
V enture Capital Partnership (Limited Partnership).
(2) Ningbo Meiyue V enture Capital Partnership (Limited Partnership) is interested in 5.3% of the
equity interest of Meicloud Technology Co., Ltd. Mr. Fang Hongbo holds 38.7% interest in
Ningbo Meiyue V enture Capital Partnership (Limited Partnership), an employee shareholding
platform. As such, Mr. Fang is deemed to be interested in the shares held by Ningbo Meiyue
V enture Capital Partnership (Limited Partnership).
(3) Ningbo Meiyue V enture Capital Partnership (Limited Partnership) is interested in 3.3% of the
equity interest of Annto Smart Logistics Technology Co., Ltd. Mr. Fang Hongbo holds 38.7%
interest in Ningbo Meiyue V enture Capital Partnership (Limited Partnership), an employee
shareholding platform. As such, Mr. Fang is deemed to be interested in the shares held by Ningbo
Meiyue V enture Capital Partnership (Limited Partnership).
(4) Ningbo Meishan V enture Capital Partnership (Limited Partnership) and Meishan (Guangdong)
Equity Investment Partnership (Limited Partnership) are interested in 3.0% and 2.4% of the
equity interest of Guangdong Midea Smart Technology Industry Investment Fund (LLP),
respectively. Mr. Fang Hongbo holds 80.6% interest in Ningbo Meishan V enture Capital
Partnership (Limited Partnership) and 99.98% interest in Meishan (Guangdong) Equity
Investment Partnership (Limited Partnership). As such, Mr. Fang is deemed to be interested in the
shares held by Ningbo Meishan V enture Capital Partnership (Limited Partnership) and Meishan
(Guangdong) Equity Investment Partnership (Limited Partnership), respectively.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-31 –


--- page 714 ---
(iii) Interests of Substantial Shareholders in Members of Our Group (Excluding Our
Company)
Save as disclosed below and the disclosure in the section headed “Substantial
Shareholders”, our Directors are not aware of any other person who will, immediately
following completion of the Global Offering and assuming that the Offer Size Adjustment
Option is not exercised and no new Shares are issued under the Over-allotment Option
and our Share Schemes, and no other changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing, have an interest or short
position in our Shares or underlying Shares which would fall to be disclosed to us under
the provisions of Divisions 2 and 3 of Part XV of the SFO, or, will be, directly or
indirectly, interested in 10% or more of the issued voting shares of our Company or any
other member of our Group.
Member of our Group Name of substantial shareholder
Approximate
% held by the
substantial
shareholder
GD Midea Air-Conditioning
Equipment Co., Ltd. (Ⴁ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Toshiba Carrier Corporation 20.0%
Midea Group Wuhan Refrigeration
Equipment Co., Ltd. (؛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Toshiba Carrier Corporation 20.0%
Foshan Midea Chungho Water
Purification Equipment. Co., Ltd.
(ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chungho Nais Co., Ltd
(૶ಳNAISٟ)
40.0%
Hefei Midea-SIIX Electronics Co.,
Ltd. (ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Siix Hong Kong Ltd
(ʮ̡)
25.0%
Guangdong Midea-SIIX Electronics
Co., Ltd. (Ҏд౶ཥɿϞ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Siix Hong Kong Ltd
(ʮ̡)
25.0%
Jingzhou Midea-SIIX Electronics
Co., Ltd. (Ҏд౶ཥɿϞ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Siix Hong Kong Ltd ( Ҏд౶
ʮ̡)
25.0%
T.G. Battery Co. (China) Ltd. (ʆ
ཥϫʈุ(ʕ਷)ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Guangdong Desay
Corporation (ᅃᒄණྠ
ʮ̡)
15.0%
T.G. Battery Co. (Hong Kong)
Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
GP Batteries International
Limited
50.0%
MR Semiconductor Ltd. (ʠ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Noone Semiconductor Ltd.
(ࠢ
ʮ̡)
16.9%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-32 –


--- page 715 ---
Member of our Group Name of substantial shareholder
Approximate
% held by the
substantial
shareholder
MR Semiconductor Ltd. (ʠ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Ningbo Meixin Investment
Partnership (Limited
Partnership) (ҳ༟
ΥྫΆุ(Υྫ))
19.2%
Shenzhen CLOU Electronics Co.,
Ltd. (΅Ϟ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Shenzhen Y uanzhi Investment
Co., Ltd. ( ଉέ̹༟͉༶ᐄ
ʮ̡)
13.0%
Wuhan TTium Motor Technology
Co., Ltd (ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wuhan TIANTI No. 1
Enterprise Management
Partnership (L.P .) (ဏ˂
૒ɓ໮Άุ၍ଣΥྫΆุ
(Υྫ))
10.7%
Wuhan TTium Motor Technology
Co., Ltd (ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HL Corp (Shenzhen)
(ٰ࢝
ʮ̡)
12.5%
Wuhan TTium Motor Technology
Co., Ltd (ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Liu Han ( ᄎӼ) 12.6%
Luanping Huitong Photovoltaic
Power Co., Ltd. ( ᝒ̻ᅆஷΈͿ೯
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Long Tengyun ( Ꮂᙜථ) 40.0%
Hefei Midea Hekang Photovoltaic
Technology Co., Ltd. (Υ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Wang Shizhen (ޜ20.0%
Shanghai Swisslog Technology Co.,
Ltd (ʮ̡)/H1118/H1118/H1118
SWISSLOG ASIA LIMITED 50.0%
Guangdong Swisslog Technology
Co., Ltd. (ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Swisslog AG 50.0%
Swisslog Healthcare Shanghai Co.,
Ltd. (ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Swisslog Healthcare Holding
AG
50.0%
Foshan Midea Carrier
Air-Conditioning Equipment Co.,
Ltd. (කлႡиண௪Ϟ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Carrier Asia Limited
(ʮ̡)
40.0%
Hefei M&B Air Conditioning
Equipment Co., Ltd. (ᑌ௹
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Bosch (China) Investment
Co., Ltd. ( ௹˰(ʕ਷)ҳ༟
ʮ̡)
40.0%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-33 –


