Midea Group Co., Ltd. Interim Report for the First Quarter 2021 April 2021 1 Interim Report for the First Quarter 2021 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 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 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. 2 Interim Report for the First Quarter 2021 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. 2021 Jan.-Mar. 2020 YoY Change (%) Operating revenue (RMB'000) 82,504,017 58,013,031 42.22% Net profit attributable to shareholders of 6,468,588 4,810,977 34.45% the Company (RMB'000) Net profit attributable to shareholders of the Company before non-recurring 6,649,368 4,816,912 38.04% gains and losses (RMB'000) Net cash flows from operating activities 8,553,861 7,668,597 11.54% (RMB'000) Basic earnings per share (RMB/share) 0.93 0.70 32.86% Diluted earnings per share 0.92 0.69 33.33% (RMB/share) Weighted average ROE (%) 5.35% 4.62% 0.73% 31 Mar. 2021 31 Dec. 2020 Change (%) Total assets (RMB'000) 369,174,526 360,382,603 2.44% Net assets attributable to shareholders 117,532,628 117,516,260 0.01% 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 trading 7,047,686,070 session before disclosure (share) Fully diluted earnings per share based on the latest share capital above: Dividend paid to preference shareholders - Fully diluted earnings per share based on the latest 0.92 share capital above (RMB/share) Non-recurring gains and losses √ Applicable □ N/A Unit: RMB’000 Item Jan.-Mar. 2021 Note 3 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Gain or loss from disposal of non-current assets 1,579 Except for effectively hedging business related to normal business operations of the Company, gain or loss arising from the change in the fair value of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other -566,661 non-current financial assets, as well as investment gain or loss produced from the disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other non-current financial assets Other 366,439 Less: Corporate income tax -26,239 Minority interests (after tax) 8,376 Total -180,780 -- 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 404,034 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 Domestic Pledg Midea Holding Co., Ltd. non-state-owned 30.78 2,169,178,713 100,000,000 ed corporation Hong Kong Securities Clearing Foreign 14.91 1,050,938,349 Company Limited corporation 4 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. State-owned China Securities Finance Co., Ltd. 2.81 198,145,134 corporation Domestic Fang Hongbo 1.66 116,990,492 87,742,869 individual Domestic The securities account of Midea Group non-state-owned 1.64 115,686,277 Co., Ltd. for share repurchase corporation Canada Pension Plan Investment Board Foreign 1.47 103,913,897 - own funds (stock exchange) corporation State-owned Central Huijin Asset Management Ltd. 1.28 90,169,354 corporation Domestic Huang Jian 1.22 86,140,000 individual Foreign Li Jianwei 0.71 50,160,000 individual Domestic Yuan Liqun 0.57 40,343,895 individual Top 10 non-restricted common shareholders Number of non-restricted Type of shares Name of shareholder common shares held at the Type Shares period-end Midea Holding Co., Ltd. 2,212,046,613 RMB common stock 2,212,046,613 Hong Kong Securities Clearing Company Limited 1,050,938,349 RMB common stock 1,050,938,349 China Securities Finance Co., Ltd. 198,145,134 RMB common stock 198,145,134 The securities account of Midea Group Co., Ltd. 115,686,277 RMB common stock 115,686,277 for share repurchase Canada Pension Plan Investment Board- own 103,913,897 RMB common stock 103,913,897 funds (stock exchange) Central Huijin Asset Management Ltd. 90,169,354 RMB common stock 90,169,354 Huang Jian 86,140,000 RMB common stock 86,140,000 Li Jianwei 50,160,000 RMB common stock 50,160,000 Yuan Liqun 40,343,895 RMB common stock 40,343,895 Merrill Lynch International 39,798,754 RMB common stock 39,798,754 Explanation of related relationship or/and acting-in-concert parties among the N/A above-mentioned shareholders 1. The Company’s shareholder Yuan Liqun holds 4,227,400 shares Top ten non-restricted common shareholders in the Company through her common securities account and taking part in securities margin trading (if any) 36,116,495 shares in the Company through her account of collateral 5 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. securities for margin trading, representing a total holding of 40,343,895 shares in the Company. 