Midea Group Co., Ltd. Interim Report for the First Quarter 2019 April 2019 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Section I Important Reminders 1. The Board of Directors, the Supervisory Committee as well as all the directors, supervisors and senior management staff of Midea Group Co., Ltd. (hereinafter referred to as the “Company”) have warranted that this Report contains no false record, misleading statement or material omission. And they shall be jointly and severally liable for the factuality, accuracy and completeness of the information given in this Report. 2. All the directors have attended the Q1 report review board meeting. 3. The financial statements contained in this Report have not been audited by a certified public auditors (CPAs) firm. 4. Mr. Fang Hongbo, Chairman of the Board and President of the Company, and Ms. Zhong Zheng, Director of Finance of the Company, have represented and warranted that the financial statements in this Report are factual, accurate and complete. 5. This Report has been prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 1 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Section II Company Profile 1. Major Accounting Data and Financial Indicators Does the Company adjust retrospectively or restate accounting data of previous years? □ Yes √ No Jan.-Mar. 2019 Jan.-Mar. 2018 YoY Change (%) Operating revenues (RMB'000) 75,205,780 69,737,528 7.84% Net profits attributable to shareholders 6,129,026 5,256,231 16.60% of the Company (RMB'000) Net profits attributable to shareholders of the Company before non-recurring 6,084,881 5,077,715 19.84% profits and losses (RMB'000) Net cash flows from operating activities 11,842,782 4,429,092 167.39% (RMB'000) Basic earnings per share (RMB/share) 0.94 0.80 17.50% Diluted earnings per share 0.93 0.79 17.72% (RMB/share) Weighted average ROE (%) 7.08% 6.87% 0.21% 31 Mar. 2019 31 Dec. 2018 Change (%) Total assets (RMB'000) 278,910,215 263,701,148 5.77% Net assets attributable to shareholders 89,610,201 83,072,116 7.87% of the Company (RMB'000) Total share capital of the Company on the last trading session before disclosure: Total share capital of the Company on the last 6,585,838,349 trading session before disclosure (share) Fully diluted earnings per share based on the 0.93 latest share capital above (RMB/share) Note: On the last trading session before the disclosure of this report, the Company’s total share capital was 6,603,422,687 shares. Subtracting the repurchased 17,584,338 shares in 2019, the number was 6,585,838,349 shares. Non-recurring profits and losses √ Applicable □ N/A Unit: RMB’000 Item Jan.-Mar. 2019 Note 2 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Profit or loss from disposal of non-current assets -6,368 Except for effectively hedging business related to normal business operations of the Company, profit or loss arising from the change in the fair value of held-for-trading financial -62,512 assets and liabilities, as well as investment profit or loss produced from the disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets Other 140,386 Less: Corporate income tax 22,714 Minority interests (after tax) 4,647 Total 44,145 -- Explain the reasons if the Company classifies an item as a non-recurring profit/loss according to the definition in the, or classifies any non-recurring profit/loss item mentioned in the said explanatory announcement as a recurring profit/loss item □ Applicable √ N/A No such cases for the Reporting Period. 2. Total number of shareholders and shareholdings of the top ten shareholders at the period-end 2.1 Total number of common shareholders, preference shareholders with resumed voting rights and shareholdings of the top ten common shareholders at the period-end Unit: share Total number of preference Total number of common 162,344 shareholders with resumed voting 0 shareholders at the period-end rights at the period-end (if any) Top ten shareholders Pledged or frozen Sharehol shares Number of Nature of ding Number of Status Name of shareholder restricted shareholder percenta shares held of Number of shares held ge (%) share shares s Midea Holding Co., Ltd. Domestic 33.48 2,212,046,613 Pledg 551,000,000 3 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. non-state-owned ed corporation Hong Kong Exchanges and Clearing Foreign 16.18 1,069,044,139 Limited corporation State-owned China Securities Finance Co., Ltd. 3.00 198,145,134 corporation Domestic Fang Hongbo 2.07 136,990,492 102,742,869 individual Canada Pension Plan Investment Board Foreign 1.82 120,379,067 - own funds (stock exchange) corporation Domestic Huang Jian 1.33 88,023,300 individual State-owned Central Huijin Asset Management Ltd. 1.19 78,474,900 corporation Hillhouse Capital Management Limited Foreign 0.94 61,831,900 - HCM China Fund corporation Foreign GIC Private Limited 0.84 55,535,104 corporation Domestic Xiaomi Technology Co., Ltd. non-state-owned 0.81 53,500,000 corporation Top ten non-restricted common shareholders Number of non-restricted Type of shares Name of