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美的集团:2019年第一季度报告全文(英文版)2019-05-07  

						         Midea Group Co., Ltd.
Interim Report for the First Quarter 2019




                 April 2019
                                  Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



                   Section I Important Reminders

1. The Board of Directors, the Supervisory Committee as well as all the

directors, supervisors and senior management staff of Midea Group Co.,

Ltd. (hereinafter referred to as the “Company”) have warranted that this

Report contains no false record, misleading statement or material

omission. And they shall be jointly and severally liable for the factuality,

accuracy and completeness of the information given in this Report.

2. All the directors have attended the Q1 report review board meeting.

3. The financial statements contained in this Report have not been

audited by a certified public auditors (CPAs) firm.

4. Mr. Fang Hongbo, Chairman of the Board and President of the

Company, and Ms. Zhong Zheng, Director of Finance of the Company,

have represented and warranted that the financial statements in this

Report are factual, accurate and complete.

5. This Report has been prepared in both Chinese and English. Should

there be any discrepancy between the two versions, the Chinese version

shall prevail.




                                                                                                  1
                                                        Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.




                                    Section II Company Profile

1. Major Accounting Data and Financial Indicators

Does the Company adjust retrospectively or restate accounting data of previous years?

□ Yes √ No

                                                Jan.-Mar. 2019              Jan.-Mar. 2018          YoY Change (%)

Operating revenues (RMB'000)                            75,205,780                  69,737,528                    7.84%

Net profits attributable to shareholders
                                                         6,129,026                   5,256,231                   16.60%
of the Company (RMB'000)

Net profits attributable to shareholders
of the Company before non-recurring                      6,084,881                   5,077,715                   19.84%
profits and losses (RMB'000)

Net cash flows from operating activities
                                                        11,842,782                   4,429,092                 167.39%
(RMB'000)

Basic earnings per share (RMB/share)                             0.94                        0.80                17.50%

Diluted earnings per share
                                                                 0.93                        0.79                17.72%
(RMB/share)

Weighted average ROE (%)                                     7.08%                       6.87%                    0.21%

                                                 31 Mar. 2019                31 Dec. 2018            Change (%)

Total assets (RMB'000)                                 278,910,215                 263,701,148                    5.77%

Net assets attributable to shareholders
                                                        89,610,201                  83,072,116                    7.87%
of the Company (RMB'000)

Total share capital of the Company on the last trading session before disclosure:

Total share capital of the Company on the last
                                                                                                          6,585,838,349
trading session before disclosure (share)

Fully diluted earnings per share based on the
                                                                                                                     0.93
latest share capital above (RMB/share)

Note: On the last trading session before the disclosure of this report, the Company’s total share capital was

6,603,422,687 shares. Subtracting the repurchased 17,584,338 shares in 2019, the number was 6,585,838,349 shares.

Non-recurring profits and losses

√ Applicable □ N/A
                                                                                                           Unit: RMB’000

                             Item                                       Jan.-Mar. 2019                 Note


                                                                                                                            2
                                                            Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



Profit or loss from disposal of non-current assets                                     -6,368

Except for effectively hedging business related to normal
business operations of the Company, profit or loss arising
from the change in the fair value of held-for-trading financial
                                                                                      -62,512
assets and liabilities, as well as investment profit or loss
produced from the disposal of held-for-trading financial
assets and liabilities and available-for-sale financial assets

Other                                                                                140,386



Less: Corporate income tax                                                             22,714

        Minority interests (after tax)                                                  4,647

Total                                                                                  44,145                 --

Explain the reasons if the Company classifies an item as a non-recurring profit/loss according to the

definition in the , or classifies any non-recurring

profit/loss item mentioned in the said explanatory announcement as a recurring profit/loss item

□ Applicable √ N/A

No such cases for the Reporting Period.


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

2.1 Total number of common shareholders, preference shareholders with resumed voting rights
and shareholdings of the top ten common shareholders at the period-end

                                                                                                                       Unit: share

                                                                     Total number of preference
Total number of common
                                                162,344              shareholders with resumed voting                  0
shareholders at the period-end
                                                                     rights at the period-end (if any)

                                                     Top ten shareholders

                                                                                                           Pledged or frozen
                                                                 Sharehol                                           shares
                                                                                             Number of
                                                Nature of          ding      Number of                     Status
            Name of shareholder                                                               restricted
                                              shareholder        percenta   shares held                      of      Number of
                                                                                            shares held
                                                                  ge (%)                                   share       shares
                                                                                                             s

Midea Holding Co., Ltd.                     Domestic                33.48 2,212,046,613                    Pledg 551,000,000


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                                                      Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                                        non-state-owned                                                ed
                                        corporation

Hong Kong Exchanges and Clearing        Foreign
                                                              16.18 1,069,044,139
Limited                                 corporation

                                        State-owned
China Securities Finance Co., Ltd.                             3.00    198,145,134
                                        corporation

                                        Domestic
Fang Hongbo                                                    2.07    136,990,492 102,742,869
                                        individual

Canada Pension Plan Investment Board Foreign
                                                               1.82    120,379,067
- own funds (stock exchange)           corporation

                                        Domestic
Huang Jian                                                     1.33     88,023,300
                                        individual

                                        State-owned
Central Huijin Asset Management Ltd.                           1.19     78,474,900
                                        corporation

Hillhouse Capital Management Limited    Foreign
                                                               0.94     61,831,900
- HCM China Fund                       corporation

                                        Foreign
GIC Private Limited                                            0.84     55,535,104
                                        corporation

                                        Domestic
Xiaomi Technology Co., Ltd.             non-state-owned        0.81     53,500,000
                                        corporation

                                     Top ten non-restricted common shareholders

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

                                                                                      RMB common
Midea Holding Co., Ltd.                                               2,212,046,613                      2,212,046,613
                                                                                      stock

                                                                                      RMB common
Hong Kong Exchanges and Clearing Limited                              1,069,044,139                      1,069,044,139
                                                                                      stock

                                                                                      RMB common
China Securities Finance Co., Ltd.                                     198,145,134                          198,145,134
                                                                                      stock

