Report for the First Quarter of 2015 of Midea Group Co., Ltd. Midea Group Co., Ltd. Report for the First Quarter of 2015 April 2015 1 Report for the First Quarter of 2015 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 contains no false records, misleading statements or material omission. And they shall be jointly and severally liable for the factuality, accuracy and completeness of the contents of this report. 1.2 All directors have attended the Q1 report review board meeting. 1.3 The Q1 Financial Report has not been audited by a CPAs firm. 1.4 Mr. Fang Hongbo, Chairman of the Board and President of the Company, and Ms. Yuan Liqun, responsible person for the Company’s financial affairs, have represented and warranted that the financial report in this report is factual, accurate and complete. 1.5 This report has been prepared in both Chinese and English. Should there be any misunderstanding between the two versions, the Chinese version shall prevail. 2 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Section II. Financial Highlights & Changes in 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 Jan.-Mar. 2015 Jan.-Mar. 2014 +/- (%) Sales revenues (RMB’000) 42,426,713.97 38,351,110.06 10.63% Net profit attributable to shareholders of 3,342,134.83 2,538,849.11 31.64% the Company (RMB’000) Net profit attributable to shareholders of the Company after extraordinary gains and 3,019,956.04 2,889,535.17 4.51% losses (RMB’000) Net cash flows from operating activities 2,498,715.37 3,223,813.31 -22.49% (RMB’000) Basic EPS (RMB Yuan/share) 0.79 0.60 31.67% Diluted EPS (RMB Yuan/share) 0.79 0.60 31.67% Weighted average ROE (%) 8.11% 7.47% 0.64% 31 Mar. 2015 31 Dec. 2014 +/- (%) Total assets (RMB’000) 135,830,927.66 120,292,088.16 12.92% Net assets attributable to shareholders of 42,939,219.43 39,470,499.84 8.79% the Company (RMB’000) Total share capital of the Company on the last trading session before disclosure: Total share capital of the Company on the last trading session 4,215,808,472 before disclosure (share) Whether the Company's share capital changed and the change affected the owners' equity due to reasons like the issuance of new shares, allotment of shares, equity incentive plans, and repurchases during the time from the end of the reporting period to the date when this report was released □ Yes √ No Items and amounts of extraordinary gains and losses √Applicable □Inapplicable Unit: RMB’000 Item Jan.-Mar. 2015 Note Gains/losses on the disposal of non-current assets (including the -24,085.96 3 Report for the First Quarter of 2015 of Midea Group Co., Ltd. offset part of asset impairment provisions) Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at 50,679.86 certain quotas or amounts according to the country’s unified standards Gain/loss on entrusting others with investments or asset 327,797.78 management 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 226,393.76 financial liabilities and financial assets available for sale, except for effective hedging related to the normal businesses of the Company Non-operating income and expenses other than the above 18,487.37 Less: Income tax effects 172,995.55 Minority interests effects (after tax) 104,098.47 Total 322,178.79 -- 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 □ Applicable √ Inapplicable No such cases in the reporting period. 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 90,553 period-end Shareholdings of the top ten common shareholders Pledged or frozen Shareholding Number of shares Nature of Number of the Name of shareholder percentage restricted shares Status shareholder shares held Number of (%) held of shares shares 4 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Domestic Midea Holding Co., Ltd. non-state-owned 35.49% 1,496,250,000 1,496,250,000 Pledged 205,205,500 corporation Domestic Rongrui Equity Investment (Zhuhai) non-state-owned 7.22% 304,500,000 0 Partnership (limited partnership) corporation Domestic Fang Hongbo 2.17% 91,326,995 90,000,000 individual Domestic Tianjin CDH Jiatai Equity Investment non-state-owned 1.85% 78,000,000 0 Partnership (limited partnership) corporation Domestic Huang Jian 1.78% 75,160,057 75,000,000 individual Domestic Ningbo Maysun Equity Investment Partnership non-state-owned 1.78% 75,000,000 75,000,000 (limited partnership) corporation Domestic Yuan Liqun 1.44% 60,500,000 60,000,000 individual Overseas CDH M-Tech (HK) Co., Ltd. 1.42% 60,000,000 0 corporation Overseas CDH Spark (HK) Co., Ltd. 1.36% 57,500,000 0 corporation Domestic Huang Xiaoming 1.24% 52,213,366 50,000,000 Pledged 8,993,000 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 304,500,000 RMB ordinary shares 304,500,000 partnership) Tianjin CDH Jiatai Equity Investment Partnership (limited 78,000,000 RMB ordinary shares 78,000,000 partnership) CDH M-Tech (HK) Co., Ltd. 60,000,000 RMB ordinary shares 60,000,000 CDH Spark (HK) Co., Ltd. 57,500,000 RMB ordinary shares 57,500,000 Merrill Lynch International 44,005,222 RMB ordinary shares 44,005,222 China Life Insurance Company Ltd.-Dividend-Individual 41,465,007 RMB ordinary shares 41,465,007 Dividend-005L-FH002Shen UBS AG 39,177,207 RMB ordinary shares 39,177,207 5 Report for the First Quarter of 2015 of Midea Group Co., Ltd. National Social Security Fund 104 Portfolio 35,488,888 RMB ordinary shares 35,488,888 New China Life Insurance Company Ltd. - Dividend - 32,837,906 RMB ordinary shares 32,837,906 Individual Dividend-018L-FH002Shen Morgan Stanley & Co. International Plc. 31,494,873 RMB ordinary shares 31,494,873 Two individual shareholders, Mr. Fang Hongbo and Ms. Yuan Liqun, serve as a director and as a senior executive in Midea Group. CDH Jiatai, CDH M-Tech and CDH Spark, which hold a total stake of 4.63% in Midea Group, are related parties. Related-parties or acting-in-concert parties among the The company has not confirmed if any associated relationship exists above-mentioned shareholders 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". asTop ten non-restricted common shareholders taking part in Inapplicable securities margin trading (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 such cases in the reporting period. 