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美的集团:2014年第三季度报告全文(英文版)2014-11-12  

						                     Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




      Midea Group Co., Ltd.
Report for the Third Quarter of 2014




              October 2014




                                                                                1
                                              Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




                       Section I. Important Reminders


1.1 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 records, misleading statements or material omission. The

Company shall be jointly and severally liable for this.

1.2 All directors have attended the Q3 report review board session

1.3 This report has not been audited by a Certified Public Auditor (CPA) firm.

1.4 Mr. Fang Hongbo, Chairman of the Board and President of the Company, and Ms.

Yuan Liqun, (Chief Financial Officer) 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 been prepared in both Chinese and English. Should there be any

discrepancy between the two versions, the Chinese version shall prevail.




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                                                                         Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




          Section II. Financial Highlights & Change of Shareholders

I. Major accounting data and financial indexes

Does the Company adjust retrospectively or restate accounting data of previous years due to changes in
accounting policy or correction of any accounting error?

□ Yes √ No
                                                 30 Sept. 2014                    31 Dec. 2013               Increase/decrease (%)

Total assets (RMB’000)                                115,822,866.87                    96,946,024.77                          19.47%

Net assets attributable to shareholders
                                                        38,088,008.32                    32,847,431.04                          15.95%
of the Company (RMB’000)

                                                                          YoY
                                                                                                                  YoY increase/decrease
                                             Jul.-Sept. 2014        increase/decrease      Jan.-Sept. 2014
                                                                                                                          (%)
                                                                          (%)

Sales revenues (RMB’000)                       31,753,306.09                   14.19%         109,084,157.93                   16.36%

Net profit attributable to shareholders of
                                                 2,342,823.51                   70.86%            8,952,956.27                  122.82%
the Company (RMB’000)
Net profit attributable to shareholders of
the Company after extraordinary gains            1,960,777.55                   93.17%            8,628,423.12                  174.52%
and losses (RMB’000)
Net cash flows from operating activities
                                                               --                   --           13,853,704.08                  155.29%
(RMB’000)

Basic EPS (RMB Yuan/share)                                0.56                  24.44%                     2.12                 42.28%

Diluted EPS (RMB Yuan/share)                              0.56                  24.44%                     2.12                 42.28%

Weighted average ROE (%)                                6.35%                   0.16%                    25.35%                   2.81%

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 corresponding period of last year is measured on the basis of the share capital after the

increment, which was calculated according to 4.216 billion shares 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, net profit for the current period is shown

on a post-merger basis whilst the comparable figure for last year, which is used to calculate the YoY

increase/decrease, is on pre-merger basis. In order to help investors compare and analyze the overall business

performance of Midea Group on a comparable basis, the following pro-forma income statement shows the

relevant items adjusted as if the merger of Midea Group and GD Midea Holding had taken place on 1 Jan. 2013:

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                                                                         Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


                                                 Jan.-Sept. 2014                                       Jul.-Sept. 2014

                                                                       YoY                                                    YoY
                              Jan. –Sept. 2014 Jan. –Sept. 2013 increase/decreas Jul. - Sept. 2014 Jul. - Sept. 2013 increase/decreas
                                                                      e (%)                                                  e (%)

 Net profit attributable to
 shareholders of the             8,952,956.27      6,000,088.32           49.21%        2,342,823.51      1,821,136.55             28.65%
 Company (RMB’000)

 Minority interest
                                   886,514.94        754,658.98           17.47%         279,019.63         191,769.80             45.50%
 income (RMB'000)

 EPS (RMB Yuan/share)                     2.12              1.42          49.30%                0.56                 0.43          30.23%



Items and amounts of extraordinary gains and losses
√Applicable □Inapplicable
                                                                                                       Unit: RMB Ten Thousand Yuan

                                       Item                                         Amount as of Jan.-Sept. 2014            Note

Gains/losses on the disposal of non-current assets (including the offset part of
asset impairment provisions)                                                                           -129,824.96

Government grants recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain quotas or
amounts according to the country’s unified standards                                                  532,787.73

Gain/loss on entrusting others with investments or asset management                                    519,020.14

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 assets                      -405,864.35
available for sale, except for effective hedging related to the normal
businesses of the Company

Reversal of impairment provisions for the accounts receivable on which
impairment tests were carried out separately                                                              5,548.24

Non-operating income and expenses other than the above                                                  52,992.03

Other gain/loss items that meet the definition of an extraordinary gain/loss                           -150,549.03

Less: Income tax effects                                                                                89,861.92

      Minority interests effects (after tax)                                                            11,402.93

                                       Total                                                           324,533.15

Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item


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                                                                    Report for the Third Quarter of 2014 of Midea Group Co., Ltd.



   □ Applicable √ Inapplicable

   II. Total number of shareholders and shareholdings of the top ten shareholders at the
   period-end

   1. Total number of common shareholders and shareholdings of the top ten common shareholders at the
   period-end

                                                                                                                          Unit: share

Total number of common shareholders at the
                                                                                                                                  114,907
period-end

                                         Shareholdings of the top ten common shareholders

                                                                                                                   Pledged or frozen
                                                               Shareholdin                       Number of
                                                 Nature of                    Number of the                              shares
             Name of shareholder                               g percentage                    restricted shares
                                                shareholder                    shares held                         Status of   Number
                                                                   (%)                               held
                                                                                                                    shares     of shares

                                             Domestic

Midea Holding Co., Ltd.                      non-state-owned        35.49%     1,496,250,000     1,496,250,000

                                             corporation

Rongrui Equity Investment (Zhuhai)           Domestic

Partnership (limited partnership)            non-state-owned         7.22%      304,500,000                    0

                                             corporation

Fang Hongbo                                  Domestic
                                                                     2.17%        91,326,995        90,995,247
                                             individual

Tianjin CDH Jiatai Equity Investment         Domestic

Partnership (limited partnership)            non-state-owned         1.85%        78,000,000                   0

                                             corporation

Huang Jian                                   Domestic
                                                                     1.80%        75,700,000        75,000,000
                                             individual

Ningbo Meisheng Equity Investment            Domestic

Partnership (limited partnership)            non-state-owned         1.78%        75,000,000        75,000,000

                                             corporation

Yuan Liqun                                   Domestic                1.44%        60,500,000        60,375,000




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                                                                       Report for the Third Quarter of 2014 of Midea Group Co., Ltd.



                                               individual

CDH M-Tech (HK) Co., Ltd.                      Overseas
                                                                        1.42%       60,000,000                         0
                                               corporation

CDH Spark (HK) Co., Ltd.                       Overseas
                                                                        1.36%       57,500,000                         0
                                               corporation

                                               Domestic
Huang Xiaoming                                                          1.24%       52,213,366           52,213,366
                                               individual

                                    Shareholdings of the top ten non-restricted common shareholders

                                                                      Number of non-restricted                     Type of shares
                      Name of shareholder                            common shares held at the
                                                                                                                Type           Number
                                                                             period-end

Rongrui Equity Investment (Zhuhai) Partnership (limited                                                RMB ordinary
                                                                                      304,500,000                              304,500,000
partnership)                                                                                           shares


Tianjin CDH Jiatai Equity Investment Partnership (limited                                              RMB ordinary
                                                                                          78,000,000                            78,000,000
partnership)                                                                                           shares

                                                                                                       RMB ordinary
CDH M-Tech (HK) Co., Ltd.                                                                 60,000,000                            60,000,000
                                                                                                       shares

                                                                                                       RMB ordinary
CDH Spark (HK) Co., Ltd.                                                                  57,500,000                            57,500,000
                                                                                                       shares

                                                                                                       RMB ordinary
National Social Security Fund 104 Portfolio                                               50,988,858                            50,988,858
                                                                                                       shares

                                                                                                       RMB ordinary
Ningbo Kailian Industrial Development Co., Ltd.                                           48,451,743                            48,451,743
                                                                                                       shares

                                                                                                       RMB ordinary
MERRILL LYNCH INTERNATIONAL                                                               41,045,576                            41,045,576
                                                                                                       shares

                                                                                                       RMB ordinary
National Social Security Fund 103 Portfolio                                               37,531,918                            37,531,918
                                                                                                       shares

China Construction Bank- Bosera Thematic Sectors securities                                            RMB ordinary
                                                                                          31,064,455                            31,064,455
investment funds                                                                                       shares


China Construction Bank- Penghua Value Advantage Stock-based                              30,481,463 RMB ordinary               30,481,463




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                                                                        Report for the Third Quarter of 2014 of Midea Group Co., Ltd.



