Midea Group Co., Ltd.
Interim Report for the Third Quarter 2019
October 2019
1
Interim Report for the Third 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 Q3 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 CEO 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 true,
accurate and complete.
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Interim Report for the Third 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
30 September 2019 31 December 2018 Change (%)
Total assets (RMB'000) 285,289,199 263,701,148 8.19%
Net assets attributable to
shareholders of the Company 98,241,158 83,072,116 18.26%
(RMB'000)
July-September January-
YoY Change (%) YoY Change (%)
2019 September 2019
Operating revenue (RMB'000) 67,147,862 6.36% 220,918,162 7.37%
Net profit attributable to
shareholders of the Company 6,128,898 23.48% 21,315,967 19.08%
(RMB'000)
Net profit attributable to
shareholders of the Company
6,042,274 27.16% 20,597,948 19.39%
before non-recurring gains and
losses (RMB'000)
Net cash flows from operating
-- -- 29,790,279 52.07%
activities (RMB'000)
Basic earnings per share
0.89 17.11% 3.20 17.65%
(RMB/share)
Diluted earnings per share
0.89 18.67% 3.18 18.22%
(RMB/share)
Weighted average ROE (%) 6.35% 0.24% 23.46% 0.81%
Non-recurring gains and losses
√ Applicable □ N/A
Unit: RMB’000
Item January-September 2019 Note
Gains and losses on disposal of non-current asset -34,416
Except for effectively hedging business related to normal
-66,602
business operations of the Company, gains and losses
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
arising from the change in the fair value of held-for-trading
financial assets and liabilities, as well as investment gains
and losses produced from the disposal of held-for-
trading financial assets and liabilities and available-for-
sale financial assets
Other 1,102,169
Less: Corporate income tax 268,517
Minority interests (after tax) 14,615
Total 718,019 --
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the
definition in the , or classifies any non-recurring
gain/loss item mentioned in the said explanatory announcement as a recurring gain/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 ordinary shareholders and shareholdings of the top ten ordinary
shareholders at the period-end
Unit: share
Total number of preference
Total number of ordinary shareholders at shareholders with resumed
200,887 0
the period-end voting rights at the period-
end (if any)
Top ten shareholders
Pledged or frozen
Shareholding Number of
Nature of Number of shares
Name of shareholder percentage restricted
shareholder shares held Status of Number of
(%) shares held
shares shares
Domestic non-
2,212,046,61
Midea Holding Co., Ltd. state-owned 31.77% 0 Pledged 215,000,000
3
corporation
Hong Kong Securities Clearing Foreign 1,024,708,54
14.72% 0 - -
Company Limited corporation 6
State-owned
China Securities Finance Co., Ltd. 2.85% 198,145,134 0 - -
corporation
Fang Hongbo Domestic 1.97% 136,990,492 102,742,869 - -
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
individual
Canada Pension Plan Investment
Foreign
Board － own funds (stock 1.73% 120,379,067 0 - -
corporation
exchange)
Central Huijin Asset Management State-owned
1.30% 90,169,354 0 - -
Ltd. corporation
Domestic
Huang Jian 1.26% 88,032,200 0 - -
individual
Foreign
Merrill Lynch International 0.84% 58,506,848 0 - -
corporation
Foreign
Li Jianwei 0.74% 51,791,941 0 - -
individual
Domestic
Huang Xiaoxiang 0.72% 50,189,788 0 Pledged 14,648,500
individual
Top ten non-restricted ordinary shareholders
Number of non-restricted Type of shares
Name of shareholder ordinary shares held at the
Type Number
period-end
RMB-denominated
Midea Holding Co., Ltd. 2,212,046,613 2,212,046,613
ordinary share
RMB-denominated
Hong Kong Securities Clearing Company Limited 1,024,708,546 1,024,708,546
ordinary share
RMB-denominated
China Securities Finance Co., Ltd. 198,145,134 198,145,134
ordinary share
Canada Pension Plan Investment Board － own RMB-denominated
120,379,067 120,379,067
funds (stock exchange) ordinary share
RMB-denominated
Central Huijin Asset Management Ltd. 90,169,354 90,169,354
ordinary share
RMB-denominated
Huang Jian 88,032,200 88,032,200
ordinary share
RMB-denominated
Merrill Lynch International 58,506,848 58,506,848
ordinary share
RMB-denominated
Li Jianwei 51,791,941 51,791,941
ordinary share
RMB-denominated
Huang Xiaoxiang 50,189,788 50,189,788
ordinary share
RMB-denominated
GIC Private Limited 49,053,247 49,053,247
ordinary share
Explanation of related relationship or/and acting- N/A
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
in- concert parties among the above-mentioned
shareholders
1. The Company’s shareholder Huang Jian holds 88,022,200 shares
in the Company through his ordinary securities accounts and 10,000
shares in the Company through his accounts of collateral securities
for margin trading, representing a total holding of 88,032,200 shares
Top ten non-restricted ordinary shareholders in the Company.
