2014 Semi-annual Report of Midea Group Co., Ltd. Midea Group Co., Ltd. 2014 Semi-annual Report August 2014 1 2014 Semi-annual Report of Midea Group Co., Ltd. Section I. Important Reminders, Contents & Definitions The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior management staff of Midea Group Co., Ltd. (hereinafter referred to as “the Company”) warrant that this report is factual, accurate and complete without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that. All directors have attended the board session for reviewing this report. The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital. Mr. Fang Hongbo, chairman of the Board and president of the Company, and Ms. Yuan Liqun, responsible person for the Company’s financial affairs, have represented and warranted that the financial statements in this report are factual, accurate and complete. This report has not been audited by a CPAs firm. The future plans and some other forward-looking statements mentioned in this report shall not be considered as virtual promises of the Company to investors. And investors are kindly reminded to pay attention to possible investment risks. This report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 2 2014 Semi-annual Report of Midea Group Co., Ltd. Contents Section I. Important Reminders, Contents & Definitions ....................................... 2 Section II. Company Profile ....................................................................................... 5 Section III. Highlights of Accounting Data & Financial Indicators ....................... 7 Section IV. Report of the Board of Directors .......................................................... 10 Section V. Significant Events .................................................................................... 37 Section VI. Change in Shares & Shareholders ....................................................... 60 Section VII. Preferred Shares................................................................................... 66 Section VIII. Directors, Supervisors & Senior Management Staff ....................... 67 Section IX. Financial Report .................................................................................... 70 Section X. Documents Available for Reference..................................................... 118 3 2014 Semi-annual Report of Midea Group Co., Ltd. Definitions Term Refers to Definition Company, the Company, or Midea Group Refers to Midea Group Co., Ltd. Little Swan Refers to Wuxi Little Swan Company Limited TITONI Refers to TITONI Investments Development Ltd. GD Midea Holding Refers to GD Midea Holding Co., Ltd. Reporting period Refers to 1 Jan. 2014-30 Jun. 2014 4 2014 Semi-annual Report of Midea Group Co., Ltd. Section II. Company Profile I. Basic information of the Company Stock Abbreviation Midea Group Stock Code 000333 Stock exchange listed with Shenzhen Stock Exchange Chinese name of the Company 美的集团股份有限公司 Abbr. of the Chinese name of 美的集团 the Company (if any) English name of the Company MIDEA GROUP CO.,LTD. (if any) Legal Representative Fang Hongbo II. Contact information Company Secretary Securities Affairs Representative Name Jiang Peng Wang Jing Midea Headquarters Building, No. 6 Meidi Dadao, Beijiao Town, Shunde District, Foshan City, Contact address Guangdong Province, China Tel. 0757-26605456 0757-26334559 Fax 0757-26651991 E-mail IR@midea.com III. Other information 1. Ways to contact the Company The registered address, office address and their postal codes, website address and email address of the Company did not change during the reporting period. The said information can be found in the 2013 Annual Report. 2. About information disclosure and where this report is placed The newspapers designated by the Company for information disclosure, the website designated by CSRC for disclosing this report and the location where this report is placed did not change during the reporting period. The said information can be found in the 2013 Annual Report. 3. Change of the registered information The registration date and place of the Company, its business license No., taxation registration No. and organizational code did not 5 2014 Semi-annual Report of Midea Group Co., Ltd. change during the reporting period. The said information can be found in the 2013 Annual Report. 4. Other relevant information No change occurred to other relevant information of the Company during the reporting period. The said information can be found in the 2013 Annual Report. 6 2014 Semi-annual Report of Midea Group Co., Ltd. Section III. Highlights of Accounting Data & Financial Indicators I. Major accounting data and financial indicators Does the Company adjust retrospectively or restate accounting data of previous years due to change of any accounting policy or correction of any accounting error? □ Yes √ No Reporting period Same period of last year YoY +/- (%) Operating revenues (RMB'000) 77,330,851.84 65,939,479.12 17.28% Net profit attributable to shareholders of 6,610,132.76 2,646,834.61 149.74% the Company (RMB'000) Net profit attributable to shareholders of the Company after extraordinary gains and 6,667,645.57 2,128,115.51 213.31% losses (RMB'000) Net cash flows from operating activities 13,171,462.85 3,569,363.63 269.01% (RMB'000) Basic EPS (RMB Yuan/share) 1.57 1.06 48.11% Diluted EPS (RMB Yuan/share) 1.57 1.06 48.11% Weighted average ROE (%) 18.97% 16.95% 2.02% As at the end of the As at the end of last year +/- (%) reporting period Total assets (RMB'000) 118,089,557.79 96,946,024.77 21.81% Net assets attributable to shareholders of 35,727,510.77 32,847,431.04 8.77% the Company (RMB'000) Notes: 1. Midea Group granted 15 additional shares for every 10 shares using the capital reserve on 30 Apr. 2014. As required, the EPS for the same period of last year shall be measured on the basis of the share capital after the increment (1,000,000,000 shares for the same period of last year; and 2,500,000,000 after the increment). 2. Midea Group merged with GD Midea Holding through share issuance and share exchange in Sept. 2013. Pursuant to the accounting standards for income statement preparation, the net profit for the current period was after Midea Group merged with GD Midea Holding, while the net profit for the same period of last year was before Midea Group merged with GD Midea Holding when Midea Group held a 41.17% stake in GD Midea Holding. In order to help investors compare and analysis the overall business performance of Midea Group on the same basis, relevant items are adjusted as follows based on the pro-forma income statement (i.e. the merger of Midea Group and GD Midea Holding is deemed to have been finished on 1 Jan. 2013): 7 2014 Semi-annual Report of Midea Group Co., Ltd. Jan.-Jun. 2014 Jan.-Jun. 2013 YoY +/- (%) Net profit attributable to shareholders of the 6,610,132.76 4,178,951.77 58.18% Company (RMB’000) Minority interest income (RMB'000) 607,495.31 562,889.18 7.92% EPS (RMB Yuan/share) 1.57 0.99 58.59% Number of the Company’s total shares in the trading day before disclosure: Number of the Company’s total shares in the 4,215,808,472 trading day before disclosure (share) Whether the Company's share capital changed and the change affected the owners' equity due to reasons like the issuance of new shares, allotment of shares, equity incentive plans, and repurchases during the time from the end of the Reporting Period to the date when the Semi-annual Report was released □ Yes √ No II. Differences between accounting data under domestic and overseas accounting standards 1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards □ Applicable √ Inapplicable 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards □ Applicable √ Inapplicable 3. Explain reasons for the differences between accounting data under domestic and overseas accounting standards □ Applicable √ Inapplicable III. Items and amounts of extraordinary gains and losses √Applicable □ Inapplicable Unit: RMB’000 Item Amount Explanation Gains/losses on the disposal of non-current assets (including the offset part -59,759.96 of asset impairment provisions) Government grants recognized in the current period 449,018.93 Gain/loss on entrusting others with investments or asset management 174,990.06 8 2014 Semi-annual Report of Midea Group Co., Ltd. Gain/loss on debt restructuring 1,688.20 Gains and losses on change in fair value from tradable financial assets and tradable financial liabilities, as well as investment income from disposal of tradable financial assets and tradable financial liabilities and financial -656,529.00 assets available for sales except for effective hedging related with normal businesses of the Company Non-operating income and expenses other than the above -60,340.08 Less: Income tax effects -43,373.67 Minority interests effects (after tax) -50,045.37 Total -57,512.81 9 Midea Group Co., Ltd. 2014 Semi-Annual Report Section IV. Report of the Board of Directors I. Overview In face of the downward macro-economy, the call-off of the consumption stimulus package, the macro-control of the real estate policy, etc. in the first half of 2014, growth of the household appliance industry as a whole slowed down, and the industry entered a new period of restructuring, consumption upgrading and “efficiency comes first”. To promote efficiency and upgrade products, to enhance the development of intelligent products and the e-commerce layout, and to promote innovation in technology, marketing channels and service modes became the core driving force for household appliance makers to keep growing. In the first half of the year, sub-industries of household appliances started to polarize in growth. Among them, the A/C industry remained the sub-industry with the most certain growth in the consumer appliance industry, with a continuously strong sale at home. The kitchen appliance industry kept a fast and stable growth. And the refrigerator and washing machine industries were almost the same in growth. Along with consumption upgrading, high-end household appliances became a more and more obvious trend in the industry. The proportions of inverter air conditioners, cooling & heating air conditioners, multi-door and side-by-side combination refrigerators, roller washing machines, high-end kitchen appliances and small household appliances increased, with their average prices increasing and their profit growth much faster than the income growth. Leading enterprises in the industry still relied on their absolute advantages in brand and channel, and at the same time increased their inputs to R&D and new product development, which promoted competition marketization and business centralization. They maintained a sound and fast growth over the average level in the industry. In general, the driving forces of the household appliance industry in China remain, which are as below: 1. China’s economy is still in the process of speed-up industrialization and urbanization. In 2017, the urbanization rate is expected to reach 57%, and the per capita GDP is expected to reach USD10,000, which means there’s large space for improvement both in quantity and quality. The development of urbanization, construction of new rural areas, improvement of living condition and per capita income, together with the low overall ownership rate of house appliances in third and fourth tier cities, will make the undeveloped consumption demand keep releasing. 2. The stock quantity of household appliances has excessed 1.6 billion. The demand of upgrading appliances starts to become the significant driving motivation for sales volume growth. The upgrade of appliances in performance 10 Midea Group Co., Ltd. 2014 Semi-Annual Report and quality in aspects of energy-saving, environmental protection, intellectualization, networking, breakthrough in industrial design, and etc., will effectively push forward the consumption upgrade of household appliances, lead the improvement of optimization of product structure and profitability of household appliance enterprises, and offset some negative influences brought by the fluctuation of real estate sales. 3. The maturity of intelligent control technology, electronic information technology, the technology of internet of things, and related supporting technologies, as well as the popularization of smart mobile terminals, will effectively drive the fast development of smart household appliances. The development trend of smart home has gradually become the industry consensus. Household appliances is transforming from manufacturers of single products to providers with service of integrated solutions of smart home for clients, facing great growth space. According to the forecast of All View Consulting, the income of smart appliances will reach RMB1 trillion in 2020. 4. The potential of global household appliance market is tremendous. With the fast economy growth of markets in emerging countries, the overseas markets still waits for big moves. Chinese household appliance enterprises, especially the leading enterprises, have possessed globally competitive power. II. Main businesses analysis (1) Overview In the first half year of 2014, guided by three main strategies of “products lead, efficiency drives, and operation globalizes”, the Company deepened its transformation, focused on improving products and efficiency, continuously strengthened profitability and operation quality, and further stabilized competitive market advantage by the synergy of multiple products. In the first half of the year, the operating revenues of the Company achieved a year-on-year increase of 17.28%, the net profit attributable to the Company calculated with the same caliber increased 58.18% as compared with the same period of last year, the general gross margin of 25.85% increased by 2.92% as compared with the same period of last year, the overall rate of net profit attributable to the Company of 8.51% reached a year-on-year increase of 2.18% as calculated with the same caliber, and the net cash flows from operating activities amounted to RMB 13.171 billion, representing a year-on-year growth of 269.01%. Key work in the 1st half of Y2014 is listed below: (1) Insisting on investment on R&D of customers, continuous optimization of product structure, and stable 11 Midea Group Co., Ltd. 2014 Semi-Annual Report enhancement of product power The Company, according to the basic sense of making better products, insisted on customer research and product development, resulting to continuous optimized product structure, stable enhancement of high-end product ratio, continuous strengthened profitability, and increasingly improved public praises for products. In the field of household air conditioners, the ECO energy-saving product series, advertised as “lower to one kwh electric power per night”, fully expanded the scale to three main series covering 16 product types, which formed sales mix of luxurious, high-end, and mid-end products equipped with super excellent market competitiveness. By technology cooperation with Aliyun and dependency on advanced technologies such as IOT (hereinafter referred to Internet of Things) and cloud computing, the Midea IOT smart air conditioners perfectly realized 12 top industrial intellectual technologies including voice control, sleep mode, reservation control, electric power management, and information reminder. Brand-new sub-diversified air conditioners were independently developed, for instances, the kitchen air conditioners with highly efficient lampblack filtration and powerful refrigeration function, and the children’s air conditioners with caring system and exclusive sleep mode launched to the market. The Midea R290 environmentally friendly new refrigerant air conditioners gained the first 3C authentication in China, and successfully won the bidding for the project of household air conditioners in 23 stadiums for 2014 Nanjing Youth Olympic Games. From the beginning of this year, ten product models of Midea air conditioners were selected in “leading energy-saving products”, Midea air conditioners of wholly-sealed series and ECO energy-saving Shanghu product series, advertised as “lower to one kwh per night”, gained the UET certification, and multiple product designs won the Red Dot Concept Design Award of Y2014, the Americas IDEA Industrial Design Award, and the German IF Design Award. In the field of central air conditioners, by right of advantages such as internationally leading technologies, abundant product lines, distinguished quality, and rapid local service, the Company frequently won the bidding of significant projects in the world, including 75% stadiums in Brazil World Cup, the UAE 5000-villa project, Singapore Changi Airport, Thailand Don Muang Airport, and the Pakistan top-1 wind power generation project. In the field of retail sales for home decoration, depending on the activity of “million wealth”, the home decoration