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 6 Interim Report for the First Quarter 2021 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 Financial statement 31 March 31 December Change items 2021/January- 2020/January-Ma Reasons for the changes (%) (consolidated) March 2021 rch 2020 Financial assets held Mainly due to the decreased 17,847,023 28,239,601 -36.80% for trading structured deposits Mainly due to the changes in the Derivative financial 212,889 161,225 32.04% fair value of derivative financial liabilities instruments Current portion of 3,416,313 6,310,181 -45.86% Mainly due to the repayment of non-current liabilities borrowings Mainly due to the reclassification Long-term payables - 13,260 -100.00% to contract liabilities Mainly due to the increased share Treasury stock 13,396,198 6,094,347 119.81% repurchase Mainly due to the increased sales Operating revenue 82,504,017 58,013,031 42.22% revenue Mainly due to the changes in the Interest income 513,036 342,786 49.67% finance business Mainly due to the increased sales Cost of sales 63,526,113 43,428,300 46.28% revenue Mainly due to the changes in the Interest costs 15,059 53,023 -71.60% finance business Mainly due to the increased sales Taxes and surcharges 390,356 281,138 38.85% revenue Selling and distribution Mainly due to the increased sales 7,456,925 5,656,993 31.82% expenses revenue Mainly due to the increased Financial expense -960,112 -267,397 -259.06% interest income Mainly due to the increased Other income 345,651 81,818 322.46% subsidies received Gains on changes in -830,632 20,570 -4,138.07% Mainly due to the changes in the fair value 7 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. fair value of financial assets held for trading Credit impairment Mainly due to the changes in the 180,953 131,813 37.28% losses finance business Asset impairment Mainly due to the increased 115,967 -1,430 8,209.58% losses inventory valuation allowances Mainly due to the increased Gains/(Losses) on 1,400 3,841 -63.55% losses on disposal of non-current disposal of assets assets Mainly due to the increased Non-operating income 72,204 46,134 56.51% subsidies received Non-operating Mainly due to the increased other 25,720 16,726 53.77% expenses expenses Mainly due to the increased profits Minority interests 100,849 -587 17,280.41% of joint ventures Mainly due to the increased cash Net cash flows from -932,059 -5,485,574 83.01% received from disposal of investing activities investments Mainly due to the increased cash Net cash flows from -3,537,964 300,610 -1,276.93% payments relating to other financing activities financing activities Mainly due to the increased net Net increase in cash 4,033,640 2,540,236 58.79% cash flows from investing and cash equivalents 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 29th Meeting of the 3rd Board of Directors on 23 February 2021. As such, the Company was agreed to repurchase, with its own funds, no less than 50,000,000 shares and no more than 100,000,000 shares by way of centralized bidding at a price not exceeding RMB140/share. The share repurchase plan would be implemented within 12 months starting from the date it was approved by the Board of Directors. And the repurchased shares would be used for the Company’s equity incentive schemes and/or employee stock 8 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. ownership schemes. The Announcement on the Completion of the Implementation of the Share Repurchase Plan was disclosed on 3 April 2021. As of 2 April 2021, the Company has cumulatively repurchased 99,999,931 shares (1.4189% of the Company’s total share capital as of 31 March 2021). With the highest trading price being RMB95.68/share and the lowest being RMB80.29/share, the total payment amounted to RMB8,664,107,576.69 (exclusive of trading fees). With the repurchased shares close to the upper limit of the share repurchase plan of 100,000,000 shares, the implementation of this share repurchase plan has been completed. 