taking part in securities margin trading (if any) 2. The Company’s shareholder Huang Xiaoxiang holds 39,841,788
shares in the Company through his ordinary securities accounts and
10,348,000 shares in the Company through his accounts of collateral
securities for margin trading, representing a total holding of
50,189,788 shares in the Company.
Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary 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
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Interim Report for the Third 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
30 September 31 December
Financial statement items 2019/January- 2018/January- Change
Reasons for the changes
(consolidated) September September (%)
2019 2018
Mainly due to the increased net cash
Cash at bank and on hand 52,428,387 27,888,280 87.99%
flows from operating activities
Mainly due to changes of the fair value
Derivative financial asset 37,068 220,197 -83.17%
of derivative financial instrument
Mainly due to the transfer-out of the
Construction in progress 1,400,406 2,077,621 -32.60%
completed construction in progress
Mainly due to the increased structural
Other non-current asset 4,845,628 550,352 780.46%
deposit exceeding one year
Borrowings from the Mainly due to the repayment of
0 99,754 -100.00%
Central Bank borrowings from the Central Bank
Customer deposits and Mainly due to the changes in the
deposits from banks and 78,118 44,386 76.00% business operations of Midea Group
other financial institutions Finance
Mainly due to the changes in the fair
Derivative financial liability 80,813 756,299 -89.31%
value of derivative financial instrument
Mainly due to the repayment of current
Current portion of non-
192,717 7,122,712 -97.29% portion of debentures payable and long-
current liability
term borrowing
Long-term borrowing 42,314,469 32,091,439 31.86% Mainly due to the increased borrowings
Mainly due to the repayment of long-
Long-term payable 28,117 88,890 -68.37%
term payable
Mainly due to the transfer of gains and
Other comprehensive losses on changes in fair value of
-852,782 -1,332,153 35.98%
income available-for-sale financial asset into
undistributed profit
Minority interest 6,120,778 9,382,401 -34.76% Mainly due to the purchase of minority
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
interest in Little Swan
Mainly due to the changes in the
Interest income 854,941 1,647,457 -48.11% business operations of Midea Group
Finance
Mainly due to the changes in the
Interest cost 115,595 180,410 -35.93% business operations of Midea Group
Finance
Mainly due to the changes in the gains
Investment income 183,139 1,276,499 -85.65% and losses on the delivery of derivative
financial instrument
Gains on changes in fair Mainly due to the changes in the fair
299,107 -882,313 133.90%
value value of derivative financial instrument
Mainly due to the transfer of bad debt
Asset impairment loss -59,162 -237,086 75.05% provision loss and loan provision loss
into losses on credit impairment
Mainly due to the increase of other
Non-operating income 343,075 226,964 51.16%
income
Mainly due to the increased cash
Net cash flows from
29,790,279 19,589,580 52.07% received from sales of good or
operating activities
rendering of service
Net cash flows from
-7,546,097 -10,826,057 30.30% Mainly due to the increased borrowing
financing activities
Net increase in cash and Mainly due to the increased net cash
6,840,248 -11,608,197 158.93%
cash equivalents flows from operating activities
2. Progress, influence and solutions of significant events
□ Applicable √ N/A
Progress of any share repurchase
√ 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
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Centralized Bidding, the Specific Implementation Rules of the Shenzhen Stock Exchange for the Share
Repurchase by Listed Companies, and other applicable rules; therefore, the Company hereby discloses
its share repurchase progress up to the end of September 2019 as follows:
As of 30 September 2019, the Company has cumulatively repurchased 60,252,129 shares (0.8654% of
Company’s total share capital as of that date) by way of centralized bidding in its securities account for
repurchase. With the highest trading price being RMB 55.00/share and the lowest being RMB 45.62/share,
the total payment amounted to RMB 3,099,683,600.75 (exclusive of trading fees). The repurchase was
in line with the requirements of applicable laws and regulations, as well as the repurchase plan of the
Company.