--- page 716 ---
Member of our Group Name of substantial shareholder
Approximate
% held by the
substantial
shareholder
KONG Intelligent Environment
(Xi’an) Co., LTD (છ౽ᅆᐑྤ
(Гτ)ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Shaanxi Construction
Investment Holdings Co.,
Ltd. (ࠢ
ʮ̡)
35.0%
Winone Elevator Company Limited
(ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Guangdong Biaodi
Investment Co., Ltd.
(ʮ̡)
20.0%
Ningbo Meizhi Uni-Innovation
Investment Center (LLP) (ߕت
౽ձ௴ҳ༟ʕː(Υྫ)) /H1118/H1118/H1118/H1118/H1118
Li Feide (ᅃ) 29.4%
Guangdong Y ueyun Industrial
Internet Innovation Technology
Co., Ltd. (ຽථʈุʝᑌၣ௴
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
New Pearl Group Co., Ltd.
(ʮ̡)
10.0%
Midea Intelligent Lighting &
Controls Technology Co., Ltd.
(ʮ̡) /H1118/H1118/H1118/H1118
Ningbo Meiyisheng V enture
Capital Partnership
(Limited Partnership)
(୤ʺ௴ุҳ༟Υྫ
Άุ(Υྫ))
12.8%
Midea Intelligent Lighting &
Controls Technology Co., Ltd.
(ʮ̡) /H1118/H1118/H1118/H1118
Ningbo Meishun Investment
Partnership (limited
Partnership) (නҳ༟
ΥྫΆุ(Υྫ))
14.2%
GD Midea Caffitaly Coffee Machine
Manufacturing CO., Ltd (ߕ؇
ʮ̡) /H1118/H1118/H1118/H1118/H1118
ALBA Investments Limited
(ʮ̡)
30.0%
Guangdong Midea Cuchen Company
Ltd. (ཥኜႡி
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Cuchen Co. Ltd 40.0%
Midea Robozone Technology
Co., Ltd (ப΂
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Ningbo Kuntian Enterprise
Management Partnership
(Limited Partnership)
(˂Άุ၍ଣΥྫΆ
ุ
(Υྫ))
11.0%
Midea Robozone Technology
Co., Ltd (ப΂
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Ningbo Meiyu V enture
Capital Partnership
(Limited Partnership)
(๬௴ุҳ༟ΥྫΆ
ุ(Υྫ))
11.4%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-34 –


--- page 717 ---
Member of our Group Name of substantial shareholder
Approximate
% held by the
substantial
shareholder
Guangdong Midea Supply Chain
Finance Co., Ltd. (ԶᏐ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Foshan Shunde Shunsheng
Investment Development
Co., Ltd. ( Нʆ̹නᅃਜන
ʮ̡)
15.0%
Clivet Air S.r.l. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Bissoli Giorgio 10.0%
Clivet Air S.r.l. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Bissoli Luca 10.0%
Midea Scott & English Electronics
SDN. BHD. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Eastern Trinity 25.0%
Frylands B.V . /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118South American Coöperatief
U.A.
49.0%
Carrier Midea India Private
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Sensitech Emea B.V . 40.0%
Misr Refrigeration and Air
Conditioning Manufacturing
Company, S.A.E. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Aldridge Holdings LLC 25.0%
Misr Refrigeration and Air
Conditioning Manufacturing
Company, S.A.E. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
China-Africa Electrical
Equipment Investment Co.,
Limited
11.7%
Misr Refrigeration and Air
Conditioning Manufacturing
Company, S.A.E. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Carrier HV A VR Investment
B.V
10.1%
South American HoldCo II B.V . /H1118/H1118/H1118/H1118South American Coöperatief
U.A.
49.0%
Miraco Development Services and
Trading Company S.A.E. /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Carrier Corporation Company 20.4%
Motinova (Vieˆt Nam) Technology
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HL-VT CORP (VIETNAM) 30.0%
Carrier S.R.L /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Arco S.R.L. 27.9%
Limited Liability Company
“Home Appliances”
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
OJSC “David-Gorodoksky
Electromechanical Plant”
45.0%
Toshiba Sales & Services
Sdn. Bhd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
TSS SALE & SERVICE
SDN. BHD.
20.0%
Thai Toshiba Electric Industries
Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
THAI ELECTRIC
INDUSTRIES Co., Ltd.
45.5%
Toshiba Thailand Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118Suriyasat Group 31.5%
Note:
(1) The English name is for identification only.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-35 –


--- page 718 ---
D. Disclaimer
Save as disclosed in this section and the section headed “Business” in this
document:
(i) none of our Directors or the chief executive of our Company has any interest
or short position in the shares, underlying shares or debentures of our Company
or any of its associated corporation (within the meaning of Part XV of the SFO)
which will have to be notified to our Company and the Hong Kong Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which will
be required, pursuant to section 352 of the SFO, to be entered in the register
referred to therein, or which will be required to be notified to our Company and
the Hong Kong Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers once the H Shares are listed;
(ii) none of our Directors, Supervisors or any of the experts referred to under the
paragraph headed “—5. Other Information — E. Qualification of Experts” has
any direct or indirect interest in the promotion of our Company, or in any assets
which have within the two years immediately preceding the date of this
document been acquired or disposed of by or leased to any member of our
Group, or are proposed to be acquired or disposed of by or leased to any
member of our Group;
(iii) none of our Directors or Supervisors is materially interested in any contract or
arrangement subsisting at the date of this document which is significant in
relation to the business of our Group taken as a whole;
(iv) none of our Directors or Supervisors is materially interested in any contract or
arrangement subsisting at the date of this document which is significant in
relation to the business of our Group taken as a whole;
(v) none of our Directors or Supervisors has any existing or proposed service
contracts with any member of our Group (excluding contracts expiring or
determinable by the employer within one year without payment of
compensation (other than statutory compensation));
(vi) so far as is known to our Directors, no person (not being a Director or chief
executive of our Company or any member of our Group) will, immediately
following the completion of the Global Offering, have an interest or short
position in the Shares or underlying Shares of our Company which would fall
to be disclosed to our Company under the provisions of Divisions 2 and 3 of
Part XV of SFO or be interested, directly or indirectly, in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any member of our Group; and
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-36 –


--- page 719 ---
(vii) none of our Directors, Supervisors or their respective close associates (as
defined under the Listing Rules) or our Shareholders who are interested in
more than 5% of the issued share capital of our Company has any interest in
the five largest customers or the five largest suppliers of our Group.
4. OUR INCENTIVE SCHEMES
A. Stock Option Incentive Plans
The following is a summary of the principal terms of the Fifth Stock Option Incentive
Plan, the Sixth Stock Option Incentive Plan, the Seventh Stock Option Incentive Plan, the
Eighth Stock Option Incentive Plan and the Ninth Stock Option Incentive Plan (collectively,
the “ Stock Option Incentive Plans ”). Given no further share options will be granted under the
Stock Option Incentive Plans after the Listing, the terms of the Stock Option Incentive Plans
are not subject to the provisions of Chapter 17 of the Listing Rules.
(i) Purpose
The purpose of the Stock Option Incentive Plans is to improve our Group’s corporate
governance structure and incentive mechanism and incentivize our Group’s management
and key employees to achieve a sustained and healthy development of our Group in order
to realize our Group’s long-term objectives. The Stock Option Incentive Plans are
implemented to align the interests of the Shareholders with the interests of our Group and
employee which will benefit the sustained development of our Group.
(ii) Administration
The Stock Option Incentive Plans are subject to the approval of the Shareholders’
meeting, administration of the Board and the supervision of the board of Supervisors.
(iii) Participants
The participants of the Stock Option Incentive Plans include key technical
personnels and mid-level management in our Group’s research and development,
production and quality control departments, overseas personnels, young management and
tech talent. The scope of participants excludes independent directors, supervisors and
shareholders or actual controller who individually or collectively hold 5% or more of the
shares of our Company and their spouse, parents and children.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-37 –