shareholder common shares held at the Type Number period-end RMB common Midea Holding Co., Ltd. 2,212,046,613 2,212,046,613 stock RMB common Hong Kong Exchanges and Clearing Limited 1,069,044,139 1,069,044,139 stock RMB common China Securities Finance Co., Ltd. 198,145,134 198,145,134 stock Canada Pension Plan Investment Board- own funds RMB common 120,379,067 120,379,067 (stock exchange) stock RMB common Huang Jian 88,023,300 88,023,300 stock RMB common Central Huijin Asset Management Ltd. 78,474,900 78,474,900 stock Hillhouse Capital Management Limited- HCM China RMB common 61,831,900 61,831,900 Fund stock 4 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. RMB common GIC Private Limited 55,535,104 55,535,104 stock RMB common Xiaomi Technology Co., Ltd. 53,500,000 53,500,000 stock RMB common Yuan Liqun 51,994,300 51,994,300 stock Explanation of related relationship or/and acting-in-concert parties among the above-mentioned N/A shareholders Top ten non-restricted common shareholders taking N/A part in securities margin trading (if any) Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company conduct any promissory repurchase during the Reporting Period □ Yes √ No No such cases in the Reporting Period. 2.2 Total number of preference shareholders and shareholdings of the top ten preference shareholders at the period-end □ Applicable √ N/A 5 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Section III Significant Events 1. Major changes of main items in financial statements and financial indicators within the Report Period, as well as the reasons for the changes √ Applicable □ N/A Unit: RMB’000 31 March 31 December Financial statement Change 2019/January- 2018/January- Reasons for the changes items (consolidated) (%) March 2019 March 2018 Mainly due to the changes in the fair Derivative financial assets 87,975 220,197 -60.05% value of derivative financial instruments Mainly due to the reclassification to Long-term receivables 16,280 34,815 -53.24% current assets as a result of business changes Mainly due to the increased Short-term borrowings 1,270,263 870,390 45.94% borrowings Borrowings from the Central Mainly due to the repayment of 50,996 99,754 -48.88% Bank borrowings to the Central Bank Customer deposits and Mainly due to the changes in the deposits from banks and 91,638 44,386 106.46% operation of Midea Group Finance other financial institutions Mainly due to the changes in the fair Derivative financial liabilities 275,822 756,299 -63.53% value of derivative financial instruments Mainly due to the payment of Employee benefits payable 3,979,688 5,788,004 -31.24% salaries to employees Mainly due to the retirement of Treasury stock 1,473,697 4,918,427 -70.04% treasury stock Mainly due to the changes in the Interest income 294,332 549,959 -46.48% operation of Midea Group Finance Mainly due to the changes in the Interest expenses 75,120 150,518 -50.09% operation of Midea Group Finance Mainly due to the increased interest Finance expenses -481,058 95,978 -601.22% income on deposits Mainly due to the decreased Other income 66,516 224,233 -70.34% governmental subsidies 6 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Mainly due to the decreased gains Investment income -146,977 317,938 -146.23% on delivered derivative financial instruments Mainly due to the changes in the fair Profit/loss on changes in fair 230,915 -118,467 294.92% value of derivative financial value instruments Profit/loss on disposal of Mainly due to the decreased losses -6,369 -13,053 51.21% assets on disposal of non-current assets Mainly due to the increased cash Net cash flows from 11,842,782 4,429,092 167.39% received from sales of goods or operating activities rendering of services Net cash flows from Mainly due to the increased cash -16,811,399 -7,250,092 -131.88% investing activities paid to acquire investments Net cash flows from Mainly due to the increased cash 4,139,282 -2,254,205 283.62% financing activities received from borrowings 2. Progress, influence and solutions of significant events √ Applicable □ N/A On 23 October 2018, the Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan Company Limited in a Share Swap via A-share Offering and other relevant proposals were considered and approved at the 2nd Meeting of the 3rd Board. On 21 November 2018, the Proposal on the Review of the Report of Midea Group Co., Ltd. on Merging with Wuxi Little Swan Company Limited in a Share Swap via A-share Offering and the Related Transaction (Draft) and Its Summary, together with other relevant proposals, were considered and approved at the 4th Meeting of the 3rd Board. On 21 December 2018, the Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan Company Limited in a Share Swap via A-share Offering, together with other relevant proposals, were considered and approved at the 3rd Special Meeting of Shareholders of 2018. On 12 March 2019, the Company received the CSRC Reply on the Approval of the Merger of Midea Group Co., Ltd. with Wuxi Little Swan Company Limited (ZJXK [2019] No. 352). On 24 April 