business of central air conditioners grew rapidly. As at the end of Jun, the sales scale of retail products (light commercial products and domestic water heaters) reached RMB 940 million, growing by 65% as compared with the same period of last year. The Midea centrifugal machines and water-cooled screw chillers had passed the certification by AHRI. The highly-efficient falling-film screw air-source heat pumps and the MDVS 12 Midea Group Co., Ltd. 2014 Semi-Annual Report direct-injection strong-heart multi-connected machines had passed the certification by the world-class authoritative AHRI. The split-type air-energy water heater and “smart shower band” won the IDEA Silver Award by their outstanding performances. The Midea central air conditioners earned the two significant industry awards of “The Best Supplier Cooperatorsfor Chinese Real Estate Industry” and “The Annual Central Air Conditioner Brand Supplier Mostly Trusted by Chinese Real Estate Industry” again. In the field of refrigerators, focusing on the technology research and result transformation on technologies of food preservation, materials, intelligence, refrigeration, packaging, CAE (simulation models), and door-sealing, the Midea super-low energy-consuming products, described as “1 kwh electric power in four days” gained the authoritative technology certification by CSC, thoroughly and systematically upgraded refrigerator energy-saving function while supported by five key energy-saving technologies including vacuum multivariant foaming, super-high efficient compressor, super-low standby energy consumption, optimization of refrigeration system, and optimization of refrigeration structure. The high-end Midea refrigerators of G-ZONE Series featured by 450L capacity and large multiple doors, together with the four-door open-in-pair Flush-Arc Series had the honor to win the German Red Dot Design Award of Y2014. In the Summit Forum of Chinese Refrigerator Industry in 2014, Midea won diversified awards including Energy-Saving Star, Energy-saving and Frostless Star, Leading Smart Refrigerator Brand in the Industry in one time. In the “Y2014 Leader Lists” announced by the Energy-Efficiency Identification Management Centre under China National Institute of Standardization, the Midea refrigerators won grand slam ranks in the Leader List of Smart Household Appliance Enterprises in 2014, the Leader List of Smart Household Appliances in 2014, the Leader List of Most Favored Bands of Household Appliances by Consumers in 2014, and the Leader List of Most Favored Household Appliances by Consumers in 2014, and thus became one of the biggest winners in the industry. In the field of washing machines, the Company accomplished over 200 new product development projects. Little Swan, our subordinate brand, launched the 3rd-generation auto throw-in washing machines, which meant 15 models of smart product series covering roller and impeller machines could realize innovative functions such as precise throw-in, smart special stain cleaning, and smart water magic cube. The “FCS Fast-cleaning Smart System” could allow users choose the washing ways by themselves, and automatically adjust the most proper washing time. The independently developed PhaseIII series of washing machine controllers smoothly passed the certification by UL, the internationally authoritative testing institute, and thus won the green card for entering the USA market. Plenty of products won the “Appliance” low-carbon environment protection award granted by China 13 Midea Group Co., Ltd. 2014 Semi-Annual Report Household Electrical Appliances Association and German IF Design Award. In the field of small household appliances, the Midea smart integrated kitchen adopted WIFI technology and IGRS interconnection and interworking agreement, constructed one-cloud and N-end IOT technology structure, realized integrated control over the whole kitchen electric appliances, mated synergic and unified kitchen electrical appliances, and provided users with integrated kitchen solutions. The Midea “stream cleaning” extractor hoods were endowed with intellectual functions of auto testing and auto reminder, winning 32 patents. The Midea X7 microwave ovens combined IOT technology with cloud technology, and realized functions of auto cooking through bar code scanning, remote control, and smart menu download, bringing users brand-new cooking experience. The Midea safe stoves set up sound defense lines for kitchen safety by 6 core technology innovations in gas leak alarming, auto gas turn-off for accidental heat -off, child-lock protection, skid resisting pot support, timing heat-off, and firewall. The Midea no-pot series of water purifiers, carrying the originally created patent of three-rolled-film technology, upgraded the single-channel water processing to multi-channel same-time water processing, which largely increased the output capacity of pure water. The Midea “zero cold water” water heaters realized the function of imMideate starting-up hot water. The Midea “flowing water” water heaters adopted patent drainage structure to drain incrustation inside tubes by pressing one button and improve water quality in inner tubes. In the field of small household appliances, the Company’s products won numerous awards in home and abroad. The smart suits of extractor hoods and stoves, as well as the outer box packaging of dust catchers won the German IF Design Award in 2014. The new Midea electric heating products earned the technology innovation award in “Appliance Awards”. The Midea “Panda Kaka” electric press cookers and QH2108 multi-functional electric induction cookers separately won the first and second prizes in the 3rd China “Taihu Award” Design Contest. G-ZONE, the high-end products of dish-washing machines won the Red Dot Design Award. (2) Arranging growth space for new businesses, as well as positively and pragmatically carrying forward the strategy of smart home furnishing In Mar, the Company published the M-Smart home furnishing strategy, trying to form smart service modes including “smart air steward”, “smart nutrition steward”, “smart healthy water steward”, and “smart energy and safety protection steward”, and provide customers with the most professional experience for smart home furnishing on the basis of the advantage of the most comprehensive product groups and user base of the Company in the globe. The Company had established smart home furnishing research institute to speed up the construction of the interconnected platform of smart home furnishing for whole-category household electric appliances by 14 Midea Group Co., Ltd. 2014 Semi-Annual Report systematically integrating the superior resources of its advantage of subordinate industry groups and technology R&D, as well as adopting technologies of sense, big data, and smart control. The Company internally unified and coordinated to construct core competitiveness, and had accomplished the Group’s general no-category WIFI mode development and testing, the debugging of prototypes of 17 product types. The 1st-phase establishment of cloud server platform, and continuously developed the follow-up certification and reliance verification. The Company opened and integrated with external sides, cooperated in multiple layers with Alibaba, Jingdong, Huawei, Qualcomm, Neusoft, BAT, LeTV, and Hong Kong University of Science and Technology, promoted the breakthrough in the limit of single smart products, and forged open smart home furnishing appliance systems. (3) Speeding up the transformation for internet thinking, and making a full-pledged push into E-commerce business In the 1st half of Y2014, Midea founded the E-commerce company, set up the official comprehensive Midea flagship store for whole-category products in Tmall, activated the “love Midea” store operation, propelled the full-channel strategy layout of Midea’s E-commerce business, impelled the synergism of internal logistics resources and socialized logistics resources, accelerated the logistics construction and regional warehouse layout in main lines and branch lines, included excellent offline resources such as Midea flagship stores, exclusive shops and aftersales service networks into the supporting system for E-commerce business, speeded up the mix of Midea’s online and offline E-commerce business, and advanced the “last kilometer” service level for E-commerce business. In the 1st half of Y2014, the sales revenue of E-commerce business of Midea Group accumulated to RMB3.93 billion, representing a year-on-year increase of 160%, of which the sales revenue of major appliances amounted to RMB 1.93 billion, growing by 245% as compared with the same period of last year. The Company further consolidated its strategic cooperation with platforms of Jingdong and Tmall. In the 1st half of Y2014, the sales revenue of Midea Group in Jingdong platform achieved RMB 1.63 billion, increasing by 220% as compared with the same period of last year, and the sales revenue of Midea Group in Taobao (including Tmall) achieved RMB 1.96 billion, increasing by 132% as compared with the same period of last year. The Midea brand has become the number one brand for sales amount in small household appliances in Taobao (including Tmall), and the sales ratio of core categories such as air conditioners, refrigerators, water heaters, electric cookers, electric induction cookers, electric pressure cookers, microwave ovens, and electric fans, ranked into the top 2 in the industry, achieving the development goal of “counted as one/two of the best” for E-commerce business. As flagship stores were significant links in Midea’s E-commerce strategy, the Company spared no effort to push 15 Midea Group Co., Ltd. 2014 Semi-Annual Report forward the opening of Midea flagship store and the system construction of information management and aftersales service standardization, and positioned the flagship stores as providers with quaternity functions of retail, aftersales service, delivery and installation, as well as member BBS. As at the end of Jun 2014, about 1400 flagship stores had been set up, the capability of comprehensive aftersales service for whole product categories were thoroughly improved, the value and effect of Midea flagship stores as the strategic channels of Midea Group with special competitive advantages had been showing out, and the O2O converged business of E-commerce mainly based on flagship stores were gradually being implemented. (4) Refining operation management, promoting process reform, and raising operation efficiency The Company further downsized organizational layers, established nimble organizations, activated operation motivation, and elevated operation efficiency; promoted the system of benchmarking management and scientific assessment for the enterprise, optimized inventory structure, reinforced treasury control, and controlled the non-operating expenses; continuously established and perfected related systems, processes, and standards, carried forward the work of one Midea, one system, and one standard, got through the internal and external value chains, and gradually established a highly-efficient process and system conducted by the market; advanced refined manufacturing and quality engineering, pushed forward the system transformation and upgrade by smart technology, atomization technology, and information technology, increased investment on automation equipment, and improved production efficiency; continued on strict quality control, executed the “one-vote negation system” for quality accidents, and improved the market maintenance ratio by 44% in 2014 as compared with the same period of last year. (5) Positively arranging strategic overseas layout, and pushing forward the local sales growth in overseas market The Company set International Division as the base of international strategies that can quickly absorb top international talents, preliminarily put up the operation and management platform of overseas company, gradually established the structure of basic internationalization process, and set up an alarming and correction system cored around internal finance control, internal and external audit, compliance management, and legal affair management. The Company positively boosted the rapid growth of local businesses of investment projects in overseas emerging markets, and effectively made up the fluctuation risk of OEM export businesses. In the 1st half year, the local businesses in overseas market continuously took turn for the better, and presented overall rapid growth trend of sales amount and profit. According to the standard of comparable exchange rates, the local businesses in overseas 16 Midea Group Co., Ltd. 2014 Semi-Annual Report market in the first half year increased by 36%, of which the Manaus manufacture base of household air conditioners under Midea-Carrier Brazil joint venture had been built up as the largest manufacture base of household air conditioners in Latin America, Midea air conditioner fans of the joint venture had won the biggest market share in Brazil, and the assembly lines of microwave ovens had been put into operation. In the 2nd half year of 2014, facing the changes and impacts of internal and external environment, the Company will hold on operation idea of deepening transformation, daring to change, and re-increasing, continue on investment increase for R&D and technologies, make better products, improve efficiency, create values around consumers and clients, and consolidate the market status and core competitiveness of the enterprise. In respect of “deepening transformation”, the Company will concern about consumer demand, continue on expansion of R&D investment and product development, deeply dig out innovative selling points of products, strictly control quality management, and ensure the sustainable optimization of product structure and stable improvement of profitability; carry on delicacy management, improve the asset turnover ratio, and construct new advantages in cost; continue to propel the level of refined manufacturing and automation, and raise the manufacturing efficiency and product quality. In respect of “daring to change”, the Company will give play to the advantages of Midea’s diversified product categories and industrial clusters, take the sense of making good products as fundamental, improve the synergy capability of internal resources, and positively and pragmatically impel Midea’s M-SAMRT smart home furnishing strategy and E-commerce breakthrough strategy; insist on simplification of operation and management, intensify customer orientation, carry on delayering of organizations and structures, get directed by value creation, and raise the efficiency of operation and management; stick to the introduction of technical talents and professional talents, improve team vitality and profession, and gradually cut down the quantity of functional staffs; further reform the enterprise culture, promote the atmosphere of honesty and fairness, and improve the vitality and dynamism of the enterprise; and carry on perfecting the incentive system, make staffs share company growth value, and improve the competitiveness of remuneration. In respect of “re-increasing”, the Company will clearly plan, analyze, and implement the “333 Strategic Plan” of Midea Group, and prepare supporting resources. Midea Group will take around 3 years to make better products, consolidate basis, solidify its quality, and further improve operation quality; take around 3 years to stand out among the top three brands in Chinese household appliances and become the industry leader; and take around 3 years to win a share in the world-class household appliance industry and realize global operation. 