2. Total number of preference shareholders and shareholdings of the top ten preference shareholders at the period-end □ Applicable √ Inapplicable 6 Report for the First Quarter of 2015 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/ Balance sheet items 31 Mar. 2015 31 Dec. 2014 Main reason for the change Decrease (%) Business grew and the operating Monetary funds 9,210,123.97 6,203,282.81 48.47% efficiency improved. Due from banks and other financial Operating changes in Midea Group 1,046,502.02 2,126,444.99 -50.79% institutions Finance Changes in the fair value of Derivative financial assets 308,051.02 162,513.84 89.55% derivative financial assets Notes receivable 27,551,795.43 17,097,233.37 61.15% Sales increased. Accounts receivable 13,487,865.88 9,362,102.75 44.07% Sales increased. Prepayments 2,093,978.64 1,414,470.45 48.04% Procurement increased. Dividends receivable from associates Dividends receivable 61,603.82 45,943.22 34.09% increased. Short-term borrowings from outside Short-term borrowings 8,238,588.50 6,070,879.03 35.71% increased. Customer bank deposits due to banks Operating changes in Midea Group 213.58 7,493.81 -97.15% and other financial institutions Finance Changes in the fair value of Derivative financial liabilities 103,679.33 74,960.70 38.31% derivative financial assets Notes payable 18,522,639.98 12,648,496.99 46.44% Procurement increased. Remuneration for employees was Payroll payable 1,208,350.59 2,199,776.95 -45.07% paid. Sales increased and income tax and Taxes and fares payable 4,908,100.78 3,280,150.71 49.63% VAT increased accordingly. The dividends for last year were paid Dividends payable 11,703.66 93,799.03 -87.52% in the current period. Non-current liabilities due within 1 Some non-current liabilities due 17,061.66 611,900.00 -97.21% year within 1 year were repaid. Jan.-Mar. Jan.-Mar. Increase/Dec Income statement items Main reason for the change 2015 2014 rease (%) 7 Report for the First Quarter of 2015 of Midea Group Co., Ltd. The business scale of Midea Group Interest expenses 98,854.06 68,558.65 44.19% Finance expanded. Business tax and surtaxes 329,869.89 215,272.48 53.23% Sales increased. Selling expenses 5,363,077.42 3,710,417.81 44.54% Sales increased. Financial expenses 195,782.99 -44,139.27 -543.56% Exchange losses increased. Asset impairment losses 241,604.72 353,776.63 -31.71% Accounts receivable grew slower. Changes in the fair value of Gains on fair value changes 153,580.51 -776,075.05 -119.79% derivative financial instruments Financial management gains Investment gains 527,790.47 272,930.60 93.38% increased. Gains on disposal of non-current Gains on disposal of non-current assets 8,650.10 17,633.87 -50.95% assets decreased. Losses on disposal of non-current Non-operating expense 43,517.96 81,111.66 -46.35% assets decreased. Losses on disposal of non-current Losses on disposal of non-current 26,312.08 62,182.41 -57.69% assets assets decreased. Income tax expenses 776,836.83 594,390.32 30.69% Profits increased. Jan.-Mar. Jan.-Mar. Increase/Dec Cash flow statement items Main reason for the change 2015 2014 rease (%) Investments and financial Net cash flows from investing activities -1,175,368.57 257,253.68 -556.89% management increased. Net cash flows from financing 1,325,027.56 4,571,664.18 -71.02% Borrowings secured decreased. activities II. Progress and influence of significant events, as well as the analysis and explanation on solutions √ Applicable □ Inapplicable 1. The Company and Beijing Jingdong Century Trading Co., Ltd., a subsidiary of Jingdong Group, signed on 31 Dec. 2014 a letter of intent for strategic cooperation in 2015, confirming the annual business goal of RMB10 billion between Midea and Jingdong as well as the wish to deepen cooperation in intelligent homes and channel expansion. Jingdong, with its expertise in logistics, Internet technology, big data analysis and the intelligent cloud platform, is beneficial to Midea’s e-commerce business. 2. On 12 Dec. 2014, the Proposal for the Plan for Private A-share Offering to Specific Entities was reviewed and approved at the 25th Meeting of the 1st Board of Directors. The Company intended to issue RMB ordinary shares 8 Report for the First Quarter of 2015 of Midea Group Co., Ltd. (A-share) of 55,000,000 in number to Xiaomi Technology Co., Ltd. at RMB23.01/share, with the par value per share at RMB1.00/share and the total raised funds not exceeding RMB1,265,550,000. On 23 Jan. 2015, the Company received the CSRC Notice of Acceptance of Administrative Permission Application (No. 150067) issued by China Securities Regulatory Commission (“CSRC”) dated 22 Jan. 2015. On 24 Apr. 2015, the Company disclosed the Announcement about Implementation of the 2014 Annual Profit Distribution, with the date recorded as 29 Apr. 2015 and the ex-right and ex-dividend date on 30 Apr. 2015. Upon completion of the profit distribution, the price for the said private A-share offering to Xiaomi Technology was adjusted from RMB23.01/share to RMB22.01/share. 3. On 27 Mar. 2015, the Core Management Team Shareholding Plan and Midea Group Partners Plan (Draft) was reviewed and approved at the 26th Meeting of the 1st Board of Directors, which was initiated to further improve the corporate governance mechanism, increase the overall value, promote transformation of “managers” towards “partners” and improve and reform the remuneration and incentive structure. The shareholding plan would be rolled out to 31 core management personnel who have played and will play an important role in the Company’s overall performance and its medium to long-term development, with capital from the Shareholding Plan special fund, the holders’ own funds and the funds raised through financing under the staff shareholding plan. The special fund provided for the first phase of the shareholding plan stood at RMB115 million. As the shareholding plan’s Phase One holders’ meeting resolved, China International Capital Co., Ltd. (CICC) agreed to serve as the administrator for the shareholding plan’s Phase One. On 21 Apr. 2015, the shareholding plan was reviewed and approved at the 2014 Annual General Meeting. 4. On 27 Mar. 2015, the Proposal for Adjustments to the Incentive Receivers and Exercised Option Number of the Stock Option Incentive Plan was reviewed and approved at the 26th Meeting of the 1st Board of Directors, agreeing to the adjustments to the incentive receivers and exercising any option number for the equity incentive plan Phase One due to resignations, position changes, disqualification in performance appraisal, by some incentive receivers. After adjustments, the number of incentive receivers changed from 681 to 626 and the number of stock options entitled but not yet exercised fell from 99,862,500 to 90,660,000. Meanwhile, the Proposal for the Exercise-related Matters for the First Exercise Period for the Stock Option Incentive Plan Phase One was also reviewed and approved at the Meeting. The exercise conditions for the first exercise period for the Stock Option Incentive Plan Phase One were satisfied. 613 incentive receivers were confirmed and passed the appraisal for the Stock Option Incentive Plan Phase One, with 29,840,000 exercisable stock options in the first exercise period. 