Canada Pension Plan Investment Board- own funds                                      RMB common
                                                                       120,379,067                          120,379,067
(stock exchange)                                                                      stock

                                                                                      RMB common
Huang Jian                                                              88,023,300                           88,023,300
                                                                                      stock

                                                                                      RMB common
Central Huijin Asset Management Ltd.                                    78,474,900                           78,474,900
                                                                                      stock

Hillhouse Capital Management Limited- HCM China                                      RMB common
                                                                        61,831,900                           61,831,900
Fund                                                                                  stock



                                                                                                                          4
                                                      Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                                                                                     RMB common
GIC Private Limited                                                     55,535,104                         55,535,104
                                                                                     stock

                                                                                     RMB common
Xiaomi Technology Co., Ltd.                                             53,500,000                         53,500,000
                                                                                     stock

                                                                                     RMB common
Yuan Liqun                                                              51,994,300                         51,994,300
                                                                                     stock

Explanation of related relationship or/and
acting-in-concert parties among the above-mentioned                                                                N/A
shareholders

Top ten non-restricted common shareholders taking
                                                                                                                   N/A
part in securities margin trading (if any)

Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the

Company conduct any promissory repurchase during the Reporting Period

□ Yes √ No

No such cases in the Reporting Period.


2.2 Total number of preference shareholders and shareholdings of the top ten preference
shareholders at the period-end


□ Applicable √ N/A




                                                                                                                         5
                                                       Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.




                                    Section III Significant Events

1. Major changes of main items in financial statements and financial indicators
within the Report Period, as well as the reasons for the changes

√ Applicable □ N/A
                                                                                                                Unit: RMB’000

                                     31 March       31 December
   Financial statement                                                 Change
                                   2019/January-    2018/January-                      Reasons for the changes
  items (consolidated)                                                    (%)
                                    March 2019       March 2018
                                                                                    Mainly due to the changes in the fair
Derivative financial assets               87,975           220,197       -60.05%    value     of     derivative       financial
                                                                                    instruments

                                                                                    Mainly due to the reclassification to
Long-term receivables                     16,280            34,815       -53.24%    current   assets       as    a   result   of
                                                                                    business changes

                                                                                    Mainly    due     to    the      increased
Short-term borrowings                   1,270,263          870,390        45.94%
                                                                                    borrowings

Borrowings from the Central                                                         Mainly due to the repayment of
                                          50,996            99,754       -48.88%
Bank                                                                                borrowings to the Central Bank

Customer deposits and
                                                                                    Mainly due to the changes in the
deposits from banks and                   91,638            44,386       106.46%
                                                                                    operation of Midea Group Finance
other financial institutions

                                                                                    Mainly due to the changes in the fair
Derivative financial liabilities         275,822           756,299       -63.53%    value     of     derivative       financial
                                                                                    instruments

                                                                                    Mainly due to the payment of
Employee benefits payable               3,979,688        5,788,004       -31.24%
                                                                                    salaries to employees

                                                                                    Mainly due to the retirement of
Treasury stock                          1,473,697        4,918,427       -70.04%
                                                                                    treasury stock

                                                                                    Mainly due to the changes in the
Interest income                          294,332           549,959       -46.48%
                                                                                    operation of Midea Group Finance
                                                                                    Mainly due to the changes in the
Interest expenses                         75,120           150,518       -50.09%
                                                                                    operation of Midea Group Finance
                                                                                    Mainly due to the increased interest
Finance expenses                         -481,058           95,978      -601.22%
                                                                                    income on deposits
                                                                                    Mainly    due    to     the      decreased
Other income                              66,516           224,233       -70.34%
                                                                                    governmental subsidies



                                                                                                                              6
                                               Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                                                                            Mainly due to the decreased gains
Investment income                  -146,977        317,938      -146.23%    on delivered derivative financial
                                                                            instruments

                                                                            Mainly due to the changes in the fair
Profit/loss on changes in fair
                                    230,915        -118,467      294.92%    value    of    derivative     financial
value
                                                                            instruments

Profit/loss on disposal of                                                  Mainly due to the decreased losses
                                      -6,369        -13,053       51.21%
assets                                                                      on disposal of non-current assets

                                                                            Mainly due to the increased cash
Net      cash    flows   from
                                 11,842,782      4,429,092       167.39%    received from sales of goods or
operating activities
                                                                            rendering of services

Net      cash    flows   from                                               Mainly due to the increased cash
                                 -16,811,399    -7,250,092      -131.88%
investing activities                                                        paid to acquire investments

Net      cash    flows   from                                               Mainly due to the increased cash
                                  4,139,282     -2,254,205       283.62%
financing activities                                                        received from borrowings


2. Progress, influence and solutions of significant events

√ Applicable □ N/A

On 23 October 2018, the Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan

Company Limited in a Share Swap via A-share Offering and other relevant proposals were considered

and approved at the 2nd Meeting of the 3rd Board. On 21 November 2018, the Proposal on the Review

of the Report of Midea Group Co., Ltd. on Merging with Wuxi Little Swan Company Limited in a Share

Swap via A-share Offering and the Related Transaction (Draft) and Its Summary, together with other

relevant proposals, were considered and approved at the 4th Meeting of the 3rd Board. On 21

December 2018, the Proposal on the Plan of Midea Group Co., Ltd. to Merge with Wuxi Little Swan

Company Limited in a Share Swap via A-share Offering, together with other relevant proposals, were

considered and approved at the 3rd Special Meeting of Shareholders of 2018. On 12 March 2019, the

Company received the CSRC Reply on the Approval of the Merger of Midea Group Co., Ltd. with Wuxi

Little Swan Company Limited (ZJXK [2019] No. 352). On 24 April 2019, the Company received the Reply

of the Foshan Central Sub-Branch of the State Administration of Foreign Exchange on the Foreign

Exchange Affairs in Midea Group Co., Ltd.’s Merger with Wuxi Little Swan Company Limited in a Share

Swap via A-share Offering. On 26 April 2019, the Company disclosed the Indicative Announcement on

the Distribution and Implementation of Appraisal Right for the Merger with Wuxi Little Swan Company



                                                                                                                 7
                                                          Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



Limited in a Share Swap via A-share Offering, setting the record date for the appraisal right on 7 May

2019. And trading in the Company’s stock will be suspended from 8 May 2019 for the distribution and

declaration of appraisal right, etc.