--- page 720 ---
(iv) Maximum number of options
The shares underlying the options to be granted under the Stock Option Incentive
Plans are A Shares to be issued by our Company to the selected participants. Each option
granted represents the right to purchase one Share within the exercise period at the
exercise price. The maximum number of options that can be granted under each of the
Stock Option Incentive Plans are as follows:
Stock Option Incentive Plan
Maximum number of options
to be granted under the plan
The Fifth Stock Option Incentive Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,080,000
The Sixth Stock Option Incentive Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,240,000
The Seventh Stock Option Incentive Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,260,000
The Eighth Stock Option Incentive Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111882,480,000
The Ninth Stock Option Incentive Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118109,074,000
(v) Date of grant and duration of the incentive plan
The date on which the options are granted shall be a trading day determined by the
Board within 60 days after the date of approval of the Stock Option Incentive Plans by
the Shareholders’ meeting. The grant of options shall be approved by the Board,
registered and announced within 60 days after the approval of the Stock Option Incentive
Plans by the Shareholders’ meeting. The Stock Option Incentive Plans shall be valid for
a term of between 4 to 6 years commencing from the date of completion of the grant of
the options.
(vi) Conditions to the grant of options
The options under the Stock Option Incentive Plans will only be granted to selected
participants if the following conditions are fulfilled:
(a) With respect to our Company, none of the following circumstances having
occurred:
(1) An audit report with an adverse opinion or a disclaimer of opinion has
been issued by the reporting accountant with respect to our Company’s
accountant’s report for the most recent fiscal year;
(2) An audit report with an adverse opinion or a disclaimer of opinion has
been issued by the reporting accountant with respect to the internal
control report contained in accountant’s report for the most recent fiscal
year;
(3) Our Company has not distributed dividends in accordance with the laws
and regulations, our Articles of Association or our public commitment
within the last 36 months after its listing;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-38 –


--- page 721 ---
(4) Applicable laws and regulations prohibit the implementation of any share
incentive scheme; or
(5) Any other circumstances determined by the CSRC.
(b) With respect to a grantee, none of the following circumstances having
occurred:
(1) The grantee has been regarded as an inappropriate person by the stock
exchange within the last 12 months;
(2) The grantee has been regarded as an inappropriate person by the CSRC or
its local office within the last 12 months;
(3) The grantee has been punished or prohibited from entering into the
securities market by the CSRC or its local office within the last 12
months;
(4) The grantee is not qualified to serve as a director or senior management
according to the PRC Company Law;
(5) The grantee is prohibited from participating in any incentive plan of listed
companies according to applicable laws and regulations;
(6) Any other circumstances determined by the CSRC; or
(7) The grantee is found by the Board to be in serious breach of the rules of
our Company.
No consideration is paid/payable for the options granted under Stock Option
Incentive Plans.
(vii) Exercise of options
Options may be exercised by a grantee provided that (i) the conditions set out under
paragraph (vi) above are fulfilled at the time of exercise of options; and (ii) the annual
assessment and performance targets as set out under the Stock Option Incentive Plans are
achieved.
The exercise price for the option to be granted under each Stock Option Incentive
Plan shall be the higher of (i) the average trading price of the Shares in the trading day
before the announcement of the draft plan; and (ii) the average trading price of the Shares
during 20 trading days before the announcement of the draft plan. The number of options
granted and the exercise prices will be adjusted upon the occurrence of certain events,
including increase in the share capital by way of capitalization of capital reserves, issue
of bonus shares, subdivision of shares and issue of new shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-39 –


--- page 722 ---
The exercise schedule of the options granted are either:
(a) exercisable in tranches of 30% or 40% in each of the three exercise periods that
occur between the first trading date after the 24-month anniversary from the
date of grant and the last trading day up to the 60-month anniversary of the date
of grant;
(b) exercisable in tranches of 25% in each of the four exercise periods that occur
between the first trading date after the 24-month anniversary from the date of
grant and the last trading day up to the 72-month anniversary of the date of
grant; or
(c) exercisable in tranches of 20%, 30% or 50% in each of the three exercise
periods that occur between the first trading date after the 12-month anniversary
from the date of grant and the last trading day up to the 48-month anniversary
of the date of grant.
Save for the exercise of the options granted under the Ninth Stock Option Incentive
Plan, the exercise of the options granted shall be on a trading day, which shall not fall
within the following periods (i) 30 days before the publication of annual report, interim
report, and quarterly report; (ii) the period starting from 30 days before the initial
publication of annual report, interim report, quarterly report (due to any delay of
publication) until one day before the publication of such report; (iii) 10 days before the
publication of earnings forecast and preliminary earnings estimate, (iv) the period starting
from the date of occurrence of any significant price-sensitive event or the decision-
making process in respect of such event until two trading days after the date of
announcement of such event; and (v) any other period stipulated by the CSRC and the
Shenzhen Stock Exchange.
The exercise of the options granted under the Ninth Stock Option Incentive Plan
shall be on a trading day, which shall not fall within the following periods (i) 30 days
before the publication of annual report and interim report, (ii) the period starting from 30
days before the initial publication of annual report and interim report (due to any delay
of publication) until one day before the publication of such report; (iii) 10 days before the
publication of quarterly report, earnings forecast and preliminary earnings estimate, (iv)
the period starting from the date of occurrence of any significant price-sensitive event or
the decision-making process in respect of such event until the date of announcement of
such event; and (v) any other period stipulated by the CSRC and the Shenzhen Stock
Exchange.
The grantees must exercise their options within the validity period of the respective
options. Upon the expiry of the validity period, options granted but not exercised will
cease to be exercisable and shall be canceled by our Company.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-40 –