Securities Investment Fund                                                                           shares

                                                                   Two natural person shareholders, Mr. Fang Hongbo and Ms. Yuan

                                                                   Liqun, serve as director and senior executive. CDH Jiatai, CDH

                                                                   M-Tech and CDH Spark hold 4.63% shares of Midea Group have an

                                                                   associated relationship and are shareholders acting-in-concert. Ningbo


Explanation of the associated relationship or/and persons Kailian Industrial Development Co., Ltd. acts-in-concert with Midea
acting-in-concert among the above-mentioned shareholders           Holding Co., Ltd. The company has not confirmed if any associated

                                                                   relationship exists among other shareholders of tradable shares and

                                                                   whether other shareholders of tradable shares belong to persons

                                                                   acting-in-concert specified in the "Management of Information

                                                                   Disclosure for Shareholding Alteration in a Listed Company".

Top ten non-restricted common shareholders taking part in margin
                                                                   Inapplicable
financing and securities lending (if any)

   Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company
   carry out any agreed buy-back in the reporting period?

   □ Yes √ No
   No shareholder of the Company carried out any agreed buy-back in the reporting period.

   2. Total number of preferred share holders and shareholdings of the top ten preferred share holders at the
   period-end


   □ Applicable √ Inapplicable




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                                                                   Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




                                       Section III. Significant Events

I. Major changes in main accounting statement items and financial indicators within the
reporting period, as well as reasons for the changes


√ Applicable □ Inapplicable
                                                                                                                   Unit: RMB’000

                                                                                Increase/
                                                 30 Sept.         31 Dec.                          Main reason for the
           Balance Sheet items                                                  decrease
                                                  2014             2013                                 change
                                                                                  (%)
                                                                                               Operational changes of the
 Due from the Central Bank                       1,337,565.99     923,632.22        44.82%
                                                                                               finance subsidiary

 Due from banks and other financial                                                            Operational changes of the
                                                  372,984.83     1,746,284.24       -78.64%
 institutions                                                                                  finance subsidiary

 Financial assets measured at fair value and
                                                                                               Fair value changes of derivative
 of which the changes are recorded into           226,091.63      759,565.22        -70.23%
                                                                                               financial instruments
 current gains and losses

 Accounts receivable                            10,471,852.19    7,928,438.25       32.08%     Sales increased

 Dividends receivable                              51,018.44       25,863.84        97.26%     Dividends from associates

                                                                                               Bank wealth management
 Other current assets                           22,802,244.49     463,107.71      4823.75%
                                                                                               products increased
                                                                                               The deductible temporary
 Deferred income tax assets                      3,533,606.95    2,567,204.45       37.64%
                                                                                               difference increased

 Financial liabilities measured at fair value
                                                                                               Fair value changes of derivative
 and of which the changes are recorded into        73,347.19       11,260.18       551.39%
                                                                                               financial instruments
 current gains and losses

                                                                                               Sales increased and income tax
 Taxes payable                                   2,387,089.94    1,028,015.10      132.20%
                                                                                               and VAT increased accordingly
                                                                                               Profit allocation in the current
 Dividends payable                                256,657.70       94,046.21       172.91%
                                                                                               period
                                                                                               Non-current liabilities due
 Non-current liabilities due within 1 year        698,552.22     1,617,370.17       -56.81%
                                                                                               within 1 year were repaid
                                                                                               Sales increased and rebate and
 Other current liabilities                      21,804,593.33   12,608,380.03       72.94%     installation expenditure
                                                                                               increased accordingly
                                                                                               Long-term borrowings became
 Long-term borrowings                              22,913.44      711,464.64        -96.78%
                                                                                               due within 1 year

 Specific payables                                                                             An alteration and relocation
                                                  856,341.10       52,073.96      1544.47%
                                                                                               amount was received in the


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                                                                Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


                                                                                            current period

                                                                             Increase/
                                             Jan.-Sept.      Jan.-Sept.                        Main reason for the
 Income statement items (Jan.-Sept.)                                         Decrease
                                                2014            2013                                change
                                                                               (%)
                                                                                            The business of the finance
 Interest income                               503,212.87      173,853.18       189.45%
                                                                                            subsidiary expanded
                                                                                            The business of the finance
 Interest expenses                             243,027.70      140,859.52        72.53%
                                                                                            subsidiary expanded

                                                                                            Interest expenses and exchange
 Financial expenses                             -11,698.64     631,080.06      -101.85%
                                                                                            losses decreased

                                                                                            Fair value changes of the
 Gains on fair value changes                  -598,637.76      397,072.61      -250.76%
                                                                                            derivative financial instruments

                                                                                            Wealth management gains
 Investment gains                              839,388.23      635,272.83        32.13%
                                                                                            increased
 Income tax expenses                         2,035,610.94    1,417,018.12        43.65%     Profits increased

                                                                             Increase/
       Cash flow statement item              Jan.-Sept.      Jan.-Sept.                        Main reason for the
                                                                             decrease
               (Jan.-Sept.)                     2014            2013                                change
                                                                               (%)
                                                                                            Operating profits increased and
 Net cash flows from operating activities   13,853,704.08    5,426,595.05       155.29%     capital management was
                                                                                            enhanced

                                                                                            Wealth management investment
 Net cash flows from investing activities   -24,179,641.66    -453,029.52      5237.32%
                                                                                            increased

 Net cash flows from financing activities    -1,314,530.93   -1,079,902.44       21.73%     Changes in borrowings

According to the , we restated the long-term

equity investments formerly measured at the cost method as available-for-sale financial assets, and adjusted the

year-beginning data accordingly.

II. Progress and influence of significant events, as well as the analysis and explanation on
solutions


√ Applicable □ Inapplicable

On 7 Jun. 2014, we released the . As mentioned in the announcement, we intended to, with TITONI (a

wholly-funded overseas subsidiary) as the acting-in-concert party, make a partial tender offer to Little Swan

shareholders for 126,497,553 shares, which accounted for 20% of the total shares of Little Swan. The tender offer


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                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.



was approved by CSRC with no dissent on the 27th of the same month. The tender offer would last for 30 natural

days from 3 Jul. 2014 to 1 Aug. 2014. The final tender offer price was RMB 10.45/share for Little Swan A-shares

and HKD 10.05 for Little Swan B-shares.

As of 1 Aug. 2014 when the tender offer expired, we had accepted 16,286,546 Little Swan A-shares and

63,353,228 Little Swan B-shares, with the combined number accounting for 12.59% of the total shares of Little

Swan. The ownership transfer formalities were completed, marking the completion of the tender offer. After the

transfer, we directly and indirectly held 333,153,059 shares of Little Swan, representing a stake of 52.67% in it.

This would further promote business collaboration between us and Little Swan, and enhance the core

competitiveness of our washing machine business.

                                                                                             Index to the relevant
             Overview of the significant event              Date of disclosure          announcement disclosed on the
                                                                                                   website

Suggestive Announcement on Making a Partial Tender
                                                               7 Jun. 2014                   www.cninfo.com.cn
Offer to All Shareholders of Wuxi Little Swan Co., Ltd.

Suggestive Announcement on CSRC Approving and
                                                              30 Jun. 2014                   www.cninfo.com.cn
Unveiling the Tender Offer Report




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                                                                                                                                         Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


      III. 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/Parties
                                                                                                                             Date of
 Undertaking   involved in the                                    Details of undertaking                                                          Term                Particulars on the performance
                                                                                                                           Undertaking
                 undertaking

                                 1.Undertaking of Midea Holding Ltd. (hereinafter referred to as "Midea                                   Apart      from the 1.   There   has   been    no   violation     of

                                 Holding"), and He Xiangjian, respectively the controlling shareholder and actual                         first    item      of commitments.

                                 controller of Midea Group Co., Ltd., in relation to a Lock-Up Share Agreement.                           commitments

Undertaking                      He Xiangjian and Midea Holding have given an undertaken as follows: Neither party                        whose           legal

made in the                      will transfer or entrust others to manage their directly and indirectly held Midea                       duration       covers
               Controlling
offering                         Group shares issued prior to this issuance, nor sell them to Midea Group within 36                       36 months from
               shareholders
documents or                     months of the listing date of Midea Group's stocks,. If they break the above 28 March. 2013 the date of Midea
               Actual
shareholding                     undertaking, they will assume all liabilities arising therefrom.                                         Group’s       listing
               controller
alteration                       2. Undertaking of Midea Holding and the actual controller He Xiangjian towards                           (18 Sept. 2013 to 2. There has been no violation of these

documents                        the maintenance of the independence of Midea Group.                                                      18      September, commitments.