                                                                                                 Index to the related
           Summary of the significant event                       Disclosure date
                                                                                                   announcement

The Proposal on the Plan of Midea Group Co., Ltd. to
Merge with Wuxi Little Swan Company Limited in a
                                                                                            Announcement No. 2018-087
Share Swap via A-share Offering and other relevant                24 October 2018
                                                                                                on www.cninfo.com.cn
proposals were considered and approved at the 2nd
Meeting of the 3rd Board.

The Proposal on the Review of the Report of Midea
Group Co., Ltd. on Merging with Wuxi Little Swan
Company Limited in a Share Swap via A-share
                                                                                            Announcement No. 2018-095
Offering and the Related Transaction (Draft) and Its            22 November 2018
                                                                                                on www.cninfo.com.cn
Summary, together with other relevant proposals,
were considered and approved at the 4th Meeting of
the 3rd Board.

The Proposal on the Plan of Midea Group Co., Ltd. to
Merge with Wuxi Little Swan Company Limited in a
                                                                                            Announcement No. 2018-105
Share Swap via A-share Offering, together with other            22 December 2018
                                                                                                on www.cninfo.com.cn
relevant proposals, were considered and approved at
the 3rd Special Meeting of Shareholders of 2018.

The Company received the CSRC Reply on the
Approval of the Merger of Midea Group Co., Ltd. with                                        Announcement No. 2019-032
                                                                   13 March 2019
Wuxi Little Swan Company Limited (ZJXK [2019] No.                                               on www.cninfo.com.cn
352).

The Company received the Reply of the Foshan
Central Sub-Branch of the State Administration of
Foreign Exchange on the Foreign Exchange Affairs in                                         Announcement No. 2019-049
                                                                   24 April 2019
Midea Group Co., Ltd.’s Merger with Wuxi Little Swan                                           on www.cninfo.com.cn
Company Limited in a Share Swap via A-share
Offering (FHF [2019] No. 1).

The Company disclosed the Indicative Announcement
on the Distribution and Implementation of Appraisal
Right for the Merger with Wuxi Little Swan Company
Limited in a Share Swap via A-share Offering, setting                                       Announcement No. 2019-052
                                                                   26 April 2019
the record date for the appraisal right on 7 May 2019.                                          on www.cninfo.com.cn
And trading in the Company’s stock will be suspended
from 8 May 2019 for the distribution and declaration of
appraisal right, etc.

Progress of any share repurchase

                                                                                                                          8
                                                Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



√Applicable □N/A

The Proposal on the Plan for the Repurchase of Some Public Shares was approved at the 7th Meeting

of the 3rd Board of Directors on 22 February 2019. As such, the Company was agreed to repurchase,

with its own funds, no less than 60,000,000 shares and no more than 120,000,000 shares through

bidding at the stock exchange at a price not exceeding RMB55/share. The Report on the Repurchase of

Some Public Shares was disclosed on 28 February 2019.

As per the Measures on the Administration of Listed Companies’ Buying back Shares Held by the Public

(Trial), the Supplementary Provisions on the Share Repurchase by Listed Companies by Means of

Centralized Bidding, the Specific Implementation Rules of the Shenzhen Stock Exchange for the Share

Repurchase by Listed Companies, and other applicable rules, the Company shall disclose the share

repurchase progress in its periodic reports. Therefore, the Company hereby discloses its share

repurchase progress up to the end of April 2019 as follows:

Up to 29 April 2019, the Company has repurchased a total of 17,584,338 shares (0.2663% of the

Company’s total share capital) in its securities account for repurchase through bidding at the stock

exchange, with a total payment of RMB855,786,862.34 (exclusive of transaction charges). The highest

repurchase price was RMB54.90/share and the lowest was RMB45.62/share. The repurchase is in

compliance with the applicable laws and regulations, as well as the Company’s repurchase plan.

Progress of any repurchased share reduction through bidding at the stock exchange

□ Applicable √ N/A


3. Overdue commitments of the Company’s actual controller, shareholders, related
parties and acquirer, as well as the Company and other commitment makers in the
Report Period or ongoing at the period-end

□ Applicable √ N/A

No such cases in the Reporting Period.


4. Operating result forecast for January-June 2019

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

period-start until the end of the next Report Period according to predictions as well as any explanations

for these reasons:


                                                                                                                9
                                                                               Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



□ Applicable √ N/A


5. Securities investment

√Applicable □N/A
                                                                                                                                                              Unit: RMB’000

                  Abb                                                    Profit or Cumula
           Cod revi                           Meas                      loss from tive fair                                        Profit
Type                                                                                                  Purcha                                                                Fund
           e of atio            Initial      ureme         Opening      change in value                             Sold in          or         Closing
    of                                                                                                 sed in                                                 Account ing
           sec n of investment                    nt        carrying    fair value change                               the        loss in carrying
secur                                                                                                   the                                                   ing title sour
           uriti sec            cost          metho         amount        during     charged                        period          the         amount
 ities                                                                                                 period                                                                   ce
           es     uriti                             d                         the          to                                      period
                  es                                                      period         equity

Dom
                                                                                                                                                              Financi
estica
                                             Fair                                                                                                             al
lly/Ov            XIA                                                                                                                                                       Own
           181                               value                                                                                                            assets
ersea             OMI      1,272,584                       1,122,609 -130,555 -24,030                           -              -           -     968,024                    Fund
            0                                metho                                                                                                            availabl
s                 -W                                                                                                                                                        s
                                             d                                                                                                                e for
listed
                                                                                                                                                              sale
stock

Total                      1,272,584                --     1,122,609 -130,555 -24,030                           -              -           -     968,024                -       --