5. On 27 Mar. 2015, the Proposal for the Stock Option Incentive Plan Phase II (Draft) and its abstract were reviewed and approved at the 26th Meeting of the 1st Board of Directors. In order to further improve the corporate 9 Report for the First Quarter of 2015 of Midea Group Co., Ltd. governance structure, perfect the incentive mechanism, increase the sense of duty and mission of the management team and key business personnel for the Company’s sustained and healthy development, and ensure the realization of development objectives, the Company intended to grant 84,300,000 stock options to 738 incentive receivers, which accounted for 2% of the totally issued shares. The exercise price for the said stock options was RMB31.54/share. The Stock Option Incentive Plan Phase II can only be carried out when the Company files it to CSRC with no dissent from the latter and after it is reviewed and approved by the General Meeting. Index to the relevant Overview of the significant event Date of disclosure announcement disclosed on the website Announcement about Midea and Jingdong Signing a Letter of Intent for 6 Jan. 2015 www.cninfo.com.cn Strategic Cooperation Announcement about CSRC’s Acceptance of the Private Offering 24 Jan. 2015 www.cninfo.com.cn Application Core Management Team Shareholding Plan & “Midea Group Partners 31 Mar. 2015 www.cninfo.com.cn Plan” (Draft) Announcement about Adjustments to the Incentive Receivers and 31 Mar. 2015 www.cninfo.com.cn Exercised Option Number of the Stock Option Incentive Plan Announcement about the Exercise-related Matters for the First Exercise 31 Mar. 2015 www.cninfo.com.cn Period for the Stock Option Incentive Plan Phase I Stock Option Incentive Plan Phase II (Draft) of Midea Group Co., Ltd. 31 Mar. 2015 www.cninfo.com.cn 10 Report for the First Quarter of 2015 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 Undertaking Undertaking Undertaking Details of undertaking Term Particulars on the performance giver date 1. Undertaking of Midea Holding Ltd. (hereinafter referred to as "Midea Apart from the 1. There has been no violation of commitments. Holding"), and He Xiangjian, respectively the controlling shareholder and actual first item of controller of Midea Group Co., Ltd., towards the lock-up period of shares. commitments, He Xiangjian and Midea Holding have undertaken as follows: Within 36 months from its duration Undertaking the listing date of Midea Group's stocks, they will neither transfer or entrust others to validity spans made in Controlling manage their directly and indirectly held shares of Midea Group issued prior to this 36 months from offering shareholder, issuance, nor sell them to Midea Group. If they break the above undertaking, they will 28 Mar. the day of documents or actual assume all liabilities arising therefrom. 2013 Midea Group’s shareholding controller 2. Undertaking of Midea Holding and the actual controller He Xiangjian towards listing which is 2. There is no violation of commitments. alternation the maintenance of the independence of Midea Group. 18 Sept. 2013 documents He Xiangjian and Midea Holding have undertaken as follows: He Xiangjian, Midea to 18 Sept. Holding and their controlled enterprises will remain independent from Midea Group in 2016 , all other respect of personnel, finance, assets, business and institutions, etc. in accordance with items are relevant laws and regulations and regulatory documents. They will faithfully fulfill the indefinite. 11 Report for the First Quarter of 2015 of Midea Group Co., Ltd. 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. Undertaking of Midea Holding and the actual controller He Xiangjian towards 3. There has been no violation of commitments. avoiding competition within the industry. In order to avoid possible competition within the industry between Midea Group and Midea Holding and its controlled enterprises as well as He Xiangjian, his immediate family and his controlled companies, He Xiangjian and Midea Holding have undertaken as follows: (1). None of the entities or individuals mentioned above is or will be engaged in the same or similar business as the existing main business of Midea Group and its controlled companies. They are not or will not engage or participate in such business that is competitive to the existing main business of Midea Group and its controlled companies by controlling other economic entities, institutions or economic organizations; (2). If Midea Group and its controlled companies expand their business on the basis of the existing ones to those where the above mentioned related entities or individuals are already performing production and operation, as long as He Xiangjian is still the actual controller of Midea Group, and Midea Holding the controlling shareholder, they will 12 Report for the First Quarter of 2015 of Midea Group Co., Ltd. agree on solving the problem of competition within the industry arising therefrom, within a reasonable period; (3). If Midea Group and its controlled companies expand their business scope on the basis of the existing ones to those where the above mentioned related subjects have not gone into production or operation, as long as He Xiangjian is still the actual controller of Midea Group, and Midea Holding the controlling shareholder, they would undertake as not to engage in any business competing with the new ones of Midea Group and its controlled companies; (4). In accordance with effective laws, regulations or other regulatory documents of People's Republic of China, as long as He Xiangjian is identified as the actual controller of Midea Group, and Midea Holding the controlling shareholder, they will not change or terminate this undertaking. (5). He Xiangjian and Midea Holding shall faithfully fulfill the above undertaking, and assume the corresponding legal responsibilities. If they fail to fulfill their obligations and responsibilities conferred by the undertaking, they would bear the corresponding legal responsibilities according to relevant laws, rules, regulations and regulatory 4. There has been no violation of commitments. documents. 4. Undertaking of Midea Holding and the actual controller He Xiangjian towards the regulation of related transactions. In order to regulate matters of related transactions that may occur in the future between 13 Report for the First Quarter of 2015 of Midea Group Co., Ltd. 