17 Midea Group Co., Ltd. 2014 Semi-Annual Report 2. YoY change of major financial data Unit: RMB’000 Same period of last Reporting period YoY change Reason for change year Operating revenues 77,330,851.84 65,939,479.12 17.28% Operating costs 57,343,283.31 50,818,563.75 12.84% Selling expenses 7,623,680.06 6,134,252.63 24.28% Administrative expenses 3,349,324.40 3,157,978.59 6.06% Decrease of interest expenses and Financial expenses -288,553.70 581,588.60 -149.61% YoY increase of exchange gains 1,530,715.47 980,052.69 56.19% Expansion of sales scale in the Income tax expenses reporting period Mainly caused by increase of Net cash flows from operating 13,171,462.85 3,569,363.63 269.01% operating profit and decrease of activities loans issued to clients Net cash flows from investing Increase of cash paid for -22,486,720.02 -569,313.88 3,849.79% activities investment and financing Net cash flows from financing Increase of trade financing 4,791,762.54 415,524.14 1,053.19% activities borrowings Net increase in cash and cash Above reasons for cash flow -4,534,542.85 3,404,743.94 -233.18% equivalents changes Major changes to the profit structure or sources of the Company during the reporting period: □ Applicable √ Inapplicable Reporting period progress of the future development planning in the disclosed documents of the Company such as share-soliciting prospectuses, offering prospectuses, asset reorganization reports, etc.: □ Applicable √ Inapplicable III. Breakdown of main business Unit: RMB’000 Increase/decrease Increase/decrease Increase/decrease of operating of operating costs of gross profit Operating Gross profit rate Operating costs revenues over the over the same rate over the same revenues (%) same period of period of last year period of last year last year (%) (%) (%) Classified by industry: Industry of 73,211,746.10 54,044,665.56 26.18% 18.00% 14.23% 2.43% 18 Midea Group Co., Ltd. 2014 Semi-Annual Report manufacturing Industry of 1,572,766.55 1,388,965.63 11.69% 2.70% 3.87% -0.99% logistics transportation Classified by product: Major appliances 51,299,125.77 37,419,693.85 27.06% 19.02% 13.96% 3.24% Air conditioners 41,692,542.15 30,507,576.85 26.83% 18.24% 14.02% 2.71% and accessories Refrigerators and 5,008,742.18 3,663,813.70 26.85% 21.24% 8.67% 8.46% accessories Washing 4,597,841.44 3,248,303.30 29.35% 24.00% 19.96% 2.38% machines and accessories Small household 17,792,284.51 13,116,945.26 26.28% 17.94% 17.03% 0.57% appliances Electrical 4,120,335.82 3,508,026.45 14.86% 6.88% 7.39% -0.41% machines Logistics 1,572,766.55 1,388,965.63 11.69% 2.70% 3.87% -0.99% Classified by region: Domestic 44,895,216.40 32,313,015.18 28.03% 25.06% 23.57% 0.87% Overseas 27,292,542.66 20,915,402.72 23.37% 7.08% 1.05% 4.57% In order to let investors get an actual understanding of real operation scale and capability of electrical machines and logistics of the Company, the above figures of electrical machines and logistic include internal sales data. As for figures excluding internal sales data, please refer to the notes to the financial report in this Semi-annual Report. IV. Core competitiveness analysis 1. Sustainable leading capability of innovation and R&D Midea Group has been committed to product innovation and R&D, introduced high-level leading technical talents in the industry, and kept technology cooperation with leading scientific research institutions in home and abroad. Depending on the perfect innovation mechanism, as well as the sustainable and mass input to scientific research resources, the scientific technology level of Midea Group has kept standing at the advanced level in home and even abroad. The series of innovative products firstly researched, developed, and launched by Midea, including the full direct-current inverter air conditioners which are advertised as “1 kwh electric power per night”, 19 Midea Group Co., Ltd. 2014 Semi-Annual Report washing-drying integral machines which are advertised as “smart auto throw-in”, the “streaming cube” series of microwave ovens, the IH smart electric cookers, the high-temperature stream-cleaning extractor hoods, and the flowing-water water heaters have been highly recognized by the market. The Company has founded a research institute for smart home furnishing, and stepped ahead in strategic layout of smart home furnishing and development of smart products on the basis of the Company’s abundant product categories and large user groups. 2. Broad and stable channel networks Midea has formed omnibearing and stereo market coverage through many years of development and layout. In mature primary and secondary markets, the Company has always kept good cooperation with large appliance chain stores such as Gome and Suning. In broad third and fourth markets, the Company has added flagship store, exclusive stores, traditional channels, and new channels as effective supplement. The channel networks of the Company has realized full coverage in primary and secondary markets, and coverage rate of higher than 95% in third and fourth markets. At the same time, advantages of the Company in brands, products, offline channels, and logistics layout, have also provided beneficiary guarantee for the Company’s rapid expansion in E-commerce businesses and channels. In China, Midea Group has cooperated with most initial distributors for many years and cultivated high brand loyalty in distribution, In overseas market, Midea group has established plenty of overseas branches and institutes, set up production base in 6 foreign countries, and accelerated the marketing network construction in potential markets including Southeast Asia, North America, South America, Europe, and Middle East. 3. Capability of integrated synergic operation in supply chain and resource sharing Midea Group is the one and only household appliance production enterprise in China with full industry chain and full product lines. With the supporting of industrial leading R&D and manufacturing technologies for core appliance accessories such as compressors, electric control, and magnetron, together with powerful capability of production of up-stream accessories of electrical machines and logistics service, the Company has formed a whole industry chain covering integrated R&D, manufacturing, and sales of key accessories and complete machines. Meanwhile, speaking of product lines, products of Midea Group cover major appliances such as air conditioners, refrigerators, and washing machines, and almost all main small household appliances for kitchen and bathroom, such as microwave ovens, electric cookers, and dish-washing machines, which founds an innate advantageous basis for providing consumers with integrated solutions. 20 Midea Group Co., Ltd. 2014 Semi-Annual Report Midea Group makes systematic planning and rational layout in production capacity and structure, comprehensively considers about factors such as regional radiation, supporting supply, and logistic cost, and converges large-scale and flexible production of diversified product categories, so that the Company can face the market change with more flexibility. At the same time, the advantage of full industry chain and full products makes Midea Group sufficiently share the resources in aspects of procurement, brands, technologies, and channels, and forms omnibearing synergic effect. 4. Perfect governance mechanism and effective incentive mechanism of the Company The Company pays close attention to governance structure, enterprise management and control, separation of powers, and the construction of power-centralized and power-separated mechanisms. It has formed mature management mechanism for professional managers. Having been operated for lots of years, the business divisions of the Company, which have formulated evaluation and incentive systems with fully decentralized powers and performance-oriented appraisal, have become the training and growth platform for professional managers of the Company. The Company’s high-class operating management are all professional managers trained by operation and practices in Midea, and have worked in units of Midea for more than 15 years, possessed abundant experience of the industry and management, obtained profound understanding for global and Chinese household electrical appliances, and can make precise analysis on industrial operation environment and enterprise operation management. Mechanism advantages of the Company found a solid basis for Midea’s stable and sustainable future development. Currently, the Company’s high-class management, core management teams, and mid-class talents have hold about 9% of the Company’s shares by diversified means of direct and indirect shareholding, incentive plans of stock options, and etc. The Company has set up an incentive mechanism featured by coincident profit between the operating management and whole shareholders, as well as the unified relation between stock incentive and restraint for long-term and short-term periods. 5. Industry-leading scale advantages Midea Group owns complete industry supply chain of air conditioners, refrigerator, and washing machines, as well as complete small household appliance product groups. The Group has built 16 products bases in China, radiating to five main regions of South China, East China, Middle China, Southwest China, and North China, and built overseas production bases in Vietnam, The Republic of Belarus, Egypt, Brazil, Argentina, and India. The production capacity and volume, and sales amount of major and small appliances of the Company all stably stand 21 Midea Group Co., Ltd. 2014 Semi-Annual Report among the front ranks in home and abroad. Meanwhile, Midea Group also owns strong supply capability for up-stream accessories of household appliances. The overall production capacity of electric machines of the Company is about 100 million units. The production and sales volume both rank high in the world. At the same time, the powerful transportation and distribution capability of logistics division in Midea Group provides strong guarantee for the development of the Company’s household appliance industry. Midea Group makes scale layout in household appliances and related industries, consolidates the leading competitive position of the Company in the industry, and guarantees the overall advantages of the Company in aspects of cost control, quality control, resource integration, and supply promptness. V. Investment analysis 1. Investments in equities of external parties (1) Investments in external parties □ Applicable √ Inapplicable The Company did not invest in any external party in the reporting period. (2) Equity-holdings in financial enterprises √Applicable □ Inapplicable Gain/loss Initial Closing in the Opening Opening Closing Closing Enterprise Enterprise investment equity-hol reporting Account equity-holdi equity-holdi equity-holdi book value Equity source name variety cost ding ratio period ing title ngs (share) ng ratio (%) ngs (share) (RMB’000) (RMB’000) (%) (RMB’000 ) Golden Eagle Long-ter Fund Fund m equity Sponsoring 50,000.00 50,000,000 20.00% 50,000,000 20.00% 28,656.55 896.52 Management company investme and setting up Co., Ltd. nt Long-ter Bank of Jiang Commerci Private 13,220.45 2,202,564 0.00% 5,232,676 0.00% 13,330.45 - m equity Su al bank offering investme 22 Midea Group Co., Ltd. 2014 Semi-Annual Report nt Long-ter Hubei Bank Commerci m equity Private Corporation 5000.00 5,870,266 1.29% 5,870,266 1.29% 5,000.00 - al bank investme offering Limited nt Foshan Shunde Rural Long-ter Commercial Commerci m equity Private 452,840.00 186,104,160 6.33% 186,104,160 6.33% 452,840.00 59,214.96 Bank al bank investme offering Company nt Limited Long-ter Zhangshu Commerci m equity Private Shunyin 6,000.00 6,000,000 6.00% 6,000,000 0.60% 6,000.00 180.00 al bank investme offering County Bank nt Long-ter Fengcheng Commerci m equity Private Shunyin 6000.00 6,000,000 6.00% 6,000,000 0.60% 6,000.00 60.00 al bank investme offering County Bank nt Total 533,060.45 256,176,990 -- 259,207,102 -- 511,827.00 60,351.48 -- -- (3) Investment in securities □ Applicable √ Inapplicable 2. Wealth management entrustment, derivative investments and entrustment loans (1) Wealth management entrustment √Applicable □Inapplicable Unit: RMB Ten thousand Actual Related-p Impairme Payment Principal gain/loss Name of arty Product Beginnin Ending nt Expected Relation Amount determin actually for trustee transactio variety g date date provision gain ation recovered reporting n or not (if any) period Bank Agreem Bank No No finance 4,838,255 2014.1.1 2015.4.22 3,765,163 17,499.01 17,499.01 ent products 23 Midea Group Co., Ltd. 2014 Semi-Annual Report Total 4,838,255 -- -- -- 3,765,163 17,499.01 17,499.01 Source of the entrusted funds Self-owned funds Cumulative overdue principals and gains None Involving cases (if applicable) Not applicable Disclosure date of the board announcement approving the wealth management 2014.03.29 entrustment (if any) Disclosure date of the general meeting announcement approving the wealth 2014.04.22 management entrustment (if any) (2) Derivative investment √Applicable □Inapplicable Unit: RMB’000 Proportion Rela of the ted- Impair closing part Actual Type of Initial Opening ment Closing investment Rela y Beginning gain/loss in Operator derivative investment Ending date investment provisi investment amount in tion trans date reporting investment amount amount on (if amount the actio period any) Company’ n or s closing not net assets Futures Futures No No hedging 2014.01.01 2014.12.31 0 3,480.88 0.01% 1,590.60 company contracts Forward Bank No No exchange 803,708.02 2014.01.01 2014.12.31 803,708.02 0 -410,682.78 -1.15% -1,123,585.69 contract Total 803,708.02 803,708.02 0 -407,201.90 -1.14% -1,121,995.09 Capital source for derivative All self-owned funds investment Disclosure date of the board announcement approving the 29 Mar 2014 derivative investment (if any) Disclosure date of the general meeting announcement approving the 22 Apr 2014 derivative investment (if any) 24 Midea Group Co., Ltd. 2014 Semi-Annual Report 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 to avoid the risks of exchange and interest rate fluctuation, realize the preservation and appreciation of forex assets, reduce forex liabilities, as well as achieve locked-in costs. The Company has performed sufficient evaluation and control against derivatives investment and position risks, details of which are described as follows: 1. Legal risk: The Company's futures business and forex funds businesses shall be conducted in compliance with laws and regulations, with clearly covenanted responsibility and obligation relationship between the Company and the agencies. Control measures: The Company has designated relevant responsible departments to enhance learning of laws and regulations and market rules, conducted strict examination and verification of contracts, defined responsibility and obligation well, and strengthened compliance check, so as to ensure that the Company's derivatives investment and position operations meet the 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. Analysis on risks and control Control measures: The Company has not only developed relevant management systems that clearly measures of derivative products held defined the assignment of responsibility and approval process for the futures business and forex funds in the reporting period (including but business, but also established a comparatively well-developed monitoring mechanism, aiming to not limited to market risk, liquidity effectively reduce operational risk by strengthening risk control over the business, decision-making risk, credit risk, operation risk, law and trading processes. risk, etc.) 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 of market prices or fair 1. Profit/loss from futures hedging contracts incurred during the Reporting Period was RMB values in the reporting period of the 1,590,600; invested derivatives. And the analysis 2. Profit/loss from forward forex contracts incurred during the Reporting Period was RMB 25 Midea Group Co., Ltd. 2014 Semi-Annual Report on the fair value of the derivatives -1,123,585,690; should include the specific use 3. Public quotations in futures market or forward forex quotations announced by Bank of China are methods and the relevant assumptions used in the analysis of derivatives fair value. and parameters. Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of No change derivatives in the reporting period compared to the previous reporting period The Company's independent directors are of the view that: the futures hedging business is an effective instrument for the Company to eliminate price volatility and implement risk prevention measures Specific opinion from independent through enhanced internal control, thereby improving the operation and management of the Company; directors on the Company’s the Company's foreign exchange risk management capability can be further improved through the derivatives investment and risk forex funds business, so as to maintain and increase the value of foreign exchange assets; and the control abovementioned investment in derivatives can help the Company to fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry out derivatives investment business, and the risks are controllable. (3) Entrustment loans □ Applicable √ Inapplicable 3. Use of raised funds □ Applicable √ Inapplicable 4. Analysis to main subsidiaries and stock-participating companies √ Applicable □ Inapplicable Main subsidiaries and stock-participating companies: Main Total Operating Operating Compan Registered capital Net assets Net profit Company name Industry products/ser assets revenues profit y variety (ten thousand) (million) (million) vices (million) (million) (million) Manufac Guangdong Midea Refrigeration Subsidia Air turing RMB 85,400.00 20,676.06 2,671.23 19,393.79 664.94 600.07 Equipment Co., Ltd. ry conditioners industry Guangdong Midea Group Wuhu Subsidia Manufac Air USD 693 11,442.47 1,016.80 10,756.04 249.40 217.97 Refrigeration Equipment Co., Ltd. ry turing conditioners 26 Midea Group Co., Ltd. 2014 Semi-Annual Report industry Manufac Wuhu GMCC Air-conditioning Subsidia Air turing RMB 83,000 1,780.98 1,075.89 2,786.21 291.24 219.53 Equipment Co., Ltd. ry conditioners industry Foshan Shunde Midea Electric Manufac Subsidia Water Appliance Manufacturing Co., turing USD 4,200.00 2,386.59 701.70 2,994.75 430.11 376.33 ry heaters Ltd. industry Kitchen & Guangdong Midea Kitchen Manufac Subsidia Bathroom Appliances Manufacturing Co., turing USD 7,200.00 4,962.46 1,067.82 5,247.96 533.98 457.74 ry electric Ltd. industry appliances Manufac Small Guangdong Midea Life Electric Subsidia turing household USD3,926.00 1,533.02 546.78 1,252.45 947.31 930.08 Manufacturing Co., Ltd. ry industry appliances 5. Significant projects invested with non-raised funds □ Applicable √ Inapplicable VI. Predict the operating results of Jan.