2019, the Company received the Reply of the Foshan Central Sub-Branch of the State Administration of Foreign Exchange on the Foreign Exchange Affairs in Midea Group Co., Ltd.’s Merger with Wuxi Little Swan Company Limited in a Share Swap via A-share Offering. On 26 April 2019, the Company disclosed the Indicative Announcement on the Distribution and Implementation of Appraisal Right for the Merger with Wuxi Little Swan Company 7 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Limited in a Share Swap via A-share Offering, setting the record date for the appraisal right on 7 May 2019. And trading in the Company’s stock will be suspended from 8 May 2019 for the distribution and declaration of appraisal right, etc. Index to the related Summary of the significant event Disclosure date announcement The Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan Company Limited in a Announcement No. 2018-087 Share Swap via A-share Offering and other relevant 24 October 2018 on www.cninfo.com.cn proposals were considered and approved at the 2nd Meeting of the 3rd Board. The Proposal on the Review of the Report of Midea Group Co., Ltd. on Merging with Wuxi Little Swan Company Limited in a Share Swap via A-share Announcement No. 2018-095 Offering and the Related Transaction (Draft) and Its 22 November 2018 on www.cninfo.com.cn Summary, together with other relevant proposals, were considered and approved at the 4th Meeting of the 3rd Board. The Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan Company Limited in a Announcement No. 2018-105 Share Swap via A-share Offering, together with other 22 December 2018 on www.cninfo.com.cn relevant proposals, were considered and approved at the 3rd Special Meeting of Shareholders of 2018. The Company received the CSRC Reply on the Approval of the Merger of Midea Group Co., Ltd. with Announcement No. 2019-032 13 March 2019 Wuxi Little Swan Company Limited (ZJXK [2019] No. on www.cninfo.com.cn 352). The Company received the Reply of the Foshan Central Sub-Branch of the State Administration of Foreign Exchange on the Foreign Exchange Affairs in Announcement No. 2019-049 24 April 2019 Midea Group Co., Ltd.’s Merger with Wuxi Little Swan on www.cninfo.com.cn Company Limited in a Share Swap via A-share Offering (FHF [2019] No. 1). The Company disclosed the Indicative Announcement on the Distribution and Implementation of Appraisal Right for the Merger with Wuxi Little Swan Company Limited in a Share Swap via A-share Offering, setting Announcement No. 2019-052 26 April 2019 the record date for the appraisal right on 7 May 2019. on www.cninfo.com.cn And trading in the Company’s stock will be suspended from 8 May 2019 for the distribution and declaration of appraisal right, etc. Progress of any share repurchase 8 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. √Applicable □N/A The Proposal on the Plan for the Repurchase of Some Public Shares was approved at the 7th Meeting of the 3rd Board of Directors on 22 February 2019. As such, the Company was agreed to repurchase, with its own funds, no less than 60,000,000 shares and no more than 120,000,000 shares through bidding at the stock exchange at a price not exceeding RMB55/share. The Report on the Repurchase of Some Public Shares was disclosed on 28 February 2019. As per the Measures on the Administration of Listed Companies’ Buying back Shares Held by the Public (Trial), the Supplementary Provisions on the Share Repurchase by Listed Companies by Means of Centralized Bidding, the Specific Implementation Rules of the Shenzhen Stock Exchange for the Share Repurchase by Listed Companies, and other applicable rules, the Company shall disclose the share repurchase progress in its periodic reports. Therefore, the Company hereby discloses its share repurchase progress up to the end of April 2019 as follows: Up to 29 April 2019, the Company has repurchased a total of 17,584,338 shares (0.2663% of the Company’s total share capital) in its securities account for repurchase through bidding at the stock exchange, with a total payment of RMB855,786,862.34 (exclusive of transaction charges). The highest repurchase price was RMB54.90/share and the lowest was RMB45.62/share. The repurchase is in compliance with the applicable laws and regulations, as well as the Company’s repurchase plan. Progress of any repurchased share reduction through bidding at the stock exchange □ Applicable √ N/A 3. Overdue commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other commitment makers in the Report Period or ongoing at the period-end □ Applicable √ N/A No such cases in the Reporting Period. 