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 any related transactions with Midea Group and its controlled companies using their utmost efforts to reduce them. For unavoidable related transactions with Midea Group and its controlled companies, including but not limited to commodity trading, providing services to each other or as agent, they will sign legal normative agreements with Midea Group, and go through approval procedures in accordance with related laws, regulations, rules, other regulatory documents, and relevant provisions of the Articles of Association of Midea Group. They guarantee to offer fair prices for related transactions, and fulfill the information disclosure obligations in respect of the related transactions according to related laws, regulations, rules, other regulatory documents, and relevant provisions of the Articles of Association of Midea Group. They also guarantee not to illegally transfer funds or profits from Midea Group, or damage the interests of its shareholders at their advantages during the related transactions. (2) They shall fulfill the obligation of withdrawing from voting that involves the above mentioned related transactions at the general meeting of Midea Group; (3) The related subject mentioned above shall not require Midea Group to offer more favorable conditions than those to any independent third party in any fair market 14 Report for the First Quarter of 2015 of Midea Group Co., Ltd. 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 5. So far, this shareholding transfer has not brought responsibilities conferred by the undertaking, they will bear the corresponding legal about any loss caused by any dispute or potential responsibilities according to relevant laws, rules, regulations and regulatory documents. disputes. There has been no violation of 5. Related undertaking by He Xiangjian, the actual controller of Midea Group, on commitments. Midea Trade Union Committee transferring its limited equity of Midea Group. On 4 January , 2001, the Midea Trade Union Committee signed the "Equity Transfer Contract" with five people, i.e. He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning and Liang Jieyin, where it transfered all limited equity of Midea Group (22. 85%) respectively to those five people. According to the confirmation letter issued by members of the Midea Trade Union Committee at that time, the equity transfer price was determined after mutual discussion on the basis of their true opinions, therefore there was no dispute or potential dispute. On 28 June, 2013, Foshan Shunde Beijiao General Union, superior department of Midea Trade Union Committee, issued a confirmation letter to the fact that Midea 15 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Trade Union Committee funded the establishment of Midea Group Co., Ltd. In addition, the letter also confirmed that the council of Midea Trade Union Committee is entitled to dispose any property of the committee, and such property disposal does not need agreement from all staff committee members. Midea Holding and He Xiangjian, respectively the controlling shareholder and actual controller of Midea Group Co., Ltd. have undertaken as follows: For any loss of Midea Group caused by any dispute or potential dispute arising from the matters of equity 6. So far, the payment of the staff social insurance transfer mentioned above, they are willing to assume full liability for such loss. and the housing provident fund has not brought 6. Commitments on Issues about Payment of the Staff Social Insurance and the about any controversy or potential disputes. There Housing Provident Fund involved in Midea Group's Overall Listing has been no violation of commitments. Midea Holding and He Xiangjian: Midea Holding have undertaken to be liable for (1) paying such expenses and related expenses on time based on the requirements of relevant state departments, if Midea Group is required to be liable for the payment of staff social insurance and the housing provident fund and the payment required by relevant state authorities prior to this merger, (2) paying corresponding compensation for all direct and indirect losses incurred by Midea Group and its subsidiaries due to this merger, (3) indemnifying and holding harmless Midea Group and its subsidiaries 7.1 The Process of Property Ownership Certificate: in time from such expenses where Midea Group and its subsidiaries are required to pay The Report discloses that the Company is trying to get them in advance. the Property Ownership Certificate for 177 of its 7. Commitments on issues about asset alteration, asset flaw and house leasing of properties, which cover an area of 2,148,485.65 square 16 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Midea Group and its subsidiaries meters. So far, 51 applications have been approved, the Midea Holding and He Xiangjian have undertaken as follows: total area covers 1,638,892.27 square meters, which (1) Midea Holding will do its utmost to assist and urge Midea Group (including its accounts for 76.28% of total area; 12 applications are subsidiaries) to complete renaming procedures of related assets, such as land, houses, under process, covering an area of 449,431.84 square trademarks, patents and stock rights, declared in the related files of this merger. Midea meters, accounting for 20.92% of total area. These 12 Holding will be liable for all compensations of losses caused by issues about renaming properties are in possession of ownership certificates procedures of related assets mentioned above to Midea Group. have not brought about any controversy or dispute. The (2) Midea Holding shall do its utmost to assist Midea Group (including its subsidiaries) remaining 114 properties, spanning an area of to apply for ownership certificates of land and property declared in related files of this 60,161.54 square meters account for 2.8% of the total merger. area. These properties are all small unit size auxiliary (3) For those houses without ownership certificates due to incomplete formalities in the facilities such as secuirty booth, transformer room, past, Midea Holding shall assist Midea Group (including its controlled subsidiaries) in power room, pump room, gas station and so on, for going through relevant construction-related formalities again and obtaining the which property ownership certificates cannot be granted corresponding house ownership certificates. If the competent authorities require Midea or applied for. So far these 114 properties have not been Group to dismantle buildings that can not acquire the real estate registration procedures required to be dismantled by competent departments so re-application, Midea Holding shall do its utmost to provide assistance and be liable for that these buildings are still in regular use, which has any related expenses used in dismantling such buildings by Midea Group (including its not brought about any controversy or any company loss subsidiaries). caused