6. Investments in financial derivatives

√ Applicable □ N/A
                                                                                                                                                               Unit: RMB'000

                                                                                                                                                      Closing
           Rel                                                                                                                                       investme
                                                                                                                        Amou
           atio                                                                                 Purch                                                    nt
                                                                                                            Sold         nt
           nshi Rel                                                                             ased                                                  amount
                          Type            Initial                               Opening                       in        provid Closing                                Actual
Opera       p     ated                                                                            in                                                   as a
                            of        investme Starting            Ending investme                          Repor ed for investme                                  gain/loss in
    ting   with tran                                                                            Repor                                                percenta
                          deriva            nt             date        date         nt                       ting impair                  nt                         Reporting
party the sact                                                                                   ting                                                ge of the
                           tive           amount                                amount                      Perio ment              amount                            Period
           Co      ion                                                                          Perio                                                Company
                                                                                                              d          (if
           mpa                                                                                    d                                                  ’s closing
                                                                                                                        any)
            ny                                                                                                                                          net
                                                                                                                                                      assets

Futur                     Futur                                   31
es                        es                             1 January Decem
           No     No                             276                                     276            -           -          -               659     0.001%               2,893
comp                      contra                         2019     ber
any                       cts                                     2019



                                                                                                                                                                                     10
                                                                    Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                       Forwa
                                                         31
                       rd
                                               1 January Decem
Bank No        No      forex        -644,052                                        -      -      -   -48,933   -0.055%      246,936
                                               2019      ber         -644,052
                       contra
                                                         2019
                       cts

Total                               -643,776      --           --    -643,776       -      -      -   -48,274   -0.054%      249,829

Source of derivatives
                                All from the Company’s own funds
investment funds

Litigation involved (if
                                N/A
applicable)

Disclosure date of the
announcement about
the board’s consent for 18 April 2019
the derivative
investment (if any)
Disclosure date of the
announcement about
the general meeting’s
                                -
consent for the
derivative investment (if
any)

                                For the sake of eliminating the cost risk of the Company's bulk purchases of raw materials as a
                                result of significant fluctuations in raw material prices, the Company not only carried out futures
                                business for some of the materials, but also made use of bank financial instruments and
                                promoted forex funds business, with the purpose of avoiding the risks of exchange and interest
                                rate fluctuation, realizing the preservation and appreciation of forex assets, reducing forex
                                liabilities, as well as achieving locked-in costs. The Company has performed sufficient
Risk        analysis          of evaluation and control against derivatives investment and position risks, details of which are
positions        held         in described as follows:
derivatives during the 1. Legal risk: The Company's futures business and forex funds businesses shall be conducted
Reporting Period and in compliance with laws and regulations, with clearly covenanted responsibility and obligation
explanation of control relationship between the Company and the agencies.
measures (Including but Control measures: The Company has designated relevant responsible departments to enhance
not limited to market learning of laws and regulations and market rules, conducted strict examination and verification
risk, liquidity risk, credit of contracts, defined responsibility and obligation well, and strengthened compliance check, so
risk,   operational         risk, as to ensure that the Company's derivatives investment and position operations meet the
legal risk, etc.)               requirements of the laws and regulations and internal management system of the Company.
                                2. Operational risk: Imperfect internal process, staff, systems and external issues may cause the
                                Company to suffer from loss during the course of its futures business and forex funds business.
                                Control measures: The Company has not only developed relevant management systems that
                                clearly defined the assignment of responsibility and approval process for the futures business
                                and forex funds business, but also established a comparatively well-developed monitoring
                                mechanism, aiming to effectively reduce operational risk by strengthening risk control over the


                                                                                                                                   11
                                                                  Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                                   business, decision-making and trading processes.
                                   3. Market risk: Uncertainties caused by changes in the prices of bulk commodity and exchange
                                   rate fluctuations in foreign exchange market could lead to greater market risk in the futures
                                   business and forex funds business. Meanwhile, inability to timely raise sufficient funds to
                                   establish and maintain hedging positions in futures operations, or the forex funds required for
                                   performance in forex funds operations being unable to be credited into account could also result
                                   in loss and default risks.
                                   Control measures: The futures business and forex funds business of the Company shall always
                                   be conducted by adhering to prudent operation principles. For futures business, the futures
                                   transaction volume and application have been determined strictly according to the requirements
                                   of production & operations, and the stop-loss mechanism has been implemented. Besides, to
                                   determine the prepared margin amount which may be required to be supplemented, the futures
                                   risk measuring system has been established to measure and calculate the margin amount
                                   occupied, floating gains and losses, margin amount available and margin amount required for
                                   intended positions. As for forex funds business, a hierarchical management mechanism has
                                   been implemented, whereby the operating unit which has submitted application for funds
                                   business should conduct risk analysis on the conditions and environment affecting operating
                                   profit and loss, evaluate the possible greatest revenue and loss, and report the greatest
                                   acceptable margin ratio or total margin amount, so that the Company can update operating
                                   status of the funds business on a timely basis to ensure proper funds arrangement before the
                                   expiry dates.

Changes          in     market
prices or fair value of
derivative             products
during     the        Reporting
                                   1. Profit/loss from futures contracts during the Reporting Period was RMB2,893,000.
Period,                 specific
                                   2. Profit/loss from forward forex contracts during the Reporting Period was RMB246,936,000.
methods          used      and
                                   3. Public quotations in futures market or forward forex quotations announced by the Bank of
relevant         assumption
                                   China are used in the analysis of derivatives fair value.
and parameter settings
shall be disclosed for
analysis of fair value of
derivatives

Explanation of
significant changes in
accounting policies and
specific financial
accounting principles in
respect of the                     No change
Company's derivatives
for the Reporting Period
as compared to the
previous Reporting
Period



                                                                                                                                 12
                                                       Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


                        The Company's independent directors are of the view that the futures hedging business is an
Special opinions
                        effective instrument for the Company to eliminate price volatility and implement risk prevention
expressed by
                        measures through enhanced internal control, thereby improving the operation and management
independent directors
                        of the Company; the Company's foreign exchange risk management capability can be further
concerning the
                        improved through the forex funds business, so as to maintain and increase the value of foreign
Company's derivatives
                        exchange assets and the abovementioned investment in derivatives can help the Company to
investment and risk
                        fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry
control
                        out derivatives investment business, and the risks are controllable.