4. Operating result forecast for January-June 2019 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-start until the end of the next Report Period according to predictions as well as any explanations for these reasons: 9 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. □ Applicable √ N/A 5. Securities investment √Applicable □N/A Unit: RMB’000 Abb Profit or Cumula Cod revi Meas loss from tive fair Profit Type Purcha Fund e of atio Initial ureme Opening change in value Sold in or Closing of sed in Account ing sec n of investment nt carrying fair value change the loss in carrying secur the ing title sour uriti sec cost metho amount during charged period the amount ities period ce es uriti d the to period es period equity Dom Financi estica Fair al lly/Ov XIA Own 181 value assets ersea OMI 1,272,584 1,122,609 -130,555 -24,030 - - - 968,024 Fund 0 metho availabl s -W s d e for listed sale stock Total 1,272,584 -- 1,122,609 -130,555 -24,030 - - - 968,024 - -- 6. Investments in financial derivatives √ Applicable □ N/A Unit: RMB'000 Closing Rel investme Amou atio Purch nt Sold nt nshi Rel ased amount Type Initial Opening in provid Closing Actual Opera p ated in as a of investme Starting Ending investme Repor ed for investme gain/loss in ting with tran Repor percenta deriva nt date date nt ting impair nt Reporting party the sact ting ge of the tive amount amount Perio ment amount Period Co ion Perio Company d (if mpa d ’s closing any) ny net assets Futur Futur 31 es es 1 January Decem No No 276 276 - - - 659 0.001% 2,893 comp contra 2019 ber any cts 2019 10 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Forwa 31 rd 1 January Decem Bank No No forex -644,052 - - - -48,933 -0.055% 246,936 2019 ber -644,052 contra 2019 cts Total -643,776 -- -- -643,776 - - - -48,274 -0.054% 249,829 Source of derivatives All from the Company’s own funds investment funds Litigation involved (if N/A applicable) Disclosure date of the announcement about the board’s consent for 18 April 2019 the derivative investment (if any) Disclosure date of the announcement about the general meeting’s - consent for the derivative investment (if any) For the sake of eliminating the cost risk of the Company's bulk purchases of raw materials as a result of significant fluctuations in raw material prices, the Company not only carried out futures business for some of the materials, but also made use of bank financial instruments and promoted forex funds business, with the purpose of avoiding the risks of exchange and interest rate fluctuation, realizing the preservation and appreciation of forex assets, reducing forex liabilities, as well as achieving locked-in costs. The Company has performed sufficient Risk analysis of evaluation and control against derivatives investment and position risks, details of which are positions held in described as follows: derivatives during the 1. Legal risk: The Company's futures business and forex funds businesses shall be conducted Reporting Period and in compliance with laws and regulations, with clearly covenanted responsibility and obligation explanation of control relationship between the Company and the agencies. measures (Including but Control measures: The Company has designated relevant responsible departments to enhance not limited to market learning of laws and regulations and market rules, conducted strict examination and verification risk, liquidity risk, credit of contracts, defined responsibility and obligation well, and strengthened compliance check, so risk, operational risk, as to ensure that the Company's derivatives investment and position operations meet the legal risk, etc.) requirements of the laws and regulations and internal management system of the Company. 2. Operational risk: Imperfect internal process, staff, systems and external issues may cause the Company to suffer from loss during the course of its futures business and forex funds business. Control measures: The Company has not only developed relevant management systems that clearly defined the assignment of responsibility and approval process for the futures business and forex funds business, but also established a comparatively well-developed monitoring mechanism, aiming to effectively reduce operational risk by strengthening risk control over the 11 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. business, decision-making and trading processes. 3. Market risk: Uncertainties caused by changes in the prices of bulk commodity and exchange rate fluctuations in foreign exchange market could lead to greater market risk in the futures business and forex funds business. Meanwhile, inability to timely raise sufficient funds to establish and maintain hedging positions in futures operations, or the forex funds required for performance in forex funds operations being unable to be credited into account could also result in loss and default risks. Control measures: The futures business and forex funds business of the Company shall always be conducted by adhering to prudent operation principles. For futures business, the futures transaction volume and application have been determined strictly according to the requirements of production & operations, and the stop-loss mechanism has been implemented. Besides, to determine the prepared margin amount which may be required to be supplemented, the futures risk measuring system has been established to measure and calculate the margin amount occupied, floating gains and losses, margin