by disputes. There is no violation of (4) Under any circumstances that Midea Group suffers from losses incurred through commitments. no longer using those properties or failing to obtain or collect in time, the ownership 7.2 The Use of Rental Houses of This Company 17 Report for the First Quarter of 2015 of Midea Group Co., Ltd. certificates of those properties currently being used or any losses caused by other The Report discloses that as of 31 December, 2012 , our reasons, Midea Holding shall compensate any loss for these reasons in time and in full. company used 113 leasing houses in total, of which our Midea Holding shall compensate the actual loss Midea Group suffers, from any company can't get the property certificate of 100 leasing circumstances above resulting from penalties subjected to by competent authorities or houses from the leasing party. So far the contracts of 77 through claims by any third party. out of the 113 rental houses haven't been signed to (5) Based on issues of defective house leasing declared in related files of this merger, extend the leasehold. The property certificates of 2 of Midea Holding shall provide sufficient compensations for all economic losses incurred the remaining 36 houses have been obtained while the by Midea Group (including its subsidiaries) where the leasehold relations above other 34 certificates haven't been obtained. These 34 become invalid or other disputes occur, which are caused by rights claims from a third rental houses haven't rendered our company any party or by means of an administrative authority exercising a right and therefore results economic loss or penalty caused by defective property in any economic losses due to eviction from rental houses, or any penalties subjected to rights, which result in removing to other rental houses. by competent government departments or any recourse from related parties. 7.3 Land Use Rights of Leasing Use (6) Based on the issues of defective land leasing declared in related files of this merger, The "Report" discloses that as of 31 December, 2012, when leasehold relations become invalid caused by defects of land leasing or when our company has had one case of using rental houses, other disputes occur, resulting in any economic losses to Midea Group (including its covering a total area of 57,506.95 square meters for subsidiaries) or through any penalties administered by competent government which the lessor of the rental land mentioned above did departments. Likewise if the lessor can't compensate for losses caused by such not provide any legal ownership files showing or defective leasing, Midea Holding shall compensate Midea Group for losses caused by detailing ownership of this land. So far this rental land such defective land leasing has not rendered our company any controversy or any Midea Holding will compensate any losses of Midea Group where a violation of loss caused by disputes. There has been no violation of 18 Report for the First Quarter of 2015 of Midea Group Co., Ltd. guarantees and commitments referred to previously occurs or such guarantees and commitments. commitments are not consistent with the reality. 7.4 The Procedures of Renaming Land Owner Under Process Caused by the Alteration of the Company's Name The Report discloses that there are still 10 cases in the process of registering a new land owner caused by changing the company's name of our company and its subsidiaries. So far, five cases have been approved and the other five cases are still under review, which have not rendered any loss to the company. There has been no violation of commitments. 7.5 Processing the Renaming Procedures of Some Trademarks So far, 8 of the 62 trademarks cases involved in the Report have applied for cancellation of the subjects through their owners and these trademarks shall 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. 19 Report for the First Quarter of 2015 of Midea Group Co., Ltd. There has been no violation of commitments. 36 months from Shareholders of Midea Group, Ningbo Maysun, Fang Hongbo, Huang Jian, Cai Qiwu, 18 Sept. 2013, Yuan Liqun, Huang Xiaoming, Li Jianwei, Zheng Weikang, promise that since Midea 28 Mar. the date of Other Group is listed on the Shenzhen Stock Exchange Center, the transferal or delegation 2013 Midea Group’s There has been no violation of commitments. shareholders of others to manage these issued shares who have direct or indirect ownership of Midea listing, to 18 Group, has been forbidden for a period of 36 months. Midea Group is not allowed to Sept. 2016 buy back those shares either. Whether the undertaking is Yes fulfilled in time Specific reasons for failing to fulfill any N/A undertaking and plan for the next step (if any) 20 Report for the First Quarter of 2015 of Midea Group Co., Ltd. IV. Predicting the operating results for Jan.-Jun. 2015 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 V. Securities investment □ Applicable √ Inapplicable No such cases in the reporting period. VI. Shareholdings in other listed companies □ Applicable √ Inapplicable No such cases in the reporting period. VII. Investments in derivatives √ Applicable □ Inapplicable Unit: RMB’0,000 Proportion of the Actual Related-party Type of Initial Opening Impairment Closing closing investment gain/loss in Operator Relation transaction or derivative investment Start date End date investment provision (if investment amount in the reporting not investment amount amount any) amount Company’s period closing net assets Futures Futures No No hedging -327.94 2015.01.01 2015.12.31 -327.94 0.00 341.90 0.01% -402.35 company contracts Forward Bank No No exchange -19,490.04 2015.01.01 2015.12.31 -19,490.04 0.00 15,764.61 0.37% 46,898.32 contract Total -19,817.98 -19,817.98 0.00 16,106.51 0.38% 46,495.97 Capital source for derivative investment All self-owned funds Disclosure date of the board announcement 31 Mar. 2015 approving the derivative investment (if any) Disclosure date of the general meeting 22 Apr. 2015 announcement approving the derivative 21 Report for the First Quarter of 2015 of Midea Group Co., Ltd. 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 business, with the purpose of reducing the risks associated with exchange and interest rate fluctuations, realizing the preservation and appreciation of forex assets, reducing forex liabilities, and achieving locked-in costs. The Company has undertaken extensive evaluation and risk control with regard to derivative investment positions, details of which are as follows: 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 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. Analysis of risks and control measures of Control measures: The Company has not only developed relevant management systems that clearly define derivative products held in the reporting period the assignment of responsibility and approval process for the futures business and forex funds businesses, but (including but not limited to market risk, has also established a well-developed monitoring mechanism, aimed at effectively reducing operational risk liquidity risk, credit risk, operational risk, legal by strengthening its risk control over the business, decision-making and trading processes. risk, etc.) 