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. Financial investments 4.1 Securities investments √ Applicable □ N/A Unit: RMB’000 Profit or Cumula loss from Meas tive fair Type Code Abbrevi change Purcha Profit or Fund Initial ureme Opening value Sold in Closing of of ation of in fair sed in loss in Account ing investment nt carrying change the carrying secur securi securiti value the the ing title sour cost metho amount charged period amount ities ties es during period period ce d to the equity period Over Fair Financi Own seas XIAOMI 1810 769,972 value 1,676,547 -374,629 3,885 - - -374,629 1,305,803 al asset fund listed -W metho held for s stock 9 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. d trading Over Fair Financi Own seas value al asset DNK Danke 172,190 35,126 -6,534 183 - - -6,534 28,775 fund listed metho held for s stock d trading Dom Espress Fair Financi estica Own 6880 if value al asset lly 13,998 128,032 -40,625 - - - -40,625 87,407 fund 18 System metho held for listed s s d trading stock Dom Fair Financi estica Own 6881 value al asset lly EFORT 178,534 475,260 -119,260 - - - -119,260 356,000 fund 65 metho held for listed s d trading stock Total 1,134,694 -- 2,314,965 -541,048 4,068 - - -541,048 1,777,985 - -- 4.2 Derivatives investments √ Applicable □ N/A Unit: RMB’000 Rel Closing Amou atio investment nt nshi Rel Purcha amount as Actual Type Sold in provid Closing Opera p ated Initial Starti Opening sed in a gain/loss of Endin Reporti ed for investm ting with tran investment ng investment Reporti percentage in deriva g date ng impair ent party the sact amount date amount ng of the Reporting tive Period ment amount Co ion Period Company’s Period (if mpa closing net any) ny assets Futur Futur es es 01/01/ 31/12/ No No 105 105 - - - 18,905 0.0161% 39,921 comp contra 2021 2021 any cts FX 01/01/ 31/12/ Bank No No deriva 1,007,587 1,007,587 6,674.9 4,468.1 - 564,255 0.4801% 264,788 2021 2021 tives Total 1,007,692 -- -- 1,007,692 6,674.9 4,468.1 - 583,160 0.4962% 304,709 Source of derivatives All from the Company’s own funds investment funds Litigation involved (if N/A 10 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. applicable) Disclosure date of the announcement about the board’s consent for 30/04/2021 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 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 Risk analysis of relationship between the Company and the agencies. positions held in derivatives during the Control measures: The Company has designated relevant responsible departments to enhance Reporting Period and learning of laws and regulations and market rules, conducted strict examination and verification explanation of control of contracts, defined responsibility and obligation well, and strengthened compliance check, so measures (Including but as to ensure that the Company's derivatives investment and position operations meet the not limited to market requirements of the laws and regulations and internal management system of the Company. risk, liquidity risk, credit 2. Operational risk: Imperfect internal process, staff, systems and external issues may cause the risk, operational risk, Company to suffer from loss during the course of its futures business and forex funds business. legal risk, etc.) 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 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 11 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. 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. Gain from futures contracts during the Reporting Period was RMB39.921 million. Period, specific 2. Gain from FX derivatives during the Reporting Period was RMB264.788 million. 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 Special opinions The Company's independent directors are of the view that the futures hedging business is an expressed by effective instrument for the Company to eliminate price volatility and implement risk prevention independent directors measures through enhanced internal control, thereby improving the operation and management concerning the of the Company; the Company's foreign exchange risk management capability can be further Company's derivatives improved through the forex funds business, so as to maintain and increase the value of foreign investment and risk exchange assets and the abovementioned investment in derivatives can help the Company to 12 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. control fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry out derivatives investment business, and the risks are controllable. 