7. Visits received during the Reporting Period

√ Applicable □ N/A

            Date                    Type of visit        Type of visitor                    Discussions

                                                                           Please refer to Investor Relations Activities
14-15 January 2019                 Field research          Institution     from 14 January 2019 to 15 January 2019 on
                                                                           the website of www.cninfo.com.cn

                                                                           Please refer to Investor Relations Activities
17 January 2019                    Field research          Institution     on 17 January 2019 on the website of
                                                                           www.cninfo.com.cn

                                                                           Please refer to Investor Relations Activities
21-22 February 2019                Field research          Institution     from 21 February 2019 to 22 February 2019
                                                                           on the website of www.cninfo.com.cn


8. Irregular provision of guarantees

□ Applicable √ N/A

No such cases in the Reporting Period.


9. Occupation of the Company’s funds by the controlling shareholder or its related
parties for non-operating purposes

□ Applicable √ N/A

No such cases in the Reporting Period.




                                                                                                                            13
                                                     Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.




                                 Section IV Financial Statements

1. Financial statements


                                             Balance Sheet

Prepared by Midea Group Co., Ltd.                    31 March 2019                                   Unit: RMB’000
                                   31 March 2019     31 December 2018          31 March 2019       31 December 2018
             ASSETS
                                    Consolidated        Consolidated             Company               Company
  Current assets:
  Cash at bank and on hand              29,004,072             27,888,280           15,384,459             15,361,626
  Trading financial assets               5,170,374                                    4,189,001
  Derivative financial assets              87,975                 220,197                      -                      -
  Notes and accounts
                                        38,877,726             31,946,468                      -                      -
receivable
  Advances to suppliers                  2,456,293              2,215,888                33,871                 55,069
  Loans and advances                    12,786,217             11,328,392                      -                      -
  Other receivables                      3,063,118              2,971,368           11,845,517             11,593,020
  Inventories                           24,090,062             29,645,018                      -                      -
  Other current assets                  85,126,533             76,473,827           68,060,974             55,052,256
     Total current assets             200,662,370             182,689,438           99,513,822             82,061,971
  Non-current assets:
  Available-for-sale financial
                                                                1,906,878                                       56,579
assets
  Long-term receivables                    16,280                  34,815                      -                      -
  Long-term equity investments           2,723,743              2,713,316           28,271,761             28,236,295
  Other non-current financial
                                          861,403                                        56,579
assets
  Investment properties                   387,008                 391,765               551,306               560,954
  Fixed assets                          21,974,050             22,437,212             1,018,460             1,056,790
  Construction in progress               2,033,026              2,077,621                62,237                 51,872
  Intangible assets                     15,657,203             16,186,675               712,715               712,454
  Goodwill                              28,178,411             29,100,390                      -                      -
  Long-term prepaid expenses             1,167,629              1,191,373               166,648               174,684
  Deferred tax assets                    4,742,976              4,421,313               162,094               202,703
  Other non-current assets                506,116                 550,352                 1,355                  4,576
  Total non-current assets              78,247,845             81,011,710           31,003,155             31,056,907
         TOTAL ASSETS                 278,910,215             263,701,148          130,516,977            113,118,878


Legal representative:             Principal in charge of accounting:            Head of accounting department:
Fang Hongbo                       Zhong Zheng                                   Chen Lihong

                                                                                                                    14
                                                        Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.




                                     Balance Sheet (Continued)

Prepared by Midea Group Co., Ltd.                       31 March 2019                                   Unit: RMB’000
         LIABILITIES AND             31 March 2019       31 December 2018         31 March 2019       31 December 2018
  SHAREHOLDERS' EQUITY                Consolidated          Consolidated            Company               Company
  Current liabilities:
  Short-term borrowings                    1,270,263                 870,390             1,309,000               575,000
  Borrowings from the Central
                                              50,996                  99,754                      -                      -
Bank
  Customer deposits and
deposits from banks and other                 91,638                  44,386                      -                      -
financial institutions
  Derivative financial liabilities           275,822                 756,299                      -                      -
  Notes and accounts payable              65,882,696              60,226,741                      -                      -
  Advances from customers                 13,144,610              16,781,666                      -                      -
  Employee benefits payable                3,979,688               5,788,004              559,160                573,632
  Taxes payable                            3,694,302               3,875,298              188,579                280,499
  Other payables                           2,933,143               3,346,129           86,359,825             74,714,012
  Current portion of non-current
                                           6,808,447               7,122,712                      -                      -
liabilities
  Other current liabilities               37,552,173              31,319,709                33,248                 44,414
     Total current liabilities           135,683,778             130,231,088           88,449,812             76,187,557
  Non-current liabilities:
  Long-term borrowings                    34,913,366              32,091,439             4,000,000                       -
  Long-term payables                         103,240                  88,890                      -                      -
  Provisions                                 276,291                 268,887                      -                      -
  Deferred income                            682,961                 647,583                      -                      -
  Long-term employee benefits
                                           2,351,078               2,480,318                      -                      -
payable
  Deferred tax liabilities                 4,420,366               4,422,074                      -                      -
  Other non-current liabilities            1,011,153               1,016,352                      -                      -
  Total non-current liabilities           43,758,455              41,015,543             4,000,000                       -
          Total liabilities              179,442,233             171,246,631           92,449,812             76,187,557
  Shareholders' equity:
  Share capital                            6,603,423               6,663,031             6,603,423             6,663,031
  Capital surplus                         15,432,472              18,451,307             7,606,037            10,615,389
  Less: Treasury stock                    (1,473,697)             (4,918,427)          (1,473,697)            (4,918,427)
  Other comprehensive income              (1,291,512)             (1,332,153)               10,010                  6,020
  General risk reserve                       366,947                 366,947                      -                      -
  Surplus reserve                          5,079,096               5,079,096             5,079,096             5,079,096
  Undistributed profits                   64,893,472              58,762,315           20,242,296             19,486,212