--- page 723 ---
(viii) Outstanding options
As of the Latest Practicable Date, the number of A Shares underlying the outstanding
options granted under the Stock Option Incentive Plans amounted to 121,837,304 A
Shares, representing approximately 1.6% of the issued Shares immediately following the
completion of the Listing (assuming no changes to our issued and outstanding shares
between the Latest Practicable Date and the Listing). As of the Latest Practicable Date,
the outstanding options were held by 3,073 grantees, none of whom was a Director,
Supervisor or senior management of our Company. Assuming full exercise of all
outstanding options granted under the Stock Option Incentive Plans, the issued and
outstanding shareholding of the Shareholders immediately following completion of the
Listing will be diluted by approximately 1.60%. The dilution effect on our earnings per
Share would be approximately 1.60%.
The table below sets forth the details of the options granted to connected persons
who are not the Directors, Supervisors or senior management of our Company under the
Stock Option Incentive Plans which were outstanding as of the Latest Practicable Date:
Name of the grantee
Position in the
Company Date of grant Address
Number of
shares under
options
granted Exercise price
Exercise
period
A Shares underlying
outstanding options
as a percentage
of issued Shares
immediately after
the Global
Offering (1)
Connected Persons
Mr. Sun Y uhuan /H1118/H1118/H1118Director of GD Midea
Air Conditioning
Equipment Co., Ltd.
4 June 2021 2302, Building 51,
Xiangxinyuan,
No. 2021 Lihu
Avenue, Binhu
District, Wuxi,
Jiangsu Province,
China
56,000 RMB74.26 4 June 2021 to
3 June 2026
0.0007%
8 June 2022 56,000 RMB49.13 8 June 2022 to
7 June 2027
0.0007%
Ms. Luo Huidan /H1118/H1118/H1118Supervisor of Ningbo
Midea United
Materials Supply
Co. Ltd.
8 June 2022 No. 8, Huzhu Group,
Jinji Village
Committee, Pingshi
Town, Lechang,
Guangdong
Province, China
30,000 RMB49.13 8 June 2022 to
7 June 2027
0.0004%
Note:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised and
no new Shares are issued under the Over-allotment Option and our Share Schemes, and no other changes
are made to the issued share capital of our Company between the Latest Practicable Date and Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-41 –


--- page 724 ---
The table below sets forth the details of options granted to other grantees (excluding the
abovementioned connected persons of our Company) under the Stock Option Incentive Plans,
categorized by the number of underlying shares, which were outstanding as of the Latest
Practicable Date:
Category by number
of underlying Shares
Number of
grantees Date of grant
Vesting
period
Exercise
period Exercise Price
Number of
shares under
options granted
Approximate
percentage of the
issued Shares
immediately after
completion of
Global Offering (1)
150,001 to 221,000 /H1118/H1118 5 30 May 2019 4 years 30 May 2019 to
29 May 2025
RMB42.56 865,890 0.01%
4 June 2021 3 years 4 June 2021 to
3 June 2026
RMB74.26
8 June 2022 3 years 8 June 2022 to
8 June 2027
RMB49.13
100,001 to 150,000 /H1118/H1118 75 11 March 2019 4 years 11 March 2019 to
10 March 2025
RMB35.56 8,525,620 0.11%
30 May 2019 4 years 30 May 2019 to
29 May 2025
RMB42.56
4 June 2021 3 years 4 June 2021 to
3 June 2026
RMB74.26
8 June 2022 3 years 8 June 2022 to
8 June 2027
RMB49.13
50,001 to 100,000 /H1118/H1118/H1118 741 11 March 2019 4 years 11 March 2019 to
10 March 2025
RMB35.56 50,370,468 0.67%
30 May 2019 4 years 30 May 2019 to
29 May 2025
RMB42.56
4 June 2021 3 years 4 June 2021 to
3 June 2026
RMB74.26
8 June 2022 3 years 8 June 2022 to
8 June 2027
RMB49.13
1 to 50,000 /H1118/H1118/H1118/H1118/H11182,250 11 March 2019 4 years 11 March 2019 to
10 March 2025
RMB35.56 61,933,326 0.83%
30 May 2019 4 years 30 May 2019 to
29 May 2025
RMB42.56
4 June 2021 3 years 4 June 2021 to
3 June 2026
RMB74.26
8 June 2022 3 years 8 June 2022 to
8 June 2027
RMB49.13
Note:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised and
no new Shares are issued under the Over-allotment Option and our Share Schemes, and no other changes
are made to the issued share capital of our Company between the Latest Practicable Date and Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-42 –


--- page 725 ---
The table below sets forth the details of options granted to other grantees (excluding the
abovementioned connected persons of our Company) for each of the Stock Option Incentive
Plans which were outstanding as of the Latest Practicable Date:
Stock Option
Incentive Plan
Number of
grantees (2)
Date of
grant
Number of
A Shares
underlying the
outstanding
options
Exercise
price
Exercise
period
A Shares underlying the
outstanding options as
a percentage of issued
Shares immediately
after completion of
the Global Offering (1)
The Fifth Stock
Option Incentive
Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118
22 11 March
2019
303,880 RMB35.56 11 March
2019 to
10 March
2025
0.004%
The Sixth Stock
Option Incentive
Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118
505 30 May 2019 4,260,786 RMB42.56 30 May 2019
to 29 May
2025
0.06%
The Eighth Stock
Option Incentive
Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118
1,270 4 June 2021 37,513,878 RMB74.26 4 June 2021
to 3 June
2026
0.50%
The Ninth Stock
Option Incentive
Plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118
2,395 8 June 2022 79,616,760 RMB49.13 8 June 2022
to 7 June
2027
1.06%
Notes:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised and
no new Shares are issued under the Over-allotment Option and our Share Schemes, and no other changes
are made to the issued share capital of our Company between the Latest Practicable Date and Listing.
(2) The individual grantees may have options granted in one or more of the Stock Option Incentive Plans.
B. Restricted Share Incentive Schemes
The following is a summary of the principal terms of 2018 Restricted Share Incentive
Scheme, 2019 Restricted Share Incentive Scheme, 2020 Restricted Share Incentive Scheme,
2021 Restricted Share Incentive Scheme, 2022 Restricted Share Incentive Scheme and 2023
Restricted Share Incentive Scheme (collectively, the “ Restricted Share Incentive Schemes ”).
The terms of Restricted Share Incentive Schemes are not subject to the provisions of Chapter
17 of the Listing Rules as they do not involve any grant of restricted Shares by our Company
after our Listing. Save as otherwise disclosed, the terms of each of the Restricted Share
Incentive Schemes are substantially similar and are summarized below.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-43 –