-Sept. 2014 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the next reporting period according to prediction, as well as explanations on the reasons: √ Applicable □ Inapplicable Performance prediction: same rise Statement of business performance forecast (based on income statement) From the beginning of the Same period in year to the end of the next Increase/decrease (%) the last year reporting period Estimated amount of YoY increase aggregate net profit (RMB 87 -- 96 40 118% -- 140% 100 million) Basic earnings per share YoY increase 2.06 -- 2.28 0.95 118% -- 140% (RMB Yuan/share) In Sept. 2013, Midea Group merged with GD Midea Holding through share exchange. The income Explanations for business statement has been compiled based on accounting standards. The net profit of the Period was the performance forecast data generated following the merger, while the figure in the same period of the previous year was 27 Midea Group Co., Ltd. 2014 Semi-Annual Report calculated based on 41. 17% shares held by Midea Group in GD Midea Holding before the merger. On 30 Apr. 2014, as Midea Group accomplished the capitalization of capital reserve, resulting to 10 shares transferred to 15 shares. According to related rules, the basic earnings per share as at the same period of last year shall be calculated by share capital after adjustment. To facilitate contrastive analysis based on the same statistical standards for investors, based on the pro-forma profit statement (the merger of GD Midea Holding is deemed as to have been completed on 1 Jan. 2013), the Company's business performance is expected to improve in Jan.-Sept. of 2014 as follows: Statement of business performance forecast (based on pro-forma profit statement) From the beginning of the Same period in year to the end of the next Increase/decrease the last year reporting period Estimated amount of aggregate net profit (RMB 87 -- 96 60 YoY increase 45% -- 60% 100 million) Basic earnings per share 2.06 -- 2.28 1.42 YoY increase 45% -- 60% (RMB Yuan/share) Explanations for business performance forecast VII. Explanation by the Board of Directors and the Supervisory Committee about the “non-standard audit report” issued by the CPAs firm for the reporting period □ Applicable √ Inapplicable VIII. Explanation by the Board of Directors about the “non-standard audit report” for last year □ Applicable √ Inapplicable IX. Implementation of profit allocation during the reporting period Profit allocation plan implemented during the reporting period, especially execution and adjustment of the cash dividend plan and the plan for turning capital reserve into share capital: √ Applicable □ Inapplicable The Company’s profit scheme and capitalization of capital reserve for Y2013 is as follows: Based on the total 28 Midea Group Co., Ltd. 2014 Semi-Annual Report 1,686,323,389 shares as at 31 Dec 2013, the Company distributed cash of RMB 20.00 for every ten shares to all shareholders. Meanwhile, additional 15 shares were granted for every ten shares of all shareholders using the capital reserve. The scheme was reviewed and passed in the Y2013 Annual General Shareholders Meeting held on 21 Apr. 2014. The equity registration date for profit allocation and capitalization of capital reserve is 29 Apr. 2014, and the ex-equity and ex-dividend date is 30 Apr 2014. The aforesaid profit allocation scheme has been successfully accomplished. Special statement about the cash dividend policy In compliance with the Company’s Articles of Association and the Yes resolution of the general meeting Specific and clear dividend standard and ratio: Yes Complete decision-making procedure and mechanism: Yes Independent directors fulfilled their responsibilities and played their Yes due role: Minority shareholders have the chance to fully express their opinion and desire and their legal rights and interests were fully Yes protected: In adjustment or alteration of the cash dividend policy, the conditions and procedure were in compliance with regulations and Inapplicable transparent: X. Preplan for profit distribution and turning capital reserve into share capital for the reporting period □ Applicable √ Inapplicable XI. Researches, visits and interviews received in the reporting period √ Applicable □ Inapplicable Main discussion and Way of Time Place Visitor type Visitor materials provided by the reception Company On-site Guizot Jinan Securities, E-Fund, Inhuman The Company mainly Company Fund Management Co., Ltd, An bang Asset 2014-01-09 survey Institution briefed the investors Management Co., Ltd, New Value, Western Securities about: (1) current status 29 Midea Group Co., Ltd. 2014 Semi-Annual Report Strategy and development of the 2014-01-13 Shanghai Institution UBS Greater China Conference meeting industry; (2) operation and development strategy On-site Company CLSA Asia-Pacific Markets, CICC, of the Company; (3) 2014-01-15 survey Institution HUABAO TRUST, CAPITAL CICC other regular report disclosed by the On-site Company CICC, GENESIS INVESTMENT Company and topics 2014-01-22 survey Institution MANAGEMENT,LLP involved in the announcement. On-site Company Morgan Stanley, Fallopian Capital, 2014-02-13 survey Institution Capitalistic Informative report provided by the Murrain Securities, Value Partners Fund, Company: public On-site BOCI-Prudential, TPG-AXON Capital, Company information, such as 2014-02-18 survey Institution DIAM, Jillian Dresdner, BlackRock, regular report Manulife Asset Management, China announcement of the Investment Corporation(HK) Company. Company On-site 2014-02-20 Institution CICC, First State Investment (Hong Kong) survey New product CICC, CITIC Securities, Shenyin Wanguo release Company Securities, Changjiang Securities, Haitong 2014-03-03 meeting of Institution Securities, Sinolink Securities, UBS Securities, China Merchants Securities, kitchen China Galaxy Securities, Guosen Securities appliance Orient Securities, Guotai Junan Securities, Strategy CICC, Investment Sheng Ta Investment Company meeting of 2014-03-10 Institution Management, Dongguan securities, smart Shenzhen Fenghuangyuan Investment, First e-house Capital Securities, First Capital Securities, 30 Midea Group Co., Ltd. 2014 Semi-Annual Report China Life Pension, Shenyin Wanguo Securities, Sinolink Securities, Guosen Securities, Shenyin Wanguo Securities, Haitong Securities, Xinhua Asset Management, Guotai Junan Securities, Xinhua Asset Management, Huashang Fund, CITIC Securities, New bergman Investment, New bergman Investment, Bosera Fund, UBS Securities, Galaxy Securities, Da Cheng Fund Management, PICC, Changxin Asset Management, Shenzhen Dingshi Investment, Great Wall Fund, Harvest Fund, Guosen Securities, Industrial Securities, Changjiang Securities, Ping’an Asset Management, Everbright Pramerica Fund, Greenwoods Asset Management, E-Fund, Yinhua Fund, Taikang Assets, ABC-CA FUND, Press Greenwoods Asset, Binyuan Capital, meeting of Guosen Securities, Guotai Junan Securities, intelligent CITIC Securities, Shenyin Wanguo 2014-03-17 Hangzhou air Institution Securities, Changjiang Securities, Dachang conditioner FMC, Galaxy Securities, Sinolink of Internet Securities, Galaxy Asset, Team-Top of Things Investment, Haitong Securities, GTJA Allianz Fund, E-Fund, GTJA Allianz Fund E-Fund, Guangzhou Jinjun Investment, Jin Annual Company Huatai Investment, Industrial Securities, 2014-03-31 performance Institution Galaxy Asset, Changsheng Fund, GTS Fund, Essence Securities, First Capital seminar Securities, GF Securities, Shenyin Wanguo 31 Midea Group Co., Ltd. 2014 Semi-Annual Report Securities, Sinolink Securities, Guangzhou Asia bond, Guotai Junan Securities, Runhui Investment, CICC, China Merchants Securities, New bergman Investment, CITIC Securities, China AMC, Bosera Fund, UBS Securities, New bergman Investment, New bergman Investment, Harvest Fund Management, Guosen Securities, Changjiang Securities, ICBC Credit Suisse , Greenwoods Asset, Yinhua Fund Company Teleconfere 2014-04-08 Institution Greenwoods Asset nce China AMC, Yinhua Fund, Harvest Fund Management, Huashang Fund, Harvest Fund Management, China Life, New China Life, Changsheng Fund, CCB Principal Asset Management, Minsheng Canada Royal Fund, CCB Principal Asset 2014-04-15 Beijing Road show Institution Management, ICBC Credit Suisse, CUAM, Yimin Fund, CICC, Taikang AMC, StarRock Investment Management, Cephei Capital, ShanghaiIvy Investment Management Company, Fosun Group Cultural Industry, KEYWISE CAPITAL, Hillhouse Capital Company Teleconfere 2014-04-16 Institution Bernstein nce On-site Company 2014-04-18 survey Institution New Idea Investment 2014-04-29 Company Performance Institution CICC, Guosen Securities , CITIC , Shenyin 32 Midea Group Co., Ltd. 2014 Semi-Annual Report seminar Wanguo Securities, Greenwoods Asset, ETON PARK, Citibank, Hillhouse Capital , Founder Securities, Guangdong Development Fund, Anbang Capital, Bosera Asset Management, Penghua Fund, Dachang FMC , Ping An Asset , Prudential Fund, Galaxy Securities, Chongyang Investment, GF Securities , Haitong Securities, UBS Securities, Sinolink Securities, HSBC, ChinaAMC, Harvest Fund Management, JPMorgan Chase, Sunshine Insurance , Taikang AMC, ZEAL ASSET MGMT, Yinhua fund On-site 2014-04-30 Company Institution Marshall Wace survey Mirae Asset , Ping An Asset Management, 2014-05-12 Shanghai Road show Institution AIA China, Power pacific, Bisheng investment, Sumitomo Mitsui Schroders PLC-NV, Guotai Asset 2014-05-13 Shanghai Road show Institution Management, KaiYu capital, Rosefinch Investment Temasek Investment, Norges Bank, SPD BANK AXA Fund, Fullgoad Fund, Tianzhi Fund, Bank of China Investment, 2014-05-14 Shanghai Road show Institution Pacific Investment, Fad Fund, Zongyi Holdings, CITIC Securities, Nomura Investment, Greenwoods Asset 2014-05-15 Shenzhen Road show Institution Penghua Fund, Zexinyide, Infore Capital, 33 Midea Group Co., Ltd. 2014 Semi-Annual Report Copower Investment, First Capital Securities, E&B Asset Management, UBS SDIC, Team-Top Investment, Yujin Fund, Yinshi Investment, Baoying Fund 2014-05-18 Guangzhou Road show Institution E-Fund, Guangfa Fund Bosera Fund, Rotong Fund, China Southern 2014-05-19 Shenzhen Road show Institution Fund, Southwest Securities, Qianhaikaiyuan Fund On-site Yiheng Capital, Runhui Investment, Company 2014-05-21 survey Institution Samsung Investment, Changxin Asset Management, UBS Securities BNP Paribas Investment, Nomura Warrants On-site 2014-05-27 Company Institution (Hong Kong), Ping’an Asset survey Management, China AMC, GMT Capital Invesco Investment, CLSA Asia-Pacific On-site 2014-05-28 Company Institution Markets, Schroders, Keywise Capital, survey Zhongma Consultant Northeast Securities, Orient Securities Asset Management, New Idea Investment, Cathay Investors, China International Fund Management, APS Investment, Great Wall Securities, Xiangying Asset Management, Strategy 2014-06-04 Chengdu Institution UBS SDIC, Topology Investment, meeting Yizhenglang Investment, Pudao Investment, Tianan Insurance, Jingyuan Capital, Hezhangzhichun Investment, Rosefinch Investment, Yinhua Fund, New Center Investment 34 Midea Group Co., Ltd. 2014 Semi-Annual Report On-site Company 2014-06-09 survey Institution Overlook Investments On-site Company 2014-06-10 survey Institution Mizuho Securities China Southern Fund, Changsheng Fund, Strategy Huashang Fund, Minshen Canada Royal 2014-06-12 Yichang Institution meeting Fund, CICC, Union Asset, China Export & Credit Insurance, CITIC Securities Comgest, DIAM Asset Management, Shouzheng Fund, Jiafu Asset Management, ChinaRock Capital, Panah Fund, Canada Pension Plan, Vontobel , Manulife Asset Strategy Management, Alliance Bernstein Hong 2014-06-16 Hong Kong Institution meeting Kong, Baring Asset Management, Pengsheng Asset Management, Atlantis Investment, Goldman Sachs Asia, Eliv Investment & Management, UBS Global , Azentus Capital Orient Securities Asset Management, Guolian Securities, Xingzhi Venture Capital, First-Trust Fund, Galaxy Asset, Jifu Strategy Fund, Guosen Securities, Willam Blair, 2014-06-17 Shanghai Institution meeting HSBC Fund, Renhang Investment, Liangsheng International, Mingxiang Investment, Hezi Capital, Fortune SG Fund, Spring Capital 35 Midea Group Co., Ltd. 2014 Semi-Annual Report On-site Company Taikang Assets, Santa Lucia , Norges 2014-06-23 survey Institution Bank, DCG capital, Standard Chartered Jingyuan Capital, Golden Nest Capital, Morgan Asset Management, Value Partners Golds Ta Te Fund, Fullgoad Fund, Zhong Ou Asset Management, Value Partners Group, Value Partners Fund, AIA China, Shengshu Investment, East Capital, LORD Strategy ABBETT Fund, Qianhe Capital 2014-06-25 Shanghai Institution meeting Management, Jifu Fund, Atlantis Investment, Jet KingInvestment, Neuberger Berman Investment, Tengyue Fund, Ping’an Asset Management, Lion Global Investors, Princeton Asset Management, Newport Asia, Yongjin Investment, Ivy Assets, Nomura Investment, Yiheng Capital MontPelerin Investment & Management, ShanghaiBBC Stock, Baohong Investment & Management, Golden Bloom Capital, Strategy CITIC Securities, Essence Fund, Sinolink 2014-06-26 Ningbo Institution meeting Securities, Think Investment & Management, Sinosteel International, Dingda Fund, Anbang Asset Management, SinoPAC Securities 36 Midea Group Co., Ltd. 2014 Semi-Annual Report Section V. Significant Events I. Corporate governance The situation of the Company’s governance did not differ in principle from the Company Law and the relevant CSRC requirements in the reporting period. II. Significant lawsuits or arbitrations □ Applicable √ Inapplicable III. Media’s queries □ Applicable √ Inapplicable IV. Bankruptcy reorganization □ Applicable √ Inapplicable V. Asset transactions 1. Purchase of assets □ Applicable √ Inapplicable 2. Sale of assets □ Applicable √ Inapplicable 3. Business combination □ Applicable √ Inapplicable VI. Implementation of equity incentive and its influence √ Applicable □ Inapplicable On 10 January, 2014, the first session of the 14th meeting of the board of directors of the company reviewed and adopted the Stock Option Incentive Plan (Draft) of Midea Group Co., ltd., awarding 40,512,000 stock options to the incentive object, which accounts 2.41% of the company’s total equity of 1,686,323,389 shares when signing the incentive plan. On 27 January, 2014, the China securities regulatory commission confirmed that they have no objection to the stock option incentive plan which recorded on Measures for Share Incentive Management of Listed Companies (on Trial). 