Progress of any repurchased share reduction through centralized price bidding
□ 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. Securities investments
√ Applicable □ N/A
Unit: RMB’000
Profit or
loss from Cumulati
Meas Sold Profit
Code changes ve fair Purcha Fundi
Type of Abbreviat Initial ureme Opening in or Closing Acco
of in fair value sed in ng
securiti ion of investme nt carrying the loss in carrying untin
securi value changes the sourc
es securities nt cost metho amount peri the amount g title
ties during charged period e
d od period
the to equity
period
Financ
ial
Overseas Fair
assets Own
listed 1810 XIAOMI-W 1,272,584 value 1,122,609 -357,106 22,701 - - - 788,204
held Funds
stock method
for
trading
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Financ
ial
Domestic Fair
Espressif assets Own
ally listed 688018 value - 79,092 - 56,340 - - 135,432
Systems 14,625 held Funds
stock method
for
trading
Total 1,287,209 -- 1,122,609 -278,014 22,701 56,340 - - 923,636 -- --
5. Wealth management entrustment
□ Applicable √ N/A
No such cases in the Reporting Period.
6. Derivatives investment
√ Applicable □ N/A
Unit: RMB’000
Closing
Rel
Amou investme
atio Purch
Sold nt nt
nshi Rel ased
Type Initial Opening in provid Closing amount Actual
Opera p ated in
of investme Starting Ending investme Repor ed for investme as a gain/loss in
ting with tran Repor
deriva nt date date nt ting impair nt percenta Reporting
party the sact ting
tive amount amount Perio ment amount ge of the Period
Co ion Perio
d (if Company
mpa d
any) ’s closing
ny
net asset
Futur Futur
es es 01/01/20 31/12/20
No No 276 276 - - - 2,184 0.0022% 7,050
comp contra 19 19
any cts
Forwa
rd
01/01/20 31/12/20
Bank No No forex -644,052 -644,052 - - - -524,088 -0.5335% -1,005,062
19 19
contra
cts
Total -643,776 -- -- -643,776 - - - -521,904 -0.5312% -998,012
Source of derivatives All from the Company’s own funds
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
investment funds
Litigation involved (if
N/A
applicable)
Disclosure date of the
announcement about
the board’s consent for 20/04/2019
the derivative
investment (if any)
Disclosure date of the
announcement about
the general meeting’s
14/05/2019
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 evaluation and control
against derivatives investment and position risks, details of which are described as follows:
1. Legal risk: The Company's futures business and forex funds businesses shall be conducted in
compliance with laws and regulations, with clearly covenanted responsibility and obligation
relationship between the Company and the agencies.
Risk analysis of
Control measures: The Company has designated relevant responsible departments to enhance
positions held in
learning of laws and regulations and market rules, conducted strict examination and verification of
derivatives during the
contracts, defined responsibility and obligation well, and strengthened compliance check, so as to
Reporting Period and
ensure that the Company's derivatives investment and position operations meet the requirements
explanation of control
of the laws and regulations and internal management system of the Company.
measures (Including but
2. Operational risk: Imperfect internal process, staff, systems and external issues may cause the
not limited to market
Company to suffer from loss during the course of its futures business and forex funds business.
risk, liquidity risk, credit
Control measures: The Company has not only developed relevant management systems that
risk, operational risk,
clearly defined the assignment of responsibility and approval process for the futures business and
legal risk, etc.)
forex funds business, but also established a comparatively well-developed monitoring mechanism,
aiming to effectively reduce operational risk by strengthening risk control over the 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
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
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 from futures contracts during the Reporting Period was RMB 7,050,000.
Period, specific
2. Loss from forward forex contracts during the Reporting Period was RMB -1,005,062,000.
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 N/A
Company's derivatives
for the Reporting Period
as compared to the
previous Reporting
Period
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 fully
investment and risk
bring out its competitive advantages. Therefore, it is practicable for the Company to carry out
control
derivatives investment business, and the risks are controllable.
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
7. Visits received during the Reporting Period
√ Applicable □ N/A
Date Type of visit Type of visitor Discussions
Please refer to Investor Relations
Activities from 4 July 2019 to 5 July
4-5 July 2019 Field research Institution
2019 on the website of
www.cninfo.com.cn
Please refer to Investor Relations
Activities from 22 July 2019 to 26 July
22-26 July 2019 Field research Institution
2019 on the website of
www.cninfo.com.cn
Please refer to Investor Relations
Activities from 17 September 2019 to 18
17-18 September 2019 Field research Institution
September 2019 on the website of
www.cninfo.com.cn
Please refer to Investor Relations
24 September 2019 Field research Institution Activities on 24 September 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.