--- page 726 ---
(i) Purpose
The purpose of the Restricted Share Incentive Schemes is to improve our Group’s
corporate governance structure and incentive mechanism and incentivize our Group’s
management and key employee to achieve a sustained and healthy development of our
Group in order to realize our Group’s long-term objectives. The Restricted Share
Incentive Schemes are implemented to align the interests of the Shareholders with the
interests of the Group and employee which will benefit the sustained development of our
Group.
(ii) Administration
The Restricted Share Incentive Schemes are subject to the approval of the
Shareholders’ meeting, administration of the Board and the supervision of the board of
Supervisors and independent Directors of our Company.
(iii) Participants
The participants of the Restricted Share Incentive Schemes include key personnels
of our Group such as key technical personnels and core department management staff who
have significant contributions to the business development of our Group or the
responsible departments. The scope of participants excludes independent directors,
supervisors and shareholders or actual controller who individually or collectively hold
5% or more of the shares of our Company and their spouse, parents and children.
(iv) Source and maximum number of Shares
For 2018 Restricted Share Incentive Scheme, the Shares underlying the scheme shall
be A Shares issued by our Company, all of which have been fully issued on 21 June 2018
and 10 May 2019. The Shares underlying the remaining Restricted Share Incentive
Schemes (other than 2018 Restricted Share Incentive Scheme) shall be A Shares
purchased by our Company from the secondary market. Each restricted Share granted
represents the right to purchase one A Share within the agreed period at the grant price.
The restricted Shares are subject to a lock-up period and will only be unlocked upon
fulfilling the unlocking conditions stipulated. The maximum number of restricted Shares
that can be granted under each of the Restricted Shares Incentive Schemes are as follows:
Restricted Share Incentive Scheme
Maximum number of
restricted Shares to be
granted under the scheme
2018 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,010,000
2019 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,350,000
2020 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,180,000
2021 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,570,000
2022 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,630,000
2023 Restricted Share Incentive Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,375,000
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-44 –


--- page 727 ---
(v) Date of grant and term of the Scheme
The date on which the restricted Shares are granted shall be determined by the Board
within 60 days after the date of approval of the Restricted Share Incentive Schemes by
the shareholders’ meeting. The grant of restricted Shares shall be approved by the Board,
registered and announced within 60 days after the approval of the Restricted Share
Incentive Schemes by the Shareholders’ meeting. The Restricted Share Incentive Schemes
shall be effective from the date of completion of the grant of restricted Shares under the
Schemes up to the date when the restricted Shares granted under the Schemes are no
longer under any lock-ups or have been repurchased and cancelled, provided that the term
of the Schemes shall not exceed 48 months, 60 months or 72 months (as the case may be).
(vi) Lock-up for Directors and the senior management team
If the grantee is a Director or a senior management of our Company who terminates
the employment before expiry of the term, during the period of the original term of
employment and the following six months, the Shares to be transferred in each year shall
not exceed 25% of the total Shares he or she holds. No share held by such Director or
senior management can be transferred within six months after termination of his or her
employment. If the grantee is a Director or senior management of our Company, income
gained through sale of Shares within six months of the purchase or purchase of Shares
within six months of the sale shall belong to our Company and will be forfeited by the
Board. If there is any change in the applicable laws and regulations on the foregoing
lock-up requirements, the grantee shall comply with the amended laws and regulations.
(vii) Conditions to the grant of restricted Shares
The restricted Shares under the Restricted Share Incentive Schemes will only be
granted to selected participants if the following conditions are fulfilled:
(a) With respect to our Company, none of the following circumstances having
occurred:
(1) An audit report with an adverse opinion or a disclaimer of opinion has
been issued by the reporting accountant with respect to our Company’s
accountant’s report for the most recent fiscal year;
(2) An audit report with an adverse opinion or a disclaimer of opinion has
been issued by the reporting accountant with respect to the internal
control report contained in accountant’s report for the most recent fiscal
year;
(3) Our Company has not distributed dividends in accordance with the laws
and regulations, our Articles of Association or our public commitment
within the last 36 months after its listing;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-45 –


--- page 728 ---
(4) Applicable laws and regulations prohibit the implementation of any share
incentive scheme; or
(5) Any other circumstances determined by the CSRC.
(b) With respect to a grantee, none of the following circumstances having
occurred:
(1) The grantee has been regarded as an inappropriate person by the stock
exchange within the last 12 months;
(2) The grantee has been regarded as an inappropriate person by the CSRC or
its local office within the last 12 months;
(3) The grantee has been punished or prohibited from entering into the
securities market by the CSRC or its local office within the last 12
months;
(4) The grantee is not qualified to serve as a director or senior management
according to the PRC Company Law;
(5) The grantee is prohibited from participating in any incentive plan of listed
companies according to applicable laws and regulations;
(6) Any other circumstances determined by the CSRC; or
(7) The grantee is found by the Board to be in serious breach of the rules of
our Company.
(viii) Unlocking and vesting of restricted Shares
The lock-up period for restricted Shares commences from date of grant of restricted
Shares to the grantee and the interval between the date of completion of the grant and the
date of unlocking of the restricted Shares shall be twelve or twenty-four months. During
the lock-up period, the restricted Shares granted to the grantee shall not be transferred,
used as guarantee or for repayment of debt. In addition, the restricted Shares will only be
unlocked when (i) the conditions set out under paragraph (vii) above are fulfilled; and (ii)
the annual assessment and performance targets as set out under the Schemes are achieved.
The restricted Shares will be unlocked after the lock-up period in accordance with
the unlocking schedule as set out under the scheme during a period of 4 to 6 years as
follows:
(a) unlocked in tranches of 30% or 40% in each of the three unlocking periods that
occur between the first trading date after the 24-month anniversary from the
date of grant and the last trading day up to the 60-month anniversary of the date
of grant;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-46 –