37 Midea Group Co., Ltd. 2014 Semi-Annual Report On 17 February, 2014, the company held the first provisional shareholders meeting in 2014, which reviewed and adopted the Stock Option Incentive Plan. On 18 February, 2014, the first session of the 16th meeting of the board of directors of the Company reviewed and adopted the Proposal on Adjustments of Stock Option Incentive Objects and Grant Numbers, Proposal on Determination of Grant Date of Stock Option Incentive Plan and Proposal on Grant Matters of Stock Option Incentive Plan, determining the date of grant to be 18 February, 2014 and agreeing to award 40,512,000 stock options to the 691 incentive objects due to some employees has left the Company and not meet the requirements of incentive objects. After the completion of first grant registration of stock option on 10 March, 2014, the former incentive objects, Wang Jianlin, Zhu Jinsong, Liao Guojin, Tong Huai, Shen Peng, Yang Xiaowen, Zhu Ruihua, Liu Yanshou, Wang Qingbo and Wang Kun, have left the Company after share option grant and before exercising. According to the requirements of Stock Option Incentive Plan (Draft), non-exercised stock option from demission date could be canceled for those incentive objects. Therefore, the above ten people are not qualified for incentive objects and the related 567,000 stock options would be canceled. After adjustment, the first amount of incentive objects awarded stock option is 681 and numbers of awarded non-exercised stock option are 39,945,000. On 30 April, 2014, the Company has completed the equity allocation program of distributing 20.00 Yuan for 10 shares and increasing 15 shares for 10 shares by capital reserve. After implementation of equity allocation program, the exercise price of stock incentive plan has been adjusted to 18.72 Yuan from previous 48.79 Yuan and exercise numbers from 39,945,000 to 99,862,500. VII. Significant related-party transactions 1. Related-party transactions concerning routine operation √ Applicable □ Inapplicable Related Subject Amount of party Related party Percentage as the Related party Related party matter of the related party Related party transacti transaction amount of similar transaction relationship related party transactions on pricing basis transactions (%) settlement transactions (RMB’000) class Guangdong Company Payment after Yingke controlled by Purchase Purchase Market price 70,429.79 0.13 products Electronics Co., family members Ltd of actual 38 Midea Group Co., Ltd. 2014 Semi-Annual Report controller Zhejiang Company Purchase Purchase of Market price Payment after Shangfeng controlled by varnished 411,979.24 0.75 products Industrial Co., family members wire Ltd of actual Market price Payment after Services Services of controller products custom 944.61 0.00 clearance Total -- 483,353.64 -- -- Description of return of bulk sales in details Inapplicable The actual performance (if any) of the estimated total The associated amount limit between the Company and the related amounts of day-to-day related party transactions to be parties and the subsidiaries did not exceed the estimated total amounts conducted in the period under review during the of day-to-day related party transactions by type. Reporting Period by type. The reason for the big difference between the transaction Inapplicable price and the market reference price 2. Related-party transactions arising from acquisition and sale of assets □ Applicable √ Inapplicable 3. Related-party transactions arising from joint investment in external parties □ Applicable √ Inapplicable 4. Credits and liabilities with related parties Was there any non-operating credit or liability with any related party? □ Yes √ No 5. Other significant related-party transactions √ Applicable □ Inapplicable Disclosure date of the Website where the interim Title of the interim announcement interim announcement announcement was disclosed 39 Midea Group Co., Ltd. 2014 Semi-Annual Report Announcement about related party transaction in relation to loans http://www.cninfo.com.cn 2014-01-28 and deposits of Shunde Rural Commercial Bank VIII. Occupation of the Company’s funds for non-operating purposes by the controlling shareholder and its related parties □ Applicable √ Inapplicable IX. Significant contracts and fulfillment thereof 1. Trusteeship, contracting and leasing (1) Trusteeship □ Applicable √ Inapplicable (2) Contracting □ Applicable √ Inapplicable (3) Leasing □ Applicable √ Inapplicable 2. Guarantees provided by the Company √ Applicable □ Inapplicable The Company's external guarantees (excluding guarantees provided for its subsidiaries) Guaranteed Guarantee amount Date of Whether Guaranteed Actual provided Name of guaranteed limit occurrence Guarantee Guarantee performan amount guaranteed for related party announcem (agreement type period ce was limit amount party or not ent issuing signing date) completed (yes or no) date None - - - - - - - - Total line of external guarantees Actual amount of external 0.00 0.00 approved during the Reporting guarantees provided during 40 Midea Group Co., Ltd. 2014 Semi-Annual Report Period (A1) the Reporting Period (A2) Total line of external guarantees Actual amount of external approved at the end of Reporting 0.00 guarantees provided at the end 0.00 Period (A3) of Reporting Period (A4) Guarantee provided by the Company for its subsidiaries Actual Whet Guarantee Guaranteed guarante her Guarantee Amount Date of amount limit ed perfor provided limit occurrence Guarantee Guarantee Name of guaranteed party announceme amount manc for related (ten (agreement type period nt issuing (ten e was party or not thousand signing date) date thousand comp (yes or no) Yuan) Yuan) leted Midea Group Finance Co., Ltd 2014-3-29 715,800 2012-12-31 0 Warranty 2014-12-31 No No Guangdong Midea Refrigeration No No 2012-12-31 264,734 Warranty Equipment Co., Ltd 2014-3-29 767,480 2014-12-31 GD Midea Group Wuhu Refrigeration No No 2012-3-1 0 Warranty Equipment Co., Ltd. 2014-3-29 40,000 2015-2-1 Foshan Midea Carrier Refrigeration No No 2012-11-14 8,296 Warranty Equipment Co., Ltd. 2014-3-29 53,000 2015-2-1 Midea Commercial Air Conditioning No No 2012-11-14 1,806 Warranty Equipment Co., Ltd., Guangdong Province 2014-3-29 26,000 2015-2-1 Guangdong Midea Lighting Electric No No 2012-12-31 0 Warranty Manufacturing Co., Ltd 2014-3-29 3,000 2014-12-31 Guangdong Midea Heating & Ventilation No No 2012-11-14 38,620 Warranty Equipment Co., Ltd. 2014-3-29 66,000 2015-2-1 Hefei Midea Heating & Ventilation No No 2012-12-31 6 Warranty Equipment Co., Ltd. 2014-3-29 27,000 2014-12-31 Chongqing Midea General Refrigeration No No 2012-12-31 0 Warranty Equipment Co., Ltd. 2014-3-29 19,000 2014-12-31 41 Midea Group Co., Ltd. 2014 Semi-Annual Report Guangdong GMCC Precise Manufacture No No 2012-11-14 2,399 Warranty Co., Ltd. 2014-3-29 55,500 2015-2-1 Guangdong GMCC Precise Manufacture No No 2012-11-14 328 Warranty Co., Ltd. 2014-3-29 42,500 2015-2-1 Anhui GMCC Refrigeration Equipment No No 2012-11-14 6,726 Warranty Co., Ltd. 2014-3-29 42,000 2015-2-1 Wuhu GMCC Air Conditioning Equipment No No 2012-11-14 70,493 Warranty Co., Ltd. 2014-3-29 84,900 2015-2-1 Hefei Midea Refrigerator Co., Ltd. 2014-3-29 81,500 2012-11-14 0 Warranty 2015-2-1 No No Hefei Hualing Co., Ltd. 2014-3-29 87,000 2012-11-14 799 Warranty 2015-2-1 No No Hubei Midea Refrigerator Co., Ltd. 2014-3-29 52,000 2012-3-1 0 Warranty 2014-3-1 No No Guangzhou Hualing Refrigerator Co., Ltd 2014-3-29 22,000 2012-3-1 701 Warranty 2014-3-1 No No Hefei Midea Washing Equipment No No 2012-2-1 0 Warranty Manufacturing Co., Ltd. 2014-3-29 40,000 2015-2-1 Ningbo Midea Joint Materials Supply Co. No No 2012-12-31 7,199 Warranty Ltd 2014-3-29 55,000 2014-12-31 Guangdong Welling Motor Co., Ltd. 2014-3-29 46,000 2012-11-14 885 Warranty 2015-2-1 No No Welling (Wuhu) Motor Manufacturing Co., No No 2012-11-14 2,881 Warranty Ltd 2014-3-29 40,000 2015-2-1 Foshan Welling Washer Motor No No 2012-11-14 6,946 Warranty Manufacturing Co., Ltd. 2014-3-29 65,200 2015-2-1 Foshan Welling Electronic and Electric No No 2012-11-14 91 Warranty Appliances Co., Ltd. 2014-3-29 10,000 2015-2-1 Foshan Welling Material Co., Ltd. 2014-3-29 15,000 2012-11-14 0 Warranty 2015-2-1 No No Guangdong Midea Life Electric No No 2012-12-31 490 Warranty Manufacturing Co., Ltd. 2014-3-29 27,000 2015-2-1 Foshan Shunde Midea Drinking No No 2012-12-31 170 Warranty Manufacturing Co., Ltd. 2014-3-29 18,000 2015-2-1 42 Midea Group Co., Ltd. 2014 Semi-Annual Report Foshan Shunde Midea Electric Appliance No No 2012-12-31 24,913 Warranty Manufacturing Co., Ltd. 2014-3-29 42,500 2015-2-1 Guangdong Midea Kitchen Appliances No No 2012-11-14 269,830 Warranty Manufacturing Co., Ltd. 2014-3-29 557,000 2015-2-1 Guangdong Witt Vacuum Electronics No No 2012-11-14 6,652 Warranty Manufacturing Co., Ltd. 2014-3-29 13,000 2015-2-1 Foshan Shunde Midea Washing Appliance No No 2012-11-14 86,952 Warranty Manufacturing Co., Ltd. 2014-3-29 292,500 2015-2-1 Wuhu Midea Washing Appliance No No 2012-11-14 91 Warranty Manufacturing Co., Ltd. 2014-3-29 14,500 2015-2-1 Guangdong Midea Environment No No 2012-11-14 88,211 Warranty Appliances Manufacturing Co., Ltd. 2014-3-29 148,000 2014-12-31 Guangdong Midea Kitchen & Bathroom No No 2012-11-14 0 Warranty Appliances Manufacturing Co., Ltd. 2014-3-29 15,000 2015-2-1 Foshan Midea Kitchen Appliances No No 2012-12-31 0 Warranty Manufacturing Co., Ltd. 2014-3-29 63,000 2014-12-31 Wuhu Midea Kitchen & Bathroom Electric No No 2012-2-1 665 Warranty Manufacturing Co., Ltd. 2014-3-29 15,000 2015-2-1 Jiangsu Midea Chunhua Electric Co., Ltd. 2014-3-29 23,000 2012-11-14 0 Warranty 2014-11-15 No No Wuhu Annto Logistics 2014-3-29 10,000 2012-11-14 0 Warranty 2015-2-1 No No Jiangxi Midea Guiya Lighting Co., Ltd. 2014-3-29 14,000 2012-12-31 1,556 Warranty 2014-12-31 No No Guangdong Midea Boutique Electric No No 2012-12-31 0 Warranty Manufacturing Co., Ltd. 2014-3-29 10,000 2015-2-1 Midea International Holdings Ltd. 2014-3-29 400,000 2011-8-31 238,736 Warranty 2014-8-31 No No Midea International Trading Co., Ltd 2014-3-29 45,000 2011-8-31 39,355 Warranty 2014-8-31 No No Calpore Macao Commercial Offshore Ltd. 2014-3-29 25,000 2011-8-31 25,058 Warranty 2014-8-31 No No Mecca International (BVI) Limited 2014-3-29 5,400 2011-8-31 3,920 Warranty 2014-8-31 No No Midea Electric Investment (BVI) Limited 2014-3-29 100,000 2011-8-31 66,724 Warranty 2014-8-31 No No 43 Midea Group Co., Ltd. 2014 Semi-Annual Report Midea Refrigeration (Hong Kong) Co., No No 2013-5-14 1,244 Warranty Ltd. 2014-3-29 31,500 2014-5-14 Midea Electric Trading (Singapore) Co. Long-term Long-term No No 163,275 Warranty Pte. Ltd 2014-3-29 450,000 effective effective Long-term Long-term No No 0 Warranty Midea Life Electric (Vietnam) Co., Ltd 2014-3-29 40,000 effective effective Long-term Long-term No No 9,054 Warranty PT.MIDEA HVAC INDONESIA 2014-3-29 10,000 effective effective Long-term Long-term No No 0 Warranty Midea Malaysia Joint Venture 2014-3-29 10,000 effective effective Long-term Long-term No No 0 Warranty Carrier Midea India Private Limited 2014-3-29 10,000 effective effective Long-term Long-term No No 0 Warranty Carrier S.A. 2014-3-29 effective effective 8,000 Long-term Long-term No No 0 Warranty Carrier Fueguina S.A. 2014-3-29 effective effective Actual amount of guarantees provided Total of guaranteed amount limit approved and provided 1,738,687 for subsidiaries 1,738,687 for subsidiaries during the Reporting Period (B1) during the Reporting Period (B2) Actual amount of guarantees provided Total of guaranteed amount limit approved and provided 1,439,807 for subsidiaries at 1,439,807 for subsidiaries at the end of Reporting Period (B3) the end of Reporting Period (B4) Total amount of guarantees provided by the Company (namely total amount of the above two items) Total amount of guarantees approved Actual amount of guarantees 44 Midea Group Co., Ltd. 2014 Semi-Annual Report during the Reporting Period 1,738,687 provided during the Reporting 1,738,687 (A1+B1) Period (A2+B2) Total amount of guarantees approved Actual amount of guarantees at the end of Reporting Period 1,439,807 provided at the end of 1,439,807 (A3+B3) Reporting Period (A4+B4) Ratio of total guarantee amount (i.e. A4+B4) to the Company's net asset 40.30% Of which: Amount of guarantee provided for shareholders, actual controller 0 and related party (C) Amount of guarantee of indebtedness directly or indirectly provided for the guaranteed party with the asset-liability ratio of 471,109 over 70% (D) The portion of total guarantee amount in excess of 50% of net 0 asset (E) Total of the above-mentioned three guarantee amounts (C+D+E) 471,109 Explanation on several and joint liability possibly borne for undue None guarantee Explanation of external guarantees in breach of the specified None procedures (1) Illegal provision of guarantees for external parties □ Applicable √ Inapplicable 3. Other significant contracts □ Applicable √ Inapplicable 45 Midea Group Co., Ltd. 2014 Semi-Annual Report 4. Other significant transactions □ Applicable √ Inapplicable 46 Midea Group Co., Ltd. 2014 Semi-Annual Report X. Commitments made by the Company or any shareholder holding over 5% of the Company’s shares in the reporting period or such commitments carried down into the reporting period √ Applicable □ Inapplicable Party involved Undertaking Undertaking in Details of undertaking Term Particulars on the performance date undertakin g 1.Undertaking of Midea Holding Ltd. (hereinafter referred to as "Midea Holding"), Apart from the 1. There is no violation of commitments. and He Xiangjian, respectively the controlling shareholder and actual controller of first item of Undertaking Midea Group Co., Ltd., towards the lock-up period of shares. commitments Controllin made in He Xiangjian and Midea Holding have undertaken as follows: Within 36 months since whose valid g offering the listing date of Midea Group's stocks, they will neither transfer or entrust others to duration shareholde 28 March, documents or manage their directly and indirectly held shares of Midea Group issued prior to this continues 36 rs 2013 shareholding issuance, nor sell them to Midea Group. If they break the above undertaking, they will months from Actual alternation assume all liabilities arising therefrom. the day, controller documents 2. Undertaking of Midea Holding and the actual controller He Xiangjian towards 18 September, 2. There is no violation of commitments. the maintenance of the independence of Midea Group. 2013, of Midea He Xiangjian and Midea Holding have undertaken as follows: He Xiangjian, Midea Group’s listing 47 Midea Group Co., Ltd. 2014 Semi-Annual Report Holding and their controlled enterprises will keep independent from Midea Group in to respect of personnel, finance, assets, business and institutions, etc. in accordance with 18 September, relevant laws and regulations and regulatory documents. They will faithfully fulfill the 2016, other above undertaking, and assume the corresponding legal liability. If they fail to fulfill their items are obligations and responsibilities conferred by the undertaking, they will bear the indefinite. corresponding legal liabilities according to relevant laws, rules, regulations and regulatory documents. 3. Undertaking of Midea Holding and the actual controller He Xiangjian towards 3. There is no violation of commitments. avoiding competition within the industry. In order to avoid possible competition within the industry between Midea Group and Midea Holding and its controlled enterprises as well as He Xiangjian, his immediate family and his controlled companies, He Xiangjian and Midea Holding have undertaken as follows: (1). None of the entities or individuals mentioned above is or will be engaged in the same or similar business as the existing main business of Midea Group and its controlled companies. They are not or will not be engaged or participating in such business that is competitive to the existing main business of Midea Group and its controlled companies by controlling other economic entities, institutions or economic organizations; (2). If Midea Group and its controlled companies expand their business on the basis of the existing ones to those where the above mentioned related entities or individuals have 48 Midea Group Co., Ltd. 2014 Semi-Annual Report already performed production and operation, as long as He Xiangjian is still the actual controller of Midea Group, and Midea Holding the controlling shareholder, they will agree on solving the problem of competition within the industry arising therefrom within a reasonable period; (3). If Midea Group and its controlled companies expand their business scope on the basis of the existing ones to those where the above mentioned related subjects have not gone into production or operation, as long as He Xiangjian is still the actual controller of Midea Group, and Midea Holding the controlling shareholder, they would undertake as not engage in competitive business to the new ones of Midea Group and its controlled companies; (4). In accordance with effective laws, regulations or other regulatory documents of People's Republic of China, as long as He Xiangjian is identified as the actual controller of Midea Group, and Midea Holding the controlling shareholder, they will not change or terminate this undertaking. (5). He Xiangjian and Midea Holding shall faithfully fulfill the above undertaking, and assume the corresponding legal responsibilities. If they fail to fulfill their obligations and responsibilities conferred by the undertaking, they would bear the corresponding legal responsibilities according to relevant laws, rules, regulations and regulatory documents. 4. Undertaking of Midea Holding and the actual controller He Xiangjian towards 4. There is no violation of commitments. the regulation of related transactions. 