5. Progress on projects financed with raised funds □ Applicable √ N/A 6. Operating result forecast for January-June 2021 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-start until the end of the next Reporting Period according to predictions as well as any explanations for these reasons: □ Applicable √ N/A 7. Significant contracts arising from the Company’s ordinary course of business □ Applicable √ N/A 8. Wealth management entrustment □ Applicable √ N/A No such cases in the Reporting Period. 9. Irregular provision of guarantees □ Applicable √ N/A No such cases in the Reporting Period. 10. 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. 11. Visits received during the Reporting Period √ Applicable □ N/A Date Place Type of Type of Visitor Discussions Index to main 13 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. visit visitor inquiry information BOCIM, New China Fund, Taiping Asset Management, Ping An Annuity Insurance, SWS MU Fund Management, Kaiyuan Securities, 1. Midea’s new Fullgoal Fund, CICC business structure Securities, Industrial and strategic focus? Securities, Essence 2. Midea’s planning Fund, Huamei and strategy for Investment, Fullgoal overseas sales in Log Sheet of Fund, UBS SDIC, the near future? Investor Huitong Fund, 3. KUKA’s latest Relations Midea Group Focusbridge Fund, BOC condition and future Activities for 18 18 March 2021 By phone Institution HQ Wealth Management, development? March 2021 Minsheng Royal, 4. What are the disclosed on Maxwealth Fund, positions for www.cninfo.com Huashang Fund, Guotai WINONE Elevator .cn Junan Securities Asset and WDM, which Management, Ping An were acquired in the Fund Management, past year, in Midea’s Xueshi Investment, business landscape Western Leadbank FMC, in the future? AXA SPDB Investment Managers, PICC Pension, Xinyuan Asset Management, and BOCIM 14 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Section IV Financial Statements 1. Financial statements Balance Sheet Prepared by Midea Group Co., Ltd. 31 March 2021 Unit: RMB’000 31 March 2021 31 December 2020 31 March 2021 31 December 2020 ASSETS Consolidated Consolidated Company Company Current assets: Cash at bank and on hand 86,223,870 81,210,482 62,926,571 49,240,180 Financial assets held for trading 17,847,023 28,239,601 8,875,145 16,614,658 Derivative financial assets 329,867 420,494 - - Notes receivable 4,609,220 5,304,510 - - Accounts receivable 26,388,315 22,978,363 - - Receivables financing 12,868,889 13,901,856 - - Advances to suppliers 3,208,993 2,763,710 77,952 45,306 Contract assets 3,875,902 3,236,848 - - Loans and advances 19,728,893 16,469,069 - - Other receivables 2,757,223 2,973,945 33,832,202 28,318,670 Inventories 31,496,638 31,076,529 - - Other current assets 38,238,606 33,079,918 24,805,849 20,533,745 Total current assets 247,573,439 241,655,325 130,517,719 114,752,559 Non-current assets: Other debt investments 23,256,572 21,456,155 21,864,572 20,064,155 Long-term receivables 937,727 981,623 - - Loans and advances 952,561 1,113,501 - - Long-term equity investments 2,951,553 2,901,337 56,142,828 54,991,161 Other investments in equity instruments 38,975 46,651 - - Other non-current financial assets 3,302,444 3,360,849 79,139 80,937 Investment properties 366,254 405,559 466,099 476,839 15 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Fixed assets 21,955,436 22,239,214 708,433 749,835 Construction in progress 1,508,141 1,477,302 260,637 204,304 Right-of-use assets 2,050,852 8,402 Intangible assets 16,588,979 15,422,393 681,037 684,997 Goodwill 28,365,224 29,557,218 - - Long-term prepaid expenses 1,321,140 1,300,962 94,750 97,078 Deferred tax assets 7,435,518 7,208,635 286,871 287,360 Other non-current assets 10,569,711 11,255,879 10,040,163 10,141,031 Total non-current assets 121,601,087 118,727,278 90,632,931 87,777,697 TOTAL ASSETS 369,174,526 360,382,603 221,150,650 202,530,256 Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 16 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Balance Sheet (Continued) Prepared by Midea Group Co., Ltd. 31 March 2021 Unit: RMB’000 LIABILITIES AND SHAREHOLDERS' 31 March 2021 31 December 2020 31 March 2021 31 December 2020 EQUITY Consolidated Consolidated Company Company Current liabilities: Short-term borrowings 11,589,187 9,943,929 490,570 799,314 Customer deposits and deposits from 98,785 87,535 - - banks and other financial institutions Derivative financial liabilities 212,889 161,225 - - Notes payable 29,015,231 28,249,939 - - Accounts payable 58,403,164 53,930,261 - - Contract liabilities 20,148,760 18,400,922 - - Employee benefits payable 4,956,559 6,954,822 558,134 562,954 Taxes payable 4,667,549 5,758,058 984,212 1,326,219 Other payables 4,278,661 4,501,391 145,857,360 123,120,354 Current portion of non-current 3,416,313 6,310,181 7,786 4,000,000 liabilities Other current liabilities 51,057,776 49,852,239 3,004,427 3,048,794 Total current liabilities 187,844,874 184,150,502 150,902,489 132,857,635 Non-current liabilities: Long-term borrowings 46,909,801 42,827,287 12,000,000 5,800,000 Lease liabilities 1,422,561 684 Long-term payables - 13,260 - - Provisions 299,147 298,110 - - Deferred income 823,607 779,729 - - Long-term employee benefits payable 1,838,312 2,159,675 - - Deferred tax liabilities 4,975,914 5,223,954 46,647 67,792 Other non-current liabilities 691,182 692,986 - - Total non-current liabilities 56,960,524 51,995,001 12,047,331 5,867,792 Total liabilities 244,805,398 236,145,503 162,949,820 138,725,427 Shareholders' equity: Share capital 7,047,686 7,029,976 7,047,686 7,029,976 17 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Capital surplus 23,340,345 22,488,105 29,956,567 29,123,547 Less: Treasury stock (13,396,198) (6,094,347) (13,396,198) (6,094,347) Other comprehensive income (1,574,746) (1,549,003) (4,529) (16,009) General risk reserve 587,984 587,984 - - Specific reserve 13,441 12,730 Surplus reserve 7,966,362 7,966,362 7,966,362 7,966,362 Undistributed profits 93,547,753 87,074,453 26,630,942 25,795,300 Total equity attributable to 117,532,627 117,516,260 58,200,830 63,804,829 shareholders of the Company Minority interests 6,836,501 6,720,840 - - Total shareholders' equity 124,369,128 124,237,100 58,200,830 63,804,829 TOTAL LIABILITIES AND 369,174,526 360,382,603 221,150,650 202,530,256 SHAREHOLDERS' EQUITY Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 18 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Income Statement Prepared by Midea Group Co., Ltd. January-March 2021 Unit: RMB’000 January-March January-March January-March January-March Item 2021 2020 2021 2020 Consolidated Consolidated Company Company 1. Total revenue 83,017,120 58,355,915 442,664 382,710 Including: Operating revenue 82,504,017 58,013,031 442,664 382,710 Interest income 513,036 342,786 - - Fee and commission income 67 98 - - 2. Total operating cost (75,354,650) (53,240,225) 257,173 166,944 Including: Cost of sales (63,526,113) (43,428,300) (11,610) (10,696) Interest expenses (15,059) (53,023) - - Fee and commission expenses (1,776) (1,976) - - Taxes and surcharges (390,356) (281,138) (18,648) (14,860) Selling and distribution expenses (7,456,925) (5,656,993) - - General and administrative expenses (2,404,839) (2,008,521) (233,265) (129,126) Research and development expenses (2,519,694) (2,077,671) - - Financial income 960,112 267,397 520,696 321,626 Including: Interest expenses (317,428) (272,142) (504,197) (397,286) Interest income 1,158,995 778,923 1,024,813 718,942 Add: Other income 345,651 81,818 152,367 1,687 Investment income 531,167 409,709 254,440 222,065 Including: Investment income from 136,353 137,588 70,473 74,300 associates and joint ventures Gains/(Losses) on changes in fair (830,632) 20,570 (249,001) 86,529 value Credit impairment losses (180,953) (131,813) (664) (6,179) Asset impairment losses (115,967) 1,430 - - Gains/(Losses) on disposal of assets 1,400 3,841 (964) - 3. Operating profit 7,413,136 5,501,245 856,015 853,756 Add: Non-operating income 72,204 46,134 448 842 Less: Non-operating expenses (25,720) (16,726) - (12,629) 4. Total profit 7,459,620 5,530,653 856,463 841,969 19 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Less: Income tax expenses (890,183) (720,263) (25,533) (52,467) 5. Net profit 6,569,437 4,810,390 