                                 He Xiangjian and Midea Holding have undertaken as follows: He Xiangjian, Midea                           2016       inclusive),

                                 Holding and their controlled enterprises will remain independent from Midea Group                        all other items are

                                 in respect of personnel, finance, assets, business and institutions, etc. in accordance                  indefinite



                                                                                                                                                                                                       11
                                                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

with relevant laws and regulations and regulatory documents. They will faithfully

fulfill the above undertaking, and assume the corresponding legal liability. If they fail

to fulfill their obligations and responsibilities conferred by the undertaking, they will

bear the corresponding legal liabilities according to relevant laws, rules, regulations

and regulatory documents.                                                                                       3. There has been no violation of these

3. Undertaking of Midea Holding and the actual controller He Xiangjian towards                                  commitments.

avoiding competition within the industry.

In order to avoid possible competition within the industry between Midea Group,

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

identical or similar business areas as the existing main business of Midea Group and

its controlled companies. They are not or will not be engaged or are not currently

participating in any such business areas that is competitive to the existing main

business area 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 scope within

existing areas to those where the above mentioned related entities or individuals have

already commenced production and operation, as long as He Xiangjian is still the

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                                                                                          Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

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 within

existing areas to those where the above mentioned related parties have not yet

commenced 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 to engage in any competitive business contrary to the any new

business area 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 any 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 has been no violation of these

the regulation of related-party transactions.                                                                 commitments.

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                                                                                           Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

In order to regulate matters of related-party 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-party transactions with Midea Group and its controlled

companies using their utmost efforts to minimize them. For unavoidable related-party

transactions with Midea Group and its controlled companies, including but not limited

to commodity trading, providing services to each other or as an 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-party transactions, and fulfill all information disclosure

obligations in respect of the related-party 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 funds or

profits from Midea Group, or damage the interests of its shareholders for their own

advantage during these related-party transactions.

(2) They shall fulfill the obligation of withdrawing from all voting that involves the

above mentioned related-party transactions at general meetings of Midea Group;

(3) The related parties mentioned above shall not require Midea Group to offer more

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                                                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

favorable conditions than those offered to any independent third party in any fair

market 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,
                                                                                                                5. So far, this shareholding transfer has not
on Midea Trade Union Committee transferring its limited equity of Midea
                                                                                                                brought about any loss caused by any
Group.
                                                                                                                dispute or potential disputes. There has been
On 4 January 2001, Midea Trade Union Committee signed the "Equity Transfer
                                                                                                                no violation of commitments.
Contract" with five people, namely He Xiangjian, Chen Dajiang, Feng Jingmei, Chen

Kangning and Liang Jieyin, where it would transfer all of its 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

                                                                                                                                                      15
                                                                                         Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

opinions, therefore there was no dispute or any potential future dispute.

On 28 June. 2013, Foshan Shunde Beijiao General Union, superior department of

Midea Trade Union Committee, issued a confirmation letter supporting the fact that

the Midea Trade Union Committee funded the establishment of Midea Group Co.,

Ltd. Furthermore, this letter also confirmed that the council of Midea Trade Union

Committee is entitled to dispose of all the property of the committee, and that this

property disposal does not need agreement from all staff committee members.

(1). Midea Holding and He Xiangjian, the controlling shareholder and actual

controller of Midea Group Co., Ltd., respectively have undertaken as follows: For any

loss incurred by Midea Group, caused by any dispute or potential dispute arising from

any matters of equity transfer mentioned above, they are willing to assume full

liability for such loss.

6. Commitments on Issues about Payment of Staff Social Insurance and Housing                                 6. So far, the payment of Staff Social

Provident Fund involved in Midea Group's Overall Listing                                                     Insurance and Housing Provident Fund has

Midea Holding and He Xiangjian have both undertaken to be liable for                                         not brought about any controversy or

(1) paying such expenses and related expenses on time based on the requirements of                           potential disputes. There has been no

relevant state departments. However Midea Group is liable for the payment of staff                           violation of commitments.

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)

                                                                                                                                                   16
                                                                                              Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

indemnifying and including a holding-harmless clause absolving Midea Group and its

subsidiaries from any such expenses where Midea Group and its subsidiaries are

required to pay them in advance.

7. Commitments on issues about asset modifications, asset damages and property                                    7.1 The Process of Property Ownership

leasing of Midea Group and its subsidiaries                                                                       Certificate:

Midea Holding and He Xiangjian have undertaken as follows:                                                        The "Report" discloses that our company owns

(1) Midea Holding will do its utmost to assist and urge Midea Group (including its                                177 properties, which cover an area of

subsidiaries) to complete renaming procedures of related assets, such as land, house,                             2,148,485.65 square meters (m2). Property

trademark, patent and stock rights declared in the related files of this merger. Midea                            Ownership Certificates are being processed for

Holding will also be liable for all compensation for losses to Midea Group caused by                              properties 65 (m2) in size. So far, 46

any issues regarding the renaming procedures of related assets set out above.                                     applications have been approved covering an

(2) Midea Holding shall do its utmost to assist Midea Group (including its                                        area of 1,531, 504.83 (m2), which accounts for

subsidiaries) in applying for ownership certificates of land and buildings declared in                            71.28% of the total area; 17 applications are

any related files of this merger.                                                                                 under process, which covers an area of

(3) Midea Holding shall assist Midea Group (including its subsidiaries) in re-applying                            556,819.28 (m2) accounting for 25.92% of the

for corresponding construction procedures and uncompleted property ownership                                      total area. Those properties under process of

certificates due to historical reasons. If the competent authorities require Midea Group                          ownership certificates have not brought about

to dismantle any properties that are not successful in their re-application for real estate                       any controversy or dispute. The remaining 115

registration procedures, Midea Holding shall do its utmost to provide assistance and                              properties, an area of which covers 60161.54

will also be liable for any related expenses used in the dismantling of such buildings                            (m2), accounts for 2.8% of the total area. These

                                                                                                                                                         17
                                                                                          Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

by Midea Group (including its subsidiaries).                                                                  properties are all small auxiliary facilities such

(4) If under any circumstances Midea Group suffers any loss through no longer using                           as: security booths, transformer rooms, power

or in the present way using the land or property above caused by failing to obtain or                         rooms, pump rooms, gas stations for which

collect in time the ownership certificates of the land or property above or loss caused                       property ownership certificates cannot be

by other reasons, Midea Holding shall compensate any loss for these reasons in time                           applied for. As yet these 115 properties have

and fully. Midea Holding shall compensate any actual loss Midea Group suffers from                            not been required to be dismantled by

where the circumstances above result in punishments by competent authorities or                               competent departments so these buildings are

claims by any third party.                                                                                    still in regular use. No controversies or any

(5) Based on issues of defective property leasing declared in the related files of this                       company losses caused by disputes have been

merger, Midea Holding shall provide sufficient compensation for all economic losses                           incurred. There has been no violation of

to Midea Group (including its subsidiaries) where the leasehold relations above have                          commitments.

either become invalid or where other disputes occur, (a 3rd party rights claim or an                          7.2 The Use of Rental Houses of This

administrative department exercises a right or option) and therefore results in any                           Company

economic loss caused by the necessary rental of other property through penalties                              The "Report" discloses that as of 31 December

subjected to by competent government departments or through recourse of related                               2012, our company had 113 leasing houses in

parties.                                                                                                      use, of which 100 were unable to get the

(6) Based on issues of defective land leasing declared in the related files of this                           property certificate from the leasing party. So

merger where leasehold relations become invalid due to defective land leasing or                              far, the contracts of 60 of the 113 rental houses

other disputes occur resulting in economic losses to Midea Group (including its                               have not signed an extension to the leasehold.

subsidiaries) or through penalties subjected to by competent government departments.                          Of the remaining 53 properties 6 have received

                                                                                                                                                       18
                                                                                       Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

Additionally if the lessor cannot compensate any losses caused by defective leasing,                       the property certificate while the other 47

Midea Holding shall compensate Midea Group any for losses caused by such                                   certificates have yet to be obtained. These 53

defective land leasing                                                                                     rental properties have not rendered any

Midea Holding will compensate Midea Group where any losses are incurred due to a                           economic loss or penalty caused by defective

violation of guarantees and commitments as noted above or such guarantees and                              property rights to the company, which results in

commitments are inconsistent in reality.                                                                   the relocation to other rental properties.