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Section IV Financial Statements
1. Financial statements
Consolidated and Company Balance Sheets
Prepared by Midea Group Co., Ltd. 30 September 2019 Unit: RMB’000
30 September 30 September
31 December 2018 31 December 2018
Assets 2019 2019
Consolidated Consolidated Company Company
Current assets:
Cash at bank and on hand 52,428,387 27,888,280 42,648,970 15,361,626
Financial assets held for trading 923,636 -
Derivative financial assets 37,068 220,197 - -
Notes receivable 13,675,697 12,556,294 - -
Accounts receivable 20,260,192 19,390,174 - -
Receivables financing 2,701,739 -
Advances to suppliers 2,227,801 2,215,888 34,727 55,069
Loans and advances 13,367,842 11,328,392 - -
Other receivables 2,288,711 2,971,368 13,646,037 11,593,020
Inventories 24,004,608 29,645,018 - -
Other current assets 68,171,450 76,473,827 56,771,485 55,052,256
Total current assets 200,087,131 182,689,438 113,101,219 82,061,971
Non-current assets:
Available-for-sale financial assets 1,906,878 56,579
Long-term receivables 1,286,584 34,815 - -
Long-term equity investments 2,755,931 2,713,316 45,756,076 28,236,295
Other non-current financial assets 1,401,558 476,552
Investment properties 372,988 391,765 529,345 560,954
Fixed assets 21,456,506 22,437,212 928,983 1,056,790
Construction in progress 1,400,406 2,077,621 118,199 51,872
Intangible assets 15,783,449 16,186,675 704,795 712,454
Goodwill 28,996,310 29,100,390 - -
Long-term prepaid
1,206,972 1,191,373 130,043 174,684
expenses
Deferred tax assets 5,695,736 4,421,313 40,651 202,703
Other non-current assets 4,845,628 550,352 4,206,897 4,576
Total non-current assets 85,202,068 81,011,710 52,891,541 31,056,907
Total Assets 285,289,199 263,701,148 165,992,760 113,118,878
Legal representative: Fang Hongbo Director of Finance: Zhong Zheng Prepared by: Chen Lihong
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Consolidated and Company Balance Sheets (Continued)
Prepared by Midea Group Co., Ltd. 30 September 2019 Unit: RMB’000
30 September 30 September
31 December 2018 31 December 2018
Liabilities and Owners’ Equity 2019 2019
Consolidated Consolidated Company Company
Current liabilities:
Short-term borrowings 1,033,098 870,390 385,750 575,000
Borrowings from the Central Bank - 99,754 - -
Customer deposits and deposits from
78,118 44,386 - -
banks and other financial institutions
Derivative financial liabilities 80,813 756,299 - -
Notes payable 24,658,451 23,325,115 - -
Accounts payable 36,717,265 36,901,626 - -
Advances from customers 12,139,003 16,781,666 - -
Employee benefits payable 5,271,613 5,788,004 559,237 573,632
Taxes payable 3,930,320 3,875,298 555,479 280,499
Other payables 3,443,595 3,346,129 103,947,539 74,714,012
Current portion of non-current liabilities 192,717 7,122,712 - -
Other current liabilities 41,860,506 31,319,709 8,915 44,414
Total current liabilities 129,405,499 130,231,088 105,456,920 76,187,557
Non-current liabilities:
Long-term borrowings 42,314,469 32,091,439 4,000,000 -
Long-term payables 28,117 88,890 - -
Provisions 300,033 268,887 - -
Deferred income 559,771 647,583 - -
Long-term employee benefits payable 2,552,655 2,480,318 - -
Deferred tax liabilities 4,677,501 4,422,074 56,033 -
Other non-current liabilities 1,089,218 1,016,352 - -
Total non-current liabilities 51,521,764 41,015,543 4,056,033 -
Total liabilities 180,927,263 171,246,631 109,512,953 76,187,557
Shareholders’ equity:
Share capital 6,962,228 6,663,031 6,962,228 6,663,031
Capital surplus 19,258,463 18,451,307 25,599,317 10,615,389
Less: Treasury stock (3,759,732) (4,918,427) (3,759,732) (4,918,427)
Other comprehensive income (852,782) (1,332,153) 10,922 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 71,186,938 58,762,315 22,587,976 19,486,212
Total equity attributable to
98,241,158 83,072,116 56,479,807 36,931,321
shareholders of the Company
Minority interests 6,120,778 9,382,401 - -
Total shareholders’ equity 104,361,936 92,454,517 56,479,807 36,931,321
Total Liabilities and Owners’ Equity 285,289,199 263,701,148 165,992,760 113,118,878