830,930 789,502 (1) Classified by continuity of operations Net profit from continuing operations 6,569,437 4,810,390 830,930 789,502 Net profit from discontinued operations - - - - (2) Classified by ownership of the equity Attributable to shareholders of the Company 6,468,588 4,810,977 830,930 789,502 Minority interests 100,849 (587) - - 6. Other comprehensive income, net of tax (42,607) (834,341) 11,480 - Other comprehensive income attributable to (25,743) (583,429) 11,480 - shareholders of the Company, net of tax (1) Other comprehensive income items which will 94,651 (34,092) - - not be reclassified subsequently to profit or loss 1) Changes arising from remeasurement of 94,607 (34,092) - - defined benefit plan 2) Changes in fair value of other investments in 44 - - - equity instruments (2) Other comprehensive income items which will (120,394) (549,337) 11,480 - be reclassified subsequently to profit or loss 1) Other comprehensive income that will be transferred subsequently to profit or loss under the 12,308 1,606 11,480 - equity method 2) Cash flow hedging reserve (197,769) (326,367) - - 3) Exchange differences on translation of 65,067 (224,576) - - foreign currency financial statements Other comprehensive income attributable to (16,864) (250,912) - - minority shareholders, net of tax 7. Total comprehensive income 6,526,830 3,976,049 842,410 789,502 Attributable to shareholders of the Company 6,442,845 4,227,548 842,410 789,502 Minority interests 83,985 (251,499) - - 8. Earnings per share (1) Basic earnings per share (RMB Yuan) 0.93 0.70 N/A N/A (2) Diluted earnings per share (RMB Yuan) 0.92 0.69 N/A N/A Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 20 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Cash Flow Statement Prepared by Midea Group Co., Ltd. January-March 2021 Unit: RMB’000 January-March January-March January-March January-March Item 2021 2020 2021 2020 Consolidated Consolidated Company Company 1. Cash flows from operating activities: Cash received from sales of goods or rendering 70,624,192 54,493,549 - - of services Net increase in customer deposits and deposits 11,250 9,220 - - from banks and other financial institutions Net decrease in deposits with the Central Bank 823,134 26,198 - - Cash received from interest, fee and commission 449,113 356,968 - - Refund of taxes and surcharges 2,185,291 1,481,374 - - Cash received relating to other operating 1,612,552 771,562 23,394,410 13,336,223 activities Sub-total of cash inflows 75,705,532 57,138,871 23,394,410 13,336,223 Cash paid for goods and services (43,141,773) (29,986,705) - - Net increase in loans and advances (3,182,455) (420,707) - - Cash paid for interest, fee and commission (17,033) (55,731) - - Cash paid to and on behalf of employees (10,119,594) (8,895,742) (5,245) (9,783) Payments of taxes and surcharges (3,252,112) (2,621,587) (14,624) (2,964) Cash paid relating to other operating activities (7,438,704) (7,489,802) (7,745,089) (2,828,386) Sub-total of cash outflows (67,151,671) (49,470,274) (7,764,958) (2,841,133) Net cash flows from operating activities 8,553,861 7,668,597 15,629,452 10,495,090 2. Cash flows from investing activities: Cash received from disposal of investments 27,124,590 22,580,275 17,800,000 20,960,000 Cash received from returns on investments 942,913 1,005,097 987,658 980,079 Net cash received from disposal of fixed assets, 16,233 8,683 255 - intangible assets and other long-term assets Net cash received from disposal of subsidiaries 2,479 - - - and other business units Sub-total of cash inflows 28,086,215 23,594,055 18,787,913 21,940,079 Cash paid to acquire fixed assets, intangible (2,145,202) (884,830) (78,204) (47,168) assets and other long-term assets Cash paid to acquire investments (26,718,699) (28,183,538) (25,870,441) (27,760,000) 21 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Net cash paid to acquire subsidiaries and other (146,982) (11,261) - - business units Cash paid relating to other investing activities (7,391) - - - Sub-total of cash outflows (29,018,274) (29,079,629) (25,948,645) (27,807,168) Net cash flows from investing activities (932,059) (5,485,574) (7,160,732) (5,867,089) 3. Cash flows from financing activities: Cash received from capital contributions 358,749 361,920 