                                                                                                                       15
                                                         Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


  Total equity attributable to
                                            89,610,201               83,072,116              38,067,165             36,931,321
shareholders of the Company
  Minority interests                         9,857,781                9,382,401                        -                        -
  Total shareholders' equity                99,467,982               92,454,517              38,067,165             36,931,321
  TOTAL LIABILITIES AND
                                           278,910,215              263,701,148             130,516,977            113,118,878
 SHAREHOLDERS' EQUITY


Legal representative:              Principal in charge of accounting:                     Head of accounting department:
Fang Hongbo                        Zhong Zheng                                            Chen Lihong




                                            Income Statement

Prepared by Midea Group Co., Ltd.                            January-March 2019                                Unit: RMB’000
                                              January-March          January-March         January-March        January-March
                   Item                            2019                   2018                  2019                2018
                                               Consolidated           Consolidated            Company             Company
1. Total revenue                                   75,500,426            70,287,509                467,215            414,674
  Including: Operating revenue                     75,205,780            69,737,528                467,215            414,674
            Interest income                              294,332            549,959                        -                    -
            Fee and commission income                        314                    22                     -                    -
2. Total Cost                                     (67,960,739)          (63,943,697)               305,333            (55,101)
  Including: Cost of sales                        (53,877,858)          (51,869,174)              (13,345)            (14,077)
            Interest expenses                            (75,120)          (150,518)                       -                    -
            Fee and commission
                                                          (2,456)                 (808)                    -                    -
expenses
             Taxes and surcharges                    (489,405)             (403,126)               (7,116)            (13,485)
             Selling and distribution
                                                   (9,513,634)           (7,468,456)                       -                    -
expenses
             General and administrative
                                                   (1,977,121)           (1,818,424)             (109,198)           (103,980)
expenses
             Research and development
                                                   (2,205,598)           (1,938,818)                       -                    -
expenses
            Finance expenses                             481,058            (95,978)               435,139             76,092
            Including: Interest expenses             (224,786)             (190,329)             (297,552)           (125,483)
                       Interest income                   953,378            299,045                736,263            201,028
             Asset impairment losses                     (12,317)          (198,395)                       -               349
             Credit impairment losses                (288,288)                                         (147)
  Add: Other income                                       66,516            224,233                        -                    -
        Investment income                            (146,977)              317,938                 71,992            117,752



                                                                                                                            16
                                                   Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


          Including: Investment income
                                                   105,865             75,515             66,507              58,704
from associates and joint ventures
          Profit/(loss) on changes in fair
                                                   230,915          (118,467)             33,665                    -
value
          Profit /(loss) on disposal of
                                                    (6,369)          (13,053)                    -               263
assets
3. Operating profit                              7,683,772         6,754,463             878,205            477,588
  Add: Non-operating income                         57,022             60,554               4,372              1,769
  Less: Non-operating expenses                     (21,839)          (25,846)                (85)            (4,003)
4. Total profit                                  7,718,955         6,789,171             882,492            475,354
  Less: Income tax expenses                     (1,177,710)       (1,143,376)           (128,539)             24,669
5. Net profit                                    6,541,245         5,645,795             753,953            500,023
  (1) Classified by continuity of
operations
         Net profit from continuing
                                                 6,541,245         5,645,795             753,953            500,023
operations
         Net profit from discontinued
                                                          -                  -                   -                  -
operations
  (2) Classified by ownership of the
equity
         Attributable to equity owners of the
                                                 6,129,026         5,256,231             753,953            500,023
Company
         Minority interests                        412,219           389,564                     -                  -
6. Other comprehensive income, net
                                                     2,436           137,056                3,990             71,838
of tax
  Other comprehensive income
attributable to shareholders of the                 40,641           213,386                3,990             71,838
Company, net of tax
  (1) Other comprehensive income items
which will not be reclassified                     (38,094)             8,985                    -                  -
subsequently to profit or loss
  1) Changes arising from
                                                   (38,094)             8,985                    -                  -
remeasurement of defined benefit plan
  (2) Other comprehensive income items
which will be reclassified subsequently to          78,735           204,401                3,990             71,838
profit or loss
  1) Other comprehensive income that
will be transferred subsequently to profit          (1,994)            22,831               3,990             17,101
or loss under the equity method
  2) Changes in fair value of
                                                          -            45,797                    -            54,737
available-for-sale financial assets
  3) Reserve for cash flow hedges                   90,207             33,437                    -                  -
  4) Translation of foreign currency                (9,478)          102,336                     -                  -



                                                                                                                  17
                                                      Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


financial statements
  Other comprehensive income
attributable to minority shareholders, net           (38,205)           (76,330)                    -                  -
of tax
7. Total comprehensive income                      6,543,681          5,782,851              757,943           571,861
  Attributable to shareholders of the
                                                   6,169,667          5,469,617              757,943           571,861
Company
  Minority interests                                 374,014            313,234                     -                  -
8. Earnings per share:
  Basic earnings per share (RMB Yuan)                    0.94                 0.80                N/A               N/A
  Diluted earnings per share (RMB
                                                         0.93                 0.79                N/A               N/A
Yuan)


Legal representative:              Principal in charge of accounting:                Head of accounting department:
Fang Hongbo                        Zhong Zheng                                       Chen Lihong