Legal representative: Fang Hongbo Director of Finance: Zhong Zheng Prepared by: Chen Lihong
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Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Consolidated and Company Income Statements
Prepared by Midea Group Co., Ltd. July-September 2019 Unit: RMB’000
July-September 2019 July-September 2018 July-September 2019 July-September 2018
Item
Consolidated Consolidated Company Company
1. Total revenue 67,441,421 63,668,797 430,828 436,307
Including: Revenue 67,147,862 63,132,816 430,828 436,307
Interest income 293,244 535,443 - -
Fee and commission income 315 538 - -
2. Total cost of sales (60,633,135) (57,678,454) 398,909 443,878
Including: Cost of sales (48,211,456) (45,783,292) (11,247) (10,607)
Interest costs (10,052) (12,175) - -
Fee and commission expenses (1,672) (730) - -
Taxes and surcharges (363,402) (376,334) (7,733) (5,305)
Selling and distribution expenses (8,148,056) (7,504,769) - -
General and administrative expenses (2,117,322) (2,294,597) (188,845) (113,359)
Research and development expenses (2,459,620) (2,450,200) - -
Financial expenses 678,445 743,643 606,734 573,149
Including: Interest expenses (139,821) (206,984) (420,920) (222,533)
Interest income 1,240,082 505,000 1,017,880 560,492
Add: Other income 311,572 310,676 107,985 150
Investment income 170,499 363,875 2,421,409 2,170,005
Including: Share of profit of
130,349 89,122 59,881 58,329
associates and joint ventures
Including: Profits or losses arising
from derecognition of financial assets - - - -
measured at amortized costs
Gains on changes in fair value (48,755) (268,385) - -
Asset impairment losses 85,494 63,001 - (35)
Losses on credit impairment 2,400 1,044
Gains on disposals of assets (20,711) 16,759 12 45,364
3. Operating profit 7,308,785 6,476,269 3,360,187 3,095,669
Add: Non-operating income 192,712 76,164 2,371 907
Less: Non-operating expenses (37,053) (22,589) (451) -
4. Total profit 7,464,444 6,529,844 3,362,107 3,096,576
Less: Income tax expenses (1,164,143) (1,219,284) (41,229) (261,715)
5. Net profit 6,300,301 5,310,560 3,320,878 2,834,861
(1) Classified by continuity of
operations
Net profit from continuing operations 6,300,301 5,310,560 3,320,878 2,834,861
Net profit from discontinued
- - - -
operations
(2) Classified by ownership of the
equity
Attributable to equity owners of the
6,128,898 4,963,393 3,320,878 2,834,861
Company
Minority interests 171,403 347,167 - -
16
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
6. Other comprehensive
(36,582) (4,416) (1,853) 35,511
income, net of tax
Other comprehensive income
attributable to equity owners of the 6,956 (7,368) (1,853) 35,511
Company, net of tax
(1) Other comprehensive income
items which will not be reclassified to (45,952) 27,169 - -
profit or loss
1. Changes arising from
remeasurement on defined benefit (45,952) 27,169 - -
plans
(2) Other comprehensive income
items which will be reclassified 52,908 (34,537) (1,853) 35,511
subsequently to profit or loss
1. Other comprehensive income
that could be reclassified to profit and (1,332) 23,639 (1,853) 12,939
loss under equity method
2. Changes in fair value of
- (117,028) - 16,327
available-for-sale financial assets
3. Cash flow hedging reserve (90,476) (366,451) - 6,245
4. Differences arising from
translation of foreign currency 144,716 425,303 - -
financial statements
Other comprehensive income
attributable to minority shareholders, (43,538) 2,952 - -
net of tax
7. Total comprehensive income 6,263,719 5,306,144 3,319,025 2,870,372
Attributable to equity owners of the
6,135,854 4,956,025 3,319,025 2,870,372
Company
Attributable to minority interests 127,865 350,119 - -
8. Earnings per share:
(1) Basic earnings per share 0.89 0.76 N/A N/A
(2) Diluted earnings per share 0.89 0.75 N/A N/A
Legal representative: Fang Hongbo Director of Finance: Zhong Zheng Prepared by: Chen Lihong
17
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Consolidated and Company Income Statements
Prepared by Midea Group Co., Ltd. January-September 2019 Unit: RMB’000