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 the 1. Profit/loss from futures hedging contracts incurred during the Reporting Period was RMB -4,023,500; invested derivatives during the reporting period. 2. Profit/loss from forward forex contracts incurred during the Reporting Period was RMB 468,983,200; Analysis of the derivative’s fair value should 3. Public quotations in futures market or forward forex quotations announced by Bank of China are used in include the specific methods of use and the 22 Report for the First Quarter of 2015 of Midea Group Co., Ltd. relevant assumptions and parameters. 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 The Company's independent directors are of the view that: the futures hedging business is an effective instrument for the Company to eliminate price volatility and implement risk prevention measures through Specific opinion from independent directors on enhanced internal controls, thereby improving the operation and management of the Company; the the Company’s derivatives investment and risk Company's foreign exchange risk management capability can be further improved through the forex funds control 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. VIII. Research, visits and interviews received during the reporting period √Applicable □Inapplicable Main discussion and Way of Visitor Time Place Visitor materials provided by the reception type Company China Universal Assets, Step Stone Assets, Investment Banking,Corporate Finance, Value Strategy Partners Funds, Ideapark, OCH-ZIFF Capital, Xijing, 8 Jan. 2015 Hong Kong Institution The main contents of the meeting Tianma Assets, Indus, TPG-AXON CAPITAL, Company’s reception of Farallon, MARSHALL WACE, Rays Capital, LBN, investors included: BAM, PINE RIVER, Full Vision Capital, Primero (1) Industry status and Changli Capital, Goldman Sachs, BlackRock Assets, development condition; Henderson Global Investors (Hong Kong) Limited, (2) The Company's Fedelity Fund, Invesco Ltd, Cathay Life, J.P. business situation and Morgan Asset, Shanghai Baoyin, China Universal development strategy; Assets, Harvest Fund, Temasek, Yiheng Capital, (3) Related content in PROTEK(HK), Prudence Investment Management, regular reports, and Strategy Nomura Securities, New Ideas Investment, UBP 12 Jan. 2015 Shanghai Institution announcements published meeting Asset Management, APS Asset Management, by the other companies. REYHER Investment, Springs Capital, Baring Assets BOSVALEN, Panah Fund, Kingsmead, Tiger Information provided by Pacific, HIGHBRIDGE, WELLINGTON the Company: regular MANAGEMENT, SPARX, Carrhae Capital, Stone reports, announcements Forest Capital, Bestinver, Turiyacapital, Comgest, and other public data of Bernstein, PIMCO, Matthews, Truck, Broad Peak the Company. The Field Jingyuan Capital, Trivest Investment, Ideapark,、 16 Jan. 2015 Institution Company research SMC CHINA FUND, Pacific Eagle, BlueCrest, UG, 23 Report for the First Quarter of 2015 of Midea Group Co., Ltd. ACORN CAPITAL The Field 21 Jan. 2015 Institution Stock Department of China Life Insurance Asset Company research The Field 23 Jan. 2015 Institution GLG Company research The Field 23 Jan. 2015 Institution Carmignac Gestion Company research The Field 27 Jan. 2015 Institution Tiger Fund Company research Telephone The 28 Jan. 2015 communicat Institution Government of Singapore Investment Corp Company ion The Field 28 Jan. 2015 Institution Fedelity Fund, Company research Taiwan SinoPac Securities, Fuh Hwa Securities Investment Trust, Mega International Investment Telephone Trust, Taishin Securities Investment Trust, Fubon The 29 Jan. 2015 communicat Institution Securities Investment Trust, Nan Shan Life Insurance, Company ion MassMutual Mercuries Life, CTBC Life Insurance, Fubon Life Insurance, CENTRAL REINSURANCE CORPORATION, Ruiteng Investment The Field 29 Jan. 2015 Institution China Merchants Securities Company research The Field 29 Jan. 2015 Institution Nikko Asset Company research Shenyin & Wanguo Investment Management, Princeton Capital Management, Value Partners Fund, Blue Pool Capital, Janchor, The Bank of Field Tokyo-Mitsubishi UFJ Ltd., The Bank of China Life 30 Jan. 2015 Hong Kong Institution research Insurance, Oberweis、Daiwa Asset Investment, VL Asset Investment, Taiping Assets, Xinsheng Assets, Hong Kong Huguang International Investment, BOSVALEN, Morgan Stanley, Karst Peak、Primero The Field 2 Feb. 2015 Institution Putnam Investment Management Company research Telephone The 4 Feb. 2015 communicat Institution Yuanta Securities Investment Trust, KGI Securities Company ion The Field 5 Feb. 2015 Institution Capital World Investors Company research 24 Report for the First Quarter of 2015 of Midea Group Co., Ltd. The Field 6 Feb. 2015 Institution Singapore Jin Rong Assets Company research Telephone The 11 Feb. 2015 communicat Institution Falcon Edge Company ion The Field 11 Feb. 2015 Institution Merrill Lynch Company research Telephone The 12 Feb. 2015 communicat Institution BROAD PEAK Company ion The Field 5 Mar. 2015 Institution Merrill Lynch Company research The Field 10 Mar. 2015 Institution Kora Capital Company research The Field Excel Investment、Trilogy Partners, Farallon Capital, 10 Mar. 2015 Institution Company research Myriad Asset, Azentus Capital The Field 12 Mar. 2015 Institution Investec Company research The Field 16 Mar. 2015 Institution Broad Peak Company research The Field 18 Mar. 2015 Institution Mercuries Life Insurance Company research Bank of China Investment Management, (CITIC Asset Management Corporation Ltd, CITICS, CICC, Zheng Xiang Investment, China Merchants investment Management, Great Wall Fund, Yuan Xin, Golden Trust Sinopac Fund Management, Galaxy Securities, E Fund, Aegon-industrial Fund Management, New China Assets, Co-power Capital, Century Securities, Rongtong Fund, Invesco Great Wall, Greenwoods Asset, Jin Niu Investment, Harvest Performance 31 Mar. 2015 Shenzhen Institution Fund, Huili Assets, ChinaAMC, Huaqiang presentation investment, Citibank, Hanxi Fund, Korea Investment Trust, Haitong Securities, Guosen Securities, Guotai Junan Security Assets