49 Midea Group Co., Ltd. 2014 Semi-Annual Report In order to regulate matters of related transactions that may occur in the future between Midea Group and Midea Holding and its controlled companies as well as He Xiangjian, his immediate family and his controlled companies, He Xiangjian and Midea Holding have undertaken as follows: (1) They will regulate related transactions with Midea Group and its controlled companies with their utmost efforts to reduce them. For unavoidable related transactions with Midea Group and its controlled companies, including but not limited to commodity trading, providing services to each other or as agent, they will sign legal normative agreements with Midea Group, and go through approval procedures in accordance with related laws, regulations, rules, other regulatory documents, and relevant provisions of the Articles of Association of Midea Group. They guarantee to offer fair prices for related transactions, and fulfill the information disclosure obligations in respect of the related transactions according to related laws, regulations, rules, other regulatory documents, and relevant provisions of the Articles of Association of Midea Group. They also guarantee not to illegally transfer the funds or profits from Midea Group, or damage the interests of its shareholders at their advantages during the related transactions. (2) They shall fulfill the obligation of withdrawing from voting that involves the above mentioned related transactions at the general meeting of Midea Group; (3) The related subject mentioned above shall not require Midea Group to offer more favorable conditions than those to any independent third party in any fair market 50 Midea Group Co., Ltd. 2014 Semi-Annual Report transactions. (4) In accordance with effective laws, regulations or other regulatory documents of People's Republic of China, as long as He Xiangjian is identified as the actual controller of Midea Group, and Midea Holding the controlling shareholder, they shall not change or terminate this undertaking. (5) He Xiangjian and Midea Holding will faithfully fulfill the above undertaking and assume the corresponding legal liabilities. If they fail to fulfill their obligations and responsibilities conferred by the undertaking, they will bear the corresponding legal responsibilities according to relevant laws, rules, regulations and regulatory documents. 5. Related undertaking by He Xiangjian, the actual controller of Midea Group, on 5. So far, this shareholding transfer has not brought Midea Trade Union Committee transferring its limited equity of Midea Group. about any loss caused by any dispute or potential On 4 January , 2001, the Midea Trade Union Committee signed the "Equity Transfer disputes. There is no violation of commitments. Contract" with five people, i.e. He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning and Liang Jieyin, where it will transfer its all limited equity of Midea Group (22. 85%) respectively to those five people. According to the confirmation letter issued by members of the Midea Trade Union Committee at that time, the equity transfer price was determined after mutual discussion on the basis of their true opinions, therefore there was no dispute or potential dispute. On 28 June, 2013, Foshan Shunde Beijiao General Union, superior department of Midea Trade Union Committee, issued a confirmation letter for the fact that the Midea Trade 51 Midea Group Co., Ltd. 2014 Semi-Annual Report Union Committee funded for the establishment of Midea Group Co., Ltd. What's more, the letter also confirmed that the council of Midea Trade Union Committee is entitled to dispose the property of the committee, and such property disposal needs not agreement from all staff committee members. Midea Holding and He Xiangjian, respectively the controlling shareholder and actual controller of Midea Group Co., Ltd. have undertaken as follows: For any loss of Midea Group caused by any dispute or potential dispute arising from the matters of equity transfer mentioned above, they are willing to assume full liability for such loss. 6. Commitments on Issues about Payment of the Staff Social Insurance and the 6. So far, the payment of the staff social insurance Housing Provident Fund involved in Midea Group's Overall Listing and the housing provident fund has not brought Midea Holding and He Hengjian: Midea Holding have undertaken to be liable for (1) about any controversy or potential disputes. There is paying such expenses and related expenses in time based on the requirements of relevant no violation of commitments. state departments if Midea Group is required to be liable for the payment of the staff social insurance and the housing provident fund and the payment required by relevant state authorities before this merger, (2) paying corresponding compensation for all direct and indirect losses of Midea Group and its subsidiaries due to this merger, (3) indemnifying and holding harmless Midea Group and its subsidiaries in time from such expenses when Midea Group and its subsidiaries are required to pay them in advance. 7. Commitments on issues about asset alteration, asset flaw and house leasing of 7.1 The Process of Property Ownership Certificate: Midea Group and its subsidiaries The "Report" discloses that our company owns 177 52 Midea Group Co., Ltd. 2014 Semi-Annual Report Midea Holding and He Hengjian have undertaken as follows: properties, which cover an area of 2,148,485.65 square (1) Midea Holding will do its utmost to assist and urge Midea Group (including its meters. Property Ownership Certificates are being subsidiaries) to complete renaming procedures of related assets, such as land, house, processed for houses in size of 65 square meters So far, trademark, patent and stock right, declared in related files of this merger. Midea 43 applications have been approved, the area of which Holding will be liable for all compensations of losses caused by issues about renaming covers 1,470,388.83 square meters, accounting for procedures of related assets above to Midea Group. 68.41% of total area; 19 applications are under process, (2) Midea Holding shall do its utmost to assist Midea Group (including its subsidiaries) the area of which covers 618,959.62 square meters, to apply for ownership certificates of land and house declared in related files of this accounting for 28.80% of total area, and the properties merger. under process of ownership certificates has not brought (3) Midea Holding shall assist Midea Group (including its subsidiaries) to re-apply for about any controversy or dispute; remaining 115 corresponding construction procedures and apply for their ownership certificates for properties, the area of which covers 60161.54 square houses without complete procedures, left over from history, to apply for the ownership meters, account for 2.8% of total area, and there certificate. If the competent authorities requires Midea Group to dismantle buildings that properties are all auxiliary facilities and their unit area can't have the re-application for real estate registration procedures, Midea Holding shall is very small, such as gate booth, transformer room, do its utmost to provide assistance and be liable for related expenses used for dismantling power room, pump room, gas station and so on, for such buildings by Midea Group (including its subsidiaries). which property ownership certificates can't be applied (4) Under the circumstances that Midea Group suffers from loss of no longer using or in for. So far these 115 properties has not been required to the present way using the land or house above caused by failing to obtain or collect in be dismantled by competent departments so that these time the ownership certificates of the land or house above or loss caused by other buildings are still in regular use, which has not brought reasons, Midea Holding shall compensate any loss for these reasons in time and fully. about any controversy or any company loss caused by 53 Midea Group Co., Ltd. 2014 Semi-Annual Report Midea Holding shall compensate the actual loss Midea Group suffers from for that the disputes. There is no violation of commitments. circumstances above result in punishments of competent authorities or claims of any third party. 7.2 The Use of Rental Houses of This Company (5) Based on the issues of defective house leasing declared in related files of this merger, The "Report" discloses that as of 31 December, 2012 , Midea Holding shall provide sufficient compensations for all economic losses for our company used 113 leasing houses in total, of which Midea Group (including its subsidiaries) when leasehold relations above become invalid our company can't get the property certificate of 100 or other disputes occur, which is caused by a rights claim of the third party or a rights leasing houses from the leasing party. So far the exercising of the administrative organ and results in economic losses of removing to contracts of 50 of the 113 rental houses haven't been other rental houses, penalty by competent government departments or recourse of related signed to extend the leasehold. The property certificates parties. of 6 of the remaining 63 houses have been obtained (6) Based on the issues of defective land leasing declared in related files of this merger, while the other 57 certificates haven't been obtained. when leasehold relations become invalid that is caused by defects of land leasing or other These 57 rental houses haven't rendered our company disputes occur, which results in economic losses Midea Group (including its subsidiaries) any economic loss or penalty caused by defective suffers from or penalty by competent government departments, meanwhile if the lesser property rights, which result in removing to other rental can't compensate losses caused by such defective leasing, Midea Holding shall houses. compensate Midea Group for losses caused by such defective land leasing Midea Holding will compensate any losses of Midea Group when a violation of 7.3 Land Use Rights of Leasing Use guarantees and commitments above occurs or such guarantees and commitments are not The "Report" discloses that as of 31 December, 2012, consistent with the reality. our company has had one case of using rental houses, the total area of which is 57,506.95 square meters. The 54 Midea Group Co., Ltd. 2014 Semi-Annual Report lesser of the rental land mentioned above hasn't provided ownership files of owning access to this land. So far this rental land hasn't rendered our company any controversy or any loss caused by disputes. There is no violation of commitments. 7.4 The Procedures of Renaming Land Owner Under Process Caused by the Alteration of the Company's Name The "Report" discloses that there are still 10 cases under process of renaming land owner caused by changing the company's name in our company and its subsidiaries. So far, five cases have been approved and the other five cases are still under process, which haven't rendered our company any loss. There is no violation of commitments. 7.5 Processing the Renaming Procedures of Some Trademarks So far, 8 cases of the 62 trademarks involved in the "Report" should be applied for cancellation of the 55 Midea Group Co., Ltd. 2014 Semi-Annual Report subjects of their owners and these trademarks shall be no longer in use. The company will no apply for the renaming procedures for those trademarks. The renaming procedures of the remaining 54 cases have been processed and this commitment has been fulfilled. There is no violation of commitments. 1. Shareholders of Midea Group, Ningbo Meisheng, Fang Hongbo, Huang Jian, Cai Apart from the Qiwu, Yuan Liqun, Huang Xiaoming, Li Jianwei, Zheng Weikang, promise that Since first item of Midea Group was listed at Shenzhen Stock Exchange Center, transferring or delegating commitments others to manage the shares with direct or indirect ownership of Midea Group issued whose valid before this time has been forbidden within 36 months. Midea Group is not allowed to buy duration Other back those shares either. 28 March, continues 36 There is no violation of commitments. shareholde 2013 months from rs 2. Zhuhai Rongrui and Jiazhao Holding are in a relation of persons acting in concert. the day, 18 Both jointly hold 7.9% shares of Midea Group. Commitments on Locked-up Shares, September, CDH Jiatai, CDH M-Tech and CDH Spark are in a relation of persons acting in concert. 2013, of Midea Both jointly hold 4.63% shares of Midea Group Commitments on Locked-up Shares: Group’s listing Since Midea Group was listed at Shenzhen Stock Exchange Center, transferring or to 18 delegating others to manage the shares with direct or indirect ownership of Midea Group September, 56 Midea Group Co., Ltd. 2014 Semi-Annual Report issued before this time has been forbidden within 12 months. Midea Group is not allowed 2016, other to buy back those shares either. items are indefinite. 3. The former Midea Group Supervisor, Liao Wenjian, holds 7,000 shares (6,033 after stock-for-stock and increase by transferring) and promises that since Midea Group was listed at Shenzhen Stock Exchange Center, transferring or delegating others to manage the shares with direct or indirect ownership of Midea Group issued before this time has been forbidden within 12 months. Midea Group is not allowed to buy back those shares either. 4. The mother of Midea Group Secretary of the Board- Jiang Peng, Huang Lazhen, holds 7,100 shares of Midea Electric Appliances (6,117 after stock-for-stock and increase by transferring) and promises that since Midea Group was listed at Shenzhen Stock Exchange Center, transferring or delegating others to manage the shares with direct or indirect ownership of Midea Group issued before this time has been forbidden within 12 months. Midea Group is not allowed to buy back those shares either. Whether to fulfill the Yes commitment in 57 Midea Group Co., Ltd. 2014 Semi-Annual Report time 58 Midea Group Co., Ltd. 2014 Semi-Annual Report XI. Engagement and disengagement of the CPAs firm Has the semi-annual financial report been audited? □ Yes √ No XII. Punishments and rectifications □ Applicable √ Inapplicable XIII. Delisting risk due to violation of laws or regulations □ Applicable √ Inapplicable XIV. Other significant events √ Applicable □ Inapplicable On 7 June, 2014, Midea Group issued the business prompted bulletin with partial offer to all shareholders of the wholly-owned subsidiary, Wuxi Little Swan Company Limited. In the Bulletin, Midea group plans to wholly control the overseas company, TITONI, as the person acting in concert by the method of partial offer. It plans to purchase 126,497,553 shares of Little Swan, occupying 20% of the general capital. Shareholders of A-shares and B-shares of Little Swan would purchase shares in advance by the offer. It is planned that on the basis of arithmetic mean value of daily weighted average prices of A-shares and B-shares before 30 trading days, A-shares and B-shares would be purchased with 15% premium, thereinto price of A-shares without dividend is 10.75 Yuan/share and price of B-shares without dividend is 10.43 HKD/share. On 16 April, 2014, the Little Swan annual equity allocation program has been approved on the 2013 general meeting. Little Swan would distribute 3 Yuan for each 10 shares on the cardinal number of 632,487,764 general capital shares. The cash bonus for B-shares shareholders should be paid on the first workday after resolution, 17 April, 2014 with the middle rate issued by People’s Bank of China from Renminbi to Hong Kong dollar (HKD:RMB= 1: 0.7941). On 6 June, 2014, Little Swan published the 2013 Annual Equity Allocation Bulletin, indicating that ex-rights and ex-dividend date of A-shares and B-shares is 12 June, 2014. Until the end of report period, Little Swan 2013 Annual Equity Allocation has been completed. Therefore, the purchase price of tender offer is 10.45 Yuan/share for A-shares and 10.05 HKD/share for B-shares. The offer would be expired on 1 August, 2014 with 16,286,546 shares of Little Swan A-shares and 63,353,228 shares of Little Swan B-shares, occupying 12.59% of the general capital. 59 Midea Group Co., Ltd. 2014 Semi-Annual Report Section VI. Change in Shares & Shareholders I. Change in shares Unit: Share Before this alteration Increase or decrease of this alteration (+, -) After this alteration Shares Proporti Issuin Sendin transferred Proporti Amount on g new g from public Others Subtotal Amount on (%) shares shares accumulation (%) fund 1. Restricted Shares 1,000,005,480 59.30% 0 0 1,500,008,040 4,837,557 1,504,845,597 2,504,851,077 59.41% 1.1 State Shareholding 0 0.00% 0 0 0 0 0 0 0.00% 1.2 State-owned 0 0.00% 0 0 0 0 0 0 0.00% Corporate Shareholding 1.3 Other Domestic-funded 941,505,480 55.83% 0 0 1,412,258,040 4,837,557 1,417,095,597 2,358,601,077 55.94% Shareholdings Where: Domestic 781,500,000 46.34% 0 0 1,172,250,000 0 1,172,250,000 1,953,750,000 46.34% Corporate Shareholding Domestic Natural Persons' 160,005,480 9.49% 0 0 240,008,040 4,837,557 244,845,597 404,851,077 9.60% Shareholding 1.4 Overseas-funded 58,500,000 3.47% 0 0 87,750,000 0 87,750,000 146,250,000 3.47% Shareholding Where: Overseas 58,500,000 3.47% 0 0 87,750,000 0 87,750,000 146,250,000 3.47% Corporate Shareholding Overseas Natural Persons' 0 0.00% 0 0 0 0 0 0 0.00% Shareholding 60 Midea Group Co., Ltd. 2014 Semi-Annual Report 2. Non-restricted Shares 686,317,909 40.70% 0 0 1,029,477,043 -4,837,557 1,024,639,486 1,710,957,395 40.59% 2.1 RMB Equity 686,317,909 40.70% 0 0 1,029,477,043 -4,837,557 1,024,639,486 1,710,957,395 40.59% 2.2 Domestic Listed 0 0.00% 0 0 0 0 0 0 0.00% Overseas-funded Shares 2.3 Overseas Listed 0 0.00% 0 0 0 0 0 0 0.00% Overseas-funded Shares 2.4 Others 0 0.00% 0 0 0 0 0 0 0.00% 3. Total Shares 1,686,323,389 100.00% 0 0 2,529,485,083 0 2,529,485,083 4,215,808,472 100.00% Reasons for changes in shares √ Applicable □ Inapplicable 1. According to the resolution of the general meeting, on 30 April, 2014, the Company granted 15 additional shares for every 10 shares using the capital reserve. 