January-September January-September January-September January-September
Item 2019 2018 2019 2018
Consolidated Consolidated Company Company
1. Total revenue 221,774,064 207,404,713 1,307,278 1,302,617
Including: Revenue 220,918,162 205,756,653 1,307,278 1,302,617
Interest income 854,941 1,647,457 - -
Fee and commission income 961 603 - -
2. Total cost of sales (196,851,290) (185,720,216) 1,107,772 486,951
Including: Cost of sales (156,652,745) (149,664,730) (35,306) (32,561)
Interest costs (115,595) (180,410) - -
Fee and commission expenses (5,343) (2,259) - -
Taxes and surcharges (1,291,992) (1,223,984) (18,736) (23,006)
Selling and distribution expenses (27,677,878) (24,397,272) - -
General and administrative expenses (6,227,447) (5,629,888) (400,985) (281,257)
Research and development expenses (6,994,380) (6,349,429) - -
Financial expenses 2,114,090 1,727,756 1,562,799 823,775
Including: Interest expenses (540,950) (511,687) (1,064,704) (499,991)
Interest income 3,328,798 1,262,815 2,612,130 1,091,446
Add: Other income 973,521 936,954 251,288 184,227
Investment income 183,139 1,276,499 9,168,806 8,753,457
Including: Share of profit of
362,945 276,367 204,334 185,410
associates and joint ventures
Including: Profits or losses arising
from derecognition of financial assets (709) -
measured at amortized costs
Gains on changes in fair value 299,107 (882,313) - -
Asset impairment losses (59,162) (237,086) - 251
Losses on credit impairment (176,647) (11)
Gains on disposals of assets (34,416) (2,000) 12 45,627
3. Operating profit 26,108,316 22,776,551 11,835,145 10,773,130
Add: Non-operating income 343,075 226,964 32,559 5,325
Less: Non-operating expenses (97,432) (79,098) (740) (4,038)
4. Total profit 26,353,959 22,924,417 11,866,964 10,774,417
Less: Income tax expenses (3,993,735) (3,834,166) (211,303) (269,645)
5. Net profit 22,360,224 19,090,251 11,655,661 10,504,772
(1) Classified by continuity of
operations
Net profit from continuing operations 22,360,224 19,090,251 11,655,661 10,504,772
Net profit from discontinued
- - - -
operations
(2) Classified by ownership of the
equity
Attributable to equity owners of the
21,315,967 17,900,239 11,655,661 10,504,772
Company
Minority interests 1,044,257 1,190,012 - -
6. Other comprehensive
135,571 (590,795) 4,902 132,425
income, net of tax
18
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Other comprehensive income
attributable to equity owners of the 141,924 (407,255) 4,902 132,425
Company, net of tax
(1) Other comprehensive income
items which will not be reclassified to (124,704) 45,455 - -
profit or loss
1. Changes arising from
remeasurement on defined benefit (124,704) 45,455 - -
plans
(2) Other comprehensive income
items which will be reclassified 266,628 (452,710) 4,902 132,425
subsequently to profit or loss
1. Other comprehensive income
that could be reclassified to profit and (1,583) 69,613 4,902 47,245
loss under equity method
2. Changes in fair value of
- (102,449) - 78,935
available-for-sale financial assets
3. Cash flow hedging reserve (56,352) (1,000,918) - 6,245
4. Differences arising from
translation of foreign currency 324,563 581,044 - -
financial statements
Other comprehensive income
attributable to minority shareholders, (6,353) (183,540) - -
net of tax
7. Total comprehensive income 22,495,795 18,499,456 11,660,563 10,637,197
Attributable to equity owners of the
21,457,891 17,492,984 11,660,563 10,637,197
Company
Attributable to minority interests 1,037,904 1,006,472 - -
8. Earnings per share:
(1) Basic earnings per share 3.20 2.72 N/A N/A
(2) Diluted earnings per share 3.18 2.69 N/A N/A
Legal representative: Fang Hongbo Director of Finance: Zhong Zheng Prepared by: Chen Lihong
19
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Consolidated and Company Cash Flow Statements
Prepared by Midea Group Co., Ltd. January-September 2019 Unit: RMB’000
January-September January-September January-September January-September
Items 2019 2018 2019 2018
Consolidated Consolidated Company Company