--- page 729 ---
(b) unlocked in tranches of 25% in each of the four unlocking periods that occur
between the first trading date after the 24-month anniversary from the date of
grant and the last trading day up to the 72-month anniversary of the date of
grant;
(c) unlocked in tranches of 20%, 30% or 50% in each of the three unlocking
periods that occur between the first trading date after the 12-month anniversary
from the date of grant and the last trading day up to the 48-month anniversary
of the date of grant; or
(d) unlocked in tranches of 30% or 40% in each of the three unlocking periods that
occur between the first trading date after the 12-month anniversary from the
date of grant and the last trading day up to the 48-month anniversary of the date
of grant.
The grantees shall pay the grant price upon fulfilment of all the conditions of the
restricted Shares to purchase the A Shares from our Company. The grant price of each
restricted Shares shall not be lower than the nominal value of each A Share and, in
principle, shall not be lower than (as the case may be):
(a) the higher of (1) 50% of the average trading price of the A Shares on the
trading date before the announcement of the draft scheme; and (2) 50% of the
average trading price of the A Shares during the 20 trading dates before the
announcement of the draft scheme;
(b) the higher of (1) 50% of the average trading price of the A Shares on the
trading date before the announcement of the draft scheme; (2) 50% of the
average trading price of the A Shares during the 20 trading dates before the
announcement of the draft scheme; and (3) 50% of the average trading price of
the A Shares during the 60 trading dates before the announcement of the draft
scheme; or
(c) the higher of (1) 50% of the average trading price of the A Shares on the
trading date before the announcement of the draft scheme; (2) 50% of the
average trading price of the A Shares during the 20 trading dates before the
announcement of the draft scheme; (3) 50% of the average trading price of the
A Shares during the 60 trading dates before the announcement of the draft
scheme; and (4) 50% of the average trading price of the A Shares during the
120 trading dates before the announcement of the draft scheme.
The number of restricted Shares granted and/or the grant prices will be adjusted
upon the occurrence of certain events, including payment of dividend, increase in the
share capital by way of capitalization of capital reserves, issue of bonus shares,
subdivision of shares and issue of new shares. Our Company may repurchase the
restricted Shares upon occurrence of certain events as set out in the Schemes, including
but not limited to the change of the positions of the grantee or termination of employment.
Subject to the price adjustment mechanisms and other terms and conditions as set out
under the Schemes, the price payable by our Company for the repurchase of restricted
Shares shall be equivalent to the grant price of the relevant restricted Shares.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-47 –


--- page 730 ---
(ix) Dividend and voting rights
Upon transfer of the A Shares by our Company, the grantees of restricted Shares will
be entitled to exercise the right of Shareholders, including but not limited to the right to
receive dividends and voting rights. Before the unlocking of the restricted Shares, the
restricted Shares (including the right to receive dividends) shall be locked and such
restricted Shares shall not be transferred or used to guarantee or repay debts.
(x) Outstanding restricted Shares
As of the Latest Practicable Date, the number of outstanding restricted Shares
granted under the Restricted Share Incentive Schemes was 22,271,893, representing
approximately 0.30% of the issued Shares immediately following the completion of the
Listing (assuming no changes to our issued and outstanding shares between the Latest
Practicable Date and the Listing).
The following table sets forth the number of outstanding restricted Shares granted
to Directors, senior management or connected persons of our Company under the
Restricted Share Incentive Schemes as of the Latest Practicable Date:
Name of
grantee
Position in our
Company
Date of
grant
Number of
outstanding
restricted
Shares Grant Price
Lock-up
period
Approximate
percentage of
issued Shares
immediately
after
completion of
the Global
Offering (1)
Senior
Management
Ms. Zhao
Wenxin /H1118/H1118/H1118
Chief People Officer 4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Wang
Jinliang /H1118/H1118/H1118
Vice President 4 June 2021 40,000 RMB39.92 2 years 0.0005%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Li
Guolin /H1118/H1118/H1118
Vice President 4 June 2021 40,000 RMB39.92 2 years 0.0005%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Jiang
Peng /H1118/H1118/H1118/H1118/H1118
Board Secretary 4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Connected
persons
Mr. Hu Jia /H1118/H1118/H1118Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 64,000 RMB39.92 2 years 0.0009%
8 June 2022 42,000 RMB26.47 2 years 0.0006%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-48 –


--- page 731 ---
Name of
grantee
Position in our
Company
Date of
grant
Number of
outstanding
restricted
Shares Grant Price
Lock-up
period
Approximate
percentage of
issued Shares
immediately
after
completion of
the Global
Offering (1)
Ms. Chen
Lihong /H1118/H1118/H1118Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
8 June 2022 42,000 RMB26.47 2 years 0.0006%
Mr. Fu Jian /H1118/H1118Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Jiang
Xuan /H1118/H1118/H1118/H1118
Director of Midea
Electric Trading
(Singapore) Co.
Ptd. Ltd.
4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Liu Jin /H1118/H1118Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 24,000 RMB39.92 2 years 0.0003%
8 June 2022 49,000 RMB26.47 2 years 0.0007%
Mr. Y ang Hao /H1118Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 28,000 RMB39.92 2 years 0.0004%
8 June 2022 42,000 RMB26.47 2 years 0.0006%
Mr. Zhao
Dongye /H1118/H1118/H1118
Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 28,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Mr. Zhou
Shuqing /H1118/H1118/H1118
Chairman and general
manager of Ningbo
Midea United
Materials Supply
Co. Ltd.
4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 42,000 RMB26.47 2 years 0.0006%
Mr. Zhou
Zhiwen /H1118/H1118/H1118
Director of GD
Midea Air-
Conditioning
Equipment Co.,
Ltd.
4 June 2021 32,000 RMB39.92 2 years 0.0004%
8 June 2022 56,000 RMB26.47 2 years 0.0007%
Note:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised
and no new Shares are issued under the Over-allotment Option and our Share Schemes, and no
other changes are made to the issued share capital of our Company between the Latest Practicable
Date and Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-49 –


--- page 732 ---
The table below sets forth the details of outstanding restricted Shares granted to other
grantees (excluding Directors, senior management and connected persons of our Company)
under the Restricted Share Incentive Schemes as of the Latest Practicable Date:
Restricted Share
Incentive Scheme
Number of
Grantees
Date of
grant
Number of
outstanding
restricted
Shares Grant Price
Lock-up
period
Approximate
percentage of
issued Shares
immediately
after
completion of
the Global
Offering (1)
2018 Restricted Share
Incentive Scheme /H1118/H1118/H1118
1 11 March
2019
12,500 RMB23.59 2 years 0.0002%
2019 Restricted Share
Incentive Scheme /H1118/H1118/H1118
38 30 May
2019
428,698 RMB25.79 2 years 0.006%
2021 Restricted Share
Incentive Scheme /H1118/H1118/H1118
92 4 June 2021 2,618,524 RMB39.92 2 years 0.03%
2022 Restricted Share
Incentive Scheme /H1118/H1118/H1118
156 8 June 2022 6,863,938 RMB26.47 2 years 0.09%
2023 Restricted Share
Incentive Scheme /H1118/H1118/H1118
415 20 June
2023
11,267,233 RMB25.89 1 year 0.15%
Note:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised and
no new Shares are issued under the Over-allotment Option and our Share Schemes, and no other changes
are made to the issued share capital of our Company between the Latest Practicable Date and Listing.
C. Stock Ownership Schemes
Our Company adopted the Fourth and the Fifth Core Management Team and Business
Partner Stock Ownership Schemes, the Seventh and the Eighth Core Management Team and
Global Partner Stock Ownership Schemes, the 2023 Stock Ownership Scheme and the 2024
Stock Ownership Scheme (collectively, the “ Stock Ownership Schemes ”) during the period
from 21 May 2021 to 19 April 2024, which were outstanding as of the Latest Practicable Date.
Given the Stock Ownership Schemes do not involve issue of new Shares by our Company, the
terms of the Stock Ownership Schemes are not subject to the provisions of Chapter 17 of the
Listing Rules.
(i) Participants of the schemes
The participants of the Stock Ownership Schemes include core senior management,
senior management and key technical personnel of our Company as set out in the
schemes.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-50 –