                                                                                                           7.3 Land Use Rights of Leasing Use

                                                                                                           The "Report" discloses that as of 31 December,

                                                                                                           2012, our company has had one rental property

                                                                                                           issue (Total Area 57,506.95 m2).The lessor of

                                                                                                           the rental land mentioned above has not

                                                                                                           provided any ownership files pertaining to the

                                                                                                           ownership of this land. So far this rental land

                                                                                                           has not rendered any controversies to our

                                                                                                           company or these disputes caused any losses.

                                                                                                           There has been no violation of commitments.

                                                                                                           7.4 The Procedures for Renaming Land

                                                                                                           Ownership Under Process Caused by the

                                                                                                           Alteration of the Company's Name

                                                                                                           The "Report" discloses that there are still 10

                                                                                                                                                        19
                                                                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

                                                                                                                                  renaming land ownership cases under process

                                                                                                                                  caused by changing the company name of our

                                                                                                                                  company and its subsidiaries. So far, five cases

                                                                                                                                  have been approved and the other five cases are

                                                                                                                                  still under process, which have not rendered

                                                                                                                                  any loss to our company. There has been no

                                                                                                                                  violation of commitments.

                                                                                                                                  7.5 Processing the Renaming Procedures of

                                                                                                                                  Some Trademarks

                                                                                                                                  So far, of the 62 trademarks involved in the

                                                                                                                                  "Report" 8 cases are currently in the process of

                                                                                                                                  being cancelled by their owners and will no

                                                                                                                                  longer be in use. The company will not 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 has

                                                                                                                                  been no violation of commitments.


Other          1. Shareholders of Midea Group, Ningbo Meisheng, Fang Hongbo, Huang Jian, Cai 28 Mar. 2013    Apart   from the 1.        There     has   been   no   violation     of

shareholders   Qiwu, Yuan Liqun, Huang Xiaoming, Li Jianwei, Zheng Weikang, promise that since               first   item    of         commitments.

                                                                                                                                                                          20
                                                                                          Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

Midea Group has been listed on the Shenzhen Stock Exchange Center, the transferal          commitments              2-4. The execution of these commitments has

or delegation of others to manage these shares issued before this time to members that     whose           legal been completed and there have been no

have either direct or indirect ownership of Midea Group is prohibited for a period of      duration       covers violation of commitments.

36 months. Midea Group is also not allowed to buy back those shares.                       36 months from

2. Zhuhai Rongrui and Jiazhao Holding are in a relation of persons acting-in-concert.      the date of Midea

They jointly hold 7.9% shares of Midea Group and have made commitments to                  Group’s       listing

lock-up these shares. CDH Jiatai, CDH M-Tech and CDH Spark are in a relation of            (18 Sept. 2013 to

persons acting-in-concert. They jointly hold 4.63% shares of Midea Group and have          18      September,

made commitments on these locked-up shares. Since Midea Group was listed on the            2016       inclusive),

Shenzhen Stock Exchange Center, the transfer of shares issued before this time to          all other items are

members with direct or indirect ownership of Midea Group is forbidden for a period         indefinite

of 12 months. In addition the delegation and management of said shares issued before

this time to members with direct or indirect ownership of Midea Group is also

forbidden for a period of 12 months. Midea Group is also not allowed to buy back

those shares.

3. A former Midea Group Supervisor, Liao Wenjian, holds 7,000 shares of Midea

Electrical Appliances (6,033 after a stock-for-stock swop and transfers) and promises

that since Midea Group was listed on the Shenzhen Stock Exchange Center, the

transfer of shares issued before this time to members with direct or indirect ownership

of Midea Group is forbidden for a period of 12 months. In addition the delegation and

                                                                                                                                                       21
                                                                                                               Report for the Third Quarter of 2014 of Midea Group Co., Ltd.

                      management of said shares issued before this time to members with direct or indirect

                      ownership of Midea Group is also forbidden for a period of 12 months. Midea Group

                      is also not allowed to buy back those shares.

                      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 a stock-for-stock swop

                      and transfer) and promises that since Midea Group was listed on the Shenzhen Stock

                      Exchange Center, the transfer of shares issued before this time to members with direct

                      or indirect ownership of Midea Group is forbidden for a period of 12 months. In

                      addition the delegation and management of said shares issued before this time to

                      members with direct or indirect ownership of Midea Group is also forbidden for a

                      period of 12 months. Midea Group is also not allowed to buy back those shares.


Whether to

fulfill the
                Yes
commitment in

time




                                                                                                                                                                         22
                                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




IV. Predicting the operating results of 2014


Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-start

until the end of the next reporting period according to predictions as well as any explanations for these reasons:

√ Applicable □ Inapplicable

Performance prediction: Sharp year-on-year rise

Performance data type: Interval number

                      Statement of 2014 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
aggregate net profit (RMB                    100 --             110            53.17                                88% --          107%
                                                                                              YoY increase
100 million)

Basic   earnings      per   share
                                            2.37 --            2.61              1.26                               88% --          107%
(RMB Yuan/share)                                                                              YoY increase

                                    In Sept. 2013, Midea Group merged with GD Midea Holding through a share exchange. The income
                                    statement has been compiled based on accounting standards. The net profit for the period resulted
                                    from the data generated following the merger, while the figure in the same period of the previous
Explanations    for     business year was calculated based on 41. 17% shares held by Midea Group in GD Midea Holding before the
performance forecast                merger and the figure after the merger should be calculated based on 100%.
                                    On 30 Apr. 2014, Midea Group accomplished the capitalization of capital reserve, resulting in 10
                                    shares converted 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 dependent 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 2014 as follows:

               Statement of 2014 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                    100 --             110                73        YoY increase           37% --           51%
100 million)

Basic earnings per share                    2.37 --            2.61              1.73        YoY increase           37% --           51%



                                                                                                                                        23
                                                                                             Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


        (RMB Yuan/share)


        V. Securities investment

        □ Applicable √ Inapplicable

        The Company was not involved in any securities investment during the reporting period.


        VI. Investments in derivatives

        √ Applicable □ Inapplicable
                                                                                                                                  Unit: RMB Ten Thousand Yuan
                                                                                                                                                Proportion of the

                          Related-party    Type of        Initial                                Opening                           Closing     closing investment   Actual gain/loss
                                                                                                               Impairment
  Operator   Relation transaction or      derivative    investment   Start date   End date      investment                        investment     amount in the        in reporting
                                                                                                             provision (if any)
                              not         investment      amount                                 amount                            amount      Company’s closing       period

                                                                                                                                                   net assets

                                          Futures
 Futures
               No             No          hedging              0.00 01/01/14      31/12/14            0.00               0.00        170.19                  0.00            28.37
company
                                          contracts

                                          Forward
   Bank        No             No          exchange      80,370.80 01/01/14        31/12/14     80,370.80                 0.00     -1,052.53                  0.00     -64,904.65
                                          contract

Total                                                   80,370.80                              80,370.80                 0.00       -882.34                  0.00     -64,876.28

Capital source for derivative investment               All self-owned funds

Disclosure date of the board announcement
                                                       29 Mar 2014
approving the derivative investment (if any)

Disclosure date of the general meeting
announcement        approving the derivative 22 Apr 2014
investment (if any)

                                                       In order to reduce the price 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
Analysis of risks and control measures of business, with the purpose of reducing the risks associated with exchange and interest rate
derivative products held in the reporting fluctuations, realizing the preservation and appreciation of forex assets, reducing forex liabilities,
period (including but not limited to market and achieving locked-in costs. The Company has undertaken extensive evaluation and risk control
risk, liquidity risk, credit risk, operational with regard to derivative investment positions, details of which are as follows:
risk, legal risk, etc.)                                1. Legal risk: The Company's futures business and forex funds businesses are conducted in
                                                       compliance with laws and regulations, with clearly defined responsibilities and obligations between
                                                       the Company and agencies.
                                                       Control measures: The Company has designated relevant departments with the responsibility for



                                                                                                                                                                        24
                                                                               Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