                                          Cash Flow Statement

Prepared by Midea Group Co., Ltd.                         January-March 2019                            Unit: RMB’000
                                              January-March      January-March        January-March     January-March
                    Item                          2019                2018                 2019              2018
                                              Consolidated       Consolidated            Company           Company
1. Cash flows from operating activities:
  Cash received from sales of goods or
                                                  61,230,159         55,069,088                     -                  -
rendering of services
  Net increase in customer deposits and
deposits from banks and other financial               47,252                     -                  -                  -
institutions
  Net decrease in loans and advances                         -               6,203                  -                  -
  Net decrease in deposits with the Central
                                                     228,122                     -                  -                  -
Bank
  Cash received for interest, fee and
                                                     433,884            465,657                     -                  -
commission
  Refund of taxes and surcharges                   2,255,964           1,855,685                    -                  -
  Cash received relating to other operating
                                                     675,619           1,555,171           12,053,410        6,054,301
activities
         Sub-total of cash inflows                64,871,000         58,951,804            12,053,410        6,054,301
  Cash paid for goods and services               (32,531,577)       (35,207,473)                    -                  -
  Net increase in loans and advances              (1,486,229)                    -                  -                  -
  Net decrease in customer deposits and                      -          (27,278)                    -                  -



                                                                                                                     18
                                                   Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


deposits from banks and other financial
institutions
  Net increase in deposits with the Central
                                                         -        (1,422,269)                    -                  -
Bank
  Net decrease in borrowings from the
                                                  (48,758)                   -                   -                  -
Central Bank
  Cash paid for interest, fee and
                                                  (79,055)          (151,332)                    -                  -
commission
  Cash paid to and on behalf of employees      (8,147,054)        (7,569,431)            (11,503)           (43,024)
  Payments of taxes and surcharges             (3,835,224)        (2,826,238)            (49,908)           (13,485)
  Cash paid relating to other operating
                                               (6,900,321)        (7,318,691)           (322,665)           (43,781)
activities
         Sub-total of cash outflows           (53,028,218)       (54,522,712)           (384,076)          (100,290)
Net cash flows from operating activities       11,842,782           4,429,092         11,669,334          5,954,011
2. Cash flows from investing activities:
  Cash received from disposal of
                                               10,793,208         11,755,659           3,406,557          6,507,371
investments
  Cash received from returns on
                                                  233,728            470,848             198,723            834,942
investments
  Net cash received from disposal of fixed
assets, intangible assets and other                64,509              23,595                    -                  -
long-term assets
  Net cash received from disposal of
                                                         -                   -                   -                  -
subsidiaries and other business units
  Cash received relating to other investing
                                                         -                   -                   -                  -
activities
         Sub-total of cash inflows             11,091,445         12,250,102           3,605,280          7,342,313
  Cash paid to acquire fixed assets,
intangible assets and other long-term          (1,143,943)          (927,703)            (40,220)          (112,978)
assets
  Cash paid to acquire investments            (26,581,092)       (18,424,204)       (25,408,375)         (2,302,699)
  Net cash paid to acquire subsidiaries
                                                (177,809)           (148,287)                    -                  -
and other business units
  Cash paid relating to other investing
                                                         -                   -                   -                  -
activities
         Sub-total of cash outflows           (27,902,844)       (19,500,194)       (25,448,595)         (2,415,677)
Net cash flows from investing activities      (16,811,399)        (7,250,092)       (21,843,315)          4,926,636
3. Cash flows from financing activities:
  Cash received from capital contributions        777,348           1,013,304            698,761            491,953
  Including: Cash received from capital
contributions by minority shareholders of          78,587            521,351                     -                  -
subsidiaries
  Cash received from borrowings                 5,122,321            978,979           5,727,000                    -



                                                                                                                  19
                                                      Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


  Cash received from issuing short-term
                                                             -                  -                   -                  -
financing bonds
  Cash received relating to other financing
                                                             -                  -                   -                  -
activities
         Sub-total of cash inflows                  5,899,669          1,992,283           6,425,761           491,953
  Cash repayments of borrowings                     (663,249)        (2,138,653)           (993,000)                   -
  Cash payments for short-term financing
                                                             -                  -                   -                  -
bonds
  Cash payments for interest expenses
                                                    (262,635)          (325,629)           (195,585)           (74,404)
and distribution of dividends or profits
  Including: Cash payments for dividends
or profit to minority shareholders of                        -           (80,657)                   -                  -
subsidiaries
  Cash payments relating to other
                                                    (834,503)        (1,782,206)           (691,717)                   -
financing activities
        Sub-total of cash outflows                 (1,760,387)       (4,246,488)         (1,880,302)           (74,404)
Net cash flows from financing activities            4,139,282        (2,254,205)           4,545,459           417,549
4. Effect of foreign exchange rate
                                                    (160,965)          (357,924)                    -                  -
changes on cash and cash equivalents
5. Net increase in cash and cash
                                                    (990,300)        (5,433,129)         (5,628,522)        11,298,196
equivalents
  Add: Cash and cash equivalents at the
                                                   17,952,282        21,831,653           10,181,934        25,978,543
beginning of the period
6. Cash and cash equivalents at the end
                                                   16,961,982        16,398,524            4,553,412        37,276,739
of the period


Legal representative:               Principal in charge of accounting:              Head of accounting department:
Fang Hongbo                         Zhong Zheng                                     Chen Lihong



2. Adjustments to the Financial Statements

2.1 Adjustments to the financial statements at the beginning of the first execution year of any
new standards governing financial instruments, revenue or leases


√ Applicable □ N/A




                                                                                                                     20
                                                        Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.