--- page 733 ---
(ii) Source of shares and participants’ interest in the scheme
Our Company will repurchase the A Shares from the open market and such A Shares
will be transferred to the Stock Ownership Schemes at the purchase price as set out under
each scheme. The Fourth and the Fifth Core Management Team and Business Partner
Stock Ownership Schemes, the Seventh and the Eighth Core Management Team and
Global Partner Stock Ownership Schemes and the 2024 Stock Ownership Scheme were
funded by our Company. For the 2023 Stock Ownership Scheme, its funding is from the
legal income of the employees, bonuses or other sources permitted under the laws and
regulations. Each participant of the Stock Ownership Schemes holds certain percentage
of the interest in the Stock Ownership Schemes.
(iii) Term of the scheme
Each Stock Ownership Scheme is valid for a period of four or five years
commencing from the date of approval by the Shareholders and the date of publication of
announcement of our Company in respect of transfer of the relevant A Shares from the
repurchase securities account of our Company to the Stock Ownership Schemes (the
“Announcement Date ”).
(iv) Administration of the scheme
The Stock Ownership Schemes are subject to the approval of the Shareholders. Each
scheme is administered by a committee (the “ Scheme Management Committee ”), the
members of which are elected by the participants of the Stock Ownership Scheme. The
Scheme Management Committees oversee the day-to-day management of the Stock
Ownership Schemes and exercise shareholders’ rights on behalf of the participants.
(v) Lock-up and vesting of the shares
The A Shares held by the Stock Ownership Schemes are subject to a lock-up period
of 12 months or 24 months, commencing from the Announcement Date. After the expiry
of the forgoing lock-up period, subject to attainment of performance targets and personal
evaluation, the participants’ entitlement to the corresponding portion of A Shares
(together with the dividend) held by the Stock Ownership Schemes will be vested in three
tranches in the proportion of 40%, 30% and 30%. The vested A Shares will be sold by the
Scheme Management Committee and the proceeds will be distributed to the participants
proportionately.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-51 –


--- page 734 ---
(vi) Total number of shares held by the schemes
As of the Latest Practicable Date, the total number of A Shares held by the Stock
Ownership Schemes was 41,072,259, representing approximately 0.56% of the issued
Shares immediately following the completion of the Listing (assuming no changes to our
issued Shares between the Latest Practicable Date and the Listing Date).
The table below sets forth the details of the A Shares held by the Stock Ownership
Schemes as of the Latest Practicable Date:
Name of Stock
Ownership Scheme
Number of
Grantees
A Shares
held by the
scheme as of
the Latest
Practicable
Date
Approximate
percentage of
issued Shares
as of the
Latest
Practicable
Date
Approximate
percentage of
issued Shares
immediately
after
completion of
the Global
Offering (1)
The Fourth Core
Management Team and
Business Partner Stock
Ownership Scheme /H1118/H1118/H111844 1,985,611 0.03% 0.03%
The Fifth Core
Management Team
and Business Partner
Stock Ownership
Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111855 2,826,759 0.04% 0.04%
The Seventh Core
Management Team
and Global Partner
Stock Ownership
Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 2,436,518 0.03% 0.03%
The Eighth Core
Management Team
and Global Partner
Stock Ownership
Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 3,770,433 0.05% 0.05%
2023 Stock Ownership
Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118147 9,946,276 0.14% 0.13%
2024 Stock Ownership
Scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118604 20,106,662 0.29% 0.27%
Note:
(1) The calculation is based on the assumption that the Offer Size Adjustment Option is not exercised
and no new Shares are issued under the Over-allotment Option and our Share Schemes, and no
other changes are made to the issued share capital of our Company between the Latest Practicable
Date and Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-52 –


--- page 735 ---
5. OTHER INFORMATION
A. Estate Duty
Our Directors have been advised that no material liability for estate duty under PRC laws
is likely to fall upon any member of our Group.
B. Litigation
Save as disclosed in the sections headed “Business” and “Financial Information” in this
document, no member of our Group is engaged in any litigation, arbitration or claim of material
importance, and no litigation, arbitration or claim of material importance is known to our
Directors to be pending or threatened by or against our Company that would have a material
adverse effect on our Company’s results of operations or financial condition.
C. Joint Sponsors
The Joint Sponsors have made an application on behalf of our Company to the Listing
Committee for listing of, and permission to deal in, the H Shares of our Company. All
necessary arrangements have been made enabling the H Shares to be admitted into CCASS.
Each of Joint Sponsors satisfies the independence criteria applicable to sponsors set out
in Rule 3A.07 of the Listing Rules.
Pursuant to the engagement letter entered into between our Company and each of the Joint
Sponsors, we have agreed to pay each of the Joint Sponsors a fee of US$500,000 to act as the
sponsors of our Company in connection with the proposed listing on the Hong Kong Stock
Exchange.
D. Compliance Adviser
Our Company has appointed Huatai Financial Holdings (Hong Kong) Limited as our
compliance adviser in compliance with Rules 3A.19 of the Listing Rules.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-53 –


--- page 736 ---
E. Qualification of Experts
The qualification of the experts, as defined under the Listing Rules, who have given
opinions in this document are as follows:
Name Qualification
China International Capital Corporation
Hong Kong Securities Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Licenced to conduct type 1 (dealing in
securities), type 2 (dealing in futures
contracts), type 4 (advising on
securities), type 5 (advising on futures
contracts) and type 6 (advising on
corporate finance) regulated activities as
defined under the SFO
Merrill Lynch (Asia Pacific) Limited /H1118/H1118/H1118A licenced corporation under the SFO for
type 1 (dealing in securities), type 4
(advising on securities), type 5 (advising
on futures contracts) and type 6
(advising on corporate finance) of the
regulated activities as defined under the
SFO
Jia Y uan Law Offices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Legal adviser to our Company as to PRC
laws
PricewaterhouseCoopers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Certified Public Accountants under
Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong)
and Registered Public Interest Entity
Auditor under Accounting and Financial
Reporting Council Ordinance (Chapter
588 of the Laws of Hong Kong)
Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Independent industry consultant
F. Consents of Experts
Each of the experts as referred to in “— 5. Other Information — E. Qualification of
Experts” in this Appendix has given and has not withdrawn its consent to the issue of this
document with the inclusion of its view, report and/or letter and/or legal opinion (as the case
may be) and references to its name included herein in the form and context in which it
respectively appears.
None of the experts named above has any shareholding interest in any member of our
Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons
to subscribe for securities in any member of our Group.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-54 –