amount available and margin amount required for intended positions. As for forex funds business, a hierarchical management mechanism has been implemented, whereby the operating unit which has submitted application for funds business should conduct risk analysis on the conditions and environment affecting operating profit and loss, evaluate the possible greatest revenue and loss, and report the greatest acceptable margin ratio or total margin amount, so that the Company can update operating status of the funds business on a timely basis to ensure proper funds arrangement before the expiry dates. Changes in market prices or fair value of derivative products during the Reporting 1. Profit/loss from futures contracts during the Reporting Period was RMB2,893,000. Period, specific 2. Profit/loss from forward forex contracts during the Reporting Period was RMB246,936,000. methods used and 3. Public quotations in futures market or forward forex quotations announced by the Bank of relevant assumption China are used in the analysis of derivatives fair value. and parameter settings shall be disclosed for analysis of fair value of derivatives Explanation of significant changes in accounting policies and specific financial accounting principles in respect of the No change Company's derivatives for the Reporting Period as compared to the previous Reporting Period 12 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. The Company's independent directors are of the view that the futures hedging business is an Special opinions effective instrument for the Company to eliminate price volatility and implement risk prevention expressed by measures through enhanced internal control, thereby improving the operation and management independent directors of the Company; the Company's foreign exchange risk management capability can be further concerning the improved through the forex funds business, so as to maintain and increase the value of foreign Company's derivatives exchange assets and the abovementioned investment in derivatives can help the Company to investment and risk fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry control out derivatives investment business, and the risks are controllable. 7. Visits received during the Reporting Period √ Applicable □ N/A Date Type of visit Type of visitor Discussions Please refer to Investor Relations Activities 14-15 January 2019 Field research Institution from 14 January 2019 to 15 January 2019 on the website of www.cninfo.com.cn Please refer to Investor Relations Activities 17 January 2019 Field research Institution on 17 January 2019 on the website of www.cninfo.com.cn Please refer to Investor Relations Activities 21-22 February 2019 Field research Institution from 21 February 2019 to 22 February 2019 on the website of www.cninfo.com.cn 8. Irregular provision of guarantees □ Applicable √ N/A No such cases in the Reporting Period. 9. Occupation of the Company’s funds by the controlling shareholder or its related parties for non-operating purposes □ Applicable √ N/A No such cases in the Reporting Period. 13 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Section IV Financial Statements 1. Financial statements Balance Sheet Prepared by Midea Group Co., Ltd. 31 March 2019 Unit: RMB’000 31 March 2019 31 December 2018 31 March 2019 31 December 2018 ASSETS Consolidated Consolidated Company Company Current assets: Cash at bank and on hand 29,004,072 27,888,280 15,384,459 15,361,626 Trading financial assets 5,170,374 4,189,001 Derivative financial assets 87,975 220,197 - - Notes and accounts 38,877,726 31,946,468 - - receivable Advances to suppliers 2,456,293 2,215,888 33,871 55,069 Loans and advances 12,786,217 11,328,392 - - Other receivables 3,063,118 2,971,368 11,845,517 11,593,020 Inventories 24,090,062 29,645,018 - - Other current assets 85,126,533 76,473,827 68,060,974 55,052,256 Total current assets 200,662,370 182,689,438 99,513,822 82,061,971 Non-current assets: Available-for-sale financial 1,906,878 56,579 assets Long-term receivables 16,280 34,815 - - Long-term equity investments 2,723,743 2,713,316 28,271,761 28,236,295 Other non-current financial 861,403 56,579 assets Investment properties 387,008 391,765 551,306 560,954 Fixed assets 21,974,050 22,437,212 1,018,460 1,056,790 Construction in progress 2,033,026 2,077,621 62,237 51,872 Intangible assets 15,657,203 16,186,675 712,715 712,454 Goodwill 28,178,411 29,100,390 - - Long-term prepaid expenses 1,167,629 1,191,373 166,648 174,684 Deferred tax assets 4,742,976 4,421,313 162,094 202,703 Other non-current assets 506,116 550,352 1,355 4,576 Total non-current assets 78,247,845 81,011,710 31,003,155 31,056,907 TOTAL ASSETS 278,910,215 263,701,148 130,516,977 113,118,878 Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 14 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Balance Sheet (Continued) Prepared by Midea Group Co., Ltd. 31 March 2019 Unit: RMB’000 LIABILITIES AND 31 March 2019 31 December 2018 31 March 2019 31 December 2018 SHAREHOLDERS' EQUITY Consolidated