                                              enhancing expertise in laws, regulations and market rules, conducting strict examination and
                                              verification of contracts, defining responsibility and obligations, and strengthening compliance
                                              checks, 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: Risks caused by imperfect internal processes, staff, systems and external issues
                                              may cause the Company to incur losses during the course of its futures business and forex funds
                                              business.
                                              Control measures: The Company has not only developed relevant management systems that clearly
                                              define the assignment of responsibility and approval process for the futures business and forex
                                              funds businesses, but has also established a well-developed monitoring mechanism, aimed at
                                              effectively reducing operational risk by strengthening its risk control over the business,
                                              decision-making and trading processes.
                                              3. Market risk: Uncertainties caused by changes in the prices of bulk commodities and exchange
                                              rate fluctuations in foreign exchange markets could lead to greater market risk in the futures
                                              business and forex funds business. Meanwhile, the inability to raise sufficient funds in a timely
                                              manner in order to establish and maintain hedging positions in futures operations, or forex funds
                                              required for performance in forex funds operations that are 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 are always
                                              conducted by adhering to prudent operation principles. For futures business, futures transaction
                                              volumes and applications have been strictly determined according to the requirements for
                                              production and operations, and a stop-loss mechanism has been implemented. Furthermore, to
                                              determine the prepared margin amount which may be required to be supplemented, a futures risk
                                              measuring system has been established to measure and calculate the margin amount already in use,
                                              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 applications for funds business
                                              should conduct a risk analysis on the conditions and environment that could affect the 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 the operating status of the
                                              funds business on a timely basis thus ensuring the arrangement of proper funds before expiry dates.

Changes in market prices or fair values of 1. Profit/loss from futures hedging contracts incurred during the Reporting Period was RMB
the invested derivatives during the reporting 283,700;
period. Analysis of the derivative’s fair value 2. Profit/loss from forward forex contracts incurred during the Reporting Period was RMB
should include the specific methods of use -649,046,500;
and    the    relevant   assumptions    and 3. Public quotations in futures market or forward forex quotations announced by Bank of China are
parameters.                                   used in the analysis of the derivatives fair value.

Whether significant changes occurred to the
Company’s accounting policy and specific
accounting principles of derivatives in the No change
reporting period compared to the previous
reporting period

Specific opinion from independent directors The Company's independent directors are of the view that: the futures hedging business is an

                                                                                                                                          25
                                                                                 Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


on the Company’s derivatives investment effective instrument for the Company to eliminate price volatility and implement risk prevention
and risk control                              measures through enhanced internal controls, thereby improving the operation and management of
                                              the Company; the Company's foreign exchange risk management capability can be further improved
                                              through the forex funds business, so as to maintain and increase the value of foreign exchange
                                              assets; the abovementioned investment in derivatives can help the Company to fully realize its
                                              competitive advantages. Therefore, it is practical for the Company to carry out derivatives
                                              investment business when the risks are controllable.


      VII. Research, visits and interviews conducted during the reporting period

      √Applicable □Inapplicable

                                                                                                                                           Main discussion and
                                        Way of         Visitor
           Time          Place                                                                 Visitor                               materials provided by the
                                       reception        type
                                                                                                                                                Company

                                                                   Fidelity     Investments,      Allianz    Dresdner      Asset
                                                                   Management, Och-Ziff Capital Management Group ,
      8 Jul. 2014     Hong Kong       Road Show       Institution Blackrock, Keywise Capital, AMP Capital Investors,
                                                                   Principal Global Investors, Value Partners, Eton Park
                                                                   Capital, AllianceBernstein

                                                                   Yiheng Capital, China International Alternative
      10 Jul. 2014    Hong Kong       Road Show       Institution Association, AP Asset 、 Doric Capital, Samsung The main contents of the
                                                                   Investment, Value Partners                                        Company’s reception of
                                                                                                                                     investors included:
                          The
      17 Jul. 2014                  Field   Research Institution Han Lun Investment                                                  (1) Industry status and
                       Company
                                                                                                                                     development condition;
                          The                                      Essence       Securities,      Wellington     Management
      18 Jul. 2014                  Field   Research Institution                                                                     (2)      The       Company's
                       Company                                     Company
                                                                                                                                     business       situation   and
                          The          Telephone                                                                                     development strategy; (3)
      21 Jul. 2014                                    Institution Kai Yu Capital
                       Company      Communication                                                                                    Related content in regular
                                                                   Greenwoods Asset Management, UBS Securities, reports,                                        and
                                                                   Sinolink Securities, Changsheng fund, CICC, Guotai announcements published
                                                                   Junan      Securities,   Founder      Securities,     Haitong by the other companies.
                                                                   Securities, Bosera Fund, Upstone, Guosen Securities, (4)Information                    provided
                                                                   SCB, Eastern bay, ICBC Credit Suisse, Xinhua Asset, by the Company: regular
                                      The Second
                                                                   Dongguan Securities, Hongyuan Securities, CITICS, reports,                       announcements
                          The           Term of
      30 Jul. 2014                                    Institution Galaxy Securities, Shenyin &Wanguo, Penghua Fund, and other public data of
                       Company      Investors Open
                                                                   Changjiang       Securities,      China     Orient      Asset the Company.
                                            Day
                                                                   Management, Essence Fund, Hua An Fund, Harvest
                                                                   Fund, UBS SDIC, Great Wall Fund, Anbang Asset,
                                                                   ChinaAMC, China Universal Asset Management,
                                                                   CICC Asset Management, E fund, ,Guodu Securities,
                                                                   Paktek Asia, BNP Paribas SA

      19 Aug. 2014     Shenzhen        Mid-Term       Institution CICC,       Changjiang       Securities,   Citic     securities,


                                                                                                                                                         26
                                                                   Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


                          Performance                   Sinolink   Securities,     Guotai    Junan   Securities,
                           Presentation                 Minsheng Securities, Essence Securities, Shenyin &
                                                        Wanguo, UBS Securities, Guosen Securities, Founder
                                                        Securities, Industrial Securities,    Bohai Securities,
                                                        China Merchants Securities, Essence Securities,
                                                        Dongxing Securities, Telecom Funds, Bosera Funds、
                                                        Dachang Fund, E fund, ChinaAMC, ABC-CA Fund,
                                                        Fortune SG Fund, Penghua Fund, China Merchants
                                                        Fund, Baoying Fund, Everbright Pramerica, Soochow
                                                        Fund, QHKY Fund, Morgan Stanley Huaxin Fund,
                                                        Yinhua Fund, Baishan Investment, Huashang Fund,
                                                        Galaxy Fund, China Life Insurance, CPIC, Yongjin
                                                        Group, Eastern Bay, Century Securities, Paktek Asia,
                                                        GF Securities proprietary trading, Bosston Capital,
                                                        Gaoguan     Invesatment,     Value    Partners,   Orient
                                                        Securities Asset Management, Keywise Investment,
                                                        Neo-Criterion,   Gemboom Investment,          Chinalion
                                                        Securities, Guangzhou Long-term Investment, Qianhe
                                                        Capital, Huatai Securities, Ping An Asset, Hillview
                                                        Capital, Hua An Insurance, Ganyuan Capital,
                                                        Shenzhen Co-power Venture, Pine River

                                                        CICC, Asia Value Capital, Bespinver Fund、Comgest
                                                        Investment、East Capital, IBN, J.P. Morgan, NCC
                                                        Fund, Pramerica Fund, Pichon investment, Bisheng
                                                        Investment, OFI Asset, HanHua Capital, HSBC asset,
                                                        Value Partners, BOCOM International Trust, Goal
                                                        Headspring Capital, Morgan Stanley Huaxin Fund,
                 The        Telephone
20 Aug. 2014                              Institution Samsung Assets, Xingguang Life Insurance, Nomura
               Company   Communication
                                                        Investment, Pioneer Investments 、 Jupiter Asset
                                                        Management, Sloane Robinson, Investec Asset
                                                        Management, Carrhae Capital, Alandsbanken Asset
                                                        Management,      Nordea     Investment    Management,
                                                        Hermes Fund, Pictet Asset Management, Robeco
                                                        Fund

                                                        Fortune Investment, Mirae Asset, Houde Investment,
                 The
21 Aug. 2014             Field   Research Institution Liuhe Capital, Shenzhen Economic Construction
               Company
                                                        Investment, Essence Securities

                 The
22 Aug. 2014             Field   Research Institution E Fund, Bosera Funds
               Company