2. With confidence in a long-term solid growth, in June, 2014, led by Chairman and President Mr. Fang Hongbo, the top management bought in a total of 6,450,000 shares of Midea Group from the secondary market. Approval of share changes □ Applicable √ Inapplicable Transfer of share ownership □ Applicable √ Inapplicable Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and the last reporting period. √ Applicable □ Inapplicable During the report period, the capital reserve increase from accumulation fund from each 10 shares to 15 shares has completed on 30 April. The general capital shares increase from 1,686,323,389 to 4,215,808,472. The influences of shares alteration on financial indicators, such as basic earnings per share, diluted earnings per share and net assets per share that belong to shareholders of equities in the last year or period. 2013 First half of 2014 Index Calculated on original shares Calculated on new shares Calculated on new shares Basic EPS (earnings 4.33 1.73 1.57 61 Midea Group Co., Ltd. 2014 Semi-Annual Report per share) Diluted EPS (earnings 4.33 1.73 1.57 per share) Net asset value per 19.47 7.79 8.50 share Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose □ Applicable √ Inapplicable Change of the total shares, shareholder structure, asset structure and liability structure □ Applicable √ Inapplicable II. Total number of shareholders and their shareholdings Unit: share Total number of preferred share Total number of common holders who had resumed their shareholders at the end of the 90,273 0 voting right at the end of the reporting period reporting period (if any) Shareholdings of shareholders holding more than 5% shares or top 10 shareholders Pledged or Increase/dec Number of frozen Sharehol rease of Number of shares held at Number of shares Nature of ding shares non-restricte Name of shareholder the end of the restricted Statu Num shareholder percenta during the d shares reporting shares held s of ber of ge (%) reporting held period shar share period es s Domestic Midea Holding Co., Ltd. non-state-owned 35.49% 1,496,250,000 897,750,000 1,496,250,000 0 legal persons Rongrui Equity Investment Domestic (Zhuhai) Partnership (limited non-state-owned 7.22% 304,500,000 182,700,000 304,500,000 0 partnership) legal persons Fang Hongbo Domestic Natural 2.17% 91,326,995 55,326,995 90,995,247 331,748 persons 62 Midea Group Co., Ltd. 2014 Semi-Annual Report Tianjin CDH Jiatai Equity Domestic Investment Partnership non-state-owned 1.85% 78,000,000 46,800,000 78,000,000 0 (limited partnership) legal persons Huang Jian Domestic Natural 1.79% 75,400,000 45,400,000 75,000,000 400,000 persons Ningbo Meisheng Equity Domestic Investment Partnership non-state-owned 1.78% 75,000,000 45,000,000 75,000,000 0 (limited partnership) legal persons Domestic Natural Yuan Liqun 1.44% 60,500,000 36,500,000 60,375,000 125,000 persons CDH M-Tech (HK) Co., Ltd. Overseas legal 1.42% 60,000,000 36,000,000 60,000,000 0 persons CDH Spark (HK) Co., Ltd. Overseas legal 1.36% 57,500,000 34,500,000 57,500,000 0 persons National Social Security Fund State-owned legal 1.28% 53,888,858 32,199,970 0 53,888,858 104 Portfolio persons Strategic investor or general corporation becoming a top ten shareholder due to placing of Inapplicable new shares (if any) Two natural person shareholders, Mr. Fang Hongbo and Ms. Yuan Liqun, serve Explanation on associated relationship or/and as director and senior executive; CDH Jiatai, CDH M-Tech and CDH Spark that persons acting in concert among the above-mentioned shareholders hold 4.63% shares of Midea Group have an association relation and are shareholders acting in concert. Shareholdings of the top ten shareholders holding non-restricted shares Number of Type of share Name of shareholder non-restricted shares held at the period-end Type Number 53,888,858 RMB ordinary 53,888,858 National Social Security Fund 104 Portfolio shares 48,451,743 RMB ordinary 48,451,743 Ningbo Kailian Industrial Development Co., Ltd. shares 63 Midea Group Co., Ltd. 2014 Semi-Annual Report MERRILL LYNCH INTERNATIONAL 44,660,825 RMB ordinary 44,660,825 shares National Social Security Fund 103 Portfolio 41,297,117 RMB ordinary 41,297,117 shares China Construction Bank- Bosera Thematic Sectors securities 34,696,709 RMB ordinary 34,696,709 investment funds shares China Construction Bank- Penghua Value Advantage Stock-based 33,003,435 RMB ordinary 33,003,435 Securities Investment Fund shares National Social Security Fund 102 Portfolio 32,640,483 RMB ordinary 32,640,483 shares UBS AG 28,914,598 RMB ordinary 28,914,598 shares Bosera Value Advantage Stock-based Securities Investment Fund 25,553,708 RMB ordinary 25,553,708 shares MORGAN STANLEY & CO. INTERNATIONAL PLC 24,968,393 RMB ordinary 24,968,393 shares Ningbo Kailian Industrial Development Co., Ltd. acts in concert with Midea Holding Co., Ltd. The company hasn't confirmed that there exists association relations among other Explanation on associated relationship or/and persons acting in concert among the top ten tradable shareholders and between the top shareholders of tradable shares and whether other ten tradable shareholders and the top ten shareholders shareholders of tradable shares belongs to persons acting in concert specified in "Management of Information Disclosure for Shareholding Alteration in a Listed Company". Explanation on the top 10 shareholders participating in the margin Naught trading business (if any) Did any shareholder of the Company carry out an agreed buy-back in the reporting period? □ Yes √ No III. Change of the controlling shareholder or the actual controller Change of the controlling shareholder in the reporting period 64 Midea Group Co., Ltd. 2014 Semi-Annual Report □ Applicable √ Inapplicable Change of the actual controller in the reporting period □ Applicable √ Inapplicable IV. Any shareholding increase plan proposed or implemented by any shareholder or its act-in-concert party during the reporting period □ Applicable √ Inapplicable 65 Midea Group Co., Ltd. 2014 Semi-Annual Report Section VII. Preferred Shares I. Issuance and listing of preferred shares in the reporting period □ Applicable √ Inapplicable II. Number of preferred share holder and their shareholdings □ Applicable √ Inapplicable III. Buy-back or conversion of preferred shares □ Applicable √ Inapplicable IV. Resumption and exercise of voting rights of preferred shares □ Applicable √ Inapplicable V. Accounting policies adopted for preferred shares and reasons □ Applicable √ Inapplicable 66 Midea Group Co., Ltd. 2014 Semi-Annual Report Section VIII. Directors, Supervisors & Senior Management Staff I. Change of shareholdings of directors, supervisors and senior management staff □ Applicable √ Inapplicable Sharehol Shareholdi Restricted ding ng shares Shareholding decrease Shareholdin Restricted Restricted increase granted Current at the during g at the shares held at shares held at Name Position during the during this /former period-begin the period-end the period- the period- end reporting reporting (share) reportin (share) begin (share) (share) period period g period (share) (share) (share) Fang Chairman and Current 36,000,000 1,326,995 0 91,326,995 0 0 0 Hongbo President Director, Vice President and Yuan Chief Current 24,000,000 500,000 0 60,500,000 0 0 0 Liqun Financial Officer Director and Cai Qiwu Former 20,000,000 1,806,830 0 51,806,830 0 0 0 Vice President Huang Director and Former 20,000,000 2,213,366 0 52,213,366 0 0 0 Xiaoming Vice President Wu Director and Current 0 0 0 0 0 0 0 Wenxin Vice President Li Jianwei Director Current 20,000,000 603,042 0 50,603,042 0 0 0 He Director Current 0 0 0 0 0 0 0 Jianfeng Li Feide Director Current 0 0 0 0 0 0 0 Xu Hai Director Current 0 0 0 0 0 0 0 Hu Director Current 0 0 0 0 0 0 0 Xiaoling Wu Independent Current 0 0 0 0 0 0 0 Shinong Director Fu Independent Current 0 0 0 0 0 0 0 Zhengping Director Zhu Independent Current 0 0 0 0 0 0 0 67 Midea Group Co., Ltd. 2014 Semi-Annual Report Guilong Director Guo Independent Current 0 0 0 0 0 0 0 Xuejin Director Independent Li Wenjing Current 0 0 0 0 0 0 0 Director Chairman of the Zeng Qiao Current 0 0 0 0 0 0 0 Supervisory Committee Zheng Supervisor Former 10,000,000 0 0 25,000,000 0 0 0 Weikang Worker-repres Liao entative Former 2,413 500 0 7,283 0 0 0 Wenjian supervisor Worker-repres Jiang entative Former 0 0 0 0 0 0 0 Deqing supervisor Zhao Jun Supervisor Current 0 0 0 0 0 0 0 Worker-repres Li entative Current 0 0 0 0 0 0 0 Baoqiong supervisor Zhu Vice President Current 0 0 0 0 0 0 0 Fengtao Gu Vice President Current 0 0 0 0 0 0 0 Yanmin Company Jiang Peng Current 0 0 0 0 0 0 0 Secretary Total -- -- 130,002,413 6,450,733 0 331,457,516 0 0 0 Notes: Main reasons for the change of the share capital: 1. The Company granted 15 additional shares for every 10 shares using the capital reserve in the reporting period; and 2. In Jun. 2014, the top management team led by Chairman & President Mr. Fang Hongbo bought in a total of 6,450,000 shares of Midea Group on the secondary market. II. Change of directors, supervisors and senior management staff □ Applicable √ Inapplicable Name Position Type Date Reason 68 Midea Group Co., Ltd. 2014 Semi-Annual Report Worker-represent Liao Wenjian Former 8 Jan. 2014 Job turnover ative supervisor Worker-represent Jiang Deqing Elected 8 Jan. 2014 ative supervisor Zheng Weikang Supervisor Former 27 Mar. 2014 Job turnover Zhao Jun Supervisor Elected 27 Mar. 2014 Director and Wu Wenxin Elected 21 Apr. 2014 Vice President Zhu Fengtao Vice President Elected 21 Apr. 2014 Gu Yanmin Vice President Elected 21 Apr. 2014 Worker-represent Jiang Deqing Former 27 May 2014 Job turnover ative supervisor Worker-represent Li Baoqiong Elected 27 May 2014 ative supervisor Note: Former Director & Vice President Mr. Cai Qiwu and Mr. Huang Xiaoming submitted their resignations to the Company on 4 Jul. 2014, resigning as Director & Vice President due to personal and job turnover reasons. 69 Midea Group Co., Ltd. 2014 Semi-Annual Report Section IX. Financial Report (The 2014 Semi-annual Report of the Company has not been audited by a CPAs firm.) Consolidated Balance Sheet Prepared by: Midea Group Co., Ltd. 30 Jun. 2014 Unit: RMB’000 Asset Note Closing balance Opening balance Current Assets: Monetary funds 1 16,724,752.40 15,573,683.04 Deposit in Central Bank 2 845,485.75 923,632.22 Deposit in other banks 3 301,326.62 1,746,284.24 Transactional financial assets 4 87,046.63 759,565.22 Notes receivable 5 18,041,673.42 14,150,532.20 Accounts receivable 6 12,733,090.01 7,928,438.25 Accounts paid in advance 7 1,894,869.60 2,432,420.54 Loans and advances to 8 4,955,475.26 5,100,085.71 customers Interest receivable Dividends receivable 9 54,072.87 25,863.84 Other accounts receivable 10 1,214,722.96 1,025,395.19 Inventories 11 10,056,015.77 15,197,723.84 Non-current assets due within 1 year Other current assets 12 18,491,454.40 463,107.71 Total current assets 85,399,985.69 65,326,732.00 Non-current assets: Available-for-sale financial 13 1,007.45 1,068.60 assets Held-to-maturity investments Long-term accounts receivable Long-term equity 15 1,774,069.89 1,755,798.09 investments 70 Midea Group Co., Ltd. 2014 Semi-Annual Report Investing properties 16 140,143.61 205,834.70 Fixed assets 17 19,829,755.95 19,572,161.32 Construction in progress 18 418,344.90 612,601.28 Engineering materials Disposal of fixed assets Intangible assets 19 3,478,664.88 3,325,738.40 R&D expense Goodwill 20 2,931,003.59 2,931,003.59 Long-term deferred expenses 21 661,961.02 647,882.34 Deferred income tax assets 22 3,454,620.81 2,567,204.45 Other non-current assets Total non-current assets 32,689,572.10 31,619,292.77 Total assets 118,089,557.79 96,946,024.77 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Consolidated Balance Sheet (Continued) Prepared by: Midea Group Co., Ltd. 30 Jun. 2014 Unit: RMB’000 Liabilities and shareholders’ Note Closing balance Opening balance equity Current liabilities: Short-term borrowings 24 18,313,554.60 8,872,173.98 Borrowings from the Central 25 29,998.40 89,708.03 Bank Customer bank deposits and due to banks and other financial 277.14 61.00 institutions Intra-group borrowings Transactional financial 26 126,144.43 11,260.18 liabilities 71 Midea Group Co., Ltd. 2014 Semi-Annual Report Notes payable 27 5,759,289.32 6,308,478.45 Accounts payable 28 18,869,813.91 17,508,099.66 Accounts received in advance 29 4,175,925.51 4,983,346.26 Payroll payable 30 1,394,567.21 1,968,837.73 Taxes and fares payable 31 2,792,337.06 1,028,015.10 Interest payable 32 88,789.61 69,823.87 Dividends payable 33 292,712.84 94,046.21 Other accounts payable 34 1,361,488.79 1,487,781.02 Non-current liabilities due 35 275,927.84 1,617,370.17 within 1 year Other current liabilities 36 20,666,990.47 12,608,380.03 Total current liabilities 74,147,817.13 56,647,381.69 Non-current liabilities: Long-term borrowings 37 682,486.42 711,464.64 Bonds payable 38 158,191.59 152,716.59 Long-term payables Specific payables 720,418.52 52,073.96 Projected liabilities 39 26,027.05 33,466.19 Deferred income tax 22 53,002.54 123,797.62 liabilities Other non-current liabilities 40 143,510.64 144,561.80 Total non-current liabilities 1,783,636.76 1,218,080.80 Total liabilities 75,931,453.89 57,865,462.49 Shareholders’ equity Share capital 41 4,215,808.47 1,686,323.39 Capital reserves 42 12,760,847.63 15,620,790.78 Less: Treasury stock Surplus reserves 43 569,544.32 569,544.32 Retained profits 44 18,542,475.19 15,304,989.21 Foreign exchange difference -361,164.84 -334,216.66 Total equity attributable to 35,727,510.77 32,847,431.04 owners of the Company Minority interests 6,430,593.13 6,233,131.24 72 Midea Group Co., Ltd. 2014 Semi-Annual Report Total shareholders’ equity 42,158,103.90 39,080,562.28 Total liabilities and 118,089,557.79 96,946,024.77 shareholders’ equity Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Consolidated Income Statement Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Item Note Current period Same period of last year I. Operating revenues 77,708,218.36 66,047,405.11 Including: Sales income 1 77,330,851.84 65,939,479.12 Interest income 376,858.22 107,925.99 Handling charge and commission 508.30 income II. Operating costs 69,018,279.27 61,301,220.13 Including: Cost of sales 1 57,343,283.31 50,818,563.75 Interest expenses 191,553.43 79,864.23 Handling charge and commission 727.61 682.27 expenses Business tax and surtaxes 2 446,827.77 344,871.74 Selling expenses 3 7,623,680.06 6,134,252.63 Administrative expenses 4 3,349,324.40 3,157,978.59 Financial expenses 5 -288,553.70 581,588.60 Asset impairment loss 6 351,436.39 183,418.32 Add: Gain/(loss) from change in fair value 7 -788,353.68 331,319.88 (“-” for loss) Investment gains 8 426,447.09 437,475.62 Including: share of profits in associates and 34,977.39 25,667.61 joint ventures III. Operating profits 8,328,032.50 5,514,980.48 Add: non-operating income 9 553,423.06 354,675.47 73 Midea Group Co., Ltd. 2014 Semi-Annual Report Less: non-operating expense 10 133,112.02 147,762.31 Including: loss from non-current asset 99,791.39 85,285.81 disposal IV. Total profits 8,748,343.54 5,721,893.64 Less: Income tax expense 11 1,530,715.47 980,052.69 V. Net profit 7,217,628.07 4,741,840.95 Including: Net profit achieved by combined parties before the combinations Attributable to owners of the Company 6,610,132.76 2,646,834.61 Minority shareholders’ income 607,495.31 2,095,006.34 VI. Earnings per share (I) Basic earnings per share 12 1.57 1.06 (II) Diluted earnings per share 12 1.57 1.06 Ⅶ. Other comprehensive incomes 13 -391,206.22 -168,451.58 Ⅷ. Total comprehensive incomes 6,826,421.85 4,573,389.37 Attributable to owners of the Company 6,185,869.45 2,597,845.35 Attributable to minority shareholders 640,552.40 1,975,544.02 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Consolidated Cash Flow Statement Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Item Note Current period Same period of last year I. Cash flows from operating activities: Cash received from sale of commodities 50,376,575.36 44,476,563.82 and rendering of service Net increase of deposits from customers 216.14 and dues from banks Net increase of loans from the central -59,709.63 bank 74 Midea Group Co., Ltd. 2014 Semi-Annual Report Cash received from interest, handling 377,366.52 107,925.99 charges and commissions Tax