1. Cash flows from operating
activities
Cash received from sales of
187,113,896 160,376,963 - -
goods or rendering of services
Net increase in customer
deposits and deposits from banks 33,732 18,824 - -
and other financial institutions
Net decrease in loans and
- 1,267,226 - -
advances
Net decrease in deposits with the
648,514 - - -
Central Bank
Net increase in borrowings from
- 17,458 - -
the Central Bank
Cash received for interest, fee
902,622 975,800 - -
and commission
Refund of taxes and surcharges 5,917,442 4,903,836 - -
Cash received relating to other
3,744,879 5,073,697 30,468,856 23,765,185
operating activities
Sub-total of cash inflows 198,361,085 172,633,804 30,468,856 23,765,185
Cash paid for goods and services (105,994,827) (98,306,306) - -
Net increase in loans and
(2,092,334) - - -
advances
Net increase in deposits with the
- (1,121,072) - -
Central Bank
Net decrease in borrowings from
(99,754) - - -
the Central Bank
Cash paid for interest, fee and
(128,590) (183,202) - -
commission
Cash paid to and on behalf of
(20,676,547) (19,638,796) (47,774) (326,747)
employees
Payments of taxes and
(12,283,945) (11,157,941) (105,868) (23,009)
surcharges
Cash paid relating to other
(27,294,809) (22,636,907) (2,242,060) (2,269,335)
operating activities
Sub-total of cash outflows (168,570,806) (153,044,224) (2,395,702) (2,619,091)
Net cash flows from operating
29,790,279 19,589,580 28,073,154 21,146,094
activities
2. Cash flows from investing
activities
Cash received from disposal of
40,816,042 47,800,654 22,834,164 23,444,983
investments
Cash received from returns on
1,863,837 1,522,671 10,545,206 9,761,421
investments
Net cash received from disposal
of fixed assets, intangible assets 99,908 69,144 - -
and other long-term assets
Net cash received from disposal
of subsidiaries and other - 24,311 - -
business units
20
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Sub-total of cash inflows 42,779,787 49,416,780 33,379,370 33,206,404
Cash paid to acquire fixed assets,
intangible assets and other long- (2,882,478) (3,659,281) (114,621) (210,157)
term assets
Cash paid to acquire investments (55,452,534) (66,565,111) (49,346,463) (47,235,579)
Net cash paid to acquire
subsidiaries and other business (195,094) (171,245) - -
units
Sub-total of cash outflows (58,530,106) (70,395,637) (49,461,084) (47,445,736)
Net cash flows from investing
(15,750,319) (20,978,857) (16,081,714) (14,239,332)
activities
3. Cash flows from financing
activities
Cash received from capital
2,438,759 2,526,025 2,323,132 1,910,933
contributions
Including: Cash received from
capital contributions by minority 115,627 615,092 - -
shareholders of subsidiaries
Cash received from borrowings 11,568,424 2,344,612 6,509,500 1,140,000
Sub-total of cash inflows 14,007,183 4,870,637 8,832,632 3,050,933
Cash repayments of borrowings (7,758,275) (3,084,621) (2,698,750) -
Cash payments for distribution of
dividends, profits or interest (10,475,327) (8,953,224) (9,660,929) (8,209,025)
expenses
Including: Cash payments for
dividends or profit to minority (1,320,885) (498,030) - -
shareholders of subsidiaries
Cash paid relating to other
(3,319,678) (3,658,849) (3,092,751) (1,828,808)
financing activities
Sub-total of cash outflows (21,553,280) (15,696,694) (15,452,430) (10,037,833)
Net cash flows from financing
(7,546,097) (10,826,057) (6,619,798) (6,986,900)
activities
4. Effect of foreign exchange
rate changes on cash and cash 346,385 607,137 - -
equivalents
5. Net increase in cash and
6,840,248 (11,608,197) 5,371,642 (80,138)
cash equivalents
Add: Cash and cash equivalents
17,952,282 21,831,653 10,181,934 25,978,543
at the beginning of the period
6. Cash and cash equivalents
24,792,530 10,223,456 15,553,576 25,898,405
at the end of the period
Legal representative: Fang Hongbo Director of Finance: Zhong Zheng Prepared by: Chen Lihong
21
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
2. Adjustments to Financial Statements
1. Adjustments to financial statement items at the beginning of the year of the implementation of