                                             Balance Sheet

 Prepared by Midea Group Co., Ltd.                        31 March 2019                                 Unit: RMB’000
                                         Consolidated                                        Company
      ASSETS             31 December       1 January                       31 December        1 January
                                                           Adjustment                                         Adjustment
                            2018             2019                               2018             2019
  Current assets:
  Cash at bank and
                           27,888,280      27,888,280                  -      15,361,626      15,361,626                 -
on hand
  Trading financial
                                   N/A      2,654,045         2,654,045                N/A      1,521,007       1,521,007
assets
  Derivative financial
                             220,197          220,197                  -                 -                -              -
assets
  Notes and
                           31,946,468      31,946,468                  -                 -                -              -
accounts receivable
  Advances to
                            2,215,888       2,215,888                  -           55,069          55,069                -
suppliers
  Loans and
                           11,328,392      11,328,392                  -                 -                -              -
advances
  Other receivables         2,971,368       2,960,939          (10,429)       11,593,020      11,593,020                 -
  Inventories              29,645,018      29,645,018                  -                 -                -              -
  Other current
                           76,473,827      74,952,820       (1,521,007)       55,052,256      53,531,249      (1,521,007)
assets
Total current assets      182,689,438     183,812,047         1,122,609       82,061,971      82,061,971                 -
  Non-current
assets:
  Available-for-sale
                            1,906,878               N/A     (1,906,878)            56,579               N/A      (56,579)
financial assets
  Long-term
                              34,815           34,815                  -                 -                -              -
receivables
  Long-term equity
                            2,713,316       2,713,316                  -      28,236,295      28,236,295                 -
investments
  Other non-current
                                   N/A        784,269           784,269                N/A         56,579          56,579
financial assets
  Investment
                             391,765          391,765                  -         560,954          560,954                -
properties
  Fixed assets             22,437,212      22,437,212                  -        1,056,790       1,056,790                -
  Construction in
                            2,077,621       2,077,621                  -           51,872          51,872                -
progress
  Intangible assets        16,186,675      16,186,675                  -         712,454          712,454                -
  Goodwill                 29,100,390      29,100,390                  -                 -                -              -
  Long-term prepaid         1,191,373       1,191,373                  -         174,684          174,684                -



                                                                                                                       21
                                                        Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


expenses
  Deferred tax assets        4,421,313      4,421,313                  -         202,703          202,703                -
  Other non-current
                               550,352        550,352                  -            4,576           4,576                -
assets
 Total non-current
                            81,011,710     79,889,101       (1,122,609)       31,056,907      31,056,907                 -
         assets
  TOTAL ASSETS             263,701,148    263,701,148                  -     113,118,878     113,118,878                 -




                                    Balance Sheet (Continued)

 Prepared by Midea Group Co., Ltd.                       31 March 2019                                  Unit: RMB’000
  LIABILITIES AND                        Consolidated                                        Company
 SHAREHOLDERS'            31 December      1 January                       31 December        1 January
                                                           Adjustment                                         Adjustment
         EQUITY              2018            2019                               2018             2019
  Current liabilities:
  Short-term
                               870,390        870,390                  -          575,000         575,000                -
borrowings
  Borrowings from
                             99,754.00         99,754                  -                 -                -              -
the Central Bank
  Customer deposits
and deposits from
                                44,386         44,386                  -                 -                -              -
banks and other
financial institutions
  Derivative financial
                               756,299        756,299                  -                 -                -              -
liabilities
  Notes and
                            60,226,741     60,226,741                  -                 -                -              -
accounts payable
  Advances from
                            16,781,666     16,781,666                  -                 -                -              -
customers
  Employee benefits
                             5,788,004      5,788,004                  -          573,632         573,632                -
payable
  Taxes payable              3,875,298      3,875,298                  -          280,499         280,499                -
  Other payables             3,346,129      3,346,129                  -      74,714,012      74,714,012                 -
  Current portion of
                             7,122,712      7,122,712                  -                 -                -              -
non-current liabilities
  Other current
                            31,319,709     31,319,709                  -           44,414          44,414                -
liabilities
     Total current
                           130,231,088    130,231,088                  -      76,187,557      76,187,557                 -
       liabilities
  Non-current
liabilities:


                                                                                                                       22
                                               Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


  Long-term
                        32,091,439    32,091,439              -                 -               -               -
borrowings
  Long-term
                           88,890        88,890               -                 -               -               -
payables
  Provisions              268,887       268,887               -                 -               -               -
  Deferred income         647,583       647,583               -                 -               -               -
  Long-term
employee benefits        2,480,318     2,480,318              -                 -               -               -
payable
  Deferred tax
                         4,422,074     4,422,074              -                 -               -               -
liabilities
  Other non-current
                         1,016,352     1,016,352              -                 -               -               -
liabilities
 Total non-current
                        41,015,543    41,015,543              -                 -               -               -
        liabilities
   Total liabilities   171,246,631   171,246,631              -      76,187,557      76,187,557                 -
  Shareholders'
equity:
  Share capital          6,663,031     6,663,031              -        6,663,031       6,663,031                -
  Capital surplus       18,451,307    18,451,307              -      10,615,389      10,615,389                 -
  Less: Treasury
                       (4,918,427)   (4,918,427)              -      (4,918,427)     (4,918,427)                -
stock
  Other
comprehensive          (1,332,153)    -1,332,153              -            6,020           6,020                -
income
  General risk
                          366,947       366,947               -                 -               -               -
reserve
  Surplus reserve        5,079,096     5,079,096              -        5,079,096       5,079,096                -
  Undistributed
                        58,762,315    58,762,315              -      19,486,212      19,486,212                 -
profits
  Total equity
attributable to
                        83,072,116    83,072,116              -      36,931,321      36,931,321                 -
shareholders of the
Company
  Minority interests     9,382,401     9,382,401              -                 -               -               -
Total shareholders'
                        92,454,517    92,454,517              -      36,931,321      36,931,321                 -
          equity
TOTAL LIABILITIES
           AND
                       263,701,148   263,701,148              -     113,118,878     113,118,878                 -
 SHAREHOLDERS'
          EQUITY




                                                                                                              23
                                                Interim Report for the First Quarter 2019 of Midea Group Co., Ltd.


2.2 Retrospective Restatement of Comparative Data due to the First Execution of any New
Standards Governing Financial Instruments or Leases


√ Applicable □ N/A

The Company adopts the new accounting standard governing financial instruments starting from 1

January 2019 and adjusts the format of its financial statements according to the Notice of the Ministry of

Finance on Revising and Issuing the Format of Financial Statements of General Enterprises 2018. And

the affected financial statement items and amounts are shown in the two financial statements above.


3. Auditor’s report

Is this Report audited by a CPAs firm?

□ Yes √ No

This Report is un-audited by a CPAs firm.




                                                                               Midea Group Co., Ltd.

                                                                       Legal Representative: Fang Hongbo

                                                                                     30 April 2019




                                                                                                               24