Consolidated Company Company Current liabilities: Short-term borrowings 1,270,263 870,390 1,309,000 575,000 Borrowings from the Central 50,996 99,754 - - Bank Customer deposits and deposits from banks and other 91,638 44,386 - - financial institutions Derivative financial liabilities 275,822 756,299 - - Notes and accounts payable 65,882,696 60,226,741 - - Advances from customers 13,144,610 16,781,666 - - Employee benefits payable 3,979,688 5,788,004 559,160 573,632 Taxes payable 3,694,302 3,875,298 188,579 280,499 Other payables 2,933,143 3,346,129 86,359,825 74,714,012 Current portion of non-current 6,808,447 7,122,712 - - liabilities Other current liabilities 37,552,173 31,319,709 33,248 44,414 Total current liabilities 135,683,778 130,231,088 88,449,812 76,187,557 Non-current liabilities: Long-term borrowings 34,913,366 32,091,439 4,000,000 - Long-term payables 103,240 88,890 - - Provisions 276,291 268,887 - - Deferred income 682,961 647,583 - - Long-term employee benefits 2,351,078 2,480,318 - - payable Deferred tax liabilities 4,420,366 4,422,074 - - Other non-current liabilities 1,011,153 1,016,352 - - Total non-current liabilities 43,758,455 41,015,543 4,000,000 - Total liabilities 179,442,233 171,246,631 92,449,812 76,187,557 Shareholders' equity: Share capital 6,603,423 6,663,031 6,603,423 6,663,031 Capital surplus 15,432,472 18,451,307 7,606,037 10,615,389 Less: Treasury stock (1,473,697) (4,918,427) (1,473,697) (4,918,427) Other comprehensive income (1,291,512) (1,332,153) 10,010 6,020 General risk reserve 366,947 366,947 - - Surplus reserve 5,079,096 5,079,096 5,079,096 5,079,096 Undistributed profits 64,893,472 58,762,315 20,242,296 19,486,212 15 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Total equity attributable to 89,610,201 83,072,116 38,067,165 36,931,321 shareholders of the Company Minority interests 9,857,781 9,382,401 - - Total shareholders' equity 99,467,982 92,454,517 38,067,165 36,931,321 TOTAL LIABILITIES AND 278,910,215 263,701,148 130,516,977 113,118,878 SHAREHOLDERS' EQUITY Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong Income Statement Prepared by Midea Group Co., Ltd. January-March 2019 Unit: RMB’000 January-March January-March January-March January-March Item 2019 2018 2019 2018 Consolidated Consolidated Company Company 1. Total revenue 75,500,426 70,287,509 467,215 414,674 Including: Operating revenue 75,205,780 69,737,528 467,215 414,674 Interest income 294,332 549,959 - - Fee and commission income 314 22 - - 2. Total Cost (67,960,739) (63,943,697) 305,333 (55,101) Including: Cost of sales (53,877,858) (51,869,174) (13,345) (14,077) Interest expenses (75,120) (150,518) - - Fee and commission (2,456) (808) - - expenses Taxes and surcharges (489,405) (403,126) (7,116) (13,485) Selling and distribution (9,513,634) (7,468,456) - - expenses General and administrative (1,977,121) (1,818,424) (109,198) (103,980) expenses Research and development (2,205,598) (1,938,818) - - expenses Finance expenses 481,058 (95,978) 435,139 76,092 Including: Interest expenses (224,786) (190,329) (297,552) (125,483) Interest income 953,378 299,045 736,263 201,028 Asset impairment losses (12,317) (198,395) - 349 Credit impairment losses (288,288) (147) Add: Other income 66,516 224,233 - - Investment income (146,977) 317,938 71,992 117,752 16 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Including: Investment income 105,865 75,515 66,507 58,704 from associates and joint ventures Profit/(loss) on changes in fair 230,915 (118,467) 33,665 - value Profit /(loss) on disposal of (6,369) (13,053) - 263 assets 3. Operating profit 7,683,772 6,754,463 878,205 477,588 Add: Non-operating income 57,022 60,554 4,372 1,769 Less: Non-operating expenses (21,839) (25,846) (85) (4,003) 4. Total profit 7,718,955 6,789,171 882,492 475,354 Less: Income tax expenses (1,177,710) (1,143,376) (128,539) 24,669 5. Net profit 6,541,245 5,645,795 753,953 500,023 (1) Classified by continuity of operations Net profit from continuing 6,541,245 5,645,795 753,953 500,023 operations Net profit from discontinued - - - - operations (2) Classified by ownership of the equity Attributable to equity owners of the 6,129,026 5,256,231 753,953 500,023 Company Minority interests 412,219 389,564 - - 6. Other comprehensive income, net 2,436 137,056 3,990 71,838 of tax Other comprehensive income attributable to shareholders of the 40,641 213,386 3,990 71,838 Company, net of tax (1) Other comprehensive income items which will not be reclassified (38,094) 8,985 - - subsequently to profit or loss 1) Changes arising from (38,094) 8,985 - - remeasurement of defined benefit plan (2) Other comprehensive income items which will be reclassified subsequently to 78,735 204,401 3,990 71,838 profit or loss 1) Other comprehensive income that will be transferred subsequently to profit (1,994) 22,831 3,990 17,101 or loss under the equity method 2) Changes in fair value of - 45,797 - 54,737 available-for-sale financial assets 3) Reserve for cash flow hedges 90,207 33,437 - - 4) Translation of foreign currency (9,478) 