the new accounting standards governing financial instruments, revenue or leases which have
been implemented since 2019
√ Applicable □ N/A
Consolidated and Company Balance Sheets
Prepared by Midea Group Co., Ltd. Unit: RMB’000
Consolidated Company
Assets Adjustmen Adjustmen
2018-12-31 2019-01-01 2018-12-31 2019-01-01
t t
Current assets:
Cash at bank and on hand 27,888,280 27,888,280 - 15,361,626 15,361,626 -
Financial assets held for
N/A 2,654,045 2,654,045 N/A 1,521,007 1,521,007
trading
Derivative financial assets 220,197 220,197 - - - -
Notes receivable 12,556,294 11,049,539 (1,506,755) - - -
Accounts receivable 19,390,174 18,641,979 (748,195) - - -
Receivables financing N/A 2,254,950 2,254,950 N/A - -
Advances to suppliers 2,215,888 2,215,888 - 55,069 55,069 -
Loans and advances 11,328,392 11,328,392 - - - -
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 assets 76,473,827 74,952,820 (1,521,007) 55,052,256 53,531,249 (1,521,007)
Total current assets 182,689,438 183,812,047 1,122,609 82,061,971 82,061,971 -
Non-current assets:
Available-for-sale financial
1,906,878 N/A (1,906,878) 56,579 N/A (56,579)
assets
Long-term receivables 34,815 34,815 - - - -
Long-term equity
2,713,316 2,713,316 - 28,236,295 28,236,295 -
investments
Other non-current financial
N/A 784,269 784,269 N/A 56,579 56,579
assets
Investment properties 391,765 391,765 - 560,954 560,954 -
Fixed assets 22,437,212 22,437,212 - 1,056,790 1,056,790 -
Construction in progress 2,077,621 2,077,621 - 51,872 51,872 -
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 -
expenses
Deferred tax assets 4,421,313 4,421,313 - 202,703 202,703 -
Other non-current assets 550,352 550,352 - 4,576 4,576 -
Total non-current assets 81,011,710 79,889,101 (1,122,609) 31,056,907 31,056,907 -
Total Assets 263,701,148 263,701,148 - 113,118,878 113,118,878 -
22
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Balance Sheets (Continued)
Prepared by Midea Group Co., Ltd. Unit: RMB’000
Consolidated Company
Liabilities and Owners’
Adjustmen Adjustmen
Equity 2018-12-31 2019-01-01 2018-12-31 2019-01-01
t t
Current liabilities:
Short-term borrowings 870,390 870,390 - 575,000 575,000 -
Borrowings from the
99,754 99,754 - - - -
Central Bank
Customer deposits and
deposits from banks and 44,386 44,386 - - - -
other financial institutions
Derivative financial
756,299 756,299 - - - -
liabilities
Notes payable 23,325,115 23,325,115 - - - -
Accounts payable 36,901,626 36,901,626 - - - -
Advances from customers 16,781,666 16,781,666 - - - -
Employee benefits payable 5,788,004 5,788,004 - 573,632 573,632 -
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 non-
7,122,712 7,122,712 - - - -
current liabilities
Other current liabilities 31,319,709 31,319,709 - 44,414 44,414 -
Total current liabilities 130,231,088 130,231,088 - 76,187,557 76,187,557 -
Non-current liabilities:
Long-term borrowings 32,091,439 32,091,439 - - - -
Long-term payables 88,890 88,890 - - - -
Provisions 268,887 268,887 - - - -
Deferred income 647,583 647,583 - - - -
Long-term employee
2,480,318 2,480,318 - - - -
benefits payable
Deferred tax liabilities 4,422,074 4,422,074 - - - -
Other non-current liabilities 1,016,352 1,016,352 - - - -
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 stock (4,918,427) (4,918,427) - (4,918,427) (4,918,427) -
Other comprehensive
(1,332,153) (994,706) 337,447 6,020 6,020 -
income
General risk reserve 366,947 366,947 - - - -
Surplus reserve 5,079,096 5,079,096 - 5,079,096 5,079,096 -
Undistributed profits 58,762,315 58,424,868 (337,447) 19,486,212 19,486,212 -
23
Interim Report for the Third Quarter 2019 of Midea Group Co., Ltd.
Total equity attributable to
shareholders of the 83,072,116 83,072,116 - 36,931,321 36,931,321 -
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 -
Owners’ Equity
2. Retrospective adjustments to comparative data of the previous period due to the
implementation of the new accounting standards governing financial instruments or leases since
2019
□ Applicable √ N/A
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
31 October 2019
24