refunds received 1,916,846.95 1,676,850.99 Other cash received relating to operating 1 1,235,894.43 1,097,569.73 activities Subtotal of cash inflows from operating 53,847,189.77 47,358,910.53 activities Cash paid for goods and services 23,640,077.67 24,606,772.88 Net increase of customer lendings and -140,373.38 2,256,413.04 advances Net increase of funds deposited in the -74,239.40 235,567.08 central bank and amount due from banks Cash for paying interest, handling 193,074.20 39,338.69 charges and commissions Cash paid to and for employees 5,562,772.47 4,713,708.27 Various taxes paid 4,432,638.16 3,539,645.08 Other cash payment relating to operating 2 7,061,777.20 8,398,101.86 activities Subtotal of cash outflows from operating 40,675,726.92 43,789,546.90 activities Net cash flows from operating activities 13,171,462.85 3,569,363.63 II. Cash flows from investing activities: Cash received from retraction of 4,001,000.00 1,000.00 investments Cash received from return on 288,626.73 414,878.02 investments Net cash received from disposal of fixed assets, intangible assets and other long-term 1,116,283.31 192,402.45 assets Net cash received from disposal of 91,299.20 subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from 5,405,910.04 699,579.67 investing activities Cash paid to acquire fixed assets, 1,388,961.92 1,268,893.55 75 Midea Group Co., Ltd. 2014 Semi-Annual Report intangible assets and other long-term assets Cash paid for investment 26,488,790.03 Net cash paid to acquire subsidiaries and 14,878.11 other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing 27,892,630.06 1,268,893.55 activities Net cash flows from investing activities -22,486,720.02 -569,313.88 III. Cash flows from financing activities: Cash received from capital 11,596.04 contributions Including: Cash received from minority 11,596.04 shareholder investments by subsidiaries Cash received from borrowings 24,804,161.79 16,739,126.11 Subtotal of cash inflows from financing 24,804,161.79 16,750,722.15 activities Cash repayment of borrowings 15,368,031.10 10,999,678.30 Cash for repaying medium term notes 1,000,000.00 2,000,000.00 Cash for repaying short-term financing 1,000,000.00 bonds Cash paid for interest expenses and 3,644,368.15 1,758,519.71 distribution of dividends or profit Including: dividends or profit paid by 268,328.09 1,421,355.93 subsidiaries to minority shareholders Other cash payments relating to 577,000.00 financing activities Sub-total of cash outflows from financing 20,012,399.25 16,335,198.01 activities Net cash flows from financing activities 4,791,762.54 415,524.14 IV. Effect of foreign exchange rate changes -11,048.22 -10,829.95 on cash and cash equivalents V. Net increase in cash and cash -4,534,542.85 3,404,743.94 equivalents Add: Opening balance of cash and 16,763,873.80 12,544,078.77 cash equivalents 76 Midea Group Co., Ltd. 2014 Semi-Annual Report VI. Closing balance of cash and cash 12,229,330.95 15,948,822.71 equivalents Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu 77 Midea Group Co., Ltd. 2014 Semi-Annual Report Consolidated Statement of Changes in Shareholders’ Equity Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Current period Equity attributable to shareholders of the Company Item Total Less: Minority Specific Retained shareholders’ Share capital Capital reserve treasury Surplus reserve Others interests reserve profit equity stock I. Balance at the end of the 1,686,323.39 15,620,790.78 569,544.32 15,304,989.21 -334,216.66 6,233,131.24 39,080,562.28 previous year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the 1,686,323.39 15,620,790.78 569,544.32 15,304,989.21 -334,216.66 6,233,131.24 39,080,562.28 year III. Increase/ decrease in the 2,529,485.08 -2,859,943.15 3,237,485.98 -26,948.18 197,461.89 3,077,541.62 period (“-” means decrease) (I) Net profit 6,610,132.76 607,495.31 7,217,628.07 (II) Other comprehensive -397,315.13 -26,948.18 33,057.09 -391,206.22 incomes Subtotal of (I) and (II) -397,315.13 6,610,132.76 -26,948.18 640,552.40 6,826,421.85 (III) Capital paid in and reduced 73,677.81 16,675.40 90,353.21 78 Midea Group Co., Ltd. 2014 Semi-Annual Report by shareholders 1. Capital paid in by 4,325.21 4,325.21 shareholders 2. Amounts of share-based payments recognized in owners’ 73,677.81 12,350.19 86,028.00 equity 3. Others (IV) Profit allocation -3,372,646.78 -466,586.66 -3,839,233.44 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to -3,372,646.78 -466,586.66 -3,839,233.44 shareholders 4. Other (V) Internal carry-forward of 2,529,485.08 -2,536,305.83 6,820.75 shareholders’ equity 1. New increase of share 2,529,485.08 -2,529,485.08 capital from capital reserves 2. New increase of share capital from surplus reserves 3. Surplus reserves for making up losses 4. Other -6,820.75 6,820.75 (Ⅵ) Specific reserve 79 Midea Group Co., Ltd. 2014 Semi-Annual Report 1. Withdrawn in the period 2. Used in the period (Ⅶ) Other IV. Closing balance 4,215,808.47 12,760,847.63 569,544.32 18,542,475.19 -361,164.84 6,430,593.13 42,158,103.90 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Consolidated Statement of Changes in Shareholders’ Equity (Continued) Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Last year Equity attributable to shareholders of the Company Total Item Minority Capital Less: treasury Specific Retained shareholders’ Share capital Surplus reserve Others interests reserve stock reserve profit equity I. Balance at the end of the previous 1,000,000.00 3,037,311.98 66,439.07 10,490,636.40 -280,856.59 18,851,954.48 33,165,485.34 year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 1,000,000.00 3,037,311.98 66,439.07 10,490,636.40 -280,856.59 18,851,954.48 33,165,485.34 80 Midea Group Co., Ltd. 2014 Semi-Annual Report III. Increase/ decrease in the period (“-” 686,323.39 12,583,478.80 503,105.25 4,814,352.81 -53,360.07 -12,618,823.24 5,915,076.94 means decrease) (I) Net profit 5,317,458.06 2,980,038.37 8,297,496.43 (II) Other comprehensive incomes 45,162.31 -53,360.07 -159,203.57 -167,401.33 Subtotal of (I) and (II) 45,162.31 5,317,458.06 -53,360.07 2,820,834.80 8,130,095.10 (III) Capital paid in and reduced by shareholders 1. Capital paid in by shareholders 2. Amounts of share-based payments recognized in owners’ equity 3. Others (IV) Profit allocation 503,105.25 -503,105.25 -1,683,090.79 -1,683,090.79 1. Appropriations to surplus 503,105.25 -503,105.25 reserves 2. Appropriations to general risk provisions 3. Appropriations to shareholders -1,683,090.79 -1,683,090.79 4. Other (V) Internal carry-forward of 686,323.39 12,491,559.52 -13,177,882.91 shareholders’ equity 1. New increase of share capital from capital reserves 2. New increase of share capital from surplus reserves 81 Midea Group Co., Ltd. 2014 Semi-Annual Report 3. Surplus reserves for making up losses 4. Other 686,323.39 12,491,559.52 -13,177,882.91 (Ⅵ) Specific reserve 1. Withdrawn in the period 2. Used in the period (Ⅶ) Other 46,756.97 -578,684.34 -531,927.37 IV. Closing balance 1,686,323.39 15,620,790.78 569,544.32 15,304,989.21 -334,216.66 6,233,131.24 39,080,562.28 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu 错误!未找到引用源。 82 Midea Group Co., Ltd. 2014 Semi-Annual Report Balance Sheet of the Company Prepared by: Midea Group Co., Ltd. 30 Jun. 2014 Unit: RMB’000 Asset Note Closing balance Opening balance Current Assets: Monetary funds 15,213,595.25 14,309,967.73 Transactional financial assets Notes receivable 2,006,640.65 2,176,916.60 Accounts receivable Accounts paid in advance 862.37 349,358.36 Interest receivable Dividends receivable 1,002,056.76 286,507.04 Other accounts receivable 1 1,658,613.59 3,519,029.46 Inventories Non-current assets due within 1 year Other current assets 16,225,644.00 Total current assets 36,107,412.62 20,641,779.19 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term accounts receivable Long-term equity investments 2 17,243,344.47 16,960,799.70 Investing properties 418,912.57 891,732.65 Fixed assets 1,511,787.16 788,783.72 Construction in progress 41,221.55 46,985.28 Engineering materials Disposal of fixed assets Intangible assets 267,238.76 177,196.73 R&D expenses Goodwill Long-term deferred expenses 100,703.14 109,960.04 83 Midea Group Co., Ltd. 2014 Semi-Annual Report Deferred income tax assets 7,003.32 7,222.31 Other non-current assets Total non-current assets 19,590,210.97 18,982,680.43 Total assets 55,697,623.59 39,624,459.62 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Balance Sheet of the Company (Continued) Prepared by: Midea Group Co., Ltd. 30 Jun. 2014 Unit: RMB’000 Liabilities and shareholders’ equity Note Closing balance Opening balance Current liabilities: Short-term borrowings 500,000.00 140,000.00 Transactional financial liabilities 8,329.12 Notes payable Accounts payable 2,410.09 7,831.48 Accounts received in advance Payroll payable 3,991.00 21,717.74 Taxes and fares payable 10,450.74 16,856.22 Interest payable 127,153.37 144,847.77 Dividends payable Other accounts payable 39,552,344.59 23,082,573.69 Non-current liabilities due within 999,942.58 1 year Other current liabilities 875.94 875.94 Total current liabilities 40,205,554.85 24,414,645.42 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables 84 Midea Group Co., Ltd. 2014 Semi-Annual Report Projected liabilities Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 40,205,554.85 24,414,645.42 Shareholders’ equity Share capital 4,215,808.47 1,686,323.39 Capital reserves 5,352,546.75 7,880,598.46 Less: Treasury stock Surplus reserves 569,544.32 569,544.32 Retained profits 5,354,169.20 5,073,348.03 Shareholders’ equity 15,492,068.74 15,209,814.20 Total liabilities and shareholders’ 55,697,623.59 39,624,459.62 equity Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Income Statement of the Company Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Item Note Current period Same period of last year I. Sales income 1 365,575.75 29,498.98 Less: cost of sales 1 8,067.65 Business tax and surtaxes 4,834.15 7,191.17 Selling expenses Administrative expenses 173,013.55 56,521.53 Financial costs 17,137.16 98,907.09 Asset impairment loss -4,436.52 1,272.21 Add: gain from change in fair -8,329.12 value Investment gains 2 3,499,071.54 1,025,525.66 85 Midea Group Co., Ltd. 2014 Semi-Annual Report Including: income form investment on associates and joint 44.77 4,915.96 ventures II. Operating profits 3,657,702.18 891,132.64 Add: non-operating income 8,477.51 34,469.51 Less: non-operating expense 8,870.09 3,499.88 Including: loss from 8,769.43 2.95 non-current asset disposal III. Total profits 3,657,309.60 922,102.27 Less: income tax expense 3,841.65 IV. Net profit 3,653,467.95 922,102.27 V. Other comprehensive income VI. Total comprehensive income 3,653,467.95 922,102.27 Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu Cash Flow Statement of the Company Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Item Note Current period Same period of last year I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service Tax refunds received Other cash received relating to operating 19,341,190.68 5,031,827.86 activities Subtotal of cash inflows from operating 19,341,190.68 5,031,827.86 activities Cash paid for goods and services Cash paid to and for employees 27,900.87 37,841.31 Various taxes paid 4,309.27 32,485.41 Other cash payment relating to operating 59,580.27 2,568,732.23 86 Midea Group Co., Ltd. 2014 Semi-Annual Report activities Subtotal of cash outflows from operating 91,790.41 2,639,058.95 activities Net cash flows from operating activities 19,249,400.27 2,392,768.91 II. Cash flows from investing activities: Cash received from retraction of 24,901.98 investments Cash received from return on investments 2,705,700.46 1,020,609.71 Net cash received from disposal of fixed assets, intangible assets and other long-term 36,984.39 assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from investing 2,767,586.83 1,020,609.71 activities Cash paid to acquire fixed assets, intangible 172,426.07 67,179.43 assets and other long-term assets Cash paid for investment 20,875,420.03 Net cash paid to acquire subsidiaries and 75,000.00 other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing 21,047,846.10 142,179.43 activities Net cash flows from investing activities -18,280,259.27 878,430.28 III. Cash flows from financing activities: Cash received from capital contributions Of which: Cash received by subsidiaries as minority shareholder investments Cash received from borrowings 1,100,000.00 2,350,000.00 Subtotal of cash inflows from financing 1,100,000.00 2,350,000.00 activities Cash repayment of borrowings 740,000.00 840,000.00 87 Midea Group Co., Ltd. 2014 Semi-Annual Report Cash for repaying medium term notes 1,000,000.00 2,000,000.00 Cash for repaying short-term financing 1,000,000.00 bonds Cash paid for interest expenses and 3,670,757.28 343,648.08 distribution of dividends or profit Of which: Dividends and shares of profit paid by subsidiaries to minority shareholders Other cash payments relating to financing 577,000.00 activities Sub-total of cash outflows from financing 5,410,757.28 4,760,648.08 activities Net cash flows from financing activities -4,310,757.28 -2,410,648.08 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents -3,341,616.28 860,551.11 Add: Opening balance of cash and cash 13,809,135.41 1,483,866.89 equivalents VI. Closing balance of cash and cash 10,467,519.13 2,344,418.00 equivalents Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu 错误!未找到引用源。 错误!未找到引用源。 88 Midea Group Co., Ltd. 2014 Semi-Annual Report Statement of Changes in Shareholders’ Equity of the Company Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Current period Item Total Less: treasury Specific Share capital Capital reserve Surplus reserve Retained profit shareholders’ stock reserve equity I. Balance at the end of the previous 1,686,323.39 7,880,598.46 569,544.32 5,073,348.03 15,209,814.20 year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 1,686,323.39 7,880,598.46 569,544.32 5,073,348.03 15,209,814.20 III. Increase/ decrease in the period 2,529,485.08 -2,528,051.71 280,821.17 282,254.54 (I) Net profit 3,653,467.95 3,653,467.95 (II) Other comprehensive incomes Subtotal of (I) and (II) 3,653,467.95 3,653,467.95 (III) Capital paid in and reduced by 1,433.37 1,433.37 shareholders 1. Capital paid in by shareholders 2. Amounts of share-based payments recognized in shareholders’ 1,433.37 1,433.37 equity 89 Midea Group Co., Ltd. 2014 Semi-Annual Report 3. Others (IV) Profit allocation -3,372,646.78 -3,372,646.78 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to shareholders -3,372,646.78 -3,372,646.78 4. Other (V) Internal carry-forward of 2,529,485.08 -2,529,485.08 shareholders’ equity 1. New increase of share capital 2,529,485.08 -2,529,485.08 from capital reserves 2. New increase of share capital from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn in the period 2. Used in the period (Ⅶ) Other IV. Closing balance 4,215,808.47 5,352,546.75 569,544.32 5,354,169.20 15,492,068.74 90 Midea Group Co., Ltd. 2014 Semi-Annual Report Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu 错误!未找到引用源。 Statement of Changes in Shareholders’ Equity of the Company (Continued) Prepared by: Midea Group Co., Ltd. Jan.-Jun. 2014 Unit: RMB’000 Last year Total Item Capital Less: treasury Specific Share capital Surplus reserve Retained profit shareholders’ reserve stock reserve equity I. Balance at the end of the previous year 1,000,000.00 684,003.31 66,439.07 545,400.75 2,295,843.13 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 1,000,000.00 684,003.31 66,439.07 545,400.75 2,295,843.13 III. Increase/ decrease in the period 686,323.39 7,196,595.15 503,105.25 4,527,947.28 12,913,971.07 (I) Net profit 5,031,052.53 5,031,052.53 (II) Other comprehensive incomes Subtotal of (I) and (II) 5,031,052.53 5,031,052.53 (III) Capital paid in and reduced by 686,323.39 7,196,595.15 7,882,918.54 shareholders 1. Capital paid in by shareholders 686,323.39 7,196,595.15 7,882,918.54 91 Midea Group Co., Ltd. 2014 Semi-Annual Report 2. Amounts of share-based payments recognized in shareholders’ equity 3. Others (IV) Profit allocation 503,105.25 -503,105.25 1. Appropriations to surplus 503,105.25 -503,105.25 reserves 2. Appropriations to general risk provisions 3. Appropriations to shareholders 4. Other (V) Internal carry-forward of shareholders’ equity 1. New increase of share capital from capital reserves 2. New increase of share capital from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn in the period 2. Used in the period (Ⅶ) Other IV. Closing balance 1,686,323.39 7,880,598.46 569,544.32 5,073,348.03 15,209,814.20 92 Midea Group Co., Ltd. 2014 Semi-Annual Report Legal representative : Fang Hongbo Person-in-charge of finance: Yuan Liqun Prepared by: Chen Jianwu 93 Midea Group Co., Ltd. 2014 Semi-Annual Report Midea Group Co., Ltd. Legal Representative: Fang Hongbo 18 August 2014 94