                                                        Fuh Hwa Securities Investment Trust, Xinshou, Hua
                                                        Nan Securities, China RE Insurance, Shin Kong
26 Aug. 2014   Taiwan      Road Show      Institution
                                                        Investment Trust , Huamei, Fubon Life Insurance,
                                                        Prudential Investment Trust, FSITC, SinoPac SITC、


                                                                                                                             27
                                                                       Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


                                                           Cathay Pacific Investment Trust, Value Partners
                                                           Concord     Investment    Trust,   Fubon     Securities
                                                           Investment Trust,        Nan Shan Life Insurance,
                                                           Mercuries Life Insurance, Cathay United Bank

                  The
28 Aug. 2014               Field   Research Institution Youshan Fund
               Company

                                                           First-trust Fund, CathayUnited, Khazanah Nasional
                               Strategy
2 Sep. 2014     Suzhou                       Institution Berhad,      Orient   Assent     Management,   Sunshine
                               Meeting
                                                           Insurance, CITIC Assent Management

                  The         Telephone
3 Sep. 2014                                  Institution Capital World Investors
               Company     Communication

                                                           Value Partners, Nomura International, Tiger Pacific
                                                           Capital, Happy Dragon Fund, UBS SDIC, Mitsubishi
                                                           J-WORKS Investment Services (Hong Kong), The
                               Strategy                    Government Of Singapore Investment Consulting,
3 Sep. 2014    Shanghai                      Institution
                               Meeting                     Pine River, Schroders, Sumitomo Mitsui Trust, Daiwa
                                                           Asset Management, Fullerton investment, South
                                                           Korea     Investment,    Boc    Hong    Kong     Asset
                                                           Management, DNB

                                                           Boyu Capital, Libang Investment, Credit Suisse,
                                                           Taconic Capital, INDUS Capital, Manulife Asset
                                                           Management, PrinceT Asset Management, Ashmore,
                                                           Robert Lloyd George investment, Yongrong Asset,
                                                           Aberdeen Asset, Julius Baer, Oriental capital, Pine
                                                           River, China Everbright, Daiwa Investment Trust
                                                           Investment, Credit Suisse, Myriad Asset, Nordea,
                                                           Pangu Capital, Allianz Global Investors, QHKY
                               Strategy
3 Sep. 2014    Hong Kong                     Institution Fund, JiaFu Asset, China Capital, Wellington Global
                               Meeting
                                                           Investment, Desheng Investment, Value Partners, Pei
                                                           Da Investment, OOCL, Eurizon Capital, ChinaRock
                                                           Capital, Tianping, Asset Management,           IMPAX,
                                                           Trilogy, Winnington Capital, COMGEST, Bosston
                                                           Capital, Morgan Stanley (Asia), Xiang Ying Capital,
                                                           CICC, ChinaAMC, Viking, Xiangjian, Wellington
                                                           Global, Heqi Capital, JK Capital, Och-Ziff Capital
                                                           Management, Hill House Capital, OWL CREEK

                  The
4 Sep. 2014                Field   Research Institution GF Securities
               Company

                                                           Australia JCP Investment, National Australia Bank
                  The
9 Sep. 2014                Field   Research Institution Management, MLC, Ibbotson Associates, William
               Company
                                                           Blair

10 Sep. 2014      The      Field   Research Institution Credit Suisse


                                                                                                                                 28
                                                                      Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


               Company

                                                           Aberdeen Asset, Changli Capital, Everest Capital,
                                                           Putman, PINE BRIDGE,UBS, Polunin Capital、Moon
                                                           Capital,   Farallon   Capital,   Smith    Tan   asset
10 Sep. 2014   Singapore     Road Show       Institution
                                                           management, Tahan Capital, New Ideas Investment,
                                                           Broad Peak、GMO、Aberdeen、Lazard、Fidelity
                                                           Investments

                 The                                       Merrill Lynch International, International Investment
11 Sep. 2014               Field   Research Institution
               Company                                     Trust, Wang San international

                 The          Telephone
12 Sep. 2014                                 Institution Merrill Lynch International,
               Company     Communication

                 The
16 Sep. 2014               Field   Research Institution The National Social Security Fund, Kaiyu Investment
               Company

                                                           AMP        Capital      Investors,       BOSVALEN,
                                                           LIGHTHOUSE, Goldhorse Capital, UBS Global,
                               Strategy                    Tree Line, Macquarie Fund, BESTINVER, DNB
16 Sep. 2014   Shenzhen                      Institution
                               Meeting                     ASSET, Morgan Stanley, Evenstar Advisors, Jianan
                                                           Investment, Libang Investment, Balyasny Asset,
                                                           Leiya Investment, YiHeng Capital

                               Strategy
24 Sep. 2014   Shanghai                      Institution Mingyu Asset, Huashang Fund
                               Meeting

                 The          Telephone
29 Sep. 2014                                 Institution Kai Yu Capital
               Company     Communication

                 The          Telephone
30 Sep. 2014                                 Institution Fidelity Investments
               Company     Communication




                                                                                                                                29
                                                                     Report for the Third Quarter of 2014 of Midea Group Co., Ltd.




                                      Section IV. Financial Statements


I. Financial statements


                                                     Balance Sheet

Prepared by: Midea Group Co., Ltd.                                                                               Unit: RMB’000

                                               30 Sep. 2014                                     31 Dec. 2013
                Assets
                                      Consolidated        The Company            Consolidated               The Company

Current Assets:

  Monetary funds                           8,470,307.05       10,995,040.04            15,573,683.04                14,309,967.73

  Deposits at central bank                 1,337,565.99                                   923,632.22

  Deposits at other banks                   372,984.83                                  1,746,284.24

  Financial assets measured at fair
value and for which changes are
                                            226,091.63                                    759,565.22
recorded into current gains and
losses

  Notes receivable                        18,343,120.20        2,463,819.18            14,150,532.20                 2,176,916.60

  Accounts receivable                     10,471,852.19                                 7,928,438.25

  Accounts paid in advance                 1,871,967.71             814.94              2,432,420.54                   349,358.36

  Loans and advances                       7,433,770.01                                 5,100,085.71

  Interest receivable

  Dividends receivable                       51,018.44          561,542.04                 25,863.84                   286,507.04

  Other accounts receivable                 818,157.88          861,551.08              1,025,395.19                 3,519,029.46

  Inventories                             10,970,974.88                                15,197,723.84

  Assets held for sale

  Non-current assets due within 1
year

  Other current assets                    22,802,244.49       20,486,257.36               463,107.71

Total current assets                      83,170,055.30       35,369,024.64            65,326,732.00                20,641,779.19

 Non-current assets:

  Available-for-sale financial              844,627.29          895,725.80                844,439.05                   895,725.80


                                                                                                                               30
                                                                           Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


assets

  Held-to-maturity investments

  Long-term accounts receivable

  Long-term equity investment                    930,071.74        16,518,983.98                912,427.64                 16,065,073.90

  Investment property                            196,844.56           469,489.16                205,834.70                      891,732.65

  Fixed assets                                19,590,976.08         1,436,171.08             19,572,161.32                      788,783.72

  Construction in progress                       528,028.24            41,336.74                612,601.28                       46,985.28

  Engineering materials

  Disposal of fixed assets

  Intangible assets                            3,469,529.85           263,490.21              3,325,738.40                      177,196.73

  R&D expense

  Goodwill                                     2,931,003.59                                   2,931,003.59

  Long-term deferred expenses                    628,123.27            69,538.39                647,882.34                      109,960.04

  Deferred income tax assets                   3,533,606.95            10,045.90              2,567,204.45                        7,222.31

  Other non-current assets

Total of non-current assets                   32,652,811.57        19,704,781.26             31,619,292.77                 18,982,680.43

Total assets                                115,822,866.87         55,073,805.90             96,946,024.77                 39,624,459.62

Legal representative:                 Person-in-charge of the accounting work:              Chief of the accounting division:




                                             Balance Sheet (Continued)

Prepared by: Midea Group Co., Ltd.                                                                                      Unit: RMB’000

   Liabilities and Shareholders’                   30 Sep. 2014                                      31 Dec. 2013
                 Equity                  Consolidated          The Company            Consolidated                The Company

 Current liabilities:

  Short-term borrowings                       10,914,688.74                                 8,872,173.98                        140,000.00