102,336 - - 17 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. financial statements Other comprehensive income attributable to minority shareholders, net (38,205) (76,330) - - of tax 7. Total comprehensive income 6,543,681 5,782,851 757,943 571,861 Attributable to shareholders of the 6,169,667 5,469,617 757,943 571,861 Company Minority interests 374,014 313,234 - - 8. Earnings per share: Basic earnings per share (RMB Yuan) 0.94 0.80 N/A N/A Diluted earnings per share (RMB 0.93 0.79 N/A N/A Yuan) Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong Cash Flow Statement Prepared by Midea Group Co., Ltd. January-March 2019 Unit: RMB’000 January-March January-March January-March January-March Item 2019 2018 2019 2018 Consolidated Consolidated Company Company 1. Cash flows from operating activities: Cash received from sales of goods or 61,230,159 55,069,088 - - rendering of services Net increase in customer deposits and deposits from banks and other financial 47,252 - - - institutions Net decrease in loans and advances - 6,203 - - Net decrease in deposits with the Central 228,122 - - - Bank Cash received for interest, fee and 433,884 465,657 - - commission Refund of taxes and surcharges 2,255,964 1,855,685 - - Cash received relating to other operating 675,619 1,555,171 12,053,410 6,054,301 activities Sub-total of cash inflows 64,871,000 58,951,804 12,053,410 6,054,301 Cash paid for goods and services (32,531,577) (35,207,473) - - Net increase in loans and advances (1,486,229) - - - Net decrease in customer deposits and - (27,278) - - 18 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. deposits from banks and other financial institutions Net increase in deposits with the Central - (1,422,269) - - Bank Net decrease in borrowings from the (48,758) - - - Central Bank Cash paid for interest, fee and (79,055) (151,332) - - commission Cash paid to and on behalf of employees (8,147,054) (7,569,431) (11,503) (43,024) Payments of taxes and surcharges (3,835,224) (2,826,238) (49,908) (13,485) Cash paid relating to other operating (6,900,321) (7,318,691) (322,665) (43,781) activities Sub-total of cash outflows (53,028,218) (54,522,712) (384,076) (100,290) Net cash flows from operating activities 11,842,782 4,429,092 11,669,334 5,954,011 2. Cash flows from investing activities: Cash received from disposal of 10,793,208 11,755,659 3,406,557 6,507,371 investments Cash received from returns on 233,728 470,848 198,723 834,942 investments Net cash received from disposal of fixed assets, intangible assets and other 64,509 23,595 - - long-term assets Net cash received from disposal of - - - - subsidiaries and other business units Cash received relating to other investing - - - - activities Sub-total of cash inflows 11,091,445 12,250,102 3,605,280 7,342,313 Cash paid to acquire fixed assets, intangible assets and other long-term (1,143,943) (927,703) (40,220) (112,978) assets Cash paid to acquire investments (26,581,092) (18,424,204) (25,408,375) (2,302,699) Net cash paid to acquire subsidiaries (177,809) (148,287) - - and other business units Cash paid relating to other investing - - - - activities Sub-total of cash outflows (27,902,844) (19,500,194) (25,448,595) (2,415,677) Net cash flows from investing activities (16,811,399) (7,250,092) (21,843,315) 4,926,636 3. Cash flows from financing activities: Cash received from capital contributions 777,348 1,013,304 698,761 491,953 Including: Cash received from capital contributions by minority shareholders of 78,587 521,351 - - subsidiaries Cash received from borrowings 5,122,321 978,979 5,727,000 - 19 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Cash received from issuing short-term - - - - financing bonds Cash received relating to other financing - - - - activities Sub-total of cash inflows 5,899,669 1,992,283 6,425,761 491,953 Cash repayments of borrowings (663,249) (2,138,653) (993,000) - Cash payments for short-term financing - - - - bonds Cash payments for interest expenses (262,635) (325,629) (195,585) (74,404) and distribution of dividends or profits Including: Cash payments for dividends or profit to minority shareholders of - (80,657) - - subsidiaries Cash payments relating to other (834,503) (1,782,206) (691,717) - financing activities Sub-total of cash outflows (1,760,387) (4,246,488) (1,880,302) (74,404) Net cash flows from financing activities 4,139,282 (2,254,205) 4,545,459 417,549 4. Effect of foreign exchange rate (160,965) (357,924) - - changes on cash and cash equivalents 5. Net increase in cash and cash (990,300) (5,433,129) (5,628,522) 11,298,196 equivalents Add: Cash and cash equivalents at the 17,952,282 21,831,653 10,181,934 25,978,543 beginning of the period 6. Cash and cash equivalents at the end 16,961,982 16,398,524 4,553,412 37,276,739 of the period Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 2. Adjustments to the Financial Statements 2.1 Adjustments to the financial statements at the beginning of the first execution year of any new standards governing financial instruments, revenue or leases √ Applicable □ N/A 20 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Balance Sheet Prepared by Midea Group Co., Ltd. 31 March 2019 Unit: RMB’000 Consolidated Company ASSETS 31 December 1 January 31 December 1 January Adjustment Adjustment 2018 2019 2018 2019 Current assets: Cash at bank and 27,888,280 27,888,280 - 15,361,626 15,361,626 - on hand Trading financial N/A 2,654,045 2,654,045 N/A 1,521,007 1,521,007 assets Derivative financial 220,197 220,197 - - - - assets Notes and 31,946,468 31,946,468 - - - - accounts receivable Advances to 2,215,888 2,215,888 - 55,069 55,069 - suppliers Loans and 11,328,392 11,328,392 - - - - advances Other receivables 2,971,368 2,960,939 (10,429) 11,593,020 11,593,020 - Inventories 29,645,018 29,645,018 - - - - Other current 76,473,827 74,952,820 (1,521,007) 55,052,256 53,531,249 (1,521,007) assets Total current assets 182,689,438 183,812,047 1,122,609 82,061,971 82,061,971 - Non-current assets: Available-for-sale 1,906,878 N/A (1,906,878) 56,579 N/A (56,579) financial assets Long-term 34,815 34,815 - - - - receivables Long-term equity 2,713,316 2,713,316 - 28,236,295 28,236,295 - investments Other non-current N/A 784,269 784,269 N/A 56,579 56,579 financial assets Investment 391,765 391,765 - 560,954 560,954 - properties Fixed assets 22,437,212 22,437,212 - 1,056,790 1,056,790 - Construction in 2,077,621 2,077,621 - 51,872 51,872 - progress Intangible assets 16,186,675 16,186,675 - 712,454 712,454 - Goodwill 29,100,390 29,100,390 - - - - Long-term prepaid 1,191,373 1,191,373 - 174,684 174,684 - 21 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. expenses Deferred tax assets 4,421,313 4,421,313 - 202,703 202,703 - Other non-current 550,352 550,352 - 4,576 4,576 - assets Total non-current 81,011,710 79,889,101 (1,122,609) 31,056,907 31,056,907 - assets TOTAL ASSETS 263,701,148 263,701,148 - 113,118,878 113,118,878 - Balance Sheet (Continued) Prepared by Midea Group Co., Ltd. 31 March 2019 Unit: RMB’000 LIABILITIES AND Consolidated Company SHAREHOLDERS' 31 December 1 January 31 December 1 January Adjustment Adjustment EQUITY 2018 2019 2018 2019 Current liabilities: Short-term 870,390 870,390 - 575,000 575,000 - borrowings Borrowings from 99,754.00 99,754 - - - - the Central Bank Customer deposits and deposits from 44,386 44,386 - - - - banks and other financial institutions Derivative financial 756,299 756,299 - - - - liabilities Notes and 60,226,741 60,226,741 - - - - accounts payable Advances from 16,781,666 16,781,666 - - - - customers Employee benefits 5,788,004 5,788,004 - 573,632 573,632 - payable Taxes payable 3,875,298 3,875,298 - 280,499 280,499 - Other payables 3,346,129 3,346,129 - 74,714,012 74,714,012 - Current portion of 7,122,712 7,122,712 - - - - non-current liabilities Other current 31,319,709 31,319,709 - 44,414 44,414 - liabilities Total current 130,231,088 130,231,088 - 76,187,557 76,187,557 - liabilities Non-current liabilities: 22 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. Long-term 32,091,439 32,091,439 - - - - borrowings Long-term 88,890 88,890 - - - - payables Provisions 268,887 268,887 - - - - Deferred income 647,583 647,583 - - - - Long-term employee benefits 2,480,318 2,480,318 - - - - payable Deferred tax 4,422,074 4,422,074 - - - - liabilities Other non-current 1,016,352 1,016,352 - - - - liabilities Total non-current 41,015,543 41,015,543 - - - - liabilities Total liabilities 171,246,631 171,246,631 - 76,187,557 76,187,557 - Shareholders' equity: Share capital 6,663,031 6,663,031 - 6,663,031 6,663,031 - Capital surplus 18,451,307 18,451,307 - 10,615,389 10,615,389 - Less: Treasury (4,918,427) (4,918,427) - (4,918,427) (4,918,427) - stock Other comprehensive (1,332,153) -1,332,153 - 6,020 6,020 - income General risk 366,947 366,947 - - - - reserve Surplus reserve 5,079,096 5,079,096 - 5,079,096 5,079,096 - Undistributed 58,762,315 58,762,315 - 19,486,212 19,486,212 - profits Total equity attributable to 83,072,116 83,072,116 - 36,931,321 36,931,321 - shareholders of the Company Minority interests 9,382,401 9,382,401 - - - - Total shareholders' 92,454,517 92,454,517 - 36,931,321 36,931,321 - equity TOTAL LIABILITIES AND 263,701,148 263,701,148 - 113,118,878 113,118,878 - SHAREHOLDERS' EQUITY 23 Interim Report for the First Quarter 2019 of Midea Group Co., Ltd. 2.2 Retrospective Restatement of Comparative Data due to the First Execution of any New Standards Governing Financial Instruments or Leases √ Applicable □ N/A The Company adopts the new accounting standard governing financial instruments starting from 1 January 2019 and adjusts the format of its financial statements according to the Notice of the Ministry of Finance on Revising and Issuing the Format of Financial Statements of General Enterprises 2018. And the affected financial statement items and amounts are shown in the two financial statements above. 3. Auditor’s report Is this Report audited by a CPAs firm? □ Yes √ No This Report is un-audited by a CPAs firm. Midea Group Co., Ltd. Legal Representative: Fang Hongbo 30 April 2019 24