358,749 361,920 Including: Cash received from capital contributions by minority shareholders of - - - - subsidiaries Cash received from borrowings 9,152,583 1,403,478 6,200,000 308,744 Cash received from issuance of short-term 2,999,629 - 2,999,629 - financing bonds Cash received relating to other financing activities 16,742 - - - Sub-total of cash inflows 12,527,703 1,765,398 9,558,378 670,664 Cash repayments of borrowings (5,081,076) (260,351) (4,308,744) - Cash repayments of short-term financing bonds (3,000,000) - (3,000,000) - Cash payments for interest expenses and (426,488) (383,344) (461,849) (400,222) distribution of dividends or profits Including: Cash payments for dividends or (81,772) (62,631) - - profit to minority shareholders of subsidiaries Cash payments relating to other financing (7,558,103) (821,093) (7,394,100) (802,059) activities Sub-total of cash outflows (16,065,667) (1,464,788) (15,164,693) (1,202,281) Net cash flows from financing activities (3,537,964) 300,610 (5,606,315) (531,617) 4. Effect of foreign exchange rate changes on cash (50,198) 56,603 - - and cash equivalents 5. Net increase in cash and cash equivalents 4,033,640 2,540,236 2,862,405 4,096,384 Add: Cash and cash equivalents at beginning of 23,548,509 30,441,760 16,595,063 12,408,650 period 6. Cash and cash equivalents at end of period 27,582,149 32,981,996 19,457,468 16,505,034 Legal representative: Principal in charge of accounting: Head of accounting department: Fang Hongbo Zhong Zheng Chen Lihong 22 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. 2. Adjustments to the Financial Statements 2.1 Adjustments to financial statement items at the beginning of the year of the first implementation of the new accounting standards governing leases which have been implemented since 2021 √ Applicable □ N/A Whether any balance sheet items at the beginning of the year requires adjustment √ Yes □ No Balance Sheet Prepared by Midea Group Co., Ltd. 31 March 2021 Unit: RMB’000 Consolidated Company ASSETS 31 December 1 January 31 December Adjustment 1 January 2021 Adjustment 2020 2021 2020 Current assets: Cash at bank and on 81,210,482 81,210,482 - 49,240,180 49,240,180 - hand Financial assets held 28,239,601 28,239,601 - 16,614,658 16,614,658 - for trading Derivative financial 420,494 420,494 - - - - assets Notes receivable 5,304,510 5,304,510 - - - - Accounts receivable 22,978,363 22,978,363 - - - - Receivables financing 13,901,856 13,901,856 - - - - Advances to suppliers 2,763,710 2,763,710 - 45,306 45,306 - Contract assets 3,236,848 3,236,848 - - - - Loans and advances 16,469,069 16,469,069 - - - - Other receivables 2,973,945 2,973,945 - 28,318,670 28,318,670 - Inventories 31,076,529 31,076,529 - - - - Other current assets 33,079,918 33,079,918 - 20,533,745 20,533,745 - Total current assets 241,655,325 241,655,325 - 114,752,559 114,752,559 - Non-current assets: Other debt investments 21,456,155 21,456,155 - 20,064,155 20,064,155 - Long-term receivables 981,623 981,623 - - - - Loans and advances 1,113,501 1,113,501 - - - - 23 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Long-term equity 2,901,337 2,901,337 - 54,991,161 54,991,161 - investments Other investments in 46,651 46,651 - - - - equity instruments Other non-current 3,360,849 3,360,849 - 80,937 80,937 - financial assets Investment properties 405,559 405,559 - 476,839 476,839 - Fixed assets 22,239,214 22,212,866 (26,348) 749,835 749,835 - Construction in 1,477,302 1,477,302 - 204,304 204,304 - progress Right-of-use assets - 2,155,516 2,155,516 - 10,340 10,340 Intangible assets 15,422,393 15,422,393 - 684,997 684,997 - Goodwill 29,557,218 29,557,218 - - - - Long-term prepaid 1,300,962 1,300,962 - 97,078 97,078 - expenses Deferred tax assets 7,208,635 7,208,635 - 287,360 287,360 - Other non-current 11,255,879 11,255,879 - 10,141,031 10,141,031 - assets Total non-current 118,727,278 120,856,446 2,129,168 87,777,697 87,788,037 10,340 assets TOTAL ASSETS 360,382,603 362,511,771 2,129,168 202,530,256 202,540,596 10,340 24 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Balance Sheet (Continued) Prepared by Midea Group Co., Ltd. 31 March 2021 Unit: RMB’000 Consolidated Company LIABILITIES AND 31 December 1 January 31 December 1 January Adjustm SHAREHOLDERS' EQUITY