  Borrowings from the Central
                                                  29,998.40                                    89,708.03
  Bank

  Customer bank deposits and
  due to banks and other financial                   165.31                                        61.00
  institutions

  Intra-group borrowings

  Financial liabilities measured at               73,347.19            35,657.94               11,260.18


                                                                                                                                       31
                                                               Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


fair   value     and    for     which
changes    are      recorded     into
current gains and losses

Notes payable                            6,868,061.43                           6,308,478.45

Accounts payable                        18,330,442.21        2,331.59          17,508,099.66                       7,831.48

Accounts received in advance             5,816,324.11                           4,983,346.26

Employees’ compensation
                                         1,601,517.13        3,911.39           1,968,837.73                      21,717.74
payable

Tax payable                              2,387,089.94      59,543.99            1,028,015.10                      16,856.22

Interest payable                           51,788.07      127,940.18               69,823.87                     144,847.77

Dividends payable                         256,657.70                               94,046.21

Other accounts payable                   1,527,675.60   39,212,604.92           1,487,781.02                  23,082,573.69

Liabilities held for sale

Non-current       liabilities     due
                                          698,552.22                            1,617,370.17                     999,942.58
within 1 year

Other current liabilities               21,804,593.33         875.94           12,608,380.03                         875.94

Total current liabilities               70,360,901.38   39,442,865.95          56,647,381.69                  24,414,645.42

Non-current liabilities:

Long-term borrowings                       22,913.44                              711,464.64

Bonds payable                             160,929.09                              152,716.59

Long-term payables

Specific payables                         856,341.10                               52,073.96

Estimated liabilities                      26,990.29                               33,466.19

Deferred income tax liabilities            66,306.92                              123,797.62

Other non-current liabilities             153,664.58                              144,561.80

Total non-current liabilities            1,287,145.42                           1,218,080.80

Total liabilities                       71,648,046.80   39,442,865.95          57,865,462.49                  24,414,645.42

Owners’ equity

Share capital                            4,215,808.47    4,215,808.47           1,686,323.39                   1,686,323.39

Capital reserves                        13,005,367.80    5,355,482.75          15,566,756.01                   7,880,598.46

Less: Treasury stock

Other comprehensive income                -151,445.70                              54,034.77

Surplus reserves                          569,544.32      569,544.32              569,544.32                     569,544.32



                                                                                                                         32
                                                                          Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


 Retained profits                            20,885,298.71         5,490,104.41              15,304,989.21                   5,073,348.03

 Foreign exchange differences                   -436,565.28                                    -334,216.66

 Total equity attributable to
                                             38,088,008.32        15,630,939.95              32,847,431.04                  15,209,814.20
 owners of the Company

 Minority interests                            6,086,811.75                                   6,233,131.24

 Total owners’ (or
                                             44,174,820.07        15,630,939.95              39,080,562.28                  15,209,814.20
 shareholders’) equity

 Total liabilities and owners’
                                            115,822,866.87        55,073,805.90              96,946,024.77                  39,624,459.62
 (or shareholders’) equity

Legal representative:                Person-in-charge of the accounting work:          Chief of the accounting division:




                                                     Income Statement

Prepared by: Midea Group Co., Ltd.                                                                                        Unit: RMB’000

                                                                           Jul.-Sept. 2014                         Jul.-Sept. 2013
                              Item
                                                                Consolidated      The Company         Consolidated        The Company

I. Total operating revenues                                      31,880,719.37         168,600.18       27,873,177.72           16,318.47

  Including: Sales income                                        31,753,306.09         168,600.18       27,807,250.53           16,318.47

       Interest income                                              126,354.65                                65,927.19

       Handling charges and commission income                          1,058.63

II. Total operating costs                                        29,419,094.89         331,256.12       25,923,773.64           72,529.59

  Including: Cost of sales                                       24,138,196.09          12,106.43       21,101,081.92

       Interest expenses                                             51,474.27                                60,995.29

       Handling charges and commission expenses                         477.12                                  222.43

       Business taxes and surcharges                                174,283.28           5,829.08            142,852.88              168.12

       Selling and distribution expenses                          3,138,092.30                           2,930,548.95

       Administrative expenses                                    1,734,117.98          84,042.66        1,606,731.18           25,078.13

       Financial expenses                                           276,855.06         230,522.71             49,491.46         44,613.39

       Asset impairment losses                                       -94,401.21         -1,244.76             31,849.53          2,669.95

  Add: Gain from change in fair value                               189,715.92         -27,328.82             65,752.73

       Income from investment                                       412,941.14         372,323.97            197,797.21        -87,461.03

 Including: share of profits in associates and joint ventures        14,212.71           1,170.91            -18,339.96         -4,356.52

III. Business profit                                              3,064,281.54         182,339.21        2,212,954.02         -143,672.15



                                                                                                                                        33
                                                                      Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


  Add: non-operating income                                     153,047.67           5,103.51        286,482.88             530.70

         Including: gain from non-current asset disposal         12,000.30                            14,547.96

  Less: non-operating expenses                                   90,590.60             836.98         49,565.12               0.77

         Including: loss from non-current asset disposal         75,335.81                            27,559.52               0.42

IV. Total profit                                               3,126,738.61       186,605.74       2,449,871.78        -143,142.22

  Less: Income tax expense                                      504,895.47          50,670.52        436,965.43

V. Net profit                                                  2,621,843.14       135,935.22       2,012,906.35        -143,142.22

  Including: Net profit achieved by combined parties before
the combinations

  Attributable to owners of the Company                        2,342,823.51       135,935.22       1,371,199.78        -143,142.22

  Minority shareholders’ income                                279,019.63                           641,706.57

VI. The after-tax net income of other comprehensive
                                                                 52,659.54                             -1,436.07
income
  (I) Other comprehensive income items that cannot be
reclassified as gains and losses
  1. Changes in net liabilities or assets from re-measuring
benefit plans
  2. The share of other comprehensive income under the
equity method, in the invested entity, that cannot be
classified into profits and losses
  (II) Other comprehensive incomes will be reclassified into
                                                                 52,659.54                             -1,436.07
the profits and losses
  1. The share of other comprehensive income, under the
equity method, in the invested entity , that will be
reclassified into profits and losses
  2. Changes in fair value of available-for-sale financial
                                                                     41.98                              -236.67
assets
  3. Held-to-maturity investments reclassified as gains and
losses on available-for-sale financial assets
  4. Effective part of the gains and losses of cash flows
                                                                193,800.36                            21,033.18
through hedging

  5. Foreign exchange differences                              -141,182.80                           -22,232.58

VII. Total comprehensive income                                2,674,502.68       135,935.22       2,011,470.28        -143,142.22

  Attributable to owners of the Company                        2,459,237.75       135,935.22       1,386,892.79        -143,142.22

  Attributable to minority shareholders                         215,264.93                           624,577.49

VIII. Earnings per share

  (I) Basic earnings per share                                         0.56                                 0.45

  (II) Diluted earnings per share                                      0.56                                 0.45



                                                                                                                                34
                                                                          Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


Legal representative:               Person-in-charge of the accounting work:               Chief of the accounting division:




                                                     Income Statement

Prepared by: Midea Group Co., Ltd.                                                                                         Unit: RMB’000

                                                                          Jan.-Sept. 2014                           Jan.-Sept. 2013
                             Item
                                                                  Consolidated             The Company       Consolidated The Company

I. Total operating revenues                                           109,588,937.73            534,175.93 93,920,582.83         45,817.45

  Including: Sales income                                             109,084,157.93            534,175.93 93,746,729.65         45,817.45

       Interest income                                                    503,212.87                            173,853.18

       Handling charges and commission income                                   1,566.93

II. Total operating costs                                              98,437,374.16            529,872.11 87,224,993.77        236,421.59

  Including: Cost of sales                                             81,481,479.40             20,174.08 71,919,645.67

       Interest expenses                                                  243,027.70                            140,859.52

       Handling charges and commission expenses                                 1,204.73                            904.70

       Business taxes and surcharges                                      621,111.05             10,663.23      487,724.62        7,359.29

       Selling and distribution expenses                               10,761,772.36                          9,064,801.58

       Administrative expenses                                           5,083,442.38           257,056.21    4,764,709.77       81,599.66

       Financial expenses                                                  -11,698.64           247,659.87      631,080.06      143,520.48

       Asset impairment loss                                              257,035.18             -5,681.28      215,267.85        3,942.16