--- page 737 ---
G. Binding Effect
This document shall have the effect, if an application is made in pursuance hereof, of
rendering all persons concerned bound by all the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance so far as applicable.
H. No Material Adverse Change
Our Directors confirm that, there has been no material adverse change in our business,
financial condition and results of operations since 30 April 2024, being the latest balance sheet
date of our consolidated financial statements as set out in the Accountant’s Report in Appendix
I to this document, and up to the date of this document.
I. Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer are affected on the H Share register of members of our Company,
including in circumstances where such transactions are effected on the Stock Exchange. The
current rate of Hong Kong stamp duty for such sale, purchase and transfer on each of the
purchaser and the seller is 0.1% of the consideration or, if higher, the fair value of the H Shares
being sold or transferred.
J. Restriction on Share Repurchases
For details of the restrictions on share repurchases by our Company, please refer to
“Summary of the Articles of Association — Increase, Decrease, Repurchase and Transfer of
Shares — Repurchase of Shares” in Appendix V to this document.
K. Preliminary Expenses
We have not incurred any material preliminary expenses.
L. Promoters
Within two years immediately preceding the date of this document, no cash, securities or
other benefit has been paid, allotted or given nor is any proposed to be paid, allotted or given
to any promoters in connection with the Global Offering and the related transactions described
in this document.
M. Related Party Transactions
Our Group entered into the related party transactions within the two years immediately
preceding the date of this document as mentioned in “Appendix I — Accountant’s Report —
45. Related Party Transactions.”
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-55 –


--- page 738 ---
N. Miscellaneous
Save as disclosed in this section and in the section headed “Financial Information” in this
document:
(i) within the two years immediately preceding the date of this document:
(a) no share or loan capital of our Company or any of our subsidiaries had been
issued or agreed to be issued or proposed to be fully or partly paid either for
cash or a consideration other than cash;
(b) no share or loan capital of our Company or any of our subsidiaries had been
under option or is agreed conditionally or unconditionally to be put under
option;
(c) no commissions, discounts, brokerages or other special terms had been granted
or agreed to be granted in connection with the issue or sale of any share or loan
capital of our Company or any of our subsidiaries; and
(d) no commission had been paid or payable for subscription, agreeing to
subscribe, procuring subscription or agreeing to procure subscription of any
share in our Company or any of our subsidiaries;
(ii) there are no founder, management or deferred shares, convertible debt securities nor
any debentures in our Company or any of our subsidiaries;
(iii) there has not been any interruption in the business of our Group which may have or
has had a significant effect on the financial position of our Group in the 12 months
preceding the date of this document;
(iv) our Company has no outstanding convertible debt securities or debentures;
(v) there is no arrangement under which future dividends are waived or agreed to be
waived;
(vi) save for the A Shares of our Company that are listed on the Shenzhen Stock
Exchange, and save for the H Shares to be issued in connection with the Global
Offering, none of the equity and debt securities of our Company, if any, is listed or
dealt with in any other stock exchange nor is any listing or permission to deal being
or proposed to be sought; and
(vii) all necessary arrangements have been made to enable the H shares to be admitted
into CCASS for clearing and settlement.
O. Bilingual Document
The English language and Chinese language versions of this document are being
published separately in reliance upon the exemption provided by section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-56 –


--- page 739 ---
A. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG
KONG
The documents attached to the copy of this document delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) a copy of each of the material contracts referred to in “Statutory and General
Information — 2. Further Information about our Business — A. Summary of Our
Material Contracts” in Appendix VI to this document; and
(b) the written consents referred to in the section headed “Statutory and General
Information — 5. Other Information — F. Consents of Experts” in Appendix VI to
this document.
B. DOCUMENTS A V AILABLE ON DISPLAY
Electronic copies of the following documents will be available on display on the website
of our Company at www.midea.com.cn and on the website of the Hong Kong Stock Exchange
at www.hkexnews.hk during a period of 14 days from the date of this document:
(a) the Articles of Association;
(b) the accountant’s report from PricewaterhouseCoopers, the text of which is set out in
Appendix I to this document;
(c) the audited consolidated financial statements of our Group for the years ended
31 December 2021, 2022 and 2023 and the four months ended 30 April 2024;
(d) the report on review of the unaudited interim condensed consolidated financial
information of our Group for the six months ended 30 June 2024 from
PricewaterhouseCoopers, the text of which is set out in the section headed
“Unaudited Interim Condensed Consolidated Financial Information” in Appendix IA
to this document;
(e) the report from PricewaterhouseCoopers on the unaudited pro forma financial
information of our Group, the text of which is set out in the section headed
“Unaudited Pro Forma Financial Information” in Appendix II to this document;
(f) the industry report issued by Frost & Sullivan referred to in “Industry Overview” in
this document;
(g) the PRC legal opinions issued by Jia Y uan Law Offices in respect of certain general
corporate matters and property interests in Mainland China of our Group;
(h) the material contracts referred to in “Statutory and General Information — 2.
Further Information about our Business — A. Summary of Our Material Contracts”
in Appendix VI to this document;
(i) the written consents referred to in “Statutory and General Information — 5. Other
Information — F. Consents of Experts” in Appendix VI to this document;
(j) the contracts referred to in the section headed “3. Further Information About Our
Directors and Supervisors – A. Particulars of Directors’ and Supervisors’ Service
Contracts and Appointment Letters” in Appendix VI to this document;
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-1 –


--- page 740 ---
(k) the PRC Company Law, Securities Law, and the Trial Measures for the
Administration Related to the Overseas Securities Offering and Listing by Domestic
Companies, together with unofficial English translations thereof; and
(l) the terms of the Stock Option Incentive Plans.
DOCUMENT A V AILABLE FOR INSPECTION
A copy of a full list of all the grantees under the Stock Option Incentive Plans will be
made available for public inspection at our Company’s Hong Kong legal adviser’s office in
Hong Kong at 42/F, Edinburgh Tower, The Landmark, 15 Queen’s Road Central, Hong Kong
during normal business hours up to and including the date which is 14 days from the date of
this document.
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-2 –


--- page 741 ---