Management, GuoDu Securities Institute, Guangzhou Long Term Investment, GF Securities, Everbright Prudential Fund, GUANJUN Asset, ICBC Credit Suisse, ICBCI - Circulation Capital, Gaoyi Capital, Goldman Sachs Gao Hua, ChinaVenture Investment, Fengling Capital, Soochow Fund, Orient Securities, Daoning 25 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Investment, Springs- Capital, Da Hong Assets, Bosera Fund, ESSENCE SECURITIES, Yiheng Capital, Ward Ferry, Value partner, Trilogy Partners, Sumeru Capital, Senrigan Capital Group Limited, RCM Asia Pacific Limited, Ozcap, Overlook capital, Norges, First State, Eton Park Asia Limited, Comgest, Cloud Ridge Capital, Central Asset, BOSVALEN ASSET MANAGEMENT, Black Rock, Axis Capital, APS Asset, etc. (120 institutions in total) 26 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Section IV. Financial Statements I. Financial statements Balance Sheet Prepared by: Midea Group Co., Ltd. Unit: RMB’000 30 Mar. 2015 31 Dec. 2014 Assets Consolidated The Company Consolidated The Company Current assets: Monetary funds 9,210,123.97 13,017,745.12 6,203,282.81 8,452,623.95 Deposits at central bank 1,428,629.09 1,279,592.47 Deposits at other banks 1,046,502.02 2,126,444.99 Financial assets measured at fair value and for which changes are recorded into current gains and losses Derivative financial assets 308,051.02 162,513.84 Notes receivable 27,551,795.43 519,825.93 17,097,233.37 693,828.61 Accounts receivable 13,487,865.88 9,362,102.75 Accounts paid in advance 2,093,978.64 2,879.83 1,414,470.45 1,102.42 Loans and advances 7,074,277.66 5,940,800.47 Interest receivable Dividends receivable 61,603.82 3,129.44 45,943.22 280,771.02 Other accounts receivable 866,643.28 2,639,024.15 1,180,767.53 2,418,306.21 Inventories 27 Report for the First Quarter of 2015 of Midea Group Co., Ltd. 11,029,452.31 15,020,030.26 Assets held for sale Non-current assets due within 1 year Other current assets 27,833,598.41 22,920,117.28 26,593,892.46 22,892,049.61 Total current assets 101,992,521.53 39,102,721.75 86,427,074.62 34,738,681.82 Non-current assets: Available-for-sale financial assets 1,709,070.34 1,218,277.80 1,655,494.72 1,230,277.80 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 892,488.65 16,652,242.51 951,874.39 16,548,882.73 Investment property 152,145.97 298,877.58 171,634.90 323,355.75 Fixed assets 19,225,545.69 1,600,574.36 19,521,814.06 1,653,024.17 Construction in progress 565,298.63 42,386.34 661,882.29 42,386.34 Engineering materials Disposal of fixed assets Intangible assets 3,380,380.94 285,079.66 3,431,958.12 280,656.35 R&D expense Goodwill 2,931,791.41 2,931,791.41 Long-term deferred expenses 843,137.29 79,507.00 758,576.10 68,787.68 Deferred income tax assets 4,138,547.21 1,061.99 3,779,987.55 4,483.56 Other non-current assets Total of non-current assets 33,838,406.13 20,178,007.24 33,865,013.54 20,151,854.38 28 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Total assets 135,830,927.66 59,280,728.99 120,292,088.16 54,890,536.20 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Yuan Liqun Chief of the accounting division: Chen Jianwu Balance Sheet (Continued) Prepared by: Midea Group Co., Ltd. Unit: RMB’000 Liabilities and Shareholders’ 30 Mar. 2015 31 Dec. 2014 Equity Consolidated The Company Consolidated The Company Current liabilities: Short-term borrowings 8,238,588.50 6,070,879.03 500,000.00 Borrowings from the Central Bank Customer bank deposits and due to banks and other financial 213.58 7,493.81 institutions Intra-group borrowings Financial liabilities measured at fair value and for which changes are recorded into current gains and losses Derivative financial liabilities 103,679.33 2,939.62 74,960.70 54.78 Financial assets sold and repurchased 210,153.27 Notes payable 18,522,639.98 12,648,496.99 Accounts payable 20,720,158.95 3,243.31 20,137,454.46 2,671.39 Accounts received in advance 4,178,809.48 3,992,540.46 Employees’ compensation payable 1,208,350.59 832.32 2,199,776.95 16,865.00 Tax payable 4,908,100.78 3,280,150.71 51,951.23 79,234.73 Interest payable 25,274.92 142,527.52 22,912.17 217,050.96 29 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Dividends payable 11,703.66 93,799.03 Other accounts payable 1,396,760.54 40,825,904.15 1,223,548.76 36,057,338.71 Liabilities held for sale Non-current liabilities due within 1 year 17,061.66 611,900.00 Other current liabilities 25,497,009.90 22,778,936.05 Total current liabilities 85,038,505.14 41,054,681.65 73,142,849.12 36,845,932.07 Non-current liabilities: Long-term borrowings 14,607.85 19,205.03 Bonds payable 155,763.80 153,026.30 Long-term payables Specific payables 847,394.36 851,825.49 Estimated liabilities 24,428.61 25,573.83 Deferred income tax liabilities 343,743.98 342,235.91 Other non-current liabilities 27,748.86 25,917.24 Total non-current liabilities Total liabilities 1,413,687.46 1,417,783.80 Shareholders’ equity 86,452,192.60 41,054,681.65 74,560,632.92 36,845,932.07 Share capital Notes payable 4,215,808.47 4,215,808.47 4,215,808.47 4,215,808.47 Other equity instruments Of which: preference shares Perpetual bonds Capital reserves 13,058,394.16 5,356,552.11 13,024,883.19 5,356,080.10 Less: Treasury stock Other comprehensive income -681,225.04 -774,298.83 30 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Surplus reserves 1,189,791.32 1,189,791.32 1,189,791.32 1,189,791.32 Retained profits 25,156,450.52 7,463,895.44 21,814,315.69 7,282,924.24 Total equity attributable to shareholders of the Company 42,939,219.43 18,226,047.34 39,470,499.84 18,044,604.13 Minority interests 6,439,515.63 6,260,955.40 Total shareholders’ equity 49,378,735.06 18,226,047.34 45,731,455.24 18,044,604.13 Total liabilities and shareholders’ equity 135,830,927.66 59,280,728.99 120,292,088.16 54,890,536.20 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Yuan Liqun Chief of the accounting division: Chen Jianwu Income Statement Prepared by: Midea Group Co., Ltd. Unit: RMB’000 Jan.-Mar. 2015 Jan.