  Add: Gain from change in fair value                                     -598,637.76           -35,657.94      397,072.61

       Income from investment                                             839,388.23          3,871,395.51      635,272.83      938,064.63

 Including: share of profits in associates and joint ventures                  49,190.10          1,215.68         7,327.65           559.43

III. Business profit                                                   11,392,314.04          3,840,041.39    7,727,934.50      747,460.49

  Add: non-operating income                                               706,470.73             13,581.02      641,158.35       35,000.21

      Including: gain from non-current asset disposal                          52,031.73             42.01       38,148.66

  Less: non-operating expenses                                            223,702.62              9,707.07      197,327.43        3,500.65

      Including: loss from non-current asset disposal                     175,127.20              8,769.43      112,845.33              3.37

IV. Total profit                                                       11,875,082.15          3,843,915.34    8,171,765.42      778,960.05

  Less: Income tax expense                                               2,035,610.94            54,512.17    1,417,018.12

V. Net profit                                                            9,839,471.21         3,789,403.17    6,754,747.30      778,960.05

  Including: Net profit achieved by combined parties
before the combinations

  Attributable to owners of the Company                                  8,952,956.27         3,789,403.17    4,018,034.39      778,960.05



                                                                                                                                         35
                                                                             Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


  Minority shareholders’ income                                             886,514.94                        2,736,712.91

VI. The after-tax net income of other comprehensive
                                                                             -338,546.68                        -169,887.65
income
  (I) Other comprehensive income items that cannot be
reclassified as gains and losses
  1. Changes in net liabilities or assets from re-measuring
benefit plans
  2. The share of other comprehensive income under the
equity method, in the invested entity, that cannot be
classified into profits and losses
  (II) Other comprehensive income that will be reclassified
                                                                             -338,546.68                        -169,887.65
into profits and losses
  1. The share of other comprehensive income, under the
equity method, in the invested entity , that will be
reclassified into profits and losses
  2. Changes in fair value of available-for-sale financial
                                                                                  -10.00                             -274.66
assets
  3. Held-to-maturity investments reclassified as gains and
losses on available-for-sale financial assets
  4. Effective part of the gains and losses of cash flows
                                                                             -205,863.79                          -22,717.72
through hedging

  5. Foreign exchange differences                                            -132,672.89                        -146,895.27

VII. Total comprehensive income                                             9,500,924.53       3,789,403.17    6,584,859.65        778,960.05

  Attributable to owners of the Company                                     8,645,107.20       3,789,403.17    3,984,738.14        778,960.05

  Attributable to minority shareholders                                      855,817.33                        2,600,121.51

VIII. Earnings per share

  (I) Basic earnings per share                                                      2.12                                1.49

  (II) Diluted earnings per share                                                   2.12                                1.49

Legal representative:                  Person-in-charge of the accounting work:             Chief of the accounting division:




                                                    Cash Flow Statement

Prepared by: Midea Group Co., Ltd.                                                                                            Unit: RMB’000

                                                                          Jan.-Sept. 2014                           Jan.-Sept. 2013
                          Item
                                                                  Consolidated             The Company      Consolidated        The Company

I. Cash flows from operating activities:

  Cash received from sale of commodities and                             78,057,006.28                        63,042,320.83



                                                                                                                                          36
                                                            Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


rendering of service

  Net increase of deposits from customers and dues
                                                               104.31
from banks

  Net increase of loans from central bank                   -59,709.63                       299,999.68

  Cash received from interest, handling charges and
                                                           504,779.80                        173,853.18
commissions

  Tax refunds received                                    2,909,213.40                     2,976,349.07

  Other cash received relating to operating activities    1,754,268.97   19,292,418.87     2,268,416.28     6,255,985.98

Subtotal of cash inflows from operating activities       83,165,663.13   19,292,418.87    68,760,939.04     6,255,985.98

  Cash paid for goods and services                       38,895,396.31                    35,561,619.90

  Net increase of customer lendings and advances          2,362,954.65                     3,579,159.30

  Net increase of funds deposited at central bank and
                                                           417,840.83                        308,896.35
amounts due from banks

  Cash for paying interest, handling charges and
                                                           245,672.29                        141,188.81
commissions

  Cash paid to and for employees                          7,876,851.14       29,958.39     6,692,571.59        48,239.38

  Various taxes paid                                      6,913,017.12         6,722.99    5,183,832.04         9,894.04

  Other cash payment relating to operating activities    12,600,226.71    1,632,429.98    11,867,076.00       730,255.64

Subtotal of cash outflows from operating activities      69,311,959.05    1,669,111.36    63,334,343.99       788,389.06

Net cash flows from operating activities                 13,853,704.08   17,623,307.51     5,426,595.05     5,467,596.92

II. Cash flows from investing activities:

  Cash received from retraction of investments            5,440,020.00       24,901.98         1,000.00

  Cash received from return on investments                 682,830.12     3,492,060.54       713,005.52     1,025,474.57

  Net cash received from disposal of fixed assets,
                                                          1,299,396.24       36,984.39       545,749.16
intangible assets and other long-term assets

  Net cash received from disposal of subsidiaries or
                                                                                             106,514.71        20,000.00
other business units

  Other cash received relating to investing activities

Subtotal of cash inflows from investing activities        7,422,246.36    3,553,946.91     1,366,269.39     1,045,474.57

  Cash paid to acquire fixed assets, intangible assets
                                                          1,610,167.83      179,619.71     1,798,517.26        75,716.16
and other long-term assets

  Cash paid for investments                              29,296,675.30   22,372,749.70        20,781.65        95,781.65

  Net cash paid to acquire subsidiaries and other
                                                           695,044.89
business units



                                                                                                                      37
                                                                              Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


  Other cash payments relating to investing activities

Subtotal of cash outflows from investing activities                       31,601,888.02    22,552,369.41     1,819,298.91         171,497.81

Net cash flows from investing activities                                  -24,179,641.66   -18,998,422.50     -453,029.52         873,976.76

III. Cash flows from financing activities:

    Cash received from capital contributions                                                                    11,596.04

    Including:        Cash   received      from    minority
                                                                                                                11,596.04
shareholder investments by subsidiaries

    Cash received from borrowings                                         36,914,176.05     2,700,000.00    28,224,100.12       4,600,000.00

    Cash received from issuance of medium term notes

    Cash received from issuance of short-term
    financing bonds

    Other cash received relating to financing activities

Subtotal of cash inflows from financing activities                        36,914,176.05     2,700,000.00    28,235,696.16       4,600,000.00

    Cash repayment of borrowings                                          33,441,969.54     2,840,000.00    23,409,485.87       3,450,000.00

    Cash for repaying medium term notes                                     1,000,000.00    1,000,000.00     2,000,000.00       2,000,000.00

    Cash for repaying short-term financing bonds                                                             1,000,000.00       1,000,000.00

    Cash paid for interest expenses and distribution of
                                                                            3,786,737.44    3,950,745.81     1,904,912.73         406,409.27
    dividends or profit

    Including: dividends or profit paid by subsidiaries
                                                                             342,464.38                      1,585,032.21
    to minority shareholders

    Other      cash    payments   relating    to   financing
                                                                                                             1,001,200.00       1,001,200.00
    activities

Sub-total of cash outflows from financing activities                      38,228,706.98     7,790,745.81    29,315,598.60       7,857,609.27

Net cash flows from financing activities                                   -1,314,530.93    -5,090,745.81   -1,079,902.44       -3,257,609.27

IV. Effect of foreign exchange rate changes on cash
                                                                               -8,090.92                       -14,881.40
and cash equivalents

V. Net increase in cash and cash equivalents                              -11,648,559.43    -6,465,860.80    3,878,781.69       3,083,964.41

  Add: Opening balance of cash and cash equivalents                       16,763,873.80    13,809,135.41    12,544,078.77       1,483,866.89

VI. Closing balance of cash and cash equivalents                            5,115,314.37    7,343,274.61    16,422,860.46       4,567,831.30

Legal representative:                   Person-in-charge of the accounting work:            Chief of the accounting division:


II. Audit report

Is this report audited?
□ Yes √ No


                                                                                                                                          38
                                        Report for the Third Quarter of 2014 of Midea Group Co., Ltd.


The Company’s report is not audited.



                                              Midea Group Co., Ltd.
                                        Legal Representative: Fang Hongbo

                                                     24 October 2014




                                                                                                  39