Adjustment 2020 2021 2020 2021 ent Current liabilities: Short-term borrowings 9,943,929 9,943,929 - 799,314 799,314 - Customer deposits and deposits from banks and other financial 87,535 87,535 - - - - institutions Derivative financial liabilities 161,225 161,225 - - - - Notes payable 28,249,939 28,249,939 - - - - Accounts payable 53,930,261 53,930,261 - - - - Contract liabilities 18,400,922 18,400,922 - - - - Employee benefits payable 6,954,822 6,954,822 - 562,954 562,954 - Taxes payable 5,758,058 5,758,058 - 1,326,219 1,326,219 - Other payables 4,501,391 4,501,391 - 123,120,354 123,120,354 - Current portion of non-current 6,310,181 6,939,183 629,002 4,000,000 4,007,693 7,693 liabilities Other current liabilities 49,852,239 49,852,239 - 3,048,794 3,048,794 - Total current liabilities 184,150,502 184,779,504 629,002 132,857,635 132,865,328 7,693 Non-current liabilities: Long-term borrowings 42,827,287 42,827,287 - 5,800,000 5,800,000 - Lease liabilities 1,513,426 1,513,426 - 2,647 2,647 Long-term payables 13,260 - (13,260) - - - Provisions 298,110 298,110 - - - - Deferred income 779,729 779,729 - - - - Long-term employee benefits 2,159,675 2,159,675 - - - - payable Deferred tax liabilities 5,223,954 5,223,954 - 67,792 67,792 - Other non-current liabilities 692,986 692,986 - - - - Total non-current liabilities 51,995,001 53,495,167 1,500,166 5,867,792 5,870,439 2,647 Total liabilities 236,145,503 238,274,671 2,129,168 138,725,427 138,735,767 10,340 Shareholders' equity: Share capital 7,029,976 7,029,976 - 7,029,976 7,029,976 - 25 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. Capital surplus 22,488,105 22,488,105 - 29,123,547 29,123,547 - Less: Treasury stock (6,094,347) (6,094,347) - (6,094,347) (6,094,347) - Other comprehensive income (1,549,003) (1,549,003) - (16,009) (16,009) - General risk reserve 587,984 587,984 - - - - Specific reserve 12,730 12,730 - - - - Surplus reserve 7,966,362 7,966,362 - 7,966,362 7,966,362 - Undistributed profits 87,074,453 87,074,453 - 25,795,300 25,795,300 - Total equity attributable to 117,516,260 117,516,260 - 63,804,829 63,804,829 - shareholders of the Company Minority interests 6,720,840 6,720,840 - - - - Total shareholders' equity 124,237,100 124,237,100 - 63,804,829 63,804,829 - TOTAL LIABILITIES AND 360,382,603 362,511,771 2,129,168 202,530,256 202,540,596 10,340 SHAREHOLDERS' EQUITY Notes to the adjustments Pursuant to the Notice of Revising and Issuing the Accounting Standard No. 21 for Business Enterprises—Leases (CK [2018] No. 35) issued by the Ministry of Finance on 7 December 2018, the Company has adopted, starting from 1 January 2021, the revised Accounting Standard No. 21 for Business Enterprises—Leases (hereinafter referred to as the “New Lease Standard”). According to the New Lease Standard, the Company chooses to adjust the amounts of retained earnings and other relevant financial statement items at the beginning of the year of the first implementation of the New Lease Standard based on the cumulative effects arising from the first implementation of the New Lease Standard, with no adjustments to comparable data. For finance leases before the first implementation date, the Company recognizes right-of-use assets and lease liabilities based on the original carrying amounts of the assets held under the finance leases and the finance lease payables respectively on the first implementation date. For operating leases other than short-term leases and leases of low-value assets before the first implementation date, the Company recognizes lease liabilities on the first implementation date based on the present value of the balances of lease payables discounted using the interest rate of the Company’s incremental borrowings on the first implementation date, and recognizes right-of-use assets by making necessary adjustments to prepaid rents based on amounts equivalent to lease liabilities. 26 Interim Report for the First Quarter 2021 of Midea Group Co., Ltd. 2.2 Retrospective adjustments to comparative data of the previous period due to the first implementation of the new accounting standards leases since 2021 □ Applicable √ N/A 3. Auditor’s report Is this Report audited by a CPAs firm? □Yes √No Midea Group Co., Ltd. Legal Representative: Fang Hongbo 30 April 2021 27