-Mar. 2014 Item Consolidated The Company Consolidated The Company I. Total operating revenues 42,574,425.37 126,937.94 38,533,256.41 137,257.35 Including: Sales income 42,426,713.97 126,937.94 38,351,110.06 137,257.35 Interest income 146,675.78 182,146.35 Handling charges and 1,035.62 commission income II. Total operating costs 38,878,820.78 321,306.78 34,616,054.15 156,249.60 Including: Cost of sales 31,041,580.76 5,131.89 28,689,939.33 17,127.61 Interest expenses 98,854.06 68,558.65 Handling charges and 389.37 337.45 commission expenses Business taxes and surcharges 329,869.89 440.55 215,272.48 1,256.02 Selling and distribution expenses 5,363,077.42 3,710,417.81 Administrative expenses 1,607,661.57 80,775.91 1,621,891.07 92,142.16 Financial expenses 195,782.99 235,496.85 -44,139.27 49,945.05 Asset impairment loss 241,604.72 -538.42 353,776.63 -4,221.24 Add: Gain from change in fair value 153,580.51 -2,884.84 -776,075.05 -3,556.74 31 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Income from investment 527,790.47 390,492.65 272,930.60 233,441.94 Including: share of profits in associates 15,208.72 1,215.68 19,454.63 71.27 and joint ventures III. Business profit 4,376,975.57 193,238.97 3,414,057.81 210,892.95 Add: non-operating income 94,168.96 22,027.33 122,099.17 10,852.36 Including: gain from non-current 8,650.10 354.15 17,633.87 asset disposal 41.11 Less: non-operating expenses 43,517.96 4,334.46 81,111.66 8,870.04 Including: loss from non-current 26,312.08 3,734.46 62,182.41 asset disposal 8,769.38 IV. Total profit 4,427,626.57 210,931.84 3,455,045.32 212,875.27 Less: Income tax expense 776,836.83 594,390.32 29,960.65 5,685.39 V. Net profit 3,650,789.74 180,971.19 2,860,655.00 207,189.88 Including: Net profit achieved by combined parties before the combinations Attributable to owners of the Company 3,342,134.83 180,971.19 2,538,849.11 207,189.88 Minority shareholders’ income 308,654.91 321,805.89 VI. The after-tax net income of other -2,510.60 -234,564.28 comprehensive income The after-tax net income of other comprehensive income attributable to 93,073.79 -264,728.01 owners of the Company (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 93,073.79 -264,728.01 will be reclassified into profits and losses 1. The share of other comprehensive income, under the equity method, in the -5,514.27 16,022.30 invested entity , that will be reclassified into profits and losses 2. Changes in fair value of -820.17 -14.42 32 Report for the First Quarter of 2015 of Midea Group Co., Ltd. available-for-sale financial assets 3. Held-to-maturity investments reclassified as gains and losses on available-for-sale financial assets 4. Effective part of the gains and 231,232.42 -293,971.99 losses of cash flows through hedging 5. Foreign exchange differences -131,824.19 13,236.10 6. Other The after-tax net income of other comprehensive income attributable to -95,584.39 30,163.73 minority shareholders VII. Total comprehensive income 3,648,279.14 180,971.19 2,626,090.72 207,189.88 Attributable to owners of the 3,435,208.62 180,971.19 2,274,121.10 207,189.88 Company Attributable to minority shareholders 213,070.52 351,969.62 VIII. Earnings per share (I) Basic earnings per share 0.79 0.60 (II) Diluted earnings per share 0.79 0.60 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Yuan Liqun Chief of the accounting division: Chen Jianwu Cash Flow Statement Prepared by: Midea Group Co., Ltd. Unit: RMB’000 Jan.-Mar. 2015 Jan.-Mar. 2014 Item Consolidated The Company Consolidated The Company I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 25,578,062.67 19,194,300.03 Net increase of deposits from customers and dues from banks -7,280.23 6,600.07 Net increase of loans from central bank 110,291.66 Cash received from interest, 33 Report for the First Quarter of 2015 of Midea Group Co., Ltd. handling charges and commissions 147,711.40 182,146.35 Tax refunds received 1,121,281.80 957,556.72 Other cash received relating to operating activities 1,207,298.06 6,000,634.08 994,846.88 10,705,628.59 Subtotal of cash inflows from operating activities 28,047,073.70 6,000,634.08 21,445,741.71 10,705,628.59 Cash paid for goods and services 16,100,503.33 9,236,942.09 Net increase of customer lendings and advances 1,115,647.70 -592,727.39 Net increase of funds deposited at central bank and amounts due from 151,065.49 -133,591.68 banks Cash for paying interest, handling charges and commissions 99,243.43 68,896.10 Cash paid to and for employees 3,472,711.35 28,227.07 3,240,584.65 24,295.77 Various taxes paid 2,000,945.86 12,422.08 1,504,612.89 1,510.30 Other cash payment relating to operating activities 2,608,241.17 432,825.89 4,897,211.74 2,370,199.13 Subtotal of cash outflows from operating activities 25,548,358.33 473,475.04 18,221,928.40 2,396,005.20 Net cash flows from operating activities 2,498,715.37 5,527,159.04 3,223,813.31 8,309,623.39 II. Cash flows from investing activities: Cash received from retraction of investments 2,380.46 13,860.00 24,901.98 Cash received from return on investments 492,988.79 596,897.53 236,049.11 542,475.72 Net cash received from disposal of fixed assets, intangible assets and other 8,810.40 354.15 925,139.30 36,984.39 long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from 34 Report for the First Quarter of 2015 of Midea Group Co., Ltd. investing activities 504,179.65 611,111.68 1,161,188.41 604,362.09 Cash paid to acquire fixed assets, intangible assets and other long-term 523,829.03 183,970.53 902,058.24 140,335.52 assets Cash paid for investments 1,155,719.19 475,952.90 330,000.00 Net cash paid to acquire subsidiaries and other business units 1,876.49 Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 1,679,548.22 659,923.43 903,934.73 470,335.52 Net cash flows from investing -1,175,368.57 -48,811.75 257,253.68 134,026.57 activities III. Cash flows from financing activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 5,883,038.37 14,420,203.63 1,100,000.00 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 5,883,038.37 14,420,203.63 1,100,000.00 Cash repayment of borrowings 4,433,876.85 500,000.00 8,595,134.47 340,000.00 Cash for repaying medium term notes 1,000,000.00 1,000,000.00 Cash for repaying short-term financing bonds Cash paid for interest expenses and distribution of dividends or profit 124,133.96 405,234.42 253,404.98 232,604.90 35 Report for the First Quarter of 2015 of Midea Group Co., Ltd. Including: dividends or profit paid by subsidiaries to minority 119,432.36 82,760.68 shareholders Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 4,558,010.81 905,234.42 9,848,539.45 1,572,604.90 Net cash flows from financing 1,325,027.56 -905,234.42 4,571,664.18 -472,604.90 activities IV. Effect of foreign exchange rate changes on cash and cash -80,698.63 -14,111.80 equivalents V. Net increase in cash and cash 2,567,675.73 4,573,112.87 8,038,619.37 7,971,045.06 equivalents Add: Opening balance of cash and cash equivalents 5,272,238.35 6,879,717.05 16,763,873.80 13,809,135.41 VI. Closing balance of cash and cash equivalents 7,839,914.08 11,452,829.92 24,802,493.17 21,780,180.47 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Yuan Liqun Chief of the accounting division: Chen Jianwu II. Auditor’s report Is this report audited by a CPAs firm? □ Yes √ No The Company’s report is un-audited by a CPAs firm. Midea Group Co., Ltd. Legal Representative: Fang Hongbo 29 April 2015 36